Cross-Border Clauses
(Credit Agreement)

Summary

These cross-border clauses are used in a credit agreement and are specifically applicable to non-U.S. borrowers (also referred to as foreign borrowers). They cover key issues lenders need to consider when lending to non-U.S. borrowers. These clauses include practical guidance and drafting notes. The representations and warranties in a credit agreement establish certain facts regarding the borrowers at a point in time and warrant their accuracy going forward during the term of the loan. Generally, non-U.S. borrowers would make the same standard representations and warranties as U.S. borrowers with a few modifications or additional representations and warranties such as those shown in these example provisions to address the foreign status of some of the borrowers. The miscellaneous provisions also address matters relating to the foreign borrowers. Such provisions may be included in the loan term, covenants or miscellaneous articles of the credit agreement depending on the structure of the agreement. In addition to the provisions below, credit agreements with foreign borrowers typically include country-specific provisions relating to the borrower's country of origin. These country-specific provisions may include reference to debtor-creditor laws of the borrower's country that may affect the borrower and collectability of the loans, such as laws comparable to U.S. bankruptcy laws, local laws relating to enforcement of a judgment, or laws affecting collateral. The provisions regarding anti-terrorism laws, including anti-money laundering laws and economic sanctions, and anti-corruption laws also may include references to specific laws of the country of the borrowers. Local counsel in the relevant jurisdiction(s) should be consulted to determine any other local law issues that may be applicable to the transaction(s) and should be covered in the credit agreement. You should also obtain legal opinions from local counsel to confirm the legality and enforceability of the credit agreement. The capitalized terms used in these sample provisions should be conformed to the defined terms in the relevant credit agreement, and other appropriate modifications should be made to reflect the specific terms of your transaction. The defined term "Loan Parties" used in these provisions refers to the borrower and guarantor(s). The term "Subsidiaries" will be defined in the credit agreement in relation to the borrower, typically the parent company, and may exclude certain subsidiaries either in the definition or in a schedule to the credit agreement due to tax consequences or for other reasons. These provisions assume (1) that the lenders are located in the U.S., (2) that New York law governs the transaction, and New York is the agreed upon jurisdiction and forum for any disputes, (3) that the loans are secured by collateral and that the borrower(s) is/are also the grantor(s) of the collateral given to secure the loans under the credit agreement, and (4) that no majority-owned foreign subsidiaries guaranty or grant collateral to secure U.S. loans. These clauses should be read in conjunction with the following practice notes: • Cross-Border Lending Transactions • Cross-Border Financing Transactions • Representations and Warranties Clauses (Credit Agreement) • Bank Secrecy Act, USA PATRIOT Act, AMLA, OFAC, and other Anti-money Laundering / Anti-terrorism Regulations For a full listing of key content covering a credit agreement, see Credit Agreement Resource Kit.