SYNNEX CORP10K_021307

FORM 10-KSYNNEX CORP - SNXExhibit: �

Filed: February 13, 2007 (period: November 30, 2006)

Annual report which provides a comprehensive overview of the company for the past year

Table of Contents

PART I

Items 10 (as to directors and Section 16(a) Beneficial Ownership Reporting Compliance),11, 12 (as t

PART II

26 Item 5. Market for Registrant s Common Equity and Related Stockholder Matters 26 PART I

Item 1. Business Overview Item 1A. Risk Factors. Item 1B. Unresolved Staff Comments. Item 2. Properties Item 3. Legal Proceedings Item 4. Submission of Matters to a Vote of Security Holders PART II

Item 5. Market for Registrant s Common Equity and Related Stockholder Matters Item 6. Selected Consolidated Financial Data Item 7. Management s Discussion and Analysis of Financial Condition and Results of

Operations

Item 7A. Quantitative and Qualitative Disclosures about Market Risk Item 8. Financial Statements and Supplementary Data Item 9. Changes In and Disagreements with Accountants on Accounting and Financial

Disclosure

Item 9A. Controls and Procedures Item 9B. Other Information PART III

Item 10. Directors and Executive Officers of the Registrant Item 11. Executive Compensation Item 12. Security Ownership of Certain Beneficial Owners and Management and Related

Stockholder Matt

Item 13. Certain Relationships and Related Transactions Item 14. Principal Accountant Fees and Services PART IV

Item 15. Exhibits and Financial Statement Schedules SIGNATURES EXHIBIT INDEX

EX-10.1 (AMENDED AND RESTATED 2003 STOCK INCENTIVE PLAN)

EX-10.14 (EMPLOYMENT AGREEMENT)

EX-10.15 (SECOND AMENDED AND RESTATED CREDIT AGREEMENT)

EX-10.16 (SECOND AMENDED AND RESTATED RECEIVABLES SALE ANDSERVICING AGREEMENT)

EX-10.17 (SECOND AMENDED AND RESTATED RECEIVABLES FUNDING ANDADMINISTRATION AGREEMENT)

EX-23.1 (CONSENT OF PRICEWATERHOUSECOOPERS LLP)

EX-31.1 (RULE 13A-14(A) CERTIFICATION OF CEO)

EX-31.2 (RULE 13A-14(A) CERTIFICATION OF CFO)

EX-32.1 (STATEMENT OF CEO AND CFO UNDER SECTION 906)

Table of Contents

UNITED STATESSECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

⌧ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended November 30, 2006

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from to

Commission File Number: 001-31892

SYNNEX CORPORATION(Exact name of registrant as specified in its charter)

Delaware 94-2703333(State or other jurisdiction of

incorporation or organization) (IRS Employer

Identification No.)

44201 Nobel DriveFremont, California

94538(Zip Code)

(Address of principal executive offices)

(510) 656-3333(Registrant’s telephone number, including area code)

Securities registered to Section 12(b) of the Act:Common Stock, par value $0.001 per share

New York Stock ExchangeSecurities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No ⌧Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No ⌧Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934

during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filingrequirements for the past 90 days. Yes ⌧ No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to thebest of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to thisForm 10-K ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filerand large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one).

Large accelerated filer ¨ Accelerated filer ⌧ Non-accelerated filer ¨Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No ⌧The aggregate market value of Common Stock held by non-affiliates of the registrant (based upon the closing sale price on the New York Stock Exchange

on February 1, 2007) was approximately $316,192,235. Shares held by each executive officer, director and by each person who owns 10% or more of theoutstanding Common Stock have been excluded in that such persons may be deemed to be affiliates. This determination of affiliate status is not necessarily aconclusive determination for other purposes.

As of February 1, 2007, there were 30,894,096 shares of Common Stock, $0.001 per share par value, outstanding.

DOCUMENTS INCORPORATED BY REFERENCEItems 10 (as to directors and Section 16(a) Beneficial Ownership Reporting Compliance), 11, 12 (as to Beneficial Ownership) and 13 of Part III

incorporate by reference information from the registrant’s proxy statement to be filed with the Securities and Exchange Commission in connection with thesolicitation of proxies for the registrant’s 2007 Annual Meeting of Stockholders to be held on March 20, 2007.

Source: SYNNEX CORP, 10-K, February 13, 2007

Table of ContentsSYNNEX CORPORATION

TABLE OF CONTENTS

2006 FORM 10-K

PagePART I 1

Item 1. Business Overview 1Item 1A. Risk Factors 9Item 1B. Unresolved Staff Comments 23Item 2. Properties 23Item 3. Legal Proceedings 23Item 4. Submission of Matters to a Vote of Security Holders 24

PART II 26Item 5. Market for Registrant’s Common Equity and Related Stockholder Matters 26Item 6. Selected Consolidated Financial Data 28Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. 29Item 7A. Quantitative and Qualitative Disclosures about Market Risk 47Item 8. Financial Statements and Supplementary Data 49Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 90Item 9A. Controls and Procedures 90Item 9B. Other Information 91

PART III 92Item 10. Directors and Executive Officers of the Registrant 92Item 11. Executive Compensation 92Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 92Item 13. Certain Relationships and Related Transactions 93Item 14. Principal Accountant Fees and Services 93

PART IV 94Item 15. Exhibits and Financial Statement Schedules 94


Table of Contents PART I

When used in this Annual Report on Form 10-K (the “Report”), the words “believes,” “plans,” “estimates,” “anticipates,” “expects,” “intends,”“allows,” “can,” “will,” “provides” and similar expressions are intended to identify forward-looking statements. These are statements that relate to futureperiods and include statements relating to our services, our relationships with and the value we provide to our OEM suppliers and reseller customers, ourrelationship with MiTAC International, our regional strategy for our distribution operations, our distribution and contract assembly services, our strategy withrespect to international operations, the effect of current and future legal proceedings, our IT infrastructure, our plan to continue our investment in IT services,our continued business expansion, our dependency on our relationships with our OEMs, adequacy of our facilities, expansion of our operations throughinvestments or acquisitions, gross margin, selling, general and administrative expenses, fluctuations in future revenue and operating results and future expenses,fluctuations in inventory, our estimates regarding our capital requirements and our needs for additional financing, our infrastructure needs and growth, use ofour working capital, thefts at our warehouses, market consolidation, expansion of our operations, competition, impact of new rules and regulations affectingpublic companies, expectations regarding dividends, our disclosure controls and procedures, statements regarding our securitization program and sources ofrevenue. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected. These risksand uncertainties include, but are not limited to, those risks discussed below and under Item 1A, “Risk Factors,” as well as the seasonality of the buying patternsof our customers, the concentration of sales to large customers, dependence upon and trends in capital spending budgets in the IT industry, fluctuations ingeneral economic conditions, increased competition and costs related to expansion of our operations. These forward-looking statements speak only as of the datehereof. We expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein toreflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

In the sections of this Report entitled “Business Overview” and “Management’s Discussion and Analysis of Financial Condition and Results ofOperations” all references to “SYNNEX,” “we,” “us,” “our” or the “Company” mean SYNNEX Corporation and our subsidiaries, except where it is madeclear that the term means only the parent company.

SYNNEX, the SYNNEX Logo, and all other SYNNEX company, product and services names and slogans are trademarks or registered trademarks ofSYNNEX Corporation. SYNNEX and the SYNNEX Logo Reg. U.S. Pat. & Tm. Off. Other names and marks are the property of their respective owners.

Item 1. Business Overview

We are a global information technology, or IT, supply chain services company. We offer a comprehensive range of services to IT original equipmentmanufacturers and software publishers, collectively OEMs, and reseller customers worldwide. The supply chain services that we offer include productdistribution, related logistics, contract assembly and demand generation marketing.

We have been in the IT distribution business since 1980 and are one of the largest IT product distributors based on 2006 reported revenue. We focus ourcore wholesale distribution business on a limited number of leading IT OEMs, which allows us to enhance and increase the value we provide to our OEMsuppliers and reseller customers.

In our distribution operations, we purchase IT systems, peripherals, system components, packaged software and networking equipment from OEMsuppliers such as HP, IBM, Intel, Lenovo and Microsoft and sell them to our reseller customers. We perform the same function for our purchases of licensedsoftware products. Our reseller customers include value-added resellers, or VARs, corporate resellers, government resellers, system integrators, direct marketersand retailers. We currently distribute and market approximately 15,000 products (as measured by active SKUs) from over 100 OEM suppliers to more than15,000 resellers.

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Table of ContentsOur contract assembly operations are generally related to building IT systems such as network security appliances, servers and workstations. By leveraging

the inventory management capabilities and system component supplier relationships of our distribution business, we provide cost-effective IT system assembly.

Because we offer distribution, contract assembly, demand generation marketing, IT solutions and complementary supply chain services, OEM suppliersand resellers can outsource to us multiple areas of their business outside of their core competencies. This model allows us to provide services at several pointsalong the IT product supply chain.

We believe that the combination of our broad range of supply chain capabilities, our focus on serving the leading IT OEMs and our efficient operationsenables us to realize strong and expanding relationships with these OEMs and reseller customers. We are headquartered in Fremont, California and havedistribution, sales and assembly facilities in the United States, Canada, China, Mexico and the United Kingdom.

We were originally incorporated in the State of California as COMPAC Microelectronics, Inc. in November 1980, and we changed our name to SYNNEXInformation Technologies, Inc. in February 1994. We later reincorporated in the State of Delaware under the name of SYNNEX Corporation in October 2003.

Our Products and Suppliers

We distribute a full range of IT products, including IT systems, peripherals, system components, software and networking equipment for more than 100OEM suppliers, enabling us to offer comprehensive solutions to our reseller customers. Our primary OEM suppliers for the fiscal year ended November 30, 2006and representative products we currently distribute for them include the following:

Supplier Representative ProductsAcer Mobile PCs, Displays and MonitorsHP

Desktop and Mobile PCs, Printers, Imaging Products, Supplies,Servers, Storage Products

IBM Servers, Storage Systems, SoftwareIntel CPUs, Motherboards, Networking ProductsLenovo Desktop and Mobile PCsLexmark Printers and SuppliesMicrosoft Operating Systems, Application SoftwarePanasonic Mobile PCsSymantec Security SoftwareXerox Printers and Supplies

During fiscal 2006, our distribution product mix by category was in the following ranges:

Product Category: Peripherals 31%-35%IT Systems 29%-33%System Components 16%-20%Software 10%-14%Networking Equipment 4%-8%

Our largest OEM supplier is HP. Revenue from the sale of HP products represented approximately 25% and 28% of our revenue for fiscal 2006 and 2005,respectively. We entered into a U.S. Business Development Partner Agreement with HP on November 6, 2003, which governs our relationship with HP in theUnited States. The agreement remains in effect until May 31, 2007 unless terminated earlier in accordance with its terms. As is typical with our OEM supplieragreements, either party may terminate the agreement upon 30 days written

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Table of Contentsnotice. In addition, either party may terminate the agreement with cause upon 15 days written notice. “Cause” is not defined in the agreement. In the event theagreement is terminated for cause or if we in any way fail to perform any of our obligations under the agreement, any and all agreements between HP and us forthe resale of any and all products, support and services will automatically terminate upon such default or termination. In the event of any breach of the agreementby us, HP may terminate the agreement and we may be required to refund HP any discounts or program payments paid during the period we were in breach ofthe agreement and reimburse HP for reasonable attorneys’ fees. If either party becomes insolvent or bankrupt, the other party may terminate the agreementwithout notice and cancel any unfulfilled obligations, except for payment obligations. Our subsidiaries in Canada and Mexico have territorial supplier agreementswith subsidiaries of HP located in the same countries.

In addition to HP, we have distribution agreements with most of our suppliers. These agreements usually provide for nonexclusive distribution rights andpertain to specific geographic territories. The agreements are also generally short-term, subject to periodic renewal, and often contain provisions permittingtermination by either our supplier or us without cause upon relatively short notice. An OEM supplier that elects to terminate a distribution agreement willgenerally repurchase its products carried in our inventory.

Our IT distribution and assembly business subjects us to the risk that the value of our inventory will be affected adversely by suppliers’ price reductions orby technological changes affecting the usefulness or desirability of the products comprising our inventory. Many of our OEM suppliers offer us limitedprotection from the loss in value of our inventory due to technological change or a supplier’s price reductions. Under many of these agreements, we have alimited period of time to return or exchange products or claim price protection credits. We monitor our inventory levels and attempt to time our purchases tomaximize our protection under supplier programs.

Our OEM suppliers generally warrant the products we distribute and allow returns of defective products, including those returned to us by our resellercustomers. We generally do not independently warrant the products we distribute; however, we warrant our services with regard to products that we configure forour reseller customers, and the products that we assemble from components purchased from other sources. Historically, our warranty expense has not beenmaterial.

Our Customers

Distribution

We currently distribute IT products to more than 15,000 resellers. Resellers are classified primarily by the end-users to which they sell as well as theservices they provide. End-users include large corporations, governments, small-to medium-sized businesses, or SMBs, and personal users. In addition, resellersvary greatly in size and geographic reach. No reseller accounted for more than 10% of our total revenue in fiscal 2006 or 2005. Our reseller customers buy fromus and other distributors and our larger reseller customers also buy certain products directly from OEM suppliers. Some of our largest reseller customers includeApptis, Business Depot, CDW and Insight.

Contract Assembly

The customers of our contract assembly business are IT product OEMs seeking to outsource product assembly and production logistics. Currently, ourprimary contract assembly customer is Sun Microsystems. No contract assembly customer accounted for more than 10% of our total revenue in fiscal 2006 or2005. Sun Microsystems accounted for approximately 91% and 93% of our contract assembly revenue in fiscal 2006 and 2005, respectively.

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Table of ContentsOur Services We offer a variety of services to our distribution and contract assembly customers, including the following:

Distribution Distribution Services. We have sophisticated pick, pack and ship operations, which allows us to efficiently receive shipments from our OEM suppliers andfill orders for our reseller customers. We generally stock or otherwise have access to the inventory of our OEM suppliers to satisfy the demands of our resellercustomers.

Logistics Services. We provide logistics support to our reseller customers such as outsourced fulfillment, virtual distribution and direct ship to end-users.Other logistics support activities we provide include generation of customized shipping documents, multi-level serial number tracking for customized, configuredproducts and online order and shipment tracking. We also provide logistics support both individually and in bulk directly to resellers, other distributors andend-users.

Online Services. We maintain electronic data interchange and web-based communication links with many of our reseller customers. These links improvethe speed and efficiency of our transactions with our reseller customers by enabling them to search for products, check inventory availability and prices,configure systems, place and track orders, receive invoices, review account status and process returns. We also have web-application software that allows ourresellers or their end-user customers to order software and take delivery online.

Financing Services. We offer our reseller customers a wide range of financing options, including net terms, third party leasing and floor plan financing,letters of credit and arrangements where we collect payments directly from the end-user. The availability and terms of our financing services are subject to ourcredit policies or those of third party financing providers to our reseller customers.

Marketing Services. We offer our OEM suppliers a full range of marketing activities targeting specific resellers, including direct mail, external mediaadvertising, reseller product training, targeted telemarketing campaigns, national and regional trade shows, database analysis, print on demand services andweb-based marketing.

Demand Generation Marketing. We offer a system that generates awareness and demand for products and services, including business and channeldevelopment, integrated sales and marketing campaigns, lead development and product marketing strategic planning and consulting.

Technical Support Services. We provide our reseller customers technical support services, including pre- and post-sale support.

Contract Assembly Materials Procurement and Management. We provide our contract assembly customers with materials procurement and management activities includingplanning, purchasing, expediting and warehousing system components and materials used in the assembly process. Because we distribute many of the systemcomponents used in the assembly of our contract assembly customers’ products, our assembly customers are able to minimize their inventory risk by takingadvantage of the terms and conditions of our distribution relationships. In addition, we also offer increased inventory availability to our contract assemblycustomers because we stock items for both distribution and assembly.

Assembly Services. We provide our OEM assembly customers with systems design and build-to-order, or BTO, and configure-to-order, or CTO, assemblycapabilities. BTO assembly consists of building a group of

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Table of Contentssystems with the same pre-defined specifications, generally for our OEM customers’ inventory. CTO assembly consists of building a customized system for anOEM customer’s individual order specifications. We possess adequate systems and assembly flexibility to produce both large and small volumes of products thatinclude numerous configurations. We also offer production value-added services such as kitting, reconfiguration, asset tagging and hard drive imaging.

Joint Design and Manufacturing Services. We offer contract design and manufacturing services to OEMs through our relationship with our largest indirectstockholder, MiTAC International. MiTAC International’s design capabilities complement our system assembly capabilities and allow us to deliver a completedesign-to-delivery solution for our OEM customers. Sales and Marketing As of November 30, 2006, we employed 1,015 sales, marketing and demand generation services professionals. We serve our large commercial andgovernment reseller customers through dedicated sales professionals. We market to smaller resellers through dedicated regional sales teams. In addition, we havededicated product marketing and sales specialists that focus on the sale and promotion of the products of selected suppliers. These specialists are also directlyinvolved in establishing new relationships with leading OEMs to create demand for their products and services and with resellers for their customers’ needs. Oursales and marketing professionals are complemented by members of our executive management team who are integral in identifying potential new customeropportunities, promoting sales growth and ensuring customer satisfaction. We have sales offices in North America, Latin America and Asia and attempt to locateour sales and marketing professionals in close proximity to our reseller customers.

We also have a sales team dedicated to cultivating new contract assembly opportunities with IT product OEMs. On selected opportunities, this team workswith MiTAC International representatives to offer OEMs comprehensive outsourced supply chain solutions. This joint sales effort enables us to deliver completedesign-to-delivery solutions for our OEM customers. Our Operations Distribution We operate 20 distribution facilities in the United States, Canada, China and Mexico. Our distribution processes are highly automated to reduce errors,ensure timely order fulfillment and enhance the efficiency of our warehouse operations and back office administration. In North America, our distributionfacilities are geographically dispersed to be near end-users and reseller customers. This regional strategy enables us to benefit from lower shipping costs andshorter delivery lead times to our customers. Furthermore, we track several performance measurements to continuously improve the efficiency and accuracy ofour distribution operations. Our regional locations also enable us to make local deliveries and provide will-call fulfillment to more customers than if ourdistribution operations were centralized, resulting in better service to our customers. Our workforce is comprised of permanent and temporary employees,enabling us to respond to short-term changes in order activity.

Our proprietary IT systems and processes enable us to automate many of our distribution operations. For example, we use radio frequency and bar codescanning technologies in all of our warehouse operations to maintain real time inventory records, facilitate frequent cycle counts and improve the accuracy oforder fulfillment. We use palm readers to capture real time labor cost data enabling efficient management of our daily labor costs. We also scan and archivereceiving documents and generate electronic freight out vouchers to streamline our accounts payable administration.

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Table of ContentsTo enhance the accuracy of our order fulfillment and protect our inventory from shrinkage, our systems also incorporate numerous controls. These controls

include order weight checks, bar code scanning, and serial number profile verification to verify that the product shipped matches the customer order. We also usedigital video imaging to record our small package shipping activities by order. These images and other warehouse and shipping data are available online to ourcustomer service representatives enabling us to quickly respond to order inquiries by our customers.

Contract Assembly

We operate our principal assembly facilities in the United States and the United Kingdom. In our contract assembly business, we source materials,assemble IT systems, and ship completed products on behalf of our OEM customers. We generally assemble IT systems, including workstations and servers, byincorporating system components from our distribution inventory and other sources. Additionally, we perform production value-added services, including kitting,asset tagging, hard drive imaging and reconfiguration. Our contract assembly facilities are ISO 9001:2000 certified.

We focus on system level contract assembly rather than full service manufacturing in order to minimize our capital investments in our assembly business.Because of the variability of our assembly orders, our assembly workforce is predominantly comprised of temporary workers. We also partner with MiTACInternational to provide certain manufacturing capabilities, including design and printed circuit board assembly as these activities require extensive capitalinvestments and labor.

International Operations

Approximately 21% and 20% of our total revenue for fiscal 2006 and 2005, respectively, originated outside of the United States. A key element in ourbusiness strategy has been to expand our global presence in order to provide our distribution and contract assembly capabilities to OEMs in locations that meettheir regional requirements. Consistent with this strategy, we have established international operations in Canada, China, Mexico and the United Kingdom.

Purchasing

Product costs represent our single largest expense and IT product inventory is one of our largest working capital investments. Furthermore, productprocurement from our OEM suppliers is a highly complex process that involves marketing incentive programs, rebate programs, price protection, volume andearly payment discounts and other arrangements. Consequently, efficient and effective purchasing operations are critical to our success.

Our purchasing group works closely with many areas of our organization, especially our product managers who work closely with our OEM suppliers andour sales force, to understand the volume and mix of IT products that should be purchased. In addition, the purchasing group utilizes an internally developed,proprietary information systems application tool, which further aids the purchasing group in forecasting future product demand based on several factors,including past sales levels, expected product life cycle and current and projected economic conditions. Our information system tools also track warehouse andchannel inventory levels and open purchase orders on a real time basis enabling us to stock inventory at a regional level closer to the customer as well as toactively manage our working capital resources. This level of automation allows for greater efficiencies of inventory management by replenishing and turninginventory, as well as placing purchase orders, on a more frequent basis. Furthermore, our system tools also allow for automated checks and controls to preventthe generation of inaccurate orders.

The purchasing group is supported by employees based in China, who handle daily back office routine functions such as purchase order issuance, changesto purchase orders and returns. Having a purchasing support team in China allows us to benefit from highly skilled and lower cost labor.

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Table of ContentsManaging our OEM supplier incentive programs is another critical function of our purchasing group. We attempt to maximize the benefits of incentives,

rebates and volume and early payment discounts that our OEM suppliers offer us from time to time. We carefully evaluate these purchasing benefits relative toour product handling and carrying costs so that we do not overly invest in our inventory. We also closely monitor inventory levels on a product-by-product basisand plan purchases to take advantage of OEM supplier provided price protection. By managing inventory levels at each of our regional distribution facilities, wecan minimize our shipping costs by stocking products near to our resellers and their end-user customers.

Financial Services We offer various credit terms to our customers as well as prepayment, credit card and cash on delivery terms. We also collect outstanding accountsreceivable on behalf of our reseller customers in certain markets. In issuing credit to our reseller customers, we closely and continually monitor theircreditworthiness through our information systems, which contain detailed information on each customer’s payment history, as well as through periodic detailedcredit file reviews by our financial services staff. In addition, we participate in a North American credit association whose members exchange customer creditrating information. We have also purchased credit insurance in some geographies to further control credit risks. Finally, we establish reserves for estimated creditlosses in the normal course of business.

We also sell to certain reseller customers where the transactions are financed by a third party floor plan financing company. The expenses charged by thesefinancing companies will be subsidized either by our OEM suppliers or paid by us. We generally receive payment from these financing institutions within 15 to30 days from the date of sale, depending on the specific arrangement.

Information Technology Our IT systems manage the entire order cycle, including processing customer orders, production planning, customer billing and payment tracking. Theseinternally developed IT systems make our distribution and contract assembly operations more efficient and provide visibility into all aspects of our operations.We believe our IT infrastructure is scalable to support further growth. The continuing enhancement of our IT systems facilitates improved product and inventorymanagement, streamlines order and delivery processes, and increases operational flexibility.

To allow our customers and suppliers to communicate and transact business with us in an efficient and consistent manner, we have implemented a mix ofproprietary and off-the-shelf software programs, which integrate our IT systems with those of our customers and suppliers. In particular, we maintain EDI andweb-based communication links with many of our reseller customers to enable them to search for products, check real time price, inventory availability andspecifications, place and track orders, receive invoices and process returns. We plan to continue making significant investments in our IT systems to facilitate theflow of information, increase our efficiency and lower transaction costs. Competition We operate in a highly competitive environment, both in the United States and internationally. The IT product distribution and contract assemblyindustries are characterized by intense competition, based primarily on product availability, credit terms and availability, price, speed and accuracy of delivery,effectiveness of sales and marketing programs, ability to tailor specific solutions to customer needs, quality and depth of product lines, pre-sale and post-saletechnical support, flexibility and timely response to design changes, technological capabilities, product quality, service and support. We compete with a varietyof regional, national and international IT product distributors and contract manufacturers.

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Table of ContentsOur current major competitors in IT product distribution include Bell Microproducts, Ingram Micro, ScanSource and Tech Data and, to a lesser extent,

regional distributors. We also face competition from our OEM suppliers, which also sell directly to resellers and end-users. The distribution industry has recentlyundergone, and continues to undergo, major consolidation. During this period, a number of significant players within the IT distribution industry exited ormerged with other players within the distribution market. We have participated in this consolidation through our acquisitions of Merisel Canada, Gates/Arrow,EMJ Data Systems Limited and Azerty United Canada, and we are continuing to evaluate other opportunities.

We constantly seek to expand our business into areas primarily related to our core distribution business as well as other support, logistic and value-addedservices. As we enter new business areas, we may encounter increased competition from our current competitors and/or new competitors.

Our current competitors in contract assembly include Benchmark Electronics, Sanmina, SCI and Solectron, as well as other electronic manufacturingservice providers and original design manufacturers. We also face competition from the manufacturing and assembly operations of our current and potentialcustomers, who continually evaluate the relative benefits of internal manufacturing and assembly compared to outsourcing.

Many of our competitors are substantially larger and have greater financial, operating, manufacturing and marketing resources than us. Some of ourcompetitors may have broader geographic breadth and range of services than us and may have more developed relationships with their existing customers. Weattempt to offset our scale disadvantage by focusing on a limited number of leading OEMs to represent, running the most efficient and low cost operationpossible and offering a high level of customer service.

Employees

As of November 30, 2006, we had 2,647 full-time employees, including 1,015 in sales, marketing and demand generation services professionals, 1,261 indistribution and assembly operations, and 371 in executive, finance, IT and administration. Given the variability in our business and the quick response timerequired by customers, it is critical that we are able to rapidly ramp-up and ramp-down our production capabilities to maximize efficiency. As a result, wefrequently use a significant number of temporary or contract workers, which totaled approximately 738, on a full-time equivalent basis, at November 30, 2006.Our employees are not represented by a labor union, nor are they covered by a collective bargaining agreement. We consider our employee relations to be good.

Available Information

Our website is http://www.synnex.com. We make available free of charge, on or through our website, our annual, quarterly and current reports, as well asany amendments to these reports, as soon as reasonably practicable after electronically filing these reports with the Securities and Exchange Commission(“SEC”). Information contained on our website is not a part of this report. We have adopted a code of ethics applicable to our principal executive, financial andaccounting officers. We make available free of charge, on or through our website’s investor relations page, our code of ethics.

The SEC maintains an Internet site at http://www.sec.gov that contains reports, proxy and information statements of the Company. All reports that theCompany files with the SEC may be read and copied at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, DC, 20549. Information about theoperation of the Public Reference Room can be obtained by calling the SEC at 1-202-551-8090.

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Table of Contents

Item 1A. Risk Factors.

The following are certain risk factors that could affect our business, financial results and results of operations. These risk factors should be considered inconnection with evaluating the forward-looking statements contained in this Annual Report on Form 10-K because these factors could cause the actual resultsand conditions to differ materially from those projected in the forward-looking statements. Before you buy our common stock, you should know that makingsuch an investment involves some risks, including the risks described below. The risks that have been highlighted here are not the only ones that we face. If anyof the risks actually occur, our business, financial condition or results of operations could be negatively affected. In that case, the trading price of our commonstock could decline, and you may lose all or part of your investment.

Risks Related to Our Business

We anticipate that our revenue and operating results will fluctuate, which could adversely affect the price of our common stock.

Our operating results have fluctuated and will fluctuate in the future as a result of many factors, including:

• general economic conditions and level of IT spending;

• the loss or consolidation of one or more of our significant OEM suppliers or customers;

• market acceptance, product mix and life of the products we assemble and distribute;

• competitive conditions in our industry that impact our margins;

• pricing, margin and other terms with our OEM suppliers;

• variations in our levels of excess inventory and doubtful accounts, and changes in the terms of OEM supplier-sponsored programs, such as priceprotection and return rights; and

• the impact of acquisitions we make.

Although we attempt to control our expense levels, these levels are based, in part, on anticipated revenue. Therefore, we may not be able to controlspending in a timely manner to compensate for any unexpected revenue shortfall.

Our operating results also are affected by the seasonality of the IT products industry. We have historically experienced higher sales in our fourth fiscalquarter due to patterns in the capital budgeting, federal government spending and purchasing cycles of end-users. These patterns may not be repeated insubsequent periods.

You should not rely on period-to-period comparisons of our operating results as an indication of future performance. The results of any quarterly periodare not indicative of results to be expected for a full fiscal year. In future quarters, our operating results may be below our expectations or those of our publicmarket analysts or investors, which would likely cause our share price to decline. For example, in March 2005, we announced that our revenue and net incomefor the three months ended February 28, 2005 would be lower than our previously released guidance and, as a result, our share price subsequently declinedsubstantially.

We depend on a small number of OEMs to supply the IT products that we sell and the loss of, or a material change in, our business relationship with amajor OEM supplier could adversely affect our business, financial position and operating results.

Our future success is highly dependent on our relationships with a small number of OEM suppliers. Sales of HP products represented approximately 25%of our total revenue in fiscal 2006 and approximately 28% of our total revenue in fiscal 2005. Our OEM supplier agreements typically are short-term and may beterminated without cause upon short notice. For example, our agreement with HP will expire on May 31, 2007. The loss or

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Table of Contentsdeterioration of our relationship with a major OEM supplier, the authorization by OEM suppliers of additional distributors, the sale of products by OEMsuppliers directly to our reseller customers and end-users, or our failure to establish relationships with new OEM suppliers or to expand the distribution andsupply chain services that we provide OEM suppliers could adversely affect our business, financial position and operating results. In addition, OEM suppliersmay face liquidity or solvency issues that in turn could negatively affect our business and operating results.

Our business is also highly dependent on the terms provided by our OEM suppliers. Generally, each OEM supplier has the ability to change the terms andconditions of its sales agreements, such as reducing the amount of price protection and return rights or reducing the level of purchase discounts, rebates andmarketing programs available to us. From time to time, we may conduct business with a supplier without a formal agreement because the agreement has expiredor otherwise. In such case, we are subject to additional risk with respect to products, warranties and returns, and other terms and conditions. If we are unable topass the impact of these changes through to our reseller customers, our business, financial position and operating results could be adversely affected. Our gross margins are low, which magnifies the impact of variations in revenue, operating costs and bad debt on our operating results. As a result of significant price competition in the IT products industry, our gross margins are low, and we expect them to continue to be low in the future.Increased competition arising from industry consolidation and low demand for certain IT products may hinder our ability to maintain or improve our grossmargins. These low gross margins magnify the impact of variations in revenue, operating costs and bad debt on our operating results. A portion of our operatingexpenses is relatively fixed, and planned expenditures are based in part on anticipated orders that are forecasted with limited visibility of future demand. As aresult, we may not be able to reduce our operating expenses as a percentage of revenue to mitigate any further reductions in gross margins in the future. If wecannot proportionately decrease our cost structure in response to competitive price pressures, our business and operating results could suffer.

We also receive purchase discounts and rebates from OEM suppliers based on various factors, including sales or purchase volume and breadth ofcustomers. A decrease in net sales could negatively affect the level of volume rebates received from our OEM suppliers and thus, our gross margins. Becausesome rebates from OEM suppliers are based on percentage increases in sales of products, it may become more difficult for us to achieve the percentage growth insales required for larger discounts due to the current size of our revenue base. A decrease or elimination of purchase discounts and rebates from our OEMsuppliers would adversely affect our business and operating results. Because we sell on a purchase order basis, we are subject to uncertainties and variability in demand by our reseller and contract assembly customers,which could decrease revenue and adversely affect our operating results. We sell to our reseller and contract assembly customers on a purchase order basis rather than pursuant to long-term contracts or contracts with minimumpurchase requirements. Consequently, our sales are subject to demand variability by our reseller and contract assembly customers. The level and timing of ordersplaced by our reseller and contract assembly customers vary for a variety of reasons, including seasonal buying by end-users, the introduction of new hardwareand software technologies and general economic conditions. Customers submitting a purchase order may cancel, reduce or delay their orders. If we are unable toanticipate and respond to the demands of our reseller and contract assembly customers, we may lose customers because we have an inadequate supply ofproducts, or we may have excess inventory, either of which may harm our business, financial position and operating results.

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Table of ContentsWe are subject to the risk that our inventory value may decline, and protective terms under our OEM supplier agreements may not adequately coverthe decline in value, which in turn may harm our business, financial position and operating results. The IT products industry is subject to rapid technological change, new and enhanced product specification requirements, and evolving industry standards.These changes may cause inventory on hand to decline substantially in value or to rapidly become obsolete. Most of our OEM suppliers offer limited protectionfrom the loss in value of inventory. For example, we can receive credit from many OEM suppliers for products held in inventory in the event of a supplier pricereduction. In addition, we have a limited right to return a certain percentage of purchases to most OEM suppliers. These policies are subject to time restrictionsand do not protect us in all cases from declines in inventory value. In addition, our OEM suppliers may become unable or unwilling to fulfill their protectionobligations to us. The decrease or elimination of price protection or the inability of our OEM suppliers to fulfill their protection obligations could lower our grossmargins and cause us to record inventory write-downs. If we are unable to manage our inventory with our OEM suppliers with a high degree of precision, wemay have insufficient product supplies or we may have excess inventory, resulting in inventory write-downs, either of which may harm our business, financialposition and operating results. We depend on OEM suppliers to maintain an adequate supply of products to fulfill customer orders on a timely basis, and any supply shortages ordelays could cause us to be unable to timely fulfill orders, which in turn could harm our business, financial position and operating results. Our ability to obtain particular products in the required quantities and to fulfill reseller customer orders on a timely basis is critical to our success. In mostcases, we have no guaranteed price or delivery agreements with our OEM suppliers. We occasionally experience a supply shortage of certain products as a resultof strong demand or problems experienced by our OEM suppliers. If shortages or delays persist, the price of those products may increase, or the products maynot be available at all. In addition, our OEM suppliers may decide to distribute, or to substantially increase their existing distribution business, through otherdistributors, their own dealer networks, or directly to resellers. Accordingly, if we are not able to secure and maintain an adequate supply of products to fulfill ourreseller customer orders on a timely basis, our business, financial position and operating results may be adversely affected. We may suffer adverse consequences from changing interest rates. Our total borrowings and off balance sheet arrangements are variable rate obligations that could expose us to interest rate risks. At November 30, 2006, wehad approximately $442.6 million in such variable rate obligations. If interest rates increase, our interest expense would increase, which would negatively affectour net income. Additionally, increasing interest rates may increase our future borrowing costs and restrict our access to capital. A portion of our revenue is financed by floor plan financing companies and any termination or reduction in these financing arrangements couldincrease our financing costs and harm our business and operating results. A portion of our distribution revenue is financed by floor plan financing companies. Floor plan financing companies are engaged by our customers tofinance, or “floor,” the purchase of products from us. In exchange for a fee, we transfer the credit risk on the sale of our products to the floor plan companies. Wecurrently receive payment from these financing companies within approximately 15 to 30 days from the date of the sale, which allows our business to operate atmuch lower relative working capital levels than if such programs were not available. If these floor plan arrangements are terminated or substantially reduced, theneed for more working capital and the increased financing cost could harm our business and operating results. We have not experienced any termination orsignificant reduction in floor plan arrangements in the past.

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Table of ContentsWe have significant credit exposure to our reseller customers, and negative trends in their businesses could cause us significant credit loss andnegatively impact our cash flow and liquidity position. We extend credit to our reseller customers for a significant portion of our sales to them. Resellers have a period of time, generally 30 days after the date ofinvoice, to make payment. As a result, we are subject to the risk that our reseller customers will not pay for the products they purchase. For example, our Mexicosubsidiary has entered into a contract with a Mexico reseller customer, which involves extended payment terms and could expose us to additional collection risks.In addition, in the three months ended May 31, 2006, we recorded a bad debt provision of approximately $1.5 million due to an increase in collection risk of oneof our customers. Our credit exposure risk may increase due to liquidity or solvency issues experienced by our resellers as a result of an economic downturn or adecrease in IT spending by end-users. If we are unable to collect payment for products we ship to our reseller customers or if our reseller customers are unable totimely pay for the products we ship to them, it will be more difficult or costly to utilize receivable-based financing, which could negatively impact our cash flowand liquidity position. We experienced theft of product from our warehouses and future thefts could harm our operating results. From time to time, we have experienced incidents of theft at various facilities. In fiscal 2003 and fiscal 2005 we experienced theft as a result of break-insat four of our warehouses in which approximately $12.9 million of inventory was stolen. Based on our investigation, discussions with local law enforcement andmeetings with federal authorities, we believe the thefts at our warehouses were part of an organized crime effort that targeted a number of technology equipmentwarehouses throughout the United States.

In March 2005, approximately $4.0 million of inventory was stolen from our facility in the City of Industry, California. We subsequently recoveredapproximately $0.5 million through law enforcement and federal authorities. We filed a claim with our insurance provider for the amount of the loss, less a smalldeductible. We have received substantially all of the claimed amount.

These types of incidents may make it more difficult or expensive for us to obtain theft coverage in the future. In the future, incidents of theft may recur forwhich we may not be fully insured. A significant portion of our contract assembly revenue comes from a single customer, and any decrease in sales from this customer could adverselyaffect our revenue. Sales to our primary contract assembly customer, Sun Microsystems were approximately $494.0 million or 91% of our contract assembly revenue in fiscal2006 and approximately $486.0 million or 93% in fiscal 2005. Our contract assembly business will remain dependent on our relationship with Sun Microsystemsin the foreseeable future, subjecting us to risks with respect to the success and life cycle of Sun Microsystems products we assemble and the pricing terms wenegotiate with Sun Microsystems and our suppliers. Accordingly, if we are unable to assemble new and successful products for Sun Microsystems on appropriatepricing terms, our business and operating results would be adversely affected.

The future success of our relationship with Sun Microsystems also depends on MiTAC International continuing to work with us to service SunMicrosystems’ requirements at an appropriate cost. We rely on MiTAC International to manufacture and supply subassemblies and components for the computersystems we assemble for Sun Microsystems. As MiTAC International’s ownership interest in us decreases, MiTAC International’s interest in the success of ourbusiness and operations may decrease as well. If we are unable to maintain our relationship and appropriate pricing terms with MiTAC International, ourrelationship with Sun Microsystems could suffer, which in turn could harm our business, financial position and operating results. In addition, if we were unableto obtain assembly contracts for new and successful products our business and operating results would suffer.

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Table of ContentsWe have pursued and intend to continue to pursue strategic acquisitions or investments in new markets and may encounter risks associated with theseactivities, which could harm our business and operating results. We have in the past pursued and in the future expect to pursue acquisitions of, or investments in, businesses and assets in new markets, either within oroutside the IT products industry, that complement or expand our existing business. Our acquisition strategy involves a number of risks, including:

• difficulty in successfully integrating acquired operations, IT systems, customers, OEM supplier and partner relationships, products and businesseswith our operations;

• loss of key employees of acquired operations or inability to hire key employees necessary for our expansion;

• diversion of our capital and management attention away from other business issues;

• an increase in our expenses and working capital requirements;

• in the case of acquisitions that we may make outside of the United States, difficulty in operating in foreign countries and over significant geographicaldistances; and

• other financial risks, such as potential liabilities of the businesses we acquire. Our growth may be limited and our competitive position may be harmed if we are unable to identify, finance and complete future acquisitions. We believethat further expansion may be a prerequisite to our long-term success as some of our competitors in the IT product distribution industry have larger internationaloperations, higher revenues and greater financial resources than us. We have incurred costs and encountered difficulties in the past in connection with ouracquisitions and investments. For example, our operating margins were initially adversely affected as a result of our acquisition of Merisel Canada Inc. and wehave written off substantial investments in the past, one of which was eManage.com, Inc. Also, our acquisition of EMJ Data Systems, Ltd., or EMJ, caused aninitial negative effect on our operating margins as we integrated EMJ’s systems, operations and personnel. Future acquisitions may result in dilutive issuances ofequity securities, the incurrence of additional debt, large write-offs, a decrease in future profitability, or future losses. The incurrence of debt in connection withany future acquisitions could restrict our ability to obtain working capital or other financing necessary to operate our business. Our recent and future acquisitionsor investments may not be successful, and if we fail to realize the anticipated benefits of these acquisitions or investments, our business and operating resultscould be harmed. We are dependent on a variety of IT and telecommunications systems, and any failure of these systems could adversely impact our business andoperating results. We depend on IT and telecommunications systems for our operations. These systems support a variety of functions, including inventory management,order processing, shipping, shipment tracking and billing.

Failures or significant downtime of our IT or telecommunications systems could prevent us from taking customer orders, printing product pick-lists,shipping products or billing customers. Sales also may be affected if our reseller customers are unable to access our price and product availability information.We also rely on the Internet, and in particular electronic data interchange, or EDI, for a large portion of our orders and information exchanges with our OEMsuppliers and reseller customers. The Internet and individual websites have experienced a number of disruptions and slowdowns, some of which were caused byorganized attacks. In addition, some websites have experienced security breakdowns. If we were to experience a security breakdown, disruption or breach thatcompromised sensitive information, it could harm our relationship with our OEM suppliers or reseller customers. Disruption of our website or the Internet ingeneral could impair our order processing or more generally prevent our OEM suppliers or reseller customers from accessing information. The occurrence of anyof these events could have an adverse effect on our business and operating results.

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Table of ContentsWe rely on independent shipping companies for delivery of products, and price increases or service interruptions from these carriers could adverselyaffect our business and operating results. We rely almost entirely on arrangements with independent shipping companies, such as FedEx and UPS, for the delivery of our products from OEMsuppliers and delivery of products to reseller customers. Freight and shipping charges can have a significant impact on our gross margin. As a result, an increasein freight surcharges due to rising fuel cost or general price increases will have an immediate adverse effect on our margins, unless we are able to pass theincreased charges to our reseller customers or renegotiate more favorable terms with our OEM suppliers. In addition, in the past, UPS has experienced workstoppages due to labor negotiations with management. The termination of our arrangements with one or more of these independent shipping companies, thefailure or inability of one or more of these independent shipping companies to deliver products, or the unavailability of their shipping services, even temporarily,could have an adverse effect on our business and operating results. Because we conduct substantial operations in China, risks associated with economic, political and social events in China could negatively affect ourbusiness and operating results. A substantial portion of our IT systems operations, including our IT systems support and software development operations, is located in China. In addition,we also conduct general and administrative activities from our facility in China. As of November 30, 2006, we had 624 personnel located in China. We expect toincrease our operations in China in the future. Our operations in China are subject to a number of risks relating to China’s economic and political systems,including:

• a government controlled foreign exchange rate and limitations on the convertibility of the Chinese renminbi;

• extensive government regulation;

• changing governmental policies relating to tax benefits available to foreign-owned businesses;

• the telecommunications infrastructure;

• a relatively uncertain legal system; and

• uncertainties related to continued economic and social reform. Our IT systems are an important part of our global operations. Any significant interruption in service, whether resulting from any of the aboveuncertainties, natural disasters or otherwise, could result in delays in our inventory purchasing, errors in order fulfillment, reduced levels of customer service andother disruptions in operations, any of which could cause our business and operating results to suffer. Changes in foreign exchange rates and limitations on the convertibility of foreign currencies could adversely affect our business and operating results. In fiscal 2006 and 2005, approximately 21% and 20%, respectively, of our total revenue was generated outside the United States. Most of our internationalrevenue, cost of revenue and operating expenses are denominated in foreign currencies. We presently have currency exposure arising from both sales andpurchases denominated in foreign currencies. Changes in exchange rates between foreign currencies and the U.S. dollar may adversely affect our operatingmargins. For example, if these foreign currencies appreciate against the U.S. dollar, it will make it more expensive in terms of U.S. dollars to purchase inventoryor pay expenses with foreign currencies. This could have a negative impact to us if revenue related to these purchases is transacted in U.S. dollars. In addition,currency devaluation can result in a loss to us if we hold deposits of that currency as well as make our products, which are usually purchased by us with U.S.dollars, relatively more expensive than products manufactured locally. We currently conduct only limited hedging activities, which involve the use of currencyforward contracts. Hedging foreign currencies can be risky. There is also additional risk if the currency is not freely or actively traded. Some currencies, such asthe Chinese renminbi, are subject to limitations on conversion

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Table of Contentsinto other currencies, which can limit our ability to hedge or to otherwise react to rapid foreign currency devaluations. We cannot predict the impact of futureexchange rate fluctuations on our business and operating results.

Because of the experience of our key personnel in the IT products industry and their technological expertise, if we were to lose any of our key personnel,it could inhibit our ability to operate and grow our business successfully.

We operate in the highly competitive IT products industry. We are dependent in large part on our ability to retain the services of our key senior executivesand other technical experts and personnel. Except for Robert Huang, our President and Chief Executive Officer and Jim Estill, the President and Chief ExecutiveOfficer of SYNNEX Canada Limited, all other employees and executives, generally do not have employment agreements. Furthermore, we do not carry “keyperson” insurance coverage for any of our key executives. We compete for qualified senior management and technical personnel. The loss of, or inability to hire,key executives or qualified employees could inhibit our ability to operate and grow our business successfully.

We may become involved in intellectual property or other disputes that could cause us to incur substantial costs, divert the efforts of our management,and require us to pay substantial damages or require us to obtain a license, which may not be available on commercially reasonable terms, if at all.

We may from time to time receive notifications alleging infringements of intellectual property rights allegedly held by others relating to our business or theproducts we sell or assemble for our OEM suppliers and others. Litigation with respect to patents or other intellectual property matters could result in substantialcosts and diversion of management and other resources and could have an adverse effect on our business. Although we generally have various levels ofindemnification protection from our OEM suppliers and contract assembly customers, in many cases any indemnification to which we may be entitled is subjectto maximum limits or other restrictions. In addition, we have developed proprietary IT systems that play an important role in our business. If any infringementclaim is successful against us and if indemnification is not available or sufficient, we may be required to pay substantial damages or we may need to seek andobtain a license of the other party’s intellectual property rights. We may be unable to obtain such a license on commercially reasonable terms, if at all.

We are from time to time, involved in other litigation in the ordinary course of business. For example, we are currently defending a trademarkinfringement action and a civil matter involving third party investors in eManage.com, we may not be successful in defending these or other claims. Regardlessof the outcome, litigation could result in substantial expense and could divert the efforts of our management.

Because of the capital intensive nature of our business, we need continued access to capital, which, if not available to us or if not available on favorableterms, could harm our ability to operate or expand our business.

Our business requires significant levels of capital to finance accounts receivable and product inventory that is not financed by trade creditors. If cash fromavailable sources is insufficient, proceeds from our accounts receivable securitization program are limited or cash is used for unanticipated needs, we may requireadditional capital sooner than anticipated. In the event we are required, or elect, to raise additional funds, we may be unable to do so on favorable terms, or at all.Our current and future indebtedness could adversely affect our operating results and severely limit our ability to plan for, or react to, changes in our business orindustry. We could also be limited by financial and other restrictive covenants in any credit arrangements, including limitations on our borrowing of additionalfunds and issuing dividends. Furthermore, the cost of debt financing has increased recently and could significantly increase in the future, making it costprohibitive to borrow, which could force us to issue new equity securities.

If we issue new equity securities, existing stockholders may experience additional dilution, or the new equity securities may have rights, preferences orprivileges senior to those of existing holders of common stock.

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Table of ContentsIf we cannot raise funds on acceptable terms, we may not be able to take advantage of future opportunities or respond to competitive pressures or unanticipatedrequirements. Any inability to raise additional capital when required could have an adverse effect on our business and operating results.

The terms of our indebtedness agreements impose significant restrictions on our ability to operate which in turn may negatively affect our ability torespond to business and market conditions and therefore have an adverse effect on our business and operating results.

As of November 30, 2006, we had approximately $98.8 million in outstanding short and long-term borrowings under term loans and lines of credit,excluding trade payables. As of November 30, 2006, approximately $343.8 million of our accounts receivable were sold to and held by three financial institutionsunder our accounts receivable securitization programs. The terms of our current indebtedness agreements restrict, among other things, our ability to:

• incur additional indebtedness;

• pay dividends or make certain other restricted payments;

• consummate certain asset sales or acquisitions;

• enter into certain transactions with affiliates; and

• merge, consolidate or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of our assets.

We are also required to maintain specified financial ratios and satisfy certain financial condition tests, including minimum net worth and fixed chargecoverage ratio as outlined in our senior secured revolving line of credit arrangement. We may be unable to meet these ratios and tests, which could result in theacceleration of the repayment of the related debt, the termination of the facility or the increase in our effective cost of funds. As a result, our ability to operatemay be restricted and our ability to respond to business and market conditions limited, which could have an adverse effect on our business and operating results.

We have significant operations concentrated in Northern California, South Carolina, Toronto and Beijing and any disruption in the operations of ourfacilities could harm our business and operating results.

Our worldwide operations could be subject to natural disasters and other business disruptions, which could seriously harm our revenue and financialcondition and increase our costs and expenses. We have significant operations in our facilities located in Fremont, California, Greenville, South Carolina,Toronto, Canada and Beijing, China. As a result, any prolonged disruption in the operations of our facilities, whether due to technical difficulties, power failures,break-ins, destruction or damage to the facilities as a result of a natural disaster, fire or any other reason, could harm our operating results. We currently do nothave a formal disaster recovery plan and may not have sufficient business interruption insurance to compensate for losses that could occur.

Global health, economic, political and social conditions may harm our ability to do business, increase our costs and negatively affect our stock price.

External factors such as potential terrorist attacks, acts of war, geopolitical and social turmoil or epidemics in many parts of the world could prevent orhinder our ability to do business, increase our costs and negatively affect our stock price. For example, increased instability may adversely impact the desire ofemployees and customers to travel, the reliability and cost of transportation, our ability to obtain adequate insurance at reasonable rates or require us to incurincreased costs for security measures for our domestic and international operations. These uncertainties make it difficult for us and our customers to accuratelyplan future business activities. More generally, these geopolitical social and economic conditions could result in increased volatility in the United States andworldwide financial markets and economy. We are predominantly uninsured for losses and interruptions caused by terrorist acts and acts of war.

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Table of ContentsPart of our business is conducted outside of the United States, exposing us to additional risks that may not exist in the United States, which in turn couldcause our business and operating results to suffer. We have international operations in Canada, China, Mexico and the United Kingdom. In fiscal 2006 and 2005, approximately 21% and 20%, respectively,of our total revenue was generated outside the United States. In fiscal 2006 and 2005, approximately 17% and 16%, respectively, of our total revenue wasgenerated in Canada. No other country or region accounted for more than 10% of our total revenue. Our international operations are subject to risks, including:

• political or economic instability;

• changes in governmental regulation;

• changes in import/export duties;

• trade restrictions;

• difficulties and costs of staffing and managing operations in certain foreign countries;

• work stoppages or other changes in labor conditions;

• difficulties in collecting of accounts receivable on a timely basis or at all;

• taxes; and

• seasonal reductions in business activity in some parts of the world.

We may continue to expand internationally to respond to competitive pressure and customer and market requirements. Establishing operations in any otherforeign country or region presents risks such as those described above as well as risks specific to the particular country or region. In addition, until a paymenthistory is established over time with customers in a new geography or region, the likelihood of collecting receivables generated by such operations could be lessthan our expectations. As a result, there is a greater risk that reserves set with respect to the collection of such receivables may be inadequate. In addition, ourMexico subsidiary has entered into a contract with a Mexico reseller customer which involves extended payment terms and could expose us to additionalcollection risks. Further, if our international expansion efforts in any foreign country are unsuccessful, we may decide to cease operations, which would likelycause us to incur similar additional expenses and loss.

In addition, changes in policies or laws of the United States or foreign governments resulting in, among other things, higher taxation, currency conversionlimitations, restrictions on fund transfers or the expropriation of private enterprises, could reduce the anticipated benefits of our international expansion.Furthermore, any actions by countries in which we conduct business to reverse policies that encourage foreign trade or investment could adversely affect ourbusiness. If we fail to realize the anticipated revenue growth of our future international operations, our business and operating results could suffer.

Risks Related to Our Relationship with MiTAC International We rely on MiTAC International for certain manufacturing and assembly services and the loss of these services would require us to seek alternateproviders that may charge us more for their services. We rely on MiTAC International to manufacture and supply subassemblies and components for some of our contract assembly customers, including SunMicrosystems, our primary contract assembly customer, and our reliance on MiTAC International may increase in the future. Our relationship with MiTACInternational has been informal and is not governed by long-term commitments or arrangements with respect to pricing terms, revenue or capacity commitments.Accordingly, we negotiate manufacturing and pricing terms on a project-by-project basis, based on manufacturing services rendered by MiTAC International orus. As MiTAC’s ownership interest in us decreases, MiTAC’s interest in the success of our business and operations may decrease as well. In the

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Table of Contentsevent MiTAC International were to no longer provide such services and components to us, we would need to find an alternative source for these services andcomponents. We may be unable to obtain alternative services and components on similar terms, which may in turn increase our manufacturing costs. In addition,we may not find manufacturers with sufficient capacity, which may in turn lead to shortages in our product supplies. Increased costs and products shortagescould harm our business and operating results.

Our business relationship with MiTAC International has been and will continue to be negotiated as related parties and therefore may not be the result ofarms’-length negotiations between independent parties. Our relationship, including pricing and other material terms with our shared customers or with MiTACInternational, may or may not be as advantageous to us as the terms we could have negotiated with unaffiliated third parties. We have a joint sales and marketingagreement with MiTAC International, pursuant to which both parties agree to use their commercially reasonable efforts to promote the other party’s serviceofferings to their respective customers who are interested in such product offerings. To date, there has not been a significant amount of sales attributable to thejoint marketing agreement. This agreement does not provide for the terms upon which we negotiate manufacturing and pricing terms. These negotiations havebeen on a case-by-case basis. The agreement has an initial term of one year and automatically renews for subsequent one-year terms unless either party provideswritten notice of non-renewal within 90 days of the end of any renewal term. The agreement may also be terminated without cause either by the mutual writtenagreement of both parties or by either party without cause upon 90 days prior written notice of termination to the other party. Either party may immediatelyterminate the agreement by providing written notice (a) of the other party’s material breach of any provision of the agreement and failure to cure within 30 days,or (b) if the other party becomes bankrupt or insolvent. In addition, we are party to a general agreement with MiTAC International and Sun Microsystems underwhich we work with MiTAC International to provide contract assembly services to Sun Microsystems. Some of our customer relationships evolved from relationships between such customers and MiTAC International and the loss of such relationshipscould harm our business and operating results. Our relationship with Sun Microsystems and some of our other customers evolved from customer relationships that were initiated by MiTAC International.Our relationship with Sun Microsystems is a joint relationship with MiTAC International and us, and the future success of our relationship with SunMicrosystems depends on MiTAC International continuing to work with us to service Sun Microsystems’ requirements. The original agreement between SunMicrosystems and MiTAC International was signed on August 28, 1999 and we became a party to the agreement on February 12, 2002. Substantially all of ourcontract assembly services to Sun Microsystems are covered by the general agreement. The agreement continues indefinitely until terminated in accordance withits terms. Sun Microsystems may terminate this agreement for any reason on 60 days written notice. Any party may terminate the agreement with written noticeif one of the other parties materially breaches any provision of the agreement and the breach is incapable of being cured or is not cured within 30 days. Theagreement may also be terminated on written notice if one of the other parties becomes bankrupt or insolvent. If we are unable to maintain our relationship withMiTAC International, our relationship with Sun Microsystems could suffer and we could lose other customer relationships or referrals, which in turn could harmour business, financial position and operating results. There could be potential conflicts of interest between us and affiliates of MiTAC International, which could impact our business and operating results. MiTAC International’s and its affiliates’ continuing beneficial ownership of our common stock could create conflicts of interest with respect to a variety ofmatters, such as potential acquisitions, competition, issuance or disposition of securities, election of directors, payment of dividends and other business matters.Similar risks could exist as a result of Matthew Miau’s positions as our Chairman, the Chairman of MiTAC International and as a director or officer of MiTACInternational’s affiliated companies. For fiscal 2006, Mr. Miau received a retainer of $225,000 from us. Compensation payable to Mr. Miau is based upon theapproval of the

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Table of ContentsCompensation Committee. We also have adopted a policy requiring material transactions in which any of our directors has a potential conflict of interest to beapproved by our Audit Committee. Both our Audit Committee and Compensation Committee are composed of disinterested members of the Board.

Synnex Technology International Corp., or Synnex Technology International, a publicly traded company based in Taiwan and affiliated with MiTACInternational, currently provides distribution and fulfillment services to various markets in Asia and Australia, and is also a potential competitor of ours. MitacIncorporated, a privately held company based in Taiwan and a separate entity from MiTAC International, directly and indirectly owns approximately 15.2% ofSynnex Technology International and approximately 8.5% of MiTAC International. MiTAC International directly and indirectly owns 0.3% of SynnexTechnology International and Synnex Technology International directly and indirectly owns approximately 0.4% of MiTAC International. In addition, MiTACInternational directly and indirectly owns approximately 8.8% of Mitac Incorporated and Synnex Technology International directly and indirectly ownsapproximately 14.2% of Mitac Incorporated. Synnex Technology International indirectly through its ownership of Peer Developments Limited ownsapproximately 17.4% of our outstanding common stock. Neither MiTAC International nor Synnex Technology International is restricted from competing with us.In the future, we may increasingly compete with Synnex Technology International, particularly if our business in Asia expands or Synnex TechnologyInternational expands its business into geographies or customers we serve. Although Synnex Technology International is a separate entity from us, it is possiblethat there will be confusion as a result of the similarity of our names. Moreover, we cannot limit or control the use of the Synnex name by Synnex TechnologyInternational or MiTAC International, and our use of the Synnex name may be restricted as a result of registration of the name by Synnex TechnologyInternational or the prior use in jurisdictions where they currently operate.

As of November 30, 2006, our executive officers, directors and principal stockholders owned approximately 48% of our common stock and thisconcentration of ownership could allow them to control all matters requiring stockholder approval and could delay or prevent a change in control ofSYNNEX.

As of November 30, 2006, our executive officers, directors and principal stockholders owned approximately 48% of our outstanding common stock. Inparticular, MiTAC International and its affiliates, owned approximately 47% of our common stock.

In addition, MiTAC International’s interests and ours may increasingly conflict. For example, we rely on MiTAC International for certain manufacturingand supply services and for relationships with certain key customers. As a result of a decrease in their ownership in us, we may lose these services andrelationships, which may lead to increased costs to replace the lost services and the loss of certain key customers. We cannot predict the likelihood that we mayincur increased costs or lose customers if MiTAC International’s ownership percentage of us decreases in the future.

Risks Related to Our Industry

Volatility in the IT industry could have a material adverse effect on our business and operating results.

The IT industry in which we operate has experienced decreases in demand. Softening demand for our products and services may be caused by an economicdownturn and over-capacity, as well as problems with the salability of inventory and collection of reseller customer receivables.

While in the past we may have benefited from consolidation in our industry resulting from delays or reductions in IT spending in particular, and economicweakness in general, any such volatility in the IT industry could have an adverse effect on our business and operating results.

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Table of ContentsOur distribution business may be adversely affected by some OEM suppliers’ strategies to increase their direct sales, which in turn could cause ourbusiness and operating results to suffer. Consolidation of OEM suppliers has resulted in fewer sources for some of the products that we distribute. This consolidation has also resulted in largerOEM suppliers that have significant operating and financial resources. Some OEM suppliers, including some of the leading OEM suppliers that we service, havebeen selling a greater volume of products directly to end-users, thereby limiting our business opportunities. If large OEM suppliers continue the trend to selldirectly to our resellers, rather than use us as the distributor of their products, our business and operating results will suffer. OEMs are limiting the number of supply chain service providers with which they do business, which in turn could negatively impact our business andoperating results. Currently, there is a trend towards reducing the number of authorized distributors used by OEM suppliers. As a smaller market participant in the ITproduct distribution and contract assembly industries, than some of our competitors, we may be more susceptible to loss of business from further reductions ofauthorized distributors or contract assemblers by IT product OEMs. For example, the termination of Sun Microsystems’ contract assembly business with uswould have a significant negative effect on our revenue and operating results. A determination by any of our primary OEMs to consolidate their business withother distributors or contract assemblers would negatively affect our business and operating results. The IT industry is subject to rapidly changing technologies and process developments, and we may not be able to adequately adjust our business tothese changes, which in turn would harm our business and operating results. Dynamic changes in the IT industry, including the consolidation of OEM suppliers and reductions in the number of authorized distributors used by OEMsuppliers, have resulted in new and increased responsibilities for management personnel and have placed, and continue to place, a significant strain upon ourmanagement, operating and financial systems and other resources. We may be unable to successfully respond to and manage our business in light of industrydevelopments and trends. Also crucial to our success in managing our operations will be our ability to achieve additional economies of scale. Our failure toachieve these additional economies of scale or to respond to changes in the IT industry could adversely affect our business and operating results. We are subject to intense competition in the IT industry, both in the United States and internationally, and if we fail to compete successfully, we will beunable to gain or retain market share. We operate in a highly competitive environment, both in the United States and internationally. The IT product distribution and contract assemblyindustries are characterized by intense competition, based primarily on product availability, credit availability, price, speed of delivery, ability to tailor specificsolutions to customer needs, quality and depth of product lines, pre-sale and post-sale technical support, flexibility and timely response to design changes,technological capabilities, service and support. We compete with a variety of regional, national and international IT product distributors and contractmanufacturers and assemblers. In some instances, we also compete with our own customers, our own OEM suppliers and MiTAC International.

Our primary competitors are substantially larger and have greater financial, operating, manufacturing and marketing resources than us. Some of ourcompetitors may have broader geographic breadth and range of services than us and may have more developed relationships with their existing customers. Wemay lose market share in the United States or in international markets, or may be forced in the future to reduce our prices in response to the actions of ourcompetitors and thereby experience a reduction in our gross margins.

We may initiate other business activities, including the broadening of our supply chain capabilities, and may face competition from companies with moreexperience in those new areas. In addition, as we enter new areas of

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Table of Contentsbusiness, we may also encounter increased competition from current competitors or from new competitors, including some who may once have been our OEMsuppliers or reseller customers. Increased competition and negative reaction from our OEM suppliers or reseller customers resulting from our expansion into newbusiness areas may harm our business and operating results. Compliance with changing regulation of corporate governance and public disclosure may result in additional expenses. Changing laws, regulations and standards relating to corporate governance and public disclosure, including the Sarbanes-Oxley Act of 2002, newSecurities and Exchange Commission, or SEC, regulations and New York Stock Exchange rules, are creating uncertainty for companies such as ours. These newor changed laws, regulations and standards are subject to varying interpretations in many cases due to their lack of specificity, and as a result, their application inpractice may evolve over time as new guidance is provided by regulatory and governing bodies, which could result in continuing uncertainty regardingcompliance matters and higher costs necessitated by ongoing revisions to disclosure and corporate governance practices. As a result, our efforts to comply withevolving laws, regulations and standards have resulted in, and are likely to continue to result in, increased general and administrative expenses and a diversion ofmanagement time and attention from revenue-generating activities to compliance activities. In particular, our ongoing efforts to comply with Section 404 of theSarbanes-Oxley Act of 2002 and the related regulations regarding our management’s required assessment of our internal control over financial reporting and ourindependent registered public accounting firm’s attestation of that assessment have required the commitment of significant financial and managerial resources.We expect these efforts to require the continued commitment of significant resources. If our efforts to comply with new or changed laws, regulations andstandards differ from the activities intended by regulatory or governing bodies due to ambiguities related to practice, our reputation may be harmed. While we believe that we currently have adequate internal control over financial reporting, we are exposed to risks from legislation requiringcompanies to evaluate those internal controls. Section 404 of the Sarbanes-Oxley Act of 2002 requires our management to report on, and our independent registered public accounting firm to attest to,the effectiveness of our internal control structure and procedures for financial reporting. We completed an evaluation of the effectiveness of our internal controlover financial reporting for the fiscal year ended November 30, 2006, and we have an ongoing program to perform the system and process evaluation and testingnecessary to continue to comply with these requirements. We expect to continue to incur increased expense and to devote additional management resources toSection 404 compliance. In the event that our chief executive officer, chief financial officer or independent registered public accounting firm determines that ourinternal control over financial reporting is not effective as defined under Section 404, investor perceptions and our reputation may be adversely affected and themarket price of our stock could decline. Changes to financial accounting standards may affect our results of operations and cause us to change our business practices. We prepare our financial statements to conform to generally accepted accounting principles, or GAAP. These accounting principles are subject tointerpretation by the Financial Accounting Standards Board or FASB, American Institute of Certified Public Accountants, the SEC and various bodies formed tointerpret and create appropriate accounting policies. A change in those policies can have a significant effect on our reported results and may affect our reportingof transactions completed before a change is announced. Changes to those rules or the questioning of current practices may adversely affect our reportedfinancial results or the way we conduct our business. We will have significant and ongoing accounting charges resulting from option grant and other equityincentive expensing due to adoption of SFAS 123(R) – “Share-Based Payment” that will reduce our overall net income. In addition, since we historically haveused equity-related compensation as a component of our total employee compensation program, the accounting change could make the use of equity-relatedcompensation less attractive to us and therefore make it more difficult to attract and retain employees.

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Table of ContentsRisks Related to Our Common Stock

Our common stock has been subject to substantial price and volume fluctuations due to a number of factors, some of which are beyond our control. Share prices and trading volumes for many distribution and contract assembly service related companies fluctuate widely for a number of reasons,including some reasons which may be unrelated to their businesses or results of operations. This market volatility, as well as general domestic or internationaleconomic, market and political conditions, could materially adversely affect the price of our common stock without regard to our operating performance. Inaddition, our operating results may be below the expectations of public market analysts and investors. If this were to occur, the market price of our common stockwould likely decrease. Significant fluctuations in the market price of our common stock could result in securities class action claims against us, which could seriously harm ouroperating results. Securities class action claims have been brought against companies in the past where volatility in the market price of that company’s securities has takenplace. This kind of litigation could be very costly and divert our management’s attention and resources, and any adverse determination in this litigation could alsosubject us to significant liabilities, any or all of which could adversely affect our business and operating results. Anti-takeover provisions in our restated certificate of incorporation may make it more difficult for someone to acquire us in a hostile takeover. Our Board of Directors has the authority to issue up to 5,000,000 shares of preferred stock and to determine the price, rights, preferences, privileges andrestrictions, including voting rights, of those shares without any further vote or action by our stockholders. The rights of the holders of our common stock will besubject to, and may be adversely affected by, the rights of the holders of any preferred stock that we may issue in the future. The issuance of preferred stock,while providing flexibility in connection with possible acquisitions and other corporate purposes, could have the effect of making it more difficult for a thirdparty to acquire a majority of our outstanding voting shares.

In addition, our restated certificate of incorporation contains certain provisions that, together with the ownership position of our officers, directors and theiraffiliates, could discourage potential takeover attempts and make attempts by stockholders to change management more difficult, which could adversely affectthe market price of our common stock. If securities or industry analysts do not publish research or reports about our business, our stock price and trading volume could decline. The trading market for our common stock will depend on the research and reports that industry or securities analysts publish about us or our business. Wedo not have any control over these analysts. If one or more of the analysts who covers us were to downgrade our stock, our stock price would likely decline. Ifone or more of these analysts ceases coverage of our Company or fails to regularly publish reports on us, we could lose visibility in the financial markets, whichin turn could cause our stock price or trading volume to decline. We are subject to additional rules and regulations as a public company, which will increase our administration costs which in turn could harm ouroperating results. As a public company, we incur significant legal, accounting and other expenses. In addition, the Sarbanes-Oxley Act of 2002, as well as rules subsequentlyimplemented by the SEC, has required changes in corporate governance practices of public companies. In addition to final rules and rule proposals already madeby the SEC, the New York Stock Exchange, or NYSE, has adopted revisions to its requirements for companies that are

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Table of ContentsNYSE-listed. These rules and regulations have increased our legal and financial compliance costs, and made some activities more time consuming or costly. Wealso expect these rules and regulations to make it more difficult and more expensive for us to obtain director and officer liability insurance, and we may berequired to accept reduced coverage or incur substantially higher costs to obtain coverage. These rules and regulations could also make it more difficult for us toattract and retain qualified members of our Board of Directors, particularly to serve on our Audit Committee, and qualified executive officers.

Item 1B. Unresolved Staff Comments.

None.

Item 2. Properties

Our principal executive offices are located in Fremont, California. We operate more than 40 distribution, assembly and administrative facilities in fivedifferent countries encompassing a total of approximately 2.5 million square feet. We lease each of these facilities, except a 62,500 square foot sales andmarketing facility in Greenville, South Carolina, a 100,000 square foot distribution center in Markham, Ontario, Canada a 41,000 square foot administrativefacility in Beijing, China and a 124,400 square foot administrative and assembly facility in Telford, United Kingdom, which we own. In the United States, weoperate 20 principal facilities with a total area of approximately 1.7 million square feet of space. Leases for our current facilities expire between December 2006and February 2014. Our principal assembly facility is located in Fremont, California and our principal distribution facilities are located in Edison, New Jersey,Memphis, Tennessee, Los Angeles, California and Toronto, Ontario. We have sublet unused portions of some of our facilities. We believe our facilities are wellmaintained and adequate for current operating needs.

Item 3. Legal Proceedings

We are from time to time involved in legal proceedings, including the following:

In May 2002, Seanix Technology Inc. filed a trademark infringement action in the Federal Court of Canada against us and our Canadian subsidiary,SYNNEX Canada Limited. The suit claims that we have infringed on Seanix’s exclusive rights to its Canadian trademark registration and caused confusionbetween the two companies resulting from, among other things, our use of trademarks confusingly similar to the Seanix trademarks. The complaint seeksinjunctive relief and monetary damages in an amount to be determined. Substantial discovery has taken place; however, no trial date has been set.

In May 2002, Acropolis Systems, Inc. and Tony Yeh filed a civil suit in Santa Clara County California Superior Court against us, Robert Huang, C. KevinChuang and Stephen R. Bowling. The suit alleges violation of California securities laws, fraud and concealment and breach of contract resulting from, amongother things, failure to disclose the existence of a lien in favor of us on the assets of eManage.com Inc. prior to entering into stock purchase agreements for sharesof eManage.com stock. At the time of this stock purchase, we were the majority stockholders of eManage.com. The complaint seeks monetary damages in theamount of approximately $2.0 million. Substantial discovery has taken place and a trial date has been set for June 2007.

In September 2004, the United States Bankruptcy Court for the Northern District of Texas entered judgment in favor of DSLangdale Two, LLC andDSLangdale Three, LLC, Inc. in the amount of $4.2 million against Daisytek (Canada), Inc., a former wholly owned subsidiary of EMJ Data Systems Limited, acompany that we acquired in September 2004. This lawsuit was subsequently settled for $4.6 million in May 2006. This settlement did not result in anyadditional liability in fiscal 2006.

In addition, we have been involved in various bankruptcy preference actions where we were a supplier to the companies now in bankruptcy. Thesepreference actions are filed by the bankruptcy trustee on behalf of the

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Table of Contentsbankrupt estate and generally seek to have payments made by the debtor within 90 days prior to the bankruptcy returned to the bankruptcy estate for allocationamong all of the bankruptcy estate’s creditors. We are not aware of any currently pending preference actions.

From time to time, we are also involved in legal proceedings in the ordinary course of business.

We do not believe that these proceedings will have a material adverse effect on our results of operations, financial position or cash flows of our business.

Item 4. Submission of Matters to a Vote of Security Holders

None.

Executive Officers of the Registrant

The following table sets forth information regarding our executive officers as of November 30, 2006:

Name Age PositionRobert Huang 61 President, Chief Executive Officer and DirectorPeter Larocque 45 President, US DistributionJim Estill 49 President and Chief Executive Officer, SYNNEX Canada LimitedJohn Paget 57 President, Technology Solutions DivisionDennis Polk 40 Chief Operating Officer and Chief Financial OfficerSimon Leung 41 General Counsel and Corporate Secretary

Robert Huang founded our Company in 1980 and serves as President, Chief Executive Officer and Director. Prior to founding our Company, Mr. Huangserved as the Headquarters Sales Manager of Advanced Micro Devices, a semiconductor company. Mr. Huang received his Bachelor of Science degree inElectrical Engineering from Kyushyu University, Japan, Master of Science degrees in Electrical Engineering and Statistics from the University of Rochester anda Master of Science degree in Management Science from the Sloan School of Management at the Massachusetts Institute of Technology.

Peter Larocque is our President, U.S. Distribution since July 2006 and previously served as Executive Vice President of Distribution since June 2001,Senior Vice President of Sales and Marketing from September 1997 until June 2001. Mr. Larocque is responsible for our U.S. distribution business.Mr. Larocque received a Bachelor of Science degree in Economics from the University of Western Ontario, Canada.

Jim Estill joined SYNNEX Canada Limited in September 2004 as President and Chief Executive Officer after the acquisition of EMJ Data SystemsLimited by SYNNEX Canada. Mr. Estill founded EMJ in 1979 and was President and Chief Executive Officer of EMJ. Mr. Estill received a Bachelor of Sciencedegree in Systems Design Engineering and a Professional Engineering degree from the University of Waterloo, Ontario.

John Paget was our President, Technology Solutions Division and previously served as our President of North America and Chief Operating officer fromMay 2004 to July 2006. He previously held the position of Senior Vice President and General Manager of GE Technology Financial Services, a part of GECommercial Finance, a General Electric company since January 2003. Prior to GE Technology Financial Services, Mr. Paget served as President and ChiefExecutive Officer of GE Access, a worldwide distributor of Unix Products. Throughout his tenure at GE Access, Mr. Paget held a variety of executivemanagement positions in sales and operations and was with the company since 1997. Mr. Paget received a B.S. in Administrative Services from PepperdineUniversity. Effective February 2007, Mr. Paget has resigned from our Company.

Dennis Polk is our Chief Operating Officer and Chief Financial Officer and served in this capacity since July 2006 and previously served as ChiefFinancial Officer and Senior Vice President of Corporate Finance since

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Table of Contentsjoining us in February 2002. Mr. Polk received a Bachelor of Science degree in Accounting from Santa Clara University and is a Certified Public Accountant.

Simon Leung is our General Counsel and Corporate Secretary and has served in this capacity since May 2001. Mr. Leung joined us in November 2000 asCorporate Counsel. From December 1999 to November 2000, Mr. Leung was an attorney at the law firm of Paul, Hastings, Janofsky & Walker LLP. From May1995 to December 1999, Mr. Leung was an attorney at the former law firm of Fotenos & Suttle, P.C. Mr. Leung received a Bachelor of Arts degree from theUniversity of California, Davis and his Juris Doctor degree from the University of Minnesota Law School.

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Table of Contents PART II

Item 5. Market for Registrant’s Common Equity and Related Stockholder Matters

Our common stock, par value $0.001, is traded on the New York Stock Exchange (“NYSE”) under the symbol “SNX.” The following table sets forth therange of high and low sales prices for our common stock for each of the periods listed, as reported by the NYSE.

Price Range ofCommon Stock

Low HighFiscal 2005 First Quarter $ 20.65 $ 24.63Second Quarter $ 13.45 $ 23.17Third Quarter $ 15.20 $ 18.95Fourth Quarter $ 15.32 $ 18.08

Fiscal 2006 First Quarter $ 15.11 $ 19.09Second Quarter $ 16.90 $ 19.76Third Quarter $ 16.20 $ 23.00Fourth Quarter $ 20.94 $ 23.87

As of February 1, 2007, our common stock was held by 539 stockholders of record. Because many of the shares of our common stock are held by brokersand other institutions on behalf of stockholders, we are unable to estimate the total number of beneficial owners represented by these stockholders of record. Wehave not declared or paid any cash dividends since our inception. We currently intend to retain future earnings, if any, for use in our operations and the expansionof our business. If we elect to pay cash dividends in the future, payment will depend on our financial condition, results of operations and capital requirements, aswell as other factors deemed relevant by our Board of Directors. In addition, our credit facilities place restrictions on our ability to pay dividends.

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Table of ContentsStock Price Performance Graph

The stock price performance graph below, which assumes a $100 investment on November 25, 2003 and reinvestment of any dividends, compares ourcumulative total shareowner return (assuming reinvestment of dividends), the NYSE Composite Index and the Standard Industrial Classification (“SIC”) CodeIndex (SIC Code 5045—Computer and Computer Peripheral Equipment and Software) for the period beginning November 25, 2003 through November 30,2006. The closing price per share of our common stock was $22.71 on November 30, 2006. No cash dividends have been declared on our common stock sincethe initial public offering. The comparisons in the table are required by the Securities and Exchange Commission and are not intended to forecast or be indicativeof possible future performance of our common stock.

Total Return Analysis 11/25/2003 11/30/2003 11/30/2004 11/30/2005 11/30/2006SYNNEX Corporation 100.00 100.35 150.70 110.21 159.93SIC Code Index 100.00 100.00 121.62 112.58 129.92NYSE Market Index 100.00 100.00 114.68 127.65 148.46

Securities Authorized for Issuance under Equity Compensation Plans

Information regarding the Securities Authorized for Issuance under Equity Compensation Plans can be found under Item 12 of this Report.

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Table of Contents

Item 6. Selected Consolidated Financial Data The following selected consolidated financial data are qualified by reference to, and should be read together with, “Management’s Discussion andAnalysis of Financial Condition and Results of Operations” and the consolidated financial statements and related Notes included in Item 7 of this Report. Theselected consolidated statement of operations and cash flow data presented below for the fiscal years ended November 30, 2006, 2005 and 2004 and theconsolidated balance sheet data as of November 30, 2006 and 2005 have been derived from our audited consolidated financial statements included elsewhere inthis Report. The consolidated statements of operations and other data for the fiscal years ended November 30, 2003 and 2002 and the consolidated balance sheetdata as of November 30, 2004, 2003 and 2002 have been derived from our consolidated financial statements that are not included in this Report. Theconsolidated statements of operations data generally include the operating results from our acquisitions from the closing date of each acquisition. Historicaloperating results are not necessarily indicative of the results that may be expected for any future period. Please see “Management’s Discussion and Analysis ofFinancial Condition and Results of Operations” and Note 2 and Note 4 to our consolidated financial statements included elsewhere in this Report for a discussionof factors, such as business combinations, that affect the comparability of the following selected consolidated financial data.

Fiscal Years Ended November 30,

2006

2005

2004

2003

2002

(in thousands, except per share data) Statements of Operations Data: Revenue $ 6,343,514 $ 5,640,769 $ 5,150,447 $ 3,944,886 $ 3,596,265 Cost of revenue (6,058,155) (5,402,211) (4,935,075) (3,766,518) (3,432,089)

Gross profit 285,359 238,558 215,372 178,368 164,176 Selling, general and administrative expenses (189,117) (159,621) (137,712) (121,352) (114,657)

Income from continuing operations before non-operating items, income taxes and minority interest 96,242 78,937 77,660 57,016 49,519 Interest expense and finance charges, net (16,659) (17,036) (7,959) (7,007) (6,182)Other income (expense), net 570 1,559 (900) (3,478) 1,169

Income from continuing operations before income taxes and minority interest 80,153 63,460 68,801 46,531 44,506 Provision for income taxes (28,320) (23,912) (23,091) (17,090) (16,680)Minority interest in subsidiary (448) 58 376 267 49

Income from continuing operations 51,385 39,606 46,086 29,708 27,875 Income from discontinued operations, net of tax — 511 479 288 157 Gain on sale of discontinued operations, net of tax — 12,708 — — —

Net income $ 51,385 $ 52,825 $ 46,565 $ 29,996 $ 28,032

Net income per common share, basic:

Income from continuing operations $ 1.73 $ 1.39 $ 1.73 $ 1.34 $ 1.26 Discontinued operations — 0.46 0.01 0.02 0.01

Net income per common share, basic $ 1.73 $ 1.85 $ 1.74 $ 1.36 $ 1.27

Net income per common share, diluted:

Income from continuing operations $ 1.61 $ 1.27 $ 1.53 $ 1.21 $ 1.15 Discontinued operations — 0.43 0.02 0.01 0.01

Net income per common share, diluted $ 1.61 $ 1.70 $ 1.55 $ 1.22 $ 1.16

November 30,

2006

2005

2004

2003

2002

(in thousands) Balance Sheet Data: Cash and cash equivalents $ 27,881 $ 13,636 $ 28,726 $ 22,079 $ 15,503 Working capital 416,865 350,529 316,935 217,397 200,021 Total assets 1,382,734 1,082,488 999,697 789,928 629,075 Current borrowings under term loans and lines of credit 50,834 28,548 74,996 69,464 19,685 Long-term borrowings 47,967 1,153 13,074 8,134 38,714 Total stockholders’ equity 511,546 437,225 369,656 252,814 213,218


2006

2005

2004

2003

2002

(in thousands) Other Data: Depreciation and Amortization $ 9,781 $ 8,778 $ 7,845 $ 7,412 $ 8,337

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Table of Contents Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with “SelectedConsolidated Financial Data” and the Consolidated Financial Statements and related Notes included elsewhere in this Report.

When used in this Annual Report on Form 10-K (the “Report”), the words “believes,” “plans,” “estimates,” “anticipates,” “expects,” “intends,” andsimilar expressions are intended to identify forward-looking statements. These are statements that relate to future periods and include statements about ourservices, economic and industry trends, thefts at our warehouses, gross margin, selling, general and administrative expense, our estimates regarding our capitalrequirements and our needs for additional financing, expenses related to the expansion of our operations, effect of future expansion on our operations, criticalaccounting policy effects, impact of new accounting pronouncements, use of our working capital, and statements regarding our securitization program andsources of revenue. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected.These risks and uncertainties include, but are not limited to, those risks discussed below, as well as the seasonality of the buying patterns of our customers, theconcentration of sales to large customers, dependence upon and trends in capital spending budgets in the IT industry and fluctuations in general economiccondition and the risks set forth above under Item 1A, “Risk Factors.” These forward-looking statements speak only as of the date hereof. We expressly disclaimany obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in ourexpectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. Overview We are a global information technology, or IT, supply chain services company. We offer a comprehensive range of services to IT original equipmentmanufacturers and software publishers, collectively OEMs, and reseller customers worldwide. The supply chain services that we offer include productdistribution, related logistics and support services, contract assembly and demand generation marketing.

We have been in the IT distribution business since 1980 and are one of the largest IT product distributors based on 2006 reported revenue. We focus ourcore wholesale distribution business on a limited number of leading IT OEMs, which allows us to enhance and increase the value we provide to our OEMsuppliers and reseller customers.

Because we offer distribution, contract assembly and demand generation marketing, OEM suppliers and resellers can outsource to us multiple areas oftheir business outside of their core competencies. This model allows us to provide services at several points along the IT product supply chain. We believe thatthe combination of our broad range of supply chain capabilities, our focus on serving the leading IT OEMs and our efficient operations enables us to realizestrong relationships with our OEM suppliers and reseller customers. We are headquartered in Fremont, California and have distribution, sales and assemblyfacilities in the United States, Canada, China, Mexico and the United Kingdom.

Revenue and Cost of Revenue We derive our revenue primarily through the distribution of IT systems, peripherals, system components, software and networking equipment, and, to alesser extent, from contract assembly. We recognize revenue in both our distribution and contract assembly operations generally as products are shipped, if apurchase order exists, the sales price is fixed or determinable, collection of the resulting receivable is reasonably assured, risk of loss and title have transferredand product returns are reasonably estimable. Shipping terms are typically F.O.B. our warehouse. Provisions for sales returns are estimated based on historicaldata and are recorded concurrently with the recognition of revenue. Our distribution sales are made to reseller customers on a purchase order basis

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Table of Contentsand generally relate to a specific order from a reseller’s end-user customer. Our contract assembly sales are generated from specific purchase orders receivedfrom our OEM customers for a specified unit quantity. We generally do not have long-term sales agreements with our reseller or contract assembly customers.

Revenue from our distribution business represented approximately 91%, 91% and 89% of our total revenue in fiscal 2006, 2005 and 2004, respectively. Inour distribution business, our primary customers are resellers. None of our reseller customers accounted for more than 10% of our total revenue in fiscal 2006,2005 or 2004. Approximately 25%, 28% and 28% of our total revenue in fiscal 2006, 2005 and 2004, respectively, was derived from the sale of HP products.Most of our remaining distribution revenue is derived from the distribution of IT products of a relatively small number of other suppliers.

Approximately 9%, 9% and 11% of our total revenue in fiscal 2006, 2005 and 2004, respectively, was derived from our contract assembly business. Weprovide contract assembly services primarily to IT product OEMs. Our contract assembly revenue is dependent on a small number of customers. Revenue fromcontract assembly provided to Sun Microsystems accounted for less than 10% of our total revenue in fiscal 2006 and 2005 and approximately 10% of our totalrevenue in 2004. Sun Microsystems accounted for approximately 91%, 93% and 93% of our contract assembly revenue in fiscal 2006, 2005 and 2004,respectively.

The market for IT products is generally characterized by declining unit prices and short product life cycles. Our distribution business is also highlycompetitive on the basis of price. We set our sales price based on the market supply and demand characteristics for each particular product or bundle of productswe distribute. From time to time, we also participate in the incentive and rebate programs of our OEM suppliers. These programs are important determinants ofthe final sales price we charge to our reseller customers. To mitigate the risk of declining prices and obsolescence of our distribution inventory, our OEMsuppliers generally offer us limited price protection and return rights for products that are marked down or discontinued by them. We carefully manage ourinventory to maximize the benefit to us of these supplier provided protections.

A significant portion of our cost of distribution revenue is the purchase price we pay our OEM suppliers for the products we sell, net of any rebates andpurchase discounts received from our OEM suppliers. Cost of distribution revenue also consists of provisions for inventory losses and write-downs, and freightexpenses associated with the receipt in and shipment out of our inventory. Our contract assembly cost of revenue consists primarily of cost of materials, labor andoverhead.

Margins The IT product distribution and contract assembly industries in which we operate are characterized by low gross profit as a percentage of revenue, or grossmargin, and low income from operations as a percentage of revenue, or operating margin. Our gross margin has fluctuated between 4.2% and 4.5% annually overthe past three years due to changes in the mix of products we sell, customers we sell to, competition, seasonality and the general economic environment.Increased competition arising from industry consolidation and low demand for IT products may hinder our ability to maintain or improve our gross margin.Generally, when our revenue becomes more concentrated on limited products or customers, our gross margin tends to decrease due to increased pricing pressurefrom OEM suppliers or reseller customers. Our operating margin has also fluctuated between 1.40% and 1.52% annually over the past three years, basedprimarily on our ability to achieve economies of scale, the management of our operating expenses, changes in the relative mix of our distribution and contractassembly revenue and the timing of our acquisitions and investments.

Recent Acquisitions and Divestitures We seek to augment our organic growth with strategic acquisitions of businesses and assets that complement and expand our supply chain servicecapabilities. We also divest businesses that we deem not strategic to our ongoing operations. Our historical acquisitions have brought us new reseller customersand OEM

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Table of Contentssuppliers, extended the geographic reach of our operations, particularly in international markets, and expanded the services we provide to our OEM suppliers andcustomers. We account for acquisitions using the purchase method of accounting and include acquired entities within our consolidated financial statements fromthe closing date of the acquisition.

During the fiscal year ended November 30, 2006, we completed the following acquisitions:

On April 28, 2006, we acquired the assets of the Telpar distribution segment of Peak Technologies, Inc., or Telpar, for approximately $3.3 million. Telparsold auto-ID, data capture and point of sales products and services. The Telpar business has been fully integrated within our distribution segment. The aggregatepurchase price was allocated to tangible and identifiable intangible assets acquired and liabilities assumed based on estimates of fair value. The excess of thepurchase price over the fair value of identifiable net assets acquired of $429,000 has been recognized as intangible assets.

On June 9, 2006, we acquired substantially all of the assets of the Azerty United Canada ink and toner distribution business of United Stationers SupplyCompany, or Azerty, for approximately $14.3 million. The Azerty acquisition strengthens our position in printer supplies distribution in Canada. The Azertybusiness has been fully integrated within our distribution segment. The aggregate purchase price was allocated to tangible and identifiable intangible assetsacquired and liabilities assumed based on estimates of fair value. The excess of the purchase price over the fair value of identifiable net assets acquired of $1.3million has been recognized as goodwill and $114,000 has been recognized as intangible assets.

On September 14, 2006, our wholly owned subsidiary, BSA Sales, LLC, or BSA Sales, acquired all of the outstanding capital stock of ConcentrixCorporation or Concentrix based in Rochester, New York for approximately $8.0 million. Concentrix is an integrated marketing company that provides callcenter, database analysis, and print on demand services to customers in the transportation, publishing, banking, healthcare and high technology industries.Concentrix’s business strategy complements and expands our resources and capabilities of our demand generation business. The acquisition agreement allowedfor an earnout payment of $2.5 million to be paid if certain milestones were met in the first 120 days after the acquisition. The defined milestones were notachieved and no earnout payment will be paid on this transaction. We have accounted for the acquisition of capital stock as a purchase and accordingly the excessof the purchase price over the fair value of identifiable net assets acquired of $4.2 million has been recognized as goodwill and $3.8 million has been recognizedas intangible assets. The valuation of the identifiable intangible assets acquired was based on management’s estimates using a valuation report prepared by anindependent third party. The Concentrix and BSA Sales operations have been merged under the name of Concentrix Corporation effective December 1, 2006.

The above acquisitions, individually and in the aggregate, did not meet the conditions of a material business combination as defined by the Securities andExchange Commission. As such, they were not subject to the disclosure requirements of SFAS No. 141. However, we believe that disclosures provided hereinare useful to the understanding of the goodwill and intangible assets activities through November 30, 2006.

During the fiscal year ended November 30, 2005, we did not acquire any businesses and divested two of our subsidiaries, SYNNEX K.K. and EMJAmerica, Inc.

In May 2005, we sold approximately 93% of the equity in SYNNEX K.K., our Japan subsidiary, to MCJ Company Limited, or MCJ, a Japan based publiccompany. We sold our Japan distribution business, as it was not strategic to our current North American focused distribution and assembly business model. Wereceived shares of MCJ stock as consideration for SYNNEX K.K. We were restricted from selling the MCJ stock until one year after the sale date. As a result ofthis equity investment, we recorded the gains or losses on our investment in each period, based on the closing price of MCJ stock. These non-operating gains orlosses are reported in “Other income (expense), net.” In order to reduce the risk of holding the MCJ shares, we entered into several forward contracts to sell MCJshares for a fixed price in April 2006. All the contracts were settled in April, 2006 and

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Table of Contentsthere were no contracts outstanding as of November 30, 2006. As of November 30, 2005, such contracts covered 100% of the MCJ shares held by the Company.

In June 2005, we sold the operations of our EMJ America, Inc. subsidiary to the management team of EMJ America. EMJ America was a subsidiary of ourCanadian-based subsidiary EMJ Data Systems Limited, or EMJ, and was not in the same business as EMJ. The operations of our EMJ America subsidiary werenot material to us.

Economic and Industry Trends

Our revenue is highly dependent on the end-market demand for the IT products that we distribute and assemble. This end-market demand is influenced bymany factors including the introduction of new IT products and software by OEMs, replacement cycles for existing IT products and overall economic growth andgeneral business activity. A difficult and challenging economic environment may also lead to consolidation or decline in the IT distribution industry andincreased price based competition.

Seasonality

Our operating results are affected by the seasonality of the IT products industry. We have historically experienced higher sales in our fourth fiscal quarterdue to patterns in the capital budgeting, federal government spending and purchasing cycles of our customers and end-users. These patterns may not be repeatedin subsequent periods.

Deferred Compensation Plan

We have a deferred compensation plan for a limited number of our directors and employees. We maintain a liability on our balance sheet for salary andbonus amounts deferred by participants and we accrue interest expense on unpaid amounts. Interest expense on the deferred amounts is classified in “Interestexpense and finance charges, net” on our consolidated statement of operations. The plan allows for the participants to direct investments of deferred amounts inequity securities. These equity investments are classified as trading securities. GAAP requires that gains (losses) on the deferred compensation equity securitiesbe recorded in “Other income (expense), net” and that an equal amount be charged (or credited if losses) to “Selling, general and administrative expenses”relating to compensation amounts which are payable to the plan participants. Deferred compensation expense was $1.1 million, $1.6 million, and $243,000 infiscal 2006, 2005 and 2004, respectively.

Unearned Share-Based Compensation

In prior years, in connection with the granting of restricted stock and employee stock options that had exercise prices determined to be below fair marketvalue on the date of grant, we recorded unearned share-based compensation. Unearned share-based compensation represents the difference between the fairmarket value of our common stock on the date of grant and either the exercise price of stock options or the fair market value of restricted stock awards, as thecase may be. Unearned share-based compensation is included as a reduction of stockholders’ equity and is amortized over the vesting period of the applicablestock options or restricted stock awards, generally five years, using the straight-line method. Our share-based compensation expense relates to stock optionsgranted to individuals and is reflected in selling, general and administrative expenses. The balance of the unearned share-based compensation was $1.6 million asof November 30, 2005, due to the issuance of restricted stock and stock options. The balance of unearned share-based compensation was reclassified toadditional paid-in capital upon adoption of SFAS No. 123(R), effective December 1, 2005.

Share-based compensation expense was $3.7 million, $28,000 and $202,000 in fiscal 2006, 2005 and 2004, respectively.

Insurance Coverage

From time to time, we have experienced incidents of theft at various facilities. In fiscal 2003 and fiscal 2005 we experienced theft as a result of break-insat four of our warehouses in which approximately $12.9 million of

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Table of Contentsinventory was stolen. Based on our investigation, discussions with local law enforcement and meetings with federal authorities, we believe the thefts at ourwarehouses were part of an organized crime effort that targeted a number of technology equipment warehouses throughout the United States. As a result of thelosses in 2003, we reduced our inventory value by $9.4 million, and recorded estimated proceeds, net of deductibles as a receivable from our insurance company,included within “Other current assets” on our balance sheet as of November 30, 2003. In January 2004 we received a final settlement from our insurancecompany that amounted to substantially all of the receivable recorded as of November 30, 2003.

In March 2005, approximately $4.0 million of inventory was stolen from our facility in the City of Industry, California. We subsequently recoveredapproximately $0.5 million through law enforcement and federal authorities. We filed a claim with our insurance provider for the amount of the loss, less a smalldeductible. We have received substantially all of the claimed amount.

These types of incidents may make it more difficult or expensive for us to obtain theft coverage in the future. There is no assurance that future incidents oftheft will not recur.

Critical Accounting Policies and Estimates

The discussions and analyses of our consolidated financial condition and results of operations are based on our consolidated financial statements, whichhave been prepared in conformity with generally accepted accounting principles in the United States. The preparation of these financial statements requires us tomake estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of any contingent assets and liabilities at the financialstatement date, and reported amounts of revenue and expenses during the reporting period. On an ongoing basis, we review and evaluate our estimates andassumptions, including those that relate to accounts receivable, vendor programs, inventories, intangible assets and other long-lived assets, share-basedcompensation, income taxes, and contingencies and litigation. Our estimates are based on our historical experience and a variety of other assumptions that webelieve to be reasonable under the circumstances, the results of which form the basis for making our judgment about the carrying values of assets and liabilitiesthat are not readily available from other sources. Actual results could differ from these estimates under different assumptions or conditions.

We believe the following critical accounting policies are affected by our judgment, estimates and/or assumptions used in the preparation of ourconsolidated financial statements.

Revenue Recognition. We recognize revenue generally as products are shipped, if a purchase order exists, the sale price is fixed or determinable, collectionof resulting receivables is reasonably assured, risk of loss and title have transferred and product returns are reasonably estimable. Shipping terms are typicallyF.O.B. our warehouse. Provisions for sales returns are estimated based on historical data and are recorded concurrently with the recognition of revenue. Theseprovisions are reviewed and adjusted periodically by us. Revenue is reduced for early payment discounts and volume incentive rebates offered to customers.

We purchase licensed software products from original equipment manufacturer or OEM vendors and distribute them to customers. Revenue is recognizedupon shipment of software products when a purchase order exists, the sales price is fixed or determinable and collection is determined to be probable. Subsequentto the sale of software products, we generally have no obligation to provide any modification, customization, upgrades, enhancements, or any other post-contractcustomer support.

Our Mexico operation entered into a multi-year contract to sell equipment to a contractor that provides equipment and services to the Mexicangovernment. Under the agreement, the Mexican government makes payments into our account. The payments on this contract by the Mexican government aregenerally due on a

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Table of Contentsmonthly basis and are contingent upon the contractor continuing to provide services to the government. We recognize product revenue and cost of revenue on astraight-line basis over the term of the contract.

Share-Based Compensation. Effective December 1, 2005, we adopted the provisions of SFAS No. 123(R), “Share-Based Payment” or SFAS No. 123(R),which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees and directors, includingemployee stock options and employee stock purchases, based on estimated fair values. We previously applied Accounting Principles Board Opinion No. 25,“Accounting for Stock Issued to Employees” and related Interpretations and provided the required pro forma disclosures of SFAS No. 123, “Accounting forStock-Based Compensation” or SFAS No. 123, which was superseded by SFAS No. 123(R). We applied the provisions of Staff Accounting Bulletin No. 107relating to SFAS No. 123(R).

Accounts Receivable. We provide allowances for doubtful accounts on our accounts receivable for estimated losses resulting from the inability of ourcustomers to make required payments. If the financial condition of our customers were to deteriorate, which may result in the impairment of their ability to makepayments, additional allowances may be required. In estimating our allowance, we take into consideration the overall quality and aging of our receivableportfolio, our continuing credit evaluation of our customers’ financial condition, current economic trends, historical experience with collections and collateralobtained from our customers in certain circumstances.

OEM Supplier Programs. We receive funds from OEM suppliers for inventory price protection, product rebates, marketing and infrastructurereimbursement, and promotion programs. Product rebates are recorded as a reduction of cost of revenue. Marketing, infrastructure and promotion programs arerecorded, net of direct costs, in selling, general and administrative expense. Any excess funds associated with these programs are recorded in cost of revenue. Weaccrue rebates based on the terms of the program and sales of qualifying products. Some of these programs may extend over one or more quarterly reportingperiods. Amounts received or receivable from OEM suppliers that are not yet earned are deferred on our balance sheet. Actual rebates may vary based on volumeor other sales achievement levels, which could result in an increase or reduction in the estimated amounts previously accrued. In addition, if market conditionswere to deteriorate due to an economic downturn, OEM suppliers may change the terms of some or all of these programs or cease them altogether. Any suchchange could lower our gross margins on products we sell or revenue earned. We also provide reserves for receivables on OEM supplier programs for estimatedlosses resulting from OEM suppliers’ inability to pay, or rejections of such claims by OEM suppliers.

Inventories. Our inventory levels are based on our projections of future demand and market conditions. Any sudden decline in demand and/or rapidproduct improvements and technological changes can cause us to have excess and/or obsolete inventories. On an ongoing basis, we review for estimated obsoleteor unmarketable inventories and write-down our inventories to their estimated net realizable value based upon our forecasts of future demand and marketconditions. These write-downs are reflected in our cost of revenue. If actual market conditions are less favorable than our forecasts, additional inventory reservesmay be required. Our estimates are influenced by the following considerations: sudden decline in demand due to economic downturns, rapid productimprovements and technological changes, our ability to return to OEM suppliers a certain percentage of our purchases, and protection from loss in value ofinventory under our OEM supplier agreements.

Goodwill, Intangible Assets and Other Long-Lived Assets. We assess potential impairment of our goodwill, intangible assets and other long-lived assetswhen there is evidence that recent events or changes in circumstances have made recovery of an asset’s carrying value unlikely. We also assess potentialimpairment of our goodwill, intangible assets and other long-lived assets on an annual basis. If indicators of impairment were present in intangible assets used inoperations and future cash flows were not expected to be sufficient to recover the assets’ carrying amount, an impairment loss would be charged to expense in theperiod identified. The amount of an impairment loss would be recognized as the excess of the asset’s carrying value over its fair value.

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Table of ContentsFactors we consider important, which may cause an impairment include: significant changes in the manner of use of the acquired asset, negative industry oreconomic trends, and significant underperformance relative to historical or projected operating results.

Income Taxes. As part of the process of preparing our consolidated financial statements, we have to estimate our income taxes in each of the taxingjurisdictions in which we operate. This process involves estimating our current tax expense together with assessing any temporary differences resulting from thedifferent treatment of certain items, such as the timing for recognizing revenue and expenses, for tax and accounting purposes. These differences may result indeferred tax assets and liabilities, which are included in our consolidated balance sheet. We are required to assess the likelihood that our deferred tax assets,which include net operating loss carry forwards and temporary differences that are expected to be deductible in future years, will be recoverable from futuretaxable income or other tax planning strategies. If recovery is not likely, we have to provide a valuation allowance based on our estimates of future taxableincome in the various taxing jurisdictions, and the amount of deferred taxes that are ultimately realizable. The provision for current and deferred taxes involvesevaluations and judgments of uncertainties in the interpretation of complex tax regulations by various taxing authorities. Actual results could differ from ourestimates.

Contingencies and Litigation. There are various claims, lawsuits and pending actions against us incident to our operations. If a loss arising from theseactions is probable and can be reasonably estimated, we record the amount of the loss, or the minimum estimated liability when the loss is estimated using arange within which no point is more probable than another. Based on current available information, we believe that the ultimate resolution of these actions willnot have a material adverse effect on our financial position, results of operations or cash flows. As additional information becomes available, we assess anypotential liability related to these actions and may need to revise our estimates. Future revisions of our estimates could materially impact the results of ouroperations, financial position or cash flows. Results of Operations The following table sets forth, for the indicated periods, data as percentages of revenue:

Fiscal Years EndedNovember 30,

2006

2005

2004

Statements of Operations Data: Revenue 100.00% 100.00% 100.00%Cost of revenue (95.50) (95.77) (95.82) Gross profit 4.50 4.23 4.18 Selling, general and administrative expenses (2.98) (2.83) (2.67) Income from continuing operations before non-operating items, income taxes and minority interest 1.52 1.40 1.51 Interest expense and finance charges, net (0.26) (0.30) (0.15)Other income (expense), net 0.01 0.03 (0.02) Income from continuing operations before income taxes and minority interest 1.27 1.13 1.34 Provision for income taxes (0.45) (0.43) (0.45)Minority interest in subsidiaries (0.01) — — Income from continuing operations 0.81 0.70 0.89 Income from discontinued operations, net of tax — 0.01 0.01 Gain on sale of discontinued operations, net of tax — 0.23 — Net income 0.81% 0.94% 0.90%

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Table of ContentsFiscal Years Ended November 30, 2006 and 2005

Revenue.

Year Ended

November 30, 2006 Year Ended

November 30, 2005 % Change (in thousands) (in thousands) Revenue $ 6,343,514 $ 5,640,769 12.5%Distribution revenue $ 5,800,293 $ 5,120,824 13.3%Contract assembly revenue $ 543,221 $ 519,945 4.5%

The increase in our distribution revenue was primarily attributable to continued growth in our business in the United States and Canada, includingobtaining additional market share, overall increased demand for products through the IT distribution channel and increased selling and marketing efforts. Ourdistribution revenue also increased due to our focus on our new enterprise and consumer electronics distribution divisions and contribution from our Azerty,Telpar and Concentrix acquisitions.

The increase in contract assembly revenue was the result of increased demand from our primary contract assembly customer, Sun Microsystems, as well asincrease in demand and customer count in our non-Sun assembly business.

The increase in our revenue was somewhat mitigated by continued significant competition in the IT distribution marketplace, vendor direct sales models,our desire to focus on operating income growth before revenue growth and gradual declines in the average selling price of the products we sell.

Gross Profit.

Year Ended


November 30, 2005 % Change (in thousands) (in thousands) Gross profit $ 285,359 $ 238,558 19.6%Percentage of revenue 4.50% 4.23% 6.4%

Our gross profit is affected by a variety of factors, including competition, the mix and average selling prices of products we sell and the mix of customersto whom we sell, rebate and discount programs from our suppliers, freight costs and reserves for inventory losses.

The increase in gross margin percentage was a result of higher margins in our distribution segment, mainly due to our focused efforts on all aspects of ourgross margin, including ongoing improvements in our pricing initiatives and increased value-added service offerings, as well as customer and product mix. Ourcontract assembly gross margin percentage decreased due to changes in pricing and product mix with our largest contract assembly customer, Sun Microsystems,partially offset by an improvement in margin in our non-Sun assembly business.

While we currently do not expect any significant change in our total gross margin, it may decrease in future periods as a result of the relative mix of ourdistribution and contract assembly revenue, distribution customer mix, potential increased competition, softness in the overall economy or changes to the termsand conditions in which we do business with our OEMs.

Selling, General and Administrative Expenses.

Year Ended


November 30, 2005 % Change (in thousands) (in thousands) Selling, general and administrative expenses $ 189,117 $ 159,621 18.5%Percentage of revenue 2.98% 2.83% 5.3%

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Table of ContentsOur selling, general and administrative expenses consist primarily of salaries, commissions, bonuses, and related expenses for personnel engaged in sales,

product marketing, distribution and contract assembly operations and administration. Selling, general and administrative expenses also include share-basedcompensation expense, deferred compensation expense or income, temporary personnel fees, costs of our facilities, utility expense, professional fees,depreciation expense on our capital equipment and amortization expense on our intangible assets, offset by reimbursements from OEM suppliers.

Selling, general and administrative expenses increased in fiscal 2006 from the prior year, primarily as a result of incremental expenses associated with ourincreased revenue, an increase in headcount for new and existing business initiatives, continued investments in all aspects of our business, additional expensesassociated with our acquisition and integration of Telpar, Azerty and Concentrix and share-based compensation expense of $3.7 million, as a result of theadoption of SFAS No.123(R), on December 1, 2005. These increases were partially offset by a $2.5 million restructuring charge that was incurred in fiscal 2005.

Netted against selling, general and administrative expenses are reimbursements from OEM suppliers of $25.7 million for fiscal 2006, compared to $20.0million in the prior year. The reimbursements relate to marketing, infrastructure and promotion programs such as advertisements in trade publications, directmarketing campaigns through mail and e-mail and product demonstrations at trade shows. We make the arrangements and pay for the advertising, facility feesand other costs of the programs, which feature the OEM suppliers’ products.

The restructuring charge in fiscal 2005 was primarily incurred to eliminate duplicate personnel and excess facilities that occurred as a result of ouracquisition of EMJ. The restructuring resulted in employee termination benefits of $0.7 million, estimated facilities exit expenses of $1.7 million and other costsof $0.1 million.

Income from Continuing Operations before Non-Operating Items, Income Taxes and Minority Interest.

Year Ended


November 30, 2005 % Change (in thousands) (in thousands) Income from continuing operations before non-operating items,

income taxes and minority interest $ 96,242 $ 78,937 21.9%Distribution income from continuing operations before

non-operating items, income taxes and minority interest $ 88,458 $ 65,912 34.2%Contract assembly income from continuing operations before

non-operating items, income taxes and minority interest $ 7,784 $ 13,025 (40.2)%

Income from continuing operations before non-operating items, income taxes and minority interest as a percentage of revenue was 1.52% for fiscal 2006,compared to 1.40% in the prior year. Our distribution operating income percentage increased to 1.53% in fiscal 2006 from 1.29% in the prior year, primarily dueto an increase in our distribution gross margin and improved operating results from our Mexico operation. Our contract assembly operating income percentagedecreased to 1.43% in fiscal 2006 from 2.51% in the prior year, primarily due to a decrease in gross margin due to changes in pricing and product mix with ourlargest contract assembly customer, Sun Microsystems, partially offset by improvement in gross margin in our non-Sun assembly business.

Interest Expense and Finance Charges, Net.

Year Ended


November 30, 2005 % Change (in thousands) (in thousands) Interest expense and finance charges, net $ 16,659 $ 17,036 (2.2)%

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Table of ContentsAmounts recorded in interest expense and finance charges, net, are primarily due to interest expense paid on our lines of credit, long-term debt and

deferred compensation liability, fees associated with third party accounts receivable flooring arrangements and the sale of accounts receivable through oursecuritization facility, offset by income earned on our excess cash investments and financing income from our Mexico operation.

The decrease in interest expense and finance charges, net, was due to long-term project business we engaged in with one of our customers in Mexico. Theprimary return from this business is interest income resulting from long-term financing of computer hardware sold to our customer and is reflected in our netfinancing cost for the year. This income amount was partially offset by an increase in finance charges and interest expenses due to an overall higher interest rateenvironment, higher borrowings due to increased business and increased long-term debt due to the long-term project in Mexico.

Other Income, Net.

Year Ended


November 30, 2005 % Change (in thousands) (in thousands) Other income, net $ 570 $ 1,559 (63.4)%

Amounts recorded in other income, net, include foreign currency transaction gains and losses, investment gains and losses, including those in our deferredcompensation plan and other non-operating gains and losses.

The decrease in other income, net, in fiscal 2006 as compared with the prior year, was primarily due to a decrease in deferred compensation income of $0.5million and a decrease in foreign exchange gain of $0.4 million.

Provision for Income Taxes. Income taxes consist of our current and deferred tax expense resulting from our income earned in domestic and foreignjurisdictions. Our effective tax rate was 35.3% in fiscal 2006 as compared with an effective tax rate of 37.7% in fiscal 2005. The effective tax rate in fiscal 2006was lower than fiscal 2005, primarily due to higher profit in lower tax jurisdictions and the utilization of previously unrecognized net operating loss carryforwards at our Mexico operation due to its profitability in fiscal 2006.

Minority Interest. Minority interest is the portion of earnings from operations from our subsidiary in Mexico attributable to others. Minority interestexpense was $448,000 in fiscal 2006 compared to a benefit of $58,000 in fiscal 2005 due to the profitability at our Mexico subsidiary in fiscal 2006.

In November 2006, we repurchased the remaining interest in our Mexico operation from our minority shareholders.

Discontinued Operations. During the second quarter of fiscal 2005, we sold approximately 93% of SYNNEX K.K. to MCJ, in exchange for 25,809 sharesof MCJ. We have reported the results of operations and financial position of this business in discontinued operations within the consolidated statements ofoperations for all periods presented.

Fiscal Years Ended November 30, 2005 and 2004

Revenue.

Year Ended


November 30, 2004 % Change (in thousands) (in thousands) Revenue $ 5,640,769 $ 5,150,447 9.5%Distribution revenue $ 5,120,824 $ 4,573,438 12.0%Contract assembly revenue $ 519,945 $ 577,009 (9.9)%

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Table of ContentsThe increase in our distribution revenue was mostly attributable to increased demand for products through the IT distribution channel, primarily in the

United States, and the acquisition of EMJ in September 2004. Our revenue increase was also a result of our increased selling and marketing efforts and increasedsales to direct marketers, government VARs and retail customers. The increase in our distribution revenue was somewhat mitigated by continued significantcompetition in the IT distribution marketplace, our desire to focus on operating income growth before revenue growth and gradual declines in the average sellingprice of the products we sell.

The decrease in contract assembly revenue was primarily the result of a decrease in demand from our largest contract assembly customer, SunMicrosystems as well as a decrease in the average selling prices for the products we assemble. This decrease in demand was primarily due to product life cyclesand product transitions currently ongoing for the products we assemble for Sun Microsystems.

Gross Profit.

Year Ended


November 30, 2004 % Change (in thousands) (in thousands) Gross profit $ 238,558 $ 215,372 10.8%Percentage of revenue 4.23% 4.18% 1.2%

The increase in gross profit percentage was a result of higher margins in our distribution segment, mainly due to improvements in our North Americanpricing initiatives as well as customer and product mix and the EMJ acquisition. Our contract assembly gross profit percentage increased slightly due to changesin product and customer mix.

Selling, General and Administrative Expenses.

Year Ended


November 30, 2004 % Change (in thousands) (in thousands) Selling, general and administrative expenses $ 159,621 $ 137,712 15.9%Percentage of revenue 2.83% 2.67% 6.0%

Selling, general and administrative expenses increased in fiscal 2005 from the prior year, and, as a percentage of revenue, selling, general andadministrative expenses increased in fiscal 2005 to 2.8% from 2.7% in the prior year. The increase, on a dollar basis, was primarily the result of incrementalexpenses associated with our increased revenue in the United States, the EMJ acquisition in September 2004, a $1.4 million increase in deferred compensationexpense and continued investments in new business initiatives. In addition, our selling, general and administrative expenses increased due to a $2.5 millionrestructuring charge incurred in the year ended November 30, 2005 in our Canadian distribution segment. The restructuring charge was primarily incurred toeliminate duplicate personnel and excess facilities that occurred as a result of our acquisition of EMJ. The restructuring resulted in employee termination benefitsof $0.7 million, estimated facilities exit expenses of $1.7 million and other costs of $0.1 million. Selling, general and administrative expenses, on a percentage ofrevenue basis, remained constant from the prior year after adjusting for the additional costs related to the EMJ acquisition, deferred compensation expense,restructuring charges and investments in new business initiatives.

Netted against selling, general and administrative expenses are reimbursements from OEM suppliers of $20.0 million for fiscal 2005, compared to $16.3million in the prior year. The reimbursements relate to

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Table of Contentsmarketing, infrastructure and promotion programs such as advertisements in trade publications, direct marketing campaigns through mail and e-mail and productdemonstrations at trade shows. We make the arrangements and pay for the advertising, facility fees and other costs of the programs, which feature the OEMsuppliers’ products.

Income from Continuing Operations before Non-Operating Items, Income Taxes and Minority Interest.

Year Ended


November 30, 2004 % Change (in thousands) (in thousands) Income from continuing operations before non-operating items, income taxes

and minority interest $ 78,937 $ 77,660 1.6%Distribution income from continuing operations before non-operating items,

income taxes and minority interest $ 65,912 $ 63,255 4.2%Contract assembly income from continuing operations before non-operating

items, income taxes and minority interest $ 13,025 $ 14,405 (9.6)%

Income from continuing operations before non-operating items, income taxes and minority interest as a percentage of revenue was 1.4% for fiscal 2005,decreased slightly from 1.5% in the prior year due to the increase in selling, general and administrative expenses. Our distribution operating income percentagedecreased to 1.3% in fiscal 2005 from 1.4% in the prior year primarily due to our restructuring charges in the first and third quarters of fiscal 2005 and a $1.4million increase in deferred compensation expense. This was partially offset by a $0.8 million decrease in the operating loss of our Mexico operation. While theincrease in deferred compensation expense had an effect on operating income, there was no effect on net income as the increase in deferred compensationexpense was offset by an investment gain, which is recorded in other income (expense), net.

The decrease in the operating loss in Mexico was a result of focused efforts to reduce costs and improve operating effectiveness. Our contract assemblyoperating income percentage did not significantly change from fiscal 2005 to the prior year.

Interest Expense and Finance Charges, Net.

Year Ended


November 30, 2004 % Change (in thousands) (in thousands) Interest expense and finance charges, net $ 17,036 $ 7,959 114.0%

The increase in interest expense and finance charges, net, was a result of higher finance charges due to higher interest rates as compared to those in 2004and higher debt levels due to the EMJ acquisition as well as to finance increased revenue, $0.8 million associated with our new securitization borrowing facilityin Canada and $0.5 million related to the repayment of debt resulting from the acquisition of EMJ.

Other Income (Expense), Net.

Year Ended


November 30, 2004 % Change (in thousands) (in thousands) Other income (expense), net $ 1,559 ($ 900) 273.2%

The increase in other income (expense), net, in fiscal 2005 as compared with the same period in the prior year, was primarily due to a decrease of $2.4million in foreign exchange losses, a $1.4 million increase in investment gains related to deferred compensation and $0.3 million gain associated with ourinvestment in MCJ.

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Table of ContentsThese amounts were offset by a one-time receipt of $1.2 million from the settlement of the final purchase price related to the acquisition of our subsidiary in theUnited Kingdom, which was recorded in the third quarter of 2004.

Provision for Income Taxes. Income taxes consist of our current and deferred tax expense resulting from our income earned in domestic and foreignjurisdictions. Our effective tax rate was 37.7% in fiscal 2005 as compared with an effective tax rate of 33.6% in fiscal 2004. The effective tax rate in 2005 washigher than that in 2004 due to a non-recurring $2.0 million income tax benefit reflected in the 2004 effective tax rate.

Minority Interest. Minority interest is the portion of earnings from operations from our subsidiary in Mexico attributable to others. Minority interest benefitdecreased to $58,000 in fiscal 2005 from a benefit of $376,000 in fiscal 2004 due to the losses at our Mexico subsidiary exceeding the minority investmentamount.

Discontinued Operations. During the second quarter of fiscal 2005, we sold approximately 93% of SYNNEX K.K. to MCJ, in exchange for 25,809 sharesof MCJ. We have reported the results of operations and financial position of this business in discontinued operations within the consolidated statements ofoperations for all periods presented.

The results from the operations of SYNNEX K.K., prior to the sale, were as follows (in thousands):

Fiscal Year Ended

November 30, 2005 2004 Revenue $ 64,477 $ 163,544 Cost of revenue (59,916) (153,938)

Gross profit 4,561 9,606 Selling, general and administrative expenses (3,170) (8,286)

Income from operations before non-operating items, income taxes and minority interest 1,391 1,320 Interest expense and finance charges, net (140) (464)Other income (expense), net (245) 158

Income before income taxes and minority interest 1,006 1,014 Provision for income taxes (434) (459)Minority interest (61) (76)

Net income $ 511 $ 479

Liquidity and Capital Resources

Cash Flows

Our business is working capital intensive. Our working capital needs are primarily to finance accounts receivable and inventory. We rely heavily on debt,accounts receivable flooring programs and the sale of our accounts receivable under our securitization programs for our working capital needs.

We have financed our growth and cash needs to date primarily through working capital financing facilities, bank credit lines and cash generated fromoperations. The primary uses of cash have been to fund increases in inventory and accounts receivable resulting from increased sales, and for acquisitions.

To increase our market share and better serve our customers, we may further expand our operations through investments or acquisitions. We expect thatthis expansion would require an initial investment in personnel,

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Table of Contentsfacilities and operations, which may be more costly than similar investments in current operations. As a result of these investments, we may experience anincrease in cost of sales and operating expenses that is disproportionate to revenue from those operations. These investments or acquisitions would likely befunded primarily by incurring additional debt or issuing common stock.

Net cash used in operating activities was $18.9 million in fiscal 2006. Cash used in operating activities in fiscal 2006 was primarily attributable to a net useof cash for working capital and decrease in net deferred assets of $95.9 million, offset by net income of $51.4 million, depreciation and amortization of $9.8million, share-based compensation of $3.7 million and excess tax benefits from stock options of $0.9 million. The cash used for working capital in fiscal 2006was due to an increase in inventory, net deferred assets, as a result of our multi-year contract from our Mexico operation, and accounts receivable, partially offsetby an increase in accounts payable. The fluctuations in these working capital balances were primarily related to overall higher revenue levels and a net increasein sales of accounts receivable under our securitization program of $69.0 million.

Prior to adopting SFAS No. 123(R), we presented all tax benefits resulting from the exercise of stock options as cash flows from operating activities in theconsolidated statement of cash flows. SFAS No. 123(R), requires cash flows resulting from excess tax benefits to be classified as a part of cash flows fromfinancing activities. As a resulting of adopting SFAS No. 123(R), $6.0 million of excess of tax benefits for the twelve months ended November 30, 2006 havebeen reported as a cash inflow from financing activities.

Net cash provided by operating activities was $7.3 million in fiscal 2005. Cash provided by operating activities in fiscal 2005 was primarily attributable tonet income of $52.8 million and depreciation and amortization of $8.8 million offset by the use of cash for working capital of $42.4 million. The cash used forworking capital in fiscal 2005 was primarily due to increases in inventory and vendor receivables, partially offset by increases in accounts payable and payablesto affiliates. The fluctuations in these working capital balances were primarily related to overall higher revenue levels and a net increase in sales of accountsreceivable under our securitization program of $78.5 million.

Net cash provided by operating activities was $0.2 million in fiscal 2004. Cash provided by operating activities in fiscal 2004 was primarily attributable tonet income of $46.6 million and depreciation and amortization of $7.8 million offset by the use of cash for working capital of $63.6 million. The cash used forworking capital in fiscal 2004 was primarily due to increases in accounts receivable, receivables from vendors and inventory, partially offset by increases inaccounts payable and payables to affiliates. The fluctuations in these working capital balances were primarily due to a net decrease in sales of our accountsreceivable under our securitization program of $13.7 million.

Net cash used in investing activities was $24.3 million in fiscal 2006, $7.7 million in fiscal 2005 and $49.6 million in fiscal 2004. Cash used in investingactivities in fiscal 2006 was primarily the result of the purchase of short-term investments of $15.3 million, the acquisition of Azerty, Telpar and Concentrix for$12.7 million, $2.9 million, and $6.4 million, respectively, capital expenditures of $7.9 million and increase in restricted cash of $8.1 million offset by proceedsfrom sale of investments of $28.4 million. The use of cash in fiscal 2005 was primarily the result of a $3.0 million investment in Microland, the final paymentsfor the acquisitions of EMJ and BSA Sales, Inc. of $4.8 million and capital expenditures of $6.4 million, partially offset by a decrease in restricted cash of $2.0million. The use of cash in fiscal 2004 was primarily the result of the acquisition of EMJ for $42.2 million and capital expenditures of $6.4 million.

Net cash provided by financing activities was $58.6 million in fiscal 2006 and was a result of net proceeds from bank loans and lines of credit of $61.7million, primarily associated with borrowings for our Mexico operation, proceeds from issuances of common stock of $11.2 million and a tax benefit of $6.0million due to the adoption of SFAS No. 123(R), offset by cash overdraft of $20.3 million. Net cash used in financing activities of

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Table of Contents$13.6 million in fiscal 2005 was primarily due to the net repayment of borrowings under our credit facilities of $43.6 million, offset by cash overdraft of $22.1million and proceeds from issuance of common stock of $9.0 million. Net cash provided by financing activities was $56.8 million in fiscal 2004 and wasprimarily related to proceeds from our initial public offering and stock option exercises of $61.0 million and our cash overdraft of $2.9 million, offset by net debtpayments of $7.0 million.

We believe that cash flows from operations, our current cash balance and funds available under our working capital and credit facilities will be sufficientto meet our working capital needs and planned capital expenditures for the next 12 months.

Capital Resources

Our cash and cash equivalents totaled $27.9 million and $13.6 million at November 30, 2006 and 2005, respectively.

Off Balance Sheet Arrangements

We have a six-year revolving accounts receivable securitization program in the United States, or U.S. Arrangement, which provides for the sale of up to$275.0 million of U.S. trade accounts receivable, or U.S. Receivables, to two financial institutions. The program expires in August 2008. In connection with thisprogram substantially all of our U.S. trade accounts receivable are transferred without recourse to our wholly owned subsidiary, which, in turn, sells an undividedinterest in the U.S. Receivables to the financial institutions. Sales of the U.S. Receivables to the financial institutions under this program result in a reduction oftotal accounts receivable in our consolidated balance sheet. The remaining accounts receivable not sold to the financial institutions are carried at their netrealizable value, including an allowance for doubtful accounts. Our effective borrowing cost under the program is the prevailing dealer commercial paper rate ofreturn plus 0.75% per annum. At November 30, 2006 and 2005, the amount of U.S. Receivables sold to and held by the financial institutions under U.S.Arrangement totaled $273.0 million and $229.2 million, respectively. The U.S. Arrangement contains customary financial covenants, including, but not limitedto, requiring us to maintain on a consolidated basis:

• a minimum net worth at the end of each fiscal quarter in each fiscal year ending on or after November 30, 2003 of not less than (i) the minimum networth required under the U.S. Arrangement for the immediately preceding fiscal year plus (ii) an amount equal to 50% of the positive net income ofus and our subsidiaries on a consolidated basis for the immediately preceding fiscal year plus (iii) an amount equal to 100% of the amount of anyequity raised by or capital contributed to us during the immediately preceding fiscal year;

• a fixed charge ratio for each rolling period from and after the closing of the U.S. Arrangement of not less than 1.70 to 1.00. The fixed charge ratio isthe ratio of EBITDA for the rolling period ending on such date to “fixed charges” for such period. Fixed charges means, with respect to any of ourfiscal periods (a) cash interest expense during such period, plus (b) regularly scheduled payments of principal on our debt (other than debt owingunder the amended U.S. Arrangement, as defined) paid during such period, plus (c) the aggregate amount of all capital expenditures made by usduring such period, plus (d) income tax expense during such period, plus (e) any dividend, return of capital or any other distribution in connectionwith our capital stock. Rolling period means as of the end of any or our fiscal quarters, the immediately preceding four fiscal quarters (including thefiscal quarter then ending); and

• with respect to our wholly owned subsidiary, a net worth percentage of not less than 5.0%.

In February 2007, we amended our U.S. Arrangement to increase our securitization program to $350.0 million of U.S. Receivables, with a group offinancial institutions. We extended the maturity date of our U.S. Arrangement, as amended, from August 2008 to February 2011. Our effective borrowing costunder our U.S.

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Table of ContentsArrangement, as amended, is the prevailing dealer commercial paper rate or London Inter Bank Offered Rate, or LIBOR, plus 0.55% per annum. Our amendedU.S. Arrangement contains similar financial covenants as the former program except that the fixed charge ratio was reduced to 1.60 to 1.00.

We have a one-year revolving accounts receivable securitization program in Canada through SYNNEX Canada Limited, or Canadian Arrangement, whichprovides for the sale of up to C$100.0 million of U.S. and Canadian trade accounts receivable to a financial institution. We renewed our Canadian Arrangementfor an additional year until November 2007 with similar terms and conditions. In connection with this program, substantially all of SYNNEX Canada’s U.S. andCanadian trade accounts receivable are sold to the financial institution on a fully serviced basis. Sales of the accounts receivable to the financial institution underthe Canadian Arrangement result in a reduction of total accounts receivable in our consolidated balance sheet. Our effective discount rate under the CanadianArrangement is the prevailing Bankers’ Acceptance rate of return or prime rate in Canada plus 0.45% per annum. At November 30, 2006 and 2005, the amountof our accounts receivable sold to and held by the financial institution under the Canadian Arrangement totaled $70.8 and $45.6 million, respectively. TheCanadian Arrangement contains customary financial covenants, including, but not limited to, requiring us to maintain on a consolidated basis:

• a minimum net worth at the end of each fiscal quarter in each fiscal year ending on or after November 30, 2005 of not less than (i) the minimum networth required under the arrangement for the immediately preceding fiscal year plus (ii) an amount equal to 50% of the positive net income of usand our subsidiaries on a consolidated basis for the immediately preceding fiscal year plus (iii) an amount equal to 100% of the amount of anyequity raised by or capital contributed to us during the immediately preceding fiscal year.

We believe that available funding under our accounts receivable securitization programs provides us increased flexibility to make incremental investmentsin strategic growth initiatives and to manage working capital requirements, and that there are sufficient trade accounts receivable to support the U.S. andCanadian Arrangements. As we have in prior periods, we expect we will increase these programs if our revenue levels continue to increase. Under theseprograms, we continue to service the accounts receivable, and receive a service fee from the financial institutions for the U.S. Arrangement. In connection withthis Canadian Arrangement, we issued a guarantee of SYNNEX Canada’s performance under the Canadian Arrangement.

We are also obligated to provide periodic financial statements and investment reports, notices of material litigation and any other information relating toour U.S. Arrangement as requested by the financial institutions.

As is customary in trade accounts receivable securitization arrangements, a credit rating agency’s downgrade of the third party issuer of commercial paperor of a back-up liquidity provider (which provides a source of funding if the commercial paper market cannot be accessed) could result in an adverse change orloss of our financing capacity under these programs if the commercial paper issuer or liquidity back-up provider is not replaced. Loss of such financing capacitycould have a material adverse effect on our financial condition and results of operations.

We have also issued guarantees to certain vendors and lenders of our subsidiaries for the total amount of $148.1 million as of November 30, 2006 and$76.4 million as of November 30, 2005. We are obligated under these guarantees to pay amounts due should our subsidiaries not pay valid amounts owed to theirvendors or lenders. The vendor guarantees are typically less than one-year arrangements, with 30-day cancellation clauses and the lender guarantees are typicallyfor the term of the loan agreement.

On Balance Sheet Arrangements

We have a senior secured revolving line of credit arrangement, or the Revolver, with a group of financial institutions, which is secured by our inventoryand other assets and expires in 2008. The Revolver’s maximum

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Table of Contentscommitment is $45.0 million. Interest on borrowings under the Revolver is based on the financial institution’s prime rate or LIBOR plus 1.75% at our option.The borrowings outstanding under the Revolver at November 30, 2006 was $27.1 million and there were no borrowings outstanding at November 30, 2005.

In February 2007 we amended the Revolver, to increase the commitment up to a maximum of $100.0 million. The agreement was extended to February2011. Interest on the borrowing under the Revolver is based on LIBOR plus 1.50%.

In December 2006, SYNNEX Canada established a revolving line of credit arrangement with a credit limit of C$20.0 million. The revolving credit facilityexpires in January 2010. Interest on this facility is based on the Canadian adjusted prime rate. In connection with this revolving credit facility, we issued aguarantee of SYNNEX Canada’s obligations. SYNNEX Canada had a revolving loan agreement with a financial institution with a credit limit of C$125.0million. Borrowings under this former loan agreement were collateralized by substantially all of SYNNEX Canada’s assets, including inventories and accountsreceivable. This agreement was terminated in fiscal 2005.

