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$55,000,000
LOAN AND SECURITY AGREEMENT
BY AND AMONG
OAKWOOD HOMES CORPORATION
AND
EACH OF ITS SUBSIDIARIES THAT ARE SIGNATORIES HERETO
AS BORROWERS,
THE LENDERS THAT ARE SIGNATORIES HERETO
AS THE LENDERS,
AND
FOOTHILL CAPITAL CORPORATION
AS THE ARRANGER AND ADMINISTRATIVE AGENT
DATED AS OF JANUARY 22, 2002
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LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (this "Agreement"), is entered into as
of January 22, 2002, between and among, on the one hand, the lenders identified
on the signature pages hereof as lenders (such lenders, together with their
respective successors and assigns, are referred to hereinafter each individually
as a "Lender" and collectively as the "Lenders"), FIRST UNION NATIONAL BANK, a
national banking association, FOOTHILL CAPITAL CORPORATION, a California
corporation, as the arranger and administrative agent for the Lenders ("Agent"),
and, on the other hand, OAKWOOD HOMES CORPORATION, a North Carolina corporation
("Parent"), and each of Parent's Subsidiaries identified on the signature pages
hereof (such Subsidiaries, together with Parent, are referred to hereinafter
each individually as a "Borrower," and individually and collectively, jointly
and severally, as the "Borrowers"). The parties agree as follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1 DEFINITIONS. As used in this Agreement, the following terms
shall have the following definitions:
"Account Debtor" means any Person who is or who may become
obligated under, with respect to, or on account of, an Account, chattel paper,
or a General Intangible.
"Accounts" means all of Borrowers' now owned or hereafter
acquired right, title, and interest with respect to "accounts" (as that term is
defined in the Code) and any and all supporting obligations in respect thereof,
but excluding any accounts in which any Borrower's only interest in such account
arises out of such Borrower's capacity as a servicer or as a fiduciary.
"ACH Transactions" means any cash management or related
services (including the Automated Clearing House processing of electronic funds
transfers through the direct Federal Reserve Fedline system) provided by Wells
Fargo or its Affiliates or by Funds Management Bank for the account of any
Borrower or any of its Subsidiaries.
"Additional Commitment" means such additional amounts which
may from time to time after the Closing Date be issued by any New Lenders as a
commitment to make Advances hereunder pursuant to Section 14.3 hereof, which
additional amounts shall be issued in increments of $5,000,000, and shall not
exceed $10,000,000 in the aggregate for all such additional amounts.
"Additional Documents" has the meaning set forth in Section
4.4.
"Administrative Borrower" has the meaning set forth in Section
17.9.
"Advances" has the meaning set forth in Section 2.1.
"Affiliate" means, as applied to any Person, any other Person
who, directly or indirectly, controls, is controlled by, or is under common
control with, such Person. For
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purposes of this definition, "control" means the possession, directly or
indirectly, of the power to direct the management and policies of a Person,
whether through the ownership of Stock, by contract, or otherwise; provided,
however, that, for purposes of the definition of Eligible Accounts and Section
7.14 hereof: (a) any Person which owns directly or indirectly 20% or more of the
securities having ordinary voting power for the election of directors or other
members of the governing body of a Person or 20% or more of the partnership or
other ownership interests of a Person (other than as a limited partner of such
Person) shall be deemed to control such Person; (b) each director (or comparable
manager) of a Person shall be deemed to be an Affiliate of such Person; and (c)
each partnership or joint venture in which a Person is a partner or joint
venturer shall be deemed to be an Affiliate of such Person.
"Agent" means Foothill, solely in its capacity as arranger and
administrative agent for the Lenders hereunder, and any successor thereto.
"Agent's Account" means an account at a bank designated by
Agent from time to time as the account into which Borrowers shall make all
payments to Agent for the benefit of the Lender Group and into which the Lender
Group shall make all payments to Agent under this Agreement and the other Loan
Documents; unless and until Agent notifies Administrative Borrower and the
Lender Group to the contrary, Agent's Account shall be that certain deposit
account listed on Schedule A-1.
"Agent Advances" has the meaning set forth in Section
2.3(e)(i).
"Agent's Liens" means the Liens granted by Borrowers to Agent
for the benefit of the Lender Group under this Agreement or the other Loan
Documents.
"Agent-Related Persons" means Agent, together with its
Affiliates, officers, directors, employees, and agents.
"Agreement" has the meaning set forth in the preamble hereto.
"Aircraft Mortgage" means, individually and collectively, one
or more aircraft mortgages executed and delivered by any Borrower granting to
Agent for the benefit of the Lender Group and Funds Management Bank, a first
priority security interest in any aircraft owned by any such Borrower
(including, without limitation, any engines or propeller of such aircraft) in
form suitable for recordation with the Federal Aviation Administration, and in
form and substance satisfactory to Agent.
"Applicable Prepayment Premium" means, as of any date of
determination, an amount equal to (a) during the period of time from and after
the date of the execution and delivery of this Agreement up to the date that is
the first anniversary of the Closing Date, 5% times the Maximum Revolver Amount,
(b) during the period of time from and including the date that is the first
anniversary of the Closing Date up to the date that is the second anniversary of
the Closing Date, 4% times the Maximum Revolver Amount, (c) during the period of
time from and including the date that is the second anniversary of the Closing
Date up to the date that is the third anniversary of the Closing Date, 3% times
the Maximum Revolver Amount, (d) during the period of time from and including
the date that is the third anniversary of the Closing Date up to the date that
is the fourth anniversary of the Closing Date, 2% times the Maximum Revolver
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Amount, and (e) during the period of time from and including the date that is
the fourth anniversary of the Closing Date up to the Maturity Date, 1% times the
Maximum Revolver Amount.
"Assignee" has the meaning set forth in Section 14.1.
"Assignment and Acceptance" means an Assignment and Acceptance
Agreement in the form of Exhibit A-1.
"Assumption Agreement" means any agreement executed after the
Closing Date by a Person pursuant to which such Person becomes a Borrower
hereunder, assuming all Obligations hereunder as if such Person was a Borrower
on the Closing Date, in form and substance satisfactory to Agent.
"Authorized Person" means any officer or other employee of
Administrative Borrower.
"Availability" means, as of any date of determination, if such
date is a Business Day, and determined at the close of business on the
immediately preceding Business Day, if such date of determination is not a
Business Day, the amount that Borrowers are entitled to borrow as Advances under
Section 2.1 (after giving effect to all then outstanding Obligations (other than
Bank Product Obligations) and all sublimits and reserves applicable hereunder).
"Bank Product Agreements" means those certain treasury,
depositary and cash management service agreements, whether written or oral,
entered into from time to time by a Borrower or any of its Subsidiaries in
connection with any of the Bank Products.
"Bank Product Obligations" means all obligations, liabilities,
contingent reimbursement obligations, fees, and expenses owing (including,
without limitation, payment of any amounts that, but for the provisions of the
Bankruptcy Code, would become owing) by a Borrower or any of its Subsidiaries to
(a) Wells Fargo or its Affiliates, or (b) the Funds Management Bank, in each
case, pursuant to or evidenced by the Bank Product Agreements or otherwise
arising out of the provision of Bank Products and irrespective of whether for
the payment of money, whether direct or indirect, absolute or contingent, due or
to become due, now existing or hereafter arising, and including all such amounts
that a Borrower or any of its Subsidiaries is obligated to reimburse to Agent or
any member of the Lender Group as a result of Agent or such member of the Lender
Group purchasing participations or executing indemnities or reimbursement
obligations with respect to the Bank Products provided to a Borrower or any of
its Subsidiaries pursuant to the Bank Product Agreements and including all
reasonable fees and expenses (including attorneys fees) incurred by Wells Fargo
or Funds Management Bank in drafting, reviewing, administering, or amending the
Bank Product Agreements or any other Loan Document, and all reasonable fees and
expenses (including attorneys fees) incurred by Wells Fargo or Funds Management
Bank in terminating, enforcing (including attorneys fees and expenses incurred
in connection with a "workout," a "restructuring," or an Insolvency Proceeding
concerning a Borrower or any of its Subsidiaries or in exercising rights or
remedies under the Bank Product Agreements of any other Loan Document), or
defending the Bank
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Product Agreements or any other Loan Document, irrespective of whether suit is
brought, or in taking any Remedial Action concerning the Collateral.
"Bank Products" means any service or facility extended to any
Borrower or any of its Subsidiaries (a) by Wells Fargo or any Affiliate of Wells
Fargo including (i) credit cards, (ii) credit card processing services, (iii)
debit cards, (iv) purchase cards, (v) ACH Transactions, (vi) cash management,
including controlled disbursement, accounts or services, or (vii) Hedge
Agreements, or (b) by the Funds Management Bank with respect to the provision of
treasury, depositary and cash management services, including, without
limitation, in connection with any ACH Transactions.
"Bank Product Reserves" means, as of any date of
determination, the amount of reserves that Agent has established (based upon the
Agent's reasonable determination of the credit exposure in respect of then
extant Bank Products) for Bank Products then provided or outstanding.
"Bankruptcy Code" means the United States Bankruptcy Code, as
in effect from time to time.
"Base Rate" means, the rate of interest announced within Wells
Fargo at its principal office in San Francisco as its "prime rate", with the
understanding that the "prime rate" is one of Wells Fargo's base rates (not
necessarily the lowest of such rates) and serves as the basis upon which
effective rates of interest are calculated for those loans making reference
thereto and is evidenced by the recording thereof after its announcement in such
internal publication or publications as Wells Fargo may designate.
"Base Rate Loan" means each portion of an Advance that bears
interest at a rate determined by reference to the Base Rate.
"Base Rate Margin" means 1.50 percentage points.
"Benefit Plan" means a "defined benefit plan" (as defined in
Section 3(35) of ERISA) for which any Borrower or any Subsidiary or ERISA
Affiliate of any Borrower has been an "employer" (as defined in Section 3(5) of
ERISA) within the past six years.
"Bill and Hold Letter" means, in connection with any Account
arising on a bill and hold basis, an agreement executed by the applicable
Account Debtor confirming the unconditional obligation of such Account Debtor to
take the goods related thereto and pay such invoice to the applicable Borrower,
in the form of Exhibit D attached hereto.
"Board of Directors" means the board of directors (or
comparable managers) of Parent or any committee thereof duly authorized to act
on behalf thereof.
"Books" means all of each Borrower's now owned or hereafter
acquired books and records (including all of its Records indicating,
summarizing, or evidencing its assets (including the Collateral) or liabilities,
all of its Records relating to its business operations or financial condition,
and all of its goods or General Intangibles related to such information);
provided that Books shall not include books and records of OAC LLC in its
capacity as servicer
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relating solely to assets transferred pursuant to a Securitized Transaction, the
Warehouse Facility and the Servicer Advance Facility.
"Borrower" and "Borrowers" have the respective meanings set
forth in the preamble to this Agreement, provided, however, "Borrower" and
"Borrowers" shall also include any other Person that becomes a Borrower
hereunder by delivering to Agent (a) an Assumption Agreement, (b) all documents
and instruments Agent deems necessary to perfect or continue its security
interest in any Collateral of such new Borrower, including, without limitation,
financing statements and Mortgages, (c) Collateral Access Agreements as may be
requested by Agent, (d) lien searches against such Person in all relevant
jurisdictions, and (e) all opinions of counsel, and certificates, documents and
instruments as Agent may request, in each case, in form and substance
satisfactory to Agent.
"Borrowing" means a borrowing hereunder consisting of Advances
made on the same day by the Lenders (or Agent on behalf thereof), or by Swing
Lender in the case of a Swing Loan, or by Agent in the case of an Agent Advance,
in each case, to Administrative Borrower.
"Borrowing Base" has the meaning set forth in Section 2.1.
"Borrowing Base Availability" means, as of any date of
determination, the Borrowing Base as calculated pursuant to Section 2.1, less
the Letter of Credit Usage, less outstanding Advances as of such date.
"Borrowing Base Certificate" means a certificate in the form
of Exhibit B-1.
"Business Day" means any day that is not a Saturday, Sunday,
or other day on which national banks are authorized or required to close.
"Capital Lease" means a lease that is required to be
capitalized for financial reporting purposes in accordance with GAAP.
"Capitalized Lease Obligation" means any Indebtedness
represented by obligations under a Capital Lease.
"Cash Equivalents" means (a) marketable direct obligations
issued or unconditionally guaranteed by the United States or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within 1 year from the date of acquisition thereof, (b)
marketable direct obligations issued by any state of the United States or any
political subdivision of any such state or any public instrumentality thereof
maturing within 1 year from the date of acquisition thereof and, at the time of
acquisition, having the highest rating obtainable from either S&P or Moody's,
(c) commercial paper maturing no more than 270 days from the date of acquisition
thereof and, at the time of acquisition, having a rating of A-1 or P-1, or
better, from S&P or Moody's, (d) certificates of deposit or bankers' acceptances
maturing within 1 year from the date of acquisition thereof either (i) issued by
any bank organized under the laws of the United States or any state thereof
which bank has a rating of A or A2, or better, from S&P or Moody's, or (ii)
certificates of deposit less than or equal to $100,000 in the aggregate issued
by any other bank insured by the Federal Deposit Insurance Corporation, and (e)
"overnight investments" at, "overnight deposits" at, or short-term obligations
issued by,
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any commercial bank located in the United States in those areas where Borrowers
conduct their respective businesses and provided the commercial bank's deposits
are insured by the Federal Deposit Insurance Corporation.
"Cash Management Bank" has the meaning set forth in Section
2.7(a).
"Cash Management Account" has the meaning set forth in Section
2.7(a).
"Cash Management Agreements" means those certain cash
management service agreements, in form and substance satisfactory to Agent, each
of which is among Administrative Borrower, Agent, and one of the Cash Management
Banks.
"Change of Control" means (a) any "person" or "group" (within
the meaning of Sections 13(d) and 14(d) of the Exchange Act), becomes the
beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of 25%, or more, of the Stock of Parent having the right to vote for
the election of members of the Board of Directors, or (b) a majority of the
members of the Board of Directors do not constitute Continuing Directors, or (c)
any Borrower ceases to directly own and control 100% of the outstanding capital
Stock of each of its Subsidiaries extant as of the Closing Date.
"Closing Date" means the date of the making of the initial
Advance (or other extension of credit) hereunder or the date on which Agent
sends the Administrative Borrower a written notice that each of the conditions
precedent set forth in Section 3.1 either have been satisfied or have been
waived, which date shall not be later than January 22, 2002.
"Closing Date Business Plan" means the set of Projections of
Borrowers for the 5 year period following the Closing Date (on a year-by-year
basis, and for the 1 year period following the Closing Date, on a month-by-month
basis), in form and substance (including as to scope and underlying assumptions)
satisfactory to Agent.
"Code" means the Georgia Uniform Commercial Code, as in effect
from time to time, together with any replacement or successor statutes enacted
thereto, including, without limitation, "Revised Article 9."
"Collateral" means all of each Borrower's now owned or
hereafter acquired right, title, and interest in and to each of the following:
(a) Accounts,
(b) Books,
(c) Deposit Accounts,
(d) Equipment,
(e) General Intangibles,
(f) Inventory,
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(g) Investment Property,
(h) Negotiable Collateral,
(i) Real Property Collateral,
(j) money or other assets of each such Borrower that now
or hereafter come into the possession, custody, or control of any member of the
Lender Group, and
(k) the proceeds and products, whether tangible or
intangible, of any of the foregoing, including proceeds of insurance covering
any or all of the foregoing, and any and all Accounts, Books, Deposit Accounts,
Equipment, General Intangibles, Inventory, Investment Property, Negotiable
Collateral, Real Property, money, or other tangible or intangible property
resulting from the sale, exchange, collection, or other disposition of any of
the foregoing, or any portion thereof or interest therein, and the proceeds
thereof.
Provided, that so long as Agent has not delivered a notice to any Borrower that
an Event of Default has occurred hereunder, to the extent transferred by OAC LLC
to the "Transferor" (as defined in the Warehouse Facility Documents) pursuant to
the Warehouse Facility Documents, any Collateral herein constituting Accounts
(but specifically excluding Eligible Accounts), Mortgage Loans (but specifically
excluding the Aircraft Mortgages and Agent's Mortgages on the Real Property of
any Borrower), Installment Sales Contracts, chattel paper, or related documents,
in each case arising with respect to retail financing to consumers, upon such
transfer in accordance with the Warehouse Facility Documents, and for no other
purpose whatsoever, shall be automatically and without any further action by
Agent, released from the lien of, and the security interest created by this
Agreement and any other Loan Documents, provided, further, that if the foregoing
Accounts, Mortgage Loans, Installment Sales Contracts, chattel paper or related
documents are conveyed back to any Borrower for any reason consistent with the
Warehouse Facility Documents, then such assets shall automatically upon
re-conveyance and without any further action by any party, become subject to the
security interest and Lien of Agent, and shall for all purposes, constitute part
of the Collateral.
"Collateral Access Agreement" means a landlord waiver,
mortgagee waiver, bailee letter, or acknowledgement agreement of any lessor,
warehouseman, processor, consignee, or other Person in possession of, having a
Lien upon, or having rights or interests in the Equipment or Inventory, in each
case, in form and substance satisfactory to Agent.
"Collections" means all cash, checks, notes, instruments, and
other items of payment (including insurance proceeds, proceeds of cash sales,
rental proceeds, and tax refunds) of Borrowers, provided, however, that
Collections shall not include any cash, checks, notes, instruments and other
items of payment that are collected in any Borrower's capacity as a fiduciary in
connection with the Warehouse Facility Documents, Servicer Advance Documents,
any Securitized Transaction, or REMIC trust.
"Commitment" means, with respect to each Lender, its
Commitment and, with respect to all Lenders, their Commitments in each case as
such Dollar amounts are set forth beside such Lender's name under the applicable
heading on Schedule C-1 or on the signature page of the Assignment and
Acceptance pursuant to which such Lender became a Lender
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hereunder in accordance with the provisions of Section 14.1 or on the signature
page to a Lender Assumption Agreement pursuant to which any New Lender became a
Lender hereunder in accordance with the provisions of Section 14.3.
"Common Carrier Reserves" means reserves established from time
to time by Agent in its discretion for fees and expenses owed by any Borrower to
Bennett Truck Transport, Inc., or any subsequent common carrier selected by any
Borrower for the purpose of transporting and delivering manufactured housing and
mobile homes. Common Carrier Reserves shall be set, initially, at an amount
equal to the accounts payable balance owed to such common carrier, and may be
adjusted by Agent from time to time in its discretion.
"Compliance Certificate" means a certificate substantially in
the form of Exhibit C-1 delivered by the chief financial officer of Parent to
Agent.
"Concentration Account" means Borrowers' concentration account
number 2000000983947, at FUNB, Charlotte, North Carolina, or such other
concentration account established by Borrowers with prior written consent of
Agent.
"Continuing Director" means (a) any member of the Board of
Directors who was a director (or comparable manager) of Parent on the Closing
Date, and (b) any individual who becomes a member of the Board of Directors
after the Closing Date if such individual was appointed or nominated for
election to the Board of Directors by a majority of the Continuing Directors,
but excluding any such individual originally proposed for election in opposition
to the Board of Directors in office at the Closing Date in an actual or
threatened election contest relating to the election of the directors (or
comparable managers) of Parent (as such terms are used in Rule 14a-11 under the
Exchange Act) and whose initial assumption of office resulted from such contest
or the settlement thereof.
"Control Agreement" means a control agreement, in form and
substance satisfactory to Agent, executed and delivered by the applicable
Borrower, Agent, and the applicable securities intermediary with respect to a
Securities Account or a bank with respect to a Deposit Account.
"Daily Balance" means, with respect to each day during the
term of this Agreement, the amount of an Obligation owed at the end of such day.
"DDA" means any checking or other demand Deposit Account
maintained by any Borrower.
"Dealers" means independent dealers that sell manufactured
housing or mobile homes at retail to consumers, and other non-retail customers.
"Default" means an event, condition, or default that, with the
giving of notice, the passage of time, or both, would be an Event of Default.
"Defaulting Lender" means any Lender that fails to make any
Advance (or other extension of credit) that it is required to make hereunder on
the date that it is required to do so hereunder.
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"Defaulting Lender Rate" means (a) the Base Rate for the first
3 days from and after the date the relevant payment is due, and (b) thereafter,
at the interest rate then applicable to Advances that are Base Rate Loans
(inclusive of the Base Rate Margin applicable thereto).
"Deposit Account" means all of Borrowers' now owned or
hereafter acquired right, title and interest with respect to any "deposit
account" (as that term is defined in the Code), including, without limitation,
any demand, time, savings, passbook or similar account maintained with a bank,
but not including deposit accounts held in a fiduciary or agency capacity.
"Depository Account Agreement" means that certain depository
account agreement entered into on the Closing Date by and among FUNB, Agent and
Parent with respect to, among other things, the Concentration Account and the
Foothill Account.
"Designated Account" means that certain account at the
Designated Account Bank, designated as such on Schedule D-1, or such other
deposit account of Administrative Borrower (located within the United States)
that has been designated as such, in writing, by Administrative Borrower to
Agent.
"Designated Account Bank" means FUNB, whose office is located
at Charlotte, North Carolina, and whose ABA number is 053000219.
"Dilution" means, as of any date of determination, a
percentage, based upon the experience of the immediately prior 90 days that is
the result of dividing the Dollar amount of (a) bad debt write-downs, discounts,
advertising allowances, credits, or other dilutive items with respect to the
Accounts owed by Dealers during such period, by (b) Borrowers' Collections with
respect to Accounts owed by Dealers during such period (excluding extraordinary
items) plus the Dollar amount of clause (a). For purposes of calculating
Dilution, each of Borrowers' respective Divisions will be calculated
individually.
"Dilution Reserve" means, as of any date of determination, an
amount sufficient to reduce the advance rate against Eligible Accounts by one
percentage point for each percentage point by which Dilution is in excess of
5.0%. The Dilution Reserve will be calculated by Division and applied to the
Eligible Accounts of such Division.
"Disbursement Letter" means an instructional letter executed
and delivered by Administrative Borrower to Agent regarding the extensions of
credit to be made on the Closing Date, the form and substance of which is
satisfactory to Agent.
"Division" means of each Borrowers' individual manufacturing
business units in effect from time to time, which as of the Closing Date,
consist of "Golden West Perris," "Golden West Albany," "Destiny," "Schult," and
"HBOS," and "Divisions" means, collectively, without duplication, each of the
foregoing.
"Dollars" or "$" means United States dollars.
"Due Diligence Letter" means the due diligence letter sent by
Agent's counsel to Administrative Borrower, together with Administrative
Borrower's completed responses to the inquiries set forth therein, the form and
substance of such responses to be satisfactory to Agent.
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"EBITDA" means, with respect to any fiscal period, Parent's
and its Subsidiaries consolidated net earnings (or loss), minus extraordinary
gains, plus, for such period, (a) interest expense, (b) income taxes, (c)
depreciation, (d) amortization, (e) the sum of (i) accounting losses realized
from the Securitized Transactions less accounting gains realized from
Securitized Transactions, in each case including the lower of cost or market
adjustments to the carrying value of loans held for sale and gains or losses
recognized on sales of Securitization Securities subsequent to the closing of
the Securitized Transaction which created such securities, (ii) accounting
losses arising from unrealized mark-to-market adjustments to the value of
Securitization Securities required under GAAP less accounting gains arising from
unrealized mark to market adjustments to the value of Securitization Securities
required under GAAP, and (iii) [out of pocket] expenses incurred by a Borrower,
as servicer, in connection with the loan assumption program that have not been
passed to the related Securitization Entity, in each case including adjustments
to loan servicing assets or liabilities and to guarantee obligations of
Securitization Securities sold, provided, the total adjustment pursuant to the
foregoing clauses (i), (ii) and (iii) shall not exceed $35,000,000 in the
aggregate in any fiscal year, (f) non-cash charges related to the closure of
retail sales centers and manufacturing facilities, and (g) extraordinary losses
(with the exception of non-cash charges that require an accrual or reserve for
cash charges for any future period, normally recurring accruals, and any
writedown of inventory), and, in the case of any such adjustments under clauses
(a) through (g), only to the extent included in the calculation of consolidated
net earnings (without duplication), all of the foregoing as determined in
accordance with GAAP.
"Eligible Accounts" means those Accounts created by any
Borrower in the ordinary course of its business, that arise out of its sale of
finished goods to Dealers, that comply with each of the representations and
warranties respecting Eligible Accounts made by Borrowers under the Loan
Documents, and that are not excluded as ineligible by virtue of one or more of
the criteria set forth below; provided, however, that such criteria may be made
more restrictive from time to time by Agent in Agent's Permitted Discretion (for
such periods of time as may be determined by Agent) to address the results of
any audit performed by Agent from time to time after the Closing Date. In
determining the amount to be included, Eligible Accounts shall be calculated net
of customer deposits and unapplied cash remitted to Borrowers. Eligible Accounts
shall not include the following:
(a) Accounts that the Account Debtor has failed to pay within 30
days of original invoice date or Accounts with selling terms of more than 30
days,
(b) Accounts owed by an Account Debtor (or its Affiliates) where
50% or more of all Accounts owed by that Account Debtor (or its Affiliates) are
deemed ineligible under clause (a) above,
(c) Accounts with respect to which the Account Debtor is an
employee, Affiliate, or agent of any Borrower, or a retail consumer,
(d) Accounts arising in a transaction wherein goods are placed on
consignment or are sold pursuant to a guaranteed sale, a sale or return, a sale
on approval, a bill and hold not subject to a Bill and Hold Letter, or any other
terms by reason of which the payment by the Account Debtor may be conditional,
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(e) Accounts that are not payable in Dollars,
(f) Accounts with respect to which the Account Debtor either (i)
does not maintain its chief executive office in the United States, or (ii) is
not organized under the laws of the United States or any state thereof, or (iii)
is the government of any foreign country or sovereign state, or of any state,
province, municipality, or other political subdivision thereof, or of any
department, agency, public corporation, or other instrumentality thereof, unless
the Account is supported by an irrevocable letter of credit satisfactory to
Agent (as to form, substance, and issuer or domestic confirming bank) that has
been delivered to Agent and is directly drawable by Agent,
(g) Accounts with respect to which the Account Debtor is either
(i) the United States or any department, agency, or instrumentality of the
United States (exclusive, however, of Accounts with respect to which the
applicable Borrower has complied, to the reasonable satisfaction of Agent, with
the Assignment of Claims Act, 31 USC ss. 3727), or (ii) any state of the United
States (exclusive, however, of (y) Accounts owed by any state that does not have
a statutory counterpart to the Assignment of Claims Act or (z) Accounts owed by
any state that does have a statutory counterpart to the Assignment of Claims Act
as to which the applicable Borrower has complied to Agent's satisfaction),
(h) Accounts with respect to which the Account Debtor is a
creditor of any Borrower, has or has asserted a right of setoff, has disputed
its liability, or has made any claim with respect to its obligation to pay the
Account, to the extent of such claim, right of setoff, or dispute,
(i) Accounts with respect to an Account Debtor whose total
obligations owing to Borrowers exceed 10% (such percentage as applied to a
particular Account Debtor being subject to reduction or increase by Agent in its
Permitted Discretion on a case-by-case basis, based upon any change in the
creditworthiness of such Account Debtor) of all Eligible Accounts, to the extent
of the obligations owing by such Account Debtor in excess of such percentage,
(j) Accounts with respect to which the Account Debtor is subject
to an Insolvency Proceeding, is not Solvent, has gone out of business, or as to
which a Borrower has received notice of an imminent Insolvency Proceeding or a
material impairment of the financial condition of such Account Debtor,
(k) Accounts with respect to which the Account Debtor is located
in the states of New Jersey, Minnesota, or West Virginia (or any other state
that requires a creditor to file a business activity report or similar document
in order to bring suit or otherwise enforce its remedies against such Account
Debtor in the courts or through any judicial process of such state), unless the
applicable Borrower has qualified to do business in New Jersey, Minnesota, West
Virginia, or such other states, or has filed a business activities report with
the applicable division of taxation, the department of revenue, or with such
other state offices, as appropriate, for the then-current year, or is exempt
from such filing requirement,
(l) Accounts, the collection of which, Agent, in its Permitted
Discretion, believes to be doubtful by reason of the Account Debtor's financial
condition,
(m) Accounts that are not subject to a valid and perfected first
priority Agent's Lien,
11
(n) Accounts with respect to which (i) the goods giving rise to
such Account have not been shipped and billed to the Account Debtor (except to
the extent such Accounts are Eligible Bill and Hold Accounts), or (ii) the
services giving rise to such Account have not been performed and billed to the
Account Debtor, or
(o) Accounts that represent the right to receive progress payments
or other advance billings that are due prior to the completion of performance by
the applicable Borrower of the subject contract for goods or services.
"Eligible Bill and Hold Accounts" means Accounts that (a)
arise from the sale of goods on a bill and hold basis, (b) otherwise constitute
Eligible Accounts hereunder, and (c) are subject to a Bill and Hold Letter
delivered to Agent.
"Eligible Bill and Hold Sublimit" means $2,000,000.
"Eligible Inventory" means Inventory of Borrowers consisting
of first quality finished goods comprised of manufactured housing or mobile
homes held for sale in the ordinary course of Borrowers' business located at one
of the business locations of Borrowers set forth on Schedule E-1 (or in-transit
between any such locations), that complies with each of the representations and
warranties respecting Eligible Inventory made by Borrowers in the Loan
Documents, and that is not excluded as ineligible by virtue of the one or more
of the criteria set forth below; provided, however, that such criteria may be
made more restrictive from time to time by Agent in Agent's Permitted Discretion
(for such periods of time as may be determined by Agent) to address the results
of any audit or appraisal performed by Agent from time to time after the Closing
Date. In determining the amount to be so included, Inventory shall be valued at
the lower of estimated cost (excluding any intercompany profit or markup) or
market on a basis consistent with Borrowers' historical accounting practices. An
item of Inventory shall not be included in Eligible Inventory if:
(a) a Borrower does not have good, valid, and marketable
title thereto,
(b) it is not located at one of the locations in the
United States set forth on Schedule E-1 or in transit from one such location to
another such location,
(c) it is located on real property leased by a Borrower
or in a contract warehouse, in each case, unless it is segregated or otherwise
separately identifiable from goods of others, if any, stored on the premises,
or, if a Collateral Access Agreement for such location has been requested by
Agent and such Collateral Access Agreement has not been executed by the lessor,
warehouseman, or other third party, as the case may be,
(d) it is not subject to Agent's valid and perfected
first priority Lien,
(e) it consists of used goods or goods returned or
rejected by a Borrower's customers, or
(f) it consists of goods that are obsolete (including,
without limitation, any Inventory manufactured more than 3 years prior to any
Advance date in 2002 and 2 years prior to any Advance date thereafter, with
respect thereto) or slow moving, restrictive or custom items,
12
work-in-process, raw materials, or goods that constitute spare parts, packaging
and shipping materials, supplies used or consumed in a Borrower's business,
goods owned by Suburban or New Dimension Homes, Inc., bill and hold goods,
defective goods, "seconds," or Inventory acquired on consignment.
"Eligible Transferee" means (a) a commercial bank organized
under the laws of the United States, or any state thereof, and having total
assets in excess of $250,000,000, (b) a commercial bank organized under the laws
of any other country which is a member of the Organization for Economic
Cooperation and Development or a political subdivision of any such country and
which has total assets in excess of $250,000,000, provided that such bank is
acting through a branch or agency located in the United States, (c) a finance
company, insurance company, or other financial institution or fund that is
engaged in making, purchasing, or otherwise investing in commercial loans in the
ordinary course of its business and having (together with its Affiliates) total
assets in excess of $250,000,000, (d) any Affiliate (other than individuals) of
a Lender that was party hereto as of the Closing Date, (e) so long as no Event
of Default has occurred and is continuing, any other Person approved by Agent
and Administrative Borrower, which approval shall not be unreasonably withheld,
and (f) during the continuation of an Event of Default, any other Person
approved by Agent.
"Environmental Actions" means any complaint, summons,
citation, notice, directive, order, claim, litigation, investigation, judicial
or administrative proceeding, judgment, letter, or other communication from any
Governmental Authority, or any third party involving violations of Environmental
Laws or releases of Hazardous Materials from (a) any assets, properties, or
businesses of any Borrower or any predecessor in interest, (b) from adjoining
properties or businesses, or (c) from or onto any facilities which received
Hazardous Materials generated by any Borrower or any predecessor in interest.
"Environmental Law" means any applicable federal, state,
provincial, foreign or local statute, law, rule, regulation, ordinance, code,
binding and enforceable guideline, binding and enforceable written policy or
rule of common law now or hereafter in effect and in each case as amended, or
any judicial or administrative interpretation thereof, including any judicial or
administrative order, consent decree or judgment, to the extent binding on
Borrowers, relating to the environment, employee health and safety, or Hazardous
Materials, including CERCLA; RCRA; the Federal Water Pollution Control Act, 33
USC ss. 1251 et seq.; the Toxic Substances Control Act, 15 USC ss. 2601 et seq.;
the Clean Air Act, 42 USC ss. 7401 et seq.; the Safe Drinking Water Act, 42 USC
ss. 3803 et seq.; the Oil Pollution Act of 1990, 33 USC ss. 2701 et seq.; the
Emergency Planning and the Community Right-to-Know Act of 1986, 42 USC ss. 11001
et seq.; the Hazardous Material Transportation Act, 49 USC ss. 1801 et seq.; and
the Occupational Safety and Health Act, 29 USC ss.651 et seq. (to the extent it
regulates occupational exposure to Hazardous Materials); any state and local or
foreign counterparts or equivalents, in each case as amended from time to time.
"Environmental Liabilities and Costs" means all liabilities,
monetary obligations, Remedial Actions, losses, damages, punitive damages,
consequential damages, treble damages, costs and expenses (including all
reasonable fees, disbursements and expenses of counsel, experts, or consultants,
and costs of investigation and feasibility studies), fines, penalties,
13
sanctions, and interest incurred as a result of any claim or demand by any
Governmental Authority or any third party, and which relate to any Environmental
Action.
"Environmental Lien" means any Lien in favor of any
Governmental Authority for Environmental Liabilities and Costs.
"Equipment" means all of Borrowers' now owned or hereafter
acquired right, title, and interest with respect to any "equipment" (as that
term is defined in the Code), including, without limitation, all machinery,
machine tools, motors, aircraft (including, without limitation, any engines or
propeller of such aircraft), furniture, furnishings, fixtures, vehicles
(including motor vehicles), tools, parts, goods (other than consumer goods, farm
products, or Inventory), wherever located, including all attachments,
accessories, accessions, replacements, substitutions, additions, and
improvements to any of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and any successor statute thereto.
"ERISA Affiliate" means (a) any Person subject to ERISA whose
employees are treated as employed by the same employer as the employees of a
Borrower under IRC Section 414(b), (b) any trade or business subject to ERISA
whose employees are treated as employed by the same employer as the employees of
a Borrower under IRC Section 414(c), (c) solely for purposes of Section 302 of
ERISA and Section 412 of the IRC, any organization subject to ERISA that is a
member of an affiliated service group of which a Borrower is a member under IRC
Section 414(m), or (d) solely for purposes of Section 302 of ERISA and Section
412 of the IRC, any Person subject to ERISA that is a party to an arrangement
with a Borrower and whose employees are aggregated with the employees of
Borrower under IRC Section 414(o).
"Event of Default" has the meaning set forth in Section 8.
"Excess Availability" means the amount, as of the date any
determination thereof is to be made, equal to Availability minus the aggregate
amount, if any, of all trade payables of Borrowers aged in excess of their
historical levels with respect thereto and all book overdrafts in excess of
their historical practices with respect thereto, in each case as determined by
Agent in its Permitted Discretion.
"Exchange Act" means the Securities Exchange Act of 1934, as
in effect from time to time.
"Excluded Entities" means (a) OFC, (b) OCC, (c) OMI, (d) Oak
Leaf, (e) OMI Note Trust 2001-A, a Delaware business trust, (f) Tarheel, (g)
Oakwood Advance Receivables Company, LLC, a Nevada limited liability company,
(h) Oakwood Investment Corporation, a Nevada corporation, (i) Oakwood NSPV-I
Corporation, a Nevada corporation, (j) Oakwood MHD4, LLC, a Delaware limited
liability company, (k) MHD4 Holding Group, Ltd., a Texas limited partnership,
(l) Acquisition/USA, Ltd., a Texas limited partnership, (m) Oakwood
International Management, LLC, a North Carolina limited liability company, (n)
Oakwood International Limited Partnership, a North Carolina limited partnership,
and (o) any other Person formed after the Closing Date, upon prior notice to
Agent, in which a Borrower owns Stock, and
14
which Person owns no assets and does not engage in any business other than
acting as a special purpose vehicle or conduit trust in a Securitized
Transaction.
"Excluded Properties" means the "Manufacturing" and "Sales
Center" Real Property owned by any Borrower at the following locations (a) 806
W. Dixie, Asheboro, North Carolina (Herschel Lewis property), (b) 508 Palmer
Road, Rockwell, North Carolina (Lecil Thomas property), (c) 2445 Pacific Blvd.
South, Albany, Oregon (U.S. Bancorp property), and (d) the Liquidating Real
Property.
"Existing Lender" means FUNB.
"Existing Letters of Credit" has the meaning set forth in
Section 16.20(b).
"Fee Letter" means that certain fee letter, dated as of
January 22, 2002, between Borrowers and Agent, together with any other fee
letter entered into between Borrowers and Agent (including without limitation,
any fee letter in connection with the issuance of an Additional Commitment),
each in form and substance satisfactory to Agent.
"FEIN" means Federal Employer Identification Number.
"Foothill" means Foothill Capital Corporation, a California
corporation.
"Foothill Account" means account #2000014019551 maintained in
Foothill's name at FUNB, Charlotte, North Carolina.
"FUNB" means First Union National Bank, a national banking
association.
"Funding Date" means the date on which a Borrowing occurs.
"Funds Management Bank" means FUNB in its capacity as funds
management bank, together with its Affiliates.
"GAAP" means generally accepted accounting principles as in
effect from time to time in the United States, consistently applied.
"General Intangibles" means all of Borrowers' now owned or
hereafter acquired right, title, and interest with respect to general
intangibles (including payment intangibles, contract rights, rights to payment,
rights arising under common law, statutes, or regulations, choses or things in
action, goodwill, patents, trade names, trademarks, servicemarks, copyrights,
blueprints, drawings, purchase orders, customer lists, monies due or recoverable
from pension funds, route lists, rights to payment and other rights under any
royalty or licensing agreements, infringement claims, computer programs,
information contained on computer disks or tapes, software, literature, reports,
catalogs, money, insurance premium rebates, tax refunds, and tax refund claims),
and any and all supporting obligations in respect thereof, and any other
personal property; provided, however, that General Intangibles shall not include
(a) goods, Accounts, Investment Property, and Negotiable Collateral, and (b) at
any time the Servicer Advance Facility is outstanding, any contractual right to
reimbursement from a Securitization Entity for a
15
P&I Advance made by OAC LLC as servicer in a Securitized Transaction in
connection with the Servicer Advance Facility.
