-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, G4VyOSdS5qPjqVUT0BNbma2RD1X5Rlc34MAAEem8K00x+dy3Tg3rvjZCHkBfwNJ8 +AtueiIXnTWJitQJsriFyw== 0001022408-04-000064.txt : 20040818 0001022408-04-000064.hdr.sgml : 20040818 20040818104045 ACCESSION NUMBER: 0001022408-04-000064 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 10 CONFORMED PERIOD OF REPORT: 20040818 ITEM INFORMATION: Other events FILED AS OF DATE: 20040818 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EPLUS INC CENTRAL INDEX KEY: 0001022408 STANDARD INDUSTRIAL CLASSIFICATION: FINANCE LESSORS [6172] IRS NUMBER: 541817218 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-28926 FILM NUMBER: 04983276 BUSINESS ADDRESS: STREET 1: 400 HERNDON PARKWAY CITY: HERNDON STATE: VA ZIP: 20176 BUSINESS PHONE: 7038345710 MAIL ADDRESS: STREET 1: 400 HERNDON PARKWAY STREET 2: SUITE B CITY: HERNDON STATE: VA ZIP: 20170 FORMER COMPANY: FORMER CONFORMED NAME: MLC HOLDINGS INC DATE OF NAME CHANGE: 19960906 8-K 1 f_8k.txt 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): August 17, 2004 EPLUS INC. ----------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 000-28926 54-1817218 -------------- -------------- -------------- (State or other jurisdiction (Commission File Number) (IRS Employer of incorporation) Identification No.) 400 Herndon Parkway, Herndon, Virginia 20170 ----------------------------------------------------- (Address, including zip code, of principal executive office) (703) 834-5710 -------------- (Registrant's telephone number, including area code) -1- Item 5. Other Events On August 17, 2004, ePlus Technology, inc.(ePlus), a wholly-owned subsidiary of ePlus inc., modified the current floor planning agreements with GE Commercial Distribution Finance Corporation ("GECDF") that were originally entered into on September 8, 2000. In this modification, GECDF agreed to modify the current Business Finance Agreement and Agreement for Wholesale Financing by modifying and adding certain contractual provisions as follows: 1. Provide to ePlus an Accounts Receivable Facility of (i) Fifteen Million Dollars ($15,000,000) at all times and (ii) Twenty Million Dollars ($20,000,000) from the seasonal uplift term defined as from August 1st to December 31st of each calendar year , however, at no time other than during the seasonal uplift period will the principal amount outstanding under the Accounts Receivable Facility and the inventory floorplan credit facility exceed, in the aggregate, Fifty Million Dollars ($50,000,000) and at no time during the seasonal uplift period will the principal amount outstanding under the Accounts Receivable Facility and the inventory floorplan credit facility exceed, in the aggregate, Seventy Five Million Dollars $75,000,000). The previous agreement had a total limit of $50,000,000. 2. Flexibility was added to allow the inventory floorplan credit facility to be used to a level up to the total facility limit provided that the combined usage balances of the Accounts Receivable Plan and inventory floorplan credit facility cannot exceed, at certain defined times, Fifty Million Dollars ($50,000,000) or Seventy Five Million Dollars $75,000,000 during the seasonal period of August 1 to December 31. 3. The agreement modified and limited to $500,000 the eligibility of certain accounts receivable that were related to deferred income transactions. Purpose of the Credit Facility ePlus Technology, inc. uses this credit source to finance its working capital requirements for inventories and accounts receivable. Our traditional business as sellers of computer technology assets and related network equipment and software products is financed through these arrangements known as floorplan financing, where the interest expense generally for the first thirty to forty days is not charged but is paid for by the distributor/manufacturer. These floorplan liabilities are recorded as accounts payable-trade as they are normally repaid within the thirty to forty day time frame and represent an assigned accounts payable originally generated with the supplier/manufacturer. If the thirty to forty day obligation is not paid timely, interest is then assessed at the stated contractual rates. Principal Terms of the Credit Facility The contracts provide for various repayment days dependent on the distributor/manufacturer, but the majority is 40 days on average. The facility can be terminated with 90 days notice by either party. The facility is for inventory financing and accounts receivable financing, and has an aggregate limit of $50,000,000 or $75,000,000 from the seasonal period August 1st to December 31st. Interest is assessed at the prime rate, which will at no time be lower than 5.25%, minus one-half of one percent on the outstanding principal debt under the accounts receivable facility. ePlus inc., the parent of ePlus Technology, inc., has guaranteed this facility up to $10,500,000. ePlus Group, inc., with the consent of its credit facility supplier, agreed to guaranty any items it received from but not paid to ePlus Technology, inc. EXHIBIT INDEX The following exhibits are filed as part of this report: 5.1 Text of Business Financing Agreement dated September 8, 2000 between Deutsche Financial Services Corporation (now known as GE Commercial Distribution Finance Corporation) and ePlus Technology, inc. 5.1A Text of Amendment to Business Financing Agreement and Agreement for Wholesale Financing dated March 31, 2004 between GE Commercial Distribution Finance Corporation and ePlus Technology, inc. 5.1B Text of Amendment to Business Financing Agreement and Agreement for Wholesale Financing dated June 24, 2004 between GE Commercial Distribution Finance Corporation and ePlus Technology, inc. -2- 5.1C Text of Amendment to Business Financing Agreement and Agreement for Wholesale Financing dated August 17, 2004 between GE Commercial Distribution Finance Corporation and ePlus Technology, inc. 5.2 Text of Agreement for Wholesale Financing dated September 8, 2000 between Deutsche Financial Services (now known as GE Commercial Distribution Finance Corporation) and ePlus Technology, inc. 5.3 Text of Paydown Addendum to Business Financing Agreement between Deutsche Financial Services (now known as GE Commercial Distribution Finance Corporation) Corporation) and ePlus Technology, inc. 5.4 Text of Limited Guaranty dated June 24, 2004 between GE Commercial Distribution Finance Corporation and ePlus inc. 5.5 Text of Collateral Guaranty dated March 31, 2004 between GE Commercial Distribution Finance Corporation and ePlus Group, inc. 5.6 Text of Agreement Regarding Collateral Rights and Waiver between GE Commercial Distribution Finance Corporation and National City Bank, as Administrative Agent, dated March 24, 2004
SIGNATURE 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. By: /s/ Steven J. Mencarini ------------------------------ Steven J. Mencarini Date: August 18, 2004 Chief Financial Officer -3- EX-99 2 f_exh5-1.txt BUSINESS FINANCING AGREEMENT This Business Financing Agreement ("Agreement") is made as of September 8, 2000 between Deutsche Financial Services Corporation ("DFS") and ePlus Technology, inc., a |___| SOLE PROPRIETORSHIP, |___| PARTNERSHIP, |XX| CORPORATION, |___| LIMITED LIABILITY COMPANY (check applicable term) ("Dealer"), having a principal place of business located at 400 Herndon Parkway, Herndon, Virginia 20170. - -------------------------------------------------------------------------------- 1. DEFINITIONS ----------- 1.1 Special Definitions. The following terms will have the following meanings in this Agreement, Agreement for Wholesale Financing and in the Other Agreements: "Accounts": all accounts, leases, contract rights, chattel paper, choses in action and instruments, including any lien or other security interest that secures or may secure any of the foregoing, plus all books, invoices, documents and other records in any form evidencing or relating to any of the foregoing, now owned or hereafter acquired by Dealer. "Accounts Receivable Facility": a credit facility extended pursuant to this Agreement. "Agreement for Wholesale Financing": any Agreement for Wholesale Financing, as amended from time to time, which Dealer has executed in conjunction with inventory financing extended by DFS. "Average Contract Balance": the amount determined by dividing: (a) the sum of the Daily Contract Balances (as defined in Section 2.1.1) for a billing period; by, (b) the actual number of days in such billing period. "Default": the events or occurrences enumerated in Section 6. "Entity": any individual, association, firm, corporation, partnership, limited liability company, trust, governmental body, agency or instrumentality whatsoever. "Government Accounts": Accounts due and payable to a U.S. county, state or federal governmental body, agency or instrumentality; or body, agency or instrumentality of the District of Columbia. "Guarantor": a guarantor of any of the Obligations. "Inventory": all of Dealer's presently owned and hereafter acquired goods which are held for sale or lease. "Obligations": all liabilities and indebtedness now or hereafter arising, owing, due or payable from Dealer to DFS (and any of its subsidiaries and affiliates), including any third party claims against Dealer satisfied or acquired by DFS, whether primary or secondary, joint or several, direct, contingent, fixed or otherwise, and whether or not evidenced by instruments or evidences of indebtedness, and all covenants, agreements (including consent to binding arbitration), warranties, duties and representations, whether such Obligations arise under this Agreement, the Other Agreements or any other agreements previously, now or hereafter executed by Dealer and delivered to DFS or by operation of law. "Other Agreements": all security agreements (including the Agreement for Wholesale Financing), mortgages, leases, -1- instruments, documents, guarantees, schedules, certificates, contracts and similar agreements heretofore, now or hereafter executed by Dealer and delivered to DFS or delivered by or on behalf of Dealer to a third party and assigned to DFS by operation of law or otherwise. "Non-Government Accounts": all Accounts other than Government Accounts. "Prime Rate": the rate of interest which Chase Manhattan 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 six and one half percent (6.5%) per annum. The Prime Rate will change and take effect for purposes of this Agreement on the day that Chase Manhattan Bank announces any change in its Prime Rate or reference rate. 2. CREDIT FACILITY/INTEREST RATES/FEES ----------------------------------- 2.1 Accounts Receivable Facility. Subject to the terms of this Agreement, DFS agrees to provide to Dealer an Accounts Receivable Facility of SIX MILLION DOLLARS ($6,000,000). DFS' decision to advance funds will not be binding until the funds are actually advanced. 2.1.1 Interest. Dealer agrees to pay interest to DFS on the Daily Contract Balance at a rate equal to the Prime Rate minus one-half of one percent (0.5%) per annum. Such interest will: (i) be computed based on a 360 day year; (ii) be calculated each day by multiplying the Daily Rate (as defined below) by the Daily Contract Balance (as defined below); and (iii) accrue from the date that DFS authorizes any Electronic Transfer (as defined in Section 3.10 herein) or otherwise makes an advance under the Accounts Receivable Facility until DFS receives the full and final payment of the principal debt which Dealer owes to DFS, subject to the terms of Section 3.8 herein. The "Daily Rate" is the quotient of the applicable annual rate provided herein divided by 360. The "Daily Contract Balance" is the amount of the outstanding principal debt which Dealer owes to DFS on the Accounts Receivable Facility at the end of each day (including the amount of all Electronic Transfers authorized) after DFS has credited the payments which it has received on the Accounts Receivable Facility, subject to the terms of Section 3.8 herein. 2.1.2Maximum Interest. Dealer acknowledges that DFS intends to strictly conform to the applicable usury laws governing this Agreement. Regardless of any provision contained herein or in any other document executed or delivered in connection herewith or therewith, DFS shall never be deemed to have contracted for, charged or be entitled to receive, collect or apply as interest on this Agreement (whether termed interest herein or deemed to be interest by judicial determination or operation of law), any amount in excess of the maximum amount allowed by applicable law, and, if DFS ever receives, collects or applies as interest any such excess, such amount which would be excessive interest will be applied first to the reduction of the unpaid principal balances of advances under this Agreement, and, second, any remaining excess will be paid to Dealer. In determining whether or not the interest paid or payable under any specific contingency exceeds the highest lawful rate, Dealer and DFS shall, to the maximum extent permitted under applicable law: (a) characterize any non-principal payment (other than payments which are expressly designated as interest payments hereunder) as an expense or fee rather than as interest; (b) exclude voluntary pre-payments and the effect thereof; and (c) spread the total amount of interest throughout the entire term of this Agreement so that the interest rate is uniform throughout such term. 2.2 Payments. DFS will send Dealer a monthly billing statement(s) identifying all charges due on Dealer's account with DFS. The interest -2- and fee charges specified on each billing statement will be: (a) due and payable in full immediately on receipt, and (b) an account stated, unless DFS receives Dealer's written objection thereto within fifteen (15) days after it is mailed to Dealer. If DFS does not receive, by the 25th day of any given month, payment of all charges accrued to Dealer's account with DFS during the immediately preceding month, Dealer will (to the extent allowed by law) pay DFS a late fee ("Late Fee") equal to the greater of $5 or 5% of the amount of such finance charges (payment of the Late Fee does not waive the default caused by the late payment). Dealer will also pay DFS $100 for each of Dealer's checks returned unpaid for insufficient funds (an "NSF check") (such $100 payment repays DFS' estimated administrative costs; it does not waive the default caused by the NSF check). DFS may adjust the billing statement at any time to conform to applicable law and this Agreement. Dealer waives the right to direct the application of any payments hereafter received by DFS on account of the Obligations. DFS will have the continuing exclusive right to apply and reapply any and all such payments in such manner as DFS may deem advisable notwithstanding any entry by DFS upon its books and records. 2.3 One Loan. DFS may combine all of DFS' advances to Dealer or on Dealer's behalf, whether under this Agreement or any Other Agreements, and whether provided by one or more of DFS' branch offices, together with all finance charges, fees and expenses related thereto, to make one debt owed by Dealer. 3. ACCOUNTS RECEIVABLE FACILITY - ADDITIONAL PROVISION ---------------------------------------------------------------------- 3.1 Schedules. Dealer will, no less than weekly or as otherwise agreed to, furnish DFS with a schedule of Accounts ("Schedule") which will: (a) describe all Accounts created or acquired by Dealer since the last Schedule furnished DFS; (b) inform DFS 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 DFS of any adverse information relating to the financial condition of any obligor. 3.2 Available Credit. On receipt of each Schedule, DFS will credit Dealer with such amount as DFS may deem advisable up to Ninety Percent (90%) of the net amount of the eligible Government Accounts listed in such Schedule and up to Eighty-Five Percent (85%) of the net amount of the eligible Non-Government Accounts listed in such Schedule; provided, however, that such amount so credited shall not exceed Dealer's maximum Accounts Receivable Facility from time to time established by DFS (the "Available Credit"). If Dealer's outstanding loans under Dealer's Accounts Receivable Facility exceed Dealer's Available Credit, Dealer will immediately pay to DFS an amount not less than the difference between (i) Dealer's outstanding loans under Dealer's Accounts Receivable Facility, and (ii) Dealer's Available Credit. No loans need be made by DFS if Dealer is in Default. 3.3 Ineligible Accounts. DFS will have the sole right to determine eligibility of Accounts and, without limiting DFS' discretion in that regard, the following Accounts will be deemed ineligible: (a) Accounts created from the sale of goods and services on non-standard terms and/or that allow for payment to be made more than thirty (30) days from the date of sale; (b) Non-Government Accounts unpaid more than ninety (90) days from date of invoice and Government Accounts unpaid more than one-hundred twenty (120) days from date of invoice; (c) all Accounts of any obligor with fifty percent (50%) or more of the outstanding balance unpaid for more than ninety (90) days from the date of invoice; (d) Accounts for which the obligor is an officer, director, shareholder, partner, member, owner, employee, agent, parent, subsidiary, affiliate of, or is related to Dealer or has common shareholders, officers, directors, owners, partners or members; (e) consignment sales; (f) Accounts for which the payment is or may be conditional; (g) Accounts for which the obligor is not a commercial or institutional entity or is not a resident of the United States or Canada; (h) Accounts with respect to which any warranty or -3- representation provided in Subsection 3.4 is not true and correct; (i) Accounts which Dealer knows represent goods or services purchased for a personal, family or household purpose; (j) Accounts which represent goods used for demonstration purposes or loaned by the Dealer to another party; (k) Accounts which are progress payment, barter, or contra accounts; and (l) any and all other Accounts which DFS reasonably deems to be ineligible. If DFS determines that any Account is or becomes an ineligible Account and such ineligible Account exceeds the Available Credit (as such term is defined in the Paydown Addendum dated the date hereof), immediately upon notice thereof from DFS, Dealer will pay to DFS an amount equal to the monies loaned by DFS for such ineligible Account. 3.4 Warranties and Representations. For each Account which Dealer lists on any Schedule, Dealer warrants and represents to DFS that at all times: (a) such Account is genuine; (b) such Account is not evidenced by a judgment or promissory note or similar instrument or agreement; (c) it represents an undisputed bona fide transaction completed in accordance with the terms of the invoices and purchase orders relating thereto; (d) the goods sold or services rendered which resulted in the creation of such Account have been delivered or rendered to and accepted by the obligor; (e) the amounts shown on the Schedules, Dealer's books and records and all invoices and statements delivered to DFS with respect thereto are owing to Dealer and are not contingent; (f) no payments have been or will be made thereon except payments turned over to DFS; (g) there are no offsets, counterclaims or disputes existing or asserted with respect thereto and Dealer has not made any agreement with any obligor for any deduction or discount of the sum payable thereunder except regular discounts allowed by Dealer in the ordinary course of its business for prompt payment; (h) there are no facts or events which in any way impair the validity or enforceability thereof or reduce the amount payable thereunder from the amount shown on the Schedules, Dealer's books and records and the invoices and statements delivered to DFS with respect thereto; (i) all persons acting on behalf of obligors thereon have the authority to bind the obligor; (j) the goods sold or transferred giving rise thereto are not subject to any lien, claim, encumbrance or security interest which is superior to that of DFS; and (k) there are no proceedings or actions known to Dealer which are threatened or pending against any obligor thereon which might result in any material adverse change in such obligor's financial condition. 3.5 Notes. Loans made pursuant to this Agreement need not be evidenced by promissory notes unless otherwise required by DFS in DFS' sole discretion. 3.6 Certain Charges. Dealer will: (a) reimburse DFS for all charges made by banks, including charges for collection of checks and other items of payment, and (b) pay DFS' fees for transfers of funds to or from the Dealer. DFS may, from time to time, announce its fees for transfers of funds to or from the Dealer, including the issuance of Electronic Transfers. 