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Negative Pledge Agreement Template for New Zealand

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Key Requirements PROMPT example:

Negative Pledge Agreement

"I need a Negative Pledge Agreement for a manufacturing company borrowing NZD 5 million from ABC Bank Limited, with exceptions allowing for equipment finance and trade credit security interests up to NZD 500,000."

Document background
The Negative Pledge Agreement is a crucial document in New Zealand's commercial lending landscape, typically used in situations where a lender provides unsecured financing but seeks protection against the borrower creating security interests in favor of other creditors. This agreement is particularly common in corporate lending, syndicated facilities, and bond issuances. The document details the scope of prohibited security arrangements, permitted exceptions, and consequences of breach, all within the context of New Zealand law and market practice. The agreement must comply with the Personal Property Securities Act 1999 and other relevant New Zealand legislation, while also considering practical aspects of enforcement and monitoring. It's especially relevant when lenders want to maintain the borrower's asset base available for unsecured creditors without taking formal security.
Suggested Sections

1. Parties: Identifies and defines the parties to the agreement, typically the borrower/pledgor and the lender/beneficiary

2. Background: Sets out the context of the agreement, including reference to any related facility agreements or other financing arrangements

3. Definitions and Interpretation: Defines key terms used throughout the agreement and establishes interpretation principles

4. Negative Pledge Covenant: The core provision where the pledgor agrees not to create or permit the creation of any security interests over its assets

5. Permitted Security: Defines exceptions to the negative pledge covenant, listing types of security interests that are permitted

6. Representations and Warranties: Pledgor's confirmations regarding its capacity, authority, and existing security interests

7. Duration: Specifies the period during which the negative pledge remains in effect

8. Events of Default: Lists circumstances that constitute a breach of the agreement

9. Remedies: Sets out the rights and remedies available to the beneficiary in case of breach

10. Governing Law and Jurisdiction: Specifies New Zealand law as governing law and establishes jurisdiction for disputes

Optional Sections

1. Financial Covenants: Additional financial obligations of the pledgor, used when stricter financial control is required

2. Information Undertakings: Obligations to provide financial and other information, included for more complex arrangements

3. Security Release Provisions: Procedures for releasing security interests, included when existing security needs to be released

4. Cross-Default: Provisions linking defaults under other agreements, used when there are multiple related agreements

5. Further Assurance: Obligations to execute additional documents or take further steps, included for complex transactions

6. Assignment and Transfer: Rules regarding transfer of rights under the agreement, included when transferability is important

7. Costs and Expenses: Allocation of transaction costs and enforcement expenses, included for larger transactions

Suggested Schedules

1. Schedule 1 - Existing Security Interests: Lists all existing security interests that are permitted to remain in place

2. Schedule 2 - Affected Assets: Identifies the assets or classes of assets subject to the negative pledge

3. Schedule 3 - Permitted Security Interest Categories: Detailed list and description of categories of security interests that are permitted exceptions

4. Schedule 4 - Form of Compliance Certificate: Standard form for periodic confirmation of compliance with the agreement

5. Appendix A - Related Party Details: Lists related entities or subsidiaries affected by the negative pledge

Authors

Alex Denne

Head of Growth (Open Source Law) @ tiktok³ÉÈ˰æ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Relevant legal definitions



































Clauses























Relevant Industries

Banking and Financial Services

Commercial Real Estate

Manufacturing

Retail

Infrastructure

Energy

Mining

Agriculture

Technology

Healthcare

Transportation and Logistics

Relevant Teams

Legal

Finance

Treasury

Risk Management

Compliance

Credit

Corporate Banking

Commercial

Company Secretariat

Debt Capital Markets

Relevant Roles

Chief Financial Officer

Finance Director

Treasury Manager

Legal Counsel

Corporate Lawyer

Risk Manager

Credit Manager

Compliance Officer

Banking Relationship Manager

Finance Manager

Commercial Director

Company Secretary

Industries






Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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