A line of credit agreement, sometimes called a line of credit (LOC), is an agreement between a financial institution, such as a bank, and a client that establishes the maximum loan amount the client can borrow. The client can take money out as needed until the credit limit is reached, and as money is repaid, it can be borrowed again.
The interest rate, payments amount, and other rules are set by the financial institution. A line of credit agreement can be unsecured or secured by collateral, although an unsecured LOC will have a higher interest rate.
Below is a list of common sections included in Line Of Credit Agreements. These sections are linked to the below sample agreement for you to explore.
LINE OF CREDIT AGREEMENT
THIS LINE OF CREDIT AGREEMENT (“ Agreement ”) is made and entered into effective as of the 13th day of August, 2019 (“ Effective Date ”) by and among (the “ Lender ”) and/or its successors and assigns (collectively, with the Lender) and Aptorum Therapeutics Limited , a Cayman Islands exempted company (“ Borrower ”).
R E C I T A L S :
| A. | The Borrower wishes to obtain from the Lender, a line of credit facility of up to $[ ] (the “ Line of Credit ”). |
| B. | In connection with the Line of Credit, the Borrower entered into a Promissory Note with the Lender (the “ Note ”) to borrow up to $[ ]. |
| C. | In full reliance on the representations made by Borrower in this Agreement and the Line of Credit Documents, Lender is willing to extend such financing to Borrower upon the terms, covenants and conditions contained in this Agreement and in the Line of Credit Documents. |
NOW, THEREFORE, in consideration of the mutual promises, covenants and agreements contained in this Agreement, Borrower and Lender mutually agree as follows:
Unless the context clearly indicates otherwise, certain terms used in this Agreement shall have the meanings set forth below:
“ Business Day ” shall mean any day of the week other than Saturday, Sunday or other day that is recognized as a holiday in the United States of America.
“ Default ” shall mean the occurrence and continuance of any of the events listed in Sections 6.1 or 6.2 of this Agreement.
“ Governmental Authority ” shall mean the government of the United States, any state, province or political subdivision thereof, any other foreign country, any multi-national organization or body and any entity exercising executive, judicial, legislative, police, taxing, regulatory or administrative authority or power of any nature.
“ Line of Credit ” shall mean the financing provided by Lender to Borrower under the terms of this Agreement in the maximum principal amount of [ ].
“ Line of Credit Documents ” shall refer to this Agreement and the Note. All of the Line of Credit Documents are incorporated herein by reference.
“ Material Adverse Event ” means any circumstance or event that, individually or collectively with other circumstances or events, may reasonably be expected to have a material adverse effect on the financial condition or Business of the Borrower, as now conducted or as proposed to be conducted.
“ Maturity Date ” shall mean the third anniversary of the Effective Date, being the date that all sums evidenced by the Note shall be due and payable;
“ Note ” shall mean reference to the promissory Note issued by the Borrower to the Lender to evidence the Line of Credit and in the form of Exhibit A annexed hereto and made a part hereof.
“ Person ” shall mean and includes an individual, a partnership, a corporation, a limited liability company, a trust, an unincorporated association, a joint venture or any other entity or a government or any agency or political subdivision thereof.
AMOUNT AND TERMS OF LINE OF CREDIT
How ContractsCounsel Works Hiring a lawyer on ContractsCounsel is easy, transparent and affordable. 1. Post a Free Project Complete our 4-step process to provide info on what you need done. 2. Get Bids to Review Receive flat-fee bids from lawyers in our marketplace to compare. 3. Start Your Project Securely pay to start working with the lawyer you select.2.1 Line of Credit . On the Effective Date, the Lender shall provide the Borrower with a Line of Credit up to the maximum amount of [ ], representing the maximum aggregate amount of the advances of funds from the Line of Credit (each an “ Advance ”) that may be outstanding and any time under the Line of Credit (the “ Principal Indebtedness ”), from which Borrower may draw down, at any time and from time to time during the period from and including the date of this Line of Credit through the day immediately preceding the Maturity Date, a principal amount not to exceed at any one time outstanding, as to all such Advances in the aggregate, the Principal Indebtedness. The entire Principal Indebtedness of the Line of Credit shall be due and payable on the earlier to occur of (a) the occurrence and continuation of a Default hereunder, or (b) the Maturity Date (as the same may be extended as herein provided).
2.2 Interest . Interest shall be payable on the outstanding Principal Indebtedness at the rate of eight percent (8%) per annum (the “ Interest Rate ”), payable semi-annually in arrears on February 12 and August 12 in each year. Interest at the Interest Rate on all outstanding Advances shall be payable with the then outstanding Principal Indebtedness on the Maturity Date.
