AMENDMENT TO BUSINESS FINANCING AGREEMENT AND
AGREEMENT FOR WHOLESALE FINANCING
This Amendment is made to (i) that certain Business Financing Agreement
executed on the 31st day August, 2000, between ePlus Technology, inc. ("Dealer")
and GE Commercial Distribution Finance Corporation ("CDF"), as amended ("BFA")
and (ii) that certain Agreement for Wholesale Financing between Dealer and CDF
dated August 31, 2000, as amended ("AWF").
FOR VALUE RECEIVED, CDF and Dealer agree as follows (capitalized terms
shall have the same meaning as defined in the BFA unless otherwise indicated):
1. The definition of "Government Accounts" in section 1.1 of the BFA is
hereby restated in its entirety as follows:
"'Government Accounts': means accounts due and payable from a U.S. county, state
or federal governmental body, agency or instrumentality; or body, agency or
instrumentality of the District of Columbia."
2. The definition of "Prime Rate" in section 1.1 of the BFA is hereby
restated in its entirety as follows:
"'Prime Rate': the rate of interest which XX Xxxxxx Xxxxx Bank publicly
announces from time to time as its prime rate or reference rate;
provided, however, that for purposes of this Agreement, the interest
rate charged to Dealer will at no time be computed on a Prime Rate of
less than five and one quarter of one percent (5.25%) per annum. The
Prime Rate will change and take effect for purposes of this Agreement
on the day that XX Xxxxxx Chase Bank announces any change in its Prime
Rate or reference rate."
3. Section 2.1 of the BFA is hereby amended in its entirety to read as
follows:
"2.1 Accounts Receivable Facility. Subject to the terms of this
Agreement, CDF agrees to provide to Dealer an Accounts Receivable
Facility of Seven Million Dollars ($7,000,000.00); provided, however,
that at no time will the principal amount outstanding under the
Accounts Receivable Facility and Dealer's inventory floorplan credit
facility with CDF exceed, in the aggregate, Thirty-Three Million
Dollars ($33,000,000.00). CDF's decision to advance funds will not be
binding until the funds are actually advanced."
In addition, subject to the terms of the AWF, CDF agrees to provide to
Dealer an inventory floorplan credit facility of Thirty-Three Million Dollars
($33,000,000.00); provided, however, that at no time will the principal amount
outstanding under Dealer's inventory floorplan credit facility with CDF and
Dealer's Accounts Receivable Facility exceed, in the aggregate Thirty-Three
Million Dollars ($33,000,000.00). CDF's decision to advance funds will not be
binding until the funds are actually advanced.
4. Section 3.1 of the BFA is hereby deleted in its entirety and
restated to read as follows:
"3.1 Schedules. Dealer will, no less than weekly or as otherwise agreed
to, furnish CDF with a schedule of Accounts ("Schedule") which will:
(a) describe all Accounts created or acquired by Dealer since the last
Schedule furnished CDF; (b) inform CDF of any rejection of goods by any
obligor, delays in delivery of goods, non-performance of contracts and
of any assertion of any claim, offset or counterclaim by any obligor;
and (c) inform CDF of any adverse information relating to the financial
condition of any obligor. Furthermore, together with each submission of
a Schedule, and, in any event, not less than weekly or as otherwise
agreed to, Dealer will also furnish CDF with detailed aging reports for
its accounts receivable and accounts payable as well as detailed
journals to support the Accounts described on such Schedule."
