When Discharge of First Lien Obligations Deemed Not to Have Occurred Clause
(First Lien/Second Lien Intercreditor Agreement)

Summary

This template is a When Discharge of First Lien Obligations Deemed Not to Have Occurred clause is used in an intercreditor agreement and ensures that refinanced first lien obligations, and possibly second lien obligations, continue to receive the benefit of the intercreditor agreement. This clause contains drafting notes and practical guidance. Section ensures that any "Refinancing" (as defined in the intercreditor agreement) of the first lien obligations will receive the benefit of the intercreditor agreement. Section is the parallel provision for second lien obligations if refinancings of such obligations are permitted. Read this clause in conjunction with the following practice notes: • Intercreditor Agreements • Lien Subordination vs. Debt Subordination • First Lien Debt and Intercreditor Arrangements • First Lien Debt Cap • "Waterfall": Priority of Application of Proceeds • Remedies Block: Standstill • Turnover Provisions • Second Lien Lender Buyout Option • Release of Second Lien on Sale of Collateral • Amendments and Waivers to First Lien Documents and Second Lien Documents • Consent to DIP Financing and Use of Cash Collateral • 363 Sales and Adequate Protection For a full listing of key content covering intercreditor agreeements, see Intercreditor Agreements Resource Kit.