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Facility Agreement for Canada

Facility Agreement Template for Canada

A Canadian law-governed Facility Agreement is a comprehensive legal document that establishes the terms and conditions under which a lender or group of lenders provides financing to a borrower. The agreement incorporates provisions compliant with Canadian federal and provincial regulations, including the Bank Act and Interest Act requirements. It details the facility amount, interest calculations, repayment terms, security arrangements, representations and warranties, covenants, and events of default. The document also addresses specific Canadian legal considerations such as currency provisions, tax implications, and enforcement mechanisms under Canadian law.

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What is a Facility Agreement?

The Facility Agreement serves as the primary document governing credit facilities in Canadian financing transactions. It is used when a lender extends credit to a borrower, whether for general corporate purposes, acquisitions, working capital, or specific projects. The agreement must comply with Canadian federal legislation such as the Bank Act and Interest Act, as well as relevant provincial laws. The document typically includes detailed provisions on facility terms, conditions precedent, drawdown mechanics, interest calculations, repayment obligations, security arrangements, and events of default. This Facility Agreement is particularly crucial in establishing clear rights and obligations of all parties while ensuring compliance with Canadian regulatory requirements and market practices. It can be adapted for bilateral or syndicated lending arrangements and may include provisions for both secured and unsecured facilities.

What sections should be included in a Facility Agreement?

1. Parties: Identification of the lender(s), borrower(s), and any guarantors

2. Background: Context of the facility agreement and purpose of the loan

3. Definitions and Interpretation: Definitions of terms used throughout the agreement and rules of interpretation

4. The Facility: Core terms of the facility including amount, purpose, and availability

5. Conditions Precedent: Conditions that must be satisfied before drawdown

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

7. Interest: Interest rates, calculation periods, and payment provisions

8. Repayment and Prepayment: Terms for scheduled repayments and voluntary/mandatory prepayments

9. Representations and Warranties: Borrower's representations regarding its status and capacity

10. Covenants: Positive and negative undertakings of the borrower

11. Events of Default: Circumstances constituting default and consequences

12. Changes to Parties: Rules for assignments and transfers

13. Administration: Payment mechanics, calculations, and notices

14. Governing Law and Enforcement: Choice of law and jurisdiction provisions

What sections are optional to include in a Facility Agreement?

1. Syndication Provisions: Required for syndicated facilities, covering voting rights and facility agent roles

2. Multiple Currencies: Include when the facility can be drawn in different currencies

3. Security Provisions: Required when the facility is secured, detailing security structure and enforcement

4. Guarantees: Include when there are guarantors supporting the facility

5. Market Disruption: Include for facilities with floating rates to address market disruption scenarios

6. Increased Costs and Tax Gross-Up: Include for sophisticated borrowers to address regulatory changes and tax implications

7. Anti-Corruption and Sanctions: Include for cross-border facilities or when required by lender policy

8. Accordion Feature: Include when facility amount may be increased under prescribed conditions

What schedules should be included in a Facility Agreement?

1. Conditions Precedent Documents: List of required documents and conditions to be satisfied

2. Form of Drawdown Request: Template for borrower to request drawdown of the facility

3. Form of Transfer Certificate: Template for transferring commitments between lenders

4. Repayment Schedule: Detailed schedule of repayment dates and amounts

5. Financial Covenants: Detailed calculations and definitions for financial covenants

6. Forms of Security Documents: Templates for required security documentation

7. Existing Security and Permitted Liens: List of existing security interests and permitted encumbrances

8. Contact Details: Contact information for all parties for notices and communications

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

Canada

Publisher

Genie AI

Document Type

Loan Agreement

Sector

Banking

Cost

Free to use
Relevant legal definitions

































































Clauses






































Relevant Industries

Banking and Financial Services

Commercial Real Estate

Manufacturing

Retail

Technology

Infrastructure

Energy

Healthcare

Agriculture

Mining

Transportation and Logistics

Telecommunications

Relevant Teams

Legal

Finance

Treasury

Risk Management

Compliance

Credit

Corporate Banking

Documentation

Operations

Business Development

Relevant Roles

Chief Financial Officer

Finance Director

Treasury Manager

Corporate Lawyer

Legal Counsel

Risk Manager

Credit Manager

Relationship Manager

Compliance Officer

Banking Officer

Corporate Secretary

Finance Manager

Senior Loan Officer

Transaction Manager

Documentation Specialist

Industries








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