Qualified Accounts. Upon delivery to the Agent of each Schedule of Accounts, the Agent shall make a determination, in its sole discretion, as to which Accounts listed thereon shall be deemed Qualified Accounts. An Account shall not be considered a Qualified Account unless the Agent determines, in its sole discretion, that such Account has met the following minimum requirements: the Account 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 any Borrower to make such Account payable by the Account Debtor; the Account arises from an arm’s length transaction in the ordinary course of the Borrowers’ business between a Borrower and an Account Debtor which is not an Affiliate of a Borrower or an officer, stockholder or employee of a Borrower or of any Affiliate of a Borrower, or a member of the family of an officer, stockholder or employee of a Borrower or of any Affiliate of a Borrower; the Borrower to whom such Account is owing is able to bring suit against the Account Debtor through judicial process and there exist no defenses to the enforcement of such Borrower’s remedies against such Account Debtor, and the Account does not represent a progress billing consisting of an invoice for goods sold or used or services rendered pursuant to a contract under which the Account Debtor’s obligation to pay that invoice is subject to Borrower’s completion of further performance under such contract or is subject to the equitable lien of a surety bond issuer; the Account shall not (a) if payable on a “net 10 basis” be or have been unpaid more than thirty (30) days from the invoice date; (b) if payable on a “net 30 basis” or basis other than described in the preceding clause (a) be or have been unpaid more than ninety (90) days from the invoice date, (c) be delinquent more than sixty (60) days, or (d) be payable by an Account Debtor (1) more than 50% of whose Accounts have remained unpaid for more than ninety (90) days from the invoice date or are delinquent more than sixty (60) days, or (2) whose Accounts constitute, in the Agent’s determination, an unduly high percentage of the aggregate amount of all outstanding Accounts; the goods the sale of which gave rise to the Account were shipped or delivered or provided to the Account Debtor on an absolute sale basis and not on a xxxx 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; the Account is not evidenced by chattel paper or an instrument of any kind; the Account Debtor with respect to the Account (a) is solvent, (b) is not the subject of any bankruptcy or insolvency proceedings of any kind or of any other proceeding or action, threatened or pending, which might have a materially adverse effect on its business, unless the Agent, in its sole discretion, notifies the Borrower that the Account of such an Account Debtor can be considered a Qualified Account, and (c) is not, in the sole discretion of the Agent, deemed ineligible for credit for other reasons (including, without limitation, unsatisfactory past experiences of the Borrowers or any of the Banks with the Account Debtor or unsatisfactory reputation of the Account Debtor or the Account Debtor suspends business, makes a general assignment for the benefit of creditors or fails to pay its debts generally as they come due); the Account Debtor is not located outside Canada or the United States of America;
Appears in 2 contracts
Samples: Credit Agreement (Super Test Petroleum Inc), Credit Agreement (Kwik Fil Inc)
Qualified Accounts. Upon delivery to the Administrative Agent of each Schedule of Accounts, the Administrative Agent shall make a determination, in its sole discretionReasonable Credit Judgment, as to which Accounts listed thereon shall be deemed Qualified Accounts. An Account shall not be considered a Qualified Account unless the Administrative Agent determines, in its sole discretionReasonable Credit Judgment, that such Account has met the following minimum requirements: :
(i) the Account 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 any Borrower Loan Party to make such Account payable by the Account Debtor; the Account arises from an arm’s arm’s-length transaction in the ordinary course of the Borrowers’ a Loan Party’s business between a Borrower such Loan Party and an Account Debtor which is not an Affiliate of a Borrower any Loan Party or an officer, stockholder or employee of a Borrower any Loan Party or of any Affiliate of a Borrowerany Loan Party, or a member of the family of an officer, stockholder or employee of a Borrower any Loan Party or of any Affiliate of a Borrower; the Borrower to whom such Account is owing is able to bring suit against the Account Debtor through judicial process and there exist no defenses to the enforcement of such Borrower’s remedies against such Account Debtor, and the Account does not represent a progress billing consisting of an invoice for goods sold or used or services rendered pursuant to a contract under which the Account Debtor’s obligation to pay that invoice is subject to Borrower’s completion of further performance under such contract or is subject to the equitable lien of a surety bond issuer; any Loan Party;
