Common use of Eligible Inventory Clause in Contracts

Eligible Inventory. Agent shall have the sole right, in its sole discretion, in Good Faith to determine which Inventory is eligible (the "Eligible Inventory"). Without limiting Agent's discretion, the following Inventory shall not be Eligible Inventory: (i) Inventory which is obsolete, not in good condition, or not either currently usable or currently salable in the ordinary course of such Borrower's business; (ii) Inventory which Agent determines, in the exercise of Agent's sole discretion and in accordance with Agent's customary business practices, to be unacceptable due to age, type, category and/or quantity; (iii) Inventory which is not subject to internal control and management procedures acceptable to Agent, in Agent's sole discretion; (iv) Inventory with respect to which Agent does not have a first priority and valid fully perfected security interest; (v) Inventory of a Borrower which is stored or placed with a bailee, warehouseman, supplier, lessor or similar party other than Inventory with warehousemen, bailees or lessors as to which such Borrower has notified Agent in writing and which have signed an agreement in favor of Agent in form and substance satisfactory to Agent; (vi) Inventory delivered to a Borrower on consignment; (vii) Inventory sold by a Borrower on consignment, other than such Inventory consisting of railcar wheels furnished on consignment (each, a "Permitted Consignment"), provided that (a) such Borrower has notified Agent in writing of such consignment and the location thereof, (b) Agent has received a written agreement signed by the consignor thereof as to Agent's rights in and to such Inventory which agreement is in form and substance satisfactory to Agent, and (c) the amount (valued as provided in Subsection 2.4) of such Inventory does not exceed $1,500,000 in the aggregate for all Borrowers; (viii) Inventory constituting supplies; and (ix) Inventory which is not located at one of the locations designated on Schedule 6.5 (other than Permitted Consignments). In the event that previously scheduled Inventory ceases to be Eligible Inventory under the above-described criteria, and as a result there has been a material net decrease in the aggregate amount of Eligible Inventory since that last reported in the preceding Collateral Report, the Borrower experiencing such decrease shall notify Agent and each Lender thereof immediately after such Borrower has obtained knowledge thereof.

Eligible Inventory. Agent shall have the sole rightInventory owned by a Borrower that is deemed by Agent, in its sole discretionPermitted Discretion, in Good Faith to determine which Inventory is eligible (the "Eligible Inventory"). Without limiting Agent's discretion, the following Inventory shall not be Eligible Inventory: ; provided that, no Inventory shall be Eligible Inventory unless it (a) is located at a Borrower’s principal place of business or any other facility storing cased goods and/or bulk wine that complies with such Borrower’s related representations and warranties contained in this Agreement, (b) is not used, returned, obsolete, spoiled, inadequately sealed, packaged or stored, or otherwise unmerchantable, consigned, demonstrative or custom inventory, supplies (other than bulk wine), packing or shipping materials, (c) is bulk wine at cost or wholesale “FOB” cased wine, that is not older than three years following December 31 of its vintage year for white wine and that is either (i) Inventory which is obsolete, not in good condition, older than four years following December 31 of its vintage year for red wine or not either currently usable or currently salable in the ordinary course of such Borrower's business; (ii) Inventory which Agent determines, is four years or older following December 31 of its vintage year for red wine but does not exceed $5,000,000 in the exercise aggregate in Value of Agent's sole discretion and in accordance with Agent's customary business practices, to be unacceptable due to age, type, category and/or quantitysuch red wine; (iiid) Inventory which is not held on consignment, nor subject to internal control any deposit or down payment; (e) meets all standards imposed by any Governmental Authority; (f) conforms with the covenants and management procedures acceptable representations herein; (g) is subject to Agent’s duly perfected, in Agent's sole discretion; first priority Lien, and no other Lien (ivother than (x) Inventory any Lien permitted pursuant to PACA or any other similar agricultural law or regulation with respect to which Agent does not have has established a first priority and valid fully perfected security interestGrower’s Reserve, (y) non-consensual Permitted Liens arising by operation of law which are junior to the Agent’s Lien, or (z) any other Lien with respect to which Agent has establish an appropriate reserve its Permitted Discretion); (vh) Inventory is within the continental United States, is not in transit (except (x) between locations of a Borrower which is stored Borrowers, or placed (y) to another location disclosed to Agent with a bailee, warehouseman, supplier, lessor or similar party other than Inventory with warehousemen, bailees or lessors as respect to which such Borrower has notified Agent in writing and which have signed an agreement in favor of Agent in form and substance satisfactory to Agent; (vi) Inventory delivered to a Borrower on consignment; (vii) Inventory sold by a Borrower on consignment, other than such Inventory consisting of railcar wheels furnished on consignment (each, a "Permitted Consignment"), provided that (a) such Borrower has notified Agent in writing of such consignment and the location thereof, (b) Agent has received an appropriate Lien Waiver or established an appropriate reserve in its Permitted Discretion, and is not consigned to any Person; (i) is not subject to any warehouse receipt or negotiable Document; (j) is not subject to any License or other arrangement that restricts such Borrower’s or Agent’s right to dispose of such Inventory, unless Agent has received an appropriate Lien Waiver or established an appropriate reserve in its Permitted Discretion; (k) is not located on leased premises or in the possession of a written agreement signed warehouseman, processor, repairman, mechanic, shipper, freight forwarder or other Person, unless the lessor or such Person has delivered a Lien Waiver or an appropriate Rent and Charges Reserve has been established; (l) is reflected in the details of a current perpetual inventory report; or (m) if it is Inventory owned by the consignor thereof as to Agent's rights a target acquired in connection with a Permitted Acquisition, an appraisal and field examination with respect to such Inventory which agreement is in form have been completed and substance are reasonably satisfactory to Agent, Agent (which appraisal and (c) field examination may be conducted prior to the amount (valued as provided in Subsection 2.4) closing of such Inventory does not exceed $1,500,000 in the aggregate for all Borrowers; (viii) Inventory constituting supplies; and (ix) Inventory which is not located at one of the locations designated on Schedule 6.5 (other than Permitted ConsignmentsAcquisition). In the event that previously scheduled Inventory ceases to be Eligible Inventory under the above-described criteria, and as a result there has been a material net decrease in the aggregate amount of Eligible Inventory since that last reported in the preceding Collateral Report, the Borrower experiencing such decrease shall notify Agent and each Lender thereof immediately after such Borrower has obtained knowledge thereof.

Eligible Inventory. Agent shall have the sole right, in its sole discretion, in Good Faith to determine which Inventory is eligible (the "Eligible Inventory"). Without limiting Agent's discretion, the following " shall be Inventory owned by Borrower; provided that Eligible Inventory shall not be Eligible Inventory: include any inventory (a) held on consignment, or not otherwise owned by Borrower, (b) which is damaged or is subject to any legal encumbrance other than Permitted Encumbrances, (c) which is not in the possession of Borrower unless (i) Agents have received a waiver from the party in possession (including, without limitation, with respect to all consolidator locations) of such inventory in form and substance reasonably satisfactory to Agents or (ii) such inventory is in transit from one Permitted Inventory Location to another Permitted Inventory Location, and the total duration of such transit time is not more than three (3) Business Days, (d) which is obsoletesubject to any lien, encumbrance or security interest which is prior to the liens granted to Agent (other than landlord's or lessor's liens under leases to which Borrower is a party provided no amount secured by such lien has become due and payable and not been paid), (e) as to which appropriate Uniform Commercial Code financing statements showing Borrower as debtor and Agent as secured party have not been filed in good conditionthe proper filing office or offices in order to perfect Agent's security interest therein, (f) which has been shipped to a customer of Borrower regardless of whether such shipment is on a consignment basis, (g) which is not located at a Permitted Inventory Location unless such Inventory is in transit from one Permitted Inventory Location to another Permitted Inventory Location, and the total duration of such transit time is not more than three (3) Business Days, (h) which consists of display items or packing or shipping materials, manufacturing supplies, work-in process Inventory or replacement parts, (i) which is not either currently usable or currently salable of a type for sale in the ordinary course of such Borrower's business; , (iij) Inventory which Agent determinesconsists of Hazardous Materials or goods that can only be transported or sold with licenses that are not readily available, in the exercise of Agent's sole discretion and in accordance with Agent's customary business practices, to be unacceptable due to age, type, category and/or quantity; or (iiik) Inventory which is not subject to internal control and management procedures covered by casualty insurance acceptable to Agent, in Agent's sole discretion; (iv) Inventory with respect to which Agent does not have a first priority and valid fully perfected security interest; (v) Inventory of a Borrower which is stored or placed with a bailee, warehouseman, supplier, lessor or similar party other than Inventory with warehousemen, bailees or lessors as to which such Borrower has notified Agent in writing and which have signed an agreement in favor of Agent in form and substance satisfactory to Agent; (vi) Inventory delivered to a Borrower on consignment; (vii) Inventory sold by a Borrower on consignment, other than such Inventory consisting of railcar wheels furnished on consignment (each, a "Permitted Consignment"), provided that (a) such Borrower has notified Agent in writing of such consignment and the location thereof, (b) Agent has received a written agreement signed by the consignor thereof as to Agent's rights in and to such Inventory which agreement is in form and substance satisfactory to Agent, and (c) the amount (valued as provided in Subsection 2.4) of such Inventory does not exceed $1,500,000 in the aggregate Agents. General criteria for all Borrowers; (viii) Inventory constituting supplies; and (ix) Inventory which is not located at one of the locations designated on Schedule 6.5 (other than Permitted Consignments). In the event that previously scheduled Inventory ceases to be Eligible Inventory under the above-described criteria, may be established and as a result revised by Agents from time to time if Agents reasonably determine that there has been a material net decrease substantive change in the aggregate amount of shrinkage, character, composition or mix, markdowns or retail markons and markups inconsistent with prior period practice, industry standards or current business plans. Agents may in their Permitted Discretion from time to time, upon three (3) days' prior notice to Borrower establish Reserves with respect to Eligible Inventory since to the extent that last reported Agents reasonably determine that (A) the liquidation value of the Eligible Inventory, or any category thereof, has decreased , or (B) the nature of the inventory has changed. In determining whether to establish Reserves with respect to Eligible Inventory, Agents may consider events, conditions, contingencies or risks which are also considered in the preceding Collateral Report, the Borrower experiencing such decrease shall notify Agent and each Lender thereof immediately after such Borrower has obtained knowledge thereofdetermining Eligible Inventory.

Eligible Inventory. Agent The second sentence of the definition of Eligible Inventory is hereby deleted and replaced with the following: "Inventory located outside the United States of America that a Revolving Loan Borrower has acquired in accordance with the terms of the purchase arrangements between such Revolving Loan Borrower and a supplier and as to which such Revolving Loan Borrower has obtained legal title and that would otherwise be determined by Lender to be Eligible Inventory in all respects which is in transit to the premises of a Customs Broker in the United States of America which is an Eligible Inventory Location or such other Eligible Inventory Location in the United States of America; provided, that, (a) Lender has a first priority perfected security interest in and lien upon such Inventory, (b) Lender has possession of not less than two (2) of a total of three (3) originals of the documents of title with respect to such Inventory and all of the terms and conditions of Section 8 of the Twenty-Seventh Amendment to Loan Agreement, dated as of October 31, 2003, among Lender, Borrowers and Guarantors shall have the sole rightbeen satisfied, in its sole discretion, in Good Faith to determine which Inventory is eligible (the "Eligible Inventory"). Without limiting Agent's discretion, the following Inventory c) Lender shall not be Eligible Inventory: have received (i) Inventory which is obsoletea Notification and Acknowledgment Agreement, not in good conditionduly authorized, executed and delivered by either or not either currently usable or currently salable in both of the ordinary course Customs Broker and Freight Forwarder, as the case may be, handling the shipping and delivery of such Borrower's business; Inventory, (ii) Inventory a copy of the certificate of marine cargo insurance in connection therewith in which Agent determinesit has been named as an additional insured and loss payee in a manner acceptable to Lender, in the exercise of Agent's sole discretion and in accordance with Agent's customary business practices, to be unacceptable due to age, type, category and/or quantity; (iii) a copy of the invoice, packing slip and manifest with respect thereto, (d) such Inventory which is not subject to internal control and management procedures acceptable to Agent, in Agent's sole discretion; (iv) Inventory with respect to which Agent does not have a first priority and valid fully perfected security interest; (v) Inventory any Letter of a Borrower which is stored or placed with a bailee, warehouseman, supplier, lessor or similar party other than Inventory with warehousemen, bailees or lessors as to which such Borrower has notified Agent in writing and which have signed an agreement in favor of Agent in form and substance satisfactory to Agent; (vi) Inventory delivered to a Borrower on consignment; (vii) Inventory sold by a Borrower on consignment, other than such Inventory consisting of railcar wheels furnished on consignment (each, a "Permitted Consignment"), provided that (a) such Borrower has notified Agent in writing of such consignment and the location thereofCredit Accommodation, (b) Agent has received a written agreement signed by the consignor thereof as to Agent's rights in and to such Inventory which agreement is in form and substance satisfactory to Agent, and (ce) the aggregate amount (valued as provided in Subsection 2.4) of the Value of such Inventory does not exceed $1,500,000 in the aggregate for all Borrowers; (viii) Inventory constituting supplies; and (ix) Inventory which that is not located at one of the locations designated on Schedule 6.5 (other than Permitted Consignments). In the event that previously scheduled Inventory ceases deemed to be Eligible Inventory under the above-described criteriashall not at any time exceed $1,000,000, and as a result there has (f) such Inventory shall not have been a material net decrease in the aggregate amount of Eligible Inventory since that last reported in the preceding Collateral Report, the Borrower experiencing such decrease shall notify Agent and each Lender thereof immediately after such Borrower has obtained knowledge thereoftransit for more than sixty (60) days."

Eligible Inventory. Agent shall have the sole rightInventory of any Borrower (other than work-in-process, packaging materials and supplies, tooling, samples and literature) which Agent, in its sole discretionjudgment, exercised in Good Faith a commercially reasonable manner, deems to determine which Inventory is eligible (the "be Eligible Inventory"). Without limiting Agent's discretionthe generality of the foregoing, the following no Inventory shall not be Eligible InventoryInventory if: (i) Inventory it is not raw materials or finished goods which is obsoletemeet the specifications of the purchase order or contract for such Inventory, not in good condition, if any; or not either currently usable or currently salable in the ordinary course of such Borrower's business; (ii) Inventory which Agent determinesit is not in good, in the exercise of Agent's sole discretion new and in accordance with Agent's customary business practices, to be unacceptable due to age, type, category and/or quantitysaleable condition; or (iii) Inventory which it is not subject to internal control and management procedures acceptable to Agentslow-moving, in Agent's sole discretionobsolete or unmerchantable; or (iv) Inventory with respect to which Agent it does not have a first priority and valid fully perfected security interestmeet all standards imposed by any governmental agency or authority; or (v) Inventory of a Borrower which is stored it does not conform in all respects to any covenants, warranties and representations set forth in the Agreement; or placed with a bailee, warehouseman, supplier, lessor or similar party other than Inventory with warehousemen, bailees or lessors as to which such Borrower has notified Agent in writing and which have signed an agreement in favor of Agent in form and substance satisfactory to Agent; (vi) Inventory delivered it is not at all times subject to Agent’s duly perfected, first priority security interest or is subject to a Borrower on consignmentLien that is not a Permitted Lien; or (vii) it is not situated at a location in compliance with the Agreement, provided that Inventory sold situated at a location not owned by a Borrower on consignment, other than such will be Eligible Inventory consisting of railcar wheels furnished on consignment (each, a "Permitted Consignment"), provided that (a) such Borrower has notified Agent in writing of such consignment and the location thereof, (b) only if Agent has received a written satisfactory landlord’s agreement signed by the consignor thereof or bailee letter, as to Agent's rights in and applicable, with respect to such Inventory which agreement location; or (viii) it is in form transit; or (ix) it is not otherwise acceptable to Agent in its sole judgment, exercised in a commercially reasonable manner. Environmental Laws – all federal, state and substance satisfactory local laws, rules, regulations, ordinances, orders and consent decrees relating to Agenthealth, safety and environmental matters. ERISA – the Employee Retirement Income Security Act of 1974, as amended, and (c) any successor statute, and all rules and regulations from time to time promulgated thereunder. Event of Default – as defined in Section 10.1 of the amount (valued as provided in Subsection 2.4) of such Inventory does not exceed $1,500,000 Agreement. Existing Mortgage Indebtedness – money borrowed owed by Borrowers in the aggregate for all Borrowers; principal amount of Seven Million One Hundred Six Thousand Dollars (viii$7,106,000) Inventory constituting supplies; and (ix) Inventory which is not located at one as of the locations designated on Schedule 6.5 Closing Date. Fee Letter – as defined in Section 2.3 of the Agreement. Final Xxxxxxxx Accounts – Accounts owed to Perma-Pipe if arising out of projects for which ninety-five percent (other than Permitted Consignments). In the event that previously scheduled Inventory ceases 95%) or more of xxxxxxxx to be Eligible Inventory under the above-described criteria, and as a result there has been a material net decrease in the aggregate amount of Eligible Inventory since that last reported in the preceding Collateral Report, the Borrower experiencing made on such decrease shall notify Agent and each Lender thereof immediately after such Borrower has obtained knowledge thereof.project have occurred. X-0

