OfficeMax 2013 Annual Report Download - page 188

(p) for which reclamation rights have been asserted by the seller;
(q) (i) for which any contract relating to such Inventory expressly includes retention of title in favor of the vendor or supplier thereof or
(ii) for which any contract relating to such Inventory does not address retention of title and the relevant Loan Party has not represented to the
Administrative Agent that there is no retention of title in favor of the vendor or supplier thereof; provided that up to 50% of the value of any Inventory of
the type described in clause (ii) shall be deemed Eligible Inventory to the extent applicable Retention of Title Reserves have been established in respect
thereof; or
(r) which is Customer-Specific Inventory;
provided, that in determining the value of the Eligible Inventory, such value shall be reduced by, without duplication, any amounts representing (a) Deferred
Cash Discounts; (b) Vendor Rebates; (c) costs included in Inventory relating to advertising; (d) the shrink reserve; and (e) the unreconciled discrepancy
between the general inventory ledger and the perpetual Inventory ledger, to the extent the general Inventory ledger reflects less Inventory than the perpetual
inventory ledger; provided further that the Aggregate Availability represented by the Eligible Canadian Inventory in the US Borrowing Base shall not exceed
$25,000,000 at any time.
Standards of eligibility may be made more restrictive from time to time solely by the Administrative Agent in the exercise of its Permitted
Discretion, with any such changes to be effective three days after delivery of notice thereof to the Borrower Representative and the Lenders.
“Eligible LC Inventory” means the value of commercial and documentary Letters of Credit issued relating to Inventory that has or will be shipped
to a Loan Party’s location (as to which, in the case of locations leased by a Loan Party, a Collateral Access Agreement has been obtained, or appropriate Rent
Reserves have been taken) and which Inventory (a) is or will be owned by a Loan Party, (b) is fully insured on terms satisfactory to the applicable Collateral
Agent, (c) is subject to a first priority Lien upon such goods in favor of the Collateral Agent (except for any possessor Lien upon such goods in the possession
of a freight carrier or shipping company securing only the freight charges for the transportation of such goods to such Loan Party and other Permitted
Encumbrances), (d) is evidenced or deliverable pursuant to documents, notices, instruments, statements and bills of lading that have been delivered to the
applicable Collateral Agent or an agent acting on its behalf, and (e) is otherwise deemed to be “Eligible Inventory” hereunder; provided further that no such
Inventory of the Canadian Loan Parties, the Dutch Loan Parties or the UK Loan Parties shall be “Eligible LC Inventory” prior to the completion of a
satisfactory initial appraisal of such Inventory of the Canadian Loan parties’, the Dutch Loan Parties’ or UK Loan Parties’, as applicable; provided further
that the Aggregate Availability represented by the Eligible LC Inventory in the US Borrowing Base, the UK Borrowing Base and the Dutch Borrowing Base,
collectively, shall not exceed $100,000,000 at any time. The applicable Collateral Agent shall have the right to establish, modify, or eliminate Reserves against
Eligible LC Inventory from time to time in its Permitted Discretion. In addition, the applicable Collateral Agent shall have the right, from time to time, to adjust
any of the criteria set forth above and to establish new criteria with respect to Eligible LC Inventory in its Permitted Discretion, subject to the approval of the
Administrative Agent in the case of adjustments, new criteria or the elimination of Reserves which have the effect of making more credit available or are
otherwise adverse to the Lenders; provided, however, for the avoidance of doubt, no such approval shall be required in the case of any adjustment or the
elimination of Reserves caused by operation of the provisions of this Agreement relating to the Aggregate Borrowing Base.
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