Common use of Eligible Inventory Clause in Contracts

Eligible Inventory. Unless stated otherwise in paragraph 13 below, "Eligible Inventory" (a) shall be valued at the cost or present market value of Debtor's Inventory (as defined in the Michigan Uniform Commercial Code, as amended and in effect from time to time) determined in accordance with generally accepted accounting principles, consistently applied ("GAAP"), and (b) shall mean all of Debtor's Inventory which is in good and merchantable condition, which is not obsolete or discontinued, which would be properly classified as "work-in-process" or "raw materials" or as "finished goods inventory" under and in accordance with GAAP, provided, however, that "work-in-process" advances based on Inventory shall not exceed $350,000, and which is subject to a first priority, properly perfected security interest in favor of Bank, but excluding (1) consigned goods, inventory located outside the United States of America or Canada, (2) Inventory covered by or subject to a seller's right to repurchase, or any consensual or nonconsensual lien or security interest (including, without limitation, purchase money security interests) other than in favor of Bank, whether senior or junior to Bank's security interest, and (3) Inventory that Bank, acting in its reasonable discretion, after having notified Debtor, excludes. Inventory which is at any time Eligible Inventory, but which subsequently fails to meet any of the foregoing requirements, shall forthwith cease to be Eligible Inventory.

Eligible Inventory. Unless stated otherwise in paragraph 13 below, "Eligible Inventory" (a) shall be valued at the lesser of cost or present market value of Debtor's ’s Inventory (as defined in the Michigan Uniform Commercial Code, as amended and in effect from time to time) ), as determined in accordance with generally accepted accounting principles, consistently applied ("“GAAP"”), and as may be adjusted by Bank, in Bank's discretion, for age and seasonality or other factors affecting the value of such Inventory; and (b) shall mean all of Debtor's Inventory which is in good and merchantable condition, free from all material defects, which is not obsolete or discontinued, which would be properly classified as "work-in-process" or "“raw materials" ” or as "“finished goods inventory" ” under and in accordance with GAAP, provided, however, that "work-in-process" advances based on Inventory shall not exceed $350,000, and which is subject to a first priority, properly perfected security interest in favor of Bank, and which strictly complies with all Debtor's representations and warranties to Bank set forth in this Agreement, the Security Agreement and any other agreement(s) between Debtor and Bank, but excluding (1i) Debtor’s "work-in-process" inventory, supplies and packaging, consigned goods, inventory Inventory located outside the United States of America or Canada, (2ii) Inventory covered by or subject to a seller's right to repurchase, or any consensual or nonconsensual lien or security interest (including, without limitation, purchase money security interests) other than in favor of Bank, whether senior or junior to Bank's security interest, (iii) Inventory consisting of raw materials or purchased parts not in saleable form or condition, (iv) defective Inventory or Inventory under repair, (v) Inventory not insured and/or without a lender's loss payable provision in favor of Bank, (vi) Inventory located or stored at leased premises or with a bailee, warehouseman or other third party without Bank's prior written consent and unless a lessor's agreement, collateral access agreement, bailment agreement or other similar agreement in form and substance acceptable to Bank is in place, pursuant to which such lessor, bailee, warehouseman or other third party acknowledges Bank's security interest in such Inventory and permits Bank access to and possession of such Inventory, and (3vii) Inventory that Bank, acting in its reasonable sole discretion, after having notified Debtor, excludes. Inventory which is at any time Eligible Inventory, but which subsequently fails to meet any of the foregoing requirements, shall forthwith cease to be Eligible Inventory and shall be immediately deducted from the calculation of Eligible Inventory.

Eligible Inventory. Unless stated otherwise in paragraph 13 below, "Eligible Inventory" shall be Inventory owned by Borrower; provided that Eligible Inventory shall not include any inventory (a) shall be valued at the cost held on consignment, or present market value of Debtor's Inventory (as defined in the Michigan Uniform Commercial Codenot otherwise owned by Borrower, as amended and in effect from time to time) determined in accordance with generally accepted accounting principles, consistently applied ("GAAP"), and (b) shall mean all of Debtor's Inventory which is in good and merchantable conditiondamaged or is subject to any legal encumbrance other than Permitted Encumbrances, (c) which is not obsolete or discontinued, which would be properly classified as "work-in-process" or "raw materials" or as "finished goods inventory" under and in accordance with GAAP, provided, however, that "work-in-process" advances based on Inventory shall not exceed $350,000, and which is subject to the possession of Borrower unless (i) Agents have received a first priority, properly perfected security interest waiver from the party in favor of Bank, but excluding (1) consigned goods, inventory located outside the United States of America or Canada, (2) Inventory covered by or subject to a seller's right to repurchase, or any consensual or nonconsensual lien or security interest possession (including, without limitation, purchase money security interestswith respect to all consolidator locations) other than of such inventory in favor of Bank, whether senior form and substance reasonably satisfactory to Agents or junior (ii) such inventory is in transit from one Permitted Inventory Location to Bank's security interestanother Permitted Inventory Location, and the total duration of such transit time is not more than three (3) Inventory that BankBusiness Days, acting in its reasonable discretion, after having notified Debtor, excludes. Inventory (d) which is subject 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 the 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 any 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 of a type for sale in the ordinary course of Borrower's business, (j) which consists of Hazardous Materials or goods that can only be transported or sold with licenses that are not readily available, or (k) which is not covered by casualty insurance acceptable to Agents. General criteria for Eligible Inventory may be established and revised by Agents from time to time if Agents reasonably determine that there has been a substantive change in the 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 to the extent that Agents reasonably determine that (A) the liquidation value of the Eligible Inventory, but which subsequently fails to meet or any category thereof, has decreased , or (B) the nature of the foregoing requirementsinventory has changed. In determining whether to establish Reserves with respect to Eligible Inventory, shall forthwith cease to be Agents may consider events, conditions, contingencies or risks which are also considered in determining Eligible Inventory.

