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EXHIBIT 10.4
LOAN AGREEMENT
Dated as of: March 26, 1999
Parties: Xxxxxxx Bros. U.S. Finance Limited Partnership (Delaware) ("Borrower")
Xxxxxxx Bros. Auctioneers Incorporated ("Guarantor")
And: U.S. BANK NATIONAL ASSOCIATION ("Lender")
ARTICLE I
DEFINITIONS AND INTERPRETIVE PROVISIONS
1.1 DEFINITIONS.
As used in this Agreement, the following terms shall have the following
meanings:
"Access Laws" means the Americans With Disabilities Act of 1990; the
Fair Housing Amendments Act of 1988; all other federal, state and local laws or
ordinances related to disabled access; and all statutes, rules, regulations,
ordinances, orders of governmental bodies and regulatory agencies and orders and
decrees of any court adopted, enacted or issued with respect thereto; all as now
existing or hereafter amended or adopted.
"Default" means any Event of Default or any event which with the giving
of notice or the passage of time, or both, would constitute an Event of Default.
"Environmental Laws" means all laws, rules, regulations, or ordinances
of any Governmental Body pertaining to Hazardous Substances and environmental
regulation, contamination or clean-up including, without limitation, the federal
statutes commonly known as CERCLA and RCRA and all other national, state or
provincial lien or environmental clean-up statutes, all as now existing or
hereafter amended or adopted.
"GAAP" means Canadian generally accepted accounting principles
consistently applied.
"Governmental Body" means (a) any foreign or domestic national, federal,
state or local government or municipality or political subdivision of any
government or municipality, (b) any assessment, improvement, community
facilities or other special taxing district, (c) any governmental or
quasi-governmental body, agency, authority, board, bureau, commission,
corporation, department, instrumentality or public body, (d) any court,
administrative tribunal, arbitrator, public utility or regulatory body, or (e)
any central bank or comparable authority.
"Guaranty" means each guaranty of any obligations of Borrower to Lender
heretofore, contemporaneously herewith or hereafter executed by any Guarantor or
any other Person.
"Hazardous Substances" means (a) any substance or material defined or
designated as hazardous or toxic waste, hazardous or toxic material, or a
hazardous, toxic or radioactive substance (or designated by any similar term) by
or for purposes of any applicable Environmental Law; (b) asbestos and any
substance or compound containing asbestos; and (c) any other hazardous, toxic or
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dangerous waste, substance or material, including but not limited to gasoline,
crude oil, fuel oil, diesel oil, and any other related petroleum products.
"Loan Documents" means this Agreement, the Reducing Revolver Note, the
Guaranties and all other documents and instruments attached hereto, referred to
herein or heretofore, contemporaneously herewith or hereafter executed or
delivered to Lender by any Person in connection with any indebtedness of
Borrower to Lender.
"Loan Party" means each party hereto other than Lender.
"Parent" means Xxxxxxx Bros. Auctioneers Incorporated, which is
incorporated under the laws of Canada.
"Person" means an individual or entity, including without limitation a
corporation, general or limited partnership, limited liability company, trust,
unincorporated association, government or government agency.
"RB Companies" means the Parent and each of its present or future direct
and indirect subsidiaries.
1.2 OTHER INTERPRETIVE PROVISIONS.
1.2.1 Unless otherwise specified, the words "herein," "hereof,"
"hereto," "hereunder" and similar terms refer to this Agreement as a whole and
not to any particular provisions of this Agreement and subsection, section, and
exhibit references are to this Agreement.
1.2.2 The word "or" shall not be exclusive; the singular includes the
plural and the plural includes the singular; the masculine includes the feminine
and the feminine includes the masculine, and the word "including" is not
limiting and means "including without limitation".
1.2.3 References to any Loan Document shall mean such Loan Document as
amended, modified, supplemented or extended from time to time and any number of
substitutions, renewals and replacements thereof or therefor.
1.2.4 References to governmental laws, statutes, ordinances, rules and
regulations shall be construed as including all amendments, consolidations and
replacements thereof or therefor.
1.2.5 Headings in this Agreement and each of the other Loan Documents
are for convenience of reference only and are not part of the substance hereof
or thereof.
1.2.6 Except as otherwise provided in this Agreement or any other Loan
Document, all accounting terms used in this Agreement or any other Loan Document
shall be construed, and all accounting and financial information or computations
shall be prepared or computed, in accordance with GAAP. If GAAP changes during
the term of this Agreement such that any covenants contained herein would then
be calculated in a different manner or with different components, the Loan
Parties and Lender agree to negotiate in good faith to amend this Agreement in
such respects as is necessary to conform those covenants as criteria for
evaluating the Loan Parties' financial condition to substantially the same
criteria as were effective before such change in GAAP, provided, however, that
until the Loan Parties and Lender so amend this Agreement, all such covenants
shall be calculated in accordance with GAAP as in effect on the date of this
Agreement.
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ARTICLE II
REDUCING REVOLVER LOANS
2.1 LOANS. Subject to the terms and conditions of this Agreement, Lender
agrees to make loans to Borrower from time to time on a reducing revolving
credit basis (each a "Reducing Revolver Advance", and collectively, the
"Reducing Revolver Loans"), provided that the aggregate principal amount of
outstanding Reducing Revolver Loans shall at no time exceed the Maximum Reducing
Revolver Amount in effect at such time.
