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EXHIBIT 10.11
 
SUBORDINATION AGREEMENT

This SUBORDINATION AGREEMENT (as the same may from time to time be amended,
restated or otherwise modified, this “Agreement”) is made and entered into, as
of December 10, 2012, by and among CCOM GROUP, INC., a New York corporation
(“Debtor”), MICHAEL GOLDMAN, an individual (the “Subordinated Creditor”), and
KEYBANK NATIONAL ASSOCIATION, a national banking association (“Lender”).

WHEREAS, Debtor is, contemporaneously herewith, incurring indebtedness to the
Subordinated Creditor pursuant to a certain Subordinated Promissory Note dated
December 10, 2012 in the original principal amount of Five Hundred Thousand
Dollars ($500,000) (as the same may from time to time be amended, restated or
otherwise modified or replaced, the “Subordinated Note”);

WHEREAS, Lender has provided financial accommodations to Debtor pursuant to the
Credit and Security Agreement by and among Debtor, Universal Supply Group, Inc.,
a New York corporation, The RAL Supply Group, Inc., a New York corporation, and
S&A Supply, Inc., a New York corporation (together with their respective
successors and assigns, collectively, “Borrowers” and, individually, each a
“Borrower”) and Lender, dated as of the 18th day of October, 2011, (as amended
and as the same may from time to time be further amended, restated or otherwise
modified or replaced, the “Credit Agreement”); and

WHEREAS, in order to induce Lender to continue to provide the financial
accommodations established pursuant to the Credit Agreement, the Subordinated
Creditor desires to and does hereby subordinate, in accordance with the
provisions of this Agreement, the indebtedness and other obligations evidenced
by the Subordinated Note, and all other indebtedness owing from Debtor to the
Subordinated Creditor, to any and all indebtedness now or hereafter owing by
Debtor to Lender in accordance with the provisions of this Agreement;

NOW, THEREFORE, in consideration of the foregoing, the parties agree as follows:

1.             Definitions.  As used herein, the following terms shall have the
following meanings:

“Default” means that term as defined in Section 4 hereof.

“Distributions” means that term as defined in Section 9(a)(ii) hereof.

“Proceeding” means that term as defined in Section 9(a)(i) hereof.

“Refinancing” means that term as defined in Section 19 hereof.

“Refinancing Party” means that term as defined in Section 19 hereof.
 
 
 

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“Senior Indebtedness” means, collectively, all indebtedness and other
obligations of one or more Borrowers and any of their respective affiliates to
Lender, or any affiliate thereof, pursuant to the Credit Agreement and any cash
management or interest rate protection arrangement with Lender, in each case,
whether owing by only one Borrower or by one or more Borrowers with one or more
others in a several, joint or joint and several capacity, whether owing
absolutely or contingently, whether created by note, overdraft, guaranty of
payment or other contract or by quasi-contract, or statute or other operation of
law, whether incurred directly to Lender (or any affiliate of Lender) or
acquired by Lender (or any affiliate of Lender) by purchase, pledge or otherwise
and whether participated to or from Lender (or any affiliate of Lender) in whole
or in part, including, without limitation, the loans, letters of credit and
other financial accommodations granted to one or more Borrowers pursuant to the
Credit Agreement, and any extensions, renewals, modifications, and amendments
thereof, all accrued interest thereon, and every other liability, now or
hereafter owing to Lender (or any affiliate of Lender) by any Borrower or any of
their affiliates.

“Subordinated Debt Documents” means the Subordinated Note and any additional
promissory notes that may, from time to time, be entered into by Debtor and
owing to the Subordinated Creditor, and any other document executed in
connection therewith.

“Subordinated Indebtedness” means, collectively, all indebtedness and other
obligations evidenced by the Subordinated Debt Documents and any other
indebtedness or other obligations now owing, or that hereafter may become owing,
from Debtor or any of its affiliates, to the Subordinated Creditor, howsoever
such indebtedness and other obligations may be hereafter created, extended,
renewed or evidenced.

2.             Subordination of Subordinated Payments.  Except as set forth
herein, the Subordinated Indebtedness shall at all times and in all respects be
subordinate and junior in right of payment to all Senior Indebtedness.

