Equity Cure Right Clause Samples
The Equity Cure Right clause allows a borrower or company to remedy a financial covenant breach by injecting new equity capital within a specified period. In practice, if the company fails to meet certain financial ratios or covenants, shareholders can contribute additional funds, which are then counted as if the covenant had been met for that period. This mechanism provides flexibility for companies facing temporary financial difficulties, helping them avoid default and the associated consequences by giving them a chance to restore compliance through fresh equity investment.
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Equity Cure Right. Notwithstanding the foregoing, if an Event of Default occurs as a result of Borrowers’ failure to comply with Section 6.5(a) and Section 6.5(b) (a “Curable Default”), an equity contribution to Innovex (in the form of common equity or other equity having terms acceptable to Agent in its Permitted Discretion) in an amount (the “Specified Contribution”) sufficient to, when added to EBITDA as more fully set forth below, cause Borrowers to be in compliance with this Section 6.5 after the last day of the fiscal quarter for which such Event of Default occurred (beginning with the first full fiscal quarter following the Closing Date) but prior to the day that is twenty (20) Business Days after the day on which financial statements are required to be delivered to Agent for such fiscal quarter pursuant to Section 9.8 (the “Required Contribution Date”), will, at the written request of Borrowing Agent, be included in the calculations of EBITDA solely for the purposes of determining compliance with such financial covenants at the end of such fiscal quarter and any subsequent testing period that includes such fiscal quarter; provided further that (a) the maximum amount of any Specified Contribution will be no greater than the amount required to cause Borrowers to be in compliance with Section 6.5; (b) the use of proceeds from any Specified Contribution will be disregarded for all other purposes under this Agreement and the Other Documents (including, to the extent applicable, calculating EBITDA for purposes of determining basket levels, pricing and other items governed by reference to EBITDA or that include EBITDA in the determination thereof in any respect); (c) there shall be no more than two (2) Specified Contributions made during any four (4) consecutive fiscal quarter period, and no Specified Contribution in any two (2) consecutive quarters, in each case during any time in which Fixed Charge Coverage Ratio compliance is being tested quarterly, (d) the proceeds of all Specified Contributions will be paid to Agent and applied to prepay the Advances in the manner set forth in Section 2.20(d) of this Agreement and (e) the reduction in total Indebtedness resulting from such application of the Specified Contribution shall not be taken into account for purposes of measuring compliance with the financial covenants in this Section 6.5 during any period that includes Adjusted EBITDA resulting from a Specified Contribution. Borrowing Agent shall deliver to Agent irrevocable w...
Equity Cure Right. In the event any Event of Default arises as a result of a breach of any covenant set forth in Section 8 (each, a “Financial Covenant Default”), as of the end of any Measurement Period, the Borrower shall have the right to cure such Financial Covenant Default (the “Cure Right”) by issuing or selling Equity Interests or receiving cash capital contributions in each case during the period of ten days following the date of delivery of the Compliance Certificate for such Measurement Period and treating the amount of the net proceeds thereof as Consolidated EBITDA for such Measurement Period, provided that:
(a) the Borrower shall deliver to the Agent written notice of its intent to exercise the Cure Right with respect to any Financial Covenant Default concurrent with the delivery by the Borrower of the Compliance Certificate for such Measurement Period;
(b) the amount of the net proceeds of any Equity Interests or cash capital contributions treated as Consolidated EBITDA for such Measurement Period shall be no greater that the amount required to cause the Borrower to be in compliance with the covenants set forth in Section 8 as at the end of such Measurement Period;
(c) the Borrower shall have the right to exercise the Cure Right not more than two times in any fiscal year and not more than four times during the term of this Agreement; and
(d) such net proceeds shall be treated as Consolidated EBITDA for such Measurement Period and for the future four fiscal quarter period that includes such Measurement Period. Upon receipt of evidence reasonably satisfactory to the Agent of the Borrower’s receipt of such net proceeds, together with a restated Compliance Certificate evidencing compliance with the covenants set forth in Section 8 hereof for the Measurement Period after giving effect to the exercise of the Cure Right in accordance with the terms hereof, in each case within such 10 day period, the Borrower shall be deemed to have satisfied the requirements of Section 8 for the Measurement Period with the same effect as though there had been no failure to comply therewith, and the Financial Covenant Default existing from breach of such covenants shall be deemed cured for the purposes of this Agreement with no further action required by the Agent or the Lenders.
