covenant


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Related to covenant: Covenant marriage

Covenant

An agreed action to be undertaken (Positive) or not done (Negative). A breach of a covenant is a default.

Covenant

A provision in an indenture. An indenture sets the terms of a bond; its terms include the coupon rate, the period until maturity, and whether the bond comes with any special features like convertibility or whether it is callable. A covenant within an indenture states what actions the issuer and the bondholder may or may not take in certain situations. Covenants (and indentures generally) exist to reduce the risk to all parties to a bond.

covenant

A clause in a loan agreement written to protect the lender's claim by keeping the borrower's financial position approximately the same as it was at the time the loan agreement was made. Essentially, covenants spell out what the borrower may do and must do in order to satisfy the terms of the loan. For example, the borrower may be prohibited from issuing more debt by using certain assets as collateral. Likewise, the borrower may be required to issue reports to bondholders on certain dates. Also called protective covenant, restrictive covenant. See also negative covenant, positive covenant.
Case Study In February 2002 Qwest Communications issued a warning that the company was in danger of violating a bank loan covenant by the end of June. A major slump in the telecom business combined with heavy indebtedness caused concern that the firm's debt would exceed the specified maximum of 3.75 earnings before interest, taxes, depreciation, and amortization. A month later the company announced that in return for agreeing to use $608 million from a $1.5 billion bond issue to reduce bank debt, the bankers agreed to a concession that raised the covenant maximum to 4.25 until the end of September, and 4.00 during the following six months. The covenant had been included as part of the original bank loan agreement in order to help insure that Qwest could continue to meet its existing obligations before taking on additional debt.

covenant

a written agreement by a person to pay a given sum of money to some other person or organization for a specified period of time. Where a covenant arrangement allows a donor relief from income tax on any sums paid over, the covenant provides a tax-efficient means of making financial provision for a relative or charity.

covenant

a specific condition in a legal agreement or CONTRACT. For instance, a formal agreement between a COMMERCIAL BANK and a JOINT-STOCK COMPANY to which it is loaning money might contain a covenant stipulating a limit on dividend distributions from profits.

covenant

An agreement. For example,one can make a “covenant not to compete”a provision of a business sale,or one can write a restrictive covenant regarding the use of real property into the real estate records,which binds all owners whether it is contained in their specific deed or not.

References in periodicals archive ?
In most acquisitions where the target employee-owner played an integral part in the operation of the acquired business, the acquirer and owner will execute a noncompete covenant in connection with the transaction.
shows how the covenant ideal, which was central to the concerns of the founders of the United States, is necessary today amid avaricious misuse of economic power and denial of basic economic rights.
And auction experts are urging property seekers to research covenants in place before making a bid.
In 2004, seven years after the initial passage of the covenant marriage legislation, the Louisiana legislature imposed additional obligations on covenant spouses, many of which are merely hortatory in nature.
Despite the cause of a debt covenant violation or the potential breach of a debt covenant, planning and communication can help most companies navigate the current economic and regulatory storms.
The 1987 covenant could have been filed away, but the signing churches and KAIROS are making a real effort to ensure this document is not forgotten," said Allen.
Revolutionary England and the National Covenant is based on prodigious archival research, and the arguments derived from the subscription returns may be the most original section of the book.
When commentator and media personality Tavis Smiley approached Haki Madhubuti about publishing The Covenant, there was already reason to be pessimistic as well as optimistic about the book's prospects.
She views the covenant marriage movement as a way for religious groups to bring God more openly into traditional family values and calls it "a wonderful idea" for individual rituals, although she doesn't think the state should play a role.
Civil covenants reflected more ad-hoc arrangements although here Weir turns up some surprises.
4(2), all amounts received or receivable in respect of the grant of a restrictive covenant would, except for three narrowly prescribed exceptions set forth in subsection 56.