(ii) the Account shall not (a) if payable on a “net 10 basis” be or have been unpaid more than thirty (30) days from the invoice date; (b) if payable on a “net 30 basis” or basis other than described in the preceding clause (a) be or have been unpaid more than ninety (90) days from the invoice date, (cb) be delinquent more than sixty (60) days, or (dc) be payable by an Account Debtor (1) more than 50% of whose Accounts have remained unpaid for more than ninety (90) days from the invoice date or are delinquent more than sixty (60) days, or (2) whose Accounts constitute, in the Administrative Agent’s determination, an unduly high percentage of the aggregate amount of all outstanding Accounts after taking into account the credit-worthiness of the Account Debtors for such Accounts; provided, however, that (x) Account Debtors with Investment Grade ratings shall not be subject to restriction under this clause (ii)(c)(2), and (y) Account Debtors with Accounts constituting less than ten percent (10%) of otherwise Qualified Accounts shall not be subject to restriction under this clause (ii)(c)(2);
(iii) the goods the sale of which gave rise to the Account were shipped or delivered or provided to the Account Debtor on an absolute sale basis and not on a xxxx bill 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 is not evidenced by chattel paper or an instrument of any kind; ;
(v) the Account Debtor with respect to the Account (a) is solventSolvent, (b) is the end-user of the goods sold and is not a broker or other intermediary unless (i) such broker or intermediary is acceptable to the Administrative Agent in its sole discretion, or (ii) such broker or intermediary has provided a letter of credit supporting such Account in form and substance acceptable to the Administrative Agent in its Reasonable Credit Judgment, (c) is not the subject of any bankruptcy or insolvency proceedings of any kind or of any other proceeding or action, threatened or pending, which might have a materially adverse effect on its business, unless the Agent, in its sole discretion, notifies the Borrower that the Account of such an Account Debtor can be considered a Qualified Account, and (cd) is not, in the sole discretion of the Administrative Agent, deemed ineligible for credit for other reasons (including, without limitation, unsatisfactory past experiences of the Borrowers any Loan Party or any of the Banks Lenders with the Account Debtor or unsatisfactory reputation of the Account Debtor or Debtor);
(vi) the Account Debtor suspends business, makes a general assignment for the benefit of creditors or fails to pay its debts generally as they come due); the Account Debtor (a) is not located outside Canada or the continental United States of America or (b) if the Account Debtor is located outside Canada or the continental United States, the Account is supported by a letter of credit or FICA insurance deemed adequate and acceptable by the Administrative Agent;
(vii) the Account Debtor (a) is not (i) the government of the United States of America, or any department, agency or instrumentality thereof or (ii) the government of Canada, or any department, agency or instrumentality thereof, or (b) if the Account Debtor is an entity mentioned in clause (vii)(a)(i), 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 to the Administrative Agent’s satisfaction. Notwithstanding the provisions of the foregoing sentence of this Section (vii), for any TVA Accounts for which the Federal Assignment of Claims Act (or applicable similar legislation) has not been fully complied with so as to validly perfect the Lenders’ Prior Security Interest to the Administrative Agent’s satisfaction, such Accounts shall (to the extent such TVA Accounts satisfy the other provisions applicable to Qualified Accounts) be deemed to be Qualified Accounts, subject to a reduced 70% advance rate under Section (ii) of the definition of “Borrowing Base”, provided that:
(a) No TVA Accounts have been unpaid more than forty five (45) days from the invoice date, or are delinquent more than five (5) days. No TVA Accounts shall be Qualified Accounts while any such Account is delinquent as set forth in the preceding sentence; and
(b) No payments on TVA Accounts shall have been paid to any account other than a deposit account subject to a Deposit Account Control Agreement. From and after the date of any payment on an Account in violation of the preceding sentence, no TVA Accounts shall be Qualified Accounts (whether or not payments have subsequently been made to a deposit account subject to a Deposit Account Control Agreement), unless the Administrative Agent permits such Accounts to be Qualified Accounts in the sole discretion of the Administrative Agent. At any time that the TVA Accounts fully comply with the Federal Assignment of Claims Act (or applicable similar legislation) so as to validly perfect the Lenders’ Prior Security Interest to the Administrative Agent’s satisfaction, such Accounts shall (to the extent such TVA Accounts satisfy the other provisions applicable to Qualified Accounts) be deemed to be Qualified Accounts subject to the 85% advance rate under Section (ii) of the definition of “Borrowing Base”. All of the foregoing notwithstanding, no TVA Accounts shall be deemed to be Qualified Unbilled Accounts unless such TVA Accounts meet all of the provisions applicable to Qualified Unbilled Accounts, including, but not limited to, the requirement in Section (vii)(b) above.