3.             Restrictions on Subordinated Payments.  Until the Senior
Indebtedness shall have been indefeasibly paid in full, no payments of principal
or interest, or any other amount payable in connection therewith, shall be made
on or with respect to the Subordinated Indebtedness, except as permitted in
Section 4 of this Agreement.  In addition, until the Senior Indebtedness shall
have been indefeasibly paid in full, the Subordinated Indebtedness shall be
subject to the following restrictions:

(a)           The Subordinated Creditor shall not ask for, demand, sue for,
accept or receive payment from Debtor or any other person or entity (except as
permitted in Section 4 hereof), by set-off or in any other manner, either in
whole or in part, on or with respect to, the Subordinated Indebtedness, or any
security therefor, without obtaining the prior written consent of Lender;

(b)           In the event of (i) any distribution, division or application,
partial or complete, voluntary or involuntary, by operation of law or otherwise,
of all or any part of the assets of  Debtor or the proceeds thereof, to
creditors of Debtor by reason of the liquidation, dissolution or other winding
up of the business of Debtor, or (ii) any sale, receivership, insolvency or
bankruptcy proceeding, or assignment for the benefit of creditors, or any
proceeding by or against Debtor for any relief under any bankruptcy or
insolvency laws relating to the relief of debtors, readjustment of indebtedness,
reorganization, compositions or extensions, the Subordinated Creditor covenants
that any payment or distribution of any kind or character, either in cash,
securities or other property that shall be paid or delivered, or payable or
deliverable, upon or with respect to the Subordinated Indebtedness immediately
shall be paid or delivered directly to Lender for application on the Senior
Indebtedness, whether or not due, until the Senior Indebtedness first shall have
been fully paid and satisfied; and
 
 
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(c)           So long as any portion of the Senior Indebtedness remains
outstanding, the Subordinated Creditor shall not enforce any judgment that it
might obtain with respect to the Subordinated Indebtedness (including, without
limitation, execution, attachment or foreclosure of judgment liens against any
assets of Debtor or any affiliate of Debtor or any other person or entity)
without obtaining the prior written consent of Lender, regardless of whether
Debtor is in default of any of its obligations to the Subordinated Creditor
under the Subordinated Indebtedness.

4.             Permitted Payments.  Notwithstanding the provisions hereof,
Debtor may make, and the Subordinated Creditor may receive from Debtor,
regularly scheduled payments of principal and interest to the Subordinated
Creditor under the Subordinated Debt Documents, so long as (a) the Subordinated
Creditor is not in breach or violation of this Agreement, and (b) no event of
default, or event with which the passage of time or the giving of notice, or
both, would constitute an event of default (collectively, a “Default”) shall, at
the time such payment is made, then exist under the Credit Agreement or any loan
document executed in connection therewith, or, after giving pro forma effect to
such payment, immediately thereafter shall begin to exist.  Anything in this
Section 4 to the contrary notwithstanding, in the event that Lender notifies the
Subordinated Creditor of such breach or violation of this Agreement or that a
Default has occurred or will occur under the Credit Agreement, then the
Subordinated Creditor may not receive any further payments on the Subordinated
Debt Documents unless and until Lender notifies Debtor and the Subordinated
Creditor that a payment may be made.  In the event that the Subordinated
Creditor receives any such payment that is not otherwise permitted under this
Section 4, the provisions of Section 6 hereof shall apply.

5.             Appointment of Power of Attorney.  The Subordinated Creditor
hereby irrevocably authorizes, appoints, and empowers Lender to (if the
Subordinated Creditor refuses to do so within two business days after request of
Lender) demand, sue for, collect, and receive every such payment or distribution
and give acquittance therefor and to file claims and take such other
proceedings, in Lender’s own name or in the name of and as attorney-in-fact for
the Subordinated Creditor, as Lender may deem necessary or advisable for the
enforcement of this Agreement; and the Subordinated Creditor shall execute and
deliver to Lender such powers of attorney, assignments, or other instruments as
may be requested by Lender to enable Lender to enforce any and all claims upon
or with respect to the Subordinated Indebtedness and any security therefor and
to collect and receive all payments or distributions that may be payable or
deliverable at any time upon or with respect to the Subordinated Indebtedness.

6.             Delivery of Payments to Lender.  Except for the payments
permitted pursuant to Section 4 of this Agreement, if any payment, distribution,
security or proceeds thereof is received by the Subordinated Creditor upon or
with respect to any indebtedness of Debtor to the Subordinated Creditor
(including the Subordinated Indebtedness) prior to the satisfaction in full of
the Senior Indebtedness by each Borrower, the Subordinated Creditor shall
receive and hold such payment, distribution, security or proceeds in trust for
Lender and immediately shall deliver the same to Lender in precisely the form
received (except for the endorsement or assignment of the Subordinated Creditor
where necessary), for application to the Senior Indebtedness, whether or not
due, and until so delivered the same shall be held in trust by the Subordinated
Creditor as property of Lender.  In the event of the failure of the Subordinated
Creditor to make any such endorsement or assignment, Lender, or any of its
officers or employees, hereby irrevocably is constituted and appointed
attorney-in-fact of the Subordinated Creditor with full power to make the same.
 
