Director’s Loan Agreement Unsecured

DATED 05 November 2023

LOAN AGREEMENT

Between

Name of Director ‘The Borrower’

And

Name of Company ‘The Lender’

THIS AGREEMENT IS DATED: 05 day of November 2023.

BETWEEN:

Name of Director (the “Borrower”) of Address and

Name of Company (the “Lender”), a company incorporated in England & Wales with company number Company number and whose registered office is situated at Registered Address.

NOW IT IS HEREBY AGREED as follows:

Background

The Borrower is a director of the Lender. The Lender has agreed to lend the Borrower with a loan of £amount on an unsecured basis in accordance with the terms set out in this agreement.

Loan Amount and Disbursement 

The Lender agrees to provide the Borrower with a loan in the amount of £[Loan Amount] (the “Loan”). This Loan will be transferred to the Borrower’s nominated bank account on or before [Advance Date].

Interest

The Loan shall bear interest at an annual rate of 8%. Interest will be calculated [daily] [monthly] on the outstanding balance from the Commencement Date until the Loan is fully repaid, and it will be charged to the Borrower [monthly] [quarterly] in arrears. In the event of a default in payment, the same interest rate shall apply to the total amount due, including both the principal and any accrued interest at the time of default.

Use of Funds

The Borrower agrees to use all sums borrowed under this Agreement solely for the intended purpose of the loan. The Lender shall have no obligation to monitor or verify the use of any funds disbursed under this Agreement.

Terms and Repayments

The Borrower shall repay the Loan in instalments as set out in Schedule 1 and may not reborrow any part of the Loan that has been repaid. The Loan must be repaid in full on or before [Repayment Date] (the “Repayment Date”). The Borrower may choose to repay the Loan early, either in full or in part, without incurring any penalty. Any partial repayments made will be applied first to any outstanding interest and thereafter to the principal amount.

Drawdown

The Loan shall be available for drawing by the Borrower in [not more than number Advances] [one Advance]. The Lender agrees to pay [each] [the] Advance to the Borrower in immediately available cleared funds on the date of the relevant Advance, either to the Borrower directly or for the Borrower’s account. The Advances will be disbursed to the Borrower by the Lender in the following amounts and on the respective dates:

 Security

Notwithstanding any security or charge the Borrower may have provided in relation to other amounts owed to the Lender, the Loan shall at all times remain entirely unsecured.

Warranties

The Borrower warrants that they have full legal capacity and authority to enter into this Agreement and that doing so does not breach any fiduciary duties or create a conflict of interest with their role as a director. The Borrower confirms that the loan will be used solely for the stated purpose, that they are not insolvent, involved in any litigation, or in breach of any laws or obligations which would affect this Agreement. The Borrower further warrants that all relevant disclosures have been made and that they have not misrepresented or withheld any material information from the Lender. The information, in written or electronic format, supplied by the Borrower to the Lender in connection with the Loan and this Agreement was, at the time it was supplied to the best of the Borrower’s knowledge:

Covenants

The Borrower covenants and undertakes that, for the duration of this Agreement, they shall:

• use the Loan strictly for its stated purpose;
• promptly repay the Loan in accordance with the terms set out herein;
• not take any action or omit to act in a way that would cause a breach of this Agreement or any applicable laws; and
• notify the Lender immediately of any event that may materially affect their ability to fulfil their obligations under this Agreement, including but not limited to insolvency, resignation as a director, or commencement of legal proceedings against them.

Events of Default

Each of the following events or circumstances shall constitute an Event of Default under this Agreement:

• the Borrower’s failure to make any Repayment Instalment, including interest, within 25 days from the due Repayment Date;
• if any of the Warranties provided by the Borrower are, or prove to be, incomplete, untrue, or incorrect;
• the commencement of any insolvency proceedings against the Borrower or the Borrower entering into an arrangement with creditors;
• any procedure being initiated against the Borrower to attach or take possession of their property for the payment of a debt;
• if the Borrower’s appointment as director of the Lender ceases for any reason;
• the death of the Borrower; or
• any event or circumstance that, in the reasonable opinion of the Lender, is likely to materially and adversely affect the Borrower’s ability to perform their obligations or comply with the terms of this Agreement.

Enforcement of Payment

In the event of an Event of Default, the Unpaid Amount, along with any accrued interest, shall become immediately due and payable, subject to the service of notice and/or obtaining a court order.

Remedies, Waivers, and Legal Rights

Any amendment to this Agreement must be made in writing and signed by or on behalf of both parties. A waiver of any right or consent given under this Agreement is only valid if it is in writing, signed by the party granting it, and applies solely to the specific situation for which it is given. The failure or delay by either party to exercise any right under this Agreement shall not be considered a waiver of that right. Similarly, the partial or single exercise of any right does not prevent further exercise of that or any other right. All rights and remedies set out in this Agreement are cumulative and do not exclude any rights or remedies available under law or otherwise.

Third Party Exclusion and Severability 

This Agreement is intended solely for the benefit of the parties to it, and no person who is not a party shall have any rights under it by virtue of the Contracts (Rights of Third Parties) Act 1999. If any provision of this Agreement is found by a court or other competent authority to be invalid, illegal, or unenforceable, whether in whole or in part, such finding shall not affect the validity and enforceability of the remaining provisions, which shall continue in full force and effect.

Communications

All communications regarding the loan must be in writing and sent by hand, pre-paid first-class post, fax, or email. For the Lender, communications should be directed to its registered office or any address the Lender notifies the Borrower. For the Borrower, communications should be sent to the address listed in the Agreement or any address the Borrower notifies the Lender. Communications will be deemed received:

• two Business Days after posting by first-class post;
• on the day of delivery if hand-delivered;
• on the day of transmission if sent by fax or email before 5:00 pm, or the next Business Day if after 5:00 pm. Communications to the Lender should be marked for the attention of [Name of Person].

Governing Law and Jurisdiction

This agreement, along with any non-contractual obligations or matters arising out of or in connection with it, shall be governed by and interpreted in accordance with the laws of England and Wales. Any dispute, claim, or legal proceedings relating to this agreement, including those concerning any non-contractual obligations or matters, shall be subject to the exclusive jurisdiction of the courts of England and Wales.