2.2 MAXIMUM AMOUNT.
2.2.1 The initial Maximum Reducing Revolver Amount shall be
$35,000,000. On April 1, 2000 and on the same day of 2001, 2002 and 2003 and on
April 2, 2004 (each a "Reduction Date") the Maximum Reducing Revolver Amount
shall be reduced by $1,750,000.
2.2.2 The Maximum Reducing Revolver Amount may also be reduced
pursuant to Section 6.1.3.
2.2.3 Borrower may permanently reduce the maximum Reducing
Revolver Amount, provided that Borrower notifies Lender in writing not less than
two weeks prior to such permanent reduction.
2.2.4 On September 30, 2004 the Maximum Reducing Revolver Amount
shall be permanently reduced to $0.00.
2.3 USE OF PROCEEDS. Borrower shall use the proceeds of the initial
Reducing Revolver Advance to fund the acquisition of the assets of Xxxxx
Auctioneers, Inc. Subsequent Reducing Revolver Advances shall be used for
Borrower's general corporate purposes.
2.4 NOTE. The Reducing Revolver Loans shall be evidenced by a promissory
note executed by Borrower in the principal amount of $35,000,000 substantially
in the form attached as EXHIBIT A ("Reducing Revolver Note"). The Reducing
Revolver Loans shall be subject to all terms and conditions of the Reducing
Revolver Note and of this Agreement.
2.5 INTEREST. Interest on the unpaid principal balance of the Reducing
Revolver Note shall be due and payable at the times and at the rates set forth
in the Reducing Revolver Note.
2.6 PRINCIPAL PAYMENTS. On each Reduction Date, Borrower shall pay to
Lender such amount as is necessary to reduce the principal balance of the
Reducing Revolver Note to the Maximum Reducing Revolver Amount in effect as of
such date. The principal balance of the Reducing Revolver Note shall be due and
payable in full on September 30, 2004.
2.7 ADDITIONAL PAYMENTS. In addition to the payments otherwise required
on the Reducing Revolver Note, if at any time the outstanding principal balance
of the Reducing Revolver Note exceeds the Maximum Reducing Revolver Amount,
Borrower shall pay to Lender on demand an amount equal to the amount by which
such principal balance exceeds the Maximum Reducing Revolver Amount.
2.8 REQUESTS FOR ADVANCES. Whenever Borrower wishes to request a
Reducing Revolver Advance, Borrower shall give Lender notice thereof in
accordance with the provisions of the Reducing Revolver Note.
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2.9 LOAN FEE. On the date of the initial Reducing Revolver Advance,
Borrower shall pay to Lender a loan fee in the amount of $8,750.00 for the
period from such date through June 30, 1999. On September 1, 1999, and on the
first day of the last month of each fiscal quarter thereafter, Borrower shall
pay to Lender a fee for such fiscal quarter computed at a rate per annum equal
to the Applicable Percentage (based upon the Debt to EBITDA Ratio as of the last
day of the preceding fiscal quarter) of the Maximum Reducing Revolver Amount as
in effect on the first day of such fiscal quarter. Notwithstanding the
foregoing, if Borrower does not timely furnish a Compliance Certificate setting
forth the Debt to EBITDA Ratio, the Applicable Percentage shall be automatically
adjusted, as of the first day of the last month of the applicable fiscal
quarter, to the highest rate set forth below.
The Applicable Percentage shall be the percent per annum set
forth below opposite the applicable Debt to EBITDA Ratio (as defined in Section
6.1.1).
DEBT TO EBITDA RATIO APPLICABLE PERCENTAGE
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Less than 1.0 to 1.0 .075%
Equal to or greater than 1.0 to 1.0 but less than 1.75 to 1.0 .10%
Equal to or greater than 1.75 to 1.0 but less than 2.50 to 1.0 .125%
Equal to or greater than 2.50 to 1.0 but less than 3.25 to 1.0 .15%
Equal to or greater than 3.25 to 1.0 .20%
ARTICLE III
GUARANTIES AND NEGATIVE PLEDGE
3.1 GUARANTY. All present and future obligations of Borrower to Lender
shall be guaranteed by Guarantor. Concurrently with execution of this Agreement,
Guarantor shall execute and deliver a guaranty to Lender.
3.2 MAXIMUM GUARANTY AMOUNT. Notwithstanding any contrary provision of
any Guaranty, if any action or proceeding is commenced asserting that the
Guaranty of any Guarantor is subject to avoidance as a fraudulent transfer or
fraudulent conveyance or any similar term under any applicable state or federal
law, the obligations of such Guarantor under such Guaranty shall be limited to
the maximum amount that would not render such Guarantor's obligations subject to
avoidance under such law in such action or proceeding.
3.3 NEGATIVE PLEDGE.
3.3.1 Without the prior written consent of Lender, the Parent
shall not, and shall not permit any of the other RB Companies to, grant, create,
assume or permit to exist any pledge, assignment for security purposes,
encumbrance, mortgage, hypothecation, or any other security interest (including
without limitation, any conditional sale or other title retention agreement and
any financing or capital lease having substantially the same economic effect as
any of the foregoing) in all or any portion of any real or personal property now
owned or hereafter acquired by the RB Companies (collectively, "Property"),
except those liens and security interests in effect as of March 31, 1999 which
are described on attached SCHEDULE 3.3.1.
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3.3.2 Notwithstanding any other provision of this Agreement, the
RB Companies may create or permit to exist purchase money security interests or
equivalent security interests (including without limitation capital or financing
leases) granted to secure the purchase price of or to finance the acquisition of
equipment for use in the ordinary course of the RB Companies business so long as
(a) such security interest does not extend to any Property other than the
equipment acquired, and (b) such security interest secures only the obligation
to pay the purchase price (or the obligation under any capital or financing
lease).
