EXHIBIT 10.9

 

SUBORDINATION OF LOANS AGREEMENT

 

THIS SUBORDINATION AGREEMENT (the “Agreement”) is made as of September 30, 2014,
but made effective as of October 3, 2014, by and between STEPHEN SABER (the
“Loan Holder”), TCA GLOBAL CREDIT MASTER FUND, LP (“Lender”), THE PULSE NETWORK,
INC., a Nevada corporation, THE PULSE NETWORK, INC., a Massachusetts corporation
and THE PULSE NETWORK MANAGEMENT, LLC, a Massachusetts limited liability company
(collectively, the “Credit Parties”).

 

W I T N E S S E T H:

 

WHEREAS, the Credit Parties have borrowed, or may in the future borrow, funds
from Loan Holder, for which Credit Parties are or may become indebted to and in
favor of Loan Holder (all present or future indebtedness of Credit Parties, or
any one or more of them, to Loan Holder, of every kind and description, direct
or contingent, due or not due, secured or unsecured, original, renewed or
extended and whether now in existence or hereafter arising, hereinafter
collectively referred to as the “Subordinated Debt”); and

 

WHEREAS, the Lender has made or will make a loan to Credit Parties (the “Loan”),
which Loan is evidenced by that certain Credit Agreement dated of even date
herewith by and among Lender and Credit Parties (the “Credit Agreement”), which
Credit Agreement and related Loan Documents provide to Lender a first priority
security interest (“Lender’s Security Interest”) in the Collateral of each of
the Credit Parties. Capitalized terms used in this Agreement and not otherwise
defined herein, shall have the same meanings ascribed to such terms in the
Credit Agreement; and

 

WHEREAS, Loan Holder is a guarantor and/or shareholder, director, officer or
otherwise associated with Credit Parties, and will materially benefit as a
result of the Lender making the Loan to Credit Parties; and

 

WHEREAS, Loan Holder acknowledges that the Lender is willing to make the Loan
only on the condition that the Subordinated Debt be subordinate and inferior to
the Loan, and to all other indebtedness of any Credit Parties to Lender, whether
now in existence or hereafter created; and

 

WHEREAS, Loan Holder has agreed to subordinate the Subordinated Debt to the lien
and effect of the Loan and Lender’s Security Interest and all security
instruments securing the Loan, and all other indebtedness of Credit Parties to
Lender of every kind and description, direct or contingent, due or not due,
secured or unsecured, original, renewed or extended, whether now in existence or
hereafter arising; and

 

 
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WHEREAS, Loan Holder acknowledges that Lender would not effectuate the Loan
without the execution of this Agreement by Loan Holder.

 

NOW, THEREFORE, in consideration of, and as an inducement to Lender to make the
Loan, Loan Holder and Credit Parties do hereby agree as follows:

 

1. Recitals. The recitals set forth above are true and correct and are
incorporated herein by reference.

 

2. No Further Indebtedness. Loan Holder and Credit Parties do hereby warrant and
represent that as of the date hereof, the only Subordinated Debt currently
outstanding which is due and owing from any Credit Parties to Loan Holder is
$560,239.00, and that no further indebtedness shall be incurred between Credit
Parties and Loan Holder during the term of the Loan and this Agreement.

 

3. Subordination. Loan Holder does hereby unconditionally subordinate the
Subordinated Debt to the Loan and all other present and future debts and
obligations of Credit Parties to Lender, said indebtedness including all
obligations of Credit Parties to Lender of every kind and description, direct or
contingent, due or not due, secured or unsecured, original, renewed or extended,
whether now in existence or hereafter arising and to the lien and effect of
Lender’s Security Interest in and to the Collateral and to all Loan Documents
and all other debts and obligations of Credit Parties to Lender.

 

