General Provisions Regarding Subordinated Notes Clause Samples
The "General Provisions Regarding Subordinated Notes" clause defines the fundamental terms and conditions that govern subordinated notes issued under an agreement. It typically outlines the ranking of these notes below other forms of debt, specifies payment priorities, and may address matters such as interest accrual, maturity, and rights of noteholders. For example, it clarifies that in the event of liquidation, subordinated noteholders are paid only after senior creditors have been satisfied. The core function of this clause is to establish the legal and financial framework for subordinated notes, ensuring all parties understand their relative rights and obligations, and to manage the risk hierarchy among creditors.
General Provisions Regarding Subordinated Notes. (a) The Company may sell the Subordinated Notes only upon the affirmative vote of both a majority of the Board of Directors and the holders of two-thirds (based on the aggregate liquidation preference) of the Company Preferred Securities and Company Parity Preferred Securities (if any), voting together as a single class.
(b) The Company may not agree to any modification or amendment to the Subordinated Notes as long as any Company Preferred Securities or Company Parity Preferred Securities (if any) are outstanding unless holders of two-thirds (based on the aggregate liquidation preference) of the Company Preferred Securities and Company Parity Preferred Securities (if any), voting as a class, consent to such modification or amendment. Such consent to modification or amendment of the Subordinated Notes shall not be required if (i) the proposed amendment or modification would not materially and adversely affect the rights, preferences, powers or privileges of the holders of the Company Preferred Stock and (ii) the Company has received a letter from each of Moody's Investors Service Inc. and Standard & Poor's Ratings Services ▇▇ ▇▇▇ effect that such amendment will not result in a downgrading of its respective rating then assigned to the Company Preferred Securities.