ARTICLE IV
CONDITIONS PRECEDENT
4.1 INITIAL CONDITIONS PRECEDENT. The effectiveness of this Agreement is
subject to satisfaction of each of the following conditions precedent
concurrently with or prior to execution of this Agreement:
4.1.1 Lender shall have received executed originals of this
Agreement, the Reducing Revolver Note, and each other Loan Document required by
Lender.
4.1.2 Lender shall have received all documents and information
Lender may request relating to the authority for and validity of this Agreement
and the other Loan Documents, and to any other related matters, each in form and
substance satisfactory to Lender.
4.1.3 Lender shall have received such additional documents and
information and each Loan Party shall have satisfied such additional
requirements as Lender reasonably requires.
4.1.4 Lender shall have received the fee required by Section 2.9.
4.1.5 Lender shall have received an opinion from counsel for
Guarantor acceptable to Lender, covering such matters as Lender reasonably
requires.
4.2 CONDITIONS PRECEDENT TO EACH REDUCING REVOLVER ADVANCE. Lender's
agreement to Reducing Revolver Advance is subject to satisfaction of the
following conditions on the date Reducing Revolver Advance is made.
4.2.1 No Default shall have occurred or will exist following the
making of the Reducing Revolver Advance.
4.2.2 The representations and warranties in this Agreement shall
be true and correct as of such date.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.1 REPRESENTATIONS AND WARRANTIES. Each Loan Party hereby represents
and warrants as of the date of execution of this Agreement and as of the date of
each Reducing Revolver Advance:
5.1.1 EXISTENCE AND POWER. Borrower is a duly organized and
validly existing limited partnership and Guarantor is a duly organized and
validly existing corporation, and each Loan Party is duly qualified and in good
standing in each jurisdiction where the conduct of its business or the ownership
of its properties requires such qualification, and has full power, authority and
legal right to carry on its business as presently conducted, to own and operate
its properties and assets, and to execute, deliver and perform the Loan
Documents and all other documents to be executed and delivered by it.
5.1.2 AUTHORIZATION. Its execution, delivery and performance of
the Loan Documents and all documents to be executed, delivered or performed by
it and any borrowing in connection therewith have been duly authorized by all
necessary corporate or other entity action, do not contravene any law,
regulation, rule or order binding on it, or its articles of incorporation or
operating agreement, and do not contravene the provisions of or constitute a
default under any agreement or instrument to which it is a party or by which it
may be bound or affected.
5.1.3 LITIGATION. There are no actions, proceedings,
investigations, or claims pending against it, or to its knowledge, threatened
against or affecting it, before any court or arbitrator or any governmental body
or agency which would be likely to result in a judgment or order against it (in
excess of insurance coverage) for more than $1,000,000 individually or in the
aggregate, excluding any matters previously reflected in Guarantor's financial
statements as of December 31, 1998 (the "Existing Claims").
5.1.4 FINANCIAL CONDITION. Its most recent balance sheet and
related statements of income, retained earnings and cash flows heretofore
delivered to Lender fairly present as of the date thereof its financial
condition for the period then ended, all in accordance with GAAP. Since that
date there have been no material adverse changes in its financial condition or
operations, except as disclosed to Lender in writing.
5.l.5 TAXES. It has filed all tax returns and reports required of
it, and has paid all taxes payable by it which have become due pursuant to such
tax returns and all other taxes and assessments payable by it.
5.1.6 OTHER AGREEMENTS. It is not in breach of or in default
under any agreement to which it is a party or which is binding on it or any of
its assets, which such breach or default would have a material adverse effect on
its financial condition or operations.
5.1.7 GOVERNMENTAL APPROVALS. No approval, authorization,
consent, certificate of compliance, license, permit or exemption from, contract
with, registration or filing with or report or notice to any Governmental Body
is required for its due execution, delivery and performance of the Loan
Documents or the loyalty, validity, binding effect and enforceability of any of
the Loan Documents, except such as have been obtained and are in full force and
effect.
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5.1.8 COMPLIANCE WITH LAWS. It is in compliance in all material
respects with all applicable laws, regulations and ordinances of any
Governmental Body, including without limitation all environmental permits,
Environmental Laws, Access Laws and laws regulating employee pensions or
retirement plans.
5.1.9 NO MATERIAL MISSTATEMENTS. No report, financial statement,
representation or other information furnished by it to Lender contains any
material misstatement of fact or omits to state any material fact necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading.
5.1.10 ENFORCEABILITY. This Agreement constitutes, and each other
Loan Document to which it is a party when executed and delivered to Lender will
constitute a legal, valid and binding obligation of such Loan Party, enforceable
in accordance with its terms.
5.2 CONTINUING REPRESENTATIONS. Each request by Borrower for a Reducing
Revolver Advance shall be deemed to be its representation and warranty that (a)
no Default has occurred, or will exist after the making of such Reducing
Revolver Advance, and (b) all representations and warranties set forth in this
Agreement are true, accurate and complete as of the date of such request.
ARTICLE VI
FINANCIAL COVENANTS AND INFORMATION
6.1 FINANCIAL COVENANTS. Until payment and performance in full of all
obligations of each Loan Party under the Loan Documents, each Loan Party agrees
that:
6.1.1 DEBT TO EBITDA RATIO. The Parent shall maintain, on a
consolidated basis, as of the last day of each fiscal quarter, a Debt to EBITDA
Ratio of not more than 4.0 to 1.0.