3.7 Collections. Unless otherwise directed by DFS, to expedite collection of Accounts for the benefit of DFS, Dealer shall notify all of its obligors to make payment of the Accounts to one or more lock-boxes under the sole control of DFS. The lock-box, and all accounts into which the proceeds of any such lock-box(es) are deposited, shall be established at banks selected by the Dealer and satisfactory to DFS in its sole discretion. Dealer shall issue to any such banks an irrevocable letter of instruction, in form and substance reasonably acceptable to DFS, directing such banks to deposit all payments or other remittances received in the lock-box to such account or accounts as DFS shall direct, for application against the outstanding balance of the Obligations. All funds deposited in the lock-box or any such account immediately shall become the property of DFS, and any disbursements of the proceeds in the lock-box or any such account will only be made to DFS. Dealer shall obtain the agreement of such banks to waive any offset rights against the funds so deposited. DFS assumes no responsibility for such lock-box arrangement, including, without limitation, any claim of accord and satisfaction or release with respect to deposits which any banks accept thereunder. All remittances which Dealer receives in payment of any Accounts, and the proceeds of -4- any of the other Collateral, shall be: (i) kept separate and apart from Dealer's own funds so that they are capable of identification as DFS' property; (ii) held by Dealer as trustee of an express trust for DFS' benefit; and (iii) shall be immediately deposited in such accounts designated by DFS. All proceeds received or collected by DFS with respect to Accounts, and reserves and other property of Dealer in possession of DFS at any time or times hereafter, may be held by DFS without interest to Dealer until all Obligations are paid in full or applied by DFS on account of the Obligations. DFS may release to Dealer such portions of such reserves and proceeds as DFS may determine. Upon the occurrence and during the continuance of a Default, DFS may notify the obligors that the Accounts have been assigned to DFS, collect the Accounts directly in its own name and charge the collection costs and expenses, including attorneys' fees, to Dealer. DFS has no duty to protect, insure, collect or realize upon the Accounts to preserve rights in them. 3.8 Collection Days. All payments and all amounts received on any Account will be credited by DFS to Dealer's account (subject to final collection thereof) after allowing two (2) business days for collection of checks or other instruments. 3.9 Power of Attorney. Dealer irrevocably appoints DFS (and any person designated by it) as Dealer's true and lawful Attorney with full power to at any time, in the discretion of DFS (whether or not Default has occurred) to: (a) endorse the name of Dealer upon any of the items of payment or proceeds and deposit the same in the account of DFS for application to the Obligations; (b) sign the name of Dealer to verify the accuracy of the Accounts; (c) sign the name of Dealer on any document or instrument that DFS shall deem necessary or appropriate to perfect and maintain perfected the security interests in the Collateral under this Agreement and the Other Agreements; and (d) initiate and settle any insurance claim and endorse Dealer's name on any check, instrument or other item of payment. In the event of a Default, Dealer irrevocably appoints DFS (and any person designated by it) as Dealer's true and lawful Attorney with full power to at any time, in the discretion of DFS to: (i) demand payment, enforce payment and otherwise exercise all of Dealer's rights, and remedies with respect to the collection of any Accounts; (ii) settle, adjust, compromise, extend or renew any Accounts; (iii) settle, adjust or compromise any legal proceedings brought to collect any Accounts; (iv) sell or assign any Accounts upon such terms, for such amounts and at such time or times as DFS may deem advisable; (v) discharge and release any Accounts; (vi) prepare, file and sign Dealer's name on any Proof of Claim in Bankruptcy or similar document against any obligor; (vii) endorse the name of Dealer upon any chattel paper, document, instrument, invoice, freight bill, bill of lading or similar document or agreement relating to any Account or goods pertaining thereto; and (viii) take control in any manner of any item of payments or proceeds and for such purpose to notify the Postal Authorities to change the address for delivery of mail addressed to Dealer to such address as DFS may designate.. The power of attorney is for value and coupled with an interest and is irrevocable so long as any Obligations remain outstanding and by DFS exercising such right, DFS shall not waive any right against Dealer until the Obligations are paid in full. 3.10 Continuing Requirements. Advances hereunder will be made by DFS, at Dealer's direction, by paper check, electronic transfer by Automated Clearing House ("ACH"), Fed Wire Funds Transfer ("Fed Wire") or such other electronic means as DFS may announce from time to time (ACH, Fed Wire and such other electronic transfer are collectively referred to as "Electronic Transfers"). If Dealer does not request advances be made in a specific method of transfer, DFS may determine from time to time in its sole discretion what method of transfer to use. Dealer will: (a) if from time to time required by DFS, immediately upon their creation, deliver to DFS copies of all invoices, delivery evidences and other such documents relating to each Account; (b) not permit or agree to any material extension, compromise, settlement or change to any Account unless it has notified DFS of its intention to do so; (c) affix appropriate endorsements or assignments upon all such items of -5- payment and proceeds so that the same may be properly deposited by DFS to DFS' account; (d) immediately notify DFS in writing which Accounts may be deemed ineligible as defined in Subsection 3.3; (e) mark all chattel paper and instruments now owned or hereafter acquired by it to show that the same are subject to DFS' security interest and immediately thereafter deliver such chattel paper and instruments to DFS with appropriate endorsements and assignments to DFS; (f) within ten (10) days after the end of each month, provide DFS with a detailed aging of its Accounts for each month, (g) provide the names and addresses of all obligors upon DFS' request. 3.11 Release. Dealer releases DFS from all claims and causes of action which Dealer may now or hereafter have for any loss or damage to it claimed to be caused by or arising from: (a) any failure of DFS to protect, enforce or collect, in whole or in part, any Account; (b) DFS' notification to any obligors thereon of DFS' security interest in any of the Accounts; (c) DFS' directing any obligor to pay any sum owing to Dealer directly to DFS; and (d) any other act or omission to act on the part of DFS, its officers, agents or employees, except for willful misconduct or gross negligence. DFS will have no obligation to preserve rights to Accounts against prior parties. Dealer waives all rights of offset and counterclaims Dealer may have against DFS. 3.12 Review. Dealer grants DFS an irrevocable license to enter Dealer's business locations during normal business hours with forty-eight (48) hours prior notice to Dealer (unless Dealer is in Default in which case no prior notice shall be required) to: (a) account for and inspect all Collateral; (b) verify Dealer's compliance with this Agreement; and (c) review, examine, and make copies of Dealer's books, records, files and business procedures and practices. Dealer further agrees to pay DFS a review fee of ONE THOUSAND DOLLARS ($1,000) per quarter for any such review, inspection or examination made by DFS. DFS may, without notice to Dealer and at any time or times hereafter, verify the validity, amount or any other matter relating to any Account by mail, telephone, or other means, in the name of Dealer or DFS. 4. SECURITY - COLLATERAL --------------------- 4.1 Grant of Security Interest. To secure payment of all of Dealer's current and future Obligations and to secure Dealer's performance of all of the provisions under this Agreement and the Other Agreements, Dealer grants DFS a security interest in all of Dealer's inventory, equipment, fixtures, accounts, contract rights, chattel paper, security agreements, instruments, deposit accounts, reserves, documents, and general intangibles; and all judgments, claims, insurance policies, and payments owed or made to Dealer thereon; all whether now owned or hereafter acquired, all attachments, accessories, accessions, returns, repossessions, exchanges, substitutions and replacements thereto, and all proceeds thereof. All such assets are collectively referred to herein as the "Collateral." All of such terms for which meanings are provided in the Uniform Commercial Code of the applicable state are used herein with such meanings. Dealer covenants with DFS that DFS may realize upon all or part of any Collateral in any order it desires and any realization by any means upon any Collateral will not bar realization upon any other collateral. Dealer's liability under this Agreement is direct and unconditional and will not be affected by the release or nonperfection of any security interest granted hereunder. All Collateral financed by DFS, and all proceeds thereof, will be held in trust by Dealer for DFS, with such proceeds being payable in accordance with this Agreement. 5. WARRANTIES AND REPRESENTATIONS ------------------------------ 5.1 Affirmative Warranties and Representations. Except as otherwise specifically provided in the Other Agreements, Dealer warrants and represents to DFS that: (a) Dealer has good title to all Collateral; (b) DFS' security interest in the Accounts will at all times -6- constitute a perfected, first security interest in such Accounts and will not become subordinate to the security interest, lien, encumbrance or claim of any Entity; (c) Dealer will execute all documents DFS reasonably requests to perfect and maintain DFS' security interest in the Collateral and to fully consummate the transactions contemplated under this Agreement and the Other Agreements; (d) Dealer will at all times be duly organized, existing, in good standing, qualified and licensed to do business in each state, county, or parish, in which the nature of its business or property so requires; (e) Dealer has the right and is duly authorized to enter into this Agreement; (f) Dealer's execution of this Agreement does not constitute a breach of any agreement to which Dealer is now or hereafter becomes bound; (g) there are and will be no actions or proceedings pending or threatened against Dealer which might result in any material adverse change in Dealer's financial or business condition or which might in any way adversely affect any of Dealer's assets; (h) Dealer will maintain the Collateral in good condition and repair; (i) Dealer has duly filed and will duly file all tax returns required by law; (j) Dealer has paid and will pay when due all taxes, levies, assessments and governmental charges of any nature; (k) Dealer will maintain a system of accounting in accordance with generally accepted accounting principles and account records which contain such information in a format as may be requested by DFS; (l) Dealer will keep and maintain all of its books and records pertaining to the Accounts either at its principal place of business designated in this Agreement or at a designated storage facility of which DFS has been notified in writing; (m) Dealer will promptly supply DFS with such information concerning it or any Guarantor as DFS hereafter may reasonably request; (n) Dealer will give DFS thirty (30) days prior written notice of any change in Dealer's identity, name, form of business organization, ownership, management, principal place of business, Collateral locations or other business locations; and before moving any books and records to any other location; (o) Dealer will observe and perform all matters required by any lease, license, concession or franchise forming part of the Collateral in order to maintain all the rights of DFS thereunder; (p) Dealer will advise DFS of the commencement of material legal proceedings against Dealer or any Guarantor; (q) Dealer will comply with all applicable laws and will conduct its business in a manner which preserves and protects the Collateral and the earnings and incomes thereof; and (r) Dealer will keep the Collateral insured for its full insurable value under an "all risk" property insurance policy with a company acceptable to DFS, naming DFS as a lender loss-payee and containing standard lender's loss payable and termination provisions. Dealer will provide DFS with written evidence of such property insurance coverage and lender's loss-payee endorsement. 5.2 Negative Covenants. Dealer will not at any time (without DFS' prior written consent: (a) grant to or in favor of any Entity a security interest in or permit to exist a lien, claim or encumbrance in the Accounts which is superior to the interest of DFS; (b) other than in the ordinary course of its business and if material in nature, sell, lease or otherwise dispose of or transfer any of its assets; (c) merge or consolidate with another Entity unless Dealer is the surviving entity of such merger or consolidation and, after giving effect to such merger or consolidation, Dealer is in full compliance with all of the covenants contained in this Agreement and the Other Agreements; (d) acquire the assets or ownership interest of any other Entity provided that after giving effect to such acquisition, Dealer is in full compliance with all of the covenants contained in this Agreement and the Other Agreements; (e) enter into any material transaction not in the ordinary course of business; (f) guarantee or indemnify or otherwise become in any way liable with respect to the obligations of any Entity, except by endorsement of instruments or items of payment for deposit to the general account of Dealer or which are transmitted or turned over to DFS on account of the Obligations; (g) redeem, retire, purchase or otherwise acquire, directly or indirectly, any of Dealer's capital stock; (h) make any change in Dealer's capital structure or in any of its business objectives or operations which -7- might in any way adversely affect the ability of Dealer to repay the Obligations; (i) make any distribution of Dealer's assets not in the ordinary course of business; (j) incur any debts outside of the ordinary course of business except renewals or extensions of existing debts and interest thereon; and (k) except for inter-company payments made in the ordinary course of business, make any loans, advances, contributions or payments of money or in goods to any affiliated entity or to any officer, director, stockholder, member or partner of Dealer or of any such entity (except for compensation for personal services actually rendered). 5.3 Financial Statements. Dealer will deliver to DFS: (a) within ninety (90) days after the end of each of Dealer's fiscal years, a reasonably detailed balance sheet as of the last day of such fiscal year and a reasonably detailed income statement covering Dealer's operations for such fiscal year, in a form satisfactory to DFS; (b) within forty-five (45) days after the end of each of Dealer's fiscal quarters, a reasonably detailed balance sheet as of the last day of such quarter and an income statement covering Dealer's operations for such quarter in a form satisfactory to DFS; (c) within ten (10) business days after request therefor by DFS, any other report requested by DFS relating to the Collateral or the financial condition of Dealer. Dealer warrants and represents to DFS that all financial statements and information relating to Dealer or any Guarantor which have been or may hereafter be delivered by Dealer or any Guarantor to DFS are true and correct and have been and will be prepared in accordance with generally accepted accounting principles consistently applied and, with respect to such previously delivered statements or information, there has been no material adverse change in the financial or business condition of Dealer or any Guarantor since the submission to DFS, either as of the date of delivery, or, if different, the date specified therein, and Dealer acknowledges DFS' reliance thereon. 6. DEFAULT ------- 6.1 Definition. Dealer will be in default under this Agreement if: (a) Dealer breaches any terms, warranties or representations contained herein or in any Other Agreements (other than as set forth in clause (d) or (e) below) and such breach is not cured within ten (10) days of Dealer's receipt of notice thereof; (b) any Guarantor of Dealer's debts to DFS breaches any terms, warranties or representations contained in any guaranty or Other Agreements and such breach is not cured within the applicable cure period set forth therein; (c) any representation, statement, report, or certificate made or delivered by Dealer or any Guarantor to DFS is not accurate when made and such inaccuracy is not cured within ten (10) days of Dealer's or guarantor's receipt of notice thereof; (d) Dealer fails to pay any of the Obligations when due and payable and such failure is not cured within two (2) days of receipt of notice thereof; (e) Dealer abandons any Collateral and such abandonment is not cured within two (2) days of Dealer's receipt of notice thereof; (f) Dealer or any Guarantor is or becomes in default in the payment of any debt owed to any third party in an amount over five hundred thousand dollars (US$500,000) and such default is not cured within two (2) days of Dealer's or guarantor's receipt of notice thereof; (g) a money judgment issues against Dealer or any guarantor in an amount over $500,000 ; (h) an attachment, sale or seizure issues or is executed against any assets of Dealer or of any Guarantor having a value of over $500,000; (i) the undersigned dies while Dealer's business is operated as a sole proprietorship, any general partner dies while Dealer's business is operated as a general or limited partnership, or any member dies while Dealer's business is operated as a limited liability company, as applicable; (j) any Guarantor dies; (k) Dealer or any Guarantor shall cease existence as a corporation, partnership, limited liability company or trust, as applicable; (l) Dealer or any Guarantor ceases or suspends business; (m) Dealer, any Guarantor or any member while Dealer's business is operated as a limited liability company, as applicable, makes a general assignment for the benefit of creditors; (n) Dealer, any Guarantor or any member while Dealer's business is operated as a limited liability company, as applicable, becomes -8- insolvent or voluntarily or involuntarily becomes subject to the Federal Bankruptcy Code, any state insolvency law or any similar law; (o) any receiver is appointed for any assets of Dealer, any Guarantor or any member while Dealer's business is operated as a limited liability company, as applicable; (p) any guaranty of Dealer's debt to DFS is terminated; (q) Dealer loses any franchiserelated to any Collateral which DFS finances; (r) Dealer or any Guarantor misrepresents Dealer's or such Guarantor's financial condition or organizational structure; (s) there shall occur a material adverse change in the financial or other condition or business prospects of Dealer or any Guarantor; or (t) DFS is not secured with respect to any of the Collateral or the payment of any part of Dealer's Obligations. Notwithstanding anything to the contrary in this Agreement, DFS will not be obligated to make any advances hereunder or issue any approvals to Vendors during any cure period set forth above. 6.2 Rights of DFS. In the event of a Default: (a) DFS may at any time at DFS' election, without notice or demand to Dealer, do any one or more of the following: declare all or any of the Obligations immediately due and payable, together with all costs and expenses of DFS' collection activity, including, without limitation, all reasonable attorneys' fees; exercise any or all rights under applicable law (including, without limitation, the right to possess, transfer and dispose of the Collateral); and/or cease extending any additional credit to Dealer (DFS' right to cease extending credit shall not be construed to limit the discretionary nature of this credit facility). (b) Dealer will segregate and keep the Collateral in trust for DFS, and in good order and repair, and will not sell, rent, lease, consign, otherwise dispose of or use any Collateral, nor further encumber any Collateral. (c) Upon DFS' oral or written demand, Dealer will immediately deliver the Collateral to DFS, in good order and repair, at a place specified by DFS, together with all related documents; or DFS may, in DFS' sole discretion and without notice or demand to Dealer, take immediate possession of the Collateral together with all related documents. (d) DFS may, without notice, apply a default finance charge to Dealer's outstanding principal indebtedness equal to the default rate specified in Dealer's financing program with DFS, if any, or if there is none so specified, at the lesser of 3% per annum above the rate in effect immediately prior to the Default, or the highest lawful contract rate of interest permitted under applicable law. (e) DFS may, without notice to Dealer and at any time or times enforce payment and collect, by legal proceedings or otherwise, Accounts in the name of Dealer or DFS; and take control of any cash or non-cash items of payment or proceeds of Accounts and of any rejected, returned, repossessed or stopped in transit goods relating to Accounts. DFS may at its sole election and without demand enter, with or without process of law, any premises where Collateral might be and, without charge or liability to DFS therefor do one or more of the following: (i) take possession of the Collateral and use or store it in said premises or remove it to such other place or places as DFS may deem convenient; (ii) take possession of all or part of such premises and the Collateral and place a custodian in the exclusive control thereof until completion of enforcement of DFS' security interest in the Collateral or until DFS' removal of the Collateral and, (iii) remain on such premises and use the same, together with Dealer's materials, supplies, books and records, for the purpose of performing all acts necessary and incidental to the collection or liquidation of such Collateral. All of DFS' rights and remedies are cumulative. DFS' failure to exercise any of DFS' rights or remedies hereunder will not waive any of DFS' rights or remedies as to any past, current or future Default. -9- 6.3 Sale of Collateral. Dealer agrees that if DFS conducts a private sale of any Collateral by requesting bids from 10 or more dealers or distributors in that type of Collateral, any sale by DFS of such Collateral in bulk or in parcels within 120 days of: (a) DFS' taking possession and control of such Collateral; or (b) when DFS is otherwise authorized to sell such Collateral; whichever occurs last, to the bidder submitting the highest cash bid therefor, is a commercially reasonable sale of such Collateral under the Uniform Commercial Code. Dealer agrees that the purchase of any Collateral by a vendor, as provided in any agreement between DFS and the vendor, is a commercially reasonable disposition and private sale of such Collateral under the Uniform Commercial Code, and no request for bids shall be required. Dealer further agrees that seven (7) or more days prior written notice will be commercially reasonable notice of any public or private sale (including any sale to a vendor). Dealer irrevocably waives any requirement that DFS retain possession and not dispose of any Collateral until after an arbitration hearing, arbitration award, confirmation, trial or final judgment. If DFS disposes of any such Collateral other than as herein contemplated, the commercial reasonableness of such disposition will be determined in accordance with the laws of the state governing this Agreement. 