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A Subordinated Loan Agreement is essential in complex financing structures where multiple layers of debt exist. This document, governed by Canadian law, establishes a loan that is contractually subordinated to senior debt obligations, meaning it has a lower priority for repayment. The agreement is commonly used in corporate finance, acquisition financing, or business expansion scenarios where companies need additional capital but must maintain existing senior lending relationships. The document includes detailed provisions on payment subordination, enforcement standstill periods, and turnover obligations, all structured to comply with Canadian federal and provincial laws. The Subordinated Loan Agreement must carefully balance the subordinated lender's rights to receive payments against the superior rights of senior creditors, while ensuring compliance with Canadian banking regulations, interest rate laws, and security legislation.

1. Parties: Identification of the lender, borrower, and any existing senior creditors who may need to be party to the agreement

2. Background: Context of the subordinated loan, including existence of senior debt and purpose of the subordination

3. Definitions: Key terms including Senior Debt, Subordinated Debt, Payment Default, Enforcement Action, etc.

4. The Loan: Principal amount, purpose, and drawdown conditions of the subordinated loan

5. Interest: Interest rate, calculation method, payment dates, and default interest provisions

6. Repayment: Terms and schedule for repayment of principal and any prepayment provisions

7. Subordination Provisions: Core provisions establishing priority of senior debt and restrictions on subordinated debt payments

8. Turnover Provisions: Obligations to turn over any payments received in violation of subordination provisions

9. Permitted Payments: Circumstances under which payments on subordinated debt are allowed

10. Payment Blockage: Conditions triggering payment blockage and its duration

11. Representations and Warranties: Standard representations plus specific ones related to existing debt and security

12. Covenants: Borrower's ongoing obligations including information provision and debt restriction

13. Events of Default: Circumstances constituting default and resulting rights

14. Enforcement Standstill: Restrictions on enforcement actions by subordinated lender

15. Assignments and Transfers: Rules for transferring the subordinated debt

16. Notices: Communication requirements and methods

17. Governing Law and Jurisdiction: Applicable law and courts having jurisdiction