Eligible Inventory. Agent ELIGIBLE INVENTORY" shall have consist of all Inventory of each of the sole rightBorrowers, in its sole discretion, in Good Faith to determine which Inventory is eligible (except the "Eligible Inventory"). Without limiting Agent's discretion, the following Inventory shall not be Eligible Inventoryfollowing: (i) work in process; (ii) Inventory which is damaged, obsolete, not in good condition, or not either currently usable or currently salable saleable in the ordinary course of such Borrower's businessbusiness as determined by Lender; (iiiii) Inventory which Agent Lender determines, in the exercise of Agent's sole discretion and or which in accordance with Agentsuch Borrower's customary business practices, to be is unacceptable due to age, type, category and/or quantity; (iii) , including any Inventory which is not subject to internal control and management procedures acceptable to Agent, in Agentexcess of a one (1) year's sole discretionsupply or is otherwise slow-moving; (iv) Inventory with respect to which Agent Lender does not have a first priority and valid valid, fully perfected security interestLien; (v) Inventory consisting of a packaging or supplies; (vi) Inventory in the possession of such Borrower but not owned by such Borrower; (vii) Inventory produced in violation of the Fair Labor Standards Act and subject to the so-called "hot goods" provision contained in Title 29 U.S.C. Section 215(a)(1); (viii) Inventory with respect to which any disclosure is required in the applicable Monthly Report or Borrowing Base Certificate in accordance with SECTION 11.1(q); (ix) Inventory which is stored or placed with a bailee, warehouseman, supplier, lessor or similar party on consignment (other than Inventory inventory with warehousemen, bailees or lessors as respect to which the Borrowers have satisfied all requirements set forth in SECTION 9.7) or is located at a place other than the places of business and collateral locations of such Borrower listed on SCHEDULE 10.29; PROVIDED that, subject to SECTION 11.24, in the case of leased or bailment locations listed on SCHEDULE 10.29, no Inventory located at any such location shall be "ELIGIBLE INVENTORY" until the applicable landlord or bailee has notified Agent in writing and which have signed an agreement in favor of Agent executed a lien waiver in form and substance satisfactory to AgentLender) including Inventory in transit; (vix) Inventory delivered to a Borrower on consignment; (vii) Inventory sold by a Borrower on consignment, other than such Inventory consisting of railcar wheels furnished on consignment (each, a "Permitted Consignment"), provided that (a) such Borrower has notified Agent in writing finished goods which do not meet the specifications of such consignment and the location thereof, (b) Agent has received a written agreement signed by the consignor thereof as to Agent's rights in and to purchase order for which such Inventory which agreement is in form and substance satisfactory to Agent, and (c) the amount (valued as provided in Subsection 2.4) of such Inventory does not exceed $1,500,000 in the aggregate for all Borrowers; (viii) Inventory constituting supplieswas produced; and (ixxi) Inventory which is not located at one of fails to meet the locations designated on Schedule 6.5 (other than Permitted Consignments)standards imposed by any governmental agency, or department or division thereof, having regulatory authority over such goods, its use and/or sale. In the event that Inventory previously scheduled Inventory in a Monthly Report or Borrowing Base Certificate ceases to be Eligible Inventory under the above-described criteriaInventory, and as a result there has been a material net decrease in the aggregate amount of Eligible Inventory since that last reported in the preceding Collateral Report, the Borrower experiencing such decrease Borrowers shall notify Agent and each Lender thereof immediately after such Borrower has obtained knowledge thereofimmediately.

Eligible Inventory. Agent shall have the sole right, in its sole discretion, in Good Faith to determine which Inventory is eligible (the "Eligible Inventory"). Without limiting Agent's discretion" shall consist of all of the Inventory of each of the Borrower, except the following Inventory shall not be Eligible Inventoryfollowing: (i) Inventory which is damaged, obsolete, not in good condition, or not either currently usable or currently salable saleable in the ordinary course of such the Borrower's business; (ii) Inventory which Agent determines, in the exercise of Agent's sole discretion and in accordance with Agentthe Borrower's customary business practices, to be is unacceptable due to age, type, category and/or quantity, including, without limitation, any Inventory which is in excess of a one (1) year's supply or is otherwise slow-moving; (iii) Inventory which is not subject to internal control and management procedures acceptable to Agent, in Agent's sole discretion; (iv) Inventory with respect to which the Agent does not have a first priority and valid valid, fully perfected security interestLien; (iv) Inventory consisting of chassis, manuals, labels, packaging or supplies; (v) Inventory in the possession of a the Borrower which is stored or placed with a bailee, warehouseman, supplier, lessor or similar party other than Inventory with warehousemen, bailees or lessors as to which such Borrower has notified Agent in writing and which have signed an agreement in favor of Agent in form and substance satisfactory to Agentbut not owned by the Borrower; (vi) Inventory delivered produced in violation of the Fair Labor Standards Act and subject to a Borrower on consignmentthe so-called "hot goods" provision contained in Title 29 U.S.C. Section 215(a)(1); (vii) Inventory sold by a Borrower on consignment, other than such Inventory consisting of railcar wheels furnished on consignment (each, a "Permitted Consignment"), provided that (a) such Borrower has notified Agent in writing of such consignment and the location thereof, (b) Agent has received a written agreement signed by the consignor thereof as with respect to Agent's rights in and to such Inventory which agreement any specific disclosure is in form and substance satisfactory to Agent, and (c) the amount (valued as provided in Subsection 2.4) of such Inventory does not exceed $1,500,000 required in the aggregate for all Borrowersapplicable Monthly Report or Borrowing Base Certificate in accordance with subsection 3.11; (viii) Inventory constituting supplieswhich is on consignment or is located at a place other than the places of business and collateral locations of the Borrower listed on Exhibit 8.6; provided that, subject to subsection 7.9, in the case of leased or bailment locations listed on Exhibit 8.6, no Inventory located at any such location shall be "Eligible Inventory" until the applicable landlord or bailee has executed a lien waiver in form and substance reasonably satisfactory to the Agent) including, without limitation, Inventory in transit; (ix) Inventory consisting of finished goods which is do not located at one meet the specifications of the locations designated on Schedule 6.5 (other than Permitted Consignments). In the event that previously scheduled Inventory ceases to be Eligible Inventory under the above-described criteria, and as a result there has been a material net decrease in the aggregate amount of Eligible Inventory since that last reported in the preceding Collateral Report, the Borrower experiencing such decrease shall notify Agent and each Lender thereof immediately after such Borrower has obtained knowledge thereof.purchase

Eligible Inventory. Agent shall have the sole right, in its sole discretion, in Good Faith to determine which Inventory is eligible (the "Eligible Inventory"). Without limiting Agent's discretion" shall consist of all of the Inventory, except the following Inventory shall not be Eligible Inventoryfollowing: (i) Inventory which is damaged, obsolete, not in good condition, or not either currently usable or currently salable saleable in the ordinary course of such the Borrower's businessbusiness as determined by the Agent; (ii) Inventory which the Agent determines, in the exercise of Agent's sole discretion and or which in accordance with Agentthe Borrower's customary business practices, to be is unacceptable due to age, type, category and/or quantity, including, without limitation, any Inventory which is in excess of a one (1) year's supply or is otherwise slow-moving; (iii) Inventory which is not subject to internal control and management procedures acceptable to Agent, in Agent's sole discretion; (iv) Inventory with respect to which the Agent does not have a first priority and valid valid, fully perfected security interestLien; (iv) Inventory consisting of cream, film, boxes, packaging or supplies or rework coffee; (v) Inventory in the possession of a the Borrower but not owned by the Borrower; (vi) Inventory produced in violation of the Fair Labor Standards Act and subject to the so-called "hot goods" provision contained in Title 29 U.S.C. Section 215(a)(1); (vii) Inventory with respect to which any disclosure is required in the applicable Monthly Report in accordance with SUBSECTION 3.11; (viii) Inventory which is stored or placed with located at a bailee, warehouseman, supplier, lessor or similar party place other than the collateral locations of the Borrower listed on EXHIBIT 8.6; provided that, subject to SUBSECTION 7.9, in the case of leased locations listed on EXHIBIT 8.6, no Inventory with warehousemen, bailees or lessors as to which located at any such Borrower location shall be "Eligible Inventory" until the applicable landlord has notified Agent in writing and which have signed an agreement in favor of Agent executed a lien waiver in form and substance satisfactory to the Agent) including, without limitation, Inventory in transit; (vi) Inventory delivered to a Borrower on consignment; (vii) Inventory sold by a Borrower on consignment, other than such Inventory consisting of railcar wheels furnished on consignment (each, a "Permitted Consignment"), provided that (a) such Borrower has notified Agent in writing of such consignment and the location thereof, (b) Agent has received a written agreement signed by the consignor thereof as to Agent's rights in and to such Inventory which agreement is in form and substance satisfactory to Agent, and (c) the amount (valued as provided in Subsection 2.4) of such Inventory does not exceed $1,500,000 in the aggregate for all Borrowers; (viii) Inventory constituting supplies; and (ix) Inventory consisting of finished goods which do not meet the specifications of the purchase order for which such Inventory was produced; (x) Inventory which fails to meet the standards imposed by any governmental agency, or department or division thereof, having regulatory authority over such goods, its use and/or sale; (xi) Inventory which is not located at one of held on consignment by the locations designated Borrower; (xii) Inventory owned by the Borrower which is held on Schedule 6.5 consignment by other Persons; and (other than Permitted Consignments)xii) Inventory which the Agent determines in good faith to be unacceptable. In the event that Inventory previously scheduled Inventory in a Monthly Report ceases to be Eligible Inventory under the above-described criteria, and as a result there has been a material net decrease in the aggregate amount of Eligible Inventory since that last reported in the preceding Collateral ReportInventory, the Borrower experiencing such decrease shall notify the Agent and each Lender thereof immediately after such Borrower has obtained knowledge thereofimmediately.

Eligible Inventory. The Agent shall have the sole right, in its sole the exercise of the Agent’s reasonable discretion, in Good Faith to determine which whether Inventory is eligible for inclusion in the Borrowing Base at any particular time (the "such eligible inventory being referred to as “Eligible Inventory"”). Without limiting the Agent's discretion’s right to determine that Inventory does not constitute Eligible Inventory, the following Inventory shall not be Eligible Inventory: (a) Inventory reasonably determined by the Agent to be out-of-condition or otherwise unmerchantable, including, without limitation, Inventory deemed to be out-of-condition or otherwise unmerchantable by the United States Department of Agriculture, any state’s Department of Agriculture, or any other Governmental Authority having regulatory authority over Borrower or any of Borrower’s assets or activities; (b) Inventory for which a prepayment has been received; (c) Inventory in the possession of third parties, unless it is Inventory: (i) Inventory at a location shown on Exhibit 3B, for which is obsoletethe Agent has received a bailee letter satisfactory to the Agent, not in good conditionexecuted by such third party, or not either currently usable or currently salable in the ordinary course of such Borrower's business; (ii) Inventory which Agent determinescovered by negotiable warehouse receipts or negotiable bills of lading issued by either: (A) a warehouseman licensed and bonded by the United States Department of Agriculture or any state’s Department of Agriculture, or (B) a recognized carrier having an office in the exercise of Agent's sole discretion United States and in accordance with a financial condition reasonably acceptable to the Agent's customary business practices, which receipts or bills of lading designate the Agent directly or by endorsement as the only Person to be unacceptable due which or to age, type, category and/or quantitythe order of which the warehouseman or carrier is legally obligated to deliver such Goods; (iiid) Inventory in which is not subject to internal control and management procedures acceptable to Agent, in Agent's sole discretion; (iv) Inventory with respect to which the Agent does not not, for any reason, have a first priority and valid fully perfected security interest; (v) Inventory of a Borrower which is stored or placed with a bailee, warehouseman, supplier, lessor or similar party other than Inventory with warehousemen, bailees or lessors as to which such Borrower has notified Agent in writing and which have signed an agreement in favor of Agent in form and substance satisfactory to Agent; (vi) Inventory delivered to a Borrower on consignment; (vii) Inventory sold by a Borrower on consignment, other than such Inventory consisting of railcar wheels furnished on consignment (each, a "Permitted Consignment"), provided that (a) such Borrower has notified Agent in writing of such consignment and the location thereof, (b) Agent has received a written agreement signed by the consignor thereof as to Agent's rights in and to such Inventory which agreement is in form and substance satisfactory to Agent, and (c) the amount (valued as provided in Subsection 2.4) of such Inventory does not exceed $1,500,000 in the aggregate for all Borrowers; (viii) Inventory constituting supplies; and (ixe) Inventory which is not located at one of the locations designated on Schedule 6.5 (other than Permitted Consignments). In the event that previously scheduled Inventory ceases to be Eligible Inventory under the above-described criteria, and as a result there has been a material net decrease in the aggregate amount Agent’s opinion may be subject to liens or conflicting claims of Eligible Inventory since that last reported ownership (except with regard to Producer Payables deducted in accordance with the preceding Collateral ReportBorrowing Base computation), the Borrower experiencing whether such decrease shall notify Agent and each Lender thereof immediately after such Borrower has obtained knowledge thereofliens or conflicting claims are asserted or could be asserted by any Person.

