A revolving credit facility agreement template is a legal document that outlines the terms and conditions governing a revolving credit facility between a lender and a borrower. This facility allows the borrower to borrow funds up to a predetermined limit, repay the borrowed amount, and borrow again, within a specified period. To create a professional template, ensure it includes the following essential sections:
Form of Credit Agreement – Revolving Credit Facility (Nov
1. Parties
Clearly identify the lender and borrower by their legal names and addresses.
2. Definitions
Provide definitions for key terms used throughout the agreement, such as “credit facility,” “borrower,” “lender,” “commitment fee,” “interest rate,” “drawings,” “repayments,” “default,” and “event of default.”
3. Commitment Amount and Term
Specify the maximum credit limit available to the borrower and the duration of the credit facility.
4. Interest Rate
Outline the method for calculating the interest rate, such as a base rate plus a margin.
5. Fees and Charges
Detail any applicable fees, including commitment fees, arrangement fees, and default interest rates.
6. Drawings and Repayments
Specify the procedures for drawing down funds from the credit facility and repaying the borrowed amount.
7. Security
If applicable, describe the collateral or security provided by the borrower to secure the loan.
8. Events of Default
List events that, if they occur, could trigger a default under the agreement, such as failure to make payments, breach of covenants, or insolvency.
9. Remedies Upon Default
Outline the lender’s rights and remedies in the event of a default, such as acceleration of the debt, foreclosure on collateral, and collection of damages.
10. Representations and Warranties
Include representations and warranties made by the borrower regarding its financial condition, business operations, and compliance with applicable laws.
11. Covenants
Specify covenants that the borrower must comply with during the term of the credit facility, such as financial ratios, maintenance of insurance, and prohibition on certain actions.
12. Governing Law and Jurisdiction
Indicate the governing law that will apply to the agreement and the jurisdiction in which disputes will be resolved.
13. Notices
Specify the addresses to which notices should be sent.
14. Entire Agreement
State that the agreement constitutes the entire understanding between the parties and supersedes all prior or contemporaneous agreements.
15. Counterparts
Indicate that the agreement may be executed in multiple counterparts, each of which will be deemed an original.
16. Amendment and Waiver
Specify the procedures for amending or waiving any provision of the agreement.
17. Assignment
Address the assignability of the agreement by either party.
18. Severability
Provide that if any provision of the agreement is found to be invalid or unenforceable, the remaining provisions will remain in full force and effect.
Design Elements for Professionalism and Trust
To create a revolving credit facility agreement template that conveys professionalism and trust, consider the following design elements:
Clear and concise language: Use simple, clear language that is easy to understand.
Consistent formatting: Maintain consistent formatting throughout the document, including font, font size, line spacing, and margins.
Professional layout: Use a professional layout that is easy to read and navigate.
Headings and subheadings: Use clear headings and subheadings to organize the document and make it easier to find specific information.
White space: Use white space effectively to create a visually appealing and easy-to-read document.
Error-free content: Ensure that the document is free of errors, including grammatical, spelling, and typographical errors.
Legal review: Have the agreement reviewed by a legal professional to ensure that it is legally sound and complies with applicable laws.
By incorporating these essential sections and design elements, you can create a professional and effective revolving credit facility agreement template that meets the needs of both the lender and the borrower.