 
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7.             Assignment of Claims.  The Subordinated Creditor shall not assign
or transfer any claim, or suffer or permit the creation or attachment of any
lien, claim, encumbrance, hypothecation or pledge upon any claim, that the
Subordinated Creditor has or may have against Debtor, or with respect to the
Subordinated Indebtedness, while any portion of the Senior Indebtedness remains
unpaid, unless such assignment or transfer is made (a) expressly subject to this
Agreement, and (b) upon obtaining Lender’s prior written consent to such an
assignment or transfer.

8.             No Challenge to Senior Indebtedness or Liens.  The Subordinated
Creditor agrees that it will not at any time contest the validity, perfection,
priority or enforceability of the Senior Indebtedness, the Credit Agreement or
any security or other document executed in connection therewith, or in
connection with any Refinancing, as hereinafter defined, or the liens and
security interests of Lender or any Refinancing Party, as hereinafter defined,
in the collateral securing the Senior Indebtedness.

9.             Proceedings and Distributions.

(a)           For the purposes of this Section 9, the following terms shall have
the following meanings:

(i)           “Proceeding” means any assignment by Debtor for the benefit of
creditors, or any filing of a voluntary petition by or involuntary petition
against Debtor pursuant to any chapter of the federal bankruptcy code, or any
institution of a voluntary proceeding by or involuntary proceeding against
Debtor under any other federal or state law relating to relief of debtors, or
any appointment of a receiver, trustee or liquidator of Debtor or of all or a
substantial part of its assets, or any liquidation or dissolution of Debtor, or
any other marshaling of the assets and liabilities of Debtor; and

(ii)           “Distributions” means, collectively, all cash securities and
other properties payable or otherwise distributable on or in respect of the
Subordinated Indebtedness in any Proceeding;

(b)           In any Proceeding, Lender shall have the right, but not the duty,
to prepare and file a proof of claim based upon the Subordinated Indebtedness
and to vote and otherwise enforce and use the same in such manner as Lender
shall deem advisable; provided that, if Lender fails to file such proof of claim
on or before the fifth day next preceding the last day permitted for such
filing, the Subordinated Creditor shall give Lender written notice of such
failure and thereupon file a proof of claim, based on the Subordinated
Indebtedness and giving effect to this Agreement.  In each such Proceeding, the
Subordinated Creditor shall, at no cost or expense to Lender, furnish such
witnesses and such supporting records and other data, execute and deliver such
writings, and make and do all such other and further acts and things as Lender
may request; and
 
 
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(c)           Lender shall be entitled to receive Distributions in respect of
the Subordinated  Indebtedness until the Senior Indebtedness has been paid in
full (including, but not limited to, all interest accruing from time to time on
the Senior Indebtedness after the commencement of any Proceeding, whether or not
a claim for such interest is allowable under such Proceeding).  All
Distributions (other than cash and bearer instruments) shall be issued in
Lender’s name, and all Distributions, whatever the form thereof, shall be
delivered directly to Lender.  No one delivering any Distributions to Lender
shall have any responsibility to follow Lender’s application thereof.  If, for
any reason, the Subordinated Creditor shall receive any payment of or security
for or Distribution in respect of the Subordinated Indebtedness, or any part
thereof, before payment in full of the Senior Indebtedness (including, but not
limited to, all interest accruing from time to time on the Senior Indebtedness
after the commencement of any Proceeding, whether or not a claim for such
interest is allowable under such Proceeding), the Subordinated Creditor shall
receive the same in trust and shall deliver the same, in the form received,
directly to Lender.  The Subordinated Creditor shall execute and deliver such
endorsements, assignments, transfer powers and other writings in respect of the
foregoing as Lender may from time to time demand, and Lender shall have the
right to execute and deliver the same for and on behalf of the Subordinated
Creditor and in the name of the Subordinated Creditor whenever the Subordinated
Creditor omits doing so.

