We have updated this Standard Document to be consistent with the revisions to the LSTA's Model Credit Agreement Provisions effective August 8, 2014.
Assignment and Assumption: Multiple Assignments of Loans
A standard form of master assignment and assumption of loans and commitments used for multiple assignments in syndicated loan transactions. This Standard Document (or a similar form for single assignments) is typically included as an exhibit to the loan agreement and is consistent with the form of assignment and assumption published by the Loan Syndications and Trading Association (LSTA). This Standard Document has integrated notes with important explanations and drafting and negotiating tips.
Use for Assignments Between Multiple Assignees and/or Multiple Assignors
This form is used by lenders to effect assignments of loans and commitments between multiple assignees and/or multiple assignors in syndicated loan transactions. It is consistent with (but not identical to) the form of assignment and assumption published by the Loan Syndication and Trading Association (www.practicallaw.com/4-382-3597) (LSTA Assignment and Assumption) and used by many major banks.
On August 8, 2014, the LSTA revised the LSTA Assignment and Assumption so that the form does not need to be drafted to take into account the identity of the assignees. This will avoid the need for "pop-ups" on electronic settlement platforms that ask for assignee information in order to complete the form. This should improve efficiency and speed of settling trades. This Standard Document is consistent with that format.
An assignment and assumption is typically included as an exhibit to the loan agreement.
For more information see Practice Note, Assignments and Participations of Loans (www.practicallaw.com/8-381-8532) and Standard Clauses, Loan Agreement: Assignment and Participation Clauses (www.practicallaw.com/8-383-3066).
For a form of assignment and assumption between a single assignee and a single assignor, see Standard Document, Assignment and Assumption: Single Assignment of Loans (www.practicallaw.com/2-382-1269).
Complete all square bracketed items (in all capitalized letters) with the facts of the deal.
All square bracketed items (in all lower case letters) are optional language to be selected or deleted depending on the specifics of the transaction.
The following capitalized terms are used in this document but are not defined. Ensure that they conform to the defined terms used in the loan agreement, if applicable:
Affiliate; Approved Fund; Commitment; Defaulting Lender; Eligible Assignee; Facility; Foreign Lender; L/C Issuer; Lender; Loan; Loan Document; Loans; Note; Person; Subsidiary; and Swingline Lender.
For standard definitions, see Standard Clauses, Loan Agreement: Standard Definitions (www.practicallaw.com/4-383-8339).
ASSIGNMENT AND ASSUMPTION
This Assignment and Assumption (this "Assignment and Assumption") is dated as of the Effective Date (referred to below) and is entered into by and between the Assignor[s] identified below ([each an][the] "Assignor") and the Assignee[s] identified below ([each an][the] "Assignee"). The parties hereto hereby agree that the rights and obligations of the [Assignors][and][Assignees] hereunder are several and not joint. Capitalized terms used but not defined herein shall have the meanings set forth in the Loan Agreement identified below (as amended, supplemented or otherwise modified from time to time, the "Loan Agreement"). The parties hereto hereby agree to the Standard Terms and Conditions for Assignment and Assumption (the "Standard Terms and Conditions") specified in Annex 1 attached hereto which are incorporated herein by reference and made a part of this Assignment and Assumption as if set forth in full herein. [Each][The] Assignee hereby acknowledges receipt of a copy of the Loan Agreement.
