Reserves; Change in Reserves Clause Samples
The "Reserves; Change in Reserves" clause defines how a party, typically a lender or financial institution, establishes and adjusts reserve amounts to cover potential future obligations or risks. In practice, this clause allows the party to set aside funds or require the borrower to maintain certain balances, and to increase or decrease these reserves as circumstances change, such as shifts in market conditions or the borrower's financial status. Its core function is to provide a mechanism for managing risk and ensuring that sufficient funds are available to address unforeseen liabilities or changes in exposure.
Reserves; Change in Reserves. The Agents may at any time and from time to time in the exercise of their Permitted Discretion establish and increase or decrease Reserves; provided that the Agents shall have provided the Borrower at least three (3) Business Days’ prior written notice of any such establishment or increase; and provided further, that the Agents may only establish or increase a Reserve after the date hereof based on an event, condition or other circumstance arising after the Closing Date or based on facts not known to the Agents as of the Closing Date. The amount of any Reserve established by the Agents shall have a reasonable relationship to the event, condition or other matter that is the basis for the Reserve. Upon delivery of such notice, the Agents shall be available to discuss the proposed Reserve or increase, and the Borrower may take such action as may be required so that the event, condition or matter that is the basis for such Reserve or increase no longer exists, in a manner and to the extent reasonably satisfactory to the Agents in the exercise of their Permitted Discretion. In no event shall such notice and opportunity limit the right of the Agents to establish or change such Reserve, unless the Agents shall have determined in their Permitted Discretion that the event, condition or other matter that is the basis for such new Reserve or such change no longer exists or has otherwise been adequately addressed by the Borrower. Notwithstanding anything herein to the contrary, Reserves shall not duplicate eligibility criteria contained in the definition of “Eligible Inventory” and vice versa, or reserves or criteria deducted in computing the cost or market value of Eligible Inventory or the Net Orderly Liquidation Value of Eligible Inventory and vice versa.
Reserves; Change in Reserves. The Administrative Agent may at any time and from time to time in the exercise of its Permitted Discretion establish, increase or decrease Reserves; provided that the Administrative Agent shall have provided the Administrative Borrower at least five Business Days’ prior written notice of any such establishment or increase. 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. Upon delivery of such notice, the Administrative Agent shall be available to discuss the proposed Reserve or increase, and the Administrative Borrower and the other Borrowers may take such action as may be required so that the event, condition or matter that is the basis for such Reserve or increase no longer exists, in a manner and to the extent reasonably satisfactory to the Administrative Agent in the exercise of their Permitted Discretion. In no event shall such notice and opportunity limit the right of the Administrative Agent to establish or change such Reserve, unless the Administrative Agent shall have determined in its Permitted Discretion that the event, condition or other matter that is the basis for such new Reserve or such change no longer exists or has otherwise been adequately addressed by the Borrowers. Notwithstanding anything herein to the contrary, Reserves shall not duplicate eligibility criteria contained in the definition of “Eligible Inventory” and vice versa, or reserves or criteria deducted in computing the cost or market value of Eligible Inventory or the Net Orderly Liquidation Value of Eligible Inventory and vice versa.