FIFTH AMENDMENT AND CONSENT
TO CREDIT FACILITIES AGREEMENT
(WITH WAIVER OF DEFAULTS)
This FIFTH AMENDMENT AND CONSENT TO CREDIT FACILITIES AGREEMENT (this
"Agreement") is entered into and effective as of July 21, 2003, by and among
Xxxxxxx IT Solutions, Inc. (formerly known as, Pomeroy Computer Resources,
Inc.), Xxxxxxx Select Integration Solutions, Inc., Xxxxxxx Select Advisory
Services, Inc., Pomeroy IT Solutions Sales Company, Inc. (formerly known as,
Pomeroy Computer Resources Sales Company, Inc.), Xxxxxxx Computer Resources
Holding Company, Inc., Xxxxxxx 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, as amended by the Third Amendment and Consent to Credit
Facilities Agreement, dated as of April 11, 2002, and as further amended by
the Fourth Amendment and Consent to Credit Facilities Agreement, dated as
of May 12, 2003 (the "Fourth Amendment) and each of the consents given
thereunder (as amended from time to time, 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 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 greement shall become effective as of
July 21, 2003, but only if this Agreement has been executed by each Borrower,
Administrative Agent and the Required Lenders.
3. AMENDMENT OF CONSENT TO REDEMPTIONS. The first sentence of Section 4
to the Fourth Amendment is hereby deleted and replaced with the following:
"Notwithstanding the terms of Section 14.11 of the Original Loan Agreement,
the Required Lenders consent to the redemption by Xxxxxxx IT Solutions,
Inc. (formerly known as, Pomeroy Computer Resources, Inc.) of the lesser of
(i) Thirteen Million Dollars ($13,000,000) market value of shares of
Xxxxxxx IT Solutions, Inc.'s (formerly known as, Pomeroy Computer
Resources, Inc.) 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."
4. CONSENT TO DIVIDEND. Notwithstanding the terms of Section 14.10 of the
Original Loan Agreement, the Required Lenders consent to the payment by Xxxxxxx
IT Solutions, Inc. (formerly known as, Pomeroy Computer Resources, Inc.) of a
cash dividend up to an aggregate of Ten Million Dollars ($10,000,000) with
respect to its common stock, 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 payment of a dividend after giving effect to this Agreement. Such
payment of a dividend may occur in one or more dividend declarations, in each
case subject to the conditions set forth in the preceding sentence. This consent
is conditioned upon all such dividends being declared and paid on or before the
close of business on June 25, 2004.
5. WAIVER OF DEFAULTS. Borrower has notified Administrative Agent that
Borrower has violated the Minimum Fixed Charge Coverage covenant contained in
Section 15.6 as of the end of Borrower's fiscal quarters ended January 5, 2003
and 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 Fixed Charge Coverage covenant contained in Section
15.6 as of the end of Borrower's fiscal quarters ended January 5, 2003 and April
5, 2003. The waivers contained in this Section 5 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 15.6 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.
6. AMENDMENTS. The Original Loan Agreement is hereby amended as follows:
6.1. SPECIAL DEFINITIONS - FIXED CHARGES. For all periods after April 5,
2003, the definition of Fixed Charges in Section 15.1 of the Original Loan
Agreement is deleted in its entirety and replaced with the following:
"15.1. SPECIAL DEFINITIONS - FIXED CHARGES. "Fixed Charges" means, for any
period of calculation, the sum of (i) Interest Expense, (ii) the sum of all
scheduled principal payments on long term Indebtedness of Borrower
(including mandatory payments on the Term Loan, but excluding all scheduled
principal payments on the Subordinated Indebtedness (so long as there is no
breach by the Subordinated Lender or the Borrower to any Subordination
Agreement) and current maturities of "leasehold indebtedness" as determined
under GAAP), (iii) federal, state and local income taxes paid, (iv) Capital
Expenditures (excluding permitted expenditures for
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Permitted Acquisitions or acquisitions otherwise consented to in writing by
Required Lenders), (v) dividends and distributions paid or declared, and
(vi) the sum of all scheduled payments under all Capital Leases.
Notwithstanding (v) immediately above, the calculation of Fixed Charges
shall exclude for the trailing four fiscal quarters effected thereby, an
aggregate of Ten Million Dollars ($10,000,000) of cash dividends declared
and paid by Xxxxxxx IT Solutions, Inc. (formerly known as Pomeroy Computer
Resources, Inc.) on its common stock on or after July 21, 2003 but on or
before June 25, 2004 if such dividends are permitted to be declared and
paid under the terms of this Agreement and the other Loan Documents.
6.2. MINIMUM FIXED CHARGE COVERAGE. For all periods after April 5, 2003,
Section 15.6 of the Original Loan Agreement is deleted in its entirety and
replaced with the following:
"15.6. MINIMUM FIXED CHARGE COVERAGE. Each Borrower covenants that the
ratio of Borrower's EBITDA to Fixed Charges, calculated as of the last day
of each fiscal quarter for the four fiscal quarter period then ended shall
be no less than 2.00:1.00 for any fiscal quarter ending after January 5,
2003."
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
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facsimile or other electronic transmission, and such signatures shall be fully
binding on the party sending the same.
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 IT SOLUTIONS SALES COMPANY, INC.
(FORMERLY KNOWN AS, 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: Xxxxx Xxxxxxx
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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