Common use of Determination of Borrowing Base Clause in Contracts

Determination of Borrowing Base. (i) The Lenders agree, subject to the terms and conditions of this Credit Agreement, from time to time, to make loans and advances to the Borrowers hereunder on a revolving basis. Such loans and advances to the Borrowers (each, a "Revolving Loan"; and collectively, the "Revolving Loans"), together with the Letter of Credit Obligations outstanding, shall not in the aggregate exceed the lesser of: (A) the Revolving Credit Committed Amount then in effect; or (B) the following amount (the "Borrowing Base") calculated as follows: (1) an amount equal to up to 85% of the then Eligible Accounts Receivable; plus (2) an amount equal to the sum of (a) up to 45% of the Eligible Inventory consisting of Mom and Pops country hams, plus (b) up to 55% of the Eligible Inventory consisting of Pierre Foods/Claremont location raw materials, plus (c) up to 65% of the Eligible Inventory consisting of Pierre Foods/Cincinnati location raw materials, plus (d) up to 55% of the Eligible Inventory consisting of Smokehouse finished goods, plus (e) up to 50% of the Eligible Inventory consisting of Pierre Foods/Claremont location bakery finished goods, plus (f) up to 65% of the Eligible Inventory consisting of Pierre Foods/Cincinnati location finished goods; plus (3) an amount equal to up to 70% of the Eligible Equipment and Eligible Real Property determined as of its initial inclusion into the Borrowing Base; provided, however, that on the last day of each calendar quarter such initial amount shall be reduced by an amount equal to 1/28th of such initial amount; and provided, further, that no more than $2,500,000 shall be included in the Borrowing Base with respect to Approved Restaurants during each of the first two years following the Closing Date; minus (4) reserves established by the Agent from time to time in its reasonable discretion, including, without limitation, reserves against the Unsecured Letters of Credit. Subject to the relevant terms and provisions set forth herein, the Agent at all times shall be entitled to reduce or increase the advance rates (but not in excess of the advance rates set forth in clauses (1) through (3) immediately above) and standards of eligibility under this Credit Agreement, in each case in its reasonable discretion. (ii) No Lender shall be obligated at any time to make available to the Borrowers its Revolving Credit Commitment Percentage of any requested Revolving Loan if such amount plus its Revolving Credit Commitment Percentage of all Revolving Loans and its Revolving Credit Commitment Percentage of all Letter of Credit Obligations then outstanding would exceed such Lender's Revolving Credit Commitment at such time. The aggregate balance of Revolving Loans and the aggregate amount of all Letter of Credit Obligations outstanding shall not at any time exceed the Revolving Credit Committed Amount. No Lender shall be obligated to make available, nor shall the Agent make available, any Revolving Loans to any of the Borrowers to the extent such Revolving Loan when added to the then outstanding Revolving Loans and all Letter of Credit Obligations would cause the aggregate outstanding Revolving Loans and all Letter of Credit Obligations to exceed the Borrowing Base. The Borrowers shall promptly repay to the Agent for the account of the Lenders from time to time the full amount of the excess, if any of (A) the amount of all Revolving Loans and Letter of Credit Obligations outstanding over (B) the lesser of (1) the Revolving Credit Committed Amount and (2) the Borrowing Base.

Determination of Borrowing Base. (ia) The Lenders agree, subject Subject to the terms Section 2.2(b) and conditions of this Credit Agreement, from time to time, to make loans and advances to the Borrowers hereunder on a revolving basis. Such loans and advances to the Borrowers (each, a "Revolving Loan"; and collectively, the "Revolving Loans"Section 2.3(c), together with the Letter of Credit Obligations outstanding, Revolving Loans shall not in the aggregate principal amount exceed the lesser of: (i) the Total Commitments then in effect minus the Letter of Credit Obligations; and (ii) the amount then equal to: (A) Eighty-five percent (85%) of the Revolving Credit Committed Amount then in effect; orEligible Accounts Receivable, plus (B) Fifty-five percent (55%) of the following amount 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." In addition, eighty-five percent (85%) of the Eligible Accounts Receivable