"Ginkgo" means Ginkgo Corporation, a Delaware corporation.
"Governing Documents" means, with respect to any Person, the
certificate or articles of incorporation or formation, by-laws, or other
organizational documents of such Person.
"Governmental Authority" means any federal, state, local, or
other governmental or administrative body, instrumentality, department, or
agency or any court, tribunal, administrative hearing body, arbitration panel,
commission, or other similar dispute-resolving panel or body.
"Hazardous Materials" means (a) substances that are defined or
listed in, or otherwise classified pursuant to, any applicable laws or
regulations as "hazardous substances," "hazardous materials," "hazardous
wastes," "toxic substances," or any other formulation intended to define, list,
or classify substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, reproductive toxicity, or "EP
toxicity", (b) oil, petroleum, or petroleum derived substances, natural gas,
natural gas liquids, synthetic gas, drilling fluids, produced waters, and other
wastes associated with the exploration, development, or production of crude oil,
natural gas, or geothermal resources, (c) any flammable substances or explosives
or any radioactive materials, and (d) asbestos in any form or electrical
equipment that contains any oil or dielectric fluid containing levels of
polychlorinated biphenyls in excess of 50 parts per million.
"Hedge Agreement" means any and all transactions, agreements,
or documents now existing or hereafter entered into between Borrower or its
Subsidiaries and Wells Fargo or its Affiliates, which provide for an interest
rate, credit, commodity or equity swap, cap, floor, collar, forward foreign
exchange transaction, currency swap, cross currency rate swap, currency option,
or any combination of, or option with respect to, these or similar transactions,
for the purpose of hedging Borrower's or its Subsidiaries' exposure to
fluctuations in interest or exchange rates, loan, credit exchange, security or
currency valuations or commodity prices.
"Indebtedness" means (a) all obligations for borrowed money,
(b) all obligations evidenced by bonds, debentures, notes, or other similar
instruments and all reimbursement or other obligations in respect of letters of
credit, bankers acceptances, interest rate swaps, or other financial products,
(c) all obligations under Capital Leases, (d) all obligations or liabilities of
others secured by a Lien on any asset of a Borrower, irrespective of whether
such obligation or liability is assumed, (e) all obligations for the deferred
purchase price of assets (other than trade debt incurred in the ordinary course
of business and repayable in accordance with customary trade practices), and (f)
any obligation guaranteeing or intended to guarantee (whether directly or
indirectly guaranteed, endorsed, co-made, discounted, or sold with recourse) any
obligation of any other Person.
"Indemnified Liabilities" has the meaning set forth in Section
11.3.
"Indemnified Person" has the meaning set forth in Section
11.3.
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"Indentures" means individually and collectively (i) that
certain Indenture dated as of March 2, 1999, between Parent as Issuer and The
First National Bank of Chicago, as Trustee, and (ii) that certain First
Supplemental Indenture dated as of March 2, 1999 between Parent as Issuer and
The First National Bank of Chicago, as Trustee, in each case with respect to the
Senior Notes.
"Insolvency Proceeding" means any proceeding commenced by or
against any Person under any provision of the Bankruptcy Code or under any other
state or federal bankruptcy or insolvency law, assignments for the benefit of
creditors, formal or informal moratoria, compositions, extensions generally with
creditors, or proceedings seeking reorganization, arrangement, or other similar
relief.
"Installment Sales Contract" means a retail installment
contract or other contract or agreement (including promissory notes, Mortgage
Loans, or deeds of trust) originated or acquired by Parent or one of its
Subsidiaries with various retail purchasers regarding either (a) (i) the sale of
manufactured housing or mobile homes and the financing of such sale; (ii) the
financing of any previously owned manufactured housing or mobile homes, (iii)
the financing of any real estate relating to manufactured housing or mobile
homes, or (iv) the refinancing of any such financing, together with all
promissory notes, mortgages, agreements for deed and other writings related
thereto, or (b) the grant of a security interest in such manufactured housing or
mobile home or real property to secure such financing or refinancing.
"Intangible Assets" means, with respect to any Person, that
portion of the book value of all of such Person's assets that would be treated
as intangibles under GAAP.
"Intellectual Property Security Agreement" means that certain
intellectual property security agreement dated of even date herewith, executed
and delivered by Borrowers in favor of Agent for the benefit of the Lender Group
and Funds Management Bank, in form and substance satisfactory to Agent, as
amended, restated, supplemented, or otherwise modified from time to time.
"Inventory" means all of Borrowers' now owned or hereafter
acquired right, title, and interest with respect to all "inventory" (as that
term is defined in the Code), including, without limitation, pre-fabricated
housing, mobile homes, modular homes and like materials, goods held for sale or
lease or to be furnished under a contract of service, goods that are leased by a
Borrower as lessor, goods that are furnished by a Borrower under a contract of
service, work in process, or materials used or consumed in a Borrower's business
and raw materials (but excluding raw materials to the extent that such raw
materials are not commingled with work-in-process and have not been employed in
the manufacture or production of finished goods inventory), including all
accessions, additions, attachments, improvements, substitutions and replacements
thereto; provided, that Inventory shall not include the inventory owned by
Suburban or New Dimension Homes, Inc.
"Investment" means, with respect to any Person, any investment
by such Person in any other Person (including Affiliates) in the form of loans,
guarantees, advances, or capital contributions (excluding (a) commission,
travel, and similar advances to officers and employees of such Person made in
the ordinary course of business, and (b) bona fide Accounts arising in the
17
ordinary course of business consistent with past practices), purchases or other
acquisitions for consideration of Indebtedness or Stock, and any other items
that are or would be classified as investments on a balance sheet prepared in
accordance with GAAP.
"Investment Property" means all of Borrowers' now owned or
hereafter acquired right, title, and interest with respect to "investment
property" as that term is defined in the Code, and any and all supporting
obligations in respect thereof.
"IRB" means Industrial Revenue Bond.
"IRB Properties" means the real property and related
improvements owned or leased by any Borrower set forth on Schedule 5.22.
"IRC" means the Internal Revenue Code of 1986, as in effect
from time to time.
"Issuing Lender" means Foothill or any other Lender that, at
the request of Administrative Borrower and with the consent of Agent agrees, in
such Lender's sole discretion, to become an Issuing Lender for the purpose of
issuing L/Cs or L/C Undertakings pursuant to Section 2.12.
"L/C" has the meaning set forth in Section 2.12(a).
"L/C Disbursement" means a payment made by the Issuing Lender
pursuant to a Letter of Credit.
"L/C Undertaking" has the meaning set forth in Section
2.12(a).
"Lender" and "Lenders" have the respective meanings set forth
in the preamble to this Agreement, and shall include any other Person made a
party to this Agreement in accordance with the provisions of Section 14.1 and
Section 14.3.
"Lender Assumption Agreement" means any agreement executed
after the Closing Date by a New Lender pursuant to which such New Lender becomes
a Lender hereunder and purchases an Additional Commitment, in accordance with
Section 14.3 hereof, and in form and substance satisfactory to Agent.
"Lender Group" means, individually and collectively, each of
the Lenders (including the Issuing Lender) and Agent.
"Lender Group Expenses" means all (a) costs or expenses
(including taxes, and insurance premiums) required to be paid by a Borrower
under any of the Loan Documents that are paid or incurred by any one or more
members of the Lender Group, (b) fees or charges paid or incurred by Agent in
connection with the Lender Group's transactions with Borrowers, including, fees
or charges for photocopying, notarization, couriers and messengers,
telecommunication, public record searches (including tax lien, judgment,
litigation, and UCC searches and including searches with the patent and
trademark office, the copyright office, or the department of motor vehicles),
filing, recording, publication, appraisal (including periodic Collateral
appraisals or business valuations to the extent of the fees and charges (and up
to the
18
amount of any limitation) contained in this Agreement, real estate surveys, real
estate title policies and endorsements, and environmental audits, (c) costs and
expenses incurred by Agent in the disbursement of funds to or for the account of
Borrowers (by wire transfer or otherwise), (d) charges paid or incurred by Agent
resulting from the dishonor of checks, (e) reasonable costs and expenses paid or
incurred by the Lender Group to correct any default or enforce any provision of
the Loan Documents, or in gaining possession of, maintaining, handling,
preserving, storing, shipping, selling, preparing for sale, or advertising to
sell the Collateral, or any portion thereof, irrespective of whether a sale is
consummated, (f) audit fees and expenses of the Lender Group related to audit
examinations of the Books to the extent of the fees and charges (and up to the
amount of any limitation) contained in this Agreement, (g) reasonable costs and
expenses of third party claims or any other suit paid or incurred by any one or
more members of the Lender Group in enforcing or defending the Loan Documents or
in connection with the transactions contemplated by the Loan Documents or the
Lender Group's relationship with any Borrower or any guarantor of the
Obligations, (h) Agent's and each Lender's reasonable fees and expenses
(including attorneys fees) incurred in advising, structuring, drafting,
reviewing, administering, or amending the Loan Documents, and (i) Agent's and
each Lender's reasonable fees and expenses (including attorneys fees) incurred
in terminating, enforcing (including attorneys fees and expenses incurred in
connection with a "workout," a "restructuring," or an Insolvency Proceeding
concerning any Borrower or in exercising rights or remedies under the Loan
Documents), or defending the Loan Documents, irrespective of whether suit is
brought, or in taking any Remedial Action concerning the Collateral.
"Lender-Related Person" means, with respect to any Lender,
such Lender, together with such Lender's Affiliates, and the officers,
directors, employees, and agents of such Lender.
"Letter of Credit" means an L/C or an L/C Undertaking, as the
context requires.
"Letter of Credit Usage" means, as of any date of
determination, the aggregate undrawn amount of all outstanding Letters of Credit
plus 100% of the amount of outstanding time drafts accepted by an Underlying
Issuer as a result of drawings under Underlying Letters of Credit.
"Lien" means any interest in an asset securing an obligation
owed to, or a claim by, any Person other than the owner of the asset, whether
such interest shall be based on the common law, statute, or contract, whether
such interest shall be recorded or perfected, and whether such interest shall be
contingent upon the occurrence of some future event or events or the existence
of some future circumstance or circumstances, including the lien or security
interest arising from a mortgage, deed of trust, encumbrance, pledge,
hypothecation, assignment, deposit arrangement, security agreement, conditional
sale or trust receipt, or from a lease, consignment, or bailment for security
purposes and also including reservations, exceptions, encroachments, easements,
rights-of-way, covenants, conditions, restrictions, leases, and other title
exceptions and encumbrances affecting Real Property.
"Liquidating Personal Property" means the Personal Property
Collateral of any Borrower located at one of the locations described on Schedule
L-1.
19
"Liquidating Real Property" means the Real Property Collateral
of any Borrower located at one of the locations described on Schedule L-2.
"Loan Account" has the meaning set forth in Section 2.10.
"Loan Documents" means this Agreement, the Bank Product
Agreements, the Cash Management Agreements, the Control Agreements, the
Collateral Access Agreements, the Aircraft Mortgage and related supplements, the
Depository Account Agreement, the Intellectual Property Security Agreement, the
Disbursement Letter, the Due Diligence Letter, the Fee Letter, the Letters of
Credit, the Mortgages, the Officers' Certificate, the Pledge Agreement, any note
or notes executed by a Borrower in connection with this Agreement and payable to
a member of the Lender Group, and any other agreement entered into, now or in
the future, by any Borrower and the Lender Group in connection with this
Agreement.
"Lot Inventory" means those certain individual parcels of Real
Property owned by Parent or any of its Subsidiaries that are not used as a
business office, construction center, manufacturing center, sales center,
regional retail office, community center, or credit and collections office.
"Material Adverse Change" means (a) a material adverse change
in the business, prospects, operations, results of operations, assets,
liabilities or condition (financial or otherwise) of Borrowers taken as a whole,
(b) a material impairment of a Borrower's ability to perform its obligations
under the Loan Documents to which it is a party or of the Lender Group's ability
to enforce the Obligations or realize upon the Collateral, or (c) a material
impairment of the enforceability or priority of the Agent's Liens with respect
to the Collateral as a result of an action or failure to act on the part of a
Borrower.
"Maturity Date" has the meaning set forth in Section 3.4.
"Maximum Revolver Amount" means, at any time of determination,
the sum of (a) $55,000,000, plus (b) the amount of any Additional Commitments
which may have been issued by any New Lenders.
"Mortgage Loan" means a "Mortgage" or a "Mortgage Loan" as
defined in the Warehouse Facility Documents, but shall in no event include any
Mortgage in favor of Agent.
"Mortgages" means, individually and collectively, one or more
mortgages, deeds of trust, or deeds to secure debt, executed and delivered by
any Borrower in favor of Agent, for the benefit of the Lender Group and Funds
Management Bank, in form and substance satisfactory to Agent, that encumber the
Real Property Collateral and the related improvements thereto.
"Negotiable Collateral" means all of Borrowers' now owned and
hereafter acquired right, title, and interest with respect to letters of credit,
letter of credit rights, instruments, promissory notes, drafts, documents, and
chattel paper (including electronic chattel paper and tangible chattel paper),
and any and all supporting obligations in respect thereof.
20
"Net Liquidation Percentage" means the percentage of the book
value of Borrowers' Inventory that is estimated to be recoverable, after
liquidation expenses, in an orderly liquidation of such Inventory, such
percentage to be as determined from time to time by a qualified appraisal
company selected by Agent.
"New Lender" means any Person satisfactory to Agent in its
sole discretion that becomes a Lender hereunder pursuant to the provisions of
Section 14.3 hereof.
"OAC LLC" means Oakwood Acceptance Corporation, LLC, a
Delaware limited liability company and wholly-owned Subsidiary of Parent and
successor by merger to Oakwood Acceptance Corporation, a North Carolina
corporation.
"Obligations" means (a) all loans, Advances, debts, principal,
interest (including any interest that, but for the provisions of the Bankruptcy
Code, would have accrued), contingent reimbursement obligations with respect to
outstanding Letters of Credit, premiums, liabilities (including all amounts
charged to Borrowers' Loan Account pursuant hereto), obligations, fees
(including the fees provided for in the Fee Letter), charges, costs, Lender
Group Expenses (including any fees or expenses that, but for the provisions of
the Bankruptcy Code, would have accrued), lease payments, guaranties, covenants,
and duties of any kind and description owing by Borrowers to the Lender Group
pursuant to or evidenced by the Loan Documents and irrespective of whether for
the payment of money, whether direct or indirect, absolute or contingent, due or
to become due, now existing or hereafter arising, and including all interest not
paid when due and all Lender Group Expenses that Borrowers are required to pay
or reimburse by the Loan Documents, by law, or otherwise, and (b) all Bank
Product Obligations. Any reference in this Agreement or in the Loan Documents to
the Obligations shall include all amendments, changes, extensions,
modifications, renewals replacements, substitutions, and supplements, thereto
and thereof, as applicable, both prior and subsequent to any Insolvency
Proceeding.
"Oak Leaf" means Oak Leaf Holdings, LLC, a Delaware limited
liability company.
"OCC" means Oakwood Capital Corp., a Nevada corporation and
wholly-owned Subsidiary of OAC LLC.
"OFC" means Oakwood Financial Corporation, a Nevada
corporation and wholly-owned Subsidiary of Parent.
"Officers' Certificate" means the representations and
warranties of officers form submitted by Agent to Administrative Borrower,
together with Borrowers' completed responses to the inquiries set forth therein,
the form and substance of such responses to be satisfactory to Agent.
"OMH" means Oakwood Mobile Homes, Inc., a North Carolina
corporation and wholly-owned Subsidiary of Parent.
"OMI" means Oakwood Mortgage Investors, a Nevada corporation
and wholly-owned Subsidiary of OAC LLC.
21
"Organizational Identification Number" means, with respect to
any Person, the organizational identification number assigned to such Person by
the applicable Governmental Authority or agency of the jurisdiction of
organization or formation of such Person.
"Originating Lender" has the meaning set forth in Section
14.1(e).
"Overadvance" has the meaning set forth in Section 2.5.
"Parent" has the meaning set forth in the preamble to this
Agreement.
"P&I Advance" means a "principal and interest advance" made by
OAC LLC, as servicer, pursuant to, and as that term is defined in, any pooling
and servicing agreement entered into by any Borrower with respect to any
Securitized Transaction.
"Participant" has the meaning set forth in Section 14.1(e).
"Pay-Off Letter" means a letter, in form and substance
satisfactory to Agent, from Existing Lender to Agent respecting the issuance of
an L/C to Existing Lender in support of the Existing Letters of Credit, the
payment of any other amounts necessary to repay in full all of the obligations
of Borrowers owing to Existing Lender and the release of all of the Liens
existing in favor of Existing Lender in and to the assets of Borrowers.
"Permitted Discretion" means a determination made in good
faith and in the exercise of reasonable (from the perspective of a secured
asset-based lender) business judgment.
"Permitted Dispositions" means (a) sales or other dispositions
by Borrowers of Equipment that is substantially worn, damaged, obsolete, or no
longer necessary in the ordinary course of business in an aggregate amount not
to exceed $2,000,000 per year (measured at the greater of net book value or fair
market value), (b) sales by Borrowers of Inventory to buyers in the ordinary
course of business, (c) the use or transfer of money or Cash Equivalents by
Borrowers in a manner that is not prohibited by the terms of this Agreement or
the other Loan Documents, (d) the licensing by Borrowers, on a non-exclusive
basis, of patents, trademarks, copyrights, and other intellectual property
rights in the ordinary course of the applicable Borrower's business, (e) the
sale of (i) the Liquidating Real Property, and (ii) the Liquidating Personal
Property, provided that in either case with respect to this subsection (e): (A)
no Event of Default then exists, (B) (x) any Liquidating Personal Property
consisting of Equipment is sold on an arm's length basis to a Person that is not
an Affiliate of a Borrower, (y) the sale price for any Liquidating Personal
Property consisting of Inventory is not less than 75% of manufactured cost, and
(z) the sale price for any Liquidating Real Property is not less than the value
for such item set forth on Schedule L-2 or is approved in advance by Agent, and
(C) the proceeds of such sale are used to repay the Advances hereunder, (f)
subject to Section 7.22 hereof, sales and assignments by OMH of Installment
Sales Contracts to OAC LLC for a purchase price that is consistent with the
terms of the Warehouse Facility Documents, in cash, (g) subject to Section 7.22
hereof, the sale by OAC LLC of Installment Sales Contracts pursuant to the terms
of the Warehouse Facility Documents or in connection with a Securitized
Transaction, (h) subject to Section 7.22 hereof, the sale by OAC LLC of the
contractual right to reimbursement from a Securitization Entity for a P&I
Advance made by OAC LLC as servicer in connection with the Servicer Advance
Facility pursuant to the Servicer Advance Documents, (i) the sale by OFC of
22
Securitization Securities without recourse, provided that the proceeds of such
sale are delivered to Parent and used to repay Advances hereunder, and (j)
dispositions between Borrowers permitted pursuant to Section 7.3(c).
"Permitted Investments" means (a) investments in Cash
Equivalents, (b) investments in negotiable instruments for collection, (c)
advances made in connection with purchases of goods or services in the ordinary
course of business, (d) investments by any Borrower in any other Borrower
provided that if any such investment is in the form of Indebtedness, such
Indebtedness shall be subordinate and junior to Agent's right to repayment
hereunder, (e) loans made by OMH or OAC LLC in the ordinary course of business
pursuant to Installment Sales Contracts, (f) contributions by OAC LLC to OCC and
receivables generated from the sale of Installment Sales Contracts by OAC LLC to
Ginkgo (which receivables are paid in full on a weekly basis), in each case in
the ordinary course of business in connection with the sale of Installment Sales
Contracts pursuant to the Warehouse Facility Documents, (g) unsecured
intercompany loans of Parent to Tarheel permitted pursuant to the Tarheel
Support Agreement, and unsecured intercompany loans from Tarheel to Parent, (h)
Investments in OFC, Oakwood Investment Corporation, Oakwood NSPV-I Corporation,
and, after the Closing Date, any subsequently formed Excluded Entity acting
solely as a special purpose vehicle in a Securitized Transaction, provided that
(1) such Investment is required under, and made in the ordinary course of, such
Securitized Transaction and consistent with the practices of such Borrower prior
to the Closing Date, or (2) such special purpose vehicle becomes a Borrower
under this Agreement, (i) capital contributions by OAC LLC to Oakwood Advance
Receivables Company, LLC in the ordinary course of business pursuant to the
Servicer Advance Documents, (j) Securitization Securities generated through
Securitized Transactions in the ordinary course of business, and (k) up to
$2,000,000 in the aggregate at any time outstanding in Investments not described
in clauses (a)-(j) above.
"Permitted Liens" means (a) Liens held by Agent to secure the
Obligations, (b) Liens for unpaid taxes that either (i) are not yet delinquent,
or (ii) do not constitute an Event of Default hereunder and are the subject of
Permitted Protests, (c) Liens set forth on Schedule P-1, (d) the interests of
lessors under transactions accounted for as operating leases, (e) purchase money
Liens or the interests of lessors under Capital Leases to the extent that such
Liens or interests secure Permitted Purchase Money Indebtedness and so long as
such Lien attaches only to the asset purchased or acquired and the proceeds
thereof, (f) Liens arising by operation of law in favor of warehousemen,
landlords, carriers, mechanics, materialmen, laborers, or suppliers, incurred in
the ordinary course of business and not in connection with the borrowing of
money, and which Liens either (i) are for sums not yet delinquent, or (ii) are
the subject of Permitted Protests, (g) Liens arising from deposits made in
connection with obtaining worker's compensation or other unemployment insurance,
(h) Liens or deposits to secure performance of bids, tenders, or leases incurred
in the ordinary course of business and not in connection with the borrowing of
money, (i) Liens granted as security for surety or appeal bonds in connection
with obtaining such bonds in the ordinary course of business, (j) Liens
resulting from any judgment or award that is not an Event of Default hereunder,
(k) Liens with respect to the Real Property Collateral that are exceptions to
the commitments for title insurance issued in connection with the Mortgages, as
accepted by Agent, (l) with respect to any Real Property that is not part of the
Real Property Collateral, easements, rights of way, and zoning restrictions that
do not materially interfere with or impair the use or operation thereof, (m)
Liens created by Suburban and New
23
Dimension Homes, Inc. in their respective financed inventory and related
accounts and proceeds to secure Indebtedness to their respective floor plan
lenders used to purchase such inventory in an aggregate principal amount not to
exceed $10,000,000 at any time, (n) Liens on Installment Sales Contracts,
Securitization Securities, and the proceeds of the foregoing created pursuant to
the Warehouse Facility Documents or pursuant to a Securitized Transaction, (o)
Liens in favor of Funds Management Bank arising solely by virtue of any
statutory or common law provision relating to banker's liens, rights of
recoupment or set-off as to deposit accounts maintained with, or other funds in
the possession of Funds Management Bank, and (p) Liens granted by OAC LLC in
favor of either (i) Oakwood Advance Receivables Company, LLC or (ii) the
indenture trustee pursuant to the Servicer Advance Documents, in and to the
contractual right to reimbursement from a Securitization Entity for a P&I
Advance made by OAC LLC as servicer pursuant to the Servicer Advance Documents.
"Permitted Protest" means the right of the applicable Borrower
or its Subsidiaries to protest any Lien (other than any such Lien that secures
the Obligations), taxes (other than payroll taxes or taxes that are the subject
of a United States federal tax lien), or rental payment, provided that (a) a
reserve with respect to such obligation is established on the Books in such
amount as is required under GAAP, (b) any such protest is instituted promptly
and prosecuted diligently by Borrower or its Subsidiary, as applicable, in good
faith, and (c) Agent is satisfied that, while any such protest is pending, there
will be no impairment of the enforceability, validity, or priority of any of the
Agent's Liens.
"Permitted Purchase Money Indebtedness" means, as of any date
of determination, Purchase Money Indebtedness incurred after the Closing Date in
an aggregate principal amount outstanding at any one time not in excess of
$20,000,000.
"Person" means natural persons, corporations, limited
liability companies, limited partnerships, general partnerships, limited
liability partnerships, joint ventures, trusts, land trusts, business trusts, or
other organizations, irrespective of whether they are legal entities, and
governments and agencies and political subdivisions thereof.
"Personal Property Collateral" means all Collateral other than
Real Property.
"Pledge Agreement" means that certain pledge agreement dated
of even date herewith, in favor of Agent for the benefit of the Lender Group and
Funds Management Bank, executed and delivered by each Borrower that owns Stock
of any Subsidiary of Parent, specifically including, but not limited to, the
Stock of any special purpose vehicles or trusts that are the purchasers of
Securitization Securities or Installment Sales Contracts under the Warehouse
Facility or other Securitized Transaction, but not including any special purpose
vehicle or trust whose Stock is prohibited from being pledged pursuant to its
Governing Documents, in form and substance satisfactory to Agent, as amended,
restated, supplemented, or otherwise modified from time to time.
"Pricing Reserves" means 1.4% of the manufactured cost of
retail Inventory, manufactured between October 1, 2000 and September 30, 2001.
Additional pricing reserves for Inventory manufactured subsequent to September
30, 2001, will be evaluated by Agent's
24
auditors at each quarterly audit, and will equate to the amount of costing
variances in excess of 2%.
"Projections" means Parent's forecasted (a) balance sheets,
(b) profit and loss statements, and (c) cash flow statements, all prepared on a
consistent basis with Parent's historical financial statements, together with
appropriate supporting details and a statement of underlying assumptions.
"Pro Rata Share" means:
(a) with respect to a Lender's obligation to make
Advances and receive payments of principal, interest, fees, costs, and expenses
with respect thereto (x) prior to the Commitment being reduced to zero, the
percentage of such Lender's Commitment, as compared to all Commitments, and (y)
from and after the time the Commitment has been terminated or reduced to zero,
the percentage obtained by dividing (i) the aggregate unpaid principal amount of
such Lender's Advances by (ii) the aggregate unpaid principal amount of all
Advances, and
(b) with respect to a Lender's obligation to participate
in Letters of Credit, to reimburse the Issuing Lender, and to receive payments
of fees with respect thereto and with respect to all other matters, (x) prior to
the Commitment being reduced to zero, the percentage of such Lender's
Commitment, as compared to all Commitments, and (y) from and after the time the
Commitment has been terminated or reduced to zero, the percentage obtained by
dividing (i) the aggregate unpaid principal amount of such Lender's Advances by
(ii) the aggregate unpaid principal amount of all Advances.
"Purchase Money Indebtedness" means Indebtedness (other than
the Obligations, but including Capitalized Lease Obligations), incurred at the
time of, or within 20 days after, the acquisition of any fixed assets for the
purpose of financing all or any part of the acquisition cost thereof.
"Real Property" means any estates or interests in real
property now owned or hereafter acquired by any Borrower and the improvements
thereto.
"Real Property Collateral" means the parcel or parcels of Real
Property identified on Schedule R-1 except that Real Property Collateral shall
not include the Lot Inventory and the Excluded Properties.
"Rebate Reserves" means, in the aggregate, reserves for volume
rebates, advertising rebates, and dealer assistance rebates for all Dealers, in
an amount for each such Dealer equal to the lesser of the Accounts owed by such
Dealer or the accrued amount of rebates for such Dealer from time to time on
Borrowers' books and records.
"Record" means information that is inscribed on a tangible
medium or which is stored in an electronic or other medium and is retrievable in
perceivable form.
"Remedial Action" means all actions taken to (a) clean up,
remove, remediate, contain, treat, monitor, assess, evaluate, or in any way
address Hazardous Materials in the indoor or outdoor environment, (b) prevent or
minimize a release or threatened release of Hazardous
25
Materials so they do not migrate or endanger or threaten to endanger public
health or welfare or the indoor or outdoor environment, (c) perform any
pre-remedial studies, investigations, or post-remedial operation and maintenance
activities, or (d) conduct any other actions authorized by 42 USC ss. 9601.
"REMIC" means a corporation, trust or other entity that elects
to be treated as a real estate mortgage investment conduit for Federal income
tax purposes.
"Rent Reserves" means reserves established from time to time
by Agent in its sole discretion for rent payable by any Borrower at any Eligible
Inventory location in an amount of 3 month(s) rent at each such location, and as
adjusted from time to time.
"Report" has the meaning set forth in Section 16.17.
"Repurchase Agreements" means, collectively, that certain
Inventory Repurchase Agreement dated on or about July 31, 2000 between Oakwood
Homes Corporation and Conseco Finance Servicing Corporation, those certain
Guaranty of Repurchase Obligations dated on or about March 24, 2000 between
certain Subsidiaries of Parent and Bombardier Capital, Inc., those certain
Vendor Agreements dated on or about September 1, 1998 between certain
Subsidiaries of Parent and Deutsche Financial Services Corporation, and any
similar repurchase agreement subsequently entered into by a Borrower and a floor
plan lender, the form and substance of which are customary in Borrowers'
industry.
"Required Availability" means Excess Availability and
unrestricted cash and Cash Equivalents in an amount of not less than
$15,000,000.
"Required Lenders" means, at any time, Lenders whose Pro Rata
Shares aggregate 66-2/3% or more of the Commitments, or if the Commitments have
been terminated irrevocably, 66-2/3% or more of the Obligations (other than Bank
Product Obligations) then outstanding, provided, however, that, if there are
only 2 Lenders at any time, Required Lenders shall mean both such Lenders.
"Required Refinance Date" means, (a) with respect to the
Senior Notes and the Reset Debenture, respectively, 180 days prior to the
maturity date thereof, and (b) with respect to the Servicer Advance Documents
and the Warehouse Facility Documents, respectively, 90 days prior to the
maturity date thereof.
"Reserve Percentage" means, on any day, for any Lender, the
maximum percentage prescribed by the Board of Governors of the Federal Reserve
System (or any successor Governmental Authority) for determining the reserve
requirements (including any basic, supplemental, marginal, or emergency
reserves) that are in effect on such date with respect to eurocurrency funding
(currently referred to as "eurocurrency liabilities") of that Lender, but so
long as such Lender is not required or directed under applicable regulations to
maintain such reserves, the Reserve Percentage shall be zero.
"Reset Debentures" means those $17,000,000 8% Series A and
Series B Reset Debentures due 2007 issued by Parent, with an interest rate to be
reset on June 1, 2002, in accordance with, and as more particularly described in
the Reset Indenture.
26
"Reset Indenture" means that certain Indenture dated as of
March 1, 1992 between Parent as Issuer and Delaware Trust Company, as Trustee,
as amended by that First Supplemental Indenture dated as of March 1, 1992 and
that Second Supplemental Indenture dated as of July 15, 1992 with respect to the
Reset Debentures.
"Revolver Usage" means, as of any date of determination, the
sum of (a) the then extant amount of outstanding Advances, plus (b) the then
extant amount of the Letter of Credit Usage.
"Risk Participation Liability" means, as to each Letter of
Credit, all reimbursement obligations of Borrowers to the Issuing Lender with
respect to an L/C Undertaking, consisting of (a) the amount available to be
drawn or which may become available to be drawn, (b) all amounts that have been
paid by the Issuing Lender to the Underlying Issuer to the extent not reimbursed
by Borrowers, whether by the making of an Advance or otherwise, and (c) all
accrued and unpaid interest, fees, and expenses payable with respect thereto.
"SEC" means the United States Securities and Exchange
Commission and any successor thereto.
"Securities Account" means a "securities account" as that term
is defined in the Code.
"Securitization Entity" means any corporation, trust or other
entity that elects to be treated as a real estate mortgage investment conduit
for Federal income tax purposes, or any other entity created as a conduit
vehicle to consummate a Securitized Transaction.
"Securitization Security" means any interest in a
Securitization Entity.
"Securitized Transaction" means any sale or other transfer of
Installment Sales Contracts, Securitization Securities, or Mortgage Loans to a
Securitization Entity, or the creation of a pool of Installment Sales Contracts,
which in either case is (i) sponsored by Parent or any of its Subsidiaries, and
(ii) used to support pass-through certificates or other similar securities or
any similar type of transaction that results in the creation of a pool of
Installment Sales Contracts supporting securities sold to investors in publicly
registered or privately placed securities transactions.
"Senior Notes" means (i) those $125,000,000 7.875% Senior
Notes, due 2004 issued by Parent and (ii) those $175,000,000 8.125% Senior
Notes, due 2009 issued by Parent, in each case, as more particularly described
in the Indentures.
"Servicer Advance Documents" means, collectively, (a) that
certain Receivables Contribution Agreement between OAC LLC, as Seller, and
Oakwood Advance Receivables Company, L.L.C., dated as of September 28, 2001, (b)
that certain Indenture by and among Oakwood Advance Receivables Company, L.L.C.
as Issuer, The Chase Manhattan Bank, as Trustee, Verification Agent and Paying
Agent and OAC LLC individually and as REMIC Servicer dated as of September 28,
2001, (c) that certain Note Purchase Agreement by and among Oakwood Advance
Receivables Company, L.L.C., OAC LLC, the Servicer Advance Lender, and the
Purchasers party thereto dated as of September 28, 2001, (d) those certain "OAC
27
Advance Receivables Backed Notes" dated as of September 28, 2001 and later
issued by Oakwood Advance Receivables Company, L.L.C. in favor of the holder
thereof, and (e) that certain "P&I Advance Disbursement and Purchase
Administration Agreement" by and among OAC LLC, as Servicer, Oakwood Advance
Receivables Company, L.L.C., as Purchaser, the Chase Manhattan Bank as Trustee
and agent of the Servicer, together with any similar agreement entered into
thereafter in replacement thereof, whether relating to a REMIC trust that is now
existing or hereafter formed, in substantially the form of any of the foregoing,
each in form and substance satisfactory to Agent.
"Servicer Advance Facility" means that certain receivables
purchase facility provided to OAC LLC or any of the Subsidiaries of Parent
pursuant to the Servicer Advance Documents.
"Servicer Advance Lender" means, collectively, The Prudential
Insurance Company of America and its Affiliates, ABS Fund, and Norwest Stable
Return Fund, together with any of their respective permitted successors and
assigns.
"Settlement" has the meaning set forth in Section 2.3(f)(i).
"Settlement Date" has the meaning set forth in Section
2.3(f)(i).
"Solvent" means, with respect to any Person on a particular
date, that such Person is not insolvent (as such term is defined in the Uniform
Fraudulent Transfer Act).
"Stock" means all shares, options, warrants, partnership
interests, limited liability company interests, other interests, participations,
equity interests or other equivalents (regardless of how designated) of or in a
Person, whether voting or nonvoting, including common stock, preferred stock, or
any other "equity security" (as such term is defined in Rule 3a11-1 of the
General Rules and Regulations promulgated by the SEC under the Exchange Act).
"Subsidiary" of a Person means a corporation, partnership,
limited liability company, or other entity in which that Person directly or
indirectly owns or controls the shares of Stock having ordinary voting power to
elect a majority of the board of directors (or appoint other comparable
managers) of such corporation, partnership, limited liability company, or other
entity.
"Suburban" means Suburban Home Sales, Inc., a Michigan
corporation.
"Swing Lender" means Foothill or any other Lender that, at the
request of Administrative Borrower and with the consent of Agent agrees, in such
Lender's sole discretion, to become the Swing Lender hereunder.
"Swing Loan" has the meaning set forth in Section 2.3(d)(i).
"Tangible Net Worth" means, as of any date of determination,
the result of (a) the sum of (i) the total consolidated stockholder's equity of
Parent and its Subsidiaries, and (ii) (x) all losses related to Securitized
Transactions (whether cash or non-cash) since October 1, 2001, plus (y) [out of
pocket] expenses incurred by a Borrower, as servicer, in connection with the
loan
28
assumption program that have not been passed to the related Securitization
Entity (up to a maximum aggregate amount pursuant to this clause (ii) during
each fiscal year of $35,000,000), minus (b) the sum of (i) all Intangible Assets
(including, without limitation, goodwill) of Parent and its Subsidiaries, (ii)
all amounts due to Parent and its Subsidiaries from Affiliates (other than
receivables generated from the sale of Inventory in the ordinary course of
business), and (iii) (x) all gains related to Securitized Transactions (whether
cash or non-cash) since October 1, 2001, and (y) all gains in connection with
the loan assumption program (up to a maximum aggregate gain during each fiscal
year of $35,000,000 pursuant to this clause (iii)).
"Tarheel" means Tarheel Insurance Company, Ltd. (f/k/a Blue
Ridge Insurance Company, Ltd.), a Bermuda corporation, and a Subsidiary of
Parent.
"Tarheel Guaranty Agreement" means that certain guaranty
agreement executed by Parent, as guarantor, in favor of American Bankers
Insurance Company of Florida and American Modern Insurance Company, as in
existence on the Closing Date, by which Parent guarantees the payment of certain
primary obligations owing by Tarheel, as primary obligor, in connection with the
insurance business of Tarheel.
"Tarheel Support Agreement" means the obligation of Parent, by
which Parent agrees to maintain compliance by Tarheel with the minimum solvency
margin requirements of the applicable laws of Bermuda up to a maximum obligation
of Parent thereunder limited to the sum of $15,000,000.
"Taxes" has the meaning set forth in Section 16.11.
"Underlying Issuer" means a third Person which is the
beneficiary of an L/C Undertaking and which has issued a letter of credit at the
request of the Issuing Lender for the benefit of Borrowers.
"Underlying Letter of Credit" means a letter of credit that
has been issued by an Underlying Issuer.
"Voidable Transfer" has the meaning set forth in Section 17.7.
"Warehouse Facility" means that certain receivables purchase
facility provided to Parent or any of its Subsidiaries pursuant to the Warehouse
Facility Documents.
"Warehouse Facility Documents" means, collectively, (a) that
certain Custodial Agreement dated as of February 9, 2001 among OMI Note Trust
2001-A as Issuer, the Warehouse Lender as Note Agent, OAC LLC as Seller-Servicer
and The Chase Manhattan Bank as Custodian, (b) that certain Class A Note
Purchase Agreement dated as of February 9, 2001 among OMI Note Trust 2001-A as
Issuer, OAC LLC as Seller-Servicer, Oak Leaf Holdings, LLC as Depositor, Gingko
Corporation as Transferor, the purchasers party thereto and the Warehouse Lender
as agent, (c) that certain Sale and Servicing Agreement dated as of February 9,
2001, among Oak Leaf Holdings, LLC, as Depositor, OMI Note Trust 2001-A as
Issuer, Gingko Corporation, as Transferor, OAC LLC as Seller-Servicer and The
Chase Manhattan Bank as Backup Servicer, Indenture Trustee and Custodian, (d)
that certain Trust Agreement dated as of February 9, 2001 between Oak Leaf
Holdings, LLC as Depositor and Wilmington
29
Trust Company as Owner Trustee, and (e) that certain Indenture dated as of
February 9, 2001 between OMI Note Trust 2001-A as Issuer and The Chase Manhattan
Bank as Indenture Trustee, together with any similar agreement entered into
thereafter in replacement thereof, whether relating to OMI Note Trust 2001-A or
any successor entity that is now existing or hereafter formed, in substantially
the form of any of the foregoing, each in form and substance satisfactory to
Agent.
