This Subordinated Loan Agreement (the “Agreement”) is effective [DATE],
BETWEEN: [YOUR FULL NAME] (the "Lender"), a company organized and existing under the laws of the [State/Province] of [STATE/PROVINCE] with its address located at:
AND: [SECOND PARTY NAME] (the "Borrower"), a company organized and existing under the laws of the [State/Province] of [STATE/PROVINCE], with its address located at:
WHEREAS, the Borrower is required to maintain certain financial resources as part of its regulatory obligations.
WHEREAS, the Lender has agreed to lend [has lent] to the Borrower an amount as set out herein upon and subject to the terms contained in this Agreement.
WHEREAS, the Borrower wishes to use the Loan as a Qualifying Subordinated Loan, the circumstances giving rise to the Loan and the effective subordination of the Loan.
NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:
1.1 “Agreement” means this Agreement and any amendment or variation hereto which has been agreed between the parties and which has received the prior consent in writing of the parties;
1.2 “Business Day” means any day except Saturday, Sunday or a national bank or public holiday;
“Excluded Liabilities” means
iabilities which are expressed to be
and, in the opinion of the Insolvency Officer of the Borrower do rank
junior to the Subordinated Liabilities in the Insolvency of the Borrower;
“Insolvency” means and includes the commencement of the liquidation, winding up, bankruptcy and sequestration (whichever term may apply to the Lender or the Borrower) or the equivalent in any other jurisdiction to which the Lender
or the Borrower may be subject
Liabilities” means all present and future sums,
iabilities and obligations payable or owing by the Borrower (whether actual or contingent, jointly or severally or otherwise howsoever);
“Loan” means the indebtedness of the Borrower to the Lender referred to in Sub-clause 2.1 of this Agreement;
“Qualifying Subordinated Loan” means a qualifying subordinated loan on terms approved by the
and signed by the parties thereto;
“Senior Liabilities” means all Liabilities except the Subordinated Liabilities a
nd the Excluded Liabilities;
“Subordinated Liabilities” means all Liabilities to the Lender in respect of the Loan made or deemed to be made hereunder and all interest payable thereon, where applicable
The Borrower hereby acknowledges its indebtedness to the Lender in] the sum of [ ] as an unsecured
oan [to be drawn down in cash] [drawn down in cash] upon and subject to the terms and conditions of this Agreement. The terms for repayment of the Loan are:
[Detail terms for repayment]:
Until repayment of the Loan in full
the Borrower will pay to the Lender interest on the Loan, such interest to be calculated and to be payable as hereinafter provided.
[Enter details of interest calculations and manner and time of payments.]
Payments of interest at a rate not exceeding the rate provided for in
Sub-clause 3.2 above
may be made without prior notice to or prior written consent of the
, except that no such payment may be made without the prior written approval of the
where, immediately after the payment, the Borrower’s Financial Resources would be less than or equal to the Financial Resources Requirements.
REPAYMENT OF THE LOAN
Subject to the provisions of
Clause 7 of
the Loan shall be repayable upon the expiry of
months’ written notice given by the Lender to the Borrower
such notice shall cease to have effect if the winding up of the Borrower commences before the date on which such notice expires.
Subject to the provisions of
of this Agreement
the Borrower may make an early repayment of the whole or any part of the Loan
the Borrower must give to the Lender not less than
Business Days’ prior notice of its intention to make such repayment, specifying the amount thereof and the date on which it is to be made (such notice to be ineffective if the winding up of the Borrower commences before the date on which the notice expires); and
the Borrower shall simultaneously pay all interest accrued to the date of repayment.
EVENT OF DEFAULT
Subject to Clause 7
if, in respect of the Loan, default is made for a period of
days or more in the payment of any principal due; or
days or more in
the payment of any interest due;
the Lender may enforce the payment by undertaking the procedures required to institute proceedings for the Insolvency of the Borrower after giving seven
Business Days' prior written notice to the
of its intention to do so.
If an order is made or an effective resolution is passed for the Insolvency of the Borrower, the Loan shall forthwith become repayable.
No remedy against the Borrower other than as specifically provided by this Clause 6 shall be available to the Lender
whether for the recovery of amounts owing under this Agreement or in respect of any breach by the Borrower of any of its obligations under this Agreement.
g the provisions of
4, 5 and 6
hereof, the rights of the Lender in respect of the Subordinated Liabilities are subordinated in all respects to the Senior Liabilities
payment of any amount (whether principal, interest or otherwise and whether by way of repayment or prepayment) of the Subordinated Liabilities is conditional upon:
rior to the Insolvency of the Lender or the Borrower) the Borrower being in compliance with its Financial Resources Requirements prevailing at the time of payment by the Borrower, and accordingly
no such payment which would otherwise fall due for payment shall be payable
except to the extent that the Borrower could make such payment and still be in compliance with such Financial Resources Requirements immediately thereafter;
fter the Insolvency of the Lender or the Borrower) the Borrower being “solvent” at the time of, and immediately after, the payment by the Borrower and accordingly
no such amount which would otherwise fall due for payment shall be payable
except to the extent that the Borrower could make such payment and still be “solvent
, in either case:
For the purposes of Sub-clause 7.1.2 above, the Borrower shall be “solvent” if it is able to pay its debts (other than the Subordinated Liabilities) in full
bligations which are not payable or capable of being established or determined in the Insolvency of the Borrower (for the avoidance of doubt, other than contingent obligations, which shall be treated as if matured in the full amount); and
the Excluded Liabilities
Interest (where payable) will continue to accrue at the rate specified
pursuant to Clause 3
on any amount which does not become payable under this Clause 7.