(viii) the Account is a valid, binding and legally enforceable obligation of the Account 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 Debtor, and no facts exist which may provide a basis for any of the foregoing in the present or future;
(ix) the Account is subject to the Administrative Agent’s and the Lenders’ Prior Security Interest and is not subject to any other Lien, claim, encumbrance or security interest whatsoever, other than Permitted Liens;
(x) the Account is evidenced by an invoice or other documentation and arises from a contract which is in form and substance satisfactory to the Administrative Agent;
(xi) each Loan Party has observed and complied with all laws of the state in which the Account Debtor or the Account is located which, if not observed and complied with, would deny to any Loan Party access to the courts of such state;
(xii) the goods giving rise to the Account were not, at the time of sale thereof, subject to any Lien or encumbrance except the Administrative Agent and the Lenders’ Prior Security Interest;
(xiii) the Account is payable in freely transferable U.S. Dollars; and
(xiv) the Account is not, or should not be, disqualified for any other reason generally accepted in the commercial finance business. In addition to the foregoing requirements, Accounts of any Account Debtor which are otherwise Qualified Accounts shall be reduced to the extent of any accounts payable (including, without limitation, the Administrative Agent’s estimate of any contingent liabilities) by the Loan Parties to such Account Debtor; provided that the Administrative Agent, in its sole discretion, may determine that none of the Accounts in respect to such Account Debtor shall be Qualified Accounts in the event that there exists an unreasonably large amount of payables owing to such Account Debtor. Notwithstanding the qualification standards specified above, upon prior notice to the Borrower, the Administrative Agent may at any time or from time to time revise such qualification standards or, in its Reasonable Credit Judgment, determine that one or more Accounts are not eligible to be Qualified Accounts.
Appears in 2 contracts
Samples: Credit Agreement (Armstrong Coal Company, Inc.), Credit Agreement (Armstrong Energy, Inc.)
Qualified Accounts. Upon delivery to the Administrative Agent of each Schedule of Accounts, the Administrative Agent shall make a determination, in its sole discretionPermitted Discretion, as to which Accounts listed thereon shall be deemed Qualified Accounts. An Account of any Borrower shall not be considered a Qualified Account unless the Administrative Agent determines, in its sole discretionPermitted Discretion, that such Account has met the following minimum requirements: :
(i) the Account 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 any such Borrower to make such Account payable by the Account Debtor; the Account arises from an arm’s arm’s-length transaction in the ordinary course of the Borrowers’ such Borrower’s business between a such Borrower and an Account Debtor which is not an Affiliate of a any Borrower or an officer, stockholder or employee of a the Borrower or of any Affiliate of a any Borrower, or a member of the family of an officer, stockholder or employee of a any Borrower or of any Affiliate of a any Borrower; the Borrower to whom such Account is owing is able to bring suit against the Account Debtor through judicial process and there exist no defenses to the enforcement of such Borrower’s remedies against such Account Debtor, and the Account does not represent a progress billing consisting of an invoice for goods sold or used or services rendered pursuant to a contract under which the Account Debtor’s obligation to pay that invoice is subject to Borrower’s completion of further performance under such contract or is subject to the equitable lien of a surety bond issuer; ;
(ii) the Account shall not (a) if payable on a “net 10 basis” be or have been unpaid more than thirty (30) days from the invoice date; (b) if payable on a “net 30 basis” or basis other than described in the preceding clause (a) be or have been unpaid more than ninety (90) days from the invoice date, (cb) be delinquent more than sixty (60) days, or (dc) be payable by an Account Debtor (1) more than fifty percent (50% %) of whose Accounts have remained unpaid for more than ninety (90) days from the invoice date or such Account Debtor are delinquent more than sixty (60) daysnot deemed Qualified Accounts hereunder, or (2) whose Accounts constitute, in the Administrative Agent’s determinationPermitted Discretion, an unduly high percentage of the aggregate amount of all outstanding Accounts; ;
(iii) all covenants, representations and warranties contained in this Agreement with respect to such Account has been complied with;
(iv) the goods or services the sale of which gave rise to the Account were shipped or delivered or provided to the Account Debtor on an absolute sale basis and not on a xxxx 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; ;
