Document:

Libor 1 Month Exhibit between PDSi & KeyBank dated November 26, 2003

 Exhibit 10(ad) 
  
 LIBOR 1 MONTH EXHIBIT 
  

					
	Principal

	 	Loan Date

	 	Maturity

	$5,000,000.00	 	11-26-2003	 	05-15-2005

  
 References in the
shaded area are for Lender’s use only and do not limit the applicability of this document to any particular loan or item. 
 Any item
above containing    has been omitted due to text length limitations. 
  

					
	 Borrower:
	  	Lender:	  	 KeyBank National Association

	 	  	 	  	 OH-MM-Columbus

	 	  	 	  	 88 East Broad Street

	 	  	 	  	 Columbus, OH 43215

  
 This LIBOR 1 MONTH EXHIBIT is attached
to and by this reference is made a part of the Promissory Note, dated November 26, 2003, and executed in connection with a loan or other financial accommodations between KEYBANK NATIONAL ASSOCIATION and PINNACLE DATA SYSTEMS, INC 
  
 1. DEFINITIONS: For the purposes of this Addendum, the following definitions will apply:

  
 “Business Day” means a day on
which dealings are carried on in the London interbank eurodollar market. 
  
 “LIBOR Interest Period” means the period commencing on the date an advance bearing interest at the LIBOR Rate is made, continued, or converted and continuing for one month, with successive
periods commencing on the same day of each month thereafter; 
  
 “LIBOR Rate” means the rate per annum calculated by the Lender in good faith, which Lender determines with reference to the rate per annum (rounded upwards to the next higher whole multiple of 1/16% if such rate is
not such a multiple) at which deposits in United States dollars are offered by prime banks in the London interbrain eurodollar market two Business Days prior to the day on which such rate is calculated by Bank, in an amount comparable to the amount
of such advance and with a maturity equal to the LIBOR Interest Period; 
  
 “LIBOR Reserve Requirements” means, for any advance bearing interest at the LIBOR Rate, the maximum reserves (whether basic, supplemental, marginal, emergency, or otherwise) prescribed by the Board of Governors of
the Federal Reserve System (or any successor) with respect to liabilities or assets consisting of or including “Eurocurrency liabilities” (as defined in Regulation D of the Board of Governors of the Federal Reserve System) having a term
equal to the term of such advance. 
  
 “Margin”
means two and sixty one hundredths percent (2.60%). 
  
 “Note Rate” means the interest rate provided for in the Note based on the Lender’s Prime Rate (as defined in the Note). 
  
 2. INTEREST RATE. Notwithstanding anything contained in the Note to the contrary, advances under the Note shall bear interest at a fixed rate of interest equal to the
LIBOR Rate plus the Margin for the duration of a LIBOR Interest Period; provided that no such advance shall be in an amount of less than $ $500,000.00, and provided further that no LIBOR Interest Period may extend beyond the maturity date of the
Note. Upon the expiration of the initial LIBOR Interest Period, Borrower may elect a new LIBOR Rate or the Note Rate. If Borrower fails to make an election, the advances will bear interest at the LIBOR Rate plus the Margin for consecutive LIBOR
Interest Periods until an election is made. During any LIBOR Interest Period, Borrower shall continue to make interest payments as required by the Note. 
  
 3. INCREASED COSTS. If, because of the introduction of or any change in, or because of any judicial, administrative, or other governmental interpretation of, any
law or regulation, there shall be any increase in the cost to Lender of making, funding, maintaining, or allocating capital to any advance bearing interest at the LIBOR Rate, including a change in LIBOR Reserve Requirements, then Borrower shall,
from time to time upon demand by Lender, pay to Lender additional amounts sufficient to compensate Lender for such increased cost. 
  
 4. ILLEGALITY. If, because of the introduction of or any change in, or because of any judicial, administrative, or other governmental interpretation of, any law or
regulation, it becomes unlawful for Lender to make, fund, or maintain any advance at the LIBOR Rate, then Lender’s obligation to make, fund, or maintain any such advance shall terminate and each affected outstanding advance shall be converted
to the Note Rate on the earlier of the termination date for each LIBOR Interest Period or the date the making, funding, or maintaining of each such advance becomes unlawful. 
  