Eligible Inventory. Unless stated otherwise in paragraph 13 below, The second sentence of the definition of Eligible Inventory is hereby deleted and replaced with the following: "Eligible Inventory" (a) shall be valued at the cost or present market value of Debtor's Inventory (as defined in the Michigan Uniform Commercial Code, as amended and in effect from time to time) determined in accordance with generally accepted accounting principles, consistently applied ("GAAP"), and (b) shall mean all of Debtor's Inventory which is in good and merchantable condition, which is not obsolete or discontinued, which would be properly classified as "work-in-process" or "raw materials" or as "finished goods inventory" under and in accordance with GAAP, provided, however, that "work-in-process" advances based on Inventory shall not exceed $350,000, and which is subject to a first priority, properly perfected security interest in favor of Bank, but excluding (1) consigned goods, 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 Canadasuch 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 covered 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 been satisfied, (c) Lender shall have received (i) a Notification and Acknowledgment Agreement, duly authorized, executed and delivered by either or subject both of the Customs Broker and Freight Forwarder, as the case may be, handling the shipping and delivery of such Inventory, (ii) a copy of the certificate of marine cargo insurance in connection therewith in which it has been named as an additional insured and loss payee in a manner acceptable to a seller's right to repurchase, or any consensual or nonconsensual lien or security interest (including, without limitation, purchase money security interests) other than in favor of Bank, whether senior or junior to Bank's security interestLender, and (3iii) a copy of the invoice, packing slip and manifest with respect thereto, (d) such Inventory is not subject to any Letter of Credit Accommodation, (e) the aggregate amount of the Value of such Inventory that Bank, acting in its reasonable discretion, after having notified Debtor, excludes. is deemed to be Eligible Inventory which is shall not at any time Eligible Inventoryexceed $1,000,000, but which subsequently fails to meet any of the foregoing requirements, and (f) such Inventory shall forthwith cease to be Eligible Inventorynot have been in transit for more than sixty (60) days."

Eligible Inventory. Unless stated otherwise in paragraph 13 belowInventory owned by a Borrower that is deemed by Agent, "Eligible Inventory" (a) shall be valued at the cost or present market value of Debtor's Inventory (as defined in the Michigan Uniform Commercial Code, as amended and in effect from time to time) determined in accordance with generally accepted accounting principles, consistently applied ("GAAP"), and (b) shall mean all of Debtor's Inventory which is in good and merchantable condition, which is not obsolete or discontinued, which would be properly classified as "work-in-process" or "raw materials" or as "finished goods inventory" under and in accordance with GAAP, provided, however, that "work-in-process" advances based on Inventory shall not exceed $350,000, and which is subject to a first priority, properly perfected security interest in favor of Bank, but excluding (1) consigned goods, inventory located outside the United States of America or Canada, (2) Inventory covered by or subject to a seller's right to repurchase, or any consensual or nonconsensual lien or security interest (including, without limitation, purchase money security interests) other than in favor of Bank, whether senior or junior to Bank's security interest, and (3) Inventory that Bank, acting in its reasonable discretionPermitted Discretion, after having notified Debtor, excludes. Inventory which is at any time Eligible Inventory, but which subsequently fails to meet any of the foregoing requirements, shall forthwith cease to 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) not older than four years following December 31 of its vintage year for red wine or (ii) is four years or older following December 31 of its vintage year for red wine but does not exceed $5,000,000 in the aggregate in Value of such red wine; (d) is not held on consignment, nor subject to any deposit or down payment; (e) meets all standards imposed by any Governmental Authority; (f) conforms with the covenants and representations herein; (g) is subject to Agent’s duly perfected, first priority Lien, and no other Lien (other than (x) any Lien permitted pursuant to PACA or any other similar agricultural law or regulation with respect to which Agent has established a Grower’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); (h) is within the continental United States, is not in transit (except (x) between locations of Borrowers, or (y) to another location disclosed to Agent with respect to which 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 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 a target acquired in connection with a Permitted Acquisition, an appraisal and field examination with respect to such Inventory have been completed and are reasonably satisfactory to Agent (which appraisal and field examination may be conducted prior to the closing of such Permitted Acquisition).

