SECOND AMENDMENT TO LOAN AGREEMENT
This SECOND AMENDMENT TO LOAN AGREEMENT (this "Amendment") is
entered into as of July 31, 2002, by and among 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
collectively as the "Borrowers"), the Lenders identified on the signature pages
hereto (the "Lenders"), and FOOTHILL CAPITAL CORPORATION, in its capacity as
agent (the "Agent") for the Lenders,
W I T N E S S E T H:
WHEREAS, the Borrowers, the Lenders and the Agent have entered
into that certain Loan and Security Agreement dated as of January 22, 2002 (as
the same may be modified, amended, restated or supplemented from time to time,
the "Loan Agreement"), pursuant to which the Lenders have agreed to make loans
and other financial accommodations to the Borrowers from time to time; and
WHEREAS, the Borrowers have requested that the Loan Agreement
be modified and amended to, among other things, exclude certain non-cash charges
incurred during the month of June, 2002 from the definition of EBITDA and
Tangible Net Worth, and the Agent and the Lenders have agreed to the requested
amendment on the terms and conditions set forth herein; and
NOW THEREFORE, in consideration of the foregoing premises and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree that all capitalized terms
not otherwise defined herein shall have the meanings ascribed to such terms in
the Loan Agreement, and further agree as follows:
1. Amendment to Section 1.1 of the Loan Agreement. Section 1.1 of the
Loan Agreement, "Definitions" is hereby modified by:
(a) amending the definition of "Base Rate Margin" by deleting
reference to "1.50 percentage points" and inserting "3.50 percentage points" in
substitution thereof;
(b) deleting the definition of "Bill and Hold Letter" in its
entirety;
(c) amending the definition of "EBITDA" to exclude the
non-cash booking and impairment charge of $86,518,000 incurred by Borrower
during the month of June, 2002 as a result of increase in guaranty requirements
and servicer liabilities with respect to Securitized Transactions;
(d) deleting reference to "Bill and Hold Letter" set forth in
clause (d) of the definition of "Eligible Accounts";
(e) deleting reference to "(except to the extent such Accounts
are Eligible Bill and Hold Accounts)" set forth in clause (n) of the definition
of "Eligible Accounts";
(f) deleting the definition of "Eligible Bill and Hold
Accounts" in its entirety;
(g) deleting the definition of "Eligible Bill and Hold
Sublimit" in its entirety;
(h) deleting reference to "3 years prior to any Advance date
in 2002 and 2 years prior to any Advance date thereafter" set forth in clause
(f) of the definition of "Eligible Inventory" and inserting "2 years prior to
any Advance date" in substitution thereof; and
(i) amending the definition of "Tangible Net Worth" to exclude
the non-cash booking and impairment charge of $86,518,000 incurred by Borrower
during the month of June, 2002 as a result of increase in guaranty requirements
and servicer liabilities with respect to Securitized Transactions.
2. Amendment to Section 2.1 of the Loan Agreement. Section 2.1 of the
Loan Agreement, "Revolver Advances" is hereby modified and amended by deleting
the proviso in the final clause of Section 2.1(a)(x)(i) related to Eligible Bill
and Hold Accounts and the Eligible Bill and Hold Sublimit, in its entirety.
3. Amendment to Section 2.6 of the Loan Agreement. Section 2.6 of the
Loan Agreement, "Interest Rates and Letter of Credit Fee: Rates, Payments and
Calculations" is hereby modified and amended as follows:
(a) Section 2.6(a) of the Loan Agreement, "Interest Rates" is
hereby modified and amended by deleting the reference to "a per annum rate less
than 7%" and inserting "a per annum rate less than 9%" in substitution thereof;
and
(b) Section 2.6(b) of the Loan Agreement, "Letter of Credit
Fee" is hereby modified and amended by deleting the reference to "3% per annum"
and inserting "5% per annum" in substitution thereof.
4. Amendment to Section 3.6 of the Loan Agreement. Section 3.6 of the
Loan Agreement, "Early Termination by Borrowers" is hereby modified and amended
by deleting the clause "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%" contained in the final sentence thereof, in its entirety.
