Common use of Determination of Borrowing Base Clause in Contracts

Determination of Borrowing Base. Borrower acknowledges that: (a) The Administrative Agent may, in its discretion, from time to time, upon five (5) days notice to the Borrower, (x) reduce the lending formula with respect to Eligible Receivables to the extent that the Administrative Agent determines that: (i) the dilution with respect of the Borrowing Base Parties’ accounts for any period has increased in any material respect or may be reasonably anticipated to increase in any material respect above the historical levels, or (ii) the general creditworthiness of account debtors or other obligors of the Borrowing Base Parties has declined. (b) The Administrative Agent may conduct and/or obtain periodic appraisals of the Borrowing Base Parties’ inventory, at such intervals as the Administrative Agent may require, provided that other than with respect to an appraisal pursuant to Section 2.10(d) or upon the occurrence and during the continuance of an Event of Default, such appraisals shall not be conducted and/or obtained at the expense of Borrower; and the Administrative Agent may, in its discretion, from time to time, upon five (5) days notice to the Borrower, reduce the lending formula(s) with respect to Eligible Inventory to the extent that the Administrative Agent determines that: (i) the number of days of the turnover of the inventory of the Borrowing Base Parties for any period has changed in any material adverse respect, (ii) the liquidation value of the Eligible Inventory, or any category thereof, has decreased, or (iii) the nature and quality of the inventory of the Borrowing Base Parties has deteriorated in any material respect or the mix of such inventory has changed materially. In determining whether to reduce the lending formula(s) pursuant to sub-section (a) and this sub-section (b), the Administrative Agent may consider events, conditions, contingencies or risks which are also considered in determining Eligible Accounts Receivable or Eligible Inventory, as applicable. (c) The Administrative Agent may from time to time conduct or obtain, at Borrower’s expense, periodic audits or “field examinations” of the Borrowing Base Parties’ accounts, books and records, accounting systems and similar personal property, which shall not include or constitute inventory appraisals (which shall be subject to Sections 2.10(b) and (d)), provided that so long as no Event of Default shall have occurred and remain in effect, Borrower shall only be required to pay for one (1) such audit or field examination during any twelve month period (unless any such audit or field examination is required by governmental regulation). (d) Notwithstanding Section 2.10(b), if at any time the aggregate amount of all outstanding Revolving Advances exceeds either (i) the Eligible Receivables Component plus the Eligible Inventory Component (calculated, for purposes of this Section 2.10(d), without including any work in process inventory in such amount) or (ii) 80% of the then-applicable aggregate Revolving Commitments, the Administrative Agent shall have the right in its discretion to require an additional appraisal of the Borrowing Base Parties’ inventory to be conducted at Borrower’s expense, and the results of such inventory appraisal shall be in form and substance satisfactory to the Administrative Agent.

Determination of Borrowing Base. Borrower acknowledges that: (a) The Administrative Agent maySubject to Section 2.2(b) and Section 2.3(c), Revolving Loans shall not in its discretion, from time to time, upon five (5) days notice to aggregate principal amount exceed the Borrower, (x) reduce the lending formula with respect to Eligible Receivables to the extent that the Administrative Agent determines that: lesser of: (i) the dilution with respect Total Commitments then in effect minus the Letter of the Borrowing Base Parties’ accounts for any period has increased in any material respect or may be reasonably anticipated to increase in any material respect above the historical levels, or Credit Obligations; and (ii) the general creditworthiness of account debtors or other obligors amount then equal to: (A) Eighty-five percent (85%) of the Eligible Accounts Receivable, plus (B) Fifty-five percent (55%) of the Eligible Inventory, and minus (C) the Lease Reserve Amount, if any, and minus (D) the Letter of Credit Obligations. The sum of the amounts calculated in accordance with clause (ii)(A), (B) and (C) above is hereinafter referred to as the "Borrowing Base Parties has