Term Facility Agreement Template for Hong Kong

The Term Facility Agreement is a fundamental document used in corporate lending transactions where a borrower requires fixed-term financing for specific business purposes such as acquisitions, capital expenditure, or refinancing existing debt. This sophisticated agreement, governed by Hong Kong law, comprehensively documents the relationship between lenders and borrowers, including facility terms, conditions precedent, representations and warranties, covenants, and events of default. It incorporates specific Hong Kong regulatory requirements and market practices, particularly those applicable to authorized institutions under the Banking Ordinance. The agreement can be adapted for bilateral or syndicated lending arrangements and may include security and guarantee provisions depending on the transaction structure. Used extensively in Hong Kong's financial center, the Term Facility Agreement provides a robust framework for managing the rights and obligations of all parties throughout the facility's lifecycle.

1. Parties: Identification of the lender(s), borrower(s), agent (if applicable), and security trustee (if applicable)

2. Background: Brief description of the facility and its purpose

3. Definitions and Interpretation: Definitions of key terms and interpretation principles

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

5. Conditions Precedent: Documents and conditions required before drawdown

6. Drawdown: Procedure and requirements for utilization of the facility

7. Repayment: Terms of repayment including scheduled repayments and final maturity

8. Prepayment and Cancellation: Voluntary and mandatory prepayment provisions

9. Interest: Interest calculation, periods, and payment provisions

10. Fees: All fees payable under the facility

11. Tax Gross Up and Indemnities: Tax provisions and related indemnities

12. Increased Costs: Provisions dealing with changes in law or regulations affecting lenders' costs

13. Representations: Borrower's representations and warranties

14. Information Undertakings: Requirements for financial and other information

15. General Undertakings: Positive and negative covenants

16. Events of Default: Default triggers and consequences

17. Changes to Parties: Transfer and assignment provisions

18. Payment Mechanics: Payment procedures and calculations

19. Set-off: Rights of set-off and their application

20. Notices: Communication procedures and contact details

21. Calculations and Certificates: Basis for calculations and form of certificates

22. Partial Invalidity: Severability provisions

23. Remedies and Waivers: Rights and remedies of the parties

24. Amendments and Waivers: Procedures for modifications to the agreement

25. Counterparts: Execution in multiple counterparts

26. Governing Law: Hong Kong law as governing law

27. Enforcement: Jurisdiction and dispute resolution provisions