The Subordinated Loan Agreement is essential in complex financing structures where varying levels of creditor priority are required. This document type is commonly used in Hong Kong for corporate restructurings, acquisition financing, or when companies need to raise additional capital while maintaining existing senior debt arrangements. It sets out the terms under which the subordinated loan is provided, including crucial provisions regarding payment restrictions, enforcement limitations, and the relationship with senior debt. The agreement must comply with Hong Kong regulatory requirements, particularly when involving regulated financial institutions. Key elements include subordination mechanics, restricted payment conditions, events of default, and specific provisions required for effectiveness under Hong Kong law. The document is particularly relevant when companies need to establish clear creditor hierarchies while maintaining flexibility in their capital structure.

1. Parties: Identifies the lender, borrower, and any other relevant parties to the agreement

2. Background: Sets out the context of the subordinated loan and its relationship to any senior debt

3. Definitions and Interpretation: Defines key terms including 'Senior Debt', 'Subordinated Debt', 'Enforcement Action', and interpretation principles

4. The Facility: Details of the subordinated loan amount, purpose, and availability

5. Subordination and Ranking: Core provisions establishing the subordinated nature of the debt and its ranking in relation to other creditors

6. Drawdown: Conditions and mechanics for drawing down the subordinated loan

7. Interest: Interest rate, calculation periods, and payment provisions, including restrictions on interest payments

8. Repayment and Prepayment: Terms for repayment, including restrictions on repayment while senior debt is outstanding

9. Representations and Warranties: Standard and subordination-specific representations and warranties

10. Covenants: Positive and negative covenants, including restrictions on actions affecting senior debt

11. Events of Default: Default triggers and consequences, modified to reflect subordinated nature

12. Payments and Tax: Payment mechanics, currency provisions, and tax gross-up obligations

13. Changes to Parties: Transfer and assignment provisions, often more restrictive than senior facilities

14. Notices: Communication requirements and methods between parties

15. Governing Law and Jurisdiction: Specifies Hong Kong law as governing law and jurisdiction for disputes