SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 24, 2003
EPLUS INC.
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(Exact name of registrant as specified in its charter)
Delaware 000-28926 54-1817218
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(State or other jurisdiction of (Commission File Number) (IRS Employer
incorporation) Identification No.)
400 Herndon Parkway, Herndon, Virginia 20170
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(Address, including zip code, of principal executive office)
(703) 834-5710
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(Registrant's telephone number, including area code)
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Item 5. Other Events
On July 24, 2003 ePlus inc. (the "Company") announced by press release that it
had early renewed its credit facility and increased the maximum amount that can
be borrowed to $45 million from the current facility. This credit facility
agreement will expire on July 21, 2006. The credit facility has three
participants, National City Bank, Branch Banking and Trust Company and Bank of
America. Each bank has committed $15 million to the facility.
Purpose of the Credit Facility
We use the credit facility primarily for the short-term financing of inventory,
receivables, and equipment prior to the sale or permanent financing provided by
non-recourse loans obtained from third party lenders. As of July 24, 2004 there
was no outstanding balance on this facility.
Principal Terms of the Credit Facility
Borrowings under the facility will bear interest at LIBOR plus 175 basis points
or, at our option, at an alternative base rate which is the higher of (i) the
prime commercial lending rate of the Administrative Agent, in its individual
capacity as a bank, as announced from time to time at its head office, or (ii)
the Federal Funds Rate plus 1/2 of 1% (one-half of one percent). The credit
facility is secured by certain of Companys' assets such as chattel paper
(including leases), receivables, inventory, and equipment. In addition, we have
entered into pledge agreements for the stock of each of our Subsidiaries. The
availability of the credit facility is subject to a borrowing base formula that
consists of inventory, receivables, purchased assets, and leases. Availability
under the credit facility may be limited by the asset value of equipment
purchased by us or by terms and conditions in the credit facility agreeement. If
we are unable to sell the equipment or unable to finance the equipment on a
permanent basis within a certain time period, the availability of credit under
the facility could be diminished or eliminated. The credit facility contains
covenants relating to the following: minimum tangible net worth; cash flow
coverage ratios; maximum debt to equity ratio; maximum amount of guarantees of
subsidiary obligations; mergers; acquisitions; and asset sales. The credit
facility is a full recourse obligation and is secured by a first priority
blanket lien on all of our assets.
Exhibit Index
The following exhibit is filed as part of this report:
Exhibit
Number Item
5.1 Text of Credit Agreement dated July 21, 2003 between ePlus
inc., ePlus Group, inc., ePlus Government, inc., and ePlus
Capital, inc., with National City Bank, Inc., as Agent.
99.1 Press Release
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ePlus inc.
(Registrant)
Date: _______________ By: /s/ STEVEN J. MENCARINI
July 25, 2003 ----------------------------------------
Steven J. Mencarini
Chief Financial Officer
EXECUTION COPY
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SECOND AMENDED AND RESTATED CREDIT AGREEMENT
Among
ePlus inc.
And its Subsidiaries Named Herein
And
Certain Banking Institutions Named Herein
With
NATIONAL CITY BANK
As Administrative Agent
BRANCH BANKING AND TRUST OF VIRGINIA
As Syndication Agent
BANK OF AMERICA, N.A.
As Documentation Agent
dated
as of
July 21, 2003
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Table of Contents
1. CERTAIN DEFINITIONS.....................................................................................1
1.1 Definitions....................................................................................1
1.2 Accounting Terms..............................................................................17
2. THE CREDIT.............................................................................................17
2.1 The Loans.....................................................................................17
(a) Loans; Commitment....................................................................17
(b) Interest Rate Options................................................................18
(c) Maximum Loans Outstanding............................................................18
(d) Minimum Loan Amount..................................................................18
(e) Commitment Percentages...............................................................18
(f) Reborrowing..........................................................................18
(g) Several Obligations..................................................................18
2.2 The Notes.....................................................................................19
2.3 Funding Procedures............................................................................19
(a) Requests for Advance.................................................................19
(b) Irrevocability.......................................................................20
(c) Availability of Funds................................................................20
(d) Funding Assumptions..................................................................20
(e) Funding of Net Amount................................................................20
2.4 Interest......................................................................................21
(a) Alternate Base Rate..................................................................21
(b) LIBO Rate............................................................................21
(c) Renewals and Conversions of Loans....................................................21
(d) Automatic Reinstatement..............................................................21
(e) Default Rate.........................................................................22
2.5 Swing Line Loans..............................................................................22
2.6 Procedure for Swing Line Borrowing; Refunding of Swing Line Loans.............................22
2.7 Fees..........................................................................................24
(a) Structuring and Arranging Fee; Administrative Fee; Upfront Fee.......................24
(b) Commitment Fee.......................................................................24
2.8 Reduction or Termination of Commitment........................................................24
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(a) Voluntary Reduction or Termination...................................................24
(b) Credit Termination Date Acceleration.................................................24
2.9 Loan Prepayments (Optional and Mandatory).....................................................24
(a) Base Rate Loans......................................................................24
(b) LIBO Rate Loans......................................................................24
(c) Mandatory Prepayments................................................................25
2.10 Payments......................................................................................25
(a) Base Rate Loans......................................................................25
(b) LIBO Rate Loans......................................................................25
(c) Form of Payments, Application of Payments, Payment Administration, Etc...............25
(d) Net Payments.........................................................................25
(e) Prepayment of LIBO Rate Loans........................................................26
(f) Demand Deposit Account...............................................................26
2.11 Changes in Circumstances; Yield Protection....................................................26
2.12 Illegality....................................................................................28
3. REPRESENTATIONS AND WARRANTIES.........................................................................28
3.1 Organization, Standing........................................................................28
3.2 Corporate Authority, Validity, Etc............................................................29
3.3 Litigation....................................................................................29
3.4 ERISA.........................................................................................29
3.5 Financial Statements..........................................................................30
3.6 Not in Default, Judgments, Etc................................................................30
3.7 Taxes.........................................................................................30
3.8 Permits, Licenses, Etc........................................................................30
3.9 No Materially Adverse Contracts, Etc..........................................................30
3.10 Compliance with Laws, Etc.....................................................................31
(a) Compliance Generally.................................................................31
(b) Hazardous Wastes, Substances and Petroleum Products..................................31
3.11 Solvency......................................................................................31
3.12 Subsidiaries, Etc.............................................................................31
3.13 Title to Properties, Leases...................................................................31
3.14 Public Utility Holding Company; Investment Company............................................32
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3.15 Margin Stock..................................................................................32
3.16 Use of Proceeds...............................................................................32
3.17 Disclosure Generally..........................................................................32
3.18 No Material Adverse Change....................................................................32
3.19 Insurance.....................................................................................32
4. CONDITIONS PRECEDENT...................................................................................33
4.1 All Loans.....................................................................................33
(a) Documents............................................................................33
(b) Compliance Certificate...............................................................33
(c) Borrowing Base Certificate...........................................................33
(d) Covenants; Representations...........................................................33
(e) Defaults.............................................................................33
(f) Material Adverse Change..............................................................33
4.2 Conditions to First Loan......................................................................33
(a) Articles, Bylaws.....................................................................33
(b) Evidence of Authorization............................................................33
(c) Legal Opinions.......................................................................34
(d) Incumbency...........................................................................34
(e) Note.................................................................................34
(f) Documents............................................................................34
(g) Lien Searches........................................................................34
(h) Due Diligence........................................................................34
(i) Pledged Stock; Stock Power...........................................................34
(j) Filings, Registrations, and Recordings...............................................34
(k) Consents.............................................................................35
(l) Insurance............................................................................35
(m) Other Agreements.....................................................................35
(n) Fees, Expenses.......................................................................35
(o) Collateral Field Audit...............................................................35
5. AFFIRMATIVE COVENANTS..................................................................................35
5.1 Financial Statements and Reports..............................................................35
(a) Annual Statements....................................................................35
(b) Quarterly Statements.................................................................36
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(c) Compliance Certificate...............................................................36
(d) Budgets and Projections..............................................................36
(e) No Default...........................................................................36
(f) Collateral Field Audit...............................................................37
(g) ERISA................................................................................37
(h) Material Changes.....................................................................37
(i) Other Information....................................................................37
(j) Monthly Borrowing Base Certificate...................................................37
(k) Monthly Accounts Receivable Aging Report.............................................37
(l) Quarterly Inventory Report...........................................................37
(m) Quarterly Residuals Report...........................................................37
5.2 Corporate Existence...........................................................................37
5.3 ERISA.........................................................................................38
5.4 Compliance with Regulations...................................................................38
5.5 Conduct of Business; Permits and Approvals, Compliance with Laws..............................38
5.6 Maintenance of Property; Insurance............................................................38
5.7 Payment of Debt; Payment of Taxes, Etc........................................................38
5.8 Notice of Events..............................................................................39
5.9 Inspection Rights.............................................................................39
5.10 Generally Accepted Accounting Principles......................................................40
5.11 Compliance with Material Contracts............................................................40
5.12 Use of Proceeds...............................................................................40
5.13 Further Assurances............................................................................40
5.14 Restrictive Covenants in Other Agreements.....................................................40
5.15 Hedge Agreements..............................................................................40
6. NEGATIVE COVENANTS.....................................................................................41
6.1 Consolidation and Merger......................................................................41
6.2 Debt..........................................................................................41
6.3 Liens.........................................................................................41
6.4 Guarantees....................................................................................41
6.5 Margin Stock..................................................................................41
6.6 Acquisitions and Investments..................................................................41
6.7 Transfer of Assets; Nature of Business........................................................42
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6.8 Restricted Payments...........................................................................42
6.9 Change of Management..........................................................................42
6.10 Limitation on Capital Expenditures............................................................42
6.11 Limitation on Optional Payments and Modification of Indebtedness..............................42
6.12 Accounting Change.............................................................................42
6.13 Transactions with Affiliates..................................................................43
6.14 Restriction on Amendment of This Agreement....................................................43
6.15 Restriction on Hedge Arrangements.............................................................43
6.16 Restriction on Mexican Subsidiary.............................................................43
6.17 Restriction on Transfers from Borrowers to Non-Borrower Subsidiaries of Borrowers.............43
7. FINANCIAL COVENANTS....................................................................................44
7.1 Maximum Recourse Leverage.....................................................................44
7.2 Maximum Recourse Debt to EBITDA...............................................................44
7.3 Interest Coverage Ratio.......................................................................44
7.4 Minimum Net Worth.............................................................................44
7.5 Borrowing Base................................................................................44
7.6 Delinquency of Portfolio......................................................................44
(a) Asset Management Contracts...........................................................45
(b) Buy-Sell Contracts...................................................................45
(c) Lease Portfolio......................................................................45
8. DEFAULT................................................................................................45
8.1 Events of Default.............................................................................45
(a) Payments.............................................................................45
(b) Covenants............................................................................45
(c) Representations and Warranties.......................................................45
(d) Bankruptcy...........................................................................46
(e) Certain Other Defaults...............................................................46
(f) Judgments............................................................................46
(g) Attachments..........................................................................46
(h) Change of Management.................................................................47
(i) Security Interests...................................................................47
(j) Material Adverse Change..............................................................47
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(k) ERISA................................................................................47
9. COLLATERAL.............................................................................................48
9.1 Collateral....................................................................................48
10. ADMINISTRATIVE AGENT...................................................................................48
10.1 Appointment and Authorization.................................................................48
10.2 Duties and Obligations........................................................................48
10.3 The Administrative Agent as a Bank............................................................49
10.4 Independent Credit Decisions..................................................................49
10.5 Indemnification...............................................................................49
10.6 Successor Administrative Agent................................................................50
10.7 Allocations Made By the Administrative Agent..................................................50
11. MISCELLANEOUS..........................................................................................50
11.1 Waiver........................................................................................50
11.2 Amendments....................................................................................51
11.3 Governing Law.................................................................................51
11.4 Participations and Assignments................................................................51
11.5 Captions......................................................................................52
11.6 Notices.......................................................................................52
11.7 Sharing of Collections, Proceeds and Set-Offs; Application of Payments........................52
11.8 Expenses; Indemnification.....................................................................53
11.9 Survival of Warranties and Certain Agreements.................................................53
11.10 Severability..................................................................................54
11.11 Banks' Obligations Several; Independent Nature of Banks' Rights...............................54
11.12 No Fiduciary Relationship.....................................................................54
11.13 CONSENT TO JURISDICTION AND SERVICE OF PROCESS................................................54
11.14 WAIVER OF JURY TRIAL..........................................................................54
11.15 Counterparts; Effectiveness...................................................................55
11.16 Use of Defined Terms..........................................................................55
11.17 Offsets.......................................................................................55
11.18 Entire Agreement..............................................................................55
11.19 Rights of Banks...............................................................................55
11.20 2000 Credit Agreement.........................................................................56
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SCHEDULES AND EXHIBITS
SCHEDULE 1 DISCLOSURE SCHEDULES
SCHEDULE 2 APPLICABLE MARGINS, COMMITMENT FEE
EXHIBIT A SUBSIDIARIES
EXHIBIT B BANKS' LOAN COMMITMENTS AND PERCENTAGES
EXHIBIT C NOTES
EXHIBIT D BORROWING BASE CERTIFICATE
EXHIBIT E SECURITY AGREEMENT
EXHIBIT F PLEDGE AGREEMENT
EXHIBIT G COMPLIANCE CERTIFICATE
EXHIBIT H ACCOUNTS RECEIVABLE AGING REPORT
EXHIBIT I QUARTERLY INVENTORY REPORT
EXHIBIT J RESIDUALS REPORT
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Second Amended and Restated Credit Agreement
This Second Amended and Restated Credit Agreement, dated as of July 21,
2003 (this "Agreement"), is entered into by and among ePlus inc., a Delaware
corporation, each of its subsidiaries that are signatories hereto and named in
Exhibit A attached hereto and such other entities that hereafter become a
subsidiary and are added to Exhibit A (collectively, the "Borrowers" and
individually, a "Borrower"), National City Bank, a national banking association,
as administrative agent for the Banks under this Agreement ("Administrative
Agent"), the other banking institution signatories hereto and named in Exhibit B
attached hereto, and such other institutions that hereafter become a "Bank"
pursuant to Sec. 11.4 hereof (collectively, the "Banks" and individually, a
"Bank").
Preliminary Statement
WHEREAS, the parties hereto desire to amend and restate the 2001 Credit
Agreement (which amended and restated in their entirety the 2000 Credit
Agreement and the 1998 Credit Agreement) (defined below)) in its entirety by
entering into this Agreement.
WHEREAS, the Borrowers desire to have available to them a line of credit
facility the proceeds of which may be used for general corporate purposes.
WHEREAS, the Borrowers have requested that the Banks continue such credit
facility and make loans to the Borrowers under the terms and conditions
hereinafter set forth.
WHEREAS, the Banks are willing to continue such credit facility and to make
loans to the Borrowers under the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and promises hereinafter
set forth and intending to be legally bound hereby, the parties hereto agree as
follows:
1. Certain Definitions
1.1 Definitions.
"1998 Credit Agreement" shall mean the Credit Agreement dated December
18, 1998, as amended, among MLC Holdings, Inc., MLC Group, Inc. and
MLC Federal, Inc., certain banking institutions named therein and
First Union National Bank, as Agent.
"1998 Pledge Agreement" shall mean the Pledge Agreement dated December
18, 1998, as amended, made by MLC Holdings, Inc. in favor of First
Union National Bank, as Agent.
"1998 Security Agreement" shall mean the Security Agreement dated
December 18, 1998, as amended, among MLC Holdings, Inc., MLC Group,
Inc. and MLC Federal, Inc., and First Union National Bank, as Agent.
"2000 Credit Agreement" shall mean the Credit Agreement, dated as of
December 15, 2000, among the Borrowers, the Administrative Agent and
the banking institutions named therein, which 2000 Credit Agreement
amended and restated in its entirety the 1998 Credit Agreement.
"2001 Credit Agreement" shall mean the Amended and Restated Credit
Agreement, dated as of January 19, 2001, among the Borrowers, the
Administrative Agent and the banking institutions named therein, which
2001 Credit Agreement amended and restated in its entirety the 2000
Credit Agreement.
"Accounts Receivable Aging Report" shall mean a report substantially
in the form of Exhibit H hereto.
"Additional Amount" shall have the meaning set forth in Sec. 2.10(e).
"Administrative Agent" shall mean National City Bank and any successor
thereto.
"Affiliate" shall mean (i) MLC/CLC LLC, a Virginia limited liability
company and (ii) any Person: (a) which directly or indirectly
controls, or is controlled by, or is under common control with any
Borrower; (b) which directly or indirectly beneficially owns or holds
five percent (5%) or more of any class of voting stock of any
Borrower; or (c) five percent (5%) or more of whose voting stock is
directly or indirectly beneficially owned or held by any Borrower. The
term "control" means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies
of a Person, whether through the ownership of voting securities, by
contract, or otherwise.
"Aggregate Loan Commitment" shall have the meaning set forth in Sec.
2.1(a).
"Agreement" shall mean this Credit Agreement, as amended,
supplemented, modified, replaced, substituted for or restated from
time to time and all exhibits and schedules attached hereto.
"Alternate Base Rate" shall mean, for any day, the higher of (i) the
prime commercial lending rate of the Administrative Agent, in its
individual capacity as a bank, as announced from time to time at its
head office, or (ii) the Federal Funds Rate plus 1/2 of 1% (one-half
of one percent), in either case calculated on a basis of the number of
days elapsed in a year of 360 days.
"AMC Inventory and Equipment" shall mean new or used items of
Inventory or Equipment purchased by a Borrower for sale or lease to
any AMC Party under an Asset Management Contract. Once an item of AMC
Inventory and Equipment has been sold or leased by such Borrower to an
AMC Party, such item shall no longer be an item of AMC Inventory and
Equipment but, instead, shall result in the creation of either a
Receivable or a Lease.
"AMC Parties" shall mean those entities which become parties to Asset
Management Contracts, unless and until disqualified by the
Administrative Agent in its sole discretion.
"Applicable Borrowing Margin" shall have the meanings set forth in
Schedule 2 attached to this Agreement as it pertains to Base Rate
Loans and LIBO Rate Loans.
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"Asset Management Contracts" shall mean those leases and contracts
which are entered into in the ordinary course of business between a
Borrower and the AMC Parties pursuant to which such Borrower may
supply an AMC Party with technology and other equipment. In order to
qualify as an Asset Management Contract, the lease or contract must
specifically identify the equipment supplied to the AMC Party and must
absolutely obligate the AMC Party to purchase or lease the identified
equipment from such Borrower by a date certain.
"Available Credit Commitment" shall mean, as to any Bank at any time,
an amount equal to the excess, if any, of (a) such Bank's Loan
Commitment then in effect over (b) such Bank's Loans outstanding and
such Bank's Commitment Percentage of the Swing Line Loans then
outstanding; provided, that in calculating the Bank's Loan Commitment
for the purpose of determining such Bank's unused portion of its Loan
Commitment pursuant to Sec2.7, the Bank's Commitment Percentage of the
Swing Line Loans then outstanding shall be deemed to be zero.
"Bank" or "Banks" shall mean have the meaning set forth in the
preamble.
"Base Rate Loans" shall mean Loans for which the applicable rate of
interest is based upon the Alternate Base Rate.
"Borrowing Base" shall mean: (i) with respect to Leases, in each case,
the lesser of 95% of the cost of the Equipment subject to the Eligible
Lease or 95% of the Net Present Value of Lease Payments applicable to
the Lease; (ii) with respect to Receivables, 90% of Eligible
Receivables; (iii) with respect to AMC Inventory and Equipment, 95% of
the cost to the applicable Borrower of the Eligible AMC Inventory and
Equipment, net of all rebates, allowances and credits; (iv) with
respect to Non-AMC Inventory and Equipment, 90% of the cost to the
applicable Borrower of the Eligible Non-AMC Inventory and Equipment up
to the lesser of $5,000,000, net of all rebates, allowances and
credits, or 50% of the aggregate Borrowing Base; and (v) with respect
to Residuals, 25% of the net present value of Residuals up to the
lesser of $5,000,000 or 25% of the aggregate Borrowing Base. No item
shall be included in the Borrowing Base unless and until the
vendor/manufacturer of the Equipment or underlying Equipment, as
applicable, has been paid in full.
"Borrowing Base Certificate" shall mean a certificate in substantially
the form attached hereto as Exhibit D which shall be signed by the
chief financial officer, treasurer or controller of ePlus inc.
"Business Day" shall mean any day other than a Saturday, Sunday, or
other day on which commercial banks in Philadelphia are authorized or
required to close under the laws of the Commonwealth of Pennsylvania
or the State of Ohio.
"Buy-Sell Contracts" shall mean those agreements which are entered
into in the ordinary course of business between a Borrower and a
purchaser with respect to specified equipment owned by that Borrower.
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"Capital Expenditure" shall mean for any period, with respect to any
person, the aggregate of all expenditures by such Person and its
Subsidiaries for the acquisition or leasing (pursuant to a capital
lease) of fixed or capital assets or additions to equipment (including
replacements, capitalized repairs and improvements during such period
for its use) which should be capitalized under GAAP on a consolidated
balance sheet of such Person and its Subsidiaries.
"Capital Lease" shall mean all lease obligations of any Person for any
property (whether real, personal or mixed) which have been or should
be capitalized on the books of the lessee in accordance with GAAP.
"Capital Stock" shall mean any and all shares, interests,
participations or other equivalents (however designated) of capital
stock of a corporation, any and all equivalent ownership interests in
a Person (other than a corporation) and any and all warrants, rights
or options to purchase any of the foregoing.
"Change of Management" shall mean if any of the following Persons
cease to hold their following current positions at ePlus inc.: (i)
Phillip G. Norton as Chairman of the Board of Directors or (ii) Bruce
Bowen as Executive Vice President.
"Closing Date" shall mean the date of this Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and all rules and regulations with respect thereto in
effect from time to time.
"Collateral" shall have the meaning set forth in ss. 9.1.
"Commitment Fee" shall have the meaning set forth in ss. 2.7(b).
"Commitment Percentage" shall have the meaning set forth in ss.
2.1(e).
"Commitment Period" shall mean the period beginning on the Closing
Date and ending on the Credit Termination Date.
"Compliance Certificate" shall have the meaning set forth in ss.
4.1(b).
"Credit Termination Date" shall have the meaning set forth in ss. 2.2.
"Debt" shall mean, as of any date of determination with respect to the
Borrowers, without duplication, (i) all items which in accordance with
Generally Accepted Accounting Principles would be included in
determining total liabilities as shown on the liability side of a
balance sheet of the Borrowers as of the date on which Debt is to be
determined, (ii) all indebtedness of others with respect to which any
Borrower has become liable by way of a guarantee or endorsement (other
than for collection or deposit in the ordinary course of business),
(iii) all contingent liabilities of the Borrowers, and (iv) lease
obligations that, in conformity with GAAP, have been capitalized on
the Borrowers' balance sheet.
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"Default Rate" on any Loan shall mean 2% per annum above the Alternate
Base Rate plus Applicable Borrowing Margin then in effect.
"Dollars" shall mean the lawful currency of the United States of
America.
"EBIT" shall mean the sum of (i) net income, plus (ii) amounts
deducted for interest and taxes, minus (iii) income from extraordinary
items.
"EBITDA" shall mean the sum of (i) net income, plus (ii) amounts
deducted for interest, taxes, depreciation and amortization, minus
(iii) income from extraordinary items.
"Eligible AMC Inventory and Equipment" shall mean all AMC Inventory
and Equipment so long as: (i) the relevant Asset Management Contract
has not been terminated; (ii) the relevant AMC Party is in compliance
with its obligations under its Asset Management Contract; (iii) the
relevant AMC Party has not notified any Borrower that such Borrower or
any other Borrower is in default of any of its obligations under the
Asset Management Contract; (iv) the AMC Inventory and Equipment is not
subject to any prior assignment, claim, lien, security interest or
other limitation on the absolute title of the applicable Borrower
thereto; (v) the item of AMC Inventory and Equipment constitutes
Collateral as defined in the Security Agreement; (vi) the item of AMC
Inventory or Equipment has not been part of the Borrowing Base for
more than 90 days; (vii) the item of AMC Inventory or Equipment is
specifically confirmed to be the subject of a Lease which is to be
executed and delivered in connection therewith; and (viii) no invoice
has been rendered in connection with said Inventory or Equipment for
reimbursement of monies disbursed by any Borrower with respect to a
purchase order on the basis that Lease Documents have not been or are
not expected to be entered into with respect to the assets relating to
that purchase order. In addition, the aggregate of all Eligible AMC
Inventory and Equipment for any one account debtor/lessee or group of
affiliated account debtors/lessees which is included in the Collateral
shall not at any time exceed: (i) $15,000,000 for Investment Grade
Credits; and (ii) $3,000,000 for Non-Investment Grade Credits.
"Eligible Lease" shall mean a Lease in which: (i) a Borrower is the
sole lessor; (ii) the Lease arose in the ordinary course of business
of such Borrower; (iii) the lessee is not an Affiliate of any
Borrower; (iv) the Equipment has been delivered to and accepted by the
lessee and is currently subject to the Lease; (v) neither the Lease
nor the related Equipment is subject to any prior assignment, claim,
lien, security interest or other limitation on the absolute title of
the applicable Borrower thereto; (vi) the Lease payments are not more
than 60 days past due with respect to any payment required thereby
(Lease payments in respect of a newly effective Lease shall not be
deemed 60 days past due until 60 days have elapsed since the effective
date of the Lease); (vii) the Lease provides that the obligations of
the lessee to make payments thereunder are absolute; (viii) the Lease
is freely assignable; (ix) the Lease is not subject to any defense of
the lessee; (x) the lessee is not the subject of an bankruptcy,
reorganization or similar proceedings and is not insolvent; (xi) the
Lease is with a lessee/account debtor which is not located outside of
the United States of America; (xii) the Lease has not been part of the
Borrowing Base for more than 12 months; (xiii) the initial term of the
Lease does not exceed 72 months, provided, however, that a Lease with
an initial term exceeding 72 months shall be eligible for inclusion in
the Borrowing Base upon the prior written consent of the
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Administrative Agent, which consent will be granted in the
Administrative Agent's sole discretion; and (xiv) the Lease and the
Equipment being leased constitute Collateral as defined in the
Security Agreement. In addition, the aggregate of all Eligible
Receivables and Eligible Leases for any one account debtor/lessee or
group of affiliated account debtors/lessees which is included in the
Collateral shall not at any time exceed: (i) $15,000,000 for
Investment Grade Credits; and (ii) $5,000,000 for Non-Investment Grade
Credits.
"Eligible Non-AMC Inventory and Equipment" shall mean all Non-AMC
Inventory and Equipment so long as: (i) such Non-AMC Inventory and
Equipment has a wholesale value equal to or greater than the cost of
same to the applicable Borrower; (ii) such Non-AMC Inventory and
Equipment is not subject to any prior assignment, claim, lien,
security interest or other limitation on the absolute title of the
applicable Borrower thereto; (iii) the item of Non-AMC Inventory or
Equipment has not been part of the Borrowing Base for more than 90
days; (iv) the item of Non-AMC Inventory or Equipment is specifically
confirmed to be the subject of a Lease which is to be executed and
delivered in connection therewith; and (v) such Non-AMC Inventory and
Equipment constitutes Collateral as defined in the Security Agreement.
In addition, the aggregate of all Non-AMC Inventory and Equipment
intended for use by any one account debtor/lessee or group of
affiliated account debtors/lessees which is included in the Collateral
shall not at any time exceed shall not at any time exceed $2,500,000.
"Eligible Receivable" shall mean any Receivables with respect to
which: (i) a Borrower is the sole account creditor; (ii) the
Receivable arose in the ordinary course of business of the applicable
Borrower or ePlus Technology inc.; (iii) if originated by ePlus
Technology, Inc., such Receivable and all rights of the account
creditor thereunder have been irrevocably assigned to a Borrower by
ePlus Technology inc.; (iv) the account debtor is not an Affiliate of
any Borrower; (v) the goods giving rise to the Receivable have been
delivered to and accepted by the account debtor; (vi) the Receivable
is not subject to any prior assignment, claim, lien, security interest
or other limitation on the absolute title of the applicable Borrower
thereto; (vii) in the case of Receivables not involving AMC Inventory
and Equipment or Non-AMC Inventory and Equipment, the Receivable is
not more than 30 days past due pursuant to the contractual agreement
of the parties, excluding any amendments thereto for the purpose of
extending the due date; (viii) not more than 120 days have elapsed
since the date the vendor/manufacturer was paid, in the case of AMC
Inventory and Equipment or Non-AMC Inventory and Equipment and not
more than 30 days have elapsed since the date of the invoice to the
obligor in respect of said Receivable which is no longer included in
the Borrowing Base as Eligible AMC Inventory and Equipment or as
Eligible Non-AMC Inventory and Equipment; (ix) the Receivable is not
subject to any defense of the account debtor; (x) the Receivable is
freely assignable; (xi) the Receivable is not questionable as to
collectibility; (xii) the account debtor is not the subject of any
bankruptcy, reorganization or similar proceeding and is not insolvent;
(xiii) the Receivable is with an account debtor which is not located
outside of the United States of America; (xiv) the Receivable does not
have a due date longer than 60 days from the date of provision of the
goods to the account debtor; and (xv) the Receivable constitutes
Collateral as defined in the Security Agreement. In addition, the
aggregate of all Eligible Receivables and Eligible Leases for any one
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account debtor/lessee or group of affiliated account debtors/lessees
which is included in the Collateral shall not at any time exceed: (i)
$15,000,000 for Investment Grade Credits; and (ii) $4,000,000 for
Non-Investment Grade Credits. No amount payable with respect to a
Lease shall be deemed an Eligible Receivable. For purposes of
clarification, the amount of an Eligible Receivable assigned to a
Borrower by ePlus Technology, inc. shall be the amount collectible
thereunder and not the cost thereof.
"Environmental Control Statutes" shall mean each and every applicable
federal, state, county or municipal environmental statute, ordinance,
rule, regulation, order, directive or requirement, together with all
successor statutes, ordinances, rules, regulations, orders, directives
or requirements, of any Governmental Authority, including without
limitation laws in any way related to Hazardous Substances.
"Equipment" shall mean new and used equipment purchased by a Borrower
from Persons for lease to unaffiliated Persons. The term "Equipment"
also shall include all items shown on the original purchase invoice
including computer software, installation charges and training.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as it may be amended from time to time.
