Increased Costs or Reduced Return Clause Samples
The "Increased Costs or Reduced Return" clause allows a party, typically a lender or service provider, to adjust terms or seek compensation if regulatory changes or unforeseen circumstances increase their costs or reduce their expected returns. For example, if new laws require a bank to hold more capital or pay additional taxes, this clause enables the bank to pass those costs on to the borrower or client. Its core function is to protect the affected party from financial losses due to external changes, ensuring that the original economic balance of the agreement is maintained despite evolving regulatory or market conditions.
Increased Costs or Reduced Return. If, due to either (a) the introduction of or any change in or in the interpretation of any U.S. law or regulation, or (b) the compliance with any guideline or request from any governmental authority, there shall be any increase in the cost to Lender of maintaining its commitments hereunder or agreeing to make or making, funding or maintaining Revolving Advances or Term Loan to any one, or more, or all Borrowers, or any reduction in the rate of return on Lender's capital as a consequence of its obligations hereunder to a level below that which Lender would have achieved but for such events described in clauses (a) and (b) above, each affected Borrower shall, from time to time, upon demand by Lender, pay to Lender additional amounts sufficient to compensate Lender for such increased costs or reduced return within ten (10) Business Days of receipt of the receipt of the certificate referred to below. A certificate identifying with reasonable specificity the basis for and the amount of such increased costs or reduced return shall be submitted to Borrowers by Lender and shall be conclusive and binding for all purposes, absent manifest error. In determining such amount, Lender shall use reasonable averaging and attribution methods.
Increased Costs or Reduced Return. If any Law, guideline or interpretation or any change in any Law, guideline or interpretation or application thereof by any Official Body charged with the interpretation or administration thereof or compliance with any request or directive (whether or not having the force of Law) of any central bank or other Official Body:
(a) subjects Bank, its holding company or any of their respective assets to any tax or charge with respect to this Agreement, the Note or payments by Borrower of principal, interest, or other amounts due from Borrower hereunder or under the Note (except for taxes, including any franchise tax, on the overall net income of Bank),
(b) imposes, modifies or deems applicable any reserve, special deposit, allocation of capital or similar requirement (including, without limitation, Regulation D of the Board of Governors of the Federal Reserve System) against credits or commitments to extend credit extended by, or assets (funded or contingent) of, deposits with or for the account of, or other acquisition of funds by, Bank or its holding company, or
(c) imposes, modifies or deems applicable any capital adequacy or similar requirement (A) against assets (funded or contingent) of, or credits or commitments to extend credit extended by, Bank or its holding company, or (B) otherwise applicable to the obligations of Bank under this Agreement, and the result of any of the foregoing is to increase the actual cost to, reduce the actual income receivable by, or impose any actual expenses (including loss of margin) upon Bank with respect to this Agreement, the Note, or the making, maintenance or funding of any part of the Loan (or, in the case of any capital adequacy or similar requirement, to have the effect of reducing the rate of return on Bank's capital, taking into consideration Bank's customary policies with respect to capital adequacy) by an amount which Bank in its reasonable discretion deems to be material, and, provided such cost, reduction in income, or expense affects other loans similar to the Loan and Bank generally requires compensation similar to the compensation provided herein to be paid on such similar loans, Bank may from time to time notify Borrower of the amount determined in good faith (using any averaging and attribution methods employed in good faith) by Bank to be necessary to compensate Bank for such increase in cost, reduction of income or additional expense. Such notice shall be delivered within three (3) months of the date Bank...
Increased Costs or Reduced Return. If, due to either (a) the introduction of or any change in or in the interpretation of any U.S. or foreign law or regulation, or (b) the compliance with any guideline or request from any governmental authority, there shall be any increase in the cost to Lender of maintaining its commitments hereunder or agreeing to make or making, funding or maintaining the Term Loan or any reduction in the rate of return on Lender's capital as a consequence of its obligations hereunder to a level below that which Lender would have achieved but for such events described in clauses (a) and (b) above (taking into consideration Lender's policies to comply with statutorily required levels with respect to capital adequacy), then Borrower agrees from time to time, upon demand by Lender to pay to Lender additional amounts sufficient to compensate Lender for such increased costs or reduced return. A certificate identifying with reasonable specificity the basis for and the amount of such increased costs or reduced return shall be submitted to Borrower by Lender and shall be conclusive and binding for all purposes, absent manifest error. In determining such amount, Lender may use reasonable averaging and attribution methods.
Increased Costs or Reduced Return. If any Law, guideline or interpretation or any change in any Law, guideline or interpretation or application thereof by any Official Body charged with the interpretation or administration thereof or compliance with any request or directive (whether or not having the force of Law) of any central bank or other Official Body: (a) subjects Citibank to any tax or changes the basis of taxation (including in both cases withholding taxes) with respect to this Agreement or the Credits (except for taxes on the overall net income of Citibank, franchise taxes, any branch profits taxes, and any taxes attributable to a failure of Citibank to withhold United States federal income taxes under the due diligence requirements imposed upon a withholding agent under §1.1441 7(b) of the income tax regulations); (b) imposes, modifies or deems applicable any reserve, special deposit or similar requirement against credits or commitments to extend credit extended by, or assets (funded or contingent) of, deposits with or for the account of, or other acquisitions of funds by, Citibank; or (c) imposes, modifies or deems applicable any capital adequacy or similar requirement (i) against assets (funded or contingent) of, or letters of credit, other credits or commitments to extend credit extended by, Citibank, or (ii) otherwise applicable to the obligations of Citibank under this Agreement or the Credits, and the result of any of the foregoing is to increase the cost to, reduce the income receivable by, or impose any expense upon Citibank with respect to this Agreement or the Credits, or the issuance or maintenance of any Credit (or, in the case of any capital adequacy or similar requirement, to have the effect of reducing the rate of return on Citibank’s capital, taking into consideration Citibank’s customary policies with respect to capital adequacy) by an amount which Citibank in its sole discretion deems to be material, Citibank shall from time to time notify Applicant of the amount determined in good faith (using any averaging and attribution methods employed in good faith) by Citibank to be necessary to compensate Citibank for such increase in cost, reduction of income, additional expense or reduced rate of return. Such notice shall set forth in reasonable detail the basis for such determination, provided, however, that any such determination shall be conclusive and binding absent manifest error. Such amount shall be due and payable by Applicant to Citibank ten Business Days after...