THIRD RESTATED FINANCING AND SECURITY AGREEMENT
THIS THIRD RESTATED FINANCING AND SECURITY AGREEMENT is entered into as of
July 6, 1995, between NATIONSCREDIT COMMERCIAL CORPORATION, a North Carolina
corporation with its principal place of business at 1105 Hamilton Street,
Allentown, Pennsylvania 18101 ("Secured Party"), and WINNEBAGO INDUSTRIES, INC.,
an Iowa corporation with its principal place of business at 605 Crystal Lake
Road, Forest City, Iowa 50436 ("Debtor").
RECITALS
WHEREAS, Debtor and Secured Party are party to a Second Amended Financing
and Security Agreement dated as of March 17, 1994 ("Existing Agreement"), which
the parties desire to amend and restate as set forth herein;
NOW, THEREFORE, for valuable consideration hereby acknowledged, the parties
agree as follows:
Section 1. Definitions. The following terms when capitalized have the
meanings as given in this Section 1 whenever used in this Agreement:
1.1 "Accounting Month" means the period from the last Friday of a calendar
month to and including the last Thursday of the following calendar month. If a
calendar month ends on Thursday, then the next accounting month shall be from
the first Friday of the month to and including the last Thursday of the same
calendar month.
1.2 "Accounts Receivable" means all accounts, contract rights, instruments,
documents, chattel paper, general intangibles (including, without limitation,
choses in action, tax refunds and insurance proceeds), and other obligations or
indebtedness owed to Debtor from any source whatever.
1.3 "Borrowing Base" means an amount equal to the lesser of $30,000,000 or
75% of Eligible Inventory. All calculations of the Borrowing Base shall be at
Debtor's book value of the Inventory, or market value, whichever is less, and
shall be calculated net of any amounts owing by Debtor to a manufacturer of the
Eligible Inventory.
1.4 "Business Day" means any day of the week, Monday through Friday, on
which Secured Party is open for the regular conduct of business.
1.5 "Collateral" means all Accounts Receivable and Inventory now owned or
hereafter acquired by Debtor, and all products and proceeds thereof, including,
but not limited to, cash, instruments, credits, chattel paper, general
intangibles and accounts.
1.6 "Eligible Inventory" means (a) recreational vehicles that have been
fully manufactured by Debtor and are ready for delivery to a dealer, and (b)
motor home chassis and related components constituting part of Debtor's raw
materials. Such Inventory must be subject to no lien, encumbrance or other
interest of any person or entity except as permitted hereunder, and must be
otherwise reasonably acceptable to Secured Party.
1.7 "Inventory" means all goods, merchandise and other personal property
now owned or hereafter acquired by Debtor, wherever located, which are held for
sale or lease, or are furnished or to be furnished under any contract of
service, or are raw materials, work-in-process, finished goods, supplies or
materials used or consumed in Debtor's business, and all products thereof; all
substitutions, replacements, additions or accessions therefor and thereto; and
all cash or non-cash proceeds and products of the foregoing, including insurance
proceeds.
1.8 "Line of Credit" means the line of credit established under this
Agreement.
1.9 "Obligations" means all indebtedness, obligations and liabilities of
Debtor to Secured Party of every kind and description, direct or indirect,
secured or unsecured, joint or several, absolute or contingent, due or to become
due, whether for payment or performance, now existing or hereafter arising,
regardless of how the same arise or by what instrument, agreement or book
account they may be evidenced, or whether evidenced by any instrument, agreement
or book account, including, without limitation, all loans (including any loan by
renewal or extension), all indebtedness, all undertakings to take or refrain
from taking any action, all indebtedness, liabilities or obligations owing from
Debtor to others which Secured Party may have obtained by purchase, negotiation,
discount, assignment or otherwise, and all interest, taxes, fees, charges,
expenses and attorney's fees chargeable to Debtor or incurred by Secured Party
under this Agreement, or any other document or instrument delivered in
connection herewith, and further including, without limitation, all obligations
of Debtor to Secured Party pursuant to this Agreement and their inventory
floor-plan finance agreement.
1.10 "Prime Rate" means the prime rate as announced by NationsBank, N.A.
(Carolinas) at its office in Charlotte, North Carolina on the last day of an
Accounting Month, effective for outstanding balances in the succeeding
Accounting Month. When a change in the Prime Rate is announced, the change will
take effect for the succeeding month, and will apply to new advances as well as
to existing balances.
Section 2. Agreement to Lend. Subject to all of the terms and conditions
herein contained, Secured Party grants to Debtor a revolving line of credit in
the amount of $30,000,000, and Debtor may borrow, repay and reborrow up to such
amount as set forth herein. In lieu of a promissory note or other instrument
evidencing the indebtedness hereunder, Secured Party will maintain an account
reflecting Debtor's outstanding indebtedness ("Revolving Loan Account"). Failure
to make notation of any advance or other Obligations arising hereunder, however,
will not affect the obligations of Debtor. Entries in the Revolving Loan Account
and related records will be conclusive, absent manifest error.
Section 3. Term and Prepayment.
