Covenant Default on This Note Clause Samples
The "Covenant Default on This Note" clause defines what constitutes a breach of the borrower's obligations under the terms of the note, specifically relating to covenants or promises made in the agreement. If the borrower fails to perform or violates any of these covenants—such as maintaining certain financial ratios, providing required reports, or refraining from prohibited actions—this clause triggers a default. Its core practical function is to protect the lender by providing clear grounds for declaring a default and potentially accelerating repayment or taking other remedial actions if the borrower does not comply with agreed-upon covenants.
Covenant Default on This Note. In the event that the Company shall fail to comply with any of the covenants or other agreements contained in the Stock Purchase Agreement, or any guarantee or other agreement or instrument relating to this Note or an Event of Default shall occur with respect to this Note (other than a Payment Default) which default or event of default shall not have been cured or waived (in this Paragraph 4, a "Covenant Default"), and a holder of Junior Debt shall have received written notice of such Covenant Default from the Company or any Holder of this Note or any representative thereof, then no cash payment shall be made after receipt of such written notice by that holder of Junior Debt, in each case, on account of that Junior Debt, whether for principal, interest or otherwise, unless and until such this Note shall have been irrevocably paid in full or until such Covenant Default shall have been cured or waived.