Increased Costs and Reduced Return Clause Samples

The "Increased Costs and Reduced Return" clause is designed to protect a party—typically a lender or service provider—if changes in law, regulation, or circumstances increase their costs or decrease their expected financial return under an agreement. In practice, this clause allows the affected party to notify the other party and request compensation or adjustment to the contract terms to offset the financial impact. For example, if new regulations require a bank to hold more capital, increasing its costs, the bank can invoke this clause to recover those costs from the borrower. The core function of this clause is to allocate the risk of unforeseen regulatory or economic changes, ensuring that the party providing services or financing is not unfairly disadvantaged by external factors beyond their control.

Increased Costs and Reduced Return. (a) If any Lender, any Agent or the L/C Issuer shall have determined that any Change in Law shall (i) subject such Agent, such Lender or the L/C Issuer, or any Person controlling such Agent, such Lender or the L/C Issuer to any tax, duty or other charge with respect to this Agreement or any Loan made by such Agent or such Lender or any Letter of Credit issued by the L/C Issuer, or change the basis of taxation of payments to such Agent, such Lender or the L/C Issuer or any Person controlling such Agent, such Lender or the L/C Issuer of any amounts payable hereunder (except for Indemnified Taxes and Excluded Taxes), (ii) impose, modify or deem applicable any reserve, special deposit or similar requirement against any Loan, any Letter of Credit or against assets of or held by, or deposits with or for the account of, or credit extended by, such Agent, such Lender or the L/C Issuer or any Person controlling such Agent, such Lender or the L/C Issuer or (iii) impose on such Agent, such Lender or the L/C Issuer or any Person controlling such Agent, such Lender or the L/C Issuer any other condition regarding this Agreement or any Loan or Letter of Credit, and the result of any event referred to in clauses (i), (ii) or (iii) above shall be to increase the cost to such Agent, such Lender or the L/C Issuer of making any Loan, issuing, guaranteeing or participating in any Letter of Credit, or agreeing to make any Loan or issue, guaranty or participate in any Letter of Credit, or to reduce any amount received or receivable by such Agent, such Lender or the L/C Issuer hereunder, then, upon demand by such Agent, such Lender or the L/C Issuer, the Borrowers shall pay to such Agent, such Lender or the L/C Issuer such additional amounts as will compensate such Agent, such Lender or the L/C Issuer for such increased costs or reductions in amount; provided, however, that notwithstanding anything to the contrary in this Section 2.10(a), it shall be a condition to a Lender’s or L/C Issuer’s exercise of its rights, if any, under this Section 2.10(a) that such Lender or L/C Issuer shall generally be exercising similar rights with respect to borrowers under similar agreements. (b) If any Agent, any Lender or the L/C Issuer shall have determined that any Change in Law either (i) affects or would affect the amount of capital required or expected to be maintained by such Agent, such Lender or the L/C Issuer or any Person controlling such Agent, such Lender or the L/C Issuer, and such ...