5. Amendment to Section 4.6 of the Loan Agreement. Section 4.6 of the
Loan Agreement, "Right to Inspect" is hereby modified and amended by adding the
following proviso after the final sentence in Section 4.6:
"Notwithstanding anything to the contrary in this Section 4.6,
Borrowers acknowledge that Agent shall have the right to engage an advisor to
review the Borrowers' business plans, cash flow, liquidity, securitizations and
other related matters, and Borrowers further acknowledge and agree (x) to
cooperate fully with such advisor, and (y) that the fees and expenses related to
the engagement of such advisor shall constitute Lender Group Expenses, payable
by Borrowers in accordance with the terms of this Agreement."
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6. Amendment to Section 6.8 of the Loan Agreement. Section 6.8 of the
Loan Agreement, "Insurance" is hereby modified and amended by deleting the
second sentence in Section 6.8(b) thereof in its entirety and inserting the
following in substitution thereof:
"Agent shall have the exclusive right to adjust any losses
payable under any such insurance policies in excess of $50,000, without any
liability to Borrowers whatsoever in respect of such adjustments."
7. Amendment to Section 6.18 of the Loan Agreement. Section 6.18 of the
Loan Agreement, "Refinance or Extended Maturity Date for Senior Notes and Reset
Debenture" is hereby modified and amended by deleting the reference to the
"Agent in its discretion" in the final clause of Section 6.18 and inserting
"Agent and the Required Lenders in their discretion" in substitution thereof.
8. Amendment to Section 7.20 of the Loan Agreement. Section 7.20 of the
Loan Agreement, "Financial Covenants" is hereby modified and amended by
inserting the following sentence after the final sentence in Section 7.20:
"Failure to deliver, by August 31 of each year, the
Projections described in this Section 7.20 in form and substance satisfactory to
Agent shall constitute an Event of Default."
9. No Other Waiver or Amendment. Except as otherwise set forth herein,
the execution, delivery and effectiveness of this Amendment shall not operate as
a waiver of any right, power or remedy of the Agent or the Lenders under the
Loan Agreement or any of the other Loan Documents, nor constitute a waiver of
any provision of the Loan Agreement or any of the other Loan Documents. Except
for the amendment set forth above, the text of the Loan Agreement and all other
Loan Documents shall remain unchanged and in full force and effect and each
Borrower hereby ratifies and confirms its obligations thereunder. This Amendment
shall not constitute a modification of the Loan Agreement or a course of dealing
with the Agent or the Lenders at variance with the Loan Agreement such as to
require further notice by the Agent or the Lenders to require strict compliance
with the terms of the Loan Agreement and the other Loan Documents in the future,
except as expressly set forth herein. Each Borrower acknowledges and expressly
agrees that the Agent and the Lenders reserve the right to, and do in fact,
require strict compliance with all terms and provisions of the Loan Agreement
and the other Loan Documents. The Borrowers have no knowledge of any challenge
to the Agent's or any Lenders' claims arising under the Loan Documents, or to
the effectiveness of the Loan Documents.
10. Conditions Precedent to Effectiveness. This Amendment shall become
effective as of the date hereof when, and only when, the Agent shall have
received all of the following:
(a) payment of an Agent's amendment fee from the Borrower in
the amount of $50,000 (it being understood that, by execution and delivery of
this Amendment, Borrower authorizes Agent to charge Borrower's Loan Account for
such fee and such amount shall thereafter accrue interest at the rate applicable
to Advances under the Loan Agreement in accordance with Section 2.6 of the Loan
Agreement) payable to the Agent for its sole benefit;
(b) payment of a Lenders' amendment fee from the Borrower in
the amount of
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$450,000 (it being understood that, by execution and delivery of this Amendment,
Borrower authorizes Agent to charge Borrower's Loan Account for such fee and
such amount shall thereafter accrue interest at the rate applicable to Advances
under the Loan Agreement in accordance with Section 2.6 of the Loan Agreement)
which shall be for the benefit of the Lenders in accordance with each Lender's
Pro Rata Share;
(c) fully executed and delivered counterparts of this
Amendment by the Borrowers, Lenders and Agent;
(d) such other information, documents, instruments or
approvals as the Agent or the Agent's counsel may reasonably require.
