Exhibit 10.7
INTERCREDITOR AGREEMENT
This
Intercreditor Agreement (this "Agreement"), dated as of September
7,
2005, is by and among the investors
identified on the signature page hereto,
(collectively, the "Investors"), Montgomery
Equity Partners, LTD ("Montgomery"),
a Delaware limited partnership, (Montgomery
also referred to as the "Lender"),
and In Veritas Medical Diagnostics, Inc. a
Colorado corporation (the
"Borrower"). All terms used herein which
are defined in Section 1 hereof or in
the text of any other Section hereof shall
have the meanings given therein.
WITNESSETH:
WHEREAS,
Montgomery is purchasing from the Company Seven Hundred Fifty
Thousand Dollars ($750,000) of Secured
Convertible Debentures of the Company
(the "Convertible Debentures").
WHEREAS, the
Borrower shall have filed a form UCC-1 with regard to the
Pledged Property (the "Collateral") as
detailed in the Security Agreement
("Security Agreement") dated the date
hereof between the Company and Montgomery,
and provided proof of such filing to
Montgomery.
WHEREAS, the
Borrower has, or will be granting liens in substantially all
of its assets in favor of the Investors,
pursuant to a certain investment that
the Investors made in the Company.
WHEREAS, The
Investors desires to agree upon Montgomery purchasing the
Convertible Debentures that Montgomery
shall be a secured party pursuant to the
UCC-1 filed on behalf of Montgomery and
shall be superior to the Investors as if
Montgomery's UCC-1 was filed before any and
all of the Investor's liens, and for
the application of proceeds of the
Collateral after certain events and certain
payments with respect to the Indebtedness
(as that term is defined below) and to
agree upon various other matters with
respect to their respective agreements
with the Borrower and their rights
thereunder.
NOW, THEREFORE,
for the above reasons, in consideration of the mutual
covenants herein, and for other good and
valuable consideration, the receipt and
sufficiency of which is hereby
acknowledged, the parties hereto agree as
follows:
1. Definitions.
Unless otherwise
defined herein, for the purposes of this Agreement, the
following terms shall have the meanings
specified with respect thereto below.
Any plural term that is used herein in the
singular shall be taken to mean each
entity or item of the defined class and any
singular term that is used herein in
the plural shall be taken to mean all of
the entities or items of the defined
class, collectively.
"Enforcement"
shall mean (a) for the Lender to make written demand for
payment of or accelerate the time for
payment of any of the Indebtedness (as
that term is defined below) in favor of
such Lender, (b) for the Lender to
terminate its commitment to make revolving
loans prior to the scheduled date for
the expiration of such commitment, as such
date may be extended from time to
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time, (c) for the Lender to commence
enforcement of any rights or remedies under
or with respect to the Convertible
Debentures, any note, or any other
Indebtedness, or to set off or appropriate
any balances held by it for the
account of Borrower or any other property
at any time held or owing by it to or
for the credit or account of Borrower, (d)
for the Lender to commence the
judicial or non judicial enforcement of any
rights or remedies under the
Convertible Debentures, this Agreement and
the Security Agreement (the
"Collateral Documents") (other than an
action solely for the purpose of
establishing, continuing or defending the
lien or security interest intended to
be created by the Collateral Documents upon
or in any Collateral as against or
from claims of third parties on or in such
Collateral), to appropriate any
property at any time held or owing by it to
or for the credit or for the account
of any Borrower or to otherwise take any
action to realize upon the Collateral,
or (e) the commencement by, against or with
respect to Borrower of any
proceeding under any bankruptcy,
reorganization, compromise, arrangement,
insolvency, readjustment of debt,
dissolution or liquidation or similar law or
for the appointment of a receiver
("Insolvency Proceedings") either.
"Enforcement
Proceeds" shall have the meaning given in Section 4(a) hereof.
"Event of
Default" shall mean the occurrence of an "Event of Default", as
defined in the Convertible Debentures,
which is not waived by the Lender.
"Indebtedness"
shall mean the principal amount of and interest due to the
Lender, and all of the other present or
future indebtedness, liabilities and
obligations of Borrower now or hereafter
owed to any or all of the Lenders under
the Convertible Debenture, the Collateral
Documents or any agreements or
instruments delivered under or in
connection therewith, and all renewals and
extensions thereof; provided that any
amount of Indebtedness that is not allowed
as a claim against the Borrower in any
Insolvency Proceeding shall not
constitute "Indebtedness" for the purposes
of Section 4(c) and 4(d) of this
Agreement.