Equity Cure Right. Notwithstanding anything to the contrary contained in this Section 7.1 or in Section 8, in the event that Group Members fail to comply with the requirements of the financial covenant set forth in Section 7.1(a) (the "Financial Condition Covenant") until the expiration of the day that is ten (10) Business Days after the earlier of (i) the date the Compliance Certificate calculating such covenants is required to be delivered pursuant to Section 6.2(a)(ii)(x) or (ii) the date such Compliance Certificate is actually delivered, Borrower shall have the right to issue Capital Stock (other than Disqualified Stock) to Permitted Investors for cash or otherwise receive cash contributions to the capital of Borrower (collectively, the "Cure Right") in order to prepay the Term Loans, without penalty or premium, with such amounts as are necessary to be in compliance with the Financial Condition Covenant (the "Cure Amount"). In no event shall the Cure Amount be greater than the amount required for purposes of complying with the Financial Condition Covenant as set forth herein. The Cure Amount will be used solely to prepay the Term Loans and shall be applied to the prepayment of installments due in respect of the Term Loans in inverse order of maturity. The Cure Right may be exercised not more than two (2) two times in any four consecutive fiscal quarters period (and may not be exercised in consecutive fiscal quarters), and not more than four (4) times prior to the later of (x) the Revolving Termination Date or (y) the Term Loan Maturity Date. Upon the Administrative Agent's receipt of the Cure Amount, the Financial Condition Covenant shall be recalculated (for such period and shall be so calculated for any subsequent period that includes the fiscal quarter in respect of which the Cure Right was exercised) giving effect to the following pro forma adjustments: (a) Consolidated Adjusted EBITDA shall be increased by the lesser of (i) 20% of Consolidated Adjusted EBITDA (calculated prior to giving effect to the Cure Amount) and (ii) the Cure Amount and (b) if, after giving effect to the foregoing calculations, Borrower is in compliance with the requirements of the Financial Covenants, then Borrower shall be deemed to have satisfied such Financial Condition Covenant as of the relevant date of determination with the same effect as though there had been no failure to comply therewith at such date, and the applicable breach or default of the Financial Condition Covenant th...
Equity Cure Right. In the event of an actual or prospective breach of the financial covenants set forth in Sections 7.12.1, 7.12.2 and 7.12.4 of this Agreement, Borrower shall have the right to issue additional common equity or preferred equity (in the case of preferred equity, on terms reasonably satisfactory to the Lender) to the Investor Group for cash (each such issuance by the Borrower, an “Equity Cure Contribution”). In order to cure such actual or prospective breach, an Equity Cure Contribution shall be deemed an addition to Consolidated Net Income in the most recently ended fiscal quarter for the sole purpose of measuring EBITDA, the Fixed Charge Coverage Ratio and Interest Coverage Ratio set forth in Sections 7.12.1, 7.12.2 and 7.12.4, provided that (i) the aggregate amount of any Equity Cure Contribution shall not exceed $2,000,000, (ii) no more than our (4) Equity Cure Contributions may occur during the term of this Agreement, (iii) no more than one Equity Cure Contribution may occur in any 12-month period, (iv) the aggregate amount of all Equity Cure Contributions made during the term of this Agreement shall not exceed $6,000,000, (v) if a Compliance Certificate showing a breach of any covenant set forth in Section 7.12.1 and/or 7.12.2 is delivered (or was due to be delivered), any corresponding Equity Cure Contribution must be made within 15 Business Days of the date such Compliance Certificate was due, (vi) no Default or Event of Default (other than the breach of the financial covenants to be cured by the Equity Cure Contribution) shall have occurred or be continuing, and (vii) Borrower shall have otherwise obtained Lender’s prior written consent. On the date that an Equity Cure Contribution is made, the Financial Officer shall deliver to the Administrative Agent (A) written notice of such Equity Cure Contribution and (B) a compliance certificate demonstrating compliance with the financial covenants after application of the Equity Cure Contribution.