Eligible Inventory. Unless stated otherwise Inventory owned by a Borrowing Base Obligor that Agent, in paragraph 13 belowits discretion, "deems to be Eligible Inventory" . Without limiting the foregoing, no Inventory shall be Eligible Inventory unless it (a) shall be valued at the cost is finished goods, “brite” goods (finished goods which have not been labeled), semi-finished frozen goods or present market value of Debtor's Inventory can, can stock and plastic container raw materials (as defined in the Michigan Uniform Commercial Code, as amended and in effect from time to time) determined in accordance with generally accepted accounting principles, consistently applied ("GAAP"other than Cold Storage Pears), and not work-in-process (other than “brite” goods and semi-finished frozen goods); (b) shall mean all of Debtor's Inventory which is not held on consignment, nor subject to any deposit or down payment; (c) is in good and merchantable condition, which saleable condition and is not damaged, defective, shopworn or otherwise unfit for sale; (d) is not slow-moving (i.e., older than two pack seasons), obsolete or discontinuedunmerchantable, and does not constitute returned or repossessed goods, unless such goods are suitable for resale; (e) meets all standards imposed by any Governmental Authority, has not been acquired from a Person subject to any Sanction or on any specially designated nationals list maintained by OFAC, and does not constitute hazardous materials under any Environmental Law; (f) conforms with the covenants and representations herein; (g) is subject to Agent’s duly perfected, first priority Lien, except a Permitted Lien; (h) is within the continental United States or Canada, is not in transit except between locations of Borrowing Base Obligors, 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 Borrowing Base Obligor’s or Agent’s right to dispose of such Inventory, unless Agent has received an appropriate Lien Waiver (other than in respect of Excluded License Agreements); (k) (i) is not located on leased premises or in the 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 Rent and Charges Reserve has been established, (ii) is not located at a facility owned by a Borrowing Base Obligor subject to a mortgage unless the mortgagee of such Real Estate shall have entered into a Mortgagee Consent, or (iii) is located on leased premises or in the possession of a warehouseman, processor, repairman, mechanic, shipper, freight forwarder or is located at a facility owned by a Borrowing Base Obligor but subject to a mortgage and for which would a Lien Waiver or Mortgagee Consent, as applicable, has not been obtained, provided that the amount of Inventory that may be properly classified as "work-in-process" or "raw materials" or as "finished goods inventory" Eligible Inventory under this clause (iii) of this clause (k) will not at any time exceed 10% of all Inventory of the Borrowing Base Obligors in the aggregate, subject to the maintenance of Rent and in accordance Charges Reserves with GAAPrespect thereto, providedit being understood, however, that "work-in-process" advances based on the Agent anticipates, without limiting the generality of the Agent’s discretion with respect to the maintenance of additional Rent and Charges Reserves, that the Rent and Charges Reserves will include an amount equal to the amount of rent, mortgage payments, fees and equivalent amounts that are payable by the Borrowing Base Obligors for a period of 90 days with respect to any location (A) referenced in this clause (iii) of this clause (k) and (B) for which the landlord, warehouseman or mortgagee with respect thereto has not waived or subordinated any rights it may have in the Collateral to the rights of the Agent; (l) has not been sold to any Borrowing Base Obligor; (m) was not purchased from a Person that has a pending PACA Claims asserted against a Borrowing Base Obligor or any Subsidiary at the time that the Eligible Inventory shall is being determined; and (n) is not exceed $350,000, and which is subject to a first priority, properly perfected security interest Lien in favor of Bank, but excluding (1) consigned goods, inventory located outside a seller of farm products or a secured creditor of a seller of farm products pursuant to the United States of America or Canada, (2) Inventory covered by or subject to a seller's right to repurchase, or any consensual or nonconsensual lien or security interest (including, without limitation, purchase money security interests) other than in favor of Bank, whether senior or junior to Bank's security interest, and (3) Inventory that Bank, acting in its reasonable discretion, after having notified Debtor, excludes. Inventory which is at any time Eligible Inventory, but which subsequently fails to meet any of the foregoing requirements, shall forthwith cease to be Eligible InventoryFood Security Act.

