Exhibit 10.1

 

FIFTH AMENDMENT TO COMMERCIAL CREDIT AGREEMENT

 

THIS FIFTH AMENDMENT TO COMMERCIAL CREDIT AGREEMENT ("Fifth Amendment"), dated
as of February 3, 2012, is made and entered into by and between ELECTRO RENT
CORPORATION, a California corporation ("Borrower"), and UNION BANK, N.A., a
national banking association ("Bank").

 

RECITALS:

 

A. Borrower and Bank are parties to that certain Commercial Credit Agreement
dated as of September 29, 2008, as amended by (i) that certain First Amendment
dated as of March 6, 2009, (ii) that certain Second Amendment dated as of
September 17, 2009, (iii) that certain Third Amendment dated as of September 22,
2010 and (iv) that certain Fourth Amendment dated as of September 28, 2011 (as
so amended, the "Agreement"), pursuant to which Bank agreed to extend credit to
Borrower in the amounts provided for therein.

 

B. Borrower has requested that Bank agree to (i) increase the permitted maximum
aggregate outstanding principal amount of the Revolving Loan from $10,000,000 to
$25,000,000, (ii) extend the termination date of the Revolving Loan (as such
term is defined in Section 1.1 of the Agreement) from October 1, 2012 to October
1, 2015, (iii) increase the Standby L/C Sublimit from $5,000,000 to $10,000,000
and (iv) amend the Agreement in certain other respects. Bank is willing to agree
to so increase the permitted maximum aggregate outstanding principal amount of
the Revolving Loan, so extend the termination date of the Revolving Loan, so
increase the Standby L/C Sublimit and so amend the Agreement, subject, however,
to the terms and conditions of this Fifth Amendment.

 

 

AGREEMENT:

 

In consideration of the above recitals and of the mutual covenants and
conditions contained herein, Borrower and Bank agree as follows:

 

1. Defined Terms. Initially capitalized terms used herein which are not
otherwise defined shall have the meanings assigned thereto in the Agreement.

 

2. Amendments to the Agreement.

 

(a) Section 1.1 of the Agreement is hereby amended by substituting the amount
“$25,000,000” for the amount “$10,000,000” appearing in the third line thereof.

 

(b) Section 1.1 of the Agreement is hereby further amended by substituting the
date “October 1, 2015” for the date “October 1, 2012” appearing in the eighth
line thereof.

 

(c) Section 1.1.1 of the Agreement is hereby amended by substituting the amount
“$10,000,000” for the amount “$5,000,000” appearing in the fourth line thereof.

 

(d) Section 1.1.1 of the Agreement is hereby further amended by substituting the
date “October 1, 2015” for the date “October 1, 2012” appearing in the last line
thereof.

 

(e) Section 1.1.2 of the Agreement is hereby amended by substituting the amount
“$10,000,000” for the amount “$5,000,000” appearing in the fifth line thereof.

 

(f) Section 1.1.2 of the Agreement is hereby further amended by substituting the
date “October 1, 2015” for the date “October 1, 2012” appearing in the last line
thereof.

 

(g) Section 1.1.3 of the Agreement is hereby amended by substituting the amount
“$10,000,000” for the amount “$5,000,000” appearing in the last line thereof.

 

(h) The first paragraph of Section 1.2(a) of the Agreement is hereby amended to
read in full as follows:

 

“(a) All principal outstanding under the Revolving Loan which is not bearing
interest at a fixed interest rate as described below shall bear interest at a
rate per annum equal to the Reference Rate minus one-quarter of one percent (1/4
of 1%), which rate shall vary as and when the Reference Rate changes.”

 

(i) Section 1.2(b) of the Agreement is hereby amended to read in full as
follows:

 

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“(b) At Borrower’s option, advances hereunder, in increments of at least
$100,000, shall bear interest at a per annum rate, based on an index selected by
Borrower, which is one and one-half percent (1-1/2%) per annum in excess of the
LIBOR Rate for the interest period selected by Borrower and acceptable to Bank.”

 

(j) Section 3(a) of the Agreement is hereby amended to read in full as follows:

 

“(a) Borrower shall pay to Bank annual commitment fees as follows: (i) on or
before the effective date of the Fifth Amendment to this Agreement, for the
period from the effective date of the Fifth Amendment through and including
October 1, 2012, a commitment fee in the sum of $10,000; (ii) on October 2,
2012, for the period from October 2, 2012 through and including October 1, 2013,
a commitment fee in the sum of $25,000, (iii) on October 2, 2013, for the period
from October 2, 2013 through and including October 1, 2014, a commitment fee in
the sum of $25,000, and (d) on October 2, 2014, for the period from October 2,
2014 through and including October 1, 2015, a commitment fee in the sum of
$25,000, all of which commitment fees when paid shall be non-refundable.”

