Common use of Change in Borrowing Base Clause in Contracts

Change in Borrowing Base. (a) The Borrowing Base shall be determined by the Agent by reference to the Borrowing Base Report required to be delivered pursuant to ss.8.4(f)(A). (b) The Agent may, in its reasonable discretion, from time to time, reduce the Borrowing Base by such amounts ("Reserves") as the Agent may from time to time establish and revise (a) to reflect events, conditions, contingencies or risks which do or may adversely affect either (A) any Collateral, the rights of the Agent or any of the Lenders in any Collateral or its value or (B) the security interest and other rights of the Agent or any of the Lenders in the Collateral (including the enforceability, perfection and priority thereof) or (b) to reflect the belief of the Agent that any Borrowing Base Report or other collateral report or financial information furnished by or on behalf of the Borrowers to the Agent or any of the Lenders is or may have been incomplete, inaccurate or misleading in any material respect. Reserves may include, but are not limited to: reserves to reflect (a) an increase in the dilution of Accounts Receivable, (b) material changes in the number of days turnover in inventory, (c) the deterioration in any material respect of the liquidation value of inventory or a change in the mix of inventory, (d) taxes and other governmental charges, whether ad valorem, personal property or otherwise and whether or not the tax claims therefor may have priority over the Agent's security interest in any of the Collateral, (e) any customs, duty, freight or other out-of-pocket costs or expenses required or advisable to "land" any Eligible Inventory the purchase of which is supported by a Letter of Credit and (f) any offset claims which an account debtor has against any Account Receivable. (c) The Agent shall give to the Borrowers written notice of any change in the Borrowing Base determined by the Agent. Such notice shall be effective immediately upon its receipt by the Borrowers. Notwithstanding anything contained in this Agreement to the contrary, it shall not constitute an Event of Default (but shall constitute a Default) to the extent that the Loans, and all Letter of Credit Exposure exceeds the Borrowing Base as adjusted pursuant to this Section 2.9 until five (5) days after the Borrowers receipt of notice of such change in the Borrowing Base.

Change in Borrowing Base. (a) The Borrowing Base shall be determined monthly (or at such other interval as may be specified pursuant to §9.4(h)) by the Agent by reference to the Borrowing Base Report required to be delivered pursuant to ss.8.4(f)(A). (b) The Agent may, in its reasonable discretion, from time to time, reduce the Borrowing Base by such amounts ("Reserves") as the Agent may from time to time establish and revise (a) to reflect events, conditions, contingencies or risks which do or may adversely affect either (A) any Collateral, the rights of the Agent or any of the Lenders in any Collateral or its value or (B) the security interest and other rights of the Agent or any of the Lenders in the Collateral (including the enforceability, perfection and priority thereof) or (b) to reflect the belief of the Agent that any Borrowing Base Report or other collateral report or financial information furnished obtained by or on behalf of the Borrowers provided to the Agent or any of the Lenders is or may have been incomplete, inaccurate or misleading in any material respectAgent. Reserves may include, but are not limited to: reserves to reflect (a) an increase in the dilution of Accounts Receivable, (b) material changes in the number of days turnover in inventory, (c) the deterioration in any material respect of the liquidation value of inventory or a change in the mix of inventory, (d) taxes and other governmental charges, whether ad valorem, personal property or otherwise and whether or not the tax claims therefor may have priority over the Agent's security interest in any of the Collateral, (e) any customs, duty, freight or other out-of-pocket costs or expenses required or advisable to "land" any Eligible Inventory the purchase of which is supported by a Letter of Credit and (f) any offset claims which an account debtor has against any Account Receivable. (c) The Agent shall give to the Borrowers Borrower written notice of any change in the Borrowing Base determined by the Agent. Such In the case of a reduction in the lending formula with respect to Eligible Accounts Receivable, such notice shall be effective immediately upon its receipt by the Borrowers. Notwithstanding anything contained in this Agreement to the contrary, it shall not constitute an Event of Default (but shall constitute a Default) to the extent that the Loans, and all Letter of Credit Exposure exceeds the Borrowing Base as adjusted pursuant to this Section 2.9 until five (5) days after its receipt by the Borrowers Borrower, and in the case of any change in the general criteria for Eligible Accounts Receivable, such notice shall be effective upon its receipt of by the Borrower. Prior to the time that such notice becomes effective the Borrowing Base shall be computed as it would have been computed in the absence of such change notice. (e) Section 3.2 of the Credit Agreement is amended by deleting the first sentence of such 3.2 and restating it in its entirety as follows: If at any time the sum of the outstanding amount of the Revolving Credit Loans, the Maximum Drawing Amount and all Unpaid Reimbursement Obligations exceeds the lesser of (a) the Total Commitment at such time and (b) the Borrowing Base at such time, then the Borrower shall immediately pay the amount of such excess to the Agent for the respective accounts of the Banks for application: first, to any Unpaid Reimbursement Obligations; second, to the Revolving Credit Loans; and third, to provide to the Agent cash collateral for Reimbursement Obligations as contemplated by §4.2(b) and (c). In addition, the Borrower promises to the Agent for the respective accounts of the Banks immediately upon receipt thereof, 100% of the Net Cash Proceeds from (a) the sale or other disposition of assets permitted by §10.5.2 (other than the sale of inventory or the licensing of intellectual property in the ordinary course of business consistent with past practice), (b) from any equity issuances permitted hereunder by the Parent Companies, the Borrower or their Subsidiaries; or (c) from debt issuances permitted hereunder by the Parent Companies, the Borrower or their Subsidiaries, pursuant to any public offerings or debt offerings under Rule 144(a) of the Rule and Regulations of the Securities and Exchange Commission, all of which amounts shall be applied in accordance with the preceding sentence of this §3.2. (f) Section 4.1.1 of the Credit Agreement is amended by deleting the proviso in such §4.1.1 and restating it in its entirety as follows: , provided, however, that, after giving effect to such request, the sum of (a) the Maximum Drawing Amount of all Letters of Credit, (b) all Unpaid Reimbursement Obligations, and (c) the Dollar Equivalent of the amount of all Revolving Credit Loans outstanding shall not exceed the lesser of (x) the Total Commitment and (y) the Borrowing Base. (g) Section 5.4 of the Credit Agreement is amended by deleting the first sentence of such §5.4 and restating it in its entirety as follows: All computations of Commitment Fees, Letter of Credit Fees or other fees shall, unless otherwise expressly provided herein, be based on a 365-day year and paid for the actual number of days elapsed, and all computations of interest on Prime Rate Loans and Eurocurrency Rate Loans shall be based on a 360-day year and paid for the actual number of days elapsed. (h) Section 9.4 of the Credit Agreement is amended by redesignating clause (g) of such §9.4 as clause (j) and by adding the following new clauses (g) – (i) immediately before such redesignated clause (j): (g) as soon as practicable, but in any event within thirty (30) days after the end of each month in each fiscal year of the Borrower, copies of unaudited monthly consolidated financial statements of the Parent Companies, the Borrower and their Subsidiaries for such month and unaudited monthly consolidating financial statements of the Parent Companies, the Borrower and their Subsidiaries for such month, each prepared in accordance with generally accepted accounting principles, together with a certification by the principal financial or accounting officer of the Borrower that the information contained in such financial statements fairly presents the financial condition of the Parent Companies, the Borrower and their Subsidiaries on the date thereof (subject to year-end adjustments and the exclusion of footnotes); (h) within fifteen (15) days after the end of each calendar month or at such earlier time as the Agent may reasonably request, a Borrowing Base Report setting forth the Borrowing Base as at the end of such calendar month or other date so requested by the Agent; (i) within fifteen (15) days after the end of each calendar month, an Accounts Receivable aging report; and (i) Section 9.9.1 of the Credit Agreement is amended by inserting immediately after the phrase “by, its and their officers,” the following new text: and to conduct examinations and verifications (whether by internal commercial finance examiners or independent auditors) of all components of the Borrowing Base, (j) Section 11.2 of the Credit Agreement is amended by deleting such §11.2 and restating it in its entirety as follows:

Change in Borrowing Base. (a) The Borrowing Base shall be determined by the Agent by reference to the Borrowing Base Report required to be delivered pursuant to ss.8.4(f)(Ass.9.4(f) and the Agent may, in its reasonable discretion, adjust the Borrowing Base based upon the Agent's review of the weekly report of sales and collections delivered pursuant to ss.9.4(f). (b) The Agent may, in its reasonable discretion, from time to time, reduce the Borrowing Base by such amounts ("Reserves") as the Agent may from time to time establish and revise (a) to reflect events, conditions, contingencies or risks which do or may adversely affect either (A) any Collateral, the 35 -28- rights of the Agent or any of the Lenders in any Collateral or its value or (B) the security interest and other rights of the Agent or any of the Lenders in the Collateral (including the enforceability, perfection and priority thereof) or (b) to reflect the belief of the Agent that any Borrowing Base Report or other collateral report or financial information furnished by or on behalf of the Borrowers to the Agent or any of the Lenders is or may have been incomplete, inaccurate or misleading in any material respect. Reserves may include, but are not limited to: reserves to reflect (a) an increase in the dilution of Accounts Receivable, (b) material changes in the number of days turnover in inventory, (c) the deterioration in any material respect of the liquidation value of inventory or a change in the mix of inventory, (d) taxes and other governmental charges, whether ad valorem, personal or real property or otherwise and whether or not the tax claims therefor may have priority over the Agent's security interest in any of the Collateral, and (e) any customs, duty, freight or other out-of-pocket costs or expenses required or advisable to "land" any Eligible Inventory the purchase of which is supported by a Letter of Credit and (f) any offset claims which an account debtor has against any Account ReceivableCredit. (c) The Agent shall give to the Borrowers Borrower written notice of any change in the Borrowing Base determined by the Agent. Such notice shall be effective immediately upon five (5) days after its receipt by the Borrowers. Notwithstanding anything contained in this Agreement Prior to the contrary, it shall not constitute an Event of Default (but shall constitute a Default) to the extent time that the Loans, and all Letter of Credit Exposure exceeds such notice becomes effective the Borrowing Base shall be computed as adjusted pursuant to this Section 2.9 until five (5) days after it would have been computed in the Borrowers receipt of notice absence of such change in the Borrowing Basenotice.