Common use of Reserves; Changes to Reserves Clause in Contracts

Reserves; Changes to Reserves. (a) The initial Inventory Reserves and Availability Reserves as of the date of this Agreement are the following: (i) Shrink (an Inventory Reserve): An amount equal to the shrink reserve maintained by the Domestic Borrowers in their general ledger, consistent with past practices or determined based on such other methodology as the Lead Borrower and the Administrative Agent may agree. (ii) Rent (an Availability Reserve): An amount equal to two months rent for all of the Domestic Borrowers’ leased locations in the states of Virginia, Pennsylvania, Washington and other states in which Applicable Law provides a landlord with a Lien for unpaid rent having priority over the Lien of the Collateral Agent, other than leased locations with respect to which the Collateral Agent has received a landlord’s waiver of lien in form reasonably satisfactory to the Collateral Agent or the applicable lease contains such a waiver in form reasonably satisfactory to the Collateral Agent. (iii) Customer Deposits (an Availability Reserve): An amount equal to 100% of the customer deposits made for layaway goods received by the Domestic Borrowers. (iv) Customer Credit Liabilities (an Availability Reserve): An amount equal to 50% of the Domestic Borrowers’ Customer Credit Liabilities as reflected in the Domestic Borrowers’ books and records. (v) Customer Refunds (an Availability Reserve): An amount equal to 100% of the refunds made to the Domestic Borrowers’ customers as reflected in the Domestic Borrowers’ books and records. (b) Each Agent may hereafter establish additional Reserves or change any of the foregoing Reserves in the exercise of the reasonable judgment of such Agent after furnishing one (1) Business Day’s prior notice to the Lead Borrower, provided that the Agents shall not modify the methodology in which Reserves described in Section 2.03(a) hereof are determined from time to time; and provided further that nothing contained herein shall permit the Agents to establish Reserves which would not be permitted under the definitions of “Availability Reserves” and “Inventory Reserves.”

Reserves; Changes to Reserves. (a) The initial Inventory Reserves and Availability Reserves as of the date of this Agreement Effective Date are the following: (i) Shrink (an Inventory Reserve): An (a) In an amount equal to the shrink reserve maintained by the Domestic Borrowers Loan Parties in their general ledger, consistent with past practices or determined based on such other methodology as the Lead Borrower and the Administrative Agent may agreepractices. (ii) Rent Landlord Lien Reserve (an Availability Reserve): An amount equal to two months all past due rent for all of (A) the Domestic Borrowers’ leased locations in the states of VirginiaWashington, Virginia and Pennsylvania, Washington and other states in which Applicable Law provides a landlord with a Lien for unpaid rent having priority over the Lien (B) all of the Collateral AgentBorrowers’ distribution centers or warehouses, other than leased locations than, in each case, such locations, distribution centers or warehouses with respect to which the Collateral Administrative Agent has received a landlord’s waiver of lien Collateral Access Agreement in form and substance reasonably satisfactory to the Collateral Agent or Administrative Agent, provided that if Availability at any time is less than fifteen percent (15%) of the applicable lease contains lesser of (x) the then FILO Borrowing Base (or, if the FILO Commitments have been terminated, the then Tranche A Borrowing Base) and (y) the then Revolving Credit Ceiling, then such a waiver in form reasonably satisfactory amount shall be increased by an amount equal to the Collateral Agenttwo (2) months’ rent for all such locations, distribution centers and warehouses. (iii) Customer Deposits (an Availability Reserve): An amount equal to 100% of the customer deposits made for layaway goods received by the Domestic Borrowers. (iv) Customer Credit Liabilities (an Availability Reserve): An As of any date, an amount equal to fifty percent (50% %) of the Domestic Borrowers’ Customer Credit Liabilities as reflected in the Domestic Borrowers’ books and records. (v) Customer Refunds (an Availability Reserve): An amount equal to 100% of the refunds made to the Domestic Borrowers’ customers as reflected in the Domestic Borrowers’ books and recordsLiabilities. (b) Each The Administrative Agent may hereafter establish additional Reserves or change any of the foregoing Reserves Reserves, in the exercise of its reasonable business judgment acting in accordance with industry standards for asset based lending in the reasonable judgment of retail industry, provided that such Agent after furnishing one Reserves shall not be established or changed except upon not less than six (16) Business Day’s prior Days’ notice to the Lead Borrower, provided Borrowers (during which period the Administrative Agent shall be available to discuss any such proposed Reserve with the Borrowers and the Borrowers may take such action as may be required so that the Agents shall not modify event, condition or matter that is the methodology basis for such Reserve no longer exists, in which Reserves described in Section 2.03(a) hereof are determined from time a manner and to timethe extent reasonably satisfactory to the Administrative Agent); and provided further that nothing no such prior notice shall be required for changes to any Reserves resulting solely by virtue of mathematical calculations of the amount of the Reserve in accordance with the methodology of calculation previously utilized (such as, but not limited to, rent and Customer Credit Liabilities). The amount of any Reserve established by the Administrative Agent shall have a reasonable relationship to the event, condition or other matter that is the basis for the Reserve. Notwithstanding anything herein to the contrary, Reserves shall not duplicate eligibility criteria contained herein shall permit in the Agents to establish Reserves which would not be permitted under definition of Eligible Inventory, or reserves or criteria deducted in computing the definitions Appraised Value of “Availability Reserves” and “Inventory ReservesEligible Inventory.”