Equity Cure Right. In the event that the Borrowers fail to comply with the requirements of any financial covenant set forth in Sections 6.11(b) and (c) until the tenth day after delivery of the related Compliance Certificate, Ventures shall have the right to issue Permitted Cure Securities for cash or otherwise receive cash contributions to the capital of Ventures, and, in each case, to contribute any such cash to the capital of the Borrowers, and apply the amount of the proceeds thereof to increase Consolidated EBITDAR with respect to such applicable quarter (the "Cure Right"); provided that (a) such proceeds are actually received 130 HB: 4868-8978-1628.11 by the Borrowers no later than 10 Business Days after the date on which financial statements are required to be delivered with respect to such fiscal quarter hereunder, (b) the Cure Right shall not be exercised more than two times during the term of the Loans, (d) in each period of four fiscal quarters, there shall be at 131 HB: 4868-8978-1628.11 least three consecutive fiscal quarters during which the Cure Right is not exercised, and (e) such proceeds shall be applied to prepay the Loans in accordance with Section 2.06. If, after giving effect to the foregoing pro forma adjustment (but not, for the avoidance of doubt, giving pro forma effect to any repayment of Debt in connection therewith), the Borrowers re in compliance with the financial covenants set forth in Sections 6.11(b) and (c), the Borrowers shall be deemed to have satisfied the requirements of such Sections as of the relevant date of determination with the same effect as though there had been no failure to comply on such date, and the applicable breach or default of such Sections 6.11(b) and (c) that had occurred shall be deemed cured for purposes of this Agreement. The parties hereby acknowledge that this Section may not be relied on for purposes of calculating any financial ratios other than as applicable to Sections 6.11(b) and
Equity Cure Right.
(i) Notwithstanding anything to the contrary contained in Section 8.16(a), in the event that any Loan Party would otherwise be in default of the financial covenant set forth in Section 8.16(a) for any period, on or before the tenth (10th) Business Day subsequent to the due date for delivery of the financial statements for such period pursuant to Section 7.01 (such period, the “Cure Period”), the Borrower shall have the right to issue Qualified Capital Stock for cash in an aggregate amount not to exceed the amount necessary to cure the relevant failure to comply with Section 8.16(a) (such equity contribution, a “Specified Equity Contribution”), and upon the receipt by the Borrower of such Specified Equity Contribution within the Cure Period, the financial covenant set forth in Section 8.16(a) shall be recalculated giving effect to the following pro forma adjustments (collectively, the “Cure Right”):
(A) Consolidated Revenues shall be increased for the applicable fiscal quarter (the “Applicable Quarter”) and any period of four (4) consecutive fiscal quarters that includes the Applicable Quarter, solely for the purpose of measuring the financial covenant set forth in Section 8.16(a), and not for any other purpose under this Agreement or any other Loan Document, by an amount equal to the Specified Equity Contribution; and
(B) If, after giving effect to the foregoing recalculation, the Loan Parties shall then be in compliance with the requirements of the financial covenant set forth in Section 8.16(a), the Loan Parties shall be deemed to have satisfied the requirements of the financial covenant set forth in Section 8.16(a) as of the relevant date of determination with the same effect as though there had been no failure to comply therewith at such date, and the applicable breach or default of the covenant set forth in Section 8.16(a) that had occurred shall be deemed cured for the purposes of this Agreement and the other Loan Documents.
(ii) Notwithstanding anything herein to the contrary, (A) the Loan Parties shall provide notice to the Administrative Agent of their intention to exercise the Cure Right no later than the date of delivery of the financial statements evidencing such noncompliance pursuant to Section 7.01, (B) in each four (4) consecutive fiscal quarter period, there shall be a period of at least two (2) fiscal quarters in respect of which no Cure Right is exercised, (C) the Specified Equity Contribution shall be no greater than the amount re...
Equity Cure Right. (a) If the requirements of any of paragraphs (a) to (c) of Clause 19.2 (Financial condition) (a Relevant Financial Covenant) are not met in respect of a Relevant Period, the cash proceeds (the “Cure Amount”) received by the Borrower pursuant to any New Equity (a “Cure Subscription”) or additional shareholder loans or Permitted Subordinated Debt (a “Cure Loan”) (in each case in accordance with this Agreement) after the end of that Relevant Period but prior to the end of the period of 20 Business Days following the date on which the Compliance Certificate setting out the calculations in respect of the relevant covenant determination is required to be delivered pursuant to Clause 18.2 (Compliance Certificate) shall be included in a recalculation of the Relevant Financial Covenant(s) by making a pro forma adjustment to Consolidated EBITDA (solely for the purpose of ascertaining compliance with the Relevant Financial Covenant(s) and not for any other purpose) such that Consolidated EBITDA is increased by an amount equal to the Cure Amount.
(b) If, after giving effect to the recalculation referred to in paragraph (a) above, the requirements of the Relevant Financial Covenant(s) are met, then (subject to the other provisions of this Clause 19.3) the requirements of paragraphs (a) to (c) of Clause 19.2 (Financial condition) shall be deemed to have been satisfied as at the relevant original date of determination as though there had been no failure to comply with such requirements and any Default or Event of Default occasioned thereby shall be deemed to have been remedied for the purposes of the Bridge Finance Documents.
