Upfront Fee/OID Clause Samples
The Upfront Fee/OID clause defines the requirement for the borrower to pay a fee or accept an original issue discount (OID) at the outset of a loan transaction. Typically, this means the lender either receives a lump-sum payment at closing or advances less than the full principal amount, with the difference representing the OID. For example, a $1,000,000 loan with a 2% OID would result in the borrower receiving $980,000 but owing the full $1,000,000. This clause ensures the lender is compensated for extending credit and can help cover administrative costs or increased risk, thereby incentivizing the lender to provide the loan.
POPULAR SAMPLE Copied 24 times
Upfront Fee/OID. On the Effective Date, the Borrowers shall pay, or cause to be paid, to the Initial Term Lenders, an upfront fee (the “Initial Term Loan Upfront Fee”) in an amount equal to 2.00% of the aggregate principal amount of the Initial Term Loans actually funded by the Initial Term Loan Lenders on the Closing Date; provided, that, at the option of each Initial Term Lenders, such Initial Term Loan Upfront Fee shall be taken in the form of an equivalent amount of original issue discount in respect of the aggregate principal amount of Initial Term Loans made by such Initial Term Lender on the Effective Date; provided, further that the parties hereto agree to treat the Initial Term Loan Upfront Fee as original issue discount for U.S. federal (and all applicable state and local) income tax purposes.
Upfront Fee/OID. The Borrower shall pay to the Lead Arrangers for the account of each Initial Incremental Term Loan Lender upfront fees (“Upfront Fees”), at a rate equal to 1.5% of the aggregate principal amount of the Incremental Term Loan funded on the Acquisition Closing Date (as defined below). Upfront Fees shall be due and payable, on a pro rata basis, on the Acquisition Closing Date to each Initial Incremental Term Loan Lender lending the Incremental Term Loan on the Acquisition Closing Date. At the option of the Lead Arrangers, the Upfront Fees may be structured as original issue discount.