October 18, 1996
Pomeroy Computer Resources, Inc.
0000 Xxxxxxxxxx Xxxx
Xxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxxx
Vice President
Dear Ed:
This letter agreement (this "Amendment") confirms and
evidences certain agreements between Star Bank, National
Association, a national banking association (the "Bank"), and
Xxxxxxx Computer Resources, Inc., a Delaware corporation
("Xxxxxxx") and your subsidiary companies, C&N Corp., a Tennessee
corporation, Xenas Communications Corp., an Ohio corporation and
Xxxxxxx Computer Leasing Company, Inc., a Kentucky corporation
(collectively with Xxxxxxx, the "Borrowers"), with respect to
amendment of the Loan Agreement between the Bank and the
Borrowers originally dated as of March 14, 1996 (the
"Agreement"), as follows:
1. REVOLVING CREDIT LOANS. The Agreement is hereby
amended effective as of August 20, 1996, so that the fifth
paragraph of Section 4(a), concerning the Incentive Pricing
Spread, shall be modified to eliminate the EBITDA Ratio portion
of same and hereafter read as follows:
The interest rate pricing of the Revolving Credit
Loans noted herein shall be subject to incentive
pricing adjustments (the "Incentive Pricing Spread") as
follows, such adjustments to be effective as of the
fifteenth day of the second fiscal month following
Borrowers' quarterly consolidated fiscal periods,
commencing with such statements due for the period
ended July 5, 1996 (and with any Borrower-favorable
price adjustments in the Incentive Pricing Spread
conditioned on no events of default then existing under
this Agreement) and remain effective until readjusted
by the next fiscal quarter's report showing a different
rate should be in effect:
DEBT RATIO INCENTIVE PRICING SPREAD
PER ANNUM BELOW PRIME
RATE (OR ABOVE LIBOR
RATE)
Prime LIBOR
Less than 4.0 to 1.0 0.50% 225 basis
points
Less than 3.0 to 1.0 0.75% 200 basis
points
Less than 2.0 to 1.0 0.75% 175 basis
points
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The "Debt Ratio" shall be as defined in Exhibit "2(o)".
All financial terms shall be defined pursuant to
generally accepted accounting principles as
consistently applied to Xxxxxxxx's business.
It is acknowledged that, as of the effective date of this
amendment, based on the applicable Incentive Pricing Spread, the
current interest rate on variable priced Loans is the Prime Rate
minus 0.75% per annum and on fixed price loans, the LIBOR Rate
plus 175 basis points.
2. FINANCIAL COVENANTS. Exhibit "2(o)" is hereby
modified effective as of the date of this letter and restated to
read as noted in revised Exhibit "2(o)" attached to this
Amendment.
3. REPRESENTATIONS, WARRANTIES, AND COVENANTS. Except
as expressly amended hereby, all representations, warranties and
covenants of the Borrowers set forth in the Agreement shall be
deemed restated as of the date hereof, and the Borrowers further
represent and warrant that:
(a) This Amendment has been duly executed and
delivered by the Borrower and authorized by all requisite
corporate action; and
(b) The execution and delivery by the Borrowers of
this Amendment does not constitute a violation of any applicable
law or a breach of any provision contained in any Borrower's
Certificate or Articles of Incorporation or By-Laws or
Regulations, or contained in any order of any court or other
governmental agency or in any agreement, instrument or document
to which any Borrower is a party or by which the Borrowers or any
of their assets or properties is bound.
(c) Giving effect to this amendment, there is
outstanding no Event of Default (other than waived previously by
the Bank in writing).
4. MISCELLANEOUS
(a) The Borrowers shall reimburse the Bank for all
out-of-pocket costs and expenses, including without limitation
reasonable attorneys' fees, incurred by the Bank or for which the
Bank becomes obligated in connection with or arising out of this
Amendment.
(b) As amended hereby, the Agreement shall remain in
full force and effect, and all references in the Loan Documents
to "the Agreement" shall mean the Agreement as amended hereby.
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(c) Capitalized terms used but not defined herein
shall have the same meanings herein as in the Agreement.
(d) This Amendment may be executed in counterparts.
Xx, please acknowledge the agreement of the Borrowers
to the terms set forth in this Amendment by having two copies of
this Amendment duly executed by the Borrowers in the appropriate
places below and returning one of such copies to the Bank with
copies of the certified resolutions noted above.
STAR BANK, NATIONAL ASSOCIATION
By: _______________________________
Xxxxxxx X. Xxxxx
Vice President
ACKNOWLEDGED, ACCEPTED AND AGREED
TO AS OF THE DATE FIRST NOTED ABOVE:
XXXXXXX COMPUTER RESOURCES, INC. XENAS COMMUNICATIONS CORP.
By: __________________________ By:________________________
Xxxxx X. Xxxxxxxxx Xxxxx X. Xxxxxxxxx
Chief Financial Officer Secretary-Treasurer
and Treasurer
C & N CORP. XXXXXXX COMPUTER LEASING
COMPANY, INC.
By:____________________________ By:________________________
Xxxxx X. Xxxxxxxxx Xxxxx X. Xxxxxxxxx
Vice President Secretary-Treasurer
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EXHIBIT 2(o)
____________
FINANCIAL COVENANTS
___________________
In addition to the provisions of the Loan Agreement,
Borrowers shall have the following requirements:
1. Maintain consolidated Tangible Net Worth at no less
than $25,000,000.
"Tangible Net Worth" shall mean all equity accounts plus any debt
fully subordinated to the Bank (excluding, however, debt owed to
Supply) minus all intangible assets minus any amounts due from
officers, shareholders, or affiliates of the Borrowers (excluding
employee travel or expense advances extended in the normal course
of business).
2. Maintain a ratio of consolidated Debt to
consolidated Tangible Net Worth [the "Debt Ratio"] of not more
than 4.0 to 1.0
"Debt" hereunder shall mean all the obligations and liabilities
of the Borrowers including (but not limited to) accounts payable,
accrued expenses, Bank borrowings, other notes payable,
capitalized lease obligations, and amounts due to floor plan
finance companies.
3. Generate at all times consolidated trailing twelve
(12) month after-tax net income of not less than the following
amounts by and after the following dates:
AMOUNT DATE
$3,500,000 October 5, 1996
$3,500,000 January 5, 1997
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