Pomeroy IT Solutions/David B. Pomeroy, II SC 13D

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 13D

(Rule 13d-101)

INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO
RULE 13d-2(a)
(Amendment No.___)*

POMEROY IT SOLUTIONS, INC

(Name of Issuer)

Common Stock, $.01 Par Value

(Title of Class of Securities)

731822 10 2

(CUSIP Number)

David B. Pomeroy, II
42475 N. 112^th Street
N. Scottsdale, AZ 85262
(480) 595-0699

With a copy to:

Richard G. Schmalzl
Graydon Head & Ritchey LLP
1900 Fifth Third Center
511 Walnut Street
Cincinnati, Ohio 45202
(513) 629-2828
(513) 333-4326 (fax)

(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)

April 4, 2008

(Date of Event Which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. þ

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7 for other parties to whom copies are to be sent.

* The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter the disclosures provided in a prior cover page.

The information required in the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

(Continued on following pages)

TABLE OF CONTENTS


	Item 1. Security and Issuer
	Item 2. Identity and Background
	Item 3. Source and Amount of Funds or Other Consideration
	Item 4. Purpose of Transaction
	Item 5. Interest in Securities of the Issuer
	Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer
	Item 7. Material to Be Filed as Exhibits
SIGNATURES


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NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)

David B. Pomeroy, II

CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)

(a) o

(b) o

SEC USE ONLY

SOURCE OF FUNDS (SEE INSTRUCTIONS)

CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) o

N/A

CITIZENSHIP OR PLACE OF ORGANIZATION

United States of America

SOLE VOTING POWER

NUMBER OF

2,070,679*

SHARED VOTING POWER

BENEFICIALLY

OWNED BY

22,636**

EACH

SOLE DISPOSITIVE POWER

REPORTING

PERSON

2,070,679*

WITH

SHARED DISPOSITIVE POWER

22,636**

AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON

2,093,315

CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS)

N/A

PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)

16.69%

TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)

* Includes 452,000 Shares issuable upon exercise of currently exercisable stock options.

** Represents 22,636 Shares owned by Mr. Pomeroy’s spouse as to which he disclaims beneficial ownership.


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Preliminary Note: The Reporting Person (defined below) filed a Schedule 13G/A on February 15, 2007 (the “Schedule 13G/A”) reporting his aggregate ownership of 2,208,315 of the Issuer’s Shares (defined below), representing approximately 16.83% of such Shares. Between the date of the Schedule 13G/A and April 4, 2008, the Reporting Person disposed of 115,000 of the Issuer’s Shares, representing approximately 0.95% of such Shares. This Schedule 13D reports all of the Shares previously reported on the Schedule 13G/A, less the Shares disposed of by the Reporting Person after the date of the Schedule 13G/A filing, bringing the Reporting Person’s aggregate holdings to 2,093,315 or 16.69% of such Shares. The Reporting Person is converting his reporting from Schedule 13G to Schedule 13D for the reasons set forth in Item 4 below.

Item 1. Security and Issuer

The class of equity securities to which this statement relates is the Common Stock, $0.01 par value per share (the “Shares”), of Pomeroy IT Solutions, Inc. a Delaware corporation (the “Issuer”). The principal executive offices of the Issuer are located at 1020 Petersburg Road, Hebron, Kentucky 41048.

Item 2. Identity and Background

(a) This statement is filed by David B. Pomeroy, II (the “Reporting Person”).

(b) The residence address of the Reporting Person is 42475 N. 112^th Street, N. Scottsdale, Arizona 85262.

(d) During the last five years, the Reporting Person has not been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors).

(e) During the last five years, the Reporting Person has not been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws.

(f) The Reporting Person is a citizen of the United States of America.

Item 3. Source and Amount of Funds or Other Consideration

As discussed in more detail in Item 4, the Reporting Person is actively pursuing the acquisition of all of the Issuer’s outstanding Shares; however, the Reporting Person has yet to acquire any Shares pursuant to this course of action. Therefore, to date, the Reporting Person has not used any funds to purchase additional Shares of the Issuer. The Reporting Person’s historical purchases of Shares were funded with his personal funds.

Item 4. Purpose of Transaction

The Reporting Person is the founder, largest stockholder and a long-time director of the Issuer. The Reporting Person has converted to a Schedule 13D because he is actively pursuing the acquisition of the Issuer, including but not limited to the acquisition of all of the Issuer’s outstanding Shares. On April 4, 2008, the Reporting Person entered into a joint bidding agreement (the “Joint Bidding Agreement”) with Charlesbank Equity Fund VI Limited Partnership (“Charlesbank”), a Boston based private equity firm, pursuant to which the Reporting Person and Charlesbank agreed, among other things, to cooperate with each other to (i) negotiate and enter into a definitive agreement with the Issuer providing for the acquisition of the Issuer, (ii) obtain approval of such acquisition from the board of directors and shareholders of the Issuer, (iii) secure, and when


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obtained, cause to be available, at or subsequent to the consummation of the acquisition, third party financing to augment the equity contributions of the Reporting Person and Charlesbank, (iv) vote (or cause to be voted) at any meeting of shareholders of the Issuer, all of the Shares held by them and their respective affiliates in favor of the approval of the acquisition, and all other transactions contemplated by the foregoing, and (v) take all other actions necessary or advisable to cause the acquisition to be consummated. The foregoing summary of the Joint Bidding Agreement is qualified in its entirety by reference to the copy of the Joint Bidding Agreement included as Exhibit A to this Schedule 13D.

