Hedge Covenants Sample Clauses
Hedge covenants are contractual provisions that require a party, typically a borrower, to enter into and maintain certain hedging arrangements, such as interest rate swaps or currency hedges, to manage financial risks associated with variable rates or foreign exchange exposure. These covenants often specify the types of hedging instruments to be used, the minimum coverage required, and ongoing reporting obligations to the lender. The core function of hedge covenants is to mitigate the risk of adverse market movements, thereby protecting both the borrower and lender from significant financial volatility.
Hedge Covenants. (i) As of the initial Payment Date and thereafter, so long as any of the Class A VFCs are outstanding, if on any date either:
(1) the then current Aggregate Notional Amount of all Hedge Transactions (excluding any interest rate cap transactions) hedging the Prime Rate Assets (i) is less than the aggregate amount of the Class A Advances Outstanding of such Prime Rate Assets or (ii) is greater than the amount specified in clause (i) above by more than the Floating Prime Rate Permitted Excess Amount; or
(2) the Aggregate Notional Amount for any future calculation period of all Hedge Transactions (excluding any interest rate cap transactions) hedging the Prime Rate Assets (i) is less than the projected aggregate amount of the Class A Advances Outstanding of the Prime Rate Assets for the corresponding Collection Period or (ii) is greater than the amount specified in clause (i) above by more than the Floating Prime Rate Permitted Excess Amount; then, not later than 1:00 p.m. (New York City time) on the Determination Date preceding the next Payment Date, the Servicer will notify the Administrative Agent and the Hedge Counterparties of such event and, with effect on such next Payment Date, one or more of the Hedge Transactions hedging the Prime Rate Assets will be reduced or amended, or the Seller will enter into one or more additional Hedge Transactions, as the case may be, in accordance with the terms of the applicable Hedge Agreements so that, as applicable, the Aggregate Notional Amount for each calculation period of the Hedge Transactions hedging the Prime Rate Assets will be equal to the aggregate amount of the Class A Advances Outstanding of the Prime Rate Assets at the end of the corresponding Collection Period or as projected to be outstanding at the end of the corresponding Collection Period,
(ii) So long as any of the Class A VFCs are outstanding, if on any date either:
(1) the then current Aggregate Notional Amount of all Hedge Transactions under all Hedge Agreements then in effect (excluding any interest rate cap transactions) exceeds the then Aggregate Outstanding Asset Balance; or
(2) the Aggregate Notional Amount of all Hedge Transactions (excluding any interest rate cap transactions) for any future calculation period under all Hedge Agreements then in effect exceeds the projected Aggregate Outstanding Asset Balance for the corresponding Collection Period; then, not later than 1:00 p.m. (New York City time) on the Determination Date preceding the n...
Hedge Covenants. (a) The Issuer shall, prior to entering into any Hedge Transaction, provide each Purchaser written notice of its intent to do so and shall deliver a summary of the material terms of such Hedge Transaction with such notice.
(b) The Originator, the Servicer and the Depositor hereby acknowledge that the Issuer will Grant to the Indenture Trustee pursuant to the Indenture, all right, title and interest of the Issuer in any Hedging Agreement, Hedge Transaction, and all present and future amounts payable by a Hedge Counterparty to the Issuer under or in connection with the any such Hedging Agreement and Hedge Transaction(s) with the applicable Hedge Counterparty (the "Hedge Collateral"), and the Issuer hereby Grants a security interest to the Indenture Trustee, on behalf of the Noteholders, in any Hedge Collateral. The Issuer acknowledges that, as a result of that assignment, the Issuer may not, without the prior written consent of the Majority Noteholders, exercise any rights under any Hedging Agreement or Hedge Transaction, except for Issuer's right under any Hedging Agreement to enter into Hedge Transactions in order to meet the Issuer's obligations under Section 7.02(a) hereof. Nothing herein shall have the effect of releasing the Issuer from any of its obligations under any Hedging Agreement or any Hedge Transaction, nor be construed as requiring the consent of the Indenture Trustee or any Noteholder for the performance by Issuer of any such obligations.
(c) Any Hedge Transaction shall be entered into with a Hedge Counterparty and governed by a Hedging Agreement. The Issuer shall, promptly upon execution thereof, provide to the Indenture Trustee and each Purchaser, a copy of each Hedging Agreement entered into in connection with this Agreement.