7. MISCELLANEOUS ------------- 7.1 Termination. This Agreement will continue in full force and effect and be non-cancellable by Dealer (except that it may be terminated by DFS upon sixty (60) days written notice to Dealer or in the exercise of its rights and remedies upon Default by Dealer) for a period of two (2) years from the first day of the first month following the date hereof and for successive one (1) year periods thereafter, subject to termination as to future transactions at the end of any such period on at least ninety (90) days prior written notice by Dealer to DFS. If such notice of termination is given by Dealer to DFS, such notice will be ineffective unless Dealer pays to DFS all Obligations on or before the termination date. Any termination of this Agreement by Dealer or DFS will have the effect of accelerating the maturity of all Obligations not then otherwise due. 7.1.1Termination Privilege. Despite anything to the contrary in Section 7.1 of this Agreement, this Agreement may be terminated by Dealer at any time upon ninety (90) days prior written notice and payment to DFS of the following sum (in addition to payment of all Obligations, whether or not by their terms then due) which sum represents liquidated damages for the loss of the bargain and not as a penalty, and the same is hereby acknowledged by Dealer: (i) if Dealer's termination occurs at any time from the date hereof up to and including the date preceding the first anniversary of the date hereof, the sum shall equal One Hundred Twenty Five Thousand Dollars (representing one half of one percent (.50%) multiplied by Twenty-Five Million Dollars ($25,000,000)); and (ii) if Dealer's termination occurs at any time from the first anniversary of the date hereof up to and including the date preceding the second anniversary of the date hereof, the sum shall equal Sixty-Two Thousand Five Hundred Dollars (representing one quarter of one percent (.25%) multiplied by Twenty-Five Million Dollars ($25,000,000)). This sum will also be paid by Dealer if the Agreement is terminated by DFS on account of Dealer's Default, but shall not be payable if the Agreement is terminated by DFS absent a Default by Dealer. 7.1.2Termination due to DFS Sale. In the event that DFS is a party to a merger, consolidation or sale of all or substantially all of its assets ("Sale"), Dealer shall have the right to notify DFS of its intention to terminate this Agreement at any time during the first ninety (90) days following such Sale. This Agreement may continue, at Dealer's election, for up to ninety (90) additional days after Dealer provides DFS with notice. In the event that Dealer elects to terminate this Agreement pursuant to this Section, the provisions of Section 7.1.1 shall not apply. -10- 7.1.3Effect of Termination. Dealer will not be relieved from any Obligations to DFS arising out of DFS' advances or commitments made before the effective termination date of this Agreement. DFS will retain all of its rights, interests and remedies hereunder until Dealer has paid all of Dealer's Obligations to DFS. All waivers set forth within this Agreement will survive any termination of this Agreement. 7.2 Collection. Checks and other instruments delivered to DFS on account of the Obligations will constitute conditional payment until such items are actually paid to DFS. 7.3 Demand, Etc. Dealer irrevocable waives notice of: presentment, demand, protest, nonpayment, nonperformance and dishonor. Dealer and DFS irrevocably waive all rights to claim any punitive and/or exemplary damages. Dealer waives all notices of default and non-payment at maturity of any or all of the Accounts. 7.4 Reimbursement. Dealer will assume and reimburse DFS upon demand for all expenses incurred by DFS in connection with the preparation of this Agreement and the Other Agreements (including fees and costs of outside counsel) and all filing and recording fees and taxes payable in connection with the filing or recording of all documents under this Agreement and the Other Agreements; provided, however, that such total reimbursement by Dealer hereunder will not exceed the sum of ONE THOUSAND DOLLARS ($1,000.00). 7.5 Additional Obligations. DFS, without waiving or releasing any Obligation or Default, may perform any Obligations that Dealer fails or refuses to perform. All sums paid by DFS on account of the foregoing and any expenses, including reasonable attorneys' fees, will be a part of the Obligations, payable on demand and secured by the Collateral. 7.6 NO ORAL AGREEMENTS. ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT INCLUDING PROMISES TO EXTEND OR RENEW SUCH DEBTS ARE NOT ENFORCEABLE. TO PROTECT DEALER AND DFS FROM MISUNDERSTANDING OR DISAPPOINTMENT, ALL AGREEMENTS COVERING SUCH MATTERS ARE CONTAINED IN THIS WRITING AND THE OTHER AGREEMENTS, WHICH IS THE COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN THE PARTIES, EXCEPT AS SPECIFICALLY PROVIDED HEREIN OR AS THE PARTIES MAY LATER AGREE IN WRITING TO MODIFY IT. THERE ARE NO UNWRITTEN AGREEMENTS BETWEEN THE PARTIES. DFS may, from time to time, announce in writing to Dealer its policies and procedures regarding its administration of this facility, including, without limitation, DFS' fees for the transfer of funds to or from Dealer, including Electronic Transfers; any subsequent use by Dealer of this facility following any such announcement shall constitute Dealer's acceptance of such revised policies and procedures. Time is of the essence regarding Dealer's performance of its obligations to DFS notwithstanding any course of dealing or custom on DFS' part to grant extensions of time. DFS will have the right to refrain from or postpone enforcement of this Agreement or any Other Agreements between DFS and Dealer without prejudice and the failure to strictly enforce these agreements will not be construed as having created a course of dealing between DFS and Dealer contrary to the specific terms of the agreements or as having modified, released or waived the same. The express terms of this Agreement will not be modified by any course of dealing, usage of trade, or custom of trade which may deviate from the terms hereof. 7.7 Severability. If any provision of this Agreement or the Other Agreements or the application thereof is held invalid or -11- unenforceable, the remainder of this Agreement and the Other Agreements will not be impaired or affected and will remain binding and enforceable. 7.8 Supplement. If Dealer and DFS have heretofore executed Other Agreements in connection with all or any part of the Collateral, this Agreement shall supplement each and every Other Agreement previously executed by and between Dealer and DFS, and in that event this Agreement shall neither be deemed a novation nor a termination of any such previously executed Other Agreement nor shall execution of this Agreement be deemed a satisfaction of any obligation secured by such previously executed Other Agreement. In the event of any conflict between the terms of this Agreement and any previously executed Business Financing Agreement between DFS and Dealer, the terms of this Agreement shall control. 7.9 Section Titles. The Section titles used in this Agreement are for convenience only and do not define or limit the contents of any Section. 7.10 Binding Effect. Dealer cannot assign its interest in this Agreement or any Other Agreements without DFS' prior written consent, although DFS may assign or participate DFS' interest, in whole or in part, without Dealer's consent. This Agreement and the Other Agreements will protect and bind DFS' and Dealer's respective heirs, representatives, successors and assigns. 7.11 Notices. Except as otherwise stated herein, all notices, arbitration claims, responses, requests and documents will be sufficiently given or served if mailed or delivered: (a) to Dealer at Dealer's principal place of business specified above; and (b) to DFS at 655 Maryville Centre Drive, St. Louis, Missouri 63141-5832, Attention: General Counsel, or such other address as the parties may hereafter specify in writing. 7.12 Receipt of Agreement. Dealer acknowledges that it has received a true and complete copy of this Agreement. Dealer acknowledges that it has read and understood this Agreement. Notwithstanding anything herein to the contrary: (a) DFS may rely on any facsimile copy, electronic data transmission or electronic data storage of any Schedule, statement, financial statements or other reports, and (b) such facsimile copy, electronic data transmission or electronic data storage will be deemed an original, and the best evidence thereof for all purposes, including, without limitation, under this Agreement or any Other Agreements, and for all evidentiary purposes before any arbitrator, court or other adjudicatory authority. 7.13 Information. DFS may provide to any third party upon request any public credit information on Dealer that DFS may from time to time possess or any financial or other information on Dealer that DFS may from time to time possess as required by law. DFS may obtain from any third party any credit, financial or other information regarding Dealer that such third party may from time to time possess. 8. BINDING ARBITRATION ------- ----------- 8.1 Arbitrable Claims. Except as otherwise specified below, all actions, disputes, claims and controversies under common law, statutory law or in equity of any type or nature whatsoever (including, without limitation, all torts, whether regarding negligence, breach of fiduciary duty, restraint of trade, fraud, conversion, duress, interference, wrongful replevin, wrongful sequestration, fraud in the inducement, usury or any other tort, all contract actions, whether regarding express or implied terms, such as implied covenants of good faith, fair dealing, and the commercial reasonableness of any Collateral disposition, or any other contract claim, all claims of deceptive trade practices or lender liability, and all claims questioning the reasonableness or lawfulness of any act), whether arising before or after the date of this Agreement, and whether directly or indirectly relating to: (a) this Agreement or any Other Agreements and/or any amendments and addenda hereto or thereto, or the breach, invalidity or termination hereof or thereof; (b) any previous or subsequent agreement between DFS and Dealer; (c) any act committed -12- by DFS or by any parent company, subsidiary or affiliated company of DFS (the "DFS Companies"), or by any employee, agent, officer or director of an DFS Company whether or not arising within the scope and course of employment or other contractual representation of the DFS Companies provided that such act arises under a relationship, transaction or dealing between DFS and Dealer; and/or (d) any other relationship, transaction or dealing between DFS and Dealer (collectively the "Disputes"), will be subject to and resolved by binding arbitration. 8.2 Administrative Body. All arbitration hereunder will be conducted in accordance with the Commercial Arbitration Rules of The American Arbitration Association ("AAA"). If the AAA is dissolved, disbanded or becomes subject to any state or federal bankruptcy or insolvency proceeding, the parties will remain subject to binding arbitration which will be conducted by a mutually agreeable arbitral forum. The parties agree that all arbitrator(s) selected will be attorneys with at least five (5) years secured transactions experience. The arbitrator(s) will decide if any inconsistency exists between the rules of any applicable arbitral forum and the arbitration provisions contained herein. If such inconsistency exists, the arbitration provisions contained herein will control and supersede such rules. The site of all arbitration proceedings will be in the Division of the Federal Judicial District in which AAA maintains a regional office that is closest to Dealer. 8.3 Discovery. Discovery permitted in any arbitration proceeding commenced hereunder is limited as follows. No later than thirty (30) days after the filing of a claim for arbitration, the parties will exchange detailed statements setting forth the facts supporting the claim(s) and all defenses to be raised during the arbitration, and a list of all exhibits and witnesses. No later than twenty-one (21) days prior to the arbitration hearing, the parties will exchange a final list of all exhibits and all witnesses, including any designation of any expert witness(es) together with a summary of their testimony; a copy of all documents and a detailed description of any property to be introduced at the hearing. Under no circumstances will the use of interrogatories, requests for admission, requests for the production of documents or the taking of depositions be permitted. However, in the event of the designation of any expert witness(es), the following will occur: (a) all information and documents relied upon by the expert witness(es) will be delivered to the opposing party, (b) the opposing party will be permitted to depose the expert witness(es), (c) the opposing party will be permitted to designate rebuttal expert witness(es), and (d) the arbitration hearing will be continued to the earliest possible date that enables the foregoing limited discovery to be accomplished. 8.4 Exemplary or Punitive Damages. The Arbitrator(s) will not have the authority to award exemplary or punitive damages. 8.5 Confidentiality of Awards. All arbitration proceedings, including testimony or evidence at hearings, will be kept confidential, although any award or order rendered by the arbitrator(s) pursuant to the terms of this Agreement may be entered as a judgment or order in any state or federal court and may be confirmed within the federal judicial district which includes the residence of the party against whom such award or order was entered. This Agreement concerns transactions involving commerce among the several states. The Federal Arbitration Act, Title 9 U.S.C. Sections 1 et seq., as amended ("FAA") will govern all arbitration(s) and confirmation proceedings hereunder. 8.6 Prejudgment and Provisional Remedies. Nothing herein will be construed to prevent DFS' or Dealer's use of bankruptcy, receivership, injunction, repossession, replevin, claim and delivery, sequestration, seizure, attachment, foreclosure, liquidation and/or any other prejudgment or provisional action or remedy relating to any Collateral for any current or future debt owed by either party to the other. Any such action or remedy will not waive DFS' or Dealer's right to compel arbitration of any Dispute 8.7 Attorneys' Fees. If either Dealer or DFS brings any other action for judicial relief with respect to any Dispute (other than those set forth in Section 8.6), the party bringing such action will be liable for and immediately pay all of the other party's costs and expenses (including attorneys' fees) incurred to stay or dismiss such action and remove or refer such Dispute to arbitration. If either Dealer or -13- DFS brings or appeals an action to vacate or modify an arbitration award and such party does not prevail, such party will pay all costs and expenses, including attorneys' fees, incurred by the other party in defending such action. Additionally, if Dealer sues DFS or institutes any arbitration claim or counterclaim against DFS in which DFS is the prevailing party, Dealer will pay all costs and expenses (including attorneys' fees) incurred by DFS in the course of defending such action or proceeding. 8.8 Limitations. Any arbitration proceeding must be instituted: (a) with respect to any Dispute for the collection of any debt owed by either party to the other, within two (2) years after the date the last payment was received by the instituting party; and (b) with respect to any other Dispute, within two (2) years after the date the incident giving rise thereto occurred, whether or not any damage was sustained or capable of ascertainment or either party knew of such incident. Failure to institute an arbitration proceeding within such period will constitute an absolute bar and waiver to the institution of any proceeding, whether arbitration or a court proceeding, with respect to such Dispute. 8.9 Survival After Termination. The agreement to arbitrate will survive the termination of this Agreement. 9. INVALIDITY/UNENFORCEABILITY OF BINDING ARBITRATION. IF THIS AGREEMENT IS --------------------------- ---------- ------------ FOUND TO BE NOT SUBJECT TO ARBITRATION, ANY LEGAL PROCEEDING WITH RESPECT TO ANY DISPUTE WILL BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE WITHOUT A JURY. DEALER AND DFS WAIVE ANY RIGHT TO A JURY TRIAL IN ANY SUCH PROCEEDING. 10. Governing Law. Dealer acknowledges and agrees that this and all Other --------- ---- Agreements between Dealer and DFS have been substantially negotiated, and will be substantially performed, in the state of Missouri. Accordingly, Dealer agrees that all Disputes will be governed by, and construed in accordance with, the laws of such state, except to the extent inconsistent with the provisions of the FAA which shall control and govern all arbitration proceedings hereunder. IN WITNESS WHEREOF, Dealer and DFS have executed this Agreement as of the date first set forth hereinabove. THIS CONTRACT CONTAINS BINDING ARBITRATION, JURY WAIVER AND PUNITIVE DAMAGE WAIVER PROVISIONS. DEUTSCHE FINANCIAL SERVICES ePlus Technology, inc. CORPORATION By: __________________________ By:______________________________ Print Name:___________________ Print Name:______________________ Title:________________________ Title: __________________________ By: _____________________________ Print Name: _____________________ Title: __________________________ ATTEST: _________________________________ (Assistant Secretary) Print Name: _____________________ -14- SECRETARY'S CERTIFICATE OF RESOLUTION I certify that I am the Secretary of the corporation named below, and that the following completely and accurately sets forth a resolution of the Board of Directors of the corporation adopted by unanimous written consent in accordance with the certificate of incorporation, charter and by-laws of the corporation, and that they have not been revoked, annulled or amended in any manner whatsoever. "RESOLVED, That the below named officers of this corporation are hereby authorized and empowered on behalf of this corporation: to obtain financing from Deutsche Financial Services Corporation ("DFS") in such amounts and on such terms as they deem proper; to enter into and execute the financing, security, pledge and other agreements with DFS relating to the terms upon which such financing may be obtained and security and/or other credit support is to be furnished by this corporation therefor; from time to time to supplement or amend any such agreements; execute and deliver any and all assignments and schedules; and from time to time to pledge, assign, mortgage, grant security interests, and otherwise transfer, to DFS as collateral security for any obligations of this corporation to DFS, whenever and however arising, any assets of this corporation, whether now owned or hereafter acquired; the Board of Directors hereby ratifying, approving and confirming that which said officers have done or may do with respect to the foregoing." I do further certify that following are the names and specimen signatures of the officers of said corporation so empowered and authorized, namely: President: Nadim Achi By: /s/_____________________________ (Print Name) (Signature Controller: Elaine Marion By: /s/_____________________________ (Print Name) (Signature) IN WITNESS WHEREOF, I have executed and affixed the seal of the corporation on the date stated below. ____________________________________ Dated: September___, 2000 Secretary ____________________________________ Corporate Name (SEAL) -15- EX-32 3 f_exh5-1a.txt 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 JP Morgan Chase 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 JP Morgan 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/ Steven J. Mencarini --------------------------------- /s/ Erica S. Stoecker Steven J. Mencarini - ---------------------------- Erica S. Stoecker, Secretary Chief Financial Officer GE COMMERCIAL DISTRIBUTION FINANCE CORPORATION /s/ David Mintert --------------------------------- David Mintert Vice President of Operations EX-99 4 f_exh5-1b.txt 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. 