AMENDED AND RESTATED REVOLVING AND TERM LOAN AGREEMENT
by and among
Cavalier Homes, Inc.,
Quality Housing Supply, LLC,
Cavalier Manufacturing, Inc.,
Cavalier Industries, Inc.,
Delta Homes, Inc.,
Cavalier Enterprises, Inc.
Cavalier Associated Retailers, Inc.,
Quality Certified Insurance Services, Inc.,
Cavalier Asset Management, Inc.,
Cavalier Manufacturing Asset Co., Inc.,
Cavalier Industries Asset Co., Inc.
Cavalier Enterprises Asset Co., Inc.
Cavalier Real Estate Co., Inc.,
Cavalier Acceptance Corporation,
as Borrowers
and
First Commercial Bank,
as Lender
Dated as of
March 31, 2000
TABLE OF CONTENTS
No.
ARTICLE I
DEFINITIONS ........................................................ 1
1.1 Defined Terms .................................... 1
1.2 Accounting Terms ................................. 1
1.3 Construction of Terms ............................ 1
ARTICLE II
THE REVOLVING LOAN ................................................. 2
2.1 General Terms .................................... 2
2.2 Disbursement of the Revolving Loan ............... 4
2.3 The Revolving Note ............................... 4
2.4 Payments of Principal ............................ 4
2.5 Revolving Loan Borrowing Procedures, Interest Rates,
Payments of Interest and Related Provisions ....... 4
2.6 Payment to Lender ................................ 9
2.7 Use of Proceeds .................................. 9
2.8 [Intentionally Omitted]........................... 9
2.9 Letters of Credit9
2.10 Commitment and Non-Usage Fees for the Revolving
Loan ............................................. 10
ARTICLE III
THE TERM LOANS ..................................................... 10
3.1 General Terms of the Term Loans .................. 10
3.2 Disbursement of the Term Loan(s) ................. 11
3.3 .................................................. 11
The Term Note(s) ................................. 11
3.4 Payments of Principal ............................ 11
3.5 Prepayment ....................................... 11
3.6 Interest Rate and Payments of Interest ........... 12
3.7 Payment to Lender ................................ 13
3.8 Use of Proceeds .................................. 13
3.9 [Intentionally Omitted] .......................... 13
3.10 [Intentionally Omitted] .......................... 13
ARTICLE IV
CONDITIONS PRECEDENT ............................................... 13
4.1 Documents Required for the Closing ............... 13
4.2 Documents Required for Subsequent Advances ....... 15
4.3 Additional Conditions to the Term Loan(s) ........ 15
4.4 Additional Required Documents .................... 16
4.5 Certain Events ................................... 16
4.6 Legal Matters .................................... 17
ARTICLE V
COLLATERAL SECURITY ................................................ 17
5.1 Composition of the Collateral .................... 17
5.2 Rights in Property Held by Lender ................ 17
5.3 Rights in Property Held Either by Borrowers or by
Lender ........................................... 17
5.4 Priority of Liens ................................ 18
5.5 Perfection ....................................... 18
5.6 Chattel Paper or Instruments ..................... 18
5.7 Release of Documentation For Eligible Contracts .. 19
5.8 Power of Attorney ................................ 19
ARTICLE VI
REPRESENTATIONS AND WARRANTIES ..................................... 20
6.1 Original 20
6.2 Additional Representations and Warranties of Cavalier
Acceptance ....................................... 23
6.3 Reliance By Cavalier Acceptance on Dealer
Representations .................................. 25
ARTICLE VII
COVENANTS OF BORROWERS ............................................. 25
7.1 Affirmative Covenants ............................ 25
7.2 Negative Covenants ............................... 30
7.3 Financial Covenants .............................. 32
ARTICLE VIII
ADDITIONAL COVENANTS OF CAVALIER ACCEPTANCE ........................ 33
8.1 Affirmative Covenants ............................ 33
8.2 Negative Covenants ............................... 34
8.3 Financial Covenants .............................. 34
ARTICLE IX
DEFAULT ............................................................ 35
9.1 Events of Default ................................ 35
9.2 Acceleration ..................................... 36
9.3 Remedies ......................................... 36
9.4 Right of Set-Off ................................. 37
9.5 Demand Obligations ............................... 38
9.6 Special Remedies ................................. 38
ARTICLE X
MISCELLANEOUS ...................................................... 38
10.1 Construction ..................................... 38
10.2 Further Assurances ............................... 39
10.3 Indemnity ........................................ 39
10.4 Enforcement and Waiver by Lender ................. 39
10.5 Expenses of Lender ............................... 39
10.6 Notices .......................................... 39
10.7 Indemnity, Waiver and Release by Borrowers ....... 40
10.8 Reliance on this Agreement ....................... 41
10.9 Participation .................................... 41
10.10 No Partnership or Joint Venture .................. 41
10.11 Governing Law .................................... 41
10.12 JURISDICTION; WAIVERS ............................ 42
10.13 Binding Effect, Assignment ....................... 43
10.14 Termination ...................................... 43
10.15 Obligations Unconditional and Absolute ........... 43
10.16 Entire Agreement, Amendments ..................... 43
10.17 Severability ..................................... 43
10.18 Headings ......................................... 43
10.19 Counterparts ..................................... 43
10.20 Seal ............................................. 44
SCHEDULES AND EXHIBITS
Schedule I - Defined Terms
Schedule II - Borrower Exceptions
Exhibit II.6.1(B) - Other Corporate or Fictitious Names
Exhibit II.6.1(D) - Mergers, Acquisitions, and Certain Changes
Exhibit II.6.1(I) - Claims, Litigation
Exhibit II.7.2(G) - Existing Guaranties
Exhibit A - Form of Term Note
Exhibit B - Request for Advance - Revolving Loan
Exhibit C - Compliance Certificate - Consolidated
Exhibit C-1 - Compliance Certificate - Cavalier Acceptance
Exhibit D - Subrogation and Contribution Agreement
Exhibit E - Assumption Agreement
Exhibit F - Existing Liens
Exhibit G - Qualification to do Business
Exhibit H - Places of Business and Locations of the Collateral
Exhibit I - Existing Indebtedness
Exhibit J - States of Incorporation of Consolidated Entities
Exhibit K - Cavalier Homes's Ownership of Consolidated Entities
AMENDED AND RESTATED REVOLVING AND TERM LOAN AGREEMENT
THIS AMENDED AND RESTATED REVOLVING AND TERM LOAN
AGREEMENT (this "Agreement"), dated as of March 31, 2000, is made by and among
Cavalier Homes, Inc., a Delaware corporation ("Cavalier Homes"), Quality Housing
Supply, LLC, a Delaware limited liability company, Cavalier Manufacturing, Inc.,
a Delaware corporation, Cavalier Industries, Inc., a Delaware corporation, Delta
Homes, Inc., a Mississippi corporation, Cavalier Enterprises, Inc., a Delaware
corporation, Cavalier Associated Retailers, Inc., a Delaware corporation,
Quality Certified Insurance Services, Inc., an Alabama corporation, Cavalier
Asset Management, Inc., a Delaware corporation, Cavalier Manufacturing Asset
Co., Inc., a Delaware corporation, Cavalier Industries Asset Co., Inc., a
Delaware corporation, Cavalier Enterprises Asset Co., Inc., a Delaware
corporation, Cavalier Real Estate Co., Inc., a Delaware corporation, and
Cavalier Acceptance Corporation, an Alabama corporation ("Cavalier Acceptance"),
(collectively, the "Initial Participating Subsidiaries"; Cavalier Homes and the
Initial Participating Subsidiaries, together with all entities who hereafter
become Participating Subsidiaries or Participating Partnerships, being
hereinafter sometimes collectively referred to as the "Borrowers"), and First
Commercial Bank, an Alabama state banking corporation (the "Lender").
W I T N E S S E T H:
WHEREAS, certain of the Borrowers and Lender entered into that
certain Revolving, Warehouse and Term Loan Agreement dated as of February 17,
1994, as amended by that certain First Amendment to Revolving, Warehouse and
Term Loan Agreement dated as of March 14, 1996, as amended by that certain
Second Amendment to Revolving, Warehouse and Term Loan Agreement dated as of
June 1, 1998 (as heretofore amended, the "Original Loan Agreement") to provide
financing for Borrowers;
WHEREAS, former Borrowers under the Original Loan Agreement,
Belmont Homes, Inc. and Spirit Homes, Inc., were merged into Cavalier
Enterprises, Inc., and Bellcrest Homes, Inc. was merged into Cavalier
Industries, Inc.
WHEREAS, Borrowers and Lender wish to amend and restate the
Original Loan Agreement in its entirety, as hereinafter set forth, for the
purpose, among others, to provide Borrowers with financing in a maximum sum of
$35,000,000 upon the terms and subject to the conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the promises herein
contained, and each intending to be legally bound hereby, the parties hereto
agree as follows:
ARTICLE I
DEFINITIONS
1.1 Defined Terms. Defined terms used herein are as set forth on
Schedule I attached hereto.
1.2 Accounting Terms. Accounting terms used and not otherwise
defined in this Agreement have the meanings determined by, and all calculations
with respect to accounting or financial matters unless otherwise provided herein
shall be computed in accordance with, Generally Accepted Accounting Principles.
1.3 Construction of Terms. Whenever used in this Agreement,
the singular number shall include the plural and the plural the singular, and
pronouns of one gender shall include all genders. References herein to articles,
sections, paragraphs or subparagraphs or the like shall refer to the
corresponding articles, sections, paragraphs or subparagraphs or the like of
this Agreement. The words "hereof", "herein", and terms of similar import shall
refer to this entire Agreement. Unless the context clearly requires otherwise,
the use of the words
"including", "such as", or terms of similar meaning, shall not be construed to
imply the exclusion of any other particular elements.
ARTICLE II
THE REVOLVING LOAN
2.1 General Terms.
(A) Subject to the terms hereof, Lender will lend to
Borrowers, jointly and severally (except as limited by the terms of subsection
(D) of this Section 2.1 or by the terms of the Assumption Agreements), from time
to time until the Loan Termination Date for the Revolving Loan, such sums in
integral multiples of $10,000 as Borrowers may request, but which shall not
exceed, in the aggregate principal amount at any one time outstanding, the
lesser of:
(1)(a) $35,000,000 minus (b) the aggregate outstanding
principal balance of a ll Term Loans, or
(2) the Revolving Loan Commitment.
(B) Subject to the terms hereof, Borrowers may jointly and
severally borrow, repay without penalty or premium, and reborrow hereunder, from
the date of this Agreement until the Loan Termination Date for the Revolving
Loan. If at any time the unpaid principal balance of the Revolving Loan exceeds
the amount Borrowers could borrow at such time under the formula set forth
above, Borrowers shall immediately and without demand pay such sums to Lender,
in multiples of $10,000 to the extent necessary to reduce the Revolving Loan to
an amount which Borrowers could borrow at that time under such formula.
(C) Each Participating Subsidiary and Participating
Partnership, separately and severally, hereby appoints and designates Cavalier
Homes as such party's agent and attorney-in-fact to act on behalf of such party
for all purposes of the Loan Documents. Cavalier Homes shall have authority to
exercise on behalf of each Participating Subsidiary and Participating
Partnership all rights and powers that Cavalier Homes deems, in its sole
discretion, necessary, incidental or convenient in connection with the Loan
Documents, including the authority to execute and deliver certificates,
documents, agreements and other instruments referred to in or contemplated by
the Loan Documents, request Advances hereunder, request the issuance of Letters
of Credit, receive all proceeds of Advances under the Revolving Loan, give all
notices, approvals and consents required or requested from time to time by
Lender and take any other actions and steps that a Participating Subsidiary or a
Participating Partnership could take for its own account in connection with the
Loan Documents from time to time, it being the intent of the Participating
Subsidiaries and the Participating Partnerships to grant to Cavalier Homes
plenary power to act on behalf of the Participating Subsidiaries and the
Participating Partnerships in connection with and pursuant to the Loan
Documents. The appointment of Cavalier Homes as agent and attorney-in-fact for
the Participating Subsidiaries and the Participating Partnerships hereunder
shall be coupled with an interest and be irrevocable so long as any Loan
Document shall remain in effect. The Lender need not obtain any Participating
Subsidiary's or Participating Partnership's consent or approval for any act
taken by Cavalier Homes pursuant to any Loan Document, and all such acts shall
bind and obligate Cavalier Homes, the Participating Subsidiaries and the
Participating Partnerships, jointly and severally. Lender may rely on any
representation or request made or action taken by Cavalier Homes in connection
with the Loan Documents as authorized by the Participating Subsidiaries and the
Participating Partnerships. Each Participating Subsidiary and Participating
Partnership forever waives and releases any claim (whether now or hereafter
arising) against Lender based on Cavalier Homes's lack of authority to act on
behalf of any Participating Subsidiary or Participating Partnership in
connection with the Loan Documents.
