SGS 2 - Representations/warranties + boilerplate clauses

Question 1

When are reps and warranties repeated?

Answer 1

• Date of agreement
• Date of each Utilisation Request
• First day of each interest period

Question 2

When will warranties not require repetition?

Answer 2

• Covered by undertaking/indemnity
• Legal representations
• Subject only relevant at initial date

Question 3

What is a tax gross up clause?

Answer 3

• A clause stating that if there is a change in law which means withholding tax is payable, then the repayments will be grossed up to account for this.

Question 4

When is borrower not required to pay withholding tax?

Answer 4

When lender is

• Qualifying lender (corporation tax payer)
• In a double tax treaty jurisdiction

Question 5

What costs are excluded from an increased costs clause?

Answer 5

1. Tax
2. Increased costs from lenders own fault
3. Mandatory increases due to libor

Question 6

Mitigation clause:

Answer 6

Requires bank to mitigate increased costs.

Question 7

What options does a borrower have when under an increased costs/tax gross up clause?

Answer 7

• Prepayment

- Replacement of lender (other than agent)