Subordinated Termination Fee Clause Samples
A Subordinated Termination Fee clause establishes that, in the event of early contract termination, a specific fee is owed but its payment is ranked below other obligations, such as senior debt. In practice, this means that if the contract is ended prematurely, the party entitled to the fee will only receive payment after higher-priority creditors have been satisfied. This clause is commonly used in financing or acquisition agreements to protect senior lenders and clarify the order in which claims are paid, thereby managing risk and ensuring the enforceability of payment priorities.
Subordinated Termination Fee. (i) On the Termination Date, the Advisor shall be entitled to a Subordinated Termination Fee. The Subordinated Termination Fee, if any, will be payable in the form of a promissory note equal to (A) fifteen percent (15%) of the amount, if any, by which (1) the sum of (v) the fair market value (determined by appraisal as of the Termination Date) of the Investments on the Termination Date, less (w) any Loans secured by such Investments, plus (x) total Distributions paid through the Termination Date on Shares issued in Offerings through the Termination Date, less (y) the liquidation preference of all Preferred Stock issued on or prior to the Termination Date (whether or not converted into Shares), which liquidation preference shall be reduced by any amounts paid on or prior to the Termination Date to purchase or redeem any shares of Preferred Stock or any Shares issued on conversion of any Preferred Stock, less (z) any amounts distributable as of the Termination Date to limited partners who received OP Units in connection with the acquisition of any Investments upon the liquidation or sale of such Investments (assuming the liquidation or sale of such Investments on the Termination Date), exceeds (2) the sum of the Gross Proceeds raised in all Offerings through the Termination Date (less amounts paid on or prior to the Termination Date to purchase or redeem any Shares purchased in an Offering pursuant to the Company’s share repurchase plan or otherwise) and the total amount of cash that, if distributed to those Stockholders who purchased Shares in an Offering on or prior to the Termination Date, would have provided such Stockholders an annual six percent (6%) cumulative, non-compounded return on the Gross Proceeds raised in all Offerings through the Termination Date, measured for the period from inception through the Termination Date, less (B) any prior payments to the Advisor of the Subordinated Participation In Net Sales Proceeds or the Subordinated Incentive Listing Fee. In addition, at the time of termination, the Advisor may elect to defer its right to receive a Subordinated Termination Fee until either a Listing or an Other Liquidity Event occurs.
(ii) If the Advisor elects to defer its right to receive a Subordinated Termination Fee and there is a Listing, then the Advisor will be entitled to receive a Subordinated Termination Fee in an amount equal to (A) fifteen percent (15%) of the amount, if any, by which (1) the sum of (t) the fair market value (det...