Reserves; Changes to Reserves. (a) The initial Inventory Reserves and Availability Reserves as of the date of this Agreement are the following: (i) Shrink (an Inventory Reserve): An amount equal to one-half of one percent (0.50%) of the shrink reserve maintained by gross sales of the Domestic Borrowers in their general ledger, consistent with past practices for the fiscal year to date or determined based on such other methodology as the Lead Borrower and the Administrative Agent may agree. The percentage of gross sales to be reserved hereunder may be adjusted by the Administrative Agent based upon the results of any physical inventory undertaken by the Domestic Borrowers in accordance with the provisions of Section 2.03(b) hereof. (ii) Rent (an Availability Reserve): An amount equal to two months rent for all of the Domestic Borrowers’ ' leased locations in the states of Virginia, Pennsylvania, Washington and other states in which Applicable Law provides a landlord with a Lien for unpaid rent having priority over the Lien of the Collateral Agent, other than leased locations with respect to which the Collateral Agent has received a landlord’s 's waiver of lien in form reasonably satisfactory to the Collateral Agent or the applicable lease contains such a waiver in form reasonably satisfactory to the Collateral Agent. (iii) Customer Deposits Layaways (an Availability Reserve): An amount equal to 100% of the customer deposits made for layaway goods received by the Domestic Borrowers. (iv) Customer Credit Liabilities (an Availability Reserve): An amount equal to 50% of the Domestic Borrowers’ ' Customer Credit Liabilities as reflected in the Domestic Borrowers’ books and records. (v) Customer Refunds (an Availability Reserve): An amount equal to 100% of the refunds made to the Domestic Borrowers’ customers as reflected in the Domestic Borrowers’ ' books and records. (b) Each The Administrative Agent may hereafter establish additional Reserves or change any of the foregoing Reserves Reserves, in the exercise of the reasonable judgment of such the Administrative Agent after furnishing one ten (110) Business Day’s days prior notice to the Lead BorrowerBorrower , provided that the Agents Administrative Agent shall not modify the methodology in which Reserves described in Section 2.03(a) hereof are determined from time to time; , and further provided further that nothing contained herein in no event shall permit the Agents Administrative Agent establish new Reserves in any fiscal quarter in an aggregate amount in excess of ten percent (10%) of the Borrowing Base (as set forth in the most recent Borrowing Base Certificate delivered to establish Reserves which would not be permitted the Administrative Agent under the definitions Section 5.01(b) of “Availability Reserves” and “Inventory Reservesthis Agreement).”

