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A reusable bilateral term-loan agreement governed by Scots law, for a lender advancing a loan to a borrower, with optional security, guarantee, confidentiality and data-processing provisions.
Scotland
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This agreement is dated the date on which it is signed by the last of the parties.
This agreement is made between [TO BE CONFIRMED — Lender] (the "Lender") and [TO BE CONFIRMED — Borrower] (the "Borrower").
"Loan" means the principal sum of [TO BE CONFIRMED — Loan amount] to be advanced under this agreement.
"Purpose" means [TO BE CONFIRMED — Purpose].
"Availability Period" means
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"Interest Rate" means [TO BE CONFIRMED — Interest Rate] per annum.
"Interest Period" means each successive period of [TO BE CONFIRMED — Interest Period] beginning on the date the Loan is advanced, except that the final Interest Period ends on the Repayment Date.
"Repayment Date" means [TO BE CONFIRMED — Repayment Date].
"Default Interest Rate" means [TO BE CONFIRMED — Default Interest Rate] per annum.
"Arrangement Fee" means [TO BE CONFIRMED — Arrangement Fee].
"Prepayment Notice Period" means [TO BE CONFIRMED — Prepayment Notice Period].
"Business Day" means a day other than a Saturday, Sunday or public holiday in Scotland when banks are generally open for business in Edinburgh.
References to a person include an individual, company, corporation, partnership, unincorporated body, government, state or agency. A reference to law includes any amendment or re-enactment of it. Writing includes email. If a payment falls due on a day that is not a Business Day, it is due on the next Business Day unless that day falls in a different calendar month, in which case it is due on the preceding Business Day.
Subject to the Conditions Precedent clause, the Lender agrees to make the Loan available to the Borrower during the Availability Period. The Borrower may make only one drawing, and any undrawn amount is cancelled when the Availability Period ends.
The Borrower must apply all amounts borrowed under this agreement only for the Purpose. The Lender is not obliged to monitor or verify that application.
The Borrower may request the Loan by giving the Lender written notice at least three Business Days before the proposed drawing date. The notice must state the proposed drawing date and the account into which the Loan is to be paid, and is irrevocable once given.
The Lender is not required to make the Loan unless it has received, in form and substance reasonably satisfactory to it, this agreement duly executed by the parties, evidence of each party's authority to enter into and perform this agreement, and the Borrower's drawdown notice. The Lender may waive a condition precedent only in writing.
Interest accrues daily on the outstanding principal of the Loan at the Interest Rate, calculated on the basis of the actual number of days elapsed and a 365-day year. The Borrower must pay accrued interest at the end of each Interest Period and on the Repayment Date.
The Borrower must pay the Arrangement Fee to the Lender on the date the Loan is advanced. The Arrangement Fee is non-refundable once paid.
If the Borrower fails to pay an amount when due, interest accrues on the overdue amount from its due date until payment at the Default Interest Rate instead of the Interest Rate, to the extent permitted by law. Default interest is payable on demand.
The Borrower must make each payment due under this agreement in immediately available funds, in the currency in which the Loan is denominated, to the account nominated by the Lender. Payments must be made in full without set-off, counterclaim, deduction or withholding except where required by law. If a deduction or withholding is required by law, the Borrower must promptly provide evidence of it and use reasonable endeavours to obtain any available relief.
The Lender may apply a payment received from the Borrower first to costs and expenses due under this agreement, then to default interest, then to interest, fees and finally to principal.
The Borrower must repay the outstanding principal of the Loan on the Repayment Date.
The Borrower may prepay all or part of the Loan by giving the Lender at least the Prepayment Notice Period's written notice. A partial prepayment must be at least one tenth of the original principal amount of the Loan. A prepayment must include accrued interest on the amount prepaid and is irrevocable once notified.
