The Subordinated Debt Clause Samples
The Subordinated Debt clause defines the terms under which certain debt obligations are ranked below other debts in terms of repayment priority. In practice, this means that if the borrower defaults or enters bankruptcy, holders of subordinated debt will only be repaid after all senior creditors have been satisfied. For example, in a corporate financing structure, subordinated loans or notes are paid after bank loans or other senior obligations. This clause is essential for allocating risk among creditors and clarifying the order of repayment, which can facilitate additional financing by reassuring senior lenders of their priority status.
The Subordinated Debt. Lender agrees to extend the Subordinated Debt to Borrower in accordance with the terms of, and subject to the conditions set forth in, this Agreement, the Subordinated Debenture and the other Loan Documents. An initial Borrowing Tranche in an amount equal to the entire principal amount of the Subordinated Debt shall be borrowed on the Closing Date and, thereafter, any such Borrowing Tranche may be converted or renewed from time to time in accordance with the terms and subject to the conditions set forth in this Agreement. Subject to Section 2.6 and any other conditions and limitations set forth in this Agreement, any Borrowing Tranche under the Subordinated Debt shall be treated as, at Borrower’s election subject to and in accordance with the terms set forth in this Agreement: (a) a LIBO Rate Tranche and shall bear interest per annum at a rate equal to 1.35% (135 basis points) plus the LIBO Rate; or (b) a Base Rate Tranche and shall bear interest at a rate equal to 0.20% (20 basis points) plus the Base Rate. The unpaid principal balance plus all accrued but unpaid interest on the Subordinated Debt shall be due and payable on the Subordinated Debt Maturity Date, or such earlier date on which such amount shall become due and payable on account of acceleration by Lender in accordance with the terms of the Subordinated Debenture or this Agreement.
The Subordinated Debt. Lender agrees to extend the Subordinated Debt to Borrower in accordance with the terms of, and subject to the conditions set forth in, this Agreement, the Subordinated Debenture and the other Loan Documents. No Borrowing Tranche under the Subordinated Debt shall be created on the Closing Date. Thereafter, any Borrowing Tranche under the Subordinated Debt may be created, converted or renewed from time to time in accordance with the terms and subject to the conditions set forth in this Agreement; provided, however, that new Borrowing Tranches for the Subordinated Debt shall not be created after April 30, 2008. Subject to Section 2.6 and any other conditions and limitations set forth in this Agreement, any Borrowing Tranche under the Subordinated Debt shall be treated as, at Borrower’s election subject to and in accordance with the terms in this Agreement: (a) a LIBO Rate Tranche and shall bear interest per annum at a rate equal to 1.50% (150 basis points) plus the LIBO Rate; or (b) a Base Rate Tranche and shall bear interest at a rate equal to the Base Rate. The unpaid principal balance plus all accrued but unpaid interest on the Subordinated Debt shall be due and payable on the Subordinated Debt Maturity Date, or such earlier date on which such amount shall become due and payable on account of acceleration by Lender in accordance with the terms of the Subordinated Debenture or this Agreement.
The Subordinated Debt. Provided that no Event of Default has occurred under the Credit Agreement as amended by this First Amendment and all of the conditions precedent as hereinafter set forth have been fulfilled to the satisfaction of the Administrative Agent, the Lenders which are parties to this First Amendment consent to the incurrence by the Borrowers of the indebtedness evidenced by that certain subordinated promissory note of the Borrowers of even date herewith in favor of INBERDON ENTERPRISES LTD., in the form thereof attached hereto as Exhibit "A" (the "Subordinated Note") and to the repayment thereof in accordance with paragraph (h) of the Subordination Provisions contained therein. It is intended that subject to the consent of the Required Lenders the indebtedness to be evidenced by the Subordinated Note shall constitute Subordinated Debt under the Credit Agreement, as amended by this First Amendment. For the purposes of applying the covenant set forth in Section 9.1(h) only, the Indebtedness under the Subordinated Debt shall not be included in the definition of Debt.