Template:Nutshell 2002 ISDA 2(d)

2(d) Deduction or Withholding for Tax.

(i) Gross-Up. The parties must pay without withholding unless required by law. Where a paying party has to withhold, then will:—

(1) promptly tell the recipient about the withholding;

(2) promptly pay the amount withheld to the relevant authorities (including any amount withheld from any gross-up payment required under this Section) when it determines the withholding is required or, if sooner, finds out that the amount has been assessed against the recipient;

(3) promptly provide the recipient with an official receipt for the tax payment; and

(4) if it is an Indemnifiable Tax, gross the payment up to ensure that the recipient actually receives the full amount it would otherwise have received (free of Indemnifiable Taxes). However, the payer will not have to gross up any withholding that would not have been needed paid but for:—

(A) the recipient failing to provide tax information required under Section 4(a), or breaching any Payee Tax Representations; or

(B) any of the recipient's Payee Tax Reps failing to be accurate other than because of (I) any regulatory action taken after a Transaction is entered into or (II) a Change in Tax Law.

(ii) Liability. If:—

(1) The payer is required by law to withhold a non-Indemnifiable Tax;

(2) The payer nonetheless does not so withhold; and

(3) The payer suffers by direct assessment a liability for that Tax,

then, except where the recipient has satisfied that Tax liability the recipient will promptly reimburse the payer for that liability (plus interest, but excluding penalties unless the recipient has failed to provide tax information required under Section 4(a), or breaching any Payee Tax Representations.