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EXHIBIT 10.1
AMENDMENT NO. 6 TO AMENDED AND RESTATED
CREDIT FACILITIES AGREEMENT
This
AMENDMENT NO. 6 TO AMENDED AND RESTATED CREDIT FACILITIES
AGREEMENT (this “Agreement”) is entered into and
effective as of June 25, 2008, by and among (1) Pomeroy IT
Solutions, Inc. (formerly known as, Pomeroy Computer
Resources, Inc., and as successor by merger with Val Tech
Computer Systems, Inc.), (2) Pomeroy Select Integration
Solutions, Inc., (3) Pomeroy Staffing Solutions, LLC
(formerly, prior to conversion, Pomeroy Select Advisory
Services, Inc.), (4) Pomeroy IT Solutions Sales Company, Inc.
(formerly known as, Pomeroy Computer Resources Sales Company,
Inc., and as successor by merger with TheLinc, LLC and as
successor by merger with Micrologic Business Systems of K.C.,
LLC), (5) Pomeroy Computer Resources Holding Company, Inc.,
(6) Pomeroy Computer Resources Operations, LLP, (7) PCR
Holdings, Inc. (formerly known as, Technology Integration
Financial Services, Inc.), (8) PCR Properties, LLC (formerly,
prior to conversion, PCR Properties, Inc., and prior to such
conversion, formerly known as, T.I.F.S. Advisory Services,
Inc.), (9) Alternative Resources Corporation, a Delaware
corporation (as successor by merger with Pomeroy Acquisition
Sub, Inc.), (10) ARC Service, Inc., a Delaware corporation,
(11) ARC Staffing Management LLC, a Delaware limited liability
company, (12) ARC Shared Services LLC, a Delaware limited
liability company, (13) ARC Technology Management LLC, a
Delaware limited liability company, (14) ARC Solutions, Inc.,
a Delaware corporation, and (15) ARC Midholding, Inc., a
Delaware corporation (collectively and separately referred to
as, “Borrower” or “Borrowers”), and GE
Commercial Distribution Finance Corporation, formerly known as
Deutsche Financial Services Corporation (“GECDF”),
as Administrative Agent, and GECDF as the sole
Lender.
Recitals
:
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A.
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Borrower,
Administrative Agent and Lenders are party to that certain Amended
and Restated Credit Facilities Agreement dated as of June 25, 2004,
as amended by Amendment No. 1 (with Waiver) to Amended and Restated
Credit Facilities Agreement dated as of March 31, 2006, as amended
by Amendment No. 2 (with Waiver) to Amended and Restated Credit
Facilities Agreement dated as of April 13, 2006, as amended by
Amendment No. 3 (with Waiver) to Amended and Restated Credit
Facilities Agreement dated as of June 23, 2006, as amended by
Amendment No. 4 to Amended and Restated Credit Facilities Agreement
dated as of June 25, 2007, as amended by Amendment No. 5 to Amended
and Restated Credit Facilities Agreement dated as of April 15,
2008, and as further amended or modified or consented to from time
to time (the “Loan Agreement”).
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B.
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GE
Commercial Distribution Finance Corporation, as the sole Lender,
and Borrower have agreed to the provisions set forth herein on the
terms and conditions contained herein.
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Agreement
Therefore,
in consideration of the mutual agreements herein and other
sufficient consideration, the receipt of which is hereby
acknowledged, Borrower, Administrative Agent and Lender hereby
agree as follows:
1.
Definitions. All
references to the “Agreement” or the “Loan
Agreement” in the Loan Agreement and in this Agreement shall
be deemed to be references to the 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 Agreement shall become effective
as of the date first written above, but only if this Agreement has
been executed by Borrower, Administrative Agent and Lender, and
only if all of the documents listed on Exhibit A to
this Agreement have been delivered and, as applicable, executed,
sealed, attested, acknowledged, certified, or authenticated, each
in form and substance satisfactory to Administrative Agent and
Lender, and a “Sixth Amendment Fee” in the amount of
Eighty Thousand Dollars ($80,000) shall be paid to Lender,
provided, however, if the Aggregate Floorplan Loan Volume plus,
without duplication, the Interim Floorplan Loan for the period June
25, 2008 through and including June 24, 2009 is greater than One
Hundred Twenty Million Dollars ($120,000,000), then on or before
July 31, 2009, GECDF shall refund Thirty Thousand Dollars ($30,000)
of the previously paid Sixth Amendment
Fee. Borrower hereby irrevocably authorizes the
Administrative Agent to make a Revolving Loan to pay the Sixth
Amendment Fee.
3.
