SUBORDINATION AGREEMENT
_______________________
THIS SUBORDINATION AGREEMENT (this "Agreement") is entered into
this ______ day of ________________, 1997, among (i) POMEROY
COMPUTER RESOURCES, INC., a Delaware corporation (the
"Borrower"), (ii) MAGIC BOX, INC., a Florida corporation, its
successors and assigns (the "Subordinated Creditor"), and (iii)
STAR BANK, N.A., an Ohio banking corporation, its successors or
assigns (the "Senior Creditor").
R E C I T A L S
_______________
WHEREAS, pursuant to an Amended and Restated Loan Agreement,
dated as of March 14, 199 6, as amended by a Letter Agreement
dated June 27, 1996, as further amended by a Letter Agreement
dated June 26, 1997 (the "Senior Loan Agreement"), between the
Borrower and the Senior Creditor, the Senior Creditor has
extended a commitment to make available to Borrower certain
revolving credit and term loans in the aggregate principal amount
of Fifteen Million ($15,000,000.00) Dollars (the "Senior Loans");
and
WHEREAS, the Senior Loans are to be evidenced by a revolving
credit note (together with all substitutions and replacements
therefor and all amendments and supplements thereof in accordance
with the terms of this Agreement (the "Senior Notes") in the
maximum aggregate principal amount not to exceed Fifteen Million
($15,000,000.00) Dollars.
WHEREAS, Borrower is using a portion of the proceeds of the
Senior Loans to purchase substantially all the assets of
Subordinated Creditor; and
WHEREAS, in connection with the acquisition of substantially all
the assets of Subordinated Creditor, the Subordinated Creditor
will take back four promissory notes in the aggregate principal
amount of $542,000.00 plus interest, fees, costs and other
amounts payable in respect thereof ("Acquisition Debt") in
partial consideration of the payment of the purchase price for
such assets; and
WHEREAS, a condition under the Senior Loans is the execution and
delivery of this Subordination Agreement;
NOW, THEREFORE, in consideration of the premises and for other
good and valuable consideration, the parties agree as follows:
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ARTICLE 1
DEFINITIONS
1.1 Certain Terms. The following terms, when used in this
Agreement, including the introductory paragraph and Recitals
hereto, shall, except where the context otherwise requires, have
the following meanings:
1.1.01 "Acquisition Debt" has the meaning specified in
the fourth paragraph of the recitals hereto.
1.1.02 "Acquisition Note" collectively means the
promissory notes issued by Borrower to the Subordinated Creditor
which evidences the Acquisition Debt.
1.1.03 "Agreement" means this Subordination Agreement.
1.1.04 "Applicable Law" means and includes statutes and
rules and regulations thereunder and interpretations thereof by
any governmental agency charged with the administration or the
interpretation thereof, and orders, requests, directives,
instructions and notices of any governmental authority.
1.1.05 "Bankruptcy or Insolvency Proceeding" means any
insolvency or bankruptcy case or proceeding, or any receivership,
liquidation, reorganization, assignment for the benefit of
creditors or other similar case or proceeding for the liquida-
tion, dissolution, reorganization or winding up of the Borrower,
or of all or any portion of the property of Borrower, whether
voluntary or involuntary, partial or complete.
1.1.06 "Borrower" has the meaning specified in the
introductory paragraph hereto.
1.1.07 "Enforcement Action" means
(a) the acceleration of any Subordinated Debt,
(b) any realization or foreclosure upon any collateral
securing the Subordinated Debt,
(c) any demand by the Subordinated Creditor for
payment of the Subordinated Debt, or
(d) subject always to the provisions contained in the
next sentence, the enforcement of any of the rights or remedies
of the Subordinated Creditor against the Borrower, whether under
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the Subordinated Debt Documents or otherwise, and whether by
action at law, suit in equity, arbitration proceedings or
otherwise.
The term "Enforcement Action" shall not include or be
deemed to include the giving of notices (including, without
limitation, notices of default, notices of Events of Default,
notices of demand for payment, notices of breaches of covenants,
etc.), the making of requests or the delivery of other
communications pursuant to and upon the terms permitted or
otherwise contemplated by any of the Subordinated Debt Documents,
it being understood and agreed that any action of the kind
described above in the foregoing sentence may be taken by the
Subordinated Creditor at any time and from time to time after the
date hereof without any limitation or restriction.