Eligible Inventory. Agent shall have Eligible Finished Goods Inventory, Eligible Work-in-Process and Eligible Raw Materials. ELIGIBLE RAW MATERIALS. On any date, an amount equal to the sole rightDollar Equivalent of the gross book value, determined in its sole discretionaccordance with the first-in, first-out method of inventory accounting, as reflected on the Borrower's or a Subsidiary Guarantor's books in Good Faith accordance with generally accepted accounting principles consistently applied, of raw materials used to determine produce the Borrower's or one of the Subsidiary Guarantor's inventory, including any finished goods inventory returned by a customer or no longer sold by the Borrower or the Subsidiary Guarantors and (a) which Inventory has been converted into Eligible Raw Materials, (b) which is eligible (the "Eligible Inventory"). Without limiting Agent's discretion, the following Inventory shall not be Eligible Inventory: (i) Inventory which is obsoletelocated on property owned by the Borrower or the Subsidiary Guarantors, not in good condition, or not either currently usable or currently salable in the ordinary course of such Borrower's business; (ii) Inventory which Agent determines, in held by the exercise of Agent's sole discretion and in accordance with Agent's customary business practices, to be unacceptable due to age, type, category and/or quantity; (iii) Inventory which is not subject to internal control and management procedures acceptable to Agent, in Agent's sole discretion; (iv) Inventory with respect to which Agent does not have Borrower or a first priority and valid fully perfected security interest; (v) Inventory of a Subsidiary Guarantor on properties leased by the Borrower which is stored or placed with a bailee, warehouseman, supplier, lessor or similar party other than Inventory with warehousemen, bailees or lessors the Subsidiary Guarantors as to which the Administrative Agent has received a waiver from the lessor of such Borrower has notified Agent in writing and which have signed an agreement in favor of Agent property in form and substance satisfactory to the Administrative Agent; , unless the relevant date of determination is on or prior to thirty (vi30) Inventory delivered to a Borrower on consignment; (vii) Inventory sold by a Borrower on consignment, other than such Inventory consisting of railcar wheels furnished on consignment (each, a "Permitted Consignment"), provided that (a) such Borrower has notified Agent in writing of such consignment and days after the location thereofEffective Date, (biii) not in the possession of the Borrower or the Subsidiary Guarantors and is not in transit and (X) the Administrative Agent has received a written agreement signed by waiver from the consignor thereof as to Agent's rights party in and to possession of such Inventory which agreement is inventory in form and substance satisfactory to the Administrative Agent, (Y) the Administrative Agent has reduced the value of such inventory by reserves reasonably deemed adequate by the Administrative Agent, and in any event in an amount equal to all obligations of the Borrower and its Subsidiaries to the party in possession or (Z) the relevant date is on prior to thirty (30) days after the Effective Date or (iv) is in transit from one location in which the Administrative Agent had a perfected security interest in such inventory to a second location where the Administrative Agent has taken all steps necessary to obtain a perfected security interest in inventory at such location, and has been in transit for a period of less than ten (10) days, (c) as to which the amount (valued as provided in Subsection 2.4) of such Inventory does not exceed $1,500,000 in the aggregate for all Borrowers; (viii) Inventory constituting supplies; and (ix) Inventory which is not located at Borrower or one of the locations designated on Schedule 6.5 Subsidiary Guarantors has acquired title and the Administrative Agent has a valid and perfected first-priority security interest under all applicable law, and (d) as to which the Borrower has furnished reasonably detailed information to the Lenders in a Borrowing Base Report, after taking into account all charges and liens (other than Permitted Consignments)those of the Administrative Agent and carrier, warehouse, customs and similar statutory liens arising in the ordinary course of business) of all kinds against such raw materials. In Without limiting the event that previously scheduled Inventory ceases generality of the foregoing, Eligible Raw Materials shall not include any raw materials covered by a document of title until the document of title has been delivered to the Administrative Agent or which the Administrative Agent reasonably deems to be obsolete or not useable raw materials. Raw material immediately loses the status of Eligible Inventory under Raw Material if and when the aboveBorrower or one of the Subsidiary Guarantors sells it, otherwise passes title thereto, consumes it, or materially changes it in the course of processing the same, or the Administrative Agent releases or transfers its security interest therein. Notwithstanding the foregoing, but without duplication, Eligible Raw Materials shall be reduced by the amount of any specific reserve established by the Borrower with respect to any Eligible Raw Materials other than the LIFO reserve maintained by the Borrower in accordance with generally accepted accounting principles. ELIGIBLE WORK-described criteriaIN-PROCESS On any date, an amount equal to the Dollar Equivalent of the gross book value, as reflected on the Borrower's or a Subsidiary Guarantor's books in accordance with generally accepted accounting principles consistently applied, of usable work-in-process of the Borrower and the Subsidiary Guarantors and as to which the Borrower has furnished reasonably detailed information to the Lenders in a Borrowing Base Report in connection with the manufacture of its products in the ordinary course of its business, including any finished goods inventory returned by a customer or no longer sold by the Borrower or the Subsidiary Guarantors and which has been converted into Eligible Work-in-Process, which is (a) (i) located on property owned by the Borrower or the Subsidiary Guarantors, (ii) held by the Borrower or a Subsidiary Guarantor on properties leased by the Borrower or the Subsidiary Guarantors as to which the Administrative Agent has received a waiver from the lessor of such property in form and substance satisfactory to the Administrative Agent, unless the relevant date of determination is on or prior to thirty (30) days after the Effective Date, (iii) not in the possession of the Borrower or the Subsidiary Guarantors and is not in transit and (X) the Administrative Agent has received a waiver from the party in possession of such inventory in form and substance satisfactory to the Administrative Agent, (Y) the Administrative Agent has reduced the value of such inventory by reserves reasonably deemed adequate by the Administrative Agent, and as in any event in an amount equal to all obligations of the Borrower and the Subsidiary Guarantors to the party in possession or (Z) the relevant date of determination is on or prior to thirty (30) days after the Effective Date or (iv) is in transit from one location in which the Administrative Agent had a result there perfected security interest in such inventory to a second location where the Administrative Agent has taken all steps necessary to obtain a perfected security interest in such inventory at such location, and has been in transit for a material net decrease in period of less than ten (10) days, and (b) as to which the aggregate Borrower or one of the Subsidiary Guarantors has title and the Administrative Agent has a valid and perfected first-priority security interest. Without limiting the generality of the foregoing, Eligible Work-in-Process shall not include work-in-process which the Administrative Agent reasonably deems to be obsolete or not marketable. Work-in-process immediately loses the status of Eligible Work-in-Process if and when the Borrower or one of the Subsidiary Guarantors sells it, otherwise passes title thereto, consumes it, or the Administrative Agent releases or transfers its security interest therein. Notwithstanding the foregoing, but without duplication, Eligible Work-in-Process shall be reduced by the amount of Eligible Inventory since that last reported in the preceding Collateral Report, any specific reserves established by the Borrower experiencing such decrease shall notify Agent and each Lender thereof immediately after such with respect to any Eligible Work-in-Process other than the LIFO reserve maintained by the Borrower has obtained knowledge thereofin accordance with generally accepted accounting principles. EMPLOYEE BENEFIT PLAN. Any employee benefit plan within the meaning of Section 3(3) of ERISA maintained or contributed to by the Borrower or any ERISA Affiliate, other than a Guaranteed Pension Plan or a Multiemployer Plan. ENVIRONMENTAL LAWS. See Section 7.16(a).

Eligible Inventory. Agent shall have With respect to the sole rightBorrower, in its sole discretion, in Good Faith to determine which Inventory is eligible (finished goods inventory owned by the "Borrower; provided that Eligible Inventory"). Without limiting Agent's discretion, the following Inventory shall not be Eligible Inventory: include any inventory (a) held on consignment, or not otherwise owned by the Borrower, (b) which is damaged or is subject to any legal encumbrance other than Permitted Liens, (c) which is not in the possession of the Borrower unless (i) Inventory which is obsoletethe Administrative Agent has received a waiver from the party in possession (including, not in good conditionwithout limitation, or not either currently usable or currently salable in the ordinary course of such Borrower's business; (ii) Inventory which Agent determines, in the exercise of Agent's sole discretion and in accordance with Agent's customary business practices, to be unacceptable due to age, type, category and/or quantity; (iii) Inventory which is not subject to internal control and management procedures acceptable to Agent, in Agent's sole discretion; (iv) Inventory with respect to which Agent does not have a first priority and valid fully perfected security interest; (vall consolidator locations) Inventory of a Borrower which is stored or placed with a bailee, warehouseman, supplier, lessor or similar party other than Inventory with warehousemen, bailees or lessors as to which such Borrower has notified Agent in writing and which have signed an agreement in favor of Agent inventory in form and substance reasonably satisfactory to the Administrative Agent or (ii) such inventory is in transit from one Permitted Inventory Location to another Permitted Inventory Location, and the total duration of such transit time is not more than three (3) Business Days, (d) which is subject to any lien, encumbrance or security interest which is prior to the liens granted to the Agent (other than landlord's or lessor's liens under leases to which the Borrower is a party provided no amount secured by such lien has become due and payable and not been paid), (e) as to which appropriate Uniform Commercial Code financing statements showing the Borrower as debtor and the Agent as secured party have not been filed in the proper filing office or offices in order to perfect the Agent; 's security interest therein, (vif) Inventory delivered which has been shipped to a customer of the Borrower regardless of whether such shipment is on consignment; (vii) Inventory sold by a Borrower on consignment, other than such Inventory consisting of railcar wheels furnished on consignment (each, a "Permitted Consignment"), provided that (a) such Borrower has notified Agent in writing of such consignment and the location thereofbasis, (bg) Agent has received a written agreement signed by the consignor thereof as to Agent's rights in and to such Inventory which agreement is in form and substance satisfactory to Agent, and (c) the amount (valued as provided in Subsection 2.4) of such Inventory does not exceed $1,500,000 in the aggregate for all Borrowers; (viii) Inventory constituting supplies; and (ix) Inventory which is not located at a Permitted Inventory Location unless such inventory is in transit from one Permitted Inventory Location to another Permitted Inventory Location, and the total duration of the locations designated on Schedule 6.5 such transit time is not more than three (other than Permitted Consignments)3) Business Days. In the event that previously scheduled Inventory ceases to be General criteria for Eligible Inventory under may be established and revised by the above-described criteria, and as a result Administrative Agent from time to time if the Administrative Agent reasonably determines that there has been a material net decrease substantive change in the aggregate shrinkage, character, composition or mix, markdowns or retail markons and markups inconsistent with prior period practice, industry standards or current business plans. For the period from the Closing Date through June 30, 1999, the Administrative Agent may in its Permitted Discretion include in Eligible Inventory (with an advance rate of up to 55% of Net Book Value for Borrowing Base purposes and advances against such category not exceeding $1,500,000) up to $3,000,000 of inventory which generally complies with the requirements set forth above for Eligible Inventory but consisting of shoes held for sale at up to four "Aisle 3" Stores and (i) owned by Shoe Seller in which the Borrower has a perfected first-priority lien securing the obligations of Shoe Seller to the Borrower, all of which has been assigned to the Agent and all of which is on terms and conditions satisfactory to the Administrative Agent or (ii) owned by the Borrower and consigned to Shoe Seller pursuant to consignment arrangements satisfactory to the Administrative Agent, including without limitation that the Borrower complies with 9-114 of the Uniform Commercial Code and takes all other steps necessary to maintain a perfected, first priority interest in such inventory and, in either case, the Agent has received an acknowledgment by Shoe Seller that the Agent has a first-priority perfected lien in such inventory and all proceeds thereof, which proceeds shall be subject to cash management arrangements satisfactory to the Administrative Agent. The amount of shoe inventory included in Eligible Inventory since that last reported pursuant to this paragraph will be adjusted by the Administrative Agent in the preceding Collateral Reportits Permitted Discretion based upon, among other things, the detailed weekly borrowing base reports with respect to such inventory by location and appraisals provided to the Administrative Agent. For purposes of this paragraph, "Shoe Seller" means a company formed by Mr. John Shannon for thx xxxxxxx xx operating retail shoe departments. Employee Benefit Plan. Any employee benefit plan within the meaning of 3(3) of ERISA maintained or contributed to by the Borrower experiencing such decrease shall notify Agent and each Lender thereof immediately after such Borrower has obtained knowledge thereofor any ERISA Affiliate, other than a Multiemployer Plan. Environmental Laws. See 7.18(a).

Eligible Inventory. Agent shall have With respect to the sole rightBorrower or any of its Subsidiaries, finished goods, work in its sole discretionprogress, in Good Faith to determine which Inventory is eligible (supplies, packaging materials and raw materials and component parts inventory owned by the "Borrower or such Subsidiary; PROVIDED that Eligible Inventory"). Without limiting Agent's discretion, the following Inventory shall not be Eligible Inventory: include any inventory (i) Inventory which is obsolete, not in good conditionheld on consignment, or not either currently usable otherwise owned by the Borrower or currently salable in such Subsidiary, or of a type no longer sold by the ordinary course of Borrower or such Borrower's business; Subsidiary, (ii) Inventory which Agent determines, in has been returned by a customer (until an appropriate adjustment has been made to the exercise of Agent's sole discretion corresponding Account Receivable and so long as such inventory is undamaged and in accordance with Agent's customary business practicessaleable condition) or is damaged or subject to any legal encumbrance other than Permitted Liens, to be unacceptable due to age, type, category and/or quantity; (iii) Inventory which is not subject to internal control and management procedures acceptable to Agent, in Agent's sole discretion; (iv) Inventory with respect to which the possession of the Borrower or such Subsidiary unless the Agent does not have has received a first priority and valid fully perfected security interest; (v) Inventory waiver from the party in possession of a Borrower which is stored or placed with a bailee, warehouseman, supplier, lessor or similar party other than Inventory with warehousemen, bailees or lessors as to which such Borrower has notified Agent in writing and which have signed an agreement in favor of Agent inventory in form and substance satisfactory to the Agent; (vi) Inventory delivered to a Borrower on consignment; (vii) Inventory sold by a Borrower on consignment, other than such Inventory consisting of railcar wheels furnished on consignment (each, a "Permitted Consignment"), provided that (a) such Borrower has notified Agent in writing of such consignment and the location thereof, (biv) which is held by the Borrower or such Subsidiary on property leased by the Borrower or a Subsidiary, unless the Agent has received a written agreement signed by waiver from the consignor lessor of such leased property and, if any, sublessor thereof as to Agent's rights in and to such Inventory which agreement is in form and substance satisfactory to the Agent, (v) as to which appropriate Uniform Commercial Code financing statements showing the Borrower or such Subsidiary as debtor and (c) the amount (valued Agent as provided in Subsection 2.4) of such Inventory does secured party have not exceed $1,500,000 been filed in the aggregate for proper filing office or offices in order to perfect the Agent's security interest therein, (vi) which has been shipped to a customer of the Borrower or such Subsidiary regardless of whether such shipment is on a consignment basis (unless, with respect to any such inventory held on consignment by a third party, all Borrowers; relevant provisions of ss.ss.2-326 and 9-114 of the Uniform Commercial Code have been complied with and the Agent has a valid and perfected first priority security interest therein), (viiivii) Inventory constituting supplies; and (ix) Inventory which is not located at one within the United States of America, or (viii) which the Agent reasonably deems to be obsolete or not marketable. General criteria for Eligible Inventory may be established and revised from time to time by the Agent in its reasonable business judgement. Notwithstanding section (iv) of this definition, the requirement for Landlord Consents and Waivers shall be waived with respect to the properties which are leased by the Borrower as of the locations designated on Schedule 6.5 Closing Date; PROVIDED, HOWEVER, if the lease for any such property shall be amended, restated, renewed or otherwise modified, section (other than Permitted Consignments). In the event that previously scheduled Inventory ceases to iv) shall once more be Eligible Inventory under the above-described criteria, in full force and as a result there has been a material net decrease in the aggregate amount of Eligible Inventory since that last reported in the preceding Collateral Report, the Borrower experiencing such decrease shall notify Agent and each Lender thereof immediately after such Borrower has obtained knowledge thereofeffect.

Eligible Inventory. Agent Lender shall have the sole right, in its sole discretion, discretion exercised in Good Faith Faith, to determine which Inventory is eligible (the "Eligible Inventory"). Without limiting AgentLender's discretion, the following Inventory shall not be Eligible Inventory: (i) Inventory which is obsolete, not in good condition, or not either currently usable or currently salable in the ordinary course of such Borrower's business; (ii) Inventory which Agent Lender determines, in the exercise of AgentLender's sole discretion exercised in Good Faith and in accordance with AgentLender's customary business practices, to be unacceptable due to age, type, category and/or quantity; (iii) Inventory which is work in process; (iv) Inventory which is not subject to internal control and management procedures acceptable to AgentLender, in AgentLender's sole discretiondiscretion exercised in Good Faith; (ivv) Inventory with respect to which Agent Lender does not have a first priority and valid fully perfected security interest; (vvi) Inventory of a Borrower which is stored or placed with a bailee, consignee, warehouseman, supplier, lessor or similar party other than Inventory with warehousemen, bailees or lessors as to which such Borrower has notified Agent in writing Lender and which have signed an agreement in favor of Agent Lender in form and substance satisfactory to Agent; (vi) Inventory delivered to a Borrower on consignmentLender; (vii) Inventory sold by a delivered to Borrower on consignment, other than such Inventory consisting of railcar wheels furnished on consignment (each, a "Permitted Consignment"), provided that (a) such Borrower has notified Agent in writing of such consignment and the location thereof, (b) Agent has received a written agreement signed by the consignor thereof as to Agent's rights in and to such Inventory which agreement is in form and substance satisfactory to Agent, and (c) the amount (valued as provided in Subsection 2.4) of such Inventory does not exceed $1,500,000 in the aggregate for all Borrowers; (viii) Inventory constituting supplies; and (ixviii) Inventory which is not located at one of the locations designated owned or leased by Borrower listed on Schedule 6.5 (other than Permitted Consignments)6.5. In the event that previously scheduled Inventory ceases to be Eligible Inventory under the above-described criteria, and as a result there has been a material net decrease in the aggregate amount of Eligible Inventory since that last reported in the preceding Collateral Report, the Borrower experiencing such decrease shall notify Agent and each Lender thereof immediately after such Borrower has obtained knowledge thereof. Notwithstanding the foregoing, Inventory which is physically located at a location designated as a leased sales office on Schedule 6.5 shall not be Eligible Inventory.