Eligible Inventory. Unless stated otherwise Based on the most recent Borrowing Base ------------------ Certificate delivered by Borrower to Revolving Credit Agent and on other information available to Revolving Credit Agent, Revolving Credit Agent shall in paragraph 13 below, its sole discretion determine which Inventory of Borrower shall be "Eligible -------- Inventory" for purposes of this Agreement. Revolving Credit Agent reserves the --------- right, at any time and from time to time after the Closing Date, to adjust any such criteria, to establish new criteria and to adjust advance rates with to Eligible Inventory in its sole discretion, subject to the approval of Requisite Lenders in the case of adjustments, or new criteria or changes in advance rates which have the effect of making more credit available. Without limiting the generality of the foregoing, no Inventory shall be Eligible Inventory unless: (a) shall be valued at the cost it is raw materials or present market value of Debtor's Inventory (as defined in the Michigan Uniform Commercial Code, as amended and in effect from time to time) determined in accordance with generally accepted accounting principles, consistently applied ("GAAP"), and finished goods; (b) shall mean all of Debtor's Inventory which it is in good good, new and merchantable saleable condition, which ; (c) it is not slow-moving, obsolete or discontinued, which would be properly classified as "work-in-process" or "raw materials" or as "finished goods inventory" under unmerchantable; (d) it meets all standards imposed by any Governmental Authority; (e) it conforms in all respects to the warranties and representations set forth in accordance with GAAP, provided, however, that "work-in-process" advances based on Inventory shall not exceed $350,000, this Agreement; (f) it is owned by Borrower and which is at all times subject to a Agent's duly perfected, first priority, properly perfected priority security interest and no other Lien except a Permitted Lien; (g) it is in Borrower's possession and control, situated at a location in compliance with the Agreement and is not in transit or outside the continental United States; (h) it is not covered by a negotiable document of title, unless such document has been delivered to Agent with all necessary endorsements, free and clear of all Liens except those in favor of Bank, but excluding Agent and Lenders; (1i) consigned goods, inventory located outside it does not consist of goods which have been returned by the United States buyer; (j) it consists of America goods held for sale or Canada, utilized in the ordinary course of Borrower's business; and (2k) Inventory it is covered by or subject casualty insurance acceptable to a seller's right Agent and to repurchase, or any consensual or nonconsensual lien or security interest (including, without limitation, purchase money security interests) other than in favor of Bank, whether senior or junior to Bank's security interest, and (3) Inventory that Bank, acting in its reasonable discretion, after having notified Debtor, excludes. Inventory which is at any time Eligible Inventory, but which subsequently fails to meet any of the foregoing requirements, shall forthwith cease to be Eligible InventoryRevolving Credit Agent.

Eligible Inventory. Unless stated otherwise in paragraph 13 below, "“Eligible Inventory" ” (a) shall be valued at the lesser of the cost or present market value of Debtor's ’s Inventory (as defined in the Michigan Uniform Commercial CodePersonal Property Security Act (Ontario), as amended and in effect from time to time) determined in accordance with generally accepted accounting principles, consistently applied ("“GAAP"”), and (b) shall mean all of Debtor's ’s Inventory which is in good and merchantable condition, which is not obsolete or discontinued, which would be properly classified as "work-in-process" or "“raw materials" ” or as "“finished goods inventory" Inventory” under and in accordance with GAAP, provided, however, that "work-in-process" advances based on Inventory shall not exceed $350,000, and which is subject to a first priority, properly perfected security interest in favor of Bank, but excluding (1) Debtor’s work-in-process Inventory, consigned goods, inventory located outside the United States of America or Canada, (2) Inventory covered by or subject to a seller's ’s right to repurchase, or any consensual or nonconsensual lien or security interest (including, without limitation, purchase money security interests) other than in favor of Bank, whether senior or junior to Bank's ’s security interest, (3) Inventory subject to creditors’ rights under Section 81.1 of the Bankruptcy and Insolvency Act (Canada), (4) Inventory stored, warehoused or located at a site for which Debtor has not provided to Bank a landlord, bailee or mortgagee waiver or similar agreement in form and substance acceptable to Bank, and (35) Inventory that Bank, acting in its reasonable sole discretion, after having notified Debtor, excludes. Inventory which is at any time Eligible Inventory, but which subsequently fails to meet any of the foregoing requirements, shall forthwith cease to be Eligible Inventory.

Eligible Inventory. Unless stated otherwise in paragraph 13 below, "Eligible Inventory" (a) shall be valued at the cost or present market value of Debtor's Inventory (as defined in the Michigan Uniform Commercial Code, as amended and in effect from time to time) determined in accordance with generally accepted accounting principles, consistently applied ("GAAP"), and (b) shall mean all Inventory other than the following: (A) Any item of Debtor's Inventory which is not in good and merchantable condition, or does not meet all standards imposed by any governmental agency, or department or division thereof, having regulatory authority over such goods, its use or sale, or is either currently unusable or currently unsalable in the ordinary course of Borrower's business, or is not otherwise acceptable to Lender due to age, type, category or quantity; (B) Any item of Inventory which is not obsolete located at one of the locations listed on Exhibit 3.3(B) attached hereto, is not subject to and covered by Lender's perfected security interest and is subject to any other lien, claim, encumbrance or discontinuedsecurity interest; (C) Any item of Inventory which has been consigned, sold or leased to any Person; (D) Any item of Inventory unless each of the warranties and representations set forth in Section 9.3 has been reaffirmed with respect such item of Inventory at the date that the most recent Inventory Report was delivered to Lender; and (E) Any item of Inventory which would be properly classified as "work-is work in-process" ; (F) Any item of Inventory located in Canada or "raw materials" or as "finished goods inventory" under and in accordance with GAAP, provided, however, that "work-in-process" advances based on Inventory shall not exceed $350,000, and which is subject to a first priority, properly perfected security interest in favor of Bank, but excluding (1) consigned goods, inventory located outside the United States Kingdom; (G) Any item of America or Canada, (2) Inventory covered by or subject to a seller's right to repurchase, or any consensual or nonconsensual lien or security interest (including, without limitation, purchase money security interests) other than in favor of Bank, whether senior or junior to Bank's security interest, and (3) Inventory that Bank, acting in its reasonable discretion, after having notified Debtor, excludes. Inventory which is at any time Eligible Slow Moving Inventory, but ; (H) Any item of Inventory which subsequently fails to meet any is courseware; (I) Any item of Inventory which is a sort of the foregoing requirementsFMST Simulator; and (J) Any item of Inventory which was purchased by Borrower in or as part of a "bulk" transfer or sale of assets unless Borrower, shall forthwith cease to be Eligible Inventoryand the seller of such item, have complied with all applicable bulk sales or bulk transfer laws.