(v) the Account is not evidenced by chattel paper or an instrument of any kind; ;
(vi) the Account Debtor with respect to the Account (a) is solventSolvent, (b) is not the subject of any bankruptcy or insolvency proceedings of any kind or of any other proceeding or action, threatened or pending, which might have a materially adverse effect on its business, unless the Agent, in its sole discretion, notifies the Borrower that the Account of such an Account Debtor can be considered a Qualified Account, and (c) is not, in the sole discretion Permitted Discretion of the Administrative Agent, deemed ineligible for credit for other reasons (including, without limitation, unsatisfactory past experiences of the Borrowers or any of the Banks Lenders with the Account Debtor or unsatisfactory reputation of the Account Debtor or the Account Debtor suspends business, makes a general assignment for the benefit of creditors or fails to pay its debts generally as they come dueDebtor); ;
(vii) (a) the Account Debtor is not located outside the continental United States of America and Canada or (b) if the Account Debtor is located outside the continental United States and Canada, the Account is supported by a letter of credit or FICA insurance deemed adequate and acceptable by the Administrative Agent; provided, however, notwithstanding the foregoing, otherwise Qualified Accounts where the Account Debtor is located outside the continental United States and Canada and is not supported by a letter of credit or FICA insurance deemed adequate and acceptable by the Administrative Agent shall only be excluded from Qualified Accounts to the extent they exceed, singularly or in the aggregate, an amount equal to the lesser of (i) Four Million and 00/100 Dollars ($4,000,000.00) or (ii) ten percent (10%) of the Borrowing Base on any applicable date of determination;
(viii) (a) the Account Debtor is not the government of the United States of America, or any state, department, agency or instrumentality thereof, or (b) if the Account 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 Administrative Agent’s Prior Security Interest to the Administrative Agent’s satisfaction; provided, however, notwithstanding the foregoing, otherwise Qualified Accounts where the Account Debtor is the government of the United States of America, or any state, department, agency or instrumentality thereof and the Federal Assignment of Claims Act (or applicable similar legislation) has not been fully complied with so as to validly perfect the Administrative Agent’s Prior Security Interest to the Administrative Agent’s satisfaction shall only be excluded from Qualified Accounts to the extent they exceed, singularly or in the aggregate, Two Million and 00/100 Dollars ($2,000,000.00);
(ix) the Account is a valid, binding and legally enforceable obligation of the Account 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 Debtor, and no facts exist which may provide a basis for any of the foregoing in the present or future;
(x) the Account is subject to the Administrative Agent’s Prior Security Interest and is not subject to any other Lien, claim, encumbrance or security interest whatsoever;
(xi) the Account is evidenced by an invoice or other documentation and arises from a contract which is in form and substance satisfactory to the Administrative Agent;
(xii) the Borrowers have observed and complied with all laws of the state in which the Account Debtor or the Account is located which, if not observed and complied with, would deny to the Borrowers access to the courts of such state;
(xiii) the Account is not subject to any provision prohibiting its assignment or requiring notice of or consent to such assignment;
(xiv) the goods giving rise to the Account were not, at the time of sale thereof, subject to any Lien or encumbrance except the Administrative Agent’s Prior Security Interest;
(xv) the Account is payable in freely transferable Dollars; and
(xvi) the Account is not, or should not be, disqualified for any other reason generally accepted in the commercial finance business. In addition to the foregoing requirements, Accounts of any Account Debtor which are otherwise Qualified Accounts shall be reduced to the extent of any accounts payable (including, without limitation, the Administrative Agent’s estimate of any contingent liabilities) by any Borrower to such Account Debtor (“Contras”); provided that the Administrative Agent, in its sole discretion, may determine that none of the Accounts in respect to such Account Debtor shall be Qualified Accounts in the event that there exists an unreasonably large amount of payables owing to such Account Debtor. Notwithstanding the qualification standards specified above, upon prior notice to the Borrowing Agent, the Administrative Agent may at any time or from time to time revise such qualification standards or, in its Permitted Discretion, determine that one or more Accounts are not eligible to be Qualified Accounts.