shall at least be thirty-five percent (35%) of Outstandings (the ") calculated as follows:Inventory Sublimit"). (1b) an amount equal The Agent shall (x) at any time be entitled to up (i) establish and increase or decrease reserves against Eligible Accounts Receivable and Eligible Inventory, and (ii) impose additional restrictions (or eliminate the same) to 85% the standards of the then "Eligible Accounts Receivable; plus " and "Eligible Inventory" and (2y) an amount 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 sum of advance rates stated in Section 2.2(a)(ii)(A) or (aB) up to 45% of or the Inventory Sublimit, and "Eligible Inventory consisting of Mom and Pops country hams, plus (b) up to 55% of Inventory," in the Eligible Inventory consisting of Pierre Foods/Claremont location raw materials, plus (c) up to 65% of the Eligible Inventory consisting of Pierre Foods/Cincinnati location raw materials, plus (d) up to 55% of the Eligible Inventory consisting of Smokehouse finished goods, plus (e) up to 50% of the Eligible Inventory consisting of Pierre Foods/Claremont location bakery finished goods, plus (f) up to 65% of the Eligible Inventory consisting of Pierre Foods/Cincinnati location finished goods; plus (3) an amount equal to up to 70% of the Eligible Equipment and Eligible Real Property determined as exercise of its initial inclusion into the Borrowing Base; provided, however, that Permitted Discretion. The Agent may but shall not be required to rely on the last day of each calendar quarter such initial amount shall be reduced by an amount equal to 1/28th of such initial amount; and provided, further, that no more than $2,500,000 shall be included in the Borrowing Base with respect Certificate and any other schedules or reports delivered to Approved Restaurants during each it in connection herewith in determining the then eligibility of the first two years following the Closing Date; minus (4) reserves established Accounts and Inventory. Reliance thereon by the Agent from time to time shall not be deemed to limit the right of the Agent to revise advance rates or standards of eligibility as provided in this Section 2.2(b). (c) The Borrowing Base will be computed weekly (or, if requested by the Agent in the exercise of its reasonable discretionPermitted Discretion, including, without limitation, reserves against the Unsecured Letters of Credit. Subject more frequently as so requested) and a Borrowing Base Certificate presenting its computation will be delivered promptly to the relevant terms and provisions Agent as set forth in Section 7.1(e). Notwithstanding anything to the contrary contained herein, the Agent at all times shall be entitled satisfied that (based on the final collateral examination report delivered pursuant to reduce or increase Section 5.1(w) below), on the advance rates (but not in excess Closing Date and after giving effect to the consummation of the advance rates set forth in clauses (1) through (3) immediately above) and standards of eligibility under this Credit AgreementTransaction, in each case in its reasonable discretion. (ii) No Lender the Borrower shall be obligated at any time able to make available incur additional Outstandings, after giving effect to the Borrowers its Revolving Credit Commitment Percentage Outstandings on the Closing Date of any requested Revolving Loan if such amount plus its Revolving Credit Commitment Percentage of all Revolving Loans and its Revolving Credit Commitment Percentage of all Letter of Credit Obligations then outstanding would exceed such Lender's Revolving Credit Commitment at such time. The aggregate balance of Revolving Loans and the aggregate amount of all Letter of Credit Obligations outstanding shall not at any time exceed the Revolving Credit Committed Amount. No Lender shall be obligated to make available, nor shall the Agent make available, any Revolving Loans to any of the Borrowers to the extent such Revolving Loan when added to the then outstanding Revolving Loans and all Letter of Credit Obligations would cause the aggregate outstanding Revolving Loans and all Letter of Credit Obligations to exceed $50,000,000 or more in compliance with the Borrowing Base. The Borrowers shall promptly repay to the Agent for the account of the Lenders from time to time the full amount of the excess, if any of (A) the amount of all Revolving Loans Base and Letter of Credit Obligations outstanding over (B) the lesser of (1) the Revolving Credit Committed Amount and (2) the Borrowing BaseInventory Sublimits restrictions.