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 Fifteen Million Dollars ($15,000,000.00); 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, Fifty Million Dollars ($50,000,000.00). 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 Fifty Million Dollars ($50,000,000.00); 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 Fifty Million Dollars ($50,000,000.00). CDF's decision to advance funds will not be binding until the funds are actually advanced. 2. Section 3.12 of the BFA is hereby amended in its entirety to read as follows: "3.12 Review. Dealer grants CDF an irrevocable license to enter Dealer's business locations during normal business hours with forty-eight (48) hours prior notice to Dealer (unless Dealer is in Default in which case no prior notice shall be required) to: (a) account for and inspect all Collateral; (b) verify Dealer's compliance with this Agreement; and (c) review, examine, and make copies of Dealer's books, records, files and business procedures and practices. Dealer further agrees to pay CDF a review fee of Three Thousand Dollars ($3,000.00) per quarter for any such review, inspection or examination made by CDF. CDF may, without notice to Dealer and at any time or times hereafter, verify the validity, amount or any other matter relating to any Account by mail, telephone, or other means, in the name of Dealer or CDF." 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 24th day of June, 2004. ePlus Technology, inc. Attest: Steven J. Mencarini Erica S. Stoecker, Secretary Chief Financial Officer GE COMMERCIAL DISTRIBUTION FINANCE CORPORATION David Mintert Vice President of Operations EX-99 5 f_exh5-1c.txt 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. 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 (i) Fifteen Million Dollars ($15,000,000.00) at all times other than during the Seasonal Uplift Period (as defined below), and (ii) Twenty Million Dollars ($20,000,000.00) from August 1st through December 31st of each calendar year (the "Seasonal Uplift Period"); provided, however, that (iii) at no time other than during the Seasonal Uplift Period will the principal amount outstanding under the Accounts Receivable Facility and Dealer's inventory floorplan credit facility with CDF exceed, in the aggregate, Fifty Million Dollars ($50,000,000.00), and (iv) at no time during the Seasonal Uplift Period will the principal amount outstanding under the Accounts Receivable Facility and Dealer's inventory floorplan credit facility with CDF exceed, in the aggregate, Seventy-five Million Dollars ($75,000,000.00). 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 (a) Fifty Million Dollars ($50,000,000.00) at all times other than during the Seasonal Uplift Period, and (b) Seventy-five Million Dollars ($75,000,000.00) during the Seasonal Uplift Period; provided, however, that (c) at no time other than during the Seasonal Uplift Period will the principal amount outstanding under the Accounts Receivable Facility and Dealer's inventory floorplan credit facility with CDF exceed, in the aggregate, Fifty Million Dollars ($50,000,000.00), and (d) at no time during the Seasonal Uplift Period will the principal amount outstanding under the Accounts Receivable Facility and Dealer's inventory floorplan credit facility with CDF exceed, in the aggregate Seventy-five Million Dollars ($75,000,000.00). CDF's decision to advance funds will not be binding until the funds are actually advanced. 2. The following section is hereby added to the BFA as if fully set forth therein: "3.3A Deferred Revenue. Each quarter, not later than the 15th of the month following a calender quarter end, Dealer will submit to CDF a detailed report, in a form satisfactory to CDF, describing the deferred revenue of Dealer (each a "DR Summary"). Notwithstanding anything to the contrary contained in Section 3.3 and without limiting CDF's discretion to determine the eligibility of Accounts, upon receipt of each DR Summary from Dealer, CDF will hold as ineligible any amount exceeding Five Hundred Thousand Dollars ($500,000.00) of the potential off-set listed on such DR Summary. In the event that CDF does not receive a DR Report in any quarter, the entire amount of Dealer's deferred service revenue will be deemed ineligible, as reflected on the most recent financial statement or other report provided by Dealer to CDF, until such time as CDF receives a new DR Report." 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 _____ day of ___________________, 2004. ePlus Technology, inc. Attest: _________________________________ _________________________________ Steven J. Mencarini Erica S. Stoecker, Secretary Chief Financial Officer GE COMMERCIAL DISTRIBUTION FINANCE CORPORATION _________________________________ David Mintert Vice President of Operations EX-99 6 f_exh5-2.txt AGREEMENT FOR WHOLESALE FINANCING This Agreement for Wholesale Financing ("Agreement") is made as of September 8, 2000 between Deutsche Financial Services Corporation ("DFS") and ePlus Technology, inc., a |___| SOLE PROPRIETORSHIP, | | PARTNERSHIP, | x | CORPORATION, | | LIMITED LIABILITY COMPANY (check applicable term) ("Dealer"), having a principal place of business located at 400 Herndon Parkway, Herndon, Virginia 20170. 1. Extension of Credit. Subject to the terms of this Agreement, DFS may extend credit to Dealer from time to time to purchase inventory from DFS approved vendors ("Vendors") and for other purposes. If DFS advances funds to Dealer following Dealer's execution of this Agreement, DFS will be deemed to have entered into this Agreement with Dealer, whether or not executed by DFS. DFS' decision to advance funds will not be binding until the funds are actually advanced. DFS may combine all of DFS' advances to Dealer or on Dealer's behalf, whether under this Agreement or any other agreement, and whether provided by one or more of DFS' branch offices, together with all finance charges, fees and expenses related thereto, to make one debt owed by Dealer. DFS may, at any time without notice to Dealer, elect not to finance any inventory sold by particular Vendors who are in default of their obligations to DFS, or with respect to which DFS reasonably feels insecure. This is an agreement regarding the extension of credit, and not the provision of goods or services. 2. Financing Terms and Statements of Transaction. Dealer and DFS agree that certain financial terms of any advance made by DFS under this Agreement, whether regarding finance charges, other fees, maturities, curtailments or other financial terms, are not set forth herein because such terms depend, in part, upon the availability of Vendor discounts, payment terms or other incentives, prevailing economic conditions, DFS' floorplanning volume with Dealer and with Dealer's Vendors, and other economic factors which may vary over time. Dealer and DFS further agree that it is therefore in their mutual best interest to set forth in this Agreement only the general terms of Dealer's financing arrangement with DFS. Upon agreeing to finance a particular item of inventory for Dealer, DFS will send Dealer a Statement of Transaction identifying such inventory and the applicable financial terms. Unless Dealer notifies DFS in writing of any objection within fifteen (15) days after a Statement of Transaction is mailed to Dealer: (a) the amount shown on such Statement of Transaction will be an account stated; (b) Dealer will have agreed to all rates, charges and other terms shown on such Statement of Transaction; (c) Dealer will have agreed that DFS is financing the items of inventory referenced in such Statement of Transaction at Dealer's request; and (d) such Statement of Transaction will be incorporated herein by reference, will be made a part hereof as if originally set forth herein, and will constitute an addendum hereto. If Dealer objects to the terms of any Statement of Transaction, Dealer agrees to pay DFS for such inventory in accordance with the most recent terms for similar inventory to which Dealer has not objected (or, if there are no prior terms, at the lesser of 16% per annum or at the maximum lawful contract rate of interest permitted under applicable law), but Dealer acknowledges that DFS may then elect to terminate Dealer's financing program pursuant to Section 17, and cease making additional advances to Dealer. However, such termination will not accelerate the maturities of advances previously made, unless Dealer shall otherwise be in default of this Agreement. 3. Grant of Security Interest. To secure payment of all of Dealer's current and future debts to DFS, whether under this Agreement or any current or future guaranty or other agreement, Dealer grants DFS a security interest in all of Dealer's inventory, equipment, fixtures, accounts, contract rights, chattel paper, security agreements, instruments, deposit accounts, reserves, documents, and general intangibles; and all judgments, claims, insurance policies, and payments owed or made to Dealer thereon; all -1- whether now owned or hereafter acquired, all attachments, accessories, accessions, returns, repossessions, exchanges, substitutions and replacements thereto, and all proceeds thereof. All such assets are collectively referred to herein as the "Collateral." All of such terms for which meanings are provided in the Uniform Commercial Code of the applicable state are used herein with such meanings. All Collateral financed by DFS, and all proceeds thereof, will be held in trust by Dealer for DFS, with such proceeds being payable in accordance with Section 9. 4. Affirmative Warranties and Representations. Dealer warrants and represents to DFS that: (a) Dealer has good title to all Collateral; (b) DFS' security interest in the Collateral financed by DFS is not now and will not become subordinate to the security interest, lien, encumbrance or claim of any person; (c) Dealer will execute all documents DFS reasonably requests to perfect and maintain DFS' security interest in the Collateral; (d) Dealer will deliver to DFS immediately upon each request, and DFS may retain, each Certificate of Title or Statement of Origin issued for Collateral financed by DFS; (e) Dealer will at all times be duly organized, existing, in good standing, qualified and licensed to do business in each state, county, or parish, in which the nature of its business or property so requires; (f) Dealer has the right and is duly authorized to enter into this Agreement; (g) Dealer's execution of this Agreement does not constitute a breach of any agreement to which Dealer is now or hereafter becomes bound; (h) there are no actions or proceedings pending or threatened against Dealer which might result in any material adverse change in Dealer's financial or business condition or which might in any way adversely affect any of Dealer's assets; (i) Dealer will maintain the Collateral in good condition and repair; (j) Dealer has duly filed and will duly file all tax returns required by law; (k) Dealer has paid and will pay when due all taxes, levies, assessments and governmental charges of any nature; (l) Dealer will keep and maintain all of its books and records pertaining to the Collateral at its principal place of business designated in this Agreement or at a designated storage facility of which DFS has been notified in writing; (m) Dealer will promptly supply DFS with such information concerning it or any guarantor as DFS hereafter may reasonably request; (n) all Collateral will be kept at Dealer's principal place of business listed above, and such other locations, if any, of which Dealer has notified DFS in writing or as listed on any current or future Exhibit "A" attached hereto which written notice(s) to DFS and Exhibit A(s) are incorporated herein by reference; (o) Dealer will give DFS thirty (30) days prior written notice of any change in Dealer's identity, name, form of business organization, ownership, management, principal place of business, Collateral locations or other business locations, and before moving any books and records to any other location; (p) Dealer will observe and perform all matters required by any lease, license, concession or franchise forming part of the Collateral in order to maintain all the rights of DFS thereunder; (q) Dealer will advise DFS of the commencement of material legal proceedings against Dealer or any guarantor; and (r) Dealer will comply with all applicable laws and will conduct its business in a manner which preserves and protects the Collateral and the earnings and incomes thereof. 5. Negative Covenants. Dealer will not at any time (without DFS' prior written consent): (a) other than in the ordinary course of its business and if material in nature, sell, lease or otherwise dispose of or transfer any of its assets; (b) rent, lease, demonstrate, consign, or use any Collateral financed by DFS; or (c) merge or consolidate with another entity unless Dealer is the surviving entity of such merger or consolidation and, after giving effect to such merger or consolidation, Dealer is in full compliance with all of the covenants contained in this Agreement and the any other agreements with DFS. 6. Insurance. Dealer will immediately notify DFS of any material loss, theft or damage to any Collateral. Dealer will keep the Collateral insured for its full insurable value under an "all risk" property insurance policy with a company acceptable to DFS, naming DFS as a lender loss-payee and -2- containing standard lender's loss payable and termination provisions. Dealer will provide DFS with written evidence of such property insurance coverage and lender's loss-payee endorsement. 7. Financial Statements. Dealer will deliver to DFS: (a) within ninety (90) days after the end of each of Dealer's fiscal years, a reasonably detailed balance sheet as of the last day of such fiscal year and a reasonably detailed income statement covering Dealer's operations for such fiscal year, in a form satisfactory to DFS; (b) within forty-five (45) days after the end of each of Dealer's fiscal quarters, a reasonably detailed balance sheet as of the last day of such quarter and an income statement covering Dealer's operations for such quarter, in a form satisfactory to DFS; and (c) within ten (10) business days after request therefor by DFS, any other report requested by DFS relating to the Collateral or the financial condition of Dealer. Dealer warrants and represents to DFS that all financial statements and information relating to Dealer or any guarantor which have been or may hereafter be delivered by Dealer or any guarantor are true and correct and have been and will be prepared in accordance with generally accepted accounting principles consistently applied and, with respect to such previously delivered statements or information, there has been no material adverse change in the financial or business condition of Dealer or any guarantor since the submission to DFS, either as of the date of delivery, or, if different, the date specified therein, and Dealer acknowledges DFS' reliance thereon. 8. Reviews. Dealer grants DFS an irrevocable license to enter Dealer's business locations during normal business hours with forty-eight (48) hours prior notice to Dealer (unless Dealer is in Default in which case no prior notice shall be required) to: (a) account for and inspect all Collateral; (b) verify Dealer's compliance with this Agreement; and (c) examine and copy Dealer's books and records related to the Collateral. 9. Payment Terms. Dealer will immediately pay DFS the principal indebtedness owed DFS on each item of Collateral financed by DFS (as shown on the Statement of Transaction identifying such Collateral) on the earliest occurrence of any of the following events: (a) when such Collateral is lost, stolen or damaged; (b) for Collateral financed under Pay-As-Sold ("PAS") terms (as shown on the Statement of Transaction identifying such Collateral), when such Collateral is sold, transferred, rented, leased, otherwise disposed of or matured; (c) in strict accordance with any curtailment schedule for such Collateral (as shown on the Statement of Transaction identifying such Collateral); (d) for Collateral financed under Scheduled Payment Program ("SPP") terms (as shown on the Statement of Transaction identifying such Collateral), in strict accordance with the installment payment schedule; and (e) when otherwise required under the terms of any financing program agreed to in writing by the parties. Regardless of the SPP terms pertaining to any Collateral financed by DFS, if DFS determines that the current outstanding debt which Dealer owes to DFS exceeds the aggregate wholesale invoice price of such Collateral in Dealer's possession, Dealer will immediately upon demand pay DFS the difference between such outstanding debt and the aggregate wholesale invoice price of such Collateral. If Dealer from time to time is required to make immediate payment to DFS of any past due obligation discovered during any Collateral review, or at any other time, Dealer agrees that acceptance of such payment by DFS shall not be construed to have waived or amended the terms of its financing program. The proceeds of any Collateral received by Dealer will be held by Dealer in trust for DFS' benefit, for application as provided in this Agreement. Dealer will send all payments to DFS' branch office(s) responsible for Dealer's account. DFS may apply: (i) payments to reduce finance charges first and then principal, regardless of Dealer's instructions; and (ii) principal payments to the oldest (earliest) invoice for Collateral financed by DFS, but, in any event, all principal payments will first be applied to such Collateral which is sold, lost, stolen, damaged, rented, leased, or otherwise disposed of or unaccounted for. Any third party discount, rebate, bonus or credit granted to Dealer for any Collateral will not reduce the debt Dealer owes DFS until DFS has -3- received payment therefor in cash. Dealer will: (1) pay DFS even if any Collateral is defective or fails to conform to any warranties extended by any third party; (2) not assert against DFS any claim or defense Dealer has against any third party; and (3) indemnify and hold DFS harmless against all claims and defenses asserted by any buyer of the Collateral relating to the condition of, or any representations regarding, any of the Collateral. Dealer waives all rights of offset and counterclaims Dealer may have against DFS. 10. Calculation of Charges. Dealer will pay finance charges to DFS on the outstanding principal debt which Dealer owes DFS for each item of Collateral financed by DFS at the rate(s) shown on the Statement of Transaction identifying such Collateral, unless Dealer objects thereto as provided in Section 2. The finance charges attributable to the rate shown on the Statement of Transaction will: (a) be computed based on a 360 day year; (b) be calculated by multiplying the Daily Charge (as defined below) by the actual number of days in the applicable billing period; and (c) accrue from the invoice date of the Collateral identified on such Statement of Transaction until DFS receives full payment in good funds of the principal debt Dealer owes DFS for each item of such Collateral in accordance with DFS' payment recognition policy and DFS applies such payment to Dealer's principal debt in accordance with the terms of this Agreement. The "Daily Charge" is the product of the Daily Rate (as defined below) multiplied by the Average Daily Balance (as defined below). The "Daily Rate" is the quotient of the annual rate shown on the Statement of Transaction divided by 360, or the monthly rate shown on the Statement of Transaction divided by 30. The "Average Daily Balance" is the quotient of (i) the sum of the outstanding principal debt owed DFS on each day of a billing period for each item of Collateral identified on a Statement of Transaction, divided by (ii) the actual number of days in such billing period. Dealer will also pay DFS $100 for each check returned unpaid for insufficient funds (an "NSF check") (such $100 payment repays DFS' estimated administrative costs; it does not waive the default caused by the NSF check). The annual percentage rate of the finance charges relating to any item of Collateral financed by DFS will be calculated from the invoice date of such Collateral, regardless of any period during which any finance charge subsidy shall be paid or payable by any third party. Dealer acknowledges that DFS intends to strictly conform to the applicable usury laws governing this Agreement. Regardless of any provision contained herein or in any other document executed or delivered in connection herewith or therewith, DFS shall never be deemed to have contracted for, charged or be entitled to receive, collect or apply as interest on this Agreement (whether termed interest herein or deemed to be interest by judicial determination or operation of law), any amount in excess of the maximum amount allowed by applicable law, and, if DFS ever receives, collects or applies as interest any such excess, such amount which would be excessive interest will be applied first to the reduction of the unpaid principal balances of advances under this Agreement, and, second, any remaining excess will be paid to Dealer. In determining whether or not the interest paid or payable under any specific contingency exceeds the highest lawful rate, Dealer and DFS shall, to the maximum extent permitted