Junior Security Interest Clause Samples
A Junior Security Interest is a legal claim on collateral that ranks below other security interests in terms of repayment priority. In practice, this means that if the borrower defaults and the collateral is liquidated, holders of senior security interests are paid first, and only after their claims are satisfied do junior security holders receive payment. This clause is commonly used in financing arrangements where multiple lenders are involved, and it clarifies the order in which creditors are repaid. Its core function is to allocate risk among creditors by establishing a clear hierarchy of claims, thereby reducing disputes and uncertainty in the event of borrower default.
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Junior Security Interest. (a) WFBC agrees that Gateway may take a security interest in WFBC Collateral junior to the security interest of WFBC to secure the TSA Obligations and that the granting of such junior security interest shall not be deemed to be a default under the Account Purchase Agreement. Gateway agrees that the security interest of WFBC in WFBC Collateral granted under the Asset Purchase Agreement shall be and remain senior to the security interest of Gateway granted hereby in WFBC Collateral. MPC agrees that the grant of any security interest in WFBC Collateral other than the security interest to Gateway securing payment of the TSA Obligations shall be a default under the terms of the Account Purchase Agreement.
(b) Subject to the first-priority security interest granted to WFBC under the Asset Purchase Agreement, MPC hereby grants to Gateway, as collateral for the TSA Obligations, a security interest, under the Uniform Commercial Code as in effect in the applicable jurisdiction (the “UCC”), in the following described property, as defined under the UCC: all presently existing or hereafter arising, now owned or hereafter acquired property including, but not limited to, accounts, general intangibles, contracts rights, investment property, deposit accounts, the Gateway Reserve Funds (as defined below) established hereunder, inventory, instruments, chattel paper, documents, insurance proceeds, and all books and records pertaining to accounts and all proceeds and products of the foregoing property together with a controlled collateral account to be maintained at W▇▇▇▇ Fargo Bank, N.A. and controlled by WFBC with a balance of $1,500,000 which account shall serve as additional collateral for the TSA Obligations (collectively, “Gateway Collateral” and, together with WFBC Collateral, “Common Collateral”).
(c) MPC shall execute and deliver to Gateway any and all documents and instruments as Gateway may request from time to time. MPC authorizes Gateway to file a UCC financing statement with any appropriate authority reflecting its security interest and further authorizes Gateway to file other filings including amendments (other than amendments adding collateral) as Gateway deems appropriate.
(d) WFBC hereby acknowledges that if and to the extent it holds, or a third party holds on its behalf, physical possession of or “control” (as defined in the UCC) of any Common Collateral, such possession or control is also for the benefit of Gateway solely to the extent required to perfect ...
Junior Security Interest. Subject to Permitted Liens, the Notes will be secured by a second priority lien and security interest in all of the personal property assets of the Company, as well as all of the personal property assets of those Persons executing the Security Agreement as a "Grantor"; provided, however, that in no event shall such second priority lien and security interest apply to the real property interests of any "Grantor."
Junior Security Interest. 23 7.3 No Payments on Notes Permitted................................................. 23 SECTION 8. EVENTS OF DEFAULT; RIGHTS AND REMEDIES......................................... 23
Junior Security Interest. Subject to consent by Old National Bank ("ONB") if performing under this Section 9(e) would cause the breach of any covenant in any agreement between BFS or any Affiliate and ONB, BFS will grant and extend to Beasleys as additional security for the Note a second or junior security interest in all of its assets subject and subordinate to the position of ONB under the Subordination Agreement dated February 27, 2003.