Phoenix Bondholder Litigation

The dual use of the word “duration” in the Macaulay duration and the modified duration, as both the weighted average time until repayment and as the percentage change in price, often causes confusion. Duration is the weighted average of the times until fixed cash flows of a financial asset are received. Bonds provide the borrower with external funds to finance long-term investments, or, in the case of government bonds, to finance current expenditure. Bond Indenture is the legal document; all the clauses mentioned in the document are applicable to all the stakeholders involved in the transaction. After a discussion with the advisor, the company decided to approach various investors, and rather than negotiating them individually company decided to create a Bond Indenture or deed of trust, which will act as a contract between XYZ and all investors .

Section 11.2 Fees, Charges and Expenses of Trustee and Paying Agents. The Trustee and any Paying Agent shall be entitled to payment and/or reimbursement for reasonable fees, costs and expenses for services rendered hereunder and all advances, counsel fees and other fees, costs and expenses reasonably and necessarily made or incurred in and about the execution of the trusts created by this Indenture. The Issuer has made provisions in the Loan Agreement for the payment of such Administration Expenses and reference is hereby made to the Loan Agreement for the provisions so made. In this regard, it is understood that the Issuer pledges no funds or revenues other than those derived from and the avails of the Trust Estate to the payment of any obligation of the Issuer set forth in this Indenture, including the obligations set forth in this Section 11.2, but nothing herein shall be construed as prohibiting the Issuer from using any other funds and revenues for the payment of any of its obligations under this Indenture. Upon an Event of Default, but only upon an Event of Default, the Trustee and the Paying Agent shall have a first lien with right of payment prior to payment on account of principal or interest of any Bond issued hereunder upon the Trust Estate for such reasonable and necessary advances, fees, costs and expenses incurred by them respectively.

In so holding, of course, our cases are directed to claims against an issuer not to those directed against an indenture trustee. A bond agreement is often defined as “a contract for privately placed debt.” More specifically, bond agreements represent privately placed securities or investment vehicles that are not for sale to the general public, but instead, they are sold directly to institutional investors . Bond agreements are typically issued by smaller companies. Bond agreements may be eligible for exemption from SEC registration requirements, which could present slightly more risk to you as an investor, without having the contractual agreement a bond indenture provides.

The Trustee shall not be responsible for any loss or damage resulting from an action or non-action in accordance with any such opinion or advice. Upon surrender of any Bond for redemption in part only, the Issuer shall execute and the Trustee shall authenticate and deliver to the holder thereof a new Bond or Bonds of the same series and the same maturity of authorized denominations in an aggregate principal amount equal to the unredeemed portion of the Bond surrendered. The Series 2021 Bonds shall be subject to mandatory redemption in whole, at a redemption price equal to 100% of the principal amount thereof being redeemed plus accrued an indenture is a legal document that details the rights of bondholders interest thereon to the redemption date on the ninetieth day after a Determination of Taxability. Subject to the foregoing provisions of this Section 3.1 the Series 2021 Bonds shall be redeemed in whole, unless, in the opinion of Bond Counsel, the redemption of a portion of the Series 2021 Bonds would have the result that interest payable on the Series 2021 Bonds remaining outstanding after such redemption would not be includable in the gross income for federal income tax purposes of any owner of any such Series 2021 Bonds. No Bonds may be issued under the provisions of this Indenture except in accordance with this Article.

Bankruptcy Indenture

The indenture will list the details of these special features, including the dates when the special features will be available, and under what conditions. For convertible bonds, for instance, the conversion ratio or conversion price will be specified, which determines the number of shares of stock the bond can be converted to. Bond ratings below BBB/Baa are not considered to be investment-grade; these bonds are called junk bonds. These are Certified Public Accountant bonds that are rated below investment grade by the credit rating agencies. As these bonds are more risky than investment grade bonds, investors expect them to earn a higher yield. The threshold between investment-grade and speculative-grade ratings has important market implications for issuers ‘ borrowing costs. A bond is an instrument of indebtedness of the bond issuer to the holders, as such it is often referred to as a debt instrument.

Covenants could also be Affirmative, which requires the issuer to meet certain criteria. These could be the requirement of cash reserves, financial ratios, financial statements, and more. The offering memorandum, also known as a prospectus, is a document that describes a financial security for potential buyers.

The modified duration is a derivative or price sensitivity and measures the percentage rate of change of price with respect to yield. The concept of modified duration can be applied to interest-rate sensitive instruments with non-fixed cash flows. The modified duration is the name given to the price sensitivity and is the percentage change in price for a unit change in yield. It really makes sense only for an instrument with fixed cash flows. The Macaulay duration is the name given to the weighted average time until cash flows are received and is measured in years. Indenture is the only legal document that is referred in case of any dispute regarding the bond.

If the position of Paying Agent shall become vacant for any reason, the Issuer shall, within thirty days thereafter, appoint such bank or trust company as shall be specified by the Company as such Paying Agent to fill such vacancy; provided, however, that, if the Issuer shall fail to appoint such Paying Agent within said Online Accounting period, the Trustee shall make such appointment. The Trustee may accept a certificate of an Assistant Secretary of the Issuer to the effect that a resolution in the form therein set forth has been adopted by the Issuer as conclusive evidence that such resolution has been duly adopted, and is in full force and effect.

