Common use of Limitation on Borrowings Clause in Contracts

Limitation on Borrowings. Outstanding borrowings under the Line of Credit, to a maximum of the principal amount set forth above, shall not at any time exceed Two Million Dollars ($2,000,000.00), unless such outstanding borrowings are less than or equal to eighty percent (80%) of Borrower’s eligible accounts receivable. All of the foregoing shall be determined by Bank upon receipt and review of all collateral reports required hereunder and such other documents and collateral information as Bank may from time to time require. Borrower acknowledges that said borrowing base was established by Bank with the understanding that, among other items, the aggregate of all returns, rebates, discounts, credits and allowances for the immediately preceding three (3) months at all times shall be less than five percent (5%) of Borrower’s gross sales for said period. If such dilution of Borrower’s accounts for the immediately preceding three (3) months at any time exceeds five percent (5%) of Borrower’s gross sales for said period, or if there at any time exists any other matters, events, conditions or contingencies which Bank reasonably believes may affect payment of any portion of Borrower’s accounts, Bank, in its sole discretion, may reduce the foregoing advance rate against eligible accounts receivable to a percentage appropriate to reflect such additional dilution and/or establish additional reserves against Borrower’s eligible accounts receivable. As used herein, “eligible accounts receivable” shall consist solely of trade accounts created in the ordinary course of Borrower’s business, upon which Borrower’s right to receive payment is absolute and not contingent upon the fulfillment of any condition whatsoever, and in which Bank has a perfected security interest of first priority, and shall not include: (i) any account which is past due more than twice Borrower’s standard selling terms, except with respect to any account for which Borrower has provided extended payment terms not to exceed one hundred eighty (180) days, any such account which is more than thirty (30) days past due; (ii) that portion of any account for which there exists any right of setoff, defense or discount (except regular discounts allowed in the ordinary course of business to promote prompt payment) or for which any defense or counterclaim has been asserted; (iii) any account which represents an obligation of any state or municipal government or of the United States government or any political subdivision thereof (except accounts which represent obligations of the United States government and for which the assignment provisions of the Federal Assignment of Claims Act, as amended or recodified from time to time, have been complied with to Bank’s satisfaction); (iv) any account which represents an obligation of an account debtor located in a foreign country other than an account debtor located in a Canadian province or territory, so long as, in Bank’s determination, such Canadian jurisdiction recognizes Bank’s first priority security interest in and right to collect such account as a consequence of any security agreements and UCC filings in favor of Bank; (v) any account which arises from the sale or lease to or performance of services for, or represents an obligation of, an employee, affiliate, partner, member, parent or subsidiary of Borrower; (vi) that portion of any account, which represents interim or progress bxxxxxxx or retention rights on the part of the account debtor; (vii) any account which represents an obligation of any account debtor when twenty percent (20%) or more of Borrower’s accounts from such account debtor are not eligible pursuant to (i) above; (viii) that portion of any account from an account debtor which represents the amount by which Borrower’s total accounts from said account debtor exceeds fifty percent (50%) of Borrower’s total accounts; (ix) any account deemed ineligible by Bank when Bank, in its sole discretion, deems the creditworthiness or financial condition of the account debtor, or the industry in which the account debtor is engaged, to be unsatisfactory.

Appears in 1 contract

Samples: Credit Agreement (Mellanox Technologies, Ltd.)