"Warehouse Lender" means Credit Suisse First Boston, New York
Branch, as note agent.
"Wells Fargo" means Wells Fargo Bank, National Association, a
national banking association.
1.2 ACCOUNTING TERMS. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP. When used herein, the
term "financial statements" shall include the notes and schedules thereto.
Whenever the term "Borrowers" or the term "Parent" is used in respect of a
financial covenant or a related definition, it shall be understood to mean
Parent and its Subsidiaries on a consolidated basis unless the context clearly
requires otherwise.
1.3 CODE. Any terms used in this Agreement that are defined in the
Code shall be construed and defined as set forth in the Code unless otherwise
defined herein.
1.4 CONSTRUCTION. Unless the context of this Agreement or any
other Loan Document clearly requires otherwise, references to the plural include
the singular, references to the singular include the plural, the term
"including" is not limiting, and the term "or" has, except where otherwise
indicated, the inclusive meaning represented by the phrase "and/or." The words
"hereof," "herein," "hereby," "hereunder," and similar terms in this Agreement
or any other Loan Document refer to this Agreement or such other Loan Document,
as the case may be, as a whole and not to any particular provision of this
Agreement or such other Loan Document, as the case may be. Section, subsection,
clause, schedule, and exhibit references herein are to this Agreement unless
otherwise specified. Any reference in this Agreement or in the other Loan
Documents to any agreement, instrument, or document shall include all
alterations, amendments, changes, extensions, modifications, renewals,
replacements, substitutions, joinders, and supplements, thereto and thereof, as
applicable (subject to any restrictions on such alterations, amendments,
changes, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements set forth herein); provided, however, all references
herein to defined terms in the Warehouse Facility Documents or the Servicer
Advance Documents shall be deemed to be a reference to such terms as defined in
the Warehouse Facility Documents or the Servicer Advance Documents as of the
Closing Date, unless any amendment to such defined terms after the Closing Date
is consented to by Agent. Any reference herein to any Person shall be construed
to include such Person's successors and assigns. Any requirement of a writing
contained herein or in the other Loan Documents shall be satisfied by the
transmission of a Record and any Record transmitted shall constitute a
representation and warranty as to the accuracy and completeness of the
information contained therein.
1.5 SCHEDULES AND EXHIBITS. All of the schedules and exhibits attached
to this Agreement shall be deemed incorporated herein by reference.
30
2. LOAN AND TERMS OF PAYMENT.
2.1 REVOLVER ADVANCES.
(a) Subject to the terms and conditions of this Agreement, and during
the term of this Agreement, each Lender with a Commitment agrees (severally,
not jointly or jointly and severally) to make advances ("Advances") to
Borrowers in an amount at any one time outstanding not to exceed such Lender's
Pro Rata Share of an amount equal to the lesser of (i) the Maximum Revolver
Amount less the Letter of Credit Usage or (ii) the Borrowing Base less the
Letter of Credit Usage. For purposes of this Agreement, "Borrowing Base," as of
any date of determination, shall mean the result of:
(x) the lesser of
(i) (A) the amount of Eligible Accounts less
Rebate Reserves, multiplied by (B) 85%, less (C) the
amount, if any, of the applicable Dilution Reserve;
provided, however, that Advances based on Eligible
Bill and Hold Accounts shall not exceed the Eligible
Bill and Hold Sublimit, and
(ii) an amount equal to Borrowers'
Collections with respect to Accounts owed by Dealers
for the immediately preceding 30 day period, plus
(y) the lesser of
(i) (A) the value of Eligible Inventory
less the Pricing Reserve, multiplied by (B) 60%, and
(ii) 80% times the then extant Net
Liquidation Percentage times the book value of
Borrowers' Eligible Inventory, minus
(z) the sum of (i) the Bank Product Reserves, and (ii)
the aggregate amount of Rent Reserves, Common
Carrier Reserves, and other reserves, if any,
established by Agent under Section 2.1(b).
(b) Anything to the contrary in this Section 2.1 notwithstanding,
Agent shall have the right to establish reserves in such amounts, and with
respect to such matters, as Agent in its Permitted Discretion shall deem
necessary or appropriate, against the Borrowing Base, including, but not
limited to, reserves with respect to (i) sums that Borrowers are required to
pay (such as taxes, assessments, insurance premiums, or, in the case of leased
assets, rents or other amounts payable under such leases) and has failed to pay
under any Section of this Agreement or any other Loan Document, and (ii)
amounts owing by Borrowers to any Person to the extent secured by a Lien on, or
trust over, any of the Collateral (other than any existing Permitted Lien set
forth on Schedule P-1 which is specifically identified thereon as entitled to
have priority over
31
the Agent's Liens), which Lien or trust, in the Permitted Discretion of Agent
likely would have a priority superior to the Agent's Liens (such as Liens or
trusts in favor of landlords, warehousemen, carriers, mechanics, materialmen,
laborers, or suppliers, or Liens or trusts for ad valorem, excise, sales, or
other taxes where given priority under applicable law) in and to such item of
the Collateral. In addition to the foregoing, Agent shall have the right to
decrease the advance rates set forth in the definition of Borrowing Base above
from time to time (for such periods of time as may be determined by Agent)
based on Borrowers' actual liquidation experience, and to have the Inventory
reappraised by a qualified appraisal company selected by Agent from time to
time after the Closing Date for the purpose of redetermining the Net
Liquidation Percentage of the Eligible Inventory portion of the Collateral and,
as a result, redetermining the Borrowing Base.
(c) The Lenders with Commitments shall have no obligation to make
additional Advances hereunder to the extent such additional Advances would
cause the Revolver Usage to exceed the Maximum Revolver Amount.
(d) Amounts borrowed pursuant to this Section may be repaid and,
subject to the terms and conditions of this Agreement, reborrowed at any time
during the term of this Agreement.
2.2 INTENTIONALLY OMITTED.
2.3 BORROWING PROCEDURES AND SETTLEMENTS.
(a) PROCEDURE FOR BORROWING. Each Borrowing shall be made by an
irrevocable written request by an Authorized Person delivered to Agent (which
notice must be received by Agent no later than 1:00 p.m. (Georgia time) on the
Business Day prior to the date that is the requested Funding Date in the case
of a request for an Advance specifying (i) the amount of such Borrowing, and
(ii) the requested Funding Date, which shall be a Business Day; provided,
however, that in the case of a request for Swing Loan in an amount of
$5,000,000, or less, such notice will be timely received if it is received by
Agent no later than 1:00 p.m. (Georgia time) on the Business Day that is the
requested Funding Date) specifying (i) the amount of such Borrowing, and (ii)
the requested Funding Date, which shall be a Business Day. At Agent's election,
in lieu of delivering the above-described written request, any Authorized
Person may give Agent telephonic notice of such request by the required time,
with such telephonic notice to be confirmed in writing within 24 hours of the
giving of such notice.
(b) AGENT'S ELECTION. Promptly after receipt of a request for a
Borrowing pursuant to Section 2.3(a), Agent shall elect, in its discretion, (i)
to have the terms of Section 2.3(c) apply to such requested Borrowing, or (ii)
if the Borrowing is for an Advance, to request Swing Lender to make a Swing
Loan pursuant to the terms of Section 2.3(d) in the amount of the requested
Borrowing; provided, however, that if Swing Lender declines in its sole
discretion to make a Swing Loan pursuant to Section 2.3(d), Agent shall elect
to have the terms of Section 2.3(c) apply to such requested Borrowing.
32
(c) MAKING OF ADVANCES.
(i) In the event that Agent shall elect to have the
terms of this Section 2.3(c) apply to a requested Borrowing as
described in Section 2.3(b), then promptly after receipt of a request
for a Borrowing pursuant to Section 2.3(a), Agent shall notify the
Lenders, not later than 4:00 p.m. (Georgia time) on the Business Day
immediately preceding the Funding Date applicable thereto, by
telecopy, telephone, or other similar form of transmission, of the
requested Borrowing. Each Lender shall make the amount of such
Lender's Pro Rata Share of the requested Borrowing available to Agent
in immediately available funds, to Agent's Account, not later than
1:00 p.m. (Georgia time) on the Funding Date applicable thereto. After
Agent's receipt of the proceeds of such Advances, upon satisfaction of
the applicable conditions precedent set forth in Section 3 hereof,
Agent shall make the proceeds thereof available to Administrative
Borrower on the applicable Funding Date by transferring immediately
available funds equal to such proceeds received by Agent to
Administrative Borrower's Designated Account; provided, however, that,
subject to the provisions of Section 2.3(i), Agent shall not request
any Lender to make, and no Lender shall have the obligation to make,
any Advance if Agent shall have actual knowledge that (1) one or more
of the applicable conditions precedent set forth in Section 3 will not
be satisfied on the requested Funding Date for the applicable
Borrowing unless such condition has been waived, or (2) the requested
Borrowing would exceed the Availability on such Funding Date.
(ii) Unless Agent receives notice from a Lender on or
prior to the Closing Date or, with respect to any Borrowing after the
Closing Date, at least 1 Business Day prior to the date of such
Borrowing, that such Lender will not make available as and when
required hereunder to Agent for the account of Borrowers the amount of
that Lender's Pro Rata Share of the Borrowing, Agent may assume that
each Lender has made or will make such amount available to Agent in
immediately available funds on the Funding Date and Agent may (but
shall not be so required), in reliance upon such assumption, make
available to Borrowers on such date a corresponding amount. If and to
the extent any Lender shall not have made its full amount available to
Agent in immediately available funds and Agent in such circumstances
has made available to Borrowers such amount, that Lender shall on the
Business Day following such Funding Date make such amount available to
Agent, together with interest at the Defaulting Lender Rate for each
day during such period. A notice submitted by Agent to any Lender with
respect to amounts owing under this subsection shall be conclusive,
absent manifest error. If such amount is so made available, such
payment to Agent shall constitute such Lender's Advance on the date of
Borrowing for all purposes of this Agreement. If such amount is not
made available to Agent on the Business Day following the Funding
Date, Agent will notify Administrative Borrower of such failure to
fund and, upon demand by Agent, Borrowers shall pay such amount to
Agent for Agent's account, together with interest thereon for each day
elapsed since the date of such Borrowing, at a rate per annum equal to
the interest rate applicable at the time to the Advances composing
such Borrowing. The failure of any Lender to
33
make any Advance on any Funding Date shall not relieve any other
Lender of any obligation hereunder to make an Advance on such Funding
Date, but no Lender shall be responsible for the failure of any other
Lender to make the Advance to be made by such other Lender on any
Funding Date.
(iii) Agent shall not be obligated to transfer to a
Defaulting Lender any payments made by Borrowers to Agent for the
Defaulting Lender's benefit, and, in the absence of such transfer to
the Defaulting Lender, Agent shall transfer any such payments to each
other non-Defaulting Lender member of the Lender Group ratably in
accordance with their Commitments (but only to the extent that such
Defaulting Lender's Advance was funded by the other members of the
Lender Group) or, if so directed by Administrative Borrower and if no
Default or Event of Default had occurred and is continuing (and to the
extent such Defaulting Lender's Advance was not funded by the Lender
Group), retain same to be re-advanced to Borrowers as if such
Defaulting Lender had made Advances to Borrowers. Subject to the
foregoing, Agent may hold and, in its Permitted Discretion, re-lend to
Borrowers for the account of such Defaulting Lender the amount of all
such payments received and retained by it for the account of such
Defaulting Lender. Solely for the purposes of voting or consenting to
matters with respect to the Loan Documents, such Defaulting Lender
shall be deemed not to be a "Lender" and such Lender's Commitment
shall be deemed to be zero. This Section shall remain effective with
respect to such Lender until (x) the Obligations under this Agreement
shall have been declared or shall have become immediately due and
payable, (y) the non-Defaulting Lenders, Agent, and Administrative
Borrower shall have waived such Defaulting Lender's default in
writing, or (z) the Defaulting Lender makes its Pro Rata Share of the
applicable Advance and pays to Agent all amounts owing by Defaulting
Lender in respect thereof. The operation of this Section shall not be
construed to increase or otherwise affect the Commitment of any
Lender, to relieve or excuse the performance by such Defaulting Lender
or any other Lender of its duties and obligations hereunder, or to
relieve or excuse the performance by Borrowers of their duties and
obligations hereunder to Agent or to the Lenders other than such
Defaulting Lender. Any such failure to fund by any Defaulting Lender
shall constitute a material breach by such Defaulting Lender of this
Agreement and shall entitle Administrative Borrower at its option,
upon written notice to Agent, to arrange for a substitute Lender to
assume the Commitment of such Defaulting Lender, such substitute
Lender to be acceptable to Agent. In connection with the arrangement
of such a substitute Lender, the Defaulting Lender shall have no right
to refuse to be replaced hereunder, and agrees to execute and deliver
a completed form of Assignment and Acceptance Agreement in favor of
the substitute Lender (and agrees that it shall be deemed to have
executed and delivered such document if it fails to do so) subject
only to being repaid its share of the outstanding Obligations (other
than Bank Product Obligations) (including an assumption of its Pro
Rata Share of the Risk Participation Liability) without any premium or
penalty of any kind whatsoever; provided further, however, that any
such assumption of the Commitment of such Defaulting Lender shall not
be deemed to constitute a waiver of any of the Lender Groups' or
Borrowers' rights
34
or remedies against any such Defaulting Lender arising out of or in
relation to such failure to fund.
(d) MAKING OF SWING LOANS.
(i) In the event Agent shall elect, with the consent of
Swing Lender, as a Lender, to have the terms of this Section 2.3(d)
apply to a requested Borrowing as described in Section 2.3(b), Swing
Lender as a Lender shall make such Advance in the amount of such
Borrowing (any such Advance made solely by Swing Lender as a Lender
pursuant to this Section 2.3(d) being referred to as a "Swing Loan"
and such Advances being referred to collectively as "Swing Loans")
available to Borrowers on the Funding Date applicable thereto by
transferring immediately available funds to Administrative Borrower's
Designated Account. Each Swing Loan is an Advance hereunder and shall
be subject to all the terms and conditions applicable to other
Advances and all payments on any Swing Loan shall be payable to Swing
Lender as a Lender solely for its own account (and for the account of
the holder of any participation interest with respect to such Swing
Loan). Subject to the provisions of Section 2.3(i), Agent shall not
request Swing Lender as a Lender to make, and Swing Lender as a Lender
shall not make, any Swing Loan if Agent has actual knowledge that (i)
one or more of the applicable conditions precedent set forth in
Section 3 will not be satisfied on the requested Funding Date for the
applicable Borrowing unless such condition has been waived, or (ii)
the requested Borrowing would exceed the Availability on such Funding
Date. Swing Lender as a Lender shall not otherwise be required to
determine whether the applicable conditions precedent set forth in
Section 3 have been satisfied on the Funding Date applicable thereto
prior to making, in its sole discretion, any Swing Loan.
(ii) The Swing Loans shall be secured by the Agent's
Liens, shall constitute Advances and Obligations hereunder, and shall
bear interest at the rate applicable from time to time to Advances
that are Base Rate Loans.
(e) AGENT ADVANCES.
(i) Agent hereby is authorized by Borrowers and the
Lenders, from time to time in Agent's sole discretion, (1) after the
occurrence and during the continuance of a Default or an Event of
Default, or (2) at any time that any of the other applicable
conditions precedent set forth in Section 3 have not been satisfied,
to make Advances to Borrowers on behalf of the Lenders that Agent, in
its Permitted Discretion deems necessary or desirable (A) to preserve
or protect the Collateral, or any portion thereof, (B) to enhance the
likelihood of repayment of the Obligations (other than the Bank
Product Obligations), or (C) to pay any other amount chargeable to
Borrowers pursuant to the terms of this Agreement, including Lender
Group Expenses and the costs, fees, and expenses described in Section
10 (any of the Advances described in this Section 2.3(e) shall be
referred to as "Agent Advances"). Each Agent Advance is an Advance
hereunder and shall be subject to all the terms and conditions
applicable to other Advances and
35
all payments thereon shall be payable to Agent solely for its own
account (and for the account of the holder of any participation
interest with respect to such Agent Advance).
(ii) The Agent Advances shall be repayable on demand by
the Borrowers and secured by the Agent's Liens granted to Agent under
the Loan Documents, shall constitute Advances and Obligations
hereunder, and shall bear interest at the rate applicable from time to
time to Advances that are Base Rate Loans.
(f) SETTLEMENT. It is agreed that each Lender's funded portion of
the Advances is intended by the Lenders to equal, at all times, such Lender's
Pro Rata Share of the outstanding Advances. Such agreement notwithstanding,
Agent, Swing Lender, and the other Lenders agree (which agreement shall not be
for the benefit of or enforceable by Borrowers) that in order to facilitate the
administration of this Agreement and the other Loan Documents, settlement among
them as to the Advances, the Swing Loans, and the Agent Advances shall take
place on a periodic basis in accordance with the following provisions:
(i) Agent shall request settlement ("Settlement") with
the Lenders on a weekly basis, or on a more frequent basis if so
determined by Agent, (1) on behalf of Swing Lender, with respect to
each outstanding Swing Loan, (2) for itself, with respect to each
Agent Advance, and (3) with respect to Collections received, as to
each by notifying the Lenders by telecopy, telephone, or other similar
form of transmission, of such requested Settlement, no later than 4:00
p.m. (Georgia time) on the Business Day immediately prior to the date
of such requested Settlement (the date of such requested Settlement
being the "Settlement Date"). Such notice of a Settlement Date shall
include a summary statement of the amount of outstanding Advances,
Swing Loans, and Agent Advances for the period since the prior
Settlement Date. Subject to the terms and conditions contained herein
(including Section 2.3(c)(iii)): (y) if a Lender's balance of the
Advances, Swing Loans, and Agent Advances exceeds such Lender's Pro
Rata Share of the Advances, Swing Loans, and Agent Advances as of a
Settlement Date, then Agent shall, by no later than 3:00 p.m. (Georgia
time) on the Settlement Date, transfer in immediately available funds
to the account of such Lender as such Lender may designate, an amount
such that each such Lender shall, upon receipt of such amount, have as
of the Settlement Date, its Pro Rata Share of the Advances, Swing
Loans, and Agent Advances, and (z) if a Lender's balance of the
Advances, Swing Loans, and Agent Advances is less than such Lender's
Pro Rata Share of the Advances, Swing Loans, and Agent Advances as of
a Settlement Date, such Lender shall no later than 3:00 p.m. (Georgia
time) on the Settlement Date transfer in immediately available funds
to the Agent's Account, an amount such that each such Lender shall,
upon transfer of such amount, have as of the Settlement Date, its Pro
Rata Share of the Advances, Swing Loans, and Agent Advances. Such
amounts made available to Agent under clause (z) of the immediately
preceding sentence shall be applied against the amounts of the
applicable Swing Loan or Agent Advance and, together with the portion
of such Swing Loan or Agent Advance representing Swing Lender's Pro
36
Rata Share thereof, shall constitute Advances of such Lenders. If any
such amount is not made available to Agent by any Lender on the
Settlement Date applicable thereto to the extent required by the terms
hereof, Agent shall be entitled to recover for its account such amount
on demand from such Lender together with interest thereon at the
Defaulting Lender Rate.
(ii) In determining whether a Lender's balance of the
Advances, Swing Loans, and Agent Advances is less than, equal to, or
greater than such Lender's Pro Rata Share of the Advances, Swing
Loans, and Agent Advances as of a Settlement Date, Agent shall, as
part of the relevant Settlement, apply to such balance the portion of
payments actually received in good funds by Agent with respect to
principal, interest and fees payable by Borrowers and allocable to the
Lenders hereunder, and proceeds of Collateral. To the extent that a
net amount is owed to any such Lender after such application, such net
amount shall be distributed by Agent to that Lender as part of such
next Settlement.
(iii) Between Settlement Dates, Agent, to the extent no
Agent Advances or Swing Loans are outstanding, may pay over to Swing
Lender any payments received by Agent, that in accordance with the
terms of this Agreement would be applied to the reduction of the
Advances, for application to Swing Lender's Pro Rata Share of the
Advances. If, as of any Settlement Date, Collections received since
the then immediately preceding Settlement Date have been applied to
Swing Lender's Pro Rata Share of the Advances other than to Swing
Loans, as provided for in the previous sentence, Swing Lender shall
pay to Agent for the accounts of the Lenders, and Agent shall pay to
the Lenders, to be applied to the outstanding Advances of such
Lenders, an amount such that each Lender shall, upon receipt of such
amount, have, as of such Settlement Date, its Pro Rata Share of the
Advances. During the period between Settlement Dates, Swing Lender
with respect to Swing Loans, Agent with respect to Agent Advances, and
each Lender (subject to the effect of letter agreements between Agent
and individual Lenders) with respect to the Advances other than Swing
Loans and Agent Advances, shall be entitled to interest at the
applicable rate or rates payable under this Agreement on the daily
amount of funds employed by Swing Lender, Agent, or the Lenders, as
applicable.
(g) NOTATION. Agent shall record on its books the principal
amount of the Advances owing to each Lender, including the Swing Loans owing to
Swing Lender, and Agent Advances owing to Agent, and the interests therein of
each Lender, from time to time. In addition, each Lender is authorized, at such
Lender's option, to note the date and amount of each payment or prepayment of
principal of such Lender's Advances in its books and records, including
computer records, such books and records constituting conclusive evidence,
absent manifest error, of the accuracy of the information contained therein.
(h) LENDERS' FAILURE TO PERFORM. All Advances (other than Swing
Loans and Agent Advances) shall be made by the Lenders contemporaneously and in
accordance with their Pro Rata Shares. It is understood that (i) no Lender
shall be responsible for any failure by any other Lender to perform its
obligation to make any Advance (or other extension of credit)
37
hereunder, nor shall any Commitment of any Lender be increased or decreased as
a result of any failure by any other Lender to perform its obligations
hereunder, and (ii) no failure by any Lender to perform its obligations
hereunder shall excuse any other Lender from its obligations hereunder.
(i) OPTIONAL OVERADVANCES. Any contrary provision of this
Agreement notwithstanding, the Lenders hereby authorize Agent or Swing Lender,
as applicable, and Agent or Swing Lender, as applicable, may, but is not
obligated to, knowingly and intentionally, continue to make Advances (including
Swing Loans) to Borrowers notwithstanding that an Overadvance exists or thereby
would be created, so long as (i) after giving effect to such Advances
(including a Swing Loan), the Revolver Usage does not exceed the Borrowing Base
by more than $1,000,000, (ii) after giving effect to such Advances (including
any Swing Loan) the outstanding Revolver Usage (except for and excluding
amounts charged to the Loan Account for interest, fees, or Lender Group
Expenses) does not exceed the Maximum Revolver Amount, and (iii) at the time of
the making of any such Advance (including a Swing Loan), Agent does not
believe, in good faith, that the Overadvance created by such Advance will be
outstanding for more than 30 days. The foregoing provisions are for the
exclusive benefit of Agent, Swing Lender, and the Lenders and are not intended
to benefit Borrowers in any way. The Advances and Swing Loans, as applicable,
that are made pursuant to this Section 2.3(i) shall be subject to the same
terms and conditions as any other Advance or Swing Loan, as applicable and the
rate of interest applicable thereto shall be the rate applicable to Advances
that are Base Rate Loans under Section 2.6(c) hereof without regard to the
presence or absence of a Default or Event of Default, provided that upon such
Default or Event of Default, the rate of interest applicable to any Advance
hereunder shall be increased to the interest rate applicable pursuant to
Section 2.6(c).
(j) In the event Agent obtains actual knowledge that the Revolver
Usage exceeds the amounts permitted by the preceding paragraph, regardless of
the amount of, or reason for, such excess, Agent shall notify Lenders as soon
as practicable (and prior to making any (or any additional) intentional
Overadvances (except for and excluding amounts charged to the Loan Account for
interest, fees, or Lender Group Expenses) unless Agent determines that prior
notice would result in imminent harm to the Collateral or its value), and the
Lenders with Commitments thereupon shall, together with Agent, jointly
determine the terms of arrangements that shall be implemented with Borrowers
and intended to reduce, within a reasonable time, the outstanding principal
amount of the Advances to Borrowers to an amount permitted by the preceding
paragraph. In the event Agent or any Lender disagrees over the terms of
reduction or repayment of any Overadvance, the terms of reduction or repayment
thereof shall be implemented according to the determination of the Required
Lenders.
(k) Each Lender with a Commitment shall be obligated to settle
with Agent as provided in Section 2.3(f) for the amount of such Lender's Pro
Rata Share of any unintentional Overadvances by Agent reported to such Lender,
any intentional Overadvances made as permitted under this Section 2.3(i), and
any Overadvances resulting from the charging to the Loan Account of interest,
fees, or Lender Group Expenses.
2.4 PAYMENTS.
38
(a) PAYMENTS BY BORROWERS.
(i) Except as otherwise expressly provided herein, all
payments by Borrowers shall be made to Agent's Account for the account
of the Lender Group and shall be made in immediately available funds,
no later than 2:00 p.m. (Georgia time) on the date specified herein.
Any payment received by Agent later than 2:00 p.m. (Georgia time)
shall be deemed to have been received on the following Business Day
and any applicable interest or fee shall continue to accrue until such
following Business Day.
(ii) Unless Agent receives notice from Administrative
Borrower prior to the date on which any payment is due to the Lenders
that Borrowers will not make such payment in full as and when
required, Agent may assume that Borrowers have made (or will make)
such payment in full to Agent on such date in immediately available
funds and Agent may (but shall not be so required), in reliance upon
such assumption, distribute to each Lender on such due date an amount
equal to the amount then due such Lender. If and to the extent
Borrowers do not make such payment in full to Agent on the date when
due, each Lender severally shall repay to Agent on demand such amount
distributed to such Lender, together with interest thereon at the
Defaulting Lender Rate for each day from the date such amount is
distributed to such Lender until the date repaid.
(b) APPORTIONMENT AND APPLICATION.
(i) Except as otherwise provided with respect to
Defaulting Lenders and except as otherwise provided in the Loan
Documents (including letter agreements between Agent and individual
Lenders), aggregate principal and interest payments shall be
apportioned ratably among the Lenders (according to the unpaid
principal balance of the Obligations to which such payments relate
held by each Lender) and payments of fees and expenses (other than
fees or expenses that are for Agent's separate account, after giving
effect to any letter agreements between Agent and individual Lenders)
shall be apportioned ratably among the Lenders. All payments shall be
remitted to Agent and all such payments (other than payments received
while no Default or Event of Default has occurred and is continuing
and which relate to the payment of principal or interest of specific
Obligations or which relate to the payment of specific fees), and all
proceeds of Accounts or other Collateral received by Agent, shall be
applied as follows:
(A) first, to pay any Lender Group Expenses
then due to Agent or Issuing Lender under the Loan Documents,
until paid in full,
(B) second, to pay any Lender Group Expenses
then due to the Lenders under the Loan Documents, on a
ratable basis, until paid in full,
39
(C) third, to pay any fees then due to Agent
(for its separate account, after giving effect to any letter
agreements between Agent and the individual Lenders) under
the Loan Documents until paid in full,
(D) fourth, to pay any fees then due to any or
all of the Lenders (after giving effect to any letter
agreements between Agent and individual Lenders) under the
Loan Documents, on a ratable basis, until paid in full,
(E) fifth, to pay interest due in respect of
all Agent Advances, until paid in full,
(F) sixth, ratably to pay interest due in
respect of the Advances (other than Agent Advances) and the
Swing Loans until paid in full,
(G) seventh, to pay the principal of all Agent
Advances until paid in full,
(H) eighth, to pay the principal of all Swing
Loans until paid in full,
(I) ninth, to pay the principal of all Advances
until paid in full,
(J) tenth, if an Event of Default has occurred
and is continuing, to Agent, to be held by Agent, for the
ratable benefit of Issuing Lender and those Lenders having a
Revolver Commitment, as cash collateral in an amount up to
105% of the then extant Letter of Credit Usage until paid in
full,
(K) eleventh, to pay any other Obligations
owing to any of Agent or Lenders until paid in full,
(L) twelfth, if (1)(X) an Event of Default has
occurred and is continuing, and (Y) the Commitments have been
terminated, or the Agent is exercising remedies to enforce
its Lien against the Collateral as a secured party pursuant
to the Code, or (2) the Agent or Borrowers are otherwise
liquidating all or substantially all of the Collateral, to
pay all Bank Product Obligations until paid in full, and
(M) thirteenth, to Borrower (to be wired to the
Designated Account) or such other Person entitled thereto
under applicable law.
(ii) Agent promptly shall distribute to each Lender,
pursuant to the applicable wire instructions received from each Lender
in writing, such funds as it may be entitled to receive, subject to a
Settlement delay as provided in Section 2.3(h).
(iii) In each instance, so long as no Default or Event of
Default has occurred and is continuing, Section 2.4(b) shall not be
deemed to apply to any
40
payment by Borrowers specified by Borrowers to be for the payment of
specific Obligations then due and payable (or prepayable) under any
provision of this Agreement.
(iv) For purposes of the foregoing, "paid in full" means
payment of all amounts owing under the Loan Documents according to the
terms thereof, including loan fees, service fees, professional fees,
interest (and specifically including interest accrued after the
commencement of any Insolvency Proceeding), default interest, interest
on interest, and expense reimbursements, whether or not the same would
be or is allowed or disallowed in whole or in part in any Insolvency
Proceeding.
(v) Notwithstanding anything to the contrary, the
Applicable Prepayment Premium shall not be paid to any Lender until
all other Obligations (other than Bank Product Obligations) have been
paid in full.
(vi) In the event of a direct conflict between the
priority provisions of this Section 2.4 and other provisions contained
in any other Loan Document, but subject to set-off rights of Funds
Management Bank provided in Section 16.13(b), it is the intention of
the parties hereto that such priority provisions in such documents
shall be read together and construed, to the fullest extent possible,
to be in concert with each other. In the event of any actual,
irreconcilable conflict that cannot be resolved as aforesaid, the
terms and provisions of this Section 2.4 shall control and govern.
2.5 OVERADVANCES. If, at any time or for any reason, the amount
of Obligations (other than Bank Product Obligations) owed by Borrowers to the
Lender Group pursuant to Sections 2.1 and 2.12 is greater than either the
Dollar or percentage limitations set forth in Sections 2.1 or 2.12, (an
"Overadvance"), Borrowers immediately shall pay to Agent, in cash, the amount
of such excess, which amount shall be used by Agent to reduce the Obligations
in accordance with the priorities set forth in Section 2.4(b). In addition,
Borrowers hereby promise to pay the Obligations (including principal, interest,
fees, costs, and expenses) in Dollars in full to the Lender Group as and when
due and payable under the terms of this Agreement and the other Loan Documents.
41
2.6 INTEREST RATES AND LETTER OF CREDIT FEE: RATES, PAYMENTS, AND
CALCULATIONS.
(a) INTEREST RATES. Except as provided in clause (c)
below, all Obligations (except for undrawn Letters of Credit and except for
Bank Product Obligations) that have been charged to the Loan Account pursuant
to the terms hereof shall bear interest on the Daily Balance thereof, at a per
annum rate equal to the Base Rate plus the Base Rate Margin.
The foregoing notwithstanding, at no time shall any portion of the
Obligations (other than Bank Product Obligations) bear interest on the Daily
Balance thereof at a per annum rate less than 7%. To the extent that interest
accrued hereunder at the rate set forth herein would be less than the foregoing
minimum daily rate, the interest rate chargeable hereunder for such day
automatically shall be deemed increased to such minimum rate.
(b) LETTER OF CREDIT FEE. Borrowers shall pay Agent (for
the ratable benefit of the Lenders with a Commitment, subject to any letter
agreement between Agent and individual Lenders), a Letter of Credit fee (in
addition to the charges, commissions, fees, and costs set forth in Section
2.12(e)) which shall accrue at a rate equal to 3% per annum times the Daily
Balance of the undrawn amount of all outstanding Letters of Credit.
(c) DEFAULT RATE. Upon the occurrence and during the
continuation of an Event of Default (and at the election of Agent or the
Required Lenders),
(i) all Obligations (except for undrawn Letters
of Credit and except for Bank Product Obligations) that have
been charged to the Loan Account pursuant to the terms hereof
shall bear interest on the Daily Balance thereof at a per
annum rate equal to 4 percentage points above the per annum
rate otherwise applicable hereunder, and
(ii) the Letter of Credit fee provided for above
shall be increased to 4 percentage points above the per annum
rate otherwise applicable hereunder.
(d) PAYMENT. Interest, Letter of Credit fees, and all
other fees payable hereunder shall be due and payable, in arrears, on the first
day of each month at any time that Obligations or Commitments are outstanding.
Borrowers hereby authorize Agent, from time to time without prior notice to
Borrowers, to charge such interest and fees, all Lender Group Expenses (as and
when incurred), the charges, commissions, fees, and costs provided for in
Section 2.12(e) (as and when accrued or incurred), the fees and costs provided
for in Section 2.11 (as and when accrued or incurred), and all other payments
as and when due and payable to Agent, any Lender or Issuing Lender under any
Loan Document to Borrowers' Loan Account, which amounts thereafter shall
constitute Advances hereunder and shall accrue interest at the rate then
applicable to Advances hereunder. Any interest not paid when due shall be
charged to Borrowers' Loan Account and shall thereafter constitute Advances
hereunder and shall accrue interest at the rate then applicable to Advances
that are Base Rate Loans hereunder.
(e) COMPUTATION. All interest and fees chargeable under
the Loan Documents shall be computed on the basis of a 360 day year for the
actual number of days elapsed. In the event the Base Rate is changed from time
to time hereafter, the rates of interest
42
hereunder based upon the Base Rate automatically and immediately shall be
increased or decreased by an amount equal to such change in the Base Rate.
(f) INTENT TO LIMIT CHARGES TO MAXIMUM LAWFUL RATE.
Borrowers and the Lender Group hereby agree and stipulate that the only charges
imposed upon Borrowers for the use of money in connection with this Agreement
are and shall be the specific interest and fees described in this Article 2 and
in any other Loan Document. Notwithstanding the foregoing, Borrowers and the
Lender Group further agree and stipulate that all agency fees, syndication
fees, facility fees, underwriting fees, default charges, late charges, funding
or "breakage" charges, increased cost charges, the Applicable Prepayment
Premium, "float" or "clearance" charges, attorneys' fees and reimbursement for
costs and expenses paid by the Lender Group to third parties or for damages
incurred by the Lender Group are charges to compensate the Lender Group for
underwriting and administrative services and costs or losses performed or
incurred, and to be performed and incurred, by the Lender Group in connection
with this Agreement and the other Loan Documents. In no event shall the amount
of interest and other charges for the use of money payable under this Agreement
exceed the maximum amounts permissible under any law that a court of competent
jurisdiction shall, in a final determination, deem applicable. Borrowers and
the Lender Group, in executing and delivering this Agreement, intend legally to
agree upon the rate or rates of interest and other charges for the use of money
and manner of payment stated within it; provided, however, that, anything
contained herein to the contrary notwithstanding, if the amount of such
interest and other charges for the use of money or manner of payment exceeds
the maximum amount allowable under applicable law, then, ipso facto as of the
date of this Agreement, Borrowers are and shall be liable only for the payment
of such maximum as allowed by law, and payment received from Borrowers in
excess of such legal maximum whenever received, shall be applied to reduce the
principal balance of the Obligations to the extent of such excess.
2.7 CASH MANAGEMENT.
(a) Borrowers shall (i) establish and maintain cash
management services of a type and on terms satisfactory to Agent one or more of
the banks set forth on Schedule 2.7(a) (each, a "Cash Management Bank"), and
shall request in writing and otherwise take such reasonable steps to ensure
that all of its Account Debtors that are Dealers forward payment of the amounts
owed by them directly to such Cash Management Bank, and (ii) deposit or cause
to be deposited promptly, and in any event no later than the first Business Day
after the date of receipt thereof, all Collections (including those sent
directly by Account Debtors (including retail Account Debtors with respect to
Accounts not transferred to the Warehouse Facility) to a Cash Management Bank
but not including proceeds from the Warehouse Facility or the Servicer Advance
Facility that are deposited into the Concentration Account) into the Foothill
Account or any other bank account in Agent's name (each, a "Cash Management
Account") at one of the Cash Management Banks. Borrowers shall deposit, or
cause to be deposited all funds available to Borrowers (including, without
limitation, proceeds from the Warehouse Facility and Servicer Advance Facility)
into the Concentration Account (x) within 1 Business Day of any borrowing under
the Warehouse Facility, and (y) in the case of all other funds, as
expeditiously as possible.
(b) Borrowers shall cause each Cash Management Bank to
establish and maintain Cash Management Agreements with Agent and Borrowers, in
form and substance
43
acceptable to Agent. Except for the Depository Account Agreement, each such
Cash Management Agreement shall provide, among other things, that (i) all items
of payment deposited in such Cash Management Account and proceeds thereof are
held by such Cash Management Bank as agent or bailee-in-possession for Agent,
(ii) the Cash Management Bank has no rights of setoff or recoupment or any
other claim against the applicable Cash Management Account, other than for
payment of its service fees and other charges directly related to the
administration of such Cash Management Account and for returned checks or other
items of payment, and (iii) upon instruction from Agent, such Cash Management
Bank shall immediately forward by daily sweep all amounts in the applicable
Cash Management Account to the Agent's Account. At the election of Agent in its
reasonable discretion, Agent may direct Borrowers and a Cash Management Bank
to, and Borrowers agree to, cause a sweep of all amounts in such Cash
Management Accounts into Agent's Account if, (A) as of any date of
determination, there are outstanding Advances and Borrowing Base Availability
is less than $20,000,000, or (B) any Event of Default exists. Any funds swept
to the Agent's Account pursuant to clause (A) of the previous sentence shall be
applied to repay the outstanding Advances with any excess refunded to
Borrowers, and any funds swept to Agent's Account pursuant to clause (B) of the
previous sentence shall be applied to Borrowers' Obligations or refunded to
Borrowers as set forth in Section 2.4.