Appears in 1 contract
Samples: Credit Agreement (Universal Stainless & Alloy Products Inc)
Qualified Accounts. Upon delivery to the Administrative Agent of each Schedule of Accounts, the Administrative Agent shall make a determination, in its sole discretionPermitted Discretion, as to which Accounts listed thereon shall be deemed Qualified Accounts. An Account of any Borrower shall not be considered a Qualified Account unless the Administrative Agent determines, in its sole discretionPermitted Discretion, that such Account has met the following minimum requirements: :
(i) the Account 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 any such Borrower to make such Account payable by the Account Debtor; the Account arises from an arm’s arm’s-length transaction in the ordinary course of the Borrowers’ such Borrower’s business between a such Borrower and an Account Debtor which is not an Affiliate of a any Borrower or an officer, stockholder or employee of a the Borrower or of any Affiliate of a any Borrower, or a member of the family of an officer, stockholder or employee of a any Borrower or of any Affiliate of a any Borrower; the Borrower to whom such Account is owing is able to bring suit against the Account Debtor through judicial process and there exist no defenses to the enforcement of such Borrower’s remedies against such Account Debtor, and the Account does not represent a progress billing consisting of an invoice for goods sold or used or services rendered pursuant to a contract under which the Account Debtor’s obligation to pay that invoice is subject to Borrower’s completion of further performance under such contract or is subject to the equitable lien of a surety bond issuer; ;
(ii) the Account shall not (a) if payable on a “net 10 basis” be or have been unpaid more than thirty (30) days from the invoice date; (b) if payable on a “net 30 basis” or basis other than described in the preceding clause (a) be or have been unpaid more than ninety (90) days from the invoice date, (cb) be delinquent more than sixty (60) days, or (dc) be payable by an Account Debtor (1) more than fifty percent (50% %) of whose Accounts have remained unpaid for more than ninety (90) days from the invoice date or such Account Debtor are delinquent more than sixty (60) daysnot deemed Qualified Accounts hereunder, or (2) whose Accounts constitute, in the Administrative Agent’s determinationPermitted Discretion, an unduly high percentage of the aggregate amount of all outstanding Accounts; ;
(iii) all covenants, representations and warranties contained in this Agreement with respect to such Account has been complied with;
(iv) the goods or services the sale of which gave rise to the Account were shipped or delivered or provided to the Account Debtor on an absolute sale basis and not on a xxxx 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; ;
(v) the Account is not evidenced by chattel paper or an instrument of any kind; ;
(vi) the Account Debtor with respect to the Account (a) is solventSolvent, (b) is not the subject of any bankruptcy or insolvency proceedings of any kind or of any other proceeding or action, threatened or pending, which might have a materially adverse effect on its business, unless the Agent, in its sole discretion, notifies the Borrower that the Account of such an Account Debtor can be considered a Qualified Account, and (c) is not, in the sole discretion Permitted Discretion of the Administrative Agent, deemed ineligible for credit for other reasons (including, without limitation, unsatisfactory past experiences of the Borrowers or any of the Banks Lenders with the Account Debtor or unsatisfactory reputation of the Account Debtor or the Account Debtor suspends business, makes a general assignment for the benefit of creditors or fails to pay its debts generally as they come dueDebtor); ;
(vii) (a) the Account Debtor is not located outside the continental United States of America and Canada or (b) if the Account Debtor is located outside the continental United States and Canada, the Account is supported by a letter of credit or FICA insurance deemed adequate and acceptable by the Administrative Agent; provided, however, notwithstanding the foregoing, otherwise Qualified Accounts where the Account Debtor is located outside the continental United States and Canada and is not supported by a letter of credit or FICA insurance deemed adequate and acceptable by the Administrative Agent shall only be excluded from Qualified Accounts to the extent they exceed, singularly or in the aggregate, an amount equal to Five Million and 00/100 Dollars ($5,000,000.00);