 5. REIMBURSEMENT OF COSTS. If Borrower repays any advance bearing interest at the LIBOR Rate prior to the end of the applicable LIBOR
Interest Period, including without limitation a prepayment under paragraphs 3 or 4 above, Borrower shall reimburse Lender on demand for the resulting loss or expense incurred by Lender, including without limitation any loss or expense incurred in
obtaining, liquidating or reemploying deposits from third parties, with a minimum amount due for each prepayment of $200.00 for each such LIBOR advance. If the actual reimbursement amount for any such advance exceeds $200.00, a statement as to the
amount of such loss or expense, prepared in good faith and in reasonable detail by Lender and submitted by Lender to the Borrower, shall be conclusive and binding for all purposes absent manifest error in computation. Calculation of all amounts
payable to Lender under this paragraph shall be made as though Lender shall have actually funded the relevant advance through deposits or other funds acquired from third parties for such purpose; provided, however, that Lender may fund any advance
bearing interest at the Libor Rate, in any manner it sees fit and the foregoing assumption shall be utilized only for purposes of calculation of amounts payable under this paragraph. Lender will be entitled to receive the reimbursement provided for
herein regardless of whether the prepayment is voluntary or involuntary (including demand or acceleration of the Note upon Borrower’s default). 
  
 THIS LIBOR 1 MONTH EXHIBIT IS EXECUTED ON NOVEMBER 26, 2003. 
  

			
	 BORROWER:

	 PINNACLE DATA SYSTEMS, INC.

		
	 By:
	 	 /s/ Michael R Sayre

	 	 	Michael R Sayre, Executive Vice President of
	 	 	PINNACLE DATA SYSTEMS, *C.Amend. to Loan Agreement & Variable Note between PDSi & KeyBank dated 11/26/2003

 Exhibit 10(ae) 
  
 AMENDMENT TO LOAN AGREEMENT AND ALLONGE 
 TO VARIABLE RATE PROMISSORY NOTE 
  
 This Amendment to Loan Agreement (this “Amendment”) is made effective November 26, 2003 by and between Pinnacle Data Systems, Inc. (“Borrower”), and KeyBank National Association, a national banking association
(“Lender”). 
  
 BACKGROUND INFORMATION

  
 A. On or about the date of this Amendment, Lender has made
a loan to Borrower in the principal amount of up to $5,000,000 (the “Loan”) pursuant to a Business Loan Agreement (Asset Based) (the “Loan Agreement”). The Loan is evidenced by a $5,000,000 Promissory Note (the “Note”).
Borrower has also granted Lender a security interest in all of Borrower’s personal property pursuant to a Security Agreement dated the same date as this Amendment (the “Security Agreement”). The Note, the Security Agreement, and any
other agreements between Lender and Borrower relating to the Loan are sometimes referred to hereinafter, collectively, as the “Related Agreements” and, individually, as a “Related Agreement “). The terms defined *
in the Loan Agreement shall be used in this Amendment, and have the same meaning as defined in the Loan Agreement, unless a term is otherwise defined in this Amendment. To the extent that there are any inconsistencies between the provisions of this
Amendment and the provisions of the Loan Agreement, or any of the other Loan Documents, then the applicable provisions of this Amendment shall control and supercede the inconsistent provisions of the Loan Agreement, or any of the other Related
Agreements. 
  
 B. The Borrower and Lender desire to make certain
amendments to the Loan Agreement. Accordingly, Lender and Borrower have agreed to enter into this Amendment. 
  
 STATEMENT OF AGREEMENT 
  
 The parties to this Amendment acknowledge the accuracy of the foregoing Background Information and for adequate consideration received, receipt of which is hereby acknowledged, hereby agree as follows: 
  
 §1. Acknowledgement. Except as otherwise specifically set
forth in this Amendment, the Loan, and all other obligations of Borrower under the Related Agreements, shall remain as currently set forth in the Loan Agreement and the Related Agreements and nothing in this Amendment shall alter, modify, limit, or
impair any of the rights, powers, or remedies that Lender may have under the Loan Agreement, the Note, or any of the other Related Agreements. 
  