"ERISA Affiliate" shall mean any corporation which is a member of the
same controlled group of corporations as any Borrower within the
meaning of ss. 414(b) of the Code, or any trade or business which is
under common control with any Borrower within the meaning of ss.
414(c) of the Code.
"Event of Default" shall have the meaning set forth in ss. 8.1.
"Federal Funds Rate" shall mean, for any day, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to
the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by
Federal funds brokers on such day, as published by the Federal Reserve
Bank of New York on the Business Day next succeeding such day,
provided that if the day for which such rate is to be determined is
not a Business Day, the Federal Funds Rate for such day shall be such
rate on such transactions on the next preceding Business Day as so
published on the next succeeding Business Day.
"Fee Letter" shall mean the Fee Letter, dated July 16, 2003, between
ePlus inc. and the Administrative Agent, as the same may be amended,
supplemented, replaced or otherwise modified from time to time in
accordance with this Agreement.
"Fiscal Quarter" shall mean a fiscal quarter of the Borrowers, which
shall be any quarterly period ending on March 31, June 30, September
30 or December 31 of any year.
"Fiscal Year" shall mean a fiscal year of the Borrowers, which shall
end on the last day of March in each year.
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"Generally Accepted Accounting Principles" or "GAAP" shall mean
generally accepted accounting principles as in effect from time to
time in the United States, consistently applied.
"GAAP Net Worth" shall mean, as calculated in accordance with GAAP,
the sum of capital stock, plus paid-in capital, plus retained earnings
minus treasury stock.
"Governmental Authority" shall mean the federal, state, county or
municipal government, or any department, agency, bureau or other
similar type body obtaining authority therefrom or created pursuant to
any laws, including without limitation Environmental Control Statutes.
"Hazardous Substances" shall mean without limitation, any regulated
substance, toxic substance, hazardous substance, hazardous waste,
pollution, pollutant or contaminant, as defined or referred to in the
Resource Conservation and Recovery Act, as amended, 15 U.S.C., ss.2601
et seq.; the Comprehensive Environmental Response, Compensation and
Liability Act, 33 U.S.C. ss.1251 et seq.; the federal underground
storage tank law, Subtitle I of the Resource Conservation and Recovery
Act, as amended, P.L. 98-616, 42 U.S.C. ss.6901 et seq.; together with
any amendments thereto, regulations promulgated thereunder and all
substitutions thereof, as well as words of similar purport or meaning
referred to in any other federal, state, county or municipal
environmental statute, ordinance, rule or regulation.
"Hedge Arrangement" means for any period for any Person any
arrangement or transaction between such Person and any other Person
which is a rate swap transaction, basis swap, forward rate
transaction, commodity swap, interest rate option, forward foreign
exchange transaction, cap transaction, floor transaction, collar
transaction, currency swap transaction, cross-currency rate swap
transaction, currency option or any other similar transaction
(including any option with respect to any of such transactions or
arrangements) designed to protect or mitigate against risks in
interest, currency exchange or commodity price fluctuations.
"Indebtedness for Borrowed Money" shall mean (i) all indebtedness,
liabilities, and obligations, now existing or hereafter arising, for
money borrowed, whether or not evidenced by any note, indenture, or
agreement (including, without limitation, the Notes and any
indebtedness for money borrowed from an Affiliate) and (ii) all
indebtedness of others for money borrowed (including indebtedness of
an Affiliate) with respect to which any Borrower has become liable by
way of a guarantee or indemnity.
"Indemnitee" shall have the meaning set forth in ss. 11.8.
"Intangible Assets" shall mean all assets which would be classed as
intangible assets under GAAP consistently applied, including, without
limitation, goodwill (whether representing the excess of cost over
book value of assets acquired or otherwise), patents, trademarks,
trade names, copyrights, franchises, and deferred charges (including,
without limitation, unamortized debt discount and expense,
organization costs, and research and development costs). For purposes
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of this definition, prepayments of taxes, license fees and other
expenses shall not be deemed Intangible Assets.
"Interest Period" shall mean with respect to any LIBO Rate Loan, each
period commencing on the date any such Loan is made, or, with respect
to a LIBO Rate Loan being renewed, the last day of the next preceding
Interest Period with respect to a LIBO Rate Loan, and ending on the
numerically corresponding day (or, if there is no numerically
corresponding day, on the last day of the calendar month) in the
first, second, third or sixth calendar month thereafter as selected
under the procedures specified in ss. 2.3 if the Banks are then
offering LIBO Rate Loans for such period; provided that each LIBO Rate
Loan Interest Period which would otherwise end on a day which is not a
Business Day (or, for purposes of Loans to be repaid on a London
Business Day, such day is not a London Business Day) shall end on the
next succeeding Business Day (or London Business Day, as appropriate)
unless such next succeeding Business Day (or London Business Day, as
appropriate) falls in the next succeeding calendar month, in which
case the Interest Period shall end on the next preceding Business Day
(or London Business Day, as appropriate).
"Inventory" shall mean new and used goods purchased by a Borrower from
Persons for sale to unaffiliated Persons. The term "inventory" also
shall include all items shown on the original purchase invoice
including computer software, installation charges and training.
"Investment" in any Person shall mean (a) the acquisition (whether for
cash, property, services or securities or otherwise) of capital stock,
bonds, notes, debentures, partnership or other ownership interests or
other securities of such Person; (b) any deposit with, or advance,
loan or other extension of credit to, such Person (other than any such
deposit, advance, loan or extension of credit having a term not
exceeding 90 days in the case of unaffiliated Persons and 120 days in
the case of Affiliates representing the purchase price of inventory or
supplies purchased in the ordinary course of business) or guarantee or
assumption of, or other contingent obligation with respect to,
Indebtedness for Borrowed Money or other liability of such Person; (c)
any capital contribution to any Person; and (d) (without duplication
of the amounts included in (a),(b) and (c)) any amount that may,
pursuant to the terms of such investment, be required to be paid,
deposited, advanced, lent or extended to or guaranteed or assumed on
behalf of such Person.
"Investment Grade Credit" shall mean any account debtor/lessee of any
Borrower which is rated BBB- or higher by Standard & Poor's or Baa3 or
higher by Moody's.
"Lease" shall mean any lease of Equipment (or conditional sales
agreement or similar financing arrangement) made by a Borrower, as
lessor.
"Lease Documents" shall mean a schedule referencing assets described
in a purchase order and the master lease agreement incorporated
therein by reference.
"LIBO Rate" shall mean, for the applicable Interest Period, (i) the
rate, rounded upwards to the next one-sixteenth of one percent,
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determined by the Administrative Agent three London Business Days
prior to the date of the corresponding LIBO Rate Loan, at which the
Administrative Agent is offered deposits in dollars at approximately
11:00 A.M., London time by leading banks in the interbank Eurodollar
or eurocurrency market for delivery on the date of such Loan in an
amount and for a period comparable to the amount and Interest Period
of such Loan and in like funds, divided by (ii) a number equal to one
(1.0) minus the LIBO Rate Reserve Percentage. The LIBO Rate shall be
adjusted automatically with respect to any LIBO Rate Loan outstanding
on the effective date of any change in the LIBO Rate Reserve
Percentage, as of such effective date. LIBO Rate shall be calculated
on the basis of the number of days elapsed in a year of 360 days.
"LIBO Rate Loans" shall mean Loans accruing interest based on the LIBO
Rate.
"LIBO Rate Reserve Percentage" shall mean, for any LIBO Rate Loan for
any Interest Period therefore, the daily average of the stated maximum
rate (expressed as a decimal) at which reserves (including any
marginal, supplemental, or emergency reserves) are required to be
maintained during such Interest Period under Regulation D by the
Administrative Agent against "Eurocurrency liabilities" (as such term
is used in Regulation D) but without benefit of credit proration,
exemptions, or offsets that might otherwise be available to the
Administrative Agent from time to time under Regulation D. Without
limiting the effect of the foregoing, the LIBO Rate Reserve Percentage
shall reflect any other reserves required to be maintained by the
Administrative Agent against (1) any category of liabilities which
includes deposits by reference to which the rate for LIBO Rate Loans
is to be determined; or (2) any category of extension of credit or
other assets which include LIBO Rate Loans.
"Lien" shall mean any lien, mortgage, security interest, chattel
mortgage, pledge or other encumbrance (statutory or otherwise) of any
kind securing satisfaction of an obligation, including any agreement
to give any of the foregoing, any conditional sales or other title
retention agreement, any lease in the nature thereof, and the filing
of or the agreement to give any financing statement under the Uniform
Commercial Code of any jurisdiction or similar evidence of any
encumbrance, whether within or outside the United States.
"Loan" or "Loans" shall have the meanings set forth in ss. 2.1(a).
"Loan Commitment" shall have the meaning set forth in ss. 2.1(a).
"Loan Documents" shall mean this Agreement, the Notes, the Security
Agreement, the Pledge Agreement, the Fee Letter, any Qualifying Hedge
Arrangements and all other documents directly related or incidental to
such documents, the Loans or the Collateral.
"London Business Day" shall mean any Business Day other than a
Saturday, Sunday, or other day on which commercial banks in London are
authorized or required to close under English laws.
"Material Adverse Change" shall mean any event or condition which, in
the reasonable determination of the Administrative Agent or the
Required Banks, could result in a material adverse change in the
financial condition, business, properties or profits of the Borrowers
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taken as a group, or which gives reasonable grounds to conclude that
the Borrowers, taken as a group, may not or will not be able to
perform or observe (in the normal course) their obligations under the
Loan Documents.
"Material Adverse Effect" shall mean any event or condition which (i)
could have a material adverse effect on the financial condition,
business, properties, or profits of the Borrowers, taken as a group,
(ii) gives reasonable grounds to conclude that the Borrowers, taken as
a group, will not be able to perform their obligations under this
Agreement, the Notes and the other Loan Documents, or (iii) is
reasonably likely to affect the legality, validity or enforceability
of this Agreement, the Notes, the other Loan Documents or the rights
and remedies of the holders of the Loans.
"Multiemployer Plan" shall mean a multiemployer plan as defined in
ERISA ss. 4001(a)(3), which covers employees of any Borrower or any
ERISA Affiliate of any Borrower.
"Net Cost" shall mean with respect to any item of Inventory, the net
cost to the applicable Borrower of such Inventory, excluding delivery,
installation and similar charges and after giving effect to all
discounts and credits provided in connection with the purchase
thereof, as established by the invoice for such Inventory, a copy of
which such Borrower shall deliver to the Administrative Agent upon the
Administrative Agent's request.
"Net Income" shall mean net income after income taxes and
extraordinary items as shown on the income statement. "Net Present
Value of Lease Payments" shall mean, with respect to any Eligible
Lease, the Present Value of Lease Payments less any sums payable by
the applicable Borrower under that Eligible Lease.
"Net Worth" shall mean, as calculated in accordance with GAAP, the sum
of capital stock, plus paid-in capital, plus retained earnings and
Subordinated Debt, if any, minus treasury stock.
"Non-AMC Inventory and Equipment" shall mean new or used items of
Inventory or Equipment (which shall consist of certain computer and
other technology equipment) purchased by a Borrower for sale or lease
to any Person other than an AMC Party. Once an item of Non-AMC
Inventory and Equipment has been sold or leased by such Borrower to a
Person, such item shall no longer be an item of Non-AMC Inventory and
Equipment but, instead, shall result in the creation of either a
Receivable or a Lease.
"Non-Investment Grade Credit" shall mean any account debtor/lessee of
any Borrower which is not an Investment Grade Credit.
"Note" or "Notes" shall have the meaning set forth in ss. 2.2 and also
shall include the Swing Line Note.
"Obligations" shall mean all now existing or hereafter arising debts,
obligations, covenants, and duties of payment or performance of every
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kind, matured or unmatured, direct or contingent, owing, arising, due,
or payable to the Administrative Agent or the other Banks by or from
any Borrower arising out of this Agreement or any other Loan Document,
including, without limitation, all obligations to repay principal of
and interest on the Loans, and to pay interest, fees, costs, charges,
expenses, professional fees, and all sums chargeable to any Borrower
or for which any Borrower is liable as indemnitor under the Loan
Documents, whether or not evidenced by any note or other instrument.
"Ordinary Course Sale or Financing" shall mean each of the following
to occur in the ordinary course of business of any Borrower:
(a) the sale (including the installment or conditional sale) by
such Borrower of Inventory and Equipment so long as such Borrower
receives from such sale 100% of the fair market value, based on
equipment sold in the ordinary course and not in distress-sale
circumstances, of the Inventory and Equipment being sold;
(b) the financing (including refinancing) by such Borrower of
Inventory and Equipment pursuant to this Agreement and the other
Loan Documents, so long as such Borrower receives from such
financing 100% of the fair market value, based on equipment sold
in the ordinary course and not in distress-sale circumstances, of
the Inventory and Equipment being financed; provided, however,
that except to the extent otherwise provided in clause (d) below
in connection with the simultaneous sale or financing of any
Lease described therein (i) any Lien granted by such Borrower to
such lender in connection with such financing (which may be a
first priority Lien) shall not attach to any property of any
Borrower other than the specific financed Inventory and
Equipment, and (ii) the Debt of such Borrower to such lender in
connection with such financing shall be without recourse to any
Borrower except with respect to such Borrower's interest in the
specific financed Inventory and Equipment;
(c) the sale by such Borrower of its ownership interest in any
Inventory and Equipment which has been refinanced in an Ordinary
Course Sale or Financing described in clause (b) above; and
(d) the sale, financing (including refinancing) by such Borrower
of any Lease providing for the lease of Inventory and Equipment
so long as such Borrower receives from such sale or financing
100% of the Net Present Value of Lease Payments for the Leases
being sold or financed; provided, however, that, except to the
extent otherwise provided in the clause (b) above in connection
with the simultaneous financing of Inventory and Equipment (i)
any Lien granted by such Borrower to such lender in connection
with any such financing (which may be a first priority Lien)
shall not attach to any property of any Borrower other than the
specific financed Lease, and (ii) the Debt of such Borrower to
such lender in connection with such financing shall be without
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recourse to any Borrower except with respect to such Borrower's
interest in the specific financed Lease.
Notwithstanding the foregoing, a financing transaction described in
clauses (b) or (d) above shall still qualify as an Ordinary Course
Sale or Financing even if the Debt of such Borrower to such lender in
connection with such financing is with recourse to such Borrower, as
long as the total of such recourse financing for all Borrowers, in the
aggregate, is not more than 15% of the total amount of such financing
in effect for all Borrowers at any time under clauses (b) and (d).
"PBGC" shall mean the Pension Benefit Guaranty Corporation and any
successor thereto.
"Pension Plan" shall mean, at any time, any Plan (including a
Multiemployer Plan), the funding requirements of which (under ERISA
ss. 302 or Code ss. 412) are, or at any time within the six years
immediately preceding the time in question, were in whole or in part,
the responsibility of any Borrower or any ERISA Affiliate of any
Borrower.
"Permitted Debt" shall mean (a) Debt of Borrowers under this
Agreement, including but not limited to the Notes, (b) Subordinated
Debt, (c) nonrecourse Debt incurred in connection with an Ordinary
Course Sale or Financing, and (d) recourse Debt expressly permitted by
this Agreement (including as permitted in connection with an Ordinary
Course Sale or Financing). Permitted Debt of the type described in
clauses (b), (c) and (d) and outstanding on the date of this Agreement
is listed on Schedule 1 hereto.
"Permitted Liens" shall mean (a) any Liens for current taxes,
assessments and other governmental charges not yet due and payable or
being contested in good faith by a Borrower by appropriate proceedings
and for which adequate reserves have been established by such Borrower
as reflected in its financial statements; (b) any mechanic's,
materialman's, carrier's, warehousemen's or similar Liens for sums not
yet due or being contested in good faith by a Borrower by appropriate
proceedings and for which adequate reserves have been established by
such Borrower as reflected in its financial statements; (c) easements,
rights-of-way, restrictions and other similar encumbrances on the real
property or fixtures of a Borrower incurred in the ordinary course of
business which individually or in the aggregate for all Borrowers are
not substantial in amount and which do not in any case materially
detract from the value or marketability of the property subject
thereto or interfere with the ordinary conduct of the business of any
Borrower; (d) Liens (other than Liens imposed on any property of any
Borrower pursuant to ERISA or ss. 412 of the Code) incurred or
deposits made in the ordinary course of business, including Liens in
connection with workers' compensation, unemployment insurance and
other types of social security and Liens to secure performance of
tenders, statutory obligations, surety and appeal bonds (in the case
of appeal bonds such Lien shall not secure any reimbursement or
indemnity obligation in an amount greater than $250,000), bids, leases
that are not Capital Leases, performance bonds, sales contracts and
other similar obligations, in each case, not incurred in connection
with the obtaining of credit or the payment of a deferred purchase
price, and which do not, in the aggregate, result in a Material
Adverse Effect; (e) Liens, if any, existing on the date hereof and
listed in Schedule 1 hereto; (f) Liens on specific assets, if any,
whether existing on the date hereof or hereafter created, with respect
to Indebtedness for Borrowed Money of a type similar to that
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contemplated herein (including any Lien on Inventory, Equipment or
Leases granted in connection with a nonrecourse refinancing
transaction which qualifies as an Ordinary Course Sale or Financing)
provided that no such Lien shall be a Lien on any of the Collateral;
(g) Liens in favor of the Administrative Agent, for the benefit of
itself and the other Banks, in the Collateral contemplated by this
Agreement and the other Loan Documents and (h) Liens against
Collateral arising on account of Qualifying Hedge Arrangements.
"Person" shall mean any individual, corporation, partnership, joint
venture, association, company, business trust or entity, or other
entity of whatever nature.
"Plan" shall mean an employee benefit plan as defined in ss. 3(3) of
ERISA, other than a Multiemployer Plan, whether formal or informal and
whether legally binding or not.
"Pledge Agreement" shall mean the Pledge Agreement in the form and
substance attached hereto as Exhibit F.
"Potential Default" shall mean an event, condition or circumstance
that with the giving of notice or lapse of time or both would become
an Event of Default.
"Present Value of Lease Payments" shall mean the sum of all payments
required to be paid to the lessor under an Eligible Lease with each of
such payments discounted to its present value by applying a discount
rate to each payment equal to the lesser of (a) the one-month LIBO
Rate in effect at the time of the calculation plus the Applicable
Borrowing Margin, or (b) the Alternate Base Rate in effect at the time
of the calculation plus the Applicable Borrowing Margin; provided,
however, that any payment under an Eligible Lease shall only be
included for the purpose of calculating the Present Value of Lease
Payments if (i) the payment is not yet due under the Lease; and (ii)
the lessee has no discretion as to whether or not to make the payment.
"Prohibited Transaction" shall mean a transaction that is prohibited
under Code ss. 4975 or ERISA ss. 406 and not exempt under Code ss.
4975 or ERISA ss. 408.
"Property" shall mean any right or interest in or to property of any
kind whatsoever, whether real, personal or mixed and whether tangible
or intangible.
"Qualifying Hedge Arrangements" means a Hedge Arrangement which is
entered into after the date hereof, is permitted pursuant to ss. 6.15
and in respect of which the Administrative Agent has received written
notice from the Borrower providing the Administrative Agent with
particulars of such Hedge Arrangement together with a certificate from
the Borrower which provides the details of all then outstanding Hedge
Arrangements and certifies that such new Hedge Arrangement to which
such certificate relates complies with the limitations set forth in
ss. 6.15.
"Quarterly Inventory Report" shall mean a report substantially in the
form of Exhibit I hereto.
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"Receivables" shall mean all contractual accounts receivable of all
Borrowers; provided, however, that "Receivables" shall not include (i)
any amounts receivable in respect of Asset Management Contracts during
the period when the applicable AMC Inventory and Equipment is included
in the Borrowing Base as Eligible AMC Inventory and Equipment; or (ii)
any amounts receivable in respect of the sale of Non-AMC Inventory and
Equipment during the period when the applicable Non-AMC Inventory and
Equipment is included in the Borrowing Base as Eligible Non-AMC
Inventory and Equipment.
"Recovery Event" shall mean any settlement of or payment in excess of
$500,000 in respect of any property or casualty insurance claim or any
condemnation proceeding (or series of related claims or proceedings)
relating to any asset (or series of related assets) of any of the
Borrowers.
"Refunded Swing Line Loans" shall have the meaning set forth in ss.
2.6(b).
"Refunding Date" shall have the meaning set forth in ss. 2.6(c).
"Regulation" shall mean any statute, law, ordinance, regulation, order
or rule of any United States or foreign, federal, state, local or
other government or governmental body, including, without limitation,
those covering or related to banking, financial transactions,
securities, public utilities, environmental control, energy, safety,
health, transportation, bribery, record keeping, zoning,
antidiscrimination, antitrust, wages and hours, employee benefits, and
price and wage control matters.
"Regulation D" shall mean Regulation D of the Board of Governors of
the Federal Reserve System, as it may be amended from time to time.
"Regulatory Change" shall mean any change after the date of the 2001
Credit Agreement in any Regulation (including Regulation D) or the
adoption or making after such date of any interpretations, directives
or requests of or under any Regulation (whether or not having the
force of law) by any court or governmental or monetary authority
charged with the interpretation or administration thereof applying to
a class of banks including any one of the Banks but excluding any
foreign office of any Bank.
"Release" shall mean without limitation, the presence, leaking,
leaching, pouring, emptying, discharging, spilling, using, generating,
manufacturing, refining, transporting, treating, or storing of
Hazardous Substances at, into, onto, from or about the property or the
threat thereof, regardless of whether the result of an intentional or
unintentional action or omission, and which is in violation of
applicable law.
"Reportable Event" shall mean, with respect to a Pension Plan: (a) Any
of the events set forth in ERISA ss.ss. 4043(b) (other than a
reportable event as to which the provision of 30 days' notice to the
PBGC is waived under applicable regulations) or 4063(a) or the
regulations thereunder, (b) an event requiring any Borrower or any
ERISA Affiliate of any Borrower to provide security to a Pension Plan
under Code ss. 401(a)(29) and (c) any failure by any Borrower or any
ERISA Affiliate of any Borrower to make payments required by Code ss.
412(m).
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"Request for Advance" shall have the meaning set forth in ss. 2.3.
"Required Banks" at any time shall mean Banks whose Loan Commitments
equal or exceed 66 2/3% of the Aggregate Loan Commitment if no Loans
are outstanding or, if Loans are outstanding, Banks whose outstanding
Loans equal or exceed 66 2/3% of the Loans.
"Requirement of Law" shall mean, as to any Person, the governing
documents of such Person, and any law, treaty, rule or regulation or
determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or
any of its Property or to which such Person or any of its Property is
subject.
"Residuals" shall mean all of the Borrowers' retained interest in
Equipment under a Lease at the expiration of such Lease, excluding the
firm term rental payments when such Leases are assigned, pledged or
sold to non-recourse lenders, which includes the ownership title and
all proceeds from a subsequent sale, rental, renewal or Lease renewal.
"Residuals Report" shall mean a report substantially in the form of
Exhibit J hereto.
"Security Agreement" shall mean the Security Agreement in the form and
substance attached hereto as Exhibit E.
"Solvent" shall mean, with respect to any Person, that the aggregate
present fair saleable value of such Person's assets is in excess of
the total amount of its probable liabilities on its existing debts as
they become absolute and matured, such Person has not incurred debts
beyond its foreseeable ability to pay such debts as they mature, and
such Person has capital adequate to conduct the business it is
presently engaged in or is about to engage in.
"Subordinated Debt" shall mean Debt of Borrowers which is subordinate
to the Obligations pursuant to terms acceptable to Administrative
Agent and listed on Schedule 1 hereto.
"Subsidiary" shall mean a corporation or other entity the shares of
stock or other equity interests of which having ordinary voting power
(other than stock or other equity interests having such power only by
reason of the happening of a contingency) to elect a majority of the
board of directors or other managers of such corporation are at the
time owned, or the management of which is otherwise controlled,
directly or indirectly through one or more intermediaries or both, by
any Borrower.
"Swing Line Bank" shall mean the Administrative Agent, in its capacity
as the lender of Swing Line Loans.
"Swing Line Commitment" shall mean the obligation of the Swing Line
Bank to make Swing Line Loans pursuant to ss. 2.5 in an aggregate
principal amount at any one time outstanding not to exceed $5,000,000.
"Swing Line Loans" shall have the meaning set forth in ss. 2.5.
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"Swing Line Note" shall have the meaning set forth in ss. 2.2 (b).
"Swing Line Participation Amount" shall have the meaning set forth in
ss. 2.6.
"Tangible Net Worth" shall mean Net Worth minus Intangible Assets.
"Taxes" shall have the meaning set forth in ss. 2.10(d).
"Termination Event" shall mean, with respect to a Pension Plan: (a) a
Reportable Event, (b) the termination of a Pension Plan, or the filing
of a notice of intent to terminate a Pension Plan, or the treatment of
a Pension Plan amendment as a termination under ERISA ss. 4041(c), (c)
the institution of proceedings to terminate a Pension Plan under ERISA
ss. 4042 or (d) the appointment of a trustee to administer any Pension
Plan under ERISA ss. 4042.
"Total Recourse Funded Debt" shall mean (i) all indebtedness,
liabilities, and obligations, now existing or hereafter arising, for
money borrowed by a Borrower on a recourse basis whether or not
evidenced by any note, indenture, or agreement (including, without
limitation, the Notes and any indebtedness for money borrowed from an
Affiliate) and (ii) all indebtedness of others for money borrowed
(including indebtedness of an Affiliate) with respect to which a
Borrower has become liable on a recourse basis by way of a guarantee
or indemnity.
"Unfunded Pension Liabilities" shall mean, with respect to any Pension
Plan at any time, the amount determined by taking the accumulated
benefit obligation, as disclosed in accordance with Statement of
Accounting Standards No. 87, over the fair market value of Pension
Plan assets.
"Unrecognized Retiree Welfare Liability" shall mean, with respect to
any Plan that provides post-retirement benefits other than pension
benefits, the amount of the accumulated post-retirement benefit
obligation, as determined in accordance with Statement of Financial
Accounting Standards No. 106, as of the most recent valuation date.
Prior to the date such statement is applicable to any Borrower, such
amount of the obligation shall be based on an estimate made in good
faith.
1.2 Accounting Terms. All accounting terms not specifically defined
herein shall be construed in accordance with Generally Accepted Accounting
Principles consistent with those applied in the preparation of the
financial statements referred to in ss. 3.5, and all financial data
submitted pursuant to this Agreement shall be prepared in accordance with
such principles.
2. The Credit
2.1 The Loans.
(a) Loans; Commitment. Subject to the terms and conditions herein set
forth, each Bank agrees, severally and not jointly, to make revolving
credit loans (herein called individually a "Loan" and collectively, the
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"Loans") to the Borrowers during the Commitment Period in amounts not to
exceed at any time outstanding the commitment amount set forth opposite the
name of such Bank on Exhibit B hereto (each such amount, as the same may be
reduced pursuant to ss. 2.8, being hereinafter called such Bank's "Loan
Commitment"). The Banks' collective commitment to make Loans shall be the
"Aggregate Loan Commitment"). The maturity date of each Note, as provided
in ss. 2.2 below, shall be the Credit Termination Date. All Loans shall be
made by the Banks simultaneously and pro rata in accordance with their
respective Loan Commitments. All Loans shall be made to the Borrowers at
the primary office of the Administrative Agent in Philadelphia located at
One South Broad Street, 13th Floor, Philadelphia, Pennsylvania 19107 or at
such other address as the Administrative Agent may provide by notice to all
parties hereto.
(b) Interest Rate Options. The Borrower may request Loans to bear
interest at the Alternate Base Rate or LIBO Rate options, as described in
ss.2.4. The Loans outstanding at any one time may involve any combination
of such interest rate options in such amounts as the Borrower may
determine, subject to the terms and conditions hereof, including the
requirements concerning minimum Loan requests and the requirements that (i)
no request may be made which would require more than one interest rate
option or more than one Interest Period to apply to Loans made on any
single date, (ii), in the case of LIBO Rate Loans, no LIBO Rate Loan may
have an Interest Period extending beyond the Credit Termination Date, and
(iii) the aggregate number of all Loans outstanding shall not exceed six.
(c) Maximum Loans Outstanding. No Borrower shall be entitled to any
new Loan if, after giving effect to such Loan, the unpaid amount of the
then outstanding Loans and Swing Line Loans would exceed the Aggregate Loan
Commitment.
(d) Minimum Loan Amount. Except for Loans which exhaust the full
remaining amount of the Aggregate Loan Commitment and conversions which
result in the conversion of all Loans subject to a particular interest rate
option, each of which may be in lesser amounts, (i) each LIBO Rate Loan
when made (and each conversion of Base Rate Loans into LIBO Rate Loans)
shall be in an amount at least equal to $250,000, and (ii) each Base Rate
Loan when made (and each conversion of LIBO Rate Loans into Base Rate
Loans) shall be in an amount at least equal to $250,000.
(e) Commitment Percentages. The obligation of each Bank to make a Loan
to the Borrowers at any time shall be limited to its percentage (the
"Commitment Percentage") as set forth opposite its name on Exhibit B hereto
multiplied by the aggregate principal amount of the Loan requested. The
principal amounts of the respective Loans made by the Banks on the occasion
of each borrowing shall be pro rata in accordance with their respective
Commitment Percentages. No Bank shall be required or permitted to make any
Loan if, immediately after giving effect to such Loan, and the application
of the proceeds of a Loan to the extent applied to the repayment of the
Loans, the sum of such Bank's Loans and Swing Line Loans (in the case of
the Swing Line Bank) outstanding would exceed such Bank's Loan Commitment.
(f) Reborrowing. Prior to the Credit Termination Date and within the
limits of the Aggregate Loan Commitment, the Borrowers may borrow, prepay
(pursuant to ss. 2.9) and reborrow Loans. All Loans shall mature and be due
and payable on the Credit Termination Date.
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(g) Several Obligations. The failure of any one or more Banks to make
Loans in accordance with its or their obligations shall not relieve the
other Banks of their several obligations hereunder, but in no event shall
the aggregate amount at any one time outstanding which any Bank shall be
required to lend hereunder exceed its Loan Commitment.
