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Item 1. On July 13, 2007, Pomeroy IT Solutions, Inc. filed the following current
report on Form 8-K relating to its 2007 Annual Meeting of Stockholders.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): July 12, 2007
Pomeroy IT Solutions, Inc.
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(Exact Name of Registrant as Specified in Its Charter)
Delaware
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(State or Other Jurisdiction of Incorporation)
000-20022 31-1227808
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(Commission File Number) (IRS Employer Identification No.)
1020 Petersburg Road
Hebron, Kentucky 41048
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(Address of Principal Executive Offices) (Zip Code)
(859) 586-0600
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(Registrant's Telephone Number, Including Area Code)
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(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange
Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
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ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
On July 12, 2007, the Company entered into a Settlement Agreement (the
"Settlement Agreement") with Flagg Street Capital LLC, a Delaware limited
liability company, Flagg Street Partners LP, a Delaware limited partnership,
Flagg Street Partners Qualified LP, a Delaware limited partnership, Flagg Street
Offshore, LP, a Cayman Islands limited partnership, Jonathan Starr
(collectively, "Flagg Street"), Michael A. Ruffolo, and Richard S. Press. The
Settlement Agreement settles the proxy contest between the Company and Flagg
Street. Flagg Street had previously filed and distributed proxy materials in
connection with the Company's 2007 Annual Meeting of Stockholders to elect
Messrs. Starr, Ruffolo and Press to the Company's Board to replace three of the
Company's nominees.
SUMMARY OF THE SETTLEMENT AGREEMENT
Pursuant to the terms of the Settlement Agreement, Flagg Street agreed
that it would withdraw its slate of nominees and terminate its proxy
solicitation in connection with the Annual Meeting. In addition, Flagg Street
agreed that it would cause all shares of the Company's Common Stock beneficially
owned by it to be present, in person or by proxy, and voted in favor of the
nominees recommended by the Board at the Annual Meeting. The Company has agreed
to use its best efforts to cause each director and their respective affiliates
and associates to do the same.
The Settlement Agreement also provides that the Board will take action
to expand the number of seats on the Board to twelve and appoint two of the
Flagg Street Nominees to the Board immediately, which the Board has done, as
described above. Pursuant to the terms of the Settlement Agreement, all three of
the Flagg Street Nominees have been added to the Board's revised slate of
nominees for election at the Annual Meeting, increasing the total number of
Board nominees for election by our stockholders to eleven. The Board has agreed
to recommend the election of all eleven nominees.
The Settlement Agreement further requires that, following the Annual
Meeting, James H. Smith will retire from the Board of Directors consistent with
Mr. Smith's prior, publicly announced intentions, and, accordingly, resign as a
director and the number of directors constituting the Board of Directors will be
fixed at a maximum of eleven until the Company's 2008 annual meeting of
stockholders (the "2008 Annual Meeting). Under the Settlement Agreement, Flagg
Street has the right to have one of the Flagg Street Nominees serve on each
committee of the Board, effective following the Annual Meeting. In particular,
Jonathan Starr will be appointed to the Audit Committee, Richard S. Press will
be appointed to the Nominating and Corporate Governance Committee, and Michael
A. Ruffolo will be appointed to the Compensation Committee and the Stock Option
Committee. The Settlement Agreement also provides that the Board will form a
special committee (the "Special Committee"), to include Mr. Ruffolo, to conduct
a search for a President and Chief Executive Officer to replace Stephen E.
Pomeroy, our former President and Chief Executive Officer. The President and
Chief Executive Officer recommended by the Special Committee and hired by the
Company will, promptly after commencement of his or her employment, be appointed
to serve as a director of the Company in
the place of Kevin G. Gregory, unless Mr. Gregory is appointed President and
Chief Executive Officer in connection with this process. The parties also agreed
that at any time prior to but not later than the 2008 Annual Meeting, the number
of directors constituting the Board of Directors will be fixed at a maximum of
ten, which, if necessary, will be facilitated by the resignation of any of the
New Nominees other than a Flagg Street Nominee.
Flagg Street and the Flagg Street Nominees are prohibited by the
Settlement Agreement from engaging in an election contest in connection with the
2008 Annual Meeting, if all the Flagg Street Nominees are re-nominated by the
Company for election at the 2008 Annual Meeting and they all accept the
nomination and agree to be named in the Company's proxy statement. However, if
Flagg Street or any Flagg Street Nominee engages in an election contest in
connection with the 2008 Annual Meeting, the Company shall have no obligation to
include any Flagg Street Nominee on the Company's slate of nominees the Company
recommends for election at the 2008 Annual Meeting. The Settlement Agreement
contains certain other provisions, including restrictions on public
announcements and certain other communications, mutual releases of claims in
connection with the proxy contest and related covenants not to sue, certain
representations and warranties of the parties, and the Company's agreement to
reimburse Flagg Street's reasonable documented out-of-pocket costs and expenses
not to exceed an aggregate of $350,000.
The foregoing summary is qualified by reference to the complete text of
the Settlement Agreement, which is filed as Exhibit 99.1 hereto and incorporated
herein in its entirety by reference.
ITEM 5.02. DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF
DIRECTORS; APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF
CERTAIN OFFICERS.
(d) On July 12, 2007, pursuant to the Settlement Agreement, the Board of
Directors expanded the size of the Board by two and appointed Mr. Jonathan Starr
and Mr. Michael A. Ruffolo to the vacancies created thereby. The information set
forth in Item 1.01 above is incorporated herein in its entirety by reference.
ITEM 8.01. OTHER EVENTS.
PRESS RELEASE
On July 12, 2007, the Company issued a press release relating to the
Settlement Agreement. Such press release is included as Exhibit 99.2 hereto and
is incorporated herein in its entirety by reference.
CHANGE IN ANNUAL MEETING DATE
The Company has changed the original July 12, 2007 date of its annual
meeting of stockholders to July 31, 2007 in order to allow its stockholders
additional time to receive and review supplemental proxy materials relating to
the Settlement Agreement and revised slate of director nominees, and to cast
their proxies with respect thereto. The June 6, 2007 record date for the annual
meeting has not changed.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
Exhibit No. Description
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99.1 Settlement Agreement dated July 12, 2007.
99.2 Press Release of Pomeroy IT Solutions, Inc., dated July 12, 2007.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
POMEROY IT SOLUTIONS, INC.
Date: July 13, 2007 By: /s/ Kevin Gregory
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Name: Kevin Gregory
Title: President and
Chief Executive Officer
EXHIBIT INDEX
Exhibit No. Description
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99.1 Settlement Agreement dated July 12, 2007.
99.2 Press Release of Pomeroy IT Solutions, Inc., dated July 12, 2007.
Exhibit 99.1
SETTLEMENT AGREEMENT
THIS SETTLEMENT AGREEMENT, dated July 12, 2007, by and among Flagg
Street Capital LLC, a Delaware limited liability company, Flagg Street Partners
LP, a Delaware limited partnership, Flagg Street Partners Qualified LP, a
Delaware limited partnership, Flagg Street Offshore, LP, a Cayman Islands
limited partnership, Jonathan Starr (collectively, "Flagg Street"), Michael A.
Ruffolo, Richard S. Press and Pomeroy IT Solutions, Inc., a Delaware corporation
(the "Company").
W I T N E S S E T H:
WHEREAS, Flagg Street is the beneficial owner of 1,249,325 shares of
common stock, $.01 par value, of the Company (the "Common Stock"), or
approximately 9.8% of the Common Stock issued and outstanding;
WHEREAS, Flagg Street has nominated certain individuals for election to
the Board of Directors of the Company (the "Pomeroy Board") at the 2007 annual
meeting of stockholders of the Company (the "Annual Meeting") initially
scheduled to be held on July 12, 2007;
WHEREAS, Flagg Street has filed a definitive proxy statement with the
Securities and Exchange Commission ("SEC") with respect to the solicitation of
proxies to be used at the Annual Meeting to elect Flagg Street's nominees,
Jonathan Starr, Michael A. Ruffolo and Richard S. Press (referred to herein,
together with any substitutes or successors of such individuals as set forth in
Sections 3.1(d) and 3.3(a), as the "Flagg Street Nominees") as members of the
Pomeroy Board;
WHEREAS, the Company announced on July 5, 2007 that the Pomeroy Board
terminated Stephen E. Pomeroy as its President and Chief Executive Officer, that
it voted to withdraw the nomination of Stephen E. Pomeroy to stand for election
as a director nominee at the Annual Meeting, and that it intends to reschedule
the Annual Meeting;
WHEREAS, Flagg Street and the Company have determined that the best
interests of Flagg Street and the Company would be served by Flagg Street not
engaging in a solicitation of proxies for the election of the Flagg Street
Nominees in opposition to the nominees of the Pomeroy Board, and the other
arrangements set forth herein;
NOW, THEREFORE, in consideration of the promises, mutual
representations, warranties, covenants and agreements set forth herein, and
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, and intending to be legally bound, the parties hereto
hereby agree as follows:
Section 1. Representations and Warranties of the Company.
The Company hereby represents, warrants and agrees that (a) it has full
legal right, power and authority to execute, deliver and perform this Agreement,
and consummate the transactions contemplated hereby, (b) the execution and
delivery of this Agreement, and the consummation by the Company of the
transactions contemplated hereby have been duly authorized by all necessary
corporate actions, and (c) this Agreement constitutes valid, legal and binding
obligations of the Company, enforceable against it in accordance with its terms,
except that such enforcement may be subject to bankruptcy, insolvency,
reorganization, moratorium (whether general or specific) or other laws now or
hereafter in effect. The performance of the terms of this Agreement shall not
conflict with, constitute a violation of, or require any notice or consent
under, the Certificate of Incorporation or Bylaws of the Company or any
agreement or instrument to which the Company is a party or by which the Company
is bound, and shall not require any consent, approval or notice under any
provision of any judgment, order, decree, statute, rule or regulation applicable
to the Company.
Section 2. Representations and Warranties of Flagg Street and
the Flagg Street Nominees.
(a) Flagg Street hereby represents, warrants and agrees
that (a) it has full legal right, power and authority
to execute, deliver and perform this Agreement, and
consummate the transactions contemplated hereby, (b)
the execution and delivery of this Agreement, and the
consummation by Flagg Street of the transactions
contemplated hereby have been duly authorized by all
necessary corporate and limited partnership actions,
and (c) this Agreement constitutes valid, legal and
binding obligations of Flagg Street, enforceable
against it in accordance with its terms, except that
such enforcement may be subject to bankruptcy,
insolvency, reorganization, moratorium (whether
general or specific) or other laws now or hereafter
in effect. The performance of the terms of this
Agreement shall not conflict with, constitute a
violation of, or require any notice or consent under,
the organizational documents of Flagg Street or any
agreement or instrument to which Flagg Street is a
party or by which Flagg Street is bound, and shall
not require any consent, approval or notice under any
provision of any judgment, order, decree, statute,
rule or regulation applicable to Flagg Street.
(b) Each of the Flagg Street Nominees hereby severally,
but not jointly, represents, warrants and agrees that
(a) he has full legal right, power and authority to
execute, deliver and perform this Agreement, and
consummate the transactions contemplated hereby, (b)
this Agreement constitutes valid, legal and binding
obligations of such Flagg Street Nominee, enforceable
against him in accordance with its terms, except that
such enforcement may be subject to bankruptcy,
insolvency, reorganization, moratorium (whether
general or specific) or other laws now or hereafter
in effect. The performance of the terms of this
Agreement shall not conflict with, constitute a
violation of, or require any notice or consent under,
any agreement or instrument to which such Flagg
Street Nominee is a party or by which such Flagg
Street Nominee is bound, and shall not require any
consent, approval or notice under any provision of
any judgment, order, decree, statute, rule or
regulation applicable to such Flagg Street Nominee.
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Section 3. Board Composition; Related Matters.
3.1 Concurrently with the execution of this Agreement, the Pomeroy Board
will take the necessary action to accomplish the following:
(a) Cause the number of directors constituting the
Pomeroy Board to be fixed at twelve (12) until the
Annual Meeting;
(b) Appoint two Flagg Street Nominees to fill the
vacancies on the Pomeroy Board created by the
expanded size of the Pomeroy Board to twelve (12)
such that the Pomeroy Board will consist of David B.
Pomeroy, Kevin G. Gregory, William H. Lomicka,
Vincent D. Rinaldi, Debra E. Tibey, Kenneth R.
Waters, David G. Boucher, Ronald E. Krieg, Stephen E.
Pomeroy, James H. Smith, Jonathan Starr and Michael
A. Ruffolo;
(c) Reschedule the Annual Meeting to be held and
concluded on a date not later than July 31, 2007. The
only matters that shall be acted upon at the Annual
Meeting shall be the election of directors, as
provided herein, and the ratification of the
appointment of auditors;
(d) Cause the Company's slate of director nominees for
election at the Annual Meeting to be composed of
David B. Pomeroy, Kevin G. Gregory, William H.
Lomicka, Vincent D. Rinaldi, Debra E. Tibey, Kenneth
R. Waters, David G. Boucher, Ronald E. Krieg,
Jonathan Starr, Michael A. Ruffolo and Richard S.
Press (collectively, the "Continuing Directors"),
with Richard S. Press designated to fill the vacancy
created by Stephen E. Pomeroy not being nominated and
re-elected to the Pomeroy Board. Should any of
Messrs. Starr, Ruffolo and Press be unable to serve
as a director, Flagg Street shall have the right to
designate a substitute deemed qualified by the
Nominating and Corporate Governance Committee. Should
any of the Continuing Directors other than Messrs.
Starr, Ruffolo and Press be unable to serve as a
director, the remaining Continuing Directors other
than the Flagg Street Nominees shall have the right
to designate a substitute deemed qualified by the
Nominating and Corporate Governance Committee; and
(e) Publicly recommend and solicit proxies for the
election of the Continuing Directors to the Pomeroy
Board at the Annual Meeting. Flagg Street will, and
the Company shall use its best efforts to cause the
current members of the Pomeroy Board and their
Affiliates and Associates to, vote all shares of
Common Stock which they are entitled to vote at the
Annual Meeting in favor of the election of each of
the Continuing Directors and such votes shall not be
revoked in any manner. For purposes of this
Agreement, the terms "Affiliate" and "Associate"
shall have the respective meanings set forth in Rule
12b-2 promulgated by the SEC under the Securities
Exchange Act of 1934, as amended (the "Exchange
Act").
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3.2 Immediately following the Annual Meeting, the Pomeroy Board will take
the necessary action to accomplish the following:
(a) James H. Smith will retire from the Pomeroy Board
and, accordingly, resign as a director of the Pomeroy
Board. An executed copy of James H. Smith's
resignation from the Pomeroy Board, effective
immediately after the Annual Meeting, is attached
hereto as Exhibit A;
(b) Cause the number of directors constituting the
Pomeroy Board to be fixed at a maximum of eleven (11)
until the 2008 annual meeting of stockholders of the
Company (the "2008 Annual Meeting"). At any time
prior to but not later than the 2008 Annual Meeting,
the number of directors constituting the Pomeroy
Board will be fixed at a maximum of ten (10), which,
if necessary, will be facilitated by the resignation
of any of the Continuing Directors other than a Flagg
Street Nominee;
(c) Appoint (i) Michael A. Ruffolo to the Compensation
Committee and the Stock Option Committee, (ii)
Richard S. Press to the Nominating and Corporate
Governance Committee, and (iii) Jonathan Starr to the
Audit Committee. The Pomeroy Board will also appoint
one Flagg Street Nominee, to be selected at Flagg
Street's sole discretion, to any other committee of
the Pomeroy Board formed after the appointment of the
Flagg Street Nominees to the Pomeroy Board; and
(d) Commence a search for a President and Chief Executive
Officer and form a Special Committee of the Pomeroy
Board (the "Special Committee"), which will include
Michael A. Ruffolo, for the purpose of conducting
such search. The Special Committee shall use all
commercially reasonable best efforts to recommend to
the full Pomeroy Board a President and Chief
Executive Officer (the "Candidate") who is
satisfactory to all the members of the Special
Committee not later than October 31, 2007 (the
"Initial Deadline"). If, after using all commercially
reasonable best efforts, the Special Committee cannot
agree on a Candidate by the Initial Deadline, the
deadline for recommending a Candidate who is
satisfactory to all the members of the Special
Committee will be extended to December 31, 2007 (the
"Final Deadline"). The Candidate recommended by the
Special Committee pursuant to this Section 3.2(d)
will be hired by the Company as soon as practicable
after such recommendation. The Candidate hired by the
Company pursuant to this Section 3.2(d) will,
promptly after commencement of his or her employment,
be appointed to serve as a member of the Pomeroy
Board in the place of Kevin G. Gregory unless Mr.
Gregory is the Candidate. An executed copy of Mr.
Gregory's resignation from the Pomeroy Board,
effective concurrently with the appointment of the
Candidate to the extent Mr. Gregory is not the
Candidate, is attached hereto as Exhibit B.
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3.3 Vacancies
(a) In the case of any vacancy occurring among any of the
Flagg Street Nominees serving on the Pomeroy Board,
Flagg Street will have the right to designate an
individual deemed qualified by the Nominating and
Corporate Governance Committee as a representative
for appointment as a successor to hold office for the
unexpired term of the Flagg Street Nominee whose
place will be vacant.
(b) In the case of any vacancy occurring among any of the
Continuing Directors other than the Flagg Street
Nominees serving on the Pomeroy Board, the Continuing
Directors other than the Flagg Street Nominees will
have the right to designate an individual deemed
qualified by the Nominating and Corporate Governance
Committee as a representative for appointment as a
successor to hold office for the unexpired term of
the Continuing Director whose place will be vacant,
unless such vacancy results from any express
provision of this Agreement.
3.4 Within 10 business days following receipt of reasonably satisfactory
documentation thereof, the Company will reimburse Flagg Street for its
reasonable out-of-pocket fees and expenses incurred through the date of the
execution and performance of this Agreement in connection with its activities
relating to the Annual Meeting, including without limitation, the nomination and
election of directors, the acquisition or solicitation of proxies, any acts or
filings in connection therewith, and the negotiation and execution of this
Agreement, provided such reimbursement shall not exceed $350,000 in the
aggregate.
3.5 Flagg Street, on behalf of itself and the Flagg Street Nominees, hereby
covenants as follows:
(a) Flagg Street Partners Qualified LP hereby withdraws
its letters to the Company dated April 3, 2007 and
May 29, 2007 nominating the Flagg Street Nominees as
directors for election to the Pomeroy Board at the
Annual Meeting.
(b) To the extent all the Flagg Street Nominees are
nominated by the Company for election as directors at
the 2008 Annual Meeting, all the Flagg Street
Nominees accept such nomination and all the Flagg
Street Nominees agree to be included as director
nominees in the Company's proxy statement for the
2008 Annual Meeting, Flagg Street and the Flagg
Street Nominees will not effect, seek, offer, engage
in, propose or cause or participate in any
"solicitation" of "proxies" (as such terms are
defined in the rules and regulations promulgated
under the Exchange Act), relating to the election of
directors of the Company at the 2008 Annual Meeting.
The commencement by Flagg Street or the Flagg Street
Nominees of an election contest in connection with
the 2008 Annual Meeting is referred to herein as a
"2008 Election Contest". In the event Flagg Street
and/or any of the Flagg Street Nominees commences a
2008 Election Contest, the
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Company shall have no obligation to include any Flagg
Street Nominee on the Company's slate of director
nominees it recommends for election at the 2008
Annual Meeting, regardless of any prior nomination by
the Company of a Flagg Street Nominee or a Flagg
Street Nominee's acceptance of such nomination.
Section 4. Miscellaneous.
4.1 Covenant Not to Sue. Flagg Street and the Flagg Street Nominees and
each of its and their Associates and Affiliates, on the one hand, and the
Company and its directors and each of its and their Associates and Affiliates,
on the other hand, agrees not to sue or otherwise commence or continue in any
manner, directly or indirectly, any suit, claim, action, right or cause of
action relating to any acts or omissions in connection with the Annual Meeting
(other than acts or omissions of the Company's director nominees named in the
Company's definitive proxy statement filed with the SEC on June 8, 2007 (without
giving effect to any subsequent amendments or supplements thereto) who do not
stand for election as directors at the Annual Meeting), including without
limitation, the nomination or election of directors, the solicitation of proxies
or any acts or filings in connection therewith; provided, however, that neither
party hereto shall be prohibited from enforcing its rights under and pursuant to
this Agreement, including without limitation the commencement of an election
contest and solicitation of proxies.
4.2 Company Release. The Company, on behalf of itself, its directors,
officers, employees, representatives and agents (collectively, the "Company
Releasors"), does hereby, fully and forever, release and discharge Flagg Street,
its partners, members, directors, officers, employees, attorneys,
representatives and agents, including, without limitation, the Flagg Street
Nominees (collectively, the "Flagg Street Releasees") from any and all actions,
claims, complaints, rights or causes of action, debts, demands or suits of any
kind or nature whatsoever, statutory, equitable or legal, foreseen or
unforeseen, known or unknown, matured or unmatured that the Company Releasors
have, may have or might claim to have against the Flagg Street Releasees through
the date hereof in connection with the Annual Meeting.
4.3 Flagg Street Release. Flagg Street, on behalf of itself, its partners,
members, directors, officers, employees, representatives and agents, and the
Flagg Street Nominees (collectively, the "Flagg Street Releasors") do hereby,
fully and forever, release and discharge the Company, its directors, officers,
employees, attorneys, representatives and agents (other than the Company's
director nominees named in the Company's definitive proxy statement filed with
the SEC on June 8, 2007 (without giving effect to any subsequent amendments or
supplements thereto) who do not stand for election as directors at the Annual
Meeting) (collectively, the "Company Releasees") from any and all actions,
claims, complaints, rights or causes of action, debts, demands or suits of any
kind or nature whatsoever, statutory, equitable or legal, foreseen or
unforeseen, known or unknown, matured or unmatured that the Flagg Street
Releasors have, may have or might claim to have against the Company Releasees
through the date hereof in connection with the Annual Meeting.
4.4 Specific Performance. Flagg Street, including the Flagg Street
Nominees, on the one hand, and the Company, on the other hand, acknowledges and
agrees that irreparable injury to the other party hereto would occur in the
event any of the provisions of this Agreement were not
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performed in accordance with their specific terms or were otherwise breached and
that such injury would not be adequately compensable in damages. It is
accordingly agreed that Flagg Street, including the Flagg Street Nominees, on
the one hand, and the Company, on the other hand (the "Moving Party"), shall
each be entitled to specific enforcement of, and injunctive relief to prevent
any violation of, the terms hereof and the other party hereto will not take
action, directly or indirectly, in opposition to the Moving Party seeking such
relief on the grounds that any other remedy or relief is available at law or in
equity, nor shall such other party seek the posting of a bond as a condition for
obtaining any such relief. An application for specific performance pursuant to
this Section 4.4 shall not preclude the Moving Party from seeking other relief
available at law or in equity.
4.5 Press Release. Promptly following the execution and delivery of this
Agreement, the Company shall issue the press release attached hereto as Exhibit
C (the "Press Release"). None of the parties hereto, including any individual
member of the Pomeroy Board (including the Flagg Street Nominees), will make any
public statements regarding the Annual Meeting (including in any filing with the
SEC or any other regulatory or governmental agency, including any stock
exchange) that are inconsistent with, or otherwise contrary to, the statements
in the Press Release issued pursuant to this Section 4.5; provided, however,
that this Section 4.5 shall be inoperative to the extent Flagg Street or any of
the Flagg Street Nominees commences a 2008 Election Contest.
4.6 Other Announcements.
(a) In furtherance, and not in limitation, of Section
4.5, from the date of this Agreement through and
until the 2008 Annual Meeting, none of the parties
hereto, nor any of the Continuing Directors, shall
make any public statement (including any statement in
any filing with the SEC or any other governmental
agency), nor make any private statement to any of the
Company's stockholders or potential stockholders,
that is critical of or disparages this Agreement or
any actions taken prior to the date hereof by any of
the foregoing in connection with the Annual Meeting,
except as and to the extent expressly permitted in
clause 4.6(b) below.
(b) Any statement otherwise prohibited by clause 4.6(a)
may nevertheless be made without violating clause
4.6(a) if (i) such statement is either required by
applicable law, rule or regulation (including any
statement required by any filing with the SEC or any
other governmental agency) or is required to be made
by the person seeking to make such statement in order
to comply with such person's fiduciary duties to the
Company or its stockholders, in each case as
reasonably determined by such person based on the
advice of outside counsel and upon reasonable prior
written notice to the parties hereto of the nature of
the statement and the basis pursuant to which it is
required to be made, (ii) such statement refers or
relates to any of the Company's director nominees
named in the Company's definitive proxy statement
filed with the SEC on June 8, 2007 (without giving
effect to any subsequent amendments or supplements
thereto) who do not stand
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for election as directors at the Annual Meeting), or
(iii) Flagg Street or any of the Flagg Street
Nominees commences a 2008 Election Contest.
4.7 Proxy Statement. The Company agrees to provide Flagg Street an
opportunity to review and comment on the portions of all proxy materials to be
filed by the Company in connection with the Annual Meeting containing statements
relating to Flagg Street, the Flagg Street Nominees and this Agreement.
4.8 Confidentiality Agreement. As soon as reasonably practicable following
the execution and delivery of this Agreement, Richard S. Press and the Company
will enter into an appropriate confidentiality agreement for the purpose of
allowing the Company to integrate Mr. Press into the business and affairs of the
Company in anticipation of his election to the Pomeroy Board at the Annual
Meeting.
4.9 No Waiver. Any waiver by either Flagg Street or the Company of a breach
of any provision of this Agreement shall not operate as or be construed to be a
waiver of any other breach of such provision or of any breach of any other
provision of this Agreement. The failure of either party to insist upon strict
adherence to any term of this Agreement on one or more occasions shall not be
considered a waiver or deprive that party of the right thereafter to insist upon
strict adherence to that term or any other term of this Agreement.
4.10 Successors and Assigns. All the terms and provisions of this Agreement
shall inure to the benefit of and shall be enforceable by the successors and
assigns of the parties hereto.
4.11 Survival of Representations. All representations and warranties made by
the parties in this Agreement or pursuant hereto shall survive the execution of
this Agreement.
4.12 Entire Agreement; Amendments. This Agreement and the Exhibits hereto
contain the entire understanding of the parties hereto with respect to its
subject matter. There are no restrictions, agreements, promises,
representations, warranties, covenants or undertakings other than those
expressly set forth herein. This Agreement may be amended only by a written
instrument duly executed by the parties hereto or their respective successors or
assigns. Notwithstanding the foregoing, nothing in this Agreement is intended
to, nor shall be construed as, limiting or otherwise changing any of the duties
and other obligations the Flagg Street Nominees may have in their respective
capacities as directors of the Company.
4.13 Severability. The invalidity or unenforceability of any provision
hereof in any jurisdiction will not affect the validity or enforceability of the
remainder hereof in that jurisdiction or the validity or enforceability of this
Agreement, including that provision, in any other jurisdiction. To the extent
permitted by applicable law, each party waives any provision of applicable law
that renders any provision hereof prohibited or unenforceable in any respect. If
any provision of this Agreement is held to be unenforceable for any reason, it
will be adjusted rather than voided, if possible, in order to achieve the intent
of the parties to the extent possible.
4.14 Headings. The section headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
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4.15 Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing and will be delivered by electronic
transmission:
If to the Company:
Pomeroy IT Solutions, Inc.
1020 Petersburg Road
Hebron, KY 41048
Attn: Kevin G. Gregory
Telecopy: 888-717-4279
Email: kgregory@pomeroy.com
With a copy to:
Greenberg Traurig LLP
1200 Seventeenth Street
Suite 2400
Denver, CO 80202
Attn: Steven Segal, Esq.
Telecopy: (720) 904-7619
Email: segalst@gtlaw.com
If to Flagg Street:
Flagg Street Capital LLC
44 Brattle Street
Cambridge, MA 02138
Attn: Jonathan Starr
Telecopy: (617) 876-6081
Email: jonathan@flaggstreet.com
with a copy to:
Olshan Grundman Frome Rosenzweig & Wolosky LLP
65 East 55th Street
New York, NY 10022
Attention: Steven Wolosky, Esq.
Telecopy: (212) 451-2222
Email: swolosky@olshanlaw.com
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
4.16 Governing Law; Jurisdiction. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Delaware
without reference to the conflict of laws principles thereof. The parties hereto
agree to submit to the jurisdiction of any court of competent jurisdiction
located in the State of Delaware to resolve any dispute relating to
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this Agreement and waive any right to move to dismiss or transfer any such
action brought in any such court on the basis of any objection to personal
jurisdiction or venue.
4.17 Counterparts. This Agreement may be executed in counterparts, each of
which shall be an original, but all of which together shall constitute one and
the same Agreement.
4.18 No Admission. Nothing contained herein shall constitute an admission by
any party hereto of liability or wrongdoing.
[SIGNATURES ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement or caused this Agreement to be duly executed by their authorized
representative, as of the day and year first above written.
FLAGG STREET PARTNERS LP
By: Flagg Street Capital LLC, its
General Partner
By: /s/ Jonathan Starr
-----------------------------
Name: Jonathan Starr
Title: Founding Member
FLAGG STREET PARTNERS QUALIFIED LP
By: Flagg Street Capital LLC, its
General Partner
By: /s/ Jonathan Starr
-----------------------------
Name: Jonathan Starr
Title: Founding Member
FLAGG STREET OFFSHORE, LP
By: Flagg Street Capital LLC, its
General Partner
By: /s/ Jonathan Starr
-----------------------------
Name: Jonathan Starr
Title: Founding Member
FLAGG STREET CAPITAL LLC
By: /s/ Jonathan Starr
-----------------------------
Name: Jonathan Starr
Title: Founding Member
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JONATHAN STARR
/s/ Jonathan Starr
-----------------------------
Name: Jonathan Starr
Richard S. Press
/s/ Richard S. Press
-----------------------------
Name: Richard S. Press
Michael A. Ruffolo
/s/ Michael A. Ruffolo
-----------------------------
Name: Michael A. Ruffolo
POMEROY IT SOLUTIONS, INC.
By: /s/ Kenneth R. Waters
-----------------------------
Name: Kenneth R. Waters
Title: Lead Independent Director
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Exhibit 99.2
PRESS RELEASE
For Immediate Release
POMEROY IT SOLUTIONS SETTLES PROXY BATTLE
ANNUAL STOCKHOLDERS MEETING POSTPONED TO JULY 31, 2007
Hebron, KY and Cambridge, MA, July 12, 2007 - Pomeroy IT Solutions, Inc.
(Nasdaq: PMRY) and Flagg Street Capital, which owns approximately 9.8% of the
Company's outstanding stock, announced today that they have entered into a
settlement agreement that will end Flagg Street's proxy solicitation.
Under the terms of the settlement agreement, the Company will expand the size of
its Board to 12, and two of Flagg Street's three director nominees, Jonathan
Starr and Michael Ruffolo, will be immediately added to the Board. All three of
Flagg Street's nominees, including Richard Press, also will be nominated by the
Board for election to full terms as directors at the Company's 2007 annual
meeting of stockholders, along with the Board's other nominees. Flagg Street's
nominees will also be entitled to representation on each Board committee.
"After meeting with each of the Flagg Street nominees, we are impressed with
their credentials and accomplishments," said Kenneth Waters, Lead Independent
Director. "Mike, Dick and Jonathan are highly competent, well-regarded in their
respective industries, and have been uniformly involved in successful endeavors.
Collectively, they will add considerable depth and relevant insight to the
strategic direction of the Company. We look forward to their strong positive
contributions to the Board," added Waters.
"We invested in Pomeroy because we believe in the Company's potential," said
Jonathan Starr, founder and principal of Flagg Street Capital. "We believe that
the Pomeroy Board has undertaken some very positive corporate governance
initiatives that benefit all Pomeroy stockholders. It's time now to focus on the
future. We are committed to working with the other Board members and management
to help make Pomeroy a great company for stockholders, customers, and
employees," added Starr.
The Company's 2007 annual meeting of stockholders has been rescheduled for July
31, 2007. The Company intends to mail to stockholders a supplement to its proxy
statement, along with a new proxy card, for use in connection with the 2007
annual meeting. Proxy cards previously provided by the Company and Flagg Street
will not be valid for voting at the annual meeting.
ABOUT POMEROY IT SOLUTIONS, INC.
Pomeroy IT Solutions, Inc. is a leading provider of IT infrastructure solutions
focused on enterprise, network and end-user technologies. Leveraging its core
competencies in IT Outsourcing and Professional Services, Pomeroy delivers
consulting, deployment,
operational, staffing and product sourcing solutions through the disciplines of
Six-Sigma, program and project management, and industry best practices.
Pomeroy's consultative approach and adaptive methodology enables Fortune 2000
corporations, government entities, and mid-market clients to realize their
business goals and objectives by leveraging information technology to simplify
complexities, increase productivity, reduce costs, and improve profitability.
For more information, go to www.pomeroy.com.
ABOUT FLAGG STREET CAPITAL LLC
Flagg Street Capital LLC is a Massachusetts-based registered investment advisor.