OR NEW CRITERIA WHICH
HAVE THE EFFECT OF MAKING MORE CREDIT AVAILABLE.
ELIGIBLE ACCOUNTS - U.S. SHALL
NOT INCLUDE ANY ACCOUNT OF BORROWER OR A SECURED GUARANTOR:
(I)
THAT DOES NOT ARISE FROM THE SALE OF
GOODS OR THE PERFORMANCE OF SERVICES BY BORROWER OR A SECURED GUARANTOR IN THE
ORDINARY COURSE OF ITS BUSINESS;
(II)
(A) UPON WHICH BORROWER'S OR THE
APPLICABLE SECURED GUARANTOR'S RIGHT TO RECEIVE PAYMENT IS NOT ABSOLUTE OR IS
CONTINGENT UPON THE FULFILLMENT OF ANY CONDITION WHATSOEVER OR (B) AS TO WHICH
BORROWER OR THE APPLICABLE SECURED GUARANTOR IS NOT ABLE TO BRING SUIT OR
OTHERWISE ENFORCE ITS REMEDIES AGAINST THE ACCOUNT DEBTOR THROUGH JUDICIAL
PROCESS, OR (C) IF THE ACCOUNT REPRESENTS 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 OR THE APPLICABLE SECURED GUARANTOR'S COMPLETION OF FURTHER
PERFORMANCE UNDER SUCH CONTRACT OR IS SUBJECT TO THE EQUITABLE LIEN OF A SURETY
BOND ISSUER;
(III)
TO THE EXTENT THAT ANY DEFENSE,
COUNTERCLAIM, SETOFF OR DISPUTE IS ASSERTED AS TO SUCH ACCOUNT;
(IV)
THAT IS NOT A TRUE AND CORRECT STATEMENT OF
BONA FIDE INDEBTEDNESS INCURRED IN THE AMOUNT OF THE ACCOUNT FOR MERCHANDISE
SOLD TO OR SERVICES RENDERED AND ACCEPTED BY THE APPLICABLE ACCOUNT DEBTOR;
(V)
WITH RESPECT TO WHICH AN INVOICE HAS NOT
BEEN SENT TO THE APPLICABLE ACCOUNT DEBTOR;
(VI)
THAT (A) IS NOT OWNED BY BORROWER OR A SECURED
GUARANTOR OR (B) IS SUBJECT TO ANY RIGHT, CLAIM, SECURITY INTEREST OR OTHER
INTEREST OF ANY OTHER PERSON, OTHER THAN LIENS DESCRIBED IN CLAUSES (A) AND (G)
OF THE DEFINITION OF PERMITTED ENCUMBRANCES AND LIENS IN FAVOR OF AGENT, ON
BEHALF OF ITSELF AND LENDERS BUT ONLY TO THE EXTENT OF SUCH RIGHT, CLAIM,
SECURITY INTEREST OR OTHER INTEREST;
(VII)
THAT ARISES FROM A SALE TO ANY DIRECTOR,
OFFICER, OTHER EMPLOYEE OR AFFILIATE OF ANY CREDIT PARTY, OR TO ANY ENTITY THAT
HAS ANY COMMON OFFICER WITH ANY CREDIT PARTY;
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(VIII)
THAT IS THE OBLIGATION OF AN ACCOUNT DEBTOR THAT
IS THE UNITED STATES GOVERNMENT OR A POLITICAL SUBDIVISION THEREOF, OR ANY
STATE, COUNTY OR MUNICIPALITY OR DEPARTMENT, AGENCY OR INSTRUMENTALITY THEREOF,
UNLESS BORROWER OR THE APPLICABLE SECURED GUARANTOR HAS COMPLIED WITH RESPECT TO
SUCH OBLIGATION WITH THE FEDERAL ASSIGNMENT OF CLAIMS ACT OF 1940, OR ANY
APPLICABLE STATE, COUNTY OR MUNICIPAL LAW RESTRICTING ASSIGNMENT THEREOF,
PROVIDED, THAT THE BORROWING AVAILABILITY BASED ON SUCH OBLIGATIONS SHALL NOT IN
ANY EVENT EXCEED $7,500,000 IN THE AGGREGATE;
(IX)
THAT IS THE OBLIGATION OF AN ACCOUNT DEBTOR
LOCATED IN A FOREIGN COUNTRY OTHER THAN CANADA OR THE UNITED KINGDOM, UNLESS
PAYMENT THEREOF IS ASSURED BY A LETTER OF CREDIT OR CREDIT INSURANCE ASSIGNED
AND DELIVERED TO AGENT, SATISFACTORY TO AGENT AS TO FORM, AMOUNT AND ISSUER;
(X)
TO THE EXTENT BORROWER OR ANY SECURED
GUARANTOR OR ANY SUBSIDIARY THEREOF IS LIABLE FOR GOODS SOLD OR SERVICES
RENDERED BY THE