FOURTH AMENDMENT TO
CREDIT FACILITIES AGREEMENT
(WITH CONSENT TO REDEMPTION AND WAIVER OF DEFAULT)
This FOURTH AMENDMENT TO CREDIT FACILITIES AGREEMENT (this "Agreement") is
entered into and effective as of May 12, 2003, by and among Pomeroy Computer
Resources, Inc., Pomeroy Select Integration Solutions, Inc., Pomeroy Select
Advisory Services, Inc., Pomeroy Computer Resources Sales Company, Inc., Pomeroy
Computer Resources Holding Company, Inc., Pomeroy Computer Resources Operations,
LLP, PCR Holdings, Inc. (formerly known as, Technology Integration Financial
Services, Inc.), PCR Properties, Inc. (formerly known as, T.I.F.S. Advisory
Services, Inc.), TheLinc, LLC, Val Tech Computer Systems, Inc., and Micrologic
Business Systems of K.C., LLC (collectively and separately referred to as,
"Borrower"), and GE Commercial Distribution Finance Corporation, formerly known
as Deutsche Financial Services Corporation ("GECDF"), as Administrative Agent,
and GECDF and the other lenders listed on the signature pages hereto (and their
respective successors and permitted assigns), as "Lenders" (the "Lenders").
RECITALS:
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A. Borrower, Administrative Agent and Lenders are party to that certain Credit
Facilities Agreement dated as of June 28, 2001, as amended by the First
Amendment to Credit Facilities Agreement dated as of November 13, 2001, as
amended by the Second Amendment to Credit Facilities Agreement dated as of
March 18, 2002, and as further amended by the Third Amendment and Consent
to Credit Facilities Agreement, dated as of April 11, 2002 (the "Original
Loan Agreement").
B. Required Lenders and Borrower have agreed to the provisions set forth
herein on the terms and conditions contained herein.
AGREEMENT
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Therefore, in consideration of the mutual agreements herein and other
sufficient consideration, the receipt of which is hereby acknowledged, Borrower,
Administrative Agent and the Required Lenders hereby agree as follows:
1. DEFINITIONS. All references to the "Agreement" or the "Loan Agreement" in the
Original Loan Agreement and in this Agreement shall be deemed to be references
to the Original Loan Agreement as it is amended hereby and as it may be amended,
restated, extended, renewed, replaced, or otherwise modified from time to time.
Capitalized terms used and not otherwise defined herein have the meanings given
them in the Loan Agreement.
2. EFFECTIVENESS OF AGREEMENT. This Agreement shall become effective as of May
12_, 2003, but only if (i) this Agreement has been executed by each Borrower,
Administrative Agent and the Required Lenders, (ii) Borrowers have paid to
Administrative Agent, for the pro-rata benefit of the Lenders, an Amendment Fee
of Twenty Five Thousand Dollars ($25,000), and (iii) Borrowers have delivered to
Administrative Agent resolutions certified by the corporate secretary of each
Borrower authorizing the execution, delivery and performance of this Amendment.
3. WAIVER OF DEFAULTS. Borrower has notified Administrative Agent that Borrower
has violated the Minimum Net Income After Tax covenant contained in Section 15.5
as of the end of Borrower's fiscal
quarter ended April 5, 2003. Under Section 16.1.7, Borrower's violation of the
referenced financial covenant constitutes an Event of Default. The Borrower has
requested that the Required Lenders waive such Event of Default. The Required
Lenders hereby waive the Event of Default arising under Section 16.1.7 due to
Borrower's violation of the Minimum Net Income After Tax covenant contained in
Section 15.5 as of the end of Borrower's fiscal quarter ended April 5, 2003. The
waivers contained in this Section 3 are specific in intent and are valid only
for the specific purposes for which given. Nothing contained herein obligates
Administrative Agent or any Lender to agree to any additional waivers of any
provisions of any of the Loan Documents, including but not limited to Sections
15.5 and 16.1.7. The waivers contained in this Section are waivers of known
Events of Default only, and shall not operate as a waiver of Administrative
Agent's or any Lenders' right to exercise remedies resulting from (i) existing
and/or continuing Defaults or Events of Default of which Administrative Agent or
such Lender is not actually aware, or (ii) other future Defaults or Events of
Default, whether or not of a similar nature and whether or not known to
Administrative Agent or any Lender.
4. CONSENT TO REDEMPTIONS. Notwithstanding the terms of Section 14.11 of the
Original Loan Agreement, the Required Lenders consent to the redemption by
Pomeroy Computer Resources, Inc. of the lesser of (i) Eleven Million One Hundred
Seventy Thousand Dollars ($11,170,000) market value of shares of Pomeroy
Computer Resources, Inc.'s common stock, or (ii) One Million (1,000,000) shares
of Pomeroy Computer Resources, Inc.'s common stock, in any case if and only if
there is no Existing Default and no Default or Event of Default will occur or is
reasonably likely to occur as a result of such redemption. Such redemption may
occur in one or more redemptions, in each case subject to the conditions set
forth in the preceding sentence. This consent is conditioned upon all such
redemptions being completed on or before the close of business on June, 1, 2004.