2.2 The Notes.
(a) The Loans made by each Bank shall be evidenced by a single
promissory note of the Borrowers (each such promissory note as it may be
amended, extended, modified, restated, replaced, substituted for or
renewed, being referred to herein as a "Note" and all Notes together as the
"Notes") in principal face amount equal to such Bank's Loan Commitment
payable to the order of such Bank and otherwise in the form attached hereto
as Exhibit C. Each Note shall be dated its date of issuance, shall bear
interest at the rate per annum and be payable as to principal and interest
in accordance with the terms hereof. Each Note shall mature on the earliest
to occur of (i) the date of termination in full, pursuant to ss.ss. 2.9 or
8.1 hereof, of the obligations of such Bank under ss. 2.1 or (ii) July 21,
2006 (such earlier date to be deemed the "Credit Termination Date"). Upon
maturity, the Loans evidenced by each Bank's Note shall be due and payable.
Each Bank shall maintain records of all Loans made by it and evidenced by
its Note and of all payments thereon, which records shall be conclusive
absent manifest error.
(b) The Swing Line Loans made by the Swing Line Bank shall be
evidenced by a single promissory note of the Borrowers (such promissory
note as it may be amended, extended, modified, restated, replaced,
substituted for or renewed, being referred to herein as the "Swing Line
Note") in principal face amount of $5,000,000. The Swing Line Note shall be
dated its date of issuance, shall bear interest at the rate per annum and
be payable as to principal and interest in accordance with the terms
hereof. The Swing Line Note shall mature on the earliest to occur of (ii)
the tenth Business Day after the drawing thereof and (ii) the Credit
Termination Date. Upon maturity, the Swing Line Loans evidenced by the
Swing Line Note shall be due and payable. The Swing Line Bank shall
maintain records of all Swing Line Loans made by it and evidenced by the
Swing Line Note and of all payments thereon, which records shall be
conclusive absent manifest error.
2.3 Funding Procedures.
(a) Requests for Advance. Each request for a Loan or the conversion or
renewal of an interest rate with respect to a Loan shall be made not later
than 11:00 a.m. on a Business Day by delivery to the Administrative Agent
of a written request signed by the Borrowers or, in the alternative, a
telephone request followed promptly by written confirmation of the request
(a "Request for Advance"), specifying the date and amount of the Loan to be
made, converted or renewed, selecting the interest rate option applicable
thereto, and in the case of a LIBO Rate Loan, specifying the Interest
Period applicable to such Loan. The form of request to be used in
connection with the making, conversion or renewal of Loans shall be that
form provided to the Borrowers by the Administrative Agent. Each request
shall be received on the same Business Day of the date of the proposed
borrowing, conversion or renewal in the case of Base Rate Loans and three
London Business Days prior to the date of the proposed borrowing,
conversion or renewal in the case of LIBO Rate Loans. No request shall be
effective until actually received in writing by the Administrative Agent.
Any request may be made by submission of such request by facsimile
transmission with the signed original being promptly transmitted to the
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Administrative Agent. The Administrative Agent shall be entitled to rely on
a facsimile of the signed original as fully as if it had received the
signed original.
(b) Irrevocability. Upon receipt of a request for a Loan and if the
conditions precedent provided herein shall be satisfied at the time of such
request, the Administrative Agent promptly shall notify each Bank of such
request and of such Bank's ratable share of such Loan. Upon receipt of a
request for a Loan by the Administrative Agent, the request shall not be
revocable by any Borrower.
(c) Availability of Funds. Not later than 1:00 p.m. EST on the date of
each Loan, each Bank shall make available (except as provided in clause (d)
below) its ratable share of such Loan, in immediately available funds, to
the Administrative Agent at the address set forth opposite its name on the
signature page hereof or at such account in London as the Administrative
Agent shall specify to the Borrowers and the Banks. Unless the
Administrative Agent knows that any applicable condition specified herein
has not been satisfied, it will make funds so received from the Banks
immediately available to the Borrowers on the date of each Loan by a credit
to the account designated by the Borrowers at the Administrative Agent 's
address set forth opposite its name on the signature page hereof or at such
other destination and in such other form as the Borrowers may request, in
writing.
(d) Funding Assumptions. Unless the Administrative Agent shall have
been notified by any Bank at least one Business Day prior to the date of
the making, conversion or renewal of any LIBO Rate Loan, or by 11:00 a.m.
EST on the date of the making, conversion or renewal of any Base Rate Loan,
that such Bank does not intend to make available to the Administrative
Agent such Bank's portion of the total amount of the Loan to be made,
converted or renewed on such date, the Administrative Agent may assume that
such Bank has made or will make such amount available to the Administrative
Agent on the date of the Loan and the Administrative Agent may, in reliance
upon such assumption, make available to the Borrowers a corresponding
amount. If and to the extent such Bank shall not have so made such funds
available to the Administrative Agent, such Bank agrees to repay the
Administrative Agent forthwith on demand such corresponding amount together
with interest thereon, for each day from the date such amount is made
available to the Borrowers until the date such amount is repaid to the
Administrative Agent, at the Federal Funds Rate plus 50 basis points for
three Business Days, and thereafter at the Alternate Base Rate plus the
Applicable Borrowing Margin. If such Bank shall repay to the Administrative
Agent such corresponding amount, such amounts so repaid shall constitute
such Bank's Loan for purposes of this Agreement. If such Bank does not
repay such corresponding amount forthwith upon the Administrative Agent 's
demand therefor, the Administrative Agent shall promptly notify the
Borrowers, and the Borrowers shall immediately pay such corresponding
amount to the Administrative Agent, without any prepayment penalty or
premium, but with interest on the amount repaid, for each day from the date
such amount is made available to the Borrowers until the date such amount
is repaid to the Administrative Agent, at the rate of interest applicable
at the time to such Loan. Nothing herein shall be deemed to relieve any
Bank of its obligation to fulfill its Loan Commitment hereunder or to
prejudice any rights which the Borrowers may have against any Bank as a
result of any default by such Bank hereunder.
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(e) Funding of Net Amount. If the Banks make a Loan on a day on which
all or any part of an outstanding Loan from the Banks is to be repaid, each
Bank shall apply the proceeds of its new Loan to make such repayment and
only an amount equal to the difference (if any) between the amount being
borrowed and the amount being repaid shall be made available by such Bank
to the Borrowers as provided in clause (c).
2.4 Interest. The following interest rates may be applicable to any
Loan or Loans, as requested by the Borrowers from time to time.
(a) Alternate Base Rate. Each Base Rate Loan shall bear interest on
the principal amount thereof from the date made until such Loan is paid in
full or converted, at a rate per annum equal to the Alternate Base Rate
plus the Applicable Borrowing Margin.
(b) LIBO Rate. Each LIBO Rate Loan shall bear interest on the
principal amount thereof from the date made until such Loan is paid in
full, renewed, or converted, at a rate per annum equal to the LIBO Rate
plus the Applicable Borrowing Margin. After receipt of a request for a LIBO
Rate Loan, the Administrative Agent shall proceed to determine the LIBO
Rate to be applicable thereto. The Administrative Agent shall give prompt
notice by telephone or facsimile to the Borrowers of the LIBO Rate thus
determined in respect of each LIBO Rate Loan or any change therein.
(c) Renewals and Conversions of Loans. On the last day of each
Interest Period, the LIBO Rate Loan then maturing shall automatically be
renewed for a new Interest Period of like duration, unless the Borrowers
shall have given the Administrative Agent notice of a permitted conversion
or renewal for an Interest Period of different duration as provided in ss.
2.4 hereof, or an Event of Default or Potential Default exists or would
thereby occur. If no Event of Default or Potential Default exists or would
thereby occur, the Borrowers shall have the right to convert Base Rate
Loans into LIBO Rate Loans, to convert LIBO Rate Loans into Base Rate
Loans, and to renew LIBO Rate Loans for Interest Periods of different
duration, from time to time, provided that they shall give the
Administrative Agent notice of each permitted conversion or renewal as
provided in ss. 2.4 hereof, and LIBO Rate Loans may be converted or renewed
for different Interest Periods only as of the last day of the applicable
Interest Period for such Loans. The Administrative Agent shall use
reasonable commercial efforts to notify the Borrowers of the effectiveness
of such conversion or renewal (automatic or not automatic), and the new
interest rate to which the converted or renewed Loan is subject, as soon as
practicable after the conversion or renewal; provided, however, that any
failure to give such notice shall not affect the Borrowers' obligations or
the Banks' rights and remedies hereunder in any way whatsoever. In the
event a LIBO Rate Loan is not automatically renewed as provided herein and
the Borrowers shall not have selected an alternative Interest Period for
any LIBO Rate Loan maturing as provided herein, such Loan shall be
automatically converted into a Base Rate Loan on the last day of the
Interest Period for such Loan.
(d) Automatic Reinstatement. The joint and several liability of the
Borrowers under this ss. 2.4 shall continue to be effective or be
automatically reinstated, as the case may be, if at any time any payment,
in whole or in part, to the Banks is rescinded or must otherwise be
restored or returned upon the insolvency, bankruptcy, dissolution,
liquidation or reorganization of any Borrower or any other Person, or upon
or as a result of the appointment of a custodian, receiver, trustee or
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other officer with similar powers with respect to any Borrower or any other
Person or any substantial part of its property, or otherwise, all as though
such payment had not been made.
(e) Default Rate. From and after the date of an Event of Default shall
have occurred and for so long as an Event of Default shall be continuing,
the Loans and the Swing Line Loans shall bear interest at the Default Rate.
2.5 Swing Line Loans.
(a) Subject to the terms and conditions hereof, the Swing Line Bank
agrees to make a portion of the credit otherwise available to the Borrowers
under the Aggregate Loan Commitment from time to time during the Commitment
Period by making swing line loans ("Swing Line Loans") to any Borrower;
provided that (i) the aggregate principal amount of Swing Line Loans
outstanding at any time shall not exceed the Swing Line Commitment then in
effect (notwithstanding that the Swing Line Loans outstanding at any time,
when aggregated with the Swing Line Bank's other outstanding Loans
hereunder, may exceed the Swing Line Commitment then in effect) and (ii) no
Borrower shall request, and the Swing Line Bank shall not make, any Swing
Line Loan if, after giving effect to the making of such Swing Line Loan,
the aggregate amount of the Available Credit Commitments for any Bank would
be less than zero. During the Commitment Period, such Borrower may use the
Swing Line Commitment by borrowing, repaying and reborrowing, all in
accordance with the terms and conditions hereof. Swing Line Loans shall be
Base Rate Loans only.
(b) Such Borrower shall repay all outstanding Swing Line Loans no
later than the earlier to occur of (i) the tenth Business Day after the
drawing thereof and (ii) the Credit Termination Date.
2.6 Procedure for Swing Line Borrowing; Refunding of Swing Line Loans.
(a) Whenever such Borrower desires that the Swing Line Bank make Swing
Line Loans it shall give the Swing Line Bank irrevocable telephonic notice
confirmed promptly in writing (which telephonic notice must be received by
the Swing Line Bank not later than 11:00 A.M. on a Business Day on the
proposed borrowing date), specifying (i) the amount to be borrowed and (ii)
the requested borrowing date (which shall be a Business Day during the
Commitment Period). Each borrowing under the Swing Line Commitment shall be
in an amount equal to $250,000 or a whole multiple of $250,000 in excess
thereof. Not later than 1:00 P.M. on a Business Day on the borrowing date
specified in a notice in respect of Swing Line Loans, the Swing Line Bank
shall make available to the Administrative Agent, at the address set forth
opposite the Administrative Agent's name on the signature page hereof or at
such account in London as the Administrative Agent shall specify to such
Borrower and the Banks, an amount in immediately available funds equal to
the amount of the Swing Line Loan to be made by the Swing Line Bank. The
Administrative Agent shall make the proceeds of such Swing Line Loan
available to such Borrower on such borrowing date in immediately available
funds.
(b) The Swing Line Bank, at any time and from time to time in its sole
and absolute discretion may, on behalf of such Borrower (which hereby
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irrevocably directs the Swing Line Bank to act on its behalf), on one
Business Day's notice given by the Swing Line Bank no later than 11:00 A.M.
on a Business Day, request each Bank to make, and each Bank hereby agrees
to make, a Loan in an amount equal to such Bank's Commitment Percentage of
the aggregate amount of the Swing Line Loans (the "Refunded Swing Line
Loans") outstanding on the date of such notice, to repay the Swing Line
Bank. Each Bank shall make the amount of such Loan available to the
Administrative Agent at the Administrative Agent's funding office in
immediately available funds, not later than 1:00 on a Business Day, one
Business Day after the date of such notice. The proceeds of such Loans
shall be immediately made available by the Administrative Agent to the
Swing Line Bank for application by the Swing Line Bank to the repayment of
the Refunded Swing Line Loans. Such Borrower irrevocably authorizes the
Swing Line Bank to charge such Borrower's accounts with the Administrative
Agent (up to the amount available in each such account) in order to
immediately pay the amount of such Refunded Swing Line Loans to the extent
amounts received from the Banks are not sufficient to repay in full such
Refunded Swing Line Loans.
(c) If prior to the time a Loan would have otherwise been made
pursuant to Section 2.6(b), one of the events described in Section 8(d)
shall have occurred and be continuing with respect to such Borrower or if
for any other reason, as determined by the Swing Line Bank in its sole
discretion, Loans may not be made as contemplated by Section 2.6(b), each
Bank shall, on the date such Loan was to have been made pursuant to the
notice referred to in Section 2.6(b) (the "Refunding Date"), purchase for
cash an undivided participating interest in the then outstanding Swing Line
Loans by paying to the Swing Line Bank an amount (the "Swing Line
Participation Amount") equal to (i) such Bank's Commitment Percentage times
(ii) the sum of the aggregate principal amount of Swing Line Loans then
outstanding which were to have been repaid with such Loans.
(d) Whenever, at any time after the Swing Line Bank has received from
any Bank such Bank's Swing Line Participation Amount, the Swing Line Bank
receives any payment on account of the Swing Line Loans, the Swing Line
Bank will distribute to such Bank its Swing Line Participation Amount
(appropriately adjusted, in the case of interest payments, to reflect the
period of time during which such Bank's participating interest was
outstanding and funded and, in the case of principal and interest payments,
to reflect such Bank's pro rata portion of such payment if such payment is
not sufficient to pay the principal of and interest on all Swing Line Loans
then due); provided, however, that in the event that such payment received
by the Swing Line Bank is required to be returned, such Bank will return to
the Swing Line Bank any portion thereof previously distributed to it by the
Swing Line Bank.
(e) Each Bank's obligation to make the Loans referred to in Section
2.6(b) and to purchase participating interests pursuant to Section 2.6(c)
shall be absolute and unconditional and shall not be affected by any
circumstance, including, without limitation, (i) any setoff, counterclaim,
recoupment, defense or other right which such Bank or such Borrower may
have against the Swing Line Bank, such Borrower or any other Person for any
reason whatsoever; (ii) the occurrence or continuance of a Default or an
Event of Default or the failure to satisfy any of the other conditions
specified in Section 5; (iii) any adverse change in the condition
(financial or otherwise) of such Borrower; (iv) any breach of this
Agreement or any other Loan Document by such Borrower, any other party to
this credit facility or any other Bank; or (v) any other circumstance,
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happening or event whatsoever, whether or not similar to any of the
foregoing.
2.7 Fees.
(a) Structuring and Arranging Fee; Administrative Fee; Upfront Fee. A
structuring and arranging fee as well as an administrative fee shall be
payable to the Administrative Agent as set forth in the Fee Letter. The
Borrowers also agree, jointly and severally, to pay to the Administrative
Agent and the other Banks all reasonable fees and expenses, including
upfront fees, as determined by the Administrative Agent as set forth in the
Fee Letter.
(b) Commitment Fee. The Borrowers agree, jointly and severally, to pay
to the Administrative Agent for the account of each Bank as compensation
for the Aggregate Loan Commitment, a fee ("Commitment Fee") computed at the
rate per annum set forth in Schedule 2 attached to this Agreement on the
average daily amount of the unused portion of the Aggregate Loan Commitment
accrued from and after the date hereof. The unused portion of the Aggregate
Loan Commitment shall mean the Aggregate Loan Commitment less the aggregate
principal amount of the outstanding Loans hereunder, but shall not include
any amounts due under Swing Line Loans. The Commitment Fee shall be
calculated and be payable quarterly in arrears and on the Credit
Termination Date. The Commitment Fee shall be calculated on the basis of a
360-day year for the actual number of days elapsed.
2.8 Reduction or Termination of Commitment.
(a) Voluntary Reduction or Termination. The Borrowers may at any time,
on not less than three Business Days' written notice, (i) permanently
reduce the Aggregate Loan Commitment, provided that any reduction shall be
in the amount of $1,000,000 or a multiple thereof and that no such
reduction shall cause the aggregate principal amount of Loans outstanding
to exceed the Aggregate Loan Commitment as reduced, or (ii) terminate the
Aggregate Loan Commitment.
(b) Credit Termination Date Acceleration. In the event the Aggregate
Loan Commitment is terminated, the Credit Termination Date shall accelerate
to such date of termination and the Borrowers shall, simultaneously with
such termination, repay the Base Rate Loans and LIBO Rate Loans in
accordance with ss. 2.10.
2.9 Loan Prepayments (Optional and Mandatory).
(a) Base Rate Loans. On two Business Day's notice to the
Administrative Agent and the Banks, the Borrowers may, at their option,
prepay any Base Rate Loan in whole at any time or in part from time to
time, provided that each partial prepayment shall be in the principal
amount of $1,000,000 or, if greater, then in multiples thereof and, if less
than $1,000,000 shall be outstanding, in principal amount equal to the
aggregate principal amount remaining outstanding.
(b) LIBO Rate Loans. On three Business Day's notice to the
Administrative Agent and the Banks, the Borrowers may, at their option
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prepay any LIBO Rate Loan provided that if they shall prepay a LIBO Rate
Loan prior to the last day of the applicable Interest Period, or shall fail
to borrow any LIBO Rate Loan on the date such Loan is to be made, they
shall pay to each Bank, in addition to the principal and interest then to
be paid in the case of a prepayment, on such date of prepayment, the
Additional Amount incurred or sustained by such Bank as a result of such
prepayment or failure to borrow.
(c) Mandatory Prepayments. The Borrower shall prepay Base Rate Loans
and LIBO Rate Loans, in such order and combination as it may elect, in an
amount equal to (1) 100% of the net proceeds received by it from the sale
of any material assets which sale was not made in the ordinary course of
the Borrower's business, (2) 100% of the net cash proceeds, if any, from
any Capital Stock issued by the Borrower or Debt incurred by the Borrower
(other than Indebtedness for Borrowed Money) and (3) 100% of the net
proceeds of any Recovery Event.
2.10 Payments.
(a) Base Rate Loans. Accrued interest on all Base Rate Loans shall be
due and payable on the last Business Day of each calendar month and upon
the Credit Termination Date.
(b) LIBO Rate Loans. Accrued interest on LIBO Rate Loans with Interest
Periods of one, two, three or six months shall be due and payable on the
last day of such Interest Period. Accrued interest on LIBO Rate Loans with
Interest Periods of six months shall be due and payable at the end of the
third month and on the last day of the Interest Period.
(c) Form of Payments, Application of Payments, Payment Administration,
Etc. Provided that no Event of Default or Potential Default then exists,
all payments and prepayments shall be applied to the Loans in such order
and to such extent as shall be specified by the Borrowers, by written
notice to the Administrative Agent at the time of such payment or
prepayment. Except as otherwise provided herein, all payments of principal,
interest, fees, or other amounts payable by the Borrowers hereunder shall
be remitted to the Administrative Agent on behalf of the Banks at the
address set forth opposite its name on the signature page hereof or at such
office or account as the Administrative Agent shall specify to the
Borrowers, in immediately available funds not later than 2:00 p.m. on the
day when due. Whenever any payment is stated as due on a day which is not a
Business Day, the maturity of such payment shall, except as otherwise
provided in the definition of "Interest Period," be extended to the next
succeeding Business Day and interest shall continue to accrue during such
extension. Each Borrower authorizes the Administrative Agent to deduct from
any account of any Borrower maintained at the Administrative Agent or over
which the Administrative Agent has control any amount payable under this
Agreement, the Notes or any other Loan Document. The Administrative Agent
's failure to deliver any bill, statement or invoice with respect to
amounts due under this Section or under any Loan Document shall not affect
the Borrowers' joint and several obligation to pay any installment of
principal, interest or any other amount under this Agreement when due and
payable.
(d) Net Payments. All payments made to the Banks by the Borrowers
hereunder, under the Notes or under any other Loan Document will be made
without set off, counterclaim or other defense. All such payments will be
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made free and clear of, and without deduction or withholding for, any
present or future taxes, levies, imposts, duties, fees, assessments or
other charges of whatever nature now or hereafter imposed by any
jurisdiction or any political subdivision or taxing authority thereof or
therein (but excluding any tax imposed on or measured by the gross or net
income of a Bank (including all interest, penalties or similar liabilities
related thereto) pursuant to the laws of the United States of America or
any political subdivision thereof, or taxing authority of the United States
of America or any political subdivision thereof, in which the principal
office or applicable lending office of a Bank is located), and all
interest, penalties or similar liabilities with respect thereto
(collectively, together with any amounts payable pursuant to the next
sentence, "Taxes"). If any Taxes are so levied or imposed, the Borrowers
agree to pay the full amount of such Taxes, and such additional amounts as
may be necessary so that every payment of all amounts due hereunder, under
each Note or under any other Loan Document, after withholding or deduction
for or on account of any Taxes, will not be less than the amount provided
for herein or in such Note. The Borrowers will furnish to each Bank upon
request certified copies of tax receipts evidencing such payment by the
Borrowers. The Borrowers will indemnify and hold harmless each Bank, and
reimburse each Bank upon its written request, for the amount of any Taxes
so levied or imposed and paid or withheld by each Bank.
(e) Prepayment of LIBO Rate Loans. If any principal of a LIBO Rate
Loan shall be repaid (whether upon prepayment, reduction of the Loan
Commitment after acceleration or for any other reason) or converted to a
Base Rate Loan prior to the last day of the Interest Period applicable to
such LIBO Rate Loan or if the Borrowers fail for any reason to borrow a
LIBO Rate Loan after giving irrevocable notice pursuant to ss. 2.3, the
Borrowers shall pay to the Administrative Agent on behalf of the Banks, in
addition to the principal and interest then to be paid, such additional
amounts as may be necessary to compensate each Bank for all direct and
indirect costs and losses (including losses resulting from redeployment of
prepaid or unborrowed funds at rates lower than the cost of such funds to
each Bank, and including lost profits incurred or sustained by each Bank)
as a result of such repayment or failure to borrow (the "Additional
Amount"). The Additional Amount (which each Bank shall take reasonable
measures to minimize) shall be specified in a written notice or certificate
delivered to the Borrowers by the Administrative Agent. Such notice or
certificate shall contain a calculation in reasonable detail of the
Additional Amount to be compensated and shall be conclusive as to the facts
and the amounts stated therein, absent manifest error.
(f) Demand Deposit Account. The Borrowers shall maintain at least one
demand deposit account with the Administrative Agent for purposes of this
Agreement. Each Borrower authorizes the Administrative Agent (but the
Administrative Agent shall not be obligated) to deposit into said account
all amounts to be advanced to the Borrowers hereunder. Further, each
Borrower authorizes the Administrative Agent (but the Administrative Agent
shall not be obligated) to deduct from said account, or any other account
maintained by the Borrowers at the Administrative Agent any amount payable
hereunder on or after the date upon which it is due and payable. Such
authorization shall include but not be limited to amounts payable with
respect to principal, interest, fees and expenses.
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2.11 Changes in Circumstances; Yield Protection.
(a) If any Regulatory Change or compliance by any Bank with any
request made after the date of the 2001 Credit Agreement by the Board of
Governors of the Federal Reserve System or by any Federal Reserve Bank or
other central bank or fiscal, monetary or similar authority (in each case
whether or not having the force of law) shall:
(i) impose, modify or make applicable any reserve, special
deposit, Federal Deposit Insurance Corporation premium or similar
requirement or imposition against assets held by, or deposits in or
for the account of, or loans made by, or any other acquisition of
funds for loans or advances by, any Bank;
(ii) impose on any Bank any other condition regarding its Note;
(iii) subject any Bank to, or cause the withdrawal or termination
of any previously granted exemption with respect to, any tax
(including any withholding tax but not including any income tax not
currently causing such Bank to be subject to withholding) or any other
levy, impost, duty, charge, fee or deduction on or from any payments
due from any Borrower; or
(iv) change the basis of taxation of payments from any Borrower
to such Bank (other than by reason of a change in the method of
taxation of such Bank's net income);
and the result of any of the foregoing events is to increase the cost to
any Bank of making or maintaining any Loan or to reduce the amount of
principal, interest or fees to be received by any Bank hereunder in respect
of any Loan, such Bank will immediately so notify the Administrative Agent
and the Borrowers. If such Bank determines in good faith that the effects
of the change resulting in such increased cost or reduced amount cannot
reasonably be avoided or the cost thereof mitigated, then upon notice by
such Bank to the Administrative Agent and the Borrowers, the Borrowers
shall pay to such Bank on each interest payment date of the Loan, such
additional amount as shall be necessary to compensate such Bank for such
increased cost or reduced amount.
(b) If any Bank shall determine that any Regulation regarding capital
adequacy or the adoption of any Regulation regarding capital adequacy,
which Regulation is applicable to banks (or their holding companies)
generally and a specific bank (or its holding company) specifically, or any
change therein, or any change in the interpretation or administration
thereof by any governmental authority, central bank or comparable agency
charged with the interpretation or administration thereof, or compliance by
such Bank (or its holding company) with any such request or directive
regarding capital adequacy (whether or not having the force of law) of any
such authority, central bank or comparable agency, has the effect of
reducing the rate of return on such Bank's capital as a consequence of its
obligations hereunder to a level below that which such Bank could have
achieved but for such adoption, change or compliance (taking into
consideration such Bank's policies with respect to capital adequacy) by an
amount deemed by such Bank to be material, the Borrowers shall promptly pay
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to such Bank, upon the demand of such Bank, such additional amount or
amounts as will compensate such Bank for such reduction.
(c) If any Bank shall determine (which determination shall be, in the
absence of fraud or manifest error, conclusive and binding upon all parties
hereto) that by reason of abnormal circumstances affecting the interbank
Eurodollar or applicable eurocurrency market, adequate and reasonable means
do not exist for ascertaining the LIBO Rate to be applicable to the
requested LIBO Rate Loan or that Eurodollar or eurocurrency funds in
amounts sufficient to fund all the LIBO Rate Loans are not obtainable on
reasonable terms, such Bank shall give notice of such inability or
determination by telephone and thereupon the obligations of the Banks to
make, convert other Loans to, or renew such LIBO Rate Loan shall be
excused, subject, however, to the right of the Borrowers at any time
thereafter to submit another request.
(d) Determination by any Bank for purposes of this ss. 2.11 of the
effect of any Regulatory Change or other change or circumstance referred to
above on its costs of making or maintaining Loans or on amounts receivable
by it in respect of the Loans and of the additional amounts required to
compensate such Bank in respect of any additional costs, shall be made in
good faith and shall be evidenced by a certificate, signed by an officer of
such Bank and delivered to the Borrowers, as to the fact and amount of the
increased cost incurred by or the reduced amount accruing to such Bank
owing to such event or events. Such certificate shall be prepared in
reasonable detail and shall be conclusive as to the facts and amounts
stated therein, absent manifest error.
(e) Each Bank will notify the Borrowers of any event that will entitle
such Bank to compensation pursuant to this Section as promptly as
practicable after it obtains knowledge thereof and determines to request
such compensation. Said notice shall be in writing, shall specify the
applicable Section or Sections of this Agreement to which it relates and
shall set forth the amount or amounts then payable pursuant to this
Section. The Borrowers shall pay such Bank the amount shown as due on such
notice within 30 days after its receipt of the same.
2.12 Illegality. Notwithstanding any other provision in this
Agreement, if the adoption of any applicable Regulation, or any change
therein, or any change in the interpretation or administration thereof by
any governmental authority, central bank, or comparable agency charged with
the interpretation or administration thereof, or compliance by any Bank
with any request or directive (whether or not having the force of law) of
any such authority, central bank, or comparable agency shall make it
unlawful or impossible for such Bank to (1) maintain its Loan Commitment,
then upon notice to the Borrowers and the Administrative Agent by such
Bank, the Loan Commitment shall terminate; or (2) maintain or fund its LIBO
Rate Loans, then upon notice to the Borrowers of such event, the Borrowers'
outstanding LIBO Rate Loans shall be converted into Base Rate Loans.
3. Representations and Warranties
Each Borrower jointly and severally represents and warrants to the
Administrative Agent and the Banks that:
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3.1 Organization, Standing. It and each Subsidiary of any Borrower (i)
is a corporation duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation, (ii) has the corporate
power and authority necessary to own their respective assets, carry on
their respective businesses and enter into and perform their obligations
hereunder and under each Loan Document to which they are a party, and (iii)
are qualified to do business and are in good standing in each jurisdiction
where the nature of their business or the ownership of their properties
requires such qualification, except where the failure to be so qualified
would not have a Material Adverse Effect.
3.2 Corporate Authority, Validity, Etc. The making and performance of
the Loan Documents are within its power and authority and have been duly
authorized by all necessary corporate action. The making and performance of
the Loan Documents do not and under present law will not require any
consent or approval of the shareholders of any Borrower or any other
person, do not and under present law will not violate any law, rule,
regulation order, writ, judgment, injunction, decree, determination or
award, do not violate any provision of its charter or by-laws, do not and
will not result in any breach of any material agreement, lease or
instrument to which it is a party, by which it is bound or to which any of
its assets are or may be subject, and do not and will not give rise to any
Lien upon any of its assets. The number of shares and classes of the
capital stock of each Borrower and the ownership thereof are accurately set
forth on Schedule 1 attached hereto; all such shares are validly issued,
fully paid and non-assessable, and the issuance and sale thereof are in
compliance with all applicable federal and state securities and other
applicable laws; and the shareholders' ownership thereof is free and clear
of any liens or encumbrances or other contractual restrictions. Further, no
Borrower is in default under any such agreement, lease or instrument. No
authorizations, approvals or consents of, and no filings or registrations
with, any governmental or regulatory authority or agency are necessary for
the execution, delivery or performance by any Borrower of any Loan Document
to which it is a party or for the validity or enforceability thereof. Each
Loan Document, when executed and delivered, will be the legal, valid and
binding obligation of each Borrower, enforceable against it in accordance
with its terms.