 §2. Termination of Existing Loan Documents. Concurrently with the Loan being made pursuant to the Related Agreements, the existing loan
documents between Lender and Borrower including without limitation a Promissory Note, a Business Loan Agreement, and a Security Agreement, all dated August 10, 2000 as may have been amended from time to time, shall be terminated and of no further
force or effect; provided that Lender’s first priority security interest in all of Borrower’s personal property shall remain perfected and in full force and effect and the Security Agreement described above shall be deemed an amendment to
and. replacement of any existing security agreement between Lender and Borrower. Lender shall have no further obligation to make any advances or other payments to the Borrower or any other person or entity pursuant to such terminated loan documents.

  
 §3. Amendment. The Loan Agreement is
hereby amended as follows: 

 The Section of the Loan Agreement titled “AFFIRMATIVE COVENANTS - FINANCIAL STATEMENTS”
is hereby amended by adding the following additional covenants 
  
 Accounts Receivable Aging Report. Within 20 days after the end of each calendar quarter, management prepared accounts receivable aging report in a format satisfactory to the Lender. 
  
 Borrowing Base Report. Within 20 days after the end of each calendar month,
a borrowing base certificate in a format satisfactory to the Lender. 
  
 The Section of the Loan Agreement titled “NEGATIVE COVENANTS” is hereby deleted. in its entirety and the following is hereby inserted in its place: 
  
 NEGATIVE COVENANTS. Borrower covenants and agrees with Lender that while this Agreement is in effect, Borrower shall not,
without the prior written consent of Lender: 
  
 Consolidation, Merger or Acquisition. Except as permitted below, (a) merge or consolidate with or into any other Person, or (b) make any acquisition of the business or assets of any other Person (an “Acquisition”);
provided that Borrower may make Acquisitions in any calendar year, in an amount not to exceed $500,000 for such calendar year. 
  
 Disposition of Assets. Convey, sell, lease, transfer or otherwise dispose of any of its property, business or assets (including, without
limitation, accounts receivable and leasehold assets), whether now owned or hereafter acquired, except for (a) equipment or other assets sold, ]eased, assigned or otherwise disposed of in the ordinary course of business and (b) the sale of
inventory, if any, in the ordinary course of business. 
  
 Obligations. Create, incur, assume, or suffer to exist any Obligation, except the following: 
  

	 	a.	Obligations owed by Borrower to the Bank, 

  

	 	b.	Obligations of Borrower secured by a purchase money security interest in only the property being purchased and/or capitalized lease obligations, both in an aggregate amount not to
exceed $250,000 in any calendar year. 

  
 For
purposes of the foregoing, “Obligation” shall mean (i) all indebtedness for borrowed money (excluding current trade liabilities incurred in the ordinary course of business and payable in accordance with customary practices), or
which is evidenced by a note, bond, debenture or similar instrument, (ii) all obligations under leases that are treated as capitalized leases in accordance with GAAP, (c) all obligations in respect of bankers acceptances issued or created for the
account of such Person, and all reimbursement obligations (contingent or otherwise) in respect of any letters of credit issued for the account to the extent not secured by cash and without duplication of any underlying Indebtedness, (d) all
liabilities secured by any Lien on any property even if Borrower has not assumed or otherwise become liable for the payment thereof, (e) without duplication, all guarantees of any Obligation and (f) all obligations in respect of any balance deferred
and. unpaid. of the purchase price of any property (excluding any such balance that constitutes a current trade liability incurred in the ordinary course of business and payable in accordance with customary practices) if and to the extent the
balance would appear as a liability upon a balance sheet prepared in accordance with GAAP. 

 Liens. Create, incur, assume or stiffer to exist any Lien on any of its properties or assets, except for
Permitted Liens. 
  
