Drop Dead Fee Clause Samples
A Drop Dead Fee clause establishes a fixed payment that becomes due if a transaction or agreement fails to close by a specified deadline. In practice, this fee is typically paid by the party responsible for the delay or failure, and it serves as compensation for the time, resources, and opportunity costs incurred by the other party. The core function of this clause is to incentivize timely completion of the deal and to allocate financial risk in the event of a breakdown, thereby providing certainty and encouraging both parties to meet their obligations within the agreed timeframe.
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Drop Dead Fee. (a) If:
(i) (x) no disbursement is made within 3 (three) months from the date of this Contract or (y) in case the Credit is cancelled in full under Article 2.6 (Cancellation) prior to the expiry of this term, the Borrower shall pay to the Bank a one-off contractual fee equal to 1% (100 basis points) of the Tranche A; and
(ii) (x) in case Tranche B is not fully drawn on the Final Availability Date even though the conditions set out under paragraphs (j) to (m) of Part D of Schedule F (Tranche B – Conditions Precedent) have been fulfilled, or (y) in case Tranche B is cancelled in full under Article 2.6 (Cancellation) prior to the expiry of this term, the Borrower shall pay to the Bank a one-off contractual fee equal to 3% (three hundred basis points) of the then available undrawn and uncancelled balance of the Credit on that date. For the avoidance of doubt, this one-off contractual fee of 3% (three hundred basis points) will only apply to Tranche B where the conditions of disbursement set out under paragraphs (j) to (m) of Part D of Schedule F (Tranche B – Conditions Precedent) have been fulfilled but Tranche B is not fully drawn, (individually the “Drop Dead Fee” and together the “Drop Dead Fees”).
(b) The Drop Dead Fees shall be payable by the Borrower to the Bank within 15 (fifteen) days of the Borrower’s receipt of the Bank’s demand or within any longer period specified in the Bank’s demand.
(c) For the avoidance of doubt, any Drop Dead Fee payable under this Article 2.9 (Drop Dead Fee) is independent of any other fees stipulated in this Contract.
Drop Dead Fee. If no Disbursement is made within 12 (twelve) months of the date of this Contract, a drop dead fee of 1% (100 basis points) of the Credit (the "Drop Dead Fee") shall be payable by the Borrower to the Bank within 15 (fifteen) days of the Borrower's receipt of the Bank's demand or within any longer period specified in the Bank's demand.
Drop Dead Fee. (a) The Borrower shall pay to the Bank the Drop Dead Fee in accordance with the terms of the Finance Fee Letter.
(b) For the avoidance of doubt, the Drop Dead Fee payable under the Finance Fee Letter is independent of any other fees stipulated in this Contract.