under applicable law: (A) characterize any non-principal payment (other than payments which are expressly designated as interest payments hereunder) as an expense or fee rather than as interest; (B) exclude voluntary pre-payments and the effect thereof; and (C) spread the total amount of interest throughout the entire term of this Agreement so that the interest rate is uniform throughout such term. 11. Billing Statement. DFS will send Dealer a monthly billing statement identifying all charges due on Dealer's account with DFS. The charges specified on each billing statement will be: (a) due and payable in full immediately on receipt; and (b) an account stated, unless DFS receives Dealer's written objection thereto within 15 days after it is mailed to Dealer. If DFS does not receive, by the 25th day of any given month, payment of all charges accrued to Dealer's account with DFS during the immediately preceding month, Dealer will (to the extent allowed by law) pay DFS a late fee ("Late Fee") equal to the greater of $5 or 5% of the amount of such finance charges (payment of the Late Fee does not waive the default caused by the late payment). DFS may adjust the billing statement at any time to conform to applicable law and this Agreement. -4- 12. Default. Dealer will be in default under this Agreement if: (a) Dealer breaches any terms, warranties or representations contained herein, in any Statement of Transaction to which Dealer has not objected as provided in Section 2, or in any other agreement between DFS and Dealer (other than as set forth in clause (d) or (e) below) and such breach is not cured within ten (10) days of Dealer's receipt of notice thereof; (b) any guarantor of Dealer's debts to DFS breaches any terms, warranties or representations contained in any guaranty or other agreement between the guarantor and DFS and such breach is not cured within the applicable cure period set forth therein; (c) any representation, statement, report or certificate made or delivered by Dealer or any guarantor to DFS is not accurate when made and such inaccuracy is not cured within ten (10) days of Dealer's or guarantor's receipt of notice thereof; (d) Dealer fails to pay any portion of Dealer's debts to DFS when due and payable hereunder or under any other agreement between DFS and Dealer and such failure is not cured within two (2) days of receipt of notice thereof; (e) Dealer abandons any Collateral and such abandonment is not cured within two (2) days of Dealer's receipt of notice thereof; (f) Dealer or any guarantor is or becomes in default in the payment of any debt to a third party in excess of five hundred thousand dollars (US $500,000) and such default is not cured within two (2) days of Dealer's or guarantor's receipt of notice thereof; (g) a money judgment issues against Dealer or any guarantor in excess of $500,000; (h) an attachment, sale or seizure issues or is executed against any assets of Dealer or of any guarantor having a value of over $500,000; (i) the undersigned dies while Dealer's business is operated as a sole proprietorship, any general partner dies while Dealer's business is operated as a general or limited partnership, or any member dies while Dealer's business is operated as a limited liability company, as applicable; (j) any guarantor dies; (k) Dealer or any guarantor shall cease existence as a corporation, partnership, limited liability company or trust, as applicable; (l) Dealer or any guarantor ceases or suspends business; (m) Dealer, any guarantor or any member while Dealer's business is operated as a limited liability company, as applicable, makes a general assignment for the benefit of creditors; (n) Dealer, any guarantor or any member while Dealer's business is operated as a limited liability company, as applicable, becomes insolvent or voluntarily or involuntarily becomes subject to the Federal Bankruptcy Code, any state insolvency law or any similar law; (o) any receiver is appointed for any assets of Dealer, any guarantor or any member while Dealer's business is operated as a limited liability company, as applicable; (p) any guaranty of Dealer's debts to DFS is terminated; (q) Dealer loses any franchise related to any Collateral which DFS finances; (r) Dealer or any guarantor misrepresents Dealer's or such guarantor's financial condition or organizational structure; (s) there shall occur a material adverse change in the financial or other condition or business prospects of Dealer or any guarantor; or (t) DFS is not secured with respect to any of the Collateral or the payment of any part of Dealer's obligation to DFS. Notwithstanding anything to the contrary in this Agreement, DFS will not be obligated to make any advances hereunder or issue any approvals to Vendors during any cure period set forth above. 13. Rights of DFS Upon Default. In the event of a default: (a) DFS may at any time at DFS' election, without notice or demand to Dealer, do any one or more of the following: declare all or any part of the debt Dealer owes DFS immediately due and payable, together with all costs and expenses of DFS' collection activity, including, without limitation, all reasonable attorneys' fees; exercise any or all rights under applicable law (including, without limitation, the right to possess, transfer and dispose of the Collateral); and/or cease extending any additional credit to Dealer (DFS' right to cease extending credit shall not be construed to limit the discretionary nature of this credit facility). (b) Dealer will segregate and keep the Collateral in trust for DFS, and in good order and repair, and will not sell, rent, lease, consign, otherwise dispose of or use any Collateral, nor further encumber any Collateral. (c) Upon DFS' oral or written demand, Dealer will immediately deliver the Collateral to DFS, in good order and repair, at a place specified by DFS, together with all related documents; -5- or DFS may, in DFS' sole discretion and without notice or demand to Dealer, take immediate possession of the Collateral together with all related documents. (d) DFS may, without notice, apply a default finance charge to Dealer's outstanding principal indebtedness equal to the default rate specified in Dealer's financing program with DFS, if any, or if there is none so specified, at the lesser of 3% per annum above the rate in effect immediately prior to the default, or the highest lawful contract rate of interest permitted under applicable law. All of DFS' rights and remedies are cumulative. DFS' failure to exercise any of DFS' rights or remedies hereunder will not waive any of DFS' rights or remedies as to any past, current or future default. 14. Sale of Collateral. Dealer agrees that if DFS conducts a private sale of any Collateral by requesting bids from 10 or more dealers or distributors in that type of Collateral, any sale by DFS of such Collateral in bulk or in parcels within 120 days of: (a) DFS' taking possession and control of such Collateral; or (b) when DFS is otherwise authorized to sell such Collateral; whichever occurs last, to the bidder submitting the highest cash bid therefor, is a commercially reasonable sale of such Collateral under the Uniform Commercial Code. Dealer agrees that the purchase of any Collateral by a Vendor, as provided in any agreement between DFS and the Vendor, is a commercially reasonable disposition and private sale of such Collateral under the Uniform Commercial Code, and no request for bids shall be required. Dealer further agrees that seven (7) or more days prior written notice will be commercially reasonable notice of any public or private sale (including any sale to a Vendor). Dealer irrevocably waives any requirement that DFS retain possession and not dispose of any Collateral until after an arbitration hearing, arbitration award, confirmation, trial or final judgment. If DFS disposes of any such Collateral other than as herein contemplated, the commercial reasonableness of such disposition will be determined in accordance with the laws of the state governing this Agreement. 15. Power of Attorney. Dealer grants DFS an irrevocable power of attorney to: execute or endorse on Dealer's behalf any checks, financing statements, instruments, Certificates of Title and Statements of Origin pertaining to the Collateral; supply any omitted information and correct errors in any documents between DFS and Dealer; initiate and settle any insurance claim pertaining to the Collateral; and do anything to preserve and protect the Collateral and DFS' rights and interest therein. 16. Information. DFS may provide to any third party upon request any public credit information on Dealer that DFS may from time to time possess or any financial or other information on Dealer that DFS may from time to time possess as required by law. DFS may obtain from any Vendor any credit, financial or other information regarding Dealer that such Vendor may from time to time possess. 17. Termination. Either party may terminate this Agreement at any time by written notice received by the other party. If DFS terminates this Agreement, Dealer agrees that if Dealer: (a) is not in default hereunder, sixty (60) days prior notice of termination is reasonable and sufficient (although this provision shall not be construed to mean that shorter periods may not, in particular circumstances, also be reasonable and sufficient); or (b) is in default hereunder, no prior notice of termination is required. Dealer will not be relieved from any obligation to DFS arising out of DFS' advances or commitments made before the effective termination date of this Agreement. DFS will retain all of its rights, interests and remedies hereunder until Dealer has paid all of Dealer's debts to DFS. All waivers set forth within this Agreement will survive any termination of this Agreement. 18. Binding Effect. Dealer cannot assign its interest in this Agreement without DFS' prior written consent, although DFS may assign or participate DFS' interest, in whole or in part, without Dealer's consent. This Agreement -6- will protect and bind DFS' and Dealer's respective heirs, representatives, successors and assigns. 19. Notices. Except as otherwise stated herein, all notices, arbitration claims, responses, requests and documents will be sufficiently given or served if mailed or delivered: (a) to Dealer at Dealer's principal place of business specified above; and (b) to DFS at 655 Maryville Centre Drive, St. Louis, Missouri 63141-5832, Attention: General Counsel, or such other address as the parties may hereafter specify in writing. 20. NO ORAL AGREEMENTS. ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT INCLUDING PROMISES TO EXTEND OR RENEW SUCH DEBTS ARE NOT ENFORCEABLE. TO PROTECT DEALER AND DFS FROM MISUNDERSTANDING OR DISAPPOINTMENT, ALL AGREEMENTS COVERING SUCH MATTERS ARE CONTAINED IN THIS WRITING, WHICH IS THE COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN THE PARTIES, EXCEPT AS SPECIFICALLY PROVIDED HEREIN OR AS THE PARTIES MAY LATER AGREE IN WRITING TO MODIFY IT. THERE ARE NO UNWRITTEN AGREEMENTS BETWEEN THE PARTIES. 21. Other Waivers. Dealer irrevocable waives notice of: presentment, demand, protest, nonpayment, nonperformance and dishonor. Dealer and DFS irrevocably waive all rights to claim any punitive and/or exemplary damages. 22. Severability. If any provision of this Agreement or its application is invalid or unenforceable, the remainder of this Agreement will not be impaired or affected and will remain binding and enforceable. 23. Supplement. If Dealer and DFS have heretofore executed other agreements in connection with all or any part of the Collateral, this Agreement shall supplement each and every other agreement previously executed by and between Dealer and DFS, and in that event this Agreement shall neither be deemed a novation nor a termination of such previously executed agreement nor shall execution of this Agreement be deemed a satisfaction of any obligation secured by such previously executed agreement. 24. Receipt of Agreement. Dealer acknowledges that it has received a true and complete copy of this Agreement. Dealer acknowledges that it has read and understood this Agreement. Notwithstanding anything herein to the contrary: (a) DFS may rely on any facsimile copy, electronic data transmission or electronic data storage of this Agreement, any Statement of Transaction, billing statement, invoice from a Vendor, financial statements or other reports, and (b) such facsimile copy, electronic data transmission or electronic data storage will be deemed an original, and the best evidence thereof for all purposes, including, without limitation, under this Agreement or any other agreement between DFS and Dealer, and for all evidentiary purposes before any arbitrator, court or other adjudicatory authority. 25. Miscellaneous. Time is of the essence regarding Dealer's performance of its obligations to DFS notwithstanding any course of dealing or custom on DFS' part to grant extensions of time. Dealer's liability under this Agreement is direct and unconditional and will not be affected by the release or nonperfection of any security interest granted hereunder. DFS will have the right to refrain from or postpone enforcement of this Agreement or any other agreements between DFS and Dealer without prejudice and the failure to strictly enforce these agreements will not be construed as having created a course of dealing between DFS and Dealer contrary to the specific terms of the agreements or as having modified, released or waived the same. The express terms of this Agreement will not be modified by any course of dealing, usage of trade, or custom of trade which may deviate from the terms hereof. If Dealer fails to pay any taxes, fees or other obligations which may impair DFS' interest in the Collateral, or fails to keep the Collateral insured, DFS may, but shall not be required to, pay such taxes, fees or obligations and pay the cost to insure the Collateral, and the amounts paid will be: (a) an additional debt owed by Dealer to DFS, which shall be subject to finance charges as provided herein; and (b) due and payable immediately in full. Dealer agrees to pay all of DFS' reasonable attorneys' fees and expenses incurred by DFS in enforcing DFS' rights hereunder. The Section titles used in this Agreement are for convenience only and do not define or limit the contents of any Section. -7- 26. BINDING ARBITRATION. 26.1 Arbitrable Claims. Except as otherwise specified below, all actions, disputes, claims and controversies under common law, statutory law or in equity of any type or nature whatsoever (including, without limitation, all torts, whether regarding negligence, breach of fiduciary duty, restraint of trade, fraud, conversion, duress, interference, wrongful replevin, wrongful sequestration, fraud in the inducement, usury or any other tort, all contract actions, whether regarding express or implied terms, such as implied covenants of good faith, fair dealing, and the commercial reasonableness of any Collateral disposition, or any other contract claim, all claims of deceptive trade practices or lender liability, and all claims questioning the reasonableness or lawfulness of any act), whether arising before or after the date of this Agreement, and whether directly or indirectly relating to: (a) this Agreement and/or any amendments and addenda hereto, or the breach, invalidity or termination hereof; (b) any previous or subsequent agreement between DFS and Dealer; (c) any act committed by DFS or by any parent company, subsidiary or affiliated company of DFS (the "DFS Companies"), or by any employee, agent, officer or director of a DFS Company whether or not arising within the scope and course of employment or other contractual representation of the DFS Companies provided that such act arises under a relationship, transaction or dealing between DFS and Dealer; and/or (d) any other relationship, transaction or dealing between DFS and Dealer (collectively the "Disputes"), will be subject to and resolved by binding arbitration. 26.2 Administrative Body. All arbitration hereunder will be conducted in accordance with the Commercial Arbitration Rules of The American Arbitration Association ("AAA"). If the AAA is dissolved, disbanded or becomes subject to any state or federal bankruptcy or insolvency proceeding, the parties will remain subject to binding arbitration which will be conducted by a mutually agreeable arbitral forum. The parties agree that all arbitrator(s) selected will be attorneys with at least five (5) years secured transactions experience. The arbitrator(s) will decide if any inconsistency exists between the rules of any applicable arbitral forum and the arbitration provisions contained herein. If such inconsistency exists, the arbitration provisions contained herein will control and supersede such rules. The site of all arbitration proceedings will be in the Division of the Federal Judicial District in which AAA maintains a regional office that is closest to Dealer. 26.3 Discovery. Discovery permitted in any arbitration proceeding commenced hereunder is limited as follows. No later than thirty (30) days after the filing of a claim for arbitration, the parties will exchange detailed statements setting forth the facts supporting the claim(s) and all defenses to be raised during the arbitration, and a list of all exhibits and witnesses. No later than twenty-one (21) days prior to the arbitration hearing, the parties will exchange a final list of all exhibits and all witnesses, including any designation of any expert witness(es) together with a summary of their testimony; a copy of all documents and a detailed description of any property to be introduced at the hearing. Under no circumstances will the use of interrogatories, requests for admission, requests for the production of documents or the taking of depositions be permitted. However, in the event of the designation of any expert witness(es), the following will occur: (a) all information and documents relied upon by the expert witness(es) will be delivered to the opposing party, (b) the opposing party will be permitted to depose the expert witness(es), (c) the opposing party will be permitted to designate rebuttal expert witness(es), and (d) the arbitration hearing will be continued to the earliest possible date that enables the foregoing limited discovery to be accomplished. -8- 26.4 Exemplary or Punitive Damages. The Arbitrator(s) will not have the authority to award exemplary or punitive damages 26.5 Confidentiality of Awards. All arbitration proceedings, including testimony or evidence at hearings, will be kept confidential, although any award or order rendered by the arbitrator(s) pursuant to the terms of this Agreement may be entered as a judgment or order in any state or federal court and may be confirmed within the federal judicial district which includes the residence of the party against whom such award or order was entered. This Agreement concerns transactions involving commerce among the several states. The Federal Arbitration Act, Title 9 U.S.C. Sections 1 et seq., as amended ("FAA") will govern all arbitration(s) and confirmation proceedings hereunder. 26.6 Prejudgment and Provisional Remedies. Nothing herein will be construed to prevent DFS' or Dealer's use of bankruptcy, receivership, injunction, repossession, replevin, claim and delivery, sequestration, seizure, attachment, foreclosure, liquidation and/or any other prejudgment or provisional action or remedy relating to any Collateral for any current or future debt owed by either party to the other. Any such action or remedy will not waive DFS' or Dealer's right to compel arbitration of any Dispute. 26.7 Attorneys' Fees. If either Dealer or DFS brings any other action for judicial relief with respect to any Dispute (other than those set forth in Section 26.6), the party bringing such action will be liable for and immediately pay all of the other party's costs and expenses (including attorneys' fees) incurred to stay or dismiss such action and remove or refer such Dispute to arbitration. If either Dealer or DFS brings or appeals an action to vacate or modify an arbitration award and such party does not prevail, such party will pay all costs and expenses, including attorneys' fees, incurred by the other party in defending such action. Additionally, if Dealer sues DFS or institutes any arbitration claim or counterclaim against DFS in which DFS is the prevailing party, Dealer will pay all costs and expenses (including attorneys' fees) incurred by DFS in the course of defending such action or proceeding. 26.8 Limitations. Any arbitration proceeding must be instituted: (a) with respect to any Dispute for the collection of any debt owed by either party to the other, within two (2) years after the date the last payment was received by the instituting party; and (b) with respect to any other Dispute, within two (2) years after the date the incident giving rise thereto occurred, whether or not any damage was sustained or capable of ascertainment or either party knew of such incident. Failure to institute an arbitration proceeding within such period will constitute an absolute bar and waiver to the institution of any proceeding, whether arbitration or a court proceeding, with respect to such Dispute. 26.9 Survival After Termination. The agreement to arbitrate will survive the termination of this Agreement. 27. INVALIDITY/UNENFORCEABILITY OF BINDING ARBITRATION. IF THIS AGREEMENT IS FOUND TO BE NOT SUBJECT TO ARBITRATION, ANY LEGAL PROCEEDING WITH RESPECT TO ANY DISPUTE WILL BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE WITHOUT A JURY. DEALER AND DFS WAIVE ANY RIGHT TO A JURY TRIAL IN ANY SUCH PROCEEDING. 