Guaranty Trigger Sample Clauses
A Guaranty Trigger clause defines the specific events or conditions that activate a guarantor’s obligation to fulfill the commitments of another party, typically when the primary obligor defaults or fails to perform. In practice, this clause outlines what constitutes a triggering event, such as missed payments, insolvency, or breach of contract, and clarifies the process by which the guarantor is notified and required to act. Its core function is to provide certainty and protection to the beneficiary by ensuring that the guarantor’s responsibilities are clearly defined and automatically engaged when necessary, thereby mitigating the risk of non-performance.
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Guaranty Trigger. (1) If, at any time after the Closing Date, the Guaranty Trigger shall occur, the Company shall cause each directly or indirectly owned Wholly-Owned Subsidiary of the Company that is (i) a Domestic Subsidiary or a Canadian Subsidiary, (ii) a Look-Through Subsidiary (except under the circumstances contemplated by Section 6.13 with respect to a Canadian Subsidiary, in which case the requirements of this clause (ii) shall not apply to such Canadian Subsidiary) and (iii) not otherwise excluded from the requirements of this Section 6.14 pursuant to clause (2) below (such Subsidiary, so long as it satisfies each of the foregoing criteria, an “Eligible Subsidiary Guarantor”) to become a Guarantor and in the case of an Eligible Subsidiary Guarantor that is a Domestic Subsidiary which owns Eligible Pledged Securities, to become a Pledgor (and the Company itself shall also become a Pledgor) for the purpose of pledging such Eligible Pledged Securities (subject to the limitations set forth in the Pledge and Security Agreement) in accordance with the requirements of Section 6.14(c); provided, however, that the requirements to become a Pledgor shall not apply to any Subsidiary so long as such Subsidiary does not own any Eligible Pledged Securities.
(2) Notwithstanding anything to the contrary contained above in this Section 6.14 or anything else in this Agreement or in any other Loan Document, no Subsidiary shall be an Eligible Subsidiary Guarantor and required to become a Guarantor and/or Pledgor, as applicable, if any one or more of the following circumstances applies to such Subsidiary:
(i) such Subsidiary’s only assets consist of $5,000 or less in cash;
(ii) such Subsidiary, or the direct or indirect parent company or general partner of such Subsidiary whose only significant asset (in each case) is the equity ownership of such Subsidiary (or the direct or indirect parent company of such Subsidiary), enters into (or is a party to) a material contract pursuant to a transaction otherwise permitted under this Agreement and the terms of which prohibit or restrict such Subsidiary from executing a counterpart of the Subsidiaries Guaranty and/or the Pledge and Security Agreement (and from becoming a guarantor and/or pledgor under the Senior Notes or other Indebtedness other than Indebtedness incurred under such material contract); or
(iii) the terms of any applicable Laws prohibit or restrict such Subsidiary from executing a counterpart of the Subsidiaries Guaranty and/or t...