Parity Debt Clause Samples
A Parity Debt clause defines the terms under which certain debts are considered equal in ranking and priority with other specified debts, particularly in the context of repayment and claims on assets. In practice, this means that if a borrower issues new debt, that new debt must not have a higher claim to repayment or collateral than the existing parity debt, ensuring all such debts are treated equally in the event of default or liquidation. The core function of this clause is to protect creditors by preventing the borrower from subordinating their claims, thereby maintaining fairness and reducing the risk of unequal treatment among similar classes of debt holders.
Parity Debt. (i) The Borrower shall ensure that the lenders from time to time in respect of any outstanding Parity Debt shall, in the documents governing the terms of such Indebtedness, (a) recognize the existence and validity of the obligations represented by the Notes and (b) agree to refrain from making or asserting any claim that the Loan Documents or the obligations represented by the Notes are invalid or not enforceable in accordance with its and their terms as a result of the circumstances surrounding the incurrence of such obligations.
(ii) Each Bank and each other Person that becomes a Bank, as evidenced by its acceptance of its Notes, (a) acknowledges the existence and validity of the obligations of the Borrower and Heritage under the Note Purchase Agreements (and any replacement, extension, renewal, refunding or refinancing thereof permitted by Section 7B.2, as the case may be) and (b) agrees to refrain from making or asserting any claim that such obligations or the instruments governing the terms thereof are invalid or not enforceable in accordance with its and their terms as a result of the circumstances surrounding the incurrence of such obligations.
Parity Debt. In addition to the Loan, the Agency may issue or incur Parity Debt in such principal amount as shall be determined by the Agency. The Agency may issue and deliver any Parity Debt subject to the following specific conditions which are hereby made conditions precedent to the issuance and delivery of such Parity Debt issued under this Section 2.07:
(a) No Event of Default shall have occurred and be continuing, and the Agency shall otherwise be in compliance with all covenants set forth in this Loan Agreement.
(b) The Tax Revenues for the then current Fiscal Year, as set forth in a Written Certificate of the Agency, based on assessed valuation of property in the Project Area as evidenced in the written records of the County, shall be at least equal to one hundred percent (100%) of Maximum Annual Debt Service.
(c) The issuance of such Parity Debt shall not cause the Agency to exceed any applicable Plan Limitations. Without limiting the generality of the foregoing, the Agency shall not issue any Parity Debt in the event and to the extent that either (i) the amount of Maximum Annual Debt Service in any Fiscal Year following such issuance exceeds the aggregate amount of Tax Revenues which are eligible under the Redevelopment Plan to be allocated to the Agency in any Fiscal Year, or (ii) the aggregate principal amount of all outstanding obligations of the Agency, including such Parity Debt, exceeds any applicable limit in the Redevelopment Plan on the aggregate principal amount of indebtedness which the Agency is permitted to have outstanding at any one time.
(d) The Agency shall deliver to the City a Written Certificate of the Agency certifying that the conditions precedent to the issuance of such Parity Debt set forth in subsections (a), (b), and (c) above have been satisfied.
Parity Debt. The Corporation may incur Parity Debt, subject, however to compliance with Section IX of this Regulatory Agreement and the following conditions:
1. The Trustee shall act as trustee for the Parity Debt;
2. The agreement under which Parity Debt is issued shall require that:
a. A Loan Default Event shall constitute an event of default under such agreement and this Regulatory Agreement;
b. Rights and obligations of the holders of Parity Debt shall be substantially the same as the rights and obligations of the Holders of Bonds under the Indenture, except that Parity Debt will not be issued if not covered under the Contract of Insurance; and
c. Remedies upon an event of default shall be substantially the same as the remedies provided in the Indenture, this Regulatory Agreement and the Loan Agreement, and, prior to exercising any such remedies, the holders of such Parity Debt (or a trustee representing their interest) shall be required to cooperate with the Trustee to the end that the interests of such holders and the Bondowners shall be equally protected;
3. Any collateral given or to be given to secure Parity Debt shall also secure the Bonds on a pari passu basis; provided that the Bond Reserve Account shall only secure the Bonds and the Corporation may but need not establish similar reserve accounts for debt service of Parity Debt;
4. The Parity Debt shall be prepayable in accordance with terms substantially in the form of and under the conditions prescribed in Section 4.01(A) of the Indenture; and
5. Any Parity Debt shall be insured by the Office under the Insurance Law or, if the Parity Debt can be issued as such without being insured under the Insurance Law, with the consent of the Office.
Parity Debt. The District further covenants that, except for obligations issued or incurred to prepay the Installment Payments in full pursuant to Section 4.02 hereof, the District shall not issue or incur any Parity Debt unless:
(i) The District is not in default under the terms of this Installment Sale Agreement;
(ii) Net Revenues, calculated on sound accounting principles, either (i) as shown by the books of the District for the latest Fiscal Year, as verified by a certificate of an Authorized Representative of the District, or (ii) as shown by the books of the District for any more recent twelve (12) month period selected by the District, as verified by a certificate or opinion of an Independent Certified Public Accountant employed by the District, plus in either case (at the option of the District) the Additional Revenues, shall be at least equal to one hundred fifteen percent (115%) of the amount of Maximum Annual Debt Service on all outstanding Parity Obligations and the Parity Obligations to be issued.
