Section 467 loan Clause Samples

A Section 467 loan clause governs the tax treatment of certain loans with deferred or prepaid interest under Section 467 of the Internal Revenue Code. It typically applies to loans where the payment schedule does not match the accrual of interest, such as when interest is paid in advance or deferred to later periods. The clause outlines how both parties must recognize interest income and expense for tax purposes, often requiring accrual-based accounting even if cash payments differ. Its core function is to ensure that interest is reported consistently and accurately for tax compliance, preventing tax deferral or acceleration through unconventional payment arrangements.
Section 467 loan. In general—(1)
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Section 467 loan. Pursuant to the Section 467 Regulations, Licensor is required for income tax purposes only, to treat a portion of Licensee’s pre-payment of the Annual Fees as if it were a loan from Licensee to Licensor (the “Section 467 Loan”). For income tax purposes, Licensor will recognize both the license fee income (in the amount shown in Column C labeled “IRC § 467 Fees” in the table on Schedule 1 to this Addendum) and interest expense (in the amount shown in Column D labeled “Section 467 Interest”); and Licensee will recognize the license fee expense and interest income in the same respective amounts. For every Agreement Year in which such interest income arises under the Section 467 Regulations, Licensor will issue to Licensee an appropriate Form 1099 reflecting the amount of interest income deemed to have arisen, for income tax purposes, in connection with the balance of the Section 467 Loan. No cash interest payments will be made to Licensee. Licensee is advised to consult with its tax advisors regarding the treatment of this Agreement for tax purposes.
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Related to Section 467 loan

  • Existing Loan Seller represents and warrants to Buyer that the Existing Loan is the only indebtedness secured by the Property and that the information contained on Exhibit H is true, correct and complete in all material respects. To Seller’s Knowledge, neither Seller nor any guarantor is in default or breach of any provisions of the documents evidencing the Existing Loan and, to Seller’s Knowledge, no event or circumstance has occurred or exists which but for the passage of time would be a default under the Existing Loan. At Closing, Buyer shall accept the conveyance of the Property subject to the Existing Loan, including, without limitation, all liens securing its payment. If this Contract is still pending, by no later than fifteen (15) days after the Effective Date, Seller shall cause Existing Lender to deliver to Buyer (or for Seller to deliver to Buyer) a complete assumption and application, and thereafter Buyer shall, at its sole cost and expense, during the pendency of this Contract use diligent, commercially reasonable efforts, in cooperation with Seller, to facilitate Buyer’s assumption of the Existing Loan, including, without limitation, promptly furnishing and/or paying for all items required by the holder of the Existing Loan or its servicer to process Buyer’s application and pay all costs required by the holder of the Existing Loan or its servicer (such costs and all other costs and expenses of the holder of the Existing Loan or its servicer to consider, investigate, process, approve and document the transaction contemplated by this Contract, including all application, underwriting, legal, rating agency and assumption fees, being sometimes collectively referred to as the “Assumption Costs”); provided, however, in no event shall the Assumption Costs include any legal fees of Seller’s own counsel or legal fees of Existing Lender’s counsel necessitated by Seller’s negotiation of the Assumption Documents or necessitated by Seller’s pursuit of an exchange contemplated by Section 16.14 hereof. In addition, any assumption fee based solely on the amount of the Existing Loan need not be paid until Closing. Such efforts by Buyer shall include causing Buyer’s rights under this Contract to be assigned by no later than Closing to a single purpose entity or other special purpose entity as required by the holder of the Existing Loan or its servicer and causing an appropriate guarantor (“New Guarantor”) to become a guarantor of any non-recourse carveouts and environmental indemnitees of the Existing Loan in place and stead of the principals of Seller from and after the Closing Date. If the Assumption Documents require that Buyer or New Guarantor give representations or warranties to Existing Lender with respect to matters affecting the Property prior to Closing, Seller and such principals of Seller currently liable therefor shall indemnify, defend and hold harmless Buyer and New Guarantor from all claims from Existing Lender and all damages, costs and expenses owed to Existing Lender as a result of a breach thereof, provided that the representations and warranties so made are limited to reasonable matters affecting the Property prior to Closing. Except as expressly provided in this Section 4.4, Buyer, and not Seller, shall be responsible for all costs, fees and expenses incurred or payable as a result of the Assumption Costs and complying with the requirements of the Existing Loan for an assumption, and Buyer hereby agrees to indemnify, defend and hold harmless Seller from all of said costs, fees and expenses. Buyer’s foregoing indemnity regarding the Assumption Costs shall survive Closing and any termination of this Contract. The liens, assignments and security interests of the Existing Loan shall each be Permitted Exceptions (as shall be the Assumption Document to be executed at Closing).