Eligible Inventory. Agent shall have Eligible Finished Goods Inventory, Eligible Work-in-Process and Eligible Raw Materials. Eligible Raw Materials. On any date, an amount equal to the sole rightDollar Equivalent of the gross book value, determined in its sole discretionaccordance with the first-in, first-out method of inventory accounting, as reflected on the Borrower's or a Subsidiary Guarantor's books in Good Faith accordance with generally accepted accounting principles consistently applied, of raw materials used to determine produce the Borrower's or one of the Subsidiary Guarantor's inventory, including any finished goods inventory returned by a customer or no longer sold by the Borrower or the Subsidiary Guarantors and which Inventory is eligible (the "has been converted into Eligible Inventory"). Without limiting Agent's discretionRaw Materials, the following Inventory shall not be Eligible Inventory: (i) Inventory which is obsolete(a)(i) located on property owned by the Borrower or the Subsidiary Guarantors, not in good condition, or not either currently usable or currently salable in the ordinary course of such Borrower's business; (ii) Inventory which Agent determines, in held by the exercise of Agent's sole discretion and in accordance with Agent's customary business practices, to be unacceptable due to age, type, category and/or quantity; (iii) Inventory which is not subject to internal control and management procedures acceptable to Agent, in Agent's sole discretion; (iv) Inventory with respect to which Agent does not have Borrower or a first priority and valid fully perfected security interest; (v) Inventory of a Subsidiary Guarantor on properties leased by the Borrower which is stored or placed with a bailee, warehouseman, supplier, lessor or similar party other than Inventory with warehousemen, bailees or lessors the Subsidiary Guarantors as to which the Administrative Agent has received a waiver from the lessor of such Borrower has notified Agent in writing and which have signed an agreement in favor of Agent property in form and substance satisfactory to the Administrative Agent; , unless the relevant date of determination is on or prior to thirty (vi30) Inventory delivered to a Borrower on consignment; (vii) Inventory sold by a Borrower on consignment, other than such Inventory consisting of railcar wheels furnished on consignment (each, a "Permitted Consignment"), provided that (a) such Borrower has notified Agent in writing of such consignment and days after the location thereofEffective Date, (biii) not in the possession of the Borrower or the Subsidiary Guarantors and is not in transit and (X) the Administrative Agent has received a written agreement signed by waiver from the consignor thereof as to Agent's rights party in and to possession of such Inventory which agreement is raw materials in form and substance satisfactory to the Administrative Agent, (Y) the Administrative Agent has reduced the value of such raw materials by reserves reasonably deemed adequate by the Administrative Agent, and in any event in an amount equal to all obligations of the Borrower and its Subsidiaries to the party in possession or (Z) the relevant date of determination is on prior to thirty (30) days after the Effective Date or (iv) is in transit from one location in which the Administrative Agent had a perfected security interest in such raw materials to a second location where the Administrative Agent has taken all steps necessary to obtain a perfected security interest in raw materials at such location, and has been in transit for a period of less than ten (10) days, (b) as to which the Borrower or one of the Subsidiary Guarantors has acquired title and the Administrative Agent has a valid and perfected first-priority security interest under all applicable law, and (c) as to which the amount Borrower has furnished reasonably detailed information to the Lenders in a Borrowing Base Report, after taking into account all charges and liens (valued as provided other than those of the Administrative Agent and carrier, warehouse, customs and similar statutory liens arising in Subsection 2.4the ordinary course of business) of all kinds against such Inventory does raw materials. Without limiting the generality of the foregoing, Eligible Raw Materials shall not exceed $1,500,000 in include any raw materials covered by a document of title until the aggregate for all Borrowers; (viii) Inventory constituting supplies; document of title has been delivered to the Administrative Agent or which the Administrative Agent reasonably deems to be obsolete or not useable raw materials. Raw material immediately loses the status of Eligible Raw Material if and (ix) Inventory which is not located at when the Borrower or one of the locations designated on Schedule 6.5 (Subsidiary Guarantors sells it, otherwise passes title thereto, consumes it, or materially changes it in the course of processing the same, or the Administrative Agent releases or transfers its security interest therein. Notwithstanding the foregoing, but without duplication, Eligible Raw Materials shall be reduced by the amount of any specific reserve established by the Borrower with respect to any Eligible Raw Materials other than Permitted Consignmentsthe LIFO reserve maintained by the Borrower in accordance with generally accepted accounting principles. Eligible Work-in-Process. On any date, an amount equal to the Dollar Equivalent of the gross book value, as reflected on the Borrower's or a Subsidiary Guarantor's books in accordance with generally accepted accounting principles consistently applied, of usable work-in-process of the Borrower and the Subsidiary Guarantors and as to which the Borrower has furnished reasonably detailed information to the Lenders in a Borrowing Base Report in connection with the manufacture of its products in the ordinary course of its business, including any finished goods inventory returned by a customer or no longer sold by the Borrower or the Subsidiary Guarantors and which has been converted into Eligible Work-in-Process, which is (a) (i) located on property owned by the Borrower or the Subsidiary Guarantors, (ii) held by the Borrower or a Subsidiary Guarantor on properties leased by the Borrower or the Subsidiary Guarantors as to which the Administrative Agent has received a waiver from the lessor of such property in form and substance satisfactory to the Administrative Agent, unless the relevant date of determination is on or prior to thirty (30) days after the Effective Date, (iii) not in the possession of the Borrower or the Subsidiary Guarantors and is not in transit and (X) the Administrative Agent has received a waiver from the party in possession of such work-in-process in form and substance satisfactory to the Administrative Agent, (Y) the Administrative Agent has reduced the value of such work-in-process by reserves reasonably deemed adequate by the Administrative Agent, and in any event in an amount equal to all obligations of the Borrower and the Subsidiary Guarantors to the party in possession or (Z) the relevant date of determination is on or prior to thirty (30) days after the Effective Date or (iv) is in transit from one location in which the Administrative Agent had a perfected security interest in such work-in-process to a second location where the Administrative Agent has taken all steps necessary to obtain a perfected security interest in such work-in-process at such location, and has been in transit for a period of less than ten (10) days, and (b) as to which the Borrower or one of the Subsidiary Guarantors has title and the Administrative Agent has a valid and perfected first-priority security interest. Without limiting the generality of the foregoing, Eligible Work-in-Process shall not include work-in-process which the Administrative Agent reasonably deems to be obsolete or not marketable. Work-in-process immediately loses the status of Eligible Work-in-Process if and when the Borrower or one of the Subsidiary Guarantors sells it, otherwise passes title thereto, consumes it, or the Administrative Agent releases or transfers its security interest therein. Notwithstanding the foregoing, but without duplication, Eligible Work-in-Process shall be reduced by the amount of any specific reserves established by the Borrower with respect to any Eligible Work-in-Process other than the LIFO reserve maintained by the Borrower in accordance with generally accepted accounting principles. Employee Benefit Plan. Any employee benefit plan within the meaning of (S)3(3) of ERISA maintained or contributed to by the Borrower or any ERISA Affiliate, other than a Guaranteed Pension Plan or a Multiemployer Plan. Environmental Laws. See (S)7.17(a). In the event that previously scheduled Inventory ceases to be Eligible Inventory under the above-described criteria, and as a result there has been a material net decrease in the aggregate amount of Eligible Inventory since that last reported in the preceding Collateral Report, the Borrower experiencing such decrease shall notify Agent and each Lender thereof immediately after such Borrower has obtained knowledge thereofEPA. See (S)7.17.

Eligible Inventory. Agent shall have the sole rightFinished goods, work in its sole discretion, in Good Faith to determine which Inventory is eligible progress and raw materials (the "including saleable scrap) owned by any Borrower (other than Metalsco); provided that Eligible Inventory"). Without limiting Agent's discretion, the following Inventory shall not be Eligible Inventory: include any inventory (i) Inventory which is obsoleteconstitute stores and supplies, not in good condition(ii) held on consignment, or not either currently usable or currently salable in the ordinary course of otherwise owned by such Borrower's business; (ii) Inventory which Agent determines, in the exercise or of Agent's sole discretion and in accordance with Agent's customary business practicesa type no longer sold by such Borrower, to be unacceptable due to age, type, category and/or quantity; (iii) Inventory which has been returned by a customer or is damaged or subject to any legal encumbrance other than Permitted Liens, (iv) which is not subject in the possession or control of such Borrower or Approved Party, at Permitted Inventory Locations unless it is (A) in transit from one Permitted Inventory Location within the United States of America to internal control and management procedures acceptable to Agentanother Permitted Inventory Location within the United States of America, in Agent's sole discretion; or (ivB) Inventory with respect to which Agent does not have a first priority and valid fully perfected security interest; In-Transit Alumina, (v) Inventory of a Borrower which is stored or placed with a bailee, warehouseman, supplier, lessor or similar party other than Inventory with warehousemen, bailees or lessors as to which either (A) appropriate UCC financing statements showing such Borrower has notified as debtor and the Agent as secured party have not been filed in the proper filing office or offices in order to provide the Agent with a valid and perfected first priority security interest therein or (B) all documents of title relating to such Inventory have been consigned to the Agent in writing a manner reasonably acceptable to the Agent and which have signed the Agent or an agreement Approved Customs Broker is in favor possession of Agent in form and substance satisfactory all documents of title relating to Agent; such goods, (vi) Inventory delivered which has been shipped to a customer of such Borrower regardless of whether such shipment is on consignment; a consignment basis, or (vii) Inventory sold by a Borrower on consignment, other than such Inventory consisting which is not located within the United States of railcar wheels furnished on consignment (each, a "Permitted Consignment"), provided that (a) such Borrower has notified Agent in writing of such consignment and the location thereofAmerica, (bviii) any inventory located at the Hawesville Facility, unless, the Agent has received a written agreement signed by the consignor thereof as to Agent's rights in and to such Inventory which agreement is in form and substance satisfactory to Agent, and (c) the amount (valued as provided in Subsection 2.4) of such Inventory does not exceed $1,500,000 Non-Setoff Agreement in the aggregate for all Borrowers; (viii) Inventory constituting supplies; and form of Exhibit K hereto or (ix) Inventory which is the Agent reasonably deems to be obsolete or not located at one marketable. Employee Benefit Plan. Any employee benefit plan within the meaning of ss.3(3) of ERISA maintained or contributed to by any of the locations designated on Schedule 6.5 (Borrowers or any ERISA Affiliate, other than Permitted Consignmentsa Guaranteed Pension Plan or a Multiemployer Plan. Environmental Laws. See ss.7.18(a). In the event that previously scheduled Inventory ceases to be Eligible Inventory under the above-described criteria, and as a result there has been a material net decrease in the aggregate amount of Eligible Inventory since that last reported in the preceding Collateral Report, the Borrower experiencing such decrease shall notify Agent and each Lender thereof immediately after such Borrower has obtained knowledge thereofEPA. See ss.7.18(b).

Eligible Inventory. With respect to S&H, finished goods owned by such Borrower; PROVIDED that Eligible Inventory shall not include any inventory (i) held on consignment, or not otherwise owned by such Borrower, or of a type no longer sold by such Borrower; (ii) which has been returned by a customer or is damaged or subject to any legal encumbrance other than Permitted Liens; (iii) which is not in the possession of such Borrower unless (A) such inventory is subject to a documentary letter of credit issued by a lender approved by the Administrative Agent shall have and the sole rightAdministrative Agent has possession of and a first priority, perfected security interest in the documents of title relating to such inventory, (B) such inventory is in transit from one Permitted Inventory Location of such Borrower within the United States of America to another Permitted Inventory Location of such Borrower within the United States of America or (C) the aggregate gross book value of such inventory does not exceed $6,000,000 with respect to inventory located at such Borrower's distribution center and warehouse located at 8145 Xxxxxx Xxxxx, Florence, Kentucky and operated by The Discovery Channel Store, Inc. pursuant to the Cooperation and Services Agreement between The Discovery Channel Store, Inc. and such Borrower, and $1,750,000 with respect to all other inventory locations and the Administrative Agent has received (x) a waiver in form and substance satisfactory to the Administrative Agent from the possessor of such inventory, (y) financing statements in form and substance satisfactory to the Administrative Agent executed and delivered by such Borrower as secured party/bailxx xxx the possessor of such inventory as debtor/bailee, for filing in the appropriate jurisdictions PROVIDED, HOWEVER, that the Administrative Agent may in its sole discretion, waive the foregoing requirement with respect to financing statements, and (z) an assignment in Good Faith form and substance satisfactory to determine which Inventory is eligible (the "Eligible Inventory"). Without limiting Agent's discretion, Administrative Agent by the following Inventory shall not be Eligible Inventory: (i) Inventory which is obsolete, not in good condition, or not either currently usable or currently salable in secured party/bailxx xx the ordinary course Administrative Agent of such Borrower's business; (ii) Inventory which Agent determines, in the exercise of Agent's sole discretion and in accordance with Agent's customary business practices, to be unacceptable due to age, type, category and/or quantity; (iii) Inventory which is not subject to internal control and management procedures acceptable to Agent, in Agent's sole discretionaforementioned financing statements; (iv) Inventory with respect to in which the Administrative Agent does not have a valid and perfected first priority and valid fully perfected security interest; (v) Inventory which has been shipped to a customer of such Borrower regardless of whether such shipment is on a Borrower consignment basis; (vi) which is stored or placed with not located at a bailee, warehouseman, supplier, lessor or similar party other than Permitted Inventory with warehousemen, bailees or lessors as to which Location of such Borrower within the United States of America, unless (A) such inventory is subject to a documentary letter of credit issued by a lender approved by the Administrative Agent and the Administrative Agent has notified possession of and a first priority, perfected security interest in the documents of title relating to such inventory or (B) such inventory is in transit from one Permitted Inventory Location of such Borrower within the United States of America to another Permitted Inventory Location of such Borrower within the United States of America; (vii) which the Majority Lenders reasonably deem to be obsolete or not marketable; (viii) which is located in California unless the Administrative Agent in writing and which have signed an agreement in favor of Agent has received a legal opinion in form and substance satisfactory to Agent; (vi) Inventory delivered to a Borrower on consignment; (vii) Inventory sold by a Borrower on consignment, other than such Inventory consisting the Administrative Agent that the Loan Documents comply with the provisions of railcar wheels furnished on consignment (each, a "Permitted Consignment"), provided that (a) such Borrower has notified Agent in writing of such consignment and the location thereof, (b) Agent has received a written agreement signed by the consignor thereof as to Agent's rights in and to such Inventory which agreement is in form and substance satisfactory to Agent, and (c) the amount (valued as provided in Subsection 2.4ss.9102(5)(b) of such Inventory does not exceed $1,500,000 the Uniform Commercial Code as in the aggregate for all Borrowers; (viii) Inventory constituting supplies; and effect in California, or (ix) Inventory which is not located at one consists of the locations designated on Schedule 6.5 (other than Permitted Consignments). In the event that previously scheduled Inventory ceases to be Eligible Inventory under the above-described criteria, and as a result there has been a material net decrease in the aggregate amount of Eligible Inventory since that last reported in the preceding Collateral Report, the Borrower experiencing such decrease shall notify Agent and each Lender thereof immediately after such Borrower has obtained knowledge thereoflive plantings.