Eligible Inventory. Unless stated otherwise Upon Borrower's delivery to Lender of an Inventory Report, Lender shall, in paragraph 13 belowits reasonable credit judgment, "determine which items of Inventory and Gaming Supply Inventory listed thereon are Eligible Inventory and Gaming Supply Eligible Inventory" . Without limiting Lender's discretion to make such determination, the following Inventory and Gaming Supply Inventory shall not be deemed to be Eligible Inventory and Gaming Supply Eligible Inventory: (aA) shall be valued at the cost or present market value of Debtor's Any Inventory (as defined in the Michigan Uniform Commercial Code, as amended and in effect from time to time) determined in accordance with generally accepted accounting principles, consistently applied ("GAAP"), and (b) shall mean all of Debtor's any Gaming Supply Inventory which is slow moving, is not in good and merchantable condition, which does not meet all standards imposed by any governmental agency, or department or division thereof, having regulatory authority over such goods (including the use or sale thereof), is not obsolete currently useable or discontinuedcurrently saleable in the ordinary course of Borrower's or Gaming Supply's businesses, or is otherwise unacceptable to Lender due to age, type, category or quantity; (B) Any Inventory and any Gaming Supply Inventory which would be properly classified as "work-in-process" (i) is not located at one of the locations listed on Exhibit 3.2(B) attached hereto, (ii) is in the possession of, or "raw materials" located on the premises of, a bailee, warehouseman, processor, vendor or as "finished goods inventory" under other third party, unless Borrower has delivered to Lender an appropriate waiver from such party in form and in accordance with GAAPsubstance satisfactory to Lender, provided, however, that "work-in-process" advances based on Inventory shall (iii) is not exceed $350,000, subject to and which covered by Lender's security interest or (iv) is subject to a first priorityany other lien, properly perfected claim, encumbrance or security interest other than liens, claims, encumbrances or security interests in favor of Bank, but excluding (1) consigned goods, inventory located outside the United States of America or Canada, (2) Inventory covered by or NatWest and subject to the terms of the Intercreditor Agreement; (C) Any Inventory and any Gaming Supply Inventory which has been consigned, bailed, sold or leased to any Person; (D) Any Inventory and Gaming Supply Inventory with respect to which the representations and warranties set forth in Section 9.3 have not been reaffirmed and ratified as of the date of the most recent Inventory Report delivered to Lender; (E) Any Inventory and any Gaming Supply Inventory which was purchased by Borrower or Gaming Supply in or as part of a seller's right to repurchase"bulk" transfer or sale of assets unless Borrower or Gaming Supply, or any consensual or nonconsensual lien or security interest (including, without limitation, purchase money security interests) other than in favor of Bank, whether senior or junior to Bank's security interestas applicable, and (3) the seller of such Inventory that Bank, acting in its reasonable discretion, after having notified Debtor, excludes. or Gaming Supply Inventory which is at any time Eligible Inventory, but which subsequently fails to meet any of the foregoing requirements, shall forthwith cease to be Eligible Inventory.have complied with all applicable bulk transfer laws;

Eligible Inventory. Unless stated otherwise Inventory owned by a Borrower that Lender, in paragraph 13 belowits Permitted Discretion, "deems to be Eligible Inventory" . Without limiting the foregoing, no Inventory shall be Eligible Inventory unless it (a) shall be valued at the cost is finished goods or present market value of Debtor's Inventory (as defined in the Michigan Uniform Commercial Code, as amended and in effect from time to time) determined in accordance with generally accepted accounting principles, consistently applied ("GAAP")raw materials, and (b) shall mean all of Debtor's Inventory which is in good and merchantable condition, which is not obsolete or discontinued, which would be properly classified as "work-in-process" , packaging or "raw shipping materials" , labels, samples, display items, bags, replacement parts or as "finished goods inventory" under manufacturing supplies; (b) is not held on consignment, nor subject to any deposit or down payment; (c) is in new and in accordance with GAAPsaleable condition and is not damaged, provideddefective, howevershopworn or otherwise unfit for sale; (d) is not slow-moving, that "work-in-process" advances based on Inventory shall not exceed $350,000perishable, obsolete or unmerchantable, and which does not constitute returned or repossessed goods; (e) meets all standards imposed by any Governmental Authority, has not been acquired from an entity that is the target of any Sanction or on any specially designated nationals list maintained by OFAC, and does not constitute hazardous materials under any Environmental Law; (f) conforms, in all material respects, with the covenants and representations herein; (g) is subject to a Lender’s duly perfected, first prioritypriority Lien, properly perfected security interest in favor of Bank, but excluding and no other Lien other than Permitted Liens that do not have priority over the Lender’s Lien; (1h) consigned goods, inventory located outside is within the continental United States of America or Canada, is not in transit except between locations of Borrowers, and is not consigned to any Person; (2i) Inventory covered by or is not subject to a seller's any warehouse receipt or negotiable Document; (j) is not subject to any License or other arrangement that restricts such Borrower’s or Lender’s right to repurchasedispose of such Inventory, unless Lender has received an appropriate Lien Waiver; (k) is not located on leased premises or any consensual in the possession of a warehouseman, processor, repairman, mechanic, shipper, freight forwarder or nonconsensual lien other Person, unless the lessor or security interest (including, without limitation, purchase money security interests) other than in favor of Bank, whether senior such Person has delivered a Lien Waiver or junior to Bank's security interest, an appropriate Rent and Charges Reserve has been established; and (3l) Inventory that Bank, acting is reflected in its reasonable discretion, after having notified Debtor, excludes. Inventory which is at any time Eligible Inventory, but which subsequently fails to meet any the details of the foregoing requirements, shall forthwith cease to be Eligible Inventorya current perpetual inventory report.

