Forfeiture of Operating Units Clause Samples
The Forfeiture of Operating Units clause establishes the conditions under which a party may lose its rights or interests in specific operating units, typically as a consequence of breaching contractual obligations or failing to meet performance benchmarks. In practice, this clause might apply if a partner in a joint venture fails to contribute required capital or does not achieve agreed-upon production targets, resulting in the automatic transfer or loss of their share in the operating unit. Its core function is to incentivize compliance and performance by providing a clear penalty for non-fulfillment, thereby protecting the interests of the other parties and ensuring the smooth operation of the venture.
Forfeiture of Operating Units. A Management Member’s Operating Units shall be subject to forfeiture in accordance with the schedule in Section 7.2 hereof if he or she becomes an Inactive Management Member before the fifth anniversary of the issuance date of the Operating Units.
Forfeiture of Operating Units. A Management Member’s Operating Units shall be subject to forfeiture in accordance with the schedule in Section 7.2(a)(ii) hereof if he or she becomes an Inactive Management Member before the fourth anniversary of the issuance date of such Member’s Operating Units. Notwithstanding the forfeiture provisions of this Agreement that apply to Operating Units, only Retainable Operating Units held by Management Members and Inactive Management Members shall participate in distributions under Section 9.1; provided that all Operating Units that are then held (and not previously forfeited) by Management Members and Inactive Management Members shall vest and be entitled to participate in distributions made upon an Exit Event. For purposes of this Agreement, “Retainable Operating Units” means, at any particular date of determination, (a) with respect to any Management Member, such number of Operating Units then held by such Management Member that would be retained and not forfeited by such Management Member pursuant to the schedule set forth in Section 7.2(a)(ii) hereof if the employment of such Management Member with the Company or the Subsidiary that employs such Management Member was terminated at such time for any reason other than for Cause and (b) with respect to an Inactive Management Member, all Operating Units retained (and not previously forfeited in accordance with the schedule set forth in Section 7.2(a)(ii)) by such Inactive Management Member.