5. The terms of that certain Paydown Addendum to Business Financing
Agreement and Agreement for Wholesale Financing dated August 31, 2000 between
Dealer and CDF are hereby deleted in their entirety and Section 3.2 of the BFA
is hereby restated to read as follows and, to the extent applicable, the
following provision shall also amend the AWF:
"3.2 Available Credit; Paydown. On receipt of each Schedule, CDF will
credit Dealer with such amount as CDF may deem advisable up to the
remainder of (i) (a) ninety percent (90%) of the net amount of eligible
Government Accounts listed on such Schedule plus (b) eighty-five
percent (85%) of the net amount of Dealer's eligible Non-Government
Accounts listed on such Schedule plus (c) eighty-five percent (85%) of
the net amount of eligible Intercompany Lease Receivables (as defined
below) listed in such schedule up to a maximum of Four Million Dollars
($4,000,000) (the amount determined by adding ss.3.2(i)(a) plus
ss.3.2(i)(b) plus ss.3.2(i)(c) is referred to herein as the `Eligible
Credit'), minus (ii) the amount of Dealer's SPP Deficit (as defined
below) under Dealer's Agreement for Wholesale Financing (the 'AWF')
with CDF as in effect from time to time (the amount determined by
subtracting ss.3.2(ii) from ss.3.2(i) is referred to herein as the
'Available Credit').
Dealer's 'SPP Deficit' shall mean the amount, if any, by which Dealer's
total current outstanding indebtedness to CDF under the AWF as of the
date of the Inventory Report (as defined below) exceeds the Inventory
Value (as defined below) as determined by, and as of the date of, the
Inventory Report. Such SPP Deficit, if any, will remain in effect for
purposes of this Agreement until the preparation and delivery by Dealer
to CDF of a new Inventory Report. Dealer will forward to CDF by the
tenth (10th) day of every month an Inventory Report dated as of the
last day of the prior month which specifies the total aggregate
wholesale invoice price of all of Dealer's inventory that is unsold and
in Dealer's possession and control as of the date of the Inventory
Report.
The term Inventory Value is defined herein to mean One Hundred Percent
(100%) of the total aggregate wholesale invoice price of all of
Dealer's inventory that is unsold and in Dealer's possession and
control as of the date of the Inventory Report to the extent that CDF
has a first priority, fully perfected security interest therein;
excluding therefrom (i) all inventory drop shipped from Dealer's
vendors directly to Dealer's customers and (ii) all inventory in
Dealer's possession that is subject to returned merchandise
authorizations issued by Dealer's vendors.
In addition, if Dealer's outstanding loans under Dealer's accounts
receivable credit facility as set forth in Section 2.1 of this
Agreement at any time exceed Dealer's Available Credit, Dealer will
immediately pay to CDF an amount not less than the difference between
(i) Dealer's outstanding loans under Dealer's accounts receivable
credit facility as set forth in Section 2.1 of this Agreement, and (ii)
Dealer's Available Credit.
Furthermore, as an amendment to the AWF, in the event Dealer's SPP
Deficit exceeds at any time (i) Dealer's Eligible Credit, minus (ii)
Dealer's outstanding loans under Dealer's accounts receivable credit
facility as set forth in Section 2.1 of this Agreement, Dealer will
immediately pay to CDF, as a reduction of Dealer's total current
outstanding indebtedness to CDF under the AWF, the difference between
(i) Dealer's SPP Deficit, and (ii)(a) Dealer's Eligible Credit, minus
(b) Dealer's outstanding loans under Dealer's accounts receivable
credit facility as set forth in Section 2.1 of this Agreement. CDF will
loan Dealer, on request, such amount so credited or a part thereof as
requested provided that at no time will such outstanding loans exceed
Dealer's maximum accounts receivable credit facility as set forth in
Section 2.1 of this Agreement. No advances or loans need be made by CDF
if Dealer is in Default."
6. Section 3.8 of the BFA is hereby amended in its entirety to read as
follows:
"3.8 Collection Days. All payments and all amounts received on any
Account will be credited by CDF to Dealer's account (subject to final
collection thereof) after allowing one (1) business day for collection
of checks or other instruments."
7. Section 5.2 of the BFA is hereby amended to add the following
subsentences (l) and (m), and to the extent applicable, the following provision
shall also amend the AWF:
"(l) move any Collateral financed by CDF out of the United States
of America; or (m) store Collateral financed by CDF with any third
party."