(iii) At the discretion of the District, a reserve fund shall be funded for such proposed Parity Debt which may be at least equal to the amount resulting from the application on the closing date of such Parity Debt of the formula contained in the definition of “Reserve Requirement.”
(iv) So long as all of the Outstanding Certificates are held by the Original Purchaser, the prior written consent of such Original Purchaser shall have been obtained.
Parity Debt. Except for debt issued to refund the Loan, the Agency may not issue or incur Parity Debt secured by the Housing Set-Aside. Any document authorizing such Parity Debt must provide that (i) interest is payable on April 1 and October 1 in each year of the term of such refunding bonds except the first twelvemonth period, during which interest may be payable on either April 1 or October 1; (ii) the principal of such refunding bonds is payable only on October 1 in any year; and (iii) the final maturity of any refunding bonds does not exceed the final maturity of the Bonds being refunded. Annual debt service on the refunding bonds must be lower than annual debt service on the Bonds being refunded during every year the refunding bonds will be outstanding.
Parity Debt. The obligations evidenced by this Agreement and the Notes constitute Parity Debt (as defined in the Trust Agreement) and this Agreement shall be considered a Parity Debt Agreement.
Parity Debt. Loans, bonds, notes, advances or indebtedness, or other obligations of City payable from and secured by a pledge of water rates, and charges of City on a parity with the obligations to be paid by City pursuant to this Agreement.
Parity Debt. The Lessee will not incur any other obligations, except under the conditions and in the manner provided in the Master Operating Lease, payable from the Net Revenues, nor voluntarily create or cause to be created any debt, lien, pledge, assignment, encumbrance or other charge, having priority to or being on a parity with the lien of the Master Operating Lease and the interest thereon upon the Net Revenues.
Parity Debt. The Authority may from time to time request the authentication and delivery of a Series of Parity Debt by providing to the Trustee (at or prior to such authentication and delivery) the following:
(a) Copies of the Agreement and each applicable Series Resolution certified by an Authorized Officer;
(b) an Officer’s Certificate showing compliance with Section 301(b) and to the effect that there is no default hereunder that will remain uncured immediately following such delivery, nor an uncured failure of the State or the City to comply with their respective agreements provided for in §§ 2799-ii and 2799-jj of the Act, as in effect at the date hereof;
(c) an opinion of Counsel as to the due authorization, execution and delivery by the Authority of this Indenture and each relevant Supplemental Indenture; to the effect that the Series Resolution is in full force and effect and that the Bonds or Notes to be issued as Parity Debt are valid and binding obligations of the Authority secured by the pledge of the Indenture; and to the effect that their issuance will not adversely affect the exclusion from gross income for federal income tax purposes of interest on Tax-Exempt Bonds or Tax-Exempt Notes theretofore issued (as set forth in the opinions delivered with such prior Bonds or Notes);
(d) at the delivery of such Bonds or of Notes in anticipation thereof (but not both):
(i) a certificate by the Director of Management and Budget setting forth the collections for the most recent Fiscal Year ended at least two months prior to the date of such certificate, of the Statutory Revenues, collected by the State and to be payable to the Authority; and
(ii) an Officer’s Certificate setting forth:
Parity Debt. In addition to the Loan, the Successor Agency may issue or incur Parity Debt in such principal amount as shall be determined by the Successor Agency, solely for the purpose of prepaying all or a portion of the Loan for savings in accordance with Section 34177.5(a) of the Health and Safety Code of the State. The Successor Agency may issue or incur any Parity Debt subject to the following specific conditions which are hereby made conditions precedent to the issuance or incurrence of such Parity Debt issued under this Section 3.05:
(a) No Event of Default shall have occurred and be continuing, and the Successor Agency shall otherwise be in compliance with all covenants set forth in this Loan Agreement, unless the issuance of such Parity Debt will cure the Event of Default or noncompliance.
(b) The issuance of such Parity Debt shall comply with Section 34177.5 of the Health and Safety Code of the State.
(c) The related Parity Debt Instrument shall provide that:
(i) Interest on such Parity Debt shall be payable on February 1 and August 1 in each year of the term of such Parity Debt except the first twelve-month period, during which interest may be payable on any February 1 and August 1 ; and
(ii) The principal of such Parity Debt shall not be payable or subject to mandatory sinking fund redemption on any date other than August 1 in any year.
(d) The Successor Agency shall deliver to the Lender a Written Certificate of the Successor Agency certifying that the conditions precedent to the issuance of such Parity Debt set forth in subsections (a), (b) and (c) above have been satisfied.