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The Limited Recourse Loan Agreement is a specialized financing document used in Saudi Arabia when lenders agree to provide Shariah-compliant financing with recourse limited to specific assets or revenue streams, rather than having full recourse to all the borrower's assets. This type of agreement is particularly common in project finance, real estate development, and infrastructure projects where the financing is secured by the project's assets and cash flows. The document must comply with both Saudi Arabian law and Islamic finance principles, incorporating appropriate Shariah-compliant structures such as Murabaha or Musharaka. It includes detailed provisions regarding the security package, profit calculation mechanisms, conditions precedent, and clearly defined recourse limitations. The agreement is typically used for large-scale projects where lenders accept project-specific risks and require detailed security and monitoring arrangements.

1. Parties: Identification of the lender(s) and borrower(s), including their full legal names and addresses

2. Background: Context of the loan, purpose, and key commercial aspects of the transaction

3. Definitions and Interpretation: Definitions of terms used in the agreement and rules of interpretation

4. Facility and Purpose: Details of the loan facility, amount, and permitted purpose

5. Limited Recourse Nature: Clear specification of the limited recourse nature and the specific assets/revenue streams against which recourse is available

6. Islamic Finance Principles: Confirmation of Shariah compliance and relevant Islamic finance structure

7. Conditions Precedent: Conditions that must be satisfied before the loan becomes available

8. Drawdown Mechanics: Procedures and requirements for drawing down the loan

9. Profit Rate and Payment: Profit rate calculation (instead of interest) and payment terms in compliance with Shariah

10. Security Structure: Details of security arrangements over the specific assets/revenue streams

11. Representations and Warranties: Standard and transaction-specific representations and warranties

12. Covenants: Positive and negative obligations of the borrower

13. Events of Default: Circumstances constituting default and consequences

14. Recourse Limitations: Detailed provisions limiting recourse to specified assets/revenue streams

15. Payment Mechanics: Details of payment procedures and accounts

16. Changes to Parties: Rules regarding assignments and transfers

17. Governing Law and Jurisdiction: Saudi law as governing law and jurisdiction provisions

18. Notices: Communication procedures between parties

19. Counterparts: Execution in counterparts provisions