Subject to and in accordance with the Standard Terms and Conditions and the Loan Agreement, as of the Effective Date (selected by the Administrative Agent identified below), and for an agreed consideration, [each][the] Assignor hereby irrevocably sells and assigns to the [respective] Assignee[s], and [each][the] Assignee hereby irrevocably purchases and assumes from the [respective] Assignor[s], (a) all of the [respective] Assignor['s][s'] rights and obligations as a Lender under the Loan Agreement, the Loan Documents and any other documents or instruments delivered pursuant thereto to the extent related to the amount and percentage interest identified below of all of such outstanding rights and obligations of the [respective] Assignor[s] under the facilities identified below (including, without limitation, any letters of credit, swingline loans and guaranties included therein) and (b) to the extent permitted by applicable law, all suits, claims, causes of action and any other right of the [respective] Assignor[s] (as [a Lender][Lenders]) against any Person, whether known or unknown, arising under or with respect to the Loan Agreement, any other Loan Document, any other documents or instruments delivered pursuant thereto or the loan transactions governed thereby or otherwise based on or related to any of the foregoing, including, but not limited to, contract claims, statutory claims, tort claims, malpractice claims and all other claims at law or in equity with respect to the rights and obligations sold and assigned pursuant to clause (a) above (the rights and obligations sold and assigned pursuant to clauses (a) and (b) above, collectively, [an][the] "Assigned Interest"). Such sale and assignment is without recourse to [any][the] Assignor and, except as expressly provided in this Assignment and Assumption, without representation or warranty by [any][the] Assignor.
If there are numerous assignors and/or assignees, the parties can be identified on an attached schedule (and the first sentence should be revised to reflect this change). In addition, the second sentence should reflect the correct multiple parties (whether multiple assignees and/or multiple assignors).
The capitalized term "Loan Documents" used in this agreement should conform to the term used in the loan agreement (such as "Credit Documents") or be deleted if the loan agreement does not use this concept.
1. Assignor[s]: ______________________________
2. Assignee[s]: ______________________________ [and is an [Affiliate/Approved Fund] of [NAME OF LENDER]]
Retain the bracketed language after the assignee signature line only if the assignment is to an affiliate (www.practicallaw.com/1-382-3221) or an approved fund (www.practicallaw.com/1-382-3235) of a lender. If there are multiple assignees, this language should be included for each applicable assignee.
3. Borrower(s): ______________________________
4. Administrative Agent: ______________________, as the administrative agent under the Loan Agreement
5. Loan Agreement: [The Loan Agreement, dated as of ________, among [NAME OF BORROWER(S)], the Lenders from time to time party thereto, [and] [NAME OF ADMINISTRATIVE AGENT], as Administrative Agent, [L/C Issuer and Swingline Lender]
6. Assigned Interest[s]:
Aggregate Amount of Commitment/ Loans for all Lenders
Amount of Commitment/ Loans Assigned
Percentage of Commitment/ Loans Assigned
3rd Column: Each type of facility should be listed on a separate line in the table (such as revolving credit (www.practicallaw.com/9-382-3774) commitment, term loan (www.practicallaw.com/4-382-3875) or term B loan) opposite the name of the applicable assignor and assignee.
4th and 5th Columns: If the second bracketed language is selected in paragraph 2 of Annex 1, these amounts must be adjusted by the counterparties for any payments or prepayments made between the Trade Date and the Effective Date. If the first bracketed language is selected, the administrative agent must adjust such amounts.
5th Column: The amount of loans or commitments assigned must comply with any minimum amounts for assignments required by the loan agreement.
6th Column: List (to at least nine decimals) as a percentage of the commitment/loans of all lenders under the loan agreement.
7th Column: Record the CUSIP number (www.practicallaw.com/9-382-3378) if one has been assigned to the loan. Not all loans have CUSIP numbers.
7. [Trade Date: [DATE] (COMPLETE IF THE PARTIES HERETO INTEND THAT THE MINIMUM ASSIGNMENT AMOUNT WILL BE DETERMINED AS OF THE TRADE DATE.)
Effective Date: [DATE] (THIS WILL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR; TO BE INSERTED BY THE ADMINISTRATIVE AGENT.)
8. [[Each][The] Assignor attaches the Note[s] held by it and requests that the Administrative Agent exchange such Note[s] for new Note[s] payable to the [respective] Assignee in [an amount/amounts] equal to the [Commitment][and][ Loan[s]] assumed by the [respective] Assignee pursuant hereto [and to the [respective] Assignor in [an amount/amounts] equal to the [Commitment][and][Loan[s]] retained by the [respective] Assignor].]
Include this optional clause if notes were issued to an assignor and are requested by an assignee. Many deals do not issue notes unless they are requested by a lender so this clause is not applicable in that case. This clause is not included in the LSTA Assignment and Assumption.