10.           Legend.  The Subordinated Note, and any other instrument
evidencing any of the Subordinated Indebtedness, or any portion thereof, shall
bear the following legend (or other similar language reasonably satisfactory to
Lender) on the first page thereof: “THE INDEBTEDNESS EVIDENCED BY THIS NOTE IS
SUBORDINATE TO THE INDEBTEDNESS OF THE MAKER (OR ANY SUCCESSOR THERETO) TO
KEYBANK NATIONAL ASSOCIATION AND ITS SUCCESSORS AND ASSIGNS PURSUANT TO THE
TERMS OF A SUBORDINATION AGREEMENT DATED DECEMBER 7, 2012, AS SUCH AGREEMENT MAY
FROM TIME TO TIME BE AMENDED, RESTATED OR OTHERWISE MODIFIED (OR ANY SUCCESSOR
AGREEMENT WHICH REPLACES AND REFERENCES SUCH AGREEMENT).”

11.           Representation of the Subordinated Creditor; Amendment of
Subordinated Debt Documents.  The Subordinated Creditor represents and warrants
to Lender that, as of the date hereof, the entire indebtedness of Debtor to the
Subordinated Creditor is evidenced by the Subordinated Debt Documents.  Copies
of all of the Subordinated Debt Documents have been delivered to Lender and a
copy of the Subordinated Note is attached hereto as Exhibit A.  None of the
Subordinated Debt Documents may be amended or modified in any respect without
the prior written consent of Lender (which consent shall not be unreasonably
withheld).
 
 
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12.           Additional Agreements with Lender.  At any time, and from time to
time, Lender may enter into any agreements with one or more Borrowers as Lender
may deem proper, including extending the time of payment or renewing, increasing
the amount, or otherwise altering the terms of the Credit Agreement or any
document executed in connection therewith or affecting the security or
guaranties, if any, underlying any or all of such obligations, or may exchange,
sell, or surrender or otherwise deal with any such security or guaranties, or
may release any balance of funds of one or more Borrowers, with Lender, without
notice to the Subordinated Creditor, and without in any way impairing or
affecting this Agreement thereby.

13.           Reliance by Lender on the Subordinated Creditor.  The Subordinated
Creditor hereby consents and covenants that all obligations and liabilities of
each Borrower to Lender shall be deemed to have been made or incurred, in part,
in reliance upon this Agreement.

14.           Waiver of Lender’s Rights.  No waiver shall be deemed to be made
by Lender of any of its rights hereunder unless the same shall be in writing
signed on behalf of Lender.  Each waiver, if any, shall be a waiver only with
respect to the specific instance involved and shall in no way impair the rights
of Lender or the obligations of the Subordinated Creditor to Lender in any other
respect at any other time.

15.           Waiver of Notice and Successors and Assigns.  The undersigned
hereby waive (a) notice of acceptance of this Agreement; (b) notice of the
existence, creation, extension, refunding, refinancing or non-payment of all or
any of the Senior Indebtedness; (c) all diligence in collection or protection of
or realization upon the Senior Indebtedness, or any part thereof or any security
therefor; and (d) notice of the release, waiver or cancellation of any obligors
or guarantors of all or any portion of the Senior Indebtedness or any security
therefor.  This Agreement shall be immediately binding upon Debtor and the
Subordinated Creditor, and its successors, heirs, executors, administrators and
permitted assigns, and the subordination described herein shall inure to the
benefit of Lender and its successors and assigns.

16.           Governing Law.  This Agreement shall be construed according to the
laws of the State of New York, without regard to principles of conflicts of
laws.  Wherever possible each provision of this Agreement shall be interpreted
in such manner as to be effective and valid under applicable law, but if any
provision of this Agreement shall be prohibited by or invalid under such law,
such provision shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.

17.           Entire Agreement.  This Agreement sets forth the entire agreement
and understanding among the parties as to the subject matter hereof and merges
and supersedes all prior discussions, agreements, and undertakings of every kind
and nature among them with respect to the subject matter hereof.

18.           Nonwaiver of Payments.  In the event that the Subordinated
Creditor is required to pay to Lender any funds or other property that the
Subordinated Creditor receives from Debtor or any of its affiliates, or in
respect of the Subordinated Indebtedness other than as permitted under Section 4
hereof, Lender and Debtor acknowledge that the Subordinated Creditor shall not
have waived the rights of the Subordinated Creditor to payment in full under the
Subordinated Debt Documents, subject, however, to the terms of this Agreement.
 
