SGS 3 - EoD

Question 1

What remedies are available to the lender for an EoD?

Answer 1

W - Waiver
A- Acceleration (on demand, cancellation, repayable)
D - Drawstop
E - Enforce security

Question 2

What is the only remedy available for a DEFAULT?

Answer 2

Drawstop

Question 3

What is the effect of phrasing an EoD as just a DEFAULT?

Answer 3

Essentially disapplies the grace-period as a default includes a potential default (i.e. a default which has occurred but has not yet become and EoD as it is still in the grace period)

Question 4

How long should a grace period be for a non-payment?

Answer 4

3 days

Question 5

How long should a grace period be for a financial covenant?

Answer 5

None in general, though can set specific grace periods for specific EoD.

Question 6

What is a mulligan?

Answer 6

Where a default must occur more than once, at the test dates to be declared an EoD.

Question 7

How long will a grace period be for ‘other obligations’?

Answer 7

20-30 days

Again though different periods can be set for specific obligations

Question 8

What are the components of a cross-default clause?

Answer 8

1. Non-payment default
2. Cross default OR cross acceleration wording
3. De-minimis level for cross-default if below x

Question 9

What are common conditions of a waiver?

Answer 9

• Fee
• Waiver only relates to specific EoD
• Time limit on how long waiver lasts for