"Such Consent Not To Be Unreasonably Withheld …"

Most commercial enterprises believe that they act reasonably in conducting their business affairs and operations. However, reasonableness, like beauty, can often be in the eye of the beholder. What seems reasonable to an entrepreneur borrower looking to expand its operations may not be seen as reasonable in the eyes of a lender that would prefer its borrower to follow a slower and more sustainable growth plan.

Credit Agreements typically contain a series of covenants that restrict or limit certain activities of borrowers. Recognizing their likely future need for a waiver of a particular limitation or prohibition to permit a specific one-time action, borrowers will often request carve-outs from the covenant pattern by adding a link to the words “unless the Lender otherwise consents”. Borrowers will also typically try to tie down the discretion of their lenders when it comes to providing their consent. The addition of the words, “such consent not to be