Determination of Borrowing Base. (i) The Lenders agree, subject to the terms and conditions of this Credit Agreement, from time to time, to make Lenders' loans and advances to or for the Borrowers hereunder on a revolving basis. Such loans and advances to the benefit of Borrowers (each, a "Revolving Loan"; and collectively, the "Revolving Loans"), ) together with the outstanding Letter of Credit Obligations outstandingshall be made subject to the terms hereof, on a revolving basis, but shall not in the aggregate exceed at any time an amount (the "Borrowing Base") equal to the lesser of: (A) the Revolving Credit Committed Amount then in effect; or (B) the aggregate of the following amount (the "Borrowing Base") calculated as followsamounts: (1) an amount equal to up to the sum of (a) 85% of Eligible Accounts Receivable; plus (b) the then lesser of (i) $250,000 and (ii) 85% of Eligible Canadian Accounts Receivable; plus (2) an amount equal to the sum lesser of (a) up the Inventory Sublimit, or (b) an amount equal to 45the sum of (i) 55% of the Eligible Inventory consisting comprised of Mom and Pops country hamspaper raw material, plus (bii) up to 55% of the Eligible Inventory consisting of Pierre Foods/Claremont location raw materials, plus (c) up to 65% of the Eligible Inventory consisting of Pierre Foods/Cincinnati location raw materials, plus (d) up to 55% of the Eligible Inventory consisting of Smokehouse finished goods, plus (e) up to 50% of the Eligible Inventory consisting comprised of Pierre Foods/Claremont location bakery finished goods, ink raw material; plus (fiii) up to 6535% of the Eligible Inventory consisting comprised of Pierre Foods/Cincinnati location finished goodsother raw material; plus (3) an amount equal the Equipment Availability; minus (4) the Bond Reserve; minus (5) the Customer Rebate Reserve; minus (6) the Availability Reserve. (ii) Agent shall have the right, in its sole, but reasonable discretion, to up establish reserves (in addition to 70% the establishment of Bond Reserve and the Eligible Equipment and Eligible Real Property determined as of its initial inclusion into the Borrowing Base; provided, however, that on the last day of each calendar quarter such initial amount shall be reduced by an amount equal Customer Rebate Reserve) from time to 1/28th of such initial amount; and provided, further, that no more than $2,500,000 shall be included in time against the Borrowing Base with respect to Approved Restaurants during each such matters, events or contingencies and in such amounts as Agent may determine. All references to the Borrowing Base in this Credit Agreement shall mean the amount calculated under the definition of the first two years following the Closing Date; minusBorrowing Base less any reserves then in existence. (4iii) reserves established by the Agent from time to time The advance rate in its reasonable discretion, including, without limitation, reserves against the Unsecured Letters of Credit. Subject to the relevant terms and provisions set forth herein, the Agent at all times clause (i)(B)(1) above shall be entitled reduced by 1.0% for each 1.0% by which the Dilution Rate for the Accounts exceeds 5.0%. If Borrowers implement a perpetual inventory system that is reasonably satisfactory to reduce or increase Agent (as indicated in writing by Agent to Borrower Agent), then the advance rates (but not in excess of the advance rates percentage set forth in clauses (1Section 2.1(b)(i)(B)(2)(b)(i) through (3) immediately above) and standards of eligibility under this Credit Agreement, in each case in its reasonable discretionshall increase to 60%. (iiiv) No Lender shall be obligated at any time to make available to the Borrowers its Revolving Credit Commitment Percentage of any requested Revolving Loan if such amount plus its Revolving Credit Commitment Percentage of all Revolving Loans and its Revolving Credit Commitment Percentage of all Letter of Credit Obligations then outstanding would exceed such Lender's Revolving Credit Commitment at such time. The aggregate balance of Revolving Loans and the aggregate amount of all Letter of Credit Obligations outstanding shall not at any time exceed the Revolving Credit Committed AmountBorrowing Base. No Lender shall be obligated to make available, nor shall the Agent make available, any Revolving Loans to any of the Borrowers to the extent such Revolving Loan Loan, when added to the then outstanding Revolving Loans and all Letter of Credit Obligations Obligations, would cause the aggregate outstanding Revolving Loans and all Letter of Credit Obligations to exceed the Borrowing Base. The Borrowers shall promptly repay to the Agent on demand for the account of the Lenders from time to time the full amount of the excess, if any any, of (A) the amount of all Revolving Loans and Letter of Credit Obligations outstanding over (B) the lesser Borrowing Base. Any excess of Loans and Letter of Credit Obligations over the Borrowing Base shall constitute in any event Obligations and shall be secured by the Collateral. (1v) Borrowers shall have the Revolving Credit right at any time and from time to time, upon ten (10) Business Days prior written notice to Agent to permanently reduce, without premium or penalty (but subject to Section 2.3(c) and Section 4.11 of this Agreement), the Committed Amount in the minimum amount of $3,000,000 and integral multiples of $1,000,000 in excess thereof. Upon the effectiveness of such notice, each Lender's Commitment shall be reduced in accordance with each Lender's Commitment Percentage of the amount specified in the notice. Agent shall promptly notify Lenders of its receipt of such notice. Any notice to reduce the Committed Amount pursuant to this Section 2.1(b)(v) shall be permanent and may not be revoked. In the event of any such reduction, outstanding Obligations in an amount in excess of the Committed Amount, as so reduced, shall be paid on the effective date together with interest accrued on the amount so paid (2subject to Section 4.11 of this Agreement) to the Borrowing Basedate of reduction.