Eligible Inventory. Agent shall have the sole right, in its sole discretionreasonable discretion exercised in accordance with its customary business practices, in Good Faith to determine which Inventory of Borrowers is eligible (the "Eligible Inventory"). Without limiting Agent's discretion, the following Inventory shall not be Eligible Inventory: (i) Inventory which is obsolete, not in good condition, or not either currently usable or currently salable in the ordinary course of such the applicable Borrower's business; (ii) Inventory other than blank T-shirt stock, current calendar model year die-cast finished goods and prior calendar model year die-cast finished goods, (iii) Inventory which Agent determines, in the exercise of Agent's sole reasonable discretion and exercise in accordance with Agent's customary business practices, to be unacceptable due to age, type, category and/or quantity; (iii) Inventory which is not subject to internal control and management procedures acceptable to Agent, in Agent's sole discretionof any Person other than Borrowers; (iv) Inventory with respect to which Agent Agent, on behalf of Lenders, does not have a first priority and valid fully perfected security interestLien; (v) QVC Inventory of a Borrower or any other Inventory which is stored or placed with a bailee, consignee, warehouseman, supplier, lessor or similar party other than party, unless otherwise deemed to be Eligible Inventory with warehousemen, bailees or lessors as to which such Borrower has notified by Agent in writing its sole discretion; provided, that QVC Inventory shall not be deemed ineligible by virtue of the criteria set forth in this clause (v) so long as (1) such Inventory is held on consignment by QVC at a location owned or leased by QVC, Inc., (2) such Inventory is not otherwise ineligible under any of the other criteria set forth in this subsection 3.10, (3) such Inventory is owned by the applicable Borrower, whose ownership interest in such Inventory is prior to all creditors of QVC, Inc. and which has been perfected in accordance with Section 9-114 of the Code (and Borrowers have signed an agreement in favor provided written evidence thereof to Agent), (4) Agent, on behalf of Lenders, shall have a first and valid fully perfected Lien on such Inventory and (5) Agent and QVC, Inc. shall have entered into a bailee letter with respect to all Inventory at such location in form and substance satisfactory to Agent; (vi) Inventory delivered to a any Borrower on consignment; (vii) Inventory sold by a Borrower on consignment, other than such Inventory consisting of railcar wheels furnished on consignment (each, a "Permitted Consignment"), provided that (a) such Borrower has notified Agent in writing of such consignment and the location thereof, (b) Agent has received a written agreement signed by the consignor thereof as to Agent's rights in and to such Inventory which agreement is in form and substance satisfactory to Agent, and (c) the amount (valued as provided in Subsection 2.4) of such Inventory does not exceed $1,500,000 in the aggregate for all Borrowers; (viii) Inventory constituting supplies; and (ix) Inventory which is not located at one of the locations designated on Schedule 6.5 3.10 hereof or at one of the other locations permitted under subsection 8.10 hereof; (other than Permitted Consignments)viii) Inventory for which any Borrower has invoiced the customer, whether or not the customer has paid for such Inventory; (ix) Inventory the completion of manufacture or sale of which by Agent following a Default would require the consent of, or royalty payments to, any third party, except for Inventory subject to the rights of licensees under Motor Sports License Agreements entered into in the ordinary course of business; and (x) Inventory with respect to which any disclosure is required in the applicable Monthly Report or Collateral Report in accordance with subsection 3.11 hereof. In the event that previously scheduled Inventory having a value in excess of $200,000 in the aggregate ceases to be Eligible Inventory under the above-described criteria, and as a result there has been a material net decrease in the aggregate amount of Eligible Inventory since that last reported in the preceding Collateral Report, the Borrower experiencing such decrease Representative shall notify Agent and each Lender thereof immediately promptly after such any Borrower has obtained knowledge thereof.

Eligible Inventory. With respect to the Borrower and AEL, finished goods and piece goods owned by the Borrower or, ONLY with respect to finished goods and piece goods inventory located in Hong Kong, AEL or the Borrower if the Borrower has taken all steps requested by the Facility Agent to grant to the Facility Agent, for the benefit of the Agents and the Lenders, a first-priority perfected charge over the assets of the Borrower located in Hong Kong, pursuant to such documentation (including, without limitation, a debenture, corporate authority documentation, and one or more legal opinion(s)) as shall have the sole rightbe satisfactory, in form and substance, to the Facility Agent; PROVIDED that Eligible Inventory shall not include any inventory (a) held on consignment, or not otherwise owned by the Borrower or AEL or of a type no longer sold by the Borrower, (b) which has been returned by a customer or is damaged or subject to any legal encumbrance other than Permitted Liens, (c) which (i) if such goods are located in the United States, is not in the possession of the Borrower or any of its sole discretionSubsidiaries unless the Facility Agent has received a waiver from the party in possession of such inventory in form and substance reasonably satisfactory to the Facility Agent or (ii) if such goods are in transit, with respect to which all documents of title relating to such Inventory have not been consigned to the Facility Agent in Good Faith a manner reasonably acceptable to determine the Facility Agent and the Facility Agent or an Approved Customs Broker is not in possession of all documents of title relating to such goods, (d) which Inventory is eligible held by the Borrower or any of its Subsidiaries on property leased by the Borrower or any of its Subsidiaries, unless the Facility Agent has received a waiver from the lessor of such leased property and, if any, sublessor thereof in form and substance reasonably satisfactory to the Facility Agent, (e) as to which the security interest of the Facility Agent has not been duly perfected under applicable local law, (f) which has been shipped to a customer of the Borrower or any of its Subsidiaries regardless of whether such shipment is on a consignment basis, (g) which the Facility Agent reasonably deems to be obsolete or not marketable or otherwise does not consider "Eligible Inventory"). Without limiting Agent's discretion, the following Inventory shall not be Eligible Inventory: (ih) Inventory which is obsoletereasonably deemed by the Facility Agent, not in good conditionbased upon reasonable credit, commercial, accounting or not either currently usable or currently salable in the ordinary course of such Borrower's business; (ii) Inventory which Agent determines, in the exercise of Agent's sole discretion and in accordance with Agent's customary business practicesother considerations, to be unacceptable due to agefor inclusion in Eligible Inventory, type, category and/or quantity; or (iiii) Inventory which is not subject owned by the Borrower and located in Hong Kong unless the Borrower has taken all steps requested by the Facility Agent to internal control and management procedures acceptable grant to the Facility Agent, for the benefit of the Agents and the Lenders, a first-priority perfected charge over the assets of the Borrower located in Agent's sole discretion; Hong Kong, pursuant to such documentation (ivincluding, without limitation, a debenture, corporate authority documentation, and one or more legal opinion(s)) Inventory with respect to which Agent does not have a first priority and valid fully perfected security interest; (v) Inventory of a Borrower which is stored or placed with a baileeas shall be satisfactory, warehouseman, supplier, lessor or similar party other than Inventory with warehousemen, bailees or lessors as to which such Borrower has notified Agent in writing and which have signed an agreement in favor of Agent in form and substance satisfactory substance, to the Facility Agent; (vi) Inventory delivered to a Borrower on consignment; (vii) Inventory sold by a Borrower on consignment, other than such Inventory consisting of railcar wheels furnished on consignment (each, a "Permitted Consignment"), provided that (a) such Borrower has notified Agent in writing of such consignment and the location thereof, (b) Agent has received a written agreement signed by the consignor thereof as to Agent's rights in and to such Inventory which agreement is in form and substance satisfactory to Agent, and (c) the amount (valued as provided in Subsection 2.4) of such Inventory does not exceed $1,500,000 in the aggregate for all Borrowers; (viii) Inventory constituting supplies; and (ix) Inventory which is not located at one of the locations designated on Schedule 6.5 (other than Permitted Consignments). In the event that previously scheduled Inventory ceases to be Eligible Inventory under the above-described criteria, and as a result there has been a material net decrease in the aggregate amount of Eligible Inventory since that last reported in the preceding Collateral Report, the Borrower experiencing such decrease shall notify Agent and each Lender thereof immediately after such Borrower has obtained knowledge thereof.

Eligible Inventory. Agent ELIGIBLE INVENTORY" shall have consist of all of the sole rightInventory of Borrower, in its sole discretion, in Good Faith to determine which Inventory is eligible (except the "Eligible Inventory"). Without limiting Agent's discretion, the following Inventory shall not be Eligible Inventoryfollowing: (ia) work in process; (b) Inventory which is damaged, obsolete, not in good condition, or not either currently usable or currently salable saleable in the ordinary course of such Borrower's businessbusiness as reasonably determined by Agent; (iic) Inventory which Agent reasonably determines, in the exercise of Agent's sole discretion and or which in accordance with AgentBorrower's customary business practices, to be is unacceptable due to age, type, category and/or quantity; (iii) , including any Inventory which is not subject to internal control and management procedures acceptable to Agent, in Agentexcess of a one (1) year's sole discretionsupply or is otherwise slow-moving; (ivd) Inventory with respect to which Agent does not have a first priority and valid valid, fully perfected security interestLien; (ve) Inventory of a Borrower which is stored or placed with a bailee, warehouseman, supplier, lessor or similar party other than Inventory with warehousemen, bailees or lessors as to which such Borrower has notified Agent in writing and which have signed an agreement in favor of Agent in form and substance satisfactory to Agent; (vi) Inventory delivered to a Borrower on consignment; (vii) Inventory sold by a Borrower on consignment, other than such Inventory consisting of railcar wheels furnished packaging or supplies; (f) Inventory in the possession of Borrower but not owned by Borrower; (g) Inventory produced in violation of the Fair Labor Standards Act and subject to the so-called "hot goods" provision contained in Title 29 U.S.C. Section 215(a)(1); (h) Inventory which is on consignment (eachor is located at a place other than the places of business and collateral locations of Borrower listed on SCHEDULE 11.29; provided that, subject to SECTION 11.24, in the case of leased or bailment locations listed on SCHEDULE 11.29, no Inventory located at any such location shall be Eligible Inventory until the applicable landlord or bailee has executed a "Permitted Consignment"), provided that (a) such Borrower has notified Agent in writing of such consignment and the location thereof, (b) Agent has received a written agreement signed by the consignor thereof as to Agent's rights in and to such Inventory which agreement is lien waiver in form and substance satisfactory to Agent, and including Inventory in transit; (ci) Inventory consisting of finished goods which do not meet the amount (valued as provided in Subsection 2.4) specifications of the purchase order for which such Inventory does not exceed $1,500,000 in the aggregate for all Borrowers; (viii) Inventory constituting supplieswas produced; and (ixj) Inventory which is not located at one of fails to meet the locations designated on Schedule 6.5 (other than Permitted Consignments). In the event that previously scheduled Inventory ceases to be Eligible Inventory under the above-described criteriastandards imposed by any governmental agency, and as a result there has been a material net decrease in the aggregate amount of Eligible Inventory since that last reported in the preceding Collateral Reportor department or division thereof, the Borrower experiencing having regulatory authority over such decrease shall notify Agent and each Lender thereof immediately after such Borrower has obtained knowledge thereofgoods, their use and/or sale.

Eligible Inventory. Agent shall have With respect to the sole rightBorrower or any of its ------------------ Subsidiaries, finished goods and work in its sole discretion, in Good Faith to determine which Inventory is eligible (progress and raw materials owned by the "Borrower or such Subsidiary; provided that Eligible Inventory"). Without limiting Agent's discretion, the following Inventory shall not be Eligible Inventory: include -------- any inventory (i) Inventory which is obsolete, not in good conditionheld on consignment, or not either currently usable otherwise owned by the Borrower or currently salable in such Subsidiary, or of a type no longer sold by the ordinary course of Borrower or such Borrower's business; Subsidiary, (ii) Inventory which Agent determineshas been returned by a customer and is damaged or subject to any legal encumbrance other than Permitted Liens, in the exercise of Agent's sole discretion and in accordance with Agent's customary business practices, to be unacceptable due to age, type, category and/or quantity; (iii) Inventory which is not subject to internal control in the possession of the Borrower or such Subsidiary unless (A) the Loan and management procedures acceptable to Agent, Collateral Agent has received a waiver from the party in Agent's sole discretion; (iv) Inventory with respect to which Agent does not have a first priority and valid fully perfected security interest; (v) Inventory possession of a Borrower which is stored or placed with a bailee, warehouseman, supplier, lessor or similar party other than Inventory with warehousemen, bailees or lessors as to which such Borrower has notified Agent in writing and which have signed an agreement in favor of Agent inventory in form and substance satisfactory to Agent; the Loan and Collateral Agent or (vi) Inventory delivered to a Borrower on consignment; (vii) Inventory sold by a Borrower on consignment, other than such Inventory consisting of railcar wheels furnished on consignment (each, a "Permitted Consignment"), provided that (aB) such Borrower has notified Agent in writing of such consignment and the location thereofinventory is In-Transit Inventory, (biv) which is held by the Borrower or such Subsidiary on property leased by the Borrower or a Subsidiary, unless the Loan and Collateral Agent has received a written agreement signed by waiver from the consignor lessor of such leased property and, if any, sublessor thereof as to Agent's rights in and to such Inventory which agreement is in form and substance satisfactory to the Loan and Collateral Agent, (v) as to which (other than with the case of In- Transit Inventory) appropriate Uniform Commercial Code financing statements showing the Borrower or such Subsidiary as debtor and (c) the amount (valued Loan and Collateral Agent as provided in Subsection 2.4) of such Inventory does secured party have not exceed $1,500,000 been filed in the aggregate for all Borrowers; proper filing office or offices in order to perfect the Loan and Collateral Agent's security interest therein, (vi) which has been shipped to a customer of the Borrower or such Subsidiary regardless of whether such shipment is on a consignment basis, (vii) which, other than In-Transit Inventory, is not located within the United States of America, (viii) Inventory constituting supplies; which the Loan and Collateral Agent reasonably deem to be not marketable, (ix) Inventory which is scrap inventory, held coils (i.e. coils not located used for initial orders) in excess of $1,000,000 at one any time, and "Other Inventory" as classified by the Borrower on its financial statements as of the locations designated on Schedule 6.5 Balance Statement Date, or (other than Permitted Consignments). In the event that previously scheduled Inventory ceases to be Eligible Inventory under the above-described criteria, and as a result there x) which has been a material net decrease in the aggregate amount of Eligible Inventory since that last reported in the preceding Collateral Report, owned by the Borrower experiencing or such decrease shall notify Agent and each Lender thereof immediately after such Borrower has obtained knowledge thereofSubsidiary for more than one (1) year.

Eligible Inventory. Agent shall have With respect to the sole rightBorrower or any of its Subsidiaries, finished goods, work in its sole discretion, in Good Faith to determine which Inventory is eligible (progress and raw materials and component parts inventory owned by the "Borrower or such Subsidiary; provided that Eligible Inventory"). Without limiting Agent's discretion, the following Inventory shall not be Eligible Inventory: include any inventory (i) Inventory which is obsolete, not in good conditionheld on consignment, or not either currently usable otherwise owned by the Borrower or currently salable such Subsidiary, or of a type no longer sold by the Borrower or such Subsidiary, (ii) which has been returned by a customer and not saleable in the ordinary course of such the Borrower's business; (ii) Inventory which Agent determinesbusiness or is damaged or subject to any legal encumbrance other than Permitted Liens, in the exercise of Agent's sole discretion and in accordance with Agent's customary business practices, to be unacceptable due to age, type, category and/or quantity; (iii) Inventory which is not subject to internal control and management procedures acceptable to Agent, in Agent's sole discretion; (iv) Inventory with respect to which the possession of the Borrower or such Subsidiary unless the Agent does not have has received a first priority and valid fully perfected security interest; (v) Inventory waiver from the party in possession of a Borrower which is stored or placed with a bailee, warehouseman, supplier, lessor or similar party other than Inventory with warehousemen, bailees or lessors as to which such Borrower has notified Agent in writing and which have signed an agreement in favor of Agent inventory in form and substance satisfactory to the Agent; (vi) Inventory delivered to a Borrower on consignment; (vii) Inventory sold by a Borrower on consignment, other than such Inventory consisting of railcar wheels furnished on consignment (each, a "Permitted Consignment"), provided that (a) such Borrower has notified Agent in writing of such consignment and the location thereof, (biv) which is held by the Borrower or such Subsidiary on property leased by the Borrower or a Subsidiary, unless the Agent has received a written agreement signed by waiver from the consignor lessor of such leased property and, if any, sublessor thereof as to Agent's rights in and to such Inventory which agreement is in form and substance satisfactory to the Agent, (v) as to which appropriate Uniform Commercial Code financing statements showing the Borrower or such Subsidiary as debtor and (c) the amount (valued Agent as provided in Subsection 2.4) of such Inventory does secured party have not exceed $1,500,000 been filed in the aggregate for all Borrowers; proper filing office or offices in order to perfect the Agent's security interest therein, (viiivi) Inventory constituting supplies; and which has been shipped to a customer of the Borrower or such Subsidiary regardless of whether such shipment is on a consignment basis, (ixvii) Inventory which is not located at one within the United States of America, or (viii) which the locations designated on Schedule 6.5 Majority Banks reasonably deem to be obsolete or not marketable. Employee Benefit Plan. Any employee benefit plan within the meaning of (S)3(3) of ERISA maintained of contributed to by the Borrower or any ERISA Affiliate, other than Permitted Consignments)a Multiemployer Plan. In the event that previously scheduled Inventory ceases Environmental Laws. Any judgment, decree, order, law, license, rule or regulation pertaining to be Eligible Inventory environmental matters, including without limitation, those arising under the above-described criteria, Resource Conservation and as a result there has been a material net decrease in the aggregate amount of Eligible Inventory since that last reported in the preceding Collateral ReportRecovery Act ("RCRA"), the Borrower experiencing such decrease shall notify Agent Comprehensive Environmental Response, Compensation and each Lender thereof immediately after such Borrower has obtained knowledge thereofLiability Act of 1980 as amended ("CERCLA"), the Superfund Amendments and Reauthorization Act of 1986 ("XXXX"), the Federal Clean Water Act, the Federal Clean Air Act, the Toxic Substances Control Act, or any applicable state or local statutes, regulation, ordinance, order or decree relating to the environment.