As used herein:
"Debt to EBITDA Ratio" means, as of any date of
determination, the ratio, for the Parent and its subsidiaries on a consolidated
basis of (a) long term debt (including liabilities as lessee on capital leases
and the current portion of long term debt and capital leases) as of such date to
(b) EBITDA for the period of four consecutive fiscal quarters ending on such
date (each such period, an "Annual Period").
"EBITDA" means, for any time period net income (or loss)
for such time period plus the amount which in determining net income (or loss)
has been deducted for interest expense, income taxes, depreciation and
amortization.
6.1.2 FUNDED DEBT RATIO. The Parent shall maintain, on a
consolidated basis, as of the last day of each fiscal quarter, a ratio of Funded
Debt to Funds Employed of not more than .75 to 1.0.
As used herein:
"Funded Debt" means, as of any date of determination, the
principal portion of all interest bearing indebtedness (including liabilities as
lessee on capital leases) of the Parent at such time.
"Funds Employed" means as of any date of determination the
sum of (a) the
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Parent's Funded Debt plus (b) an amount equal to the Parent's assets minus the
Parent's liabilities.
6.1.3 FIXED CHARGE RATIO. The Parent shall maintain, on a
consolidated basis, as of the last day of each fiscal quarter, a Fixed Charge
Ratio of not less than 1.50 to 1.0.
"Fixed Charge Ratio" means, as of any date of
determination, the ratio, for the Parent and its subsidiaries on a consolidated
basis, of (a) EBITDA for the Annual Period ending on such date, minus dividends
declared or paid during such Annual Period to (b) the sum of (i) the current
portion of long term debt (including liabilities as lessee on capital leases),
plus (ii) the Required Sinking Fund Amount for the Annual Period commencing on
such date, plus (iii) interest expense for the Annual Period ending on such
date.
6.1.4 RIGHT TO CURE. If the financial statements delivered by
Borrower pursuant to Section 6.2.2 demonstrate that the Loan Parties are not in
compliance with the requirements of Sections 6.1.1, 6.1.2 or 6.1.3 as of the end
of any fiscal quarter, the Loan Parties shall have 30 days following timely
delivery of such financial statements within which to cure the violation by
delivering to Lender such additional financial statements as Lender requires
which demonstrate compliance with such requirements as of the last day of the
month prior to the date of delivery of such additional financial statements
(including, for purposes of this calculation only, EBITDA dividends and interest
expense for the one-year period ending on such last day and the current portion
of long term debt and Required Sinking Fund Amount for the one-year period
commencing on such day). If the violation is not cured within such time period,
then Lender may, at its sole discretion, call the loan by declaring the entire
outstanding balance of principal and interest on the Reducing Revolver Note
immediately due and payable.
6.1.5 DEBT. Without the prior written consent of Lender, which
shall not be unreasonably withheld, the Parent shall not, and shall not permit
any of the RB Companies to, incur or permit to exist, any indebtedness to or
commitments for indebtedness from any Person, except a) indebtedness to and
commitments from Lender, b) indebtedness and commitments existing on the date
hereof and set forth on attached SCHEDULE 6.1.2 and any renewals or extensions
thereof (but excluding any increase thereof) c) short term trade obligations
incurred in the ordinary course of business, and d) additional indebtedness
and/or commitments in an aggregate principal amount of up to $10,000,000.
6.1.6 SINKING FUND. On a consolidated basis, Parent shall at all
times on and after April 1, 2000, maintain cash on hand in an amount at least
equal to the Required Sinking Fund Amount at such time. The Required Sinking
Fund Amount shall be $3,250,000 as of April 1, 2000. On April 1 of each year
thereafter (each a "Sinking Fund Increase Date") the Required Sinking Fund
Amount shall be increased by $3,250,000. Notwithstanding the foregoing, the
Sinking Fund Amount shall not increase on any Sinking Fund Increase Date if, at
least 10 days prior to such date, Borrower (a) notifies Lender of its election
to permanently reduce the Maximum Reducing Revolver Amount by an amount equal to
the required increase in the Sinking Fund Amount and (b) makes such payments as
are necessary to reduce the principal balance of the Reducing Revolver Note by
such amount.
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6.2 FINANCIAL INFORMATION.
6.2.1 As soon as available and in any event within 120 days after
the end of each of its fiscal years, the Parent shall deliver to Lender its CPA
or Chartered Accountant audited balance sheet as at the end of such fiscal year;
related statements of income, retained earnings and cash flows for such year;
and report, if any, to management by the accountant who prepared the financial
statements, in each case certified by a certified public accountant acceptable
to Lender. No document or report shall contain a disclaimer of opinion or
adverse opinion except such as Lender in its sole discretion may determine to be
immaterial.
6.2.2 As soon as available and in any event within 45 days after
the end of each of its fiscal quarters, the Parent shall deliver to Lender its
internally prepared consolidated balance sheet and related statements of income,
retained earnings and cash flow as at the end of such quarter, and for the
fiscal year to date.
6.2.3 As soon as available and in any event within 45 days after
the end of each fiscal quarter Borrower or the Parent shall deliver to Lender,
at Borrower's sole expense, a Compliance Certificate, substantially in the form
attached as EXHIBIT B signed by its chief financial officer or other authorized
officer acceptable to Lender.
6.2.4 Within 10 days after filing, the Parent shall deliver to
Lender copies of all financial statements, proxy statements, reports and other
documents which the Parent files with the Securities and Exchange Commission or
sends to its stockholders.