Determination of Borrowing Base. (ia) The Lenders agree, subject Subject to the terms Section 2.2(b) and conditions of this Credit Agreement, from time to time, to make loans and advances to the Borrowers hereunder on a revolving basis. Such loans and advances to the Borrowers (each, a "Revolving Loan"; and collectively, the "Revolving Loans"Section 2.3(c), together with the Letter of Credit Obligations outstanding, Revolving Loans shall not in the aggregate principal amount exceed the lesser of: (i) The lesser of (A) the Revolving Credit Committed Amount Total Commitments then in effecteffect and (B) the aggregate amount permitted by the Senior Secured Note Indenture to be outstanding under the Credit Agreement minus, in each case, the sum of (x) the Letter of Credit Obligations and (y) the Borrower’s exposure (as determined by the applicable counterparty and notified to the Agent or, if no such notification is received, as determined by the Agent) under any Permitted Hedge Agreements; orand (ii) the amount then equal to: (A) Eighty-five percent (85%) of the Eligible Accounts Receivable, plus (B) the following amount lesser of (x) sixty percent (60%) of the net book value of Eligible Inventory, (y) eighty-five percent (85%) of the appraised net orderly liquidation value of the Eligible Inventory, based on the most recent appraisal delivered to, and approved by, the Agent and (z) sixty percent (60%) of the total Borrowing Base (the "amount in this clause (z), the “Inventory Sublimit”) and minus (C) the Borrower’s exposure (as determined by the applicable counterparty and notified to the Agent or, if no such notification is received, as determined by the Agent) under any Permitted Hedge Agreements; and minus (D) the Letter of Credit Obligations. The sum of the amounts calculated in accordance with clauses (ii)(A), (B) and (C) above is hereinafter referred to as the “Borrowing Base".” The Agent at any time shall be entitled to (i) calculated as follows: establish and increase or decrease reserves against Eligible Accounts Receivable and Eligible Inventory, (1ii) an amount reduce the advance rates under Section 2.2(a)(ii)(A) or (B) or restore such advance rates to any level equal to up or below the advance rates stated in Section 2.2(a)(ii)(A) or (B), and (iii) impose additional restrictions (or eliminate the same) to 85% the standards of the then “Eligible Accounts Receivable; plus (2) an amount equal to ” and “Eligible Inventory,” in the sum of (a) up to 45% of the Eligible Inventory consisting of Mom and Pops country hams, plus (b) up to 55% of the Eligible Inventory consisting of Pierre Foods/Claremont location raw materials, plus (c) up to 65% of the Eligible Inventory consisting of Pierre Foods/Cincinnati location raw materials, plus (d) up to 55% of the Eligible Inventory consisting of Smokehouse finished goods, plus (e) up to 50% of the Eligible Inventory consisting of Pierre Foods/Claremont location bakery finished goods, plus (f) up to 65% of the Eligible Inventory consisting of Pierre Foods/Cincinnati location finished goods; plus (3) an amount equal to up to 70% of the Eligible Equipment and Eligible Real Property determined as exercise of its initial inclusion into the Borrowing Base; provided, however, that Permitted Discretion. The Agent may but shall not be required to rely on the last day of each calendar quarter such initial amount shall be reduced by an amount equal to 1/28th of such initial amount; and provided, further, that no more than $2,500,000 shall be included in the Borrowing Base with respect Certificate and any other schedules or reports delivered to Approved Restaurants during each it in connection herewith in determining the then eligibility of the first two years following the Closing Date; minus (4) reserves established Accounts and Inventory. Reliance thereon by the Agent from time to time in its reasonable discretion, including, without limitation, reserves against shall not be deemed to limit the Unsecured Letters right of Credit. Subject to the relevant terms and provisions set forth herein, the Agent at all times shall be entitled to reduce or increase the revise advance rates (but not in excess of the advance rates set forth in clauses (1) through (3) immediately above) and or standards of eligibility under as provided in this Credit Agreement, in each case in its reasonable discretionSection 2.2(b). (ii) No Lender shall be obligated at any time to make available to the Borrowers its Revolving Credit Commitment Percentage of any requested Revolving Loan if such amount plus its Revolving Credit Commitment Percentage of all Revolving Loans and its Revolving Credit Commitment Percentage of all Letter of Credit Obligations then outstanding would exceed such Lender's Revolving Credit Commitment at such time. The aggregate balance of Revolving Loans and the aggregate amount of all Letter of Credit Obligations outstanding shall not at any time exceed the Revolving Credit Committed Amount. No Lender shall be obligated to make available, nor shall the Agent make available, any Revolving Loans to any of the Borrowers to the extent such Revolving Loan when added to the then outstanding Revolving Loans and all Letter of Credit Obligations would cause the aggregate outstanding Revolving Loans and all Letter of Credit Obligations to exceed the Borrowing Base. The Borrowers shall promptly repay to the Agent for the account of the Lenders from time to time the full amount of the excess, if any of (A) the amount of all Revolving Loans and Letter of Credit Obligations outstanding over (B) the lesser of (1) the Revolving Credit Committed Amount and (2) the Borrowing Base.