Debt Subordination Sample Clauses
A Debt Subordination clause establishes that one party's debt claims will be ranked below those of other specified creditors in the event of liquidation or bankruptcy. In practice, this means that if the debtor defaults or is liquidated, the subordinated lender will only be repaid after senior creditors have been fully satisfied. This clause is commonly used in financing arrangements to protect senior lenders by ensuring their claims take priority, thereby reducing their risk and clarifying the order of repayment among creditors.
POPULAR SAMPLE Copied 12 times
Debt Subordination. Each Guarantor hereby agrees that the Subordinated Indebtedness (as defined below) shall be subordinate and junior in right of payment to the Full Satisfaction of the Obligations. The Subordinated Indebtedness shall not be payable, and no payment of principal, interest or other amounts on account thereof, and no property or guarantee of any nature to secure or pay the Subordinated Indebtedness shall be made or given, directly or indirectly by or on behalf of any Debtor (hereafter defined) or received, accepted, retained or applied by any Guarantor unless and until the Obligations shall have been Fully Satisfied; except that prior to the occurrence and continuance of an Event of Default, each Debtor shall have the right to make payments and a Guarantor shall have the right to receive payments on the Subordinated Indebtedness from time to time in the ordinary course of business. When an Event of Default exists, no payments may be made or given on the Subordinated Indebtedness, directly or indirectly, by or on behalf of any Debtor or received, accepted, retained or applied by any Guarantor unless and until the Obligations shall have been Fully Satisfied. If any sums shall be paid to a Guarantor by any Debtor or any other Person on account of the Subordinated Indebtedness when such payment is not permitted hereunder, such sums shall be held in trust by such Guarantor for the benefit of Administrative Agent and the other Credit Parties and shall forthwith be paid to Administrative Agent and applied by Administrative Agent against the Guaranteed Indebtedness in accordance with this Guaranty Agreement. For purposes of this Guaranty Agreement and with respect to a Guarantor, the term “Subordinated Indebtedness” means all indebtedness, liabilities, and obligations of any Borrower or any other Guarantor (each Borrower and such other Guarantor herein the “Debtors”) to such Guarantor, whether such indebtedness, liabilities, and obligations now exist or are hereafter incurred or arise, or are direct, indirect, contingent, primary, secondary, several, joint and several, or otherwise, and irrespective of whether such indebtedness, liabilities, or obligations are evidenced by a note, contract, open account, or otherwise, and irrespective of the Person or Persons in whose favor such indebtedness, obligations, or liabilities may, at their inception, have been, or may hereafter be created, or the manner in which they have been or may hereafter be acquired by such Guarantor.
Debt Subordination. (a) Except as set forth in subsection (b) below, Creditor hereby agrees that all of the Obligations to Creditor are subordinate to the Obligations to Lender, and Creditor hereby subordinates payment and performance by Borrower and any other Obligor of all Obligations to Creditor in favor of payment and performance by Borrower and any other Obligor of all Obligations to Lender. Creditor further agrees that it will not demand, accept, or receive from Borrower or any other Obligor any payment or performance of any Obligations to Creditor (except for Permitted Payments, as defined in subsection (b) below) until all of Obligations to Lender have been indefeasibly paid in full in cash, and performed in favor of Lender, and Lender’s Documents have been terminated. If any payments in violation of the foregoing sentence are remitted to Creditor by Borrower or any other Obligor, Creditor will receive them in trust for Lender and will forward to Lender the same forthwith.
(b) Notwithstanding the foregoing, so long as no Event of Default exists under Lender’s Documents and no default has occurred under the Creditor’s Documents, Borrower may pay Creditor (I) regularly scheduled monthly or quarterly payments of interest and principal as set forth (and to the extent set forth) in the Creditor’s Documents (the “Regular Periodic Payments”), and (II) the entire principal amount and all accrued and unpaid non-default interest thereon as set forth (and to the extent set forth) in the Creditor’s Documents on the earlier of (A) June 11, 2020 or (B) the closing date of any public or private offering of equity or debt of the Borrower for gross proceeds to Borrower of at least $1,000,000.00 (the “Gross Offering Proceeds”). For the avoidance of doubt, Regular Periodic Payments shall not include any prepayments of principal or interest. For the avoidance of doubt, permitted payments under the foregoing clause (II) (collectively with Regular Periodic Payments, “Permitted Payments”) shall not exceed the amount of Gross Offering Proceeds received by Borrower.
(c) Upon a distribution of the assets or readjustment of the indebtedness of any Obligor by reason of liquidation, composition, bankruptcy, arrangement, receivership, assignment for the benefit of creditors or any other action or proceeding involving the readjustment of all or any of the debts of such Obligor, or the application of the assets of such Obligor to the payment or liquidation thereof, Creditor acknowledges that the pay...