(viii) (a) the Account Debtor is not the government of the United States of America, or any state, department, agency or instrumentality thereof, or (b) if the Account 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 Administrative Agent’s Prior Security Interest to the Administrative Agent’s satisfaction; provided, however, notwithstanding the foregoing, otherwise Qualified Accounts where the Account Debtor is the government of the United States of America, or any state, department, agency or instrumentality thereof and the Federal Assignment of Claims Act (or applicable similar legislation) has not been fully complied with so as to validly perfect the Administrative Agent’s Prior Security Interest to the Administrative Agent’s satisfaction shall only be excluded from Qualified Accounts to the extent they exceed, singularly or in the aggregate, Two Million and 00/100 Dollars ($2,000,000.00);
(ix) the Account is a valid, binding and legally enforceable obligation of the Account 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 Debtor, and no facts exist which may provide a basis for any of the foregoing in the present or future;
(x) the Account is subject to the Administrative Agent’s Prior Security Interest and is not subject to any other Lien, claim, encumbrance or security interest whatsoever;
(xi) the Account is evidenced by an invoice or other documentation and arises from a contract which is in form and substance satisfactory to the Administrative Agent;
(xii) the Borrowers have observed and complied with all laws of the state in which the Account Debtor or the Account is located which, if not observed and complied with, would deny to the Borrowers access to the courts of such state;
(xiii) the Account is not subject to any provision prohibiting its assignment or requiring notice of or consent to such assignment;
(xiv) the goods giving rise to the Account were not, at the time of sale thereof, subject to any Lien or encumbrance except the Administrative Agent’s Prior Security Interest;
(xv) the Account is payable in freely transferable Dollars; and
(xvi) the Account is not, or should not be, disqualified for any other reason generally accepted in the commercial finance business. In addition to the foregoing requirements, Accounts of any Account Debtor which are otherwise Qualified Accounts shall be reduced to the extent of any accounts payable (including, without limitation, the Administrative Agent’s estimate of any contingent liabilities) by any Borrower to such Account Debtor (“Contras”); provided that the Administrative Agent, in its sole discretion, may determine that none of the Accounts in respect to such Account Debtor shall be Qualified Accounts in the event that there exists an unreasonably large amount of payables owing to such Account Debtor. Notwithstanding the qualification standards specified above, upon prior notice to the Borrowing Agent, the Administrative Agent may at any time or from time to time revise such qualification standards or, in its Permitted Discretion, determine that one or more Accounts are not eligible to be Qualified Accounts.
Appears in 1 contract
Samples: Credit Agreement (Universal Stainless & Alloy Products Inc)
Qualified Accounts. Upon delivery to the Agent of each Schedule of Accounts, the Agent shall make a determination, in its sole discretion, as to which Accounts listed thereon shall be deemed Qualified Accounts. An Account shall not be considered a Qualified Account unless the Agent determines, in its sole discretion, that such Account has met the following minimum requirements: :
(i) the Account 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 any Borrower the applicable Loan Party to make such Account payable by the Account Debtor; the Account arises from an arm’s arm's-length transaction in the ordinary course of the Borrowers’ such Loan Party's business between a Borrower such Loan Party and an Account Debtor which is not an Affiliate of a Borrower any Loan Party or an officer, stockholder or employee of a Borrower any Loan Party or of any Affiliate of a Borrowerany Loan Party, or a member of the family of an officer, stockholder or employee of a Borrower any Loan Party or of any Affiliate of a Borrower; the Borrower to whom such Account is owing is able to bring suit against the Account Debtor through judicial process and there exist no defenses to the enforcement of such Borrower’s remedies against such Account Debtor, and the Account does not represent a progress billing consisting of an invoice for goods sold or used or services rendered pursuant to a contract under which the Account Debtor’s obligation to pay that invoice is subject to Borrower’s completion of further performance under such contract or is subject to the equitable lien of a surety bond issuer; any Loan Party;