6.2.5 From time to time, each Loan Party shall provide to Lender
such information as Lender may reasonably request concerning the financial
condition and business affairs of such Loan Party.
ARTICLE VII
AFFIRMATIVE COVENANTS
Until payment and performance in full of all obligations of each Loan
Party under the Loan Documents, each Loan Party agrees that:
7.1 INSPECTION RIGHTS. At any reasonable time, and from time to time
upon the reasonable request of Lender, it will permit Lender to examine and make
copies of and abstracts from its records and books of account, to visit its
properties and to discuss its affairs, finances and accounts with any of its
officers or representatives.
7.2 KEEPING OF BOOKS AND RECORDS. It will keep adequate records and
books of account in which complete entries will be made reflecting all material
financial transactions, and except as otherwise specifically provided herein,
will prepare all financial statements, computations and information required
hereunder in accordance with GAAP.
7.3 OTHER OBLIGATIONS. It will pay and discharge before the same shall
become delinquent all indebtedness, taxes and other obligations for which it is
liable or to which its income or property is subject and all claims for labor
and materials or supplies which, if unpaid, might become by law a lien upon its
assets, unless it is contesting the indebtedness, taxes, or other obligations in
good faith and provision has been made to the reasonable satisfaction of Lender
for the payment thereof in the event any such contest is determined adversely to
it.
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7.4 INSURANCE. It will provide, maintain and deliver to Lender policies
of insurance on its properties and operations, in such form and amounts and
covering such risks as Lender may require.
7.5 COMPLIANCE WITH LAWS. It shall comply in all material respects with
all laws, regulations and ordinances of any Governmental Body (including but not
limited to all Environmental Laws, Access Laws, the Fair Labor Standards Act and
laws regulating employee pension and retirement plans) and promptly provide
written notice to Lender of the receipt of any notice of violation thereof from
any governmental authority which violation, alone or together with any other
such violations, could reasonably be expected to have a material adverse effect
on its business, assets, operations or condition, financial or otherwise.
7.6 NOTIFICATION. Promptly after learning thereof, it will notify Lender
in writing of:
7.6.1 The occurrence of any Default, and if such Default is then
continuing, a certificate of its chief financial officer or other authorized
officer setting forth the details thereof and the action which it is taking or
proposes to take with respect thereto.
7.6.2 The occurrence of any release of any Hazardous Substances
onto or affecting any of its property or any adjacent property, any Collateral,
or any other environmental problem or liability with respect to any such
property.
7.6.3 The details of any claim, lien, litigation, administrative
proceeding or judgment involving $1,000,000 or more individually or in the
aggregate (other than the Existing Claims) threatened, instituted or completed
against any Loan Party, or any assets of any Loan Party, including but not
limited to any and all enforcement, cleanup, removal or other governmental or
regulatory proceedings pursuant to any Environmental Laws.
ARTICLE VIII
NEGATIVE COVENANTS
Until payment and performance in full of all obligations of each Loan
Party under the Loan Documents, each Loan Party agrees that except with the
written consent of Lender:
8.1 LIQUIDATION, MERGER, ETC. It shall not wind up, liquidate or
dissolve itself, reorganize, merge or consolidate with or into, or convey, sell,
assign, transfer, lease or otherwise dispose of (whether in one transaction or
in a series of transactions) all or substantially all of its assets (whether now
owned or hereafter acquired) to any Person, except one of the RB Companies.
8.2 TYPE OF BUSINESS. It shall not make any material change in the
character of its business.
8.3 STRUCTURE. It shall not make any material change in its
organizational structure.
8.4 TRANSACTIONS WITH AFFILIATES. It shall not enter into any
transaction with any affiliate, including, without limitation, the purchase,
sale, or exchange of property or the rendering of any service, except in the
ordinary course of business and upon fair and reasonable terms no less favorable
to it than those that would prevail in a comparable arm's-length transaction
with a Person not an affiliate.
ARTICLE IX
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FOREIGN JURISDICTION, CURRENCY AND TAX MATTERS
9.1 JURISDICTION.
9.1.1 Each Loan Party hereby irrevocably consents to the
non-exclusive jurisdiction of any state or federal court of competent
jurisdiction in the State of Oregon, in any action, suit or proceeding
("Proceeding") enforcing or otherwise arising out of this Agreement or any of
the other Loan Documents, and irrevocably agrees that all claims which are the
subject of such Proceeding may be heard or determined in any such court.
9.1.2 Each Loan Party hereby designates and appoints Xxxxxxx Coie
LLP, whose address in the United States is 0000 XX Xxxxx Xxxxxx, #0000,
Xxxxxxxx, XX 00000-0000, as its authorized agent ("Agent") and true and lawful
attorney in fact in its name, place and stead to accept service of a summons and
complaint or any other process in any such Proceeding and agrees that the
failure of Agent to give any notice of any such service of process to any Loan
Party shall not impair or affect the validity of such service or of any judgment
based thereon.
9.1.3 Each Loan Party waives personal service of process and
consents to the service of any and all process in any Proceeding by mail or hand
delivery or as otherwise provided by the laws of the State of Oregon or the
United States of America, (a) to each Loan Party at Xxxxxxx Coie LLP, 0000 XX
Xxxxx Xxxxxx, #0000, Xxxxxxxx, XX 00000-0000 or at such other address in the
United States as each Loan Party provides in writing to Bank for such service;
(b) to Agent at Agent's address set forth above.