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Increased Costs and Reduced Return. (a) If any Change in Law shall (i) subject any Secured Party to any Taxes (other than (A) Indemnified Taxes, (B) Taxes described in clauses (b) through (d) of the definition of Excluded Taxes and (C) Connection Income Taxes) with respect to this Agreement or any Term Loan made by such Agent or such Lender, (ii) impose, modify or deem applicable any reserve, special deposit or similar requirement against any Term Loan or against assets of or held by, or deposits with or for the account of, or credit extended by, such Secured Party or any Person controlling such Secured Party or (iii) impose on such Secured Party or any Person controlling such Secured Party any other condition regarding this Agreement or any Term Loan, and the result of any event referred to in clauses (i), (ii) or (iii) above shall be to increase the cost to such Secured Party of making any Term Loan or agreeing to make any Term Loan, or to reduce any amount received or receivable by such Secured Party hereunder, then, upon demand by such Secured Party, the Borrower shall pay to such Secured Party such additional amounts as will compensate such Secured Party for such increased costs or reductions in amount. (b) If any Change in Law either (i) affects or would affect the amount of capital required or expected to be maintained by such Secured Party or any Person controlling such Secured Party, and such Secured Party determines that the amount of such capital is increased as a direct or indirect consequence of any Term Loans made or maintained, such Secured Party’s or such other controlling Person’s other obligations hereunder, or (ii) has or would have the effect of reducing the rate of return on such Secured Party’s or such other controlling Person’s capital to a level below that which such Secured Party or such controlling Person could have achieved but for such circumstances as a consequence of any Term Loans made or maintained, or any agreement to make Loans or such Secured Party’s or such other controlling Person’s other obligations hereunder (in each case, taking into consideration, such Secured Party’s or such other controlling Person’s policies with respect to capital adequacy), then, upon demand by such Secured Party, the Borrower shall pay to such Secured Party from time to time such additional amounts as will compensate such Secured Party for such cost of maintaining such increased capital or such reduction in the rate of return on such Secured Party’s or such other controlling Per...

Increased Costs and Reduced Return. (a) Subject to the limitation in Section 2.03(a)(ii), if, due to either (i) the introduction of or any change (other than any change by way of imposition or increase of reserve requirements, in the case of Eurocurrency Rate Advances, included in the Eurocurrency Rate Reserve Percentage), after the date hereof, in or in the interpretation of any law or regulation or (ii) the compliance with any guideline or request from any central bank or other governmental authority (whether or not having the force of law) issued after the date hereof, there shall be any increase in the cost to any Bank of agreeing to make, making, funding or maintaining Eurocurrency Rate Advances (including, without limitation, any conversion of any Advance denominated in an Alternative Currency other than the Euro into an Advance denominated in Euro), by an amount reasonably deemed by such Bank to be material, then from time to time, within ten days after demand by such Bank (with a copy of such demand to the Administrative Agent), such Borrower shall pay to the Administrative Agent for the account of such Bank additional amounts sufficient to compensate such Bank for such increased cost; provided that no Borrower shall be obligated to pay any such amount to the extent such amount results from a change, guideline or request which took effect more than 90 days prior to the date of such demand. (b) Subject to the limitation in Section 2.03(a)(ii), if any Bank shall have determined that the adoption, after the date hereof, of any applicable law, rule or regulation regarding capital adequacy, or any change therein, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Bank (or its Applicable Lending Office) with any request or directive issued after the date hereof regarding capital adequacy (whether or not having the force of law) of any such authority, central bank or comparable agency, has or would have the effect of reducing the rate of return on such Bank's capital as a consequence of its obligations hereunder to a level below that which such Bank could have achieved but for such adoption, change or compliance by an amount reasonably deemed by such Bank to be material, then from time to time, within ten days after demand by such Bank (with a copy of such demand to the Administrative Agent), the Company shall pay to the Administrative A...

Increased Costs and Reduced Return. If Lender shall have determined that the adoption or implementation of, or any change in, any law, rule, treaty or regulation, or any policy, guideline or directive of, or any change in, the interpretation or administration thereof by, any court, central bank or other administrative or governmental authority, or compliance by Lender with any directive of, or guideline from, any central bank or other Governmental Authority or the introduction of, or change in, any accounting principles applicable to Lender (whether or not having the force of law), in each case, occurring after the date hereof, shall (i) subject the Lender to any tax, duty or other charge with respect to this Agreement or any Loan made hereunder, or change the basis of taxation of payments to Lender of any amounts payable hereunder (except for taxes on the overall net income of Lender), (ii) impose, modify or deem applicable any reserve, special deposit or similar requirement against any Loan, or against assets of or held by, or deposits with or for the account of, or credit extended by, Lender, or (iii) impose on Lender any other condition regarding this Agreement or any Loan, and the result of any event referred to in clauses (i), (ii) or (iii) above shall be to increase the cost to Lender of making any Loan, or agreeing to make any Loan or to reduce any amount received or receivable by Lender, then, upon demand by Lender, the Borrower shall pay to Lender such additional amounts as will compensate the Lender for such increased costs or reductions in amount. All amounts payable under this Section shall bear interest from the date of demand by the Lender until payment in full to the Lender at the highest interest rate applicable to the Obligations. With respect to this Section 9.2, Lender shall treat Borrower no differently than Lender treats other similarly situated Borrowers. A certificate of the Lender claiming compensation under this Section, specifying the event herein above described and the nature of such event shall be submitted by the Lender to the Borrower, setting forth the additional amount due and an explanation of the calculation thereof, and the Lender’s reasons for invoking the provisions of this Section, and the same shall be final and conclusive absent manifest error.