 Guaranties. Guarantee or otherwise be or
become directly or contingently responsible or otherwise liable for the Obligations of any other person or entity. 
  
 Distributions. Make any Distribution, if as a result of such Distribution, Borrower would be in violation of any of the Financial Covenants set
forth in this Agreement. Notwithstanding the foregoing, if there is an Event of Default, or an event that with notice and/or the passage would become an Event of Default, as long as such Event of Default shall exist Borrower shall not make any
Distributions whatsoever. 
  
 Loans and Investments, Make
any loan or advance to any other person or entity or purchase or otherwise acquire any capital stock or other ownership interest, assets, obligations or other securities of, make any capital contribution to, or otherwise invest in, or acquire any
interest in, any other person or entity. 
  
 Lines of Business.
Alter the nature of the Borrower’s business as operated on the date of this Agreement in any material respect. 
  
 Subsidiaries. Create any subsidiaries. 
  
 The following new Section titled “FINANCIAL COVENANTS” is hereby added after the Section titled “NEGATIVE COVENANTS”: 
  
 FINANCIAL COVENANTS. Borrower covenants and agrees with ender that while this
agreement is in effect, Borrower shall not: 
  
 Total Debt to
Tangible Net Worth Ratio. Maintain a Total Debt to Tangible Net Worth Ratio of 2.00 to 1.00 or less, as of December 31, 2003, and at the end of each fiscal quarter thereafter, to be tested on a rolling four quarters basis. “Total
Debt” means all of Borrower’s liabilities including Subordinated Debt. “Subordinated Debt’ means indebtedness and other liabilities of Borrower which have been subordinated by written agreement to the Lender in form
and substance acceptable to Lender. “Tangible Net Worth” means Borrower’s total assets excluding all intangible assets (i.e., goodwill, trademarks, patents, copyrights, organizational expenses, and similar intangible items, but
including leaseholds and leasehold improvements), less Total Debt. 
  
 Operating Cash Flow to Fixed Charge Ratio. Maintain an Operating Cash Flow to Fixed Charge Ratio of not less than 1.30 to 1.00 as of December 31, 2003, and at the end of each fiscal quarter thereafter, to be tested on a rolling four
quarters basis. “Operating Cash Flow” shall mean net income after taxes and exclusive of extraordinary gains and losses, gains on the sale of fixed assets, and other income; plus depreciation, amortization, interest expense and
lease expenses (provided that all lease expense payments made by Borrower for the lease of its headquarters located at 6600 Port Road, Columbus, Ohio 43125 shall be excluded from the calculation of Fixed Charges), less Distributions.
“Distributions” shall mean any cash payment made for the purchase, acquisition, redemption, repurchase, or retirement of any capital stock or other equity interest of the Borrower or as a dividend, return of capital, or other
distribution in respect of any capital stock or other equity interest. “Fixed Charges” shall mean the sum of interest expense, current maturities of long-term debt, current maturities of capital leases, lease expenses (except as
provided below), preferred Distributions, and Capital Expenditures (all calculated for the preceding twelve month period); provided that all lease expense 

 payments made by Borrower for the lease of its headquarters located at 6600 Port Road, Columbus, Ohio
43125 shall be excluded from the calculation of Fixed Charges. “Capital Expenditures” means net fixed assets at the beginning of the period less net fixed assets at the end of the period, plus depreciation expense for that period.

  
 §4. Effect of Modification. Except as
expressly modified by this Amendment, all of the ten-ns and conditions of the Loan Agreement, the Note, and all of the other Related Agreements, as they may have been previously modified in writing, shall remain in full force and effect. 

 

			
	 LENDER:

	 KEYBANK NATIONAL ASSOCIATION

		
	 By:
	 	 /s/ Roger D Campbell

	 	 	 Roger D Campbell, Senior Vice President

  
 BORROWER: 
  

			
	 PINNACLE DATA SYSTEMS, INC.

		
	 By:
	 	 /s/ Michael R. Sayre

	 	 	 Michael R. Sayre,

	 	 	 Executive Vice President

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