Eligible Inventory. Unless stated otherwise Upon Borrowers' delivery to Lender of an Inventory Certification Report, Lender shall determine, in paragraph 13 belowits reasonable business judgment, which Inventory listed thereon is "Eligible Inventory." In making this determination, Lender will consider the following requirements: (aA) shall be valued at With respect to Vita, the cost or present market value of Debtor's Inventory (as defined in the Michigan Uniform Commercial Code, as amended and in effect from time to time) determined in accordance with generally accepted accounting principles, consistently applied ("GAAP"), and (b) shall mean all of Debtor's Inventory which is in good and merchantable condition, which is not obsolete or discontinued, which would be properly classified as "work-in-process" or "raw materials" or as "constitutes finished goods inventory" under and in accordance with GAAP, providedor raw fish (excluding, however, that "work-in-process" advances based ingredients (other than raw fish) used to process finished goods Inventory)), meets all standards imposed by any governmental agency, or department or division thereof, having regulatory authority over such goods, is currently saleable in the ordinary course of Vita's business and is not otherwise unacceptable to Lender due to age, type, category and/or quantity; (B) With respect to Virginia Honey, the Inventory is in good condition, meets all standards imposed by any governmental agency, or department or division thereof, having regulatory authority over such goods, and is not otherwise unacceptable to Lender due to age, type, category and/or quantity; (C) The Inventory is located at one of the locations listed on Schedule 5.6 attached hereto, is subject to and covered by Lender's perfected security interest and is not subject to any other lien, claim, encumbrance or security interest other than Permitted Liens (all Inventory at other locations shall not exceed $350,000, and be considered to be Eligible Inventory); (D) The Inventory has not been consigned to a customer of a Borrower (Inventory which is subject to a first priority, properly perfected security interest in favor return due to expiration of Bank, but excluding code dates or due to being deemed "unwholesome" by the Account Debtor shall not be considered to be consigned Inventory); (1E) consigned goods, inventory located outside the United States of America or Canada, (2) Inventory covered by or subject to a seller's right to repurchase, or any consensual or nonconsensual lien or security interest (including, without limitation, purchase money security interests) other than in favor of Bank, whether senior or junior to Bank's security interest, and (3) Inventory that Bank, acting in its reasonable discretion, after having notified Debtor, excludes. Inventory which is at any time Eligible Inventory, but which subsequently fails to meet any Each of the foregoing requirements, shall forthwith cease warranties and representations set forth in Section 9.3 of this Agreement has been reaffirmed with respect thereto at the time the most recent Inventory Report was delivered to be Eligible InventoryLender; and (F) The Inventory was not purchased by a Borrower in or as part of a "bulk" transfer or sale of assets unless such Borrower has complied with all applicable bulk sales or bulk transfer laws.

Eligible Inventory. Unless stated otherwise in paragraph 13 belowInventory owned by Borrower or a Borrowing Base Guarantor; provided that, "no Inventory shall be Eligible Inventory" Inventory unless it (a) shall be valued at the cost or present market value of Debtor's Inventory (as defined in the Michigan Uniform Commercial Codeis finished goods, as amended and in effect from time to time) determined in accordance with generally accepted accounting principles, consistently applied ("GAAP"), and (b) shall mean all of Debtor's Inventory which is in good and merchantable condition, which is not obsolete or discontinued, which would be properly classified as "work-in-process" process or "raw materials" , and not packaging or as "finished goods inventory" under 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 covenants 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 accordance with GAAPAgent’s sole discretion; (h) is within the continental United States or Canada, providedis not in transit (except Eligible In-Transit Inventory not to exceed $20,000,000 at any time outstanding), howeverand is 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, that "work-in-process" advances based 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 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 sole discretion; provided further, Inventory shall not exceed $350,000be Eligible Inventory if it is Inventory which Agent has (i) determined in its Credit Judgment is unacceptable for inclusion in the Aggregate Borrowing Base, Tranche A Borrowing Base and which is subject to a first priority, properly perfected security interest in favor of Bank, but excluding Tranche B Borrowing Base and (1ii) consigned goods, inventory located outside the United States of America or Canada, provided at least two (2) Inventory covered by Business Days’ prior notice to Borrower (including telephonic or subject to a seller's right to repurchase, or any consensual or nonconsensual lien or security interest (including, without limitation, purchase money security interestselectronic notice promptly confirmed in writing) other than in favor of Bank, whether senior or junior to Bank's security interest, and (3) Inventory that Bank, acting in its reasonable discretion, after having notified Debtor, excludes. Inventory which is at any time Eligible Inventory, but which subsequently fails to meet any of the foregoing requirements, shall forthwith cease to be Eligible Inventorysuch determination.

