Document:

Exhibit 10.18

 

SUBORDINATION AGREEMENT

 

This Subordination
Agreement (the “Agreement”) is made as of March 28, 2013, by and between Shannon Zimmerman and Angel Zimmerman (collectively,
“Creditor”), and SILICON VALLEY BANK, a California-chartered bank, with its principal place of business at 3003 Tasman
Drive, Santa Clara, California 95054 (“Bank”).

 

Recitals

 

A.           SAJAN,
INC., a Delaware corporation (“Borrower”), has requested and/or obtained certain loans or other credit accommodations
from Bank to Borrower which are or may be from time to time secured by assets and property of Borrower.

 

B.           Creditor
has extended loans or other credit accommodations to Borrower, and/or may extend loans or other credit accommodations to Borrower
from time to time.

 

C.           In
order to induce Bank to extend credit to Borrower and, at any time or from time to time, at Bank’s option, to make such further
loans, extensions of credit, or other accommodations to or for the account of Borrower, or to purchase or extend credit upon any
instrument or writing in respect of which Borrower may be liable in any capacity, or to grant such renewals or extension of any
such loan, extension of credit, purchase, or other accommodation as Bank may deem advisable, Creditor is willing to subordinate:
(i) all of Borrower’s indebtedness to Creditor (including, without limitation, principal, premium (if any), interest, fees,
charges, expenses, costs, professional fees and expenses, and reimbursement obligations), plus any dividends and/or distributions
or other payments pursuant to call, put, or conversion features in connection with equity securities of Borrower issued to or held
by Creditor, whether presently existing or arising in the future (the “Subordinated Debt”) to all of Borrower’s
indebtedness and obligations to Bank; provided, however, that Subordinated Debt shall not include any salary or bonuses payable
in the ordinary course by Borrower to Creditor; and (ii) all of Creditor’s security interests, if any, to all of Bank’s
security interests in the Borrower’s property.

 

NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:

 

1.          Creditor
subordinates to Bank any security interest or lien that Creditor may have in any property of Borrower. Notwithstanding the respective
dates of attachment or perfection of the security interest of Creditor and the security interest of Bank, the security interest
of Bank in the Collateral (the “Collateral”), as defined in a certain Amended and Restated Loan and Security Agreement
between Borrower and Bank dated as of March 28, 2013, as may be amended from time to time (the “Loan Agreement”), shall
at all times be senior to the security interest of Creditor.

 

2.          All
Subordinated Debt is subordinated in right of payment to all obligations of Borrower to Bank now existing or hereafter arising,
together with all reasonable costs of collecting such obligations (including reasonable attorneys’ fees), including, without
limitation, all interest accruing after the commencement by or against Borrower of any bankruptcy, reorganization or similar proceeding,
and all obligations under the Loan Agreement (the “Senior Debt”).

 

3.          Creditor
will not demand or receive from Borrower (and Borrower will not pay to Creditor) all or any part of the Subordinated Debt, by way
of payment, prepayment, setoff, lawsuit or otherwise, nor will Creditor exercise any remedy with respect to the Collateral, nor
will Creditor accelerate the Subordinated Debt, or commence, or cause to commence, prosecute or participate in any administrative,
legal or equitable action against Borrower, until such time as (i) the Senior Debt is fully paid in cash, (ii) Bank has no commitment
or obligation to lend any further funds to Borrower, and (iii) all financing agreements between Bank and Borrower are terminated.
The foregoing notwithstanding, provided that an Event of Default, as defined in the Loan Agreement, has not occurred and is not
continuing and would not exist immediately after such payment, Creditor shall be entitled to receive each regularly scheduled,
non-accelerated payment of non-default interest as and when due and payable in accordance with the terms of that certain Promissory
Note dated February 23, 2010, as amended by that certain Amendment to Promissory Note dated as of February 22, 2011, as amended
again by that certain Second Amendment to Promissory Note, dated March 26, 2012, and as may be further amended from time to time
as approved by Bank (collectively, the “Note”) in a principal amount of $750,000 issued by Borrower to Creditor as
in effect on the date hereof or as modified with the written consent of the Bank.

 

    	1.