1.1.08 "Enforcement Action Notice" has the meaning
specified in Section 3.2(b).
1.1.09 "Event of Default" has, in connection with
permitted payments under Section 2.6 hereof, the meaning
specified in the Senior Loan Agreement and, with respect to
Standstill Events as defined herein and as used in Section 3, has
the meaning specified in the Acquisition Note.
1.1.10 "Extension of Credit" means any loan, letter of
credit or other extension of credit of any kind or character and
in the case of revolving credit facilities, includes lending and
relending up to the maximum amount thereof, the substitution of
term notes for portions of the revolving credit notes and any
Permitted Increase.
1.1.11 "Instrument" means any contract, agreement,
indenture, mortgage or other document or writing (whether a
formal agreement, letter or otherwise) under which any obligation
is evidenced, assumed or undertaken, or any right to any lien is
granted or perfected.
1.1.12 "Payment in Full" and "Paid in Full" mean payment
in full in cash.
1.1.13 "Payment or Distribution on Account of
Subordinated Debt" or "Payment or Distribution" means any payment
or distribution of any kind or character, whether in cash,
securities or other property or any combination thereof, and
whether voluntary or involuntary, on account of principal of, or
interest on any Subordinated Debt, or on account of any
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redemption, retirement, repurchase or other acquisition for value
of any Subordinated Debt.
1.1.14 "Permitted Increase" means any increase in the
principal amount of the Senior Debt effected by Senior Lender,
except the aggregate amounts of any such increases outstanding at
any one time shall not exceed the amount set forth on Exhibit A
attached hereto.
1.1.15 "Proceeds" shall have the meaning
(a) ascribed to that term under the U.C.C. and shall
in any event include any and all payments or distributions of any
kind or character received by way of exercise of rights of set-
off, counterclaim or cross-claim, or enforcement of any claim,
against the Borrower,
(b) any and all proceeds of any insurance, indemnity,
warranty, guaranty of letter of credit payable to the Borrower
with respect to any collateral securing the Subordinated Debt or
Senior Debt, or
(c) any and all other amounts from time to time paid
or payable or distributable under or with respect to any
collateral securing the Subordinated Debt or Senior Debt.
1.1.16 "Star Bank, N.A" as used in the defined terms
"Senior Debt" and "Senior Debt Documents", means and includes
Star Bank, N.A., the party executing this Agreement as Senior
Creditor, and its successors or assigns in title and any so-
called "participants" purchasing any participating interests or
so-called "participants" in any of the rights, title or interest
of Star Bank, N.A. under any of the Senior Debt Documents or in
relation to any of the Senior Debt.
1.1.17 "Reorganization Securities" means securities
issued by the Borrower (or any successor) in exchange for all
Subordinated Debt upon the effectiveness of a plan of
reorganization in bankruptcy of the Borrower that are either (a)
equity securities of the Borrower having no mandatory redemption,
repurchase or dividend obligations, and that are not convertible
into or exchangeable for any securities having mandatory payment,
redemption, repurchase or dividend obligations or (b) debt
securities of the Borrower the payment of which is subordinated,
at least to the extent provided in this Agreement with respect to
the Subordinated Debt, prior to the Payment in Full of the Senior
Debt, provided that no class of Senior Debt is impaired (within
the meaning of Section 1124 of Title 11 of the United States
Code) by such plan of reorganization.
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1.1.18 "Senior Creditor" has the meaning specified in the
introductory paragraph hereto.
1.1.19 "Senior Debt " means all indebtedness and other
obligations of the Borrower, contingent or otherwise, to the
Senior Creditor, now or hereafter existing, under or with respect
to:
(a) extension of Credit by the Senior Creditor under
the Senior Debt Documents in an aggregate outstanding principal
amount not exceeding Fifteen Million Dollars ($15,000,000.00).
(b) interest (including interest accruing at the
contract rate after the commencement of any Bankruptcy or
Insolvency Proceeding, whether or not such interest is an allowed
claim in such proceeding) on Extensions of Credit described in
clause (a) of this definition and on any Permitted Increase
described in clause (c) below, and fees, costs, expenses,
ties, reimbursements and other amounts owing to the Senior
Creditor on Extensions of Credit described in clause (a) of this
definition; and
(c) any Permitted Increase.
