FIRST AMENDMENT TO CREDIT AGREEMENT
FIRST
AMENDMENT TO CREDIT AGREEMENT
This
FIRST AMENDMENT TO CREDIT AGREEMENT (the “First Amendment”) dated July 11, 2006,
is by and among ePlus inc., a Delaware corporation (“ePlus”), the Subsidiaries
of ePlus signatory hereto (including ePlus, each individually a “Borrower” and
collectively, the “Borrowers”), the Banks signatory hereto (the “Banks”), and
National City Bank, as Administrative Agent for the Banks (the “Administrative
Agent”).
BACKGROUND
A. Pursuant
to that certain Credit Agreement dated
September
23,
2005,
by and
among the Borrowers, the Banks, and the Administrative Agent (as the same may
be
modified and amended from time to time, including by this First Amendment,
the
“Credit Agreement”), the Banks agreed, inter
alia,
to
extend to the Borrowers a revolving credit facility in the maximum aggregate
principal amount of $35,000,000.
B. The
Borrowers did not deliver their annual audited financial statements prior to
May
31, 2006, as required by Section 5.1(a) of the Credit Agreement (collectively,
the “Financial Statement Event”), and have advised the Banks that the will be
unable to deliver financial statements in the timeframe set forth in Section
5.1
of the Credit Agreement.
C. The
Borrowers have requested an extension of the Credit Termination Date from July
21, 2006, to July 10, 2009, and an amendment to the applicable margins and
Section 5.1, to which the Banks are willing to agree, on the terms and subject
to the conditions set forth herein.
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, the parties hereto
agree
as follows:
1. Definitions.
(a) General
Rule.
Except
as expressly set forth herein, all capitalized terms used and not defined herein
shall have the respective meanings ascribed thereto in the Credit Agreement.
(b) Additional
Definition.
The
following additional definition shall be added to Article 1 of the Credit
Agreement to read in its entirety as follows:
“First
Amendment”
means
the First Amendment to this Agreement dated July 11, 2006.
(c) Amended
Definition.
The
following definition in Article 1 of the Credit Agreement shall be amended
and
restated to read in its entirety as follows:
“Credit
Termination
Date”
means
the earliest to occur of (a) the date of termination in full, pursuant to §§ 2.9
or 8.1 hereof, of the obligations of such Bank under § 2.1 or (b) July 10,
2009.
2. Amendment
to Section 5.1.
Section
5.1 of the Credit Agreement is hereby amended and restated to read in its
entirety as set forth on Schedule 1 to this First Amendment.
3. Modification
of Schedule 2.
Schedule 2 of the Credit Agreement is hereby amended and restated to read in
its
entirety as set forth on Schedule 2 to this First Amendment.
4. Representations and Warranties. Each Borrower hereby represents and warrants to the Administrative Agent and each Bank that, except as to the Financial Statement Event, as to such Borrower:
(a) Representations.
each of the representations and warranties of such Borrower contained in the
Credit Agreement and/or the other Loan Documents are true, accurate and correct
in all material respects on and as of the date hereof as if made on and as
of
the date hereof, except to the extent such representation or warranty was made
as of a specific date;
(b) Power
and Authority.
(i)
such Borrower has the power and authority under the laws of its jurisdiction
of
organization and under its organizational documents to enter into and perform
this First Amendment and any other documents which the Banks require such
Borrower to deliver hereunder (this First Amendment and any such additional
documents delivered in connection with the First Amendment are herein referred
to as the “Amendment Documents”); (ii) such Borrower is in good standing in its
jurisdiction of organization and each additional jurisdiction in which it is
required to be so qualified; and (iii) all actions, corporate or otherwise,
necessary or appropriate for the due execution and full performance by the
Borrower of the First Amendment have been adopted and taken and, upon their
execution, the Credit Agreement, as amended by this First Amendment will
constitute the valid and binding obligations of the Borrower enforceable in
accordance with their respective terms;
(c) No
Violations of Law or Agreements.
the
making and performance of the First Amendment will not violate any provisions
of
any law or regulation, federal, state, local, or foreign, or the organizational
documents of such Borrower, or result in any breach or violation of, or
constitute a default or require the obtaining of any consent under, any
agreement or instrument by which such Borrower or its property may be
bound;
(d) No
Default.
no
Default or Event of Default has occurred and is continuing; and
(e) No
Material Adverse Effect.
No
Material Adverse Effect has occurred since September 23, 2005.
5. Conditions
to Effectiveness of Amendment.
This
First Amendment shall be effective upon the Administrative Agent’s receipt of
the following, each in form and substance reasonably satisfactory to the
Banks:
(a) First
Amendment.
this
First Amendment, duly executed by the Borrowers and the Banks;
(b) Consent
and Waivers.
copies
of any consents or waivers necessary in order for the Borrowers to comply with
or perform any of its covenants, agreements or obligations contained in any
agreement, which are required as a result of the Borrowers’ execution of this
First Amendment, if any; and
(c) Other
Documents and Actions.
such
additional agreements, instruments, documents, writings and actions as the
Banks
may reasonably request.
6. Limited
Waiver; Ratification.
Subject
to the terms and conditions of this First Amendment, the Banks and
Administrative Agent hereby waive the Financial Statement Event (provided that
the delivery of the required
audited financial statements for the period ending March 31, 2006,
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7. Acknowledgments.
