TRADE RECEIVABLES PURCHASE FACILITY AGREEMENT

Exhibit 10-AAgg

 

TRADE RECEIVABLES PURCHASE FACILITY AGREEMENT

 

This Trade Receivables Purchase Facility Agreement (together with any amendments, supplements, restatements, replacements, substitutions, exhibits, or schedules hereto and each Obligor Letter executed in connection herewith, this “ Agreement ”) is made as of this 26th day of May, 2005, between TECH DATA CORPORATION, a Florida corporation, with offices at 5350 Tech Data Drive, Clearwater, Florida 33760 (“ Tech Data ”) and each of its wholly owned domestic subsidiaries that executes this Agreement or that executes a Supplement hereto substantially in the form of Exhibit A (Tech Data and each such subsidiary, individually, a “ Company ” and collectively, the “ Companies ”), and SUNTRUST BANK, a Georgia banking corporation (referred to herein as “ SunTrust ”).

 

RECITALS

 

WHEREAS, each Company solicits orders for its goods and services sold in the ordinary course of its business to customers located in the United States, which purchases by such customers are solely for their business, commercial or organizational purposes and use, and not for their personal, family or household use;

 

WHEREAS, each Company desires to offer to sell to SunTrust certain accounts receivable generated from the sale of such goods and services to certain of its customers which are approved by SunTrust by separate letter agreement, and SunTrust desires to purchase certain of such accounts receivable in accordance with the terms of this Agreement and in strict reliance upon the warranties, representations, covenants and indemnities of the Companies hereunder; and

 

WHEREAS, the parties are entering into this Agreement to set forth the terms and conditions governing all such sales and purchases of such accounts receivable, and all related transactions contemplated hereby;

 

NOW, THEREFORE, in consideration of the mutual promises contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

 

Definitions.

 

In addition to the other terms defined in this Agreement, the following terms whenever used in this Agreement shall have the respective meanings herein specified (such meanings to be equally applicable to both the singular and plural forms of such defined terms):

 

“ Actions ” shall mean any Commercial Dispute or any demand, suit, legal action or proceeding, summons, subpoena, inquiry or investigation of any nature, civil, criminal, regulatory or otherwise.

 

“ Adjustment(s) ” means, with respect to each Eligible Receivable offered for purchase, as of each Purchase Date, the aggregate of:

 

(i) all discounts and allowances to which each Obligor would be entitled if it made full payment on such Eligible Receivable on the most expeditious basis or in the shortest term or satisfied any other conditions or requirements for such discounts and allowances;

(ii) all returns, replacements and credits relating to or regarding such Eligible Receivable, known at the Purchase Date; and

 

(iii) all partial payments received or collected on or prior to any date of determination of such Adjustment with respect to the Eligible Receivables.

 

“ Affiliate ” of a party shall mean any entity that is owned by, owns or is under common control with such party or its ultimate parent.

 

“ Applicable Margin ” shall be determined based on the S&P Rating for each Obligor or any Guarantor therefor as set forth in such Obligor Letter for each Obligor.

 

“ Bankruptcy Exception ” shall mean, in respect of any agreement, contract or commitment, any limitation thereon with respect to enforceability imposed by any bankruptcy, conservatorship, receivership, insolvency, moratorium, or similar laws affecting creditors’ rights generally, and any limitation imposed on the remedies of specific performance and injunction and other forms of equitable relief applied at the discretion of the court before which any proceedings therefor may be brought.

 

“ Books and Records ” shall mean any Company’s books and records relating to its Receivables, including all Eligible Receivables offered for purchase by SunTrust and all Purchased Receivables, and all associated Invoices and all related documents and information.

 

“ Business Day ” shall mean any day other than a Saturday, Sunday or other day on which commercial banks in Atlanta, Georgia, are authorized or required by law to close.

 

“ Change of Control ” shall have the meaning given to such term in the Credit Agreement.

 

“ Collections ” shall refer to all monies collected with respect to the Purchased Receivables.

 

“ Commercial Dispute ” shall mean (i) any returns, replacements, chargebacks, credits and any other Adjustments relating to any Purchased Receivable, (ii) any disputes or claims (including, without limitation, any dispute alleged as to price, invoice terms, quantity, or quality, breach of contract, warranty, representation, or covenant by any Company in respect of any Purchased Receivable, or late or wrongful delivery and related claims of release from liability, counterclaim or any alleged claim of deduction, offset, set-off, recoupment, counterclaim or otherwise) arising out of, or in connection with, all or any portion of a Purchased Receivable or any other transaction related thereto, or (iii) non-payment, in whole or in part, within one hundred twenty (120) days past the Due Date for such Purchased Receivable for any other reason or cause other than Financial Inability to Pay.

