Common use of Deferral Right Clause in Contracts

Deferral Right. So long as no Event of Default (as defined in Section 4.2 herein) has occurred and is continuing, the Corporation may elect, at its sole option, on any date other than an Interest Payment Date (but subject to the notice requirements specified below), to defer the interest payable on the Notes on one or more occasions, for up to five consecutive years (a “Deferral Period”). During any Deferral Period, interest on the Notes will continue to accrue at the then-applicable interest rate on the Notes (as reset from time to time on any Interest Reset Date occurring during such Deferral Period). In addition, during any Deferral Period, interest on the deferred interest (“compound interest”) will accrue at the then-applicable interest rate on the Notes (as reset from time to time on any Interest Reset Date occurring during such Deferral Period), compounded semi-annually, to the extent permitted by applicable law. There is no limit on the number of Deferral Periods that may occur. Any such deferral will not constitute an Event of Default or any other breach under the Indenture and the Notes. Deferred interest will accrue until paid (including, to the extent permitted by law, any compound interest). A Deferral Period terminates on any Interest Payment Date on which the Corporation pays all accrued and unpaid interest (including, to the extent permitted by law, any compound interest). No Deferral Period may extend beyond the Maturity Date or any date fixed for redemption, as applicable. The Corporation will give the Holders of the Notes written notice of its election to commence or continue a Deferral Period at least 10 days and not more than 60 days before the next Interest Payment Date.