3.3 Litigation. Except as disclosed on Schedule 1, there are no
actions, suits or proceedings pending or, to any Borrower's knowledge,
threatened against or affecting any Borrower or any Subsidiary of any
Borrower or any assets of any of them before any court, government agency,
or other tribunal which if adversely determined reasonably could have a
Material Adverse Effect. If there is any disclosure on Schedule 1, the
status (including the tribunal, the nature of the claim and the amount in
controversy) of each such litigation matter as of the date of this
Agreement is set forth in Schedule 1.
3.4 ERISA. (a) Each Borrower, each Subsidiary of any Borrower and each
ERISA Affiliate of such Borrower or such Subsidiary is in compliance in all
material respects with all applicable provisions of ERISA and the
regulations promulgated thereunder; and, neither such Borrower, such
Subsidiary nor any ERISA Affiliate maintains or contributes to or has
maintained or contributed to any multiemployer plan (as defined in ss. 4001
of ERISA) under which such Borrower, such Subsidiary or any ERISA Affiliate
could have any withdrawal liability; (b) neither any Borrower, any
Subsidiary of any Borrower nor any ERISA Affiliate sponsors or maintains
any Plan under which there is an accumulated funding deficiency within the
meaning of ss. 412 of the Code, whether or not waived; (c) the aggregate
liability for accrued benefits and other ancillary benefits under each Plan
that is or will be sponsored or maintained by any Borrower, any Subsidiary
of any Borrower or any ERISA Affiliate (determined on the basis of the
actuarial assumptions prescribed for valuing benefits under terminating
single-employer defined benefit plans under Title IV of ERISA) does not
exceed the aggregate fair market value of the assets under each such
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defined benefit pension Plan; (d) the aggregate liability of the Borrowers,
the Subsidiaries of any Borrower and each ERISA Affiliate arising out of or
relating to a failure of any Plan to comply with the provisions of ERISA or
the Code, will not have a Material Adverse Effect; and (e) there does not
exist any unfunded liability (determined on the basis of actuarial
assumptions utilized by the actuary for the plan in preparing the most
recent Annual Report) of the Borrowers, the Subsidiaries of any Borrower or
any ERISA Affiliate under any plan, program or arrangement providing
post-retirement life or health benefits.
3.5 Financial Statements. The consolidated and consolidating financial
statements of ePlus inc. and its Subsidiaries as of and for the Fiscal
Years ending March 31, 1998, March 31, 1999, March 31, 2000, March 31, 2001
and March 31, 2002, consisting in each case of a balance sheet, a statement
of operations, a statement of shareholders' equity, a statement of cash
flows and accompanying footnotes, furnished to the Banks in connection
herewith, present fairly, in all material respects, the financial position,
results of operations and operating statistics of ePlus inc. and its
Subsidiaries as of the dates and for the periods referred to, in conformity
with Generally Accepted Accounting Principles. Except as set forth on
Schedule 1 hereto, there are no liabilities, fixed or contingent, which are
not reflected in such financial statements, other than liabilities which
are not required to be reflected in such balance sheets.
3.6 Not in Default, Judgments, Etc.. No Event of Default or Potential
Default under any Loan Document has occurred and is continuing. Each
Borrower and each Subsidiary of any Borrower has satisfied all judgments
and is not in default with respect to any judgment, writ, injunction,
decree, rule, or regulation of any court, arbitrator, or federal, state,
municipal, or other governmental authority, commission, board, bureau,
agency, or instrumentality, domestic or foreign.
3.7 Taxes. Each Borrower and each Subsidiary of any Borrower has filed
all federal, state, local and foreign tax returns and reports which they
are required by law to file and as to which its failure to file would have
a Material Adverse Effect, and has paid all taxes, including wage taxes,
assessments, withholdings and other governmental charges which are
presently due and payable, other than those being contested in good faith
by appropriate proceedings, if any, and disclosed on Schedule 1. The tax
charges, accruals and reserves on the books of each Borrower and each
Subsidiary of any Borrower are adequate to pay all such taxes that have
accrued but are not presently due and payable.
3.8 Permits, Licenses, Etc. Each Borrower and each Subsidiary of any
Borrower possesses all permits, licenses, franchises, trademarks, trade
names, copyrights and patents necessary to the conduct of their respective
businesses as presently conducted or as presently proposed to be conducted,
except where the failure to possess the same would not have a Material
Adverse Effect.
3.9 No Materially Adverse Contracts, Etc.. No Borrower and no
Subsidiary of any Borrower is subject to any charter, corporate or other
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legal restriction, or any judgment, decree, order, rule or regulation which
in the judgment of its directors or officers has or is expected in the
future to have a materially adverse effect on its operations, business,
assets, liabilities or upon its ability to perform under the Loan
Documents. No Borrower and no Subsidiary of any Borrower is a party to any
contract or agreement which in the judgment of its directors or officers
has or is expected to have any materially adverse effect on its business,
except as otherwise reflected in adequate reserves.
3.10 Compliance with Laws, Etc.
(a) Compliance Generally. Each Borrower and each Subsidiary of any
Borrower is in compliance in all material respects with all Regulations
applicable to their respective businesses (including obtaining all
authorizations, consents, approvals, orders, licenses, exemptions from, and
making all filings or registrations or qualifications with, any court or
governmental department, public body or authority, commission, board,
bureau, agency, or instrumentality), the noncompliance with which
reasonably could have a Material Adverse Effect.
(b) Hazardous Wastes, Substances and Petroleum Products. Each Borrower
and each Subsidiary of any Borrower has received all permits and filed all
notifications necessary to carry on its business; and is in compliance in
all respects with all Environmental Control Statutes. No Borrower and no
Subsidiary of any Borrower has given any written or oral notice, or failed
to give required notice, to the Environmental Protection Agency ("EPA") or
any state or local agency with regard to any actual or imminently
threatened Release of Hazardous Substances on properties owned, leased or
operated by it or used in connection with the conduct of its business and
operations. No Borrower and no Subsidiary of any Borrower has received
notice that it is potentially responsible for costs of clean-up or
remediation of any actual or imminently threatened Release of Hazardous
Substances pursuant to any Environmental Control Statute. To the best of
each Borrower's knowledge and belief, no real property owned or leased by
any Borrower or any Subsidiary of any Borrower is in violation of any
Environmental Laws and no Hazardous Substances are present on said real
property in violation of applicable law. No Borrower and no Subsidiary of
any Borrower has been identified in any litigation, administrative
proceedings or investigation as a potentially responsible party for any
liability under any Environmental Laws.
3.11 Solvency. Each Borrower and each Subsidiary of any Borrower is,
and after giving effect to the transactions contemplated hereby, will be,
Solvent.
3.12 Subsidiaries, Etc. No Borrower has any Subsidiaries, except as
set forth in Schedule 1 hereto. Set forth in Schedule 1 hereto is a
complete and correct list, as of the date of this Agreement, of all
Investments held by each Borrower in any joint venture or other Person.
3.13 Title to Properties, Leases. Each Borrower has good and
marketable title to all assets and properties reflected as being owned by
it in its financial statements as well as to all assets and properties
acquired since said date (except property disposed of since said date in
the ordinary course of business). Except for the Liens set forth in
Schedule 1 hereto and any other Permitted Liens, there are no Liens on any
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of such assets or properties. It has the right to, and does, enjoy peaceful
and undisturbed possession under all material leases under which it is
leasing property as a lessee. All such leases are valid, subsisting and in
full force and effect, and none of such leases is in default, except where
such default, either individually or in the aggregate, could not have a
Material Adverse Effect. None of the pledged Collateral is subject to any
Lien. Upon the filing of financing statements set forth in Schedule 1, the
Administrative Agent, on behalf of itself and the other Banks, will have a
properly perfected, first priority security interest in all of the
Collateral.
3.14 Public Utility Holding Company; Investment Company. No Borrower
and no Subsidiary of any Borrower is a "public utility company" or a
"holding company," or a "subsidiary company" of a "holding company," or an
"affiliate" of a "holding company" or of a "subsidiary company" of a
"holding company," as such terms are defined in the Public Utility Holding
Company Act of 1935, as amended; or a "public utility" within the meaning
of the Federal Power Act, as amended. Further, no Borrower and no
Subsidiary of any Borrower is an "investment company" or an "affiliated
person" of an "investment company" or a company "controlled" by an
"investment company" as such terms are defined in the Investment Company
Act of 1940, as amended.
3.15 Margin Stock. No Borrower and no Subsidiary of any Borrower is or
will be engaged principally or as one of its important activities in the
business of extending credit for the purpose of purchasing or carrying or
trading in any margin stocks or margin securities (within the meaning of
Regulation U of the Board of Governors of the Federal Reserve System as
amended from time to time). No Borrower will use or permit any proceeds of
the Loans or Swing Line Loans to be used, either directly or indirectly,
for the purpose, whether immediate, incidental or ultimate, of buying or
carrying margin stocks or margin securities.
3.16 Use of Proceeds. The Borrowers will use the proceeds of any Loan
or Swing Line Loan to refinance existing indebtedness, to support working
capital needs, to finance permitted acquisitions and for general corporate
purposes.
3.17 Disclosure Generally. The representations and statements made by
each Borrower on its own behalf or on behalf of its Subsidiaries in
connection with this credit facility and the Loans, including
representations and statements in each of the Loan Documents, do not and
will not contain any untrue statement of a material fact or omit to state a
material fact or any fact necessary to make the representations made not
materially misleading. No written information, exhibit, report, brochure or
financial statement furnished by any Borrower to the Banks in connection
with this credit facility, the Loans, or any Loan Document contains or will
contain any material misstatement of fact or omit to state a material fact
or any fact necessary to make the statements contained therein not
misleading.
3.18 No Material Adverse Change. Since March 31, 2002, there has been
no development or event that has had or could reasonably be expected to
have a Material Adverse Effect.
3.19 Insurance. Each Borrower and each Subsidiary of any Borrower is
insured by insurers of recognized financial responsibility against such
losses and risks and in such amounts as are prudent and customary in the
businesses in which it is engaged; and each Borrower and each Subsidiary of
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any Borrower (i) has not received notice from any insurer or agent of such
insurer that substantial capital improvements or other material
expenditures will have to be made in order to continue such insurance or
(ii) does not have any reason to believe that it will not be able to renew
its existing insurance coverage as and when such coverage expires or obtain
similar coverage from similar insurers at a cost that could not reasonably
be expected to have a Material Adverse Effect.
4. Conditions Precedent
4.1 All Loans. After this Agreement has become effective, the
obligation of each Bank to make any Loan (including but not limited to the
first Loan hereunder) is conditioned upon the following:
(a) Documents. The Borrowers shall have delivered and the
Administrative Agent shall have received a Request for Advance.
(b) Compliance Certificate. The Administrative Agent shall have
received a certificate in the form attached hereto as Exhibit G
("Compliance Certificate").
(c) Borrowing Base Certificate. The Administrative Agent shall have
received a Borrowing Base Certificate dated the date of the Loan requested
under this Agreement with sufficient Collateral thereunder.
(d) Covenants; Representations. The Administrative Agent shall have
received a certificate from each Borrower stating that such Borrower and
any Subsidiary of such Borrower, as applicable, is in compliance with all
covenants, agreements and conditions in each Loan Document and each
representation and warranty contained in each Loan Document is true with
the same effect as if such representation or warranty had been made on the
date such Loan is made or issued.
(e) Defaults. The Administrative Agent shall have received a
certificate from each Borrower stating that immediately prior to and after
giving effect to such transaction, no Event of Default or Potential Default
shall exist.
(f) Material Adverse Change. Since March 31, 2002, there shall not
have been any Material Adverse Change with respect to any Borrower or any
Subsidiary of any Borrower, and there shall not be any other event or
circumstance which gives the Administrative Agent or the Required Banks
reasonable grounds to conclude that any Borrower may not or will not be
able to perform or observe (in the normal course) its obligations hereunder
and under the Notes or the other Loan Documents.
4.2 Conditions to First Loan. In addition to the conditions to all
Loans as provided in ss. 4.1, the obligation of each Bank to make its first
Loan hereunder is conditioned upon the following:
(a) Articles, Bylaws. Each Bank shall have received copies of the
Articles or Certificates of Incorporation and Bylaws of each Borrower and
each Subsidiary of any Borrower, certified by the applicable Secretary of
State and either the Secretary or Assistant Secretary of such Borrower or
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Subsidiary; together with a Certificate of Good Standing from any
jurisdiction where the nature of its business or the ownership of its
properties requires such qualification except where the failure to be so
qualified would not have a Material Adverse Effect.
(b) Evidence of Authorization. Each Bank shall have received copies
certified by the Secretary or Assistant Secretary of each Borrower of all
corporate or other action taken by each Person other than a Bank who is a
party to any Loan Document to authorize its execution and delivery and
performance of the Loan Documents and to authorize the Loans, together with
such other related papers as the Administrative Agent shall reasonably
require.
(c) Legal Opinions. Each Bank shall have received a favorable written
opinion in form and substance satisfactory to the Banks from Michael E.
Geltner & Associates, as counsel for the Borrowers and the Subsidiaries of
the Borrowers, which shall be addressed to the Banks and be dated the date
of the first Loan.
(d) Incumbency. The Administrative Agent, on behalf of the Banks,
shall have received a certificate signed by the secretary or assistant
secretary of each Borrower and each Subsidiary of any Borrower, together
with the true signature of the officer or officers authorized to execute
and deliver the Loan Documents and certificates thereunder, upon which the
Banks shall be entitled to rely conclusively until it shall have received a
further certificate of the secretary or assistant secretary of any Borrower
or Subsidiary, as applicable, amending such Borrower's and such
Subsidiary's prior certificate and submitting the signature of the officer
or officers named in the new certificate as being authorized to execute and
deliver Loan Documents and certificates thereunder.
(e) Note. Each Bank shall have received its Note duly executed,
completed and issued in accordance herewith.
(f) Documents. The Administrative Agent, on behalf of the Banks, shall
have received all certificates, instruments and other documents then
required to be delivered pursuant to any Loan Documents, in each instance
in form and substance reasonably satisfactory to it.
(g) Lien Searches. The Administrative Agent shall have received the
results of a recent lien, tax lien, judgment and litigation search in each
of the jurisdictions or offices in which Uniform Commercial Code financing
statements or other filings or recordations should be made to evidence or
perfect first priority security interests in all tangible and intangible
property of the Borrowers, and such search shall reveal no Liens on any of
the tangible and intangible property of the Borrowers except for the
Permitted Liens set forth in Schedule 1.
(h) Due Diligence. The Administrative Agent shall have completed, and
be satisfied with the results of, its due diligence investigation of the
Borrowers and their Subsidiaries.
(i) Pledged Stock; Stock Power. The Administrative Agent shall have
received the certificates representing the shares of Capital Stock pledged
pursuant to the Pledge Agreement, together with an undated stock power for
each such certificate executed in blank by a duly authorized officer of the
pledgor thereof.
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(j) Filings, Registrations, and Recordings. Each document (including,
without limitation, any Uniform Commercial Code financing statement)
required by the Security Agreement or under any law or reasonably requested
by the Administrative Agent to be filed, registered or recorded in order to
create in favor of the Administrative Agent, for the benefit of itself and
the other Banks, a properly perfected, first priority security interest in
the Collateral described therein, shall have been delivered to the
Administrative Agent in proper form for filing, registration or
recordation.
(k) Consents. Each Borrower shall have provided to each Bank evidence
satisfactory to it that all governmental, shareholder and third party
consents and approvals necessary in connection with the transactions
contemplated hereby have been obtained and remain in effect.
(l) Insurance. The Administrative Agent shall have received insurance
certificates satisfying the requirements set forth in ss.5.6.
(m) Other Agreements. Each Borrower shall have executed and delivered
each other Loan Document required hereunder.
(n) Fees, Expenses. The Borrowers shall simultaneously pay or shall
have paid all fees and expenses due hereunder or any other Loan Document.
(o) Collateral Field Audit. The Administrative Agent shall have
received a collateral field audit of the Borrowers prepared by RSM
McGladrey.
5. Affirmative Covenants
Each Borrower covenants and agrees that from and after the date hereof
and so long as any Loan Commitment is in effect or any Obligation remains
unpaid or outstanding, it will:
5.1 Financial Statements and Reports. Furnish to the Administrative
Agent and to each Bank the following financial information:
(a) Annual Statements. No later than ninety (90) days after the end of
each Fiscal Year, the consolidated and consolidating balance sheet of ePlus
inc. and its Subsidiaries as of the end of such year and the prior year in
comparative form, and related statements of operations, shareholders'
equity, and cash flows for the Fiscal Year and the prior Fiscal Year in
comparative form. The financial statements shall be in reasonable detail
with appropriate notes and be prepared in accordance with Generally
Accepted Accounting Principles. The consolidated annual financial
statements shall be certified (without any qualification or exception) by
independent certified public accountants of nationally recognized standing
reasonably acceptable to the Administrative Agent. Such financial
statements shall be accompanied by a report of such independent certified
public accountants stating that, in the opinion of such accountants, such
financial statements present fairly, in all material respects, the
financial position, and the results of operations and the cash flows of
ePlus inc. and its Subsidiaries for the period then ended in conformity
with Generally Accepted Accounting Principles, except for inconsistencies
resulting from changes in accounting principles and methods agreed to by
such accountants and specified in such report, and that, in the case of
such financial statements, the examination by such accountants of such
financial statements has been made in accordance with generally accepted
auditing standards and accordingly included examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements
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and assessing the accounting principles used and significant estimates
made, as well as evaluating the overall financial statement presentation.
Each financial statement provided under this subsection (a) shall be
accompanied by a certificate signed by such accountants either stating that
during the course of their examination nothing came to their attention
which would cause them to believe that any event has occurred and is
continuing which constitutes an Event of Default or Potential Default, or
describing each such event. In addition to the annual financial statements,
each Borrower shall, promptly upon receipt thereof, furnish to the Banks a
copy of each other report submitted to its board of directors by its
independent accountants in connection with any annual, interim or special
audit made by them of the financial records of any Borrower.
(b) Quarterly Statements. No later than sixty (60) calendar days after
the end of each of the first three Fiscal Quarters of each Fiscal Year, the
consolidated and consolidating balance sheet and related statements of
operations, shareholders' equity and cash flows of ePlus inc. and its
Subsidiaries for such period and for the period from the beginning of such
fiscal year to the end of such Fiscal Quarter and a corresponding financial
statement for the same period in the preceding Fiscal Year certified by the
chief financial officer of ePlus inc. as having been prepared in accordance
with Generally Accepted Accounting Principles (subject to changes resulting
from audits and year-end adjustments); provided, however, that if the
independent certified public accountants issue a review report on the
quarterly financial statements of any Borrower, the financial statements
required by this subsection (b) shall be accompanied by a certificate
signed by such accountants either stating that during the course of their
examination nothing came to their attention which would cause them to
believe that any event has occurred and is continuing which constitutes an
Event of Default or Potential Default, or describing each such event and
the remedial steps being taken by the Borrowers or any of them.
(c) Compliance Certificate. Within sixty (60) calendar days after the
end of each of the first three Fiscal Quarters of each Fiscal Year and
within one hundred thirty (130) calendar days after the end of each Fiscal
Year, a Compliance Certificate signed by the chief executive officer,
president, or chief financial officer ePlus inc.
(d) Budgets and Projections. No later than ninety (90) calendar days
after the end of each fiscal year of the Borrowers, a detailed consolidated
budget for the following fiscal year on a quarterly basis for the Borrowers
(including a projected consolidated balance sheet of the Borrowers and
their Subsidiaries as of the end of the following fiscal year, and the
related consolidated statements of projected cash flow, projected changes
in financial position and projected income), and, as soon as available,
significant revisions, if any, of such budget and projections with respect
to such fiscal year (collectively, the "Projections"), which Projections
shall in each case be accompanied by a certificate of a responsible officer
stating that such Projections are based upon reasonable estimates,
information and assumptions and that such responsible officer has no reason
to believe that such Projections are incorrect or misleading in any
material respect.
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(e) No Default. Within sixty (60) calendar days after the end of each
of the first three Fiscal Quarters of each Fiscal Year and within one
hundred thirty (130) calendar days after the end of each Fiscal Year, a
certificate signed by the chief executive officer, chief operating officer
or chief financial officer of each Borrower certifying that, to the best of
such officer's knowledge, after due inquiry, no event has occurred and is
continuing which constitutes an Event of Default or Potential Default, or
describing each such event and the remedial steps being taken by the
Borrowers or any of them.
(f) Collateral Field Audit. Provide a collateral field audit of the
Borrowers prepared by Freed Maxick or other mutually acceptable firm at
least once a year on the anniversary date of this Agreement.
(g) ERISA. All reports and forms filed with respect to all Plans,
except as filed in the normal course of business and that would not result
in an adverse action to be taken under ERISA, and details of related
information of a Reportable Event, promptly following each filing.
(h) Material Changes. Notification to the Administrative Agent and to
each Bank of any litigation, administrative proceeding, investigation,
business development, or change in financial condition which could
reasonably have a Material Adverse Effect, promptly following its
discovery.
(i) Other Information. Promptly, upon request by the Administrative
Agent from time to time (which may be on a monthly or other basis), each
Borrower shall provide such other information and reports regarding its
operations, business affairs, prospects and financial condition as the
Agent or the Banks may reasonably request.
(j) Monthly Borrowing Base Certificate. No later than fifteen (15)
days after the end of each calendar month, as of the last day of such
calendar month, a Borrowing Base Certificate signed by the chief financial
officer, treasurer or controller of ePlus inc.
(k) Monthly Accounts Receivable Aging Report. No later than thirty
(30) days after the end of each calendar month for the first eleven (11)
months of each Fiscal Year and no later than sixty (60) days after the end
of each Fiscal Year, an accounts receivable aging report in the form
attached hereto as Exhibit H ("Accounts Receivable Aging Report") signed by
the chief financial officer, treasurer or controller of ePlus inc. In the
case of the first two calendar months of each Fiscal Quarter, the
information contained in this report need not include Receivables related
to Buy/Sell Contracts or AMC Receivables (less than or over 120 days) as
referenced in Exhibit H hereto.
(l) Quarterly Inventory Report. No later than sixty (60) calendar days
after the end of each Fiscal Quarter for the first three (3) Fiscal
Quarters of each Fiscal Year and no later than one hundred thirty (130)
days after the end of each Fiscal Year, a quarterly inventory report in the
form attached hereto as Exhibit I ("Quarterly Inventory Report") signed by
the chief financial officer, treasurer or controller of ePlus inc.
(m) Quarterly Residuals Report. Within sixty (60) calendar days after
the end of each of the first three Fiscal Quarters of each Fiscal Year and
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within one hundred thirty (130) calendar days after the end of each Fiscal
Year, a residuals report in the form attached hereto as Exhibit J
("Residuals Report") signed by the chief financial officer, treasurer or
controller of ePlus inc.
5.2 Corporate Existence. Preserve its corporate existence and the
corporate existence of each of its Subsidiaries, and all of their
respective material franchises, licenses, patents, copyrights, trademarks
and trade names consistent with good business practice; and maintain, keep,
and preserve all of its properties (tangible and intangible) necessary or
useful in the conduct of its business in good working order and condition,
ordinary wear and tear excepted.
5.3 ERISA. Comply in all material respects with the provisions of
ERISA to the extent applicable to any Plan maintained for the employees of
any Borrower, any Subsidiary of any Borrower or any ERISA Affiliate; do or
cause to be done all such acts and things that are required to maintain the
qualified status of each Plan and tax exempt status of each trust forming
part of such Plan; not incur any material accumulated funding deficiency
(within the meaning of ERISA and the regulations promulgated thereunder),
or any material liability to the PBGC (as established by ERISA); not permit
any event to occur as described in ss. 4042 of ERISA or which may result in
the imposition of a lien on its properties or assets; notify the Banks in
writing promptly after it has come to the attention of senior management of
any Borrower of the assertion or threat of any "reportable event" or other
event described in ss. 4042 of ERISA (relating to the soundness of a Plan)
or the PBGC's ability to assert a material liability against it or impose a
lien on its, its Subsidiaries' or any ERISA Affiliates' properties or
assets; and refrain from engaging in any Prohibited Transactions or actions
causing possible liability under ss. 5.02 of ERISA.
5.4 Compliance with Regulations. Comply in all material respects with
all Regulations applicable to the business of any Borrower or any
Subsidiary of any Borrower, the noncompliance with which reasonably could
have a Material Adverse Effect.
5.5 Conduct of Business; Permits and Approvals, Compliance with Laws.
Continue to engage in an efficient and economical manner in a business
substantially the same as conducted by it on the date of this Agreement;
maintain in full force and effect, its franchises, and all licenses,
patents, trademarks, trade names, contracts, permits, approvals and other
rights necessary to the profitable conduct of its business.
5.6 Maintenance of Property; Insurance. Keep all of the property,
equipment and systems of the Borrowers and the Subsidiaries of the
Borrowers useful and necessary in their respective business in good working
order and condition, ordinary wear and tear excepted. Maintain insurance
with financially sound and reputable insurance companies or associations in
such amounts and covering such risks as are usually carried by companies
engaged in the same or a similar business and similarly situated, which
insurance may provide for reasonable deductibility from coverage thereof.
5.7 Payment of Debt; Payment of Taxes, Etc. Where the amount involved
exceeds $250,000 or where the non-payment or non-discharge would otherwise
have a Material Adverse Effect on any Borrower, any Subsidiary of any
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Borrower or any of the assets of such entities: promptly pay and discharge
(a) all of its Debt in accordance with the terms thereof; (b) all taxes,
assessments, and governmental charges or levies imposed upon it or upon its
income and profits, upon any of its property, real, personal or mixed, or
upon any part thereof, before the same shall become in default; (c) all
lawful claims for labor, materials and supplies or otherwise, which, if
unpaid, might become a lien or charge upon such property or any part
thereof; provided, however, that so long as such Borrower first notifies
the Banks of its intention to do so, such Borrower shall not be required to
pay and discharge any such Debt, tax, assessment, charge, levy or claim so
long as the failure to so pay or discharge does not constitute or result in
an Event of Default or a Potential Default hereunder and so long as no
foreclosure or other similar proceedings shall have been commenced against
such property or any part thereof and so long as the validity thereof shall
be contested in good faith by appropriate proceedings diligently pursued
and it shall have set aside on its books adequate reserves with respect
thereto.
5.8 Notice of Events. Promptly upon discovery of any of the following
events, the Borrowers shall provide telephone notice to the Banks
(confirmed within three (3) calendar days by written notice), describing
the event and all action the Borrowers, their Subsidiaries or any of them,
as applicable, propose to take with respect thereto:
(a) an Event of Default or Potential Default under this Agreement or
any other Loan Document;
(b) any default or event of default under a contract or contracts and
the default or event of default involves payments by any Borrower or any
Borrower's Subsidiary in an aggregate amount equal to or in excess of
$250,000;
(c) a default or event of default under or as defined in any evidence
of or agreements for Indebtedness for Borrowed Money under which the
liability of any Borrower or any Subsidiary of any Borrower is equal to or
in excess of $250,000, singularly or in the aggregate, whether or not an
event of default thereunder has been declared by any party to such
agreement or any event which, upon the lapse of time or the giving of
notice or both, would become an event of default under any such agreement
or instrument or would permit any party to any such instrument or agreement
to terminate or suspend any commitment to lend to such Borrower or such
Subsidiary or to declare or to cause any such indebtedness to be
accelerated or payable before it would otherwise be due;
(d) the institution of, any material adverse determination in, or the
entry of any default judgment or order or stipulated judgment or order in,
any suit, action, arbitration, administrative proceeding, criminal
prosecution or governmental investigation against any Borrower or any
Subsidiary of any Borrower in which the amount in controversy is in excess
of $250,000, singularly or in the aggregate; or
(e) any change in any Regulation, including, without limitation,
changes in tax laws and regulations, which would have a Material Adverse
Effect.
5.9 Inspection Rights. During regular business hours and then as often
as requested of any Borrower or it Subsidiary by the Administrative Agent,
permit the Administrative Agent, or any authorized officer, employee,
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agent, or representative of the Administrative Agent to examine and make
abstracts from the records and books of account of any Borrower or its
Subsidiary, wherever located, and to visit the properties of any Borrower;
and to discuss the affairs, finances, and accounts of any Borrower or any
Subsidiary of any Borrower with its Chairman, President, any executive vice
president, its chief financial officer, treasurer, controller or
independent accountants. If no Event of Default or Potential Default shall
be in existence, the Administrative Agent shall limit such examination to
two times each calendar year and the Borrowers shall reimburse the
Administrative Agent for its expenses in connection with each such
inspection promptly following the completion of each such inspection. If
the inspection shall be made during the continuance of a Potential Default
or an Event of Default, there shall be no limit on the number of
inspections which can be made. Similarly, in the event of any inspection
during such period, the Borrowers shall reimburse the Administrative Agent
for its expenses in connection with each such inspection promptly following
the completion of each such inspection. At all times, it is understood and
agreed by the Borrowers that all expenses in connection with any such
inspection which may be incurred by any Borrower, any officers and
employees thereof and the attorneys and independent certified public
accountants therefor shall be expenses payable by the Borrowers and shall
not be expenses of the Banks. The Administrative Agent shall be permitted
to communicate the information gained from any such inspection to the other
Banks.
5.10 Generally Accepted Accounting Principles. Maintain the books and
records of the Borrowers and any Subsidiaries of the Borrowers at all times
in accordance with Generally Accepted Accounting Principles.
5.11 Compliance with Material Contracts. Each Borrower and each
Subsidiary will comply in all material respects with all obligations,
terms, conditions and covenants, as applicable, in all Debt of each
Borrower and each such Subsidiary and all instruments and agreements
related thereto, and all other instruments and agreements to which it is a
party or by which it is bound or any of its properties is affected and in
respect of which the failure to comply reasonably could have a Material
Adverse Effect.
5.12 Use of Proceeds. The Borrowers will use the proceeds of any Loan
made pursuant hereto to refinance existing indebtedness, to support working
capital needs, to finance permitted acquisitions and for general corporate
purposes.
5.13 Further Assurances. Do such further acts and things and execute
and deliver to the Administrative Agent and/or the Banks such additional
assignments, agreements, powers and instruments, as the Administrative
Agent and/or any Bank may reasonably require or reasonably deem advisable
to carry into affect the purposes of this Agreement or to better assure and
confirm unto the Administrative Agent and each Bank its rights, powers and
remedies hereunder.