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Limitation on Borrowings. Outstanding (i) Notwithstanding anything to the contrary contained elsewhere in this Agreement, if Facility Usage (as defined below) under the Line of Credit at any time exceeds thirty-five percent (35%) of the sum of Borrower's accounts receivable (exclusive of reserves established by Borrower, if any, for returns, promotional allowances and bad debt, as set forth on Borrower's collateral reports) and inventory as reported on Borrower's monthly and annual financial statements delivered to Bank pursuant to Section 4.3 below (such event being referred to herein as the "Formula Borrowing Triggering Event"), outstanding borrowings under the Line of Credit, to a maximum of the principal amount set forth above, shall not at any time exceed Two Million Dollars a borrowing base ($2,000,000.00), unless such outstanding borrowings are less than or "Borrowing Base") equal to eighty the sum of (A) seventy percent (8070%) of Borrower’s 's eligible accounts receivable. All receivable (exclusive of reserves established by Borrower, if any, for returns, promotional allowances and bad debt, as set forth on Borrower's collateral reports), plus (B) forty-six percent (46%) of the foregoing shall be determined by Bank upon receipt cost of Borrower's finished goods inventory, and review of all collateral reports required hereunder and such other documents and collateral information as Bank may from time to time require. Borrower acknowledges that said borrowing base was established by Bank with the understanding that, among other items, the aggregate of all returns, rebates, discounts, credits and allowances for the immediately preceding three (3) months at all times shall be less than thirty-five percent (535%) of Borrower’s gross sales for said period. If such dilution the cost of Borrower’s accounts for the immediately preceding three 's raw materials (3) months at any time exceeds five percent (5%) exclusive of inventory that is consigned by Borrower or is not otherwise in Borrower’s gross sales for said period, or if there at any time exists any other matters, events, conditions or contingencies which Bank reasonably believes may affect payment of any portion of Borrower’s accounts, Bank, in its sole discretion, may reduce the foregoing advance rate against eligible accounts receivable 's possession and inventory that is not then subject to a percentage appropriate to reflect such additional dilution and/or establish additional reserves against Borrower’s eligible accounts receivable. As used herein, “eligible accounts receivable” shall consist solely of trade accounts created in the ordinary course of Borrower’s business, upon which Borrower’s right to receive payment is absolute and not contingent upon the fulfillment of any condition whatsoever, and in which Bank has a perfected security interest of first priority, and shall not include: (i) any account which is past due more than twice Borrower’s standard selling terms, except with respect to any account for which Borrower has provided extended payment terms not to exceed one hundred eighty (180) days, any such account which is more than thirty (30) days past due; (ii) that portion of any account for which there exists any right of setoff, defense or discount (except regular discounts allowed in the ordinary course of business to promote prompt payment) or for which any defense or counterclaim has been asserted; (iii) any account which represents an obligation of any state or municipal government or of the United States government or any political subdivision thereof (except accounts which represent obligations of the United States government and for which the assignment provisions of the Federal Assignment of Claims Act, as amended or recodified from time to time, have been complied with to Bank’s satisfaction); (iv) any account which represents an obligation of an account debtor located in a foreign country other than an account debtor located in a Canadian province or territory, so long as, in Bank’s determination, such Canadian jurisdiction recognizes Bank’s first priority security interest in and right to collect such account as a consequence of any security agreements and UCC filings lien in favor of Bank; (v) any account which arises from the sale or lease to or performance of services for, or represents an obligation ofwhich is obsolete, an employeeunsaleable or damaged), affiliate, partner, member, parent or subsidiary of Borrower; plus (viC) that portion of any account, which represents interim or progress bxxxxxxx or retention rights on the part of the account debtor; (vii) any account which represents an obligation of any account debtor when twenty thirty-five percent (20%) or more of Borrower’s accounts from such account debtor are not eligible pursuant to (i) above; (viii) that portion of any account from an account debtor which represents the amount by which Borrower’s total accounts from said account debtor exceeds fifty percent (5035%) of the undrawn amount of commercial Letters of Credit (as defined in Section 1.1(c) below) issued and outstanding with respect to inventory acquired by Borrower’s total accounts; ; provided, however, that outstanding borrowings against Borrower's inventory and undrawn commercial Letters of Credit (ixas described in clauses (B) and (C) above) shall not at any account deemed ineligible by Bank when Bank, time exceed 100% of availability for Borrower's eligible accounts receivable described in its sole discretion, deems the creditworthiness or financial condition clause (A) above. For purposes of the account debtorforegoing, or "Facility Usage" shall mean, as of any date of determination, the industry in which sum of (x) the account debtor is engaged, to be unsatisfactoryaggregate principal amount of advances then outstanding under the Line of Credit plus (y) the aggregate undrawn amount of all Letters of Credit then outstanding plus (z) the aggregate amount of all Acceptances (as defined below) then outstanding.