Treatment of Airplane Lease
Termination. Borrower has informed the
Administrative Agent that it intends to terminate its lease of its
corporate airplane (the “Airplane
Lease”). Borrower has requested that that the
Lender confirm that any loss due to the termination of the Airplane
Lease shall be considered an “nonrecurring loss” under
clause (B)(i) of the definition of EBITDA.
The
Lender hereby confirms that any loss due to the termination of
the Airplane Lease shall be a “nonrecurring loss”
under clause (B)(i) of the definition of EBITDA.
4.
Amendments. The
Loan Agreement is hereby amended as follows:
4.1.
Revolving Loans
Aggregate Amount. Section 3.1.1 of the
Loan Agreement is deleted and replaced with the
following:
“
3.1.1. Aggregate
Amount. Subject to the limitations in
Section 3.1.2, Section 3.6 and elsewhere herein, each Lender
commits to make available to Borrower, from the Effective Date
to the Revolving Loan Maturity Date, such Lender’s
pro-rata share (as listed on Exhibit 3 hereto) of an
“Aggregate Revolving Loan Commitment” that is
initially Eighty Million Dollars ($80,000,000), but which may
decrease from time to time as provided herein, minus the
outstanding amount of the Swingline Loans and minus the
outstanding amount of the Aggregate Floorplan Loans made and
outstanding Approvals granted due to any unused portion of the
Aggregate Revolving Loan Facility as provided in Section
3.2.1, by funding such Lender’s pro-rata share of
Revolving Loan Advances made from time to time by
Administrative Agent as provided herein. Subject to
the limitations in Section 3.1.2 and elsewhere herein,
payments and prepayments that are applied to reduce the
Aggregate Revolving Loan may be reborrowed through Revolving
Loan Advances. Each Lender’s Revolving Loan
Commitment is its pro-rata share of the Aggregate Revolving
Loan Commitment. Upon any reduction of the
Aggregate Revolving Loan Commitment permitted in this
Agreement, each Lender’s Revolving Loan Commitment will
automatically reduce by such Lender’s pro-rata share of
such reduction of the Aggregate Revolving Loan
Commitment.”
4.2.
Borrowing
Base. Section 3.1.4. of the Loan Agreement
is deleted and replaced with the following:
“The
“Borrowing Base” on any date shall
be:
3.1.4.1. (A) 85% of the total outstanding
principal balance of all of Borrowers’ Eligible Accounts as
of the close of business on such date, or as certified in the
Borrowing Base Certificate most recently furnished to
Administrative Agent as required in Section 13.14.1, whichever is
less, plus (B) the lesser of (i) Thirteen Million Dollars
($13,000,000) and (ii) 65% of the total outstanding principal
balance of all of Borrowers’ Eligible Unbilled Service
Accounts as of the close of business on such date, or as certified
in the Borrowing Base Certificate most recently furnished to
Administrative Agent as required in Section 13.14.1, whichever is
less; minus
3.1.4.2. Ten Million Dollars ($10,000,000) provided,
however, at any time if, for the preceding complete two fiscal
quarters there has been no Default or Event of Default, then,
beginning on the first day of the next following fiscal quarter,
the foregoing amount shall be reduced to Five Million Dollars
($5,000,000); provided further, however, if a Default or an Event
of Default subsequently occurs, then such amount shall immediately
be increased to Ten Million Dollars ($10,000,000) but such amount
shall be reduced to Five Million Dollars ($5,000,000) if any such
Default or Event of Default is waived or cured to the satisfaction
of the Administrative Agent and the Required Lenders, and no
Default or Event of Default occurs for the next two fiscal quarter
period following any such waiver or cure (such reduction to occur
beginning on the first day of the next following fiscal quarter);
minus
3.1.4.3. the amount, as determined by
Administrative Agent, on the Aggregate Floorplan Loan Facility and
the Interim Floorplan Loan Facility not paid by Borrower due to a
bona fide, good faith dispute by Borrower with regards to any
invoice from a Vendor relating to any particular Advance under the
Aggregate Floorplan Loan Facility or Interim Floorplan Loan
Facility, as the case may be (although failure of Borrower to pay
such amounts by the final due date as set forth in the applicable
Statement of Transaction will be an immediate Event of Default);
minus.
3.1.4.4. any other reserves or deductions
from the “Borrowing Base” which Administrative Agent or
the Required Lenders believe to be appropriate in their respective
commercially reasonable discretion.”
4.3.
Eligible
Accounts. The lead-in clause to the
definition of Eligible Accounts in Section 3.1.5 is deleted and
replaced with the following:
““Eligible
Accounts” include all of Borrowers’ Accounts other
than Eligible Unbilled Service Accounts and other than the
following, unless approved in writing by Administrative Agent
in each case:”
4.4.