(D) The liability of each Participating Partnership with
respect to the Obligations shall be limited to an amount equal to its
Partnership Liabilities. The liability of each Participating Subsidiary with
respect to the Obligations shall be limited to an amount equal to the greater of
(i) 95% of the Participating Subsidiary's Net Worth (as hereinafter defined)
from time to time; or (ii) the amount that in a legal proceeding brought within
the applicable limitations period is determined by the final, non-appealable
order of a court having jurisdiction over the issue and the applicable parties
to be the amount of value given by Lender, or received by the Participating
Subsidiary, in exchange for the obligations of the Participating Subsidiary
under this Agreement and the other Loan Documents. As used in this subsection
(D), "Net Worth" shall mean (x) the fair value of the property of the
Participating Subsidiary from time to time (taking into consideration the value,
if any of rights of subrogation, contribution and indemnity), minus (y) the
total liabilities of the Participating Subsidiary (including contingent
liabilities discounted in appropriate instances, but excluding liabilities of
the Participating Subsidiary under this Agreement and the other Loan Documents)
from time to time.
(E) Each of the Initial Participating Subsidiaries (i)
acknowledges that it has had full and complete access to the underlying papers
relating to the Obligations and all other papers executed by any Person in
connection with the Obligations, has reviewed them and is fully aware of the
meaning and effect of their contents; (ii) is fully informed of all
circumstances that bear upon the risks of executing this Agreement and the other
Loan Documents and which a diligent inquiry would reveal; (iii) has adequate
means to obtain from the other Borrowers on a continuing basis information
concerning the other Borrowers' financial condition and is not depending on
Lender to provide such information, now or in the future; and (iv) agrees that
Lender shall have no obligation to advise or notify it or to provide it with any
data or information.
(F) Each of the Initial Participating Subsidiaries hereby
agrees that its obligations and liabilities with respect to the Obligations
other than the Term Note(s) are joint and several with the other Borrowers,
continuing, absolute and unconditional (subject to the provisions of subsection
(D) of this Section 2.1). Without limiting the generality of the foregoing, the
obligations and liabilities of each of the Initial Participating Subsidiaries
with respect to the Loans and the Notes or under the Security Documents shall
not be released, discharged, impaired, modified or in any way affected by (i)
the invalidity or unenforceability of any Loan Document, (ii) the failure of
Lender to give such Initial Participating Subsidiary a copy of any notice given
to any other Borrower, (iii) any modification, amendment or supplement of any
obligation, covenant or agreement contained in any Loan Document, (iv) any
compromise, settlement, release or termination of any obligation, covenant or
agreement in any Loan Document, (v) any waiver of payment, performance or
observance by or in favor of any other Borrower of any obligation, covenant or
agreement under any Loan Document, (vi) any consent, extension, indulgence or
other action or inaction, or any exercise or non-exercise of any right, remedy
or privilege with respect to any Loan Document, (vii) the extension of time for
payment or performance of any of the Obligations, (viii) the release or
discharge of Lender's claims against any Collateral now or any time hereafter
securing any of the Obligations or Borrowers, or any of them, by operation of
law or otherwise or (ix) any other matter that might be otherwise raised in
avoidance of, or in defense against an action to enforce, the obligations of
such Initial Participating Subsidiary under this Agreement, the Loans, the Notes
or any other Loan Document.
(G) None of the Borrowers will exercise any rights that it may
acquire by way of subrogation under this Agreement or any of the Loan Documents
or any Subrogation and Contribution Agreement referred to in subsection (H)
below, by any payment made hereunder or under any of the other Loan Documents or
otherwise, until all the Obligations have been paid in full and this Agreement
has been terminated. If any amount shall be paid to a Borrower on account of any
such subrogation rights at any time when all of the Obligations shall not have
been paid in full and this Agreement terminated, such amount shall be held in
trust for the benefit of Lender and shall be paid forthwith to Lender to be
credited to and applied toward the Obligations, whether matured or unmatured, in
accordance with the terms of the Loan Documents.
(H) Borrowers will not amend or waive any provision of the
Subrogation and Contribution Agreement entered into by Borrowers of even date
herewith, nor consent to any departure by any party thereto from such
Subrogation and Contribution Agreement or from any similar Subrogation and
Contribution Agreements executed by other Participating Subsidiaries and
Participating Partnerships after the Closing, without having obtained the prior
written consent of Lender to such amendment, waiver or consent.
2.2 Disbursement of the Revolving Loan. Lender will credit or pay
the proceeds of each Advance under the Revolving Loan to the deposit account of
any Borrower with Lender or in such other manner as Borrowers and Lender may
from time to time agree.
2.3 The Revolving Note. Borrowers' joint and several obligation
to repay the Revolving Loan shall be evidenced by the Revolving Note, which
shall be duly executed by the Borrowers who are signatories hereto and joined in
by each Subsidiary and Controlled Partnership that becomes a Participating
Subsidiary or Participating Partnership after the Closing, under the terms of an
Assumption Agreement.
2.4 Payments of Principal. If not earlier demanded pursuant to
Section 9.2 or Section 9.5 hereof, the outstanding principal balance of the
Revolving Loan shall be due and payable to Lender on the Loan Termination Date
for the Revolving Loan. Such Loan Termination Date includes the date that demand
is made by Lender, which demand may be made at any time in Lender's sole and
absolute discretion.
2.5 Revolving Loan Borrowing Procedures, Interest Rates, Payments
of Interest and Related Provisions.
2.5.1 Borrowing Notices.
(A) Cavalier Homes, on behalf of itself and the
other Borrowers, will give Lender an appropriate Borrowing Notice not later than
10:00 a.m. Local Time three (3) Banking Days prior to the Borrowing Date for
LIBOR Rate Loans and not later than 10:00 a.m. Local Time on the Borrowing Date
for Floating Rate Loans. A Borrowing Notice is deemed to be given when actually
received by Lender at its Commercial Loan Department.
(B) Once given to Lender, except as provided in
Section 2.5.14 or unless Lender shall otherwise consent, such Borrowing Notice
shall not thereafter be revocable by Borrowers.
(C) On the Borrowing Date, if all terms and
conditions of this Agreement have been complied with, Lender shall make
available the requested Advance of the Revolving Loan.
(D) If requested by Lender, Cavalier, on behalf
of itself and the other Borrowers, shall deliver to Lender, not later than 12:00
noon Local Time on the Borrowing Date, written confirmation (substantially in
the form of Exhibit B) of any oral Borrowing Notice. Cavalier shall certify to
the accuracy of the information set forth thereon.
2.5.2 Interest Rate. Unless Borrowers shall have elected a
LIBOR Rate for all or a portion of the Advance of the Revolving Loan as provided
in Section 2.5.3 hereof, the aggregate unpaid principal amount of each Advance
of the Revolving Loan shall bear interest at a rate equal to the Floating Rate
with respect to the Revolving Loan.
2.5.3 Election of LIBOR Rate.
(A) Subject to the provisions of Sections 2.5.4,
2.5.13, 2.5.14 and 2.7, Cavalier Homes, on behalf of itself and the other
Borrowers, may elect to pay interest on all or part of an Advance of the
Revolving Loan or the Revolving Loan at the LIBOR Rate for an Interest Period by
giving Lender
(1) An appropriate Borrowing Notice
specifying a LIBOR Rate not later
than 10:00 a.m. Local Time three
(3) Banking Days prior to the
Borrowing Date (in the case of a new
Advance); or
(2) An appropriate Rate Selection Notice
specifying a LIBOR Rate not later
than 10:00 a.m. Local Time three (3)
Banking Days prior to the first day
of the new Interest Period (in the
case of the outstanding LIBOR Rate
Loan); or
(3) An appropriate Rate Selection Notice
specifying a LIBOR Rate not later
than 10:00 a.m. Local Time three (3)
Banking Days prior to the first day
of the Interest Period (in the case
of the conversion of any outstanding
Floating Rate Loan to a LIBOR Rate
Loan).
(B) (1) Borrowers may obtain estimates of
the interest rates on which the
Base LIBOR Rate is calculated by
telephoning Lender's rate desk on
any day Lender is open for business.
Borrowers may obtain quotations of
the interest rates on which the
Base LIBOR Rate is calculated by
telephoning Lender's rate desk
between 9:00 a.m. and 10:00 a.m.
Local Time on any Banking Day. A
Rate Selection Notice is deemed
given when actually received by
Lender at its Commercial Loan
Department. If the Rate Selection
Notice is initially given in
writing, it shall be given in
substantially the form of Exhibit B
hereto. If the Rate Selection Notice
is given in writing, Cavalier Homes,
on behalf of itself and the other
Borrowers, shall certify to the
accuracy of the information set
forth thereon. If Borrowers fail
to select a new rate option by
giving a Rate Selection Notice by
10:00 a.m. Local Time on the
appropriate Banking Day pursuant to
the provisions of Section 2.5.3
hereof, the Revolving Loan or that
portion of the Revolving Loan
covered by the expiring LIBOR Rate
option shall be a Floating Rate
Loan on and after the last day of
the Interest Period until the
Revolving Loan is paid or until the
effective date of a new Rate
Selection Notice pursuant to this
section, whichever is the first to
occur.
(2) If requested by Lender, Cavalier
Homes, on behalf of itself and the
other Borrowers, shall deliver to
Lender, not later than 12:00 noon
Local Time on the first day of the
Interest Period, written
confirmation (substantially in the
form of Exhibit B hereto) of any
oral Rate Selection Notice. Cavalier
Homes shall certify to the accuracy
of the information set forth
thereon.
2.5.4 Restrictions on Interest Periods and Conversion to
LIBOR Rate. Each new Advance of the Revolving Loan shall be in an amount of at
least $500,000 and in an integral multiple of $100,000 if a LIBOR Rate Loan and
that part of each Floating Rate Loan or LIBOR Rate Loan which is converted to,
or continued as, a LIBOR Rate Loan, shall be in an amount of at least $500,000
and shall be in an integral multiple of $100,000. No Interest Period may extend
beyond the Loan Termination Date of the Revolving Loan. Borrowers may not elect
a LIBOR Rate if, on the effective date of such election, there exists an Event
of Default.
2.5.5 Interest Basis and Payment Dates.
(A) Interest at the rates determined according
to Sections 2.5.2 and 2.5.3 shall be calculated on the basis of a 360-day year
and the actual number of days elapsed. Interest shall accrue on the unpaid
principal balance of all Advances of the Revolving Loan at the applicable rate
from and including the date the Advance is made to (but not including) the date
of any payment on the Revolving Loan if payment is received by Lender prior to
2:00 p.m. Local Time and if not received by such time, then through and
including the date payment is received.
(B) All interest accrued on each Floating Rate
Loan made under this Article II shall be payable monthly on the first (1st) day
of each calendar month; and all interest accrued on each LIBOR Rate Loan made
under this Article II shall be payable on the last day of the applicable LIBOR
Rate Interest Period, and if such LIBOR Rate Interest Period exceeds three (3)
months, interest accrued on such LIBOR Rate Loan also shall be payable on the
date which is three (3) months after the first day of the applicable LIBOR
Rate Interest Period. If not sooner paid in accordance with the subsection
2.5.5(B), all accrued but unpaid interest on the Revolving Loan shall be due and
payable on the Loan Termination Date of the Revolving Loan.
(C) If any scheduled payment is late ten (10)
days or more, Borrowers agree to pay a late charge equal to five percent (5%) of
the amount of the payment which is late, but not more than the maximum amount
allowed by applicable Law (the "Late Charge"). This subparagraph does not extend
any payment due date expressly stated in the Agreement or any Loan Document and
does not in any way prevent or estop Lender from requiring that payments be made
by Borrowers strictly when due. Unless accepted by Lender, and unless
accompanied by all other amounts then due to Lender, the tender of such payment
by Borrowers does not cure the Event of Default arising from the payment default
upon which such Late Charge was assessed.