8. All of the terms of paragraph numbered 3 of that certain Addendum to
Business Financing Agreement and Agreement for Wholesale Financing dated
February 12, 2001 between Dealer and CDF are hereby deleted in their entirety
and restated to read as follows:
"Unused Line Fee. If, at any time, the Average Loan Balance (as
defined below) for any calendar month is less than Fifty Percent
(50%) of the Accounts Receivable Facility then Dealer agrees to
pay CDF an unused line fee in an amount equal to 0.0208% per
month (0.25% annualized) of the difference between (a) the total
Accounts Receivable Facility minus (b) the Average Loan Balance
for such month. The "Average Loan Balance" is equal to (1) the
sum of the Daily Loan Balances (as defined below) during a
billing period; divided by (2) the actual number of days in such
billing period. The "Daily Loan Balance" is equal to the amount
of the outstanding principal debt which Dealer owes to CDF on the
Accounts Receivable Facility at the end of each day (including
the amount of all Electronic Transfers authorized) after CDF has
credited the payments which it has received on the Accounts
Receivable Facility. The Daily Loan Balance shall not be subject
to Section 3.8 of the Agreement. Such unused line fee shall be
payable monthly in arrears and due pursuant to the monthly
billing statement. Once received by CDF, a line fee shall not be
refundable by CDF for any reason."
9. Section 7.1 through Sections 7.1.2 of the BFA are hereby restated
in their entirety to read as follows:
"7.1 Termination. Either party may terminate this Agreement upon
ninety (90) days written notice received by the other party. Any
termination of this Agreement by Dealer or CDF will have the
effect of accelerating the maturity of all Obligations not then
otherwise due. Dealer will be obligated to CDF for CDF's advances
or commitments made before the effective termination date of this
Agreement. CDF will retain all of its rights, interests and
remedies hereunder until Dealer has paid CDF in full. All
waivers, and the agreement to arbitrate, set forth in this
Agreement will survive any termination of this Agreement."
10. As of the date of execution of this Amendment, all prior financial
covenants, including without limitation the terms of paragraph numbered 2 of
that certain Paydown Addendum to Business Financing Agreement and Agreement for
Wholesale Financing dated August 31, 2000 between Dealer and CDF, are hereby
deleted in their entirety and restated to read as follows: "Dealer will:
A. (i) as of the last day of Dealer's fiscal quarter ending
December 31, 2003, maintain a Tangible Net Worth and Subordinated
Debt (`TNW') in the combined amount of not less than (a) Fourteen
Million Fifty Thousand Dollars ($14,050,000.00) plus (b) Fifty
Percent (50%) of Dealer's Net Income for the fiscal quarter ----
then-ended, and (ii) as of the last day of each fiscal quarter
thereafter, beginning with the fiscal quarter ending March 31,
2004, maintain a TNW in the combined amount of not less than the
sum of (1) Fifty Percent (50%) of Dealer's Net Income for the
quarter then-ended plus (2) the ---- minimum TNW required for the
prior fiscal quarter end (if Net Income is a negative number for
any quarter [e.g., a loss], such amount shall not reduce Dealer's
TNW for that quarter, and shall be disregarded for all future TNW
calculations so that any such negative number shall not reduce
the minimum TNW required hereunder for any subsequent quarter);
B. as of the last day of Dealer's fiscal quarter ending
December 31, 2003 and as of the last day of each fiscal quarter
thereafter, maintain a ratio of Debt minus Subordinated Debt to
Tangible Net Worth and Subordinated Debt of not more than Three
to One (3.0:1.0).
