Shareholder Loan Agreement Template

SHAREHOLDER LOAN AGREEMENT TEMPLATE FREE

This Shareholder Loan Agreement (the "Agreement") is entered into and made effective as of [Date] (the "Effective Date"), by and between:

THE LENDER: [Insert Shareholder/Lender Legal Name], having its principal place of residence or registered office at [Insert Address] ("Lender"); and

THE BORROWER: [Insert Company Name], a [Insert State/Country of Incorporation] corporation, having its principal place of business at [Insert Address] ("Borrower").

RECITALS

WHEREAS, the Lender is a registered shareholder holding [Insert Number] shares of common/preferred stock in the Borrower, representing [Insert Percentage]% of the total issued and outstanding equity interest of the Borrower;

WHEREAS, the Borrower requires working capital and liquidity to fund its ongoing commercial operations and business expansion initiatives; and

WHEREAS, the Lender has agreed to extend a secured/unsecured loan facility to the Borrower in an aggregate principal amount of [Insert Dollar Amount] ([Insert Written Dollar Amount]), subject to the terms, covenants, and conditions set forth herein.

NOW, THEREFORE, in consideration of the mutual covenants, promises, representations, and warranties contained herein, and for other good and valuable consideration, the receipt and legal sufficiency of which are hereby mutually acknowledged, the Parties agree as follows:

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SECTION 1: OPERATIONAL DEFINITIONS

For the purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires, the following terms shall have the meanings assigned to them below:

1.1 "Business Day" means any day, other than a Saturday, Sunday, or a statutory or civic holiday, on which commercial banks are open for normal banking business in [Insert Jurisdiction/City].

1.2 "Default Rate" means the lesser of [Insert Percentage, e.g., 18]% per annum or the maximum rate permitted by applicable law, calculated on the basis of a 365-day year and the actual number of days elapsed.

1.3 "Event of Default" has the meaning ascribed to such term in Section 4.1 of this Agreement.

1.4 "Interest Rate" means [Insert Percentage, e.g., 8]% per annum, simple/compounded [Select one], calculated annually.

1.5 "Maturity Date" means [Insert Date], or such earlier date as the Principal Sum and all accrued interest may become due and payable pursuant to the terms of this Agreement or by acceleration upon an Event of Default.

1.6 "Party" means either the Lender or the Borrower, and "Parties" means both the Lender and the Borrower collectively.

1.7 "Principal Sum" means the aggregate principal amount of [Insert Dollar Amount] ([Insert Written Dollar Amount]) advanced by the Lender to the Borrower pursuant to Section 3.1.

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SECTION 2: SUBSTANTIVE TERMS & OBLIGATIONS

2.1 Loan Advance

Subject to the terms and conditions of this Agreement, the Lender agrees to disburse the Principal Sum to the Borrower in a single lump-sum wire transfer / [Insert alternative payment method] on the Effective Date to the designated bank account provided by the Borrower in writing.

2.2 Interest Accrual

The Principal Sum outstanding from time to time shall bear interest at the Interest Rate, commencing on the Effective Date and continuing until the Principal Sum is paid in full. Interest shall be calculated on the basis of the actual number of days elapsed over a year of 365 days.

2.3 Repayment Terms

The Borrower shall repay the Principal Sum, together with all accrued and unpaid interest thereon, in full on or before the Maturity Date. Repayment shall be made in lawful money of [Insert Country/Currency] via wire transfer of immediately available funds to the account designated by the Lender.

2.4 Voluntary Prepayment

The Borrower reserves the right to prepay the Principal Sum, in whole or in part, at any time prior to the Maturity Date, without premium or penalty, provided that the Borrower shall deliver written notice of such prepayment to the Lender at least [Insert Number, e.g., 10] Business Days prior to the intended prepayment date. Any partial prepayment shall be applied first to accrued and unpaid interest, and second to the reduction of the Principal Sum.

2.5 Subordination

The indebtedness evidenced by this Agreement is subordinate and junior in right of payment, to the extent and in the manner hereinafter set forth, to the prior payment in full of all existing and future senior bank debt, institutional financing, and bona fide trade creditors of the Borrower ("Senior Indebtedness"). The Lender shall not demand, receive, or accept any payment contrary to the subordination provisions contained herein until all Senior Indebtedness has been fully satisfied.

2.6 Representations and Warranties of the Borrower

The Borrower hereby represents and warrants to the Lender as follows: (a) Organization and Good Standing: The Borrower is a corporation duly organized, validly existing, and in good standing under the laws of the jurisdiction of its incorporation. (b) Power and Authority: The Borrower has all requisite corporate power and authority to execute, deliver, and perform its obligations under this Agreement. (c) Binding Obligation: This Agreement has been duly authorized, executed, and delivered by the Borrower and constitutes a legal, valid, and binding obligation of the Borrower, enforceable against the Borrower in accordance with its terms.

2.7 Representations and Warranties of the Lender

The Lender hereby represents and warrants to the Borrower as follows: (a) Capacity / Authority: The Lender has the full legal capacity, power, and authority to enter into this Agreement and to advance the Principal Sum. (b) Source of Funds: The funds advanced pursuant to this Agreement are derived from lawful sources and do not violate any domestic or international anti-money laundering statutes.

