EXHIBIT 10.136
INTERCREDITOR AND SUBORDINATION
AGREEMENT
THIS INTERCREDITOR AND SUBORDINATION
AGREEMENT (this
Agreement ), dated as of October 11, 2006,
BETWEEN:
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(1)
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HALO
TECHNOLOGY HOLDINGS, INC ., a Nevada corporation (the Borrower
);
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(2)
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THE WHOLLY
OWNED SUBSIDIARIES OF THE BORROWER (as such may change from time to time as the
Borrower acquires or disposes of subsidiaries, the
Subsidiaries and collectively with the Borrower, the
Credit Parties );
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(3)
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THE
FINANCIAL INSTITUTIONS listed in Part 1 of Schedule 1 (the
Senior Lenders ); and
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(4)
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THE HOLDERS
OF SUBORDINATED NOTES listed in Part 2 of Schedule 1 (as
such schedule is deemed changed from time to time as new
Subordinated Noteholderss become parties to the Subscirption
Agreement, the Subordinated Noteholders and together with
the Senior Lenders, the Lenders ).
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WHEREAS:
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(A)
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pursuant to
certain Subordinated Secured Promissory Notes, dated
January 31, 2005 in favor of each of the Senior Lenders (as
amended, the Senior Notes ), Borrower has agreed to pay the
Senior Lenders the aggregate principal amount of $2,500,000
; and
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(B)
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the Borrower
and the Subordinated Noteholderss and others have entered into a
subscription agreement (the Subordinated Subscription
Agreement ) and in connection with the Subordinated
Subscription Agreement, in those certain promissory notes (the
Subordinated Promissory Notes ) the Borrower has agreed to
pay the Subordinated Noteholders the aggregate principal sum of up
to $5,000,000 together with accrued interest.
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NOW,
THEREFORE, the parties hereto agree as follows:
The
parties hereto hereby agree as follows:
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(a)
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The following
terms shall have the following meanings:
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Agreement : this Intercreditor and Subordination
Agreement.
Collateral : any and all property from time to time subject
to security interests to secure payment or performance of the
Senior Obligations.
Collection Action : shall mean (a) to demand, sue for, take
or receive from or on behalf of any Credit Party or any guarantor
of the Subordinated Obligations, by set-off or in any other manner,
the whole or any part of any moneys which may now or hereafter be
owing by any Credit Party with respect to the Subordinated
Obligations, (b) to initiate or participate with others in any
suit, action or proceeding against any Credit Party to
(i) enforce payment of or to collect the whole or any part of
the Subordinated Obligations or (ii) commence judicial enforcement
of any of the rights and remedies under the Subordinated
Transaction Documents or applicable law with respect to the
Subordinated Obligations or the Subordinated Transaction Documents,
(c) to accelerate any Subordinated Obligations, or (d) to
exercise any put option or to cause any Credit Party to honor any
redemption or mandatory prepayment obligation under any
Subordinated Transaction Document; provided, that, notwithstanding
the foregoing, in the case of the Subordinated Noteholders,
“Collection Action” shall not mean the exercise by a
Subordinated Noteholders of its right to exercise any warrants as
provided under the Subordinated Transaction Documents.
Collateral Enforcement Action
: shall mean any action by the
Subordinated Noteholders to (a) exercise or seek to exercise
any rights or exercise any remedies with respect to any Collateral,
(b) institute any action or proceeding with respect to such
rights or remedies, including, any action of foreclosure or
(c) contest, protest or object to any foreclosure proceeding,
postpetition financing, use of cash collateral or action brought by
any Senior Noteholder or to any other exercise by any Senior
Noteholder of any rights and remedies under any Finance
Document.
Finance Document : shall mean the Senior Notes and all other
documents that from time to time evidence the Senior Obligations or
secure payment or performance thereof.
