Exhibit 10.2

SUBORDINATION AND INTERCREDITOR AGREEMENT

This SUBORDINATION AND INTERCREDITOR AGREEMENT (this “Agreement”) is made as of
August 21, 2012 and effective as of May 9, 2012, by and between HALLWOOD FAMILY
(BVI), L.P., a British Virgin Islands limited partnership (“Creditor”), and
BRANCH BANKING AND TRUST COMPANY (together with its successors and assigns,
“Bank”).

Recitals

A. BROOKWOOD COMPANIES INCORPORATED, a Delaware corporation (“Brookwood”),
KENYON INDUSTRIES, INC., a Delaware corporation (“Kenyon”), BROOKWOOD
LAMINATING, INC., a Delaware corporation (“Laminating”), ASHFORD BROMLEY, INC.,
a Delaware corporation (“Ashford”), and STRATEGIC TECHNICAL ALLIANCE, LLC, a
Delaware limited liability company (“STA,” together with Brookwood, Kenyon,
Laminating, and Ashford, each individually, a “Borrower” and collectively, the
“Borrowers”) have requested and/or obtained certain loans or other credit
accommodations from Bank pursuant to that certain Loan Agreement dated March 30,
2012 by and among Bank and Borrowers (as amended, restated, supplemented, or
otherwise modified from time to time, the “Loan Agreement”).

B. Pursuant to the Loan Agreement, THE HALLWOOD GROUP INCORPORATED, a Delaware
corporation (“Hallwood Group”), entered into that certain Pledge and Security
Agreement dated as of March 30, 2012 in favor of Bank (as amended, restated,
supplemented, or otherwise modified from time to time, the “Bank Pledge
Agreement”) pursuant to which Hallwood Group granted a first priority lien and
security interest in the Pledged Collateral (as defined in the Bank Pledge
Agreement, referred to herein as the “Collateral”) to Bank to secure the
indebtedness arising under the Loan Agreement.

C. Subsequent to the date of the Loan Agreement, Hallwood Group (i) issued that
certain Promissory Note dated as of May 9, 2012 in the original principal amount
of $10,000,000 to Creditor (as amended, restated, supplemented, or otherwise
modified from time to time, the “Hallwood Note”) evidencing a loan from Creditor
to Hallwood Group (the “Hallwood Loan”), and (ii) in relation to the Hallwood
Note and to secure the Hallwood Loan, entered into that certain Pledge and
Security Agreement dated as of May 9, 2012 in favor of Creditor (as amended,
restated, supplemented, or otherwise modified from time to time, the “Hallwood
Family Pledge Agreement”) and that certain Security Agreement dated as of May 9,
2012 in favor of Creditor (as amended, restated, supplemented, or otherwise
modified from time to time, the “Hallwood Family Security Agreement”) pursuant
to which Hallwood Group granted a junior lien and security interest in certain
of its assets to the Creditor, including the Collateral.

D. In order to induce Bank to continue to extend credit to Borrowers, Bank has
required that Creditor enter into this Agreement.

NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:

1. Definitions. As used in this Agreement, the following words and terms shall
have the meaning set forth below and, unless defined herein, shall have the
meaning set forth in the Uniform Commercial Code, as amended from time to time.

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“Bank Indebtedness” means all of the following: (a) the aggregate principal
indebtedness advanced from time to time under the Loan Agreement and the other
Bank Loan Documents; (b) all interest accrued and accruing on the aggregate
principal outstanding under the Bank Loan Documents from time to time
(including, without limitation, any interest accruing after a Proceeding
relating to any Borrower, whether or not a claim for post-filing or
post-petition interest is allowed in such proceeding); (c) all other fees or
monetary obligations owed under the Bank Loan Documents (including, without
limitation, any fees incurred or accruing after a Proceeding relating to any
Borrower, whether or not a claim for post-filing or post-petition fees is
allowed in such proceeding); and (d) all costs incurred by the Bank under the
Bank Loan Documents in commencing or pursuing any enforcement action(s) with
respect to the amounts described in clauses (a) through (c), including
attorneys’ fees and disbursements (including, without limitation, any costs
incurred or accruing after any Proceeding relating to any Borrower, whether or
not a claim for post-filing or post-petition costs is allowed in such
proceeding). “Bank Indebtedness” shall also include all amendments,
modifications and refinancings of any of the foregoing with the same or another
lender.

