Leverage Ratio Cure Right Sample Clauses
The Leverage Ratio Cure Right clause allows a borrower to remedy a breach of the leverage ratio covenant by taking specific corrective actions, typically by injecting additional equity or subordinated debt. In practice, if the borrower's leverage ratio exceeds the agreed threshold, the borrower can use this right within a set period to restore compliance, often by making a capital contribution or similar financial adjustment. This clause provides flexibility to borrowers, helping them avoid default and its consequences by offering a structured opportunity to address temporary financial setbacks.
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Leverage Ratio Cure Right. (a) Notwithstanding anything to the contrary contained in Section11.02, in the event the Borrower fails to comply with the requirements of the Leverage Ratio Covenant, during the period from the end of the relevant fiscal quarter until the expiration of the fifteenth Business Day subsequent to the date the financial statements are required to be delivered pursuant to Section 8.018.01(a) or 8.01(b) (the “Leverage Cure Applicable Time”), the Borrower shall have the right to (A) issue Permitted Cure Securities for cash or (B) apply cash then held by the Borrower in excess of the Minimum Cash Balance so long as, immediately after giving effect to the Leverage Ratio Cure Right, the Borrower continues to hold at least the Minimum Cash Balance (the “Leverage Ratio Cure Right”) and, upon the receipt by the Borrower of any such cash proceeds or application of such cash amounts (the “Cure Amount”) pursuant to the exercise of such Leverage Ratio Cure Right, (i) the Cure Amount shall be applied to the prepayment of the Loans, (ii) the Leverage Ratio Covenant shall be recalculated giving effect to a pro forma adjustment by which EBITDA shall be increased with respect to such applicable fiscal quarter and any four-quarter period that contains such quarter, solely for the purpose of measuring the Leverage Ratio Covenant and not for any other purpose under this Agreement, by an amount equal to the Cure Amount and (iii) any reduction in Indebtedness (or cash netting) from the proceeds of the Cure Amount shall not be given pro forma effect when measuring compliance with the Leverage Ratio Covenant for such fiscal quarter. The resulting increase to EBITDA from the application of a Cure Amount shall not result in any adjustment to EBITDA or any other financial definition for any purpose under this Agreement other than for purposes of calculating the Leverage Ratio Covenant and, except to the extent of any reduction in Indebtedness (or cash netting) from the proceeds of the Cure Amount, the proceeds of the Cure Amount shall be disregarded for other purposes of this Agreement (including determining pricing, financial ratio-based conditions (subject to clause (ii) of the foregoing sentence) or basket amounts). The Cure Amount shall be no greater than the amount required for purposes of complying with the Leverage Ratio Covenant. If, after giving effect to the adjustments in this Section 11.05, the Borrower shall then be in compliance with the requirements of the Leverage Ra...