To
induce the Banks to enter into this First Amendment, each Borrower acknowledges,
agrees, warrants, and represents that:
(a) Acknowledgment
of Obligations; Collateral; Waiver of Claims.
(i) the
Loan Documents are valid and enforceable against, and all of the terms and
conditions of the Loan Documents are binding on, the Borrowers; (ii) the liens
and security interests granted to the Administrative Agent by the Borrowers
pursuant to the Loan Documents are valid, legal and binding, properly recorded
or filed and first priority perfected liens and security interests; and (iii)
the Borrowers hereby waive any and all defenses, set-offs and counterclaims
which they, whether jointly or severally, may have or claim to have against
the
Administrative Agent or any Bank as of the date hereof.
(b) No
Waiver of Existing Defaults.
Other
than the Financial Statement Event, no Default or Event of Default exists
immediately before or immediately after giving effect to this First Amendment.
Nothing in this First Amendment nor any communication between the Administrative
Agent, any Bank, any Borrower or any of their respective officers, agents,
employees or representatives shall be deemed to constitute a waiver of (i)
any
Default or Event of Default arising as a result of the foregoing representation
proving to be false or incorrect in any material respect; or (ii) any rights
or
remedies which the Administrative Agent or any Bank has against any Borrower
under the Credit Agreement or any other Loan Document and/or applicable law,
with respect to any such Default or Event of Default arising as a result of
the
foregoing representation proving to be false or incorrect in any material
respect.
8. Binding
Effect.
This
First Amendment shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns.
9. Governing
Law.
This
First Amendment and all rights and obligations of the parties hereunder 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.
10. Headings.
The
headings of the sections of this First Amendment are inserted for convenience
only and shall not be deemed to constitute a part of this First
Amendment.
11. Counterparts.
This
First Amendment may be executed in any number of counterparts with the same
affect as if all of the signatures on such counterparts appeared on one document
and each counterpart shall be deemed an original.
3
IN
WITNESS WHEREOF, the parties hereto have caused this First Amendment to Credit
Agreement to be executed under seal by their duly authorized officers, all
as of
the day and year first written above.
ePLUS
inc.
By:
/s/
Xxxxxxx X.Xxxxxxxxx
Name:
Xxxxxxx
X. Xxxxxxxxx
Title:
Senior
Vice President
ePLUS
Group, inc.
By:
/s/
Xxxxxxx X.Xxxxxxxxx
Name:
Xxxxxxx
X. Xxxxxxxxx
Title:
Senior
Vice President
ePLUS
Government, inc.
By:
/s/
Xxxxxxx X.Xxxxxxxxx
Name:
Xxxxxxx
X. Xxxxxxxxx
Title:
Senior
Vice President
ePLUS
Capital, inc.
By:
/s/
Xxxxxxx X.Xxxxxxxxx
Name:
Xxxxxxx
X. Xxxxxxxxx
Title:
President
4
NATIONAL
CITY BANK
By:
/s/
Xxxxxxx X. Xxxxxx
Name:
Xxxxxxx
X. Xxxxxx
Title:
Senior
Vice President
BRANCH
BANKING AND TRUST COMPANY OF VIRGINIA
By:
/s/
Xxx Xxxxxxxxxxx
Name:
Xxx
Xxxxxxxxxxx
Title:
Vice
President
5
SCHEDULE
1
Section
5.1 Financial
Statements and Reports.
Furnish
to the Administrative Agent and to each Bank the following financial
information:
(a) Annual
Statements.
As soon
as available and in any event within one hundred twenty (120) days after the
end
of each Fiscal Year, the consolidated and consolidating balance sheet of the
Parent 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 GAAP. 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 the Parent and its Subsidiaries
for the period then ended in conformity with GAAP, 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 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.
Delivery to the Administrative Agent and Banks of the Parent’s filed Form 10-K
for the applicable Fiscal Quarter shall satisfy the foregoing
requirement.
(b) Quarterly
Statements.
As soon
as available and in any event within ninety (90) 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 the Parent 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 the Parent
as
having been prepared in accordance with GAAP (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. Delivery to the Administrative Agent and Banks of the Parent’s
filed Form 10-Q for the applicable Fiscal Year shall satisfy the foregoing
requirement.
(c) Compliance
Certificate
and
Quarterly Reports.
At each
time financial statements are delivered pursuant to Section 5.1(a) or Section
5.1(b) hereof, (i) a Compliance Certificate, (ii) a quarterly inventory report
in the form attached hereto as Exhibit I (“Quarterly
Inventory Report”),
and
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(d) No
Default.
At each
time financial statements are delivered pursuant to Section 5.1(a) or Section
5.1(b) hereof, 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.
(e) Budgets
and Projections.
As soon
as available and in any event within one hundred twenty (120) 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.
(f) Collateral
Field Audit.
Provide
a collateral field audit of the Borrowers prepared by a 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 would 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 the Parent.
(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 the Parent. 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.
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SCHEDULE
2
Applicable
Margins and Commitment Fee
Advances
under the Facility shall carry an interest rate based upon the Borrowers’ 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
|
200.0
bps
|
25.0
bps
|
|
>
1.5 < 2.5
|
175.0
bps
|
0.0
bps
|
|
<
1.5
|
150.0
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
£
33.33%%
of the Facility = 65 bps
Usage
> 33.33% <
66.66%
of the Facility = 45 bps
Usage
> 66.66% of the Facility = 25 bps
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