Insolvency Event : (a) any Credit Party commences any case,
proceeding or other action (i) under any existing or future
law of any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization, conservatorship or relief
of debtors, seeking to have an order for relief entered with
respect to it, or seeking to adjudicate it a bankrupt or insolvent,
or seeking reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with respect
to it or its debts, or (ii) seeking appointment of a receiver,
trustee, custodian, conservator or other similar official for it or
for all or any substantial part of its assets, or any Credit Party
making a general assignment for the benefit of its creditors; or
(b) there being commenced against any Credit Party any case,
proceeding or other action of a nature referred to in clause
(a) above which (i) results in the entry of an order for
relief or any such adjudication or appointment or (ii) remains
undismissed, undischarged or unbonded for a period of 60 days;
or (c) there being commenced against any Credit Party or any
of its subsidiaries any case, proceeding or other action seeking
issuance of a warrant of attachment, execution, distraint or
similar process against all or any substantial part of its assets
which results in the entry of an order for any such relief which
shall not have been vacated, discharged, or stayed or bonded
pending appeal within 60 days from the entry thereof; or
(d) any Credit Party taking any action in furtherance of, or
indicating its consent to, approval of, or acquiescence in, any of
the acts set forth in clause (a), (b) or (c) above; or
(e) any Credit Party generally not paying, or being unable to
pay, or admitting in writing its inability to pay, its debts as
they become due.
Senior Event of Default : any “Event of Default” under any
Finance Document.
Senior Obligations : each obligation and liability
whether:
(a) present or future, actual, contingent
or unliquidated; or
(b) owed jointly or severally (or in any
other capacity whatsoever),
of any Credit Party to any Senior Lender under
or in connection with any Finance Document is a Senior
Obligation.
Senior Security Documents
: all documents and instruments, now
existing or hereafter arising, which create or purport to create a
security interest in property to secure payment or performance of
the Senior Obligations including the Senior Security
Agreements.
Subordinated Obligations
: each obligation and liability
whether:
(a) present or future, actual, contingent
or unliquidated; or
(b) owed jointly or severally (or in any
other capacity whatsoever),
of any Credit Party to the Subordinated
Noteholders under or in connection with any Subordinated
Transaction Document is a Subordinated Obligation.
Subordinated Transaction Documents
: the Subordinated Promissory Notes
and all other documents that from time to time evidence the
Subordinated Obligations or secure payment or performance
thereof.
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(b)
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The words
“hereof,” “herein” and
“hereunder” and words of similar import when used in
this Agreement shall refer to this Agreement as a whole and not to
any particular provision of this Agreement, and section and
paragraph references are to this Agreement unless otherwise
specified.
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(c)
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The meanings
given to terms defined herein shall be equally applicable to both
the singular and plural forms of such terms.
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(d)
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The words
(i)“includes” and “including” are not
limiting; (ii) “or” is not exclusive; (iii)
“all” includes “any” and “any”
includes “all” and means “any one or more”;
(iv) references to any instrument, document, mortgage,
assignment or agreement of any kind includes any amendments,
restatements or modifications; (v) headings are for
convenience only, and do not affect the meaning of any provision;
and (vi) references to the consent, satisfaction, acceptance,
discretion, judgment, option, requirement or approval (or
variations of those terms) of any Senior Noteholder are, unless
otherwise specifically indicated, to be interpreted as if followed
by the phrase “in its absolute discretion”.
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(a)
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Each Credit
Party and the Subordinated Noteholders agrees, for itself and each
future holder of the Subordinated Obligations, that the
Subordinated Obligations are expressly “subordinate and
junior in right of payment” (as that phrase is defined in
paragraph 2(b)) to all Senior Obligations.
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(b)
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“Subordinate and junior in right of
payment” means, for purposes of paragraph 2(a), that (i) no
part of the Subordinated Obligations shall have any claim to the
assets of any Credit Party on a parity with or prior to the claim
of the Senior Obligations; and (ii) unless and until the
Senior Obligations have been paid in full, then, without the
express prior written consent of the Senior Lenders, no
Subordinated Noteholders will take, demand or receive from any
Credit Party, and no Credit Party will make, give or permit,
directly or indirectly, by setoff, redemption, purchase or in any
other manner, any payment of (of whatever kind or nature, whether
in cash, property, securities or otherwise) the Subordinated
Obligations provided, however, that the Subordinated Noteholders
may be issued common stock of the Borrower pursuant to the
conversion of the Subordinated Notes in accordance with the terms
of the Subordinated Notes (provided that the conversion terms set
forth therein are not amended or modified after the date hereof
without the prior written consent of the Senior Lenders (provided
that the conversion terms set forth therein are not amended or
modified after the date hereof without the prior written consent of
the Senior Lenders), and provided, further however, that so long as
an Event of Default has not occurred and is continuing,
(i) the Borrower may make, and the Subordinated Noteholders
may receive, regularly scheduled payments (not prepayments) of
interest on the Subordinated Promissory Notes in accordance with
the terms thereof (provided that the scheduled interest payments
set forth therein are not amended or modified after the date hereof
without the prior written consent of the Senior Lenders) determined
on a non-accelerated basis (without giving effect to any default
rate of interest thereunder) and (ii) the Borrower may prepay
the Subordinated Obligations in full out of the proceeds of any new
equity contributions made in the Borrower which were not intended
to be used in connection with the financing of an Acquisition to
the extent such equity contributions are sufficient to prepay the
Subordinated Obligations and may partially prepay the Subordinated
Obligations if such proceeds are not sufficient to pay the
Subordinated Obligations in full.