11. Representations and Warranties of Borrowers. Each Borrower
represents and warrants to the Agent and the Lenders as follows:
(a) Each Borrower is a corporation, limited liability company,
or limited partnership organized or formed, as the case may be, validly existing
and in good standing under the laws of the jurisdiction indicated on the
signature pages hereto and in all other jurisdictions in which the failure to be
so qualified reasonably could be expected to constitute a Material Adverse
Change;
(b) The execution, delivery, and performance by each Borrower
of this Amendment and the Loan Documents to which it is a party, as amended
hereby, are within such Borrower's corporate, limited liability company, or
partnership authority, have been duly authorized by all necessary corporate,
limited liability company, or partnership action and do not and will not (i)
violate any provision of federal, state, or local law or regulation applicable
to such 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
any Borrower, other than Permitted Liens, or (iv) require any approval of any
Borrower's shareholders, partners, or members or any approval or consent of any
Person under any material contractual obligation of any Borrower;
(c) The execution, delivery, and performance by each Borrower
of this Amendment and the Loan Documents to which it is a party, as amended
hereby, 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) This Amendment and each other Loan Document to which each
Borrower is a party, and all other documents contemplated hereby and thereby,
when executed and delivered by each Borrower will be the legally valid and
binding obligations of such Borrower, enforceable against each 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; and
(e) No Default or Event of Default is existing.
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12. Counterparts. This Amendment may be executed in multiple
counterparts, each of which shall be deemed to be an original and all of which,
taken together, shall constitute one and the same agreement. In proving this
Amendment in any judicial proceedings, it shall not be necessary to produce or
account for more than one such counterpart signed by the party against whom such
enforcement is sought. Any signatures delivered by a party by facsimile
transmission shall be deemed an original signature hereto.
13. Reference to and Effect on the Loan Documents. Upon the
effectiveness of this Amendment, on and after the date hereof each reference in
the Loan Agreement to "this Agreement", "hereunder", "hereof" or words of like
import referring to the Loan Agreement, and each reference in the other Loan
Documents to "the Loan Agreement" "thereunder", "thereof" or words of like
import referring to the Loan Agreement, shall mean and be a reference to the
Loan Agreement as amended hereby.
14. Costs, Expenses and Taxes. Borrowers agree to pay on demand all
reasonable costs and expenses in connection with the preparation, execution, and
delivery of this Amendment and the other instruments and documents to be
delivered hereunder, including, without limitation, the reasonable fees and
out-of-pocket expenses of counsel for the Agent with respect thereto and with
respect to advising the Agent as to its rights and responsibilities hereunder
and thereunder.
15. Governing Law. This Amendment shall be deemed to be made pursuant
to the laws of the State of Georgia with respect to agreements made and to be
performed wholly in the State of Georgia, and shall be construed, interpreted,
performed and enforced in accordance therewith.
16. Loan Document. This Amendment shall be deemed to be a Loan Document
for all purposes.
[THE REMAINDER OF THE PAGE IS INTENTIONALLY BLANK.]
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IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Amendment as of the day and year first written above.
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
SECOND AMENDMENT TO LOAN AGREEMENT
Signature Page 1
CREST CAPITAL LLC, a Nevada limited
liability company
/s/ Monte L. Miller
-----------------------------------------
By: Monte L. Miller
Its: Vice 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
SECOND AMENDMENT TO LOAN 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: Vice President
DREAMSTREET COMPANY, LLC,
a Delaware limited liability company
/s/ Robert A. Smith
-----------------------------------------
By: Robert A. Smith
Its: Vice President
SECOND AMENDMENT TO LOAN 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
SECOND AMENDMENT TO LOAN AGREEMENT
Signature Page 4
AGENT:
FOOTHILL CAPITAL CORPORATION,
a California corporation, as Agent
/s/ Renee D. Lefebvre
-----------------------------------------
By: Renee D. Lefebvre
Its: VP
LENDERS:
FOOTHILL CAPITAL CORPORATION,
as Lender and Issuing Bank
/s/ Renee D. Lefebvre
-----------------------------------------
By: Renee D. Lefebvre
Its: VP
TEXTRON FINANCIAL CORPORATION,
as Lender
/s/ Christopher A. Goukos
-----------------------------------------
By: Christopher A. Goukos
Its: President, Consumer Lending Division
THE CIT GROUP/BUSINESS CREDIT, INC.,
as Lender
/s/ Dominick A. Varipapa
-----------------------------------------
By: Dominick A. Varipapa
Its: Assistant Vice President
SECOND AMENDMENT TO LOAN AGREEMENT
Signature Page 5