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Form #1354

Subordination agreement.

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Subordination agreement.

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Subordination agreement.

(a). All rights under this agreement of seller or under any extension or renewal of this agreement, will be subordinate, as set forth, to the right of preferred creditors to receive payment of obligations owed to them. Preferred creditors are: (i) any obligee of debtor's trade accounts payable; and (ii) holders of notes, bonds or debentures issued by debtor for advances made or credit extended after this date.

(b). Upon the happening of any of the following events with respect to debtor, preferred creditors shall be entitled to receive that part of any distribution, dividend or disbursement which would otherwise be made to seller under this agreement: (i) its adjudication as a bankrupt by a court of competent jurisdiction; (ii) the filing of a petition seeking its reorganization; (iii) the appointment of one or more trustees or receivers of all or substantially all of its property; (iv) its filing of a petition to take advantage of any insolvency act; (v) its assignment for the benefit of creditors; (vi) the institution of any other judicial proceeding where it shall become necessary or desirable to file or present claims against it; (vii) its liquidation or dissolution. Seller irrevocably authorizes any one or more preferred creditors to file claims, receive distributions, dividends or disbursements, and take all other actions necessary or desirable to effectuate the purposes of this subparagraph, either in seller's name or in the name of the preferred creditor.

(c). Seller will not be entitled to retain any prepayment under this agreement unless the amounts owned to preferred creditors, as of the date of prepayment, are paid in full, or any payment under this agreement if debtor is in default in payment to any preferred creditor, and (i) written notice of default has been given debtor prior to payment and judicial proceedings are commenced with respect to default within 30 days after the receipt of notice by debtor, or (ii) judicial proceedings have been commenced in respect of default.

(d). Nothing in this paragraph shall prevent the receipt by seller of payments if none of the events listed in subparagraph (b) have occurred and seller has not retained payments in violation of the provisions of subparagraph (c).

(e). No preferred creditor shall have the right to enforce this subordination invalidated or impaired by any knowledge obtained by him or her or by any act of or failure to act by the preferred creditor, including, without limitation, the following acts: the receiving, releasing or substitution of collateral; the granting of renewals or extensions; the modification of the terms of the indebtedness; or the waiver of compliance with any terms or conditions.

(f). If debtor is liquidated and dissolved and substantially all of the assets of debtor are distributed to a successor company, this subordination shall apply as set forth above for the benefit of preferred creditors (as defined above) of the successor company.



 
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Terms Of Use

Submissions to this site, including any legal or business forms, posts, responses to questions or other communications by contributors are not intended as and should not be construed as legal advice. You are strongly encouraged to consult competent legal council before engaging in any action based upon content contained on this site.

These downloadable forms are only for personal use. Retransmission, redistribution, or any other commercial use is prohibited. This includes reposting forms from this site to another site offering free legal or other document forms for download.

Please note that the donator may have included different usage terms regarding this form, and you agree to abide by these terms. It is highly recommended that you have a licensed attorney review any legal documents for which you are searching in order to make sure that your needs are being properly and completely satisfied.

Your use of this site constitutes your acceptance of our terms of use and your agreement to hold this site, its officers, employees and any contributors to this site harmless for any damage you might incur from your use of any submissions contained on this site. If you do not agree to the above terms, please do not proceed.

These forms are provided to assist business owners and others in understanding important points to consider in different transactions. They are offered with the understanding that no legal advice, accounting, or other professional service is being offered by these documents or on this website. Laws vary in the different states. Agreements acceptable in one state may not be enforced the same way under the laws of another state. Also, agreements should relate specifically to the particular facts of each situation. Therefore, it is important to consult legal counsel whenever utilizing these forms. The Forms are not a substitute for legal advice YourFreeLegalForms.com is not engaged in recommending or referring members on the site or making claims about the competence, character or qualifications of its participating members.
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