1.1.20 "Senior Debt Documents" means, collectively, (a)
the Senior Loan Agreement and (b) the Senior Notes (subject
always to the provisions of the defined term "Senior Debt") and
each other Instrument executed in connection with or evidencing,
governing, guaranteeing or securing any indebtedness under any
such document or any Permitted Increase, all as the same may be
amended, modified or supplemented pursuant to the terms thereof
in accordance with the provisions of this Agreement.
1.1.21 "Senior Loans" has the meaning specified in the
first paragraph of the Recitals hereto.
1.1.22 "Senior Loan Agreement" has the meaning specified
in the first paragraph of the Recitals hereto.
1.1.23 "Standstill Event" means the occurrence of any one
or more of the _________________
Events of Default under the Acquisition Note.
1.1.24 "Standstill Event Notice" shall mean the date the
Subordinated Creditor shall have provided written notice of such
Standstill Event to the Senior Creditor and Borrower.
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1.1.25 "Standstill Period " means, in relation to any
Standstill Event, the period beginning on the date the Standstill
Event in relation to such Standstill Period shall have occurred
and ending on the date determined pursuant to Section 3.1(a).
1.1.26 "Subordinated Creditor" has the meaning specified
in the introductory paragraph hereto or any holder of the
Acquisition Note.
1.1.27 "Subordinated Debt " means all indebtedness and
other obligations of the Borrower, contingent or otherwise, now
or hereafter existing, under or in respect of the Acquisition
Note, and interest (including interest accruing after the
occurrence of an Event of Default as defined in the Acquisition
Note), fees, costs, expenses, indemnities, reimbursements thereon
and other amounts payable in respect thereof (including any such
obligations to prepay, repurchase, retire, redeem or acquire for
value any such indebtedness).
1.1.28 "Subordinated Debt Documents" means, collectively
the Acquisition Note, and
(a) each Instrument now or hereafter executed in
connection with or evidencing, governing, guarantying or securing
any indebtedness under any such document.
1.1.29 "U.C.C." means the Uniform Commercial Code, as in
effect from time to time in the State of Ohio.
1.2 Senior Loan Agreement Unless otherwise defined herein or
the context otherwise requires, terms used in this Agreement,
including the introductory paragraph and Recitals hereto, that
are defined in the Senior Loan Agreement (as in effect on the
date hereof), have the meanings given to such terms in the Senior
Loan Agreement (as in effect on the date hereof).
1.3 U.C.C. Definitions Unless otherwise defined herein or the
context otherwise requires, terms for which meanings are provided
in the U.C.C. are used in this Agreement, including the
introductory paragraph and Recitals hereto, with such meanings.
1.4 General Provisions Relating to Definitions Terms for which
meanings are defined in this Agreement shall apply equally to the
singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The term "including" means
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including, without limiting the generality of any description
preceding such term. Except as otherwise expressly provided
herein, each reference herein to any Person shall include a
reference to such Person's successors in title and assigns or (as
the case may be) his successors, assigns, heirs, executors,
administrators and other legal representatives. Except as
otherwise expressly provided herein, references to any Instrument
defined in this Agreement refer to such Instrument as originally
executed, or, if subsequently varied, replaced or supplemented
from time to time, as so varied, replaced or supplemented and in
effect at the relevant time of reference thereto.
ARTICLE 2
DEBT SUBORDINATION ARRANGEMENTS
2.1 Agreement to Subordinate. The Borrower and the Subordinated
Creditor agree with and for the benefit of the Senior Creditor
that all Subordinated Debt is hereby expressly subordinated and
made junior in right of payment, to the extent and in the manner
provided in this Agreement, to the prior Payment in Full of all
Senior Debt.
2.2 Bankruptcy or Insolvency Proceeding. In the event of any
Bankruptcy or Insolvency Proceeding:
(a)The Senior Creditor shall first be entitled to receive
Payment in Full of all Senior Debt before the Subordinated
Creditor shall be entitled to receive any payment or distribution
on account of Subordinated Debt (other than distributions in the
form of Reorganization Securities); and
(b)the Senior Creditor shall be entitled to receive (until
Payment in Full of all Senior Debt) any payment or distribution
on account of Subordinated Debt (other than distributions in the
form of Reorganization Securities) which may be payable or
deliverable to the Subordinated Creditor (including any such
payment or distribution payable or deliverable by virtue of the
provisions of, or any security for, any Instrument governing
indebtedness which is subordinate and junior in right of payment
to the Subordinated Debt).
