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A Subordinate Loan Agreement is used when a borrower requires additional financing while maintaining existing senior debt arrangements. This document, governed by Philippine law, establishes the hierarchical structure of debt obligations, where the subordinated loan ranks below senior debt in terms of payment priority and security rights. The agreement is particularly crucial in corporate financing scenarios, restructuring situations, or when companies need to strengthen their capital structure without disturbing existing senior lending arrangements. It includes detailed provisions on payment restrictions, enforcement limitations, and inter-creditor arrangements, all compliant with Philippine banking regulations and the New Central Bank Act. The agreement becomes especially relevant when businesses need to raise additional capital while maintaining existing banking relationships or during corporate expansion phases.

1. Parties: Identifies the lender, borrower, and any other relevant parties including senior creditors

2. Background: Explains the context of the subordinated loan and its relationship to senior debt

3. Definitions and Interpretation: Defines key terms and establishes interpretation rules

4. The Facility: Details the loan amount, purpose, and drawdown conditions

5. Subordination Terms: Establishes the subordination structure, ranking of debt, and payment priorities

6. Interest: Specifies interest rates, calculation methods, and payment terms

7. Repayment and Prepayment: Sets out repayment schedule and any prepayment provisions

8. Conditions Precedent: Lists conditions that must be met before drawdown

9. Representations and Warranties: Contains standard and transaction-specific representations

10. Covenants: Details positive and negative obligations of the borrower

11. Events of Default: Lists circumstances constituting default and consequences

12. Changes to Parties: Addresses assignment and transfer provisions

13. Payment Mechanics: Specifies payment procedures and calculations

14. Notices: Sets out formal communication requirements

15. Governing Law and Enforcement: Specifies Philippine law as governing law and enforcement provisions