4. No Payments on Subordinated Debt; Event of Default. Loan Holder and Credit
Parties do hereby warrant, represent and agree that no payment (principal,
interest or any other payment) shall be made, permitted or accepted under or
with respect to any of the Subordinated Debt (or under any other document or
agreement) during the term of the Loan, except that Credit Parties may make
payments to Loan Holder on account of the Subordinated Debt not to exceed
$10,000 per month, and $120,000 in the aggregate. If any payment is made by
Credit Parties in payment of the Subordinated Debt, or if any security or
proceeds thereof is received by Loan Holder on account of the Subordinated Debt
contrary to the terms of this Agreement, the same shall be and constitute an
Event of Default under the Credit Agreement and the Loan Documents. Upon the
occurrence of an Event of Default under the Credit Agreement or any other Loan
Documents, Lender shall be entitled to immediately exercise all remedies
provided to Lender in connection with the Collateral and under the Loan
Documents, and each and every amount paid by or on behalf of Credit Parties to
Loan Holder, or any payments, security, proceeds or other items received by Loan
Holder (from Credit Parties or from an individual or an entity on behalf of
Credit Parties) will be forthwith paid by Loan Holder to Lender, in precisely
the form received (except for Loan Holder’s endorsement, where necessary), to be
credited and applied, in Lender’s sole discretion, upon any indebtedness
(principal and/or interest and/or otherwise as Lender may elect, in its sole
discretion) then owing to Lender by Credit Parties and, whether matured or
unmatured, and, until so delivered, the same shall be held in trust by Loan
Holder as the property of Lender. In the event of a failure of Loan Holder to
endorse any instrument for the payment of monies so received by Loan Holder
payable to Loan Holder’s order, Lender, or any officer or employee of Lender, is
hereby irrevocably constituted and appointed attorney-infact (coupled with an
interest) for Loan Holder with full power to make any such endorsement and with
full power of substitution.

 

 
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5. No Enforcement By Loan Holder. Loan Holder will not exercise any collection
rights with respect to the Subordinated Debt, will not take possession of, sell
or dispose of, or otherwise deal with any Collateral, and will not exercise or
enforce any right or remedy which may be available to them with respect to the
Subordinated Debt, unless and until such time as the Loan, as the same may be
modified from time to time, including all principal, interest and other charges
associated therewith, has been paid in full and no other debts or obligations
are due and owing from Credit Parties to Lender. Loan Holder shall immediately
notify Lender, in writing, of any default by Credit Parties under any
Subordinated Debt, and any default under or with respect to any Subordinated
Debt shall be and constitute a default under the Loan entitling Lender to
exercise all of its rights in connection with the Collateral and under the Loan
Documents.

 

6. No Impairment of Lender Remedies. Lender may exercise collection rights, may
take possession of, sell or dispose of, and otherwise deal with, the Collateral
and may exercise or enforce any right or remedy available to Lender under the
Loan Documents with respect to the Collateral, whether available prior to or
after the occurrence of any default in connection with the Subordinated Debt.

 

7. Additional Security. In order to effectuate the foregoing subordination, Loan
Holder does hereby transfer and assign to Lender, as additional collateral and
security for the Loan, any and all debts and obligations of Credit Parties to
Loan Holder, all of the said claims or demands of Loan Holder against Credit
Parties, with full right on the part of Lender, in its own name or in the name
of Loan Holder, to collect and enforce said claims by suit, proof of debt in
bankruptcy, or other liquidation proceedings or otherwise.

 

8. Payments Upon Bankruptcy Events. Upon any distribution of the assets or
readjustment of indebtedness of Credit Parties, whether by reason of
reorganization, liquidation, dissolution, bankruptcy, receivership, assignment
for the benefit of creditors, or any other action or proceeding involving the
readjustment of all or any part of the Subordinated Debt or the application of
the assets of Credit Parties to the payment or liquidation thereof, either in
whole or in part, Lender shall be entitled to receive payment in full of any and
all indebtedness under the Loan or otherwise then owing to Lender by Credit
Parties prior to the payment of all or any of the Subordinated Debt.

 

 
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9. Restrictions on Transferability of Subordinated Debt. Each person comprising
a Loan Holder (jointly and severally) agrees that he/she shall not transfer,
assign, encumber, hypothecate or subordinate, at any time while this Agreement
remains in effect, any right, claim or interest of any kind in or to any of the
Subordinated Debt, either principal or interest or otherwise, and there shall
promptly be placed on each promissory note or other document or agreement
constituting a portion of the Subordinated Debt, a legend reciting that the same
is subject to this Agreement.

 

10. Lender’s Rights. Loan Holder acknowledges that Lender may, at any time, in
its discretion, renew or extend the time of payment of all or any portion of the
Loan, or any other existing or future indebtedness or obligations of Credit
Parties to Lender and/or waive or delay in enforcing any rights or release any
collateral relative thereto at any time(s) and, in reference thereto, to modify
or amend the Loan Documents and/or make and enter into such agreement(s),
compromise(s) and other indulgence(s), as Lender may deem proper or desirable,
without notice to or further assent of Loan Holder, all without in any manner
impairing or affecting this Agreement or any of Lender’s rights hereunder.

 

11. Statement of Account. Loan Holder hereby agrees to provide and deliver to
Lender, upon demand, from time to time, a statement of the account of Loan
Holder with Credit Parties, and that Credit Parties will duly comply with and
conform with each and every term of this Agreement, on its part required to be
performed.