Subject to t
he provisions of Sub-clauses 7.5, 7.6 and 7.7
below, if the Lender shall receive from the Borrower payment of any sum in respect of the Subordinated Liabilities
when any of the terms and conditions referred to in Sub-clause 7.1 above is not
where there has been a
breach of Sub-clause 6.3,
the payment of such sum shall be void for all purposes.
Any sum referred to in Sub-clause 7.5 above shall remain the property of the Borrower and shall be received by the Lender
to return it to the Borrower.
Any sum so returned shall then be treated for the purposes of the Borrower's obligations hereunder as if it had not been paid by the Borrower
and its original payment shall be deemed not to have discharged any of the obligations of the Borrower hereunder.
A request to the Lender for return of any sum referred to in Sub-clause 7.5
shall be in writing and shall be made by or on behalf of the Borrower
or, as the case may be, its Insolvency Officer.
REPRESENTATIONS AND UNDERTAKINGS OF THE BORROWER
From and after the date hereof
the Borrower will not:
provide security for the repayment of all or any part of the Subordinated Liabilities;
redeem, purchase or otherwise acquire any of the Subordinated Liabilities;
repay or procure the repayment of any of the Subordinated Liabilities otherwise than in accordance w
ith the terms of this Agreement;
take or omit to take any action whereby the subordination of the Subordinated Liabilities or any part thereof to the Senior Liabilities might be terminated, impaired or adversely affected;
arrange or permit any contract of suretyship (or similar agreement) relating to its liabilities under this Agreement to be
, and other than as disclosed in writing, the Borrower represents that it has not done so before the date of this Agreement.
REPRESENTATIONS AND UNDERTAKINGS OF THE LENDER
From and after the date of this Agreement, the Lender shall not:
assign, transfer, dispose of or encumber the whole or any part of the Subordinated Liabilities or purport to do so in favour of any person;
purport to retain or set off at any time any amount payable by it to the Borrower against any amount of the Subordinated Liabilities
except to the extent that payment of such amount of the Subordinated Liabilities would be permitted at such time by this Agreement, and any amount set off or retained in breach of this Clause shall remain the property of the Borrower
and the Lender shall hold on trust for the Borrower and immediately pay an amount equal to any such retention or set
off to the Borrower
and such retention or set
off shall be deemed not to have occurred;
attempt to obtain or procure repayment of any of the Subordinated Liabilities
otherwise than in accordance with the terms of this Agreement;
take or omit to take any action whereby the subordination of the Subordinated Liabilities or any part of them to the Senior Liabilities might be terminated, impaired or adversely affected; or
exercise any right of subrogation which may arise or take or enforce any security, guarantee or indemnity from any person for all or any part of the Subordinated Liabilities, and the Lender shall, upon obtaining or enforcing any security, guarantee or indemnity
notwithstanding this undertaking, hold the same (and any proceeds thereof) on trust for the Borrower, and
other than as disclosed in writing, the Lender represents that it has not done so before the date of this Agreement.
The Lender and the Borrower agree to do such further acts as may be required from time to time
whether or not required by the terms of this Agreement
in order to ensure that the Loan remains a Qualifying Subordinated Loan.
AMALGAMATION AND RECONSTRUCTION
This Agreement shall remain binding on the Lender and the Borrower
notwithstanding any amalgamation that may be effected by the Lender and/or the Borrower with any other person
and notwithstanding any reconstruction by the Lender and/or the Borrower involving the formation of, and transfer of all or any of their assets to, a new person
and the benefit and all rights conferred upon the Lender and/or Borrower may be assigned to and enforced by any such person
as if such person had been named herein instead of the Lender and/or Borrower, as appropriate.
Neither the Borrower nor the Lender shall assign or transfer any of its rights and/or obligatio
of this Agreement without the written consent of the other.
All notices required or permitted hereunder shall be in writing and shall be deemed effectively given: (a) upon personal delivery to the party to be notified, (b) when sent by confirmed electronic mail (c) five days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent to the
at the address as set forth on the signature page hereof and to
at the address set forth on Exhibit A attached hereto or at such other address or electronic mail address as the
by 10 days’ advance written notice to the other parties hereto.
The invalidity, illegality or unenforceability of any provision of this Agreement shall in no way affect the validity, legality or enforceability of any other provision.
SUCCESSORS AND ASSIGNS
This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, subject to the limitations set forth herein.
This Agreement may be executed in two or more counterparts, each one of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
This Agreement, the exhibits and schedules hereto, the Related Agreements and the other documents delivered pursuant hereto constitute the full and entire understanding and agreement between the parties with regard to the subjects hereof
and no party shall be liable for or bound to any other in any manner by any oral or written representations, warranties, covenants and agreements except as specifically set forth herein and therein.
18.1 This Agreement shall be construed and enforced in accordance with the laws of the [State/Province] of [State/PROVINCE].
IN WITNESS WHEREOF, each party to this Agreement has caused it to be executed at [place of execution] on the date indicated above.
Authorized Signature Authorized Signature
Print Name and Title Print Name and Title