“ Company Guaranty ” shall mean the agreement of each Company to guaranty the payment and performance of the obligations of each other Company pursuant to this Agreement under the provisions of Section 14 .

 

“ Confidential Information ” shall mean confidential or proprietary information about any party, including but not limited to such party’s marketing philosophy and objectives, competitive advantages and disadvantages, pricing, accountholder and customer names and addresses, financial results, systems (including computer systems, owned or licensed software, and systems’ screens, capabilities, outputs and functions), operating procedures, manuals and practices, sales volume(s), Goods mix or other information regarding the business or affairs of each party and its Affiliates, which such party reasonably identifies to the other party in writing as being confidential and/or proprietary; provided, however, that in no event shall “Confidential Information” constitute information of one party (the “first party”): (i) known to the other party prior to the commencement of discussions between the parties hereto leading up to the execution of this Agreement and from a source other than the first party hereto, free of any obligation to keep it confidential; (ii) in the public domain or made available publicly on a non-confidential basis from a third party source other than through disclosure known to the other party to be unauthorized; or (iii) independently developed by or lawfully known to such other party prior to the date of disclosure of such information by the first party hereto.

 

“ Control Agreement ” shall mean a deposit account control agreement or a blocked account agreement in form and substance satisfactory to SunTrust with respect to each SunTrust Deposit Account by and among SunTrust, each Company, and the financial institution with which each SunTrust Deposit Account is maintained.

 

“ Credit Agreement ” shall mean that certain Second Amended and Restated Credit Agreement dated as of March 7, 2005, by and among Tech Data Corporation, Bank of America, N.A., as Administrative Agent, and the Lenders party thereto as amended or replaced from time to time.

 

“ Credit and Collection Policies and Procedures ” shall mean those credit and collection policies and procedures delivered and certified to SunTrust by Tech Data as of the date of this Agreement.

 

“ Default ” shall mean any event or condition that constitutes an Event of Default or that with the giving of any required notice or lapse of time or both would become an Event of Default.

 

“ Dilution ” shall mean, for any Period, the aggregate amount of all Purchased Receivables not paid when due by the Obligors for any reason other than their respective Financial Inability to Pay.

 

“ Discount Percentage ” shall mean the percentage calculated as set forth in Schedule 2 .

 

“ Dollar ” or “ $ ” shall refer to the lawful currency of the United States of America.

“ Due Date ” shall mean the date indicated on the Invoice for any Receivable as the date when final payment in full is due to be made with respect to such Receivable.

 

“ Eligible Receivables ” shall mean Receivables that meet the following eligibility criteria:

 

Obligors on such Receivables at the time of purchase must:

 

not have (i) filed a petition for relief, or have filed against them a petition under federal, state or foreign bankruptcy law or statute or any other similar Laws, including, but not by way of limitation, any relief sought for or against any Obligor under Laws dealing with or relating to receivership, insolvency, conservatorship, moratorium, reorganization, arrangement, dissolution or liquidation or the inability to pay its debts; (ii) had appointed a custodian, receiver, liquidator, trustee or sequestrator or similar official relative to any part of its assets; (iii) made an assignment for the benefit of its creditors or admitted in writing its inability, or be generally unable, to pay its debts as such debts become due; or (iv) dissolved or taken steps to dissolve (other than pursuant to a consolidation, amalgamation, merger or corporate reorganization) or wind up its business; provided , however , that an Obligor may be approved in advance by SunTrust notwithstanding the application of this subsection (a);

 

not be the subject of any threatened or pending Actions (other than Commercial Disputes arising in the ordinary course of business which alone or in the aggregate do not constitute a material portion of the Receivables) asserted by or against any Company or SunTrust or have caused any loss on the part of any Company or SunTrust as a result of any fraud; and

 

satisfy the applicable requirements set forth in the Obligor Letter for such Obligor; and

 

Receivables at the time of purchase must:

 

be an “account” or “payment intangible” (within the meaning of Article 9 of the UCC), be generated from an Obligor which meets the criteria set forth in clause (1) of this definition, and arise in connection with purchases of Goods solely for business, commercial or organizational purposes and use, and not for personal, family or household use, and which transactions do not constitute consumer lending or the extension of credit by any Company to an Obligor for personal, family or household use or private consumption and not subject to any consumer protection laws;

provide for repayment in full of the unpaid balance thereof not later than ninety (90) days from the date of the applicable Invoice;

 

not be charged off by any Company;

 

not be past due;

 

not be subject to any security interests, liens, security filings, rights of set-off, or other claims or encumbrances against any Company;

 

be denominated in Dollars;

 

not constitute, in whole or in part, any interest, late charges or late fees or arise or stem from any progress payments, incomplete projects or partially performed services;