declinedBase." In addition, eighty-five percent (85%) of the Eligible Accounts Receivable shall at least be thirty-five percent (35%) of Outstandings (the "Inventory Sublimit"). (b) The Administrative Agent shall (x) at any time be entitled to (i) establish and increase or decrease reserves against Eligible Accounts Receivable and Eligible Inventory, and (ii) impose additional restrictions (or eliminate the same) to the standards of "Eligible Accounts Receivable" and "Eligible Inventory" and (y) upon not less than ten (10) days' prior notice to the Borrower reduce the advance rates under Section 2.2(a)(ii)(A) or (B) or the Inventory Sublimit or restore such advance rates to any level equal to or below the advance rates stated in Section 2.2(a)(ii)(A) or (B) or the Inventory Sublimit, and "Eligible Inventory," in the exercise of its Permitted Discretion. The Agent may conduct and/or obtain periodic appraisals of the Borrowing Base Parties’ inventory, at such intervals as the Administrative Agent may require, provided that other than with respect to an appraisal pursuant to Section 2.10(d) or upon the occurrence and during the continuance of an Event of Default, such appraisals but shall not be conducted and/or obtained at required to rely on each Borrowing Base Certificate and any other schedules or reports delivered to it in connection herewith in determining the expense then eligibility of Borrower; Accounts and Inventory. Reliance thereon by the Administrative Agent may, in its discretion, from time to time, upon five (5) days notice time shall not be deemed to limit the Borrower, reduce the lending formula(s) with respect to Eligible Inventory to the extent that the Administrative Agent determines that: (i) the number of days right of the turnover Agent to revise advance rates or standards of the inventory of the Borrowing Base Parties for any period has changed eligibility as provided in any material adverse respect, (ii) the liquidation value of the Eligible Inventory, or any category thereof, has decreased, or (iii) the nature and quality of the inventory of the Borrowing Base Parties has deteriorated in any material respect or the mix of such inventory has changed materially. In determining whether to reduce the lending formula(s) pursuant to sub-section (a) and this sub-section (bSection 2.2(b), the Administrative Agent may consider events, conditions, contingencies or risks which are also considered in determining Eligible Accounts Receivable or Eligible Inventory, as applicable. (c) The Administrative Borrowing Base will be computed weekly (or, if requested by the Agent may from time in the exercise of its Permitted Discretion, more frequently as so requested) and a Borrowing Base Certificate presenting its computation will be delivered promptly to time conduct the Agent as set forth in Section 7.1(e). Notwithstanding anything to the contrary contained herein, the Agent shall be satisfied that (based on the final collateral examination report delivered pursuant to Section 5.1(w) below), on the Closing Date and after giving effect to the consummation of the Transaction, the Borrower shall be able to incur additional Outstandings, after giving effect to the Outstandings on the Closing Date of $50,000,000 or obtain, at Borrower’s expense, periodic audits or “field examinations” of more in compliance with the Borrowing Base Parties’ accounts, books and records, accounting systems and similar personal property, which shall not include or constitute inventory appraisals (which shall be subject to Sections 2.10(b) and (d)), provided that so long as no Event of Default shall have occurred and remain in effect, Borrower shall only be required to pay for one (1) such audit or field examination during any twelve month period (unless any such audit or field examination is required by governmental regulation)Inventory Sublimits restrictions. (d) Notwithstanding Section 2.10(b), if at any time the aggregate amount of all outstanding Revolving Advances exceeds either (i) the Eligible Receivables Component plus the Eligible Inventory Component (calculated, for purposes of this Section 2.10(d), without including any work in process inventory in such amount) or (ii) 80% of the then-applicable aggregate Revolving Commitments, the Administrative Agent shall have the right in its discretion to require an additional appraisal of the Borrowing Base Parties’ inventory to be conducted at Borrower’s expense, and the results of such inventory appraisal shall be in form and substance satisfactory to the Administrative Agent.