In May 2006, SYNNEX Mexico S.A. de C.V. established a secured term loan agreement, or Term Loan, with a group of financial institutions. The interestrate for any unpaid principal amount is the Equilibrium Interbank Interest Rate, plus 2.00% per annum. The final maturity date for repayment of all unpaidprincipal is November 24, 2009. The amount outstanding, under the Term Loan as of November 30, 2006 was $70.4 million. The Term Loan contains customaryfinancial covenants. In connection with this Term Loan, we issued a guarantee of SYNNEX Mexico’s obligations.

We have other lines of credit and revolving facilities with financial institutions, which provide for borrowing capacity aggregating approximately $10.8million and $9.5 million at November 30, 2006 and 2005, respectively. At November 30, 2006 and 2005, we had borrowings of $0.1 million and $1.8 million,respectively, outstanding under these facilities. We also have various term loans, bonds, short-term borrowings and mortgages with financial institutions totalingapproximately $1.2 million and $1.5 million at November 30, 2006 and 2005, respectively. The expiration dates of these facilities range from 2007 to 2013.Future principal payments due under these term loans, bonds and mortgages and payments due under our operating lease arrangements after November 30, 2006are as follows (in thousands):

Payments Due By Period

Total Less than

1 Year 1 - 3

Years 3 - 5

Years > 5

YearsContractual Obligations Principal debt payments $ 98,801 $ 50,834 $ 47,892 $ 75 $ — Interest on debt 10,242 5,271 4,965 6 — Non-cancelable operating leases 73,382 12,758 25,902 21,873 12,849

Total $ 182,425 $ 68,863 $ 78,759 $ 21,954 $ 12,849

We are in compliance with all material covenants or other requirements set forth in our accounts receivable financing programs and credit agreementsdiscussed above.

Recent Accounting Pronouncements

In June 2006, the Financial Accounting Standards Board, or FASB, issued FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes—aninterpretation of FASB Statement No. 109,” or FIN 48. FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financialstatements in accordance with FASB Statement No. 109, “Accounting for Income Taxes,” and prescribes a recognition threshold and measurement process forthe financial statement recognition and measurement of a tax position

45


Table of Contentstaken or expected to be taken in a tax return. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods,disclosure and transition. FIN 48 is effective for the fiscal years beginning after December 15, 2006 and will be applicable to us in the first quarter of fiscal 2008.We are currently evaluating the effect of FIN 48 on our consolidated financial position and results of operations.

In June 2006, Emerging Issues Task Force or EITF issued consensus on Issue No. 06-03, “How Taxes Collected from Customers and Remitted toGovernmental Authorities Should Be Presented in the Income Statement (That Is, Gross versus Net Presentation)” or EITF No. 06-03. We are required to adoptthe provisions of EITF No. 06-03 in the first quarter of fiscal 2007. We do not expect the provisions of EITF No. 06-03 to have a material impact on the ourconsolidated financial position, results of operations or cash flows.

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements,” or SFAS No. 157. SFAS No. 157 provides guidance for using fair valueto measure assets and liabilities. It also responds to investors’ requests for expanded information about the extent to which companies measure assets andliabilities at fair value, the information used to measure fair value, and the effect of fair value measurements on earnings. SFAS No. 157 applies whenever otherstandards require (or permit) assets or liabilities to be measured at fair value, and does not expand the use of fair value in any new circumstances. SFAS No. 157is effective for financial statements issued for fiscal years beginning after November 15, 2007 and is required to be adopted by us in the first quarter of fiscal2008. We are currently evaluating the effect that the adoption of SFAS No. 157 will have on our consolidated financial position and consolidated results ofoperations.

In September 2006, the SEC issued Staff Accounting Bulletin, or SAB, No. 108, “Considering the Effects of Prior Year Misstatements when QuantifyingMisstatements in Current Year Financial Statements,” or SAB No. 108. SAB No. 108 provides guidance on the consideration of the effects of prior yearmisstatements in quantifying current year misstatements for the purpose of a materiality assessment. SAB No. 108 establishes an approach that requiresquantification of financial statement errors based on the effects of each of the company’s balance sheet and statement of operations and the related financialstatement disclosures. Early application of the guidance in SAB 108 is encouraged in any report for an interim period of the first fiscal year ending afterNovember 15, 2006, and we adopted SAB No. 108 in fiscal 2006. The adoption did not have material impact on our consolidated financial condition and resultsof operations.

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Table of Contents

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

Foreign Currency Risk

We are exposed to foreign currency risk in the ordinary course of business. We hedge cash flow exposures for our major countries using a combination offorward contracts. Principal currencies hedged are the British pound, Canadian dollar and Mexican peso. These instruments are generally short-term in nature,with typical maturities of less than one year. We do not hold or issue derivative financial instruments for trading purposes.

The following table presents the hypothetical changes in fair values in our outstanding derivative instruments at November 30, 2006 and 2005 that aresensitive to the changes in foreign currency exchange rates. The modeling technique used measures the change in fair values arising from an instantaneousstrengthening or weakening of the U.S. dollar by 5%, 10% and 15% (in thousands). Although we do not apply hedge accounting to our forward contracts, ourforeign exchange contracts are marked-to-market and any material gains and losses on our hedge contracts resulting from a hypothetical, instantaneous change inthe strength of the U.S. dollar would be significantly offset by mark-to-market gains and losses on the corresponding assets and liabilities being hedged.

Loss on DerivativeInstruments Given a

Weakening of U.S. dollarby X Percent

Gain (Loss)Assuming No

Change inExchange Rate

Gain on DerivativeInstruments Given a

Strengthening of U.S. dollarby X Percent

15% 10% 5% 5% 10% 15%Forward contracts at November 30, 2006 $ (6,369) $ (4,003) $ (1,892) $ 363 $ 1,706 $ 3,250 $ 4,654Forward contracts at November 30, 2005 $ (7,184) $ (4,516) $ (2,136) $ (320) $ 1,926 $ 3,672 $ 5,259

Interest Rate Risk

During the last two years, the majority of our debt obligations have been short-term in nature and the associated interest obligations have floated relative tomajor interest rate benchmarks. While we have not used derivative financial instruments to alter the interest rate characteristics of our investment holdings ordebt instruments in the past, we may do so in the future.

A 150 basis point increase or decrease in rates at November 30, 2006 would not result in any material change in the fair value of our obligation. Thefollowing tables presents the hypothetical interest expense related to our outstanding borrowings for the years ended November 30, 2006 and 2005 that aresensitive to changes in interest rates. The modeling technique used measures the interest expense arising from hypothetical parallel shifts in the respectivecountries’ yield curves, of plus or minus 5%, 10% and 15% for the years ended November 30, 2006 and 2005 (in thousands).

Interest Expense Given anInterest Rate Decrease

by X Percent

Actual InterestExpense

Assuming NoChange in

Interest Rate

Interest Expense Given anInterest Rate Increase

by X Percent 15% 10% 5% 5% 10% 15%

SYNNEX US $3,554 $3,763 $ 3,972 $ 4,181 $ 4,390 $ 4,599 $ 4,808SYNNEX Mexico $5,588 $5,917 $ 6,245 $ 6,574 $ 6,903 $ 7,231 $ 7,560SYNNEX Canada 75 79 84 88 93 97 101SYNNEX UK 5 5 5 5 6 6 6

Total for the year ended November 30, 2006 $9,222 $9,764 $10,306 $ 10,848 $11,392 $11,933 $12,475

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Table of Contents

Interest Expense Given anInterest Rate Decrease

by X Percent

Actual InterestExpense

Assuming NoChange in

Interest Rate

Interest Expense Given anInterest Rate Increase

by X Percent 15% 10% 5% 5% 10% 15%

SYNNEX US $ 686 $ 727 $ 767 $ 807 $ 848 $ 888 $ 928SYNNEX Mexico — — — — — — — SYNNEX Canada 1,340 1,419 1,498 1,577 1,655 1,734 1,813SYNNEX UK 59 63 66 70 73 77 80

Total for the year ended November 30, 2005 $ 2,085 $ 2,209 $ 2,331 $ 2,454 $ 2,576 $ 2,699 $ 2,821

Equity Price Risk

The equity price risk associated with our marketable equity securities at November 30, 2006 and 2005 is not material in relation to our consolidatedfinancial position, results of operations or cash flow. Marketable equity securities include shares of common stock. The investments are classified as eithertrading or available-for-sale securities. Securities classified as trading are recorded at fair market value, based on quoted market prices and unrealized gains andlosses are included in results of operations. Securities classified as available-for-sale are recorded at fair market value, based on quoted market prices andunrealized gains and losses are included in other comprehensive income. Realized gains and losses, which are calculated based on the specific identificationmethod, are recorded in operations as incurred.

During the second quarter of fiscal 2005, we sold approximately 93% of the equity we held in our subsidiary, SYNNEX K.K. to MCJ, in exchange for25,809 shares of MCJ. Our remaining equity interest in SYNNEX K.K. is accounted for under the cost method, as we do not have significant influence overeither MCJ or SYNNEX K.K. In order to reduce the risk of holding the MCJ shares, we entered into forward contracts to sell MCJ shares for fixed prices in April2006. As of November 30, 2005, such contracts covered 100% of the MCJ shares held by us and these contracts had a value of $22,609. As of November 30,2006, there were no outstanding forward contracts.

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Table of Contents

Item 8. Financial Statements and Supplementary Data

INDEX

PageConsolidated Financial Statements of SYNNEX Corporation

Report of Independent Registered Public Accounting Firm 50Consolidated Balance Sheets as of November 30, 2006 and 2005 52Consolidated Statements of Operations for the years ended November 30, 2006, 2005 and 2004 53Consolidated Statements of Stockholders’ Equity and Comprehensive Income for the years ended November 30, 2006, 2005 and 2004 54Consolidated Statements of Cash Flows for the years ended November 30, 2006, 2005 and 2004 55Notes to Condensed Consolidated Financial Statements 56Selected Quarterly Consolidated Financial Data (Unaudited) 89

Financial Statement Schedule Schedule II: Valuation and Qualifying Accounts for the years ended November 30, 2006, 2005 and 2004 90

Financial statement schedules not listed above are either omitted because they are not applicable or the required information is shown in the ConsolidatedFinancial Statements or in the Notes thereto.

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Table of ContentsReport of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholdersof SYNNEX Corporation:

We have completed integrated audits of SYNNEX Corporation’s 2006, 2005 and 2004 consolidated financial statements and of its internal control overfinancial reporting as of November 30, 2006 in accordance with the standards of the Public Company Accounting Oversight Board (United States). Our opinions,based on our audits, are presented below. Consolidated financial statements and financial statement schedule In our opinion, the consolidated financial statements listed in the accompanying index present fairly, in all material respects, the financial position ofSYNNEX Corporation and its subsidiaries at November 30, 2006 and November 30, 2005, and the results of their operations and their cash flows for each of thethree years in the period ended November 30, 2006 in conformity with accounting principles generally accepted in the United States of America. In addition, inour opinion, the financial statement schedule listed in the accompanying index presents fairly, in all material respects, the information set forth therein when readin conjunction with the related consolidated financial statements. These financial statements and financial statement schedule are the responsibility of theCompany’s management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits. Weconducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standardsrequire that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit offinancial statements includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accountingprinciples used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide areasonable basis for our opinion.

As discussed in Note 14 to the consolidated financial statements, effective December 1, 2005 the Company changed its method of accounting forshare-based payments. Internal control over financial reporting Also, in our opinion, management’s assessment, included in Management’s Report on Internal Control Over Financial Reporting appearing underItem 9A, that the Company maintained effective internal control over financial reporting as of November 30, 2006 based on criteria established in InternalControl—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), is fairly stated, in all materialrespects, based on those criteria. Furthermore, in our opinion, the Company maintained, in all material respects, effective internal control over financial reportingas of November 30, 2006, based on criteria established in Internal Control—Integrated Framework issued by the COSO. The Company’s management isresponsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financialreporting. Our responsibility is to express opinions on management’s assessment and on the effectiveness of the Company’s internal control over financialreporting based on our audit. We conducted our audit of internal control over financial reporting in accordance with the standards of the Public CompanyAccounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effectiveinternal control over financial reporting was maintained in all material respects. An audit of internal control over financial reporting includes obtaining anunderstanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness ofinternal control, and performing such other procedures as we consider necessary in the circumstances. We believe that our audit provides a reasonable basis forour opinions.

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Table of ContentsA company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting

and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control overfinancial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect thetransactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation offinancial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only inaccordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliancewith the policies or procedures may deteriorate.

/s/ PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLPSan Jose, CaliforniaFebruary 13, 2007

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CONSOLIDATED BALANCE SHEETS(in thousands, except for par value)

November 30,2006

November 30,2005

ASSETS Current assets:

Cash and cash equivalents $ 27,881 $ 13,636 Short-term investments 13,271 27,985 Accounts receivable, net 363,437 342,322 Receivable from vendors, net 95,080 82,721 Receivable from affiliates 1,855 5,177 Inventories 594,642 494,617 Deferred income taxes 17,994 15,445 Current deferred assets 13,990 — Other current assets 9,887 10,908

Total current assets 1,138,037 992,811

Property and equipment, net 36,698 33,713 Goodwill and intangible assets, net 48,588 43,004 Deferred income taxes 6,716 4,781 Long-term deferred assets 139,111 — Other assets 13,584 8,179

Total assets $ 1,382,734 $ 1,082,488

LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities:

Borrowings under term loans and lines of credit $ 50,834 $ 28,548 Accounts payable 462,480 448,339 Payable to affiliates 89,831 85,871 Accrued liabilities 81,818 68,619 Other current liabilities — 6,085 Current deferred liabilities 29,516 — Income taxes payable 6,693 4,820

Total current liabilities 721,172 642,282

Long-term borrowings 47,967 1,153 Long-term liabilities 10,131 840 Long-term deferred liabilities 90,686 — Deferred income taxes 1,232 988

Total liabilities 871,188 645,263

Commitments and contingencies (Note 19) — — Stockholders’ equity:

Preferred stock, $0.001 par value, 5,000 shares authorized, no shares issued or outstanding — — Common stock, $0.001 par value, 100,000 shares authorized, 30,477 and 28,948 shares issued and outstanding 30 29 Additional paid-in capital 181,188 161,195 Unearned share-based compensation — (1,644)Accumulated other comprehensive income 13,999 12,701 Retained earnings 316,329 264,944

Total stockholders’ equity 511,546 437,225

Total liabilities and stockholders’ equity $ 1,382,734 $ 1,082,488

The accompanying Notes are an integral part of these consolidated financial statements.

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CONSOLIDATED STATEMENTS OF OPERATIONS(in thousands, except for per share amounts)

Fiscal Year Ended November 30,

2006

2005

2004

Revenue $ 6,343,514 $ 5,640,769 $ 5,150,447 Cost of revenue (6,058,155) (5,402,211) (4,935,075) Gross profit 285,359 238,558 215,372 Selling, general and administrative expenses (189,117) (159,621) (137,712) Income from continuing operations before non-operating items, income taxes and minority interest 96,242 78,937 77,660 Interest expense and finance charges, net (16,659) (17,036) (7,959)Other income (expense), net 570 1,559 (900) Income from continuing operations before income taxes and minority interest 80,153 63,460 68,801 Provision for income taxes (28,320) (23,912) (23,091)Minority interest in subsidiary (448) 58 376 Income from continuing operations 51,385 39,606 46,086 Income from discontinued operations, net of tax — 511 479 Gain on sale of discontinued operations, net of tax — 12,708 — Net income $ 51,385 $ 52,825 $ 46,565 Earnings per share:

Basic Income from continuing operations $ 1.73 $ 1.39 $ 1.73 Discontinued operations — 0.46 0.01

Net income per common share—basic $ 1.73 $ 1.85 $ 1.74

Diluted

Income from continuing operations $ 1.61 $ 1.27 $ 1.53 Discontinued operations — 0.43 0.02

Net income per common share—diluted $ 1.61 $ 1.70 $ 1.55

Weighted average common shares outstanding—basic 29,700 28,555 26,691 Weighted average common shares outstanding—diluted 32,014 31,131 30,111


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CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITYAND COMPREHENSIVE INCOME (in thousands)

Common Stock

AdditionalPaid-inCapital

UnearnedShare-basedCom-

pensation

AccumulatedOther

ComprehensiveIncome(Loss)

RetainedEarnings

TotalStockholders’

Equity

ComprehensiveIncome

Shares Amount

Balances, November 30, 2003 22,118 $ 22 $ 80,067 $ (202) $ 7,373 $165,554 $ 252,814 Amortization of unearned share-based compensation — — — 202 — — 202 Tax benefits from exercise of non-qualified employee stock

options — — 4,431 — — — 4,431 Issuance of common stock for cash on exercise of options 1,670 2 9,703 — — — 9,705 Issuance of common stock for cash on initial public offering 3,739 4 48,796 — — — 48,800 Issuance of common stock for employee stock purchase plan 200 — 2,426 — — — 2,426 Change in unrealized gains on available-for-sale securities — — — — (23) — (23) $ (23)Foreign currency translation adjustment — — — — 4,736 — 4,736 4,736 Net income — — — — — 46,565 46,565 46,565

Balances, November 30, 2004 27,727 28 145,423 — 12,086 212,119 369,656 $ 51,278

Amortization of unearned share-based compensation — — — 28 — — 28 Tax benefits from exercise of non-qualified employee stock

options — — 5,090 — — — 5,090 Issuance of common stock for cash on exercise of options 1,066 1 6,969 — — — 6,970 Issuance of restricted stock — — 1,672 (1,672) — — — Issuance of common stock for employee stock purchase plan 155 — 2,041 — — — 2,041 Change in unrealized gains on available-for-sale securities — — — — 135 — 135 $ 135 Foreign currency translation adjustment — — — — 480 — 480 480 Net income — — — — — 52,825 52,825 52,825

Balances, November 30, 2005 28,948 29 161,195 (1,644) 12,701 264,944 437,225 $ 53,440

Share-based compensation — — 3,710 — — — 3,710 Tax benefits from exercise of non-qualified employee stock

options — — 6,932 — — — 6,932 Issuance of common stock on exercise of options and

restricted stock 1,475 1 10,121 — — — 10,122 Issuance of common stock for employee stock purchase plan 54 — 874 — — — 874 Reclassification upon adoption of SFAS No. 123(R) — — (1,644) 1,644 — — — Foreign currency translation adjustment — — — — 1,298 — 1,298 $ 1,298 Net income — — — — — 51,385 51,385 51,385

Balances, November 30, 2006 30,477 $ 30 $181,188 $ — $ 13,999 $316,329 $ 511,546 $ 52,683


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CONSOLIDATED STATEMENTS OF CASH FLOWS(in thousands)

Fiscal Year Ended November 30,

2006

2005

2004

Cash flows from operating activities: Net income $ 51,385 $ 52,825 $ 46,565 Adjustments to reconcile net income to net cash provided by (used in) operating activities:

Depreciation expense 5,462 4,809 4,296 Amortization of intangible assets 4,319 3,941 3,347 Share-based compensation 3,710 28 202 Provision for doubtful accounts 9,081 7,083 5,506 Tax benefits from employee stock plans 6,932 5,090 4,431 Excess tax benefit from share-based compensation (6,016) — — Unrealized (gain) on trading securities (672) (1,333) (247)Realized (gain) loss on investments 2,329 (265) 23 (Gain) loss on disposal of fixed assets 36 947 (12)Stock received from sale of business — (20,406) — Unrealized gain on short-term investments — (3,037) — Minority interest in subsidiary 448 (58) (300)Changes in assets and liabilities, net of acquisition of businesses:

Accounts receivable (14,979) (1,645) (67,356)Receivable from vendors (12,348) (13,903) (14,383)Receivable from affiliates 3,323 (3,209) (1,300)Inventories (92,403) (101,973) (23,953)Other assets (1,656) (3,370) 9,386 Deferred assets (149,268) — — Payable to affiliates 3,966 16,894 13,902 Accounts payable 35,281 51,899 20,177 Accrued liabilities 13,260 12,957 (110)Deferred liabilities 118,871 — —

Net cash provided by (used in) operating activities (18,939) 7,274 174

Cash flows from investing activities: Purchases of short-term investments (15,300) (1,927) (1,243)Proceeds from sale of short-term investments 28,367 5,805 4,527 Minority investment — (3,000) — Acquisition of businesses, net of cash acquired (21,319) (4,769) (44,526)Purchase of property and equipment, net (7,916) (6,406) (6,377)Proceeds from sale of property and equipment, net — 532 — Decrease (increase) in restricted cash (8,141) 2,020 (2,000)

Net cash used in investing activities (24,309) (7,745) (49,619)

Cash flows from financing activities: Cash overdraft (20,271) 22,052 2,906 Proceeds from revolving line of credit — 1,792 42,050 Payments on revolving line of credit (2,283) — (47,050)Proceeds from bank loan 380,704 913,411 763,875 Repayment of bank loan (289,772) (983,040) (768,194)Net proceeds (payments) under other lines of credit (26,980) 30,190 1,166 Proceeds from issuance of bonds — — 1,844 Payments of bonds and other long-term liabilities — (5,917) (737)Excess tax benefit from share-based compensation 6,016 — — Dividend payment to minority shareholder — (1,133) — Net proceeds from issuance of common stock 11,212 9,048 60,961

Net cash provided by (used in) financing activities 58,626 (13,597) 56,821

Effect of exchange rate changes on cash and cash equivalents (1,133) (1,022) (729)

Net increase (decrease) in cash and cash equivalents 14,245 (15,090) 6,647 Cash and cash equivalents at beginning of period 13,636 28,726 22,079

Cash and cash equivalents at end of period $ 27,881 $ 13,636 $ 28,726

Supplemental disclosures of cash flow information: Interest paid $ 5,292 $ 4,155 $ 2,891

Income taxes paid $ 23,217 $ 24,153 $ 22,638

The accompanying Notes are an integral part of these financial statements.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(amounts in thousands, except per share amounts)

NOTE 1—ORGANIZATION AND BASIS OF PRESENTATION:

SYNNEX Corporation (together with its subsidiaries, herein referred to as “SYNNEX” or the “Company”) is an information technology products supplychain services company. The Company’s supply chain outsourcing services include distribution, contract assembly, logistics and demand generation marketing.SYNNEX is headquartered in Fremont, California and has operations in the United States, Canada, China, Mexico and the United Kingdom.

NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Use of estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires managementto make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of thefinancial statements and the reported amounts of revenue and expense during the reporting period. These estimates are evaluated on a regular basis and are basedon historical experience and on various assumptions that the Company believes are reasonable. Actual results could differ from those estimates.

Principles of consolidation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries and majority-owned subsidiaries in whichno substantive participating rights are held by minority stockholders. All significant intercompany accounts and transactions have been eliminated.

The consolidated financial statements include 100% of the assets and liabilities of these majority owned subsidiaries and the ownership interest of minorityinvestors are recorded as minority interest. Investments in 20% through 50% owned affiliated companies are included under the equity method of accountingwhere the Company exercises significant influence over operating and financial affairs of the investee. Investments in less than 20% owned companies orinvestments in 20% through 50% owned companies where the Company does not exercise significant influence over operating and financial affairs of theinvestee are recorded under the cost method.

Cash and cash equivalents

The Company considers all highly liquid debt instruments purchased with an original maturity or remaining maturity at date of purchase of three months orless to be cash equivalents. Cash equivalents consist principally of money market deposit accounts that are stated at cost, which approximates fair value. TheCompany is exposed to credit risk in the event of default by financial institutions to the extent that cash balances with financial institutions are in excess ofamounts that are insured by the Federal Deposit Insurance Corporation.

Restricted cash

The Company has restricted cash in the amount of $8,141 for future payments to one of its vendors relating to a long-term project at the Company’sMexico operation as of November 30, 2006. The Company did not have a restricted cash balance at November 30, 2005.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(continued)(amounts in thousands, except for per share amounts)

Investments

The Company classifies its investments in marketable securities as trading and available-for-sale. All securities related to its deferred compensation planand the Company’s former investment in MCJ Company Ltd. (“MCJ”) are classified as trading and are recorded at fair value, based on quoted market prices, andunrealized gains and losses are included in “Other income (expense), net” in the Company’s financial statements. All other securities are classified asavailable-for-sale and are recorded at fair market value, based on quoted market prices, and unrealized gains and losses are included in accumulated othercomprehensive income, a component of stockholders’ equity. Realized gains and losses, which are calculated based on the specific identification method, anddeclines in value judged to be other than temporary, if any, are recorded in operations as incurred.

To determine whether a decline in value is other than temporary, the Company evaluates several factors, including current economic environment, marketconditions, operational and financial performance of the investee, and other specific factors relating to the business underlying the investment, including businessoutlook of the investee, future trends in the investee’s industry and the Company’s intent to carry the investment for a sufficient period of time for any recoveryin fair value. If a decline in value is deemed as other than temporary, the Company records reductions in carrying values to estimated fair values, which aredetermined based on quoted market prices if available or on one or more of the valuation methods such as pricing models using historical and projected financialinformation, liquidation values, and values of other comparable public companies.

Long-term investments include instruments that the Company has the ability and intent to hold for more than twelve months. The Company classifies itslong-term investments as available-for-sale if a readily determinable fair value is available.

The Company has investments in equity instruments of privately held companies. These investments are included in other assets and are accounted forunder the cost method, as the Company does not have the ability to exercise significant influence over their operations. The Company monitors its investmentsfor impairment by considering current factors, including economic environment, market conditions, operational performance and other specific factors relating tothe business underlying the investment, and records reductions in carrying values when necessary.

Allowance for doubtful accounts

The allowance for doubtful accounts is estimated to cover the losses resulting from the inability of customers to make payments for outstanding balances.In estimating the required allowance, the Company takes into consideration the overall quality and aging of the receivables, credit evaluations of customers’financial condition and existence of credit insurance. The Company also evaluates the collectability of accounts receivable based on specific customercircumstances, current economic trends, historical experience with collections and any value and adequacy of collateral received from customers.

Inventories

Inventories are stated at the lower of cost or market. Cost is computed based on the weighted-average method. Inventories consist of finished goodspurchased from various manufacturers for distribution resale and components used for contract assembly. The Company records estimated inventory reserves forquantities in excess of demand, cost in excess of market value and product obsolescence.

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Property and equipment

Property and equipment are stated at cost, less accumulated depreciation. Depreciation and amortization are computed using the straight-line method basedupon the shorter of the estimated useful lives of the assets, or the lease term of the respective assets, if applicable. Maintenance and repairs are charged toexpense as incurred, and improvements are capitalized. When assets are retired or otherwise disposed of, the cost and accumulated depreciation and amortizationare removed from the accounts and any resulting gain or loss is reflected in operations in the period realized. The depreciation and amortization periods forproperty and equipment categories are as follows:

Equipment and Furniture 3-7 yearsSoftware 3-7 yearsLeasehold Improvements 3-10 yearsBuildings 39 years

Goodwill

The Company has adopted Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets” (“SFAS No. 142”), whichrevised the standards of accounting for goodwill, by replacing the amortization of these assets with the requirement that they are reviewed annually forimpairment, or more frequently if impairment indicators exist. The values assigned to goodwill and indefinite-lived intangible assets are usually based onestimates and judgments regarding expectations for the success and life cycle of products and technologies acquired. No goodwill impairment was recorded forthe periods presented.

Intangible assets

Intangible assets consist of vendor lists, customer lists, trade names and land rights, which are amortized on a straight-line basis over their estimated lives.Intangible assets are amortized as follows:

Vendor lists 4-10 yearsCustomer lists 4-8 yearsTrademarks 4-10 yearsOther intangible assets 3-5 years

Software costs

The Company develops software for internal use only. The payroll and other costs related to the development of software have been expensed as incurred.Excluding the costs of support, maintenance and training functions that are not subject to capitalization, the costs of the software department were not materialfor the periods presented. If the internal software development costs become material, the Company will capitalize the costs based on the defined criteria forcapitalization in accordance with Statement of Position 98-1, “Accounting for the Costs of Computer Software Developed or Obtained for Internal Use.”

Impairment of long-lived assets

The Company reviews the recoverability of its long-lived assets, such as property and equipment, when events or changes in circumstances occur thatindicate the carrying value of the asset or asset group may not be recoverable. The assessment of possible impairment is based on the Company’s ability torecover the carrying

58




value of the asset or asset group from the expected future pre-tax cash flows, undiscounted and without interest charges, of the related operations. If these cashflows are less than the carrying value of such assets, an impairment loss is recognized for the difference between estimated fair value and carrying value. Themeasurement of impairment requires management to estimate future cash flows and the fair value of long-lived assets.

Long-term deferred assets and long-term deferred liabilities

The Company’s Mexico operation has entered into a multi-year contract to sell equipment to an independent third party contractor that provides equipmentand services to the Mexican government. The payments by the Mexican government are generally due on a monthly basis and are contingent upon the contractorcontinuing to provide services to the Mexican government. The Company recognizes product revenue and cost of revenue on a straight-line basis over the term ofthe contract. All long-term accounts receivable and deferred cost of revenue associated with this contract are included in the consolidated balance sheet under thecaption “Long-term deferred assets.” According to contract terms, the Company will also hold back a certain amount of accounts payable for a certain period oftime. All long-term accounts payable from contractual obligations associated with this contract and long-term deferred revenues are included in the consolidatedbalance sheet under the caption “Long-term deferred liabilities.”

Concentration of credit risk

Financial instruments that potentially subject the Company to significant concentration of credit risk consist principally of cash and cash equivalents andaccounts receivable. The Company’s cash and cash equivalents are maintained with high quality institutions, the compositions and maturities of which areregularly monitored by management. Through November 30, 2006, the Company had not experienced any losses on such deposits.

Accounts receivable include amounts due from customers primarily in the technology industry. The Company performs ongoing credit evaluations of itscustomers’ financial condition and limits the amount of credit extended when deemed necessary, but generally requires no collateral. The Company alsomaintains allowances for potential credit losses. In estimating the required allowances, the Company takes into consideration the overall quality and aging of thereceivable portfolio, the existence of a limited amount of credit insurance and specifically identified customer risks. Through November 30, 2006, such losseshave been within management’s expectations.

In fiscal 2006 and fiscal 2005, sales to no single customer exceeded 10% or more of the Company’s total revenue. In fiscal 2004, sales to one customeraccounted for 10% of the Company’s total revenue. At November 30, 2006, no single customer comprised more than 10% of the total consolidated accountsreceivable balance. At November 30, 2005, one customer accounted for approximately 18% of the total consolidated accounts receivable balance.

Revenue recognition

The Company recognizes revenue generally as products are shipped, if a purchase order exists, the sale price is fixed or determinable, collection ofresulting receivables is reasonably assured, risk of loss and title have transferred and product returns are reasonably estimable. Shipping terms are typicallyF.O.B. the Company’s warehouse. Provisions for sales returns are estimated based on historical data and are recorded concurrently with the recognition ofrevenue. These provisions are reviewed and adjusted periodically by the Company. Revenue is reduced for early payment discounts and volume incentive rebatesoffered to customers.

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The Company purchases licensed software products from original equipment manufacturer (“OEM”) vendors and distributes them to customers. Revenue

is recognized upon shipment of software products when a purchase order exists, the sales price is fixed or determinable and collection is determined to beprobable. Subsequent to the sale of software products, the Company generally has no obligation to provide any modification, customization, upgrades,enhancements, or any other post-contract customer support.

The Company’s Mexico operation has entered into a multi-year contract to sell equipment to a contractor that provides equipment and services to theMexican government. Under the agreement, the Mexican government makes payments into the Company’s account. The payments on this contract by theMexican government are generally due on a monthly basis and are contingent upon the contractor continuing to provide services to the government. TheCompany recognizes product revenue and cost of revenue on a straight-line basis over the term of the contract.

Original Equipment Manufacturer supplier programs

Funds received from OEM suppliers for inventory volume promotion programs, price protection and product rebates are recorded as adjustments to cost ofrevenue. The Company tracks vendor promotional programs for volume discounts on a program-by-program basis. The Company monitors the balances ofreceivables from vendors on a quarterly basis and adjusts the balance due for differences between expected and actual volume sales. Vendor receivables aregenerally collected through reductions authorized by the vendor, to accounts payable. For product rebates, the Company records a reduction of cost of revenue.Funds received for specific marketing and infrastructure reimbursements, net of direct costs, are recorded as adjustments to selling, general and administrativeexpenses, and any excess reimbursement amount is recorded as an adjustment to cost of revenue.

Royalties

The Company purchases licensed software products from OEM vendors, which it subsequently distributes to resellers. Royalties to OEM vendors areaccrued for and recorded in cost of revenue when software products are shipped and revenue is recognized.

Warranties

The Company’s OEM suppliers generally warrant the products distributed by the Company and allow returns of defective products. The Companygenerally does not independently warrant the products it distributes; however, the Company does warrant the following: (1) its services with regard to productsthat it assembles for its customers, and (2) products that it builds to order from components purchased from other sources. To date neither warranty expense, northe accrual for warranty costs has been material to the Company’s consolidated financial statements.

Advertising

Costs related to advertising and promotion expenditures of products are charged to selling, general and administrative expense as incurred. To date, costsrelated to advertising and promotion expenditures have not been material.

Income taxes

The asset and liability method is used in accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the expectedtax consequences of temporary differences between the tax basis of

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assets and liabilities and their reported amounts in the financial statements using enacted tax rates and laws that will be in effect when the difference is expectedto reverse. Valuation allowances are provided against assets that are not likely to be realized.

Fair value of financial instruments

For certain of the Company’s financial instruments, including cash, short-term investments, forward contracts, accounts receivable and accounts payable,the carrying amounts approximate fair value due to the short maturities. The amount shown for borrowings also approximates fair value since current interestrates offered to the Company for debt of similar maturities are approximately the same. The estimated fair values of foreign exchange forward contracts are basedon market prices or current rates offered for contracts with similar terms and maturities. The ultimate amounts paid or received under these foreign exchangecontracts, however, depend on future exchange rates. The gains or losses are recognized as “Other income (expense), net” based on changes in the fair value ofthe contracts, which generally occur as a result of changes in foreign currency exchange rates.

Foreign currency translations

The functional currencies of the Company’s foreign subsidiaries are their respective local currencies, with the exception of the Company’s UK operation,for which the functional currency is the U.S. dollar. The financial statements of the foreign subsidiaries, other than the UK operations, are translated into U.S.dollars for consolidation as follows: assets and liabilities at the exchange rate as of the balance sheet date, stockholders’ equity at the historical rates of exchange,and income and expense amounts at the average exchange rate for the quarter. Translation adjustments resulting from the translation of the subsidiaries’ accountsare included in “Accumulated other comprehensive income.” Gains and losses resulting from foreign currency transactions are included within “Other income(expense), net.” Such amounts are not significant to any of the periods presented.

Comprehensive income

Comprehensive income is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstancesfrom non-owner sources. The primary components of comprehensive income for the Company include net income, foreign currency translation adjustmentsarising from the consolidation of the Company’s foreign subsidiaries and unrealized gains and losses on the Company’s available-for-sale securities.

Share-based compensation

Effective December 1, 2005, the Company began accounting for share-based compensation under the provision of Statement of Financial AccountingStandards (“SFAS”) No. 123(R), “Share-Based Payment,” which requires the recognition of the fair value of share-based compensation. Under the fair valuerecognition provisions for SFAS No. 123(R), share-based compensation is estimated at the grant date based on the fair value of the awards expected to vest andrecognized as expense ratably over the requisite service period of the award. The Company has used the Black-Scholes valuation model to estimate fair value ofshare-based awards, which requires various assumptions including estimating stock price volatility, forfeiture rates and expected life.

Net income per common share

Net income per common share-basic is computed by dividing the net income for the period by the weighted-average number of shares of common stockoutstanding during the period. Net income per common share-diluted reflects the potential dilution that could occur if stock options were exercised. Thecalculations of net income per common share are presented in Note 15.

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SFAS No. 128, “Earnings Per Share” requires that employee stock options, nonvested shares and similar equity instruments granted by the Company be

treated as potential common shares outstanding in computing diluted earnings per share. Diluted shares outstanding include the dilutive effect of in-the-moneyoptions. Under the treasury stock method, the amount the employee must pay for exercising stock options, the amount of compensation cost for future servicesthat the Company has not yet recognized and the amount of tax benefits that would be recorded in additional paid-in-capital when the award becomes deductibleare assumed to be used to repurchase shares.

Reclassifications

Certain reclassifications, in addition to the reclassifications relating to discontinued operations discussed in Note 21, have been made to the November 30,2004 financial statements to conform to the November 30, 2005 financial statements. These reclassifications did not change previously reported total assets,liabilities, and stockholders’ equity or net income.

Recent accounting pronouncements

In June 2006, the Financial Accounting Standards Board or FASB issued FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes—aninterpretation of FASB Statement No. 109” or FIN 48. FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financialstatements in accordance with FASB Statement No. 109, “Accounting for Income Taxes,” and prescribes a recognition threshold and measurement process forthe financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance onderecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. FIN 48 is effective for the fiscal years beginning afterDecember 15, 2006 and will be applicable to the Company in the first quarter of fiscal 2008. The Company is currently evaluating the effect of FIN 48 on itsconsolidated financial position and results of operations.

In June 2006, Emerging Issues Task Force or EITF issued consensus on Issue No. 06-03, “How Taxes Collected from Customers and Remitted toGovernmental Authorities Should Be Presented in the Income Statement (That Is, Gross versus Net Presentation)” or EITF No. 06-03. The Company is requiredto adopt the provisions of EITF No. 06-03 in the first quarter of fiscal 2007. The Company does not expect the provisions of EITF No. 06-03 to have a materialimpact on the Company’s consolidated financial position, results of operations or cash flows.

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” or SFAS No.157. SFAS No. 157 provides guidance for using fair valueto measure assets and liabilities. It also responds to investors’ requests for expanded information about the extent to which companies measure assets andliabilities at fair value, the information used to measure fair value, and the effect of fair value measurements on earnings. SFAS No. 157 applies whenever otherstandards require (or permit) assets or liabilities to be measured at fair value, and does not expand the use of fair value in any new circumstances. SFAS No. 157is effective for financial statements issued for fiscal years beginning after November 15, 2007 and is required to be adopted by the Company in the first quarter offiscal 2008. The Company is currently evaluating the effect that the adoption of SFAS No. 157 will have on its consolidated results of operations and financialcondition.

In September 2006, the SEC issued Staff Accounting Bulletin No. 108, “Considering the Effects of Prior Year Misstatements when QuantifyingMisstatements in Current Year Financial Statements” or SAB No. 108. SAB No. 108 provides guidance on the consideration of the effects of prior yearmisstatements in quantifying current year misstatements for the purpose of a materiality assessment. SAB No. 108 establishes an approach that

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requires quantification of financial statement errors based on the effects of each of the Company’s balance sheet and statement of operations and the relatedfinancial statement disclosures. Early application of the guidance in SAB No. 108 is encouraged in any report for an interim period of the first fiscal year endingafter November 15, 2006. The Company adopted SAB No. 108 in fiscal 2006. The adoption did not have a material impact on the Company’s consolidatedfinancial condition and results of operations.

NOTE 3—BALANCE SHEET COMPONENTS:

November 30, 2006 2005 Short-term investments Trading

MCJ $ — $ 25,346 Securities, deferred compensation 13,093 2,379 Money market, deferred compensation 60 149

13,153 27,874

Available-for-Sale Securities 114 108 Money market 4 3

118 111

$ 13,271 $ 27,985

Accounts receivable, net Trade accounts receivables $394,986 $368,407 Less: Allowance for doubtful accounts (14,433) (12,688)Less: Allowance for sales returns (17,116) (13,397)

$363,437 $342,322

Receivable from vendors, net Receivables from vendors $ 97,694 $ 85,447 Less: Allowance for doubtful accounts (2,614) (2,726)

$ 95,080 $ 82,721

Inventories Components $ 66,775 $ 47,114 Finished goods 527,867 447,503

$594,642 $494,617

Property and equipment, net Equipment and computers $ 42,790 $ 40,203 Furniture and fixtures 7,377 7,210 Vehicles 450 344 Buildings and land 34,300 31,960

84,917 79,717 Less: Accumulated depreciation (48,219) (46,004)

$ 36,698 $ 33,713

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Goodwill and Intangible Assets:

November 30, 2006 2005

Gross

Amount AccumulatedAmortization

NetAmount

GrossAmount

AccumulatedAmortization

NetAmount

Goodwill $ 30,144 $ — $ 30,144 $ 24,840 $ — $ 24,840Vendor lists 22,062 (16,307) 5,755 22,062 (14,155) 7,907Customer lists 15,141 (4,738) 10,403 12,715 (3,130) 9,585Other intangible assets 3,259 (973) 2,286 1,086 (414) 672

$ 70,606 $ (22,018) $ 48,588 $ 60,703 $ (17,699) $ 43,004

Amortization expense was $4,319, $3,941 and $3,347 for the years ended November 30, 2006, 2005 and 2004, respectively. Goodwill and intangibleassets increased as of November 30, 2006 compared to November 30, 2005 due to the acquisitions of Azerty, Telpar and Concentrix. Estimated futureamortization expense is as follows:

Years ending November 30, 2007 $ 5,0992008 4,7992009 4,6872010 2,3192011 1,401thereafter 139

$ 18,444

November 30,

2006 2005Accrued liabilities: Payroll related accruals $ 19,184 $ 15,149Deferred compensation liability 18,425 16,770Royalty and warranty accruals 6,796 3,518Other accrued liabilities 37,413 33,182

$ 81,818 $ 68,619

NOTE 4—ACQUISITIONS:

Acquisitions during the year ended November 30, 2006

On April 28, 2006, the Company acquired the assets of the Telpar distribution segment of Peak Technologies, Inc., or Telpar, for approximately $3,309.Telpar sold auto-ID, data capture and point of sales products and services. The Telpar business has been fully integrated within the Company’s distributionsegment. The aggregate purchase price was allocated to tangible and identifiable intangible assets acquired and liabilities assumed based on estimates of fairvalue. The excess of the purchase price over the fair value of identifiable net assets acquired of $429 has been recognized as intangible assets.

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On June 9, 2006, the Company acquired substantially all of the assets of the Azerty United Canada ink and toner distribution business from United

Stationers Supply Company, or Azerty, for approximately $14,330. The Azerty acquisition strengthens the Company’s position in printer supplies distribution inCanada. The Azerty business has been fully integrated within the Company’s distribution segment. The aggregate purchase price was allocated to tangible andidentifiable intangible assets acquired and liabilities assumed based on estimates of fair value. The excess of the purchase price over the fair value of identifiablenet assets acquired of $1,286 has been recognized as goodwill and $114 has been recognized as intangible assets.

On September 14, 2006, the Company’s wholly owned subsidiary, BSA Sales, LLC, or BSA Sales, acquired all of the outstanding capital stock ofConcentrix Corporation or Concentrix based in Rochester, New York for approximately $8,000. Concentrix is an integrated marketing company that providescall center, database analysis, and print on demand services to customers in the transportation, publishing, banking, healthcare and high technology industries.Concentrix’s business strategy complements and expands the Company’s resources and capabilities of the Company’s demand generation business. Theacquisition agreement allowed for an earnout payment of $2,500 to be paid if certain milestones were met in the first 120 days after the acquisition. The definedmilestones were not achieved and no earnout payment will be paid on this transaction. The Company has accounted for the acquisition of capital stock as apurchase and, accordingly the excess of the purchase price over the fair value of identifiable net assets acquired of $4,183 has been recognized as goodwill and$3,800 has been recognized as intangible assets. The valuation of the identifiable intangible assets acquired was based on management’s estimates using avaluation report prepared by an independent third party. The Concentrix and BSA Sales operations have been merged under the name of Concentrix Corporationeffective December 1, 2006.

The above acquisitions, individually and in the aggregate, did not meet the conditions of a material business combination as defined by the Securities andExchange Commission. As such, they were not subject to the disclosure requirements of SFAS No. 141. However, the Company believes that disclosuresprovided herein are useful to the understanding of the goodwill and intangible assets activities through November 30, 2006.

There were no acquisitions during the year ended November 30, 2005.

Acquisitions during the year ended November 30, 2004

During the fourth quarter of fiscal 2004, the Company acquired all of the outstanding common stock of EMJ Data Systems Limited or EMJ, a publiclytraded Canadian company on the Toronto Stock Exchange, for cash of approximately $45,056. EMJ is a distributor of computer products and peripherals. Theresults of operations of EMJ are included in the Company’s consolidated financial statements from the date of acquisition.

The purchase consideration has been allocated as follows, based on the estimated fair value of asset acquired and liabilities assumed:

Fair

ValuePurchase Consideration Cash $44,695Acquisition costs 361

$45,056

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FairValue

AmortizationPeriod

Allocation Accounts receivable $ 36,847 — Goodwill 19,734 — Inventories 17,519 — Fixed assets 6,099 — Other assets 4,393 — Identifiable intangible assets 8,387 3 - 10 yearsBorrowings (11,061) — Accounts payable and accruals (13,239) — Long-term liabilities (16,074) — Other liabilities (7,549) — $ 45,056

The goodwill was assigned to the distribution segment and is not expected to be deductible for tax purposes.

The following unaudited pro forma financial information combines the consolidated results of operations as if the acquisition of EMJ had occurred as ofthe beginning of the periods presented. Pro forma adjustments include only the effects of events directly attributed to transactions that are factually supportableand expected to have a continuing impact. The pro forma results contained in the table below include pro forma adjustments for amortization of acquiredintangibles and additional finance charges related to the financing of the purchase consideration of the acquisitions.


2004

2003

(unaudited)Revenue $ 5,365,941 $ 4,099,142Net income $ 46,312 $ 31,183Net income per common share—basic $ 1.74 $ 1.41Net income per common share—diluted $ 1.54 $ 1.27

The pro forma financial information is not necessarily indicative of the operating results that would have occurred had the acquisition been consummated

as of the beginning of periods presented, nor are they necessarily indicative of future operating results.

On March 1, 2004, the Company acquired all of the common stock of BSA Sales, Inc. or BSA, a privately held company, for approximately $2,100. Anadditional $1,900 was earned by BSA’s selling stockholders by meeting certain performance objectives through March 1, 2005. The purchase price allocationand pro forma financial information for the acquisition of BSA are not presented herein as the impact to the Company’s financial statements is not significant.

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NOTE 5—INVESTMENTS:

The carrying amount of the Company’s investments is shown in the table below:

November 30, 2006 2005

Original

Cost

Unrealized(Losses)/

Gains Fair

Value Original

Cost

Unrealized(Losses)/

Gains Fair

ValueShort-Term:

Trading $ 12,729 $ 424 $ 13,153 $ 24,590 $ 3,284 $ 27,874Available-for-sale 757 (639) 118 757 (646) 111

$ 13,486 $ (215) $ 13,271 $ 25,347 $ 2,638 $ 27,985

Short-term trading securities consist of equity securities relating to the Company’s deferred compensation plan (See Note 11). In addition, for the fiscalyear ended November 30, 2005, short-term trading securities include an investment in MCJ shares in the amount of $25,346 that was disposed in fiscal 2006.Short-term available-for-sale securities primarily consist of investments in other companies’ equity securities. As of November 30, 2006, all gross unrealizedlosses on short-term available-for-sale securities had been in a loss position for more than 12 months.

Total realized losses on investments were $2,329 and $23 for the fiscal year ended November 30, 2006 and 2004, respectively. Total realized gains oninvestments were $265 for the fiscal year ended November 30, 2005.

NOTE 6—ACCOUNTS RECEIVABLE ARRANGEMENTS:

The Company has established a six-year revolving securitization arrangement (the “U.S. Arrangement”) through a consolidated wholly owned subsidiaryto sell up to $275,000 of U.S. trade accounts receivable (the “U.S. Receivables”) to two financial institutions. The U.S. Arrangement expires in August 2008. Inconnection with the U.S. Arrangement, the Company sells its U.S. Receivables to its wholly owned subsidiary on a continuing basis, which will in turn sell anundivided interest in the U.S. Receivables to the financial institutions without recourse, at market value, calculated as the gross receivable amount, less a facilityfee. The fee is based on the prevailing dealer commercial paper interest rate plus 0.75%. A separate fee based on the unused portion of the facility, at 0.30% perannum, is also charged by the financial institutions.

The Company has also established a one-year revolving accounts receivable arrangement (the “Canadian Arrangement”) through SYNNEX CanadaLimited, or SYNNEX Canada, to sell up to C$100,000 of U.S. and Canadian trade receivables (the “Canadian Receivables”) to a financial institution. TheCompany renewed the Canadian Arrangement for an additional year until November 2007 with similar terms and conditions. In connection with the CanadianArrangement, SYNNEX Canada sells its Canadian Receivables to the financial institution on a fully serviced basis. The effective discount rate of the CanadianArrangement is the prevailing Bankers’ Acceptance rate of return or prime rate in Canada plus 0.45% per annum. To the extent that cash was received inexchange, the amount of U.S. and Canadian Receivables sold to the financial institutions has been recorded as a true sale, in accordance with SFAS No. 140,“Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities.”

The amount of U.S. and Canadian Receivables sold to the financial institutions and not yet collected from customers at November 30, 2006 and 2005 was$ 343,838 and $274,751, respectively. The wholly owned

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subsidiary is consolidated in the financial statements of the Company, and the remaining balance of unsold U.S. and Canadian Receivables at November 30, 2006and 2005 of $345,676 and $253,488, respectively, are included within “Accounts receivable, net.”

The gross proceeds resulting from the sale of the U.S. and Canadian Receivables totaled approximately $1,013,987 and $1,054,382 in 2006 and 2005,respectively. The gross payments to the financial institutions under the U.S. and Canadian Arrangements totaled approximately $972,851 and $949,540 in 2006and 2005, respectively, which arose from the subsequent collection of U.S. and Canadian Receivables. The proceeds (net of the facility fee) are reflected in theconsolidated statement of cash flows in operating activities within changes in accounts receivable.

The Company continues to collect the U.S. and Canadian Receivables on behalf of the financial institutions, for which it receives a service fee from thefinancial institutions for the U.S. Receivables, and remits collections to the financial institutions. The Company estimates that the service fee it receives for theU.S. Receivables approximates the market rate for such services, and as a result, has recognized no servicing assets or liabilities in its consolidated balance sheet.Facility fees (net of service fees) charged by the financial institutions totaled $16,602, $6,209 and $3,431 in 2006, 2005 and 2004, respectively, and wererecorded within “Interest expense and finance charges, net.”

In February 2007, the Company amended its U.S. Arrangement to increase the securitization program to $350,000 of U.S. Receivables, with a group offinancial institutions. The Company extended the maturity date of the U.S. Arrangement from August 2008 to February 2011. The Company’s effectiveborrowing cost under the U.S. Arrangement, as amended, is the prevailing dealer commercial paper rate or LIBOR plus 0.55% per annum. The U.S.Arrangement, as amended, contains similar financial covenants as the former program except that the fixed charge ratio was reduced to 1.60 to 1.00.

Under the U.S. and Canadian Arrangements the Company is required to maintain certain financial covenants to maintain its eligibility to sell additionalU.S. and Canadian Receivables under the facilities. These covenants include minimum net worth, minimum fixed charge ratio, and net worth percentage. TheCompany was in compliance with all material covenants at November 30, 2006 and 2005.

As is customary in trade accounts receivable securitization arrangements, a credit rating agency’s downgrade of the third party issuer of commercial paperor of a back-up liquidity provider (which provides a source of funding if the commercial paper market cannot be accessed) could result in an adverse change orloss of our financing capacity under these programs if the commercial paper issuer or liquidity back-up provider is not replaced. Loss of such financing capacitycould have a material adverse effect on the Company’s financial condition and results of operations.

The Company has also entered into financing agreements with various financial institutions (“Flooring Companies”) to allow certain customers of theCompany to finance their purchases directly with the Flooring Companies. Under these agreements, the Flooring Companies pay to the Company the sellingprice of products sold to various customers, less a discount, within approximately 15 to 30 days from the date of sale. The Company is contingently liable torepurchase inventory sold under flooring agreements in the event of any default by its customers under the agreement and such inventory being repossessed bythe Flooring Companies. See Note 19, “Commitments and Contingencies” for additional information. Approximately $954,814, $1,161,396 and $1,166,417 ofthe Company’s net sales were financed under these programs in 2006, 2005 and 2004, respectively. Approximately $44,394 and $40,914 of accounts receivableat November 30, 2006 and 2005,

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respectively, were subject to flooring agreements. Flooring fees were approximately $5,507, $5,524 and $2,960 in 2006, 2005 and 2004, respectively, and areincluded within “Interest expense and finance charges, net.”

NOTE 7—BORROWINGS:

Borrowings consist of the following:

November 30, 2006 2005 SYNNEX US line of credit $ 27,070 $ — SYNNEX Canada revolving accounts receivable securitization program — 26,391 SYNNEX Canada term loan 1,178 1,518 SYNNEX Mexico term loan 70,436 — SYNNEX UK line of credit 81 1,792 Other 36 —

98,801 29,701 Less: Current portion (50,834) (28,548)

Non-current portion $ 47,967 $ 1,153

SYNNEX US senior secured revolving line of credit

The Company has a senior secured revolving line of credit arrangement (the “Revolver”) with a group of financial institutions, which is secured by theCompany’s inventory and other assets. The Revolver’s maximum commitment is $45,000. Interest on borrowings under the Revolver is based on the financialinstitution’s prime rate or London Inter Bank Offered Rate (“LIBOR.”) plus 1.75% at the Company’s option. A fee of 0.30% per annum is payable with respectto the unused portion of the commitment. The Company is required to comply with minimum net worth and minimum fixed charge ratio covenants. TheCompany was in compliance with all material covenants at November 30, 2006 and 2005.

In February 2007, the Company amended the Revolver to increase the Company’s borrowing up to a maximum of $100,000. The agreement was alsoextended to February 2011. Interest on the borrowing under the Revolver is based on LIBOR plus 1.50%.

SYNNEX Canada revolving accounts receivable securitization program

SYNNEX Canada has a one-year revolving accounts receivable securitization program, which provides for the sale of up to C$100,000 of U.S. andCanadian trade accounts receivable to a financial institution. All assets sold were qualified for off balance sheet treatment as of November 30, 2006. The balanceoutstanding at November 30, 2005 for assets sold that did not qualify for off balance sheet treatment was $26,391.

SYNNEX Canada revolving loan

SYNNEX Canada had a revolving loan agreement with a financial institution. Borrowings under the loan agreement were collateralized by substantially allof SYNNEX Canada’s assets, including inventories and accounts receivable. Borrowings bore interest at the prime rate of a Canadian bank designated by thefinancial institution or at the financial institution’s Bankers’ Acceptance rate plus 1.2% for Canadian dollar denominated loans and at the prime rate of a U.S.bank designated by the financial institution or at LIBOR plus 1.2% for U.S. dollar denominated loans. This loan was terminated in fiscal 2005.

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In December 2006, SYNNEX Canada entered into a revolving credit facility with a credit limit of C$20,000. The revolving credit facility expires in

January 2010. Interest on this facility is based on the Canadian adjusted prime rate.

SYNNEX Canada term loan

Upon acquisition of EMJ (see Note 4), the Company assumed a term loan with a Canadian bank. This Canadian dollar denominated loan bears interest atthe bank’s floating rate (7.5% at November 30, 2006) and is payable in monthly installments through January 2011.

SYNNEX Mexico secured term loan

In May 2006, SYNNEX Mexico signed a secured term loan agreement, or Term Loan. The interest rate for any unpaid principal amount is the EquilibriumInterbank Interest Rate, plus 2.00% per annum. The final maturity date for repayment of any unpaid principal is November 24, 2009. The amount outstanding,under the Term Loan as of November 30, 2006 was $70,436.

SYNNEX UK term loans

SYNNEX UK has a British pound denominated loan agreement with a financial institution. The total credit available under this facility was $1,966 as ofNovember 30, 2006, and there were no borrowings outstanding at November 30, 2006 and 2005. This facility bears interest at LIBOR plus 1.5%.

SYNNEX UK has a second British pound denominated loan agreement with a financial institution. The total credit available under this facility was $8,846as of November 30, 2006. The balance outstanding at November 30, 2006 and 2005 was $81 and $1,792, respectively. The facility bears interest at the financialinstitution’s prime rate plus 1.5%.

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Future principal payments

Future principal payments under the above loans as of November 30, 2006 are as follows:

Fiscal Years Ending November 30, 2007 $50,8342008 23,2652009 24,6272010 752011 and thereafter —

$98,801

Guarantees

The Company has issued guarantees to certain vendors and lenders of its subsidiaries’ for trade credit lines and loans, totaling $148,117 and $76,395 as ofNovember 30, 2006 and 2005. The Company is obligated under these guarantees to pay amounts due should its subsidiaries not pay valid amounts owed to theirvendors or lenders. The vendor guarantees are typically less than one-year arrangements, with 30-day cancellation clauses and the lender guarantees are typicallyfor the term of the loan agreement.

NOTE 8—OTHER LIABILITIES:

Other liabilities consisted of the following:

November 30, 2006 2005 SYNNEX US Long-term Liabilities $ 8,195 $ — SYNNEX Canada Debentures — 5,009 SYNNEX Canada Preference Shares — 1,076 SYNNEX Canada Promissory Note 407 409 Other liabilities 1,529 431

10,131 6,925 Less: Current portion — (6,085)

Non-current portion $10,131 $ 840

Debentures

The Company assumed subordinated debentures in the amount of $10,266 as part of its acquisition of EMJ (see Note 4). These debentures had a three-yearterm, were not collateralized, paid interest at a rate of 12% and were paid off on their maturity date in September 2006.

Preference Shares

The Company assumed preference shares in the amount of $7,068 as part of its acquisition of EMJ (see Note 4). The preference shares had an annualcumulative dividend at a rate of 8% and were paid off on their due date in September 2006.

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Promissory Note The Company assumed a non-interest bearing promissory note in the amount of $1,771 as part of its acquisition of EMJ (see Note 4). Interest is imputedon this Canadian dollar denominated debt at a rate of 5% per annum and it is payable in October 2037. NOTE 9—DERIVATIVE INSTRUMENTS: In the normal course of business, the Company enters into currency forward contracts to protect itself from the risk that the eventual cash outflows orinflows resulting from the purchase or sale of inventory will be adversely affected by exchange rate fluctuations. The Company does not apply hedge accountingto these currency forward contracts and has not designated any of them as hedging instruments. As of November 30, 2006, 2005 and 2004, the Company hadunrealized losses (gains) of ($363), $320, and $662, respectively, as a result of fair value changes on its outstanding currency forward contracts. These unrealizedlosses and gains were charged (credited) to “Other income (expense), net.” The Company’s policy is to not allow the use of derivatives for trading or speculativepurposes.

During the second quarter of fiscal 2005, the Company sold approximately 93% of the equity it held in its subsidiary, SYNNEX K.K. to MCJ, in exchangefor 25,809 shares of MCJ. The Company’s remaining equity interest in SYNNEX K.K. is accounted for under the cost method, as it does not have significantinfluence over either MCJ or SYNNEX K.K. In order to reduce the risk of holding the MCJ shares, the Company had entered into forward contracts to sell MCJshares for fixed prices in April 2006. There were no contracts outstanding as of November 30, 2006. As of November 30, 2005, such contracts covered 100% ofthe MCJ shares held by the Company and these contracts had a value of $22,609. NOTE 10—INCOME TAXES: The provisions for income taxes from continuing operations consisted of:


2006

2005

2004

Current tax provision: Federal $24,483 $18,772 $19,216 State 4,825 3,790 3,710 Foreign 3,310 2,796 1,296 $32,618 $25,358 $24,222 Deferred tax provision (benefit): Federal $ (3,747) $ (666) $ 964 State (769) (264) 127 Foreign 218 (516) (2,222) $ (4,298) $ (1,446) $ (1,131) Total tax provision $28,320 $23,912 $23,091

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Net deferred tax assets consist of the following:


2006

2005

Inventory reserves $ 5,374 $ 1,397 Bad debt and sales return reserves 4,391 5,988 Vacation and profit sharing accruals 1,125 745 Depreciation and amortization (2,177) (2,756)State tax deduction 795 607 Deferred compensation 8,062 6,575 Net operating losses 3,219 8,313 Deferred revenue 2,339 — Foreign tax credit 1,607 — Other 350 547 Valuation allowance (1,607) (2,178) Net deferred tax assets $23,478 $19,238

The valuation allowance relates to foreign tax credits for which realization of assets is uncertain.

A reconciliation of the statutory U.S. federal income tax rate to the Company’s effective income tax rate is as follows:


2006

2005

2004

Federal statutory income tax rate 35.0% 35.0% 35.0%States taxes, net of federal income tax benefit 3.3 3.6 4.2 Foreign taxes (1.9) (0.8) 2.1 Effect of unbenefitted tax assets (2.4) 0.2 (5.4)Other 1.3 (0.3) (2.3) Effective income tax rate 35.3% 37.7% 33.6%

At November 30, 2006, the Company had approximately $3,584 of federal operating loss carry forwards available to offset future taxable income, which

will expire in varying amounts from November 30, 2009 to November 30, 2026. Additionally, the Company had $4,944 in net operating loss carry forwards forthe Company’s Canadian subsidiary that begin to expire in 2012. NOTE 11—DEFERRED COMPENSATION PLAN: The Company has a deferred compensation plan for certain directors and officers. The plan is designed to permit eligible officers and directors toaccumulate additional income through a nonqualified deferred compensation plan that enables the officer or director to make elective deferrals of compensationto which he or she will become entitled in the future.

An account is maintained for each participant for the purpose of recording the current value of his or her elective contributions, including earnings creditedthereto. The participant may designate one or more

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investments as the measure of investment return on the participant’s account. The participant’s account is adjusted monthly to reflect earnings and losses on theparticipant’s designated investments.

The amount credited to the participant’s account will be distributed as soon as practicable after the earlier of the participant’s termination of employmentor attainment of age sixty-five. The distribution of benefits to the participant will be made in accordance with the election made by the participant in a lump sumor in equal monthly or annual installments over a period not to exceed fifteen years.

In the event the participant requests an early distribution other than a hardship distribution, a 10% withdrawal penalty will be levied. Such distribution willbe in the form of a lump sum cash payment.

As of November 30, 2006 and 2005, the deferred compensation liability balance was $18,425 and $16,770, respectively. Of the balances deferred, $13,153and $2,528 have been invested in equity securities at November 30, 2006 and 2005, respectively, and are classified as trading securities. The Company hasrecorded gains in “Other income (expense), net” on the trading securities of $1,082, $1,597 and $243 for the years ended November 30, 2006, 2005 and 2004,respectively. An amount equal to these gains has been charged to selling, general and administrative expenses, relating to the deferred compensation amountswhich are payable to the directors and officers. NOTE 12—EMPLOYEE BENEFIT PLAN: The Company has a 401(k) Plan (the “Plan”) under which eligible employees may contribute the lesser of up to 15% of their gross compensation or themaximum amount as provided by law. Employees become eligible to participate in the Plan on the first day of the month after their employment date. TheCompany can make discretionary contributions under the Plan. During 2006, 2005 and 2004, the Company contributed $378, $211 and $179, respectively. NOTE 13—STOCKHOLDERS’ EQUITY: Initial Public Offering The Company completed its initial public offering (“IPO”) on December 1, 2003 and sold an aggregate of 3,578 shares of its common stock. In January2004, the underwriters of the Company’s IPO exercised a portion of their over-allotment option and purchased an additional 161 shares of common stock fromthe Company. Net proceeds from the IPO and the exercise of the over-allotment option aggregated approximately $48,800.

Amended and Restated 2003 Stock Incentive Plan The Company’s 2003 Stock Incentive Plan was adopted by its Board of Directors and approved by its stockholders in 2003. The plan provides for thedirect award or sale of shares of common stock, restricted stock and restricted stock units, the grant of options to purchase shares of common stock and the awardof stock appreciation rights to employees and non-employee directors, advisors and consultants.

The 2003 Stock Incentive Plan is administered by the Company’s Compensation Committee. The Compensation Committee determines which eligibleindividuals are to receive awards under the plan, the number of shares subject to the awards, the vesting schedule applicable to the awards and other terms of theaward, subject to the limits of the plan. The Compensation Committee may delegate its administrative authority, subject to certain limitations, with respect toindividuals who are not officers.

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The Board of Directors will be able to amend or modify the 2003 Stock Incentive Plan at any time, subject to any required stockholder approval. The plan

will terminate no later than September 1, 2013.

The number of authorized shares under the 2003 Stock Incentive Plan will not exceed 14,112 shares of common stock. No participant in the 2003 StockIncentive Plan may receive option grants or stock appreciation rights of more than 1,500 shares per calendar year, or more than 2,500 shares in the participant’sfirst calendar year of service. During the year ended November 30, 2006, the Board of Directors granted 187 options at exercise prices ranging from $16.51 to$23.13 per share. In the year ended November 30, 2005, the Board of Directors granted 555 options at exercise prices ranging from $16.66 to $18.97 per share.

Under the 2003 Stock Incentive Plan:

Qualified employees are eligible for the grant of incentive stock options to purchase shares of common stock.

Qualified employees and non-employee directors, advisors and consultants are eligible for the grant of nonstatutory stock options, restricted stock grantsand restricted stock units.

Prior to January 4, 2007, qualified non-employee directors who first joined the Board of Directors after the plan was effective received an initial optiongrant of twenty-five thousand shares, and all non-employee directors were eligible for annual option grants of five thousand shares for each year they continuedto serve. The exercise price of these option grants was equal to 100% of the fair market value of those shares on the date of the grant.

Amended and Restated 2003 Stock Incentive Plan, on and after January 4, 2007

On and after January 4, 2007, qualified non-employee directors who first join the Board of Directors after the plan is effective receive an initial optiongrant of ten thousand shares and two thousand shares of restricted stock. All non-employee directors are eligible for annual grants of two thousand shares ofrestricted stock for each year they continue to serve. The exercise price of these option grants is equal to 100% of the fair market value of those shares on the dateof the grant. In addition, these stock option and restricted stock grants vest over a three year period of time.

The Compensation Committee determines the exercise price of options or the purchase price of restricted stock grants, but the option price for incentivestock options will not be less than 100% of the fair market value of the stock on the date of grant and the option price for nonstatutory stock options will not beless than 85% of the fair market value of the stock on the date of grant.

Qualified employees and non-employee directors, advisors and consultants will also be eligible for the award of stock appreciation rights, which enable theholder to realize the value of future appreciation in our common stock, payable in cash or shares of common stock.

The following table summarizes the stock options outstanding and exercisable under the Company’s option plans as of November 30, 2006 and 2005:

Number of Options at

November 30, 2006 Number of Options at

November 30, 2005

Outstanding Exercisable Outstanding ExercisableAmended and Restated 2003 Stock Incentive Plan 5,994 4,444 7,387 5,158

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2003 Employee Stock Purchase Plan

The Company’s 2003 Employee Stock Purchase Plan (“ESPP”) permits eligible employees to purchase common stock through payroll deductions. Themaximum number of shares a participant may purchase during a single accumulation period is one thousand two hundred fifty. The plan was approved by theCompany’s stockholders and approved by its Board of Directors in 2003. A total of 500 shares of common stock has been reserved for issuance under the ESPP.

Prior to March 2005 amendment, the ESPP had been implemented in a series of overlapping offering periods of 24 months’ duration, with new offeringperiods, other than the first offering period, beginning in October and April each year. Each offering period consisted of four accumulation periods of up to sixmonths each. During each accumulation period, payroll deductions accumulate without interest. On the last trading day of each accumulation period,accumulated payroll deductions are used to purchase common stock.

Prior to the March 2005 amendment, the purchase price equaled 85% of the fair market value per share of common stock on either the first trading day ofthe offering period or on the last trading day of the accumulation period, whichever was less. If the fair market value of the Company’s stock at the start of anoffering period is higher than the fair market value at the start of a subsequent offering period, then the first offering period will automatically terminate andparticipants will be automatically re-enrolled in the new offering period.

The weighted-average per share ESPP enrollment date fair value of common stock during the fiscal year ended November 30, 2006 and 2005 was $1.25and $4.35, respectively.

In March 2005, the Company’s Board of Directors approved the following amendments to the ESPP to be effective for the accumulation period beginningApril 1, 2005:

• Reduction of participant purchase price discount of Company stock from 15% to 5%;

• Reduction of two year offering periods and six month accumulation periods to three month offering and accumulation periods;

• Maximum purchase limit of $10 of stock per calendar year per participant; and

• Associate vice president level employees and above are not eligible to participate. NOTE 14—SHARE-BASED COMPENSATION: Effective December 1, 2005, the Company adopted the provisions of SFAS No. 123(R), “Share-Based Payment” (“SFAS No. 123(R)”) which requires themeasurement and recognition of compensation expense for all share-based payment awards made to employees and directors, including employee stock options,stock awards and employee stock purchases, based on estimated fair values. The Company previously applied Accounting Principles Board Opinion No. 25,“Accounting for Stock Issued to Employees,”(“APB No. 25”) and related Interpretations and provided the required pro forma disclosures of SFAS No. 123,“Accounting for Stock-Based Compensation” (“SFAS No. 123”), which was superseded by SFAS No. 123(R). The Company has also applied the provisions ofStaff Accounting Bulletin No. 107 (“SAB No. 107”) relating to SFAS No. 123(R). Prior to the Adoption of SFAS No. 123(R) Prior to the adoption of SFAS No. 123(R), the Company provided the disclosures required under SFAS No. 123, as amended by SFAS No. 148,“Accounting for Stock-Based Compensation—Transition and

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Disclosure.” No employee share-based compensation was reflected in net income for the periods ended November 30, 2005, as all options granted under thoseplans had an exercise price equal to the fair market value of the underlying common stock on the date of grant.

The pro forma information for the fiscal years ended November 30, 2005 and 2004 was as follows:

Fiscal Years Ended

November 30, 2005 2004 Net income—as reported $52,825 $46,565 Plus: Share-based employee compensation expense determined under APB No. 25, included in reported net income 28 202 Less: Share-based employee compensation expense determined under fair value based method related to the

employee stock purchase plan (353) (1,613)Less: Share-based employee compensation expense determined under fair value based method related to stock

options (2,967) (3,429)

Net income—pro forma $49,533 $41,725

Net earnings per share—basic: As reported $ 1.85 $ 1.74 Pro forma $ 1.73 $ 1.56

Net earnings per share—diluted: As reported $ 1.70 $ 1.55 Pro forma $ 1.62 $ 1.42

Shares used in computing net income per share—basic: As reported 28,555 26,691 Pro forma 28,555 26,691

Shares used in computing net income per share—diluted: As reported 31,131 30,111 Pro forma 30,573 29,410

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Impact of the Adoption of SFAS No. 123(R)

The Company elected to adopt the modified prospective application transition method as provided by SFAS No. 123(R). Accordingly, during fiscal yearended November 30, 2006, the Company recorded share-based compensation cost totaling the amount that would have been recognized had the fair value methodbeen applied since the effective date of SFAS No. 123(R). Previously reported amounts have not been restated. The effect of recording share-based compensationfor the fiscal year ended November 30, 2006 were as follows:

Fiscal Year EndedNovember 30, 2006

Share-based compensation expense by type of award: Employee stock options $ 2,210 Restricted stock 1,444 Employee stock purchase plan 56

Total share-based compensation 3,710 Tax effect on share-based compensation (1,319)

Net effect on net income $ 2,391

Tax effect on: Cash flows from operations $ 916 Cash flows from financing activities $ 6,016

Effect on earnings per share: Basic $ 0.08 Diluted $ 0.07

Share-based compensation expense of $1,444 related to restricted stock would have been recorded under the provisions of APB No. 25 for the fiscal yearended November 30, 2006.

As of December 1, 2005, the Company had an unrecorded deferred share-based compensation balance related to stock options of $9,307 before estimatedforfeitures. In the Company’s pro forma disclosures prior to the adoption of SFAS No. 123(R), the Company accounted for forfeitures upon occurrence. SFASNo. 123(R) requires forfeitures to be estimated at the time of grant and revised if necessary in subsequent periods if actual forfeitures differ from thoseestimates. Accordingly, as of December 1, 2005, the Company estimated that the share-based compensation for the awards not expected to vest was $310, andtherefore, the unrecorded deferred share-based compensation balance related to stock options was adjusted to $8,997 after estimated forfeitures.

During the fiscal year ended November 30, 2006, the Company granted approximately 187 stock options, with an estimated total grant-date fair value of$1,781. Of this amount, the Company estimated that the share-based compensation for the awards not expected to vest was $59 for the fiscal year endedNovember 30, 2006. During the fiscal year ended November 30, 2006, the Company recorded share-based compensation related to stock options and theemployee stock purchase plan of $2,266.

As of November 30, 2006, the unrecorded deferred share-based compensation balance related to stock options was $8,367 and will be recognized over anestimated weighted average amortization period of 3.5 years.

No share-based compensation was capitalized as inventory at November 30, 2006. The Company did not capitalize any share-based compensation toinventory at December 1, 2005 when the SFAS No. 123(R) was initially adopted.

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Valuation Assumptions SFAS No. 123(R) requires companies to estimate the fair value of share-based payment awards on the date of grant using an option-pricing model. Thevalue of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service period in the Company’s financialstatements. Share-based compensation expense recognized during the period is based on the value of the portion of share-based payment awards that is ultimatelyexpected to vest during the period. In connection with the adoption of SFAS No. 123(R), the Company reassessed its valuation technique and relatedassumptions.

The Company estimates the fair value of stock options using the Black-Scholes valuation model, consistent with the provisions of SFAS No. 123(R), SAB107 and the Company’s prior period pro forma disclosures of net earnings, including share-based compensation (determined under a fair value method asprescribed by SFAS No. 123). The Black-Scholes option-pricing model was developed for use in estimating the fair value of short-lived exchange traded optionsthat have no vesting restrictions and are fully transferable. In addition, option-pricing models require the input of highly subjective assumptions, including theoption’s expected life and the price volatility of the underlying stock. The expected stock price volatility assumption was determined using historical volatility ofthe Company’s common stock. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option valuation model and thestraight-line attribution approach with the following weighted-average assumptions:

Fiscal Year Ended

November 30,2006

November 30,2005

November 30,2004

Stock option plan:

Expected life (years) 6.3 5.0 5.0 Risk-free interest rate 4.7% 4.0% 3.4%Expected volatility 35.7% 39.1% N/A Dividend yield 0% 0% 0%

Stock purchase plan: Expected life (years) 0.3 1.2 1.2 Risk-free interest rate 4.8% 2.2% 2.0%Expected volatility 29.8% 48.6% 58.1%Dividend yield 0% 0% 0%

Prior to the adoption of SFAS No. 123(R), the Company used historical volatility in deriving its expected volatility assumption.

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A summary of the activity under the Company’s stock option plans is set forth below:

Options Outstanding

Shares AvailableFor Grant

Number ofShares

WeightedAverage

Exercise Price

Balances, November 30, 2003 5,430 8,682 7.57Options granted (1,142) 1,142 16.50Options exercised — (1,669) 5.45Options cancelled 140 (140) 12.76

Balances, November 30, 2004 4,428 8,015 $ 9.12

Restricted stock granted (97) — — Restricted stock cancelled 1 — — Options granted (555) 555 17.39Options exercised — (1,067) 6.54Options cancelled 116 (116) 14.36

Balances, November 30, 2005 3,893 7,387 10.03 Balances, November 30, 2005 3,893 7,387 $ 10.03

Restricted stock granted (487) — — Restricted stock cancelled 4 — — Options granted (187) 187 21.61Options exercised — (1,460) 7.04Options cancelled 120 (120) 13.99

Balances, November 30, 2006 3,343 5,994 $ 11.00

The options outstanding and exercisable at November 30, 2006 were in the following exercise price ranges:

Options Outstanding

Options Vested and Exercisable

Range of Exercise Prices

Shares

WeightedAverage

Life(Years)

WeightedAverageExercise

Price

AggregateIntrinsic

Value

Shares

WeightedAverage

Life(Years)

WeightedAverageExercise

Price

AggregateIntrinsic

Value

$3.00 – $4.50 1,148 2.59 $ 4.50 $ 20,904 1,148 2.59 $ 4.50 $ 20,904$7.00 – $10.00 2,333 4.14 $ 9.38 $ 31,102 2,262 4.10 $ 9.36 $ 30,197$12.00 – $15.54 879 6.42 $ 12.13 $ 9,295 550 6.23 $ 12.11 $ 5,830$16.10 – $23.13 1,634 8.30 $ 17.29 $ 8,858 484 7.98 $ 16.62 $ 2,948 $3.00 – $23.13 5,994 5.31 $ 11.00 $ 70,159 4,444 4.40 $ 9.24 $ 59,879

The aggregate intrinsic value in the table above represents the total pretax intrinsic value, based on the Company’s closing stock price of $22.71 as ofNovember 30, 2006, which would have been received by the option holders had all option holders exercised their options as of that date. The total number ofin-the-money options exercisable as of November 30, 2006 was 4,444.

The weighted average grant-date fair value of options, as determined under SFAS No. 123(R), granted during the fiscal year ended November 30, 2006was $9.24. The total fair value of shares vested during the fiscal

80




year ended November 30, 2006 was $5,288. The total intrinsic value of options exercised during the fiscal year ended November 30, 2006 was $18.7 million. Thetotal cash received from employees as a result of employee stock option exercises during the fiscal year ended November 30, 2006 was $10,283. In connectionwith these exercises, the tax benefits realized by the Company for the fiscal year ended November 30, 2006 was $6,932.

The Company settles employee stock option exercises with newly issued common shares.

Restricted Stock

During the fiscal year ended November 30, 2006, the Company’s Compensation Committee approved the grant of 250 shares of restricted stock units toRobert Huang, the Company’s President and Chief Executive Officer. These restricted stock units will vest with respect to 25% of the shares on the date that is13 months after the date of grant, and an additional 25% of the shares on the second, third and fourth anniversaries of the date of grant. The Company recordedthe $4,763 value of these restricted stock units and will amortize that amount over the service period. The value of the restricted stock units was based on theclosing market price of the Company’s common stock on the date of award.

As of November 30, 2006, there was $10,279 of total deferred share-based compensation related to nonvested restricted stock granted under the Amendedand Restated 2003 Stock Incentive Plan. That cost is expected to be recognized over an estimated weighted average amortization period of 4.1 years.

Amortization cost for all restricted stock awards for the fiscal year ended November 30, 2006 was $1,444.

A summary of the status of the Company’s nonvested restricted stock as of November 30, 2006, is presented below:

Restricted Stock

Number of

Shares

Weightedaverage

grant-datefair value

Nonvested at November 30, 2005 97 $ 17.17Awards granted 487 20.96Awards vested (19) 17.17Awards cancelled/expired/forfeited (4) 18.29

Nonvested at November 30, 2006 561 $ 20.45

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NOTE 15—NET INCOME PER COMMON SHARE: The following table sets forth the computation of basic and diluted net income per common share for the period indicated:


2006

2005

2004

Net income from continuing operations $51,385 $39,606 $46,086Income from discontinued operations, net of tax — 511 479Gain on sale of discontinued operations, net of tax — 12,708 — Net income $51,385 $52,825 $46,565 Weighted average common shares—basic 29,700 28,555 26,691Effect of dilutive securities: Stock options and restricted stock 2,314 2,576 3,420 Weighted average common shares—diluted 32,014 31,131 30,111 Earnings per share:

Basic Income from continuing operations $ 1.73 $ 1.39 $ 1.73Discontinued operations $ — $ 0.46 $ 0.01

Net income per common share—basic $ 1.73 $ 1.85 $ 1.74

Diluted

Income from continuing operations $ 1.61 $ 1.27 $ 1.53Discontinued operations $ — $ 0.43 $ 0.02

Net income per common share—diluted $ 1.61 $ 1.70 $ 1.55

Options to purchase 747, 67 and 130 shares of common stock as at November 30, 2006, 2005 and 2004, respectively, have not been included in thecomputation of diluted net income per share as their effect would have been anti-dilutive. NOTE 16—RELATED PARTY TRANSACTIONS: Purchases of inventories from MiTAC International Corporation and its affiliates (principally motherboards and other peripherals) were approximately$430,543, $397,000 and $406,000 during the years ended November 30, 2006, 2005 and 2004, respectively. Sales to MiTAC International and its affiliatesduring the years ended November 30, 2006, 2005 and 2004, were approximately $2,288, $1,777 and $1,738, respectively. The Company’s relationship withMiTAC International has been informal and is not governed by long-term commitments or arrangements with respect to pricing terms, revenue, or capacitycommitments. Accordingly, the Company negotiates manufacturing and pricing terms, including allocating customer revenue, on a case-by-case basis withMiTAC International.

In October 2001, as a new investment option for the deferred compensation plan, the Company established a brokerage account in Taiwan. The purpose ofthe account is to hold shares of MiTAC International and its affiliates. As of November 30, 2004, the fair market value of the common stock acquired wasapproximately $2,259. This brokerage account was closed in fiscal 2005.

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In August 2004, the Company realized a gain of $1,245 for a settlement with MiTAC International on the final purchase price related to the acquisition of

the Company’s current subsidiary in the United Kingdom, which was acquired from MiTAC International in fiscal 2000. This amount is included in “Otherincome (expense), net.” NOTE 17—SEGMENT INFORMATION: Segments were determined based on products and services provided by each segment. Accounting policies of the segments are the same as those describedin the summary of significant accounting policies. The Company has identified the following two reportable business segments: The Distribution segment distributes computer systems and complementary products to a variety of customers, including value-added resellers, systemintegrators, retailers and direct resellers.

The Contract Assembly segment provides electronics assembly services to OEMs, including integrated supply chain management, build-to-order andconfigure-to-order system configurations, materials management and logistics.

Summarized financial information related to the Company’s reportable business segments as at November 30, 2006, 2005 and 2004, and for each of theyears then ended is shown below:

Distribution

ContractAssembly

Consolidated

Fiscal year ended November 30, 2004: Revenue $ 4,573,438 $ 577,009 $ 5,150,447Income from continuing operations before non-operating items, income taxes and minority interest 63,255 14,405 77,660Total assets 800,618 199,079 999,697

Fiscal year ended November 30, 2005: Revenue $ 5,120,824 $ 519,945 $ 5,640,769Income from continuing operations before non-operating items, income taxes and minority interest 65,912 13,025 78,937Total assets 846,220 236,268 1,082,488

Fiscal year ended November 30, 2006: Revenue $ 5,800,293 $ 543,221 $ 6,343,514Income from continuing operations before non-operating items, income taxes and minority interest 88,458 7,784 96,242Total assets 1,109,162 273,572 1,382,734

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Summarized financial information related to the geographic areas in which the Company operated at November 30, 2006, 2005 and 2004 and for each of

the years then ended is shown below:

NorthAmerica

Other

ConsolidationAdjustments

Consolidated

Fiscal year ended November 30, 2004: Revenue $ 4,902,143 $ 271,753 $ (23,449) $ 5,150,447Income from continuing operations 47,548 1,320 (2,782) 46,086Other long-lived assets 20,592 15,968 — 36,560

Fiscal year ended November 30, 2005: Revenue $ 5,440,293 $ 237,965 $ (37,489) $ 5,640,769Income from continuing operations 35,761 4,051 (206) 39,606Other long-lived assets 23,460 18,432 — 41,892

Fiscal year ended November 30, 2006: Revenue $ 6,119,306 $ 265,728 $ (41,520) $ 6,343,514Income from continuing operations 44,417 7,076 (108) 51,385Other long-lived assets 33,805 16,477 — 50,282

Revenue in the U.S. was approximately 79%, 80% and 83% of total revenue for fiscal 2006, 2005 and 2004, respectively.

NOTE 18—RISK AND UNCERTAINTIES: The Company operates in a highly competitive industry and is subject to various risks and uncertainties. Factors that could affect the Company’s futureoperating results and cause actual results to differ materially from expectations include, but are not limited to, dependence on few customers and vendors,competition, new products and services, dependence upon key personnel, industry conditions, foreign currency fluctuations, and aspects of its strategicrelationship with MiTAC International. NOTE 19—COMMITMENTS AND CONTINGENCIES: The Company leases its facilities under operating lease agreements, which expire in various periods through 2014. Future minimum rental obligationsunder non-cancelable lease agreements as of November 30, 2006 were as follows:

Fiscal Year Ending November 30, 2007 $12,7582008 13,0392009 12,8632010 14,1642011 7,709thereafter 12,849

Total minimum lease payments $73,382

Rent expense for the years ended November 30, 2006, 2005 and 2004 amounted to $9,393, $9,423 and $8,887, respectively.

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The Company was contingently liable at November 30, 2006, under agreements to repurchase repossessed inventory acquired by flooring companies as a

result of default on floor plan financing arrangements by the Company’s customers. These arrangements are described in Note 6. Losses, if any, would be thedifference between repossession cost and the resale value of the inventory. There have been no repurchases through November 30, 2006 under these agreements,nor is the Company aware of any pending customer defaults or repossession obligations.

The Company is from time to time involved in legal proceedings, including the following:

In May 2002, Seanix Technology Inc. filed a trademark infringement action in the Federal Court of Canada against the Company and its Canadiansubsidiary, SYNNEX Canada Limited. The suit claims that the Company has infringed on Seanix’s exclusive rights to its Canadian trademark registration andcaused confusion between the two companies resulting from, among other things, the Company’s use of trademarks confusingly similar to the Seanix trademarks.The complaint seeks injunctive relief and monetary damages in an amount to be determined. Substantial discovery has taken place and no trial date has been set.

In May 2002, Acropolis Systems, Inc. and Tony Yeh filed a civil suit in Santa Clara County California Superior Court against the Company, RobertHuang, C. Kevin Chuang and Stephen R. Bowling. The suit alleges violation of California securities laws, fraud and concealment and breach of contract resultingfrom, among other things, failure to disclose the existence of a lien in favor of the Company on the assets of eManage.com Inc. prior to entering into stockpurchase agreements for shares of eManage.com stock. At the time of this stock purchase, the Company was the majority stockholder of eManage.com. Thecomplaint seeks monetary damages in the amount of approximately $2,000. Substantial discovery has taken place and a trial date has been set for June 2007.

In addition, the Company has been involved in various bankruptcy preference actions where the Company was a supplier to the companies now inbankruptcy. These preference actions are filed by the bankruptcy trustee on behalf of the bankrupt estate and generally seek to have payments made by the debtorwithin 90 days prior to the bankruptcy returned to the bankruptcy estate for allocation among all of the bankrupt estate’s creditors. The Company is not aware ofany currently pending preference actions.

The Company does not believe that these proceedings will have a material adverse effect on the Company’s results of operations, financial position or cashflows of the business.

NOTE 20—RESTRUCTURING CHARGES:

In the first quarter of fiscal 2005, the Company announced a restructuring program in its distribution segment, which impacted approximately 35employees across multiple business functions in SYNNEX Canada and closed its facilities in Richmond, British Columbia, Calgary, Alberta and Saint-Laurent,Quebec. All terminations were completed by May 31, 2005. In the third quarter of fiscal 2005, the Company closed its facility in Markham, Ontario. Thisrestructuring resulted in a total expense of $2,513, which consisted of employee termination benefits of $711, estimated facilities exit expenses of $1,681 andother expenses in the amount of $121. All charges were recorded in accordance with SFAS No. 146, “Accounting for Costs Associated with Exit or DisposalActivities.”

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The following table summarizes the activity related to the liability for restructuring charges through November 30, 2006:

Severance

and Benefits Facility andExit Costs Other Total

Balance of accrual at November 30, 2004 $ — $ — $— $ — Restructuring charges expensed in the year ended November 30,

2005 711 1,681 121 2,513 Cash payments (690) (293) (17) (1,000)Adjustments — 157 — 157 Non-cash charges — (636) — (636)

Balance of accrual at November 30, 2005 21 909 104 1,034 Cash payments (21) (452) (11) (484)Non-cash charges — (344) (93) (437)

Balance of accrual at November 30, 2006 $ — $ 113 $— $ 113

The unpaid portion of the restructuring charges is included in the consolidated balance sheet under the caption “Accrued liabilities.”

NOTE 21—DISCONTINUED OPERATIONS:

During the second quarter of fiscal 2005, the Company sold approximately 93% of the equity it held in its subsidiary, SYNNEX K.K. to MCJ, in exchangefor 26 shares of MCJ. The Company recorded a gain of $12,708, net of tax, as a result of this sale, in the second quarter of fiscal 2005. The Company’sremaining equity interest in SYNNEX K.K. is accounted for under the cost method, as the Company does not have significant involvement or influence overeither MCJ or SYNNEX K.K. In connection with this sale, the Company paid a dividend of $1,133 to the minority shareholders of SYNNEX K.K.

Under the provisions of FASB Statement No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” the sale of SYNNEX K.K.qualified as a discontinued operation component of the Company. Accordingly, the Company has excluded results of its Japan’s operation from its consolidatedstatements of operations for each of the three years in the period ended November 30, 2005 to present this business in discontinued operations.

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The following table shows the results of operation of SYNNEX K.K.:

December 1, 2004to April 19, 2005

(date of sale)

Fiscal Year EndedNovember 30,

2004

Revenue $ 64,477 $ 163,544 Cost of revenue (59,916) (153,938) Gross profit 4,561 9,606 Selling, general and administrative expenses (3,170) (8,286) Income from operations before non-operating items, income taxes and minority interest 1,391 1,320 Interest expense and finance charges, net (140) (464)Other income (expense), net (245) 158 Income before income taxes and minority interest 1,006 1,014 Provision for income taxes (434) (459)Minority interest in subsidiary (61) (76) Net income $ 511 $ 479

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The following table shows the effect of the restatement on the consolidated financial statements:

As PreviouslyReported

Fiscal YearEnded

November 30,2004

As ReportedHerein

Fiscal YearEnded

November 30,2004

Revenue $ 5,313,991 $ 5,150,447 Cost of revenue (5,089,013) (4,935,075) Gross profit 224,978 215,372 Selling, general and administrative expenses (145,998) (137,712) Income from continuing operations before non-operating items, income taxes and minority interest 78,980 77,660 Interest expense and finance charges, net (8,423) (7,959)Other income (expense), net (742) (900) Income from continuing operations before income taxes and minority interest 69,815 68,801 Provision for income taxes (23,550) (23,091)Minority interest in subsidiary 300 376 Income from continuing operations 46,565 46,086 Income from discontinued operations, net of tax — 479 Net income $ 46,565 $ 46,565 Earnings per share:

Basic Income from continuing operations $ 1.74 $ 1.73 Discontinued operations — 0.01

Net income per common share—basic $ 1.74 $ 1.74

Diluted

Income from continuing operations $ 1.55 $ 1.53 Discontinued operations — 0.02

Net income per common share—diluted $ 1.55 $ 1.55

Under the terms of the sale the Company was restricted from selling the shares of MCJ it received until April 2006. As described in Note 5, the shareswere classified as trading securities and were recorded at fair value, based on quoted market prices. As of November 30, 2005, the fair value of the shares of MCJwas $25,346, and that amount is included in short-term investments.

In order to reduce the risk of holding the MCJ shares, the Company entered into forward contracts to sell MCJ shares for fixed prices in April 2006. As ofNovember 30, 2005, such contracts covered 100% of the MCJ shares held by the Company and these contracts had a value of $22,609. As of November 30,2006, there were no outstanding forward contracts.

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Table of ContentsSELECTED QUARTERLY CONSOLIDATED FINANCIAL DATA (Unaudited)

The following table presents selected unaudited consolidated financial results for each of the eight quarters in the two-year period ended November 30,2006. In the Company’s opinion, this unaudited information has been prepared on the same basis as the audited information and includes all adjustments(consisting of only normal recurring adjustments) necessary for a fair statement of the financial information for the periods presented.

Fiscal 2006

Three Months Ended Fiscal 2005

Three Months Ended

Feb. 28,

2006 May 31,

2006 Aug. 31,

2006 Nov. 30,

2006 Feb. 28,

2005 May 31,

2005 Aug. 31,

2005 Nov. 30,

2005 (in thousands) Statement of Operations Data: Revenue $ 1,501,735 $ 1,511,701 $ 1,592,204 $ 1,737,874 $ 1,309,763 $ 1,346,328 $ 1,391,590 $ 1,593,088 Cost of revenue (1,436,725) (1,443,353) (1,519,486) (1,658,591) (1,253,629) (1,289,772) (1,332,612) (1,526,198)

Gross profit 65,010 68,348 72,718 79,283 56,134 56,556 58,978 66,890 Selling, general and administrative expenses (42,763) (45,952) (49,205) (51,197) (39,712) (38,159) (39,249) (42,501)

Income from continuing operations before non-operating items,income taxes and minority interest 22,247 22,396 23,513 28,086 16,422 18,397 19,729 24,389

Interest expense and finance charges, net (5,853) (4,340) (2,743) (3,723) (3,812) (3,521) (3,777) (5,926)Other income (expense), net 273 (482) 265 514 709 949 (1,155) 1,056

Income from continuing operations before income taxes and minorityinterest 16,667 17,574 21,035 24,877 13,319 15,825 14,797 19,519

Provision for income taxes (5,984) (6,257) (7,015) (9,064) (5,042) (6,006) (5,759) (7,105)Minority interest in subsidiaries — — (241) (207) 26 32 — —

Income from continuing operations 10,683 11,317 13,779 15,606 8,303 9,851 9,038 12,414 Income from discontinued operations, net of tax — — — — 304 207 — — Gain on sale of discontinued operations, net of tax — — — — — 12,323 — 385

Net income $ 10,683 $ 11,317 $ 13,779 $ 15,606 $ 8,607 $ 22,381 $ 9,038 $ 12,799

Net income per common share, basic $ 0.37 $ 0.38 $ 0.46 $ 0.51 $ 0.31 $ 0.78 $ 0.31 $ 0.44

Net income per common share, diluted $ 0.34 $ 0.36 $ 0.43 $ 0.48 $ 0.27 $ 0.72 $ 0.29 $ 0.41

Weighted average common shares outstanding—basic 29,055 29,499 29,879 30,369 28,005 28,764 29,481 28,903

Weighted average common shares outstanding—diluted 31,204 31,600 31,878 32,565 31,450 31,120 31,673 31,103

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SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTSFor the Years Ended November 30, 2006, 2005 and 2004

(in thousands)

Description

Balanceat

Beginningof Year

Additionsand

Subtractionsfrom

Acquisitionsand

Dispositions

AdditionsCharged

toRevenues

andCostsand

Expense

Write-offsand

Deductions

Balanceat Endof Year

Fiscal Year Ended November 30, 2004 Allowance for doubtful trade receivables 8,996 4,106 5,506 (6,731) 11,877Allowance for doubtful vendor receivables 3,246 782 1,632 (1,565) 4,095Allowance for sales returns 5,526 — 8,044 (693) 12,877Allowance for deferred tax assets 8,869 (294) (211) (6,048) 2,316

Fiscal Year Ended November 30, 2005 Allowance for doubtful trade receivables 11,877 (12) 7,083 (6,260) 12,688Allowance for doubtful vendor receivables 4,095 — 897 (2,266) 2,726Allowance for sales returns 12,877 — 1,000 (480) 13,397Allowance for deferred tax assets 2,316 — 515 (653) 2,178

Fiscal Year Ended November 30, 2006 Allowance for doubtful trade receivables 12,688 2,328 9,081 (9,664) 14,433Allowance for doubtful vendor receivables 2,726 — 1,548 (1,660) 2,614Allowance for sales returns 13,397 — 3,719 — 17,116Allowance for deferred tax assets 2,178 — 1,607 (2,178) 1,607

Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure None.

Item 9A. Controls and Procedures Evaluation of Disclosure Controls and Procedures We maintain “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the “ExchangeAct”), that are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed,summarized, and reported within the time periods specified in Securities and Exchange Commission rules and forms, and that such information is accumulatedand communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regardingrequired disclosure. In designing and evaluating our disclosure controls and procedures, management recognized that disclosure controls and procedures, nomatter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures aremet. Our disclosure controls and procedures have been designed to meet reasonable assurance standards. Additionally, in designing disclosure controls andprocedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls andprocedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and therecan be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

Based on their evaluation as of the end of the period covered by this Annual Report on Form 10-K, our Chief Executive Officer and Chief FinancialOfficer have concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

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Table of ContentsManagement’s Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in ExchangeAct Rules 13a-15(f). Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting andthe preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control over financialreporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect thetransactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation offinancial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only inaccordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliancewith the policies or procedures may deteriorate.

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, weconducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control—Integrated Frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, our management concludes that, as ofNovember 30, 2006, our internal control over financial reporting was effective based on those criteria.

Our management’s assessment of the effectiveness of our internal control over financial reporting as of November 30, 2006 has been audited byPricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in its report which appears in Item 8 of this Annual Report on Form10-K.

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) identified in connection withmanagement’s evaluation during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financialreporting.

Item 9B. Other Information

None.

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Table of Contents PART III

Item 10. Directors and Executive Officers of the Registrant The information required by this item (with respect to Directors) is incorporated by reference from the information under the caption “Election ofDirectors” contained in our Proxy Statement to be filed with the Securities and Exchange Commission in connection with the solicitation of proxies for our 2007Annual Meeting of Stockholders to be held on March 20, 2007 (the “Proxy Statement”). Certain information required by this item concerning executive officersis set forth in Part I of this Report under the caption “Executive Officers of the Registrant.”

Item 405 of Regulation S-K calls for disclosure of any known late filing or failure by an insider to file a report required by Section 16(a) of the ExchangeAct. This information is contained in the section called “Section 16(a) Beneficial Ownership Reporting Compliance” in the Proxy Statement and is incorporatedherein by reference.

The Company has adopted a code of ethics that applies to all of the Company’s employees, including its principal executive officer, its principal financialofficer, its controller and persons performing similar functions. This code of ethics, called a Code of Ethics and Business Conduct for Employees, Officers andDirectors, is available free of charge on the Company’s public website (www.synnex.com) on the investor relations webpage. Future amendments or waiversrelating to the code of ethics will be disclosed on the webpage referenced in this paragraph within five (5) business days following the date of such amendment orwaiver.

Item 11. Executive Compensation The information required by this item is incorporated by reference from the information under the captions “Election of Directors—Directors’Compensation,” “Executive Compensation,” and “Election of Directors—Compensation Committee Interlocks and Insider Participation” contained in the ProxyStatement.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The information required by this item with respect to security ownership of certain beneficial owners and management is incorporated by reference fromthe information under the caption “Security Ownership of Certain Beneficial Owners and Management” contained in the Proxy Statement. Equity Compensation Plan Information The following table sets forth certain information regarding our equity compensation plans as of November 30, 2006:

Plan category

Number of securitiesto be issued upon

exercise ofoutstanding options

(a)

Weighted-averageexercise price

ofoutstanding

options(b)

Number of securitiesremaining availablefor future issuance

under equitycompensation plans(excluding securitiesreflected in column

(a)) (c)

Equity compensation plans approved by security holders 5,993,767 $ 11.00 3,432,772(1)(2)

(1) Includes the number of shares reserved for issuance under our Amended and Restated 2003 Stock Incentive Plan. The number of shares authorized forissuance under our Amended and Restated 2003 Stock Incentive Plan will not exceed the sum of (1) the number of shares subject to outstanding optionsgranted under our 1997 Stock Option Plan/Stock Issuance Plan, our Special Executive Stock Option/Stock Issuance Plan and

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Table of Contents

our 1993 Stock Option Plan outstanding, to the extent those options expire, terminate or are cancelled for any reason prior to being exercised, plus(2) 5,506,649 shares of common stock; provided, however, that the number of authorized shares under our Amended and Restated 2003 Stock IncentivePlan will not exceed 14,111,761 shares of common stock.

(2) Includes 500,000 shares available-for-sale pursuant to our 2003 Employee Stock Purchase Plan (as amended). Shares of common stock will be purchasedat a price equal to 95% of the fair market value per share of common stock on either the first trading day of the offering period or on the last trading day ofthe accumulation period, whichever is less.

Item 13. Certain Relationships and Related Transactions The information required by this item is incorporated by reference from the information contained under the caption “Certain Relationships and RelatedParty Transactions” contained in the Proxy Statement.

Item 14. Principal Accountant Fees and Services The information required by this item is incorporated by reference from the information contained under the caption “Ratification of the Appointment ofIndependent Registered Public Accountants” contained in the Proxy Statement.

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Table of Contents PART IV

Item 15. Exhibits and Financial Statement Schedules (a) Documents filed as part of this report:

(1) Financial Statements

See Index under Item 8.

(2) Financial Statement Schedule


(3) Exhibits

See Item 15(b) below. Each compensatory plan required to be filed has been identified. (b) Exhibits.

ExhibitNumber

Description of Document

3(i).1

Restated Certificate of Incorporation (incorporated by reference to Exhibit 3(i)3 to Amendment No. 1 to the Company’s Registration Statementon Form S-1 (File No. 333-108543)).

3(ii).2

Restated Bylaws (incorporate by reference to Exhibit 3(ii)3 to Amendment No. 1 to the Company’s Registration Statement on Form S-1 (FileNo. 333-108543)).

4.1

Form of Common Stock Certificate (incorporated by reference to the exhibit of the same number to Amendment No. 2 to the Company’sRegistration Statement on Form S-1 (File No. 333-108543)).

10.1# Amended and Restated 2003 Stock Incentive Plan and form of agreements thereunder.

10.2#

2003 Employee Stock Purchase Plan (incorporated by reference to Exhibit 10.5 to Amendment No. 2 to the Company’s Registration Statementon Form S-1 (File No. 333-108543)).

10.3

Form of Indemnification Agreement between the Registrant and its officers and directors (incorporated by reference to Exhibit 10.6 to theCompany’s Registration Statement on Form S-1 (File No. 333-108543)).

10.4

Registration Rights Agreement dated as of July 1, 2002 (incorporated by reference to Exhibit 10.7 to the Company’s Registration Statement onForm S-1 (File No. 333-108543)).

10.5

Standard Industrial Lease dated December 5, 1996, between the Registrant and Alexander & Baldwin, Inc. (incorporated by reference toExhibit 10.10 to the Company’s Registration Statement on Form S-1 (File No. 333-108543)).

10.6

First Amendment to Lease, dated May 24, 1999, between the Registrant and Bedford Property Investors, Inc. (incorporated by reference toExhibit 10.11 to the Company’s Registration Statement on Form S-1 (File No. 333-108543)).

10.7

Second Amendment to Lease, dated March 30, 2001, between the Registrant and Bedford Property Investors, Inc. (incorporated by reference toExhibit 10.12 to the Company’s Registration Statement on Form S-1 (File No. 333-108543)).

10.8#

Form of Change of Control Severance Plan (incorporated by reference to Exhibit 10.13 to Amendment No. 1 to the Company’s RegistrationStatement on Form S-1 (File No. 333-108543)).

10.9

HP U.S. Business Development Partner Agreement dated November 6, 2003, between the Registrant and Hewlett-Packard Company(incorporated by reference to Exhibit 10.14 to Amendment No. 2 to the Company’s Registration Statement on Form S-1 (File No.333-108543)).

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Table of Contents

ExhibitNumber Description of Document

10.10

Master External Manufacturing Agreement, dated August 28, 1999, by and among the Registrant, MiTAC International Corporation and SunMicrosystems, Inc., including amendments thereto (incorporated by reference to Exhibit 10.15 to Amendment No. 2 to the Company’sRegistration Statement on Form S-1 (File No. 333-108543)).

10.11

Joint Sales and Marketing Agreement, dated May 6, 2002, between the Registrant and MiTAC International Corporation (incorporated byreference to Exhibit 10.16 to Amendment No. 2 to the Company’s Registration Statement on Form S-1 (File No. 333-108543)).

10.12

Master Agreement and Plan of Reorganization among the Company, SYNNEX, K.K. and MCJ Co., Ltd. dated March 29, 2005 (incorporated byreference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended May 31, 2005).

10.13#

Employment Agreement dated February 7, 2006, by and between the Registrant and Robert Huang (incorporated by reference to Exhibit 10.1 tothe Company’s Current Report on Form 8-K filed on February 13, 2006).

10.14# Employment Agreement dated July 14, 2004, by and between the Registrant and Jim Estill

10.15

Second Amended and Restated Credit Agreement dated as of February 12, 2007 by and among the Registrant, the lenders signatory thereto fromtime to time, and General Electric Capital Corporation, a Delaware corporation.

10.16

Second Amended and Restated Receivables Sale and Servicing Agreement, dated as of February 12, 2007, among the Originator, the Servicer andSIT Funding Corporation.

10.17

Second Amended and Restated Receivables Funding and Administration Agreement, dated as February 12, 2007, among SIT FundingCorporation, the lenders party thereto and General Electric Capital Corporation.

21.1

Subsidiaries of the Company (incorporated by reference to Exhibit 21.1 to the Company’s Annual Report on Form 10-K for the fiscal year endedNovember 30, 2004).

23.1 Consent of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm.

24.1 Power of Attorney (see page 96 of this Form 10-K).

31.1 Rule 13a-14(a) Certification of Chief Executive Officer.

31.2 Rule 13a-14(a) Certification of Chief Financial Officer.

32.1*

Statement of the Chief Executive Officer and Chief Financial Officer under Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section1350).

# Indicates management contract or compensatory plan or arrangement.* In accordance with Item 601(b)(32)(ii) of Regulation S-K and SEC Release Nos. 33-8238 and 34-47986, Final Rule: Management’s Reports on Internal

Control Over Financial Reporting and Certification of Disclosure in Exchange Act Periodic Reports, the certifications furnished in Exhibit 32.1 hereto aredeemed to accompany this Form 10-K and will not be deemed “filed” for purpose of Section 18 of the Exchange Act. Such certifications will not be deemedto be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the registrant specifically incorporates itby reference.

(c) Financial Statement Schedules.


95


Table of ContentsSIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signedon its behalf by the undersigned, thereunto duly authorized.

Date: February 13, 2007

SYNNEX CORPORATION

By: /s/ ROBERT HUANG

Robert Huang

President and Chief Executive Officer

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Robert Huang and Dennis Polk, andeach of them, his true and lawful attorneys-in-fact, each with full power of substitution, for him or her in any and all capacities, to sign any amendments to thisreport on Form 10-K and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission,hereby ratifying and confirming all that each of said attorneys-in-fact or their substitute or substitutes may do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of theregistrant and in the capacities and on the dates indicated.

Name Title Date

/s/ ROBERT HUANGRobert Huang

President, Chief Executive Officer and Director(Principal Executive Officer)

February 13, 2007

/s/ DENNIS POLKDennis Polk

Chief Financial Officer (Principal Financial andPrincipal Accounting Officer)

February 13, 2007

/s/ MATTHEW MIAUMatthew Miau

Chairman of the Board

February 13, 2007

/s/ FRED BREIDENBACHFred Breidenbach

Director

February 13, 2007

/s/ JAMES VAN HORNEJames Van Horne

Director

February 13, 2007

/s/ GREGORY QUESNELGregory Quesnel

Director

February 13, 2007

/s/ DAVID RYNNEDavid Rynne

Director

February 13, 2007

/s/ DWIGHT STEFFENSENDwight Steffensen

Director

February 13, 2007

96


Table of ContentsEXHIBIT INDEX

ExhibitNumber

Description of Document

3(i)1

Restated Certificate of Incorporation (incorporated by reference to Exhibit 3(i)3 to Amendment No. 1 to the Company’s Registration Statementon Form S-1 (File No. 333-108543)).

3(ii)2

Restated Bylaws (incorporate by reference to Exhibit 3(ii)3 to Amendment No. 1 to the Company’s Registration Statement on Form S-1 (FileNo. 333-108543)).

4.1

Form of Common Stock Certificate (incorporated by reference to the exhibit of the same number to Amendment No. 2 to the Company’sRegistration Statement on Form S-1 (File No. 333-108543)).

10.1# Amended and Restated 2003 Stock Incentive Plan and form of agreements thereunder.

10.2#

2003 Employee Stock Purchase Plan (incorporated by reference to Exhibit 10.5 to Amendment No. 2 to the Company’s Registration Statementon Form S-1 (File No. 333-108543)).

10.3

Form of Indemnification Agreement between the Registrant and its officers and directors (incorporated by reference to Exhibit 10.6 to theCompany’s Registration Statement on Form S-1 (File No. 333-108543)).

10.4

Registration Rights Agreement dated as of July 1, 2002 (incorporated by reference to Exhibit 10.7 to the Company’s Registration Statement onForm S-1 (File No. 333-108543)).

10.5

Standard Industrial Lease, dated December 5, 1996, between the Registrant and Alexander & Baldwin, Inc. (incorporated by reference to Exhibit10.10 to the Company’s Registration Statement on Form S-1 (File No. 333-108543)).

10.6

First Amendment to Lease, dated May 24, 1999, between the Registrant and Bedford Property Investors, Inc. (incorporated by reference toExhibit 10.11 to the Company’s Registration Statement on Form S-1 (File No. 333-108543)).

10.7

Second Amendment to Lease, dated March 30, 2001, between the Registrant and Bedford Property Investors, Inc. (incorporated by reference toExhibit 10.12 to the Company’s Registration Statement on Form S-1 (File No. 333-108543)).

10.8#

Form of Change of Control Severance Plan (incorporated by reference to Exhibit 10.13 to Amendment No. 1 to the Company’s RegistrationStatement on Form S-1 (File No. 333-108543)).

10.9

HP U.S. Business Development Partner Agreement, dated November 6, 2003, between the Registrant and Hewlett-Packard Company(incorporated by reference to Exhibit 10.14 to Amendment No. 2 to the Company’s Registration Statement on Form S-1 (File No. 333-108543)).

10.10

Master External Manufacturing Agreement, dated August 28, 1999, by and among the Registrant, MiTAC International Corporation and SunMicrosystems, Inc., including amendments thereto (incorporated by reference to Exhibit 10.15 to Amendment No. 2 to the Company’sRegistration Statement on Form S-1 (File No. 333-108543)).

10.11

Joint Sales and Marketing Agreement, dated May 6, 2002, between the Registrant and MiTAC International Corporation (incorporated byreference to Exhibit 10.16 to Amendment No. 2 to the Company’s Registration Statement on Form S-1 (File No. 333-108543)).

10.12

Master Agreement and Plan of Reorganization among the Company, SYNNEX, K.K. and MCJ Co., Ltd. dated March 29, 2005 (incorporated byreference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended May 31, 2005).

97


Table of Contents

ExhibitNumber Description of Document

10.13#

Employment Agreement dated February 7, 2006, by and between the Company and Robert Huang (incorporated by reference to Exhibit 10.1 tothe Company’s Current Report on Form 8-K filed on February 13, 2006).

10.14# Employment Agreement dated July 14, 2004, by and between the Registrant and Jim Estill

10.15

Second Amended and Restated Credit Agreement dated as of February 12, 2007 by and among the Registrant, the lenders signatory thereto fromtime to time, and General Electric Capital Corporation, a Delaware corporation.

10.16

Second Amended and Restated Receivables Sale and Servicing Agreement, dated as of February 12, 2007, among the Originator, the Servicerand SIT Funding Corporation.

10.17

Second Amended and Restated Receivables Funding and Administration Agreement, dated as February 12, 2007, among SIT FundingCorporation, the lenders party thereto and General Electric Capital Corporation.

21.1

Subsidiaries of the Company (incorporated by reference to Exhibit 21.1 to the Company’s Annual Report on Form 10-K for the fiscal year endedNovember 30, 2004).

23.1 Consent of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm.

24.1 Power of Attorney (see page 96 of this Form 10-K).

31.1 Rule 13a-14(a) Certification of Chief Executive Officer.

31.2 Rule 13a-14(a) Certification of Chief Financial Officer.

32.1*

Statement of the Chief Executive Officer and Chief Financial Officer under Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section1350).

# Indicates management contract or compensatory plan or arrangement.* In accordance with Item 601(b)(32)(ii) of Regulation S-K and SEC Release Nos. 33-8238 and 34-47986, Final Rule: Management’s Reports on Internal

Control Over Financial Reporting and Certification of Disclosure in Exchange Act Periodic Reports, the certifications furnished in Exhibit 32.1 hereto aredeemed to accompany this Form 10-K and will not be deemed “filed” for purpose of Section 18 of the Exchange Act. Such certifications will not be deemedto be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the registrant specifically incorporates itby reference.

98


Exhibit 10.1

SYNNEX CORPORATION

2003 STOCK INCENTIVE PLAN

(Adopted by the Board on September 2, 2003,

and amended and restated by the Board on January 10, 2006, June 20, 2006 and January 4, 2007.

Reflects 2:1 Reverse Stock Split on November 12, 2003)


TABLE OF CONTENTS

PageSection 1. ESTABLISHMENT AND PURPOSE. 1

Section 2. DEFINITIONS. 1 (a) “Affiliate” 1 (b) “Award” 1 (c) “Board of Directors” 1 (d) “Change in Control” 1 (e) “Code” 2 (f) “Committee” 2 (g) “Company” 2 (h) “Consultant” 2 (i) “Disability” 3 (j) “Employee” 3 (k) “Exchange Act” 3 (l) “Exercise Price” 3 (m) “Fair Market Value” 3 (n) “ISO” 3 (o) “Misconduct” 3 (p) “Nonstatutory Option” or “NSO” 4 (q) “Offeree” 4 (r) “Option” 4 (s) “Optionee” 4 (t) “Outside Director” 4 (u) “Parent” 4 (v) “Participant” 4 (w) “Plan” 4 (x) “Purchase Price” 4 (y) “Restricted Share” 4 (z) “Restricted Share Agreement “ 4 (aa) “SAR” 4 (bb) “SAR Agreement” 4 (cc) “Service” 4 (dd) “Share” 4 (ee) “Stock” 4 (ff) “Stock Option Agreement” 5 (gg) “Stock Unit” 5 (hh) “Stock Unit Agreement” 5 (ii) “Subsidiary” 5

Section 3. ADMINISTRATION. 5 (a) Committee Composition 5 (b) Committee for Non-Officer Grants 5 (c) Committee Procedures 5

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(d) Committee Responsibilities 6

Section 4. ELIGIBILITY. 7 (a) General Rule 7 (b) Automatic Grants to Outside Directors. 7 (c) Ten-Percent Stockholders. 8 (d) Attribution Rules. 8 (e) Outstanding Stock. 9

Section 5. STOCK SUBJECT TO PLAN. 9 (a) Basic Limitation 9 (b) Additional Shares 9

Section 6. RESTRICTED SHARES 9 (a) Restricted Stock Agreement 9 (b) Payment for Awards 9 (c) Vesting 10 (d) Voting and Dividend Rights 10 (e) Restrictions on Transfer of Shares 10

Section 7. TERMS AND CONDITIONS OF OPTIONS. 10 (a) Stock Option Agreement 10 (b) Number of Shares 10 (c) Exercise Price 10 (d) Withholding Taxes 11 (e) Exercisability and Term 11 (f) Exercise of Options Upon Termination of Service 11 (g) Effect of Change in Control 11 (h) Leaves of Absence 11 (i) No Rights as a Stockholder 12 (j) Modification, Extension and Renewal of Options 12 (k) Restrictions on Transfer of Shares 12 (l) Buyout Provisions 12

Section 8. PAYMENT FOR SHARES. 12 (a) General Rule 12 (b) Surrender of Stock 12 (c) Services Rendered 12 (d) Cashless Exercise 12 (e) Exercise/Pledge 13 (f) Promissory Note 13 (g) Other Forms of Payment 13 (h) Limitations under Applicable Law 13

Section 9. STOCK APPRECIATION RIGHTS. 13 (a) SAR Agreement 13 (b) Number of Shares 13

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(c) Exercise Price 13 (d) Exercisability and Term 13 (e) Effect of Change in Control 14 (f) Exercise of SARs 14 (g) Modification or Assumption of SARs 14

Section 10. STOCK UNITS. 14 (a) Stock Unit Agreement 14 (b) Payment for Awards 14 (c) Vesting Conditions 14 (d) Voting and Dividend Rights 14 (e) Form and Time of Settlement of Stock Units 15 (f) Death of Recipient 15 (g) Creditors’ Rights 15

Section 11. ADJUSTMENT OF SHARES. 15 (a) Adjustments 15 (b) Dissolution or Liquidation 16 (c) Reorganizations 16 (d) Reservation of Rights 16

Section 12. LEGAL AND REGULATORY REQUIREMENTS. 16

Section 13. WITHHOLDING TAXES. 17 (a) General 17 (b) Share Withholding 17

Section 14. LIMITATION ON PARACHUTE PAYMENTS. 17 (a) Scope of Limitation. 17 (b) Basic Rule 17 (c) Reduction of Payments 17 (d) Related Corporations 18

Section 15. NO EMPLOYMENT RIGHTS. 18

Section 16. DURATION AND AMENDMENTS. 18 (a) Term of the Plan 18 (b) Right to Amend or Terminate the Plan 18 (c) Effect of Amendment or Termination 18

Section 17. EXECUTION. 18

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SYNNEX CORPORATION

2003 STOCK INCENTIVE PLAN

SECTION 1. ESTABLISHMENT AND PURPOSE.

The Plan was adopted by the Board of Directors on September 2, 2003, effective as of the date of the initial offering of Stock to the public pursuant to aregistration statement filed by the Company with the Securities and Exchange Commission, and was amended and restated by the Board of Directors onJanuary 10, 2006. The purpose of the Plan is to promote the long-term success of the Company and the creation of stockholder value by (a) encouragingEmployees, Outside Directors and Consultants to focus on critical long-range objectives, (b) encouraging the attraction and retention of Employees, OutsideDirectors and Consultants with exceptional qualifications and (c) linking Employees, Outside Directors and Consultants directly to stockholder interests throughincreased stock ownership. The Plan seeks to achieve this purpose by providing for Awards in the form of restricted shares, stock units, options (which mayconstitute incentive stock options or nonstatutory stock options) or stock appreciation rights.

SECTION 2. DEFINITIONS.

(a) “Affiliate” shall mean any entity other than a Subsidiary, if the Company and/or one of more Subsidiaries own not less than 50% of such entity.

(b) “Award” shall mean any award of an Option, a SAR, a Restricted Share or a Stock Unit under the Plan.

(c) “Board of Directors” shall mean the Board of Directors of the Company, as constituted from time to time.

(d) “Change in Control” shall mean the occurrence of any of the following events:

(i) A change in the composition of the Board of Directors occurs, as a result of which fewer than one-half of the incumbent directors are directorswho either:

(A) Had been directors of the Company on the “look-back date” (as defined below) (the “original directors”); or

(B) Were elected, or nominated for election, to the Board of Directors with the affirmative votes of at least a majority of the aggregate of theoriginal directors who were still in office at the time of the election or nomination and the directors whose election or nomination was previously soapproved (the “continuing directors”); or

(ii) Any “person” (as defined below) who by the acquisition or aggregation of securities, is or becomes the “beneficial owner” (as defined in Rule13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 50% or more of the combined voting power of theCompany’s then outstanding securities

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ordinarily (and apart from rights accruing under special circumstances) having the right to vote at elections of directors (the “Base Capital Stock”); exceptthat any change in the relative beneficial ownership of the Company’s securities by any person resulting solely from a reduction in the aggregate numberof outstanding shares of Base Capital Stock, and any decrease thereafter in such person’s ownership of securities, shall be disregarded until such personincreases in any manner, directly or indirectly, such person’s beneficial ownership of any securities of the Company; or

(iii) The consummation of a merger or consolidation of the Company with or into another entity or any other corporate reorganization, if personswho were not stockholders of the Company immediately prior to such merger, consolidation or other reorganization own immediately after such merger,consolidation or other reorganization 50% or more of the voting power of the outstanding securities of each of (A) the continuing or surviving entity and(B) any direct or indirect parent corporation of such continuing or surviving entity; or

(iv) The sale, transfer or other disposition of all or substantially all of the Company’s assets.

For purposes of subsection (d)(i) above, the term “look-back” date shall mean the later of (1) September 2, 2003 or (2) the date 24 months prior to the dateof the event that may constitute a Change in Control.

For purposes of subsection (d)(ii)) above, the term “person” shall have the same meaning as when used in Sections 13(d) and 14(d) of the Exchange Actbut shall exclude (1) a trustee or other fiduciary holding securities under an employee benefit plan maintained by the Company or a Parent or Subsidiary and (2) acorporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of the Stock.

Any other provision of this Section 2(d) notwithstanding, a transaction shall not constitute a Change in Control if its sole purpose is to change the state ofthe Company’s incorporation or to create a holding company that will be owned in substantially the same proportions by the persons who held the Company’ssecurities immediately before such transaction, and a Change in Control shall not be deemed to occur if the Company files a registration statement with theSecurities and Exchange Commission for the initial offering of Stock to the public.

(e) “Code” shall mean the Internal Revenue Code of 1986, as amended.

(f) “Committee” shall mean the Compensation Committee as designated by the Board of Directors, which is authorized to administer the Plan, asdescribed in Section 3 hereof.

(g) “Company” shall mean SYNNEX Corporation

(h) “Consultant” shall mean a consultant or advisor who provides bona fide services to the Company, a Parent, a Subsidiary or an Affiliate as anindependent contractor or a member of the board of directors of a Parent or a Subsidiary who is not an Employee. Service as a Consultant shall be consideredService for all purposes of the Plan.

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(i) “Disability” shall mean that the Optionee is unable to engage in any substantial gainful activity by reason of any medically determinable physical ormental impairment.

(j) “Employee” shall mean any individual who is a common-law employee of the Company, a Parent or a Subsidiary.

(k) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

(l) “Exercise Price” shall mean, in the case of an Option, the amount for which one Common Share may be purchased upon exercise of such Option, asspecified in the applicable Stock Option Agreement. “Exercise Price,” in the case of a SAR, shall mean an amount, as specified in the applicable SARAgreement, which is subtracted from the Fair Market Value of one Common Share in determining the amount payable upon exercise of such SAR.

(m) “Fair Market Value” with respect to a Share, shall mean the market price of one Share of Stock, determined by the Committee as follows:

(i) If the Stock was traded over-the-counter on the date in question but was not traded on The Nasdaq Stock Market, then the Fair Market Value shallbe equal to the last transaction price quoted for such date by the OTC Bulletin Board or, if not so quoted, shall be equal to the mean between the lastreported representative bid and asked prices quoted for such date by the principal automated inter-dealer quotation system on which the Stock is quoted or,if the Stock is not quoted on any such system, by the Pink Sheets LLC;

(ii) If the Stock was traded on The Nasdaq Stock Market, then the Fair Market Value shall be equal to the last reported sale price quoted for suchdate by The Nasdaq Stock Market;

(iii) If the Stock was traded on a United States stock exchange on the date in question, then the Fair Market Value shall be equal to the closing pricereported for such date by the applicable composite-transactions report; and

(iv) If none of the foregoing provisions is applicable, then the Fair Market Value shall be determined by the Committee in good faith on such basisas it deems appropriate.

In all cases, the determination of Fair Market Value by the Committee shall be conclusive and binding on all persons.

(n) “ISO” shall mean an employee incentive stock option described in Section 422 of the Code.

(o) “Misconduct” shall mean the commission of any act of fraud, embezzlement or dishonesty by the Participant, any unauthorized use or disclosure bythe Participant of confidential information or trade secrets of the Company (or any Parent or Subsidiary), or any other intentional misconduct by the Participantadversely affecting the business or affairs of the Company (or any Parent or Subsidiary) in a material manner. The foregoing definition shall not be deemed to beinclusive of all the acts or omissions which the Company (or any Parent or Subsidiary) may consider as grounds for the dismissal or discharge of the Participantor any other individual in the Service of the Company (or any Parent or Subsidiary).

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(p) “Nonstatutory Option” or “NSO” shall mean an employee stock option that is not an ISO.

(q) “Offeree” shall mean an individual to whom the Committee has offered the right to acquire Shares under the Plan (other than upon exercise of anOption).

(r) “Option” shall mean an ISO or Nonstatutory Option granted under the Plan and entitling the holder to purchase Shares.

(s) “Optionee” shall mean an individual or estate who holds an Option or SAR.

(t) “Outside Director” shall mean a member of the Board of Directors who is not a common-law employee of the Company, a Parent or a Subsidiary.Service as an Outside Director shall be considered Service for all purposes of the Plan, except as provided in the second sentence of Section 4(a).

(u) “Parent” shall mean any corporation (other than the Company) in an unbroken chain of corporations ending with the Company, if each of thecorporations other than the Company owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the othercorporations in such chain. A corporation that attains the status of a Parent on a date after the adoption of the Plan shall be a Parent commencing as of such date.

(v) “Participant” shall mean an individual or estate who holds an Award.

(w) “Plan” shall mean this 2003 Stock Incentive Plan of SYNNEX Corporation, as amended from time to time.

(x) “Purchase Price” shall mean the consideration for which one Share may be acquired under the Plan (other than upon exercise of an Option), asspecified by the Committee.

(y) “Restricted Share” shall mean a Share awarded under the Plan.

(z) “Restricted Share Agreement” shall mean the agreement between the Company and the recipient of a Restricted Share which contains the terms,conditions and restrictions pertaining to such Restricted Shares.

(aa) “SAR” shall mean a stock appreciation right granted under the Plan.

(bb) “SAR Agreement” shall mean the agreement between the Company and an Optionee which contains the terms, conditions and restrictions pertainingto his or her SAR.

(cc) “Service” shall mean service as an Employee, Consultant or Outside Director.

(dd) “Share” shall mean one share of Stock, as adjusted in accordance with Section 11 (if applicable).

(ee) “Stock” shall mean the Common Stock of the Company.

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(ff) “Stock Option Agreement” shall mean the agreement between the Company and an Optionee that contains the terms, conditions and restrictionspertaining to such Option.

(gg) “Stock Unit” shall mean a bookkeeping entry representing the Company’s obligation to deliver one Share (or distribute cash) on a future date inaccordance with the terms, conditions and restrictions of a Stock Unit Agreement.

(hh) “Stock Unit Agreement” shall mean the agreement between the Company and the recipient of a Stock Unit which contains the terms, conditions andrestrictions pertaining to such Stock Unit.

(ii) “Subsidiary” shall mean any corporation, if the Company and/or one or more other Subsidiaries own not less than 50% of the total combined votingpower of all classes of outstanding stock of such corporation. A corporation that attains the status of a Subsidiary on a date after the adoption of the Plan shall beconsidered a Subsidiary commencing as of such date.

SECTION 3. ADMINISTRATION.

(a) Committee Composition. The Plan shall be administered by the Committee. The Committee shall consist of two or more directors of the Company, whoshall be appointed by the Board. In addition, the composition of the Committee shall satisfy

(i) such requirements as the Securities and Exchange Commission may establish for administrators acting under plans intended to qualify forexemption under Rule 16b-3 (or its successor) under the Exchange Act; and

(ii) such requirements as the Internal Revenue Service may establish for outside directors acting under plans intended to qualify for exemption underSection 162(m)(4)(C) of the Code.

(b) Committee for Non-Officer Grants. The Board may also appoint one or more separate committees of the Board, each composed of one or moredirectors of the Company who need not satisfy the requirements of Section 3(a), who may administer the Plan with respect to Employees who are not consideredofficers or directors of the Company under Section 16 of the Exchange Act, may grant Awards under the Plan to such Employees and may determine all terms ofsuch grants. Within the limitations of the preceding sentence, any reference in the Plan to the Committee shall include such committee or committees appointedpursuant to the preceding sentence. The Board of Directors may also authorize one or more officers of the Company to designate Employees, other than officersunder Section 16 of the Exchange Act, to receive Awards and/or to determine the number of such Awards to be received by such persons; provided, however,that the Board of Directors shall specify the total number of Awards that such officers may so award.

(c) Committee Procedures. The Board of Directors shall designate one of the members of the Committee as chairman. The Committee may hold meetingsat such times and places as it shall determine. The acts of a majority of the Committee members present at meetings at which a quorum exists, or acts reduced toor approved in writing by all Committee members, shall be valid acts of the Committee.

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(d) Committee Responsibilities. Subject to the provisions of the Plan, the Committee shall have full authority and discretion to take the following actions:

(i) To interpret the Plan and to apply its provisions;

(ii) To adopt, amend or rescind rules, procedures and forms relating to the Plan;

(iii) To authorize any person to execute, on behalf of the Company, any instrument required to carry out the purposes of the Plan;

(iv) To determine when Awards are to be granted under the Plan;

(v) To select the Offerees and Optionees;

(vi) To determine the number of Shares to be made subject to each Award;

(vii) To prescribe the terms and conditions of each Award, including (without limitation) the Exercise Price and Purchas Price, and the vesting orduration of the Award (including accelerating the vesting of Awards, either at the time of the Award or thereafter, without the consent of the Participant),to determine whether an Option is to be classified as an ISO or as a Nonstatutory Option, and to specify the provisions of the agreement relating to suchAward;

(viii) To amend any outstanding Award agreement, subject to applicable legal restrictions and to the consent of the Participant if the Participant’srights or obligations would be adversely affected;

(ix) To prescribe the consideration for the grant of each Award or other right under the Plan and to determine the sufficiency of such consideration;

(x) To determine the disposition of each Award or other right under the Plan in the event of a Participant’s divorce or dissolution of marriage;

(xi) To determine whether Awards under the Plan will be granted in replacement of other grants under an incentive or other compensation plan of anacquired business;

(xii) To correct any defect, supply any omission, or reconcile any inconsistency in the Plan or any Award agreement; and

(xiii) To take any other actions deemed necessary or advisable for the administration of the Plan.

