[{"data":1,"prerenderedAt":534},["ShallowReactive",2],{"document-subordination-agreement-private-companies-D425":3},{"document":4,"label":24,"preview":11,"thumb":25,"description":5,"descriptionCustom":6,"apiDescription":5,"pages":8,"extension":10,"parents":26,"breadcrumb":30,"related":38,"customDescModule":180,"customdescription":6,"mdFm":181,"mdProseHtml":533},{"description":5,"descriptionCustom":6,"label":7,"pages":8,"size":9,"extension":10,"preview":11,"thumb":12,"svgFrame":13,"seoMetadata":14,"parents":15,"keywords":23},"SUBORDINATION AGREEMENT This Subordination Agreement (the \"Agreement\") is effective [DATE], BETWEEN: [FIRST PARTY NAME] (the \"Lender\"), a company organized and existing under the laws of the [State/Province] of [STATE/PROVINCE], with its head office located at: [YOUR COMPLETE ADDRESS] AND: [SHAREHOLDER NAME] (the \"Shareholder\"), an individual residing at: [COMPLETE ADDRESS] AND: [NAME] (the \"Borrower\"), a company organized and existing under the laws of the [State/Province] of [STATE/PROVINCE], with its head office located at: [COMPLETE ADDRESS] WHEREAS [YOUR COMPANY NAME] (\"the Lender\") has agreed to lend to [NAME] (\"the Borrower\") the aggregate principal amount of [AMOUNT] and, in its sole discretion, may lend to the Borrower an additional amount not to exceed [AMOUNT] (collectively the \"Indebtedness\") on the terms and conditions contained in that certain memorandum of loan agreement and that certain grid promissory note each dated as of [DATE] (collectively, the \"Loan Agreements\"); AND WHEREAS it is a condition of the Loan Agreements that repayment of the Indebtedness be secured by a mortgage, charge, hypothecation, pledge and assignment of the property, assets and undertaking of the Borrower (\"the [YOUR COMPANY NAME] Security\") on the terms and conditions of that certain general security agreement by the Borrower in favor of the Lender dated as [DATE]; AND WHEREAS the Borrower is also indebted to [SHAREHOLDER NAME] (\"the shareholder\"), the shareholder of [YOUR COMPANY NAME], and as security therefore has heretofore granted a security interest to and in favor of the Shareholder (the \"Shareholder Security\") in the property, assets and undertaking of the Borrower pursuant to a general security agreement dated [DATE]; AND WHEREAS it is a condition precedent to the advance of any monies pursuant to the Loan Agreements that the Shareholder be subordinated to [YOUR COMPANY NAME] on the terms and conditions contained herein; NOW THEREFORE this agreement witnesses that in consideration of the premises herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. The [YOUR COMPANY NAME] Security shall at all times rank in priority to the Shareholder Security and Shareholder Security is and shall be subject and subordinated to and shall rank subsequent to the [YOUR COMPANY NAME] Security in all respects. 2. The subordination of the Shareholder Security to the [YOUR COMPANY NAME] Security provided for herein shall apply in all events and circumstances regardless of: (a) the date of creation, granting, execution, attachment, registration or perfection of any of the [YOUR COMPANY NAME] Security, or the Shareholder Security; (b) the date of any advance or advances made to the borrower by either the Lender or the Shareholder; (c) the date of default by the Borrower under either the [YOUR COMPANY NAME] Security, or the Shareholder Security or the dates of crystallization of any floating charges constituted by any of the [YOUR COMPANY NAME] Security, or the Shareholder Security; (d) Any priority granted by any principle of law or any statute in [STATE/PROVINCE]; or (e) the giving of or failure to give notice to the Borrower or any other person. 3",null,"Subordination Agreement Private 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Equipment","/template/subordination-and-cession-of-priority-leased-equipment-D411","https://templates.business-in-a-box.com/imgs/250px/411.png",{"label":76,"url":77,"thumb":78,"extension":10},"Line Of Credit Agreement","/template/line-of-credit-agreement-D14003","https://templates.business-in-a-box.com/imgs/250px/14003.png",{"label":80,"url":81,"thumb":82,"extension":10},"Revolving Credit Agreement","/template/revolving-credit-agreement-D14051","https://templates.business-in-a-box.com/imgs/250px/14051.png",{"label":84,"url":85,"thumb":86,"extension":10},"Shareholder Loan Agreement","/template/shareholder-loan-agreement-D13239","https://templates.business-in-a-box.com/imgs/250px/13239.png",{"description":88,"descriptionCustom":6,"label":89,"pages":90,"size":91,"extension":10,"preview":92,"thumb":93,"svgFrame":94,"seoMetadata":95,"parents":97,"keywords":96,"url":105},"PERSONAL GUARANTEE This Personal Guarantee (the \"Agreement\") is effective [DATE], BETWEEN: [FIRST PARTY NAME] (the \"Guarantor\"), an individual with his main address located at: [YOUR COMPLETE ADDRESS] AND: [YOUR COMPANY NAME] (the \"Second Party\"), a company organized and existing under the laws of the [State/Province] of [STATE/PROVINCE], with its head office located at: [YOUR COMPLETE ADDRESS] I, [NAME OF GUARANTOR], residing at [COMPLETE ADDRESS], hereby personally and solidarity guarantee all of the obligations of [YOUR COMPANY NAME] and agree to be bound solidarity with [YOUR COMPANY NAME] for the prompt performance of [YOUR COMPANY NAME]'s obligations under that certain [SPECIFY] Agreement dated [DATE] (the \"Agreement\") between [YOUR COMPANY NAME] and [COMPANY NAME], including without limitation the payment of all goods, wares and merchandise as [YOUR COMPANY NAME] may from time to time select and purchase on credit from [COMPANY NAME], and hereby expressly renounce to the benefits of division and discussion. Furthermore, I agree that waive may extend the time for payment of any amounts owing to it by waive and/or may waive any default by waive without it in any way lessening or limiting my liability hereunder. Notwithstanding the foregoing, my guarantee hereunder to pay any and all amounts owing by [YOUR COMPANY NAME] to [COMPANY NAME] shall be limited to the sum of [AMOUNT] OR [%] of such outstanding amount.","Personal Guarantee","2",513,"https://templates.business-in-a-box.com/imgs/1000px/personal-guarantee-D405.png","https://templates.business-in-a-box.com/imgs/250px/405.png","https://templates.business-in-a-box.com/svgs/docviewerWebApp1.html?v6#405.xml",{"title":96,"description":6},"personal guarantee",[98,100,102],{"label":17,"url":99},"finance-accounting",{"label":20,"url":101},"business-loan",{"label":103,"url":104},"Guaranties & Collateral","guaranties-collateral","/template/personal-guarantee-D405",{"description":107,"descriptionCustom":6,"label":108,"pages":109,"size":91,"extension":10,"preview":110,"thumb":111,"svgFrame":112,"seoMetadata":113,"parents":115,"keywords":119,"url":120},"SERVICE AGREEMENT This SERVICE AGREEMENT (\"Agreement\") is effective [DATE], BETWEEN: [COMPANY NAME] (the \"Contractor\"), a company organized and existing under the laws of [STATE/PROVINCE], with its head office located at: [COMPLETE ADDRESS] AND: [COMPANY NAME] (the \"Customer\"), a company organized and existing under the laws of [STATE/PROVINCE], with its head office located at: [COMPLETE ADDRESS] (The Contractor and the Customer shall be individually referred to as a \"Party\" and collectively referred to as the \"Parties\", as the context may require). WHEREAS A. Contractor has experience and expertise in [DESCRIBE EXPERIENCE AND SERVICE]. B. Customer desires to have Contractor provide services for them. C. Contractor desires to provide services to Customer on the terms and conditions set forth herein (the \"Services\"). NOW THEREFORE, in consideration of the above recitals, the representations, warranties, and agreements contained in this Agreement and for other good and valuable consideration, the receipt and adequacy of which are now acknowledged, the Parties agree as follows: SERVICES PROVIDED Beginning on upon agreement to this contract, [CONTRACTOR] will provide to [CUSTOMER] the following service (collectively, the /Services\"): Description of the project: [DESCRIBE THE SERVICE REQUIRED]. SCOPE OF WORK Contractor agrees to provide Services pursuant to the Scope of Work set forth in Exhibit A attached hereto (the \"Scope of Work\"). TERM Unless both parties mutually agree on an extension, this contract will automatically terminate on [SPECIFY]. PERFORMANCE The parties agree to do everything possible to ensure that the terms of this Agreement take effect. PAYMENT FOR SERVICES In exchange for the Services rendered, a payment of [SPECIFY] will be made to the Contractor upon completion of the scheduled Services described in this Contract. If an invoice is not paid on the due date, interest will be added to the current balance. These amounts shall be payable, and the Customer shall pay all overdue amounts at the lesser of [SPECIFY] per cent per annum or the maximum percentage permitted by applicable law. Or Customer will pay Contractor as follows: [SPECIFY]. DELIVERY OF SERVICES The Contractor will exercise due diligence in the provision of services. However, the Customer acknowledges that the indicated delivery times and other payment milestones listed in Scope of