(D) If, at any time, the rate of interest
accruing on any Advance of the Revolving Loan or the Late Charge shall be deemed
by any competent court of law, governmental agency or tribunal to exceed the
maximum rate of interest permitted by any applicable Laws, then, for such time
as such interest rate or Late Charge, as applicable, would be deemed excessive,
its application shall be suspended and there shall be charged instead on any
such Advance the maximum rate of interest permissible under such Laws, and any
excess interest or charges actually collected by Lender shall be credited as a
partial prepayment of principal.
(E) The Floating Rate shall change
contemporaneously with each change in the Revolving Rate.
2.5.6 Method of Payment. Each payment (including any
prepayment) of principal of and interest on the Revolving Loan and each payment
of Borrowers' reimbursement or indemnification obligations under Sections 2.5.8,
2.5.10, 2.5.11 or 10.3 or any other provision hereunder, shall be made to Lender
without set-off or counterclaim in Dollars in immediately available funds at
Lender's main office (or, in the case of LIBOR Rate Loans at such other Lending
Installation, if any, as may be specified in a notice to Cavalier Homes by
Lender) by 2:00 p.m. Local Time on the date when payment is due.
2.5.7 Application of Payments. Any payment received by
Lender from Borrowers, or any of them, with respect to the Revolving Loan or
with no particular Obligation specified, will be applied by Lender to all
obligations of Borrowers to Lender under the Revolving Note or this Agreement,
with each such payment to be applied in the following order unless Lender, at
its option, designates a different order from time to time: first to any sums
(other than principal or interest) then due, next to interest, and the remainder
(if any) to principal, with the most recent Advances of principal under the
Revolving Loan to be paid first.
2.5.8 Optional Prepayments. Borrowers may, at any time and
from time to time, with respect to the Revolving Loan, prepay any Floating Rate
Loan, in whole or in part, without premium or penalty. Payment of principal
owing upon any LIBOR Rate Loan, in whole or in part, is permitted only on the
last day of the applicable Interest Period. If, notwithstanding the provisions
of this section, a LIBOR Rate Loan is prepaid for any reason other than demand
by Lender for payment, Borrowers, jointly and severally, shall indemnify Lender
on demand for any loss incurred thereby, including any loss in liquidating or
employing deposits acquired to fund or maintain the LIBOR Rate Loan.
2.5.9 Lending Installations. Lender and any Participant may
book LIBOR Rate Loans at any Lending Installation selected by it, and may change
the Lending Installation from time to time. All terms of this Agreement shall
apply to any such Lending Installation.
2.5.10 Failure to Pay or Borrow on Certain Dates; Taxes.
(A) If any payment of a LIBOR Rate Loan occurs
on a date which is not the last day of an Interest Period, or if a LIBOR Rate
Loan is not made on the date specified in the Borrowing Notice or Rate Selection
Notice for any reason other than default of Lender or a Participant, Borrowers,
jointly and severally, shall upon demand indemnify Lender and each Participant
for any costs incurred by Lender and each
Participant resulting therefrom, including any loss in liquidating as employing
deposits acquired to fund or maintain the LIBOR Rate Loan.
(B) If and to the extent that any deduction is
required by law to be made from any payment to Lender under this Agreement or
the Revolving Note on account of present or future taxes of any nature
whatsoever imposed within the United States of America by any Governmental
Authority, Borrowers shall make the deduction for the account of Lender and make
timely payment thereof to the appropriate Governmental Authority. Borrowers
shall confirm any payment of such taxes by sending official tax receipts or
certified copies thereof to Lender promptly after payment.
2.5.11 Increased Cost and Reduced Return.
(A) If after the date hereof the adoption of any
applicable Requirement of Law or any change therein, or any change in the
interpretation or administration thereof by any Governmental Authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by Lender or any Participant (or any of their applicable
Lending Installations) with any request or directive (whether or not having the
force of law) of any such Governmental Authority, central bank or comparable
agency:
(1) shall subject Lender or any
Participant (or any of their
applicable Lending Installations) to
any tax, duty or other charge with
respect to LIBOR Rate Loans, the
Revolving Note or any of their
obligation to make or maintain LIBOR
Rate Loans, or shall change the
basis of taxation of payments to
Lender or any Participant (or any of
their applicable Lending
Installation) of the principal of or
interest on the LIBOR Rate Loans or
any other amounts due under this
Agreement in respect of LIBOR Rate
Loans or any of their obligation to
make or maintain the LIBOR Rate
Loans (except for changes in the
rate of tax on the overall net
income of Lender, any Participant or
any of their applicable Lending
Installations); or
(2) shall impose, modify or deem
applicable any reserve, special
deposit or similar requirement
(including, without limitation, any
such requirement imposed by the
Board of Governors of the Federal
Reserve System, but excluding with
respect to any LIBOR Rate Loan any
such requirement included in the
applicable Reserve Requirement in
calculating the Base LIBOR Rate for
such loan) against assets of,
deposits with or for the account of,
or credit extended by, Lender or any
Participant (or any of their
applicable Lending Installations) or
on the London, England interbank
eurodollar market, or any other
condition affecting the LIBOR Rate
Loans, the Revolving Note or
Lender's or any Participant's
obligation to make or maintain LIBOR
Rate Loans;
and the result of any of the foregoing is to increase the cost
to Lender or any Participant (or any of their applicable Lending Installations)
of making or maintaining a LIBOR Rate Loan (except to the extent such increased
costs are already included in the determination of the applicable interest
rate), or to reduce the amount of any sum received or receivable by Lender of
any Participant (or any of their applicable Lending Installations) under this
Agreement or under the Revolving Note with respect thereto, or otherwise to
reduce the net yield to Lender or any Participant on the Loan by a material
amount, then, within the time period specified in Section 2.5.12 hereof and upon
delivery to Cavalier Homes of a certificate complying with Section 2.5.12
hereof, Borrowers shall pay to Lender such additional amount or amounts as will
compensate Lender and the affected Participants for such increased cost or
reduction.
(B) If after the date hereof Lender or any
Participant shall have reasonably determined that the adoption of any applicable
Requirement of Law regarding capital adequacy, or any change therein, or any
change in the interpretation or administration thereof by any Governmental
Authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by Lender or any Participant (or any of
their Lending Installations) with any request or directive regarding capital
adequacy (whether or not having the force of law) of any such Governmental
Authority, central bank or comparable agency, has reduced the rate of return on
capital of Lender (or any person or entity controlling Lender) or any
Participant as a consequence of Lender's or such Participant's obligations
hereunder to a level below that which Lender (or such person or entity) or such
Participant would have achieved but for such adoption, change, compliance,
request or directive by a material amount, then from time to time, within the
time specified in Section 2.15.12 hereof, Borrowers shall pay to Lender and such
Participant such additional amount or amounts as will compensate Lender (or such
person or entity) and such Participant for such reduction.
(C) Lender will promptly notify Cavalier Homes
of any event of which it has knowledge, occurring after the date hereof, which
will entitle Lender or any Participant to compensation pursuant to this Section
2.5.11 and will designate a different Lending Installation if such designation
will avoid the need for, or reduce the amount of, such compensation and will
not, in the reasonable judgment of Lender, expose Lender or any Participant to
additional liability, costs or reduction in rate of return. Determinations by
Lender and any Participant for purposes of this Section 2.5.11 of the effect of
the adoption of any applicable Requirement of Law, or any change therein, or any
change in the interpretation or administration thereof by any Governmental
Authority, central bank or comparable agency charged with the interpretation or
administration thereof, of compliance by Lender or any Participant (or their
applicable Lending Installations) with any request or directive (whether or not
having the force of law) of any such Governmental Authority, central bank or
comparable agency on its costs of making or maintaining the Revolving Loan or on
amounts receivable by it in respect of the Revolving Loan, and of the additional
amounts required to compensate Lender and any Participant in respect of any
increased costs or reduction in rate of return, shall be conclusive, provided
that such determinations are made on a reasonable basis and are supported by a
certificate complying with Section 2.5.12 hereof.
2.5.12 Lender's Certificates; Survival of Indemnity. A
certificate of Lender, any Participant, or any Lending Installation, as to the
amounts due under Sections 2.5.8, 2.5.10 or 2.5.11 and all other determinations
by any of them pursuant thereto, shall, in the absence of manifest error and so
long as made on any reasonable basis, be presumed to be correct. Determination
of amounts payable under such sections in connection with a LIBOR Rate Loan
shall be calculated as though Lender, the affected Participants, or the affected
Lending Installation funded the LIBOR Rate Loan through the purchase of a
deposit of the type, amount and maturity corresponding to the deposit used as a
reference in determining the applicable Base LIBOR Rate for such loan. The
amount specified in the certificate shall be payable at the end of the
applicable Interest Period or within 15 days after receipt by Cavalier Homes of
the certificate, whichever is later. In determining amounts owed, any reasonable
averaging and attribution methods may be used, which methods shall be specified
in the certificate or other documentation accompanying the demand for payment.
The obligations of Borrowers under Sections 2.5.8, 2.5.10 and 2.5.11 shall
survive payment of the Revolving Loan and termination of this Agreement, but
such obligations shall terminate two years after the date the Revolving Note is
paid in full unless, prior to the end of such two-year period, Lender or any
Participant shall have given Cavalier Homes notice that claim is made under any
of such sections and the approximate amount of such claim.
2.5.13 Illegality Affecting LIBOR Rate Loans. If, on or
after the date of this Agreement, the adoption of any applicable Requirement of
Law, or any change therein, or any change in the interpretation or
administration thereof by any Governmental Authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by Lender or any Participant (or any of their applicable Lending Installations)
with any request or directive (whether or not having the force of law) of any
such Governmental Authority, central bank or comparable agency shall make it
unlawful or impossible for Lender or any Participant (or any of their applicable
Lending Installations) to make, maintain or fund LIBOR Rate Loans, Lender shall
so notify Cavalier Homes, whereupon until Lender notifies Cavalier Homes that
the
circumstances giving rise to such suspension no longer exist, the obligation of
Lender and any Participant to make or maintain LIBOR Rate Loans shall be
suspended. As a result of such suspension, the Advances of the Revolving Loan
shall instead accrue interest at the Floating Rate. Before giving any notice
pursuant to this section, Lender and each affected Participant shall designate a
different Lending Installation for the LIBOR Rate Loans if such designation will
avoid the need for giving such notice and will not, in the judgment of Lender,
be otherwise disadvantageous to Lender or any Participant.
2.5.14 Availability of Interest Rate; Basis for Determining
Interest Rate Inadequate or Unfair. If on or prior to the first day of any
Interest Period for any LIBOR Rate Loan:
(A) Lender or any Participant determines or is
advised that deposits in Dollars (in the applicable amounts) are not being
offered in the relevant market for such Interest Period, or
(B) Lender or any Participant determines that
the LIBOR Rate will not adequately and fairly reflect the cost to Lender or such
Participant of funding the LIBOR Rate Loan for such Interest Period,
Lender shall forthwith give notice thereof to Cavalier Homes,
whereupon until Lender notifies Cavalier Homes that the circumstances giving
rise to such suspension no longer exist, the obligation to make or maintain
LIBOR Rate Loans shall be suspended. Unless Cavalier Homes notifies Lender at
least two Banking Days before the date of any Advance of the Revolving Loan for
which a Borrowing Notice has previously been given that the Borrowers elect not
to borrow, as a result of such suspension, such Advances shall instead accrue
interest at the Floating Rate.
2.6 Payment to Lender. All sums payable to Lender hereunder shall
be paid directly to Lender in United States Dollars and immediately available
funds at the place payment is due. If Lender shall send to Borrowers statements
of amounts due hereunder, such statements shall be considered correct and
conclusively binding on Borrowers unless Borrowers notify Lender to the contrary
within thirty (30) days of the receipt of any statement that any Borrower deems
to be incorrect. Alternatively, at its sole discretion, Lender may charge
against any deposit account of any Borrower all or any part of any amount due
hereunder.
2.7 Use of Proceeds. The proceeds of the Revolving Loan shall be
used by Borrowers initially to renew and extend all existing loans or letters of
credit of Borrowers with Lender and thereafter for general working capital
purposes.
2.8 [Intentionally Omitted].
2.9 Letters of Credit.
(A) At the request of Cavalier Homes, Lender may from time to
time, but at its sole discretion, issue Letters of Credit for the account of
Borrowers in such amounts as requested by Borrowers and approved by Lender;
provided, however, that the maximum aggregate amount of outstanding Letter of
Credit Obligations shall not exceed, when added to the Revolving Loan, the
maximum amount available to Borrowers under Section 2.1(A) hereof. Each request
by Borrowers for issuance of a Letter of Credit shall be submitted by Cavalier
Homes on behalf of Borrowers on Lender's then-standard application and agreement
form for Letters of Credit, shall obligate Borrowers to reimburse Lender upon
demand for any amounts drawn upon the Letter of Credit and for such other sums
as specified therein, shall be executed by a duly authorized officer of Cavalier
Homes and, if Lender should require, shall be submitted to Lender at least two
(2) business days prior to the proposed date of issuance for such Letter of
Credit. In consideration for Lender's issuance of any Letter of Credit,
Borrowers shall pay to Lender a fee for the issuance of each such Letter of
Credit equal to one percent (1%) per annum of the amount of the Letter of
Credit. This fee shall be due and payable upon the issuance of a Letter of
Credit and Lender may, at its election, obtain payment of any such fee, if such
fee is not paid upon issuance of the Letter of Credit, either by debiting any
account of any Borrower in the amount of such fee or making an Advance under the
Revolving Loan Commitment for the purpose of paying such fee. Any such Letter of
Credit issued by Lender shall be in form and substance satisfactory to Lender,
shall be in
an amount that does not exceed the maximum amount permitted under this
subsection (A) and shall expire by its terms on a date not later than the Loan
Termination Date for the Revolving Loan.
(B) If a draft drawn under any Letter of Credit is presented
to Lender and honored by Lender, Borrowers shall, immediately upon written
demand of Lender, reimburse Lender for the amount of such draft, together with
interest thereon, from the date such draft is honored by Lender to and including
the date of reimbursement by Borrowers, at the rate of interest applicable to
Advances under the Revolving Loan Commitment. If Borrowers should fail to
reimburse Lender upon such demand, Lender at its option may, but shall not be
required to, and without further notice to or demand upon Borrowers, make an
Advance for the purpose of paying to Lender the amount due to Lender together
with interest thereon. Any Advance made by Lender under subsection (A) or this
subsection (B) of this Section 2.9, shall for all purposes under this Agreement
be treated as an Advance under the Revolving Loan Commitment, and the amount of
any such Advance shall be included as part of the unpaid principal balance of
the Revolving Loan.
(C) Notwithstanding any other provision of this Agreement,
this Agreement shall not be terminated by Borrowers at any time during which any
Letter of Credit is in effect. The provisions of this Section 2.9 shall govern
the issuance of any Letter of Credit issued by Lender for the account of
Borrowers, but this Agreement does not require or obligate Lender to issue any
such Letters of Credit, with the issuance thereof being at Lender's sole
discretion.
2.10 Commitment and Non-Usage Fees for the Revolving Loan. At
Closing and upon the renewal (if applicable) of the Revolving Loan, Borrowers
shall pay the Commitment Fee (or if at renewal, such other commitment fee as
shall be mutually agreed upon by Cavalier Homes and Lender) for the Revolving
Loan. In addition, Borrowers shall pay to Lender a non-usage fee (the "Non-Usage
Fee") equal to one-quarter of one percent (0.25%) times the Unused Line Amount
(as hereinafter defined). As used in this Section 2.10, the term "Unused Line
Amount" shall mean the amount by which the maximum Revolving Loan Commitment
(which is $35,000,000 as of March 31, 2000) exceeds (i) the average outstanding
principal balance of the Revolving Loan for the preceding 12-month period, plus
(ii) the aggregate outstanding principal balance of all Term Loans. The Unused
Line Amount and Non-Usage Fee shall be computed on March 31, 2001 for the
preceding 12-month period ended March 31, 2001, and again on each subsequent
March 31 for the preceding 12-month period then ended. The Non-Usage Fee shall
be payable each April 15 following the March 31 computation date. If Borrowers
do not pay any Non-Usage Fee to Lender upon written demand, Lender, at its
option may, but shall not be required to, and without further notice or demand
upon Borrowers, make an Advance on the Revolving Loan for the purpose of paying
to Lender the amount of such Non-Usage Fee. Any such Advance so made by Lender
shall for all purposes under the Agreement be treated as an Advance under the
Revolving Loan Commitment, and the amount of any such Advance shall be included
as part of the unpaid principal balance of the Revolving Loan. Alternatively,
Lender, at its option may, but shall not be required to, and without further
notice or demand upon any of the Borrowers, charge against any deposit account
of any of the Borrowers all or any part of the Non-Usage Fee due hereunder.
ARTICLE III
THE TERM LOANS
3.1 General Terms of the Term Loans.
(A) Until the Loan Termination Date for the Revolving Loan,
and so long as no Event of Default shall have occurred and be continuing, and
subject to the satisfaction of all conditions precedent contained in Article IV,
indebtedness owing under the Revolving Loan borrowed for the benefit of Cavalier
Acceptance may, in a minimum principal amount of $2,000,000, be converted to a
Term Loan; provided that the maximum aggregate principal amount outstanding
under the Revolving Loan and all of the Term Loans shall not exceed $35,000,000;
provided further that the maximum aggregate principal amount outstanding under
all of the Term Loans shall not exceed the Contracts Borrowing Base. The
Eligible Contracts delivered by Cavalier Acceptance to Lender with respect to
each Term Loan shall for certain purposes hereunder be allocated to such Term
Loan
(the "Allocated Eligible Contracts"); provided, however, that no more than
fifteen percent (15%) of the Eligible Contracts allocated to any applicable Term
Loan shall be C-Rated Contracts.
(B) If at any time the unpaid principal balance of any Term
Loan shall exceed eighty percent (80%) of the aggregate outstanding principal
balance of the Allocated Eligible Contracts for such Term Loan, then Cavalier
Acceptance shall have thirty (30) days within which to (i) substitute a
replacement Eligible Contract to increase the aggregate outstanding balance of
the Allocated Eligible Contracts for such Term Loan, and/or (2) pay such sums to
Lender, in multiples of $10,000, all as necessary to assure that the outstanding
principal balance of such Term Loan is not more than eighty percent (80%) of the
aggregate outstanding principal balance of the Allocated Eligible Contracts for
such Term Loan; provided, however, that with respect to any such Allocated
Eligible Contracts which are Conseco Contracts, Cavalier Acceptance agrees that
the loan-to-value threshold (at which Cavalier Acceptance must either substitute
a new Eligible Contract or repay principal owing on the Term Loan) shall be
seventy percent (70%) rather than eighty percent (80%).
3.2 Disbursement of the Term Loan(s). Lender will credit or pay
the proceeds of each Advance under the Term Loan Commitment to Cavalier
Acceptance's deposit account with Lender or in such other manner as Cavalier
Acceptance and Lender may from time to time agree. The Term Loan(s) will be
advanced solely as a conversion to a Term Loan of indebtedness outstanding under
the Revolving Loan.
3.3 The Term Note(s). At the time of the establishment of any
Term Loan, Cavalier Acceptance will execute and deliver to Lender a Term Note,
evidencing the principal amount so converted, and will pay to Lender all
interest then accrued but unpaid on said principal amount. The principal amount
of any Term Note shall not be less than $2,000,000.
3.4 Payments of Principal.
The Term Loan(s). If not earlier demanded pursuant to Section
9.2, the principal of each Term Loan shall be payable in eighty-three (83)
monthly installments, beginning on the 15th day of the month next succeeding the
date of the applicable Term Note, and continuing on the same day of each month
thereafter until the seventh anniversary date of each such Term Note, at which
time all outstanding principal of such Term Loan, together with all accrued but
unpaid interest thereon, shall be payable. The monthly installments payable on
each Term Loan shall be the amount required, at the applicable interest rate, to
repay such Term Loan, in full, in substantially equal monthly payments. All
principal amounts repaid on any Term Loan, subject to Section 2.1, shall be
available for reborrowing under the Revolving Loan.
3.5 Prepayment. The Term Loan(s) may be prepaid, in full or in
part, upon not less than thirty (30) days notice if such prepayment is
voluntary; provided, however, that a prepayment premium (the "Premium") shall be
payable on the Excess Amount (as hereinafter defined) if such prepayment(s)
(whether voluntary or mandatory) should occur within three (3) years from the
date of the applicable Term Note(s) which evidences the Term Loan(s) upon which
such prepayment has been made, as follows: (a) until the first anniversary date
of the Term Note, the Premium shall be equal to one and one-half percent (1.50%)
times the Excess Amount; (b) from the first anniversary date of the Term Note
until the third anniversary date thereof, the premium shall be equal to one
percent (1.00%) times the Excess Amount; and (c) from and after the third
anniversary date of each Term Note, there shall be no Premium payable upon any
prepayment of such Term Loan. As used herein, the "Excess Amount" means the
amount by which the principal prepayments made on any Term Note, measured on an
annual basis for the applicable Prepayment Period (as hereinafter defined),
shall exceed (A) the outstanding principal balance on the first day of the
Prepayment Period times (B) ten percent (10%). As used herein, the "Prepayment
Period" (x) means the period beginning on the date of the applicable Term Note
and continuing until (but not including) the first anniversary date of such Term
Note and (y) on and after the first such anniversary date, means the period
commencing on such anniversary date and continuing until (but not including) the
next anniversary date. For example, if the outstanding principal balance of a
Term Note on the first day of the Year-One Prepayment Period is $5,000,000, then
ten percent (10%) of such amount would be equal to $500,000, which would be the
amount of principal that could be prepaid during the Year-One Prepayment Period
without payment of any Premium. If the amount prepaid during the Year-One
Prepayment Period for such loan was $750,000, then the Excess Amount would be
$250,000 ($750,000 - 500,000), and the applicable Premium would be equal
to$3,750.00 (1.5% times $250,000).
For partial prepayments, Lender on each April 15 shall
calculate the amount of Premium due on each Term Note for the most
recently-ended Prepayment Period occurring on or before said April 15, and the
amount of such premium shall be payable by Cavalier Acceptance each May 15,
following the April 15 computation date. For prepayments in full, the premiums
shall be computed and payable on the date of prepayment. In addition to the
prepayments specified under Section 3.1(B), the Term Loans shall be subject to
certain mandatory prepayments in the event that Cavalier Acceptance shall have
received prepayments to it of Chattel Paper which constitutes Collateral under
this Agreement (regardless of whether such Chattel Paper is classified as an
Eligible Contract), as follows: (1) In the event that Cavalier Acceptance shall
receive a principal prepayment upon an Allocated Eligible Contract, then 80% of
the amount of such prepayment shall be due to Lender as a prepayment to Lender
of the Term Loan to which such Allocated Eligible Contract was allocated; and
(2) in the event that Cavalier Acceptance should receive a prepayment of any
other Chattel Paper constituting Collateral under this Agreement, then the full
amount of such prepayment shall be due to Lender as a prepayment to be applied
by Lender to such Indebtedness outstanding upon the Term Loans as Lender may
elect.
3.6 Interest Rate and Payments of Interest.
The Term Loan(s). Interest on each Term Loan shall be
calculated and paid as follows:
(1) Interest on the principal balance of each
Term Loan, from time to time outstanding,
will be payable at a rate (the "Term Rate")
that will be fixed for five years at the per
annum rate of interest equal to 195 basis
points (1.95%) above the Five Year Treasury
in the case of Term Loans converted from the
Revolving Loan on or after the date of this
Agreement. For any Term Loan, the Five Year
Treasury shall be measured by adding, on the
date of calculation, the Five Year Treasury
rates as have been made available on the
thirteen (13) Mondays immediately preceding
(but not including) the date of the Term
Note, and dividing such sum by thirteen
(13). Lender will furnish to Cavalier Homes
a report of the Five Year Treasury each
week. After five years, such fixed rate
shall convert to a floating rate of interest
equal to three-quarters of one percent
(.75%) above the Prime Rate in effect from
time to time; provided, however, that such
floating rate shall never be less than the
original fixed rate for such Term Note, and
shall never be greater (prior to maturity)
than the original fixed rate multiplied by
1.50. The Term Rate in effect from time to
time after maturity, whether by acceleration
or otherwise, shall be equal to the
applicable Term Rate in effect prior to said
maturity plus two percent (2.00%).
(2) During any period of time in which the
interest rate for any Term Loan is not a
fixed rate, each time the Prime Rate shall
change, the Term Rate for such Term Loan
shall change contemporaneously with such
change in the Prime Rate.
(3) Interest shall be calculated on the basis of
a 360-day year, by multiplying the product
of the principal amount outstanding and the
applicable rate by the actual number of days
elapsed, and dividing by 360. Accrued
interest through the last day of each
calendar month shall be payable on the due
date of each payment of principal under the
Term Note.
(4) Cavalier Acceptance agrees to pay a late
charge equal to five percent (5%) of the
amount of the payment which is late, but no
more than the maximum amount allowed by
applicable Law (the "Late Charge") as
follows: (a) if any scheduled payment is
late twenty (20) days or more or (b) if any
scheduled payment is late ten (10) days or
more, and two (2) or more scheduled payments
have been late twenty (20) days or more
since February 1 of the year in which such
scheduled payment is late ten (10) days or
more. This subparagraph does not extend any
payment due date expressly stated in the
Agreement or any Security Document and does
not in any way prevent or estop Lender from
requiring that payments be made by Cavalier
Acceptance strictly when due. Unless
accepted by Lender, and unless accompanied
by all other amounts then due to Lender, the
tender of such payment by Cavalier
Acceptance does not cure the Event of
Default arising from the payment default
upon which such Late Charge was assessed.
(5) If, at any time, the Term Rate or a Late
Charge shall be deemed by any competent
court of law, governmental agency or
tribunal to exceed the maximum rate of
interest permitted by any applicable Laws,
then, for such time as the Term Rate or Late
Charge, as applicable, would be deemed
excessive, its application shall be
suspended and there shall be charged instead
the maximum rate of interest permissible
under such Laws, and any excess interest or
charges actually collected by Lender shall
be credited as a partial prepayment of
principal.
3.7 Payment to Lender. All sums payable to Lender hereunder
shall be paid directly to Lender in United States Dollars and immediately
available funds at the place payment is due. If Lender shall send to Cavalier
Acceptance statements of amounts due hereunder, such statements shall be
considered correct and conclusively binding on Cavalier Acceptance unless
Cavalier Acceptance notifies Lender to the contrary within thirty (30) days of
its receipt of any statement which it deems to be incorrect. Alternatively, at
its sole discretion, Lender may charge against any deposit account of Cavalier
Acceptance all or any part of any amount due hereunder.
3.8 Use of Proceeds. The proceeds of the Term Loan(s) shall be
used solely to repay portions of the Revolving Loan used by Cavalier Acceptance
to originate and fund loans (evidenced by Chattel Paper falling within the
definition of an Eligible Contract) for the purchase of manufactured homes.
3.9 [Intentionally Omitted].
3.10 [Intentionally Omitted].
ARTICLE IV
CONDITIONS PRECEDENT
The obligation of Lender to make the Loans and any Advance under this
Agreement, and the issuance by Lender of any Letter of Credit, is subject to the
following conditions precedent:
4.1 Documents Required for the Closing. Prior to the disbursement
of the initial Advance, the following instruments and documents, duly executed
by all proper Persons, shall have been delivered to Lender:
(A) This Agreement;
(B) The Revolving Note;
(C) The Assumption Agreement;
(D) The financing statements required by Section 5.5;
(E) A certificate of Cavalier Homes's and each Initial
Participating Subsidiary's corporate secretary, in form satisfactory to Lender,
dated as of the date of this Agreement, certifying as to the incumbency and
signatures of the officers of each such Borrower signing this Agreement, the
Revolving Note, and the other Loan Documents, and each other document to be
delivered pursuant hereto, together with the following documents attached
thereto:
(1) A copy of resolutions of such Borrower's
board of directors authorizing the
execution, delivery and performance of this
Agreement, the Revolving Note and the other
Loan Documents, and each other document to
be delivered pursuant hereto; and
(2) A copy, certified as of the most recent date
practicable by the judge of probate of the
county in which such Borrower's articles or
certificate of incorporation is filed or the
secretary of state of the state where such
Borrower is incorporated, as appropriate, of
such Borrower's articles or certificate of
incorporation;
(F) A copy of the bylaws of each Borrower (attached to the
appropriate certificate of corporate secretary for each such Borrower);
(G) Certificates, as of the most recent dates practicable, of
the aforesaid secretaries of state, the secretary of state of each state in
which each Borrower is qualified as a foreign corporation and the department of
revenue or taxation of each of the foregoing states, as to the good standing of
such Borrower;
(H) A written opinion of ▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇, legal counsel
for Borrowers, dated as of the date of this Agreement and addressed to Lender,
in form satisfactory to Lender;
(I) The Closing Certificate, in form satisfactory to Lender;
(J) A Compliance Certificate as of a date not more than one
(1) day prior to the initial Advance, substantially in the form of Exhibit C or
Exhibit C-1, as appropriate, attached hereto and incorporated herein, certifying
the existence of certain facts and financial information, and, in the case of
any Term Loan, certifying a Contracts Borrowing Base under the Term Loan
Commitment of not less than the amount of the requested initial Advance;
(K) The Commitment Fee;
(L) The Pledge Agreements, in form satisfactory to Lender,
together with certificates representing the shares pledged thereby, duly
endorsed in blank;
(M) The Guaranty Agreement, in form satisfactory to Lender;
(N) The Assignment of Life Insurance, in form satisfactory to
Lender;
(O) The Subrogation and Contribution Agreement, substantially
in the form of Exhibit D, attached hereto and incorporated herein;
(P) The binders for the insurance policies described in
Section 7.1(E) of this Agreement (such insurance policies shall be delivered to
Lender within sixty (60) calendar days of the date of Closing); and
(Q) The payment of accrued costs and expenses under Section
10.5 of this Agreement.
4.2 Documents Required for Subsequent Advances. At the time of,
and as a condition to, each subsequent Advance under the Revolving Loan
Commitment or the Term Loan Commitment, Cavalier Homes or Cavalier Acceptance,
as appropriate, shall have duly delivered to Lender the following instruments
and documents duly executed by all proper parties:
(A) A Compliance Certificate, substantially in the form of
Exhibit C or Exhibit C-1, attached hereto and incorporated herein, as
appropriate, current for the month in which each Advance is requested,
acceptable to Lender; and
(B) A Request for Advance, substantially in the form of
Exhibit B, attached hereto and incorporated herein.
Borrowers hereby agree (i) that Lender shall be entitled to rely upon the most
recent Compliance Certificate in its possession until the same are superseded,
respectively, by another such certificate, and (ii) that each Request for
Advance shall constitute a confirmation of the representations and warranties
contained in the most recent such certificates then in Lender's possession, as
well as those contained in Article VI hereof.
4.3 Additional Conditions to the Term Loan(s). Conversion of the
Indebtedness owing under the Revolving Loan to a Term Loan is subject to the
following additional conditions precedent:
(A) Cavalier Acceptance shall have delivered to Lender a duly
authorized and executed Term Note pertaining to such Term Loan;
(B) The original principal amount of any Term Note shall not
be less than $2,000,000;
(C) The original principal amount of any Term Note shall not
exceed the Contracts Borrowing Base for the Allocated Eligible Contracts
furnished to and accepted as collateral for such Term Note by Lender;
(D) Lender and its counsel shall be satisfied in all respects
with the enforceability against Cavalier Acceptance of any Term Note delivered
to evidence a Term Loan;
(E) Cavalier Acceptance shall have provided to Lender a
schedule of the Allocated Eligible Contracts delivered at the time of conversion
for such Term Loan, setting out such information as may be required by Lender,
but which shall include, among other things, the name and account number for
each individual borrower, the outstanding principal balance of such borrower's
Eligible Contract, and the date through which payment has been made, and shall
have provided the executed original Eligible Contracts and such other documents
related to the Eligible Contracts as Lender may require or request. Lender, upon
receipt of the foregoing documents shall have a reasonable amount of time to
review the same for conformity to Lender's collateral review standards and the
requirements of this Agreement. If any document submitted relative to an
Eligible Contract requires correction or otherwise to be conformed to Lender's
collateral review standards, then such document shall be returned to Cavalier
Acceptance for correction and the Chattel Paper to which the document relates
shall be ineligible as an Eligible Contract and for funding the Advance
requested. With the prior written consent of Lender, Cavalier Acceptance may
provide Eligible Contract(s) in substitution for the Chattel Paper which fails
to meet Lender's collateral review standards.
4.4 Additional Required Documents.
(A) Lender shall also have received on or before the date on
which a Subsidiary becomes a Participating Subsidiary (i) a certificate of each
Subsidiary's corporate secretary, in form satisfactory to Lender and certifying
as to the incumbency and signatures of the officers of each such Subsidiary,
together with the following documents attached thereto:
(1) A copy of resolutions of such Subsidiary's
board of directors authorizing the
execution, delivery and performance of this
Agreement, the Revolving Note and the other
Loan Documents, and each other document to
be delivered pursuant hereto;
(2) A copy, certified as of the most recent date
practicable by the judge of probate of the
county in which such Subsidiary's articles
or certificate of incorporation is filed or
the secretary of state of the state where
such Subsidiary is incorporated, as
appropriate, of such Subsidiary's articles
or certificate of incorporation; and
(3) At Lender's request, a copy of such
Subsidiary's bylaws;
(ii) certificates, as of the most recent dates practicable of the aforesaid
secretaries of state, the secretary of state of each state in which each
Subsidiary is qualified as a foreign corporation and the department of revenue
or taxation of each of the foregoing states, as to the good standing of such
Subsidiary; (iii) a written opinion of ▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇, legal counsel for
each Subsidiary and addressed to Lender, in form satisfactory to Lender; (iv)
fully executed copies of all Loan Documents that this Agreement requires to be
executed or delivered (or both) by such Subsidiary (including a duly executed
Subrogation and Contribution Agreement and a duly executed Assumption Agreement,
in the case of any Subsidiary that becomes a Participating Subsidiary after the
Closing, and fully executed Security Documents); and (v) such additional
supporting documents as Lender or its counsel may reasonably request.
(B) Lender shall also have received on or before the date on
which a Controlled Partnership becomes a Participating Partnership (i) a copy of
the partnership agreement under which such Controlled Partnership was formed,
certified as true and correct on and as of the date of which Loan Documents are
executed and delivered by such Controlled Partnership; (ii) a written opinion of
▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇, legal counsel for such Controlled Partnership and addressed
to Lender, in form satisfactory to Lender; (iii) duly executed copies of all
Loan Documents that this Agreement requires to be executed or delivered (or
both) by such Controlled Partnership (including a duly executed Assumption
Agreement, in the case of any Controlled Partnership that becomes a
Participating Partnership after the Closing, and fully executed Security
Documents); and (iv) such additional supporting documents as Lender or its
counsel may reasonably request.
4.5 Certain Events. At the time of the initial Advance, of each
subsequent Advance under any of the Loans and of the issuance of each Letter of
Credit:
(A) The representations and warranties set forth in this
Agreement shall be true and correct with the same effect as though such
representations and warranties had been made on the date the Advance was
requested and on the date of the Advance, as the case may be, except as
otherwise expressly provided;
(B) No Event of Default shall have occurred and be
continuing, and no event shall have occurred and be continuing that, with the
giving of notice or passage of time or both, would be an Event of Default;
(C) No material adverse change shall have occurred in the
financial condition of any Borrower since the date of this Agreement; and
(D) No demand for payment shall have been made by Lender;
(E) Cavalier Homes and Cavalier Acceptance shall be full
compliance with the provisions of Section 7.3 or Section 8.3, as appropriate,
hereof; and
(F) All of the Loan Documents shall have remained in full
force and effect.
4.6 Legal Matters. At the time of the disbursement of the initial
Advance, and of each subsequent Advance, under the Revolving Loan Commitment or
under the Term Loan Commitment, and of the issuance of each Letter of Credit,
all legal matters incidental thereto shall be satisfactory to counsel to Lender.
ARTICLE V
COLLATERAL SECURITY
5.1 Composition of the Collateral. The property in which a
security interest is granted pursuant to the provisions of Sections 5.2 and 5.3
hereof or pursuant to the provisions of any Security Document is herein
collectively called the "Collateral." The Collateral and all of each Borrower's
other property of any kind held by Lender, shall stand as one general,
continuing collateral security for all Obligations and may be retained by Lender
until all Obligations have been satisfied in full and Lender's commitment to
lend under this Agreement has been terminated.
5.2 Rights in Property Held by Lender. As security for the
prompt satisfaction of all Obligations, each Borrower hereby assigns, transfers
and conveys to Lender all of such Borrower's right, title and interest in and
to, and grants Lender a lien on and a security interest in, all amounts that may
be owing from time to time by Lender to such Borrower in any capacity,
including, without limitation, any balance or share belonging to such Borrower,
of any deposit or other account with Lender, which lien and security interest
shall be independent of any right of set-off which Lender may have.
5.3 Rights in Property Held Either by Borrowers or by Lender.
As further security for the prompt satisfaction of all Obligations, in addition
to any other or further security provided under any of the Security Documents,
each Borrower hereby assigns to Lender all of such Borrower's right, title and
interest in and to, and grants Lender a lien upon and security interest in, all
of the following, wherever located, whether now owned or hereafter acquired,
together with all replacements therefor and proceeds (including, without
limitation, insurance proceeds) thereof (all of which shall constitute original
Collateral under this Agreement):
(A) Accounts;
(B) Chattel Paper;
(C) Contracts;
(D) Contract Rights;
(E) Documents;
(F) Eligible Contracts;
(G) General Intangibles;
(H) Instruments;
(I) Inventory;
(J) Rights as seller of Goods and rights to returned,
repossessed or reclaimed Goods; and
(K) All Records pertaining to any of the Collateral.
5.4 Priority of Liens. The foregoing liens shall be first and
prior liens except for Permitted Liens.
5.5 Perfection.
(A) Each Borrower will:
(1) Execute such financing statements (including
amendments thereto and continuation
statements thereof), in form satisfactory to
Lender as Lender may from time to time
specify;
(2) Pay, or reimburse Lender for paying, all
costs and taxes of filing or recording the
same in such public offices as Lender may
designate;
(3) Deliver such of the Collateral which in the
sole judgment of Lender is best perfected by
possession, to Lender or its designated
agent or bailee; and
(4) Take such other steps as Lender may from
time to time direct, including, without
limitation, the noting of Lender's lien on
the Collateral and on any certificates of
title therefor, all to perfect Lender's
security interest in the Collateral.
(B) Cavalier Homes and each other applicable Borrower will
further:
(1) Execute such stock powers relating to the
Pledged Stock, in form satisfactory to
Lender as Lender may from time to time
specify;
(2) Pay, or reimburse Lender for paying, all
costs for the transfer of the Pledged Stock;
(3) Deliver the Pledged Stock to Lender or its
designated agent or bailee; and
(4) Take such other steps as Lender may from
time to time direct, all to perfect Lender's
security interest in the Collateral.
(C) In addition to the foregoing, and not in limitation
thereof:
(1) A carbon, photographic, or other
reproduction of this Agreement shall be
sufficient as a financing statement and may
be filed in any appropriate office in lieu
thereof; and,
(2) To the extent lawful, each Borrower hereby
appoints Lender as its attorney- in-fact
(without requiring Lender to act as such) to
execute any financing statement in the name
of such Borrower, and to perform all other
acts that Lender deems appropriate to
perfect and continue its security interest
in, and to protect and preserve, the
Collateral.
5.6 Chattel Paper or Instruments. Each Borrower will deliver
immediately to Lender any Chattel Paper or Instruments arising out of the
Collateral usually, but not exclusively, as proceeds. Further, the parties
hereby agree that such Chattel Paper or Instruments constitute original
Collateral rather than proceeds; but if proceeds, then Lender's security
interest created by this Agreement in the Chattel Paper or Instruments shall not
be claimed merely as proceeds.
5.7 Release of Documentation For Eligible Contracts. In the
event Cavalier Acceptance or Lender shall determine that a document relative to
any Chattel Paper or any Eligible Contract which has been delivered to Lender in
connection with the conversion of a portion of the Revolving Loan to a Term Loan
fails to meet Lender's collateral review standards or is otherwise deficient
subsequent to the initial review by Lender, then upon Cavalier Acceptance's
delivery to Lender of a trust receipt in form and substance satisfactory to
Lender and designating the purpose for which delivery is requested, Lender shall
deliver such documents to Cavalier Acceptance for correction. Within forty-five
(45) days of Lender' delivery of any such nonconforming document to Cavalier
Acceptance for correction, such document shall be corrected or otherwise conform
to Lender's collateral review standards, or the Contract to which the
nonconforming document relates shall be ineligible and Cavalier Acceptance shall
pay Lender the unpaid principal balance of such Contract or, with the prior
written consent of Lender, shall deliver to Lender Eligible Contract(s) in
substitution for such Contract.
5.8 Power of Attorney. Each Borrower hereby constitutes and
appoints Lender, or any other person whom Lender may designate, as such
Borrower's attorney-in-fact, to exercise upon the occurrence of any Event of
Default, solely at Borrowers' joint and several cost and expense, all or any of
the following powers, all of which powers, being coupled with an interest, shall
be irrevocable until all Obligations shall have been performed and paid:
(A) To receive, take, endorse, sign and deliver in Lender's
name or in the name of any Borrower any and all checks, notes, drafts and other
instruments relating to Accounts and Eligible Contracts which constitute part of
the Collateral;
(B) To receive, open and dispose of all mail addressed to any
Borrower that relates to the Collateral and to notify postal authorities to
change the address for the delivery thereof to such address as Lender may
designate;
(C) To transmit to account parties and to obligors upon
Accounts and Eligible Contracts which constitute part of the Collateral, notice
of Lender's interest therein, and to demand and to receive from such Persons at
any time, in the name of Lender or of any Borrower or of the designee of Lender,
information concerning such Accounts, such Eligible Contracts, and the amounts
owing thereon;
(D) To notify such Account Debtors and/or obligors to make
payments on such Accounts and/or Eligible Contracts directly to Lender or to a
lock-box designated by Lender;
(E) To take or to bring, in the name of Lender or in the name
of any Borrower, all steps, action, suits or proceedings deemed by Lender to be
necessary or desirable to effect the collection of such Accounts or such
Eligible Contracts;
(F) To exercise all of the rights and remedies of Borrowers,
or any of them, with respect to the collection of the Accounts;
(G) To settle, adjust, compromise, extend, renew, discharge,
terminate or release the Accounts in whole or in part;
(H) To sell or assign the Accounts upon such terms, for such
amounts and at such time or times as Lender deems advisable;
(I) To take control, in any manner, of any item of payment
on, or proceeds of, Collateral;
(J) To use the information recorded on or contained in any
data processing equipment and computer hardware and software relating to the
Collateral to which any Borrower has access; and
(K) To do all acts and things necessary, in Lender's sole
judgment, to carry out the purposes of this Agreement.
All acts of such attorney-in-fact or designee taken pursuant
to this Section 5.8 or Section 9.6 are hereby ratified and approved by each
Borrower, and said attorney or designee shall not be liable for any acts or
omissions nor for any error of judgment or mistake of fact or law.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
6.1 Original. To induce Lender to enter into this Agreement, each
of the Borrowers jointly and severally represents and warrants to Lender, as of
the date hereof and, except as otherwise expressly provided, as of all times
(including, without limitation, as of the date each Advance under any of the
Loans is requested and made) until this Agreement is terminated in writing, all
Obligations hereunder are satisfied and no commitments hereunder remain
outstanding, as follows:
(A) Cavalier Homes is a corporation duly organized, validly
existing and in good standing under the Laws of the State of Delaware; each
Consolidated Entity is duly organized, validly existing and in good standing
under the Laws of the state in which it is incorporated or formed, all as set
forth in Exhibit J, attached hereto and incorporated herein; Cavalier Homes and
each Consolidated Entity has the lawful power to own its properties and to
engage in the business it conducts, and is duly qualified and in good standing
in the jurisdictions wherein the nature of the business transacted by it or
property owned by it makes such qualification necessary; the states in which
Cavalier Homes and each Consolidated Entity is qualified to do business are set
forth in Exhibit G, attached hereto and incorporated herein; the percentage of
ownership by Cavalier Homes or another Borrower as applicable, of the
outstanding stock of each Consolidated Entity is as listed in Exhibit K,
attached hereto and incorporated herein; the addresses of all places of business
and headquarters of Cavalier Homes and each Consolidated Entity are as set forth
in Exhibit H, attached hereto and incorporated herein, and the addresses of all
places where the Collateral is located and a brief description of the nature of
the Collateral at each such location are set forth in Exhibit H;
(B) Neither Cavalier Homes nor any Consolidated Entity has
used any corporate or fictitious name other than the name for Cavalier Homes or
each Consolidated Entity as is used in this Agreement, which is the same as the
name shown, respectively, on Cavalier Homes's and each Consolidated Entity's
certificate or articles of incorporation through the date of filing of the last
amendment thereto, except as set forth in Exhibit II.6.1(B) attached hereto and
incorporated herein;
(C) None of the Borrowers is directly or indirectly
controlled by, or acting on behalf of, any Person which is an "Investment
Company," within the meaning of the Investment Company Act of 1940, as amended;
(D) Neither Cavalier Homes nor any Consolidated Entity has
been the surviving corporation in a merger, acquired any business, or changed
its principal executive office within five (5) years and one (1) month prior to
the date hereof, except as set forth in Exhibit II.6.1(D), attached hereto and
incorporated herein;
(E) Neither Cavalier Homes nor any Consolidated Entity is in
default with respect to any of its existing Indebtedness, and the making and
performance of this Agreement, the Notes, and the other Loan Documents will not
(immediately, or with the passage of time, the giving of notice, or both):
(1) Violate the charter or by-law provisions of
any Borrower, or violate any Law or result
in a default under any contract, agreement,
or instrument to which any Borrower or any
Consolidated Entity is a party or by which
any Borrower or any Consolidated Entity or
its property is bound; or
(2) Result in the creation or imposition of any
security interest in, or lien or encumbrance
upon, any of the assets of any Borrower or
any Consolidated Entity, except in favor of
Lender;
(F) Each Borrower has the power and authority to enter into
and perform this Agreement, the Notes to which it is a party, and the other Loan
Documents, and to incur the obligations herein and therein
provided for, and has taken all corporate action necessary to authorize the
execution, delivery, and performance of this Agreement, the Notes to which it is
a party, and the other Loan Documents;
(G) This Agreement, the Notes, and the other Loan Documents
are, or when delivered will be, valid, binding, and enforceable in accordance
with their respective terms;
(H) The Security Documents, together with any UCC-1s and all
other documents filed in connection therewith, create as security for the
Obligations, a valid and enforceable perfected first priority security interest
in and lien on all of each Borrower's rights, title and interest in the
Collateral, in favor of Lender, superior and prior to the rights of all third
Persons and subject to no other liens.
(I) Except as disclosed in the footnotes to the Financial
Statements delivered to Lender, or in Exhibit II.6.1(I) attached hereto and
incorporated herein, and except for matters in which an insurer has accepted the
defense without reservation of rights, there is no pending order, notice, claim,
litigation, proceeding or investigation against or affecting Cavalier Homes or
any Consolidated Entity, except such order, notice, claim, litigation,
proceeding or investigation that, in the good-faith judgment of management of
Cavalier Homes or such Consolidated Entity, is not reasonably likely to result
in an adverse decision that would require the payment of $1,000,000 or more;
(J) Cavalier Homes and each Consolidated Entity has good and
marketable title to all of its assets, including the Collateral, free of any
security interest, encumbrance or lien, or claim of any third person except for
Permitted Liens;
(K) The Financial Statements, including any schedules and
notes pertaining thereto, have been prepared in accordance with Generally
Accepted Accounting Principles consistently applied, and fully and fairly
present the financial condition of Cavalier Homes and the Consolidated Entities
as of the dates thereof and the results of operations for the periods covered
thereby, and there have been no material adverse changes in the Consolidated
financial condition or business of Cavalier Homes and the Consolidated Entities
from the dates of the Financial Statements to the date hereof;
(L) As of the date of the Financial Statements, Cavalier
Homes and the Consolidated Entities had no material Indebtedness of any nature,
including, without limitation, liabilities for taxes and any interest or
penalties relating thereto, except to the extent reflected (in a footnote or
otherwise) and reserved against in the Financial Statements or as disclosed in
or permitted by this Agreement; none of the Borrowers knows or has any
reasonable ground to know of any basis for the assertion against it or any
Consolidated Entity of any material Indebtedness of any nature not fully
reflected and reserved against in the Financial Statements;
(M) Except as otherwise permitted herein, Cavalier Homes and
each Consolidated Entity have filed all federal, state and local tax returns and
other reports that they are required by Law to file prior to the date hereof and
which are material to the conduct of its businesses, have paid or caused to be
paid all taxes, assessments and other governmental charges that are due and
payable prior to the date hereof, and have made adequate provision for the
payment of such taxes, assessments or other charges accruing but not yet
payable; none of the Borrowers has any knowledge of any deficiency or additional
assessment in a materially important amount in connection with any taxes,
assessments or charges not provided for on its books;
(N) Except to the extent that the failure to comply would not
materially interfere with the conduct of the business of Cavalier Homes or any
Consolidated Entity, each of Cavalier Homes and each Consolidated Entity has, to
the best of its knowledge, complied with all applicable Law with respect to:
(1) Any restrictions, specifications, or other
requirements pertaining to products that
Cavalier Homes or any Consolidated Entity
manufactures or sells or to the services
that Cavalier Homes or any Consolidated
Entity performs;
(2) The conduct of its businesses; and
(3) The use, maintenance and operation of the
real and personal properties owned or leased
by it in the conduct of its businesses;
(O) No representation or warranty by any Borrower contained
herein or in any certificate or other document furnished by any Borrower
pursuant hereto contains any untrue statement of material fact or omits to state
a material fact necessary to make such representation or warranty not misleading
in light of the circumstances under which it was made;
(P) Each consent, approval or authorization of, or filing,
registration or qualification with, any Person that is required to be obtained
or effected by Cavalier Homes or any Consolidated Entity, in connection with the
execution and delivery of this Agreement, the Notes, and the other Loan
Documents, or the undertaking or performance of any obligation hereunder or
thereunder has been duly obtained or effected;
(Q) All existing Indebtedness of each Borrower:
(1) For money borrowed; or
(2) Under any security agreement, mortgage, or
agreement covering the lease by any Borrower
as lessee of real or personal property,
is described in Exhibit I, attached hereto and incorporated herein;
(R) To the best of each Borrower's knowledge, all parties
(including each of Borrower and each Consolidated Entity) to any material lease,
contract or commitment of any kind to which any Borrower or any other
Consolidated Entity is a party have complied with the provisions of such lease,
contract or commitment; no party is in default under any material lease,
contract, or other commitment thereof and no event has occurred which, but for
the giving of notice or the passage of time, or both, would constitute a
default;
(S) Neither Cavalier Homes nor any Consolidated Entity has
made any agreement or taken any action which may cause any Person to become
entitled to a commission or finder's fee as a result of the making of any of the
Loans;
(T) Cavalier Homes's Consolidated federal tax returns for all
years of operation, including the fiscal year of Cavalier Homes ended December
31, 1999, have been filed with the Internal Revenue Service and have not been
challenged or have been challenged and finally resolved;
(U) Each Benefit Plan maintained or contributed to by any
Borrower or any ERISA Affiliate that is a Pension Plan satisfies the minimum
funding standards of Section 302 of ERISA; (1) there have been no Reportable
Events (as defined in Section 4043 of ERISA) or Prohibited Transactions (as
defined in Section 408 of ERISA) with respect to any Benefit Plan; (2) the
Internal Revenue Service has not issued a minimum funding waiver with respect to
any Benefit Plan that is a Pension Plan; (3) none of the Benefit Plans is a
multiemployer plan as defined in Section 3(37) of ERISA; (4) each Benefit Plan
to which 4980B of the Internal Revenue Code of 1986, as amended, applies has
been operated in compliance therewith; and (5) no Benefit Plan provides benefits
to employees beyond retirement or other termination of employment other than
benefits required by Section 4980B of the Internal Revenue Code of 1986, as
amended.
(V) Each of Cavalier Homes and the Consolidated Entities is,
to the best of its knowledge, in compliance with all Environmental Laws;
(W) Each Borrower owns or has the rights to use, pursuant to
written licenses, all patents, trademarks and copyrights used or employed in its
business and products; and
(X) No Borrower's Inventory is subject to any license
agreement relating to patents, trademarks or copyrights which could, directly or
indirectly, preclude or render impracticable the realization by Lender of the
value of such Inventory.
6.2 Additional Representations and Warranties of Cavalier
Acceptance. To induce Lender to enter into this Agreement, Cavalier Acceptance
represents and warrants to Lender, as of the date hereof and as of all times
(including, without limitation, as of the date each Advance under the Term Loan
Commitment is requested and made) until this Agreement is terminated in writing,
all Obligations hereunder are satisfied, and no commitments hereunder remain
outstanding, that with respect to each Eligible Contract included in the
Collateral:
(A) All parties to the Eligible Contract (including any
co-buyer, co-maker, or guarantor) were of legal age and otherwise had legal
capacity to contract at the time they signed the Eligible Contract, and any
party identified as a "buyer" is, to the best knowledge of Cavalier Acceptance,
not a "straw-man" buyer acting on behalf of an undisclosed third party, but is
instead intending to own and use the manufactured home described thereon;
(B) All signatures on the Eligible Contract (including the
signature of any co-buyer, co- maker, or guarantor) are genuine and, if made in
a representative capacity, were duly authorized, and the Eligible Contract is
valid and enforceable in accordance with its terms;
(C) The address, including the county of residence, of each
party to the Eligible Contract as of the date of execution of the Eligible
Contract is correctly shown on the Eligible Contract;
(D) The Eligible Contract correctly sets forth the cash
selling price and down payment made to the dealer in cash and/or the amount
allowed by the dealer for any property taken in trade, and the application
submitted to Cavalier Acceptance in connection with the Eligible Contract
arising therefrom is true and correct in all respects to the best knowledge of
Cavalier Acceptance, and each of the Eligible Contracts and the application
fully and accurately disclose any incentive, rebate, refund, or the like
provided to or on behalf of the purchaser, directly or indirectly, and whether
provided by the manufacturer and/or the dealer;
(E) The cash down payment made by the purchaser and shown on
the Eligible Contract does not represent, either directly or indirectly, a loan
made by, or otherwise arranged by, the dealer to or for the purchaser;
(F) The Eligible Contract correctly describes the
manufactured home sold by the dealer to the purchaser;
(G) The sale of the manufactured home covered by the Eligible
Contract was a bona fide sale at retail in the regular course of the dealer's
business or a sale by such dealer of a manufactured home that has been
repossessed by Cavalier Acceptance;
(H) The manufactured home described in the Eligible Contract
is not subject to any lien, encumbrance or security interest except any security
interest created in favor of Cavalier Acceptance;
(I) No party has required credit life insurance, credit
disability insurance, accident and health insurance or any other insurance of
any kind (other than property damage insurance) in connection with the Eligible
Contract and the purchase of any such insurance coverage is truly optional with
the purchaser;
(J) The purchaser received a fully completed copy of the
Eligible Contract at the time he or she signed it;
(K) Unless Lender has expressly consented in writing, the
Eligible Contract was not past due more than ninety (90) days (and the Eligible
Contract has not been re-dated) or dishonored at the time it
was sold to Cavalier Acceptance or pledged to Lender hereunder, and Cavalier
Acceptance has no notice or knowledge of any claim, defense, or setoff to which
the purchaser is entitled;
(L) The dealer has notified the purchaser that the Eligible
Contract would be submitted to Cavalier Acceptance, at its office, and the
purchaser has been notified of the appropriate address of such office, and that
all payments are to be made by the purchaser only to Cavalier Acceptance or its
assigns, and the dealer has not received any payment on the Eligible Contract
except for payments disclosed to Cavalier Acceptance in writing at the time the
Eligible Contract is offered for sale to Cavalier Acceptance;
(M) There has been delivered or caused to be delivered to the
appropriate authority within ten (10) days following the date upon which the
purchaser took possession of the manufactured home a duly completed application
for a certificate of title for the vehicle described in the Eligible Contract,
Cavalier Acceptance is shown as the "first lienholder" on said application, and
the application was accompanied by the existing certificate of title or the
manufacturer's certificate of origin for the home described on the application
and the appropriate fee, or, if the home is not subject to the title laws, there
has been delivered to Cavalier Acceptance a financing statement which correctly
described the home as collateral, is signed by the purchaser as "debtor", is
executed by the dealer as "secured party", shows the correct name and address of
the purchaser as "debtor", and shows Cavalier Acceptance as either "secured
party" or "assignee of secured party";
(N) The manufactured home described on the Eligible Contract
is new unless expressly designated on the Eligible Contract as "used";
(O) The manufactured home identification number and/or serial
number shown on the Eligible Contract and on the certificate of title
application and/or financing statement are true and correct;
(P) The sale which gave rise to the Eligible Contract was not
solicited at the residence of the purchaser and is not subject to rescission or,
if solicited at a location deemed under applicable law to constitute the
residence of the purchaser and to give rise to a right of rescission, notice of
such right of rescission was duly given to all persons entitled thereto, which
right has expired without being exercised;
(Q) Either the manufacturer or the dealer has agreed to
service and repair the home described on the Eligible Contract in accordance
with any warranty made by the dealer or the manufacturer with respect to the
home;
(R) All insurance premiums financed under the Eligible
Contract have been paid, except as otherwise disclosed in writing;
(S) The person executing the Eligible Contract on behalf of
the dealer, including its execution as the seller of the home and as the
assignor of the Eligible Contract to Cavalier Acceptance, was fully authorized
to execute and deliver the Eligible Contract on behalf of the dealer, and the
representations, warranties and covenants set forth in the dealer's assignment
for each Eligible Contract are, upon delivery of such Eligible Contract to
Cavalier Acceptance the valid and binding obligations of the dealer;
(T) Cavalier Acceptance has good title to, and full right and
power to assign to Lender the Eligible Contract, and the Eligible Contract is
not subject to any lien, encumbrance, or prior assignment;
(U) All requirements of all applicable federal and state
consumer protection laws and regulations in connection with the Eligible
Contract and the sale of the home described thereon have been complied with;
(V) If the Eligible Contract is a Federal Housing
Administration contract, the manufactured home and the home site upon which it
has been or will be placed meet all applicable eligibility requirements
promulgated by the Department of Housing and Urban Development (HUD), and the
requirements set forth in HUD's regulations, including, without limitation, the
requirement that certain certificates be furnished by the dealer and/or the
purchaser to Cavalier Acceptance concerning and evidencing such compliance, have
been complied with;
(W) In connection with any sale or attempted sale of a
manufactured home to any person, the dealer did not hold itself out as an agent
of Cavalier Acceptance for any purpose, and did not make any representations,
assurance or other statements of any kind to any such person which purport in
any way on behalf of or binding upon Cavalier Acceptance; and
(X) The manufactured home is insured by the purchaser thereof
against loss, theft or damage (including both collision and comprehensive
coverages) in an amount not less than the lesser of the unpaid balance owing on
the Eligible Contract or the average retail value of the home, under a policy of
insurance which provides for payment to Cavalier Acceptance in the event of a
loss covered by the policy.
6.3 Reliance By Cavalier Acceptance on Dealer Representations.
Lender and Cavalier Acceptance recognize that, in making the representations and
warranties specified in Section 6.2 of this Agreement, Cavalier Acceptance has
relied, in those instances where knowledge of the matters contained in the
representations and warranties would not be within the personal knowledge of
Cavalier Acceptance, upon representations and warranties provided to Cavalier
Acceptance by the mobile home dealer from whom Cavalier Acceptance acquired the
particular Eligible Contract. To that end, Lender and Cavalier Acceptance agree
that so long as such representations and warranties are made by Cavalier
Acceptance in good faith and without knowledge that any such representation or
warranty contained in Section 6.2 is incorrect when made, then any such
misrepresentation (if any) shall not be deemed to be an Event of Default
hereunder, and the only effect of such misrepresentation shall be to cause such
Chattel Paper to thereupon cease to be an Eligible Contract for purposes of this
Agreement.
ARTICLE VII
COVENANTS OF BORROWERS
Each Borrower does hereby jointly and severally covenant and agree with
Lender that, so long as any of the Obligations remains unsatisfied or any
commitments hereunder remain outstanding, and thereafter until this Agreement is
terminated in writing, it will comply, and it will cause the other Borrowers and
other Consolidated Entities to comply, at all times with the following
covenants, unless the Lender in a particular instance shall have given its prior
written consent to the contrary:
7.1 Affirmative Covenants.
(A) Each Borrower will take and will cause each other
Consolidated Entity to take all necessary steps to preserve its corporate
existence and franchises and comply with all present and future Laws applicable
to it in the operation of its businesses and all material agreements to which it
is subject.
(B) Each Borrower will use the proceeds of the Revolving Loan
only for the purposes set forth in Section 2.7, and will furnish to Lender such
evidence as it may reasonably require with respect to such use.
