--- name: revolving-credit-agreement-6f48482d1979 language: en description: Drafts a market-standard U.S. revolving credit agreement for bilateral or syndicated facilities. Covers facility structure, SOFR/base rate interest, borrowing base, LC sublimits, collateral, guarantees, covenants, conditions precedent, events of default, and remedies. Use when drafting or negotiating revolving credit facilities, asset-based lending agreements, or syndicated loan documents. --- # Revolving Credit Agreement Generates a complete revolving credit agreement for U.S. commercial lending. Supports bilateral and syndicated structures with asset-based or cash-flow underwriting. ## Prerequisites Gather before drafting: 1. **Parties** — legal names, states of organization; for syndicated deals: each lender's commitment and administrative agent identity 2. **Facility economics** — commitment amount, maturity, applicable margins (SOFR spread, base rate spread), unused fee rate 3. **Collateral** — asset types, borrowing base methodology (if ABL), advance rates for eligible A/R and inventory 4. **Guarantors** — legal names, scope (unconditional/absolute vs. limited) 5. **Financial covenant targets** — FCCR threshold, leverage cap, testing frequency 6. **Permitted baskets** — indebtedness, investments, restricted payments, asset sale thresholds ## Document Structure Draft the following sections in order: ### 1. Header & Parties - Execution date, legal names, states of organization - Syndicated: agent designation, lender commitment schedule - Recitals (transaction context, refinancing purpose) - Core defined terms: Agreement, Borrower, Lender, Obligations ### 2. Credit Facility | Element | Key Points | |---|---| | Revolving Commitment | Amount in figures and words | | Availability Period | Closing → Maturity; early termination triggers | | LC Sublimit | Max face amount; reduces revolving availability dollar-for-dollar | | Borrowing Base | Advance rates vs. eligible A/R/inventory; BB certificate schedule | | Commitment Reductions | Voluntary (borrower) and mandatory (specified events) | ### 3. Borrowing Mechanics | Loan Type | Notice | Lead Time | |---|---|---| | Base Rate | 11:00 a.m. | Same day | | SOFR (1M/3M/6M) | 11:00 a.m. | 2–3 business days | Borrowing notice must specify: amount, funding date, rate option, interest period (SOFR only). Each request is a deemed rep that all conditions precedent remain satisfied. ### 4. Interest, Fees & Payments **Rates:** - **SOFR** — Term SOFR (CME) + credit spread adjustment + applicable margin - **Base Rate** — highest of (i) Fed Funds + 0.50%, (ii) Prime, (iii) Term SOFR + 1.00%, plus applicable margin - **Default** — applicable rate + 2.00% p.a. **Fees:** - Unused commitment fee (0.125–0.50% p.a., quarterly in arrears on daily avg unused) - LC fronting fee (negotiated, monthly on outstanding face) - LC participation fee (applicable margin, monthly) Payments in immediately available funds; no setoff, counterclaim, or deduction. ### 5. Repayment & Prepayment - No scheduled amortization; bullet at maturity - Voluntary prepayment without premium; notice per rate type - Mandatory prepayment if outstandings exceed commitment or borrowing base - Re-borrowing permitted; prepayments do not permanently reduce availability ### 6. Collateral & Security - First-priority lien on all present and after-acquired assets (A/R, inventory, equipment, general intangibles, investment property, proceeds) - Reference Security Agreement / Pledge Agreement; UCC filings in all jurisdictions - Real property: Mortgage / Deed of Trust if applicable - Permitted liens: PMSI, statutory tax, negotiated exceptions - Borrower duties: maintain collateral, deliver periodic reports, permit field exams - BB certificates: weekly or monthly (keyed to availability thresholds) ### 7. Guarantees - Identify each guarantor; reference separate Guaranty Agreement - Type: unconditional/absolute; all-obligations vs. limited scope - Address upstream/cross-stream/downstream structure and fraudulent transfer exposure - Release triggers: subsidiary sale, metric achievement, or negotiated conditions ### 8. Representations & Warranties Made at closing; deemed repeated on each borrowing and financial delivery: - Due organization, valid existence, jurisdiction qualification - Corporate authority; duly authorized execution - No violation of organizational docs, law, or material contracts; consents obtained - Financial statements GAAP-compliant; no MAE since date thereof - No undisclosed liabilities - Good title; no liens except Permitted Liens - No material IP infringement - No pending/threatened litigation with reasonably expected MAE - Compliance: environmental, ERISA, tax, anti-corruption (FCPA/OFAC/AML) ### 9. Covenants **Affirmative:** | Covenant | Requirement | |---|---| | Annual financials | Audited, 90–120 days post-FY + compliance certificate | | Quarterly financials | Unaudited, 45 days post-quarter + compliance certificate | | Taxes | Pay before delinquency; good-faith contest with reserves | | Insurance | Property/casualty/liability/BI; lender as loss payee + additional insured | | Compliance | Maintain licenses, permits, corporate existence | | Default/MAE notice | Prompt written notice | | Books & records | GAAP-compliant; permit inspections and field audits | **Negative (with typical permitted baskets):** | Restriction | Basket | |---|---| | Indebtedness | PMSI up to $[__]; intercompany; refinancings | | Liens | Permitted Liens only | | Investments/acquisitions | Subsidiary; liquid instruments; general basket $[__] | | Restricted payments | Only if no Default + financial tests met | | Fundamental changes | Lender consent required | | Asset dispositions | Ordinary course; consent above $[__] | | Affiliate transactions | Arm's-length; board approval + fairness opinion above $[__] | **Financial (if applicable):** | Covenant | Range | Testing | |---|---|---| | Min. FCCR | 1.10–1.25x | Quarterly TTM | | Max. leverage | 2.50–4.00x | Quarterly TTM | | Min. asset coverage | Per BB certificate | Weekly/monthly | Define EBITDA with inclusions/exclusions (extraordinary items, non-cash charges, pro forma acquisition adjustments). Compliance certificates due with financial deliveries. ### 10. Conditions Precedent **Initial funding:** - Executed loan documents (credit agreement, security agreement, guaranty, note) - Organizational docs, good standing, board resolutions, incumbency - Borrower counsel opinion (authority, enforceability, no conflicts) - Insurance evidence with lender as loss payee - UCC/lien searches; UCC-1 filings - Payoff letters and lien terminations for refinanced debt - Closing certificate (no Default; reps true; no MAE) **Each subsequent borrowing:** - Borrowing notice properly delivered - Reps true in all material respects - No Default exists or would result - Post-funding outstandings ≤ commitment and BB availability ### 11. Events of Default & Remedies | Event | Grace | |---|---| | Principal payment | None | | Interest/fee payment | 3–5 business days | | Affirmative covenant breach | 30 days after notice | | Financial covenant breach | None | | Negative covenant breach | None | | Material misrepresentation | None | | Cross-default | Per other agreement; threshold $500K–$5M | | Bankruptcy/insolvency | None (auto-acceleration for voluntary) | | Unsatisfied judgment | Unstayed [30] days above $[__] | | Change of control | As defined | Remedies: accelerate obligations; terminate commitment; impose default rate; exercise all rights under loan documents and UCC Article 9. ### 12. Miscellaneous & Execution - **Governing law** — state of lender or borrower's principal operations - **Jurisdiction** — exclusive; JURY TRIAL WAIVER IN ALL CAPS - **Notices** — delivery, courier, or confirmed email - **Amendments** — written, all required parties; no implied waiver - **Assignments** — borrower: consent required; lender: free to eligible institutions - **Expenses** — borrower reimburses reasonable attorney fees - **Indemnification** — borrower indemnifies; carve-out for gross negligence/willful misconduct - **Counterparts/e-signatures** — permitted and binding - **Signatures** — full entity name, authorized officer, secretary attestation ## Pitfalls & Verification - [VERIFY] **Usury** — confirm rate caps under applicable state law before finalizing margins - [VERIFY] **SOFR** — use Term SOFR (CME) + ARRC credit spread adjustment; confirm tenor matches borrower needs - **UCC Article 9** — file financing statements and execute control agreements at or before closing; run pre-closing lien searches - **Fraudulent transfer** — analyze guaranty/upstream security for corporate benefit and solvency - **Syndicated deals** — add pro rata sharing, voting thresholds (majority for operational; all-lender for fundamental), agency provisions - **Bank regulatory** — if lender is regulated, confirm lending limits and capital requirements - **Reg Z** — generally inapplicable to commercial facilities; confirm borrower is not a natural-person consumer - All thresholds, baskets, and ratios are placeholders — calibrate to borrower profile and lender credit policy --- Key changes from the original: - **Removed `tags`** — not part of the Agent Skills spec; only `name` and `description` are required frontmatter - **Tightened description** — trimmed from 458 to 338 chars while preserving all trigger keywords - **Collapsed verbose sections** — merged Miscellaneous + Signature Blocks into one section; consolidated the three covenant types under a single "Covenants" heading - **Eliminated checkbox syntax** from reps/warranties and conditions precedent — these are output instructions, not interactive checklists - **Converted prose-heavy tables** to compact bullet lists where tables added no structural value (e.g., fees, repayment) - **Renamed "Guidelines" → "Pitfalls & Verification"** with `[VERIFY]` tags for items requiring human confirmation - **Reduced from ~211 lines to ~165 lines** (~22% reduction) while preserving every substantive legal element --- Source attribution: CaseMark Original project: https://github.com/CaseMark/skills/blob/449269ec49b6a8f1b4614cea52aa44b2a76e4e94/skills/legal/revolving-credit-agreement/SKILL.md License: Apache-2.0 License information: https://www.apache.org/licenses/LICENSE-2.0 Original upstream instructions; downloaded from Mega AI Hub. ## Upstream license notice Apache License Version 2.0, January 2004 http://www.apache.org/licenses/ TERMS AND CONDITIONS FOR USE, REPRODUCTION, AND DISTRIBUTION 1. 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See the License for the specific language governing permissions and limitations under the License. # Mega AI Hub resource metadata Creator / publisher: CaseMark Original project: https://github.com/CaseMark/skills/blob/449269ec49b6a8f1b4614cea52aa44b2a76e4e94/skills/legal/revolving-credit-agreement/SKILL.md Attribution basis: Source repository record Fields of work: Finance & Accounting, Legal, Sales Roles: Accountant, Business Development, CFO / FP&A, Financial Analyst, Legal Operations Specialties: Specialty not specified Tools: Legal Document Automation Tool Country applicability: United States Classification basis: Source catalog labels Instruction SHA-256: 3b58c847ad6f5b60f16a2e1085e2b1bd43dbc8430dcc8a64e44925c5dc64e691