3.1 Term of Credit Line. The Line of Credit shall be available to Debtor
for an initial term ending on the last Business Day of March 1997 ("Initial
Term"); provided an Event of Default (as hereafter defined) has not occurred
during the Initial Term, the Line of Credit shall continue to be available
during successive one year periods ("Renewal Terms"), with each Renewal Term
automatically arising unless either party provides notice to the other at least
90 days in advance of the expiration of the Initial Term or a Renewal Term that
the party giving notice wishes to terminate the Line of Credit. Upon expiration
of the Initial Term or a Renewal Term without a new Renewal Term arising, the
Line of Credit shall be terminated and all amounts outstanding under the Line of
Credit, and otherwise under this Agreement, shall immediately be due and payable
without notice or demand.
3.2 Prepayment. Debtor may prepay all or any portion of the advances
hereunder at any time; provided, however, if Debtor prepays all advances and
other amounts owing under the Line of Credit, then the Line of Credit shall be
terminated and no longer available to Debtor unless Debtor continues to provide
Secured Party with the financial information required hereby and otherwise to
comply with the covenants herein. Each prepayment shall be applied first to
accrued interest and charges owing hereunder, and then to principal.
Section 4. Advances.
4.1 Conditions for Advances. As long as (a) there exists no Event of
Default, or circumstance that with the passage of time or giving of notice could
constitute an Event of Default, (b) the representations and warranties of Debtor
set forth herein are true and complete as of the date of the advance, and (c)
the credit and financial condition of Debtor are, in the sole and absolute
discretion of Secured Party, satisfactory, Secured Party will make advances to
Debtor under the Line of Credit in such amounts as Debtor may request, but in no
event may total outstanding advances hereunder exceed the Borrowing Base at any
time.
4.2 Requests for Advances. Debtor shall accompany each request for an
advance with a Borrowing Base Certificate, in the form of Exhibit A hereto or
any other form satisfactory to Secured Party ("Borrowing Base Certificate").
Each request for an advance shall constitute a representation and warranty by
Debtor that the Borrowing Base, based on the Eligible Inventory on the date of
the certificate, justifies the requested advance and that the conditions set
forth in Section 4.1(a) and (b) are satisfied. All advances shall be by check or
wire transfer and, if by wire transfer, a $12.50 wire transfer fee shall be
charged to Debtor for each transfer up to five transfers in one calendar month
and a $25 wire transfer fee shall be charged for each transfer beyond five
transfers in any one calendar month. Wire transfers to Debtor's operating
account will be made by Secured Party the next Business Day following Secured
Party's receipt of Debtor's request for an available advance.
Section 5. Interest.
5.1 Interest Rates. All advances under the Line of Credit shall bear
interest from the date made until paid at a per annum rate equal to the Prime
Rate plus 0.5%. During the continuance of an Event of Default, all amounts owing
hereunder shall bear interest at such rate plus an additional 6.0% per annum.
5.2 Rate Limitation. It is not the intention of any party to this Agreement
to make an agreement violative of the laws of any applicable jurisdiction
relating to usury. In no event shall Debtor be obligated to pay any amount in
excess of the maximum amount of interest permitted under applicable law. If
Secured Party ever receives anything of value that is deemed to constitute
excess interest under applicable law, an amount equal to such excess shall be
applied to the reduction of principal and any remainder shall be promptly
refunded to the payor.
Section 6. Payment.
6.1 Required Payments. Debtor shall immediately pay to Secured Party:
(a) Each week (in conjunction with the submission of the Borrowing Base
Certificate), if necessary, an amount sufficient to reduce the
principal amount outstanding under the Line of Credit to the Borrowing
Base;
(b) On the earlier of the twentieth day of each month or upon receipt of
Secured Party's statement, all accrued and unpaid interest for the
preceding month; and
(c) Upon the termination of the Line of Credit under Section 3 hereof, the
total outstanding principal indebtedness under the Line of Credit, all
accrued and unpaid interest, all amounts advanced and secured by this
Agreement, and all other amounts owed to Secured Party.
6.2 General Obligation. Debtor agrees that the obligation to repay each
advance made under the Line of Credit, together with interest thereon, shall not
be limited to any specific fund but shall be a direct and general liability of
Debtor. Until checks and other instruments delivered to Secured Party in payment
or on account of Debtor's obligations are actually paid to Secured Party, Debtor
agrees that such items constitute conditional payment only.
6.3 Charge to Revolving Loan Account. Secured Party is hereby authorized to
charge the interest and other charges accruing under this Agreement to the
Revolving Loan Account as of the first day of the Accounting Month following the
month in which the charge was incurred. All collections shall be applied first
to payment of any such unpaid interest or expenses, then toward the satisfaction
of the oldest unpaid advance owing by Debtor to Secured Party.
6.4 Statements of Account. At least once each month during the term of this
Agreement, Secured Party shall render to Debtor a statement of account for its
Revolving Loan Account, which statement shall be considered correct and accepted
by Debtor and conclusively binding upon Debtor unless Debtor notifies Secured
Party to the contrary within 15 days of the date on which said statements were
sent to Debtor.
Section 7. Security Interest. Debtor hereby grants Secured Party a
continuing security interest in all of the Collateral to secure to Secured Party
the prompt and complete payment and performance of the Obligations. Debtor
represents, warrants and agrees that Secured Party's security interest is
subject to only those liens permitted under Section 14.2 hereof, and Secured
Party's position in the Collateral will not change as funds are advanced by
Secured Party to Debtor under this Agreement.