“Bank Loan Documents” shall mean the “Loan Documents” as defined in the Loan
Agreement.

“Creditor Documents” shall mean the Hallwood Note, the Hallwod Family Pledge
Agreement, the Hallwood Family Security Agreement, and all other documents and
instruments evidencing, securing or pertaining to any portion of the Hallwood
Loan, in each case, as amended, supplemented, restated, modified, renewed,
extended or replaced from time to time.

“Proceeding” shall mean the filing of any petition or the institution of any
proceeding by or against any Borrower under any provisions of the Bankruptcy
Reform Act, Title 11 of the United States Code, or any other or similar law
relating to bankruptcy, insolvency, reorganization or other relief for debtors,
or generally affecting creditors’ rights, or seeking the appointment of a
receiver, trustee, custodian or liquidator of or for any Borrower or any of its
assets.

2. Subordination. Creditor subordinates to Bank any security interest or lien
that such Creditor may have in the Collateral, whether presently existing or
arising in the future. Notwithstanding (a) the respective dates of attachment or
perfection of the security interest of Creditor and the security interest of
Bank or (b) any provision of the Uniform Commercial Code or any other applicable
law to the contrary, the security interest of Bank in the Collateral, shall at
all times be prior to the security interest, if any, of Creditor in the
Collateral.

3. Forbearance by Creditor. Until all Bank Indebtedness has been fully paid and
satisfied, any commitments to lend under the Loan Agreement have terminated, and
any letters of credit under the Loan Agreement have expired or otherwise been
terminated, Creditor shall take no action, without the prior written consent of
Bank, to enforce its security interest in the Collateral, including but not
limited to, attempting to collect or realize upon the Collateral or

 

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foreclosing any security interest in the Collateral. In the event that Creditor
obtains possession of any proceeds of the Collateral, said proceeds shall be
held in trust by Creditor as the property of Bank and Creditor shall promptly
deliver same to Bank in precisely the form received.

4. Enforcement of Bank’s Security Interest. Bank may at any time exercise all
rights and remedies as are granted to it by law and/or in the Bank Loan
Documents with respect to the Collateral, without the consent of Creditor. In
this regard, Bank shall account to Creditor for any surplus received from a
liquidation or disposition of the Collateral in excess of the Bank Indebtedness.
In liquidating or disposing of the Collateral, Bank need only use its reasonable
best judgment with respect thereto and shall not be liable to Creditor for any
act or omission with respect to the liquidation of the Collateral or the fact
that the proceeds realized from a liquidation of the Collateral could, under any
circumstances, have been greater, excluding any liability arising out of a sale
which is not commercially reasonable.

5. Survival of Agreement in the Event of Insolvency. In the event of Hallwood
Group’s insolvency, reorganization or any case or Proceeding, these provisions
shall remain in full force and effect, and Bank’s claims against Hallwood Group
and the estate of each Borrower and Hallwood Group shall be paid in full before
any payment is made to Creditor.

6. Provisions Applicable After Proceeding.

(a) The provisions of this Agreement shall continue in full force and effect
notwithstanding the occurrence of any Proceeding.