5.14 Restrictive Covenants in Other Agreements. In the event that any
Borrower shall enter into or otherwise become subject to or suffer to exist
any agreement pertaining to Debt which contains covenants or restrictions
that are more restrictive on it than the covenants and restrictions
contained in this Agreement, each and every such covenant and restriction
shall be deemed incorporated herein by reference as fully as if set forth
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herein. If and to the extent that any such covenant or restriction shall be
inconsistent with or otherwise be in conflict with any covenant or
restriction set forth herein (other than by reason of its being more
restrictive), this Agreement shall govern.
5.15 Hedge Agreements. At the request of the Administrative Agent and
at least on an annual basis, review its hedge program with the
Administrative Agent and provide satisfactory evidence that it has entered
into and is maintaining a sound and fiscally responsible hedge program for
interest risk management and foreign exchange fluctuations. Each Borrower
shall administer such hedge program to reduce materially the risk to such
Borrower's financial position.
6. Negative Covenants
Each Borrower covenants and agrees on behalf of itself and its
Subsidiaries, unless specifically excepted hereafter, that from and after
the date hereof and so long as any Loan Commitment is in effect or any
Obligation remains unpaid or outstanding, it and its Subsidiaries will not:
6.1 Consolidation and Merger. Merge or consolidate with or into any
corporation except, if no Potential Default or Event of Default shall have
occurred and be continuing either immediately prior to or upon the
consummation of such transaction, any Person may be merged into any
Borrower, as long as such Borrower is the surviving entity.
6.2 Debt. Except for Debt incurred by a Subsidiary of a Borrower that
is not also a Borrower hereunder, create, assume or permit to exist any
Debt except for Permitted Debt.
6.3 Liens. Except for Liens on assets or property against a Subsidiary
of a Borrower that is not also a Borrower hereunder, create, assume or
permit to exist any Lien on any of their property or assets, whether now
owned or hereafter acquired, or upon any income or profits therefrom,
except Permitted Liens.
6.4 Guarantees. Guarantee or otherwise in any way become or be
responsible for indebtedness or obligations (including working capital
maintenance, take-or-pay contracts) of any other Person (including but not
limited to any Subsidiary of any Borrower), contingently or otherwise, in
any amounts that would exceed an aggregate of $15,000,000 for all Borrowers
and their Subsidiaries taken together.
6.5 Margin Stock. Use or permit any proceeds of the Loans to be used,
either directly or indirectly, for the purpose, whether immediate,
incidental or ultimate, of buying or carrying margin stock within the
meaning of Regulation U of The Board of Governors of the Federal Reserve
System, as amended from time to time.
6.6 Acquisitions and Investments. Purchase or otherwise acquire
(including without limitation by way of share exchange) any part or amount
of the capital stock or assets of, or make any Investments in any other
Person; or enter into any new business activities or ventures not directly
related to their present business; or create any Subsidiary, unless, with
respect to purchases or acquisitions and to the extent applicable, (a) the
stock, obligations or securities acquired or held by the Borrower or the
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Borrower's Subsidiary is received in settlement of Debts created in the
ordinary course of business and owed to such Borrower or Borrower's
Subsidiary, (b) the Borrower or the Borrower's Subsidiary makes and owns
(i) Investments in certificates of deposits or time deposits having
maturities in each case not exceeding one year from the date of issuance
thereof and issued by a Bank, or any FDIC-insured commercial bank
incorporated in the United States or any state thereof having a combined
capital and surplus of not less than $150,000,000, (ii) Investments in
marketable direct obligations issued or unconditionally guaranteed by the
United States of America, any agency thereof, or backed by the full faith
and credit of the United States of America, in each case maturing within
one year from the date of issuance or acquisition thereof, (iii)
Investments in commercial paper issued by a corporation incorporated in the
United States or any state thereof maturing no more than one year from the
date of issuance thereof and, at the time of acquisition, having a rating
of A-1 (or better) by Standard & Poor's Corporation or P-1 (or better) by
Moody's Investors Service, Inc. and (iv) Investments in money market mutual
funds all of the assets of which are invested in cash or investments
described in the immediately preceding clauses (i), (ii) and (iii), (c)
such purchase or acquisition is non-hostile, (d) the aggregate purchase
price of each purchase or acquisition is less than or equal to $5,000,000,
(e) the aggregate purchase price of all purchases and acquisitions during
any twelve month period is less than or equal to $20,000,000, (f) no Event
of Default or Potential Default exists or would exist immediately
thereafter at the closing of such purchase or acquisition or arise from the
consummation of such purchase or acquisition, and (g) prior to each
purchase or acquisition closing, the Administrative Agent shall receive (i)
revised projection models incorporating such purchase or acquisition and
(ii) evidence that after the purchase or acquisition closing, the Aggregate
Loan Commitment less all of the then outstanding Loans will be greater than
or equal to $10,000,000.
6.7 Transfer of Assets; Nature of Business. Sell, transfer, pledge,
assign or otherwise dispose of any of their assets unless such sale or
disposition shall be in the ordinary course of its business for value
received (and in the case of any sale or refinancing of Inventory,
Equipment or Leases, each such sale or refinancing must be an Ordinary
Course Sale or Financing), or discontinue, liquidate or change in any
material respect any substantial part of their operations or business.
Sales of groups of Leases in securitization transactions that comply with
the requirements of an Ordinary Course Sale or Financing shall be
permitted.
6.8 Restricted Payments. Make or pay any redemptions, repurchases,
dividends or distributions of any kind with respect to its capital stock
except that as long as no Event of Default or Potential Default shall be in
existence: (i) dividends may be made and paid as long as the aggregate
thereof does not exceed 50% of its net income (net of any net losses)
accumulated after September 30, 2000; and (ii) repurchases of the common
stock may occur during the twelve month period commencing when the stock
buyback plan of the Company becomes effective so long as such repurchases
do not exceed $7,500,000 in the aggregate.
6.9 Change of Management. Permit any Change of Management.
6.10 Limitation on Capital Expenditures. Make or commit to make, on an
aggregate basis with any other Borrower and with any Subsidiary of any
Borrower, any Capital Expenditure in excess of $10,000,000 per annum,
excluding assets purchased under the ordinary course of its financing
business.
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6.11 Limitation on Optional Payments and Modification of Indebtedness.
Make any optional or voluntary payment, prepayment, repurchase or
redemption of any recourse Debt or amend, modify or otherwise change, or
consent or agree to or permit any amendment, modification, waiver or other
change to, any of the terms of any recourse Debt agreement, unless such
amendment, modification or waiver would extend the maturity or reduce the
amount of any payment of principal thereof, reduce the rate or extend the
date for payment of interest thereon or relax any covenant or other
restriction applicable to the Borrower and does not involve the payment of
a consent fee.
6.12 Accounting Change. Make or permit any change in financial
accounting policies or financial reporting practices, except as required by
Generally Accepted Accounting Principles or regulations of the Securities
and Exchange Commission, if applicable.
6.13 Transactions with Affiliates. Enter into any transaction
(including, without limitation, the purchase, sale or exchange of property,
the rendering of any services or the payment of management fees) with any
Affiliate, except transactions in the ordinary course of, and pursuant to
the reasonable requirements of, their business, and in good faith and upon
commercially reasonable terms and except for assignments to ePlus Group,
inc. of receivables generated by ePlus Technology, inc. arising from its
normal business activities, which receivables, upon such assignment, meet
the criteria for Eligible Receivables.
6.14 Restriction on Amendment of This Agreement. Enter into or
otherwise become subject to or suffer to exist any agreement which would
require them or any of them to obtain the consent of any other person as a
condition to the ability of the Banks and the Borrowers to amend or
otherwise modify this Agreement.
6.15 Restriction on Hedge Arrangements. Enter into or permit to be
outstanding at any time any Hedge Arrangement unless:
(a) such Hedge Arrangement is a rate swap, interest rate option,
forward rate transaction, forward foreign exchange transaction or cross
currency rate swap transaction;
(b) such Hedge Arrangement is designed to protect the Borrower against
fluctuations in currency exchange rates or interest rates;
(c) such Hedge Arrangement has been entered into by the Borrower bona
fide and in good faith in the ordinary course of its business for the
purpose of carrying on the same and not for speculative purposes;
(d) the counterparty under such Hedge Arrangement is reasonably
acceptable to the Administrative Agent;
(e) the counterparty under such Hedge Arrangement is not given any
security interest in the Collateral which is superior to the Bank's;
(f) the extent of the security interest, if any, of the counterparty
under such Hedge Arrangement is not greater than the counterparty's credit
exposure under the Hedge Arrangement and such credit exposure is calculated
in a reasonable and customary manner; and
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(g) documentation of such Hedge Arrangement shall conform to ISDA
standards and must be acceptable to the Administrative Agent with respect
to intercreditor issues.
6.16 Restriction on Mexican Subsidiary. Permit MLC Leasing S.A. DE
C.V. ESTATUTS (Mexico) to become an active corporation.
6.17 Restriction on Transfers from Borrowers to Non-Borrower
Subsidiaries of Borrowers. Lend, invest or transfer any cash or other
Property to Subsidiaries of Borrowers when such Subsidiaries are not
Borrowers, except for loans, investments and transfers made by the Borrower
in the ordinary course of business pursuant to a good-faith, arm's length
transaction relating to the Borrower's (a) purchase of Equipment or
Inventory or (b) Capital Expenditures except for transfer of funds to ePlus
Technology, inc. in connection with its assignment to ePlus Group, inc. of
receivables generated by ePlus Technology, inc. as set forth in ss. 6.13,
which transfer shall represent the purchase price of such receivables and
shall not exceed 100% of the amount of such receivables.
7. Financial Covenants.
The Borrowers, jointly and severally, covenant and agree that from and
after the date hereof and so long as the any Loan Commitment is in effect
or any Obligation remains unpaid or outstanding:
7.1 Maximum Recourse Leverage. The ratio of Total Recourse Funded Debt
to Tangible Net Worth of ePlus inc. and its Subsidiaries on a consolidated
basis will not at any time exceed 3.00:1.
7.2 Maximum Recourse Debt to EBITDA. The ratio of Total Recourse
Funded Debt to EBITDA of ePlus inc. and its Subsidiaries on a consolidated
basis for the four (4) most recently ended consecutive Fiscal Quarters will
not at any time exceed 3.00:1.
7.3 Interest Coverage Ratio. The ratio of EBIT to interest expense of
ePlus inc. and its Subsidiaries on a consolidated basis for the four (4)
most recently ended consecutive Fiscal Quarters will not at any time be
less than 1.75.
7.4 Minimum Net Worth. Net Worth of ePlus inc. and its Subsidiaries on
a consolidated basis will not at any time be less than the sum of (i) 90%
of consolidated GAAP Net Worth on December 31, 2002, (ii) seventy-five
percent (75%) of Net Income for each Fiscal Quarter ending after December
31, 2002 without deduction for any net losses, (iii) one hundred percent
(100%) of the net proceeds from any sale of equity securities after the
date of this Agreement, and (iv) one hundred percent (100%) of the fair
value of any equity securities issued after the date of this Agreement in
connection with any acquisition permitted hereunder or by waiver hereto.
7.5 Borrowing Base. The aggregate principal amount of Loans
outstanding shall not at any time exceed the Borrowing Base or the
Aggregate Loan Commitment, whichever is less; provided, however, that this
covenant shall not be deemed breached if, at the time such aggregate amount
exceeds said level, within four Business Days after the earlier of the date
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any Borrower first has knowledge of such excess or the date of the next
Borrowing Base Certificate disclosing the existence of such excess, a
prepayment of Loans shall be made in an amount sufficient to assure
continued compliance with this covenant in the future.
7.6 Delinquency of Portfolio. The delinquency will not exceed the
following, as presented substantially in the form of Exhibit G hereto:
(a) Asset Management Contracts. In the case of accounts receivable
pertaining to Asset Management Contracts, the aggregate amount of accounts
receivable which are more than 120 days past due will not exceed five
percent (5%) of the aggregate amount of all such accounts receivable.
Notwithstanding the Borrowers' internal record keeping procedures, an
account receivable shall not be deemed to be more than 120 days past due
with respect to any individual Asset Management Contract until 120 days
shall have elapsed following the date such contract was executed, delivered
and made effective. For purposes of this calculation, contracts that have
been amended or otherwise modified or waived in order to cure any
delinquency shall be deemed to be delinquent in their entireties.
(b) Buy-Sell Contracts. In the case of accounts receivable pertaining
to Buy-Sell Contracts, the aggregate amount of accounts receivable which
are more than 60 days past due will not exceed five percent (5%) of the
aggregate amount of all such accounts receivable. An account receivable
pertaining to Buy-Sell Contracts shall be deemed to be more than 60 days
past due with respect to any individual contract if it is 60 days past due
as specified in the applicable contract. For purposes of this calculation,
contracts that have been amended or otherwise modified or waived in order
to cure any delinquency shall be deemed to be delinquent in their
entireties.
(c) Lease Portfolio. In the case of accounts receivable pertaining to
lease agreements, the aggregate amount of accounts receivable which are
more than 90 days past due will not exceed five percent (5%) of the
aggregate amount of all such accounts receivable. An account receivable
pertaining to a lease agreement shall be deemed to be more than 90 days
past due with respect to any individual agreement if it is 90 days past due
as specified in the applicable agreement. For purposes of this calculation,
leases that have been amended or otherwise modified or waived in order to
cure any delinquency shall be deemed to be delinquent in their entireties.
8. Default
8.1 Events of Default. The Borrowers shall be in default if any one or
more of the following events (each an "Event of Default") occurs:
(a) Payments. The Borrowers fail to pay any principal of or interest
on any Note when due and payable (whether at maturity, by notice of
intention to prepay, or otherwise) or fail to pay when it is due and
payable any other amount payable under any Loan Document and such failure
shall continue for a period of five days or more.
(b) Covenants. The Borrowers fail to observe or perform (1) any term,
condition or covenant set forth in ss.ss.5.1(a), 5.1(b), 5.1(c), or 5.1(j),
ss.5.2 (first sentence only); and any section of Article 6 or 7 of this
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Agreement, as and when required, or (2) any term, condition or covenant
contained in this Agreement or any other Loan Document other than as set
forth in (1) above, as and when required and such failure shall continue
for a period of 10 days or more.
(c) Representations and Warranties. Any representation or warranty
made or deemed to be made by any Borrower, herein or in any Loan Document
or in any exhibit, schedule, report or certificate delivered pursuant
hereto or thereto shall prove to have been false, misleading or incorrect
in any material respect when made or deemed to have been made.
(d) Bankruptcy. Any Borrower or any Subsidiary of any Borrower is
dissolved or liquidated, makes an assignment for the benefit of creditors,
files a petition in bankruptcy, is adjudicated insolvent or bankrupt,
petitions or applies to any tribunal for any receiver or trustee, commences
any proceeding relating to itself under any bankruptcy, reorganization,
readjustment of debt, dissolution or liquidation law or statute of any
jurisdiction, has commenced against it any such proceeding which remains
undismissed for a period of thirty (30) days, or indicates its consent to,
approval of or acquiescence in any such proceeding, or any receiver of or
trustee for any Borrower, any Subsidiary of any Borrower or any substantial
part of the property of any Borrower or any Subsidiary of any Borrower is
appointed, or if any such receivership or trusteeship to continues
undischarged for a period of thirty (30) days.
(e) Certain Other Defaults. Any Borrower, any Subsidiary of any
Borrower or the Borrowers as a group shall fail to pay when due any
Indebtedness for Borrowed Money which singularly or in the aggregate
exceeds $250,000, and such failure shall continue beyond any applicable
cure period, or any Borrower, any Subsidiary of any Borrower or the
Borrowers as a group shall suffer to exist any default or event of default
in the performance or observance, subject to any applicable grace period,
of any agreement, term, condition or covenant with respect to any agreement
or document relating to Indebtedness for Borrowed Money if the effect of
such default is to permit, with the giving of notice or passage of time or
both, the holders thereof, or any trustee or agent for said holders, to
terminate or suspend any commitment (which is equal to or in excess of
$250,000) to lend money or to cause or declare any portion of any
borrowings thereunder to become due and payable prior to the date on which
it would otherwise be due and payable, provided that during any applicable
cure period the Banks' obligations hereunder to make further Loans shall be
suspended. Notwithstanding anything to the contrary in the immediately
preceding sentence, it shall not be an Event of Default hereunder for a
Borrower or a Subsidiary of a Borrower to fail to pay when due any
Indebtedness for Borrowed Money so long as such Borrower or such Subsidiary
is contesting in good faith through litigation its obligation to pay such
Indebtedness for Borrowed Money; provided, however, that if the aggregate
amount of any Indebtedness for Borrowed Money contested by a Borrower, the
Subsidiary or the Borrowers as a group exceeds $250,000, such Borrower (for
itself and its Subsidiaries) or Borrowers, as applicable, shall be required
to post a bond equal to the amount that such Indebtedness for Borrowed
Money exceeds $250,000.
(f) Judgments. Any judgments against any Borrower, any Subsidiary of
any Borrower or the Borrowers as a group or against assets or property of
any Borrower, the Subsidiary or the Borrowers as a group for amounts in
excess of $250,000 in the aggregate remain unpaid, unstayed on appeal,
undischarged, unbonded and undismissed for a period of thirty (30) days.
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(g) Attachments. Any assets of any Borrower or the Borrowers as a
group shall be subject to attachments, levies, or garnishments for amounts
in excess of $250,000 in the aggregate which have not been dissolved or
satisfied within twenty (20) days after service of notice thereof to such
Borrower or Borrowers, as applicable.
(h) Change of Management. There occurs any Change of Management.
(i) Security Interests. Any security interest created pursuant to any
Loan Document shall cease to be in full force and effect, or shall cease in
any material respect to give the Administrative Agent, the Liens, rights,
powers and privileges purported to be created thereby (including, without
limitation, a perfected security interest in, and Lien on, all of the
Collateral), superior to and prior to the rights of all third Persons, and
subject to no other Liens (except as permitted by ss. 6.3).
(j) Material Adverse Change. There occurs any Material Adverse Change.
(k) ERISA. (a) Any Borrower or any ERISA Affiliate of any such
Borrower is not in compliance in all material respects with all applicable
provisions of ERISA and the regulations promulgated thereunder; and, either
the Borrower or an ERISA Affiliate of such Borrower maintains or
contributes to or has maintained or contributed to any multiemployer plan
(as defined in ss. 4001 of ERISA) under which such Borrower any ERISA
Affiliate could have any withdrawal liability; (b) either the Borrower or
any ERISA Affiliate of the Borrower sponsors or maintains any Plan under
which there is an accumulated funding deficiency within the meaning of ss.
412 of the Code, whether or not waived; (c) the aggregate liability for
accrued benefits and other ancillary benefits under each Plan that is or
will be sponsored or maintained by the Borrower or any ERISA Affiliate of
the Borrower (determined on the basis of the actuarial assumptions
prescribed for valuing benefits under terminating single-employer defined
benefit plans under Title IV of ERISA) exceeds the aggregate fair market
value of the assets under each such defined benefit pension Plan; (d) the
aggregate liability of the Borrower and each ERISA Affiliate of the
Borrower arising out of or relating to a failure of any Plan to comply with
the provisions of ERISA or the Code, will have a Material Adverse Effect;
and (e) an unfunded liability (determined on the basis of actuarial
assumptions utilized by the actuary for the plan in preparing the most
recent Annual Report) of the Borrower or any ERISA Affiliate exists under
any plan, program or arrangement providing post-retirement life or health
benefits.
THEN and in every such event other than that specified in ss. 8.1(d), the
Administrative Agent may, in its sole discretion, or at the written request
of the Required Banks shall, terminate the Aggregate Loan Commitment (the
date of such termination then being the Credit Termination Date) and
declare the Notes, the Swing Line Note and all other Obligations, including
without limitation accrued interest, to be, and they shall thereupon
forthwith become due and payable without presentment, demand, or notice of
any kind, all of which are hereby expressly waived by each Borrower. Upon
the taking of any such action, the Administrative Agent shall provide
prompt notice of such action to the other Banks. Upon the occurrence of any
event specified in ss. 8.1(d), the Notes, Swing Line Loans and all other
Obligations, including without limitation accrued interest, shall
immediately be due and payable without presentment, demand, protest or
other notice of any kind, all of which are hereby expressly waived by each
Borrower and the Aggregate Loan Commitment shall immediately terminate (the
date of such termination then being the Credit Termination Date). From and
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after the date an Event of Default shall have occurred and for so long as
an Event of Default shall be continuing, the Loans shall bear interest at
the Default Rate.
9. Collateral
9.1 Collateral. Except as otherwise specifically set forth herein or
in any other Loan Document, any and all Loans made and outstanding and
their repayment at all times shall be secured by a first priority,
perfected, security interest in the Collateral (as defined in the Security
Agreement, hereinafter referred to as the "Collateral") subject only to
Permitted Liens.
10. Administrative Agent
10.1 Appointment and Authorization. Each Bank hereby irrevocably
appoints and authorizes National City Bank, as Administrative Agent
hereunder and as collateral agent, to take such action on its behalf and to
exercise such powers under this Agreement and the Loan Documents as are
specifically delegated to it as Administrative Agent by the terms hereof or
thereof, together with such other powers as are reasonably incidental
thereto. The relationship between the Administrative Agent and each Bank
has no fiduciary aspects, and the Administrative Agent's duties hereunder
are acknowledged to be only ministerial and not involving the exercise of
discretion on its part. Nothing in this Agreement or any Loan Document
shall be construed to impose on the Administrative Agent any duties or
responsibilities other than those for which express provision is made
herein or therein. In performing its duties and functions under this
Article 10, the Administrative Agent does not assume and shall not be
deemed to have assumed, and hereby expressly disclaims, any obligation with
or for any Borrower. As to matters not expressly provided for in this
Agreement or any Loan Document, the Administrative Agent shall not be
required to exercise any discretion or to take any action or communicate
any notice, but shall be fully protected in so acting or refraining from
acting upon the instructions of the Required Banks and their respective
successors and assigns; provided, however, that in no event shall the
Administrative Agent be required to take any action which exposes it to
individual liability or which is contrary to this Agreement, any Loan
Document or applicable law, and the Administrative Agent shall be fully
justified in failing or refusing to take any action hereunder unless it
shall first be specifically indemnified to its satisfaction by the Banks
against any and all liability and expense which may be incurred by it by
reason of taking or omitting to take any such action. If an indemnity
furnished to the Administrative Agent for any purpose shall, in its
reasonable opinion, be insufficient or become impaired, the Administrative
Agent may call for additional indemnity from the Banks and not commence or
cease to do the acts for which such indemnity is requested until such
additional indemnity is furnished.
10.2 Duties and Obligations. In performing its functions and duties
hereunder on behalf of the Banks, the Administrative Agent shall exercise
the same care and skill as it would exercise in dealing with loans for its
own account. Neither the Administrative Agent nor any of its directors,
officers, employees or other agents shall be liable for any action taken or
omitted to be taken by it or them under or in connection with this
Agreement or any Loan Document except for its or their own gross negligence
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or willful misconduct. Without limiting the generality of the foregoing,
the Administrative Agent (a) may consult with legal counsel and other
experts selected by it and shall not be liable for any action taken or
omitted to be taken by it in good faith and in accordance with the advice
of such experts; (b) makes no representation or warranty to any Bank as to,
and shall not be responsible to any Bank for, any recital, statement,
representation or warranty made in or in connection with this Agreement,
any Loan Document or in any written or oral statement (including a
financial or other such statement), instrument or other document delivered
in connection herewith or therewith or furnished to any Bank by or on
behalf of any Borrower; (c) shall have no duty to ascertain or inquire into
any Borrower's performance or observance of any of the covenants or
conditions contained herein or to inspect any of the property (including
the books and records) of any Borrower or inquire into the use of the
proceeds of the Loans or (unless the officers of the Administrative Agent
active in their capacity as officers of the Administrative Agent on any
Borrower's account have actual knowledge thereof or have been notified in
writing thereof) to inquire into the existence or possible existence of any
Event of Default or Potential Default; (d) shall not be responsible to any
Bank for the due execution, legality, validity, enforceability,
effectiveness, genuineness, sufficiency, collectibility or value of this
Agreement or any other Loan Document or any instrument or document executed
or issued pursuant hereto or in connection herewith, except to the extent
that such may be dependent on the due authorization and execution by the
Administrative Agent itself; (e) except as expressly provided herein in
respect of information and data furnished to the Administrative Agent for
distribution to the Banks, shall have no duty or responsibility, either
initially or on a continuing basis, to provide to any Bank any credit or
other information with respect to any Borrower, whether coming into its
possession before the making of the Loans or at any time or times
thereafter; and (f) shall incur no liability under or in respect of this
Agreement or any other Loan Document for, and shall be entitled to rely and
act upon, any notice, consent, certificate or other instrument or writing
(which may be by facsimile (telecopier), telegram, cable, or other
electronic means) believed by it to be genuine and correct and to have been
signed or sent by the proper party or parties.
10.3 The Administrative Agent as a Bank. With respect to its Loan
Commitment and the Loans and Swing Line Loans made and to be made by it,
the Administrative Agent shall have the same rights and powers under this
Agreement and all other Loan Documents as the other Banks and may exercise
the same as if it were not the Administrative Agent. The terms "Bank" and
"Banks" as used herein shall, unless otherwise expressly indicated, include
the Administrative Agent in its individual capacity. The Administrative
Agent and any successor Administrative Agent which is a commercial bank,
and their respective affiliates, may accept deposits from, lend money to,
act as trustee under indentures of and generally engage in any kind of
business with, the Borrowers and their affiliates from time to time, all as
if such entity were not the Administrative Agent hereunder and without any
duty to account therefor to any Bank.
10.4 Independent Credit Decisions. Each Bank acknowledges to the
Administrative Agent that it has, independently and without reliance upon
the Administrative Agent or any other Bank, and based upon such documents
and information as it has deemed appropriate, made its own independent
credit analysis and decision to enter into this Agreement. Each Bank also
acknowledges that it will, independently or through other advisers and
representatives but without reliance upon the Administrative Agent or any
other Bank, and based upon such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in
taking or refraining from taking any action under this Agreement or any
Loan Document.
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10.5 Indemnification. The Banks agree to indemnify the Administrative
Agent (to the extent not previously reimbursed by the Borrowers), ratably
in proportion to each Bank's Commitment Percentage, from and against any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses and disbursements of any kind or nature
whatsoever which may be imposed on, incurred by or asserted against the
Administrative Agent in its capacity as Administrative Agent in any way
relating to or arising out of this Agreement or any Loan Document or any
action taken or omitted to be taken by the Administrative Agent in its
capacity as Administrative Agent hereunder or under any Loan Document;
provided that none of the Banks shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from the Administrative
Agent 's gross negligence or willful misconduct. Without limiting the
generality of the foregoing, each Bank agrees to reimburse the
Administrative Agent, promptly on demand, for such Bank's ratable share
(based upon the aforesaid apportionment) of any out-of-pocket expenses
(including reasonable counsel fees and disbursements) incurred by the
Administrative Agent in connection with the preparation, execution,
administration or enforcement of, or the preservation of any rights under,
this Agreement and the Loan Documents to the extent that the Administrative
Agent is not reimbursed for such expenses by the Borrowers.
10.6 Successor Administrative Agent. The Administrative Agent may
resign at any time by giving written notice of such resignation to the
Banks and the Borrowers, such resignation to be effective only upon the
appointment of a successor Administrative Agent as hereinafter provided.
Upon any such notice of resignation, the Banks shall jointly appoint a
successor Administrative Agent upon written notice to the Borrowers and the
Administrative Agent. If no successor Administrative Agent shall have been
jointly appointed by such Banks and shall have accepted such appointment
within thirty (30) days after the Administrative Agent shall have given
notice of resignation, the Administrative Agent may, upon notice to the
Borrowers and the Banks, appoint a successor Administrative Agent. Upon its
acceptance of any appointment as Administrative Agent hereunder, the
successor Administrative Agent shall succeed to and become vested with all
the rights, powers, privileges and duties of the Administrative Agent, and
the Administrative Agent shall be discharged from its duties and
obligations as Administrative Agent under this Agreement and the Loan
Documents. After the Administrative Agent 's resignation hereunder, the
provisions hereof shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was the Administrative Agent under this
Agreement and the Loan Documents.
10.7 Allocations Made By the Administrative Agent. As between the
Administrative Agent and the Banks, unless a Bank objecting to a
determination or allocation made by the Administrative Agent pursuant to
this Agreement delivers to the Administrative Agent written notice of such
objection within two hundred ten (210) days after the date any distribution
was made by the Administrative Agent, such determination or allocation
shall be conclusive on such one hundred twentieth day and only those items
expressly objected to in such notice shall be deemed disputed by such Bank.
The Administrative Agent shall not have any duty to inquire as to the
application by the Banks of any amounts distributed to them.
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11. Miscellaneous
11.1 Waiver. No failure or delay on the part of the Administrative
Agent or any Bank or any holder of any Note in exercising any right, power
or remedy under any Loan Document shall operate as a waiver thereof; nor
shall any single or partial exercise of any such right, power or remedy
preclude any other or further exercise thereof or the exercise of any other
right, power or remedy under any Loan Document. The remedies provided under
the Loan Documents are cumulative and not exclusive of any remedies
provided by law.
11.2 Amendments. No amendment, modification, termination or waiver of
any Loan Document or any provision thereof nor any consent to any departure
by the Borrowers therefrom shall be effective, except for the addition of
an Additional Bank to this Agreement, unless the same shall have been
approved in writing by the Required Banks, be in writing and be signed by
the Administrative Agent, the Required Banks and the Borrowers, and then
any such waiver or consent shall be effective only in the instance and for
the specific purpose for which given, provided, however, that unanimous
written consent of all of the Banks shall be required for: (a) any increase
in the amount of the Aggregate Loan Commitment; (b) any reduction in
principal, interest, or fees payable by the Borrowers under this Agreement;
(c) any extension of the Credit Termination Date or the maturity date of
any Loan; (d) any extension of the due date for payment of any principal,
interest or fees to be collected on behalf of the Banks; (e) any release of
all or substantially all of the Collateral; (f) any change in the
definition of Required Banks and (g) any release of a Borrower or a
guarantor of principal, interest, or fees payable by the Borrowers under
this Agreement. No notice to or demand on the Borrowers shall entitle the
Borrowers to any other or further notice or demand in similar or other
circumstances.
11.3 Governing Law. The Loan Documents and all rights and obligations
of the parties thereunder shall be governed by and be construed and
enforced in accordance with the laws of the Commonwealth of Pennsylvania
without regard to Pennsylvania or federal principles of conflict of laws.