(c) So long as no Default or Event of Default has
occurred and is continuing, Administrative Borrower may amend Schedule 2.7(a)
to add or replace a Cash Management Bank or Cash Management Account; provided,
however, that (i) such prospective Cash Management Bank shall be satisfactory
to Agent and Agent shall have consented in writing in advance to the opening of
such Cash Management Account with the prospective Cash Management Bank, and
(ii) prior to the time of the opening of such Cash Management Account,
Borrowers and such prospective Cash Management Bank shall have executed and
delivered to Agent a Cash Management Agreement. Borrowers shall close any of
their Cash Management Accounts (and establish replacement cash management
accounts in accordance with the foregoing sentence) promptly and in any event
within 30 days of notice from Agent that the creditworthiness of any Cash
Management Bank is no longer acceptable in Agent's reasonable judgment, or as
promptly as practicable and in any event within 60 days of notice from Agent
that the operating performance, funds transfer, or availability procedures or
performance of the Cash Management Bank with respect to Cash Management
Accounts or Agent's liability under any Cash Management Agreement with such
Cash Management Bank is no longer acceptable in Agent's reasonable judgment.
(d) The Cash Management Accounts shall be cash
collateral accounts, with all cash, checks and similar items of payment in such
accounts securing payment of the Obligations, and in which Borrowers are hereby
deemed to have granted a Lien to Agent. Borrowers shall not establish or
maintain any concentration accounts other than the Concentration Account.
2.8 CREDITING PAYMENTS; FLOAT CHARGE. The receipt of any payment
item by Agent (whether from transfers to Agent by the Cash Management Banks
pursuant to the Cash Management Agreements or otherwise) shall not be
considered a payment on account unless such payment item is a wire transfer of
immediately available federal funds made to the Agent's Account or unless and
until such payment item is honored when presented for payment. Should any
payment item not be honored when presented for payment, then Borrowers shall be
deemed
44
not to have made such payment and interest shall be calculated accordingly.
Anything to the contrary contained herein notwithstanding, any payment item
shall be deemed received by Agent only if it is received into the Agent's
Account on a Business Day on or before 2:00 p.m. (Georgia time). If any payment
item is received into the Agent's Account on a non-Business Day or after 2:00
p.m. (Georgia time) on a Business Day, it shall be deemed to have been received
by Agent as of the opening of business on the immediately following Business
Day.
2.9 DESIGNATED ACCOUNT. Agent is authorized to make the Advances,
and Issuing Lender is authorized to issue the Letters of Credit, under this
Agreement based upon telephonic or other instructions received from anyone
purporting to be an Authorized Person, or without instructions if pursuant to
Section 2.6(d). Administrative Borrower agrees to establish and maintain the
Designated Account with the Designated Account Bank for the purpose of
receiving the proceeds of the Advances requested by Borrowers and made by Agent
or the Lenders hereunder. Unless otherwise agreed by Agent and Administrative
Borrower, any Advance, Agent Advance, or Swing Loan requested by Borrowers and
made by Agent or the Lenders hereunder shall be made to the Designated Account.
2.10 MAINTENANCE OF LOAN ACCOUNT; STATEMENTS OF OBLIGATIONS. Agent
shall maintain an account on its books in the name of Borrowers (the "Loan
Account") on which Borrowers will be charged with all Advances (including Agent
Advances and Swing Loans) made by Agent, Swing Lender, or the Lenders to
Borrowers or for Borrowers' account, the Letters of Credit issued by Issuing
Lender for Borrowers' account, and with all other payment Obligations hereunder
or under the other Loan Documents (except for Bank Product Obligations),
including, accrued interest, fees and expenses, and Lender Group Expenses. In
accordance with Section 2.8, the Loan Account will be credited with all
payments received by Agent from Borrowers or for Borrowers' account, including
all amounts received in the Agent's Account from any Cash Management Bank.
Agent shall render statements regarding the Loan Account to Administrative
Borrower, including principal, interest, fees, and including an itemization of
all charges and expenses constituting Lender Group Expenses owing, and such
statements shall be conclusively presumed to be correct and accurate and
constitute an account stated between Borrowers and the Lender Group unless,
within 30 days after receipt thereof by Administrative Borrower, Administrative
Borrower shall deliver to Agent written objection thereto describing the error
or errors contained in any such statements.
2.11 FEES. Borrowers shall pay to Agent the following fees and
charges, which fees and charges shall be non-refundable when paid (irrespective
of whether this Agreement is terminated thereafter) and shall be apportioned
among the Lenders in accordance with the terms of letter agreements between
Agent and individual Lenders:
(a) UNUSED LINE FEE. On the first day of each month
during the term of this Agreement, payable in arrears, an unused line fee in an
amount equal to 0.50% per annum times the result of (a) the Maximum Revolver
Amount, less (b) the sum of (i) the average Daily Balance of Advances that were
outstanding during the immediately preceding month, plus (ii) the average Daily
Balance of the Letter of Credit Usage during the immediately preceding month,
45
(b) FEE LETTER FEES. As and when due and payable under
the terms of the Fee Letter, Borrowers shall pay to Agent the fees set forth in
the Fee Letter, and
(c) AUDIT, APPRAISAL, AND VALUATION CHARGES. For the
separate account of Agent (or, in the case of clause (i) below, the Lenders, as
applicable), audit, appraisal, and valuation fees and charges as follows, (i) a
fee of $850 per day, per auditor, plus out-of-pocket expenses for each
financial audit of a Borrower performed by personnel employed by Agent or a
Lender, (ii) if implemented, a one time charge of $5,000 plus out-of-pocket
expenses for expenses for the establishment of electronic collateral reporting
systems, (iii) a fee of $1,500 per day per appraiser, plus out-of-pocket
expenses, for each appraisal of the Collateral performed by personnel employed
by Agent, and (iv) the actual charges paid or incurred by Agent if it elects to
employ the services of one or more third Persons to perform financial audits of
Borrowers, to appraise the Collateral, or any portion thereof, or to assess a
Borrower's business valuation.
2.12 LETTERS OF CREDIT
(a) Subject to the terms and conditions of this
Agreement, the Issuing Lender agrees to issue letters of credit for the account
of Borrowers (each, an "L/C") or to purchase participations or execute
indemnities or reimbursement obligations (each such undertaking, an "L/C
Undertaking") with respect to letters of credit issued by an Underlying Issuer
(as of the Closing Date, the prospective Underlying Issuer is to be Wells Fargo
or any National Association of Insurance Commissioners approved bank Affiliate
of Wells Fargo) for the account of Borrowers. To request the issuance of an L/C
or an L/C Undertaking (or the amendment, renewal, or extension of an
outstanding L/C or L/C Undertaking), Administrative Borrower shall hand deliver
or telecopy (or transmit by electronic communication, if arrangements for doing
so have been approved by the Issuing Lender) to the Issuing Lender and Agent
(reasonably in advance of the requested date of issuance, amendment, renewal,
or extension) a notice requesting the issuance of an L/C or L/C Undertaking, or
identifying the L/C or L/C Undertaking to be amended, renewed, or extended, the
date of issuance, amendment, renewal, or extension, the date on which such L/C
or L/C Undertaking is to expire, the amount of such L/C or L/C Undertaking, the
name and address of the beneficiary thereof (or of the Underlying Letter of
Credit, as applicable), and such other information as shall be necessary to
prepare, amend, renew, or extend such L/C or L/C Undertaking. If requested by
the Issuing Lender, Borrowers also shall be an applicant under the application
with respect to any Underlying Letter of Credit that is to be the subject of an
L/C Undertaking. The Issuing Lender shall have no obligation to issue a Letter
of Credit if any of the following would result after giving effect to the
requested Letter of Credit:
(i) the Letter of Credit Usage would exceed the
Borrowing Base less the amount of outstanding Advances, or
(ii) the Letter of Credit Usage would exceed
$45,000,000, or
(iii) the Letter of Credit Usage would exceed the
Maximum Revolver Amount less the then extant amount of
outstanding Advances.
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Borrowers and the Lender Group acknowledge and agree that
certain Underlying Letters of Credit may be issued to support letters of credit
that already are outstanding as of the Closing Date. Each Letter of Credit (and
corresponding Underlying Letter of Credit) shall have an expiry date no later
than 30 days prior to the Maturity Date and all such Letters of Credit (and
corresponding Underlying Letter of Credit) shall be in form and substance
acceptable to the Issuing Lender (in the exercise of its Permitted Discretion),
including the requirement that the amounts payable thereunder must be payable
in Dollars. If Issuing Lender is obligated to advance funds under a Letter of
Credit, Borrowers immediately shall reimburse such L/C Disbursement to Issuing
Lender by paying to Agent an amount equal to such L/C Disbursement not later
than 2:00 p.m., Georgia time, on the date that such L/C Disbursement is made,
if Administrative Borrower shall have received written or telephonic notice of
such L/C Disbursement prior to 1:00 p.m., Georgia time, on such date, or, if
such notice has not been received by Administrative Borrower prior to such time
on such date, then not later than 11:00 a.m., Georgia time, on (i) the Business
Day that Administrative Borrower receives such notice, if such notice is
received prior to 1:00 p.m., Georgia time, on the date of receipt, and, in the
absence of such reimbursement, the L/C Disbursement immediately and
automatically shall be deemed to be an Advance hereunder and, thereafter, shall
bear interest at the rate then applicable to Advances that are Base Rate Loans
under Section 2.6. To the extent an L/C Disbursement is deemed to be an Advance
hereunder, Borrowers' obligation to reimburse such L/C Disbursement shall be
discharged and replaced by the resulting Advance. Promptly following receipt by
Agent of any payment from Borrowers pursuant to this paragraph, Agent shall
distribute such payment to the Issuing Lender or, to the extent that Lenders
have made payments pursuant to Section 2.12(c) to reimburse the Issuing Lender,
then to such Lenders and the Issuing Lender as their interests may appear.
(b) Promptly following receipt of a notice of L/C
Disbursement pursuant to Section 2.12(a), each Lender with a Commitment agrees
to fund its Pro Rata Share of any Advance deemed made pursuant to the foregoing
subsection on the same terms and conditions as if Borrowers had requested such
Advance and Agent shall promptly pay to Issuing Lender the amounts so received
by it from the Lenders. By the issuance of a Letter of Credit (or an amendment
to a Letter of Credit increasing the amount thereof) and without any further
action on the part of the Issuing Lender or the Lenders with Commitments, the
Issuing Lender shall be deemed to have granted to each Lender with a
Commitment, and each Lender with a Commitment shall be deemed to have
purchased, a participation in each Letter of Credit, in an amount equal to its
Pro Rata Share of the Risk Participation Liability of such Letter of Credit,
and each such Lender agrees to pay to Agent, for the account of the Issuing
Lender, such Lender's Pro Rata Share of any payments made by the Issuing Lender
under such Letter of Credit. In consideration and in furtherance of the
foregoing, each Lender with a Commitment hereby absolutely and unconditionally
agrees to pay to Agent, for the account of the Issuing Lender, such Lender's
Pro Rata Share of each L/C Disbursement made by the Issuing Lender and not
reimbursed by Borrowers on the date due as provided in clause (a) of this
Section, or of any reimbursement payment required to be refunded to Borrowers
for any reason. Each Lender with a Commitment acknowledges and agrees that its
obligation to deliver to Agent, for the account of the Issuing Lender, an
amount equal to its respective Pro Rata Share pursuant to this Section 2.12(b)
shall be absolute and unconditional and such remittance shall be made
notwithstanding the occurrence or continuation of an Event of Default or
Default or the failure to satisfy any condition set forth in Section 3 hereof.
If any such Lender fails to make available to
47
Agent the amount of such Lender's Pro Rata Share of any payments made by the
Issuing Lender in respect of such Letter of Credit as provided in this Section,
Agent (for the account of the Issuing Lender) shall be entitled to recover such
amount on demand from such Lender together with interest thereon at the
Defaulting Lender Rate until paid in full.
(c) Each Borrower hereby agrees to indemnify, save,
defend, and hold the Lender Group harmless from any loss, cost, expense, or
liability, and reasonable attorneys fees incurred by any one or more members of
the Lender Group arising out of or in connection with any Letter of Credit;
provided, however, that no Borrower shall be obligated hereunder to indemnify
for any loss, cost, expense, or liability that is caused by the gross
negligence or willful misconduct of the Issuing Lender or any other member of
the Lender Group. Each Borrower agrees to be bound by the Underlying Issuer's
regulations and interpretations of any Underlying Letter of Credit or by
Issuing Lender's interpretations of any L/C issued by Issuing Lender to or for
such Borrower's account, even though this interpretation may be different from
such Borrower's own, and each Borrower understands and agrees that the Lender
Group shall not be liable for any error, negligence, or mistake, whether of
omission or commission, in following Borrowers' instructions or those contained
in the Letter of Credit or any modifications, amendments, or supplements
thereto. Each Borrower understands that the L/C Undertakings may require
Issuing Lender to indemnify the Underlying Issuer for certain costs or
liabilities arising out of claims by Borrowers against such Underlying Issuer.
Each Borrower hereby agrees to indemnify, save, defend, and hold the Lender
Group harmless with respect to any loss, cost, expense (including reasonable
attorneys fees), or liability incurred by any one or more members of the Lender
Group under any L/C Undertaking as a result of the Lender Group's
indemnification of any Underlying Issuer; provided, however, that no Borrower
shall be obligated hereunder to indemnify for any loss, cost, expense, or
liability that is caused by the gross negligence or willful misconduct of the
Issuing Lender or any other member of the Lender Group.
(d) Each Borrower hereby authorizes and directs any
Underlying Issuer to deliver to the Issuing Lender all instruments, documents,
and other writings and property received by such Underlying Issuer pursuant to
such Underlying Letter of Credit and to accept and rely upon the Issuing
Lender's instructions with respect to all matters arising in connection with
such Underlying Letter of Credit and the related application.
(e) Any and all charges, commissions, fees, and costs
incurred by the Issuing Lender relating to Underlying Letters of Credit shall
be Lender Group Expenses for purposes of this Agreement and immediately shall
be reimbursable by Borrowers to Agent for the account of the Issuing Lender; it
being acknowledged and agreed by each Borrower that, as of the Closing Date,
the issuance charge imposed by the prospective Underlying Issuer is $300 per
Letter of Credit (including, without limitation, any backup Letter of Credit or
replacement Letter of Credit), that such issuance charge may be changed from
time to time, that the Underlying Issuer also imposes a schedule of charges for
amendments, extensions, drawings, and renewals, and that the annual usage fee
imposed by the Underlying Issuer for each such Letter of Credit is .825% per
annum times the face amount of each Underlying Letter of Credit (prorated based
upon the number of days such Letter of Credit remains outstanding), which fee
shall be payable by Borrowers monthly in arrears.
48
(f) If by reason of (i) any change in any applicable
law, treaty, rule, or regulation or any change in the interpretation or
application thereof by any Governmental Authority, or (ii) compliance by the
Underlying Issuer or any one or more members of the Lender Group with any
direction, request, or requirement (irrespective of whether having the force of
law) of any Governmental Authority or monetary authority including, Regulation
D of the Federal Reserve Board as from time to time in effect (and any
successor thereto):
(i) any reserve, deposit, or similar
requirement is or shall be imposed or modified in respect of
any Letter of Credit issued hereunder, or
(ii) there shall be imposed on the Underlying
Issuer or the Lender Group any other condition regarding any
Underlying Letter of Credit or any Letter of Credit issued
pursuant hereto,
and the result of the foregoing is to increase, directly or indirectly, the
cost to any one or more members of the Lender Group of issuing, making,
guaranteeing, or maintaining any Letter of Credit or to reduce the amount
receivable in respect thereof by any one or more members of the Lender Group,
then, and in any such case, Agent may, at any time within a reasonable period
after the additional cost is incurred or the amount received is reduced, notify
Administrative Borrower, and Borrowers shall pay on demand such amounts as
Agent may specify to be necessary to compensate the Lender Group for such
additional cost or reduced receipt, together with interest on such amount from
the date of such demand until payment in full thereof at the rate then
applicable to Base Rate Loans hereunder. The determination by Agent of any
amount due pursuant to this Section, as set forth in a certificate setting
forth the calculation thereof in reasonable detail, shall, in the absence of
manifest or demonstrable error, be final and conclusive and binding on all of
the parties hereto.
2.13 INTENTIONALLY OMITTED.
2.14 CAPITAL REQUIREMENTS. If, after the date hereof, any Lender
determines that (i) the adoption of or change in any law, rule, regulation or
guideline regarding capital requirements for banks or bank holding companies, or
any change in the interpretation or application thereof by any Governmental
Authority charged with the administration thereof, or (ii) compliance by such
Lender or its parent bank holding company with any guideline, request or
directive of any such entity regarding capital adequacy (whether or not having
the force of law), the effect of reducing the return on such Lender's or such
holding company's capital as a consequence of such Lender's Commitments
hereunder to a level below that which such Lender or such holding company could
have achieved but for such adoption, change, or compliance (taking into
consideration such Lender's or such holding company's then existing policies
with respect to capital adequacy and assuming the full utilization of such
entity's capital) by any amount deemed by such Lender to be material, then such
Lender may notify Administrative Borrower and Agent thereof. Following receipt
of such notice, Borrowers agree to pay such Lender on demand the amount of such
reduction of return of capital as and when such reduction is determined, payable
within 90 days after presentation by such Lender of a statement in the amount
and setting forth in reasonable detail such Lender's calculation thereof and the
assumptions upon which such calculation was based (which statement shall be
deemed true and
49
correct absent manifest error). In determining such amount, such Lender may use
any reasonable averaging and attribution methods.
2.15 JOINT AND SEVERAL LIABILITY OF BORROWERS.
(a) Each of Borrowers is accepting joint and several
liability hereunder and under the other Loan Documents in consideration of the
financial accommodations to be provided by the Agent and the Lenders under this
Agreement, for the mutual benefit, directly and indirectly, of each of
Borrowers and in consideration of the undertakings of the other Borrowers to
accept joint and several liability for the Obligations.
(b) Each of Borrowers, jointly and severally, hereby
irrevocably and unconditionally accepts, not merely as a surety but also as a
co-debtor, joint and several liability with the other Borrowers, with respect
to the payment and performance of all of the Obligations (including, without
limitation, any Obligations arising under this Section 2.15), it being the
intention of the parties hereto that all the Obligations shall be the joint and
several obligations of each Person composing Borrowers without preferences or
distinction among them.
(c) If and to the extent that any of Borrowers shall
fail to make any payment with respect to any of the Obligations as and when due
or to perform any of the Obligations in accordance with the terms thereof, then
in each such event the other Persons composing Borrowers will make such payment
with respect to, or perform, such Obligation.
(d) The Obligations of each Person composing Borrowers
under the provisions of this Section 2.15 constitute the absolute and
unconditional, full recourse Obligations of each Person composing Borrowers
enforceable against each such Borrower to the full extent of its properties and
assets, irrespective of the validity, regularity or enforceability of this
Agreement or any other circumstances whatsoever.
(e) Except as otherwise expressly provided in this
Agreement, each Person composing Borrowers hereby waives notice of acceptance
of its joint and several liability, notice of any Advances or Letters of Credit
issued under or pursuant to this Agreement, notice of the occurrence of any
Default, Event of Default, or of any demand for any payment under this
Agreement, notice of any action at any time taken or omitted by Agent or
Lenders under or in respect of any of the Obligations, any requirement of
diligence or to mitigate damages and, generally, to the extent permitted by
applicable law, all demands, notices and other formalities of every kind in
connection with this Agreement (except as otherwise provided in this
Agreement). Each Person composing Borrowers hereby assents to, and waives
notice of, any extension or postponement of the time for the payment of any of
the Obligations, the acceptance of any payment of any of the Obligations, the
acceptance of any partial payment thereon, any waiver, consent or other action
or acquiescence by Agent or Lenders at any time or times in respect of any
default by any Person composing Borrowers in the performance or satisfaction of
any term, covenant, condition or provision of this Agreement, any and all other
indulgences whatsoever by Agent or Lenders in respect of any of the
Obligations, and the taking, addition, substitution or release, in whole or in
part, at any time or times, of any security for any of the Obligations or the
addition, substitution or release, in whole or in part, of any Person composing
Borrowers. Without limiting the generality of the foregoing, each of Borrowers
assents to any other action or
50
delay in acting or failure to act on the part of any Agent or Lender with
respect to the failure by any Person composing Borrowers to comply with any of
its respective Obligations, including, without limitation, any failure strictly
or diligently to assert any right or to pursue any remedy or to comply fully
with applicable laws or regulations thereunder, which might, but for the
provisions of this Section 2.15 afford grounds for terminating, discharging or
relieving any Person composing Borrowers, in whole or in part, from any of its
Obligations under this Section 2.15, it being the intention of each Person
composing Borrowers that, so long as any of the Obligations hereunder remain
unsatisfied, the Obligations of such Person composing Borrowers under this
Section 2.15 shall not be discharged except by performance and then only to the
extent of such performance. The Obligations of each Person composing Borrowers
under this Section 2.15 shall not be diminished or rendered unenforceable by
any winding up, reorganization, arrangement, liquidation, reconstruction or
similar proceeding with respect to any Person composing Borrowers or any Agent
or Lender. The joint and several liability of the Persons composing Borrowers
hereunder shall continue in full force and effect notwithstanding any
absorption, merger, amalgamation or any other change whatsoever in the name,
constitution or place of formation of any of the Persons composing Borrowers or
any Agent or Lender.
(f) Each Person composing Borrowers represents and
warrants to Agent and Lenders that such Borrower is currently informed of the
financial condition of Borrowers and of all other circumstances which a
diligent inquiry would reveal and which bear upon the risk of nonpayment of the
Obligations. Each Person composing Borrowers further represents and warrants to
Agent and Lenders that such Borrower has read and understands the terms and
conditions of the Loan Documents. Each Person composing Borrowers hereby
covenants that such Borrower will continue to keep informed of Borrowers'
financial condition, the financial condition of other guarantors, if any, and
of all other circumstances which bear upon the risk of nonpayment or
nonperformance of the Obligations.
(g) Each of the Persons composing Borrowers waives all
rights and defenses arising out of an election of remedies by the Agent or any
Lender, even though that election of remedies, such as a nonjudicial
foreclosure with respect to security for a guaranteed obligation, has destroyed
the Agent's or such Lender's rights of subrogation and reimbursement against
such Borrower under applicable law.
(h) Each of the Persons composing Borrowers waives all
rights and defenses that such Borrower may have because the Obligations are
secured by Real Property. This means, among other things:
(i) Agent and Lenders may collect from such
Borrower without first foreclosing on any Real or Personal
Property Collateral pledged by Borrowers.
(ii) If Agent or any Lender forecloses on any
Real Property Collateral pledged by Borrowers:
(A) The amount of the Obligations may
be reduced only by the price for which that
collateral is sold at the foreclosure sale, even if
the collateral is worth more than the sale price.
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(B) Agent and Lenders may collect from
such Borrower even if Agent or Lenders, by
foreclosing on the Real Property Collateral, have
destroyed any right such Borrower may have to
collect from the other Borrowers.
This is an unconditional and irrevocable waiver of any rights and defenses such
Borrower may have because the Obligations are secured by Real Property.
(i) The provisions of this Section 2.15 are made for the
benefit of the Agent, the Lenders and their respective successors and assigns,
and may be enforced by it or them from time to time against any or all of the
Persons composing Borrowers as often as occasion therefor may arise and without
requirement on the part of any such Agent, Lender, successor or assign first to
marshal any of its or their claims or to exercise any of its or their rights
against any of the other Persons composing Borrowers or to exhaust any remedies
available to it or them against any of the other Persons composing Borrowers or
to resort to any other source or means of obtaining payment of any of the
Obligations hereunder or to elect any other remedy. The provisions of this
Section 2.15 shall remain in effect until all of the Obligations shall have
been paid in full or otherwise fully satisfied. If at any time, any payment, or
any part thereof, made in respect of any of the Obligations, is rescinded or
must otherwise be restored or returned by any Agent or Lender upon the
insolvency, bankruptcy or reorganization of any of the Persons composing
Borrowers, or otherwise, the provisions of this Section 2.15 will forthwith be
reinstated in effect, as though such payment had not been made.
(j) Any claim which any Borrower may have against any
other Borrower with respect to any payments to any Agent or Lender hereunder or
under any other Loan Documents, and any claim which any Borrower may have
against any other Borrower or Subsidiary with respect to any intercompany
obligations, notes, instruments, agreements or other similar indebtedness, are
hereby expressly made subordinate and junior in right of payment, without
limitation as to any increases in the Obligations arising hereunder or
thereunder, to the prior payment in full in cash of the Obligations and, in the
event of any insolvency, bankruptcy, receivership, liquidation, reorganization
or other similar proceeding under the laws of any jurisdiction relating to any
Borrower, its debts or its assets, whether voluntary or involuntary, all such
Obligations shall be paid in full in cash before any payment or distribution of
any character, whether in cash, securities or other property, shall be made to
any other Borrower therefor.
(k) After the occurrence and during the continuance of
any Default or Event of Default, each of the Persons composing Borrowers hereby
agrees that, (i) the payment of any amounts due with respect to the
indebtedness owing by any Borrower to any other Borrower is hereby subordinated
to the prior payment in full in cash of the Obligations, (ii) it will not
enforce any of its rights of contribution or subrogation against the other
Persons composing Borrowers with respect to any liability incurred by it
hereunder or under any of the other Loan Documents, any payments made by it to
the Agent or the Lenders with respect to any of the Obligations or any
collateral security therefor until such time as all of the Obligations have
been paid in full in cash, and (iii) such Borrower will not demand, sue for or
otherwise attempt to collect any indebtedness of any other Borrower owing to
such Borrower until the Obligations shall have been paid in full in cash. If,
notwithstanding the foregoing sentence, such Borrower shall collect, enforce or
receive any amounts in respect of such indebtedness, such amounts shall be
collected,
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enforced and received by such Borrower as trustee for the Agent, and the Agent
shall apply such amounts to the Obligations in accordance with Section 2.4(b).
3. CONDITIONS; TERM OF AGREEMENT.
3.1 CONDITIONS PRECEDENT TO THE INITIAL EXTENSION OF CREDIT. The
obligation of the Lender Group (or any member thereof) to make the initial
Advance (or otherwise to extend any credit provided for hereunder), is subject
to the fulfillment, to the satisfaction of Agent and each Lender of each of the
conditions precedent set forth below:
(a) the Closing Date shall occur on or before January
22, 2002;
(b) Agent shall have received all financing statements
required by Agent, duly executed by the applicable Borrowers, and Agent shall
have received searches reflecting the filing of all such financing statements;
(c) Agent shall have received each of the following
documents, in form and substance satisfactory to Agent, duly executed, and each
such document shall be in full force and effect:
(i) the Cash Management Agreements,
(ii) the Control Agreements,
(iii) the Intellectual Property Security
Agreement,
(iv) the Disbursement Letter,
(v) the Due Diligence Letter,
(vi) the Fee Letter,
(vii) the Aircraft Mortgages,
(viii) Collateral Access Agreements for the IRB
Properties (except for the IRB Property located in Milton,
Pennsylvania) and the properties described in clauses (a)
through (c) in the definition of Excluded Properties,
(ix) the Officers' Certificate,
(x) the Pledge Agreement, together with all
certificates representing the shares of Stock or other equity
interests pledged thereunder, including Stock or LLC powers
with respect thereto endorsed in blank, and
(xi) the Pay-Off Letter, together with UCC
termination statements and other documentation evidencing the
termination by Existing Lender of its Liens in and to the
properties and assets of Borrowers.
53
(d) Agent shall have received a certificate from the
Secretary of each Borrower (i) attesting to the resolutions of such Borrower's
Board of Directors authorizing its execution, delivery, and performance of this
Agreement and the other Loan Documents to which such Borrower is a party and
authorizing specific officers of such Borrower to execute the same and (ii)
certifying the names and true signatures of the officers of such Borrower
authorized to sign each Loan Document to which such Borrower is a party;
(e) Agent shall have received copies of each Borrower's
Governing Documents, as amended, modified, or supplemented to the Closing Date,
certified by the Secretary of such Borrower;
(f) Agent shall have received a certificate of status
with respect to each Borrower, dated within 30 days of the Closing Date, such
certificate to be issued by the appropriate officer of the jurisdiction of
organization of such Borrower, which certificate shall indicate that such
Borrower is in good standing in such jurisdiction;
(g) Agent shall have received certificates of status
with respect to each Borrower, each dated within 45 days of the Closing Date,
such certificates to be issued by the appropriate officer of the jurisdictions
(other than the jurisdiction of organization of such Borrower) in which its
failure to be duly qualified or licensed would materially impair (i) such
Borrower's ability to operate in such state, (ii) such Borrower's ability to
perform its Obligations under the Loan Documents to which it is a party, or of
the Lender Group's ability to enforce the Obligations or realize upon the
Collateral, or (iii) the enforceability or priority of Agent's Liens with
respect to the Collateral as a result of an action or failure to act on the
part of the Borrower, which certificates shall indicate that such Borrower is
in good standing in such jurisdictions;
(h) Agent shall have received a certificate of
insurance, together with the endorsements thereto, as are required by Section
6.8, the form and substance of which shall be satisfactory to Agent;
(i) Agent shall have received opinions of Borrowers'
in-house and outside counsel and opinions of Borrowers' local counsel with
respect each jurisdiction in which a Mortgage is delivered pursuant to Section
3.1(r) below, each addressed to Agent, Lenders and Funds Management Bank and in
form and substance satisfactory to Agent;
(j) Agent shall have received satisfactory evidence
(including a certificate of the chief financial officer of Parent) that all tax
returns required to be filed by Borrowers have been timely filed and all taxes
upon Borrowers or their properties, assets, income, and franchises (including
Real Property taxes and payroll taxes) have been paid prior to delinquency,
except such taxes that are the subject of a Permitted Protest;
(k) Borrowers shall have the Required Availability after
giving effect to the initial extensions of credit hereunder;
(l) Agent shall have completed its respective business,
legal, and collateral due diligence, including (i) a collateral audit and
review of Borrowers' books and records and verification of Borrowers'
representations and warranties to the Lender Group, the results of
54
which shall be satisfactory to Agent, and (ii) an inspection of the locations
where Inventory is located, the results of which shall be satisfactory to
Agent;
(m) Agent shall have received completed reference checks
with respect to Borrowers' senior management, the results of which shall be
satisfactory to Agent in its sole discretion;
(n) Agent shall have received an appraisal of the Net
Liquidation Percentage applicable to Borrowers' Inventory and an appraisal of
Borrowers' Equipment, the results of which shall be satisfactory to Agent;
(o) Agent shall have received Borrowers' Closing Date
Business Plan and such Closing Date Business Plan shall be satisfactory to
Agent;
(p) Borrowers shall pay all Lender Group Expenses
incurred in connection with the transactions evidenced by this Agreement;
(q) For the parcels of Real Property located at 7800
McCloud Road, Greensboro, North Carolina and 2225 S. Holden Road, Greensboro,
North Carolina, Agent shall have received (i) an appraisal, (ii) a Mortgage,
(iii) duly executed real estate fixture filings in the form appropriate for
recordation in the respective local filing jurisdiction, (iv) an environmental
indemnity agreement with respect thereto, (v) a phase-1 environmental report,
and (vi) an ALTA lender's extended coverage title insurance policy (or marked
commitment to issue the same) issued by a title insurance company satisfactory
to Agent in an amount satisfactory to Agent assuring Agent that the Mortgage on
such Real Property is a valid and enforceable first priority mortgage Lien,
clear of all defects and encumbrances except Permitted Liens, which shall be in
form and contain endorsements satisfactory to Agent, the scope and results of
each of the foregoing shall be in form and substance satisfactory to Agent;
(r) Agent shall have received an appraisal of Borrowers'
Inventory dated not less than 90 days prior to the Closing Date;
(s) Agent shall have received copies of the Repurchase
Agreements and the Indentures, in each case in form and substance satisfactory
to Agent;
(t) Agent shall have received executed copies of each of
the Warehouse Facility Documents, including any amendments thereto (including,
without limitation, any amendment to such documents reducing or eliminating the
requirement that any Borrower hereunder maintain a $75,000,000 revolving credit
facility throughout the term of such documents), together with a certificate of
the Secretary of the Administrative Borrower certifying each such document as
being a true, correct, and complete copy thereof;
(u) Agent shall have received executed copies of each of
the Servicer Advance Documents, together with a certificate of the Secretary of
the Administrative Borrower certifying each such document as being a true,
correct, and complete copy thereof;
(v) Borrowers shall have received all licenses,
approvals or evidence of other actions required by any Governmental Authority
in connection with the execution and delivery
55
by Borrowers of this Agreement or any other Loan Document or with the
consummation of the transactions contemplated hereby and thereby; (w) Agent
shall have received Uniform Commercial Code, tax and judgment lien search
results for Borrowers, and the same shall be satisfactory to Agent;
(x) Agent shall have completed a satisfactory review of
any potential third party vendor lien issues on the Collateral;
(y) Agent shall have successfully syndicated at least
$20,000,000 of the Commitments to Lenders other than Affiliates of Agent;
(z) Agent shall have received UCC termination statements
and other documentation evidencing termination of a security interest by any
third party on the Collateral, as Agent may require;
(aa) Agent shall have received Borrowers' unaudited
financial statements for the fiscal period ended October, 2001, and November,
2001, and audited financial statements for the fiscal year ended September 30,
2001, and each of the foregoing shall be in form and substance satisfactory to
Agent;
(bb) Since September 30, 2001, there shall have been no
general disruption or general adverse development in the financial markets, or
in the market for prefabricated, manufactured or mobile homes, in each case
determined by the Agent;
(cc) Since September 30, 2001, there shall have been no
material adverse change in Borrowers' financial performance or condition, no
material adverse change in the value of the Collateral, and no material
deterioration in Borrowers' accounts payable; and
(dd) all other documents and legal matters in connection
with the transactions contemplated by this Agreement shall have been delivered,
executed, or recorded and shall be in form and substance satisfactory to Agent.
3.2 CONDITIONS SUBSEQUENT TO THE INITIAL EXTENSION OF CREDIT. The
obligation of the Lender Group (or any member thereof) to continue to make
Advances (or otherwise extend credit hereunder) is subject to the fulfillment,
on or before the date applicable thereto, of each of the conditions subsequent
set forth below (the failure by Borrowers to so perform or cause to be
performed constituting an Event of Default):
(a) within 30 days of the Closing Date, Borrowers shall
deliver to Agent certified copies of the policies of insurance, together with
the endorsements thereto, as are required by Section 6.8, the form and
substance of which shall be satisfactory to Agent and its counsel;
(b) within 60 days of the Closing Date, for each
respective parcel of Real Property set forth on Schedule R-2 designated thereon
as "Manufacturing," Agent shall have received (i) a Mortgage, (ii) an ALTA
lender's extended coverage title insurance policy (or marked commitment to
issue the same) issued by a title insurance company satisfactory to Agent
56
in an amount satisfactory to Agent assuring Agent that the Mortgage on such
Real Property is a valid and enforceable first priority mortgage Lien, clear of
all defects and encumbrances except Permitted Liens, which shall be in form and
contain endorsements satisfactory to Agent, (iii) duly executed real estate
fixture filings in the form appropriate for recordation in the respective local
filing jurisdiction, (iv) an environmental indemnity agreement with respect
thereto, (v) a phase-1 environmental report, the scope and results of which are
satisfactory to Agent, (vi) an appraisal, and (vii) an opinion of Borrowers'
local counsel addressed to Agent, the Lender Group and Funds Management Bank
for each jurisdiction in which such "Manufacturing" Real Property set forth on
Schedule R-2 is located, and each of the foregoing shall be in form and
substance satisfactory to Agent;
(c) within 60 days of the Closing Date, for each
respective parcel of Real Property set forth on Schedule R-2 designated thereon
as "Sales" or "Office," Agent shall have received (i) a Mortgage, (ii) duly
executed real estate fixture filings in the form appropriate for recordation in
the respective local filing jurisdiction, (iii) an environmental indemnity
agreement with respect thereto, and (iv) if such "Sales" center is located in a
state in which a "Manufacturing" facility described in Section 3.2(c) is
located, an opinion of Borrowers' local counsel addressed to Agent, the Lender
Group and Funds Management Bank for each such jurisdiction, and each of the
foregoing shall be in form and substance satisfactory to Agent;
(d) by the applicable Required Refinance Date, Borrowers
shall refinance (in accordance with Section 6.18 hereof), obtain an extension
of the maturity date therefor, or convert (provided no Change of Control
results therefrom) the Senior Notes and Reset Debenture; and
(e) by the applicable Required Refinance Date, Borrowers
shall refinance (in accordance with Section 6.19 hereof), or obtain an
extension of the maturity date, as applicable, for the Servicer Advance
Facility and the Warehouse Facility.
3.3 CONDITIONS PRECEDENT TO ALL EXTENSIONS OF CREDIT. The
obligation of the Lender Group (or any member thereof) to make all Advances (or
to extend any other credit hereunder) shall be subject to the following
conditions precedent:
(a) the representations and warranties contained in this
Agreement and the other Loan Documents shall be true and correct in all
material respects on and as of the date of such extension of credit, as though
made on and as of such date (except to the extent that such representations and
warranties relate solely to an earlier date, in which case such representations
and warranties shall be true and correct in all material respects as of such
earlier date);
(b) no Default or Event of Default shall have occurred
and be continuing on the date of such extension of credit, nor shall either
result from the making thereof;
(c) no injunction, writ, restraining order, or other
order of any nature prohibiting, directly or indirectly, the extending of such
credit shall have been issued and remain in force by any Governmental Authority
against any Borrower, Agent, any Lender, or any of their Affiliates;
(d) no Material Adverse Change shall have occurred;
57
(e) the additional amount that could be drawn by the
"Issuer" (as defined in the Servicer Advance Documents) as a "Transferor
Interest" (as defined in the Servicer Advance Documents) payment does not
exceed $2,000,000, provided that this clause (e) shall not apply solely in
connection with the issuance of a Letter of Credit hereunder; and
(f) the Warehouse Facility shall be drawn to within
$5,000,000 of the maximum availability thereunder, given the practical
limitations of, and potential disruptions in the commercial paper market; such
$5,000,000 amount shall be calculated at the end of the third Business Day
prior to funding such Advance hereunder, provided that this clause (f) shall
not apply solely in connection with the issuance of a Letter of Credit
hereunder.
3.4 TERM. This Agreement shall become effective upon the
execution and delivery hereof by Borrowers, Agent, Funds Management Bank, and
the Lenders and shall continue in full force and effect for a term ending on
January 21, 2007 (the "Maturity Date"). The foregoing notwithstanding, the
Lender Group, upon the election of the Required Lenders, shall have the right
to terminate its obligations under this Agreement immediately and without
notice upon the occurrence and during the continuation of an Event of Default.
