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Negative Pledge Agreement Template for Switzerland

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Key Requirements PROMPT example:

Negative Pledge Agreement

"Need a Swiss law Negative Pledge Agreement between ABC Bank AG as lender and XYZ Manufacturing GmbH as borrower, with specific carve-outs for existing equipment financing and a CHF 2 million permitted security basket."

Document background
The Negative Pledge Agreement is a fundamental document in Swiss banking and finance practice, typically used in conjunction with loan agreements, facility agreements, or other financing arrangements. It serves as a protective mechanism for lenders by restricting a borrower's ability to grant security interests over its assets to other parties. Under Swiss law, this agreement must be carefully drafted to ensure enforceability and compliance with the Swiss Code of Obligations and related banking regulations. The document includes detailed provisions on permitted exceptions, monitoring requirements, and consequences of breach. It is particularly important in unsecured lending arrangements where the lender relies on the borrower's overall creditworthiness and unencumbered asset base. The agreement also typically addresses Swiss-specific legal considerations regarding security interests and enforcement mechanisms.
Suggested Sections

1. Parties: Identification of the parties entering into the agreement, including their full legal names, addresses, and registration details

2. Background: Context of the agreement, including reference to any related financing arrangements or reasons for the negative pledge

3. Definitions and Interpretation: Definitions of key terms used in the agreement and rules of interpretation

4. Negative Pledge Undertaking: Core provision containing the borrower's undertaking not to create or permit security interests over its assets

5. Permitted Security: List and description of security interests that are expressly permitted as exceptions to the negative pledge

6. Representations and Warranties: Statements of fact and assurances given by the pledgor regarding their ability to enter into the agreement and status of assets

7. Duration: Term of the agreement and conditions for termination

8. Events of Default: Circumstances that constitute a breach of the agreement and trigger remedies

9. Remedies: Rights and actions available to the beneficiary in case of breach

10. Notices: Process and requirements for formal communications between parties

11. Governing Law and Jurisdiction: Specification of Swiss law as governing law and jurisdiction for disputes

12. Miscellaneous: Standard boilerplate provisions including severability, amendments, and entire agreement

Optional Sections

1. Further Assurance: Obligation to take additional actions to give effect to the agreement, included in complex transactions

2. Information Undertakings: Obligations to provide information about assets and potential security interests, used in larger financing arrangements

3. Costs and Expenses: Allocation of costs related to the agreement, included when significant expenses are anticipated

4. Assignment and Transfer: Provisions regarding the ability to transfer rights under the agreement, included when transferability is important

5. Third Party Rights: Provisions addressing whether third parties have rights under the agreement, included when relevant under the transaction structure

6. Parallel Debt: Creates parallel payment obligations, included when required for enforceability in certain jurisdictions or structures

Suggested Schedules

1. Schedule 1 - Existing Security: List of security interests existing at the time of the agreement that are permitted to continue

2. Schedule 2 - Form of Compliance Certificate: Template for periodic confirmation of compliance with negative pledge obligations

3. Schedule 3 - Assets: List of specific assets subject to the negative pledge, if not all assets are covered

4. Appendix A - Signing Authorities: Documentation proving authority of signatories to enter into the agreement

5. Appendix B - Corporate Approvals: Copies of relevant corporate approvals authorizing the agreement

Authors

Alex Denne

Head of Growth (Open Source Law) @ ¶¶Òõ¶ÌÊÓÆµ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Relevant legal definitions
































Clauses

























Relevant Industries

Banking and Financial Services

Corporate Lending

Investment Banking

Real Estate

Infrastructure

Manufacturing

Energy

Telecommunications

Healthcare

Mining and Natural Resources

Transportation and Logistics

Relevant Teams

Legal

Finance

Treasury

Compliance

Risk Management

Corporate Secretariat

Credit Administration

Banking Operations

Transaction Management

Relevant Roles

Chief Financial Officer

Finance Director

Treasury Manager

Legal Counsel

Corporate Lawyer

Banking Lawyer

Compliance Officer

Risk Manager

Credit Manager

Transaction Manager

Finance Manager

Corporate Secretary

Banking Relationship Manager

Loan Officer

Security Trustee

Industries






Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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