"Enforcement
Date" with respect to an Enforcement shall mean the earliest
date on or prior to the date of such
Enforcement and (a) on which an Enforcement
Event occurs and (b) on each date after
which, until the date of such
Enforcement, one or more Enforcement Events
were in effect.
"Enforcement
Event" shall mean (a) an Enforcement, (b) the occurrence of
any Event of Default (unless such Event of
Default has been waived pursuant to
the terms of the Convertible Debentures
with the consent of the Lender), or (c)
any refusal by the Lender to make any
revolving loan requested by the Borrower
(irrespective of whether the conditions
precedent thereto specified in the
applicable Convertible Debentures have been
satisfied) where such revolving loan
would not cause the Borrower to exceed the
limitations set forth in such
Convertible Debentures.
2. Lien Priorities.
The parties
hereto expressly agree that the security interests and liens
granted to the Lender shall secure the
Indebtedness of the Lender and that,
notwithstanding the relative priority or
the time of grant, creation, attachment
or perfection under applicable law of any
security interests and liens of the
Investors upon or in any of the Collateral
to secure any Indebtedness, whether
such security interests and liens are now
existing or hereafter acquired or
arising and whether such security interests
and liens are in or upon now
existing or hereafter arising Collateral,
such security interests and liens of
the Lender shall be first and prior
security interests and liens in favor of the
Lender to secure the Indebtedness.
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3. Certain Notices.
The Lender
agrees to use its reasonable efforts to give to the Investors
(a) copies of any notice of the occurrence
or existence of an Event of Default
sent to Borrower, promptly after the
sending of such notice to Borrower, (b)
notice of the occurrence or existence of an
Event of Default of which such party
has knowledge, promptly after obtaining
knowledge thereof, (c) notice of refusal
of a Lender to make a revolving loan
promptly after such refusal, and (d) notice
of an Enforcement by such party, prior to
commencing such Enforcement, but the
failure to give any of the foregoing
notices shall not affect the validity of
such notice of an Event of Default given to
the Borrower or create a cause of
action against or cause a forfeiture of any
rights of the party failing to give
such notice or create any claim or right on
behalf of any other Lender or third
party.
4. Distribution of Proceeds of
Collateral After Enforcement; Sharing of
Certain
Payments.
(a) Distribution of Enforcement Proceeds. On and after the
occurrence
of an Event of
Default, all proceeds of Collateral received by the Lender
(including,
without limitation, any amount of any balances held by any
Lender for the
account of any other Lender or any other property held or
owing by it to
or for the credit or for the account of any Lender setoff or
appropriated by
it) ("Enforcement Proceeds") shall be delivered to the
Lender.
(b) Distribution
of Payments. On and after the occurrence of an Event of
Default, and any
other payments received, directly or indirectly, by the
Lender on or
with respect to any Indebtedness (including, without
limitation, any
payment under any guaranty agreement, any payment in any
Insolvency
Proceeding and the proceeds from any sale of any Indebtedness
or
any interest
therein to Borrower) shall not be shared by the Lender and the
Investors.
5. Other Guaranties; Liens and
Security Interests.
(a) The Lender and the Investors agree that the Lender may
exercise
any rights or
remedies under the Convertible Debentures or the Collateral
Documents which
have or may have arisen or which may arise as a result of
an Event of
Default or an acceleration of the maturities of the
Indebtedness and
that it will give the Lender prompt written notice of the
exercise of any
such rights or remedies.
(b) Nothing contained in this Agreement shall (i) prevent the
Lender
from imposing a
default rate of interest in accordance with the applicable
Convertible
Debentures, as applicable, or prevent the Lender from raising
any defenses in
any action in which it has been made a party defendant or
has been joined
as a third party, or (ii) affect or impair the right the
Lender may have
under the terms and conditions governing the Indebtedness
to accelerate
and demand repayment of such Indebtedness. Subject only to
the express
limitations set forth in this Agreement, the Lender retains the
right to freely
exercise its right