Debt Subordination. Each Guarantor hereby agrees that the Subordinated Indebtedness (as defined below) shall be subordinate and junior in right of payment to the Full Satisfaction of the Obligations. The Subordinated Indebtedness shall not be payable, and no payment of principal, interest or other amounts on account thereof, and no property or guarantee of any nature to secure or pay the Subordinated Indebtedness shall be made or given, directly or indirectly by or on behalf of any Debtor (hereafter defined) or received, accepted, retained or applied by any Guarantor unless and until the Obligations shall have been Fully Satisfied; except that prior to the occurrence and continuance of an Event of Default, each Debtor shall have the right to make payments and a Guarantor shall have the right to receive payments on the Subordinated Indebtedness from time to time in the ordinary course of business. When an Event of Default exists, no payments may be made or given on the Subordinated
Debt Subordination. Each Guarantor hereby agrees that the Subordinated Indebtedness (as defined below) shall be subordinate and junior in right of payment to the Full Satisfaction of the Obligations guaranteed hereby. The Subordinated Indebtedness shall not be payable, and no payment of principal, interest or other amounts on account thereof, and no property or guarantee of any nature to secure or pay the Subordinated Indebtedness shall be made or given, directly or indirectly by or on behalf of any Debtor (hereafter defined) or
Debt Subordination. Each Second Lien Secured Party covenants and agrees, notwithstanding anything to the contrary contained in any of the Second Lien Loan Documents, that the payment of any and all of the Second Lien Obligations and any other claims under the Second Lien Loan Documents shall be subordinate and subject in right and time of payment, to the extent and in the manner hereinafter set forth, to the First Lien Obligations and to any other claims under the First Lien Loan Documents. Each First Lien Secured Party shall be deemed to have acquired First Lien Obligations in reliance upon the provisions contained in this Agreement.
Debt Subordination. Except as set forth in Section 4 hereof, ------------------ Subordinate Lender will not ask for, demand, ▇▇▇ for, take or receive from the Borrower, by setoff or in any other manner, the whole or any part of the Subordinated Debt, whether principal or interest, unless and until the Senior Indebtedness shall have been fully paid and satisfied and all financing arrangements between the Senior Lenders and the Borrower have been terminated in writing by Agent and/or the Senior Lenders.
Debt Subordination. If and to the extent that any one Obligor is now or hereafter becomes indebted to any other Obligor, for Money Borrowed, including in respect of any loans or advances between or among Obligors with the proceeds of any Loans obtained pursuant hereto, all rights of payment and claim for all of such Indebtedness and any future advances thereon shall be subject, inferior and subordinate to the full and final payment and performance of the Obligations, and no Obligor shall exercise any right or remedy to enforce the payment of such Indebtedness unless and except to the extent expressly permitted by Lender.
Debt Subordination. The payment of any amounts due with respect to any indebtedness of Borrower now or hereafter held by Guarantor is hereby subordinated to the prior payment in full of the Obligations, and Guarantor agrees that, in the absence of Lender's prior written consent, Guarantor will not demand, accept or ▇▇▇ for any payment upon, or otherwise attempt to collect, any such indebtedness of Borrower to Guarantor until the Obligations shall have been paid in full. If, notwithstanding the foregoing, Guarantor shall, without Lender's prior written consent, collect, enforce or receive any amounts in respect of such indebtedness, such amounts shall be collected, enforced and received by Guarantor as trustee for Lender and be paid over to Lender on account of the Obligations without affecting in any manner the liability of Guarantor under the other provisions of this Guaranty.
Debt Subordination. (a) The Junior Creditor hereby agrees that the Junior Debt is subordinate, and the payment thereof, directly or indirectly, by any means whatsoever, is deferred, to the prior payment in full of all of the Senior Debt, to the extent and in the manner set forth in this Agreement.
(b) Except as set forth in Section 4 below, unless and until the Senior Debt shall have been fully paid and the Senior Creditor Documents and all outstanding commitments of each Senior Creditor for the incurring of additional Senior Debt shall have been irrevocably terminated in writing, the Junior Creditor will not:
(i) Accelerate, ask, demand, ▇▇▇ for, take or receive from or on behalf of any Company, by setoff or in any other manner, the whole or any part of any monies which may now or hereafter be owing to the Junior Creditor on the Junior Debt; or
(ii) Initiate or participate with others in any suit, action or proceeding against any Company, or otherwise take action against any Company or any of its assets, to enforce payment of or to collect the whole or any part of the Junior Debt; or
(iii) Commence any bankruptcy, arrangement, reorganization or insolvency proceeding against any Company; or
(iv) Ask, demand, take or receive any security for any of the Junior Debt other than that granted pursuant to the LJH Documents.
(c) The provisions of this Agreement shall apply with respect to all of the Senior Debt, regardless of whether the Senior Debt has already been incurred or may be incurred in the future by future advances or other financial accommodations made or extended by a Senior Creditor to a Company pursuant to the Senior Creditor Documents.
(d) If the Junior Creditor in violation of this Agreement shall commence, prosecute or participate in any suit, action or proceeding against any Company or shall attempt to enforce, foreclose or realize upon any security for the Junior Debt, including, without limitation, the Senior Creditor Collateral, such Company or any Senior Creditor may interpose as a defense or plea the making of this Agreement and any Senior Creditor may intervene and interpose such defense in its name or in the name of such Company, and such Company or such Senior Creditor may by virtue of this Agreement restrain the enforcement thereof in the name of such Company or such Senior Creditor.
Debt Subordination. This creates at least two classes of debt, one junior or subordinate to the other.
a. UCC 1-310—An obligation may be issued as subordinated to the performance of another obligation of the person obligated, or a creditor may subordinate its right to performance of any obligation by agreement with either the person obligated or another creditor of the person obligated. Subordination does not create a security interest as against either the common debtor or a subordinated creditor.4
b. Note that the subordination may be in favor of a creditor who is not a party to the subordination agreement. This is common where the debt of a particular creditor is subordinated to an entire class of “senior” debt and is common in public bond deals.