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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."
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
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
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
Banking and Financial Services
Commercial Real Estate
Manufacturing
Retail
Infrastructure
Energy
Mining
Agriculture
Technology
Healthcare
Transportation and Logistics
Legal
Finance
Treasury
Risk Management
Compliance
Credit
Corporate Banking
Commercial
Company Secretariat
Debt Capital Markets
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
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