By letter dated April 4, 2008 and delivered to the Issuer’s board of directors on April 5, 2008 (the “Joint Offer Letter”), the Reporting Person informed the Issuer’s board that he has partnered with Charlesbank to make a non-binding offer jointly to acquire all of the issued and outstanding capital stock of the Issuer for a price of $7.05 per share, which represents a 20.7% premium to the closing price of such stock on April 4, 2008. The non-binding offer is on an all cash basis and is not subject to obtaining any financing. The non-binding offer is subject to the satisfactory completion of due diligence, the negotiation and execution of a definitive agreement on mutually agreeable terms and the receipt of any necessary corporate and other third party approvals, including the approval of the Issuer’s board of directors and shareholders. The complete text of the Joint Offer Letter is included as Exhibit B to this Schedule 13D.

The Reporting Person does not have any present plan or proposal which would relate to or result in any of the matters set forth in subparagraphs (a) — (j) of Item 4 of Schedule 13D except as described herein or such as would occur upon completion of any of such actions.

The Reporting Person reserves the right, based on all relevant factors and subject to applicable law, at any time and from time to time, to review or reconsider his position, change his purpose, take other actions (including actions that could involve one or more of the types of transactions or have one or more of the results described in subparagraphs (a) — (j) of Item 4 of Schedule 13D) or formulate and implement plans or proposals with respect to any of the foregoing.

Item 5. Interest in Securities of the Issuer

	(a),(b)		The information set forth in rows 7 through 13 of the cover page hereto for the Reporting Person is incorporated herein by reference. The percentage amount set forth in row 13 of the cover page for the Reporting Person filed herewith is calculated based upon the 12,089,520 Shares outstanding as of February 29, 2008 as reported by the Issuer in its Form 10-K filed with the Securities and Exchange Commission on March 26, 2008 plus the Reporting Person’s 452,000 Shares issuable upon exercise of currently exercisable stock options.

	(c)		None other than as disclosed in Item 4 above.

	(d)		Not applicable.

	(e)		Not applicable.

Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer

On April 4, 2008, the Reporting Person and Charlesbank entered into the Joint Bidding Agreement. A copy of the Joint Bidding Agreement is filed herewith as Exhibit A and incorporated herein by reference.


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On April 5, 2008, the Reporting Person and Charlesbank delivered to the Issuer’s board of directors the Joint Offer Letter. A copy of the Joint Offer Letter is filed herewith as Exhibit B and incorporated herein by reference.

As indicated above, some of the Shares beneficially owned by the Reporting Person are subject to options, which have been granted by the Issuer to the Reporting Person subject to the terms of the related option grant agreements and related stock option plans.

Except for the Joint Bidding Agreement, the Joint Offer Letter and any option grant agreements or stock option plans, there are no other contracts, arrangements, understandings or relationships (legal or otherwise), including, but not limited to, transfer of voting of any of the securities, finder’s fees, joint ventures, loan or option arrangements, puts or calls, guarantees of profits, division of profits or loss, or the giving or withholding of proxies, between the Reporting Person, Charlesbank and any other person, with respect to any securities of the Issuer, including any securities pledged or otherwise subject to a contingency the occurrence of which would give another person voting power or investment power over such securities other than standard default and similar provisions contained in loan agreements.

Item 7. Material to Be Filed as Exhibits

	Exhibit A:		Joint Bidding Agreement, dated as of April 4, 2008, between David Pomeroy and Charlesbank Equity Fund VI Limited Partnership.

	Exhibit B:		Joint Offer Letter, dated as of April 4, 2008, from David Pomeroy and Charlesbank Equity Fund VI Limited Partnership to the Board of Directors of Pomeroy IT Solutions, Inc.


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EXHIBIT A

JOINT BIDDING AGREEMENT

This Joint Bidding Agreement (this “Agreement”), dated as of April 4, 2008, by and between David Pomeroy (“Pomeroy”) and Charlesbank Equity Fund VI, Limited Partnership, a Massachusetts limited partnership (“Charlesbank” and, together with Pomeroy, the “Parties”).