  • Reduction of Servicing Compensation in Connection with Prepayment Interest Shortfalls In the event that any Mortgage Loan is the subject of a Prepayment Interest Shortfall, the Servicer shall, from amounts in respect of the Servicing Fee for such Distribution Date, deposit into the Collection Account, as a reduction of the Servicing Fee for such Distribution Date, no later than the Servicer Remittance Date immediately preceding such Distribution Date, an amount up to the Prepayment Interest Shortfall; provided that the amount so deposited shall not exceed the Compensating Interest for such Distribution Date. In case of such deposit, the Servicer shall not be entitled to any recovery or reimbursement from the Depositor, the Trustee, the Issuing Entity or the Certificateholders. With respect to any Distribution Date, to the extent that the Prepayment Interest Shortfall exceeds Compensating Interest (such excess, a "Non-Supported Interest Shortfall"), such Non-Supported Interest Shortfall shall reduce the Current Interest with respect to each Class of Certificates, pro rata based upon the amount of interest each such Class would otherwise be entitled to receive on such Distribution Date. Notwithstanding the foregoing, there shall be no reduction of the Servicing Fee in connection with Prepayment Interest Shortfalls related to the Relief Act or bankruptcy proceedings and the Servicer shall not be obligated to pay Compensating Interest with respect to Prepayment Interest Shortfalls related to the Relief Act or bankruptcy proceedings.

  • Initial Term Loan The Borrower shall give the Administrative Agent an irrevocable Notice of Borrowing prior to 11:00 a.m. on the Closing Date requesting that the Term Loan Lenders make the Initial Term Loan as a Base Rate Loan on such date (provided that the Borrower may request, no later than three (3) Business Days prior to the Closing Date, that the Lenders make the Initial Term Loan as a LIBOR Rate Loan if the Borrower has delivered to the Administrative Agent a letter in form and substance reasonably satisfactory to the Administrative Agent indemnifying the Lenders in the manner set forth in Section 5.9 of this Agreement). Upon receipt of such Notice of Borrowing from the Borrower, the Administrative Agent shall promptly notify each Term Loan Lender thereof. Not later than 1:00 p.m. on the Closing Date, each Term Loan Lender will make available to the Administrative Agent for the account of the Borrower, at the Administrative Agent’s Office in immediately available funds, the amount of such Initial Term Loan to be made by such Term Loan Lender on the Closing Date. The Borrower hereby irrevocably authorizes the Administrative Agent to disburse the proceeds of the Initial Term Loan in immediately available funds by wire transfer to such Person or Persons as may be designated by the Borrower in writing.

  • Initial Loan Notwithstanding any provision contained in this Agreement to the contrary, Lender shall have no obligation to make the initial Loan or issue the initial Letter of Credit under this Agreement unless Lender shall have first received: (a) this Agreement and the Note, each duly executed by Borrower; (b) the Guaranty, duly executed by Laclede Energy; (c) a copy of resolutions (including an incumbency certificate) of the Board of Directors of Borrower, duly adopted, which authorize the execution, delivery and performance of this Agreement, the Note and the other Transaction Documents, certified by the Secretary of Borrower; (d) a copy of resolutions of the Board of Directors (including an incumbency certificate) of Laclede Energy, duly adopted, which authorize the execution, delivery and performance of its Guaranty, certified by the Secretary of Laclede Energy; (e) copies of the Articles of Incorporation of Borrower and Laclede Energy, including any amendments thereto, certified by the Secretary of State of the states of their respective incorporations; (f) copies of the Bylaws of Borrower and Laclede Energy, including any amendments thereto, certified by the Secretaries of Borrower and Laclede Energy; (g) certificates of corporate good standing of Borrower and Laclede Energy issued by the Secretary of State of the states of their respective incorporations; (h) an opinion of the General Counsel of Borrower and Laclede Energy, in form and substance satisfactory to Lender and Lender’s counsel; (i) UCC search results from the Missouri Secretary of State for Borrower and Laclede Energy; (j) copies of all financial statements and other exhibits and schedules required by this Agreement and the other Transaction Documents; (k) a letter of direction from Borrower with respect to the disbursement of the proceeds of the initial Loan under this Agreement; (l) a fee letter, duly executed by Borrower and Lender; and (m) such other agreements, documents, instruments and certificates as Lender may reasonably request.

  • Increased LIBO Rate Loan Costs, etc The Borrower agrees to reimburse each Lender and each Issuer for any increase in the cost to such Lender or Issuer of, or any reduction in the amount of any sum receivable by such Secured Party in respect of, such Secured Party’s Commitments and the making of Credit Extensions hereunder (including the making, continuing or maintaining (or of its obligation to make or continue) any Loans as, or of converting (or of its obligation to convert) any Loans into, LIBO Rate Loans) that arise in connection with any change in, or the introduction, adoption, effectiveness, interpretation, reinterpretation or phase-in after the Restatement Effective Date of, any law or regulation, directive, guideline, decision or request (whether or not having the force of law) of any Governmental Authority, except for such changes with respect to increased capital costs and Taxes which are governed by Sections 4.5 and 4.6, respectively. Each affected Secured Party shall promptly notify the Administrative Agent and the Borrower in writing of the occurrence of any such event, stating the reasons therefor and the additional amount required fully to compensate such Secured Party for such increased cost or reduced amount. Such additional amounts shall be payable by the Borrower directly to such Secured Party within five Business Days of its receipt of such notice, and such notice shall, in the absence of manifest error, constitute prima facie evidence thereof and shall be binding on the Borrower.