28. Governing Law. Dealer acknowledges and agrees that this and all other agreements between Dealer and DFS have been substantially negotiated, and will be substantially performed, in the state of Missouri . Accordingly, Dealer agrees that all Disputes will be governed by, and construed in accordance with, the laws of such state, except to the extent inconsistent with the provisions of the FAA which shall control and govern all arbitration proceedings hereunder. IN WITNESS WHEREOF, Dealer and DFS have executed this Agreement as of the date first set forth hereinabove. -9- THIS CONTRACT CONTAINS BINDING ARBITRATION, JURY WAIVER AND PUNITIVE DAMAGE WAIVER PROVISIONS. DEUTSCHE FINANCIAL SERVICES CORPORATION ePlus Technology, inc. Dealer's Name By:____________________________________ By:___________________________________ Print Name:____________________________ Print Name:___________________________ Title:_________________________________ Title:________________________________ By:___________________________________ Print Name:___________________________ Title:________________________________ ATTEST: ______________________________________ (Assistant) Secretary Print Name:___________________________ (SEAL) SECRETARY'S CERTIFICATE OF RESOLUTION I certify that I am the Secretary of the corporation named below, and that the following completely and accurately sets forth a resolution of the Board of Directors of the corporation adopted by unanimous written consent. "RESOLVED, That the several officers, directors, and agents of this corporation, or any one or more of them, are hereby authorized and empowered on behalf of this corporation: to obtain financing from Deutsche Financial Services Corporation ("DFS") in such amounts and on such terms as such officers, directors or agents deem proper; to enter into financing, security, pledge and other agreements with DFS relating to the terms upon which such financing may be obtained and security and/or other credit support is to be furnished by this corporation therefor; from time to time to supplement or amend any such agreements; and from time to time to pledge, assign, mortgage, grant security interests, and otherwise transfer, to DFS as collateral security for any obligations of this corporation to DFS, whenever and however arising, any assets of this corporation, whether now owned or hereafter acquired; the Board of Directors hereby ratifying, approving and confirming all that any of said officers, directors or agents have done or may do with respect to the foregoing." IN WITNESS WHEREOF, I have executed and affixed the seal of the corporation on the date stated below. Dated:_________________, 20_____ _______________________________________ Secretary _______________________________________ Corporate Name (SEAL) -10- EX-99 7 f_exh5-3.txt PAYDOWN ADDENDUM TO BUSINESS FINANCING AGREEMENT AND AGREEMENT FOR WHOLESALE FINANCING (Credit for Inventory Financed by DFS Only) This Addendum is made to (i) that certain Business Financing Agreement executed on the day August, 2000, between ePlus Technology, inc. ("Dealer") and Deutsche Financial Services Corporation ("DFS"), as amended ("BFA") and (ii) that certain Agreement for Wholesale Financing between Dealer and DFS dated September 8, 2000, as amended ("AWF"). FOR VALUE RECEIVED, DFS and Dealer agree as follows: 1. Section 3.2 of the BFA is hereby amended to read as follows, and, to the extent applicable, the following provision shall also amend the AWF (capitalized terms shall have the same meaning as defined in the BFA unless otherwise indicated): "3.2 Available Credit; Paydown. On receipt of each Schedule, DFS will credit Dealer with such amount as DFS may deem advisable up to the remainder of (a) the sum of (i) Ninety Percent (90%) of the net amount of the eligible Government Accounts listed in such Schedule plus (ii) Eighty-Five Percent (85%) of the net amount of the eligible Non-Government Accounts listed in such Schedule (the applicable percentage set forth in (a)(i) and (a)(ii) is hereinafter referred to as the "Advance Rate"), minus (b) the amount of Dealer's SPP Deficit (as defined below) under Dealer's Agreement for Wholesale Financing (the 'AWF') with DFS as in effect from time to time (the 'Available Credit'). Dealer's 'SPP Deficit' shall mean the amount, if any, by which Dealer's total current outstanding indebtedness to DFS 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 DFS of a new Inventory Report. Dealer will forward to DFS 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 financed by DFS under the AWF 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 financed by DFS under the AWF that is unsold and in Dealer's possession and control as of the date of the Inventory Report and to the extent that DFS has a first priority, fully perfected security interest therein. 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 DFS 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 (a) the Advance Rate multipled by the net amount of Dealer's eligible Accounts, minus (b) 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 DFS, as a reduction of Dealer's total current outstanding indebtedness to DFS under the AWF, the difference between (i) Dealer's SPP Deficit, and (ii) (a) the Advance Rate multipled by the net amount of Dealer's eligible Accounts minus (b) Dealer's outstanding loans under Dealer's accounts receivable credit facility as set forth in Section 2.1 of this Agreement. DFS 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 DFS if Dealer is in Default." 2. The following paragraph is incorporated into the AWF and BFA as if fully and originally set forth therein: -1- "Dealer will at all times maintain: (a) a Tangible Net Worth and Subordinated Debt in the combined amount of not less than Four Million Five Hundred Thousand Dollars ($4,500,000); and (b) a ratio of Debt minus Subordinated Debt to Tangible Net Worth and Subordinated Debt of not more than Six and One Half to One (6.5:1.0). For purposes of this paragraph: (i) 'Tangible Net Worth' means the book value of Dealer's assets less liabilities, excluding from such assets all Intangibles; (ii) 'Intangibles' means and includes general intangibles (as that term is defined in the Uniform Commercial Code); accounts receivable and advances due from officers, directors, employees, stockholders 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; and such other similar items as DFS may from time to time determine in DFS' sole discretion; (iii) 'Debt' means all of 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 Dealer has pledged assets to secure performance, whether or not direct recourse liability has been assumed by Dealer; and (iv) 'Subordinated Debt' means all of Dealer's Debt which is subordinated to the payment of Dealer's liabilities to DFS by an agreement in form and substance satisfactory to DFS. The foregoing terms will be determined in accordance with generally accepted accounting principles consistently applied, and, if applicable, on a consolidated basis." All other terms and provision of the BFA and AWF, to the extent consistent with the foregoing, are hereby ratified and will remain unchanged and in full force and effect. IN WITNESS WHEREOF, Dealer and DFS have both read this Paydown Addendum to the Business Financing Agreement and Agreement for Wholesale Financing, understand all the terms and provisions hereof and agree to be bound thereby and subject thereto as of this day of August, 2000. ePlus Technology, inc. Attest: By:____________________________________ ___________________________ Title:_________________________________ (Assistant) Secretary DEUTSCHE FINANCIAL SERVICES CORPORATION By:____________________________________ Title:_________________________________ -2- EX-99 8 f_exh5-4.txt LIMITED GUARANTY TO: GE Commercial Distribution Finance Corporation (formerly known as Deutsche Financial Services Corporation) In consideration of financing provided or to be provided by you to ePlus Technology, inc. ("Dealer"), and for other good and valuable consideration received, we jointly, severally, unconditionally and absolutely guaranty to you, from property held separately, jointly or in community, the immediate payment when due of all current and future liabilities owed by Dealer to you, whether such liabilities are direct, indirect or owed by Dealer to a third party and acquired by you ("Liabilities"). We will pay you on demand the full amount of all sums owed by Dealer to you, together with all costs and expenses (including, without limitation, reasonable attorneys' fees). We also indemnify and hold you harmless from and against all (a) losses, costs and expenses you incur and/or are liable for (including, without limitation, reasonable attorneys' fees) and (b) claims, actions and demands made by Dealer or any third party against you, which in any way relate to any relationship or transaction between you and Dealer. Notwithstanding the foregoing, if you enforce this Guaranty our maximum aggregate liability hereunder to you at such time will not exceed Ten Million Five Hundred Thousand Dollars ($10,500,000.00). Our guaranty will not be released, discharged or affected by, and we hereby irrevocably consent to, any: (a) change in the manner, place, interest rate, finance or other charges, or terms of payment or performance in any current or future agreement between you and Dealer, the release, settlement or compromise of or with any party liable for the payment or performance thereof or the substitution, release, non-perfection, impairment, sale or other disposition of any collateral thereunder; (b) change in Dealer's financial condition; (c) interruption of relations between Dealer and you or us; (d) claim or action by Dealer against you; and/or (e) increases or decreases in any credit you may provide to Dealer. We will pay you even if you have not: (i) notified Dealer that it is in default of the Liabilities, and/or that you intend to accelerate or have accelerated the payment of all or any part of the Liabilities, or (ii) exercised any of your rights or remedies against Dealer, any other person or any current or future collateral. This Guaranty is assignable by you and will inure to the benefit of your assignee. If Dealer hereafter undergoes any change in its ownership, identity or organizational structure, this Guaranty will extend to all current and future obligations which such new or changed legal entity owes to you. We irrevocably waive notice of: your acceptance of this Guaranty, presentment, demand, protest, dishonor, nonpayment, nonperformance, breach or default, your intent to accelerate and your acceleration of any indebtedness of Dealer, the amount of indebtedness of Dealer outstanding at any time, the number and amount of advances made by you to Dealer in reliance on this Guaranty, and any claim or action against Dealer. We further waive all right of contribution from other guarantors, all other demands and notices required by law, all rights of offset and counterclaims against you or Dealer, all defenses to the enforceability of this Guaranty (including, without limitation, fraudulent inducement), and all defenses based on suretyship or impairment of collateral, and defenses which the Dealer may assert on the underlying debt, including but not limited to, failure of consideration, breach of warranty, fraud, payment, statute of frauds, bankruptcy, lack of legal capacity, statute of limitations, lender liability, deceptive trade practices, accord and satisfaction and usury. We also waive all rights to claim, arbitrate for or sue for any punitive or exemplary damages. In addition, we hereby irrevocably subordinate to you any and all of our present and future rights and remedies: (a) of subrogation against Dealer or any other guarantor to any of your rights or remedies against Dealer or any other guarantor, (b) of contribution, reimbursement, indemnification and restoration from Dealer or any other guarantor, and (c) to assert any other claim or action against Dealer or any other guarantor directly or indirectly relating to this Guaranty, such subordinations to last until you have been paid in full for all Liabilities. All of our waivers and subordinations herein will survive any termination of this Guaranty. We have made an independent investigation of the financial condition of Dealer and give this Guaranty based on that investigation and not upon any representation made by you. We have access to current and future Dealer financial information which enables us to remain continuously informed of Dealer's financial condition. We represent and warrant to you that we have received and will receive substantial direct or indirect benefit by making this Guaranty and incurring the Liabilities. We will provide you with financial statements on us each year within ninety (90) days after the end of Dealer's fiscal year end. We represent that all financial statements and information which have been or may hereafter be delivered by us or Dealer to you are and will be correct and prepared in accordance with generally accepted accounting principles consistently applied, and there has been no material adverse change in the financial or business condition of us or Dealer since the submission to you of such financial statements, and we acknowledge your reliance thereon. This Guaranty will survive any federal and/or state bankruptcy or insolvency action involving Dealer. We are solvent and our execution of this Guaranty will not make us insolvent. If you are required in any action involving Dealer to return or rescind any payment made to or value received by you from or for the account of Dealer, this Guaranty will remain in full force and effect and will be automatically reinstated without any further action by you and notwithstanding any termination of this Guaranty or your release of us. Any delay or failure by you, or your successors or assigns, in exercising any of your rights or remedies hereunder will not waive any such rights or remedies. Oral agreements or commitments to loan money, extend credit or to forbear from enforcing repayment of a debt including promises to extend or renew such debt are not enforceable. To protect us and you from misunderstanding or disappointment, any agreements we reach covering such matters are contained in this writing, which is the complete and exclusive statement of the agreement between us, except as specifically provided herein or as we may later agree in writing to modify it. Notwithstanding anything herein to the contrary, you may rely on any facsimile copy, electronic data transmission or electronic data storage of: this Guaranty, any agreement between you and Dealer, any Statement of Transaction, billing statement, invoice from a vendor, financial statements or other reports, which will be deemed an original, and the best evidence thereof for all purposes. We may terminate this Guaranty by a written notice to you, the termination to be effective sixty (60) days after you receive and acknowledge it, but the termination will not terminate our obligations hereunder for Liabilities arising prior to the effective termination date. We have read and understood all terms and provisions of this Guaranty. We acknowledge receipt of a true and complete copy of this Guaranty and of all agreements between you and Dealer. The meanings of all terms herein are equally applicable to both the singular and plural forms of such terms. BINDING ARBITRATION. Except as otherwise specified below, all actions, disputes, claims and controversies under common law, statutory law or in equity of any type or nature whatsoever, whether arising before or after the date of this Guaranty, and whether directly or indirectly relating to: (a) this Guaranty and/or any amendments and addenda hereto, or the breach, invalidity or termination hereof; (b) any previous or subsequent agreement between you and us; (c) any act committed by you or by any parent company, subsidiary or affiliated company of you (the "CDF Companies"), or by any employee, agent, officer or director of a CDF Company, whether or not arising within the scope and course of employment or other contractual representation of the CDF Companies provided that such act arises under a relationship, transaction or dealing between you and Dealer or you and us; and/or (d) any other relationship, transaction, dealing or agreement between you and Dealer or you and us (collectively the "Disputes"), will be subject to and resolved by binding arbitration. Notwithstanding the foregoing, the parties agree that either party may pursue claims against the other that do not exceed Fifteen Thousand Dollars ($15,000) in the aggregate in a court of competent jurisdiction. Service of arbitration claims shall be acceptable if made by U.S. mail or overnight delivery to the address for the party described herein. All arbitration hereunder will be conducted in accordance with The Commercial Arbitration Rules of either: (a) The American Arbitration Association ("AAA") or (b) United States Arbitration & Mediation ("USA&M"). The party first filing an arbitration claim shall designate which arbitration forum and rules are to be applied for all disputes between the parties. The arbitration rules are found at www.adr.org for AAA, and at www.usam-midwest.com for USA&M. AAA claims may be filed in any AAA office. Claims filed with USA&M shall be filed in their Midwest office located at 720 Olive Street, Suite 2020, St. Louis, Missouri 63101. All arbitrator(s) selected will be attorneys with at least five (5) years secured transactions experience. A panel of three arbitrators shall hear all claims exceeding One Million Dollars ($1,000,000), exclusive of interest, costs and attorneys' fees. The arbitrator(s) will decide if any inconsistency exists between the rules of any applicable arbitral forum and the arbitration provisions contained herein. If such inconsistency exists, the arbitration provisions contained herein will control and supersede such rules. The arbitrator shall follow the terms of this agreement and the applicable law, including without limitation, the attorney-client privilege and the attorney workproduct doctrine. Each party hereby consents to a documentary hearing for all arbitration claims, by submitting the dispute to the arbitrator(s) by written briefs and affidavits, along with relevant documents. However, arbitration claims will be submitted by way of an oral hearing, if any party requests an oral hearing within forty (40) days after service of the claim, and that party remits the appropriate deposit for AAA's fees and arbitrator compensation within ten (10) days of making the request. The site of all oral arbitration hearings will be in the Division of the Federal Judicial District in which AAA or USA&M maintains a regional office that is closest to Dealer. Discovery permitted in any arbitration proceeding commenced hereunder is limited as follows: No later than forty (40) days after the filing and service of a claim for arbitration, the parties in contested cases will exchange detailed statements setting forth the facts supporting the claim(s) and all defenses to be raised during the arbitration, and a list of all exhibits and witnesses. No later than twenty-one (21) days prior to the oral arbitration hearing, the parties will exchange a final list of all exhibits and all witnesses, including any designation of any expert witness(es) together with a summary of their testimony; a copy of all documents and a detailed description of any property to be introduced at the hearing. Under no circumstances will the use of interrogatories, requests for admission, requests for the production of documents or the taking of depositions be permitted. However, in the event of the designation of any expert witness(es), the following will occur: (a) all information and documents relied upon by the expert witness(es) will be delivered to the opposing party; (b) the opposing party will be permitted to depose the expert witness(es); (c) the opposing party will be permitted to designate rebuttal expert witness(es); and (d) the arbitration hearing will be continued to the earliest possible date that enables the foregoing limited discovery to be accomplished. The Arbitrator(s) will not have the authority to award exemplary or punitive damages. All arbitration proceedings, including testimony or evidence at hearings, will be kept confidential, although any award or order rendered by the arbitrator(s) pursuant to the terms of this Guaranty may be confirmed as a judgment or order in any state or federal court of competent jurisdiction within the federal judicial district which includes the residence of the party against whom such award or order was entered. This Guaranty concerns transactions involving commerce among the several states. The Federal Arbitration Act ("FAA") will govern all arbitration(s) and confirmation proceedings hereunder. Nothing herein will be construed to prevent your or our use of bankruptcy, receivership, injunction, repossession, replevin, claim and delivery, sequestration, seizure, attachment, foreclosure, and/or any other prejudgment or provisional action or remedy relating to any collateral for any current or future debt owed by either party to the other. Any such action or remedy will not waive your or our right to compel arbitration of any Dispute. If either we or you bring any other action for judicial relief with respect to any Dispute (other than those set forth in the preceding paragraphs), the party bringing such action will be liable for and immediately pay all of the other party's costs and expenses (including attorneys' fees) incurred to stay or dismiss such action and remove or refer such Dispute to arbitration. If either we or you