 

neither contravene any Law nor be the subject of any pending or threatened Actions;

 

be established pursuant to the selling Company’s policies and procedures in the ordinary course of business;

 

be Receivables for which the selling Company is in possession of the related contract file;

 

be Receivables for which SunTrust’s ownership interest in such Receivables is perfected under the UCC and other applicable laws;

 

be Receivables that are in full force and effect and as to which the selling Company shall have performed all of its obligations and requirements necessary so as to have such Receivables constitute the binding and enforceable obligation of the respective Obligors for the full amounts thereof in accordance with their respective terms and not subject to any Commercial Disputes at the time of sale thereof;

 

be Receivables that satisfy all applicable requirements, if any, of the Credit and Collections Policies and Procedures;

 

if constituting SPV Receivables, be Receivables (i) which have been repurchased by Tech Data for fair market value and in which all rights, title and interests have been transferred by the SPV to Tech Data without reservation of any rights or interest, (ii) for which each other party claiming an interest therein has executed a release of all of its rights, title and interests therein (including a release in respect of any UCC financing statement of record with respect thereto), and (iii) as to which SunTrust has received such other documentation, consents, and certificates as it shall reasonably request, all of which

shall be in form and substance satisfactory to SunTrust; and be Receivables documented consistently with the selling Company’s standard administration and documentation policies and procedures.

 

“ Event of Default ” shall have the meaning set forth in Section 10.1 .

 

“ Fee Letter ” shall mean that certain letter agreement of even date herewith by and between SunTrust and Tech Data.

 

“ Financial Inability to Pay ” shall mean the failure of any Obligor to make a payment with respect to any Purchased Receivable as a consequence of the Obligor: (1) instituting a proceeding seeking a judgment of insolvency or bankruptcy or other similar relief under any bankruptcy or insolvency law, (2) having instituted against it a proceeding seeking a judgment of insolvency or bankruptcy or other similar relief under any bankruptcy or insolvency law, which proceeding results in a judgment of insolvency or bankruptcy or the entry of an order for relief or for the making of an order for its winding-up or liquidation, or such proceeding is not dismissed, discharged or stayed within ninety (90) days following the institution thereof, or (3) becoming subject to the appointment of a receiver, trustee, custodian, or other similar official for it or for all or substantially all of its assets and as a result thereof the Obligor is no longer paying its debts generally as they become due.

 

“ Goods ” shall mean goods or services sold in the ordinary course of business by a Company to an Obligor, which purchases are solely for business, commercial or organizational purposes and use, and not for personal, family or household use.

 

“ Guarantor ” shall mean the guarantor who is obligated under a Guaranty.

 

“ Guaranty ” shall mean any guaranty required under the terms of the Obligor Letter with respect to an Obligor, pursuant to which the Guarantor thereunder agrees to guaranty the payment and performance of the obligations of such Obligor to the Companies, or any of them, and which is either in favor of SunTrust or is assignable to SunTrust without notice or consent of such guarantor and which is in form and substance satisfactory to SunTrust, as the same may be amended, supplemented and restated from time to time.

 

“ Initial Discount Percentage ” shall have the meaning set forth in Schedule 2 attached hereto.

 

“ Initial Purchase Date ” shall mean May 31, 2005.

 

“ Initial Term ” shall mean the period beginning on the date of this Agreement and continuing for 364 days, unless this Agreement is sooner terminated as provided herein.

 

“ Invoice Amount ” means, as of each Purchase Date, the total dollar amount relating to each Eligible Receivable to be purchased by SunTrust as set forth on the applicable Invoices.

“ Invoices ” shall mean all sales and purchase orders, invoices, bills of lading and other contractual rights relating to Receivables generated by the bona fide sale of Goods to the respective Obligors.

 

“ Laws ” shall mean all applicable federal, state and local laws, rules and regulations, including, but not limited to, all statutes, laws, rules, regulations, ordinances, codes, orders, decisions, injunctions, judgments, and decrees of any governmental, judicial or administrative authority.

 

“ LIBOR ” shall mean, for any applicable Period, that rate per annum which is equal to the quotient of:

 

(i) the rate per annum equal to the offered rate for deposits in Dollars of amounts comparable to the principal amount of Purchased Receivables outstanding pursuant to this Agreement offered for a term of one month, which rate appears on the display designated as Page 3750 on the Dow Jones Markets Service (or such other page on that service or such other service designated by the British Bankers’ Association for the display of such Association’s Interest Settlement Rates for Dollar deposits) as of 11:00 a.m. (London, England time) on the first Business Day of such Period or if such Page 3750 is unavailable for any reason at such time, the rate which appears on the Reuters Screen ISDA Page as of such date and such time; provided , that if SunTrust determines that the relevant foregoing sources are unavailable for the relevant Period, LIBOR shall mean the rate of interest determined by SunTrust to be the average (rounded upward, if necessary, to the nearest 1/100 ^th of 1%) of the rates per annum at which deposits in Dollars are offered to United States money center banks in the London interbank market as of 11:00 a.m. (London, England time) on the first Business Day of such Period; and