Section 8. Special Provisions Relating to Inventory.
8.1 Attachment; Possession. Secured Party's security interest in the
Inventory shall continue through all steps of manufacture and sale, and shall
attach without further act to raw materials, work-in-process, finished goods,
returned goods, and proceeds resulting from sale or disposition of Inventory.
Until all Obligations have been satisfied, Secured Party's security interest in
Inventory and in all proceeds thereof shall continue in full force and effect,
and Secured Party shall have, in its discretion and at any time after the
occurrence of an Event of Default, the right to take physical possession of the
Inventory and to maintain it on Debtor's premises, in a public warehouse, or at
such place as Secured Party may remove the Inventory or any part thereof. If
Secured Party exercises its right to take possession of Inventory, Debtor will,
upon demand and at Debtor's own cost and expense, assemble the Inventory and
make it available to Secured Party at a place or places reasonably convenient to
Secured Party.
8.2 Location of Inventory. All Inventory shall be maintained at Debtor's
facilities in Forest City, Iowa, Hampton, Iowa and Lorimore, Iowa. No Inventory
shall be removed therefrom, except for the purpose of sale or finishing in the
ordinary course of Debtor's business, and except for such sales, Debtor will not
sell, encumber, grant a security interest in, dispose of or permit the sale,
encumbrance, return or disposal of any Inventory without Secured Party's prior
written consent.
8.3 Perfection; Verification. Debtor will perform any and all steps that
Secured Party may request to perfect its security interest in the Inventory,
including, without limitation, leasing warehouses to Secured Party or its
designee, placing and maintaining signs, appointing custodians, executing and
filing financing statements or continuations in form and substance satisfactory
to Secured Party, maintaining stock records and transferring Inventory to
warehouses. A physical verification of all Inventory wherever located will be
taken by Debtor at least every 12 months and, in any case, as often as
reasonably required by Secured Party, but not more than twice a year so long as
there is no Event of Default. A copy of such physical verification shall be
submitted to Secured Party. Debtor shall also submit to Secured Party a copy of
the annual physical Inventory as observed and tested by its public accountants
in accordance with standard accounting principles.
8.4 Disclaimer of Warranty. Debtor has selected both the Inventory and the
suppliers from whom Debtor acquires its Inventory, and Debtor assumes all
responsibility and risk for the existence, character, quality, condition and
value of all Inventory. DEBTOR ACKNOWLEDGES THAT SECURED PARTY HAS MADE NO
EXPRESS OR IMPLIED WARRANTIES WITH RESPECT TO ANY INVENTORY OR OTHER COLLATERAL,
INCLUDING ANY WARRANTY OF MERCHANTABILITY, QUALITY OR FITNESS, AND DEBTOR
IRREVOCABLY WAIVES ANY CLAIMS AGAINST SECURED PARTY WITH RESPECT TO THE
INVENTORY AND OTHER COLLATERAL WHETHER FOR BREACH OF WARRANTY OR OTHERWISE. Any
such claims shall not alter, diminish or otherwise impair Debtor's liabilities
or obligations to Secured Party hereunder. Secured Party does not assume any
obligations of Debtor relating to the Inventory, any Accounts Receivable, any
contract obligations, or any other obligations or duties arising from the
Collateral.
Section 9. Reporting Requirements.
9.1 Required Reports. Debtor shall deliver each of the following financial
reports ("Required Reports") to Secured Party, all of which shall be certified
by a corporate officer to be true and correct:
(a) Monthly financial statements showing the current month and
year-to-date cumulative figures, to be delivered within 20 days of the
end of each month;
(b) Concurrently with delivery of the monthly financial statements,
monthly inventory reports showing the value of Inventory by categories
for each manufacturer, the amounts owing to each manufacturer and the
aging of each category of Inventory;
(c) Weekly (each Friday) Borrowing Base Certificates when there is a
balance outstanding on the Line of Credit; and
(d) Any other reports deemed necessary by Secured Party.
9.2 Preparation of Reports. All Required Reports may be internally prepared
and shall be prepared in accordance with generally accepted accounting
principles, consistently applied ("GAAP"); provided, however, that if
discrepancies are noted from Secured Party's audits conducted pursuant to
Section 10 hereof during any two consecutive audits, which lead Secured Party to
conclude that the preparation of Required Reports are materially inaccurate,
then at Secured Party's request supported by an independent auditor's opinion
that material inaccuracies exist in Debtor's internally prepared Required
Reports, all Required Reports shall be prepared by an independent certified
public accountant acceptable to Secured Party.
9.3 Additional Reports. In addition to Required Reports, Debtor shall
deliver 12-month projections of sales, operating expenses and income for the
upcoming fiscal year at least 30 days prior to the end of each then current
fiscal year, 12-month projections of sales, operating expenses and income for
the next 12-month period within 30 days of Secured Party's request (which are to
be made no more frequently than once per month), and fiscal year end financial
statements prepared and audited by an independent certified public accountant
within 90 days of the fiscal year end; provided, however, Debtor shall use its
best efforts to expedite delivery of fiscal year end financial statements. When
Debtor causes audited year end financial statements to be prepared by an
independent certified public accountant ("Auditor") as required under this
Section, Debtor shall also engage its Auditor to undertake to advise Secured
Party of any material change in previously reported statements of accounts
receivable, accounts payable and inventory made by Debtor as well as any
adjustments made to accounts receivable, accounts payable and inventory by the
Auditor.
