FROM TIME TO TIME AFTER THE EFFECTIVE DATE, TO ADJUST ANY
OF THE CRITERIA SET FORTH BELOW OR TO ESTABLISH NEW CRITERIA IN ITS REASONABLE
CREDIT JUDGMENT TO REFLECT CHANGES IN SCHAUBLIN'S BUSINESS OPERATIONS OR THE
COLLECTABILITY OF ACCOUNTS, SUBJECT TO THE APPROVAL OF REQUISITE REVOLVING
LENDERS IN THE CASE OF ADJUSTMENTS OR NEW CRITERIA WHICH HAVE THE EFFECT OF
MAKING MORE CREDIT AVAILABLE.
ELIGIBLE ACCOUNTS - SCHAUBLIN SHALL NOT INCLUDE
ANY ACCOUNT OF SCHAUBLIN:
(I)
THAT DOES NOT ARISE FROM THE SALE OF
GOODS OR THE PERFORMANCE OF SERVICES BY SCHAUBLIN IN THE ORDINARY COURSE OF ITS
BUSINESS;
(II)
(A) UPON WHICH SCHAUBLIN'S RIGHT TO
RECEIVE PAYMENT IS NOT ABSOLUTE OR IS CONTINGENT UPON THE FULFILLMENT OF ANY
CONDITION WHATSOEVER OR (B) AS TO WHICH SCHAUBLIN 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
SCHAUBLIN'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;
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(V)
WITH RESPECT TO WHICH AN INVOICE HAS NOT
BEEN SENT TO THE APPLICABLE ACCOUNT DEBTOR;
(VI)
THAT (A) IS NOT OWNED BY SCHAUBLIN 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;
(VIII)
THAT IS THE OBLIGATION OF AN ACCOUNT DEBTOR THAT
IS A GOVERNMENTAL ENTITY, UNLESS SCHAUBLIN HAS COMPLIED WITH RESPECT TO SUCH
OBLIGATION WITH ANY APPLICABLE LAW RESTRICTING ASSIGNMENT THEREOF;
(IX)
THAT IS THE OBLIGATION OF AN ACCOUNT DEBTOR
LOCATED IN A COUNTRY OTHER THAN THE UNITED STATES, CANADA, SWITZERLAND, FRANCE,
THE UNITED KINGDOM, GERMANY, ITALY, SPAIN, AUSTRALIA, DENMARK, THE NETHERLANDS
OR LUXEMBURG 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 SCHAUBLIN OR ANY
SUBSIDIARY THEREOF IS LIABLE FOR GOODS SOLD OR SERVICES RENDERED BY THE
APPLICABLE ACCOUNT DEBTOR TO BORROWER OR SCHAUBLIN OR ANY SUBSIDIARY THEREOF BUT
ONLY TO THE EXTENT OF THE POTENTIAL OFFSET;