Eligible Inventory. All of the Inventory owned by Borrower and reflected in the most recent Borrowing Base Certificate delivered by Borrower to Agent shall be "Eligible Inventory" for purposes of this Agreement, except any Inventory to which any of the exclusionary criteria set forth below applies. Agent shall have the sole right to establish or modify or eliminate Reserves against Eligible Inventory from time to time in its reasonable credit judgment. In addition, Agent reserves the right, at any time and from time to time after the Closing Date, to adjust any of the criteria set forth below, to establish new criteria (including, without limitation, determining that custom or excess Inventory is partially or fully ineligible) and to adjust advance rates with respect to Eligible Inventory, in its sole discretionreasonable credit judgment, subject to the approval of Requisite Tranche A Revolving Lenders in Good Faith to determine the case of changes in advance rates which Inventory is eligible (have the "effect of making more credit available. Eligible Inventory"). Without limiting Agent's discretion, the following Inventory shall not be Eligible include any Inventory of Borrower that: is not owned by Borrower free and clear of all Liens and rights 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 Permitted Encumbrances in favor of landlords, and bailees to the extent permitted in Section 5.9 hereof or Permitted Encumbrances in favor of carriers (subject to Reserves established by Agent in accordance with Section 5.9 hereof); (i) is not located on premises owned, leased or rented by Borrower and set forth in Disclosure Schedule (3.2), or (ii) is stored at a leased location not set forth on Disclosure Schedule 3.2, unless Agent has given its prior consent thereto and unless (x) a reasonably satisfactory landlord waiver has been delivered to Agent, (y) Reserves reasonably satisfactory to Agent have been established with respect thereto in accordance with statutory requirements or (z) Agent has agreed that Inventory at such location constitutes Eligible Inventory, or (iii) is stored with a bailee or warehouseman unless a reasonably satisfactory, acknowledged bailee letter has been received by Agent and Reserves reasonably satisfactory to Agent have been established with respect thereto, or (iv) is located at an owned location not set forth on Disclosure Schedule (3.2) subject to a mortgage 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 not set forth on Disclosure Schedule (3.2) if the aggregate book value of Inventory at any such location is less than $100,000 unless Agent has given its prior written consent with respect thereto under this Section 1.7(b)(v); is placed or accepted on consignment or is in transit, except for Eligible In-Transit Inventory in transit to locations of Credit Parties as to which Agent's Liens have been perfected at origin and destination; is covered by a negotiable document of title, unless such document has been delivered to Agent or custom broker as to whom a custom brokerage agreement in form and substance acceptable to Agent has been received with all necessary endorsements, free and clear of all Liens except those in favor of Agent and Lenders; is layaway, monogrammed, obsolete, shopworn, seconds, damaged or unfit for sale; consists of display items or packing or shipping materials, manufacturing supplies, work-in-process Inventory or replacement parts; consists of goods which have been returned by the buyer; is not in good condition, or not either currently usable or currently salable of a type held for sale in the ordinary course of such Borrower's business; (ii) Inventory which Agent determines, in the exercise of Agent's sole discretion and in accordance with Agent's customary business practices, to be unacceptable due to age, type, category and/or quantity; (iii) Inventory which is not subject to internal control and management procedures acceptable to Agent, in Agent's sole discretion; (iv) Inventory with respect to which Agent does not have a first priority and valid fully perfected security interest; (v) Inventory of a Borrower which is stored or placed with a bailee, warehouseman, supplier, lessor or similar party other than Inventory with warehousemen, bailees or lessors as to which such Borrower has notified Agent in writing and which have signed an agreement lien in favor of Agent on behalf of itself and Lenders, subject to Permitted Encumbrances; breaches any of the representations or warranties pertaining to Inventory set forth in form the Loan Documents; consists of any and substance satisfactory all internal expenses of Borrower or other expenses not included in landed costs as determined in accordance with GAAP whether or not classified by Borrower as "unicap"; consists of Hazardous Materials or goods that can be transported or sold only with licenses that are not readily available; is not covered by casualty insurance reasonably acceptable to Agent; (vi) any Inventory delivered located in any store of Borrower which has been closed for business for more than 20 days in any Fiscal Quarter; is located at 0000 Xxxxx 000xx Xxxxxx, Xxxx, Xxxxxxxxxx; is otherwise unacceptable to a Borrower on consignment; (vii) Inventory sold by a Borrower on consignment, other than such Inventory consisting of railcar wheels furnished on consignment (each, a "Permitted Consignment"), provided that (a) such Borrower has notified Agent in writing its reasonable credit judgment; does not meet standards, rules and regulations applicable to such goods for their use or sale imposed by any Person having regulatory authority over such matters; was produced in violation of such consignment Fair Labor Standards Act and subject to the location so- called "hot goods" provision contained in Title 29, Chapter 8, U.S.C.  215(a); or is not currently usable or merchantable and readily saleable to the public, at prices approximating at least the cost thereof, (b) Agent has received a written agreement signed by the consignor thereof as to Agent's rights in and to such Inventory which agreement is in form and substance satisfactory to Agent, and (c) the amount (valued as provided in Subsection 2.4) of such Inventory does not exceed $1,500,000 in the aggregate for all Borrowers; (viii) Inventory constituting supplies; and (ix) Inventory which is not located at one normal course of the locations designated on Schedule 6.5 (other than Permitted Consignments). In the event that previously scheduled Inventory ceases to be Eligible Inventory under the above-described criteria, and as a result there has been a material net decrease in the aggregate amount of Eligible Inventory since that last reported in the preceding Collateral Report, the Borrower experiencing such decrease shall notify Agent and each Lender thereof immediately after such Borrower has obtained knowledge thereofBorrower's business.

Eligible Inventory. Agent ELIGIBLE INVENTORY" shall have consist of all of the sole rightInventory of Borrower and each Guarantor, in its sole discretion, in Good Faith to determine which Inventory is eligible (except the "Eligible Inventory"). Without limiting Agent's discretion, the following Inventory shall not be Eligible Inventoryfollowing: (i) Inventory which is damaged, obsolete, not in good condition, or not either currently usable or currently salable saleable in the ordinary course of such BorrowerPerson's businessbusiness as determined by Agent; (ii) Inventory which Agent determines, in the exercise of Agent's sole discretion and or which in accordance with Agentsuch Person's customary business practices, to be is unacceptable due to age, type, category and/or quantity, including any Inventory which is in excess of a one (1) year's supply or is otherwise slow-moving; (iii) Inventory which is not subject to internal control and management procedures acceptable to Agent, in Agent's sole discretion; (iv) Inventory with respect to which Agent does not have a first priority and valid valid, fully perfected security interestLien; (iv) Inventory consisting of packaging or supplies; (v) Inventory in the possession of a Borrower such Person but not owned by such Person; (vi) Inventory 52 produced in violation of the Fair Labor Standards Act and subject to the so-called "hot goods" provision contained in Title 29 U.S.C. ss.215(a)(1); (vii) Inventory with respect to which any disclosure is requireD in the applicable Monthly Report or Borrowing Base Certificate in accordance with clauses (i) through (vi) of Section 9.5; (viii) Inventory which is stored on consignment or placed with is located at a bailee, warehouseman, supplier, lessor or similar party place other than the places of business and collateral locations of such Person listed on Schedule 11.29; provided that, subject to Section 11.24, in the case of leased or bailment locations listed on Schedule 11.29, no Inventory with warehousemen, bailees located at any such location shall be "Eligible Inventory" until the applicable landlord or lessors as to which such Borrower bailee has notified Agent in writing and which have signed an agreement in favor of Agent executed a lien waiver in form and substance satisfactory to Agent; (vi) Inventory delivered to a Borrower on consignment; (vii) Inventory sold by a Borrower on consignment, other than such Inventory consisting of railcar wheels furnished on consignment (each, a "Permitted Consignment"), provided that (a) such Borrower has notified Agent including Inventory in writing of such consignment and the location thereof, (b) Agent has received a written agreement signed by the consignor thereof as to Agent's rights in and to such Inventory which agreement is in form and substance satisfactory to Agent, and (c) the amount (valued as provided in Subsection 2.4) of such Inventory does not exceed $1,500,000 in the aggregate for all Borrowerstransit; (viii) Inventory constituting supplies; and (ix) Inventory consisting of finished goods which is do not located at one meet the specifications of the locations designated on Schedule 6.5 purchase order for which such Inventory was produced; (other than Permitted Consignments)x) Inventory which fails to meet the standards imposed by any governmental agency, or department or division thereof, having regulatory authority over such goods, its use and/or sale and (xi) work in process. In the event that Inventory previously scheduled Inventory in a Monthly Report or Borrowing Base Certificate ceases to be Eligible Inventory under Inventory, Borrower shall notify, or shall cause the above-described criteriaapplicable Guarantor to notify, and as a result there has been a material net decrease in the aggregate amount of Eligible Inventory since that last reported in the preceding Collateral Report, the Borrower experiencing such decrease shall notify Agent and each Lender thereof immediately after such Borrower has obtained knowledge thereofimmediately.

Eligible Inventory. Agent shall have the sole right, in its sole discretion, in Good Faith to determine which Inventory is eligible (the "Eligible Inventory"). Without limiting Agent's discretion" shall consist of all of the Inventory of a Borrower, except the following Inventory shall not be Eligible Inventoryfollowing: (i) work in process; (ii) Inventory which is damaged, obsolete, not in good condition, or not either currently usable or currently salable saleable in the ordinary course of such Borrower's businessbusiness as determined by Lender in its reasonable business discretion; (iiiii) Inventory which Agent Lender determines, in the exercise of Agent's sole discretion and or which in accordance with Agentsuch Borrower's customary business practices, to be is unacceptable due to age, type, category and/or quantity; (iii) , including any Inventory which is not subject to internal control and management procedures acceptable to Agent, in Agentexcess of a one (1) year's sole discretionsupply or is otherwise slow-moving; (iv) Inventory with respect to which Agent Lender does not have a first priority and valid valid, fully perfected security interestLien except; (v) Inventory consisting of a packaging or supplies; (vi) Inventory in the possession of such Borrower but not owned by such Borrower; (vii) Inventory produced in violation of the Fair Labor Standards Act and subject to the so-called "hot goods" provision contained in Title 29 U.S.C. ss.215(a)(1); (viii) Inventory with respect to which any disclosure is required in the applicable Monthly Report or Borrowing Base Certificate in accordance with Section 11.1(n); (ix) Inventory which is stored on consignment or placed with is located at a bailee, warehouseman, supplier, lessor or similar party place other than Inventory with warehousemen, bailees or lessors as to which the places of business and collateral locations of such Borrower listed on Schedule 10.29; provided that, subject to Section 11.24, in the case of leased or bailment locations listed on Schedule 10.29, no Inventory located at any such location shall be "Eligible Inventory" until the applicable landlord or bailee has notified Agent in writing and which have signed an agreement in favor of Agent executed a lien waiver in form and substance satisfactory to AgentLender) including Inventory in transit; (vix) Inventory delivered to a Borrower on consignment; (vii) Inventory sold by a Borrower on consignment, other than such Inventory consisting of railcar wheels furnished on consignment (each, a "Permitted Consignment"), provided that (a) such Borrower has notified Agent in writing finished goods which do not meet the specifications of such consignment and the location thereof, (b) Agent has received a written agreement signed by the consignor thereof as to Agent's rights in and to purchase order for which such Inventory which agreement is in form and substance satisfactory to Agent, and (c) the amount (valued as provided in Subsection 2.4) of such Inventory does not exceed $1,500,000 in the aggregate for all Borrowers; (viii) Inventory constituting supplieswas produced; and (ixxi) Inventory which is not located at one of fails to meet the locations designated on Schedule 6.5 (other than Permitted Consignments)standards imposed by any governmental agency, or department or division thereof, having regulatory authority over such goods, its use and/or sale. In the event that Inventory previously scheduled Inventory in a Monthly Report or Borrowing Base Certificate ceases to be Eligible Inventory under the above-described criteriaInventory, and as a result there has been a material net decrease in the aggregate amount of Eligible Inventory since that last reported in the preceding Collateral Report, the Borrower experiencing such decrease Borrowers shall notify Agent and each Lender thereof immediately after such Borrower has obtained knowledge thereofimmediately.

Eligible Inventory. Agent shall have The term ELIGIBLE INVENTORY means, at any date of determination thereof, the sole rightaggregate amount, as at such time, of INVENTORY owned by any or all of the BORROWERS which is acceptable to the LENDER to be included in the calculation of the BORROWING BASE. The criteria for eligibility may be fixed and revised by the LENDER from time to time in its sole discretionreasonable discretion in accordance with its internal credit policies, and any such determinations by the LENDER will be promptly communicated to the BORROWERS. INVENTORY in Good Faith no event shall be deemed to determine which Inventory is eligible (the "Eligible Inventory"). Without limiting Agent's discretion, the following Inventory shall not be Eligible InventoryELIGIBLE INVENTORY unless: (ia) Inventory which the LENDER has a first priority perfected security interest in its INVENTORY; (b) it is obsolete, not in good condition, or not either normally and currently usable or currently salable saleable in the ordinary course of such Borrower's businessbusiness of any or all of the BORROWERS; (iic) Inventory which Agent determinesit is not work in process; (d) it is located on the premises of a BORROWER; (e) it does not consist of defective, damaged, obsolete, returned or repossessed items of INVENTORY or used goods or goods taken in trade; (f) it does not consist of slow moving items or items determined by the exercise of Agent's LENDER in its sole discretion and in accordance with Agent's customary business practices, to be unacceptable due to age, type, category and/or quantitystale or dated merchandise; (iiig) Inventory which is it does not subject consist of packing or packaging materials, general supplies, catalogs, promotion materials, specialty inventory, inventory on loan to internal control and management procedures acceptable to Agentany PERSON, in Agentitems used as demonstrators, prototypes, or salesman's sole discretionsamples; (ivh) Inventory it does not consist of an item consigned to any or all of the BORROWERS or with respect to which Agent does not have any PERSON claims a first priority and valid fully perfected security interestlien; (vi) Inventory it has not been consigned by any or all of the BORROWERS to a Borrower which consignee; (j) it is stored or placed with a bailee, warehouseman, supplier, lessor or similar party not held by any PERSON (other than Inventory with warehousemen, bailees a BORROWER) or lessors as to which located upon any premises not owned in fee simple by a BORROWER unless such Borrower PERSON or the owner of such premises has notified Agent in writing and which have signed an executed a lien waiver agreement in favor of Agent in form and substance satisfactory to Agent; (vi) Inventory delivered to a Borrower on consignment; (vii) Inventory sold by a Borrower on consignment, other than such Inventory consisting of railcar wheels furnished on consignment (each, a "Permitted Consignment"), provided that (a) such Borrower has notified Agent in writing of such consignment and the location thereof, (b) Agent has received a written agreement signed by the consignor thereof as to Agent's rights in and to such Inventory which agreement is in form and substance satisfactory to Agent, and (c) the amount (valued as provided in Subsection 2.4) of such Inventory does not exceed $1,500,000 in the aggregate for all Borrowers; (viii) Inventory constituting suppliesLENDER; and (ixk) Inventory it has not been deemed unmerchantable or otherwise unsatisfactory by the LENDER for any reason, in the LENDERS sole discretion, by written notice to the BORROWERS. The value of any INVENTORY deemed to meet the criteria for ELIGIBLE INVENTORY shall be determined at the least of: (i) the BORROWERS net purchase or manufacturing cost; (ii) the lowest then-existing market price; (iii) the BORROWERS lowest selling price, less estimated expenses for packing, selling and delivery; or (iv) any price ceiling which is not located at one may be established by governmental order, regulation, or restriction. The LENDER shall be the discretionary judge of the locations designated on Schedule 6.5 (other than Permitted Consignments). In the event that previously scheduled Inventory ceases value of any INVENTORY, based upon such information as it deems, in its reasonable discretion, to be Eligible Inventory under the above-described criteria, and as a result there has been a material net decrease relevant or applicable in the aggregate amount of Eligible Inventory since making that last reported in the preceding Collateral Report, the Borrower experiencing such decrease shall notify Agent and each Lender thereof immediately after such Borrower has obtained knowledge thereofdetermination. Section 1.38.

