Springing financial covenant Clause Samples
A springing financial covenant is a contractual provision that becomes effective only when certain predefined conditions or triggers are met, rather than applying at all times. For example, a lender may require a borrower to comply with a specific leverage ratio only if the borrower’s outstanding debt exceeds a set threshold or if a revolving credit facility is drawn above a certain percentage. This clause provides flexibility to the borrower by not imposing ongoing financial restrictions unless risk levels increase, while also protecting the lender by ensuring additional safeguards are in place when the borrower's financial position becomes riskier.
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Springing financial covenant. (a) Amend the covenant set out in Clause 20.2 (Financial Ratio) so that is reads as follows:
(a) Subject to Clause 21.5 (Cross default), in the event that on the last day of a Ratio Period the aggregate of the Outstandings under any Revolving Facility (other than Documentary Credits that are cash collateralised or undrawn) and any net indebtedness under each Ancillary Facility exceeds an amount equal to 33 1⁄3 per cent. of the aggregate of the Revolving Facility Commitments and each Ancillary Facility Commitment, UPC Broadband shall procure that the ratio of Senior Net Debt to Annualised EBITDA on that day shall not exceed 4.75:1 unless otherwise agreed in writing by the Composite Revolving Facility Instructing Group and UPC Broadband.
(b) If the financial covenant set out in paragraph (a) has been breached for a Ratio Period (the “First Measurement Period”) but is complied with when tested for the next Ratio Period (the “Second Measurement Period”), then, the prior breach of such financial covenant or any Event of Default arising therefrom shall not (or shall be deemed to not) directly or indirectly constitute, or result in, a breach of any representation, warranty, undertaking or other term in the Finance Documents or a Default or an Event of Default unless the Facility Agent has taken any action under Clause 21.20 (Maintenance Covenant Revolving Facility Acceleration) before the delivery of the certificate referred to at Clause 19.2(a)(iii)(B) (Financial information) in respect of the Second Measurement Period (a “Second Test Period Deemed Cured”); provided that, if the financial covenant set out in paragraph (a) above is not required to be tested for the Second Measurement Period, it shall be so tested solely for the purpose of determining whether a Second Test Period Deemed Cure has occurred.”
Springing financial covenant. Beginning with the Fiscal Month in which Borrowing Availability is at any time less than or equal to $50,000,000 and continuing thereafter until the Commitment Termination Date, Borrowers and their Subsidiaries, on a consolidated basis (but excluding the MAG Entities), shall be in compliance with either clause (i) or clause (ii) below (but shall not be required to be in compliance with both clauses (i) and (ii) below):
Springing financial covenant. During each Covenant Trigger Period, the Lead Borrower shall not permit (i) the Fixed Charge Coverage Ratio for the last period of four (4) consecutive Fiscal Quarters ended prior to the beginning of such Covenant Trigger Period for which financial statements have been delivered to the Administrative Agent pursuant to Section 5.1(a) or (b), as applicable, to be less than 1.00:1.00, (ii) the Fixed Charge Coverage Ratio for the period or four (4) consecutive Fiscal Quarters for which financial statements first are delivered to the Administrative Agent pursuant to Section 5.1(a) or (b), as applicable, during such Covenant Trigger Period to be less than 1.00:1.00 or (iii) the Fixed Charge Coverage Ratio for any period or four (4) consecutive Fiscal Quarters ending during such Covenant Trigger Period to be less than 1.00:1.00. Within three (3) Business Days after the beginning of a Covenant Trigger Period, the Lead Borrower shall provide to the Administrative Agent a compliance certificate calculating the Fixed Charge Coverage Ratio for the period of four consecutive Fiscal Quarters for which financial statements are required to be delivered ended immediately prior to the beginning of such Covenant Trigger Period based on the most recent financial statements required to be delivered pursuant to Section 5.1(a) or (b), as applicable.
Springing financial covenant. (a) Lead Borrower and the Restricted Subsidiaries shall, on any date when Availability is less than the greater of (a) 10.0% of the Line Cap, and (b) $8,000,000, have a Consolidated Fixed Charge Coverage Ratio of at least 1.0 to 1.0, tested as of the last day of the most recently ended Test Period, and at the end of each succeeding fiscal quarter thereafter until the date on which Availability has been equal to or exceeded the greater of (a) 10.0% of the Line Cap, and (b) $8,000,000 for 30 consecutive days.
(b) For purposes of determining compliance with the Springing Financial Covenant for any Test Period, any proceeds of cash equity contributions (which equity shall be common equity or otherwise in a form reasonably acceptable to the Administrative Agent) made to Holdings (which shall be contributed in cash to the common equity of Lead Borrower), following the end of such Test Period and on or prior to the date (the “Cure Expiration Date”) that is 10 Business Days after (i) in the case of testing compliance when the Lead Borrower and the Restricted Subsidiaries initially become subject to testing the Springing Financial Covenant, the date the Lead Borrower and the Restricted Subsidiaries become subject to testing the Springing Financial Covenant for such Test Period or (ii) in the case of any subsequent testing of the Springing Financial Covenant while the Lead Borrower and its Restricted Subsidiaries continue to be subject to testing of the Springing Financial Covenant after the applicable date referred to in the foregoing clause (i), the date of delivery of the Section 9.01 Financials with respect to the fiscal quarter most recently ended for the relevant Test Period, will, at the request of Lead Borrower pursuant to a notice (a “Cure Notice”) delivered to the Administrative Agent on or prior to the Cure Expiration Date, be included in the calculation of Consolidated EBITDA solely for the purposes of determining compliance with the Springing Financial Covenant at the end of such fiscal quarter and applicable subsequent Test Periods which include such fiscal quarter (any such contribution so included in the calculation of Consolidated EBITDA, a “Specified Equity Contribution”); provided that (a) in each four fiscal quarter period, there shall be at least two fiscal quarters in respect of which Specified Equity Contributions will not be included in the calculation of Consolidated EBITDA and Specified Equity Contributions may not be included in such calcu...