bring or appeal an action to vacate or modify an arbitration award and such party does not prevail, such party will pay all costs and expenses, including attorneys' fees, incurred by the other party in defending such action. Additionally, if we sue you or institute any arbitration claim or counterclaim against you in which you are the prevailing party, we will pay all costs and expenses (including attorneys' fees) incurred by you in the course of defending such action or proceeding. Any arbitration proceeding must be instituted: (a) with respect to any Dispute for the collection of any debt owed by either party to the other, within two (2) years after the date the last payment was received by the instituting party; and (b) with respect to any other Dispute, within two (2) years after the date the incident giving rise thereto occurred, whether or not any damage was sustained or capable of ascertainment or either party knew of such incident. Failure to institute an arbitration proceeding within such period will constitute an absolute bar and waiver to the institution of any proceeding with respect to such Dispute. Except as otherwise stated herein, all notices, arbitration claims, responses, requests and documents will be sufficiently given or served if mailed or delivered: (i) to us at our address below; (ii) to you at 655 Maryville Centre Drive, St. Louis, Missouri 63141-5832, Attention: General Counsel; or such other address as the parties may specify from time to time in writing. The agreement to arbitrate will survive the termination of this Guaranty. IF THIS GUARANTY IS FOUND TO BE NOT SUBJECT TO ARBITRATION, ANY LEGAL PROCEEDING WITH RESPECT TO ANY DISPUTE WILL BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE WITHOUT A JURY. WE WAIVE ANY RIGHT TO A JURY TRIAL IN ANY SUCH PROCEEDING. The terms contained in this Guaranty supercede and replace the terms of that certain Limited Guaranty signed March 19, 2003 by ePlus inc. with respect to financing provided to ePlus Technology, inc. and to ePlus Technology of PA, inc. This Guaranty and all agreements between Dealer and you have been substantially negotiated, and will be substantially performed, in the state of Missouri. Accordingly, all Disputes will be governed by, and construed in accordance with, the laws of such state, except to the extent inconsistent with the provisions of the FAA which will control and govern all arbitration proceedings hereunder. THIS GUARANTY CONTAINS BINDING ARBITRATION, JURY WAIVER AND PUNITIVE DAMAGES WAIVER PROVISIONS. Date: ______________, 2004 ePLUS inc. Steven J. Mencarini, Chief Financial Officer Address of Guarantor: 400 Herndon Parkway Herndon, VA SECRETARY'S CERTIFICATE I hereby certify that I am the Secretary or Assistant Secretary of ePLUS inc. ("Guarantor") and that execution of the above Limited Guaranty was ratified, approved and confirmed by the Shareholders at a meeting, if necessary, and pursuant to a resolution of the Board of Directors of Guarantor at a meeting of the Board of Directors duly called, and which is currently in effect, which resolution was duly presented, seconded and adopted and reads as follows: "BE IT RESOLVED that any officer of this corporation is hereby authorized to execute a guaranty of the obligations of ePlus Technology, inc. ("Dealer") to GE Commercial Distribution Finance Corporation on behalf of the corporation, which instrument may contain such terms as the above named persons may see fit including, but not limited to a waiver of notice of the acceptance of the guaranty; presentment; demand; protest; notices of nonpayment, nonperformance, dishonor, the amount of indebtedness of Dealer outstanding at any time, any legal proceedings against Dealer, and any other demands and notices required by law; and any right of contribution from other guarantors." IN WITNESS WHEREOF, I have hereunto set my hand and affixed the corporate seal on this ____ day of _______________, 2004. ePLUS inc. (SEAL) Erica S. Stoecker, Secretary EX-99 9 f_exh5-5.txt COLLATERALIZED GUARANTY TO: GE COMMERCIAL DISTRIBUTION FINANCE CORPORATION ("CDF") 1. Guaranty and Indemnification. In consideration of financing provided or to be provided by you to ePlus Technology, inc. ("Dealer"), and for other good and valuable consideration received, the undersigned (individually and/or collectively "Guarantor") unconditionally and absolutely guaranty to CDF, from property held separately, jointly or in community, the immediate payment when due of all current and future liabilities ("Liabilities") owed by Dealer to CDF for inventory financed by CDF: (i) which is the subject of a purchase order issued by Guarantor to Dealer and (ii) for which Dealer has not received payment in full ("CDF-Financed Inventory"). 2. Consents. This Guaranty will not be released, discharged or affected by, and Guarantor hereby irrevocably consents to, any: (a) change in the manner, place, interest rate, finance or other charges, or terms of payment or performance in any current or future agreement between CDF and Dealer, the release, settlement or compromise of or with any party liable for the payment or performance thereof or the substitution, release, non-perfection, impairment, sale or other disposition of any collateral thereunder; (b) change in Dealer's financial condition; (c) interruption of relations between Dealer and CDF or Guarantor; (d) claim or action by Dealer against CDF; and/or (e) increases or decreases in any credit CDF may provide to Dealer. 3. Unconditional Obligations. Guarantor will pay CDF even if CDF has not: (a) notified Dealer that it is in default of the Liabilities, and/or that CDF intends to accelerate or has accelerated the payment of all or any part of the Liabilities, or (b) exercised any of CDF's rights or remedies against Dealer, any other person or any current or future collateral. If Dealer hereafter undergoes any change in its ownership, identity or organizational structure, this Guaranty will extend to all current and future obligations which such new or changed legal entity owes to CDF. 4. Waivers. Guarantor irrevocably waives notice of: CDF's acceptance of this Guaranty, presentment, demand, protest, dishonor, nonpayment, nonperformance, breach or default, CDF's intent to accelerate and CDF's acceleration of any indebtedness of Dealer, the amount of indebtedness of Dealer outstanding at any time, the number and amount of advances made by CDF to Dealer in reliance on this Guaranty, and any claim or action against Dealer. Guarantor further waives all right of contribution from other guarantors, all other demands and notices required by law, all rights of offset and counterclaims against CDF or Dealer, all defenses to the enforceability of this Guaranty (including, without limitation, fraudulent inducement), and all defenses based on suretyship or impairment of collateral, and defenses which the Dealer may assert on the underlying debt, including but not limited to, failure of consideration, breach of warranty, fraud, payment, statute of frauds, bankruptcy, lack of legal capacity, statute of limitations, lender liability, deceptive trade practices, accord and satisfaction and usury. Guarantor also waives all rights to claim, arbitrate for or sue for any punitive or exemplary damages. In addition, Guarantor hereby irrevocably subordinates to CDF any and all of Guarantor's present and future rights and remedies: (a) of subrogation against Dealer or any other guarantor to any of CDF's rights or remedies against Dealer or any other guarantor, (b) of contribution, reimbursement, indemnification and restoration from Dealer or any other guarantor; and (c) to assert any other claim or action against Dealer or any other guarantor directly or indirectly relating to this Guaranty, such subordinations to last until CDF has been paid in full for all Liabilities. All of Guarantor's waivers and subordinations herein will survive any termination of this Guaranty. 5. Warranties and Representations. Guarantor has made an independent investigation of the financial condition of Dealer and gives this Guaranty based on that investigation and not upon any representation made by CDF. Guarantor has access to current and future Dealer financial information which enables Guarantor to remain continuously informed of Dealer's financial condition. Guarantor represents and warrants to CDF that Guarantor has received and will receive substantial direct or indirect benefit by making this Guaranty and incurring the Liabilities. Guarantor also represents and warrants to CDF that Guarantor is solvent and Guarantor's execution of this Guaranty will not make Guarantor insolvent. Guarantor further represents and warrants to CDF that: (a) the present fair salable value of Guarantor's assets is greater than the amount required to pay Guarantor's liabilities (including contingent, subordinated, unmatured and unliquidated liabilities); (b) Guarantor is able to pay all of its liabilities (including contingent, subordinated, unmatured and unliquidated liabilities) as they become absolute and matured; and (c) Guarantor does not have unreasonably small capital. 6. Security Interest. To secure payment of all Liabilities and all of Guarantor's current and future debts to CDF, whether under this Guaranty or any current or future guaranty or other agreement, Guarantor grants CDF a security interest in all CDF-Financed inventory, all accounts, chattel paper, rental or lease payments and other amounts which are due or to become due to Guarantor arising from the sale or lease of CDF-Financed inventory; all judgments, claims, insurance policies and payments owed or made to Guarantor thereon; all rights powers, and remedies (but none of the duties or obligations, if any) of Guarantor in connection therewith; and all proceeds of any of the foregoing (collectively "Collateral"). CDF's security interest shall extend to each item of CDF-Financed Inventory until such time as Dealer has been paid in full for such item of CDF-Financed Inventory. All of such terms for which meanings are provided in the Uniform Commercial Code of the applicable state, as the same may be amended, are used herein with such meanings. 7. Additional Warranties and Representations. Guarantor warrants and represents to CDF that: (a) Guarantor has good title to all Collateral; (b) CDF's security interest in the Collateral financed by CDF for Dealer or Guarantor is not now and will not become subordinate to the security interest or claim of any person; (c) Guarantor will execute all documents CDF requests to perfect and maintain CDF's security interest in the Collateral, and will cause all third parties in possession of Collateral to provide such acknowledgment or control of CDF's security interest as CDF may require; (d) Guarantor will deliver to CDF immediately upon each request, and CDF may retain, each Certificate of Title or Statement of Origin issued for Collateral financed by CDF for Dealer or Guarantor; (e) Guarantor will at all times be duly organized, existing, in good standing, qualified and licensed to do business in each jurisdiction in which the nature of its business or property so requires; (f) Guarantor has the right and is duly authorized to enter into this Guaranty; (g) Guarantor's execution of this Guaranty does not, and will not, constitute a breach of any law or agreement to which Guarantor is now or hereafter becomes bound; (h) there are and will be no actions or proceedings pending or threatened against Guarantor which might result in any material adverse change in Guarantor's financial or business condition; (i) Guarantor will maintain the Collateral in good condition; (j) Guarantor has duly filed and will duly file all tax returns required by law, and will pay when due all taxes, levies, assessments and governmental charges; (k) Guarantor will keep and maintain all of its books and records pertaining to the Collateral at its chief executive office designated below; (l) Dealer and Guarantor will keep all Collateral at Dealer's chief executive office or Guarantor's chief executive office listed below, and such other locations within the United States of America of which Dealer or Guarantor has notified CDF in writing or has listed on any current or future Exhibit "A" attached to any Agreement for Wholesale Financing or security agreement between Dealer and CDF or this Guaranty, which written notice(s) to CDF and Exhibit A(s) are incorporated herein by reference; (m) Guarantor will give CDF thirty (30) days prior written notice of any change in Guarantor's identity, name, form of business organization, ownership, chief executive office, Collateral locations or other business locations; (n) Guarantor will notify CDF of the commencement of material legal proceedings against Dealer or Guarantor; (o) Guarantor will comply with all applicable laws; and (p) Guarantor has provided CDF with a copy of Guarantor's Articles of Incorporation, Articles of Organization, Articles of Formation, Partnership Agreement, or Certificate of Limited Partnership, as applicable, and will provide any subsequent amendments thereto bearing indicia of filing from the appropriate governmental authority, or such other documents verifying Guarantor's true and correct legal name. 8. Negative Covenants. Guarantor will not at any time without CDF's prior written consent: (a) other than in the ordinary course of its business, sell, lease or otherwise dispose of or transfer any of its assets; (b) other than in the ordinary course of business, rent, lease, demonstrate, consign, license or use any Collateral financed by CDF for Dealer or Guarantor; (c) merge or consolidate with another entity unless (i) CDF receives at least ninety (90) days prior written notice of such merger or consolidation and (ii) Guarantor is the surviving entity of such merger or consolidation or if Guarantor is not the surviving entity, the surviving entity executes all documentation reasonably requested by CDF to assume Guarantor's liabilities to CDF; (d) move any Collateral financed by CDF out of the United States of America; or (e) store Collateral financed by CDF with any third party. 9. Insurance. Guarantor will immediately notify CDF of any loss, theft or damage to any Collateral. Guarantor will keep the Collateral insured for its full insurable value under an "all risk" property insurance policy with a company acceptable to CDF, naming CDF as a lender loss-payee and containing standard lender's loss payable and termination provisions. Guarantor will provide CDF with written evidence of such property insurance coverage and lender's loss-payee endorsement. 10. Financial Statements. Guarantor will provide CDF with financial statements on it each year within ninety (90) days after the end of Dealer's fiscal year end. Guarantor represents that all financial statements and information which have been or may hereafter be delivered by Guarantor or Dealer are and will be correct and prepared in accordance with generally accepted accounting principles consistently applied, and there has been no material adverse change in the financial or business condition of Guarantor or Dealer since the submission to CDF of such financial statements, and Guarantor acknowledges CDF's reliance thereon. 11. Reviews. Guarantor grants CDF an irrevocable license to enter Guarantor's business locations during normal business hours with 48 hours prior notice to Guarantor (unless Guarantor is in default, in which case no prior notice shall be required) to: (a) account for and inspect all Collateral; and (b) examine and copy Guarantor's books and records related to the Collateral. 12. Default. Guarantor will be in default under this Guaranty if: (a) Dealer breaches any terms in any agreement between CDF and Dealer; (b) Dealer fails to pay any debt to CDF when due and payable under any agreement between CDF and Dealer; (c) Guarantor breaches any terms contained in this Guaranty or in any other agreement between Guarantor and CDF; (d) Guarantor fails to pay any debt to CDF when due and payable under any agreement between CDF and Guarantor; (e) any representation, statement, report or certificate which Dealer or Guarantor makes or delivers to CDF is not accurate when made; (f) Dealer or Guarantor abandons any Collateral; (g) Dealer or Guarantor is or becomes in default in the payment of any debt owed to any third party, or Dealer or Guarantor is or becomes in default under any loan agreement; (h) an attachment, sale or seizure issues or is executed against any assets of Dealer or Guarantor; (i) intentionally omitted; (j) Dealer or Guarantor ceases existence as a corporation, as applicable, or ceases or suspends business; (k) Dealer or Guarantor, as applicable, makes a general assignment for the benefit of creditors; (l) Dealer or Guarantor, as applicable, becomes insolvent or voluntarily or involuntarily becomes subject to the Federal Bankruptcy Code, any state insolvency law or any similar law; (m) any receiver is appointed for any assets of Dealer or Guarantor, as applicable; (n) this Guaranty or any other guaranty of Dealer's debts to CDF is terminated; (o) Dealer or Guarantor loses, or is in default of, any franchise, license or right to deal in any Collateral which CDF finances; (p) Dealer or Guarantor misrepresents its respective financial condition or organizational structure; or (q) CDF determines in good faith that it is insecure with respect to any of the Collateral or the payment of Dealer's or Guarantor's obligation to CDF. 13. Rights of CDF Upon Default. In the event of a default: (a) CDF may at any time, without notice or demand to Dealer or Guarantor, do any one or more of the following: declare all or any part of the debt Guarantor owes CDF, whether contingent or noncontingent and whether arising hereunder or under any other agreement between Guarantor and CDF, immediately due and payable, together with all costs and expenses of CDF's collection activity, including all reasonable attorneys' fees; exercise any rights under applicable law; and/or cease extending any additional credit to Guarantor, if applicable, or Dealer, which shall not be construed to limit the discretionary nature of any credit facility. (b) Guarantor will segregate and keep the Collateral in trust for CDF, and will not dispose of or use any Collateral, nor further encumber any Collateral. (c) Upon CDF's demand, Guarantor will immediately deliver the Collateral to CDF at a place specified by CDF, together with all related documents; or CDF may, without notice or demand to Guarantor, take immediate possession of the Collateral together with all related documents. All of CDF's rights and remedies are cumulative. CDF's failure to exercise any of its rights or remedies hereunder will not waive any of CDF's rights or remedies as to any past, current or future default. 14. Sale of Collateral. Guarantor agrees that if CDF conducts a sale of any Collateral by requesting bids from ten (10) or more dealers or distributors in that type of Collateral, or pursuant to any internet auction or sale posting on a third party auction sale site, any sale by CDF of such Collateral in bulk or in parcels within one hundred twenty (120) days of: (a) CDF's taking possession and control of such Collateral; or (b) when CDF is otherwise authorized to sell such Collateral; whichever occurs last, to the bidder submitting the highest cash bid therefor, is a commercially reasonable sale of such Collateral under the Uniform Commercial Code. Guarantor agrees that the purchase of any Collateral by a vendor, as provided in any agreement between CDF and the vendor, is a commercially reasonable disposition and private sale of such Collateral under the Uniform Commercial Code, and no request for bids shall be required. Guarantor further agrees that seven (7) or more days prior written notice will be commercially reasonable notice of any public or private sale (including any sale to a Vendor). Guarantor irrevocably waives any requirement that CDF retain possession and not dispose of any Collateral until after an arbitration hearing, arbitration award, confirmation, trial or final judgment. If CDF disposes of any Collateral other than as herein contemplated, the laws of the state governing this Guaranty will determine the commercial reasonableness of such disposition. 15. Power of Attorney. Guarantor grants CDF an irrevocable power of attorney to: execute or endorse on Guarantor's behalf any checks, financing statements, instruments, and Certificates of Title and Statements of Origin pertaining to the Collateral, to the extent consistent with the terms of this Guaranty; supply any omitted information and correct errors in any documents between CDF and Guarantor; initiate and resolve any insurance claim pertaining to the Collateral; and do anything to protect and preserve the Collateral and CDF's rights and interest therein. 16. Termination. Guarantor may terminate this Guaranty by a written notice to CDF, the termination to be effective ninety (90) days after CDF receives and acknowledges it, but the termination will not terminate Guarantor's obligations hereunder for Liabilities arising prior to the effective termination date. 17. Binding Effect. Guarantor cannot assign this Guaranty without CDF's prior written consent. CDF may assign its interest herein without notice to, or consent from, Guarantor. This Guaranty will protect and bind CDF's and Guarantor's respective heirs, representatives, successors and assigns. 18. Notices. Except as otherwise stated herein, all notices, arbitration claims, responses, requests and documents will be sufficiently given or served if mailed or delivered: (a) to Guarantor at its address below; (b) to CDF at 655 Maryville Centre Drive, St. Louis, Missouri 63141-5832, Attention: General Counsel; or such other address as the parties may specify from time to time in writing. 