1. Contract Drafting 2011-03-24 University of Houston Law Center Spring 2011 D. C. Toedt III

2. Guest speakers from Akin Gump: William D. MorrisEddy S. Blanton, Jr.

3. Objective of this class session High-level overview of typical transaction Survey of documents to be drafted Selected legal- and business points NOT:  Equip students to do financing deals “solo”  Provide contract forms

4. Overview 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?

5. Creditworthiness – “investment grade rating” Who decides? What criteria? What consequences?

6. Definitions GAAP [12] – what is it? Cash Equivalents [13, 14] – why so detailed? EBITDA [16] – what is it? Why do we care? Control [17] – why allow < 50% ownership? Equity Interests [18] – how does that come in? Facility Fee [21] – what’s that? Why use it?

7. Definitions (continued) Guarantor [22] – why would a subsidiary guarantee the parent’s debt (instead of vice versa)? Hedging [24] – what’s that? Letter of credit [25] – mechanics? Majority Lenders [27] – why define this? MAC clause [30] – what role does it play?

8. Definitions (continued) Material Subsidiary [31] – why define so precisely? Moody’s [32] – any fallout from 2008? Note [33] – why bother? Restricted Payment [37] – where does this come in? Swingline Loan [38] – any difference from a regular loan?

9. Loan mechanics [39] Can borrower pick and choose which lender(s) to borrow from? Why / why not? [42] Why “prima facie evidence”? [45] Telephonic borrowing – why not require a writing? [46] Letters of credit – why address here? [53] Increased cost of loans – how does this work, and why that way?

10. Article III – reps and warranties [57] Why both a rep and warranty? [58] Whom the reps are addressed to [59] Financials present “fairly, in all material respects” – why this language?

11. Article IV – Affirmative Covenants Why have these? [60] Use of proceeds – why? What’s the significance? [62] Additional guarantors – why? [63] Guaranty release at IGRD – is this typical?

12. Article V – Financial Covenants [67] Why the IGRD carve-out? [68] Restrictions on transactions with Affiliates – what does this language address? [72] Permitted Senior Debt – restrictions apply even after IGRD; why? [73] Fundamental changes See also Negative Covenants PDF

13. Article VII - Conditions [76] Certificates – personal liability? [77] Opinions of counsel – why? What consequences? How are these handled?

14. Article VIII - Defaults [80] 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”?

15. Article IX – Miscellaneous [sic] [92] Survival of reps, warranties, etc. – why is this language included? [95] Why NY law?

16. Other questions?

17. Last question (With apologies to Wait Wait Don’t Tell Me)