Appears in 1 contract

Samples: Credit Agreement (Pacer Technology)

Limitation on Borrowings. (i) Outstanding borrowings under the Line of Credit, to a maximum of the principal amount set forth above, shall not at any time exceed Two Million Dollars an aggregate of ($2,000,000.00), unless such outstanding borrowings are less than or equal to eighty A) fifty percent (8050%) of unbilled accounts receivable, up to an amount of the lesser of (1) $5,000,000 and (2) seventeen and one-half percent (17.5%) of eligible accounts receivable, and (B) seventy percent (70%) of Borrower’s 's eligible accounts receivablereceivable (the sum of “A” and “B”, hereafter, the “Availability”). All of the The foregoing shall be determined by Bank upon receipt and review of all collateral reports required hereunder and such other documents and collateral information as Bank may from time to time require. Borrower acknowledges that said borrowing base was established by Bank with the understanding that, among other items, the aggregate of all returns, rebates, discounts, credits and allowances for the immediately preceding three (3) months at all times shall be less than five percent (5%) of Borrower’s 's gross sales for said period. If such dilution of Borrower’s 's accounts for the immediately preceding three (3) months at any time exceeds five percent (5%) of Borrower’s 's gross sales for said period, or if there at any time exists any other matters, events, conditions or contingencies which Bank reasonably believes may affect payment of any portion of Borrower’s 's accounts, Bank, in its sole discretion, may reduce the foregoing advance rate against eligible accounts receivable to a percentage appropriate to reflect such additional dilution and/or establish additional reserves against Borrower’s 's eligible accounts receivable. . (ii) As used herein, "eligible accounts receivable" shall consist solely of trade accounts created in the ordinary course of Borrower’s 's business, upon which Borrower’s 's right to receive payment is absolute and not contingent upon the fulfillment of any condition whatsoever, and in which Bank has a perfected security interest of first priority, and shall not include: (iA) any account which is past due more than twice Borrower’s standard selling terms, except with respect to any account for which Borrower has provided extended payment terms not to exceed one hundred eighty ninety (180) days, any such account which is more than thirty (3090) days past due; (iiB) that portion of any account for which there exists any right of setoff, defense or discount (except regular discounts allowed in the ordinary course of business to promote prompt payment) or for which any defense or counterclaim has been asserted; (iiiC) any account which represents an obligation of any state or municipal government or of the United States government or any political subdivision thereof (except accounts which represent obligations of the United States government and for which the assignment provisions of the Federal Assignment of Claims Act, as amended or recodified from time to time, have been complied with to Bank’s 's satisfaction); (ivD) any account which represents an obligation of an account debtor located in a foreign country other than an account debtor located in a Canadian province or territory, so long as, in Bank’s determination, such Canadian jurisdiction recognizes Bank’s first priority security interest in and right to collect such account as a consequence of any security agreements and UCC filings in favor of Bankcountry; (vE) any account which arises from the sale or lease to or performance of services for, or represents an obligation of, an employee, affiliate, partner, member, parent or subsidiary of Borrower; (viF) that portion of any account, which represents interim or progress bxxxxxxx or retention rights on the part of the account debtor; (viiG) any account which represents an obligation of any account debtor when twenty percent (20%) or more of Borrower’s 's accounts from such account debtor are not eligible pursuant to (i) above; (viiiH) that portion of any account from an account debtor which represents the amount by which Borrower’s 's total accounts from said account debtor exceeds fifty twenty-five percent (5025%) of Borrower’s 's total accounts; (ixI) that portion of any account for which the due date has been extended after original delivery to the account debtor; and (J) any account deemed ineligible by Bank when Bank, in its sole discretion, deems the creditworthiness or financial condition of the account debtor, or the industry in which the account debtor is engaged, to be unsatisfactory.

Appears in 1 contract

Samples: Credit Agreement (Englobal Corp)

