Rush Enterprises, Inc. filed SEC Form 8-K: Entry into a Material Definitive Agreement, Creation of a Direct Financial Obligation, Financial Statements and Exhibits

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Date of Report (Date of earliest event reported): October 1, 2021

 

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Item 1.01         Entry into a Material Definitive Agreement.

 

On October 1, 2021, Rush Truck Leasing, Inc. (“RTL”), a wholly owned subsidiary of Rush Enterprises, Inc. (“Rush”), entered into that certain Amended and Restated Inventory Financing and Purchase Money Security Agreement (the “Agreement”) with PACCAR Leasing Company (“PLC”), a division of PACCAR Financial Corp.

 

Pursuant to the terms of the Agreement, PLC agreed to make up to $300 million of revolving credit loans to finance certain of RTL’s capital expenditures, including commercial vehicle purchases and other equipment to be leased or rented through RTL’s PacLease franchise. RTL may borrow, repay and reborrow loans from time to time until the maturity date, provided, however, that the outstanding principal amount on any date shall not exceed the borrowing base (as defined in the Agreement) and RTL shall not permit the value of any PLC financed assets (as defined in the Agreement) not manufactured by PACCAR, Inc. to exceed 30% of the borrowing base. In connection with the Agreement, RTL issued a $300 million promissory note to PLC (the “Note”).

 

Advances under the Agreement bear interest per annum, payable on the fifth day of the following month, at RTL’s option, at either (A) the prime rate (as defined in the Agreement), minus 1.55%, provided that the floating rate of interest is subject to a floor of 0%, or (B) a fixed rate, to be determined between RTL and PLC in each instance of borrowing at a fixed rate. Each request by RTL for an advance must be approved by PLC in its sole discretion. The Note is where the interest rates are described. The Note provides for a delinquency charge on late payments of the prime rate plus 2.0% per annum.

 

RTL may voluntarily prepay advances up to twice per month. In the event that the average daily outstanding principal balance is less than the minimum balance threshold (as defined in the Agreement), then the prepayment premium for that quarter will be 3.5% of the amount by which the minimum balance threshold exceeded the average daily outstanding principal balance. In the event that the average daily outstanding principal balance is equal to or greater than the minimum balance threshold, then the prepayment premium for that quarter will be waived. There will be no prepayment premium after January 1, 2024.

 

Commencing on January 1, 2024, RTL will begin paying PLC on a quarterly basis an unused commitment fee of 0.15% of the total loan commitment, less the average daily outstanding principal balance of the loan during such quarter. RTL shall have the option, commencing January 1, 2024, to adjust the total loan commitment to an amount not less than 50% of the then-outstanding principal amount of the loan.

 

RTL granted PLC a security interest in: (i) all of the PLC financed assets; (ii) the leases between RTL and customers of RTL related to PLC financed assets; and (iii) all proceeds of any of the foregoing in whatever form, in order to secure its obligations under the Agreement.

 

The Agreement expires October 1, 2025, although either party has the right to terminate the Agreement at any time upon 180 days written notice. If RTL terminates the Agreement prior to October 1, 2025, then all payments will be deemed to be voluntary prepayments subject to a potential prepayment premium as described above.

 

If at any time the outstanding balance of the loan exceeds the borrowing base, then at PLC’s request, RTL agrees to: (i) pay the amount of such excess within five (5) days following PLC’s written request; or (ii) grant PLC a security interest in additional PLC financed assets, and their corresponding leases, as necessary to make the borrowing base equal to or greater than the outstanding balance of the Note.

 

 

If an event of default exists under the Agreement, PLC will be able to 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 Agreement:

 

 

 

 

 

 

 

Rush has guaranteed RTL’s obligations under the Agreement pursuant to a Corporate Guarantee previously provided to PLC, dated as of November 1, 2002 (the “Guarantee”).

 

The Agreement amends and restates that certain Inventory Financing and Purchase Money Security Agreement Paper Loan Agreement, dated as of May 31, 2002 and as amended from time to time.

 

The foregoing description is qualified in its entirety by reference to the full text of (i) the Agreement, which is attached as Exhibit 10.1 to this Current Report on Form 8-K and incorporated in this Item 1.01 by reference, and (ii) the Note, which is attached as Exhibit 10.2 to this Current Report on Form 8-K and incorporated in this Item 1.01 by reference; and (iii) the Guarantee, which is attached as Exhibit 10.3 to this Current Report on Form 8-K and incorporated in this Item 1.01 by reference.

 

 

The information described in Item 1.01 above relating to the Floor Plan Credit Agreement and WF Credit Agreement is incorporated into this Item 2.03 by reference.

 

 

 

 

 

SIGNATURES

 

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.