An analysis of MasterCard's $2.75BN Credit Agreement

Credit agreements are typically all boilerplate but do reflect the trends in litigation, securities law and the economic environment. For that reason, it is useful to read them occasionally. From the credit agreement available here(at the SEC site), I noticed the following things(this is not a complete list but merely the unusual/interesting aspects)

• 1.1- floating rate is the highest of 3 floating rates(Citi base rate/1 month LIBOR+1%/0.5%+Fed rate)
• 1.1 Interestingly, the commitment fee and applicable margin are based on the credit rating instead of merely on time basis. As expected, lower the rating higher the fee.
• 1.1 Adjusted EBITDA definition seems standard except 
• that restructuring expense is amortized pro rata over 8 quarters recognizing cookie jar reserve accounting!! Consolidated EBITDA will be reduced in the quarter in which such charges or expenses are incurred and in each of the immediately following seven quarters by an amount equal to 1/8 of the amount of such charges or expenses so added back.
• Non Cash income/expenses are added back/subtracted as the case maybe-other expenses or charges to the extent that such expenses or charges do not represent a cash item in such period

• 1.1 Material Adverse Change is defined to exclude any factor disclosed in the 10K/10Q/8K filed before the agreement date. That is quite logical because the lenders should have done due diligence to incorporate it into the lending decision. Such clauses also encourage complete and fair disclosure by corporates prior to lending to avoid such complications layer. Also, Master Card being in credit card processing and banks failing in the USA,MAC excludes  settlement failure by one or more customers of the Borrower
• 1.1 Surprisingly, indebtness('adjusted debt') includes nearly all sorts of off balance sheet debt(capital leases, guarantee, L/C, pledged assets) but excludes under funded pension obligations.
• MasterCard can choose the interest period(month/quarter/half year) for each period differently. That gives some flexibility. 
• 9.14(b) Maybe because of recent Wall Street/City litigation on breach of trust, a clause exists that neither the Managing Administrative Agent nor any Lender has any fiduciary relationship with or duty to it arising out of or in connection with this Agreement or any of the other Loan Documents, and the relationship between Managing Administrative Agent and Lenders, on one hand, and the Borrower, on the other hand, in connection herewith or therewith is solely that of debtor and creditor.
• 9.15 Big Business is(with due reason) afraid of jury trials where sympathy may rule over legal obligations . Hence, all parties unconditionally waive trial by jury