EBITDA Cure Sample Clauses
The EBITDA Cure clause allows a borrower to remedy a breach of financial covenants related to EBITDA by injecting additional equity or subordinated debt within a specified period. In practice, if the borrower's EBITDA falls below the required threshold, the clause permits the shortfall to be covered by a capital contribution, which is then treated as if it were additional EBITDA for covenant compliance purposes. This mechanism provides flexibility for borrowers to avoid default due to temporary financial setbacks, ensuring that lenders are protected while giving the borrower an opportunity to stabilize their financial position.
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EBITDA Cure. For purposes of determining whether an Event of Default has occurred under any financial covenant set forth in Section 6.8(b) and Section 6.8(d) (the “Specified EBITDA Financial Covenants”), at the irrevocable written election of Company (which election shall constitute a commitment to satisfy the requirements of this Section 8.2.1) given within 30 days after the end of the relevant Fiscal Quarter, the Net Equity Proceeds of any Qualified Stock that are contributed or otherwise paid as equity capital to Company after the last day of such Fiscal Quarter and on or prior to the day that is ten days after the date of such notice of written election (the “Specified EBITDA Cure Period”) will be deemed to have increased Consolidated Adjusted EBITDA (after giving effect to any annualization or similar adjustments thereto) solely for the purposes of determining compliance with the Specified EBITDA Financial Covenants at the end of such fiscal reporting period (any such equity contribution, a “Specified EBITDA Equity Contribution”); provided that each of the following requirements are satisfied:
(i) Specified EBITDA Equity Contributions may not be made in consecutive Fiscal Quarters;
(ii) no more than four Specified EBITDA Equity Contributions may be made during the term of this Agreement;
(iii) any Specified EBITDA Equity Contribution may only be deemed to increased Consolidated Adjusted EBITDA to the extent that such deemed increase would cause the Note Parties to be in compliance with the Specified EBITDA Financial Covenants when re-calculated as of the original test date after giving effect to such deemed increase;
(iv) the amount of any Specified EBITDA Equity Contribution that is deemed to increase Consolidated Adjusted EBITDA on the last day of such fiscal reporting period will be no greater than the lesser of (x) the amount required to cause Company to be in compliance with the Specified EBITDA Financial Covenants and (y) ten percent (10%) of the trailing twelve months Consolidated Adjusted EBITDA;
(v) all Specified EBITDA Equity Contributions and the use of proceeds therefrom will be disregarded for all other purposes under the Note Documents (including for purposes of determining Consolidated Adjusted EBITDA, compliance with baskets, the Applicable Margin, and any other item governed by reference to Consolidated Adjusted EBITDA, for purposes of calculating Consolidated Total Debt, for purposes of determining the satisfaction of any Default or Event of Defa...