9.1.4 Each Loan Party waives any defense or objection to
jurisdiction or venue in the aforesaid courts, including any objection or
defense based upon lack of personal jurisdiction, insufficiency of summons or
process, sovereign immunity or other immunity from suit or the doctrine of forum
non conveniens. Each Loan Party agrees that a final judgment rendered against
such Loan Party by any state or federal court in the state of Oregon in any
action, suit or proceeding shall be conclusive and may be enforced in other
jurisdictions, domestic or foreign, by suit on the judgment or in any other
manner provided by law.
9.1.5 Nothing herein shall affect the right of Lender to serve
legal process or obtain jurisdiction in any other manner permitted by law, or
affect the right of Lender to bring any action, suit or proceeding against any
Loan Party or its property in the courts of any other jurisdiction, domestic or
foreign.
9.2 JUDGMENT CURRENCY.
9.2.1 All references to money amounts herein or in any other Loan
Document are to lawful money of the United States of America. The payment
obligations of any Loan Party under any Loan Document shall not be discharged by
any amount paid in any currency other than United States Dollars ("USD"), except
to the extent of the USD amount realized by Lender when the amount paid is
converted to USD under Lender's normal banking practices.
9.2.2 If, for purposes of obtaining judgment in any foreign court
it is necessary to convert a sum due hereunder from USD into another currency
(the "Other Currency"), the rate of exchange shall be that at which, in
accordance with its normal banking practice, Lender could
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purchase USD with the Other Currency on the date judgment is obtained; provided,
however, that the obligation of any Loan Party in respect of any amount due to
Lender in USD shall be discharged only if and to the extent that, on the day of
receipt of any sum adjudged due in the Other Currency, Lender is able, in
accordance with its normal banking practice, to purchase the amount of USD with
such Other Currency which Lender could have purchased on the judgment date.
9.2.3 If the amount paid to Lender in any currency other than
USD, whether pursuant to a judgment or otherwise, does not, upon conversion to
USD in accordance with Lender's normal banking practices, yield the amount of
USD due hereunder, each Loan Party, as a separate obligation, and
notwithstanding any judgment or other recovery, agrees to indemnify Lender
against and to pay to Lender on demand, in USD, any difference between the sum
originally due in USD and the amount of USD obtained by Lender.
9.3 DEDUCTION AND WITHHOLDING. Any and all payments made by any Loan
Party shall be made free and clear of and without deduction for any present or
future taxes, levies, imposts, dedications, charges or withholding pursuant to
any applicable laws ("Taxes"), unless such Loan Party shall be required by
applicable law to make any such deduction. If, pursuant to any requirement of
applicable law, any Loan Party shall make any deduction or withholding from any
amount to be paid hereunder, then the parties shall, on a best efforts basis,
agree to modify the terms of the Reducing Revolver Loan so as to eliminate the
required withholding. The Loan Parties shall furnish to Lender, as soon as
reasonable, such receipts and other documents as may be required to establish
payment of such Taxes and any tax credit to which Lender may be entitled. The
obligations of each Party under this Section 9.3 shall survive the termination
of the Loan Agreement and the repayment of the indebtedness evidenced by or
guaranteed by the Loan Documents. Upon receipt of any tax credit or refund to
which the Lender is entitled, the Loan Parties shall pay to Lender the amount,
if any, which is necessary so that Lender is made whole and receives the amount
it would have received if no withholding had occurred.
ARTICLE X
DEFAULT
10.1 EVENTS OF DEFAULT. The occurrence of any of the following shall
constitute an Event of Default under this Agreement and each of the Loan
Documents:
10.1.1 Any failure of any Loan Party to pay any portion of any
principal, interest, fees or any other amount when due under this Agreement, the
Reducing Revolver Note or any other Loan Document.
10.1.2 Any failure of any Loan Party to pay, perform or comply
with any term of this Agreement, any other Loan Document, or any other agreement
between Lender or any affiliate of Lender and any Loan Party or any of the RB
Companies.
10.1.3 Any indebtedness of any Loan Party under any note,
indenture, agreement, undertaking or obligation of any kind to any Person,
including Lender, becomes due by acceleration or otherwise and is not paid.
10.1.4 Any default under any security instrument securing any
indebtedness or obligation of Borrower to Lender or any security interest or
lien created or purported to be created by any security document shall cease to
be, or shall be asserted by any Person not to be, a valid, first
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priority security interest or lien.
10.1.5 Any Guaranty shall cease to be, or shall be asserted by
any Loan Party not to be, in full force and effect.
10.1.6 Any warranty, representation, statement, or information
made or furnished to Lender by or on behalf of any Loan Party proves to have
been false or misleading in any material respect when made or furnished or when
deemed made or furnished, or becomes false or misleading in any material respect
at any time thereafter.
10.1.7 The commencement of any proceeding under any bankruptcy or
insolvency laws by or against, appointment of a receiver for any part of the
property of, insolvency or business failure of, or any attachment, seizure or
levy on any property of, any Loan Party.
10.1.8 The dissolution or liquidation of any Loan Party or the
taking by any Loan Party of any action to authorize a dissolution or
liquidation.
10.1.9 The interruption or cessation of a material portion of any
Loan Party's ordinary business operations.
10.1.10 Except with respect to the Existing Claims, any judgment,
writ of attachment or similar process in an amount in excess of $1,000,000
individually or in the aggregate shall be entered or filed against any Loan
Party or any property of any Loan Party and remains unpaid, unvacated, unbonded
or unstayed for a period of 30 days or more.
