United
States
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): July 27, 2006 (July 24, 2006)
ePlus
inc.
(Exact
name of registrant as specified in its charter)
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Delaware
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54-1817218
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(State
or other jurisdiction of incorporation or
organization)
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(Commission
File Number)
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(I.R.S.
Employer Identification
No.)
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13595
Dulles Technology Drive, Herndon, VA 20171-3413
(Address,
including zip code, of principal executive offices)
Registrant's
telephone number, including area code: (703)
984-8400
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Check
the
appropriate
box below if the Form 8-K filing
is intended to simultaneously satisfy the filing
obligation of the registrant under any of the following provisions
(see
General Instruction A.2
below):
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[
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Written
communications pursuant to Rule 425 under the
Securities Act (17 CFR
230.425)
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[
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Soliciting material pursuant to Rule 14a-12
under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule
14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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[
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Pre-commencement communications pursuant to Rule
13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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As
previously disclosed, we are involved in three lawsuits arising from four
separate installment sales to a customer named CyberCo Holdings, Inc.
(“Cyberco”). According to the United States Attorney for the Western District of
Michigan, the Cyberco principals were allegedly perpetrating a scam, which
victimized several dozen leasing and lending institutions. In or about April
2006, one of the principals of Cyberco was indicted for fraud, money laundering,
and conspiracy. Cyberco, related affiliates, and at least one principal are
in
Chapter 7 bankruptcy, and no future payments are expected from
Cyberco.
The
first two lawsuits, both in the United States
District Court for the Southern District of New York, involve three of the
sales, which we had assigned on a non-recourse basis to GMAC Commercial Finance,
LLC ("GMAC"). On January 4, 2005, GMAC filed suit
against ePlus Group, inc. seeking repayment of the underlying
non-recourse promissory note, which is approximately $10,646,000 plus
interest. The total claim sought by GMAC was approximately $13.4 million
("GMAC Claim"). The same day, we filed suit against GMAC, Travelers
Property Casualty Company of America ("Travelers") and Banc of America Leasing
and Capital, LLC ("BoA"), seeking a declaratory judgment that any potential
liability is covered by our liability policy with Travelers, and that we have
no
liability to GMAC or BoA. The two cases have been administratively
consolidated, and we subsequently dismissed BoA from the suit. On February
9, 2006, the court granted summary judgment for Travelers, determining that
our
claim was not covered by our insurance policies. We anticipate appealing
that decision, but, under current law, we have not been able to do so until
after final judgment in the litigation with GMAC. The ultimate decision on
insurance coverage will apply to the claims filed both by GMAC and by
BoA.
On
July 24, 2006, we entered into a settlement
agreement with GMAC. Pursuant to the GMAC settlement agreement, we were
required to pay GMAC $6.0 million concurrently with the signing of the
agreement. The Company believes the after-tax net cash outflow resulting
from the settlement will be approximately $3.6 million. The settlement,
which was unanticipated, has been recorded in the year ended March 31,
2006. Effective on the 91st day following GMAC's receipt of our
payment, GMAC and its affiliates will release and forever discharge ePlus
and its affiliates from any and all claims arising out of or relating to the
subject of the GMAC lawsuit. In the event any portion of our payment to
GMAC is avoided, rescinded, set aside or otherwise returned or repaid, the
amount repaid plus the difference between the GMAC claim and the settlement
payment shall be immediately reinstated and fully enforceable by GMAC, and
GMAC's release of ePlus from liability described in the previous
sentence would be rescinded.
While
we intend to vigorously assert our claims that
this settlement payment is covered by our insurance policies, it is uncertain
whether we will ultimately prevail in our claim against Travelers.
A
copy of the Company's press release issued on July
27, 2006, relating to the foregoing, is filed as Exhibit 99.1 hereto and
incorporated herein by reference.
Item
9.01 Financial Statements and
Exhibits
(a)
Not applicable.
(b)
Not applicable.
(c)
Exhibits
99.1
Press Release dated July 27, 2006 issued by
ePlus inc.
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.
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ePlus inc. |
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By: /s/ Steven J.
Mencarini |
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Steven J. Mencarini |
| Date: July 27, 2006 |
Chief Financial
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