 

(ii) a percentage equal to 1.00 minus the stated maximum rate of all reserve requirements (expressed as a decimal) as specified in Regulation D of the Board of Governors of the Federal Reserve System then applicable to SunTrust (including, without limitation, any marginal, emergency, supplemental, special or other reserves) that would be applicable on the first Business Day of the relevant Period during which LIBOR is to be applicable to eurocurrency liabilities in an amount substantially equal to the principal amount of the Purchased Receivables outstanding pursuant to this Agreement and with a maturity date as of the last day of the relevant Period, all as reasonably determined by SunTrust, such sum to be rounded up to the nearest whole multiple of 1/100 of 1%.

 

“ Lien ” shall mean any lien, claim, encumbrance, pledge, charge, security interest, title retention, assignment, financing statement, preference, priority or any other rights, restrictions, or interests of any kind, or inuring to the benefit or preference of any Person with respect to any asset.

 

“ New Invoice Amounts ” shall mean, in the calculation of the Discount Percentage for any Settlement Date, the aggregate amount of the Eligible Receivables being purchased by SunTrust on such Settlement Date as reflected on the Invoices for such Eligible Receivables.

“ Obligor ” shall mean any customer to which a Company sells Goods and which is approved as an Obligor by SunTrust by execution and delivery of an Obligor Letter.

 

“ Obligor Letter ” shall mean a separate letter agreement substantially in the form of Exhibit B pursuant to which SunTrust approves a given customer as an “Obligor” hereunder.

 

“ Period ” shall refer to the monthly period between Purchase Dates or Settlement Dates.

 

“ Person ” shall mean any individual, partnership, joint venture, firm, corporation, limited liability company, association, trust or other enterprise or any governmental authority.

 

“ Program Fee ” shall mean a fee equal to the Receivables Balance on any given Settlement Date multiplied by the Program Fee Percentage on such Settlement Date.

 

“ Program Fee Percentage ” shall be the percentage calculated as set forth in Schedule 2 attached hereto.

 

“ Purchase Date ” shall mean each date on which SunTrust purchases an Eligible Receivable and the related Purchased Assets which, unless otherwise agreed, shall be a date listed on Schedule 1 , as amended and supplemented from time to time.

 

“ Purchase Price ” shall mean the purchase price paid by SunTrust directly to Tech Data for the account of the selling Company in Dollars for the Receivables being purchased, which shall be in an amount computed according to the following formula:

 

(1.000 - Discount Percentage (expressed as a decimal))

x (Invoice Amounts - Adjustments)

 

“ Purchased Assets ” shall mean, with respect to each Eligible Receivable sold to SunTrust, all of the selling Company’s rights, title and interests in and to such Receivable (absolutely and without reservation by such Company of any ownership or other interests), including without limitation, all Invoices evidencing such Receivable and all related rights, claims, supporting obligations, remedies, benefits and other rights and interests as described in the definition of “ Receivables .”

 

“ Purchased Receivables ” shall mean the Receivables that have been purchased by SunTrust from a Company pursuant to the provisions of this Agreement.

 

“ Receivables ” shall mean any account, receivable, account receivable, indebtedness, other receivable, contract right, chose in action, and general intangible arising out of and related to accounts and related inventory, chattel paper, documents and proceeds thereof, wherever located, arising out of the sale of Goods to an Obligor by any Company; all Invoices; all rights to payment of any interest, finance, returned check or late charges, if any, in respect of amounts due under any Invoices; all indebtedness and other obligations owed to such Company as a result of the sale of such Goods pursuant to the Invoice; any and all rights and remedies as to stoppage in transit, reclamation, return and repossession and rights of an unpaid seller, and all returned, reclaimed, and repossessed Goods sold or

financed pursuant thereto; all rights as to any Goods or other property, contracts of indemnity, letters of credit, guaranties or sureties, (including without limitation, all Guaranties), pledges, hypothecations, mortgages, chattel mortgages, security agreements, deeds of trust, proceeds of insurance, and other collateral, liens or proceeds thereof at any time constituting supporting obligations for the Receivables; any proceeds of the foregoing; and any and all other rights, remedies, benefits and interests, both legal and equitable, to which such Company may be entitled in respect of any of the foregoing, including, but not limited to, any rights, remedies, benefits, and interests set forth in the UCC with respect to “accounts”, “payment intangibles” and “supporting obligations.”