Subject to the requirements of applicable law, the Committee may designate persons other than members of the Committee to carry out its responsibilities andmay prescribe such conditions and limitations as it may deem appropriate, except that the Committee may not delegate its authority with regard to the selectionfor participation of or the granting of Options or other rights under the Plan to persons subject to Section 16 of the Exchange Act. All decisions,

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interpretations and other actions of the Committee shall be final and binding on all Offerees, all Optionees, and all persons deriving their rights from an Offereeor Optionee. No member of the Committee shall be liable for any action that he has taken or has failed to take in good faith with respect to the Plan, any Option,or any right to acquire Shares under the Plan.

SECTION 4. ELIGIBILITY.

(a) General Rule. Only Employees shall be eligible for the grant of ISOs. Only Employees, Consultants and Outside Directors shall be eligible for thegrant of Restricted Shares, Stock Units, Nonstatutory Options or SARs.

(b) Automatic Grants to Outside Directors.

(i) Each Outside Director who first joins the Board of Directors after January 4, 2007, and who was not previously an Employee, shall receive aNonstatutory Option to purchase 10,000 Shares (subject to adjustment under Section 11) and 2,000 Restricted Shares (subject to adjustment underSection 11) on the first business day after his or her election to the Board of Directors; provided, however, if the first business day after his or her electionfalls within a trading black-out period, then the grant date for Options or Restricted Shares granted pursuant to this section shall be upon the expiration ofthe third trading day after the trading black-out period ends.

(ii) On the first business day following the conclusion of each regular annual meeting of the Company’s stockholders after such Outside Director’sappointment or election to the Board of Directors, commencing with the annual meeting occurring after January 4, 2007, each Outside Director who willcontinue serving as a member of the Board of Directors thereafter shall receive 2,000 Restricted Shares (subject to adjustment under Section 11), providedsuch Outside Director has served on the Board of Directors for at least six months; provided, further, if the first business day following the conclusion ofthe regular annual meeting of the Company’s stockholders after such Outside Director’s appointment or election to the Board of Directors falls within atrading black-out period, then the grant date for Restricted Shares granted pursuant to this section shall be upon the expiration of the third trading day afterthe trading black-out period ends.

(iii) The Exercise Price of all Nonstatutory Options granted to an Outside Director under this Section 4(b) shall be equal to 100% of the Fair MarketValue of a Share on the date of grant, payable in one of the forms described in Section 8(a), (b) or (d).

(iv)(A) With respect to Options granted to Outside Directors under this Section 4(b) after January 4, 2007, one-third (1/3) of the Shares subject toeach Option shall vest and become exercisable on the first anniversary of the date of grant, and the balance of the Shares subject to each Option (i.e., theremaining two-thirds (2/3)) shall vest and become exercisable monthly over a two-year period beginning on the day which is one month after the firstanniversary of the date of grant; (B) with respect to Restricted Shares awarded to Outside Directors under this Section 4(b) after January 4, 2007, one-third(1/3) of the Restricted Shares shall vest on each anniversary of the date of grant over

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a three-year period; and (C) notwithstanding the foregoing, upon an Outside Director’s retirement from the Board of Directors with the consent of theBoard, each award of Restricted Shares under Section 4(b)(ii) above to such Outside Director shall become fully vested.

(v) Subject to Sections 4(b)(vi) and (vii) below, all Nonstatutory Options granted to an Outside Director under this Section 4(e) shall terminate onthe day before the tenth anniversary of the date of grant of such Options.

(vi) If an Outside Director’s Service terminates for any reason, then his or her Options granted under this Section 4(b) shall expire on the earliest ofthe following occasions:

(A) The expiration date determined pursuant to Section 4(b)(v) above;

(B) The date 12 months after the termination of the Outside Director’s Service, if the termination occurs because of his or her death orDisability;

(C) The date of the Outside Director’s termination of Service, if the termination occurs by reason of his or her Misconduct; or

(D) The date three months after the termination of the Outside Director’s Service, if the termination occurs for any reason other than death,Disability or Misconduct.

The Outside Director may exercise all or part of his or her Options at any time before the expiration of such Options under the preceding sentence, butonly to the extent that such Options had become vested before his or her Service terminated. The balance of such Options shall lapse when the OutsideDirector’s Service terminates.

(vii) In the event that the Outside Director dies after the termination of his or her Service but before the expiration of his or her Options grantedunder this Section 4(b), then his or her Options shall expire on the earlier of the following dates:

(A) The expiration date determined pursuant to Section 4(b)(v) above; or

(B) The date 12 months after his or her death.

(c) Ten-Percent Stockholders. An Employee who owns more than 10% of the total combined voting power of all classes of outstanding stock of theCompany, a Parent or Subsidiary shall not be eligible for the grant of an ISO unless such grant satisfies the requirements of Section 422(c)(5) of the Code.

(d) Attribution Rules. For purposes of Section 4(c) above, in determining stock ownership, an Employee shall be deemed to own the stock owned, directlyor indirectly, by or for such Employee’s brothers, sisters, spouse, ancestors and lineal descendants. Stock owned, directly or indirectly, by or for a corporation,partnership, estate or trust shall be deemed to be owned proportionately by or for its stockholders, partners or beneficiaries.

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(e) Outstanding Stock. For purposes of Section 4(c) above, “outstanding stock” shall include all stock actually issued and outstanding immediately after thegrant. “Outstanding stock” shall not include shares authorized for issuance under outstanding options held by the Employee or by any other person.

SECTION 5. STOCK SUBJECT TO PLAN.

(a) Basic Limitation. Shares offered under the Plan shall be authorized but unissued Shares or treasury Shares. Subject to Section 5(b) below, themaximum aggregate number of Options, SARs and Restricted Shares awarded under the Plan shall not exceed the sum of (i) the number of Shares subject tooutstanding options granted under the Company’s 1997 Stock Option/Stock Issuance Plan, Special Executive Stock Option/Stock Issuance Plan and 1993 StockOption Plan (the “Predecessor Plans”), as of the effective date of the Plan, to the extent those options expire, terminate or are cancelled for any reason prior toexercise in full, plus (ii) 5,506,649 Shares; provided, however, that such sum shall not exceed 14,111,761 Shares. The limitations of this Section 5(a) shall besubject to adjustment pursuant to Section 11. All Share amounts set forth in the Plan have been adjusted to give effect to a 2 for 1 reverse stock split of the Stockwhich was effected on November 12, 2003. The number of Shares that are subject to Options or other rights outstanding at any time under the Plan shall notexceed the number of Shares which then remain available for issuance under the Plan. The Company, during the term of the Plan, shall at all times reserve andkeep available sufficient Shares to satisfy the requirements of the Plan.

(b) Additional Shares. If Restricted Shares or Shares issued upon the exercise of Options are forfeited, then such Shares shall again become available forAwards under the Plan. If Stock Units, Options or SARs are forfeited or terminate for any other reason before being exercised or settled, as applicable, then thecorresponding Shares shall again become available for Awards under the Plan. If Stock Units are settled, then only the number of Shares (if any) actually issuedin settlement of such Stock Units shall reduce the number available under Section 5(a) and the balance shall again become available for Awards under the Plan. IfSARs are exercised, then only the number of Shares (if any) actually issued in settlement of such SARs shall reduce the number available in Section 5(a) and thebalance shall again become available for Awards under the Plan.

SECTION 6. RESTRICTED SHARES

(a) Restricted Stock Agreement. Each grant of Restricted Shares under the Plan shall be evidenced by a Restricted Stock Agreement between the recipientand the Company. Such Restricted Shares shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent withthe Plan. The provisions of the various Restricted Stock Agreements entered into under the Plan need not be identical.

(b) Payment for Awards. Subject to the following sentence, Restricted Shares may be sold or awarded under the Plan for such consideration as theCommittee may determine, including (without limitation) cash, cash equivalents, full-recourse promissory notes, past services and future services. To the extentthat an Award consists of newly issued Restricted Shares, the Award recipient shall furnish consideration with a value not less than the par value of suchRestricted Shares in the form of cash, cash equivalents, or past services rendered to the Company (or a Parent or Subsidiary), as the Committee may determine.

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(c) Vesting. Each Award of Restricted Shares may or may not be subject to vesting. Vesting shall occur, in full or in installments, upon satisfaction of theconditions specified in the Restricted Stock Agreement. A Restricted Stock Agreement may provide for accelerated vesting in the event of the Participant’sdeath, disability or retirement or other events. The Committee may determine, at the time of granting Restricted Shares of thereafter, that all or part of suchRestricted Shares shall become vested in the event that a Change in Control occurs with respect to the Company.

(d) Voting and Dividend Rights. The holders of Restricted Shares awarded under the Plan shall have the same voting, dividend and other rights as theCompany’s other stockholders. A Restricted Stock Agreement, however, may require that the holders of Restricted Shares invest any cash dividends received inadditional Restricted Shares. Such additional Restricted Shares shall be subject to the same conditions and restrictions as the Award with respect to which thedividends were paid.

(e) Restrictions on Transfer of Shares. Restricted Shares shall be subject to such rights of repurchase, rights of first refusal or other restrictions as theCommittee may determine. Such restrictions shall be set forth in the applicable Restricted Stock Agreement and shall apply in addition to any general restrictionsthat may apply to all holders of Shares.

SECTION 7. TERMS AND CONDITIONS OF OPTIONS.

(a) Stock Option Agreement. Each grant of an Option under the Plan shall be evidenced by a Stock Option Agreement between the Optionee and theCompany. Such Option shall be subject to all applicable terms and conditions of the Plan and may be subject to any other terms and conditions which are notinconsistent with the Plan and which the Committee deems appropriate for inclusion in a Stock Option Agreement. The Stock Option Agreement shall specifywhether the Option is an ISO or an NSO. The provisions of the various Stock Option Agreements entered into under the Plan need not be identical. Options maybe granted in consideration of a reduction in the Optionee’s other compensation.

(b) Number of Shares. Each Stock Option Agreement shall specify the number of Shares that are subject to the Option and shall provide for the adjustmentof such number in accordance with Section 11. Options granted to an Optionee in a single calendar year of the Company shall not cover more than 1,500,000Shares, except that Options granted to a new Employee or Consultant in the calendar year of the Company in which his or her Service first commences shall notcover more than 2,500,000 Shares (in each case subject to adjustment in accordance with Section 11).

(c) Exercise Price. Each Stock Option Agreement shall specify the Exercise Price. The Exercise Price of an ISO shall not be less than 100% of the FairMarket Value of a Share on the date of grant, except as otherwise provided in Section 4(c), and the Exercise Price of an NSO shall not be less 85% of the FairMarket Value of a Share on the date of grant. Notwithstanding the foregoing, a Stock Option Agreement may specify that the exercise price of an NSO may varyin accordance with a predetermined formula. Subject to the foregoing in this Section 7(c), the Exercise Price under any Option shall be determined by theCommittee at its sole discretion. The Exercise Price shall be payable in one of the forms described in Section 8.

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(d) Withholding Taxes. As a condition to the exercise of an Option, the Optionee shall make such arrangements as the Committee may require for thesatisfaction of any federal, state, local or foreign withholding tax obligations that may arise in connection with such exercise. The Optionee shall also make sucharrangements as the Committee may require for the satisfaction of any federal, state, local or foreign withholding tax obligations that may arise in connectionwith the disposition of Shares acquired by exercising an Option.

(e) Exercisability and Term. Each Stock Option Agreement shall specify the date when all or any installment of the Option is to become exercisable. TheStock Option Agreement shall also specify the term of the Option; provided that the term of an ISO shall in no event exceed 10 years from the date of grant (fiveyears for Employees described in Section 4(c)). A Stock Option Agreement may provide for accelerated exercisability in the event of the Optionee’s death,disability, or retirement or other events and may provide for expiration prior to the end of its term in the event of the termination of the Optionee’s Service.Options may be awarded in combination with SARs, and such an Award may provide that the Options will not be exercisable unless the related SARs areforfeited. Subject to the foregoing in this Section 7(e), the Committee at its sole discretion shall determine when all or any installment of an Option is to becomeexercisable and when an Option is to expire.

(f) Exercise of Options Upon Termination of Service. Each Stock Option Agreement shall set forth the extent to which the Optionee shall have the right toexercise the Option following termination of the Optionee’s Service with the Company and its Subsidiaries, and the right to exercise the Option of any executorsor administrators of the Optionee’s estate or any person who has acquired such Option(s) directly from the Optionee by bequest or inheritance. Such provisionsshall be determined in the sole discretion of the Committee, need not be uniform among all Options issued pursuant to the Plan, and may reflect distinctionsbased on the reasons for termination of Service.

(g) Effect of Change in Control. The Committee may determine, at the time of granting an Option or thereafter, that such Option shall become exercisableas to all or part of the Shares subject to such Option in the event that a Change in Control occurs with respect to the Company.

(h) Leaves of Absence. An Employee’s Service shall cease when such Employee ceases to be actively employed by, or a Consultant to, the Company (orany subsidiary) as determined in the sole discretion of the Board of Directors. For purposes of Options, Service does not terminate when an Employee goes on abona fide leave of absence, that was approved by the Company in writing, if the terms of the leave provide for continued service crediting, or when continuedservice crediting is required by applicable law. However, for purposes of determining whether an Option is entitled to ISO status, an Employee’s Service will betreated as terminating 90 days after such Employee went on leave, unless such Employee’s right to return to active work is guaranteed by law or by a contract.Service terminates in any event when the approved leave ends, unless such Employee immediately returns to active work. The Company determines which leavescount toward Service, and when Service terminates for all purposes under the Plan.

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(i) No Rights as a Stockholder. An Optionee, or a transferee of an Optionee, shall have no rights as a stockholder with respect to any Shares covered by hisOption until the date of the issuance of a stock certificate for such Shares. No adjustments shall be made, except as provided in Section 11.

(j) Modification, Extension and Renewal of Options. Within the limitations of the Plan, the Committee may modify, extend or renew outstanding optionsor may accept the cancellation of outstanding options (to the extent not previously exercised), whether or not granted hereunder, in return for the grant of newOptions for the same or a different number of Shares and at the same or a different exercise price, or in return for the grant of the same or a different number ofShares. The foregoing notwithstanding, no modification of an Option shall, without the consent of the Optionee, adversely affect his or her rights or obligationsunder such Option.

(k) Restrictions on Transfer of Shares. Any Shares issued upon exercise of an Option shall be subject to such special forfeiture conditions, rights ofrepurchase, rights of first refusal and other transfer restrictions as the Committee may determine. Such restrictions shall be set forth in the applicable StockOption Agreement and shall apply in addition to any general restrictions that may apply to all holders of Shares.

(l) Buyout Provisions. The Committee may at any time (a) offer to buy out for a payment in cash or cash equivalents an Option previously granted or(b) authorize an Optionee to elect to cash out an Option previously granted, in either case at such time and based upon such terms and conditions as theCommittee shall establish.

SECTION 8. PAYMENT FOR SHARES.

(a) General Rule. The entire Exercise Price or Purchase Price of Shares issued under the Plan shall be payable in lawful money of the United States ofAmerica at the time when such Shares are purchased, except as provided in Section 8(b) through Section 8(g) below.

(b) Surrender of Stock. To the extent that a Stock Option Agreement so provides, payment may be made all or in part by surrendering, or attesting to theownership of, Shares which have already been owned by the Optionee or his representative. Such Shares shall be valued at their Fair Market Value on the datewhen the new Shares are purchased under the Plan. The Optionee shall not surrender, or attest to the ownership of, Shares in payment of the Exercise Price ifsuch action would cause the Company to recognize compensation expense (or additional compensation expense) with respect to the Option for financial reportingpurposes.

(c) Services Rendered. At the discretion of the Committee, Shares may be awarded under the Plan in consideration of services rendered to the Company ora Subsidiary prior to the award. If Shares are awarded without the payment of a Purchase Price in cash, the Committee shall make a determination (at the time ofthe award) of the value of the services rendered by the Offeree and the sufficiency of the consideration to meet the requirements of Section 6(b).

(d) Cashless Exercise. To the extent that a Stock Option Agreement so provides, payment may be made all or in part by delivery (on a form prescribed bythe Committee) of an irrevocable direction to a securities broker to sell Shares and to deliver all or part of the sale proceeds to the Company in payment of theaggregate Exercise Price.

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(e) Exercise/Pledge. To the extent that a Stock Option Agreement so provides, payment may be made all or in part by delivery (on a form prescribed bythe Committee) of an irrevocable direction to a securities broker or lender to pledge Shares, as security for a loan, and to deliver all or part of the loan proceeds tothe Company in payment of the aggregate Exercise Price.

(f) Promissory Note. To the extent that a Stock Option Agreement or Restricted Stock Agreement so provides, payment may be made all or in part bydelivering (on a form prescribed by the Company) a full-recourse promissory note. However, the par value of the Common Shares being purchased under thePlan, if newly issued, shall be paid in cash or cash equivalents.

(g) Other Forms of Payment. To the extent that a Stock Option Agreement or Restricted Stock Agreement so provides, payment may be made in any otherform that is consistent with applicable laws, regulations and rules.

(h) Limitations under Applicable Law. Notwithstanding anything herein or in a Stock Option Agreement or Restricted Stock Agreement to the contrary,payment may not be made in any form that is unlawful, as determined by the Committee in its sole discretion.

SECTION 9. STOCK APPRECIATION RIGHTS.

(a) SAR Agreement. Each grant of a SAR under the Plan shall be evidenced by a SAR Agreement between the Optionee and the Company. Such SAR shallbe subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan. The provisions of the various SARAgreements entered into under the Plan need not be identical. SARs may be granted in consideration of a reduction in the Optionee’s other compensation.

(b) Number of Shares. Each SAR Agreement shall specify the number of Shares to which the SAR pertains and shall provide for the adjustment of suchnumber in accordance with Section 11. SARs granted to any Optionee in a single calendar year shall in no event pertain to more than 1,500,000 Shares, exceptthat SARs granted to a new Employee or Consultant in the calendar year of the Company in which his or her Service first commences shall not pertain to morethan 2,500,000 Shares. The limitations set forth in the preceding sentence shall be subject to adjustment in accordance with Section 11.

(c) Exercise Price. Each SAR Agreement shall specify the Exercise Price. A SAR Agreement may specify an Exercise Price that varies in accordance witha predetermined formula while the SAR is outstanding.

(d) Exercisability and Term. Each SAR Agreement shall specify the date when all or any installment of the SAR is to become exercisable. The SARAgreement shall also specify the term of the SAR. A SAR Agreement may provide for accelerated exercisability in the event of the Optionee’s death, disabilityor retirement or other events and may provide for expiration prior to the end of its term in the event of the termination of the Optionee’s service. SARs may beawarded in combination with Options, and such an Award may provide that the SARs will not be exercisable unless the related Options are forfeited. A SARmay be included in an ISO only at the time of grant but may be included in an NSO at the time of grant or thereafter. A SAR granted under the Plan may providethat it will be exercisable only in the event of a Change in Control.

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(e) Effect of Change in Control. The Committee may determine, at the time of granting a SAR or thereafter, that such SAR shall become fully exercisableas to all Common Shares subject to such SAR in the event that a Change in Control occurs with respect to the Company.

(f) Exercise of SARs. Upon exercise of a SAR, the Optionee (or any person having the right to exercise the SAR after his or her death) shall receive fromthe Company (a) Shares, (b) cash or (c) a combination of Shares and cash, as the Committee shall determine. The amount of cash and/or the Fair Market Value ofShares received upon exercise of SARs shall, in the aggregate, be equal to the amount by which the Fair Market Value (on the date of surrender) of the Sharessubject to the SARs exceeds the Exercise Price.

(g) Modification or Assumption of SARs. Within the limitations of the Plan, the Committee may modify, extend or assume outstanding SARs or mayaccept the cancellation of outstanding SARs (whether granted by the Company or by another issuer) in return for the grant of new SARs for the same or adifferent number of shares and at the same or a different exercise price. The foregoing notwithstanding, no modification of a SAR shall, without the consent ofthe holder, may alter or impair his or her rights or obligations under such SAR.

SECTION 10. STOCK UNITS.

(a) Stock Unit Agreement. Each grant of Stock Units under the Plan shall be evidenced by a Stock Unit Agreement between the recipient and the Company.Stock Units shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan. The provisions of thevarious Stock Unit Agreements entered into under the Plan need not be identical. Stock Units may be granted in consideration of a reduction in the recipient’sother compensation.

(b) Payment for Awards. To the extent that an Award is granted in the form of Stock Units, no cash consideration shall be required of the Awardrecipients.

(c) Vesting Conditions. Each Award of Stock Units may or may not be subject to vesting. Vesting shall occur, in full or in installments, upon satisfactionof the conditions specified in the Stock Unit Agreement. A Stock Unit Agreement may provide for accelerated vesting in the event of the Participant’s death,disability or retirement or other events. The Committee may determine, at the time of granting Stock Units or thereafter, that all or part of such Stock Units shallbecome vested in the event that a Change in Control occurs with respect to the Company.

(d) Voting and Dividend Rights. The holders of Stock Units shall have no voting rights. Prior to settlement or forfeiture, any Stock Unit awarded under thePlan may, at the Committee’s discretion, carry with it a right to dividend equivalents. Such right entitles the holder to be credited with an amount equal to all cashdividends paid on one Share while the Stock Unit is outstanding. Dividend equivalents may be converted into additional Stock Units. Settlement of dividendequivalents may be made in the form of cash, in the form of Shares, or in a combination of both. Prior to distribution, any dividend equivalents which are notpaid shall be subject to the same conditions and restrictions (including without limitation, any forfeiture conditions) as the Stock Units to which they attach.

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(e) Form and Time of Settlement of Stock Units. Settlement of vested Stock Units may be made in the form of (a) cash, (b) Shares or (c) any combinationof both, as determined by the Committee. The actual number of Stock Units eligible for settlement may be larger or smaller than the number included in theoriginal Award, based on predetermined performance factors. Methods of converting Stock Units into cash may include (without limitation) a method based onthe average Fair Market Value of Shares over a series of trading days. Vested Stock Units may be settled in a lump sum or in installments. The distribution mayoccur or commence when all vesting conditions applicable to the Stock Units have been satisfied or have lapsed, or it may be deferred to any later date. Theamount of a deferred distribution may be increased by an interest factor or by dividend equivalents. Until an Award of Stock Units is settled, the number of suchStock Units shall be subject to adjustment pursuant to Section 11.

(f) Death of Recipient. Any Stock Units Award that becomes payable after the recipient’s death shall be distributed to the recipient’s beneficiary orbeneficiaries. Each recipient of a Stock Units Award under the Plan shall designate one or more beneficiaries for this purpose by filing the prescribed form withthe Company. A beneficiary designation may be changed by filing the prescribed form with the Company at any time before the Award recipient’s death. If nobeneficiary was designated or if no designated beneficiary survives the Award recipient, then any Stock Units Award that becomes payable after the recipient’sdeath shall be distributed to the recipient’s estate.

(g) Creditors’ Rights. A holder of Stock Units shall have no rights other than those of a general creditor of the Company. Stock Units represent anunfunded and unsecured obligation of the Company, subject to the terms and conditions of the applicable Stock Unit Agreement.

SECTION 11. ADJUSTMENT OF SHARES.

(a) Adjustments. In the event of a subdivision of the outstanding Stock, a declaration of a dividend payable in Shares, a declaration of a dividend payable ina form other than Shares in an amount that has a material effect on the price of Shares, a combination or consolidation of the outstanding Stock (byreclassification or otherwise) into a lesser number of Shares, a recapitalization, a spin-off or a similar occurrence, the Committee shall make such adjustments asit, in its sole discretion, deems appropriate in one or more of:

(i) The number of Options, SARs, Restricted Shares and Stock Units available for future Awards under Section 5;

(ii) The limitations set forth in Section 5(a), Section 7(b) and Section 9(b);

(iii) The number of NSOs to be granted to Outside Directors under Section 4(b);

(iv) The number of Shares covered by each outstanding Option and SAR;

(v) The Exercise Price under each outstanding Option and SAR; or

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(vi) The number of Stock Units included in any prior Award which has not yet been settled.

Except as provided in this Section 11, a Participant shall have no rights by reason of any issue by the Company of stock of any class or securities convertible intostock of any class, any subdivision or consolidation of shares of stock of any class, the payment of any stock dividend or any other increase or decrease in thenumber of shares of stock of any class.

(b) Dissolution or Liquidation. To the extent not previously exercised or settled, Options, SARs and Stock Units shall terminate immediately prior to thedissolution or liquidation of the Company.

(c) Reorganizations. In the event that the Company is a party to a merger or other reorganization, outstanding Awards shall be subject to the agreement ofmerger or reorganization. Such agreement shall provide for:

(i) The continuation of the outstanding Awards by the Company, if the Company is a surviving corporation;

(ii) The assumption of the outstanding Awards by the surviving corporation or its parent or subsidiary;

(iii) The substitution by the surviving corporation or its parent or subsidiary of its own awards for the outstanding Awards;

(iv) Full exercisability or vesting and accelerated expiration of the outstanding Awards; or

(v) Settlement of the full value of the outstanding Awards in cash or cash equivalents followed by cancellation of such Awards.

(d) Reservation of Rights. Except as provided in this Section 11, an Optionee or Offeree shall have no rights by reason of any subdivision or consolidationof shares of stock of any class, the payment of any dividend or any other increase or decrease in the number of shares of stock of any class. Any issue by theCompany of shares of stock of any class, or securities convertible into shares of stock of any class, shall not affect, and no adjustment by reason thereof shall bemade with respect to, the number or Exercise Price of Shares subject to an Option. The grant of an Option pursuant to the Plan shall not affect in any way theright or power of the Company to make adjustments, reclassifications, reorganizations or changes of its capital or business structure, to merge or consolidate or todissolve, liquidate, sell or transfer all or any part of its business or assets.

SECTION 12. LEGAL AND REGULATORY REQUIREMENTS.

Shares shall not be issued under the Plan unless the issuance and delivery of such Shares complies with (or is exempt from) all applicable requirements oflaw, including (without limitation) the Securities Act of 1933, as amended, the rules and regulations promulgated thereunder, state securities laws and regulationsand the regulations of any stock exchange on which the Company’s securities may then be listed, and the Company has obtained the approval or favorable rulingfrom any governmental agency which the Company determines is necessary or advisable.

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SECTION 13. WITHHOLDING TAXES.

(a) General. To the extent required by applicable federal, state, local or foreign law, a Participant or his or her successor shall make arrangementssatisfactory to the Company for the satisfaction of any withholding tax obligations that arise in connection with the Plan. The Company shall not be required toissue any Shares or make any cash payment under the Plan until such obligations are satisfied.

(b) Share Withholding. The Committee may permit a Participant to satisfy all or part of his or her withholding or income tax obligations by having theCompany withhold all or a portion of any Shares that otherwise would be issued to him or her or by surrendering all or a portion of any Shares that he or shepreviously acquired. Such Shares shall be valued at their Fair Market Value on the date when taxes otherwise would be withheld in cash. In no event may aParticipant have Shares withheld that would otherwise be issued to him or her in excess of the number necessary to satisfy the legally required minimum taxwithholding.

SECTION 14. LIMITATION ON PARACHUTE PAYMENTS.

(a) Scope of Limitation.. This Section 14 shall apply to an Award only if the independent auditors most recently selected by the Board (the “Auditors”)determine that the after-tax value of such Award to the Optionee or Offeree, taking into account the effect of all federal, state and local income taxes,employment taxes and excise taxes applicable to the Optionee or Offeree (including the excise tax under section 4999 of the Code), will be greater after theapplication of this Section 14 than it was before application of this Section 14.

(b) Basic Rule. In the event that the Auditors determine that any payment or transfer by the Company under the Plan to or for the benefit of a Participant (a“Payment”) would be nondeductible by the Company for federal income tax purposes because of the provisions concerning “excess parachute payments” inSection 280G of the Code, then the aggregate present value of all Payments shall be reduced (but not below zero) to the Reduced Amount. For purposes of thisSection 14, the “Reduced Amount” shall be the amount, expressed as a present value, which maximizes the aggregate present value of the Payments withoutcausing any Payment to be nondeductible by the Company because of Section 280G of the Code.

(c) Reduction of Payments. If the Auditors determine that any Payment would be nondeductible by the Company because of Section 280G of the Code,then the Company shall promptly give the Participant notice to that effect and a copy of the detailed calculation thereof and of the Reduced Amount, and theParticipant may then elect, in his or her sole discretion, which and how much of the Payments shall be eliminated or reduced (as long as after such election theaggregate present value of the Payments equals the Reduced Amount) and shall advise the Company in writing of his or her election within 10 days of receipt ofnotice. If no such election is made by the Participant within such 10-day period, then the Company may elect which and how much of the Payments shall beeliminated or reduced (as long as after such election the aggregate present value of the Payments equals the Reduced Amount) and shall notify the Participantpromptly of such election. For purposes of this Section 14, present value

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shall be determined in accordance with Section 280G(d)(4) of the Code. All determinations made by the Auditors under this Section 14 shall be binding upon theCompany and the Participant and shall be made within 60 days of the date when a Payment becomes payable or transferable. As promptly as practicablefollowing such determination and the elections hereunder, the Company shall pay or transfer to or for the benefit of the Participant such amounts as are then dueto him or her under the Plan and shall promptly pay or transfer to or for the benefit of the Participant in the future such amounts as become due to him or herunder the Plan.

(d) Related Corporations. For purposes of this Section 14, the term “Company” shall include affiliated corporations to the extent determined by theAuditors in accordance with Section 280G(d)(5) of the Code.

SECTION 15. NO EMPLOYMENT RIGHTS.

No provision of the Plan, nor any right or Option granted under the Plan, shall be construed to give any person any right to become, to be treated as, or toremain an Employee. The Company and its Subsidiaries reserve the right to terminate any person’s Service at any time and for any reason, with or withoutnotice.

SECTION 16. DURATION AND AMENDMENTS.

(a) Term of the Plan. The Plan, as set forth herein, shall terminate automatically on September 1, 2013, and may be terminated on any earlier date pursuantto Subsection (b) below.

(b) Right to Amend or Terminate the Plan. The Board of Directors may amend the Plan at any time and from time to time. Rights and obligations underany Award granted before amendment of the Plan shall not be materially impaired by such amendment, except with consent of the Participant. An amendment ofthe Plan shall be subject to the approval of the Company’s stockholders only to the extent required by applicable laws, regulations or rules.

(c) Effect of Amendment or Termination. No Awards shall be granted under the Plan after the termination thereof. The termination of the Plan, or anyamendment thereof, shall not affect Awards previously granted under the Plan.

SECTION 17. EXECUTION.

To record the amendment and restatement of the Plan by the Board of Directors on January 4, 2007, the Company has caused its authorized officer toexecute the same.

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SYNNEX Corporation

By /s/ Simon Leung Simon Leung General Counsel and Secretary

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Exhibit 10.14

EMPLOYMENT AGREEMENT

This Employment Agreement (“Agreement”) is made and entered into as of the Effective Date (as defined in the Support Agreement referred to below) by andbetween SYNNEX Canada Limited, a corporation amalgamated under the laws of the Province of Ontario (hereinafter called the “Company”) and James A.Estill (hereinafter called “Employee”).

WHEREAS:

A. Employee has been employed with EMJ Data Systems Ltd. (“EMJ”);

B. A Retention Escrow Agreement between, among others, Company and Employee has been made and entered into as of July 14, 2004;

C. A Support Agreement between, among others, Company and EMJ has been made an entered into as of July 14, 2004;

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants herein contained and other good and valuable consideration, the receiptand sufficiency of which is acknowledged, the parties agree as follows:

1. Employment. Company shall employ Employee and Employee shall perform services on behalf of Company as its employee as provided herein during theEmployment Period. In this Agreement, “Employment Period” shall mean the period beginning on the Effective Date, and terminating the date on whichEmployee’s employment is terminated in accordance with the provisions of Section 11 hereof or upon the death of Employee, whichever occurs first.

2. Capacity and Services. Company shall employ Employee as President and Chief Executive Officer of Company. Employee shall perform such duties andhave such authority as may from time to time be assigned, delegated or limited by Company’s Board of Directors (the “Board”) or the President and ChiefExecutive Officer of SYNNEX Corporation. Employee shall perform these duties in accordance with the charter documents and by-laws of Company, theinstructions of the Board, the President and Chief Executive Officer of SYNNEX Corporation and Company policy. Employee shall diligently and faithfullyserve Company and use Employee’s best efforts to promote the interests and goodwill of Company.

3. Full Time and Attention. Employee shall devote 100% of Employee’s business time to Employee’s duties hereunder, provided however that the Employeeshall be entitled to engage in other commercial and community activities provided that those activities do not conflict with the Employee’s duties hereunder orare not adverse to the interests of Company, including without limitation, participation on boards of directors of other companies of which the Employee is as ofthe date hereof a director and such other entities as consented to by the Company in writing.

4. Salary. The base salary rate of Employee shall be CAD$110,000.00 per year, subject to withholdings and payable in accordance with Company’s usualpayroll practices (“base salary”). Employee’s base salary and performance may be reviewed on an annual basis. In its sole discretion, Company may increaseEmployee’s base salary rate.

5. Discretionary Bonus. In addition to base salary, Employee will be eligible, but in no event entitled, to receive bonus compensation based on the discretionand profitability of Company and/or other criteria as may be determined at Company’s sole discretion from time to time. Bonus plans, entitlement and eligibilitymay be modified from time to time at the discretion of Company’s Board of Directors or SYNNEX Corporation, but in any event, shall be consistent withCompany’s plans and practices for other senior executives of Company.


- 2 - 6. Executive Compensation. In addition to base salary, and in accordance with applicable plans, policies and programs, the Employee shall be eligible toparticipate in SYNNEX Corporation’s stock option plan and any other executive compensation programs that may be in place from time to time for seniorexecutives of Company, on a basis consistent with other senior executives of Company.

7. Health and Welfare Benefits. Employee will be entitled to participate in Employee health benefit programs which are generally made available to seniorexecutives of Company. Company may, at any time and from time to time, modify, suspend, or discontinue any or all such benefits for its employees generally orfor any group thereof, without any obligation to replace any such benefit with any other benefit, or to otherwise compensate Employee in respect thereof.

8. Vacation. Employee is entitled to take up to four weeks’ vacation per calendar year. Unless otherwise agreed in writing, vacation must be taken in the year inwhich it accrues, may not be carried over from year to year. The taking and timing of vacations shall be in accordance with Company’s policies and practices forsenior Employees taking into consideration the needs of Company.

9. Expenses Incidental to Employment. Company shall promptly reimburse Employee in accordance with its normal policies and practices for Employee’stravel and other expenses or disbursements reasonably and necessarily incurred or made in connection with Company’s business.

10. Proprietary Information and Inventions Agreement. Employee will comply with the terms of Company’s Proprietary Information and InventionsAgreement, attached hereto as Schedule “A”, the terms of which are incorporated herein by reference and together shall be referred to as this “Agreement”.

11. Non-Competition. During Employee’s employment with Company and for a period of two years thereafter, Employee shall not engage in any activity whichis “in competition” with Company in Canada, provided however that if Employee is terminated following a change in control of Company said two year periodshall be reduced to nil. For the purposes hereof, “in competition” means acting, directly or indirectly, alone or as a partner, officer, director, employee,consultant, agent, independent contractor or shareholder of any entity that is in competition with the products or services from time to time being designed,developed, licensed, marketed or sold by Company.

12. Termination.

(a) Cause. Company may immediately terminate the employment of Employee at any time for Cause by providing written notice to Employee of Employee’simmediate termination of employment. If Company terminates the employment of Employee for Cause under this Section 11(a), Employee’s benefits shallcease and Company shall not be obligated to make any further payments under this Agreement except amounts due and owing at the time of thetermination. Without limiting the foregoing, any one or more of the following events shall constitute Cause:

(i) theft, dishonesty, or breach of law by Employee;

(ii) any material breach or default of Employee’s obligations hereunder, or any material neglect of duty, misconduct or disobedience of Employee indischarging any of Employee’s duties and responsibilities hereunder;


- 3 -

(iii) Employee’s acceptance of a gift of any kind, other than gifts of nominal or inconsequential value, from any source directly or indirectly related to

Employee’s employment with Company, except if the acceptance of such a gift is in the ordinary course of business in the industry of Companyprovided that Employee provides notice to Company’s Board of Directors’ of his acceptance of such a gift;

(iv) any failure of or refusal by Employee to comply with the reasonable and lawful policies, rules and regulations of Company; or

(v) anything or any behaviour on the part of Employee that constitutes just Cause at law in accordance with the laws of the Province of Ontario.

(b) Resignation. Employee shall give Company 30 days’ written notice of the resignation of Employee’s employment hereunder and, subject to the followingsentence, Employee’s employment shall terminate on the date specified in the notice. Upon receipt of Employee’s notice of resignation, or at any timethereafter, Company shall have the right to elect to pay Employee’s base salary for the remainder of the notice period and continue Employee’s benefits forthe period of notice (subject to any exclusions required by Company’s insurers), and if Company so elects, Employee’s employment shall terminateimmediately upon such payment.

(c) Disability. “Disability” as used in this Agreement shall mean a physical or mental incapacity of Employee that has prevented Employee from performingthe essential duties customarily assigned to Employee, with all reasonable accommodations required by law, for 180 days, whether or not consecutive, outof any 12 consecutive months and that in the opinion of Company’s Board of Directors, acting reasonably, is likely to continue. If Company determinesthat Employee has suffered any Disability, Company may terminate Employee’s employment by notice given to Employee. If Employee’s employmentterminates by reason of notice given under this Section 11(c), Employee shall receive, in lieu of all amounts otherwise payable hereunder (except foramounts earned but not yet paid to Employee through the date of such Disability), compensation at Employee’s base salary rate for a 3-month periodfollowing the date of Disability. If and for so long as Employee is eligible and meets any conditions of Company’s plans and policies, Employee will beentitled to long-term disability benefits.

(d) Termination on Notice. Company may terminate the employment of Employee at any time without Cause, by prior written notice or pay in lieu of noticegiven to Employee in accordance with applicable employment laws and the common law of the Province of Ontario. Company will recognize Employee’sservice with EMJ for the purpose of determining the period of notice.

(e) Resignation for Good Reason. Employee may resign his employment hereunder for Good Reason upon written notice to Company specifying the reasonsfor resigning for Good Reason. If Employee resigns his employment hereunder for Good Reason, Employee shall be entitled to a payment in lieu of noticein accordance with applicable laws of the Province of Ontario as if Employee’s employment had been terminated without Cause and without prior notice.For the purposes of this Agreement, resignation for “Good Reason” means a resignation by Employee due to a:

(i) significant or material diminution in Employee’s authority, duties or responsibilities normally associated with Employee’s position, that is not curedwithin 10 days of written notification thereof to Company by Employee;


- 4 -

(ii) significant or material change in Employee’s current reporting relationships without prior reasonable notice (which is to be calculated in accordancewith paragraph 11(d) hereto), that is not cured within 10 days of written notification thereof to Company by Employee; or

(iii) reduction by Company of Employee’s base salary rate.

(f) Employee’s health and welfare benefit coverage shall cease upon termination of Employee’s employment pursuant to Sections 11(d) or 11(e), except thatwhere the employment is terminated by pay in lieu of notice, benefit coverage (subject to any exclusions required by Company’s insurers) shall continueonly until the expiry of the notice period or until Employee commences other employment, whichever occurs first. For the purposes of this Section 11 andCompany’s obligations, “pay in lieu of notice” of “payment in lieu of notice” shall be at Employee’s base salary rate and shall not include any bonus,incentive, executive compensation, stock options, or other discretionary income or benefits, and shall be paid in a lump sum promptly followingEmployee’s termination of employment subject to dispute as to the length of notice period for which payment is to be made. The notice or paymentsprovided for in this Section 11 shall be inclusive of Employee’s entitlement to notice, termination pay, and severance pay under the Employment StandardsAct, 2000, shall satisfy all of Company’s obligations in relation to the termination of Employee’s employment and shall be accepted and received byEmployee in lieu of any other notice, pay in lieu of notice, termination pay, severance pay, claim or cause of action for damages relating to the terminationof Employee’s employment. Employee acknowledges and agrees that the provisions of Section 11 are fair and reasonable, subject to dispute as to thelength of notice period for which payment is to be made, and are the result of negotiation.

(g) Employee shall be entitled to all earned but unpaid base salary and payments in respect of expenses subject to reimbursement accrued or incurred up to andincluding the date on which notice of termination or resignation is given.

13. Results of Termination. Upon termination of Employee’s employment, this Agreement shall remain in force except that the provisions of 2, 3, 4, 5, 6, 7 and8 shall terminate, and Company shall have no further obligations or responsibilities to Employee hereunder or under any of Company’s employee benefitprograms except as expressly provided in Section 11, and nothing herein contained shall be construed to limit or restrict in any way Company’s ability to pursueany remedies it may have at law or equity pursuant to the provisions of this Agreement of Employee’s employment.

14. Representations and Warranties. Employee represents and warrants to Company that the execution and performance of this Agreement will not result in orconstitute a default, breach, or violation, or an event that, with notice or lapse of time or both, would be a default, breach, or violation, of any understanding,agreement or commitment, written or oral, express or implied, to which Employee is a party or by which Employee or Employee’s property is bound. Employeeshall defend, indemnify and hold Company harmless from any liability, expense or claim (including solicitor’s fees incurred in respect thereof) by any person inany way arising out of, relating to, or in connection with any incorrectness of breach of the representations and warranties in this Section 13.

15. Rights and Remedies. All rights and remedies of the parties are separate and cumulative, and none of them, whether exercised or not, shall be deemed to beto the exclusion of any other rights or remedies or shall be deemed to limit or prejudice any other legal or equitable rights or remedies which either of the partiesmay have.


- 5 - 16. Waiver. Any purported waiver of any default, breach or non-compliance under this Agreement is not effective unless in writing and signed by the party to bebound by the waiver. No waiver shall be inferred from or implied by any failure to act or delay in acting by a party in respect of any default, breach ornon-observance or by anything done or omitted to be done by the other party. The waiver by a party of any default, breach or non-compliance under thisAgreement shall not operate as a waiver of that party’s rights under this Agreement in respect of any continuing or subsequent default, breach or non-observance(whether of the same or any other nature).

17. Severability. Any provision of this Agreement that is prohibited or unenforceable shall be ineffective to the extent of the prohibition or unenforceability andshall be severed from the balance of this Agreement, all without affecting the remaining provisions of this Agreement or affecting the validity or enforceability ofsuch provision.

18. Notices. Any notice or other communication required or permitted to be given or made under this Agreement shall be in writing and shall be effectively givenand made if (i) delivered personally, (ii) sent by prepaid courier service, or (iii) sent by fax, or other similar means of electronic communication, in each case tothe applicable address set out below:

(a) if to Company, to: SYNNEX Canada Limited 44201 Nobel Drive Fremont, CA 94538 Attn: Chief Financial Officer General Counsel Fax: (510) 656-3333

(b) if to Employee, to: James A. Estill c/o EMJ Data Systems Ltd. 7067 Wellington Rd. 124 RR6, Guelph, Ontario, Canada N1H 6J3 Attn: Jim Estill Fax: (519) 837-1479

Any such communication so given or made shall be deemed to have been given or made and to have been received on the day of delivery if delivered by 5:00p.m. on that day. Otherwise, the communication shall be deemed to have been given and made and to have been received on the next following business day.Any party may from time to time change its address under this Section 17 by notice to the other party given in the manner provided by this section.

19. Successors and Assigns. This Agreement shall enure to the benefit of, and be binding on, the parties and their respective heirs, administrators, executors,successors and permitted assigns. Company shall have the right to assign this Agreement to any successor (whether direct or indirect, by purchase,amalgamation, arrangement, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of Company provided only that Companymust first require the successor to expressly assume and agree to perform this Agreement in the same manner and to the same extent that Company would berequired to perform it if no such succession had taken place. Employee by Employee’s signature hereto expressly consents to such assignment. Employee shallnot assign or transfer, whether absolutely, by way of security or otherwise, all or any part of Employee’s rights or obligations under this Agreement without theprior consent of Company, which may be arbitrarily withheld.


- 6 - 20. Entire Agreement. This Agreement and its Schedules, and applicable provisions of the Retention Escrow Agreement constitute the entire agreement andunderstanding with respect to the employment of Employee by Company and related covenants and supersedes any and all prior agreements and understandings,whether oral or written, relating thereto. This Agreement shall not be modified or amended except by written agreement signed by Employee and by arepresentative of Company pursuant to a duly adopted resolution of its Board of Directors approving such modification or amendment

21. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the Province of Ontario and the laws of Canadaapplicable in that Province.

22. Headings. The division of this Agreement into sections and the insertion of headings are for convenience of reference only and shall not affect theconstruction or interpretation of this Agreement.

23. Full Satisfaction. The terms set out in this Agreement, provided that such terms are satisfied by Company, are in lieu of (and not in addition to) and in fullsatisfaction of any and all other claims or entitlements which Employee has or may have upon the termination of Employee’s employment and the compliance byCompany with these terms will effect a full and complete release of Company and its parent and their respective affiliates, associates, subsidiaries and relatedcompanies from any and all claims which Employee may have for whatever reason or cause in connection with Employee’s employment and the termination ofit, other than those obligations specifically set out in this Agreement. In agreeing to the terms set out in this Agreement, Employee specifically agrees to deliverupon request appropriate resignations from all offices and positions with Company and its parent and their respective affiliated, associated, subsidiary or relatedcompanies if, as and when requested by Company upon termination of Employee’s employment within the circumstances contemplated by this Agreement.

24. Acknowledgement. Employee acknowledges that:

(a) Employee’s obligations under this Agreement are in addition to and not in substitution of any fiduciary duty Employee may owe to Company, itsparent and/or its affiliates;

(b) Employee has read and understands the terms of this Agreement and the obligations hereunder;

(c) Employee has been given an opportunity to obtain independent legal advice concerning the interpretation and effect of this Agreement; and

(d) Employee has received a fully executed original copy of this Agreement.

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- 7 -

IN WITNESS WHEREOF the parties have executed this Agreement.

Date: July 14, 2004

/s/ Pamela Hughes /s/ James A. EstillWitness James A. Estill

Date: July 14, 2004 SYNNEX Canada Limited

By: /s/ Simon Y. Leung Name: Simon Y. Leung Title: General Counsel and Corporate Secretary


Schedule “A”

PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT

The following Agreement confirms certain terms of my employment with SYNNEX Canada Limited, (hereafter referred to as “SYNNEX” or “theCompany”), which is a material part of the consideration for my employment by the Company and the compensation received by me from the Company fromtime to time. The headings contained in this Agreement are for convenience only, have no legal significance, and are intended to change or limit this Agreementin any matter whatsoever.

A. Definitions

1. The “Company”

As issued in this Agreement, the “Company” refers to SYNNEX and each of its subsidiaries or affiliated companies. I recognize and agree that myobligations under this Agreement and all term of this Agreement apply to me regardless of whether I am employed by or work for SYNNEX or any othersubsidiary or affiliated company of SYNNEX. Furthermore, I understand and agree that the terms of this Agreement will continue to apply to me even if Itransfer at some time from one subsidiary or affiliate of the Company to another.

2. “Proprietary Information”

I understand that the Company possesses and will possess Proprietary Information which is important to its business. For purposes of this Agreement,“Proprietary Information” is information that was or will be developed, created, or discovered by or on behalf of the Company, or which became or will becomeknown by, or was or is conveyed to the Company, which has commercial value in the Company’s business.

“Proprietary Information” includes, but is not limited to information about software programs and subroutines, source and object code, algorithms, tradesecrets, designs, technology, know-how, processes, data, ideas, techniques, inventions (whether patentable or not), works or authorship, formulas, business andproduct development plans, customer lists, terms of compensation and performance levels of Company employees, Company customers and other informationconcerning the Company’s actual or anticipated business, research or development, or which is received in confidence by or for the Company from any otherperson.

I understand that my employment creates a relationship of confidence and trust between the Company and me with respect to Proprietary Information.

3. “Company Documents and Materials”

I understand that the Company possesses or will posses “Company Documents and Materials” which are important to its business. For purposes of thisAgreement, “Company Documents and Materials” are documents or other media or tangible items that contain or embody Proprietary Information of any otherinformation concerning the business, operations or plan of the Company, whether such documents, media or items have been prepared by me or by others.

“Company Documents and Material” include, but are not limited to, blueprints, drawings, photographs, charts, graphs, notebook, customer lists, computerdisks, tapes or printouts, sound recordings and other printed, typewritten or handwritten documents, sample products, prototypes and models.

B. Assignment of Rights

All Proprietary Information, and all patents, patent rights, copyrights, trade secret rights, trademark rights and other rights (including, without limitation;intellectual property rights) anywhere in the world in connection with Proprietary Information, is and shall be the sole property of the Company. I hereby assignto the Company any and all rights, title and interest I may have or acquire in such Proprietary Information.


- 2 -

At all times, both during my employment by the Company and after its termination, I will keep in confidence and trust and will not use or disclose anyProprietary Information or anything relating to it without the prior written consent of an officer of the Company, except as may be necessary in the ordinarycourse of performing my duties to the Company.

C. Maintenance and Return of Company Documents and Materials

I agree to make and maintain adequate and current written records, in a form specified by the Company, of all inventions, trade secrets and works ofauthorship assigned or to be assigned to the Company pursuant to this Agreement. All Company Documents and Material are and shall be the sole property of theCompany.

I agree that during my employment by the Company, I will not remove any Company Documents and Material from the business premises of the Companyor deliver any Company Document and Materials to any person or entity outside the Company, except as I am required to do in connection with performing theduties of my employment. I further agree that, immediately upon the termination of my employment by me or by the Company for any reason, or during myemployment if so requested by the Company, I will return all Company Documents and Material, apparatus, equipment and other physical property, or anyreproduction of such property, excepting only (i) my personal copies of records relating to my compensation; (ii) my personal copies of any material previouslydistributed generally to stockholders of the Company; (iii) my copy of this Agreement.

D. Disclosure of Inventions to the Company

I will promptly disclose in writing to my immediate supervisor or to such other person designated by the Company all “Inventions”, which includes,without limitation, all software programs or subroutines, source or object code, algorithms, improvements, inventions, works of authorship, trade secrets,technology, designs, formulas, ideas, processes, techniques, know-how and data, whether or not patentable, made or discovered or conceived or reduced topractice or developed by me, either alone or jointly with others, during the term of my employment.

I will also disclose to the President of the Company all Inventions made, discovered, conceived, reduced to practice, or developed by me within six(6) months after the termination of my employment with the Company which resulted, in whole or in part, from my prior employment by the Company. Suchdisclosures shall be received by the Company in confidence (to the extent such Inventions are not assigned to the Company pursuant to Section (E) below) anddo not extend the assignment made in Section (E) below.

E. Rights to New Ideas

1. Assignment of Inventions to the Company

I agree that all Inventions which I make, discover, conceive, reduce to practice or develop (in whole or in part, either alone or jointly with others) duringmy employment shall be the sole property of The Company. I also agree to assign and release all interests in any such Inventions to The Company and to executeall documents required to apply for and obtain Letters Patent or copyright in Canada or in any other country.

The assignment shall not extend to Inventions, the assignment of which is prohibited by any applicable law.

2. Works Made for Hire

The Company shall be the sole owner of all patents, patents rights, copyrights, trade secret rights, trademark rights and all other intellectual property orother rights in connection with Inventions. I further acknowledge and agree that such Inventions, including, without limitation, any computer programs,programming documentation, and other works of authorship, are “works made for hire” for purposes of the Company’s rights under copyright laws. I herebyassign to the Company any and all rights, title and interest I may have or acquire in such Inventions. If in the course of my employment with the Company, Iincorporate into a Company product, process or machine a prior Invention owned by me or in which I have interest, the Company is hereby granted and shallhave a nonexclusive, royalty-free, irrevocable, perpetual, sublicensable, worldwide license to make, have made, modify, use, market, sell, and distribute suchprior Invention as part of or in connection with such product, process or machine.


- 3 -

3. Cooperation

I agree to perform, during and after my employment, all acts deemed necessary or desirable by the Company to permit and assist it, at the Company’sexpense, in further evidencing and perfecting the assignments made to the Company under this Agreement and in obtaining, maintaining, defending andenforcing patents, patent rights, copyrights, trademark rights, trade secret rights or any other rights in connection with such Inventions and improvements theretoin any and all countries. Such acts may include, but are not limited to, execution of documents and assistance of cooperation in legal and proceedings. I herebyirrevocably designate and appoint the Company and its duly authorized officers and agents, as my agents and attorney-in-fact to act for and on my behalf andinstead of me, to execute and file any documents, applications or related finding and to do all other lawfully permitted acts to further the purposes set forth abovein the Subsection 1, including, without limitation, the perfection of assignment and the prosecution and issuance of patents, patent applications, copyrightapplications and registrations, trademark applications and registrations or other rights in connection with such Inventions and improvements thereto with thesame legal force and effect as if executed by me.

4. Assignment or Waiver of Moral Rights

Any assignment of copyright hereunder (and any ownership of a copyright as a work made for hire) include all rights of paternity, integrity, disclosure andwithdrawal and any other rights that may be known as or referred to as “moral rights” (collectively “Moral Rights”). To the extent such Moral Rights cannot beassigned under applicable law and to the extent the following is allowed by the laws in the various countries where Moral Rights exist, I hereby waive suchMoral Rights and consent to any action of the Company that would violate such Moral Rights in the absence of such consent.

5. List of Inventions

I have attached hereto as Exhibit A a complete list of all inventions or improvements to which I claim ownership and that I desire to remove from theoperation of this Agreement, and I acknowledge and agree that such list is complete. If no such list is attached to this Agreement, I represent that I have no suchinventions or improvements at the time of signing this Agreement.

F. Non-Solicitation of Company Employees

During the term of my employment and for one (1) year thereafter (the “Applicable Period”), I will not directly or indirectly encourage or solicit anyemployee of the Company to leave the Company for any reason or to accept employment with any other company, or to otherwise alter his, her of theirrelationship with Company. In accordance with this restriction, I will not interview or provide any input to any third party regarding any such person during theApplicable Period. However, this obligation shall not affect any responsibility I may have as an employee of the Company with respect to the bona fide hiringand firing of Company personnel.

G. Company Authorization for Publication

Prior to submitting or disclosing for possible publication or dissemination outside the Company any material prepared by me that incorporates informationthat concerns the Company’s business, I agree to deliver a copy of such material to an officer of the Company for his or her review. Within twenty (20) daysfollowing such submission, the Company agrees to notify me in writing whether the Company believes such material contains any Proprietary Information orInventions, and I agree to make such deletions and revisions as are reasonably requested by the Company to protect its Proprietary Information and Inventions. Ifurther agree to obtain the written consent of the Company prior to any review of such material by persons outside the Company.


- 4 - H. Duty of Loyalty

I agree that, during my employment with the Company, I will not provide consulting services to or become an employee of, any other firm or personengaged in a business in any way competitive with the Company, without first informing the Company of the existence of such proposed relationship andobtaining the prior written consent of my manager and the Human Resources Manager responsible for the organization in which I work.

I. Former Employer Information

I represent that my performance of all the terms of this Agreement and as an employee of the Company does not and will not breach any agreement tokeep in confidence proprietary information, knowledge or data acquired by me in confidence or in trust prior to my employment by the Company, and I will notdisclose to the Company or induce the Company to use any confidential or proprietary information or material belonging to any previous employer or others. Ihave not entered into and I agree I will not enter into any agreement, either written or oral, in conflict herewith or in conflict with my employment with theCompany. I further agree to conform to the rules and regulation of the Company.

J. Severability

I agree that if one or more provisions of this Agreement are held to be unenforceable under applicable law, such provisions shall be excluded from thisAgreement and the balance of the Agreement shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms.

K. Authorization to Notify New Employer

I hereby authorize the Company to notify my new employer about my rights and obligations under this Agreement following the termination of myemployment with the Company.

L. Effective Date

This Agreement shall be effective as of the first day of my employment with the Company and shall be binding upon me, my heirs, executor, assigns andadministrators and shall inure to the benefit of the Company, its subsidiaries, successors and assigns.

M. Governing Law

This Agreement shall be governed by and construed in accordance with the laws of the Province of Ontario and the laws of Canada applicable to thatprovince, and should be treated, in all respects, as an Ontario contract.

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- 5 - I HAVE READ THIS AGREEMENT CAREFULLY AND I UNDERSTAND AND ACCEPT THE OBLIGATIONS WHICH IT IMPOSES UPON MEWITHOUT RESERVATION. NO PROMISES OR REPRESENTATIONS HAVE BEEN MADE TO ME TO INDUCE ME TO SIGN THIS AGREEMENT. ISIGN THIS AGREEMENT VOLUNTARILY AND FREELY.

July 14, 2004 /s/ James A. EstillDate James A. Estill


- 6 - EXHIBIT A

1. The following is a complete list of all inventions or improvement relevant to the subject matter of my employment by the Company that have been

made or discovered or conceived or first reduced to practice by me or jointly with others prior to my employment by the Company that I desire toremove from the operation of the Company’s Proprietary Information and Inventions Agreement:

⌧ No Inventions or improvements

¨ See below: Any and all inventions regarding

¨ Additional sheets attached

2. I propose to bring to my employment the following material and documents that I obtained during the period of my prior employment. These

materials and documents are not the property of any third party and are not subject to any restrictions under any non-disclosure agreement or otheragreement limiting their use.

⌧ No materials or documents

¨ See below:

July 14, 2004 /s/ James A. EstillDate James A. Estill


Exhibit 10.15

EXECUTION VERSION

SECOND AMENDED AND RESTATED CREDIT AGREEMENT

Dated as of February 12, 2007

among

SYNNEX CORPORATIONas Borrower

and

THE LENDERS SIGNATORY HERETO FROM TIME TO TIME,as Lenders

and

GENERAL ELECTRIC CAPITAL CORPORATION,as Agent and Lender

and

GE CAPITAL MARKETS SERVICES, INC.,as Sole Lead Arranger and Bookrunner


TABLE OF CONTENTS

PageARTICLE 1 AMOUNT AND TERMS OF CREDIT

SECTION 1.1. Credit Facilities SECTION 1.2. Repayment; Reduction or Termination of Commitment 6SECTION 1.3. Use of Proceeds 8SECTION 1.4. Interest 8SECTION 1.5. Eligible Inventory; Eligible Receivables 11SECTION 1.6. Fees 13SECTION 1.7. Cash Management System 13SECTION 1.8. Receipt of Payments 13SECTION 1.9. Application and Allocation of Payments 14SECTION 1.10. Lenders’ Additional Rights 15SECTION 1.11. Accounting 15SECTION 1.12. Indemnity 15SECTION 1.13. Access 16SECTION 1.14. Taxes 17SECTION 1.15. Capital Adequacy; Increased Costs; Illegality 18SECTION 1.16. Single Loan 20SECTION 1.17. Pro Rata Treatment 20SECTION 1.18. Bank Products 21SECTION 1.19. Non-Receipt of Funds by the Agent 21SECTION 1.20. Swap Related Reimbursement Obligations 22

ARTICLE 2 CONDITIONS PRECEDENT

SECTION 2.1. Conditions to Effectiveness 23SECTION 2.2. Conditions to Each Advance and Letter of Credit 24

ARTICLE 3 REPRESENTATIONS AND WARRANTIES

SECTION 3.1. Existence; Compliance with Law 25SECTION 3.2. Executive Offices; Collateral Locations; Corporate or Other Names 25SECTION 3.3. Power; Authorization; Enforceable Obligations 25SECTION 3.4. Financial Statements and Projections 26SECTION 3.5. No Litigation 26SECTION 3.6. Taxes 26SECTION 3.7. Material Adverse Change 27SECTION 3.8. Ownership of Property; Liens 27SECTION 3.9. Restrictions; No Default; Material Contracts 28SECTION 3.10. Labor Matters 28SECTION 3.11. Ventures, Subsidiaries and Affiliates; Outstanding Stock and Debt 29

i


TABLE OF CONTENTS (Cont’d)

PageSECTION 3.12. Government Regulation 29SECTION 3.13. Margin Regulations 30SECTION 3.14. ERISA 30SECTION 3.15. Brokers 31SECTION 3.16. Patents, Trademarks, Copyrights and Licenses 31SECTION 3.17. Full Disclosure 32SECTION 3.18. Hazardous Materials 32SECTION 3.19. Insurance Policies 32SECTION 3.20. Deposit and Disbursement Accounts 32SECTION 3.21. Solvency 33SECTION 3.22. Inactive Subsidiaries 33

ARTICLE 4 FINANCIAL STATEMENTS AND INFORMATION

SECTION 4.1. Reports and Notices 33SECTION 4.2. Communication with Accountants 33

ARTICLE 5 AFFIRMATIVE COVENANTS

SECTION 5.1. Maintenance of Existence and Conduct of Business 34SECTION 5.2. Payment of Charges and Claims 34SECTION 5.3. Books and Records 35SECTION 5.4. Litigation 35SECTION 5.5. Insurance 35SECTION 5.6. Compliance with Laws 36SECTION 5.7. Agreements 36SECTION 5.8. Supplemental Disclosure 37SECTION 5.9. Environmental Matters 38SECTION 5.10. Landlords’ Agreements, Mortgagee Agreements and Bailee Letters 38SECTION 5.11. [Reserved] 39SECTION 5.12. Application of Proceeds 39SECTION 5.13. Fiscal Year 39SECTION 5.14. Casualty and Condemnation 39SECTION 5.15. Subsidiaries 40SECTION 5.16. Intellectual Property 40SECTION 5.17. Further Assurances 41

ARTICLE 6 NEGATIVE COVENANTS

SECTION 6.1. Mergers, Subsidiaries, Etc 41SECTION 6.2. Investments 42SECTION 6.3. Debt 46SECTION 6.4. Affiliate and Employee Loans and Transactions 47SECTION 6.5. Capital Structure and Business 48

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PageSECTION 6.6. Guaranteed Debt 49SECTION 6.7. Liens 50SECTION 6.8. Sale of Assets 50SECTION 6.9. Material Contracts 51SECTION 6.10. ERISA 51SECTION 6.11. Financial Covenants 52SECTION 6.12. Hazardous Materials 52SECTION 6.13. Sale-Leasebacks 52SECTION 6.14. Cancellation of Debt 52SECTION 6.15. Restricted Payments 52SECTION 6.16. Real Property Leases 53SECTION 6.17. Bank Accounts 53SECTION 6.18. No Speculative Transactions 53SECTION 6.19. Margin Regulations 54SECTION 6.20. Limitation on Negative Pledge Clauses, Etc 54SECTION 6.21. Accounting Changes 55SECTION 6.22. Amendments and Modifications to Debt Documents 55SECTION 6.23. Change of Corporate Name or Location; Change of Fiscal Year 55SECTION 6.24. Changes to Synnex Mexico Loan Documents 56SECTION 6.25. Mex Bank of America Account 56SECTION 6.26. SFC Accounts 56

ARTICLE 7 TERM

SECTION 7.1. Duration 57SECTION 7.2. Survival of Obligations 57

ARTICLE 8 EVENTS OF DEFAULT; RIGHTS AND REMEDIES

SECTION 8.1. Events of Default 57SECTION 8.2. Remedies 59SECTION 8.3. Waivers by Borrower 60SECTION 8.4. Application of Proceeds 60

ARTICLE 9 ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT

SECTION 9.1. Assignment and Participations 61SECTION 9.2. Appointment of Agent 64SECTION 9.3. The Agent’s Reliance, Etc 65SECTION 9.4. GE Capital and Affiliates 65SECTION 9.5. Lender Credit Decision 66SECTION 9.6. Indemnification 66SECTION 9.7. Successor Agent 66SECTION 9.8. Setoff and Sharing of Payments 67

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PageSECTION 9.9. Advances; Payments; Non-Funding Lenders; Information; Actions in Concert 68

ARTICLE 10 MISCELLANEOUS

SECTION 10.1. Complete Agreement; Amendments and Waivers 70SECTION 10.2. Fees and Expenses 72SECTION 10.3. No Waiver 73SECTION 10.4. Remedies 74SECTION 10.5. Severability 74SECTION 10.6. Conflict of Terms 74SECTION 10.7. Right of Set-off 74SECTION 10.8. Authorized Signature 74SECTION 10.9. Notices. 75SECTION 10.10. Section Titles 76SECTION 10.11. Counterparts 76SECTION 10.12. Time of the Essence 76SECTION 10.13. Confidentiality 76SECTION 10.14. Successors and Assigns 77SECTION 10.15. Amendment and Restatement 77SECTION 10.16. Governing Law 78SECTION 10.17. Waiver of Trial Jury 79SECTION 10.18. Press Releases and Related Matters 79SECTION 10.19. Reinstatement 79SECTION 10.20. Advice of Counsel 80SECTION 10.21. No Strict Construction 80SECTION 10.22. Third-Party Beneficiaries; Deliveries to GECDFC; Intercreditor Agreement 80

ANNEX A DEFINITIONS; RULES OF CONSTRUCTION

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SECOND AMENDED AND RESTATED CREDIT AGREEMENT

This SECOND AMENDED AND RESTATED CREDIT AGREEMENT (this “Agreement”) (a) is entered into as of February 12, 2007, by andamong SYNNEX CORPORATION, a Delaware corporation (the “Borrower”), and GENERAL ELECTRIC CAPITAL CORPORATION, a Delawarecorporation (“GE Capital”), for itself as Lender, and as Agent for the Lenders, and the other Lenders signatory hereto from time to time, and (b) amends andrestates the First Amended Credit Agreement defined below.

RECITALS

WHEREAS, the Borrower and GE Capital are parties to that certain Amended and Restated Credit Agreement dated as of July 9, 2002, as amendedby Amendment No. 1, dated as of October 17, 2002, Amendment No. 2, dated as of May 15, 2003, Amendment No. 3, dated as of June 30, 2003, AmendmentNo. 4, dated as of September 5, 2003, Amendment No. 5, dated as of December 30, 2003, Amendment No. 6, dated as of September 17, 2004, AmendmentNo. 7, dated as of September 16, 2005, Amendment No. 8, dated as of February 8, 2006, and Amendment No. 9, dated as of May 17, 2006, and as furtheramended, supplemented or otherwise modified from time to time prior to the date hereof (the “First Amended Credit Agreement”), which First Amended CreditAgreement, in turn, amended and restated in its entirety, that certain Credit Agreement dated as of December 19, 1997 by and between Borrower and GE Capital(the “Original Credit Agreement”); and

WHEREAS, the Borrower desires to borrow up to $50,000,000 in the aggregate from the Lenders, and to reserve the right to request additionalrevolving loan commitments of up to $50,000,000 in the aggregate, and the Lenders are willing to make certain loans and other financial accommodations infavor of the Borrower of up to such amounts in the aggregate upon the terms and conditions set forth herein;

NOW, THEREFORE, in consideration of the premises and the mutual covenants hereinafter contained, the parties hereto agree as follows:

Unless otherwise defined herein, capitalized terms used herein shall have the respective meanings ascribed to them in Annex A and, for purposes ofthis Agreement and the other Loan Documents, the rules of construction set forth in Annex A shall govern. Unless otherwise indicated, all references in thisAgreement to articles, sections, subsections, schedules, annexes, exhibits, and attachments shall refer to the corresponding articles, sections, subsections,schedules, annexes, exhibits, and attachments of or to this Agreement. All schedules, annexes, exhibits and attachments hereto, or expressly identified to thisAgreement, are incorporated herein by reference, and taken together, shall constitute but a single agreement. Unless otherwise expressly set forth herein or in awritten amendment referring to such schedules and annexes, all schedules and annexes referred to herein shall mean the schedules and annexes as in effect as ofthe Effective Date. The above Recitals shall be construed as part of this Agreement.

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ARTICLE 1

AMOUNT AND TERMS OF CREDIT

SECTION 1.1. Credit Facilities.

(a) Revolving Credit Facility. (i) Upon and subject to the terms and conditions hereof, each Lender severally agrees to make available from time totime until the Commitment Termination Date its Pro Rata Share of advances (each, a “Revolving Credit Advance”) to the Borrower. Each Lender’s Pro RataShare of the Revolving Credit Loan shall not exceed its separate Revolving Credit Commitment. The obligations of each Lender hereunder shall be several andnot joint. The aggregate principal amount of Revolving Credit Advances outstanding shall not exceed at any time the lesser of (A) the Maximum Amount and(B) the Borrowing Base, in each case less the principal amount of the Swing Line Loan and Letter of Credit Obligations outstanding at such time. Until theCommitment Termination Date, the Borrower may from time to time borrow, repay and reborrow under this Section 1.1(a)(i).

(ii) Each Revolving Credit Advance shall be made on notice by the Borrower in writing (by telecopy or overnight courier) to the Agent (which shallpromptly notify the Lenders) at its address at 100 California Street, 10th floor, San Francisco, CA 94111, Attention: SYNNEX Corporation, Account Manager,Telecopier No.: (513) 794-8542, Telephone No.: (415) 277-7400, or such other address as is notified to Borrower in writing by Agent. Such notice shall be givenno later than noon (New York time) on the Business Day of the proposed Revolving Credit Advance, in the case of an Index Rate Loan, or noon (New Yorktime) on the date which is three (3) Business Days prior to the proposed Revolving Credit Advance, in the case of a LIBOR Loan. Each such notice of borrowing(a “Notice of Revolving Credit Advance”) shall be substantially in the form of Exhibit 1.1(a)(ii) hereto and shall include the information required in such Exhibitand such other information as may reasonably be required by the Agent. If the Borrower desires to have the Revolving Credit Advances bear interest by referenceto the LIBOR Rate, it must comply with Section 1.4 (d). The Agent shall be entitled to rely upon and shall be fully protected under this Agreement in relyingupon any Notice of Revolving Credit Advance, Notice of Conversion/Continuation or similar notice believed by the Agent to be genuine and to assume that thepersons executing and delivering the same were duly authorized unless the responsible individual acting thereon for the Agent shall have actual knowledge to thecontrary.

(iii) The Borrower shall execute and deliver to each Lender a note to evidence the Revolving Credit Commitment of that Lender. Each note shall bein the principal amount of the Revolving Credit Commitment of the applicable Lender, dated the Effective Date and substantially in the form of Exhibit1.1(a)(iii). Each Revolving Credit Note shall represent the obligation of the Borrower to pay the amount of each Lender’s Revolving Credit Commitment or, ifless, the applicable Lender’s Pro Rata Share of the aggregate unpaid principal amount of all Revolving Credit Advances to the Borrower, together with interestthereon as prescribed in Section 1.4. The entire unpaid balance of the Revolving Credit Loan and all other non-contingent Obligations shall be immediately dueand payable in full in immediately available

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funds on the Commitment Termination Date. The date and amount of each Revolving Credit Advance made by the Lenders to the Borrower and each payment ofprincipal with respect thereto shall be recorded on the books and records of such Lender, which books and records shall constitute conclusive evidence, absentmanifest error, of the accuracy of the information therein recorded.

(iv) The Borrower shall furnish to the Agent and each Lender a Borrowing Base Certificate substantially in the form of Exhibit 1.1(a)(iv) hereto,completed and signed by an officer of the Borrower listed in Schedule 10.8, which certificate sets forth a calculation of the Borrowing Base of the Borrower at thetimes and for the periods set forth in Annex E. The Borrower agrees that, in making any Revolving Credit Advance available to the Borrower hereunder, theAgent and each Lender shall be entitled to rely upon the most recent Borrowing Base Certificate delivered to the Agent and the Lenders by the Borrower. TheBorrower further agrees that if the Borrower shall have failed to deliver a Borrowing Base Certificate to the Agent and the Lenders within the specified period,the Lenders shall be under no obligation to make any further Revolving Credit Advances to the Borrower, or incur any additional Letter of Credit Obligations,until such time as such Borrowing Base Certificate is delivered to the Agent and the Lenders.

(v) Any provision of this Agreement to the contrary notwithstanding, at the request of Borrower, in its discretion Agent may (but shall haveabsolutely no obligation to), make Revolving Credit Advances to Borrower on behalf of the Lenders in amounts that cause the outstanding balance of theaggregate Revolving Credit Loan to exceed the Borrowing Base (less the Swing Line Loan) (any such excess Revolving Credit Advances are herein referred tocollectively as “Overadvances”); provided that (A) no such event or occurrence shall cause or constitute a waiver of Agent’s, the Swing Line Lender’s orLenders’ right to refuse to make any further Overadvances, Swing Line Advances or Revolving Credit Advances, or incur any Letter of Credit Obligations, as thecase may be, at any time that an Overadvance exists, (B) no Overadvance shall result in a Default or Event of Default due to Borrower’s failure to comply withSection 1.2(b) for so long as Agent permits such Overadvance to remain outstanding, but solely with respect to the amount of such Overadvance, and (C) noOveradvance may remain outstanding more than 30 days (and for at least five consecutive Business Days after such Overadvance is repaid, no furtherOveradvance may be made). In addition, Overadvances may be made even if the conditions to lending set forth in Section 2 have not been met. All Overadvancesshall constitute Index Rate Loans, shall bear interest at the Default Rate and shall be payable on the earlier of demand or the Commitment Termination Date.Except as otherwise provided in Section 1.9, the authority of Agent to make Overadvances is limited to an aggregate amount not to exceed 10% of the BorrowingBase at any time, shall not cause the Revolving Credit Loan to exceed the Maximum Amount, and may be revoked prospectively by a written notice to Agentsigned by the Lenders holding more than 50% of the Revolving Loan Commitments.

(b) Swing Line Facility. (i) Upon and subject to the terms and conditions hereof, the Swing Line Lender agrees to make available from time to timeuntil the Commitment Termination Date advances (each, a “Swing Line Advance”) to the Borrower. The aggregate

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amount of Swing Line Advances outstanding shall not exceed the lesser of (A) the Swing Line Commitment and (B) the lesser of (x) the Maximum Amount, and(y) (except for Overadvances) the Borrowing Base, in either case less the outstanding principal balance of the Revolving Credit Loan at such time (“Swing LineAvailability”). Until the Commitment Termination Date, the Borrower may from time to time borrow, repay and reborrow under this Section 1.1(b). Each SwingLine Advance shall be made on notice by the Borrower in writing (by telecopy or overnight courier) to the Agent at its address at 100 California Street, 10thfloor, San Francisco, CA 94111, Attention: SYNNEX Corporation, Account Manager, Telecopier No.: (513) 794-8542, Telephone No.: (415) 277-7400, or suchother address as is notified to Borrower in writing by Agent. Such notice shall be given no later than noon (New York time) on the Business Day of the proposedSwing Line Advance. Each such notice of borrowing (a “Notice of Swing Line Advance”) shall be substantially in the form of Exhibit 1.1(b)(i) hereto and shallinclude the information required in such Exhibit and such other information as may reasonably be required by the Agent. The Agent shall be entitled to rely uponand shall be fully protected under this Agreement in relying upon any Notice of Swing Line Advance or similar notice believed by the Agent to be genuine and toassume that the persons executing and delivering the same were duly authorized unless the responsible individual acting thereon for the Agent shall have actualknowledge to the contrary. Unless the Swing Line Lender has received at least one Business Day’s prior written notice from the Requisite Lenders instructing itnot to make a Swing Line Advance, the Swing Line Lender shall, notwithstanding the failure of any conditions precedent set forth in Section 2.2, be entitled tofund such Swing Line Advance, and to have each lender make Revolving Credit Advances in accordance with Section 1.1(b)(iii) or purchase participationinterests in accordance with Section 1.1(b)(iv). Notwithstanding any other provision of this Agreement or the other Loan Documents, the Swing Line Loan shallconstitute an Index Rate Loan. Borrower shall repay the aggregate outstanding principal amount of the Swing Line Loan upon demand therefor by Agent.

(ii) The Borrower shall execute and deliver to the Swing Line Lender a promissory note to evidence the Swing Line Commitment. Such note shallbe in the principal amount of the Swing Line Commitment of the Swing Line Lender, dated the Effective Date and substantially in the form of Exhibit 1.1(b)(ii)(the “Swing Line Note”). The Swing Line Note shall represent the obligation of the Borrower to pay the amount of the Swing Line Commitment or, if less, theaggregate unpaid principal amount of all Swing Line Advances made to the Borrower together with interest thereon as prescribed in Section 1.4. The entireunpaid balance of the Swing Line Loan and all other non-contingent Obligations shall be immediately due and payable in full in immediately available funds onthe Commitment Termination Date if not sooner paid in full.

(iii) The Swing Line Lender, at any time and from time to time in its sole and absolute discretion, may, and shall on at least a weekly basis, onbehalf of the Borrower (and the Borrower hereby irrevocably authorizes the Swing Line Lender to so act on its behalf) request each Lender (including the SwingLine Lender) to make a Revolving Credit Advance to the Borrower (which shall be an Index Rate Loan) in an amount equal to such Lender’s Pro Rata Share ofthe principal amount of the Swing Line Loan (the “Refunded Swing Line Loan”) outstanding on the date such notice is given. Unless any of the events describedin Sections

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8.1(f) shall have occurred (in which event the procedures of Section 1.1(b)(iv) shall apply) and regardless of whether the conditions precedent set forth in thisAgreement to the making of a Revolving Credit Advance are then satisfied, each Lender shall disburse directly to the Agent, its Pro Rata Share of a RevolvingCredit Advance on behalf of the Swing Line Lender, prior to 3:00 p.m. (New York time), in immediately available funds on the Business Day next succeedingthe date such notice is given. The proceeds of such Revolving Credit Advances shall be immediately paid to the Swing Line Lender and applied to repay theRefunded Swing Line Loan.

(iv) If, prior to refunding the Swing Line Loan with a Revolving Credit Advance pursuant to Section 1.1(b)(iii), one of the events described inSections 8.1(f) shall have occurred, then, subject to the provisions of Section 1.1(b)(v) below, each Lender will, on the date such Revolving Credit Advance was tohave been made for the benefit of the Borrower, purchase from the Swing Line Lender an undivided participation interest in the Swing Line Loan in an amountequal to its Pro Rata Share of the Swing Line Loan. Upon request, each Lender will promptly transfer to the Swing Line Lender, in immediately available funds,the amount of its participation.

(v) Each Lender’s obligation to make Revolving Credit Advances in accordance with Section 1.1(b)(iii) and to purchase participation interests inaccordance with Section 1.1(b)(iv) shall be absolute and unconditional and shall not be affected by any circumstance, including (A) any setoff, counterclaim,recoupment, defense or other right which such Lender may have against the Swing Line Lender, the Borrower or any other Person for any reason whatsoever;(B) the occurrence or continuance of any Default or Event of Default; (C) any inability of the Borrower to satisfy the conditions precedent to borrowing set forthin this Agreement on the date upon which such participation interest is to be purchased; or (D) any other circumstance, happening or event whatsoever, whetheror not similar to any of the foregoing. If any Lender does not make available to the Agent or the Swing Line Lender, as applicable, the amount required pursuantto Section 1.1(b)(iii) or 1.1(b)(iv), as the case may be, the Swing Line Lender shall be entitled to recover such amount on demand from such Lender, together withinterest thereon for each day from the date of non-payment until such amount is paid in full at the Federal Funds Rate for the first two Business Days and at theIndex Rate plus the Applicable Margin thereafter.

(c) The Agent shall be entitled to rely upon, and shall be fully protected in relying upon, any Notice of Revolving Credit Advance, Notice ofConversion/Continuation or similar notice believed by the Agent to be genuine. The Agent may assume that each Person executing and delivering such a noticewas duly authorized, unless the responsible individual acting thereon for the Agent has actual knowledge to the contrary.

SECTION 1.1A Letters of Credit. Subject to and in accordance with the terms and conditions contained herein and in Annex J, Borrower shall have theright to request, and Lenders agree to incur, or purchase participations in, Letter of Credit Obligations in respect of Borrower.

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SECTION 1.2. Repayment; Reduction or Termination of Commitment.

(a) The Borrower hereby promises to pay to the Agent, for the account of each Lender, the entire outstanding principal amount of the RevolvingCredit Loan, and the Revolving Credit Loan shall mature, on the Commitment Termination Date.

(b) In the event that the outstanding principal balance of the Revolving Credit Loan made to the Borrower shall at any time exceed the BorrowingAvailability, the Borrower shall immediately repay the Revolving Credit Advances made to the Borrower in the amount of such excess and, if after suchrepayment any excess remains because of the Letter of Credit Obligations, such repayment shall be accompanied by cash collateralization or other satisfaction ofsuch Letter of Credit Obligations in accordance with Annex J. Any such excess balance described in the preceding sentence shall nevertheless constituteObligations that are secured by the Collateral and entitled to all of the benefits thereof and of the Loan Documents and shall be evidenced by the RevolvingCredit Notes. Notwithstanding the foregoing, any Overadvance made pursuant to Section 1.1(a)(v) shall be repaid in accordance with Section 1.1(a)(v).

(c) The Borrower shall have the right at any time and from time to time, upon sixty (60) days’ prior written notice to the Agent, to permanentlyreduce (ratably among the Lenders) or terminate voluntarily the Revolving Credit Commitments (in whole or in part) without premium or penalty other than asprovided in Section 1.4(e); provided that the Revolving Credit Commitments shall not be reduced to lower than $25,000,000, except in connection with areduction to zero or a termination thereof. The aggregate amount of any such partial reduction of the Revolving Credit Commitments shall be in integralmultiples of $5,000,000 and to the extent, if any, that the Revolving Credit Loan and the Swing Line Loan then outstanding exceed the Maximum Amount atsuch time (after giving effect to such reduction in the Revolving Credit Commitments), such reduction shall be accompanied by (a) prepayment of the RevolvingCredit Advances in the amount of such excess and, if after such prepayment any excess remains because of the Letter of Credit Obligations, such reduction shallbe accompanied by cash collateralization or other satisfaction of such Letter of Credit Obligations in accordance with Annex J, in each case together with thepayment of any fees, premiums, costs and charges required to be paid pursuant to Section 1.4(e), and accrued interest on the amount so prepaid to the date of suchprepayment. Upon the termination of the Revolving Credit Commitments, the Borrower’s right to receive Revolving Credit Advances, or request that Letter ofCredit Obligations be incurred on its behalf, or request Swing Line Advances shall terminate and the Borrower’s obligation to pay the Unused Facility Fee shallterminate, and notwithstanding anything to the contrary contained herein or in any Revolving Credit Note, the entire outstanding balance of the Revolving CreditLoan and the Swing Line Loan shall be immediately due and payable. On the date of such termination, the Borrower shall pay to the Agent in immediatelyavailable funds all of its Obligations and any accrued and unpaid interest and in accordance with Annex J shall cash collateralize all Letter of Credit Obligationsor otherwise satisfy such Letter of Credit Obligations.

(d) All Obligations (excluding the GECDFC Obligations), including the Revolving Credit Loan, shall be immediately due and payable, and theRevolving Credit

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Commitments shall immediately terminate, in each instance without notice, on the earliest of (x) the occurrence of the “Commitment Termination Date” (asdefined in the Receivables Funding Agreement), (y) the date of the voluntary termination by SFC of the loan commitments under the Receivables FundingAgreement or (z) the date of the voluntary termination by the Borrower or SFC of the obligations of the Borrower or SFC to transfer or purchase, as appropriate,receivables pursuant to the Receivables Sale Agreement.

(e) For the purposes of increasing the Revolving Credit Commitments, the Borrower may from time to time request a new or additional commitment(an “Incremental Commitment”) from one or more Lenders or other Persons consented to by the Agent pursuant to the Incremental Commitment Agreement(each such Person upon satisfaction of the conditions set forth herein, an “Incremental Lender”) so long as (x) after giving effect to such IncrementalCommitment, (A) the Revolving Credit Commitment shall not exceed $100,000,000, (B) each such Incremental Commitment is in a minimum amount of$25,000,000 and integral multiples of $25,000,000 in excess of such amount, and (C) the aggregate amount of all such Incremental Commitments hereunder shallnot exceed $50,000,000, and (y) on the date on which such Incremental Commitment is requested to be effective (such date, an “Incremental CommitmentDate”), no Default or Event of Default shall have occurred and be continuing, or will occur after giving effect to such Incremental Commitment. No IncrementalCommitment pursuant to this Section 1.2(e) shall be effective unless the Borrower delivers to the Agent an Incremental Commitment Agreement executed anddelivered by the Borrower and the related Incremental Lender and a certificate executed by an officer of the Borrower listed in Schedule 10.8 to the effect that thecondition set forth in clause (y) above is satisfied; provided, that subject to the conditions set forth herein, each Lender hereby commits to provide its Pro RataShare of each Incremental Commitment at any time prior to the first anniversary of the Effective Date. Neither the Agent nor any Lender shall be obligated todeliver or fund any Incremental Commitment pursuant hereto unless such Person becomes party to an Incremental Commitment Agreement as an IncrementalLender. On each Incremental Commitment Date, and as a condition to becoming a Lender hereunder, the applicable Incremental Lenders shall fund Advances tothe Agent in an amount necessary for such Incremental Lender’s Pro Rata Share to be equal to (I) the sum of (A) such Lender’s Revolving Credit Advances, plus(B) such Lender’s share of the obligations to purchase participations in Swing Line Advances and refinance Swing Line Advances pursuant to Section 1.1(b) ofthis Agreement, divided by (II) the aggregate outstanding principal amount of the Revolving Credit Loan and the Swing Line Loan on such IncrementalCommitment Date. Upon receipt of such amount, the Agent shall disburse such amounts to the other Lenders ratably in accordance with their Pro Rata Shares.Notwithstanding anything herein to the contrary, in connection with any request by Borrower for an Incremental Commitment hereunder by any Person,Borrower shall first deliver to the Agent a written notice requesting that the existing Lenders provide such Incremental Commitment hereunder based on suchLenders’ Pro Rata Shares, and to the extent that any Lender hereunder agrees to provide any portion of such Incremental Commitment, such Lender shall alwaysbe entitled to fund a portion of such Incremental Commitment that is necessary to preserve its Pro Rata Share hereunder as in effect immediately prior to givingeffect to such Incremental Commitment.

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(f) Within five (5) Business Days of receipt by the Borrower or any Domestic Subsidiary thereof of any Net Cash Proceeds of a sale, assignment orother disposition of assets or property, other than sales of assets permitted under Section 6.8(a), 6.8(b), 6.8(c) or 6.8(d), the Borrower agrees to make a mandatoryprepayment of the Advances in an amount equal to one hundred percent (100%) of such Net Cash Proceeds.

SECTION 1.3. Use of Proceeds. The Borrower shall use the proceeds of the Revolving Credit Loan and the Swing Line Loan for (i) the payment of costsand expenses of the financing transactions contemplated by this Agreement and the Receivables Funding Agreement that are payable by the Borrower, and(ii) general working capital and other corporate purposes of the Borrower not prohibited by the terms of this Agreement and the other Loan Documents. TheBorrower agrees that it shall not borrow any Revolving Credit Advances or Swing Line Advances except to fulfill its immediate cash needs for such purposes.

SECTION 1.4. Interest.

(a) The Borrower shall pay interest to the Agent for the account of each Lender on the aggregate outstanding balance of the Revolving CreditAdvances made to the Borrower from time to time from the date made until paid in full at a per annum interest rate equal to the Index Rate in effect from time totime or, at the election of the Borrower, the applicable LIBOR Rate, in each case, plus the Applicable Margin. The Borrower shall pay interest to the Agent forthe account of the Swing Line Lender on the aggregate outstanding balance of the Swing Line Advances made to the Borrower from time to time from the datemade until maturity at a per annum interest rate equal to the applicable Index Rate plus the Applicable Margin in effect from time to time.

On the Effective Date, the Applicable Margins are as follows:

Applicable Margin for Index Rate Loans (1.00)%

Applicable Margin for LIBOR Loans 1.50%

Applicable Margin for Letters of Credit 1.50%

The Applicable Margins may be adjusted by reference to the following grids:

If Fixed Charge Coverage Ratio is: Level of

Applicable Margins:< 1.9:1.0 Level I> 1.9:1.0 Level II

Applicable Margins Level I Level II Applicable Margin for Index Rate Loans (1.00)% (1.25)%Applicable Margin for LIBOR Loans 1.50% 1.20%Applicable Margin for Letters of Credit 1.50% 1.25%

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Adjustments in the Applicable Margins shall commence with the first Fiscal Quarter ending after the first anniversary of the Effective Date, and thereafter shallbe implemented quarterly on a prospective basis, for each calendar month commencing at least five (5) days after the date of delivery to Lenders of the quarterlyunaudited or annual audited (as applicable) Financial Statements evidencing the need for an adjustment. Concurrently with the delivery of those FinancialStatements, Borrower shall deliver to Agent and Lenders a certificate, signed by its chief financial officer, setting forth in reasonable detail the basis for thecontinuance of, or any change in, the Applicable Margins. Failure to timely deliver such Financial Statements shall, in addition to any other remedy provided forin this Agreement, result in an increase in the Applicable Margins to the highest level set forth in the foregoing grid, until the date of delivery of those FinancialStatements demonstrating that such an increase is not required. If an Event of Default has occurred and is continuing at the time any reduction in the ApplicableMargins is to be implemented, that reduction shall be deferred until the first day of the first calendar month following the date on which such Event of Default iswaived or cured. If, for any reason (including inaccurate reporting on financial statements or a Compliance Certificate), it is determined that a higher ApplicableMargin should have applied to a period than was actually applied, then the proper margin shall be applied retroactively and the Borrower shall pay to Agent, forthe benefit of the Lenders, promptly on demand therefor, an amount equal to the difference between the amount of interest and fees that would have accruedusing the proper margin and the amount actually paid.

(b) Interest on the Revolving Credit Advances and the Swing Line Advances made to the Borrower shall be payable by the Borrower to the Agentfor the account of each Lender at the following times: (i) on each Interest Payment Date; (ii) on the date of any payment or prepayment of the principal of theRevolving Credit Advances or the Swing Line Advances (to the extent of the interest accrued and unpaid on such portion paid or prepaid); and (iii) if any interestaccrues or remains payable after the Commitment Termination Date, upon demand. If any payment of principal of the Revolving Credit Advances or the SwingLine Advances becomes due and payable on a day other than a Business Day, the maturity thereof will be extended to the next succeeding Business Day (exceptas set forth in the definition of LIBOR Period) and, with respect to payments of principal, interest thereon shall be payable at the then applicable rate during suchextension. Interest shall be calculated by the Agent on a daily basis and on the basis of a three hundred sixty (360) day year, in each case for the actual number ofdays occurring in the period for which such interest is payable. Each determination by the Agent of an interest rate hereunder and each calculation of interesthereunder shall be conclusive and binding for all purposes, absent manifest error.

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(c) Upon the occurrence and during the continuation of any Event of Default, at the election of the Agent (or upon the written request of theRequisite Lenders) confirmed by written notice from the Agent to the Borrower, (x) the interest rate applicable to the Letter of Credit Fees and principal on theRevolving Credit Advances and the Swing Line Advances shall be increased to the Default Rate and (y) interest on interest and other Obligations (excludingprincipal on the Revolving Credit Advances and the Swing Line Advances) in default shall be charged at the Default Rate and shall be payable on demand. Suchincreased interest rate or interest charge, as appropriate, or Letter of Credit Fees at the Default Rate, shall commence to accrue on the date of the occurrence ofthe Default giving rise to such Event of Default.

(d) So long as no Default or Event of Default shall have occurred and be continuing, and subject to the additional conditions precedent set forth inSection 2.2, the Borrower shall have the option to (i) request that any Revolving Credit Advances be made as a LIBOR Loan, (ii) convert at any time all or anypart of outstanding Revolving Credit Advances from Index Rate Loans to LIBOR Loans, (iii) convert any LIBOR Loan to an Index Rate Loan, subject topayment of LIBOR breakage costs in accordance with Section 1.4(e) if such conversion is made prior to the expiration of the LIBOR Period applicable thereto, or(iv) continue all or any portion of any LIBOR Loan as a LIBOR Loan upon the expiration of the applicable LIBOR Period, and the succeeding LIBOR Period ofthat continued LIBOR Loan shall commence on the last day of the LIBOR Period of the LIBOR Loan to be continued. Any portion of the Revolving CreditAdvances to be made or continued as, or converted into, a LIBOR Loan must be in a minimum amount of $2,000,000 and integral multiples of $500,000 inexcess of such amount. Any such election must be made by noon (New York time) on the third (3rd) Business Day prior to (1) the date of any proposedRevolving Credit Advance which is to bear interest at the LIBOR Rate, (2) the end of each LIBOR Period with respect to any LIBOR Loans to be continued assuch, or (3) the date on which the Borrower wishes to convert any Index Rate Loan to a LIBOR Loan for a LIBOR Period designated by the Borrower in suchelection. If no election is received with respect to a LIBOR Loan by noon (New York time) on the third (3rd) Business Day prior to the end of the LIBOR Periodwith respect thereto (or if a Default or an Event of Default shall have occurred and be continuing or the additional conditions precedent set forth in Section 2.2shall not have been satisfied), that LIBOR Loan shall be converted to an Index Rate Loan at the end of its LIBOR Period. The Borrower must make such electionby notice to the Agent in writing, by telecopy or overnight courier. In the case of any conversion or continuation, such election must be made pursuant to awritten notice (a “Notice of Conversion/Continuation”) in the form of Exhibit 1.4(d).

(e) To induce the Lenders to provide the LIBOR Rate option on the terms provided herein, if (i) any LIBOR Loans are repaid in whole or in partprior to the last day of any applicable LIBOR Period (whether that repayment is made pursuant to any provision of this Agreement or any other Loan Documentor is the result of acceleration, by operation of law or otherwise); (ii) the Borrower shall default in payment when due of the principal amount of or interest onany LIBOR Loan; (iii) the Borrower shall default in making any borrowing of, conversion into or continuation of LIBOR Loans after the Borrower has givennotice requesting the same in accordance herewith; or (iv) the Borrower shall fail to make any prepayment of a LIBOR Loan after the Borrower has given anotice thereof in accordance herewith, the Borrower

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shall indemnify and hold harmless each Lender from and against all losses, costs and expenses resulting from or arising from any of the foregoing. Suchindemnification shall include any loss (including loss of margin) or expense arising from the reemployment of funds obtained by it or from fees payable toterminate deposits from which such funds were obtained. For the purpose of calculating amounts payable to a Lender under this subsection, each Lender shall bedeemed to have actually funded its relevant LIBOR Loan through the purchase of a deposit bearing interest at the LIBOR Rate in an amount equal to the amountof that LIBOR Loan and having a maturity comparable to the relevant Interest Period; provided, however, that each Lender may fund each of its LIBOR Loans inany manner it sees fit, and the foregoing assumption shall be utilized only for the calculation of amounts payable under this subsection. This covenant shallsurvive the termination of this Agreement and the payment of the Revolving Credit Notes and all other amounts payable hereunder. As promptly as practicableunder the circumstances, each Lender shall provide the Borrower with its written calculation of all amounts payable pursuant to this Section 1.4(e), and suchcalculation shall be binding on the parties hereto unless the Borrower shall object in writing within ten (10) Business Days of receipt thereof, specifying the basisfor such objection in detail.

(f) Notwithstanding anything to the contrary set forth in this Section 1.4, if a court of competent jurisdiction determines in a final order that the rateof interest payable hereunder exceeds the highest rate of interest permissible under law (the “Maximum Lawful Rate”), then so long as the Maximum LawfulRate would be so exceeded, the rate of interest payable hereunder shall be equal to the Maximum Lawful Rate; provided, however, that if at any time thereafter therate of interest payable hereunder is less than the Maximum Lawful Rate, the Borrower shall continue to pay interest hereunder at the Maximum Lawful Rateuntil such time as the total interest received by the Agent, on behalf of the Lenders, is equal to the total interest which would have been received had the interestrate payable hereunder been (but for the operation of this paragraph) the interest rate payable since the Closing Date as otherwise provided in this Agreement.Thereafter, interest hereunder shall be paid at the rate(s) of interest and in the manner provided in Sections 1.4(a) through (e) above, unless and until the rate ofinterest again exceeds the Maximum Lawful Rate, and at that time this paragraph shall again apply. In no event shall the total interest received by any Lenderpursuant to the terms hereof exceed the amount which such Lender could lawfully have received had the interest due hereunder been calculated for the full termhereof at the Maximum Lawful Rate. If the Maximum Lawful Rate is calculated pursuant to this paragraph, such interest shall be calculated at a daily rate equalto the Maximum Lawful Rate divided by the number of days in the year in which such calculation is made. If, notwithstanding the provisions of thisSection 1.4(f), a court of competent jurisdiction shall finally determine that a Lender has received interest hereunder in excess of the Maximum Lawful Rate, theAgent shall, to the extent permitted by applicable law, promptly apply such excess in the order specified in Section 1.9 and thereafter shall refund any excess tothe Borrower or as a court of competent jurisdiction may otherwise order.

SECTION 1.5. Eligible Inventory; Eligible Receivables.

(a) Based on the most recent Borrowing Base Certificate delivered by the Borrower to the Agent and on other information available to the Agent,the Agent shall in its

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reasonable business judgment determine which Inventory of the Borrower shall be deemed to be “Eligible Inventory” of the Borrower for purposes ofdetermining the amounts, if any, to be advanced to the Borrower under the Revolving Credit Loan and the Swing Line Loan. In determining whether anyparticular Inventory constitutes Eligible Inventory, the Agent shall not include any such Inventory to which any of the exclusionary criteria set forth belowapplies. The Agent reserves the right, at any time and from time to time after the Effective Date, to adjust any such criteria, to establish new criteria and to adjustadvance rates with respect to Eligible Inventory in its reasonable business judgment, subject to the approval of Supermajority Lenders in the case of adjustmentsor new criteria or changes in advance rates which have the effect of making more credit available. Eligible Inventory shall not include any Inventory of theBorrower:

(i) that is not owned by the Borrower free and clear of all Liens and rights of any other Person (including the rights of a purchaser that has madeprogress payments and the rights of a surety that has issued a bond to assure the Borrower’s performance with respect to that Inventory), except the Liens infavor of the Agent, on behalf of itself and the Lenders, and a second Lien in favor of GE Capital as the Administrative Agent under the Receivables FundingAgreement;

(ii) that is (i) not located on premises owned, leased or operated by the Borrower or (ii) stored with a bailee, warehouseman or similar Person, unlessthe Agent has given its prior consent thereto and unless (x) a satisfactory bailee letter or landlord waiver has been delivered to the Agent, or (y) Reservessatisfactory to the Agent have been established with respect thereto, or (iii) located at any site if the aggregate book value of Inventory at any such location is lessthan $100,000;

(iii) that is placed on consignment, is in transit or is otherwise not located on premises owned, leased or operated by the Borrower;

(iv) that is covered by a negotiable document of title, unless such document and evidence of acceptable insurance covering such Inventory havebeen delivered to the Agent;

(v) that in the Agent’s reasonable determination, is excess, obsolete, unsalable, shopworn, seconds, damaged, imperfect or unfit for sale;

(vi) that consists of display items, promotional materials, packing or shipping materials, manufacturing supplies, work-in-process Inventory orreplacement parts;

(vii) that consists of goods which have been returned by the buyer;

(viii) that is not of a type held for sale in the ordinary course of the Borrower’s business;

(ix) that consists of discontinued or slow-moving items (over 90 days old), goods of substandard quality or goods classified as “clearanceinventory”;

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(x) that is bill-and-hold inventory or that is evidenced by an account;

(xi) as to which the Agent’s Lien, on behalf of itself and the Lenders, therein is not a first priority perfected Lien;

(xii) as to which any of the representations or warranties pertaining to Inventory set forth in this Agreement or the Borrower Security Agreement isuntrue;

(xiii) that consists of any costs associated with “freight-in” charges;

(xiv) that consists of Hazardous Materials or goods that can be transported or sold only with licenses that are not readily available;

(xv) that is not covered by casualty insurance acceptable to the Agent;

(xvi) that is (i) Cisco Inventory, (ii) Dell Inventory, (iii) Hewlett Packard Inventory, (iv) Lenovo Inventory, or (v) IBM Inventory; or

(xvii) that is otherwise unacceptable to the Agent in its reasonable business judgment.

(b) Eligible Receivables. Agent reserves the right, at any time and from time to time after the Effective Date, to adjust any of the criteria set forth inthe definitions of Eligible Receivables, and to establish new criteria, and to adjust advance rates with respect to Eligible Receivables, in its reasonable creditjudgment, reflecting changes in the collectibility or realization values of such Accounts arising or discovered by Agent after the Effective Date subject to theapproval of Supermajority Lenders in the case of adjustments or new criteria or changes in advance rates which have the effect of making more credit available.

SECTION 1.6. Fees. As compensation for the Agent’s and the Lenders’ costs, skills, services and efforts incurred and expended in making the RevolvingCredit Loan available to the Borrower, the Borrower agrees to pay to the Agent for its own account or the account of the Lenders, as the case may be, the Letterof Credit Fee as provided in Annex J and the fees set forth in Annex D.

SECTION 1.7. Cash Management System. On or prior to the Effective Date, the Borrower and each other Domestic Subsidiary of the Borrower (other thanSFC) will establish and maintain until the Termination Date, the cash management system described in Annex B.

SECTION 1.8. Receipt of Payments. The Borrower shall make each payment under this Agreement not later than 3:00 p.m. (New York time) on the daywhen due in Dollars in immediately available funds to the Collection Account. Payments received after 3:00 p.m. (New York time) on any Business Day shall bedeemed to have been received on the following Business Day. For the purposes of computing interest and Fees and determining the Borrowing Availability as ofany date: (i) all payments (including cash sweeps) consisting of cash, wire, or electronic transfers in immediately available funds shall be deemed received by theAgent upon

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deposit in the Collection Account; and (ii) all payments consisting of checks, drafts, or similar non-cash items shall be deemed received upon receipt of goodfunds following deposit in the Collection Account. Subject to Section 9.9(a)(ii), each payment received by the Agent under this Agreement or any RevolvingCredit Note or Swing Line Note for the account of any Lender or the Swing Line Lender, as applicable, shall be paid by the Agent promptly to such Lender, inthe same funds received, for application to the Revolving Credit Loan, Swing Line Loan or other obligation in respect of which such payment is made.

SECTION 1.9. Application and Allocation of Payments. The Borrower irrevocably waives the right to direct the application of any and all payments at anytime or times hereafter received from or on behalf of the Borrower, and the Borrower irrevocably agrees that the Agent and the Lenders shall have the continuingexclusive right to apply any and all such payments against the then due and payable Obligations and in repayment of the Revolving Credit Advances as theLenders may deem advisable. In the absence of a specific determination by the Agent with respect thereto or unless otherwise expressly provided herein,payments shall be applied in the following order: (a) to then due and payable Fees, expenses and other Obligations (including Revolving Credit Advances madeby the Agent in its capacity as the Agent) owing by the Borrower to the Agent; (b) to then due and payable interest payments on the Swing Line Loan owing bythe Borrower; (c) to then due and payable principal payments on the Swing Line Loan owing by the Borrower; (d) to then due and payable interest payments onthe Revolving Credit Loan (to include the Letter of Credit Fees) and unpaid Swap Related Reimbursement Obligations, ratably in proportion to the interestaccrued as to the Revolving Credit Loan and Swap Related Reimbursement Obligation, as applicable; (e) to then due and payable principal payments on theRevolving Credit Loan owing by the Borrower and unpaid Swap Related Reimbursement Obligations and to provide for cash collateral for Letter of CreditObligations in the manner described in Annex J, ratably to the aggregate, combined principal balance of the Revolving Credit Advances, unpaid Swap RelatedReimbursement Obligations and outstanding Letter of Credit Obligations; and (f) to any other Obligations to the Lenders owing by the Borrower; provided that ifan Event of Default shall occur and be continuing or after the acceleration of the Obligations (by operation of law or otherwise), such payments shall be appliedto the Obligations in the manner and order described in Section 8.4. Except as otherwise provided in this Agreement, if after making all of the payments referredto in the immediately preceding sentence, there shall remain with the Agent any excess monies received from or on behalf of the Borrower, the Agent shallpromptly return same to the Borrower by depositing such amount into a Disbursement Account of the Borrower (or as required by law); provided that if at suchtime there shall exist an Event of Default (and for so long as an Event of Default is continuing), the Agent may retain such excess monies as cash collateral forany outstanding Obligations. The Agent, on behalf of the Lenders, is authorized to, and at its option may, make or cause to be made Revolving Credit Advancesby the Lenders on behalf of the Borrower for payment of any or all Fees, expenses, charges, costs, principal, interest, or other Obligations then due and payableby the Borrower under this Agreement or any of the Loan Documents, even if the making of such Revolving Credit Advance causes the outstanding balance ofthe Revolving Credit Loan to exceed the Borrowing Availability, in which case the terms of Section 1.2(b) shall apply.

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SECTION 1.10. Lenders’ Additional Rights.

(a) The Borrower agrees that, in addition to (and without limitation of) any right of setoff, banker’s lien or counterclaim a Lender may otherwisehave, each Lender shall be entitled, at its option (but subject, as between the Lenders, to the provisions of Section 9.9(f)), to offset balances held by such Lenderor its Affiliates for the account of the Borrower at any of its or its Affiliates offices, in Dollars or in any other currency, against any principal of or interest on anyof such Lender’s pro rata portion of the Revolving Credit Loan or any other amount payable to such Lender hereunder, that is not paid when due (regardless ofwhether such balances are then due to the Borrower), in which case such Lender shall promptly notify the Borrower and the Agent thereof; provided, that suchLender’s failure to give such notice shall not affect the validity thereof.

(b) Nothing contained herein shall require the Agent and/or the Lenders to exercise any right as against the Borrower as described in thisSection 1.10 or shall affect the right of the Agent and/or the Lenders to exercise, and retain the benefits of exercising, any such right with respect to any otherindebtedness or obligation of the Borrower.

SECTION 1.11. Accounting. The Agent will provide a monthly accounting of transactions under the Revolving Credit Loan and the Swing Line Loan tothe Borrower. Each and every such accounting shall (absent manifest error) be deemed final, binding and conclusive upon the Borrower in all respects as to allmatters reflected therein, unless the Borrower, within sixty (60) days after the date any such accounting is rendered, shall notify the Agent in writing of anyobjection which the Borrower may have to any such accounting, describing the basis for such objection with specificity. In that event, only those items (the“disputed items”) expressly objected to in such notice shall be deemed to be disputed by the Borrower. The Agent’s determination in good faith, based upon thefacts available, of any disputed item shall (absent manifest error) be final, binding and conclusive on the Borrower.

SECTION 1.12. Indemnity.

(a) The Borrower shall indemnify and hold the Agent, each Lender, and their respective Affiliates, officers, directors, employees, attorneys andagents (each, an “Indemnified Person”), harmless from and against any and all suits, actions, costs, fines, deficiencies, penalties, proceedings, claims, damages,losses, liabilities and expenses (including attorneys’ fees and disbursements and other costs of investigations or defense, including those incurred upon anyappeal) (each, a “Claim”) which may be instituted or asserted against or incurred by such Indemnified Person as the result of this Agreement, any other LoanDocument, credit having been extended under this Agreement or any other Loan Document, the use or intended use of proceeds of Revolving Credit Advances orSwing Line Advances, or otherwise arising in connection with the transactions contemplated hereunder and thereunder, including any and all EnvironmentalLiabilities and Costs and regardless of whether the Indemnified Person is a party to such Claim; provided, that the Borrower shall not be liable for anyindemnification to such Indemnified Person with respect to (x) any portion of any such Claim which results from such Indemnified Person’s gross negligence orwillful misconduct as determined by a final judgment

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of a court of competent jurisdiction, or (y) any portion of such Claim which arises solely out of or in connection with a dispute between such Indemnified Personand one or more other Indemnified Persons. NEITHER THE AGENT NOR ANY LENDER NOR ANY OTHER INDEMNIFIED PERSON SHALL BERESPONSIBLE OR LIABLE TO ANY OTHER PARTY HERETO, ANY SUCCESSOR, ASSIGNEE OR THIRD PARTY BENEFICIARY OF SUCHPERSON OR ANY OTHER PERSON ASSERTING CLAIMS DERIVATIVELY THROUGH SUCH PARTY, FOR INDIRECT, PUNITIVE,EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A RESULT OF CREDIT HAVING BEEN EXTENDEDUNDER THE LOAN DOCUMENTS, THE USE OR INTENDED USE OF PROCEEDS OF REVOLVING CREDIT ADVANCES OR OTHERWISEIN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED HEREBY. The foregoing provision in favor of any Indemnified Person shall be inaddition to any rights that such Indemnified Person may have at common law or otherwise, including, but not limited to, any right to contribution.

In any suit, proceeding or action brought by the Agent or the Lenders relating to any Collateral for any sum owing hereunder, or to enforce anyprovision of any Collateral, the Borrower shall save, indemnify and keep the Agent and the Lenders harmless from and against all expense, loss or damagesuffered by reason of any defense, setoff, counterclaim, recoupment or reduction of liability whatsoever of the obligor thereunder arising out of a breach by theBorrower of any obligation thereunder or arising out of any other agreement, indebtedness or liability at any time owing to, or in favor of, such obligor or itssuccessors from the Borrower, all such obligations of the Borrower shall be and remain enforceable against, and only against, the Borrower and shall not beenforceable against the Agent or any Lender.

(b) The Borrower hereby acknowledges and agrees that neither the Agent nor any Lender (as of the date hereof) (i) is now or has ever been incontrol of any of the Real Property or the affairs of the Borrower or any Subsidiary thereof, or (ii) has the capacity through the provisions of the Loan Documentsto influence the conduct of the Borrower or any Subsidiary thereof with respect to the ownership, operation or management of any of the Real Property.

SECTION 1.13. Access. The Borrower shall (and shall cause each of its Subsidiaries to) (a) provide access to the Agent (on behalf of the Lenders) and anyof its officers, employees, representatives, consultants and agents, to the properties and facilities of the Borrower or any of its Subsidiaries, (b) permit the Agent(on behalf of the Lenders) and any of its officers, employees, representatives, consultants and agents to inspect, audit and make extracts from all of theBorrower’s and its Subsidiaries’ records, files and books of account, (c) permit the Agent (on behalf of the Lenders) or any representatives, consultants or agentsof the Agent to inspect, review and evaluate the Collateral, and (d) make available to the Agent and its counsel, as quickly as practicable under the circumstances,originals or copies of all books, records, board minutes, contracts, insurance policies, environmental audits, business plans, files, financial statements (actual andproforma), filings with federal, state and local and foreign regulatory agencies, and other instruments and documents which the Agent may reasonably request inorder to assure that the Borrower is in compliance with its obligations under the Loan Documents, to

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ascertain and/or verify the business, operations and condition (financial or otherwise) of the Borrower and/or to audit, inspect, verify, protect, preserve orotherwise deal with any of the Collateral; provided, that unless a Default or Event of Default has occurred and is continuing, or the Agent (acting in good faith)has reason to believe that a Default or Event of Default is imminent, or the Agent in its sole discretion exercised in good faith deems the Lenders’ rights orinterests in any Collateral or otherwise under this Agreement insecure, such audits shall be upon reasonable notice and shall be conducted during normal businesshours (it being understood and agreed that the Agent will make a good faith effort to schedule any such audits concurrently with audits under the analogousprovisions of the Receivables Funding Documents). The Borrower agrees to render to the Agent and its representatives, consultants and agents at the Borrower’scost and expense, such clerical and other assistance as may be reasonably requested in connection with the exercise of the Agent’s rights pursuant to theforegoing sentence. The Borrower shall also deliver any document or instrument necessary for the Agent as it may from time to time request, to obtain recordsfrom any service bureau or other Person which maintains records for the Borrower or its Subsidiaries, and shall maintain duplicate records or supportingdocumentation on media, including computer tapes and disks owned by the Borrower. The Agent shall conduct a field examination of the Borrower, its booksand records, and the Collateral at least twice per calendar year, unless Requisite Lenders shall otherwise agree.

SECTION 1.14. Taxes.

(a) Any and all payments by or on behalf of the Borrower hereunder or under any Note or other Loan Document, shall be made, in accordance withthis Section 1.14, free and clear of and without deduction or withholding for any and all present or future Taxes. If the Borrower shall be required by law todeduct or withhold any Taxes from or in respect of any sum payable hereunder or under any Note or other Loan Document to the Agent or any Lender, asapplicable, (i) the sum payable shall be increased as may be necessary so that after making all required deductions and withholdings (including deductions andwithholdings applicable to additional sums payable under this Section 1.14), the Agent or such Lender, as applicable, receives an amount equal to the sum itwould have received had no such deductions or withholdings been made, (ii) the Borrower shall make such deductions and withholdings, and (iii) the Borrowershall pay the full amount deducted or withheld to the relevant taxing or other authority in accordance with applicable law.

(b) In addition, the Borrower agrees to pay any present or future intangible personal property, stamp or documentary taxes or any other excise orproperty taxes, charges or similar levies that arise from any payment made hereunder or under the Notes or from the execution, delivery or registration of, orotherwise with respect to, this Agreement, the other Loan Documents or any other matter contemplated by this Agreement (hereinafter referred to as “OtherTaxes”).

(c) The Borrower shall indemnify and pay, within ten (10) days of demand therefor, the Agent or any Lender, as applicable, for the full amount ofTaxes or Other Taxes (including any Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this Section 1.14) paid by the Agent or suchLender, as applicable, and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto, whether or not such Taxes or OtherTaxes were correctly or legally asserted.

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(d) Within thirty (30) days after the date of any such payment of Taxes or Other Taxes, the Borrower shall furnish to the Agent or any Lender, asapplicable, at its address referred to in Section 10.9, the original or a certified copy of a receipt evidencing payment thereof.

(e) Without prejudice to the survival of any other agreement of the Borrower under this Agreement or any other Loan Document, the agreementsand obligations of the Borrower contained in this Section 1.14 shall survive the Termination Date.

(f) Each Lender organized under the laws of a jurisdiction outside the United States (a “Foreign Lender”) as to which payments to be made underthis Agreement or under the Notes are exempt from United States withholding tax under an applicable statute or tax treaty shall provide to Borrower and Agent aproperly completed and executed IRS Form W-8ECI or Form W-8BEN or other applicable form, certificate or document prescribed by the IRS or the UnitedStates certifying as to such Foreign Lender’s entitlement to such exemption (a “Certificate of Exemption”). Any foreign Person that seeks to become a Lenderunder this Agreement shall provide a Certificate of Exemption to Borrower and Agent prior to becoming a Lender hereunder. No foreign Person may become aLender hereunder if such Person fails to deliver a Certificate of Exemption in advance of becoming a Lender.

SECTION 1.15. Capital Adequacy; Increased Costs; Illegality.

(a) If any Lender shall have determined that the adoption after the date hereof of any law, treaty, governmental (or quasi-governmental) rule,regulation, guideline or order regarding capital adequacy, reserve requirements or similar requirements or compliance by such Lender with any request ordirective regarding capital adequacy, reserve requirements or similar requirements (whether or not having the force of law) from any central bank or otherGovernmental Authority increases or would have the effect of increasing the amount of capital, reserves or other funds required to be maintained by such Lender(excluding with respect to LIBOR Loans any such requirement included in the calculation of the LIBOR Rate) and thereby reducing the rate of return on suchLender’s capital as a consequence of its obligations hereunder, then the Borrower shall from time to time upon demand by such Lender (with a copy of suchdemand to the Agent) pay to the Agent, for the account of such Lender, additional amounts sufficient to compensate such Lender for such reduction. A certificateas to the amount of that reduction and showing the basis of the computation thereof submitted by such Lender to the Borrower and to the Agent shall, absentmanifest error, be final, conclusive and binding for all purposes.

(b) If, due to either (i) the introduction of or any change in any law or regulation (or any change in the interpretation thereof) or (ii) the compliancewith any guideline or request from any central bank or other Governmental Authority (whether or not having the force of law), in each case, effective after thedate hereof, there shall be any increase in the cost to any Lender of agreeing to make or making, funding or maintaining any Loan, then the

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Borrower shall from time to time, upon demand by such Lender (with a copy of such demand to the Agent), pay to the Agent for the account of such Lenderadditional amounts sufficient to compensate such Lender for such increased cost. A certificate as to the amount of such increased cost, submitted to the Borrowerand to the Agent by such Lender, shall be conclusive and binding on the Borrower for all purposes, absent manifest error. Each Lender agrees that, as promptlyas practicable after it becomes aware of any circumstances referred to above which would result in any such increased cost, the affected Lender shall, to theextent not inconsistent with such Lender’s internal policies of general application, use reasonable commercial efforts to minimize costs and expenses incurred byit and payable to it by the Borrower pursuant to this Section 1.15(b).

(c) Notwithstanding anything to the contrary contained herein, if the introduction of or any change in any law or regulation (or any change in theinterpretation thereof) shall make it unlawful, or any central bank or other Governmental Authority shall assert that it is unlawful, for any Lender to agree tomake or to make or to continue to fund or maintain any LIBOR Loan, then, unless that Lender is able to make or to continue to fund or to maintain such LIBORLoan at another branch or office of that Lender without, in that Lender’s opinion, adversely affecting it or its Revolving Credit Advances or the income obtainedtherefrom, on notice thereof and demand therefor by such Lender to the Borrower through the Agent, (i) the obligation of such Lender to agree to make or tomake or to continue to fund or maintain LIBOR Loans shall terminate and (ii) the Borrower shall forthwith prepay in full all outstanding LIBOR Loans owing tosuch Lender, together with interest accrued thereon, unless the Borrower, within five (5) Business Days after the delivery of such notice and demand, converts allsuch LIBOR Loans into an Index Rate Loan.

(d) Replacement or Prepayment of Lender in Respect of Increased Costs. Within fifteen (15) days after receipt by the Borrower of written notice anddemand from any Lender (an “Affected Lender”) for payment of additional amounts or increased costs as provided in Section 1.14(a), 1.15(a) or 1.15(b), theBorrower may, at its option, notify the Agent and such Affected Lender of its intention to replace or prepay in full the Affected Lender. So long as no Default orEvent of Default shall have occurred and be continuing, the Borrower, with the consent of the Agent, may obtain, at the Borrower’s expense, a replacementLender (“Replacement Lender”) for the Affected Lender, which Replacement Lender must be satisfactory to the Agent in its reasonable discretion. If theBorrower obtains a Replacement Lender within ninety (90) days following notice of its intention to do so, the Affected Lender must sell and assign its RevolvingCredit Advances and Revolving Credit Commitment to such Replacement Lender for an amount equal to the principal balance of all Revolving Credit Advancesheld by the Affected Lender and all accrued interest and Fees with respect thereto through the date of such sale, provided that the Borrower shall have reimbursedthe Affected Lender for the additional amounts or increased costs that it is entitled to receive under this Agreement through the date of such sale and assignment,including, without limitation, all amounts payable pursuant to Section 1.4(e). Alternatively, so long as no Default or Event of Default shall have occurred and becontinuing, the Borrower may, within ninety (90) days following notice of its intention to do so, prepay the principal balance of all Revolving Credit Advancesheld by the Affected Lender and pay all accrued interest and Fees with respect thereto

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through the date of such repayment, provided that the Borrower shall have reimbursed the Affected Lender for the additional amounts or increased costs that it isentitled to receive under this Agreement through the date of such prepayment, including, without limitation, all amounts payable pursuant to Section 1.4(e), andprovidedfurther that, effective upon the date of such prepayment, the Affected Lender’s Revolving Credit Commitment shall automatically be terminated in itsentirety and the Maximum Amount and the aggregate amount of the Commitments shall be adjusted accordingly.

(e) Unavailability of Rates. If the Requisite Lenders determine that, for any reason adequate and reasonable means do not exist for determining theLIBOR Rate for any requested LIBOR Period with respect to a proposed LIBOR Loan, or that the LIBOR Rate applicable pursuant to Section 1.4(a) for anyrequested LIBOR Period with respect to a proposed LIBOR Loan does not adequately and fairly reflect the cost to such Lenders of funding such LIBOR Loan,the Agent will promptly so notify the Borrower and each Lender. Thereafter, the obligation of the Lenders to make or maintain LIBOR Loans hereunder shall besuspended until the Agent, upon the instruction of the Requisite Lenders, revokes such notice in writing. Upon receipt of such notice, the Borrower may revokeany Notice of Revolving Credit Advance or Notice of Conversion/Continuation then submitted by it. If the Borrower does not revoke such notice, the Lendersshall make, convert or continue the Advances, as proposed by the Borrower, in the amount specified in the applicable notice submitted by the Borrower, but suchAdvances shall be made, converted or continued as Index Rate Loans instead of LIBOR Loans.

Notwithstanding the foregoing, the Borrower shall not have the right to obtain a Replacement Lender or prepay the Affected Lender if the Affected Lenderrescinds its demand for increased costs or additional amounts within fifteen (15) days following its receipt of the Borrower’s notice of intention to replace orprepay such Affected Lender. Furthermore, if the Borrower gives a notice of intention to replace or prepay and does not so replace or prepay such AffectedLender within ninety (90) days thereafter, the Borrower’s rights under this Section 1.15(d) shall terminate and the Borrower shall promptly pay all increased costsor additional amounts demanded by such Affected Lender pursuant to Sections 1.14(a), 1.15(a) and 1.15(b).

SECTION 1.16. Single Loan. All Advances to the Borrower and all of the other Obligations of the Borrower arising under this Agreement and the otherLoan Documents shall constitute one general obligation of the Borrower secured, until the Termination Date, by all of the Collateral.

SECTION 1.17. Pro Rata Treatment. Except to the extent otherwise provided herein: (a) each Revolving Credit Advance shall be incurred and made by theLenders prorata according to the amounts of their respective ratable portions of the Revolving Credit Commitments; (b) each payment or prepayment of principalof the Revolving Credit Loan by the Borrower shall be made to the Agent for the account of the Lenders prorata in accordance with the respective unpaidprincipal amounts of the Revolving Credit Loan held by the Lenders; (c) each payment of interest on the Revolving Credit Loan by the Borrower shall be madeto the Agent for the account of the Lenders prorata in accordance with the amounts of interest on the Revolving Credit Loan then due and payable to each Lender;(d) each payment of Unused Facility Fees

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shall be made to the Agent for the account of the Lenders pro rata according to the amounts of their respective Revolving Credit Commitments; and (e) eachpayment of Letter of Credit Fees or provision of cash collateral for Letter of Credit Obligations shall be made to the Agent for the account of the Lenders, prorata, according to the amounts of their respective Letter of Credit Obligations.

SECTION 1.18. Bank Products. The Borrower may request and the Agent or any Lender may, in its sole and absolute discretion, arrange for the Borrowerto obtain from the Agent or any Lender or any of their respective Affiliates, Bank Products although the Borrower is not required to do so. If Bank Products areprovided by an Affiliate of the Agent or a Lender in reliance on an indemnity from the Agent or such Lender (to the extent such indemnity is approved in writingby the Borrower), the Borrower agrees to pay the Agent or such Lender, as the case may be, all costs and obligations owing by the Agent or such Lender whicharise from any such indemnity given by the Agent or such Lender to its Affiliates related to such Bank Products; provided, however, nothing herein shall limit theBorrower’s rights against the Agent or such Lender or any of their respective Affiliates that arise under any documents relating to such Bank Products. ThisSection 1.18 shall survive termination of this Agreement.

SECTION 1.19. Non-Receipt of Funds by the Agent. Unless the Agent shall have been notified by a Lender or by the Borrower (in either case, a “Payor”)prior to the date on which such Payor is to make payment to the Agent of (in the case of a Lender) the proceeds of a Revolving Credit Advance to be made bysuch Lender hereunder or (in the case of the Borrower) a payment to the Agent for account of one or more of the Lenders hereunder (such payment being hereincalled the “Required Payment”), which notice shall be effective upon receipt by the Agent, that such Payor does not intend to make the Required Payment to theAgent, the Agent may assume that the Required Payment has been made and may, in reliance upon such assumption (but shall not be required to), make theamount thereof available to the intended recipient(s) on such date; and, if such Payor has not in fact made the Required Payment to the Agent, the recipient(s) ofsuch payment shall, on demand, repay to the Agent the amount so made available together with interest thereon in respect of each day during the periodcommencing on the date (the “Advance Date”) such amount was so made available by the Agent until the date the Agent recovers such amount, at a rate perannum equal to the Index Rate plus the Applicable Margin or, if the Payor is a Lender, the Federal Funds Rate in effect from time to time and, if such recipient(s)shall fail promptly to make such payment, the Agent shall be entitled to recover such amount, on demand, from such Payor, together with interest as aforesaid;provided that if neither the recipient(s) nor such Payor shall return or make, as appropriate, the Required Payment to the Agent within three (3) Business Days ofthe Advance Date, then, retroactively to the Advance Date, such Payor and the recipient(s) shall each be obligated to pay interest on the Required Payment(without duplication) as follows:

(a) if the Required Payment shall represent a payment to be made by the Borrower to the Lenders, the Borrower and the recipient(s) shall (withoutduplication) each be obligated retroactively to the Advance Date to pay interest in respect of the Required Payment at the Default Rate (and, in case therecipient(s) shall return the Required Payment to the Agent, without limiting the obligation of the Borrower to pay interest to such recipient(s) at the Default Ratein respect of the Required Payment); and

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(b) if the Required Payment shall represent proceeds of a Revolving Credit Advance to be made by the Lenders to the Borrower, such Payor and theBorrower shall (without duplication) each be obligated retroactively to the Advance Date to pay interest in respect of the Required Payment at the rate of interestprovided for such Required Payment pursuant hereto (and, in case the Borrower shall return the Required Payment to the Agent, without limiting any claim theBorrower may have against the Payor in respect of the Required Payment).

Nothing in this Section 1.19 or elsewhere in this Agreement or the other Loan Documents shall be deemed to require the Agent to advance funds on behalf of anyLender or to relieve any Lender from its obligation to fulfill its Revolving Credit Commitment hereunder or to prejudice any rights that the Borrower may haveagainst any Lender as a result of any default by such Lender hereunder.

SECTION 1.20. Swap Related Reimbursement Obligations.

(a) Borrower agrees to reimburse GE Capital in immediately available funds in the amount of any payment made by GE Capital under a SwapRelated L/C (such reimbursement obligation, whether contingent upon payment by GE Capital under the Swap Related L/C or otherwise, being herein called a“Swap Related Reimbursement Obligation”). No Swap Related Reimbursement Obligation for any Swap Related L/C may exceed the amount of the paymentobligations owed by Borrower under the interest rate protection or hedging agreement or transaction supported by the Swap Related L/C.

(b) A Swap Related Reimbursement Obligation shall be due and payable by Borrower within one (1) Business Day after the date on which therelated payment is made by GE Capital under the Swap Related L/C.

(c) Any Swap Related Reimbursement Obligation shall, during the period in which it is unpaid, bear interest at the rate per annum equal to theLIBOR Rate plus one percent (1%), as if the unpaid amount of the Swap Related Reimbursement Obligation were a LIBOR Loan, and not at any otherwiseapplicable Default Rate. Such interest shall be payable upon demand. The following additional provisions apply to the calculation and charging of interest byreference to the LIBOR Rate:

(i) The LIBOR Rate shall be determined for each successive one-month LIBOR Period during which the Swap Related Reimbursement Obligationis unpaid, notwithstanding the occurrence of any Event of Default and even if the LIBOR Period were to extend beyond the Commitment Termination Date.

(ii) If a Swap Related Reimbursement Obligation is paid during a monthly period for which the LIBOR Rate is determined, interest shall bepro-rated and charged for the portion of the monthly period during which the Swap Related Reimbursement Obligation was unpaid. Section 1.4(e) shall not applyto any payment of a Swap Related Reimbursement Obligation during the monthly period.

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(d) Except as provided in the foregoing provisions of this Section 1.20 and in Section 10.2, Borrower shall not be obligated to pay to GE Capital orany of its Affiliates any Letter of Credit Fee, or any other fees, charges or expenses, in respect of a Swap Related L/C or arranging for any interest rate protectionor hedging agreement or transaction supported by the Swap Related L/C. GE Capital and its Affiliates shall look to the beneficiary of a Swap Related L/C forpayment of any such letter of credit fees or other fees, charges or expenses and such beneficiary may factor such fees, charges, or expenses into the pricing of anyinterest rate protection or hedging arrangement or transaction supported by the Swap Related L/C.

(e) If any Swap Related L/C is revocable prior to its scheduled expiry date, GE Capital agrees not to revoke the Swap Related L/C unless theCommitment Termination Date or an Event of Default has occurred.

(f) GE Capital or any of its Affiliates shall be permitted to (i) provide confidential or other information furnished to it by the Borrower or any of itsSubsidiaries (including, without limitation, copies of any documents and information in or referred to in the Closing Checklist, Financial Statements andCompliance Certificates) to a beneficiary of a Swap Related L/C and (ii) receive confidential or other information from the beneficiary relating to any agreementor transaction supported or to be supported by the Swap Related L/C. However, no confidential information shall be provided to any Person under this paragraphunless the Person has agreed to comply with the covenant substantially as contained in Section 10.13 of this Agreement.

ARTICLE 2

CONDITIONS PRECEDENT

SECTION 2.1. Conditions to Effectiveness. This Agreement shall become effective when, and only when, the following conditions have been fulfilled tothe satisfaction of the Agent:

(a) This Agreement or counterparts hereof shall have been duly executed by, and delivered to, the Borrower, the Agent and each Lender.