For purposes of this paragraph: (i) 'Tangible Net Worth' means the book
value of the Dealer's assets less liabilities, excluding from such
assets all Intangibles; (ii) 'Intangibles' means and includes general
intangibles; software (purchased or developed in-house); accounts
receivable and advances due from officers, directors, employees,
stockholders, members, owners and affiliates; leasehold improvements
net of depreciation; licenses; good will; prepaid expenses; escrow
deposits; covenants not to compete; the excess of cost over book value
of acquired assets; franchise fees; organizational costs; finance
reserves held for recourse obligations; capitalized research and
development costs; the capitalized cost of patents, trademarks, service
marks and copyrights net of amortization; and such other similar items
as CDF may from time to time reasonably determine in CDF's sole
discretion; (iii) 'Debt' means all of the Dealer's liabilities and
indebtedness for borrowed money of any kind and nature whatsoever,
whether direct or indirect, absolute or contingent, and including
obligations under capitalized leases, guaranties, or with respect to
which the Dealer has pledged assets to secure performance, whether or
not direct recourse liability has been assumed by the Dealer; (iv)
'Subordinated Debt' means all of the Dealer's Debt which is
subordinated to the payment of the Dealer's liabilities to CDF by an
agreement in form and substance satisfactory to CDF; and (v) 'Net
Income' means Dealer's net income or loss after extraordinary items and
after provision for income taxes. The foregoing terms will be
determined in accordance with generally accepted accounting principles
consistently applied."
11. The following paragraph is incorporated into the AWF and BFA as if
fully and originally set forth therein:
"Dealer may make a one-time dividend to its parent company, ePlus,
inc., in an amount not to exceed Three Million Five Hundred Thousand Dollars
($3,500,000.00). In addition, Dealer, from time to time, may make a dividend to
ePlus, inc. if, after giving effect to such dividend, Dealer is not in default
under the terms and conditions of the Agreement, and Dealer's Available
Borrowing (as defined below) exceeds Five Million Dollars ($5,000,000). Dealer's
`Available Borrowing' shall mean the lesser of (i) Dealer's Available Credit
under the Accounts Receivable Facility and (ii) Dealer's maximum credit facility
($33,000,000) minus the sum of the principal amount outstanding under Dealer's
Accounts Receivable Facility plus the principal amount outstanding under
Dealer's inventory floorplan credit facility plus the amount of open approvals
under Dealer's inventory floorplan credit facility (amounts approved by CDF for
Dealer's inventory purchases, but which, for any reason remain unfunded by CDF).
All other dividends or distributions shall be prohibited without CDF's
prior written consent."
12. The following paragraph is hereby incorporated into the BFA, and,
to the extent applicable, the following provision shall also amend the AWF:
"Notwithstanding anything to the contrary set forth in Section 3.3(d)
of the BFA, but without limiting CDF's discretion to determine the eligibility
of Accounts, Accounts which arise from the sale of goods ordered by ePlus Group,
inc., in its capacity as agent on behalf of its customers, will be eligible from
the date of the invoice to ePlus Group, inc. generated as a result of such order
("Invoice"), until the earlier to occur of (i) the date of execution of a lease
agreement between ePlus Group, inc. and a lessee covering such goods or (ii)
thirty days from the date of the Invoice (each, an "Intercompany Lease
Receivable"), to the extent that CDF has a first priority, fully perfected
security interest therein."
Dealer waives notice of CDF's acceptance of this Amendment.
All other terms and provisions of the AWF and BFA, to the extent not
inconsistent with the foregoing, are ratified and remain unchanged and in full
force and effect.
IN WITNESS WHEREOF, each of Dealer and CDF have executed this Amendment
on this 31st day of March, 2004.
ePlus Technology, inc.
Attest: /s/ Xxxxxx X. Xxxxxxxxx
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/s/ Xxxxx X. Xxxxxxxx Xxxxxx X. Xxxxxxxxx
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Xxxxx X. Xxxxxxxx, Secretary Chief Financial Officer
GE COMMERCIAL DISTRIBUTION
FINANCE CORPORATION
/s/ Xxxxx Xxxxxxx
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Xxxxx Xxxxxxx
Vice President of Operations
