Common use of Agreements Regarding Inventory Clause in Contracts

Agreements Regarding Inventory. If between the date Borrower has delivered a Borrowing Base Certificate to Agent and the date the next Borrowing Base Certificate is due under this Agreement, Borrower learns of inventory, in an aggregate amount equal to or greater than $250,000, that has been returned to Borrower by its customer, then Borrower shall notify Agent promptly upon Borrower’s learning thereof. Without obtaining Agent’s prior consent (which consent will not be unreasonably withheld or delayed) and being in compliance with the applicable terms of the Borrower Security Agreement, Borrower will not: (i) accept any returns of Inventory included in the Borrowing Base outside the ordinary course of business, (ii) enter into any agreement, practice, arrangement, or transaction under which title to, or ownership of, any Inventory included in the Borrowing Base which is being sold by Borrower is, or purports to be, transferred to, or held by, a Person other than Borrower before such Inventory is delivered to such Person by Borrower, or (iii) store any Inventory included in the Borrowing Base with, or place any Inventory in the possession or control of, any bailee, processor, warehouseman, consignee or any other Person, not a party to a bailee, warehouseman or similar agreement with Agent, under any arrangement, practice or agreement (oral or written). Borrower may, in the ordinary course of business, make a sale of Inventory to any customer on a xxxx-and-hold, guaranteed sale, sale and return, sale on approval, consignment or any other repurchase or return basis except that (a) any Receivables arising from such sales will be ineligible Receivables for Borrowing Base purposes and (b) any Inventory pertaining thereto will be ineligible for Borrowing Base purposes except any Consigned Inventory which is otherwise Eligible Inventory under clause (ii)(e) of the definition of Eligible Inventory.

Agreements Regarding Inventory. If between In addition to the date Borrower has delivered a Borrowing Base Certificate to Agent and the date the next Borrowing Base Certificate is due under be delivered in accordance with this Agreement, Borrower learns of inventory, in an aggregate amount equal to or greater than $250,000, that has been returned to Borrower by its customer, then Borrower Borrowers shall notify Agent promptly upon Borrower’s learning thereofof all material returns and recoveries of Inventory. Without obtaining Agent’s prior consent (which consent will not be unreasonably withheld or delayed) and being in compliance with the applicable terms of the Borrower Security Agreement, no Borrower will notwill: (ia) accept any returns of Inventory included in the Borrowing Base outside the ordinary course of business, (iib) except for Inventory delivered to North American Stainless constituting Eligible Inventory, enter into any agreement, practice, arrangement, or transaction under which title to, or ownership of, any Inventory included in the Borrowing Base which is being sold by any Borrower is, or purports to be, transferred to, or held by, a Person other than a Borrower before such Inventory is delivered to such Person by a Borrower, (c) make a sale of Inventory to any customer on a xxxx-and-hold, guaranteed sale, sale or return, sale on approval, consignment or any other repurchase or return basis, or (iiid) store any Inventory included in the Borrowing Base with, or place any Inventory in the possession or control of, any bailee, processor, warehouseman, consignee or any other Person, not a party to a bailee, warehouseman or similar agreement with Agent, under any arrangement, practice or agreement (oral or written). Nothing permitted by this Section 3.3, however, may be construed to alter in any way the criteria for Eligible Inventory. Each Borrower will undertake a physical count of its Inventory at least one time each calendar year in accordance with procedures approved by Borrowers’ Accountants and Agent. Whenever an Event of Default exists (and at such other times not more frequently than once per calendar year), Agent may, in at the ordinary course sole expense of businessBorrowers, make a sale obtain appraisals or updates thereof of Borrowers’ Inventory to any customer from an appraiser, and prepared on a xxxx-and-holdbasis, guaranteed salesatisfactory to Agent, sale such appraisals and returnupdates to include information required by applicable law and regulations and by the internal policies of Agent (including, sale on approval, consignment or any other repurchase or return basis except that (a) any Receivables arising from such sales will be ineligible Receivables for Borrowing Base purposes and (b) any Inventory pertaining thereto will be ineligible for Borrowing Base purposes except any Consigned Inventory which is otherwise Eligible Inventory under clause (ii)(e) but not limited to a determination of the definition Net Orderly Liquidation Value Percentage of Eligible Borrowers’ Inventory). The appraisers performing the appraisal and the methods of appraisal used by the appraisers doing the appraisal are subject to Agent’s approval in its discretion exercised in good faith. From and after the date Agent receives and approves the most recent appraisal undertaken pursuant to this Section 3.3, the Net Orderly Liquidation Value Percentage of Borrowers’ Inventory will equal the Net Orderly Liquidation Value Percentage of Borrowers’ Inventory established by the most recent appraisal.