3.5 EFFECT OF TERMINATION. On the date of termination of this
Agreement, all Obligations (including contingent reimbursement obligations of
Borrowers with respect to any outstanding Letters of Credit and including all
Bank Product Obligations) immediately shall become due and payable without
notice or demand (including (a) either (i) providing cash collateral to be held
by Agent for the benefit of those Lenders with a Commitment in an amount equal
to 105% of the then extant Letter of Credit Usage, or (ii) causing the original
Letters of Credit to be returned to the Issuing Lender, and (b) subject to
Section 16.20(e) hereof, providing cash collateral to be held by Agent for the
benefit of Wells Fargo or its Affiliates and Funds Management Bank with respect
to the then extant Bank Product Obligations). No termination of this Agreement,
however, shall relieve or discharge Borrowers of their duties, Obligations, or
covenants hereunder and the Agent's Liens in the Collateral shall remain in
effect until all Obligations have been fully and finally discharged and the
Lender Group's obligations to provide additional credit hereunder have been
terminated. When this Agreement has been terminated and all of the Obligations
have been fully and finally discharged and the Lender Group's obligations to
provide additional credit under the Loan Documents have been terminated
irrevocably, Agent will, at Borrowers' sole expense, execute and deliver any
UCC termination statements, lien releases, mortgage releases, re-assignments of
trademarks, discharges of security interests, and other similar discharge or
release documents (and, if applicable, in recordable form) as are reasonably
necessary to release, as of record, the Agent's Liens and all notices of
security interests and liens previously filed by Agent with respect to the
Obligations.
3.6 EARLY TERMINATION BY BORROWERS. Borrowers have the option, at
any time upon 90 days prior written notice by Administrative Borrower to Agent,
to terminate this Agreement by paying to Agent, for the benefit of the Lender
Group, in cash, the Obligations (including (a) either (i) providing cash
collateral to be held by Agent for the benefit of those Lenders with a
Commitment in an amount equal to 105% of the then extant Letter of Credit
Usage, or (ii) causing the original Letters of Credit to be returned to the
Issuing Lender), and (b) subject to Section 16.20(e) hereof, providing cash
collateral to be held by Agent for the benefit of Wells Fargo or its Affiliates
and Funds Management Bank with respect to the then extant Bank Product
58
Obligations), in full, together with the Applicable Prepayment Premium (to be
allocated based upon letter agreements between Agent and individual Lenders).
If Administrative Borrower has sent a notice of termination pursuant to the
provisions of this Section, then the Commitments shall terminate and Borrowers
shall be obligated to repay the Obligations (including (a) either (i) providing
cash collateral to be held by Agent for the benefit of those Lenders with a
Commitment in an amount equal to 105% of the then extant Letter of Credit
Usage, or (ii) causing the original Letters of Credit to be returned to the
Issuing Lender, and (b) subject to Section 16.20(e) hereof, providing cash
collateral to be held by Agent for the benefit of Wells Fargo or its Affiliates
with respect to the then extant Bank Product Obligations), in full, together
with the Applicable Prepayment Premium, on the date set forth as the date of
termination of this Agreement in such notice, provided, however, that, (x) if
no Additional Commitment has been issued hereunder within 60 days of the
Closing Date pursuant to the terms and conditions hereof and no Event of
Default has occurred hereunder within such 60 day period, and (y) Borrower has
provided Agent with written notice of its intent to terminate this Agreement on
a termination date that is prior to the first anniversary of the Closing Date,
and no Event of Default exists at the time such notice is given, then, no
Applicable Prepayment Penalty shall be due from Borrowers if Borrowers
terminate this Agreement on a termination date that is prior to the first
anniversary of the Closing Date. In the event of the termination of this
Agreement and repayment of the Obligations at any time prior to the Maturity
Date, for any other reason, including (a) termination upon the election of the
Required Lenders to terminate after the occurrence of an Event of Default, (b)
foreclosure and sale of Collateral, (c) sale of the Collateral in any
Insolvency Proceeding, or (d) restructure, reorganization or compromise of the
Obligations by the confirmation of a plan of reorganization, or any other plan
of compromise, restructure, or arrangement in any Insolvency Proceeding, then,
in view of the impracticability and extreme difficulty of ascertaining the
actual amount of damages to the Lender Group or profits lost by the Lender
Group as a result of such early termination, and by mutual agreement of the
parties as to a reasonable estimation and calculation of the lost profits or
damages of the Lender Group, Borrowers shall pay the Applicable Prepayment
Premium to Agent (to be allocated based upon letter agreements between Agent
and individual Lenders), measured as of the date of such termination; provided,
however, if at the time of such termination by the Required Lenders, no Default
exists under Section 7.20, and no Event of Default under Sections 8.1, 8.3,
8.4, 8.5, 8.6, 8.10 or 8.11 shall have occurred, the Applicable Prepayment
Premium otherwise payable hereunder shall be reduced by 50%.
59
4. CREATION OF SECURITY INTEREST.
4.1 GRANT OF SECURITY INTEREST. Each Borrower hereby grants to
Agent, for the benefit of the Lender Group and for the benefit of the Funds
Management Bank solely to secure Bank Product Obligations owed to the Funds
Management Bank, a continuing security interest in all of its right, title, and
interest in all currently existing and hereafter acquired or arising Personal
Property Collateral in order to secure prompt repayment of any and all of the
Obligations in accordance with the terms and conditions of the Loan Documents
and in order to secure prompt performance by Borrowers of each of their
covenants and duties under the Loan Documents. The Agent's Liens in and to the
Personal Property Collateral shall attach to all Personal Property Collateral
without further act on the part of Agent, any other member of the Lender Group,
Funds Management Bank, or Borrowers.
4.2 NEGOTIABLE COLLATERAL. In the event that any Collateral is
evidenced by or consists of Negotiable Collateral, certificated securities or
other instruments and if and to the extent that perfection or priority of
Agent's security interest is dependent on or enhanced by possession, the
applicable Borrower, immediately upon the request of Agent, shall endorse and
deliver physical possession of such Negotiable Collateral, certificated
securities or other instruments to Agent; provided, that endorsement and
delivery shall not be required in connection with an Installment Sales
Contract.
4.3 COLLECTION OF ACCOUNTS, GENERAL INTANGIBLES, AND NEGOTIABLE
COLLATERAL. At any time after the occurrence and during the continuation of an
Event of Default, Agent or Agent's designee may (a) notify Account Debtors that
are Dealers that the Accounts, chattel paper, or General Intangibles and any
other payment intangibles have been assigned to Agent or that Agent has a
security interest therein, or (b) collect the Accounts, chattel paper, or
General Intangibles or other payment intangibles directly and charge the
collection costs and expenses to the Loan Account. Each Borrower agrees that it
will hold in trust for the Lender Group and Funds Management Bank, as the
Lender Group's trustee, any Collections that it receives and immediately will
deliver said Collections to Agent or a Cash Management Bank in their original
form as received by the applicable Borrower.
4.4 DELIVERY OF ADDITIONAL DOCUMENTATION REQUIRED; AUTHORIZATION
TO FILE UCC FINANCING STATEMENTS. Each Borrower authorizes Agent to file,
transmit, or communicate, as applicable, UCC financing statements, in-lieu
financing statements, continuation statements and amendments in order to
perfect the Agent's Liens on the Collateral without such Borrower's signature
to the extent permitted by applicable law. Notwithstanding the foregoing, at
any time upon the request of Agent, Borrowers shall execute and deliver to
Agent, any and all financing statements, original financing statements in lieu
of continuation statements, fixture filings, security agreements, pledges,
assignments, endorsements of certificates of title, and all other documents
(the "Additional Documents") upon which any Borrower's signature may be
required and that Agent may request in its Permitted Discretion, in form and
substance satisfactory to Agent, to perfect and continue perfected or better
perfect the Agent's Liens in the Collateral (whether now owned or hereafter
arising or acquired), to create and perfect Liens in favor of Agent in any Real
Property acquired after the Closing Date, and in order to fully consummate all
of the transactions contemplated hereby and under the other Loan Documents. To
the maximum extent permitted by applicable law, each Borrower authorizes Agent
to execute any such
60
Additional Documents in the applicable Borrower's name and authorize Agent to
file such executed Additional Documents in any appropriate filing office. In
addition, on such periodic basis as Agent shall require, Borrowers shall (a)
provide Agent with a report of all new patentable, copyrightable, or
trademarkable materials acquired or generated by Borrowers during the prior
period, (b) cause all patents, copyrights, and trademarks acquired or generated
by Borrowers that are not already the subject of a registration with the
appropriate filing office (or an application therefor diligently prosecuted) to
be registered with such appropriate filing office in a manner sufficient to
impart constructive notice of Borrowers' ownership thereof, and (c) cause to be
prepared, executed, and delivered to Agent supplemental schedules to the
applicable Loan Documents to identify such patents, copyrights, and trademarks
as being subject to the security interests created thereunder. In addition,
Borrowers agree that, upon acquiring any interest in a commercial tort claim,
such Borrower shall, in writing, describe the details of such claim and assign
an interest thereto to Agent, and upon acquiring any chattel paper after the
date hereof (electronic, tangible or otherwise), such Borrower shall assign to
Agent a security interest in such chattel paper, or if applicable, deliver such
chattel paper to Agent as Collateral hereunder.
4.5 POWER OF ATTORNEY. Each Borrower hereby irrevocably makes,
constitutes, and appoints Agent (and any of Agent's officers, employees, or
agents designated by Agent) as such Borrower's true and lawful attorney, with
power to (a) if such Borrower refuses to, or fails timely to execute and
deliver any of the documents described in Section 4.4, sign the name of such
Borrower on any of the documents described in Section 4.4, (b) at any time that
an Event of Default has occurred and is continuing, sign such Borrower's name
on any invoice or bill of lading relating to the Collateral, drafts against
Account Debtors, or notices to Account Debtors, (c) send requests for
verification of Accounts, (d) endorse such Borrower's name on any Collection
item that may come into the Lender Group's possession, (e) at any time that an
Event of Default has occurred and is continuing, make, settle, and adjust all
claims under such Borrower's policies of insurance and make all determinations
and decisions with respect to such policies of insurance, and (f) at any time
that an Event of Default has occurred and is continuing, settle and adjust
disputes and claims respecting the Accounts, chattel paper, or General
Intangibles directly with Account Debtors, for amounts and upon terms that
Agent determines to be reasonable, and Agent may cause to be executed and
delivered any documents and releases that Agent determines to be necessary. The
appointment of Agent as each Borrower's attorney, and each and every one of its
rights and powers, being coupled with an interest, is irrevocable until all of
the Obligations have been fully and finally repaid and performed and the Lender
Group's obligations to extend credit hereunder are terminated.
4.6 RIGHT TO INSPECT. Agent and each Lender (through any of their
respective officers, employees, or agents) shall have the right, from time to
time hereafter to inspect the Books and to check, test, and appraise the
Collateral in order to verify Borrowers' financial condition or the amount,
quality, value, condition of, or any other matter relating to, the Collateral,
provided, any Lender may accompany Agent or its representatives during any
examination or audit, with the costs thereof reimbursed to such Lender on the
same basis as Agent. Borrowers acknowledge that Agent shall have the right to
(a) conduct updated Inventory appraisals not less than twice in each year;
provided, if at any time, the outstanding Advances hereunder (without giving
effect to any Letters of Credit) exceed $5,000,000 for more than 5 consecutive
Business Days, Agent has the right to request an Inventory appraisal if the
last such Inventory appraisal was conducted
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more than 90 days prior to such date, (b) engage Douglas Guardian, or any other
acceptable firm, to perform test counts of the Inventory for not less than 100%
of Borrowers' inventory locations during a 12 month period, with at least 5% of
Borrowers' "sales centers" tested each month, (c) require appraisals or
evaluations as deemed necessary by Agent, and (d) require audits not less than
once every 120 days, in each case at Borrowers' expense.
4.7 CONTROL AGREEMENTS. Each Borrower agrees that it will not
transfer assets out of any Securities Accounts other than as permitted under
Section 7.19 and, if to another securities intermediary, unless each of the
applicable Borrower, Agent, and the substitute securities intermediary have
entered into a Control Agreement. No arrangement contemplated hereby or by any
Control Agreement in respect of any Securities Accounts or other Investment
Property shall be modified by Borrowers without the prior written consent of
Agent. Upon the occurrence and during the continuance of a Default or Event of
Default, Agent may notify any securities intermediary to liquidate the
applicable Securities Account or any related Investment Property maintained or
held thereby and remit the proceeds thereof to the Agent's Account.
5. REPRESENTATIONS AND WARRANTIES.
In order to induce the Lender Group to enter into this Agreement, each
Borrower makes the following representations and warranties to the Lender Group
which shall be true, correct, and complete, in all material respects, as of the
date hereof, and shall be true, correct, and complete, in all material
respects, as of the Closing Date, and at and as of the date of the making of
each Advance (or other extension of credit) made thereafter, as though made on
and as of the date of such Advance (or other extension of credit) (except to
the extent that such representations and warranties relate solely to an earlier
date, in which case such representations and warranties shall be true and
correct in all material respects as of such earlier date) and such
representations and warranties shall survive the execution and delivery of this
Agreement:
5.1 NO ENCUMBRANCES. Each Borrower has good and indefeasible
title to its Collateral and the Real Property, free and clear of Liens except
for Permitted Liens and each Borrower has the right to grant the Liens in the
Collateral it purports to grant to Agent.
5.2 ELIGIBLE ACCOUNTS. The Eligible Accounts are bona fide
existing payment obligations of Account Debtors created by the sale and
delivery of Inventory or the rendition of services to such Account Debtors in
the ordinary course of Borrowers' business, owed to Borrowers without defenses,
disputes, offsets, counterclaims, or rights of return or cancellation. As to
each Account that is identified by Borrower as an Eligible Account in a
borrowing base report submitted to Agent, such Account is not excluded as
ineligible by virtue of one or more of the excluding criteria set forth in the
definition of Eligible Accounts.
5.3 ELIGIBLE INVENTORY. All Eligible Inventory is of good and
merchantable quality, free from defects. As to each item of Inventory that is
identified by Borrower as Eligible Inventory in a borrowing base report
submitted to Agent, such Inventory is not excluded as ineligible by virtue of
one or more of the excluding criteria set forth in the definition of Eligible
Inventory.
5.4 EQUIPMENT. All of the Equipment is used or held for use in
Borrowers' business and is fit for such purposes except for Equipment not in
use prior to the Closing Date.
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5.5 LOCATION OF INVENTORY AND EQUIPMENT. The Inventory and
Equipment are not stored with a bailee, warehouseman, or similar party and are
located only at the locations identified on Schedule 5.5.
5.6 INVENTORY RECORDS. Each Borrower keeps correct and accurate
records itemizing and describing the type, quality, and quantity of its
Inventory and the book value thereof.
5.7 LEGAL NAME; LOCATION OF CHIEF EXECUTIVE OFFICE; FEIN. With
respect to each Borrower as of the date hereof, such Borrower's (a) legal name
as set forth on the public records of such Borrower's jurisdiction of
organization, (b) Organizational Identification Number, (c) FEIN, (d) chief
executive office address, and (e) location of Accounts and Books, together with
any chief executive office maintained by such Borrower during the past five
years, if different than the location disclosed pursuant to subsection (d)
hereof, is indicated in Schedule 5.7. No Borrower has used any other name or
trade name during the past five years other than those disclosed on Schedule
5.7.
5.8 DUE ORGANIZATION AND QUALIFICATION; SUBSIDIARIES
(a) Each Borrower is duly organized and existing and in
good standing under the laws of the jurisdiction of its organization and
qualified to do business in any state where the failure to be so qualified
reasonably could be expected to result in a Material Adverse Change.
(b) Set forth on Schedule 5.8(b), is a complete and
accurate description of the authorized Stock of each Borrower, by class, and,
as of the Closing Date, a description of the number of shares of each such
class that are issued and outstanding. Other than as described on Schedule
5.8(b), there are no subscriptions, options, warrants, or calls relating to any
shares of any Borrower's Stock, including any right of conversion or exchange
under any outstanding security or other instrument. No Borrower is subject to
any obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire any shares of its Stock or any security convertible into or exchangeable
for any of its Stock.
(c) Set forth on Schedule 5.8(c), is a complete and
accurate list of each Borrower's direct and indirect Subsidiaries, showing: (i)
the jurisdiction of their organization; (ii) the number of shares of each class
of common and preferred Stock authorized for each of such Subsidiaries; and
(iii) the number and the percentage of the outstanding shares of each such
class owned directly or indirectly by the applicable Borrower. All of the
outstanding Stock of each such Subsidiary has been validly issued and is fully
paid and non-assessable. Borrowers have no direct or indirect ownership
interests in any Person except for the Subsidiaries disclosed on Schedule
5.8(c).
(d) Except as set forth on Schedule 5.8(d), there are no
subscriptions, options, warrants, or calls relating to any shares of any
Subsidiary of any Borrower's Stock, including any right of conversion or
exchange under any outstanding security or other instrument. No Subsidiary of
any Borrower is subject to any obligation (contingent or otherwise) to
repurchase or otherwise acquire or retire any shares of any Borrower's
Subsidiaries' Stock or any security convertible into or exchangeable for any
such Stock.
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5.9 DUE AUTHORIZATION; NO CONFLICT.
(a) As to each Borrower, the execution, delivery, and
performance by such Borrower of this Agreement and the Loan Documents to which
it is a party have been duly authorized by all necessary action on the part of
such Borrower.
(b) As to each Borrower, the execution, delivery, and
performance by such Borrower of this Agreement and the Loan Documents to which
it is a party do not and will not (i) violate any provision of federal, state,
or local law or regulation applicable to any Borrower, the Governing Documents
of any Borrower, or any order, judgment, or decree of any court or other
Governmental Authority binding on any Borrower, (ii) conflict with, result in a
breach of, or constitute (with due notice or lapse of time or both) a default
under any material contractual obligation of any Borrower, (iii) result in or
require the creation or imposition of any Lien of any nature whatsoever upon
any properties or assets of Borrower, other than Permitted Liens, or (iv)
require any approval of any Borrower's interestholders or any approval or
consent of any Person under any material contractual obligation of any
Borrower.
(c) Other than the filing of financing statements,
fixture filings, and Mortgages, the execution, delivery, and performance by
each Borrower of this Agreement and the Loan Documents to which such Borrower
is a party do not and will not require any registration with, consent, or
approval of, or notice to, or other action with or by, any Governmental
Authority or other Person.
(d) As to each Borrower, this Agreement and the other
Loan Documents to which such Borrower is a party, and all other documents
contemplated hereby and thereby, when executed and delivered by such Borrower
will be the legally valid and binding obligations of such Borrower, enforceable
against such Borrower in accordance with their respective terms, except as
enforcement may be limited by equitable principles or by bankruptcy,
insolvency, reorganization, moratorium, or similar laws relating to or limiting
creditors' rights generally.
(e) The Agent's Liens are validly created, perfected,
and first priority Liens, subject only to Permitted Liens.
5.10 LITIGATION. Other than those matters disclosed on Schedule
5.10, there are no actions, suits or proceedings pending or, to the best
knowledge of Borrowers, threatened against Borrowers or any of their
Subsidiaries, as applicable, except for (a) matters that are fully covered by
insurance (subject to customary deductibles), (b) matters typically arising
from the manufacture and wholesale sale of manufactured housing and the
manufacture and retail sale, financing and insuring of manufactured housing,
each in the ordinary course of business, which, if decided adversely to any
Borrower or its Subsidiaries would not, (i) result in claims against or
liability of Borrowers and their Subsidiaries in an aggregate amount in excess
of $4,000,000, and (ii) individually or in the aggregate result in a Material
Adverse Change, and (c) matters arising after the Closing Date that, if decided
adversely to Borrowers, or any of their Subsidiaries, as applicable, could not
reasonably be expected to result in a Material Adverse Change.
5.11 NO MATERIAL ADVERSE CHANGE. All financial statements relating
to Borrowers that have been delivered by Borrowers to the Lender Group have
been prepared in accordance
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with GAAP (except, in the case of unaudited financial statements, for the lack
of footnotes and being subject to year-end audit adjustments) and present
fairly in all material respects, Borrowers' financial condition as of the date
thereof and results of operations for the period then ended. There has not been
a Material Adverse Change with respect to Borrowers since the date of the
latest financial statements submitted to the Lender Group on or before the
Closing Date.
5.12 FRAUDULENT TRANSFER.
(a) Each Borrower is Solvent (after giving effect to all
rights of contribution, subrogation and indemnification available to such
Borrower arising pursuant to any guarantees given by, or joint and several
liability of, such Borrower).
(b) No transfer of property is being made by any
Borrower and no obligation is being incurred by any Borrower in connection with
the transactions contemplated by this Agreement or the other Loan Documents
with the intent to hinder, delay, or defraud either present or future creditors
of Borrowers.
5.13 EMPLOYEE BENEFITS. None of Borrowers, any of their
Subsidiaries, or any of their ERISA Affiliates maintains or contributes to any
Benefit Plan.
5.14 ENVIRONMENTAL CONDITION. Except as set forth on Schedule
5.14, (a) to Borrowers' knowledge, none of Borrowers' properties or assets has
ever been used by Borrowers or by previous owners or operators in the disposal
of, or to produce, store, handle, treat, release, or transport, any Hazardous
Materials, where such production, storage, handling, treatment, release or
transport was in violation, in any material respect, of applicable
Environmental Law, (b) to Borrowers' knowledge, none of Borrowers' properties
or assets has ever been designated or identified in any manner pursuant to any
environmental protection statute as a Hazardous Materials disposal site, (c)
none of Borrowers have received notice that a Lien arising under any
Environmental Law has attached to any revenues or to any Real Property owned or
operated by Borrowers, and (d) none of Borrowers have received a summons,
citation, notice, or directive from the Environmental Protection Agency or any
other federal or state governmental agency concerning any action or omission by
any Borrower resulting in the releasing or disposing of Hazardous Materials
into the environment.
5.15 BROKERAGE FEES. Borrowers have not utilized the services of
any broker or finder in connection with Borrowers' obtaining financing from the
Lender Group under this Agreement and no brokerage commission or finders fee is
payable by Borrowers in connection herewith.
5.16 INTELLECTUAL PROPERTY. Each Borrower owns, or holds licenses
in, all trademarks, trade names, copyrights, patents, patent rights, and
licenses that are necessary to the conduct of its business as currently
conducted. Attached hereto as Schedule 5.16 is a true, correct, and complete
listing of all material domestic patents, patent applications, trademarks,
trademark applications, copyrights, and copyright registrations as to which
each Borrower is the owner or is an exclusive licensee.
5.17 REAL AND PERSONAL PROPERTY. Borrowers own all Real Property
Collateral and Personal Property Collateral free and clear of all Liens and
encumbrances except for Permitted Liens.
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5.18 LEASES. Borrowers enjoy peaceful and undisturbed possession
under all leases material to the business of Borrowers and to which Borrowers
are a party or under which Borrowers are operating. All of such leases are
valid and subsisting and no material default by Borrowers exists under any of
them.
5.19 DDAS. Set forth on Schedule 5.19 are all of the DDAs of each
Borrower, including, with respect to each depository (i) the name and address
of that depository, and (ii) the account numbers of the accounts maintained
with such depository.
5.20 COMPLETE DISCLOSURE. All factual information (taken as a
whole) furnished by or on behalf of Borrowers in writing to Agent or any Lender
(including all information contained in the Schedules hereto or in the other
Loan Documents) for purposes of or in connection with this Agreement, the other
Loan Documents or any transaction contemplated herein or therein is, and all
other such factual information (taken as a whole) hereafter furnished by or on
behalf of Borrowers in writing to the Agent or any Lender will be, true and
accurate in all material respects on the date as of which such information is
dated or certified and not incomplete by omitting to state any fact necessary
to make such information (taken as a whole) not misleading in any material
respect at such time in light of the circumstances under which such information
was provided. On the Closing Date, the Closing Date Projections represent, and
as of the date on which any other Projections are delivered to Agent, such
additional Projections represent Borrowers' good faith best estimate of its
future performance for the periods covered thereby.
5.21 INDEBTEDNESS. Set forth on Schedule 5.21 is a true and
complete list of all Indebtedness of each Borrower outstanding immediately
prior to the Closing Date that is to remain outstanding after the Closing Date
and such Schedule accurately reflects the aggregate principal amount of such
Indebtedness and the principal terms thereof.
5.22 IRB PROPERTIES. Set forth on Schedule 5.22 is a true and
complete list of all of Borrowers' IRB Properties which consist of Real
Property or improvements financed with IRBs or similar instruments.
5.23 NO DEFAULT. No Borrower is in default of any payment or
performance obligation with respect to any Indenture, Reset Indenture,
Repurchase Agreement, Securitized Transaction, Warehouse Facility Document,
Servicer Advance Document, or IRB related document.
5.24 CASH ON HAND IN SPECIAL PURPOSE VEHICLES AND SECURITIZATION
ENTITIES. None of OFC, OMI, Oakwood Investment Corporation, Oakwood NSPV-I
Corporation or Oak Leaf retains cash on hand in excess of $50,000 for more than
two Business Days. No other special purpose vehicle or Securitization Entity,
substantially all the issued debt (if any) and equity interests of which are
owned entirely by any Borrower (either directly or indirectly), retains cash on
hand in excess of $50,000 for more than two Business Days.
6. AFFIRMATIVE COVENANTS.
Each Borrower covenants and agrees that, so long as any credit
hereunder shall be available and until full and final payment of the
Obligations (other than Bank Product
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Obligations) and termination of the Commitments, Borrowers shall and shall
cause each of their respective Subsidiaries to do all of the following:
6.1 ACCOUNTING SYSTEM. Maintain a system of accounting that
enables Borrowers to produce financial statements in accordance with GAAP and
maintain records pertaining to the Collateral that contain information as from
time to time reasonably may be requested by Agent. Borrowers also shall keep an
inventory reporting system that shows all additions, sales, claims, returns,
and allowances with respect to the Inventory.
6.2 COLLATERAL REPORTING. Provide Agent (and if so requested by
any Lender, with copies for such Lender) with the following documents at the
following times in form satisfactory to Agent, in each case, unless the context
clearly requires otherwise, for Parent and each Subsidiary on a consolidated
basis (excluding the Excluded Entities):
- -------------------------------------------------------------------------------
Weekly (a) a Borrowing Base;
(b) Inventory reports specifying each
Borrower's cost and the wholesale market
value of its Inventory, by category;
(c) a detailed aging, by total, of the
Accounts; and
(d) any borrowing base certificate or
similar borrowing availability calculation,
if applicable, with respect to the
Warehouse Facility and Servicer Advance
Facility.
- -------------------------------------------------------------------------------
Monthly (not later than the 20th (e) details (including the amount and
day of each month) description of Inventory) on any repurchase
day of each month) required by floor plan
lenders under the respective repurchase
contracts;
(f) a month-end detailed aging of Accounts
and an Accounts roll-forward together with
a sales journal, collection journal, and
credit register since the last such
schedule, unless requested sooner by Agent;
(g) notice of all returns, disputes, or
claims in excess of $50,000 with respect to
any Account owed by a Dealer;
(h) a detailed calculation of the Borrowing
Base (including detail regarding those
Accounts that are not Eligible Accounts and
that Inventory which is not Eligible
Inventory);
(i) a summary aging, by vendor, of
Borrowers' accounts payable and any book
overdraft;
(j) a detailed aging, of Borrowers'
Inventory, together with a mix report;
(k) a reconciliation of month-end Accounts
aging, Inventory
- -------------------------------------------------------------------------------
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- -------------------------------------------------------------------------------
perpetual, and payables aging to the
general ledger and month-end financial
statements;
(l) a calculation of Dilution for the prior
month;
(m) a report containing the status of
Borrowers' liquidation plan of the
Liquidating Real Property and the
Liquidating Personal Property, as
applicable, containing Borrowers' current
experience with such liquidation and sale
and gross margin percentages noted;
(n) a report detailing, for each day during
the preceding month, Borrowers'
availability and outstanding borrowings
under the Warehouse Facility and Servicer
Advance Facility;
(o) a report containing all lease payments
made by Borrowers' during the prior month
with respect to leased real property, such
report to contain a disclosure and
explanation of any delay with respect to
such lease payments or notices received
pursuant to such leases;
(p) a report regarding each Borrower's
accrued, but unpaid, ad valorem taxes; and
(q) a copy of the MD&A Report and Executive
Report, in each case as customarily
prepared by Parent and its Subsidiaries for
each month and supported by such supporting
documentation as shall be requested by
Agent in its reasonable discretion.
- -------------------------------------------------------------------------------
Quarterly (not later than 45 (r) a detailed list of each Borrower's
days after quarter-end) customers other than retail consumers; and
(s) results of Douglas Guardian reports for
such period.
- -------------------------------------------------------------------------------
Upon request by Agent (t) copies of invoices in connection with
the Accounts, credit memos, remittance
advices, deposit slips, shipping and
delivery documents in connection with the
Accounts and, for Inventory and Equipment
acquired by Borrowers, purchase orders and
invoices; and
(u) such other reports as to the
Collateral, or the financial condition of
Borrowers as Agent may request.
- -------------------------------------------------------------------------------
In addition, each Borrower agrees to cooperate fully with Agent to
facilitate and implement a system of electronic collateral reporting in order
to provide electronic reporting of each of the items set forth above.
6.3 FINANCIAL STATEMENTS, REPORTS, CERTIFICATES. Deliver to
Agent, with copies to each Lender:
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(a) as soon as available, but in any event within 20
days (45 days in the case of a month that is the end of one of the first 3
fiscal quarters in a fiscal year) after the end of each month during each of
Parent's fiscal years,
(i) a company prepared consolidated and
consolidating balance sheet and income statement, and
consolidated statement of cash flow, covering Parent's and
its Subsidiaries' operations during such period with a
comparison to the same period in the preceding fiscal year,
(ii) a certificate signed by the chief financial
officer of Parent to the effect that:
(A) the financial statements delivered
hereunder have been prepared in accordance with GAAP
(except for the lack of footnotes and being subject
to year-end audit adjustments) and fairly present in
all material respects the financial condition of
Parent and its Subsidiaries,
(B) the representations and warranties
of Borrowers contained in this Agreement and the
other Loan Documents are true and correct in all
material respects on and as of the date of such
certificate, as though made on and as of such date
(except to the extent that such representations and
warranties relate solely to an earlier date), and
(C) there does not exist any condition
or event that constitutes a Default or Event of
Default (or, to the extent of any non-compliance,
describing such non-compliance as to which he or she
may have knowledge and what action Borrowers have
taken, are taking, or propose to take with respect
thereto), and
(iii) for each month that is the date on which a
financial covenant in Section 7.20 is to be tested, a
Compliance Certificate demonstrating, in reasonable detail,
compliance at the end of such period with the applicable
financial covenants contained in Section 7.20, and
(b) as soon as available, but in any event within 90
days after the end of each of Parent's fiscal years,
(i) consolidated financial statements of Parent
and its Subsidiaries for each such fiscal year, audited by
independent certified public accountants that are either a
"Big Five" firm or other firm reasonably acceptable to Agent
and certified, without any qualifications, by such
accountants to have been prepared in accordance with GAAP
(such audited financial statements to include a balance
sheet, income statement, statement of cash flow, and a
comparison to the same period in the preceding fiscal year,
and, if prepared, such accountants' letter to management),
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(ii) a certificate of such accountants addressed
to Agent and the Lenders stating that such accountants do not
have knowledge of the existence of any Default or Event of
Default under Section 7.20,
(iii) a consolidating balance sheet and income
statement of Parent and its Subsidiaries for each such fiscal
year, which financial statements reconcile to the audited
financial statements provided pursuant to Section 6.3(b)(i).
(c) as soon as available, but in any event within 30
days prior to the start of each of Parent's fiscal years, copies of Borrowers'
Projections, in form and substance (including as to scope and underlying
assumptions) satisfactory to Agent in its discretion, for the forthcoming 5
years, year by year, and for the forthcoming fiscal year, month by month,
certified by the chief financial officer of Parent as being such officer's good
faith best estimate of the financial performance of Parent and its Subsidiaries
during the period covered thereby,
(d) if and when filed by any Borrower,
(i) 10-Q quarterly reports, Form 10-K annual
reports, and Form 8-K current reports,
(ii) any other filings made by any Borrower with the
SEC,
(iii) copies of Borrowers' federal income tax
returns, and any amendments thereto, filed with the Internal
Revenue Service, and
(iv) any other information that is provided by
Parent to its shareholders generally,
(e) if and when filed by any Borrower and as requested
by Agent, satisfactory evidence of payment of applicable sales and excise taxes
in each jurisdictions in which (i) any Borrower conducts business or is
required to pay any such sales or excise tax, (ii) where any Borrower's failure
to pay any such applicable sales or excise tax would result in a Lien on the
properties or assets of any Borrower, or (iii) where any Borrower's failure to
pay any such applicable excise tax reasonably could be expected to result in a
Material Adverse Change,
(f) promptly after the commencement thereof, but in any
event within 3 days after service of process with respect thereto, on any
Borrower, notice of all actions, suits or proceedings brought by or against any
Borrower before any Governmental Authority which, if determined adversely to
such Borrower, could result in a Material Adverse Change,
(g) as soon as any Borrower has knowledge of any event
or condition that (i) constitutes a Default or an Event of Default, (ii)
constitutes a Material Adverse Change, or (iii) could reasonably be expected to
result in a Material Adverse Change, notice thereof and a statement of the
curative action that Borrowers propose to take with respect thereto,
(h) as soon as any Borrower has received a material
notice delivered under any Repurchase Agreement (including, without limitation,
any notice to repurchase Inventory),
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the Indenture, the Reset Indenture, the Warehouse Facility Documents,
Securitized Transaction, the Servicer Advance Documents, or IRB, copies of such
notice, and
(i) upon the request of Agent, any other report
reasonably requested relating to the financial condition of Borrowers.
In addition to the financial statements referred to above, Borrowers
agree to deliver income statements and balance sheets prepared on both a
consolidated and consolidating basis and that no Borrower, or any Subsidiary of
a Borrower, will have a fiscal year different from that of Parent. Borrowers
agree that their independent certified public accountants are authorized to
communicate with Agent and to release to Agent whatever financial information
concerning Borrowers that Agent reasonably may request. Each Borrower waives
the right to assert a confidential relationship, if any, it may have with any
accounting firm or service bureau in connection with any information requested
by Agent pursuant to or in accordance with this Agreement, and agree that Agent
may contact directly any such accounting firm or service bureau in order to
obtain such information.
6.4 INTENTIONALLY OMITTED.
6.5 RETURN. Cause returns and allowances as between Borrowers and
their Account Debtors, to be on the same basis and in accordance with the usual
customary practices of the applicable Borrower, as they exist at the time of
the execution and delivery of this Agreement. If, at a time when no Event of
Default has occurred and is continuing, any Account Debtor returns any
Inventory to any Borrower, the applicable Borrower promptly shall determine the
reason for such return and, if the applicable Borrower accepts such return,
issue a credit memorandum (with a copy to be sent to Agent) in the appropriate
amount to such Account Debtor. If, at a time when an Event of Default has
occurred and is continuing, any Account Debtor returns any Inventory to any
Borrower, the applicable Borrower promptly shall determine the reason for such
return and, if Agent consents (which consent shall not be unreasonably
withheld), issue a credit memorandum (with a copy to be sent to Agent) in the
appropriate amount to such Account Debtor.
6.6 MAINTENANCE OF PROPERTIES. Maintain and preserve all of its
properties which are necessary or useful in the proper conduct to its business
in good working order and condition, ordinary wear and tear excepted, and
comply at all times with the provisions of all leases to which it is a party as
lessee, so as to prevent any loss or forfeiture thereof or thereunder.
6.7 TAXES. Cause all assessments and taxes, whether real,
personal, or otherwise, due or payable by, or imposed, levied, or assessed
against Borrowers or any of their assets to be paid in full, before delinquency
or before the expiration of any extension period, except to the extent that the
validity of such assessment or tax shall be the subject of a Permitted Protest.
Borrowers will make timely payment or deposit of all tax payments and
withholding taxes required of it by applicable laws, including those laws
concerning F.I.C.A., F.U.T.A., state disability, and local, state, and federal
income taxes, and will, upon request, furnish Agent with proof satisfactory to
Agent indicating that the applicable Borrower has made such payments or
deposits. Borrowers shall deliver satisfactory evidence of payment of
applicable excise taxes in each jurisdiction in which any Borrower is required
to pay any such excise tax.
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6.8 INSURANCE.
(a) At Borrowers' expense, maintain insurance respecting
its property and assets wherever located, covering loss or damage by fire,
theft, explosion, and all other hazards and risks as ordinarily are insured
against by other Persons engaged in the same or similar businesses. Borrowers
also shall maintain business interruption, public liability, and product
liability insurance, as well as insurance against larceny, embezzlement, and
criminal misappropriation. All such policies of insurance shall be in such
amounts and with such insurance companies as are reasonably satisfactory to
Agent. Borrowers shall deliver copies of all such policies to Agent with a
satisfactory lender's loss payable endorsement naming Agent as sole loss payee
or additional insured, as appropriate. Each policy of insurance or endorsement
shall contain a clause requiring the insurer to give not less than 30 days
prior written notice to Agent in the event of cancellation of the policy for
any reason whatsoever.
(b) Administrative Borrower shall give Agent prompt
notice of any loss covered by such insurance. Agent shall have the exclusive
right to adjust any losses payable (i) in absence of a Default or Event of
Default, with respect to Inventory under any such insurance policies in excess
of $1,000,000, (ii) during the existence of a Default or an Event of Default,
with respect to any Inventory under any such insurance policies, (iii) in
absence of a Default or Event of Default, with respect to Equipment and Real
Property under any such insurance policies in excess of $2,500,000, and (iv)
during the existence of a Default or an Event of Default, with respect to
Equipment and Real Property under any such insurance policies in excess of
$250,000, without any liability to Borrowers whatsoever in respect of such
adjustments. Any monies received as payment for any loss under any insurance
policy mentioned above (other than liability insurance policies) or as payment
of any award or compensation for condemnation or taking by eminent domain,
shall be paid over to Agent to be applied at the option of the Required Lenders
either to the prepayment of the Obligations or shall be disbursed to
Administrative Borrower under staged payment terms reasonably satisfactory to
the Required Lenders for application to the cost of repairs, replacements, or
restorations. Any such repairs, replacements, or restorations shall be effected
with reasonable promptness and shall be of a value at least equal to the value
of the items or property destroyed prior to such damage or destruction.
(c) Borrowers shall not take out separate insurance
concurrent in form or contributing in the event of loss with that required to
be maintained under this Section 6.8, unless Agent is included thereon as named
insured with the loss payable to Agent under a lender's loss payable
endorsement or its equivalent. Administrative Borrower immediately shall notify
Agent whenever such separate insurance is taken out, specifying the insurer
thereunder and full particulars as to the policies evidencing the same, and
copies of such policies promptly shall be provided to Agent.