2.3 Borrowing Notice . All Advances, other than the Initial Advance shall be made by Lender on a date which shall be not later than five (5) days following written request therefore from Borrower.
2.4 Prepayment . Borrower may prepay, in whole or in part, the Principal Indebtedness of the Line of Credit, and all Interest accrued on any outstanding Advances at any time prior to the Maturity Date, without the prior written consent of each of the Lender and without payment of any premium or penalty.
2.5 Extension of Maturity Date . At any time prior to the Maturity Date upon mutual written consent of the Borrower and the Lender, the Maturity Date may be extended for up to an additional three year period, in which case the “Maturity Date” shall mean such later date as is agreed upon by the parties.
ADDITIONAL AGREEMENTS OF THE BORROWER
3.1 Conditions Precedent to Disbursement at Closing . Prior to the disbursement of any of the proceeds of the Line of Credit to or for the account of Borrower at closing of the Line of Credit, and as a condition precedent to such disbursement, all of the conditions set forth below must be satisfied as determined by Lender, in Lender’ sole discretion.
(a) Line of Credit Documents . On the Effective Date, the Borrower shall execute and deliver to the Lender, a counterpart of all Line of Credit Documents in favor of the Lender.
(b) Miscellaneous Items . Borrower shall deliver to Lender such other items, documents and evidences pertaining to the Line of Credit as may reasonably be requested by Lender.
REPRESENTATIONS AND WARRANTIES
4.1 The Borrower does hereby represent and warrant to Lender, as of the date hereof (except as to any representation or warranty which specifically relates to another date), as follows (provided that any fact or item disclosed with respect to one representation or warranty shall be deemed to be disclosed with respect to each other representations or warranty, but only to the extent that the applicability of such fact or item with respect to such other representation or warranty can reasonably be inferred from the disclosure with respect to such fact or item contained in the disclosure schedules of Borrower):
a) Authority to Execute and Perform Agreements . The Borrower has the full legal right and power and all authority and approval required to enter into, execute and deliver this Agreement and the other Line of Credit Documents and to perform fully its obligations hereunder and thereunder. The execution and delivery of this Agreement and the other Line of Credit Documents by the Borrower and the consummation of the transactions contemplated hereby and thereby have been or will be duly and validly authorized by all necessary individual and corporate action, and no other proceedings on the part of Borrower are necessary to authorize this Agreement and the other Line of Credit Documents or to consummate the transactions so contemplated. This Agreement and the other Line of Credit Documents have all been or will be duly executed and delivered and are the valid and binding obligations of Borrower enforceable against Borrower in accordance with their terms, except as may be limited by bankruptcy, moratorium, insolvency or other similar laws generally affecting the enforcement of creditors’ rights.
b) No Breach . The Borrower's execution, delivery and performance of this Agreement and the other Line of Credit Documents and the consummation of the transactions contemplated hereby and thereby will not violate, conflict with or otherwise result in the breach or violation of any of the terms and conditions of, result in a modification of the effect of or constitute (or with notice or lapse of time or both would constitute) a default under (a) the Borrower’s Memorandum and Articles of Association; (b) any Contract to which the Borrower is a party or by or to which it or any of their assets are bound or subject; or (c) any governmental law or judicial Order against, or binding upon or applicable to Borrower or their assets.
c) No Broker . No broker, finder, agent or similar intermediary has acted for or on behalf of Borrower in connection with this Agreement or the transactions contemplated hereby, and no broker, finder, agent or similar intermediary is entitled to any broker’s, finder’s or similar fee or other commission in connection therewith based on any agreement, arrangement or understanding with Borrower or any action taken by Borrower.
d) No Legal Proceedings . As of the date hereof, there is no action, suit or proceeding other than a pending, or to the knowledge of the Borrower threatened, against or involving the Borrower in any court, or before any arbitrator of any kind, or before or by any governmental body, which in the reasonable judgment of the Borrower (taking into account the exhaustion of all appeals) would have a material adverse effect on the financial condition of Borrower, and there is no action, suit or proceeding pending, or to the knowledge of the Borrower threatened, against or involving the Borrower in any court, or before any arbitrator of any kind, or before or by any governmental body, which in the reasonable judgment of the Borrower (taking into account the exhaustion of all appeals) would have a material adverse effect on the financial condition of the Borrower, or which purports to affect the legality, validity, binding effect or enforceability of this Agreement or the Note.