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SECTION 3: PERFORMANCE METRICS & REPORTING

3.1 Financial Transparency: Upon the written request of the Lender, the Borrower shall furnish un-audited quarterly financial statements within [Insert Number, e.g., 45] days following the close of each fiscal quarter, and audited annual financial statements within [Insert Number, e.g., 120] days following the close of each fiscal year.

3.2 Use of Proceeds: The Borrower covenants and agrees that the Principal Sum advanced hereunder shall be utilized exclusively for general corporate working capital requirements and shall not be diverted to speculative investments, shareholder dividends, or executive bonuses without the prior written consent of the Lender.

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SECTION 4: DEFAULT, TERMINATION, AND REMEDIES

4.1 Events of Default

The occurrence of any of the following events shall constitute an "Event of Default" under this Agreement: (a) Failure to Pay: The Borrower fails to pay any Principal Sum or accrued interest within [Insert Number, e.g., 5] Business Days of the date when due. (b) Breach of Covenant: The Borrower fails to perform, observe, or comply with any other material covenant, term, or condition contained in this Agreement and such failure continues uncured for a period of thirty (30) business days after receipt of written notice from the Lender. (c) Insolvency: The Borrower files a petition in bankruptcy, is adjudicated bankrupt or insolvent, makes an assignment for the benefit of creditors, invokes any proceeding under any bankruptcy or insolvency law, or has a receiver or trustee appointed for all or substantially all of its assets.

4.2 Notice and Cure Period

Except for a payment default under Section 4.1(a) (which shall be subject to a strict 5-business-day grace period), the Lender shall provide the Borrower with written notice detailing any alleged Event of Default. The Borrower shall have a period of thirty (30) business days from the receipt of such notice to cure the specified breach (the "Cure Period").

4.3 Legal Remedies Upon Default

Upon the occurrence of an Event of Default and the expiration of the applicable Cure Period without cure, the Lender may, at its sole discretion, exercise any or all of the following remedies: (a) Acceleration: Declare the entire unpaid Principal Sum, together with all accrued and unpaid interest and any other sums payable hereunder, immediately due and payable, without presentment, demand, protest, or notice of any kind, all of which are hereby expressly waived by the Borrower. (b) Default Interest: Commencing on the date of the Event of Default, the outstanding Principal Sum shall accrue interest at the Default Rate until paid in full. (c) Legal Action: Institute legal or equitable proceedings to enforce the performance of this Agreement and to collect all amounts due.

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SECTION 5: BOILERPLATE LEGAL PROVISIONS

5.1 Severability: If any provision of this Agreement is held to be invalid, illegal, or unenforceable by a court of competent jurisdiction, such provision shall be modified to the minimum extent necessary to make it valid and enforceable. If modification is not possible, the provision shall be deemed severed, and the remaining provisions of this Agreement shall remain in full force and effect.

5.2 Entire Agreement: This Agreement constitutes the final, complete, and exclusive statement of the agreement between the Parties with respect to the subject matter hereof and supersedes all prior and contemporaneous understandings, negotiations, representations, and agreements, whether oral or written.

5.3 Force Majeure: Neither Party shall be liable for any failure or delay in performing its obligations under this Agreement if such failure or delay arises from causes beyond its reasonable control, including acts of God, flood, fire, earthquake, explosion, war, terrorism, epidemics, pandemics, government regulations, or national utility failures (each a "Force Majeure Event"), provided that the affected Party uses commercially reasonable efforts to resume performance as soon as practicable.

5.4 Governing Law: This Agreement, and all claims or causes of action (whether in contract, tort, or statute) that may be based upon, arise out of, or relate to this Agreement, shall be governed by, and enforced in accordance with, the internal laws of [Insert State/Country], without regard to its conflict of laws principles.

5.5 Dispute Resolution

Any dispute, controversy, or claim arising out of or relating to this Agreement, including its formation, execution, breach, termination, or invalidity, shall be settled by binding arbitration administered by [Insert Arbitration Body, e.g., the American Arbitration Association] in accordance with its commercial arbitration rules. The place of arbitration shall be [Insert City, State/Country]. The proceedings shall be conducted in the English language by a single arbitrator appointed in accordance with the said rules. The award rendered by the arbitrator shall be final and binding upon the Parties, and judgment upon the award may be entered in any court having jurisdiction thereof.

5.6 Amendments and Waivers: No modification, amendment, or waiver of any provision of this Agreement shall be effective unless executed in writing by both Parties. No failure or delay by either Party in exercising any right, power, or remedy under this Agreement shall operate as a waiver thereof.

5.7 Assignment: Neither Party may assign, transfer, or delegate its rights or obligations under this Agreement, in whole or in part, without the prior written consent of the other Party; provided, however, that the Lender may assign its rights hereunder to any affiliate or successor entity without prior consent.

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SECTION 6: FORMAL EXECUTION BLOCK

IN WITNESS WHEREOF, the Parties hereto have caused this Shareholder Loan Agreement to be duly executed by their respective authorized officers or representatives as of the Effective Date written above.

BORROWER:

[Insert Company Name]

By: ___________________________________
Name: [Insert Authorized Signatory Name]
Title: [Insert Title, e.g., Chief Executive Officer]
Date: [Insert Date]

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LENDER:

[Insert Shareholder/Lender Legal Name]

By: ___________________________________
Name: [Insert Signatory Name]
Title: [Insert Title / "Managing Shareholder" / "Individual"]
Date: [Insert Date]