Subordination Agreement
Borrower: Seer Technologies, Inc.
Creditor: Level 8 Systems, Inc., a New York corporation
Date: December 31, 1998
This Subordination Agreement is executed by the above-named Creditor
("Creditor") in favor of Greyrock Capital, a Division of NationsCredit
Commercial Corporation ("Greyrock"), whose address is 00000 Xxxxxxxx Xxxx.,
Xxxxx 000, Xxx Xxxxxxx, XX 00000, with respect to the above-named Borrower
("Borrower"). In order to induce Greyrock to extend or continue to extend
financing to the Borrower (but without obligation on Greyrock's part to do
so), the Creditor hereby agrees as follows:
1. Subordination of Debt. Creditor hereby subordinates payment by the
Borrower of any and all indebtedness, liabilities, guarantees and other
obligations of the Borrower to Creditor, now existing or hereafter arising
* (collectively, the "Subordinated Debt"), to the payment to Greyrock, in
full in cash, of all indebtedness, liabilities, guarantees and other
obligations of the Borrower to Greyrock, now existing or hereafter arising,
including without limitation any interest accruing after the commencement
of any bankruptcy, arrangement, or reorganization proceeding with respect
to Borrower (whether or not such interest is recoverable from the Borrower
or allowable or provable in any such proceeding) (collectively, the
"Greyrock Debt"). Creditor represents and warrants that the Subordinated
Debt ** the following:
*Under the Promissory Note referred to below and all extensions, renewals
and modifications thereof
**consists of
That certain Promissory Note dated December 31, 1998 in the original
principal amount of $12,000,000, which has a present unpaid principal
balance of $12,000,000.
Creditor agrees not to ask for, demand, xxx for, take or receive all or any
part of the Subordinated Debt nor any security therefor, unless and until
all of the Greyrock Debt has been paid and performed in full, in cash.
Creditor further agrees that upon any distribution of the assets or
readjustment of the indebtedness of the Borrower whether by reason of
liquidation, composition, bankruptcy, arrangement, receivership, assignment
for the benefit of creditors or any other action or proceeding involving
the readjustment of all or any of the Subordinated Debt, or the application
of the assets of the Borrower to the payment or liquidation thereof,
Greyrock shall be entitled to receive payment in full in cash of all of the
Greyrock Debt prior to the payment of all or any part of the Subordinated
Debt, and in order to enable Greyrock to enforce its rights hereunder in
any such action or proceeding, Greyrock is hereby irrevocably authorized
and empowered in its sole discretion (but without any obligation on its
part) to make and present for and on behalf of Creditor such proofs of
claim against the Borrower on account of the Subordinated Debt as Greyrock
may deem expedient or proper and to vote such proofs of claim in any such
proceeding and to receive and collect any and all dividends or other
payments or disbursements made thereon in whatever form the same may be
paid or issued and to apply same on account of the Greyrock Debt. Creditor
further agrees to execute and deliver to Greyrock such assignments or other
instruments as may be required by Greyrock in order to enable Greyrock to
enforce any and all such claims and to collect any and all dividends or
other payments or disbursements which may be made at any time on account of
all and any of the Subordinated Debt. Creditor shall endorse all notes and
other written evidence of the Subordinated Debt with a statement that they
are subordinated to the Greyrock Debt pursuant to the terms of this
agreement, in such form as Greyrock shall require, and Creditor will
exhibit the originals of such notes and other written evidence of the
Subordinated Debt to Greyrock so that Greyrock can confirm that such
endorsement has been made, but this Subordination Agreement shall be fully
effective, even if no such endorsement is made. Any amounts received by
Creditor contrary to the provisions of this Section shall be held in trust
by Creditor for the benefit of Greyrock and shall forthwith be paid over to
Greyrock to be applied to the Greyrock debt in such order as Greyrock in
its sole discretion shall determine, without limiting any other right of
Greyrock hereunder or otherwise and without otherwise affecting the
liability of Creditor.