Eligible Unbilled
Service Accounts. A new Section 3.1.6 is
hereby added to the Loan Agreement as follows:
“
3.1.6 Eligible
Unbilled Service Accounts. “Eligible
Unbilled Service Accounts” includes all of
Borrowers’ Unbilled Service Accounts other than all
Eligible Accounts and all of the following, unless approved in
writing by Administrative Agent in each case: (i)
any Unbilled Service Account with respect to which
Administrative Agent does not have a valid and enforceable,
perfected first priority Security Interest; (ii) any Unbilled
Service Account which is greater than 30 days old from the
last month end Recruitmax Accrual Report; (iii) any Unbilled
Service Account of a single Account Debtor if 50% or more of
the balances due on all Accounts of such Account Debtor are
ineligible under Section 3.1.4.1(A); (iv) any Unbilled Service
Account with respect to which the Account Debtor is a
Borrower, a Subsidiary or an Affiliate thereof or an employee
or officer of Borrower or any Subsidiary or Affiliate thereof;
(v) any Unbilled Service Account with respect to which the
Account Debtor does not maintain its chief executive office
within the United States and any Unbilled Service Account with
respect to which the Account Debtor is the government of any
foreign country or any municipality or other political
subdivision thereof, or any department, agency, public
corporation or other instrumentality thereof; (vi) any
Unbilled Service Account which is created from the rental or
lease of any Inventory not owned by Borrower; (vii) any
Unbilled Service Account with respect to goods or services
whose delivery or performance has been rejected by the Account
Debtor or whose earlier acceptance has been revoked; (viii)
Intentionally Omitted; (ix) any Unbilled Service Account owing
by an Account Debtor that is the subject of a bankruptcy or
similar insolvency proceeding, has made an assignment for the
benefit of creditors, has acknowledged that it is unable to
pay its debts as they mature, or whose assets have been
transferred to a receiver or trustee, or who has ceased
business as a going concern; (x) any Unbilled
Service Account with respect to which the Account
Debtor’s obligation to pay the Unbilled Service Account
is conditional upon the Account Debtor’s approval or is
otherwise subject to any repurchase obligation or return
right, as with sales made on a bill and hold, guarantied sale,
sale and return, sale on approval (except with respect to
Unbilled Service Accounts in connection with which Account
Debtors are entitled to return Inventory solely on the basis
of the quality of such Inventory) or consignment basis; (xi)
any Unbilled Service Account owing by an Account Debtor that
has disputed liability or made any claim with respect to any
other Account due from such Account Debtor, or that has any
right of set-off against such Account, or to which Borrower is
indebted in any way, but only to the extent of such
indebtedness, set-off, dispute or claim; (xii) any Unbilled
Service Account subject to a chargeback from a volume discount
or an advertising discount, but only to the extent of such
chargeback or discount; (xiii) any Unbilled Service Account
owing by an Account Debtor whose Indebtedness to Borrower
exceeds a credit limit satisfactory to Administrative Agent;
(xiv) Intentionally Omitted; (xv) any Unbilled Service Account
with respect to which the delivery of goods or performance of
services is bonded in favor of Borrower; (xvi) any Unbilled
Service Account as to which Administrative Agent does not have
the right or ability to obtain direct payment to
Administrative Agent; (xvii) any Unbilled Service Account with
respect to which any of the covenants and agreements contained
in any of the Loan Documents or any of the Representations and
Warranties are not or have ceased to be complete and correct
or have been breached; (xviii) any Unbilled Service Account
which is evidenced by a promissory note or other instrument or
by chattel paper or which has been reduced to judgment; (xix)
any Unbilled Service Account which arises out of a sale or
lease not made in the ordinary course of Borrower’s
business; (xx) Intentionally Omitted; (xxi) Intentionally
Omitted; (xxii) any Unbilled Service Account owing from any
supplier or Vendor of any Borrower, including, without
limitation under or in connection with any rebate, subsidy,
incentive or similar program; (xxiii) any Unbilled Service
Account owing to any Person other than Borrower;
(xxiv) any Unbilled Service Account arising from the leasing
of Inventory; (xxv) any Unbilled Service Accounts
that are Lease-in-Process Inventory; (xxvi) with regards to
any Unbilled Service Accounts arising from the provision of
services, any such Accounts which are invoiced prior to the
performance of the applicable services; (xxvii) any Unbilled
Service Account as to which Administrative Agent has
determined in its reasonable discretion that the prospect of
payment or collection on a timely basis is impaired or that
Administrative Agent otherwise deems in its reasonable
discretion to be uncreditworthy. Notwithstanding
the foregoing, Unbilled Service Accounts owned by a Target
Company may be included within the definition of
“Eligible Accounts” and within the Borrowing Base
on the day of the closing of a Permitted Acquisition to fund
such Permitted Acquisition if and only if such Unbilled
Service Accounts meet the eligibility requirements of each
clause of this Section immediately upon the closing of such
Permitted Acquisition.”