RECITALS

WHEREAS, Pomeroy currently serves as a director of Pomeroy IT Solutions, Inc., a Delaware corporation (the “Company”), and owns shares of common stock, par value $.01 per share (“Shares”), of the Company;

WHEREAS, the Parties wish to act jointly in connection with a potential acquisition of the Company (the “Acquisition”); and

WHEREAS, the Parties desire to enter into this Agreement in order to delineate their respective rights and obligations with respect to, among other things, the Shares they currently hold or may hereafter acquire, their joint efforts in connection with the Acquisition, and the sharing of expenses they may incur in connection with the foregoing;

AGREEMENT

NOW, THEREFORE, and in consideration of the mutual terms, covenants and conditions set forth herein, as well as for other good and valuable consideration, the parties, intending to be legally bound, hereby agree as follows:

ARTICLE I
AGREEMENTS REGARDING THE ACQUISITION

Section 1. Joint Bidding Efforts. The Parties agree to act jointly and to cooperate with each other in connection with the Acquisition and all other transactions related thereto, including, without limitation, using their commercially reasonable efforts to (i) negotiate and enter into a definitive agreement with the Company providing for the Acquisition, (ii) obtain approval of the Acquisition from the board of directors and shareholders of the Company, (iii) secure, and when obtained, to cause to be available, at or within 6 months subsequent to the consummation of the Acquisition, third party financing (the “Newco Debt”) to augment the equity contributions of Charlesbank and Pomeroy hereunder, (iv) vote (or cause to be voted), at any meeting of shareholders of the Company (or in connection with any written consent in lieu thereof), all of the Shares held by them and their respective Affiliates in favor of the approval of the Acquisition, and all other transactions contemplated by the foregoing, and (v) take all other actions necessary or advisable to cause the Acquisition to be consummated. Except as otherwise expressly provided herein, all actions taken directly or indirectly by any of the Parties in connection with, or in furtherance of, the Acquisition shall require the unanimous consent of all the Parties, including, without limitation, all communications between any of the Parties and the board of directors or management of the Company relating to the Acquisition.

Section 2. Acquisition Proposal. As soon as reasonably practicable after the execution of this Agreement, the Parties agree to use commercially reasonable efforts to jointly


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submit to the Company a non-binding written offer with respect to the Acquisition substantially in the form of Exhibit A hereto (the “Acquisition Proposal”). During the Term (as defined below), the Parties agree to jointly cooperate to further develop, modify, and otherwise amend the Acquisition Proposal and to use commercially reasonable efforts to reach agreement with the Company on the Acquisition Proposal (subject to the mutual agreement of the Parties, in their sole discretion, of any such developments, modifications or amendments). Notwithstanding anything in this Agreement to the contrary, nothing herein shall require any Party to commit to any specific terms with respect to the Acquisition, including with respect to price, structure or financing, and each party agrees that it shall be under no obligation to consummate the Acquisition unless the Parties shall reach agreement on mutually satisfactory terms with respect to the Acquisition. Unless and until otherwise agreed to in writing by the Parties, any Acquisition Proposals shall be non-binding and subject to satisfactory completion of full due diligence to the satisfaction of each Party, in its sole discretion. Any Acquisition Proposals submitted by or of behalf of the Parties shall not require that financing be a condition to closing of the Acquisition.

Section 3. Pomeroy Rollover. Subject to the terms of Article II, Section 2, in connection with any Acquisition Proposal made by the Parties, Pomeroy shall agree to rollover all of his equity interests in the Company prior to the Acquisition into equity interests in the Company or any successor thereto, including any acquisition vehicle created by the Parties to acquire the Company (“Newco”), simultaneously with consummation of the Acquisition (the “Rollover Equity”). The Parties agree that the Rollover Equity shall represent equity ownership in Newco equal to the pro rata amounts of equity invested by Pomeroy (based on the value of the Rollover Equity) and Charlesbank in Newco based upon Charlesbank’s equity investment in Newco after obtaining the Newco Debt (the “Charlesbank Net Equity Investment”). By way of example, if Pomeroy’s Rollover Equity had a value of $10,000,000 and the Charlesbank Net Equity Investment was $20,000,000, then Pomeroy would receive a 33.33% equity stake at closing and Charlesbank would receive a 66.67% equity stake at closing.

Section 4. Charlesbank Closing Fee. At the closing of any Acquisition, Newco shall pay to Charlesbank a closing fee equal to 2% of the equity capital provided or arranged for by Charlesbank in connection with the consummation of the Acquisition, excluding the Rollover Equity.

Section 5. Future Stock Purchases. During the Term of this Agreement, each of the Parties agrees that they will not, and will not authorize or permit any of their subsidiaries, Affiliates or representatives to, acquire or dispose of any capital stock of or other equity interests (or securities convertible into, or exercisable or exchangeable for capital stock or other equity interests) in the Company, without the prior written consent of the other, which such consent may be withheld in each Party’s sole discretion. In the event that the Parties determine to acquire additional blocks of Shares prior to the consummation of the Acquisition, the Parties shall coordinate with each other on such acquisitions to the extent practicable.

