Below is generic language that every entrepreneur should demand its venture debt partner include up front, in term sheets, to ensure full capital utility. Simply stated, the assurances below set the baseline for any true economic comparison.
For the avoidance of doubt and notwithstanding anything to the contrary contained in this Agreement or in the other Loan Documents:
(a) the occurrence of a Material Adverse Change or Material Adverse Effect shall not constitute an Event of Default or otherwise allow Lender to declare the outstanding Loans due and payable;
(b) Lender shall not be entitled to (i) require Borrower’s investors or members of Borrower’s Board of Directors to make written or verbal commitments of ongoing financial support, or (ii) require Borrower to conduct its banking or hold its deposits at any specific bank or financial institution;
(c) Borrower shall not be required to maintain any minimum tangible net worth, working capital, current ratio, quick asset ratio, liquidity ratio or debt-to-equity ratio or comply with any similar financial covenant; and
(d) if Borrower becomes insolvent then Lender shall not be entitled to declare an Event of Default or otherwise demand that the outstanding Loans shall be due and payable provided Borrower continues to be able to pay its debts as they become due.