11.4 Participations and Assignments. Each Borrower hereby acknowledges
and agrees that any Bank may at any time: (a) grant participations in all
or any portion of its Note or of its right, title and interest therein or
in or to this Agreement (collectively, "Participations") to any other
lending office of such Bank or, with the consent of the Borrowers (not to
be unreasonably withheld), to any other bank, lending institution or other
entity which has the requisite sophistication to evaluate the merits and
risks of investments in Participations ("Participants"); provided, however,
that: (i) all amounts payable by the Borrowers hereunder shall be
determined as if such Bank had not granted such Participation; and (ii) any
agreement pursuant to which such Bank may grant a Participation: (x) shall
provide that such Bank shall retain the sole right and responsibility to
enforce the obligations of the Borrowers hereunder including, without
limitation, the right to approve any amendment, modification or waiver of
any provisions of this Agreement; and (y) such participation agreement may
provide that such Bank will not agree to any modification, amendment or
waiver of this Agreement without the consent of the Participant if such
modification, amendment or waiver would reduce the principal of or rate of
interest on any Loan or postpone the date fixed for any payment of
principal of or interest on any Loan or increase the Aggregate Loan
Commitment or release any of the Collateral; and (b) assign any or all of
its obligations under this Agreement and the Loan Documents (but only with
the consent of ePlus inc. and the Administrative Agent which consent shall
not be unreasonably withheld), provided that each such assignment shall be
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in an amount of at least $5,000,000; and (ii) each such assignment by a
Bank of its Note or a portion thereof, or Loan Commitment or a portion
thereof shall be made in such manner so that the same portion of its Loans,
Note and Loan Commitment is assigned to the respective assignee. Upon each
such assignment, the assigning Bank shall pay the Administrative Agent an
assignment fee of $3,500.
11.5 Captions. Captions in the Loan Documents are included for
convenience of reference only and shall not constitute a part of any Loan
Document for any other purpose.
11.6 Notices. All notices, requests, demands, directions, declarations
and other communications between the Banks and the Borrowers provided for
in any Loan Document shall, except as otherwise expressly provided, be
mailed by registered or certified mail, return receipt requested, or
telegraphed, or faxed, or delivered in hand to the applicable party at its
address indicated opposite its name on the signature pages hereto. The
foregoing shall be effective and deemed received three days after being
deposited in the mails, postage prepaid, addressed as aforesaid and shall
whenever sent by telegram, telegraph or fax or delivered in hand be
effective when received. Any party may change its address by a
communication in accordance herewith.
11.7 Sharing of Collections, Proceeds and Set-Offs; Application of
Payments.
(a) If any Bank, by exercising any right of set-off, counterclaim or
foreclosure against trade collateral or otherwise, receives payment of
principal or interest or other amount due on any Note which is greater than
the percentage share of such Bank (determined as set forth below), the Bank
receiving such proportionately greater payment shall purchase such
participations in the Loans held by the other Banks, and such other
adjustments shall be made as may be required, so that all such payments
shall be shared by the Banks on the basis of their percentage shares;
provided that if all or any portion of such proportionately greater payment
of such indebtedness is thereafter recovered from, or must otherwise be
restored by, such purchasing Bank, the purchase shall be rescinded and the
purchase price restored to the extent of such recovery, but without
interest being paid by such purchasing Bank. The percentage share of each
Bank shall be based on the portion of the outstanding Loans of such Bank
(prior to receiving any payment for which an adjustment must be made under
this Section) in relation to the aggregate outstanding Loans of all the
Banks. Each Borrower agrees, to the fullest extent may effectively do so
under applicable law, that any holder of a participation in a Loan or
reimbursement obligation, whether or not acquired pursuant to the foregoing
arrangements, may exercise rights of set-off or counterclaim and other
rights with respect to such participation as fully as if such holder of a
participation were a direct creditor of any Borrower in the amount of such
participation. If under any applicable bankruptcy, insolvency or other
similar law, any Bank receives a secured claim in lieu of a set-off to
which this Section would apply, such Bank shall, to the extent practicable,
exercise its rights in respect of such secured claim in a manner consistent
with the rights of the Banks entitled under this Section to share in the
benefits of any recovery on such secured claim.
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(b) If an Event of Default or Potential Default shall have occurred
and be continuing the Administrative Agent and each Bank and each Borrower
agree that all payments on account of the Loans shall be applied by the
Administrative Agent and the Banks as follows:
First, to the Administrative Agent for any Administrative Agent fees
then due and payable under this Agreement until such fees are paid in
full;
Second, to the Administrative Agent for any fees, costs or expenses
(including expenses described in ss. 11.8) incurred by the
Administrative Agent under any of the Loan Documents or this
Agreement, then due and payable and not reimbursed by the Borrowers or
the Banks until such fees, costs and expenses are paid in full;
Third, to the Banks for their percentage shares of the Commitment Fee
then due and payable under this Agreement until such fee is paid in
full;
Fourth, to the Banks for their respective shares of all costs,
expenses and fees then due and payable from the Borrowers until such
costs, expenses and fees are paid in full;
Fifth, to the Banks for their percentage shares of all interest then
due and payable from the Borrowers until such interest is paid in
full, which percentage shares shall be calculated by determining each
Bank's percentage share of the amounts allocated in (a) above
determined as set forth in said clause (a); and
Sixth, to the Banks for their percentage shares of the principal
amount of the Loans then due and payable from the Borrowers until such
principal is paid in full, which percentage shares shall be calculated
by determining each Bank's percentage share of the amounts allocated
in (a) above determined as set forth in said clause (a).
11.8 Expenses; Indemnification. The Borrowers will from time to time
reimburse the Administrative Agent promptly following demand for all
reasonable out-of-pocket expenses (including the reasonable fees and
expenses of legal counsel) in connection with (i) the preparation of the
Loan Documents, (ii) the making of any Loans, and (iii) the administration
of the Loan Documents, including but not limited to all amendments, waivers
and advice concerning the Loan Documents. The Borrowers also will from time
to time reimburse the Administrative Agent and each Bank for all
out-of-pocket expenses (including the reasonable fees and expenses of legal
counsel) in connection with the enforcement of the Loan Documents. In
addition to the payment of the foregoing expenses, each Borrower hereby
agrees to indemnify, protect and hold the Administrative Agent, each Bank
and any holder of any Note and the officers, directors, employees, agents,
affiliates and attorneys of the Administrative Agent, each Bank and such
holder (collectively, the "Indemnitees") harmless from and against any and
all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses and disbursements of any kind or nature,
including reasonable fees and expenses of legal counsel, which may be
imposed on, incurred by, or asserted against such Indemnitee by any
Borrower or other third parties and arise out of or relate to this
Agreement or the other Loan Documents or any other matter whatsoever
related to the transactions contemplated by or referred to in this
Agreement or the other Loan Documents; provided, however, that the
Borrowers shall have no obligation to an Indemnitee hereunder to the extent
that the liability incurred by such Indemnitee has been determined by a
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court of competent jurisdiction to be the result of gross negligence or
willful misconduct of such Indemnitee.
11.9 Survival of Warranties and Certain Agreements. All agreements,
representations and warranties made or deemed made herein shall survive the
execution and delivery of this Agreement, the making of the Loans hereunder
and the execution and delivery of the Note. Notwithstanding anything in
this Agreement or implied by law to the contrary, the agreements of the
Borrowers set forth in ss.ss. 2.10(d), 2.10(e), 2.11 and 11.8 shall survive
the payment of the Loans and the termination of this Agreement. This
Agreement shall remain in full force and effect until the repayment in full
of all amounts owed by the Borrowers under the Notes or any other Loan
Document.
11.10 Severability. The invalidity, illegality or unenforceability in
any jurisdiction of any provision in or obligation under this Agreement,
the Notes or other Loan Documents shall not affect or impair the validity,
legality or enforceability of the remaining provisions or obligations under
this Agreement, the Notes or other Loan Documents or of such provision or
obligation in any other jurisdiction.
11.11 Banks' Obligations Several; Independent Nature of Banks' Rights.
The obligation of each Bank hereunder is several and not joint and no Bank
shall be the agent of any other (except to the extent the Administrative
Agent is authorized to act as such hereunder). No Bank shall be responsible
for the obligation or commitment of any other Bank hereunder. In the event
that any Bank at any time should fail to make a Loan as herein provided,
the other Banks, or any of them as may then be agreed upon, at their sole
option, may make the Loan that was to have been made by the Bank so failing
to make such Loan. Nothing contained in any Loan Document and no action
taken by the Administrative Agent or any Bank pursuant hereto or thereto
shall be deemed to constitute the Banks to be a partnership, an
association, a joint venture or any other kind of entity. The amounts
payable at any time hereunder to each Bank shall be a separate and
independent debt, and, subject to the terms of this Agreement, each Bank
shall be entitled to protect and enforce its rights arising out of this
Agreement and it shall not be necessary for any other Bank to be joined as
an additional party in any proceeding for such purpose.
11.12 No Fiduciary Relationship. No provision in this Agreement or in
any of the other Loan Documents and no course of dealing between the
parties shall be deemed to create any fiduciary duty by any Bank to any
Borrower.
11.13 CONSENT TO JURISDICTION AND SERVICE OF PROCESS. EACH BORROWER,
THE ADMINISTRATIVE AGENT AND EACH BANK HEREBY CONSENTS TO THE JURISDICTION
OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE EASTERN DISTRICT OF
PENNSYLVANIA AND IRREVOCABLY AGREES THAT, ANY ACTIONS OR PROCEEDINGS
ARISING OUT OF OR RELATING TO THE NOTE, THIS AGREEMENT OR THE OTHER LOAN
DOCUMENTS MAYBE LITIGATED IN SUCH COURTS. EACH PARTY TO THIS AGREEMENT
ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND
UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND
WAIVES ANY DEFENSE OF FORUM NON CONVENIENT, AND IRREVOCABLY AGREES TO BE
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BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT,
ANY NOTE, OR SUCH OTHER LOAN DOCUMENT.
11.14 WAIVER OF JURY TRIAL. EACH BORROWER, THE ADMINISTRATIVE AGENT
AND EACH BANK HEREBY WAIVES ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, ANY
OF THE LOAN DOCUMENTS, OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT
MATTER OF THIS AGREEMENT AND THE LENDER/BORROWER RELATIONSHIP ESTABLISHED
HEREBY. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY
AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE
SUBJECT MATTER OF THIS TRANSACTION, INCLUDING WITHOUT LIMITATION, CONTRACT
CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND
STATUTORY CLAIMS. EACH BORROWER, THE ADMINISTRATIVE AGENT AND EACH BANK
ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO THE TRANSACTION,
THAT EACH HAS ALREADY RELIED ON THE WAIVER IN ENTERING INTO THIS AGREEMENT
AND THAT EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED FUTURE
DEALINGS. EACH BORROWER, THE ADMINISTRATIVE AGENT AND EACH BANK FURTHER
WARRANTS AND REPRESENTS THAT EACH HAS REVIEWED THIS WAIVER WITH ITS LEGAL
COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL
RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS
IRREVOCABLE, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS, MODIFICATIONS, REPLACEMENTS OR RESTATEMENTS TO THIS
AGREEMENT, THE LOAN DOCUMENTS, OR TO ANY OTHER DOCUMENTS OR AGREEMENTS
RELATING TO THE LOANS. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE
FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
11.15 Counterparts; Effectiveness. This Agreement and any amendment
hereto or waiver hereof may be signed in any number of counterparts, each
of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument. This Agreement and any
amendments hereto or waivers hereof shall become effective when the
Administrative Agent shall have received signed counterparts or notice by
fax of the signature page that the counterpart has been signed and is being
delivered to it or facsimile that such counterparts have been signed by all
the parties hereto or thereto.
11.16 Use of Defined Terms. All words used herein in the singular or
plural shall be deemed to have been used in the plural or singular where
the context or construction so requires. Any defined term used in the
singular preceded by "any" shall be taken to indicate any number of the
members of the relevant class.
11.17 Offsets. Nothing in this Agreement shall be deemed a waiver or
prohibition of any Bank's right of banker's lien or offset.
11.18 Entire Agreement. This Agreement, the Notes issued hereunder and
the other Loan Documents constitute the entire understanding of the parties
-55-
hereto as of the date hereof with respect to the subject matter hereof and
thereof and supersede any prior agreements, written or oral, with respect
hereto or thereto.
11.19 Rights of Banks. Subject to the provisions of Section 11.7
hereof, each of the Banks and their respective Affiliates, without having
to account to the other Banks or any other Person, may accept other
compensation from the Borrowers and their Affiliates and may accept
deposits from, lend money to and generally engage in any kind of banking,
trust or other business with the Borrowers and their Affiliates to the same
extent and under the same circumstances as though the Loan Documents had
not been entered into; provided, however, that no such transaction shall
be, or cause any Borrower to be, in violation of any Loan Documents as at
the time any such transaction shall take place.
11.20 2001 Credit Agreement. This Agreement shall be deemed to, and
does hereby, amend and restate in its entirety the 2001 Credit Agreement.
Simultaneous with the execution and delivery of this Agreement, the
commitment of each bank party under the 2001 Credit Agreement is hereby
modified to be as set forth in Exhibit B to this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
-56-
IN WITNESS WHEREOF, the parties hereto have each caused this Agreement to
be duly executed by their duly authorized representatives as of the date first
above written.
ePLUS inc.
By: /s/KLEYTON L. PARKHURST
----------------------------------
Name: Kleyton L. Parkhurst
Title: Senior Vice President
ePLUS Group, inc.
By: /s/KLEYTON L. PARKHURST
----------------------------------
Name: Kleyton L. Parkhurst
Title: Senior Vice President
ePLUS Government, inc.
By: /s/KLEYTON L. PARKHURST
----------------------------------
Name: Kleyton L. Parkhurst
Title: Senior Vice President
ePLUS Capital, inc.
By: /s/KLEYTON L. PARKHURST
----------------------------------
Name: Kleyton L. Parkhurst
Title: President
Notices To:
George W. Fox, Jr.
400 Herndon Parkway
Herndon, Virginia 20170
FAX No. 703-834-5718
-57-
NATIONAL CITY BANK
By: /s/MICHAEL J. LABRUM
----------------------------------
Name: Michael J. Labrum
Title: Senior Vice President
Notices To:
Michael J. Labrum
Senior Vice President
National City Bank
Transportation, Equipment & Lease Finance Group
One South Broad Street, 13th Floor, Loc. 01-5997
Philadelphia, PA 19107
Fax: 267-256-4001
BRANCH BANKING AND TRUST COMPANY OF
VIRGINIA, A VIRGINIA BANKING
CORPORATION
By: /s/RONALD P. GUDBRANDSEN
----------------------------------
Name: Ronald P.Gudbrandsen
Title: Senior Vice President
Notices To:
Ronald P. Gudbrandsen
Senior Vice President
1909 K Street, N.W.
Washington, D.C. 20006
Fax: 202-835-9287
BANK OF AMERICA, N.A.
By: /s/JESSICA L. TENCZA
----------------------------------
Name: Jessica L. Tencza
Title: Vice President
Notices To:
Jessica L. Tencza
Vice President
Bank of America, N.A.
8300 Greensboro Drive
Mezzanine Level
McLean, VA 22102
Fax: 703-761-8118
-58-
SCHEDULE 1
DISCLOSURE SCHEDULE
Section 3.2 Corporate Authority, Validity, Etc.
-----------------------------------------------
Section 3.3 Litigation
----------------------
Section 3.5 Fixed or Contingent Liabilities Not Reflected in Financial
Statements
--------------------------------------------------------------------------------
Section 3.7 Taxes
-----------------
Section 3.12 Subsidiaries and Investments
-----------------------------------------
Section 3.13 (a) Permitted Liens
--------------------------------
Section 3.13(b) Financing Statements to Be Filed
------------------------------------------------
Section 6.2 Permitted Debt
--------------------------
SCHEDULE 2
Applicable Margins and Commitment Fee
Advances under the Facility shall carry an interest rate based upon the
Borrower's ratio of Total Recourse Funded Debt to Earnings Before Interest,
Taxes, Depreciation, and Amortization ("Total Recourse Funded Debt to EBITDA"),
as outlined below:
------------------------------- --------------- -------------
Total Recourse Funded
Debt/EBITDA LIBOR + ABR+
------------------------------- --------------- -------------
>2.5 250.0 bps 25.0 bps
> 2.0 <2.5 225.0 bps 0.0 bps
-
> 1.5 < 2.0 200.0 bps 0.0 bps
-
< 1.5 175.0 bps 0.0 bps
------------------------------- --------------- -------------
The Commitment Fee will be subject to a performance grid determined by the usage
under the Facility based upon the following:
Usage < 50% of the Facility = 50 bps
-
Usage > 50% of the Facility = 30 bps
EXHIBIT A
List of ePlus inc. Subsidiaries
ePlus Group, inc.
ePlus Government, inc.
ePlus Capital, inc.
EXHIBIT B
Banks' Loan Commitments and Percentages
Bank Commitment Percentage
---- ---------- ----------
National City Bank $15,000,000 33.334%
Specialized Banking Group, Philadelphia Region
One South Broad Street, 13th Floor, Loc. 01-5997
Philadelphia, PA 19107
Fax: 267-256-4001
Branch Banking and Trust Company, $15,000,000 33.333%
of Virginia, a Virginia banking corporation
Ron Gudbrandsen
1909 K Street, N.W.
Washington, D.C. 20006
Fax: 202-835-9287
Bank of America, N.A. $15,000,000 33.333%
Jessica Tencza
8300 Greensboro Drive
Mezzanine Level
McLean, VA 22102
Fax: 703-761-8118
EXHIBIT C
Note
$15,000,000 Philadelphia, PA July 21, 2003
For Value Received, ePlus inc., a Delaware corporation, ePlus Group, inc., a
Virginia corporation, ePlus Government, inc., a Virginia corporation, and ePlus
Capital, inc., a Virginia corporation, (collectively, the "Borrowers" and
individually, a "Borrower") hereby jointly and severally promise to pay to the
order of National City Bank (the "Bank"), in lawful currency of the United
States of America in immediately available funds at the offices of NATIONAL CITY
BANK located at One South Broad St., 13th Floor, Philadelphia, Pennsylvania, on
the earlier to occur of acceleration of the maturity date as provided in the
Credit Agreement described below or the Credit Termination Date, the principal
sum of FIFTEEN MILLION DOLLARS ($15,000,000) or, if less, the then unpaid
principal amount of all Loans made by the Bank pursuant to the Credit Agreement
(defined below).
The Borrowers jointly and severally promise also to pay interest on the unpaid
principal amount hereof in like money at such office from the date hereof until
paid in full at the rates and at the times provided in the Second Amended and
Restated Credit Agreement, dated as of July 21, 2003, by and among the Borrowers
and the banking institutions named therein, with National City Bank, as
Administrative Agent (as such may be amended, modified, supplemented, restated
and/or replaced from time to time, the "Credit Agreement").
This Note is a Note referred to in the Credit Agreement. This Note is entitled
to the benefits of and is secured by security interests referred to in the
Credit Agreement. Capitalized terms used in this Note but not defined herein
shall have the meanings ascribed to such terms in the Credit Agreement. This
Note is subject to voluntary prepayment and mandatory repayment prior to demand,
acceleration of maturity or the Credit Termination Date, in whole or in part, as
provided in the Credit Agreement.
In case an Event of Default shall occur and be continuing, the maturity date of
the principal of and the accrued interest on this Note may be accelerated and be
declared to be due and payable in the manner and with the effect provided in the
Credit Agreement.
Each Borrower hereby waives presentment, demand, protest or notice of any kind
in connection with this Note.
Notwithstanding the face amount of this Note, the undersigneds' liability
hereunder shall be limited, at all times, to the actual aggregate outstanding
indebtedness relating to the Loans, including all principal and interest,
together with all fees and expenses as provided in the Credit Agreement, as
established by the Bank's books and records which shall be conclusive absent
manifest error.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF
THE COMMONWEALTH OF PENNSYLVANIA WITHOUT REGARD TO PENNSYLVANIA OR FEDERAL
PRINCIPLES OF CONFLICT OF LAWS.
ePLUS inc.
By: /s/KLEYTON L. PARKHURST
----------------------------------
Name: Kleyton L. Parkhurst
Title: Senior Vice President
ePLUS Group, inc.
By: /s/KLEYTON L. PARKHURST
----------------------------------
Name: Kleyton L. Parkhurst
Title: Senior Vice President
ePLUS Government, inc.
By: /s/KLEYTON L. PARKHURST
----------------------------------
Name: Kleyton L. Parkhurst
Title: Senior Vice President
ePLUS Capital, inc.
By: /s/KLEYTON L. PARKHURST
----------------------------------
Name: Kleyton L. Parkhurst
Title: President
-2-
Note
$15,000,000 Philadelphia, PA July 21, 2003
For Value Received, ePlus inc., a Delaware corporation, ePlus Group, inc., a
Virginia corporation, ePlus Government, inc., a Virginia corporation, and ePlus
Capital, inc., a Virginia corporation, (collectively, the "Borrowers" and
individually, a "Borrower") hereby jointly and severally promise to pay to the
order of Branch Banking and Trust Company of Virginia, a Virginia banking
corporation (the "Bank"), in lawful currency of the United States of America in
immediately available funds at the offices of NATIONAL CITY BANK located at One
South Broad St., 13th Floor, Philadelphia, Pennsylvania, on the earlier to occur
of acceleration of the maturity date as provided in the Credit Agreement
described below or the Credit Termination Date, the principal sum of FIFTEEN
MILLION DOLLARS ($15,000,000) or, if less, the then unpaid principal amount of
all Loans made by the Bank pursuant to the Credit Agreement (defined below).
The Borrowers jointly and severally promise also to pay interest on the unpaid
principal amount hereof in like money at such office from the date hereof until
paid in full at the rates and at the times provided in the Second Amended and
Restated Credit Agreement, dated as of July 21, 2003, by and among the Borrowers
and the banking institutions named therein, with National City Bank, as
Administrative Agent (as such may be amended, modified, supplemented, restated
and/or replaced from time to time, the "Credit Agreement").
This Note is a Note referred to in the Credit Agreement. This Note is entitled
to the benefits of and is secured by security interests referred to in the
Credit Agreement. Capitalized terms used in this Note but not defined herein
shall have the meanings ascribed to such terms in the Credit Agreement. This
Note is subject to voluntary prepayment and mandatory repayment prior to demand,
acceleration of maturity or the Credit Termination Date, in whole or in part, as
provided in the Credit Agreement.
In case an Event of Default shall occur and be continuing, the maturity date of
the principal of and the accrued interest on this Note may be accelerated and be
declared to be due and payable in the manner and with the effect provided in the
Credit Agreement.
Each Borrower hereby waives presentment, demand, protest or notice of any kind
in connection with this Note.
Notwithstanding the face amount of this Note, the undersigneds' liability
hereunder shall be limited, at all times, to the actual aggregate outstanding
indebtedness relating to the Loans, including all principal and interest,
together with all fees and expenses as provided in the Credit Agreement, as
established by the Bank's books and records which shall be conclusive absent
manifest error.
-3-
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF
THE COMMONWEALTH OF PENNSYLVANIA WITHOUT REGARD TO PENNSYLVANIA OR FEDERAL
PRINCIPLES OF CONFLICT OF LAWS.
ePLUS inc.
By: /s/KLEYTON L. PARKHURST
----------------------------------
Name: Kleyton L. Parkhurst
Title: Senior Vice President
ePLUS Group, inc.
By: /s/KLEYTON L. PARKHURST
----------------------------------
Name: Kleyton L. Parkhurst
Title: Senior Vice President
ePLUS Government, inc.
By: /s/KLEYTON L. PARKHURST
----------------------------------
Name: Kleyton L. Parkhurst
Title: Senior Vice President
ePLUS Capital, inc.
By: /s/KLEYTON L. PARKHURST
----------------------------------
Name: Kleyton L. Parkhurst
Title: President
-4-
Note
$15,000,000 Philadelphia, PA July 21, 2003
For Value Received, ePlus inc., a Delaware corporation, ePlus Group, inc., a
Virginia corporation, ePlus Government, inc., a Virginia corporation, and ePlus
Capital, inc., a Virginia corporation, (collectively, the "Borrowers" and
individually, a "Borrower") hereby jointly and severally promise to pay to the
order of Bank of America, N.A.(the "Bank"), in lawful currency of the United
States of America in immediately available funds at the offices of NATIONAL CITY
BANK located at One South Broad St., 13th Floor, Philadelphia, Pennsylvania, on
the earlier to occur of acceleration of the maturity date as provided in the
Credit Agreement described below or the Credit Termination Date, the principal
sum of FIFTEEN MILLION DOLLARS ($15,000,000) or, if less, the then unpaid
principal amount of all Loans made by the Bank pursuant to the Credit Agreement
(defined below).
The Borrowers jointly and severally promise also to pay interest on the unpaid
principal amount hereof in like money at such office from the date hereof until
paid in full at the rates and at the times provided in the Second Amended and
Restated Credit Agreement, dated as of July 21, 2003, by and among the Borrowers
and the banking institutions named therein, with National City Bank, as
Administrative Agent (as such may be amended, modified, supplemented, restated
and/or replaced from time to time, the "Credit Agreement").
This Note is a Note referred to in the Credit Agreement. This Note is entitled
to the benefits of and is secured by security interests referred to in the
Credit Agreement. Capitalized terms used in this Note but not defined herein
shall have the meanings ascribed to such terms in the Credit Agreement. This
Note is subject to voluntary prepayment and mandatory repayment prior to demand,
acceleration of maturity or the Credit Termination Date, in whole or in part, as
provided in the Credit Agreement.
In case an Event of Default shall occur and be continuing, the maturity date of
the principal of and the accrued interest on this Note may be accelerated and be
declared to be due and payable in the manner and with the effect provided in the
Credit Agreement.
Each Borrower hereby waives presentment, demand, protest or notice of any kind
in connection with this Note.
Notwithstanding the face amount of this Note, the undersigneds' liability
hereunder shall be limited, at all times, to the actual aggregate outstanding
indebtedness relating to the Loans, including all principal and interest,
together with all fees and expenses as provided in the Credit Agreement, as
established by the Bank's books and records which shall be conclusive absent
manifest error.
-5-
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF
THE COMMONWEALTH OF PENNSYLVANIA WITHOUT REGARD TO PENNSYLVANIA OR FEDERAL
PRINCIPLES OF CONFLICT OF LAWS.
ePLUS inc.
By: /s/KLEYTON L. PARKHURST
----------------------------------
Name: Kleyton L. Parkhurst
Title: Senior Vice President
ePLUS Group, inc.
By: /s/KLEYTON L. PARKHURST
----------------------------------
Name: Kleyton L. Parkhurst
Title: Senior Vice President
ePLUS Government, inc.
By: /s/KLEYTON L. PARKHURST
----------------------------------
Name: Kleyton L. Parkhurst
Title: Senior Vice President
ePLUS Capital, inc.
By: /s/KLEYTON L. PARKHURST
----------------------------------
Name: Kleyton L. Parkhurst
Title: President
-6-
EXHIBIT D
Borrowing Base Certificate
Date of Certificate: _________________________
Date of Information: _________________________
To: National City Bank
Gentlemen:
This Borrowing Base Certificate is delivered to you pursuant to the terms of
ss.ss.4.1(c) or 5.1(j), as appropriate, of the Second Amended and Restated
Credit Agreement, dated as of July 21, 2003, as currently in effect. Capitalized
terms used without definition below have the same meanings as they have in the
Credit Agreement.
We hereby certify that:
1. No Potential Default or Event of Default has occurred and is continuing as
of the date of this Borrowing Base Certificate.
2. There has been no Material Adverse Change since [insert the date of the
most recent financial statements delivered to the Banks pursuant to the
terms of ss. 5.1 of the Credit Agreement], except as disclosed on the
attached schedules.
3. The information set forth on the attached schedules is true, current and
complete as of the date of this Borrowing Base Certificate.
ePLUS inc.
By:
Name:
Title:
ePLUS Group, inc.
By:
Name:
Title:
ePLUS Government, inc.
By:
Name:
Title:
ePLUS Capital, inc.
By:
Name:
Title:
-2-
ePLUS inc.
ePLUS Group, inc.
ePLUS Government, inc.
ePLUS Capital, inc.
Computation of Borrowing Base Availability
--------------,
Collateral Loan Value
A. Eligible Leases @ the lesser of:
(a) 95% of the acquisition cost
of the equipment subject to such
Leases or (b) 95% of the Net
Present Value of Lease Payments $_____________
B. Eligible Receivables @ 90% $_____________
C. Eligible AMC Equipment
and Inventory @ 95% of the $_____________
acquisition cost, net all rebates,
allowances and credits
D. Eligible Non-AMC Equipment
and Inventory* @ 90% of the
acquisition cost, net all rebates,
allowances and credits
(subject to $5,000,000 sublimit) $_____________
E. Residuals* @ 25% of the net present
value (subject to $5,000,000 limit)
1. Total Eligible Collateral $_____________
* 25% of net present value of Residuals cannot at any time exceed 25% of the
Borrowing Base.
Maximum Loans
2. Maximum Loans: $45,000,000 $45,000,000.00
Credit Usage
3. Aggregate Loan Balance (principal) at date of
certificate $____________________
Loan Availability
4. Line 1 minus Line 3 $____________________
5. Line 2 minus Line 3 $____________________
6. Availability (Line 4 or Line 5 whichever is less) $____________________
7. Amount of Loan Requested This Date (if any) $____________________
(Not to exceed line 6)
-3-
Certification: Date: _______________________
ePLUS inc.
By:
Name:
Title:
ePLUS Group, inc.
By:
Name:
Title:
ePLUS Government, inc.
By:
Name:
Title:
ePLUS Capital, inc.
By:
Name:
Title:
New Collateral and Cumulative Collateral Information shall be provided together
with the Borrowing Base Certificate, and shall include, but not be limited to,
the following information: Customer Name, Contract Number, Monthly Payment,
Lease Term, Remaining Term, Gross Remaining, Equipment Cost.
-4-
EXHIBIT E
Second Amended and Restated Security Agreement
This Second Amended and Restated Security Agreement, dated as of July 21,
2003 (this "Security Agreement"), is entered into by and among ePlus inc., a
Delaware corporation, ePlus Group, inc., a Virginia corporation, ePlus
Government, inc., a Virginia corporation, and ePlus Capital, inc., a Virginia
corporation, each with its main business office located at 400 Herndon Parkway,
Herndon, Virginia 20170 (collectively, the "Debtors" and individually, a
"Debtor") and NATIONAL CITY BANK, a national banking association, as
Administrative Agent for itself and on behalf of each of the Banks now or
hereafter party to the Credit Agreement (defined below) (the "Secured Party").