2. Modifications to Greyrock Debt; Waivers. Until Greyrock has
received payment in full of all Greyrock Debt, the Creditor agrees that, in
addition to any other rights that Greyrock may have at law or in equity,
Greyrock may at any time, and from time to time, without the Creditor's
consent and without notice to the Creditor, renew, extend or increase any
of the Greyrock Debt or that of any other person at any time directly or
indirectly liable for the payment of any Greyrock Debt, accept partial
payments of the Greyrock Debt, settle, release (by operation of law or
otherwise), compound, compromise, collect or liquidate any of the Greyrock
Debt, make loans or advances to the Borrower secured in whole or in part by
collateral or unsecured or refrain from making any loans or advances to the
Borrower, change, waive, alter or vary the interest charge on, or any other
terms or provisions of the Greyrock Debt or any present or future
instrument, document or agreement between Greyrock and the Borrower,
release, exchange, fail to perfect, delay the perfection of, fail to resort
to, or realize upon any collateral, and take any other action or omit to
take any other action with respect to the Greyrock Debt or any collateral
as Greyrock deems necessary or advisable in Greyrock's sole discretion.
The Creditor waives any right to require Greyrock to marshal any assets in
favor of the Creditor or against or in payment of any or all of the
Greyrock Debt. Creditor further waives any defense arising by reason of
any claim or defense based upon an election of remedies by Greyrock which
in any manner impairs, affects, reduces, releases, destroys and/or
extinguishes the Creditor's subrogation rights, rights to proceed against
the Borrower for reimbursement, and/or any other rights of the Creditor.
3. Default. The Creditor shall promptly give Greyrock written notice
of any default or event of default under any document, instrument or
agreement evidencing, securing or relating to any of the Subordinated Debt.
Until the Greyrock Debt has been paid and performed in full, the Creditor
shall not enforce, or exercise any rights or remedies with respect to, the
Subordinated Debt, judicially or non-judicially (including without
limitation the commencement of any bankruptcy or insolvency proceeding
against the Borrower), or attempt to do any of the foregoing.
4. No Commitment; Bankruptcy Financing. It is understood and agreed
that this Agreement shall in no way be construed as a commitment or
agreement by Greyrock to continue financing arrangements with the Borrower
and that Greyrock may terminate such arrangements at any time, in
accordance with Greyrock's agreements with the Borrower. In the event of
any financing of the Borrower by Greyrock during a bankruptcy, arrangement,
or reorganization of Borrower, the Creditor agrees that the term "Greyrock
Debt" shall include without limitation all indebtedness, liabilities and
obligations incurred in any such proceeding, and the Creditor agrees to
take such actions and execute such documents in such proceedings as may be
reasonably necessary in order to effectuate the foregoing.
5. No Contest. Creditor agrees not to contest the validity,
perfection, priority or enforceability of the Greyrock Debt or Greyrock's
security interest in any collateral.
6. Financial Condition of Borrower. The Creditor is presently informed
of the financial condition of the Borrower and of all other circumstances
which a diligent inquiry would reveal and which bear upon the risk of non-
payment of the Greyrock Debt and the Subordinated Debt. The Creditor
covenants that it will continue to keep itself informed as to the
Borrower's financial condition and all other circumstances which bear upon
the risk of non-payment of the Greyrock Debt and the Subordinated Debt.
The Creditor waives any right to require Greyrock to disclose to it any
information which Greyrock may now or hereafter acquire concerning the
Borrower.
7. Revivor. If, after payment of the Greyrock Debt, the Borrower
thereafter becomes liable to Greyrock on account of the Greyrock Debt, or
any payment made on the Greyrock Debt shall for any reason be returned by
Greyrock, this Agreement shall thereupon in all respects become effective
with respect to such subsequent or reinstated Greyrock Debt, without the
necessity of any further act or agreement between Greyrock and the
Creditor.