Reserves; Changes to Reserves. (a) The initial Inventory Reserves and Availability Reserves as of the date of this Agreement Closing Date are the following: (i) Shrink (an Inventory Reserve): An amount equal to the shrink reserve maintained by the Domestic Borrowers Loan Parties in their general ledger, consistent with past practices or determined based on such other methodology as the Lead Borrower and the Administrative Agent may agreepractices. (ii) Rent Landlord Lien Reserve (an Availability Reserve): An amount equal to two months all past due rent for all of the Domestic Borrower’s leased locations plus one (1) months’ rent for all of (A) the Borrowers’ leased locations in the states of VirginiaWashington, Virginia and Pennsylvania, Washington and other states in which Applicable Law provides a landlord with a Lien for unpaid rent having priority over the Lien (B) all of the Collateral AgentBorrowers’ distribution centers or warehouses, other than leased locations than, in each case, such locations, distribution centers or warehouses with respect to which the Collateral Administrative Agent has received a landlord’s waiver of lien Collateral Access Agreement in form and substance reasonably satisfactory to the Collateral Agent or the applicable lease contains such a waiver in form reasonably satisfactory to the Collateral Administrative Agent. (iii) Customer Deposits (an Availability Reserve): An amount equal to 100% of the customer deposits made for layaway goods received by the Domestic Borrowers. (iv) Customer Credit Liabilities (an Availability Reserve): An As of any date, an amount equal to fifty percent (50% %) of the Domestic Borrowers’ Customer Credit Liabilities as reflected Liabilities. (iv) Purchase Price Variance (an Inventory Reserve): an amount equal to the reserve maintained by the Loan Parties in the Domestic Borrowers’ books and recordstheir general ledger, consistent with past practices. (v) Customer Refunds LCM Inventory Reserve (an Availability Inventory Reserve): An a lower of cost or market reserve in an amount equal to 100% of the refunds made reserve maintained by the Loan Parties in their general ledger, consistent with past practices. (vi) Unreconciled Variance to G/L (an Inventory Reserve): an amount equal to any unreconciled variance between the Loan Parties general ledger and the stock ledger that results in a higher stock ledger inventory balance relative to the Domestic Borrowers’ customers as reflected in the Domestic Borrowers’ books and recordsgeneral ledger inventory balance. (vii) The Interim Letter of Credit Inventory Reserves. (b) Each The Administrative Agent may hereafter establish additional Reserves or change any of the foregoing Reserves, in its Permitted Discretion; provided that such Reserves in the exercise of the reasonable judgment of such Agent after furnishing one shall not be established or changed except upon not less than six (16) Business Day’s prior Days’ notice to the Lead Borrower, provided Borrower (during which period the Administrative Agent shall be available to discuss any such proposed Reserve with the Lead Borrower and the Borrowers may take such action as may be required so that the Agents shall not modify event, condition or matter that is the methodology basis for such Reserve no longer exists, in which Reserves described in Section 2.03(a) hereof are determined from time a manner and to timethe extent reasonably satisfactory to the Administrative Agent); and provided further that nothing no such prior notice shall be required for changes to any Reserves resulting solely by virtue of mathematical calculations of the amount of the Reserve in accordance with the methodology of calculation previously utilized (such as, but not limited to, rent and Customer Credit Liabilities). The amount of any Reserve established by the Administrative Agent shall have a reasonable relationship to the event, condition or other matter that is the basis for the Reserve. Notwithstanding anything herein to the contrary, Reserves shall not duplicate eligibility criteria contained herein shall permit in the Agents to establish Reserves which would not be permitted under definition of Eligible Credit Card Receivables, Eligible In-Transit Inventory, Eligible Inventory, Eligible Letter of Credit Inventory, Eligible Trade Receivables or reserves or criteria deducted in computing the definitions Appraised Value of “Availability Reserves” and “Inventory ReservesEligible Inventory.”

Reserves; Changes to Reserves. (a) The initial Inventory Reserves and Availability Reserves as of the date of this Agreement Closing Date are the following: (i) Shrink (an Inventory Reserve): An (a) In an amount equal to the shrink reserve maintained by the Domestic Borrowers Loan Parties in their general ledger, consistent with past practices or determined based on such other methodology as the Lead Borrower and the Administrative Agent may agreepractices. (ii) Rent Landlord Lien Reserve (an Availability Reserve): (A) An amount equal to two months all past due rent for all of the Domestic Borrowers’ leased locations in the states of VirginiaWashington, Virginia and Pennsylvania, Washington and other states in which Applicable Law provides a landlord with a Lien for unpaid rent having priority over the Lien of the Collateral Agent, other than leased locations with respect to which the Collateral Agent has Agents have received a landlord’s waiver or subordination of lien in form reasonably satisfactory to the Collateral Agent Agents, plus (B) an amount equal to all past due rent for all of the Borrowers’ distribution centers or warehouses, other than distribution centers or warehouses with respect to which the applicable lease contains such Agents have received a landlord’s waiver or subordination of lien in form reasonably satisfactory to the Collateral AgentAgents. (iii) Customer Deposits (an Availability Reserve): An amount equal to 100% of the customer deposits made for layaway goods received by the Domestic Borrowers. (iv) Customer Credit Liabilities (an Availability Reserve): An As of any date, an amount equal to fifty percent (50% %) of the Domestic Borrowers’ Customer Credit Liabilities as reflected in the Domestic Borrowers’ books and records. (v) Customer Refunds (an Availability Reserve): An amount equal to 100% other than on account of the refunds made to the Domestic Borrowers’ customers as reflected in the Domestic Borrowers’ books and recordscustomer deposits). (b) Each The Administrative Agent may hereafter establish additional Reserves or change any of the foregoing Reserves Reserves, in the exercise of its reasonable business judgment acting in accordance with industry standards for asset based lending in the reasonable judgment of retail industry, provided that such Agent after furnishing one Reserves shall not be established or changed except upon not less than six (16) Business Day’s prior Days notice to the Lead Borrower, provided that Borrowers (during which period the Agents shall be available to discuss any such proposed Reserve with the Borrowers and the Borrowers may take such action as may be required so that the event, condition or matter that is the basis for such Reserve no longer exists, in a manner and to the extent reasonably satisfactory to the Administrative Agent). The amount of any Reserve established by the Administrative Agent shall have a reasonable relationship to the event, condition or other matter that is the basis for the Reserve. Notwithstanding anything herein to the contrary, Reserves shall not modify duplicate eligibility criteria contained in the methodology definition of Eligible Inventory, or reserves or criteria deducted in which Reserves described in Section 2.03(a) hereof are determined from time to time; and provided further that nothing contained herein shall permit computing the Agents to establish Reserves which would not be permitted under the definitions Appraised Value of “Availability Reserves” and “Inventory ReservesEligible Inventory.”