covenant

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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 classic literature ?
I take the official oath today with no mental reservations, and with no purpose to construe the Constitution or laws by any hypercritical rules.
In either case, the EXECUTION of the business, which alone requires the knowledge of local details, must be devolved upon discreet persons in the character of commissioners or assessors, elected by the people or appointed by the government for the purpose.
With what propriety, therefore, or for what good purposes, are attempts at this particular period made by some men to depreciate the importance of the Union?
They were to frame a NATIONAL GOVERNMENT, adequate to the EXIGENCIES OF GOVERNMENT, and OF THE UNION; and to reduce the articles of Confederation into such form as to accomplish these purposes.
Hence it is only the enlightened ruler and the wise general who will use the highest intelligence of the army for purposes of spying and thereby they achieve great results.
I have understood," said I, "that efforts have been made for that purpose from time immemorial.
Now if in this particular science any one would attend to its original seeds, and their first shoot, he would then as in others have the subject perfectly before him; and perceive, in the first place, that it is requisite that those should be joined together whose species cannot exist without each other, as the male and the female, for the business of propagation; and this not through choice, but by that natural impulse which acts both upon plants and animals also, for the purpose of their leaving behind them others like themselves.
He knew that the people in the North who gave money gave it for the purpose of helping the whole cause of Negro civilization, and not merely for the advancement of any one school.
Only by renouncing our claim to discern a purpose immediately intelligible to us, and admitting the ultimate purpose to be beyond our ken, may we discern the sequence of experiences in the lives of historic characters and perceive the cause of the effect they produce (incommensurable with ordinary human capabilities), and then the words chance and genius become superfluous.
Seeing how important an organ of locomotion the tail is in most aquatic animals, its general presence and use for many purposes in so many land animals, which in their lungs or modified swim-bladders betray their aquatic origin, may perhaps be thus accounted for.
For these purposes I have employed all the wit and humour of which I am master in the following history; wherein I have endeavoured to laugh mankind out of their favourite follies and vices.
I believe these definitions to be adequate also to human purposes and desires, but for the present I am only occupied with animals and with what can be learnt by external observation.