Defeasance Option Clause Samples

A Defeasance Option is a contractual provision that allows a borrower to release a property from a mortgage lien by substituting other collateral, typically government securities, that will generate enough income to cover the remaining loan payments. In practice, the borrower purchases and pledges these securities to the lender, ensuring the lender continues to receive scheduled payments even though the original property is no longer encumbered. This clause is commonly used in commercial real estate loans to facilitate property sales or refinancing while maintaining the lender’s expected cash flow, effectively solving the problem of prepayment restrictions or penalties.
Defeasance Option. This Note, and the Obligations outstanding ----------------- hereunder, may not be prepaid in whole or in part. However, notwithstanding the foregoing: I. So long as no Event of Default shall have occurred and be continuing, at any time during the Defeasance Period, Borrower may cause the release of the Collateral and the Properties from the lien of the Loan Documents upon the satisfaction of the following conditions (such release of the lien and satisfaction of such conditions referred to herein as the "Defeasance Option"): (i) not less than thirty (30) days and not more than sixty (60) days prior written notice shall be given to CSFC specifying a Payment Date on which the Defeasance Collateral (as hereinafter defined) is to be delivered (such Payment Date, the "Release Date"); (ii) all accrued and unpaid interest and all other sums then due under this Note and under the other Loan Documents up to the Release Date, including, without limitation, all costs and expenses incurred by CSFC or its agents in connection with such release (including, without limitation, the fees and expenses incurred by attorneys and accountants in connection with the review of the proposed Defeasance Collateral and the preparation of the Defeasance Loan Agreement (as hereinafter defined) and related documentation and any revenue, documentary stamp or intangible taxes or any other tax or charge due in connection with the transfer of the Note or otherwise required to accomplish the agreements of this Section 4(I), and all fees, costs and expenses incurred or to be incurred by Lender in the purchase of such U.S. Obligations and the assumption payments referred to herein), shall be paid in full on or prior to the Release Date; and (iii) Borrower shall deliver to CSFC on or prior to the Release Date: (A) an amount (in immediately available funds) equal to the remaining principal amount of this Note and the Yield Maintenance Premium (hereinafter defined), if any, sufficient to purchase direct, non-callable obligations of the United States of America (the "Defeasance Collateral") that provide for payments prior, but as close as possible, to all successive monthly Payment Dates occurring after the Release Date through the Maturity Date (and assuming the Loan is paid in full on the Maturity Date), with each such payment being equal to or greater than the amount of the corresponding installment of principal and interest required to be paid under this Note (the "Defeasance Deposit"). The De...
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Defeasance Option. 17 Defect .....................................................................................17
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Related to Defeasance Option

  • DEFEASANCE AND COVENANT DEFEASANCE SECTION 1301.

  • Option to Effect Legal Defeasance or Covenant Defeasance; Defeasance The Issuer may, at its option and at any time, elect to have either Section 8.2 or 8.3 hereof be applied to all outstanding Notes upon compliance with the conditions set forth below in this Article VIII.

  • Company’s Option to Effect Defeasance or Covenant Defeasance The Company may elect, at its option at any time, to have Section 1302 or Section 1303 applied to any Securities or any series of Securities, as the case may be, designated pursuant to Section 301 as being defeasible pursuant to such Section 1302 or 1303, in accordance with any applicable requirements provided pursuant to Section 301 and upon compliance with the conditions set forth below in this Article. Any such election shall be evidenced by a Board Resolution or in another manner specified as contemplated by Section 301 for such Securities.

  • Conditions to Defeasance or Covenant Defeasance The following shall be the conditions to the application of Section 1502 or Section 1503 to any Securities or any series of Securities, as the case may be: (1) The Company shall irrevocably have deposited or caused to be deposited with the Trustee (or another trustee which satisfies the requirements contemplated by Section 609 and agrees to comply with the provisions of this Article applicable to it) as trust funds in trust for the purpose of making the following payments, specifically pledged as security for, and dedicated solely to, the benefits of the Holders of such Securities, (A) money in an amount, or (B) U.S. Government Obligations which through the scheduled payment of principal and interest in respect thereof in accordance with their terms will provide, not later than one day before the due date of any payment, money in an amount, or (C) a combination thereof, in each case sufficient, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay and discharge, and which shall be applied by the Trustee (or any such other qualifying trustee) to pay and discharge, the principal of and any premium and interest on such Securities on the respective Stated Maturities, in accordance with the terms of this Indenture and such Securities. As used herein, “U.S. Government Obligation” means (x) any security which is (i) a direct obligation of the United States of America for the payment of which the full faith and credit of the United States of America is pledged or (ii) an obligation of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America the payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America, which, in either case (i) or (ii), is not callable or redeemable at the option of the issuer thereof, and (y) any depositary receipt issued by a bank (as defined in Section 3(a)(2) of the Securities Act) as custodian with respect to any U.S. Government Obligation which is specified in clause (x) above and held by such bank for the account of the holder of such depositary receipt, or with respect to any specific payment of principal of or interest on any U.S. Government Obligation which is so specified and held, provided that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depositary receipt from any amount received by the custodian in respect of the U.S. Government Obligation or the specific payment of principal or interest evidenced by such depositary receipt.

  • Option to Effect Defeasance or Covenant Defeasance The Issuer or the Guarantors may, at any time, elect to have either Section 1202 or Section 1203 be applied to all the Outstanding Securities of any series designated pursuant to Section 301 as being defeasible pursuant to this Article Twelve, upon compliance with the applicable requirements provided pursuant to Section 301 and upon compliance with the conditions set forth below in this Article Twelve. Any such election shall be evidenced by a Board Resolution or in another manner specified as contemplated by Section 301 for such Securities.