Limitation on Borrowings. Outstanding borrowings under the Line of Credit, to a maximum Credit as of any date shall not exceed the lesser of (i) the principal amount set forth above, shall not at any time exceed Two Million Dollars in subsection ($2,000,000.00a) hereinabove and (ii) an aggregate of (A) seventy-five percent (75%) (or such other percentage as may be established pursuant to this subsection (d)) of Borrower’s Eligible Accounts Receivable (as hereinafter defined) as set forth in the most recent Borrowing Base certificate delivered to Bank pursuant to Section 4.3(f), unless such outstanding borrowings are less than or equal to eighty plus (B) fifty percent (8050%) of Borrower’s eligible accounts receivableEligible Pre Xxxx Reserves (as hereinafter defined) as set forth in the most recent Borrowing Base certificate delivered to Bank pursuant to Section 4.3(f), plus (C) up to Twenty Million and No/100 Dollars ($20,000,000.00), based on the value of Borrower’s equipment as evidenced by a desktop appraisal satisfactory to Bank (the amount described in this clause (ii), the “Borrowing Base”). All of the foregoing shall be determined by Bank upon receipt and review of all collateral reports required hereunder and such other documents and collateral information as Bank may from time to time require, including, without limitation, updated desktop appraisals of Borrower’s equipment as deemed necessary by Bank to support the amount in the foregoing clause (ii)(C). Borrower acknowledges that said borrowing base Borrowing Base was established by Bank with the understanding that, among other items, the aggregate of all returns, rebates, discounts, credits and allowances for the immediately preceding three (3) months at all times shall be less than five percent (5%) of Borrower’s gross sales for said period. If such dilution of Borrower’s accounts for the immediately preceding three (3) months at any time exceeds five percent (5%) of Borrower’s gross sales for said period, or if there at any time exists any other matters, events, conditions or contingencies which Bank reasonably believes may adversely affect payment of any portion of Borrower’s accounts, Bank, in its sole discretion, may reduce the foregoing Eligible Accounts Receivable advance rate against eligible accounts receivable to a percentage appropriate to reflect such additional dilution and/or establish additional reserves against Borrower’s eligible accounts receivable. As used herein, “eligible accounts receivable” shall consist solely of trade accounts created (provided that any such reserves must be established by Bank in the ordinary course exercise of Borrower’s businessits reasonable (from the perspective of a secured, upon which Borrower’s right to receive payment is absolute and not contingent upon asset-based lender) judgment, in good faith). If outstanding borrowings under the fulfillment Line of Credit as of any condition whatsoeverdate exceed the Borrowing Base as of such date, and Borrower shall immediately prepay the Line of Credit in which Bank has a perfected security interest of first priority, and shall not include: (i) any account which is past due more than twice Borrower’s standard selling terms, except with respect to any account for which Borrower has provided extended payment terms not to exceed one hundred eighty (180) days, any such account which is more than thirty (30) days past due; (ii) that portion of any account for which there exists any right of setoff, defense or discount (except regular discounts allowed in the ordinary course of business to promote prompt payment) or for which any defense or counterclaim has been asserted; (iii) any account which represents an obligation of any state or municipal government or of the United States government or any political subdivision thereof (except accounts which represent obligations of the United States government and for which the assignment provisions of the Federal Assignment of Claims Act, as amended or recodified from time to time, have been complied with to Bank’s satisfaction); (iv) any account which represents an obligation of an account debtor located in a foreign country other than an account debtor located in a Canadian province or territory, so long as, in Bank’s determination, such Canadian jurisdiction recognizes Bank’s first priority security interest in and right to collect such account as a consequence of any security agreements and UCC filings in favor of Bank; (v) any account which arises from the sale or lease amount equal to or performance of services for, or represents an obligation of, an employee, affiliate, partner, member, parent or subsidiary of Borrower; (vi) that portion of any account, which represents interim or progress bxxxxxxx or retention rights on the part of the account debtor; (vii) any account which represents an obligation of any account debtor when twenty percent (20%) or more of Borrower’s accounts from such account debtor are not eligible pursuant to (i) above; (viii) that portion of any account from an account debtor which represents greater than the amount by which Borrower’s total accounts from said account debtor exceeds fifty percent (50%) of Borrower’s total accounts; (ix) any account deemed ineligible by Bank when Bank, in its sole discretion, deems the creditworthiness or financial condition of the account debtor, or the industry in which the account debtor is engaged, to be unsatisfactorysuch excess.

Appears in 1 contract

Samples: Revolving Line of Credit Note and Credit Agreement (American Woodmark Corp)

