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PLAYBOOK TEMPLATES
Loan Agreement (Secured)
A Secured Loan Agreement provides financing backed by collateral assets, outlining repayment and enforcement terms. This playbook explains negotiation of covenants, events of default, and security perfection requirements.
Financial Covenants
Negotiation strategy
Ensure covenants are realistic and clearly defined to prevent defaults. Regularly review the borrower's financial health and adjust covenants as necessary.
Negotiate for covenants that reflect your financial projections and industry benchmarks. Seek flexibility in testing periods and cure periods.
Essential elements
1
Debt to Equity Ratio
Maintain specific ratio limits.
2
Interest Coverage Ratio
Ensure sufficient earnings to cover interest.
3
Loan to Value Ratio
Limit loan amount relative to asset value.
Action framework
ACCEPT
Propose edits when industry-specific metrics are not reflected.
EDIT
Reject clauses that are overly restrictive or unrealistic.
ADD
Add covenants when financial health monitoring is insufficient.
PRO TIP
Collaborate with industry experts to ensure covenants are aligned with market standards.
Real-world examples
FAVORABLE
Preferred Debt to Equity Ratio
"The Borrower shall maintain a Debt to Equity Ratio of no greater than 3:1, tested quarterly."
NEUTRAL
Fallback Debt to Equity Ratio
"The Borrower shall maintain a Debt to Equity Ratio of no greater than 4:1, tested semi-annually, with a 30-day cure period for breaches."
UNFAVORABLE
Overly Restrictive Debt to Equity Ratio
"The Borrower shall maintain a Debt to Equity Ratio of no greater than 1:1, tested monthly."
Alternative scenarios & positions
High-Risk Projects
In high-risk projects, stricter covenants may be necessary to mitigate potential financial instability.
Start-Up Companies
Start-ups may require more lenient covenants to accommodate growth and fluctuating financials.
Established Corporations
Established corporations might negotiate for less frequent testing periods due to stable financial histories.
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WEEK 1
CLM Readiness and Design
Our CX team works with you to understand your contracting challenges, prioritize key workflows, and identify the biggest impact areas. We build a tailored implementation plan that fits your needs.
WEEK 2
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We connect DocJuris to your contract repositories, set up admin and user accounts, and ensure your environment is ready for success.
WEEK 3
Deliver & Test
Your team builds initial playbooks, reviews existing clause libraries, and trains the DocJuris agent to align with your internal standards and negotiation positions.
WEEK 4
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