 
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19.           Refinancing of Senior Indebtedness.  Lender may, from time to
time, without notice to the undersigned, assign or transfer any or all of the
Senior Indebtedness or any interest therein or permit another person or entity
(a “Refinancing Party”) to extend credit to one or more Borrowers to enable any
such Borrower to repay all or a portion of the Senior Indebtedness (a
“Refinancing”), and, notwithstanding any such assignment, transfer or
Refinancing or any subsequent assignment, transfer or Refinancing, such
indebtedness shall be and remain Senior Indebtedness for the purposes of this
Agreement, and every immediate and successive assignee, transferee or
Refinancing Party of any of the Senior Indebtedness or of any interest therein,
including, without limitation, any Refinancing Party, shall, to the extent of
the interest of such assignee, transferee or Refinancing Party in the Senior
Indebtedness, be entitled to the rights and benefits of this Agreement to the
same extent as if such assignee, transferee or Refinancing Party were Lender,
and have the same irrevocable powers of attorney granted hereunder to
Lender.  On and after the date of the Refinancing, (a) such Refinancing Party
shall be deemed to be Lender hereunder, (b) references to the Senior
Indebtedness shall be deemed to be the obligations owing to the Refinancing
Party, and (c) references to the loan documents of Lender shall be deemed to
refer to the loan documents of the Refinancing Party.  In connection with any
Refinancing, the Subordinated Creditor agrees, promptly upon request of the
Refinancing Party, to correct any material defect or error that may be
discovered in this Agreement, such that the Refinancing Party fails to obtain
the full benefits intended by this Agreement.

20.           Termination.  The subordinations, agreements and priorities set
forth in this Agreement shall remain in full force and effect until all of the
Senior Indebtedness has been indefeasibly paid in full and all commitments to
each Borrower from Lender (including any Refinancing Party) have been
terminated, regardless of whether any party hereto in the future seeks to
rescind, amend, terminate or reform, by litigation or otherwise, its respective
agreements with any Borrower.

21.           Counterparts.  This Agreement may be executed in any number of
counterparts, by different parties hereto on the same or separate counterparts
and by facsimile signature, and each such counterpart, when executed and
delivered, shall be deemed to be an original, and all of which taken together
shall constitute but one and the same Agreement.

22.           Notice.  All notices, requests, demands and other communications
provided for hereunder shall be in writing and mailed or delivered to Debtor,
Lender or the Subordinated Creditor, as the case may be, addressed to the
address of Debtor, Lender or the Subordinated Creditor, as the case may be,
specified on the signature page of this Agreement.  All notices, statements,
requests, demands and other communications provided for hereunder shall be
deemed to be given or made when delivered or two business days after being
deposited in the mails with postage prepaid by registered or certified mail,
addressed as aforesaid, or sent by facsimile with telephonic confirmation of
receipt.  All notices hereunder shall not be effective until received.
 
 
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23.           Jurisdiction and Venue.  All judicial proceedings arising out of
or relating to this Agreement or any obligation hereunder may be brought in any
state or federal court sitting in New York County, New York, and by their
respective execution and delivery of this Agreement, the undersigned accept for
themselves and in connection with their properties, generally and
unconditionally, the jurisdiction of the aforesaid courts and waive any defense
of forum nonconveniens, and irrevocably agree to be bound by any judgment
rendered thereby in connection with this Agreement.

[Remainder of page intentionally left blank.]
 
 
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JURY TRIAL WAIVER.  THE UNDERSIGNED, TO THE EXTENT PERMITTED BY LAW, EACH HEREBY
WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE WHETHER
SOUNDING IN CONTRACT, TORT, OR OTHERWISE, AMONG THE SUBORDINATED CREDITOR,
DEBTOR, AND LENDER, OR ANY THEREOF, ARISING OUT OF, IN CONNECTION WITH, RELATED
TO OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH
THIS AGREEMENT OR ANY DOCUMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR
THE TRANSACTIONS RELATED THERETO.

IN WITNESS WHEREOF, the undersigned have executed and delivered this
Subordination Agreement as of the date first set forth above.

Address:
275 Wagaraw Road
 
CCOM GROUP, INC.
 
Hawthorne, NJ 07506
       
Attention: William Pagano
 
By:
         
William Pagano
       
Chief Executive Officer
         
Address:
127 Public Square
 
KEYBANK NATIONAL ASSOCIATION
 
Cleveland, Ohio  44114
       
Attention: KeyBank Business Capital
 
By:
         
Nadine M. Eames
       
Vice President
         
Address:
            Michael Goldman, personally        

Signature Page to
Subordination Agreement
 
 
 

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EXHIBIT A

SUBORDINATED NOTE

Please see attached.
 
 
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