A negative pledge is a contractual clause that restricts a borrower from creating any future security interests, like liens or pledges on their assets, without the prior consent of the lender. This provision is designed to protect the lender's position by ensuring that the borrower's assets remain unencumbered or, at the very least, do not become subordinated to other creditors.
The 2030 Notes will not benefit from any negative pledge.
Negative Pledge; Restrictions on Hypothecation of Property. iMedia hereby agrees that until all Obligations have been indefeasibly paid in full and the Loan Agreement has been terminated, iMedia will not directly or indirectly create, assume, incur or suffer to be created, assumed or incurred any security interest, Lien, charge, mortgage, pledge, hypothecation, assignment or encumbrance of any kind on all or any part of the Equity Interests other than as created by this Agreement or consented to by Agent.
Restriction on Further Negative Pledge. iMedia hereby agrees that until all Obligations have been indefeasibly paid in full and the Loan Agreement has been terminated, the Original Owners will not grant a similar “negative pledge” as that described in Section 3 above or enter into any agreement not to create, assume, incur or suffer to be created, assumed or incurred any security interest, Lien, charge, mortgage, pledge, hypothecation, assignment or encumbrance of any kind in favor of any Person.
Negative Pledge: The Registrant signed a negative pledge in accordance with which all of the Israeli Subsidiary’s obligations towards the Registrant, and all of the Registrant’s rights under the incorporation documents of the Israeli Subsidiary, and any other past or future documents and rights pursuant to any loans made to the Israeli Subsidiary, are subordinated in all respects to the Israeli Subsidiary’s obligations towards the Bank.
The New RCF contains a negative pledge covenant over the participating interests held by the Company’s wholly-owned subsidiary, Kosmos Energy Ghana Investments, in the West Cape Three Points and Deepwater Tano blocks offshore Ghana.
The New Line of Credit is secured by a Negative Pledge and Negative Assignment Agreement dated June 15, 2022 on securities and investment property (the “Negative Pledge Agreement”), has a 12 month term and a maturity date of June 15, 2023. Amounts outstanding on the New Line of Credit will bear interest at a per annum rate equal to the Wall Street Journal Prime Rate minus 0.25%. There is no prepayment penalty incurred by terminating the New Line of Credit. LCNB is subject to standard events of default.
Section 10.8. Restrictive Agreements; Negative Pledge Clauses. The Obligors will not, and will not permit any of their respective Subsidiaries (other than any CLO Subsidiary) to, directly or indirectly, enter into, incur or permit to exist or become effective any agreement or other arrangement that prohibits, limits, restricts or imposes any condition upon (a) the ability of any Obligor or any Subsidiary to create, incur, assume or permit to exist any Lien upon any of its property, assets or revenues, whether now owned or hereafter acquired, or (b) the ability of any Subsidiary to pay dividends or other distributions on account of its Capital Stock or to make or repay loans or advances to the Obligors or any other Subsidiary or to deliver a Guaranty with respect to Indebtedness of the Obligors or any other Subsidiary; provided that (i) the foregoing shall not apply to restrictions and conditions imposed by law or by this Agreement; (ii) the foregoing shall not apply to restrictions and conditions existing on the date hereof identified on Schedule 10.8 (and any extension, renewal or amendment or modification thereof, provided that such extension, renewal, amendment or modification does not expand the scope of, any such restriction or condition); (iii) the foregoing shall not apply to customary restrictions and conditions contained in agreements relating to the sale of a Subsidiary, business or assets pending such sale, provided such restrictions and conditions apply only to the Subsidiary, business or assets that is to be sold and such sale is permitted hereunder; (iv) clause (a) of the foregoing shall not apply to restrictions or conditions imposed by any agreement relating to secured Indebtedness permitted by this Agreement if such restrictions or conditions apply only to the property or assets securing such Indebtedness; (v) clause (a) of the foregoing shall not apply to customary provisions in leases restricting the assignment thereof; and (vi) the foregoing shall not apply to restrictions and conditions (x) contained in agreements evidencing a Permitted Financing or (y) applicable to an Obligor or a Subsidiary that serves as the direct or indirect general partner, manager, managing member or similar controlling entity of one or more investment funds contained in subscription credit facility agreements.
Negative Pledge. So long as any Note remains outstanding, but only up to the time all amounts of principal and interest have been placed at the disposal of the Fiscal Agent, the Issuer undertakes not to create or permit to subsist any mortgage, charge, pledge, lien or other encumbrance upon any or all of its present or future assets to secure any present or future Bond Issue without at the same time, or prior thereto, securing such Notes equally and rateably therewith. Bond Issue means any indebtedness of the Issuer which is, in the form of, or is represented by, any bond, security, certificate or other instrument which is or is capable of being listed, quoted or traded on any stock exchange or in any securities market (including any over-the-counter market) and any guarantee or other indemnity in respect of such indebtedness.
A negative pledge is a clause commonly used in loan agreements and bond indentures, which prohibits the borrower from creating any future security interests on their assets that would rank ahead of the interests of existing secured lenders. Its main purpose is to maintain the borrower’s ability to offer collateral to the existing creditors or to keep their assets unencumbered, thereby protecting the lender’s interests.
A negative pledge should be used when:
A negative pledge clause should clearly articulate the restrictions on the borrower regarding the creation of future liens or encumbrances. While the specific language might vary depending on jurisdiction and the particularities of the transaction, a basic framework includes:
Example:
The Borrower shall not create, assume, incur, or suffer to exist any lien upon any of its property, whether now owned or hereafter acquired, except for permitted encumbrances as expressly defined in Schedule X.
Negative pledges are typically included in:
These clauses serve to protect the financial interests of the party extending credit or investing, ensuring that their claim is not impaired by the borrower’s future actions regarding encumbrances on assets.
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