 

“ Receivable Adjustment ” shall mean the Dollar amount which may be properly deducted from the amount due under a Purchased Receivable as the result of the settlement of a Commercial Dispute.

 

“ Receivables Balance ” means the total net outstanding balance of all Purchased Receivables previously purchased by SunTrust from a Company as of any applicable Purchase Date.

 

“ Receivables List ” shall mean a list of Eligible Receivables of Tech Data and/or any other Company submitted to SunTrust pursuant to the terms of this Agreement (which list may be in the form of hard copy, facsimile or electronic transmission) identifying such offered Eligible Receivables in a form satisfactory to SunTrust, together with a summary receivable aging report for the Eligible Receivables included on such Receivables List, and which shall include the following information regarding the Eligible Receivables:

 

(a) a summary of the Eligible Receivables offered to be sold by each Company on such Purchase Date;

 

(b) the original terms on which the Eligible Receivables offered to be sold on such Purchase Date are owed, including the Due Dates;

 

(c) the respective Obligors by whom they are payable;

 

(d) a preliminary funding summary estimating the amounts to be paid by SunTrust for such Eligible Receivables; and

 

(e) all other data or information otherwise requested by SunTrust in connection with such Eligible Receivables.

 

“ Release, Reconveyance and Consent Letter ” shall mean that certain letter agreement by and among Tech Data, SPV, Bank of America, National Association, as Administrative Agent, and the other parties thereto dated as of April 25, 2005 with respect to the SPV Receivables.

 

“ Removal Letter ” shall mean a letter agreement substantially in the form of Exhibit C hereto, pursuant to which a Person which is an Obligor is removed from this Agreement as an “Obligor.”

“ Removed Obligor ” shall mean a Person which has been an Obligor but which has been removed from this Agreement as an Obligor pursuant to the terms of a Removal Letter.

 

“ Renewal Term ” shall mean any term, after the Initial Term, for which this Agreement is extended in accordance with the provisions of Section 12.1 .

 

“ Repurchase Receivable ” shall mean a Purchased Receivable which has been repurchased by the selling Company in accordance with the provisions of Section 5.3 or 5.6 .

 

“ S&P ” means Standard & Poor’s, a division of The McGraw-Hill Companies, Inc., or any successor to the business of such division in the rating of securities.

 

“ S&P Rating ” shall mean the unsecured non-credit-enhanced long-term debt rating for a given Person established by S&P for such Person.

 

“ SPV ” shall mean Tech Data Finance SPV, Inc., a Delaware corporation.

 

“ SPV Receivables ” shall mean Receivables which were purchased by the SPV from Tech Data and which have been repurchased by Tech Data.

 

“ Servicer ” shall mean Tech Data, or any successor thereto, which provides the services described in Section 11.1.

 

“ Settlement Date ” shall mean each date on which the parties effectuate the settlement procedures set forth in Section 4.3, which, unless otherwise agreed, shall be a date listed on Schedule 1, as amended and supplemented from time to time.

 

“ Settlement Date Discount Percentage ” shall have the meaning set forth in Schedule 2 attached hereto.

 

“ SunTrust Deposit Account ” shall refer, individually and collectively, to any bank account established for the purpose of receiving payments and other monies and proceeds collected with respect to Receivables, which shall be subject to a Control Agreement in favor of SunTrust, in form and substance satisfactory to SunTrust.

 

“ SunTrust Indemnitees ” shall mean SunTrust and SunTrust’s affiliates, and their respective officers, employees and directors.

 

“ Supplement ” shall mean a supplement substantially in the form of Exhibit A attached hereto, executed by each Person becoming a Company hereunder and a party to this Agreement.

 

“ Transactions ” shall mean the sales and purchases of such accounts receivable, and all related transactions, contemplated by this Agreement.

“ Transfer and Assignment ” shall mean that certain Transfer and Assignment by and between Tech Data and SPV dated as of May 26, 2005, with respect to the SPV Receivables.

 

“ UCC ” shall mean the Uniform Commercial Code, as in effect in the applicable jurisdiction from time to time.

 

“ Unpaid Balance ” shall mean, with respect to any Receivable, the aggregate amount required to prepay in full the principal of, and all interest, finance, prepayment and other fees or charges of any kind payable in respect of, such Receivable.

 

“ Unresolved Dispute Amount ” shall mean that portion of a Purchased Receivable which is subject to a Commercial Dispute.

 

“ Weekly Receivables Report ” shall mean the reports which are required to be provided to SunTrust under Section 4.3(1) .

 

“ Weekly Sales Report ” mean the reports which are required to be provided to SunTrust under Section 8.6 .

 

Purchase and Sale of Receivables .