10.1.11 The failure of any Loan Party to provide Lender with
financial information promptly when requested.
10.1.12 Any change in ownership of any of the partnership
interests in Borrower.
10.1.13 Any material adverse change, as reasonably determined by
Lender, in the financial condition or management of any Loan Party or Lender
reasonably deems itself insecure with respect to the payment or performance of
the obligations of any Loan Party to Lender.
10.2 CONSEQUENCES OF DEFAULT; LENDER'S RIGHTS AND REMEDIES. Time is of
the essence of this Agreement.
10.2.1 Upon the occurrence of any Event of Default and at any
time thereafter Lender may, at its sole option, do any one or more of the
following:
(a) Without notice to any Loan Party, terminate the availability
of Reducing Revolver Advances and declare the entire outstanding balance of
principal and interest on the Reducing Revolver Note and other Loan Documents
immediately due and payable, whereupon the same shall become immediately due and
payable without presentment, demand, protest or other requirements of any kind,
all of which are expressly waived by each Loan Party; and
(b) Exercise any and all other rights and remedies provided in
the Loan Documents and in any related agreements and documents, and as otherwise
provided by law.
10.2.2 Notwithstanding any right to cure events of default
provided in the Reducing Revolver Note or any of the other Loan Documents, each
Loan Party agrees that such Loan Party
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shall have only such cure rights as may be set forth herein.
ARTICLE XI
ARBITRATION
11.1 ARBITRATION OF CLAIMS. Either Lender or any Loan Party may require
that all disputes, claims, counterclaims, and defenses, including those based on
or arising from any alleged tort ("Claims") relating in any way to this
Agreement, any loan, any of the Loan Documents, or any transaction of which this
Agreement is a part (each a "Credit"), be settled by binding arbitration in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association and Title 9 of the U.S. Code. All Claims will be subject to the
statutes of limitation applicable if they were litigated. This provision is void
if the Credit, at the time of the proposed submission to arbitration, is secured
by real property located outside of Oregon or Washington, or if the effect of
the arbitration procedure (as opposed to any Claims of any Loan Party) would be
to materially impair Lender's ability to realize on any Collateral securing the
Credit.
11.2 ARBITRATORS. If arbitration occurs and each party's Claim is less
than $100,000, one neutral arbitrator will decide all issues; if any party's
Claim is $100,000 or more three neutral arbitrators will decide all issues. All
arbitrators will be active Oregon State Bar members in good standing. All
arbitration hearings will be held in Portland, Oregon. In addition to all other
powers, the arbitrator(s) shall have the exclusive right to determine all issues
of arbitrability. Judgment on any arbitration award may be entered in any court
with jurisdiction.
11.3 OTHER REMEDIES. If any party institutes any judicial proceeding
relating to any Credit, such action shall not be a waiver of the right to submit
any Claim to arbitration. In addition, each has the right before, during, and
after any arbitration to exercise any number of the following remedies, in any
order or concurrently: (a) setoff; (b) self-help repossession; (c) judicial or
non-judicial foreclosure against real or personal property collateral; (d)
provisional remedies, including injunction, appointment of receiver, attachment,
claim and delivery and replevin.
11.4 GOVERNING PROVISION. Each Loan Party agrees that, notwithstanding
any contrary provision of the Reducing Revolver Note or any of the other Loan
Documents, the provisions of this Article shall govern the arbitration of all
matters described herein.
ARTICLE XII
MISCELLANEOUS
12.1 NO WAIVER BY LENDER. No failure or delay of Lender in exercising
any right, power or remedy under this Agreement or any Loan Document shall
operate as a waiver of such right, power or remedy of Lender or of any other
right. A waiver of any provision of any Loan Document shall not constitute a
waiver of or prejudice Lender's right otherwise to demand strict compliance with
that provision or any other provision. Any waiver, permit, consent or approval
of any kind or character on the part of Lender must be in writing and shall be
effective only to the extent specifically set forth in such writing.
12.2 COSTS AND FEES. Without limiting any other provisions of this
Agreement, Borrower hereby agrees to pay Lender on demand an amount equal to all
costs and expenses incurred by Lender in connection with the negotiation,
preparation, execution, administration and enforcement of the Loan Documents,
including without limitation all recording costs, filing fees, costs of
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appraisals, collateral audits, costs of perfecting, maintaining and defending
Lender's security interest in the Collateral and fees of in-house and outside
counsel.
12.3 NOTICES. Except as otherwise specifically set forth in any Loan
Document, all notices, requests and demands hereunder shall be in writing, and
shall be deemed to have been given when hand-delivered, when sent by registered
or certified mail, postage prepaid, or when sent by telecopier, addressed as set
forth below; provided, however, that any request for a Reducing Revolver Advance
shall not be effective until received by Lender. Any party may at any time
change its address for notices by giving notice of such change to the other
parties.
If to Borrower or Guarantor: If to Lender:
c/o Ritchie Bros. Auctioneers Incorporated U.S. Bank National Association
0000 Xxxxxxxxxx Xxxx Xxxxxx Corporate Banking
Xxxxxxxx, XX Xxxxxx X0X 0X0 000 X.X. Xxxxx Xxxxxx, T-4
Fax: (000) 000-0000 Xxxxxxxx, XX 00000
Fax: (000) 000-0000
12.4 COLLECTION COSTS AND ATTORNEY FEES. Whether or not litigation or
arbitration is commenced, the Loan Party promises to pay all costs of collecting
any amounts which may become due to Lender under any of the Loan Documents.
