SECTION 1303. Covenant Defeasance Clause Samples
The Covenant Defeasance clause allows a borrower to be released from certain restrictive covenants in a debt agreement upon meeting specific conditions, typically by depositing sufficient funds or government securities to cover future payments. In practice, once these requirements are satisfied, the borrower is no longer bound by obligations such as maintaining certain financial ratios or restrictions on additional debt, though the obligation to repay principal and interest remains. This clause provides the borrower with greater operational flexibility while still ensuring that lenders are protected against default on payment terms.
SECTION 1303. Covenant Defeasance. 52 SECTION 1304. Conditions to Defeasance or Covenant Defeasance..................................... 53
SECTION 1303. Covenant Defeasance. 56 Section 1304. Conditions to Defeasance or Covenant Defeasance.................. 57
SECTION 1303. Covenant Defeasance. 68 SECTION 1304. Conditions to Defeasance or Covenant Defeasance . . . . . . . .
SECTION 1303. Covenant Defeasance. Upon the Company’s exercise of its option (if any) to have this Section applied to any Securities or any series of Securities, as the case may be, (1) the Company shall be released from its obligations under Sections 1008 through 1010, inclusive, and any covenants provided pursuant to Sections 301(18), 901(2) or 901(7) for the benefit of the Holders of such Securities and (2) the occurrence of any event specified in Sections 501(4) (with respect to any of Sections 1008 through 1010, inclusive, and any such covenants provided pursuant to Section 301(18), 901(2) or 901(7)) and 501(7) shall be deemed not to be or result in an Event of Default, in each case with respect to such Securities as provided in this Section on and after the date the conditions set forth in Section 1304 are satisfied (hereinafter called “Covenant Defeasance”). For this purpose, such Covenant Defeasance means that, with respect to such Securities, the Company may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such specified Section (to the extent so specified in the case of Section 501(4)), whether directly or indirectly by reason of any reference elsewhere herein to any such Section or by reason of any reference in any such Section to any other provision herein or in any other document, but the remainder of this Indenture and such Securities shall be unaffected thereby.
SECTION 1303. Covenant Defeasance. 89 SECTION 1304. CONDITIONS TO DEFEASANCE OR COVENANT DEFEASANCE .............90
SECTION 1303. Covenant Defeasance. Upon the Company’s exercise of its option (if any) to have this Section 1303 applied to any Securities or any series of Securities, as the case may be, (1) the Company shall be released from its obligations under Section 1004 and any covenants provided pursuant to Section 301(18), Section 901(2), Section 901(6) or Section 901(7) for the benefit of the Holders of such Securities and (2) the occurrence of any event specified in Section 501(4) (with respect to Section 1004 and any such covenants provided pursuant to Section 301(18), Section 901(2), Section 901(6) or Section 901(7) and Section 501(8) shall be deemed not to be or result in an Event of Default, in each case with respect to such Securities as provided in this Section 1303 on and after the date the conditions set forth in Section 1304 are satisfied (hereinafter called “Covenant Defeasance”)). For this purpose, such Covenant Defeasance means that, with respect to such Securities, the Company and any Guarantor may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such specified Section (to the extent so specified in the case of Section 501(4)), whether directly or indirectly by reason of any reference elsewhere herein to any such Section or by reason of any reference in any such Section to any other provision herein or in any other document, but the remainder of this Indenture and such Securities thereof shall be unaffected thereby. If the Company exercises its Covenant Defeasance option, payment of the Securities may not be accelerated because of, and a default or Event of Default shall be deemed not to exist as a result of or to arise out of, an Event of Default with respect to the failure of the Company to comply with any covenants provided pursuant to Section 301(18), Section 901(2), Section 901(6) or Section 901(7). Upon the effectiveness of Covenant Defeasance with respect to any series of Securities, each Guarantor of the Securities of such series shall be automatically and unconditionally released and discharged from all of its obligations under its Guarantee of the Securities of such series and all of its other obligations under this Indenture in respect of the Securities of such series, without any action by the Company, any Guarantor or the Trustee and without the consent of the Holders of any Securities.
SECTION 1303. Covenant Defeasance. Upon the Company’s exercise of its option, if any, to have this Section 1303 applied to any Securities or any series of Securities, or if this Section 1303 shall otherwise apply to any Securities or any series of Securities, (1) the Company shall be released from its obligations under Section 801 and any covenants provided pursuant to Section 301(18), Section 901(1) or Section 901(11) for the benefit of the Holders of such Securities and (2) the occurrence of any event specified in Section 501(4) and Section 501(7) shall be deemed not to be or result in an Event of Default, in each case with respect to such Securities as provided in this Section 1303 on and after the date the conditions set forth in Section 1304 are satisfied (“Covenant Defeasance”). For this purpose, such Covenant Defeasance means that, with respect to such Securities, the Company may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such specified Section, whether directly or indirectly by reason of any reference elsewhere herein to any such Section or by reason of any reference in any such Section to any other provision herein or in any other document, but the remainder of this Indenture and such Securities shall be unaffected thereby.
SECTION 1303. Covenant Defeasance. 65 Section 1304. Application by Trustee of Funds Deposited for Payment of Securities.................................................67
SECTION 1303. Covenant Defeasance. 65 Section 1304. Conditions to Defeasance or Covenant Defeasance . 65 Section 1305. Deposited Money and U.S. Government Obligations to be Held in Trust; Miscellaneous Provisions ................................. 67
SECTION 1303. Covenant Defeasance. 89 SECTION 1304. CONDITIONS TO DEFEASANCE OR COVENANT DEFEASANCE.........................................90 SECTION 1305. DEPOSITED MONEY AND U.S. GOVERNMENT OBLIGATIONS TO BE HELD IN TRUST; OTHER MISCELLANEOUS PROVISIONS.............................................................92