Common use of reserves for Clause in Contracts

reserves for. (i) sales to the United States of America or to any agency, department or division thereof except where assignment of all resulting accounts receivable due or to become due under a particular contract is made by any Obligor to the Agent and the Agent is satisfied that all requirements for compliance with the Assignment of Claims Act and/or other applicable statutes, rules, or regulations have been fulfilled; (ii) foreign sales other than sales (A) secured by stand-by letters of credit (in form and substance satisfactory to the Agent) issued or confirmed by, and payable at, banks having a place of business in the United States of America and payable in United States currency, (B) covered by policies of foreign credit insurance that are in form and substance satisfactory to the Agent and are issued by one or more insurance carriers that are fully acceptable to the Agent, and are assigned to the Agent with the Agent named as loss payee thereunder or (C) to customers residing in Canada provided such sales otherwise comply with all of the other criteria for eligibility hereunder, are payable in U.S. Dollars and all such sales do not exceed Seven Hundred Fifty Thousand Dollars ($750,000) in the aggregate at any one time; (iii) accounts that remain unpaid more than ninety (90) days from invoice date; (iv) contras; (v) sales to any Affiliate of an Obligor; (vi) xxxx and hold (deferred shipment) or consignment sales; (vii) sales to any customer which is (w) insolvent, (x) the debtor in any bankruptcy, insolvency, arrangement, reorganization, receivership or similar proceedings under any federal or state law, (y) negotiating, or has called a meeting of its creditors for purposes of negotiating, a compromise of its debts or (z) in the Agent's reasonable business judgment, financially unacceptable to the Agent or has a credit rating unacceptable to the Agent; (viii) all sales to any customer if fifty percent (50%) or more of either (x) all outstanding invoices or (y) the aggregate dollar amount of all outstanding invoices, are unpaid more than ninety (90) days from invoice date; (ix) any other reasons deemed necessary by the Agent in its reasonable business judgment and which are customary either in the commercial finance industry or in the lending practices of the Agent or the Lenders; and (x) an amount representing, historically, returns, discounts, claims, credits and allowances. Eligible Inventory shall mean the gross amount of each Obligor's Inventory that conforms to the warranties contained herein and which at all times continues to be acceptable to the Agent in the exercise of its reasonable business judgment less any work-in-process, supplies (other than raw material), goods not present in the United States of America, goods returned or rejected by the customers of such Obligor and other than goods that are undamaged and resalable in the normal course of business, goods to be returned to the suppliers of such Obligor, goods in transit to third parties (other than the agents or warehouses of such Obligor) and less any reserves required by the Agent in its reasonable discretion for special order goods, market value declines and xxxx and hold (deferred shipment) or consignment sales.

reserves for. (i) sales to the United States of America or to any agency, department or division thereof except where assignment of all resulting accounts receivable due or to become due under a particular contract is made by any Obligor to the Agent and the Agent is satisfied that all requirements for compliance with the Assignment of Claims Act and/or other applicable statutes, rules, or regulations have been fulfilled; (ii) foreign sales other than sales (A) secured by stand-by letters of credit (in form and substance satisfactory to the Agent) issued or confirmed by, and payable at, banks having a place of business in the United States of America and payable in United States currency, (B) covered by policies of foreign credit insurance that are in form and substance satisfactory to the Agent and are issued by one or more insurance carriers that are fully acceptable to the Agent, and are assigned to the Agent with the Agent named as loss payee thereunder or (C) to customers residing in Canada provided such sales otherwise comply with all of the other criteria for eligibility hereunder, are payable in U.S. Dollars and all such sales do not exceed Seven Hundred Fifty Thousand Dollars ($750,000) in the aggregate at any one time; (iii) accounts that remain unpaid more than ninety (90) days from invoice date; (iv) contras; (v) sales to any Affiliate of an Obligor; (vi) xxxx and hold (deferred shipment) or consignment sales; (vii) sales to any customer which is (w) insolvent, (x) the debtor in any bankruptcy, insolvency, arrangement, reorganization, receivership or similar proceedings under any federal or state law, (y) negotiating, or has called a meeting of its creditors for purposes of negotiating, a compromise of its debts or (z) in the Agent's reasonable business judgment, financially unacceptable to the Agent or has a credit rating unacceptable to the Agent; (viii) all sales to any customer if fifty percent (50%) or more of either (x) all outstanding invoices or (y) the aggregate dollar amount of all outstanding invoices, are unpaid more than ninety (90) days from invoice date; (ix) any other reasons deemed necessary by the Agent in its reasonable business judgment and which are customary either in the commercial finance industry or in the lending practices of the Agent or the Lenders; and (x) an amount representing, historically, returns, discounts, claims, credits and allowances. Eligible Inventory ELIGIBLE INVENTORY shall mean the gross amount of each Obligor's Inventory that conforms to the warranties contained herein and which at all times continues to be acceptable to the Agent in the exercise of its reasonable business judgment judgment, less any (i) work-in-process, (ii) supplies (other than raw material), (ii) goods not present in the United States of America, (iii) goods returned or rejected by the customers of such Obligor and (other than goods that are undamaged and resalable in the normal course of business), (iv) goods to be returned to the suppliers of such Obligor, (v) goods in transit to third parties (other than the agents or warehouses of such Obligor), (vi) goods that are obsolescent, and (vii) goods, located at a place identified on Schedule 5.04 that is not one of the Excluded Premises, that are moved to one or more of the Excluded Premises (unless they are returned to a place identified on Schedule 5.04 that is not one of the Excluded Premises), and less any reserves required by the Agent in its reasonable discretion for special order goods, market value declines and xxxx and hold (deferred shipment) or consignment sales; PROVIDED, HOWEVER, that (without limiting the requirement that Inventory, to qualify as "Eligible Inventory", must satisfy each of the other components of this definition) no Inventory located at premises that are subject to a Warehouse Lease identified on Schedule 5.04 that is not included on Schedule 2.01 as of the Closing Date shall constitute "Eligible Inventory" until such time as an appropriate landlord's waiver or warehouse acknowledgment is received by Agent with respect to such premises.