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A Loan Against Letter of Credit is a specialized financing arrangement commonly used in international trade and commerce within the UAE. This document is utilized when a borrower seeks to obtain financing from a bank or financial institution using an existing Letter of Credit as collateral. The agreement is structured to comply with UAE Federal Laws, particularly the Commercial Transactions Law and Central Bank regulations, while incorporating international banking practices. It becomes relevant when companies need working capital or trade finance solutions, particularly in import/export scenarios. The document includes comprehensive details about the loan facility, security arrangements, drawdown procedures, and repayment terms, while ensuring compliance with both UAE law and Shariah principles where applicable. It's particularly important in the UAE market where Letter of Credit transactions form a significant part of trade finance operations.

1. Parties: Identification of the Lender (typically a bank or financial institution) and the Borrower, including their full legal names, registration details, and addresses

2. Background: Context of the transaction, including reference to the underlying Letter of Credit, its purpose, and the basis for the loan request

3. Definitions: Key terms used throughout the agreement, including 'Letter of Credit', 'Security', 'Facility Amount', 'Maturity Date', etc.

4. Facility: Details of the loan facility, including amount, purpose, and relationship to the Letter of Credit

5. Conditions Precedent: Conditions that must be satisfied before the loan can be drawn, including LC documentation requirements

6. Drawdown: Procedures and requirements for drawing down the loan facility

7. Interest and Fees: Interest rate, calculation method, payment dates, and any applicable fees

8. Repayment: Terms of repayment, including schedule, method, and currency

9. Security: Details of the Letter of Credit as security and any additional security requirements

10. Representations and Warranties: Standard and transaction-specific representations made by the Borrower

11. Covenants: Positive and negative obligations of the Borrower during the loan term

12. Events of Default: Circumstances constituting default and consequences thereof

13. Governing Law and Jurisdiction: Specification of UAE law as governing law and jurisdiction details