Definitions
1. General: Failure to do something required by an agreement, in the performance of a duty, or under a law.
2. Borrowing: Failure to meet the terms of a loan agreement. Its two types are:
- Fiscal: – Failure to make repayment on the due date. Generally, if a payment is 30 days overdue, the loan is in default.
- Covenantal: – Failure to live up to one or more covenants of the loan agreement such as exceeding the prescribed total borrowings.
Events of Default
The Events of Default clause explicitly enumerates the situations that will constitute an “Event of Default” under the agreement. In general, the clause includes defaulting on any Notes or Loan agreements, violating any representations and warranties, and failing to perform obligations. Many clause examples also include a catchall term that includes any breach or other default of any other term in the Agreement.
1. Defaults. The following events shall be Events of Default:
2. The occurrence of an Event of Default (as defined in the Notes) under the Notes;
3. Any representation or warranty of the Company in this Agreement or in the Loan Agreement shall prove to have been incorrect in any material respect when made;
4. The failure by the Company to observe or perform any of its obligations hereunder or in the Loan Agreement for ten (10) days after receipt by the Company of notice of such failure from the Secured Party; and
5. Any breach of, or default under the terms of this Agreement. “Events of default‖ are typically established between the parties and memorialized in the security agreement. Events of default could include, but are not limited to:
- Payment-related default
- Performance-related default
- Failure to properly maintain (abandonment) or enforce (infringement) the IP rights”
