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3.12 REPRESENTATIONS AND WARRANTIES

Representations and warranties constitute statements by the borrower on an on-going basis during the term of the loan and are used to inform the parties to the loan agreement of the fact that the loan was granted on the basis of the economic, financial, legal, and tax situation disclosed by the borrower at the time the agreement was concluded; should any substantial discrepancies or breaches emerge between the information provided and that subsequently ascertained, the bank may terminate the agreement and/or to refuse to advance funds.

These agreements generally take the following form. The borrower makes the representations and warranties set out in this clause to each finance party.

A very detailed example of clauses follows.

• Status

• it and each finance party is a corporation, duly incorporated with limited liability and validly existing under the law of its jurisdiction of incorporation.

• it and each finance party has the power to own its assets and carry on its business as it is being conducted.

• Legal validity

• each transaction document to which it and/or each finance party is a party is, subject to any general principles of law limiting its obligations which are specifically referred to in any legal opinion required to be delivered under this agreement, its legally valid, binding and enforceable obligation;

• each transaction document to which it and/or each finance party is a party is in the proper form for its enforcement in the jurisdiction of its incorporation.

• Non-conflict with other obligations

• the entry into and performance by it and each finance party of, and the transactions contemplated by, the transaction documents do not and will not conflict with:

• any law or regulation applicable to it or that finance party;

• its or the relevant finance party's constitutional documents; or

• any agreement or instrument binding upon it or the relevant finance party or any of its or the relevant LeaseCo's assets.

• Power and authority

• It and each finance party has the power to enter into, perform and deliver, and has taken all necessary action to authorize its entry into, performance and delivery of, the transaction documents to which it is a party and the transactions contemplated by those transaction documents.

• Validity and admissibility in evidence

• Save as referred to in this clause, all authorizations required or desirable:

• to enable it and each finance party lawfully to enter into, exercise its rights and comply with its obligations in the transaction documents to which it is a party; and

• to make the transaction documents to which it and each finance party is a party admissible in evidence in its jurisdiction of incorporation,

• have been obtained or effected and are in full force and effect.

• Governing law and enforcement

• Subject to any general principles of law limiting its obligations and referred to in any legal opinion required under this agreement:

• the choice of... law as the governing law of the finance documents will be recognized and enforced in the jurisdiction of incorporation of each finance party;

• any judgment obtained in ... in relation to a finance document will be recognized and enforced in the jurisdiction of incorporation of each finance party; and

• its and each finance party's irrevocable submission under this agreement to the jurisdiction of the courts of... not to claim any immunity to which it or its assets may be entitled are legal, valid and binding under the laws of its jurisdiction of incorporation of each finance party.

• No default

• No event of default is outstanding and no default will result from the execution of, or the performance of any transaction contemplated by, any transaction document.

• No other event or circumstance is outstanding which constitutes a default under any other agreement or instrument which is binding on it or to which its assets are subject to an extent or in a manner which has or is reasonably likely to have a material adverse effect.

• Information

• In this sub clause Information means the business plan and all other written Information provided by or on behalf of the Borrower in connection with the transaction documents.

• Any factual Information contained in the Information was true and accurate in all material respects as at the date it was provided or as at the date (if any) at which it is stated to be given.

• The financial projections contained in the Information have been prepared on the basis of recent historical Information and on the basis of reasonable assumptions.

• Each expression of opinion, expectation, intention or policy contained in the Information was made after careful consideration and enquiry and is believed by the Borrowers to be fair and reasonable as at the date at which it is stated to be given and can be properly supported.

• The Information did not omit as at its date any Information which, if disclosed, would make the Information untrue or misleading in any material respect.

• As at the utilization date, nothing has occurred since the date any of the Information was delivered to an administrative party which, if disclosed, would make the Information untrue or misleading in any material respect.

• Valuation

• All factual written Information supplied by it or on its behalf to the valuer for the purposes of each Valuation was true and accurate as at its date or (if appropriate) as at the date (if any) at which it is stated to be given;

• Any financial projections contained in the Information referred to in paragraph ... have been prepared as at their date, on the basis of recent historical Information and assumptions believed by it to be fair and reasonable;

• It has not omitted to supply any information which, if disclosed, would adversely affect the valuation; and

• In the case of the initial valuation only, nothing has occurred since the date Information referred to in paragraph ... was supplied and the utilization date which, if it had occurred prior to the initial valuation, would adversely affect the initial valuation.

• Information for Report on Title

• The written factual Information supplied by the Borrowers or on their behalf to the lawyers who prepared any Report on Title for the purpose of that Report on Title was true and accurate in all material respects as at its date or (if appropriate) as at the date (if any) at which it is stated to be given;

• the Information referred to in paragraph ... was at the date it was expressed to be given complete and did not omit any Information which, if disclosed would make that Information untrue or misleading in any material respect; and

• as at the utilization date, nothing has occurred since the date of any Information referred to in paragraph ... which, if disclosed, would make that Information untrue or misleading in any material respect.

• Financial statements

• The audited financial statements of the Borrower recently delivered to the bank:

• have been prepared in accordance with accounting principles and practices generally accepted in its jurisdiction of incorporation, consistently applied; and

• fairly represent its financial condition (consolidated, if applicable) as at the date to which they were drawn up, except, in each case, as disclosed to the contrary in those financial statements.

• There has been no material adverse change in the consolidated financial condition of either Borrower since the date to which the financial statements referred to in paragraph ... were drawn up.

• No other business

• Neither Borrower has traded or carried on any business since the date of its incorporation except for the acquisition (including the funding of the acquisition), ownership and management of its interests in the relevant Property.

• Neither Borrower is party to any material agreement other than the transaction documents.

• Neither Borrower:

• has or has had, any employees;

• has any Subsidiaries;

• has any obligation in respect of any retirement benefit or occupational pension scheme of any person.

• Ranking of Security

• The security conferred by each security document and the LeaseCo security agreement constitutes a first priority security interest of the type described, over the assets referred to, in that security document or the LeaseCo security agreement and those assets are not subject to any prior or pari passu security interest.

• Litigation proceedings

• No litigation, arbitration or administrative proceedings of or before any court, arbitral body or agency are current or (to the best of its knowledge and belief) pending or threatened against it which (a) are reasonably likely to be adversely determined and (b) if adversely determined, would have a material adverse effect.

• Environmental law

• To the best of its knowledge and belief (after due enquiry) and save as disclosed in the Report on Title or the valuation:

• the Borrower:

• has obtained all requisite environmental approvals required for the purposes of its ownership and operation of its Property as it is operated as at the date of this agreement; and

• is, and has been, in compliance with the environmental approvals referred to in paragraph ... and all environmental laws where failure to do so could reasonably be likely to have a material adverse effect;

• no environmental claim is pending or threatened against it, and no circumstances are existing which could reasonably be expected to result in an environmental claim against it, which, if substantiated, is reasonably likely to have, a material adverse effect; and

• no material generally known to be hazardous to health or safety has been used, or stored or dumped, or is present, at the Property in a manner which could reasonably be expected to have a material adverse effect.

 
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