(c) The relevant Cure Amount shall be added to and considered to be part of Consolidated EBITDA solely for the purpose of ascertaining compliance with that Relevant Financial Covenant(s) as at the end of the Relevant Period immediately prior to the receipt and application of such Cure Amount in accordance with this Clause 19.3 and as at the end of the next three following Relevant Periods.
(d) Not more than one Cure Subscription or Cure Loan may occur in any twelve Month period and not more than four Cure Subscriptions or Cure Loans may occur prior to the date that is 108 Months after the Closing Date.
(e) Any Cure Amount must be applied in accordance with the terms of the Senior Facilities Agreement.
(f) Prior to a Cure Subscription or Cure Loan, the Borrower shall deliver to the Bridge Facility Agent a certificate signed by two directors of the Bo...
Equity Cure Right. (a) Subject to paragraph (b) below, if any Compliance Certificate delivered by the Company demonstrated that the Bank Group is in breach of any of the financial covenants set out in paragraphs (a), (b) or (c) of Clause 23.2 (Ratios) as at the relevant Quarter Date to which such Compliance Certificate relates, then the Company may, at its option, within 5 Business Days of delivery of such Compliance Certificate and without prejudice to the rights of the Lenders under Clause 27 (Events of Default) cure such breach (an “Equity Cure Right”) by procuring that the proceeds of any New Equity be contributed into the Bank Group and either:
(i) applied towards the prepayment of the Term Facilities; or
(ii) added back to the calculation of Consolidated Operating Cashflow, in each case, in an amount which, if such test(s) were to be recalculated as at such Quarter Date but giving effect to such application or add-back, such test(s) would have been satisfied.
(b) The Equity Cure Right shall be subject to the following conditions:
(i) subject to sub-paragraph (ii) below, such Equity Cure Right may not be used on more than three occasions over the life of the Facilities;
(ii) in the case of an add-back to the calculation of Consolidated Operating Cashflow, such Equity Cure Right may only be used on one occasion over the life of the Facilities, and in an amount not exceeding £100 million;
(iii) in the case of an add-back to the calculation of Consolidated Operating Cashflow, such add-back may not be rolled forward or otherwise taken into account on any subsequent Quarter Date on which such financial covenants are to be tested; and
(iv) such Equity Cure Right may not be used for any two consecutive Quarter Dates.
(c) Any proceeds of New Equity which are contributed into the Bank Group for the purposes specified above, shall thereafter be retained within the Bank Group.
Equity Cure Right a) In the event that in respect of a testing period any Financial Covenant would not be complied with, the Borrower has a right to effect an equity cure by procuring the injection of Cash in an amount sufficient to cure the non-compliance with the Financial Covenants (but no more than CHF 75,000,000) by an increase of the share capital, increase of capital reserves or granting of shareholder loans that are subordinated to the rights and claims of the Finance Parties under the Finance Documents (and having, for the avoidance of doubt, a maturity date later than the Final Maturity Date) prior to the date falling 10 (ten) Business Days after the due date for delivery of the Compliance Certificate that showed non-compliance with the Financial Covenants; within 10 (ten) Business Days after the completion of the injection, the Company shall deliver to Agent a revised Compliance Certificate and a revised unaudited consolidated balance sheet, income statement and cash flow statement (as at the date of the most recent quarter but taking into account the equity cure measures as if they had been effected on that date) showing that the non-compliance with the Financial Covenant has been cured.
b) The right to exercise such equity cure right shall exist only once during the term of this Agreement.
c) The proceeds from such injection of Cash pursuant to paragraph (a) above shall be used to prepay Loans in an amount sufficient to cure non-compliance with the respective Financial Covenant in accordance with Clause 9.1 (Voluntary prepayments).
Equity Cure Right. Notwithstanding the foregoing Section 6.5(a), if an Event of Default occurs as a result of Borrowers’ failure to comply with Section 6.5(a) (a “Curable Default”), an equity contribution resulting from Borrowers issuing Equity Interests in exchange for cash, in an amount (the “Specified Contribution”) sufficient to, when added to Adjusted EBITDA as more fully set forth below, cause Borrowers to be in compliance with Section 6.5(a) after the last day of the fiscal quarter for which such Event of Default occurred (beginning with the first full fiscal quarter following the Closing Date) but prior to the day that is twenty (20) Business Days after the day on which financial statements are required to be delivered to Agent for such fiscal quarter pursuant to Section 9.8, will, at the written request of Borrowing Agent, and [PHI Group] Revolving Credit, Term Loan and Security Agreement
1. Upon timely receipt by Agent in cash of the applicable Specified Contribution and application of the Specified Contribution to the Obligations, the applicable Curable Defaults shall be deemed waived.