Applicable Margin Adjustment Sample Clauses
The Applicable Margin Adjustment clause defines how the interest margin applied to a loan or credit facility may change under certain conditions. Typically, this clause outlines specific triggers—such as changes in a borrower's credit rating, leverage ratio, or market benchmarks—that will cause the margin to increase or decrease. For example, if a borrower's financial health improves, the margin may be reduced, lowering their interest payments; conversely, a deterioration could result in a higher margin. The core function of this clause is to ensure that the cost of borrowing accurately reflects the borrower's risk profile over time, thereby protecting the lender while incentivizing the borrower to maintain or improve their financial standing.
Applicable Margin Adjustment. (a) On the second Banking Day following each date the Borrower delivers a compliance certificate to the Administrative Agent pursuant to Section 11.1(b)(i) which discloses a Leverage Ratio at a Level which differs from the Level then in effect, the Applicable Margin applicable to all Loans outstanding on the date any such change takes effect will be adjusted immediately, but without retroactive effect.
(b) Notwithstanding the foregoing:
(i) the Applicable Margin shall be Level 1 in Schedule J on and from the date of this Agreement until the conclusion of the first Fiscal Quarter following it; and
(ii) if the Borrower fails to deliver a compliance certificate to the Administrative Agent by the date required to do so under Section 11.1(b)(i), the Leverage Ratio shall be deemed as from such date to be at Level IV until such failure is cured, at which time the Applicable Margin shall be determined in accordance with the table set forth in Schedule J, but without any adjustments having retroactive effect.
Applicable Margin Adjustment. Provided this Second Amendment becomes effective, the amendment of the definition of Applicable Margin set forth in Section 3 hereof shall be effective on **[TO BE CLOSING DATE]**, 2002, notwithstanding anything in such definition to the contrary.