(b) Creditor agrees not to initiate or prosecute, and not to encourage any other
person to initiate or prosecute, any claim, action or other proceeding:
(i) challenging the enforceability of the Bank’s claim in any Proceeding;
(ii) challenging the enforceability of any liens or security interests in assets
securing the Bank Indebtedness; (iii) asserting any claims that Borrowers may
hold with respect to Bank; (iv) challenging any valuation of the collateral
securing the Bank Indebtedness submitted by or on behalf of Bank; or
(v) objecting to any motion by Bank for relief from the automatic stay in order
for Bank to exercise its rights under the Bank Loan Documents, any motion by
Bank for adequate protection, any motion by Bank to dismiss any Proceeding, any
motion by Bank to appoint a bankruptcy trustee or examiner, any 363 Sale of
Collateral approved by Bank, or any motion by Bank to convert any Proceeding to
any other Chapter of the Bankruptcy Code.

(c) If Hallwood Group becomes the subject of a Proceeding, then Bank, on behalf
of Creditor, shall have the right and is hereby empowered to vote the full
amount of the Hallwood Loan at such proceeding and at any meeting of creditors
of such Borrower whether or not such meeting is held in a Proceeding. Bank and
any officer or employee designated by Bank for such purpose is hereby
constituted and appointed attorney-in-fact for Creditor with full power (which
power, being coupled with an interest, shall be irrevocable until the Bank
Indebtedness is paid in full in cash) to vote the Hallwood Loan in any of the
foregoing proceedings and at any meeting of creditors of any Borrower and to
file any claim, proof of debt or proof of claim in any such proceeding, and to
compromise, settle and to give releases for any of the Hallwood Loan, and to
endorse Creditor’s name upon any instruments given as a payment on or
distribution in connection with the Hallwood Loan.

 

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7. Control and Turnover of Collateral. Creditor hereby appoints Bank as its
agent and bailee solely for the purposes of perfecting Creditor’s liens on any
of the Collateral that is in the possession or under the control of Bank, and
Bank hereby accepts such appointment and hereby acknowledges that it holds
possession of or otherwise controls any such Collateral for the benefit of the
Creditor as a secured party; provided, that Bank shall not have any duty or
liability to Creditor to protect or preserve any rights pertaining to any of the
Collateral and, except for gross negligence or willful misconduct as determined
pursuant to a final non-appealable order of a court of competent jurisdiction,
Creditor hereby waives and releases Bank from all claims and liabilities arising
pursuant to Bank’s role as bailee with respect to the Collateral, so long as
Bank shall use the same degree of care with respect thereto as Bank uses for
similar property pledged to Bank as collateral for indebtedness of others to
Bank. Reasonably promptly after all Bank Indebtedness has been fully paid and
satisfied, any commitments to lend under the Loan Agreement have terminated, and
any letters of credit under the Loan Agreement have expired or otherwise been
terminated, Bank shall, without recourse, deliver or assign control of the
remainder of the Collateral, if any, in its possession or under its control to
Creditor unless the Hallwood Loan shall have been paid in full or except as may
otherwise be required by applicable law or court order.

8. Amendment of Creditor Documents; Notice of Default. No amendment of the
documents evidencing or relating to the Hallwood Loan or the Creditor Documents
shall directly or indirectly modify the provisions of this Agreement in any
manner which might terminate or impair the subordination of the security
interest or lien that Creditor may have in the Collateral. Creditor shall
provide Bank notice of any default under any Creditor Document simultaneously
with the delivery of notice of such default to Hallwood Group.

9. Effectiveness of Agreement; Payments. This Agreement shall remain effective
until all Bank Indebtedness has been fully paid and satisfied, any commitments
to lend under the Loan Agreement have terminated, and any letters of credit
under the Loan Agreement have expired or otherwise been terminated. Creditor
agrees that Bank may modify, extend, or amend the Bank Loan Documents now or
hereafter executed between Borrowers and Bank, including, without limitation,
increase from time to time the maximum principal amount of the credit facility
evidenced by the Bank Loan Documents, release its security interest in any of
the Collateral or extend the time for the payment of any Bank Indebtedness
without effecting or impairing the rights of Bank under this Agreement. If, at
any time after payment in full of the Bank Indebtedness any payments of the Bank
Indebtedness must be disgorged by Bank for any reason (including, without
limitation, the bankruptcy of any Borrower), then 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
Creditor Documents 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 Bank Indebtedness as Bank, in its sole
discretion, may deem appropriate, including, without limitation, compromising or
otherwise amending the terms of any documents affecting the Bank Indebtedness
and any collateral securing the Bank Indebtedness, and enforcing or failing to
enforce any rights against Hallwood Group, Borrowers or any other person. No
such action or inaction shall impair or otherwise affect Bank’s rights
hereunder.