6.9 LOCATION OF INVENTORY AND EQUIPMENT. Keep the Inventory and
Equipment only at the locations identified on Schedule 5.5; provided, however,
that Administrative Borrower may amend Schedule 5.5 so long as such amendment
occurs by written notice to Agent not less than 30 days prior to the date on
which the Inventory or Equipment is moved to such new location, so long as such
new location is within the continental United States, and so long as, at the
time of such written notification, the applicable Borrower provides any
financing statements or fixture filings necessary to perfect and continue
perfected the Agent's Liens on such assets and also
72
provides to Agent a Collateral Access Agreement if requested by Agent; and
provided further, that the Borrowers may keep Inventory with a value not to
exceed, in the aggregate, $2,000,000 in storage facilities or on storage lots
located within 20 miles of the Inventory and Equipment locations set forth on
Schedule 5.5.
6.10 COMPLIANCE WITH LAWS. Comply with the requirements of all
applicable laws, rules, regulations, and orders of any Governmental Authority,
including the Fair Labor Standards Act and the Americans With Disabilities Act,
other than laws, rules, regulations, and orders the non-compliance with which,
individually or in the aggregate, would not result in and reasonably could not
be expected to result in a Material Adverse Change.
6.11 LEASES. Pay when due all rents and other amounts payable
under any leases to which any Borrower is a party or by which any Borrower's
properties and assets are bound, unless such payments are the subject of a
Permitted Protest.
6.12 BROKERAGE COMMISSIONS. Pay any and all brokerage commission
or finders fees incurred in connection with or as a result of Borrowers'
obtaining financing from the Lender Group under this Agreement. Borrowers agree
and acknowledge that payment of all such brokerage commissions or finders fees
shall be the sole responsibility of Borrowers, and each Borrower agrees to
indemnify, defend, and hold Agent and the Lender Group harmless from and
against any claim of any broker or finder arising out of Borrowers' obtaining
financing from the Lender Group under this Agreement.
6.13 EXISTENCE. At all times preserve and keep in full force and
effect each Borrower's valid existence and good standing and any rights and
franchises material to Borrowers' businesses. Not less frequently than once per
calendar quarter, each Borrower shall, unless Agent otherwise consents in
writing, provide Agent a certificate of good standing from such Borrower's
state of incorporation or formation.
6.14 ENVIRONMENTAL.
(a) Keep any property either owned or operated by any
Borrower free of any Environmental Liens or post bonds or other financial
assurances sufficient to satisfy the obligations or liability evidenced by such
Environmental Liens, (b) comply, in all material respects, with Environmental
Laws and provide to Agent documentation of such compliance which Agent
reasonably requests, (c) promptly notify Agent of any release of a Hazardous
Material of any reportable quantity from or onto property owned or operated by
any Borrower and take any Remedial Actions required to abate said release or
otherwise to come into compliance with applicable Environmental Law, and (d)
promptly provide Agent with written notice within 10 days of the receipt of any
of the following: (i) notice that an Environmental Lien has been filed against
any of the real or personal property of any Borrower, (ii) commencement of any
Environmental Action or notice that an Environmental Action will be filed
against any Borrower, and (iii) notice of a violation, citation, or other
administrative order which reasonably could be expected to result in a Material
Adverse Change.
6.15 DISCLOSURE UPDATES. Promptly and in no event later than 5
Business Days after obtaining knowledge thereof, (a) notify Agent if any
written information, exhibit, or report
73
furnished to the Lender Group contained any untrue statement of a material fact
or omitted to state any material fact necessary to make the statements
contained therein not misleading in light of the circumstances in which made,
and (b) correct any defect or error that may be discovered therein or in any
Loan Document or in the execution, acknowledgement, filing, or recordation
thereof.
6.16 INSTALLMENT SALES CONTRACTS. From and after the Closing Date,
ensure that all Installment Sales Contracts transferred by OMH to OAC LLC or
entered into by OAC LLC with respect to Inventory will, at the time of the
transfer or execution, constitute a "Contract" (as defined in the Warehouse
Facility Documents) or Mortgage Loan, as applicable.
6.17 REINSURANCE. Cause Tarheel to maintain in full force and
effect catastrophic reinsurance of all insurance risks for which Tarheel shall
issue insurance policies to its insureds in no less than the amounts, with
comparable deductibles (taking into account the aggregate amount of insurance
to be reinsured and the capital levels and loss reserves of Tarheel) and issued
by the same or higher credit rated reinsurance companies as are currently
maintained by Tarheel as of the Closing Date, and to pay all premiums and
charges thereon when due and to perform and comply with all obligations to be
performed by Tarheel under such reinsurance policies.
6.18 REFINANCE OR EXTENDED MATURITY DATE FOR SENIOR NOTES AND
RESET DEBENTURE. By the applicable Required Refinance Date, Borrowers shall
refinance (in form and substance satisfactory to Agent) or obtain an extension
(to a date after the Maturity Date) of the maturity date for, any Senior Note
or Reset Debenture that matures during the term of this Agreement, in form and
substance satisfactory to Agent in its discretion.
6.19 REFINANCE OR EXTENDED MATURITY DATE FOR SERVICER ADVANCE
FACILITY AND WAREHOUSE FACILITY. By the applicable Required Refinance Date,
Borrowers shall refinance (in form and substance satisfactory to Agent) or
obtain an extension (to a date after the Maturity Date) of the maturity date
for, the Servicer Advance Facility and/or the Warehouse Facility, if the
Servicer Advance Facility or Warehouse Facility matures during the term of this
Agreement, in form and substance satisfactory to Agent in its discretion.
7. NEGATIVE COVENANTS.
Each Borrower covenants and agrees that, so long as any credit
hereunder shall be available and until full and final payment of the
Obligations (other than Bank Product Obligations) and termination of the
Commitments, Borrowers will not and will not permit any of their respective
Subsidiaries (other than the Excluded Entities) to do any of the following:
7.1 INDEBTEDNESS. Create, incur, assume, permit,
guarantee, or otherwise become or remain, directly or indirectly, liable with
respect to any Indebtedness, except:
(a) Indebtedness evidenced by this Agreement
and the other Loan Documents, together with Indebtedness owed to Underlying
Issuers with respect to Underlying Letters of Credit;
74
(b) Indebtedness under the Senior Notes, Reset
Debentures, and the IRBs described on Schedule 7.1(b);
(c) Permitted Purchase Money Indebtedness;
(d) refinancings, renewals, or extensions of
Indebtedness permitted under clauses (b), (c) and (g) of this Section 7.1 (and
continuance or renewal of any Permitted Liens associated therewith) so long as:
(i) the terms and conditions of such refinancings, renewals, or extensions do
not, in Agent's judgment, materially impair the prospects of repayment of the
Obligations by Borrowers or materially impair Borrowers' creditworthiness and
otherwise satisfactory to Agent, (ii) such refinancings, renewals, or
extensions do not result in an increase in the principal amount of, or interest
rate with respect to the Indebtedness so refinanced, renewed, or extended,
provided, that such interest rate may increase by up to 5% per annum (or such
greater percentage with the consent of Agent) if (X) Borrowers deliver to Agent
Projections demonstrating Borrowers' ability to service such Indebtedness at
the increased interest rate, together with all other Indebtedness of Borrowers
throughout the remaining term of this Agreement, and (Y) no Event of Default
exists or will be caused by such increase in interest rate, (iii) such
refinancings, renewals, or extensions do not result in a shortening of the
average weighted maturity of the Indebtedness so refinanced, renewed, or
extended, nor are they on terms or conditions, that, taken as a whole, are
materially more burdensome or restrictive to the applicable Borrower, and (iv)
if the Indebtedness that is refinanced, renewed, or extended was subordinated
in right of payment to the Obligations, then the terms and conditions of the
refinancing, renewal, or extension Indebtedness must include subordination
terms and conditions that are at least as favorable to the Lender Group as
those that were applicable to the refinanced, renewed, or extended
Indebtedness;
(e) (i) contingent obligations to repurchase
manufactured housing inventory from floor plan lenders pursuant to Repurchase
Agreements, (ii) or other guarantees of debt for the benefit of any other
Person in favor of such Person's floor plan lender, not to exceed $2,000,000 in
the aggregate at any one time outstanding;
(f) Indebtedness in connection with a
Securitization Transaction (including Parent's guaranty with respect thereto),
and in the case of any such guarantee entered into by Parent after the Closing
Date, such guaranty shall not differ in any material respect (including,
without limitation, the type of obligations guaranteed) than those guarantees
in existence on the Closing Date;
(g) Indebtedness in connection with the
Warehouse Facility and the Servicer Advance Facility;
(h) Indebtedness secured solely by a
Securitization Security, provided the proceeds of such Securitization Security
are delivered to Parent and used to repay Advances hereunder;
(i) Indebtedness comprising Permitted
Investments;
(j) unsecured Indebtedness of a Borrower to any
other Borrower;
75
(k) guarantees permitted under Section 7.6; and
(l) unsecured Indebtedness not permitted
pursuant to clauses (a)-(k) above, outstanding at any time in an aggregate
amount not to exceed $2,000,000.
7.2 LIENS. Create, incur, assume, or permit to exist, directly or
indirectly, any Lien on or with respect to any of its assets, of any kind,
whether now owned or hereafter acquired, or any income or profits therefrom,
except for Permitted Liens (including Liens that are replacements of Permitted
Liens to the extent that the original Indebtedness is refinanced, renewed, or
extended under Section 7.1(d) and so long as the replacement Liens only
encumber those assets that secured the refinanced, renewed, or extended
Indebtedness).
7.3 RESTRICTIONS ON FUNDAMENTAL CHANGES.
(a) Enter into any merger, consolidation,
reorganization, or recapitalization (other than a recapitalization in
connection with a refinance required hereunder of the Senior Notes or the Reset
Debentures), or reclassify its Stock or the Stock of any Subsidiary, except
that, upon not less than 30 days prior notice to Agent and delivery of such
documents and instruments as Agent shall request to continue the perfection and
priority of Agent's security interest, a Borrower may merge with any other
Borrower; provided that if such merger is with Parent, Parent is the surviving
entity.
(b) Liquidate, wind up, or dissolve any Borrower (or
suffer any liquidation or dissolution).
(c) Convey, sell, lease, license, assign, transfer, or
otherwise dispose of, in one transaction or a series of transactions, all or
any substantial part of their respective assets, except that a Borrower may
convey assets to any other Borrower in the ordinary course of business or, upon
30 days notice to Agent and delivery of such documents and instruments as Agent
shall request to continue the perfection and priority of Agent's security
interest.
7.4 DISPOSAL OF ASSETS. Other than Permitted Dispositions,
convey, sell, lease, license, assign, transfer, or otherwise dispose of any of
the assets of any Borrower or Subsidiary.
7.5 CHANGE NAME. Change any Borrower's name, state of
incorporation or formation, FEIN, corporate structure or identity, or add any
new fictitious name; provided, however, that a Borrower may change its name
upon at least 30 days prior written notice by Administrative Borrower to Agent
of such change and so long as, at the time of such written notification, such
Borrower provides any financing statements or fixture filings necessary to
perfect and continue perfected Agent's Liens.
7.6 GUARANTEE. Except as permitted under Section 7.1(e) and (f),
guarantee or otherwise become in any way liable with respect to the obligations
of any third Person except by endorsement of instruments or items of payment
for deposit to the account of Borrowers or which are transmitted or turned over
to Agent.
7.7 NATURE OF BUSINESS. Make any change in the principal nature
of Borrowers' business or permit OFC to own any assets (other than regular and
residual Securitization Securities and
76
funds used for the acquisition thereof) or incur or remain liable with respect
to any liabilities (other than those specifically permitted herein).
7.8 PREPAYMENTS AND AMENDMENTS.
(a) Make payments in connection with the Repurchase
Agreements, provided, Borrowers may make required payments thereunder not to
exceed $500,000 at any one time to a floor plan lender, so long as (i) no
Default or Event of Default then exists or would be caused thereby, (ii) Agent
receives prior written notice of such payment; and (iii) Borrowers have Excess
Availability of at least $15,000,000 both before and after giving effect to
such payment (as demonstrated to the satisfaction of Agent and certified by the
chief financial officer of Parent).
(b) If any Default or Event of Default then exists or
would be caused thereby, make scheduled payments of principal or interest in
connection with the Senior Notes or Reset Debentures.
(c) Prepay, redeem, defease, purchase, or otherwise
acquire any Indebtedness of any Borrower other than: (i) the Obligations in
accordance with this Agreement; (ii) in connection with a refinancing permitted
by Section 7.1 (d); and (iii) prepayments or purchases of any other
Indebtedness, if either (A) (x) no Default or Event of Default then exists or
would be caused thereby; (y) for the 30 consecutive days prior to such payment,
the average Daily Balance of all Advances outstanding hereunder is less than
$5,000,000; and (z) on the date of such payment and for the 30 consecutive days
following such date, there are no Advances outstanding hereunder, or (B) the
aggregate amount of such repayments and repurchases does not exceed $3,000,000
during any fiscal year. Payments on Indebtedness permitted by Section 7.8 (a)
or (b) above shall not violate this Section 7.8 (c).
(d) Directly or indirectly, amend, modify, alter,
increase, waive any of its material rights under, or change any of the terms or
conditions of (i) any agreement, instrument, document, indenture, or other
writing evidencing or concerning Indebtedness permitted under Sections
7.1(b),(e),(f),(g) and (h), except in connection with a refinancing permitted
by Section 7.1(d), (ii) any intercompany note delivered to Agent in connection
with any Loan Document, (iii) the Governing Documents of Parent or any of its
Subsidiaries including, without limitation, OAC LLC and OCC, in any manner
which would adversely affect the Agent or Lender Group or Borrowers' or any
Subsidiary's ability to perform its obligations under the Loan Documents or
restrict the ability of such Borrower or Subsidiary to grant Liens on its
assets or restrict or prohibit the pledge of the Stock of such Borrower or
Subsidiary, and (iv) any Borrower's credit and collection policy in connection
with sales to Dealers as in effect on the Closing Date, in each case without
obtaining written consent from Agent to such amendment or waiver.
(e) Borrowers will not and will not permit any of their
Subsidiaries to designate any Indebtedness as "Senior Notes" or "Senior
Indebtedness."
7.9 CHANGE OF CONTROL. Cause, permit, or suffer, directly or
indirectly, any Change of Control.
77
7.10 CONSIGNMENTS. Consign any Inventory or sell any Inventory on
sale or return, sale on approval, or other conditional terms of sale.
7.11 DISTRIBUTIONS. Other than distributions or declaration and
payment of dividends by a Borrower to another Borrower, make any distribution
or declare or pay any dividends (in cash or other property, other than common
Stock) on, or purchase, acquire, redeem, or retire any of any Borrower's Stock,
of any class, whether now or hereafter outstanding.
7.12 ACCOUNTING METHODS. Modify or change its method of accounting
(other than as may be required to conform to GAAP) or enter into, modify, or
terminate any agreement currently existing, or at any time hereafter entered
into with any third party accounting firm or service bureau for the preparation
or storage of Borrowers' accounting records without said accounting firm or
service bureau agreeing to provide Agent information regarding the Collateral
or Borrowers' financial condition.
7.13 INVESTMENTS. Except for Permitted Investments and obligations
of Parent under the Tarheel Support Agreement, directly or indirectly, make or
acquire any Investment, or incur any liabilities (including contingent
obligations) for or in connection with any Investment; provided, however, that
Borrower and its Subsidiaries shall not have Permitted Investments (other than
in the Cash Management Accounts) in deposit accounts or Securities Accounts in
excess of $500,000 outstanding at any one time unless the Borrower or its
Subsidiary, as applicable, and the applicable securities intermediary or bank
have entered into Control Agreements or similar arrangements governing such
Permitted Investments, as Agent shall determine in its Permitted Discretion, to
perfect (and further establish) Agent's Liens in such Permitted Investments.
7.14 TRANSACTIONS WITH AFFILIATES. Directly or indirectly enter
into or permit to exist any transaction with any Affiliate of any Borrower
except for transactions that are in the ordinary course of Borrowers' business,
upon fair and reasonable terms, that are fully disclosed to Agent, and that are
no less favorable to Borrowers than would be obtained in an arm's length
transaction with a non-Affiliate. Each Borrower specifically agrees not to
transfer any property, or make any loan or advance or contribution to any
Excluded Entity except in connection with Permitted Investments and Permitted
Dispositions.
7.15 SUSPENSION. Suspend or go out of a substantial portion of its
business.
7.16 INTENTIONALLY OMITTED.
7.17 USE OF PROCEEDS. Use the proceeds of the Advances for any
purpose other than (a) on the Closing Date, (i) to repay in full the
outstanding principal, accrued interest, and accrued fees and expenses owing to
Existing Lender (including the issuance of an L/C to Existing Lender in support
of Existing Letters of Credit), and (ii) to pay transactional fees, costs, and
expenses incurred in connection with this Agreement, the other Loan Documents,
and the transactions contemplated hereby and thereby, and (b) thereafter,
consistent with the terms and conditions hereof, for its lawful and permitted
purposes.
7.18 CHANGE IN LOCATION OF CHIEF EXECUTIVE OFFICE; INVENTORY AND
EQUIPMENT WITH BAILEES. Relocate its chief executive office to a new location
without Administrative
78
Borrower providing 30 days prior written notification thereof to Agent and so
long as, at the time of such written notification, the applicable Borrower
provides any financing statements or fixture filings necessary to perfect and
continue perfected the Agent's Liens and also provides to Agent a Collateral
Access Agreement with respect to such new location. The Inventory and Equipment
shall not at any time now or hereafter be stored with a bailee, warehouseman,
or similar party without (a) Agent's prior written consent to such storage, the
location of such storage and the specific Inventory and Equipment to be stored
with such bailee, warehouseman or similar party, and (b) a written consent to
hold or take possession of such Inventory or Equipment for Agent's benefit, an
acknowledgment of Agent's first-priority perfected security interest in
therein, waiver of such bailee, warehouseman or similar party's security
interest therein, and agreement not to hold such Equipment or Inventory on
behalf of any Person other than Agent after the date hereof or thereof, duly
executed and delivered to Agent by such bailee, warehouseman or similar party,
provided however, that the Borrowers may keep Inventory with an aggregate value
not to exceed, in the aggregate, $2,000,000 in storage facilities or on storage
lots located within 20 miles of the Inventory and Equipment locations set forth
on Schedule 5.5.
7.19 SECURITIES ACCOUNTS. Establish or maintain any Securities
Account (other than those Securities Accounts in existence prior to the Closing
Date, the only securities in which are debt instruments issued by Parent)
unless Agent shall have received a Control Agreement in respect of such
Securities Account. Borrowers agree to not transfer assets out of any
Securities Account; provided, however, that, so long as no Event of Default has
occurred and is continuing or would result therefrom, Borrowers may use such
assets (and the proceeds thereof) to the extent not prohibited by this
Agreement.
7.20 FINANCIAL COVENANTS. Fail to maintain:
(a) MINIMUM EBITDA. EBITDA, measured at the end of each
fiscal quarter, of not less than the required amount set forth in the following
table for the applicable period set forth opposite thereto;
- -------------------------------------------------------------------------------
Applicable Amount Applicable Period
- -------------------------------------------------------------------------------
for the 3 month period ending
$(2,750,000) December 31, 2001
- -------------------------------------------------------------------------------
for the six month period ending
$(6,300,000) March 31, 2002
- -------------------------------------------------------------------------------
for the nine month period ending
$6,000,000 June 30, 2002
- -------------------------------------------------------------------------------
for the fiscal year ending
$23,400,000 September 30, 2002
- -------------------------------------------------------------------------------
(b) MINIMUM TANGIBLE NET WORTH. Tangible Net Worth of at
least the required amount set forth in the following table as of the applicable
date set forth opposite thereto:
- -------------------------------------------------------------------------------
Applicable Amount Applicable Date
- -------------------------------------------------------------------------------
79
- -------------------------------------------------------------------------------
$162,800,000 December, 2001
- -------------------------------------------------------------------------------
$151,000,000 January, 2002
- -------------------------------------------------------------------------------
$143,000,000 February, 2002
- -------------------------------------------------------------------------------
$137,000,000 March, 2002
- -------------------------------------------------------------------------------
$134,500,000 April, 2002
- -------------------------------------------------------------------------------
$133,000,000 May, 2002
- -------------------------------------------------------------------------------
$134,000,000 June, 2002
- -------------------------------------------------------------------------------
$131,500,000 July, 2002
- -------------------------------------------------------------------------------
$133,000,000 August, 2002
- -------------------------------------------------------------------------------
$136,500,000 September, 2002
- -------------------------------------------------------------------------------
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(c) MAXIMUM CAPITAL EXPENDITURES. Make capital
expenditures in excess of $14,500,000 for Borrowers' fiscal year 2002.
For the periods beginning October 1, 2002 and for each October 1 thereafter,
Agent shall annually establish minimum EBITDA, Tangible Net Worth and maximum
capital expenditure covenants based on Projections delivered by Borrowers in
form and substance satisfactory to Agent. Such covenants shall be based on
Borrowers achieving 80% of EBITDA forecast by such Projections. Borrowers shall
not fail to maintain the respective minimum EBITDA, minimum Tangible Net Worth,
or maximum Capital Expenditure levels so established by Agent.
7.21 FINANCING STATEMENT AMENDMENTS, TERMINATIONS OR CORRECTIONS.
File or cause to be filed, any amendment to, or termination of, a financing
statement naming any Borrower as debtor and Agent as secured party, or any
correction statement with respect thereto, without the prior written consent of
Agent.
7.22 WAREHOUSE FACILITY, SERVICER ADVANCE FACILITY AND CONSUMER
FINANCING DURING THE EXISTENCE OF AN EVENT OF DEFAULT. During the existence of
any Event of Default, (a) sell Installment Sales Contracts pursuant to the
Warehouse Facility Documents if either (i) the "Class A Note Principal Balance"
(as defined in the Warehouse Facility Documents) equals or exceeds
$200,000,000, or (ii) OMI Note Trust 2001-A is unable to borrow funds pursuant
to the Warehouse Facility Documents because of any failure on the part of
Borrower or a Subsidiary to comply with any condition precedent to such
borrowing, (b) make any "servicer advance" or P&I Advance unless such "servicer
advance" or P&I Advance is fully funded from the proceeds of the Servicer
Advance Facility and any other credit facility available to Borrowers and
permitted hereunder and cash on hand not consisting of proceeds of Collateral,
or (c) if Agent has delivered a notice to such effect to any Borrower, extend
the payment terms for any consumer loan held by a Borrower pursuant to an
existing Installment Sales Contract or other financing arrangement.
8. EVENTS OF DEFAULT.
Any one or more of the following events shall constitute an event of
default (each, an "Event of Default") under this Agreement:
8.1 If Borrowers fail to pay when due and payable or when
declared due and payable, all or any portion of the Obligations (whether of
principal, interest (including any interest which, but for the provisions of
the Bankruptcy Code, would have accrued on such amounts), fees and charges due
the Lender Group, reimbursement of Lender Group Expenses, or other amounts
constituting Obligations, but not including any Bank Product Obligations);
provided, however, that in the case of Overadvances that are caused by the
charging of interest, fees or Lender Group Expenses to the Loan Account, such
event shall not cause an Event of Default if, within 3 Business Days of
incurring such Overadvance, Borrowers repay or otherwise eliminate such
Overadvance;
8.2 If (a) Borrowers fail to perform, keep, or observe any term,
provision, condition, covenant, or agreement contained in Sections 6.2
(Collateral Reporting), 6.3 (Financial
81
Statements, Reports, Certificates), 6.5 (Returns), 6.9 (Location of Inventory
and Equipment), or 6.10 (Compliance with Laws), and such failure continues for
a period of 3 Business Days; (b) Borrowers fail to perform, keep, or observe
any term, provision, condition, covenant, or agreement contained in Sections
6.1 (Accounting System), 6.6 (Maintenance of Properties), or 6.11 (Leases), and
such failure continues for a period of 10 Business Days; or (c) Borrowers fail
to perform, keep, or observe any other term, provision, condition, covenant, or
agreement contained in this Agreement, in any of the Loan Documents (other than
any Bank Product Agreements), or in any other present or future agreement
between any Borrower and any member of the Lender Group;
8.3 If any material portion of any Borrower's or any of its
Subsidiaries' assets is attached, seized, subjected to a writ or distress
warrant, levied upon, or comes into the possession of any third Person;
8.4 If an Insolvency Proceeding is commenced by any Borrower or
any of its Subsidiaries;
8.5 If an Insolvency Proceeding is commenced against any
Borrower, or any of its Subsidiaries, and any of the following events occur:
(a) the applicable Borrower or the Subsidiary consents to the institution of
the Insolvency Proceeding against it, (b) the petition commencing the
Insolvency Proceeding is not timely controverted, (c) the petition commencing
the Insolvency Proceeding is not dismissed within 45 calendar days of the date
of the filing thereof; provided, however, that, during the pendency of such
period, Agent (including any successor agent) and each other member of the
Lender Group shall be relieved of their obligation to extend credit hereunder,
(d) an interim trustee is appointed to take possession of all or any
substantial portion of the properties or assets of, or to operate all or any
substantial portion of the business of, any Borrower or any of its
Subsidiaries, or (e) an order for relief shall have been entered therein;
8.6 If any Borrower or any of its Subsidiaries is enjoined,
restrained, or in any way prevented by court order from continuing to conduct
all or any material part of its business affairs;
8.7 If a notice of Lien, levy, or assessment in excess of
$2,000,000 (individually or in the aggregate for all such Liens, levies or
assessments) is filed of record with respect to any Borrower's or any of its
Subsidiaries' assets by the United States, or any department, agency, or
instrumentality thereof, or by any state, county, municipal, or governmental
agency, and such Lien, levy or assessment is not the subject of a Permitted
Protest, or if any taxes or debts owing at any time hereafter to any one or
more of such entities in an aggregate amount in excess of $2,000,000 becomes a
Lien, that is not the subject of a Permitted Protest, whether choate or
otherwise, upon any Borrower's or any of its Subsidiaries' assets and the same
is not paid on the payment date thereof;
8.8 If a judgment or other claim becomes a Lien or encumbrance
upon any material portion of any Borrower's or any of its Subsidiaries'
properties or assets;
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8.9 If there is a default with respect to any Indebtedness in
excess of $10,000,000 (other than the Obligations), or a default that results
in termination of any agreement material to the business of any Borrower or
Subsidiary (unless such Borrower or Subsidiary has acceptable alternative
agreements available to it), and, in either case, such default (a) occurs at
the final maturity of the obligations thereunder, or (b) results in a right by
the other party thereto, irrespective of whether exercised, to accelerate the
maturity of the applicable Borrower's or its Subsidiaries' obligations
thereunder, to terminate such agreement, or to refuse to renew such agreement
pursuant to an automatic renewal right therein;
8.10 With respect to the Warehouse Facility and Servicer Advance
Facility, (a) any such facility is terminated (whether voluntarily,
involuntarily, or at the scheduled maturity thereof), or maturity date thereof
accelerated or amended to an earlier date; provided, however, that if such
facilities are terminated at the scheduled maturity thereof, no Borrower shall
be in Default hereunder if Borrowers shall have obtained another financing
facility to replace such Warehouse Facility or Servicer Advance Facility by the
applicable Required Refinance Date, in each case subject to terms and
conditions acceptable to Agent and the Lenders, (b) there is a material
modification or supplement to any Warehouse Facility Document or Servicer
Advance Document that Agent has not otherwise consented to, the result of which
is to materially increase the obligations of any Borrower thereunder, (c) any
termination event, amortization event, early amortization event or similar
event shall occur under such facility resulting in the acceleration of the
obligations owed pursuant to such facility, or (d) with respect to the
Warehouse Facility Documents, (i) the percentage set forth in section (i) of
the definition of Borrowing Base Percentage (as defined in the Warehouse
Facility Documents) or any corresponding section hereinafter in effect, is less
than 70%, (ii) the time period in which payment is to be made for Installment
Sales Contracts sold by OAC LLC as provided in Section 2.3 of the "Sale and
Servicing Agreement" is extended, or (iii) (A) the amount of the cash portion
of the consideration payable pursuant to the Warehouse Facility Documents to
OAC LLC for any "Contract" (as defined in the Warehouse Facility Documents) or
Mortgage Loan is reduced below the "Purchase Price," as defined in the
Warehouse Facility Documents, (B) the timing for such payment of any "Contract"
or Mortgage Loan to OAC LLC is extended, or (C) any "Contract" or Mortgage Loan
is sold or transferred by OAC LLC to Ginkgo (or any replacement entity) other
than in accordance with the terms of such Warehouse Facility Documents.
8.11 If any termination event, amortization event, early
amortization event or similar event shall occur under a Securitized Transaction
that will have a materially adverse effect on the liquidity of Borrowers.
8.12 If any Borrower or any of its Subsidiaries makes any payment
on account of Indebtedness that has been contractually subordinated in right of
payment to the payment of the Obligations, except to the extent such payment is
permitted by the terms of the subordination provisions applicable to such
Indebtedness;
8.13 If any misstatement or misrepresentation exists now or
hereafter in any warranty, representation, statement, or Record made to the
Lender Group by any Borrower, its Subsidiaries, or any officer, employee,
agent, or director of any Borrower or any of its Subsidiaries;
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8.14 If this Agreement or any other Loan Document (other than any
Bank Product Agreements) that purports to create a Lien, shall, for any reason,
fail or cease to create a valid and perfected and, except to the extent
permitted by the terms hereof or thereof, first priority Lien on or security
interest in the Collateral covered hereby or thereby;
8.15 Any provision of any Loan Document (other than any Bank
Product Agreements) shall at any time for any reason be declared to be null and
void by a court of competent jurisdiction, or the validity or enforceability
thereof shall be contested by any Borrower, or a proceeding shall be commenced
by any Borrower, or by any Governmental Authority having jurisdiction over any
Borrower, seeking to establish the invalidity or unenforceability thereof, or
any Borrower shall deny that any Borrower has any liability or obligation
purported to be created under any Loan Document (other than any Bank Product
Agreements);
8.16 If, without the consent of Agent, Borrowers make any payment
of principal or interest on the Senior Notes or Reset Debenture and at such
time, (a) Agent has not received prior notice of such payment, and (b)
Borrowers do not have Excess Availability of at least $15,000,000 both before
and after giving effect to such payment (as demonstrated to the satisfaction of
Agent and certified by the chief financial officer of Parent); or
8.17 If the net payments on guarantees for Securitization
Securities permitted by Section 7.1(f) exceed $5,000,000 in any fiscal year.
9. THE LENDER GROUP'S AND FUNDS MANAGEMENT BANK'S RIGHTS AND REMEDIES.
9.1 RIGHTS AND REMEDIES. Upon the occurrence, and during the
continuation, of an Event of Default, (x) the Required Lenders (at their
election but without notice of their election and without demand) may authorize
and instruct Agent to do any one or more of the following on behalf of the
Lender Group (and Agent acting upon the instructions of the Required Lenders,
shall do the same on behalf of the Lender Group), all of which are authorized
by Borrowers, and (y) at any time after the payment in full in cash of all
Obligations other than the Bank Product Obligations and the termination of the
Commitments, Funds Management Bank may authorize and instruct Agent to do any
one or more of the following on behalf of Funds Management Bank and Wells Fargo
and its Affiliates, all of which are authorized by Borrowers:
(a) Declare all Obligations, whether evidenced by this
Agreement, by any of the other Loan Documents, or otherwise, immediately due
and payable;
(b) Cease advancing money or extending credit to or for
the benefit of Borrowers under this Agreement, under any of the Loan Documents,
or under any other agreement between Borrowers and the Lender Group;
(c) Terminate this Agreement and any of the other Loan
Documents (other than any Bank Product Agreements unless acting pursuant to
Section 9.1(y)) as to any future liability or obligation of the Lender Group,
but without affecting any of the Agent's Liens in the Collateral and without
affecting the Obligations;
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(d) Settle or adjust disputes and claims directly with
Account Debtors for amounts and upon terms which Agent considers advisable, and
in such cases, Agent will credit the Loan Account with only the net amounts
received by Agent in payment of such disputed Accounts after deducting all
Lender Group Expenses incurred or expended in connection therewith;
(e) Cause Borrowers to hold all returned Inventory in
trust for Agent, segregate all returned Inventory from all other assets of
Borrowers or in Borrowers' possession and conspicuously label said returned
Inventory as the property of Agent;
(f) Without notice to or demand upon any Borrower, make
such payments and do such acts as Agent considers necessary or reasonable to
protect its security interests in the Collateral. Each Borrower agrees to
assemble the Personal Property Collateral if Agent so requires, and to make the
Personal Property Collateral available to Agent at a place that Agent may
designate which is reasonably convenient to both parties. Each Borrower
authorizes Agent to enter the premises where the Personal Property Collateral
is located, to take and maintain possession of the Personal Property
Collateral, or any part of it, and to pay, purchase, contest, or compromise any
Lien that in Agent's determination appears to conflict with the Agent's Liens
and to pay all expenses incurred in connection therewith and to charge
Borrowers' Loan Account therefor. With respect to any of Borrowers' owned or
leased premises, each Borrower hereby grants Agent a license to enter into
possession of such premises and to occupy the same, without charge, in order to
exercise any of the Lender Group's or Funds Management Bank's rights or
remedies provided herein, at law, in equity, or otherwise;
(g) Without notice to any Borrower (such notice being
expressly waived), and without constituting a retention of any collateral in
satisfaction of an obligation (within the meaning of the Code), set off and
apply to the Obligations any and all (i) balances and deposits of any Borrower
held by the Lender Group (including any amounts received in the Cash Management
Accounts), or (ii) Indebtedness at any time owing to or for the credit or the
account of any Borrower held by the Lender Group; provided, notice of such set
off shall be provided to such Borrower thereafter;
(h) Hold, as cash collateral, any and all balances and
deposits of any Borrower held by the Lender Group, and any amounts received in
the Cash Management Accounts (subject to the terms of the Depository Account
Agreement with respect to the Foothill Account), to secure the full and final
repayment of all of the Obligations;
(i) Ship, reclaim, recover, store, finish, maintain,
repair, prepare for sale, advertise for sale, and sell (in the manner provided
for herein) the Personal Property Collateral. Each Borrower hereby grants to
Agent, for the benefit of the Lender Group and Funds Management Bank, a license
or other right to use, without charge, such Borrower's labels, patents,
copyrights, trade secrets, trade names, trademarks, service marks, and
advertising matter, or any property of a similar nature, as it pertains to the
Personal Property Collateral, in completing production of, advertising for
sale, and selling any Personal Property Collateral and such Borrower's rights
under all licenses and all franchise agreements shall inure to the benefit of
the Lender Group and Funds Management Bank;
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(j) Sell the Personal Property Collateral at either a
public or private sale, or both, by way of one or more contracts or
transactions, for cash or on terms, in such manner and at such places
(including Borrowers' premises) as Agent determines is commercially reasonable.
It is not necessary that the Personal Property Collateral be present at any
such sale;
(k) Agent shall give notice of the disposition of the
Personal Property Collateral as follows:
(i) Agent shall give Administrative Borrower
(for the benefit of the applicable Borrower) a notice in
writing of the time and place of public sale, or, if the sale
is a private sale or some other disposition other than a
public sale is to be made of the Personal Property
Collateral, the time on or after which the private sale or
other disposition is to be made; and
(ii) The notice shall be personally delivered or
mailed, postage prepaid, to Administrative Borrower as
provided in Section 12, at least 10 days before the earliest
time of disposition set forth in the notice; no notice needs
to be given prior to the disposition of any portion of the
Personal Property Collateral that is perishable or threatens
to decline speedily in value or that is of a type customarily
sold on a recognized market;
(l) Agent, on behalf of the Lender Group may credit bid
and purchase at any public sale;
(m) Agent may seek the appointment of a receiver or
keeper to take possession of all or any portion of the Collateral or to operate
same and, to the maximum extent permitted by law, may seek the appointment of
such a receiver without the requirement of prior notice or a hearing;
(n) The Lender Group shall have all other rights and
remedies available to it at law or in equity pursuant to any other Loan
Documents; and
(o) Any deficiency that exists after disposition of the
Personal Property Collateral as provided above will be paid immediately by
Borrowers. Any excess will be returned, without interest and subject to the
rights of third Persons, by Agent to Administrative Borrower (for the benefit
of the applicable Borrower).
9.2 REMEDIES CUMULATIVE. The rights and remedies of the Lender
Group under this Agreement, the other Loan Documents, and all other agreements
shall be cumulative. The Lender Group shall have all other rights and remedies
not inconsistent herewith as provided under the Code, by law, or in equity. No
exercise by the Lender Group of one right or remedy shall be deemed an
election, and no waiver by the Lender Group of any Event of Default shall be
deemed a continuing waiver. No delay by the Lender Group shall constitute a
waiver, election, or acquiescence by it.
10. TAXES AND EXPENSES.
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If any Borrower fails to pay any monies (whether taxes, assessments,
insurance premiums, or, in the case of leased properties or assets, rents or
other amounts payable under such leases) due to third Persons, or fails to make
any deposits or furnish any required proof of payment or deposit, all as
required under the terms of this Agreement, then, Agent, in its sole discretion
and without prior notice to any Borrower, may do any or all of the following:
(a) make payment of the same or any part thereof, (b) set up such reserves in
Borrowers' Loan Account as Agent deems necessary to protect the Lender Group
from the exposure created by such failure, or (c) in the case of the failure to
comply with Section 6.8 hereof, obtain and maintain insurance policies of the
type described in Section 6.8 and take any action with respect to such policies
as Agent deems prudent. Any such amounts paid by Agent shall constitute Lender
Group Expenses and any such payments shall not constitute an agreement by the
Lender Group to make similar payments in the future or a waiver by the Lender
Group of any Event of Default under this Agreement. Agent need not inquire as
to, or contest the validity of, any such expense, tax, or Lien and the receipt
of the usual official notice for the payment thereof shall be conclusive
evidence that the same was validly due and owing.
11. WAIVERS; INDEMNIFICATION.
11.1 DEMAND; PROTEST; ETC. Each Borrower waives demand, protest,
notice of protest, notice of default or dishonor, notice of payment and
nonpayment, nonpayment at maturity, release, compromise, settlement, extension,
or renewal of documents, instruments, chattel paper, and guarantees at any time
held by the Lender Group or Funds Management Bank on which any such Borrower
may in any way be liable. Each Borrower waives any right it may have to require
Agent to pursue any third-Person for any of the Obligations.
11.2 THE LENDER GROUP'S LIABILITY FOR COLLATERAL. Each Borrower
hereby agrees that: (a) so long as the Lender Group complies with its
obligations, if any, under the Code, Agent shall not in any way or manner be
liable or responsible for: (i) the safekeeping of the Collateral, (ii) any loss
or damage thereto occurring or arising in any manner or fashion from any cause,
(iii) any diminution in the value thereof, or (iv) any act or default of any
carrier, warehouseman, bailee, forwarding agency, or other Person, and (b) all
risk of loss, damage, or destruction of the Collateral shall be borne by
Borrowers.