If it becomes unlawful for the Lender to perform an obligation under this agreement or to fund or maintain the Loan, the Lender must notify the Borrower promptly. The parties must discuss in good faith a lawful alternative. If no lawful alternative is agreed within ten Business Days, the Borrower must repay the Loan, accrued interest and other amounts due on the date specified by the Lender, being no earlier than the date on which performance becomes unlawful.
The Borrower represents to the Lender on the date of this agreement and on the date of drawing that it is duly established and validly existing under the law of its place of establishment; it has power and authority to enter into and perform this agreement; its obligations under this agreement are legal, valid and binding, subject to applicable insolvency laws and general principles of law; its entry into and performance of this agreement do not breach its constitutional documents or any binding obligation; and all information it has provided to the Lender in connection with this agreement is, so far as it is aware after reasonable enquiry, materially accurate and not misleading.
The Borrower must promptly give the Lender information about its financial condition and business that the Lender reasonably requests for the purpose of monitoring the Borrower's ability to perform this agreement, and must promptly notify the Lender of an event of default or a circumstance reasonably likely to result in one.
The Borrower must not create or allow to exist security over any of its assets to secure Financial Indebtedness without the Lender's prior written consent, other than security arising by operation of law in the ordinary course of business or security disclosed to the Lender in writing before the date of this agreement. "Financial Indebtedness" means indebtedness for borrowed money or under finance leases, deferred purchase arrangements or similar financing arrangements.
The Borrower must execute and deliver the separate security documents agreed by the parties and must do all things reasonably requested to perfect, preserve and protect the security created by them. The security documents govern their own creation, ranking, enforcement and release.
Any guarantee, cautionary obligation or other unilateral obligation supporting the Borrower's obligations must be set out in a separate document in a form that complies with the Requirements of Writing (Scotland) Act 1995 and must be subscribed by the person granting it where required. This agreement does not itself constitute a guarantee by a person who is not a party to it.
Each of the following is an event of default: the Borrower fails to pay an amount due under this agreement and does not remedy that failure within five Business Days; the Borrower materially breaches this agreement and, if the breach is capable of remedy, does not remedy it within ten Business Days after notice from the Lender; a representation is materially incorrect or misleading when made; the Borrower is unable to pay its debts as they fall due, enters administration, liquidation, receivership or a composition or arrangement with creditors, or any analogous event occurs; or it is unlawful for the Borrower to perform a material obligation under this agreement.
While an event of default is continuing, the Lender may by written notice cancel any undrawn commitment, declare all or part of the Loan, accrued interest and other amounts due under this agreement immediately due and payable, and enforce any rights it has.
The Borrower must indemnify the Lender against reasonable losses, liabilities and expenses that the Lender incurs as a direct result of the Borrower's breach of this agreement or an event of default, including reasonable legal costs. The Borrower is not liable under this clause to the extent that the relevant loss results from the Lender's negligence, fraud, wilful default or breach of this agreement.
Nothing in this agreement limits or excludes liability for fraud, fraudulent misrepresentation, death or personal injury caused by negligence, or any liability that cannot lawfully be limited or excluded. Subject to that, neither party is liable to the other for indirect or consequential loss, loss of profit, loss of business, loss of goodwill or loss of anticipated savings. The Lender's aggregate liability arising out of or in connection with this agreement is limited to the amount of the Loan actually advanced.
"Confidential Information" means information of a confidential nature that one party or its group companies disclose to the other in connection with this agreement. Each party must keep the other's Confidential Information confidential, use it only to perform or receive the benefit of this agreement, and disclose it only to its personnel, professional advisers, insurers and permitted subcontractors who need to know it and are bound by equivalent duties of confidence, or where the law, a court or a regulator requires disclosure. These duties do not apply to information that the recipient can show is or becomes public other than through its breach, was lawfully known to it without restriction, is independently developed, or is lawfully received from a third party without restriction. These duties continue for the Confidentiality Period and, for trade secrets, for as long as they remain trade secrets.
