Common use of Qualified Inventory Clause in Contracts

Qualified Inventory. Finished goods, work in progress, raw materials and component parts inventory owned by the Borrower shall be considered a “Qualified Inventory”, provided, however, that “qualified inventory” shall not include any inventory (a) held on consignment, or not otherwise owned by the Borrower, or of a type no longer sold by the Borrower, (b) which has been returned by a customer damaged or subject to any legal encumbrance (other than the security interest created hereunder by the Borrower to the Bank), (c) which is not in the possession of the Borrower unless the Bank has received a waiver from the party in possession of such inventory in a form and substance satisfactory to the Bank, (d) which has been shipped to a customer of the borrower regardless of whether the shipment is on a consignment basis, or (e) which the Bank deems obsolete or not marketable or otherwise unacceptable to the Bank as determined by the Bank in its sole and reasonable discretion. All such Qualified Inventory shall be valued at actual cost on a first-in, first-out basis.