Eligible Inventory. The Agent shall have the sole right, in its sole the exercise of the Agent’s reasonable discretion, in Good Faith to determine which whether Inventory is eligible for inclusion in the Borrowing Base at any particular time (the "such eligible inventory being referred to as “Eligible Inventory"”). Without limiting the Agent's discretion’s right to determine that Inventory does not constitute Eligible Inventory, the following Inventory shall not be Eligible Inventory: (a) Inventory reasonably determined by the Agent to be out-of-condition or otherwise unmerchantable, including, without limitation, Inventory deemed to be out-of-condition or otherwise unmerchantable by the United States Department of Agriculture, any state’s Department of Agriculture, or any other Governmental Authority having regulatory authority over Borrower or any of Borrower’s assets or activities; (b) Inventory for which a prepayment has been received; (c) Inventory in the possession of third parties, unless it is Inventory: (i) Inventory which is obsolete, not at a location disclosed to the Agent in good condition, accordance with Section 6.5 and/or Section 7.3 or not either currently usable or currently salable in the ordinary course of such Borrower's business; (ii) Inventory which Agent determinescovered by negotiable warehouse receipts or negotiable bills of lading issued by either: (A) a warehouseman licensed and bonded by the United States Department of Agriculture or any state’s Department of Agriculture, or (B) a recognized carrier having an office in the exercise of Agent's sole discretion United States and in accordance with a financial condition reasonably acceptable to the Agent's customary business practices, which receipts or bills of lading designate the Agent directly or by endorsement as the only Person to be unacceptable due which or to agethe order of which the warehouseman or carrier is May 27, type, category and/or quantity2004 legally obligated to deliver such Goods; (iiid) Inventory in which is not subject to internal control and management procedures acceptable to Agent, in Agent's sole discretion; (iv) Inventory with respect to which the Agent does not not, for any reason, have a first priority and valid fully perfected security interest; (v) Inventory of a Borrower which is stored or placed with a bailee, warehouseman, supplier, lessor or similar party other than Inventory with warehousemen, bailees or lessors as to which such Borrower has notified Agent in writing and which have signed an agreement in favor of Agent in form and substance satisfactory to Agent; (vi) Inventory delivered to a Borrower on consignment; (vii) Inventory sold by a Borrower on consignment, other than such Inventory consisting of railcar wheels furnished on consignment (each, a "Permitted Consignment"), provided that (a) such Borrower has notified Agent in writing of such consignment and the location thereof, (b) Agent has received a written agreement signed by the consignor thereof as to Agent's rights in and to such Inventory which agreement is in form and substance satisfactory to Agent, and (c) the amount (valued as provided in Subsection 2.4) of such Inventory does not exceed $1,500,000 in the aggregate for all Borrowers; (viii) Inventory constituting supplies; and (ixe) Inventory which is not located at one of the locations designated on Schedule 6.5 (other than Permitted Consignments). In the event that previously scheduled Inventory ceases to be Eligible Inventory under the above-described criteria, and as a result there has been a material net decrease in the aggregate amount Agent’s opinion may be subject to liens or conflicting claims of Eligible Inventory since that last reported ownership (except with regard to Producer Payables deducted in accordance with the preceding Collateral ReportBorrowing Base computation), the Borrower experiencing whether such decrease shall notify Agent and each Lender thereof immediately after such Borrower has obtained knowledge thereofliens or conflicting claims are asserted or could be asserted by any Person.

Eligible Inventory. Agent Based on the most recent Borrowing Base Certificate delivered by Borrower to Lender and on any other information available to Lender, Lender shall have determine which Inventory shall be deemed to be "Eligible Inventory" for purposes of determining the sole credit to be extended to Borrower. In determining whether any particular Inventory constitutes Eligible Inventory (and without limiting Lender's right to determine eligibility or ineligibility of any item of Collateral or its inclusion in the Borrowing Base), Lender shall not include Inventory that meets any of the criteria set forth in Schedule 1.6. Lender reserves the right, at any time and from time to time after the Closing Date, to adjust any such criteria, to establish new criteria, to adjust advance rates and to establish and modify reserves with respect to Eligible Inventory in its sole discretion, in Good Faith and Lender agrees to determine which Inventory is eligible (give notice to Borrower of each such change within 10 days thereof. Notwithstanding the "Eligible Inventory"). Without limiting Agent's discretiongenerality of the forgoing, the following Inventory shall not be Lender will establish reserves against Eligible Inventory: (a) on the Closing Date in an amount satisfactory to Lender with respect to each leased location for which (i) Inventory which the Collateral located thereon is obsolete, not in good condition, or not either currently usable or currently salable in the ordinary course of such Borrowersubject to a statutory landlord's business; Lien and (ii) Inventory Lender has not received a satisfactory landlord's agreement; and (b) on February 1, 1998 in an amount equal to one month's rent for each leased location for which Agent determines(i) all rent and related promissory notes due and owing to the landlord is not brought current (i.e., in no more than 30 days past due) by January 31, 1998, (ii) the exercise of Agent's sole discretion and in accordance with Agent's customary business practices, to be unacceptable due to age, type, category and/or quantity; (iii) Inventory which Collateral located thereon is not subject to internal control and management procedures acceptable to Agent, in Agenta statutory landlord's sole discretion; (iv) Inventory with respect to which Agent does not have a first priority and valid fully perfected security interest; (v) Inventory of a Borrower which is stored or placed with a bailee, warehouseman, supplier, lessor or similar party other than Inventory with warehousemen, bailees or lessors as to which such Borrower has notified Agent in writing and which have signed an agreement in favor of Agent in form and substance satisfactory to Agent; (vi) Inventory delivered to a Borrower on consignment; (vii) Inventory sold by a Borrower on consignment, other than such Inventory consisting of railcar wheels furnished on consignment (each, a "Permitted Consignment"), provided that (a) such Borrower has notified Agent in writing of such consignment and the location thereof, (b) Agent has received a written agreement signed by the consignor thereof as to Agent's rights in and to such Inventory which agreement is in form and substance satisfactory to AgentLien, and (ciii) the amount (valued as provided in Subsection 2.4) of such Inventory does Lender has not exceed $1,500,000 in the aggregate for all Borrowers; (viii) Inventory constituting supplies; and (ix) Inventory which is not located at one of the locations designated on Schedule 6.5 (other than Permitted Consignments). In the event that previously scheduled Inventory ceases to be Eligible Inventory under the above-described criteria, and as received a result there has been a material net decrease in the aggregate amount of Eligible Inventory since that last reported in the preceding Collateral Report, the Borrower experiencing such decrease shall notify Agent and each Lender thereof immediately after such Borrower has obtained knowledge thereofsatisfactory landlord's agreement.

Eligible Inventory. Agent Inventory owned by Borrower or a Borrowing Base Guarantor; provided that, no Inventory shall have be Eligible Inventory unless it (a) is finished goods, work-in-process or raw materials, and not packaging or shipping materials, labels, samples, display items, bags, replacement parts or manufacturing supplies; (b) is not held on consignment or approval or subject to any deposit or down payment; (c) is in new and saleable condition and is not damaged, defective, shopworn or otherwise unfit for sale; (d) is not slow-moving, obsolete or unmerchantable, and does not constitute returned or repossessed goods; (e) meets all standards imposed by any Governmental Authority and has not been acquired from an entity subject to Sanctions or any specially designated nationals list maintained by OFAC; (f) conforms with the sole rightcovenants and representations herein; (g) is subject to Agent’s duly perfected, first priority Lien, and no other Lien (other than non-consensual Permitted Liens arising by operation of law which are junior to the Agent’s Lien) unless an appropriate Reserve has been established in its Agent’s sole discretion; (h) is within the continental United States or Canada, is not in Good Faith transit (except Eligible In-Transit Inventory not to determine which Inventory exceed $20,000,000 at any time outstanding), and is eligible not consigned to any Person; (i) is not subject to any warehouse receipt or negotiable Document unless an appropriate Reserve has been established in Agent’s sole discretion; (j) is not subject to any License or other arrangement that restricts Borrower’s, any Borrowing Base Guarantor’s or Agent’s right to dispose of such Inventory, unless Agent has received an appropriate Lien Waiver; and (k) is not located on leased premises or in the "Eligible Inventory"). Without limiting possession of a warehouseman, processor, repairman, mechanic, shipper, freight forwarder or other Person, unless the lessor or such Person has delivered a Lien Waiver or an appropriate Availability Reserve has been established in Agent's ’s sole discretion; provided further, the following Inventory shall not be Eligible Inventory: Inventory if it is Inventory which Agent has (i) Inventory which determined in its Credit Judgment is obsolete, not in good condition, or not either currently usable or currently salable unacceptable for inclusion in the ordinary course of such Borrower's business; Aggregate Borrowing Base, Tranche A Borrowing Base and Tranche B Borrowing Base and (ii) Inventory which Agent determines, provided at least two (2) Business Days’ prior notice to Borrower (including telephonic or electronic notice promptly confirmed in the exercise of Agent's sole discretion and in accordance with Agent's customary business practices, to be unacceptable due to age, type, category and/or quantity; (iii) Inventory which is not subject to internal control and management procedures acceptable to Agent, in Agent's sole discretion; (iv) Inventory with respect to which Agent does not have a first priority and valid fully perfected security interest; (v) Inventory of a Borrower which is stored or placed with a bailee, warehouseman, supplier, lessor or similar party other than Inventory with warehousemen, bailees or lessors as to which such Borrower has notified Agent in writing and which have signed an agreement in favor of Agent in form and substance satisfactory to Agent; (vi) Inventory delivered to a Borrower on consignment; (vii) Inventory sold by a Borrower on consignment, other than such Inventory consisting of railcar wheels furnished on consignment (each, a "Permitted Consignment"), provided that (a) such Borrower has notified Agent in writing of such consignment and the location thereof, (b) Agent has received a written agreement signed by the consignor thereof as to Agent's rights in and to such Inventory which agreement is in form and substance satisfactory to Agent, and (c) the amount (valued as provided in Subsection 2.4writing) of such Inventory does not exceed $1,500,000 in the aggregate for all Borrowers; (viii) Inventory constituting supplies; and (ix) Inventory which is not located at one of the locations designated on Schedule 6.5 (other than Permitted Consignments). In the event that previously scheduled Inventory ceases to be Eligible Inventory under the above-described criteria, and as a result there has been a material net decrease in the aggregate amount of Eligible Inventory since that last reported in the preceding Collateral Report, the Borrower experiencing such decrease shall notify Agent and each Lender thereof immediately after such Borrower has obtained knowledge thereofdetermination.

Eligible Inventory. Agent shall have the sole right, in its sole discretion, in Good Faith to determine which Inventory is eligible (the "Eligible Inventory"). Without limiting Agent's discretion" shall consist of all of the Inventory, except the following Inventory shall not be Eligible Inventoryfollowing: (i) Inventory which is damaged, obsolete, not in good condition, or not either currently usable or currently salable saleable in the ordinary course of such the Borrower's businessbusiness as determined by the Agent; (ii) Inventory which the Agent determines, in the exercise of Agent's sole discretion and or which in accordance with Agentthe Borrower's customary business practices, to be is unacceptable due to age, type, category and/or quantity, including, without limitation, any Inventory which is in excess of a one (1) year's supply or is otherwise slow-moving; (iii) Inventory which is not subject to internal control and management procedures acceptable to Agent, in Agent's sole discretion; (iv) Inventory with respect to which the Agent does not have a first priority and valid valid, fully perfected security interestLien; (iv) Inventory consisting of packaging or supplies; (v) Inventory in the possession of a the Borrower but not owned by the Borrower; (vi) Inventory produced in violation of the Fair Labor Standards Act and subject to the so-called "hot goods" provision contained in Title 29 U.S.C. ss.215(a)(1); (vii) Inventory with respect to which any disclosure is required in the applicable Monthly Report or Borrowing Base Certificate in accordance with subsection 3.11; (viii) Inventory which is stored on consignment or placed with is located at a bailee, warehouseman, supplier, lessor or similar party place other than the places of business and collateral locations of the Borrower listed on Exhibit 8.6; provided that, subject to subsection 7.9, in the case of leased or bailment locations listed on Exhibit 8.6, no Inventory with warehousemen, bailees located at any such location shall be "Eligible Inventory" until the applicable landlord or lessors as to which such Borrower bailee has notified Agent in writing and which have signed an agreement in favor of Agent executed a lien waiver in form and substance satisfactory to the Agent) including, without limitation, Inventory in transit; (vi) Inventory delivered to a Borrower on consignment; (vii) Inventory sold by a Borrower on consignment, other than such Inventory consisting of railcar wheels furnished on consignment (each, a "Permitted Consignment"), provided that (a) such Borrower has notified Agent in writing of such consignment and the location thereof, (b) Agent has received a written agreement signed by the consignor thereof as to Agent's rights in and to such Inventory which agreement is in form and substance satisfactory to Agent, and (c) the amount (valued as provided in Subsection 2.4) of such Inventory does not exceed $1,500,000 in the aggregate for all Borrowers; (viii) Inventory constituting supplies; and (ix) Inventory consisting of finished goods which is do not located at one meet the specifications of the locations designated on Schedule 6.5 purchase order for which such Inventory was produced; and (other than Permitted Consignments)x) Inventory which fails to meet the standards imposed by any governmental agency, or department or division thereof, having regulatory authority over such goods, or their use and/or sale. In the event that the Borrower becomes aware that Inventory with a material value previously scheduled Inventory in a Monthly Report or Borrowing Base Certificate ceases to be Eligible Inventory under the above-described criteria, and as a result there has been a material net decrease in the aggregate amount of Eligible Inventory since that last reported in the preceding Collateral ReportInventory, the Borrower experiencing such decrease shall notify the Agent and each Lender thereof immediately after such Borrower has obtained knowledge thereofimmediately.

