THE ACCOUNT
DEBTOR OBLIGATED THEREON SUSPENDS BUSINESS, MAKES A GENERAL ASSIGNMENT FOR THE
BENEFIT OF CREDITORS OR FAILS TO PAY ITS DEBTS GENERALLY AS THEY COME DUE; OR
(N)
A PETITION IS FILED BY OR AGAINST ANY
ACCOUNT DEBTOR OBLIGATED UPON SUCH ACCOUNT UNDER ANY BANKRUPTCY LAW OR ANY OTHER
FEDERAL, STATE OR FOREIGN (INCLUDING ANY PROVINCIAL) RECEIVERSHIP, INSOLVENCY
RELIEF OR OTHER LAW OR LAWS FOR THE RELIEF OF DEBTORS;
(O)
THAT IS THE OBLIGATION OF AN ACCOUNT DEBTOR
IF 50% OR MORE OF THE DOLLAR AMOUNT OF ALL ACCOUNTS OWING BY THAT ACCOUNT DEBTOR
ARE INELIGIBLE UNDER THE OTHER CRITERIA SET FORTH IN CLAUSE (L) ABOVE;
(P)
AS TO WHICH AGENT DOES NOT HAVE A VALID
FIRST PRIORITY AND FULLY PERFECTED SECURITY INTEREST AND ACCOUNTS SUBJECT TO ANY
LIEN EXCEPT THOSE IN FAVOR OF AGENT AND PERMITTED ENCUMBRANCES, INCLUDING
ACCOUNTS EVIDENCED BY AN INSTRUMENT (AS DEFINED IN ARTICLE 9 OF THE UCC) NOT IN
THE POSSESSION OF AGENT;
16
(Q)
AS TO WHICH ANY OF THE REPRESENTATIONS OR
WARRANTIES IN THE LOAN DOCUMENTS ARE UNTRUE IN ANY MATERIAL RESPECT;
(R)
TO THE EXTENT SUCH ACCOUNT IS EVIDENCED
BY AN INSTRUMENT OR CHATTEL
PAPER UNLESS IN THE POSSESSION OF AGENT OR THE
AGGREGATE AMOUNT OF SUCH ACCOUNT IS NOT GREATER THAN $250,000;
(S)
TO THE EXTENT SUCH ACCOUNT EXCEEDS ANY
CREDIT LIMIT ESTABLISHED BY AGENT, IN ITS PERMITTED DISCRETION, FOLLOWING PRIOR
NOTICE OF SUCH LIMIT BY AGENT TO BORROWER;
(T)
TO THE EXTENT THAT SUCH ACCOUNT, TOGETHER
WITH ALL OTHER ACCOUNTS OWING TO SUCH ACCOUNT DEBTOR AND ITS AFFILIATES AS OF
ANY DATE OF DETERMINATION EXCEED 30% OF ALL ELIGIBLE ACCOUNTS BUT ONLY TO THE
EXTENT OF SUCH EXCESS, UNLESS SUCH ACCOUNT DEBTOR IS REASONABLY SATISFACTORY TO
AGENT OR SUCH EXCESS IS SUPPORTED BY CREDIT SUPPORT REASONABLY SATISFACTORY TO
AGENT; OR
(U)
THAT IS PAYABLE IN ANY CURRENCY OTHER THAN
DOLLARS UNLESS SUPPORTED BY CREDIT SUPPORT REASONABLY SATISFACTORY TO AGENT.
1.8
ELIGIBLE INVENTORY.
ALL OF THE INVENTORY
OWNED BY BORROWER OR ANY OF ITS DOMESTIC SUBSIDIARIES AND REFLECTED IN THE MOST
RECENT BORROWING BASE CERTIFICATE DELIVERED BY BORROWER TO AGENT SHALL BE
"ELIGIBLE INVENTORY" FOR PURPOSES OF THIS AGREEMENT, EXCEPT ANY INVENTORY TO
WHICH ANY OF THE EXCLUSIONARY CRITERIA SET FORTH BELOW APPLIES.
AGENT SHALL
HAVE THE RIGHT TO ESTABLISH, MODIFY, OR ELIMINATE RESERVES AGAINST ELIGIBLE
INVENTORY FROM TIME TO TIME IN ITS PERMITTED DISCRETION.
IN ADDITION, AGENT
RESERVES THE RIGHT, AT ANY TIME AND FROM TIME TO TIME AFTER THE RESTATEMENT
EFFECTIVE DATE, TO ADJUST ANY OF THE CRITERIA SET FORTH BELOW, TO ESTABLISH NEW
CRITERIA AND TO ADJUST ADVANCE RATES WITH RESPECT TO ELIGIBLE INVENTORY IN ITS
PERMITTED DISCRETION, SUBJECT TO THE APPROVAL OF REQUISITE LENDERS IN THE CASE
OF ADJUSTMENTS, NEW CRITERIA OR CHANGES IN ADVANCE RATES WHICH HAVE THE EFFECT
OF MAKING MORE CREDIT AVAILABLE.
ELIGIBLE INVENTORY SHALL NOT INCLUDE ANY
INVENTORY OF BORROWER OR ANY DOMESTIC SUBSIDIARY OF BORROWER THAT:
(A)
IS NOT OWNED BY BORROWER FREE AND CLEAR OF
ALL LIENS AND RIGHTS