# Subordination Agreement
**This Subordination Agreement** (the "Agreement") is made and entered into as of the ___ day of __________, 20__, by and between:
**[Lender Name]**
Address: [Lender Address]
(hereinafter referred to as the "Lender")
AND
**[Subordinated Lender Name]**
Address: [Subordinated Lender Address]
(hereinafter referred to as the "Subordinated Lender")
**RECITALS**
WHEREAS, the Lender has made a loan to [Borrower's Name], a [State] [Type of Entity] with its principal place of business at [Borrower's Address] (hereinafter referred to as the "Borrower"), which is evidenced by a [Type of Promissory Note or Loan Agreement] dated [Loan Date] in the principal amount of $[Loan Amount] (the "Loan");
WHEREAS, the Subordinated Lender has also made a loan to the Borrower, which is evidenced by a [Type of Promissory Note or Loan Agreement] dated [Subordinated Loan Date] in the principal amount of $[Subordinated Loan Amount] (the "Subordinated Loan");
WHEREAS, the parties desire to establish the priority of the Lender's Loan over the Subordinated Lender's claims against the Borrower in the event of liquidation, bankruptcy, or insolvency of the Borrower;
**NOW, THEREFORE**, in consideration of the mutual covenants and promises contained herein, the parties agree as follows:
## 1. **Subordination of the Subordinated Loan**
1.1 The Subordinated Lender hereby agrees that the payment of the principal and interest due under the Subordinated Loan shall be subordinated and junior in right of payment to the Lender’s Loan.
1.2 No payment shall be made by the Borrower on account of the Subordinated Loan unless and until all amounts due under the Lender’s Loan have been paid in full.
## 2. **Acknowledgment of Priority**
2.1 The Subordinated Lender acknowledges that the Lender has a first priority lien on all the Collateral (as defined in the Loan Agreement) of the Borrower.
2.2 The Subordinated Lender agrees that it shall not take any action to enforce its rights against the Borrower while any amounts are outstanding under the Lender's Loan.
## 3. **Events of Default**
3.1 In the event of any default under the Lender's Loan, the Subordinated Lender shall refrain from asserting any rights or claims to the Borrower's assets or income until the Lender has been paid in full.
## 4. **Notices**
4.1 Any notices required or permitted under this Agreement shall be in writing and shall be deemed duly given when delivered personally, sent by overnight courier, or sent by registered or certified mail, return receipt requested, to the addresses set forth above or to such other address as either party may designate by notice.
## 5. **Governing Law**
5.1 This Agreement shall be governed by and construed in accordance with the laws of the State of [State].
## 6. **Entire Agreement**
6.1 This Agreement constitutes the entire agreement between the parties hereto and supersedes any and all prior agreements, representations, and understandings, whether written or oral, with respect to the subject matter hereof.
## 7. **Amendments**
7.1 This Agreement may be amended only by a written instrument executed by both parties.
## 8. **Counterparts**
8.1 This Agreement may be executed in counterparts, each of which shall be deemed an original and all of which together shall constitute one agreement.
**IN WITNESS WHEREOF**, the parties have executed this Subordination Agreement as of the date first above written.
**LENDER:**
_____________________________________
[Signature]
[Printed Name]
[Title]
[Date]
**SUBORDINATED LENDER:**
_____________________________________
[Signature]
[Printed Name]
[Title]
[Date]
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*This document is a template and should be customized to meet the specific needs of the parties involved. It is advisable to seek legal counsel before entering into any legal agreement.*