Notes Reserve Account Clause Samples
The Notes Reserve Account clause establishes a dedicated account where funds are set aside to cover specific obligations related to issued notes, such as interest payments or principal repayments. Typically, this account is funded by the issuer or through proceeds from the notes, and may require maintaining a minimum balance or periodic replenishments. Its core practical function is to provide financial security for noteholders by ensuring that sufficient resources are available to meet payment obligations, thereby reducing the risk of default.
Notes Reserve Account. (a) The Co-Issuers shall establish and maintain or cause to be maintained at the Collateral Custodian, a segregated non-interest bearing trust account in the name of one or both Co-Issuers (as specified in the applicable Account Control Agreement) (such account, the “Notes Reserve Account”), for the purpose of holding a minimum balance of not less than the Notes Reserve Account Required Balance at all times, and the Co-Issuers will maintain a minimum balance of not less than the Notes Reserve Account Required Balance in the Notes Reserve Account at all times, except for periods between any Determination Date and Payment Date to the extent resulting from the application of funds in the Notes Reserve Account into the Notes Payment Account. The Notes Reserve Account shall be subject at all times to an Account Control Agreement.
(b) So long as the Collateral Custodian has not been notified by the Trustee or any Co-Issuer that an Event of Default exists, then the Collateral Custodian shall, at the written direction of either Co-Issuer from time to time cause the funds held in the Notes Reserve Account, from time to time, to be invested in one or more Cash Equivalents selected by such Co-Issuer (which Cash Equivalents shall at all times be subject to the Lien created hereunder); provided that in no event shall the Collateral Custodian: (i) have any responsibility whatsoever as to the validity or quality of any Cash Equivalent, (ii) be liable for the selection of Cash Equivalents or for investment losses incurred thereon or in respect of losses incurred as a result of the liquidation of any Cash Equivalent before its stated maturity pursuant to this Section 4.05 or the failure of a Co-Issuer to provide timely written investment direction or (iii) have any obligation to invest or reinvest any such amounts in the absence of such investment direction. Notwithstanding anything else in this Indenture to the contrary, in no event shall any Co-Issuer direct any investment in any such Cash Equivalent that will mature later than the Business Day before the next occurring Payment Date. It is agreed and understood that the entity serving as the Trustee or the Collateral Custodian may earn fees associated with the investments outlined above in accordance with the terms of such investments. In no event shall the Trustee or the Collateral Custodian be deemed an investment manager or adviser in respect of any selection of investments hereunder. It is understood and agreed that ...