 

Each Company may from time to time offer for sale to SunTrust, and SunTrust shall, so long as no Default or Event of Default has occurred and is continuing, purchase, upon the terms and conditions contained herein, all rights, title and interests in and to Eligible Receivables, including but not limited to all Invoices relating to such Eligible Receivables. Receivables to be purchased by SunTrust shall not represent any late charges or late fees either to which any Company is contractually entitled or which have been billed to any Obligor as of any Purchase Date, and all of such amounts shall be excluded from the Receivables to be purchased by SunTrust. The aggregate amount of Purchased Receivables from all of the Companies which are outstanding at any given time shall not exceed One Hundred Fifty Million Dollars ($150,000,000.00) except as otherwise agreed by SunTrust in its sole discretion. The purchase and sale of Receivables pursuant to this Agreement shall be promptly notified to the Obligors.

 

Eligible Receivables to be purchased and sold will be those specified in accordance with the procedure set forth in Section 3 below, including those to be purchased on the Initial Purchase Date.

 

In connection with each sale of Eligible Receivables to SunTrust, each Company shall sell, transfer, and assign all of its rights, title and interests in and to such Receivables to SunTrust, absolutely and without reservation by such Company of any ownership or other interests, including without limitation, all Invoices evidencing or otherwise relating to such Receivables and Purchased Assets.

 

Eligible Receivables shall be sold by the Companies to SunTrust not more frequently than once each calendar month after the Initial Purchase Date unless otherwise agreed. Unless otherwise agreed by Tech Data and SunTrust, the Purchase Date for each calendar month shall be the date set forth on Schedule 1 (unless such date does not fall on a Business Day, in which event the Purchase Date shall occur on the immediately following Business Day).

Each Company shall offer for sale to SunTrust only those Receivables that are Eligible Receivables.

 

In addition to the other provisions of this Agreement and applicable Laws, each Company hereby assigns all of its rights under each Guaranty to SunTrust. Upon request from SunTrust, each Company will execute and deliver a written assignment of any such Guaranty in favor of SunTrust, in form and substance satisfactory to SunTrust.

 

Transmission of Receivables Information and Purchase Procedure.

 

Tech Data, on behalf of itself and each other Company offering Eligible Receivables for purchase, shall deliver to SunTrust before 2:00 p.m. (Atlanta, Georgia time) not later than three Business Days immediately preceding each proposed Purchase Date, or at mutually agreed upon intervals, a Receivables List. If agreed to by SunTrust, delivery of the Receivables List may be satisfied, in whole or in any part, through direct electronic or Internet access by SunTrust to each selling Company’s systems and databases (or that of such Company’s third party provider of Receivables services, if such access is approved by the third party provider) to view or retrieve the information specified above, at no cost to SunTrust. Each Company shall timely deliver to SunTrust, in a mutually acceptable form, all other data or information otherwise required by SunTrust in order to purchase such Eligible Receivables under this Agreement.

 

SunTrust shall have the right to inspect, during each Company’s normal business hours upon at least one (1) Business Day’s prior notice, and to request and obtain copies of, each Company’s Books and Records relating to Eligible Receivables.

 

All Books and Records maintained by each Company relating to Purchased Receivables and the collection by each Company of Purchased Receivables shall be clearly identifiable for all purposes (including audit purposes) and shall clearly reflect that all rights, title and interests in the Purchased Receivables have been sold, transferred and assigned to SunTrust. SunTrust (including its auditors, legal counsel or accountants retained by SunTrust) may inspect and request copies of such Books and Records relating to Purchased Receivables at any time at each Company’s offices during normal business hours and upon notice given at least one (1) Business Day in advance to such Company. Each Company shall (i) bear responsibility for ensuring that SunTrust has the right to inspect, obtain copies, and gain access to any such Books and Records held or maintained by any third party, and (ii) bear any loss occasioned by SunTrust’s inability to obtain access to information with respect to such Purchased Receivables from the Books and Records.

 

The payment for the purchase and sale of the Purchased Receivables shall occur pursuant to Section 4 hereof. The Purchase Date for each sale of Eligible Receivables shall be deemed to occur on the date SunTrust enters the purchase of such Eligible Receivables in its books and records (including entries which may be made electronically to books and records kept on SunTrust’s computer systems). If any Company fails to deliver to SunTrust any documents evidencing any of the Purchased Receivables, including documentation of the Invoice and

delivery tracking numbers with respect to any such Purchased Receivables (and which each such Company shall hold as bailee for SunTrust), immediately upon request (or, in the case of documentation evidencing the actual delivery of Goods giving rise to such Eligible Receivables, as soon as practicable following such request by SunTrust, but in any event not later than 15 days following such request), then SunTrust may require such Company to repurchase such Receivables in accordance with the procedures set forth in Section 5 .

