Reserves; Eligibility. 8.1.3 The Agent shall have the right, at any time and from time to time after the Closing Date in its Permitted Discretion to establish, modify or eliminate Reserves upon three (3) Business Days’ prior written notice to the Borrower Agent (during which period the Agent shall be available to discuss in good faith any such proposed Reserve with the Borrower Agent and the Obligors may take such action as may be required so that the event, condition or matter that is the basis for such Reserve or modification no longer exists); provided 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 it would be reasonably likely that a Material Adverse Effect would occur were such Reserve not changed or established prior to the expiration of such three (3) Business Day period, or (3) changes to Reserves when a Default or Event of Default exists. Promptly after the Agent has knowledge that the event, condition or matter which is the basis for the establishment of a Reserve no longer exists, the Agent shall eliminate such Reserve. The establishment or change of any Reserve against the applicable Borrowing Base shall, in each case, be limited to such Reserve as the Agent determines in its Permitted Discretion to be necessary (i) to reflect items that could reasonably be expected to adversely affect the value of the applicable Eligible Accounts or Eligible Inventory or (ii) to reflect items that could reasonably be expected to adversely affect the enforceability or priority of the Agent’s Liens on the applicable ABL Priority Collateral. Notwithstanding any other provision of this Agreement to the contrary, (a) in no event shall any Reserve with respect to any component of the Borrowing Base duplicate any Reserve or adjustment already accounted for in determining eligibility criteria (including collection and/or advance rates) and (b) the amount of any such Reserve (or change in Reserve) and the scope of any change in eligibility standards shall be a reasonable quantification of the incremental dilution of the Borrowing Base attributable to the relevant contributing factor or shall have a reasonable relationship to the event, condition or other matter that is the basis for such Reserve or change.
Reserves; Eligibility. Anything to the contrary in Section 2.01(a) notwithstanding, the Majority Lenders (through the Administrative Agent) shall have the right to establish reserves in such amounts, and with respect to such matters, as the Majority Lenders in their Permitted Discretion shall deem necessary or appropriate, against the Borrowing Base, including reserves with respect to (i) sums that the Borrower or any other Obligor is required to pay (such as taxes, assessments, insurance premiums, or, in the case of leased assets, rents or other amounts payable under such leases) and has failed to pay under this Agreement or any other Financing Document, and (ii) amounts owing by the Borrower or any Subsidiary to any Person to the extent secured by a Lien on, or trust over, any of the Collateral, which Lien or trust, in the Permitted Discretion of the Majority Lenders likely would have a priority superior to the Administrative Agent’s Liens (such as Liens or trusts in favor of landlords, warehousemen, carriers, mechanics, materialmen, laborers, or suppliers, or Liens or trusts for ad valorem, excise, sales, or other taxes where given priority under applicable law) in and to such item of the Collateral. In addition to the foregoing, the Majority Lenders shall have the right to have the Inventory reappraised by a qualified appraisal company selected by the Administrative Agent (with the approval of the Majority Lenders) from time to time after the Closing Date for the purpose of redetermining the value of the Eligible Inventory portion of the Collateral and, as a result, redetermining the Borrowing Base.