 

12. Entire Agreement. This Agreement and the other Loan Documents: (i) are
valid, binding and enforceable against Credit Parties and Loan Holder in
accordance with their respective provisions and no conditions exist as to their
legal effectiveness; (ii) constitute the entire agreement between the parties
with respect to the subject matter hereof and thereof; and (iii) are the final
expression of the intentions of Loan Holder, Credit Parties and Lender. No
promises, either expressed or implied, exist between Loan Holder, Credit Parties
and Lender, unless contained herein or therein. This Agreement, together with
the other Loan Documents, supersedes all negotiations, representations,
warranties, commitments, term sheets, discussions, negotiations, offers or
contracts (of any kind or nature, whether oral or written) prior to or
contemporaneous with the execution hereof with respect to any matter, directly
or indirectly related to the terms of this Agreement and the other Loan
Documents. This Agreement and the other Loan Documents are the result of
negotiations between Loan Holder, Credit Parties and Lender and have been
reviewed (or have had the opportunity to be reviewed) by counsel to all such
parties, and are the products of all parties. Accordingly, this Agreement and
the other Loan Documents shall not be construed more strictly against Lender
merely because of Lender’s involvement in their preparation.

 

13. Amendments; Waivers. No delay on the part of Lender in the exercise of any
right, power or remedy shall operate as a waiver thereof, nor shall any single
or partial exercise by Lender of any right, power or remedy preclude other or
further exercise thereof, or the exercise of any other right, power or remedy.
No amendment, modification or waiver of, or consent with respect to, any
provision of this Agreement or the other Loan Documents shall in any event be
effective unless the same shall be in writing and acknowledged by Lender, and
then any such amendment, modification, waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given.

 

 
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14. WAIVER OF DEFENSES. LOAN HOLDER AND CREDIT PARTIES WAIVE EVERY PRESENT AND
FUTURE DEFENSE, CAUSE OF ACTION, COUNTERCLAIM OR SETOFF WHICH EITHER OF THEM MAY
NOW HAVE OR HEREAFTER MAY HAVE TO ANY ACTION BY LENDER IN ENFORCING THIS
AGREEMENT. PROVIDED LENDER ACTS IN GOOD FAITH, LOAN HOLDER AND CREDIT PARTIES
EACH RATIFIES AND CONFIRMS WHATEVER LENDER MAY DO PURSUANT TO THE TERMS OF THIS
AGREEMENT. THIS PROVISION IS A MATERIAL INDUCEMENT FOR LENDER GRANTING ANY
FINANCIAL ACCOMMODATION TO CREDIT PARTIES.

 

15. MANDATORY FORUM SELECTION. TO INDUCE LENDER TO MAKE THE LOANS, LOAN HOLDER
AND CREDIT PARTIES IRREVOCABLY AGREE THAT ANY DISPUTE ARISING UNDER, RELATING
TO, OR IN CONNECTION WITH, DIRECTLY OR INDIRECTLY, THIS AGREEMENT OR RELATED TO
ANY MATTER WHICH IS THE SUBJECT OF OR INCIDENTAL TO THIS AGREEMENT ANY OTHER
LOAN DOCUMENT, OR THE COLLATERAL (WHETHER OR NOT SUCH CLAIM IS BASED UPON BREACH
OF CONTRACT OR TORT) SHALL BE SUBJECT TO THE EXCLUSIVE JURISDICTION AND VENUE OF
THE STATE AND/OR FEDERAL COURTS LOCATED IN BROWARD COUNTY, FLORIDA; PROVIDED,
HOWEVER, LENDER MAY, AT LENDER’S SOLE OPTION, ELECT TO BRING ANY ACTION IN ANY
OTHER JURISDICTION. THIS PROVISION IS INTENDED TO BE A “MANDATORY” FORUM
SELECTION CLAUSE AND GOVERNED BY AND INTERPRETED CONSISTENT WITH FLORIDA LAW.
LOAN HOLDER AND CREDIT PARTIES HEREBY CONSENT TO THE EXCLUSIVE JURISDICTION AND
VENUE OF ANY STATE OR FEDERAL COURT HAVING ITS SITUS IN SAID COUNTY(OR TO ANY
OTHER JURISDICTION OR VENUE, IF LENDER SO ELECTS), AND EACH WAIVES ANY OBJECTION
BASED ON FORUM NON CONVENIENS. LOAN HOLDER AND CREDIT PARTIES HEREBY WAIVE
PERSONAL SERVICE OF ANY AND ALL PROCESS AND CONSENT THAT ALL SUCH SERVICE OF
PROCESS MAY BE MADE BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, DIRECTED TO
CREDIT PARTIES OR LOAN HOLDER, AS APPLICABLE, AS SET FORTH HEREIN OR IN THE
MANNER PROVIDED BY APPLICABLE STATUTE, LAW, RULE OF COURT OR OTHERWISE.

