Common use of Policy Loans Clause in Contracts

Policy Loans. a. The Company may pledge or assign the Policy, subject to the terms and conditions of this Agreement, for the sole purpose of securing a loan from the Insurer or from a third party. The amount of such loan, including accumulated interest thereon, shall not exceed the lesser of (i) the cumulative amount of premiums on the Policy paid by the Company hereunder, less any portion thereof previously recovered by the Company through a loan from or against or a withdrawal from the Policy permitted hereunder; or (ii) the cash surrender value of the Policy (as defined therein) as of the date to which premiums have been paid. Interest charges on such loan shall be paid by the Company. If the Company so encumbers the Policy, other than by a policy loan from the Insurer, then, upon the death of the Employee or upon the election of the Employee hereunder to purchase the Policy from the Company, the Company shall promptly repay such loan from the death proceeds of the Policy or the amount received from the Employee for the purchase of the Policy, as the case may be, and thereafter shall promptly take all action necessary to secure the release or discharge of such encumbrance.