The terms set forth in this Assignment and Assumption are hereby agreed to:
[NAME OF ASSIGNOR]
[NAME OF ASSIGNEE]
For both assignors and assignees, include both Fund/Pension Plan and manager making the trade (if applicable).
[Consented to and] Accepted:
[NAME OF ADMINISTRATIVE AGENT], as Administrative Agent
The bracketed language should be added only if the consent of the administrative agent is required by the terms of the loan agreement.
[NAME OF PARTY]
Add the bracketed language only if the consent of the borrower and/or other parties (such as the swingline lender or L/C issuer) is required by the terms of the loan agreement.
STANDARD TERMS AND CONDITIONS FOR ASSIGNMENT AND ASSUMPTION
1. Representations and Warranties.
1.1. Assignor[s]. [Each][The] Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of [its][the] Assigned Interest, (ii) [its][the] Assigned Interest is free and clear of any lien, encumbrance or other adverse claim, (iii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and (iv) it is not a Defaulting Lender; and (b) except as set forth herein, makes no representation or warranty and assumes no responsibility with respect to (i) any statements, representations or warranties made in or in connection with the Loan Agreement or any other Loan Document, (ii) the execution, validity, legality, enforceability, sufficiency, genuineness or value of, or the perfection or priority of any lien or security interest created or purported to be created under or in connection with, the Loan Agreement, any other Loan Document or any other instrument or document furnished pursuant thereto or any collateral thereunder, (iii) the performance or observance by the Borrower, any of its Subsidiaries or Affiliates or any other Person of any of their respective obligations under the Loan Agreement, any other Loan Document or any other instrument or document furnished pursuant thereto or (iv) the financial condition of the Borrower, any of its Subsidiaries or Affiliates or any other Person obligated in respect of the Loan Agreement or any other Loan Document.
Assignors typically sell loans and loan commitments without any representations or warranties except as to the validity of their actions, their ownership of the assets and the absence of any liens or adverse claims on the assets being sold. Assignors want to avoid any liability for the quality, sufficiency, enforceability or performance of the loans or any collateral or supporting obligations (such as guarantees) or the creditworthiness of any loan party.
1.2. Assignee[s]. [Each][The] Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and to become a Lender under the Loan Agreement, (ii) it meets all requirements of an Eligible Assignee under the Loan Agreement (subject to receipt of such consents as may be required under the Loan Agreement), (iii) it shall be bound by the provisions of the Loan Agreement as a Lender thereunder and, to the extent of [its][the] Assigned Interest, shall have the obligations of a Lender thereunder, from and after the Effective Date, (iv) it is sophisticated regarding decisions to purchase assets such as those represented by [its][the] Assigned Interest and either it, or the Person exercising discretion in making its decision to purchase [its][the] Assigned Interest, is experienced in acquiring assets of such type, (v) it has received a copy of the Loan Agreement [and the other Loan Documents], together with (or been given the opportunity to receive) copies of the most recent financial statements delivered pursuant to Section [COVENANT TO DELIVER FINANCIAL STATEMENTS] thereof, as applicable, and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Assumption and to purchase [its][the] Assigned Interest and, on the basis of such documents and information, it has made such analysis and decision independently and without reliance on the Administrative Agent or any other Lender, and (vi) if it is a Foreign Lender, attached hereto is any documentation required to be delivered by it pursuant to the terms of the Loan Agreement, duly completed and executed by the [relevant] Assignee; and (b) agrees that (i) it will, based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or refraining from taking action under the Loan Documents, independently and without reliance on the Administrative Agent, [any][the] Assignor or any other Lender, (ii) [it appoints and authorizes the Administrative Agent to take such action as agent on its behalf and to exercise such powers and discretion under the Loan Documents as are delegated to the Administrative Agent by the terms hereof and thereof, together with such powers and discretion as are reasonably incidental thereto;] and (iii) it will perform in accordance with their terms all of the obligations that are required to be performed by it as a Lender under the Loan Agreement and the other Loan Documents.