Without limiting the foregoing, if litigation or arbitration is commenced to
enforce or construe any term of any of the Loan Documents, the prevailing party
shall be entitled to recover from the other party all costs thereof, including
but not limited to such sums as the court or arbitrator(s) may adjudge
reasonable as attorney fees at trial, in any appellate proceeding, proceeding
under the bankruptcy code or receivership and post-judgment attorney fees
incurred in enforcing any judgment .
12.5 INTEGRATION; CONFLICTING TERMS. This Agreement together with the
other Loan Documents comprises the entire agreement of the parties on the
subject matter hereof and supersedes and replaces all prior agreements, oral and
written, on such subject matter. If any term of any of the other Loan Documents
expressly conflicts with the provisions of this Agreement, the provisions of
this Agreement shall control; provided, however, that the inclusion of
supplemental rights and remedies of Lender in any of the other Loan Documents
shall not be deemed a conflict with this Agreement.
12.6 ASSIGNMENT AND PARTICIPATION. Lender may from time to time assign
or sell participating interests in all or any part of its interest in this
Agreement, the Reducing Revolver Note and the other Loan Documents.
12.7 SUCCESSORS AND ASSIGNS. This Agreement and the other Loan Documents
shall be binding upon and inure to the benefit of the parties and their
respective successors and assigns, except that no Loan Party may assign or
transfer any of its rights or obligations under any Loan Document without the
prior written consent of Lender.
12.8 SEVERABILITY. If any provisions of this Agreement or any of the
Loan Documents is held invalid under any applicable laws, such invalidity shall
not affect any other provision of this Agreement that can be given effect
without the invalid provision.
12.9 GOVERNING LAW. Except to the extent that Lender has greater rights
and remedies
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under federal law, this Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Oregon without regard to
conflicts of law principles (except that matters concerning the validity and
perfection of security interests covered thereby shall be governed by the
conflicts of law provisions of the Uniform Commercial Code).
12.10 ADDITIONAL ACTS. Upon request by Lender, each Loan Party will from
time to time provide such information, execute such documents and do such acts
as may reasonably be required by Lender in connection with any indebtedness or
obligations of any of them to Lender.
12.11 DOCUMENTS SATISFACTORY TO LENDER. All information, documents and
instruments required to be executed or delivered to Lender shall be in form and
substance satisfactory to Lender.
12.12 COMPUTATIONS. All interest rates and fees referred to herein shall
be computed on the basis of a 360-day year and applied to the actual number of
days elapsed.
12.13 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, and all of said
counterparts taken together shall be deemed to constitute but one document.
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12.14 DISCLOSURE.
UNDER OREGON LAW, MOST AGREEMENTS PROMISES AND COMMITMENTS MADE
BY LENDERS AFTER OCTOBER 3, 1989, CONCERNING LOANS AND OTHER CREDIT EXTENSIONS
WHICH ARE NOT FOR PERSONAL, FAMILY OR HOUSEHOLD PURPOSES OR SECURED SOLELY BY
THE BORROWER'S RESIDENCE MUST BE IN WRITING, EXPRESS CONSIDERATION AND BE SIGNED
BY THE LENDER TO BE ENFORCEABLE.
EACH LOAN PARTY ACKNOWLEDGES RECEIPT OF A COPY OF THIS AGREEMENT.
XXXXXXX BROS. U.S. FINANCE U.S. BANK NATIONAL ASSOCIATION
LIMITED PARTNERSHIP (DELAWARE)
BY: XXXXXXX BROS. HOLDINGS LTD.,
ITS GENERAL PARTNER BY:
TITLE:
BY:
TITLE:
XXXXXXX BROS. AUCTIONEERS
INCORPORATED
BY:
TITLE:
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EXHIBIT B_____
COMPLIANCE CERTIFICATE
This Compliance Certificate is executed and delivered by
_______________________ ______________________ to U.S. Bank National Association
("Lender") pursuant to the requirements of the Loan Agreement dated as of
_______________________ between Borrower, certain other parties and Lender
("Loan Agreement"). Any capitalized terms used herein and not defined herein
shall have the meanings given to such terms in the Loan Agreement. This
Compliance Certificate covers the fiscal quarter ended __________________.
1. A review of the activities of Loan Parties during the fiscal period
covered by this Compliance Certificate has been made under the supervision of
the undersigned with a view to determining whether during such fiscal period the
Loan Parties performed and observed all of their obligations under the Loan
Agreement. To the best knowledge of the undersigned, during such fiscal period
all covenants and conditions of Loan Parties have been performed and observed
and no Default has occurred and is continuing under the Loan Agreement [with the
exceptions set forth below in response to which Loan Parties has taken or
proposes to take the following actions:
________________________________________________________________________
________________________________________________________.]
2. To the best knowledge of the undersigned, no material adverse change
has occurred with regard to Loan Parties' business, assets, operations or
condition, financial or otherwise, since the last Compliance Certificate was
delivered [with the exceptions set forth below:
________________________________________________________________________
________________________________________________________.]
3. Attached are the calculations and other supporting documentation
showing whether Loan Parties were in compliance with Sections 6.1.1, 6.1.2,
6.1.3 and 6.1.5 of the Loan Agreement as of the end of the fiscal period covered
by this Compliance Certificate. Each such calculation is derived from the books
and records of the Loan Parties and correctly reflects whether the Loan Parties
are in compliance with the applicable sections of the Loan Agreement.
4. This Compliance Certificate is executed on ________________________.
By:
Title:
