RUSH ENTERPRISES INC TX: Entering into a Material Definitive Agreement, Creating a Direct Financial Obligation or an Obligation Under an Off-Balance Sheet Arrangement of a Registrant (Form 8-K)

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Section 1.01 Entering into a Material Definitive Agreement.

Amended and Restated Wholesale Funding Agreement between RTC – Canada and BMO

On July 15, 2022, Rush Truck Centers of Canada Ltd. (“RTC-Canada”), a subsidiary of Rush Enterprises, Inc. (“Rush”), has entered into this certain Amended and Restated BMO Wholesale Funding and Guarantee Agreement (the “Agreement”) with Bank of Montreal (“BMO”).

Under the terms of the agreement, BMO agreed to compensate up to $116.7 million
CAD of revolving credit loans to finance the purchase of new and used vehicle inventory by RTC-Canada. Loans to purchase used vehicle inventory are limited to twenty percent (20%) of the available credit limit at that time. RTC-Canada may borrow, repay and re-borrow loans from time to time until the maturity date, provided, however, that the amount of principal outstanding at any date does not exceed the credit limits set forth above in regarding new and used vehicles.

In addition, with respect to each New Vehicle Inventory Loan that remains outstanding for more than 12 months, RTC-Canada must repay: (i) 10% of the original loan amount on the first anniversary of the loan; (ii) 5% of the original loan amount on each of the 18th and 24th anniversary months of the loan; and (iii) 5% of the original loan amount each month after the second loan anniversary. For each used vehicle inventory loan that remains outstanding for more than 12 months, RTC-Canada must repay: (i) 10% of the original loan amount on each of the 12th, 15th and 18th month anniversary of the loan; and (ii) 5% of the original loan amount each month after the 18th month anniversary of the loan.

Advances under the Agreement bear interest annually, payable on the first business day of each calendar month, at the Canadian Dollar Offered Rate (CDOR) plus 0.90% and, in the case of an advance to be made in US dollars at the London Interbank Offered Rate (LIBOR) plus 1.10%. Each RTC-Canada advance request must be approved by BMO in its sole discretion. RTC-Canada may voluntarily prepay advances at any time and there is no prepayment premium or unused commitment fee.

RTC-Canada has granted BMO a security interest in (i) all new and used vehicles held in inventory, including but not limited to trucks, tractors, buses, trailers, semi-trailers , frames and assemblies of gliders, together with all accessories, acquisitions, accessories, exchanges, spare parts, substitutions, repairs, additions, improvements and improvements relating thereto and all chattel papers, documents, certificates of title, certificates of origin, general intangibles, instruments, accounts and existing or future contractual rights thereto and (ii) all cash and non-cash proceeds of any of the foregoing, to secure their obligations under the OK.

Agreement expires September 14, 2026. If there is an event of default under the agreement, BMO may terminate the agreement and accelerate the maturity of all outstanding loans, as well as exercise other rights and remedies. Each of the following is an event of default under the Contract:

  ? failure to make timely payments with respect to the loan or to perform any
    obligations owed to BMO, as such obligations are set forth in the Agreement;



  ? any material breach of the Agreement or falsity of any warranty,
    representation or statement made by RTC-Canada;



  ? bankruptcy or other insolvency events;



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  ? if there occurs (i) an appropriation, (ii) confiscation, (iii) retention, or
    (iv) seizure of control, custody or possession of the Collateral (as defined
    in the Agreement) by any Governmental Authority (as defined in the Agreement);



  ? default by a guarantor or a third party under any guarantee, collateral
    agreement or other support agreement relating to the Liability (as defined in
    the Agreement);



  ? if any change occurs in (i) the legality, validity or enforceability of the
    Agreement of any of the Existing Security (as defined in the Agreement); or
    (ii) the perfection or priority of any of the Security Interests (as defined
    in the Agreement) constituted by this Agreement or the Existing Security; in
    each case which has had or could, in the reasonable opinion of BMO, reasonably
    be expected to have a material adverse effect on RTC-Canada's business;



  ? dissolution, merger or consolidation, or a material change in ownership of
    RTC-Canada;



  ? if any change occurs in the business, affairs, operations, assets, liabilities
    (contingent or otherwise), condition (financial or otherwise) or results of
    operations of RTC-Canada or any of its affiliates that has had or could, in
    the reasonable opinion of BMO, reasonably be expected to have a material
    adverse effect on RTC-Canada or its affiliates;



  ? RTC-Canada fails to pay any final judgment or court order;



  ? termination of the dealership agreements between RTC-Canada and Navistar,
    Inc.;



  ? if at any time, in the reasonable opinion of BMO, the prospect of payment or
    performance hereunder is impaired or the Collateral is insecure, including
    without limitation RTC-Canada's default under any agreement with any third
    party that has had or could, in the reasonable opinion of BMO, reasonably be
    expected to have a material adverse effect; or



  ? if certain of the events described above occur with respect to Rush.


Rush has guaranteed RTC-Canada’s obligations under the agreement pursuant to this amended and restated guarantee agreement dated July 15, 2022
between Rush and BMO (the “Amended and Restated Warranty Agreement”).

The Agreement amends and restates the BMO Wholesale Funding and Guarantee Agreement and Supplemental Agreement, each dated February 21, 2019between BMO and RTC-Canada.

The foregoing description is qualified in its entirety by reference to the full text (i) of the Agreement, which is attached as Schedule 10.1 to this current Report on Form 8-K and incorporated into this Section 1.01 by reference and (ii) the Amended Agreement and Restated Guarantee Agreement, which is attached as Schedule 10.2 to this Current Report on Form 8-K and incorporated into this Section 1.01 by reference.

Amended and Updated Warranty Agreement

As previously announced, the May 2, 2022Rush acquired an additional 30% stake in RTC-Canada, bringing total ownership of Rush si RTC-Canada to 80%. Due to Rush’s additional stake in RTC-CanadaRush has agreed to amend and restate the Warranty Agreement dated April 25, 2019between Rush and BMO, capped at $250.0 million (the “guarantee ceiling”). The Amended and Restated Warranty Agreement removes the Warranty Cap.

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The foregoing description is qualified in its entirety by reference to the full text of the Amended and Restated Warranty Agreement, which is attached as Schedule 10.2 to this current Report on Form 8-K and incorporated herein. 1.01 by reference.

Item 2.03 Creation of a Direct Financial Obligation or Obligation Under an Off-Balance Sheet Arrangement of a Registrant.

The information described in Section 1.01 above regarding the Agreement and Amended and Restated Warranty Agreement is incorporated into this Section 2.03 by reference.

Item 9.01 Financial statements and supporting documents.

(d) Exhibits

Exhibit No.   Description

10.1            First Amended and Restated BMO Wholesale Financing and Security
              Agreement dated as of July 15, 2022, between BMO and Rush Truck
              Centres of Canada Limited.
10.2            Amended and Restated Guaranty Agreement dated as of July 15, 2022,
              between Rush Enterprises, Inc. and BMO.
104           Cover Page Interactive Data File (embedded within Inline XBRL
              document).



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