ERISA Clauses
(Credit Agreement) (Borrower Friendly)

Summary

Use this template to compose borrower-friendly clauses in credit agreements related to potential liabilities of employee benefit plans under the Employee Retirement Income Security Act of 1974 (ERISA). Such relevant clauses include definitions, representations and warranties, affirmative covenants, and events of default. This template contains explanatory drafting notes. A lender's main concern relates to potential liabilities in connection with defined benefit pension plans that may be sponsored, maintained, or contributed to by the borrower or any of its affiliates. The lender should, therefore, attempt to negotiate provisions that will guard against such issues as plan underfunding and termination liability. Even where the borrower and its subsidiaries do not maintain defined benefit plans, it is customary to maintain such provisions in the credit agreement in the event the borrower or a subsidiary sponsors or becomes obligated to contribute to such a plan in the future, while the loan remains outstanding. When reviewing this template, you should refer to the full definitions, representations and warranties, affirmative covenants, and events of default sections of the credit agreement available in Practical Guidance's Finance module. See Definitions Clauses (Credit Agreement), Representations and Warranties Clauses (Credit Agreement), Affirmative Covenants Clauses (Credit Agreement), and Events of Default and Remedies Clauses (Credit Agreement). For a template providing borrower-friendly clause in credit agreements, see ERISA Clauses (Credit Agreement) (Lender Friendly). For a full listing of key content covering a credit agreement, see Credit Agreement Resource Kit.