Section 10. Inspection and Audit Rights.
10.1 Records; Inspection. Debtor will maintain complete, accurate and
current records and books of account covering all Accounts Receivable, Inventory
(including a perpetual inventory) all other Collateral, and Debtor's business
operations and finances. From time to time during Debtor's normal business
hours, Secured Party may inspect without notice Inventory and other Collateral,
and examine, audit and make extracts from the books and records, journals of
account and other financial records of Debtor; provided, however, so long as no
Event of Default has occurred, Secured Party shall give Debtor at least 48 hours
notice of inspection. Debtor hereby authorizes all federal, state and municipal
authorities to furnish to Secured Party copies of all tax returns of Debtor and
all reports of examinations or other information of Debtor which have been made
by them.
10.2 Audit. Secured Party may conduct quarterly or more frequent audits of
Debtor's books and records as Secured Party deems necessary. Debtor shall pay
Secured Party $250 for each quarterly audit, plus reasonable per diem expenses
of the employees of Secured Party.
Section 11. Insurance.
11.1 Maintenance of Insurance. Debtor shall bear the full risk of loss from
any cause or of any nature whatsoever in respect of the Collateral. At Debtor's
own cost and expense, it shall keep all Collateral fully insured, in amounts
(including deductible or coinsurance provisions) to be agreed to by both
parties, against the hazards of fire, those hazards covered by extended coverage
insurance and such other hazards as may be required by Secured Party.
11.2 Insurance Requirements. All such insurance shall be in a form and with
companies acceptable to Secured Party, shall provide at least 30 days advance
written notice to Secured Party of cancellation, change or modification in any
term, condition or amount of protection provided therein, shall provide full
breach of warranty protection and shall provide that the coverage is "primary
coverage" for the protection of Debtor and Secured Party notwithstanding any
other coverage carried by Debtor or Secured Party protecting against similar
risks. Debtor shall cause to be delivered to Secured Party the insurance
policies thereof or proper certificates evidencing the same. Such policies shall
provide, in manner satisfactory to Secured Party, that any losses thereunder
shall be payable first to Secured Party as its interests may appear. In the
event of any loss thereunder, the carriers hereby are directed by Debtor to make
payment for such loss to Secured Party and not to Debtor and Secured Party
jointly. Debtor hereby appoints Secured Party as Debtor's attorney-in-fact with
full power and authority to do all things, including, but not limited to, making
claims, receiving payments and endorsing documents, checks or drafts, necessary
or advisable to secure payments due under any policy contemplated hereby on
account of a casualty to any Collateral. All loss recoveries received by Secured
Party upon any such insurance may be applied and credited by Secured Party to
the amounts owing by Debtor under this Agreement and any other agreement then in
effect between the parties hereto. Any surplus shall be paid by Secured Party to
Debtor, provided Debtor is not in default in any of its obligations to Secured
Party under this Agreement or otherwise. Any deficiency thereon shall be paid by
Debtor to Secured Party, on demand.
Section 12. Warranties. Debtor covenants and warrants that each of the
following is at the date of this Agreement, and will be at all times throughout
the duration of this Agreement, true and correct in all respects:
12.1 Organization. Debtor is a corporation duly organized, validly existing
and in good standing under the laws of the state of its formation and is duly
qualified and licensed to do business in every state in which the nature of its
business or the location of its properties requires it to be so qualified and
licensed, and Debtor is in good standing in every such state.
12.2 Authority; Enforceability. Debtor has full power and authority to
execute, deliver and perform all of its duties and obligations under this
Agreement and all related instruments and agreements. The execution and delivery
of this Agreement and all related instruments and agreements have been duly and
lawfully authorized, and all corporate acts and proceedings necessary or proper
in the premises have been duly done, performed and taken. This Agreement and all
related instruments and agreements constitute valid and binding obligations of
Debtor, enforceable in accordance with their terms.
12.3 No Conflict. The execution and delivery of this Agreement and all
related instruments and agreements, and the performance by Debtor of the terms
and provisions thereof, do not violate Debtor's articles of incorporation or
bylaws, any applicable law or regulation, or any decree, order, instrument or
agreement to which Debtor is a party or by which Debtor or any of its property
is bound.
12.4 Corporate Power. Debtor has the corporate power to carry on its
business as currently being conducted.
12.5 Collateral Rights. Debtor is lawfully possessed and the sole owner of
the Collateral, free of any pledge, lien, encumbrance or adverse claim of any
kind or character, legal or equitable, except (a) the security interest created
by this Agreement, (b) the interests of other certain creditors in Inventory
that are subordinated to Secured Party's interest by a written subordination
agreement satisfactory to Secured Party, (c) encumbrances on Inventory in favor
of manufacturers of raw materials and components, to the extent the related
indebtedness is subtracted in the calculation of the Borrowing Base hereunder,
and (d) as otherwise consented to by Secured Party in writing (collectively,
"Permitted Liens"). Debtor has authority to encumber and pledge the Collateral
in the manner and form provided for in this Agreement.
