Effect of Legal Defeasance, Covenant Defeasance or Satisfaction and Discharge on Subordination Provisions Sample Clauses
This clause defines how the subordination provisions of an agreement are affected when legal defeasance, covenant defeasance, or satisfaction and discharge occur. In practice, it clarifies whether the obligations that are subordinated to other debts remain so after the issuer has been released from certain covenants or the debt has been legally satisfied or discharged. For example, if a company legally defeases its bonds, this clause determines if those bonds still rank below other specified debts. The core function of this clause is to ensure clarity regarding the priority of payment and the ongoing effect of subordination even after certain legal or financial milestones are reached.
Effect of Legal Defeasance, Covenant Defeasance or Satisfaction and Discharge on Subordination Provisions. Unless otherwise expressly established pursuant to Section 2.02 with respect to the Subordinated Securities of any Series, the provisions of Section 12.01 hereof, insofar as they pertain to the Subordinated Securities of such Series, and the Subordination Provisions established pursuant to clause (x) of Section 2.02 with respect to such Series, are hereby expressly made subject to the provisions for legal defeasance, covenant defeasance and satisfaction and discharge set forth in Article Eight hereof and, anything to the contrary notwithstanding, upon the effectiveness of legal defeasance, covenant defeasance or satisfaction and discharge pursuant to Article Eight with respect to the Securities of such Series, such Securities shall thereupon cease to be so subordinated and shall no longer be subject to the provisions of Section 12.01 or the Subordination Provisions established pursuant to clause (x) of Section 2.02 with respect to such Series and, without limitation to the foregoing, all moneys, U.S. Government Obligations and other securities or property deposited with the Trustee (or other qualifying trustee) in trust in connection with such legal defeasance, covenant defeasance or satisfaction and discharge, as the case may be, and all proceeds therefrom may be applied to pay the principal of, premium, if any, and interest, if any, on, and mandatory sinking fund payments, if any, with respect to the Securities of such Series as and when the same shall become due and payable notwithstanding the provisions of Section 12.01 or the Subordination Provisions.