2.3 Delivery of Prohibited Payments or Distributions on Account
of Subordinated Debt to Senior Creditor. If any Payment or
Distribution on Account of Subordinated Debt (other than
distributions in the form of Reorganization Securities or
distributions authorized by Sections 2.6 and 2.8) is collected or
received by the Subordinated Creditor, then such payment or
distribution shall be paid over or delivered forthwith to the
Senior Creditor.
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2.4 Subrogation. Upon payment in full in cash of all Senior
Debt, the Subordinated Creditor shall be immediately subrogated
to the rights of the Senior Creditor (to the extent of the
payments and distributions previously made to the Senior Creditor
pursuant to the provisions of this Article 2) to receive payments
and distributions of property of the Borrower applicable to
Senior Debt until all amounts owing on Subordinated Debt shall be
paid in full. No payments or distributions applicable to Senior
Debt which the Subordinated Creditor shall receive by reason of
its being subrogated to the rights of the Senior Creditor
pursuant to the provisions of this Section 2.4 shall, as between
the Borrower and its creditors, other than the Senior Creditor
and the Subordinated Creditor, be deemed to be a payment by the
Borrower to or for the account of Subordinated Debt; and, for the
purposes of such subrogation, no payments or distributions to the
Senior Creditor of any property to which the Subordinated
Creditor would be entitled except for the provisions of this
Agreement, and no payment pursuant to provisions of this
Agreement to the Senior Creditor by the Subordinated Creditor,
shall, as between the Borrower and its creditors, if any, other
than the Senior Creditor and the Subordinated Creditor, be deemed
to be a payment by the Borrower to or for the account of Senior
Debt, it being understood that the provisions of this Agreement
are intended solely for the purpose of defining the relative
rights of the Subordinated Creditor, on the one hand, and the
Senior Creditor, on the other hand, and nothing contained in this
Section 2.4 or elsewhere in this Agreement is intended to or
shall impair, as between the Borrower and the Subordinated
Creditor, the obligation of Borrower, which is absolute and
unconditional, to pay to the Subordinated Creditor, subject to
the rights of the Senior Creditor under this Agreement, the
Subordinated Debt as and when the same shall become due and
payable in accordance with its terms.
2.5 Senior Defaults and Acceleration. In any circumstances
where Section 2.2 does not apply, the Subordinated Creditor will
not be entitled to receive or retain any direct or indirect
payment (except any payment previously made by Borrower to the
Subordinated Creditor which complied with Sections 2.6 and 2.8)
(in cash, property, by set-off or otherwise) from the Borrower of
or on account of any Acquisition Debt if:
(a)all or any part of the Senior Debt is due and payable at
stated maturity, by acceleration or otherwise; or
(b)at the time of making such payment and immediately after
giving effect thereto, there shall exist an Event of Default
under the Senior Loan Agreement.
2.6 Permitted Payments. The Subordinated Creditor shall not be
entitled to receive or retain any prepayment (in cash, property,
by set-off or otherwise) of or on account of the Acquisition Note
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until such time as the Senior Debt is paid in full. Provided
that there exists no Event of Default (or event which would
become and Event of Default with notice or the passage of time)
under the Senior Loan Agreement which remains uncured, the
Subordinated Creditor shall be entitled to receive and retain
interest repayment and principal repayment, under the Acquisition
Debt in accordance with the terms of the Acquisition Note.
2.7 Turn-Over of Payments Received If the Subordinated
Creditor shall receive any payment with respect to the
Acquisition Note which the Subordinated Creditor is not permitted
to receive and retain pursuant to this Agreement, such payment
shall be held in trust by the Subordinated Creditor for the
benefit of, and shall be paid over promptly on demand to the
Senior Creditor or its successors and assigns, as their respec-
tive interests may appear, for application to the payment of all
Senior Debt remaining unpaid until the same shall have been paid
in full in cash, after giving effect to any concurrent payment or
distribution to the Senior Creditor. No such payments or
distributions to the Senior Creditor or its successors and
assigns shall be deemed to discharge the Senior Debt until it is
repaid in full.