    	 

    

 

4.          Creditor
shall promptly deliver to Bank in the form received (except for endorsement or assignment by Creditor where required by Bank) for
application to the Senior Debt any payment, distribution, security or proceeds received by Creditor with respect to the Subordinated
Debt other than in accordance with this Agreement.

 

5.          In
the event of Borrower’s insolvency, reorganization or any case or proceeding under any bankruptcy or insolvency law or laws
relating to the relief of debtors, these provisions shall remain in full force and effect, and Bank’s claims against Borrower
and the estate of Borrower shall be paid in full before any payment is made to Creditor.

 

6.          Until
the Senior Debt is fully paid in cash and Bank’s arrangements to lend any funds to Borrower have been terminated, Creditor
irrevocably appoints Bank as Creditor’s attorney-in-fact, and grants to Bank a power of attorney with full power of substitution,
in the name of Creditor or in the name of Bank, for the use and benefit of Bank, without notice to Creditor, to perform at Bank’s
option the following acts in any bankruptcy, insolvency or similar proceeding involving Borrower:

 

(i)          To
file the appropriate claim or claims in respect of the Subordinated Debt on behalf of Creditor if Creditor does not do so prior
to 30 days before the expiration of the time to file claims in such proceeding and if Bank elects, in its sole discretion, to file
such claim or claims; and

 

(ii)         To
accept or reject any plan of reorganization or arrangement on behalf of Creditor and to otherwise vote Creditor’s claims
in respect of any Subordinated Debt in any manner that Bank deems appropriate for the enforcement of its rights hereunder.

 

7.          Creditor
shall immediately affix a legend to the instruments evidencing the Subordinated Debt stating that the instruments are subject to
the terms of this Agreement. By the execution of this Agreement, Creditor hereby authorizes Bank to amend any financing statements
filed by Creditor against Borrower as follows: “In accordance with a certain Subordination Agreement by and among the Secured
Party, the Debtor and Silicon Valley Bank, the Secured Party has subordinated any security interest or lien that Secured Party
may have in any property of the Debtor to any security interest or lien that Silicon Valley Bank may have in any property of the
Debtor, notwithstanding the respective dates of attachment or perfection of the security interest of the Secured Party and Silicon
Valley Bank.”

 

8.          No
amendment of the documents evidencing or relating to the Subordinated Debt shall directly or indirectly modify the provisions
of this Agreement in any manner which might terminate or impair the subordination of the Subordinated Debt or the subordination
of the security interest or lien that Creditor may have in any property of Borrower without the written consent of Bank. By way
of example, such instruments shall not be amended to (i) increase the rate of interest with respect to the Subordinated Debt,
or (ii) accelerate the payment of the principal or interest or any other portion of the Subordinated Debt. Bank shall have the
sole and exclusive right to restrict or permit, or approve or disapprove, the sale, transfer or other disposition of Collateral
except in accordance with the terms of the Senior Debt. Upon written notice from Bank to Creditor of Bank's agreement to release
its lien on all or any portion of the Collateral in connection with the sale, transfer or other disposition thereof by Bank (or
by Borrower with consent of Bank), Creditor shall be deemed to have also, automatically and simultaneously, released its lien
on such Collateral, and Creditor shall upon written request by Bank, immediately take such action as shall be necessary or appropriate
to evidence and confirm such release. All proceeds resulting from any such sale, transfer or other disposition shall be applied
first to the Senior Debt until payment in full thereof, with the balance, if any, to the Subordinated Debt, or to any other entitled
party. If Creditor fails to release its lien as required hereunder, Creditor hereby appoints Bank as attorney in fact for Creditor
with full power of substitution to release Creditor's liens as provided hereunder. Such power of attorney being coupled with an
interest shall be irrevocable. 

 

    	2.

