Acceleration Clause


Also found in: Dictionary, Thesaurus, Medical, Financial, Encyclopedia, Wikipedia.

Acceleration Clause

The provision in a credit agreement, such as a mortgage, note, bond, or deed of trust, that allows the lender to require immediate payment of all money due if certain conditions occur before the time that payment would otherwise be due.

The agreement may call for acceleration whenever there is a default of any important obligation, such as nonpayment of principal or interest, or the failure to pay insurance premiums.

acceleration clause

n. a provision in a contract or promissory note that if some event (like not making payments on time) occurs then the entire amount is due or other requirements are due now, pronto. This clause is most often found in promissory notes with installment payments for purchase of real property and requires that if the property is sold then the entire amount of the note is due immediately (the so-called "due on sale clause.") Some states prohibit "due on sale" and always allow the new property owner to assume the debt. (See: acceleration, assumption)

References in periodicals archive ?
(6.) This option only exists where the acceleration clause is discretionary.
Where there is a subjective acceleration clause and the likelihood of the acceleration of the due date is remote (such as when the lender historically has not accelerated due dates of loans containing similar clauses and the financial condition of the borrower is strong and its prospects are bright), neither current classification nor disclosure is required.
Paragraph 11 states that "The Board believes that creditors and debtors perceive a substantive difference between the rights that a creditor has under such a subjective acceleration clause and the rights that a creditor has under either (a) an obligation that is due on demand or (b) an obligation that is callable because of a violation of an objectively determinable provision."
1991) ("acceleration clauses 'serve a valid business purpose'").
79-3 says if a long-term debt agreement does contain a subjective acceleration clause and acceleration of the due date is remote, neither reclassification to current liabilities nor disclosure of the acceleration clause is required.
The exercise price of the Warrants will remain unchanged at $0.15 with the acceleration clause unchanged as follows: 'If at any time after the Company's common share have a closing price on the TSX Exchange at or above a price of Cdn $0.30 per share for a period of 10 consecutive trading days, the Company may give notice by News Release that expiration of the Warrants will be accelerated to 40 days from the date of providing such notice'.
The Warrants are subject to an acceleration clause (the "Acceleration Clause") that allows the Company to accelerate the expiry date of the Warrants in the event that the volume weighted average trading price of the Common Shares on the TSX Venture Exchange equals or exceeds $0.14 for ten consecutive trading days, the Warrants will expire on the date that is at least 30 days following the issuance of a press release announcing such acceleration from the Company.
The documentation includes a negative pledge provision that is binding on KFH, as well as financial reporting obligations, covenants, KFH event and cross acceleration clause. The documentation does not contain a change of control clause.
The Finders Warrants will be subject to the same acceleration clause as the private placement warrants.
The warrants are subject to an acceleration clause that will be triggered when the company's shares trade at CAD0.40 or more for ten consecutive trading days, at which point the company reserves the right to demand exercise of the warrants within a specified period of time, barring which the warrants will expire.
The review of DEWA's ratings considers the potential for liquidity pressure due to the triggering of an acceleration clause on its $2 billion Receivables Securitisation Programme that is issued under Thor Asset Purchase Company Limited.