(b) The Agent and the Lenders shall have received such documents, instruments, certificates, opinions and agreements as the Agent shall reasonablyrequest in connection with the transactions contemplated by this Agreement, including in any event all documents, instruments, agreements and other materialslisted in the Schedule of Closing Documents attached as Annex C hereto, each in form and substance satisfactory to the Agent and the Requisite Lenders.

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(c) The Agent shall have received all fees and other amounts due and payable on or prior to the Effective Date, including, to the extent invoiced,reimbursement or payment of all out of pocket expenses required to be reimbursed or paid by the Borrower hereunder.

(d) As of the Effective Date, the Borrower and its Subsidiaries shall have satisfied such other conditions precedent as the Agent shall havereasonably required.

SECTION 2.2. Conditions to Each Advance and Letter of Credit. It shall be a condition to the funding of each Advance or the incurrence of any Letter ofCredit Obligation hereunder, or the conversion or continuation of any Revolving Credit Loan that the following statements shall be true on the date of each suchfunding, advance or incurrence, as the case may be:

(a) The Borrower’s representations and warranties contained herein or in any of the Loan Documents shall be true and correct on and as of theEffective Date and the date on which each such Advance is made or Letter of Credit Obligation is incurred, as though made on and as of such date, except to theextent that any such representation or warranty expressly relates solely to an earlier date and except for changes therein permitted or contemplated by thisAgreement and Agent and Requisite Lenders have determined not to make such Advance, convert or continue the Revolving Credit Advances or incur suchLetter of Credit Obligation as a result of the fact that such warranty or representation is untrue or incorrect.

(b) No event shall have occurred and be continuing, or would result from the making of any such Advance or incurrence of Letter of CreditObligations, which constitutes or would constitute a Default or an Event of Default and Agent or Requisite Lenders shall have determined not to make anyAdvance, convert or continue the Revolving Credit Advances or incur such Letter of Credit Obligation as a result of that Default or Event of Default.

(c) After giving effect to any such Advance or Letter of Credit Obligations, the aggregate principal amount of the Revolving Credit Advances andLetter of Credit Obligations made to the Borrower shall not exceed the Borrowing Availability and there shall be no requirement under Section 1.2(b) to prepayany Revolving Credit Loan, the aggregate principal amount of the Swing Line Advances made to the Borrower shall not exceed the Swing Line Availability, andthe aggregate Letter of Credit Obligations shall not exceed the L/C Sublimit.

(d) No event or circumstance having a Material Adverse Effect shall have occurred which shall not have been cured or waived in writing by theRequisite Lenders.

(e) All legal matters incident to the making of such Advance shall have been satisfied as of such date to the satisfaction of the Agent.

The request and acceptance by the Borrower of the proceeds of any Advance, the incurrence of any Letter of Credit Obligations or the conversion orcontinuation of any Revolving Credit Advance shall be deemed to constitute, as of the date of such request or acceptance, (i) a representation and warranty by theBorrower that the conditions in this Section 2.2 have been satisfied and (ii) a confirmation by the Borrower of the granting and continuance of the Agent’s Liens,on behalf of itself and the Lenders, pursuant to the Collateral Documents.

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ARTICLE 3

REPRESENTATIONS AND WARRANTIES

To induce the Agent and the Lenders to enter into this Agreement, the Borrower represents and warrants to the Agent and the Lenders (whichrepresentations and warranties shall be made on the Effective Date and made or deemed made at such other times as provided hereunder (including, withoutlimitation, as provided in Section 2.2)) that:

SECTION 3.1. Existence; Compliance with Law. The Borrower and each of its Domestic Subsidiaries: (a) is a corporation duly organized, validly existingand in good standing under the laws of its jurisdiction of incorporation and is duly qualified to do business and is in good standing in every jurisdiction in whichthe nature of its business requires it to be so qualified (except where the failure to be so qualified and in good standing would not have a Material AdverseEffect); (b) has the requisite power and authority and the legal right to own, pledge, mortgage, operate and convey all of its properties, to lease the property itoperates under lease, and to conduct its business as now or proposed to be conducted, and to execute and deliver this Agreement and the Loan Documents towhich they are parties and to perform the transactions contemplated hereby and thereby; (c) has all licenses, permits, consents or approvals from or by, and hasmade all filings with, and has given all notices to, all Governmental Authorities having jurisdiction, to the extent required for such ownership, operation andconduct (except where the failure to have such licenses, permits, consents or approvals or make such filings or give such notices would not have a MaterialAdverse Effect); (d) is in compliance with its articles or certificate of incorporation and bylaws and other organizational documents; and (e) is in compliance withall applicable provisions of law (except where the failure to be in compliance would not have a Material Adverse Effect).

SECTION 3.2. Executive Offices; Collateral Locations; Corporate or Other Names. As of the Effective Date, the current locations of each Credit Party’sexecutive office and all warehouses and premises within which any Collateral is stored or located are set forth in Schedule 3.2 and, except as set forth in Schedule3.2, such locations have not changed during the preceding twelve months. In addition, Schedule 3.2 lists the federal employer identification number of each CreditParty.

SECTION 3.3. Power; Authorization; Enforceable Obligations. The execution, delivery and performance by each Credit Party of this Agreement and theother Loan Documents to which it is a party and the creation by such Credit Party of all Liens provided for herein and therein: (a) are within such Credit Party’scorporate power; (b) have been duly authorized by all necessary corporate or other action; (c) do not contravene or cause such Credit Party to be in default under(i) any provision of such Credit Party’s articles or certificate of incorporation or bylaws, (ii) any contractual restriction contained in any indenture, loan or creditagreement, lease, mortgage, security agreement, bond, note or other agreement or instrument binding on or

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affecting such Credit Party or its property, or (iii) any law, rule, regulation, order, license requirement, writ, judgment, award, injunction, or decree applicable to,binding on or affecting such Credit Party or its property; (d) will not result in the creation or imposition of any Lien upon any of the property of such Credit Partyor any Subsidiary thereof other than those in favor of the Agent or any Lender, all pursuant to the Loan Documents; and (e) do not require the consent orapproval of any Governmental Authority or any other Person, except those referred to in Section 2.1(d), all of which will have been duly obtained, made orcomplied with prior to the Effective Date and which are in full force and effect. At or prior to the Effective Date, each of the Loan Documents shall have beenduly executed and delivered for the benefit of or on behalf of the Credit Party intended to be party thereto and each shall then constitute a legal, valid and bindingobligation of such Credit Party, enforceable against such Credit Party in accordance with its terms, subject, as to enforceability, to (A) any applicable bankruptcy,insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to or affecting the enforceability of creditors’ rights generally and(B) general equitable principles, whether applied in a proceeding at law or in equity.

SECTION 3.4. Financial Statements and Projections. The Borrower has delivered the Financials and Projections identified in Schedule 3.4 (whichProjections are attached hereto as Exhibit 3.4), and each of such Financials and Projections complies with the description thereof contained in Schedule 3.4.

SECTION 3.5. No Litigation. Except as set forth in Schedule 3.5, no action, claim or proceeding is now pending or, to the knowledge of the Borrower,threatened against the Borrower or any Subsidiary thereof, at law, in equity or otherwise, before any Governmental Authority (a) which challenges any suchPerson’s right, power, or competence to enter into or perform any of its obligations under the Loan Documents, or the validity or enforceability of any LoanDocument or any action taken thereunder, or (b) which is reasonably likely to result in a Material Adverse Effect. To the knowledge of the Borrower, there doesnot exist a state of facts which is reasonably likely to give rise to such proceedings. Except as set forth in Schedule 3.5, the Borrower is not a party to any consentdecree.

SECTION 3.6. Taxes. Except as disclosed in Schedule 3.6, all federal, state, local and foreign tax returns, reports and statements, including informationreturns (Form 1120-S) required to be filed by the Borrower or any Domestic Subsidiary thereof, have been filed with the appropriate Governmental Authorityand all Charges and other impositions shown thereon to be due and payable (other than Charges or other impositions which the Borrower is diligently contestingin good faith by appropriate proceedings, in respect of which no final unappealable order has been made against the Borrower, and with respect to which theBorrower is maintaining adequate reserves under GAAP) have been paid prior to the date on which any fine, penalty, interest or late charge may be added theretofor nonpayment thereof, or any such fine, penalty, interest, late charge or loss has been paid. The Borrower and each Domestic Subsidiary thereof has paid whendue and payable all material Charges required to be paid by it. Proper and accurate amounts have been withheld by the Borrower and each Domestic Subsidiarythereof from its employees for all periods in full and complete compliance with the tax, social security and unemployment withholding provisions of applicablefederal, state, local and foreign law and

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such withholdings have been timely paid to the respective Governmental Authorities. Schedule 3.6 sets forth those taxable years for which any of the tax returnsof the Borrower or any Domestic Subsidiary thereof are currently being audited by the IRS or any other applicable Governmental Authority; and any assessmentsor threatened assessments in connection with such audit or otherwise currently outstanding. Except as described in Schedule 3.6, neither the Borrower nor anyDomestic Subsidiary thereof has executed or filed with the IRS or any other Governmental Authority any agreement or other document extending, or having theeffect of extending, the period for assessment or collection of any Charges. Neither the Borrower nor any Domestic Subsidiary thereof has agreed or beenrequested to make any adjustment under IRC Section 481(a) by reason of a change in accounting method or otherwise. Neither the Borrower nor any DomesticSubsidiary thereof has any obligation under any written tax sharing agreement except as described in Schedule 3.6.

SECTION 3.7. Material Adverse Change. Except as set forth in Schedule 3.7, as of the Effective Date, neither the Borrower nor any Subsidiary thereof hasany material obligations, contingent liabilities, or liabilities for Charges, long-term leases or unusual forward or long-term commitments which are not reflectedin the audited November 30, 2005 consolidated balance sheet of the Borrower and its Subsidiaries (including all footnote disclosures thereto), except for thosewhich were incurred or entered into in the ordinary course of the Borrower’s or such Subsidiary’s business. Except as set forth in Schedule 3.7, sinceNovember 30, 2005, no event has occurred which would result in a Material Adverse Effect.

SECTION 3.8. Ownership of Property; Liens. The real estate listed in Schedule 3.8 constitutes all of the Real Property owned, leased or used in theBorrower’s and its Domestic Subsidiaries’ business. The Borrower and each of its Domestic Subsidiaries holds (a) good and marketable fee simple title to allReal Property owned by it and described in Schedule 3.8, (b) valid and marketable leasehold interests in all of such Person’s Leases (both as lessor and lessee,sublessee or assignee) described in Schedule 3.8, and (c) good and marketable title to, or valid leasehold interests in, all of its assets identified as EligibleInventory, and (d) good and marketable title to, or valid leasehold interests in, all of its other properties and assets, except, with respect to the title and leaseholdinterests referred to in the foregoing clauses (a), (b) and (d), where the failure to so hold such title or leasehold interests could not reasonably be expected toresult in a Material Adverse Effect. None of the properties and assets of the Borrower and its Domestic Subsidiaries are subject to any Liens, except Lienspermitted by Section 6.7. The Borrower and its Domestic Subsidiaries have received all deeds, assignments, waivers, consents, non-disturbance and recognitionor similar agreements, bills of sale and other documents, and duly effected all recordings, filings and other actions necessary to establish, protect and perfect theBorrower’s or such Subsidiary’s right, title and interest in and to all such real estate and other assets or property, except where the failure to do so could notreasonably be expected to result in a Material Adverse Effect. Except as described in Schedule 3.8, (a) neither the Borrower nor any of its Domestic Subsidiariesnor, to the Borrower’s knowledge, any other party to any such Lease described in Schedule 3.8 is in default of its obligations thereunder or has delivered orreceived any notice of default under any such Lease, and no event has occurred which, with the giving of notice, the passage of time, or both, would constitute adefault under any such Lease; (b) neither the Borrower nor any of its Domestic Subsidiaries either owns or holds, or is obligated under or a

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party to, any option, right of first refusal or any other contractual right to purchase, acquire, sell, assign or dispose of any Real Property owned or leased by theBorrower or any of its Domestic Subsidiaries except as set forth in Schedule 3.8; and (c) no portion of any Real Property owned or leased by the Borrower or anyof its Domestic Subsidiaries has suffered any material damage by fire or other casualty loss which has either (i) not heretofore been repaired and restored to goodoperating condition, or (ii) could not reasonably be expected to result in a Material Adverse Effect. All material permits required to have been issued orappropriate to enable the Real Property to be lawfully occupied and used for all of the purposes for which they are currently occupied and used, have beenlawfully issued and are in full force and effect. Neither the Borrower nor any of its Domestic Subsidiaries owns any tangible real or personal property locatedoutside the United States.

SECTION 3.9. Restrictions; No Default; Material Contracts. No contract, lease, agreement or other instrument to which the Borrower or any of itsDomestic Subsidiaries is a party or by which it or any of its properties or assets is bound or affected and no provision of any charter, corporate restriction,applicable law or governmental regulation has resulted in or will result in a Material Adverse Effect. Neither the Borrower nor any of its Domestic Subsidiaries isin default and, to the Borrower’s knowledge, no third party is in default, under or with respect to any material instrument, document or agreement evidencing,creating, guaranteeing or governing Debt or Guaranteed Debt of Borrower or such Domestic Subsidiary, or any Material Contract. No Default or Event ofDefault has occurred and is continuing. Schedule 3.9, as supplemented from time to time by written disclosures to the Agent, sets forth a complete and accuratelist of all Material Contracts of the Borrower and any Domestic Subsidiary thereof; provided, however, that for purposes of this Agreement, “Material Contracts”shall mean all contracts, agreements, leases and other instruments between the Borrower, or any Subsidiary thereof, and any Person which are from time to timefiled or required to be filed on any regular, periodic or special report filed by Borrower with the Securities and Exchange Commission (or any governmentalagency substituted therefor). The Borrower and each of its Domestic Subsidiaries is in compliance with (i) all material license agreements to which it is a party orbound by, and (ii) the terms and conditions of its insurance coverage and policies therefor.

SECTION 3.10. Labor Matters. Except as set forth in Schedule 3.10, there are no material strikes or other labor disputes against the Borrower or any of itsDomestic Subsidiaries that are pending or, to the Borrower’s knowledge, threatened which could have a Material Adverse Effect. Hours worked by and paymentmade to employees of the Borrower or any of its Domestic Subsidiaries have not been in violation of the Fair Labor Standards Act or any other applicable lawdealing with such matters which could have a Material Adverse Effect. All material payments due from the Borrower or any of its Domestic Subsidiaries onaccount of employee health and welfare insurance have been paid or accrued as a liability on the books of the Borrower or any of its Domestic Subsidiaries.Except as set forth in Schedule 3.10, neither the Borrower nor any of its Domestic Subsidiaries has any material obligation under any collective bargainingagreement, management agreement, or any employment agreement, and a correct and complete copy of each agreement listed on Schedule 3.10 has been providedto the Agent. There is no material organizing activity involving the Borrower or any of its Domestic Subsidiaries pending or, to the Borrower’s knowledge,threatened by any labor union or group of

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employees. Except as set forth in Schedule 3.5, there are no representation proceedings pending or, to the Borrower’s knowledge, threatened with the NationalLabor Relations Board or any similar Governmental Authority, and no labor organization or group of employees of the Borrower or any of its DomesticSubsidiaries has made a pending demand for recognition, and there are no material complaints or charges against the Borrower or any of its DomesticSubsidiaries pending or threatened to be filed with any federal, state, local or foreign court, governmental agency or arbitrator based on, arising out of, inconnection with, or otherwise relating to the employment or termination of employment by the Borrower or any of its Domestic Subsidiaries of any individual.

SECTION 3.11. Ventures, Subsidiaries and Affiliates; Outstanding Stock and Debt. On the Effective Date, neither the Borrower nor any of its Subsidiarieshas any Subsidiaries other than those Subsidiaries set forth on Schedule 3.11 and, except as set forth in Schedule 3.11, on the Effective Date, neither the Borrowernor any of its Subsidiaries is engaged in any joint venture or partnership with any other Person or has any equity interest in any other Person. On the EffectiveDate, the Stock of the Borrower and of any Subsidiary thereof owned by each of the stockholders thereof named or described in Schedule 3.11 constitutes all ofthe issued and outstanding Stock of such Persons and all such Stock is duly and validly issued, fully paid and non-assessable. Schedule 3.11 lists the name of eachSubsidiary of the Borrower, its jurisdiction of organization, the number of authorized and outstanding shares or interest of Stock of such Subsidiary and theowners of such Stock as of the Effective Date. Except as set forth in Schedule 3.11 and except for stock options issued after the Effective Date pursuant to theBorrower’s stock option plans set forth on Schedule 3.14, there are no outstanding rights to purchase stock, options, warrants or similar rights, agreements orplans pursuant to which the Borrower or any of its Subsidiaries may be required to issue, sell or purchase any Stock or other equity security. Schedule 3.11 listsall Debt of the Borrower and its Domestic Subsidiaries as of the Effective Date, other than any such Debt consisting of any Letters of Credit or any other letter ofcredit issued for the account of the Borrower or such Domestic Subsidiary by GE Capital. On and as of the Effective Date, the aggregate amount of allInvestments maintained by Borrower outside of the Borrower’s securities accounts pursuant to the Borrower’s unqualified deferred compensation arrangementsdoes not exceed $150,000.

SECTION 3.12. Government Regulation. Neither the Borrower nor any Domestic Subsidiary thereof (a) is an “investment company” or an “affiliatedperson” of, or “promoter” or “principal underwriter” for, an “investment company,” as such terms are defined in the Investment Company Act of 1940, asamended, or (b) is subject to regulation under the Federal Power Act, the Interstate Commerce Act or any other federal or state or foreign statute that restricts orlimits such Person’s ability to incur Debt, pledge its assets, or to perform its obligations hereunder or under any other Loan Document, and, with respect to theBorrower, the making of the Advances by the Lenders, the incurrence of Letter of Credit Obligations on behalf of the Borrower, the application of the proceedsand repayment thereof by the Borrower, and the consummation of the transactions contemplated by this Agreement and the other Loan Documents, will notconstitute a violation by the Borrower or any Domestic Subsidiary thereof (or to the knowledge of the Borrower, by any other Person) of any provision of anysuch statute or any rule, regulation or order issued by the Securities and Exchange Commission.

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SECTION 3.13. Margin Regulations. Neither the Borrower nor any Subsidiary thereof is engaged in the business of extending credit for the purpose ofpurchasing or carrying Margin Stock and no proceeds of any Revolving Credit Advance will be used to purchase or carry any Margin Stock or to extend credit toothers for the purpose of purchasing or carrying any Margin Stock. Neither the Borrower nor any Subsidiary thereof will take or permit to be taken any actionwhich might cause any Loan Document or any document or instrument delivered pursuant hereto or thereto to violate any regulation of the Board of Governorsof the Federal Reserve Board.

SECTION 3.14. ERISA.

(a) Schedule 3.14 lists all Plans maintained or contributed to by the Borrower, any Domestic Subsidiary thereof or any ERISA Affiliate, andseparately identifies the Title IV Plans, Multi-employer Plans, multiple employer plans subject to Section 4064 of ERISA, nonqualified or unfunded PensionPlans, Welfare Plans and Retiree Welfare Plans. IRS determination letters regarding the qualified status under IRC Section 401 of each Qualified Plan have beenreceived as of the dates listed in Schedule 3.14. Except as disclosed in Schedule 3.14, to the knowledge of the Borrower, the Qualified Plans continue to qualifyunder Section 401 of the IRC, the trusts created thereunder continue to be exempt from tax under the provisions of IRC Section 501(a), and nothing has occurredwhich would cause the loss of such qualification or tax-exempt status. Except as disclosed in Schedule 3.14, to the knowledge of the Borrower, each Plan is incompliance in all material respects with the applicable provisions of ERISA and the IRC, including the filing of all reports required under the IRC or ERISAwhich are true and correct as of the date filed, and all required contributions and benefits have been paid in accordance with the provisions of each such Plan.Neither the Borrower, any Domestic Subsidiary thereof nor any ERISA Affiliate, with respect to any Qualified Plan, has failed to make any contribution or payany amount due as required by IRC Section 412 or Section 302 of ERISA. Except as set forth on Schedule 3.14, with respect to all Retiree Welfare Plans, thepresent value of future anticipated expenses pursuant to the latest actuarial projections of liabilities does not exceed $300,000; with respect to Pension Plans,other than Qualified Plans and the unfunded Pension Plans listed in Schedule 3.14, the present value of the liabilities for current participants thereunder usinginterest assumptions described in IRC Section 411(a)(ii) does not exceed $300,000. Neither the Borrower nor any Domestic Subsidiary thereof or ERISAAffiliate has engaged in a prohibited transaction, as defined in IRC Section 4975 or Section 406 of ERISA, in connection with any Plan which would subject theBorrower or any Domestic Subsidiary thereof (after giving effect to any exemption) to a material tax on prohibited transactions imposed by IRC Section 4975 orany other material liability.

(b) Except as set forth in Schedule 3.14: (i) no Title IV Plan has any Unfunded Pension Liability; (ii) no ERISA Event or event described inSection 4062(e) of ERISA with respect to any Title IV Plan has occurred or is reasonably expected to occur which in either case would be material; (iii) there areno pending, or to the knowledge of the Borrower, material threatened, claims, actions or lawsuits (other than claims for benefits in the normal course), asserted orinstituted against (x) any Plan or its assets, (y) any fiduciary with respect to any Plan or (z) the Borrower, any Domestic Subsidiary thereof or any ERISAAffiliate with

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respect to any Plan; (iv) neither the Borrower or any Domestic Subsidiary thereof nor any ERISA Affiliate has incurred or reasonably expects to incur anyWithdrawal Liability (and no event has occurred which, with the giving of notice under Section 4219 of ERISA, would result in such liability) underSection 4201 of ERISA as a result of a complete or partial withdrawal from a Multi-employer Plan; (v) within the last five (5) years neither the Borrower or anyDomestic Subsidiary thereof nor any ERISA Affiliate has engaged in a transaction which resulted in a Title IV Plan with Unfunded Pension Liabilities beingtransferred outside of the “controlled group” (within the meaning of Section 4001(a)(14) of ERISA) of any such entity; (vi) no Plan which is a Retiree WelfarePlan provides for continuing benefits or coverage for any participant or any beneficiary of a participant after the last day of the month during which suchparticipant’s termination of employment (except as may be required by IRC Section 4980B and at the sole expense of the participant or the beneficiary of theparticipant); (vii) the Borrower, each Domestic Subsidiary thereof and each ERISA Affiliate have materially complied with the notice and continuation coveragerequirements of IRC Section 4980B and the proposed or final regulations thereunder; and (viii) no liability under any Plan has been funded, nor has suchobligation been satisfied with, the purchase of a contract from an insurance company that is not rated AAA by Standard & Poor’s Ratings Service and theequivalent by each other nationally recognized rating agency.

SECTION 3.15. Brokers. No broker or finder acting on behalf of the Borrower or any Subsidiary thereof brought about the obtaining, making or closing ofthe credit extended pursuant to this Agreement or the transactions contemplated by the Loan Documents or the transactions contemplated thereby, and neither theBorrower nor any Subsidiary thereof has any obligation to any Person in respect of any finder’s or brokerage fees in connection herewith or therewith.

SECTION 3.16. Patents, Trademarks, Copyrights and Licenses. Except as otherwise set forth in Schedule 3.16, the Borrower and each of its DomesticSubsidiaries owns all licenses, patents, patent applications, copyrights, service marks, trademarks, trademark applications and trade names which are necessary tocontinue to conduct its business as heretofore conducted by it, now conducted by it and proposed to be conducted by it, each of which is listed, together withUnited States Patent and Trademark Office or United States Copyright Office application or registration numbers (or similar information for foreign registrationor applications), where applicable, in Schedule 3.16, and will be promptly updated by the Borrower to reflect any change therein. The Borrower and each of itsSubsidiaries conducts business without infringement or claim of infringement of any license, patent, copyright, service mark, trademark, trade name, trade secretor other intellectual property right of others, except where such infringement or claim of infringement, individually or in the aggregate, could not have or result ina Material Adverse Effect. Except as set forth in Schedule 3.16, to the Borrower’s knowledge, there is no infringement or claim of infringement by others of anymaterial license, patent, copyright, service mark, trademark, trade name, trade secret or other intellectual property right of the Borrower or any Subsidiarythereof, except where such infringement or claim of infringement, individually or in the aggregate, could not have or result in a Material Adverse Effect.

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SECTION 3.17. Full Disclosure. No information contained in this Agreement, the other Loan Documents, the Financials or any written statement furnishedby or on behalf of the Borrower or any Affiliate thereof pursuant to the terms of this Agreement or any other Loan Document, which has previously beendelivered to the Agent or any Lender, contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements containedherein or therein not misleading in light of the circumstances under which they were made. All business plans and other forecasts and projections (including theProjections) furnished by or on behalf of the Borrower and made available to the Agent or any Lender relating to the financial condition, operations, business,properties or prospects of the Borrower or any Subsidiary thereof were prepared in good faith on the basis of the facts and assumptions stated therein, whichassumptions were fair in light of the conditions existing at the time of delivery of such forecasts, and represented, at the time of delivery, the Borrower’sreasonable estimate of its plans, forecasts or projections, as applicable, based on the information available at the time (it being acknowledged that actual resultsmay vary, and such variations may be material).

SECTION 3.18. Hazardous Materials. Except in the case of routine operations in the ordinary course of business in compliance with applicable permitsissued by all applicable Governmental Authorities, the Real Property is free of any Hazardous Material. Except as set forth in Schedule 3.18, there are no existingor potential environmental liabilities of the Borrower or any of its Domestic Subsidiaries of which the Borrower, after due inquiry, has knowledge, which couldresult in Environmental Liabilities and Costs in excess of $1,000,000 individually or $5,000,000 in the aggregate for the Borrower and its Domestic Subsidiaries.Except as set forth in Schedule 3.18, neither the Borrower nor any of its Domestic Subsidiaries has caused or suffered to occur any Release at, under, above orwithin any Real Property or any other real property which could expose such Person to any actual or potential liability in excess of $1,000,000, and the aggregateactual or potential liabilities of the Borrower and its Domestic Subsidiaries with respect to all such Releases does not exceed $5,000,000. Neither the Borrowernor any of its Domestic Subsidiaries is involved in operations which are reasonably likely to lead to the imposition of any liability under the Environmental Lawsin excess of $5,000,000 or any Lien on it, or any owner of any premises which it occupies, under the Environmental Laws, and neither the Borrower nor any ofits Domestic Subsidiaries has permitted any tenant or occupant of such premises to engage in any such activity.

SECTION 3.19. Insurance Policies. Schedule 3.19 lists all insurance of any nature maintained as of the Effective Date for current occurrences by theBorrower and its Domestic Subsidiaries. Such insurance complies with and shall at all times comply with the standards set forth in Annex F.

SECTION 3.20. Deposit and Disbursement Accounts. Schedule 3.20 lists all banks and other financial institutions at which the Borrower or any of itsDomestic Subsidiaries (other than SFC) maintains deposits and/or other accounts and/or post office lock boxes, including the Disbursement Accounts, and suchSchedule correctly identifies the name, address and telephone number of each depository, the name in which the account is held, a description of the purpose ofthe account, and the complete account number.

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SECTION 3.21. Solvency. The Borrower and each of its Subsidiaries is Solvent and will not become insolvent after giving effect to the transactionscontemplated by this Agreement and the Receivables Funding Documents. The Borrower and each of its Subsidiaries, after giving effect to the transactionscontemplated by this Agreement and the Receivables Funding Documents, will have an adequate amount of capital to conduct its business in the foreseeablefuture. Both before and after giving effect to the Advances and Letter of Credit Obligations to be made or incurred on each date on which Advances and Letter ofCredit Obligations requested hereunder are made or incurred, the Borrower and each of its Subsidiaries is and will be Solvent.

SECTION 3.22. Inactive Subsidiaries. Schedule 3.22 sets forth all Subsidiaries of the Borrower which do not own any assets or owe any liabilities orobligations (other than for franchise taxes and liabilities or obligations described in Schedule 3.22) or conduct any business or other activity and such Subsidiariesshall not at any time own any assets, owe any liabilities or obligations (other than for franchise taxes and liabilities or obligations described in Schedule 22) orconduct any business or other activity.

ARTICLE 4

FINANCIAL STATEMENTS AND INFORMATION

SECTION 4.1. Reports and Notices. The Borrower covenants and agrees that from and after the Effective Date and until the Termination Date, it shalldeliver to the Agent and each Lender the Financials, Projections and notices at the times and in the manner set forth in Annex E.

SECTION 4.2. Communication with Accountants. The Borrower (for itself and its Subsidiaries) authorizes the Agent (on behalf of the Lenders) tocommunicate directly with its and each Subsidiary’s independent certified public accountants and authorizes those accountants to make available to the Agent(on behalf of the Lenders) and each Lender any and all financial statements and other supporting financial documents and schedules with respect to the business,financial condition and other affairs of the Borrower and each Subsidiary thereof, in each instance, provided that the Agent shall (i) give the Borrower priornotice of each intended communication with such accountants and of each request to have such accountants make available to the Agent any such financialinformation and material and (ii) permit a representative of the Borrower to be present at any such communication or making available of financial informationand material. At or before the Effective Date, the Borrower shall deliver a letter (the “Accountant’s Letter”) addressed to and acknowledged by such accountantsinstructing them to make available to the Agent (on behalf of the Lenders) such information and records as the Agent may reasonably request and to otherwisecomply with the provisions of this Article 4. After the Effective Date, if the Borrower or any Subsidiary thereof engages the services of accountants other thanPricewaterhouseCoopers LLP, it shall deliver a letter addressed to and acknowledged by such accountants containing the same terms and provisions as theAccountant’s Letter.

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ARTICLE 5

AFFIRMATIVE COVENANTS

The Borrower covenants and agrees (for itself and any Subsidiary thereof) that, unless the Requisite Lenders shall otherwise consent in writing, from andafter the date hereof and until the Termination Date:

SECTION 5.1. Maintenance of Existence and Conduct of Business. The Borrower shall (and shall cause each of its Subsidiaries to): (a) do or cause to bedone all things necessary to preserve and keep in full force and effect its corporate existence and, except where the failure to do so could not reasonably beexpected to result in a Material Adverse Effect, its rights and franchises; (b) continue to conduct its business substantially as now conducted or as otherwisepermitted hereunder; (c) at all times maintain, preserve and protect all of its Intellectual Property, and preserve all the remainder of its property, in use or usefulin the conduct of its business and keep the same in good repair, working order and condition (taking into consideration ordinary wear and tear) and from time totime make, or cause to be made, all necessary or appropriate repairs, replacements and improvements thereto consistent with industry practices, so that thebusiness carried on in connection therewith may be properly and advantageously conducted at all times; provided that neither the Borrower nor any Subsidiaryshall be required to maintain, preserve and protect any Intellectual Property which the Borrower shall have determined, in its prudent business judgment, is notnecessary to the proper and advantageous conduct of its business; (d) maintain its Equipment and Fixtures in good operating condition sufficient for thecontinuation of such Person’s business conducted on a basis consistent with past practices and shall provide or arrange for all maintenance and service and allrepairs necessary for such purpose; and (e) with respect to each Credit Party, transact business only under the names set forth in Schedule 3.2 (unless theBorrower shall provide the Agent with not less than thirty (30) days prior written notice of any Credit Party’s use of another name and take such actions as theAgent may reasonably request in connection therewith).

SECTION 5.2. Payment of Charges and Claims. The Borrower shall (and shall cause each of its Subsidiaries to) pay and discharge in accordance with theterms thereof (A) all Charges imposed upon it or its income and profits, or any of its property (real, personal or mixed), (B) all lawful claims for labor, materials,supplies and services or otherwise, which if unpaid might by law become a Lien on its property, and (C) all rent in whatever form owing with respect to the leaseby the Borrower or any of its Subsidiaries of real property; provided, that neither the Borrower nor any such Subsidiary shall be required to pay any such Charge,claim or rent which is being contested in good faith by proper legal actions or proceedings, so long as at the time of commencement of any such action orproceeding and during the pendency thereof (i) no Default or Event of Default shall have occurred and be continuing, (ii) adequate reserves with respect theretoare established and are maintained in accordance with GAAP, (iii) such contest operates to suspend collection of the contested Charges, claims or rent and ismaintained and prosecuted continuously with diligence, (iv) none of the Collateral would be subject to forfeiture or loss or any Lien by reason of the institutionor prosecution of such contest, (v) no Lien shall exist, be imposed or be attempted to be imposed for such Charges, claims or rent

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during such action or proceeding unless the full amount of such Charge, claim or rent is covered by insurance satisfactory in all respects to the Agent, and (vi) theBorrower or such Subsidiary, as appropriate, shall promptly pay or discharge such contested Charges, claims or rent and all additional charges, interest penaltiesand expenses, if any, and shall, concurrently with the delivery of each quarterly Compliance Certificate (and in any event within 30 days after the end of eachFiscal Quarter), deliver to the Agent (x) evidence acceptable to the Agent of such compliance, payment or discharge, if such contest is terminated or discontinuedadversely to the Borrower or such Subsidiary, as appropriate, and (y) a report listing all such contested Charges then existing to the extent in excess of$5,000,000 in the aggregate and any and all reserves established and maintained with respect thereto.

SECTION 5.3. Books and Records. The Borrower shall (and shall cause each of its Subsidiaries to) keep adequate records and books of account withrespect to its business activities, in which proper entries, reflecting all of its consolidated and consolidating financial transactions, are made in accordance withGAAP and on a basis consistent with the Financials.

SECTION 5.4. Litigation. The Borrower shall notify the Agent and each Lender in writing, promptly upon learning thereof, of any litigation, Claim orother action commenced or threatened against the Borrower or any of its Subsidiaries, and of the institution against any such Person of any suit or administrativeproceeding which (a) is reasonably likely to involve an amount in excess of $5,000,000 individually or (to the extent litigation, Claims or other actions arerelated) in the aggregate or (b) is reasonably likely to result in a Material Adverse Effect if adversely determined.

SECTION 5.5. Insurance.

(a) The Borrower shall, at its (or any of its Domestic Subsidiaries’) sole cost and expense, maintain or cause to be maintained with respect to theBorrower and its Domestic Subsidiaries, the policies of insurance in such amounts and as otherwise described in Annex F. The Borrower shall notify the Agentpromptly of any occurrence causing a material loss or decline in value of any real or personal property and the estimated (or actual, if available) amount of suchloss or decline, except as specified otherwise in Annex F. The Borrower (for itself and its Domestic Subsidiaries) hereby directs all present and future insurersunder its “All Risk” policies of insurance to pay all proceeds payable thereunder in respect of Collateral directly to the Agent (on behalf of the Holders), otherthan proceeds relating to the loss or damage to property which secures Debt permitted under Section 6.3(f) that is required by the terms of such Debt to be paid tothe holder thereof (“Excluded Proceeds”). The Borrower (for itself and its Domestic Subsidiaries) irrevocably makes, constitutes and appoints the Agent (and allofficers, employees or agents designated by the Agent) as such Person’s true and lawful agent and attorney in-fact for the purpose of (i) making, settling andadjusting claims under the “All Risk” policies of insurance, (ii) endorsing the name of such Person on any check, draft, instrument or other item of payment forthe proceeds (other than Excluded Proceeds) of such “All Risk” policies of insurance, and (iii) for making all determinations and decisions with respect to such“All Risk” policies of insurance; provided, that the Agent agrees not to exercise such powers as attorney-in-fact under clause (i) or (iii) above unless a Default orEvent of

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Default shall have occurred and be continuing. In the event the Borrower and/or a Domestic Subsidiary of the Borrower at any time or times hereafter shall fail toobtain or maintain (or fail to cause to be obtained or maintained) any of the policies of insurance required above or to pay any premium in whole or in partrelating thereto, the Agent or the Lenders, without waiving or releasing any Obligations or Default or Event of Default hereunder, may at any time or timesthereafter (but shall not be obligated to) obtain and maintain such policies of insurance and pay such premium and take any other action with respect theretowhich the Agent or the Lenders deem advisable. All sums so disbursed, including attorneys’ fees, court costs and other charges related thereto, shall be payable,on demand, by the Borrower to the Agent (on behalf of the Holders) and shall be additional Obligations hereunder secured by the Collateral, provided, that if andto the extent the Borrower fails to promptly pay any of such sums upon the Agent’s demand therefor, the Agent is authorized to, and at its option may, make orcause to be made Revolving Credit Advances on behalf of the Borrower for payment thereof. If, notwithstanding that all proceeds of insurance in respect of anyCollateral shall be payable to the Agent, the Borrower or any Subsidiary thereof receives any proceeds of insurance in respect of any Collateral in respect of thepolicies required to be maintained under this Agreement (except for such proceeds which the Borrower or any Domestic Subsidiary thereof is permitted to retainpursuant to the last sentence of Section 5.14(a) to replace, repair or restore Property as therein provided), such proceeds shall be held in trust by such Person (andthe Borrower shall cause such Person to hold in trust such proceeds) for the Agent and, unless the Agent otherwise permits, shall be forthwith paid over to theAgent.

(b) The Borrower shall, if so requested by the Agent, deliver to the Agent, as often as the Agent may reasonably request, a report of a reputableinsurance broker satisfactory to the Agent with respect to its insurance policies.

(c) The Borrower shall deliver to the Agent endorsements to all of its and its Domestic Subsidiaries’ (i) “All Risk” and business interruptioninsurance naming the Agent, for the benefit of the Holders, as loss payee to the extent provided in Section 5.5(a), and (ii) general liability and other liabilitypolicies naming the Agent, for the benefit of the Holders, as an additional insured.

SECTION 5.6. Compliance with Laws. The Borrower shall (and shall cause each of its Subsidiaries to) comply with all federal, state, local and foreignlaws, permits and regulations applicable to it, including those relating to licensing, environmental, ERISA and labor matters (except where the failure to socomply could not be reasonably expected to result in a Material Adverse Effect and would not be reasonably likely to subject the Borrower or any of itsSubsidiaries to any criminal penalties (other than non-material fines) or the Agent or any of the Lenders to any civil or criminal penalties).

SECTION 5.7. Agreements. The Borrower shall (and shall cause each of its Subsidiaries to) perform, within all required time periods (after giving effect toany applicable grace periods), all of its obligations and enforce all of its rights under each agreement, contract, instrument or other document to which it is aparty, including any leases, licenses and customer contracts to which it is a party where the failure to so perform and enforce could have or result in

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a Material Adverse Effect. The Borrower shall (and shall cause each of its Subsidiaries to) take such actions or omit to take such actions so as not to cause abreach of the representations and warranties made hereunder and under the other Loan Documents.

SECTION 5.8. Supplemental Disclosure. On the request of the Agent or any Lender (in the event that such information is not otherwise delivered by theBorrower to the Agent or the Lenders pursuant to this Agreement), the Borrower will supplement (or cause to be supplemented) each Schedule hereto, orrepresentation herein or in any other Loan Document with respect to any matter hereafter arising which, if existing or occurring at the date of this Agreement,would have been required to be set forth or described in such Schedule or as an exception to such representation or which is necessary to correct any informationin such Schedule or representation which has been rendered inaccurate thereby; provided that such supplement to any such Schedule or representation shall not bedeemed an amendment thereof except if and to the extent that (i) the information disclosed in such supplement updates (A) Schedule 3.2 or Schedule 3.8 toinclude any Real Property leased or acquired by Borrower or any Domestic Subsidiary thereof in accordance with this Agreement, but includes no additionalexceptions or other changes to said schedule, (B) Schedule 3.11 to include any Subsidiaries, joint ventures or partnerships with, or other equity interests in, anyPerson that are acquired or created by Borrower or any Domestic Subsidiary thereof in accordance with this Agreement, but only if the Borrower is incompliance with its obligations under Sections 5.15 and 5.17 with respect thereto, (C) Schedule 3.14 to include any new Plans maintained or contributed to by theBorrower or any Domestic Subsidiary or ERISA Affiliate thereof in accordance with this Agreement, but includes no additional exceptions or other changes tosaid schedule, (D) Schedule 3.16 to include any additional licenses, patents, patent applications, copyrights, service marks, trademarks, trademark applicationsand trade names acquired in accordance with this Agreement and then owned by the Borrower or any Domestic Subsidiary thereof, and any registration numbersapplicable thereto, but includes no additional exceptions or other changes to said schedule, (E) Schedule 3.20 to include any deposit or securities accounts openedand maintained by Borrower or any Domestic Subsidiary thereof in accordance with this Agreement and Annex B hereto, and (F) the schedules in any SecurityAgreement that disclose the properties or locations where Collateral is located to include any new properties or locations leased or acquired after the EffectiveDate at which Collateral is located, in each case if and to the extent that each such property and location is leased or acquired, and Collateral is located at eachsuch property and location, in accordance with this Agreement and the Loan Documents and, in the case of any such supplement amending any schedule referredto in this clause (F), such schedule shall be deemed amended upon the delivery of written notice by the Borrower to Agent of any such new property or location,or (ii) such amendment is expressly consented to in writing by the Agent and Requisite Lenders, and no such amendments, except as the same may be consentedto in a writing which expressly includes a waiver, shall be or be deemed a waiver by the Lenders of any Default disclosed therein. The Borrower shall, if sorequested by the Agent or the Requisite Lenders, furnish to the Agent and the Lenders as often as it reasonably requests, statements and schedules furtheridentifying and describing the Collateral and such other reports in connection with the Collateral as the Agent and the Lenders may reasonably request, all inreasonable detail, and the Borrower shall advise the Agent and the Lenders promptly, in reasonable detail, of (a) any Lien, other than as permitted pursuant toSection 6.7, attaching to or asserted against any of

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the Collateral, (b) any material change in the composition of the Collateral, and (c) the occurrence of any other event which would have a Material AdverseEffect upon the Collateral and/or the Agent’s and Lenders’ Lien thereon.

SECTION 5.9. Environmental Matters. The Borrower shall (and shall cause each of its Subsidiaries to) (a) comply in all material respects with theEnvironmental Laws and permits applicable to it, (b) notify the Agent and each Lender promptly after the Borrower or any Subsidiary thereof becomes aware ofany Release upon any Real Property which is reasonably likely to result in or expose the Borrower or any of its Subsidiaries to actual or potential liability inexcess of $1,000,000, and (c) promptly forward to the Agent and each Lender a copy of any order, notice, permit, application, or any communication or reportreceived by the Borrower or any Subsidiary thereof in connection with any such Release or any other matter relating to the Environmental Laws that may affectany Real Property or the Borrower or any Subsidiary thereof. The provisions of this Section 5.9 shall apply whether or not the Environmental Protection Agency,any other federal agency or any state or local or foreign environmental agency has taken or threatened any action in connection with any Release or the presenceof any Hazardous Materials.

SECTION 5.10. Landlords’ Agreements, Mortgagee Agreements and Bailee Letters. The Borrower shall use good faith reasonable efforts to obtain alandlord’s agreement, mortgagee agreement or bailee letter, as applicable, from the lessor of each leased property or mortgagee of owned property or with respectto any warehouse, processor or converter facility or other location where Collateral is located, which agreement or letter shall contain a waiver or subordinationof all Liens or claims that the landlord, mortgagee or bailee may assert against the Inventory or Collateral at that location, and shall otherwise be satisfactory inform and substance to the Agent; provided, however, that the Borrower shall have no obligation to reimburse Agent and Lenders for any legal fees incurred byAgent or any Lender in connection with the negotiation, preparation, filing and/or recordation of any such landlord’s agreement, mortgagee agreement or baileeletter relating to any such property that is leased or owned, or any other location where Collateral is located, on and as of the Effective Date, and the Borrower’sobligation to reimburse Agent and Lenders for any legal fees incurred by Agent or any Lender in connection with the negotiation, preparation, filing and/orrecordation of all such landlord’s agreements, mortgagee agreements and bailee letters relating to any other such properties and locations shall not exceed $2,000for each such property or location; and provided, further, that the Lenders shall have no obligation to reimburse Agent for any such legal fees incurred by Agent inexcess of $2,000 for each such property or location unless Agent incurs such legal fees with the consent, or pursuant to the instructions, of the Requisite Lenders.With respect to such locations or warehouse space leased or owned as of the Effective Date, if the Agent has not received a landlord or mortgagee agreement orbailee letter as of the Effective Date, the Borrower’s Eligible Inventory at that location may, in the Agent’s discretion, be excluded from the Borrowing Base orbe subject to such Reserves as may be established by the Agent in its reasonable business judgment. The Borrower shall timely and fully pay and perform itsobligations under all leases and other agreements with respect to each leased location or public warehouse where any Collateral is or may be located.

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SECTION 5.11. [Reserved]

SECTION 5.12. Application of Proceeds. The Borrower shall use the proceeds of Advances as provided in Section 1.3.

SECTION 5.13. Fiscal Year. The Borrower shall (and shall cause each of its Subsidiaries to) maintain as its Fiscal Year the twelve-month period ending onNovember 30 in each year.

SECTION 5.14. Casualty and Condemnation.

(a) The Borrower shall promptly notify the Agent of any loss, damage, or destruction to any Collateral or any Real Property owned by the Borroweror any of its Domestic Subsidiaries whether or not constituting Collateral (collectively, “Property”) or arising from its use, whether or not covered by insurance;provided that no such notice is necessary with respect to the loss, damage or destruction of any Collateral or Real Property with a value of less than $3,000,000per casualty event and $10,000,000 in the aggregate. The Agent on behalf of the Lenders (in consultation with the Borrower so long as no Default or Event ofDefault is continuing) is hereby authorized to adjust losses and collect all insurance proceeds in respect of any Collateral directly. If, notwithstanding theprovisions hereof, which require that the Agent be the sole loss payee for insurance proceeds in respect of Collateral, a check or other instrument from an insureris made payable to the Borrower or the Borrower and the Agent jointly, the Agent may endorse the Borrower’s name thereon and take such other action as theAgent may elect to obtain the proceeds thereof. After deducting from such proceeds the expenses, if any, incurred by the Agent in the collection or handlingthereof, the Agent may apply such proceeds to the reduction of the Obligations under or in connection with this Agreement and the other Loan Documents in themanner set forth in Section 1.9 or, at the Agent’s option with the consent of the Requisite Lenders, may permit or require the Borrower to use such proceeds, orany part thereof, to replace, repair or restore such Collateral as provided in paragraph (d) below. So long as no Default or Event of Default shall be continuing, theBorrower shall be entitled to use such proceeds to the extent the same are proceeds payable with respect to a casualty to Collateral other than Inventory (or suchlesser amount thereof as shall be necessary) to replace, repair, restore or rebuild such Collateral as provided in paragraph (d) below where the amount of suchmoneys on account of a single event of loss, damage or destruction is less than $3,000,000 and it is reasonably expected that such replacement, repair, restorationor rebuilding can be completed within six (6) months after the loss, damage or destruction (and if not completed by the end of such six-month period, theremaining monies shall be delivered to the Agent to be applied to the payment of the Obligations).

(b) The Borrower shall, promptly upon the Borrower or any of its Domestic Subsidiaries learning of the institution of any proceeding for thecondemnation or other taking of any of its Property constituting Collateral, notify the Agent of the pendency of such proceeding, and agrees that the Agent mayparticipate in any such proceeding and the Borrower from time to time will deliver (or cause to be delivered) to the Agent all instruments reasonably requested bythe Agent to permit such participation. The Agent shall (and is hereby authorized to) collect any

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and all awards, payments or other proceeds of any such condemnation or taking and apply such proceeds to the reduction of the Obligations in the manner setforth in Section 1.9 or, at the Agent’s option with the consent of the Requisite Lenders, may permit or require the Borrower to use such proceeds, or any partthereof, to replace, repair or restore such Collateral as provided in paragraph (d) below.

(c) Subject to the terms and conditions hereof (including Section 2.2), after application of the proceeds of any loss or taking of the Borrower’sCollateral to the reduction of the Obligations pursuant to paragraphs (a) and (b) above, the Borrower may borrow Revolving Credit Advances for the purpose ofreplacing, repairing or restoring any Collateral subject to such loss or taking in accordance with paragraph (d) below.

(d) Any Collateral which is to be replaced, repaired or restored pursuant to paragraph (a), (b) or (c) above shall be replaced, repaired or restoredpursuant to such terms and conditions as the Agent may reasonably require and with materials and workmanship of substantially as good a quality as existedbefore such loss or taking, and the Borrower shall commence such replacement, repair or restoration as soon as practicable and proceed diligently with it untilcompletion to the Agent’s satisfaction. The Borrower shall provide to the Agent written progress reports, other information and evidence of its compliance withthe foregoing.

SECTION 5.15. Subsidiaries. In the event that, at any time on or after the Effective Date, the Borrower or any of its Domestic Subsidiaries creates, formsor acquires a new Domestic Subsidiary, the Borrower shall execute and deliver (or cause to be executed and delivered) to Agent, for the benefit of the Holders,within 30 days after such creation, formation or acquisition, and at all times thereafter shall maintain (or cause to be maintained) in effect, (a) a Guaranty fromsuch new Domestic Subsidiary in respect of the Obligations in substantially the form of Exhibit F-4, (b) a Security Agreement, in substantially the form of ExhibitG-4, and if necessary or reasonably desirable, other applicable Collateral Document, granting a first priority Lien (subject only to Permitted Encumbrances) onall assets of such new Domestic Subsidiary, (c) a Stock Pledge Agreement granting a Lien on all present and future issued and outstanding Stock of such newDomestic Subsidiary, all distributions made or to be made in respect thereof and all proceeds thereof, and (d) such supporting documentation, including corporateresolutions and opinions of counsel with respect to such additional Guaranty, Security Agreement, Stock Pledge Agreement or other documentation, as may bereasonably required by the Agent.

SECTION 5.16. Intellectual Property. In the event that the Borrower or any Domestic Subsidiary shall acquire any Intellectual Property which is orbecomes material to the business or operations of the Borrower or such Subsidiary or which otherwise becomes valuable, then the Borrower or such Subsidiarywhich has acquired such material or valuable Intellectual Property shall execute and deliver to the Agent, concurrently with the delivery of the next quarterlyCompliance Certificate (and in any event within 30 days after the end of the next Fiscal Quarter), such security documents and other instruments, agreements,and certificates, each in form and substance satisfactory to the Agent, as the Agent may reasonably request in order that the Agent shall have been granted a firstpriority perfected and fully enforceable Lien in such material or valuable Intellectual Property and all Proceeds thereof.

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SECTION 5.17. Further Assurances. The Borrower shall, and shall cause each of its Subsidiaries to, at its cost and expense, upon request of the Agent,duly execute and deliver, or cause to be duly executed and delivered, to the Agent such further instruments and do and cause to be done such further acts as maybe necessary or proper in the opinion of the Agent to carry out more effectually the provisions and purposes of this Agreement or any other Loan Document.

ARTICLE 6

NEGATIVE COVENANTS

The Borrower covenants and agrees (for itself and each of its Subsidiaries) that, without the Requisite Lenders’ prior written consent, from and afterthe date hereof and until the Termination Date:

SECTION 6.1. Mergers, Subsidiaries, Etc. The Borrower shall not (and shall not suffer or permit any of its Domestic Subsidiaries to), directly orindirectly, by operation of law or otherwise, merge with, consolidate with, acquire all or substantially all of the assets or Stock of, or otherwise combine with, anyPerson or acquire any Subsidiary; provided that:

(a) any Domestic Subsidiary of the Borrower may merge or consolidate with any other Domestic Subsidiary of the Borrower; and

(b) the Borrower or any of its Domestic Subsidiaries may acquire all or substantially all of the assets or Stock or other ownership interests of anyDomestic Person (the “Domestic Target”) or any Foreign Person (the “Foreign Target”), in each case subject to satisfaction of the following conditions of thisSection 6.1 (any such acquisition of a Domestic Target, a “Permitted Domestic Acquisition”; any such acquisition of a Foreign Target, a “Permitted ForeignAcquisition”; and any Permitted Domestic Acquisition or Permitted Foreign Acquisition, a “Permitted Acquisition”):

(i) such Permitted Acquisition shall only involve assets comprising a business, or those assets of a business, of the type engaged in by the Borroweras of the Effective Date, and which business would not subject the Agent or any Lender to regulatory or third party approvals in connection with the exercise ofits rights and remedies under this Agreement or any other Loan Documents, other than approvals applicable to the exercise of such rights and remedies withrespect to the Borrower prior to such Permitted Acquisition;

(ii) the sum of all amounts paid or payable in connection with any such Permitted Domestic Acquisition (including all transaction costs and allIndebtedness, liabilities and contingent obligations incurred or assumed in connection therewith or otherwise reflected on a consolidated balance sheet of theBorrower and the Domestic Target), together with the sum of all such amounts paid or payable for all such prior Permitted Domestic Acquisitions made on orafter the Effective Date (collectively, “Prior Permitted Domestic Acquisitions”) and the sum of all amounts paid or payable for all Permitted DomesticInvestments made on or prior to such date in accordance with Section 6.2(g), shall not exceed $75,000,000 in the aggregate (the “Domestic

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Cap”); provided that if, after a Permitted Domestic Acquisition shall have been consummated, (A) the Borrower delivers to the Agent, concurrently with the firstfinancial statements required to be delivered hereunder on or after the date six months following such Permitted Domestic Acquisition, (1) pro forma quarterlyconsolidated financial statements of Borrower and its Subsidiaries reflecting two Fiscal Quarters actual results and two Fiscal Quarters projected results (which(x) in the case of the financial statements reflecting actual results, shall be complete, and (y) in the case of both the actual and projected financial statements,shall fairly present in all material respects the assets, liabilities, financial condition and results of operations of Borrower and its Subsidiaries in accordance withGAAP consistently applied, but shall take into account such Permitted Domestic Acquisition and the funding of all Advances in connection therewith), and (2) acertificate of the chief financial officer of the Borrower, in form and substance acceptable to the Agent, certifying that the Borrower would be in compliance witheach financial covenant set forth in Annex G for such four-Fiscal Quarter period (and showing in reasonable detail the calculations used in determiningcompliance) on a proforma basis (taking into account such Permitted Domestic Acquisition), and (B) average daily Net Liquidity Availability for the six-monthperiod following the actual date of consummation of such Permitted Domestic Acquisition shall have been $30,000,000 or more, then such Permitted DomesticAcquisition thereafter shall not be included as a Prior Permitted Domestic Acquisition for purposes of this Section 6.1(b)(ii) and the sum of all amounts paid orpayable in connection with such Permitted Domestic Acquisition shall not be included in the calculation of the Domestic Cap;

(iii) the sum of all amounts paid or payable in connection with any such Permitted Foreign Acquisition (including all transaction costs and allIndebtedness, liabilities and contingent obligations incurred or assumed in connection therewith or otherwise reflected on a consolidated balance sheet of theBorrower and the Foreign Target), together with the sum of all amounts paid or payable for all Permitted Foreign Investments made on or prior to such date inaccordance with Section 6.2(g) (other than Permitted Foreign Investments made pursuant to Section 6.2(g)(iv) or Section 6.2(g)(v)), shall not exceed, in theaggregate, the limit set forth in Section 6.2(g)(iii); and

(iv) such Permitted Acquisition otherwise constitutes a Permitted Investment under Section 6.2(g);

provided, that, notwithstanding the foregoing, the Inventory and Accounts of the Domestic Target shall not be included in Eligible Inventory or Net ReceivablesBalance without the prior written consent of the Agent and the Requisite Lenders.

SECTION 6.2. Investments. The Borrower shall not (and shall not suffer or permit any of its Domestic Subsidiaries to), directly or indirectly, make ormaintain any Investment except:

(a) as otherwise permitted by Section 6.1(b), 6.4 or 6.6;

(b) Investments outstanding on the Effective Date and listed in Schedule 6.2, but not any additional investments therein (it being understood that anysuch Investment, once repaid or recovered, may not be reborrowed or renewed) unless such additional investment is permitted under another clause of thisSection 6.2;

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(c) cash and Cash Equivalents; provided, that (i) so long as there shall remain outstanding any principal owing on the Revolving Credit Loan or theSwing Line Loan, the aggregate amount of cash and Cash Equivalents (other than (x) checks in transit and cash in payroll accounts listed on Schedule 3.20 (solong as used solely for payroll), and (y) cash and Cash Equivalents constituting Investments permitted under Section 6.2(d)) of the Borrower and its DomesticSubsidiaries shall not exceed $1,500,000 for more than one Business Day, except any excess that may arise after all Index Rate Loans and Swing Line Advancesshall have been repaid if, at such time, any LIBOR Loan is then outstanding and application of such excess to payment of such LIBOR Loan at such time wouldcause the Borrower to be liable under Section 1.4(e), provided that such excess shall be applied to repay such LIBOR Loan on the earliest date on which any thencurrent LIBOR Period shall end; and (ii) all Cash Equivalents of the Borrower and any of its Domestic Subsidiaries shall be held in a deposit or securitiesaccount of the Borrower or a Domestic Subsidiary thereof over which the Agent, for the benefit of the Holders, has retained “control” as determined underDivisions 8 and 9 of the Code, and holds a first priority perfected Lien, subject only to Permitted Encumbrances;

(d) Investments maintained by the Borrower pursuant to the Borrower’s unqualified deferred compensation arrangements; provided that (i) theBorrower grants to Agent, for the benefit of the Holders, a first priority Lien (subject only to Permitted Encumbrances) in all such Investments made after theEffective Date that are not maintained by the Borrower in securities accounts and that are in excess of $250,000 individually, or $1,000,000 in the aggregate, andtakes any actions reasonably necessary or reasonably requested by Agent to perfect such security interest, (ii) with respect to any Investments maintained in anysecurities account, the Borrower is in compliance with its obligations under Section 11 of Annex B with respect to such securities account, and (iii) suchInvestments shall not exceed $30,000,000 in the aggregate at any time;

(e) capital contributions by the Borrower to SFC of cash or Accounts created by the Borrower pursuant to and as contemplated by the ReceivablesSale Agreement so long as no Termination Event (as defined in the Receivables Funding Agreement) is continuing;

(f) loans by the Borrower to SFC pursuant to the Receivables Funding Documents and the Ancillary Services and Lease Agreement;

(g) other Investments in (1) any Domestic Subsidiary (other than a Domestic Excluded Subsidiary) (in each case, a “Permitted DomesticInvestment”), (2) any Foreign Subsidiary (in each case, a “Permitted Foreign Investment”), or (3) any other Person (in each case, a “Permitted OtherInvestment”; and Permitted Other Investments, together with Permitted Foreign Investments and Permitted Domestic Investments, “Permitted Investments”) nototherwise permitted by clauses (a) through (f) above or clause (h) below, subject to satisfaction of the following conditions, as applicable:

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(i) the Agent shall receive at least five (5) Business Days’ prior written notice of such proposed Permitted Investment, which notice shall include areasonably detailed description of such proposed Permitted Investment;

(ii) after giving effect to any such Permitted Domestic Investment, the sum of all amounts paid or payable in connection with all Permitted DomesticInvestments (including all transaction costs and all Indebtedness, liabilities and contingent obligations incurred or assumed in connection therewith or otherwisereflected on a consolidated balance sheet of the Borrower), together with the sum of all such amounts paid or payable for all such prior Permitted DomesticInvestments existing on or made on or after the Effective Date (collectively, “Prior Permitted Domestic Investments”) and the sum of all amounts paid or payablefor all Permitted Domestic Acquisitions made on or prior to such date in accordance with Section 6.1(b), shall not exceed, in the aggregate, the Domestic Cap;provided, however, that if, after a Permitted Domestic Investment shall have been consummated, (A) the Borrower delivers to the Agent, concurrently with thefirst financial statements required to be delivered hereunder on or after the date six months following such Permitted Domestic Investment, (1) pro formaquarterly consolidated financial statements of Borrower and its Subsidiaries reflecting two Fiscal Quarters actual results and two Fiscal Quarters projected results(which (x) in the case of the financial statements reflecting actual results, shall be complete, and (y) in the case of both the actual and projected financialstatements, shall fairly present in all material respects the assets, liabilities, financial condition and results of operations of Borrower and its Subsidiaries inaccordance with GAAP consistently applied, but shall take into account such Permitted Domestic Investment and the funding of all Advances in connectiontherewith), and (2) a certificate of the chief financial officer of the Borrower, in form and substance acceptable to the Agent, certifying that the Borrower wouldbe in compliance with each financial covenant set forth in Annex G for such four-Fiscal Quarter period (and showing in reasonable detail the calculations used indetermining compliance) on a pro forma basis (taking into account such Permitted Domestic Investment), and (B) average daily Net Liquidity Availability for thesix-month period following the actual date of such Permitted Domestic Investment shall have been $30,000,000 or more, then such Permitted DomesticInvestment thereafter shall not be included as a Prior Permitted Domestic Investment for purposes of this Section 6.2(g)(ii), and the sum of all amounts paid orpayable in connection with such Permitted Domestic Investment shall not be included in the calculation of the Domestic Cap;

(iii) after giving effect to any such Permitted Foreign Investment, the sum of all amounts paid or payable in connection with all Permitted ForeignInvestments (other than Permitted Foreign Investments made pursuant to Section 6.2(g)(iv) or 6.2(g)(v)) (including all transaction costs and all Indebtedness,liabilities and contingent obligations incurred or assumed in connection therewith or otherwise reflected on a consolidated balance sheet of the Borrower),together with the sum of all amounts paid or payable for all Permitted Foreign Acquisitions made on or prior to such date in accordance with Section 6.1(b), shallnot exceed, in the aggregate, $25,000,000; provided, that the Net Cash Proceeds received by Borrower from any Foreign Subsidiary after the Effective Date inrespect of dividends on, or the repayment of principal of any loan constituting, a Permitted Foreign Investment made pursuant to this Section 6.2(g)(iii) shall bedeemed to reduce amounts paid or payable in connection with Permitted Foreign Investments made pursuant to this Section 6.2(g)(iii) for purposes of calculatingcompliance with the foregoing limit;

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(iv) after giving effect to any such Permitted Foreign Investment in Synnex Canada (other than Permitted Foreign Investments made pursuant toSection 6.2(g)(iii)), the sum of all amounts paid or payable in connection with all Permitted Foreign Investments (whether currently existing or made hereafter,and expressly including that certain intercompany loan in an aggregate principal amount of $24,912,300 (Canadian dollars) made by the Borrower to SynnexCanada pursuant to that certain Promissory Note dated September 2, 2005 executed by Synnex Canada in favor of the Borrower) in Synnex Canada pursuant tothis Section 6.2(g)(iv)) (including all transaction costs and all Indebtedness, liabilities and contingent obligations incurred or assumed in connection therewith orotherwise reflected on a consolidated balance sheet of the Borrower), shall not exceed, in the aggregate, $50,000,000; provided, that the Net Cash Proceedsreceived by Borrower from Synnex Canada after the Effective Date in respect of dividends on, or the repayment of principal of any loan constituting, a PermittedForeign Investment made pursuant to this Section 6.2(g)(iv) shall be deemed to reduce amounts paid or payable in connection with Permitted Foreign Investmentsin Synnex Canada made pursuant to this Section 6.2(g)(iv) for purposes of calculating compliance with the foregoing limit;

(v) after giving effect to any such Permitted Foreign Investment in Synnex Mexico (other than Permitted Foreign Investments made pursuant toSection 6.2(g)(iii)), the sum of all amounts paid or payable in connection with all Permitted Foreign Investments (whether currently existing or made hereafter) inSynnex Mexico pursuant to this Section 6.2(g)(v)) (including all transaction costs and all Indebtedness, liabilities and contingent obligations incurred or assumedin connection therewith or otherwise reflected on a consolidated balance sheet of the Borrower), shall not exceed, in the aggregate, $10,000,000; provided, thatthe Net Cash Proceeds received by Borrower from Synnex Mexico after the Effective Date in respect of dividends on, or the repayment of principal of any loanconstituting, a Permitted Foreign Investment made pursuant to this Section 6.2(g)(v) shall be deemed to reduce amounts paid or payable in connection withPermitted Foreign Investments in Synnex Mexico made pursuant to this Section 6.2(g)(v) for purposes of calculating compliance with the foregoing limit;

(vi) after giving effect to any such Permitted Other Investment, the sum of all amounts paid or payable in connection with all Permitted OtherInvestments (whether currently existing or made hereafter) (including all transaction costs and all Indebtedness, liabilities and contingent obligations incurred orassumed in connection therewith or otherwise reflected on a consolidated balance sheet of the Borrower) shall not exceed, in the aggregate, $15,000,000;

(vii) with respect to any Permitted Domestic Investment or Permitted Other Investment in a Domestic Person, other than a Permitted Acquisition(but without limiting the requirements of Section 6.2(g)(xii) below), subject to any restriction contained in any agreement between the Borrower or the applicableDomestic Subsidiary and the other investors in such Permitted Domestic Investment or Permitted Other Investment, at or prior to the closing of such PermittedDomestic Investment or Permitted Other Investment, the Agent will be granted a first priority perfected Lien (subject to Permitted Encumbrances) in suchPermitted Domestic

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Investment or Permitted Other Investment (including any security or instrument evidencing such Permitted Domestic Investment or Permitted Other Investment),and the Borrower or the applicable Domestic Subsidiary shall have executed such documents and taken such actions as may be required by the Agent inconnection therewith;

(viii) concurrently with delivery of the notice referred to in Section 6.2(g)(i) above, the Borrower shall have delivered to the Agent, in form andsubstance satisfactory to the Agent, a certificate of the chief financial officer of the Borrower to the effect that the Borrower will be Solvent upon theconsummation of such Permitted Investment;

(ix) average daily Net Liquidity Availability for the 60-day period preceding the consummation of such Permitted Investment shall have been$30,000,000 or more;

(x) the Agent shall have received, (A) prior to the date of such Permitted Investment, drafts of the purchase or subscription agreement for suchPermitted Investment and of all related agreements, instruments, opinions, certificates and other documents reasonably requested by the Agent, and (B) no laterthan five (5) Business Days after the date of such Permitted Investment, copies of the executed purchase or subscription agreement, related agreements andinstruments for such Permitted Investment, and all opinions, certificates and other documents reasonably requested by the Agent, in form and substancesatisfactory to the Agent;

(xi) at the time of such Permitted Investment and after giving effect thereto, no Default or Event of Default shall have occurred and be continuing;

(xii) the Borrower shall have complied with its obligations under Sections 5.10, 5.15 and 5.17 with respect to such Permitted Investment; and

(h) any other Investments in Domestic Subsidiaries (other than Domestic Excluded Subsidiaries) not otherwise permitted by clauses (a) through(g) above (in each case, an “Additional Domestic Investment”) if, after giving effect thereto, the sum of all amounts paid or payable in connection with all suchAdditional Domestic Investments (including all transaction costs and all Indebtedness, liabilities and contingent obligations incurred or assumed in connectiontherewith or otherwise reflected on a consolidated balance sheet of the Borrower) does not exceed, in the aggregate, $15,000,000; provided, that the Net CashProceeds received by Borrower from any Domestic Subsidiary after the Effective Date in respect of dividends on, or the repayment of principal of any loanconstituting, such an Additional Domestic Investment shall be deemed to reduce amounts paid or payable in connection with Additional Domestic Investmentsfor purposes of calculating compliance with the foregoing limit.

SECTION 6.3. Debt. The Borrower shall not (and shall not suffer or permit any of its Domestic Subsidiaries to) create, incur, assume or permit to exist anyDebt, except:

(a) the Obligations;

(b) Deferred Taxes;

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(c) purchase money Debt secured by purchase money Liens and Capital Leases permitted under clause (d) or (e) of Section 6.7 (and refinancings ofsuch purchase money Debt permitted by such clause (d));

(d) Debt incurred by SFC under the Receivables Funding Documents and the Ancillary Services and Lease Agreement;

(e) Debt which constitutes Guaranteed Debt permitted under Section 6.6;

(f) any other Debt owing by the Borrower or any Domestic Subsidiary in an aggregate principal amount not to exceed $25,000,000, provided, that(a) the Borrower supply to the Agent confirmation, in form and substance acceptable to the Agent, that the terms and conditions governing such Debt do not(1) provide for the grant of a Lien with respect to any of the Borrower’s Accounts, Inventory or other assets sold, contributed or in which a Lien has been grantedpursuant to the Receivables Funding Documents or the Collateral Documents (collectively, “Restricted Assets”), or (2) restrict or prohibit the sale of, or thegranting of a security interest in, any Restricted Assets by the Borrower, and (b) to the extent that the holder of such Debt is to obtain a Lien upon any of theBorrower’s Real Property, such holder shall execute and deliver to the Agent a mortgagee or landlord waiver acceptable in form and substance to the Agent;

(g) Debt which constitutes intercompany Debt permitted under Section 6.2;

(h) hedging obligations under swaps, caps and collar arrangements arranged by a Lender entered into for the sole purposes of hedging in ordinarycourse of business and consistent with industry practices (and not for speculative purposes); and

(i) other Debt set forth in Schedule 3.11, but not (I) any increase in the amount of any thereof or (II) any refinancing or refunding of any thereof solong as the Debt resulting from such refinancing or refunding (1) does not have an aggregate principal amount in excess of the Debt that was refinanced orrefunded, (2) does not mature sooner than the Debt being refinanced or refunded, (3) does not rank at the time of such refinancing or refunding senior to the Debtbeing refinanced or refunded and (4) does not contain terms (including, without limitation, terms relating to security, amortization, interest rate, premiums, fees,covenants, events of default and remedies) materially less favorable to the Borrower or to the Lenders than those applicable to the Debt being refinanced orrefunded.

SECTION 6.4. Affiliate and Employee Loans and Transactions. The Borrower shall not (and shall not suffer or permit any of its Domestic Subsidiaries to)enter into any lending, borrowing or other commercial transaction with any of its Foreign Subsidiaries, Affiliates, officers, directors, shareholders or employees,including payment of any management, consulting, advisory or similar fee; provided that:

(i) the Borrower and SFC may enter into and perform the Receivables Funding Documents; provided that sales, transfers, capital contributions andother dispositions by the Borrower and any other “Originator” (as defined in the Receivables Sale Agreement) to SFC of Accounts as therein contemplated shallonly be permitted so long as no “Termination Event” (as defined in the Receivables Funding Agreement) is continuing;

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(ii) the Borrower may (x) continue to hold and receive payments in respect of each of the officer loans described on Schedule 6.4, but not anyincrease in the amount thereof, and (y) make additional loans and advances to its officers and employees in the ordinary course of business, provided that (i) allsuch additional loans and advances are evidenced in writing in form and substance satisfactory to the Agent, (ii) all such additional loans and advances aredescribed on Schedule II to the Borrower Security Agreement, as updated by the Borrower from time to time, and, in respect of any such additional loans oradvances, the Borrower shall have delivered to the Agent all such writings evidencing such loans and advances, and (iii) the aggregate outstanding principalamount of all such additional loans and advances, together with such existing loans described on Schedule 6.4, shall not exceed $6,000,000 at any time;

(iii) the Borrower may enter into any commercial transaction (other than a lending or borrowing transaction or a transaction which would beprohibited by another provision of this Agreement or another Loan Document) with SFC on terms not less favorable to the Borrower than those which wouldhave been obtained in an arm’s-length transaction with a non-affiliated third party;

(iv) the Borrower may enter into any commercial transaction (other than a transaction that would be prohibited by another provision of thisAgreement or another Loan Document) with any of its Affiliates on terms not less favorable to the Borrower than those which would have been obtained in anarm’s-length transaction with a non-affiliated third party;

(v) SFC and the Borrower may enter into and perform the Ancillary Services and Lease Agreement;

(vi) (w) any Credit Party may enter into customary indemnification arrangements with its directors and officers in the ordinary course of business inconnection with the performance by such directors and officers of their duties and responsibilities in their capacities as officers and directors, (x) any Credit Partymay enter into employment agreements with its employees and officers, (y) any Credit Party may reimburse any officer, director or employee of such CreditParty, in the ordinary course of business and in accordance with the policies, procedures and guidelines of the Borrower and its Subsidiaries, as such policies andprocedures are adjusted from time to time, for out-of-pocket expenses incurred by such Person in the performance of such Person’s duties and responsibilities asan officer, director or employee, and (z) the Borrower may enter into the arrangements set forth on Schedule 3.14.

Set forth in Schedule 6.4 is a list of all such lending, borrowing or other commercial transactions existing or outstanding as of the Effective Date (other than theBorrower’s policies and procedures relating to expense reimbursement).

SECTION 6.5. Capital Structure and Business. Except as permitted under Section 5.1, the Borrower shall not (and shall not suffer or permit any of itsSubsidiaries to):

(a) make any changes in its business objectives, purposes or operations which could in any way adversely affect the repayment of the Obligations orhave or result in a Material Adverse Effect;

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(b) make any change in its capital structure as described in Schedule 3.11 and Schedule 6.2 (including the issuance or recapitalization of any shares ofStock or other securities convertible into Stock or any revision of the terms of its outstanding Stock), except that changes in the Borrower’s capital structure shallbe permitted so long as such changes, individually and in the aggregate, do not constitute a Change of Control;

(c) amend its articles of incorporation, charter, bylaws or other organizational documents in any manner which may (x) adversely affect the Agent orthe Lenders, the Revolving Credit Loan, the Swing Line Loan, the Collateral or the ability of the Borrower to perform its obligations under the Loan Documentsor (y) violate (or authorize or permit acts or events which may violate) any of the provisions of any Loan Document (including, without limitation, Section 6.5(b)hereof); or

(d) engage in any business other than manufacturing, operational, logistics, distribution and related services in the computer and technologyindustry.

SECTION 6.6. Guaranteed Debt. The Borrower shall not (and shall not suffer or permit any of its Domestic Subsidiaries to) incur any Guaranteed Debtexcept:

(a) by endorsement of instruments or items of payment for deposit to the general account of such Person;

(b) for performance bonds or indemnities entered into in the ordinary course of business consistent with past practices;

(c) unsecured Guaranteed Debt in respect of Debt permitted under Section 6.3(c), (d) or (f);

(d) existing secured Guaranteed Debt set forth on Part A of Schedule 6.6, not to exceed for any such Guaranteed Debt the respective amount set forthon such schedule for such Guaranteed Debt;

(e) the Synnex Mexico Guarantee in an aggregate amount not to exceed $80,000,000 (or the equivalent amount of Pesos, based on a conversion ratedetermined immediately prior to the closing of the Synnex Mexico Loan Documents) (the maximum liability under the Synnex Mexico Guaranty at any time, the“Maximum Mex Guarantee”); provided that if, and for so long as, the commitments under the Synnex Mexico Loan Documents are less than $75,000,000, andthe Maximum Mex Guarantee is less than $80,000,000, then Borrower may incur and maintain additional unsecured Guaranteed Debt guaranteeing Debt ofSynnex Mexico in an aggregate amount not to exceed $80,000,000 less the then Maximum Mex Guarantee; provided that all provisions of this Agreementotherwise applicable to the Synnex Mexico Guarantee shall apply, mutatis mutandis, to such other unsecured Guarantee;

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(f) other unsecured Guaranteed Debt set forth on Part B of Schedule 6.6 not to exceed for any such Guaranteed Debt the respective amount set forthon such schedule for such Guaranteed Debt;

(g) unsecured Guaranteed Debt in an amount not to exceed $20,000,000 with respect to Debt under an inventory line of credit provided by the Bankof Montreal to the Canadian Subsidiary; and

(h) the Canadian Subsidiary Securitization Guaranty.

SECTION 6.7. Liens. The Borrower shall not (and shall not suffer or permit any of its Domestic Subsidiaries to) create or permit to exist any Lien on anyof its properties or assets except for:

(a) presently existing or hereafter created Liens in favor of the Agent or the Lenders to secure the Obligations;

(b) [Reserved];

(c) Permitted Encumbrances;

(d) purchase money mortgages or other purchase money Liens and Capital Leases (including, without limitation, finance leases) granted after thedate hereof upon any fixed or capital assets hereafter acquired, so long as (i) any such Lien does not extend to or cover any other asset of the Borrower or any ofits Subsidiaries, (ii) such Lien secures the obligation to pay the purchase price of such asset (or the obligation under such capital or finance lease) only, (iii) theprincipal amount secured by each such Lien does not exceed the unpaid purchase price for such asset, and (iv) the aggregate amount of Debt secured by suchpurchase money Liens and Capital Leases shall not at any time exceed (together with the Debt secured by any purchase money Liens and Capital Leasespermitted under clause (b) above and any Debt permitted below in this clause (d) to refinance purchase money Debt) $15,000,000, and Liens to secure anyrefinancing of the purchase money Debt permitted under this clause (d) and under clause (b) above so long as (x) the Debt refinancing such purchase money Debtdoes not exceed the outstanding principal amount of the Debt being refinanced, and (y) the Lien securing such new Debt secures only such Debt and does notextend to or cover any asset other than the asset securing the refinanced Debt;

(e) purchase money Liens on Inventory, so long as any such Lien held by any creditor extends only to Inventory the acquisition of which wasfinanced by such creditor and not to any other property of the Borrower or any of its Subsidiaries; and

(f) Liens created under or pursuant to the Receivables Funding Documents.

SECTION 6.8. Sale of Assets. The Borrower shall not (and shall not suffer or permit any of its Domestic Subsidiaries to) sell, transfer, convey, assign orotherwise dispose of any of its assets or properties, including any Collateral; provided, that the foregoing shall not prohibit:

(a) the sale by the Borrower or any of its Domestic Subsidiaries of its Accounts and General Intangibles to SFC pursuant to and in accordance withthe Receivables Sale Agreement; provided that no such sales shall be permitted from and after (i) the occurrence of the “Commitment Termination Date” (asdefined in the Receivables Funding Documents), or (ii) notice of the occurrence of a Stop Event shall have been given by the Agent or any Lender to GE Capitalin its capacity as “Administrative Agent” under the Receivables Funding Documents;

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(b) the sale of Inventory in the ordinary course of business;

(c) the sale or disposition of any Equipment which, in each instance, has become no longer useful, obsolete or surplus to the business of theBorrower or any Domestic Subsidiary thereof;

(d) the sale by the Borrower of any securities and other Investments held from time to time in securities accounts maintained in connection withdeferred compensation arrangements pursuant to Section 6.2(d), provided that the proceeds of such sale are maintained in such securities accounts and reinvestedin accordance with the terms of such deferred compensation arrangements; and

(e) any other sale of assets or property (other than Eligible Inventory, Production Inventory, Eligible Receivables, any other Accounts or Inventoryand any other Collateral included in calculating the Borrowing Base) in an amount not to exceed $10,000,000 in the aggregate, provided that the proceeds of anysuch sale are applied to repay the Advances pursuant to Section 1.2(f).

SECTION 6.9. Material Contracts. The Borrower shall not (and shall not suffer or permit any of its Subsidiaries to) cancel or terminate any MaterialContract or amend or otherwise modify any Material Contract, or waive any default or breach under any Material Contract, unless (i) no Default or Event ofDefault exists at the time or could reasonably be expected to occur as a result thereof, and (ii) either (a) the Borrower determines that such action is in its bestinterests and in accordance with prudent business practice, or (b) such action could not reasonably be expected to have a Material Adverse Effect. The Borrowershall not agree to any amendment or modification of clause (e) of the definition of “Facility Termination Date” contained in the Receivables Funding Documents.

SECTION 6.10. ERISA. Neither the Borrower nor any Subsidiary thereof nor any ERISA Affiliate shall acquire any new ERISA Affiliate that maintains orhas an obligation to contribute to a Pension Plan that has either an “accumulated funding deficiency,” as defined in Section 302 of ERISA, or “unfunded vestedbenefits,” as defined in Section 4006(a)(3)(E)(iii) of ERISA in the case of any Pension Plan other than a Multi-employer Plan and in Section 4211 of ERISA inthe case of a Multi-employer Plan. Additionally, neither the Borrower nor any Subsidiary thereof nor any ERISA Affiliate shall: (a) permit or suffer anycondition set forth in Schedule 3.14 to cease to be met and satisfied at any time; (b) terminate any Pension Plan that is subject to Title IV of ERISA where suchtermination could reasonably be anticipated to result in liability to the Borrower or any of its Subsidiaries, (c) permit any accumulated funding deficiency, asdefined in Section 302(a)(2) of ERISA, to be incurred with respect to any Pension

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Plan; (d) fail to make any contributions or fail to pay any amounts due and owing as required by the terms of any Plan before such contributions or amountsbecome delinquent; (e) make a complete or partial withdrawal (within the meaning of Section 4201 of ERISA) from any Multi-employer Plan that would causethe Borrower, Subsidiary or ERISA Affiliate to incur withdrawal liability; or (f) at any time fail to provide the Agent and the Lenders with copies of any Plandocuments or governmental reports or filings, if reasonably requested by the Agent or any Lender.

SECTION 6.11. Financial Covenants. The Borrower shall not breach or fail to comply with any of the financial covenants set forth in Annex G, each ofwhich shall be calculated in accordance with GAAP consistently applied (and based upon the financial statements delivered hereunder).

SECTION 6.12. Hazardous Materials. The Borrower shall not and shall not suffer or permit any of its Subsidiaries or any other Person within the control ofthe Borrower: (a) to cause or permit a Release of Hazardous Material on, under in or about any Real Property; (b) to use, store, generate, treat or dispose ofHazardous Materials; or (c) to transport any Hazardous Materials to or from any Real Property; in each case in a manner or to an extent which could expose anysuch Person to any actual or potential liability in excess of $1,000,000, or could expose the Borrower and its Domestic Subsidiaries to actual or potentialliabilities in excess of $5,000,000 in the aggregate.

SECTION 6.13. Sale-Leasebacks. The Borrower shall not (and shall not suffer or permit any of its Domestic Subsidiaries to) engage in any sale-leasebackor similar transaction involving any of its property or assets.

SECTION 6.14. Cancellation of Debt. The Borrower shall not (and shall not suffer or permit any of its Domestic Subsidiaries to) cancel any claim or Debtowing to it, except for reasonable consideration and in the ordinary course of its business, or voluntarily prepay any Debt (other than the Obligations); providedthat any Domestic Subsidiary may voluntarily prepay any Debt owed by such Domestic Subsidiary to the Borrower or any other Domestic Subsidiary (other thana Domestic Excluded Subsidiary).

SECTION 6.15. Restricted Payments. The Borrower shall not (and shall not suffer or permit any of its Subsidiaries to) make any Restricted Payment to anyPerson, except that:

(a) the Borrower and its Subsidiaries may declare and pay dividends on its Stock solely in the same class of Stock of such Person;

(b) (i) any Domestic Subsidiary of the Borrower may declare and pay dividends or return capital or make any other distribution on its Stock or makepayments on any Debt, in each instance, to the Borrower or any other direct or indirect wholly-owned Domestic Subsidiary of the Borrower (other than aDomestic Excluded Subsidiary), and (ii) any Foreign Subsidiary may declare and pay dividends or return capital or make any other distribution on its Stock ormake payments on any Debt, in each instance, to the Borrower or any other Subsidiary of the Borrower;

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(c) the Borrower may (i) repurchase shares of its common stock or options for such shares or (ii) declare and pay dividends on its Stock in cash,provided, in each case, that (1) the daily average of the Net Liquidity Availability for the 90-day period immediately preceding the date of such repurchase ordividend shall be at least $30,000,000, (2) no Event of Default shall have occurred and be continuing as of the date of such repurchase or dividend (both beforeand after giving effect thereto), and (3) the aggregate amount of such repurchases and dividends shall not exceed $7,500,000 in any twelve-month period; and

(d) SFC may make Restricted Payments to the Borrower to pay SFC’s obligations under the Ancillary Services and Lease Agreement, and SFC maymake Restricted Payments to the Borrower pursuant to the Receivables Funding Documents;

provided, however, that the Restricted Payments described in clauses (a) and (c) above shall not be permitted if either a Default or an Event of Default shall haveoccurred and be continuing at the date of declaration or payment thereof or would result therefrom.

SECTION 6.16. Real Property Leases. The Borrower shall not (and shall not suffer or permit any of its Domestic Subsidiaries to) enter into or renew (byamendment, modification or otherwise) any Lease other than renewals of existing Leases upon market terms in effect at the time of renewal or upon morefavorable (to such Person) or substantially the same terms as are in effect on the Effective Date, except that, so long as no Default or Event of Default exists atthe time or could reasonably be expected to occur as a result thereof, the Borrower or any Domestic Subsidiary may enter into new Leases or renew existingLeases having rentals not exceeding $30,000,000 in the aggregate for any Fiscal Year covered by such new Leases or renewal periods of existing Leases duringthe term of this Agreement.

SECTION 6.17. Bank Accounts. The Borrower shall not (and shall not suffer or permit any of its Domestic Subsidiaries to) maintain any deposit, operatingor other bank accounts except for those accounts identified in Schedule 3.20; provided, however, that so long as no Default or Event of Default has occurred and iscontinuing, the Borrower may, after giving five (5) day’s prior written notice to the Agent, establish and maintain additional accounts in accordance with AnnexB; provided, further, that in respect of any such additional account (other than a payroll account), (a) the Agent shall have consented to the opening of suchaccount with the relevant bank, and (b) at the time of the opening of such account, the Borrower and such bank shall have executed and delivered to the Agent aRestricted Account Agreement, in form and substance acceptable to the Agent.

SECTION 6.18. No Speculative Transactions. The Borrower shall not (and shall not suffer or permit any of its Subsidiaries to) engage in any transactioninvolving interest rate or commodity options or futures contracts, derivatives, currency options or futures contracts or any similar transactions, unless suchtransaction is entered into in the ordinary course of business for the purpose of directly mitigating risks associated with liabilities, commitments or assets of suchPerson, or reasonably anticipated by such Person, and not for purposes of speculation.

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SECTION 6.19. Margin Regulations. The Borrower shall not use the proceeds of any Revolving Credit Advance to purchase or carry any Margin Stock orany equity security of a class which is registered pursuant to Section 12 of the Securities Exchange Act of 1934.

SECTION 6.20. Limitation on Negative Pledge Clauses, Etc. The Borrower shall not (and shall not suffer or permit any of its Domestic Subsidiaries to),directly or indirectly, enter into any agreement with any Person which prohibits or limits the ability of any of the Borrower or any of its Subsidiaries to create,incur, assume or suffer to exist any Lien upon any of its property, assets or revenues, whether now owned or hereafter acquired, other than the agreements withthe Agent or the Lenders pursuant to a Loan Document and Lien restrictions in a Capital Lease, other purchase money financing arrangements permittedhereunder relating to the asset financed thereunder, the Receivables Funding Documents, or other than restrictions (a) on Synnex Mexico from incurring Lienspursuant to the Synnex Mexico Loan Documents, (b) on the Borrower from incurring Liens (i) on Excluded Assets or (ii) otherwise imposed under Section 9(o)of the Synnex Mexico Guarantee, (c) on the Borrower from incurring Liens pursuant to the Canadian Collateralized Guaranty, so long as the beneficiary of theCanadian Collateralized Guaranty is subject to the IBM Intercreditor Agreement, and (d) on the Canadian Subsidiary from incurring Liens pursuant to financingarrangements entered into by it from time to time. The Borrower shall not (and shall not permit any of its Subsidiaries other than Synnex Mexico to) enter into,after the date of this Agreement, any indenture, agreement, instrument or other arrangement (other than the Receivables Funding Documents and the financingarrangements entered into by the Canadian Subsidiary or EMJ America, Inc. from time to time) that, directly or indirectly, prohibits or restrains, or has the effectof prohibiting or restraining, or imposes materially adverse conditions upon, (A) the incurrence or payment of Debt, except (x) as provided in Section 9(b) of theSynnex Mexico Guarantee, or (y) any such restriction on the payment of Debt owed by the Canadian Subsidiary to the Borrower or any other Subsidiary thereofpursuant to agreements (including without limitation any guaranty or subrogation agreement) entered into by the Borrower in accordance with the terms of thisAgreement to provide credit support to the Canadian Subsidiary in connection with financing arrangements entered into by the Canadian Subsidiary from time totime, (B) the granting of Liens (other than (x) pursuant to the terms of any purchase money Debt or Capital Lease permitted hereunder relating to the asset inquestion, (y) as provided in clause (b) or clause (c) above, or (z) as provided in the Conditional Sale Agreement in effect on the date hereof between ConcentrixCorporation and De Lage Landen Financial Services, Inc.), (C) the declaration or payment of dividends or other Restricted Payments, except (x) as provided inSection 9(j) of the Synnex Mexico Guarantee, and (y) as permitted by the proviso in the next sentence of this Section 6.20, (D) the making of loans, advances orInvestments or (E) the sale, assignment, transfer or other disposition of any property or assets (other than (v) as provided in Section 9(a) of the Synnex MexicoGuarantee, (w) pursuant to the terms of any purchase money Debt or Capital Lease permitted hereunder relating to the asset in question, (x) as provided in theCanadian Collateralized Guaranty, so long as the beneficiary of the Canadian Collateralized Guaranty is subject to the IBM Intercreditor Agreement, (y) asprovided in the Conditional Sale Agreement in effect on the date hereof between Concentrix Corporation and De Lage Landen Financial Services, Inc. or(z) restrictions in contracts of the Borrower or any such Subsidiary on the assignment of the rights and duties under such contracts). Borrower shall not, nor shallpermit

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any Subsidiary to, directly or indirectly enter into or become bound by any agreement, instrument, indenture or other obligation (other than (w) the ReceivablesFunding Documents, (x) this Agreement and the other Loan Documents, (y) the Synnex Mexico Loan Documents, and (z) agreements entered into by theCanadian Subsidiary or EMJ America, Inc. pursuant to financing arrangements entered into by the Canadian Subsidiary or EMJ America, Inc. from time to time)that could directly or indirectly restrict, prohibit or require the consent of any Person with respect to the payment of dividends, distributions or RestrictedPayments or the repayment of intercompany loans by a Subsidiary of Borrower to Borrower, provided that the Borrower may enter into agreements (includingwithout limitation any guaranty or subrogation agreement) restricting any such payments or repayments by the Canadian Subsidiary to the Borrower so long assuch agreements are otherwise permitted under this Agreement and delivered in order to provide credit support to the Canadian Subsidiary in connection withfinancing arrangements entered into by the Canadian Subsidiary from time to time. References to the provisions of the Synnex Mexico Guarantee in thisSection 6.20 shall be to such provisions on February 12, 2007.

SECTION 6.21. Accounting Changes. The Borrower shall not (and shall not suffer or permit any of its Subsidiaries to) make any significant change inaccounting treatment and reporting practices except for changes concurred in by such Person’s Independent Accounting Firm.

SECTION 6.22. Amendments and Modifications to Debt Documents. The Borrower shall not (and shall not suffer or permit any of its DomesticSubsidiaries to) directly or indirectly, amend, modify, supplement, waive compliance with, grant a waiver under, or assent to noncompliance with anyinstrument, document or agreement evidencing, creating, guaranteeing or governing Debt or Guaranteed Debt in excess of $5,000,000 permitted under Section 6.3or 6.6 or entered into in connection therewith (other than (a) instruments, documents or agreements evidencing, creating, guaranteeing or governing Debtpermitted under Section 6.3(c) so long as such action shall not violate or cause a violation of any provision of any Loan Document and (b) in connection with therefinancing or refunding of such Debt as permitted by Section 6.3(h)). The Borrower shall not (and shall not suffer or permit SFC to) agree to amend, supplementor otherwise modify any of the following defined terms set forth in the Receivables Funding Documents (or any other defined term referenced directly orindirectly in the definition of any such defined term), in each case as such defined term is defined in Annex X to the Receivables Funding Documents as in effecton the date hereof, a copy of which is attached as Annex K hereto: “Dilution Reserve Ratio”, “Dynamic Advance Rate”, “Eligible Receivables”, “ExcessConcentration Amount”, “Funding Availability”, “Net Receivables Balance”, “Obligor”, “Originator”, “Outstanding Balance” and “Borrower Account”.

SECTION 6.23. Change of Corporate Name or Location; Change of Fiscal Year. No Credit Party shall (a) change its name as it appears in official filings inthe state of its incorporation or other organization, (b) change its chief executive office, principal place of business, corporate offices, or the location of itsrecords concerning the Collateral, (c) change the type of entity that it is, (d) change its organization identification number, if any, issued by its state ofincorporation or other organization, or (e) change its state of incorporation or organization, in each case without at least 30 days’ prior written notice to Agentand after

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Agent’s written acknowledgment that any reasonable action requested by Agent in connection therewith, including to continue the perfection of any Liens infavor of Agent, on behalf of Lenders, in any Collateral, has been completed or taken, and provided that any such new location shall be in the continental UnitedStates. No Credit Party shall change its Fiscal Year.

SECTION 6.24. Changes to Synnex Mexico Loan Documents. The Borrower shall not, and shall not suffer or permit Synnex Mexico to, change or amendthe terms of any Synnex Mexico Loan Documents if the effect of such amendment is to: (a) increase the maximum principal amount of Debt extended thereunderin excess of $75,000,000, (b) increase the maximum amount of “Guaranteed Obligations” and other obligations of Borrower under the Synnex Mexico Guaranteein excess of $80,000,000 (or the equivalent amount of Pesos, based on a conversion rate determined prior to the closing of the Synnex Mexico Loan Documents),(c) grant Liens on any property or assets of Borrower or any of its Subsidiaries other than (i) Liens on the assets of Synnex Mexico or (ii) Liens on the ExcludedAssets, provided that the Mex Agent and the Agent shall have entered into a written agreement in form and substance reasonably acceptable to the Agent whichprovides that such Lien on the Excluded Assets does not include (and shall be released with respect to) any proceeds of such Excluded Assets or the ExcludedAssets described in clause (f) of the definition thereof to the extent the Borrower has any right in or title to such proceeds and such proceeds are not on deposit inthe Mex Bank of America Account except to the extent (x) such proceeds have been applied to pay the Debt of Synnex Mexico or the Borrower under theSynnex Mexico Loan Documents or (y) the Mex Agent and Mex Lenders have taken control or possession of, or otherwise transferred, acquired or disposed of,such proceeds from the Mex Bank of America Account in conjunction with the exercise of their remedies under the Synnex Mexico Loan Documents after theoccurrence and during the continuation of an Event of Default, or (d) violate Section 6.20.

SECTION 6.25. Mex Bank of America Account. Borrower shall not deposit any amounts into the Mex Bank of America Account other than the ExcludedAssets or proceeds thereof.

SECTION 6.26. SFC Accounts. Borrower shall not permit SFC to maintain more than $100,000 in the aggregate for more than two (2) Business Days inDeposit Accounts of SFC that are not subject to Control Agreements that provide for a daily sweep of funds (for the avoidance of doubt, as an example, SFC maymaintain $1,000,000 in such Deposit Accounts for two (2) consecutive Business Days so long as such amount is reduced to $100,000 or less prior to the thirdsucceeding Business Day). If at any time the sum of (i) Net Liquidity Availability, plus (ii) if the Borrowing Base exceeds the Maximum Amount at such time,the amount of such excess, is less than or equal to $25,000,000, Borrower shall promptly (and in any event no later than one Business Day thereafter) cause SFCto sweep on a daily basis all amounts received in the “Borrower Account” (as defined in the Receivables Funding Documents) to the Blocked Account.

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ARTICLE 7

TERM

SECTION 7.1. Duration. The financing arrangements contemplated hereby shall be in effect until the Commitment Termination Date. On the CommitmentTermination Date, the Revolving Credit Commitments shall terminate and the Revolving Credit Loan and all other Obligations shall immediately become dueand payable in full, in immediately available funds in Dollars.

SECTION 7.2. Survival of Obligations. Except as otherwise expressly provided for in the Loan Documents, no termination or cancellation (regardless ofcause or procedure) of any financing arrangement under this Agreement shall in any way affect or impair the Obligations, duties, indemnities, and liabilities ofthe Borrower, or the rights of the Agent or any Lender and the Lenders relating to any Obligations, due or not due, liquidated, contingent or unliquidated or anytransaction or event occurring prior to such termination, or any transaction or event, the performance of which is not required until after the CommitmentTermination Date. Except as otherwise expressly provided herein or in any other Loan Document, all undertakings, agreements, covenants, warranties andrepresentations of or binding upon the Borrower, and all rights of the Agent and each Lender, all as contained in the Loan Documents shall not terminate orexpire, but rather shall survive such termination or cancellation and shall continue in full force and effect until such time as all of the Obligations have beenindefeasibly paid in full in immediately available funds in Dollars in accordance with the terms of the agreements creating such Obligations.

ARTICLE 8

EVENTS OF DEFAULT; RIGHTS AND REMEDIES

SECTION 8.1. Events of Default. The occurrence of any one or more of the following events (regardless of the reason therefor) shall constitute an “Eventof Default” hereunder:

(a) The Borrower shall fail to make any payment in respect of any Obligations hereunder or under any of the other Loan Documents when due andpayable or declared due and payable, including any payment of principal of, or interest on, or Fees in respect of, the Revolving Credit Loan or the Swing LineLoan, and, with respect to the failure to make any payment of any Obligations hereunder (other than principal on the Revolving Credit Loan or the Swing LineLoan, which shall have no grace period), such failure shall continue unremedied for one (1) Business Day.

(b) The Borrower shall fail or neglect to perform, keep or observe any of the provisions of Section 1.7 or Article 6 (other than Section 6.2, 6.4, 6.13 or6.16, in each instance, to the extent such failure or neglect can be remedied), including any of the provisions set forth in Annex B or Annex G.

(c) The Borrower or any other Subsidiary of the Borrower shall fail or neglect to perform, keep or observe any term or provision of this Agreementor of any of the other Loan Documents (other than any such term or provision referred to in paragraph(a) or (b) above), and the same shall remain unremedied (ifcapable of being remedied) for a period ending on the first to occur of twenty (20) days after the Borrower shall receive written notice of any such failure orneglect from the Agent or any Lender or twenty (20) days after the Borrower shall become aware thereof.

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(d) (x) A default shall occur and be continuing under any other agreement, document or instrument to which the Borrower or any of its Subsidiariesis a party or by which any such Person or its property is bound, and such default (i) involves the failure to make any payment (whether of principal, interest orotherwise) due (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise) in respect of any Debt of such Person in an aggregateamount exceeding $10,000,000 or (ii) permits any holder of such Debt or a trustee to cause such Debt, or a portion thereof, in an aggregate amount exceeding$10,000,000, to become due prior to its stated maturity or prior to its regularly scheduled dates of payment; or (y) any such default under clause (x) above(whether or not continuing) causes or results in such Debt, or a portion thereof, in an aggregate amount exceeding $10,000,000, to become due prior to its statedmaturity or prior to its regularly scheduled dates of payment; or (z) a default or termination event shall occur under the Canadian Subsidiary Loan Agreement orthe Canadian Subsidiary Securitization Agreement, and as a result of such default the holder or holders of the Debt or other obligations thereunder (or an agenton behalf of such holders) make a rightful written demand for payment in an amount greater than $10,000,000 (Canadian dollars) under one or more of theCanadian Subsidiary Guaranties.

(e) Any representation or warranty herein or in any Loan Document or in any written statement pursuant thereto or hereto, any report, financialstatement or certificate made or delivered to the Agent or any Lender by the Borrower or Subsidiary of the Borrower shall be untrue or incorrect in any respect asof the date when made or deemed made (including those made or deemed made pursuant to Section 2.2).

(f) (i) The fair market value of the liabilities of the Borrower or any Material Subsidiary of the Borrower shall exceed the fair market value of itsassets, or (ii) the Borrower or any Material Subsidiary of the Borrower shall generally not pay any of its Debts as such Debts become due, or shall admit inwriting its inability to pay its Debts generally, or shall make a general assignment for the benefit of creditors, or any proceeding shall be instituted by or againstthe Borrower or any Material Subsidiary of the Borrower seeking to adjudicate it bankrupt or insolvent, or seeking liquidation, winding up, reorganization,arrangement, adjustment, protection, relief or composition of it or any of its Debts under any law relating to bankruptcy, insolvency, reorganization or relief ofdebtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, custodian or other similar official for it or for any substantial part ofits property, or any of the actions sought in such proceeding (including, without limitation, the entry of an order for relief against, or the appointment of areceiver, trustee, custodian or other similar official for, it or for any substantial part of its property) shall occur, or the Borrower or any Material Subsidiary of theBorrower shall take any corporate action to authorize any of the actions set forth in this Section 8.1(f)(ii).

(g) Judgments or orders for the payment of money (other than such judgments or orders in respect of which adequate insurance is maintained for thepayment thereof) in excess of $5,000,000 in the aggregate are rendered against the Borrower and/or any Domestic Subsidiary of the Borrower, and either(i) enforcement proceedings shall have been commenced upon any such judgment, or (ii) such judgments shall remain undischarged, unvacated, unstayed onappeal, unbonded or undismissed for a period of thirty (30) days or more.

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(h) There shall occur any Material Adverse Effect which shall not have been cured (or waived by the Requisite Lenders) within twenty (20) days ofnotice thereof from the Agent to the Borrower.

(i) Any provision of any Loan Document shall for any reason cease to be valid, binding and enforceable in accordance with its terms or theBorrower or other party thereto shall so state in writing; or any Lien created under any Collateral Document shall cease to be a valid and perfected Lien havingthe first priority in Collateral purported to be covered thereby (subject to Liens permitted hereby) as a result of any action or failure to take action on the part ofthe Borrower or any Subsidiary of the Borrower.

(j) A Change of Control shall occur.

(k) Without limiting the effect of Section 1.2(d) above, (i) there shall occur any “Termination Event” or (ii) the “Commitment Termination Date”shall have occurred, in each case, under and as defined in the Receivables Funding Agreement.

SECTION 8.2. Remedies. If any Event of Default shall have occurred and be continuing, the Letter of Credit Fee and the rate of interest applicable to theRevolving Credit Loan and the Swing Line Loan and interest and other Obligations shall be increased to or charged at, as appropriate, effective as of the date ofthe occurrence of the Default giving rise to such Event of Default, the Default Rate as provided in Section 1.4(c) or Annex D, as appropriate, unless such increaseor charge is waived in writing by the Requisite Lenders. If any Event of Default shall have occurred and be continuing, the Agent may, or if requested by theRequisite Lenders, shall without notice, take any one or more of the following actions: (a) terminate the Revolving Credit Commitments, whereupon the Lenders’obligation to make further Advances, to incur Letter of Credit Obligations and to request or cause Letters of Credit to be issued hereunder, shall terminate;(b) declare all or any portion of the Obligations to be forthwith due and payable, including the Revolving Credit Loan and the Swing Line Loan, whereupon suchObligations shall become and be due and payable, and require that the Letter of Credit Obligations be cash collateralized in the manner set forth in Annex J, allwithout presentment, demand, protest or further notice of any kind, all of which are expressly waived by Borrower and each of its Subsidiaries; or (c) exerciseany rights and remedies provided to the Agent and the Lenders under the Loan Documents and/or at law or equity, including all remedies provided under theCode; provided that upon the occurrence of an Event of Default specified in Section 8.1(f) with respect to any Credit Party, the Revolving Credit Commitments ofthe Lenders shall immediately terminate and the Obligations shall become immediately due and payable, in each case, without declaration, notice or demand byor to any Person.

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SECTION 8.3. Waivers by Borrower. Except as otherwise provided for in this Agreement and applicable law, to the full extent permitted by applicablelaw, the Borrower waives (a) presentment, demand and protest and notice of presentment, dishonor, notice of intent to accelerate, notice of acceleration, protest,default, nonpayment, maturity, release, compromise, settlement, extension or renewal of any or all Loan Documents, notes, commercial paper, accounts, contractrights, documents, instruments, chattel paper and guaranties at any time held by the Agent or any Lender on which the Borrower may in any way be liable, andthe Borrower hereby ratifies and confirms whatever the Agent or any Lender may do in this regard, (b) all rights to notice and a hearing prior to the Agent’s orthe Lenders’ taking possession or control of, or to the Agent’s or the Lenders’ replevy, attachment or levy upon, the Collateral or any bond or security whichmight be required by any court prior to allowing the Agent or any Lender to exercise any of its remedies, and (c) the benefit of any right of redemption and allvaluation, appraisal and exemption laws. The Borrower acknowledges that it has been advised by counsel of its choice with respect to this Agreement, the otherLoan Documents and the transactions contemplated by this Agreement and the other Loan Documents.

SECTION 8.4. Application of Proceeds. After the occurrence of an Event of Default or the acceleration of the Obligations, subject to the GECDFCIntercreditor Agreement, the proceeds of the Collateral and of property of Persons other than the Borrower securing the Obligations shall be applied by the Agentto payment of the Obligations in the following order, unless all Holders otherwise agree in writing or a court of competent jurisdiction shall otherwise direct:

(i) FIRST, to payment of all costs and expenses of the Agent and the Lenders incurred in connection with the preservation, collection andenforcement of the Obligations, or of any of the Liens granted to the Agent or the Lenders pursuant to the Collateral Documents or otherwise, including, withoutlimitation, any amounts advanced by the Agent to protect or preserve the Collateral;

(ii) SECOND, to payment of accrued and unpaid interest on the Swing Line Loan;

(iii) THIRD, to payment of the principal of the Swing Line Loan;

(iv) FOURTH, to payment of that portion of the Obligations (excluding the Swing Line Loan, Swap Related Reimbursement Obligations, CashManagement Obligations and GECDFC Obligations) constituting accrued and unpaid interest and fees and indemnities payable under Article 1 hereof and AnnexD hereof ratably among the Agent, the Lenders and GE Capital in accordance with the proportion which the accrued interest and fees and indemnities payableunder such Article 1 and Annex D constituting such Obligations owing to the Agent, each such Lender and GE Capital at such time bears to the aggregate amountof accrued interest and fees and indemnities payable under such Article 1 and Annex D constituting such Obligations owing to the Agent, all Lenders and GECapital at such time until such interest, fees and indemnities shall be paid in full;

(v) FIFTH, to payment of the principal of the Obligations (excluding the Swing Line Loan, Swap Related Reimbursement Obligations, CashManagement Obligations and GECDFC Obligations), ratably among the Agent, the Lenders and GE Capital in accordance with the proportion which theprincipal amount of such Obligations owing to the Agent, each such Lender or GE Capital, as applicable, bears to the aggregate principal amount of suchObligations owing to the Agent, all Lenders and GE Capital until such principal of such Obligations shall be paid in full, with that portion of the Obligationsconstituting Letter of Credit Obligations instead being cash collateralized in accordance with Annex J hereof;

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(vi) SIXTH, to the payment of all Swap Related Reimbursement Obligations;

(vii) SEVENTH, to the payment of all GECDFC Obligations;

(viii) EIGHTH, to the payment of all Cash Management Obligations, ratably among the Lenders in accordance with the proportion which theamount of such Cash Management Obligations owing to each such Lender bears to the aggregate principal amount of such Cash Management Obligations owingto all Lenders until such Cash Management Obligations shall be paid in full; and

(ix) NINTH, to the payment of all other Obligations, ratably among the Lenders in accordance with the proportion which the amount of such otherObligations owing to each such Lender bears to the aggregate principal amount of such other Obligations owing to all Lenders until such other Obligations shallbe paid in full; and

(x) TENTH, the balance, if any, after all of the Obligations has been indefeasibly satisfied, shall, except as otherwise provided in any LoanDocument, be deposited by the Agent in an operating account or accounts of the Borrower with the Agent designated by the Borrower or paid over to such otherPerson or Persons as may be required by law.

The Borrower acknowledges and agrees that they shall remain severally liable to the extent of any deficiency between the amount of the proceeds ofthe Collateral and the aggregate amount of the sums referred to in the first through eighth clauses above in respect of its Obligations.

ARTICLE 9

ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT

SECTION 9.1. Assignment and Participations. (a) The Borrower consents to any Lender’s assignment of, and/or sale of participations in, at any time ortimes, the Loan Documents, Advances and any Revolving Credit Commitment, Letter of Credit Obligations, or of any portion thereof or interest therein,including any Lender’s rights, title, interests, remedies, powers or duties thereunder, whether evidenced by a writing or not. Any assignment by a Lender shall(i) require the consent of the Agent (which shall not be unreasonably withheld or delayed) and the execution of an assignment agreement (an “AssignmentAgreement”) substantially in the form attached hereto as Exhibit 9.1(a) and otherwise in form and substance satisfactory to, and acknowledged by, the Agent;(ii) be conditioned on such assignee Lender representing to the assigning Lender and the Agent that it is purchasing the applicable Revolving Credit Advances orLetter of Credit Obligations to be assigned to it for its own account, for investment purposes and not with a view to the distribution thereof; (iii) if a partialassignment, be in an amount at least equal to $5,000,000 and, after giving effect to any such partial assignment, the assigning Lender shall have retained aRevolving Credit Commitment in an

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amount at least equal to $5,000,000; and (iv) include a payment to the Agent of an assignment fee of $3,500. In the case of an assignment by a Lender under thisSection 9.1, the assignee shall have, to the extent of such assignment, the same rights, benefits and obligations as it would if it were a Lender hereunder. Theassigning Lender shall be relieved of its obligations hereunder with respect to its Revolving Credit Commitment or assigned portion thereof from and after thedate of such assignment. The Borrower hereby acknowledges and agrees that any assignment will give rise to a direct obligation of the Borrower to the assigneeand that the assignee shall be considered to be a “Lender”. In all instances, each Lender’s liability to make Advances hereunder shall be several and not joint andshall be limited to such Lender’s Revolving Credit Commitment. In the event the Agent or any Lender assigns or otherwise transfers all or any part of a Note, theAgent or any such Lender shall so notify the Borrower and the Borrower shall, upon the request of the Agent or such Lender, execute new Notes in exchange forthe Notes being assigned. Notwithstanding the foregoing provisions of this Section 9.1(a), any Lender may at any time pledge or assign all or any portion of suchLender’s rights under this Agreement and the other Loan Documents to a Federal Reserve Bank (provided, however, that no such pledge or assignment shallrelease such Lender from such Lender’s obligations hereunder or under any other Loan Document), and any lender that is an investment fund may assign theObligations held by it and such Lender’s rights under this Agreement and the other Loan Documents to another investment fund managed by the sameinvestment advisor.

(b) Any participation by a Lender of all or any part of its Revolving Credit Commitment shall be in an amount at least equal to $5,000,000, and withthe understanding that all amounts payable by the Borrower hereunder shall be determined as if that Lender had not sold such participation, and that the holder ofany such participation, unless such holder is an Affiliate of such Lender, shall not be entitled to require such Lender to take or omit to take any action hereunderexcept actions directly affecting (i) any reduction in the principal amount of, or interest rate or Fees payable with respect to, any Advance in which such holderparticipates, (ii) any extension of the scheduled amortization of the principal amount of any Advance in which such holder participates or the final maturity datethereof, and (iii) any release of all or substantially all of the Collateral (other than in accordance with the terms of this Agreement, the Collateral Documents orthe other Loan Documents). Solely for purposes of Sections 1.12, 1.14, 1.15 and 9.8, the Borrower acknowledges and agrees that a participation shall give rise toa direct obligation of the Borrower to the participant and the participant shall be considered to be a “Lender”. Except as set forth in the preceding sentence theBorrower shall not have any obligation or duty to any participant. Neither the Agent nor any Lender (other than the Lender selling a participation) shall have anyduty to any participant and may continue to deal solely with the Lender selling a participation as if no such sale had occurred.

(c) Except as expressly provided in this Section 9.1, no Lender shall, as between the Borrower and that Lender, or the Agent and that Lender, berelieved of any of its obligations hereunder as a result of any sale, assignment, transfer or negotiation of, or granting of participation in, all or any part of theAdvances, the Notes or other Obligations owed to such Lender.

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(d) The Borrower shall assist any Lender permitted to sell assignments or participations under this Section 9.1 as reasonably required to enable theassigning or selling Lender to effect any such assignment or participation, including the execution and delivery of any and all agreements, notes and otherdocuments and instruments as shall be reasonably requested and the preparation of informational materials for, and the participation of management in meetingswith, potential assignees or participants. The Borrower shall certify the correctness, completeness and accuracy of all descriptions of the Borrower and its affairscontained in any selling materials provided by it and all other information provided by it and included in such materials, except that any Projections delivered bythe Borrower shall only be certified by the Borrower as having been prepared by the Borrower in compliance with the representations contained in Section 3.4.

(e) A Lender may furnish any information concerning the Borrower in the possession of such Lender from time to time to assignees and participants(including prospective assignees and participants). Each Lender shall obtain from assignees or participants confidentiality covenants substantially equivalent tothose contained in Section 10.13.

(f) So long as no Event of Default shall have occurred and be continuing, no Lender shall assign or sell participations in any portion of its Advancesor Revolving Credit Commitment to a potential Lender or participant, if, as of the date of the proposed assignment or sale, the assignee Lender or participantwould be subject to capital adequacy or similar requirements under Section 1.15(a), increased costs under Section 1.15(b), an inability to fund LIBOR Loans underSection 1.15(c), or withholding taxes in accordance with Section 1.15(d).

(g) Notwithstanding anything to the contrary contained herein, any Lender (a “Granting Lender”), may grant to a special purpose funding vehicle(an “SPC”), identified as such in writing by the Granting Lender to the Agent and the Borrower, the option to provide to the Borrower all or any part of anyAdvances that such Granting Lender would otherwise be obligated to make to the Borrower pursuant to this Agreement; provided that (i) nothing herein shallconstitute a commitment by any SPC to make any Advance; and (ii) if an SPC elects not to exercise such option or otherwise fails to provide all or any part ofsuch Advance, the Granting Lender shall be obligated to make such Advance pursuant to the terms hereof. The making of an Advance by an SPC hereunder shallutilize the Commitment of the Granting Lender to the same extent, and as if such Advance were made by such Granting Lender. No SPC shall be liable for anyindemnity or similar payment obligation under this Agreement (all liability for which shall remain with the Granting Lender). Any SPC may (i) with notice to,but without the prior written consent of, the Borrower and the Agent assign all or a portion of its interests in any Advances to the Granting Lender or to anyfinancial institutions (consented to by the Borrower and the Agent) providing liquidity and/or credit support to or for the account of such SPC to support thefunding or maintenance of Advances and (ii) disclose on a confidential basis any non-public information relating to its Advances to any rating agency,commercial paper dealer or provider of any surety, guarantee or credit or liquidity enhancement to such SPC. This Section 9.1(g) may not be amended without theprior written consent of each Granting Lender, all or any of whose Advances are being funded by an SPC at the time of such amendment. For the avoidance ofdoubt, the Granting Lender shall for all purposes, including without limitation, the approval of

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any amendment or waiver of any provision of any Loan Document or the obligation to pay any amount otherwise payable by the Granting Lender under the LoanDocuments, continue to be the Lender of record hereunder.

(h) Nothing contained in this Section 9.1 shall require the consent of any party for GE Capital to assign any of its rights in respect of any SwapRelated Reimbursement Obligation.

SECTION 9.2. Appointment of Agent. GE Capital is hereby appointed to act on behalf of all Holders as the Agent under this Agreement and the otherLoan Documents. The provisions of this Section 9.2 are solely for the benefit of the Agent and the Holders and neither the Borrower nor any other Person shallhave any rights as a third party beneficiary of any of the provisions hereof. In performing its functions and duties under this Agreement and the other LoanDocuments, the Agent shall act solely as an agent of the Holders and does not assume and shall not be deemed to have assumed any obligation toward orrelationship of agency or trust with or for the Borrower or any other Person. The Agent shall have no duties or responsibilities except for those expressly set forthin this Agreement and the other Loan Documents. The duties of the Agent shall be mechanical and administrative in nature and the Agent shall not have, or bedeemed to have, by reason of this Agreement, any other Loan Document or otherwise a fiduciary relationship in respect of any Lender. Neither the Agent nor anyof its Affiliates nor any of their respective officers, directors, employees, agents or representatives shall be liable to any Holder for any action taken or omitted tobe taken by it hereunder or under any other Loan Document, or in connection herewith or therewith, except for damages solely caused by its or their own grossnegligence or willful misconduct as finally determined by a court of competent jurisdiction.

If the Agent shall request instructions from the Requisite Lenders, Supermajority Lenders or all Lenders, as applicable, with respect to any act oraction (including failure to act) in connection with this Agreement or any other Loan Document, then the Agent shall be entitled to refrain from such act or takingsuch action unless and until the Agent shall have received instructions from the Requisite Lenders, Supermajority Lenders or all Lenders, as applicable, and theAgent shall not incur liability to any Person by reason of so refraining. The Agent shall be fully justified in failing or refusing to take any action hereunder orunder any other Loan Document (a) if such action would, in the opinion of the Agent, be contrary to law or the terms of this Agreement or any other LoanDocument, (b) if such action would, in the opinion of the Agent, expose the Agent to Environmental Liabilities or (c) if the Agent shall not first be indemnified toits satisfaction against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action. Without limitingthe foregoing, no Holder shall have any right of action whatsoever against the Agent as a result of the Agent acting or refraining from acting hereunder or underany other Loan Document in accordance with the instructions of the Requisite Lenders, Supermajority Lenders or all Lenders, as applicable. The Lenders herebyauthorize and direct the Agent to execute and deliver the Intercreditor Agreements. Furthermore, the Lenders hereby acknowledge that they have been providedwith a copy of that certain letter agreement dated as of the date hereof between the Agent and the Borrower, which letter sets forth the Borrower’s obligation withrespect to certain post-closing deliveries (the “Post-Closing Letter”), and hereby authorize and direct the Agent to execute and deliver the Post-Closing Letter.

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SECTION 9.3. The Agent’s Reliance, Etc. Neither the Agent nor any of its Affiliates nor any of their respective directors, officers, agents or employeesshall be liable for any action taken or omitted to be taken by it or them under or in connection with this Agreement or the other Loan Documents, except fordamages solely caused by its or their own gross negligence or willful misconduct as finally determined by a court of competent jurisdiction. Without limitation ofthe generality of the foregoing, the Agent: (a) may treat the payee of any Note as the holder thereof until the Agent receives written notice of the assignment ortransfer thereof signed by such payee and in form satisfactory to the Agent; (b) may consult with legal counsel, independent public accountants and other expertsselected by it and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants orexperts; (c) makes no warranty or representation to any Holder and shall not be responsible to any Holder for any statements, warranties or representations madein or in connection with this Agreement or the other Loan Documents; (d) shall not have any duty to ascertain or to inquire as to the performance or observanceof any of the terms, covenants or conditions of this Agreement or the other Loan Documents on the part of the Borrower to inspect the Collateral (including thebooks and records) of the Borrower; (e) shall not be responsible to any Holder for the due execution, legality, validity, enforceability, genuineness, sufficiency orvalue of this Agreement or the other Loan Documents or any other instrument or document furnished pursuant hereto or thereto; and (f) shall incur no liabilityunder or in respect of this Agreement or the other Loan Documents by acting upon any notice, consent, certificate or other instrument or writing (which may beby telecopy, telegram, cable or telex) believed by it to be genuine and signed or sent by the proper party or parties.

SECTION 9.4. GE Capital and Affiliates. With respect to its Revolving Credit Commitment hereunder, GE Capital shall have the same rights and powersunder this Agreement and the other Loan Documents as any other Lender and may exercise the same as though it were not the Agent; and the term “Lender” or“Lenders” shall, unless otherwise expressly indicated, include GE Capital in its individual capacity. GE Capital and its Affiliates may lend money to, invest in,and generally engage in any kind of business with, the Borrower, any of its Affiliates and any Person who may do business with or own securities of theBorrower or any such Affiliate, all as if GE Capital were not the Agent and without any duty to account therefor to the Holders. GE Capital and its Affiliates mayaccept fees and other consideration from the Borrower for services in connection with this Agreement or otherwise without having to account for the same to theHolders. Each Lender acknowledges the potential conflict of interest between GE Capital as a Lender and as the Agent hereunder and GE Capital asadministrative agent under the Receivables Funding Documents.

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SECTION 9.5. Lender Credit Decision. Each Lender acknowledges that it has, independently and without reliance upon the Agent or any other Holder andbased on the Financial Statements referred to in Section 3.4 and such other documents and information as it has deemed appropriate, made its own credit andfinancial analysis of the Borrower and its own decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and withoutreliance upon the Agent or any other Holder and based on such documents and information as it shall deem appropriate at the time, continue to make its owncredit decisions in taking or not taking action under this Agreement.

SECTION 9.6. Indemnification. The Lenders agree to indemnify the Agent (to the extent not reimbursed by the Borrower and without limiting theobligations of the Borrower hereunder), ratably according to their respective Pro Rata Shares, from and against any and all liabilities, obligations, losses,damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred by, orasserted against the Agent in any way relating to or arising out of this Agreement or any other Loan Document or any action taken or omitted by the Agent inconnection therewith; provided, however, that no Lender shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions,judgments, suits, costs, expenses or disbursements resulting solely from the Agent’s gross negligence or willful misconduct as finally determined by a court ofcompetent jurisdiction; and provided, further, that Lenders shall not be required to indemnify the Agent for any liabilities, obligations, losses, damages, penalties,actions, judgments, suits, costs, expenses or disbursements asserted against the Agent by GECDFC or any other Holder that is a third party beneficiary of thisAgreement (it being understood that no Lender shall be deemed to be a third party beneficiary of this Agreement for purposes of this proviso). Without limitingthe foregoing, each Lender agrees to reimburse the Agent promptly upon demand for its ratable share of any out-of-pocket expenses (including counsel fees)incurred by the Agent in connection with the preparation, execution, delivery, administration, modification, amendment or enforcement (whether throughnegotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement and each other Loan Document, tothe extent that the Agent is not reimbursed for such expenses by the Borrower.

SECTION 9.7. Successor Agent. The Agent may resign at any time by giving not less than thirty (30) days prior written notice thereof to the Lenders andthe Borrower. Upon any such resignation, the Requisite Lenders shall have the right to appoint a successor Agent. If no successor Agent shall have been soappointed by the Requisite Lenders and shall have accepted such appointment within 30 days after the resigning Agent’s giving notice of resignation, then theresigning Agent may, on behalf of the Holders, appoint a successor Agent, which shall be a Lender, if a Lender is willing to accept such appointment, orotherwise shall be a commercial bank or financial institution or a subsidiary of a commercial bank or financial institution if such commercial bank or financialinstitution is organized under the laws of the United States of America or of any State thereof and has a combined capital and surplus of at least $300,000,000. Ifno successor Agent has been appointed pursuant to the foregoing, by the 30th day after the date such notice of resignation was given by the resigning Agent, suchresignation shall become effective and the Requisite Lenders shall thereafter perform all the duties of the Agent hereunder until such time, if any, as the RequisiteLenders appoint a successor Agent as provided above. Any successor Agent appointed by Requisite Lenders hereunder shall be subject to the approval of theBorrower, such approval not to be unreasonably withheld or delayed; provided that such approval shall not be required if a Default or an Event of Default shallhave occurred and be continuing. Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent shall succeed to andbecome vested with all the rights, powers, privileges

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and duties of the resigning Agent. Upon the earlier of the acceptance of any appointment as Agent hereunder by a successor Agent or the effective date of theresigning Agent’s resignation, the resigning Agent shall be discharged from its duties and obligations under this Agreement and the other Loan Documents,except that any indemnity rights or other rights in favor of such resigning Agent shall continue. After any resigning Agent’s resignation hereunder, the provisionsof this Section 9 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was the Agent under this Agreement and the other LoanDocuments. The Agent may be removed at the written direction of the holders (other than the Agent) of two-thirds or more of the Revolving CreditCommitments (excluding the Agent’s Revolving Credit Commitment); provided that in so doing, such Lenders shall be deemed to have waived and released anyand all claims they may have against the Agent.

SECTION 9.8. Setoff and Sharing of Payments. In addition to any rights now or hereafter granted under applicable law and not by way of limitation of anysuch rights, upon the occurrence and during the continuance of any Event of Default, each Lender and each holder of any Note is hereby authorized at any timeor from time to time, without notice to the Borrower or to any other Person, any such notice being hereby expressly waived, to set off and to appropriate and toapply any and all balances held by it at any of its offices for the account of the Borrower (regardless of whether such balances are then due to the Borrower) andany other properties or assets any time held or owing by that Lender or that holder to or for the credit or for the account of the Borrower against and on accountof any of the Obligations which are not paid when due. Except to the extent otherwise provided herein, any Lender or holder of any Revolving Credit Noteexercising a right to set off or otherwise receiving any payment on account of the Obligations in excess of its Pro Rata Share thereof shall purchase for cash (andthe other Lenders or holders shall sell) such participations in each such other Lender’s or holder’s Pro Rata Share of the Obligations as would be necessary tocause such Lender to share the amount so set off or otherwise received with each other Lender or holder in accordance with their respective Pro Rata Shares.Each Lender’s obligation under this Section 9.8 shall be in addition to and not limitation of its obligations to purchase a participation in an amount equal to its ProRata Share of the Swing Line Loan under Section 1.1(b)(iv). The Borrower agrees, to the fullest extent permitted by law, that (a) any Lender or holder mayexercise its right to set off with respect to amounts in excess of its Pro Rata Share of the Obligations and may sell participations in such amount so set off to otherLenders and holders and (b) any Lender or holders so purchasing a participation in the Advances made or other Obligations held by other Lenders or holders mayexercise all rights of set-off, bankers’ lien, counterclaim or similar rights with respect to such participation as fully as if such Lender or holder were a directholder of the Advances and the other Obligations in the amount of such participation. Notwithstanding the foregoing, if all or any portion of the set-off amount orpayment otherwise received is thereafter recovered from the Lender that has exercised the right of set-off, the purchase of participations by that Lender shall berescinded and the purchase price restored without interest.

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SECTION 9.9. Advances; Payments; Non-Funding Lenders; Information; Actions in Concert.

(a) Advances; Payments. (i) The Lenders shall refund or participate in the Swing Line Loan in accordance with clauses (iii) and (iv) of Section 1.1(b).The Agent shall notify the Lenders, promptly after receipt of a Notice of Revolving Credit Advance and in any event prior to 1:00 p.m. (New York time) on thedate such Notice of Revolving Credit Advance is received, by telecopy, telephone or other similar form of transmission. Each Lender shall make the amount ofsuch Lender’s Pro Rata Share of each Revolving Credit Advance available to the Agent in same day funds by wire transfer to the Agent’s account as set forth inAnnex H not later than 3:00 p.m. (New York time) on the requested funding date, in the case of an Index Rate Loan and not later than 1:00 p.m. (New York time)on the requested funding date in the case of a LIBOR Loan. After receipt of such wire transfers (or, in the Agent’s sole discretion, before receipt of such wiretransfers), subject to the terms hereof, the Agent shall make the requested Revolving Credit Advance to the Borrower. All payments by each Lender shall bemade without setoff, counterclaim or deduction of any kind.

(ii) The Agent will advise each Lender by telephone or telecopy of the amount of such Lender’s Pro Rata Share of principal, interest and Fees paidfor the benefit of Lenders with respect to each applicable Revolving Credit Advance. Provided that such Lender has made all payments required to be made by itand purchased all participations required to be purchased by it under this Agreement and the other Loan Documents as of the date of any such payment, theAgent will pay to each Lender such Lender’s Pro Rata Share of principal, interest and Fees paid by the Borrower for the benefit of that Lender on the RevolvingCredit Advances held by it. Such payments shall be made by wire transfer to such Lender’s account (as specified by such Lender in Annex H or the applicableAssignment Agreement) not later than 5:00 p.m. (New York time) on the date of such payment.

(b) Availability of Lender’s Pro Rata Share. The Agent may assume that each Lender will make its Pro Rata Share of each Revolving CreditAdvance available to the Agent on each funding date. If such Pro Rata Share is not, in fact, paid to the Agent by such Lender when due, the Agent will be entitledto recover such amount on demand from such Lender without set-off, counterclaim or deduction of any kind. If any Lender fails to pay the amount of its Pro RataShare forthwith upon the Agent’s demand, the Agent shall promptly notify the Borrower and the Borrower shall immediately repay such amount to the Agent.Nothing in this Section 9.9(b) or elsewhere in this Agreement or the other Loan Documents shall be deemed to require the Agent to advance funds on behalf ofany Lender or to relieve any Lender from its obligation to fulfill its Revolving Credit Commitment hereunder or to prejudice any rights that the Borrower mayhave against any Lender as a result of any default by such Lender hereunder. To the extent that the Agent advances funds to the Borrower on behalf of anyLender and is not reimbursed therefor on the same Business Day as such advance is made, the Agent shall be entitled to retain for its account all interest accruedon such advance until reimbursed by the applicable Lender.

(c) Return of Payments. (i) If the Agent pays an amount to a Lender under this Agreement in the belief or expectation that a related payment hasbeen or will be received by

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the Agent from the Borrower and such related payment is not received by the Agent, then the Agent will be entitled to recover such amount from such Lender ondemand without set-off, counterclaim or deduction of any kind.

(ii) If the Agent determines at any time that any amount received by the Agent under this Agreement must be returned to the Borrower or paid toany other Person pursuant to any insolvency law or otherwise, then, notwithstanding any other term or condition of this Agreement or any other Loan Document,the Agent will not be required to distribute any portion thereof to any Lender. In addition, each Lender will repay to the Agent on demand any portion of suchamount that the Agent has distributed to such Lender, together with interest at such rate, if any, as the Agent is required to pay to the Borrower or such otherPerson, without set-off, counterclaim or deduction of any kind.

(d) Non-Funding Lenders. The failure of any Lender (such Lender, a “Non-Funding Lender”) to make any Revolving Credit Advance, to purchaseany participation in the Swing Line Loan to be made or purchased by it on the date specified therefor or to incur or purchase any participation in Letter of CreditObligations shall not relieve any other Lender (each such other Lender, an “Other Lender”) of its obligations to make such Advance or purchase suchparticipation on such date, but neither any Other Lender nor the Agent shall be responsible for the failure of any Non-Funding Lender to make a RevolvingCredit Advance to be made, or to purchase a participation to be purchased, by such Non-Funding Lender, and no Non-Funding Lender shall have any obligationto the Agent or any Other Lender for the failure by such Non-Funding Lender. Notwithstanding anything set forth herein to the contrary, a Non-Funding Lendershall not have any voting or consent rights under or with respect to any Loan Document or constitute a “Lender” (or be included in the calculation of “RequisiteLenders” hereunder) for any voting or consent rights under or with respect to any Loan Document.

(e) Dissemination of Information. The Agent will use reasonable efforts to provide the Lenders with any notice of Default or Event of Defaultreceived by the Agent from, or delivered by the Agent to, the Borrower, with notice of any Event of Default of which the Agent has actually become aware andwith notice of any action taken by the Agent following any Event of Default; provided, however, that the Agent shall not be liable to any Lender for any failureto do so, except to the extent that such failure is attributable solely to the Agent’s gross negligence or willful misconduct as finally determined by a court ofcompetent jurisdiction. The Lenders acknowledge that the Borrower is required to provide Financial Statements and Collateral Reports to the Lenders inaccordance with Annex E hereto and agree that the Agent shall have no duty to provide the same to the Lenders.

(f) Actions in Concert. Anything in this Agreement to the contrary notwithstanding, each Lender hereby agrees with each other Lender that noLender shall take any action to protect or enforce its rights arising out of this Agreement or the Notes (including exercising any rights of set-off) without firstobtaining the prior written consent of the Agent or Requisite Lenders, it being the intent of the Lenders that any such action to protect or enforce rights under thisAgreement and the Notes shall be taken in concert.

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ARTICLE 10

MISCELLANEOUS

SECTION 10.1. Complete Agreement; Amendments and Waivers. (a) This Agreement and the other Loan Documents constitute the complete agreementbetween the parties with respect to the subject matter hereof and thereof and supersede all prior agreements, commitments, understandings or inducements (oralor written, expressed or implied).

(b) Except for actions expressly permitted to be taken by the Agent, no amendment, modification, termination or waiver of any provision of thisAgreement or any other Loan Documents, or any consent to any departure by the Borrower therefrom, shall in any event be effective unless the same shall be inwriting and signed by the Agent and the Borrower, and by the Requisite Lenders, Supermajority Lenders or all affected Lenders, as applicable. Except as setforth in clauses (c) and (d) below, all such amendments, modifications, terminations or waivers requiring the consent of any Lenders shall require the writtenconsent of Requisite Lenders.

(c) No amendment, modification, termination or waiver of or consent with respect to any provision of this Agreement which increases thepercentage advance rates set forth in the definition of the Borrowing Base, or which makes less restrictive the nondiscretionary criteria for exclusion fromEligible Inventory set forth in Section 1.5, shall be effective unless the same shall be in writing and signed by the Agent, the Supermajority Lenders and theBorrower. No amendment, modification, termination or waiver of or consent with respect to any provision of this Agreement which (i) waives compliance withthe conditions precedent set forth in Section 2.2 to the making of any Advance or the incurrence of any Letter of Credit Obligations, or (ii) changes themethodology used in computing any Reserve included in the most recent Borrowing Base Certificate as of the Effective Date, which change directly results in areduction in the amount of such Reserve, shall be effective unless the same shall be in writing and signed by the Agent, the Requisite Lenders and the Borrower.Notwithstanding anything contained in this Agreement to the contrary, no waiver or consent with respect to any Default (if in connection therewith the Agent orthe Requisite Lenders, as the case may be, have exercised its or their right to suspend the making of further Advances pursuant to Section 8.2(a)) or any Event ofDefault shall be effective for purposes of the conditions precedent to the making of Advances or the incurrence of Letter of Credit Obligations set forth inSection 2.2 unless the same shall be in writing and signed by the Agent, the Requisite Lenders and the Borrower.

(d) No amendment, modification, termination or waiver shall, unless in writing and signed by the Agent and each Lender directly affected thereby,do any of the following: (i) increase the principal amount of any Lender’s Revolving Credit Commitment (which action shall be deemed to directly affect allLenders); (ii) reduce the principal of, rate of interest on or Fees payable with respect to any Advances or the incurrence of any Letter of Credit Obligations of anyaffected Lender; (iii) extend any scheduled payment date or final maturity date of the principal amount of any Advance of any affected Lender; (iv) waive,forgive, defer, extend or postpone any payment of interest or Fees as to any affected Lender;

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(v) release any Guaranty or, except as otherwise permitted herein or in the other Loan Documents, permit the Borrower or any of its Subsidiaries to sell orotherwise dispose of any Collateral with a value exceeding $2,000,000 in the aggregate (which action shall be deemed to directly affect all Lenders); (vi) changethe percentage of the Revolving Credit Commitments or of the aggregate unpaid principal amount of the Advances which shall be required for the Lenders or anyof them to take any action hereunder; (vii) amend or waive this Section 10.1 or the definitions of the terms “Requisite Lenders,” or “Supermajority Lenders”insofar as such definitions affect the substance of this Section 10.1; or (viii) amend or waive Section 1.1(a)(v) insofar as such amendment would increase theamount of Overadvances permitted to be made or outstanding under this Agreement; or (ix) amend or waive Section 6.8(a) or the definition of the term “StopEvent” insofar as such definition affects the substance of Section 6.8(a). No amendment, modification, termination or waiver shall, unless in writing and signedby GECDFC, do any of the following: (i) amend the definition of the term “GECDFC Obligations”, (ii) amend the definition of the term “Holders” in a mannerthat would adversely affect GECDFC, in its capacity as a Holder, (iii) amend Section 8.4 in a manner that would adversely affect GECDFC, in its capacity as aHolder, (iv) deprive GECDFC of its status as a third-party beneficiary under Section 10.23, or (v) amend any provision of any Loan Document in a manner thatwould deprive GECDFC, in its capacity as a Holder, of the benefits of the Liens from time to time securing the Obligations, provided that this clause (v) shall notbe construed to require the consent of GECDFC to the release by the Agent and the Lenders of any Liens securing the Obligations on the terms and conditions setforth in this Agreement, and, provided, further, that the consent of GECDFC or any other Holder that is a third party beneficiary of this Agreement shall not berequired for any amendment, modification, termination or waiver except those provided in clauses (i) through (v) of this sentence (it being understood that noLender shall be deemed to be a third party beneficiary of this Agreement for purposes of this proviso). Furthermore, no amendment, modification, termination orwaiver affecting the rights or duties of Agent or L/C Issuer, or of GE Capital in respect of any Swap Related Reimbursement Obligations, under this Agreementor any other Loan Document, including any increase in the L/C Sublimit or any release of any Guaranty or Collateral requiring a writing signed by all Lenders,shall be effective unless in writing and signed by Agent or L/C Issuer or GE Capital, as the case may be, in addition to Lenders required hereinabove to take suchaction. Each amendment, modification, termination or waiver shall be effective only in the specific instance and for the specific purpose for which it was given.No amendment, modification, termination or waiver shall be required for the Agent to take additional Collateral pursuant to any Loan Document. Noamendment, modification, termination or waiver of any provision of any Note shall be effective without the written concurrence of the holder of that Note. Nonotice to or demand on the Borrower in any case shall entitle the Borrower to any other or further notice or demand in similar or other circumstances. Anyamendment, modification, termination, waiver or consent effected in accordance with this Section 10.1 shall be binding upon each holder of the Notes at the timeoutstanding and each future holder of the Notes.

(e) If, in connection with any proposed amendment, modification, waiver or termination (a “Proposed Change”):

(i) requiring the consent of all affected Lenders, the consent of Requisite Lenders is obtained, but the consent of other Lenders whose consent isrequired is not obtained (any such Lender whose consent is not obtained as described in this clause (i) and in clauses (ii), (iii) and (iv) below being referred to as“Non Consenting Lender”);

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(ii) requiring the consent of Supermajority Lenders, the consent of Requisite Lenders is obtained, but the consent of Supermajority Lenders is notobtained;

then, so long as Agent is not a Non Consenting Lender, at Borrower’s request made within 60 days following the proposal of the Proposed Change, Agent, or aPerson reasonably acceptable to Agent, shall have the right with Agent’s consent and in Agent’s sole discretion (but shall have no obligation) to purchase fromsuch Non Consenting Lenders, and such Non Consenting Lenders agree that they shall, upon Agent’s request, sell and assign to Agent or such Person, all of theRevolving Credit Commitments of such Non Consenting Lenders for an amount equal to the principal balance of the Revolving Credit Loan held by the NonConsenting Lenders and all accrued interest and Fees with respect thereto through the date of sale, such purchase and sale to be consummated within 60 daysafter Borrower’s request pursuant to an executed Assignment Agreement.

(f) Upon indefeasible payment in full in cash and performance of all of the Obligations (other than indemnification Obligations under Section 1.12),termination of the Revolving Credit Commitments and a release of all claims against the Agent and the Lenders, and so long as no suits, actions proceedings, orclaims are pending or threatened against any Indemnified Person asserting any Claim, the Agent shall deliver to the Borrower termination statements, mortgagereleases and other documents necessary or appropriate to evidence the termination of the Liens securing payment of the Obligations.

SECTION 10.2. Fees and Expenses. Except as otherwise provided in Section 5.10, Borrower shall reimburse (i) Agent for all fees, costs and expenses(including the reasonable fees and expenses of all of its counsel, advisors, consultants and auditors) and (ii) Agent (and, with respect to clauses (a) through(f) below, all Lenders) for all fees, costs and expenses, including the reasonable fees, costs and expenses of counsel or other advisors (including environmentaland management consultants and appraisers) incurred in connection with the negotiation, preparation and filing and/or recordation of the Loan Documents andincurred in connection with:

(a) any amendment, modification or waiver of, or consent with respect to, or termination of, any of the Loan Documents or advice in connectionwith the syndication and administration of the Advances and Letters of Credit made pursuant hereto or its rights hereunder or thereunder;

(b) any litigation, contest, dispute, suit, proceeding or action (whether instituted by Agent, any Lender, the Borrower or any other Person andwhether as a party, witness or otherwise) in any way relating to the Collateral, any of the Loan Documents or any other agreement to be executed or delivered inconnection herewith or therewith, including any litigation, contest, dispute, suit, case, proceeding or action, and any appeal or review thereof, in

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connection with a case commenced by or against the Borrower or any other Person that may be obligated to Agent by virtue of the Loan Documents, includingany such litigation, contest, dispute, suit, proceeding or action arising in connection with any work-out or restructuring of the Obligations during the pendency ofone or more Events of Default; provided, that no Person shall be entitled to reimbursement under this clause (b) in respect of any litigation, contest, dispute, suit,proceeding or action to the extent any of the foregoing results from such Person’s gross negligence or willful misconduct;

(c) any attempt to enforce any remedies of Agent or any Lender against the Borrower or any other Person that may be obligated to Agent or anyLender by virtue of any of the Loan Documents, including any such attempt to enforce any such remedies in the course of any work-out or restructuring of theObligations during the pendency of one or more Events of Default; provided, that in the case of reimbursement of counsel for Lenders other than Agent, suchreimbursement shall be limited to one counsel for all such Lenders;

(d) any workout or restructuring of the Obligations during the pendency of one or more Events of Default; provided, that in the case ofreimbursement of counsel for Lenders other than Agent, such reimbursement shall be limited to one counsel for all such Lenders; and

(e) efforts to (i) monitor the Advances, Letters of Credit or any of the other Obligations, (ii) evaluate, observe or assess the Borrower or its affairs,and (iii) verify, protect, evaluate, assess, appraise, collect, sell, liquidate or otherwise dispose of any of the Collateral;

(f) including, as to each of clauses (a) through (e) above, all reasonable attorneys’ and other professional and service providers’ fees arising fromsuch services and other advice, assistance or other representation, including those in connection with any appellate proceedings, and all expenses, costs, chargesand other fees incurred by such counsel and others in connection with or relating to any of the events or actions described in this Section 10.2, all of which shallbe payable, on demand, by Borrower to Agent. Without limiting the generality of the foregoing, such expenses, costs, charges and fees may include: fees, costsand expenses of accountants, environmental advisors, appraisers, investment bankers, management and other consultants and paralegals; court costs andexpenses; photocopying and duplication expenses; court reporter fees, costs and expenses; long distance telephone charges; air express charges; telegram ortelecopy charges; secretarial overtime charges; and expenses for travel, lodging and food paid or incurred in connection with the performance of such legal orother advisory services.

SECTION 10.3. No Waiver. No failure on the part of the Agent or the Lenders, at any time or times, to require strict performance by the Borrower, of anyprovision of this Agreement and any of the other Loan Documents shall waive, affect or diminish any right of the Agent or the Lenders thereafter to demandstrict compliance and performance therewith. Any suspension or waiver of a Default shall not suspend, waive or affect any other Default whether the same isprior or subsequent thereto and whether of the same or of a different type. None of the undertakings, agreements, warranties, covenants and representations of theBorrower contained

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in this Agreement or any of the other Loan Documents and no Default by the Borrower shall be deemed to have been suspended or waived by the Lenders, unlesssuch waiver or suspension is by an instrument in writing signed by an officer of or other authorized employee of the Agent and the Requisite Lenders if requiredhereunder and directed to the Borrower specifying such suspension or waiver.

SECTION 10.4. Remedies. The rights and remedies of the Agent and the Lenders under this Agreement shall be cumulative and nonexclusive of any otherrights and remedies which the Agent or any Lender may have under any other agreement, including the Loan Documents, by operation of law or otherwise.Recourse to the Collateral shall not be required.

SECTION 10.5. Severability. Wherever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid underapplicable law, but if any provision of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent ofsuch prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement.

SECTION 10.6. Conflict of Terms. Except as otherwise provided in this Agreement or any of the other Loan Documents by specific reference to theapplicable provisions of this Agreement, or as otherwise provided in the Post-Closing Letter, if any provision contained in this Agreement is in conflict with, orinconsistent with, any provision in any of the other Loan Documents, the provisions contained in this Agreement shall govern and control.

SECTION 10.7. Right of Set-off. In addition to each Lender’s rights under Section 1.10, upon the occurrence and during the continuance of any Event ofDefault, each Lender is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to setoff and apply any and all deposits(general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by the such Lender to or for the credit or theaccount of the Borrower against any and all of the Obligations now or hereafter existing irrespective of whether or not the Agent or such Lender shall have madeany demand under this Agreement or any other Loan Document and although such Obligations may be unmatured. Each Lender agrees to use reasonable effortsto promptly notify the Agent and the Borrower after any such setoff and application made by the such Lender; provided, that the failure to give such notice (or totimely do so) shall not affect the validity of such setoff and application. The rights of each Lenders under this Section are in addition to the other rights andremedies (including other rights of setoff) which such Lenders may have.

SECTION 10.8. Authorized Signature. Until the Agent shall be notified by the Borrower to the contrary, the signature upon any document or instrumentdelivered by the Borrower pursuant hereto and believed by the Agent or any of the Agent’s officers, agents, or employees to be that of an officer or dulyauthorized representative of the Borrower listed in Schedule 10.8 shall bind the Borrower and be deemed to be the act of the Borrower affixed pursuant to and inaccordance with resolutions duly adopted by the Borrower’s Board of Directors, and the Agent and each Lender shall be entitled to assume the authority of eachsignature and authority of the Person whose signature it is or appears to be unless the Person acting in reliance on such signature shall have actual knowledge ofthe fact that such signature is false or the Person whose signature or purported signature is presented is without authority.

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SECTION 10.9. Notices.

(a) Addresses. All notices, demands, requests, directions and other communications required or expressly authorized to be made by this Agreementshall, whether or not specified to be in writing but unless otherwise expressly specified to be given by any other means, be given in writing and (i) addressed to(A) the party to be notified and sent to the address or facsimile number indicated in Annex I, or (B) otherwise to the party to be notified at its address specified onthe signature page of any applicable Assignment Agreement, (ii) posted to Intralinks ® (to the extent such system is available and set up by or at the direction ofthe Agent prior to posting) in an appropriate location by uploading such notice, demand, request, direction or other communication to www.intralinks.com,faxing it to 866-545-6600 with an appropriate bar-coded fax coversheet or using such other means of posting to Intralinks® as may be available and reasonablyacceptable to the Agent prior to such posting, (iii) posted to any other E-System set up by or at the direction of Agent in an appropriate location or (iv) addressedto such other address as shall be notified in writing (A) in the case of Borrower, Agent and Swingline Lender, to the other parties hereto and (B) in the case of allother parties, to Borrower and Agent. Transmission by electronic mail (including E-Fax, even if transmitted to the fax numbers set forth in clause (i) above) shallnot be sufficient or effective to transmit any such notice under this clause (a) unless such transmission is an available means to post to any E-System.

(b) Effectiveness. All communications described in clause (a) above and all other notices, demands, requests and other communications made inconnection with this Agreement shall be effective and be deemed to have been received (i) if delivered by hand, upon personal delivery, (ii) if delivered byovernight courier service, one Business Day after delivery to such courier service, (iii) if delivered by mail, three days after being placed in the mails, (iv) ifdelivered by facsimile (other than to post to an E-System pursuant to clause (a)(ii) or (a)(iii) above), upon sender’s receipt of confirmation of propertransmission, and (v) if delivered by posting to any E-System, on the later of the date of such posting in an appropriate location and the date access to suchposting is given to the recipient thereof in accordance with the standard procedures applicable to such E-System. Failure or delay in delivering copies of anynotice, demand, request, consent, approval, declaration or other communication to any Person (other than Borrower or Agent) designated in Annex I to receivecopies shall in no way adversely affect the effectiveness of such notice, demand, request, consent, approval, declaration or other communication. The giving ofany notice required hereunder may be waived in writing by the party entitled to receive such notice.

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SECTION 10.10. Section Titles. The Section titles and Table of Contents contained in this Agreement are and shall be without substantive meaning orcontent of any kind whatsoever and are not a part of this Agreement.

SECTION 10.11. Counterparts. This Agreement may be executed in any number of separate counterparts, each of which shall, collectively and separately,constitute one agreement.

SECTION 10.12. Time of the Essence. Time is of the essence of this Agreement and each of the other Loan Documents.

SECTION 10.13. Confidentiality.

(a) The Borrower agrees that it shall not (and shall not permit any of its Subsidiaries to) issue any news release or make any public announcementpertaining to the transactions contemplated by the Loan Documents without the prior written consent of the Agent (which consent shall not be unreasonablywithheld) unless such news release or public announcement is required by law, in which case the Borrower shall consult with the Agent prior to the issuance ofany such news release or public announcement. The Borrower may, however, disclose the general terms of this Agreement and the Receivables FundingDocuments to trade creditors, suppliers and other similarly situated Persons so long as such disclosure is not in the form of a news release or publicannouncement.

(b) The Borrower has furnished and will furnish to the Agent and the Lenders certain information concerning the Borrower and its Subsidiarieswhich the Borrower has advised is non-public, proprietary or confidential in nature (“Confidential Information”). The Agent and each Lender confirms to theBorrower, for itself, that it is the policy and practice of the Agent and such Lender to maintain in confidence all Confidential Information which is provided to itunder agreements providing for the extension of credit and which is identified to it as such, and that it will protect the confidentiality of Confidential Informationsubmitted to it with respect to the Borrower and any of its Subsidiaries under this Agreement, commensurate with its efforts to maintain the confidentiality of itsown Confidential Information, provided, however, that (i) nothing contained herein shall prevent the Agent or any Lender from disclosing ConfidentialInformation (A) to its Affiliates, to its directors, officers and employees and to any legal counsel, auditors, appraisers, consultants or other persons retained by itor its Affiliates as professional advisors, on the condition that such information not be further disclosed except in compliance with this Section 10.13(b);(B) under color of legal authority, including, without limitation, to any regulatory authority having jurisdiction over it or its operations or to or under theauthority of any court deemed by it to be of competent jurisdiction; (C) to any actual or potential assignee of or participant in any Lender’s rights and obligationsunder this Agreement pursuant to Section 9.2 hereof to the extent such actual or potential assignee or participant has agreed to maintain such information inconfidence on the basis set forth in this Section 10.13(b); (D) as necessary in connection with the exercise of its rights and remedies under this Agreement or anyof the other Loan Documents, or otherwise in connection with the transactions contemplated by this Agreement and the other Loan Documents; (E) to any ratingagency; and (F) to any provider or potential provider of liquidity or credit support to any Lender in connection herewith or in connection with the ReceivablesFunding Documents, and any assignee, participant, or potential assignee or participant of any thereof to the extent such actual or potential provider of liquidity orcredit support has agreed to maintain such information in confidence on the basis set forth in this Section 10.13(b); (ii) the terms of this Section 10.13(b)

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shall be inapplicable to any information furnished to it which is in its possession prior to the delivery to it of such information by the Borrower or any of itsSubsidiaries, or otherwise has been obtained by it on a non-confidential basis, or which was or becomes available to the public or otherwise part of the publicdomain (other than as a result of the Agent’s or such Lender’s failure or any prospective participant’s or assignee’s failure to abide hereby), or which was notnon-public, proprietary or confidential when the Borrower or any of its Subsidiaries delivered it to the Agent or any Lender; and (iii) the determination by theAgent or any Lender as to the application of any of the circumstances described in the foregoing clauses (i) and (ii) will be conclusive and binding if made in goodfaith. Notwithstanding anything herein to the contrary, the Borrower, Agent and any Lender (and each of their employees, representatives or other agents) maydisclose to any and all persons, without limitation of any kind, any information with respect to the “tax treatment” and “tax structure” (in each case, within themeaning of Treasury Regulation Section 1.6011-4) of the transactions contemplated hereby and all materials of any kind (including opinions or other taxanalyses) that are provided to the Borrower, Agent or Lender relating to such tax treatment and tax structure.

(c) Notwithstanding paragraph (b) above, the Borrower consents to the Agent publishing a tombstone or similar advertising material relating to thefinancing transaction contemplated by this Agreement.

SECTION 10.14. Successors and Assigns. This Agreement and the other Loan Documents shall be binding on and shall inure to the benefit of theBorrower, the Agent, the Lenders, and their respective successors and assigns, except as otherwise provided herein or therein. The Borrower may not assign,delegate, transfer, hypothecate or otherwise convey its rights, benefits, obligations or duties hereunder or under any of the Loan Documents without the priorexpress written consent of the Agent and all Lenders. Any such purported assignment, transfer, hypothecation or other conveyance by the Borrower without suchprior express written consent shall be void. The terms and provisions of this Agreement and the other Loan Documents are for the purpose of defining the relativerights and obligations of the Borrower, the Agent, and the Lenders with respect to the transactions contemplated hereby and there shall be no third partybeneficiaries of any of the terms and provisions of this Agreement or any of the other Loan Documents.

SECTION 10.15. Amendment and Restatement.

(a) This Agreement amends and restates in its entirety the First Amended Credit Agreement and, upon the effectiveness of this Agreement, the termsand provisions of the First Amended Credit Agreement shall, subject to Section 10.15(c), be superseded hereby.

(b) Notwithstanding the amendment and restatement of the First Amended Credit Agreement by this Agreement, all of the Obligations owing to theLenders under the First Amended Credit Agreement which remain outstanding as of the date hereof, shall constitute Obligations owing hereunder. ThisAgreement is given in substitution for the First Amended Credit Agreement, and not as payment of the Obligations of the Borrower thereunder, and is in no wayintended to constitute a novation of the First Amended Credit Agreement.

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(c) Upon the effectiveness of this Agreement, unless the context otherwise requires, each reference to the First Amended Credit Agreement in any ofthe Loan Documents and in each document, instrument or agreement executed and/or delivered in connection therewith shall mean and be a reference to thisAgreement. Except as expressly modified as of the Effective Date, all of the other Loan Documents shall remain in full force and effect and are hereby ratifiedand confirmed.

SECTION 10.16.GOVERNING LAW. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF THE LOAN DOCUMENTS, IN ALLRESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS AGREEMENT AND THEOBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THELAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE, AND ANYAPPLICABLE LAWS OF THE UNITED STATES OF AMERICA. THE BORROWER, THE AGENT, AND THE LENDERS HEREBY CONSENTAND AGREE THAT THE STATE OR FEDERAL COURTS LOCATED IN NEW YORK COUNTY, NEW YORK SHALL HAVE EXCLUSIVEJURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES PERTAINING TO THIS AGREEMENT, THE REVOLVINGCREDIT NOTES OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY MATTER ARISING OUT OF OR RELATED TO THISAGREEMENT, THE REVOLVING CREDIT NOTES OR ANY OF THE OTHER LOAN DOCUMENTS; PROVIDED, THAT THE PARTIESHERETO ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDESUCH JURISDICTION. EACH OF THE BORROWER, THE AGENT, AND THE LENDERS EXPRESSLY SUBMITS AND CONSENTS INADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND EACH OF THE BORROWER,THE AGENT AND THE LENDERS HEREBY WAIVES ANY OBJECTION WHICH SUCH PERSON MAY HAVE BASED UPON LACK OFPERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF SUCHLEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT. EACH OF THE BORROWER, THE AGENT AND THELENDERS HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCHACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER PROCESS MAY BE MADE BYREGISTERED OR CERTIFIED MAIL ADDRESSED TO SUCH PERSON AT THE ADDRESS SET FORTH IN SECTION 10.9 OF THISAGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF SUCH PERSON’S ACTUALRECEIPT THEREOF OR FIVE (5) DAYS AFTER DEPOSIT IN THE U.S. MAILS PROPER POSTAGE PREPAID.

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SECTION 10.17.WAIVER OF TRIAL JURY. BECAUSE DISPUTES ARISING IN CONNECTION WITH COMPLEX FINANCIALTRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND EXPERT PERSON AND THEPARTIES WISH APPLICABLE STATE AND FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES DESIRETHAT THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BESTCOMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TOTRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER IN CONTRACT, TORT,OR OTHERWISE, ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO, THIS AGREEMENT, THE REVOLVINGCREDIT NOTES OR ANY OF THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

SECTION 10.18. Press Releases and Related Matters. The Borrower agrees that neither it nor its Affiliates will in the future issue any press releases orother public disclosure using the name of GE Capital or its Affiliates or referring to this Agreement or the other Loan Documents without at least two(2) Business Days’ prior notice to GE Capital and without the prior written consent of GE Capital unless (and only to the extent that) the Borrower or suchAffiliate is required to do so under law and then, in any event, the Borrower or such Affiliate will consult with GE Capital before issuing such press release orother public disclosure. Each of Agent and Lenders agrees that neither it nor its Affiliates will in the future issue any press releases or other public disclosureusing the name of the Borrower or its Subsidiaries or referring to this Agreement or the other Loan Documents without at least two (2) Business Days’ priornotice to the Borrower and without the prior written consent of the Borrower unless (and only to the extent that) GE Capital, such Lender or such Affiliate isrequired to do so under law and then, in any event, GE Capital, such Lender or such Affiliate will consult with the Borrower before issuing such press release orother public disclosure. The Borrower consents to the publication by Agent or any Lender of advertising material relating to the financing transactionscontemplated by this Agreement using the Borrower’s name, product photographs, logo or trademark. Agent or such Lender shall provide a draft of anyadvertising material to the Borrower for review and comment prior to the publication thereof. Agent reserves the right to provide to industry trade organizationsinformation necessary and customary for inclusion in league table measurements.

SECTION 10.19. Reinstatement. This Agreement shall remain in full force and effect and continue to be effective should any petition be filed by or againstthe Borrower for liquidation or reorganization, should the Borrower become insolvent or make an assignment for the benefit of any creditor or creditors or shoulda receiver or trustee be appointed for all or any significant part of the Borrower’s assets, and shall continue to be effective or to be reinstated, as the case may be,if at any time payment and performance of the Obligations, or any part thereof, is, pursuant to applicable law, rescinded or reduced in amount, or must otherwisebe restored

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or returned by any obligee of the Obligations, whether as a “voidable preference,” “fraudulent conveyance,” or otherwise, all as though such payment orperformance had not been made. In the event that any payment, or any part thereof, is rescinded, reduced, restored or returned, the Obligations shall be reinstatedand deemed reduced only by such amount paid and not so rescinded, reduced, restored or returned.

SECTION 10.20. Advice of Counsel. Each of the parties represents to each other party hereto that it has discussed this Agreement and, specifically, theprovisions of Sections 10.16 and 10.17, with its counsel.

SECTION 10.21. No Strict Construction. The parties hereto have participated jointly in the negotiation and drafting of this Agreement. In the event anambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties hereto and no presumption or burdenof proof shall arise favoring or disfavoring any party by virtue of the authorship of any provisions of this Agreement.

SECTION 10.22. Third-Party Beneficiaries; Deliveries to GECDFC; Intercreditor Agreement. GECDFC and the Holders not parties hereto, if any, arethird-party beneficiaries of this Agreement and the other Loan Documents and, in their capacity as such, are entitled to the full benefits of this Agreement and theother Loan Documents to the extent and in the manner expressly set forth herein and in the other Loan Documents; provided, that no Lender shall be deemed tohave any fiduciary or other obligations to GECDFC or any such Holder. The Agent shall provide to GECDFC all reports and other deliveries required to bedelivered to the Lenders under this Agreement and the other Loan Documents. Notwithstanding anything to the contrary in this Agreement or any other LoanDocument, this Agreement is subject the terms and conditions of the GECDFC Intercreditor Agreement.

[Signature Page Follows]

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IN WITNESS WHEREOF, this Agreement has been duly executed as of the date first written above.

SYNNEX CORPORATION

By: /s/ Dennis PolkName: Dennis PolkTitle: Chief Operating Officer and Chief Financial Officer


GENERAL ELECTRIC CAPITAL CORPORATIONas Agent, Lender and Swing Line Lender

By: /s/ Eugene SeipName: Eugene SeipTitle: Duly Authorized Signatory


BANK OF AMERICA, N.A.as Lender

By: /s/ Robert M. DaltonName: Robert M. DaltonTitle: Vice President


SUMITOMO MITSUI BANKING CORPORATIONas Lender

By: /s/ Tetsuro ImaedaName: Tetsuro ImaedaTitle: General Manager


Acknowledged and Agreed: GE COMMERCIAL DISTRIBUTION FINANCE CORPORATION as a Holder

By: /s/ Kevin M. O’Hara Name: Kevin M. O’Hara Title: VP, Director of Operations


EXECUTION VERSION

ANNEX ATO CREDIT AGREEMENT

DEFINITIONS; RULES OF CONSTRUCTION

1. Definitions. Capitalized terms used in this Agreement and the other Loan Documents shall have (unless otherwise provided elsewhere in thisAgreement and the other Loan Documents) the following respective meanings:

“ACH Transactions” means any cash management or related services including the automatic clearing house transfer of funds by the Agent or anyLender for the account of the Borrower pursuant to agreement or overdrafts.

“Account Debtor” means any Person who may become obligated to the Borrower or any Subsidiary thereof under, with respect to, or on account of,an Account, Chattel Paper or General Intangibles (including a payment intangible).

“Accounts” shall mean all “accounts,” as such term is defined in the Code, now owned or hereafter acquired by the Borrower or any Subsidiarythereof and, in any event, including (a) all accounts receivable, other receivables, book debts and other forms of obligations (other than forms of obligationsevidenced by Chattel Paper, or Instruments), (including any such obligations that may be characterized as an account or contract right under the Code), (b) all ofthe Borrower’s or any of its Subsidiary’s rights in, to and under all purchase orders or receipts for goods or services, (c) all of the Borrower’s or any of itsSubsidiary’s rights to any goods represented by any of the foregoing (including unpaid sellers’ rights of rescission, replevin, reclamation and stoppage in transitand rights to returned, reclaimed or repossessed goods), (d) all rights to payment due to the Borrower or any Subsidiary thereof for property sold, leased,licensed, assigned or otherwise disposed of, for a policy of insurance issued or to be issued, for a secondary obligation incurred or to be incurred, for energyprovided or to be provided, for the use or hire of a vessel under a charter or other contract, arising out of the use of a credit card or charge card, or for servicesrendered or to be rendered by the Borrower or Subsidiary or in connection with any other transaction (whether or not yet earned by performance on the part ofthe Borrower or Subsidiary), (e) all health care insurance receivables and (f) all collateral security of any kind, given by any Account Debtor or any other Personwith respect to any of the foregoing.

“Additional Domestic Investment” shall have the meaning assigned to it in Section 6.2(h).

“Advance” shall mean any Revolving Credit Advance or Swing Line Advance, as the context may require.

“Advance Date” shall have the meaning assigned to it in Section 1.19.

ANNEX A - 1


EXECUTION VERSION

“Affiliate” shall mean, with respect to any Person, (a) each Person that, directly or indirectly, owns or controls, whether beneficially, or as a trustee,guardian or other fiduciary, five percent (5%) or more of the Stock having ordinary voting power in the election of directors of such Person, (b) each Person thatcontrols, is controlled by or is under common control with such Person or any Affiliate of such Person, or (c) each of such Person’s officers, directors, jointventures and partners. For the purpose of this definition, “control” of a Person shall mean the possession, directly or indirectly, of the power to direct or cause thedirection of its management or policies, whether through the ownership of voting securities, by contract or otherwise; provided, however, that the term “Affiliate”shall specifically exclude the Agent and each Lender.

“Agent” shall mean GE Capital in its capacity as Agent pursuant to Section 9.2 or its successor appointed pursuant to Section 9.7.

“Agreement” shall mean the Second Amended and Restated Credit Agreement to which this Annex A is attached and of which it forms a part,including all Annexes, Schedules, and Exhibits attached or otherwise identified thereto, all restatements, modifications and supplements hereof or hereto, and anyappendices, attachments, exhibits or schedules to any of the foregoing, in each case as amended, supplemented or otherwise modified from time to time; provided,that any reference to the Schedules to this Agreement shall be deemed a reference to the Schedules as in effect as of the Effective Date, unless otherwiseprovided in a written amendment thereto or in a deemed amendment pursuant to Section 5.8.

“Ancillary Services and Lease Agreement” shall mean that certain Ancillary Services and Lease Agreement dated as of December 19, 1997 betweenSFC and Synnex, as in effect on the Effective Date and without giving effect to any modifications or amendments thereto, pursuant to which Synnex agrees toprovide office space and certain administrative and clerical services to SFC and to advance to SFC subordinated loans from time to time in an aggregate not toexceed $500,000 to satisfy SFC’s initial and ongoing administrative and operating expenses.

“Applicable Margin” means the per annum interest rate margin from time to time in effect and payable in addition to the Index Rate or the LIBORRate, as the case may be, applicable to the Revolving Loan, as determined by reference to Section 1.4(a).

“Application for Letter of Credit” has the meaning ascribed to it in Annex J.

“Assignment Agreement” shall have the meaning assigned to it in Section 9.1(a).

“Bank Products” means any one or more of the following types of services or facilities extended to the Borrower by the Agent or any Lender or anyAffiliate of the Agent or any Lender in reliance on an agreement by the Agent or any Lender to indemnify such Affiliate: (a) credit cards; (b) ACH Transactions;(c) cash management, including controlled disbursement services; (d) Hedge Agreements; and (e) letters of credit and bankers acceptances.

“Blocked Account” shall have the meaning assigned to it in Annex B.

“Blocked Account Agreement” shall have the meaning assigned to it in Annex B.

ANNEX A - 2


EXECUTION VERSION

“Borrower” shall have the meaning provided in the first paragraph of this Agreement.

“Borrower Security Agreement” shall mean the Amended and Restated Security Agreement, together with all amendments, modifications andsupplements thereto (including without limitation the Omnibus Amendment), a copy of which is attached as Exhibit A hereto, executed by the Borrower in favorof the Agent for the benefit of the Holders, as further amended, supplemented or otherwise modified from time to time.

“Borrowing Availability” shall mean, as of any date of determination, the lesser of (i) the Maximum Amount and (ii) the Borrowing Base, in eachcase less the Swing Line Loan outstanding at such time.

“Borrowing Base” shall mean, as of any date of determination by the Agent, an amount equal to the sum of:

(i) the lesser of (A) the product of (x) 85% (or such other percentage as the Agent shall determine in its reasonable credit judgment) and (y) the netorderly liquidation value of Eligible Inventory (other than Production Inventory) as of such date based on the most recently conducted appraisal of theBorrower’s inventory and (B) the product of (1) 50% (or such other percentage as the Agent shall determine in its reasonable credit judgment) and (2) aggregateamount of Eligible Inventory (other than Production Inventory) as of such date, valued at the lower of cost or market value, determined on a first-in-first-outbasis; plus

(ii) the lesser of (A) the product of (x) 15%, and (y) the aggregate amount of Production Inventory as of such date, valued at the lower of cost ormarket value, determined on a first-in-first-out basis, and (B) $5,000,000 (provided, however, that the sum of clauses (i) and (ii) of this definition shall in no eventexceed $50,000,000); plus

(iii) the product of (A) the Net Receivables Advance Rate and (B) the Net Receivables Balance; plus

(iv) the product of (A) 70% and (B) the Special Obligor Aggregate Permitted Concentration Amount;

in each case, less any Reserves established by Agent at such time.

“Borrowing Base Certificate” shall mean a certificate in the form attached hereto as Exhibit 1.1(a)(iv).

“Business Day” shall mean any day that is not a Saturday, a Sunday or a day on which banks are required or permitted to be closed in the State ofNew York or the State of California and in reference to LIBOR Loans shall mean any such day that is also a LIBOR Business Day.

“Canadian Collateralized Guaranty” means the Collateralized Guaranty in effect on the date hereof executed by IBM Canada Limited and theBorrower.

ANNEX A - 3


EXECUTION VERSION

“Canadian Subsidiary” means SYNNEX Canada Limited, an Ontario corporation.

“Canadian Subsidiary Guaranties” means, collectively, the Canadian Subsidiary Loan Guaranty and the Canadian Subsidiary SecuritizationGuaranty.

“Canadian Subsidiary Loan Agreement” means the Loan Agreement dated December 15, 2006 between the Canadian Subsidiary and the Bank ofMontreal in an aggregate principal amount not to exceed $20,000,000 (Canadian dollars).

“Canadian Subsidiary Loan Guaranty” means the unsecured guaranty by the Borrower of up to $20,000,000 (Canadian dollars) of the obligations ofthe Canadian Subsidiary under the Canadian Subsidiary Loan Agreement.

“Canadian Subsidiary Securitization Agreement” means the Receivables Purchase Agreement, dated as of November 30, 2005, between theCanadian Subsidiary, Royal Bank of Canada and the Borrower, as amended by the First Amendment to Receivables Purchase Agreement, dated as of January 31,2006, the letter agreement dated July 21, 2006 between Royal Bank of Canada, the Canadian Subsidiary and the Borrower, the Third Amendment to ReceivablesPurchase Agreement, dated as of November 17, 2006, and the Fourth Amendment to Receivables Purchase Agreement, dated as of November 29, 2006.

“Canadian Subsidiary Securitization Guaranty” means the unsecured performance guaranty by the Borrower of the obligations of the CanadianSubsidiary under the Canadian Subsidiary Securitization Agreement, which guaranty is set forth in Section 9 of the Canadian Subsidiary SecuritizationAgreement.

“Capital Lease” shall mean any lease of any property (whether real, personal or mixed) by any Person as lessee that, in accordance with GAAP,either would be required to be classified and accounted for as a capital lease on a balance sheet of such Person or otherwise be disclosed as such in a note to suchbalance sheet.

“Capital Lease Obligation” shall mean, as of any date, the amount of the obligation of the lessee under a Capital Lease that, in accordance withGAAP, would appear on a balance sheet of such lessee in respect of such Capital Lease or otherwise be disclosed as such in a note to such balance sheet.

“Cash Collateral Account” has the meaning ascribed to it in Annex J.

“Cash Equivalents” shall mean: (a) securities with maturities of one year or less from the date of acquisition, issued or fully guaranteed or insuredby the government of the United States of America or any agency thereof and backed by the full faith and credit of the United States of America; (b) certificatesof deposit, Eurodollar time deposits, overnight bank deposits and bankers’ acceptances of any domestic commercial bank having capital and surplus in excess of$500,000,000, having maturities of one year or less from the date of acquisition; (c) commercial paper of an issuer rated at least A-1 by Standard & Poor’sRatings Group or P-1 by Moody’s Investors Services, Inc., or carrying an equivalent rating by a nationally recognized rating agency if both of the two namedrating agencies cease publishing ratings of investments, in each case with maturities of not more than sixty (60) days from the date acquired; and

ANNEX A - 4


EXECUTION VERSION (d) shares of money market mutual funds having net assets in excess of $500,000,000 the investments of which are limited to one or more of the types ofinvestments described in clauses (a), (b) and (c) above, provided that such mutual funds have maturities which occur or redemption or withdrawal rights whichare exercisable no later than one year from the date of investment.

“Cash Management Obligations” shall have the meaning assigned to it in the definition of “Obligations”.

“Change of Control” shall mean any event, transaction or occurrence after the Effective Date as a result of which: (a) any person or group of persons(within the meaning of the Securities Exchange Act of 1934, as amended) shall have acquired beneficial ownership (within the meaning of Rule 13d-3promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended) of a greater percentage of the issued andoutstanding shares of Stock of the Borrower having the right to vote for the election of directors of the Borrower under ordinary circumstances than owned by theMitac Group; (b) during any period of twelve (12) consecutive calendar months ending after the Effective Date, individuals who at the beginning of suchtwelve-month period constituted the board of directors of the Borrower (together with any new directors whose election by the board of directors of the Borroweror whose nomination for election by the Stockholders of the Borrower was approved by a vote of at least two-thirds of the directors then still in office who eitherwere directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason other than death ordisability to constitute a majority of the directors then in office; (c) the Borrower ceases to own and control, directly or indirectly, all of the economic and votingrights associated with all of the outstanding capital Stock of any of its Domestic Subsidiaries, or (d) the Borrower or any Domestic Subsidiary thereof shall havesold, transferred, conveyed, assigned or otherwise disposed of all or substantially all of its assets.

“Charges” shall mean all Federal, state, county, city, municipal, local, foreign or other governmental taxes (including taxes owed to PBGC at thetime due and payable), levies, assessments, charges or Liens upon or relating to (a) the Collateral, (b) the Obligations, (c) the employees, payroll, income or grossreceipts of the Borrower or any Subsidiary thereof, (d) the ownership or use by the Borrower or any Subsidiary thereof of any of its assets, or (e) any other aspectof the Borrower’s or any of its Subsidiaries’ business.

“Chattel Paper” shall mean any “chattel paper,” as such term is defined in the Code, including electronic chattel paper, now owned or hereafteracquired by the Borrower or any Subsidiary thereof.

“Claim” shall have the meaning assigned to it in Section 1.12.

“Closing Date” shall mean December 19, 1997, the date on which the initial advances were made under the Original Credit Agreement.

“Code” shall mean the Uniform Commercial Code as the same may, from time to time, be enacted and in effect in the State of New York; provided,that to the extent that the Code

ANNEX A - 5


EXECUTION VERSION is used to define any term herein or in any Loan Document and such term is defined differently in different Articles or Divisions of the Code, the definition ofsuch term contained in Article or Division 9 shall govern; providedfurther, that in the event that, by reason of mandatory provisions of law, any or all of theattachment, perfection or priority of, or remedies with respect to, Agent’s or any Lender’s Lien on any Collateral is governed by the Uniform Commercial Codeas enacted and in effect in a jurisdiction other than the State of New York, the term “Code” shall mean the Uniform Commercial Code as enacted and in effect insuch other jurisdiction solely for purposes of the provisions thereof relating to such attachment, perfection, priority or remedies and for purposes of definitionsrelated to such provisions.

“Collateral” shall mean the property covered by the Collateral Documents and any other property, real or personal, tangible or intangible, nowexisting or hereafter acquired, that may at any time be or become subject to a Lien in favor of the Agent, on behalf of the Holders, to secure any or all of theObligations.

“Collateral Documents” shall mean the Security Agreements, the Stock Pledge Agreements, the Trademark Security Agreement, the ControlAgreements and all other instruments and agreements now or hereafter securing the whole or any part of the Obligations.

“Collection Account” shall mean that certain account of the Agent, account number 502-328-54 in the name of the Agent at Deutsche Bank TrustCompany Americas, 1 Bankers Trust Plaza, New York, New York 10006, ABA number 021-001-033, or such other account as may be designated by the Agent.

“Commitment Termination Date” shall mean the earliest of (a) February 11, 2011, (b) the date of termination of the Revolving Credit Commitmentspursuant to Section 8.2, (c) the date of termination of the Revolving Credit Commitments in accordance with the provisions of Section 1.2, and (d) the“Commitment Termination Date” under the Receivables Funding Documents.

“Commitments” shall mean as to all of the Lenders, the aggregate of all of the Lenders’ Revolving Credit Commitments, which aggregatecommitment shall be $50,000,000, as such amount may be increased to up to $100,000,000 pursuant to Section 1.2(e), or otherwise adjusted, if at all, from time totime in accordance with the Agreement.

“ComputerLand” shall mean ComputerLand Corporation, a California corporation, a wholly-owned Subsidiary of the Borrower.

“Confidential Information” shall have the meaning assigned to it in Section 10.13(b).

“Contracts” shall mean all the contracts, under-takings, or agreements (other than rights evidenced by Chattel Paper, Documents or Instruments) inor under which the Borrower or any Subsidiary thereof may now or hereafter have any right, title or interest, including any agreement relating to the terms ofpayment or the terms of performance of any Account.

“Control Agreements” shall mean a control agreement, in form and substance satisfactory to the Agent, executed and delivered by the Borrower orthe applicable Domestic

ANNEX A - 6


EXECUTION VERSION Subsidiary thereof, the Agent, and the applicable securities intermediary (with respect to a securities account of Borrower or such Domestic Subsidiary) or bank(with respect to a deposit account of Borrower or such Domestic Subsidiary).

“Copyrights” shall mean any copyright to which the Borrower or any Subsidiary thereof now or hereafter has title, as well as any application for acopyright hereafter made by the Borrower or any Subsidiary thereof.

“Credit Facility Concentration Percentage” shall mean, with respect to any Special Obligor, that percentage, if any, set forth in Schedule II to thisAgreement with respect to such Special Obligor, or such other percentage as the Agent (with the consent of the Requisite Lenders) may at any time and fromtime to time designate in its sole discretion with respect to such Special Obligor in a written notification to the Borrower.

“Credit Party” shall mean the Borrower and each Guarantor.

“Debt” of any Person shall mean (a) all indebtedness of such Person for borrowed money or for the deferred purchase price of property or services(including reimbursement and all other obligations with respect to surety bonds, letters of credit and bankers’ acceptances, whether or not matured, but notincluding non-delinquent obligations to trade creditors incurred in the ordinary course of business), (b) all obligations evidenced by notes, bonds, debentures orsimilar instruments, (c) all indebtedness created or arising under any conditional sale or other title retention agreements with respect to property acquired by suchPerson (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of suchproperty), (d) all Capital Lease Obligations, (e) all Guaranteed Debt, (f) all Debt referred to in clause (a), (b), (c), (d) or (e) above secured by (or for which theholder of such Debt has an existing right, contingent or otherwise, to be secured by) any Lien upon or in property (including accounts and contract rights) ownedby such Person, even though such Person has not assumed or become liable for the payment of such Debt, (g) the Obligations, (h) all liabilities under Title IV ofERISA and (i) all liabilities under or with respect to interest rate protection or currency exchange agreements.

“Default” shall mean any event which, with the passage of time or notice or both, would, unless cured or waived, become an Event of Default.

“Default Rate” shall mean (a) with respect to principal owing on Revolving Credit Advances or Swing Line Advances, a rate per annum equal totwo percent (2%) over the rate or rates of interest otherwise in effect hereunder from time to time therefor, (b) with respect to the Letter of Credit Fee, a rate perannum equal to two percent (2%) over the Letter of Credit Fee otherwise in effect hereunder from time to time therefor, and (c) with respect to interest or otherObligations (excluding principal on the Revolving Credit Advances and Swing Line Advances and the fee payable on Letter of Credit Obligations), a rate perannum equal to the Index Rate in effect from time to time plus three percent (3.0%).

“Deferred Taxes” shall mean, with respect to any Person at any date, the amount of deferred taxes of such Person as shown on the balance sheet ofsuch Person as of such date prepared in accordance with GAAP.

ANNEX A - 7


EXECUTION VERSION

“Deposit Accounts” means all “deposit accounts” as such term is defined in the Code, now or hereafter held in the name of the Borrower or anySubsidiary thereof.

“Disbursement Accounts” shall have the meaning assigned to it in Annex B.

“Documents” shall mean all “documents,” as such term is defined in the Code, now owned or hereafter acquired by the Borrower or any Subsidiarythereof, wherever located.

“DOL” shall mean the United States Department of Labor or any successor thereto.

“Dollars” and “$” shall mean lawful money of the United States of America.

“Domestic Excluded Subsidiary” shall mean any Domestic Subsidiary, if (i) such Domestic Subsidiary has not executed and delivered to the Agent,for the benefit of the Holders, a Guaranty or Security Agreement, or such Guaranty or Security Agreement is not then in effect, or (ii) a Stock Pledge Agreementin respect of all of the then outstanding Stock of such Domestic Subsidiary has not been executed and delivered to the Agent, for the benefit of the Holders, or isnot then in effect.

“Domestic Person” shall mean any Person organized under the laws of the United States of America, any State thereof or the District of Columbia.

“Domestic Subsidiary” shall mean a Subsidiary organized under the laws of the United States of America, any State thereof or the District ofColumbia, other than EMJ America, Inc., a North Carolina corporation.

“Domestic Target” shall have the meaning assigned to it in Section 6.1(b).

“Effective Date” shall mean the date on which this Agreement becomes effective in accordance with Section 2.1.

“Eligible Inventory” shall have the meaning assigned to it in Section 1.5 of the Agreement.

“Eligible Receivables” shall have the meaning assigned to it in the Receivables Funding Documents.

“Environmental Laws” shall mean all Federal, state and local and foreign laws, statutes, ordinances, orders and regulations, now or hereafter ineffect, and in each case as amended or supplemented from time to time, and any applicable judicial or administrative interpretation thereof relating to theregulation and protection of human health, safety, the environment and natural resources (including ambient air, surface water, groundwater, wetlands, landsurface or subsurface strata, wildlife, aquatic species and vegetation). Environmental Laws include, but are not limited to, the Comprehensive EnvironmentalResponse, Compensation, and Liability Act of 1980, as amended (42 U.S.C. Sections 9601 etseq.) (“CERCLA”); the Hazardous Material Transportation Act, asamended (49 U.S.C. Sections 1801 etseq.); the Federal Insecticide, Fungicide, and Rodenticide Act, as amended (7 U.S.C. Sections 136 etseq.);

ANNEX A - 8


EXECUTION VERSION the Resource Conservation and Recovery Act, as amended (42 U.S.C. Sections 6901 etseq.) (“RCRA”); the Toxic Substance Control Act, as amended (15 U.S.C.Sections 2601 etseq.); the Clean Air Act, as amended (42 U.S.C. Sections 740 etseq.); the Federal Water Pollution Control Act, as amended (33 U.S.C. Sections1251 etseq.); the Occupational Safety and Health Act, as amended (29 U.S.C. Sections 651 etseq.) (“OSHA”); and the Safe Drinking Water Act, as amended (42U.S.C. Sections 300(f) etseq.), and any and all regulations promulgated thereunder, and all analogous state and local and foreign counterparts or equivalents andany transfer of ownership notification or approval statutes.

“Environmental Liabilities and Costs” shall mean all liabilities, obligations, responsibilities, remedial actions, removal costs, losses, damages,punitive damages, consequential damages, treble damages, costs and expenses (including all reasonable fees, disbursements and expenses of counsel, experts andconsultants and costs of investigation and feasibility studies), fines, penalties, sanctions and interest incurred as a result of any claim, suit, action or demand byany person or entity, whether based in contract, tort, implied or express warranty, strict liability, criminal or civil statute or common law (including any thereofarising under any Environmental Law, permit, order or agreement with any Governmental Authority) and which relate to any health or safety condition regulatedunder any Environmental Law or in connection with any other environmental matter or Release, threatened Release, or the presence of a Hazardous Material.

“Equipment” shall mean all “equipment,” as such term is defined in the Code, now owned or hereafter acquired by the Borrower or any Subsidiarythereof, wherever located and, in any event, including all of the Borrower’s or any of its Subsidiaries’ machinery and equipment, including processingequipment, conveyors, machine tools, data processing and computer equipment, including embedded software and peripheral equipment and all engineering,processing and manufacturing equipment, office machinery, furniture, materials handling equipment, tools, attachments, accessories, automotive equipment,trailers, trucks, forklifts, molds, dies, stamps, motor vehicles, rolling stock and other equipment of every kind and nature, trade fixtures and fixtures not forming apart of real property, together with all additions and accessions thereto, replacements therefor, all parts therefor, all substitutes for any of the foregoing, fueltherefor, and all manuals, drawings, instructions, warranties and rights with respect thereto, and all products and proceeds thereof and condemnation awards andinsurance proceeds with respect thereto.

“ERISA” shall mean the Employee Retirement Income Security Act of 1974 (or any successor legislation thereto), as amended from time to time,and any regulations promulgated thereunder.

“ERISA Affiliate” shall mean any trade or business (whether or not incorporated) under common control with the Borrower or any Subsidiarythereof and which, together with the Borrower or such Subsidiary, is treated as a single employer within the meaning of Section 414(b), (c), (m) or (o) of theIRC.

“ERISA Event” shall mean, with respect to the Borrower, any Subsidiary thereof or any ERISA Affiliate, (a) a Reportable Event with respect to aTitle IV Plan or a Multi-employer Plan; (b) the withdrawal of the Borrower, any Subsidiary thereof or any ERISA

ANNEX A - 9


EXECUTION VERSION Affiliate from a Title IV 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) ofERISA; (c) the complete or partial withdrawal of the Borrower, any Subsidiary thereof or any ERISA Affiliate from any Multi-employer Plan; (d) the filing of anotice of intent to terminate a Title IV Plan or the treatment of a plan amendment as a termination under Section 4041(c) of ERISA; (e) the institution ofproceedings to terminate a Title IV Plan or Multi-employer Plan by the PBGC; (f) the failure to make required contributions to a Qualified Plan; or (g) any otherevent or condition which might reasonably be expected to constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trusteeto administer, any Title IV Plan or Multi-employer Plan or the imposition of any material liability under Title IV of ERISA, other than PBGC premiums due butnot delinquent under Section 4007 of ERISA.

“Event of Default” shall have the meaning assigned to it in Section 8.1.

“Excluded Assets” means any rights or interest of Borrower arising in connection with (a) the Accounts Receivable Assignment Agreement dated asof February 28, 2006, among Corporativo Lanix, S.A. de C.V., Alef Soluciones Integrales, S.A. de C.V. and Accesorios y Suministros Informáticos, S.A. de C.V.(collectively, the “Lanix Consortium”), as assignors, Synnex Mexico and Borrower, as assignee, as the same may be amended, extended, replaced, restated,supplemented or otherwise modified from time to time, (b) the Accounts Receivable Assignment Agreement dated as of December 5, 2005, among the LanixConsortium, as assignors, Synnex Mexico and Borrower, as assignee, as the same may be amended, extended, replaced, restated supplemented or otherwisemodified from time to time, (c) the Multiannual Services Agreement (Contrato Multianual de Prestación de Servicios) number 62.PE.2005-2010, datedOctober 31, 2005, between the Lanix Consortium, as services providers, and the Ministry of Education (Secretaría de Educación Pública), a Ministry of theFederal Public Administration of Mxico (the “SEP”), as the same may be amended, extended, replaced, restated, supplemented or otherwise modified from timeto time, (d) the Multiannual Services Agreement (Contrato Multianual de Prestación de Servicios) number 67.PE.2005-2010, dated October 31, 2005, betweenthe Lanix Consortium, as services providers, and SEP, as the same may be amended, extended, replaced, restated, supplemented or otherwise modified from timeto time, (e) any payments, accounts (as such term is defined in the Code) or other amounts payable with respect to any of the foregoing rights or interests, (f) anyproceeds thereof, or (g) that certain deposit account number 945912430012 maintained with Bank of America (the “Mex Bank of America Account”), except thatany amounts deposited in the Mex Bank of America Account not described above shall not constitute “Excluded Assets”.

“Federal Funds Rate” shall mean, for any day, a floating rate equal to the weighted average of the rates on overnight federal funds transactionsamong members of the Federal Reserve System, as determined by the Agent in its sole discretion, which determination shall be final, binding and conclusive(absent manifest error).

“Federal Reserve Board” means the Board of Governors of the Federal Reserve System, or any successor thereto.

ANNEX A - 10


EXECUTION VERSION

“Fee Letter” shall mean that certain amended and restated letter agreement dated the Effective Date between the Borrower and the Agent, amendingand restating that certain letter agreement dated the Closing Date between the Borrower and Agent.

“Fees” shall mean any and all fees payable to the Agent or any Lender pursuant to the Agreement or any of the other Loan Documents.

“Financials” shall mean the financial statements referred to in paragraph 1 of Schedule 3.4.

“First Amended Credit Agreement” shall have the meaning assigned to it in the Recitals of the Agreement.

“Fiscal Month” shall mean, for the Borrower and its Subsidiaries, each calendar month.

“Fiscal Quarter” shall mean, for the Borrower and its Subsidiaries, each three-month period ending on February 28 (or 29), May 31, August 31, andNovember 30 in each year.

“Fiscal Year” shall mean, for the Borrower and its Subsidiaries, the twelve-month period ending on November 30 in each year. Subsequent changesof the fiscal year of the Borrower or any of its Subsidiaries shall not change the term “Fiscal Year,” unless the Requisite Lenders shall consent in writing to suchchange.

“Fixtures” shall mean all “fixtures” as such term is defined in the Code, now owned or hereafter acquired by the Borrower or any Subsidiary thereof.

“Foreign Person” shall mean any Person other than a Domestic Person.

“Foreign Subsidiary” shall mean any Subsidiary that is not a Domestic Subsidiary.

“Foreign Target” shall have the meaning assigned to it in Section 6.1(b).

“GAAP” shall mean generally accepted accounting principles in the United States of America as in effect from time to time, consistently applied, assuch term is further defined in Annex G to the Agreement.

“GE Capital” shall mean General Electric Capital Corporation, a Delaware corporation, and its successors.

“GECDFC” means GE Commercial Distribution Finance Corporation.

“GECDFC Documents” means any document or agreement evidencing the GECDFC Obligations from time to time, in each case as amended,modified, restated or replaced from time to time.

ANNEX A - 11


EXECUTION VERSION

“GECDFC Intercreditor Agreement” means that certain Amended and Restated Intercreditor Agreement, dated as of the date hereof, among theBorrower, SFC, GECDFC and GE Capital in various capacities, and the Subsidiaries of the Borrower from time to time party thereto.

“GECDFC Obligations” shall have the meaning assigned to it in the definition of “Obligations”.

“General Intangibles” shall mean all “general intangibles,” as such term is defined in the Code, now owned or hereafter acquired by the Borrower orany Subsidiary thereof, including all right, title and interest which the Borrower or any Subsidiary thereof may now or hereafter have in or under any Contract, allpayment intangibles, customer lists, Licenses, Copyrights, Trademarks, Patents, and all applications therefor and reissues, extensions or renewals thereof, rightsin Intellectual Property, interests in partnerships, joint ventures and other business associations, licenses, permits, copyrights, trade secrets, proprietary orconfidential information, inventions (whether or not patented or patentable), technical information, procedures, designs, knowledge, know-how, software, databases, data, skill, expertise, experience, processes, models, drawings, materials and records, goodwill (including the goodwill associated with any Trademark orTrademark License), all rights and claims in or under insurance policies (including insurance for fire, damage, loss and casualty, whether covering personalproperty, real property, tangible rights or intangible rights, all liability, life, key man and business interruption insurance, and all unearned premiums),uncertificated securities, choses in action, deposit, checking and other bank accounts, rights to receive tax refunds and other payments, rights to receivedividends, distributions, cash, Instruments and other property in respect of or in exchange for pledged Stock and Investment Property, rights of indemnification,all books and records, correspondence, credit files, invoices and other papers, including without limitation all tapes, cards, computer runs and other papers anddocuments in the possession or under the control of the Borrower or any Subsidiary thereof or any computer bureau or service company from time to time actingfor the Borrower or any of its Subsidiaries.

“Goods” shall mean all “goods” as defined in the Code, now owned or hereafter acquired by the Borrower or any Subsidiary thereof, whereverlocated, including embedded software to the extent included in “goods” as defined in the Code, manufactured homes, standing timber that is cut and removed forsale and unborn young of animals.

“Governmental Authority” shall mean the United States of America, any state, local or other political subdivision thereof, and any entity exercisingexecutive, legislative, judicial, regulatory or administrative functions thereof or pertaining thereto.

“Guaranteed Debt” shall mean, as to any Person, any obligation of such Person guaranteeing any indebtedness, lease, dividend, or other obligation(“primary obligations”) of any other Person (the “primary obligor”) in any manner including any obligation or arrangement of such Person (a) to purchase orrepurchase any such primary obligation, (b) to advance or supply funds (i) for the purchase or payment of any such primary obligation or (ii) to maintain workingcapital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency or any balance sheet condition of the primary obligor, (c) topurchase property, securities or services primarily for the purpose of assuring the owner of any such primary

ANNEX A - 12


EXECUTION VERSION obligation of the ability of the primary obligor to make payment of such primary obligation, or (d) to indemnify the owner of such primary obligation against lossin respect thereof. The amount of any Guaranteed Debt at any time shall be deemed to be an amount equal to the lesser at such time of (x) the stated ordeterminable amount of the primary obligation in respect of which such Guaranteed Debt is made and (y) the maximum amount for which such Person may beliable pursuant to the terms of the instrument embodying such Guaranteed Debt; or, if not stated or determinable, the maximum reasonably anticipated liability(assuming full performance) in respect thereof.

“Guaranties” shall mean, collectively, the Subsidiary Guaranty and each other guaranty, in substantially the form attached as Exhibit F-4 hereto andin substance reasonably satisfactory to the Agent, executed by any Guarantor in favor of the Agent, on behalf of the Holders, in respect of the Obligations.

“Guarantors” shall mean, collectively, ComputerLand Corporation, MiTAC Industrial Corp. and each other Person, if any, which is requested toexecute a guaranty or other similar agreement under this Agreement in favor of the Agent, on behalf of the Holders, in respect of the Obligations.

“Hazardous Material” shall mean a Hazardous Substance and/or a Hazardous Waste.

“Hazardous Substance” shall mean any element, material, compound, mixture, solution, chemical, substance, or pollutant within the definition of“hazardous substance” under Section 101(14) of the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. Section 9601(14);petroleum or any fraction, by-product or distillation product thereof; asbestos, polychlorinated biphenyls, or any radioactive substances; and any materialregulated as a hazardous substance by any jurisdiction in which the Borrower or any Subsidiary thereof owns or operates or has owned or operated a facility.

“Hazardous Waste” shall mean any element, pollutant, contaminate or discarded material (including any radioactive material) within the definitionof Section 103(6) of the Resource Conservation and Recovery Act, 42 U.S.C. Section 6903(6); and any material regulated as a hazardous waste by anyjurisdiction in which the Borrower or any Subsidiary thereof owns or operates or has owned or operated a facility, or to which the Borrower or any Subsidiarythereof sends material for treatment, storage or disposal as waste.

“Hedge Agreement” means any and all transactions, agreements or documents now existing or hereafter entered into, which provide for an interestrate, credit, commodity or equity swap, cap, floor, collar, forward foreign exchange transaction, currency swap, cross currency rate swap, currency option, or anycombination of, or option with respect to, these or similar transactions, for the purpose of hedging the Borrower’s exposure to fluctuations in interest or exchangerates, loan, credit exchange, security or currency valuations or commodity prices.

“Holders” means the Agent, the Lenders, the L/C Issuer and GECDFC.

ANNEX A - 13


EXECUTION VERSION

“IBM Intercreditor Agreement” means the Second Amended and Restated Intercreditor Agreement dated as of the date hereof, among the Borrower,SFC, the Subsidiaries of the Borrower from time to time party thereto, GE Capital, in various capacities, IBM Credit LLC, and IBM Canada Limited, asamended, supplemented or otherwise modified from time to time.

“Incremental Commitment” shall have the meaning assigned to it in Section 1.2(e).

“Incremental Commitment Agreement” means an agreement delivered by an Incremental Lender, in form and substance reasonably satisfactory tothe Agent and accepted by it and the Borrower, by which such Incremental Lender confirms its new or additional commitment pursuant to Section 1.2(e) andagrees to become bound to this Agreement and the other Loan Documents as a “Lender” thereunder.

“Incremental Commitment Date” shall have the meaning assigned to it in Section 1.2(e).

“Incremental Lender” shall have the meaning assigned to it in Section 1.2(e).

“Indemnified Person” shall have the meaning assigned to it in Section 1.12.

“Independent Accounting Firm” shall mean any of (i) Deloitte & Touche USA LLP, (ii) Ernst & Young LLP, (iii) KPMG LLP or(iv) Pricewaterhouse Coopers LLP or any of their respective successors so long as such successor is one of the four largest United States accounting firms;provided, that such firm is independent with respect to the Borrower within the meaning of the Securities Act of 1933, as amended.

“Index Rate” shall mean, for any day, a floating rate equal to the higher of (i) the rate publicly quoted from time to time by The Wall Street Journalas the “base rate on corporate loans at large U.S. money center commercial banks” (or, if The Wall Street Journal ceases quoting a base rate of the typedescribed, the highest per annum rate of interest published by the Federal Reserve Board in Federal Reserve statistical release H.15 (519) entitled “SelectedInterest Rates” as the Bank prime loan rate or its equivalent), and (ii) the Federal Funds Rate plus fifty (50) basis points per annum. Each change in any interestrate provided for in the Agreement based upon the Index Rate shall take effect at the time of such change in the Index Rate.

“Index Rate Loan” shall mean the Swing Line Loan (after maturity thereof) and any portion of the Revolving Credit Loan bearing interest byreference to the Index Rate.

“Instruments” shall mean all “instruments,” as such term is defined in the Code, now owned or hereafter acquired by the Borrower or any Subsidiarythereof, wherever located, and, in any event, including all certificated securities, all certificates of deposit, and all promissory notes and other evidences ofindebtedness, other than instruments that constitute, or are a part of a group of writings that constitute, Chattel Paper.

“Intellectual Property” shall mean, collectively, all Trademarks, all Patents, all Copyrights and all Licenses now held or hereafter acquired by theBorrower or any Subsidiary thereof, together with all franchises, tax refund claims, rights of indemnification, payments under insurance, indemnities, warrantiesand guarantees payable with respect to the foregoing.

ANNEX A - 14


EXECUTION VERSION

“Intercreditor Agreements” shall mean each of (i) that certain Amended and Restated Intercreditor Agreement dated as of the date hereof, among theBorrower, SFC, the other Subsidiaries of the Borrower from time to time party thereto and GE Capital, and acknowledged by Redwood Receivables Corporation,(ii) the IBM Intercreditor Agreement, (iii) the GECDFC Intercreditor Agreement, (iv) that certain Amended and Restated Intercreditor Agreement, dated as ofthe date hereof, among Hewlett-Packard Company, GE Capital, in various capacities, the Borrower, SFC, and the Subsidiaries of the Borrower from time to timeparty thereto, and acknowledged by Redwood Receivables Corporation, and (v) each other intercreditor agreement entered into from time to time by theBorrower, SFC, any Subsidiaries of the Borrower, GE Capital in various capacities, and other creditors, in each case as amended, supplemented or otherwisemodified from time to time.

“Interest Payment Date” means (a) as to any Index Rate Loan, the first Business Day of each month to occur while such Loan is outstanding, (b) asto any LIBOR Loan (other than the Swing Line Loan), the last day of the applicable LIBOR Period, and (c) as to any Swing Line Advance, the maturity date ofsuch Swing Line Advance; provided that, in addition to the foregoing, each of (x) the date upon which all of the Commitments have been terminated and theAdvances have been paid in full and (y) the Commitment Termination Date shall be deemed to be an “Interest Payment Date” with respect to any interest whichis then accrued under the Agreement.

“Inventory” shall mean all “inventory,” as such term is defined in the Code, now owned or hereafter acquired by the Borrower or any Subsidiarythereof, wherever located, and in any event including inventory, merchandise, goods and other personal property that are held by or on behalf of the Borrower orany Subsidiary thereof for sale or lease or are furnished or are to be furnished under a contract of service, or that constitute raw materials, work in process,finished goods, returned goods, or materials or supplies of any kind, nature or description used or consumed or to be used or consumed in the Borrower’s or anyof its Subsidiaries’ business or in the processing, production, packaging, promotion, delivery or shipping of the same, including all supplies and embeddedsoftware.

“Investment” shall mean, for any Person (a) the acquisition (whether for cash, property, services or securities or otherwise) of capital stock, bonds,notes, debentures, partnership or other ownership interests or other securities of any other Person or any agreement to make any such acquisition; (b) the makingof any deposit with, or advance, loan or other extension of credit to, any other Person (including the purchase of property from another Person subject to anunderstanding or agreement, contingent or otherwise, to resell such property to such Person); and (c) the entering into of any Guaranteed Debt of, or othercontingent obligation with respect to, Debt or other liability of any other Person and (without duplication) any amount committed to be advanced, lent orextended to such Person.

“Investment Property” shall mean all “investment property” as such term is defined in the Code now owned or hereafter acquired by the Borroweror any Subsidiary thereof, wherever located, including (i) all securities, whether certificated or uncertificated, including

ANNEX A - 15


EXECUTION VERSION stocks, bonds, interests in limited liability companies, partnership interests, treasuries, certificates of deposit, and mutual fund shares; (ii) all securitiesentitlements of the Borrower or any Subsidiary thereof, including the rights of the Borrower or any Subsidiary thereof to any securities account and the financialassets held by a securities intermediary in such securities account and any free credit balance or other money owing by any securities intermediary with respect tothat account; (iii) all securities accounts of the Borrower or any Subsidiary thereof; (iv) all commodity contracts of the Borrower or any Subsidiary thereof; and(v) all commodity accounts held by the Borrower or any Subsidiary thereof.

“IRC” shall mean the Internal Revenue Code of 1986, as amended, and any successor thereto.

“IRS” shall mean the Internal Revenue Service, or any successor thereto.

“L/C Issuer” has the meaning ascribed to it in Annex J.

“L/C Sublimit” has the meaning ascribed to it in Annex J.

“Leases” shall mean all of those leasehold estates in real property now owned or hereafter acquired by the Borrower or any Subsidiary thereof, aslessee or sublessor.

“Lenders” shall mean GE Capital and the other Lenders, if any, named on the signature pages of the Agreement, and if any such Lender shall decideto assign all or any portion of the Obligations in accordance with the terms and conditions of this Agreement, such term shall include such assignee.

“Letter of Credit” means a standby letter of credit issued for the account of Borrower by any L/C Issuer, or a bankers’ acceptance issued byBorrower, for which Agent and Lenders have incurred Letter of Credit Obligations. “Letters of Credit” is the plural form of “Letter of Credit”. The term does notinclude a Swap Related L/C.

“Letter of Credit Fee” has the meaning ascribed to it in Annex J.

“Letter of Credit Obligations” means all outstanding obligations incurred by Agent and Lenders at the request of Borrower, whether direct orindirect, contingent or otherwise, due or not due, in connection with the issuance of Letters of Credit by Agent or another L/C Issuer or the purchase of aparticipation as set forth in Annex J with respect to any Letter of Credit. The amount of such Letter of Credit Obligations shall be the maximum amount that maybe payable by Agent or Lenders thereupon or pursuant thereto.

“Letter-of-Credit Rights” means letter-of-credit rights as such term is defined in the Code, now owned or hereafter acquired by the Borrower or anySubsidiary thereof, including rights to payment or performance under a letter of credit, whether or not the Borrower or any of its Subsidiaries, as beneficiary, hasdemanded or is entitled to demand payment or performance.

“LIBOR Business Day” shall mean a Business Day on which banks in the city of London are generally open for interbank or foreign exchangetransactions.

ANNEX A - 16


EXECUTION VERSION

“LIBOR Loan” shall mean the Swing Line Loan (until maturity thereof) and any portion of the Revolving Credit Loan bearing interest by referenceto the LIBOR Rate.

“LIBOR Period” shall mean, with respect to any portion of the Revolving Credit Loan requested as or converted into a LIBOR Loan, each periodcommencing on a LIBOR Business Day selected by the Borrower pursuant to the Agreement and ending one, two or three months thereafter, as selected by theBorrower’s irrevocable notice to the Agent as set forth in Section 1.4(d); provided that the foregoing provision relating to LIBOR Periods is subject to thefollowing:

(a) if any LIBOR Period would otherwise end on a day that is not a LIBOR Business Day, such LIBOR Period shall be extended to the nextsucceeding LIBOR Business Day unless the result of such extension would be to carry such LIBOR Period into another calendar month in which eventsuch LIBOR Period shall end on the immediately preceding LIBOR Business Day;

(b) any LIBOR Period that would otherwise extend beyond the Commitment Termination Date shall end two (2) LIBOR Business Days priorto such date;

(c) any LIBOR Period pertaining to a LIBOR Loan that begins on the last LIBOR Business Day of a calendar month (or on a day for whichthere is no numerically corresponding day in the calendar month at the end of such LIBOR Period) shall end on the last LIBOR Business Day of a calendarmonth;

(d) the Borrower shall select LIBOR Periods so as not to require a payment or prepayment of any LIBOR Loan during a LIBOR Period forsuch Loan; and

(e) The Borrower shall select LIBOR Periods so that there shall be no more than ten (10) separate LIBOR Loans (other than the Swing LineLoan) in existence at any one time.

“LIBOR Rate” shall mean for each LIBOR Period, a rate of interest determined by the Agent equal to:

(a) the offered rate for deposits in United States Dollars for the applicable LIBOR Period which appears on Telerate Page 3750 as of 11:00a.m., London time, on the second full LIBOR Business Day next preceding the first day of such LIBOR Period; divided by

(b) a number equal to 1.0 minus the aggregate (but without duplication) of the rates (expressed as a decimal fraction) of reserve requirementsin effect on the day which is two (2) LIBOR Business Days prior to the beginning of such LIBOR Period (including basic, supplemental, marginal andemergency reserves under any regulations of the Board of Governors of the Federal Reserve System or other governmental authority having jurisdictionwith respect thereto, as now and from time to time in effect) for Eurocurrency funding (currently referred to as “Eurocurrency liabilities” in Regulation Dof such Board which are required to be maintained by a

ANNEX A - 17


EXECUTION VERSION

member bank of the Federal Reserve System (such rate to be adjusted to the nearest one sixteenth of one percent (1/16th of 1%) or, if there is not a nearestone sixteenth of one percent (1/16th of 1%), to the next highest one sixteenth of one percent (1/16th of 1%).

If such interest rates shall cease to be available from Telerate News Service, the LIBOR Rate shall be determined from such financial reportingservice or other information as shall be mutually acceptable to the Agent and the Borrower.

“License” shall mean any Patent License, Trademark License or other license of rights or interests now held or hereafter acquired by the Borroweror any Subsidiary thereof.

“Lien” shall mean any mortgage, deed to secure debt or deed of trust, pledge, hypothecation, assignment, deposit arrangement, lien, charge, claim,security interest, easement or encumbrance, or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever(including any lease or title retention agreement, any financing lease having substantially the same economic effect as any of the foregoing, and the filing of, oragreement to give, any financing statement perfecting a security interest under the Code or comparable law of any jurisdiction).

“Loan Documents” shall mean this Agreement, the Revolving Credit Notes, the Swing Line Note, the Guaranties, the Collateral Documents, theOmnibus Amendment, the Post-Closing Letter, the Intercreditor Agreements and all agreements, instruments, documents and certificates in favor of the Lendersexecuted in connection with the transactions contemplated by this Agreement, including, without limitation, those that are identified in the Schedule of ClosingDocuments attached as Annex C, and including all other pledges, powers of attorney, consents, assignments, contracts, notices, the Master Standby Agreement,each Letter of Credit issued hereunder and other letter of credit agreements and other written matter whether heretofore, now or hereafter executed by or onbehalf of the Borrower or any Guarantor and delivered to the Agent or the Lenders in connection with this Agreement or the financing transactions contemplatedhereby.

“Margin Stock” shall have the meaning specified in Regulation T, U or X of the Board of Governors of the Federal Reserve System, as in effectfrom time to time.

“Master Standby Agreement” means the Master Agreement for Standby Letters of Credit, dated as of May 17, 2006, a copy of which is attachedhereto as Exhibit K, between Borrower as Applicant, and GE Capital as Issuer.

“Material Adverse Effect” shall mean a material adverse effect on (i) the business, assets, liabilities, operations, prospects or financial condition ofthe Borrower and its Subsidiaries taken as a whole, (ii) the Borrower’s ability to pay or perform the Obligations in accordance with the terms thereof, (iii) theCollateral or the Agent’s Liens, on behalf of the Holders, on the Collateral or the priority of any such Liens, or (iv) the Agent’s or any Lender’s rights andremedies under this Agreement and the other Loan Documents.

“Material Contract” has the meaning assigned to it in Section 3.9.

ANNEX A - 18


EXECUTION VERSION

“Material Subsidiary” shall mean any Subsidiary of the Borrower having assets with an aggregate book value or fair market value equal to or greaterthan $5,000,000.

“Maximum Amount” shall mean, at any particular time, an amount equal to the aggregate Revolving Credit Commitments of all the Lenders, whichaggregate commitment shall be $50,000,000, as such amount may be adjusted, if at all, from time to time in accordance with the Agreement.

“Maximum Lawful Rate” shall have the meaning assigned to it in Section 1.4(d).

“Maximum Mex Guarantee” has the meaning ascribed to it in Section 6.6(e).

“Mex Agent” has the meaning ascribed to it in the definition of “Synnex Mexico Loan Agreement”.

“Mex Bank of America Account” has the meaning ascribed to it in the definition of “Excluded Assets”.

“Mex Lenders” has the meaning ascribed to it in the definition of “Synnex Mexico Loan Agreement”.

“Mitac Group” shall mean any or all of Mitac International Corp., a Taiwanese corporation, and Synnex Technology International, a Taiwanesecorporation.

“Multi-employer Plan” shall mean a “Multi-employer plan” as defined in Section 4001(a) (3) of ERISA, and to which the Borrower, any Subsidiarythereof or any ERISA Affiliate is making, is obligated to make, or within the last six years has made or been obligated to make, contributions on behalf ofparticipants who are or were employed by any of them.

“Net Borrowing Availability” shall mean, as of any date of determination, (a) the Borrowing Availability on such date, less (b) the Revolving CreditLoan then outstanding.

“Net Cash Proceeds” shall mean (a) proceeds received by the Borrower or any Domestic Subsidiary thereof in cash (including cash, equivalentsreadily convertible into cash, and such proceeds of any notes received as consideration of any other non-cash consideration when the Borrower or such DomesticSubsidiary receives payment thereon) from the sale, assignment or other disposition of any assets or property of the Borrower or such Domestic Subsidiary, netof (i) the costs of sale, assignment or other disposition (which may include only reasonable expenses of the Borrower or such Subsidiary incurred in connectionwith such transaction), and (ii) any income, franchise, transfer or other tax liability arising from such transaction, and (b) with respect to any Permitted ForeignInvestment or any Additional Domestic Investment, the proceeds received in cash by the Borrower from the relevant Foreign Subsidiary or Domestic Subsidiary,as applicable, in respect of any dividend or any repayment of principal on any loan constituting a Permitted Foreign Investment or Additional DomesticInvestment, as applicable, net of (i) any costs and expenses incurred by Borrower in connection with such dividend or repayment, and (ii) any income, franchise,transfer or other tax liability arising from or in connection with such dividend or repayment.

ANNEX A - 19


EXECUTION VERSION

“Net Liquidity Availability” shall mean, as of any date of determination, the sum of (i) the Net Borrowing Availability on such date plus (ii) theFunding Availability (as defined in the Receivables Funding Documents) on such date.

“Net Receivables Advance Rate” shall mean the positive difference, if any, of (i) the lesser of (A) 85% and (B) (x) 100%, minus (y) the product of 2times the average Dilution Ratio (as defined in the Receivables Funding Documents) for the immediately preceding twelve-month period, plus (z) 5%, less(ii) the Dynamic Advance Rate (as defined in the Receivables Funding Documents).

“Net Receivables Balance” shall have the meaning assigned to it in the Receivables Funding Documents.

“Non-Funding Lender” shall have the meaning assigned to it in Section 9.9(d).

“Note” shall mean any Revolving Credit Note or Swing Line Note.

“Notice of Conversion/Continuation” shall have the meaning assigned to it in Section 1.4(d).

“Notice of Revolving Credit Advance” shall have the meaning assigned to it in Section 1.1(a)(ii).

“Notice of Swing Line Advance” shall have the meaning assigned to it in Section 1.1(b)(i).

“Obligations” shall mean all loans, advances, liabilities and obligations for the payment of monetary amounts (whether or not such payment is thenrequired or contingent, or amounts are liquidated or determinable) owing by the Borrower or any Guarantor to (a) the Agent or any Lender, of any kind or nature,present or future, whether or not evidenced by any note, agreement, letter of credit agreement or other instrument, arising under any of the Loan Documents(including, without limitation, all debts, liabilities and obligations of the Borrower or any Guarantor to the Agent and/or any Lender now or hereafter arising fromor in connection with Bank Products (the “Cash Management Obligations”)), and (b) GECDFC and its successors and assigns, of any kind or nature, present orfuture, whether or not evidenced by any note, agreement, letter of credit agreement or other instrument (the “GECDFC Obligations”). This term includes allprincipal, interest (including interest which accrues after the commencement of any case or proceeding referred to in Section 8.1(f) or (g)), all Fees, Swap RelatedReimbursement Obligations, Charges, Claims, expenses, attorneys’ fees and any other sum chargeable to the Borrower or any Guarantor under any of the LoanDocuments or GECDFC Documents.

“Omnibus Amendment” shall mean the Omnibus Amendment and Reaffirmation Agreement, dated as of the date hereof, in the form attached heretoas Exhibit J, by and among the Borrower, the Guarantors and Agent, as such agreement may be amended, restated, supplemented or otherwise modified from timeto time in accordance herewith.

“Other Lender” shall have the meaning assigned to it in Section 9.9(d).

ANNEX A - 20


EXECUTION VERSION

“Other Taxes” shall have the meaning assigned to it in Section 1.14(b).

“Outstanding Balance” shall have the meaning assigned to it in the Receivables Funding Documents.

“Overadvance” has the meaning ascribed to it in Section 1.1(a)(v).

“Patent License” shall mean, with respect to the Borrower or any Subsidiary thereof, rights under any written agreement now owned or hereafteracquired by such Person granting any right with respect to any invention on which a Patent is in existence.

“Patents” shall mean all of the following in which the Borrower or any Subsidiary thereof now holds or hereafter acquires any interest: (a) all letterspatent of the United States of America or any other country, all registrations and recordings thereof, and all applications for letters patent of the United States ofAmerica or any other country, including registrations, recordings and applications in the United States Patent and Trademark Office or in any similar office oragency of the United States of America, any State or Territory thereof, or any other country, and (b) all reissues, divisions, continuations, continuations-in-part orextensions thereof.

“Payor” shall have the meaning assigned to it in Section 1.19.

“PBGC” shall mean the Pension Benefit Guaranty Corporation or any successor thereto.

“Pension Plan” shall mean an employee pension benefit plan, as defined in Section 3(2) of ERISA (other than a Multi-employer Plan), which is notan individual account plan, as defined in Section 3(34) of ERISA, and which the Borrower or, if a Title IV Plan, any Subsidiary of the Borrower or any ERISAAffiliate maintains, contributes to or has an obligation to contribute to on behalf of participants who are or were employed by any of them.

“Permitted Acquisition” shall have the meaning assigned to it in Section 6.1(b).

“Permitted Investment” shall have the meaning assigned to it in Section 6.2(g).

“Permitted Encumbrances” shall mean the following encumbrances: (a) Liens for taxes or assessments or other governmental Charges or levies,either not yet due and payable or to the extent that nonpayment thereof is permitted by the terms of Section 5.2; (b) pledges or deposits securing obligations underworkers’ compensation, unemployment insurance, social security or public liability laws or similar legislation; (c) pledges or deposits securing bids, tenders,contracts (other than contracts for the payment of money) or leases to which the Borrower or any of its Subsidiaries is a party (as lessee) made in the ordinarycourse of business; (d) deposits securing public or statutory obligations of the Borrower or any of its Subsidiaries; (e) inchoate and unperfected workers’,mechanics’, suppliers’ or similar liens arising in the ordinary course of business, so long as such liens attach only to Equipment, Fixtures and/or Real Property;(f) carriers’, warehousemen’s or other similar possessory liens arising in the ordinary course of business and securing liabilities in an outstanding aggregateamount not in excess of $500,000 at any time, so long as such liens attach only to Inventory; (g) deposits securing, or in lieu of, surety, appeal or customs bondsin proceedings to which the Borrower or any of its

ANNEX A - 21


EXECUTION VERSION Subsidiaries is a party; (h) any attachment or judgment lien not constituting an Event of Default under Section 8.1(g), so long as such lien attaches only to RealProperty; (i) zoning restrictions, easements, licenses, or other restrictions on the use of Real Property or other minor irregularities in title (including leaseholdtitle) thereto, so long as the same do not materially impair the use, value, or marketability of such Real Property; (j) presently existing or hereafter created Liensin favor of the Agent, on behalf of the Holders. (f) deposits securing, or in lieu of, surety, appeal or customs bonds in proceedings to which any Credit Party is aparty; (g) any attachment or judgment lien not constituting an Event of Default under Section 8.1(j); (h) customary rights of set off or bankers’ liens under depositagreements, agreements governing securities entitlements in securities accounts, the Code or common law, of banks or other financial institutions where theBorrower or any of its Domestic Subsidiaries maintains deposits or Investments permitted by Section 6.2(d) (other than deposits intended as cash collateral) in theordinary course of business; (i) Liens which arise under Article 4-208 of the Code in any applicable jurisdictions on items in collection in the ordinary course ofbusiness and documents and proceeds related thereto; and (j) Liens set forth in Schedule 6.7 existing on the Effective Date, but not any increase in the amountsecured by any such Liens or the coverage thereof to other property or assets.

“Permitted Domestic Acquisition” shall have the meaning assigned to it in Section 6.1(b).

“Permitted Domestic Investment” shall have the meaning assigned to it in Section 6.2(g).

“Permitted Foreign Acquisition” shall have the meaning assigned to it in Section 6.1(b).

“Permitted Foreign Investment” shall have the meaning assigned to it in Section 6.2(g).

“Permitted Investment” shall have the meaning assigned to it in Section 6.2(i).

“Permitted Other Investment” shall have the meaning assigned to it in Section 6.2(g).

“Person” shall mean any individual, sole proprietorship, partnership, joint venture, trust, unincorporated organization, association, corporation,limited liability company, institution, public benefit corporation, entity or government (whether Federal, state, county, city, municipal or otherwise, including anyinstrumentality, division, agency, body or department thereof).

“Plan” shall mean, with respect to the Borrower, any Subsidiary thereof or any ERISA Affiliate, at any time, an employee benefit plan, as defined inSection 3(3) of ERISA, which the Borrower, Subsidiary or ERISA Affiliate maintains, contributes to or has an obligation to contribute to on behalf ofparticipants who are or were employed by any of them.

“Post-Closing Letter” shall have the meaning assigned to it in Section 9.2.

ANNEX A - 22


EXECUTION VERSION

“Prior Permitted Domestic Acquisition” shall have the meaning assigned to it in Section 6.1(b).

“Prior Permitted Domestic Investment” shall have the meaning assigned to it in Section 6.2(g).

“Proceeds” shall mean all “proceeds,” as such term is defined in the Code, including (a) any and all proceeds of any insurance, indemnity, warrantyor guaranty payable to any Person from time to time with respect to any of the Collateral, (b) any and all payments (in any form whatsoever) made or due andpayable to any Person from time to time in connection with any requisition, confiscation, condemnation, seizure or forfeiture of all or any part of the Collateralby any Governmental Authority (or any Person acting under color of governmental authority), (c) any claim of any Person against third parties (i) for past,present or future infringement of any Patent or Patent License, or (ii) for past, present or future infringement or dilution of any Copyright, Copyright License,Trademark or Trademark License, or for injury to the goodwill associated with any Trademark or Trademark License, (d) any recoveries by any Person againstthird parties with respect to any litigation or dispute concerning any of the Collateral including claims arising out of the loss or nonconformity of, interferencewith the use of, defects in, or infringement of rights in, or damage to, Collateral, (e) all amounts collected on, or distributed on account of, other Collateral,including dividends, interest, distributions and Instruments with respect to Investment Property and pledged Stock, and (f) any and all other amounts, rights topayment or other property acquired upon the sale, lease, license, exchange or other disposition of Collateral and all rights arising out of Collateral.

“Production Inventory” shall mean all Inventory purchased for the purpose of building information technology systems on a contracted and asneeded basis for designated Obligors (as defined in the Receivables Funding Documents), but only if such Inventory would constitute Eligible Inventory but forthe fact that such Inventory is held for production and not for sale in the ordinary course of the Borrower’s business.

“Projections” shall mean the projections referred to in paragraph 2 of Schedule 3.4 and any other projections required to be delivered by theBorrower to the Agent and the Lenders under this Agreement.

“Property” shall have the meaning assigned to it in Section 5.14.

“Pro Rata Share” shall mean, with respect to all matters relating to any Lender, (a) the percentage obtained by dividing (i) the Revolving CreditCommitment of that Lender by (ii) the aggregate Revolving Credit Commitments of all Lenders, as such percentage may be adjusted by assignments permittedpursuant to Section 9.1, and (b) on and after the Commitment Termination Date, the percentage obtained by dividing (i) the aggregate outstanding principalbalance of the Revolving Credit Loan and the Swing Line Loan held by that Lender, by (ii) the outstanding principal balance of the Revolving Credit Loan andthe Swing Line Loan held by all Lenders.

“Qualified Plan” shall mean an employee pension benefit plan, as defined in Section 3(2) of ERISA, which is intended to be tax-qualified under IRCSection 401(a), and

ANNEX A - 23


EXECUTION VERSION which the Borrower, any Subsidiary of the Borrower or any ERISA Affiliate maintains, contributes to or has an obligation to contribute to on behalf ofparticipants who are or were employed by any of them.

“Real Property” shall mean all real property owned, leased or operated by the Borrower or any Subsidiary thereof.

“Receivables Funding Agreement” shall mean the Second Amended and Restated Receivables Funding and Administration Agreement dated as ofFebruary 12, 2007, by and among SFC, as borrower, the financial institutions signatory thereto from time to time as lenders, and GE Capital, as lender, swingline lender and administrative agent, as such agreement may be amended, restated, supplemented or otherwise modified from time to time in accordanceherewith.

“Receivables Funding Documents” means, collectively, the Receivables Funding Agreement and the Receivables Sale Agreement.

“Receivables Sale Agreement” shall mean the Second Amended and Restated Receivables Sale and Servicing Agreement dated as of February 12,2007, by and among each of the entities party thereto from time to time as originators, SFC, as buyer, and Borrower, as servicer, as such agreement may beamended, restated, supplemented or otherwise modified from time to time in accordance herewith.

“Refunded Swing Line Loan” shall have the meaning assigned to it in Section 1.1(b)(iii).

“Regulatory Change” shall mean, with respect to any Lender, any change after the date of this Agreement in Federal, state or foreign law orregulations (including Regulation D) or the adoption or making after such date of any interpretation, directive or request applying to a class of lenders includingsuch Lender of or under any Federal, state or foreign law or regulations (whether or not having the force of law and whether or not failure to comply therewithwould be unlawful) by any court or governmental or monetary authority charged with the interpretation or administration thereof.

“Release” shall mean, as to any Person, any release or any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping,leaching, dumping, disposing or migration of a Hazardous Material into the indoor or outdoor environment by such Person (or by a person under such Person’sdirection or control), including the movement of a Hazardous Material through or in the air, soil, surface water, ground water or property; but shall exclude anyrelease, discharge, emission or disposal in material compliance with a then effective permit or order of a Governmental Authority.

“Reportable Event” shall mean any of the events described in Section 4043(c) (1), (2), (3), (5), (6), (8) or (9) of ERISA.

“Required Payment” shall have the meaning assigned to it in Section 1.19.

ANNEX A - 24


EXECUTION VERSION

“Requisite Lenders” shall mean, at any time, (a) Lenders having more than 60% of the aggregate of the Revolving Credit Commitments of allLenders at such time, or (b) if the Revolving Credit Commitments have been terminated, Lenders holding more than 60% of the aggregate outstanding amount ofthe Advances at such time (with the Swing Line Loan being attributed to the Lenders other than the Swing Line Lender to the extent such other Lenders shallhave purchased participations in the Swing Line Loan in accordance with Section 1.1(b)(iv)) and Letter of Credit Obligations.

“Reserves” shall mean, with respect to the Borrowing Base of the Borrower (a) reserves established by the Agent from time to time against EligibleInventory pursuant to Section 5.10, (b) a reserve for shrinkage equal to 2.5% of Eligible Inventory, and (c) such other reserves against Eligible Receivables,Eligible Inventory or Borrowing Availability of the Borrower which the Agent may, in its reasonable business judgment, establish from time to time. Withoutlimiting the generality of the foregoing, Reserves established to ensure the payment of accrued interest or Indebtedness shall be deemed to be a reasonableexercise of the Agent’s credit judgment.

“Restricted Account” shall have the meaning assigned to it in Annex B.

“Restricted Account Agreement” shall have the meaning assigned to it in Annex B.

“Restricted Assets” shall have the meaning assigned to it in Section 6.3(f).

“Restricted Payment” shall mean, with respect to any Person: (a) the declaration or payment of any dividend or the occurrence of any liability tomake any other payment or distribution of cash or other property or assets in respect of such Person’s capital stock; (b) any payment on account of the purchase,redemption, defeasance or other retirement of such Person’s capital stock, or any warrants, options or other rights to acquire such capital stock, or any otherpayment or distribution made in respect thereof, either directly or indirectly; or (c) any payment, loan, contribution, or other transfer of funds or other property toany stockholder of such Person.

“Retiree Welfare Plan” shall refer to any Welfare Plan providing for continuing coverage or benefits for any participant or any beneficiary of aparticipant after such participant’s termination of employment, other than continuation coverage provided pursuant to Section 4980B of the IRC and at the soleexpense of the participant or the beneficiary of the participant.

“Revolving Credit Advance” shall have the meaning assigned to it in Section 1.1(a)(i).

“Revolving Credit Commitment” shall mean, as to each Lender, the commitment of such Lender to make Revolving Credit Advances to theBorrower pursuant to Section 1.1 or to incur Letter of Credit Obligations as set forth in Annex J, in the aggregate principal amount outstanding not to exceed theamount set forth opposite such Lender’s name on Schedule I to this Agreement or specified in any amendment hereto or any assignment hereof pursuant toSection 9.2, as such amount may be reduced, increased or terminated in accordance with the terms of this Agreement.

ANNEX A - 25


EXECUTION VERSION

“Revolving Credit Loan” means, at any time the sum of (i) the aggregate amount of Revolving Credit Advances outstanding to Borrower plus (ii) theaggregate Letter of Credit Obligations incurred on behalf of Borrower. Unless the context otherwise requires, references to the outstanding principal balance ofthe Revolving Credit Loan shall include the outstanding balance of Letter of Credit Obligations.

“Revolving Credit Notes” shall mean the promissory notes provided for by Section 1.1(a)(iii) and all promissory notes delivered in substitution orexchange therefor, in each case as the same may be modified and supplemented and in effect from time to time.

“Security Agreements” shall mean the Borrower Security Agreement, the Subsidiary Security Agreement and each other security agreement, insubstantially the form attached as Exhibit G-4 hereto and in substance reasonably satisfactory to Agent, executed by the Borrower or any Domestic Subsidiary infavor of the Agent for the benefit of the Holders, in each case as amended, supplemented or otherwise modified from time to time.

“SFC” shall mean SIT Funding Corporation, a Delaware corporation, a wholly-owned Subsidiary of Borrower.

“Software” means all “software” as such term is defined in the Code, now owned or hereafter acquired by the Borrower or any Subsidiary thereof,other than software embedded in any category of goods, including all computer programs and all supporting information provided in connection with atransaction related to any program.

“Solvent” shall mean, with respect to any Person on a particular date, that on such date (a) the fair value of the property of such Person is greaterthan the total amount of liabilities, including contingent liabilities, of such Person; (b) the present fair salable value of the assets of such Person is not less thanthe amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured; (c) such Person does not intend to,and does not believe that it will, incur debts or liabilities beyond such Person’s ability to pay as such debts and liabilities mature; and (d) such Person is notengaged in a business or transaction, and is not about to engage in a business or transaction, for which such Person’s property would constitute an unreasonablysmall capital. The amount of contingent liabilities (such as litigation, guarantees and pension plan liabilities) at any time shall be computed as the amount which,in light of all the facts and circumstances existing at the time, represents the amount which can be reasonably be expected to become an actual or maturedliability.

“Special Obligor Aggregate Permitted Concentration Amount” shall mean the sum of all Special Obligor Permitted Concentration Amounts for allSpecial Obligors.

“Special Obligors” shall mean the Obligors (as such term is defined in the Receivables Funding Documents) set forth on Schedule II to thisAgreement.

“Special Obligor Permitted Concentration Amount” shall mean, with respect to each Special Obligor, the positive difference, if any, of (a) theExcess Concentration Amount (as defined in the Receivables Funding Documents) for such Special Obligor, minus (b) the amount by which the OutstandingBalance of Eligible Receivables owing by such Special Obligor exceeds the Credit Facility Concentration Percentage for such Special Obligor; provided,

ANNEX A - 26


EXECUTION VERSION however, that in the case of a Special Obligor which is an Affiliate of other Special Obligors, the Special Obligor Permitted Concentration Amount for suchSpecial Obligor shall be calculated as if such Special Obligor and such one or more affiliated Special Obligors were one Special Obligor.

“Stock” shall mean all shares, options, warrants, general or limited partnership interests or other equivalents (regardless of how designated) of or ina corporation, partnership or equivalent entity whether voting or nonvoting, including common stock, preferred stock or any other “equity security” (as such termis defined in Rule 3a11-1 of the General Rules and Regulations promulgated by the Securities and Exchange Commission under the Securities Exchange Act of1934, as amended).

“Stock Pledge Agreement” shall mean, collectively, (a) the Pledge Agreement, dated as of December 19, 1997, together with all amendments,modifications and supplements thereto (including without limitation the Omnibus Amendment), a copy of which is attached hereto as Exhibit H, with respect to,or among other things, all of the Stock of ComputerLand, MiTAC Industrial Corp., SYNNEX Manufacturing Services, Inc., Concentrix Corporation, SYNNEXFinance Hybrid, Inc., License Online Inc. and SFC, executed by the Borrower in favor of the Agent for the benefit of the Holders, and (b) each other pledgeagreement, in form and substance reasonably satisfactory to Agent, executed by the Borrower or any Domestic Subsidiary, in favor of the Agent for the benefit ofthe Holders, pursuant to which a Lien is granted on the Stock of any of the Borrower or any Domestic Subsidiary, in each case as amended, supplemented orotherwise modified from time to time.

“Stop Event” means (a) the declaration of all or any portion of the Obligations to be forthwith due and payable pursuant to Section 8.2, or (b) theoccurrence of an Event of Default under Section 8.1(f)(ii) with respect to the Borrower.

“Subsidiary” shall mean, with respect to any Person: (a) any corporation of which an aggregate of more than 50% of the outstanding Stock havingordinary voting power to elect a majority of the board of directors of such corporation (irrespective of whether, at the time, Stock of any other class or classes ofsuch corporation shall have or might have voting power by reason of the happening of any contingency) is at the time, directly or indirectly, owned legally orbeneficially by such Person and/or one or more Subsidiaries of such Person, or with respect to which any such Person has the right to vote or designate the voteof more than 50% of such Stock whether by proxy, agreement, operation of law or otherwise; and (b) any partnership in which such Person and/or one or moreSubsidiaries of such Person shall have an interest (whether in the form of voting or participation in profits or capital contribution) of more than 50% or of whichany such Person is a general partner or may exercise the powers of a general partner. Unless the context otherwise requires, each reference to Subsidiary shall bea reference to a Subsidiary of the Borrower.

“Subsidiary Guaranty” shall mean, collectively, (i) the Subsidiary Guaranty dated as of December 19, 1997, together with all amendments,modifications and supplements thereto (including without limitation the Omnibus Amendment), a copy of which is attached hereto as Exhibit F-1, executed byLicense Online, Inc. (f/k/a ECLand.com), (ii) the Subsidiary Guaranty dated as of December 19, 1997, together with all amendments, modifications andsupplements

ANNEX A - 27


EXECUTION VERSION thereto (including without limitation the Omnibus Amendment), a copy of which is attached hereto as Exhibit F-2, executed by ComputerLand Corporation,(iii) the Subsidiary Guaranty dated as of December 29, 2000, together with all amendments, modifications and supplements thereto (including without limitationthe Omnibus Amendment), a copy of which is attached hereto as Exhibit F-3, executed by MiTAC Industrial Corp., (iv) the Guaranty dated as of the date hereof,in substantially the form attached hereto as Exhibit F-4, executed by Concentrix Corporation, Synnex Manufacturing Services, Inc. and Synnex Finance Hybrid,Inc., in each case in favor of the Agent, for the benefit of the Holders, and (v) each other guaranty, in substantially the form attached as Exhibit F-4 hereto and insubstance reasonably satisfactory to the Agent, entered into from time to time by any Domestic Subsidiary of the Borrower under this Agreement, in each case asamended, supplemented or otherwise modified from time to time.

“Subsidiary Security Agreement” shall mean, collectively, (i) the Amended and Restated Subsidiary Security Agreement, together with allamendments, modifications and supplements thereto (including without limitation the Omnibus Amendment), a copy of which is attached as Exhibit G-1 hereto,executed by ComputerLand Corporation in favor of the Agent for the benefit of the Holders, (ii) the Subsidiary Security Agreement, together with allamendments, modifications and supplements thereto (including without limitation the Omnibus Amendment), a copy of which is attached as Exhibit G-2 hereto,executed by License Online, Inc. (f/k/a ECLand.com) in favor of the Agent for the benefit of the Holders, and (iii) the Subsidiary Security Agreement, togetherwith all amendments, modifications and supplements thereto (including without limitation the Omnibus Amendment), a copy of which is attached as Exhibit G-3hereto, executed by MiTAC Industrial Corp. in favor of the Agent for the benefit of the Holders, and (iv) the Subsidiary Security Agreement dated as of the datehereof, in substantially the form attached hereto as Exhibit G-4, executed by Concentrix Corporation, Synnex Manufacturing Services, Inc. and Synnex FinanceHybrid, Inc., in favor of the Agent, for the benefit of the Holders, and (v) each other security agreement, in form and substance reasonably satisfactory to theAgent, from time to time entered into by any Domestic Subsidiary of the Borrower under this Agreement, in each case as amended, supplemented or otherwisemodified from time to time.

“Supermajority Lenders” shall mean, at any time, (a) Lenders having one-hundred percent (100%) or more of the Revolving Credit Commitments ofall Lenders at such time, or (b) if the Revolving Credit Commitments have been terminated, Lenders holding one-hundred percent (100%) or more of theaggregate outstanding amount of the Advances at such time (with the Swing Line Loan being attributed to the Lenders other than the Swing Line Lender to theextent such other Lenders shall have purchased participations in the Swing Line Loan in accordance with Section 1.1(b)(iv)) and Letter of Credit Obligations.

“Supporting Obligations” means all supporting obligations as such term is defined in the Code, including letters of credit and guaranties issued insupport of Accounts, Chattel Paper, Documents, General Intangibles, Instruments, or Investment Property.

“Swap Related L/C” means a letter of credit or other credit enhancement provided by GE Capital to the extent supporting the payment obligationsby Borrower under an interest rate protection or hedging agreement or transaction (including, but not limited to, interest rate swaps, caps, collars, floors andsimilar transactions) designed to protect or manage exposure to

ANNEX A - 28


EXECUTION VERSION the fluctuations in the interest rates applicable to any of the Advances, and which agreement or transaction Borrower entered into as the result of a specificreferral pursuant to which GE Capital, GE Corporate Financial Services, Inc. or any other Affiliate of GE Capital had arranged for Borrower to enter into suchagreement or transaction. The term includes a Swap Related L/C as it may be increased from time to time fully to support Borrower’s payment obligations underany and all such interest rate protection or hedging agreements or transactions.

“Swap Related Reimbursement Obligation” has the meaning ascribed to it in Section 1.20.

“Swing Line Advance” has the meaning assigned to it in Section 1.1(b)(i).

“Swing Line Availability” has the meaning assigned to it in Section 1.1(b)(i).

“Swing Line Commitment” shall mean, as to the Swing Line Lender, $10,000,000, which commitment constitutes a subfacility of the RevolvingCredit Commitment of the Swing Line Lender.

“Swing Line Lender” shall mean GE Capital.

“Swing Line Loan” shall mean at any time, the aggregate amount of Swing Line Advances outstanding to the Borrower.

“Swing Line Note” has the meaning assigned to it in Section 1.1(b)(ii).

“Synnex Mexico” shall mean Synnex de Mexico S.A. de C.V., a sociedad anonima organized under the laws of Mexico.

“Synnex Mexico Guarantee” shall mean that certain Loan Guarantee by Borrower, dated as of May 15, 2006, made by Borrower in favor ofDeutsche Bank Mexico, S.A., Institucion de Banca Multiple, as administrative agent, and each of the other Beneficiaries (as such term is defined in the SynnexMexico Loan Agreement), a copy of which is attached as Exhibit D hereto, as amended, supplemented or otherwise modified from time to time in accordanceherewith.

“Synnex Mexico Loan Agreement” shall mean that certain Term Loan Agreement by and between Synnex Mexico, certain lenders from time to timeparty thereto (the “Mex Lenders”) and Deutsche Bank Mexico, S.A., Institucion de Banca Multiple, as administrative agent (the “Mex Agent”), dated as ofMay 15, 2006, a copy of which is attached as Exhibit C hereto, as amended, restated, supplemented or modified to the extent not prohibited by the terms herein.

“Synnex Mexico Loan Documents” shall mean the Synnex Mexico Loan Agreement and the “Loan Documents” as defined therein, in each case asamended, restated, supplemented or modified to the extent not prohibited by the terms herein.

“Taxes” shall mean taxes, levies, imposts, deductions, Charges or withholdings, and all liabilities with respect thereto, excluding franchise taxes andother taxes imposed on or

ANNEX A - 29


EXECUTION VERSION measured by the net income of any Lender by the United States of America, the jurisdiction under the laws of which such Lender is organized or the jurisdictionin which such Lender’s applicable lending office is located or, in each case, any political subdivision thereof.

“Termination Date” shall mean the date on which (a) the Revolving Credit Commitments have been terminated in full, and the Lenders shall haveno further obligation to make any credit extensions or financial accommodations hereunder, (b) all Obligations have been indefeasibly paid in full in immediatelyavailable funds in Dollars, and (c) all Letter of Credit Obligations have been cash collateralized, canceled or backed by standby letters of credit in accordancewith Annex J.

“Title IV Plan” shall mean a Pension Plan, other than a Multi-employer Plan, which is covered by Title IV of ERISA.

“Trademark License” shall mean, with respect to the Borrower or any Subsidiary thereof, rights under any written agreement now owned orhereafter acquired by such Person granting any right to use any Trademark or Trademark registration.

“Trademarks” shall mean all of the following in which the Borrower or any Subsidiary thereof now holds or hereafter acquires any interest: (a) allcommon law and statutory trademarks, trade names, corporate names, business names, trade styles, service marks, logos, other source or business identifiers,prints and labels on which any of the foregoing have appeared or appear, designs and general intangibles of like nature, now existing or hereafter adopted oracquired, all registrations and recordings thereof, and all applications in connection therewith, including registrations, recordings and applications in the UnitedStates Patent and Trademark Office or in any similar office or agency of the United States of America, any State or Territory thereof, or any other country or anypolitical subdivision thereof; (b) all reissues, extensions or renewals thereof; and (c) all licenses thereunder and together with the goodwill associated with andsymbolized by such trademark.

“Trademark Security Agreement” shall mean, collectively, (i) the Subsidiary Trademark Security Agreement, together with all amendments,modifications and supplements thereto (including without limitation the Omnibus Amendment), a copy of which is attached as Exhibit I-1 hereto, executed byComputerLand Corporation in favor of the Agent for the benefit of the Holders, (ii) the Subsidiary Trademark Security Agreement, together with allamendments, modifications and supplements thereto (including without limitation the Omnibus Amendment), a copy of which is attached as Exhibit I-2 hereto,executed by License Online, Inc. (f/k/a ECLand.com) in favor of the Agent for the benefit of the Holders, (iii) the Trademark Security Agreement, insubstantially the form attached as Exhibit I-3 hereto, executed by the Borrower in favor of the Agent for the benefit of the Holders, (iv) the Trademark SecurityAgreement, in substantially the form attached as Exhibit I-4 hereto, executed by Concentrix Corporation in favor of the Agent for the benefit of the Holders, and(v) each other trademark security agreement, in substantially the form attached as Exhibit I-3 hereto and in substance reasonably satisfactory to the Agent, fromtime to time entered into by any Domestic Subsidiary of the Borrower under this Agreement, in each case as amended, supplemented or otherwise modified fromtime to time.

ANNEX A - 30


EXECUTION VERSION

“Unfunded Pension Liability” shall mean, at any time, the aggregate amount, if any, of the sum of (a) the amount by which the present value of allaccrued benefits under each Title IV Plan exceeds the fair market value of all assets of such Title IV Plan allocable to such benefits in accordance with Title IVof ERISA, all determined as of the most recent valuation date for each such Title IV Plan using the actuarial assumptions in effect under such Title IV Plan, and(b) for a period of five (5) years following a transaction reasonably likely to be covered by Section 4069 of ERISA, the liabilities (whether or not accrued) thatcould be avoided by the Borrower, any Subsidiary thereof or any ERISA Affiliate as a result of such transaction.

“Uniform Commercial Code jurisdiction” means any jurisdiction that had adopted all or substantially all of Article 9 as contained in the 2000Official Text of the Uniform Commercial Code, as recommended by the National Conference of Commissioners on Uniform State Laws and the American LawInstitute, together with any subsequent amendments or modifications to the Official Text.

“Unused Facility Fee” shall have the meaning assigned to it in Annex D.

“Welfare Plans” shall mean any welfare plan, as defined in Section 3(1) of ERISA, which is maintained or contributed to by the Borrower, anySubsidiary thereof or any ERISA Affiliate.

“Withdrawal Liability” shall mean, at any time, the aggregate amount of the liabilities, if any, pursuant to Section 4201 of ERISA, and any increasein contributions pursuant to Section 4243 of ERISA with respect to all Multi-employer Plans.

2. Certain Matters of Construction. (a) Except as otherwise set forth in Annex G, any accounting term used in the Agreement or the other LoanDocuments shall have, unless otherwise specifically provided therein, the meaning customarily given such term in accordance with GAAP.

(b) All other undefined terms contained in this Agreement or the other Loan Documents shall, unless the context indicates otherwise, have themeanings provided for by the Code as in effect in the State of New York to the extent the same are used or defined therein.

(c) The words “herein,” “hereof” and “hereunder” or other words of similar import refer to this Agreement as a whole, including the annexes,exhibits and schedules hereto, as the same may from time to time be amended, modified or supplemented, and not to any particular section, subsection or clausecontained in this Agreement.

(d) For purposes of this Agreement and the other Loan Documents, the following additional rules of construction shall apply: (i) wherever from thecontext it appears appropriate, each term stated in either the singular or plural shall include the singular and the plural, and pronouns stated in the masculine,feminine or neuter gender shall include the masculine, the feminine and the neuter; (ii) the term “including” shall not be limiting or exclusive, unless specificallyindicated to the contrary; (iii) all references to statutes and related regulations shall include any amendments of same and any successor statutes and regulations;and (iv) all references to any instruments or agreements, including references to any of the Loan Documents, shall include any and all modifications oramendments thereto and any and all restatements, extensions or renewals thereof.

ANNEX A - 31


Exhibit 10.16

SECOND AMENDED AND RESTATED

RECEIVABLES SALE AND SERVICING AGREEMENT


by and among

EACH OF THE ENTITIES PARTY HERETO FROM TIME TO TIME

AS ORIGINATORS,

SIT FUNDING CORPORATION,

as Buyer,

and

SYNNEX CORPORATION,

as Servicer

Receivables Sale and Servicing Agreement


TABLE OF CONTENTS

PageARTICLE I DEFINITIONS AND INTERPRETATION 2

Section 1.01. Definitions 2Section 1.02. Rules of Construction 2

ARTICLE II TRANSFERS OF RECEIVABLES 2

Section 2.01. Agreement to Transfer. 2Section 2.02. Grant of Security Interest 4Section 2.03. Originator Support Agreement 4Section 2.04. Originators Remain Liable 5

ARTICLE III CONDITIONS PRECEDENT 5

Section 3.01. Conditions Precedent to Initial Transfer 5Section 3.02. Conditions Precedent to all Transfers 6

ARTICLE IV REPRESENTATIONS, WARRANTIES AND COVENANTS 7

Section 4.01. Representations and Warranties of the Transaction Parties 7Section 4.02. Affirmative Covenants of the Originators 14Section 4.03. Negative Covenants of the Originators 20Section 4.04. Breach of Representations, Warranties or Covenants 23

ARTICLE V INDEMNIFICATION 23

Section 5.01. Indemnification 23Section 5.02. Indemnities by the Servicer. 25

ARTICLE VI MISCELLANEOUS 27

Section 6.01. Notices 27Section 6.02. No Waiver; Remedies 27Section 6.03. Successors and Assigns 28Section 6.04. Termination; Survival of Obligations. 28Section 6.05. Complete Agreement; Modification of Agreement 29Section 6.06. Amendments and Waivers 29Section 6.07. Governing Law; Consent to Jurisdiction; Waiver of Jury Trial. 29Section 6.08. Counterparts 31Section 6.09. Severability 31Section 6.10. Section Titles 31Section 6.11. No Setoff 31Section 6.12. Confidentiality. 31Section 6.13. Further Assurances. 32


i


Section 6.14. Fees and Expenses 33Section 6.15. Nonrecourse Obligations 33

ARTICLE VII SERVICER PROVISIONS 33

Section 7.01. Appointment of the Servicer 33Section 7.02. Duties and Responsibilities of the Servicer. 34Section 7.03. Collections on Receivables. 34Section 7.04. Covenants of the Servicer 35Section 7.05. Reporting Requirements of the Servicer 39

ARTICLE VIII EVENTS OF SERVICER TERMINATION 39

Section 8.01. Events of Servicer Termination 39

ARTICLE IX SUCCESSOR SERVICER PROVISIONS 41

Section 9.01. Servicer Not to Resign 41Section 9.02. Appointment of the Successor Servicer 42Section 9.03. Duties of the Servicer 42Section 9.04. Effect of Termination or Resignation 43Section 9.05. Power of Attorney 43


ii


EXHIBITS, SCHEDULES AND ANNEXES

Exhibit 2.01(a) Form of Receivables AssignmentExhibit 2.01(c)(ii) Form of Subordinated NoteExhibit 2.03 Form of Originator Support AgreementExhibit 9.05 Form of Power of Attorney

Schedule 4.01(b) Jurisdiction of Organization; Executive Offices; Collateral Locations; Corporate, Legal and Other Names; Identification NumbersSchedule 4.01(d) LitigationSchedule 4.01(h) Ventures, Subsidiaries and Affiliates; Outstanding Stock and DebtSchedule 4.01(i) Tax MattersSchedule 4.01(j) Intellectual PropertySchedule 4.01(m) ERISASchedule 4.01(t) Deposit and Disbursement AccountsSchedule 4.02(g) Corporate, Legal and Trade Names

Annex 7.05 Reporting Requirements of the ServicerAnnex X DefinitionsAnnex Y Schedule of DocumentsAnnex Z Financial Tests


iii


THIS SECOND AMENDED AND RESTATED RECEIVABLES SALE AND SERVICING AGREEMENT (as amended, restated, supplementedor otherwise modified and in effect from time to time, this “Agreement”), (a) is entered into as of February 12, 2007, by and among each of the persons signatoryhereto from time to time as Originators, each an “Originator” and, collectively, the “Originators”), SYNNEX CORPORATION, a Delaware corporation(“Parent”), in its capacity as servicer hereunder (in such capacity, the “Servicer”) and SIT FUNDING CORPORATION, a Delaware corporation (“Buyer”) and(b) amends and restates that certain Amended and Restated Receivables Transfer Agreement, dated as of August 30, 2002, between Parent as “Originator” andBuyer, as amended by that certain Amendment No. 1, dated June 30, 2003, that certain Amendment No. 2, dated December 30, 2003, that certain AmendmentNo. 3, dated December 13, 2004, that certain Amendment No. 4, dated September 16, 2005, and that certain Amendment No. 5, dated May 17, 2006 (the“Existing Transfer Agreement”).

RECITALS

A. The Buyer is a special purpose corporation the sole shareholder of which is the Parent.

B. Buyer has been formed for the sole purpose of purchasing all Receivables originated by each Originator and to finance such Receivables underthe Funding Agreement.

C. Prior to the date hereof, each Originator has sold such Receivables or contributed such Receivables to Buyer pursuant to the Existing TransferAgreement, and from and after the date hereof each Originator intends to sell, and Buyer intends to purchase, such Receivables, from time to time, as describedherein.

D. In addition, the Parent may, from time to time, contribute capital to Buyer in the form of Contributed Receivables or cash.

E. In order to effectuate the purposes of this Agreement and the Funding Agreement, Buyer desires to appoint Parent to service, administer andcollect the Receivables securing the Advances pursuant to this Agreement and Parent is willing to act in such capacity as Servicer hereunder on the terms andconditions set forth herein.

AGREEMENT

NOW, THEREFORE, in consideration of the premises and the mutual covenants hereinafter contained, and for other good and valuableconsideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:


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ARTICLE IDEFINITIONS AND INTERPRETATION

Section 1.01. Definitions. Capitalized terms used and not otherwise defined herein shall have the meanings ascribed to them in Annex X.

Section 1.02. Rules of Construction. For purposes of this Agreement, the rules of construction set forth in Annex X shall govern. All Appendices hereto, orexpressly identified to this Agreement, are incorporated herein by reference and, taken together with this Agreement, shall constitute but a single agreement.

Section 1.03. Amendment and Restatement. Upon the satisfaction or waiver of the conditions precedent set forth herein, (a) the terms and provisions of theExisting Transfer Agreement shall be amended, superseded and restated in their entirety by the terms and provisions of this Agreement and, unless expresslystated to the contrary, each reference to the document, instrument or agreement delivered in connection therewith shall mean and be a reference to thisAgreement, (b) this Agreement is not intended to and shall not constitute a novation of the Existing Transfer Agreement or the obligations and liabilities existingthereunder, (c) the commitment of each “Originator” and the “Buyer” (as each is defined in the Existing Transfer Agreement) shall, on the Effective Date,automatically be deemed restated and the only commitments shall be those hereunder, (d) with respect to any date or time period occurring and ending prior tothe Effective Date, the rights and obligations of the parties to the Existing Transfer Agreement shall be governed by the Existing Transfer Agreement and theother Related Documents (as defined therein), and (e) with respect to any date or time period occurring and ending on or after the Effective Date, the rights andobligations of the parties hereto shall be governed by this Agreement and the other Related Documents (as defined herein).

ARTICLE IITRANSFERS OF RECEIVABLES

Section 2.01. Agreement to Transfer.

(a) Receivables Transfers. Subject to the terms and conditions hereof, each Originator agrees to sell (without recourse except to the limited extentspecifically provided herein) or, in the case of the Parent, sell or contribute, to Buyer on the Effective Date and on each Business Day thereafter (each such date,a “Transfer Date”) all Receivables owned by it on each such Transfer Date other than the Excluded Receivables, and Buyer agrees to purchase or acquire as acapital contribution all such Receivables on each such Transfer Date. All such Transfers by an Originator to Buyer shall collectively be evidenced by a certificateof assignment substantially in the form of Exhibit 2.01(a) (each, a “Receivables Assignment,” and collectively, the “Receivables Assignments”), and eachOriginator and Buyer shall execute and deliver a Receivables Assignment on or before the Effective Date.

(b) Determination of Sold Receivables. On and as of each Transfer Date, (i) all Receivables other than the Excluded Receivables then owned by eachOriginator (other than the Parent) and not previously acquired by Buyer shall be sold immediately upon its creation, and


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(ii) to the extent Receivables then owned by the Parent other than the Excluded Receivables have not been contributed to Buyer in accordance withSection 2.01(d), such Receivables shall be sold to Buyer (each such Receivable sold immediately upon its creation pursuant to clauses (i) and (ii) above,individually, a “Sold Receivable” and, collectively, the “Sold Receivables”).

(c) Payment of Sale Price. (i) In consideration for each Sale of Sold Receivables hereunder, Buyer shall pay to the Originator thereof on the Transfer Datetherefor the applicable Sale Price therefor in Dollars in immediately available funds. All cash payments by Buyer under this Section 2.01(c)(i) shall be effected bymeans of a wire transfer on the day when due to such account or accounts as the Originators may designate from time to time.

(ii) To the extent that the Sale Price of Sold Receivables exceeds the amount of cash then available to Buyer, the applicable Originator hereby agreesto make a subordinated loan (each, a “Subordinated Loan”) to Buyer in an amount not to exceed the lesser of (i) the amount of such excess in satisfactionof the equivalent portion of the Sale Price not paid in cash and (ii) the maximum Subordinated Loan that could be borrowed without rendering Buyer’s NetWorth less than the Required Capital Amount. The Subordinated Loans of an Originator shall be evidenced by a subordinated promissory notesubstantially in the form of Exhibit 2.01(c)(ii) hereto (a “Subordinated Note”) executed by Buyer and payable to such Originator. The Subordinated Loansshall bear interest and be payable as provided in the Subordinated Note.

(d) Determination of Contributed Receivables. Prior to the delivery of an Election Notice, on each Transfer Date on which Buyer cannot pay the Sale Pricetherefore in cash or with Subordinated Loans, the Parent shall identify Receivables then owned by it which have not been previously acquired by Buyer otherthan the Excluded Receivables, and shall, prior to the delivery of an Election Notice, contribute such Receivables as a capital contribution to the Buyer (eachsuch contributed Receivable, individually, a “Contributed Receivable,” and collectively, the “Contributed Receivables”), to the extent Buyer cannot so pay theSale Price therefor in cash or through Subordinated Loans pursuant to the foregoing clauses (b) and (c). Notwithstanding the foregoing, the Parent shall not beobligated to make additional contributions to Buyer at any time. If on any Transfer Date (i) the Parent elects not to contribute Receivables (other than theExcluded Receivables) to Buyer when the Buyer cannot pay the Sale Price therefore in cash or through Subordinated Loans, or (ii) any Originator (other than theParent) does not sell all of its then owned Receivables to Buyer other than the Excluded Receivables, such Originator shall deliver to Buyer not later than 5:00p.m. (New York time) on the Business Day immediately preceding such Transfer Date a notice of election thereof (each such notice, an “Election Notice”).

(e) Ownership of Transferred Receivables. On and after each Transfer Date and after giving effect to the Transfers to be made on each such date, Buyershall own the Transferred Receivables and no Originator shall take any action inconsistent with such ownership nor shall any Originator claim any ownershipinterest in such Transferred Receivables. The Excluded Receivables shall not be transferred hereunder or otherwise constitute “Sold Receivables”, “ContributedReceivables” or “Transferred Receivables” hereunder or under the Related Documents.


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(f) Reconstruction of General Trial Balance. If at any time any Originator fails to generate its General Trial Balance, Buyer shall have the right toreconstruct such General Trial Balance so that a determination of the Sold Receivables and Contributed Receivables can be made pursuant to Section 2.01(b).Each Originator agrees to cooperate with such reconstruction, including by delivery to Buyer, upon Buyer’s request, of copies of all Records.

(g) Servicing of Receivables. So long as no Event of Servicer Termination shall have occurred and be continuing and no Successor Servicer has assumedthe responsibilities and obligations of the Servicer pursuant to Section 9.02, the Servicer shall (i) conduct the servicing, administration and collection of theTransferred Receivables and shall take, or cause to be taken, all such actions as may be necessary or advisable to service, administer and collect the TransferredReceivables, all in accordance with (A) the terms of this Agreement, (B) customary and prudent servicing procedures for trade receivables of a similar type and(C) all applicable laws, rules and regulations, and (ii) hold all Contracts and other documents and incidents relating to the Transferred Receivables in trust for thebenefit of Buyer, as the owner thereof, and for the sole purpose of facilitating the servicing of the Transferred Receivables in accordance with the terms of thisAgreement. Buyer hereby instructs the Servicer, and the Servicer hereby acknowledges, that the Servicer shall hold all Contracts and other documents relating tosuch Transferred Receivables in trust for the benefit of the Buyer and the Servicer’s retention and possession of such Contracts and documents shall at all timesbe solely in a custodial capacity for the benefit of the Buyer and its assigns and pledgees.

Section 2.02. Grant of Security Interest. The parties hereto intend that each Transfer shall be absolute and shall constitute a purchase and sale or capitalcontribution, as applicable, and not a loan. Notwithstanding the foregoing, in addition to and not in derogation of any rights now or hereafter acquired by Buyerunder Section 2.01 hereof, the parties hereto intend that this Agreement shall constitute a security agreement under applicable law and if a court of competentjurisdiction determines that any transaction provided for herein constitutes a loan and not a sale or capital contribution, as applicable, that each Originator shallbe deemed to have granted, and each Originator does hereby grant, to Buyer a continuing security interest in all of such Originator’s right, title and interest in, toand under the Transferred Receivables whether now owned or hereafter acquired by such Originator to secure the obligations of such Originator to Buyerhereunder (including, if and to the extent that any Transfer is recharacterized as a transfer for security under applicable law, the repayment of a loan deemed tohave been made by Buyer to the applicable Originator in the amount of the Sale Price with respect thereto, including interest thereon at the Index Rate). EachOriginator hereto reconfirms its grant of a security interest to Buyer of a first priority Lien in and to all of such Originator’s right, title and interest in, to andunder the “Transferred Receivables” under, and as defined in, the Existing Transfer Agreement.

Section 2.03. Originator Support Agreement. The Parent hereby agrees that in the event that any of its Affiliates become parties to this Agreement asOriginators, the Parent shall undertake and agree, to and for the benefit of Buyer, to cause the due and punctual performance and observance by each suchOriginator of all of the terms, conditions, agreements and undertakings on the part of such Originator to be performed or observed by it hereunder or under anyother Related Document and, in connection therewith, shall execute and deliver to Buyer an Originator Support Agreement in the form attached hereto as Exhibit2.03, to more fully evidence such undertaking.


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Section 2.04. Originators Remain Liable. It is expressly agreed by the Originators that, anything herein to the contrary notwithstanding, each Originatorshall remain liable to the Obligor (and any other party to the related Contract) under any and all of the Receivables originated by it and under the Contractstherefor to observe and perform all the conditions and obligations to be observed and performed by it thereunder. Buyer shall not have any obligation or liabilityto the Obligor or any other party to the related Contract under any such Receivables or Contracts by reason of or arising out of this Agreement or the grantingherein of a Lien thereon or the receipt by Buyer of any payment relating thereto pursuant hereto. The exercise by Buyer of any of its rights under this Agreementshall not release any Originator from any of its respective duties or obligations under any such Receivables or Contracts. Buyer shall not be required or obligatedin any manner to perform or fulfill any of the obligations of any Originator under or pursuant to any such Receivable or Contract, or to make any payment, or tomake any inquiry as to the nature or the sufficiency of any payment received by it or the sufficiency of any performance by any party under any such Receivableor Contract, or to present or file any claims, or to take any action to collect or enforce any performance or the payment of any amounts that may have beenassigned to it or to which it may be entitled at any time or times.

ARTICLE IIICONDITIONS PRECEDENT

Section 3.01. Conditions Precedent to Initial Transfer. The initial Transfer hereunder shall be subject to satisfaction of each of the following conditionsprecedent:

(a) Sale Agreement; Other Documents. This Agreement or counterparts hereof shall have been duly executed by, and delivered to, each Originator, theServicer and Buyer, and Buyer shall have received such information, documents, instruments, agreements and legal opinions as Buyer shall request in connectionwith the transactions contemplated by this Agreement, including all those identified in the Schedule of Documents, each in form and substance satisfactory toBuyer.

(b) Governmental Approvals. Buyer shall have received (i) satisfactory evidence that the Originators and the Servicer have obtained all required consentsand approvals of all Persons, including all requisite Governmental Authorities, to the execution, delivery and performance of this Agreement and the otherRelated Documents and the consummation of the transactions contemplated hereby and thereby or (ii) an Officer’s Certificate from each Originator and theServicer in form and substance satisfactory to Buyer affirming that no such consents or approvals are required.

(c) Compliance with Laws. Each Originator shall be in compliance with all applicable foreign, federal, state, provincial and local laws and regulations,including, without limitation, those specifically referenced in Section 4.02(f).


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(d) Funding Agreement Conditions. Each of those conditions precedent set forth in Section 3.01 of the Funding Agreement shall have been satisfied orwaived in writing as provided therein.

Section 3.02. Conditions Precedent to all Transfers. Each Transfer hereunder (including the initial Transfer) shall be subject to satisfaction of the followingfurther conditions precedent as of the Transfer Date therefor:

(a) the representations and warranties of each Originator contained herein or in any other Related Document shall be true and correct as of such TransferDate, both before and after giving effect to such Transfer and to the application of the Sale Price therefor, except to the extent that any such representation orwarranty expressly relates to an earlier date and except for changes therein expressly permitted by this Agreement;

(b)(i) the Administrative Agent shall not have declared the Commitment Termination Date to have occurred following the occurrence of a TerminationEvent, and (ii) the Commitment Termination Date shall not have automatically occurred, in either event, in accordance with Section 9.01 of the FundingAgreement;

(c) each Originator shall be in compliance with each of its covenants and other agreements set forth herein or in any other Related Document;

(d) each of those conditions precedent set forth in Section 3.02 of the Funding Agreement shall have been satisfied or waived in writing as providedtherein; and

(e) each Originator shall have taken such other action, including delivery of approvals, consents, opinions, documents and instruments to Buyer as Buyermay reasonably request.

The acceptance by any Originator of the Sale Price for any Sold Receivables and the contribution to Buyer by the Parent of any Contributed Receivables on anyTransfer Date shall be deemed to constitute, as of any such Transfer Date, a representation and warranty by such Originator that the conditions precedent set forthin this Article III have been satisfied. Upon any such acceptance or contribution, title to the Transferred Receivables sold or contributed on such Transfer Dateshall be vested absolutely in Buyer, whether or not such conditions were in fact so satisfied.


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ARTICLE IVREPRESENTATIONS, WARRANTIES AND COVENANTS

Section 4.01. Representations and Warranties of the Transaction Parties. To induce Buyer to purchase the Sold Receivables and to acquire the ContributedReceivables, each Transaction Party, as applicable, and, solely with respect to Section 4.01(c)(vii), the Buyer, makes the following representations and warrantiesto Buyer as of the Closing Date and, except to the extent otherwise expressly provided below, as of each Transfer Date, each of which shall survive the executionand delivery of this Agreement.

(a) Corporate Existence; Compliance with Law. Each Transaction Party (i) is a corporation duly organized, validly existing and in good standing under thelaws of its jurisdiction of organization; (ii) is duly qualified to conduct business and is in good standing in each other jurisdiction where its ownership or lease ofproperty or the conduct of its business requires such qualification, except where the failure to so qualify could not reasonably be expected to result in a MaterialAdverse Effect; (iii) has the requisite corporate power and authority and the legal right to own, pledge, mortgage or otherwise encumber and operate itsproperties, to lease the property it operates under lease, and to conduct its business, in each case, as now, heretofore and proposed to be conducted; (iv) has alllicenses, permits, consents or approvals from or by, and has made all filings with, and has given all notices to, all Governmental Authorities having jurisdiction,to the extent required for such ownership, operation and conduct, except where the failure to do any of the foregoing could not reasonably be expected to result ina Material Adverse Effect; (v) is in compliance with its articles or certificate of incorporation and by-laws; and (vi) subject to specific representations set forthherein regarding ERISA, Environmental Laws, tax laws and other laws, is in compliance with all applicable provisions of law, except where the failure to socomply, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

(b) Jurisdiction of Organization; Executive Offices; Collateral Locations; Corporate or Other Names; FEIN. As of the Closing Date, each Originator is aregistered organization of the type and is organized under the laws of the state set forth in Schedule 4.01(b) (which is its only jurisdiction of organization) andeach such Originator’s organizational identification number (if any), the current location of such Originator’s chief executive office, principal place of business,other offices, the warehouses and premises within which any records relating to the Receivables is stored or located, and the locations of its records concerningthe Receivables are set forth in Schedule 4.01(b) and none of such locations have changed within the past 12 months. During the prior five years, except as setforth in Schedule 4.01(b), no Originator has been known as or used any corporate, legal, fictitious or trade name. In addition, Schedule 4.01(b) lists the federalemployer identification number of each Originator.

(c) Corporate Power, Authorization, Enforceable Obligations. The execution, delivery and performance by each Transaction Party of this Agreement andthe other Related Documents to which it is a party and the creation and perfection of all Transfers and Liens provided for herein and therein and, solely withrespect to clause (vii) below, the exercise by Buyer or its assigns of any of its rights and remedies under any Related Document to which it is a party: (i) arewithin such Person’s corporate power; (ii) have been duly authorized by all necessary or proper corporate and shareholder action; (iii) do not contravene anyprovision of


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such Person’s articles or certificate of incorporation or by-laws; (iv) do not violate any law or regulation, or any order or decree of any court or GovernmentalAuthority except to the extent such violation could not reasonably be expected to result in a Material Adverse Effect; (v) do not conflict with or result in thebreach or termination of, constitute a default under or accelerate or permit the acceleration of any performance required by, any indenture, mortgage, deed oftrust, lease, agreement or other instrument to which such Person is a party or by which such Person or any of its property is bound; (vi) do not result in thecreation or imposition of any Adverse Claim upon any of the property of such Person; and (vii) do not require the consent or approval of any GovernmentalAuthority or any other Person, except those referred to in Section 3.01(b), all of which will have been duly obtained, made or complied with prior to the EffectiveDate. On or prior to the Effective Date, each of the Related Documents shall have been duly executed and delivered by each Transaction Party that is a partythereto and on the Closing Date each such Related Document shall then constitute a legal, valid and binding obligation of such Transaction Party, enforceableagainst it in accordance with its terms.

(d) No Litigation. No Litigation is now pending or, to the knowledge of any Transaction Party, threatened against any Transaction Party or any otherSubsidiary of the Parent that (i) challenges such Transaction Party’s right or power to enter into or perform any of its obligations under the Related Documents towhich it is a party, or the validity or enforceability of any Related Document or any action taken thereunder, (ii) seeks to prevent the Transfer or pledge of anyReceivable (other than Excluded Receivables) or the consummation of any of the transactions contemplated under this Agreement or the other RelatedDocuments or (iii) is reasonably likely to be adversely determined and, if adversely determined, could reasonably be expected to have a Material Adverse Effect.Except as set forth on Schedule 4.01(d), as of the Effective Date there is no Litigation pending or threatened that seeks damages in excess of $1,000,000 orinjunctive relief against, or alleges criminal misconduct by, any Transaction Party or any other Subsidiary of the Parent.

(e) Solvency. After giving effect to (i) the transactions contemplated by this Agreement and the other Related Documents and (ii) the payment and accrualof all transaction costs in connection with the foregoing, each Transaction Party is and will be Solvent. After giving effect to the sale and contribution ofTransferred Receivables and other payments and transactions contemplated on such Transfer Date, each Transaction Party is and will be Solvent.

(f) Material Adverse Effect. Since November 30, 2005, (i) no Transaction Party has incurred any obligations, contingent or non-contingent liabilities,liabilities for Charges, long-term leases or unusual forward or long-term commitments that, alone or in the aggregate, could reasonably be expected to have aMaterial Adverse Effect, (ii) no contract, lease or other agreement or instrument has been entered into by any Transaction Party or has become binding upon anyTransaction Party’s assets and no law or regulation applicable to any Transaction Party has been adopted that has had or could reasonably be expected to have aMaterial Adverse Effect and (iii) no Transaction Party is in default and no third party is in default under any material contract, lease or other agreement orinstrument to which such Transaction Party is a party. Since November 30, 2005 no event has occurred that alone or together with other events could reasonablybe expected to have a Material Adverse Effect.


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(g) Ownership of Receivables; Liens. Each Originator owns each Receivable (other than Excluded Receivables) originated or acquired by it free and clearof any Adverse Claim and, from and after each Transfer Date, Buyer will acquire valid and properly perfected title to and the sole record and beneficialownership interest in each Transferred Receivable purchased or otherwise acquired on such date, free and clear of any Adverse Claim or restrictions ontransferability. Each Originator has received all assignments, bills of sale and other documents, and has duly effected all recordings, filings and other actionsnecessary to establish, protect and perfect such Originator’s right, title and interest in and to the Receivables (other than Excluded Receivables) originated oracquired by it and its other properties and assets. Each Originator has rights in and full power to transfer its Receivables (other than Excluded Receivables)hereunder. No effective financing statements or other similar instruments are of record in any filing office listing any Originator as debtor and purporting to coverthe Transferred Receivables.

(h) Ventures, Subsidiaries and Affiliates; Outstanding Stock and Debt. Except as set forth in Schedule 4.01(h), no Originator has any Subsidiaries, isengaged in any joint venture or partnership with any other Person or is an Affiliate of any Person. All of the issued and outstanding Stock of each Originator(other than Parent) is directly or indirectly owned by the Parent. Except as set forth in Schedule 4.01(h), there are no outstanding rights to purchase options,warrants or similar rights or agreements pursuant to which any Originator may be required to issue, sell, repurchase or redeem any of its Stock or other equitysecurities or any Stock or other equity securities of its Subsidiaries. All outstanding Debt of each Originator as of the Effective Date is described on Schedule4.01(h).

(i) Taxes. All material tax returns, reports and statements, including information returns, required by any Governmental Authority to be filed by anyTransaction Party or any other member of the Parent Group have been filed with the appropriate Governmental Authority and all Charges have been paid prior tothe date on which any fine, penalty, interest or late charge may be added thereto for nonpayment thereof (or any such fine, penalty, interest, late charge or losshas been paid), excluding Charges or other amounts being contested in accordance with Section 4.02(k). Proper and accurate amounts have been withheld by eachTransaction Party and each such member from its respective employees for all periods in full and complete compliance with all applicable federal, state,provincial, local and foreign laws and such withholdings have been timely paid to the respective Governmental Authorities. Schedule 4.01(i) sets forth as of theClosing Date (i) those taxable years for which any Transaction Party’s or any such member’s tax returns are currently being audited by the IRS or any otherapplicable Governmental Authority and (ii) any assessments or threatened assessments in connection with such audit or otherwise currently outstanding. Exceptas described on Schedule 4.01(i), no Transaction Party or any such member has executed or filed with the IRS or any other Governmental Authority anyagreement or other document extending, or having the effect of extending, the period for assessment or collection of any Charges. No Transaction Party or anysuch member and their respective predecessors are liable for any Charges: (A) under any agreement (including any tax sharing agreements) or (B) to the best ofeach Transaction Party’s knowledge, as a transferee. As of the Closing Date, no Transaction Party has agreed or been requested to make any adjustment underIRC Section 481(a), by reason of a change in accounting method or otherwise, that would have a Material Adverse Effect.


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(j) Intellectual Property. As of the Effective Date, each Originator owns or has rights to use all intellectual property necessary to continue to conduct itsbusiness as now or heretofore conducted by it or proposed to be conducted by it. Each Originator to its knowledge conducts its business and affairs withoutinfringement of or interference with any intellectual property of any other Person. As of the Effective Date, except as set forth in Schedule 4.01(j), no Originatoris aware of any infringement or claim of infringement by others of any material intellectual property of any Originator.

(k) Full Disclosure. All information contained in this Agreement, any of the other Related Documents, or any other written statement or informationfurnished by or on behalf of any Transaction Party to Buyer relating to this Agreement, the Sold Receivables or any of the other Related Documents, in eachcase, is true and accurate in every material respect, and none of this Agreement, any of the other Related Documents, or any other written statement orinformation furnished by or on behalf of any Transaction Party to Buyer relating to this Agreement or any of the other Related Documents, in each case, taken asa whole, is misleading as a result of the failure to include therein a material fact. All information contained in this Agreement, any of the other RelatedDocuments, or any written statement furnished to Buyer has been prepared in good faith by management of the applicable Transaction Party, as the case may be,with the exercise of reasonable diligence.

(l) Notices to Obligors. Each Transaction Party has directed all Obligors of Transferred Receivables originated by it to remit all payments with respect tosuch Receivables for deposit in a Lockbox or Collection Account.

(m) ERISA.

(i) Schedule 4.01(m) lists all Plans and separately identifies all Pension Plans, including all Title IV Plans, Multiemployer Plans, ESOPs and WelfarePlans, including all Retiree Welfare Plans. Each Qualified Plan has been determined by the IRS to qualify under Section 401(a) of the IRC, the trustscreated thereunder have been determined to be exempt from tax under the provisions of Section 501 of the IRC, and, except as set forth on Schedule4.01(m), nothing has occurred that could reasonably be expected to cause the loss of such qualification or tax-exempt status. Except as otherwise providedin Schedule 4.01(m), (x) each Plan is in material compliance with the applicable provisions of ERISA and the IRC, including the timely filing of all reportsrequired under the IRC or ERISA, (y) no Transaction Party or any of their respective ERISA Affiliates has failed to make any contribution or pay anyamount due as required by either Section 412 of the IRC or Section 302 of ERISA or the terms of any Plan, subject to such sections, and (z) no TransactionParty or any of their respective ERISA Affiliates has engaged in a “prohibited transaction,” as defined in Section 4975 of the IRC, in connection with anyPlan that could reasonably be expected to subject any Transaction Party to a material tax on prohibited transactions imposed by Section 4975 of the IRC.

(ii) Except as set forth in Schedule 4.01(m): (A) no Title IV Plan has any Unfunded Pension Liability; (B) no ERISA Event or event described inSection 4062(e) of ERISA with respect to any Title IV Plan has occurred within the past three years or is reasonably expected to occur; (C) there are nopending or, to the knowledge of any


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Transaction Party, threatened claims (other than claims for benefits in the normal course), sanctions, actions or lawsuits, asserted or instituted against anyPlan or any Person as fiduciary or sponsor of any Plan; (D) no Transaction Party or any of their respective ERISA Affiliates has incurred or reasonablyexpects to incur any liability as a result of a complete or partial withdrawal from a Multiemployer Plan; (E) within the last five years no Title IV Plan withUnfunded Pension Liabilities has been transferred outside of the “controlled group” (within the meaning of Section 4001(a)(14) of ERISA) of anyTransaction Party or their respective ERISA Affiliates; (F) Stock of all Transaction Parties and their respective ERISA Affiliates makes up, in theaggregate, no more than 10% of the assets of any Plan subject to Title I of ERISA, measured on the basis of fair market value as of the last valuation dateof any Plan; and (G) no liability under any Title IV Plan has been satisfied with the purchase of a contract from an insurance company that is not ratedAAA by S&P or an equivalent rating by another nationally recognized rating agency.

(n) Brokers. No broker or finder acting on behalf of any Transaction Party was employed or utilized in connection with this Agreement or the other RelatedDocuments or the transactions contemplated hereby or thereby and no Transaction Party has any obligation to any Person in respect of any finder’s or brokeragefees in connection herewith or therewith.

(o) Margin Regulations. No Transaction Party is engaged, nor will it engage, principally or as one of its important activities, in the business of extendingcredit for the purpose of “purchasing” or “carrying” any “margin security” as such terms are defined in Regulations T, U or X of the Federal Reserve Board asnow and from time to time hereafter in effect (such securities being referred to herein as “Margin Stock”). No Transaction Party owns any Margin Stock, and noportion of the proceeds of the Sale Price from any Sale will be used, directly or indirectly, for the purpose of purchasing or carrying any Margin Stock, for thepurpose of reducing or retiring any Debt that was originally incurred to purchase or carry any Margin Stock or for any other purpose that might cause any portionof such proceeds to be considered a “purpose credit” within the meaning of Regulations T, U or X of the Federal Reserve Board. No Transaction Party will takeor permit to be taken any action that might cause any Related Document to violate any regulation of the Federal Reserve Board.

(p) Nonapplicability of Bulk Sales Laws. No transaction contemplated by this Agreement or any of the other Related Documents requires compliance withany bulk sales act or similar law.

(q) Investment Company Act Exemptions. Each purchase of Transferred Receivables under this Agreement constitutes a purchase or other acquisition ofnotes, drafts, acceptances, open accounts receivable or other obligations representing part or all of the sales price of merchandise, insurance or services within themeaning of Section 3(c)(5) of the Investment Company Act.

(r) Government Regulation. No Transaction Party is an “investment company” or an “affiliated person” of, or “promoter” or “principal underwriter” for, an“investment company,” as such terms are defined in the Investment Company Act. No Transaction Party is subject to regulation under the Federal Power Act, orany other federal or state statute that restricts or limits


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its ability to incur Debt or to perform its obligations hereunder or under any other Related Document. The purchase or acquisition of the Transferred Receivablesby Buyer hereunder, the application of the Sale Price therefor and the consummation of the transactions contemplated by this Agreement and the other RelatedDocuments will not violate any provision of any such statute or any rule, regulation or order issued by the Securities and Exchange Commission.

(s) Books and Records; Minutes. The by-laws or the certificate or articles of incorporation of each Originator require it to maintain (i) books and records ofaccount and (ii) minutes of the meetings and other proceedings of its Stockholders and board of directors (or an analogous governing body).

(t) Deposit and Disbursement Accounts. Schedule 4.01(t) lists all banks and other financial institutions at which any Originator or the Servicer maintainsdeposit accounts established for the receipt of collections on accounts receivable, including any Collection Accounts, and such schedule correctly identifies thename, address and telephone number of each depository, the name in which the account is held, a description of the purpose of the account, and the completeaccount number therefor.

(u) Representations and Warranties in Other Related Documents. Each of the representations and warranties of each Transaction Party contained in theRelated Documents (other than this Agreement) is true and correct and such Transaction Party hereby makes each such representation and warranty to, and forthe benefit of, the Buyer as if the same were set forth in full herein. Each Transaction Party consents to the assignment of Buyer’s rights with respect to all suchrepresentations and warranties to the Administrative Agent and the Lenders (and their respective successors and assigns) pursuant to the Funding Agreement asmore fully described in Section 6.03 below.

(v) Receivables. With respect to each Transferred Receivable acquired by the Buyer hereunder:

(i) Each such Receivable included in any Borrower Base Certificate as an Eligible Receivable, as of the applicable Transfer Date therefor, satisfiedthe criteria for an Eligible Receivable;

(ii) immediately prior to its transfer to Buyer, such Receivable was owned by the Originator thereof free and clear of any Adverse Claim, and suchOriginator had the full right, power and authority to sell, contribute, assign, transfer and pledge its interest therein as contemplated under this Agreementand the other Related Documents and, upon such Transfer, Buyer will acquire valid and properly perfected title to and the sole record and beneficialownership interest in such Receivable, free and clear of any Adverse Claim and, following such Transfer, such Receivable will not be subject to anyAdverse Claim as a result of any action or inaction on the part of such Originator;

(iii) the Transfer of each such Receivable pursuant to this Agreement and the Receivables Assignment executed by the Originator thereofconstitutes, as applicable, a valid sale, contribution, transfer, assignment, setover and conveyance to Buyer of all right, title and interest of such Originatorin and to such Receivable; and


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(iv) the Originator of such Receivable has no knowledge of any fact (including Dilution Factors) (including any defaults by the Obligor thereunderon any other Receivable) that would cause it or should have caused it to expect that any payments on such Receivable will not be paid in full when due orto expect any other Material Adverse Effect with respect to such Receivable.

(w) Fair Value. With respect to each Transferred Receivable acquired by the Buyer hereunder, (i) the consideration received from the Buyer in respect ofsuch Transferred Receivable represents adequate consideration and fair and reasonably equivalent value for such Transferred Receivable as of the applicableTransfer Date and (ii) such consideration is not less than the fair market value of such Transferred Receivables, in each case, as of the applicable Transfer Dateand taking into account any increase in the outstanding balance of the Subordinated Note.

(z) Supplementary Representations.

(i) Receivables; Lock-Box Accounts.

(A) Each Receivable (other than Excluded Receivables) constitutes an “account” or a “general intangible” within the meaning of theapplicable UCC.

(B) Each Account constitutes a “deposit account” within the meaning of the applicable UCC.

(ii) Creation of Security Interest. The Originators own and have good and marketable title to the Receivables (other than Excluded Receivables), theAccounts and the Collections free and clear of any Adverse Claim. The Agreement creates a valid and continuing security interest (as defined in theapplicable UCC) in the Receivables (other than Excluded Receivables), the Accounts and the Collections in favor of the Buyer, which security interest isprior to all other Adverse Claims and is enforceable as such as against any creditors of and purchasers from the Originators.

(iii) Perfection. Within 10 days of the Effective Date, the Originators have caused the filing of all appropriate financing statements in the properfiling office in the appropriate jurisdictions under applicable law and entered into Account Agreements in order to perfect the sale of the Receivables(other than Excluded Receivables) from the Originators to the Buyer pursuant to this Agreement.

(iv) Priority.

(A) Other than the transfer of the Receivables (other than Excluded Receivables) by the Originators to the Borrower pursuant to thisAgreement, no Originator has pledged, assigned, sold, conveyed, or otherwise granted a security interest in any of the Receivables (other thanExcluded Receivables), the Accounts or the Lockboxes to any other Person.


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(B) No Originator has authorized, or is aware of, any filing of any financing statement against any Originator that include a description ofcollateral covering the Receivables (other than Excluded Receivables) or all other assets transferred to the Buyer hereunder, other than any financingstatement filed pursuant to this Agreement and the Funding Agreement or financing statements that have been validly terminated on or prior to thedate hereof.

(C) No Originator is aware of any judgment, ERISA or tax lien filings against any Originator.

(D) None of the Accounts or any of the Lockboxes are in the name of any Person other than the Borrower or the Administrative Agent. NoOriginator has consented to any Bank complying with instructions of any person other than the Administrative Agent.

(v) Survival of Supplemental Representations. Notwithstanding any other provision of this Agreement or any other Related Document, therepresentations contained in this Section 4.01(z) shall be continuing, and remain in full force and effect until the Termination Date.

The representations and warranties described in this Section 4.01 shall survive the Transfer of the Transferred Receivables to Buyer, any subsequent assignmentof the Transferred Receivables by Buyer, and the termination of this Agreement and the other Related Documents and shall continue until the indefeasiblepayment in full of all Transferred Receivables.

Section 4.02. Affirmative Covenants of the Originators. Each Originator covenants and agrees that, unless otherwise consented to by Buyer and theAdministrative Agent, from and after the Effective Date and until the Termination Date:

(a) Offices and Records. Each Originator shall maintain its jurisdiction of organization, principal place of business and chief executive office and the officeat which it keeps its Records at the respective locations specified in Schedule 4.01(b) or, upon 30 days’ prior written notice to Buyer and the AdministrativeAgent, at such other location in a jurisdiction where all action requested by Buyer, any Lender or the Administrative Agent pursuant to Section 6.13 shall havebeen taken with respect to the Transferred Receivables. Each Originator shall at its own cost and expense, for not less than three years from the date on whicheach Transferred Receivable was originated, or for such longer period as may be required by law, maintain adequate Records with respect to such TransferredReceivable, including records of all payments received, credits granted and merchandise returned with respect thereto. Upon the request of Buyer, eachOriginator shall (i) mark each Contract (other than invoices) evidencing each Transferred Receivable with a legend, acceptable to Buyer, evidencing that Buyerhas purchased such Transferred Receivable and that the Administrative Agent, for the benefit of the Lenders, has a security interest in and lien thereon, and(ii) mark its master data processing records evidencing such Transferred Receivables with such a legend.


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(b) Access. Each Originator shall, at its own expense, during normal business hours, from time to time upon one Business Day’s prior notice and asfrequently as Buyer or the Servicer determines to be appropriate: (i) provide Buyer, the Servicer and any of their respective officers, employees, agents andrepresentatives access to its properties (including properties of such Originator utilized in connection with the collection, processing or servicing of theTransferred Receivables), facilities, advisors and employees (including officers) of each Originator, (ii) permit Buyer and the Servicer and any of their respectiveofficers, employees, agents and representatives to inspect, audit and make extracts from such Originator’s books and records, including all Records maintainedby such Originator, (iii) permit Buyer, the Servicer and their respective officers, employees, agents and representatives, to inspect, review and evaluate theTransferred Receivables of such Originator, and (iv) permit Buyer, the Servicer and their respective officers, employees, agents and representatives to discussmatters relating to the Transferred Receivables or such Originator’s performance under this Agreement or the affairs, finances and accounts of such Originatorwith any of its officers, directors, employees, representatives or agents (in each case, with those Persons having knowledge of such matters) and with itsindependent certified public accountants. If an Incipient Termination Event or a Termination Event shall have occurred and be continuing, or the Buyer, in goodfaith, notifies any Originator that an Incipient Termination Event or a Termination Event may have occurred, is imminent or deems its rights or interests in theTransferred Receivables insecure, each such Originator shall provide such access at all times and without advance notice and shall provide Buyer and theServicer with access to its suppliers and customers. Each Originator shall make available to Buyer and the Servicer and their respective counsel, as quickly as ispossible under the circumstances, originals or copies of all books and records, including Records maintained by such Originator, as Buyer or the Servicer mayrequest. Each Originator shall deliver any document or instrument necessary for Buyer or the Servicer, as they may from time to time request, to obtain recordsfrom any service bureau or other Person that maintains records for such Originator, and shall maintain duplicate records or supporting documentation on media,including computer tapes and discs owned by such Originator.

(c) Communication with Accountants. Each Originator authorizes Buyer and the Servicer and their designated representatives to communicate directly withits independent certified public accountants, and authorizes and, if requested by Buyer or Servicer, shall instruct those accountants to disclose and make availableto Buyer, the Servicer and their designated representatives, any and all financial statements and other supporting financial documents, schedules and informationrelating to such Originator (including copies of any issued management letters) with respect to the business, financial condition and other affairs of suchOriginator. Each Originator agrees to render to Buyer and the Servicer at such Originator’s own cost and expense, such clerical and other assistance as may bereasonably requested with regard to the foregoing. If any Termination Event shall have occurred and be continuing, each Originator shall, promptly upon requesttherefor, deliver to Buyer or its designee all Records reflecting activity through the close of business on the Business Day immediately preceding the date of suchrequest.

(d) Compliance With Credit and Collection Policies. Each Originator shall comply with the Credit and Collection Policies applicable to each TransferredReceivable and the Contracts therefor, and with the terms of such Receivables and Contracts.


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(e) Assignment. Each Originator agrees that, to the extent permitted under the Funding Agreement, Buyer may assign all of its right, title and interest in, toand under the Transferred Receivables and this Agreement, including its right to exercise the remedies set forth in Section 4.04. Each Originator agrees that, uponany such assignment, the assignee thereof may enforce directly, without joinder of Buyer, all of the obligations of such Originator hereunder, including anyobligations of such Originator set forth in Sections 4.04, 5.01 and 6.14 and that such assignees are third party beneficiaries of the Buyer’s rights hereunder.

(f) Compliance with Agreements and Applicable Laws. Each Originator shall perform each of its obligations under this Agreement and the other RelatedDocuments and comply with all federal, state, provincial and local laws and regulations applicable to it and the Receivables, including those relating to truth inlending, retail installment sales, fair credit billing, fair credit reporting, equal credit opportunity, fair debt collection practices, privacy, licensing, securities laws,margin regulations, taxation, ERISA and labor matters and environmental laws and environmental permits, except where the failure to so comply could notreasonably be expected to result in a Material Adverse Effect. Each Originator shall pay all Charges, including any stamp duties, which may be imposed as aresult of the transactions contemplated by this Agreement and the other Related Documents, except to the extent such Charges are being contested in accordancewith Section 4.01(m).

(g) Maintenance of Existence and Conduct of Business. Each Originator shall: (i) do or cause to be done all things necessary to preserve and keep in fullforce and effect its corporate existence and its rights and franchises; (ii) continue to conduct its business substantially as now conducted or as otherwise permittedhereunder and in accordance with the terms of its certificate or articles of incorporation and by-laws; (iii) at all times maintain, preserve and protect all of itsassets and properties which are necessary in the conduct of its business, including all licenses, permits, charters and registrations, and keep the same in goodrepair, working order and condition in all material respects (taking into consideration ordinary wear and tear) and from time to time make, or cause to be made,all necessary or appropriate repairs, replacements and improvements thereto consistent with industry practices; and (iv) transact business only in such corporate,legal and trade names as are set forth in Schedule 4.02(g) or, upon 30 days’ prior written notice to Buyer, in such other corporate, legal or trade names withrespect to which all action requested by Buyer pursuant to Section 6.13 shall have been taken with respect to the Transferred Receivables.

(h) Notice of Material Event. Each Originator shall promptly inform Buyer in writing of the occurrence of any of the following, in each case setting forththe details thereof, any notices or other correspondence relating thereto, and what action, if any, such Originator proposes to take with respect thereto:

(i) any Litigation commenced or threatened against the Parent, any Originator or any other Subsidiary of the Parent or with respect to or inconnection with all or any portion of the Transferred Receivables that (A) seeks damages or penalties in an uninsured amount in excess of $2,000,000 inthe aggregate, (B) seeks injunctive relief, (C) is asserted or instituted against any Plan, its fiduciaries (in their capacity as a fiduciary of any such Plan) orits assets or against the Parent, any Originator or any other Subsidiary of the Parent or any of their respective ERISA Affiliates in connection with


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any Plan, (D) alleges criminal misconduct by the Parent, any Originator or any other Subsidiary of the Parent, or (E) if determined adversely, couldreasonably be expected to have a Material Adverse Effect;

(ii) the commencement of a case or proceeding by or against the Parent, any Originator or any other Subsidiary of the Parent seeking a decree ororder in respect of the Parent, any Originator or such Subsidiary (A) under the Bankruptcy Code or any other applicable federal, state, provincial or foreignbankruptcy or other similar law, (B) appointing a custodian, receiver, liquidator, assignee, trustee or sequestrator (or similar official) for the Parent, anyOriginator or such Subsidiary or for any substantial part of such Person’s assets, or (C) ordering the winding-up or liquidation of the affairs of the Parent,any Originator or any other Subsidiary of the Parent;

(iii) the receipt of notice that (A) the Parent, such Originator, or any other Subsidiary of the Parent is being placed under regulatory supervision,(B) any material license, permit, charter, registration or approval necessary for the conduct of the Parent’s, such Originator’s or any other Subsidiary of theParent’s business is to be, or may be, suspended or revoked, or (C) the Parent, such Originator or any other Subsidiary of the Parent is to cease and desistany practice, procedure or policy employed by the Parent, such Originator or any other Subsidiary of the Parent in the conduct of its business if suchcessation could reasonably be expected to have a Material Adverse Effect;

(iv)(A) any Adverse Claim made or asserted against any of the Transferred Receivables of which it becomes aware or (B) any determination that aTransferred Receivable was not an Eligible Receivable at the time sale to Buyer or has ceased to be an Eligible Receivable on account of any matter givingrise to indemnification under Section 5.01;

(v) each infringement or claim of infringement by any Person of any intellectual property of any Originator;

(vi) the execution or filing with the IRS or any other Governmental Authority of any agreement or other document extending, or having the effect ofextending, the period for assessment or collection of any Charges;

(vii) the establishment of any Plan, Pension Plan, Title IV Plan or undertaking to make contributions to any Multiemployer Plan, ESOP, WelfarePlan or Retiree Welfare Plan not listed on Schedule 4.01(m); or

(viii) any other event, circumstance or condition that has had or could reasonably be expected to have a Material Adverse Effect.


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(i) Separate Identity.

(i) Each Originator shall, and shall cause each other member of the Parent Group to, maintain records and books of account separate from those ofBuyer.

(ii) The financial statements of the Parent and its consolidated Subsidiaries shall disclose the effects of each Originator’s transactions in accordancewith GAAP and, in addition, disclose that (A) Buyer’s sole business consists of the purchase or acceptance through capital contribution (in the case of theParent) of the Transferred Receivables from the Originators and the subsequent financing of such Receivables pursuant to the Funding Agreement,(B) Buyer is a separate legal entity with its own separate creditors who will be entitled, upon its liquidation, to be satisfied out of Buyer’s assets prior toany value in Buyer becoming available to Buyer’s equity holders and (C) the assets of Buyer are not available to pay creditors of any Originator or anyother Affiliate of such Originator.

(iii) The resolutions, agreements and other instruments underlying the transactions described in this Agreement shall be continuously maintained byeach Originator as official records.

(iv) Each Originator shall, and shall cause each other member of the Parent Group to, maintain an arm’s-length relationship with Buyer and shall nothold itself out as being liable for the Debts of Buyer.

(v) Each Originator shall, and shall cause each other member of the Parent Group to, keep its assets and its liabilities wholly separate from those ofBuyer.

(vi) Each Originator shall, and shall cause each other member of the Parent Group to, conduct its business solely in its own name or the name of theParent or Parent through its duly Authorized Officers or agents and in a manner designed not to mislead third parties as to the separate identity of Buyer.

(vii) No Originator shall (and each Originator shall cause each other member of the Parent Group not to) mislead third parties by conducting orappearing to conduct business on behalf of Buyer or expressly or impliedly representing or suggesting that such Originator or any other member of theParent Group is liable or responsible for the Debts of Buyer or that the assets of such Originator or any other member of the Parent Group are available topay the creditors of Buyer.

(viii) The operating expenses and liabilities of Buyer shall be paid from Buyer’s own funds and not from any funds of any Originator or othermember of the Parent Group.

(ix) Each Originator shall, and shall cause each other member of the Parent Group to, at all times have stationery and other business forms and amailing address and telephone number separate from those of Buyer.


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(x) Each Originator shall, and shall cause each other member of the Parent Group to, at all times limit its transactions with Buyer only to thoseexpressly permitted hereunder or under any other Related Document.

(xi) Each Originator shall, and shall cause each other member of the Parent Group to, comply with (and cause to be true and correct) each of thefacts and assumptions contained in the opinions of Pillsbury Winthrop Shaw Pittman LLP delivered pursuant to the Schedule of Documents.

(j) ERISA and Environmental Notices. Each Originator shall give Buyer prompt written notice of (i) any event that could reasonably be expected to resultin the imposition of a Lien under Section 412 of the IRC or Section 302 or 4068 of ERISA, (ii) any event that could reasonably be expected to result in theincurrence by any Originator of any liabilities under Title IV of ERISA (other than premium payments arising in the ordinary course of business), and (iii) anyenvironmental claims against the Parent, any Originator or any other Subsidiary of the Parent which, individually or in the aggregate, could reasonably beexpected to exceed $250,000.

(k) Payment, Performance and Discharge of Obligations.

(i) Subject to Section 4.02(k)(ii), each Originator shall (and shall cause each other member of the Parent Group to) pay, perform and discharge orcause to be paid, performed and discharged all of its obligations and liabilities, including all Charges upon its income and properties and all lawful claimsfor labor, materials, supplies and services, promptly when due.

(ii) Each Originator and each other member of the Parent Group may in good faith contest, by appropriate proceedings, the validity or amount of anyCharges or claims described in Section 4.02(k)(i); provided, that (A) adequate reserves with respect to such contest are maintained on the books of suchOriginator or such member, as applicable, in accordance with GAAP, (B) such contest is maintained and prosecuted continuously and with diligence,(C) none of the Transferred Receivables may become subject to forfeiture or loss as a result of such contest, (D) no Lien may be imposed to securepayment of such Charges or claims other than inchoate tax liens and (E) Buyer has advised such Originator in writing that Buyer reasonably believes thatnonpayment or nondischarge thereof could not reasonably be expected to have or result in a Material Adverse Effect.

(l) Deposit of Collections. Each Originator shall (and shall cause each of its Affiliates to) (i) instruct all Obligors to remit all payments with respect to anyTransferred Receivables directly into a Collection Account, and (ii) deposit or cause to be deposited promptly into a Collection Account, and in any event nolater than the first Business Day after receipt thereof, all Collections it may receive in respect of Transferred Receivables (and until so deposited, all suchCollections shall be held in trust for the benefit of Buyer and its assigns (including the Administrative Agent and the Lenders)). No Originator shall make orpermit to be made deposits into a Lockbox or a Collection Account other than in accordance with this Agreement and the other Related Documents. Withoutlimiting the generality of the foregoing, each Originator shall ensure that no Collections or other proceeds with respect to a Receivable reconveyed to it pursuantto Section 4.04 hereof are paid or deposited into any Lockbox or Collection Account.


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(m) Accounting Changes. If any Accounting Changes occur and such changes result in a change in the standards or terms used herein, then the partieshereto agree to enter into good faith negotiations in order to amend such provisions so as to equitably reflect such Accounting Changes with the desired resultthat the criteria for evaluating the financial condition of such Persons and their Subsidiaries shall be the same after such Accounting Changes as if suchAccounting Changes had not been made. If the parties hereto agree upon the required amendments to this Agreement, then after appropriate amendments havebeen executed and the underlying Accounting Change with respect thereto has been implemented, any reference to GAAP contained herein shall, only to theextent of such Accounting Change, refer to GAAP consistently applied after giving effect to the implementation of such Accounting Change. If such partiescannot agree upon the required amendments within 30 days following the date of implementation of any Accounting Change, then all financial statementsdelivered and all standards and terms used herein shall be prepared, delivered and used without regard to the underlying Accounting Change.

(n) Originators to Maintain Perfection and Priority. In order to evidence the interests of the Buyer under this Agreement, each Originator shall, from time totime take such action, or execute and deliver such instruments (other than filing financing statements) as may be necessary or advisable (including, such actionsas are requested by the Buyer) to maintain and perfect, as a first-priority interest, the Buyer’s ownership and security interest in the Receivables (other thanExcluded Receivables) and all other assets sold to the Buyer pursuant hereto. Each Originator shall, from time to time and within the time limits established bylaw, prepare and present to the Buyer for the Buyer’s authorization and approval all financing statements, amendments, continuations or initial financingstatements in lieu of a continuation statement in the, or other filings necessary to continue, maintain and perfect the Buyer’s ownership and security interest in theReceivables (other than Excluded Receivables) and all other assets sold to the Buyer pursuant hereto as a first-priority interest. The Buyer’s approval of suchfilings shall authorize the Originators to file such financing statements under the UCC without the signature of the Buyer where allowed by applicable law.Notwithstanding anything else in the Related Documents to the contrary, neither the Servicer nor any Originator shall have any authority to file a termination,partial termination, release, partial release or any amendment that deletes the name of a debtor or excludes collateral of any such financing statements, withoutthe prior written consent of the Buyer. Originator agrees to maintain perfection and priority of the security interest in accordance with Section 6.13 hereof.

Section 4.03. Negative Covenants of the Originators. Each Originator covenants and agrees that, without the prior written consent of Buyer, from and afterthe Closing Date and until the Termination Date:

(a) Sale of Receivables and Related Assets. No Originator shall sell, transfer, convey, assign (by operation of law or otherwise) or otherwise dispose of, orassign any right to receive income in respect of, any of its Receivables (other than Excluded Receivables) or Contracts therefor, or any of its rights with respect toany Lockbox or Collection Account, except for the sales, transfers, conveyances, assignments or dispositions expressly contemplated hereunder.


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(b) Liens. No Originator shall create, incur, assume or permit to exist any Adverse Claim on or with respect to its Receivables (other than ExcludedReceivables) (whether now owned or hereafter acquired) except for Permitted Encumbrances that do not attach to Transferred Receivables. Neither the Parentnor any of its domestic Subsidiaries shall create, incur, assume or permit to exist any Lien upon any of its property or receivables whether now owned orhereafter acquired, except for (i) Liens permitted pursuant to Section 6.7 of the Credit Agreement as in effect as of the Closing Date and (ii) Liens createdpursuant to the Credit Agreement or any credit facility effecting a refinancing of the Debt incurred pursuant to the Credit Agreement; provided that any suchcredit facility expressly excludes all Transferred Receivables from any such Lien and the terms and conditions of any such credit facility are not otherwiseinconsistent with the terms and conditions of this Agreement or any other Related Document (but in any event which terms and conditions are consistent with theprovisions of the Credit Agreement relating to the transactions contemplated by this Agreement and the other Related Documents).

(c) Modifications of Receivables or Contracts. No Originator shall extend, amend, forgive, discharge, compromise, cancel or otherwise modify the terms ofany Transferred Receivable, or amend, modify or waive any term or condition of any Contract therefor.

(d) Sale Characterization. No Originator shall (and each Originator shall cause each other member of the Parent Group not to) make statements ordisclosures or prepare any financial statements for any purpose, including for federal income tax, reporting or accounting purposes, that shall account for thetransactions contemplated by this Agreement in any manner other than with respect to the Sale of each Sold Receivable originated or acquired by it, as a true saleor absolute assignment of its full right, title and ownership interest in such Transferred Receivable to Buyer and with respect to the Transfer of each ContributedReceivable originated or acquired by it, as a contribution to the capital of Buyer.

(e) Capital Structure and Business. No Originator shall (and each Originator shall cause each other member of the Parent Group not to) (i) make anychanges in any of its business objectives, purposes or operations that could reasonably be expected to have or result in a Material Adverse Effect, (ii) make anymaterial change in its capital structure as described on Schedule 4.01(h), including the issuance or repurchase of any shares of Stock, warrants or other securitiesconvertible into Stock or any revision of the terms of its outstanding Stock or (iii) materially amend, supplement or otherwise modify its certificate or articles ofincorporation, bylaws, limited liability company agreement and other organizational documents. No member of the Parent Group shall engage in any businessother than the businesses currently engaged in by it and those incidental thereto. No Originator shall change the type of entity it is, its jurisdiction of organizationor its organizational identification number, if any, issued by its state of organization, except upon 30 days’ prior written notice to Buyer and with respect to whichjurisdiction all action requested by Buyer pursuant to Section 6.13 shall have been taken with respect to the Transferred Receivables.


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(f) Actions Affecting Rights. No Originator shall (i) take any action, or fail to take any action, if such action or failure to take action may interfere with theenforcement of any rights hereunder or under the other Related Documents, including rights with respect to the Transferred Receivables; or (ii) fail to pay anyCharge, fee or other obligation of such Originator with respect to the Transferred Receivables, or fail to defend any action, if such failure to pay or defend mayadversely affect the priority or enforceability of the perfected title of Buyer to and the sole record and beneficial ownership interest of Buyer in the TransferredReceivables or, prior to their Transfer hereunder, such Originator’s right, title or interest therein.

(g) ERISA. No Originator shall, or shall cause or permit any ERISA Affiliate to, cause or permit to occur an event that could reasonably be expected toresult in the imposition of a Lien under Section 412 of the IRC or Section 302 or 4068 of ERISA or cause or permit to occur an ERISA Event.

(h) Change to Credit and Collection Policies. No Originator shall fail to comply in any material respect with, and no change, amendment, modification orwaiver shall be made to, the Credit and Collection Policies without the prior written consent of Buyer.

(i) Adverse Tax Consequences. No Originator shall take or permit to be taken any action (other than with respect to actions taken or to be taken solely by aGovernmental Authority), or fail or neglect to perform, keep or observe any of its obligations hereunder or under the other Related Documents, that would havethe effect directly or indirectly of subjecting any payment to Buyer, or to any assignee who is a resident of the United States of America, to withholding taxation.

(j) No Proceedings. From and after the Effective Date and until the date one year plus one day following the Termination Date, no Originator shall, directlyor indirectly, institute or cause to be instituted against Buyer any proceeding of the type referred to in Sections 8.01(d) and 8.01(e) of the Funding Agreement.

(k) Mergers, Acquisitions, Sales, etc. Other than as permitted pursuant to Section 6.1 of the Credit Agreement, neither the Parent nor any of its domesticSubsidiaries shall (i) be a party to any merger or consolidation, or directly or indirectly purchase or otherwise acquire all or substantially all of the assets or anystock of any class of, or any partnership or joint venture interest in, any other Person, or otherwise create or acquire a Subsidiary, or (ii) directly or indirectly sell,transfer, assign, convey or lease whether in one or a series of transactions, all or substantially all of its assets other than pursuant hereto, or permit any Subsidiaryto do any of the foregoing, except for any such merger or consolidation, sale, transfer, conveyance, lease or assignment of or by any majority-owned Subsidiaryinto such Person or into, with or to any other majority-owned Subsidiary and any such purchase or other acquisition by such Person or any majority-ownedSubsidiary of the assets or stock of any majority-owned Subsidiary. In connection with any merger or consolidation that is permitted pursuant to Section 6.1 ofthe Credit Agreement, each Originator will (i) provide written notice thereof to the Buyer, and (ii) take all such actions and deliver, or cause to be delivered, suchopinion letters of counsel, certificates and other agreements that the Buyer deems reasonably necessary or desirable under the UCC to maintain the perfection andpriority of the Buyer’s ownership interest in the Transferred Receivables.


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(l) Modification to the Credit Agreement. The Parent will not agree to any material amendment, modification or waiver to any provision of the CreditAgreement without the prior written consent of the Administrative Agent.

(m) Commingling. No Originator shall (and each Originator shall cause each other member of the Parent Group not to) deposit or permit the deposit of anyfunds that do not constitute Collections of Transferred Receivables into any Lockbox or Collection Account, provided that after the Commitment TerminationDate, so long as any Transferred Receivables of an Obligor remain unpaid, no Originator shall instruct such Obligor to remit Collections of any TransferredReceivables to any Person or account other than to a Lockbox or Collection Account. If any funds not constituting collections of Transferred Receivables arenonetheless deposited into a Lockbox or Collection Account and such Originator so notifies Buyer, Buyer shall notify the Administrative Agent to promptlyremit any such amounts to the applicable Originator.

(n) Purchases of Receivables. No Originator shall, directly or indirectly, purchase any accounts receivable, other than Excluded Receivables, from anyPerson without the express written consent of the Buyer.

Section 4.04. Breach of Representations, Warranties or Covenants. Upon discovery by any Originator or Buyer of any breach of representation, warranty orcovenant described in Section 4.01(g), 4.01(l), 4.01(v), 4.01(w), 4.01(z), 4.02(l), 4.03(a), 4.03(b), 4.03(c), 4.03(d), 4.03(l), 4.03(m) and 4.03(n) with respect to anyTransferred Receivable, the party discovering the same shall give prompt written notice thereof to the other parties hereto. The Originator that breached suchrepresentation, warranty or covenant shall, if requested by notice from Buyer, on the first Business Day following receipt of such notice, either (a) repurchase theaffected Transferred Receivable from Buyer for cash remitted to the applicable Collection Account, (b) transfer ownership of a new Eligible Receivable or newEligible Receivables to Buyer on such Business Day, or (c) in the case of the Parent, make a capital contribution in cash to Buyer by remitting the amount of suchcapital contribution to the Collection Account, in each case, in an amount (the “Rejected Amount”) equal to the Billed Amount of such Transferred Receivableminus the sum of (i) Collections received in respect thereof plus (ii) the amount of any Dilution Factors taken into account in the calculation of the Original SalePrice thereof. Each Originator shall ensure that no Collections or other proceeds with respect to a Transferred Receivable so reconveyed to it are paid ordeposited into any Collection Account.

ARTICLE VINDEMNIFICATION

Section 5.01. Indemnification. Without limiting any other rights that Buyer or any of its Stockholders, any of its assignees including the Lenders and theAdministrative Agent, or any of their respective officers, directors, employees, attorneys, agents or representatives and transferees, successors and assigns (each,a “Buyer Indemnified Person”) may have hereunder or under applicable law, each Originator hereby agrees to indemnify and hold harmless each BuyerIndemnified Person from and against any and all Indemnified Amounts that may be claimed or asserted against or incurred by any such Buyer IndemnifiedPerson in connection with or arising out of the transactions contemplated under this Agreement or under any other Related Document,


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any actions or failures to act in connection therewith, including any and all reasonable legal costs and expenses arising out of or incurred in connection withdisputes between or among any parties to any of the Related Documents, or in respect of any Transferred Receivable or any Contract therefor or the use by suchOriginator of the Sale Price therefor; provided, that no Originator shall be liable for any indemnification to a Buyer Indemnified Person to the extent that any suchIndemnified Amounts (a) result from such Buyer Indemnified Person’s gross negligence or willful misconduct, as finally determined by a court of competentjurisdiction, or (b) constitute recourse for uncollectible or uncollected Transferred Receivables due to the failure (without cause or justification) or inability onthe part of the related Obligor to perform its obligations thereunder or the occurrence of any event of bankruptcy with respect to such Obligor. Subject to clauses(a) and (b) of the proviso in the immediately preceding sentence, but otherwise without limiting the generality of the foregoing, each Originator shall pay ondemand to each Buyer Indemnified Person any and all Indemnified Amounts relating to or resulting from:

(i) reliance on any representation or warranty made or deemed made by such Originator (or any of its officers) under or in connection with thisAgreement or any other Related Document (without regard to any qualifications concerning the occurrence or non-occurrence of a Material Adverse Effector similar concepts of materiality) or on any other information delivered by such Originator pursuant hereto or thereto that shall have been incorrect whenmade or deemed made or delivered;

(ii) the failure by such Originator to comply with any term, provision or covenant contained in this Agreement, any other Related Document or anyagreement executed in connection herewith or therewith (without regard to any qualifications concerning the occurrence or non-occurrence of a MaterialAdverse Effect or similar concepts of materiality), any applicable law, rule or regulation with respect to any Transferred Receivable or the Contracttherefor, or the nonconformity of any Transferred Receivable or the Contract therefor with any such applicable law, rule or regulation;

(iii) the failure to vest and maintain vested in Buyer, or to Transfer to Buyer, valid and properly perfected title to and sole record and beneficialownership of the Receivables that constitute Transferred Receivables, together with all Collections in respect thereof, free and clear of any Adverse Claim;

(iv) any dispute, claim, offset or defense of any Obligor (other than its discharge in bankruptcy) to the payment of any Receivable that is the subjectof a Transfer hereunder (including (x) a defense based on such Receivable or the Contract therefor not being a legal, valid and binding obligation of suchObligor enforceable against it in accordance with its terms (other than as a result of a discharge in bankruptcy), or any other claim resulting from the saleof the merchandise or services giving rise to such Receivable or the furnishing or failure to furnish such merchandise or services or relating to collectionactivities with respect to such Receivable (if such collection activities were performed by any Originator or any Affiliate thereof acting as the Servicer or aSub-Servicer) and (y) resulting from or in connection with any Dilution Factors);


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(v) any products liability claim or other claim arising out of or in connection with merchandise, insurance or services that is the subject of anyContract;

(vi) the commingling of Collections with respect to Transferred Receivables by any Originator at any time with its other funds or the funds of anyother Person;

(vii) any failure by such Originator to cause the filing of, or any delay in filing, financing statements or other similar instruments or documents underthe UCC of any applicable jurisdiction or any other applicable laws with respect to any Transferred Receivable that is the subject of a Transfer hereunderto the extent that such filing is necessary to maintain the perfection and priority of the Buyer in such Receivable, whether at the time of any such Transferor at any subsequent time;

(viii) any investigation, Litigation or proceeding related to this Agreement or the use of the Sale Price obtained in connection with any Sale or theownership of Transferred Receivables or Collections with respect thereto or in respect of any Transferred Receivable or Contract therefor;

(ix) any claim brought by any Person other than a Buyer Indemnified Person arising from any activity by such Originator or any of its Affiliates inservicing, administering or collecting any Transferred Receivables;

(x) any failure of (x) a Collection Account Bank to comply with the terms of the applicable Collection Account Agreement, (y) the ConcentrationAccount Bank to comply with the terms of the Concentration Account Agreement, or (z) the Borrower Account Bank to comply with the terms of theBorrower Account Agreement;

(xi) any withholding, deduction or Charge imposed upon any payments with respect to any Transferred Receivable, any Borrower AssignedAgreement or any other Borrower Collateral.

Section 5.02. Indemnities by the Servicer.

(a) Without limiting any other rights that a Buyer Indemnified Person may have hereunder or under applicable law, the Servicer hereby agrees toindemnify and hold harmless each Buyer Indemnified Person from and against any and all Indemnified Amounts that may be claimed or asserted against orincurred by any such Buyer Indemnified Person in connection with or arising out of the collection activities of the Servicer hereunder or out of any breach by theServicer of its obligations hereunder or under any other Related Document; provided, that the Servicer shall not be liable for any indemnification to a BuyerIndemnified Person to the extent that any such Indemnified Amount (x) results from such Buyer Indemnified Person’s gross negligence or willful misconduct, ineach case as finally determined by a court of competent jurisdiction, or (y) constitutes recourse for uncollectible or uncollected Transferred Receivables as aresult of the insolvency, bankruptcy or the failure (without cause or justification) or inability on the part of the related Obligor to perform its obligationsthereunder. Without limiting the


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generality of the foregoing, the Servicer shall pay on demand to each Buyer Indemnified Person any and all Indemnified Amounts relating to or resulting from:

(i) reliance on any representation or warranty made or deemed made by the Servicer (or any of its officers) under or in connection with thisAgreement or any other Related Document (without regard to any qualifications concerning the occurrence or non-occurrence of a Material Adverse Effector similar concepts of materiality) or on any other information delivered by the Servicer pursuant hereto or thereto that shall have been incorrect whenmade or deemed made or delivered;

(ii) the failure by the Servicer to comply with any term, provision or covenant contained in this Agreement, any other Related Document or anyagreement executed in connection herewith or therewith (without regard to any qualifications concerning the occurrence or non-occurrence of a MaterialAdverse Effect or similar concepts of materiality), any applicable law, rule or regulation with respect to any Transferred Receivable or the Contracttherefor, or the nonconformity of any Transferred Receivable or the Contract therefor with any such applicable law, rule or regulation;

(iii) the imposition of any Adverse Claim with respect to any Transferred Receivable or the Borrower Collateral as a result of any action taken by theServicer; or

(iv) the commingling of Collections with respect to Transferred Receivables by the Servicer at any time with its other funds or the funds of any otherPerson.

(b) Any Indemnified Amounts subject to the indemnification provisions of this Section 5.02 shall be paid by the Servicer to the Buyer Indemnified Personentitled thereto within five Business Days following demand therefor.


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ARTICLE VIMISCELLANEOUS

Section 6.01. Notices. Except as otherwise provided herein, whenever it is provided herein that any notice, demand, request, consent, approval, declarationor other communication shall or may be given to or served upon any of the parties by any other parties, or whenever any of the parties desires to give or serveupon any other parties any communication with respect to this Agreement, each such notice, demand, request, consent, approval, declaration or othercommunication shall be in writing and shall be deemed to have been validly served, given or delivered (a) upon the earlier of actual receipt and three BusinessDays after deposit in the United States Mail, registered or certified mail, return receipt requested, with proper postage prepaid, (b) upon transmission, when sentby email of the signed notice in PDF form or facsimile transmission (with such email or facsimile promptly confirmed by delivery of a copy by personal deliveryor United States Mail as otherwise provided in this Section 6.01), (c) one Business Day after deposit with a reputable overnight courier with all charges prepaid or(d) when delivered, if hand-delivered by messenger, all of which shall be addressed to the party to be notified and sent to the address or facsimile number setforth in Schedule 6.01 attached hereto or to such other address (or facsimile number) as may be substituted by notice given as herein provided:

Without limiting the generality of the foregoing, all notices to be provided to the Buyer hereunder shall be delivered to both the Buyer and the AdministrativeAgent under the Funding Agreement, and shall be effective only upon such delivery to the Administrative Agent in accordance with the terms of the FundingAgreement. The giving of any notice required hereunder may be waived in writing by the party entitled to receive such notice. Failure or delay in deliveringcopies of any notice, demand, request, consent, approval, declaration or other communication to any Person (other than Buyer) designated in any writtencommunication provided hereunder to receive copies shall in no way adversely affect the effectiveness of such notice, demand, request, consent, approval,declaration or other communication. Notwithstanding the foregoing, whenever it is provided herein that a notice is to be given to any other party hereto by aspecific time, such notice shall only be effective if actually received by such party prior to such time, and if such notice is received after such time or on a dayother than a Business Day, such notice shall only be effective on the immediately succeeding Business Day.

Section 6.02. No Waiver; Remedies. Buyer’s failure, at any time or times, to require strict performance by the Originators of any provision of thisAgreement or any Receivables Assignment shall not waive, affect or diminish any right of Buyer thereafter to demand strict compliance and performanceherewith or therewith. Any suspension or waiver of any breach or default hereunder shall not suspend, waive or affect any other breach or default whether thesame is prior or subsequent thereto and whether the same or of a different type. None of the undertakings, agreements, warranties, covenants and representationsof any Originator contained in this Agreement or any Receivables Assignment, and no breach or default by any Originator hereunder or thereunder, shall bedeemed to have been suspended or waived by Buyer unless such waiver or suspension is by an instrument in writing signed by an officer of or other dulyauthorized signatory of Buyer and directed to such Originator specifying such suspension or waiver. Buyer shall not waive any of the provisions set forth inSection 4.01(z) or Section 4.02(n) if such waiver would adversely affect the Ratings. Buyer’s rights and remedies under this Agreement shall be cumulative andnonexclusive of any other rights and remedies that Buyer may have under any other agreement, including the other Related Documents, by operation of law orotherwise. Recourse to the Transferred Receivables shall not be required.


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Section 6.03. Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of each Originator, Servicer and Buyer and theirrespective successors and permitted assigns, except as otherwise provided herein. No Originator nor the Servicer may assign, transfer, hypothecate or otherwiseconvey its rights, benefits, obligations or duties hereunder without the prior express written consent of Buyer. Any such purported assignment, transfer,hypothecation or other conveyance by any Originator without the prior express written consent of Buyer, shall be void. Each Originator and the Serviceracknowledges that Buyer may assign its rights granted hereunder, including the benefit of any indemnities under Article V, and upon such assignment, suchassignee shall have, to the extent of such assignment, all rights of Buyer hereunder and, to the extent permitted under the Funding Agreement, may in turn assignsuch rights. Each Originator and the Servicer agrees that, upon any such assignment, such assignee may enforce directly, without joinder of Buyer, the rights setforth in this Agreement. All such assignees, including parties to the Funding Agreement in the case of any assignment to such parties, shall be third partybeneficiaries of, and shall be entitled to enforce Buyer’s rights and remedies under, this Agreement to the same extent as Buyer or any of its designatedrepresentatives may do. The terms and provisions of this Agreement are for the purpose of defining the relative rights and obligations of each Originator, theServicer and Buyer with respect to the transactions contemplated hereby and, except for the Lenders and the Administrative Agent, no Person shall be a thirdparty beneficiary of any of the terms and provisions of this Agreement.

Section 6.04. Termination; Survival of Obligations.

(a) This Agreement shall create and constitute the continuing obligations of the parties hereto in accordance with its terms, and shall remain in full forceand effect until the Termination Date.

(b) Except as otherwise expressly provided herein or in any other Related Document, no termination or cancellation (regardless of cause or procedure) ofany commitment made by Buyer under this Agreement shall in any way affect or impair the obligations, duties and liabilities of any Originator or the rights ofBuyer relating to any unpaid portion of any and all recourse and indemnity obligations of such Originator to Buyer, including those set forth in Sections 4.04,5.01, 6.12, 6.14 and 6.15, due or not due, liquidated, contingent or unliquidated or any transaction or event occurring prior to such termination, or any transaction orevent, the performance of which is required after the Commitment Termination Date. Except as otherwise expressly provided herein or in any other RelatedDocument, all undertakings, agreements, covenants, warranties and representations of or binding upon each Originator, and all rights of Buyer hereunder, all ascontained in the Related Documents, shall not terminate or expire, but rather shall survive any such termination or cancellation and shall continue in full forceand effect until the Termination Date; provided, that the rights and remedies pursuant to Sections 4.04, the indemnification and payment provisions of Article V,and the provisions of Sections 4.03(j), 6.03, 6.12 and 6.14 shall be continuing and shall survive any termination of this Agreement.


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Section 6.05. Complete Agreement; Modification of Agreement. This Agreement and the other Related Documents constitute the complete agreementbetween the parties with respect to the subject matter hereof and thereof, supersede all prior agreements and understandings relating to the subject matter hereofand thereof, and may not be modified, altered or amended except as set forth in Section 6.06.

Section 6.06. Amendments and Waivers. No amendment, modification, termination or waiver of any provision of this Agreement or any of the otherRelated Documents, or any consent to any departure by any Originator therefrom, shall in any event be effective unless the same shall be in writing and signed byeach of the parties hereto; provided, that, prior to the Termination Date, no amendment, modification, termination or waiver of any provision of this Agreement orany of the other Related Documents, or any consent to any departure by any Originator therefrom, shall in any event be effective unless the same shall be inwriting and signed by the Administrative Agent. No consent or demand in any case shall, in itself, entitle any party to any other consent or further notice ordemand in similar or other circumstances.

Section 6.07. Governing Law; Consent to Jurisdiction; Waiver of Jury Trial.

(a) THIS AGREEMENT AND EACH RELATED DOCUMENT (EXCEPT TO THE EXTENT THAT ANY RELATED DOCUMENTEXPRESSLY PROVIDES TO THE CONTRARY) AND THE OBLIGATIONS ARISING HEREUNDER AND THEREUNDER SHALL IN ALLRESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, BE GOVERNED BY, AND CONSTRUEDAND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (INCLUDING SECTION 5-1401 OF THE GENERALOBLIGATIONS LAWS BUT OTHERWISE WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES), EXCEPT TO THE EXTENT THATTHE PERFECTION, EFFECT OF PERFECTION OR PRIORITY OF THE INTERESTS OF THE BUYER IN THE RECEIVABLES ORREMEDIES HEREUNDER OR THEREUNDER, IN RESPECT THEREOF, ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHERTHAN THE STATE OF NEW YORK, AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.

(b) EACH PARTY HERETO HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN THEBOROUGH OF MANHATTAN IN NEW YORK CITY SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMSOR DISPUTES BETWEEN THEM PERTAINING TO THIS AGREEMENT OR TO ANY MATTER ARISING OUT OF OR RELATING TO THISAGREEMENT OR ANY RELATED DOCUMENT; PROVIDED, THAT EACH PARTY HERETO ACKNOWLEDGES THAT ANY APPEALSFROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF THE BOROUGH OF MANHATTAN IN NEWYORK CITY; PROVIDED, FURTHER, THAT NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE BUYERFROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO REALIZE ON THE RECEIVABLES ORANY OTHER SECURITY FOR THE OBLIGATIONS OF THE ORIGINATORS ARISING HEREUNDER, OR TO ENFORCE A JUDGMENT OROTHER COURT ORDER IN


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FAVOR OF BUYER. EACH PARTY HERETO SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUITCOMMENCED IN ANY SUCH COURT, AND EACH PARTY HERETO HEREBY WAIVES ANY OBJECTION THAT SUCH PARTY MAY HAVEBASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUMNONCONVENIENS AND HEREBY CONSENTS TOTHE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT. EACH PARTY HERETOHEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION ORSUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE BY REGISTERED ORCERTIFIED MAIL ADDRESSED TO SUCH PARTY AT THE ADDRESS SET FORTH IN SECTION 6.01 HEREOF AND THAT SERVICE SOMADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF SUCH PARTY’S ACTUAL RECEIPT THEREOF OR THREE DAYSAFTER DEPOSIT IN THE UNITED STATES MAIL, PROPER POSTAGE PREPAID. NOTHING IN THIS SECTION SHALL AFFECT THERIGHT OF ANY PARTY HERETO TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.

(c) BECAUSE DISPUTES ARISING IN CONNECTION WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY ANDECONOMICALLY RESOLVED BY AN EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE ANDFEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR DISPUTES BE RESOLVED BYA JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THEJUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, ORPROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, ARISING OUTOF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTIONWITH THIS AGREEMENT OR ANY RELATED DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.


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Section 6.08. Counterparts. This Agreement may be executed in any number of separate counterparts, each of which shall collectively and separatelyconstitute one agreement.

Section 6.09. Severability. Wherever possible, each provision of this Agreement shall be interpreted in such a manner as to be effective and valid underapplicable law, but if any provision of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extentof such prohibition or invalidity without invalidating the remainder of such provision or the remaining provisions of this Agreement.

Section 6.10. Section Titles. The section titles and table of contents contained in this Agreement are provided for ease of reference only and shall bewithout substantive meaning or content of any kind whatsoever and are not a part of the agreement between the parties hereto.

Section 6.11. No Setoff. Each Originator’s obligations under this Agreement shall not be affected by any right of setoff, counterclaim, recoupment, defenseor other right such Originator might have against Buyer, all of which rights are hereby expressly waived by such Originator.

Section 6.12. Confidentiality.

(a) Except to the extent otherwise required by applicable law, as required to be filed publicly with the Securities and Exchange Commission, or unless eachAffected Party shall otherwise consent in writing, each Originator, the Servicer and Buyer agree to maintain the confidentiality of this Agreement (and all draftshereof and documents ancillary hereto) in its communications with third parties other than any Affected Party or any Buyer Indemnified Person and otherwisenot to disclose, deliver or otherwise make available to any third party (other than its directors, officers, employees, accountants or counsel) the original or anycopy of all or any part of this Agreement (or any draft hereof and documents ancillary hereto) except to an Affected Party or a Buyer Indemnified Person.

(b) Each Originator and the Servicer agrees that it shall not (and shall not permit any of its Subsidiaries to) issue any news release or make any publicannouncement pertaining to the transactions contemplated by this Agreement and the Related Documents without the prior written consent of Buyer (whichconsent shall not be unreasonably withheld) unless such news release or public announcement is required by law, in which case such Originator or the Servicershall consult with Buyer prior to the issuance of such news release or public announcement. Any Originator or the Servicer may, however, disclose the generalterms of the transactions contemplated by this Agreement and the Related Documents to trade creditors, suppliers and other similarly-situated Persons so long assuch disclosure is not in the form of a news release or public announcement.

(c) Except to the extent otherwise required by applicable law, or in connection with any judicial or administrative proceedings, as required to be filedpublicly with the Securities Exchange Commission, or unless the Originators and the Servicer otherwise consent in writing, the Buyer agrees (i) to maintain theconfidentiality of (A) this Agreement (and all drafts hereof and documents ancillary hereto) and (B) all other confidential proprietary information with respect tothe Originators, the Servicer and their respective Affiliates and each of their respective


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businesses obtained by the Buyer in connection with the structuring, negotiation and execution of the transactions contemplated herein and in the otherdocuments ancillary hereto, in each case, in its communications with third parties other than any Originator or the Servicer, and (ii) not to disclose, deliver, orotherwise make available to any third party (other than its directors, officers, employees, accountants or counsel) the original or any copy of all or any part of thisAgreement (or any draft hereof and documents ancillary hereto) except to any Originator. Notwithstanding the foregoing, Buyer shall be permitted to disclosecopies of this Agreement and the confidential proprietary information described above to (1) each Affected Party and each Affected Party’s and their respectiveAffiliates’ directors, officers, employees and agents, including accountants, legal counsel and other advisors (it being understood that the Persons to whom suchdisclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential and to not disclose or usesuch Information in violation of Regulation FD (17 C.F.R. § 243.100-243.103)); (2) any regulatory authority (it being understood that it will to the extentreasonably practicable provide the Originators and/or the Servicer with an opportunity to request confidential treatment from such regulatory authority), (3) to theextent required by applicable laws or regulations or by any subpoena or similar legal process, (4) to any other party to the Funding Agreement, (5) to the extentrequired in connection with the exercise of any remedies hereunder or any suit, action or proceeding relating to this Agreement or any other Related Document orthe enforcement of rights hereunder or thereunder, (6) subject to an agreement containing provisions substantially the same as those of this Section, to anyassignee or pledgee of (or participant in), or any prospective assignee or pledgee of (or participant in), any of its rights or obligations under this Agreement,(7) with the consent of the applicable Originator or Servicer or (8) to the extent such Agreement or other information (i) becomes publicly available other than asa result of a breach of this Section or (ii) becomes available to the Buyer or Affected Party on a nonconfidential basis from a source other than the Parent or anySubsidiary thereof.

Section 6.13. Further Assurances.

(a) Each Originator shall, at its sole cost and expense, upon request of Buyer, promptly and duly execute and deliver any and all further instruments anddocuments and take such further actions that may be necessary or desirable or that Buyer may request to carry out more effectively the provisions and purposesof this Agreement or any other Related Document or to obtain the full benefits of this Agreement and of the rights and powers herein granted, including (i) usingits best efforts to secure all consents and approvals necessary or appropriate for the assignment to or for the benefit of Buyer of any Transferred Receivable heldby such Originator or in which such Originator has any rights not heretofore assigned, and (ii) filing any financing or continuation statements under the UCCwith respect to the ownership interests or Liens granted hereunder or under any other Related Document. Each Originator hereby authorizes Buyer, to file anysuch financing or continuation statements without the signature of such Originator to the extent permitted by applicable law. A carbon, photographic or otherreproduction of this Agreement or of any notice or financing statement covering the Transferred Receivables or any part thereof shall be sufficient as a notice orfinancing statement where permitted by law. If any amount payable under or in connection with any of the Transferred Receivables is or shall become evidencedby any instrument, such instrument, other than checks and notes received in the ordinary course of business, shall be duly endorsed in a manner satisfactory toBuyer immediately upon such Originator’s receipt thereof and promptly delivered to Buyer.


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(b) If any Originator fails to perform any agreement or obligation under this Section 6.13, Buyer may (but shall not be required to) itself perform, or causeperformance of, such agreement or obligation, and the reasonable expenses of Buyer incurred in connection therewith shall be payable by such Originator upondemand of Buyer.

Section 6.14. Fees and Expenses. In addition to its indemnification obligations pursuant to Article V, each Originator agrees, jointly and severally, to pay ondemand all Rating Agency fees and all costs and expenses incurred by Buyer in connection with the negotiation, preparation, execution and delivery of thisAgreement and the other Related Documents, including the reasonable fees and out-of-pocket expenses incurred by Buyer, (including any such amounts owed byBuyer in connection with its financing of the Transfers hereunder), for counsel, advisors, consultants and auditors retained in connection with the transactionscontemplated hereby and advice in connection therewith, and each Originator agrees, jointly and severally, to pay all costs and expenses, if any (includingreasonable attorneys’ fees and expenses but excluding any costs of enforcement or collection of the Transferred Receivables), in connection with the enforcementof this Agreement and the other Related Documents.

Section 6.15. Nonrecourse Obligations. Notwithstanding any provision in any other Section of this Agreement to the contrary, any obligation of Buyer topay any amounts payable to the Originators pursuant to this Agreement shall be without recourse to the Buyer except to the extent that funds from Advances orCollections are available to the Buyer pursuant to the terms of the Funding Agreement for such payment (collectively, the “Buyer Available Amounts”), in theevent that amounts payable to the Originators pursuant to this Agreement exceed the Buyer Available Amounts, the excess of the amounts due hereunder (andsubject to this Section 6.15) over the Buyer Available Amounts paid shall not constitute a “claim” under Section 101(5) of the Bankruptcy Code against Buyeruntil such time as the Buyer has Buyer Available Amounts.

ARTICLE VIISERVICER PROVISIONS

Section 7.01. Appointment of the Servicer. Buyer hereby appoints the Servicer as its agent to service the Transferred Receivables and, in accordance withthe Related Documents, to enforce Buyer’s rights and interests in and under each Transferred Receivable and Contract therefor and to serve in such capacity untilthe termination of its responsibilities pursuant to Sections 8.01 or 9.01. In connection therewith, the Servicer hereby accepts such appointment and agrees toperform the duties and obligations set forth herein. The Servicer may, with the prior written consent of the Buyer, subcontract with a Sub-Servicer for thecollection, servicing or administration of the Transferred Receivables; provided, that (a) the Servicer shall remain liable for the performance of the duties andobligations of such Sub-Servicer pursuant to the terms hereof, (b) any Sub-Servicing Agreement that may be entered into and any other transactions or servicesrelating to the Transferred Receivables involving a Sub-Servicer shall be deemed to be between the Sub-Servicer and the Servicer alone, and Buyer shall not bedeemed a party thereto and shall have no obligations, duties or liabilities with respect to the Sub-Servicer and (c) each Sub-Servicing Agreement shall expresslyprovide that it shall automatically terminate upon the termination of the Servicer’s responsibilities hereunder in accordance with the terms hereof.


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Section 7.02. Duties and Responsibilities of the Servicer.

(a) Subject to the provisions of this Agreement, the Servicer shall conduct the servicing, administration and collection of the Transferred Receivables andshall take, or cause to be taken, all actions that (i) may be necessary or advisable to service, administer and collect each Transferred Receivable from time totime, (ii) the Servicer would take if the Transferred Receivables were owned by the Servicer, and (iii) are consistent with the Credit and Collection Policies andindustry practice for the servicing of accounts receivable similar to such Transferred Receivables.

(b) In addition to the foregoing, in order to ensure that the Buyer has adequate funding for the purchase of Receivables hereunder, the Servicer shall beresponsible for the following:

(i) preparation and delivery on behalf of Buyer all Borrowing Requests, Repayment Notices, Borrowing Base Certificates, Monthly Reports, WeeklyReports and Daily Reports required to be delivered under the Funding Agreement;

(ii) calculation and monitoring of the Borrowing Base and the components thereof, and whether the Receivables included in the calculation of theNet Receivables Balance are in fact Eligible Receivables; and

(iii) establishment, maintenance and administration of the Collection Accounts, the Concentration Account, and the Borrower Account in accordancewith Article VIII of the Funding Agreement.

Section 7.03. Collections on Receivables.

(a) In the event that the Servicer is unable to determine the specific Transferred Receivables on which Collections have been received from the Obligorthereunder, the parties agree that such Collections shall be deemed to have been received on such Receivables in the order in which they were originated withrespect to such Obligor. In the event that the Servicer is unable to determine the specific Transferred Receivables on which discounts, offsets or other non-cashreductions have been granted or made with respect to the Obligor thereunder, the parties agree for purposes of this Agreement only that such reductions shall bedeemed to have been granted or made (i) prior to a Termination Event, on such Receivables as determined by the Servicer, and (ii) from and after the occurrenceof a Termination Event, in the reverse order in which they were originated with respect to such Obligor.

(b) If the Servicer determines that amounts unrelated to the Transferred Receivables (the “Unrelated Amounts”) have been deposited in any Account, thenthe Servicer shall provide written evidence thereof to the Buyer no later than the first Business Day following the day on which the Servicer had actualknowledge thereof, which evidence shall be provided in writing and shall be otherwise satisfactory to Buyer.


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(c) Authorization of the Servicer. Buyer hereby authorizes the Servicer to take any and all reasonable steps in its name and on its behalf necessary ordesirable and not inconsistent with the rights of the Buyer hereunder, in the determination of the Servicer, to (a) collect all amounts due under any TransferredReceivable, including endorsing the applicable name on checks and other instruments representing Collections on such Receivable, and execute and deliver anyand all instruments of satisfaction or cancellation or of partial or full release or discharge and all other comparable instruments with respect to any suchReceivable and (b) after any Transferred Receivable becomes a Delinquent Receivable or a Defaulted Receivable and to the extent permitted under and incompliance with applicable law and regulations, commence proceedings with respect to the enforcement of payment of any such Receivable and the Contracttherefor and adjust, settle or compromise any payments due thereunder, in each case to the same extent as the applicable Originator could have done if it hadcontinued to own such Receivable. The Buyer shall furnish the Servicer with any powers of attorney and other documents necessary or appropriate to enable theServicer to carry out its servicing and administrative duties hereunder. Notwithstanding anything to the contrary contained herein, the Buyer shall have theabsolute and unlimited right to direct the Servicer (at the Servicer’s expense) (i) to commence or settle any legal action to enforce collection of any TransferredReceivable or (ii) to foreclose upon, repossess or take any other action that the Buyer deems necessary or advisable with respect thereto. In no event shall theServicer be entitled to make Buyer or any Affected Party a party to any Litigation without such Affected Party’s express prior written consent.

(d) Servicing Fees. As compensation for its servicing activities and as reimbursement for its reasonable expenses in connection therewith, the Servicer shallbe entitled to receive the Servicing Fees monthly on each Settlement Date. Such Servicing Fees shall be payable from available funds in accordance withSection 2.07 and 2.08 of the Funding Agreement. The Servicer shall be required to pay for all expenses incurred by it in connection with its activities hereunder(including any payments to accountants, counsel or any other Person) and shall not be entitled to any payment therefor other than the Servicing Fees.

Section 7.04. Covenants of the Servicer. The Servicer covenants and agrees that from and after the Effective Date and until the Termination Date:

(a) Compliance with Agreements and Applicable Laws. The Servicer shall perform each of its obligations under this Agreement and the other RelatedDocuments. The Servicer shall comply with all federal, state and local laws and regulations applicable to it and the Transferred Receivables, including thoserelating to truth in lending, retail installment sales, fair credit billing, fair credit reporting, equal credit opportunity, fair debt collection practices, privacy,licensing, taxation, ERISA and labor matters and environmental laws and environmental permits, except, in each case, where the failure to so comply could notreasonably be expected to result in a Material Adverse Effect.

(b) Maintenance of Existence and Conduct of Business. The Servicer shall: (i) do or cause to be done all things necessary to preserve and keep in full forceand effect its corporate existence and its rights and franchises; (ii) continue to conduct its business substantially as now


35


conducted or as otherwise permitted hereunder and in accordance with the terms of its certificate or articles of incorporation and by-laws; and (iii) at all timesmaintain, preserve and protect all of its assets and properties used or useful in the conduct of its business, including all licenses, permits, charters andregistrations, and keep the same in good repair, working order and condition in all material respects (taking into consideration ordinary wear and tear) and fromtime to time make, or cause to be made, all necessary or appropriate repairs, replacements and improvements thereto consistent with industry practices, except tothe extent that the failure to comply with this clause (iii) could not reasonably be expected to have a Material Adverse Effect.

(c) Deposit of Collections. The Servicer shall deposit or cause to be deposited promptly into a Collection Account, and in any event no later than the firstBusiness Day after receipt thereof, all Collections it may receive with respect to any Transferred Receivable.

(d) ERISA. The Servicer shall give the Administrative Agent prompt written notice of any event that (i) could reasonably be expected to result in theimposition of a Lien under Section 412 of the IRC or Section 302 or 4068 of ERISA, or (ii) could reasonably be expected to result in the incurrence by Servicerof any liabilities under Title IV of ERISA (other than premium payments arising in the ordinary course of business).

(e) Compliance with Credit and Collection Policies. The Servicer shall comply with the Credit and Collection Policies with respect to each TransferredReceivable and the Contract therefor. The Servicer shall not extend, amend, forgive, discharge, compromise, waive, cancel or otherwise modify the terms of anyTransferred Receivable or amend, modify or waive any term or condition of any Contract related thereto, except that the Servicer may (i) reduce the OutstandingBalance of a Receivable as required to reflect any Dilution Factors and (ii) take such actions, to the extent permitted by the Credit and Collection Policies, as theServicer may deem reasonably necessary or desirable in order to maximize Collections with respect to any past-due Receivable so long as, after giving effect toany such action, no Receivables which constituted Eligible Receivables prior to such action would no longer constitute Eligible Receivables as a result of suchaction. The Servicer shall not without the prior written consent of the Buyer amend, modify or waive any term or provision of the Credit and Collection Policies.

(f) Ownership of Transferred Receivables; Servicing Records. The Servicer shall (i) identify the Transferred Receivables clearly and unambiguously in itsServicing Records to reflect that such Transferred Receivables are the property of the Buyer and that a Lien on such Transferred Receivables has been granted tothe Administrative Agent for the benefit of the Lenders; (ii) maintain and implement administrative and operating procedures (including, without limitation, anability to recreate records evidencing such Receivables in the event of the destruction of any originals thereof) as are necessary or advisable in accordance withindustry practice (1) to reflect promptly (a) all payments received and all credits and extensions granted with respect to such Receivables, (b) the return, rejection,repossessions, or stoppage in transit of any merchandise the sale of which has given rise to any such Receivable and (c) any other reductions in the OutstandingBalance of such Receivables on account of Dilution Factors; and (2) to determine no less frequently than the date each Daily Report, Weekly Report or MonthlyReport is due, whether each Transferred Receivable then outstanding qualifies as an Eligible Receivable; (iii) by no later than the Effective Date, markconspicuously with a legend, in form and substance satisfactory to the Buyer, its books and records (including computer records) and


36


credit files pertaining to the Borrower Collateral, and its file cabinets or other storage facilities where it maintains information pertaining thereto, to evidence theassignment of the Transferred Receivables under this Agreement and the assignment and Liens granted pursuant to the Funding Agreement. Upon the occurrenceand during the continuance of a Termination Event, the Servicer shall deliver and turn over such books and records to the Buyer or its representatives at any timeon demand. The Servicer shall permit any representative of the Buyer to inspect such books and records and shall provide photocopies thereof to Buyer as morespecifically set forth in Section 7.04(i).

(g) Payment and Performance of Charges and other Obligations.

(i) Subject to Section 7.04(g)(ii), the Servicer shall pay, perform and discharge or cause to be paid, performed and discharged promptly all chargesand claims payable by it, including (A) Charges imposed upon it, its income and profits, or any of its property (real, personal or mixed) and all Chargeswith respect to tax, social security and unemployment withholding with respect to its employees, and (B) lawful claims for labor, materials, supplies andservices or otherwise before any amount thereof shall become past due.

(ii) The Servicer may in good faith contest, by appropriate proceedings, the validity or amount of any charges or claims described inSection 7.04(g)(i); provided that (A) adequate reserves with respect to such contest are maintained on the books of the Servicer, in accordance with GAAP,(B) such contest is maintained and prosecuted continuously and with diligence, (C) none of the Borrower Collateral becomes subject to forfeiture or loss asa result of such contest, (D) no Lien shall be imposed to secure payment of such charges or claims other than inchoate tax liens and (E) the AdministrativeAgent has not advised the Servicer in writing that it reasonably believes that failure to pay or to discharge such claims or charges could have or result in aMaterial Adverse Effect.

(h) Access. The Servicer agrees to provide Buyer, the Buyer’s officers, employees, directors, agents and representatives with all access that the Originatorshave covenanted and agreed to provide to the Buyer in Section 4.02(b).

(i) Communication with Accountants. The Servicer authorizes Buyer to communicate directly with its independent certified public accountants, andauthorizes and, shall upon Buyer’s request, instruct those accountants to disclose and make available to Buyer, its officers, employees, agents and representativesany and all financial statements and other supporting financial documents, schedules and information relating to the Servicer (including copies of any issuedmanagement letters) with respect to the business, financial condition and other affairs of the Servicer. The Servicer agrees to render to Buyer, at the Servicer’sown cost and expense, such clerical and other assistance as may be reasonably requested with regard to the foregoing.

(j) Collection of Transferred Receivables. In connection with the collection of amounts due or to become due under the Transferred Receivables, theBorrower Assigned Agreements and any other Borrower Collateral, the Servicer shall take such action as it, and from


37


and after the occurrence and during the continuance of a Termination Event, the Buyer may deem necessary or desirable to enforce collection of the TransferredReceivables, the Borrower Assigned Agreements and the other Borrower Collateral; provided that the applicable Originator may, rather than commencing anysuch action or taking any other enforcement action, at its option, elect to pay to the Buyer, for deposit into the Agent Account, an amount equal to theOutstanding Balance of any such Transferred Receivable. If (i) an Incipient Termination Event or a Termination Event shall have occurred and be continuing or(ii) the Buyer in good faith believes that an Incipient Termination Event or a Termination Event is imminent, then the Buyer may, without prior notice to anyOriginator or the Servicer, (x) exercise its right to take exclusive ownership and control of (1) the Collections and the Collection Accounts in accordance with theterms of the applicable Collection Account Agreements and (2) the Concentration Account and the Borrower Account (in which case the Servicer shall berequired to deposit any Collections it then has in its possession or at any time thereafter receives, immediately in the Agent Account) and (y) notify any Obligorunder any Transferred Receivable or obligors under the Borrower Assigned Agreements of the sale to Buyer of such Transferred Receivables and of the pledgeof such Transferred Receivables or Borrower Assigned Agreements, as the case may be, to the Administrative Agent and direct that payments of all amounts dueor to become due to the Buyer thereunder be made directly to the Buyer or any servicer, collection agent or Lockbox or other account designated by the Buyerand the Buyer may enforce collection of any such Transferred Receivable or the Borrower Assigned Agreements and adjust, settle or compromise the amount orpayment thereof. The Buyer shall provide prompt notice to the Servicer of any such notification of assignment, pledge or direction of payment to the Obligorsunder any Transferred Receivables.

(k) Performance of Borrower Assigned Agreements. The Servicer shall (i) perform and observe all the terms and provisions of the Borrower AssignedAgreements to be performed or observed by it, maintain the Borrower Assigned Agreements in full force and effect, enforce the Borrower Assigned Agreementsin accordance with their terms and take all action as may from time to time be requested by the Buyer in order to accomplish the foregoing, and (ii) upon therequest of and as directed by the Buyer, make such demands and requests to any other party to the Borrower Assigned Agreements as are permitted to be madeby the Servicer thereunder.

(l) License for Use of Software and Other Intellectual Property. Unless expressly prohibited by the licensor thereof or any provision of applicable law, ifany, the Servicer hereby grants to the Buyer (and to the Administrative Agent on behalf of the Lenders as assignee of the Buyer) a limited license to use, withoutcharge, the Servicer’s computer programs, software, printouts and other computer materials, technical knowledge or processes, data bases, materials, trademarks,registered trademarks, trademark applications, service marks, registered service marks, service mark applications, patents, patent applications, trade names, rightsof use of any name, labels, fictitious names, inventions, designs, trade secrets, goodwill, registrations, copyrights, copyright applications, permits, licenses,franchises, customer lists, credit files, correspondence, and advertising materials or any property of a similar nature, as it pertains to the Transferred Receivablesand the other Borrower Collateral, or any rights to any of the foregoing, only as reasonably required in connection with the collection of the TransferredReceivables and the advertising for sale, and selling any of the Borrower Collateral, or exercising of any other remedies with respect thereto, and the Serviceragrees that its rights under all licenses and franchise agreements shall inure to the Buyer (and to the Administrative Agent on behalf of the


38


Lenders as assignee of the Buyer) for purposes of the license granted herein. Except upon the occurrence and during the continuation of a Termination Event, theBuyer agrees not to use (and shall cause the Administrative Agent to covenant not to use) any such license without giving the Servicer prior written notice.

(m) Deposit of Collections. The Servicer shall (and shall cause each of its Affiliates to) (i) instruct all Obligors to remit all payments with respect to anyTransferred Receivables directly into a Lockbox or a Collection Account, and (ii) deposit or cause to be deposited promptly into a Lockbox or a CollectionAccount, and in any event no later than the first Business Day after receipt thereof, all Collections it may receive in respect of Transferred Receivables (and untilso deposited, all such Collections shall be held in trust for the benefit of Buyer and its assigns (including the Administrative Agent and the Lenders). TheServicer shall not make or permit to be made deposits into a Lockbox or a Collection Account other than in accordance with this Agreement and the otherRelated Documents. Without limiting the generality of the foregoing, the Servicer shall ensure that no Collections or other proceeds with respect to a Receivablereconveyed to any Originator pursuant to Section 4.04 hereof are paid or deposited into any Lockbox or Collection Account.

(n) Commingling. The Servicer shall not (and shall cause each other member of the Parent Group not to) deposit or permit the deposit of any funds that donot constitute Collections of Transferred Receivables into any Lockbox or Collection Account except as otherwise permitted by Section 4.03(m) hereof. If anyfunds not constituting Collections of Transferred Receivables are nonetheless deposited into a Lockbox or Collection Account and the Servicer so notifies Buyer,Buyer shall promptly remit any such amounts to the applicable Originator. So long as any Transferred Receivables of an Obligor remain unpaid, the Servicershall not instruct such Obligor to remit Collections of any Receivables other than Excluded Receivables to any Person or account other than to a Lockbox orCollection Account.

(o) Separate Identity. The Servicer shall comply with Section 4.02(i) to the same extent as if it were an Originator.

Section 7.05. Reporting Requirements of the Servicer. The Servicer hereby agrees that, from and after the Effective Date and until the Termination Date, itshall prepare and deliver or cause to be prepared and delivered to the Lenders and the Administrative Agent the financial statements, notices, reports, and otherinformation at the times, to the Persons and in the manner set forth in Annex 7.05.

ARTICLE VIIIEVENTS OF SERVICER TERMINATION

Section 8.01. Events of Servicer Termination. If any of the following events (each, an “Event of Servicer Termination”) shall occur (regardless of thereason therefor):

(a) the Servicer shall (i) fail to make any payment or deposit hereunder when due and payable and the same shall remain unremedied for one (1) BusinessDay or more; (ii) fail to deliver when due any of the reports required to be delivered pursuant to Section 7.05 or any other report related to the TransferredReceivables as required by the other Related Documents and the


39


same shall remain unremedied for two (2) Business Days or more; or (iii) fail or neglect to perform, keep or observe any other provision of this Agreement or theother Related Documents (other than any provision embodied in or covered by any other clause of this Section 8.01) and the same shall remain unremedied forfive (5) days or more following the earlier to occur of an Authorized Officer of the Servicer becoming aware of such breach and the Servicer’s receipt of noticethereof; or

(b) (i) the Servicer shall fail to make any payment with respect to any of its Debts which is in an aggregate principal amount of $10,000,000 when due, andthe same shall remain unremedied for any applicable grace period with respect thereto; or (ii) a default or breach shall occur under any agreement, document orinstrument to which the Servicer is a party or by which the Servicer or its property is bound (other than a Related Document), and such default or breach or shallremain unremedied after any applicable grace period with respect thereto and which involves a Debt which is in an aggregate principal amount of $10,000,000;or

(c) a case or proceeding shall have been commenced against the Servicer or any Affiliate which acts as a Sub-Servicer seeking a decree or order in respectof any such Person (i) under the Bankruptcy Code or any other applicable federal, state or foreign bankruptcy or other similar law, (ii) appointing a custodian,receiver, liquidator, assignee, trustee or sequestrator (or similar official) for any such Person or for any substantial part of such Person’s assets, or (iii) orderingthe winding-up or liquidation of the affairs of any such Person, and such case or proceeding continues for 60 days unless dismissed or discharged; provided,however, that such 60-day period shall be deemed terminated immediately if (x) a decree or order is entered by a court of competent jurisdiction with respect to acase or proceeding described in this subsection (c), or (y) any of the events described in Section 8.01(d) shall have occurred; or

(d) the Servicer or any Affiliate which acts as a Sub-Servicer shall (i) file a petition seeking relief under the Bankruptcy Code or any other applicablefederal, state or foreign bankruptcy or other similar law, (ii) consent or fail to object in a timely and appropriate manner to the institution of any proceedingsunder the Bankruptcy Code or any other applicable federal, state or foreign bankruptcy or similar law or to the filing of any petition thereunder or to theappointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee or sequestrator (or similar official) for any such Person or for anysubstantial part of such Person’s assets, (iii) make an assignment for the benefit of creditors, or (iv) take any corporate action in furtherance of any of theforegoing; or

(e) the Servicer or any Affiliate which acts as a Sub-Servicer generally does not pay its debts as such debts become due or admits in writing its inability to,or is generally unable to, pay its debts as such debts become due; or

(f) a final judgment or judgments for the payment of money in excess of $5,000,000 in the aggregate (net of insurance proceeds) at any time outstandingshall be rendered against the Servicer or any other Subsidiary of the Parent which acts as a Sub-Servicer and either (i) enforcement proceedings shall have beencommenced upon any such judgment or (ii) the same shall not, within 30 days after the entry thereof, have been discharged or execution thereof stayed or bondedpending appeal, or shall not have been discharged prior to the expiration of any such stay; or


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(g)(i) any information contained in any Borrowing Base Certificate, Monthly Report, Weekly Report or Daily Report is untrue or incorrect in any respector (ii) any representation or warranty of the Servicer herein or in any other Related Document or in any written statement, report, financial statement or certificate(other than a Borrowing Base Certificate) made or delivered by the Servicer to any Affected Party hereto or thereto is untrue or incorrect in any material respectas of the date when made or deemed made and such representation and warranty, if relating to any Transferred Receivable, has not been cured by the repurchaseof any such Transferred Receivable pursuant to Section 4.04; or

(h) the Buyer shall have determined that any event or condition that materially adversely affects the ability of the Servicer to collect the TransferredReceivables or to otherwise perform hereunder has occurred; or

(i) a Termination Event shall have occurred or this Agreement shall have been terminated; or

(j) a deterioration has taken place in the quality of servicing of Transferred Receivables or other Receivables, other than the Mexico Receivables, servicedby the Servicer that the Buyer, in its sole discretion, determines to be material, and such material deterioration has not been eliminated within 30 days afterwritten notice thereof shall have been given by the Administrative Agent to the Servicer; or

(k) the Servicer shall assign or purport to assign any of its obligations hereunder without the prior written consent of the Buyer; or

(l) a Change of Control shall occur; or

(m) a default or breach of any of the tests set forth in Annex Z shall occur;

then, and in any such event, the Buyer may, by delivery of a Servicer Termination Notice to the Servicer, terminate the servicing responsibilities of the Servicerhereunder, without demand, protest or further notice of any kind, all of which are hereby waived by the Servicer. Upon the delivery of any such notice, allauthority and power of the Servicer under this Agreement shall pass to and be vested in the Successor Servicer acting pursuant to Section 9.02; provided, thatnotwithstanding anything to the contrary herein, the Servicer agrees to continue to follow the procedures set forth in Section 7.02 with respect to Collections onthe Transferred Receivables until a Successor Servicer has assumed the responsibilities and obligations of the Servicer in accordance with Section 9.02.

ARTICLE IXSUCCESSOR SERVICER PROVISIONS

Section 9.01. Servicer Not to Resign. The Servicer shall not resign from the obligations and duties hereby imposed on it except upon a determination that(a) the performance of its duties hereunder has become impermissible under applicable law or regulation and (b) there is no reasonable action that the Servicercould take to make the performance of its duties hereunder


41


become permissible under applicable law. Any such determination shall (i) with respect to clause (a) above, be evidenced by an opinion of counsel to such effectand (ii) with respect to clause (b) above, be evidenced by an Officer’s Certificate to such effect, in each case delivered to the Administrative Agent. No suchresignation shall become effective until a Successor Servicer shall have assumed the responsibilities and obligations of the Servicer in accordance withSection 9.02.

Section 9.02. Appointment of the Successor Servicer. In connection with the termination of the Servicer’s responsibilities or the resignation by the Servicerunder this Agreement pursuant to Sections 8.01 or 9.01, the Buyer may at any time appoint a successor servicer to the Servicer that shall be acceptable to theAdministrative Agent and shall succeed to all rights and assume all of the responsibilities, duties and liabilities of the Servicer under this Agreement (theAdministrative Agent, in such capacity, or such successor servicer being referred to as the “Successor Servicer”); provided, that the Successor Servicer shall haveno responsibility for any actions of the Servicer prior to the date of its appointment or assumption of duties as Successor Servicer. In selecting a SuccessorServicer, the Buyer may (but shall not be required to) obtain bids from any potential Successor Servicer and may agree to any bid it deems appropriate. TheSuccessor Servicer shall accept its appointment by executing, acknowledging and delivering to the Buyer an instrument in form and substance acceptable to theBuyer.

Section 9.03. Duties of the Servicer. The Servicer covenants and agrees that, following the appointment of, or assumption of duties by, a SuccessorServicer:

(a) The Servicer shall terminate its activities as Servicer hereunder in a manner that facilitates the transfer of servicing duties to the Successor Servicer andis otherwise acceptable to the Buyer and, without limiting the generality of the foregoing, shall, at its own expense, timely deliver (i) any funds to theAdministrative Agent that were required to be remitted to the Administrative Agent for deposit in the Agent Account under the Funding Agreement and(ii) copies of all Servicing Records and other information with respect to the Transferred Receivables to the Successor Servicer at a place selected by theSuccessor Servicer. The Servicer shall cooperate with the Successor Servicer in effecting the termination of the responsibilities and rights of the predecessorServicer under this Agreement and shall account for all funds and shall execute and deliver such instruments and do such other things as may be required to vestand confirm in the Successor Servicer all rights, powers, duties, responsibilities, obligations and liabilities of the Servicer. All reasonable costs and expenses(including reasonable attorneys’ fees) incurred in connection with transferring all files and other documents in respect of the Transferred Receivables to theSuccessor Servicer shall be for the account of the predecessor Servicer.

(b) The Servicer shall terminate each existing Sub-Servicing Agreement and the Successor Servicer shall not be deemed to have assumed any of theServicer’s interests therein or to have replaced the Servicer as a party thereto.

(c) In the event that the Servicer is terminated as Servicer hereunder but no Successor Servicer has been appointed, the Servicer shall timely deliver to theAdministrative Agent or its designee, at a place designated by the Administrative Agent or such designee, all Servicing Records and other information withrespect to the Transferred Receivables which otherwise


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would be required to be delivered to the Successor Servicer under Section 9.03(a) above, and all reasonable costs and expenses (including reasonable attorneys’fees) incurred in connection with transferring such files and other documents to the Administrative Agent shall be for the account of the predecessor Servicer.

Section 9.04. Effect of Termination or Resignation. Any termination of or resignation by the Servicer hereunder shall not affect any claims that the Buyeror its assigns may have against the Servicer for events or actions taken or not taken by the Servicer arising prior to any such termination or resignation.

Section 9.05. Power of Attorney. On the Closing Date, the Servicer shall execute and deliver a power of attorney in substantially in the form attachedhereto as Exhibit 9.05 (a “Power of Attorney”). The Power of Attorney is a power coupled with an interest and shall be irrevocable until this Agreement hasterminated in accordance with its terms and all of the Transferred Receivables have been indefeasibly paid or otherwise written off as uncollectible. The powersconferred on the Buyer under each Power of Attorney are solely to protect the interests of the Buyer in the Transferred Receivables and the ability of theSuccessor Servicer to assume the servicing rights, powers and responsibilities of the Servicer hereunder and shall not impose any duty upon the Buyer or theSuccessor Servicer to exercise any such powers.

Section 9.06. No Proceedings. Each Originator and Servicer agrees that, from and after the Closing Date and until the date one year plus one day followingthe Termination Date, it will not, directly or indirectly, institute or cause to be instituted against Buyer any proceeding of the type referred to in Sections 8.01(d)and 8.01(e) of the Funding Agreement. This Section 9.06 shall survive the termination of this Agreement.

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IN WITNESS WHEREOF, the parties have caused this Receivables Sale and Servicing Agreement to be executed by their respective dulyauthorized representatives, as of the date first above written.

SYNNEX CORPORATION, individually and as anOriginator

By: /s/ Simon Y. LeungName: Simon Y. LeungTitle: Corporate Secretary

SIT FUNDING CORPORATION, as Buyer


SYNNEX CORPORATION, as Servicer



S-1


ANNEX X

DEFINITIONS

[Attached]



EXECUTION VERSION

ANNEX X

to


and

RECEIVABLES FUNDING AND ADMINISTRATION AGREEMENT

dated as of

February 12, 2007

Definitions and Interpretation

Annex X


SECTION 1. Definitions and Conventions. Capitalized terms used in the Sale Agreement (as defined below) and the Funding Agreement (as definedbelow) shall have (unless otherwise provided elsewhere therein) the following respective meanings:

“Account” shall mean any of the Concentration Account, the Borrower Account or the Collection Accounts.

“Account Agreement” shall mean any of the Borrower Account Agreement, the Concentration Account Agreement or the Collection Account Agreements.

“Accounting Changes” shall mean, with respect to any Person, (a) changes in accounting principles required by the promulgation of any rule, regulation,pronouncement or opinion of the Financial Accounting Standards Board of the American Institute of Certified Public Accountants (or any successor thereto orany agency with similar functions); (b) changes in accounting principles concurred in by such Person’s certified public accountants; (c) purchase accountingadjustments under A.P.B. 16 or 17 and EITF 88-16, and the application of the accounting principles set forth in FASB 109, including the establishment ofreserves pursuant thereto and any subsequent reversal (in whole or in part) of such reserves; and (d) the reversal of any reserves established as a result ofpurchase accounting adjustments.

“Additional Amounts” shall mean any amounts payable to any Affected Party under Sections 2.09 or 2.10 of the Funding Agreement.

“Additional Costs” shall have the meaning assigned to it in Section 2.09(b) of the Funding Agreement.

“Administrative Agent” shall have the meaning set forth in the Preamble of the Funding Agreement.

“Administrative Services Agreement” shall mean that certain Ancillary Services and Lease Agreement dated as of December 10, 1997, between theBorrower and the Parent.


“Advance Date” shall mean each day on which any Advance is made.

“Adverse Claim” shall mean any claim of ownership or any Lien, other than any ownership interest or Lien created under the Sale Agreement or theFunding Agreement.

“Affected Party” shall mean each of the following Persons: each Lender, the Administrative Agent, the Depositary, each Affiliate of the foregoing Persons,and any SPV or participant with the rights of a Lender under Section 12.02(c) of the Funding Agreement and their respective successors, transferees andpermitted assigns.

“Affiliate” shall mean, with respect to (a) any Lender or Administrative Agent, each Person that, directly or indirectly, owns or controls, whetherbeneficially, or as a trustee, guardian or other fiduciary, five percent (5%) or more of the Stock having ordinary voting power

Annex X


in the election of directors of such Person, (b) Borrower, or Parent or any of their Subsidiaries, or any Obligor, each Person that, directly or indirectly, owns orcontrols, whether beneficially, or as a trustee, guardian or other fiduciary ten percent (10%) or more of the Stock having ordinary voting power in the election ofdirectors of such Person, or (c) with respect to each Person, including those Persons to which clause (a) or (b) are applicable, (i) each Person that controls, iscontrolled by or is under common control with such Person, or (ii) each of such Person’s officers, directors, joint venturers and partners. For the purposes of thisdefinition, “control” of a Person shall mean the possession, directly or indirectly, of the power to direct or cause the direction of its management or policies,whether through the ownership of voting securities, by contract or otherwise.

“Agent Account” shall mean account number 50279513, Reference CFN8690 with the Depositary in the name of the Administrative Agent.

“Aggregate Commitment” shall mean as to all Lenders, the aggregate commitment of all Lenders to make Advances, which aggregate commitment shallbe Three Hundred Million Dollars ($300,000,000) on the Closing Date, as such amount may be adjusted, if at all, from time to time in accordance with theFunding Agreement.

“Appendices” shall mean, with respect to any Related Document, all exhibits, schedules, annexes and other attachments thereto, or expressly identifiedthereto.

“Assignment Agreement” shall mean an assignment agreement in the form of Exhibit 12.02 attached to the Funding Agreement.

“Authorized Officer” shall mean, with respect to any corporation or limited liability company, the Chairman or Vice-Chairman of the Board, the President,any Vice President, the General Counsel, the Secretary, the Treasurer, the Controller, any Assistant Secretary, any Assistant Treasurer, any manager or managingmember and each other officer of such corporation or limited liability company specifically authorized to sign agreements, instruments or other documents onbehalf of such corporation or limited liability company in connection with the transactions contemplated by the Sale Agreement, the Funding Agreement and theother Related Documents.

“Available Amounts” shall have the meaning assigned to it in Section 12.15 of the Funding Agreement.

“Bank” shall mean any of the Collection Account Banks, the Concentration Account Bank or the Borrower Account Bank.

“Bankruptcy Code” shall mean the provisions of title 11 of the United States Code, 11 U.S.C. § § 101 et seq.

“Billed Amount” shall mean, with respect to any Receivable, the amount billed on the Billing Date to the Obligor thereunder.

“Billing Date” shall mean, with respect to any Receivable, the date on which the invoice with respect thereto was generated.

2

Annex X


“BK Obligor” means an Obligor that is (i) unable to make payment of its obligations when due, (ii) a debtor in a voluntary or involuntary bankruptcyproceeding, or (iii) the subject of a comparable receivership or insolvency proceeding, unless, in the case of a bankruptcy proceeding in clause (ii) or (iii), theapplicable Originator has been designated as a “critical vendor” and the Obligor thereunder has obtained (x) in the case of any Receivable originated pre-petition,a final court order approving the payment of the pre-petition claims of such Originator on an administrative priority basis or (y) in the case of any Receivableoriginated post-petition, (A) a final court order approving the payment of the post-petition claims of such Originator on an administrative priority basis and (B) adebtor-in-possession financing facility and management of the applicable Originator reasonably believes that such financing will be available to pay theReceivables owing by such Obligor, and, in any such case, such Obligor has agreed post-petition to pay the Receivables owing by such Obligor on a current basisin accordance with its terms.

“Borrower” shall have the meaning assigned to it in the preamble to the Funding Agreement.

“Borrower Account” shall mean that certain deposit account identified as the “Borrower Account” on Schedule 4.01(q) to the Funding Agreement,maintained by the Borrower at the Borrower Account Bank, which account shall be subject to a Borrower Account Agreement.

“Borrower Account Agreement” shall mean any agreement among an Originator, the Borrower, the Administrative Agent, and the Borrower AccountBank with respect to the Borrower Account that provides, among other things, that (a) all items of payment deposited in the Borrower Account are held by theBorrower Account Bank as custodian for the Administrative Agent, (b) the Borrower Account Bank has no rights of setoff or recoupment or any other claimagainst the Borrower Account, as the case may be, other than for payment of its service fees and other charges directly related to the administration of theBorrower Account and for returned checks or other items of payment and (c) after notice from the Administrative Agent to the Borrower Account Bank, theBorrower Account Bank agrees to forward all Collections received in the Borrower Account to the Agent Account within one Business Day of receipt, and isotherwise in form and substance acceptable to the Administrative Agent.

“Borrower Account Bank” shall mean the bank or other financial institution at which the Borrower Account is maintained, which shall initially be Bank ofAmerica, N.A.

“Borrower Account Collateral” shall have the meaning assigned to it in Section 7.01(c) of the Funding Agreement.

“Borrower Assigned Agreements” shall have the meaning assigned to it in Section 7.01(b) of the Funding Agreement.

“Borrower Collateral” shall have the meaning assigned to it in Section 7.01 of the Funding Agreement.

“Borrower Obligations” shall mean all loans, advances, debts, liabilities, indemnities and obligations for the performance of covenants, tasks or duties orfor payment of

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monetary amounts (whether or not such performance is then required or contingent, or such amounts are liquidated or determinable) owing by the Borrower toany Affected Party under the Funding Agreement, any other Related Document and any document or instrument delivered pursuant thereto, and all amendments,extensions or renewals thereof, and all covenants and duties regarding such amounts, of any kind or nature, present or future, whether or not evidenced by anynote, agreement or other instrument, arising thereunder, including the Outstanding Principal Amount, interest, Unused Commitment Fees, amounts payable inrespect of Funding Excess, Successor Servicing Fees and Expenses, Additional Amounts, Additional Costs, Indemnified Amounts, and including the “SellerSecured Obligations” under, and as defined in, the Existing Receivables Purchase Agreement. This term includes all principal, interest (including all interest thataccrues after the commencement of any case or proceeding by or against the Borrower in bankruptcy, whether or not allowed in such case or proceeding), fees,charges, expenses, attorneys’ fees and any other sum chargeable to the Borrower under any of the foregoing, whether now existing or hereafter arising, voluntaryor involuntary, whether or not jointly owed with others, direct or indirect, absolute or contingent, liquidated or unliquidated, and whether or not from time to timedecreased or extinguished and later increased, created or incurred, and all or any portion of such obligations that are paid to the extent all or any portion of suchpayment is avoided or recovered directly or indirectly from any Lender or the Administrative Agent or any assignee of any Lender or the Administrative Agentas a preference, fraudulent transfer or otherwise.

“Borrowing” shall mean (i) the Revolving Credit Advances of the Lenders (other than the Swing Line Lender) made pursuant to Section 2.01(b)(iii) or(iv) of the Funding Agreement, and (ii) each Swing Line Advance made by the Swing Line Lender pursuant to Section 2.01(b)(i) of the Funding Agreement.

“Borrowing Base” shall mean, as of any date of determination, the amount equal to the lesser of:

(a) the Aggregate Commitment,

and

(b) an amount equal to the positive difference, if any, of:

(i) the product of (1) the Dynamic Advance Rate multiplied by (2) the Net Receivables Balance,

minus

(ii) the sum of (W) the Interest Reserve, (X) the Servicing Fee Reserve, and (Y) such other reserves as the Administrative Agent may determinefrom time to time based upon its reasonable credit judgment;

in each case as disclosed in the most recently submitted Borrowing Base Certificate or Borrowing Request or as otherwise determined by the AdministrativeAgent based on Borrower Collateral information available to it, including any information obtained from any audit or from any other reports with respect to theBorrower Collateral, which determination shall be final, binding and conclusive on all parties to the Funding Agreement (absent manifest error).

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“Borrowing Base Certificate” shall have the meaning assigned to it in Section 5.02(b) of the Funding Agreement.

“Borrowing Request” shall have the meaning assigned to it in Section 2.03(a) of the Funding Agreement.

“Breakage Costs” shall have the meaning assigned to it in Section 2.10 of the Funding Agreement.

“Business Day” shall mean any day that is not a Saturday, a Sunday or a day on which banks are required or permitted to be closed in the State of NewYork or, with respect to any remittances to be made by any Collection Account Bank or the Concentration Account Bank to any related Account, in thejurisdiction(s) in which the Accounts maintained by such Banks are located.

“Buyer” shall have the meaning assigned to it in the preamble to the Sale Agreement.

“Buyer Available Amounts” shall have the meaning assigned to it in Section 6.15 of the Sale Agreement.

“Buyer Indemnified Person” shall have the meaning assigned to it in Section 5.01 of the Sale Agreement.

“Capital Lease” shall mean, with respect to any Person, any lease of any property (whether real, personal or mixed) by such Person as lessee that, inaccordance with GAAP, would be required to be classified and accounted for as a capital lease on a balance sheet of such Person.

“Capital Lease Obligation” shall mean, with respect to any Capital Lease of any Person, the amount of the obligation of the lessee thereunder that, inaccordance with GAAP, would appear on a balance sheet of such lessee in respect of such Capital Lease.

“Change of Control” shall mean any event, transaction or occurrence after the Closing Date as a result of which (a) any person or group of persons (withinthe meaning of the Securities Exchange Act of 1934, as amended) shall have acquired beneficial ownership (within the meaning of Rule 13d-3 promulgated bythe Securities Exchange Commission under the Securities Exchange Act of 1934, as amended) of a greater percentage of the issued and outstanding shares ofStock of the Parent having the right to vote for the election of directors of the Parent under ordinary circumstances than indirectly owned by the Mitac Group;(b) during any period of twelve (12) consecutive calendar months ending after the Closing Date, individuals who at the beginning of such twelve-month periodconstituted the board of directors of the Parent (together with any new directors whose election by the board of directors of the Parent or whose nomination forelection by the Stockholders of the Parent was approved by a vote of at least two-thirds the directors then in office who either were directors at the beginning ofsuch

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period or whose election or nomination for election was previously so approved) cease for any reason other than death or disability to constitute a majority of thedirectors then in office; (c) the Parent ceases to own and control, directly or indirectly, all of the economic and voting rights associated with all of the outstandingStock, directly or indirectly, of any Originator (other than Parent) or the Borrower; or (d) any Transaction Party has sold, transferred, conveyed, assigned orotherwise disposed of all or substantially all of its assets (other than such a sale of assets from one Originator to another Originator).

“Charge-Off” shall mean the extent to which any Transferred Receivable is subject to any Dilution Factor described in clause (a) of the definition thereof.

“Charges” shall mean (i) all federal, state, provincial, county, city, municipal, local, foreign or other governmental taxes (including taxes owed to thePBGC at the time due and payable); (ii) all levies, assessments, charges, or claims of any governmental entity or any claims of statutory lienholders, thenonpayment of which could give rise by operation of law to a Lien on Borrower Collateral or any other property of the Borrower or any Originator and (iii) anysuch taxes, levies, assessment, charges or claims which constitute a lien or encumbrance on any property of the Borrower or any Originator.

“Class” means, with respect to an Obligor, at any time of determination the classification of such Obligor as a “Class A Obligor”, “Class B Obligor”,“Class C Obligor” or “Class D Obligor”.

“Class A Obligor”, “Class B Obligor”, “Class C Obligor” and “Class D Obligor”, respectively, shall mean at any time of determination, an Obligor havingan unsecured long-term debt rating and equivalent short-term rating from each of S&P and Moody’s as described below:

Class of Obligor Short-Term Rating Long-Term Rating of ObligorClass A Obligor A-1/P-1 A/A2 or higherClass B Obligor

A-2/P-2

A- or BBB+/ A3 or Baa1 (but lower thanA/A2)

Class C Obligor

A-3/P-3

BBB or BBB-/Baa2 or Baa3 (but lower thanBBB+/Baa1)

Class D Obligor Lower than A-3/P-3 or Not Rated Lower than BBB-/Baa3 or Not Rated

For purposes of calculating the foregoing, (i) an Obligor’s short term rating from S&P and/or Moody’s shall govern, (ii) an Obligor which does not have ashort-term rating from S&P and/or Moody’s but which has the equivalent long-term debt rating from such Rating Agency as described above shall be deemed tohave the related short-term rating, and (iii) if an Obligor’s short-term rating results in two different “Classes of Obligor” (because of differences in the short-termratings assigned by each of S&P and Moody’s, the Class for such Obligor shall be based upon the lower of the short-term ratings.

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“Closing Date” shall mean February 12, 2007.

“Collection Account” shall mean any deposit account established by or assigned to the Borrower for the deposit of Collections pursuant to and inaccordance with Section 6.01(a) of the Funding Agreement.

“Collection Account Agreement” shall mean any agreement among an Originator, the Borrower, the Administrative Agent, and a Collection Account Bankwith respect to a Lockbox and Collection Account that provides, among other things, that (a) all items of payment deposited in such Lockbox and CollectionAccount are held by such Collection Account Bank as custodian for the Administrative Agent, (b) such Collection Account Bank has no rights of setoff orrecoupment or any other claim against such Collection Account, as the case may be, other than for payment of its service fees and other charges directly relatedto the administration of such Collection Account and for returned checks or other items of payment and (c) such Collection Account Bank agrees to forward allCollections received in such Collection Account to (i) the Concentration Account within one Business Day of receipt or (ii) if the Concentration Account is notestablished, to the Agent Account within one Business Day of receipt, and is otherwise in form and substance acceptable to the Administrative Agent.

“Collection Account Bank” shall mean any bank or other financial institution at which one or more Collection Accounts are maintained.

“Collections” shall mean, with respect to any Transferred Receivable, all cash collections and other proceeds of such Receivable (including late charges,fees and interest arising thereon, and all recoveries with respect thereto that have been written off as uncollectible).

“Commercial Paper” shall mean those certain short-term promissory notes issued by the SMBC Discretionary Lender from time to time in the UnitedStates of America commercial paper market.

“Commitment” shall mean as to any Lender (other than the Swing Line Lender), the aggregate commitment of such Lender to make Revolving CreditAdvances as set forth in the signature page to the Funding Agreement or in the most recent Assignment Agreement executed by such Lender, as such amountmay be adjusted, if at all, from time to time in accordance with the Funding Agreement.

“Commitment Reduction Notice” shall have the meaning assigned to it in Section 2.02(a) of the Funding Agreement.

“Commitment Termination Date” shall mean the earliest of (a) the date so designated pursuant to Section 9.01 of the Funding Agreement, (b) the FinalAdvance Date, and (c) the date of termination of the Aggregate Commitment specified in a notice from the Borrower to the Lenders delivered pursuant to and inaccordance with Section 2.02(b) of the Funding Agreement.

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“Commitment Termination Notice” shall have the meaning assigned to it in Section 2.02(b) of the Funding Agreement.

“Concentration Account” shall mean that certain account maintained by the Borrower at Concentration Account Bank, which account shall be subject to aConcentration Account Agreement.

“Concentration Account Agreement” shall mean any agreement among an Originator, the Borrower, the Administrative Agent, and the ConcentrationAccount Bank with respect to the Concentration Account that provides, among other things, that (a) all items of payment deposited in the Concentration Accountare held by the Concentration Account Bank as custodian for the Administrative Agent, (b) the Concentration Account Bank has no rights of setoff orrecoupment or any other claim against the Concentration Account, as the case may be, other than for payment of its service fees and other charges directly relatedto the administration of the Concentration Account and for returned checks or other items of payment and (c) the Concentration Account Bank agrees to forwardall Collections received in the Concentration Account to the Agent Account within one Business Day of receipt, and is otherwise in form and substanceacceptable to the Administrative Agent.

“Concentration Account Bank” shall mean the bank or other financial institution at which the Concentration Account is maintained.

“Concentration Percentage” shall mean, with respect to an Obligor as of any date of determination, the General Concentration Percentage or, if applicable,the Special Concentration Percentage for such Obligor at such date of determination.

“Contract” shall mean any agreement or invoice pursuant to, or under which, an Obligor shall be obligated to make payments with respect to anyReceivable.

“Contributed Receivables” shall have the meaning assigned to it in Section 2.01(d) of the Sale Agreement.

“CP Rate” shall mean for each calendar month, a per annum rate of interest equal to the sum of 0.55% plus the per annum rate equivalent to the weightedaverage of the rates paid or payable by the SMBC Discretionary Lender from time to time as interest on or otherwise (by means of interest rate hedges orotherwise) in respect of Commercial Paper that is allocated, in whole or in part, to fund or maintain the SMBC Discretionary Lender’s Advances during suchcalendar month, which rates shall reflect and give effect to actual dealer fees, commissions of placement agents and other issuance costs in respect of suchCommercial Paper; provided, that if for any reason the SMBC Discretionary Lender is unable to issue Commercial Paper or determine the applicable rate hereto,the CP Rate shall in all such cases be equal to the Index Rate.

“Credit Agreement” shall mean that certain Second Amended and Restated Credit Agreement, dated as of February 12, 2007, among Parent, GE Capital asadministrative agent and the financial institutions from time to time party thereto as lenders and as in effect on Closing Date together with all amendments,restatements, supplements or modifications thereto that are in effect on the Closing Date or adopted from time to time thereafter to the extent not

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prohibited under the Related Documents, and any refinancings, replacements or refundings thereof that (a) are agreed to by (i) the Administrative Agent andRequisite Lenders or (b) (i) have terms and conditions no less favorable (as determined by the Administrative Agent, in the exercise of its reasonable creditjudgment) to the Administrative Agent or any Lender than the terms and conditions of the existing Credit Agreement and (ii) with respect to which anintercreditor agreement having terms and conditions acceptable to the Administrative Agent and the Lenders.

“Credit and Collection Policies” shall mean the written credit, collection, customer relations and service policies of the Originators in effect on the ClosingDate and attached as Exhibit A to the Funding Agreement, as the same may from time to time be amended, restated, supplemented or otherwise modified with theprior written consent of the Administrative Agent.

“Daily Report” shall have the meaning assigned to it in paragraph (a) of Annex 5.02(a) to the Funding Agreement.

“Debt” of any Person shall mean, without duplication, (a) all indebtedness of such Person for borrowed money or for the deferred purchase price ofproperty or services payment for which is deferred more than 90 days, but excluding obligations to trade creditors incurred in the ordinary course of business thatare not overdue by more than 90 days unless being contested in good faith, (b) all reimbursement and other obligations with respect to letters of credit, bankers’acceptances and surety bonds, whether or not matured, (c) all obligations evidenced by notes, bonds, debentures or similar instruments, (d) all indebtednesscreated or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights andremedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (e) all Capital LeaseObligations, (f) all obligations of such Person under commodity purchase or option agreements or other commodity price hedging arrangements, in each casewhether contingent or matured, (g) all obligations of such Person under any foreign exchange contract, currency swap agreement, interest rate swap, cap or collaragreement or other similar agreement or arrangement designed to alter the risks of that Person arising from fluctuations in currency values or interest rates, ineach case whether contingent or matured, (h) all liabilities of such Person under Title IV of ERISA, (i) all Guaranteed Indebtedness of such Person, (j) allindebtedness referred to in clauses (a) through (i) above secured by (or for which the holder of such indebtedness has an existing right, contingent or otherwise,to be secured by) any Lien upon or in property or other assets (including accounts and contract rights) owned by such Person, even though such Person has notassumed or become liable for the payment of such indebtedness, (k) all “Indebtedness” as such term is defined in the Credit Agreement, (l) all “Loans” and otherobligations of the Parent and its Subsidiaries under the Credit Agreement (which shall only be Debt of the Parent, its Subsidiaries and any Person who guaranteessuch Debt), and (m) the Borrower Obligations.

“Default Rate” shall have the meaning assigned to it in Section 2.06(b) of the Funding Agreement.

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“Default Ratio” shall mean, as of any date of determination, the ratio (expressed as a percentage) of:

(a) the sum of (without duplication) (i) the aggregate Outstanding Balance of all Transferred Receivables which became Defaulted Receivables during theSettlement Period immediately preceding such date and (ii) with respect to any Obligor that, during the Settlement Period immediately preceding such date,became (A) a debtor in a voluntary or involuntary bankruptcy proceeding, or (B) the subject of a comparable receivership or insolvency proceeding, theaggregate Outstanding Balance of Transferred Receivables owing by such Obligor that were owing by such Obligor before such Obligor became (x) a debtor in avoluntary or involuntary bankruptcy proceeding, or (y) the subject of a comparable receivership or insolvency,

to

(b) the aggregate Outstanding Balance of all Transferred Receivables originated during the Settlement Period which ended three (3) months prior to thelast day of the Settlement Period immediately preceding such date.

“Default Trigger Ratio” shall mean, as of any date of determination, the ratio (expressed as a percentage) of:

(a) the aggregate Outstanding Balance of all Defaulted Receivables as of the last day of the three Settlement Periods immediately preceding such date;

to

(b) the aggregate Outstanding Balance of all Transferred Receivables originated during the fourth, fifth and sixth Settlement Periods immediatelypreceding such date.

“Defaulted Receivable” shall mean any Transferred Receivable (a) with respect to which any payment, or part thereof, remains unpaid for more than 60days after its Maturity Date, (b) with respect to which the Obligor thereunder is a BK Obligor or (c) that otherwise has been or should be written off inaccordance with the Credit and Collection Policies.

“Delinquency Ratio” shall mean, as of any date of determination, the ratio (expressed as a percentage) of:

(a) the aggregate Outstanding Balance of all Transferred Receivables with respect to which any payment, or part thereof, is between 31 and 60 days pastdue as of the last day of the three Settlement Periods immediately preceding such date

to

(b) the aggregate Outstanding Balance of all Transferred Receivables as of the last day of the three Settlement Periods immediately preceding such date.

“Depositary” shall have the meaning assigned to it in Section 6.01(c)(i) of the Funding Agreement.

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“Dilution Factors” shall mean, with respect to any Transferred Receivable, any portion of which (a) was reduced, canceled or written-off as a result of(i) any credits, rebates, freight charges, cash discounts, volume discounts, cooperative advertising expenses, royalty payments, warranties, cost of parts requiredto be maintained by agreement (either express or implied), allowances for early payment, warehouse and other allowances, defective, rejected, returned orrepossessed merchandise or services, or any failure by any Originator to deliver any merchandise or services or otherwise perform under the underlying Contractor invoice, (ii) any change in or cancellation of any of the terms of the underlying Contract or invoice or any cash discount, rebate, retroactive price adjustment orany other adjustment by the applicable Originator which reduces the amount payable by the Obligor on the related Receivable except to the extent based on creditrelated reasons, or (iii) any setoff in respect of any claim by the Obligor thereof (whether such claim arises out of the same or a related transaction or an unrelatedtransaction) or (b) is subject to any specific dispute, offset, counterclaim or defense whatsoever (except discharge in bankruptcy of the Obligor thereof).

“Dilution Horizon Factor” shall mean, as of any date of determination, (x) the aggregate principal amount of Transferred Receivables originated during thetwo most recent Settlement Periods preceding such date divided by (y) the Net Receivables Balance as of the end of the Settlement Period immediately precedingsuch date.

“Dilution Ratio” shall mean, as of any date of determination, the ratio (expressed as a percentage) of:

(a) the aggregate Dilution Factors for all Transferred Receivables during the Settlement Period immediately preceding such date

to

(b) the aggregate Billed Amount of all Transferred Receivables originated during the second Settlement Period immediately preceding such date.

“Dilution Reserve Ratio” shall mean, as of any date of determination, the ratio (expressed as a percentage) calculated in accordance with the followingformula:

DRR = (2 *ADR) + [(HDR-ADR) x (HDR/ADR)]] x DHF];

where

DRR = the Dilution Reserve Ratio;

ADR = the average of the Dilution Ratios occurring during the twelve most recent calendar Settlement Periods preceding such date;

HDR = the highest Dilution Ratio occurring during the twelve most recent Settlement Periods preceding such date; and

DHF = the Dilution Horizon Factor.

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“Dilution Trigger Ratio” shall mean, as of any date of determination, the ratio (expressed as a percentage) of:

(a) the aggregate Dilution Factors for all Transferred Receivables for the three Settlement Periods immediately preceding such date

to

(b) the aggregate Billed Amount for all Transferred Receivables originated during the second, third and fourth Settlement Periods immediately precedingsuch date.

“Dollars” or “$” shall mean lawful currency of the United States of America.

“Dynamic Advance Rate” shall mean, as of any date of determination, a percentage equal to 100% minus the greatest of (i) 15.0%, (ii) the MinimumReserve Ratio and (iii) the sum of the Loss Reserve Ratio and the Dilution Reserve Ratio as of such date.

“Effective Date” shall have the meaning assigned to it in Section 3.01 of the Funding Agreement.

“Election Notice” shall have the meaning assigned to it in Section 2.01(d) of the Sale Agreement.

“Eligible Receivable” shall mean, as of any date of determination, a Transferred Receivable:

(a)(i) that is due and payable within 30 days of the Billing Date thereof, and (ii) with respect to which no payment or part thereof remains unpaid for morethan 60 days after its Maturity Date or more than 90 days after its Billing Date; provided, that up to 10% of the Outstanding Balance of all Eligible Receivablesmay be due and payable within 60 days of the Billing Date thereof so long as they do not remain unpaid for more than 90 days after their Billing Date.

(b) that is not a liability of an Excluded Obligor or an Obligor with respect to which more than 50% of the aggregate Outstanding Balance of allReceivables owing by such Obligor are more than 60 days past due from the Maturity Date thereof or more than 90 days past due from the Billing Date thereof;

(c) that is not a liability of an Obligor organized under the laws of any jurisdiction outside of the United States of America (including the District ofColumbia but otherwise excluding its territories and possessions);

(d) that is denominated and payable in Dollars in the United States of America and is not represented by a note or other negotiable instrument or by chattelpaper;

(e) that is not subject to any right of rescission, dispute, offset (including, without limitation, as a result of customer promotional allowances, discounts,rebates, or claims for damages), hold back defense, adverse claim or other claim (with only the portion of any such

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Receivable subject to any such right of rescission, dispute, offset (including, without limitation, as a result of customer promotional allowances, discounts,rebates, or claims for damages), hold back defense, adverse claim or other claim being considered an Ineligible Receivable by virtue of this clause (e)), whetherarising out of transactions concerning the Contract therefor or otherwise;

(f) with respect to which the Obligor thereunder is not a BK Obligor;

(g) that is not an Unapproved Receivable;

(h) that does not represent “billed but not yet shipped” goods or merchandise, partially performed or unperformed services consigned goods or “sale orreturn” goods and does not arise from a transaction for which any additional performance by the Originator thereof, or acceptance by or other act of the Obligorthereunder, including any required submission of documentation, remains to be performed as a condition to any payments on such Receivable or theenforceability of such Receivable under applicable law;

(i) as to which the representations and warranties of Sections 4.01(v)(ii) through (iv) of the Sale Agreement are true and correct in all respects as of theTransfer Date therefor;

(j) that is not the liability of an Obligor that has any claim of a material nature against or affecting the Originator thereof or the property of such Originatorwhich gives rise to a right of set-off against such Receivable (with only that portion of Receivables owing by such Obligor equal to the amount of such claimbeing an Ineligible Receivable); provided, that, claims which arise in the ordinary course of business and are properly reflected in contra accounts on the booksand records of the Originators, the Borrower and the Servicer shall not cause an otherwise Eligible Receivable to become ineligible under this paragraph (j) butshall instead cause a reduction in the Outstanding Balance of such Eligible Receivables for all computational purposes under the Related Documents;

(k) that was originated in accordance with and satisfies in all material respects all applicable requirements of the Credit and Collection Policies;

(l) that represents the genuine, legal, valid and binding obligation of the Obligor thereunder enforceable by the holder thereof in accordance with its terms;

(m) that is entitled to be paid pursuant to the terms of the Contract therefor and has not been paid in full or been compromised, adjusted, extended,reduced, satisfied, subordinated, rescinded or modified (except for adjustments to the Outstanding Balance thereof to reflect Dilution Factors made in accordancewith the Credit and Collection Policies);

(n) that does not contravene in any material respect any laws, rules or regulations applicable thereto (including laws, rules and regulations relating tousury, consumer protection, truth in lending, fair credit billing, fair credit reporting, equal credit opportunity, fair debt collection practices and privacy) and withrespect to which no party to the Contract therefor is in violation of any such law, rule or regulation that, in each case, could reasonably be expected to have amaterial adverse effect on the collectibility, value or payment terms of such Receivable;

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(o) with respect to which no proceedings or investigations are pending or threatened before any Governmental Authority (i) asserting the invalidity of suchReceivable or the Contract therefor, (ii) asserting the bankruptcy or insolvency of the Obligor thereunder; unless, in the case of a bankruptcy proceeding, theapplicable Originator has been designated as a “critical vendor” and the Obligor thereunder has obtained (A) in the case of any Receivable originatedpre-petition, a final court order approving the payment of the pre-petition claims of such Originator on an administrative priority basis or (B) in the case of anyReceivable originated post-petition, (1) a final court order approving the payment of the post-petition claims of such Originator on an administrative prioritybasis and (2) a debtor-in-possession financing facility and management of the applicable Originator reasonably believes that such financing will be available topay the Receivables owing by such Obligor, and, in any such case, such Obligor has agreed post-petition to pay the Receivables owing by such Obligor on acurrent basis in accordance with its terms, (iii) seeking payment of such Receivable or payment and performance of such Contract or (iv) seeking anydetermination or ruling that could reasonably be expected to materially and adversely affect the validity or enforceability of such Receivable or such Contract;

(p) (i) that is an “account” within the meaning of the UCC (or any other applicable legislation) of the jurisdictions in which the each of the Originators, theParent and the Borrower are organized and in which chief executive offices of each of the Originators, the Parent and the Borrower are located and (ii) under theterms of the related Contract, the right to payment thereof may be freely assigned, including as a result of compliance with applicable law (or with respect towhich, the prohibition on the assignment of rights to payment are made fully ineffective under applicable law);

(q) that is payable solely and directly to an Originator and not to any other Person (including any shipper of the merchandise or goods that gave rise tosuch Receivable), except to the extent that payment thereof may be made to a Lockbox or otherwise as directed pursuant to Article VI of the Funding Agreement;

(r) with respect to which all material consents, licenses, approvals or authorizations of, or registrations with, any Governmental Authority required to beobtained, effected or given in connection with the creation of such Receivable or the Contract therefor have been duly obtained, effected or given and are in fullforce and effect;

(s) that is created through the provision of merchandise, goods or services by the Originator thereof in the ordinary course of its business;

(t) that is not the liability of an Obligor that, under the terms of the Credit and Collection Policies, is receiving or should receive merchandise, goods orservices on a “cash on delivery” basis;

(u) that does not constitute a rebilled amount arising from a deduction taken by an Obligor with respect to a previously arising Receivable;

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(v) as to which the Borrower has a first priority perfected ownership interest and in which the Administrative Agent has a first priority perfected securityinterest, in each case not subject to any Lien, right, claim, security interest or other interest of any other Person (other than, in the case of the Borrower, the Lienof the Administrative Agent for the benefit of the Lenders);

(w) to the extent such Transferred Receivable represents sales tax or a vendor pass-through payment, such portion of such Receivable shall not be anEligible Receivable;

(x) that does not represent the balance owed by an Obligor on a Receivable in respect of which the Obligor has made partial payment;

(y) with respect to which no check, draft or other item of payment was previously received that was returned unpaid or otherwise;

(z) with respect to which, if such Receivable is a Financing Receivable, the Obligor under such Financing Receivable has entered into an intercreditoragreement with GE Capital, Synnex and Borrower, in form and substance satisfactory to the Administrative Agent and the agent under the Credit Facility;

(aa) that do not arise under partially performed or unperformed Contracts for services or the delivery of goods or merchandise; and

(bb) that complies with such other criteria and requirements as the Administrative Agent in its reasonable credit judgment may from time to time specify tothe Borrower or the Originator thereof upon not less than ten Business Days prior written notice.

“ERISA” shall mean the Employee Retirement Income Security Act of 1974 and any regulations promulgated thereunder.

“ERISA Affiliate” shall mean, with respect to any Originator, any trade or business (whether or not incorporated) that, together with such Originator, aretreated as a single employer within the meaning of Sections 414(b), (c), (m) or (o) of the IRC.

“ERISA Event” shall mean, with respect to any Originator or any ERISA Affiliate, the occurrence of one or more of the following events: (a) any eventdescribed in Section 4043(c) of ERISA with respect to a Title IV Plan unless the 30-day requirement with respect thereto has been waived pursuant to theregulations under Section 4043 of ERISA; (b) the withdrawal of any Originator or ERISA Affiliate from a Title IV Plan subject to Section 4063 of ERISA duringa plan year in which it was a “substantial employer,” as defined in Section 4001(a)(2) of ERISA; (c) the complete or partial withdrawal of any Originator or anyERISA Affiliate from any Multiemployer Plan; (d) the filing of a notice of intent to terminate a Title IV Plan or the treatment of a plan amendment as atermination under Section 4041 of ERISA; (e) the institution of proceedings to terminate a Title IV Plan or Multiemployer Plan by the PBGC; (f) the failure byany Originator or ERISA Affiliate to make when due required contributions to a Multiemployer Plan or Title IV Plan unless such failure is cured within 30 days;(g) any other event or condition that might reasonably be expected to constitute grounds under Section 4042 of ERISA for the termination of, or the appointmentof a trustee to

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administer, any Title IV Plan or Multiemployer Plan or for the imposition of liability under Section 4069 or 4212(c) of ERISA; (h) the termination of aMultiemployer Plan under Section 4041A of ERISA or the reorganization or insolvency of a Multiemployer Plan under Section 4241 of ERISA; or (i) the loss ofa Qualified Plan’s qualification or tax exempt status.

“ESOP” means a Plan that is intended to satisfy the requirements of Section 4975(e)(7) of the IRC.

“Event of Servicer Termination” shall have the meaning assigned to it in Section 8.01 of the Sale Agreement.

“Excess Concentration Amount” shall mean, with respect to any Obligor of a Transferred Receivable and as of any date of determination after givingeffect to all Eligible Receivables transferred on such date, the amount by which the Outstanding Balance of Eligible Receivables owing by such Obligor exceeds(i) the Concentration Percentage for such Obligor multiplied by (ii) the Outstanding Balance of all Eligible Receivables on such date; provided, however, that inthe case of an Obligor which is an Affiliate of other Obligors, the Excess Concentration Amount for such Obligor shall be calculated as if such Obligor and suchone or more affiliated Obligors were one Obligor.

“Excluded Obligor” shall mean any Obligor (a) that is an Affiliate of any Originator, the Parent or the Borrower, (b) that is a Governmental Authority,(c) that is Apptis Inc. or an Affiliate thereof (subject to the proviso in the definition of “Excluded Receivable”), or (d) that is designated as an Excluded Obligorby the Administrative Agent in its reasonable credit judgment upon ten (10) Business Days’ prior written notice from the Administrative Agent to the Borrower,the Lenders, the Servicer and the Parent.

“Excluded Receivable” shall mean any Receivable originated or acquired by an Originator on or after the Effective Date and not transferred to Buyer priorto the Effective Date, (a) which is a Mexico Receivable, (b) the Obligor of which is Apptis Inc., or (c) which has been assigned or purported to be assigned to anOriginator by Apptis Inc.; provided, that if (i) Parent makes a written request to Borrower and Borrower makes a written request to Administrative Agent, whichwritten requests (x) certify that Parent and Apptis Inc. have revised their contractual arrangements to provide for Apptis Inc. to be a direct obligor of Parent andattach the executed documentation evidencing such new contractual arrangements, and (y) request Borrower, Administrative Agent and Lenders to considerinclusion of all otherwise Eligible Receivables originated under such new contractual arrangement as Transferred Receivables and as Receivables which are notExcluded Receivables hereunder, (ii) such new contractual arrangements and documentation evidencing such arrangements are in form and substance satisfactoryto Borrower, Administrative Agent and Lenders and otherwise reflect that Receivables originated thereunder would otherwise be Eligible Receivables,(iii) Administrative Agent and Lenders receive other evidence and due diligence results satisfactory to Administrative Agent and Lenders with respect to suchnew contractual arrangements and, among other things, evidencing that Apptis Inc. is obligated to remit all amounts due thereunder directly to a CollectionAccount, and (iv) each applicable Lender or SPV shall have received confirmation of its Ratings after giving effect to the inclusion of such Receivables asTransferred Receivables and Eligible Receivables hereunder, then after written affirmation by Administrative

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Agent, Lenders and Borrower of the foregoing and implementation of any amendments to the Related Documents which the Administrative Agent and Lendersin good faith determine are necessary to effectuate the foregoing, all Receivables originated under such new contractual documentation shall cease to be“Excluded Receivables” under the Related Documents and Apptis Inc. shall cease to be an “Excluded Obligor” under the Related Documents.

“Existing Receivables Purchase Agreement” shall have the meaning assigned to it in the Preamble of the Funding Agreement.

“Existing Transfer Agreement” shall have the meaning assigned to it in the Preamble of the Sale Agreement.

“Federal Funds Rate” means, for any day, a floating rate equal to the weighted average of the rates on overnight federal funds transactions among membersof the Federal Reserve System, as determined by the Administrative Agent.

“Federal Reserve Board” shall mean the Board of Governors of the Federal Reserve System.

“Fee Letter” shall mean that certain letter agreement dated the Closing Date between the Parent and the Administrative Agent, amending and restating thatcertain letter agreement dated December 13, 2004, between the Borrower and GE Capital.

“Fees” shall mean any and all fees payable to the Administrative Agent or any Lender pursuant to the Funding Agreement or any other Related Document,including, without limitation, the Unused Commitment Fee.

“Final Advance Date” shall mean February 11, 2011, as such date may be extended with the consent of the Borrower, the Lenders and the AdministrativeAgent.

“Financing Receivable” shall mean a Receivable which evidences the obligation of an Obligor to pay the purchase price of merchandise, goods or serviceswhich are neither purchased nor deemed purchased by such Obligor but which were financed by such Obligor pursuant to a floorplan financing arrangement.

“Funding Agreement” shall mean that certain Second Amended and Restated Receivables Funding and Administration Agreement dated as of the ClosingDate, by and among the Borrower, the Lenders the Swing Line Lender and the Administrative Agent.

“Funding Availability” shall mean, as of any date of determination, the amount, if any, by which the Borrowing Base exceeds the Outstanding PrincipalAmount, in each case as of the end of the immediately preceding day.

“Funding Excess” shall mean, as of any date of determination, the extent to which the Outstanding Principal Amount exceeds the Borrowing Base, in eachcase as disclosed in the most recently submitted Borrowing Base Certificate or Borrowing Request or as otherwise determined by the Administrative Agent basedon Borrower Collateral information available to it, including any information obtained from any audit or from any other reports with respect to the BorrowerCollateral, which determination shall be final, binding and conclusive on all parties to the Funding Agreement (absent manifest error).

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“GAAP” shall mean generally accepted accounting principles in the United States of America as in effect from time to time, consistently applied as suchterm is further defined in Section 2(a) of this Annex X.

“GE Capital” shall mean General Electric Capital Corporation, a Delaware corporation.

“General Concentration Percentage” shall mean at any time of determination with respect to any Class of Obligor, an amount equal to the highestapplicable percentage listed opposite such Class of Obligor times the aggregate Outstanding Balance of Eligible Receivables as of such time of determination:

Class of Obligor Applicable Percentage Class A Obligor 8.0%

Class B Obligor 6.0%

Class C Obligor 3.0%

Class D Obligor 2.0%

“General Trial Balance” shall mean, with respect to any Originator and as of any date of determination, such Originator’s accounts receivable trial balance(whether in the form of a computer printout, magnetic tape or diskette) as of such date, listing Obligors and the Receivables owing by such Obligors as of suchdate together with the aged Outstanding Balances of such Receivables, in form and substance satisfactory to the Borrower and the Administrative Agent.

“Governmental Authority” shall mean any nation or government, any state, province or other political subdivision thereof, and any agency, department orother entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government.

“Guaranteed Indebtedness” shall mean, as to any Person, any obligation of such Person guaranteeing any indebtedness, lease, dividend, or other obligation(“primary obligation”) of any other Person (the “primary obligor”) in any manner, including any obligation or arrangement of such Person to (a) purchase orrepurchase any such primary obligation, (b) advance or supply funds (i) for the purchase or payment of any such primary obligation or (ii) to maintain workingcapital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency or any balance sheet condition of the primary obligor,(c) purchase

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property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to makepayment of such primary obligation, or (d) indemnify the owner of such primary obligation against loss in respect thereof. The amount of any GuaranteedIndebtedness at any time shall be deemed to be the amount equal to the lesser at such time of (x) the stated or determinable amount of the primary obligation inrespect of which such Guaranteed Indebtedness is incurred and (y) the maximum amount for which such Person may be liable pursuant to the terms of theinstrument embodying such Guaranteed Indebtedness; or, if not stated or determinable, the maximum reasonably anticipated liability (assuming fullperformance) in respect thereof.

“Incipient Servicer Termination Event” shall mean any event that, with the passage of time or notice or both, would, unless cured or waived, become anEvent of Servicer Termination.

“Incipient Termination Event” shall mean any event that, with the passage of time or notice or both, would, unless cured or waived, become a TerminationEvent.

“Incremental Commitment Date” shall have the meaning assigned to it in Section 2.02(d) of the Funding Agreement.

“Incremental Commitment Agreement” means an agreement delivered by an Incremental Lender, in form and substance reasonably satisfactory to theAdministrative Agent and accepted by it and the Borrower, by which such Incremental Lender confirms its new or additional commitment pursuant toSection 2.02(d) and agrees to become bound to the Funding Agreement and other Related Documents as a “Lender” thereunder.

“Incremental Lender” shall have the meaning assigned to it in Section 2.02(d) of the Funding Agreement.

“Indemnified Amounts” shall mean, with respect to any Person, any and all suits, actions, proceedings, claims, damages, losses, liabilities and reasonableexpenses (including, but not limited to, reasonable attorneys’ fees and disbursements and other costs of investigation or defense, including those incurred uponany appeal).

“Indemnified Person” shall have the meaning assigned to it in Section 10.01(a) of the Funding Agreement.

“Indemnified Taxes” shall have the meaning assigned to it in Section 2.08(h) of the Funding Agreement.

“Index Rate” shall mean, for any day, a floating rate equal to the higher of (a) the rate publicly quoted from time to time by The Wall Street Journal as the“base rate on corporate loans at large U.S. money center commercial banks” (or, if The Wall Street Journal ceases quoting a base rate of the type described, thehighest per annum rate of interest published by the Federal Reserve Board in Federal Reserve statistical release H.15 (519) entitled “Selected Interest Rates” asthe Bank prime loan rate or its equivalent), and (b) the sum of the Federal Funds Rate plus fifty (50) basis points per annum. Each change in any interest rateprovided for in the Funding Agreement based upon the Index Rate shall take effect at the time of such change in the Index Rate.

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“Index Rate Advance” shall mean an Advance or portion thereof bearing interest by reference to the Index Rate. Unless a LIBOR Rate Disruption Eventshall have occurred, each Revolving Credit Advance shall be a LIBOR Rate Advance.

“Ineligible Receivable” shall mean any Receivable (or portion thereof) which fails to satisfy all of the requirements of an “Eligible Receivable” set forth inthe definition thereof.

“Intercreditor Agreement” shall mean each of (i) that certain Second Amended and Restated Intercreditor Agreement dated as of February 12, 2007,originally dated December 19, 1997, entered into by and among Parent, Borrower and GE Capital, in various capacities, (ii) that certain Second Amended andRestated Intercreditor Agreement dated as of February 12, 2007, entered into by and among Parent, Borrower, GE Capital, in various capacities and IBM CreditCorporation, (iii) that certain Amended and Restated Intercreditor Agreement, dated as of February 12, 2007, among Parent, Borrower, GE CommercialDistribution Finance Corporation and GE Capital in various capacities, (iv) that certain Amended and Restated Intercreditor Agreement, dated as of February 12,2007, among Parent, Borrower, GE Capital in various capacities and Hewlett-Packard Company, and (v) each other intercreditor agreement entered into fromtime to time by Parent, Borrower, GE Capital in various capacities, and other creditors.

“Interest Payment Date” shall mean, with respect to any Advance, the first Business Day of each month; provided, that, in addition to the foregoing, each of(x) the date upon which all of the Commitments have been terminated and the aggregate Outstanding Principal Amount has been paid in full and (y) theCommitment Termination Date shall be deemed to be an “Interest Payment Date” with respect to any interest which is then accrued under the FundingAgreement.

“Interest Reserve” shall mean, as of any date of determination, an amount equal to the product of (i) 1.5, (ii) the Index Rate, (iii) the Outstanding PrincipalAmount and (iv) a fraction, the numerator of which is the higher of (a) 30 and (b) the Receivables Collection Turnover as of the end of the Settlement Periodimmediately preceding such date multiplied by 2, and the denominator of which is 360.

“Investment Company Act” shall mean the provisions of the Investment Company Act of 1940, 15 U.S.C. § § 80a et seq., and any regulations promulgatedthereunder.

“Investments” shall mean, with respect to any Borrower Account Collateral, the certificates, instruments, investment property or other investments inwhich amounts constituting such collateral are invested from time to time.

“IRC” shall mean the Internal Revenue Code of 1986 and any regulations promulgated thereunder.

“IRS” shall mean the Internal Revenue Service.

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“Lender” shall have the meaning assigned to it in the preamble of the Funding Agreement. For the avoidance of doubt, unless the context otherwiserequires, the term “Lenders” includes the Swing Line Lender.


“LIBOR Rate” shall mean, for each calendar month, a per annum rate of interest (I) with respect to the SMBC Discretionary Lender, equal to the CP Rateand (II) with respect to all other Lenders, that rate determined by the Administrative Agent equal to the sum of 0.55% plus:

(a) the offered rate for deposits in United States Dollars for the applicable calendar month which appears on Telerate Page 3750 as of 11:00 a.m.,London time, on the second full LIBOR Business Day next preceding the first day of each calendar month (unless the first day of such calendar month isnot a LIBOR Business Day, in which event the next succeeding LIBOR Business Day will be used); divided by

(b) a number equal to 1.0 minus the aggregate (but without duplication) of the rates (expressed as a decimal fraction) of reserve requirements ineffect on the day which is two (2) LIBOR Business Days prior to the beginning of such calendar month (including basic, supplemental, marginal andemergency reserves under any regulations of the Board of Governors of the Federal Reserve system or other governmental authority having jurisdictionwith respect thereto, as now and from time to time in effect) for Eurocurrency funding (currently referred to as “Eurocurrency liabilities” in Regulation Dof such Board) which are required to be maintained by a member bank of the Federal Reserve System;

provided, that if the introduction of or any change in any law or regulation (or any change in the interpretation thereof) shall make it unlawful, or any centralbank or other Governmental Authority shall assert that it is unlawful, for a Lender to agree to make or to make or to continue to fund or maintain any Advancesat the LIBOR Rate, then, unless a LIBOR Rate Disruption Event shall have occurred, the LIBOR Rate shall in all such cases be equal to the Index Rate. For theavoidance of doubt, except as provided in the immediately preceding proviso, the LIBOR Rate determined for any calendar month shall remain fixed for suchcalendar month.

If such interest rates shall cease to be available from Telerate News Service, the LIBOR Rate shall be determined from such financial reporting service orother information as shall be mutually acceptable to the Administrative Agent and the Borrower.

“LIBOR Rate Advance” shall mean an Advance or portion thereof bearing interest by reference to the LIBOR Rate. Unless a LIBOR Rate DisruptionEvent shall have occurred, each Revolving Credit Advance shall be a LIBOR Rate Advance.

“LIBOR Rate Disruption Event” means, for any Lender, notification by such Lender to the Borrower and the Administrative Agent of any of thefollowing: (i) determination by such Lender that it would be contrary to law or the directive of any central bank or other

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governmental authority to obtain United States dollars in the London interbank market to fund or maintain its Advances, (ii) the inability of such Lender, byreason of circumstances affecting the London interbank market generally, to obtain United States dollars in such market to fund its Advances or (iii) adetermination by such Lender that the maintenance of its Advances will not adequately and fairly reflect the cost to such Lender of funding such investment atsuch rate.

“Lien” shall mean any mortgage or deed of trust, pledge, hypothecation, assignment, deposit arrangement, lien, charge, claim, security interest, easementor encumbrance, or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including any lease or titleretention agreement, any financing lease having substantially the same economic effect as any of the foregoing, and the filing of, or agreement to give, anyfinancing statement perfecting a security interest under the UCC or comparable law of any jurisdiction).

“Litigation” shall mean, with respect to any Person, any action, claim, lawsuit, demand, investigation or proceeding pending or threatened against suchPerson before any court, board, commission, agency or instrumentality of any federal, state, local or foreign government or of any agency or subdivision thereofor before any arbitrator or panel of arbitrators.

“Lockbox” shall have the meaning assigned to it in Section 6.01(a)(ii) of the Funding Agreement.

“Loss Reserve Ratio” shall mean, as of any date of determination, the ratio (expressed as a percentage) calculated in accordance with the followingformula:

LRR = (LHF * ARR)] * 2,

where

LRR = the Loss Reserve Ratio;

LHF

=

a Loss Horizon Factor equal to (x) the aggregate principal amount of Transferred Receivables originated during the three (3) mostrecent Settlement Periods preceding such date divided by (z) the Net Receivables Balance as of the end of the Settlement Periodimmediately preceding such date;

ARR = the highest three-month rolling average of the Default Ratios occurring during the twelve most recent Settlement Periods.

“Material Adverse Effect” shall mean a material adverse effect on (a) the business, assets, liabilities, operations, or financial or other condition of (i) anyOriginator or the Originators considered as a whole, (ii) the Borrower, (iii) the Servicer or (iv) the Parent and its Subsidiaries considered as a whole, (b) theability of any Originator, the Borrower, the Parent or the Servicer to perform any of its obligations under the Related Documents in accordance with the termsthereof, (c) the validity or enforceability of any Related Document or the rights and remedies of the Borrower, the Lenders, SMBC-SI or the AdministrativeAgent under any Related Document, (d) the federal income tax attributes of the sale, contribution or pledge of the

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Transferred Receivables pursuant to any Related Document or (e) the Transferred Receivables (or collectibility thereof), the Contracts therefor, the BorrowerCollateral (in each case, taken as a whole) or the ownership interests or Liens of the Borrower or the Lenders or the Administrative Agent thereon or the priorityof such interests or Liens.

“Maturity Date” shall mean, with respect to any Receivable, the due date for payment therefor specified in the Contract therefor, or, if no date is sospecified, 30 days from the Billing Date.

“Mexico Receivables” shall mean Receivables arising out of any of the following: (a) the Accounts Receivable Assignment Agreement dated as ofFebruary 28, 2006, among Corporative Lanix, S.A. de C.V., Alef Soluciones Integrales, S.A. de C.V. and Accesorios y Suministros Informáticos, S.A. de C.V.(collectively, the “Lanix Consortium”), as assignors, Synnex Mexico and the Originator, as assignee, as the same may be amended, extended, replaced, restated,supplemented or otherwise modified from time to time, (b) the Accounts Receivables Assignment Agreement dated as of December 5, 2005, among the LanixConsortium, as assignors, Synnex Mexico and the Originator as assignee, as the same may be amended, extended, replaced, restated, supplemented or otherwisemodified from time to time, (c) the Multiannual Services Agreement (Contracto Multianual de Prestación de Servicios) number 62.PE.2005-2010, datedOctober 31, 2005, between the Lanix Consortium, as service providers, and the Ministry of Education (Secretaría de Educación Pública), a Ministry of theFederal Public Administration of Mxico (the “SEP”), as the same may be amended, extended, replaced, restated, supplemented or otherwise modified from timeto time, and (d) the Multiannual Services Agreement (Contracto Multianual de Prestación de Servicios) number 62.PE.2005-2010, dated October 31, 2005,between the Lanix Consortium, as service providers, and SEP, as the same may be amended, extended, replaced, restated, supplemented or otherwise modifiedfrom time to time.

“Minimum Reserve Ratio” shall mean, as of any date of determination, the ratio (expressed as a percentage) calculated in accordance with the followingformula:

MRR = ADR * DHF + CF

where

MRR = the Minimum Reserve Ratio;



CF

=

a Concentration Factor equal to the greatest of (a) the single largest Concentration Percentage applicable to any Class B Obligor, (b)the sum of the two largest Concentration Percentages applicable to any Class C Obligor and (c) the sum of the four largestConcentration Percentages applicable to any Class D Obligor (e.g. (x) if there is an Obligor that is a Class B Obligor that has aSpecial Concentration Percentage and all other Class B Obligors have a General Concentration Percentage, then clause (a) would bethe applicable Special Concentration Percentage for such Class B Obligor and (y) if there is one Obligor that is a Class C Obligorwith a Special Concentration Percentage and the General Concentration Percentage is applicable to all other Class C Obligors,clause (b) would be the sum of (i) the applicable Special Concentration Percentage for such Class C Obligor and (ii) the otherwiseapplicable General Concentration Percentage for a Class C Obligor).

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“Mitac Group” shall mean any or all of Mitac International Corp., a Taiwanese corporation, Union Petrochemical Corp., a Taiwanese corporation andSynnex Technology International, a Taiwanese corporation.

“Monthly Report” shall have the meaning assigned to it in paragraph (a) of Annex 5.02(a) to the Funding Agreement.

“Moody’s” shall mean Moody’s Investors Service, Inc. or any successor thereto.

“Multiemployer Plan” shall mean a “multiemployer plan” as defined in Section 4001(a)(3) of ERISA with respect to which any Originator or ERISAAffiliate is making, is obligated to make, or has made or been obligated to make, contributions on behalf of participants who are or were employed by any ofthem.

“Net Receivables Balance” means, as of any date of determination, the amount equal to:

(a) the Outstanding Balance of Eligible Receivables,

minus

(b) the Excess Concentration Amount.


“Net Worth” means as of any date of determination, the excess, if any, of (a) the aggregate Outstanding Balance of the Transferred Receivables at suchtime, over (b) the sum of (i) the Outstanding Principal Amount at such time, plus (ii) the aggregate outstanding principal balance of the Subordinated Loans(including any Subordinated Loan proposed to be made on the date of determination).

“Non-Consenting Lender” shall have the meaning assigned to it in Section 12.07(c) of the Funding Agreement.

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Annex X


“Non-Funding Lender” shall have the meaning assigned to it in Section 2.03(e) of the Funding Agreement.

“Notes” shall mean, collectively, the Revolving Notes and the Swing Line Note.

“Obligor” shall mean, with respect to any Receivable, the Person primarily obligated to make payments in respect thereof.

“Officer’s Certificate” shall mean, with respect to any Person, a certificate signed by an Authorized Officer of such Person.

“Originator” shall have the meaning assigned to it in the preamble to the Sale Agreement.

“Originator Support Agreement” shall mean an agreement substantially in the form of Exhibit 2.03 to the Sale Agreement made by Parent in favor of theBorrower.

“Other Lender” shall have the meaning assigned to it in Section 2.03(e) of the Funding Agreement.

“Outstanding Balance” shall mean, with respect to any Receivable, as of any date of determination, the amount (which amount shall not be less than zero)equal to (a) the Billed Amount thereof, minus (b) all Collections received from the Obligor thereunder, minus (c) all discounts to, or any other modifications by,the Originator, the Borrower or the Servicer that reduce such Billed Amount; provided, that if the Administrative Agent or the Servicer makes a good faithdetermination that all payments by such Obligor with respect to such Billed Amount have been made, the Outstanding Balance shall be zero.

“Outstanding Principal Amount” shall mean, as of any date of determination, the amount equal to (a) the aggregate Advances made by the Lenders underthe Funding Agreement on or before such date, minus (b) the aggregate amounts disbursed to any Lender in reduction of the principal of such Advances pursuantto the Funding Agreement on or before such date and not required to be returned as preference payments or otherwise; provided, that references to theOutstanding Principal Amount of any Lender shall mean an amount equal to (x) the aggregate Advances made by such Lender pursuant to the FundingAgreement on or before such date, minus (y) the aggregate amounts disbursed to such Lender in reduction of the principal of such Advances pursuant to theFunding Agreement on or before such date and not required to be returned as preference payments or otherwise.

“Parent” shall have the meaning assigned to it in the preamble to the Sale Agreement.

“Parent Group” shall mean the Parent and each of its Affiliates other than the Borrower.

“PBGC” shall mean the Pension Benefit Guaranty Corporation.

“Pension Plan” shall mean a Plan described in Section 3(2) of ERISA.

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“Permitted Encumbrances” shall mean the following encumbrances: (a) Liens for taxes or assessments or other governmental charges or levies not yet dueand payable; (b) pledges or deposits securing obligations under workmen’s compensation, unemployment insurance, social security or public liability laws orsimilar legislation; (c) pledges or deposits securing bids, tenders, government contracts, contracts (other than contracts for the payment of money) or leases towhich any Originator, the Borrower or the Servicer is a party as lessee made in the ordinary course of business; (d) deposits securing statutory obligations of anyOriginator, the Borrower or the Servicer; (e) inchoate and unperfected workers’, mechanics’, suppliers’ or similar Liens arising in the ordinary course ofbusiness; (f) carriers’, warehousemen’s or other similar possessory Liens arising in the ordinary course of business; (g) deposits securing, or in lieu of, surety,appeal or customs bonds in proceedings to which any Originator, the Borrower or the Servicer is a party; (h) any judgment Lien not constituting a TerminationEvent under Section 8.01(g) of the Funding Agreement; (i) Liens existing on the Closing Date and listed on Schedule 5.03(b) of the Funding Agreement; and(j) presently existing or hereinafter created Liens in favor of the Buyer, the Borrower, the Lenders or the Administrative Agent under the Funding Agreement andthe Related Documents.

“Permitted Investments” shall mean any of the following:

(a) obligations of, or guaranteed as to the full and timely payment of principal and interest by, the United States of America or obligations of any agency orinstrumentality thereof if such obligations are backed by the full faith and credit of the United States of America, in each case with maturities of not more than 90days from the date acquired;

(b) repurchase agreements on obligations of the type specified in clause (a) of this definition; provided, that the short-term debt obligations of the partyagreeing to repurchase are rated at least A-1 or the equivalent by S&P and P-1 or the equivalent by Moody’s;

(c) federal funds, certificates of deposit, time deposits and bankers’ acceptances of any depository institution or trust company incorporated under the lawsof the United States of America or any state, in each case with original maturities of not more than 90 days or, in the case of bankers’ acceptances, originalmaturities of not more than 365 days; provided, that the short-term obligations of such depository institution or trust company are rated at least A-1 or theequivalent by S&P and P-1 or the equivalent by Moody’s;

(d) commercial paper of any corporation incorporated under the laws of the United States of America or any state thereof with original maturities of notmore than 180 days that on the date of acquisition are rated at least A-1 or the equivalent by S&P and P-1 or the equivalent by Moody’s; and

(e) securities of money market funds rated at least A-1 or the equivalent by S&P and P-1 or the equivalent by Moody’s.

“Person” shall mean any individual, sole proprietorship, partnership, joint venture, unincorporated organization, trust, association, corporation (including abusiness trust), limited liability company, institution, public benefit corporation, joint stock company, Governmental Authority or any other entity of whatevernature.

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“Plan” shall mean, at any time during the preceding five years, an “employee benefit plan,” as defined in Section 3(3) of ERISA, that any Originator orERISA Affiliate maintains, contributes to or has an obligation to contribute to on behalf of participants who are or were employed by any Originator or ERISAAffiliate.

“Power of Attorney” shall have the meaning assigned to it in Section 9.05 of the Sale Agreement or Section 9.03 of the Funding Agreement, as applicable.

“Pro Rata Share” shall mean with respect to all matters relating to any Lender (other than the Swing Line Lender), the percentage obtained by dividing(i) the Commitment of that Lender by (ii) the Aggregate Commitment, as such percentage may be adjusted by assignments permitted pursuant to Section 12.02 ofthe Funding Agreement; provided, however, if all of the Commitments are terminated pursuant to the terms of the Funding Agreement, then “Pro Rata Share”shall mean with respect to all matters relating to any Lender, the percentage obtained by dividing (x) the sum of (A) such Lender’s Revolving Credit Advances,plus (B) such Lender’s share of the obligations to purchase participations in Swing Line Loans and refinance Swing Line Loans pursuant to Section 2.01(b)(iii)and (iv) of the Funding Agreement, by (y) the aggregate Outstanding Principal Amount.

“Projections” shall mean the Parent’s forecasted consolidated: (a) balance sheets; (b) profit and loss statements; and (c) cash flow statements consistentwith the historical financial statements of the Parent, together with appropriate supporting details and a statement of underlying assumptions.

“Proposed Change” shall have the meaning assigned to it in Section 12.07(c) of the Funding Agreement.

“Qualified Plan” shall mean a Pension Plan that is intended to be tax-qualified under Section 401(a) of the IRC.

“Rating Agency” shall mean Moody’s or S&P.

“Ratings” means for the SMBC Discretionary Lender or any SPV or any other Lender which requires such a “Rating” in connection with the FundingAgreement, the ratings by the Rating Agencies of such Person of the indebtedness for borrowed money of such Person.

“Ratios” shall mean, collectively, the Default Ratio, the Default Trigger Ratio, the Delinquency Ratio, the Dilution Ratio, the Dilution Reserve Ratio, theDilution Trigger Ratio and the Receivables Collection Turnover.

“Receivable” shall mean, with respect to any Obligor:

(a) indebtedness of such Obligor (whether constituting an account, chattel paper, document, instrument or general intangible (under which the Obligor’sprincipal obligation is a monetary obligation) and whether or not earned by performance) arising from the provision of merchandise, goods or services by anOriginator, or other Person approved by the Administrative Agent and the Lenders in their sole discretion, to such Obligor (or in the case of a FinancingReceivable, to a third party), including the right to payment of any interest or finance charges and other obligations of such Obligor with respect thereto;

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Annex X


(b) all Liens and property subject thereto from time to time securing or purporting to secure any such indebtedness of such Obligor;

(c) all guaranties, indemnities and warranties, insurance policies, financing statements, supporting obligations and other agreements or arrangements ofwhatever character from time to time supporting or securing payment of any such indebtedness;

(d) all right, title and interest of any Originator, the Parent or the Borrower in and to any goods (including returned, repossessed or foreclosed goods) thesale of which gave rise to a Receivable;

(e) all Collections with respect to any of the foregoing;

(f) all Records with respect to any of the foregoing; and

(g) all proceeds with respect to any of the foregoing.

“Receivables Assignment” shall have the meaning assigned to it in Section 2.01(a) of the Sale Agreement.

“Receivables Collection Turnover” shall mean, as of any date of determination, the amount (expressed in days) equal to:

(a) a fraction, (i) the numerator of which is equal to the aggregate Outstanding Balance of Transferred Receivables on the first day of the Settlement Periodimmediately preceding such date and (ii) the denominator of which is equal to aggregate Collections received during such Settlement Period with respect to allTransferred Receivables,

multiplied by

(b) the number of days per period contained in such Settlement Period.

“Receivables Collection Turnover Trigger” shall mean, as of any date of determination, the amount (expressed in days) equal to:

(a) a fraction, (i) the numerator of which is equal to the aggregate Outstanding Balance of Transferred Receivables on the first day of the three(3) Settlement Periods immediately preceding such date and (ii) the denominator of which is equal to aggregate Collections received during such three(3) Settlement Periods with respect to all Transferred Receivables,

multiplied by

(b) the average number of days per period contained in such three (3) Settlement Periods.

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“Records” shall mean all Contracts and other documents, books, records and other information (including customer lists, credit files, computer programs,tapes, disks, data processing software and related property and rights) prepared and maintained by any Originator, the Servicer, any Sub-Servicer or the Borrowerwith respect to the Receivables and the Obligors thereunder and the Borrower Collateral.

“Refunded Swing Line Loan” shall have the meaning assigned to it in Section 2.01(b)(iii) of the Funding Agreement.

“Regulatory Change” shall mean any change after the Closing Date in any federal, state or foreign law, regulation (including Regulation D of the FederalReserve Board), pronouncement by the Financial Accounting Standards Board or the adoption or making after such date of any interpretation, directive orrequest under any federal, state or foreign law or regulation (whether or not having the force of law) by any Governmental Authority, the Financial AccountingStandards Board, or any central bank or comparable agency, charged with the interpretation or administration thereof that, in each case, is applicable to anyAffected Party.

“Rejected Amount” shall have the meaning assigned to it in Section 4.04 of the Sale Agreement.

“Related Documents” shall mean each Collection Account Agreement, the Concentration Account Agreement, the Borrower Account Agreement, the SaleAgreement, the Funding Agreement, the Revolving Notes, the Swing Line Note, each Receivables Assignment, the Subordinated Notes, each Originator SupportAgreement, each Incremental Commitment Agreement, and all other agreements, instruments, documents and certificates identified in the Schedule ofDocuments and including all other pledges, powers of attorney, consents, assignments, contracts, notices, and all other written matter whether heretofore, now orhereafter executed by or on behalf of any Person, or any employee of any Person, and delivered in connection with the Sale Agreement, the Funding Agreementor the transactions contemplated thereby. Any reference in the Sale Agreement, the Funding Agreement or any other Related Document to a Related Documentshall include all Appendices thereto, and all amendments, restatements, supplements or other modifications thereto, and shall refer to such Related Document asthe same may be in effect at any and all times such reference becomes operative.

“Repayment Notice” shall have the meaning assigned to it in Section 2.03(h) of the Funding Agreement.

“Reportable Event” shall mean any of the events set forth in Section 4043(c) of ERISA.

“Required Capital Amount” means, at any time of determination, an amount equal to (a) the Loss Reserve Ratio times 1.25 times the Net ReceivablesBalance plus (b) the Outstanding Balance of all Transferred Receivables (other than Charge-Offs) on which any amount is unpaid more than 90 days past itsMaturity Date plus (c) the sum of the Excess Concentration Amounts for the three Obligors with the largest aggregate Outstanding Balance of EligibleReceivables.

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Annex X


“Requisite Lenders” shall mean (a) two or more Lenders having in the aggregate more than fifty-one percent (51%) of the Aggregate Commitment, or(b) if the Commitments have been terminated, two or more Lenders having in the aggregate more than fifty-one percent (51%) aggregate Outstanding PrincipalAmount; provided that if at any time there is only one Lender party to the Funding Agreement, “Requisite Lenders” shall mean such Lender.

“Retiree Welfare Plan” means, at any time, a Welfare Plan that provides for continuing coverage or benefits for any participant or any beneficiary of aparticipant after such participant’s termination of employment, other than continuation coverage provided pursuant to Section 4980B of the IRC and at the soleexpense of the participant or the beneficiary of the participant.

“Revolving Credit Advance” shall have the meaning assigned to it in Section 2.01 of the Funding Agreement. Unless a LIBOR Rate Disruption Event shallhave occurred, each Revolving Credit Advance shall be a LIBOR Rate Advance.

“Revolving Note” shall have the meaning assigned to it in Section 2.01(b) of the Funding Agreement.

“Revolving Period” shall mean the period from and including the Closing Date through and including the day immediately preceding the CommitmentTermination Date.

“S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc., or any successor thereto.

“Sale” shall mean with respect to a sale of receivables under the Sale Agreement, a sale of Receivables by an Originator to the Borrower in accordancewith the terms of the Sale Agreement.

“Sale Agreement” shall mean that certain Second Amended and Restated Receivables Sale and Servicing Agreement dated as of the Closing Date, by andamong each Originator, Servicer and the Borrower, as the Buyer thereunder.

“Sale Price” shall mean, with respect to any Sale of any Sold Receivable, a price calculated by the Borrower and approved from time to time by theAdministrative Agent equal to:

(a) the Outstanding Balance of such Sold Receivable, minus

(b) a discount reflecting the expected costs to be incurred by the Borrower in financing the purchase of the Sold Receivables until the Outstanding Balanceof such Sold Receivables is paid in full, minus

(c) a discount reflecting the portion of the Sold Receivables that is reasonably expected by such Originator on the Transfer Date to become DefaultedReceivables by reason of clause (b) of the definition thereof, minus

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Annex X


(d) a discount reflecting the portion of the Sold Receivables that is reasonably expected by such Originator on the Transfer Date to be reduced on accountof Dilution Factors, minus

(e) amounts expected to be paid to the Servicer with respect to the servicing, administration and collection of the Sold Receivables;

provided, that such calculations shall be determined based on the historical experience of (y) such Originator, with respect to the calculations required in each ofclauses (c) and (d) above, and (z) the Borrower, with respect to the calculations required in clauses (b) and (f) above.

“Schedule of Documents” shall mean the schedule, including all appendices, exhibits or schedules thereto, listing certain documents and information to bedelivered in connection with the Sale Agreement, the Funding Agreement and the other Related Documents and the transactions contemplated thereunder,substantially in the form attached as Annex Y to the Funding Agreement and the Sale Agreement.

“Securities Act” shall mean the provisions of the Securities Act of 1933, 15 U.S.C. Sections 77a et seq., and any regulations promulgated thereunder.

“Securities Exchange Act” shall mean the provisions of the Securities Exchange Act of 1934, 15 U.S.C. Sections 78a et seq., and any regulationspromulgated thereunder.

“Servicer” shall have the meaning assigned to it in the Preamble to the Sale Agreement.

“Servicer Termination Notice” shall mean any notice by the Administrative Agent to the Servicer that (a) an Event of Servicer Termination has occurredand (b) the Servicer’s appointment under the Funding Agreement has been terminated.

“Servicing Fee” shall mean, for any day within a Settlement Period, the amount equal to (a) (i) the Servicing Fee Rate divided by (ii) 360, multiplied by(b) the Outstanding Balance of Transferred Receivables on such day.

“Servicing Fee Rate” shall mean 1.00%.

“Servicing Fee Reserve” shall mean, as of any date of determination, an amount equal to the product of (i) the Servicing Fee Rate, (ii) the OutstandingBalance of Transferred Receivables and (iii) a fraction, the numerator of which is the higher of (a) 30 and (b) the Receivables Collection Turnover as of the endof the Settlement Period immediately preceding such date multiplied by 2, and the denominator of which is 360.

“Servicing Officer” shall mean any officer of the Servicer involved in, or responsible for, the administration and servicing of the Transferred Receivablesand whose name appears on any Officer’s Certificate listing servicing officers furnished to the Administrative Agent by the Servicer, as such certificate may beamended from time to time.

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Annex X


“Servicing Records” shall mean all Records prepared and maintained by the Servicer with respect to the Transferred Receivables and the Obligorsthereunder.

“Settlement Date” shall mean (i) the first Business Day of each calendar month, provided that if such day is not a Business Day, shall mean the nextBusiness Day, and (ii) from and after the occurrence of a Termination Event, any other Business Day designated as such by the Administrative Agent in its solediscretion.

“Settlement Period” shall mean (a) solely for purposes of determining the Ratios, (i) with respect to all Settlement Periods other than the final SettlementPeriod, each calendar month, whether occurring before or after the Closing Date, and (ii) with respect to the final Settlement Period, the period ending on theTermination Date and beginning with the first day of the calendar month in which the Termination Date occurs, and (b) for all other purposes, (i) with respect tothe initial Settlement Period, the period from and including the Closing Date through and including the last day of the calendar month in which the Closing Dateoccurs, (ii) with respect to the final Settlement Period, the period ending on the Termination Date and beginning with the first day of the calendar month in whichthe Termination Date occurs, and (iii) with respect to all other Settlement Periods, each calendar month.

“SMBC Committed Lender” shall mean Sumitomo Mitsui Banking Corporation.

“SMBC Discretionary Lender” shall mean Manhattan Asset Funding Company LLC.

“SMBC Lender Group” shall mean the SMBC Committed Lender and the SMBC Discretionary Lender.

“SMBC-SI” shall mean SMBC Securities, Inc., as representative on behalf of the SMBC Lender Group.

“Sold Receivable” shall have the meaning assigned to it in Section 2.01(b) of the Sale Agreement.

“Solvent” shall mean, with respect to any Person on a particular date, that on such date (a) the fair value of the property of such Person is greater than thetotal amount of liabilities, including contingent liabilities, of such Person; (b) the present fair salable value of the assets of such Person is not less than the amountthat will be required to pay the probable liability of such Person on its Debts as they become absolute and matured; (c) such Person does not intend to, and doesnot believe that it will, incur Debts or liabilities beyond such Person’s ability to pay as such Debts and liabilities mature; and (d) such Person is not engaged in abusiness or transaction, and is not about to engage in a business or transaction, for which such Person’s property would constitute an unreasonably small capital.The amount of contingent liabilities (such as Litigation, guaranties and pension plan liabilities) at any time shall be computed as the amount that, in light of allthe facts and circumstances existing at the time, represents the amount that can reasonably be expected to become an actual or matured liability.

“Special Concentration Percentage” shall mean, with respect to any Obligor, that percentage, if any, set forth in Annex Z to the Funding Agreement withrespect to such Obligor,

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or, with respect to any such Obligor or any other Obligor, such other percentage as the Administrative Agent may at any time and from time to time designate ina written notification to the Borrower and the Servicer, which designation (a) shall be in the Administrative Agent and Lenders’ sole discretion if increasing thethen applicable percentage and (b) shall be in the Administrative Agent’s reasonable credit judgment if decreasing the then applicable percentage.

“SPV” shall mean any special purpose funding vehicle which acquires any interest in a Lender’s Advances under the Funding Agreement.

“Stock” shall mean all shares, options, warrants, member interests, general or limited partnership interests or other equivalents (regardless of howdesignated) of or in a corporation, limited liability company, partnership or equivalent entity whether voting or nonvoting, including common stock, preferredstock or any other “equity security” (as such term is defined in Rule 3a11-1 of the General Rules and Regulations promulgated by the Securities and ExchangeCommission under the Securities Exchange Act).

“Stockholder” shall mean, with respect to any Person, each holder of Stock of such Person.

“Subordinated Loan” shall have the meaning given such term in Section 2.01(c) of the Sale Agreement.

“Subordinated Note” shall have the meaning given such term in Section 2.01(c) of the Sale Agreement.

“Sub-Servicer” shall mean any Person with whom the Servicer enters into a Sub-Servicing Agreement.

“Sub-Servicing Agreement” shall mean any written contract entered into between the Servicer and any Sub-Servicer pursuant to and in accordance withSection 7.01 of the Sale Agreement relating to the servicing, administration or collection of the Transferred Receivables.

“Subsidiary” shall mean, with respect to any Person, any corporation or other entity (a) of which securities or other ownership interests having ordinaryvoting power to elect a majority of the board of directors or other Persons performing similar functions are at the time directly or indirectly owned by suchPerson or (b) that is directly or indirectly controlled by such Person within the meaning of control under Section 15 of the Securities Act.

“Successor Servicer” shall have the meaning assigned to it in Section 9.02 of the Sale Agreement.

“Successor Servicing Fees and Expenses” shall mean the fees and expenses payable to the Successor Servicer as agreed to by the Borrower, the Lendersand the Administrative Agent.

“Swing Line Advance” shall have the meaning assigned to it in Section 2.01(b)(i) of the Funding Agreement.

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“Swing Line Commitment” shall mean, as to the Swing Line Lender, the commitment of the Swing Line Lender to make Swing Line Advances pursuantto the terms of the Funding Agreement. As of the Closing Date, the Swing Line Commitment is $65,000,000.

“Swing Line Lender” shall have the meaning set forth in the Preamble of the Funding Agreement.


“Swing Line Note” shall have the meaning assigned to it in Section 2.01(b)(ii) of the Funding Agreement.

“Synnex Mexico” shall mean Synnex de Mexico S.A. de C.V., a Subsidiary of the Originator.

“Termination Date” shall mean the date on which (a) the Outstanding Principal Amount has been permanently reduced to zero, (b) all other BorrowerObligations under the Funding Agreement and the other Related Documents have been indefeasibly repaid in full and completely discharged and (c) theAggregate Commitment has been irrevocably terminated in accordance with the provisions of Section 2.02(b) of the Funding Agreement.

“Termination Event” shall have the meaning assigned to it in Section 8.01 of the Funding Agreement.

“Title IV Plan” shall mean a Pension Plan (other than a Multiemployer Plan) that is covered by Title IV of ERISA and that any Originator or ERISAAffiliate maintains, contributes to or has an obligation to contribute to on behalf of participants who are or were employed by any of them.

“Transaction Parties” means the Originators, the Servicer and, if the Parent is not the Servicer, the Parent.

“Transfer” shall mean any Sale or contribution (or purported Sale or contribution) of Transferred Receivables by any Originator to the Borrower pursuantto the terms of the Sale Agreement.

“Transfer Date” shall have the meaning assigned to it in Section 2.01(a) of the Sale Agreement.

“Transferred Receivable” shall mean any Sold Receivable or Contributed Receivable; provided, that any Receivable repurchased by an Originator thereofpursuant to Section 4.04 of the Sale Agreement shall not be deemed to be a Transferred Receivable from and after the date of such repurchase unless suchReceivable has subsequently been repurchased by or contributed to the Borrower.

“UCC” shall mean, with respect to any jurisdiction, the Uniform Commercial Code as the same may, from time to time, be enacted and in effect in suchjurisdiction.

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“Unapproved Receivable” shall mean any receivable (a)(i) with respect to which the Originator’s customer relationship with the Obligor thereof arises as aresult of the acquisition by such Originator of another Person, or (ii) that was originated in accordance with standards established by another Person acquired byan Originator, in each case, solely with respect to any such acquisitions that have not been approved in writing by the Administrative Agent and the Lenders andthen only for the period prior to any such approval, or (b) that constitutes a Mexico Receivable.

“Underfunded Plan” shall mean any Plan that has an Underfunding.

“Underfunding” shall mean, with respect to any Title IV Plan, the excess, if any, of (a) the present value of all benefits under the Title IV Plan (based onthe assumptions used to fund the Title IV Plan pursuant to Section 412 of the IRC) as of the most recent valuation date over (b) the fair market value of the assetsof such Title IV Plan as of such valuation date.

“Unfunded Pension Liability” shall mean, at any time, the aggregate amount, if any, of the sum of (a) the amount by which the present value of all accruedbenefits under each Title IV Plan exceeds the fair market value of all assets of such Title IV Plan allocable to such benefits in accordance with Title IV ofERISA, all determined as of the most recent valuation date for each such Title IV Plan using the actuarial assumptions for funding purposes in effect under suchTitle IV Plan, and (b) for a period of five years following a transaction that might reasonably be expected to be covered by Section 4069 of ERISA, the liabilities(whether or not accrued) that could be avoided by any Originator or any ERISA Affiliate as a result of such transaction.

“Unrelated Amounts” shall have the meaning assigned to it in Section 7.03 of the Sale Agreement.

“Unused Commitment Fee” shall mean a fee equal to the product of (i) the amount by which the Aggregate Commitment exceeds the OutstandingPrincipal Amount (in each case, as of any date of determination) and (ii) a per annum margin equal to 0.20%.

“Weekly Report” shall have the meaning assigned to it in paragraph (a) of Annex 5.02(a) to the Funding Agreement.

“Welfare Plan” means a Plan described in Section 3(i) of ERISA.

SECTION 2. Other Terms and Rules of Construction.

(a) Accounting Terms. Unless otherwise specifically provided therein, any accounting term used in any Related Document shall have the meaningcustomarily given such term in accordance with GAAP, and all financial computations thereunder shall be computed in accordance with GAAP consistentlyapplied. That certain items or computations are explicitly modified by the phrase “in accordance with GAAP” shall in no way be construed to limit the foregoing.

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(b) Other Terms. All other undefined terms contained in any of the Related Documents shall, unless the context indicates otherwise, have the meaningsprovided for by the UCC as in effect in the State of New York to the extent the same are used or defined therein.

(c) Rules of Construction. Unless otherwise specified, references in any Related Document or any of the Appendices thereto to a Section, subsection orclause refer to such Section, subsection or clause as contained in such Related Document. The words “herein,” “hereof” and “hereunder” and other words ofsimilar import used in any Related Document refer to such Related Document as a whole, including all annexes, exhibits and schedules, as the same may fromtime to time be amended, restated, modified or supplemented, and not to any particular section, subsection or clause contained in such Related Document or anysuch annex, exhibit or schedule. Any reference to any amount on any date of determination means such amount as of the close of business on such date ofdetermination. Any reference to or definition of any document, instrument or agreement shall, unless expressly noted otherwise, include the same as amended,restated, supplemented or otherwise modified from time to time. Wherever from the context it appears appropriate, each term stated in either the singular orplural shall include the singular and the plural, and pronouns stated in the masculine, feminine or neuter gender shall include the masculine, feminine and neutergenders. The words “including,” “includes” and “include” shall be deemed to be followed by the words “without limitation”; the word “or” is not exclusive;references to Persons include their respective successors and assigns (to the extent and only to the extent permitted by the Related Documents) or, in the case ofGovernmental Authorities, Persons succeeding to the relevant functions of such Persons; and all references to statutes and related regulations shall include anyamendments of the same and any successor statutes and regulations.

(d) Rules of Construction for Determination of Ratios. The Ratios as of the last day of the Settlement Period immediately preceding the Closing Date shallbe established by the Administrative Agent on or prior to the Closing Date and the underlying calculations for periods immediately preceding the Closing Date tobe used in future calculations of the Ratios shall be established by the Administrative Agent on or prior to the Closing Date in accordance with the form ofMonthly Report. For purposes of calculating the Ratios, (i) averages shall be computed by rounding to the second decimal place and (ii) the Settlement Period inwhich the date of determination thereof occurs shall not be included in the computation thereof and the first Settlement Period immediately preceding such dateof determination shall be deemed to be the Settlement Period immediately preceding the Settlement Period in which such date of determination occurs.

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Exhibit 10.17

EXECUTION VERSION

SECOND AMENDED AND RESTATEDRECEIVABLES FUNDING AND ADMINISTRATION AGREEMENT


by and among

SIT FUNDING CORPORATION,

as Borrower,

THE FINANCIAL INSTITUTIONS SIGNATORY HERETO FROM TIME TO TIME,

as Lenders,

and

GENERAL ELECTRIC CAPITAL CORPORATION,

as a Lender, as Swing Line Lender and as Administrative Agent

Receivables Funding and Administration Agreement


TABLE OF CONTENTS

PageARTICLE I. DEFINITIONS AND INTERPRETATION 2

Section 1.01. Definitions 2Section 1.02. Rules of Construction 2Section 1.03. Amendment and Restatement 2

ARTICLE II. AMOUNTS AND TERMS OF ADVANCES 2

Section 2.01. Advances. 2Section 2.02. Optional Changes in Aggregate Commitment. 5Section 2.03. Procedures for Making Advances. 7Section 2.04. Pledge and Release of Transferred Receivables. 10Section 2.05. Commitment Termination Date 11Section 2.06. Interest; Charges. 11Section 2.07. Fees. 12Section 2.08. Application of Collections; Time and Method of Payments. 12Section 2.09. Capital Requirements; Additional Costs. 15

ARTICLE III. CONDITIONS PRECEDENT 17

Section 3.01. Conditions to Effectiveness of Agreement 17Section 3.02. Conditions Precedent to All Advances 19

ARTICLE IV. REPRESENTATIONS AND WARRANTIES 20

Section 4.01. Representations and Warranties of the Borrower 20

ARTICLE V. GENERAL COVENANTS OF THE BORROWER 30

Section 5.01. Affirmative Covenants of the Borrower 30Section 5.02. Reporting Requirements of the Borrower 32Section 5.03. Negative Covenants of the Borrower 32

ARTICLE VI. ACCOUNTS 35

Section 6.01. Establishment of Accounts. 35

ARTICLE VII. GRANT OF SECURITY INTERESTS 38

Section 7.01. Borrower’s Grant of Security Interest 38Section 7.02. Borrower’s Agreements 40Section 7.03. Delivery of Collateral 40


i


Section 7.04. Borrower Remains Liable 40Section 7.05. Covenants of the Borrower Regarding the Borrower Collateral. 41

ARTICLE VIII. TERMINATION EVENTS 44

Section 8.01. Termination Events 44

ARTICLE IX. REMEDIES 47

Section 9.01. Actions Upon Termination Event 47Section 9.02. Exercise of Remedies 49Section 9.03. Power of Attorney 49Section 9.04. Continuing Security Interest 50

ARTICLE X. INDEMNIFICATION 50

Section 10.01. Indemnities by the Borrower. 50

ARTICLE XI. ADMINISTRATIVE AGENT 52

Section 11.01. Authorization and Action. 52Section 11.02. Reliance 52Section 11.03. GE Capital and Affiliates 53Section 11.04. Lender Credit Decision 53Section 11.05. Indemnification 53Section 11.06. Successor Administrative Agent 53Section 11.07. Setoff and Sharing of Payments 54

ARTICLE XII. MISCELLANEOUS 55

Section 12.01. Notices 55Section 12.02. Binding Effect; Assignability. 55Section 12.03. Termination; Survival of Borrower Obligations Upon Commitment Termination Date. 58Section 12.04. Costs, Expenses and Taxes 58Section 12.05. Confidentiality. 60Section 12.06. Complete Agreement; Modification of Agreement 61Section 12.07. Amendments and Waivers. 61Section 12.08. No Waiver; Remedies 63Section 12.09. GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL. 63Section 12.10. Counterparts 65Section 12.11. Severability 65Section 12.12. Section Titles 65Section 12.13. Further Assurances. 65Section 12.14. No Proceedings 66Section 12.15. Limitation on Payments 66Section 12.16. Limited Recourse 66


ii


EXHIBITS Exhibit 2.01(a)(ii) Form of Revolving NoteExhibit 2.01(b)(ii) Form of Swing Line NoteExhibit 2.02(a) Form of Commitment Reduction NoticeExhibit 2.02(b) Form of Commitment Termination NoticeExhibit 2.03(a) Form of Borrowing RequestExhibit 2.03(h) Form of Repayment NoticeExhibit 5.02(b) Form of Borrowing Base CertificateExhibit 9.03 Form of Power of AttorneyExhibit 12.02(b) Form of Assignment AgreementExhibit A Credit and Collection Policy

Schedule 4.01(b) Jurisdiction of Organization/Organizational Number; Executive Offices; Collateral Locations; Corporate or Other NamesSchedule 4.01(i) Tax Matters/BorrowerSchedule 4.01(q) Deposit and Disbursement Accounts/BorrowerSchedule 5.01(b) Trade Names/BorrowerSchedule 5.03(b) Existing LiensSchedule 12.01 Notice Information

Annex 5.02(a) Reporting Requirements of the Borrower (including Forms of Monthly Report, Weekly Report and Daily Report)Annex W Administrative Agent’s Account/Lenders’ AccountsAnnex X Definitions and InterpretationsAnnex Y Schedule of DocumentsAnnex Z Special Concentration Percentages


iii


THIS SECOND AMENDED AND RESTATED RECEIVABLES FUNDING AND ADMINISTRATION AGREEMENT (as amended, restated,supplemented or otherwise modified and in effect from time to time, the “Agreement”) (a) is entered into as of February 12, 2007 by and among SIT FUNDINGCORPORATION, a Delaware corporation (the “Borrower”), the financial institutions signatory hereto from time to time as lenders (the “Lenders”), andGENERAL ELECTRIC CAPITAL CORPORATION, a Delaware corporation, as a Lender, as swing line lender (in such capacity, the “Swing Line Lender”) andas administrative agent for the Lenders hereunder (in such capacity, the “Administrative Agent”), and (b) amends and restates that certain Amended and RestatedReceivables Purchase and Servicing Agreement, dated August 30, 2002, among SIT Funding Corporation as seller, Synnex Corporation as servicer and asoriginator, General Electric Capital Corporation as administrative agent and a committed purchaser, Manhattan Asset Funding Company LLC as a conduitpurchaser, Sumitomo Mitsui Banking Corporation as a committed purchaser and as a purchaser agent, as amended by that certain Amendment No. 1, datedJune 30, 2003, that certain Amendment No. 2, dated December 30, 2003, that certain Amendment No. 3, dated December 13, 2004, that certain AmendmentNo. 4, dated September 16, 2005, and that certain Amendment No. 5, dated May 17, 2006 (as otherwise heretofore amended, restated, supplemented andmodified, the “Existing Receivables Purchase Agreement”).

RECITALS

A. The Borrower is a special purpose corporation, the sole shareholder of which is Parent.

B. The Borrower has been formed for the purpose of purchasing, or otherwise acquiring by capital contribution, Receivables of the Originators partyto the Sale Agreement.

C. Prior to the date hereof, the Borrower has funded its purchases of the Receivables, in part, by selling undivided ownership interests in suchReceivables pursuant to the Existing Receivables Purchase Agreement.

D. From and after the date hereof, the Borrower intends to fund its purchases of the Receivables, in part, by borrowing Advances and pledging all ofits right, title and interest in and to the Receivables as security therefor, and, subject to the terms and conditions hereof, the Lenders intend to make suchAdvances from time to time, as described herein.

E. The Administrative Agent has been requested and is willing to act as administrative agent on behalf of each of the Lenders in connection with themaking and financing of such Advances.

AGREEMENT

NOW, THEREFORE, in consideration of the premises and the mutual covenants hereinafter contained, and for other good and valuableconsideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:



ARTICLE I.

DEFINITIONS AND INTERPRETATION

Section 1.01. Definitions. Capitalized terms used herein and not otherwise defined shall have the meanings ascribed to them in Annex X.

Section 1.02. Rules of Construction. For purposes of this Agreement, the rules of construction set forth in Annex X shall govern. All Appendiceshereto, or expressly identified to this Agreement, are incorporated herein by reference and, taken together with this Agreement, shall constitute but a singleagreement.

Section 1.03. Amendment and Restatement. Upon the satisfaction or waiver of the conditions precedent set forth herein, (a) the terms and provisionsof the Existing Receivables Purchase Agreement shall be amended, superseded and restated in their entirety by the terms and provisions of this Agreement and,unless expressly stated to the contrary, each reference to the Existing Receivables Purchase Agreement in any of the Related Documents or any other document,instrument or agreement delivered in connection therewith shall mean and be a reference to this Agreement, (b) this Agreement is not intended to and shall notconstitute a novation of the Existing Receivables Purchase Agreement or the obligations and liabilities existing thereunder, (c) the commitment of each“Committed Purchaser” (as defined in the Existing Receivables Purchase Agreement) that is a party to the Existing Receivables Purchase Agreement shall, on theEffective Date, automatically be deemed restated and the only Commitments shall be those hereunder, (d) with respect to any date or time period occurring andending prior to the Effective Date, the rights and obligations of the parties to the Existing Receivables Purchase Agreement shall be governed by the ExistingReceivables Purchase Agreement and the other Related Documents (as defined therein), and (e) with respect to any date or time period occurring and ending onor after the Effective Date, the rights and obligations of the parties hereto shall be governed by this Agreement and the other Related Documents (as definedherein).

ARTICLE II.

AMOUNTS AND TERMS OF ADVANCES

Section 2.01. Advances.

(a) Revolving Credit Advances. (i) From and after the Effective Date and until the Commitment Termination Date and subject to the terms andconditions hereof, each Lender (other than the Swing Line Lender and SMBC Discretionary Lender) severally agrees to make its Pro Rata Share of advances(each such advance hereunder, a “Revolving Credit Advance”) to the Borrower from time to time, subject to Section 2.01(c). The Outstanding Principal Amountof all Revolving Credit Advances shall not at any time exceed the Aggregate Commitment and the Outstanding Principal Amount of Revolving Credit Advancesmade by each Lender shall not exceed such Lender’s several Commitment. Except to the extent provided in Section 2.06(c), no Lender shall make any RevolvingCredit Advances if, after giving effect thereto, a Funding Excess would exist. The Borrower may from time to time borrow, repay and reborrow Revolving CreditAdvances hereunder on the terms and conditions set forth herein.


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(ii) The Borrower shall execute and deliver to each Lender (other than the Swing Line Lender) that makes a request therefor, a note toevidence the Revolving Credit Advances which may be made hereunder from time to time by such Lender. Each such note shall be (x) in the principalamount of the Commitment of the applicable Lender, (y) dated as of the date of issuance thereof, and (z) substantially in the form of Exhibit 2.01(a)(ii)(each, a “Revolving Note”). Each Revolving Note shall represent the obligation of the Borrower to pay the amount of each Lender’s Commitment or, ifless, the Lender’s Pro Rata Share of the aggregate Outstanding Principal Amount of all outstanding Revolving Credit Advances made to the Borrower,together with interest thereon as prescribed in Section 2.06. The Outstanding Principal Amount of Revolving Credit Advances and all other accrued andunpaid Borrower Obligations shall be immediately due and payable in full in immediately available funds on the Commitment Termination Date.

(b) Swing Line Advances. (i) From and after the Effective Date and until the Commitment Termination Date and subject to the terms and conditionshereof, the Swing Line Lender agrees to make advances (each such advance hereunder, a “Swing Line Advance”) to the Borrower from time to time. Theaggregate amount of the Swing Line Loan shall not at any time exceed the Swing Line Commitment. Under no circumstances shall the Swing Line Lender makea Swing Line Advance if, after giving effect thereto, the aggregate amount of the Swing Line Loan would exceed the Swing Line Commitment. The Swing LineLender shall not make any Swing Line Advance, if after giving effect thereto, a Funding Excess would exist. The Borrower may from time to time borrow, repayand reborrow Swing Line Advances hereunder on the terms and conditions set forth herein. Unless the Swing Line Lender has received at least one BusinessDay’s prior written notice from the Lenders instructing it not to make a Swing Line Advance, the Swing Line Lender shall, notwithstanding the failure of anycondition precedent set forth in Section 3.01 or 3.02, be entitled to fund such Swing Line Advance, and to have the Lenders make Revolving Credit Advances inaccordance with Section 2.01(b)(iii) or purchase participating interests in accordance with Section 2.01(b)(iv). The Borrower shall repay the aggregate outstandingprincipal amount of the Swing Line Loan in full in immediately available funds on the Commitment Termination Date.

(ii) The Borrower shall execute and deliver to the Swing Line Lender a note to evidence the Swing Line Loan. Such note shall be in theprincipal amount of the Swing Line Commitment, dated the Closing Date and substantially in the form of Exhibit 2.01(b)(ii) (the “Swing Line Note”). TheSwing Line Note shall represent the obligation of the Borrower to pay the Swing Line Loan, together with interest thereon as prescribed in Section 2.06.The Swing Line Loan and all other accrued and unpaid Borrower Obligations shall be immediately due and payable in full in immediately available fundson the Commitment Termination Date.

(iii) The Swing Line Lender, at any time and from time to time no less frequently than once per month, shall on behalf of the Borrower (andthe Borrower


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hereby irrevocably authorizes the Swing Line Lender to so act on its behalf) request each Lender (excluding the Swing Line Lender) to make a RevolvingCredit Advance to the Borrower in an amount equal to such Lender’s Pro Rata Share of the principal amount of the Swing Line Loan (the “RefundedSwing Line Loan”) outstanding on the date such notice is given. Unless the Commitment Termination Date has occurred (in which event the procedures ofsubsection (iv) below shall apply) and regardless of whether the conditions precedent set forth in Sections 3.01 and 3.02 to the making of a Revolving CreditAdvance are then satisfied, each Lender (subject to Section 2.01(c)) shall disburse directly to the Administrative Agent, its Pro Rata Share of a RevolvingCredit Advance on behalf of the Swing Line Lender, prior to 3:00 p.m. (New York time), in immediately available funds on the Business Day nextsucceeding the date on which such notice is given; provided that (i) no Lender shall be required to make such a Revolving Credit Advance if the SwingLine Advance to be financed was made in violation of the fourth sentence of Section 2.01(b)(i) and the Funding Excess resulting therefrom has not yet beencured, (ii) no Lender shall be required to make such a Revolving Credit Advance if, after giving effect to such Revolving Credit Advance, the OutstandingPrincipal Amount of the Revolving Credit Advances made by such Lender would exceed such Lender’s several Commitment and (iii) no Lender shall berequired to make such a Revolving Credit Advance after the Final Advance Date. The proceeds of such Revolving Credit Advances shall be immediatelypaid to the Swing Line Lender and applied to repay the Refunded Swing Line Loan.

(iv) If, prior to refunding a Swing Line Loan with a Revolving Credit Advance pursuant to Section 2.01(b)(iii), the Commitment TerminationDate or one of the events described in Sections 8.01(d) or (e) has occurred, then, subject to the provisions of Section 2.01(b)(v) below, each Lender shall, onthe date such Revolving Credit Advance was to have been made for the benefit of the Borrower, purchase from the Swing Line Lender an undividedparticipation interest in the Swing Line Loan in an amount equal to its Pro Rata Share of such Swing Line Loan. Upon request by the Swing Line Lender,each Lender shall promptly transfer to the Swing Line Lender, in immediately available funds, the amount of its participation interest.

(v) Each Lender’s obligation to make Revolving Credit Advances in accordance with Section 2.01(b)(iii) and to purchase participationinterests in accordance with Section 2.01(b)(iv) shall, except to the extent described in the proviso set forth in the second to last sentence ofSection 2.01(b)(iii) and as set forth in Section 2.01(c), be absolute and unconditional and shall not be affected by any circumstance, including (A) anysetoff, counterclaim, recoupment, defense or other right that such Lender may have against the Swing Line Lender, the Borrower or any other Person forany reason whatsoever; (B) the occurrence or continuance of any Termination Event or Incipient Termination Event; (C) any inability of the Borrower tosatisfy the conditions precedent to borrowing set forth in this Agreement at any time; or (D) any other circumstance, happening or event whatsoever,whether or not similar to any of the foregoing. If any Lender does not make available to the Administrative Agent or the Swing Line Lender, as applicable,the amount required pursuant to Sections 2.01(b)(iii) or (b)(iv), as the case


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may be, the Swing Line Lender shall be entitled to recover such amount on demand from such Lender, together with interest thereon for each day from thedate of non-payment until such amount is paid in full at the Federal Funds Rate for the first two Business Days and at the Index Rate thereafter.

(c) SMBC Lender Group. Notwithstanding anything in this Agreement or any Related Document to the contrary, the SMBC Discretionary Lendershall have no commitment hereunder and may fund Advances, purchase participations in Swing Line Loans and refinance Swing Line Loans pursuant toSection 2.01(b)(iii) and (iv) of this Agreement hereunder solely in its own discretion. If the SMBC Discretionary Lender does not elect to fund an Advance, theSMBC Committed Lender shall fund in its stead subject to the conditions set forth herein. Each of the “SMBC Discretionary Lender” and “SMBC CommittedLender” shall constitute a Lender hereunder subject to the foregoing sentence. The Advances made by the SMBC Lender Group shall at no time exceed theCommitment indicated for the SMBC Committed Lender.

Section 2.02. Optional Changes in Aggregate Commitment.

(a) So long as no Incipient Termination Event or Termination Event shall have occurred and be continuing, the Borrower may, not more than twiceduring each calendar year, reduce the Aggregate Commitment permanently; provided, that (i) the Borrower shall give ten Business Days’ prior written notice ofany such reduction to the Administrative Agent substantially in the form of Exhibit 2.02(a) (each such notice, a “Commitment Reduction Notice”), (ii) any partialreduction of the Aggregate Commitment shall be in a minimum amount of $5,000,000 or an integral multiple thereof, and (iii) no such partial reduction shallreduce the Aggregate Commitment below the greater of (x) the Outstanding Principal Amount at such time and (y) $200,000,000. Any such reduction in theAggregate Commitment shall result in (i) a reduction in each Lender’s Commitment in an amount equal to such Lender’s Pro Rata Share of the amount by whichthe Aggregate Commitment is being reduced and (ii) a proportional reduction in the Swing Line Commitment; provided, however, that no such partial reductionshall reduce the Swing Line Commitment below the aggregate amount of the Swing Line Loan.

(b) The Borrower may, at any time, on at least 30 days’ prior written notice by the Borrower to the Administrative Agent, irrevocably terminate theAggregate Commitment; provided, that (i) such notice of termination shall be substantially in the form of Exhibit 2.02(b) (the “Commitment TerminationNotice”), (ii) the Borrower shall reduce the aggregate outstanding amount of Advances to zero, and make all payments required by Section 2.03(h) at the time andin the manner specified therein and (iii) the Borrower shall pay any amounts owed under Section 2.02(d) in connection therewith. Upon such termination, theBorrower’s right to request that (1) any Lender make Revolving Credit Advances or (2) the Swing Line Lender make Swing Line Advances hereunder, shall ineach case simultaneously terminate and the Commitment Termination Date shall automatically occur.

(c) Each written notice required to be delivered pursuant to Sections 2.02(a) and (b) shall be irrevocable and shall be effective (i) on the day of receiptif received by the Administrative Agent and the Lenders not later than 4:00 p.m. (New York time) on any Business


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Day and (ii) on the immediately succeeding Business Day if received by the Administrative Agent and the Lenders after such time on such Business Day or ifany such notice is received on a day other than a Business Day (regardless of the time of day such notice is received). Each such notice of termination orreduction shall specify, respectively, the amount of, or the amount of the proposed reduction in, the Aggregate Commitment.

(d) For the purposes of increasing the Aggregate Commitment, the Borrower may from time to time request a new or additional commitment fromone or more Lenders or other Persons consented to by the Administrative Agent pursuant to the Incremental Commitment Agreement (each such Person uponsatisfaction of the conditions set forth herein, an “Incremental Lender”) so long as (w) the other conditions precedent set forth in this clause (d) are satisfied,(x) after giving effect to such new or additional commitment, (A) the Aggregate Commitment shall not exceed $350,000,000, and (B) the aggregate amount of allnew or additional commitments hereunder shall not exceed $50,000,000, (y) on the date on which such commitment is requested to be effective (such date, an“Incremental Commitment Date”), Borrower will have delivered all audited financial statements required pursuant to Annex 5.02(a) with respect to the previousFiscal Year, and (z) on such Incremental Commitment Date no Incipient Termination Event, Termination Event, Incipient Servicer Termination Event or Eventof Servicer Termination shall have occurred and be continuing, or will occur after giving effect to such new or additional commitment. No new or additionalcommitment pursuant to this Section 2.02(d) shall be effective unless (i) the Borrower delivers to the Administrative Agent an Incremental CommitmentAgreement executed and delivered by the Borrower and the related Incremental Lender and such other documentation relating thereto as the AdministrativeAgent shall reasonably request, (ii) the Borrower shall have delivered to the Administrative Agent a certificate executed by an Authorized Officer of theBorrower to the effect that the condition set forth in clause (z) above is satisfied, (iii) the Borrower shall have delivered to the Administrative Agent suchadditional legal opinions, board resolutions, certificates and documentation as may be required by the relevant Incremental Commitment Agreement orreasonably requested by the Administrative Agent. Neither the Administrative Agent nor any Lender shall be obligated to deliver or fund any new or additionalcommitment pursuant hereto unless such Person becomes party to an Incremental Commitment Agreement as an Incremental Lender; provided, that subject to theconditions set forth herein, each of the SMBC Lender Group and GE Capital hereby commits to provide its respective Pro Rata Share of an IncrementalCommitment at any time prior to the first anniversary of the Closing Date. On each Incremental Commitment Date, and as a condition to becoming a Lenderhereunder, the applicable Incremental Lenders shall fund Advances to the Administrative Agent in an amount necessary for such Incremental Lender’s Pro RataShare to be equal to (I) the sum of (A) such Lender’s Revolving Credit Advances, plus (B) such Lender’s share of the obligations to purchase participations inSwing Line Loans and refinance Swing Line Loans pursuant to Section 2.01(b)(iii) and (iv) of this Agreement, divided by (II) the aggregate outstanding PrincipalAmount on such Incremental Commitment Date. Upon receipt of such amount, the Administrative Agent shall disburse such amounts to the other Lendersratably in accordance with their Pro Rata Shares. Notwithstanding anything herein to the contrary, in connection with any request by Borrower for an IncrementalCommitment hereunder by any Person, (1) Borrower shall only make such request of GE Capital and of no other Person prior to the first anniversary of theClosing Date hereof and (2) from and


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after the first anniversary of the Closing Date hereof, Borrower shall first request the existing Lenders to provide such Incremental Commitment hereunder basedon such Lenders Pro Rata Shares, and to the extent that any Lender hereunder agrees to provide any portion of such Incremental Commitment, such Lender shallalways be entitled to fund a portion of such Incremental Commitment that is necessary to preserve its Pro Rata Share hereunder as in effect immediately prior togiving effect to such Incremental Commitment.

Section 2.03. Procedures for Making Advances.

(a) Borrowing Requests. Except as provided in Sections 2.06(c) and 2.11(b)(ii), each Borrowing shall be made upon notice by the Borrower to theAdministrative Agent in the manner provided herein. Any such notice must be given in writing so that it is received no later than (1) 2:00 p.m. (New York time)on the Business Day of the proposed Advance Date set forth therein. Each Borrowing requested pursuant to a Borrowing Request shall be in the form of a SwingLine Advance until such Swing Line Advance is refunded or otherwise refinanced in accordance with Section 2.01(b)(iii) or (b)(iv). Each such notice (a“Borrowing Request”) shall (i) be substantially in the form of Exhibit 2.03(a), (ii) be irrevocable and (iii) specify the amount of the requested Borrowing (whichshall be in a minimum amount of $1,000,000 or an integral multiple of $500,000 in excess of $1,000,000) and the proposed Advance Date (which shall be aBusiness Day), and shall include such other information as may be required by the Lenders and the Administrative Agent. The Administrative Agent shall reviewthe Borrowing Base Certificate delivered in connection with each Borrowing Request to confirm whether a Funding Excess exists or would exist after givingeffect to the Borrowing requested in the related Borrowing Request. If, in connection with such review, the Administrative Agent determines that a FundingExcess exists or would exist after giving effect to the Borrowing requested in the related Borrowing Request, the Administrative Agent shall promptly notifyeach Lender thereof. Unless a LIBOR Rate Disruption Event shall have occurred, each Advance shall be a LIBOR Rate Advance.

(b) Advances; Payments.

(i)(A) The Administrative Agent shall, promptly after receipt of a Borrowing Request and in any event prior to 3:00 p.m. (New York time) onthe date such Borrowing Request is deemed received, by telecopy, telephone or other similar form of communication notify the Swing Line Lender of itsreceipt of a Borrowing Request relating to a request for Swing Line Advances, and B) the Swing Line Lender shall make the amount of such Swing LineAdvance available to the Administrative Agent in same day funds by wire transfer to the Administrative Agent’s account as set forth in Annex W not laterthan 3:00 p.m. (New York time) on the requested Advance Date. After receipt of such wire transfers (or, in the Administrative Agent’s sole discretion inaccordance with Section 2.03(c), before receipt of such wire transfers), subject to the terms hereof (including, without limitation, the satisfaction of theconditions precedent set forth in Section 3.02), the Administrative Agent shall make available to the Borrower by deposit into the Borrower Account on theAdvance Date therefor, the lesser of (x) the amount of the requested Borrowing and (y) the Funding Availability. All payments by each Lender under thisSection 2.03(b)(i) shall be made without setoff, counterclaim or deduction of any kind.


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(ii) On each Interest Payment Date, the Administrative Agent will advise each Lender (other than the Swing Line Lender) by telephone ortelecopy of the amount of such Lender’s Pro Rata Share of principal, interest and Fees (to the extent payable to all Lenders) paid for the benefit of Lenderswith respect to each applicable Revolving Credit Advance. Provided that such Lender has made all payments required to be made by it and purchased allparticipations required to be purchased by it under this Agreement and the other Related Documents as of such Interest Payment Date, the AdministrativeAgent will pay to each Lender such Lender’s Pro Rata Share of principal, interest and Fees (to the extent payable to all Lenders) with respect to eachapplicable Revolving Credit Advance, paid by the Borrower since the previous Interest Payment Date for the benefit of that Lender. Such payments shallbe made by wire transfer to such Lender’s account (as specified by such Lender in Annex W or the applicable Assignment Agreement) not later than 2:00p.m. (New York time) on each Interest Payment Date.

(iii) On each Interest Payment Date, the Administrative Agent will advise the Swing Line Lender of the amount of principal, interest and Feespaid for the benefit of the Swing Line Lender with respect to the Swing Line Loan. The Administrative Agent will pay to the Swing Line Lender theamount of principal, interest and Fees paid by the Borrower since the previous Interest Payment Date for the benefit of the Swing Line Lender. Suchpayments shall be made by wire transfer or by book balance to the Swing Line Lender’s account (as specified by the Swing Line Lender in Annex W orthe applicable Assignment Agreement) not later than 2:00 p.m. (New York time) on each Interest Payment Date.

(c) Availability of Lenders’ Advances. The Administrative Agent may assume that each Lender (other than the Swing Line Lender) will make its ProRata Share of each Borrowing of Revolving Credit Advances available to the Administrative Agent on each Advance Date. If the Administrative Agent has madeavailable to the Borrower such Lender’s Pro Rata Share of any such Borrowing but such Pro Rata Share is not, in fact, paid to the Administrative Agent by suchLender when due, the Administrative Agent will be entitled to recover such amount on demand from such Lender without set-off, counterclaim or deduction ofany kind. If any Lender fails to pay the amount of its Pro Rata Share forthwith upon the Administrative Agent’s demand, the Administrative Agent shallpromptly notify the Borrower and the Borrower shall immediately repay such amount to the Administrative Agent. Nothing in this Section 2.03(c) or elsewhere inthis Agreement or the other Related Documents shall be deemed to require the Administrative Agent to advance funds on behalf of any Lender or to relieve anyLender from its obligation to fulfill its Commitment hereunder or to prejudice any rights that the Borrower may have against any Lender as a result of any defaultby such Lender hereunder. To the extent that the Administrative Agent advances funds to the Borrower on behalf of any Lender and is not reimbursed therefor onthe same Business Day as such Revolving Credit Advance is made, the Administrative Agent shall be entitled to retain for its account all interest accrued on suchRevolving Credit Advance from the date of such Revolving Credit Advance to the date such Revolving Credit Advance is reimbursed by the applicable Lender.


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(d) Return of Payments. (i) If the Administrative Agent pays an amount to a Lender under this Agreement in the belief or expectation that a relatedpayment has been or will be received by the Administrative Agent from the Borrower and such related payment is not received by the Administrative Agent, thenthe Administrative Agent will be entitled to recover such amount from such Lender on demand without set-off, counterclaim or deduction of any kind.

(ii) If at any time any amount received by the Administrative Agent under this Agreement must be returned to the Borrower or paid to anyother Person pursuant to any insolvency law or otherwise, then, notwithstanding any other term or condition of this Agreement or any other RelatedDocument, the Administrative Agent will not be required to distribute any portion thereof to any Lender. In addition, each Lender will repay to theAdministrative Agent on demand any portion of such amount that the Administrative Agent has distributed to such Lender, together with interest at suchrate, if any, as the Administrative Agent is required to pay to the Borrower or such other Person, without set-off, counterclaim or deduction of any kind.

(e) Non-Funding Lenders. The failure of any Lender (each such Lender, a “Non-Funding Lender”) to make any Revolving Credit Advance to bemade by it on the date specified therefor shall not relieve any other Lender (each such other Lender, an “Other Lender”) of its obligations to make the RevolvingCredit Advance to be made by it, but neither any Other Lender nor the Administrative Agent shall be responsible for the failure of any Non-Funding Lender tomake a Revolving Credit Advance to be made by such Non-Funding Lender. Notwithstanding anything set forth herein to the contrary, a Non-Funding Lendershall not have any voting or consent rights under or with respect to any Related Document or constitute a “Lender” (or be included in the calculation of“Requisite Lenders” hereunder) for any voting or consent rights under or with respect to any Related Document unless and until such Non-Funding Lender shallhave cured in full its failures to make Revolving Credit Advances hereunder.

(f) Dissemination of Information. The Administrative Agent will use reasonable efforts to provide Lenders with (i) copies of all notices and otherdocuments provided to the Administrative Agent pursuant to Section 2.02(b) and Section 5.02, (ii) any notice of an Incipient Termination Event or TerminationEvent received by the Administrative Agent from, or delivered by the Administrative Agent to, the Borrower, (iii) notice of any Termination Event of which theAdministrative Agent has actually become aware, (iv) notice of any action taken by the Administrative Agent following any Termination Event, (v) imposition ofreserves pursuant to clause (b)(ii) of the definition of “Borrowing Base”, (vi) imposition of additional criteria or requirements pursuant to clause (bb) of thedefinition of “Eligible Receivables”, and (vii) copies of any amendments or waivers to this Agreement or the Related Documents; provided, however, that, in theabsence of gross negligence or willful misconduct, the Administrative Agent shall not be liable to any Lender for any failure to do so.


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(g) Actions in Concert. Anything in this Agreement to the contrary notwithstanding, each Lender hereby agrees with each other Lender that noLender shall take any action to protect or enforce its rights arising out of this Agreement, the Revolving Notes or the Swing Line Note (including exercising anyrights of set-off) without first obtaining the prior written consent of the Administrative Agent or the Requisite Lenders, it being the intent of the Lenders that anysuch action to protect or enforce rights under this Agreement, the Revolving Notes and the Swing Line Note shall, subject to any provision herein requiring thateach Lender consent to a particular action, be taken in concert and at the direction or with the consent of the Administrative Agent or the Requisite Lenders.

(h) Principal Repayments. The Borrower may at any time repay outstanding Advances hereunder; provided that (i) the Borrower shall give not lessthan one Business Day’s prior written notice of any such repayment to the Administrative Agent substantially in the form of Exhibit 2.03(h) (each such notice, a“Repayment Notice”), (ii) each such notice shall be irrevocable, (iii) each such notice shall specify the amount of the requested repayment and the proposed dateof such repayment (which shall be a Business Day), (iv) any such repayment shall be applied first to the Swing Line Loan until the Outstanding PrincipalAmount thereof has been reduced to zero, and second to the outstanding Revolving Credit Advances (provided, that if a Funding Excess exists and anyoutstanding Swing Line Advances were made in violation of the fourth sentence of Section 2.01(b)(i) or were funded after the Commitment Termination Date,then such Swing Line Advance will be repaid after the Revolving Credit Advances) and (v) any such repayment must be accompanied by payment of (A) allinterest accrued and unpaid on the portion of the outstanding principal balance of the Advances to be repaid through but excluding the date of such repaymentand (B) the amounts required to be paid in accordance with Section 2.10, if any. Any such notice of repayment must be received by the Administrative Agent nolater than 4:00 p.m. (New York time) on the Business Day immediately preceding the date of the proposed repayment; provided, further, that the foregoingrequirements shall not apply to repayment of the outstanding principal amount of Advances as a result of the application of Collections pursuant to Section 2.08.

Section 2.04. Pledge and Release of Transferred Receivables.

(a) Pledge. The Borrower shall indicate in its Records that the Transferred Receivables have been pledged hereunder and that the AdministrativeAgent has a lien on and security interest in all such Transferred Receivables for the benefit of the Lenders. The Borrower shall, and shall cause the Servicer to,hold all Contracts and other documents relating to such Transferred Receivables in trust for the benefit of the Administrative Agent on behalf of the Lenders inaccordance with their interests hereunder. The Borrower hereby acknowledges that its retention and possession of such Contracts and documents shall at all timesbe at the sole discretion of the Administrative Agent and in a custodial capacity for the Administrative Agent’s (on behalf of the Lenders) benefit only.

(b) Repurchases of Transferred Receivables. If an Originator is required to repurchase Transferred Receivables from the Borrower pursuant toSection 4.04 of the Sale Agreement, upon payment by such Originator to a Collection Account of the applicable repurchase price thereof (which repurchase priceshall not be less than an amount equal to the


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Billed Amount of such Transferred Receivable minus the sum of (A) Collections received in respect thereof and (B) the amount of any Dilution Factors takeninto account in the calculation of the Sale Price therefor), the Administrative Agent on behalf of the Lenders shall release their liens on and security interests inthe Transferred Receivables being so repurchased.

Section 2.05. Commitment Termination Date. Notwithstanding anything to the contrary set forth herein, no Lender shall have any obligation to makeany Advances from and after the Commitment Termination Date.

Section 2.06. Interest; Charges.

(a) The Borrower shall pay interest to the Administrative Agent, for the ratable benefit of the Lenders, with respect to the outstanding amount ofeach Revolving Credit Advance made or maintained by each Lender, in arrears on each applicable Interest Payment Date, (i) for each LIBOR Rate Advance, atthe applicable LIBOR Rate as in effect from time to time during the period applicable to such Interest Payment Date, and (ii) for each Index Rate Advanceoutstanding from time to time, at the applicable Index Rate as in effect from time to time during the period applicable to such Interest Payment Date. TheBorrower shall pay interest to the Administrative Agent, for the benefit of the Swing Line Lender, with respect to the outstanding amount of each Swing LineAdvance, in arrears on each applicable Interest Payment Date, at the LIBOR Rate as in effect from time to time during the period applicable to such InterestPayment Date. Interest for each Advance shall be calculated based upon actual days elapsed during the applicable calendar month or other period, for a 360 dayyear based upon actual days elapsed since the last Interest Payment Date. Unless a LIBOR Rate Disruption Event shall have occurred, each Advance shall be aLIBOR Rate Advance.

(b) So long as any Termination Event shall have occurred and be continuing, the interest rates applicable to each Advance and any other unpaidBorrower Obligation hereunder shall be increased by two percent (2.0%) per annum (such increased rate, in each case, the “Default Rate”), and all outstandingBorrower Obligations shall bear interest at the applicable Default Rate from the date of such Termination Event until such Termination Event is waived or cured.

(c) The Administrative Agent is authorized to, and at its sole election may, charge to the Borrower as Revolving Credit Advances and cause to bepaid all Fees, Rating Agency fees, expenses, charges, costs, interest and principal, other than principal of the Advances, owing by the Borrower under thisAgreement or any of the other Related Documents if and to the extent the Borrower fails to pay any such amounts as and when due, and any charges so madeshall constitute part of the Outstanding Principal Amount hereunder even if such charges would cause the aggregate balance of the Outstanding Principal Amountto exceed the Borrowing Base.


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Section 2.07. Fees.

(a) On the Effective Date, the Borrower shall pay to the Administrative Agent, for the account of itself and the Lenders, as applicable, the fees setforth in the Fee Letter that are payable on the Effective Date.

(b) From and after the Closing Date, as additional compensation for the Lenders, the Borrower agrees to pay to Administrative Agent, for the ratablebenefit of such Lenders, monthly in arrears, on each Settlement Date prior to the Commitment Termination Date and on the Commitment Termination Date, theUnused Commitment Fee.

(c) On each Settlement Date, the Borrower shall pay to the Servicer or to the Successor Servicer, as applicable, the Servicing Fee or the SuccessorServicing Fees and Expenses, respectively, in each case to the extent of available funds therefor pursuant to Section 2.08.

Section 2.08. Application of Collections; Time and Method of Payments.

(a) Each Advance shall mature, and be payable, on the earlier of (i) the date funds are allocated to such Advance pursuant to clause (iii) or (iv) ofsubsection (c) below (and in such case only to the extent of the funds so allocated), and (ii) the Commitment Termination Date (in which case such Advance shallbe payable in full).

(b) On each Business Day, the Administrative Agent shall allocate amounts on deposit in the Agent Account on such day and not previouslyallocated under this subsection (b) as follows, in the following order of priority:

(i) first, to be retained in the Agent Account and paid in accordance with clause (i) of the following subsection (c), an amount equal to theaggregate Fees accrued and unpaid through such date and all unreimbursed expenses of the Administrative Agent which are reimbursable pursuant to theterms hereof; provided, that, the sum of (i) the amounts retained pursuant to this clause first and (ii) the amounts paid pursuant to clause (i) of the followingsubsection (c) shall not exceed $100,000 in any calendar year;

(ii) second, to be retained in the Agent Account and paid in accordance with clause (ii) of the following subsection (c), an amount equal to theaggregate interest with respect to all outstanding Advances then accrued and unpaid;

(iii) third, if the Servicer has been replaced as a result of the occurrence of an Event of Servicer Termination and such Servicer is not anAffiliate of the Parent, to be retained in the Agent Account and paid in accordance with clause (iii) of the following subsection (c), an amount equal to theaggregate accrued and unpaid Servicing Fees through such date payable to such replacement Servicer;


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(iv) fourth, to be withdrawn from the Agent Account and paid, pro rata, to the Persons entitled thereto, an amount equal to all outstandingAdvances which are then due and payable;

(v) fifth, the extent not already retained in the Agent Account in accordance with clause first, to be retained in the Agent Account and paid inaccordance with clause (vi) of the following subsection (c), an amount equal to the aggregate Fees accrued and unpaid through such date and allunreimbursed expenses of the Administrative Agent which are reimbursable pursuant to the terms hereof;

(vi) sixth, if any of the conditions precedent set forth in Section 3.02 shall not be satisfied, all such remaining amounts not to exceed theOutstanding Principal Amount to be retained in the Agent Account until paid in accordance with the following subsection (c) or all such conditions aresatisfied;

(vii) seventh, to be retained in the Agent Account and paid in accordance with the applicable provisions of the following subsection (c), anamount equal to the aggregate amount of all other accrued and unpaid Borrower Obligations which are then required to be paid according to suchsubsection, including, without limitation, the expenses of the Lenders reimbursable under Section 12.04; and

(viii) eighth, unless a Termination Event or Incipient Termination Event has occurred and is continuing, any remaining amounts on deposit inthe Agent Account, to be paid to the Borrower Account (if a Termination Event or Incipient Termination Event has occurred and is continuing, suchamounts shall remain in the Agent Account).

(c) On each Settlement Date the Administrative Agent shall withdraw amounts on deposit in the Agent Account and pay such amounts as follows inthe following order of priority:

(i) first, to the extent then due and payable, pro rata, to the payment of all Fees accrued and unpaid through such date and all unreimbursedexpenses of the Administrative Agent which are reimbursable pursuant to the terms hereof; provided, that, the aggregate amount paid pursuant to this clausefirst in any calendar year shall not exceed $100,000;

(ii) second, to the payment of accrued and unpaid interest which is then due and payable in respect of the applicable Advances, pro rata;

(iii) third, if the Servicer has been replaced as a result of the occurrence of an Event of Servicer Termination and such Servicer is not anAffiliate of the Parent, to the payment of the aggregate accrued and unpaid Servicing Fees through such date payable to such replacement Servicer;

(iv) fourth, to the payment of any outstanding Advances then due and payable, pro rata; provided, that principal on Advances shall be appliedin the following


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order, to the payment of the Outstanding Principal Amount of Advances, first, in respect of Swing Line Advances, (provided, that if a Funding Excessexists and any outstanding Swing Line Advances were made in violation of the fourth sentence of Section 2.01(b)(i), then such Swing Line Advance willbe repaid after the Revolving Credit Advances), and second, in respect of Revolving Credit Advances, pro rata;

(v) fifth, if any of the conditions precedent set forth in Section 3.02 shall not be satisfied, to the payment of the Outstanding Principal Amountof all other Advances, first, in respect of Swing Line Advances (provided, that if a Funding Excess exists and any outstanding Swing Line Advances weremade in violation of the fourth sentence of Section 2.01(b)(i), then such Swing Line Advance will be repaid after the Revolving Credit Advances), andsecond, in respect of Revolving Credit Advances, together with amounts payable with respect thereto under Section 2.10, if any, pro rata;

(vi) sixth, to the extent then due and payable and not already paid in accordance with clause first above, pro rata, to the payment of all Feesaccrued and unpaid through such date and all unreimbursed expenses of the Administrative Agent which are reimbursable pursuant to the terms hereof;

(vii) seventh, to the extent then due and payable, pro rata, to the payment of all other obligations of the Borrower accrued and unpaidhereunder, including, without limitation, the expenses of the Lenders reimbursable under Section 12.04; and

(viii) eighth, to be paid to the Borrower Account.

(d) If and to the extent a Funding Excess exists on any Business Day, the Borrower shall deposit an amount equal to the amount of such FundingExcess in the Agent Account by no later than 11:00 a.m. (New York time) on the immediately succeeding Business Day, which amount shall be applied by theAdministrative Agent first, in immediate repayment of the outstanding amount of Swing Line Advances, and if no Swing Line Advances are outstanding, andsecond, in immediate repayment of the outstanding amount of Revolving Credit Advances (together with amounts payable with respect thereto underSection 2.10).

(e) To the extent that amounts on deposit in the Agent Account on any day are insufficient to pay amounts due on such day in respect of the maturedportion of any Advances or any interest, Fees or any other amounts due and payable by the Borrower hereunder, the Borrower shall pay, upon notice from theAdministrative Agent, the amount of such insufficiency to the Administrative Agent in Dollars, in immediately available funds (for the account of theAdministrative Agent, the applicable Lenders, Affected Parties or Indemnified Persons) not later than 11:00 a.m. (New York time) on such day. Any suchpayment made on such date but after such time shall be deemed to have been made on, and interest shall continue to accrue and be payable thereon at the LIBORRate (in the case of LIBOR Rate Advances) or the Index Rate (in all other cases), until the next succeeding Business Day.


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(f) The Borrower hereby irrevocably waives the right to direct the application of any and all payments received from or on behalf of the Borrower,and the Borrower hereby irrevocably agrees that any and all such payments shall be applied by the Administrative Agent in accordance with this Section 2.08.

(g) All payments of principal of the Advances and all payments of interest, Fees and other amounts payable by the Borrower hereunder shall bemade in Dollars, in immediately available funds. If any such payment becomes due on a day other than a Business Day, the maturity thereof will be extended tothe next succeeding Business Day and interest thereon at the LIBOR Rate (in the case of LIBOR Rate Advances) or Index Rate (in all other cases) shall bepayable during such extension. Payments received at or prior to 4:00 p.m. (New York time) on any Business Day shall be deemed to have been received on suchBusiness Day. Payments received after 4:00 p.m. (New York time) on any Business Day or on a day that is not a Business Day shall be deemed to have beenreceived on the following Business Day.

(h) Any and all payments by the Borrower hereunder shall be made in accordance with this Section 2.08 without setoff or counterclaim and free andclear of and without deduction for any and all present or future taxes, levies, imposts, deductions, Charges or withholdings, excluding taxes imposed on ormeasured by the net income, gross receipts or franchise taxes of any Affected Party by the jurisdictions under the laws of which such Affected Party is organizedor by any political subdivisions thereof (such non-excluded taxes, levies, imposts, deductions, Charges and withholdings being “Indemnified Taxes”). If theBorrower shall be required by law to deduct any Indemnified Taxes from or in respect of any sum payable hereunder, (i) the sum payable shall be increased asmuch as shall be necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 2.08) theAffected Party entitled to receive any such payment receives an amount equal to the sum it would have received had no such deductions been made, (ii) theBorrower shall make such deductions, and (iii) the Borrower shall pay the full amount deducted to the relevant taxing or other authority in accordance withapplicable law. Within 30 days after the date of any payment of Indemnified Taxes, the Borrower shall furnish to the Administrative Agent the original or acertified copy of a receipt evidencing payment thereof. The Borrower shall indemnify any Affected Party from and against, and, within ten days of demandtherefor, pay any Affected Party for, the full amount of Indemnified Taxes (together with any taxes imposed by any jurisdiction on amounts payable under thisSection 2.08) paid by such Affected Party and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto, whether or notsuch Indemnified Taxes were correctly or legally asserted.

(i) Upon receipt of a notice in accordance with Section 7.03 of the Sale Agreement, the Administrative Agent shall, if such amounts have not beenapplied to the Borrower Obligations, segregate the Unrelated Amounts and the same shall not be deemed to constitute Collections on Transferred Receivables.

Section 2.09. Capital Requirements; Additional Costs.

(a) If any Affected Party shall have determined that, after the date hereof, the adoption of or any change in any law, treaty, governmental (or quasigovernmental) rule,


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regulation, guideline or order regarding capital adequacy, reserve requirements or similar requirements or compliance by such Affected Party with any request ordirective regarding capital adequacy, reserve requirements or similar requirements (whether or not having the force of law) from any central bank or otherGovernmental Authority increases or would have the effect of increasing the amount of capital, reserves or other funds required to be maintained by suchAffected Party against commitments made by it under this Agreement or any other Related Document and thereby reducing the rate of return on such AffectedParty’s capital as a consequence of its commitments hereunder or thereunder, then the Borrower shall from time to time upon demand by the AdministrativeAgent pay to the Administrative Agent on behalf of such Affected Party additional amounts sufficient to compensate such Affected Party for such reductiontogether with interest thereon from the date of any such demand until payment in full at the applicable Index Rate. A certificate as to the amount of that reductionand showing the basis of the computation thereof submitted by the Affected Party to the Borrower shall be final, binding and conclusive on the parties hereto(absent manifest error) for all purposes.

(b) If, due to any Regulatory Change, there shall be any increase in the cost to any Affected Party of agreeing to make or making, funding ormaintaining any commitment hereunder or under any other Related Document, including with respect to any Advances, or other Outstanding Principal Amount,or any reduction in any amount receivable by such Affected Party hereunder or thereunder, including with respect to any Advances, or other OutstandingPrincipal Amount (any such increase in cost or reduction in amounts receivable are hereinafter referred to as “Additional Costs”), then the Borrower shall, fromtime to time upon demand by the Administrative Agent, pay to the Administrative Agent on behalf of such Affected Party additional amounts sufficient tocompensate such Affected Party for such Additional Costs together with interest thereon from the date demanded until payment in full thereof at the applicableIndex Rate. Each Affected Party agrees that, as promptly as practicable after it becomes aware of any circumstance referred to above that would result in anysuch Additional Costs, it shall, to the extent not inconsistent with its internal policies of general application, use reasonable commercial efforts to minimize costsand expenses incurred by it and payable to it by the Borrower pursuant to this Section 2.09(b).

(c) Determinations by any Affected Party for purposes of this Section 2.09 of the effect of any Regulatory Change on its costs of making, funding ormaintaining any commitments hereunder or under any other Related Documents or on amounts payable to it hereunder or thereunder or of the additional amountsrequired to compensate such Affected Party in respect of any Additional Costs shall be set forth in a written notice to the Borrower in reasonable detail and shallbe final, binding and conclusive on the Borrower (absent manifest error) for all purposes.

(d) Notwithstanding anything to the contrary contained herein, if the introduction of or any change in any law or regulation (or any change in theinterpretation thereof) shall make it unlawful, or any central bank or other Governmental Authority shall assert that it is unlawful, for any Lender to agree tomake or to make or to continue to fund or maintain any LIBOR Rate Advance, then, unless that Lender is able to make or to continue to fund or to maintain suchLIBOR Rate Advance at another branch or office of that Lender without, in that


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Lender’s opinion, adversely affecting it or its Advances or the income obtained therefrom, on notice thereof and demand therefor by such Lender to the Borrowerthrough the Administrative Agent, (i) the obligation of such Lender to agree to make or to make or to continue to fund or maintain LIBOR Rate Advances shallterminate and (ii) Borrower shall forthwith prepay in full all outstanding LIBOR Rate Advances owing to such Lender, together with interest accrued thereon,unless Borrower, within five (5) Business Days after the delivery of such notice and demand, converts all such LIBOR Rate Advances into Index Rate Advances.

Section 2.10. Breakage Costs. To induce the SMBC Lender Group to provide the LIBOR Rate on the terms provided herein, if (i) any LIBOR RateAdvances are, except by reason of the requirements in Section 2.03(c), repaid in whole or in part on any date other than an Interest Payment Date (whether thatrepayment is made pursuant to any other provision of this Agreement or any other Related Document or is the result of acceleration, by operation of law orotherwise); (ii) the Borrower shall default in payment when due of the principal amount of or interest on any LIBOR Rate Advance; (iii) the Borrower shalldefault in making any borrowing of LIBOR Rate Advances after the Borrower has given notice requesting the same in accordance herewith (including any failureto satisfy conditions precedent to the making of any LIBOR Rate Advances); or (iv) the Borrower shall fail to make any prepayment of a LIBOR Rate Advanceafter the Borrower has given a notice thereof in accordance herewith, then, in any such case, the Borrower shall indemnify and hold harmless each applicablemember of the SMBC Lender Group from and against all losses, costs and expenses resulting from or arising from any of the foregoing (any such loss, cost orexpense, “Breakage Costs”). Such indemnification shall include any loss (including loss of margin) or expense arising from the reemployment of funds obtainedby it or from fees payable to terminate deposits from which such funds were obtained (if any). For the purpose of calculating amounts payable to a member of theSMBC Lender Group under this subsection, each Lender shall be deemed to have actually funded its relevant LIBOR Rate Advance through the purchase of adeposit bearing interest at the LIBOR Rate in an amount equal to the amount of that LIBOR Rate Advance; provided, however, that each such Lender may fundeach of its LIBOR Rate Advances in any manner it sees fit, and the foregoing assumption shall be utilized only for the calculation of amounts payable under thissubsection. This covenant shall survive the termination of this Agreement and the payment of the Revolving Notes and all other amounts payable hereunder. Thedetermination by any Lender of the amount of any such loss or expense shall be set forth in a written notice to the Borrower in reasonable detail and shall befinal, binding and conclusive on the Borrower (absent manifest error) for all purposes.

ARTICLE III.

CONDITIONS PRECEDENT

Section 3.01. Conditions to Effectiveness of Agreement. This Agreement shall not be effective until the date on which each of the followingconditions have been satisfied, in the sole discretion of, or waived in writing by, the Lenders and the Administrative Agent (such date, the “Effective Date”):


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(a) Funding Agreement; Other Related Documents. This Agreement and (to the extent requested by the Lenders) the Notes shall have been dulyexecuted by, and delivered to, the parties hereto and the Lenders and the Administrative Agent shall have received such other documents, instruments,agreements and legal opinions as each Lender and the Administrative Agent shall request in connection with the transactions contemplated by this Agreement,including all those listed in the Schedule of Documents, each in form and substance satisfactory to each Lender and the Administrative Agent.

(b) Governmental Approvals. The Lenders and the Administrative Agent shall have received (i) satisfactory evidence that the Borrower, the Servicerand the Originators have obtained all required consents and approvals of all Persons, including all requisite Governmental Authorities, to the execution, deliveryand performance of this Agreement and the other Related Documents and the consummation of the transactions contemplated hereby or thereby or (ii) anOfficer’s Certificate from each of the Borrower and the Servicer in form and substance satisfactory to the Lenders and the Administrative Agent affirming that nosuch consents or approvals are required.

(c) Compliance with Laws. The Borrower and the Transaction Parties shall be in compliance with all applicable foreign, federal, state and local lawsand regulations, including, without limitation, those specifically referenced in Section 5.01(a), except to the extent noncompliance could not reasonably beexpected to have a Material Adverse Effect.

(d) Payment of Fees. The Borrower shall have paid all fees required to be paid by it on the Effective Date, including all fees required hereunder andunder the Fee Letter, and shall have reimbursed the Administrative Agent and SMBC Lender Group for (i) all Rating Agency fees and (ii) all other reasonablefees, costs and expenses of closing the transactions contemplated hereunder and under the other Related Documents, including the Administrative Agent’s andSMBC Lender Group’s legal and audit expenses, and other document preparation costs.

(e) Representations and Warranties. Each representation and warranty by the Borrower and each Transaction Party contained herein and in eachother Related Document shall be true and correct as of the Effective Date, except to the extent that such representation or warranty expressly relates solely to anearlier date.

(f) No Termination Event. A limited waiver shall have been executed and delivered by the parties hereto in form and substance acceptable to theAdministrative Agent with respect to certain Termination Events identified therein, and a limited waiver shall have been executed and delivered by the parties tothe Credit Agreement in form and substance acceptable to the Administrative Agent with respect to certain “Events of Default” identified therein. After givingeffect to such limited waivers, no Incipient Termination Event or Termination Event hereunder or any “Event of Default” or “Default” (each as defined in theCredit Agreement) shall have occurred and be continuing or would result after giving effect to any of the transactions contemplated on the Closing Date.


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(g) Audit. The Administrative Agent shall have completed a prefunding audit of the Receivables as of the Closing Date, the scope and results ofwhich are satisfactory to the Administrative Agent and each Lender in its sole discretion.

(h) Material Adverse Change. There will have been (i) no material adverse change individually or in the aggregate, (x) in the business, the industry inwhich the Parent or any Originator operates, the financial or other condition of the Parent, the Servicer, or any Originator, or (y) in the Transferred Receivablesor Related Property, taken as a whole, (ii) no litigation commenced which is reasonably likely to be adversely determined, and if so determined, would have aMaterial Adverse Effect on the Parent, the Servicer, the Originators, their business, or which would challenge the transactions contemplated under thisAgreement, the Sale Agreement and the other Related Documents, and (iii) since the Parent’s last audited financial statements and except as otherwise disclosedin the financial projections provided to the Administrative Agent on or prior to the Effective Date, no material increase in the liabilities, liquidated or contingent,of the Parent, the Servicer or the Originators, or material decrease in the assets of the Parent, the Servicer or the Originators.

(i) Waiver of Set-Off Rights. Each Originator shall have waived its rights of set-off with respect to the Transferred Receivables.

(j) Rating Agency Confirmations. The Administrative Agent shall have received such confirmations or assurances from the Rating Agencies deemednecessary or desirable by the Administrative Agent and the SMBC Lender Group.

Section 3.02. Conditions Precedent to All Advances. No Lender shall be obligated to make any Advances hereunder (including the initial Advancesbut excluding Advances made pursuant to Section 2.01(b)(iii), Section 2.01(b)(iv) or Section 2.06(c)) on any date if, as of the date thereof:

(a) any representation or warranty of the Borrower, the Servicer or any Originator contained herein or in any of the other Related Documents shallbe untrue or incorrect in any material respect as of such date, either before or after giving effect to the Advances to be made on such date and to the application ofthe proceeds therefrom, except to the extent that such representation or warranty expressly relates to an earlier date and except for changes therein expresslypermitted by this Agreement;

(b) any event shall have occurred, or would result from the making of such Advances or from the application of the proceeds therefrom, thatconstitutes an Incipient Termination Event, a Termination Event, an Incipient Servicer Termination Event or an Event of Servicer Termination;

(c) the Commitment Termination Date shall have occurred;

(d) either before or after giving effect to such Advance and to the application of the proceeds therefrom, a Funding Excess would exist;


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(e) any Originator, the Borrower or the Servicer shall fail to have taken such other action, including delivery of approvals, consents, opinions,documents and instruments to the Lenders and the Administrative Agent, as any Lender or the Administrative Agent and, if applicable, either Rating Agency,may reasonably request;

(f) on or prior to such date, the Borrower or the Servicer shall have failed to deliver any Monthly Report, Weekly Report, Daily Report orBorrowing Base Certificate required to be delivered in accordance with Section 5.02 hereof or the Sale Agreement and such failure shall be continuing; or

(g) the Administrative Agent shall have determined that any event or condition has occurred that has had, or could reasonably be expected to have orresult in, a Material Adverse Effect.

The delivery by the Borrower of a Borrowing Request and the acceptance by the Borrower of the funds from the related Borrowing on any Advance Date shall bedeemed to constitute, as of any such Advance Date, a representation and warranty by the Borrower that the conditions in this Section 3.02 have been satisfied.

ARTICLE IV.

REPRESENTATIONS AND WARRANTIES

Section 4.01. Representations and Warranties of the Borrower. To induce each Lender to make Advances from time to time and the AdministrativeAgent to take any action required to be performed by it hereunder, the Borrower makes the following representations and warranties to each Lender and theAdministrative Agent on the Effective Date and each Advance Date, each and all of which shall survive the execution and delivery of this Agreement.

(a) Existence; Compliance with Law. The Borrower (i) is a corporation duly formed, validly existing and in good standing under the laws of itsjurisdiction of incorporation, is a “registered organization” as defined in the UCC of such jurisdiction and is not organized under the laws of any otherjurisdiction; (ii) is duly qualified to conduct business and is in good standing in each other jurisdiction where its ownership or lease of property or the conduct ofits business requires such qualification; (iii) has the requisite power and authority and the legal right to own, pledge, mortgage or otherwise encumber and operateits properties, to lease the property it operates under lease, and to conduct its business, in each case, as now, heretofore and proposed to be conducted; (iv) has alllicenses, permits, consents or approvals from or by, and has made all filings with, and has given all notices to, all Governmental Authorities having jurisdiction,to the extent required for such ownership, operation and conduct; (v) is in compliance with its certificate of incorporation and bylaws; and (vi) subject to specificrepresentations set forth herein regarding ERISA, tax and other laws, is in compliance with all applicable provisions of law, except where the failure to comply,individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.


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(b) Executive Offices; Collateral Locations; Corporate or Other Names; FEIN. The state of organization and the organization identification numberof the Borrower and current location of the Borrower’s chief executive office, principal place of business, other offices, the premises within which any BorrowerCollateral is stored or located, and the locations of its records concerning the Borrower Collateral (including originals of the Borrower Assigned Agreements) areset forth in Schedule 4.01(b) and none of such locations has changed within the past 12 months (or such shorter time as the Borrower has been in existence).During the prior five years (or such shorter time as the Borrower has been in existence), except as set forth in Schedule 4.01(b), the Borrower has not been knownas or used any fictitious or trade name. In addition, Schedule 4.01(b) lists the federal employer identification number of the Borrower.

(c) Power, Authorization, Enforceable Obligations. The execution, delivery and performance by the Borrower of this Agreement and the otherRelated Documents to which it is a party, and the creation and perfection of all Liens and ownership interests provided for herein and therein: (i) are within theBorrower’s corporate power; (ii) have been duly authorized by all necessary or proper actions; (iii) do not contravene any provision of the Borrower’s certificateof incorporation or bylaws; (iv) do not violate any law or regulation, or any order or decree of any court or Governmental Authority; (v) do not conflict with orresult in the breach or termination of, constitute a default under or accelerate or permit the acceleration of any performance required by, any indenture, mortgage,deed of trust, lease, agreement or other instrument to which the Borrower or any Originator is a party or by which the Borrower or any Originator or any of theproperty of the Borrower or any Originator is bound; (vi) do not result in the creation or imposition of any Adverse Claim upon any of the property of theBorrower or any Originator; and (vii) do not require the consent or approval of any Governmental Authority or any other Person, except those which have beenduly obtained, made or complied with prior to the Effective Date as provided in Section 3.01(b). The exercise by each of the Borrower, the Lenders or theAdministrative Agent of any of its rights and remedies under any Related Document to which it is a party do not require the consent or approval of anyGovernmental Authority or any other Person, except those which will have been duly obtained, made or complied with prior to the Closing Date as provided inSection 3.01(b). On or prior to the Effective Date, each of the Related Documents to which the Borrower is a party shall have been duly executed and deliveredby the Borrower and each such Related Document shall then constitute a legal, valid and binding obligation of the Borrower enforceable against it in accordancewith its terms, except (i) as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium on other similar laws now orhereafter in effect affecting the enforcement of creditors rights in general and the rights of creditors of national banking associations and (ii) as suchenforceability may be limited by general principles of equity (whether considered in a suit at law or in equity).

(d) No Litigation. No Litigation is now pending or, to the knowledge of the Borrower, threatened against the Borrower that (i) challenges theBorrower’s right or power to enter into or perform any of its obligations under the Related Documents to which it is a party, or the validity or enforceability ofany Related Document or any action taken thereunder, (ii) seeks to prevent the transfer, sale, pledge or contribution of any Receivable or the consummation ofany of the transactions contemplated under this Agreement or the other Related Documents, or


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(iii) is reasonably likely to be adversely determined and, if adversely determined, could reasonably be expected to have a Material Adverse Effect. There is noLitigation pending or, to the knowledge of Borrower, threatened that seeks damages or injunctive relief against, or alleges criminal misconduct by, the Borrower.

(e) Solvency. After giving effect to the sale or contribution of Receivables and the Advances on such date and to the application of the proceedstherefrom, the Borrower is and will be Solvent.

(f) Material Adverse Effect. Since the date of the Borrower’s organization, (i) the Borrower has not incurred any obligations, contingent ornon-contingent liabilities, liabilities for Charges, long-term leases or unusual forward or long-term commitments, other than in connection with the transactioncontemplated by the Related Documents, (ii) no contract, lease or other agreement or instrument has been entered into by the Borrower or has become bindingupon the Borrower’s assets, other than in connection with the Related Documents, and no law or regulation applicable to the Borrower has been adopted that hashad or could reasonably be expected to have a Material Adverse Effect and (iii) the Borrower is not in default and no third party is in default under any materialcontract, lease or other agreement or instrument to which the Borrower is a party. Since the date of the Borrower’s organization, no event has occurred withrespect to the Borrower that alone or together with other events could reasonably be expected to have a Material Adverse Effect.

(g) Ownership of Property; Liens. None of the properties and assets (including the Transferred Receivables) of the Borrower are subject to anyAdverse Claims other than Permitted Encumbrances not attaching to Transferred Receivables, and there are no facts, circumstances or conditions known to theBorrower that may result in (i) with respect to the Transferred Receivables, any Adverse Claims (including Adverse Claims arising under environmental laws)and (ii) with respect to its other properties and assets, any Adverse Claims (including Adverse Claims arising under environmental laws) other than PermittedEncumbrances. The Borrower has received all assignments, bills of sale and other documents, and has duly effected all recordings, filings and other actionsnecessary to establish, protect and perfect the Borrower’s right, title and interest in and to the Transferred Receivables and its other properties and assets. Noeffective financing statement or other similar instrument are of record in any filing office listing the Borrower or any Originator as debtor and covering any of theTransferred Receivables or the other Borrower Collateral, and the Liens granted to the Lender pursuant to Section 7.01 are and will be at all times fully perfectedfirst priority Liens in and to the Borrower Collateral.

(h) Ventures, Subsidiaries and Affiliates; Outstanding Stock and Indebtedness. The Borrower has no Subsidiaries, and is not engaged in any jointventure or partnership with any other Person. The Borrower has no Investments in any Person other than Permitted Investments. The Parent is the onlyshareholder of the Borrower. There are no outstanding rights to purchase or options, warrants or similar rights or agreements pursuant to which the Borrowermay be required to issue, sell, repurchase or redeem some or all of its membership interests. Other than the Subordinated Loans, the Borrower has no outstandingDebt on the Effective Date.


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(i) Taxes. All tax returns, reports and statements, including information returns, required by any Governmental Authority to be filed by the Borrowerand all material tax returns, reports and statements, including information returns, required by any Governmental Authority to be filed by any Affiliate of theBorrower, have in each case been filed with the appropriate Governmental Authority and all Charges have been paid prior to the date on which any fine, penalty,interest or late charge may be added thereto for nonpayment thereof (or any such fine, penalty, interest, late charge or loss has been paid), excluding Charges orother amounts being contested in accordance with Section 5.01(e). Proper and accurate amounts have been withheld by the Borrower or such Affiliate from itsrespective employees for all periods in full and complete compliance with all applicable federal, state, local and foreign laws and such withholdings have beentimely paid to the respective Governmental Authorities. Schedule 4.01(i) sets forth as of the Effective Date (i) those taxable years for which the Borrower’s orsuch Affiliates’ tax returns are currently being audited by the IRS or any other applicable Governmental Authority and (ii) any assessments or threatenedassessments in connection with any such audit or otherwise currently outstanding. Except as described on Schedule 4.01(i), as of the Effective Date, neither theBorrower nor any such Affiliate has executed or filed with the IRS or any other Governmental Authority any agreement or other document extending, or havingthe effect of extending, the period for assessment or collection of any Charges. As of the Effective Date, neither the Borrower nor any of its Affiliates included inthe Parent Group has agreed or been requested to make any adjustment under IRC 481(a), by reason of a change in accounting method or otherwise, that couldreasonably be expected to have a Material Adverse Effect.

(j) Full Disclosure. All information contained in this Agreement, any Borrowing Base Certificate or any of the other Related Documents, or anyother written statement or information furnished by or on behalf of the Borrower to any Lender or the Administrative Agent relating to this Agreement, theTransferred Receivables or any of the other Related Documents, is true and accurate in every material respect, and none of this Agreement, any Borrowing BaseCertificate or any of the other Related Documents, or any other written statement or information furnished by or on behalf of the Borrower to any Lender or theAdministrative Agent relating to this Agreement or any of the other Related Documents contains any untrue statement of a material fact or omitted, omits or willomit to state a material fact necessary in order to make the statements contained herein or therein not misleading in light of the circumstances in which the samewere made. All information contained in this Agreement, any Borrowing Base Certificate or any of the other Related Documents, or any other written statementor information furnished to any Lender or the Administrative Agent has been prepared in good faith by the management of the Borrower with the exercise ofreasonable diligence.

(k) ERISA. The Borrower is in compliance with ERISA and has not incurred and does not expect to incur any liabilities (except for premiumpayments arising in the ordinary course of business) payable to the PBGC under Title IV of ERISA.

(l) Brokers. No broker or finder acting on behalf of the Borrower was employed or utilized in connection with this Agreement or the other RelatedDocuments or the transactions contemplated hereby or thereby and the Borrower has no obligation to any Person in respect of any finder’s or brokerage fees inconnection therewith.


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(m) Margin Regulations. The Borrower is not engaged in the business of extending credit for the purpose of “purchasing” or “carrying” any “marginsecurity,” as such terms are defined in Regulation U of the Federal Reserve Board as now and from time to time hereafter in effect (such securities being referredto herein as “Margin Stock”). The Borrower owns no Margin Stock, and no portion of the proceeds of the Advances made hereunder will be used, directly orindirectly, for the purpose of purchasing or carrying any Margin Stock, for the purpose of reducing or retiring any Debt that was originally incurred to purchaseor carry any Margin Stock or for any other purpose that might cause any portion of such proceeds to be considered a “purpose credit” within the meaning ofRegulations T, U or X of the Federal Reserve Board. The Borrower will not take or permit to be taken any action that might cause any Related Document toviolate any regulation of the Federal Reserve Board.

(n) Nonapplicability of Bulk Sales Laws. No transaction contemplated by this Agreement or any of the Related Documents requires compliance withany bulk sales act or similar law.

(o) Government Regulation. The Borrower is not an “investment company” or an “affiliated person” of, or “promoter” or “principal underwriter” for,an “investment company,” as such terms are defined in the Investment Company Act. The making of Advances by the Lenders hereunder, the application of theproceeds thereof and the consummation of the transactions contemplated by this Agreement and the other Related Documents will not violate any provision ofany such statute or any rule, regulation or order issued by the Securities and Exchange Commission.

(p) Nonconsolidation. The Borrower is operated in such a manner that the separate corporate existence of the Borrower, on the one hand, and anymember of the Parent Group, on the other hand, would not be disregarded in the event of the bankruptcy or insolvency of any member of the Parent Group and,without limiting the generality of the foregoing:

(i) the Borrower is a limited purpose corporation whose activities are restricted in its certificate of incorporation to those activities expresslypermitted hereunder and under the other Related Documents and the Borrower has not engaged, and does not presently engage, in any business or otheractivity other than those activities expressly permitted hereunder and under the other Related Documents, nor has the Borrower entered into any agreementother than this Agreement, the other Related Documents to which it is a party and, with the prior written consent of the Administrative Agent, any otheragreement necessary to carry out more effectively the provisions and purposes hereof or thereof;

(ii) the Borrower has duly appointed a board of directors and its business is managed solely by its own officers and directors, each of whomwhen acting for the Borrower shall be acting solely in his or her capacity as an officer or director of the Borrower and not as an officer, director, employeeor agent of any member of the Parent Group;


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(iii)(A) Borrower shall compensate all consultants and agents directly or indirectly through reimbursement of the Parent, from its own funds,for services provided to the Borrower by such consultants and agents and, to the extent any consultant or agent of the Borrower is also an employee,consultant or agent of such member of the Parent Group on a basis which reflects the respective services rendered to the Borrower and such member of theParent Group and in accordance with the terms of the Administrative Services Agreement and (B) Borrower shall not have any employees;

(iv) Borrower shall pay its own incidental administrative costs and expenses not covered under the terms of the Administrative ServicesAgreement from its own funds, and shall allocate all other shared overhead expenses (including, without limitation, telephone and other utility charges, theservices of shared consultants and agents, and reasonable legal and auditing expenses) which are not reflected in the Servicing Fee, and other items of costand expense shared between the Borrower and the Parent, pursuant to the terms of the Administrative Services Agreement, on the basis of actual use to theextent practicable and, to the extent such allocation is not practicable, on a basis reasonably related to actual use or the value of services rendered; exceptas otherwise expressly permitted hereunder, under the other Related Documents and under the Borrower’s organizational documents, no member of theParent Group (A) pays the Borrower’s expenses, (B) guarantees the Borrower’s obligations, or (C) advances funds to the Borrower for the payment ofexpenses or otherwise;

(v) other than the purchase and acceptance through capital contribution of Transferred Receivables pursuant to the Sale Agreement, theacceptance of Subordinated Loans pursuant to the Sale Agreement, the payment of distributions and the return of capital to the Parent, the payment ofServicing Fees to the Servicer under the Sale Agreement and the transactions contemplated under the Administrative Services Agreement, the Borrowerengages and has engaged in no intercorporate transactions with any member of the Parent Group;

(vi) the Borrower maintains records and books of account separate from that of each member of the Parent Group, holds regular meetings ofits board of directors and otherwise observes corporate formalities;

(vii) (A) the financial statements (other than consolidated financial statements) and books and records of the Borrower and each member ofthe Parent Group reflect the separate existence of the Borrower and (B) the consolidated financial statements of the Parent Group shall contain disclosureto the effect that the Borrower’s assets are not available to the creditors of any member of the Parent Group;

(viii) (A) the Borrower maintains its assets separately from the assets of each member of the Parent Group (including through the maintenanceof separate bank accounts and except for any Records to the extent necessary to assist the Servicer in connection with the servicing of the TransferredReceivables), (B) except as contemplated by the Administrative Services Agreement, the Borrower’s funds (including all money, checks and other cashproceeds) and assets, and records relating


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thereto, have not been and are not commingled with those of any member of the Parent Group and (C) the separate creditors of the Borrower will beentitled, on the winding-up of the Borrower, to be satisfied out of the Borrower’s assets prior to any value in the Borrower becoming available to theParent;

(ix) all business correspondence and other communications of the Borrower are conducted in the Borrower’s own name, on its own stationeryand through a separately-listed telephone number;

(x) the Borrower has and shall maintain separate office space from the offices of any member of the Parent Group and identify such office bya sign in its own name;

(xi) the Borrower shall respond to any inquiries with respect to ownership of a Transferred Receivable by stating that it is the owner of suchTransferred Receivable, and that such Transferred Receivable is pledged to the Administrative Agent for the benefit of the Lenders;

(xii) the Borrower does not act as agent for any member of the Parent Group, but instead presents itself to the public as a legal entity separatefrom each such member and independently engaged in the business of purchasing and financing Receivables;

(xiii) the Borrower maintains at least two independent directors each of whom (A) is not a Stockholder, director, officer, employee orassociate, or any relative of the foregoing, of any member of the Parent Group (other than the Borrower), all as provided in its certificate of incorporation,(B) has (1) prior experience as an independent director for an entity whose organizational documents required the unanimous consent of all independentdirectors thereof before such corporation could consent to the institution of bankruptcy or insolvency proceedings against it or could file a petition seekingrelief under any applicable federal or state law relating to bankruptcy and (2) at least three years of employment experience with one or more entities thatprovide, in the ordinary course of their respective businesses, advisory, management, independent director services or placement services to issuers ofsecuritization or structured finance instruments, agreements or securities, and (C) is otherwise acceptable to the Administrative Agent, and the retentionarrangement with such independent directors requires them to consider the interests of Borrower;

(xiv) the bylaws or certificate of incorporation of the Borrower require the affirmative vote of each independent director before a voluntarypetition under Section 301 of the Bankruptcy Code may be filed by the Borrower;

(xv) Borrower shall maintain (1) correct and complete books and records of account and (2) minutes of the meetings and other proceedings ofits shareholders and board of directors;


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(xvi) Borrower shall not hold out credit as being available to satisfy obligations of others;

(xvii) Borrower shall not acquire obligations or Stock of any member of the Parent Group;

(xviii) Borrower shall correct any known misunderstanding regarding its separate identity;

(xix) Borrower shall maintain adequate capital; and

(xx) Borrower shall comply with each of the assumptions set forth in that certain legal opinion delivered by Pillsbury Winthrop Shaw PittmanLLP with respect to true sale and non-substantive consolidation matters.

(q) Deposit and Disbursement Accounts. Schedule 4.01(q) lists all banks and other financial institutions at which the Borrower maintains deposit orother bank accounts as of the Closing Date, including any Account, and such schedule correctly identifies the name, address and telephone number of eachdepository, the name in which the account is held, a description of the purpose of the account, and the complete account number therefor. Each Accountconstitutes a deposit account within the meaning of the applicable UCC. The Borrower (or the Servicer on its behalf) has delivered to the Administrative Agent afully executed agreement pursuant to which the Borrower Account Bank (with respect to the Borrower Account), the Concentration Account Bank (in the case ofthe Concentration Account) and each Collection Account Bank (with respect to each Collection Account) has agreed to comply with all instructions originated bythe Administrative Agent directing the disposition of funds in the Accounts without further consent by the Borrower, the Servicer or any Originator. No Accountis in the name of any person other than the Borrower or the Administrative Agent, and the Borrower has not consented to any Bank following the instructions ofany Person other than the Administrative Agent. Accordingly, the Administrative Agent has a first priority perfected security interest in each Account, and allfunds on deposit therein.

(r) Transferred Receivables.

(i) Transfers. Each Transferred Receivable was purchased by or contributed to the Borrower on the relevant Transfer Date pursuant to the SaleAgreement.

(ii) Eligibility. Each Transferred Receivable designated as an Eligible Receivable in each Borrowing Base Certificate, Monthly Report, WeeklyReport or Daily Report, as the case may be, constitutes an Eligible Receivable as of the date specified in such Borrowing Base Certificate, MonthlyReport, Weekly Report or Daily Report, as applicable.

(iii) No Material Adverse Effect. The Borrower has no actual knowledge of any fact (including any defaults by the Obligor thereunder on anyother


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Receivable) that would cause it or should have caused it to expect that any payments on any Transferred Receivable designated as an Eligible Receivablein any Borrowing Base Certificate, Monthly Report, Weekly Report or Daily Report, as applicable, will not be paid in full when due or that has caused it toexpect any material adverse effect on any such Transferred Receivable.

(iv) Nonavoidability of Transfers. The Borrower shall (A) have received each Contributed Receivable as a contribution to the capital of theBorrower by the Parent as a stockholder of the Borrower and (B) (1) have purchased each Sold Receivable from the applicable Originator for cashconsideration or with the proceeds of a Subordinated Loan and (2) have accepted assignment of any Eligible Receivables transferred pursuant to clause(b) of Section 4.04 of the Sale Agreement, in each case in an amount that constitutes fair consideration and reasonably equivalent value therefor. No Salehas been made for or on account of an antecedent debt owed by any Originator to the Borrower and no such Sale is or may be avoidable or subject toavoidance under any bankruptcy laws, rules or regulations.

(s) Assignment of Interest in Related Documents. The Borrower’s interests in, to and under the Receivables Sale and Servicing Agreement and eachOriginator Support Agreement, if any, have been assigned by the Borrower to the Administrative Agent (for the benefit of itself and the Lenders) as security forthe Borrower Obligations.

(t) Notices to Obligors. Each Obligor of Transferred Receivables has been directed to remit all payments with respect to such Receivables for depositin a Lockbox or Collection Account.

(u) Representations and Warranties in Other Related Documents. Each of the representations and warranties of the Borrower contained in the RelatedDocuments (other than this Agreement) is true and correct in all respects and the Borrower hereby makes each such representation and warranty to, and for thebenefit of, the Lenders and the Administrative Agent as if the same were set forth in full herein.

(v) Supplementary Representations.

(i) Receivables; Lock-Box Accounts. (A) Each Transferred Receivable constitutes an “account” or a “general intangible” within the meaningof the applicable UCC, and (B) each Account constitutes a “deposit account” within the meaning of the applicable UCC.

(ii) Creation of Security Interest. The Borrower owns and has good and marketable title to the Transferred Receivables, Accounts andLockboxes, free and clear of any Adverse Claim. The Agreement creates a valid and continuing security interest (as defined in the applicable UCC) in theTransferred Receivables, Accounts and Lockboxes in favor of the Administrative Agent (on behalf of itself and the Lenders), which security interest isprior to all other Adverse Claims and is enforceable as such as against any creditors of and purchasers from the Borrower.


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(iii) Perfection. Within ten days of the Effective Date: (A) The Borrower has caused the filing of all appropriate financing statements in theproper filing office in the appropriate jurisdictions under applicable law and entered into Account Agreements in order to perfect the sale of theTransferred Receivables from the Originators to the Borrower pursuant to the Sale Agreement and the security interest granted by the Borrower to theAdministrative Agent (on behalf of itself and the Lenders) in the Transferred Receivables hereunder; (B) With respect to the Borrower Account, theBorrower has delivered to the Administrative Agent (on behalf of itself and the Lenders), a fully executed Borrower Account Agreement pursuant to whichthe applicable Borrower Account Bank has agreed, following the occurrence and continuation of a Termination Event, to comply with all instructionsgiven by the Administrative Agent with respect to all funds on deposit in the Borrower Account, without further consent by the Borrower, the Servicer orany Originator; and (C) With respect to each Account other than the Borrower Account, the Borrower has delivered to the Administrative Agent (on behalfof itself and the Lenders), a fully executed Account Agreement pursuant to which the applicable Bank has agreed to comply with all instructions given bythe Administrative Agent with respect to all funds on deposit in the Accounts and the related Lockboxes, without further consent by the Borrower, theServicer or any Originator.

(iv) Priority. (A) Other than the transfer of the Transferred Receivables by the Originators to the Borrower pursuant to the Sale Agreement andthe grant of security interest by the Borrower to the Administrative Agent (on behalf of itself and the Lenders) in the Transferred Receivables, theAccounts and the Lockboxes hereunder, neither the Borrower nor any Originator has pledged, assigned, sold, conveyed, or otherwise granted a securityinterest in any of the Transferred Receivables, the Accounts and the Lockboxes to any other Person. (B) Neither the Borrower nor any Originator hasauthorized, or is aware of, any filing of any financing statement against the Borrower or any Originator that include a description of collateral covering theTransferred Receivables or all other collateral pledged to the Administrative Agent (on behalf of the Lenders) pursuant to the Related Documents, otherthan any financing statement filed pursuant to the Sale Agreement and this Agreement or financing statements that have been validly terminated prior tothe date hereof. (C) The Borrower is not aware of any judgment, ERISA or tax lien filings against either the Borrower or any Originator. (D) None of theAccounts or Lockboxes is in the name of any Person other than the Borrower or the Administrative Agent. Neither the Borrower, the Servicer or anyOriginator has consented to any Bank complying with instructions of any person other than the Administrative Agent.

(v) Survival of Supplemental Representations. Notwithstanding any other provision of this Agreement or any other Related Document, therepresentations contained in this Section 4.01(v) and Section 5.01(g) shall be continuing, and remain in full force and effect until the Termination Date.


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ARTICLE V.

GENERAL COVENANTS OF THE BORROWER

Section 5.01. Affirmative Covenants of the Borrower. The Borrower covenants and agrees that from and after the Effective Date and until theTermination Date:

(a) Compliance with Agreements and Applicable Laws. The Borrower shall (i) perform each of its obligations under this Agreement and the otherRelated Documents and (ii) comply with all federal, state and local laws and regulations applicable to it and the Transferred Receivables, including those relatingto truth in lending, retail installment sales, fair credit billing, fair credit reporting, equal credit opportunity, fair debt collection practices, privacy, licensing,taxation, ERISA and labor matters and environmental laws and environmental permits except, solely with respect to this clause (ii), where the failure to socomply could not reasonably be expected to have a Material Adverse Effect.

(b) Maintenance of Existence and Conduct of Business. The Borrower shall: (i) do or cause to be done all things necessary to preserve and keep infull force and effect its corporate existence and its rights and franchises; (ii) continue to conduct its business substantially as now conducted or as otherwisepermitted hereunder and in accordance with (1) the terms of its certificate of incorporation and bylaws, (2) Section 4.01(p) and (3) the assumptions set forth ineach opinion letter of Pillsbury Winthrop Shaw Pittman LLP or other outside counsel to the Borrower from time to time delivered pursuant to Section 3.02(d) ofthe Sale Agreement with respect to issues of substantive consolidation and true sale and absolute transfer; (iii) at all times maintain, preserve and protect all of itsassets and properties used or useful in the conduct of its business, including all licenses, permits, charters and registrations, and keep the same in good repair,working order and condition in all material respects (taking into consideration ordinary wear and tear) and from time to time make, or cause to be made, allnecessary or appropriate repairs, replacements and improvements thereto consistent with industry practices; and (iv) transact business only in the name of SITFunding Corporation or such trade names as are set forth in Schedule 5.01(b).

(c) Deposit of Collections. The Borrower shall deposit or cause to be deposited promptly into a Collection Account, and in any event no later thanthe first Business Day after receipt thereof, all Collections it may receive with respect to any Transferred Receivable.

(d) Use of Proceeds. The Borrower shall utilize the proceeds of the Advances made hereunder solely for (i) the repayment of Advances made and thepayment of any fees due hereunder, (ii) the purchase of Transferred Receivables from the Originators pursuant to the Sale Agreement, (iii) the payment ofdistributions to the Parent, (iv) the repayment of Subordinated Loans, and (v) the payment of administrative fees or Servicing Fees or expenses to the Servicer orroutine administrative or operating expenses, in each case only as expressly permitted by and in accordance with the terms of this Agreement and the otherRelated Documents.


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(e) Payment and Performance of Charges and other Obligations.

(i) Subject to Section 5.01(e)(ii), the Borrower shall pay, perform and discharge or cause to be paid, performed and discharged promptly allcharges and claims payable by it, including (A) Charges imposed upon it, its income and profits, or any of its property (real, personal or mixed) and allCharges with respect to tax, social security and unemployment withholding with respect to its employees, and (B) lawful claims for labor, materials,supplies and services or otherwise before any thereof shall become past due.

(ii) The Borrower may in good faith contest, by appropriate proceedings, the validity or amount of any charges or claims described inSection 5.01(e)(i); provided, that (A) adequate reserves with respect to such contest are maintained on the books of the Borrower, in accordance withGAAP, (B) such contest is maintained and prosecuted continuously and with diligence, (C) none of the Borrower Collateral becomes subject to forfeitureor loss as a result of such contest, (D) no Lien shall be imposed to secure payment of such charges or claims other than inchoate tax liens and (E) theAdministrative Agent has not advised the Borrower in writing that it reasonably believes that failure to pay or to discharge such claims or charges couldhave or result in a Material Adverse Effect.

(f) ERISA. The Borrower shall give the Administrative Agent prompt written notice of any event that (i) could reasonably be expected to result inthe imposition of a Lien on any Borrower Collateral under Section 412 of the IRC or Section 302 or 4068 of ERISA, or (ii) could reasonably be expected toresult in the incurrence by Borrower of any liabilities under Title IV of ERISA (other than premium payments arising in the ordinary course of business).

(g) Borrower to Maintain Perfection and Priority. In order to evidence the interests of the Administrative Agent and the Lenders under thisAgreement, the Borrower shall, from time to time take such action, or execute and deliver such instruments (other than filing financing statements) as may benecessary or advisable (including, such actions as are requested by the Administrative Agent) to maintain and perfect, as a first-priority interest, theAdministrative Agent’s (on behalf of itself and the Lenders) security interest in the Transferred Receivables and all other collateral pledged to the AdministrativeAgent (on behalf of itself and the Lenders) pursuant to the Related Documents. The Borrower shall, from time to time and within the time limits established bylaw, prepare and present to the Administrative Agent upon request for the Administrative Agent’s authorization and approval all financing statements,amendments, continuations or initial financing statements in lieu of a continuation statement in the, or other filings necessary to continue, maintain and perfectthe Administrative Agent’s (on behalf of itself and the Lenders) security interest in the Transferred Receivables and all other collateral pledged to theAdministrative Agent (on behalf of itself and the Lenders) pursuant to the Related Documents as a first-priority interest. The Administrative Agent’s approval ofsuch filings shall authorize the Borrower to file such financing statements under the UCC without the signature of the Borrower, any Originator or theAdministrative Agent where allowed by applicable law. Notwithstanding anything else in the Related Documents to the contrary, neither the Borrower, theServicer, nor any Originator, shall have any authority to file a termination,


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partial termination, release, partial release or any amendment that deletes the name of a debtor or excludes collateral of any such financing statements, withoutthe prior written consent of the Administrative Agent.

Section 5.02. Reporting Requirements of the Borrower. The Borrower hereby agrees that from and after the Effective Date until the TerminationDate, it shall furnish or cause to be furnished to the Administrative Agent and the Lenders:

(a) The financial statements, notices, reports and other information at the times, to the Persons and in the manner set forth in Annex 5.02(a).

(b) At the same time each Monthly Report, Weekly Report or Daily Report, as applicable, is required to be delivered pursuant to the terms of clause(a) of Annex 5.02(a), a completed certificate in the form attached hereto as Exhibit 5.02(b) (each, a “Borrowing Base Certificate”), provided, that if (i) an IncipientTermination Event or a Termination Event shall have occurred and be continuing or (ii) the Administrative Agent, in good faith, believes that an IncipientTermination Event or a Termination Event is imminent or deems the Lenders’ rights or interests in the Transferred Receivables or the Borrower Collateralinsecure, then such Borrowing Base Certificates shall be delivered daily; and each Borrowing Base Certificate shall be prepared by the Borrower or the Serviceras of the last day of the previous month or week, in the event Borrowing Base Certificates are required to be delivered on a monthly or weekly basis, and as ofthe close of business on the previous Business Day, in the event Borrowing Base Certificates are required to be delivered on each Business Day.

(c) Such other reports, statements and reconciliations with respect to the Borrowing Base or Borrower Collateral as any Lender or theAdministrative Agent shall from time to time request in its reasonable discretion.

Section 5.03. Negative Covenants of the Borrower. The Borrower covenants and agrees that, without the prior written consent of the RequisiteLenders and the Administrative Agent, from and after the Effective Date until the Termination Date:

(a) Sale of Stock and Assets. The Borrower shall not sell, transfer, convey, assign or otherwise dispose of, or assign any right to receive income inrespect of, any of its properties or other assets or any of its Stock (whether in a public or a private offering or otherwise), any Transferred Receivable or Contracttherefor or any of its rights with respect to any Lockbox or any Collection Account, the Agent Account or any other deposit account in which any Collections ofany Transferred Receivable are deposited except as otherwise expressly permitted by this Agreement or any of the other Related Documents.

(b) Liens. The Borrower shall not create, incur, assume or permit to exist (i) any Adverse Claim on or with respect to its Transferred Receivables or(ii) any Adverse Claim on or with respect to its other properties or assets (whether now owned or hereafter acquired) except for the Liens set forth in Schedule5.03(b) and other Permitted Encumbrances. In addition, the Borrower shall not become a party to any agreement, note, indenture or instrument or take any otheraction that would prohibit the creation of a Lien on any of its properties or other assets in favor of the Lenders as additional collateral for the BorrowerObligations, except as otherwise expressly permitted by this Agreement or any of the other Related Documents.


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(c) Modifications of Receivables, Contracts or Credit and Collection Policies. The Borrower shall not, without the prior written consent of theAdministrative Agent, (i) extend, amend, forgive, discharge, compromise, waive, cancel or otherwise modify the terms of any Transferred Receivable or amend,modify or waive any term or condition of any Contract related thereto, provided that the Borrower may authorize the Servicer to take such actions as are expresslypermitted by the terms of any Related Document or the Credit and Collection Policies so long as, after giving effect to any such action, no Receivables whichconstituted Eligible Receivables prior to such action would no longer constitute Eligible Receivables as a result of such action, or (ii) amend, modify or waiveany term or provision of the Credit and Collection Policies.

(d) Changes in Instructions to Obligors. The Borrower shall not make any change in its instructions to Obligors regarding the deposit of Collectionswith respect to the Transferred Receivables, except to the extent the Administrative Agent directs the Borrower to change such instructions to Obligors or theAdministrative Agent consents in writing to such change.

(e) Capital Structure and Business. The Borrower shall not (i) make any changes in any of its business objectives, purposes or operations, (ii) makeany change in its capital structure, including the issuance of any Stock, warrants or other securities convertible into Stock or any revision of the terms of itsoutstanding Stock, (iii) amend, waive or modify any term or provision of its certificate of incorporation or bylaws, (iv) make any change to its name indicated onthe public records of its jurisdiction of organization or (v) change its jurisdiction of organization. The Borrower shall not engage in any business other than asprovided in its certificate of incorporation, bylaws and the Related Documents.

(f) Mergers, Subsidiaries, Etc. The Borrower shall not directly or indirectly, by operation of law or otherwise, (i) form or acquire any Subsidiary, or(ii) merge with, consolidate with, acquire all or substantially all of the assets or capital Stock of, or otherwise combine with or acquire, any Person.

(g) Sale Characterization; Receivables Sale and Servicing Agreement. The Borrower shall not make statements or disclosures, prepare any financialstatements or in any other respect account for or treat the transactions contemplated by the Sale Agreement (including for accounting, tax and reporting purposes)in any manner other than (i) with respect to each Sale of each Sold Receivable effected pursuant to the Sale Agreement, as a true sale and absolute assignment ofthe title to and sole record and beneficial ownership interest of the Transferred Receivables by the Originators to the Borrower or (ii) with respect to eachcontribution of Contributed Receivables thereunder, as an increase in the stated capital of the Borrower.

(h) Restricted Payments. The Borrower shall not enter into any lending transaction with any other Person. The Borrower shall not at any time(i) advance credit to any Person or (ii) declare any distributions, repurchase any membership interest, return any capital,


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or make any other payment or distribution of cash or other property or assets in respect of the Borrower’s membership interest or make a repayment with respectto any Subordinated Loans if, after giving effect to any such advance or distribution, a Funding Excess, Incipient Termination Event or Termination Event wouldexist or otherwise result therefrom.

(i) Indebtedness. The Borrower shall not create, incur, assume or permit to exist any Debt, except (i) Debt of the Borrower to any Affected Party,Indemnified Person, the Servicer or any other Person expressly permitted by this Agreement or any other Related Document, (ii) Subordinated Loans pursuant tothe Subordinated Notes, (iii) deferred taxes, (iv) unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they arepermitted to remain unfunded under applicable law, and (v) endorser liability in connection with the endorsement of negotiable instruments for deposit orcollection in the ordinary course of business.

(j) Prohibited Transactions. The Borrower shall not enter into, or be a party to, any transaction with any Person except as expressly permittedhereunder or under any other Related Document.

(k) Investments. Except as otherwise expressly permitted hereunder or under the other Related Documents, the Borrower shall not make anyinvestment in, or make or accrue loans or advances of money to, any Person, including the Parent, any director, officer or employee of the Borrower, the Parentor any of the Parent’s other Subsidiaries, through the direct or indirect lending of money, holding of securities or otherwise, except with respect to TransferredReceivables and Permitted Investments.

(l) Commingling. The Borrower shall not deposit or permit the deposit of any funds that do not constitute Collections of Transferred Receivables intoany Collection Account or the Concentration Account, except as otherwise contemplated under Section 4.02(l) of the Sale Agreement. If funds that are notCollections are deposited into a Collection Account or the Concentration Account, the Borrower shall, or shall cause the Servicer to notify the AdministrativeAgent in writing promptly upon discovery thereof, and, the Administrative Agent shall promptly remit (or direct the applicable Collection Account Bank or theConcentration Account Bank to remit) any such amounts that are not Collections to the applicable Originator or other Person designated in such notice.

(m) ERISA. The Borrower shall not, and shall not cause or permit any of its ERISA Affiliates to, cause or permit to occur an event that (i) couldreasonably be expected to result in the imposition of a Lien on any Borrower Collateral under Section 412 of the IRC or Section 302 or 4068 of ERISA, or(ii) could reasonably be expected to result in the incurrence by Borrower of any liabilities under Title IV of ERISA (other than (x) premium payments arising inthe ordinary course of business and (y) liabilities arising under Section 4041(b) of ERISA).

(n) Related Documents. The Borrower shall not amend, modify or waive any term or provision of any Related Document without the prior writtenconsent of the Administrative Agent.


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(o) Board Policies. The Borrower shall not modify the terms of any policy or resolutions of its board of directors if such modification couldreasonably be expected to have or result in a Material Adverse Effect.

(p) Additional Stockholders of Borrower. The Borrower shall not issue shares of Stock to any Person other than Parent without the prior writtenconsent of the Administrative Agent.

ARTICLE VI.

ACCOUNTS

Section 6.01. Establishment of Accounts.

(a) Collection Accounts.

(i) The Borrower has established with each Collection Account Bank one or more Collection Accounts subject, in each case, to a fullyexecuted Collection Account Agreement. The Borrower agrees that the Administrative Agent shall have exclusive dominion and control of each CollectionAccount and all monies, instruments and other property from time to time on deposit therein. The Borrower shall not make or cause to be made, or haveany ability to make or cause to be made, any withdrawals from any Collection Account except as provided in Section 6.01(b)(ii).

(ii) The Borrower (or the Servicer on Borrower’s behalf) has instructed all existing Obligors of Transferred Receivables, and shall instruct allfuture Obligors of such Receivables, to make payments in respect thereof only (A) by check or money order mailed to one or more lockboxes or postoffice boxes under the control of the Administrative Agent (each a “Lockbox” and collectively the “Lockboxes”) or (B) by wire transfer or moneygramdirectly to a Collection Account. Schedule 4.01(q) lists all Lockboxes and all Collection Account Banks at which the Borrower maintains CollectionAccounts as of the Effective Date, and such schedule correctly identifies (1) with respect to each such Collection Account Bank, the name, address andtelephone number thereof, (2) with respect to each Collection Account, the name in which such account is held and the complete account number therefor,and (3) with respect to each Lockbox, the lockbox number and address thereof. The Borrower (or the Servicer on Borrower’s behalf) shall endorse, to theextent necessary, all checks or other instruments received in any Lockbox so that the same can be deposited in the Collection Account, in the form soreceived (with all necessary endorsements), on the first Business Day after the date of receipt thereof. In addition, the Borrower shall deposit or cause to bedeposited into a Collection Account all cash, checks, money orders or other proceeds of Transferred Receivables or Borrower Collateral received by itother than in a Lockbox or a Collection Account, in the form so received (with all necessary endorsements), not later than the close of business on the firstBusiness Day following the date of receipt thereof, and until so deposited all such items or other proceeds shall be held in trust for the benefit of theAdministrative Agent. The Borrower shall not make and shall not permit the Servicer to make any deposits into a Lockbox or any Collection Accountexcept in accordance with the terms of this Agreement or any other Related Document.


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(iii) If, for any reason, a Collection Account Agreement terminates or any Collection Account Bank fails to comply with its obligations underthe Collection Account Agreement to which it is a party, then the Borrower shall promptly notify all Obligors of Transferred Receivables who hadpreviously been instructed to make wire payments to a Collection Account maintained at any such Collection Account Bank to make all future payments toa new Collection Account in accordance with this Section 6.01(a)(iii). The Borrower shall not close any Collection Account unless it shall have(A) received the prior written consent of the Administrative Agent, (B) established a new account with the same Collection Account Bank or with a newdepositary institution satisfactory to the Administrative Agent, (C) entered into an agreement covering such new account with such Collection AccountBank or with such new depositary institution substantially in the form of the predecessor Collection Account Agreement or that is satisfactory in allrespects to the Administrative Agent (whereupon, for all purposes of this Agreement and the other Related Documents, such new account shall become aCollection Account, such new agreement shall become a Collection Account Agreement and any new depositary institution shall become a CollectionAccount Bank), and (D) taken all such action as the Administrative Agent shall reasonably require to grant and perfect a first priority Lien in such newCollection Account to the Lender under Section 7.01 of this Agreement. Except as permitted by this Section 6.01(a), the Borrower shall not, and shall notpermit the Servicer to, open any new Lockbox or Collection Account without the prior written consent of the Administrative Agent.

(b) Concentration Account.

(i) The Borrower agrees that at any time that it has established more than one Collection Account that it shall (A) establish the ConcentrationAccount subject to a fully executed Concentration Account Agreement, (B) advise Administrative Agent in writing of the name of the ConcentrationAccount Bank, which depositary institution shall be reasonably satisfactory in all respects to the Administrative Agent, and of the account number of theConcentration Account, (C) enter into an agreement covering such deposit account with such Concentration Account Bank substantially in the form of theConcentration Account Agreement or that is reasonably satisfactory in all respects to the Administrative Agent (whereupon, for all purposes of thisAgreement and the other Related Documents, such new account shall become the Concentration Account, such new agreement shall become aConcentration Account Agreement and any depositary institution shall become the Concentration Account Bank), and (D) taken all such action as theAdministrative Agent shall reasonably require to grant and perfect a first priority Lien in such Concentration Account to the Lender under Section 7.01 ofthis Agreement. The Borrower agrees that the Administrative Agent shall have exclusive dominion and control of the Concentration Account and allmonies, instruments and other property from time to time on deposit therein.


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(ii) The Borrower (or the Servicer on Borrower’s behalf) agrees that at any time after which it has established a Concentration Accountpursuant to clause (b)(i) above, it shall have instructed (A) all Collection Account Banks that on a daily basis all collected and available funds on deposit ineach Collection Account are to be automatically transferred to the Concentration Account and (B) the Concentration Account Bank to automaticallytransfer all collected and available funds on deposit in the Concentration Account to the Agent Account on a daily basis.

(iii) During any time after which the Concentration Account is established pursuant to clause (b)(i) above, if, for any reason, the ConcentrationAccount Agreement relating to the Concentration Account terminates or the Concentration Account Bank fails to comply with its obligations under suchConcentration Account Agreement, then the Borrower shall promptly notify the Administrative Agent thereof and the Borrower, the Servicer or theAdministrative Agent, as the case may be, shall instruct all Collection Account Banks who had previously been instructed to make wire payments to theConcentration Account maintained at any such Concentration Account Bank to make all future payments to a new Concentration Account in accordancewith this Section 6.01(b)(iii). The Borrower shall not close the Concentration Account unless it shall have (A) received the prior written consent of theAdministrative Agent, (B) established a new account with the same Concentration Account Bank or with a new depositary institution satisfactory to theAdministrative Agent, (C) entered into an agreement covering such new account with such Concentration Account Bank or with such new depositaryinstitution substantially in the form of the Concentration Account Agreement or that is satisfactory in all respects to the Administrative Agent (whereupon,for all purposes of this Agreement and the other Related Documents, such new account shall become the Concentration Account, such new agreementshall become a Concentration Account Agreement and any new depositary institution shall become the Concentration Account Bank), and (D) taken allsuch action as the Administrative Agent shall reasonably require to grant and perfect a first priority Lien in such new Concentration Account to the Lenderunder Section 7.01 of this Agreement. Except as permitted by this Section 6.01(b), the Borrower shall not, and shall not permit the Servicer to open a newConcentration Account without the prior written consent of the Administrative Agent.

(c) Agent Account.

(i) The Administrative Agent has established and shall maintain the Agent Account with Deutsche Bank Trust Company Americas (the“Depositary”). The Agent Account shall be registered in the name of the Administrative Agent and the Administrative Agent shall, subject to the terms ofthis Agreement, have exclusive dominion and control thereof and of all monies, instruments and other property from time to time on deposit therein.

(ii) The Lenders and the Administrative Agent may deposit into the Agent Account from time to time all monies, instruments and otherproperty received by any of them as proceeds of the Transferred Receivables.


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(iii) If, for any reason, the Depositary wishes to resign as depositary of the Agent Account or fails to carry out the instructions of theAdministrative Agent, then the Administrative Agent shall promptly notify the Lenders. Neither the Lenders nor the Administrative Agent shall close theAgent Account unless (A) a new deposit account has been established with a new depositary institution, (B) the Lenders and the Administrative Agenthave entered into an agreement covering such new account with such new depositary institution satisfactory in all respects to the Administrative Agent(whereupon such new account shall become the Agent Account and such new depositary institution shall become the Depositary for all purposes of thisAgreement and the other Related Documents), and (C) the Lenders and the Administrative Agent have taken all such action as the Administrative Agentshall require to grant and perfect a first priority Lien in such new Agent Account to the Administrative Agent on behalf of the Lenders.

(d) Borrower Account.

(i) The Borrower has established the Borrower Account subject to a fully executed Borrower Account Agreement and agrees that, subject toclause (ii) below, the Administrative Agent shall have exclusive dominion and control of such Borrower Account and all monies, instruments and otherproperty from time to time on deposit therein.

(ii) The Administrative Agent hereby agrees that until such time as it exercises its right to take control of the Borrower Account underSection 7.05(d), the Borrower Account Bank shall be entitled to follow the instructions of the Borrower, or the Administrative Agent on behalf of theBorrower, with respect to the withdrawal, transfer or payment of funds on deposit in the Borrower Account.

ARTICLE VII.

GRANT OF SECURITY INTERESTS

Section 7.01. Borrower’s Grant of Security Interest. Borrower hereby reconfirms its grant of a Lien for the benefit of the Administrative Agent, theLenders, the Indemnified Parties and the Affected Parties in the “Seller Collateral” under, and as defined in, the Existing Receivables Purchase Agreement, andconfirms that such Lien has been granted to secure the Borrower Obligations, which include, without limitation, the “Seller Secured Obligations” under, and asdefined in, the Existing Receivables Purchase Agreement. Furthermore, to secure the prompt and complete payment, performance and observance of allBorrower Obligations, and to induce the Administrative Agent and the Lenders to enter into this Agreement and perform the obligations required to be performedby them hereunder in accordance with the terms and conditions hereof, the Borrower hereby grants, assigns, conveys, pledges, hypothecates and transfers to theAdministrative Agent, for the benefit of the Administrative Agent, the Lenders, the Indemnified Persons and the Affected Parties a Lien upon and securityinterest in all of the Borrower’s right, title and interest in, to and under, but none of its obligations arising from, the following property, whether now owned by orowing to, or hereafter acquired by or arising in favor of, the Borrower (including under any trade names, styles or derivations of the Borrower), and regardless ofwhere located (all of which being hereinafter collectively referred to as the “Borrower Collateral”):

(a) all Receivables;


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(b) the Sale Agreement, all Collection Account Agreements, the Concentration Account Agreement and all other Related Documents now orhereafter in effect relating to the purchase, servicing, processing or collection of Receivables (collectively, the “Borrower Assigned Agreements”), including(i) all rights of the Borrower to receive moneys due and to become due thereunder or pursuant thereto, (ii) all rights of the Borrower to receive proceeds of anyinsurance, indemnity, warranty or guaranty with respect thereto, (iii) all claims of the Borrower for damages or breach with respect thereto or for defaultthereunder and (iv) the right of the Borrower to amend, waive or terminate the same and to perform and to compel performance and otherwise exercise allremedies thereunder;

(c) all of the following (collectively, the “Borrower Account Collateral”):

(i) the Collection Accounts, the Lockboxes, and all funds on deposit therein and all certificates and instruments, if any, from time to timerepresenting or evidencing the Collection Accounts, the Lockboxes or such funds,

(ii) the Agent Account and all funds on deposit therein and all certificates and instruments, if any, from time to time representing orevidencing the Agent Account or such funds,

(iii) the Concentration Account and all funds on deposit therein and all certificates and instruments, if any, from time to time representing orevidencing the Concentration Account or such funds,

(iv) the Borrower Account and all funds on deposit therein and all certificates and instruments, if any, from time to time representing orevidencing the Borrower Account or such funds,

(v) all notes, certificates of deposit and other instruments from time to time delivered to or otherwise possessed by any Lender or any assigneeor agent on behalf of any Lender in substitution for or in addition to any of the then existing Borrower Account Collateral, and

(vi) all interest, dividends, cash, instruments, investment property and other property from time to time received, receivable or otherwisedistributed with respect to or in exchange for any and all of the then existing Borrower Account Collateral;

(d) all other property relating to the Receivables that may from time to time hereafter be granted and pledged by the Borrower or by any Person onits behalf whether under this Agreement or otherwise, including any deposit with any Lender or the Administrative Agent of additional funds by the Borrower;


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(e) all other personal property of the Borrower of every kind and nature not described above including without limitation all goods (includinginventory, equipment and any accessions thereto), instruments (including promissory notes), documents, accounts, chattel paper (whether tangible or electronic),deposit accounts, letter-of-credit rights, commercial tort claims, securities and all other investment property, supporting obligations, any other contract rights orrights to the payment of money, insurance claims and proceeds, and all general intangibles (including all payment intangibles);

(f) to the extent not otherwise included, all proceeds and products of the foregoing and all accessions to, substitutions and replacements for, andprofits of, each of the foregoing Borrower Collateral (including proceeds that constitute property of the types described in Sections 7.01(a) through (e)); and

(g) to the extent not otherwise included, all “Seller Collateral” under, and as defined in, the Existing Receivables Purchase Agreement.

Section 7.02. Borrower’s Agreements. The Borrower hereby (a) assigns, transfer and conveys the benefits of the representations, warranties andcovenants of each Originator made to the Borrower under the Sale Agreement to the Administrative Agent for the benefit of the Lenders hereunder;(b) acknowledges and agrees that the rights of the Borrower to require payment of a Rejected Amount from an Originator under the Sale Agreement may beenforced by the Lenders and the Administrative Agent; and (c) certifies that the Sale Agreement provides that the representations, warranties and covenantsdescribed in Sections 4.01, 4.02 and 4.03 thereof, the indemnification and payment provisions of Article V thereof and the provisions of Sections 4.03(j), 6.12, 6.14and 6.15 thereof shall survive the sale of the Transferred Receivables (and undivided percentage ownership interests therein) and the termination of the SaleAgreement and this Agreement.

Section 7.03. Delivery of Collateral. All certificates or instruments representing or evidencing all or any portion of the Borrower Collateral shall bedelivered to and held by or on behalf of the Administrative Agent and shall be in suitable form for transfer by delivery or shall be accompanied by duly executedinstruments of transfer or assignment in blank, all in form and substance reasonably satisfactory to the Administrative Agent. The Administrative Agent shallhave the right (a) at any time to exchange certificates or instruments representing or evidencing Borrower Collateral for certificates or instruments of smaller orlarger denominations and (b) at any time in its discretion following the occurrence and during the continuation of a Termination Event and without notice to theBorrower, to transfer to or to register in the name of the Administrative Agent or its nominee any or all of the Borrower Collateral.

Section 7.04. Borrower Remains Liable. It is expressly agreed by the Borrower that, anything herein to the contrary notwithstanding, the Borrowershall remain liable under any and all of the Transferred Receivables, the Contracts therefor, the Borrower Assigned Agreements and any other agreementsconstituting the Borrower Collateral to which it is a party


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to observe and perform all the conditions and obligations to be observed and performed by it thereunder. The Lenders and the Administrative Agent shall nothave any obligation or liability under any such Receivables, Contracts or agreements by reason of or arising out of this Agreement or the granting herein ortherein of a Lien thereon or the receipt by the Administrative Agent or the Lenders of any payment relating thereto pursuant hereto or thereto. The exercise byany Lender or the Administrative Agent of any of its respective rights under this Agreement shall not release any Originator, the Borrower or the Servicer fromany of their respective duties or obligations under any such Receivables, Contracts or agreements. None of the Lenders or the Administrative Agent shall berequired or obligated in any manner to perform or fulfill any of the obligations of any Originator, the Borrower or the Servicer under or pursuant to any suchReceivable, Contract or agreement, or to make any payment, or to make any inquiry as to the nature or the sufficiency of any payment received by it or thesufficiency of any performance by any party under any such Receivable, Contract or agreement, or to present or file any claims, or to take any action to collect orenforce any performance or the payment of any amounts that may have been assigned to it or to which it may be entitled at any time or times.

Section 7.05. Covenants of the Borrower Regarding the Borrower Collateral.

(a) Offices and Records. The Borrower shall maintain its principal place of business and chief executive office and the office at which it stores itsRecords at the respective locations specified in Schedule 4.01(b) or, upon 30 days’ prior written notice to the Administrative Agent, at such other location in ajurisdiction where all action requested by the Administrative Agent pursuant to Section 12.13 shall have been taken with respect to the Borrower Collateral. TheBorrower shall, and shall cause the Servicer to at its own cost and expense, maintain adequate and complete records of the Transferred Receivables and theBorrower Collateral, including records of any and all payments received, credits granted and merchandise returned with respect thereto and all other dealingstherewith. The Borrower shall, and shall cause the Servicer to, by no later than the Effective Date, mark conspicuously with a legend, in form and substancesatisfactory to the Administrative Agent, its books and records (including computer records) and credit files pertaining to the Borrower Collateral, and its filecabinets or other storage facilities where it maintains information pertaining thereto, to evidence this Agreement and the assignment and Liens granted pursuantto this Article VIII. Upon the occurrence and during the continuance of a Termination Event, the Borrower shall, and shall cause the Servicer to, deliver and turnover such books and records to the Administrative Agent or its representatives at any time on demand of the Administrative Agent. Prior to the occurrence of aTermination Event and upon notice from the Administrative Agent, the Borrower shall, and shall cause the Servicer to, permit any representative of theAdministrative Agent to inspect such books and records and shall provide photocopies thereof to the Administrative Agent as more specifically set forth inSection 7.05(b).

(b) Access. The Borrower shall, and shall cause the Servicer to, at its or the Servicer’s own expense, during normal business hours, from time to timeupon two Business Days’ prior notice as frequently as the Administrative Agent determines to be appropriate: (i) provide the Lenders, the Administrative Agentand any of their respective officers, employees and agents access to its properties (including properties utilized in connection with the collection,


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processing or servicing of the Transferred Receivables), facilities, advisors and employees (including officers) and to the Borrower Collateral, (ii) permit theLenders, the Administrative Agent and any of their respective officers, employees and agents to inspect, audit and make extracts from its books and records,including all Records, (iii) permit each of the Lenders and the Administrative Agent and their respective officers, employees and agents to inspect, review andevaluate the Transferred Receivables and the Borrower Collateral and (iv) permit each of the Lenders and the Administrative Agent and their respective officers,employees and agents to discuss matters relating to the Transferred Receivables or its performance under this Agreement or the other Related Documents or itsaffairs, finances and accounts with any of its officers, directors, employees, representatives or agents (in each case, with those persons having knowledge of suchmatters) and with its independent certified public accountants. If (i) the Administrative Agent in good faith deems any Lender’s rights or interests in theTransferred Receivables, the Borrower Assigned Agreements or any other Borrower Collateral insecure or the Administrative Agent in good faith believes thatan Incipient Termination Event or a Termination Event is imminent or (ii) an Incipient Termination Event or a Termination Event shall have occurred and becontinuing, then the Borrower shall, and shall cause the Servicer to, at its own expense, provide such access at all times without prior notice from theAdministrative Agent and provide the Administrative Agent with access to the suppliers and customers of the Borrower and the Servicer. The Borrower shall,and shall cause the Servicer to, make available to the Administrative Agent and its counsel, as quickly as is possible under the circumstances, originals or copiesof all books and records, including Records, that the Administrative Agent may request. The Borrower shall, and shall cause the Servicer to, and the Servicershall deliver any document or instrument necessary for the Administrative Agent, as the Administrative Agent may from time to time request, to obtain recordsfrom any service bureau or other Person that maintains records for the Borrower or the Servicer, and shall maintain duplicate records or supportingdocumentation on media, including computer tapes and discs owned by the Borrower or the Servicer.

(c) Communication with Accountants. The Borrower hereby authorizes (and shall cause the Servicer to authorize) the Lenders and theAdministrative Agent to communicate directly with its independent certified public accountants and authorizes and shall instruct those accountants and advisorsto disclose and make available to the Lenders and the Administrative Agent any and all financial statements and other supporting financial documents, schedulesand information relating to the Borrower or the Servicer (including copies of any issued management letters) and to discuss matters with respect to its business,financial condition and other affairs.

(d) Collection of Transferred Receivables. In connection with the collection of amounts due or to become due to the Borrower under the TransferredReceivables, the Borrower Assigned Agreements and any other Borrower Collateral pursuant to the Sale Agreement, the Borrower shall, or shall cause theServicer to, take such action as it, and from and after the occurrence and during the continuance of a Termination Event, the Administrative Agent, may deemreasonably necessary or desirable to enforce collection of the Transferred Receivables, the Borrower Assigned Agreements and the other Borrower Collateral;provided that the Borrower may, rather than commencing any such action or taking any other enforcement action, at its option, elect to pay to the AdministrativeAgent, for deposit into the Agent Account,


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an amount equal to the Outstanding Balance of any such Transferred Receivable; provided, further, that if (i) an Incipient Termination Event or a TerminationEvent shall have occurred and be continuing or (ii) the Administrative Agent, in good faith believes that an Incipient Termination Event or a Termination Eventis imminent, then the Administrative Agent may, without prior notice to the Seller or the Servicer, (x) exercise its right to take exclusive ownership and control of(1) the Lockboxes and the Collection Accounts in accordance with the terms of the applicable Collection Account Agreements and (2) the ConcentrationAccount and the Borrower Account (in which case the Servicer shall be required, pursuant to the Sale Agreement, to deposit any Collections it then has in itspossession or at any time thereafter receives, immediately in the Agent Account) and (y) notify any Obligor under any Transferred Receivable or obligors underthe Borrower Assigned Agreements of the pledge of such Transferred Receivables or Borrower Assigned Agreements, as the case may be, to the AdministrativeAgent on behalf of the Lenders hereunder and direct that payments of all amounts due or to become due to the Borrower thereunder be made directly to theAdministrative Agent or any servicer, collection agent or lockbox or other account designated by the Administrative Agent and, upon such notification and at thesole cost and expense of the Borrower, the Administrative Agent may enforce collection of any such Transferred Receivable or the Borrower AssignedAgreements and adjust, settle or compromise the amount or payment thereof. The Administrative Agent shall provide prompt notice to the Borrower and theServicer of any such notification of pledge or direction of payment to the Obligors under any Transferred Receivables.

(e) Performance of Borrower Assigned Agreements. The Borrower shall, and shall cause the Servicer to, (i) perform and observe all the terms andprovisions of the Borrower Assigned Agreements to be performed or observed by it, maintain the Borrower Assigned Agreements in full force and effect, enforcethe Borrower Assigned Agreements in accordance with their terms and take all action as may from time to time be reasonably requested by the AdministrativeAgent in order to accomplish the foregoing, and (ii) upon the reasonable request of and as directed by the Administrative Agent, make such demands andrequests to any other party to the Borrower Assigned Agreements as are permitted to be made by the Borrower or the Servicer thereunder.

(f) License for Use of Software and Other Intellectual Property. Unless expressly prohibited by the licensor thereof or any provision of applicablelaw, if any, the Borrower hereby grants to the Administrative Agent on behalf of the Lenders a limited license to use, without charge, the Borrower’s and theServicer’s computer programs, software, printouts and other computer materials, technical knowledge or processes, data bases, materials, trademarks, registeredtrademarks, trademark applications, service marks, registered service marks, service mark applications, patents, patent applications, trade names, rights of use ofany name, labels, fictitious names, inventions, designs, trade secrets, goodwill, registrations, copyrights, copyright applications, permits, licenses, franchises,customer lists, credit files, correspondence, and advertising materials or any property of a similar nature, as it pertains to the Borrower Collateral, or any rights toany of the foregoing, only as reasonably required in connection with the collection of the Transferred Receivables and the advertising for sale, and selling any ofthe Borrower Collateral, or exercising of any other remedies hereto, and the


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Borrower agrees that its rights under all licenses and franchise agreements shall inure to the Administrative Agent’s benefit (on behalf of the Lenders) forpurposes of the license granted herein. Except upon the occurrence and during the continuation of a Termination Event, the Administrative Agent and theLenders agree not to use any such license without giving the Borrower prior written notice.

ARTICLE VIII.

TERMINATION EVENTS

Section 8.01. Termination Events. If any of the following events (each, a “Termination Event”) shall occur (regardless of the reason therefor):

(a) the Borrower shall fail to make any payment of any monetary Borrower Obligation when due and payable and the same shall remain unremediedfor one (1) Business Day or more; or

(b)(i) the Borrower shall fail to deliver a Daily Report, Weekly Report, Monthly Report or Borrowing Base Certificate as and when requiredhereunder and such failure shall remain unremedied for two (2) Business Days or more, (ii) any Originator shall fail or neglect to perform, keep or observe anycovenant or provision of Section 4.04 of the Sale Agreement or Article V of the Sale Agreement, (iii) the Borrower, any Originator or the Servicer shall fail orneglect to perform, keep or observe any covenant or other provision of this Agreement or the other Related Documents (other than any provision embodied in orcovered by any other clause of this Section 8.01) and the same shall remain unremedied for five (5) Business Days or more following the earlier to occur of anAuthorized Officer of the Borrower becoming aware of such breach and the Borrower’s receipt of notice thereof; or

(c)(i) an Originator, the Borrower, the Parent or any of the Parent’s other Subsidiaries shall fail to make any payment with respect to any of its Debtswhich, except with respect to the Borrower, is in an aggregate principal amount in excess of $10,000,000 (other than Borrower Obligations) when due, and thesame shall remain unremedied after any applicable grace period with respect thereto; or (ii) a default or breach or other occurrence shall occur under anyagreement, document or instrument to which an Originator, the Borrower, the Parent or any of the Parent’s other Subsidiaries is a party or by which it or itsproperty is bound (other than a Related Document) which relates to a Debt which, except with respect to the Borrower, is in an aggregate principal amount inexcess of $10,000,000, which event shall remain unremedied within the applicable grace period with respect thereto, and the effect of such default, breach oroccurrence is to cause or to permit the holder or holders then to cause such Debt to become or be declared due prior to their stated maturity; or

(d) a case or proceeding shall have been commenced against the Borrower, any Originator, the Parent or any of the Parent’s other Subsidiariesseeking a decree or order in respect of any such Person under the Bankruptcy Code or any other applicable federal, state or foreign bankruptcy or other similarlaw, (i) appointing a custodian, receiver, liquidator, assignee, trustee or sequestrator (or similar official) for any such Person or for any substantial part of such


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Person’s assets, or (ii) ordering the winding up or liquidation of the affairs of any such Person, and, so long as the Borrower is not a debtor in any such case orproceedings, such case or proceeding continues for 60 days unless dismissed or discharged; provided, however, that such 60-day period shall be deemedterminated immediately if (x) a decree or order is entered by a court of competent jurisdiction with respect to a case or proceeding described in this subsection(d) or (y) any of the events described in Section 8.01(e) shall have occurred; or

(e) the Borrower, any Originator, the Parent or any of the Parent’s other Subsidiaries shall (i) file a petition seeking relief under the BankruptcyCode or any other applicable federal, state or foreign bankruptcy or other similar law, (ii) consent or fail to object in a timely and appropriate manner to theinstitution of any proceedings under the Bankruptcy Code or any other applicable federal, state or foreign bankruptcy or similar law or to the filing of anypetition thereunder or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee or sequestrator (or similar official) for anysuch Person or for any substantial part of such Person’s assets, (iii) make an assignment for the benefit of creditors, or (iv) take any corporate action infurtherance of any of the foregoing; or

(f) any Originator, the Borrower, or the Servicer (i) generally does not pay its debts as such debts become due or admits in writing its inability to, oris generally unable to, pay its debts as such debts become due or (ii) is not Solvent; or

(g) a final judgment or judgments for the payment of money in excess of $5,000,000 in the aggregate (net of insurance proceeds) at any timeoutstanding shall be rendered against any Originator, the Parent or any Subsidiary of the Parent (other than the Borrower) and either (i) enforcement proceedingsshall have been commenced upon any such judgment or (ii) the same shall not, within 30 days after the entry thereof, have been discharged or execution thereofstayed or bonded pending appeal, or shall not have been discharged prior to the expiration of any such stay; or

(h) a judgment or order for the payment of money in excess of $2,500 shall be rendered against the Borrower; or

(i) (i) any information contained in any Borrowing Base Certificate or any Borrowing Request is untrue or incorrect in any respect, or (ii) anyrepresentation or warranty of any Originator or the Borrower herein or in any other Related Document or in any written statement, report, financial statement orcertificate (other than a Borrowing Base Certificate or any Borrowing Request) made or delivered by or on behalf of such Originator or the Borrower to anyAffected Party hereto or thereto is untrue or incorrect in any material respect as of the date when made or deemed made; or

(j) any Governmental Authority (including the IRS or the PBGC) shall file notice of a Lien with regard to any assets of any Originator, the Parent orany of their respective ERISA Affiliates (other than a Lien (i) limited by its terms to assets other than Transferred Receivables and (ii) not materially adverselyaffecting the financial condition of such Originator, the Parent or any such ERISA Affiliate or the ability of the Servicer to perform its duties hereunder or underthe Related Documents); or


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(k) any Governmental Authority (including the IRS or the PBGC) shall file notice of a Lien with regard to any of the assets of the Borrower; or

(l)(1) there shall have occurred any event which, in the reasonable judgment of the Administrative Agent, materially and adversely impairs (i) theability of any Originator to originate Receivables (other than Excluded Receivables) of a credit quality which are at least of the credit quality of the Receivables(other than Excluded Receivables) as of the Effective Date, (ii) the financial condition or operations of any Originator, the Borrower or the Parent, or (iii) thecollectibility of Receivables (other than Excluded Receivables), or (2) the Administrative Agent shall have determined (and so notified the Borrower) that anyevent or condition that has had or could reasonably be expected to have or result in a Material Adverse Effect has occurred; or

(m)(i) a default or breach shall occur under any provision of the Sale Agreement and after the passing of any applicable grace period the same shallremain unremedied for two (2) Business Days or more following the earlier to occur of an Authorized Officer of the Borrower becoming aware of such breachand the Borrower’s receipt of notice thereof, or (ii) the Sale Agreement shall for any reason cease to evidence the transfer to the Borrower of the legal andequitable title to, and ownership of, the Transferred Receivables; or

(n) except as otherwise expressly provided herein, any Collection Account Agreement, the Concentration Account Agreement or the SaleAgreement shall have been modified, amended or terminated without the prior written consent of the Administrative Agent; or

(o) an Event of Servicer Termination shall have occurred; or

(p)(A) the Borrower shall cease to hold valid and properly perfected title to and sole record and beneficial ownership in the Transferred Receivablesand the other Borrower Collateral or (B) the Administrative Agent (on behalf of the Lenders) shall cease to hold a first priority, perfected Lien in the TransferredReceivables or any of the Borrower Collateral; or

(q) a Change of Control shall occur; or

(r) the Borrower shall amend its certificate of incorporation or bylaws without the express prior written consent of the Requisite Lenders and theAdministrative Agent; or

(s) the Borrower shall have received an Election Notice pursuant to Section 2.01(d) of the Sale Agreement; or

(t)(i) the Default Ratio shall exceed 2.5%; (ii) the Delinquency Ratio shall exceed 7.5%; (iii) the Dilution Trigger Ratio shall exceed 4.0%; or(iv) the Receivables Collection Turnover Trigger shall exceed 45 days; or

(u) the Administrative Agent shall have received a “Receivables Termination Notice” or an “Enforcement Notice” in each case, under (and asdefined in) the Intercreditor Agreement;


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(v) any material provision of any Related Document shall for any reason cease to be valid, binding and enforceable in accordance with its terms (orany Originator or the Borrower shall challenge the enforceability of any Related Document or shall assert in writing, or engage in any action or inaction based onany such assertion, that any provision of any of the Related Documents has ceased to be or otherwise is not valid, binding and enforceable in accordance with itsterms); or

(w) the incurrence of a liability to the PBGC under Title IV of ERISA by the Parent, any Originator or the Servicer (except for premium paymentsarising in the ordinary course of business), in excess of $1,500,000; or

(x) a Funding Excess exists at any time and the Borrower has not repaid the amount of such Funding Excess within one (1) Business Day inaccordance with Section 2.08 hereof;

then, and in any such event, the Administrative Agent, may, with the consent of the Requisite Lenders, and shall, at the request of the RequisiteLenders, by notice to the Borrower, declare the Commitment Termination Date to have occurred without demand, protest or further notice of any kind, all ofwhich are hereby expressly waived by the Borrower; provided, that the Commitment Termination Date shall automatically occur (i) upon the occurrence of anyof the Termination Events described in Sections 8.01(d), (e), (f), (j), (k), (s) or (u), (ii) three days after the occurrence of the Termination Event described inSection 8.01(a) if the same shall not have been remedied by such time, (iii) four Business Days after the occurrence of the Termination Event described inSection 8.01(x) if the same shall not have been waived by the Requisite Lenders prior to such time or (iv) ten (10) Business Days after the occurrence of aTermination Event described in Section 8.01(x) if the same shall not have been remedied by such time and regardless of whether such Termination Event shallhave been previously waived by the Requisite Lenders in accordance with clause (iii) of this paragraph, in each case without demand, protest or any notice of anykind, all of which are hereby expressly waived by the Borrower. Upon the occurrence of the Commitment Termination Date, all Borrower Obligations shallautomatically be and become due and payable in full, without any action to be taken on the part of any Person. In addition, if any Event of Servicer Terminationshall have occurred, then, the Administrative Agent may, and shall, at the request of the Requisite Lenders, by delivery of a Servicer Termination Notice toBuyer and the Servicer, terminate the servicing responsibilities of the Servicer under the Sale Agreement in accordance with the terms thereof.

ARTICLE IX.

REMEDIES

Section 9.01. Actions Upon Termination Event. If any Termination Event shall have occurred and be continuing and the Administrative Agent shallhave declared the Commitment Termination Date to have occurred or the Commitment Termination Date shall be deemed to have occurred pursuant toSection 8.01, then the Administrative Agent may exercise in respect of the Borrower Collateral, in addition to any and all other rights and remedies granted


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to it hereunder, under any other Related Document or under any other instrument or agreement securing, evidencing or relating to the Borrower Obligations orotherwise available to it, all of the rights and remedies of a secured party upon default under the UCC (such rights and remedies to be cumulative andnonexclusive), and, in addition, may take the following actions:

(a) The Administrative Agent may, without notice to the Borrower except as required by law and at any time or from time to time, (i) charge, offsetor otherwise apply amounts payable to the Borrower from the Agent Account, the Borrower Account, the Concentration Account or any Collection Accountagainst all or any part of the Borrower Obligations and (ii) without limiting the terms of Section 7.05(d), notify any Obligor under any Transferred Receivable orobligors under the Borrower Assigned Agreements of the transfer of the Transferred Receivables to the Borrower and the pledge of such Transferred Receivablesor Borrower Assigned Agreements, as the case may be, to the Administrative Agent on behalf of the Lenders hereunder and direct that payments of all amountsdue or to become due to the Borrower thereunder be made directly to the Administrative Agent or any servicer, collection agent or lockbox or other accountdesignated by the Administrative Agent.

(b) The Administrative Agent may, without notice except as specified below, solicit and accept bids for and sell the Borrower Collateral or any partthereof in one or more parcels at public or private sale, at any exchange, broker’s board or any of the Lenders’ or Agent’s offices or elsewhere, for cash, on creditor for future delivery, and upon such other terms as the Administrative Agent may deem commercially reasonable. The Administrative Agent shall have the rightto conduct such sales on the Borrower’s premises or elsewhere and shall have the right to use any of the Borrower’s premises without charge for such sales atsuch time or times as the Administrative Agent deems necessary or advisable. The Borrower agrees that, to the extent notice of sale shall be required by law, tendays’ notice to the Borrower of the time and place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification.The Administrative Agent shall not be obligated to make any sale of Borrower Collateral regardless of notice of sale having been given. The AdministrativeAgent may adjourn any public or private sale from time to time by announcement at the time and place fixed for such sale, and such sale may, without furthernotice, be made at the time and place to which it was so adjourned. Every such sale shall operate to divest all right, title, interest, claim and demand whatsoeverof the Borrower in and to the Borrower Collateral so sold, and shall be a perpetual bar, both at law and in equity, against each Originator, the Borrower, anyPerson claiming any right in the Borrower Collateral sold through any Originator or the Borrower, and their respective successors or assigns. The AdministrativeAgent shall deposit the net proceeds of any such sale in the Agent Account and such proceeds shall be applied against all or any part of the Borrower Obligations.

(c) Upon the completion of any sale under Section 9.01(b), the Borrower shall deliver or cause to be delivered to the purchaser or purchasers at suchsale on the date thereof, or within a reasonable time thereafter if it shall be impracticable to make immediate delivery, all of the Borrower Collateral sold on suchdate, but in any event full title and right of possession to such property shall vest in such purchaser or purchasers upon the completion of such sale. Nevertheless,if so requested by the Administrative Agent or by any such purchaser, the


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Borrower shall confirm any such sale or transfer by executing and delivering to such purchaser all proper instruments of conveyance and transfer and releases asmay be designated in any such request.

(d) At any sale under Section 9.01(b), any Lender or the Administrative Agent may bid for and purchase the property offered for sale and, uponcompliance with the terms of sale, may hold, retain and dispose of such property without further accountability therefor.

(e) The Administrative Agent may (but in no event shall be obligated to) exercise, at the sole cost and expense of the Borrower, any and all rightsand remedies of the Borrower under or in connection with the Borrower Assigned Agreements or the other Borrower Collateral, including any and all rights ofthe Borrower to demand or otherwise require payment of any amount under, or performance of any provisions of, the Borrower Assigned Agreements. Withoutlimiting the foregoing, the Administrative Agent shall, upon the occurrence of any Event of Servicer Termination, have the right to name any Successor Servicer(including itself) pursuant to Article VIII of the Sale Agreement.

Section 9.02. Exercise of Remedies. No failure or delay on the part of the Administrative Agent or any Lender in exercising any right, power orprivilege under this Agreement and no course of dealing between any Originator, the Borrower or the Servicer, on the one hand, and the Administrative Agent orany Lender, on the other hand, shall operate as a waiver of such right, power or privilege, nor shall any single or partial exercise of any right, power or privilegeunder this Agreement preclude any other or further exercise of such right, power or privilege or the exercise of any other right, power or privilege. The rights andremedies under this Agreement are cumulative, may be exercised singly or concurrently, and are not exclusive of any rights or remedies that the AdministrativeAgent or any Lender would otherwise have at law or in equity. No notice to or demand on any party hereto shall entitle such party to any other or further noticeor demand in similar or other circumstances, or constitute a waiver of the right of the party providing such notice or making such demand to any other or furtheraction in any circumstances without notice or demand.

Section 9.03. Power of Attorney. On the Closing Date, the Borrower shall execute and deliver a power of attorney substantially in the form attachedhereto as Exhibit 9.03 (a “Power of Attorney”). The Power of Attorney is a power coupled with an interest and shall be irrevocable until this Agreement hasterminated in accordance with its terms and all of the Borrower Obligations are indefeasibly paid or otherwise satisfied in full. The powers conferred on theAdministrative Agent under each Power of Attorney are solely to protect the Liens of the Administrative Agent and the Lenders upon and interests in theBorrower Collateral and shall not impose any duty upon the Administrative Agent to exercise any such powers. The Administrative Agent shall not beaccountable for any amount other than amounts that it actually receives as a result of the exercise of such powers and none of the Administrative Agent’sofficers, directors, employees, agents or representatives shall be responsible to the Borrower, any Originator, the Servicer or any other Person for any act orfailure to act, except to the extent of damages attributable to their own gross negligence or willful misconduct as finally determined by a court of competentjurisdiction.


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Section 9.04. Continuing Security Interest. This Agreement shall create a continuing Lien in the Borrower Collateral until the date such securityinterest is released by the Administrative Agent and the Lenders.

ARTICLE X.

INDEMNIFICATION

Section 10.01. Indemnities by the Borrower.

(a) Without limiting any other rights that the Lenders or the Administrative Agent or any of their respective officers, directors, employees, attorneys,agents, representatives, transferees, successors or assigns (each, an “Indemnified Person”) may have hereunder or under applicable law, the Borrower herebyagrees to indemnify and hold harmless each Indemnified Person from and against any and all Indemnified Amounts that may be claimed or asserted against orincurred by any such Indemnified Person in connection with or arising out of the transactions contemplated under this Agreement or under any other RelatedDocument or any actions or failures to act in connection therewith, including any and all Rating Agency costs and any and all legal costs and expenses arising outof or incurred in connection with disputes between or among any parties to any of the Related Documents; provided, that the Borrower shall not be liable for anyindemnification to an Indemnified Person to the extent that any such Indemnified Amount (x) results from such Indemnified Person’s gross negligence or willfulmisconduct, in each case as finally determined by a court of competent jurisdiction or (y) constitutes recourse for uncollectible or uncollected TransferredReceivables as a result of the insolvency, bankruptcy or the failure (without cause or justification) or inability on the part of the related Obligor to perform itsobligations thereunder. Without limiting the generality of the foregoing, the Borrower shall pay on demand to each Indemnified Person any and all IndemnifiedAmounts relating to or resulting from:

(i) reliance on any representation or warranty made or deemed made by the Borrower (or any of its officers) under or in connection with thisAgreement or any other Related Document (without regard to any qualifications concerning the occurrence or non-occurrence of a Material Adverse Effector similar concepts of materiality) or on any other information delivered by the Borrower pursuant hereto or thereto that shall have been incorrect whenmade or deemed made or delivered;

(ii) the failure by the Borrower to comply with any term, provision or covenant contained in this Agreement, any other Related Document orany agreement executed in connection herewith or therewith (without regard to any qualifications concerning the occurrence or non-occurrence of aMaterial Adverse Effect or similar concepts of materiality), any applicable law, rule or regulation with respect to any Transferred Receivable or theContract therefor, or the nonconformity of any Transferred Receivable or the Contract therefor with any such applicable law, rule or regulation;

(iii) (1) the failure to vest and maintain vested in the Borrower valid and properly perfected title to and sole record and beneficial ownership ofthe


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Receivables that constitute Transferred Receivables, together with all Collections in respect thereof and all other Borrower Collateral, free and clear of anyAdverse Claim and (2) the failure to maintain or transfer to the Administrative Agent, for the benefit of itself and the Lenders, a first priority, perfectedLien in any portion of the Borrower Collateral;

(iv) any dispute, claim, offset or defense of any Obligor (other than its discharge in bankruptcy) to the payment of any Transferred Receivable(including a defense based on such Receivable or the Contract therefor not being a legal, valid and binding obligation of such Obligor enforceable againstit in accordance with its terms), or any other claim resulting from the sale of the merchandise or services giving rise to such Receivable or the furnishing ofor failure to furnish such merchandise or services or relating to collection activities with respect to such Receivable (if such collection activities wereperformed by any of its Affiliates acting as Servicer);

(v) any products liability claim or other claim arising out of or in connection with merchandise, insurance or services that is the subject of anyContract with respect to any Transferred Receivable;

(vi) the commingling of Collections with respect to Transferred Receivables by the Borrower at any time with its other funds or the funds ofany other Person;

(vii) any failure by the Borrower to cause the filing of, or any delay in filing, financing statements or other similar instruments or documentsunder the UCC of any applicable jurisdiction or any other applicable laws with respect to any Transferred Receivable hereunder or any other BorrowerCollateral, whether at the time of the Borrower’s acquisition thereof or any Advance made hereunder or at any subsequent time;

(viii) any investigation, litigation or proceeding related to this Agreement or the ownership of Transferred Receivables or Collections withrespect thereto;

(ix) any failure of (x) a Collection Account Bank to comply with the terms of the applicable Collection Account Agreement, (y) theConcentration Account Bank to comply with the terms of the Concentration Account Agreement, or (z) the Borrower Account Bank to comply with theterms of the Borrower Account Agreement; or

(x) any withholding, deduction or Charge imposed upon any payments with respect to any Transferred Receivable, any Borrower AssignedAgreement or any other Borrower Collateral.


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(b) Any Indemnified Amounts subject to the indemnification provisions of this Section 10.01 not paid in accordance with Section 2.08 shall be paidby the Borrower to the Indemnified Person entitled thereto within five Business Days following demand therefor.

ARTICLE XI.

ADMINISTRATIVE AGENT

Section 11.01. Authorization and Action.

(a) The Administrative Agent may take such action and carry out such functions under this Agreement as are authorized to be performed by itpursuant to the terms of this Agreement, any other Related Document or otherwise contemplated hereby or thereby or are reasonably incidental thereto; provided,that the duties of the Administrative Agent set forth in this Agreement shall be determined solely by the express provisions of this Agreement, and, other than theduties set forth in Section 11.02, any permissive right of the Administrative Agent hereunder shall not be construed as a duty.

Section 11.02. Reliance. None of the Administrative Agent, any of its Affiliates or any of their respective directors, officers, agents or employeesshall be liable for any action taken or omitted to be taken by any of them under or in connection with this Agreement or the other Related Documents, except fordamages solely caused by its or their own gross negligence or willful misconduct as finally determined by a court of competent jurisdiction. Without limiting thegenerality of the foregoing, and notwithstanding any term or provision hereof to the contrary, the Borrower and each Lender hereby acknowledge and agree thatthe Administrative Agent as such (a) has no duties or obligations other than as set forth expressly herein, and has no fiduciary obligations to any person, (b) actsas a representative hereunder for the Lenders and has no duties or obligations to, shall incur no liabilities or obligations to, and does not act as an agent in anycapacity for, the Borrower (other than, with respect to the Administrative Agent, under the Power of Attorney with respect to remedial actions) or theOriginators, (c) may consult with legal counsel, independent public accountants and other experts selected by it and shall not be liable for any action taken oromitted to be taken by it in good faith in accordance with the advice of such counsel, accountants or experts, (d) makes no representation or warranty hereunderto any Affected Party and shall not be responsible to any such Person for any statements, representations or warranties made in or in connection with thisAgreement or the other Related Documents, (e) shall not have any duty to ascertain or to inquire as to the performance or observance of any of the terms,covenants or conditions of this Agreement or the other Related Documents on the part of the Borrower, the Servicer, any Originator, the Parent or any Lender, orto inspect the property (including the books and records) of the Borrower, the Servicer, any Originator, the Parent or any Lender, (f) shall not be responsible tothe Borrower, the Servicer, any Lender or any other Person for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of thisAgreement or the other Related Documents or any other instrument or document furnished pursuant hereto or thereto, (g) shall incur no liability under or inrespect of this Agreement or the other Related Documents by acting upon any notice, consent, certificate or other instrument or writing believed by it to begenuine and signed, sent or communicated by the proper party or parties and (h) shall not be bound to make any investigation into the facts or matters stated inany notice or other communication hereunder and may conclusively rely on the accuracy of such facts or matters.


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Section 11.03. GE Capital and Affiliates. GE Capital and its Affiliates may generally engage in any kind of business with any Obligor, the Parent,the Originators, the Borrower, the Servicer, any Lender, any of their respective Affiliates and any Person who may do business with or own securities of suchPersons or any of their respective Affiliates, all as if GE Capital were not the Administrative Agent and without the duty to account therefor to any Obligor, theParent, any Originator, the Borrower, the Servicer, any Lender or any other Person.

Section 11.04. Lender Credit Decision. Each Lender acknowledges that it has, independently and without reliance upon the Administrative Agent orany other Lender, and based upon such documents and information as it has deemed appropriate, made its own credit and financial analysis of the Borrower andits own decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon the Administrative Agent orany other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or nottaking action under this Agreement.

Section 11.05. Indemnification. Each of the Lenders severally agrees to indemnify the Administrative Agent (to the extent not reimbursed by theBorrower and without limiting the obligations of the Borrower hereunder), ratably according to their respective Pro Rata Shares, from and against any and allliabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may beimposed on, incurred by, or asserted against the Administrative Agent in any way relating to or arising out of this Agreement or any other Related Document orany action taken or omitted by the Administrative Agent in connection herewith or therewith; provided, however, that no Lender shall be liable for any portion ofsuch liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting solely from the AdministrativeAgent’s gross negligence or willful misconduct as finally determined by a court of competent jurisdiction. Without limiting the foregoing, each Lender agrees toreimburse the Administrative Agent promptly upon demand for its ratable share of any out-of-pocket expenses (including counsel fees) incurred by theAdministrative Agent in connection with the preparation, execution, delivery, administration, modification, amendment or enforcement (whether throughnegotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement and each other Related Document, tothe extent that the Administrative Agent is not reimbursed for such expenses by the Borrower.

Section 11.06. Successor Administrative Agent. The Administrative Agent may resign at any time by giving not less than thirty (30) days’ priorwritten notice thereof to each of the Lenders and the Borrower. Upon any such resignation, the Requisite Lenders shall have the right to appoint a successorAdministrative Agent. If no successor Administrative Agent shall have been so appointed by the Requisite Lenders and shall have accepted such appointmentwithin 30 days after the resigning the Administrative Agent’s giving notice of resignation, then the resigning Administrative Agent may, on behalf of theLenders, appoint a successor Administrative Agent, which shall be a Lender, if a Lender is willing to accept such


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appointment, or otherwise shall be a commercial bank or financial institution or a subsidiary of a commercial bank or financial institution which commercialbank or financial institution is organized under the laws of the United States of America or of any State thereof which has a long-term debt rating from S&P of“A–” or better and Moody’s of “A3” or better and has a combined capital and surplus of at least $300,000,000. If no successor Administrative Agent has beenappointed pursuant to the foregoing, by the 30th day after the date such notice of resignation was given by the resigning Administrative Agent, such resignationshall become effective and the Requisite Lenders shall thereafter perform all the duties of the Administrative Agent hereunder until such time, if any, as theRequisite Lenders appoint a successor Administrative Agent as provided above. Upon the acceptance of any appointment as the Administrative Agent hereunderby a successor Administrative Agent, such successor Administrative Agent shall succeed to and become vested with all the rights, powers, privileges and dutiesof the resigning Administrative Agent. Upon the earlier of the acceptance of any appointment as the Administrative Agent hereunder by a successorAdministrative Agent or the effective date of the resigning Administrative Agent’s resignation, the resigning Administrative Agent shall be discharged from itsduties and obligations under this Agreement and the other Related Documents, except that any indemnity rights or other rights in favor of such resigningAdministrative Agent shall continue. After any resigning Administrative Agent’s resignation hereunder, the provisions of this Article XI shall inure to its benefitas to any actions taken or omitted to be taken by it while it was the Administrative Agent under this Agreement and the other Related Documents.

Section 11.07. Setoff and Sharing of Payments. In addition to any rights now or hereafter granted under applicable law and not by way of limitationof any such rights, upon the occurrence and during the continuance of any Termination Event, each Lender and each holder of any Note is hereby authorized atany time or from time to time, without notice to the Borrower or to any other Person, any such notice being hereby expressly waived (but subject toSection 2.03(b)(i)), to set off and to appropriate and to apply any and all balances held by it at any of its offices for the account of the Borrower (regardless ofwhether such balances are then due to the Borrower) and any other properties or assets any time held or owing by that Lender or that holder to or for the credit orfor the account of the Borrower against and on account of any of the Borrower Obligations which are not paid when due. Any Lender or holder of any Noteexercising a right to set off or otherwise receiving any payment on account of the Borrower Obligations in excess of its Pro Rata Share thereof shall purchase forcash (and the other Lenders or holders shall sell) such participations in each such other Lender’s or holder’s Pro Rata Share of the Borrower Obligations as wouldbe necessary to cause such Lender to share the amount so set off or otherwise received with each other Lender or holder in accordance with their respective ProRata Shares. Each Lender’s obligation pursuant to this Section 11.07 is in addition to and not in limitation of its obligations to purchase a participation equal to itsPro Rata Share of the Swing Line Loan pursuant to Section 2.01(b). The Borrower agrees, to the fullest extent permitted by law, that (a) any Lender or holder mayexercise its right to set off with respect to amounts in excess of its Pro Rata Share of the Borrower Obligations and may sell participations in such amount so setoff to other Lenders and holders and (b) any Lender or holders so purchasing a participation in the Advances made or other Borrower Obligations held by otherLenders or holders may exercise all rights of set off, bankers’ lien, counterclaim or similar rights


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with respect to such participation as fully as if such Lender or holder were a direct holder of the Advances, and the other Borrower Obligations in the amount ofsuch participation. Notwithstanding the foregoing, if all or any portion of the set-off amount or payment otherwise received is thereafter recovered from theLender that has exercised the right of set-off, the purchase of participations by that Lender shall be rescinded and the purchase price restored without interest.

ARTICLE XII.

MISCELLANEOUS

Section 12.01. Notices. Except as otherwise provided herein, whenever it is provided herein that any notice, demand, request, consent, approval,declaration or other communication shall or may be given to or served upon any of the parties by any other parties, or whenever any of the parties desires to giveor serve upon any other parties any communication with respect to this Agreement, each such notice, demand, request, consent, approval, declaration or othercommunication shall be in writing and shall be deemed to have been validly served, given or delivered (a) upon the earlier of actual receipt and three BusinessDays after deposit in the United States Mail, registered or certified mail, return receipt requested, with proper postage prepaid, (b) upon transmission, when sentby email of the signed notice in PDF form or facsimile (with such email or facsimile promptly confirmed by delivery of a copy by personal delivery or UnitedStates Mail as otherwise provided in this Section 12.01), (c) one Business Day after deposit with a reputable overnight courier with all charges prepaid or(d) when delivered, if hand delivered by messenger, all of which shall be addressed to the party to be notified and sent to the address or facsimile number setforth below or to such other address (or facsimile number) as may be substituted by notice given as herein provided. The giving of any notice required hereundermay be waived in writing by the party entitled to receive such notice. Failure or delay in delivering copies of any notice, demand, request, consent, approval,declaration or other communication to any Person (other than any Lender and the Administrative Agent) designated in any written notice provided hereunder toreceive copies shall in no way adversely affect the effectiveness of such notice, demand, request, consent, approval, declaration or other communication.Notwithstanding the foregoing, whenever it is provided herein that a notice is to be given to any other party hereto by a specific time, such notice shall only beeffective if actually received by such party prior to such time, and if such notice is received after such time or on a day other than a Business Day, such noticeshall only be effective on the immediately succeeding Business Day. The SMBC Lender Group hereby notifies the parties hereto that all notices to any memberof the SMBC Lender Group shall be sent to SMBC-SI as their representative, as set forth on Schedule 12.01 attached hereto.

Section 12.02. Binding Effect; Assignability.

(a) This Agreement shall be binding upon and inure to the benefit of the Borrower, each Lender and the Administrative Agent and their respectivesuccessors and permitted assigns. The Borrower may not assign, transfer, hypothecate or otherwise convey any of its rights or obligations hereunder or interestsherein without the express prior written consent


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of the Requisite Lenders and the Administrative Agent. Any such purported assignment, transfer, hypothecation or other conveyance by the Borrower without theprior express written consent of the Requisite Lenders and the Administrative Agent shall be void.

(b) The Borrower hereby consents to any Lender’s assignment or pledge of, and/or sale of participations in, at any time or times after the EffectiveDate of the Related Documents, Advances, and any Commitment or of any portion thereof or interest therein, including any Lender’s rights, title, interests,remedies, powers or duties thereunder (including, without limitation, an assignment by the Swing Line Lender of all or any portion of its Swing LineCommitment), whether evidenced by a writing or not, made in accordance with this Section 12.02(b). Any assignment by a Lender shall (i) require the executionof an assignment agreement (an “Assignment Agreement”) substantially in the form attached hereto as Exhibit 12.02(b) or otherwise in form and substancesatisfactory to the Administrative Agent, and acknowledged by, the Administrative Agent and other than in the case of an assignment by a Lender to one of itsAffiliates, the consent of the Administrative Agent and, so long as no Termination Event has occurred and is continuing, the Borrower (which consent shall notbe unreasonably withheld or delayed); (ii) if a partial assignment, be in an amount at least equal to $5,000,000 and, after giving effect to any such partialassignment, the assigning Lender shall have retained Commitments in an amount at least equal to $5,000,000; (iii) require the delivery to the AdministrationAgent by the assignee or participant, as the case may be, of any forms, certificates or other evidence with respect to United States tax withholding matters, and(iv) other than in the case of an assignment by a Lender to one of its Affiliates, include a payment to the Administrative Agent by the assignor or assignee Lenderof an assignment fee of $3,500. In the case of an assignment by a Lender under this Section 12.02, the assignee shall have, to the extent of such assignment, thesame rights, benefits and obligations as it would if it were a Lender hereunder. The assigning Lender shall be relieved of its obligations hereunder with respect toits Commitments or assigned portion thereof from and after the date of such assignment. The Borrower hereby acknowledges and agrees that any assignmentmade in accordance with this Section 12.02(b) will give rise to a direct obligation of the Borrower to the assignee and that the assignee shall thereupon be a“Lender” for all purposes. In all instances, each Lender’s obligation to make Revolving Credit Advances shall be several and not joint and shall be limited tosuch Lender’s Pro Rata Share of the applicable Commitment. In the event any Lender assigns or otherwise transfers all or any part of a Revolving Note or theSwing Line Note, such Lender shall so notify the Borrower and the Borrower shall, upon the request of such Lender, execute new Revolving Notes or SwingLine Notes in exchange for the Revolving Notes or Swing Line Notes, as the case may be, being assigned. Notwithstanding the foregoing provisions of thisSection 12.02(b), any Lender may at any time pledge or assign all or any portion of such Lender’s rights under this Agreement and the other Related Documentsto any Federal Reserve Bank or to any holder or trustee of such Lender’s securities; provided, however, that no such pledge or assignment to any Federal ReserveBank, holder or trustee shall release such Lender from such Lender’s obligations hereunder or under any other Related Document and no such holder or trusteeshall be entitled to enforce any rights of such Lender hereunder unless such holder or trustee becomes a Lender hereunder through execution of an AssignmentAgreement as set forth above.


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(c) In addition to the foregoing right, any Lender may, without notice to or consent from the Administrative Agent or the Borrower, (x) grant to anSPV the option to make all or any part of any Advance that such Lender would otherwise be required to make hereunder (and the exercise of such option by suchSPV and the making of Loans pursuant thereto shall satisfy the obligation of such Lender to make such Loans hereunder); (y) assign to an SPV all or a portion ofits rights (but not its obligations) under the Related Documents, including a sale of any Advances or other Borrower Obligations hereunder and such Lender’sright to receive payment with respect to any such Borrower Obligation and (z) sell participations to one or more Persons in or to all or a portion of its rights andobligations under the Related Documents (including all its rights and obligations with respect to the Advances); provided, however, that (x) no such SPV orparticipant shall have a commitment, or be deemed to have made an offer to commit, to make Advances hereunder, and none shall be liable to any Person for anyobligations of such Lender hereunder (it being understood that nothing in this Section 12.02(c) shall limit any rights the Lender may have as against such SPV orparticipant under the terms of the applicable option, sale or participation agreement between or among such parties); and (y) no such SPV or holder of any suchparticipation shall be entitled to require such Lender to take or omit to take any action hereunder except actions directly affecting (i) any reduction in theprincipal amount of, or interest rate or Fees payable with respect to, any Advance in which such holder participates, (ii) any extension of any scheduled paymentof the principal amount of any Advance in which such holder participates or the final maturity date thereof, and (iii) any release of all or substantially all of theBorrower Collateral (other than in accordance with the terms of this Agreement or the other Related Documents). Solely for purposes of Sections 2.08, 2.09, 2.10,and 9.01, Borrower acknowledges and agrees that each such sale or participation shall give rise to a direct obligation of the Borrower to the participant or SPVand each such participant or SPV shall be considered to be a “Lender” for purposes of such sections. Except as set forth in the preceding sentence, such Lender’srights and obligations, and the rights and obligations of the other Lenders and the Administrative Agent towards such Lender under any Related Document shallremain unchanged and none of the Borrower, the Administrative Agent or any Lender (other than the Lender selling a participation or assignment to an SPV)shall have any duty to any participant or SPV and may continue to deal solely with the assigning or selling Lender as if no such assignment or sale had occurred.

(d) Except as expressly provided in this Section 12.02, no Lender shall, as between the Borrower and that Lender, or between the AdministrativeAgent and that Lender, be relieved of any of its obligations hereunder as a result of any sale, assignment, transfer or negotiation of, or granting of participation in,all or any part of the Advances, the Revolving Notes, the Swing Line Note or other Borrower Obligations owed to such Lender.

(e) The Borrower shall assist any Lender permitted to sell assignments or participations under this Section 12.02 as reasonably required to enable theassigning or selling Lender to effect any such assignment or participation, including the execution and delivery of any and all agreements, notes and otherdocuments and instruments as shall be reasonably requested and the participation of management in meetings with potential assignees or participants. TheBorrower shall, if the Administrative Agent so requests in connection with an initial syndication of the Commitments hereunder, assist in the preparation ofinformational materials for such syndication.


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(f) A Lender may furnish any information concerning the Borrower, the Originator, the Servicer and/or the Receivables in the possession of suchLender from time to time to assignees and participants (including prospective assignees and participants). Each Lender shall obtain from all prospective andactual assignees or participants confidentiality covenants substantially equivalent to those contained in Section 12.05.

Section 12.03. Termination; Survival of Borrower Obligations Upon Commitment Termination Date.

(a) This Agreement shall create and constitute the continuing obligations of the parties hereto in accordance with its terms, and shall remain in fullforce and effect until the Termination Date.

(b) Except as otherwise expressly provided herein or in any other Related Document, no termination or cancellation (regardless of cause orprocedure) of any commitment made by any Affected Party under this Agreement shall in any way affect or impair the obligations, duties and liabilities of theBorrower or the rights of any Affected Party relating to any unpaid portion of the Borrower Obligations, due or not due, liquidated, contingent or unliquidated orany transaction or event occurring prior to such termination, or any transaction or event, the performance of which is required after the Commitment TerminationDate. Except as otherwise expressly provided herein or in any other Related Document, all undertakings, agreements, covenants, warranties and representationsof or binding upon the Borrower and all rights of any Affected Party hereunder, all as contained in the Related Documents, shall not terminate or expire, butrather shall survive any such termination or cancellation and shall continue in full force and effect until the Termination Date; provided, that the rights andremedies provided for herein with respect to any breach of any representation or warranty made by the Borrower pursuant to Section 4.01(a), (c), (e), (j), (p),(r) and (v), Article IV, the indemnification and payment provisions of Article X and Sections 11.05, 12.05, 12.14 and 12.15 shall be continuing and shall survive theTermination Date.

Section 12.04. Costs, Expenses and Taxes. (a) The Borrower shall reimburse the Administrative Agent for all reasonable out of pocket expensesincurred in connection with the negotiation and preparation of this Agreement and the other Related Documents (including the reasonable fees and expenses ofall of its special counsel, advisors, consultants and auditors retained in connection with the transactions contemplated thereby and advice in connectiontherewith). The Borrower shall reimburse each Lender and the Administrative Agent for all fees, costs and expenses, including the fees, costs and expenses ofcounsel or other advisors (including environmental and management consultants and appraisers) for advice, assistance, or other representation in connectionwith:

(i) the forwarding to the Borrower or any other Person on behalf of the Borrower by any Lender of any proceeds of Advances made by suchLender hereunder;


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(ii) any amendment, modification or waiver of, consent with respect to, or termination of this Agreement or any of the other RelatedDocuments or advice in connection with the administration hereof or thereof or their respective rights hereunder or thereunder;

(iii) any Litigation, contest or dispute (whether instituted by the Borrower, any Lender, the Administrative Agent or any other Person as aparty, witness, or otherwise) in any way relating to the Borrower Collateral, any of the Related Documents or any other agreement to be executed ordelivered in connection herewith or therewith, including any Litigation, contest, dispute, suit, case, proceeding or action, and any appeal or review thereof,in connection with a case commenced by or against the Borrower, the Servicer or any other Person that may be obligated to any Lender or theAdministrative Agent by virtue of the Related Documents, including any such Litigation, contest, dispute, suit, proceeding or action arising in connectionwith any work-out or restructuring of the transactions contemplated hereby during the pendency of one or more Termination Events;

(iv) any attempt to enforce any remedies of a Lender or the Administrative Agent against the Borrower, the Servicer or any other Person thatmay be obligated to them by virtue of any of the Related Documents, including any such attempt to enforce any such remedies in the course of anywork-out or restructuring of the transactions contemplated hereby during the pendency of one or more Termination Events;

(v) any work-out or restructuring of the transactions contemplated hereby during the pendency of one or more Termination Events; and

(vi) efforts to (A) monitor the Advances, or any of the Borrower Obligations, (B) evaluate, observe or assess the Originators, the Parent, theBorrower, or the Servicer or their respective affairs, and (C) verify, protect, evaluate, assess, appraise, collect, sell, liquidate or otherwise dispose of any ofthe Borrower Collateral;

including all reasonable attorneys’ and other professional and service providers’ fees arising from such services, including those in connection with any appellateproceedings, and all reasonable expenses, costs, charges and other fees incurred by such counsel and others in connection with or relating to any of the events oractions described in this Section 12.04, all of which shall be payable, on demand, by the Borrower to the applicable Lender or the Administrative Agent, asapplicable. Without limiting the generality of the foregoing, such expenses, costs, charges and fees may include: reasonable fees, costs and expenses ofaccountants, environmental advisors, appraisers, investment bankers, management and other consultants and paralegals; court costs and expenses; photocopyingand duplication expenses; court reporter fees, costs and expenses; long distance telephone charges; air express charges; telegram or facsimile charges; secretarialovertime charges; and expenses for travel, lodging and food paid or incurred in connection with the performance of such legal or other advisory services.


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(b) In addition, the Borrower shall pay on demand any and all stamp, sales, excise and other taxes, gross receipts or franchise taxes and fees payableor determined to be payable in connection with the execution, delivery, filing or recording of this Agreement or any other Related Document excluding taxesimposed on or measured by the net income, gross receipts or franchise taxes of any Affected Party by the jurisdictions under the laws of which such AffectedParty is organized or by any political subdivisions thereof, and the Borrower agrees to indemnify and save each Indemnified Person harmless from and againstany and all liabilities with respect to or resulting from any delay or failure to pay such taxes and fees.

Section 12.05. Confidentiality.

(a) Except to the extent otherwise required by applicable law or as required to be filed publicly with the Securities and Exchange Commission, orunless the Administrative Agent shall otherwise consent in writing, the Borrower agrees to maintain the confidentiality of this Agreement (and all drafts hereofand documents ancillary hereto), in its communications with third parties other than any Affected Party or any Indemnified Person or any financial institutionparty to the Credit Agreement and otherwise not to disclose, deliver or otherwise make available to any third party (other than its directors, officers, employees,accountants or counsel) the original or any copy of all or any part of this Agreement (or any draft hereof and documents ancillary hereto) except to an AffectedParty or an Indemnified Person or any financial institution party to the Credit Agreement.

(b) The Borrower agrees that it shall not (and shall not permit any of its Subsidiaries to) issue any news release or make any public announcementpertaining to the transactions contemplated by this Agreement and the other Related Documents without the prior written consent of the Lenders and theAdministrative Agent (which consent shall not be unreasonably withheld) unless such news release or public announcement is required by law, in which case theBorrower shall consult with the Administrative Agent and any Lenders specifically referenced therein prior to the issuance of such news release or publicannouncement. The Borrower may, however, disclose the general terms of the transactions contemplated by this Agreement and the other Related Documents totrade creditors, suppliers and other similarly-situated Persons so long as such disclosure is not in the form of a news release or public announcement.

(c) The Administrative Agent and each Lender agrees to maintain the confidentiality of the Information (as defined below), and will not use suchconfidential Information for any purpose or in any matter except in connection with this Agreement, except that Information may be disclosed (1) to (i) eachAffected Party (ii) its and each Affected Party’s and their respective Affiliates’ directors, officers, employees and agents, including accountants, legal counseland other advisors (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information andinstructed to keep such Information confidential and to not disclose or use such Information in violation of Regulation FD (17 C.F.R. § 243.100-243.103)) and(iii) industry trade organizations for inclusion in league table measurements, (2) any regulatory authority (it being understood that it will to the extent reasonablypracticable provide the Borrower with an opportunity to request confidential treatment from such regulatory authority), (3) to the extent required by applicablelaws or


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regulations or by any subpoena or similar legal process, (4) to any other party to this Agreement, (5) to the extent required in connection with the exercise of anyremedies hereunder or any suit, action or proceeding relating to this Agreement or any other Related Document or the enforcement of rights hereunder orthereunder, (6) subject to an agreement containing provisions substantially the same as those of this Section, to any assignee of (or participant in), or anyprospective assignee of (or participant in), any of its rights or obligations under this Agreement, (7) with the consent of the Borrower or (8) to the extent suchInformation (i) becomes publicly available other than as a result of a breach of this Section or any other confidentiality agreement to which it is party with theBorrower or the Parent or any subsidiary thereof or (ii) becomes available to the Administrative Agent, or any Lender on a nonconfidential basis from a sourceother than the Parent or any subsidiary thereof. For the purposes of this Section, “Information” means all information received from the Borrower and Servicerrelating to the Borrower, the Servicer, the Parent or any subsidiary thereof or their businesses, or any Obligor, other than any such information that is available tothe Administrative Agent or any Lender on a nonconfidential basis prior to disclosure by Borrower or Servicer; provided that in the case of information receivedfrom the Borrower or Servicer after the date hereof, such information is clearly identified at the time of delivery as confidential. Any Person required to maintainthe confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised thesame degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.

Section 12.06. Complete Agreement; Modification of Agreement. This Agreement and the other Related Documents constitute the completeagreement among the parties hereto with respect to the subject matter hereof and thereof, supersede all prior agreements and understandings relating to thesubject matter hereof and thereof, and may not be modified, altered or amended except as set forth in Section 12.07.

Section 12.07. Amendments and Waivers.

(a) Except for actions expressly permitted to be taken by the Administrative Agent, no amendment, modification, termination or waiver of anyprovision of this Agreement or any Note, or any consent to any departure by the Borrower therefrom, shall in any event be effective unless the same shall be inwriting and signed by the Borrower and by the Requisite Lenders or, to the extent required under clause (b) below, by all affected Lenders and the Swing LineLender, as applicable, and, to the extent required under clause (b) or clause (c) below, by the Administrative Agent. Except as set forth in clause (b) below, allamendments, modifications, terminations or waivers requiring the consent of any Lenders without specifying the required percentage of Lenders shall require thewritten consent of the Requisite Lenders.

(b) (i) No amendment, modification, termination or waiver shall, unless in writing and signed by each Lender directly affected thereby, do any of thefollowing: (1) increase the principal amount of any Lender’s Commitment; (2) reduce the principal of, rate of interest on or Fees payable with respect to anyAdvance made by any affected Lender; (3) extend any scheduled payment date or final maturity date of the principal amount of any Advance of any affectedLender; (4) waive, forgive, defer, extend or postpone any payment of interest or Fees as


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to any affected Lender; (5) change the percentage of the Aggregate Commitments or of the aggregate Outstanding Principal Amount which shall be required forLenders or any of them to take any action hereunder; (6) release all or substantially all of the Borrower Collateral; or (7) amend or waive this Section 12.07 or thedefinition of the term “Requisite Lenders” insofar as such definition affects the substance of this Section 12.07. No amendment, modification, termination orwaiver shall, unless in writing and signed by each Requisite Lender and, if the SMBC Lender Group has not made any assignment of its rights hereunder and isnot included in determining Lenders that constitute Requisite Lenders, by each member of the SMBC Lender Group, do any of the following: (x) modify orwaive Section 5.03(a), (b), (e) through (l), (o) or (p), (y) modify or waive Section 8.01(v), or (z) modify any of the following definitions or component definitionsthereof in a manner which would increase availability to the Borrower for Advances hereunder: “Borrowing Base,” “Dynamic Advance Rate,” “InterestReserve,” “Servicing Fee Reserve,” or “Net Receivables Balance.” Furthermore, no amendment, modification, termination or waiver shall be effective to theextent that it (x) affects the rights or duties of the Administrative Agent under this Agreement or any other Related Document unless in writing and signed by theAdministrative Agent, or (y) affects the rights or duties of the Swing Line Lender under this Agreement or modifies or amends any other provision of thisAgreement or any other Related Document relating the Swing Line Loan, Swing Line Advances or the Swing Line Lender unless in writing and signed by theSwing Line Lender.

(ii) Each amendment, modification, termination or waiver shall be effective only in the specific instance and for the specific purpose for whichit was given. No amendment, modification, termination or waiver shall be required for the Administrative Agent to take additional Borrower Collateralpursuant to any Related Document. No amendment, modification, termination or waiver of any provision of any Note shall be effective without the writtenconcurrence of the holder of such Note. No notice to or demand on the Borrower in any case shall entitle the Borrower to any other or further notice ordemand in similar or other circumstances. Any amendment, modification, termination, waiver or consent effected in accordance with this Section 12.07shall be binding upon each holder of a Note at the time outstanding and each future holder of a Note.

(iii) Neither the Administrative Agent nor any Lender shall waive any of the provisions set forth in Section 4.01(v) or Section 5.01(g) if suchwaiver would adversely affect the Ratings.

(c) If, in connection with any proposed amendment, modification, waiver or termination (a “Proposed Change”):

(i) requiring the consent of all affected Lenders, the consent of Requisite Lenders is obtained, but the consent of other Lenders whose consentis required is not obtained (any such Lender whose consent is not obtained as described this clause (i) or in clause (ii) below being referred to as a“Non-Consenting Lender”), or

(ii) requiring the consent of all Lenders, the consent of Requisite Lenders is obtained, but the consent of all Lenders is not obtained,


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then, so long as the Administrative Agent is not a Non-Consenting Lender, at the Borrower’s request the Administrative Agent, or a Person acceptable to theAdministrative Agent, shall have the right with the Administrative Agent’s consent and in the Administrative Agent’s sole discretion (but shall have noobligation) to purchase from such Non-Consenting Lenders, and such Non-Consenting Lenders agree that they shall, upon the Administrative Agent’s request,sell and assign to the Administrative Agent or such Person, all of the Commitments of such Non-Consenting Lender for an amount equal to the principal balanceof all Advances held by the Non-Consenting Lender and all accrued interest and Fees with respect thereto through the date of sale, such purchase and sale to beconsummated pursuant to an executed Assignment Agreement.

(d) Upon indefeasible payment in full in cash and performance of all of the Borrower Obligations (other than indemnification obligations underSection 10.01), termination of the Aggregate Commitment and a release of all claims against the Administrative Agent and Lenders, and so long as no suits,actions, proceedings or claims are pending or threatened against any Indemnified Person asserting any damages, losses or liabilities that are IndemnifiedLiabilities, the Administrative Agent shall deliver to the Borrower termination statements and other documents necessary or appropriate to evidence thetermination of the Liens securing payment of the Borrower Obligations.

Section 12.08. No Waiver; Remedies. The failure by any Lender or the Administrative Agent, at any time or times, to require strict performance bythe Borrower or the Servicer of any provision of this Agreement, any Receivables Assignment or any other Related Document shall not waive, affect or diminishany right of any Lender or the Administrative Agent thereafter to demand strict compliance and performance herewith or therewith. Any suspension or waiver ofany breach or default hereunder shall not suspend, waive or affect any other breach or default whether the same is prior or subsequent thereto and whether thesame or of a different type. None of the undertakings, agreements, warranties, covenants and representations of the Borrower or the Servicer contained in thisAgreement, any Receivables Assignment or any other Related Document, and no breach or default by the Borrower or the Servicer hereunder or thereunder, shallbe deemed to have been suspended or waived by any Lender or the Administrative Agent unless such waiver or suspension is by an instrument in writing signedby an officer of or other duly authorized signatory of the applicable Lenders and the Administrative Agent and directed to the Borrower or the Servicer, asapplicable, specifying such suspension or waiver. The rights and remedies of the Lenders and the Administrative Agent under this Agreement and the otherRelated Documents shall be cumulative and nonexclusive of any other rights and remedies that the Lenders and the Administrative Agent may have hereunder,thereunder, under any other agreement, by operation of law or otherwise. Recourse to the Borrower Collateral shall not be required.

Section 12.09.GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL.

(a) THIS AGREEMENT AND EACH OTHER RELATED DOCUMENT (EXCEPT TO THE EXTENT THAT ANY RELATEDDOCUMENT EXPRESSLY PROVIDES TO THE CONTRARY) AND THE OBLIGATIONS ARISING HEREUNDER AND THEREUNDER SHALLIN ALL RESPECTS, INCLUDING ALL MATTERS OF


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CONSTRUCTION, VALIDITY AND PERFORMANCE, BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH,THE LAWS OF THE STATE OF NEW YORK (INCLUDING SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAWS BUT OTHERWISEWITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES) EXCEPT TO THE EXTENT THAT THE PERFECTION, EFFECT OFPERFECTION OR PRIORITY OF THE INTERESTS OF THE ADMINISTRATIVE AGENT IN THE RECEIVABLES OR REMEDIESHEREUNDER OR THEREUNDER, IN RESPECT THEREOF, ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THESTATE OF NEW YORK, AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.

(b) EACH PARTY HERETO HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN THEBOROUGH OF MANHATTAN IN NEW YORK CITY SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMSOR DISPUTES BETWEEN THEM PERTAINING TO THIS AGREEMENT OR TO ANY MATTER ARISING OUT OF OR RELATING TO THISAGREEMENT OR ANY OTHER RELATED DOCUMENT; PROVIDED, THAT EACH PARTY HERETO ACKNOWLEDGES THAT ANYAPPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF THE BOROUGH OF MANHATTAN INNEW YORK CITY; PROVIDEDFURTHER THAT NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE ANYLENDER OR THE ADMINISTRATIVE AGENT FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHERJURISDICTION TO REALIZE ON THE BORROWER COLLATERAL OR ANY OTHER SECURITY FOR THE BORROWER OBLIGATIONS,OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF THE LENDERS OR THE ADMINISTRATIVE AGENT. EACHPARTY HERETO SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANYSUCH COURT, AND EACH PARTY HERETO HEREBY WAIVES ANY OBJECTION THAT SUCH PARTY MAY HAVE BASED UPON LACKOF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUMNONCONVENIENS AND HEREBY CONSENTS TO THE GRANTING OFSUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT. EACH PARTY HERETO HEREBY WAIVESPERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREESTHAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAILADDRESSED TO SUCH PARTY AT THE ADDRESS PROVIDED FOR IN SECTION 12.01 HEREOF AND THAT SERVICE SO MADE SHALL BEDEEMED COMPLETED UPON THE EARLIER OF SUCH PARTY’S ACTUAL RECEIPT THEREOF OR THREE DAYS AFTER DEPOSIT INTHE UNITED STATES MAIL, PROPER POSTAGE PREPAID. NOTHING IN THIS SECTION SHALL AFFECT THE RIGHT OF ANY PARTYHERETO TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.


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(c) BECAUSE DISPUTES ARISING IN CONNECTION WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLYAND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE ANDFEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR DISPUTES BE RESOLVED BYA JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THEJUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE TO THE FULLEST EXTENT PERMITTED UNDERAPPLICABLE LAW ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE,WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTALTO THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER RELATEDDOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

Section 12.10. Counterparts. This Agreement may be executed in any number of separate counterparts, each of which shall collectively andseparately constitute one agreement.

Section 12.11. Severability. Wherever possible, each provision of this Agreement shall be interpreted in such a manner as to be effective and validunder applicable law, but if any provision of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective only to theextent of such prohibition or invalidity without invalidating the remainder of such provision or the remaining provisions of this Agreement.

Section 12.12. Section Titles. The section, titles and table of contents contained in this Agreement are and shall be without substantive meaning orcontent of any kind whatsoever and are not a part of the agreement between the parties hereto.

Section 12.13. Further Assurances.

(a) The Borrower shall, or shall cause the Servicer to, at its sole cost and expense, upon request of any of the Lenders or the Administrative Agent,promptly and duly execute and deliver any and all further instruments and documents and take such further action that may be necessary or desirable or that anyof the Lenders or the Administrative Agent may request to (i) perfect, protect, preserve, continue and maintain fully the Liens granted to the AdministrativeAgent for the benefit of itself and the Lenders under this Agreement, (ii) enable the Lenders or the Administrative Agent to exercise and enforce its rights underthis Agreement or any of the other Related Documents or (iii) otherwise carry out more effectively the provisions and purposes of this Agreement or any otherRelated Document. Without limiting the generality of the foregoing, the Borrower shall, upon request of any of the Lenders or the Administrative Agent,(A) execute and file such financing or continuation statements, or amendments thereto or assignments thereof, and such other instruments or notices that may benecessary or desirable or that any of the Lenders or the Administrative Agent may request to perfect, protect and preserve the Liens granted pursuant to thisAgreement, free and clear of all


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Adverse Claims, (B) mark, or cause the Servicer to mark, each Contract evidencing each Transferred Receivable with a legend, acceptable to each Lender andthe Administrative Agent evidencing that the Borrower has purchased such Transferred Receivables and that the Administrative Agent, for the benefit of theLenders, has a security interest in and lien thereon, (C) mark, or cause the Servicer to mark, its master data processing records evidencing such TransferredReceivables with such a legend and (D) notify or cause the Servicer to notify Obligors of the Liens on the Transferred Receivables granted hereunder.

(b) Without limiting the generality of the foregoing, the Borrower hereby authorizes the Lenders and the Administrative Agent, and each of theLenders hereby authorizes the Administrative Agent, to file one or more financing or continuation statements, or amendments thereto or assignments thereof,relating to all or any part of the Transferred Receivables, including Collections with respect thereto, or the Borrower Collateral without the signature of theBorrower or, as applicable, the Lenders, as applicable, to the extent permitted by applicable law. A carbon, photographic or other reproduction of this Agreementor of any notice or financing statement covering the Transferred Receivables, the Borrower Collateral or any part thereof shall be sufficient as a notice orfinancing statement where permitted by law.

Section 12.14. No Proceedings. Each of Administrative Agent and each Lender agrees that, from and after the Closing Date and until the date oneyear plus one day following the Termination Date, it will not, directly or indirectly, institute or cause to be instituted against the Borrower any proceeding of thetype referred to in Sections 8.01(d) and 8.01(e). This Section 12.14 shall survive the termination of this Agreement.

Section 12.15. Limitation on Payments. Notwithstanding any provision in any other section of this Agreement to the contrary, the obligation of theBorrower to pay any amounts payable to Lender or any other Affected Party pursuant to Sections 2.09, 2.10 and 10.01 of this Agreement shall be without recourseto the Borrower except as to any Collections and other amounts and/or proceeds of the Transferred Receivables (collectively, the “Available Amounts”) requiredto be distributed to the Lenders, to the extent that such amounts are available for distribution. In the event that amounts payable to a Lender or any other AffectedParty pursuant to this Agreement exceed the Available Amounts, the excess of the amounts due hereunder over the Available Amounts paid shall not constitute a“claim” under Section 101(5) of the Bankruptcy Code against the Borrower until such time as the Borrower has Available Amounts. The foregoing shall notoperate to limit the rights of the Administrative Agent or any other Affected Party to enforce any claims of Borrower or its assigns against the Originators underthe Sale Agreement or any other Related Document.

Section 12.16. Limited Recourse. The obligations of the Lenders under this Agreement and all Related Documents are solely the corporateobligations of each such Lender. No recourse shall be had for the payment of any amount owing in respect of Advances or for the payment of any fee hereunderor any other obligation or claim arising out of or based upon this Agreement or any other Related Document against any Stockholder, employee, officer, director,agent or incorporator of such Lender. The SMBC Discretionary Lender shall not, and shall not be obligated to, pay any amount pursuant to the RelatedDocuments unless such SMBC Discretionary Lender has received funds which may be used to make such payment pursuant to


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such SMBC Discretionary Lender’s commercial paper program documents. Any amount which the SMBC Discretionary Lender does not pay pursuant to theoperation of the preceding sentence shall not constitute a claim (as defined in Section 101 of the Bankruptcy Code) against or an obligation of the SMBCDiscretionary Lender for any insufficiency unless and until the SMBC Discretionary Lender satisfies the provisions of such preceding sentence. ThisSection 12.16 shall survive the termination of this Agreement.

Section 12.17. Agreement Not to Petition. Each party hereto agrees, for the benefit of the holders of the privately or publicly placed indebtedness forborrowed money for the SMBC Discretionary Lender, not, prior to the date which is one (1) year and one (1) day after the payment in full of all suchindebtedness, to acquiesce, petition or otherwise, directly or indirectly, invoke, or cause the SMBC Discretionary Lender to invoke, the process of anyGovernmental Authority for the purpose of (a) commencing or sustaining a case against the SMBC Discretionary Lender under any federal or state bankruptcy,insolvency or similar law (including the Bankruptcy Code), (b) appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar officialfor the SMBC Discretionary Lender, or any substantial part of its property, or (c) ordering the winding up or liquidation of the affairs of the SMBC DiscretionaryLender. The provisions of this Section 12.17 shall survive the termination of this Agreement.

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IN WITNESS WHEREOF, the parties have caused this Second Amended and Restated Receivables Funding and Administration Agreement to beexecuted by their respective officers thereunto duly authorized, as of the date first above written.

SIT FUNDING CORPORATION, as the Borrower

By /s/ Simon Y. LeungName Simon Y. LeungTitle Corporate Secretary


S-1


Commitment: $171,420,000 GENERAL ELECTRIC CAPITAL CORPORATION, as a Lender and as Swing Line Lender

By: /s/ Eugene Seip Name: Eugene Seip Title: Duly Authorized Signatory

GENERAL ELECTRIC CAPITAL CORPORATION, as Administrative Agent

By: /s/ Eugene Seip Name: Eugene Seip Title: Duly Authorized Signatory


S-2


Commitment: $128,580,000 SMBC LENDER GROUP:

SUMITOMO MITSUI BANKING CORPORATION,as a Lender and the SMBC Committed Lender

By: /s/ Tomoaki Nakamura Name: Tomoaki Nakamura Title: Senior Vice President

MANHATTAN ASSET FUNDING COMPANY LLC,as a Lender and the SMBC Discretionary Lender

BY: MAF RECEIVABLES CORP., its sole member

By: /s/ Amy S. Keith Name: Amy S. Keith Title: Vice President


S-3


ANNEX X

DEFINITIONS

[Attached]



EXECUTION VERSION

ANNEX X

to


and

RECEIVABLES FUNDING AND ADMINISTRATION AGREEMENT

dated as of

February 12, 2007

Definitions and Interpretation

Annex X


SECTION 1. Definitions and Conventions. Capitalized terms used in the Sale Agreement (as defined below) and the Funding Agreement (as definedbelow) shall have (unless otherwise provided elsewhere therein) the following respective meanings:

“Account” shall mean any of the Concentration Account, the Borrower Account or the Collection Accounts.

“Account Agreement” shall mean any of the Borrower Account Agreement, the Concentration Account Agreement or the Collection Account Agreements.

“Accounting Changes” shall mean, with respect to any Person, (a) changes in accounting principles required by the promulgation of any rule, regulation,pronouncement or opinion of the Financial Accounting Standards Board of the American Institute of Certified Public Accountants (or any successor thereto orany agency with similar functions); (b) changes in accounting principles concurred in by such Person’s certified public accountants; (c) purchase accountingadjustments under A.P.B. 16 or 17 and EITF 88-16, and the application of the accounting principles set forth in FASB 109, including the establishment ofreserves pursuant thereto and any subsequent reversal (in whole or in part) of such reserves; and (d) the reversal of any reserves established as a result ofpurchase accounting adjustments.

“Additional Amounts” shall mean any amounts payable to any Affected Party under Sections 2.09 or 2.10 of the Funding Agreement.

“Additional Costs” shall have the meaning assigned to it in Section 2.09(b) of the Funding Agreement.

“Administrative Agent” shall have the meaning set forth in the Preamble of the Funding Agreement.

“Administrative Services Agreement” shall mean that certain Ancillary Services and Lease Agreement dated as of December 10, 1997, between theBorrower and the Parent.


“Advance Date” shall mean each day on which any Advance is made.

“Adverse Claim” shall mean any claim of ownership or any Lien, other than any ownership interest or Lien created under the Sale Agreement or theFunding Agreement.

“Affected Party” shall mean each of the following Persons: each Lender, the Administrative Agent, the Depositary, each Affiliate of the foregoing Persons,and any SPV or participant with the rights of a Lender under Section 12.02(c) of the Funding Agreement and their respective successors, transferees andpermitted assigns.

“Affiliate” shall mean, with respect to (a) any Lender or Administrative Agent, each Person that, directly or indirectly, owns or controls, whetherbeneficially, or as a trustee, guardian or other fiduciary, five percent (5%) or more of the Stock having ordinary voting power

Annex X


in the election of directors of such Person, (b) Borrower, or Parent or any of their Subsidiaries, or any Obligor, each Person that, directly or indirectly, owns orcontrols, whether beneficially, or as a trustee, guardian or other fiduciary ten percent (10%) or more of the Stock having ordinary voting power in the election ofdirectors of such Person, or (c) with respect to each Person, including those Persons to which clause (a) or (b) are applicable, (i) each Person that controls, iscontrolled by or is under common control with such Person, or (ii) each of such Person’s officers, directors, joint venturers and partners. For the purposes of thisdefinition, “control” of a Person shall mean the possession, directly or indirectly, of the power to direct or cause the direction of its management or policies,whether through the ownership of voting securities, by contract or otherwise.

“Agent Account” shall mean account number 50279513, Reference CFN8690 with the Depositary in the name of the Administrative Agent.

“Aggregate Commitment” shall mean as to all Lenders, the aggregate commitment of all Lenders to make Advances, which aggregate commitment shallbe Three Hundred Million Dollars ($300,000,000) on the Closing Date, as such amount may be adjusted, if at all, from time to time in accordance with theFunding Agreement.

“Appendices” shall mean, with respect to any Related Document, all exhibits, schedules, annexes and other attachments thereto, or expressly identifiedthereto.

“Assignment Agreement” shall mean an assignment agreement in the form of Exhibit 12.02 attached to the Funding Agreement.

“Authorized Officer” shall mean, with respect to any corporation or limited liability company, the Chairman or Vice-Chairman of the Board, the President,any Vice President, the General Counsel, the Secretary, the Treasurer, the Controller, any Assistant Secretary, any Assistant Treasurer, any manager or managingmember and each other officer of such corporation or limited liability company specifically authorized to sign agreements, instruments or other documents onbehalf of such corporation or limited liability company in connection with the transactions contemplated by the Sale Agreement, the Funding Agreement and theother Related Documents.

“Available Amounts” shall have the meaning assigned to it in Section 12.15 of the Funding Agreement.

“Bank” shall mean any of the Collection Account Banks, the Concentration Account Bank or the Borrower Account Bank.

“Bankruptcy Code” shall mean the provisions of title 11 of the United States Code, 11 U.S.C. § § 101 et seq.

“Billed Amount” shall mean, with respect to any Receivable, the amount billed on the Billing Date to the Obligor thereunder.

“Billing Date” shall mean, with respect to any Receivable, the date on which the invoice with respect thereto was generated.

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“BK Obligor” means an Obligor that is (i) unable to make payment of its obligations when due, (ii) a debtor in a voluntary or involuntary bankruptcyproceeding, or (iii) the subject of a comparable receivership or insolvency proceeding, unless, in the case of a bankruptcy proceeding in clause (ii) or (iii), theapplicable Originator has been designated as a “critical vendor” and the Obligor thereunder has obtained (x) in the case of any Receivable originated pre-petition,a final court order approving the payment of the pre-petition claims of such Originator on an administrative priority basis or (y) in the case of any Receivableoriginated post-petition, (A) a final court order approving the payment of the post-petition claims of such Originator on an administrative priority basis and (B) adebtor-in-possession financing facility and management of the applicable Originator reasonably believes that such financing will be available to pay theReceivables owing by such Obligor, and, in any such case, such Obligor has agreed post-petition to pay the Receivables owing by such Obligor on a current basisin accordance with its terms.

“Borrower” shall have the meaning assigned to it in the preamble to the Funding Agreement.

“Borrower Account” shall mean that certain deposit account identified as the “Borrower Account” on Schedule 4.01(q) to the Funding Agreement,maintained by the Borrower at the Borrower Account Bank, which account shall be subject to a Borrower Account Agreement.

“Borrower Account Agreement” shall mean any agreement among an Originator, the Borrower, the Administrative Agent, and the Borrower AccountBank with respect to the Borrower Account that provides, among other things, that (a) all items of payment deposited in the Borrower Account are held by theBorrower Account Bank as custodian for the Administrative Agent, (b) the Borrower Account Bank has no rights of setoff or recoupment or any other claimagainst the Borrower Account, as the case may be, other than for payment of its service fees and other charges directly related to the administration of theBorrower Account and for returned checks or other items of payment and (c) after notice from the Administrative Agent to the Borrower Account Bank, theBorrower Account Bank agrees to forward all Collections received in the Borrower Account to the Agent Account within one Business Day of receipt, and isotherwise in form and substance acceptable to the Administrative Agent.

“Borrower Account Bank” shall mean the bank or other financial institution at which the Borrower Account is maintained, which shall initially be Bank ofAmerica, N.A.

“Borrower Account Collateral” shall have the meaning assigned to it in Section 7.01(c) of the Funding Agreement.

“Borrower Assigned Agreements” shall have the meaning assigned to it in Section 7.01(b) of the Funding Agreement.

“Borrower Collateral” shall have the meaning assigned to it in Section 7.01 of the Funding Agreement.

“Borrower Obligations” shall mean all loans, advances, debts, liabilities, indemnities and obligations for the performance of covenants, tasks or duties orfor payment of

3

Annex X


monetary amounts (whether or not such performance is then required or contingent, or such amounts are liquidated or determinable) owing by the Borrower toany Affected Party under the Funding Agreement, any other Related Document and any document or instrument delivered pursuant thereto, and all amendments,extensions or renewals thereof, and all covenants and duties regarding such amounts, of any kind or nature, present or future, whether or not evidenced by anynote, agreement or other instrument, arising thereunder, including the Outstanding Principal Amount, interest, Unused Commitment Fees, amounts payable inrespect of Funding Excess, Successor Servicing Fees and Expenses, Additional Amounts, Additional Costs, Indemnified Amounts, and including the “SellerSecured Obligations” under, and as defined in, the Existing Receivables Purchase Agreement. This term includes all principal, interest (including all interest thataccrues after the commencement of any case or proceeding by or against the Borrower in bankruptcy, whether or not allowed in such case or proceeding), fees,charges, expenses, attorneys’ fees and any other sum chargeable to the Borrower under any of the foregoing, whether now existing or hereafter arising, voluntaryor involuntary, whether or not jointly owed with others, direct or indirect, absolute or contingent, liquidated or unliquidated, and whether or not from time to timedecreased or extinguished and later increased, created or incurred, and all or any portion of such obligations that are paid to the extent all or any portion of suchpayment is avoided or recovered directly or indirectly from any Lender or the Administrative Agent or any assignee of any Lender or the Administrative Agentas a preference, fraudulent transfer or otherwise.

“Borrowing” shall mean (i) the Revolving Credit Advances of the Lenders (other than the Swing Line Lender) made pursuant to Section 2.01(b)(iii) or(iv) of the Funding Agreement, and (ii) each Swing Line Advance made by the Swing Line Lender pursuant to Section 2.01(b)(i) of the Funding Agreement.

“Borrowing Base” shall mean, as of any date of determination, the amount equal to the lesser of:

(a) the Aggregate Commitment,

and

(b) an amount equal to the positive difference, if any, of:

(i) the product of (1) the Dynamic Advance Rate multiplied by (2) the Net Receivables Balance,

minus

(ii) the sum of (W) the Interest Reserve, (X) the Servicing Fee Reserve, and (Y) such other reserves as the Administrative Agent may determinefrom time to time based upon its reasonable credit judgment;


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Annex X


“Borrowing Base Certificate” shall have the meaning assigned to it in Section 5.02(b) of the Funding Agreement.

“Borrowing Request” shall have the meaning assigned to it in Section 2.03(a) of the Funding Agreement.

“Breakage Costs” shall have the meaning assigned to it in Section 2.10 of the Funding Agreement.

“Business Day” shall mean any day that is not a Saturday, a Sunday or a day on which banks are required or permitted to be closed in the State of NewYork or, with respect to any remittances to be made by any Collection Account Bank or the Concentration Account Bank to any related Account, in thejurisdiction(s) in which the Accounts maintained by such Banks are located.

“Buyer” shall have the meaning assigned to it in the preamble to the Sale Agreement.

“Buyer Available Amounts” shall have the meaning assigned to it in Section 6.15 of the Sale Agreement.

“Buyer Indemnified Person” shall have the meaning assigned to it in Section 5.01 of the Sale Agreement.

“Capital Lease” shall mean, with respect to any Person, any lease of any property (whether real, personal or mixed) by such Person as lessee that, inaccordance with GAAP, would be required to be classified and accounted for as a capital lease on a balance sheet of such Person.

“Capital Lease Obligation” shall mean, with respect to any Capital Lease of any Person, the amount of the obligation of the lessee thereunder that, inaccordance with GAAP, would appear on a balance sheet of such lessee in respect of such Capital Lease.

“Change of Control” shall mean any event, transaction or occurrence after the Closing Date as a result of which (a) any person or group of persons (withinthe meaning of the Securities Exchange Act of 1934, as amended) shall have acquired beneficial ownership (within the meaning of Rule 13d-3 promulgated bythe Securities Exchange Commission under the Securities Exchange Act of 1934, as amended) of a greater percentage of the issued and outstanding shares ofStock of the Parent having the right to vote for the election of directors of the Parent under ordinary circumstances than indirectly owned by the Mitac Group;(b) during any period of twelve (12) consecutive calendar months ending after the Closing Date, individuals who at the beginning of such twelve-month periodconstituted the board of directors of the Parent (together with any new directors whose election by the board of directors of the Parent or whose nomination forelection by the Stockholders of the Parent was approved by a vote of at least two-thirds the directors then in office who either were directors at the beginning ofsuch

5

Annex X


period or whose election or nomination for election was previously so approved) cease for any reason other than death or disability to constitute a majority of thedirectors then in office; (c) the Parent ceases to own and control, directly or indirectly, all of the economic and voting rights associated with all of the outstandingStock, directly or indirectly, of any Originator (other than Parent) or the Borrower; or (d) any Transaction Party has sold, transferred, conveyed, assigned orotherwise disposed of all or substantially all of its assets (other than such a sale of assets from one Originator to another Originator).

“Charge-Off” shall mean the extent to which any Transferred Receivable is subject to any Dilution Factor described in clause (a) of the definition thereof.

“Charges” shall mean (i) all federal, state, provincial, county, city, municipal, local, foreign or other governmental taxes (including taxes owed to thePBGC at the time due and payable); (ii) all levies, assessments, charges, or claims of any governmental entity or any claims of statutory lienholders, thenonpayment of which could give rise by operation of law to a Lien on Borrower Collateral or any other property of the Borrower or any Originator and (iii) anysuch taxes, levies, assessment, charges or claims which constitute a lien or encumbrance on any property of the Borrower or any Originator.

“Class” means, with respect to an Obligor, at any time of determination the classification of such Obligor as a “Class A Obligor”, “Class B Obligor”,“Class C Obligor” or “Class D Obligor”.

“Class A Obligor”, “Class B Obligor”, “Class C Obligor” and “Class D Obligor”, respectively, shall mean at any time of determination, an Obligor havingan unsecured long-term debt rating and equivalent short-term rating from each of S&P and Moody’s as described below:

Class of Obligor Short-Term Rating Long-Term Rating of ObligorClass A Obligor A-1/P-1 A/A2 or higherClass B Obligor

A-2/P-2

A- or BBB+/ A3 or Baa1 (but lower thanA/A2)

Class C Obligor

A-3/P-3

BBB or BBB-/Baa2 or Baa3 (but lower thanBBB+/Baa1)

Class D Obligor Lower than A-3/P-3 or Not Rated Lower than BBB-/Baa3 or Not Rated

For purposes of calculating the foregoing, (i) an Obligor’s short term rating from S&P and/or Moody’s shall govern, (ii) an Obligor which does not have ashort-term rating from S&P and/or Moody’s but which has the equivalent long-term debt rating from such Rating Agency as described above shall be deemed tohave the related short-term rating, and (iii) if an Obligor’s short-term rating results in two different “Classes of Obligor” (because of differences in the short-termratings assigned by each of S&P and Moody’s, the Class for such Obligor shall be based upon the lower of the short-term ratings.

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Annex X


“Closing Date” shall mean February 12, 2007.

“Collection Account” shall mean any deposit account established by or assigned to the Borrower for the deposit of Collections pursuant to and inaccordance with Section 6.01(a) of the Funding Agreement.

“Collection Account Agreement” shall mean any agreement among an Originator, the Borrower, the Administrative Agent, and a Collection Account Bankwith respect to a Lockbox and Collection Account that provides, among other things, that (a) all items of payment deposited in such Lockbox and CollectionAccount are held by such Collection Account Bank as custodian for the Administrative Agent, (b) such Collection Account Bank has no rights of setoff orrecoupment or any other claim against such Collection Account, as the case may be, other than for payment of its service fees and other charges directly relatedto the administration of such Collection Account and for returned checks or other items of payment and (c) such Collection Account Bank agrees to forward allCollections received in such Collection Account to (i) the Concentration Account within one Business Day of receipt or (ii) if the Concentration Account is notestablished, to the Agent Account within one Business Day of receipt, and is otherwise in form and substance acceptable to the Administrative Agent.

“Collection Account Bank” shall mean any bank or other financial institution at which one or more Collection Accounts are maintained.

“Collections” shall mean, with respect to any Transferred Receivable, all cash collections and other proceeds of such Receivable (including late charges,fees and interest arising thereon, and all recoveries with respect thereto that have been written off as uncollectible).

“Commercial Paper” shall mean those certain short-term promissory notes issued by the SMBC Discretionary Lender from time to time in the UnitedStates of America commercial paper market.

“Commitment” shall mean as to any Lender (other than the Swing Line Lender), the aggregate commitment of such Lender to make Revolving CreditAdvances as set forth in the signature page to the Funding Agreement or in the most recent Assignment Agreement executed by such Lender, as such amountmay be adjusted, if at all, from time to time in accordance with the Funding Agreement.

“Commitment Reduction Notice” shall have the meaning assigned to it in Section 2.02(a) of the Funding Agreement.

“Commitment Termination Date” shall mean the earliest of (a) the date so designated pursuant to Section 9.01 of the Funding Agreement, (b) the FinalAdvance Date, and (c) the date of termination of the Aggregate Commitment specified in a notice from the Borrower to the Lenders delivered pursuant to and inaccordance with Section 2.02(b) of the Funding Agreement.

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Annex X


“Commitment Termination Notice” shall have the meaning assigned to it in Section 2.02(b) of the Funding Agreement.

“Concentration Account” shall mean that certain account maintained by the Borrower at Concentration Account Bank, which account shall be subject to aConcentration Account Agreement.

“Concentration Account Agreement” shall mean any agreement among an Originator, the Borrower, the Administrative Agent, and the ConcentrationAccount Bank with respect to the Concentration Account that provides, among other things, that (a) all items of payment deposited in the Concentration Accountare held by the Concentration Account Bank as custodian for the Administrative Agent, (b) the Concentration Account Bank has no rights of setoff orrecoupment or any other claim against the Concentration Account, as the case may be, other than for payment of its service fees and other charges directly relatedto the administration of the Concentration Account and for returned checks or other items of payment and (c) the Concentration Account Bank agrees to forwardall Collections received in the Concentration Account to the Agent Account within one Business Day of receipt, and is otherwise in form and substanceacceptable to the Administrative Agent.

“Concentration Account Bank” shall mean the bank or other financial institution at which the Concentration Account is maintained.

“Concentration Percentage” shall mean, with respect to an Obligor as of any date of determination, the General Concentration Percentage or, if applicable,the Special Concentration Percentage for such Obligor at such date of determination.

“Contract” shall mean any agreement or invoice pursuant to, or under which, an Obligor shall be obligated to make payments with respect to anyReceivable.

“Contributed Receivables” shall have the meaning assigned to it in Section 2.01(d) of the Sale Agreement.

“CP Rate” shall mean for each calendar month, a per annum rate of interest equal to the sum of 0.55% plus the per annum rate equivalent to the weightedaverage of the rates paid or payable by the SMBC Discretionary Lender from time to time as interest on or otherwise (by means of interest rate hedges orotherwise) in respect of Commercial Paper that is allocated, in whole or in part, to fund or maintain the SMBC Discretionary Lender’s Advances during suchcalendar month, which rates shall reflect and give effect to actual dealer fees, commissions of placement agents and other issuance costs in respect of suchCommercial Paper; provided, that if for any reason the SMBC Discretionary Lender is unable to issue Commercial Paper or determine the applicable rate hereto,the CP Rate shall in all such cases be equal to the Index Rate.

“Credit Agreement” shall mean that certain Second Amended and Restated Credit Agreement, dated as of February 12, 2007, among Parent, GE Capital asadministrative agent and the financial institutions from time to time party thereto as lenders and as in effect on Closing Date together with all amendments,restatements, supplements or modifications thereto that are in effect on the Closing Date or adopted from time to time thereafter to the extent not

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Annex X


prohibited under the Related Documents, and any refinancings, replacements or refundings thereof that (a) are agreed to by (i) the Administrative Agent andRequisite Lenders or (b) (i) have terms and conditions no less favorable (as determined by the Administrative Agent, in the exercise of its reasonable creditjudgment) to the Administrative Agent or any Lender than the terms and conditions of the existing Credit Agreement and (ii) with respect to which anintercreditor agreement having terms and conditions acceptable to the Administrative Agent and the Lenders.

“Credit and Collection Policies” shall mean the written credit, collection, customer relations and service policies of the Originators in effect on the ClosingDate and attached as Exhibit A to the Funding Agreement, as the same may from time to time be amended, restated, supplemented or otherwise modified with theprior written consent of the Administrative Agent.

“Daily Report” shall have the meaning assigned to it in paragraph (a) of Annex 5.02(a) to the Funding Agreement.

“Debt” of any Person shall mean, without duplication, (a) all indebtedness of such Person for borrowed money or for the deferred purchase price ofproperty or services payment for which is deferred more than 90 days, but excluding obligations to trade creditors incurred in the ordinary course of business thatare not overdue by more than 90 days unless being contested in good faith, (b) all reimbursement and other obligations with respect to letters of credit, bankers’acceptances and surety bonds, whether or not matured, (c) all obligations evidenced by notes, bonds, debentures or similar instruments, (d) all indebtednesscreated or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights andremedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (e) all Capital LeaseObligations, (f) all obligations of such Person under commodity purchase or option agreements or other commodity price hedging arrangements, in each casewhether contingent or matured, (g) all obligations of such Person under any foreign exchange contract, currency swap agreement, interest rate swap, cap or collaragreement or other similar agreement or arrangement designed to alter the risks of that Person arising from fluctuations in currency values or interest rates, ineach case whether contingent or matured, (h) all liabilities of such Person under Title IV of ERISA, (i) all Guaranteed Indebtedness of such Person, (j) allindebtedness referred to in clauses (a) through (i) above secured by (or for which the holder of such indebtedness has an existing right, contingent or otherwise,to be secured by) any Lien upon or in property or other assets (including accounts and contract rights) owned by such Person, even though such Person has notassumed or become liable for the payment of such indebtedness, (k) all “Indebtedness” as such term is defined in the Credit Agreement, (l) all “Loans” and otherobligations of the Parent and its Subsidiaries under the Credit Agreement (which shall only be Debt of the Parent, its Subsidiaries and any Person who guaranteessuch Debt), and (m) the Borrower Obligations.

“Default Rate” shall have the meaning assigned to it in Section 2.06(b) of the Funding Agreement.

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“Default Ratio” shall mean, as of any date of determination, the ratio (expressed as a percentage) of:

(a) the sum of (without duplication) (i) the aggregate Outstanding Balance of all Transferred Receivables which became Defaulted Receivables during theSettlement Period immediately preceding such date and (ii) with respect to any Obligor that, during the Settlement Period immediately preceding such date,became (A) a debtor in a voluntary or involuntary bankruptcy proceeding, or (B) the subject of a comparable receivership or insolvency proceeding, theaggregate Outstanding Balance of Transferred Receivables owing by such Obligor that were owing by such Obligor before such Obligor became (x) a debtor in avoluntary or involuntary bankruptcy proceeding, or (y) the subject of a comparable receivership or insolvency,

to

(b) the aggregate Outstanding Balance of all Transferred Receivables originated during the Settlement Period which ended three (3) months prior to thelast day of the Settlement Period immediately preceding such date.

“Default Trigger Ratio” shall mean, as of any date of determination, the ratio (expressed as a percentage) of:

(a) the aggregate Outstanding Balance of all Defaulted Receivables as of the last day of the three Settlement Periods immediately preceding such date;

to

(b) the aggregate Outstanding Balance of all Transferred Receivables originated during the fourth, fifth and sixth Settlement Periods immediatelypreceding such date.

“Defaulted Receivable” shall mean any Transferred Receivable (a) with respect to which any payment, or part thereof, remains unpaid for more than 60days after its Maturity Date, (b) with respect to which the Obligor thereunder is a BK Obligor or (c) that otherwise has been or should be written off inaccordance with the Credit and Collection Policies.

“Delinquency Ratio” shall mean, as of any date of determination, the ratio (expressed as a percentage) of:

(a) the aggregate Outstanding Balance of all Transferred Receivables with respect to which any payment, or part thereof, is between 31 and 60 days pastdue as of the last day of the three Settlement Periods immediately preceding such date

to

(b) the aggregate Outstanding Balance of all Transferred Receivables as of the last day of the three Settlement Periods immediately preceding such date.

“Depositary” shall have the meaning assigned to it in Section 6.01(c)(i) of the Funding Agreement.

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“Dilution Factors” shall mean, with respect to any Transferred Receivable, any portion of which (a) was reduced, canceled or written-off as a result of(i) any credits, rebates, freight charges, cash discounts, volume discounts, cooperative advertising expenses, royalty payments, warranties, cost of parts requiredto be maintained by agreement (either express or implied), allowances for early payment, warehouse and other allowances, defective, rejected, returned orrepossessed merchandise or services, or any failure by any Originator to deliver any merchandise or services or otherwise perform under the underlying Contractor invoice, (ii) any change in or cancellation of any of the terms of the underlying Contract or invoice or any cash discount, rebate, retroactive price adjustment orany other adjustment by the applicable Originator which reduces the amount payable by the Obligor on the related Receivable except to the extent based on creditrelated reasons, or (iii) any setoff in respect of any claim by the Obligor thereof (whether such claim arises out of the same or a related transaction or an unrelatedtransaction) or (b) is subject to any specific dispute, offset, counterclaim or defense whatsoever (except discharge in bankruptcy of the Obligor thereof).

“Dilution Horizon Factor” shall mean, as of any date of determination, (x) the aggregate principal amount of Transferred Receivables originated during thetwo most recent Settlement Periods preceding such date divided by (y) the Net Receivables Balance as of the end of the Settlement Period immediately precedingsuch date.

“Dilution Ratio” shall mean, as of any date of determination, the ratio (expressed as a percentage) of:

(a) the aggregate Dilution Factors for all Transferred Receivables during the Settlement Period immediately preceding such date

to

(b) the aggregate Billed Amount of all Transferred Receivables originated during the second Settlement Period immediately preceding such date.

“Dilution Reserve Ratio” shall mean, as of any date of determination, the ratio (expressed as a percentage) calculated in accordance with the followingformula:

DRR = (2 *ADR) + [(HDR-ADR) x (HDR/ADR)]] x DHF];

where

DRR = the Dilution Reserve Ratio;


HDR = the highest Dilution Ratio occurring during the twelve most recent Settlement Periods preceding such date; and


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