Increased Costs and Reduced Return. 2.11.1 If, on or after the date hereof, the adoption of any applicable law, rule or regulation, or any change in any applicable law, rule or regulation, or any change in the interpretation or administration thereof by any Governmental Authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Long Term Working Capital Series Holder (or its Holding Office) with any request or directive (whether or not having the force of law) of any such authority, central bank or comparable agency, (i) shall subject any Long Term Working Capital Series Holder (or its Holding Office) to any tax, duty or other charge with respect to one or more of its Long Term Working Capital Series Notes, or shall change the basis of taxation of payments to any Long Term Working Capital Series Holder (or its Holding Office) of the principal of or interest on its Long Term Working Capital Series Notes or any other amounts due under this Indenture or any Long Term Working Capital Series Notes, except for the introduction of, or changes in the rate of, tax on the overall net income of such Long Term Working Capital Series Holder (or its Holding Office), or franchise taxes, imposed by the jurisdiction (or any political subdivision or taxing authority thereof) under the laws of which such Long Term Working Capital Series Holder is organized (or in which such Long Term Working Capital Series Holder's Holding Office is located); or (ii) shall impose, modify or deem applicable any reserve (including, without limitation, any such requirement imposed by the Board of Governors of the Federal Reserve System and minimum reserve requirements of the European Central Bank but excluding any such requirement included in an applicable Eurodollar Reserve Percentage), special deposit, insurance assessment or similar requirement against assets of, deposits with or for the account of, or credit extended by, any Long Term Working Capital Series Holder (or its Holding Office) or shall impose on any Long Term Working Capital Series Holder (or its Holding Office) or the London interbank market any other condition affecting the purchasing, owning, holding or maintaining of any one or more Long Term Working Capital Series Notes by such Long Term Working Capital Series Holder (or its Holding Office) and the result of any of the foregoing is to increase the cost to such Long Term Working Capital Series Holder (or its Holding Office) or any holding company...

Increased Costs and Reduced Return. (a) If any Lender or the Administrative Agent shall have determined that the adoption or implementation of, or any change in, any law, rule, treaty or regulation, or any policy, guideline or directive of, or any change in, the interpretation or administration thereof by, any court, central bank or other administrative or Governmental Authority, or compliance by any Lender or the Administrative Agent or any Person controlling any such Lender or the Administrative Agent with any directive of, or guideline from, any central bank or other Governmental Authority (in each case, whether or not having the force of law), in each of the foregoing instances, after the date hereof, shall (i) subject any Lender or the Administrative Agent or any Person controlling any such Lender or the Administrative Agent to any tax (except for general franchise taxes and taxes on the overall net income of any Lender or the Administrative Agent or any Person controlling any such Lender or the Administrative Agent by the jurisdiction in which such Lender or the Administrative Agent, or any Person controlling any such Lender is organized, has its principal place of business, or any lending office), duty or other charge with respect to this Agreement or any Loan made by such Lender or Administrative Agent, or change the basis of taxation of payments to any Lender or the Administrative Agent or any Person controlling any such Lender or the Administrative Agent of any amounts payable hereunder (except for general franchise taxes and taxes on the overall net income of any Lender or the Administrative Agent or any Person controlling any such Lender or the Administrative Agent by the jurisdiction in which such Lender or the Administrative Agent, or any Person controlling any such Lender is organized, has its principal place of business, or any lending office), (ii) impose, modify or deem applicable any reserve, special deposit or similar requirement against any Loan, or against assets of or held by, or deposits with or for the account of, or credit extended by, any Lender or the Administrative Agent or any Person controlling any such Lender or the Administrative Agent or (iii) impose on any Lender or the Administrative Agent or any Person controlling any such Lender or the Administrative Agent any other condition regarding this Agreement or any Loan, and the result of any event referred to in clauses (i), (ii) or (iii) above shall be to increase the cost to any Lender or the Administrative A...