Section 6. Securities Laws Filings. The Parties agree to cooperate in connection with all filings required to be made with the Securities and Exchange Commission (the “SEC”) relating to the Acquisition, any Acquisition Proposal or the actions taken by the parties hereunder. Each Party and its counsel shall be given a reasonable opportunity to review and


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comment on any such filing prior to its filing with the SEC, and each Party shall give reasonable and good faith consideration to any comments made by the other Party or its counsel. Each Party agrees to provide the other with (i) any comments or other communications, whether written or oral, that may be received from the SEC or its staff with respect to any such SEC filing promptly after receipt thereof and prior to responding thereto, and (ii) a reasonable opportunity to provide comments on that response (to which reasonable and good faith consideration shall be given). Notwithstanding the foregoing, neither Party shall be responsible for or liable for the use of information contained in any SEC filing to the extent that such information was provided by the other Party for inclusion therein.

ARTICLE II
AGREEMENTS REGARDING POST-ACQUISITION MATTERS

In the event that a definitive agreement relating to an Acquisition Proposal is ultimately entered into by the Parties (or their Affiliates) and the Company, the Parties shall cause the definitive documents relating to the Acquisition to contain the following provisions:

Section 1. Board of Directors Composition. Until the later of (a) the expiration of the five-year period following the consummation of the Acquisition, or (b) the termination of the Consulting Agreement (as defined below), the board of directors of Newco shall be comprised of five (5) members, consisting of (a) three nominees of Charlesbank, and (b) two nominees of Pomeroy, which nominees other than David Pomeroy must be approved in advance by Charlesbank (provided that such approval may not be unreasonably withheld or delayed).

Section 2. Capital Structure. The Parties shall use commercially reasonable efforts to cooperate in good faith to agree on a mutually satisfactory capital structure for Newco following the Acquisition; provided, however, that such capital structure shall provide that (a) all of Charlesbank’s equity investment shall be made in exchange for convertible preferred stock of the Newco with a cumulative liquidation preference equal to an 8% annual dividend which shall accrue and remain unpaid except as provided herein, and a conversion ratio and other terms satisfactory to Charlesbank and Pomeroy, which preferred stock shall have a maturity date no earlier than the closing or consummation of a sale of Newco or similar liquidity event (as shall be mutually agreed and defined by the Parties, a “Liquidity Event”), and Charlesbank may elect at its discretion upon a Liquidity Event to either (i) receive the accrued and unpaid dividends on such preferred stock plus an amount equal to Charlesbank’s Net Equity Investment upon which payment the preferred stock would be redeemed, or (ii) convert the preferred stock into shares of Newco’s common stock at a conversion ratio such that the percentage of Newco common stock held by Charlesbank immediately following the conversion shall equal the percentage ownership interest represented by the preferred stock immediately prior to the conversion; and (b) all of Pomeroy’s Rollover Equity shall be converted into shares of common stock of Newco. Except for the foregoing, (i) nothing in this Agreement shall obligate any Party to approve any specific capital structure (which approval may be granted or withheld in each Party’s sole discretion), (ii) both Parties must approve any proposed capital structure which provides for the incurrence by Newco of more than $50 million of Newco Debt in connection with the consummation of the Acquisition, and (iii) in no event shall the capital structure of Newco following the Acquisition result in the ownership by Charlesbank of less than a majority of the outstanding capital and voting stock of Newco on a fully diluted basis.


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Section 3. Pomeroy Consulting Agreement. In connection with the consummation of the Acquisition and subject to the reasonable satisfaction of Charlesbank with its terms, Newco shall assume the Company’s existing consulting agreement with David Pomeroy and shall enter into a five year extension with an annual consulting fee of $150,000 per year and with such other terms as are substantially similar to the terms of the existing consulting agreement between the Company and Pomeroy (the “Consulting Agreement”). In connection with the Consulting Agreement, Pomeroy shall, as requested by Newco, provide Newco with professional services necessary to assist Newco with its strategic direction, core operational improvements and key management decisions. The Consulting Agreement will also provide that Pomeroy may, at the request of Newco, identify, assist in the completion of, and integrating any acquisitions or business combinations that Newco decides to consummate as approved by Newco’s board of directors, and may, at the request of Newco, assist in identifying and supervising Newco’s cost reduction and increased efficiency efforts. Pomeroy may also provide various other services to the Company as may be mutually agreed upon by the Parties.

Section 4. Management Incentive Equity Plan. Newco shall adopt a new management incentive equity plan mutually satisfactory to the Parties in their sole discretion (the “Equity Plan”). The Equity Plan shall provide for the issuance of awards with respect to equity interests representing up to 10% of the total outstanding equity interests of Newco following the closing of the Acquisition. Equity issued in connection with such awards shall have a dilutive effect on Charlesbank, Pomeroy and any other holders of equity interests in Newco on a pro rata basis. The terms of the Equity Plan shall be subject to the approval of the Parties in their sole discretion.

Section 5. Pomeroy Equity Grant. In addition to the Equity Plan, Newco shall make an equity grant to Pomeroy consisting of a stock option grant (the “Option Grant”) and a performance based fee (the “Performance Fee”). The Option Grant shall give Pomeroy the right to purchase shares of common stock of Newco equal to 5% of the total outstanding shares of preferred stock and common stock of Newco as of the closing of the Acquisition at a price per equity interest equal to the price per equity interest at which the Acquisition is consummated. The Option Grant shall vest annually in equal 1/5 increments over the five-year period following the date of grant, provided, however, the Option Grant shall accelerate and vest in full upon a Liquidity Event. Equity issued in connection with the Option Grant shall have a dilutive effect on Charlesbank, Pomeroy and any other holders of equity interests in Newco on a pro rata basis. The Performance Fee shall be payable to Pomeroy upon a Liquidity Event in an amount equal to, (a) 5% of the total return on equity received in cash by Charlesbank in connection with such Liquidity Event in excess of two and one half times (2.5x) the Charlesbank Net Equity Investment until the total return received in cash by Charlesbank equals three and one half times (3.5x) the Charlesbank Net Equity Investment, plus (b) 10% of the total return on equity received by Charlesbank in cash in connection with such Liquidity Event in excess of three and one half times (3.5x) the Charlesbank Net Equity Investment.

Section 6. Charlesbank Annual Management Fee. Newco shall pay Charlesbank an annual management fee equal to 1% of the Charlesbank Net Equity Investment.

Section 7. Lease Extension. Promptly following the closing of the Acquisition and subject to the reasonable satisfaction of Charlesbank with their terms, the Parties shall cause


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Newco to enter into lease extensions relating to the properties leased by the Company and its Affiliates from Pomeroy Investments, LLC. subject to the reasonable satisfaction of Charlesbank with their terms, such lease extensions shall be for a period of two years following the current stated lease expiration dates and shall be on the same terms and conditions as currently exist, subject to any increase in rents as contemplated by such existing leases.

Section 8. Right of First Offer. Until the occurrence of a Liquidity Event and subject to customary carve-outs, if Newco proposes to offer for sale any shares of its stock for any purpose, Newco will first offer all such shares to the Parties on a pro rata basis on substantially identical terms offered to any third party purchaser.

Section 9. Rights of Co-Sale. Until the occurrence of a Liquidity Event and subject to customary carve-outs, the Parties will provide a right of co-sale in favor of each other providing that before any Party may sell any of its or his shares of Newco stock, the selling Party will give the other Parties an opportunity to participate in such sale on a basis proportionate to the amount of securities held by the Parties.

Section 10. Other Agreements. The definitive documentation will also include other customary transfer related restrictions and agreements, including drag-along rights for Charlesbank.

ARTICLE III
ADDITIONAL AGREEMENTS

Section 1. Exclusivity. Each of the Parties acknowledges that they will expend significant time, effort and expense in pursuing the transactions contemplated hereby. In order to induce each of the Parties to expend such time, effort and expense, except for the Acquisition or as may otherwise be agreed to in writing by the Parties in their sole and absolute discretion, each of the Parties hereby undertakes and agrees that it will not (and will not permit its directors, officers, employees, advisors or representatives to), during the Term (as defined below) of this Agreement, (a) discuss, solicit or negotiate any merger, consolidation, acquisition, business combination or similar transaction relating to the Company (or any Affiliate thereof), or any of the assets of or interests (including common stock) in the Company or any Affiliate thereof (hereinafter, a “Business Combination”), or (b) take, directly or indirectly, any action to initiate, assist, solicit, negotiate, encourage, accept or otherwise pursue any offer or inquiry from any Person to engage in any Business Combination or to reach any agreement or understanding (whether or not such agreement or understanding is absolute, revocable, contingent or conditional and including, without limitation, a non-binding letter of intent) for, or otherwise attempt to consummate, any Business Combination. The terms of this paragraph shall be broadly construed to avoid any circumvention of the terms hereof.

Section 2. Confidentiality. Given the confidential nature of the discussions among the Parties, each of the Parties agrees not to, and agrees to direct each of its respective officers, directors, shareholders, employees, accountants, attorneys, consultants, advisors and potential financing sources (collectively, “Representatives”) not to, except as required by law, rule or regulation, disclose to any Person the existence or terms of this Agreement, the fact that


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discussions and evaluations are taking place concerning the potential transactions contemplated by this Agreement, or any of the terms, conditions or facts concerning such potential transactions, in each case, other than (a) those Representatives who need to know such information for the purpose of evaluating such transaction and who agree to abide by the confidentiality obligations of this paragraph, and (b) communications with officers and directors of the Company that have been mutually agreed upon by the Parties. Each Party shall be responsible for any breach of this Agreement by its respective Representatives.

Section 3. Expense Sharing. In the event that the Acquisition is not consummated, the Parties agree that all costs and expenses incurred by the Parties shall remain the sole cost and expense of the Party who incurred such costs. In the event that the Acquisition is consummated, all of the above mentioned costs and expenses shall be borne by Newco. The Parties intend to have Newco enter into an engagement agreement (a “Laidlaw Agreement”) with Laidlaw & Co (UK) Ltd. (“Laidlaw”) which, along with other customary terms, would provide Laidlaw with a $1,800,000 payment in the event that Newco consummates the Acquisition. The Parties intend that such Laidlaw Agreement would replace any other engagement agreement between Laidlaw and Pomeroy. Charlesbank shall have the authority to select all of the representatives of Newco that it deems necessary to assist with the consummation of the Acquisition, including, without limitation, attorneys and accountants and other advisors.

Section 4. Termination Fee and Expense Reimbursement. In the event that any termination fee or expense reimbursement becomes payable by the Company to any Person formed by the Parties in connection with the Acquisition, such fee or reimbursement shall be allocated to the Parties first, to reimburse the Parties for expenses as paid in accordance with Article III, Section 3, and thereafter in the following proportion: 70% of such amounts shall be paid to Charlesbank; and 30% of such amounts shall be paid to Pomeroy. Any payments payable by Pomeroy to Laidlaw pursuant to the Engagement Agreement in connection with the receipt of any termination fee or expense reimbursement in connection with the Acquisition shall be made by Pomeroy.

ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF THE BIDDERS

As an inducement to the other Parties to enter into this Agreement, each of the Parties hereby represents and warrants, severally and not jointly, to the other Parties as follows:

Section 1. Organization and Authority. If such Party is an entity, such Party is duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation. Such Party has all necessary power and authority to enter into this Agreement, to carry out its obligations hereunder and to consummate the transactions contemplated hereby. The execution and delivery by such Party of this Agreement, the performance by such Party of its obligations hereunder and the consummation by such Party of the transactions contemplated hereby have been duly authorized by all requisite action (corporate or otherwise) on the part of such Party. This Agreement has been duly executed and delivered by such Party, and (assuming due authorization, execution and delivery by the other Parties) this Agreement constitutes the


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legal, valid and binding obligation of such Party, enforceable against such Party in accordance with its terms.

Section 2. No Conflict. The execution, delivery and performance of this Agreement by such Party do not and will not (a) violate, conflict with or result in the breach of any provision of the organizational documents of such Party, (b) conflict with or violate any law, rule or regulation or any order, writ, judgment, injunction or decree of any government, regulatory or administrative authority, agency, commission, court or tribunal (each, a “Governmental Authority”) applicable to such Party or any of its assets, properties or businesses or (c) conflict with, result in any breach of, constitute a default (or event which with the giving of notice or lapse of time or both, would become a default) under, require any consent under, or give to others any rights of termination, amendment, acceleration, suspension, revocation or cancellation of, any note, bond, mortgage or indenture, contract, agreement, lease, sublease, license, permit, franchise or other instrument or arrangement to which such Party is a party, which would have a material adverse effect on the ability of such Party to carry out its obligations under, and to consummate the transactions contemplated by, this Agreement.

Section 3. Litigation. There are no actions, proceedings, claims, suits, inquiries or investigations by or against such Party pending before any Governmental Authority (or, to the best knowledge of such Party, threatened to be brought by or before any Governmental Authority) which could affect the legality, validity or enforceability of this Agreement or the consummation of the transactions contemplated hereby.

Section 4. Financing. Charlesbank hereby represents and warrants to Pomeroy that Charlesbank has as of the date hereof, and will have as of the closing of the Acquisition, the ability to call capital from its limited partners in order to consummate the Acquisition, without the need for obtaining any financing from any other third party, provided, however, that this Section 4 shall not prohibit or restrict Charlesbank from obtaining financing that is non-recourse to Newco.

ARTICLE V
GENERAL PROVISIONS

Section 1. Term. This Agreement shall have a term commencing on the date hereof and ending on the earlier of 90 days hereafter and such time as the Company rejects or fails to accept the Parties’ offer to engage in an Acquisition and Charlesbank determines not to continue its efforts to engage in the Acquisition (the “Term”); provided, however, that, during the Term, the Parties shall both use their commercially reasonable efforts to reach an exclusivity agreement with the Company pursuant to which the Parties can conduct full due diligence on the Company and negotiate definitive terms on the Acquisition on an exclusive basis (an “Exclusivity Agreement”); further provided, that, in the event that an Exclusivity Agreement is signed by the Company with the Parties (or any Affiliates thereof) during the initial Term, then the Term shall be automatically extended until the expiration of the Exclusivity Agreement; and further provided, that, in the event that a definitive agreement is executed by the Company and the Parties (or any Affiliates thereof) with respect to the Acquisition, then the Term shall be


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automatically extended until such time as the Acquisition is either consummated or terminated in accordance with the terms of such definitive agreement. Notwithstanding anything contained herein to the contrary (i) a Party may terminate this Agreement by delivering written notice to the other Party (the “Other Party”) after the Other Party has breached any of its representations or covenants contained in this Agreement, (ii) Charlesbank may terminate this Agreement by delivering written notice to Pomeroy if Charlesbank is not satisfied with its due diligence findings or any of the proposed terms of the Acquisition; (iii) Sections 1 and 2 of Article III shall survive any termination described in clause (i) or (ii) above until the end of then current Term, and (iv) this clause (iv), Sections 3 and 4 of Article III and Sections 3 and 5 of this Article V shall all survive any termination of this Agreement (whether due to the end of the Term or otherwise).

