COMMITMENT PAYMENTS AND TERMINATION FEE Clause Samples
The 'Commitment Payments and Termination Fee' clause defines the financial obligations that arise if a party commits to a contract but later terminates it before completion. Typically, this clause outlines the requirement for the terminating party to pay a specified fee or forfeit certain payments as compensation for the other party's lost opportunity or costs incurred. For example, if a client cancels a service agreement after work has begun, they may owe a portion of the contract value as a termination fee. The core function of this clause is to deter premature termination and to compensate the non-terminating party for losses resulting from early contract cancellation.
COMMITMENT PAYMENTS AND TERMINATION FEE. On the last Business Day of each twelve (12) Calendar Month period beginning on the date that is one (1) year after the Effective Date (each such period a "Commitment Evaluation Period"), if the Company has not sold at least $1,000,000 in aggregate Put Dollar Amount worth of Put Shares during that Commitment Evaluation Period, the Company, in consideration of Investor's commitment costs, including, but not limited to, due diligence expenses, shall pay to the Investor an amount (the "Non-Usage Fee") equal to the difference of (i) $100,000, minus (ii) 10% of the aggregate Put Dollar Amount of the Put Shares purchased by the Investor during that Commitment Evaluation Period. In the event that the Company delivers a Termination Notice to the Investor or an Automatic Termination occurs, the Company shall pay to the Investor (the "Termination Fee") the greater of (i) the Non-Usage Fee for the applicable Commitment Evaluation Period, or (ii) the difference of (x) $200,000, minus (y) 10% of the aggregate Put Dollar Amount of the Put Shares purchased by the Investor during all Puts to date, and the Company shall not be required to pay the Non-Usage Fee thereafter. Each Non-Usage Fee or Termination Fee is payable, in cash or Common Stock (in the manner described below), at the Company's option, within five (5) business days of the date it accrued. If such payment is made in restricted and unregistered Common Stock, the Company shall deliver to the Investor a number of shares of Common Stock equal to 150% of the amount of the Non-Usage Fee or Termination Fee that is then payable, divided by the lowest closing price of the Company's Common Stock for the five (5) Business Days immediately preceding the date of delivery of such shares to the Investor. The Company shall not be required to deliver any payments to Investor under this subsection until Investor has paid all Put Dollar Amounts that are then due.
COMMITMENT PAYMENTS AND TERMINATION FEE. In the event that the Company delivers a Termination Notice to the Investor or an Automatic Termination occurs, the Company shall pay to the Investor (the "Termination Fee") the difference of (x) $200,000, minus (y) 10% of the aggregate Put Dollar Amount of the Put Shares purchased by the Investor during all Puts to date. The Termination Fee is payable, in cash or Common Stock (in the manner described below), at the Company's option, within five (5) business days of the date it accrued. If such payment is made in restricted and unregistered Common Stock, the Company shall deliver to the Investor a number of shares of Common Stock equal to 150% of the amount of the Termination Fee that is then payable, divided by the lowest closing price of the Company's Common Stock for the five (5) Business Days immediately preceding the date of delivery of such shares to the Investor. The Company shall not be required to deliver any payments to Investor under this subsection until Investor has paid all Put Dollar Amounts that are then due.