Capitalized terms used herein and not otherwise defined herein shall have the
meanings assigned in the Credit Agreement.
Preliminary Statement
This Security Agreement amends and restates the Amended and Restated
Security Agreement dated as of January 19, 2001 in its entirety and is entered
into in accordance with and is a condition precedent to any Loan under the
Credit Agreement. All liens and security interests previously granted to the
Secured Party pursuant to the earlier Security Agreement are acknowledged and
reconfirmed, and remain in full force and effect and are not intended to be
released, replaced or impaired.
Now, therefore, the Debtors and the Secured Party, intending to be legally
bound, agree as follows:
1. Definitions.
As used herein the following terms shall have the meanings indicated:
(A) "Accounts," "Chattel Paper," "Documents," "Equipment," "General
Intangibles," "Goods," "Instruments," "Inventory" and "Proceeds" shall have the
meanings assigned to them under the Uniform Commercial Code as in effect in the
Commonwealth of Pennsylvania and shall be applicable solely for purposes of the
Collateral.
(B) "Collateral" shall mean all right, title and interest of the Debtor in,
to and under all of the assets, properties and rights of the Debtor, including,
without limitation, all personal and fixture property of the Debtor of every
kind and nature, wherever located, whether now owned or hereafter acquired or
arising, including, without limitation, all goods (including, without
limitation, consumer goods, inventory, equipment and any accessions thereto),
instruments (including, without limitation, promissory notes), documents,
accounts (including, without limitation, health-care-insurance receivables),
chattel paper (whether tangible or electronic), deposit accounts,
letter-of-credit rights (whether or not the letter of credit is evidenced by a
writing), commercial tort claims, securities and all other investment property,
supporting obligations, any other contract rights or rights to the payment of
money, insurance claims, general intangibles (including, without limitation,
payment intangibles), all cash and non-cash proceeds of all of the foregoing,
and proceeds of proceeds.
(C) "Credit Agreement" means that certain Amended and Restated Credit
Agreement, dated as of January 19, 2001, as amended and restated by that certain
Second Amended and Restated Credit Agreement dated July 21, 2003 (as such
agreement may be amended, restated, modified, replaced or substituted hereafter)
between the Debtors, the banking institutions signatories thereto, and Secured
Party as Administrative Agent for itself and the other banking institutions (the
Secured Party, in its individual capacity, and said banking institutions,
collectively, the "Banks" and, individually, a "Bank").
(D) "Lease" means any capital lease or operating lease (or conditional
sales agreement or any similar financing arrangement) upon which any Debtor is
the lessor or an assignee of the lessor which lease is included in the
Collateral.
(E) "Liabilities" means all existing and future indebtedness and other
liabilities, absolute or contingent, direct or indirect, primary or secondary,
of the Debtors to the Banks arising hereunder or in respect of the Notes or
otherwise in connection with the Credit Agreement or any Loan Document plus all
obligations of the Debtors to any Bank in respect of any interest rate swap
agreement, interest rate cap agreement, interest collar agreement, interest rate
hedging agreement, interest rate floor agreement or other similar agreement or
arrangement.
(F) "Prevailing Interest Rate" as of any date means the highest rate of
interest then payable by the Debtors under any Loan.
2. Grant of Security; Assignment of Leases.
To secure the payment, promptly when due, and the punctual performance of
all of the Liabilities, each Debtor hereby:
(A) pledges and assigns to the Secured Party, and grants to the Secured
Party and agrees that the Secured Party shall have, a general continuing lien
upon and security interest in all the Collateral, which lien and security
interest shall be a general continuing first priority lien upon and security
interest in all the Collateral.
(B) assigns and transfers to the Secured Party all such Debtor's right,
title and interest in and to all rentals and other amounts payable under the
Leases, and all proceeds from insurance and any proceeding, payable to or
receivable by such Debtor under or in connection therewith, and all rights,
powers and remedies (but none of the duties or obligations, if any) of such
Debtor under the Leases, including all rights of such Debtor to give and receive
any notice, consent, waiver, demand or approval under or in respect of the
Leases, to exercise any election or option thereunder or in respect thereof, to
accept any surrender of any property subject thereto, to execute and deliver any
bill of sale for any such property, and to do all other things which such Debtor
is entitled to do under the Leases.
3. Leases.
(A) Each Debtor shall remain liable as lessor under its Leases to perform
all the obligations assumed by each Debtor thereunder. The obligations of each
Debtor under the Leases may be performed by Secured Party or any subsequent
assignee of the Secured Party ("Subsequent Secured Party") without releasing any
Debtor therefrom. The Secured Party or any Subsequent Secured Party shall have
no liability or obligation under the Leases by reason of this Agreement and
shall not, by reason of this Agreement, be obligated to perform any of the
obligations of any Debtor under any Leases or to file any claim or take any
other action to collect or enforce any payment assigned hereunder.
(B) Each Debtor hereby agrees (i) to perform duly and punctually each of
the terms, conditions and covenants contained in the Leases, and (ii) subject to
such Debtor's business judgment and reasonable commercial practice, to exercise
promptly and diligently each and every right it may have under the Leases.
-2-
(C) Each Debtor does hereby warrant and represent that all Leases are in
full force and effect and that no Debtor has assigned or pledged, and hereby
covenants that no Debtor will assign or pledge, so long as this Agreement shall
remain in effect, the whole or any part of the rights hereby assigned, to anyone
other than the Secured Party.
(D) Each Debtor does hereby warrant and represent that for each Lease with
an original equipment cost in excess of $50,000, it has taken all possible
action to protect its first-priority security interest in such leased property,
which may include filing UCC or other financing statements (listing the
applicable Debtor as the secured party, the lessee as debtor, and such leased
property as collateral) in such locations as would be required by applicable law
(if such Debtor were a secured party and the lessee were a debtor) under the UCC
or other applicable statute or regulation, which is assignable to the Secured
Party. If any Debtor assumes a pre-existing Lease, such Debtor shall use its
best efforts to comply with this ss. 3(D) to the extent permitted under such
Lease.
(E) Subject to the provisions of this Agreement, and until the occurrence
of an Event of Default and upon demand by the Secured Party, a Debtor may
exercise all the rights and enjoy all the benefits of the lessor under its
Leases.
4. Books and Records. Each Debtor shall faithfully keep complete and
accurate books and records and make all necessary entries therein to reflect the
quantities, costs, current values and locations of all Collateral, the events
and transactions giving rise thereto and all payments, credits and adjustments
applicable thereto, shall keep the Secured Party fully and accurately informed
as to the locations of all such books and records and shall permit the Secured
Party's agents to have such access to them and to any other records pertaining
to the Debtor's business as the Secured Party may request from time to time.
5. Control of and Access to Collateral.
(A) Prior to any Lease being included in the Borrowing Base calculation,
each originally executed Lease included in the Collateral shall be marked
"Original" and legended in form satisfactory to the Secured Party to indicate
that it is the only original of the Lease held by any Debtor; provided, however,
that a Debtor may provide its Lessee with a duplicate original, which shall be
sufficiently legended so as to indicate that the Debtor holds the true
"Original." All other copies shall be marked "copy." The Secured Party may at
any time and in its sole discretion request possession any or all original
Leases; from and after such request, any Leases subject to such request shall
not be included in the Borrowing Base unless and until such original Leases are
delivered by the Debtors to the Secured Party together with a list of the
invoices for the equipment being leased (which list shall include the invoice
number, invoice date, vendor identity, description of equipment, amount of
invoice and the number and date of the check whereby the invoice was paid by the
applicable Debtor). Further, if Secured Party shall so request in connection
with its periodic reviews of the Collateral and the Borrowing Base (or at any
time after the occurrence of an Event of Default), the Debtors shall make
available to Lender the original paid invoices with respect to all equipment
related to Leases, regardless of whether such Leases were made pursuant to Asset
Management Contracts.
(B) Upon the occurrence of an Event of Default, the Secured Party shall
have the right at any time to take possession of the Collateral or any part
thereof. Notwithstanding any such taking of possession, the Collateral shall
remain at all times at the applicable Debtor's sole risk, and to the full extent
permitted by law the Secured Party shall not be responsible for any loss, damage
or diminution in the value thereof. All costs of transportation, packaging,
custody, processing, storage, and insurance of any unit or item of Collateral
which may be incurred by the Secured Party shall be promptly repaid to the
Secured Party by the Debtors together with interest thereon at the Prevailing
Interest Rate, and such Debtor's liability to the Secured Party for such
repayment with interest shall be included in the Liabilities.
-3-
(C) If any item or unit of Collateral is now or hereafter the subject of a
certificate of title or is required by law so to be, the Debtors will promptly
procure the necessary certificate of title and take all steps necessary to cause
the Secured Party's lien or security interest therein to be noted on the face of
such certificate and undertake such other steps as may be necessary to assure
that the Secured Party has a first priority, perfected security interest in each
such item or unit of Collateral, and shall thereafter deposit the original of
such certificate of title with the Secured Party.
(D) The Debtors shall immediately notify the Secured Party of any event
causing any deterioration, loss or depreciation in value of any substantial
portion of the Collateral and the Debtors' best estimate of the amount of such
deterioration, loss or depreciation.
(E) The Debtors shall afford the Secured Party's agents access to the
Collateral from time to time upon request for purposes of examination,
inspection and appraisal thereof and to verify the Debtors' books and records
pertaining thereto. After an Event of Default and upon the Secured Party's
demand therefor, the Debtors shall assemble the Collateral and make it available
to the Secured Party at such place reasonably convenient to both parties as the
Secured Party may designate, and the Secured Party's rights to such assemblage
shall be enforceable by injunction. If an Event of Default shall not exist, the
Secured Party shall furnish written prior notice to the Debtors reasonably in
advance of any intended examination, inspection, appraisal and verification and
such activity shall commence during the Debtor's normal business hours.
(F) From and after the occurrence of an Event of Default hereunder, the
Debtors shall pay to the Secured Party on demand any and all expenses of
conducting any and all periodic examinations or reviews or causing any periodic
examinations or reviews of Collateral determined to be appropriate by the
Secured Party (including but not limited to reasonable attorneys' fees and legal
expenses) which may be incurred by the Secured Party, with interest at the
Prevailing Interest Rate.
(G) Upon an Event of Default, the Secured Party is hereby granted a license
or other right to use, without charge, Debtors' labels, intellectual property,
or use of any name, trade secrets, tradenames, trademarks and advertising
matter, or any property of a similar nature, as it pertains to the Collateral,
in advertising for sale and selling any Collateral, and Debtors' rights under
all licenses and all franchise agreements shall inure to the Secured Party's
benefit.
6. Maintenance of Collateral; Sale. Subject to the Debtors' business
judgment and reasonable commercial practice, the Debtors shall take good care of
the Collateral and shall afford it suitable preventive maintenance. The Debtors
shall pay the cost of all repairs to or maintenance of the Collateral and shall
not permit anything to be done that might in any way impair the value of any of
the Collateral or any of the security intended to be afforded by this Agreement.
The Debtors shall conscientiously adhere to a well designed internal control
system with respect to the Collateral, and such system shall be capable of
permitting the Debtors and the Secured Party to identify readily at any time the
location and condition of each and every item of Collateral. The Debtors will
not permit any of the Collateral to become or be a fixture. The Debtors shall
not sell, exchange, salvage, replace or dispose of any items or unit of its
Inventory or Equipment or any of its rights therein, except that so long as no
Debtor is in default hereunder, the Debtors shall have the right to sell its
Inventory and Equipment in each case in the ordinary course of its business and
it shall have the right to lease or re-lease its Inventory and Equipment in the
ordinary course of its business.
7. Insurance.
(a) The Debtors shall bear the risk of each item or unit of Inventory and
Equipment being lost, destroyed, irreparably damaged or rendered permanently
-4-
unfit for sale, lease or use or being damaged in part, from any cause whatsoever
at any time during the term of this Agreement, and shall at its own cost and
expense obtain and keep in full force and effect, in kind and form reasonably
satisfactory to the Secured Party, or in the alternative shall cause the lessee
under each applicable Lease to do the same with respect to Inventory or
Equipment subject to the lessee's Lease, all risk of physical loss or damage
insurance covering the Inventory and Equipment wherever the same may be located,
insuring against the risks of fire, explosion, theft and such other risks as are
customarily insured against by organizations engaged in the same business and
similarly situated with the Debtors (and specifically including vandalism,
malicious mischief coverage, loss overboard and breakage), in an amount usually
carried by organizations engaged in the same business or similarly situated with
the Debtors. All policies of such insurance shall be written for the benefit of
the applicable Debtor as the insured.
(b) If the Debtors or the applicable lessee fails to pay any premium on any
such insurance, the Secured Party shall have the right, but shall be under no
obligation, to pay such premium for such Debtor's account. Such Debtor shall
repay to the Secured Party on demand all sums which the Secured Party shall have
paid under this section in respect of insurance premiums, with interest thereon
at the Prevailing Interest Rate, and such Debtor's liability to the Secured
Party for such repayment with interest shall be included in the Liabilities.
Each Debtor hereby assigns to the Secured Party any return or unearned premium
which may be due upon the cancellation for any reason whatsoever of any policy
of insurance maintained in respect of the Collateral and hereby directs the
insurer to pay the Secured Party any amount so due. The Debtors' right to
receive payment of any such return or unearned premium and the proceeds of any
such insurance shall constitute a part of the Collateral for all purposes
hereof.
8. Title to Collateral.
(A) Each Debtor has acquired or shall acquire absolute and exclusive title
to each and every item or unit of the Collateral attribute to it free and clear
of all liens, claims, security interests and other encumbrances, except as
permitted under the Credit Agreement, and each Debtor shall warrant and defend
its title to such Collateral, subject to the rights of the Secured Party,
against the claims and demands of all persons whomsoever. Without limiting the
generality of the foregoing, no Debtor shall pledge, assign or otherwise
encumber, or permit any liens or security interests (other than those in favor
of the Secured Party) to attach to, any of the Collateral, nor permit any of the
Collateral to be levied upon under any legal process.
(B) The Secured Party may, at its sole election but without obligation to
do so, discharge any unpermitted encumbrance pertaining to the Collateral and
all expenses incurred by the Secured Party in so doing, together with interest
thereon at the Prevailing Interest Rate, shall be added to the Liabilities and
shall be payable by the Debtors on demand.
9. Taxes and Liens. The Debtors shall promptly notify the Secured Party in
the event there ever arises against any of the Collateral any lien, assessment
or tax or other liability, whether or not entitled to priority over the Secured
Party's security interest hereunder. In any such event, whether or not such
notice is given, the Secured Party shall have the right (but shall be under no
obligation) to pay any tax or other liability of the Debtors deemed by the
Secured Party in good faith to affect the Secured Party's interests hereunder.
The Debtors shall repay to the Secured Party on demand all sums which the
Secured Party shall have paid under this section in respect of taxes or other
liabilities of the Debtors, with interest thereon at the Prevailing Interest
Rate, and the Debtors' liability to the Secured Party for such repayment with
interest shall be included in the Liabilities. The Secured Party shall be
subrogated to the extent of any such payment by it to all the rights and liens
of the payee against the Debtors' assets.
-5-
10. Collection of Accounts, Etc.
(A) Until otherwise notified by the Secured Party, the Debtors may collect
all the Accounts but the Proceeds of all Accounts so collected by the Debtors
shall be held by the Debtors in trust for the Secured Party. The Secured Party
may at any time during the existence of an Event of Default terminate the
authority hereby given to the Debtors to collect the Proceeds of such Accounts
and, acting if it so chooses in each Debtor's name, collect such Accounts
itself, directly or through an agent, sell, assign, compromise, discharge or
extend the time for payment of such Accounts, institute legal action for the
collection of such Accounts and do all acts and things necessary or incidental
thereto, and each Debtor hereby ratifies all that the Secured Party shall
lawfully do under the authority hereby granted to it. The Secured Party may at
any time during the existence of an Event of Default, without notice to any
Debtor, notify any account debtor on any such Account that such Account has been
assigned to the Secured Party and is to be paid directly to the Secured Party.
Alternatively, at its election the Secured Party may require any Debtor to, and
in such event such Debtor at its sole expense will, notify its account debtors
that payments thereon are thenceforth to be made directly to the Secured Party.
Without the written consent of the Secured Party in each case, no Debtor shall
compromise, discharge, extend the time for payment of or otherwise grant any
indulgence or allowance with respect to any such Account except for minor
indulgences or allowances in the ordinary course of business which are not
related to an extension or restructuring of credit to an account debtor of a
duration in excess of 30 days in any instance.
(B) If any such Account arises out of a contract with the United States or
any department, agency or instrumentality thereof, the Debtors will immediately
so notify the Secured Party in writing and will execute all instruments and take
all steps required by the Secured Party in order that the security interest of
the Secured Party hereunder in all such Accounts under such contract and the
Proceeds thereof shall be perfected under the Federal Assignment of Claims Act.
(C) From and after the occurrence and during the continuance of any Event
of Default, if any of the Collateral is or becomes evidenced by a promissory
note, draft, trade acceptance, Chattel Paper, Instrument or Document of Title,
the Debtors will promptly deliver the same to the Secured Party appropriately
endorsed to the Secured Party's order. Regardless of the form of such
endorsement, each Debtor hereby waives presentment, demand, notice of dishonor,
protest and notice of protest and all other notices with respect thereto. The
Debtors will promptly notify the Secured Party of any Material Adverse Change of
which it has knowledge in the financial condition of any account debtor on any
material Account pertaining to a Lease or in the collectibility of any of such
Accounts, and of all claims, rejections, returns and adjustments which may
result in a material reduction of the liability of an account debtor on any such
Account.
11. Locations of the Collateral; Change of Principal Place of Business;
Name; Change in Corporate Organization.
(A) If any of the Collateral or any of the Debtors' records concerning any
of the Collateral are at any time to be located on premises leased by any
Debtor, or any premises owned by any Debtor subject to a mortgage or other lien,
the Debtors shall obtain and deliver to the Secured Party, prior to the delivery
of any such Collateral or books or records to such premises, an agreement in
form satisfactory to the Secured Party waiving the landlord's, mortgagee's or
other lienholder's right to enforce against the Collateral or the Debtors'
records concerning the same and assuring the Secured Party's access to such
Collateral and books and records to facilitate the Secured Party's exercise of
its rights to take possession thereof. The location of each Debtor's chief
executive office and all locations at which any Debtor maintains a place of
business are set forth in Schedule A, and each Debtor agrees to provide the
Secured Party annually with a list of each location of any such place of
business or the establishment of any additional place of business of the
Debtors, provided however that if a Debtor intends to change its principal place
-6-
of business, such Debtor must provide thirty (30) days written notice of such
change to the Secured Party.
(B) Each Debtor represents and warrants that at no time during the past
five (5) years has it been known by or used any other name, including any trade
or fictitious name, except as disclosed in Schedule A. Each Debtor covenants
that, if such Debtor intends to change its name, it will provide thirty (30)
days written notice of such change to the Secured Party.
(C) The Debtor shall not change its type of organization, jurisdiction of
organization or other legal structure. Each Debtor covenants that, if such
Debtor intends to change its type of organization, jurisdiction of organization
or other legal structure, it will provide thirty (30) days written notice of
such change to the Secured Party.
12. Further Assurances. The Debtors shall continue to conduct their
business in substantially the manner heretofore conducted and will make no
material changes therein which might impair the security of the Secured Party.
The Debtors shall execute and deliver to the Secured Party from time to time all
such other agreements, instruments and other documents (including without
limitation all requested financing and continuation statements) and do all such
other and further acts and things as the Secured Party may reasonably request in
order further to evidence or carry out the intent of this Agreement or to
perfect the liens and security interests created hereby or intended so to be.
13. Default and Remedies.
(A) The Debtors shall be in default hereunder upon the occurrence of any
one of the following events (each an "Event of Default"):
(1) any Debtor shall fail to pay any amount payable in respect of any
Liability when due (including the expiration of any applicable grace
periods).
(2) any representation, warranty or information herein, heretofore or
hereafter furnished to the Secured Party by any Debtor in connection
with any of the Liabilities, including any warranty made by such
Debtor through the submission of any schedule, statement, certificate
or other document pursuant to or in connection with this Agreement,
shall be false in any material respect.
(3) any Debtor shall fail to timely perform any of its obligations
under this Agreement.
(4) there shall exist any Potential Default or Event of Default as
defined under the Credit Agreement.
(B) Upon the occurrence of any Event of Default which shall be continuing,
(i) unless the Secured Party elects otherwise, the entire unpaid amount of such
of the Liabilities as is not then otherwise due and payable shall become
immediately due and payable without notice to or demand on any Debtor, (ii) the
Secured Party or its agents may enter any Debtor's premises to exercise the
Secured Party's right to take possession of any Collateral, and (iii) the
Secured Party may at its option exercise from time to time any and all rights
and remedies available to it under the Uniform Commercial Code or otherwise,
including the right to assemble, receipt for, adjust, modify, repair, refurnish
or refurbish (but without any obligation to do so) or foreclose or otherwise
realize upon any of the Collateral and to dispose of any of the Collateral at
one or more public or private sales or other proceedings. Each Debtor agrees
that the Secured Party or its nominee may become the purchaser at any such sale
or sales. Each Debtor further agrees that ten (10) days shall be reasonable
-7-
prior notice of the date of any public sale or other disposition of all or any
part of the Collateral, or of the date on or after which any private sale or
other disposition of the same may be made.
(C) The exercise by the Secured Party of any one right or remedy shall not
be deemed a waiver or release of or any election against any other right or
remedy, and the Secured Party may proceed against the Debtors or any of them and
the Collateral and any other collateral granted by any Debtor to the Secured
Party under any other agreement, all in any order and through any available
remedies. A waiver on any one occasion shall not be construed as a waiver or bar
on any future occasion. All property of any kind held at any time by the Secured
Party as Collateral shall stand as one general continuing collateral security
for all the Liabilities and may be retained by the Secured Party as security
until all the Liabilities are fully satisfied. The Debtors shall pay to the
Secured Party on demand any and all expenses (including reasonably attorneys'
fees and legal expenses) which may have been incurred by the Secured Party with
interest at the Prevailing Interest Rate (i) in the prosecution or defense of
any action growing out of or connected with the subject matter of this
Agreement, the Liabilities, the Collateral or any of the Secured Party's rights
therein or thereto; or (ii) in connection with the custody, preservation, use,
operation, preparation for sale or sale of any of the Collateral, the incurring
of all of which are hereby authorized to the extent the Secured Party deems the
same advisable. The Debtors' liability to the Secured Party for any such payment
with interest shall be included in the Liabilities. The Proceeds of any
Collateral received by the Secured Party at any time before or after default,
whether from a sale or other disposition of Collateral or otherwise, or the
Collateral itself, may be applied to the payment in full or in part of such of
the Liabilities and in such order and manner as the Secured Party may elect.
Each Debtor to the extent of its rights in the Collateral waives and releases
any right to require the Secured Party to collect any of the Liabilities from
any other of the Collateral or any other collateral then held by the Secured
Party under any theory of marshaling of assets or otherwise.
14. Power of Attorney. Each Debtor hereby irrevocably appoints any officer,
employee or agent of the Secured Party as its true and lawful attorney-in-fact
with power to (i) endorse such Debtor's name upon any notes, checks, drafts,
money orders, or other instruments or payments or other Collateral that may come
into the Secured Party's possession; (ii) sign and endorse such Debtor's name
upon any documents of title, invoices, freight or express bills, assignments,
verifications and notices in connection with any of the Collateral, and any
instruments or documents relating thereto or to such Debtor's rights therein;
and (iii) execute in such Debtor's name and file one or more financing,
amendment and continuation statements covering the Collateral. Any such attorney
of such Debtor shall have full power to do any and all things necessary to be
done with respect to the above transactions as fully and effectually as such
Debtor might do, and each Debtor hereby ratifies all that said attorney shall
lawfully do or cause to be done by virtue hereof.
15. Financing Statements. Each Debtor shall execute all financing
statements and amendments thereto as the Secured Party may request from time to
time to evidence the security interest granted to the Secured Party hereunder
and will pay all filing fees and taxes, if any, necessary to effect the filing
thereof. Wherever permitted by law, each Debtor authorizes the Secured Party to
file financing statements with respect to the Collateral without the signature
of such Debtor. A copy of this Agreement or a copy of any financing statement
prepared in connection with this Agreement may itself be filed as a financing
statement.
16. Notices. All notices, requests, demands, directions, declarations and
other communications provided for herein shall be in writing (including
telegraphic and facsimile communication) and shall be mailed by registered or
certified mail, return receipt requested, or telecopied or delivered in hand to
the applicable party at its address indicated below, or, as to each party, at
-8-
such other address as shall hereafter be designated by such party in a written
notice to the others complying as to delivery with the terms of this Section.
Each such notice, request, demand, direction, declaration or other communication
shall, if mailed, be effective when deposited in the mails, postage prepaid,
addressed as aforesaid, and shall, if sent by telegram or facsimile (telecopier)
or delivered in hand or by overnight courier, be effective when received.
If to Debtor: ePlus inc.
400 Herndon Parkway
Herndon, Virginia 20170
Attention: George W. Fox, Jr.
Telecopy: (703) 834-5718
With a Copy To: Michael E. Geltner & Associates
Number 10 E. Street, S.E.
Washington, D.C. 20003
Attention: Michael E. Geltner
Telecopy: (202) 547-1138
If to Secured Party: National City Bank
Transportation, Equipment & Lease Finance Group
One South Broad Street, 13th Floor, Loc. 01-5997
Philadelphia, PA 19107
Attention: Michael J. Labrum, Senior Vice President
Telecopy: (267) 256-4001
With a Copy To: Morgan, Lewis & Bockius LLP
1701 Market Street
Philadelphia, PA 19103
Attention: Michael J. Pedrick
Telecopy: (215) 963-5001
17. Miscellaneous.
(A) This Agreement shall commence on the date hereof and shall continue in
full force and effect so long as any of the Liabilities shall exist from time to
time.
(B) No modification or waiver of any provision hereof shall be effective
unless the same is in writing and signed by the party against whom its
enforcement is sought. This Agreement and any amendment hereto or waiver of any
provision hereof may be signed in any number of counterparts with the same
effect as if the signatures thereto and hereto were upon the same instrument.
(C) The representations, warranties, covenants and agreements contained
herein are all material and continuing, and any breach of them shall constitute
a material breach of this Agreement.
(D) All the rights and remedies of the Secured Party hereunder shall be
concurrent and cumulative with and not alternative to or in lieu of the Secured
Party's rights and remedies under any other agreement or agreements.
(E) This Agreement shall bind and inure to the benefit of the parties and
their respective successors and assigns, except that no Debtor shall assign any
of its rights hereunder without the Secured Party's prior written consent.
-9-
(F) Any provision of this Agreement which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof or affecting the validity or enforceability of such provision
in any other jurisdiction.
(G) No persons other than the Debtors and the Secured Party, and the
assignees of the Secured Party, are intended to be benefited hereby or shall
have any rights hereunder, as third-party beneficiaries or otherwise.
(H) Each Debtor acknowledges that this Agreement and the obligations of the
Debtors hereunder and the security created or intended to be created hereby have
constituted, and were intended by such Debtor to constitute, a material
inducement to the Secured Party to enter into the Credit Agreement and other
agreements referred to therein, knowing that the Secured Party will rely upon
this Agreement. Each Debtor intends to be legally bound hereby.
(I) This Agreement shall be deemed to be a contract made under and shall be
construed in accordance with the laws of the Commonwealth of Pennsylvania
without regard to Pennsylvania or federal principles of conflict of laws.
-10-
IN WITNESS WHEREOF, the parties hereto have each caused this Security
Agreement to be duly executed by their duly authorized representatives as of the
date first above written.
Debtors
ePLUS inc.
By: /s/KLEYTON L. PARKHURST
----------------------------------
Name: Kleyton L. Parkhurst
Title: Senior Vice President
ePLUS Group, inc.
By: /s/KLEYTON L. PARKHURST
----------------------------------
Name: Kleyton L. Parkhurst
Title: Senior Vice President
ePLUS Government, inc.
By: /s/KLEYTON L. PARKHURST
----------------------------------
Name: Kleyton L. Parkhurst
Title: Senior Vice President
ePLUS Capital, inc.
By: /s/KLEYTON L. PARKHURST
----------------------------------
Name: Kleyton L. Parkhurst
Title: President
[SIGNATURE OF SECURED PARTY TO FOLLOW]
-11-
Secured Party
NATIONAL CITY BANK
By: /s/MICHAEL J. LABRUM
---------------------------------
Name: Michael J. Labrum
Title: Senior Vice President
-12-
Schedule A
1. None of the Collateral or books and records relating to the Collateral is
or will be located or used at any location other than the following: 3001
Spring Forest Rd., Raleigh, NC 27616 or 400 Herndon Parkway, Herndon, VA
20170
2. The location of the each Debtor's chief executive office and all locations
at which each Debtor maintains a place of business are as follows:
ePlus inc.: 400 Herndon Parkway, Herndon, VA 20170
ePlus Group, inc.: 400 Herndon Parkway, Herndon, VA 20170
ePlus Government, inc.: 400 Herndon Parkway, Herndon, VA 20170
ePlus Capital, inc.: 400 Herndon Parkway, Herndon, VA 20170
3. During the past five years the Debtors have used or been known by: MLC
Holdings, Inc., MLC Group, Inc., MLC Federal, Inc., MLC Capital, Inc., and
CLG, Inc.
EXHIBIT F
Second Amended and Restated Pledge Agreement
This Second Amended and Restated Pledge Agreement (the "Pledge Agreement"),
dated July 21, 2003, is made by ePlus inc., a Delaware corporation ("Pledgor")
in favor of NATIONAL CITY BANK (the "Pledgee"), as Administrative Agent for
itself and on behalf of each of the Banks (defined below) now or hereafter party
to the Credit Agreement (defined below). All references in this Agreement to
"Pledgee" shall mean National City Bank as Administrative Agent for itself and
the other Banks under the Credit Agreement. All capitalized terms not defined in
this Agreement shall have the meanings assigned to them in the Credit Agreement.
Preliminary Statement
Pledgor owns 100% of the capital stock of each of the companies listed on
Schedule 1 hereto.
