SIXTH AMENDMENT TO COMMERCIAL CREDIT AGREEMENT

 

THIS SIXTH AMENDMENT TO COMMERCIAL CREDIT AGREEMENT ("Sixth Amendment"), dated
as of November 29, 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, (iv) that certain Fourth Amendment dated as of September 28, 2011 and (v)
that certain Fifth Amendment dated as of February 3, 2012 (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
$25,000,000 to $50,000,000, (ii) extend the termination date of the Revolving
Loan (as such term is defined in Section 1.1 of the Agreement) from October 1,
2015 to November 30, 2015 and (iii) 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 and so amend the Agreement, subject,
however, to the terms and conditions of this Sixth 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
“$50,000,000” for the amount “$25,000,000” appearing in the third line thereof.

 

(b)   Section 1.1 of the Agreement is hereby further amended by substituting the
date “November 30, 2015” for the date “October 1, 2015” appearing in the eighth
line thereof.

 

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(c)   Section 1.1.1 of the Agreement is hereby further amended by substituting
the date “November 30, 2015” for the date “October 1, 2015” appearing in the
last line thereof.

 

(d)   Section 1.1.2 of the Agreement is hereby further amended by substituting
the date “November 30, 2015” for the date “October 1, 2015” appearing in the
last line thereof.

 

(e)   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
November 30, 2012, for the period from November 30, 2012 through and including
November 30, 2013, a commitment fee in the sum of $25,000, (ii) on November 30,
2013, for the period from November 30, 2013 through and including November 30,
2014, a commitment fee in the sum of $50,000 and (iii) on November 30, 2014, for
the period from November 30, 2014 through and including November 30, 2015, a
commitment fee in the sum of $50,000, all of which commitment fees when paid
shall be non-refundable.”

 

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

 

“(a) [Intentionally Deleted]”

 

(g)   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 August
31, 2012, $195,000,000, (ii) as at the close of the fiscal quarter (and fiscal
year) ending May 31, 2013, an amount equal to the sum of (x) $195,000,000 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.”

 

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

 

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“(c)   Borrower will achieve EBITDA of not less than Seventy Million Dollars
($70,000,000), to be measured as of the close of each fiscal quarter for the
twelve (12) month fiscal period immediately preceding the date of calculation.
As used in this Agreement, “EBITDA” shall mean (a) the consolidated net profit
after taxes of Borrower and its subsidiaries for each fiscal quarter, plus (b)
interest expense of Borrower and its subsidiaries for such fiscal quarter, plus
(c) the aggregate amount of federal and state tax expense of Borrower and its
subsidiaries for such fiscal quarter, plus (d) depreciation, amortization and
all other non-cash expenses of Borrower and its subsidiaries for such fiscal
quarter.”

 

3.        Effectiveness of this Sixth Amendment. This Sixth 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 Sixth 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 $50,000,000 (exclusive
of accrued interest and Bank’s expenses, for which each such Guarantor shall
also be obligated);

 

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

 

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

 

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

 

(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 Sixth 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;

 

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(c)          This Sixth 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
Sixth 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 Sixth 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 Sixth 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/Steven Markheim     Steven Markheim     President and Chief Operating
Officer  

 

“Bank”

 

UNION BANK, N.A.

 

By: /s/John C. Kase     John C. Kase     Vice President  

 

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