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(c)
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The expressions
“prior payment in full,” “payment in full,”
“paid in full” and any other similar terms or phrases
when used in this Agreement shall mean the irrevocable and
indefeasible payment in full, in immediately available funds, of
all of the Senior Obligations. The phrase “equity
contributions” shall mean any capital raise that is not a
Senior Obligation or required as a condition to any Advance under
the Senior Credit Agreement.
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(d) The Subordinated Creditor acknowledges
and agrees that, in addition to its covenants hereunder, the
Subordinated Obligations are and shall be junior and subordinate to
the those senior obligations as to the extent and in the manner set
forth in that certain Subordination Agreement dated as of even date
herewith made by the Subordinated Creditor, the Borrower, the
Subsidiaries of the Borrower listed on Schedule I thereof, and
Fortress Credit Corp (the “Senior Subordination
Agreement”). Both the Senior Lenders and the Subordinated
Creditor acknowledge and agree that their respective rights and
obligations under this Agreement shall not be effective until the
second Business Day following the 91 st day following
the the day the Senior Obligations (as such term is defined in the
Senior Subordination Agreement) have been Paid in Full (as such
term is defined in the Senior Subordination Agreement).
(e) Each of the Senior Lenders acknowledges
and agrees that the Senior Obligations are and shall remain junior
and subordinate to the those senior obligations as to the extent
and in the manner set forth in that certain Intercreditor and
Subordination agreement dated as of August 2, 2005 among the
Borrower, the Subsidiaries listed therein, and Fortress Credit
Corp.
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3.
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ADDITIONAL
PROVISIONS CONCERNING SUBORDINATION
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(a)
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The
Subordinated Noteholders and each Credit Party agree that upon the
occurrence of any Insolvency Event:
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(i)
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all Senior
Obligations shall be paid in full before any payment or
distribution of whatever kind or nature is made with respect to the
Subordinated Obligations; and
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(ii)
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any payment or
distribution of assets of any Credit Party, whether in cash,
property or securities (other than as permitted under clause (a)(1)
of this Section 3), to which the Subordinated Noteholders
would be entitled except for the provisions hereof, shall be paid
or delivered by such Credit Party, or any receiver, trustee in
bankruptcy, liquidating trustee, disbursing agent or other Person
making such payment or distribution, directly to the Senior
Lenders, to the extent necessary to pay in full all Senior
Obligations, before any payment or distribution of any kind or
nature shall be made to the Subordinated Noteholders.
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(b)
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Upon the
occurrence of any Insolvency Event:
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(i)
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the
Subordinated Noteholders irrevocably authorizes and empowers the
Senior Lenders (A) to demand, sue for, collect and receive
every payment or distribution on account of the Subordinated
Obligations payable or deliverable in connection with such event or
proceeding and give acquittance therefor, (B) to file claims
and proofs of claim in any statutory or non-statutory proceeding if
the Subordinated Noteholders has not demonstrated to the
satisfaction of the Senior Lenders, no later than 30 days
prior to the applicable bar date, that such Subordinated
Noteholders has filed an appropriate claim or proof of claim, and
(C) to take such other actions, in its own name, or in the
name of the Subordinated Noteholders or otherwise, as the Senior
Lenders may deem necessary or advisable for the enforcement of the
provisions of this Agreement; provided, however, that the foregoing
authorization and empowerment imposes no obligation on the Senior
Lenders to take any such action;
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(ii)
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the
Subordinated Noteholders shall take such action, duly and promptly,
as the Senior Lenders may request from time to time (A) to
collect the Subordinated Obligations for the account of the Senior
Lenders and (B) to file appropriate proofs of claim in respect
of the Subordinated Obligations; and
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(iii)
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the
Subordinated Noteholders shall execute and deliver such powers of
attorney, assignments or proofs of claim or other instruments as
the Senior Lenders may request to enable the Senior Lenders to
enforce any and all claims in respect of the Subordinated
Obligations and to collect and receive any and all payments and
distributions which may be payable or deliverable at any time upon
or in respect of the Subordinated Obligations.
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(c)
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If any payment
or distribution, whether consisting of money, property or
securities, shall be collected or received by the Subordinated
Noteholders in respect of the Subordinated Obligations, except
payments permitted to be made at the time of payment as provided in
paragraph 2(b), such Subordinated Noteholders shall forthwith
deliver the same to the Senior Lenders, in the form received, duly
indorsed to the Senior Lenders, if required, to be applied to the
payment or prepayment of the Senior Obligations until the Senior
Obligations are paid in full. Until so delivered, such payment or
distribution shall be held in trust by such Subordinated
Noteholders as the property of the Senior Lenders, segregated from
other funds and property held by the Subordinated Noteholders.
Following payment in full of the Senior Obligations, Senior Lenders
will remit to the Subordinated Noteholders as promptly as
practicable, to the extent of the Subordinated Noteholders’s
interest therein, all payments or distributions paid (by the
Subordinated Noteholders) to and held by Senior Lenders in excess
of the Senior Obligations as provided in Section 4(e) of this
Agreement.
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(d)
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Until the
Senior Obligations are paid in full, the Subordinated Noteholders
shall not take any Collection Action or Collateral Enforcement
Action with respect to the Subordinated Obligations.
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(a)
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Notwithstanding
anything to the contrary contained in any Finance Document or any
Subordinated Transaction Document and irrespective of:
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(i)
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the time, order
or method of attachment or perfection of the security interests
created by any Senior Security Document;
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(ii)
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the time or
order of filing or recording of financing statements or other
documents filed or recorded to perfect security interests in any
Collateral;
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(iii)
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anything
contained in any filing or agreement to which the Senior Lenders or
the Subordinated Noteholders now or hereafter may be a party;
and
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(iv)
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the rules for
determining perfection or priority under the Uniform Commercial
Code or any other law governing the relative priorities of secured
creditors;
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any
security interest in any Collateral pursuant to any Senior Security
Document has and shall have priority, to the extent of any unpaid
Senior Obligations, over any security interest in such Collateral
pursuant to any Subordinated Transaction Document.
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(b)
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So long as the
Senior Obligations have not been paid in full and any Senior
Security Document remains in effect, whether or not any Insolvency
Event has occurred,
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(i)
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the
Subordinated Noteholders will not take any Collateral Enforcement
Action; and
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(ii)
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the Senior
Lenders and, subject to the Finance Documents, any Senior Lenders
shall have the exclusive right to enforce rights and exercise
remedies with respect to the Collateral and the Senior Lenders
shall not be required to marshal any Collateral.
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(c)
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In exercising
rights and remedies with respect to the Collateral, the Senior
Lenders and, subject to the Finance Documents, the Senior Lenders
may enforce the provisions of the Senior Security Documents and
exercise remedies thereunder and under any other Finance Documents,
all in such order and in such manner as it or they may determine in
the exercise of its or their sole business judgment. Such exercise
and enforcement shall include the rights to sell or otherwise
dispose of Collateral, to incur expenses in connection with such
sale or disposition and to exercise all the rights and remedies of
a secured lender under the Uniform Commercial Code of any
applicable jurisdiction. In conducting any public or private sale
under the Uniform Commercial Code, the Senior Lenders shall give
the Subordinated Noteholders such notice of such sale as may be
required by the applicable Uniform Commercial Code; provided,
however, that 10 days’ notice shall be deemed to be
commercially reasonable notice.
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(d)
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When all Senior
Obligations have been paid in full and the Senior Security
Documents no longer are in effect, subject to the requirements of
the Finance Documents, the Subordinated Noteholders shall have the
right to enforce the provisions of the Subordinated Promissory
Notes and exercise remedies thereunder.
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(e)
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Any money,
property or securities realized upon the sale, disposition or other
realization by the Senior Lenders upon all or any part of the
Collateral, or otherwise received by Senior Lenders under any
provision of this Agreement shall be applied by the
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