nature shall be construed in accordance with GAAP, as in effect from
time to time, provided that if any Borrower notifies the Administrative Agent
that the Borrowers request an amendment to any provision hereof to reflect the
effect of any change occurring after the date hereof in GAAP or in the
application thereof on the operation of such provision (or if the Administrative
Agent notifies the Borrowers that the Required Lenders request an amendment to
any provision hereof for such purpose), regardless of whether any such notice is
given before or after such change in GAAP or in the application thereof, then
such provision shall be interpreted on the basis of GAAP as in effect and
applied immediately before such change shall have become effective until such
provision shall have been amended in accordance herewith.
Unless otherwise specified, all references herein to times of day shall be
references to Eastern time (daylight or standard, as applicable).
ARTICLE II
AMOUNT AND TERMS OF CREDIT
SECTION 2.1
Commitment of the Lenders.
(A)
EACH LENDER SEVERALLY AND NOT JOINTLY WITH
ANY OTHER LENDER, AGREES, UPON THE TERMS AND SUBJECT TO THE CONDITIONS HEREIN
SET FORTH, TO EXTEND CREDIT TO THE BORROWERS, OR ANY OF THEM, ON A REVOLVING
BASIS, IN THE FORM OF REVOLVING LOANS AND LETTERS OF CREDIT AND IN AN AMOUNT NOT
TO EXCEED THE LESSER OF SUCH LENDER'S COMMITMENT OR SUCH LENDER'S COMMITMENT
PERCENTAGE OF THE BORROWING BASE, SUBJECT TO THE FOLLOWING LIMITATIONS:
(I)
THE AGGREGATE OUTSTANDING AMOUNT OF THE
CREDIT EXTENSIONS SHALL NOT AT ANY TIME EXCEED THE LINE CAP.
(II)
NO LENDER SHALL BE OBLIGATED TO ISSUE ANY
LETTER OF CREDIT, AND LETTERS OF CREDIT SHALL BE AVAILABLE FROM THE ISSUING
BANKS, SUBJECT TO THE RATABLE PARTICIPATION OF ALL LENDERS, AS SET FORTH IN
SECTION 2.6.
THE BORROWERS WILL NOT AT ANY TIME PERMIT THE AGGREGATE LETTER OF
CREDIT OUTSTANDINGS TO EXCEED $20,000,000.
(III)
SUBJECT TO ALL OF THE OTHER PROVISIONS OF
THIS AGREEMENT, REVOLVING LOANS THAT ARE REPAID MAY BE REBORROWED PRIOR TO THE
EXTENDED TERMINATION DATE.
HOWEVER, NO NEW LOANS SHALL BE MADE TO THE BORROWERS
AND NO NEW LETTER OF CREDIT SHALL BE ISSUED FOR THE ACCOUNT OF THE BORROWERS,
AFTER THE EXTENDED TERMINATION DATE.
(B)
EACH BORROWING OF REVOLVING LOANS SHALL BE
MADE BY THE LENDERS RATABLY IN ACCORDANCE WITH THEIR RESPECTIVE COMMITMENT
PERCENTAGES.
THE FAILURE OF ANY LENDER TO MAKE ANY LOAN SHALL NEITHER RELIEVE
ANY OTHER LENDER OF ITS OBLIGATION TO FUND ITS LOAN IN ACCORDANCE WITH THE
PROVISIONS OF THIS AGREEMENT NOR INCREASE THE OBLIGATION OF ANY SUCH OTHER
LENDER.
SECTION 2.2
Reserves; Changes to Reserves.
(A)
THE INITIAL RESERVES AS OF THE DATE OF THIS
AGREEMENT ARE (I) THE SHRINK RESERVE, (II) THE CUSTOMER CREDIT RESERVE,
(III) THE LAYAWAY RESERVE, (IV) THE LANDLORD LIEN RESERVE (V) THE CONSIGNMENT
A/R RESERVE, (VI) OTHER INVENTORY RESERVES FOR (A) POINT OF SALE AND PERMANENT
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MARKDOWNS, (B) FORM 400 AND DAMAGED INVENTORY, AND (C) TEXAS AD VALOREM TAXES,
(VII) A RESERVE FOR