 

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10. Successors and Assigns. Creditor shall not assign any rights or obligations
under this Agreement without the prior written consent of Bank. This Agreement
shall bind any successors or assignees of Creditor and shall benefit any
successors or assigns of Bank. This Agreement is solely for the benefit of
Creditor and Bank and not for the benefit of Hallwood Group, Borrowers or any
other party.

11. Counterpart Execution. This Agreement may be executed in two or more
counterparts (including by facsimile, pdf, or other electronic transmission),
each of which shall be deemed an original and all of which together shall
constitute one instrument.

12. Governing Law. This Agreement shall be governed by the internal laws of the
State of Texas. Creditor hereby irrevocably agrees that any legal action or
proceeding arising out of or relating to this Agreement may be instituted in the
District Court in Dallas County, Texas, or the United States District Court for
the Northern District of Texas or in such other appropriate court and venue as
Bank may choose in its sole discretion. Bank and Creditor each consent to the
jurisdiction of such courts and waives any objection relating to the basis for
personal or in rem jurisdiction or to venue which Bank or Creditor may now or
hereafter have in any such legal action or proceedings.

13. WAIVER OF JURY TRIAL. UNLESS EXPRESSLY PROHIBITED BY APPLICABLE LAW, EACH OF
THE UNDERSIGNED HEREBY WAIVE THE RIGHT TO TRIAL BY JURY OF ANY MATTERS OR CLAIMS
ARISING OUT OF THIS AGREEMENT OR ANY OF THE LOAN DOCUMENTS EXECUTED IN
CONNECTION HEREWITH OR OUT OF THE CONDUCT OF THE RELATIONSHIP BETWEEN THE
CREDITOR AND BANK. THIS PROVISION IS A MATERIAL INDUCEMENT FOR BANK TO ENTER
INTO THIS AGREEMENT. FURTHER, EACH PARTY HERETO HEREBY CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR COUNSEL, HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT
SUCH PERSON PARTY WOULD NOT SEEK TO ENFORCE THIS WAIVER OR RIGHT TO JURY TRIAL
PROVISION. NO REPRESENTATIVE, AGENT, OR COUNSEL OF ANY PARTY HERETO HAS THE
AUTHORITY TO WAIVE, CONDITION, OR MODIFY THIS PROVISION.

14. Entire Agreement; Amendments. 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, Hallwood Group, or Borrowers in entering into this
Agreement and Creditor has kept and will continue to keep itself fully apprised
of the financial and other condition of Hallwood Group and Borrowers. This
Agreement may be amended only by written instrument signed by Creditor and Bank.

15. Costs of Enforcement. 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.

16. Authorization. Creditor represents and warrants to Bank that the terms and
conditions of this Agreement have been authorized by all necessary action on the
part of Creditor, and that the individual signing on behalf of Creditor has all
necessary approval and authority to do so.

 

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

 

CREDITOR:

HALLWOOD FAMILY (BVI), L.P.,

a British Virgin Islands limited partnership

By:   Hallwood G.P. (BVI) Limited, General Partner By:     Name:     Title:    

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BANK: BRANCH BANKING AND TRUST COMPANY By:     Name:     Title:    

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The undersigned approves of the terms of this Agreement.

 

HALLWOOD GROUP:

THE HALLWOOD GROUP INCORPORATED,

a Delaware corporation

By:     Name:     Title: