EXHIBIT 10.1
SENIOR SECURED, SUPER PRIORITY DEBTOR-IN-POSSESSION
LOAN AND SECURITY AGREEMENT
THIS SENIOR SECURED, SUPER PRIORITY DEBTOR-IN-POSSESSION LOAN AND
SECURITY AGREEMENT (this "Agreement"), is entered into as of November 27, 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"), 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, each a debtor and
debtor-in-possession, are referred to hereinafter each individually as a
"Borrower," and individually and collectively, jointly and severally, as
"Borrowers").
WITNESSETH:
WHEREAS, on November 15, 2002 (the "Relief Date"), Borrowers filed a
voluntary petition for relief pursuant to Chapter 11 of the Bankruptcy Code in
the United States Bankruptcy Court for the District of Delaware (the "Court"),
and Borrowers continue to operate their respective businesses and manage their
respective properties as debtors-in-possession pursuant to Section 1107 and 1108
of the Bankruptcy Code; and
WHEREAS, prior to the Relief Date, the Lenders provided financing to
Borrowers (other than Oakwood MHD4, LLC) pursuant to that Loan and Security
Agreement dated as of January 22, 2002, as amended and modified by that certain
First Amendment to Loan Agreement dated as of July 8, 2002 and as further
amended and modified by that certain Second Amendment to Loan Agreement dated as
of July 31, 2002 (as modified, amended or otherwise supplemented from time to
time prior to the Relief Date, the "Pre-Relief Date Loan Agreement"); and
WHEREAS, the Lenders' commitments to provide ongoing financing to
Borrowers under the Pre-Relief Date Loan Agreement have been terminated; and
WHEREAS, Borrowers have requested that the Lenders provide a senior
secured, super-priority debtor-in-possession revolving credit facility of up to
$25,000,000 to fund ongoing working capital requirements of Borrower and for
other general corporate purposes of Borrowers in accordance with the Budget, and
the Lenders are willing to provide such financing to Borrowers in accordance
with and subject to the terms and conditions set forth in this Agreement.
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AGREEMENT
NOW, THEREFORE, in consideration of the agreements, provisions and
covenants set forth herein, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, Borrowers, Agent and
the Lenders do hereby 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 solely in a fiduciary capacity.
"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 for the account of any Borrower or any of its Subsidiaries.
"Additional Documents" has the meaning set forth in Section 4.4.
"Adequate Protection Payments" means, to the extent Cash Collateral use
is approved by order of the Court, periodic payments to the Pre-Relief Date
Lenders pursuant to the Pre-Relief Date Loan Agreement in respect of scheduled
payments of interest, fees and other charges (excluding principal) due to such
Persons as the same become due.
"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 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
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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 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.
"Asset Sale" means the sale, lease, conveyance or other disposition of
any assets or rights (including, without limitation, by way of a sale and
leaseback or by collection or recovery from any assets, including, without
limitation, the receipt of condemnation proceeds or insurance proceeds and any
other proceeds of such assets) by Borrowers, or any of them, other than any sale
of Inventory in the ordinary course of business.
"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.
"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).
"Avoidance Actions" means actions available to the bankruptcy estate of
Borrowers in the Chapter 11 Case pursuant to Sections 544, 545, 547, 548, 549,
550, 553(b) or 724(a) of the Bankruptcy Code.
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"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
Wells Fargo or its Affiliates, 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 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 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 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 by Wells Fargo or any Affiliate of Wells Fargo
including (a) credit cards, (b) credit card processing services, (c) debit
cards, (d) purchase cards, (e) ACH Transactions, (f) cash management, including
controlled disbursement, accounts or services, or (g) Hedge Agreements.
"Bank Product Reserves" means, as of any date of determination, the
amount of reserves that Agent has established (based upon 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.
"Bankruptcy Professionals" means (a) professionals retained by Borrower
in connection with the Chapter 11 Case, (b) to the extent not included in clause
(a) above, other Persons appointed pursuant to Sections 327, 330, 331 and 1103
of the Bankruptcy Code, and (c) professionals retained by the Committee, in each
case, as approved by the Court.
"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
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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 3.50 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.
"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
relating solely to the transfer of Installment Sales Contracts by OAC LLC
pursuant to a Securitized Transaction or the Warehouse Facility.
"Borrower" and "Borrowers" have the respective meanings set forth in
the preamble to this Agreement.
"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.
"Budget" means the operating budget of Borrowers relative to Borrowers'
operations in the Chapter 11 Case, delivered to and accepted by Agent on behalf
of the Lender Group on the Closing Date, attached as an exhibit to the Interim
Order, together with any replacement budget delivered thereafter that is
satisfactory to Agent and the Required Lenders in their Permitted Discretion.
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"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.
"Carve-Out Amount" means an aggregate amount equal to the sum of (a)
$500,000, plus (b) the Holdback Amount; provided however, that such amount shall
not include (a) Professional Fees and expenses that are accrued and paid prior
to the Maturity Date, or (b) fees payable to the U.S. Trustee in the Chapter 11
Case pursuant to the Bankruptcy Code, 28 U.S.C. ss. 1930, or other similar
statute mandating payment of U.S. Trustee fees.
"Carve-Out Expenses" means fees and expenses payable to (a) Bankruptcy
Professionals, and (b) the U.S. Trustee in connection with the Chapter 11 Case,
provided, that Carve-Out Expenses shall not include any other claims that are or
may be senior to or pari passu with any of the Carve-Out Expenses.
"Cash Collateral" has the meaning ascribed to such term in Section
363(a) of the Bankruptcy Code.
"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, 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 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
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Borrower, Agent, and one of the Cash Management Banks, which remain in effect in
the Chapter 11 Case.
"Cash Management Bank" has the meaning set forth in Section 2.7(a).
"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.
"Chapter 11 Case" means the voluntary petitions for relief under
Chapter 11 of the Bankruptcy Code filed by Borrowers in the Court on November
15, 2002, jointly administered as Chapter 11 Case No. 02-13396.
"Closing Date" means the date of the making of the initial Advance (or
other extension of credit) hereunder.
"Code" means the New York 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,
(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
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(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 until such time as Agent has delivered a notice to Administrative
Borrower and Warehouse Lender that an Event of Default has occurred hereunder,
to the extent transferred (whether transferred prior to the Relief Date or
thereafter) by OAC LLC to the "Transferor" (as defined in the Warehouse Facility
Documents) pursuant to the Warehouse Facility Documents, any Accounts (but
specifically excluding Eligible Accounts), Mortgage Loans (but specifically
excluding Agent's mortgages on the Real Property or aircrafts 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 not constitute collateral hereunder and, to the extent there
is any lien on or security interest in such property created by this Agreement
prior to such transfer, then automatically and without any further action by
Agent, such property shall be 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 Waiver" 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 Collateral, in form acceptable to Agent, or
the inclusion of such provisions in the Interim Order as may be acceptable 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, 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 hereunder in accordance with the provisions
of Section 14.1.
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"Committee" means the official committee of unsecured creditors formed,
appointed or approved by the United States Trustee in the Chapter 11 Case.
"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 Wachovia Bank, National Association, 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.
"Court" has the meaning set forth in the recital paragraphs hereto.
"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.
"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).
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"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 January 22, 2002 by and among Wachovia Bank, National
Association, Agent and Parent with respect to, among other things, the
Concentration Account and the Foothill Account, which remains in effect in the
Chapter 11 Case.
"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 Wachovia Bank, National Association,
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.
"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.
"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
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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, or any other terms by reason of which the payment by
the Account Debtor may be conditional,
(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
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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,
(n) Accounts with respect to which (i) the goods giving
rise to such Account have not been shipped and billed to the Account Debtor, 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 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,
12
(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 Waiver for such location has been requested by Agent
and such Collateral Access Waiver is not in effect,
(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 2 years prior to any
Advance date with respect thereto) or slow moving, restrictive or custom items,
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
13
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, 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.
"Exchange Act" means the Securities Exchange Act of 1934, as in effect
from time to time.
14
"Excluded Entities" means (a) OCC, (b) OMI, (c) Oak Leaf, (d) OMI Note
Trust 2001-A, a Delaware business trust, (e) Tarheel, (f) Oakwood Advance
Receivables Company, LLC, a Nevada limited liability company, (g) Oakwood
Investment Corporation, a Nevada corporation, (h) Oakwood NSPV-I Corporation, a
Nevada corporation, (i) MHD4 Holding Group, Ltd., a Texas limited partnership,
(j) Acquisition/USA, Ltd., a Texas limited partnership, (k) Oakwood
International Management, LLC, a North Carolina limited liability company, (l)
Oakwood International Limited Partnership, a North Carolina limited partnership,
and (m) any other Person formed after the Closing Date, upon prior notice to
Agent, in which a Borrower owns Stock, and 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.
"Fee Letter" means that certain fee letter, dated as of November 27,
2002, between Borrowers and Agent, in form and substance satisfactory to Agent.
"FEIN" means Federal Employer Identification Number.
"Final Order" means the order of the Court entered in the Chapter 11
Case after a final hearing under Bankruptcy Rule 4001(c)(2), which, among other
matters but not by way of limitation, authorizes Borrowers to obtain
debtor-in-possession financing.
"Foothill" means Foothill Capital Corporation, a California
corporation.
"Foothill Account" means account #2000014019551 maintained in
Foothill's name at Wachovia Bank, National Association, Charlotte, North
Carolina.
"Funding Date" means the date on which a Borrowing occurs.
"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(including, without limitation,
all rights under the Subservicing Agreement), 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
goods, Accounts, Investment Property, and Negotiable Collateral.
"Ginkgo" means Ginkgo Corporation, a Delaware corporation.
15
"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.
"Holdback Amount" means, as of any date of determination prior to the
Maturity Date, the unpaid fees (provided that such fees do not exceed 20% of the
total fees on any statement) owed to any Bankruptcy Professional by Borrowers
(as calculated pursuant to the Court order approving the procedure for interim
compensation for such Bankruptcy Professional), provided that, with respect to
such fees incurred, (a) the services of such Bankruptcy Professional were
provided prior to the Maturity Date, (b) a statement for such services has been
delivered to Agent within 15 days after the end of each quarter in which the
services were performed, and (c) (i) there has been no objection filed with the
Court by Borrowers, the U.S. Trustee, the Committee, Agent, or any Lender with
respect to such fees, or (ii) a fee application has been approved by the Court.
"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
16
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.
"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, in form and substance satisfactory to Agent, as amended, restated,
supplemented, or otherwise modified from time to time.
"Interim Order" means the order of the Court entered in the Chapter 11
Case after a hearing, satisfactory in form and substance to Agent, which, among
other matters but not by way of limitation, authorizes Borrowers to obtain
credit, incur indebtedness and grant the Liens contemplated by this Agreement
and the other Loan Documents, as the case may be, and provides for the
super-priority of Lenders' claims, all as set forth in such order.
17
"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, including all accessions, additions, attachments, improvements,
substitutions and replacements thereto.
"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
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.
"Lender Group" means, individually and collectively, each of the
Lenders (including the Issuing Lender) and Agent.
18
"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 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 the Pre-Relief Date Loan Agreement, 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 the Pre-Relief Date Loan Agreement
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, (i) fees and expenses
of any financial advisor retained by the Lender Group in connection with the
Chapter 11 Case, and (j) 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 the Chapter 11 Case or
in any other "workout," "restructuring," or any other 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
19
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.
"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 (together with all exhibits and
schedules hereto), the Bank Product Agreements, the Cash Management Agreements,
the Control Agreements, the Collateral Access Waivers, the Depository Account
Agreement, the Intellectual Property Security Agreement, the Interim Order, the
Fee Letter, the Letters of Credit, 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.
"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, other than as
a result of the filing of the Chapter 11 Case, (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 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 Amount" means, at any time of determination, $25,000,000.
"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.
"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.
"Net Proceeds" means, with respect to any Asset Sale, all proceeds
derived from such Asset Sale, net of (a) commissions and other reasonable and
customary transaction costs, fees and expenses properly attributable to such
transaction and payable by Borrowers in connection therewith (in each case, paid
to non-Affiliates), (b) transfer taxes, and (c) amounts payable to holders of
senior Liens on the assets sold.
"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.
"Oak Leaf" means Oak Leaf Holdings, LLC, a Delaware limited liability
company.
"Oakwood MHD4" means Oakwood MHD4, LLC, a Delaware limited liability
company, a wholly-owned, direct subsidiary of HBOS Manufacturing, L.P. .
"Oakwood Servicing" means Oakwood Servicing Holdings Co., LLC, a Nevada
limited liability company, a wholly-owned, direct subsidiary of OAC LLC.
"Obligations" means (a) all loans, Advances, debts, principal, interest
and 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, 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.
"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.
"OMH" means Oakwood Mobile Homes, Inc., a North Carolina corporation
and wholly-owned Subsidiary of Parent.
21
"OMI" means Oakwood Mortgage Investors, a Nevada corporation and
wholly-owned Subsidiary of OAC LLC.
"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).
"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); provided
the Net Proceeds of such sale are used as set forth in Section 2.4 hereof,
(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
22
set forth on Schedule L-2 or is approved in advance by Agent, and (C) the
proceeds of such sale are used as set forth in Section 2.4 hereunder,
(f) subject to Section 7.24 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 7.24 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) the sale by OFC of Securitization Securities without
recourse, provided that the proceeds of such sale are delivered to Parent and
used as set forth in Section 2.4 hereof,
(i) dispositions between Borrowers permitted pursuant to
Section 7.3(c), and
(j) the conveyance of all right, title and interest of
OAC LLC as servicer under pooling and servicing agreements in Securitized
Transactions or under the Warehouse Facility in favor of Oakwood Servicing so
long as prior to the effectiveness of such conveyance, Agent shall have received
in form and substance satisfactory to Agent (i) a copy of an entered order of
the Court approving such conveyance and (ii) a copy of the duly executed
Subservicing Agreement in connection therewith.
"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 to consumers 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,
23
(g) unsecured intercompany loan of Parent to Tarheel made
prior to the Relief Date and in an aggregate amount not to exceed $8,500,000,
and unsecured intercompany loans from Tarheel to Parent,
(h) Investments in OFC, Oakwood Investment Corporation
and Oakwood NSPV-I Corporation; provided that 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,
(i) capital contributions made prior to the Relief Date
by (i) OAC LLC to Oakwood Advance Receivables Company, LLC in the ordinary
course of business pursuant to the Servicer Advance Documents and (ii) Parent to
Tarheel, and
(j) Securitization Securities generated through
Securitized Transactions in the ordinary course of business.
"Permitted Liens" means:
(a) Liens held by Agent to secure the Obligations,
(b) Liens for unpaid taxes (i) that are not yet
delinquent, or (ii) to the extent non-payment thereof is permitted by the
Bankruptcy Code,
(c) Liens set forth on Schedule P-1,
(d) the interests of lessors under transactions accounted
for as operating leases entered into prior to the Relief Date,
(e) purchase money Liens or the interests of lessors
under Capital Leases to the extent that such Liens or interests secure Purchase
Money Indebtedness incurred prior to the Relief Date 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 are subordinate to the Liens of
Agent and Lenders pursuant to the Interim Order,
(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,
24
(j) Liens with respect to the Real Property Collateral
that are exceptions to the commitments for title insurance issued in connection
with the Mortgages (as defined in the Pre-Relief Date Loan Agreement), as
accepted by Agent,
(k) 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,
(l) 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,
(m) Liens in favor of Oakwood Advance Receivables
Company, LLC, a Nevada limited liability company, granted by OAC LLC in P&I
Advances sold by OAC LLC pursuant to the Servicer Advance Documents,
(n) Liens arising after the Relief Date from judgments
and attachments in connection with court proceedings provided that the
attachment or enforcement of such Liens would not result in an Event of Default
hereunder and such Liens are subject to a Permitted Protest and no material
Collateral is subject to a material risk of loss or forfeiture and the claims in
respect of such Liens are fully covered by insurance (subject to ordinary and
customary deductibles) and a stay of execution pending appeal or proceeding for
review is in effect,
(o) Liens for Carve-Out Expenses not exceeding the Carve
Out Amount, and
(p) Liens securing Senior Claims.
"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 Agent's Liens.
"Permitted Uses" means (a) for working capital and other general
corporate purposes of Borrowers (including payment of trade debt incurred prior
to the Relief Date in the ordinary course as approved by the Court and set forth
in the Budget), (b) to make Adequate Protection Payments, and (c) to pay fees
and expenses of Bankruptcy Professionals (including fees owed to the U.S.
Trustee), provided that at no time shall the purchase of any Securitization
Security constitute a "Permitted Use."
"Person" means natural persons, corporations, limited liability
companies, limited partnerships, general partnerships, limited liability
partnerships, joint ventures, trusts, land trusts,
25
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, executed
and delivered by each Borrower that owns Stock of any Subsidiary of Parent,
specifically including, but not limited to, the Stock of Oakwood Servicing,
Oakwood MHD4 and 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 formed prior to the Relief Date 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.
"Pre-Relief Date Lenders" means "Lenders" as defined in the Pre-Relief
Date Loan Agreement.
"Pre-Relief Date Loan Agreement" has the meaning set forth in the
recital paragraphs hereto.
"Pre-Relief Date Loan Documents" means "Loan Documents" as defined in
the Pre-Relief Date Loan Agreement.
"Pre-Relief Date Obligations" means the sum of (a) the principal amount
of all Advances and other loans outstanding under the Pre-Relief Date Loan
Agreement as of the Closing Date, including the undrawn face amount of all
Letters of Credit thereunder, plus (b) as of any date of determination, all
accrued and unpaid interest and fees thereon (including interest and fees
accruing after the filing of the Chapter 11 Case), together with all costs,
expenses and other obligations owing under the Pre-Relief Date Loan Agreement.
"Pricing Reserves" means 1.4% of the manufactured cost of retail
Inventory, manufactured between October 1, 2001 and September 30, 2002.
Additional pricing reserves for Inventory manufactured subsequent to September
30, 2002, will be evaluated by Agent's auditors at each quarterly audit, and
will equate to the amount of costing variances in excess of 2%.
"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
26
(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 any parcel or parcels of Real Property
owned by any Borrower as of the Relief Date or thereafter acquired.
"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.
"Relief Date" has the meaning set forth in the recital paragraphs
hereto.
"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 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.
"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
27
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 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.
"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 12.5% 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.
"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.
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"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 Claims" means (a) Liens on Inventory (and related accounts and
proceeds) owned by Suburban and New Dimension Homes, Inc. securing Indebtedness
to their respective floor plan lenders in an aggregate outstanding amount not
exceeding $10,000,000, (b) Liens on the IRB Properties securing the IRBs issued
prior to the Relief Date, and (c) all other valid, perfected and non-avoidable
secured claims existing as of the Relief Date, in each case, to the extent
allowed by the Court.
"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
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.
"Servicer Advance Facility" means that certain receivables purchase
facility provided to OAC LLC prior to the Relief Date 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.
"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).
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"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).
"Subservicing Agreement" means that agreement to be entered into
between Oakwood Servicing and OAC LLC, to be dated on or after December 12,
2002, in form and substance satisfactory to Agent, pursuant to which OAC LLC
shall agree to service pooling and servicing agreements under Securitized
Transactions and the Warehouse Facility Documents on behalf of Oakwood Servicing
upon terms and conditions satisfactory to Agent.
"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).
"Tarheel" means Tarheel Insurance Company, Ltd. (f/k/a Blue Ridge
Insurance Company, Ltd.), a Bermuda corporation, and a Subsidiary of Parent.
"Taxes" has the meaning set forth in Section 16.11.
"Tax Refund Overadvance" has the meaning set forth in Section 2.1.
"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.
"U.S. Trustee" means the United States Trustee appointed to the Chapter
11 Case.
"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.
30
"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 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 amendments to such agreements on or before November 29, 2002, and any
amendments thereafter in form and substance satisfactory to Agent, and including
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,
31
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.
Agent and Lenders acknowledge and agree that on or prior to December 9, 2002,
Borrowers shall be permitted to replace Schedules P-1, 2.7, 5.5, 5.19, 5.21 and
7.8 hereto so long as such replacement schedules, or any of them, are in form
and substance satisfactory to Agent.
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
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:
(w) 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, and
(ii) an amount
equal to Borrowers'
Collections with respect to
Accounts owed by Dealers
for the immediately
preceding 30 day period,
plus
(x) the lowest of
(i) (A) the value
of Eligible Inventory less
the Pricing Reserve,
multiplied by (B) 60%,
32
(ii) 80% times the
then extant Net Liquidation
Percentage times the book
value of Borrowers'
Eligible Inventory, and
(iii) 103% times
the value of all Inventory
(including Eligible
Inventory and ineligible
Inventory) reflected on the
balance sheet included in
the Budget as of the most
recent month end, plus
(y) from the Closing Date
through the date Borrowers
receive the federal income
tax refund for the fiscal
year 2002, $15,000,000 (the
"Tax Refund Overadvance"),
minus
(z) the sum of (i) the
Carve-Out, (ii) the
aggregate outstanding
amount of Pre-Relief Date
Obligations, and (iii) the
aggregate amount of
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 Agent's Liens), which Lien or trust, in the Permitted Discretion
of Agent likely would have a priority superior to 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 Amount.
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(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 ADEQUATE PROTECTION PAYMENTS.Without further notice to or
action on the part of any Borrower, each Borrower hereby authorizes Agent and
Lenders to make Advances from time to time at such time as any Adequate
Protection Payments become due to fully fund such Adequate Protection Payments.
Agent and Lenders are authorized to deliver the proceeds of such Advance
directly to Agent (as defined in the Pre-Relief Date Loan Agreement) under the
Pre-Relief Date Loan Agreement for the payment of such Adequate Protection
Payments. Agent and Lenders are authorized to make Advances pursuant to this
Section 2.2 notwithstanding the existence of any Overadvance prior to the making
thereof or after giving effect thereto.
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. (Atlanta,
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. (Atlanta, 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.
(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. (Atlanta, 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
34
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. (Atlanta, 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 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.
35
(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 or remedies
against any such Defaulting Lender arising out of or in
relation to such failure to fund.
36
(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 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 all payments thereon shall be
payable to Agent solely for its own account (and for
37
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 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. (Atlanta, 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. (Atlanta, 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. (Atlanta,
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
38
portion of such Swing Loan or Agent Advance representing Swing
Lender's Pro 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.
39
(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) 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 (1) 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, (2) 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 Amount, and (3) 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 10 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
40
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.
(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.
(Atlanta, Georgia time) on the date specified herein. Any
payment received by Agent later than 2:00 p.m. (Atlanta,
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. Except as set forth in sections
(c), (d) and (e) below hereof, 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,
41
(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,
(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
the Lenders, 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, and
(L) twelfth, to Administrative Borrower
(to be wired to the Designated Account) or such other
Person (including the Court) 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 payment by
Borrowers specified by Borrowers to be for the payment of
specific
42
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.
(v) 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, 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.
(vi) APPLICATION OF PROCEEDS FOLLOWING
TERMINATION. Notwithstanding anything to the contrary set
forth in this Section 2.4, upon the termination of the
Commitment hereunder after the occurrence of an Event of
Default or the Maturity Date, the proceeds of all Accounts and
other Collateral shall be applied first, to any Obligations
owed or outstanding under the Pre-Relief Date Loan Agreement;
and second, to the Obligations hereunder as set forth in
Section 2.4(b)(i) above.
(c) ASSET SALES.
(i) Immediately upon receipt by Borrowers or any
of their Subsidiaries of the Net Proceeds from any Asset Sale
of Eligible Accounts or Eligible Inventory, Borrowers shall
deliver such Net Proceeds to Agent to prepay the Advances
outstanding hereunder, and then, to the extent an Overadvance
then exists, to cash collateralize letters of credit issued
under this Agreement to the extent of such Overadvance.
(ii) Upon any Asset Sale of Inventory that does
not constitute Eligible Inventory, Borrowers may retain 100%
of the Net Proceeds from such sale for working capital needs
so long as no Event of Default exists.
(iii) (A) Prior to repayment of the Tax
Refund Overadvance in full,
(x) 50% of the Net Proceeds from any
Asset Sale of Real Property
Collateral, Equipment,
Securitization Securities (whether
such Securitization Securities are
sold by a Borrower or a Subsidiary
of Borrower with the Net Proceeds of
such sale being distributed to such
Borrower as required hereunder) and
all other assets (not otherwise
43
referenced above in this Section
2.4(c)) shall be immediately
delivered to Agent and used to cash
collateralize Letters of Credit (as
defined in the Pre-Relief Date Loan
Agreement) issued under the
Pre-Relief Date Loan Agreement, and
(y) the remaining 50% of such
Net Proceeds shall be used to
permanently repay the Tax Refund
Overadvance.
(B) Upon repayment of the Tax Refund
Overadvance in full,
(x) 75% of such Net Proceeds
shall be immediately delivered to
Agent and used to cash collateralize
Letters of Credit (as defined in the
Pre-Relief Date Loan Agreement)
issued under the Pre-Relief Date
Loan Agreement, and
(y) the remaining 25% of such
Net Proceeds in an aggregate amount
of up to $10,000,000 (with any
amount in excess of $10,000,000
being applied as cash collateral as
set forth in Section 2.4(c)(iii)(B)
(x) above) may be retained by
Borrowers for working capital needs.
All amounts held to cash collateralize Letters of Credit
issued under the Pre-Relief Date Loan Agreement shall be
placed in an interest bearing account, with the interest
earned on such funds being credited to the cash collateral
balance until such Letters of Credit issued under the
Pre-Relief Date Loan Agreement are fully cash collateralized
as required by this Agreement.
(d) TAX REFUNDS. Upon receipt by any Borrower of any tax
refund, one hundred percent (100%) of such tax refund shall be
immediately delivered to Agent and used to permanently repay
the Tax Refund Overadvance. Upon repayment of the Tax Refund
Overadvance in full and so long as no Event of Default exists
hereunder, the remaining proceeds of all tax refunds may be
retained by Borrowers for working capital needs.
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.
2.6 INTEREST RATES AND LETTER OF CREDIT FEE: RATES, PAYMENTS, AND
CALCULATIONS.
44
(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 9%. 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 5% 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 5 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
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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 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)
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.
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(b) Borrowers shall cause each Cash Management Bank to
establish and maintain Cash Management Agreements with Agent and Borrowers, in
form and substance 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 any Event of Default exists.
Any funds swept to the Agent's Account pursuant to 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
47
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. (Atlanta, Georgia time). If any
payment item is received into the Agent's Account on a non-Business Day or after
2:00 p.m. (Atlanta, 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 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,
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(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 the
Maximum 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) issued under this Agreement shall
have an expiry date no later than December 31, 2002, 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., Atlanta, 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., Atlanta, 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.,
Atlanta, Georgia time, on (i) the Business Day that Administrative Borrower
receives such notice, if such notice is received prior to 1:00 p.m., Atlanta,
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 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 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, the Issuing Lender shall be deemed to
have granted to each Lender with a Commitment, and each Lender 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 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 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
50
Section 3 hereof. If any such Lender fails to make available to 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
51
upon the number of days such Letter of Credit remains outstanding), which fee
shall be payable by Borrowers monthly in arrears.
(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
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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 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 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
53
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 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 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 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:
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(i) Agent and Lenders may collect from such
Borrower without first foreclosing on any Real or Personal
Property Collateral pledged by any other 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.
(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 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.
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(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 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, enforced and received by
such Borrower as trustee for Agent, and Agent shall apply such amounts to the
Obligations in accordance with Section 2.4(b).
2.16 SUPER-PRIORITY NATURE OF OBLIGATIONS. All Obligations under
this Agreement and the Loan Documents shall constitute administrative expenses
of Borrowers in the Chapter 11 Case with priority under Section 364(c)(1) of the
Bankruptcy Code over any and all other administrative expenses of the kind
specified in, without limitation, Sections 105, 326, 330, 331, 503(b), 506(c),
507(a), 507(b) and 726 of the Bankruptcy Code, and shall also have priority over
any claims arising under Section 506(c) of the Bankruptcy Code, subject and
subordinate only to (a) the Carve-Out Expenses up to the Carve-Out Amount, (b)
Senior Claims, and (c) proceeds of, or recoveries under, Avoidance Actions,
which claims to the Avoidance Actions shall attach pari passu with other
administrative claimants. No other claim having a priority superior or pari
passu to that granted to or on behalf of Agent and the Lender Group by the
Interim Order shall be granted or approved while any of the Obligations or the
Commitment under this Agreement remain outstanding.
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 (other than any
initial Advance made to pay fees due to the Agent or any Lender hereunder or
under the Fee Letter), is subject to the fulfillment, to the satisfaction of
Agent and each Lender of each of the conditions precedent set forth below:
(a) 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 Intellectual Property Security
Agreement,
(ii) the Fee Letter, and
56
(iii) 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.
(b) 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;
(c) [Intentionally Omitted],
(d) Agent shall have received the Budget, in form and
substance satisfactory to Agent, evidencing that Borrowers have sufficient
liquidity available to meet operating needs through the term of this Agreement;
(e) Borrowers shall pay all Lender Group Expenses
incurred in connection with the transactions evidenced by this Agreement;
(f) Agent shall have received evidence that the Warehouse
Facility is in full force and effect (on substantially the same terms as in
effect prior to the Relief Date) and that no default or event of default exists
thereunder and that the continued maintenance of the Warehouse Facility shall
have been approved by the Court;
(g) the Interim Order, in form and substance satisfactory
to Lenders, approving the transactions contemplated hereby and granting a first
priority perfected security interest in the Collateral subject only to Senior
Claims and Avoidance Actions (which claims to proceeds of the Avoidance Actions
shall be pari passu claims) shall have been entered by the Court and Agent shall
have received a certified copy of such Interim Order;
(h) the automatic stay shall have been modified to permit
the creation and perfection of Agent's Liens and security interests and shall
have been automatically vacated to permit enforcement of Agent's rights and
remedies under the Loan Documents;
(i) Agent's counsel shall have received copies of all
"first day" pleadings and orders submitted to the Court by Borrowers; and
(j) 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
57
the conditions subsequent set forth below (the failure by Borrowers to so
perform or cause to be performed constituting an Event of Default):
(a) Not later than December 9, 2002, 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,
(b) Not later than December 9, 2002, Agent and Lenders
shall have received the financial statements for the period ending October 31,
2002 required to be delivered to Agent pursuant to Section 6.3 of the Pre-Relief
Date Loan Agreement,
(c) Not later than December 13, 2002, with respect to the
30-day period ending on the Relief Date, Agent shall have been provided (and if
so requested by any Lender, with copies for such Lender) with the following
documents, in each case unless the context clearly requires otherwise, for
Parent and each Subsidiary on a consolidated basis (excluding the Excluded
Entities) for such 30-day period or as of the Relief Date, as applicable:
(i) details (including the amount and
description of Inventory) on any repurchase required by floor
plan lenders under the respective repurchase contracts;
(ii) 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;
(iii) notice of all returns, disputes, or claims
in excess of $50,000 with respect to any Account owed by a
Dealer;
(iv) 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);
(v) a summary aging, by vendor, of Borrowers'
accounts payable and any book overdraft;
(vi) a detailed aging, of Borrowers' Inventory,
together with a mix report;
(vii) a reconciliation of month-end Accounts
aging, Inventory perpetual, and payables aging to the general
ledger and month-end financial statements;
(viii) a calculation of Dilution for the prior
month;
(ix) a report containing the status of Borrowers'
liquidation plan of the Liquidating Real Property and the
Liquidating Personal Property, as applicable,
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containing Borrowers' current experience with such liquidation
and sale and gross margin percentages noted;
(x) Intentionally Omitted;
(xi) a report regarding each Borrower's accrued,
but unpaid, ad valorem taxes; and
(xii) 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.
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;
(e) [Intentionally Omitted]
(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; and
(g) Agent shall have a first priority perfected security
interest in the Collateral except for Senior Claims.
3.4 TERM. This Agreement shall become effective upon the execution
and delivery hereof by Borrowers, Agent and the Lenders and shall continue in
full force and effect for a term
59
ending on the date (the "Maturity Date") that is earlier of (a) December 31,
2002, (b) the date of the closing of any other debtor-in-possession financing
facility to any of the Borrowers, (c) three Business Days after the date of
entry of a Final Order approving any debtor-in-possession financing to any of
the Borrowers, (d) the sale of all or substantially all of any Borrower's
assets, whether under Section 363 of the Bankruptcy Code, a confirmed plan of
reorganization or otherwise, or (e) the date of termination of this Agreement in
accordance with its terms after the occurrence and during the continuation of an
Event of Default. 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) 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). No termination of
this Agreement, however, shall relieve or discharge Borrowers of their duties,
Obligations, or covenants hereunder and 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, Agent's Liens and all
notices of security interests and liens previously filed by Agent with respect
to the Obligations.
3.6 [INTENTIONALLY OMITTED].
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4. CREATION OF SECURITY INTEREST.
4.1 GRANT OF SECURITY INTEREST. Each Borrower hereby grants to
Agent, for the benefit of the Lender Group, a continuing security interest in
all of its right, title, and interest in all currently existing and hereafter
acquired or arising 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. Agent's Liens in and to
the Collateral shall attach to all Collateral without further act on the part
of Agent, any other member of the Lender Group 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, 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 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 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
61
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 at such
62
times as Agent determines in its sole discretion, and (b) require audits at
such times as Agent determines in its sole discretion, in each case at
Borrowers' expense. 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.
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
63
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.
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).
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(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.
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 incurred after the
Relief Date, (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 entry of the Interim Order, 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.
(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) the Chapter 11 Case, (b) matters
that are fully covered by insurance (subject to customary deductibles), (c)
matters arising prior to the Relief Date which have been stayed, and (d)
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.
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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 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 [INTENTIONALLY OMITTED].
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 [INTENTIONALLY OMITTED].
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.
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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 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 Budget represents, and as of the date on
which any replacement thereof is delivered to Agent, such replacement Budget
represents Borrowers' good faith best estimate of its future performance and
cash flow needs 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 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 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.
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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;
(d) any borrowing base certificate or similar
borrowing availability calculation, if
applicable, with respect to the Warehouse
Facility and Servicer Advance Facility;
(e) a detailed calculation setting forth
whether Borrowers were in compliance with
Section 7.20 hereof for the immediately
preceding week; and
(f) a statement of the amount of funds in
Borrowers' possession with respect to any
sale by any Borrower of repossessed homes.
Uponrequest by Agent (g) 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
(h) 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 REPORTS AND CERTIFICATES. Deliver to Agent, with copies to
each Lender:
(a) 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
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(iv) any other information that is provided by
Parent to its shareholders generally,
(b) 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,
(c) 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,
(d) 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,
(e) as soon as any Borrower has received a material
notice delivered under any Repurchase Agreement (including, without limitation,
any notice to repurchase Inventory), the Warehouse Facility Documents,
Securitized Transaction, the Servicer Advance Documents, or IRB, copies of such
notice, and
(f) upon the request of Agent, any other report
reasonably requested relating to the financial condition of Borrowers.
Borrowers agree 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 DOCUMENTS FILED WITH THE COURT OR DELIVERED TO THE U.S.
TRUSTEE OR COMMITTEE. At the time any report (including, without limitation,
monthly reports), projection, prospectus or other similar document is filed
with the Court, provided to the Committee, or provided to the U.S. Trustee, as
applicable, deliver to Agent and each Lender copies of such monthly report,
projection, prospectus or other report describing the business and/or financial
condition of the Borrowers.
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
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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. Except to the extent non-payment is permitted by the
Bankruptcy Code, 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. To the
extent non-payment is permitted by the Bankruptcy Code, 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.
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
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under any such insurance policies in excess of $50,000, 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 Agent's Liens on such assets and also provides to Agent a Collateral
Access Waiver 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 or to the extent non-payment is permitted by the Bankruptcy
Code.
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
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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.
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 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
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perform and comply with all obligations to be performed by Tarheel under such
reinsurance policies.
6.18 REIMBURSEMENT OF SERVICING ADVANCES. Borrowers will seek
reimbursement of all amounts due to any Borrower from a Securitization Entity
or the Warehouse Facility promptly upon becoming so entitled under the relevant
Securitization Transaction or Warehouse Facility, as applicable.
6.19 DIP FINANCING. Each Borrower shall use its best efforts to
obtain, no later than December 20, 2002, the approval of the Court of a
permanent debtor-in-possession facility (which shall provide for payment in
full in cash of all Pre-Relief Date Obligations and all Obligations hereunder).
6.20 FILING OF TAX REFUND CLAIM. No later than December 23, 2002,
Borrowers shall file (and provide Agent with evidence thereof), its federal tax
refund claim for an aggregate amount of not less than $25,750,000.
6.21 RETENTION OF THE RESTRUCTURING ADVISORS. Borrowers shall
continue to engage, upon terms and conditions satisfactory to Agent,
restructuring advisory professionals acceptable to Agent.
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, and Indebtedness under the
Pre-Relief Date Loan Agreement and related loan documents;
(b) Indebtedness arising prior to the Relief Date under
the Senior Notes, Reset Debentures, the Servicer Advance Facility, and the IRBs
described on Schedule 7.1(b);
(c) Purchase Money Indebtedness incurred prior to the
Relief Date;
(d) contingent obligations to repurchase manufactured
housing inventory from floor plan lenders pursuant to Repurchase Agreements
(including the face amount of any letters of credit issued for the account of
any Borrower in favor of such floor plan lenders) in an aggregate amount not to
exceed $10,000,000 at any time outstanding;
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(e) guarantees of debt incurred prior to the Relief Date
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;
(f) Indebtedness in connection with a Securitization
Transaction (including any Pre-Relief Date guaranty of Parent with respect
thereto, it being specifically agreed that Parent shall not guaranty any
Securitized Transaction after the Relief Date);
(g) Indebtedness in connection with the Warehouse
Facility;
(h) Indebtedness described in clause (g) of the
definition of Permitted Investments;
(i) unsecured Indebtedness of a Borrower to any other
Borrower;
(j) guarantees permitted under Section 7.6; and
(k) 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. The prohibition provided for in this Section 7.2
specifically includes, without limitation, any effort by any Borrower, the
Committee or any other party-in-interest in the Chapter 11 Case to "prime" or
create pari passu to any claims or interests of the Lenders any Lien
irrespective of whether such claims or interests may be "adequately protected."
7.3 RESTRICTIONS ON FUNDAMENTAL CHANGES.
(a) Enter into any merger, consolidation,
reorganization, or recapitalization (other than in connection with a confirmed
plan of reorganization acceptable to Agent and Lenders), 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.
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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 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.
7.6 CHANGE NAME. Change any Borrower's name, state of
incorporation or formation, FEIN, corporate structure or identity, or add any
new fictitious name.
7.7 NATURE OF BUSINESS. Make any change in the principal nature
of Borrowers' business or permit (a) OFC to own any assets (other than regular
and residual Securitization Securities and funds used for the acquisition
thereof) or incur or remain liable with respect to any liabilities (other than
those specifically permitted herein) or (b) Oakwood Servicing to own any assets
or incur or remain liable with respect to any liabilities (other than the
assets and liability assigned to OAC LLC pursuant to the Subservicing
Agreement).
7.8 PREPAYMENTS AND AMENDMENTS.
(a) Except (i) as set forth on Schedule 7.8, (ii) as
specifically permitted under the Interim Order, (iii) for payments disclosed in
the Budget, to the extent permitted by the Court, (iv) other payments either
permitted by the Court after notice and a hearing, or consented to by the
Required Lenders, or (v) for the Pre-Relief Date Obligations and the
Obligations, make any payment (whether for principal, interest, fees or
otherwise) or transfer with respect to any Pre-Relief Date Lien or Pre-Relief
Date Indebtedness or other claim arising prior to the Relief Date (including,
without limitation, any guaranty of Parent of Securitization Transactions),
whether by way of "adequate protection" under the Bankruptcy Code or otherwise.
(b) 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 incurred after the Relief Date,
(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 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)
the Subservicing Agreement or 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.
7.9 CHANGE OF CONTROL. Cause, permit, or suffer, directly or
indirectly, any Change of Control, other than in connection with the
consummation of a plan of reorganization acceptable to Agent and Required
Lenders.
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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, 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 Permitted Uses.
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 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 Agent's Liens and also provides to
Agent a Collateral Access Waiver with respect to such new location. The
Inventory and Equipment shall
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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 RECEIPTS/DISBURSEMENTS RATIO. On a cumulative basis for
December 2002, measured as of the end of each week in December 2002, fail to
have the ratio of collected receipts for such period to disbursements for such
period be at least 95% of the ratio of projected receipts to projected
disbursements for such period set forth in the Budget.
7.21 MAXIMUM CAPITAL EXPENDITURES. Make capital expenditures in
excess of the amount set forth in the Budget.
7.22 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.
7.23 [INTENTIONALLY OMITTED] .
7.24 WAREHOUSE FACILITY AND SECURITIZATION TRANSACTIONS.
(a) During the existence of any Event of Default, (i)
sell Installment Sales Contracts pursuant to the Warehouse Facility Documents
if either (A) the "Class A Note Principal Balance" (as defined in the Warehouse
Facility Documents) equals or exceeds $200,000,000, or (B) 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, or (ii) make any "servicer advance,"
"escrow advance," "repossession advance," or P&I Advance if Borrowers have any
reason to believe that the foregoing will not qualify for reimbursement under,
or will not be recoverable from, the Securitization Entity.
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(b) Enter into any Securitization Transaction after the
Closing Date unless such Securitized Transaction: (a) requires the payment of a
servicing fee to any Borrower or its Affiliate, if such entity is the servicer,
of at least 100 basis points prior to the payment of any other obligations
thereunder, (b) requires cash payments for the assets transferred at a discount
rate of at least 90%, and (c) provides for liquidity in an amount not less than
the amount set forth in the Budget.
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, 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 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 [Intentionally Omitted];
8.5 If any order (other than the Interim Order) is entered by the
Court: (a) approving additional financing under Section 364(c) or (d) of the
Bankruptcy Code; (b) granting any Lien upon or affecting any Collateral; (c)
permitting the use of Cash Collateral of the Lenders under Section 363(c) of
the Bankruptcy Code without the Required Lenders' consent; or (d) which is
adverse to any member of the Lender Group or its rights and remedies hereunder
or its interest in the Collateral that would, individually or in the aggregate,
result in a Material Adverse Change;
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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 from and after the Relief Date, 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 Post-Relief Date 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;
8.9 If there is a default with respect to any Indebtedness
incurred after the Relief Date 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, (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;
(b) there is a material modification or supplement to any Warehouse Facility
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, event of
default or similar event shall occur under such facility resulting in the
acceleration of the obligations owed pursuant to such facility or the temporary
or permanent suspension of sales of Mortgage Loans, Installment Sales Contracts
or similar assets to the Warehouse Facility, or (d) (i) the percentage (whether
as a stated percentage or the calculation of the "weighted average 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
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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;
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;
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 [Intentionally Omitted];
8.17 [Intentionally Omitted];
8.18 If any claim or claims under Section 506(c) of the Bankruptcy
Code against or with respect to any of the Collateral is allowed;
8.19 The filing of any plan of reorganization or disclosure
statement attendant thereto by any Borrower or any other Person to which the
Required Lenders do not consent or otherwise agree to the treatment of their
claims;
8.20 The entry of an order confirming a plan of reorganization
that does not require repayment in full of all of Borrowers' Obligations under
this Agreement and the obligations of Borrowers to the Pre-Relief Date Lenders
under the Pre-Relief Date Loan Agreement on the earlier of the effective date
of such plan of reorganization or thirty (30) days following entry of the order
confirming such plan of reorganization;
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8.21 The entry of an order amending, supplementing, staying,
vacating or otherwise modifying the Loan Documents or the Interim Order without
the written consent of the Required Lenders;
8.22 [Intentionally Omitted];
8.23 The sale without the Required Lenders' consent, of all or
substantially all of Borrowers' assets either through a sale under Section 363
of the Bankruptcy Code, through a confirmed plan of reorganization in the
Chapter 11 Case, or otherwise;
8.24 The dismissal of the Chapter 11 Case, or the conversion of
the Chapter 11 Case from one under Chapter 11 to one under Chapter 7 of the
Bankruptcy Code;
8.25 The commencement of a suit or action against the Lenders and,
as to any suit or action brought by any Person other than Borrowers or an
officer or employee of Borrowers, the continuation thereof without dismissal
for thirty (30) days after service thereof on the Lenders, that assert, by or
on behalf of Borrowers, or any official committee in the Chapter 11 Case, any
claim or legal or equitable remedy which seeks subordination of the claim or
Lien of the Lenders hereunder or under any other Loan Document;
8.26 If, without the Required Lenders' consent, an interim or
permanent trustee is appointed in the Chapter 11 Case, or an examiner with
expanded powers to operate or manage the financial affairs, the business, or
reorganization of Borrowers is appointed in the Chapter 11 Case; or
8.27 If an order by the Court is entered granting relief from or
modifying the automatic stay of Section 362 of the Bankruptcy Code (i) to allow
any creditor to execute upon or enforce a Lien on any Collateral, or (ii) with
respect to any Lien of or the granting of any Lien on any Collateral to any
state or local environmental or regulatory agency or authority.
9. THE LENDER GROUP'S RIGHTS AND REMEDIES.
9.1 RIGHTS AND REMEDIES. Notwithstanding the provisions of
Section 362 of the Bankruptcy Code and without application or motion to the
Court, upon the occurrence, and during the continuation, of an Event of
Default, 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:
(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;
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(c) Terminate this Agreement and any of the other Loan
Documents as to any future liability or obligation of the Lender Group, but
without affecting any of Agent's Liens in the Collateral and without affecting
the Obligations;
(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 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 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, a license or other right to use,
without charge, such Borrower's labels, patents, copyrights, trade secrets,
trade
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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;
(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:
(l) 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
(i) 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;
(ii) 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);
provided, however, that notwithstanding anything to the contrary contained
herein, Agent and Lenders shall be permitted to exercise any remedy in the
nature of a liquidation of, or foreclosure on, any of the Collateral only upon
not less than five (5) Business Days' written notice to each
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Borrower, counsel to Borrowers listed in Section 12 hereof, the Committee and
counsel approved by the Court for the Committee, and the U. S. Trustee.
9.2 REMEDIES CUMULATIVE. The rights and remedies of the Lender
Group under this Agreement, the other Loan Documents, the Interim Order 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.
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 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.
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11.3 INDEMNIFICATION. Each Borrower shall pay, indemnify, defend,
and hold the Agent-Related Persons, the Lender-Related Persons with respect to
each Lender (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), 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 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 may designate to each other
in accordance herewith), or telefacsimile to Borrowers in care of
Administrative Borrower, Agent, 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: MORRIS, NICHOLS, ARSHT & TUNNELL
1201 North Market Street
P.O. Box 1347
Wilmington, DE 19899-1347
Attn: Robert Dehney, Esq.
Fax No. (302) 658-3989
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: Jesse H. Austin, III, Esq.
Fax No. (404) 815-2424
Agent and Borrowers 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 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
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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 THEREUNDER OR RELATED HERETO OR THERETO SHALL BE
DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK, APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT STATE
WITHOUT REGARD TO THE CONFLICT OF LAWS PRINCIPLES THEREOF OTHER THAN SECTIONS
5-1401 AND 5-1402 OF NEW YORK GENERAL OBLIGATIONS LAW.
(b) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS
ARISING IN CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE
TRIED AND LITIGATED ONLY IN THE U.S. BANKRUPTCY COURT FOR THE DISTRICT OF
DELAWARE, 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 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 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 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
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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 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
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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 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
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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.
(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
including, with respect to each Borrower, the estate of such Borrower, any
trustee or successor-in-interest of such Borrower in the Chapter 11 Case or any
subsequent case commenced under Chapter 7 of the Bankruptcy Code; 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.
15. AMENDMENTS; WAIVERS.
15.1 AMENDMENTS AND WAIVERS. No amendment or waiver of any
provision of this Agreement or any other Loan Document, 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 cre dit 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 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 Amount 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.
16. AGENT; THE LENDER GROUP..
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. 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 Borrowers shall have no rights as a third party beneficiary of any of the
provisions contained herein. 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, 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
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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 and Lenders 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.
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
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 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,
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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 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 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 such request and any action taken or failure to act
pursuant thereto shall be binding upon all of the Lenders.
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 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 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 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
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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 by Agent, Agent shall not have any duty or responsibility to
provide any Lender 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 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
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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 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.
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 Agent.
16.11 WITHHOLDING TAXES.
96
(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;
(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.
97
(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 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
98
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, or (z) otherwise, the Required Lenders. Upon request by Agent or
Administrative Borrower at any time, the Lenders 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 to assure that the Collateral exists or is owned by Borrowers or is
cared for, protected, or insured or has been encumbered, or that 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
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.
(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
99
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 except to the extent that such purchasing party is
required to pay interest in connection with the recovery of the excess payment.
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 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. 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.
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,
100
(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
101
shall request of Administrative Borrower the additional reports or information
reasonably specified by such Lender, and, upon receipt thereof from
Administrative Borrower, Agent 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. 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 [INTENTIONALLY OMITTED].
17. GENERAL PROVISIONS.
17.1 EFFECTIVENESS. This Agreement shall be binding and deemed
effective when executed by Borrowers, 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 or
Borrowers under any rule of
102
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.
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 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 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 is required
or elects to repay or restore, and as to all reasonable costs, expenses, and
attorneys fees of the Lender Group 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
103
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 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.
17.11 PRE RELIEF DATE LOAN AGREEMENT. Each Borrower hereby agrees
that this Agreement is separate and distinct from the Pre-Relief Date Loan
Agreement. By entering into this Agreement, the Lenders do not waive any
Defaults or Events of Default under the Pre-Relief Date Loan Agreement. In the
event that the adequate protection allowances granted pursuant to the Interim
Order are inadequate, the Lenders reserves their right to seek relief from the
automatic stay to exercise their remedies under the Pre-Relief Date Loan
Agreement.
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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/ Randelle R. Smith
-------------------------------------------
By: Randelle R. Smith
----------------------------------------
Its: VP and Asst. Treasurer
---------------------------------------
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/ Randelle R. Smith
-------------------------------------------
By: Randelle R. Smith
----------------------------------------
Its: VP and Asst. Treasurer
---------------------------------------
OAKWOOD MHD4, LLC,
a Delaware limited liability company
/s/ Robert A. Smith
-------------------------------------------
By: Robert A. Smith
----------------------------------------
Its: Vice 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/ Dennis J. Rebman
------------------------------------------
By: Dennis J. Rebman
----------------------------------------
Title: V.P.
-------------------------------------
LOAN AND SECURITY AGREEMENT
SIGNATURE PAGE 5
LENDERS:
FOOTHILL CAPITAL CORPORATION,
as Lender and Issuing Bank
/s/ Dennis J. Rebman
-------------------------------------------
By: Dennis J. Rebman
----------------------------------------
Title: V.P.
-------------------------------------
LOAN AND SECURITY AGREEMENT
SIGNATURE PAGE 6
TEXTRON FINANCIAL CORPORATION,
as Lender
/s/ Ralph J. Infante
-------------------------------------------
By: Ralph J. Infante
----------------------------------------
Title: Vice President
-------------------------------------
LOAN AND SECURITY AGREEMENT
SIGNATURE PAGE 7
THE CIT GROUP/BUSINESS CREDIT, INC.
/s/ Dominick A. Varipaca
-------------------------------------------
By: Dominick A. Varipaca
----------------------------------------
Title: Assistant Vice President
-------------------------------------
LOAN AND SECURITY AGREEMENT
SIGNATURE PAGE 8
TABLE OF CONTENTS
Page
----
1. DEFINITIONS AND CONSTRUCTION............................................................................2
1.1 Definitions....................................................................................2
1.2 Accounting Terms..............................................................................30
1.3 Code..........................................................................................30
1.4 Construction..................................................................................30
1.5 Schedules and Exhibits........................................................................31
2. LOAN AND TERMS OF PAYMENT..............................................................................31
2.1 Revolver Advances.............................................................................31
2.3 Borrowing Procedures and Settlements..........................................................32
2.4 Payments......................................................................................39
2.5 Overadvances..................................................................................42
2.6 Interest Rates and Letter of Credit Fee: Rates, Payments, and Calculations...................42
2.7 Cash Management...............................................................................44
2.8 Crediting Payments; Float Charge..............................................................45
2.9 Designated Account............................................................................45
2.10 Maintenance of Loan Account; Statements of Obligations........................................46
2.11 Fees..........................................................................................46
2.12 Letters of Credit.............................................................................47
2.13 Intentionally Omitted.........................................................................50
2.14 Capital Requirements..........................................................................50
2.15 Joint and Several Liability of Borrowers......................................................50
2.16 Super-Priority Nature of Obligations..........................................................53
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......................................55
3.3 Conditions Precedent to all Extensions of Credit..............................................55
3.4 Term..........................................................................................56
3.5 Effect of Termination.........................................................................56
3.6 [Intentionally Omitted].......................................................................56
4. CREATION OF SECURITY INTEREST..........................................................................56
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4.1 Grant of Security Interest....................................................................56
4.2 Negotiable Collateral.........................................................................57
4.3 Collection of Accounts, General Intangibles, and Negotiable Collateral........................57
4.4 Delivery of Additional Documentation Required; Authorization to File UCC Financing
Statements....................................................................................57
4.5 Power of Attorney.............................................................................58
4.6 Right to Inspect..............................................................................58
4.7 Control Agreements............................................................................59
5. REPRESENTATIONS AND WARRANTIES.........................................................................59
5.1 No Encumbrances...............................................................................59
5.2 Eligible Accounts.............................................................................59
5.3 Eligible Inventory............................................................................59
5.4 Equipment.....................................................................................59
5.5 Location of Inventory and Equipment...........................................................59
5.6 Inventory Records.............................................................................60
5.7 Legal Name; Location of Chief Executive Office; FEIN..........................................60
5.8 Due Organization and Qualification; Subsidiaries..............................................60
5.9 Due Authorization; No Conflict................................................................60
5.10 Litigation....................................................................................61
5.11 No Material Adverse Change....................................................................61
5.12 [Intentionally Omitted].......................................................................61
5.13 Employee Benefits.............................................................................61
5.14 Environmental Condition.......................................................................61
5.15 Brokerage Fees................................................................................62
5.16 Intellectual Property.........................................................................62
5.17 [Intentionally Omitted].......................................................................62
5.18 Leases........................................................................................62
5.19 DDAs..........................................................................................62
5.20 Complete Disclosure...........................................................................62
5.21 Indebtedness..................................................................................62
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5.22 IRB Properties................................................................................63
5.23 Cash on Hand in Special Purpose Vehicles and Securitization Entities..........................63
6. AFFIRMATIVE COVENANTS..................................................................................63
6.1 Accounting System.............................................................................63
6.2 Collateral Reporting..........................................................................63
6.3 Financial Statements, Reports, Certificates...................................................65
6.4 Documents Filed with the Court or Delivered to the U.S. Trustee or Committee. ................66
6.5 Return........................................................................................66
6.6 Maintenance of Properties.....................................................................66
6.7 Taxes.........................................................................................66
6.8 Insurance.....................................................................................66
6.9 Location of Inventory and Equipment...........................................................67
6.10 Compliance with Laws..........................................................................67
6.11 Leases........................................................................................68
6.12 Brokerage Commissions.........................................................................68
6.13 Existence.....................................................................................68
6.14 Environmental.................................................................................68
6.15 Disclosure Updates............................................................................68
6.16 Installment Sales Contracts...................................................................68
6.17 Reinsurance...................................................................................69
6.18 Reimbursement of Servicing Advances...........................................................69
6.19 DIP Financing.................................................................................69
6.20 Filing of Tax Refund Claim....................................................................69
6.21 Retention of the Restructuring Advisors.......................................................69
7. NEGATIVE COVENANTS.....................................................................................69
7.1 Indebtedness..................................................................................69
7.2 Liens.........................................................................................70
7.3 Restrictions on Fundamental Changes...........................................................70
7.4 Disposal of Assets............................................................................71
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7.5 Guarantee.....................................................................................71
7.6 Change Name...................................................................................71
7.7 Nature of Business............................................................................71
7.8 Prepayments and Amendments....................................................................71
7.9 Change of Control.............................................................................71
7.10 Consignments..................................................................................71
7.11 Distributions.................................................................................72
7.12 Accounting Methods............................................................................72
7.13 Investments...................................................................................72
7.14 Transactions with Affiliates..................................................................72
7.15 Suspension....................................................................................72
7.16 Intentionally Omitted.........................................................................72
7.17 Use of Proceeds...............................................................................72
7.18 Change in Location of Chief Executive Office; Inventory and Equipment with Bailees............72
7.19 Securities Accounts...........................................................................73
7.20 Receipts/Disbursement Ratio...................................................................73
7.21 Maximum Capital Expenditures..................................................................73
7.22 Financing Statement Amendments, Terminations or Corrections...................................73
7.23 [Intentionally Omitted]. .....................................................................73
7.24 Warehouse Facility and Securitization Transactions............................................73
8. EVENTS OF DEFAULT......................................................................................74
9. THE LENDER GROUP'S RIGHTS AND REMEDIES.................................................................77
9.1 Rights and Remedies...........................................................................77
9.2 Remedies Cumulative...........................................................................79
10. TAXES AND EXPENSES.....................................................................................79
11. WAIVERS; INDEMNIFICATION...............................................................................80
11.1 Demand; Protest; etc..........................................................................80
11.2 The Lender Group's Liability for Collateral...................................................80
11.3 Indemnification...............................................................................80
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12. NOTICES................................................................................................81
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.............................................................82
14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.............................................................83
14.1 Assignments and Participations................................................................83
14.2 Successors....................................................................................85
15. AMENDMENTS; WAIVERS....................................................................................85
15.1 Amendments and Waivers........................................................................86
15.2 Replacement of Holdout Lender.................................................................87
15.3 No Waivers; Cumulative Remedies...............................................................87
16. AGENT; THE LENDER GROUP................................................................................87
16.1 Appointment and Authorization of Agent........................................................87
16.2 Delegation of Duties..........................................................................88
16.3 Liability of Agent............................................................................88
16.4 Reliance by Agent.............................................................................89
16.5 Notice of Default or Event of Default.........................................................89
16.6 Credit Decision...............................................................................89
16.7 Costs and Expenses; Indemnification...........................................................90
16.8 Agent in Individual Capacity..................................................................90
16.9 Successor Agent...............................................................................91
16.10 Lender in Individual Capacity.................................................................91
16.11 Withholding Taxes.............................................................................91
16.12 Collateral Matters............................................................................93
16.13 Restrictions on Actions; Sharing of Payments..................................................94
16.14 Agency for Perfection.........................................................................95
16.15 Payments by Agent to the Lenders..............................................................95
16.16 Concerning the Collateral and Related Loan Documents..........................................95
16.17 Field Audits and Examination Reports; Confidentiality; Disclaimers by Lenders;
Other Reports and Information.................................................................95
16.18 Several Obligations; No Liability.............................................................97
16.19 Legal Representation of Agent.................................................................97
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16.20 [Intentionally Omitted].......................................................................97
17. GENERAL PROVISIONS.....................................................................................97
17.1 Effectiveness.................................................................................97
17.2 Section Headings..............................................................................97
17.3 Interpretation................................................................................97
17.4 Severability of Provisions....................................................................97
17.5 Amendments in Writing.........................................................................98
17.6 Counterparts; Telefacsimile Execution.........................................................98
17.7 Revival and Reinstatement of Obligations......................................................98
17.8 Integration...................................................................................98
17.9 Parent as agent for Borrowers.................................................................98
17.10 Conflicts.....................................................................................99
17.11 Pre Relief Date Loan Agreement................................................................99
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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
Schedule A-1 Agent's Account
Schedule C-1 Commitments
Schedule D-1 Designated Account
Schedule E-1 Eligible Inventory Locations
Schedule L-1 Liquidating Personal Property
Schedule L-2 Liquidating Real Property
Schedule P-1 Permitted Liens
Schedule 2.7(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 7.8 Permitted Prepayments
SCHEDULE C-1
COMMITMENTS
LENDER COMMITMENT
Foothill Capital Corporation $43,076,923
(53.85%)
Textron Financial Corporation $12,307,692
(15.38%)
The CIT Group/ Business $24,615,385
Credit, Inc. (30.77%)
All Lenders $25,000,000
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
SENIOR SECURED, SUPER PRIORITY DEBTOR-IN-POSSESSION
$25,000,000
LOAN AND SECURITY AGREEMENT
BY AND AMONG
OAKWOOD HOMES CORPORATION
AND
EACH OF ITS SUBSIDIARIES THAT ARE SIGNATORIES HERETO,
EACH A DEBTOR AND DEBTOR-IN-POSSESSION,
AS BORROWERS,
THE LENDERS THAT ARE SIGNATORIES HERETO
AS THE LENDERS,
AND
FOOTHILL CAPITAL CORPORATION
AS THE ADMINISTRATIVE AGENT
Dated as of December __, 2002