Work are estimates and do not constitute final delivery dates. SECURITY The Contractor must make reasonable security arrangement to protect Material from unauthorized access, collection, use, alteration or disposal. OWNERSHIP RIGHT The Customer shall hold the copyright for the agreed version of the Services as delivered, and the Customer's copyright notice may be displayed in the final version. All works, ideas, discoveries, inventions, patents, products or other information that may be protected by copyright (collectively, the \"Work Product\" developed in whole or in part by the Contractor in connection with the Services, shall be the exclusive property of the Customer. Upon request, the Contractor shall execute all documents necessary to confirm or perfect the exclusive ownership of the Customer's \"Work Product\". The Contractor retains exclusive rights to pre-existing materials used in the Customer's projects. The Customer shall not have the right to reuse, resell or otherwise transfer material belonging to the contractor or third parties. The Contractor reserves the right to use the finished public product as an example of a product. RETURN OF PROPERTY Upon the expiry or termination of this Agreement, the Contractor will return to the Customer any property, documentation, records or Confidential Information which is the property of the Customer. COMPENSATION For all services rendered by the Contractor under this Agreement, the Customer shall indemnify the Contractor. In the event that the Customer fails to make any of the payments mentioned, the Contractor shall have the right, but shall not be obliged, to exercise any of the following remedies: ","Service Agreement","6","https://templates.business-in-a-box.com/imgs/1000px/service-agreement-D12711.png","https://templates.business-in-a-box.com/imgs/250px/12711.png","https://templates.business-in-a-box.com/svgs/docviewerWebApp1.html?v6#12711.xml",{"title":114,"description":6},"service agreement",[116,118],{"label":33,"url":117},"business-legal-agreements",{"label":33,"url":117},"loan agreement","/template/loan-agreement-D12711",{"description":122,"descriptionCustom":6,"label":123,"pages":8,"size":124,"extension":10,"preview":125,"thumb":126,"svgFrame":127,"seoMetadata":128,"parents":129,"keywords":135,"url":136},"PROMISSORY NOTE This Promissory Note (the \"Note\") is made and effective the [DATE], BETWEEN: [LENDER NAME] (the \"Lender\"), an individual with his main address located at OR a corporation organized and existing under the laws of the [State/Province] of [STATE/PROVINCE], with its head office located at: [COMPLETE ADDRESS] AND: [YOUR COMPANY NAME] (the \"Borrower\"), a corporation organized and existing under the laws of the [State/Province] of [STATE/PROVINCE], with its head office located at: [YOUR COMPLETE ADDRESS] TERMS FOR VALUE RECEIVED, the Borrower promises to pay to the order of Lender, at its principal office located at [ADDRESS], or at such other place that is designated in writing by the holder hereof, the principal sum of [AMOUNT], together with all charges and interest herein provided, payable at the rate and in the manner hereinafter set forth: Borrower shall make monthly payments of principal and interest at the rate of [%] per annum based upon an amortization of [NUMBER] months. Monthly payments shall be due on or before the first day of each month with the first payment being due on or before [DATE]. If not sooner paid, all amounts due under this Note, including principal, interest and other charges shall be due and payable in full on or before the first day of [MONTH], [YEAR] (the \"Maturity Date\"). Time is of the essence of the payment obligations hereunder and each monthly payment shall be due and payable on or before the first day of each month. This Note is and will be secured by a certain first priority security interest in all of the tangible and intangible property of the Borrower, to be recorded in all applicable governmental offices. The parties shall execute a separate security agreement, in form and substance acceptable to the Lender in all respects. Borrower agrees to execute any such security agreements presented by the Lender or other documents required by the Lender in order to perfect its security interest in the above described property. Said Security Agreement and any other instruments and documents executed in connection with or given as security for this Note shall hereinafter be referred to collectively as the \"Loan Documents.\" All of the terms, covenants, Conditions, representations and warranties contained in the Loan Documents are hereby made part of this Note to the same extent and with the same force and effect as if fully set forth herein. If all or any portion of any payment due hereunder is not received by the Lender within [NUMBER] calendar days after the date when such payment is due, Borrower shall pay a late charge equal to [%] of such payment, such late charge to be immediately due and payable without demand by Lender. Borrower shall have the right to prepay all (but not a portion) of the indebtedness evidenced by this Note at any time, by paying the Lender an amount equal to the sum of (I) the principal balance then outstanding, (ii) all interest accrued to the date of such prepayment, (iii) all interest calculated through the Maturity Date, and (iv) any late charge or charges then due and owing. If any payment under this Note is not paid in full by the [DAY] of any month during the term hereof or if the entire amount due as represented by this Note is not paid in full on or before the Maturity Date, or should default be made in the performance or observation of any of the terms, covenants, or conditions contained in the Loan Documents, or if any representation or warranty contained in the Loan Documents is breached or is or becomes untrue, this Note shall be in default, and the entire principal amount outstanding hereunder, accrued interest thereon, all late charges, if any, and any and all other charges due hereunder, shall, at Lender's option, immediately become due and payable, without further notice, the giving of such notice being expressly waived by the Borrower","Promissory Note",39,"https://templates.business-in-a-box.com/imgs/1000px/promissory-note-D434.png","https://templates.business-in-a-box.com/imgs/250px/434.png","https://templates.business-in-a-box.com/svgs/docviewerWebApp1.html?v6#434.xml",{"title":6,"description":6},[130,131,132],{"label":17,"url":99},{"label":20,"url":101},{"label":133,"url":134},"Promissory Notes","promisory-note","promissory note","/template/promissory-note-D434",{"description":138,"descriptionCustom":6,"label":139,"pages":140,"size":141,"extension":10,"preview":142,"thumb":143,"svgFrame":144,"seoMetadata":145,"parents":146,"keywords":149,"url":150},"SECURITY AGREEMENT This Security Agreement (the \"Agreement\") is made and effective [DATE], BETWEEN: [SECURED PARTY NAME] (the \" Secured Party\"), a corporation organized and existing under the laws of the [State/Province] of [STATE/PROVINCE], with its head office located at: [COMPLETE ADDRESS] AND: [YOUR COMPANY NAME] (the \"Debtor\"), a corporation organized and existing under the laws of the [State/Province] of [STATE/PROVINCE], with its head office located at: [YOUR COMPLETE ADDRESS] For value received, the undersigned Debtor, promises to pay to the order of [name], together with any other holder of this note (\"Secured Party\"), [amount], with interest at the rate of [%] per annum. Payment shall be made in successive equal monthly installments of [amount]. Each such Installment is payable on the [day] of each month, commencing on [date]. Recitals WHEREAS, the Secured Party has extended to the Debtor a certain loan as evidenced by a certain promissory note, in the original principal amount equal to [amount] dated on even date herewith (the \"Note\"); and WHEREAS, the Debtor wishes to grant a first priority security interest in and to all of the Debtor's tangible and intangible personal property pursuant to the terms hereof; NOW, THEREFORE, for and in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and intending to be legally bound hereby, the parties hereto covenant and agree as follows: DEFINITIONS The following terms shall have the meanings herein specified unless the context otherwise requires. Such definitions shall be equally applicable to the singular and plural forms of the terms defined: \"Contracts\" shall mean all contracts between the Debtor and one or more additional parties. \"Contract Rights\" shall mean all rights of the Debtor (including, without limitation, all rights to payment) under each Contract. \"Copyrights\" shall mean any [country] copyright to which the Debtor now or hereafter has title, as well as any application for a [country] copyright hereafter made by the Debtor. \"Equipment\" shall mean any \"equipment,\" as such term is defined in the [law or code] as in effect on the date hereof in the State of [state/province], now or hereafter owned by Debtor and, in any event, shall include, but shall not be limited to, all machinery, equipment, furnishings, fixtures and vehicles now or hereafter owned by the Debtor and any and all additions, substitutions and