2.8 Permitted Payments; Right to Retain Payments.
Notwithstanding the foregoing, any payment in respect of the
Acquisition Debt made in compliance with the terms of this
Agreement and received by the Subordinated Creditor shall become
its sole and absolute property and shall not be subject to any
payment over or any distribution to or claim by the Senior
Creditor or any other person, unless at the time of receipt of
such payment (i) an event specified in either Section 2.2, 2.5(a)
or 2.5(b) shall have occurred and be continuing and with respect
to an event specified in Section 2.5(b) only, the Senior Creditor
shall have given Subordinated Creditor notice of such event
within sixty (60) days of the occurrence of such event of
default. In the event that the Subordinated Creditor receives
any payment on the Subordinated Debt made in compliance herewith,
and Senior Creditor has not given any notice as described above,
such payment shall conclusively be determined to be a permitted
payment hereunder, otherwise, upon receipt of such notice within
such sixty (60) day period, Subordinated Creditor shall promptly
remit such payment to Senior Creditor for application in
accordance with Section 2.3 hereof.
2.9 Borrower's Obligations Absolute. The provisions of this
Agreement are solely for the purpose of defining the relative
rights of Senior Creditor as the holder of the Senior Debt,
Borrower and the holder of the Acquisition Note. Nothing herein
shall impair, as between the Borrower and the Senior Creditor,
its successors or assigns, as the holder of any Senior Debt, the
obligations of the Borrower, which are unconditional and
absolute, to pay to the holder thereof the Senior Debt, in
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accordance with the terms of the Senior Loan Agreement. Nothing
herein shall impair, as between the Borrower and the Subordinated
Creditor, the obligations of the Borrower which are unconditional
and absolute to pay Subordinated Creditor in accordance with the
terms of the Acquisition Note, subject to the terms of this
Subordination Agreement.
ARTICLE 3
LIMITATIONS ON CERTAIN ENFORCEMENT ACTIONS
3.1 Imposition of Standstill Period.
(a)Each Standstill Period will commence on the date the
Standstill Event in relation to such Standstill Period shall
have occurred and will terminate upon the earliest to occur of
(i) the date which is 180 days after the later of (a) occurrence
of an Event of Default as defined in the Acquisition Note or (b)
the giving of the Standstill Event Notice; (ii) the date, after
such Standstill Period shall have commenced, such Standstill
Event shall have been cured or waived or shall otherwise have
ceased to exist; or (iii) June 26,1999.
(b)At any time during a Standstill Period, Borrower or
Senior Creditor may cause any Event of Default under the
Acquisition Debt to be cured and, in such event, the Subordinated
Creditor shall not have any right to accelerate the principal
payment of the Acquisition Debt as relates to such Event of
Default that was cured.
3.2 Limitations on Enforcement Actions. The Subordi nated
Creditor will not take any Enforcement Action until such time as:
(a)any Standstill Period is no longer continuing; and
(b)the Subordinated Creditor shall have given to the
Borrower and the Senior Creditor not less than 30 days' prior
written notice (an "Enforcement Action Notice") of the intent of
the Subordinated Creditor to take such Enforcement Action.
3.3 Certain Notices. The Subordinated Creditor shall not take
any action of the kind described in the second sentence of the
defined term "Enforcement Action" until the Subordinated Creditor
shall have given the Senior Creditor at least two (2) days prior
notice to the taking thereof.
3.4 Limitations on Commencement of Bankruptcy or Insolvency
Proceeding. The Subordinated Creditor will not commence or
institute, or join with any other Person or Persons in commencing
or instituting, any Bankruptcy or Insolvency Proceeding.
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3.5 Limitation on Remedies Upon Acceleration of Senior Debt
Notwithstanding any contrary provision of any Subordinated Debt
Document, the acceleration of any Senior Debt by the commencement
of legal proceedings by the Senior Creditor against the Borrower
to enforce payment of any Senior Debt shall entitle the
Subordinated Creditor to accelerate Subordinated Debt or take
other Enforcement Action (subject to the applicable provisions of
Section 2.3 of this Agreement).