11.3 INDEMNIFICATION. Each Borrower shall pay, indemnify, defend,
and hold the Agent-Related Persons, the Lender-Related Persons with respect to
each Lender, Funds Management Bank (together with its Affiliates, officers,
directors, employees and agents), each Participant, and each of their
respective officers, directors, employees, agents, and attorneys-in-fact (each,
an "Indemnified Person") harmless (to the fullest extent permitted by law) from
and against any and all claims, demands, suits, actions, investigations,
proceedings, and damages, and all reasonable attorneys fees and disbursements
and other costs and expenses actually incurred in connection therewith (as and
when they are incurred and irrespective of whether suit is brought), at any
time asserted against, imposed upon, or incurred by any of them (a) in
connection with or as a result of or related to the execution, delivery,
enforcement, performance, or administration of this Agreement, any of the other
Loan Documents, or the transactions contemplated hereby or thereby, and (b)
with respect to any investigation, litigation, or proceeding related to this
Agreement, any other Loan Document, or the use of the proceeds of the credit
provided hereunder (irrespective of whether any Indemnified Person is a party
thereto),
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or any act, omission, event, or circumstance in any manner related thereto (all
the foregoing, collectively, the "Indemnified Liabilities"). The foregoing to
the contrary notwithstanding, Borrowers shall have no obligation to any
Indemnified Person under this Section 11.3 with respect to any Indemnified
Liability that a court of competent jurisdiction finally determines to have
resulted from the gross negligence or willful misconduct of such Indemnified
Person. This provision shall survive the termination of this Agreement and the
repayment of the Obligations. If any Indemnified Person makes any payment to
any other Indemnified Person with respect to an Indemnified Liability as to
which Borrowers were required to indemnify the Indemnified Person receiving
such payment, the Indemnified Person making such payment is entitled to be
indemnified and reimbursed by Borrowers with respect thereto. WITHOUT
LIMITATION, THE FOREGOING INDEMNITY SHALL APPLY TO EACH INDEMNIFIED PERSON WITH
RESPECT TO INDEMNIFIED LIABILITIES WHICH IN WHOLE OR IN PART CAUSED BY OR ARISE
OUT OF ANY NEGLIGENT ACT OR OMISSION OF SUCH INDEMNIFIED PERSON OR OF ANY OTHER
PERSON.
12. NOTICES.
Unless otherwise provided in this Agreement, all notices or demands by
Borrowers, Agent and Funds Management Bank to the other relating to this
Agreement or any other Loan Document shall be in writing and (except for
financial statements and other informational documents which may be sent by
first-class mail, postage prepaid) shall be personally delivered or sent by
registered or certified mail (postage prepaid, return receipt requested),
overnight courier, electronic mail (at such email addresses as Administrative
Borrower, Agent, or Funds Management Bank, as applicable, may designate to each
other in accordance herewith), or telefacsimile to Borrowers in care of
Administrative Borrower, Agent, or Funds Management Bank, as the case may be,
at its address set forth below:
If to Administrative
Borrower: OAKWOOD HOMES CORPORATION
7800 McCloud Road
Greensboro, North Carolina 27409
Attn: Mr. Robert Smith
Fax No. (334) 664-3224
with copies to: RAYBURN COOPER & DURHAM, P.A.
The Carillon, Suite 1200
227 West Trade Street
Charlotte, North Carolina 28202-1675
Attn: C. Richard Rayburn, Jr., Esq.
Fax No. (704) 377-1897
If to Agent: FOOTHILL CAPITAL CORPORATION
2450 Colorado Avenue
Suite 3000W
Santa Monica, California 90404
Attn: Business Finance Division Manager
Fax No. (310) 453-7413
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with copies to: FOOTHILL CAPITAL CORPORATION
400 Northpark Town Center
1000 Abernathy Boulevard
Suite 1450
Atlanta, Georgia 30328
Attn: Business Finance Division Manager
Fax No. (770) 508-1375
and copies to: PAUL, HASTINGS, JANOFSKY & WALKER LLP
Suite 2400, 600 Peachtree Street, N.E.
Atlanta, Georgia 30308-2222
Attn: Cindy J.K. Davis, Esq.
Fax No. (404) 815-2424
If to Funds Management
Bank: FIRST UNION NATIONAL BANK
301 South College Street, TW-5
Charlotte, North Carolina 28288-0737
Attn: Mr. John McGowan
Fax No. (704) 383-6249
with copies to: O'MELVENY & MYERS LLP
555 13th Street, NW
Washington, D.C. 20004
Attn: Nadia Burgard, Esq.
Fax No. (202) 383-5414
Agent, Borrowers and Funds Management Bank may change the address at
which they are to receive notices hereunder, by notice in writing in the
foregoing manner given to the other party. All notices or demands sent in
accordance with this Section 12, other than notices by Agent in connection with
enforcement rights against the Collateral under the provisions of the Code,
shall be deemed received on the earlier of the date of actual receipt or 3
Business Days after the deposit thereof in the mail. Each Borrower acknowledges
and agrees that notices sent by the Lender Group or Funds Management Bank in
connection with the exercise of enforcement rights against Collateral under the
provisions of the Code shall be deemed sent when deposited in the mail or
personally delivered, or, where permitted by law, transmitted by telefacsimile
or any other method set forth above.
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
(a) THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
(UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT
OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT
HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH
RESPECT TO ALL MATTERS ARISING HEREUNDER OR
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THEREUNDER OR RELATED HERETO OR THERETO SHALL BE DETERMINED UNDER, GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF GEORGIA.
(b) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN
CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (OTHER THAN BANK
PRODUCT AGREEMENTS) SHALL BE TRIED AND LITIGATED ONLY IN THE STATE AND FEDERAL
COURTS LOCATED IN FULTON, GEORGIA, PROVIDED, HOWEVER, THAT ANY SUIT SEEKING
ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT AGENT'S
OPTION, IN THE COURTS OF ANY JURISDICTION WHERE AGENT ELECTS TO BRING SUCH
ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. BORROWERS,
FUNDS MANAGEMENT BANK, AND THE LENDER GROUP WAIVE, TO THE EXTENT PERMITTED
UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM
NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN
ACCORDANCE WITH THIS SECTION 13(B).
TO THE EXTENT PERMITTED BY APPLICABLE LAW, BORROWERS, FUNDS MANAGEMENT
BANK, AND THE LENDER GROUP HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL
OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE LOAN
DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT
CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR
STATUTORY CLAIMS. BORROWERS, FUNDS MANAGEMENT BANK, AND THE LENDER GROUP
REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY
WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE
EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT
TO A TRIAL BY THE COURT.
14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.
14.1 ASSIGNMENTS AND PARTICIPATIONS.
(a) Any Lender may, with the written consent of Agent
(provided that no written consent of Agent shall be required in connection with
any assignment and delegation by a Lender to an Eligible Transferee), assign
and delegate to one or more assignees (each an "Assignee") all, or any part of
all, of the Obligations, the Commitments and the other rights and obligations
of such Lender hereunder and under the other Loan Documents, in a minimum
amount of $5,000,000; provided, however, that Borrowers and Agent may continue
to deal solely and directly with such Lender in connection with the interest so
assigned to an Assignee until (i) written notice of such assignment, together
with payment instructions, addresses, and related information with respect to
the Assignee, have been given to Administrative Borrower and Agent by such
Lender and the Assignee, (ii) such Lender and its Assignee have delivered to
Administrative Borrower and Agent an executed Assignment and Acceptance in form
and
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substance satisfactory to Agent, and (iii) the assignor Lender or Assignee has
paid to Agent for Agent's separate account a processing fee in the amount of
$5,000. Anything contained herein to the contrary notwithstanding, the consent
of Agent shall not be required (and payment of any fees shall not be required)
if such assignment is in connection with any merger, consolidation, sale,
transfer, or other disposition of all or any substantial portion of the
business or loan portfolio of such Lender.
(b) From and after the date that Agent notifies the
assignor Lender (with a copy to Administrative Borrower) that it has received
an executed Assignment and Acceptance and, payment of the above-referenced
processing fee, (i) the Assignee thereunder shall be a party hereto and, to the
extent that rights and obligations hereunder have been assigned to it pursuant
to such Assignment and Acceptance, shall have the rights and obligations of a
Lender under the Loan Documents, and (ii) the assignor Lender shall, to the
extent that rights and obligations hereunder and under the other Loan Documents
have been assigned by it pursuant to such Assignment and Acceptance, relinquish
its rights (except with respect to Section 11.3 hereof) and be released from
its obligations under this Agreement (and in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender's
rights and obligations under this Agreement and the other Loan Documents, such
Lender shall cease to be a party hereto and thereto), and such assignment shall
affect a novation between Borrowers and the Assignee.
(c) By executing and delivering an Assignment and
Acceptance, the assigning Lender thereunder and the Assignee thereunder confirm
to and agree with each other and the other parties hereto as follows: (i) other
than as provided in such Assignment and Acceptance, such assigning Lender makes
no representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other Loan Document furnished
pursuant hereto, (ii) such assigning Lender makes no representation or warranty
and assumes no responsibility with respect to the financial condition of
Borrowers or the performance or observance by Borrowers of any of their
obligations under this Agreement or any other Loan Document furnished pursuant
hereto, (iii) such Assignee confirms that it has received a copy of this
Agreement, together with such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance, (iv) such Assignee will, independently and without
reliance upon Agent, such assigning Lender or any other Lender, and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement, (v) such Assignee appoints and authorizes Agent to take such
actions and to exercise such powers under this Agreement as are delegated to
Agent, by the terms hereof, together with such powers as are reasonably
incidental thereto, and (vi) such Assignee agrees that it will perform all of
the obligations which by the terms of this Agreement are required to be
performed by it as a Lender.
(d) Immediately upon each Assignee's making its
processing fee payment under the Assignment and Acceptance and receipt and
acknowledgment by Agent of such fully executed Assignment and Acceptance, this
Agreement shall be deemed to be amended to the extent, but only to the extent,
necessary to reflect the addition of the Assignee and the resulting
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adjustment of the Commitments arising therefrom. The Commitment allocated to
each Assignee shall reduce such Commitments of the assigning Lender pro tanto.
(e) Any Lender may at any time, with the written consent
of Agent, sell to one or more commercial banks, financial institutions, or
other Persons not Affiliates of such Lender (a "Participant") participating
interests in the Obligations of such Lender, the Commitment of such Lender, and
the other rights and interests of such Lender (the "Originating Lender")
hereunder and under the other Loan Documents (provided that no written consent
of Agent shall be required in connection with any sale of any such
participating interests by a Lender to an Eligible Transferee); provided,
however, that (i) the Originating Lender shall remain a "Lender" for all
purposes of this Agreement and the other Loan Documents and the Participant
receiving the participating interest in the Obligations, the Commitments, and
the other rights and interests of the Originating Lender hereunder shall not
constitute a "Lender" hereunder or under the other Loan Documents and the
Originating Lender's obligations under this Agreement shall remain unchanged,
(ii) the Originating Lender shall remain solely responsible for the performance
of such obligations, (iii) Borrowers, Agent, and the Lenders shall continue to
deal solely and directly with the Originating Lender in connection with the
Originating Lender's rights and obligations under this Agreement and the other
Loan Documents, (iv) no Lender shall transfer or grant any participating
interest under which the Participant has the right to approve any amendment to,
or any consent or waiver with respect to, this Agreement or any other Loan
Document, except to the extent such amendment to, or consent or waiver with
respect to this Agreement or of any other Loan Document would (A) extend the
final maturity date of the Obligations hereunder in which such Participant is
participating, (B) reduce the interest rate applicable to the Obligations
hereunder in which such Participant is participating, (C) release all or a
material portion of the Collateral or guaranties (except to the extent
expressly provided herein or in any of the Loan Documents) supporting the
Obligations hereunder in which such Participant is participating, (D) postpone
the payment of, or reduce the amount of, the interest or fees payable to such
Participant through such Lender, or (E) change the amount or due dates of
scheduled principal repayments or prepayments or premiums; and (v) all amounts
payable by Borrowers hereunder shall be determined as if such Lender had not
sold such participation; except that, if amounts outstanding under this
Agreement are due and unpaid, or shall have been declared or shall have become
due and payable upon the occurrence of an Event of Default, each Participant
shall be deemed to have the right of set-off in respect of its participating
interest in amounts owing under this Agreement to the same extent as if the
amount of its participating interest were owing directly to it as a Lender
under this Agreement. The rights of any Participant only shall be derivative
through the Originating Lender with whom such Participant participates and no
Participant shall have any rights under this Agreement or the other Loan
Documents or any direct rights as to the other Lenders, Agent, Borrowers, the
Collections, the Collateral, or otherwise in respect of the Obligations. No
Participant shall have the right to participate directly in the making of
decisions by the Lenders among themselves. The provisions of this Section
14.1(e) are solely for the benefit of Lender Group, and none of the Borrowers
shall have any rights as a third party beneficiary of any such provisions.
(f) In connection with any such assignment or
participation or proposed assignment or participation, a Lender may disclose
all documents and information which it now or hereafter may have relating to
Borrowers or Borrowers' business.
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(g) Any other provision in this Agreement
notwithstanding, any Lender may at any time create a security interest in, or
pledge, all or any portion of its rights under and interest in this Agreement
(i) in favor of any Federal Reserve Bank in accordance with Regulation A of the
Federal Reserve Bank or U.S. Treasury Regulation 31 CFR ss.203.14, and such
Federal Reserve Bank may enforce such pledge or security interest in any manner
permitted under applicable law, or (ii) in favor of any other Person, provided
that no such pledge or security interest shall release Lender from its
obligations hereunder or substitute any such pledge or secured party as a party
to this Agreement.
14.2 SUCCESSORS. This Agreement shall bind and inure to the benefit
of the respective successors and assigns of each of the parties hereto;
provided, however, that Borrowers may not assign this Agreement or any rights or
duties hereunder without the Lenders' prior written consent and any prohibited
assignment shall be absolutely void ab initio. No consent to assignment by the
Lenders shall release any Borrower from its Obligations. A Lender may assign
this Agreement and the other Loan Documents and its rights and duties hereunder
and thereunder pursuant to Section 14.1 hereof and, except as expressly required
pursuant to Section 14.1 hereof, no consent or approval by any Borrower is
required in connection with any such assignment.
14.3 ADDITIONAL COMMITMENTS. After the Closing Date and provided no
Default or Events of Default has occurred and is continuing at such time,
Additional Commitments may be issued to Lenders or New Lenders in an aggregate
amount not to exceed $10,000,000. Persons not then Lenders may be included as
New Lenders having Additional Commitments with the written approval of the
Agent, in its sole discretion. Prior to the effectiveness of any Additional
Commitments, Administrative Borrower shall pay to Agent, for its own account or
the account of the New Lender, as may be determined by Agent, such arrangement
and upfront fees as may be set forth in a Fee Letter in connection with the
issuance of the Additional Commitment. Each Lender or New Lender issuing an
Additional Commitment shall execute and deliver to Agent a Lender Assumption
Agreement prior to the effectiveness of such Additional Commitment. Funds
advanced under any Additional Commitments shall for all purposes constitute
Advances and be Obligations hereunder and under the Loan Documents.
15. AMENDMENTS; WAIVERS.
15.1 AMENDMENTS AND WAIVERS. Subject to the provisions of Section
16.20, no amendment or waiver of any provision of this Agreement or any other
Loan Document (other than Bank Product Agreements which may be amended between
Borrowers and Funds Management Bank), and no consent with respect to any
departure by Borrowers therefrom, shall be effective unless the same shall be in
writing and signed by the Required Lenders (or by Agent at the written request
of the Required Lenders) and Administrative Borrower (on behalf of all
Borrowers) and then any such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given; provided,
however, that no such waiver, amendment, or consent shall, unless in writing and
signed by all of the Lenders affected thereby and Administrative Borrower (on
behalf of all Borrowers) and acknowledged by Agent, do any of the following:
(a) increase or extend any Commitment of any Lender,
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(b) postpone or delay any date fixed by this Agreement or
any other Loan Document for any payment of principal, interest, fees, or other
amounts due hereunder or under any other Loan Document,
(c) reduce the principal of, or the rate of interest on,
any loan or other extension of credit hereunder, or reduce any fees or other
amounts payable hereunder or under any other Loan Document,
(d) change the percentage of the Commitments that is
required to take any action hereunder,
(e) amend this Section or any provision of the Agreement
providing for consent or other action by all Lenders,
(f) release Collateral other than as permitted by Section
16.12,
(g) change the definition of "Required Lenders",
(h) contractually subordinate any of the Agent's Liens,
(i) release any Borrower from any obligation for the
payment of money,
(j) change the definition of Borrowing Base, the
definitions of Eligible Accounts, Eligible Inventory, Maximum Revolver Amount,
Additional Commitment, or change Section 2.1(b), or
(k) amend any of the provisions of Section 16.
and, provided further, however, that no amendment, waiver or consent shall,
unless in writing and signed by Agent, Issuing Lender, or Swing Lender, affect
the rights or duties of Agent, Issuing Lender, or Swing Lender, as applicable,
under this Agreement or any other Loan Document. The foregoing notwithstanding,
any amendment, modification, waiver, consent, termination, or release of, or
with respect to, any provision of this Agreement or any other Loan Document that
relates only to the relationship of the Lender Group among themselves, and that
does not affect the rights or obligations of Borrowers, shall not require
consent by or the agreement of Borrowers.
15.2 REPLACEMENT OF HOLDOUT LENDER. If any action to be taken by
the Lender Group or Agent hereunder requires the unanimous consent,
authorization, or agreement of all Lenders, and a Lender ("Holdout Lender")
fails to give its consent, authorization, or agreement, then Agent, upon at
least 5 Business Days prior irrevocable written notice to the Holdout Lender,
may permanently replace the Holdout Lender with one or more substitute Lenders
(each, a "Replacement Lender"), and the Holdout Lender shall have no right to
refuse to be replaced hereunder, provided, each Lender that is a Holdout Lender
is so replaced. Such notice to replace the Holdout Lender shall specify an
effective date for such replacement, which date shall not be later than 15
Business Days after the date such notice is given.
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Prior to the effective date of such replacement, the Holdout
Lender and each Replacement Lender shall execute and deliver an Assignment and
Acceptance Agreement, subject only to the Holdout Lender being repaid its share
of the outstanding Obligations (including an assumption of its Pro Rata Share of
the Risk Participation Liability) without any premium or penalty of any kind
whatsoever. If the Holdout Lender shall refuse or fail to execute and deliver
any such Assignment and Acceptance Agreement prior to the effective date of such
replacement, the Holdout Lender shall be deemed to have executed and delivered
such Assignment and Acceptance Agreement. The replacement of any Holdout Lender
shall be made in accordance with the terms of Section 14.1. Until such time as
the Replacement Lenders shall have acquired all of the Obligations, the
Commitments, and the other rights and obligations of the Holdout Lender
hereunder and under the other Loan Documents, the Holdout Lender shall remain
obligated to make the Holdout Lender's Pro Rata Share of Advances and to
purchase a participation in each Letter of Credit, in an amount equal to its Pro
Rata Share of the Risk Participation Liability of such Letter of Credit.
15.3 NO WAIVERS; CUMULATIVE REMEDIES. No failure by Agent or any
Lender to exercise any right, remedy, or option under this Agreement or, any
other Loan Document, or delay by Agent or any Lender in exercising the same,
will operate as a waiver thereof. No waiver by Agent or any Lender will be
effective unless it is in writing, and then only to the extent specifically
stated. No waiver by Agent or any Lender on any occasion shall affect or
diminish Agent's and each Lender's rights thereafter to require strict
performance by Borrowers of any provision of this Agreement. Agent's and each
Lender's rights under this Agreement and the other Loan Documents will be
cumulative and not exclusive of any other right or remedy that Agent or any
Lender may have.
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16. AGENT; THE LENDER GROUP; THE FUNDS MANAGEMENT BANK.
16.1 APPOINTMENT AND AUTHORIZATION OF AGENT.
(a) AGENT. Each Lender hereby designates and appoints
Foothill as its representative under this Agreement and the other Loan Documents
and each Lender hereby irrevocably authorizes Agent to take such action on its
behalf under the provisions of this Agreement and each other Loan Document and
to exercise such powers and perform such duties as are expressly delegated to
Agent by the terms of this Agreement or any other Loan Document, together with
such powers as are reasonably incidental thereto. Funds Management Bank hereby
designates and appoints Foothill as its representative for purposes of Sections
2.4(b), 4, and 9, of this Agreement, and irrevocably (subject to Section 16.9)
authorizes Agent to take such action on its behalf under the provisions of such
sections. Agent agrees to act as such on the express conditions contained in
this Section 16. The provisions of this Section 16 are solely for the benefit of
Agent, the Lenders, and Funds Management Bank, and Borrowers shall have no
rights as a third party beneficiary of any of the provisions contained herein,
except to the extent expressly provided in Section 16.20. Any provision to the
contrary contained elsewhere in this Agreement or in any other Loan Document
notwithstanding, Agent shall not have any duties or responsibilities, except
those expressly set forth herein, nor shall Agent have or be deemed to have any
fiduciary relationship with any Lender or Funds Management Bank, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities shall
be read into this Agreement or any other Loan Document or otherwise exist
against Agent; it being expressly understood and agreed that the use of the word
"Agent" is for convenience only, that Foothill is merely the representative of
the Lenders, and only has the contractual duties set forth herein. Except as
expressly otherwise provided in this Agreement, Agent shall have and may use its
sole discretion with respect to exercising or refraining from exercising any
discretionary rights or taking or refraining from taking any actions that Agent
expressly is entitled to take or assert under or pursuant to this Agreement and
the other Loan Documents. Without limiting the generality of the foregoing, or
of any other provision of the Loan Documents that provides rights or powers to
Agent, Lenders and Funds Management Bank agree that Agent shall have the right
to exercise the following powers as long as this Agreement remains in effect:
(a) maintain, in accordance with its customary business practices, ledgers and
records reflecting the status of the Obligations, the Collateral, the
Collections, and related matters, (b) execute or file any and all financing or
similar statements or notices, amendments, renewals, supplements, documents,
instruments, proofs of claim, notices and other written agreements with respect
to the Loan Documents, (c) make Advances, for itself or on behalf of Lenders as
provided in the Loan Documents, (d) exclusively receive, apply, and distribute
the Collections as provided in the Loan Documents, (e) open and maintain such
bank accounts and cash management accounts as Agent deems necessary and
appropriate in accordance with the Loan Documents for the foregoing purposes
with respect to the Collateral and the Collections, (f) perform, exercise, and
enforce any and all other rights and remedies of the Lender Group with respect
to Borrowers, the Obligations, the Collateral, the Collections, or otherwise
related to any of same as provided in the Loan Documents, and (g) incur and pay
such Lender Group Expenses as Agent may deem necessary or appropriate for the
performance and fulfillment of its functions and powers pursuant to the Loan
Documents.
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16.2 DELEGATION OF DUTIES. Agent may execute any of its duties
under this Agreement or any other Loan Document by or through agents, employees
or attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects as
long as such selection was made without gross negligence or willful misconduct.
16.3 LIABILITY OF AGENT. None of the Agent-Related Persons shall
(i) be liable for any action taken or omitted to be taken by any of them under
or in connection with this Agreement or any other Loan Document or the
transactions contemplated hereby (except for its own gross negligence or willful
misconduct), or (ii) be responsible in any manner to any of the Lenders or Funds
Management Bank for any recital, statement, representation or warranty made by
any Borrower or any Subsidiary or Affiliate of any Borrower, or any officer or
director thereof, contained in this Agreement or in any other Loan Document, or
in any certificate, report, statement or other document referred to or provided
for in, or received by Agent under or in connection with, this Agreement or any
other Loan Document, or the validity, effectiveness, genuineness, enforceability
or sufficiency of this Agreement or any other Loan Document, or for any failure
of any Borrower or any other party to any Loan Document to perform its
obligations hereunder or thereunder. No Agent-Related Person shall be under any
obligation to any Lender or Funds Management Bank to ascertain or to inquire as
to the observance or performance of any of the agreements contained in, or
conditions of, this Agreement or any other Loan Document, or to inspect the
Books or properties of Borrowers or the books or records or properties of any of
Borrowers' Subsidiaries or Affiliates.
16.4 RELIANCE BY AGENT. Agent shall be entitled to rely, and shall
be fully protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone message,
statement or other document or conversation believed by it to be genuine and
correct and to have been signed, sent, or made by the proper Person or Persons,
and upon advice and statements of legal counsel (including counsel to Borrowers
or counsel to any Lender), independent accountants and other experts selected by
Agent. Agent shall be fully justified in failing or refusing to take any action
under this Agreement or any other Loan Document unless Agent shall first receive
such advice or concurrence of the Lenders and/or Funds Management Bank as it
deems appropriate and until such instructions are received, Agent shall act, or
refrain from acting, as it deems advisable. If Agent so requests, it shall first
be indemnified to its reasonable satisfaction by Lenders and/or Funds Management
Bank against any and all liability and expense that may be incurred by it by
reason of taking or continuing to take any such action. Agent shall in all cases
be fully protected in acting, or in refraining from acting, under this Agreement
or any other Loan Document in accordance with a request or consent of the
Lenders (and the consent of Funds Management Bank to the extent such consent is
required by Section 16.20) and such request and any action taken or failure to
act pursuant thereto shall be binding upon all of the Lenders and Funds
Management Bank.
16.5 NOTICE OF DEFAULT OR EVENT OF DEFAULT. Agent shall not be
deemed to have knowledge or notice of the occurrence of any Default or Event of
Default, except with respect to defaults in the payment of principal, interest,
fees, and expenses required to be paid to Agent for the account of the Lenders,
except with respect to Events of Default of which Agent has actual knowledge,
unless Agent shall have received written notice from a Lender or Administrative
Borrower referring to this Agreement, describing such Default or Event of
Default, and stating
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that such notice is a "notice of default." Agent promptly will notify the
Lenders of its receipt of any such notice or of any Event of Default of which
Agent has actual knowledge. If any Lender obtains actual knowledge of any Event
of Default, such Lender promptly shall notify the other Lenders and Agent of
such Event of Default. Each Lender shall be solely responsible for giving any
notices to its Participants, if any. Subject to Section 16.4, Agent shall take
such action with respect to such Default or Event of Default as may be requested
by the Required Lenders in accordance with Section 9; provided, however, that
unless and until Agent has received any such request, Agent may (but shall not
be obligated to) take such action, or refrain from taking such action, with
respect to such Default or Event of Default as it shall deem advisable.
16.6 CREDIT DECISION. Each Lender acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that no
act by Agent hereinafter taken, including any review of the affairs of Borrowers
and their Subsidiaries or Affiliates, shall be deemed to constitute any
representation or warranty by any Agent-Related Person to any Lender. Each
Lender and the Funds Management Bank represents to Agent that it has,
independently and without reliance upon any Agent-Related Person and based on
such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, prospects, operations,
property, financial and other condition and creditworthiness of Borrowers and
any other Person (other than the Lender Group) party to a Loan Document, and all
applicable bank regulatory laws relating to the transactions contemplated
hereby, and made its own decision to enter into this Agreement and to extend
credit to, or otherwise enter into agreements with, Borrowers. Each Lender and
the Funds Management Bank also represents that it will, independently and
without reliance upon any Agent-Related Person and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Agreement and the other Loan Documents, and to make such investigations as
it deems necessary to inform itself as to the business, prospects, operations,
property, financial and other condition and creditworthiness of Borrowers and
any other Person (other than the Lender Group) party to a Loan Document. Except
for notices, reports, and other documents expressly herein required to be
furnished to the Lenders or Funds Management Bank by Agent, Agent shall not have
any duty or responsibility to provide any Lender or the Funds Management Bank
with any credit or other information concerning the business, prospects,
operations, property, financial and other condition or creditworthiness of
Borrowers and any other Person party to a Loan Document that may come into the
possession of any of the Agent-Related Persons.
16.7 COSTS AND EXPENSES; INDEMNIFICATION. Agent may incur and pay
Lender Group Expenses to the extent Agent reasonably deems necessary or
appropriate for the performance and fulfillment of its functions, powers, and
obligations pursuant to the Loan Documents, including court costs, reasonable
attorneys fees and expenses, costs of collection by outside collection agencies
and auctioneer fees and costs of security guards or insurance premiums paid to
maintain the Collateral, whether or not Borrowers are obligated to reimburse
Agent or Lenders for such expenses pursuant to the Loan Agreement or otherwise.
Agent is authorized and directed to deduct and retain sufficient amounts from
Collections received by Agent to reimburse Agent for such out-of-pocket costs
and expenses prior to the distribution of any amounts to Lenders or any other
Person. In the event Agent is not reimbursed for such costs and expenses from
Collections received by Agent, each Lender hereby agrees that it is and shall be
obligated to pay to or reimburse Agent for the amount of such Lender's Pro Rata
Share thereof. Whether or not the
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transactions contemplated hereby are consummated, the Lenders shall indemnify
upon demand the Agent-Related Persons (to the extent not reimbursed by or on
behalf of Borrowers and without limiting the obligation of Borrowers to do so),
according to their Pro Rata Shares, from and against any and all Indemnified
Liabilities; provided, however, that no Lender shall be liable for the payment
to any Agent-Related Person of any portion of such Indemnified Liabilities
resulting solely from such Person's gross negligence or willful misconduct nor
shall any Lender be liable for the obligations of any Defaulting Lender in
failing to make an Advance or other extension of credit hereunder. Without
limitation of the foregoing, each Lender shall reimburse Agent upon demand for
such Lender's ratable share of any costs or out-of-pocket expenses (including
attorneys fees and expenses) incurred by Agent in connection with the
preparation, execution, delivery, administration, modification, amendment, or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement,
any other Loan Document, or any document contemplated by or referred to herein,
to the extent that Agent is not reimbursed for such expenses by or on behalf of
Borrowers. The undertaking in this Section shall survive the payment of all
Obligations hereunder and the resignation or replacement of Agent.
16.8 AGENT IN INDIVIDUAL CAPACITY. Foothill and its Affiliates may
make loans to, issue letters of credit for the account of, accept deposits from,
acquire equity interests in, and generally engage in any kind of banking,
lending, trust, financial advisory, underwriting, or other business with
Borrowers and their Subsidiaries and Affiliates and any other Person (other than
the Lender Group) party to any Loan Documents as though Foothill were not Agent
hereunder, and, in each case, without notice to or consent of the other members
of the Lender Group. The other members of the Lender Group acknowledge that,
pursuant to such activities, Foothill or its Affiliates may receive information
regarding Borrowers or their Affiliates and any other Person (other than the
Lender Group) party to any Loan Documents that is subject to confidentiality
obligations in favor of Borrowers or such other Person and that prohibit the
disclosure of such information to the Lenders, and the Lenders acknowledge that,
in such circumstances (and in the absence of a waiver of such confidentiality
obligations, which waiver Agent will use its reasonable best efforts to obtain),
Agent shall not be under any obligation to provide such information to them. The
terms "Lender" and "Lenders" include Foothill in its individual capacity.
16.9 SUCCESSOR AGENT. Subject to the last sentence of this Section
16.9, Agent may resign as Agent upon 45 days notice to the Lenders. If Agent
resigns under this Agreement, the Required Lenders shall appoint a successor
Agent for the Lenders. If no successor Agent is appointed prior to the effective
date of the resignation of Agent, Agent may appoint, after consulting with the
Lenders, a successor Agent. If Agent has materially breached or failed to
perform any material provision of this Agreement or of applicable law, the
Required Lenders may agree in writing to remove and replace Agent with a
successor Agent from among the Lenders. In any such event, upon the acceptance
of its appointment as successor Agent hereunder, such successor Agent shall
succeed to all the rights, powers, and duties of the retiring Agent and the term
"Agent" shall mean such successor Agent and the retiring Agent's appointment,
powers, and duties as Agent shall be terminated. After any retiring Agent's
resignation hereunder as Agent, the provisions of this Section 16 shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was
Agent under this Agreement. If no successor Agent has accepted appointment as
Agent by the date which is 45 days following a
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retiring Agent's notice of resignation, the retiring Agent's resignation shall
nevertheless thereupon become effective and the Lenders shall perform all of the
duties of Agent hereunder until such time, if any, as the Lenders appoint a
successor Agent as provided for above. Upon termination of the Commitments and
payment in full of all Obligations hereunder other than Bank Product
Obligations, Agent may give 10 days prior written notice of its intent to resign
as Agent hereunder to the Lenders and Funds Management Bank, and the Lenders and
Funds Management Bank agree to appoint FUNB as Agent hereunder and FUNB hereby
agrees to accept such appointment as successor Agent hereunder; provided,
however, that at any time thereafter, FUNB may resign as Agent upon prior notice
only to Administrative Borrower.
16.10 LENDER IN INDIVIDUAL CAPACITY. Any Lender and its respective
Affiliates may make loans to, issue letters of credit for the account of, accept
deposits from, acquire equity interests in and generally engage in any kind of
banking, trust, financial advisory, underwriting or other business with
Borrowers and their Subsidiaries and Affiliates and any other Person (other than
the Lender Group) party to any Loan Documents as though such Lender were not a
Lender hereunder without notice to or consent of the other members of the Lender
Group. The other members of the Lender Group acknowledge that, pursuant to such
activities, such Lender and its respective Affiliates may receive information
regarding Borrowers or their Affiliates and any other Person (other than the
Lender Group) party to any Loan Documents that is subject to confidentiality
obligations in favor of Borrowers or such other Person and that prohibit the
disclosure of such information to the Lenders, and the Lenders acknowledge that,
in such circumstances (and in the absence of a waiver of such confidentiality
obligations, which waiver such Lender will use its reasonable best efforts to
obtain), such Lender not shall be under any obligation to provide such
information to them. With respect to the Swing Loans and Agent Advances, Swing
Lender shall have the same rights and powers under this Agreement as any other
Lender and may exercise the same as though it were not the sub-agent of the
Agent.
16.11 WITHHOLDING TAXES.
(a) If any Lender is a "foreign corporation, partnership
or trust" within the meaning of the IRC and such Lender claims exemption from,
or a reduction of, U.S. withholding tax under Sections 1441 or 1442 of the IRC,
such Lender agrees with and in favor of Agent and Borrowers, to deliver to Agent
and Administrative Borrower:
(i) if such Lender claims an exemption from
withholding tax pursuant to its portfolio interest exception,
(a) a statement of the Lender, signed under penalty of
perjury, that it is not a (I) a "bank" as described in Section
881(c)(3)(A) of the IRC, (II) a 10% shareholder (within the
meaning of Section 881(c)(3)(B) of the IRC), or (III) a
controlled foreign corporation described in Section
881(c)(3)(C) of the IRC, and (B) a properly completed IRS Form
W-8BEN, before the first payment of any interest under this
Agreement and at any other time reasonably requested by Agent
or Administrative Borrower;
(ii) if such Lender claims an exemption from, or
a reduction of, withholding tax under a United States tax
treaty, properly completed IRS Form W-8BEN before the first
payment of any interest under this Agreement and at any other
time reasonably requested by Agent or Administrative Borrower;
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(iii) if such Lender claims that interest paid
under this Agreement is exempt from United States withholding
tax because it is effectively connected with a United States
trade or business of such Lender, two properly completed and
executed copies of IRS Form W-8ECI before the first payment of
any interest is due under this Agreement and at any other time
reasonably requested by Agent or Administrative Borrower;
(iv) such other form or forms as may be required
under the IRC or other laws of the United States as a
condition to exemption from, or reduction of, United States
withholding tax.
Such Lender agrees promptly to notify Agent and Administrative Borrower of any
change in circumstances which would modify or render invalid any claimed
exemption or reduction.
(b) If any Lender claims exemption from, or reduction of,
withholding tax under a United States tax treaty by providing IRS Form W-8BEN
and such Lender sells, assigns, grants a participation in, or otherwise
transfers all or part of the Obligations of Borrowers to such Lender, such
Lender agrees to notify Agent of the percentage amount in which it is no longer
the beneficial owner of Obligations of Borrowers to such Lender. To the extent
of such percentage amount, Agent will treat such Lender's IRS Form W-8BEN as no
longer valid.
(c) If any Lender is entitled to a reduction in the
applicable withholding tax, Agent may withhold from any interest payment to such
Lender an amount equivalent to the applicable withholding tax after taking into
account such reduction. If the forms or other documentation required by
subsection (a) of this Section are not delivered to Agent, then Agent may
withhold from any interest payment to such Lender not providing such forms or
other documentation an amount equivalent to the applicable withholding tax.
(d) If the IRS or any other Governmental Authority of the
United States or other jurisdiction asserts a claim that Agent did not properly
withhold tax from amounts paid to or for the account of any Lender (because the
appropriate form was not delivered, was not properly executed, or because such
Lender failed to notify Agent of a change in circumstances which rendered the
exemption from, or reduction of, withholding tax ineffective, or for any other
reason) such Lender shall indemnify and hold Agent harmless for all amounts
paid, directly or indirectly, by Agent as tax or otherwise, including penalties
and interest, and including any taxes imposed by any jurisdiction on the amounts
payable to Agent under this Section, together with all costs and expenses
(including attorneys fees and expenses). The obligation of the Lenders under
this subsection shall survive the payment of all Obligations and the resignation
or replacement of Agent.
(e) All payments made by Borrowers hereunder or under any
note or other Loan Document will be made without setoff, counterclaim, or other
defense, except as required by applicable law other than for Taxes (as defined
below). All such payments will be made free and clear of, and without deduction
or withholding for, any present or future taxes, levies, imposts, duties, fees,
assessments or other charges of whatever nature now or hereafter imposed by any
jurisdiction (other than the United States) or by any political subdivision or
taxing authority thereof or therein (other than of the United States) with
respect to such payments (but
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excluding, any tax imposed by any jurisdiction or by any political subdivision
or taxing authority thereof or therein (i) measured by or based on the net
income or net profits of a Lender, or (ii) to the extent that such tax results
from a change in the circumstances of the Lender, including a change in the
residence, place of organization, or principal place of business of the Lender,
or a change in the branch or lending office of the Lender participating in the
transactions set forth herein) and all interest, penalties or similar
liabilities with respect thereto (all such non-excluded taxes, levies, imposts,
duties, fees, assessments or other charges being referred to collectively as
"Taxes"). If any Taxes are so levied or imposed, each Borrower agrees to pay the
full amount of such Taxes, and such additional amounts as may be necessary so
that every payment of all amounts due under this Agreement or under any note,
including any amount paid pursuant to this Section 16.11(e) after withholding or
deduction for or on account of any Taxes, will not be less than the amount
provided for herein; provided, however, that Borrowers shall not be required to
increase any such amounts payable to Agent or any Lender (i) that is not
organized under the laws of the United States, if such Person fails to comply
with the other requirements of this Section 16.11, or (ii) if the increase in
such amount payable results from Agent's or such Lender's own willful misconduct
or gross negligence. Borrowers will furnish to Agent as promptly as possible
after the date the payment of any Taxes is due pursuant to applicable law
certified copies of tax receipts evidencing such payment by Borrowers.