8. General. The Creditor agrees, upon Greyrock's request, to execute
all such documents and instruments and take all such actions as Greyrock
shall deem necessary or advisable in order to carry out the purposes of
this Agreement (but this Agreement shall remain fully effective
notwithstanding any failure to execute any additional documents or
instruments). The word "indebtedness" is used in this agreement in its
most comprehensive sense and includes without limitation any and all
present and future loans, advances, credit, debts, obligations,
liabilities, representations, warranties, and guarantees, of any kind and
nature, absolute or contingent, liquidated or unliquidated, and individual
or joint. Creditor represents and warrants that it has not heretofore
transferred or assigned the Subordinated Debt or given any other
subordination agreement in respect of any Subordinated Debt, and that it
will not do so without prior written notice to Greyrock and without making
such transfer, assignment or subordination expressly subject to this
Agreement. This Agreement is solely for the benefit of Greyrock and
Greyrock's successors and assigns, and neither the Borrower nor any other
person shall have any right, benefit, priority or interest under, or
because of the existence of, this Agreement. All of Greyrock's rights and
remedies hereunder and under applicable law are cumulative and not
exclusive. This Agreement sets forth in full the terms of agreement
between the parties with respect to the subject matter hereof, and may not
be modified or amended, nor may any rights hereunder be waived, except in a
writing signed by Greyrock and the Creditor. The Creditor agrees to
reimburse Greyrock, upon demand, for all costs and expenses (including
reasonable attorneys' fees) incurred by Greyrock in enforcing this
Agreement against Creditor, whether or not suit be brought. In the event
of any litigation between the parties based upon or arising out of this
Agreement, the prevailing party shall be entitled to recover all of its
costs and expenses (including without limitation attorneys fees) from the
non-prevailing party. This Agreement shall be construed in accordance
with, and governed by, the laws of the State of California. As a material
part of the consideration to the parties for entering into this Agreement,
each party (i) agrees that all actions and proceedings based upon, arising
out of or relating in any way directly or indirectly to, this Agreement
shall be litigated exclusively in courts located within Los Angeles County,
California, (ii) consents to the jurisdiction of any such court and
consents to the service of process in any such action or proceeding by
personal delivery, first-class mail, or any other method permitted by law,
and (iii) waives any and all rights to transfer or change the venue of any
such action or proceeding to any court located outside Los Angeles County,
California. This Agreement shall be binding upon the Creditor and its
successors and assigns and shall inure to the benefit of Greyrock and
Greyrock's successors and assigns.
9. Mutual Waiver of Jury Trial. CREDITOR AND GREYROCK EACH HEREBY
WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON,
ARISING OUT OF, OR IN ANY WAY RELATING TO: (I) THIS AGREEMENT; OR (II) ANY
OTHER PRESENT OR FUTURE INSTRUMENT OR AGREEMENT BETWEEN CREDITOR AND
GREYROCK; OR (III) ANY CONDUCT, ACTS OR OMISSIONS OF CREDITOR OR GREYROCK
OR ANY OF THEIR DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, ATTORNEYS OR ANY
OTHER PERSONS AFFILIATED WITH CREDITOR OR GREYROCK; IN EACH OF THE
FOREGOING CASES, WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE.
"Creditor:"
XXXXX 0 SYSTEMS, INC.
By /s/ Xxxx Xxxxxx
Name Xxxx Xxxxxx
Title President
Address:1250 Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
CONSENT AND AGREEMENT OF BORROWER
The undersigned Borrower hereby approves of, agrees to and consents to all
of the terms and provisions of the foregoing Subordination Agreement and
agrees to be bound thereby and further agrees that any default or event of
default by the Borrower under any present or future instrument or agreement
between the Borrower and the Creditor shall constitute an immediate default
and event of default under all present and future instruments and
agreements between the Borrower and Greyrock. Borrower further agrees
that, at any time and from time to time, the foregoing Agreement may be
altered, modified or amended by Greyrock and the Creditor without notice to
or the consent of Borrower.
Borrower:
SEER TECHNOLOGIES, INC.
By /s/Xxxxxx Xxxxxxxxxxx
Name Xxxxxx Xxxxxxxxxxx
Title Co-President and
Chief Financial Officer
Accepted:
Greyrock:
GREYROCK CAPITAL, a Division of NationsCredit Commercial Corporation
By_______________________________
Title______________________________