ARTICLE 4
WAIVERS
4.1 Waivers of Notice, etc.
Creditor under this Agreement, and the subordination arrangements
contained herein, shall not be to any extent or in any way or
manner whatsoever impaired or otherwise affected by any of the
following, whether or not the Subordinated Creditor shall have
had any notice or knowledge of any thereof:
(a)the dissolution, termination of existence, death,
bankruptcy, liquidation, insolvency, appointment of a receiver
for all or any part of the property of, assignment for the
benefit of creditors by, or the commencement of any Bankruptcy or
Insolvency Proceeding by or against, the Borrower;
(b)the absorption, merger or consolidation of, or the
effectuation of any other change whatsoever in the name,
membership, constitution or place of formation of, the Borrower;
(c)any extension or postponement of the time for the
payment of any Senior Debt, the acceptance of any partial payment
thereon, any and all other indulgences whatsoever by the Senior
Creditor in respect of any Senior Debt, the taking, addition,
substitution or release, in whole or in part, at any time or
times, of any collateral securing any Senior Debt, or the
addition, substitution or release, in whole or in part, of any
Person or Persons primarily or secondarily liable in respect of
any Senior Debt;
(d)any action or delay in acting or failure to act on the
part of the Senior Creditor under any Senior Debt Documents or in
respect of the Senior Debt or any collateral securing any Senior
Debt or otherwise, including (i) any action by the Senior
Creditor to enforce any of its rights, remedies or claims in
respect of any collateral securing any Senior Debt, (ii) any
failure by the Senior Creditor strictly or diligently to assert
any rights or to pursue any remedies or claims against the
Borrower or any other Person or Persons under any of the Senior
Debt Documents or provided by statute or at law or in equity,
(iii) any failure by the Senior Creditor to perfect or to
preserve the perfection or priority of any of its Liens securing
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any Senior Debt, or (iv) any failure or refusal by the Senior
Creditor to foreclose or to realize upon any collateral securing
any Senior Debt or to take any action to enforce any of its
rights, remedies or claims under any Senior Debt Document;
(e)any modification or amendment of, or any supplement or
addition to, any Senior Debt Document;
(f)any waiver, consent or other action or acquiescence by
the Senior Creditor in respect of any default by the Borrower in
its performance or observance of or compliance with any term,
covenant or condition contained in any Senior Debt Document; or
(g)the declaration that any Senior Debt Document or any
provision thereof is null and void or illegal, invalid,
unenforceable or inadmissible in evidence; or the failure of any
Senior Debt Document to be in full force and effect.
The Subordinated Creditor hereby absolutely, unconditionally
and irrevocably assents to and waives notice of any and all
matters hereinbefore specified in clauses (a) through (g).
ARTICLE 5
AGREEMENT OF SENIOR CREDITOR AND BORROWER
5.1 Agreement of Senior Creditor to Provide Subordinated
Creditor with Notice. Senior Creditor agrees to provide the
Subordinated Creditor with notice of any and all written
notice(s) of an Event of Default that Senior Creditor has
provided to the Borrower declaring an Event of Default under the
Senior Loan Documents within sixty (60) days of such fact. Such
notice shall be provided in writing to the disbursement agent at
the following address:
Magic Box, Inc.
Attention: Israel Fintz
16698 Northwest 54th Avenue
Miami, Florida 33014
or at such other address as may be provided by the
Subordinated Creditor to the Senior Creditor; and
With a copy to: Jerry J. Sokol, Esq.
McDermott, Will & Emery
201 South Biscayne Boulevard, Suite 2200
Miami, Florida 33131-4336
5.2 Representations and Warranty of the Borrower. The Borrower
hereby represents to the Senior Creditor as follows:
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(a)all subordinated debt existing on the date hereof is
Subordinated Debt.
ARTICLE 6
MISCELLANEOUS
6.1 Amendments, Waivers, etc. The provisions of this Agreement
may from time to time be amended, modified or waived, if such
amendment, modification or waiver is in writing and consented to
by the Subordinated Creditor, Borrower and by the Senior
Creditor. No failure or delay on the part of any Person in
exercising any power or right under this Agreement shall operate
as a waiver thereof, nor shall any single or partial exercise of
any such power or right preclude any other or further exercise
thereof or the exercise of any other power or right. No notice
to or demand hereunder shall entitle any Person to any notice or
demand in similar or other circumstances, unless otherwise
required by this Agreement. The remedies herein provided are
cumulative and not exclusive of any other remedies provided at
law or in equity. No waiver or approval by a Person under this
Agreement shall, except as may be otherwise stated in such waiver
or approval, be applicable to any subsequent transactions. No
waiver or approval hereunder shall require any similar or
dissimilar waiver or approval thereafter to be granted hereunder.
6.2 Further Assurances. The Subordinated Creditor and the
Borrower will, from time to time at its own expense, promptly
execute and deliver all such further Instruments, and take all
such further action, as may be reasonably necessary or
appropriate, or as the Senior Creditor may reasonably request, in
order to carry out the intent of this Agreement.
