Trigger Event or Sequential Pay Event Sample Clauses

A Trigger Event or Sequential Pay Event clause defines specific conditions or events that activate a change in the payment structure or priority within a financial agreement, such as a securitization or structured finance deal. Typically, this clause outlines what constitutes a trigger event—like a default, missed payment, or breach of covenant—and details how, once triggered, payments will be redirected or reprioritized among different classes of investors or creditors. Its core practical function is to protect certain stakeholders by ensuring that, in adverse situations, cash flows are allocated in a way that mitigates risk and preserves the integrity of the payment hierarchy.