    	 

    

 

9.          All
necessary action on the part of the Creditor, its officers, directors, partners, members and shareholders, as applicable, necessary
for the authorization of this Agreement and the performance of all obligations of the Creditor hereunder has been taken. This
Agreement constitutes the legal, valid and binding obligation of Creditor, enforceable against Creditor in accordance with its
terms subject to applicable bankruptcy, insolvency, reorganization, fraudulent transfer or conveyance, equitable subordination,
moratorium, or similar laws affecting the rights of creditors generally. The execution, delivery and performance of and compliance
with this Agreement by Creditor will not (i) result in any material violation or default of any term of any of the Creditor’s
charter, formation or other organizational documents (such as Articles or Certificate of Incorporation, bylaws, partnership agreement,
operating agreement, etc.) or (ii) violate any material applicable law, rule or regulation.

 

10.         If,
at any time after payment in full of the Senior Debt any payments of the Senior Debt must be disgorged by Bank for any reason
(including, without limitation, the bankruptcy of Borrower), this Agreement and the relative rights and priorities set forth herein
shall be reinstated as to all such disgorged payments as though such payments had not been made and Creditor shall immediately
pay over to Bank all payments received with respect to the Subordinated Debt to the extent that such payments would have been
prohibited hereunder. At any time and from time to time, without notice to Creditor, Bank may take such actions with respect to
the Senior Debt as Bank, in its sole discretion, may deem appropriate, including, without limitation, terminating advances to
Borrower, increasing the principal amount, extending the time of payment, increasing applicable interest rates, renewing, compromising
or otherwise amending the terms of any documents affecting the Senior Debt and any collateral securing the Senior Debt, and enforcing
or failing to enforce any rights against Borrower or any other person. No such action or inaction shall impair or otherwise affect
Bank’s rights hereunder. Creditor waives any benefits of California Civil Code Sections 2809, 2810, 2819, 2845, 2847, 2848,
2849, 2850, 2899 and 3433.

 

11.         This
Agreement shall bind any successors or assignees of Creditor and shall benefit any successors or assigns of Bank. This Agreement
shall remain effective until terminated in writing by Bank. This Agreement is solely for the benefit of Creditor and Bank and not
for the benefit of Borrower or any other party. Creditor further agrees that if Borrower is in the process of refinancing any portion
of the Senior Debt with a new lender, and if Bank makes a request of Creditor, Creditor shall agree to enter into a new subordination
agreement with the new lender on substantially the terms and conditions of this Agreement.

 

12.         Creditor
hereby agrees to execute such documents and/or take such further action as Bank may at any time or times reasonably request in
order to carry out the provisions and intent of this Agreement, including, without limitation, ratifications and confirmations
of this Agreement from time to time hereafter, as and when requested by Bank.

 

13.         This
Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall
constitute one instrument.

 

14.         This
Agreement shall be governed by and construed in accordance with the laws of the State of California, without giving effect to conflicts
of laws principles. Creditor and Bank submit to the exclusive jurisdiction of the state and federal courts located in Santa Clara,
California in any action, suit, or proceeding of any kind, against it which arises out of or by reason of this Agreement. CREDITOR
AND BANK WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT
OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN.

 

    	3.

    	 

    

 

WITHOUT INTENDING IN
ANY WAY TO LIMIT THE PARTIES’ AGREEMENT TO WAIVE THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY, if the above waiver of the right
to a trial by jury is not enforceable, the parties hereto agree that any and all disputes or controversies of any nature between
them arising at any time shall be decided by a reference to a private judge, mutually selected by the parties (or, if they cannot
agree, by the Presiding Judge of the Santa Clara County, California Superior Court) appointed in accordance with California Code
of Civil Procedure Section 638 (or pursuant to comparable provisions of federal law if the dispute falls within the exclusive jurisdiction
of the federal courts), sitting without a jury, in Santa Clara County, California; and the parties hereby submit to the jurisdiction
of such court. The reference proceedings shall be conducted pursuant to and in accordance with the provisions of California Code
of Civil Procedure §§ 638 through 645.1, inclusive. The private judge shall have the power, among others, to grant provisional
relief, including without limitation, entering temporary restraining orders, issuing preliminary and permanent injunctions and
appointing receivers. All such proceedings shall be closed to the public and confidential and all records relating thereto shall
be permanently sealed. If during the course of any dispute, a party desires to seek provisional relief, but a judge has not been
appointed at that point pursuant to the judicial reference procedures, then such party may apply to the Santa Clara County, California
Superior Court for such relief. The proceeding before the private judge shall be conducted in the same manner as it would be before
a court under the rules of evidence applicable to judicial proceedings. The parties shall be entitled to discovery which shall
be conducted in the same manner as it would be before a court under the rules of discovery applicable to judicial proceedings.
The private judge shall oversee discovery and may enforce all discovery rules and order applicable to judicial proceedings in the
same manner as a trial court judge. The parties agree that the selected or appointed private judge shall have the power to decide
all issues in the action or proceeding, whether of fact or of law, and shall report a statement of decision thereon pursuant to
the California Code of Civil Procedure § 644(a). Nothing in this paragraph shall limit the right of any party at any time
to exercise self-help remedies, foreclose against collateral, or obtain provisional remedies. The private judge shall also determine
all issues relating to the applicability, interpretation, and enforceability of this paragraph.

