Document background
The Negative Pledge Agreement serves as a key protective mechanism in Austrian financing transactions, particularly in unsecured lending arrangements where lenders seek to maintain their position by preventing the borrower from granting security to other creditors. This document is commonly used in corporate loans, bond issuances, and general corporate financing where formal security is not taken but lenders require assurance about their continued priority position. Under Austrian law, while a Negative Pledge Agreement doesn't create a security interest per se, it provides contractual protection through specific undertakings and remedies. The agreement typically includes detailed provisions on permitted security interests, monitoring requirements, and enforcement mechanisms, all tailored to comply with Austrian legal requirements and market practice.