12.6 Litigation; Material Adverse Change. There are no suits or
proceedings, pending or threatened, before any court or administrative agency
which will materially adversely affect the financial condition or operations of
Debtor, and no circumstance has occurred or exists that could cause or
constitute a material adverse change in the business, operations, properties,
prospects or financial condition of Debtor from the date hereof.
12.7 Tax Returns. Debtor has duly filed all federal, state and other
governmental tax returns that it is required by law to file, and all taxes and
other sums which may be due from or against Debtor to the United States, any
state or other governmental authority have been fully paid. Debtor maintains
reserves adequate in amount to fully pay all such tax liabilities as they
accrue.
12.8 Accuracy of Reports. The Required Reports and other information
furnished by Debtor to Secured Party pursuant to this Agreement are true,
accurate and complete in all respects.
12.9 Financial Statements. All financial data which Debtor furnishes to
Secured Party will be taken from the books and records of Debtor kept in
accordance with GAAP, and the balance sheets and other financial statements so
furnished will reflect accurately the financial condition of Debtor as of the
dates and for the periods shown.
12.10 Location of Books and Inventory. Debtor will maintain all books and
records and all Inventory at its existing place of business at 605 Crystal Lake
Road, Forest City, Iowa, and shall immediately notify Secured Party in writing
of any change of such addresses or of any additional addresses.
Section 13. Affirmative Covenants. During the term of this Agreement and as
long as any of the Obligations remain unpaid and until the terms and conditions
of this Agreement have been fully performed, Debtor will:
13.1 Further Assurances. On request of Secured Party, execute and deliver
to Secured Party any and all additional instruments or agreements which Secured
Party may from time to time determine necessary or convenient to evidence or
effectuate this Agreement or the advances and other matters contemplated hereby,
including to evidence, perfect, continue or enforce the security interest
granted herein;
13.2 Compliance with Law. Comply with all applicable laws, statutes and
governmental regulations;
13.3 Taxes and Charges. Pay and discharge, before any penalty attaches
thereto for nonpayment thereof, all taxes, assessments, fees and charges of any
kind levied upon or assessed against Debtor, the Collateral, any income
therefrom, or Secured Party's rights or interests hereunder; provided, however,
that Debtor shall not be required to pay any such taxes, assessments, fees or
charges as long as it shall in good faith contest the validity thereof by
appropriate proceedings, with adequate reserves satisfactory to Secured Party;
13.4 Other Contracts. Perform in a timely manner all covenants, obligations
and agreements of Debtor under each lease, mortgage, deed of trust, or other
encumbrance or agreement relating to any property owned or leased by Debtor;
13.5 Collateral Information. Notify Secured Party immediately of any
information which Debtor has or may receive with regard to any event or
circumstance which might in any way materially adversely affect the value of any
Collateral or the rights or remedies of Secured Party with respect thereto;
13.6 Expenses. Pay to Secured Party all reasonable attorneys' fees and all
proper expenses which may be expended or incurred by Secured Party in
perfecting, enforcing or attempting to enforce any terms of or rights under this
Agreement, or with respect to any matter relating hereto;
13.7 Assignment of Rights. On request of Secured Party, assign to and
perfect for the benefit of Secured Party, any security interest or other lien
that Debtor may have in any Collateral in the possession of any party other than
Debtor or Secured Party;
13.8 Indemnification. Indemnify and hold harmless Secured Party, its parent
company, subsidiaries and all of their directors, officers, employees, agents,
successors, attorneys and assigns from and against any claim, suit, proceeding,
loss, damage, cost, expense or liability (including attorneys' fees) arising out
of the operation of Debtor's business, the Collateral, this Agreement and any
related instruments or agreements, or any matters or transactions relating to
the foregoing, including, without limitation, the exercise of Secured Party's
rights with respect to the Collateral, any alleged failure by Debtor to comply
with any federal or state law or regulation in connection with the Collateral or
Debtor's business, and any use, generation, manufacture, treatment, production,
storage, release, threatened release, discharge, disposal or presence of a
hazardous substance on, under or about Debtor's property (owned or leased) or
operations; for these purposes, the "hazardous substances" means any substance
which is or becomes designated as "hazardous" or "toxic" under any federal,
state or local law, and this indemnity shall survive repayment of Debtor's
objections to Secured Party;
13.9 Other Information. Furnish to Secured Party such other information
concerning the business affairs, properties, financial condition and/or
operation of Debtor's business as Secured Party may from time to time reasonably
request;
13.10 Existence. Cause to be done all things necessary to preserve and
maintain its existence and authority to do business in whatever states Debtor
may now or in the future do business during the term of this Agreement;
13.11 Notices. Give Secured Party prompt notice of any actual or alleged
defaults by Debtor in any payment owing to or under any loan agreement or
commitment with any other creditor; give Secured Party prompt notice of any
material adverse change in its financial condition, business or prospects, of
the occurrence of an Event of Default, or of the filing of any suit or
proceeding in which an adverse decision could have a material adverse effect
upon it or its business; and give Secured Party prompt notice in writing in
advance of any name or address change and the effective date of such change
before the change occurs;
13.12 Place of Business. Continue to maintain its principal place of
business in the state of Iowa;
13.13 Current Ratio. Maintain a current ratio of at least 1.5 to 1 at all
times ("current ratio" means the ratio of current assets to current liabilities,
both as determined in accordance with GAAP);
13.14 Net Working Capital. Maintain net working capital of at least
$35,000,000 at all times ("net working capital" means current assets minus
current liabilities, both as determined in accordance with GAAP); and
13.15 Net Worth. Maintain a net worth of at least $60,000,000 at all times
("net worth" means shareholders' equity determined in accordance with GAAP).
