Exhibit 10.9
SUBORDINATION AGREEMENT
THIS SUBORDINATION AGREEMENT (this "Agreement") is entered into effective
as of October 11, 1996, among (i) XXXXXXX COMPUTER RESOURCES, INC., a Delaware
corporation (the "Borrower"), (ii) COMMUNICATIONS TECHNOLOGY, INC. d/b/a DILAN,
a North Carolina corporation, its successors and assigns (the "Subordinated
Creditor") and (iii) STAR BANK, NATIONAL ASSOCIATION, an Ohio banking
corporation, its successors or assigns (the "Senior Creditor").
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 (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 Twenty-Five
Million ($25,000,000.00) 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
Twenty-Five Million ($25,000,000.00) 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 $1,096,000.00 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
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.
"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
liquidation, 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, 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.
"ENFORCEMENT ACTION NOTICE" has the meaning specified in Section 3.2(b).
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"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 agreement, letter or otherwise) under
which any obligation is evidenced, assumed or undertaken, or any right to any
lien is granted or perfected.
"PAYMENT IN FULL" and "PAID IN FULL" mean payment in full in cash.
"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 the amount 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.
"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.
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"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 introductory 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 Twenty-Five
Million Dollars ($25,000,000.00).
(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, indemnities,
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.
"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.
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"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).
"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 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).
"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 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
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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 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).
SECTION 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.
SECTION 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
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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.
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 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.
SECTION 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 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.
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
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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 respective 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.
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 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.
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
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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) October 11, 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.
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.
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
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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 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.
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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
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:
Communications Technology, Inc.
Attention: Xxxxxx Xxxxxx
0000 00xx Xxxxxx XX, XX
Xxxxxxx, Xxxxx Xxxxxxxx 00000
or at such other address as may be provided by the Subordinated Creditor to the
Senior Creditor; and
With a copy to: Xxxxxx X. Xxxxxx, Xx., Esq.
Xxxxxxx, Xxxxxx and Xxxxx, LLP
X X & X Xxxxxxxx
Xxxxxxx, Xxxxx Xxxxxxxx 00000
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.
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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 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.
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 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
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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 (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.
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
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OF SUCH STATE APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED WHOLLY WITHIN
SUCH STATE.
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.
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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.
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: \s\ Xxxxx X. Xxxxxxxxx
----------------------------
Title: CFO
--------------------------
Address: 0000 Xxxxxxxxxx Xx
Xxxxxx, Xxxxxxxx 00000
Fax: 000 000-0000
Attention: Xxxxx X. Xxxxxxxxx
_________________________
STAR BANK, NATIONAL ASSOCIATION
By: \s\ Xxxxxxx X. Xxxxx
-----------------------------
Title: Vice President
Address: 000 Xxxxxx Xx., Xxxx Xxxxxxxx 0000
Xxxxxxxxxx, Xxxx 00000
Fax: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx
_________________________
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COMMUNICATIONS TECHNOLOGY, INC.,
d/b/a/ DILAN
By: \s\ Xxxxxx Xxxxxx
---------------------------------------
Title: President
Address: _________________________
_________________________
Fax: _________________________
Attention: _________________________
_________________________
STATE OF OHIO )
: SS:
COUNTY OF XXXXXXXX )
On this 11th day of October, 1996, before me personally appeared Xxxxx X.
Xxxxxxxxx, to me known, who, being by me duly sworn, declared that he is the
Chief Financial Officer of XXXXXXX COMPUTER RESOURCES, INC., a signatory of the
foregoing Subordination Agreement; and that, being duly authorized, he did
execute
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the foregoing Subordination Agreement on behalf of XXXXXXX COMPUTER RESOURCES,
INC.; and that the foregoing Subordination Agreement constitutes the free act
and deed of XXXXXXX COMPUTER RESOURCES, INC.
\s\ Xxxxx X. Xxxxx
-------------------------------------------------
Notary Public
My Commission Expires:
-------------------
STATE OF OHIO )
: SS:
COUNTY OF XXXXXXXX )
On this 11th day of October, 1996, before me personally appeared Xxxxxx
Xxxxxx, to me known, who, being by me duly sworn, declared that he is the
President of COMMUNICATIONS TECHNOLOGY, INC. d/b/a DILAN, a signatory of the
foregoing Subordination Agreement; and that, being duly authorized, he did
execute the foregoing Subordination Agreement on behalf of COMMUNICATIONS
TECHNOLOGY, INC. d/b/a DILAN, and that the foregoing Subordination Agreement
constitutes the free act and deed of COMMUNICATIONS TECHNOLOGY, INC. d/b/a
DILAN.
\s\ Xxxxx X. Xxxxx
-------------------------------------------------
Notary Public
My Commission Expires:
-------
STATE OF OHIO )
: SS:
COUNTY OF XXXXXXXX )
On this 11th day of October, 1996, before me personally appeared Xxxxxxx
Xxxxx, to me known, who, being by me duly sworn, declared that he is the
President 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.
\s\ Xxxxx X. Xxxxx
-------------------------------------------------
Notary Public
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My Commission Expires: __________
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