Increased Costs and Reduced Return. (a) If any Secured Party shall have determined that any Change in Law shall (i) subject such Secured Party, or any Person controlling such Secured Party to any tax, duty or other charge with respect to this Agreement or any Loan made by such Agent or such Lender, or change the basis of taxation of payments to such Secured Party or any Person controlling such Secured Party of any amounts payable hereunder (except for (x) Other Connection Taxes that are imposed on or measured by net income (however denominated), or that are franchise Taxes or branch profits Taxes, (y) Taxes described in clauses (b) through (d) of the definition of Excluded Taxes and (z) Indemnified Taxes), (ii) impose, modify or deem applicable any reserve, special deposit or similar requirement against any Loan or against assets of or held by, or deposits with or for the account of, or credit extended by, such Secured Party or any Person controlling such Secured Party or (iii) impose on such Secured Party or any Person controlling such Secured Party any other condition (other than Taxes) regarding this Agreement or any Loan, and the result of any event referred to in clauses (i), (ii) or (iii) above shall be to increase the cost to such Secured Party of making any Loan, or agreeing to make any Loan, or to reduce any amount received or receivable by such Secured Party hereunder, then, upon demand by such Secured Party, the Borrowers shall pay to such Secured Party such Additional Amounts as will compensate such Secured Party for such increased costs or reductions in amount. However, if any such Secured Party requests such Additional Amounts under this Section 2.10, then such Secured Party shall (at the request of the Borrowers) use reasonable efforts (which shall not require such Secured Party to incur an unreimbursed loss or unreimbursed cost or expense or otherwise take any action inconsistent with its internal policies or legal or regulatory restrictions or suffer any disadvantage or burden deemed by it to be significant) to designate a different lending office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Secured Party, such designation or assignment would eliminate or reduce amounts payable pursuant to this Section 2.10 in the future. The Loan Parties hereby agree to pay all reasonable and documented costs and expenses incurred by any Secured Party in connection ...

Increased Costs and Reduced Return. If any Secured Party shall have reasonably determined that any Change in Law shall (i) subject such Secured Party, or any Person controlling such Secured Party to any tax, duty or other charge with respect to this Agreement or any Loan made by the Agent or such Lender (except for (A) Indemnified Taxes, (B) Taxes described in clauses (b) through (e) of the definition of Excluded Taxes and (C) Connection Income Taxes), (ii) impose, modify or deem applicable any reserve, special deposit or similar requirement against any Loan or against assets of or held by, or deposits with or for the account of, or credit extended by, such Secured Party or any Person controlling such Secured Party or (iii) impose on such Secured Party or any Person controlling such Secured Party any other condition (other than Taxes) regarding this Agreement or any Loan, and the result of any event referred to in clauses (i), (ii) or (iii) above shall be to increase the cost to such Secured Party of making any Loan, or agreeing to make any Loan, or to reduce any amount received or receivable by such Secured Party hereunder, then, upon demand by such Secured Party, the Borrowers shall pay to such Secured Party such additional amounts as will compensate such Secured Party for such increased costs or reductions in amount.