Section 14. Negative Covenants. During the term of this Agreement and as
long as any of the Obligations remain unpaid and until the terms and conditions
of this Agreement have been fully performed, Debtor will not, without the prior
written consent of Secured Party:
14.1 Change in Management. Make or permit any material change in the
management of Debtor without Secured Party's prior written consent, which
Secured Party agrees will not be unreasonably withheld;
14.2 Pledge or Transfer of Collateral. Pledge, assign, encumber, transfer,
or permit, create or suffer any lien to be placed upon or against any of the
Collateral, except for Permitted Liens and sales of Inventory in the ordinary
course of business;
14.3 Change in Business. Make any material change in the type of business
it now conducts or enter into any new line of business; for purposes of this
covenant, Debtor's business is considered the sale, manufacturing and marketing
of recreational vehicles;
14.4 Sale of Assets. Sell, lease, transfer or otherwise dispose of any
property or assets of Debtor, or place any Collateral in the possession of any
other person or business entity, except in the ordinary course of business;
14.5 Merger. Consolidate or merge with or into any other entity if such
merger or consolidation results in a material adverse change in Debtor's
financial condition, business or prospects, as determined by Secured Party in
its sole discretion; and
14.6 Transactions with Affiliates. Enter into any transaction with any
affiliate of Debtor, except on terms no less favorable that those that would be
available in an arms-length transaction.
Section 15. Events of Default. This Agreement and the Obligations shall be
in default upon the occurrence of any of the following (each, an "Event of
Default"):
15.1 Payment. Debtor shall fail to make any payment required to be made
under this Agreement, or any other financing agreement, security agreement or
other agreement between Debtor and Secured Party relating to the Obligations or
otherwise, and whether Secured Party is an original party or assignee;
15.2 Performance. Debtor shall fail to perform or observe any other
covenant, obligation or agreement in this Agreement, or any other financing
agreement, security agreement or other agreement between Debtor and Secured
Party relating to the Obligations or otherwise, and whether Secured Party is an
original party or assignee;
15.3 Misrepresentation. Any representation or warranty of Debtor or any
other information whatsoever provided by or on behalf of Debtor to Secured Party
shall prove to have been untrue or misleading in any material respect when made
or when in effect;
15.4 Material Change. Any material adverse change in Debtor's financial
condition or means or ability to repay, or the occurrence of any other event as
a result of which Secured Party deems itself insecure;
15.5 Insolvency. Debtor shall become insolvent, be unable to pay its debts
or cease to do business as a going concern;
15.6 Involuntary Proceedings. By the order of a court of competent
jurisdiction, a receiver, custodian, liquidator or trustee of Debtor or of a
substantial part of the Collateral shall be appointed, by decree of court Debtor
or any of its property shall be sequestered, a tax lien shall be filed against
Debtor's property, or an involuntary petition to reorganize or liquidate Debtor
pursuant to the Federal Bankruptcy Code, as it now exists or as it may hereafter
be amended, or pursuant to any other analogous statute applicable to Debtor now
or hereinafter in effect, shall be filed against Debtor and such order or
petition shall not be dismissed or stayed within 60 days;
15.7 Voluntary Proceedings. Debtor shall file a voluntary petition for
bankruptcy under any provision of any bankruptcy law or a petition to take
advantage of any insolvency act, shall make an assignment for the benefit of its
creditors, shall admit in writing an inability to pay its debts generally as
they become due, shall consent to the appointment of a receiver or receivers of
all or any part of the Collateral, or shall consent to the filing of any
bankruptcy, arrangement or reorganization petition by or against it under any
provision of any bankruptcy law;
15.8 Other Indebtedness. Debtor shall default on any payment relating to
any indebtedness of $500,000 or more owing to any other creditor, or shall
default in the performance of any term or condition relating to any such
indebtedness, in each case beyond any applicable grace period;
15.9 Judgments. A final judgment or order for the payment of money is
rendered against Debtor which exceeds $100,000 and which is not satisfied or
bonded over within 15 days of the date the judgment or order enters; or
15.10 Invalidity. This Agreement or any related instrument or agreement
shall at any time for any reason cease to be in full force and effect, or shall
be declared to be null and void, or the validity or enforceability thereof shall
be contested by Debtor, or Debtor shall deny that it has any further liability
or obligation thereunder.
Section 16. Remedies.