(ii) the Account shall not (a) if payable on a “net 10 basis” be or have been unpaid more than thirty (30) days from the invoice date; (b) if payable on a “net 30 basis” or basis other than described in the preceding clause (a) be or have been unpaid more than ninety (90) days from the invoice date, (cb) be delinquent more than sixty (60) days, or (dc) be payable by an Account Debtor (1) more than 50% of whose Accounts have remained unpaid for more than ninety (90) days from the invoice date or are delinquent more than sixty (60) days, or (2) whose Accounts constitute, in the Agent’s 's determination, an unduly high percentage of the aggregate amount of all outstanding Accounts; ;
(iii) the goods the sale of which gave rise to the Account were shipped or delivered or provided to the Account Debtor on an absolute sale basis and not on a xxxx 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 is not evidenced by chattel paper or an instrument of any kind; ;
(v) the Account Debtor with respect to the Account (a) is solvent, (b) is not the subject of any bankruptcy or insolvency proceedings of any kind or of any other proceeding or action, threatened or pending, which might have a materially adverse effect on its business, unless the Agent, in its sole discretion, notifies the Borrower that the Account of such an Account Debtor can be considered a Qualified Account, and (c) is not, in the sole discretion of the Agent, deemed ineligible for credit for other reasons (including, without limitation, unsatisfactory past experiences of the Borrowers any Loan Party or any of the Banks with the Account Debtor or unsatisfactory reputation of the Account Debtor or the Account Debtor suspends business, makes a general assignment for the benefit of creditors or fails to pay its debts generally as they come dueDebtor); ;
(vi) the Account Debtor is not located outside Canada or the continental United States of America, provided that if the Account Debtor is located in Canada, the Account is supported by a letter of credit or FICA insurance deemed adequate and acceptable by the Agent;
(vii) the Account Debtor is not the government of the United States of America, or any department, agency or instrumentality thereof, or (b) if the Account 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 Banks' Prior Security Interest to the Agent's satisfaction;
(viii) the Account is a valid, binding and legally enforceable obligation of the Account 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 Debtor, and no facts exist which may provide a basis for any of the foregoing in the present or future;
(ix) the Account is subject to the Agent's and the Banks' Prior Security Interest and is not subject to any other Lien, claim, encumbrance or security interest whatsoever;
(x) the Account is evidenced by an invoice or other documentation and arises from a contract which is in form and substance satisfactory to the Agent;
(xi) the applicable Loan Party has observed and complied with all laws of the state in which the Account Debtor or the Account is located which, if not observed and complied with, would deny to such Loan Party access to the courts of such state;
(xii) the Account 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 were not, at the time of sale thereof, subject to any Lien or encumbrance except the Agent and the Banks' Prior Security Interest;
(xiv) the Account is payable in freely transferable United States Dollars; and
(xv) the Account is not, or should not be, disqualified for any other reason generally accepted in the commercial finance business. In addition to the foregoing requirements, Accounts of any Account Debtor which are otherwise Qualified Accounts shall be reduced to the extent of any accounts payable (including, without limitation, the Agent's estimate of any contingent liabilities) by any Loan Party to such Account Debtor ("Contras"); provided that the Agent, in its sole discretion, may determine that none of the Accounts in respect to such Account Debtor shall be Qualified Accounts in the event that there exists an unreasonably large amount of payables owing to such Account Debtor.] Notwithstanding the qualification standards specified above, upon prior notice to the Borrower, the Agent may at any time or from time to time revise such qualification standards or, in its sole discretion, determine that one or more Accounts are not eligible to be Qualified Accounts.
