# Project Sale > Project Sale means the transfer of equity interests or sale of substantive assets by the [Borrower] in an [Affiliate]. **Term:** Project Sale **Last updated:** 2026-07-29 ## Definition ## What Project Sale Means in a Contract Project Sale is a defined term used most often in finance documents, particularly loan agreements, facility agreements, and intercreditor arrangements, to describe a specific disposal transaction involving equity interests or substantive assets held by an Affiliate of the Borrower. Rather than relying on a general definition of "disposal" or "asset sale," the parties carve out this particular transaction and give it a proper name so that it can be treated differently from ordinary business sales elsewhere in the contract. The practical effect is that once a transaction is labelled a Project Sale, every other clause that references that term, whether dealing with consent requirements, mandatory prepayment, or the application of proceeds, applies automatically to that transaction without needing to be redrafted or separately negotiated. This is a drafting shortcut that keeps long finance documents internally consistent. Because the definition typically references a bracketed or schedule-listed Affiliate and Borrower, the term is inherently transaction-specific rather than a general category of sale. It exists to describe one anticipated or contemplated event, often tied to a broader restructuring, refinancing, or divestment plan already known to the parties at signing. ## How Project Sale Is Defined or Measured The definition usually has two limbs: the transfer of equity interests in the named Affiliate, and the sale of substantially all of that Affiliate's assets. Either limb can trigger the defined term, meaning the parties do not need to distinguish between a share sale and an asset sale when applying downstream obligations, both are captured. Measurement of what counts as a Project Sale often depends on percentage thresholds for equity transferred, or a materiality test for what counts as "substantive" assets. Some agreements attach these thresholds directly in the definition, while others cross-refer to separate provisions dealing with material disposals or change of control. - Percentage of equity interests transferred, sometimes with a minimum threshold to trigger the defined term. - Scope of assets sold, assessed against a materiality or substantiality standard. - Identity of the counterparty, particularly if it is unaffiliated with the Borrower's group. - Timing relative to other conditions precedent or corporate events referenced in the facility. ## Where Project Sale Appears in Agreements The term typically appears in loan agreements, credit facilities, and security documents, most commonly within definitions sections, prepayment clauses, and covenants restricting disposals. It is closely associated with structured finance and leveraged transactions where a lender wants visibility into planned corporate reorganizations before they occur. Project Sale provisions frequently interact with representations and warranties, particularly where the Borrower must confirm that no undisclosed sale of Affiliate equity or assets is planned outside the agreed transaction. It can also surface in indemnity clauses addressing tax or liability consequences flowing from the sale. Beyond pure finance documents, similar concepts appear in [equity agreements](https://www.genieai.co/en-us/template-type/equity-agreement) and corporate restructuring documentation, where a defined disposal transaction needs consistent treatment across multiple related contracts, such as intercreditor deeds, security agreements, and shareholder consents. ## Why the Exact Wording Matters Because Project Sale is a defined term with contract-wide consequences, imprecise wording can create real commercial risk. If the definition fails to specify whether it captures indirect equity transfers, such as a sale of a holding company one level above the named Affiliate, parties may dispute whether a later restructuring actually falls within scope. The wording also determines whether proceeds from the Project Sale must be applied to mandatory prepayment, held in escrow, or distributed freely to the Borrower's group. Ambiguity here can delay closing of the underlying transaction while lenders and borrowers negotiate whether consent or prepayment obligations have been triggered. Courts interpreting these clauses generally apply the ordinary meaning of the words used, read in the context of the whole agreement and the law governing the contract, rather than assumptions about what the parties probably intended. Precise definitions therefore reduce the risk of costly interpretive disputes later. ## Drafting Considerations When drafting or reviewing a Project Sale definition, it is important to confirm exactly which entity is the Affiliate in question, whether the definition captures both direct and indirect transfers, and whether thresholds for equity percentage or asset materiality are clearly quantified rather than left to subjective judgment. Drafters should also check cross-references to related defined terms, such as Change of Control, Permitted Disposal, or Mandatory Prepayment Event, to ensure the Project Sale definition does not conflict with or duplicate obligations found elsewhere. Overlapping definitions are a common source of later disputes. Finally, parties negotiating a facility that anticipates a Project Sale should consider documenting the transaction consistently across related instruments, including any [equity participation agreement](https://www.genieai.co/en-us/template-type/equity-participation-agreement) or ancillary transfer documentation, so that the same triggering event is described identically throughout the transaction's legal architecture. This is particularly relevant in sectors such as [finance](https://www.genieai.co/industry/finance), where multiple interlocking agreements often reference the same underlying disposal. ## Context ### Relevant circumstances - Company restructuring - Mergers & Acquisitions - Dissolution of business ### Relevant sectors - Finance ## Relevant contract types - [Equity Agreement](https://www.genieai.co/en-us/template-type/equity-agreement) - [Equity Participation Agreement](https://www.genieai.co/en-us/template-type/equity-participation-agreement) --- This is the Markdown representation of [https://www.genieai.co/en-us/define/project-sale](https://www.genieai.co/en-us/define/project-sale), provided for AI agents and crawlers. The HTML page is canonical. See [/llms.txt](https://www.genieai.co/llms.txt) for the full content map.