16.1 Remedies Upon Event of Default. Upon the happening of an Event of
Default, Secured Party shall have all of the rights and remedies provided in
this Agreement or any other agreement between Debtor and Secured Party, as well
as those rights and remedies provided by any applicable law, rule or regulation,
including the remedies of a secured party under the Iowa Uniform Commercial
Code. In conjunction with and in addition to any of the foregoing rights and
remedies of Secured Party, Secured Party may:
(a) Declare the Line of Credit to be terminated, or modify the conditions
for advances thereunder;
(b) Declare any or all Obligations to Secured Party including, but not
limited to, all indebtedness owing under the Line of Credit, although
otherwise unmatured and contingent, to be due and payable immediately
without presentment, notice, demand or protest, all of which are
hereby waived by Debtor;
(c) Enforce any or all rights in or with respect to any Collateral;
(d) Immediately take possession, with or without legal process, of any or
all of the Collateral wherever it may be found, using self-help to do
so, and for that purpose Secured Party, for itself or as agent of
Debtor, may enter upon any premises upon which the Collateral is
situated and remove the same therefrom, without such entry
constituting a breach of the peace, or require Debtor to assemble the
Collateral and return it to Secured Party at Debtor's expense at a
place designated by Secured Party, and Debtor waives all claims or
damages due to or arising from or connected with any such action;
(e) Lease, sell or otherwise dispose of all or any of the Collateral, in
its then condition, at public or private sale or sales, with such
notice as may be required by law (it being agreed by Debtor that, in
the absence of any contrary requirement of law, 10 days prior notice
of a public or private sale of Collateral shall be deemed reasonable
notice), in its sole discretion, may deem advisable. Such sales may be
adjourned from time to time with or without notice. Secured Party
shall have the right to conduct such sales on Debtor's premises or
elsewhere and shall have the right to use Debtor's premises without
charge for such sales for such time or times as Secured Party may see
fit. Secured Party is hereby granted a license or other right to use,
without charge, Debtor's labels, patents, copyrights, rights of use of
any name, trade secrets, trade names, trademarks and advertising
matter, or any property of a similar nature, as it pertains to the
Collateral, in advertising for sale and selling any Collateral, and
Debtor's rights under all licenses and all franchise agreements shall
inure to Secured Party's benefit; and/or
(f) Take control of any funds generated by the Collateral, notify account
debtors to make payment to an account or location designated by
Secured Party, exercise all rights and remedies under any agreement
relating to any Collateral, and in Secured Party's name or Debtor's
name, demand, collect, receipt for, settle, compromise, sue for,
repossess, accept returns of, foreclose or realize upon any
Collateral, including without limitation Accounts Receivable and
related instruments and security therefor. Secured Party shall not be
chargeable with responsibility for the accuracy or validity of any
document, for the existence or value of any Collateral, for
performance of any obligations under any contract relating to any
Account Receivable, or for failure to collect any amounts owing on any
Account Receivable. After an Event of Default, Debtor may not adjust,
settle, compromise, extend or waive the amount, payment or performance
of any obligations relating to any Account Receivable, without the
prior consent of NationsCredit.
16.2 Application of Proceeds. Secured Party may purchase all or any part of
the Collateral at public or, if permitted by law, private sale and, in lieu of
actual payment of such purchase price, may set off the amount of such price
against the Obligations. The proceeds realized from the sale of any Collateral
shall be applied first to the costs, expenses and attorneys' fees incurred by
Secured Party for collection, acquisition, completion, protection, removal,
storage, sale, other disposition and delivery of the Collateral; second, to any
accrued and unpaid late charges or other fees; third, to any accrued and unpaid
interest; and fourth, to any other sums required to be paid by Debtor to Secured
Party under this Agreement or otherwise. If any deficiency shall arise, Debtor
shall remain liable to Secured Party therefor, with interest at the default rate
set forth herein.
Section 17. Applicable Law.
17.1 Governing Law. This Agreement, and all related instruments and
agreements, shall be governed by the laws of the Commonwealth of Pennsylvania.
17.2 WAIVER OF JURY TRIAL. DEBTOR AND SECURED PARTY HEREBY WAIVE ANY AND
ALL RIGHT TO TRIAL BY JURY IN ANY ACTION OR DISPUTE RELATING TO THIS AGREEMENT,
ANY RELATED INSTRUMENT OR AGREEMENT, THE OBLIGATIONS OR ANY RELATED MATTER.
17.3 Jurisdiction. The parties agree that the courts of the Commonwealth of
Pennsylvania, including the United States District Court for the Eastern
District of Pennsylvania, shall have jurisdiction to hear and determine any
claim, dispute or demand pertaining to this Agreement, and they expressly submit
and consent to such jurisdiction. Debtor hereby waives personal service of any
Summons and Complaint or other process to be issued in any action or proceeding
based upon any such claim, dispute or demand, and hereby agrees that service of
such Summons and Complaint or other process, may be made by registered or
certified mail to Debtor at the address appearing herein. Should Debtor fail to
appear or answer any Summons, Complaint, or process so served, within 30 days
after the mailing thereof, Debtor shall be deemed in default and Secured Party
shall be entitled to enter a judgment or order as demanded or prayed for
therein. Nothing herein shall affect Secured Party's right to serve process in
any other manner provided by law, or to commence legal proceedings or otherwise
proceed against Debtor in the state or federal courts of any other jurisdiction.
Section 18. Miscellaneous.