Eligible Inventory. Unless stated otherwise in paragraph 13 below, "“Eligible Inventory" ” (a) shall be valued at the lesser of the cost or present market value of Debtor's ’s Inventory (as defined in the Michigan Uniform Commercial CodePersonal Property Security Act (Ontario), as amended and in effect from time to time) determined in accordance with generally accepted accounting principles, consistently applied ("“GAAP"”), and (b) shall mean all of Debtor's ’s Inventory which is in good and merchantable condition, which is not obsolete or discontinued, which would be properly classified as "“raw materials”, “finished goods Inventory”, or “work-in-process" or "raw materials" or as "finished goods inventory" process Inventory” under and in accordance with GAAP, provided, however, that "work-in-process" advances based on Inventory shall not exceed $350,000, and which is subject to a first priority, properly perfected security interest in favor of Bank, but excluding (1) consigned goods, inventory Inventory located outside the United States of America or Canada, (2) Inventory covered by or subject to a seller's ’s right to repurchase, or any consensual or nonconsensual lien or security interest (including, without limitation, purchase money security interests) other than in favor of Bank, whether senior or junior to Bank's ’s security interest, (3) Inventory subject to creditors’ rights under Section 81.1 of the Bankruptcy and Insolvency Act (Canada), (4) Inventory stored, warehoused or located at a site for which Debtor has not provided to Bank a landlord, bailee or mortgagee waiver or similar agreement in form and substance acceptable to Bank, and (35) Inventory that Bank, acting in its reasonable sole discretion, after having notified Debtor, excludes. Inventory which is at any time Eligible Inventory, but which subsequently fails to meet any of the foregoing requirements, shall forthwith cease to be Eligible Inventory.

Eligible Inventory. Unless stated otherwise Inventory owned by a Borrower that Lender, in paragraph 13 belowits discretion, "deems to be Eligible Inventory" . Without limiting the foregoing, no Inventory shall be Eligible Inventory unless it (a) shall be valued at the cost is finished goods and not raw materials, or present market value of Debtor's Inventory (as defined in the Michigan Uniform Commercial Code, as amended and in effect from time to time) determined in accordance with generally accepted accounting principles, consistently applied ("GAAP"), and (b) shall mean all of Debtor's Inventory which is in good and merchantable condition, which is not obsolete or discontinued, which would be properly classified as "work-in-process" , packaging or "raw shipping materials" , labels, samples, display items, bags, replacement parts or as "finished goods inventory" manufacturing supplies; (b) is not held on consignment, nor 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 (i.e. Inventory that has not been sold or shipped within twelve (12) months after the date of production), perishable, obsolete or unmerchantable, and does not constitute returned or repossessed goods; except, that, Lender may, in its discretion, deem slow-moving Inventory (i.e. Inventory that has not been sold or shipped within twelve (12) months after the date of production) to be eligible for borrowing purposes, subject to the terms and conditions set forth in the definition of Inventory Formula Amount herein; (e) meets all standards imposed by any governmental authority, has not been acquired from an entity subject to any sanction or on any specially designated nationals list maintained by OFAC, and does not constitute hazardous materials under any environmental law; (f) conforms with the covenants and representations herein; (g) is subject to Lender's duly perfected, first priority Lien, and no other Lien; (h) is within the continental United States, is not in accordance with GAAPtransit except between locations of a Borrower, and is not consigned to any Person, provided, howeverthat, that "work-upon the request of Borrowers, Lender may, in its sole discretion, deem in-process" advances based on transit Inventory shall not exceed $350,000, and which is subject held by a shipping company or carrier and “on the water” to a first prioritybe eligible for borrowing purposes so long as Borrowers satisfy Lender’s customary procedures and policies with respect to in-transit Inventory, properly perfected security interest in favor of Bank, but excluding (1) consigned goods, inventory located outside the United States of America or Canada, (2) Inventory covered by or subject to a seller's right to repurchase, or any consensual or nonconsensual lien or security interest (including, without limitation, purchase money security interests) other than delivering customs brokers/freight forwarder waivers, in form and substance satisfactory to Lender, in favor of Bank, whether senior Lender with respect to such in-transit Inventory and executing an amendment to this Agreement to agree to such customary procedures and policies; (i) is not subject to any warehouse receipt or junior negotiable Document; (j) is not subject to Bankany License or other arrangement that restricts a Borrower's security interest, and (3) Inventory that Bank, acting in its reasonable discretion, after having notified Debtor, excludes. Inventory which is at any time Eligible or Lender's right to dispose of such Inventory, but which subsequently fails unless Lender has received an appropriate Lien Waiver; (k) is located (i) on a premises containing Eligible Inventory with an aggregate Value of at least $50,000, (ii) if such Inventory is located on a leased premises or in the possession of a warehouseman, processor, repairman, mechanic, shipper, freight forwarder or other Person, such lessor or such other Person has delivered a Lien Waiver or an appropriate Reserve has been established, or (iii) if such Inventory is located on a premises owned by a Borrower and such premises is subject to meet any a mortgage, the mortgagee of the foregoing requirements, shall forthwith cease such premises has delivered a mortgagee waiver in form and substance satisfactory to be Eligible InventoryLender.

