Contract Drafting 2011-03-24. University of Houston Law Center Spring 2011 D. C. Toedt III. Guest speakers from Akin Gump:. William D. Morris. Eddy S. Blanton, Jr. Objective of this class session. High-level overview of typical transaction Survey of documents to be drafted
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University of Houston Law Center
D. C. Toedt III
William D. Morris
Eddy S. Blanton, Jr.
What’s the objective – why do this deal?
What kind of borrower(s) get to do it?
Who are the “influencers” a.k.a. “players”?
Mechanics of the transaction?
GAAP  – what is it?
Cash Equivalents [13, 14] – why so detailed?
EBITDA  – what is it?Why do we care?
Control  – why allow < 50% ownership?
Equity Interests  – how does that come in?
Facility Fee  – what’s that? Why use it?
Guarantor  – why would a subsidiary guarantee the parent’s debt (instead of vice versa)?
Hedging  – what’s that?
Letter of credit  – mechanics?
Majority Lenders  – why define this?
MAC clause  – what role does it play?
Material Subsidiary  – why define so precisely?
Moody’s  – any fallout from 2008?
Note  – why bother?
Restricted Payment  – where does this come in?
Swingline Loan  – any difference from a regular loan?
 Can borrower pick and choose which lender(s) to borrow from? Why / why not?
 Why “prima facie evidence”?
 Telephonic borrowing – why not require a writing?
 Letters of credit – why address here?
 Increased cost of loans – how does this work, and why that way?
 Why both a rep and warranty?
 Whom the reps are addressed to
 Financials present “fairly, in all material respects” – why this language?
Why have these?
 Use of proceeds – why? What’s the significance?
 Additional guarantors – why?
 Guaranty release at IGRD – is this typical?
 Why the IGRD carve-out?
 Restrictions on transactions with Affiliates – what does this language address?
 Permitted Senior Debt – restrictions apply even after IGRD; why?
 Fundamental changes
See also Negative Covenants PDF
 Certificates – personal liability?
 Opinions of counsel – why? What consequences? How are these handled?
 events of default “shall occur and be continuing” – what does that mean?
Some defaults have cure periods, others don’t – why?
Any particular defaults that are especially “horrible”?
 Survival of reps, warranties, etc. – why is this language included?
 Why NY law?
(With apologies to Wait Wait Don’t Tell Me)