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This Clause contains a list of all of the matters which are subject to consent requirements other than Majority Lender consent.

Borrower Notes

There are a number of issues for Borrowers to consider in relation to these provisions, which to some extent do not reflect market practice (at least, prior to the credit crunch).

Decisions requiring unanimous consent

The list of unanimous and special majority decisions suggested in the Leveraged Facilities Agreement is quite a bit longer than was generally agreed prior to the onset of the credit crunch. It had become common for unanimous Lender consent to be limited to the following matters:

• any change in the definition of Majority Lenders or pro-rata sharing clause;

• any change to the priority of distribution of the proceeds of enforcement;

• any change in the provisions relating to the Lenders’ rights and obligations amongst themselves and the provisions relating to changes to the Lenders; and

• other matters specific to the deal where it is commercially agreed that all Lenders must consent.

Broadly speaking, this is an issue on which Lenders are currently pushing back in new deals, so what Borrowers are able to achieve is likely to depend on the particular circumstances.

“Structural Adjustments”

Leveraged facilities are long term facilities imposing extensive restrictions on the Group. The Investors and the Parent will want the financing arrangements to be as flexible as possible. It had become common in leveraged deals to agree that “structural adjustments” to the Facilities could be effected on the basis of Majority Lender consent plus the consent of affected Lenders. Therefore, many Borrowers sought to agree that any amendments to the Finance Documents which are required to effect (commonly) any of the following:

• a new tranche or facility;

• an increased commitment;

• an extension to any Availability Period;

• the redenomination of a Commitment or Loan into another currency;

• the extension of scheduled repayment dates; or

• a reduction in the amount owing to a Lender (including the Margin or interest payments), require only the consent of each Lender participating in the additional tranche or facility, or each Lender whose Commitments or amounts owing to whom are being amended (as applicable) plus Majority Lenders (usually calculated for this purpose on Lenders’ Commitments prior to the amendment in question). This position is not reflected in the Leveraged Facilities Agreement: Clause 41.2(a) requires that all of these items require unanimous consent. ‘Structural adjustment’ provisions had become reasonably common prior to the credit crunch: as mentioned above, currently this is another area where Borrowers are facing resistance from Lenders.

Increase in Indebtedness up to a Basket Amount

As a more general point, if a basket for Permitted Financial Indebtedness is agreed (see Clause 27.23 (Financial Indebtedness) above), Investors and the Parent might argue that an increase

in Commitments should not require the consent of Majority Lenders provided that the increase does not exceed the amount of the basket. Obviously, the consent of the Lender or Lenders whose Commitments are being increased will still apply. Lenders may resist if the increased Commitments are to be secured by the Transaction Security.

Release of Security

The release of the Transaction Security (save for a release that is expressly authorised in the Finance Documents, for example in relation to Permitted Disposals) or changes to the nature or scope of the Charged Property require unanimous Lender consent according to Clause 41.2(a) sub-paragraphs (ix) and (x). This is a further matter in respect of which a reduced consent requirement is commonly negotiated (or at least, was in pre-crunch deals). Supermajority consent had become the usually agreed requirement, around 80-90 per cent. of Lenders by Total Commitments.

Administrative and technical amendments

Borrowers should negotiate a provision which permits any amendments or waivers of a minor, technical or administrative nature (for example, drafting changes to resolve ambiguities in the document) to be corrected with the consent of the Agent and the Parent only. The use of such a provision may be limited (as the Agent will only want to invoke it in circumstances where it is very obvious that the amendment in question is minor, technical or administrative), but even with limited application, is likely to be worthwhile from a costs and time saving point of view.

Amendments affecting specified parties

Clause 41.2(b) provides that any amendment or waiver which relates to the rights or obligations of the Agent, the Arranger, the Issuing Bank, the Security Agent, any Ancillary Lender or any

Hedge Counterparty shall require the consent of the relevant party. Clause 41.2(c) provides that any amendment relating to the rights of Lenders to waive prepayment (see Clause 13.8 (Prepayment elections) above) shall require the consent of the affected Lenders. These

requirements (if included) should be subject to any reduced voting majorities agreed in relation to structural adjustments, release of security and administrative and technical amendments.

“Snooze and lose”

Voting disenfranchisement or “snooze and lose” provisions are common in the leveraged market, the result of the increasing diversity and size of lending syndicates in recent years. Lenders who fail to respond to requests for consent are disregarded for the purposes of determining whether any relevant majority voting approval has been obtained. The obvious purpose of such provisions is to make the decision making process as smooth as possible, although some might be concerned that their existence could elicit a swift negative response to consent requests to avoid such rights arising. Such provisions can be useful in conjunction with “yank-the-bank” provisions, see Clause 41.3 (Replacement of Lender).

Paragraph (d) is the LMA’s snooze and lose provision, added to the Leveraged Facilities Agreement in September 2008. Its inclusion is an acknowledgement of how common these provisions have become, but the drafting will require negotiation for example, it contemplates that certain consents and waivers will be excluded.

A more aggressive variant of “snooze and lose” is “delay and it’s OK”: any Lender who fails to respond to a request for consent within the specified timeframe shall be deemed to have voted in favour of the requested amendment or waiver.