Appears in 1 contract
Qualified Accounts. Upon delivery With respect to all accounts from time to time scheduled, listed or referred to in any certificate, statement or report delivered to the Agent of each Schedule of AccountsBank and purported to be Qualified Accounts by the Borrower, Borrower warrants and represents to the Agent shall make Bank that (a) the accounts are genuine, are in all respects what they purport to be, and are not evidenced by a determinationnote, in its sole discretioninstrument or judgment; (b) the accounts represent undisputed, as to which Accounts listed thereon shall be deemed Qualified Accounts. An Account shall not be considered a Qualified Account unless the Agent determines, in its sole discretion, that such Account has met the following minimum requirements: the Account represents a complete bona fide transaction transactions completed in accordance with the terms and provisions contained in the documents delivered to the Bank with respect to the accounts; (c) no payments have been or will be made on the accounts except payments immediately delivered to the Bank pursuant to this Agreement; (d) there are no material setoffs, counterclaims or disputes existing or asserted with respect to the accounts and the Borrower has not made any agreement with any account debtor for any deduction from any account; (e) there are no facts, events or occurrences which in any way impair the validity or enforcement of any account or tend to reduce the amount payable under any account as shown on the respective certificates and statements, any books and records and all invoices and statements delivered to the Bank with respect to any account; (f) all account debtors have the capacity to contract and, to the best of the Borrower’s knowledge, are solvent; (g) the services furnished and/or goods sold and delivered giving rise to any account are not subject to any lien, claim, encumbrance or services rendered security interest except that of the Bank; (but excluding any amounts in the nature of a service charge added h) 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 any Borrower to make such Account payable by the Account Debtor; the Account arises from an arm’s length transaction in the ordinary course best of the Borrowers’ business between a Borrower and an Account Debtor Borrower’s knowledge, there are no proceedings or actions which are threatened or pending against any account debtor which might result in any material adverse change in such account debtor’s financial condition; (i) the account is not an account with respect to which the account debtor is an Affiliate or a director, officer or employee of a either of the Borrower or an officer, stockholder or employee of a Borrower or of any Affiliate of a Borrower, or a member of Affiliate; (j) the family of an officer, stockholder or employee of a Borrower or of any Affiliate of a Borrower; the Borrower to whom such Account is owing is able to bring suit against the Account Debtor through judicial process and there exist no defenses to the enforcement of such Borrower’s remedies against such Account Debtor, and the Account account does not represent a progress billing consisting of arise with respect to goods which have not been shipped or arise with respect to services which have not been fully performed and accepted as satisfactory by the account debtor; (k) the account is not an invoice for goods sold or used or services rendered pursuant account with respect to a contract under which the Account Debtoraccount debtor’s obligation to pay that invoice the account is conditional upon the account debtor’s approval or is otherwise subject to Borrower’s completion of further performance under such contract any repurchase obligation or is subject return right, as with sales made on a xxxx-and-hold, guaranteed sale, sale-and-return, or sale on approval basis; and (l) the amounts shown on the applicable certificates, statements, books and records and all invoices and statements which may be delivered to the equitable lien of a surety bond issuer; the Account shall not (a) if payable on a “net 10 basis” be or have been unpaid more than thirty (30) days from the invoice date; (b) if payable on a “net 30 basis” or basis other than described in the preceding clause (a) be or have been unpaid more than ninety (90) days from the invoice date, (c) be delinquent more than sixty (60) days, or (d) be payable by an Account Debtor (1) more than 50% of whose Accounts have remained unpaid for more than ninety (90) days from the invoice date or are delinquent more than sixty (60) days, or (2) whose Accounts constitute, in the Agent’s determination, an unduly high percentage of the aggregate amount of all outstanding Accounts; the goods the sale of which gave rise to the Account were shipped or delivered or provided to the Account Debtor on an absolute sale basis and not on a xxxx 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; the Account is not evidenced by chattel paper or an instrument of any kind; the Account Debtor Bank with respect to the Account (a) is solvent, (b) is not the subject of any bankruptcy or insolvency proceedings of any kind or of any other proceeding or action, threatened or pending, which might have a materially adverse effect on its business, unless the Agent, in its sole discretion, notifies such accounts are actually and absolutely owing to the Borrower that and are not in any way contingent. The Borrower shall immediately notify the Account of such an Account Debtor can be considered a Qualified Account, and (c) is not, Bank in the sole discretion of event that any such account ceases to satisfy the Agent, deemed ineligible for credit for other reasons (including, without limitation, unsatisfactory past experiences of the Borrowers or any of the Banks with the Account Debtor or unsatisfactory reputation of the Account Debtor or the Account Debtor suspends business, makes a general assignment for the benefit of creditors or fails to pay its debts generally as they come due); the Account Debtor is not located outside Canada or the United States of America;above representations and warranties.
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Samples: Revolving Credit and Term Loan Agreement (Ipec Holdings Inc)
