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GE Commercial Distribution Finance Corporation
625 Maryville Centre Drive, 3rd Floor
Phone: 314.317.1700
Fax: 314.317.1921
March 24, 2004
National City Bank
One South Broad Street, 13th Floor
Philadelphia, PA 19107
Re: ePlus Group, inc.
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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
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David Mintert
Vice President of Operations
Acknowledged and Agreed:
NATIONAL CITY BANK, as Administrative Agent
By: /s/ MICHAEL J. LABRUM
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Name: Michael J. Labrum
Title: Senior Vice President
Date: March 24, 2004
cc: ePlus Technology, inc.
ePlus Group, inc.
WAIVER
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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
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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
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By: Michael J. Labrum
Title: Senior Vice President
BRANCH BANKING AND TRUST COMPANY OF
VIRGINIA, a Virginia Banking Corporation
/s/ RONALD P. GUDBRANDSEN
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By: Ronald P. Gudbrandsen
Title: Senior Vice President
BANK OF AMERICA, N.A.
/s/ JESSICA TENCZA
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By: Jessica Tencza
Title: Vice President