Assignees typically represent that they have legal power to acquire the loans and become a lender, meet all requirements of an "eligible assignee" under the loan agreement and accept the obligations of a lender under the loan agreement. These representations give comfort (and a cause of action for breach of contract) that the assignment does not breach the loan agreement and that the assignee accepts and is prepared to uphold its obligations as a lender.
Assignees also typically represent that they are qualified to make, and have made, their own independent credit decision to acquire the loans. This is an important representation for the assignor because it limits the assignor's liability by establishing that the assignor has no duty to the assignee in connection with the assignee's credit decision to buy the loan.
"Eligible Assignee" Definition
The definition of "Eligible Assignee" in the loan agreement should include (or should refer to sections in the loan agreement that include):
Deemed consent of the borrower.
Whether or not the borrower, its subsidiaries and affiliates or defaulting lenders can be eligible assignees.
No assignments to natural persons.
For a precautionary note on distressed debt funds as eligible assignees, see Legal Update, Meridian Sunrise Village v. NB Distressed Debt Investment Fund: Court Rules Distressed Hedge Fund Not an "Eligible Assignee" under Loan Agreement (www.practicallaw.com/2-564-0488).
If your deal includes other agents (in addition to the administrative agent), reference to the other agents should be included in clauses (a)(v) and (b)(i) (no reliance on any other agent). In addition, if any other agents have actual duties under the loan documents (such as a collateral agent), include that agent in clause (b)(ii) (appointment of agents).
If the loan agreement includes provisions regarding institutions that the borrower identifies as being disqualified as eligible assignees, then by making the representation in clause (a)(ii) that it complies with the requirements of the loan agreement, the assignee is confirming that it is not a "disqualified institution".
The term "Foreign Lender" in clause (a)(vi) should conform to the term used in the withholding tax and tax gross-ups provisions of the loan agreement.
Clause (b)(ii) is not included in the LSTA Assignment and Assumption.
2. Payments. [From and after the Effective Date, the Administrative Agent shall make all payments of principal, interest, fees and other amounts in respect of [each][the] Assigned Interest to the [relevant] Assignor[s] for amounts which have accrued prior to but excluding the Effective Date and to the [relevant] Assignee[s] for amounts which have accrued from and after the Effective Date. Notwithstanding the foregoing, the Administrative Agent shall make all payments of interest, fees or other amounts paid or payable in kind from and after the Effective Date to the [relevant] Assignee.][From and after the Effective Date, the Administrative Agent shall make all payments of principal, interest, fees and other amounts in respect of [each][the] Assigned Interest to the [relevant] Assignee[s] whether such amounts have accrued prior to or on or after the Effective Date. [Each][The] Assignor and [each][the] Assignee shall make all appropriate adjustments in payments made by the Administrative Agent for periods prior to the Effective Date or with respect to the making of this assignment directly between themselves.] Each of the Assignor[s] and the Assignee[s] agrees that it will hold in trust for the other applicable party any interest, fees and other amounts which it may receive to which such other party is entitled pursuant to this clause, and pay to such other party any such amounts which it may receive promptly upon receipt.
The administrative agent should select the first or second alternative for determining how adjustments are to be made for payments accrued before the assignment but received after the assignment was effective. The adjustments can either be made by the administrative agent or directly by the assignors and assignees. The first alternative is included in the LSTA Assignment and Assumption.
The last sentence of this clause is not included in the LSTA Assignment and Assumption.
3. General Provisions. This Assignment and Assumption shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns. This Assignment and Assumption may be executed in any number of counterparts, which together shall constitute one instrument. Delivery of an executed counterpart of a signature page of this Assignment and Assumption by facsimile or in electronic (i.e., "pdf" or "tif") format shall be effective as delivery of a manually executed counterpart of this Assignment and Assumption. This Assignment and Assumption [and the other Loan Documents] and any claim, controversy, dispute or cause of action (whether in contract or tort or otherwise) based upon, arising out of or relating to this Assignment and Assumption [(except, as to any other Loan Document, as expressly set forth therein)] and the transactions contemplated hereby and thereby shall be governed by, and construed in accordance with, the law of the State of [NAME OF STATE].