SECTION 403. COVENANT DEFEASANCE Sample Clauses
The Covenant Defeasance clause allows a borrower to be released from certain restrictive covenants in a debt agreement, typically after meeting specific conditions such as depositing sufficient funds or government securities to cover future payments. In practice, this means that once the borrower has set aside the required assets, they are no longer bound by obligations like maintaining financial ratios or restrictions on additional debt. The core function of this clause is to provide the borrower with greater flexibility and certainty by eliminating ongoing covenant requirements, while still ensuring that the lender will be repaid.
SECTION 403. COVENANT DEFEASANCE. Upon the Issuer’s exercise under Section 401 of the option applicable to this Section 403, (i) the Issuer and the Guarantors shall be released from any obligations under the covenants contained in Section 704, Sections 801 and 803, Sections 1004 through 1008, inclusive, and such other obligations as shall be set forth in any supplemental indenture for the Securities of a series and (ii) the occurrence of any event specified in Section 501(4) (with respect to any of Section 704, Sections 801 and 803, Sections 1004 through 1008, inclusive, and such other obligations as shall be set forth in any supplemental indenture for the Securities of that series), 501(5) and 501(8) shall be deemed not to be or result in an Event of Default, in each case, with respect to the Outstanding Securities of the particular series, on and after the date the conditions set forth below are satisfied (hereinafter, “Covenant Defeasance”), and the Securities of that series shall thereafter be deemed not “Outstanding” for the purposes of any direction, waiver, consent or declaration or act of Holders (and the consequences of any thereof) in connection with such covenants, but shall continue to be deemed “Outstanding” for all other purposes hereunder (it being understood that such Securities shall not be deemed outstanding for accounting purposes). For this purpose, such Covenant Defeasance means that, with respect to the Outstanding Securities of that series, the Issuer may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such covenant, whether directly or indirectly, by reason of any reference elsewhere herein to any such covenant or by reason of any reference in any such covenant to any other provision herein or in any other document and such omission to comply shall not constitute a default or Event of Default under Section 501(4) but, except as specified above, the remainder of this Indenture and the Securities of that series shall be unaffected thereby.
SECTION 403. COVENANT DEFEASANCE. 44 SECTION 404. CONDITIONS TO DEFEASANCE OR COVENANT DEFEASANCE. ....................................... 44 SECTION 405. DEPOSITED MONEY AND U.S. GOVERNMENT OBLIGATIONS TO BE HELD IN TRUST; OTHER MISCELLANEOUS PROVISIONS. ......................................................... 47
SECTION 403. COVENANT DEFEASANCE. 44 SECTION 404. CONDITIONS TO DEFEASANCE OR COVENANT DEFEASANCE. ................................ 44
SECTION 403. COVENANT DEFEASANCE. Section 404. Conditions to Defeasance or Covenant Defeasance............................................. 44
SECTION 403. COVENANT DEFEASANCE. 44 Section 404. Conditions to Defeasance or Covenant Defeasance 45 Section 405. Deposited Money and U.S. Government Obligations to Be Held in Trust; Other Miscellaneous Provisions . . . 47