 

16. WAIVER OF JURY TRIAL. LOAN HOLDER, CREDIT PARTIES AND LENDER, AFTER
CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL, EACH
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES IRREVOCABLY, ANY RIGHT TO A
TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER
THIS AGREEMENT, ANY OTHER LOAN DOCUMENT, ANY OF THE OTHER OBLIGATIONS, THE
COLLATERAL, OR ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR
WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR
ARISING FROM ANY LENDING RELATIONSHIP EXISTING IN CONNECTION WITH ANY OF THE
FOREGOING, OR ANY COURSE OF CONDUCT OR COURSE OF DEALING IN WHICH LENDER, CREDIT
PARTIES AND LOAN HOLDER ARE ADVERSE PARTIES, AND EACH AGREES THAT ANY SUCH
ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. THIS
PROVISION IS A MATERIAL INDUCEMENT FOR LENDER GRANTING ANY FINANCIAL
ACCOMMODATION TO CREDIT PARTIES.

 

 
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17. Assignability. Lender, without consent from or notice to anyone, may at any
time assign Lender’s rights in this Agreement, the other Loan Documents, the
Obligations, or any part thereof and transfer Lender’s rights in any or all of
the Collateral, and Lender thereafter shall be relieved from all liability with
respect to such Collateral. This Agreement shall be binding upon Lender, Loan
Holder and Credit Parties and their respective legal representatives, heirs and
successors.

 

18. Binding Effect. This Agreement shall become effective upon execution by Loan
Holder and Credit Parties.

 

19. Governing Law. Except in the case of the Mandatory Forum Selection Clause in
Section 15 above, which clause shall be governed and interpreted in accordance
with Florida law, this Agreement shall be delivered and accepted in and shall be
deemed to be a contract made under and governed by the internal laws of the
State of Nevada, and for all purposes shall be construed in accordance with the
laws of such State, without giving effect to the choice of law provisions of
such State.

 

20. Enforceability. Wherever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited by, unenforceable or
invalid under any jurisdiction, such provision shall as to such jurisdiction, be
severable and be ineffective to the extent of such prohibition or invalidity,
without invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of such provision in any other jurisdiction.

 

21. Time of Essence. Time is of the essence in making payments of all amounts
due Lender under the Loan Documents and in the performance and observance by
Loan Holder and Credit Parties of each covenant, agreement, provision and term
of this Agreement and the other Loan Documents.

 

22. Counterparts; Facsimile Signatures. This Agreement may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts and each such counterpart shall be deemed to be an original, but
all such counterparts shall together constitute but one and the same Agreement.
Receipt of an executed signature page to this Agreement by facsimile or other
electronic transmission shall constitute effective delivery thereof. Electronic
records of executed Loan Documents maintained by Lender shall be deemed to be
originals thereof.

 

 
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23. Notices. Except as otherwise provided herein, Loan Holder and Credit Parties
each waives all notices and demands in connection with the enforcement of
Lender’s rights hereunder. All notices, requests, demands and other
communications provided for hereunder shall be made in accordance with the terms
of the Credit Agreement, and the Loan Holder hereby agrees and acknowledges that
notice to the Credit Parties in accordance with the Credit Agreement shall be
deemed valid and effective notice to Loan Holder hereunder.

 

24. Costs, Fees and Expenses. Loan Holder and Credit Parties, and each of them,
jointly and severally, shall pay or reimburse Lender for all reasonable costs,
fees and expenses incurred by Lender or for which Lender becomes obligated in
connection with the enforcement of this Agreement, including costs and expenses
and attorneys’ fees, costs and time charges of counsel to Lender throughout all
court levels.

 

25. Termination. This Agreement shall not terminate until the termination of the
Credit Agreement and the commitments to make Loans thereunder and the full and
complete performance and satisfaction and payment in full of all the Obligations
(other than contingent indemnification obligations to the extent no claim giving
rise thereto has been asserted).

 

[Signatures on the following page]

 

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

 

LOAN HOLDER:

     

 

 

STEPHEN SABER

 

CREDIT PARTIES:

       

THE PULSE NETWORK, INC.,

a Nevada corporation

 

 

                By:    

 

  Name:             Title:            

 

THE PULSE NETWORK, INC.,

a Massachusetts corporation

 

THE PULSE NETWORK

MANAGEMENT, LLC, a Massachusetts

       

limited liability company 

                By:    

By: THE PULSE NETWORK, INC., a

  Name:    

Massachusetts corporation

  Title:       By:     Name: Title:

 

 

 

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