16.12 COLLATERAL MATTERS.
(a) The Lenders hereby irrevocably authorize Agent, at
its option and in its sole discretion, to release any Lien on any Collateral (i)
upon the termination of the Commitments and payment and satisfaction in full by
Borrowers of all Obligations, (ii) constituting property being sold or disposed
of if a release is required or desirable in connection therewith and if
Administrative Borrower certifies to Agent that the sale or disposition is
permitted under Section 7.4 of this Agreement or the other Loan Documents (and
Agent may rely conclusively on any such certificate, without further inquiry),
(iii) constituting property in which no Borrower owned any interest at the time
the security interest was granted or at any time thereafter, or (iv)
constituting property leased to a Borrower under a lease that has expired or is
terminated in a transaction permitted under this Agreement. Except as provided
above, Agent will not execute and deliver a release of any Lien on any
Collateral without the prior written authorization of (y) if the release is of
all or substantially all of the Collateral, all of the Lenders and, to the
extent required pursuant to Section 16.20(a), Funds Management Bank, or (z)
otherwise, the Required Lenders. Upon request by Agent or Administrative
Borrower at any time, the Lenders and Funds Management Bank will confirm in
writing Agent's authority to release any such Liens on particular types or items
of Collateral pursuant to this Section 16.12; provided, however, that (1) Agent
shall not be required to execute any document necessary to evidence such release
on terms that, in Agent's opinion, would expose Agent to liability or create any
obligation or entail any consequence other than the release of such Lien without
recourse, representation, or warranty, and (2) such release shall not in any
manner discharge, affect, or impair the Obligations or any Liens (other than
those expressly being released) upon (or obligations of Borrowers in respect of)
all interests retained by Borrowers, including, the proceeds of any sale, all of
which shall continue to constitute part of the Collateral.
(b) Agent shall have no obligation whatsoever to any of
the Lenders or the Funds Management Bank to assure that the Collateral exists or
is owned by Borrowers or is
102
cared for, protected, or insured or has been encumbered, or that the Agent's
Liens have been properly or sufficiently or lawfully created, perfected,
protected, or enforced or are entitled to any particular priority, or to
exercise at all or in any particular manner or under any duty of care,
disclosure or fidelity, or to continue exercising, any of the rights,
authorities and powers granted or available to Agent pursuant to any of the Loan
Documents, it being understood and agreed that in respect of the Collateral, or
any act, omission, or event related thereto, subject to the terms and conditions
contained herein, Agent may act in any manner it may deem appropriate, in its
sole discretion given Agent's own interest in the Collateral in its capacity as
one of the Lenders and that Agent shall have no other duty or liability
whatsoever to any Lender or the Funds Management Bank as to any of the
foregoing, except as otherwise provided herein.
16.13 RESTRICTIONS ON ACTIONS; SHARING OF PAYMENTS.
(a) Each of the Lenders agrees that it shall not, without
the express consent of Agent, and that it shall, to the extent it is lawfully
entitled to do so, upon the request of Agent, set off against the Obligations,
any amounts owing by such Lender to Borrowers or any Deposit Accounts of
Borrowers now or hereafter maintained with such Lender. Each of the Lenders
further agrees that it shall not, unless specifically requested to do so by
Agent, take or cause to be taken any action, including, the commencement of any
legal or equitable proceedings, to foreclose any Lien on, or otherwise enforce
any security interest in, any of the Collateral the purpose of which is, or
could be, to give such Lender any preference or priority against the other
Lenders with respect to the Collateral. Except in its capacity as a successor
Agent pursuant to Section 16.9, and subject to the exercise of any rights of
Funds Management Bank arising under statutory or common law provisions relating
to banker's liens, rights of recoupment or set-off or similar rights and
remedies as to deposit accounts (other than the Foothill Account except to the
extent permitted by the Depository Account Agreement) with respect to the Bank
Product Obligations owing to Funds Management Bank, Funds Management Bank agrees
that it shall not, unless specifically requested to do so by Agent and Funds
Management Bank so agrees, take or cause to be taken any action with respect to
the Collateral, including, the commencement of any legal or equitable
proceedings with respect to the Collateral, to foreclose any Lien on, or
otherwise enforce any security interest in, any of the Collateral.
(b) If, at any time or times any Lender shall receive (i)
by payment, foreclosure, setoff, or otherwise, any proceeds of Collateral or any
payments with respect to the Obligations arising under, or relating to, this
Agreement or the other Loan Documents, except for any such proceeds or payments
received by such Lender from Agent pursuant to the terms of this Agreement, or
(ii) payments from Agent in excess of such Lender's Pro-Rata Share of all such
distributions by Agent, such Lender promptly shall (A) turn the same over to
Agent, in kind, and with such endorsements as may be required to negotiate the
same to Agent, or in immediately available funds, as applicable, for the account
of all of the Lenders and for application to the Obligations in accordance with
the applicable provisions of this Agreement, or (B) purchase, without recourse
or warranty, an undivided interest and participation in the Obligations owed to
the other Lenders so that such excess payment received shall be applied ratably
as among the Lenders in accordance with their Pro Rata Shares; provided,
however, that if all or part of such excess payment received by the purchasing
party is thereafter recovered from it, those purchases of participations shall
be rescinded in whole or in part, as applicable, and the applicable portion of
the purchase price paid therefor shall be returned to such purchasing party, but
without interest
103
except to the extent that such purchasing party is required to pay interest in
connection with the recovery of the excess payment. Except in its capacity as a
successor Agent pursuant to Section 16.9, or in connection with its exercise of
rights arising under statutory or common law provisions relating to banker's
liens, rights of recoupment or set-off or similar rights and remedies as to
deposit accounts (other than the Foothill Account except to the extent permitted
by the Depository Account Agreement) with respect to the Bank Product
Obligations owing to Funds Management Bank, Funds Management Bank agrees, that
if it shall receive any proceeds of Collateral or any payments with respect to
the Obligations arising hereunder, or relating to, this Agreement or the other
Loan Documents, to turn over to Agent such proceeds of Collateral or payments
with respect to the Obligations, in kind, and with such endorsements as may be
required to negotiate the same to Agent, or in immediately available funds, as
applicable, for the account of all of the Lenders and for application to the
Obligations in accordance with the applicable provisions of this Agreement.
16.14 AGENCY FOR PERFECTION. Agent hereby appoints each other Lender
as its agent (and each Lender hereby accepts such appointment) for the purpose
of perfecting the Agent's Liens in assets which, in accordance with Article 9 of
the Code can be perfected only by possession. Should any Lender obtain
possession of any such Collateral, such Lender shall notify Agent thereof, and,
promptly upon Agent's request therefor shall deliver such Collateral to Agent or
in accordance with Agent's instructions.
16.15 PAYMENTS BY AGENT TO THE LENDERS. All payments to be made by
Agent to the Lenders shall be made by bank wire transfer or internal transfer of
immediately available funds pursuant to such wire transfer instructions as each
party may designate for itself by written notice to Agent. Concurrently with
each such payment, Agent shall identify whether such payment (or any portion
thereof) represents principal, premium, or interest of the Obligations.
16.16 CONCERNING THE COLLATERAL AND RELATED LOAN DOCUMENTS. Each
member of the Lender Group authorizes and directs Agent to enter into this
Agreement and the other Loan Documents relating to the Collateral, for the
benefit of the Lender Group and the Funds Management Bank. Funds Management Bank
and each member of the Lender Group agree that any action taken by Agent in
accordance with the terms of this Agreement or the other Loan Documents relating
to the Collateral and the exercise by Agent of its powers set forth therein or
herein, together with such other powers that are reasonably incidental thereto,
shall be binding upon all of the Lenders and the Funds Management Bank.
16.17 FIELD AUDITS AND EXAMINATION REPORTS; CONFIDENTIALITY;
DISCLAIMERS BY LENDERS; OTHER REPORTS AND INFORMATION. By becoming a party to
this Agreement, each Lender:
(a) is deemed to have requested that Agent furnish such
Lender, promptly after it becomes available, a copy of each field audit or
examination report (each a "Report" and collectively, "Reports") prepared by
Agent, and Agent shall so furnish each Lender with such Reports,
104
(b) expressly agrees and acknowledges that Agent does not
make any representation or warranty as to the accuracy of any Report, and (ii)
shall be liable for any information contained in any Report,
(c) expressly agrees and acknowledges that the Reports
are not comprehensive audits or examinations, that Agent or other party
performing any audit or examination will inspect only specific information
regarding Borrowers and will rely significantly upon the Books, as well as on
representations of Borrowers' personnel,
(d) agrees to keep all Reports and other material,
non-public information regarding Borrowers and their Subsidiaries and their
operations, assets, and existing and contemplated business plans in a
confidential manner; it being understood and agreed by Borrowers that in any
event such Lender may make disclosures (a) to counsel for and other advisors,
accountants, and auditors to such Lender, (b) reasonably required by any bona
fide potential or actual Assignee or Participant in connection with any
contemplated or actual assignment or transfer by such Lender of an interest
herein or any participation interest in such Lender's rights hereunder, (c) of
information that has become public by disclosures made by Persons other than
such Lender, its Affiliates, assignees, transferees, or Participants, or (d) as
required or requested by any court, governmental or administrative agency,
pursuant to any subpoena or other legal process, or by any law, statute,
regulation, or court order; provided, however, that, unless prohibited by
applicable law, statute, regulation, or court order, such Lender shall notify
Administrative Borrower of any request by any court, governmental or
administrative agency, or pursuant to any subpoena or other legal process for
disclosure of any such non-public material information concurrent with, or where
practicable, prior to the disclosure thereof, and
(e) without limiting the generality of any other
indemnification provision contained in this Agreement, agrees: (i) to hold Agent
and any such other Lender preparing a Report harmless from any action the
indemnifying Lender may take or conclusion the indemnifying Lender may reach or
draw from any Report in connection with any loans or other credit accommodations
that the indemnifying Lender has made or may make to Borrowers, or the
indemnifying Lender's participation in, or the indemnifying Lender's purchase
of, a loan or loans of Borrowers; and (ii) to pay and protect, and indemnify,
defend and hold Agent, and any such other Lender preparing a Report harmless
from and against, the claims, actions, proceedings, damages, costs, expenses,
and other amounts (including, attorneys fees and costs) incurred by Agent and
any such other Lender preparing a Report as the direct or indirect result of any
third parties who might obtain all or part of any Report through the
indemnifying Lender.
In addition to the foregoing: (x) any Lender may from time to time request of
Agent in writing that Agent provide to such Lender a copy of any report or
document provided by Borrowers to Agent that has not been contemporaneously
provided by Borrowers to such Lender, and, upon receipt of such request, Agent
shall provide a copy of same to such Lender, (y) to the extent that Agent is
entitled, under any provision of the Loan Documents, to request additional
reports or information from Borrowers, any Lender may, from time to time,
reasonably request Agent to exercise such right as specified in such Lender's
notice to Agent, whereupon Agent promptly shall request of Administrative
Borrower the additional reports or information reasonably specified by such
Lender, and, upon receipt thereof from Administrative Borrower, Agent
105
promptly shall provide a copy of same to such Lender, and (z) any time that
Agent renders to Administrative Borrower a statement regarding the Loan Account,
Agent shall send a copy of such statement to each Lender.
16.18 SEVERAL OBLIGATIONS; NO LIABILITY. Notwithstanding that
certain of the Loan Documents now or hereafter may have been or will be executed
only by or in favor of Agent in its capacity as such, and not by or in favor of
the Lenders, any and all obligations on the part of Agent (if any) to make any
credit available hereunder shall constitute the several (and not joint)
obligations of the respective Lenders on a ratable basis, according to their
respective Commitments, to make an amount of such credit not to exceed, in
principal amount, at any one time outstanding, the amount of their respective
Commitments. Nothing contained herein shall confer upon any Lender any interest
in, or subject any Lender to any liability for, or in respect of, the business,
assets, profits, losses, or liabilities of any other Lender. Each Lender shall
be solely responsible for notifying its Participants of any matters relating to
the Loan Documents to the extent any such notice may be required, and no Lender
shall have any obligation, duty, or liability to any Participant of any other
Lender. Except as provided in Section 16.7, no member of the Lender Group shall
have any liability for the acts or any other member of the Lender Group or acts
of Funds Management Bank. Funds Management Bank shall have no liability for the
acts of any member of the Lender Group. No Lender shall be responsible to any
Borrower or any other Person for any failure by any other Lender to fulfill its
obligations to make credit available hereunder, nor to advance for it or on its
behalf in connection with its Commitment, nor to take any other action on its
behalf hereunder or in connection with the financing contemplated herein.
16.19 LEGAL REPRESENTATION OF AGENT. In connection with the
negotiation, drafting, and execution of this Agreement and the other Loan
Documents, or in connection with future legal representation relating to loan
administration, amendments, modifications, waivers, or enforcement of remedies,
Paul, Hastings, Janofsky & Walker LLP ("Paul Hastings") only has represented and
only shall represent Foothill in its capacity as Agent and as a Lender. Each
other Lender hereby acknowledges that Paul Hastings does not represent it in
connection with any such matters.
16.20 FUNDS MANAGEMENT BANK.
(a) Notwithstanding anything herein to the contrary, the
Funds Management Bank agrees and acknowledges that (i) it has no voting rights
under this Agreement (including, without limitation, no right to consent to any
amendments to, and waivers of any provisions of this Agreement, or receive
notice thereof), except that (x) no amendment, modification or waiver of the
definitions of "Funds Management Bank," "Bank Products," "Bank Product
Obligations," "ACH Transactions," or "Bank Product Agreements," Section 2.4(b),
2.7(a), 2.7(b), 9.1, 11.3, 16.9, 16.13, or 16.20 shall be effective without the
prior written consent of the Funds Management Bank and (y) except in connection
with any judicial or non-judicial foreclosure proceedings against, or any sale
or other exercise of remedies against, the Collateral, or any sale of the
Collateral under Section 363 of the Bankruptcy Code, Agent shall not release its
Liens on all or substantially all of the Collateral without the prior written
consent of Funds Management Bank, (ii) it will not terminate its services as a
Cash Management Bank or close any Borrower's account (except at the request of
such Borrower) without at least 60 days prior written notice to
106
Agent and Administrative Borrower, (iii) Agent and the Lenders shall be entitled
to manage and supervise the loans hereunder in accordance with applicable law
and their respective usual practices, modified from time to time as they each
deem appropriate under the circumstances, without regard to the existence of any
rights that the Funds Management Bank may now or hereafter have in or to any of
the Collateral except as expressly set forth in this Agreement and the
Depository Account Agreement, (iv) neither Agent nor the Lenders shall have any
liability to the Funds Management Bank for, and the Funds Management Bank waives
any claim that the Funds Management Bank may now or hereafter have against Agent
and the Lenders arising out of, and the Funds Management Bank waives any
objection to, or right to object to, (1) any and all actions which Agent and the
other members of the Lender Group may take or omit to take (including, without
limitation, actions with respect to the creation, perfection or continuation of
liens or security interests in the Collateral or the Lien therefor, actions with
respect to the occurrence of an Event of Default, actions with respect to the
foreclosure upon, sale, release, or depreciation of, or failure to realize upon,
the Collateral and actions with respect to the collection of any claim for all
or any part of the Obligations from any Account Debtor, guarantor or any other
party), or the collection of the Collateral, or the valuation, use, protection
or release of any of the Collateral in each case except as may be the result of
gross negligence or willful misconduct of Agent as determined by a final
non-appealable order of a court of competent jurisdiction, (2) any motion for
relief from the automatic stay brought by Agent, (3) the procedures established
for, or the terms of, and all proceedings relating to any foreclosure on, or
sale or other liquidation of the Collateral, (4) Agent's election, in any
proceeding instituted under the Bankruptcy Code, of the application of Section
1111 (b)(2) of the Bankruptcy Code, or (5) the use of cash collateral, or any
borrowing or grant of a security interest under Section 364 of the Bankruptcy
Code, by any Borrower as debtor-in-possession, and (v) unless expressly provided
for in Section 16.20(c), Agent is not required to give the Funds Management Bank
copies of any financial information delivered by Borrower hereunder, or any
audits or appraisals or other reports prepared in connection therewith, or
notice of any action taken hereunder, or to obtain the Funds Management Bank's
consent thereto, including (1) any amendment of or any addition of or supplement
to any instrument, document or agreement relating to this Agreement, (2) any
exercise or non-exercise of any right, power or remedy under or in respect of
this Agreement or any instrument, document or agreement relating hereto, (3) the
release, sale, exchange or surrender, in whole or in part, of any part of the
Collateral or any additional collateral to which Agent may become entitled, (4)
any release of any guarantor of or pledgor securing the Obligations or any
security for such pledge or guaranty, or (5) any waiver, consent, release,
indulgence, extension, renewal, modification, delay or other action, inaction or
omission in respect of this Agreement or any instrument, document or agreement
relating thereto or any security therefor or pledge or guaranty hereof.
(b) Agent, Lenders and Borrowers acknowledge and agree that it is
a condition to the closing of the transactions contemplated hereby that
concurrently with such closing, the Underlying Issuer issue a Letter of Credit
for the benefit of Existing Lender in the initial stated amount of
$38,859,929.39 to support the obligations of Borrowers under the letters of
credit issued by Existing Lender for the account of one or more Borrowers (the
"Existing Letters of Credit"). Borrowers hereby agree to use their best efforts
to cause Issuing Lender to issue or cause to be issued replacement L/C's to the
beneficiaries of the Existing Letters of Credit no later than 60 days after the
Closing Date.
107
(c) Borrowers hereby agree to deliver to Funds Management Bank
concurrently with delivery to Agent, a copy of all items required to be
delivered to Agent pursuant to Section 6.3. Agent hereby agrees to deliver to
Funds Management Bank, (i) prior written notice of any judicial or non-judicial
foreclosure proceedings against, or any sale or other exercise of remedies
against, the Collateral, or any sale of the Collateral under Section 363 of the
Bankruptcy Code, by or on behalf of Agent, (ii) promptly upon execution thereof,
execution copies of this Agreement, the Mortgages, the Pledge Agreement, the
Intellectual Property Security Agreement, and legal opinions delivered to Agent
and all amendments, modifications and waivers of the foregoing, and (iii) upon
the reasonable request of Funds Management Bank from time to time, a copy of any
document received by Agent pursuant to Section 6.3 in the event Borrowers fail
to deliver a copy of such document directly to Funds Management Bank, and
Borrowers authorize such delivery by Agent.
(d) In the event FUNB becomes Agent hereunder pursuant to Section
16.9, Borrowers hereby jointly and severally agree to pay FUNB such fees and at
such time as shall be determined by FUNB in its reasonable discretion.
(e) Funds Management Bank agrees that this Agreement may be
terminated in connection with a refinancing of all Obligations other than Bank
Product Obligations, and to the extent all Obligations (other than Bank Product
Obligations owed to Funds Management Bank) are paid in full to the satisfaction
of Agent, Issuing Lender, and the Lenders, Funds Management Bank agrees to enter
into any agreements as may be reasonably requested by a lender selected by
Borrowers in connection with such refinancing if such agreements provide Funds
Management Bank with security and rights similar to those provided for
hereunder, and Funds Management Bank authorizes Agent to deliver assignments or
releases of the Collateral to such replacement lender at the request of
Borrowers or such replacement lender.
17. GENERAL PROVISIONS.
17.1 EFFECTIVENESS. This Agreement shall be binding and deemed
effective when executed by Borrowers, Funds Management Bank, Agent, and each
Lender whose signature is provided for on the signature pages hereof.
17.2 SECTION HEADINGS. Headings and numbers have been set forth
herein for convenience only. Unless the contrary is compelled by the context,
everything contained in each Section applies equally to this entire Agreement.
17.3 INTERPRETATION. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed or resolved against the Lender Group,
Borrowers, or Funds Management Bank whether under any rule of construction or
otherwise. On the contrary, this Agreement has been reviewed by all parties and
shall be construed and interpreted according to the ordinary meaning of the
words used so as to accomplish fairly the purposes and intentions of all parties
hereto.
17.4 SEVERABILITY OF PROVISIONS. Each provision of this Agreement
shall be severable from every other provision of this Agreement for the purpose
of determining the legal enforceability of any specific provision.
108
17.5 AMENDMENTS IN WRITING. This Agreement only can be amended by a
writing in accordance with Section 15.1.
17.6 COUNTERPARTS; TELEFACSIMILE EXECUTION. This Agreement may be
executed in any number of counterparts and by different parties on separate
counterparts, each of which, when executed and delivered, shall be deemed to be
an original, and all of which, when taken together, shall constitute but one and
the same Agreement. Delivery of an executed counterpart of this Agreement by
telefacsimile shall be equally as effective as delivery of an original executed
counterpart of this Agreement. Any party delivering an executed counterpart of
this Agreement by telefacsimile also shall deliver an original executed
counterpart of this Agreement but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Agreement. The foregoing shall apply to each other Loan Document mutatis
mutandis.
17.7 REVIVAL AND REINSTATEMENT OF OBLIGATIONS. If the incurrence or
payment of the Obligations by any Borrower or the transfer to the Lender Group
or Funds Management Bank of any property should for any reason subsequently be
declared to be void or voidable under any state or federal law relating to
creditors' rights, including provisions of the Bankruptcy Code relating to
fraudulent conveyances, preferences, or other voidable or recoverable payments
of money or transfers of property (collectively, a "Voidable Transfer"), and if
the Lender Group or Funds Management Bank is required to repay or restore, in
whole or in part, any such Voidable Transfer, or elects to do so upon the
reasonable advice of its counsel, then, as to any such Voidable Transfer, or the
amount thereof that the Lender Group or Funds Management Bank is required or
elects to repay or restore, and as to all reasonable costs, expenses, and
attorneys fees of the Lender Group or Funds Management Bank related thereto, the
liability of Borrowers automatically shall be revived, reinstated, and restored
and shall exist as though such Voidable Transfer had never been made.
17.8 INTEGRATION. This Agreement, together with the other Loan
Documents, reflects the entire understanding of the parties with respect to the
transactions contemplated hereby and shall not be contradicted or qualified by
any other agreement, oral or written, before the date hereof.
17.9 PARENT AS AGENT FOR BORROWERS. Each Borrower hereby
irrevocably appoints Parent as the borrowing agent and attorney-in-fact for all
Borrowers (the "Administrative Borrower") which appointment shall remain in full
force and effect unless and until Agent shall have received prior written notice
signed by each Borrower that such appointment has been revoked and that another
Borrower has been appointed Administrative Borrower. Each Borrower hereby
irrevocably appoints and authorizes the Administrative Borrower (i) to provide
Agent with all notices with respect to Advances and Letters of Credit obtained
for the benefit of any Borrower and all other notices and instructions under
this Agreement and (ii) to take such action as the Administrative Borrower deems
appropriate on its behalf to obtain Advances and Letters of Credit and to
exercise such other powers as are reasonably incidental thereto to carry out the
purposes of this Agreement. It is understood that the handling of the Loan
Account and Collateral of Borrowers in a combined fashion, as more fully set
forth herein, is done solely as an accommodation to Borrowers in order to
utilize the collective borrowing powers of Borrowers in the most efficient and
economical manner and at their request, and that Lender Group shall not
109
incur liability to any Borrower as a result hereof. Each Borrower expects to
derive benefit, directly or indirectly, from the handling of the Loan Account
and the Collateral in a combined fashion since the successful operation of each
Borrower is dependent on the continued successful performance of the integrated
group. To induce the Lender Group to do so, and in consideration thereof, each
Borrower hereby jointly and severally agrees to indemnify each member of the
Lender Group and hold each member of the Lender Group harmless against any and
all liability, expense, loss or claim of damage or injury, made against the
Lender Group by any Borrower or by any third party whosoever, arising from or
incurred by reason of (a) the handling of the Loan Account and Collateral of
Borrowers as herein provided, (b) the Lender Group's relying on any instructions
of the Administrative Borrower, or (c) any other action taken by the Lender
Group hereunder or under the other Loan Documents, except that Borrowers will
have no liability to the relevant Agent-Related Person or Lender-Related Person
under this Section 17.9 with respect to any liability that has been finally
determined by a court of competent jurisdiction to have resulted solely from the
gross negligence or willful misconduct of such Agent-Related Person or
Lender-Related Person, as the case may be.
17.10 CONFLICTS. Except with respect to the Depository Account
Agreement or as otherwise provided in this Agreement or any of the other Loan
Documents by specific reference to the applicable provisions of this Agreement,
if any provision contained in this Agreement conflicts with any provision in
any of the other Loan Documents, the provision contained in this Agreement
shall govern and control.
110
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered as of the date first above written.
BORROWERS:
OAKWOOD HOMES CORPORATION,
a North Carolina corporation
/s/ Robert A. Smith
---------------------------------
By: Robert A. Smith
Its: Executive Vice President
OAKWOOD ACCEPTANCE CORPORATION,
LLC, a Delaware limited liability company
/s/ Robert A. Smith
---------------------------------
By: Robert A. Smith
Its: Vice President
OAKWOOD SHARED SERVICES, LLC,
a Delaware limited liability company
/s/ Robert A. Smith
---------------------------------
By: Robert A. Smith
Its: Vice President
OAKWOOD MOBILE HOMES, INC.,
a North Carolina corporation
/s/ Robert A. Smith
---------------------------------
By: Robert A. Smith
Its: Vice President
LOAN AND SECURITY AGREEMENT
SIGNATURE PAGE 1
CREST CAPITAL LLC, a Nevada limited
liability company
/s/ Monte L. Miller
---------------------------------
By: Monte L. Miller
------------------------------
Its: President
-----------------------------
FSI FINANCIAL SERVICES, INC.,
a Michigan corporation
/s/ Robert A. Smith
---------------------------------
By: Robert A. Smith
Its: Vice President
TRI-STATE INSURANCE AGENCY, INC.,
a Michigan corporation
/s/ Robert A. Smith
---------------------------------
By: Robert A. Smith
Its: Vice President
HBOS MANUFACTURING, LP,
a Delaware limited partnership
By: Oakwood Mobile Homes, Inc.,
Its General partner
/s/ Robert A. Smith
---------------------------------
By: Robert A. Smith
Its: Vice President
LOAN AND SECURITY AGREEMENT
SIGNATURE PAGE 2
PREFERRED HOUSING SERVICES, LP, a
Delaware limited partnership
By: Oakwood Mobile Homes, Inc.,
Its General partner
/s/ Robert A. Smith
---------------------------------
By: Robert A. Smith
Its: Vice President
NEW DIMENSION HOMES, INC.,
a Delaware corporation
/s/ Robert A. Smith
---------------------------------
By: Robert A. Smith
Its: Vice President
GOLDEN WEST LEASING, LLC,
a Nevada limited liability company
/s/ Monte L. Miller
---------------------------------
By: Monte L. Miller
------------------------------
Its: President
-----------------------------
DREAMSTREET COMPANY, LLC,
a Delaware limited liability company
/s/ Robert A. Smith
---------------------------------
By: Robert A. Smith
Its: Vice President
LOAN AND SECURITY AGREEMENT
SIGNATURE PAGE 3
HOME SERVICE CONTRACT, INC., a
Michigan corporation
/s/ Robert A. Smith
---------------------------------
By: Robert A. Smith
Its: Vice President
SUBURBAN HOME SALES, INC., a Michigan
corporation
/s/ Robert A. Smith
---------------------------------
By: Robert A. Smith
Its: Vice President
LOAN AND SECURITY AGREEMENT
SIGNATURE PAGE 4
AGENT:
FOOTHILL CAPITAL CORPORATION,
a California corporation, as Agent
/s/ Kathy Plisko
-----------------------------------
By: Kathy Plisko
Title: Senior Vice President
LOAN AND SECURITY AGREEMENT
SIGNATURE PAGE 5
LENDERS:
FOOTHILL CAPITAL CORPORATION,
as Lender and Issuing Bank
/s/ Kathy Plisko
-----------------------------------
By: Kathy Plisko
Title: Senior Vice President
LOAN AND SECURITY AGREEMENT
SIGNATURE PAGE 6
TEXTRON FINANCIAL CORPORATION,
as Lender
/s/ Jerrold K. Brown
----------------------------------
By: Jerrold K. Brown
-------------------------------
Title: Senior Vice President
----------------------------
LOAN AND SECURITY AGREEMENT
SIGNATURE PAGE 7
FUNDS MANAGEMENT BANK:
FIRST UNION NATIONAL BANK,
as Funds Management Bank
/s/ John McGowan
-----------------------------------
By: John McGowan
--------------------------------
Title: Senior Vice President
-----------------------------
LOAN AND SECURITY AGREEMENT
SIGNATURE PAGE 8
TABLE OF CONTENTS
Page
------
1. DEFINITIONS AND CONSTRUCTION............................................................................1
1.1 Definitions....................................................................................1
1.2 Accounting Terms..............................................................................29
1.3 Code..........................................................................................29
1.4 Construction..................................................................................29
1.5 Schedules and Exhibits........................................................................30
2. LOAN AND TERMS OF PAYMENT..............................................................................30
2.1 Revolver Advances.............................................................................30
2.2 Intentionally Omitted.........................................................................32
2.3 Borrowing Procedures and Settlements..........................................................32
2.4 Payments......................................................................................38
2.5 Overadvances..................................................................................41
2.6 Interest Rates and Letter of Credit Fee: Rates, Payments, and Calculations...................42
2.7 Cash Management...............................................................................43
2.8 Crediting Payments; Float Charge..............................................................44
2.9 Designated Account............................................................................45
2.10 Maintenance of Loan Account; Statements of Obligations........................................45
2.11 Fees..........................................................................................45
2.12 Letters of Credit.............................................................................46
2.13 Intentionally Omitted.........................................................................49
2.14 Capital Requirements..........................................................................49
2.15 Joint and Several Liability of Borrowers......................................................50
3. CONDITIONS; TERM OF AGREEMENT..........................................................................53
3.1 Conditions Precedent to the Initial Extension of Credit.......................................53
3.2 Conditions Subsequent to the Initial Extension of Credit......................................57
3.3 Conditions Precedent to all Extensions of Credit..............................................58
3.4 Term..........................................................................................58
3.5 Effect of Termination.........................................................................59
3.6 Early Termination by Borrowers................................................................59
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4. CREATION OF SECURITY INTEREST..........................................................................60
4.1 Grant of Security Interest....................................................................60
4.2 Negotiable Collateral.........................................................................60
4.3 Collection of Accounts, General Intangibles, and Negotiable Collateral........................60
4.4 Delivery of Additional Documentation Required; Authorization to File
UCC Financing Statements......................................................................61
4.5 Power of Attorney.............................................................................61
4.6 Right to Inspect..............................................................................62
4.7 Control Agreements............................................................................62
5. REPRESENTATIONS AND WARRANTIES.........................................................................63
5.1 No Encumbrances...............................................................................63
5.2 Eligible Accounts.............................................................................63
5.3 Eligible Inventory............................................................................63
5.4 Equipment.....................................................................................63
5.5 Location of Inventory and Equipment...........................................................63
5.6 Inventory Records.............................................................................63
5.7 Legal Name; Location of Chief Executive Office; FEIN..........................................64
5.8 Due Organization and Qualification; Subsidiaries..............................................64
5.9 Due Authorization; No Conflict................................................................65
5.10 Litigation....................................................................................65
5.11 No Material Adverse Change....................................................................65
5.12 Fraudulent Transfer...........................................................................66
5.13 Employee Benefits.............................................................................66
5.14 Environmental Condition.......................................................................66
5.15 Brokerage Fees................................................................................66
5.16 Intellectual Property.........................................................................66
5.17 Real and Personal Property....................................................................67
5.18 Leases........................................................................................67
5.19 DDAs..........................................................................................67
5.20 Complete Disclosure...........................................................................67
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5.21 Indebtedness..................................................................................67
5.22 IRB Properties................................................................................67
5.23 No Default....................................................................................67
6. AFFIRMATIVE COVENANTS..................................................................................68
6.1 Accounting System.............................................................................68
6.2 Collateral Reporting..........................................................................68
6.3 Financial Statements, Reports, Certificates...................................................70
6.4 Intentionally Omitted.........................................................................72
6.5 Return........................................................................................72
6.6 Maintenance of Properties.....................................................................72
6.7 Taxes.........................................................................................73
6.8 Insurance.....................................................................................73
6.9 Location of Inventory and Equipment...........................................................74
6.10 Compliance with Laws..........................................................................74
6.11 Leases........................................................................................74
6.12 Brokerage Commissions.........................................................................74
6.13 Existence.....................................................................................75
6.14 Environmental.................................................................................75
6.15 Disclosure Updates............................................................................75
6.16 Installment Sales Contracts...................................................................75
6.17 Reinsurance...................................................................................75
6.18 Refinance or Extended Maturity Date for Senior Notes and Reset
Debenture.....................................................................................76
6.19 Refinance or Extended Maturity Date for Servicer Advance Facility and
Warehouse Facility............................................................................76
7. NEGATIVE COVENANTS.....................................................................................76
7.1 Indebtedness..................................................................................76
7.2 Liens.........................................................................................77
7.3 Restrictions on Fundamental Changes...........................................................78
7.4 Disposal of Assets............................................................................78
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7.5 Change Name...................................................................................78
7.6 Guarantee.....................................................................................78
7.7 Nature of Business............................................................................78
7.8 Prepayments and Amendments....................................................................78
7.9 Change of Control.............................................................................79
7.10 Consignments..................................................................................79
7.11 Distributions.................................................................................79
7.12 Accounting Methods............................................................................80
7.13 Investments...................................................................................80
7.14 Transactions with Affiliates..................................................................80
7.15 Suspension....................................................................................80
7.16 Intentionally Omitted.........................................................................80
7.17 Use of Proceeds...............................................................................80
7.18 Change in Location of Chief Executive Office; Inventory and Equipment
with Bailees..................................................................................80
7.19 Securities Accounts...........................................................................81
7.20 Financial Covenants...........................................................................81
7.21 Financing Statement Amendments, Terminations or Corrections...................................83
7.22 Agent's Right With Respect to Warehouse Facility, Servicer Advance
Facility and Consumer Financing Upon Event of Default.........................................83
8. EVENTS OF DEFAULT......................................................................................83
9. THE LENDER GROUP'S RIGHTS AND REMEDIES.................................................................86
9.1 Rights and Remedies...........................................................................86
9.2 Remedies Cumulative...........................................................................89
10. TAXES AND EXPENSES.....................................................................................89
11. WAIVERS; INDEMNIFICATION...............................................................................89
11.1 Demand; Protest; etc..........................................................................89
11.2 The Lender Group's Liability for Collateral...................................................89
11.3 Indemnification...............................................................................90
12. NOTICES................................................................................................91
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13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.............................................................92
14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.............................................................93
14.1 Assignments and Participations................................................................93
14.2 Successors....................................................................................95
15. AMENDMENTS; WAIVERS....................................................................................96
15.1 Amendments and Waivers........................................................................96
15.2 Replacement of Holdout Lender.................................................................97
15.3 No Waivers; Cumulative Remedies...............................................................97
16. AGENT; THE LENDER GROUP................................................................................98
16.1 Appointment and Authorization of Agent........................................................98
16.2 Delegation of Duties..........................................................................98
16.3 Liability of Agent............................................................................99
16.4 Reliance by Agent.............................................................................99
16.5 Notice of Default or Event of Default.........................................................99
16.6 Credit Decision..............................................................................100
16.7 Costs and Expenses; Indemnification..........................................................100
16.8 Agent in Individual Capacity.................................................................101
16.9 Successor Agent..............................................................................101
16.10 Lender in Individual Capacity................................................................102
16.11 Withholding Taxes............................................................................102
16.12 Collateral Matters...........................................................................104
16.13 Restrictions on Actions by Lenders; Sharing of Payments......................................105
16.14 Agency for Perfection........................................................................106
16.15 Payments by Agent to the Lenders.............................................................106
16.16 Concerning the Collateral and Related Loan Documents.........................................106
16.17 Field Audits and Examination Reports; Confidentiality; Disclaimers by
Lenders; Other Reports and Information.......................................................106
16.18 Several Obligations; No Liability............................................................107
16.19 Legal Representation of Agent................................................................108
17. GENERAL PROVISIONS....................................................................................108
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17.1 Effectiveness................................................................................108
17.2 Section Headings.............................................................................108
17.3 Interpretation...............................................................................108
17.4 Severability of Provisions...................................................................109
17.5 Amendments in Writing........................................................................109
17.6 Counterparts; Telefacsimile Execution........................................................109
17.7 Revival and Reinstatement of Obligations.....................................................109
17.8 Integration..................................................................................109
17.9 Parent as agent for Borrowers................................................................109
17.10 Conflicts....................................................................................110
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EXHIBITS AND SCHEDULES
Exhibit A-1 Form of Assignment and Acceptance
Exhibit B-1 Form of Borrowing Base Certificate
Exhibit C-1 Form of Compliance Certificate
Exhibit D Form of Bill and Hold Letter
Schedule A-1 Agent's Account
Schedule C-1 Commitments
Schedule D-1 Designated Account
Schedule E-1 Eligible Inventory Locations
Schedule E-2 Additional Excluded Properties
Schedule L-1 Liquidating Personal Property
Schedule L-2 Liquidating Real Property
Schedule P-1 Permitted Liens
Schedule R-1 Real Property Collateral
Schedule R-2 Post-Closing Real Property Mortgages
Schedule 2.8(a) Cash Management Banks
Schedule 5.5 Locations of Inventory and Equipment
Schedule 5.7 Chief Executive Office; FEIN
Schedule 5.8(b) Capitalization of Borrowers
Schedule 5.8(c) Capitalization of Borrowers' Subsidiaries
Schedule 5.8(d) Subscriptions, Options, Warrants
Schedule 5.10 Litigation
Schedule 5.14 Environmental Matters
Schedule 5.16 Intellectual Property
Schedule 5.19 Demand Deposit Accounts
Schedule 5.21 Permitted Indebtedness
Schedule 5.22 IRB Properties
Schedule 7.1(b) IRB Debt
SCHEDULE C-1
COMMITMENTS
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LENDER COMMITMENT
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Foothill Capital Corporation $35,000,000
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Textron Financial Corporation $20,000,000
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All Lenders $55,000,000
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SCHEDULE A-1
AGENT'S ACCOUNT
JP Morgan Chase Bank
New York, New York
ABA# 021000021
Credit to: Foothill Capital Corporation
Account No. 323-266193
Re: Oakwood Homes Corporation
SCHEDULE R-1
REAL PROPERTY
SCHEDULE R-2
REAL PROPERTY (POST-CLOSING MORTGAGES AND RELATED DOCUMENTS)