Re-characterization Clause Samples
A Re-characterization clause defines how certain transactions, relationships, or payments are to be interpreted for legal or regulatory purposes, regardless of how the parties label them. In practice, this clause may specify that a transaction described as a 'loan' will be treated as an 'equity investment' if it meets certain criteria, or that a payment called a 'fee' will be considered 'interest' under applicable law. The core function of this clause is to prevent parties from circumventing legal requirements or regulatory obligations by simply assigning alternative labels to their arrangements, thereby ensuring that the substance of a transaction prevails over its form.
Re-characterization. If the sale of Receivables hereunder is re-characterized as a secured loan and not a sale or if such sale shall for any reason be ineffective or unenforceable, each of the Originator and the Buyer represents and warrants as to itself that each remittance of Collections by the Originator to the Buyer hereunder will have been (i) in payment of a debt incurred by the Originator in the ordinary course of business or financial affairs of the Originator and the Buyer and (ii) made in the ordinary course of business or financial affairs of the Originator and the Buyer.
Re-characterization. If the Employer allows for Voluntary Contributions in the Adoption Agreement, a Participant may treat his or her Excess Contributions as an amount distributed to the Participant and then contributed by the Participant to the Plan. Re-characterized amounts will remain nonforfeitable and subject to the same distribution requirements as Elective Deferrals. Amounts may not be recharacterized by a Highly Compensated Employee to the extent that such amount in combination with other Employee Contributions made by that Employee would exceed any stated limit under the Plan on Voluntary Contributions. Recharacterization must occur no later than two and one-half months after the last day of the Plan Year in which such Excess Contributions arose and is deemed to occur no earlier than the date the last Highly Compensated Employee is informed in writing of the amount recharacterized and the consequences thereof. Recharacterized amounts will be taxable to the Participant for the Participant's tax year in which the Participant would have received them in cash.
Re-characterization. It is recognized that Owner and Builder are sophisticated real estate entities with substantial experience in the residential home building industry and are advised by experienced legal counsel. It is the intent of Owner and Builder that the transaction described in this Agreement be treated as an option on the part of Builder to acquire Property. Neither this Agreement nor this transaction is intended to be, nor shall it be construed to be or create, any loan, security device, equitable mortgage, or other financing transaction between the parties. In no event shall Builder have any interest (direct or indirect, legal or equitable) in and to any of the Property other than as expressly provided in this Agreement, unless and until Builder shall have actually acquired fee simple title to one or more Property through exercise of its option rights hereunder and purchase thereof in accordance with the terms of this Agreement. Even though the parties hereto declare that their sole intent is that this Agreement shall serve as an option agreement providing Builder the option to purchase Property on and subject to the terms hereof, if nevertheless (and without in any way consenting to a re-characterization of this Agreement), this Agreement or the transaction described herein is ever characterized as a financing arrangement, security device or equitable mortgage, then for such purposes Builder hereby (i) irrevocably grants, transfers and assigns to Owner, its successors and assigns, in trust, with power of sale and right of reentry and possession, all of Builder’s right, title and interest now owned or hereafter acquired in and to the Property (other than any Property previously acquired and paid for by Builder pursuant to the terms hereof) and (ii) assigns and grants to Owner all rents, issues and profits realized from or relating to the Property (other than any Property previously acquired and paid for by Builder pursuant to the terms hereof). The intent of this grant is that in the event of such re-characterization, this Agreement shall be deemed to be a mortgage, with power of sale, of the Property (other than any Property previously acquired and paid for by Builder pursuant to the terms hereof) made by Builder in favor of Owner in favor of Owner and in the event of a default by Builder hereunder, Owner will be entitled to foreclose pursuant to a non-judicial trustee’s sale procedure and/or exercise any other remedies available at law or in equity (including the...