SUBORDINATION AGREEMENT
THIS SUBORDINATION AGREEMENT (this "Agreement") is entered
into effective as of ___________, 1997, among (i) POMEROY
COMPUTER RESOURCES, INC., a Delaware corporation (the
"Borrower"), (ii) MICROCARE COMPUTER SERVICES, INC., an Indiana
corporation, its successors and assigns (the "Subordinated
Creditor") and (iii) STAR BANK, NATIONAL ASSOCIATION, a national
banking association, its successors or assigns (the "Senior Credi
tor").
RECITALS
WHEREAS, Pursuant to an Amended and Restated Loan Agreement,
dated as of March 14, 1996, as amended by a Letter Agreement
dated June 27, 1996 as amended by an Amended and Restated Loan
Agreement dated as of April 30, 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 a promissory note in the original
principal amount of $801,240.00 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:
ARTICLE 1
DEFINITIONS
SECTION 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:
"Acquisition Debt" has the meaning specified in the fourth
paragraph of the recitals hereto.
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"Acquisition Note" means the promissory note issued by
Borrower to the Subordinated Creditor which evidences the
Acquisition Debt.
"Agreement" means this Subordination Agreement.
"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.
"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.
"Borrower" has the meaning specified in the introductory
paragraph hereto.
"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 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 or actions
customarily taken by unsecured creditors in bankruptcy or
insolvency proceedings to preserve their claims, it being
understood and agreed that any such action may be taken by the
Subordinated Creditor at any time and from time to time after the
date hereof without any limitation or restriction.
"Enforcement Action Notice" has the meaning specified in
Section 3.2(b).
"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.
"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.
"Instrument" means any contract, agreement, indenture,
mortgage or other document or writing (whether a formal agree
ment, letter or otherwise) under which any obligation is
evidenced, assumed or undertaken, or any right to any lien is
granted or perfected.
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"Payment in Full" and "Paid in Full" mean payment in full in
immediately available funds.
"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 redemption, retirement,
repurchase or other acquisition for value of any Subordinated
Debt.
"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 an amount that would cause a violation of
any of the ratios set forth on Exhibit A attached hereto.
"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.
"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.
"Senior Creditor" has the meaning specified in the introduc
tory paragraph hereto.
"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, indemni
ties, reimbursements and other amounts owing to the Senior
Creditor on Extensions of Credit described in clause (a) of this
definition; and
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(c) any Permitted Increase.
"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.
"Senior Loans" has the meaning specified in the first
paragraph of the Recitals hereto.
"Senior Loan Agreement" has the meaning specified in the
first paragraph of the Recitals hereto.
"Standstill Event" means the occurrence of any one or more
of the Events of Default under the Acquisition Note.
"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.
"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).
"Star Bank, National Association", as used in the defined
terms "Senior Debt" and "Senior Debt Documents", means and
includes Star Bank, National Association, 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, National Association
under any of the Senior Debt Documents or in relation to any of
the Senior Debt.
"Subordinated Creditor" has the meaning specified in the
introductory paragraph hereto or any holder of the Acquisition
Note.
"Subordinated Debt" means all indebtedness and other obliga
tions 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 obliga
tions to prepay, repurchase, retire, redeem or acquire for value
any such indebtedness).
"Subordinated Debt Documents" means, collectively, (a) the
Acquisition Note and (b) each Instrument now or hereafter
executed in connection with or evidencing, governing, guarantying
or securing any indebtedness under any such document.
"U.C.C." means the Uniform Commercial Code, as in effect
from time to time in the State of Ohio.
SECTION 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
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effect on the date hereof), have the meanings given to such terms
in the Senior Loan Agreement (as in effect on the date hereof).
SECTION 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.
SECTION 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 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
SECTION 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.
SECTION 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 Subordi
nated 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).
SECTION 2.3. Delivery of Prohibited Payments or Distribu
tions 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.
SECTION 2.4. Subrogation. Upon payment in full and
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immediately available funds 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 obliga
tion 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.
SECTION 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 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.
SECTION 2.6. Permitted Payments. The Subordinated
Creditor shall not be entitled to receive or retain any prepay
ment (in cash, property, by set-off or otherwise) of or on
account of the Acquisition Note until such time as the Senior
Debt is paid in full; provided, however, that if no Event of
Default (or event which would become and Event of Default with
notice or the passage of time) exists 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.
SECTION 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
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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 immediately available funds, 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.
SECTION 2.8. Permitted Payments; Right to Retain Payments.
Notwith-standing 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 after 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.
SECTION 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 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
SECTION 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) July 24, 2000.
(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.
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SECTION 3.2. Limitations on Enforcement Actions.
The Subordinated 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.
