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. Notwithstanding anything to the contrary contained in Section 7.11 or in Section 8.1, in the event that Borrower fails to comply with the requirements of the financial covenants set forth in Section 7.11 (the “Financial Condition Covenants”) until the expiration of the day that is ten Business Days following the date the Compliance Certificate calculating such covenants is required to be delivered pursuant to Section 6.2(b), Borrower shall have the right to issue Equity Interests for cash or otherwise receive cash contributions to the capital of Borrower (collectively, the “Cure Right”) in such amounts as are necessary to be in compliance with such Financial Condition Covenants (the “Cure Amount”). In no event shall the Cure Amount be greater than the amount required for purposes of complying with the Financial Condition Covenants as set forth herein. The Cure Amount shall be included, as applicable, in the calculation of Consolidated EBITDA or as “cash” in subclause (a) of the definition of “Consolidated Liquidity Ratio”, in each case for the purpose of determining compliance with the Financial Condition Covenants at the end of the relevant fiscal quarter and any subsequent period that includes such fiscal quarter. The Cure Right may be exercised not more than twice in any fiscal year, and not more than four times prior to the Maturity Date. Upon the Borrower’s receipt of the Cure Amount, the Borrower shall be deemed to have satisfied such Financial Condition Covenants 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 Covenants that occurred shall be deemed cured for the purposes of this Agreement and any other Loan Document.
Equity Cure Right. In the event that the Borrowers fail to comply with the requirements of any financial covenant set forth in Section 7.11, from the end of the applicable fiscal quarter until the 10th Business Day after delivery of the related Compliance Certificate, Holdings shall have the right to issue Permitted Cure Securities for cash or otherwise receive cash contributions to the capital of Holdings (the “Cure Amount”), 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 EBITDA with respect to such applicable quarter (the “Cure Right”); provided that (a) such proceeds are actually received by the Borrowers no later than ten (10) days after the date on which financial statements are required to be delivered with respect to such fiscal quarter hereunder, (b) such proceeds do not exceed the aggregate amount necessary to cure (by addition to EBITDA) such Event of Default under Section 7.11 for such period, (c) the Cure Right shall not be exercised more than five times during the term of the Loans and (d) in each period of four fiscal quarters, there shall be at least two fiscal quarters during which the Cure Right is not exercised. 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 Indebtedness in connection therewith), the Borrowers are in compliance with the financial covenants set forth in Section 7.11, the Borrowers shall be deemed to have satisfied the requirements of such section 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 Section 7.11 that had occurred shall be deemed cured for purposes of this Agreement. The parties hereby acknowledge that this Section 8.04 may not be relied on for purposes of calculating any financial ratios other than as applicable to Section 7.11 and shall not result in any adjustment to any amounts other than the amount of the EBITDA referred to in the immediately preceding sentence. Upon the Administrative Agent’s receipt of a written notice from the Borrowers that they intend to exercise the Cure Right (a “Notice of Intent to Cure”), until the 10th Business Day following the date that financial statements for the fiscal quarter to which such Notice of Intent to Cure relates are required to be delivered pursuant to Section 6.01(a) or ...
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 $1,500,000, (ii) no more than four (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 $4,500,000, (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. 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.
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 most recently completed fiscal quarter (the “Applicable Quarter”) and any period of four 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, 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.
(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 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 required for purposes of complying with the financial coven...
Equity Cure Right. In connection with the failure of Borrowers to perform, keep or observe any term, provision, condition or covenant contained on Schedule E (a “Financial Covenant Default”), Borrowers shall have the right to cure a Financial Covenant Default on the following terms and conditions (the “Equity Cure”):
(a) In the event Borrowers desire to cure a Financial Covenant Default, Borrowing Agent shall deliver to Lender irrevocable written notice of its intent to cure (a “Cure Notice”) at any time during the period commencing on the date that any Borrower has knowledge of such Financial Covenant Default and ending on the tenth (10th) day thereafter. The Cure Notice shall set forth the calculation of the Financial Covenant Cure Amount (as hereinafter defined).
(b) In the event Borrowing Agent delivers a Cure Notice, a Specified Equity Contribution (as hereinafter defined) shall be made in an amount equal to the Financial Covenant Cure Amount at any time during the period commencing on the date of ▇▇▇▇▇▇’s receipt of such Cure Notice and ending on the tenth (10th) day following the date on which the relevant Financial Covenant Default occurred (such tenth (10th) day, the “Required Contribution Date”). The applicable shareholders of Parent shall make a capital contribution to a Borrower, as applicable, in the form of cash equity (a “Specified Equity Contribution”) or subordinated Indebtedness, whether secured or unsecured as determined by the applicable shareholders of Parent and so specified in the applicable Cure Notice, that is subject to a subordination agreement between applicable shareholders of Parent and Lender satisfactory to Lender and the proceeds thereof equal to the Financial Covenant Cure Amount shall be immediately contributed by the applicable shareholders of Parent to the capital of Borrowers and paid directly to Lender for application to the Obligations as follows: first, on account of the principal of and interest on the Revolving Loans, and second, after the Revolving Loans are paid in full, to the remaining Obligations in the order set forth in Section 4.2 hereof. The “Financial Covenant Cure Amount” shall be the amount which, if added to the amount of Liquidity as of the date of the applicable Financial Covenant Default, would result in Borrowers being in pro forma compliance with the applicable Financial Covenant as of such date.
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. If HoldCo would otherwise fail to comply with any financial covenant and no later than 20 days after the date on which the relevant Compliance Certificate is required to be delivered, the Group receives cash proceeds of any Permitted Equity Injection for these purposes (the "Cure Amount") then the financial covenants shall be calculated for the relevant testing period (and calculated for the three subsequent testing periods) by giving effect to the following adjustments:
Equity Cure Right. (a) Notwithstanding Section 16.1(j) and (k), in the event that Lessee fails (or, but for the operation of this Section 16.6, would fail) to comply with the requirements of Section 16.1(j) or (k), until the thirtieth (30th) day subsequent to the earlier of (i) the date Lessee becomes aware of such noncompliance or (ii) the date of delivery of written notice from Lessor to Lessee relating to such failure (the “Equity Cure Expiration Date”), ▇▇▇▇▇▇▇ Health shall have the right to issue its equity interests for cash or to receive an equity contribution in respect of its equity interests (the “Equity Cure Right”), and upon the receipt by ▇▇▇▇▇▇▇ Health of such cash (the “Specified Equity Contribution”) EBITDAR shall be recalculated giving effect to the following pro forma adjustments:
(i) EBITDAR for the applicable calendar quarter (and any four-quarter period that contains such quarter) shall be increased, solely for the purpose of determining compliance with Section 16.1(j) and (k), by an amount equal to the Specified Equity Contribution; and
(ii) if, after giving effect to the foregoing recalculations, Lessee shall then be in compliance with the requirements of Section 16.1(j) and (k), Lessee shall be deemed to have satisfied the requirements of such Section 16.1(j) and (k) 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 Event of Default that had occurred shall be deemed cured for purposes of this Lease.
(b) Notwithstanding anything in this Lease to the contrary, after the failure to comply with the requirements of Section 16.1(j) and (k), if Lessee has given Lessor notice that Lessee intends to cure such failure with the proceeds of a Specified Equity Contribution, Lessor shall not exercise any rights or remedies under Section 16 available during the continuance of any 4834-1440-2281v12 Event of Default on the basis of any actual or purported failure to comply with Section 16.1(j) or (k) until such failure is not cured on or prior to the Equity Cure Expiration Date.