Eligible Inventory. Agent shall have The term AELIGIBLE INVENTORY@ means all INVENTORY owned by either or both of the sole right, BORROWERS which is acceptable to the LENDER to be included in the calculation of the BORROWING BASE. The criteria for eligibility may be fixed and revised by the LENDER from time to time in its sole discretion, . INVENTORY in Good Faith no event shall be deemed to determine which Inventory is be eligible (the "Eligible Inventory"). Without limiting Agent's discretion, the following Inventory shall not be Eligible Inventoryunless: (ia) Inventory the LENDER has a first priority perfected security interest in the INVENTORY; (b) no vender, supplier or other PERSON claims any security interest or lien in or to the INVENTORY which is obsolete, not in good condition, expressly subordinated to the LENDER'S securities interests or not either liens therein; (c) it is normally and currently usable or currently salable saleable in the ordinary course of such Borrower's businessbusiness of either or both of the BORROWERS; (iid) Inventory which Agent determinesit is not raw materials or work in process; (e) it is located on the premises of either of the BORROWERS; (f) it does not consist of obsolete, returned or repossessed items of INVENTORY or used goods or goods taken in trade; (g) it does not consist of slow moving items or items determined by the exercise of Agent's LENDER in its sole discretion and in accordance with Agent's customary business practices, to be unacceptable due to age, type, category and/or quantitystale or dated merchandise; (iiih) Inventory which is it does not subject to internal control and management procedures acceptable to Agentconsist of packing materials, in Agent's sole discretioncatalogs, promotion materials, items used as demonstrators, prototypes, or salesman=s samples; (ivi) Inventory it does not consist of an item consigned to either or both of the BORROWERS or with respect to which Agent does not have any PERSON claims a first priority and valid fully perfected security interestlien; (vj) Inventory it has not been consigned by either or both of the BORROWERS to a Borrower which consignee; (k) it has not been leased by any PERSON; (l) it is stored or placed with a bailee, warehouseman, supplier, lessor or similar party not held by any PERSON (other than Inventory with warehousemen, bailees the BORROWER) or lessors as to which located upon any premises not owned in fee simple by the BORROWER unless such Borrower PERSON or the owner of such premises has notified Agent in writing and which have signed an executed a lien waiver agreement in favor of Agent in form and substance satisfactory to Agent; (vi) Inventory delivered to a Borrower on consignment; (vii) Inventory sold by a Borrower on consignment, other than such Inventory consisting of railcar wheels furnished on consignment (each, a "Permitted Consignment"), provided that (a) such Borrower has notified Agent in writing of such consignment and the location thereof, (b) Agent has received a written agreement signed by the consignor thereof as to Agent's rights in and to such Inventory which agreement is in form and substance satisfactory to Agent, and (c) the amount (valued as provided in Subsection 2.4) of such Inventory does not exceed $1,500,000 in the aggregate for all Borrowers; (viii) Inventory constituting suppliesLENDER; and (ixm) Inventory which is it has not located at one been deemed unsatisfactory by the LENDER for any reason, in the LENDER=S sole discretion, by written notice to either or both of the locations designated on Schedule 6.5 BORROWERS. The value of any INVENTORY deemed to meet the criteria for ELIGIBLE INVENTORY shall be determined at the least of: (other than Permitted Consignments)i) the BORROWERS= net purchase or manufacturing cost; (ii) the lowest then-existing market price; (iii) the BORROWERS= lowest selling price, less estimated expenses for packing, selling and delivery; or (iv) any price ceiling which may be established by governmental order, regulation, or restriction. In The LENDER shall be the event that previously scheduled Inventory ceases discretionary judge of the value of any INVENTORY, based upon such information as it deems in its discretion to be Eligible Inventory under the above-described criteria, and as a result there has been a material net decrease relevant or applicable in the aggregate amount of Eligible Inventory since making that last reported in the preceding Collateral Report, the Borrower experiencing such decrease shall notify Agent and each Lender thereof immediately after such Borrower has obtained knowledge thereofdetermination.

Eligible Inventory. The Agent shall have the sole right, in its sole the exercise of the Agent’s reasonable discretion, in Good Faith to determine which whether Inventory is eligible for inclusion in the Borrowing Base at any particular time (the "such eligible inventory being referred to as “Eligible Inventory"”). Without limiting the Agent's discretion’s right to determine that Inventory does not constitute Eligible Inventory, the following Inventory shall not be Eligible Inventory: (a) Inventory reasonably determined by the Agent to be out-of-condition or otherwise unmerchantable, including, without limitation, Inventory deemed to be out-of-condition or otherwise unmerchantable by the United States Department of Agriculture, any state’s Department of Agriculture, or any other Governmental Authority having regulatory authority over Borrower or any of Borrower’s assets or activities; (b) Inventory for which a prepayment has been received; (c) Inventory in the possession of third parties, unless it is Inventory: (i) Inventory which is obsolete, not at a location disclosed to the Agent in good condition, accordance with Section 6.5 and/or Section 7.3 or not either currently usable or currently salable in the ordinary course of such Borrower's business; (ii) Inventory which Agent determinescovered by negotiable warehouse receipts or negotiable bills of lading issued by either: (A) a warehouseman licensed and bonded by the United States Department of Agriculture or any state’s Department of Agriculture, or (B) a recognized carrier having an office in the exercise of Agent's sole discretion United States and in accordance with a financial condition reasonably acceptable to the Agent's customary business practices, which receipts or bills of lading designate the Agent directly or by endorsement as the only Person to be unacceptable due which or to age, type, category and/or quantitythe order of which the warehouseman or carrier is legally obligated to deliver such Goods; (iiid) Inventory in which is not subject to internal control and management procedures acceptable to Agent, in Agent's sole discretion; (iv) Inventory with respect to which the Agent does not not, for any reason, have a first priority and valid fully perfected security interest; (v) Inventory of a Borrower which is stored or placed with a bailee, warehouseman, supplier, lessor or similar party other than Inventory with warehousemen, bailees or lessors as to which such Borrower has notified Agent in writing and which have signed an agreement in favor of Agent in form and substance satisfactory to Agent; (vi) Inventory delivered to a Borrower on consignment; (vii) Inventory sold by a Borrower on consignment, other than such Inventory consisting of railcar wheels furnished on consignment (each, a "Permitted Consignment"), provided that (a) such Borrower has notified Agent in writing of such consignment and the location thereof, (b) Agent has received a written agreement signed by the consignor thereof as to Agent's rights in and to such Inventory which agreement is in form and substance satisfactory to Agent, and (c) the amount (valued as provided in Subsection 2.4) of such Inventory does not exceed $1,500,000 in the aggregate for all Borrowers; (viii) Inventory constituting supplies; and (ixe) Inventory which is not located at one of the locations designated on Schedule 6.5 (other than Permitted Consignments). In the event that previously scheduled Inventory ceases to be Eligible Inventory under the above-described criteria, and as a result there has been a material net decrease in the aggregate amount Agent’s opinion may be subject to liens or conflicting claims of Eligible Inventory since that last reported ownership (except with regard to Producer Payables deducted in accordance with the preceding Collateral ReportBorrowing Base computation), the Borrower experiencing whether such decrease shall notify Agent and each Lender thereof immediately after such Borrower has obtained knowledge thereofliens or conflicting claims are asserted or could be asserted by any Person.

Eligible Inventory. Agent FBS Ag Credit shall have the sole right, in its sole the ------------------ exercise of FBS Ag Credit's reasonable discretion, in Good Faith to determine which whether Inventory is eligible for inclusion in the Borrowing Base at any particular time (the such eligible inventory being referred to as "Eligible InventoryELIGIBLE INVENTORY"). Without limiting AgentFBS Ag Credit's discretionright to determine that Inventory does not constitute Eligible Inventory, the following Inventory shall not be Eligible Inventory: (a) Inventory deemed to be out-of-condition or otherwise unmerchantable by the United States Department of Agriculture, any state's Department of Agriculture, or any other governmental agency or any department or division thereof having regulatory authority over Borrower or any of Borrower's assets or activities; (b) Inventory for which a prepayment has been received; (c) Inventory in the possession of third parties, unless it is Inventory: (i) at a location shown on Exhibit 3.B, for which FBS Ag Credit has received a bailee letter satisfactory ----------- to FBS Ag Credit, executed by such third party, or (ii) covered by negotiable warehouse receipts or negotiable bills of lading issued by either: (A) a warehouseman licensed and bonded by the United States Department of Agriculture or any state's Department of Agriculture, or (B) a recognized carrier having an office in the United States and in a financial condition reasonably acceptable to FBS Ag Credit, which receipts or bills of lading designate FBS Ag Credit directly or by endorsement as the only Person to which or to the order of which the warehouseman or carrier is legally obligated to deliver such goods; and (d) Inventory which is obsolete, not in good condition, or not either currently usable or currently salable in the ordinary course of such BorrowerFBS Ag Credit's business; (ii) Inventory which Agent determines, in the exercise of Agent's sole discretion and in accordance with Agent's customary business practices, to opinion may be unacceptable due to age, type, category and/or quantity; (iii) Inventory which is not subject to internal control and management procedures acceptable to Agentliens or conflicting claims of ownership, in Agent's sole discretion; (iv) Inventory with respect to which Agent does not have a first priority and valid fully perfected security interest; (v) Inventory of a Borrower which is stored whether such liens or placed with a bailee, warehouseman, supplier, lessor conflicting claims are asserted or similar party other than Inventory with warehousemen, bailees or lessors as to which such Borrower has notified Agent in writing and which have signed an agreement in favor of Agent in form and substance satisfactory to Agent; (vi) Inventory delivered to a Borrower on consignment; (vii) Inventory sold could be asserted by a Borrower on consignment, other than such Inventory consisting of railcar wheels furnished on consignment (each, a "Permitted Consignment"), provided that (a) such Borrower has notified Agent in writing of such consignment and the location thereof, (b) Agent has received a written agreement signed by the consignor thereof as to Agent's rights in and to such Inventory which agreement is in form and substance satisfactory to Agent, and (c) the amount (valued as provided in Subsection 2.4) of such Inventory does not exceed $1,500,000 in the aggregate for all Borrowers; (viii) Inventory constituting supplies; and (ix) Inventory which is not located at one of the locations designated on Schedule 6.5 (other than Permitted Consignments)any Person. In the event that Inventory previously scheduled Inventory included in the Borrowing Base ceases to be Eligible Inventory under Inventory, Borrower shall promptly pay to FBS Ag Credit an amount sufficient to ensure that the above-described criteriaLiabilities, and as a result there has been a material net decrease in other than the aggregate amount Liabilities evidenced by the Line of Eligible Inventory since that last reported in Credit Note, shall at no time exceed the preceding Collateral Report, the Borrower experiencing such decrease shall notify Agent and each Lender thereof immediately after such Borrower has obtained knowledge thereofthen current Borrowing Base.

Eligible Inventory. Agent shall have With respect to the sole rightBorrower, in its sole discretion, in Good Faith to determine which Inventory is eligible (finished goods inventory owned by the "Borrower; PROVIDED that Eligible Inventory"). Without limiting Agent's discretion, the following Inventory shall not be Eligible Inventory: include any inventory (a) held on consignment, or not otherwise owned by the Borrower, (b) which is subject to any legal encumbrance other than Permitted Liens, (c) which is not in the possession of the Borrower unless (i) Inventory which is obsolete, not the Agent has received a waiver from the party in good condition, or not either currently usable or currently salable in the ordinary course possession of such Borrower's business; (ii) Inventory which Agent determines, in the exercise of Agent's sole discretion and in accordance with Agent's customary business practices, to be unacceptable due to age, type, category and/or quantity; (iii) Inventory which is not subject to internal control and management procedures acceptable to Agent, in Agent's sole discretion; (iv) Inventory with respect to which Agent does not have a first priority and valid fully perfected security interest; (v) Inventory of a Borrower which is stored or placed with a bailee, warehouseman, supplier, lessor or similar party other than Inventory with warehousemen, bailees or lessors as to which such Borrower has notified Agent in writing and which have signed an agreement in favor of Agent inventory in form and substance reasonably satisfactory to the Agent or (ii) such inventory is in transit from one Permitted Inventory Location to another Permitted Inventory Location, and the total duration of such transit time is not more than two (2) Business Days, (d) which is subject to any lien, encumbrance or security interest which is prior to the liens granted to the Agent (other than landlord's or lessor's liens under leases to which the Borrower is a party provided no amount secured by such lien has become due and payable and not been paid), (e) as to which appropriate Uniform Commercial Code financing statements showing the Borrower as debtor and the Agent as secured party have not been filed in the proper filing office or offices in order to perfect the Agent; 's security interest therein, (vif) Inventory delivered which has been shipped to a customer of the Borrower regardless of whether such shipment is on consignment; (vii) Inventory sold by a Borrower on consignment, other than such Inventory consisting of railcar wheels furnished on consignment (each, a "Permitted Consignment"), provided that (a) such Borrower has notified Agent in writing of such consignment and the location thereofbasis, (bg) Agent has received a written agreement signed by the consignor thereof as to Agent's rights in and to such Inventory which agreement is in form and substance satisfactory to Agent, and (c) the amount (valued as provided in Subsection 2.4) of such Inventory does not exceed $1,500,000 in the aggregate for all Borrowers; (viii) Inventory constituting supplies; and (ix) Inventory which is not located at a Permitted Inventory Location unless such inventory is in transit from one Permitted Inventory Location to another Permitted Inventory Location, and the total duration of such transit time is not more than two (2) Business Days, (h) which the Borrower reasonably deems to be obsolete or not marketable consistent with its past practices, PROVIDED that such practices shall be subject to the review and approval of the locations designated on Schedule 6.5 Agent after the occurrence and during the continuance of an Event of Default, (other than Permitted Consignments). In i) which is Packaway Inventory to the event that previously scheduled Inventory ceases to be Eligible Inventory under the above-described criteria, and as a result there has been a material net decrease in the aggregate amount extent such inventory exceeds ten percent (10%) of Eligible Inventory since that last reported in the preceding Collateral Report, or (j) which has been owned by the Borrower experiencing such decrease shall notify Agent and each Lender thereof immediately after such Borrower has obtained knowledge thereoffor more than one (1) year (except to the extent permitted in clause (i) of this definition).

Eligible Inventory. Agent shall have With respect to the sole rightBorrower and its Subsidiaries, in all inventory owned by the Borrower and its sole discretion, in Good Faith to determine which Inventory is eligible (the "Subsidiaries; PROVIDED that Eligible Inventory"). Without limiting Agent's discretion, the following Inventory shall not be Eligible Inventory: include any inventory (ia) Inventory which is obsolete, not in good conditionheld on consignment, or not either currently usable otherwise owned by the Borrower or currently salable in such Subsidiary, or of a type no longer sold by the ordinary course Borrower or such Subsidiary, (b) which is damaged or subject to any legal encumbrance other than Permitted Liens, (c) which is held by the Borrower or a Subsidiary of the Borrower on property leased by the Borrower or such Subsidiary if the aggregate book value of all Inventory located on such property is greater than $1,000,000, unless the Agent has received a waiver from the lessor of such Borrower's business; (ii) Inventory which Agent determinesleased property and, in the exercise of Agent's sole discretion and in accordance with Agent's customary business practicesif any, to be unacceptable due to age, type, category and/or quantity; (iii) Inventory which is not subject to internal control and management procedures acceptable to Agent, in Agent's sole discretion; (iv) Inventory with respect to which Agent does not have a first priority and valid fully perfected security interest; (v) Inventory of a Borrower which is stored or placed with a bailee, warehouseman, supplier, lessor or similar party other than Inventory with warehousemen, bailees or lessors as to which such Borrower has notified Agent in writing and which have signed an agreement in favor of Agent sublessor thereof in form and substance satisfactory to the Agent; , (vid) Inventory delivered as to which, as applicable, (i) appropriate Uniform Commercial Code financing statements showing the Borrower or such Subsidiary as debtor and the Agent as secured party have not been filed in the proper filing office or offices in order to perfect the Agent's security interest therein, (ii) appropriate steps have not been taken by UK Holdings, the UK Subsidiary and/or the direct Subsidiaries of the UK Subsidiary (including, without limitation, the execution and delivery by each such Person of a debenture in favor of the Agent and the registration thereof with the Company's Registration Office pursuant to Section 395 of the Company's Act of 1955) to create a valid charge in favor of the Agent over all such Person's inventory, or (iii) appropriate financing statements showing the Canadian Subsidiary as debtor have not been filed in the proper filing office or offices under the Personal Property Security Act in order to perfect the Agent's security interest therein, or (e) which in the aggregate exceeds $3,000,000 and is located outside of the United States of America, England, Wales or the Dominion of Canada. EMPLOYEE BENEFIT PLAN. Any employee benefit plan within the meaning of SECTION 3(3) of ERISA maintained or contributed to by the Borrower on consignment; (vii) Inventory sold by a Borrower on consignmentor any ERISA Affiliate, other than such Inventory consisting of railcar wheels furnished on consignment (each, a "Permitted Consignment"), provided that (aMultiemployer Plan. ENVIRONMENTAL LAWS. As set forth in SECTION 8.18(A) such Borrower has notified Agent in writing of such consignment and the location thereof, (b) Agent has received a written agreement signed by the consignor thereof as to Agent's rights in and to such Inventory which agreement is in form and substance satisfactory to Agent, and (c) the amount (valued as provided in Subsection 2.4) of such Inventory does not exceed $1,500,000 in the aggregate for all Borrowers; (viii) Inventory constituting supplies; and (ix) Inventory which is not located at one of the locations designated on Schedule 6.5 (other than Permitted Consignments). In the event that previously scheduled Inventory ceases to be Eligible Inventory under the above-described criteria, and as a result there has been a material net decrease in the aggregate amount of Eligible Inventory since that last reported in the preceding Collateral Report, the Borrower experiencing such decrease shall notify Agent and each Lender thereof immediately after such Borrower has obtained knowledge thereofhereof.