15Negative Pledge Clauses Clause Samples
A Negative Pledge Clause is a contractual provision that restricts a borrower from granting security interests over its assets to other creditors. In practice, this means the borrower cannot pledge, mortgage, or otherwise encumber its assets in favor of third parties without the consent of the lender, ensuring that the lender’s position is not subordinated by future secured debts. This clause is commonly used in unsecured loan agreements to protect the lender by maintaining their priority and reducing the risk that the borrower’s assets will be used as collateral for other obligations.
15Negative Pledge Clauses. Enter into or suffer to exist or become effective any agreement that prohibits or limits the ability of any Loan Party to create, incur, assume or suffer to exist any Lien upon any of its property or revenues, whether now owned or hereafter acquired, to secure its Obligations under the Loan Documents to which it is a party, other than (a) this Agreement and the other Loan Documents, (b) any agreement evidencing Indebtedness secured by Liens permitted by clauses (f), (g), (m), (n), and (q) of Section 7.3 as to the assets securing such Indebtedness, and (c) agreements that are customary restrictions on subleases, leases, licenses, or permits so long as such restrictions relate to the property subject thereto, (d) any agreement evidencing an asset sale, as to the assets being sold, (e) agreements that are customary provisions restricting subletting or assignment of any lease governing a leasehold interest, and (f) agreements that are customary provisions restricting assignment or transfer of any contract entered into in the ordinary course of business.
15Negative Pledge Clauses. Enter into or suffer to exist or become effective any agreement that prohibits or limits the ability of any Loan Party to create, incur, assume or suffer to exist any Lien upon any of its property or revenues, whether now owned or hereafter acquired, to secure its Obligations under the Loan Documents to which it is a party, other than (a) this Agreement and the other Loan Documents, (b) any agreements governing any purchase money Liens or Capital Lease Obligations otherwise permitted hereby (in which case, any prohibition or limitation shall only be effective against the assets financed thereby), (c) customary restrictions on the assignment of leases, licenses and other agreements, (d) any agreement in effect at the time any Subsidiary becomes a Subsidiary of a Loan Party, so long as such agreement was not entered into solely in contemplation of such Person becoming a Subsidiary or, in any such case, that is set forth in any agreement evidencing any amendments, restatements, supplements, modifications, extensions, renewals and replacements of the foregoing, so long as such amendment, restatement, supplement, modification, extension, renewal or replacement applies only to such Subsidiary and does not otherwise expand in any material respect the scope of any restriction or condition contained therein, and (e) any restriction pursuant to any document, agreement or instrument governing or relating to any Lien permitted under Sections 7.3(c), (d), (f), (g), (l), (m), (n), (o), and (s) or any agreement or option to Dispose any asset of any Group Member, the Disposition of which is permitted by any other provision of this Agreements (in each case, provided that any such restriction relates only to the assets or property subject to such Lien or being Disposed).