4.5.
Limitations on
Revolving Loan Advances. Section 3.2.1 of
the Loan Agreement is deleted and replaced with the
following:
“
3.2.1.
Floorplan Loan Facility Generally. Each
Lender shall, subject to the terms and limitations in this
Section 3.2, Section 3.6, and elsewhere herein, make available
to Borrower such Lender’s pro-rata share (as listed on
Exhibit 3 hereto) of an “Aggregate Floorplan Loan
Facility” that is (A) Eighty Million Dollars
($80,000,000) plus, if applicable, (B) at any time, the unused
portion of the Aggregate Revolving Loan Facility, by funding
such Lender’s pro-rata share thereof as provided for
herein. Each Lender’s Floorplan Loan Facility
is its pro-rata share of the Aggregate Floorplan Loan
Facility. All Floorplan Loan Advances and Interim
Floorplan Loan Advances will be made directly to approved
Vendors and not to the Borrower. No Floorplan Loan
Advance will be made which would result in either: (i) the sum
of the Aggregate Floorplan Loan, the Interim Floorplan Loan,
and all unfunded Approvals, exceeding Total Aggregate Facility
Limit; or (ii) the Lenders’ Exposure exceeding the Total
Aggregate Facility Limit. Subject to the terms of
this Agreement, payments and prepayments that are applied to
reduce the Aggregate Floorplan Loan may be re-borrowed through
subsequent Floorplan Loan Advances, subject to the terms and
conditions of this Agreement and the Loan
Documents. The Aggregate Floorplan Loan Facility is
not a commitment to lend or advance funds but is a
discretionary facility. From and after the date on
which the Administrative Agent has actual knowledge of an
Event of Default under Section 16.1.1 or under Section
16.1.12, no further Approvals will be issued and except with
respect to existing unfunded Approvals, no further Floorplan
Loan Advances shall be made. From and after the
date on which Administrative Agent has actual knowledge of any
other Event of Default, no further Approvals will be issued if
the Administrative Agent so chooses in its discretion to no
longer issue Approvals or if the Required Lenders direct the
Administrative Agent to no longer issue Approvals, and except
with respect to existing unfunded Approvals, no further
Floorplan Loan Advances shall be made.”
4.6.
Total Aggregate
Facility Limit. Section 3.6 of the Loan
Agreement is deleted and replaced with the following:
“
3.6.
Total
Aggregate Facility Limit. Notwithstanding
the Commitments herein or anything else contained in this
Agreement or any of the other Loan Documents to the contrary,
Borrower, Administrative Agent and each Lender acknowledge and
agree that at no time shall the Aggregate Revolving Loan, the
Swingline Loan, the Aggregate Floorplan Loan, the Interim
Floorplan Loan, the Letter of Credit Exposure and all unfunded
Approvals, exceed Eighty Million Dollars ($80,000,000) in the
aggregate (the “Total Aggregate Facility
Limit”).”
4.7.
Prime Increments
and LIBOR Increments. The chart in Section
4.8 of the Loan Agreement is deleted in its entirety and replaced
with the following:
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“Total Funded Indebtedness to EBITDA (calculate as set forth
herein)
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Revolving Loans and Swingline Loans LIBOR Increment
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Floorplan Loans LIBOR Increment
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Base Rate Increment for Revolving Loans and Swingline
Loans
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Base Rate Increment for Floorplan Loans
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less
than or equal to 2.75:1.00 but greater than
2.50:1.00
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3.00%
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as
agreed to between Administrative Agent and each
Lender
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1.00%
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as
agreed to between Administrative Agent and each
Lender
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less
than or equal to 2.50:1.00 but greater than
2.00:1.00
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2.75%
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as
agreed to between Administrative Agent and each
Lender
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0.75%
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as
agreed to between Administrative Agent and each
Lender
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(A)
less than or equal 2.00:1.00 but greater than or equal to
1.00:1.00 OR (B) less than 1.00:1.00 and Borrower’s
quarterly volume for the preceding quarter for the Floorplan
Loan Facility is less than $30,000,000
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2.50%
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as
agreed to between Administrative Agent and each
Lender
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0.50%
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as
agreed to between Administrative Agent and each
Lender
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(i)
less than 1.00:1.00 AND
(ii) Borrower’s quarterly volume for the preceding
quarter for the Floorplan Loan Facility is greater than or
equal to $30,000,000
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2.00%
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as
agreed to between Administrative Agent and each
Lender
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0.00%
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as
agreed to between Administrative Agent and each
Lender
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4.8.
Computation.
Section 4.11 of the Loan Agreement is delete
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