OF ANY OTHER PERSON (INCLUDING THE RIGHTS OF A PURCHASER
THAT HAS MADE PROGRESS PAYMENTS AND THE RIGHTS OF A SURETY THAT HAS ISSUED A
BOND TO ASSURE BORROWER'S PERFORMANCE WITH RESPECT TO THAT INVENTORY), EXCEPT
THE LIENS IN FAVOR OF AGENT, ON BEHALF OF ITSELF AND LENDERS, AND APPLICABLE
PERMITTED ENCUMBRANCES;
(B)
(I) IS NOT LOCATED ON PREMISES OWNED, LEASED
OR RENTED BY BORROWER AND SET FORTH IN SCHEDULE 5.12 (AS THE SAME MAY, FROM TIME
TO TIME BE SUPPLEMENTED, AMENDED OR UPDATED BY BORROWER IN WRITING AS OTHERWISE
PERMITTED HEREUNDER), (II) IS STORED AT A LEASED LOCATION, UNLESS AGENT HAS
GIVEN ITS PRIOR CONSENT THERETO AND UNLESS (X) A REASONABLY SATISFACTORY
LANDLORD WAIVER HAS BEEN DELIVERED TO AGENT, OR (Y) RESERVES SATISFACTORY TO
AGENT HAVE BEEN ESTABLISHED WITH RESPECT THERETO, (III) IS STORED WITH A BAILEE
OR WAREHOUSEMAN UNLESS A REASONABLY SATISFACTORY, ACKNOWLEDGED BAILEE LETTER HAS
BEEN RECEIVED BY AGENT OR RESERVES REASONABLY SATISFACTORY TO AGENT HAVE BEEN
ESTABLISHED WITH RESPECT THERETO, (IV) IS LOCATED AT AN OWNED LOCATION SUBJECT
TO A MORTGAGE
17
IN FAVOR OF A LENDER OTHER THAN AGENT, UNLESS A REASONABLY SATISFACTORY
MORTGAGEE WAIVER HAS BEEN DELIVERED TO AGENT, OR (V) IS LOCATED AT ANY SITE IF
THE AGGREGATE BOOK VALUE OF INVENTORY AS ANY SUCH LOCATION IS LESS THAN
$100,000;
(C)
IS PLACED ON CONSIGNMENT (EXCEPT AS
PERMITTED BY CLAUSE (B) ABOVE) OR IS IN TRANSIT, EXCEPT FOR INVENTORY IN TRANSIT
BETWEEN DOMESTIC LOCATIONS OF CREDIT PARTIES AS TO WHICH AGENT'S LIENS HAVE BEEN
PERFECTED AT ORIGIN AND DESTINATION;
(D)
IS COVERED BY A NEGOTIABLE DOCUMENT OF
TITLE, UNLESS SUCH DOCUMENT HAS BEEN DELIVERED TO AGENT WITH ALL NECESSARY
ENDORSEMENTS, FREE AND CLEAR OF ALL LIENS EXCEPT THOSE IN FAVOR OF AGENT AND
LENDERS;
(E)
IS OBSOLETE, UN-SALEABLE, SHOPWORN,
SECONDS, DAMAGED OR UNFIT FOR SALE;
(F)
CONSISTS OF DISPLAY ITEMS OR PACKING OR
SHIPPING MATERIALS, MANUFACTURING SUPPLIES OR REPLACEMENT PARTS, IN EACH CASE TO
THE EXTENT NOT CONSTITUTING INVENTORY,
(G)
CONSISTS OF MORE THAN AN AGGREGATE OF
$3,000,000 OF WORK-IN-PROCESS INVENTORY;
(H)
CONSISTS OF GOODS WHICH HAVE BEEN RETURNED
BY A BUYER, OTHER THAN UP TO $500,000 OF GOODS AT ANY GIVEN TIME THAT HAVE BEEN
RETURNED BY A BUYER OTHER THAN DUE TO DEFECT, DAMAGE OR NON-CONFORMANCE AND
WHICH HAVE BEEN ACCEPTED BY BORROWER AS A TEMPORARY ACCOMMODATION TO SUCH BUYER
AND WITH RESPECT TO WHICH BORROWER EXPECTS, IN GOOD FAITH, TO RE-SHIP TO SUCH
BUYER, ALL IN A MANNER CONSISTENT WITH PAST PRACTICE;
(I)
IS NOT OF A TYPE HELD FOR SALE OR LEASE
IN THE ORDINARY COURSE OF BORROWER'S BUSINESS;
(J)
IS NOT SUBJECT TO A FIRST PRIORITY LIEN
IN FAVOR OF AGENT ON BEHALF OF ITSELF AND LENDERS SUBJECT TO PERMITTED
ENCUMBRANCES;
(K)
BREACHES ANY OF THE REPRESENTATIONS OR
WARRANTIES PERTAINING TO INVENTORY SET FORTH IN THE LOAN DOCUMENTS IN ANY
MATERIAL RESPECT;
(L)
CONSISTS OF ANY COSTS ASSOCIATED WITH
"FREIGHT-IN" CHARGES;
(M)
CONSISTS OF GOODS THAT CAN BE TRANSPORTED OR
SOLD ONLY WITH LICENSES THAT ARE NOT