The consent provided by the Required Lenders contained in the First Consent to
Credit Facilities Agreement, dated September 20, 2001, has expired. The consent
provided by the Required Lenders contained in the Second Consent to Credit
Facilities Agreement, dated August 8, 2002, has not expired, the consent
provided by the Required Lenders contained in the Third Consent to Credit
Facilities Agreement, dated October 31, 2002 has not expired, and the consent
contained in the Fourth Consent to Credit Agreement, dated January 28, 2003 has
not expired, and the consent contained herein is in addition to the consent
contained in the Second Consent to Credit Facilities Agreement, the Third
Consent to Credit Facilities Agreement, and the Fourth Consent to Credit
Facilities Agreement. All redemptions from and after the date hereof shall be
deemed to be under the Second Consent to Credit Facilities Agreement until the
limits thereunder have been met or the consent thereunder has expired, then
under the Third Consent to Credit Facilities Agreement until the limits
thereunder have been met or the consent thereunder has expired, and then under
the Fourth Consent to Credit Facilities Agreement until the limits thereunder
have been met or the consent thereunder has expired, and all redemptions
thereafter shall be deemed to be under this Agreement subject to the terms and
conditions hereof.
5. CONSENT TO NAME CHANGE OF CERTAIN BORROWERS. Notwithstanding the terms of
Section 14.14 of the Original Loan Agreement, the Required Lenders hereby
consent to (i) the change of the legal name of Pomeroy Computer Resources, Inc.
to "Pomeroy IT Solutions, Inc.", and (ii) the change of the legal name of
Pomeroy Computer Resources Sales Company, Inc. to "Pomeroy IT Solutions Sales
Company, Inc.", with such consent being conditioned upon Borrower delivering to
Administrative Agent, within five Business Days of filing, filed-stamped copies
of the amendments to the Formation Documents evidencing such name changes
certified by the applicable Secretary of State together with shareholder
resolutions of each such Borrower certified by its respective corporate
secretary authorizing the name change of such entity as contemplated by this
Section. Borrowers hereby irrevocably authorize Administrative Agent to file any
amendments to any prior UCC filings and to file any new UCC filings, to
evidence, or continue the perfection of, its liens and Security Interests in the
Collateral.
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6. AMENDMENTS. The Original Loan Agreement is hereby amended as follows:
6.1. MINIMUM NET INCOME AFTER TAX. For all periods from and after April 6,
2003, Section 15.5 of the Original Loan Agreement is deleted in its entirety and
replaced with the following:
"14.5 MINIMUM NET INCOME AFTER TAX. Each Borrower covenants that its
Net Income as a percentage of net sales as set forth in its income
statement, calculated as of the last day of each fiscal quarter for
the four fiscal quarter period then ended, shall be no less than (i)
1.50%, for the fiscal quarter ending July 5, 2003, (ii), 1.20%, for
the fiscal quarter ending October 5, 2003, (iii) 1.50%, for the fiscal
quarter ending January 5, 2004, and (iv) 2.00%, for the fiscal quarter
ending April 5, 2004, and for each fiscal quarter ending thereafter."
7. REPRESENTATIONS AND WARRANTIES OF BORROWER. Each Borrower hereby represents
and warrants to Administrative Agent and the Lenders that (i) such Borrower's
execution of this Agreement has been duly authorized by all requisite action of
such Borrower; (ii) no consents are necessary from any third parties for such
Borrower's execution, delivery or performance of this Agreement, (iii) this
Agreement, the Loan Agreement, and each of the other Loan Documents, constitute
the legal, valid and binding obligations of Borrower enforceable against
Borrower in accordance with their terms, except to the extent that the
enforceability thereof against Borrower may be limited by bankruptcy, insolvency
or other laws affecting the enforceability of creditors rights generally or by
equity principles of general application, (iv) except as disclosed on the
disclosure schedule attached to the Original Loan Agreement, all of the
representations and warranties contained in Section 11 of the Loan Agreement are
true and correct with the same force and effect as if made on and as of the date
of this Agreement, and (v) after giving effect to this Agreement, there is no
Existing Default.
8. REAFFIRMATION. Each Borrower hereby acknowledges and confirms that (i) the
Loan Agreement and the other Loan Documents remain in full force and effect,
(ii) such Borrower has no defenses to its obligations under the Loan Agreement
and the other Loan Documents, (iii) the Security Interests of the Administrative
Agent under the Security Documents secure all the Loan Obligations under the
Loan Agreement, continue in full force and effect, and have the same priority as
before this Agreement, and (iv) such Borrower has no claim against
Administrative Agent or any Lender arising from or in connection with the Loan
Agreement or the other Loan Documents.
9. GOVERNING LAW. This Agreement has been executed and delivered in St. Louis,
Missouri, and shall be governed by and construed under the laws of the State of
Missouri without giving effect to choice or conflicts of law principles
thereunder.
10. SECTION TITLES. The section titles in this Agreement are for convenience of
reference only and shall not be construed so as to modify any provisions of this
Agreement.
11. COUNTERPARTS; FACSIMILE TRANSMISSIONS. This Agreement may be executed in one
or more counterparts and on separate counterparts, each of which shall be deemed
an original, but all of which together shall constitute one and the same
instrument. Signatures to this Agreement may be given by facsimile or other
electronic transmission, and such signatures shall be fully binding on the party
sending the same.
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12. INCORPORATION BY REFERENCE. Administrative Agent, Lenders and Borrower
hereby agree that all of the terms of the Loan Documents are incorporated in and
made a part of this Agreement by this reference.
13. NOTICE-INSURANCE.
The following notice is given pursuant to Section 427.120 of the Missouri
Revised Statutes; nothing contained in such notice shall be deemed to limit or
modify the terms of the Loan Documents:
UNLESS YOU PROVIDE EVIDENCE OF THE INSURANCE COVERAGE REQUIRED BY YOUR AGREEMENT
WITH US, WE MAY PURCHASE INSURANCE AT YOUR EXPENSE TO PROTECT OUR INTERESTS IN
YOUR COLLATERAL. THIS INSURANCE MAY, BUT NEED NOT, PROTECT YOUR INTERESTS. THE
COVERAGE THAT WE PURCHASE MAY NOT PAY ANY CLAIM THAT YOU MAKE OR ANY CLAIM THAT
IS MADE AGAINST YOU IN CONNECTION WITH THE COLLATERAL. YOU MAY LATER CANCEL ANY
INSURANCE PURCHASED BY US, BUT ONLY AFTER PROVIDING EVIDENCE THAT YOU HAVE
OBTAINED INSURANCE AS REQUIRED BY OUR AGREEMENT. IF WE PURCHASE INSURANCE FOR
THE COLLATERAL, YOU WILL BE RESPONSIBLE FOR THE COSTS OF THAT INSURANCE,
INCLUDING THE INSURANCE PREMIUM, INTEREST AND ANY OTHER CHARGES WE MAY IMPOSE IN
CONNECTION WITH THE PLACEMENT OF THE INSURANCE, UNTIL THE EFFECTIVE DATE OF THE
CANCELLATION OR EXPIRATION OF THE INSURANCE. THE COSTS OF THE INSURANCE MAY BE
ADDED TO YOUR TOTAL OUTSTANDING BALANCE OR OBLIGATION. THE COSTS OF THE
INSURANCE MAY BE MORE THAN THE COST OF INSURANCE YOU MAY BE ABLE TO OBTAIN ON
YOUR OWN.
14. NOTICE-ORAL COMMITMENTS NOT ENFORCEABLE.
The following notice is given pursuant to Section 432.045 of the Missouri
Revised Statutes; nothing contained in such notice shall be deemed to limit or
modify the terms of the Loan Documents:
ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO
FORBEAR FROM ENFORCING REPAYMENT OF A DEBT INCLUDING PROMISES TO
EXTEND OR RENEW SUCH DEBT ARE NOT ENFORCEABLE. TO PROTECT YOU
(BORROWER) AND US (CREDITOR) FROM MISUNDERSTANDING OR DISAPPOINTMENT,
ANY AGREEMENTS WE REACH COVERING SUCH MATTERS ARE CONTAINED IN THIS
WRITING, WHICH IS THE COMPLETE AND EXCLUSIVE STATEMENT OF THE
AGREEMENT BETWEEN US, EXCEPT AS WE MAY LATER AGREE IN WRITING TO
MODIFY IT.
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IN WITNESS WHEREOF, this Agreement has been duly executed as of the date
first above written.
POMEROY COMPUTER RESOURCES SALES COMPANY, INC.
as Borrowing Agent on behalf of itself and each other Borrower pursuant to the
authority and power of attorney duly granted to it by each other Borrower
By:
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Name:
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Title:
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GE COMMERCIAL DISTRIBUTION FINANCE CORPORATION,
formerly known as Deutsche Financial Services Corporation,
as Administrative Agent and a Lender
By:
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Name: David Mintert
Title: Vice President--Operations
U.S. BANK, N.A., AS A LENDER
By:
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Name:
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Title:
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NATIONAL CITY BANK, AS A LENDER
By:
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Name:
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Title:
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IBM CREDIT LLC, FORMERLY IBM CREDIT CORPORATION, AS A LENDER
By:
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Name:
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Title:
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UPS CAPITAL CORPORATION, AS A LENDER
By:
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Name:
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Title:
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FIFTH THIRD BANK, NORTHERN KENTUCKY, INC., AS A LENDER
By:
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Name:
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Title:
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TRANSAMERICA COMMERCIAL FINANCE CORPORATION, AS A LENDER
By:
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Name:
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Title:
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FIRST FINANCIAL BANK, (FORMERLY KNOWN AS NATIONAL BANK OF SOUTHWESTERN OHIO), AS
A LENDER
By:
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Name:
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Title:
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