Eligible Inventory. Unless stated otherwise in paragraph 13 below, "Eligible Inventory" (a) shall be valued at the lesser of the cost or present market value of Debtor's ’s Inventory (as defined in the Michigan Uniform Commercial Code, as amended and in effect from time to time) determined in accordance with generally accepted accounting principles, consistently applied ("GAAP"), ) and (b) shall mean all of only the Debtor's Inventory which is inventory of spas (“Spas”) that are in good and merchantable condition, which is are not obsolete or discontinued, which would be properly classified as "work-in-process" or "raw materials" or as "finished goods inventory" under and in accordance with GAAP, providedand are located at Debtor’s facilities (“Facilities”) located in Miami, howeverJacksonville, that "work-in-process" advances based on Inventory shall not exceed $350,000Melbourne, and Tampa, Florida and which is are subject to a first priority, properly perfected security interest in favor of Bank, but excluding (1) Debtor’s work-in-process inventory, consigned goods, inventory located outside the United States of America or Canada, (2) Inventory covered by or subject to a seller's right to repurchase, or any consensual or nonconsensual lien or security interest (including, without limitation, purchase money security interests) other than in favor of Bank, whether senior or junior to Bank's security interest, and (3) Inventory all other inventory at the Facilities, including, but not limited to, tubs, Vita Bath products, accessories, parts, and all other inventory that could not be classified as Spas, and (4) inventory that Bank, acting in its reasonable sole discretion, after having notified Debtor, excludes. Inventory which is at any time Eligible Inventory, but which subsequently fails to meet any of the foregoing requirements, shall forthwith cease to be Eligible Inventory.

Eligible Inventory. Unless stated 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 in paragraph 13 belowowned by such Borrower, "Eligible Inventory" or of a type no longer sold by such Borrower; (aii) shall be valued at the cost which has been returned by a customer or present market value of Debtor's Inventory is damaged or subject to any legal encumbrance other than Permitted Liens; (as defined in the Michigan Uniform Commercial Code, as amended and in effect from time to timeiii) determined in accordance with generally accepted accounting principles, consistently applied ("GAAP"), and (b) shall mean all of Debtor's Inventory which is in good and merchantable condition, which is not obsolete or discontinued, which would be properly classified as "work-in-process" or "raw materials" or as "finished goods inventory" under and in accordance with GAAP, provided, however, that "work-in-process" advances based on Inventory shall not exceed $350,000, and which 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 and the Administrative Agent has possession of and a first priority, properly perfected security interest in favor the documents of Banktitle relating to such inventory, but excluding (1B) consigned goods, such inventory located outside 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 Canada(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 ▇▇▇▇▇▇ ▇▇▇▇▇, 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, (2y) financing statements in form and substance satisfactory to the Administrative Agent executed and delivered by such Borrower as secured party/bail▇▇ ▇▇▇ 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 form and substance satisfactory to the Administrative Agent by the secured party/bail▇▇ ▇▇ the Administrative Agent of the aforementioned financing statements; (iv) in which the Administrative Agent does not have a valid and perfected first priority security interest; (v) which has been shipped to a customer of such Borrower regardless of whether such shipment is on a consignment basis; (vi) which is not located at a Permitted Inventory covered by or Location of such Borrower within the United States of America, unless (A) such inventory is subject to a seller's right documentary letter of credit issued by a lender approved by the Administrative Agent and the Administrative Agent has possession of and a first priority, perfected security interest in the documents of title relating to repurchasesuch 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 has received a legal opinion in form and substance satisfactory to the Administrative Agent that the Loan Documents comply with the provisions of ss.9102(5)(b) of the Uniform Commercial Code as in effect in California, or any consensual or nonconsensual lien or security interest (including, without limitation, purchase money security interestsix) other than in favor which consists of Bank, whether senior or junior to Bank's security interest, and (3) Inventory that Bank, acting in its reasonable discretion, after having notified Debtor, excludes. Inventory which is at any time Eligible Inventory, but which subsequently fails to meet any of the foregoing requirements, shall forthwith cease to be Eligible Inventorylive plantings.