SECTION 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; provided, however, the Subordinated Creditor shall give
Senior Creditor notice of any action it takes which is action
customarily taken by unsecured creditors in Bankruptcy or
Insolvency proceedings to preserve their claim concurrently with
or as soon as practical after such action is taken.
SECTION 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.
SECTION 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
SECTION 4.1. Waivers of Notice, etc. The obligations of
the Subordinated 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
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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
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
SECTION 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 or
acceleration of the Senior Notes under the Senior Loan Documents
within ten (10) business days of such fact. Such notice shall be
provided in writing to the disbursement agent at the following
address:
Microcare Computer Services, Inc.
Attention: Robert L. Versprille
3144 N. Shadeland Avenue
Indianapolis, IN 46226
or at such other address as may be provided by the Subordinated
Creditor to the Senior Creditor; and
With a copy to:
David Millard, Esq.
Leagre Chandler & Millard
9011 Keystone Crossing #800
P.O. Box 40609
Indianapolis, Indiana 46240
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Notwithstanding the agreement of Senior Creditor to deliver
notices pursuant to the terms above, Subordinated Creditor and
Borrower hereby acknowledge that the failure to delivery any such
notice shall not (i) affect or be deemed to be a waiver by Senior
Creditor of any of the rights or remedies of Senior Creditor
under this Agreement or (ii) create any liability on behalf of
Senior Creditor with respect to such failure to Subordinated
Creditor.
SECTION 5.2. Representations and Warranty of the Borrower.
The Borrower hereby represents to the Senior Creditor as follows:
(a) all subordinated debt existing on the date hereof is
Subordinated Debt.
ARTICLE 6
MISCELLANEOUS
SECTION 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.
SECTION 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.
SECTION 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 it 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.
SECTION 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.
SECTION 6.5. Enforcement by Senior Creditor. The Borrower
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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 continue to hold, or to continue to hold, the Senior Debt.
The Senior Creditor shall be deemed conclusively to have relied
upon the obligations 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.
SECTION 6.6. Continuing Agreement. This Agreement shall in
all respects be a continuing agreement, and this Agreement and
the agreements 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.
SECTION 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
obligations 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
Subordinated 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.
SECTION 6.8. Notices. All notices and other communications
provided to a party hereunder shall 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 sent by registered or certified mail, return receipt
requested, addressed in accordance with this Section with
postage prepaid shall be deemed given three (3) days after
deposited in a receptacle of the United States mail, and any
notice, if transmitted by facsimile transmission, shall be
deemed given when received.
SECTION 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,
representations, warranties or understandings, whether oral,
written or implied, as to the subject matter of this Agreement.
SECTION 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.
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SECTION 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.
SECTION 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 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.
SECTION 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.
SECTION 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.
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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.
POMEROY COMPUTER RESOURCES, INC.
By:______________________________
Title:___________________________
Address: _________________________
_________________________
Fax: _________________________
Attention: _________________________
_________________________
STAR BANK, NATIONAL ASSOCIATION
By:______________________________
Title:___________________________
Address: _________________________
_________________________
Fax: _________________________
Attention: _________________________
_________________________
MICROCARE COMPUTER SERVICES, INC.
By:______________________________
Title: President
Address: _________________________
_________________________
Fax: _________________________
Attention: _________________________
_________________________
STATE OF OHIO )
: SS:
COUNTY OF HAMILTON )
On this ____ day of ______________, 1997, before me personally
appeared _______________________, to me known, who, being by
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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.
_________________________________
Notary Public
My Commission Expires:
STATE OF OHIO )
: SS:
COUNTY OF HAMILTON )
On this ____ day of ___________, 1997, before me personally
appeared Robert L. Versprille, to me known, who, being by me
duly sworn, declared that he is the President of MICROCARE
COMPUTER SERVICES, INC., a signatory of the foregoing
Subordination Agreement; and that, being duly authorized,
he did execute the foregoing Subordination Agreement on
behalf of MICROCARE COMPUTER SERVICES, INC., and that the
foregoing Subordination Agreement constitutes the free act
and deed of MICROCARE COMPUTER SERVICES, INC.
________________________________
Notary Public
My Commission Expires:
STATE OF OHIO )
: SS:
COUNTY OF HAMILTON )
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, NATIONAL
ASSOCIATION, a signatory of the foregoing Subordination Agreement;
and that, being duly authorized, he did execute the foregoing
Subordination Agreement on behalf of STAR BANK, NATIONAL ASSOCIATION;
and that the foregoing Subordination Agreement constitutes the
free act and deed of STAR BANK, NATIONAL ASSOCIATION.
________________________________
Notary Public
My Commission Expires: __________
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