Section 2. Further Actions. Each of the Parties shall use its commercially best efforts to take, or cause to be taken, all appropriate action, do or cause to be done all things necessary, proper or advisable under applicable law, and to execute and deliver such documents and other papers, as may be required to carry out the provisions of this Agreement and consummate and make effective the transactions contemplated hereby.

Section 3. Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given or made (and shall be deemed to have been duly given or made upon receipt) by delivery in person, by an internationally recognized overnight courier service, by facsimile or by registered or certified mail (postage prepaid, return receipt requested) to the respective parties hereto at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Article V, Section 4):

(a) if to Charlesbank:

Charlesbank Capital Partners, LLC
200 Clarendon Street, 54th Floor
Boston, MA 02116
Attn: Brandon White and Mark Rosen
Facsimile: 617-619-5402

with a copy to:

Goodwin Procter, LLP
53 State Street
Boston, MA 02109
Attn: James Curley and James Matarese
Facsimile: 617-523-1231

(b) if to Pomeroy:


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Mr. David Pomeroy
42475 N. 112^th Street — Desert Mtn.
N. Scottsdale, AZ 85262
[Add fax]

with a copy to:

Graydon Head & Ritchey LLP
1900 Fifth Third Center
511 Walnut Street
Cincinnati, Ohio 45202
Attn: Dick Schmalzl
[Add fax]

Section 4. Certain Definitions. For purposes of this Agreement, the term:

(a) “Affiliate” means, with respect to any specified person, any other person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such specified person.

(b) “control”, with respect to the relationship between or among two or more persons, means the possession, directly or indirectly or as trustee, personal representative or executor, of the power to direct or cause the direction of the affairs or management of a person, whether through the ownership of voting securities, as trustee, personal representative or executor, by contract, credit arrangement or otherwise.

(c) “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

(d) “Person” means an individual, corporation, limited liability company, partnership, association, trust, unincorporated organization, other entity or group (as defined in Section 13(d) of the Exchange Act).

Section 5. Miscellaneous. This Agreement constitutes the entire agreement of the parties hereto with respect to the subject matter hereof and thereof and supersedes all prior agreements and undertakings, both written and oral, among the parties hereto and their Affiliates with respect to the subject matter hereof. This Agreement may be executed and delivered (including by facsimile transmission) in counterparts, each of which taken together shall constitute one and the same agreement. This Agreement may not be amended or modified except in writing signed by each of the Parties hereto. If any provision of this Agreement is void or so declared, such provision shall be deemed and is hereby severed from this Agreement, the remainder of which shall remain in full force and effect. Failure of either Party at any time to insist upon strict performance of any provision hereof shall not be construed as a waiver or relinquishment of the right to insist upon strict performance of the same provision at any time. This Agreement shall be governed by the laws of the State of New York, without regard to principles of conflicts of laws. Should legal action ever be necessary in order to enforce the


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terms and conditions of this Agreement, the prevailing party will be entitled to receive from the other party all costs incurred in connection with such enforcement, including reasonable attorney fees and costs, including such costs and fees on appeal, if any. The headings in this Agreement are for reference purposes only and do not affect in any way the meaning or interpretation of this Agreement. This Agreement may not be assigned by any Party by operation of law or otherwise without the express written consent of the other Parties and any such assignment or attempted assignment without such consent shall be void; provided, however, that Charlesbank may assign this Agreement to an Affiliate; provided further, however, that a Party’s permitted assignee of this Agreement shall execute and deliver to the other Parties a written agreement to be bound by the provisions of this Agreement. This Agreement shall be binding upon and inure solely to the benefit of the parties hereto and their respective successors and permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other person any legal or equitable right, benefit or remedy of any nature whatsoever. No provision of this Agreement may be waived except in writing by the Party entitled to the benefit of such provision.

Section 6. Specific Performance; Waiver of Jury Trial. Each Party acknowledges and agrees that the other Parties would be irreparably damaged if any of the provisions of Sections 1 or 2 of Article III of this Agreement are not performed in accordance with their specific terms and that any breach of the provisions of Sections 1 or 2 of Article III of this Agreement by a Party could not be adequately compensated in all cases by monetary damages alone. Accordingly, in addition to any other right or remedy to which the Parties may be entitled, at law or in equity, they shall be entitled to enforce any provisions of Sections 1 or 2 of Article III of this Agreement by a decree of specific performance and to temporary, preliminary and permanent injunctive relief to prevent breaches or threatened breaches of any of such provisions, without posting any bond or other undertaking. Each of the parties hereto hereby waives to the fullest extent permitted by applicable law any right it may have to a trial by jury with respect to any litigation directly or indirectly arising out of, under or in connection with this Agreement or the transactions contemplated hereby.

IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed as of the date first set forth above.

CHARLESBANK EQUITY FUND VI, LIMITED PARTNERSHIP

By: Charlesbank Equity Fund VI, GP, Limited Partnership, its General Partner

By: Charlesbank Capital Partners, LLC, its General Partner

By:

/s/ BRANDON WHITE

By:

/s/ DAVID B. POMEROY, II

Name:

Brandon White

Name:

DAVID POMEROY, II

Title:

Managing Director

Exhibit A
to
Joint Bidding Agreement

See Exhibit B to this Schedule 13D to which this Joint Bidding Agreement is attached.


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EXHIBIT B

DAVID B. POMEROY, II

April 4, 2008

Board of Directors
Pomeroy IT Solutions, Inc.
1020 Petersburg Road
Hebron, KY 41048

Gentlemen:

As the founder, largest stockholder and a long-time director of Pomeroy IT Solutions, Inc. (the “Company” or “Pomeroy”), I have expressed to the Board for some time my deep concern regarding the Company’s operating and financial performance. The difficulties that the Company has been facing in almost every key facet of its business are well-documented. In light of management’s most recent remarks on the Company’s 2008 fiscal fourth quarter performance, I fear that the Company’s problems may only be worsening—and at a rapid pace.

As we have discussed, time is very much of the essence if the Company is going to resolve its challenges. The Company is in a highly competitive industry in which margins are thin and customer loyalty is fragile. Many of the issues adversely affecting the Company, including its ongoing loss of sales/customers and sharp contraction of margins, have been under study by management for some time without adequate resolution. The state of affairs is such that if these issues are not immediately addressed, the Company could suffer irreparable harm.

In light of the above, I am deeply concerned about the erosion of shareholder value both in the near and longer term. As you know, the Company’s shares are thinly traded with little liquidity available to shareholders. Furthermore, there is no research coverage on the Company’s stock. Given the considerable time it will take to turn the Company’s business around, the Company’s share buy-back program will be insufficient on its own to maintain the inflated price level at which the stock is currently trading. I believe the significant changes the Company must make are fundamentally inconsistent with the short-term demands and scrutiny of being a public company. I am convinced that only as a private company will Pomeroy be able to act unimpeded to transform its operations.


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Therefore, I have undertaken an effort to find a financial partner who would join me in making a bid to purchase the Company. My search has been time consuming and challenging, as I have had substantial difficulty in generating interest from qualified third parties due to the deteriorating financial condition of the Company. After much effort, however, I am pleased to report that I have partnered with Charlesbank Equity Fund VI, LP (“Charlesbank”), a Boston based private equity firm that not only has substantial public and private company investment experience, but also is deeply experienced in the IT staffing industry.

By way of background, Charlesbank is a leading middle market-focused private equity firm which currently manages nearly $2.0 billion of capital on behalf of Harvard University and other large institutions. The principals of Charlesbank have been investing together since 1991 and have completed over 50 transactions. Furthermore, Charlesbank has acquired four IT staffing companies in the last eight years as it built a $300 million revenue business that was sold last year. We believe Charlesbank’s deep transaction experience and significant involvement in the IT staffing industry will be tremendous assets as we work to rapidly consummate the transaction proposed below.

To this end, this letter constitutes a non-binding offer from Charlesbank and me jointly to acquire all of the issued and outstanding capital stock of the Company for a price of $7.05 per share, which represents a 20.7% premium to today’s closing price (the “Transaction”). We believe that a premium to the current market price, which as stated earlier is largely being supported by the Company’s buy-back program, is the best outcome for the Company’s shareholders. Without a transaction of this nature, I am concerned that the Company’s stock will continue its decline to prices more in line with industry multiples of historical and expected profits. This non-binding offer is being made on an all cash basis and is not subject to obtaining any financing.

This non-binding offer remains subject to the satisfactory completion of due diligence, the negotiation and execution of a definitive agreement on mutually agreeable terms and the receipt of any necessary corporate and other third party approvals, including the approval of the Company’s Board and shareholders.

Charlesbank and I are prepared to proceed expeditiously toward satisfying the conditions necessary to reach agreement and consummate the Transaction. I will of course recuse myself from participating in all Board discussions regarding this offer and will make an appropriate 13D filing with the SEC, but will continue to fully participate in my role as a director as to all other matters. Our full team is available to answer questions, begin detailed discussions and move forward immediately.

Sincerely yours,



/s/ DAVID B. POMEROY, II
David Pomeroy, II

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CHARLESBANK EQUITY FUND VI, LIMITED PARTERSHIP By: Charlesbank Equity Fund VI, GP, Limited Partnership its General Partner By: Charlesbank Capital Partners, LLC its General Partner
By:	/s/ BRANDON WHITE
	Name:	Brandon White
	Title:	Managing Director