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The Loan Facility Agreement is a fundamental document used in Saudi Arabian financial transactions to establish and govern the provision of Shariah-compliant financing facilities. It is essential for any significant financing arrangement in Saudi Arabia, whether for corporate expansion, project finance, or general commercial purposes. The agreement must strictly comply with both Saudi Arabian law and Islamic principles, requiring approval from Shariah scholars and adherence to SAMA guidelines. It typically includes detailed provisions on facility terms, profit calculation methods, security arrangements, and enforcement mechanisms. The document is structured to protect both the financial institution's interests and ensure the borrower's obligations while maintaining Shariah compliance throughout the facility's lifetime. This agreement type is particularly important given Saudi Arabia's position as the largest Islamic finance market in the region and its commitment to Shariah-compliant financial practices.

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

2. Background: Context of the facility and confirmation of Shariah compliance

3. Definitions and Interpretation: Key terms, construction rules, and Shariah principles interpretation

4. The Facility: Nature, purpose, and amount of the facility, including profit rate structure

5. Conditions Precedent: Documents and conditions required before utilization

6. Utilization: Process and requirements for drawing down the facility

7. Profit Rate and Fees: Shariah-compliant profit rate calculation, fees, and payment terms

8. Repayment and Prepayment: Repayment schedule, prepayment terms, and related conditions

9. Islamic Finance Undertakings: Specific undertakings to ensure Shariah compliance

10. Representations and Warranties: Standard and Shariah-specific representations by the borrower

11. Information Undertakings: Financial and other information to be provided by the borrower

12. General Undertakings: Positive and negative covenants of the borrower

13. Events of Default: Circumstances constituting default and consequences

14. Changes to Parties: Transfer and assignment provisions

15. Payment Mechanics: Payment procedures, currency, and timing

16. Set-off: Rights of set-off and consolidation of accounts

17. Notices: Communication methods and contact details

18. Calculations and Certificates: Basis for calculations and evidential value of certificates

19. Governing Law and Enforcement: Saudi law as governing law and enforcement provisions

20. Shariah Board Approval: Confirmation of Shariah board approval and compliance