replacements of, any of the foregoing, wherever located, together with all attachments, components, parts, equipment and accessories installed thereon or affixed thereto. \"General Intangibles\" shall have the meaning assigned that term under the [LAW OR CODE] as in effect on the date hereof in the State of [state/province]. \"Goods\" shall have the meaning assigned that term under the [LAW OR CODE] as in effect on the date hereof in the State of [state/province]. \"Inventory\" shall mean all raw materials, workinprocess, and finished inventory of the Debtor of every type or description and all documents of title covering such inventory, and shall specifically include all \"inventory\" as such term is defined in the [law or code] as in effect on the date hereof in the State of [state/province], now or hereafter owned by the Debtor. \"Marks\" shall mean any trademarks and service marks now held or hereafter acquired by the Debtor, which are registered in the [country] Patent and Trademark Office, as well as any unregistered marks used by the Debtor in the [COUNTRY] and trade dress, including logos and/or designs, in connection with which any of these registered or unregistered marks are used. \"Obligations\" shall mean: (i) all indebtedness, obligations and liabilities (including, without limitation, guarantees and other contingent liabilities) of the Debtor to the Secured Party, including but not limited to the Note; (ii) any and all sums advanced by the Secured Party in order to preserve the Collateral or preserve its security interest in the Collateral; and (iii) in the event of any proceeding for the collection or enforcement of any indebtedness, obligations or liabilities of the Debtor referred to in clause (i), after an Event of Default shall have occurred and be continuing, the reasonable expenses of retaking, holding, preparing for sale or lease, selling or otherwise disposing or realizing on the Collateral, or of any exercise by the Collateral Agent of its rights hereunder, together with reasonable attorneys' fees and court costs. \"Patents\" shall mean any [country] patent to which the Debtor now or hereafter has title, as well as any application for a [country] patent now or hereafter made by Debtor. \"Proceeds\" shall have the meaning assigned that term under the [law or code] as in effect in the State of [state/province] on the date hereof or under other relevant law and, in any event, shall include, but not be limited to, (i) any and all proceeds of any insurance, indemnity, warranty or guaranty payable to the Secured Party or the Debtor from time to time with respect to any of the Collateral, (ii) any and all payments (in any form whatsoever) made or due and payable to the Debtor from time to time in connection with any requisition, confiscation, condemnation, seizure or forfeiture of all or any part of the Collateral by any governmental authority and (iii) any and all other amounts from time to time paid or payable under or in connection with any of the Collateral. \"Receivables\" shall mean any \"account\" as such term is defined in the [law or code] as in effect on the date hereof in the State of [STATE/PROVINCE], now or hereafter owned by Debtor and, in any event, shall include, but shall not be limited to, all of the Debtor's rights to payment for goods sold or leased or services performed by the Debtor, whether now in existence or arising from time to time hereafter, including, without limitation, rights evidenced by an account, note, contract, security agreement, or other evidence of indebtedness or security, together with (i) all security pledged, assigned, hypothecated or granted to or held by the Debtor to secure the foregoing; (ii) all of the Debtor's right, title and interest in and to any goods, the sale of which gave rise thereto; (iii) all guarantees, endorsements and indemnifications on, or of, any of the foregoing; (iv) all powers of attorney for the execution of any evidence of indebtedness or security or other writing in connection therewith; (v) all books, records, ledger cards and invoices relating thereto; (vi) all evidences of the filing of financing statements and other statements and the registration of other instruments in connection therewith and amendments thereto, notices to other creditors or secured parties, and certificates from filing or other registration officers; (vii) all credit information, reports and memoranda relating thereto and (viii) all other writings related in any way to the foregoing. GRANT OF SECURITY INTEREST The Debtor does hereby grant to the Secured Party a continuing security interest of first priority in all of the right, title and interest of the Debtor in, to and under all of the following property whether now existing or hereafter created or arising: ","Security Agreement","10",96,"https://templates.business-in-a-box.com/imgs/1000px/security-agreement-D915.png","https://templates.business-in-a-box.com/imgs/250px/915.png","https://templates.business-in-a-box.com/svgs/docviewerWebApp1.html?v6#915.xml",{"title":6,"description":6},[147,148],{"label":33,"url":117},{"label":33,"url":117},"security agreement","/template/security-agreement-D915",{"description":152,"descriptionCustom":6,"label":153,"pages":8,"size":91,"extension":10,"preview":154,"thumb":155,"svgFrame":156,"seoMetadata":157,"parents":159,"keywords":158,"url":164},"NON-DISCLOSURE AGREEMENT (NDA) This Non-Disclosure Agreement (the \"Agreement\") is made and effective [DATE], BETWEEN: [YOUR COMPANY NAME] (the \"Disclosing Party\"), a corporation organized and existing under the laws of the [State/Province] of [STATE/PROVINCE], with its head office located at: [YOUR COMPLETE ADDRESS] AND: [RECEIVING PARTY NAME] (the \"Receiving Party\"), an individual with his main address located at OR a corporation organized and existing under the laws of the [State/Province] of [STATE/PROVINCE], with its head office located at: [COMPLETE ADDRESS] WHEREAS, Receiving Party has been or will be engaged in the performance of work on [DESCRIBE]; and in connection therewith will be given access to certain confidential and proprietary information; and WHEREAS, Receiving Party and Disclosing Party wish to evidence by this Agreement the manner in which said confidential and proprietary material will be treated. NOW, THEREFORE, it is agreed as follows: NON-DISCLOSURE OF CONFIDENTIAL INFORMATION Both Parties understand and agree that each Party may have access to the confidential information of the other party. For the purposes of this Agreement, \"Confidential Information\" means proprietary and confidential information about the Disclosing Party's (or it's suppliers') business or activities. Such information includes all business, financial, technical, and other information marked or designated by such Party as \"confidential\" or \"proprietary.\" Confidential Information also includes information which, by the nature of the circumstances surrounding the disclosure, ought in good faith to be treated as confidential. For the purposes of this Agreement, Confidential Information does not include: Information that is currently in the public domain or that enters the public domain after the signing of this Agreement. Information a Party lawfully receives from a third Party without restriction on disclosure and without breach of a non-disclosure obligation. Information that the Receiving Party knew prior to receiving any Confidential Information from the Disclosing Party. Information that the Receiving Party independently develops without reliance on any Confidential Information from the Disclosing Party. Each Party agrees that it will not disclose to any third Party or use any Confidential Information disclosed to it by the other Party except when expressly permitted in writing by the other Party. Each Party also agrees that it will take all reasonable measures to maintain the confidentiality of all Confidential Information of the other Party in its possession or control. TERM The term of this Agreement is [number] of [years/months] from the date of execution by both Parties. TITLE The Receiving Party agrees that all Confidential Information furnished by the Disclosing Party shall remain the sole property of the Disclosing Party. DISCLAIMER","Non Disclosure Agreement Nda","https://templates.business-in-a-box.com/imgs/1000px/non-disclosure-agreement-nda-D12692.png","https://templates.business-in-a-box.com/imgs/250px/12692.png","https://templates.business-in-a-box.com/svgs/docviewerWebApp1.html?v6#12692.xml",{"title":158,"description":6},"non disclosure agreement nda",[160,161],{"label":33,"url":117},{"label":162,"url":163},"Confidentiality Agreements","confidentiality-agreement","/template/non-disclosure-agreement-nda-D12692",{"description":166,"descriptionCustom":6,"label":167,"pages":168,"size":91,"extension":10,"preview":169,"thumb":170,"svgFrame":171,"seoMetadata":172,"parents":174,"keywords":173,"url":179},"SHAREHOLDERS AGREEMENT This Shareholders Agreement (the \"Agreement\") is made and effective [DATE], BETWEEN: [YOUR COMPANY NAME] (the \"Company\"), a company organized and existing under the laws of the [State/Province] of [STATE/PROVINCE], with its head office located at: [YOUR COMPLETE ADDRESS] AND: [FIRST SHAREHOLDER NAME] (the \"First Shareholder\"), an individual with his main address located at OR a company organized and existing under the laws of the [State/Province] of [STATE/PROVINCE], with its head office located at: [COMPLETE ADDRESS] AND: [SECOND SHAREHOLDER NAME] (the \"Second Shareholder\"), an individual with his main address located at OR a company organized and existing under the laws of the [State/Province] of [STATE/PROVINCE], with its head office located at: [COMPLETE ADDRESS] AND: [THIRD SHAREHOLDER NAME] (the \"Third Shareholder\"), an individual with his main address located at OR a company organized and existing under the laws of the [State/Province] of [STATE/PROVINCE], with its head office located at: [COMPLETE ADDRESS] WITNESSETH: WHEREAS, the present distribution of shares of the Company is as follows: Name Number of Shares WHEREAS, in order to insure the harmonious and successful management and control of the Company, and to provide for an orderly and fair disposition of shares of common stock of the Company now or hereafter owned by any Shareholder; NOW, THEREFORE, in consideration of the mutual promises of the parties hereto, and intending to be legally bound, the parties hereby agree as follows: Definitions and organisation of the company \"Offering Shareholder\" means any Shareholder, or his personal representatives, heirs, administrators, and executors, as the case may be, who pursuant to this Agreement must or does offer all or any of his Shares to the Company or the Continuing Shareholders. \"Continuing Shareholders\" means all Shareholders other than an Offering Shareholder. \"Shares\" means shares of Common Stock of the Company now or hereafter owned by any Shareholder. \"Buyer\" means the Company or those Continuing Shareholders who purchase an Offering Shareholder's Shares pursuant to this Agreement. \"Management Shareholder\" means First Shareholder, Second Shareholder and Third Shareholder. ORGANISATION OF THE COMPANY The affairs of the Company will be managed by a board of [NUMBER] directors unless changed by a unanimous Directors' Resolution. The present directors of the Company are [DIRECTORS' NAMES]. It is agreed that [SHAREHOLDERS' NAMES] shall each be entitled to elect one director to the board of directors of the Company so long as each is a Shareholder. Two (2) directors shall constitute a quorum for the transaction of any business at any meeting of the board of directors. At all meetings of the board of directors, every motion to be carried must receive a majority of the votes cast, subject to the provisions of subparagraphs 2.4 and 2.5. Unless otherwise agreed, board meetings will be held at the head office of the Company. In the event that a nominee to the Board of one of the Shareholders shall fail to vote and act as a director to carry out the provisions of this agreement, then the shareholders agree to exercise their right as shareholders of the Company and in accordance with the Articles of the Company to remove such nominee from the Board and to elect in the place or stead thereof such individual who will use his/her best efforts to carry out the provisions of this agreement but only in the event that the Shareholder whose nominee has been removed fails to appoint a successor within a period of fourteen days from the date such nominee has been removed. The election, appointment and determination of officers and the auditors and advisors of the Company, the defining of their duties and functions and the salaries and remuneration to be paid to them will be a function of the board of directors. Until changed by the board of directors, the Officers of the Company and their annual salaries shall be: Office Held: Director: [NAME] [SALARY] Secretary: [NAME] [SALARY] All direct out-of-pocket expenses will be reimbursed provided these falls within guidelines set out by the Board of Directors from time to time. Until otherwise agreed, each officer of the Company will commit to spending his/her full time on the affairs of the Company. Until changed by the board of directors, the auditors and advisors of the Company shall be: Auditor: Legal Advisors: There shall be kept, in such bank or banks (including trust companies) as may be determined by the board of directors, bank accounts of the Company in which shall be deposited all monies received by the Company in the course of carrying on business from time to time. All payments on account of the Company shall be made by cheques drawn on the bank account and all cheques, drafts or other instruments drawn and made for the purposes of the business of the Company shall be executed by such directors, officers or employees as may from time to time be authorized so to do by the board of directors. Subject to paragraph 2.6, all decisions relating to the management and control of the business of the Company shall be determined by the board of directors of the Company, provided always that the following matters shall be determined by a Special Directors' Resolution: any capital expenditures greater than xxxx; any lease commitments greater than xxxx; the acquisition of any business interests by the Company; the elections of officers of the Company; the payment of any cash dividends or stock dividends to Shareholders of the Company; the issuance of any debt obligations of the Company; the disposal of the whole or any part of the business, undertaking, or assets of the Company outside the normal course of business of the Company the transfer of any shares of the Company; changes or variations in the objects or powers of the Company; the liquidation or winding up of the Company; the approval of any contracts or transactions outside the normal course of business; the execution of any contract involving a consideration greater than xxxx within the normal course of business; the lending of money by the Company; the guarantee by the Company of the debts or obligations of any other person, firm or body corporate; any non-budgeted expenditures greater than xxxx; business plan and/or budgets. The following decisions shall be determined by a Unanimous Directors' Resolution: alterations, variations or changes to the authorized or issued capital of the Company; the salaries and bonuses of officers and directors of the Company; the issue, redemption or purchase of any Shares; and changes in the number of directors of the Company The Shareholders may pledge any of their Shares as security for any borrowings by them provided the pledgee executes an agreement, in writing, providing that the pledgee shall be subject to all of the terms of this Agreement. The board of directors shall meet at least four times during each fiscal year of the Company. Any director can call a meeting provided 10 days notice is given. Notice may be waived. During the first year from the date of this agreement, the board of directors shall meet on a monthly basis. Directors may elect to attend a board meeting by telephone conference call. Each Shareholder shall, for so long as s/he is the owner of shares of the Company devote such of his/her business, time and energy as may be reasonably required to carry on the business of the Company and the Shareholder shall use his/her best efforts, skill and abilities to promote the interests of the Company. Each Shareholder agrees that he/she will not engage, without the consent of the other Shareholders, in a business which is directly competitive to that of the Company. Purchase for Investment","Shareholders Agreement","16","https://templates.business-in-a-box.com/imgs/1000px/shareholders-agreement-D1016.png","https://templates.business-in-a-box.com/imgs/250px/1016.png","https://templates.business-in-a-box.com/svgs/docviewerWebApp1.html?v6#1016.xml",{"title":173,"description":6},"shareholders agreement",[175,176],{"label":33,"url":117},{"label":177,"url":178},"Incorporation Agreements","incorporation-agreement","/template/shareholders-agreement-D1016",false,{"seo":182,"reviewer":193,"legal_disclaimer":197,"quick_facts":198,"at_a_glance":200,"personas":204,"variants":229,"glossary":257,"clauses":290,"how_to_fill":341,"common_mistakes":382,"faqs":407,"industries":435,"comparisons":460,"diy_vs_lawyer":475,"jurisdictions":488,"related_template_ids_curated":509,"schema":521,"classification":522},{"meta_title":183,"meta_description":184,"primary_keyword":23,"secondary_keywords":185},"Subordination Agreement Template (Private Companies) | BIB","Free subordination agreement template for private companies. Establishes lender priority, protects senior creditors, and satisfies lender requirements.",[186,187,188,189,190,191,192],"subordination agreement template word","subordination agreement free download","creditor subordination agreement","debt subordination agreement","intercreditor subordination agreement","subordination agreement small business","lender subordination agreement template",{"name":194,"credential":195,"reviewed_date":196},"Bruno Goulet","CEO, Business in a Box","2026-05-02",true,{"difficulty":199,"legal_review_recommended":197,"signature_required":197,"notarization_required":180},"advanced",{"what_it_is":201,"when_you_need_it":202,"whats_inside":203},"A Subordination Agreement for Private Companies is a legally binding contract in which one creditor (the subordinated or junior lender) agrees to rank its debt claim behind another creditor (the senior lender) in the event of the borrower's default, insolvency, or liquidation. This free Word download lets you establish a clear priority waterfall between competing creditors, satisfying bank and institutional lender requirements before funding is released.\n","Use it when a private company takes on new senior financing — bank loans, SBA loans, or asset-backed credit facilities — and an existing creditor (such as a founder, related party, or mezzanine lender) must formally step back in repayment priority. It is also required when refinancing existing debt where a subordinated obligation carries over.\n","Identification of all parties and their respective debt instruments, the subordination and standstill provisions governing repayment order, payment blockage and enforcement restrictions, representations and warranties, default cross-reference to the senior credit agreement, and governing law and signature blocks for all parties including the borrower.\n",[205,209,213,217,221,225],{"title":206,"use_case":207,"icon_asset_id":208},"Private company founders","Subordinating shareholder loans to satisfy a bank's senior lending requirements","persona-startup-founder",{"title":210,"use_case":211,"icon_asset_id":212},"Commercial lenders and banks","Requiring junior creditors to formally subordinate before releasing a term loan","persona-lender",{"title":214,"use_case":215,"icon_asset_id":216},"CFOs and finance directors","Structuring the company's debt stack to close a refinancing or growth facility","persona-cfo",{"title":218,"use_case":219,"icon_asset_id":220},"Private equity sponsors","Documenting the priority relationship between senior debt and mezzanine or seller notes","persona-investor",{"title":222,"use_case":223,"icon_asset_id":224},"Business acquisition buyers","Subordinating seller-financed notes to a senior acquisition lender's security interest","persona-small-business-owner",{"title":226,"use_case":227,"icon_asset_id":228},"Corporate lawyers and paralegals","Preparing closing documentation for leveraged transactions involving multiple creditors","persona-legal-counsel",[230,234,238,242,246,250,253],{"situation":231,"recommended_template":232,"slug":233},"Subordinating a founder or shareholder loan to a bank credit facility","Subordination Agreement (Shareholder Loan)","shareholder-loan-agreement-D13239",{"situation":235,"recommended_template":236,"slug":237},"Multi-lender transaction requiring full intercreditor terms","Intercreditor Agreement","non-profit-partnership-agreement-D14023",{"situation":239,"recommended_template":240,"slug":241},"Real estate mortgage lien priority between two lenders","Subordination Agreement (Real Estate)","real-estate-operating-agreement-D14043",{"situation":243,"recommended_template":244,"slug":245},"SBA loan requiring subordination of all other debt","Subordination Agreement (SBA Compliant)","subordination-agreement-D423",{"situation":247,"recommended_template":248,"slug":249},"Seller note subordinated to acquisition financing","Seller Note Subordination Agreement","note-purchase-agreement-D433",{"situation":251,"recommended_template":7,"slug":252},"General corporate debt subordination with payment blockage only","subordination-agreement-private-companies-D425",{"situation":254,"recommended_template":255,"slug":256},"Subordinating equipment financing to a revolving credit facility","Subordination and Standstill Agreement","secured-lumpsum-promissory-note-agreement-D13041",[258,261,264,267,270,273,276,278,281,284,287],{"term":259,"definition":260},"Senior Creditor","The lender whose debt claim has first priority of repayment in a default or insolvency scenario.",{"term":262,"definition":263},"Junior (Subordinated) Creditor","The lender or debt holder whose repayment claim ranks behind the senior creditor under the terms of the subordination agreement.",{"term":265,"definition":266},"Subordination","A contractual arrangement in which one creditor agrees that its right to repayment is junior to — and paid only after — another creditor's claim.",{"term":268,"definition":269},"Standstill Provision","A clause preventing the junior creditor from taking enforcement action (such as demanding repayment or seizing collateral) for a defined period while the senior debt is outstanding.",{"term":271,"definition":272},"Payment Blockage","A right granted to the senior creditor to suspend all payments on the subordinated debt upon the occurrence of a defined default event.",{"term":274,"definition":275},"Priority Waterfall","The contractually or legally defined order in which creditors are repaid from a borrower's assets — senior secured, then senior unsecured, then subordinated, then equity.",{"term":236,"definition":277},"A broader multi-party agreement that governs the rights, remedies, and ranking of multiple creditors — subordination agreements are often a component within one.",{"term":279,"definition":280},"Insolvency","The state in which a company cannot meet its debt obligations as they fall due or its liabilities exceed its assets, triggering priority rules for creditor repayment.",{"term":282,"definition":283},"Cross-Default","A clause stating that a default under one debt agreement automatically constitutes a default under another, activating the priority provisions of the subordination agreement.",{"term":285,"definition":286},"Permitted Payments","Specific categories of payment on the junior debt that the senior creditor expressly allows to continue — such as scheduled interest — even while the subordination is in effect.",{"term":288,"definition":289},"Enforcement Action","Any step by a creditor to recover a debt — including demand letters, litigation, acceleration of the loan, or seizure of collateral.",[291,296,301,306,311,316,321,326,331,336],{"name":292,"plain_english":293,"sample_language":294,"common_mistake":295},"Recitals and party identification","Names all three parties — the senior lender, the subordinated lender, and the borrower — and describes the debt instruments each creditor holds, including principal amounts and loan dates.","This Subordination Agreement ('Agreement') is entered into as of [DATE] by and among [SENIOR LENDER NAME] ('Senior Lender'), [JUNIOR LENDER NAME] ('Junior Lender'), and [BORROWER LEGAL NAME] ('Borrower'). Senior Lender holds a term loan in the principal amount of $[AMOUNT] dated [DATE]; Junior Lender holds a promissory note in the principal amount of $[AMOUNT] dated [DATE].","Describing the debt instruments without referencing the underlying loan agreement by date and title — if the senior debt is later amended, ambiguity arises about whether the subordination still applies.",{"name":297,"plain_english":298,"sample_language":299,"common_mistake":300},"Subordination of junior debt","The core operative clause: the junior creditor formally agrees that its entire claim — principal, interest, fees, and any other amounts — is subordinated to and ranks behind the senior debt in all respects.","Junior Lender hereby subordinates all of its right, title, and interest in and to the Junior Debt, including all principal, interest, fees, and other amounts payable thereunder, to the prior payment in full of all Senior Debt, in cash, in whatever form and whenever arising.","Limiting subordination to 'principal only' and inadvertently allowing the junior creditor to collect interest ahead of the senior creditor in an insolvency — courts have divided on this in the absence of explicit language.",{"name":302,"plain_english":303,"sample_language":304,"common_mistake":305},"Payment blockage and permitted payments","Defines the circumstances in which all junior debt payments must stop, and carves out any scheduled payments the senior lender expressly permits to continue before a blockage event occurs.","Upon the occurrence and continuance of a Senior Default, Junior Lender shall not accept or receive any payment on account of the Junior Debt without the prior written consent of Senior Lender. Notwithstanding the foregoing, Borrower may make scheduled interest payments on the Junior Debt in amounts not exceeding $[AMOUNT] per [period] provided no Senior Default has occurred.","Omitting a cap or time limit on the payment blockage period. An indefinite blockage with no cure or expiry gives the senior lender disproportionate leverage and may be challenged as unconscionable in some jurisdictions.",{"name":307,"plain_english":308,"sample_language":309,"common_mistake":310},"Standstill and enforcement restrictions","Prevents the junior creditor from accelerating repayment, initiating litigation, filing for insolvency against the borrower, or taking any enforcement step for a defined standstill period after a default.","Junior Lender shall not, without the prior written consent of Senior Lender, accelerate the Junior Debt, commence or join any insolvency proceeding against Borrower, or take any enforcement action with respect to any collateral securing the Junior Debt for a period of [180] days following written notice of a default under the Junior Debt.","Setting a standstill period without specifying what happens when it expires — an open-ended standstill effectively strips the junior creditor of all enforcement rights and may be unenforceable.",{"name":312,"plain_english":313,"sample_language":314,"common_mistake":315},"Turnover and trust obligation","Requires the junior creditor to hold in trust and immediately pay over to the senior lender any payment it receives in violation of the agreement — including distributions received in an insolvency proceeding.","If Junior Lender receives any payment on the Junior Debt in violation of this Agreement, Junior Lender shall hold such payment in trust for the benefit of Senior Lender and promptly pay it over to Senior Lender in the same form received, with any necessary endorsements.","Failing to include the trust obligation. Without it, a junior creditor who receives a payment by mistake has no clear obligation to return it, and the senior lender's recourse is limited to a restitution claim.",{"name":317,"plain_english":318,"sample_language":319,"common_mistake":320},"Senior lender's right to amend senior debt","Allows the senior lender to modify, increase, or restructure the senior debt without the junior creditor's consent, and confirms that the subordination continues to apply to the amended debt.","Junior Lender consents to any increase, extension, renewal, modification, or amendment of the Senior Debt without further notice to or consent of Junior Lender, and the subordination obligations of Junior Lender shall apply to the Senior Debt as so modified.","No cap on the senior debt amount to which the subordination applies — allowing the senior lender to increase the senior facility by any amount post-signing, diluting the junior lender's position without limit.",{"name":322,"plain_english":323,"sample_language":324,"common_mistake":325},"Representations and warranties","Each party confirms that it has authority to enter the agreement, the debt described is accurately characterized, no other agreements conflict with the subordination, and no default currently exists.","Each party represents and warrants that: (a) it has full power and authority to execute this Agreement; (b) the debt instruments described herein are in full force and effect; (c) this Agreement does not conflict with any other agreement to which it is a party; and (d) no event of default currently exists under either the Senior Debt or the Junior Debt.","Omitting a representation that no undisclosed liens or competing subordination agreements exist — a borrower with multiple creditor arrangements can inadvertently create conflicting priority claims.",{"name":327,"plain_english":328,"sample_language":329,"common_mistake":330},"Borrower acknowledgment and consent","The borrower formally acknowledges the priority arrangement, agrees not to make prohibited payments to the junior lender, and confirms its obligations under the senior debt remain unchanged.","Borrower acknowledges and agrees to the terms of this Agreement, shall not make any payment on the Junior Debt in violation hereof, and confirms that nothing herein modifies or waives any obligation of Borrower under the Senior Credit Agreement.","Treating the borrower as a passive acknowledgment party rather than a full signatory with binding obligations — without the borrower's covenant, there is no contractual bar on the borrower making prohibited payments.",{"name":332,"plain_english":333,"sample_language":334,"common_mistake":335},"Term and termination","States that the agreement remains in effect until the senior debt is paid in full, and specifies whether any residual obligations (such as the turnover obligation) survive after termination.","This Agreement shall remain in full force and effect until the Senior Debt has been paid in full in cash and all commitments of the Senior Lender have been terminated. The turnover obligations in Section [X] shall survive termination of this Agreement.","No survival clause for the turnover obligation — a junior creditor who receives a payment after the agreement 'terminates' but before the senior debt is fully discharged could argue no obligation to turn it over.",{"name":337,"plain_english":338,"sample_language":339,"common_mistake":340},"Governing law and dispute resolution","Specifies which jurisdiction's law governs the agreement and how disputes are resolved — typically the governing law of the senior credit agreement.","This Agreement shall be governed by and construed in accordance with the laws of the State of [STATE], without regard to its conflict-of-laws principles. Any dispute arising hereunder shall be resolved exclusively in the state or federal courts located in [CITY, STATE].","Choosing a governing law different from the senior credit agreement's governing law — conflicting jurisdictional interpretations of the same default event can paralyze enforcement.",[342,347,352,357,362,367,372,377],{"step":343,"title":344,"description":345,"tip":346},1,"Identify and name all three parties correctly","Enter the full registered legal name of the senior lender, the junior lender, and the borrower. Confirm each party's entity type and jurisdiction of formation. All three must be signatories.","Pull entity names directly from the relevant loan agreements rather than letterhead — trade names and legal names often differ and the mismatch can create enforceability gaps.",{"step":348,"title":349,"description":350,"tip":351},2,"Describe each debt instrument precisely","For both the senior debt and the junior debt, include the instrument name, principal amount, date of execution, and a short-form reference to the governing loan agreement. This anchors the subordination to specific obligations.","If the senior facility is a revolving credit line, state the maximum commitment amount rather than the drawn balance — the subordination should cover the full available credit, not just what has been drawn at signing.",{"step":353,"title":354,"description":355,"tip":356},3,"Define the scope of subordinated obligations","Confirm that the subordination covers all amounts owed on the junior debt — principal, interest, default interest, fees, costs, and any indemnity claims — not just the face amount of the note.","Expressly include 'all amounts now or hereafter owing' to prevent disputes if the junior debt is later amended or additional advances are made.",{"step":358,"title":359,"description":360,"tip":361},4,"Draft the payment blockage and permitted payments provisions","List the trigger events that activate the payment blockage, the cap or time limit on the blockage period, and any permitted payments (such as scheduled interest) that the senior lender agrees may continue before a blockage event.","Cap the blockage period at 180 days — this is the market standard in US and Canadian senior lending and reduces the risk of the clause being challenged as unduly oppressive.",{"step":363,"title":364,"description":365,"tip":366},5,"Set the standstill period and post-standstill rights","Enter the standstill duration (typically 90–180 days) and describe exactly what enforcement rights the junior creditor retains after the standstill expires, including whether those rights are subject to any additional conditions.","Include a statement that the standstill period resets only once per calendar year — without this, a senior lender can repeatedly extend the standstill by declaring new defaults.",{"step":368,"title":369,"description":370,"tip":371},6,"Include the turnover and trust obligation","Draft the clause requiring the junior creditor to hold prohibited payments in trust and deliver them to the senior lender immediately upon receipt, in the same form received.","Reference the specific account or wire instructions to which turnover payments should be delivered — ambiguity here can slow enforcement by days during a liquidity crisis.",{"step":373,"title":374,"description":375,"tip":376},7,"Confirm the senior lender's amendment rights and any cap on the senior debt","Grant the senior lender the right to amend, increase, or extend the senior debt without re-consent from the junior lender, but negotiate and insert a cap on the maximum principal amount covered by the subordination.","A senior debt cap of 110–120% of the current facility is market standard — it protects the junior creditor from unlimited dilution while giving the senior lender reasonable flexibility.",{"step":378,"title":379,"description":380,"tip":381},8,"Execute with all three parties before any funds are released","Obtain wet or electronic signatures from authorized representatives of the senior lender, junior lender, and borrower. The agreement must be fully executed before the senior lender disburses funds.","Confirm each signatory's authority — a corporate borrower requires a board resolution or officer certificate authorizing the signing, and many senior lenders require this as a closing deliverable.",[383,387,391,395,399,403],{"mistake":384,"why_it_matters":385,"fix":386},"Subordinating only principal and excluding interest and fees","In an insolvency, accrued interest and default interest can exceed the original principal. A subordination limited to principal allows the junior creditor to collect ahead of the senior lender on all other amounts — defeating the purpose of the agreement.","Draft the subordination clause to cover 'all amounts now or hereafter owing' on the junior debt, expressly including interest, default interest, fees, costs, and indemnity claims.",{"mistake":388,"why_it_matters":389,"fix":390},"No standstill period or an indefinite one","Without a standstill, the junior creditor can immediately accelerate and enforce on default, triggering a race to assets that damages both lenders. An indefinite standstill with no expiry strips the junior creditor of all meaningful rights and may be unenforceable.","Set a defined standstill period of 90–180 days with clear provisions on what happens when it expires and how many times it may be reset.",{"mistake":392,"why_it_matters":393,"fix":394},"Omitting the borrower as a full signatory","If the borrower does not sign and covenant against making prohibited payments, there is no direct contractual bar on the borrower paying the junior creditor — the senior lender's only remedy would be against the junior creditor after the fact.","Include the borrower as a full signatory with an express covenant not to make any payment on the junior debt in violation of the agreement.",{"mistake":396,"why_it_matters":397,"fix":398},"Using a governing law different from the senior credit agreement","Conflicting governing law between the subordination agreement and the senior credit agreement means different courts may interpret the same default event differently, creating a gap in the senior lender's enforcement chain.","Align the governing law clause with the governing law of the senior credit agreement — confirm this with the senior lender's counsel before signing.",{"mistake":400,"why_it_matters":401,"fix":402},"No cap on the senior debt amount covered by the subordination","Without a cap, the senior lender can increase the facility or add new tranches post-signing, and the entire enlarged amount ranks ahead of the junior creditor — diluting the junior position without limit.","Negotiate a defined maximum principal cap (typically 110–120% of the original facility) above which new senior advances are not automatically covered by the subordination.",{"mistake":404,"why_it_matters":405,"fix":406},"Failing to update the agreement when the senior debt is amended","If the senior credit agreement is materially amended — extended maturity, new covenants, increased rate — and the subordination agreement is not updated, the enforceability of the subordination over the amended debt is uncertain in several jurisdictions.","Include a clause granting the senior lender amendment rights and obligating the parties to execute an updated subordination if the senior debt is refinanced into a materially different instrument.",[408,411,414,417,420,423,426,429,432],{"question":409,"answer":410},"What is a subordination agreement for private companies?","A subordination agreement for private companies is a legally binding contract in which a junior creditor agrees that its debt claim against a borrower ranks behind the senior creditor's claim in all repayment priority. In practice, this means the senior lender is repaid in full before the junior creditor receives anything in a default, insolvency, or liquidation scenario. Banks and institutional lenders typically require one as a condition of extending credit when the borrower already has existing debt obligations.\n",{"question":412,"answer":413},"Who are the parties to a subordination agreement?","A subordination agreement typically involves three parties: the senior lender (whose claim has first priority), the junior or subordinated lender (whose claim ranks behind), and the borrower (who owes obligations to both). All three must sign the agreement. Without the borrower's signature and covenant against prohibited payments, the senior lender cannot directly prevent the borrower from repaying the junior creditor in violation of the agreement.\n",{"question":415,"answer":416},"Why does a bank require a subordination agreement?","Banks require subordination agreements to protect their security interest and repayment priority against other creditors the borrower may owe money to — including founders, shareholders, related-party lenders, or mezzanine debt providers. Without it, a bank's ability to recover in an insolvency is diminished if junior creditors can compete for the same assets. Most SBA loan programs and conventional commercial lending packages require all existing debt to be formally subordinated before funds are disbursed.\n",{"question":418,"answer":419},"What is the difference between a subordination agreement and an intercreditor agreement?","A subordination agreement is a focused document establishing the priority and payment restrictions between two creditors and a single borrower. An intercreditor agreement is broader — it typically governs the rights, remedies, enforcement procedures, and priorities among multiple creditors in a complex capital structure, often addressing collateral sharing, voting on restructurings, and waterfall distributions in detail. Subordination agreements are common in small and mid-market private company transactions; intercreditor agreements are standard in leveraged buyouts and syndicated lending.\n",{"question":421,"answer":422},"Does a subordination agreement affect the junior creditor's security interest?","Subordination agreements govern payment priority but do not automatically release or extinguish the junior creditor's security interest. The junior creditor typically retains its lien but agrees not to enforce it during the standstill period and to step back in the insolvency waterfall. If the senior lender requires the junior creditor to release its security interest entirely, a separate release or postponement of security instrument is needed in addition to the subordination agreement.\n",{"question":424,"answer":425},"What is a standstill provision and why does it matter?","A standstill provision prohibits the junior creditor from taking any enforcement action — accelerating the loan, filing suit, or seizing collateral — for a defined period after a default occurs, typically 90 to 180 days. It matters because without a standstill, a junior creditor can race to enforce and deplete assets before the senior lender can act, leaving the senior creditor with less collateral to recover against. The standstill period gives the senior lender time to manage the default without a competing enforcement action.\n",{"question":427,"answer":428},"Is a subordination agreement enforceable in insolvency proceedings?","In most jurisdictions — including the US, Canada, the UK, and the EU — contractual subordination agreements are generally enforceable in insolvency proceedings, provided they are properly executed and cover the relevant debt with sufficient specificity. US courts have consistently upheld subordination agreements in bankruptcy under Section 510(a) of the Bankruptcy Code. However, the precise enforceability depends on how the agreement is drafted, whether all parties had proper authority at signing, and jurisdiction-specific insolvency rules. Legal review is strongly recommended for any high-value transaction.\n",{"question":430,"answer":431},"Can a shareholder loan be subordinated to a bank loan?","Yes — shareholder loan subordination is one of the most common uses of this agreement type in private company finance. Banks routinely require founder and shareholder loans to be subordinated before extending a credit facility, because shareholder loans that rank alongside bank debt reduce the bank's effective recovery rate in a default. A subordination agreement converts the shareholder loan from a competing claim to a fully subordinated obligation, satisfying the bank's structural requirements without requiring the shareholder to repay the loan.\n",{"question":433,"answer":434},"Do I need a lawyer to draft a subordination agreement?","For straightforward subordinations — a single shareholder loan behind a standard bank facility — a high-quality template with careful customization is typically adequate for many small business transactions. Engage a lawyer when the subordinated amount is material (generally above $250,000), the transaction involves multiple creditors or complex security interests, the borrower is in financial distress, or the governing jurisdiction has specific insolvency rules that affect enforceability. A 1–2 hour lawyer review for a standard subordination typically costs $400–$800 and is worthwhile for any transaction where the senior lender's own counsel is involved.\n",[436,440,444,448,452,456],{"industry":437,"icon_asset_id":438,"specifics":439},"Technology / SaaS","industry-saas","Founder and early investor shareholder loans are routinely subordinated to venture debt or bank growth facilities as a condition of the credit approval.",{"industry":441,"icon_asset_id":442,"specifics":443},"Manufacturing","industry-manufacturing","Equipment financing lenders frequently require subordination of existing working capital or related-party debt before approving asset-backed term loans.",{"industry":445,"icon_asset_id":446,"specifics":447},"Retail and Franchising","industry-retail","Franchise acquisition financing commonly involves a seller note that must be subordinated to the senior acquisition lender as a condition of closing.",{"industry":449,"icon_asset_id":450,"specifics":451},"Construction","industry-construction","Construction lenders require subordination of all mezzanine, equity bridge, and related-party advances before disbursing draws on a project facility.",{"industry":453,"icon_asset_id":454,"specifics":455},"Professional Services","industry-professional-services","Management buyouts in professional services firms often involve seller financing that must be formally subordinated to the bank or private credit facility funding the acquisition.",{"industry":457,"icon_asset_id":458,"specifics":459},"Healthcare","industry-healthtech","Healthcare practice acquisitions financed with a mix of SBA loans and seller notes require subordination of the seller note to satisfy SBA program requirements.",[461,464,468,472],{"vs":236,"vs_template_id":462,"summary":463},"D{INTERCREDITOR_AGREEMENT_ID}","An intercreditor agreement is a comprehensive multi-party document governing the full relationship between two or more creditors — covering collateral sharing, enforcement coordination, voting rights on restructurings, and waterfall distributions. A subordination agreement is narrower, focusing on payment priority and enforcement restrictions. Use a subordination agreement for two-creditor private company transactions; use an intercreditor agreement when three or more creditors hold different tranches of a complex capital structure.",{"vs":465,"vs_template_id":466,"summary":467},"Postponement of Claim Agreement","D{POSTPONEMENT_CLAIM_ID}","A postponement of claim agreement is used predominantly in Canadian lending and achieves a similar outcome to a subordination agreement — the junior creditor postpones its right to repayment until the senior debt is paid. The key difference is that a postponement is often broader in scope and is the instrument most Canadian banks require by name. The US equivalent term is subordination agreement; both documents serve the same structural purpose.",{"vs":469,"vs_template_id":470,"summary":471},"Loan Agreement","loan-agreement-D12711","A loan agreement establishes the terms of a single debt obligation between a lender and borrower — amount, interest rate, repayment schedule, and covenants. A subordination agreement does not create a new debt; it governs the priority relationship between two existing debts. Both are needed in a multi-creditor transaction: the loan agreement creates the obligation, and the subordination agreement orders its repayment priority.",{"vs":89,"vs_template_id":473,"summary":474},"personal-guarantee-D423","A personal guarantee makes an individual personally liable for a company's debt if the company defaults. A subordination agreement governs the order in which creditors are repaid from the company's own assets — it does not introduce personal liability. In many private company financings, a senior lender requires both: a personal guarantee from the principals and a subordination agreement from any junior creditors.",{"use_template":476,"template_plus_review":480,"custom_drafted":484},{"best_for":477,"cost":478,"time":479},"Standard two-creditor subordinations — e.g., a shareholder loan subordinated to a single bank facility — where the subordinated amount is under $250,000","Free","30–60 minutes",{"best_for":481,"cost":482,"time":483},"Subordinations above $250,000, SBA-required subordinations, or transactions where the senior lender's own counsel is involved","$400–$800","1–3 days",{"best_for":485,"cost":486,"time":487},"Complex multi-creditor structures, leveraged acquisitions, distressed borrowers, or cross-border transactions with conflicting insolvency laws","$2,000–$8,000+","1–3 weeks",[489,494,499,504],{"code":490,"name":491,"flag_asset_id":492,"note":493},"us","United States","flag-us","Contractual subordination agreements are expressly enforceable in US bankruptcy proceedings under Section 510(a) of the Bankruptcy Code. SBA Standard Operating Procedures require all existing debt to be subordinated before an SBA loan is approved. State law governs formation and general contract enforcement; most senior lenders specify New York or Delaware law as the governing jurisdiction. Non-compete analogies aside, courts apply a four-corners analysis to the subordination scope — vague or incomplete coverage of the junior debt has been held insufficient in several circuit court decisions.",{"code":495,"name":496,"flag_asset_id":497,"note":498},"ca","Canada","flag-ca","Canadian banks typically use a document called a Postponement and Subordination of Claim Agreement rather than a US-style subordination agreement — the two instruments are functionally equivalent but differ in terminology and prescribed form. Provincial insolvency law (the Companies' Creditors Arrangement Act and the Bankruptcy and Insolvency Act) generally respects contractual subordination arrangements. Quebec-based transactions must be documented in French or bilingual form for provincially-regulated parties, and Quebec civil law may interpret enforcement provisions differently from common-law provinces.",{"code":500,"name":501,"flag_asset_id":502,"note":503},"uk","United Kingdom","flag-uk","Subordination agreements are enforceable under English law and are commonly used in UK leveraged finance and mid-market lending. The Insolvency Act 1986 and the Companies Act 2006 both recognize contractual priority arrangements. English courts apply a strict interpretation of the subordination scope — the agreement must clearly cover all claims, including contingent and future claims, to be effective in administration or liquidation. Financial Conduct Authority regulated lenders may have additional requirements for documentation form and execution.",{"code":505,"name":506,"flag_asset_id":507,"note":508},"eu","European Union","flag-eu","Subordination is recognized across EU member states, but enforceability in insolvency proceedings varies significantly by country. Germany, France, and the Netherlands each have distinct insolvency regimes with specific rules on how contractual subordination interacts with statutory creditor rankings. The EU Restructuring Directive (2019/1023) introduced harmonized restructuring frameworks, but implementation at member-state level is uneven as of 2026. GDPR considerations apply if the agreement requires cross-border sharing of personal data of individual guarantors or signatories.",[510,470,511,512,513,514,515,516,517,518,519,520],"personal-guarantee-D405","promissory-note-D434","security-agreement-D915","non-disclosure-agreement-nda-D12692","shareholders-agreement-D1016","term-sheet-D473","independent-contractor-agreement-D160","employment-agreement_at-will-employee-D541","letter-of-intent_acquisition-of-business-D5197","asset-purchase-agreement-D928","business-plan-canvas-(one-page)-D12527",{"emit_how_to":197,"emit_defined_term":197},{"primary_folder":117,"secondary_folder":523,"document_type":524,"industry":525,"business_stage":526,"tags":527,"confidence":532},"loans-and-promissory-notes","agreement","general","all-stages",[528,529,530,531],"subordination","debt-priority","creditor-agreement","loan-structure",0.95,"\u003Ch2>What is a Subordination Agreement for Private Companies?\u003C/h2>\n\u003Cp>A \u003Cstrong>Subordination Agreement for Private Companies\u003C/strong> is a legally binding contract in which a junior (subordinated) creditor formally agrees that its right to repayment from a borrower ranks behind the claims of a senior creditor in the event of default, insolvency, or liquidation. The document creates a contractually enforceable priority waterfall: the senior lender is paid in full before the junior creditor receives a single dollar of principal, interest, or fees. It also typically includes a standstill provision — preventing the junior creditor from taking enforcement action for a defined period — and a payment blockage right that allows the senior lender to suspend junior debt payments on the occurrence of a default. All three parties (senior lender, junior lender, and borrower) must sign for the agreement to be fully effective.\u003C/p>\n\u003Ch2>Why You Need This Document\u003C/h2>\n\u003Cp>Without a signed subordination agreement in place, a bank or institutional lender will typically decline to disburse funds — or will accelerate an existing facility — if it discovers that competing creditor claims are not formally ranked behind it. The practical consequences are severe: a pending acquisition stalls at closing, a growth credit line is withdrawn, or an SBA loan application is rejected on the final compliance checklist. Beyond satisfying lender requirements, a properly drafted subordination agreement protects the senior lender's recovery position in a default scenario by eliminating the race-to-assets dynamic that arises when multiple creditors can enforce simultaneously. For private company founders who have made shareholder loans to their own businesses, it also preserves the loan as a legitimate debt instrument rather than forcing repayment or equity conversion — a material structural benefit during a fundraise or refinancing.\u003C/p>\n",1778696350915]