 

Payment and Purchase Price.

 

The purchase of Receivables by SunTrust pursuant to this Agreement on each Purchase Date shall vest in SunTrust full legal, equitable and beneficial title in and to all Receivables purchased by SunTrust on such Purchase Date on the terms and subject to the terms and conditions of this Agreement. The entry of the purchase of such Receivables by SunTrust in its books and records shall constitute conclusive evidence of the transfer of ownership of such Receivables to SunTrust.

 

SunTrust shall pay the Purchase Price, as set forth in Section 4.3 , to Tech Data for the account of the selling Company in Dollars for the Receivables being purchased. Tech Data shall, on behalf of each of the Companies, pay the Program Fee directly to SunTrust in Dollars, as set forth in Section 4.3 when the amount of Eligible Receivables offered by all Companies for sale to SunTrust is less than Two Hundred Fifty Thousand Dollars ($250,000) and on any Settlement Date when no Eligible Receivables are offered by any Company for sale to SunTrust hereunder.

 

The parties are to adhere to the following settlement procedures, unless otherwise agreed by SunTrust, for so long as this Agreement remains in effect or any Receivables Balance remains outstanding, as follows with respect to the Purchase Price, Program Fee, Repurchase Receivables, and Commercial Disputes:

 

The Servicer shall provide to SunTrust on a weekly basis (or at such times as otherwise requested by SunTrust) an accounts aging trial balance report in such form and with such detail as approved by SunTrust, for all Purchased Receivables, and the Servicer and each of the Companies shall provide to SunTrust any other reporting reasonably requested by SunTrust.

 

The Servicer shall pay to SunTrust on or before each Settlement Date all amounts the Servicer has collected (including any proceeds of credit insurance received in respect of any Purchased Receivables) since the preceding Settlement Date on account of Purchased Receivables or otherwise for the benefit of SunTrust, the Program Fee, if any, and all amounts otherwise owed by any Company to SunTrust as of such Settlement Date.

 

Each Company shall identify and hold in trust for SunTrust all amounts remitted or paid to such Company, if any, on account of Purchased Receivables from such Company as the property of SunTrust (including any proceeds of credit insurance received in respect of any Purchased Receivables), and shall immediately deposit all such funds in the SunTrust Deposit Account from time to time, subject to reconciliation on each subsequent Settlement Date.

The obligations owed by the parties to one another as of each Settlement Date shall be netted against one another. All payments to be made by SunTrust to any Company or by any Company to SunTrust hereunder shall be made in Dollars in same day funds in time to be credited in accordance with normal banking procedures on the day when such payment is due and payable in accordance with the most current written wire instructions previously provided by one party to the other party.

 

Whenever any payment to be made by one party to the other shall become due on a day other than a Business Day, payment shall be due on the immediately following Business Day, including as provided in Section 2.4 .

 

Risk of Loss.

 

Except as specified herein below, SunTrust is assuming the risk of loss or non-payment, relative to Purchased Receivables, which is due solely to the respective Obligors’ Financial Inability to Pay on the date payment is due. Each Company retains all risk of loss or non-payment due in whole or in part to any Commercial Dispute.

 

If an Obligor does not pay all or any portion of a Purchased Receivable when such Purchased Receivable is due and payable on account of a Commercial Dispute (other than on account of a Commercial Dispute described in clause (iii) of the definition of “Commercial Dispute”), the selling Company may attempt to resolve with such Obligor the non-payment during the sixty (60) day period immediately following the earlier of (i) the date such Company became aware of the Commercial Dispute, and (ii) the Due Date for such Purchased Receivable. The selling Company shall notify SunTrust of any settlement of Commercial Disputes known to it after reasonable investigation and the applicable Receivable Adjustments, if any. The selling Company shall pay to SunTrust the amount of any such Receivable Adjustment in Dollars on the next Settlement Date. In the event that such Company pays SunTrust the Receivable Adjustment and SunTrust receives payment in full of the remaining unpaid portion of such Purchased Receivable, then any further payments received by SunTrust on such Purchased Receivable (but not to exceed the amount of Receivable Adjustment actually paid by such Company to SunTrust) shall be remitted to such Company and such Receivable Adjustment shall not be considered as an Adjustment for any further purpose under this Agreement. SunTrust shall have no duty to investigate the bona fide nature or the validity of any Commercial Dispute.