Bond Indenture

Before taking such action hereunder, the Trustee may require that it be furnished an indemnity bond satisfactory to it for the reimbursement to it of all expenses to which it may be put and to protect it against all liability, except liability which is adjudicated to have resulted from the negligence or willful misconduct of the Trustee, by reason of any action so taken by the Trustee. The Issuer covenants that it shall not take any action or suffer or permit any action to be taken or condition to exist which causes or may cause the interest payable on the online bookkeeping Bonds to be includable in gross income for purposes of federal income taxation. Without limiting the generality of the foregoing, the Issuer covenants that the proceeds of the sale of the Bonds, the earnings thereon, and any other moneys on deposit in any fund or account maintained in respect of the Bonds will not be used in a manner that would cause the Bonds to be treated as “arbitrage bonds” within the meaning of Section 148 of the Code, and all action with respect to the Bonds required by Section 148 of the Code shall be taken in a timely manner.

• For convertible bonds, for instance, the conversion ratio or conversion price will be specified, which determines the number of shares of stock the bond can be converted to.
• However, on November 30, 2009, the company had $75 million in cash on hand.
• It carries the dates when the bondholders will get the interest payments.
• This case is a purported class action brought on behalf of the holders of 8 1/8% Convertible Subordinated Debentures of Knoll International, Inc.
• Municipal bonds are issued by state and local governments — also called municipalities — to raise money for public works projects like the construction and maintenance of bridges, hospitals, schools and water treatment facilities.
• Any bank or trust company with which or into which any Paying Agent may be merged or consolidated, or to which the assets and business of such Paying Agent may be sold, shall be deemed the successor of such Paying Agent for the purposes of this Indenture.

Bonds are issued by public authorities, credit institutions, companies, and supranational institutions in the primary market. Bonds and stocks are both securities, but the major difference between the two is that stockholders have an equity stake in the company (i.e. they are owners), whereas bondholders have a creditor stake in the company (i.e. they are lenders). These contracts, once signed, are not renegotiable, so any change in the interest rate due to policy change may have financial repercussions. In the case of the securitized bond, details of the sponsor that will be a financial institution and is the in-charge of the securitization process. In case of default, the collateral is sold, and the amount is used to repay the collateralized bondholders. Mortgage bonds are bonds where real estates, equipment, and other tangible assets are kept as collateral.

When a trustee is involved a trust indenture will also be needed. A trust indenture is similar to a bond indenture, except it also details the trustee’s responsibilities in overseeing all of a bond issue’s terms. It has now become firmly fixed in our law that among the duties owed by directors of a Delaware corporation to holders of that corporations’ debt instruments, there is no duty of the broad and exacting nature characterized as a fiduciary duty. Unlike shareholders, to whom such duties are owed, holders of debt may turn to documents that exhaustively detail the rights and obligations of the issuer, the trustee under the debt indenture, and of the holders of the securities. The Series 2021 Bonds are all issued cash flow under and are all equally and ratably secured and entitled to the protection given by the Indenture. The Indenture provides that the Issuer may hereafter issue Additional Bonds from time to time under certain terms and conditions contained in the Indenture and, if issued, such Additional Bonds will be equally and ratably secured by and entitled to the protection of the Indenture. Reference is hereby made to the Indenture and all indentures supplemental thereto for the provisions, among others, with respect to the nature and extent of the security, the rights, duties and obligations of the Issuer, the Trustee and the registered owners of the Bonds, and the terms upon which the Bonds are issued and secured.

Which Of The Following Details Are Mentioned In An Indenture Contract?

Such transfers of registration or exchanges of Bonds shall be without charge to the holders of such Bonds, but any taxes or other governmental charges required to be paid with respect to the same shall be paid by the holder of the Bond requesting such transfer or exchange as a condition precedent to the exercise of such privilege. Only such Bonds as shall have endorsed thereon a Certificate of Authentication substantially in the form set forth in Exhibit A attached hereto duly executed by the Trustee shall be entitled to any right or benefit under this Indenture. No Bond shall be valid and obligatory for any purpose unless and until such Certificate of Authentication shall have been duly executed by the Trustee, and such Certificate of the Trustee upon any such Bond shall be conclusive evidence that such Bond has been authenticated and delivered under this Indenture. The Trustee’s Certificate of Authentication on any Bond shall be deemed to have been executed if signed by an authorized officer of the Trustee, but it shall not be necessary that the same officer sign the Certificate of Authentication on all of the Bonds issued hereunder. Unless the context shall otherwise indicate, “Person” or “person” shall mean any individual, corporation, partnership, joint venture, association, joint stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. “Issuer” shall mean the Mississippi Business Finance Corporation, a public corporation duly created and validly existing pursuant to the constitution and laws of the State, including the Act, or any successor to its rights and obligations under the Loan Agreement and this Indenture.

