Qualified Accounts Receivable. Upon delivery to the Administrative Agent of each Schedule of Accounts Receivable, the Administrative Agent shall make a determination, in its sole discretion, as to which Accounts Receivable listed thereon shall be deemed Qualified Accounts Receivable. An Account Receivable of any Loan Party shall not be considered a Qualified Account Receivable unless the Administrative Agent determines, in its sole discretion, that such Account Receivable has met the following minimum requirements: (i) the Account Receivable represents a complete bona fide transaction for goods sold and delivered or services rendered (but excluding any amounts in the nature of a service charge added to the amount due on an invoice because the invoice has not been paid when due) which requires no further act under any circumstances on the part of such Loan Party to make such Account Receivable payable by the Account Receivable Debtor; the Account Receivable arises from an arm’s-length transaction in the ordinary course of such Loan Party’s business between such Loan Party and an Account Receivable Debtor which is not an Affiliate of any Loan Party or an executive officer of the Borrower or any Affiliate of any Loan Party, or a member of the immediate family of an executive officer of any Loan Party or any Affiliate of any Loan Party; (ii) the Account Receivable shall (a) have been outstanding for less than one hundred twenty (120) days from the invoice date, (b) have been outstanding for less than sixty (60) days of its due date, (c) be payable by an Account Receivable Debtor for whom no more than 35% of their Accounts Receivable have been outstanding for more than one hundred twenty (120) days from the invoice date or have been outstanding for less than sixty (60) days of its due date, and (d) include only up to and including, (1) in the case of each of Dick’s Sporting Goods, Inc. and The Sports Authority, Inc., 40% of the difference between the aggregate amount of all outstanding Accounts Receivable and the sum of (a) and (b) above, and (2) in the case of all other Account Receivable Debtors, 20% of the difference between the aggregate amount of all outstanding Accounts Receivable and the sum of (a) and (b) above; (iii) the goods the sale of which gave rise to the Account Receivable were shipped or delivered or provided to the Account Receivable Debtor on an absolute sale basis and not on a ▇▇▇▇ and hold sale basis, a consignment sale basis, a guaranteed sale basis, a sale or return basis, or on the basis of any other similar understanding, and no part of such goods has been returned or rejected; (iv) the Account Receivable is not evidenced by chattel paper or an instrument of any kind; (v) the Account Receivable Debtor with respect to the Account Receivable (a) is Solvent or has taken no action to give public notice that it is not Solvent, and (b) is not the subject of any bankruptcy or insolvency proceedings of any kind or of any other proceeding or action, threatened in writing or pending, which could reasonably be expected to have a materially adverse effect on its business; (vi) (a) the Account Receivable Debtor is not located outside of the United States of America or (b) if the Account Receivable Debtor is located outside of the United States, the Account Receivable is supported by a letter of credit or FICA insurance reasonably deemed adequate and acceptable by the Administrative Agent; (vii) (a) the Account Receivable Debtor is not the government of the United States of America, or any department, agency or instrumentality thereof, or (b) if the Account Receivable Debtor is an entity mentioned in clause (vii)(a), the Federal Assignment of Claims Act (or applicable similar legislation) has been fully complied with so as to validly perfect the Lenders’ Prior Security Interest, subject to Permitted Liens, if any, to the Administrative Agent’s satisfaction; (viii) the Account Receivable is a valid, binding and legally enforceable obligation of the Account Receivable Debtor with respect thereto and is not subject to any dispute, condition, contingency, offset, recoupment, reduction, claim for credit, allowance, adjustment, counterclaim or defense on the part of such Account Receivable Debtor, and no facts exist which may provide a basis for any of the foregoing in the present or future; (ix) the Account Receivable is subject to the Administrative Agent’s and the Lenders’ Prior Security Interest, subject to Permitted Liens, if any, and is not subject to any other Lien, claim, encumbrance or security interest whatsoever; (x) the Account Receivable is evidenced by an invoice or other documentation and arises from a contract which is in form and substance reasonably satisfactory to the Administrative Agent; (xi) the Loan Parties have observed and complied in all material respects with all laws of the state in which the Account Receivable Debtor or the Account Receivable is located which, if not materially observed and complied with, would deny to the Loan Parties access to the courts of such state; (xii) the Account Receivable is not subject to any provision prohibiting its assignment or requiring notice of or consent to such assignment; (xiii) the goods giving rise to the Account Receivable were not, at the time of sale thereof, subject to any Lien or encumbrance except the Administrative Agent and the Lenders’ Prior Security Interest or any Permitted Lien; (xiv) the Account Receivable is payable in freely transferable United States Dollars; and (xv) the Account Receivable is not, or should not be, disqualified for any other reason generally accepted and reasonable in the commercial finance business. In addition to the foregoing requirements, Accounts Receivable of any Account Receivable Debtor which are otherwise Qualified Accounts Receivable shall be reduced to the extent of any accounts payable by any of the Loan Parties to such Account Receivable Debtor; provided that the Administrative Agent in its sole discretion may determine that none of the Accounts Receivable in respect to such an Account Receivable Debtor shall be Qualified Accounts Receivable in the event there exists payables owing to such Account Receivable Debtor in excess of 25% of the corresponding Account Receivables balance.
Appears in 3 contracts
Sources: Credit Agreement (Under Armour, Inc.), Credit Agreement (Under Armour, Inc.), Credit Agreement (Under Armour, Inc.)