Neither party may name the other as a lender, borrower, client or supplier, or describe this agreement or the Loan, in any publicity without the other's prior written consent.
Each party must comply with applicable data protection law, including the UK GDPR. Where the Lender processes personal data on the Borrower's behalf, it must: process it only on the Borrower's documented instructions; ensure that its personnel are bound by confidentiality; apply appropriate technical and organisational security measures; engage a sub-processor only with the Borrower's prior written authorisation and on equivalent written terms; assist the Borrower with data subjects' requests, security, breach notifications and impact assessments; notify the Borrower without undue delay of any personal data breach; transfer the personal data outside the United Kingdom only on the Borrower's instructions and as the law permits; delete or return it when this agreement ends, unless the law requires it to be kept; and make available the information needed to demonstrate compliance and allow audits. Before processing starts, the parties must record in writing the subject matter, duration, nature and purpose of the processing, the types of personal data and the categories of data subjects.
Neither party is liable for delay or failure in performing its obligations, other than payment obligations, caused by events beyond its reasonable control. The affected party must notify the other promptly and use reasonable efforts to minimise the effect. If the event prevents performance for more than the Force Majeure Period, either party may terminate this agreement by written notice.
Neither party may assign, transfer, novate or otherwise dispose of any of its rights or obligations under this agreement without the other's prior written consent, not to be unreasonably withheld or delayed. Despite this, the Lender may assign or transfer its rights to an affiliate or to a person acquiring all or a substantial part of its lending business by giving the Borrower written notice. An assignation of the Lender's right to payment takes effect against the Borrower when intimation of it is given to the Borrower in accordance with Scots law.
Except as expressly provided in this agreement, no person who is not a party to this agreement has any right under the Contract (Third Party Rights) (Scotland) Act 2017 to enforce or otherwise benefit from any term of this agreement.
This agreement and any document expressly referred to in it are the entire agreement between the parties about their subject matter. Each party acknowledges that it has not relied on a statement or representation not set out in this agreement, but nothing limits or excludes liability for fraud or fraudulent misrepresentation.
A variation of this agreement is effective only if it is in writing and signed by or on behalf of each party. A waiver of a right is effective only if it is in writing and applies only in the circumstances for which it is given. A delay or failure to exercise a right is not a waiver of that right.
If a provision of this agreement is or becomes illegal, invalid or unenforceable, it is to be treated as modified to the minimum extent necessary to make it legal, valid and enforceable. If that is not possible, it is to be treated as deleted. That does not affect the remaining provisions.
Nothing in this agreement prevents either party from taking any step necessary to interrupt or preserve any applicable prescriptive period. The parties acknowledge that rights and obligations arising under this agreement may be subject to the five-year negative prescription or another applicable prescriptive rule under Scots law.
A notice under this agreement must be in writing and delivered by hand, by pre-paid recorded post or by email to the Lender at [TO BE CONFIRMED — Lender notice address and email] or to the Borrower at [TO BE CONFIRMED — Borrower notice address and email], or to any other address a party notifies for this purpose. A notice is received: if delivered by hand, on delivery; if posted, at 9.00 am on the second Business Day after posting; and if emailed, at the time it is sent or, if that is outside business hours at the recipient's location, at 9.00 am on the next Business Day. This clause does not apply to the service of legal proceedings.
The Borrower consents to the registration of this agreement for preservation and execution in the Books of Council and Session and to the Lender extracting this agreement. The Borrower consents to registration for execution and to all lawful diligence, including summary diligence, following default in payment of any sum that is expressly constituted as due and payable under this agreement. The Lender must not use that consent except for an amount that is due and payable and remains unpaid after any applicable notice or cure period.
This agreement and any dispute or claim (including any non-contractual dispute or claim) arising out of or in connection with it or its subject matter are governed by Scots law. The courts of Scotland have exclusive jurisdiction to settle any such dispute or claim.