The owner of this Bond shall have no right to enforce the provisions of the Indenture or to institute action to enforce the covenants therein, or to take any action with respect to any event of default under the Indenture, or to institute, appear in and defend any suit or other proceeding with respect thereto, except as provided in the Indenture. In certain events, on the conditions, in the manner and with the effect set forth in the Indenture, the principal of all the Bonds issued under the Indenture and then outstanding may be declared and may become due and payable before the stated maturity thereof, together with accrued interest thereon.

The Issuer and the Trustee agree that the Company in its own name or in the name of the Issuer may enforce all of the rights of the Issuer, all obligations of the Trustee, and all of the Company’s rights provided for in this Indenture. The Company has undertaken in the Loan Agreement to make the determinations required by paragraph of this Section 7.2 and to provide statements to the Trustee to the effect that all actions with respect to the Bonds required by Section 148 of the Code have been taken. The Trustee shall be entitled to rely upon such determinations and statements as sufficient evidence of the facts therein contained. The Issuer and the Trustee shall not make or agree to make any payments or participate in any non-arms-length transaction which would have the effect of reducing the earnings on investments, thereby reducing the amount required to be rebated to the United States of America under Section 148 of the Code and regulations thereunder. Anything herein to the contrary notwithstanding, the Trustee is authorized and directed to refund to the Company, upon written request, all excess amounts as specified in the Loan Agreement, whether such excess amounts be in the Bond Fund or in special accounts. Any action taken by the Trustee in accordance with the provisions of this Section shall be binding upon the Issuer and the Bondholders.

A bond trustee is hired by a bond issuer and oversees the implementation of a bond or trust indenture, which is a contract between a bond issuer and a bondholder. The trustee has a fiduciary responsibility to act on behalf of the issuer, rather than in its own interests. Bond indenture is a legal document issued to lenders and describes key terms such as the interest rate, maturity date, convertibility, pledge, promises, representations, covenants, and other terms of the bond offering. When the offering memorandum is prepared in advance of marketing a bond, the indenture will typically be summarised in the “description of notes” section. The issuer of these convertible debentures, Knoll International, Inc. (“Knoll”), is controlled through a series of subsidiaries by defendant Knoll International Holdings, Inc., which, in turn, is controlled by defendant Marshall S. Cogan. The gist of the complaint is that defendants caused the minority shareholders of Knoll to be eliminated through a two-stage transaction involving a $12 cash tender offer followed by a cash for stock merger at the same price. The merger that culminated this process occurred on January 22, 1987 and left Knoll, the issuer, as the surviving corporation and a wholly-owned subsidiary of Holdings.

Other Types Of Indenture

Chapman’s “Presentation Catalog” is a sampling of presentations that Chapman attorneys can provide for business and legal teams. Our presentations can be tailored for business-related purposes or to earn Continuing Legal Eduction credit. Out-of-court debt restructurings may face greater hurdles to success in light of two recent federal court decisions out of New York broadly expanding dissenting bondholders’ rights under the Trust Indenture Act. To indent; to make hollows, notches, or wrinkles in; to furrow. Please declare your traffic by updating cash flow your user agent to include company specific information. IN WITNESS WHEREOF, the Issuer has caused this Indenture to be executed by its Executive Director and attested by the Secretary of the Issuer, and the Trustee has caused this Indenture to be executed on its behalf by a duly authorized officer, all as of the day and year above written. All the covenants, stipulations, provisions, agreements, rights, remedies and claims of the parties hereto in this Indenture contained shall bind and inure to the benefit of their successors and assigns.

What Is The Difference Between A Bond Agreement And A Bond Indenture?

A bond indenture also details the rights of ownership as well as the rights of a bondholder to receive payments in the form of interest until a bond matures. All bond covenants are part of a bond’s legal documentation and are part of corporate bonds and government bonds. A bond’s indenture is the portion that contains the covenants, both positive and negative, and is enforceable throughout the entire life of the bond until maturity. retained earnings 1) Generally, any written agreement between two parties. 2) A real estate deed in which two parties agree to continuing obligations; for example, one party may agree to maintain the property and the other to make periodic payments. A bond that is callable can be redeemed before the maturity date for par or face value. Redeeming a callable bond is only possible at a specific price and when certain conditions are in place.

In addition, as amplified at oral argument, plaintiffs’ position is that the facts alleged also state a claim for fraud, and for breach of contract, including a breach of an implied contractual duty of good faith. Any notice mailed as so provided shall be conclusively presumed to have been duly given, whether or not the holder or owner receives the notice. If an Event of Default shall have occurred, and if it shall have been requested so to do by the holders of a majority in aggregate principal amount of Bonds outstanding hereunder and shall have been indemnified as provided in Section 11.1 hereof, the Trustee shall be obligated to exercise such one or more of the rights and powers conferred upon it by this Section as the Trustee, being advised by counsel, shall deem most expedient in the interests of the bondholders.

More On Types Of Bonds

Bond credit rating agencies assess and report the credit worthiness of a corporation’s or government’s debt issues. Terms of indentures include the interest rate, maturity date, repayment dates, convertibility, pledge, promises, representations, covenants, and other terms of the bond offering.