 

(k) Section 7.1(a) of the Agreement is hereby amended to read in full as
follows:

 

“(a) On a consolidated basis for Borrower and its subsidiaries, a quick ratio of
(i) cash, marketable securities, trade accounts receivable (excluding those
owing from affiliates) minus bad debt reserve and accounts receivable and notes
receivable (excluding those owing from affiliates) plus the aggregate principal
amount available to be borrowed under the Revolving Loan as at the close of each
fiscal quarter to (ii) current liabilities plus the aggregate outstanding
principal amount of the Revolving Loan as at the close of each fiscal quarter of
not less than (x) 1.25 to 1.00 as at the close of the fiscal quarter ending
February 29, 2012 and (y) 0.60 to 1.00 as at the close of each fiscal quarter
thereafter.”

 

(l) Section 7.1(b) of the Agreement is hereby amended to read in full as
follows:

 

“(b) On a consolidated basis for Borrower and its subsidiaries, Tangible Net
Worth of not less than (i) as at the close of the fiscal quarter ending February
29, 2012, $200,000,000, (ii) as at the close of the fiscal quarter (and fiscal
year) ending May 31, 2012, an amount equal to the sum of (x) $200,000,000 plus
(y) twenty-five percent (25%) of the consolidated net profit after taxes of
Borrower and its subsidiaries for such previous fiscal year plus (z) one hundred
percent (100%) of any net equity proceeds raised by Borrower and its
subsidiaries after November 30, 2011 of such fiscal year and (iii) as at the
close of each fiscal quarter ending during each fiscal year thereafter, an
amount equal to the sum of (x) the minimum Tangible Net Worth required hereunder
with respect to the prior fiscal year plus (y) twenty-five percent (25%) of the
consolidated net profit after taxes of Borrower and its subsidiaries for such
previous fiscal year plus (z) one hundred percent (100%) of any net equity
proceeds raised by Borrower and its subsidiaries during such fiscal year. As
used herein, ‘Tangible Net Worth’ shall mean the consolidated net worth of
Borrower and its subsidiaries, increased by the consolidated indebtedness of
Borrower and its subsidiaries subordinated to Bank in form satisfactory to Bank
and decreased by patents, licenses, trademarks, trade names, goodwill and other
similar intangible assets, organizational expenses, and monies due from
affiliates (including officers, shareholders and directors), in each case with
respect to Borrower and its subsidiaries.”

 

3. Effectiveness of this Fifth Amendment. This Fifth Amendment shall become
effective as of the date hereof when, and only when, Bank shall have received
all of the following, in form and substance satisfactory to Bank:

 

(a) A counterpart of this Fifth Amendment, duly executed by Borrower;

 

(b) Replacement Guaranties, duly executed by ER International, Inc. and Electro
Rent Asia, Inc., each in the principal amount of $25,000,000 (exclusive of
accrued interest and Bank’s expenses, for which each such Guarantor shall also
be obligated);

 

(c) the annual commitment fee provided for in Section 3(a)(i) of the Agreement,
as amended hereby, in the sum of $10,000, which annual commitment fee shall be
non-refundable;

 

(d) A legal documentation fee in connection with the preparation of this Fifth
Amendment, in the sum of Six Hundred Dollars ($600), which legal documentation
fee shall be non-refundable; and

 

(e) Such other documents, instruments or agreements as Bank may reasonably deem
necessary in order to effect fully the purposes of this Fifth Amendment.

 

4. Ratification.

 

(a) Except as specifically amended hereinabove, the Agreement shall remain in
full force and effect and is hereby ratified and confirmed; and

 

(b) Upon the effectiveness of this Fifth Amendment, each reference in the
Agreement to "this Agreement", "hereunder", "herein", "hereof" or words of like
import referring to the Agreement shall mean and be a reference to the Agreement
as amended by this Fifth Amendment.

 

5. Representations and Warranties. Borrower represents and warrants as follows:

 

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(a) Each of the representations and warranties contained in Section 5 of the
Agreement, as amended hereby, is hereby reaffirmed as of the date hereof, each
as if set forth herein;

 

(b) The execution, delivery and performance of this Fifth Amendment are within
Borrower's corporate powers, have been duly authorized by all necessary
corporate action, have received all necessary approvals, if any, and do not
contravene any law or any contractual restriction binding on Borrower;

 

(c) This Fifth Amendment is the legal, valid and binding obligation of Borrower,
enforceable against Borrower in accordance with its terms; and

 

(d) No event has occurred and is continuing or would result from this Fifth
Amendment which constitutes an Event of Default under the Agreement, or would
constitute an Event of Default but for the requirement that notice be given or
time elapse or both.

 

6. Governing Law. This Fifth Amendment shall be deemed a contract under and
subject to, and shall be construed for all purposes and in accordance with, the
laws of the State of California.

 

7. Counterparts. This Fifth Amendment may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.

 

WITNESS the due execution hereof as of the date first above written.

 

“Borrower”       ELECTRO RENT CORPORATION       By: /s/ Craig R. Jones     Craig
R. Jones     Vice President and Chief Financial Officer          “Bank”      
UNION BANK, N.A.       By: /s/ John C. Kase     John C. Kase     Vice President
 

 

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