Minimum Tangible Net Worth Requirement Clause Samples
The Minimum Tangible Net Worth Requirement clause sets a baseline financial threshold that a party, typically a borrower or contractor, must maintain in terms of tangible net worth throughout the duration of an agreement. This requirement is usually measured by subtracting intangible assets and liabilities from total assets, ensuring the party has sufficient real, liquid assets to meet obligations. By enforcing this standard, the clause helps protect the other party from financial instability or insolvency, thereby reducing credit risk and ensuring ongoing financial health.
Minimum Tangible Net Worth Requirement. Borrower covenants and agrees that at least ninety-seven percent (97.0%) of Consolidated Tangible Net Worth (monitored and tested quarterly as of the last day of each fiscal quarter) shall be attributable solely to the Borrower and Guarantors; provided, however, that Borrower shall not be in breach of this Section 6.19(e) if, within 30 days after the date of delivery of the financial statements reflecting Borrower’s non-compliance with the foregoing, Borrower causes one or more Subsidiaries to become Guarantors (and to take the applicable actions set forth in Section 6.20(a) in furtherance thereof) as and to the extent required to cause compliance with this Section 6.19(e).
Minimum Tangible Net Worth Requirement. Borrower covenants and agrees that at least ninety-five percent (95.0%) of Consolidated Tangible Net Worth (monitored and tested quarterly as of the last day of each fiscal quarter) shall be attributable solely to the Borrower and Guarantors; provided, however, that Borrower shall not be in breach of this Section 6.19(e) if, within 30 days after the date of delivery of the financial statements reflecting Borrower’s non-compliance with the foregoing, Borrower causes one or more Subsidiaries to become Guarantors (and to take the applicable actions set forth in Section 6.20(a) in furtherance thereof) as and to the extent required to cause compliance with this Section 6.19(e); provided, further, that any portion of Consolidated Tangible Net Worth that is attributable to a Subsidiary formed by the Borrower or a Guarantor for the purpose of ownership or investment in one or more joint ventures primarily engaged in homebuilding, land acquisition or land development businesses that is not a Guarantor shall be deemed to be attributable to the Borrower and Guarantors for purposes of this calculation so long as (i) the Subsidiary’s direct parent is the Borrower or a Guarantor and (ii) the Subsidiary does not have any direct debt or guaranty obligations other than in its capacity as a member, partner or equityholder of the applicable joint venture(s).