19. Severability; Punitive Damage Waiver. If any provision of this Guaranty or its application is invalid or unenforceable, the remainder of this Guaranty will not be impaired or affected and will remain binding and enforceable. Guarantor and CDF irrevocably waive all rights to claim punitive and/or exemplary damages. 20. Supplement. If Guarantor and CDF have previously executed other guaranties or agreements pertaining to all or any part of the Collateral, this Guaranty will supplement such guaranty or agreement, and this Guaranty will neither be deemed a novation nor a termination of such guaranty or agreement, nor will execution of this Guaranty be deemed a satisfaction of any obligation secured by such guaranty or agreement. 21. Receipt of Guaranty. Guarantor acknowledges that it has received a true and complete copy of this Guaranty and of all agreements between CDF and Dealer. Guarantor has read and understood all terms and provisions of this Guaranty. Notwithstanding anything herein to the contrary, CDF may rely on any facsimile copy, electronic data transmission, or electronic data storage of: this Guaranty, any agreement between CDF and Dealer, any Statement of Transaction, billing statement, financing statement, authorization to pre-file financing statements, invoice from a vendor, financial statements or other reports, which will be deemed an original, and the best evidence thereof for all purposes. 22. NO ORAL AGREEMENTS. Oral agreements or commitments to loan money, extend credit or to forbear from enforcing repayment of a debt including promises to extend or renew such debt are not enforceable. To protect Guarantor and CDF from misunderstanding or disappointment, any agreements Guarantor and CDF or Dealer and CDF reach covering such matters are contained in this Guaranty, an Agreement for Wholesale Financing, or another agreement between Guarantor and CDF or between Dealer and CDF, which agreement(s) is (are) the complete and exclusive statement of the agreement between Guarantor and CDF and between Dealer and CDF, except as specifically provided herein, in such other agreement(s) or as Guarantor and CDF or Dealer and CDF may later agree in writing. 23. Miscellaneous. This Guaranty will survive any federal and/or state bankruptcy or insolvency action involving Dealer. If CDF is required in any action involving Dealer to return or rescind any payment made to or value received by CDF from or for the account of Dealer, this Guaranty will remain in full force and effect and will be automatically reinstated without any further action by CDF and notwithstanding any termination of this Guaranty or CDF's release of Guarantor. Any delay or failure by CDF, or CDF's successors or assigns, in exercising any of CDF's rights or remedies hereunder will not waive any such rights or remedies. If Guarantor fails to pay any taxes, fees or other obligations which may impair CDF's interest in the Collateral, or fails to keep the Collateral insured, CDF may, but shall not be required to, pay such amounts. Such paid amounts will be: (a) an additional debt which Guarantor owes to CDF, which shall be subject to finance charges at the highest rate allowed by law; and (b) due and payable immediately in full. Guarantor will pay all of CDF's reasonable attorneys' fees and expenses which CDF incurs in enforcing CDF's rights hereunder. The Section titles used herein are for convenience only, and do not define or limit the contents of any Section. 24. BINDING ARBITRATION. 24.1 Arbitrable Claims. Except as otherwise specified below, all actions, disputes, claims and controversies under common law, statutory law or in equity of any type or nature whatsoever, whether arising before or after the date of this Guaranty, and whether directly or indirectly relating to: (a) this Guaranty and/or any amendments and addenda hereto, or the breach, invalidity or termination hereof; (b) any previous or subsequent agreement between CDF and Dealer or CDF and Guarantor; (c) any act committed by CDF or by any parent company, subsidiary or affiliated company of CDF (the "CDF Companies"), or by any employee, agent, officer or director of a CDF Company, whether or not arising within the scope and course of employment or other contractual representation of the CDF Companies provided that such act arises under a relationship, transaction or dealing between CDF and Dealer or CDF and Guarantor; and/or (d) any other relationship, transaction or dealing between CDF and Dealer or CDF and Guarantor (collectively the "Disputes"), will be subject to and resolved by binding arbitration. Notwithstanding the foregoing, the parties agree that either party may pursue claims against the other that do not exceed Fifteen Thousand Dollars ($15,000) in the aggregate in a court of competent jurisdiction. Service of arbitration claims shall be acceptable if made by U.S. mail or overnight delivery to the address for the party described herein. 24.2 Administrative Body. All arbitration hereunder will be conducted in accordance with the Commercial Arbitration Rules of either: (a) The American Arbitration Association ("AAA") or (b) United States Arbitration & Mediation ("USA&M"). The party first filing an arbitration claim shall designate which arbitration forum and rules are to be applied for all disputes between the parties. The arbitration rules are found at www.adr.org for AAA, and at www.usam-midwest.com for USA&M. AAA claims may be filed in any AAA office. Claims filed with USA&M shall be filed in their Midwest office located at 720 Olive Street, Suite 2020, St. Louis, Missouri 63101. All arbitrator(s) selected will be attorneys with at least five (5) years secured transactions experience. A panel of three arbitrators shall hear all claims exceeding One Million Dollars ($1,000,000), exclusive of interest, costs and attorneys' fees. The arbitrator(s) will decide if any inconsistency exists between the rules of the applicable arbitral forum and the arbitration provisions contained herein. If such inconsistency exists, the arbitration provisions contained herein will control and supersede such rules. The arbitrator shall follow the terms of this agreement and the applicable law, including without limitation, the attorney-client privilege and the attorney workproduct doctrine. 24.3 Hearings. Each party hereby consents to a documentary hearing for all arbitration claims, by submitting the dispute to the arbitrator(s) by written briefs and affidavits, along with relevant documents. However, arbitration claims will be submitted by way of an oral hearing, if any party requests an oral hearing within forty (40) days after service of the claim, and that party remits the appropriate deposit for AAA's fees and arbitrator compensation within ten (10) days of making the request. The site of all oral arbitration hearings will be in the Division of the Federal Judicial District in which AAA or USA&M maintains a regional office that is closest to Dealer. 24.4 Discovery. Discovery permitted in any arbitration proceeding commenced hereunder is limited as follows. No later than forty (40) days after the filing and service of a claim for arbitration, the parties in contested cases will exchange detailed statements setting forth the facts supporting the claim(s) and all defenses to be raised during the arbitration, and a list of all exhibits and witnesses. No later than twenty-one (21) days prior to the oral arbitration hearing, the parties will exchange a final list of all exhibits and all witnesses, including any designation of any expert witness(es) together with a summary of their testimony; a copy of all documents and a detailed description of any property to be introduced at the hearing. Under no circumstances will the use of interrogatories, requests for admission, requests for the production of documents or the taking of depositions be permitted. However, in the event of the designation of any expert witness(es), the following will occur: (a) all information and documents relied upon by the expert witness(es) will be delivered to the opposing party; (b) the opposing party will be permitted to depose the expert witness(es); (c) the opposing party will be permitted to designate rebuttal expert witness(es); and (d) the arbitration hearing will be continued to the earliest possible date that enables the foregoing limited discovery to be accomplished. 24.5 Exemplary or Punitive Damages. The Arbitrator(s) will not have the authority to award exemplary or punitive damages. 24.6 Confidentiality of Awards. All arbitration proceedings, including testimony or evidence at hearings, will be kept confidential, although any award or order rendered by the arbitrator(s) pursuant to the terms of this Guaranty may be confirmed as a judgment or order in any state or federal court of competent jurisdiction within the federal judicial district which includes the residence of the party against whom such award or order was entered. This Guaranty concerns transactions involving commerce among the several states. The Federal Arbitration Act, Title 9 U.S.C. Sections 1 et seq., as amended ("FAA") will govern all arbitration(s) and confirmation proceedings hereunder. 24.7 Prejudgment and Provisional Remedies. Nothing herein will be construed to prevent CDF's or Guarantor's use of bankruptcy, receivership, injunction, repossession, replevin, claim and delivery, sequestration, seizure, attachment, foreclosure, and/or any other prejudgment or provisional action or remedy relating to any Collateral for any current or future debt owed by either party to the other. Any such action or remedy will not waive CDF's or Guarantor's right to compel arbitration of any Dispute. 24.8 Attorneys' Fees. If either Guarantor or CDF brings any other action for judicial relief with respect to any Dispute (other than those set forth in Sections 24.1 or 24.7), the party bringing such action will be liable for and immediately pay all of the other party's costs and expenses (including attorneys' fees) incurred to stay or dismiss such action and remove or refer such Dispute to arbitration. If either Guarantor or CDF brings or appeals an action to vacate or modify an arbitration award and such party does not prevail, such party will pay all costs and expenses, including attorneys' fees, incurred by the other party in defending such action. Additionally, if Guarantor sues CDF or institutes any arbitration claim or counterclaim against CDF in which CDF is the prevailing party, Guarantor will pay all costs and expenses (including attorneys' fees) incurred by CDF in the course of defending such action or proceeding. 24.9 Limitations. Any arbitration proceeding must be instituted: (a) with respect to any Dispute for the collection of any debt owed by either party to the other, within two (2) years after the date the last payment by or on behalf of the payor was received and applied in respect of such debt by the payee; and (b) with respect to any other Dispute, within two (2) years after the date the incident giving rise thereto occurred, whether or not any damage was sustained or capable of ascertainment or either party knew of such incident. Failure to institute an arbitration proceeding within such period will constitute an absolute bar and waiver to the institution of any proceeding, whether arbitration or a court proceeding, with respect to such Dispute. 24.10 Survival After Termination. The agreement to arbitrate will survive the termination of this Guaranty. 25. INVALIDITY/UNENFORCEABILITY OF BINDING ARBITRATION. IF THIS GUARANTY IS FOUND TO BE NOT SUBJECT TO ARBITRATION, ANY LEGAL PROCEEDING WITH RESPECT TO ANY DISPUTE WILL BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE WITHOUT A JURY. CDF AND GUARANTOR WAIVE ANY RIGHT TO A JURY TRIAL IN ANY SUCH PROCEEDING. 26. Governing Law. This Guaranty and all agreements between Dealer and CDF have been substantially negotiated, and will be substantially performed, in the state of Missouri. Accordingly, all Disputes will be governed by, and construed in accordance with, the laws of such state, except to the extent inconsistent with the provisions of the FAA which will govern all arbitration proceedings hereunder. THIS GUARANTY CONTAINS BINDING ARBITRATION, JURY WAIVER AND PUNITIVE DAMAGES WAIVER PROVISIONS. Date: ____________, 2004 ePlus Group, inc. Address of Guarantor(s): By: /s/ Steve Mencarini --------------------------------------- 400 Herndon Parkway Steve Mencarini Herndon, VA 20170 Chief Financial Officer SECRETARY'S CERTIFICATE I hereby certify that I am the Secretary or Assistant Secretary of ePlus Group, inc. ("Guarantor") and that execution of the above Collateralized Guaranty was ratified, approved and confirmed by the Shareholders at a meeting, if necessary, and pursuant to a resolution of the Board of Directors of Guarantor at a meeting of the Board of Directors duly called, and which is currently in effect, which resolution was duly presented, seconded and adopted and reads as follows: "BE IT RESOLVED that any officer of this corporation is hereby authorized to execute a guaranty of the obligations of ePlus Technology, inc. ("Dealer") to GE Commercial Distribution Finance Corporation ("CDF") on behalf of the corporation, which instrument may contain such terms as the above named persons may see fit including, but not limited to a waiver of notice of the acceptance of the guaranty; presentment; demand; protest; notices of nonpayment, nonperformance, dishonor, the amount of indebtedness of Dealer outstanding at any time, any legal proceedings against Dealer, and any other demands and notices required by law; and any right of contribution from other guarantors. As security for such guaranty to CDF, any officer of this corporation is hereby authorized to pledge, assign, mortgage, grant security interests, and otherwise transfer to CDF as collateral security for any obligations of this corporation to CDF, whenever and however arising, any assets of this corporation, whether now owned or hereafter acquired." IN WITNESS WHEREOF, I have hereunto set my hand and affixed the corporate seal on this 31st day of March, 2004. (SEAL) Secretary: /s/ Erica Stoecker ------------------ Erica Stoecker EX-99 10 f_exh5-6.txt [GRAPHIC OMITTED][GRAPHIC OMITTED] [GRAPHIC OMITTED][GRAPHIC OMITTED] GE Commercial Distribution Finance Corporation 625 Maryville Centre Drive, 3rd Floor Phone: 314.317.1700 Fax: 314.317.1921 ____________________, 2004 National City Bank One South Broad Street, 13th Floor Philadelphia, PA 19107 Re: ePlus Group, inc. ----------------- Dear Sir or Madam: As you know, GE Commercial Distribution Finance Corporation ("we" or "CDF") provides financing to ePlus Technology, inc. ("Technology"). National City Bank, in its capacity as Administrative Agent for itself and other lenders party to the Second Amended and Restated Credit Agreement dated as of July 21, 2003, as amended ("you" or "Bank") provides financing to certain affiliates of Technology including ePlus Group, inc. ("Group"). From time to time, Group, in its capacity as agent on behalf of its customers, orders merchandise from Technology which is financed by CDF ("CDF-Financed Inventory"), for the purpose of leasing such CDF-Financed Inventory to customers of Group. Group has agreed to guaranty Technology's obligations to CDF arising from such CDF-Financed Inventory, and to secure such guaranty with CDF-Financed Inventory, the purchase price of which has not been paid in full, and the proceeds thereof. Such guaranty is limited to recourse against such assets during the guaranty. CDF intends to file a financing statement or statements under the Uniform Commercial Code giving notice of a security interest in certain assets of Group as collateral security for Group's obligations under the guaranty. By your signature below, you hereby acknowledge and agree that you will not assert any right, title or security interest in and to any of the following collateral, and any right, title or security interest that you could be deemed to possess in any of the following collateral is hereby subordinated to CDF: all CDF-Financed Inventory; all accounts, chattel paper, rental or lease payments and other amounts which are due or to become due to Group arising from the sale or lease of CDF-Financed Inventory; all judgments, claims, insurance policies and payments owed or made to Group thereon; all rights, powers and remedies (but none of the duties or obligations, if any) of Group in connection therewith; and all proceeds of any of the foregoing; provided, however, that such restriction shall terminate as to nay CDF-Financed Inventory and the related proceeds thereof at such time as Technology has received payment in full for such items of CDF-Financed Inventory at Technology's Lockbox at P.O. Box 630895, Baltimore, MD 21263-0895. You acknowledge that the foregoing agreement is continuing, and that CDF may provide financing on the basis of this Agreement. Sincerely, GE COMMERCIAL DISTRIBUTION FINANCE CORPORATION /s/ David Mintert - ----------------- David Mintert Vice President of Operations Acknowledged and Agreed: NATIONAL CITY BANK, as Administrative Agent By: /s/ Michael J. Labrum --------------------------------------- Name: Michael J. Labrum Title: Senior Vice President Date: March 24, 2004 cc: ePlus Technology, inc. ePlus Group, inc. WAIVER ------ THIS WAIVER, dated as of the 24th day of March, 2004 (the "Waiver"), is hereby given by the undersigned pursuant to Sections 6.3, 6.4, 6.13 and 6.17 of the Second Amended and Restated Credit Agreement, dated as of July 21, 2003, as amended (the "Credit Agreement"), by and among ePlus, inc. and its subsidiaries named therein ("ePlus"), the banking institutions signatories thereto (the "Banks"), and National City Bank, as Administrative Agent for the Banks under the Credit Agreement (the "Agent"). Terms which are capitalized but undefined herein shall have the meaning ascribed thereto in the Credit Agreement. Preliminary Statement --------------------- WHEREAS, ePlus Technology, inc. ("ePlus Technology"), a subsidiary of ePlus, is modifying their financing arrangement with GE Commercial Distribution Finance Corporation ("CDF") with regard to specific CDF financed inventory; WHEREAS, ePlus may from time to time purchase from ePlus Technology certain inventory, and ePlus has agreed to provide a limited guaranty of certain of ePlus Technology's obligations to CDF, to the extent that the purchase price of such inventory has not been paid in full (the "CDF Guaranty"); and WHEREAS, the repayment of any amounts owed pursuant to such CDF Guaranty and any other obligations of the Borrowers covered thereby (collectively, the "CDF Guaranty Obligations") will be secured by (and CDF will have recourse only against) the assets of ePlus purchased from ePlus Technology as to which the purchase price has not been paid; and WHEREAS, pursuant to Section 6.3 of the Credit Agreement, Borrowers have agreed to restrict the ability of ePlus to create, assume or to permit any lien on any of the Borrower's property or assets as determined pursuant to such Section; and WHEREAS, pursuant to Section 6.4 of the Credit Agreement, the Borrowers have agreed to restrict the ability of ePlus to guaranty the obligations any of its subsidiaries as determined pursuant to such Section; and WHEREAS, pursuant to Section 6.13 and 6.17 of the Credit Agreement, Borrowers have agreed to restrict the ability of the Borrowers to enter into certain transactions with its Affiliates or Non-Borrower Subsidiaries; and WHEREAS, in connection with the CDF Guaranty Obligations, the Borrowers have requested that i) the Agent and the Banks waive the limitations of Sections 6.3, 6.4, 6.13 and 6.17 as and to the extent provided herein and ii) the Agent and the Banks enter into a letter Agreement with CDF establishing the Banks' respective priority in the CDF financed inventory in the form of Exhibit A (the "Subordination Letter"). NOW, THEREFORE, the undersigned Agent and the Banks hereby agree, on a one time basis, to waive the limitations of Sections 6.3, 6.4, 6.13 and 6.17 of the Credit Agreement for and solely to the extent that the CDF Guaranty Obligations violate the limitations imposed by such Sections. In addition, the undersigned Banks direct the Agent to execute and deliver the Subordination Letter in the form attached hereto as Exhibit A. The Waiver set forth above is granted precisely as written and shall not be deemed (i) to be a waiver of or a consent to, or amendment, supplement or modification of, any other term or condition of the Credit Agreement or any of the instruments or agreements referred to therein or (ii) to prejudice any other right or rights which the Banks may now have or may have in the future under or in connection with the Credit Agreement or any of the instruments or agreements referred to therein. IN WITNESS WHEREOF, the Agent and the Banks have caused this Waiver to be executed by their proper corporate officers thereunto duly authorized as of the day and year first above written. NATIONAL CITY BANK, in its individual capacity and as Administrative Agent /s/ Michael J. Labrum ------------------------------------------ By: Michael J. Labrum Title: Senior Vice President BRANCH BANKING AND TRUST COMPANY OF VIRGINIA, a Virginia Banking Corporation /s/ Ronald P. Gudbrandsen ------------------------------------------- By: Ronald P. Gudbrandsen Title: Senior Vice President BANK OF AMERICA, N.A. /s/ Jessice Tencza ------------------------------------------ By: Jessica Tencza Title: Vice President -----END PRIVACY-ENHANCED MESSAGE-----