Pledgor and Pledgee are parties to a Second Amended and Restated Credit
Agreement dated as of July 21, 2003 (as such agreement may be amended, restated,
modified, replaced or substituted hereafter, the "Credit Agreement"), by and
among Pledgor and certain of Pledgor's existing and hereinafter acquired
subsidiaries (the "Borrower Subsidiaries" and collectively with Pledgor, the
"Borrowers"), the banking institutions signatories thereto, and Pledgee as
Administrative Agent for itself and the other banking institutions (Pledgee and
the banking institutions collectively the "Banks" and individually a "Bank").
This Pledge Agreement amends and restates the Amended and Restated Pledge
Agreement dated as of January 19, 2001 in its entirety and is entered into in
accordance with and is a condition precedent to any Loan under the Credit
Agreement. All pledges and security interests previously granted to the Pledgee
pursuant to the earlier Pledge Agreement, as amended and restated from time to
time, are acknowledged and reconfirmed, and remain in full force and effect and
are not intended to be released, replaced or impaired.
Pledgor will benefit from the Loans to itself and the other Borrowers under
the terms and conditions of the Credit Agreement, and the Board of Directors of
Pledgor has determined that the execution and delivery by Pledgor of this
Agreement is necessary and convenient to the conduct, promotion and attainment
of its business.
NOW, THEREFORE, in consideration of the foregoing premises and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and intending to be legally bound hereby, Pledgor hereby makes the
following representations and warranties to Pledgee and covenants and agrees
with Pledgee as follows:
1. Pledge of Stock. As collateral security for the punctual payment and
performance of all existing and future indebtedness and other liabilities,
absolute or contingent, direct or indirect, primary or secondary, of any
Borrower to each Bank and to all Banks, of any nature whatsoever arising under
the Credit Agreement and the Notes issued thereunder (the "Notes"), that certain
Second Amended and Restated Security Agreement dated as of July 21, 2003 (the
"Security Agreement") by and among Pledgor and the Borrower Subsidiaries as
debtors and Pledgee as the secured party on behalf of itself and the other
Banks, and under any other Loan Document, and all the obligations of Pledgor
hereunder (all of such indebtedness, liabilities and obligations being
hereinafter sometimes referred to collectively as the "Obligations"), Pledgor
hereby pledges and collaterally assigns to Pledgee and grants to Pledgee and
agrees that Pledgee shall have a first priority security interest in and pledge
of 100% of the issued and outstanding shares of capital stock of each domestic
subsidiary, and 65% of the issued and outstanding shares of voting capital stock
and 100% of the issued and outstanding shares of non-voting capital stock of
each foreign subsidiary, as set forth on Schedule 1 hereto (such shares together
with any shares or other securities or property referred to in Section 6, being
hereinafter sometimes referred to collectively as the "Pledged Securities").
2. Representations and Warranties. Pledgor represents and warrants to
and agrees with Pledgee as follows:
(a) Pledgor has examined and is fully familiar and satisfied with the
Credit Agreement, Notes, Security Agreement and all other Loan Documents, and
all the representations and warranties set forth therein, whether in respect of
Pledgor or otherwise, are accurate in all respects on and as of the date hereof.
(b) The Pledged Securities are duly and validly issued, fully paid and
non-assessable and have been duly and validly pledged hereunder in accordance
with law, and Pledgor warrants and covenants to defend Pledgee's right, security
interest and special property interest in and to the Pledged Securities against
the claims and demands of all persons whomsoever. Pledgor is the exclusive
legal, equitable and beneficial owner of, and has good title to, all the Pledged
Securities on Schedule 1 hereto, free and clear of all claims, liens, security
interests and other encumbrances (except for the security interest created in
favor of Pledgee), and Pledgor has the unqualified legal right to pledge the
same hereunder. The Pledged Securities constitute 100% of the issued shares of
any class of capital stock of each domestic subsidiary, and 65% of the issued
voting shares and 100% of the issued nonvoting shares of each foreign
subsidiary, respectively, outstanding on the date hereof. Each certificate
evidencing any of the Pledged Securities pledged hereunder by Pledgor is issued
in the name of Pledgor and has attached a stock power duly signed in blank by
Pledgor with all appropriate signature guarantees and bears no restrictive or
cautionary legend. The security interest created hereby or intended so to be
represents a valid lien on and security interest in the Pledged Securities, and
such security interest is superior and prior in right to the rights of all third
persons. The parties acknowledge that, at such time as Pledgee is deemed to have
received possession of the Pledged Securities for purposes of this Agreement, no
filings or recordings (including without limitation filings under the Uniform
Commercial Code) will be necessary to be made to perfect, protect and preserve
the security interest of Pledgee in the Pledged Securities created by this
Agreement or intended so to be.
(c) Pledgor, for itself and its successors and assigns, does hereby
irrevocably waive and release all preemptive, first-refusal and other similar
rights to purchase any or all of the Pledged Securities upon any sale thereof by
Pledgee hereunder, whether such right to purchase arises under the
-2-
organizational documents of any subsidiary, by agreement, by operation of law,
or otherwise.
(d) All the foregoing representations, warranties and agreements shall
survive the execution and delivery of this Agreement, the Credit Agreement, the
Security Agreement, the Notes and all other Loan Documents.
3. Reregistration of Shares. At any time and from time to time Pledgee
may cause all or any of the Pledged Securities to be transferred into its name
or into the name of its nominee or nominees.
4. Reservation of Voting Rights. Upon the occurrence and during the
continuance of an Event of Default, Pledgee shall be entitled (but shall not be
obligated) to exercise any and all voting power with respect to the Pledged
Securities. At all other times Pledgor shall be entitled to exercise in a manner
not inconsistent with the provisions of this Agreement all voting power with
respect to the Pledged Securities.
5. Preservation and Protection of Collateral.
(a) Pledgee shall be under no duty or liability with respect to the
collection, protection or preservation of the Pledged Securities, or otherwise,
other than the obligation to deal with the Pledged Securities while in its
possession in the same manner as Pledgee deals with similar securities or
property for its own account.
(b) Pledgor agrees to pay when due all taxes, charges, Liens and
assessments against its respective Pledged Securities in which it has an
interest, unless being contested in good faith by appropriate proceedings
diligently conducted and against which adequate reserves have been established
in accordance with GAAP and evidenced to the satisfaction of Pledgee and
provided further that all enforcement proceedings in the nature of levy or
foreclosure are effectively stayed. Upon the failure of Pledgor to so pay or
contest such taxes, charges, Liens or assessments, Pledgee at its sole option
may pay or contest any of them (Pledgee having the sole right to determine the
legality or validity and the amount necessary to discharge such taxes, charges,
Liens or assessments.)
6. Additional Collateral Security. If, upon the dissolution or
liquidation (in whole or in part) of any subsidiary listed on Schedule 1 hereto,
any sum shall be paid upon or with respect to any of the Pledged Securities,
such sum shall be paid over to Pledgee to be held by Pledgee as additional
collateral security for the Obligations. In case any stock dividend shall be
declared on any of the Pledged Securities, or any shares of stock or fractions
thereof shall be issued pursuant to any stock split involving any of the Pledged
Securities, or any distribution of capital shall be made on any of the Pledged
Securities, or any property shall be distributed upon or with respect to the
Pledged Securities pursuant to any recapitalization or reclassification of the
capital of any subsidiary listed on Schedule 1 hereto, or pursuant to a
reorganization thereof, the shares or other property so distributed shall be
delivered to Pledgee as additional collateral security for the Obligations.
-3-
7. Remedies in General. Upon the occurrence and during the continuance
of an Event of Default, Pledgee shall have, without obligation to resort to
other security or to recourse against any guarantor or other party secondarily
liable, the right at any time and from time to time to sell, resell, assign and
deliver, in Pledgee's discretion, all or any of the Pledged Securities, in one
or more parcels at the same or different times, and all right, title, interest,
claim and demand therein and right of redemption thereof, at public or private
sale, for cash, upon credit or for immediate or future delivery, and at such
price or prices and on such terms as Pledgee may determine, Pledgor hereby
agreeing that upon any such sale any and all equity and right of redemption
shall be automatically waived and released without any further action on the
part of Pledgor, and in connection therewith Pledgee may grant options, all
without any demand, advertisement or notice, all of which are hereby expressly
waived. In the event of any such sale, Pledgee shall, at least 10 days before
the sale, give Pledgor notice of its intention to sell which notice Pledgor
agrees is reasonable. Upon each such sale, Pledgee or Pledgor may purchase all
or any of the Pledged Securities being sold, free of any equity or right of
redemption. The proceeds of each such sale shall be applied to the payment of
all costs and expenses of every kind for sale or delivery, including reasonable
compensation to the agents and attorneys of Pledgee, and all other expenses,
liabilities and advances made or incurred by Pledgee in connection therewith,
and after deducting such costs and expenses from the proceeds of sale, Pledgee
shall apply any residue to the payment of the Obligations in such order as
Pledgee may deem fit. The balance, if any, remaining after payment in full of
the Obligations shall be paid over to Pledgor. Upon the occurrence and during
the continuance of an Event of Default, Pledgee shall also have, without
obligation to resort to other security or to recourse against any guarantor or
other party secondarily liable and in addition to the other remedies provided in
this Section 7, the right at any time and from time to time, but not the
obligation, to exercise ownership of the Pledged Securities and to take all
actions as may be permitted under applicable law.
8. Certain Securities Law Undertakings. In the event Pledgee is permitted
to sell any of the Pledged Securities pursuant to Section 7, upon the written
request of Pledgee to cause any registration, qualification or compliance under
any federal or state securities law or laws to be effected with respect to any
of the Pledged Securities, Pledgor as soon as practicable and at its expense
will use its best efforts to cause such registration, qualification or
compliance to be effected (and be kept effective) as may be so requested and as
would permit or facilitate the sale and distribution of such Pledged Securities.
Pledgor will use its best efforts to cause Pledgee to be kept reasonably advised
in writing as to the progress of each such registration, qualification or
compliance and as to the completion thereof and will furnish or use its best
efforts to cause to be furnished to Pledgee, without expense to Pledgee, such
number of prospectuses or offering circulars and other documents incident
thereto as Pledgee may from time to time reasonably request. Pledgor will
indemnify and hold harmless Pledgee from and against any claims or liabilities
caused by any untrue statement of a material fact or omission of a material fact
required to be stated in any registration statement, offering circular or
prospectus used in connection with such registration or compliance, or necessary
to make the statements therein not misleading, except insofar as such claims or
-4-
liabilities are caused by any untrue statement or omission based on or in
conformity with any written statement supplied by Pledgee. If at any time when
Pledgee shall determine to exercise its rights to sell all or any part of the
Pledged Securities pursuant to Section 7, such Pledged Securities or the part
thereof to be sold shall not, for any reason, be effectively registered under
the Securities Act of 1933 (the "Securities Act"), Pledgee is hereby expressly
authorized to sell such Pledged Securities or such part thereof by private sale
in such manner and under such circumstances as Pledgee may deem necessary or
advisable in order that such sale may legally be effected without such
registration. Without limiting the generality of the foregoing, in any such
event Pledgee: (a) may proceed to make such private sale whether or not a
registration statement for the purpose of registering the Pledged Securities or
such part thereof shall have been filed under the Securities Act; (b) may
approach and negotiate with a restricted number of potential purchasers to
effect such sale; and (c) may restrict such sale to a limited number of
purchasers that meet certain requirements as to nature of business, level of
sophistication and investment intention (including without limitation, to
purchasers each of whom will represent and agree to the satisfaction of Pledgee
that such purchaser is purchasing for its own account, for investment, and not
with a view to the distribution or sale of such Pledged Securities or part
thereof). Pledgee may require Pledgor, and Pledgor hereby agrees upon the
written request of Pledgee, to cause: (i) a legend or legends to be placed on
the certificates to be delivered to such purchasers to the effect that the
offering and sale of the Pledged Securities represented thereby have not been
registered under the Securities Act and setting forth or referring to any
required restrictions on the transferability of such Pledged Securities; (ii)
the issuance of stop transfer instructions to the transfer agent of any
subsidiary with respect to the Pledged Securities (or if such subsidiary
transfers its own securities, a notation in the appropriate records of such
subsidiary); and (iii) to be delivered to the purchasers a signed written
agreement of Pledgor and such subsidiary, that such purchasers will be entitled
to the rights of Pledgee under this Section 8. In addition, it is understood
that any such purchasers may be required as a condition of any such sale to
furnish a signed written agreement that the Pledged Securities will not be sold
without registration or other compliance with the requirements of the Securities
Act. In the event of any such sale, Pledgor hereby consents and agrees that
Pledgee shall not incur any responsibility or liability for selling all or any
part of the Pledged Securities at a price which, Pledgee in its absolute
discretion, may deem reasonable under the circumstances, notwithstanding the
possibility that a substantially higher price might be realized if the sale were
public and deferred until after registration as aforesaid.
9. Rights and Remedies Cumulative; Indemnities. The rights, powers and
remedies provided herein in favor of Pledgee shall not be deemed exclusive, but
shall be cumulative, and shall be in addition to all other rights and remedies
in favor of Pledgee existing at law or in equity, including without limitation
all the rights, powers and remedies available to a secured party under the
Uniform Commercial Code as in effect in the Commonwealth of Pennsylvania or any
other appropriate jurisdiction. Pledgor shall indemnify and save harmless
Pledgee from and against any and all liabilities, losses and damages which it
may incur in the exercise or performance of any of its rights, powers or
remedies set forth herein; provided, however, that Pledgor shall not have any
obligation to indemnify any such indemnitee against any liability, loss or
damage resulting from such indemnitee's own gross negligence or bad faith.
10. Right to Execute Endorsements. Pledgee shall have the right, for and
in the name, place and stead of Pledgor and acting as its attorney-in-fact if
necessary, to execute endorsements, assignments and other instruments of
conveyance or transfer with respect to all or any of the Pledged Securities
whenever any such execution is required or permitted hereunder.
-5-
11. No Waiver; Amendments. No delay on the part of Pledgee in exercising
any of its options, powers or rights, and no partial or single exercise thereof,
shall constitute a waiver thereof or of any other option, power or right. None
of the terms and conditions of this Agreement may be amended, modified or waived
orally but only in a writing signed by Pledgee and Pledgor.
12. Termination of Agreement; Return of Collateral. Should this
Agreement become temporarily inoperative for any reason (including without
limitation the payment of all the Obligations) prior to the Credit Termination
Date (as defined in the Credit Agreement), this Agreement shall nevertheless
continue in effect through the Credit Termination Date to secure the payment and
performance of all future Obligations whenever and as often as they may arise
hereunder or under the Credit Agreement, the Security Agreement, Notes or any
other Loan Document. However, upon the full payment and performance of all the
Obligations and the termination of the Credit Agreement, the Security Agreement,
and Notes, this Agreement shall expire and Pledgor (except to the extent
otherwise contemplated hereby) shall be entitled to the return of all of its
respective Pledged Securities and other property and cash held in pledge
hereunder which have not been used or applied to the payment of the Obligations.
13. Further Assurances; Immunities. With respect to the Pledged
Securities and any security interest of Pledgee therein, Pledgor agrees to do,
file, record, make, execute and deliver all such acts, deeds, things, notices
and instruments as may be necessary or desirable in the opinion of Pledgee in
order to vest more fully in and assure to Pledgee the security interests in the
Pledged Securities created hereby or intended so to be and the enforcement and
realization of all of the benefits of the rights, remedies and powers of Pledgee
hereunder relating to the Pledged Securities. Without limiting the generality of
the foregoing, if at any time hereafter, whether or not due to any change in
circumstances (including without limitation any change in applicable law or any
decision hereafter made by a court construing any applicable law), it is, in the
opinion of counsel for Pledgee, necessary or desirable to file or record this
Agreement or any financing statement or other instrument relating hereto,
Pledgor agrees to pay all fees, costs and expenses of such recording or filing
and to execute and deliver any instruments which may be necessary or appropriate
to make such filing or recording effective. Pledgor hereby irrevocably appoints
Pledgee its attorney-in-fact to perform, in Pledgor's name or Pledgee's name or
otherwise, any and all acts, including without limitation the signing and filing
of financing statements and amendments thereto, which Pledgee may deem necessary
or appropriate to effect and continue the security interests created hereby or
intended so to be or otherwise to preserve and protect the Pledged Securities
and the security interest of Pledgee therein, but nothing herein contained or
otherwise shall require Pledgee to take any such action. The duty of Pledgee in
respect of the Pledged Securities shall be strictly confined to one of
reasonable care in the custody of the certificates therefor so long as they are
in the custody of Pledgee. Without limiting the generality of the preceding
sentence, Pledgee shall not be under any duty to anyone to send any notices,
perform any services, vote, exercise any options or elections with respect to,
pay any taxes or charges associated with, or otherwise take any action of any
kind with respect to, any of the Pledged Securities.
14. Transfers of Interest. Pledgee may transfer its interest in the
Pledged Securities, or any part thereof, to any replacement or successor agent
-6-
under the Credit Agreement, who shall thereupon become vested with all the
rights, remedies, powers, security interests and liens herein granted to Pledgee
in respect of the Pledged Securities or the transferred part thereof, subject,
however, to the restrictions contained herein.
15. Expenses. Pledgor agrees that the Pledged Securities secure, and
further agrees to pay on demand, all reasonable expenses (including but not
limited to attorneys' fees and costs for legal services, costs of insurance and
payments of taxes or other charges) of, or incidental to, the custody, care,
sale or realization on any of the Pledged Securities or in any way relating to
the enforcement or protection of the rights of Pledgee hereunder.
16. Notices. All notices, requests, demands, directions, declarations
and other communications provided for herein shall be in writing (including
telegraphic and facsimile communication) and shall be mailed by registered or
certified mail, return receipt requested, or telecopied or delivered in hand to
the applicable party at its address indicated below, or, as to each party, at
such other address as shall hereafter be designated by such party in a written
notice to the others complying as to delivery with the terms of this Section.
Each such notice, request, demand, direction, declaration or other communication
shall, if mailed, be effective when deposited in the mails, postage prepaid,
addressed as aforesaid, and shall, if sent by telegram or facsimile (telecopier)
or delivered in hand or by overnight courier, be effective when received.
If to Pledgor: ePlus inc.
400 Herndon Parkway
Herndon, Virginia 20170
Attention: George W. Fox, Jr.
Telecopy: (703) 834-5718
With a Copy To: Michael E. Geltner & Associates
Number 10 E. Street, S.E.
Washington, D.C. 20003
Attention: Michael E. Geltner
Telecopy: (202) 547-1138
If to Pledgee: National City Bank
Transportation, Equipment & Lease Finance Group
One South Broad Street, 13th Floor, Loc. 01-5997
Philadelphia, PA 19107
Attention: Michael J. Labrum, Senior Vice President
Telecopy: (267) 256-4001
With a Copy To: Morgan, Lewis & Bockius LLP
1701 Market Street
Philadelphia, PA 19103
Attention: Michael J. Pedrick
Telecopy: (215) 963-5001
-7-
17. Governing Law; Consent to Jurisdiction. This Agreement and the
rights and obligations of the parties hereunder shall be governed by and
construed and enforced in accordance with the laws of the Commonwealth of
Pennsylvania. Pledgor hereby consents to the jurisdiction of the courts of the
Commonwealth of Pennsylvania in any action or proceeding which may be brought
against Pledgor under or in connection with this Agreement or any of the
transactions contemplated hereby or to enforce any undertaking contained herein,
and in the event any such action or proceeding shall be brought against it,
Pledgor agrees not to raise any objection to such jurisdiction or to the laying
of the venue thereof in Pennsylvania, and further agrees that service of process
in any such action or proceeding may be duly effected upon Pledgor by service in
accordance with the provisions of the Uniform Interstate and International
Procedure Act as in effect in Pennsylvania.
18. Certain Waivers; Integration. Pledgor hereby waives notice of any and
all defaults on the part of the Borrowers under the Credit Agreement, Security
Agreement, Notes or other Loan Documents. Pledgor further waives presentment for
payment, protest, dishonor and notice of dishonor and of protest with respect to
the Notes. This Agreement states the entire agreement of the parties concerning
the subject matter hereof, and it is acknowledged that there are no customs,
usages, representations, or assurances referring to the subject matter hereof,
and no inducements leading to the execution or delivery hereof, other than those
expressed herein.
19. Counterparts. This Agreement may be executed in any number of
counterparts and all the counterparts taken together shall be deemed to
constitute one and the same instrument.
20. Miscellaneous. This Agreement shall bind and inure to the benefit of
Pledgor and Pledgee and their respective successors and assigns, except that
Pledgor shall not have the right to assign any of its rights hereunder or
interests herein without the written consent of Pledgee. No persons other than
Pledgor, Pledgee and the other Banks, and the assignees of Pledgee and the other
Banks are intended to be benefited hereby or shall have any rights hereunder, as
third-party beneficiaries or otherwise. Pledgor acknowledges that this Agreement
and the obligations of Pledgor hereunder and the security created or intended to
be created hereby have constituted, and were intended by Pledgor to constitute,
a material inducement to Pledgee and the Banks to execute and deliver the Credit
Agreement (which will inure to the direct and immediate benefit of Pledgor as a
Borrower under such Credit Agreement), knowing that Pledgee and the Banks will
rely upon this Agreement. Pledgor intends this to be a sealed instrument and to
be legally bound hereby. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without affecting the
validity or enforceability of the remainder of this Agreement or the validity or
enforceability of such provision in any other jurisdiction. Words of any gender
herein shall include any other genders, and the singular shall include the
plural and vice versa, whenever the same is necessary to produce a fair and
meaningful construction.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the undersigned has executed this Pledge Agreement as
of the day and year first above written.
ePlus inc.
By: /s/KLEYTON L. PARKHURST
----------------------------------
Name: Kleyton L. Parkhurst
Title: Senior Vice President
-9-
SCHEDULE 1
TO
PLEDGE AGREEMENT
Pledged Shares Owned and Pledged by Pledgor
Number of Class of Stock Certificate
Stock Issuer Shares Stock Nos.
------------ ------ ----- ----
ePlus Group, inc. 1000 Common 10
ePlus Government, inc. 500 Common 1
ePlus Capital inc. 500 Common 2
ePlus Technology, inc. 100 Common 1
EXHIBIT G
Compliance Certificate
The undersigned officers of ePlus inc., ePlus Group, inc., ePlus
Government, inc., and ePlus Capital inc. (each a "Borrower" and collectively the
"Borrowers") each hereby certify to National City Bank, as Administrative Agent
for itself and each of the Banks now or hereafter party to the Credit Agreement
(defined below) that as such officers they are authorized to execute this
certificate on behalf of each respective Borrower and do further certify that:
1. Each Borrower has complied and is in compliance with all covenants,
agreements and conditions in the Credit Agreement and each other Loan
Document at the date hereof.
2. Each representation and warranty contained in the Credit Agreement and
each other Loan Document is true and correct at the date hereof.
3. No Event of Default or Potential Default under the Credit Agreement or
any other Loan Document exists at the date hereof.
4. No Material Adverse Change has occurred since the date of the Credit
Agreement.
5. The covenant compliance calculations set forth in Attachment 1 hereto
are true and correct at the dates specified.
The term "Credit Agreement" means that certain Credit Agreement, dated as
of January 19, 2001, as amended and restated by the Second Amended and Restated
Credit Agreement on July 21, 2003, among the Borrowers and certain banking
institutions named therein with National City Bank, as Administrative Agent, as
said credit agreement shall have been amended, restated, supplemented, or
replaced through the date of this certificate. Terms not defined herein to have
the meanings defined in the Credit Agreement.
IN WITNESS WHEREOF, the undersigned have executed this Certificate in their
capacity as an officer of ePlus inc., ePlus Group, inc., ePlus Government, inc.
and ePlus Capital, inc. this ___ day of _____________, ______.
ePLUS inc.
By:
Name:
Title:
ePLUS Group, inc.
By:
Name:
Title:
ePLUS Government, inc.
By:
Name:
Title:
ePLUS Capital, inc.
By:
Name:
Title:
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ATTACHMENT NO. 1
TO COMPLIANCE CERTIFICATE
COVENANT COMPLIANCE CALCULATIONS
ePlus inc.
ePlus Group, inc.
ePlus Government, inc.
ePlus Capital inc.
for the (quarter, year) _____________
ending _______________
1. ss.6.4 Guarantees.
Borrowers as a group shall not guarantee or otherwise in any way become or
be responsible for indebtedness or obligations (including working capital
maintenance, take-or-pay contracts) of any other Person (including but not
limited to any Subsidiary of any Borrower), contingently or otherwise, in
any amounts that would exceed an aggregate of $15,000,000 for all Borrowers
and their Subsidiaries taken as a group.
Calculation:
2. ss. 7.1 Maximum Recourse Leverage. The ratio of Total Recourse Funded Debt
to Tangible Net Worth of ePlus inc. and its Subsidiaries on a
consolidated basis will not at any time exceed 3.00:1.
Calculation:
3. ss. 7.2 Maximum Recourse Debt to EBITDA. The ratio of Total Recourse Funded
Debt to EBITDA of ePlus inc. and its Subsidiaries on a consolidated basis
for the four (4) most recently ended consecutive Fiscal Quarters will not
at any time exceed 3.00:1.
Calculation:
4. ss. 7.3 Interest Coverage Ratio.The ratio of EBIT to interest expense of
ePlus inc. and its Subsidiaries on a consolidated basis for the four (4)
most recently ended consecutive Fiscal Quarters will not at any time be
less than 1.75.
Calculation:
5. ss. 7.4 Minimum Net Worth. Net Worth of ePlus inc. and its Subsidiaries on
a consolidated basis will not at any time be less than the sum of (i) 90%
of consolidated GAAP Net Worth on December 31, 2002, (ii) seventy-five
percent (75%) of Net Income for each Fiscal Quarter ending after December
31, 2002 without deduction for any net losses, (iii) one hundred percent
(100%) of the net proceeds from any sale of equity securities after the
date of this Agreement, and (iv) one hundred percent (100%) of the fair
value of any equity securities issued after the date of this Agreement in
connection with any acquisition permitted hereunder or by waiver hereto.
Calculation:
6. ss. 7.5 Borrowing Base
The aggregate principal amount of Loans outstanding shall not at any time
exceed the Borrowing Base or the Aggregate Loan Commitment, whichever is
less; provided, however, that this covenant shall not be deemed breached
if, at the time such aggregate amount exceeds said level, within four
Business Days after the earlier of the date any Borrower first has
knowledge of such excess or the date of the next Borrowing Base Certificate
disclosing the existence of such excess, a prepayment of Loans shall be
made in an amount sufficient to assure continued compliance with this
covenant in the future.
Calculation:
7. ss.7.6 Delinquency of Portfolio. The delinquency will not exceed the
following:
(a) Asset Management Contracts. In the case of accounts receivable
pertaining to Asset Management Contracts, the aggregate amount of accounts
receivable which are more than 120 days past due will not exceed five
percent (5%) of the aggregate amount of all such accounts receivable.
Notwithstanding the Borrowers' internal record keeping procedures, an
account receivable shall not be deemed to be more than 120 days past due
with respect to any individual Asset Management Contract until 120 days
shall have elapsed following the date such contract was executed, delivered
and made effective. For purposes of this calculation, contracts that have
been amended or otherwise modified or waived in order to cure any
delinquency shall be deemed to be delinquent in their entireties.
(b) Buy-Sell Contracts. In the case of accounts receivable pertaining to
Buy-Sell Contracts, the aggregate amount of accounts receivable which are
more than 60 days past due will not exceed five percent (5%) of the
aggregate amount of all such accounts receivable. An account receivable
pertaining to Buy-Sell Contracts shall be deemed to be more than 60 days
past due with respect to any individual contract if it is 60 days past due
as specified in the applicable contract. For purposes of this calculation,
contracts that have been amended or otherwise modified or waived in order
to cure any delinquency shall be deemed to be delinquent in their
entireties.
(c) Lease Portfolio. In the case of accounts receivable pertaining to lease
agreements, the aggregate amount of accounts receivable which are more than
90 days past due will not exceed five percent (5%) of the aggregate amount
of all such accounts receivable. An account receivable pertaining to a
lease agreement shall be deemed to be more than 90 days past due with
respect to any individual agreement if it is 90 days past due as specified
in the applicable agreement. For purposes of this calculation, leases that
have been amended or otherwise modified or waived in order to cure any
delinquency shall be deemed to be delinquent in their entireties.
-2-
EXHIBIT H
Accounts Receivable Aging Report
Date:________________
------------------------------------------------------ ------------ ------------- ----------- ----------- ----------- -----------
Current 1-30 days 31-60 days 61-90 days 91-120 120+ days
days
------------------------------------------------------ ------------ ------------- ----------- ----------- ----------- -----------
Buy/Sell Contract-Related Receivables
------------------------------------------------------ ------------ ------------- ----------- ----------- ----------- -----------
Lease Portfolio (includes direct finance and
operating leases)
------------------------------------------------------ ------------ ------------- ----------- ----------- ----------- -----------
Invoiced AMC-Related Receivables*
------------------------------------------------------ ------------ ------------- ----------- ----------- ----------- -----------
TOTAL
------------------------------------------------------ ------------ ------------- ----------- ----------- ----------- -----------
------------------------------------------------------ ------------ ------------- ----------- ----------- ----------- -----------
AMC Receivables less than 120 days
------------------------------------------------------ ------------ ------------- ----------- ----------- ----------- -----------
AMC Receivables over 120 days
------------------------------------------------------ ------------ ------------- ----------- ----------- ----------- -----------
TOTAL AMC Receivables
------------------------------------------------------ ------------ ------------- ----------- ----------- ----------- -----------
* AMC contracts which have been invoiced for payment.
EXHIBIT I
Quarterly Inventory Report
Date: ______________
TOTAL INVENTORY
Dollar Amount
ePlus Group New equipment to be placed under lease $________________
ePlus Group Used Off-Lease Equipment $________________
ePlus Group Used Equipment from the Buy/Sell Business $________________
$----------------
TOTAL INVENTORY $________________
Inventory amount written off since previous
quarter $________________
Total amount of equipment in inventory for
over 90 days. $________________
EXHIBIT J
Residual Report
Date: __________
Inception Through Date
----------------------
Lessee Purchase Revenues
Broker Sales
Renewal Revenue
Early Term Revenues
Casualty Value/Settlement Fees
Total Net Remarketing Revenue
-----------------------------
Original Residual Value - Unimpaired
Remarketing Profit
Realization over Original Residual Value