6.3 Specific Performance. Senior Creditor is hereby authorized
to demand specific performance of this Agreement at any time when
the Subordinated Creditor shall have failed to comply with any of
the provisions of this Agreement applicable to them whether or
not Borrower shall have complied with any of the provisions
hereof applicable to it, and the Subordinated Creditor hereby
irrevocably waives any defense based on the adequacy of a remedy
at law which might be asserted as a bar to such remedy of
specific performance.
6.4 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of
this Agreement or affecting the validity or enforceability of any
such provision in any other jurisdiction.
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6.5 Enforcement by Senior Creditor. The Borrower and the
Subordinated Creditor acknowledge and agree that their respective
obligations hereunder are, and are intended to be, an inducement
and consideration to the Senior Creditor to acquire and con tinue
to hold, or to continue to hold, the Senior Debt. The Senior
Creditor shall be deemed conclusively to have relied upon the ob-
ligations hereunder of the Borrower and the Subordinated Creditor
in acquiring and continuing to hold, or in continuing to hold,
the Senior Debt. The Senior Creditor is hereby made an obligee
hereunder and may enforce directly the obligations of the
Borrower and the Subordinated Creditor contained herein. The
Senior Creditor, by accepting the benefits of this Agreement, is
bound by the provisions hereof.
6.6 Continuing Agreement. This Agreement shall in all respects
be a continuing agreement, and this Agreement and the agree ments
and obligations of the Borrower and the Subordinated Creditor
hereunder shall remain in full force and effect until all Senior
Debt is indefeasibly paid in full or all Subordinated Debt is
paid in full in compliance with this Agreement.
6.7 Successors and Assigns. This Agreement shall be binding
upon, and shall inure to the benefit of, the Borrower and the
Senior Creditor and the Subordinated Creditor and their
respective successors in title and assigns. The rights and obli-
gations of the Subordinated Creditor under this Agreement shall
be assigned automatically to, and the term "Subordinated
Creditor" as used in this Agreement shall automatically include,
any assignee or successor of such Subordinated Creditor, and such
assignee or successor shall automatically become a party to this
Agreement as a Subordinated Creditor without the need for the
execution of any Instrument or the taking of any other action.
The Subordinated Creditor shall deliver a complete copy of this
Agreement to any potential assignee or successor of the Subordi-
nated Creditor prior to the effectiveness of any such assignment.
At the request of the Senior Creditor, the Subordinated
Creditor shall execute and deliver to the Senior Creditor an
instrument of accession hereto.
6.8 Notices. All notices and other communications provided to a
party hereunder shall (except as otherwise specifically provided
herein) be in writing or by facsimile transmission and addressed
or delivered to it at its address designated for notices set
forth below its signature hereto; at the addresses specified in
Section 5.1 if notice is to the Subordinated Creditor; or at such
other address as may be designated by such party in a notice to
the other parties. Any notice, if mailed and properly addressed
with postage prepaid, and any notice, if transmitted by facsimile
transmission, shall be deemed given when received.
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6.9 Entire Agreement. This Agreement constitutes the entire
agreement among the Borrower, the Senior Creditor and the
Subordinated Creditor with respect to the subject matter hereof
and supersedes any prior or contemporaneous agreements, represen-
tations, warranties or understandings, whether oral, written or
implied, as to the subject matter of the Agreement.
6.10 CHOICE OF LAW . THIS AGREEMENT HAS BEEN EXECUTED AND
DELIVERED IN THE STATE OF OHIO AND SHALL IN ALL RESPECTS BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE INTERNAL LAWS OF
SUCH STATE APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED
WHOLLY WITHIN SUCH STATE.
