Termination or Reduction of Commitments, Repayment Clauses
(Credit Agreement)

Summary

These Termination or Reduction of Commitments, Repayment clauses set forth the mechanics of repaying loans and terminating or reducing commitments under a credit agreement. They are usually found in Article II of the credit agreement in a typical syndicated loan transaction. These clauses include practical guidance and drafting notes. Note that these clauses contemplate a financing that includes the following elements: • A senior secured credit facility consisting of a term loan A and a term loan B facility, both funded in full at closing. • Agency roles for each of an administrative agent, collateral agent, and issuing bank, acting for a syndicate of lenders. • Collateral and guarantee support from the loan parties, generally including a group of the borrower's subsidiaries and the borrower's immediate parent entity. These sample provisions do not include certain borrower refinancing and add-on options that have become common in credit agreements in the past decade, including options for incremental facilities, refinancing facilities, loan buybacks, and amend and extend transactions. For templates covering these provisions, see Incremental Facility Clauses (Credit Agreement), Refinancing Amendments Clauses (Credit Agreement), Borrower Loan Buybacks Clauses (Discounted Voluntary Prepayments) (Credit Agreement), and Amend and Extend Clause (Credit Agreement). The capitalized terms used in these sample provisions should be conformed to the defined terms in the relevant credit agreement. For a full listing of related credit agreement content, see Credit Agreement Resource Kit. These clauses should be read in conjunction with the practice notes Repayment and Prepayment Provisions in Credit Agreements, Mandatory Repayment Provisions, and Application of Payments and Prepayment Penalties in Credit Agreements.