Inter-creditor and Subordination Agreement

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Inter-creditor and Subordination Agreement Powered By Docstoc
					This Inter-creditor and Subordination Agreement is an agreement between a debtor’s
creditors, whereby the secured creditors of a debtor agree to rank their security and
debt subordinate to that of another creditor. This fifteen page document contains a
defined terms section to ensure parties completely understand the terms and conditions
of the agreement. This document in its draft form contains numerous of the standard
clauses commonly used in these types of agreements; however, additional language
may be added to allow for customization to ensure the specific terms of the parties’
agreement are addressed. Use his form when creditors of a debtor agree to
subordinate their claims to that of another creditor.
                                                    Inter-Creditor and Subordination Agreement



     INTER-CREDITOR AND SUBORDINATION AGREEMENT

      THIS AGREEMENT is made as of the              day of _____________, 2____.

B E T W E E N:

                               _______________________
                                    (the "Company")

                                          - and –

                                ______________________
                                      (the "Bank")

                                          - and -

                                ______________________
                               (collectively, the "Vendors")

                                          - and -

                                 _____________________
                                    (the "Corporation")

RECITALS:

A.    Capitalized terms used in these recitals have the meanings attributed to them in this
      Agreement.

B.    The Company has agreed to provide certain credit facilities to the Corporation in
      connection with the acquisition by ______________________ (the "Purchaser") of
      ___________________ (a predecessor by amalgamation to the Corporation) (the
      "Acquisition") pursuant to a share purchase agreement dated _________________ (the
      "Purchase Agreement") entered into among, inter alia, the Vendors and the Purchaser.

C.    Payment of the Obligations (as hereinafter defined) of the Corporation to the Company
      (the "Company Obligations") is and will be secured by the Company Security (as
      hereinafter defined).

D.    the Bank has agreed to provide certain financing to the Corporation in connection with
      the Acquisition pursuant to the terms of a certain letter agreement between ___________
      as agent for __________________ (a predecessor amalgamating corporation of the
      Company) and the Bank dated _______________ (such letter agreement including any
        amendments, restatements or substitutes thereto being herein called the “Offer of
        Finance”).

E.      Payment of the Obligations of the Corporation to the Bank (the "Bank Obligations") is
        and will be secured by the Bank Security.

F.      The Corporation has certain obligations to the Vendors pursuant to a secured promissory
        note in the principal amount of ____________ ($_________) Dollars (the "Vendor
        Note"), a copy of which is attached hereto as Schedule "A".

G.      Payment of the Obligations of the Corporation to the Vendors (the "Vendor Obligations")
        is and will be secured by, inter alia, the Vendor Security.

H.      The parties wish to enter into this Agreement to establish and confirm the relative rights
        and priorities of their respective security and the obligations of the Corporation secured
        thereby.

      NOW THEREFORE, for value received and intending to be legally bound by this
Agreement, the parties agree as follows:

1.      Defined Terms. In this Agreement, in addition to the terms defined in other Sections:

        (a)      "Inventory" means property of the Corporation held for sale or lease including
                 products purchased for resale, finished goods, work in process and raw materials
                 but not including any property not intended to be directly incorporated in finished
                 goods or products to be sold.

        (b)      "Obligations" means all the obligations of the person (the "obligor") in respect of
                 which the term is used, to another person, including all debts and liabilities,
                 present and future, direct or indirect, absolute or contingent, matured or not, at
                 any time owing by the obligor to the other person in any currency or remaining
                 unpaid by the obligor to such person in any currency whether arising from
                 dealings between the obligor and such person or from any other dealings or
                 proceedings by which such person may be or become in any manner whatever a
                 creditor of the obligor and wherever incurred, and whether incurred by the obligor
                 alone or with another or others and whether as principal or surety, and includes all
                 interest, fees, legal and other costs, charges and expenses in connection with the
                 foregoing.

        (c)      "Proceeds" means identifiable or traceable personal property in any form derived
                 directly or indirectly from any dealing with the property and assets of the
                 Corporation or the proceeds therefrom, including but not limited to any payment
                 representing indemnity or compensation for loss or damage to any property and
                 assets of the Corporation or proceeds therefrom, trade-ins, lease or sale proceeds
                 and cash.



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        (d)      "the Company Security" means all present and future security issued by
				
DOCUMENT INFO
Description: This Inter-creditor and Subordination Agreement is an agreement between a debtor’s creditors, whereby the secured creditors of a debtor agree to rank their security and debt subordinate to that of another creditor. This fifteen page document contains a defined terms section to ensure parties completely understand the terms and conditions of the agreement. This document in its draft form contains numerous of the standard clauses commonly used in these types of agreements; however, additional language may be added to allow for customization to ensure the specific terms of the parties’ agreement are addressed. Use his form when creditors of a debtor agree to subordinate their claims to that of another creditor.