Common use of Reserves; Changes to Reserves Clause in Contracts

Reserves; Changes to Reserves. (a) The Inventory Reserves and Availability Reserves as of the Effective Date are as set forth on the initial Borrowing Base Certificate furnished to the Administrative Agent as of the Effective Date. (b) The Administrative Agent may hereafter establish additional Reserves or change any of the foregoing Reserves, in the exercise of its commercially reasonable business judgment acting in accordance with industry standards for asset based lending in the retail industry, provided that such Reserves shall not be established or changed except upon not less than three (3) Business Days’ notice to the Borrower (during which period the Administrative Agent shall be available to discuss any such proposed Reserve with the Borrower), provided further that no such prior notice shall be required for (1) 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, or (2) changes to Reserves or establishment of additional Reserves if a Material Adverse Effect has occurred or it would be reasonably likely that a Material Adverse Effect would occur were such Reserve not changed or established, or (3) if a Cash Dominion Event or an Event of Default has occurred and is then continuing. Notwithstanding the foregoing or anything to the contrary herein, the Administrative Agent shall impose the Debt Maturity Reserve.

Reserves; Changes to Reserves. (a) The initial Inventory Reserves and Availability Reserves as of the Effective Date are as set forth on the initial Borrowing Base Certificate furnished to the Administrative Agent as of the Effective Date. (b) The Administrative Agent may hereafter establish additional Reserves or change any of the foregoing Reserves, in the exercise of its commercially reasonable business judgment acting in accordance with industry standards for asset based lending in the retail industry, provided that such Reserves shall not be established or changed except upon not less than three (3) Business Days’ notice to the Borrower (during which period the Administrative Agent shall be available to discuss any such proposed Reserve with the Borrower), provided further that no such prior notice shall be required for (1) 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, or (2) changes to Reserves or establishment of additional Reserves if a Material Adverse Effect has occurred or it would be reasonably likely that a Material Adverse Effect would occur were such Reserve not changed or established, or (3) if a Cash Dominion Event or an Event of Default has occurred and is then continuing. Notwithstanding the foregoing or anything to the contrary herein, the Administrative Agent shall impose the Debt Maturity Reserve.