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Limitation on Borrowings. Outstanding borrowings under the Line of Credit, to a maximum of the principal amount set forth abovenot at any time to exceed an aggregate of Ten Million and 00/100s Dollars ($10,000,000.00) (“Borrowing Base Limit”). Once the outstanding borrowings exceed the Borrowing Base Limit, the maximum amount of the Line of Credit shall not at any time exceed Two Million Dollars an aggregate of: ($2,000,000.00), unless such outstanding borrowings are less than or equal to i) eighty percent (8080.00%) of Borrower’s eligible accounts receivable. All of the foregoing shall be determined by Bank upon receipt 's Eligible Accounts Receivable, and review of all collateral reports required hereunder and such other documents and collateral information as Bank may from time to time require. Borrower acknowledges that said borrowing base was established by Bank with the understanding that, among other items, the aggregate of all returns, rebates, discounts, credits and allowances for the immediately preceding three (3ii) months at all times shall be less than five fifty percent (550%) of Borrower’s gross sales for said period. If such dilution the value of Borrower’s accounts for the immediately preceding three 's Eligible Finished Goods, less undrawn amounts of outstanding letters of credit issued by Bank or any affiliate thereof (3“Borrowing Base”). The language in subsection (ii) months hereof shall be considered Eligible Finished Goods Reliance. Eligible Finished Goods Reliance shall at any no time exceeds five exceed more than fifty percent (550%) of Borrower’s gross sales the Borrowing Base; provided, however, the Eligible Finished Goods Reliance between June 1 and September 30 of each year shall at no time exceed sixty percent (60%) of the Borrowing Base.  Notwithstanding the language set out in this Section 1(b), the Line of Credit, even if it exceeds the Borrowing Base Limit, will not be subject to the Borrowing Base if the FCCR set out in Section 4.9(a) is for said period, two consecutive quarters met or if there at any time exists any other matters, events, conditions or contingencies which Bank reasonably believes may affect payment of any portion of Borrower’s accounts, Bank, in its sole discretion, may reduce the foregoing advance rate against eligible accounts receivable to a percentage appropriate to reflect such additional dilution and/or establish additional reserves against Borrower’s eligible accounts receivableexceeded.   As used herein, “eligible accounts receivable” "Eligible Accounts Receivable" shall consist solely of trade accounts, accounts receivable, other receivables or other rights to payment for goods sold or services rendered owing to Borrower, created in the ordinary course of Borrower’s 's business, upon which Borrower’s 's right to receive payment is absolute and not contingent upon the fulfillment of any condition whatsoever, and in which Bank has a perfected security interest of first priority, and shall not include::  (i) any account which is past due more than twice Borrower’s standard selling terms, except with respect to any account for which Borrower has provided extended payment terms not to exceed one hundred eighty ninety (180) days, any such account which is more than thirty (3090) days past due;;  (ii) that portion of any account for which there exists any right of setoff, defense or discount (except regular discounts allowed in the ordinary course of business to promote prompt payment) or for which any defense or counterclaim has been asserted;;  (iii) any account which represents an obligation of any state or municipal government or of the United States government or any political subdivision thereof (except accounts which represent obligations of the United States government and for which the assignment provisions of the Federal Assignment of Claims Act, as amended or recodified from time to time, have been complied with to Bank’s satisfaction);thereof;  (iv) any account which represents an obligation of an account debtor located in a foreign country other than an account debtor located in a Canadian province or territorycountry, so long asexcept to the extent any such account, in Bank’s 's determination, such Canadian jurisdiction recognizes is supported by a letter of credit or insured under a policy of foreign credit insurance, in each case in form, substance and issued by a party acceptable to Bank’s first priority security interest in and right to collect such account as a consequence of any security agreements and UCC filings in favor of Bank;;  (v) any account which arises from the sale or lease to or performance of services for, or represents an obligation of, an employee, affiliate, partner, member, parent or subsidiary of Borrower;;  (vi) that portion of any account, which represents interim or progress bxxxxxxx xxxxxxxx or retention rights on the part of the account debtor;;  (vii) any account which represents an obligation of any account debtor when twenty twenty-five percent (2025%) or more of Borrower’s 's accounts from such account debtor are not eligible pursuant to (i) above;;  (viii) that portion of any account from an account debtor which represents the amount by which Borrower’s 's total accounts from said account debtor exceeds fifty twenty-five percent (5025%) of Borrower’s 's total accounts;;  (ix) any account which represents an obligation of an account debtor that is subject to a bankruptcy, insolvency or receivership proceedings; and  (x) any account deemed ineligible by Bank when Bank, in its sole discretion, deems the creditworthiness Borrower’s internal or financial condition of the account debtor, or the industry in which the account debtor is engaged, to be unsatisfactoryexternal auditors.

Appears in 1 contract

Samples: Credit Agreement (Flexsteel Industries Inc)

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