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 periodicals archive ?
As many as 839,300 tourists visited Azerbaijan for recreation and entertainment purposes, 834,400 overseas for business, 49,100 for treatment, 14,700 for religious purposes, and 674,900 came to visit their relatives and friends.
Perhaps more significantly, when the former shareholders or partners of the domestic entity hold at least 80% of the foreign surrogate corporation, the latter will be treated as a domestic corporation for all Code purposes, under Sec.
For me, a purpose of preaching is to keep me spiritually disciplined.
So sexual intercourse was meant by God to be the right of married people only and to be used by them for two purposes only: to procreate new life, if nature so co-operates--that is sexual intercourse's procreative purpose, and to build up the love and unity of the spouses--sexual intercourse's unitive purpose.
UNIT A BLACKWELL FOUND HER LIFE'S PURPOSE DURING A PROTEST against disenfranchisement in the segregated South of the 1960s.
Because of the different tax treatment of the stock purchase under the two systems, the stock had a basis of $9,225 for regular tax purposes and $1,075,289 for the AMT.
(12) In response, some taxpayers suggested adopting the "functional interdependence test" applied for purposes of section 263A(f) in determining whether and how much interest to capitalize in connection with a capital improvement project.
The directive will encourage the formation of special purpose vehicles, whose chief characteristic is that they are funded by the issuance of debt.
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Supreme Court ruled 5-4 that the use of eminent domain for economic development constitutes a valid public purpose and therefore is permissible under the Fifth Amendment to the U.S.
FISA established a requirement of judicial approval before the government engages in at electronic surveillance (as well as physical searches) for foreign intelligence purposes. The act established the FISA Court, consisting of U.S.
Thus, Hefner argues that evolution stems from the Divine and represents the process through which the Divine brings creatures with free will (humans) into being in order to further divine purposes. "This interpretation of the conditioning matrix of evolution as the work of God...requires of us a particular view of the natural processes as themselves participants in God's grace and vehicles of that grace," he says (Hefner, 1993, p.45).