18.1 Notices. Whenever notice is given pursuant to this Agreement or
otherwise, it shall be in writing and shall be deemed to have been given when
delivered in person, sent by facsimile transmission or deposited in the United
States mails, postage prepaid, return receipt requested, addressed to the person
to whom the notice is given at the following facsimile telephone number or
mailing address, or at such other facsimile telephone number or mailing address
as may hereafter be designated by a party pursuant to notice in writing:
(a) Notice to Secured Party:
NationsCredit Commercial Corporation
1105 Hamilton Street
Allentown, PA 18101
Attn: Director of Client Administration
Facsimile No: 610-778-3209
(b) Notice to Debtor:
Winnebago Industries, Inc.
605 Crystal Lake Road
Forest City, Iowa
Attention: Fred G. Dohrman, President
Facsimile No: 515-582-6806
18.2 Entire Agreement and Modifications. The making, execution and delivery
of this Agreement by the parties has been induced by no representations,
statements, warranties or agreements other than those expressed in this
Agreement. This Agreement embodies the entire understanding of the parties and
there are no further or other agreements or understandings, written or oral, in
effect between the parties relating to its subject matter unless expressly
referred to in this Agreement. Modification of this Agreement by the parties may
be made only in writing.
18.3 Estoppel and Waiver. No term or condition of this Agreement shall be
deemed to have been waived, nor shall there be an estoppel against the
enforcement of any provision of this Agreement, except by written instrument of
the party charged with such waiver or estoppel. No such written waiver shall be
deemed a continuing waiver unless specifically stated therein and each such
waiver shall operate only as to the specific term or condition waived and shall
not constitute a waiver of such term or condition for the future or as to any
act other than that specifically waived.
18.4 Relationship of Parties. Nothing in this Agreement or any related
instrument or agreement, or in the parties' course of dealing, shall be
construed to create any partnership or joint venture agreement or relationship
between Secured Party and Debtor. The relationship between Secured Party and
Debtor is solely one of creditor and debtor; no fiduciary relationship exists
between Secured Party and Debtor, each agreeing that both parties' interests are
best served when each party acts for its own interests and not on behalf of the
other.
18.5 Assignment. Debtor may not assign any of its rights or obligations
under this Agreement or any related instrument or agreement, without the prior
written consent of Secured Party. Secured Party agrees that it will not assign
any of its rights or obligations under this Agreement or any related instrument
or agreement, without the prior written consent of Debtor; provided, however,
Debtor's consent shall not be necessary for any assignment arising as part of
any (a) sale of all or any material portion of Secured Party's loan portfolio,
(b) the sale of all or a material portion of the loan portfolio of one of its
internal divisions, or (c) sale of the capital stock of or a merger of Secured
Party to or with another person or entity, or any other change in or to Secured
Party occurring by operation of law.
18.6 Construction. The headings of sections herein are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement. Whenever applicable, the pronouns
designating the masculine and/or neuter shall equally apply to the feminine,
neuter and masculine genders and the singular shall include the plural.
18.7 Power of Attorney. Debtor hereby irrevocably appoints Secured Party,
including such employees and other representatives as Secured Party may
designate, as Debtor's true and lawful agent and attorney, with power of
substitution, to do the following in its place and stead: to execute and deliver
in the name of Debtor UCC financing statements, amendments and continuations,
and other lien filings relating to any Collateral; to cause the same to be
properly filed or recorded in the appropriate office of any jurisdiction; to
endorse Debtor's name upon any notes, checks, drafts, money orders and other
forms of instruments made payable to Debtor; to make, execute and deliver in the
name of Debtor as maker any promissory note(s) or other instruments evidencing
any outstanding Obligations; and generally to do and perform all acts and things
necessary to effect the terms and intent of this Agreement or otherwise in
discharge of the powers hereby granted, which shall specifically include the
making of any acknowledgements and affidavits necessary for filing or recording
of any of the foregoing. The foregoing powers are coupled within an interest and
shall be irrevocable, without the prior written consent of Secured Party, as
long as any Obligations remain outstanding.
18.8 Secured Party's Right to Perform. If Debtor fails to perform any act
required hereunder, including the payment of taxes, liens and insurance premiums
relating to the Collateral, Secured Party may (but shall not be required to)
perform or cause performance of such act. Any amounts expended or incurred by
Secured Party in the performance of any such act or in the enforcement of this
Agreement shall constitute part of the Obligations, will bear interest at the
default rate and will be payable upon demand. All rights and remedies of Secured
Party hereunder are cumulative. No delay of Secured Party in exercising any
right hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of a right preclude other or further exercise thereof or of any
other right hereunder.
18.9 Counterparts. This Agreement may be executed in counterparts and all
counterparts so executed shall constitute one agreement binding on all parties
hereto, notwithstanding that all the parties are not signatories to the same
instrument.
18.10 Severability. The invalidity or unenforceability of any of the
provisions of the Agreement shall not affect any other provision and this
Agreement shall be construed in all respects as if such invalid or unenforceable
provision were omitted.
IN WITNESS WHEREOF, the parties have executed this Third Restated Financing
and Security Agreement as of the date first set forth above.
WINNEBAGO INDUSTRIES, INC.
By /s/ Fred G. Dohrmann
Title: President & Chief Executive Officer
NATIONSCREDIT COMMERCIAL CORPORATION
By /s/ unreadable
Title: SVP/Director of Client Administration
Exhibit A
to
Third Restated Financing and Security Agreement
FORM OF BORROWING BASE CERTIFICATE