 

If a Purchased Receivable subject to a Commercial Dispute (other than a Commercial Dispute limited to the type described in clause (iii) of the definition of “Commercial Dispute”) has been outstanding for more than sixty (60) days past the applicable Due Date, then SunTrust may require the selling Company to repurchase the Unresolved Dispute Amount. For Commercial Disputes limited to the type described in clause (iii) of the definition of “Commercial Dispute”, SunTrust may require the selling Company to repurchase the Unresolved Dispute Amount after it has been outstanding for more than one hundred twenty (120) days past the Due Date. Subject to this Section 5.3 , such Company shall repay SunTrust the Unresolved

Dispute Amount in Dollars on the next Settlement Date and upon such repurchase such Unresolved Dispute Amount shall not be considered as an Adjustment for any further purpose under this Agreement. If the Unresolved Dispute Amount is paid by such Company, and SunTrust receives further payments of the remaining unpaid portion of such Purchased Receivable which, combined with the Unresolved Dispute Amount paid by such Company to SunTrust for such Purchased Receivable, equal to or exceeds the Invoice Amount (less applicable Adjustments) with respect to such Purchased Receivable, then further payments received by SunTrust on such Purchased Receivable (but not to exceed the Unresolved Dispute Amount actually paid by such Company to SunTrust) shall be remitted to such Company or to Tech Data on behalf of such Company. If the entire Purchased Receivable balance is repaid by such Company, it becomes a Repurchase Receivable (defined below), and SunTrust, upon payment, shall transfer the Repurchase Receivable and the rights appurtenant thereto to such Company without any warranties, representations, or recourse whatsoever, other than a representation and warranty that SunTrust has not transferred the Repurchase Receivable to any other third party and that such Repurchase Receivable is not subject to any security interest, lien or encumbrance granted or created by SunTrust; provided, however, that such transfer shall not affect, and any Repurchase Receivable so transferred shall continue to be subject to, the security interest granted pursuant to Section 8.3 of this Agreement. In the event such Company pays SunTrust the amount necessary when added to other sums received for such Repurchase Receivable, equal to the Invoice Amount (less applicable Adjustments) of the Repurchase Receivable, then any further payments received by SunTrust thereafter on such Receivable shall be remitted to such Company or to Tech Data on behalf of such Company. This repayment obligation shall apply only as set forth in this Section 5.3 . In the event that such Company repays SunTrust the entire balance owing under the Purchased Receivable as provided in this paragraph, and SunTrust receives further payments of the remaining unpaid portion of such Purchased Receivable from the Obligor, then further payments received by SunTrust on such Receivable shall be remitted to such Company or to Tech Data on behalf of such Company. SunTrust shall cooperate with such Company’s efforts to resolve and obtain payment of an Unresolved Dispute Amount.

 

The Servicer will direct the collection process to collect or resolve all Unresolved Dispute Amounts in accordance with the Credit and Collection Policies and Procedures.

 

If any Purchased Receivable shall be an amount less than that specified in the Receivables List (after giving effect to any Adjustments known on the Purchase Date) by reason of a credit issued by the selling Company or a reduction taken by an Obligor in respect of a discount or other claim, then such Company shall pay such difference to SunTrust on the next Settlement Date, or SunTrust may, at its sole option, deduct such payment from any payment due from SunTrust under this Agreement.

 

If any warranty made by any Company pursuant to this Agreement (including the warranties set forth in Section 7 below) in respect of any Purchased Receivables proves to have been inaccurate or false when deemed made hereunder, then without limiting SunTrust’s rights and remedies under this Agreement, such Purchased Receivables shall be repurchased by the selling Company on the next Settlement Date for the full amount thereof then owing to SunTrust in respect thereof.

If any Company owes SunTrust any amount under this Agreement, SunTrust may, in its sole discretion, deduct, offset or recoup the amount due and payable from any amount due or to become due under this Agreement from SunTrust, including without limitation, the payment of the Purchase Price of any Purchased Receivables thereafter purchased by SunTrust, in its sole discretion, without any form of prior notice, and such action shall constitute payment of the such Purchase Price for purposes of this Agreement.

 

Conditions to Purchase of Receivables.

 

Conditions to Purchases . The obligation of SunTrust to purchase the Eligible Receivables identified to SunTrust on the Initial Purchase Date, and to purchase any additional Eligible Receivables thereafter, is subject to the fulfillment, to the satisfaction of SunTrust, of each of the conditions precedent set forth below:

 

SunTrust shall have received a counterpart of this Agreement (or a Supplement), an Obligor Letter with respect to each Obligor, the Release, Reconveyance and Consent Letter, the Transfer and Assignment, and the Fee Letter, each of which shall be in form and substance satisfactory to SunTrust and shall be duly executed by each Company and the other parties thereto;

 

SunTrust shall have received each original Guaranty required under an Obligor Letter;

 

SunTrust shall have received satisfactory results of such UCC, judgment, pending litigation and tax lien searches as it shall deem necessary or appropriate in its sole discretion, together with a