6.11 Service of Process. This Subordination Agreement shall be
deemed made in the state in which the principal office of the
Senior Creditor is located, and all documents evidencing same,
and all the rights and obligations of the Subordinated Creditor
and the Senior Creditor hereunder, shall in any respects be
governed by and construed in accordance with the laws of the
state in which the principal office of the Senior Creditor is
located, including all matters of construction, validity and
performance. Without limitation on the Senior Creditor's ability
to exercise all its rights to protect or enforce the Senior Loans
and the Subordinated Obligations, the Subordinated Creditor and
the Senior Creditor agree that in any action or proceeding
commenced by or on behalf of the parties arising out of or
relating to this Subordination Agreement and/or any documents
evidencing same, shall be commenced and maintained exclusively in
the court of applicable general jurisdiction located in the
federal district court of applicable general jurisdiction located
in the federal district in which the principal office of the
Senior Creditor is located or any other courts of applicable
general jurisdiction located in the district where the Senior
Creditor is located. The Subordinated Creditor and the Senior
Creditor also agree that a summons and complaint commencing an
action or proceeding in any such courts by or on behalf of such
parties shall be properly served and shall confer personal
jurisdiction on a party to which said party consents, if (a)
served personally or by certified mail to the party at any of its
addresses noted herein, or (b) as otherwise provided under the
laws of the state in which the principal office of the Senior
Creditor is located. The loan(s) or other financial
accommodation(s) is in part related to the aforesaid provisions
on jurisdiction, which the Senior Creditor deems a vital part of
this subordination arrangement.
6.12 Waiver of Jury Trial. To the extent not prohibited by
Applicable Law which cannot be waived, each of the parties hereto
waives, and covenants that it will not assert (whether as
plaintiff, defendant or otherwise), any right to trial by jury in
any forum in respect of any issue, claim, demand, action or cause
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of action arising out of or based upon this Agreement or the
subject matter hereof, in each case whether now existing or
hereafter arising and whether in contract or tort or otherwise.
Each of the parties hereto acknowledges that the provisions of
this Section 6.12 constitute a material inducement upon which the
Senior Creditor is relying and will rely in holding Senior Debt.
Any party and the Senior Creditor may file an original
counterpart or a copy of this Section 6.12 with any court as
written evidence of the consent of each of the parties hereto to
the waiver of its right to trial by jury.
6.13 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original,
but all of which together shall constitute but one and the same
Instrument.
6.14 Headings. The descriptive headings in this Agreement are
inserted for convenience of reference only and shall not affect
the meaning or interpretation of this Agreement or any provision
hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed under seal by their duly authorized officers as of
the day and in the year first above written.
BORROWER:
________
POMEROY COMPUTER RESOURCES, INC.
By:_____________________________________
Title:____________________________________
Address:_________________________________
______________________________________
Fax:____________________________________
Attention:________________________________
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SUBORDINATED CREDITOR:
_____________________
MAGIC BOX, INC.
By:_____________________________________
Title:____________________________________
Address:_________________________________
______________________________________
Fax:____________________________________
Attention:________________________________
SENIOR CREDITOR:
_______________
STAR BANK, N.A.
By:_____________________________________
Title:____________________________________
Address:_________________________________
______________________________________
Fax:____________________________________
Attention:________________________________
STATE OF OHIO
COUNTY OF HAMILTON, ss:
On this ____ day of ______, 1997, before me personally
appeared ____________ _______________, to me known, who, being by
me duly sworn, declared that he is the ______________________ of
POMEROY COMPUTER RESOURCES, INC., a signatory of the foregoing
Subordination Agreement; and that, being duly authorized, he did
execute the foregoing Subordination Agreement on behalf of
POMEROY COMPUTER RESOURCES, INC.; and that the foregoing
Subordination Agreement constitutes the free act and deed of
POMEROY COMPUTER RESOURCES, INC.
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________________________________________
NOTARY PUBLIC
My Commission Expires:___________________
STATE OF FLORIDA
COUNTY OF DADE, ss:
On this ____ day of ________, 1997, before me personally
appeared ___________ ________________, to me known, who, being by
me duly sworn, declared that he is the _____________________ of
MAGIC BOX, INC., a signatory of the foregoing Subordination
Agreement; and that, being duly authorized, he did execute the
foregoing Subordination Agreement on behalf of MAGIC BOX, INC.,
and that the foregoing Subordination Agreement constitutes the
free act and deed of MAGIC BOX, INC.
________________________________________
NOTARY PUBLIC
My Commission Expires:__________________
STATE OF OHIO
COUNTY OF HAMILTON, ss:
On this ____ day of _____, 1997, before me personally
appeared ______________ ___________________ to me known, who,
being by me duly sworn, declared that he is the
__________________ of STAR BANK, N.A., a signatory of the
foregoing Subordination Agreement; and that, being duly
authorized, he did execute the foregoing Subordination Agreement
on behalf of STAR BANK, N.A.; and that the foregoing
Subordination Agreement constitutes the free act and deed of STAR
BANK, N.A..
________________________________________
NOTARY PUBLIC
My Commission Expires:__________________
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