 

15.         This
Agreement represents the entire agreement with respect to the subject matter hereof, and supersedes all prior negotiations, agreements
and commitments. Creditor is not relying on any representations by Bank or Borrower in entering into this Agreement, and Creditor
has kept and will continue to keep itself fully apprised of the financial and other condition of Borrower. This Agreement may be
amended only by written instrument signed by Creditor and Bank.

 

16.         In
the event of any legal action to enforce the rights of a party under this Agreement, the party prevailing in such action shall
be entitled, in addition to such other relief as may be granted, all reasonable costs and expenses, including reasonable attorneys’
fees, incurred in such action.

 

17.         This
Agreement replaces and supersedes in its entirety that certain Subordination Agreement, dated as of March 28, 2012, entered into
by and between Creditor and Bank.

 

[Signature page follows.]

 

    	4.

    	 

    

 

IN WITNESS WHEREOF, the undersigned have
executed this Agreement as of the date first above written.

 

	“Creditor”	 	“Bank”
	 	 	 
	/s/ Shannon Zimmerman	 	SILICON VALLEY BANK
	Shannon Zimmerman	 	 	 
	 	 	 	 
	/s/ Angel Zimmerman	 	By:	/s/ Tom Hertzberg
	Angel Zimmerman	 	Title:	Vice President II
	 	 	 	 
	The undersigned approves of the terms of this Agreement.	 	 
	 	 	 	 
	“Borrower”	 	 	 
	 	 	 	 
	SAJAN, INC., a Delaware corporation	 	 	 
	 	 	 	 
	By:	/s/ Lori Bechtel	 	 	 
	Title:	ControllerExhibit 10.19

 

THIRD AMENDMENT TO PROMISSORY NOTE

 

This Third Amendment to Promissory Note
dated and made effective as of March 21, 2013 (the “Amendment”) amends that certain Promissory Note dated February
23, 2010 in the original principal amount of $1,000,000 as amended on February 22, 2011 and again on March 26, 2012 (the “Promissory
Note”), pursuant to which the Borrower is MathStar, Inc. (n/k/a Sajan, Inc.), a Delaware corporation, and the Lenders are
Shannon Zimmerman and Angel Zimmerman.

 

Paragraph 1 of said Promissory Note currently reads as follows:

 

1.           Principal and accrued interest on this Note from and
after February 23, 2011 shall be due and payable on August 23, 2013. Interest hereunder shall be computed on the basis of a year
of three hundred sixty-five (365) days but charged for actual days principal is unpaid.

 

This Third Amendment modifies and restates paragraph 1 of said
Promissory Note in its entirety to read as follows:

 

1.           Principal and accrued interest on this Note from and
after February 23, 2011 shall be due and payable on August 23, 2015. Interest hereunder shall be computed on the basis of a year
of three hundred sixty-five (365) days but charged for actual days principal is unpaid.

 

Effective as of the date set forth above.

 

	BORROWER:	 	LENDERS:
	 	 	 
	Sajan, Inc. (f/k/a Mathstar, Inc.)	 	Shannon Zimmerman
	 	 	 
	By:	 /s/ Michael Rogers	 	/s/ Shannon Zimmerman
	 	 	 
	 	 	Angel Zimmerman
	 	 	 
	 	 	/s/ Angel Zimmerman

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