Initial Interest Rate Cap Sample Clauses
The Initial Interest Rate Cap clause sets a maximum limit on the interest rate that can be charged at the start of a loan or adjustable-rate financial product. Typically, this cap applies during the initial period of the loan, ensuring that the borrower's interest payments do not exceed a specified rate regardless of market fluctuations. By establishing this upper boundary, the clause protects borrowers from sudden spikes in interest costs at the outset, providing predictability and financial stability during the early stages of repayment.
Initial Interest Rate Cap. On or before the date hereof, Borrower shall obtain a Rate Cap with a notional amount equal to the Maximum Loan Amount for the benefit of Lender which provides for payments to be made by the Rate Cap Provider if, at any time during the term of the Loan, the LIBOR Rate exceeds the LIBOR Strike Rate. Each Rate Cap required hereunder must: (i) be issued by a Rate Cap Provider that satisfies the credit criteria set forth below in Section 2.07(c); (ii) be fully effective as of the Closing Date; (iii) permit Borrower’s interest in the Rate Cap to be assigned to Lender (and further assignable by Lender) without the payment of fees or costs and without Rate Cap Provider’s consent; (iv) contain no cross-defaults to any other agreements among Borrower, Rate Cap Provider and Lender, or any of their respective Affiliates; (v) contain no performance obligations of Borrower or Lender beyond Borrower’s payment of a one-time fee at the effective date of the Rate Cap Agreement; (vi) be evidenced by a Rate Cap Agreement acceptable to Lender in all respects in Lender’s sole good faith discretion and delivered to Lender on the Closing Date, fully executed, along with a legal opinion from Rate Cap Provider’s counsel (which may be in-house counsel) as to the authorization, execution and delivery by Rate Cap Provider and enforceability in accordance with its terms); (vii) comply with criteria issued by any of the Rating Agencies regarding interest rate cap agreements including, without limitation, the requirement for additional legal opinions from Rate Cap Provider’s counsel; (viii) otherwise be satisfactory to Lender in all respects; and (ix) have a notional amount equal to the Maximum Loan Amount.