Determination of Borrowing Base. Borrower acknowledges that: (a) The Administrative Agent may, in its discretion, from time to time, upon five (5) days notice to the Borrower, (x) reduce the lending formula with respect to Eligible Receivables to the extent that the Administrative Agent determines that: This Section 2.8 shall be applicable at all times unless (i) the dilution with respect Applicable Rating Level of the Borrowing Base Parties’ accounts for any period has increased in any material respect or may be reasonably anticipated to increase in any material respect above the historical levels, or Borrower is Level I and (ii) the general creditworthiness of account debtors or other obligors Borrower has elected to have availability under this Agreement no longer governed by the Borrowing Base; provided, however, that this Section shall apply at all times prior to the delivery of the Borrowing Base Parties has declined. (b) The Administrative Agent may conduct and/or obtain periodic appraisals Reserve Report dated effective as of the Borrowing Base Parties’ inventoryJanuary 1, at such intervals as the Administrative Agent may require, provided that other than with respect to an appraisal pursuant to Section 2.10(d) or upon the occurrence and during the continuance of an Event of Default, such appraisals shall not be conducted and/or obtained at the expense of Borrower2005; and the Administrative Agent may, in its discretion, from time to time, upon five (5) days notice to the Borrower, reduce the lending formula(s) with respect to Eligible Inventory to the extent that the Administrative Agent determines provided further that: (i) the number of days of the turnover of the inventory of the Borrowing Base Parties for any period has changed in any material adverse respect, (ii) the liquidation value of the Eligible Inventory, or any category thereof, has decreased, or (iii) the nature and quality of the inventory of the Borrowing Base Parties has deteriorated in any material respect or the mix of such inventory has changed materially. In determining whether to reduce the lending formula(s) pursuant to sub-section (a) and this sub-section (b), the Administrative Agent may consider events, conditions, contingencies or risks which are also considered in determining Eligible Accounts Receivable or Eligible Inventory, as applicable. (c) The Administrative Agent may from time to time conduct or obtain, at Borrower’s expense, periodic audits or “field examinations” of the Borrowing Base Parties’ accounts, books and records, accounting systems and similar personal property, which shall not include or constitute inventory appraisals (which shall be subject to Sections 2.10(b) and (d)), provided that so long as no Event of Default shall have occurred and remain in effect, Borrower shall only be required to pay for one (1) such audit or field examination during any twelve month period (unless any such audit or field examination is required by governmental regulation). (d) Notwithstanding Section 2.10(b), if at any time availability under this Agreement is not governed by the aggregate amount Borrowing Base but the Applicable Rating Level of all outstanding Revolving Advances exceeds either the Borrower declines to Level II or Level III, the Administrative Agent and the Required Borrowing Base Lenders shall promptly but in any event not fewer than five (5) Business Days thereafter initiate the procedure set forth herein for a Non-Standard Determination of the Borrowing Base. Notwithstanding that its Applicable Rating Level is Level I and the Borrower has elected to not have availability under this Agreement governed by a Borrowing Base, the Borrower shall have the right to elect to have availability under this Agreement governed by a Borrowing Base from the date of such election to the date of the next scheduled redetermination date for such Borrowing Base by providing written notice of its election to the Administrative Agent on or before the 45th day preceding the date scheduled for the delivery of the Reserve Report applicable to the next scheduled redetermination date. Any such election shall (i) be irrevocable for such period of time, but may be changed for subsequent periods by the delivery of an additional written notice to the Administrative Agent on or before the 45th day preceding the date scheduled for the delivery of the Reserve Report applicable to the next scheduled redetermination date following such period, and (ii) automatically continue for subsequent six-month periods until such time as the Borrower elects to not have availability under this Agreement governed by a Borrowing Base in accordance with clause (i) of this sentence. (a) Upon each delivery of a Reserve Report or Alternate Reserve Report pursuant to Section 7.1 on or before the respective dates required thereby, then with respect to the annual or semi-annual, as the case may be, determination of the Borrowing Base, the Administrative Agent will propose to the Lenders a Borrowing Base for acceptance by the Required Borrowing Base Lenders. If such Borrowing Base, as proposed by the Administrative Agent is accepted by the Required Borrowing Base Lenders, then such agreed Borrowing Base shall be communicated by the Administrative Agent to the Borrower on or before (i) the Eligible Receivables Component plus next May 1st, in the Eligible Inventory Component (calculated, for purposes case of this Section 2.10(d), without including any work in process inventory in such amount) or a Reserve Report and (ii) 80% the next November 1st, in the case of an Alternate Reserve Report, and shall remain in effect until the next November 1st or May 1st; provided that if such proposed Borrowing Base is not approved by the Required Borrowing Base Lenders prior to the applicable date then, within 30 days following the applicable date, the Required Borrowing Base Lenders will establish and agree to a Borrowing Base established using criteria agreed upon by the Required Borrowing Base Lenders, and such amount will be promptly communicated to the Borrower; provided that the then current Borrowing Base shall remain in effect until the Borrower is notified of the then-applicable aggregate Revolving Commitments, new Borrowing Base. Any Lender that shall fail to reject the proposed Borrowing Base with fifteen (15) days of its receipt of the proposed Borrowing Base shall be deemed to have approved the proposed amount of such Borrowing Base. The new Borrowing Base shall become effective as of the date that the Borrower receives notification from the Administrative Agent shall have the right in its discretion to require an additional appraisal of the new Borrowing Base Parties’ inventory Base. The Borrowing Base, as determined and established pursuant to be conducted at Borrower’s expense, and the results of such inventory appraisal shall be in form and substance satisfactory to the Administrative Agent.this