Increased Costs and Reduced Return. (a) If any Change in Law shall: (i) impose, modify or deem applicable any reserve, special deposit or similar requirement against assets of, deposits with or for account of, or credit extended by, the Bank or any Participant (each of the foregoing, an “Affected Bank”); (ii) impose on any Affected Bank any other condition affecting this Agreement or any Related Document; or (iii) subject any Affected Bank to any tax, duty or other charge with respect to this Agreement or the Related Documents, or shall change the basis of taxation of payments to the Affected Bank of the principal of or interest with respect to the Letters of Credit or in respect of any other amounts due under this Agreement or the Related Documents (except for changes in the rate of tax on the overall net income of the Affected Bank) imposed by the jurisdiction in which the Affected Bank’s principal executive office is located; and the result of any of the foregoing shall be to increase the cost to such Affected Bank of maintaining any Letter of Credit or making any Advance or maintaining any participation therein or in the Related Documents or to reduce the amount of any sum received or receivable by such Affected Bank hereunder (whether of principal, interest or otherwise) or under any Related Document, then the Successor Agency will pay to such Affected Lender such additional amount or amounts as will compensate such Affected Bank for such additional costs incurred or reduction suffered. (b) If any Affected Bank determines that any Change in Law regarding capital or liquidity requirements has or would have the effect of reducing the rate of return on such Affected Bank’s capital or on the capital of such Affected Bank’s holding company, if any, as a consequence of this Agreement, the Letters of Credit, any Advance made by the Bank or any participation in any of the foregoing to a level below that which such Affected Bank or such Affected Bank’s holding company could have achieved but for such Change in Law (taking into consideration such Affected Bank’s policies and the policies of such Affected Bank’s holding company with respect to capital adequacy and liquidity), then from time to time the Successor Agency will pay to such Affected Bank such additional amount or amounts as will compensate such Affected Bank or such Affected Bank’s holding company for any such reduction suffered that is not compensated in full by the increase in Facility Fee resulting from the application of the Liquid...

Increased Costs and Reduced Return. (a) If, due to either (i) the introduction of or any change (other than any change by way of imposition or increase of reserve requirements, in the case of Eurodollar Rate Advances, included in the Eurodollar Rate Reserve Percentage) in or in the interpretation of any law or regulation or (ii) the compliance with any guideline or request from any central bank or other governmental authority (whether or not having the force of law) adopted after the Closing Date, or reasonably determined by a Bank only after the Closing Date to be applicable to it or to its Eurodollar Rate Advances, there shall be any increase after the date hereof in the cost to any Bank of agreeing to make or making, funding or maintaining Eurodollar Rate Advances, by an amount deemed by such Bank to be material, then the Company shall from time to time, within 15 days after demand by such Bank, accompanied by the certificate required therefor under Section 2.12(c) (with a copy of such demand and such certificate to the Agent), pay to the Agent for the account of such Bank additional amounts sufficient to compensate such Bank for such increased cost. It shall be assumed, for the purpose of computing amounts to be paid by the Company to Citicorp pursuant to this Section 2.12(a), that the making, funding or maintaining by Citicorp of any Advance has been by Citibank. (b) If any Bank shall have determined that the adoption of any applicable law, rule or regulation regarding capital adequacy, or any change therein, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Bank (or its Applicable Lending Office or any corporation controlling such Bank) with any request or directive regarding capital adequacy (whether or not having the force of law) of any such authority, central bank or comparable agency, which adoption, change, request or directive is effected, made or promulgated after the Closing Date, or if effective, made or promulgated prior to such date, is reasonably determined by a Bank only after the Closing Date to be applicable to it or its obligations hereunder, has or would have the effect after the date hereof of reducing the rate of return on such Bank’s capital or the capital of any corporation controlling such Bank as a consequence of such Bank’s obligation hereunder to a level below that which such Bank could have achieved but f...