(C) Cavalier Homes will furnish to Lender:
(1) Within thirty (30) days after the close of
each calendar quarter:
(i) A Consolidated and consolidating
income statement of Cavalier Homes
and the Consolidated Entities for
such period; and
(ii) A Consolidated and consolidating
balance sheet of Cavalier Homes and
the Consolidated Entities as of the
end of such period
all in reasonable detail, subject to year-
end audit adjustments;
(2) Within ninety (90) days after the close of
each fiscal year of Cavalier Homes:
(i) A Consolidated statement of
Stockholders' Equity and a
Consolidated statement of Cash Flows
of Cavalier Homes and the
Consolidated Entities for such
fiscal year;
(ii) Consolidated and consolidating
income statements of Cavalier Homes
and the Consolidated Entities for
such fiscal year; and
(iii) Consolidated and consolidating
balance sheets of Cavalier Homes
and the Consolidated Entities as of
the end of such fiscal year
all in reasonable detail, including all
supporting schedules and comments; the
Consolidated statements and balance sheets
to be audited by an independent certified
public accountant selected by Cavalier Homes
and acceptable to Lender, and certified by
such accountants to have been prepared in
accordance with Generally Accepted
Accounting Principles, consistently applied,
by Cavalier Homes and the Consolidated
Entities, except for any inconsistencies
explained by such accountants to Lender, in
form satisfactory to Lender; in addition,
Cavalier Homes will obtain from such
independent certified public accountants and
deliver to Lender, within ninety (90) days
after the close of each fiscal year of
Cavalier Homes, their written statement that
in making the examination necessary to their
certification they have obtained no
knowledge of any Event of Default by
Cavalier Homes or any other Borrower, or
disclosing all Events of Default of Cavalier
Homes or any other Borrower of which they
have obtained knowledge; provided, however,
that in making their examination such
accountants shall not be required to go
beyond the bounds of generally accepted
auditing procedures for the purpose of
certifying financial statements; Lender
shall have the right from time to time to
discuss the affairs of Cavalier Homes and
the Consolidated Entities directly with
Cavalier Homes's independent certified
public accountant after notice to Cavalier
Homes and opportunity of Cavalier Homes to
be present at any such discussions;
(3) Contemporaneously with each quarterly and
year-end financial report required by the
foregoing paragraphs, and at any additional
time in Lender's discretion, a Compliance
Certificate, wherein in addition to the
financial information reported in such
Compliance Certificate, the president or
chief financial officer of Cavalier Homes
shall certify that he has individually
reviewed the provisions of this Agreement
and that a review of the activities of
Borrowers and the Consolidated Entities
during such year or quarterly period, as the
case may be, has been made by or under the
supervision of the signer of such
certificate with a view to determining
whether each Borrower has kept, observed,
performed and fulfilled all its obligations
under this Agreement, and that, to the best
of his knowledge, each Borrower has observed
and performed each and every undertaking
contained in this Agreement and is not at
the time in Default in the observance or
performance of any of the terms and
conditions hereof or, if any Borrower shall
be so in Default, specifying all such
Defaults and Events of Default of which he
may have knowledge;
(4) Promptly after sending or making available
or filing of the same, copies of all 10-K's
and 10-Q's that any Borrower sends or makes
available to its stockholders and all other
registration statements and reports that any
Borrower files with the Securities and
Exchange Commission or any successor Person,
which are requested by Lender;
(5) At Lender's request, an aging as of the end
of the calendar quarter or other period to
which each such request pertains, in such
form and detail as shall be satisfactory to
Lender, of all Accounts of each Borrower
certified by the president or chief
financial officer of Cavalier Homes to be
complete and correct;
(6) At Lender's request, a listing of each
Borrower's Inventory, in such form and
detail as shall be satisfactory to Lender,
showing the amount, size, grade,
manufacturer, and cost of each item or group
thereof, certified by the president or chief
financial officer of Cavalier Homes to be
complete and correct; and
(7) Upon Lender's request from time to time
copies of any or all agreements, contracts,
or commitments of the type referred to in
Section 6.1(R) hereof.
(D) Cavalier Homes and each Consolidated Entity will maintain
its Inventory, Equipment, real estate and other properties in good
condition and repair (normal wear and tear excepted), and will pay and discharge
or cause to be paid and discharged when due, the cost of repairs to or
maintenance of the same, and will pay or cause to be paid all rental or mortgage
payments due on such real estate. In addition, Borrowers jointly and severally
agree to reimburse Lender for any reasonable expenses incurred by Lender to
protect and preserve the Collateral pursuant to Section 5.5(C).
(E) Cavalier Homes and each Consolidated Entity will
maintain, or cause to be maintained, public liability insurance, and fire and
extended coverage insurance on all tangible assets owned by it, naming Lender as
mortgagee and loss payee in all policies insuring the Collateral, all in such
form and amounts as are consistent with industry practices and with such
insurers as may be satisfactory to Lender. Such policies shall contain a
provision whereby they cannot be canceled except after ten (10) days written
notice to Lender. Borrowers will furnish to Lender such evidence of insurance as
Lender may require. Borrowers hereby jointly and severally agree that, in the
event Cavalier Homes or any Consolidated Entity fails to pay or cause to be paid
the premium on any such insurance, Lender may do so and be reimbursed by
Borrower therefor. Lender is hereby appointed each Borrower's attorney-in-fact
(without requiring Lender to act as such) to endorse any check which may be
payable to such Borrower to collect such returned or unearned premiums or the
proceeds of such insurance, and any amount so collected may be applied by Lender
toward satisfaction of any of the Obligations.
(F) Cavalier Homes and the Consolidated Entities will pay or
cause to be paid when due all taxes, assessments and charges or levies imposed
upon it or on any of its property or which it is required to withhold and pay
over, except where contested in good faith by appropriate proceedings with
adequate reserves therefor having been set aside on their books; provided,
however, that Cavalier Homes and the Consolidated Entities shall pay or cause to
be paid all such taxes, assessments, charges or levies forthwith whenever
foreclosure on any lien that attached (or security therefor) appears imminent.
(G) Cavalier Homes and the Consolidated Entities will, when
requested to do so, make available for inspection by Lender's duly authorized
representatives any of its books and Records, and will furnish to Lender any
information regarding its business affairs and financial condition within a
reasonable time after written request therefor. Cavalier Homes and each Borrower
will and will cause each of the other Consolidated Entities to keep proper books
of record and account in which full, true and correct entries in all material
respects shall be substantially in conformity with GAAP and all requirements of
Law shall be satisfied in all dealings and transactions in relation to its
business and activities. Cavalier Homes and each Borrower will, and will cause
each of the other Consolidated Entities to, permit Lender's officers and
designated representatives to visit and inspect, during normal business hours,
any of the properties of such Borrower or such Consolidated Entity, and to
examine the books of account of such Borrower or such Consolidated Entity and to
discuss the affairs, finances, accounts of such Borrower or such Consolidated
Entity, and be advised as to the same by, its and their officers, all at such
reasonable times and intervals and to such reasonable extent as Lender may from
time to time request. In connection with the foregoing, Lender agrees to utilize
such documents, materials and information solely and exclusively in connection
with this Agreement and the other Loan Documents and the transactions
contemplated herein and therein to exercise its best efforts to keep all such
documents, materials and information delivered or made available by Borrowers
confidential from anyone other than Persons employed or retained by Lender who
are expected to be engaged in evaluating, approving, structuring, and enforcing
or administering the Loans; provided, however, that nothing herein shall prevent
Lender from disclosing such information;
(1) to any actual or potential assignee or
participant of any loan or note; provided
that such assignee or participant shall be
subject to this Section;
(2) upon order of any court or administrative
agency after it, to the extent practical,
gives notice to Cavalier Homes pursuant to
which Cavalier Homes or the affected
Borrower may seek a protective order against
such disclosure;
(3) upon request or demand of any regulatory
agency or authority having jurisdiction over
Lender;
(4) which has been publicly disclosed;
(5) in connection with any litigation;
(6) to the extent reasonably required in
connection with the exercise of any remedy
hereunder;
(7) to Lender's legal counsel and independent
auditors in connection with Lender's
business.
(H) Cavalier Homes and each Consolidated Entity will collect
its Accounts and Eligible Contracts and sell its Inventory only in the ordinary
course of business.
(I) Cavalier Homes and each Consolidated Entity will keep
accurate and complete Records of its Accounts, Eligible Contracts, Inventory and
Equipment, consistent with sound business practices.
(J) Cavalier Homes and each Consolidated Entity will give
immediate notice to Lender of:
(1) Any litigation or proceeding (other than
matters in which an insurer has accepted the
defense without reservation of rights) in
which it is a party, except any such
litigation or proceeding where in the
good-faith judgment of management of
Cavalier Homes or such Consolidated Entity,
such matter is not reasonably likely to
result in an adverse decision that would
require the payment of $1,000,000 or more;
and
(2) The institution of any other suit or
proceeding involving it that might
materially and adversely affect its
operations, financial condition, property or
business prospects.
(K) Within ten (10) days of Lender's request therefor, each
Borrower will furnish to Lender any or all of the following: (a) copies of
federal income tax returns filed by such Borrower; (b) such
Borrower's bylaws; and (c) a complete list of Benefit Plans that such Borrower
and its ERISA Affiliates have ever maintained or to which it or they have
contributed.
(L) Cavalier Homes and each Consolidated Entity will pay when
due (or within applicable grace periods) all Indebtedness exceeding $50,000 in
amount due third Persons, except when the amount thereof, not to exceed
$400,000, is being contested in good faith by appropriate proceedings and with
adequate reserves therefor being set aside on the books of Cavalier Homes and
each Consolidated Entity.
(M) Cavalier Homes and each Consolidated Entity will notify
Lender immediately if it becomes aware of the occurrence of any Event of Default
or of any fact, condition or event that only with the giving of notice or
passage of time or both, could become an Event of Default, or if it becomes
aware of any material adverse change in the business prospects, financial
condition (including, without limitation, proceedings in bankruptcy, insolvency,
reorganization, or the appointment of a receiver or trustee), or results of
operations of Cavalier Homes, or any Consolidated Entity, or of the failure of
Cavalier Homes or any Consolidated Entity to observe any of its undertakings
hereunder or under any of the Loan Documents.
(N) Cavalier Homes and each Consolidated Entity will notify
Lender thirty (30) days in advance of any change in the location of its chief
executive office or principal place of business.
(O) Cavalier Homes and each Consolidated Entity will notify
Lender thirty (30) days in advance of any change in the location or use of any
of the Collateral and within thirty (30) days after any change in condition,
aside from normal wear and tear, of any of the Collateral.
(P) Each Borrower and each ERISA Affiliate will:
(1) Fund each of its Pension Plans, if any, in
accordance with no less than the minimum
funding standards set forth in Section 302
of ERISA;
(2) At Lender's request, furnish to Lender,
promptly after filing the same, copies of
all reports or statements filed with the
United States Department of Labor, the
Pension Benefit Guaranty Corporation, or the
Internal Revenue Service with respect to any
Benefit Plans;
(3) Promptly advise Lender of the occurrence of
any Reportable Even or Prohibited
Transaction, each as defined in ERISA, with
respect to any Benefit Plan; and
(4) Promptly advise Lender of the issuance of a
funding waiver by the Internal Revenue
Service with respect to any Pension Plan.
(Q) Cavalier Homes and each Consolidated Entity will comply
with all Environmental Laws, and will handle, store, treat, discharge, and
dispose of any Hazardous Materials only in compliance with all Environmental
Laws.
(R) Each Borrower will maintain its primary deposit account
relationship with Lender.
7.2 Negative Covenants.
(A) Neither Cavalier Homes nor any Consolidated Entity will
change its name, enter into any merger, consolidation, reorganization or
recapitalization, reclassify its capital stock, or liquidate or dissolve;
provided, however, that this clause (A) is not intended to prevent Borrower from
raising capital through any public debt or securities offering.
(B) Neither Cavalier Homes nor any Consolidated Entity will
sell, transfer, lease or otherwise dispose of all or (except in the ordinary
course of business) any material part of its assets.
(C) Unless the proceeds of such sale are paid to Lender
pursuant to this Agreement, neither Cavalier Homes nor any Consolidated Entity
will sell, or enter into any agreement to sell, any of its Accounts or Eligible
Contracts.
(D) Neither Cavalier Homes nor any Consolidated Entity will
sell, lease, transfer, assign, or otherwise dispose of any of the Collateral
except in the ordinary course of business and as permitted under this Agreement.
(E Neither Cavalier Homes nor any Consolidated Entity will
sell, or otherwise dispose of, or for any reason cease operating, any of its
divisions, franchises, or lines of business.
(F) Neither Cavalier Homes nor any Consolidated Entity will
mortgage, pledge, grant or permit to exist a security interest in or lien, which
exceed, in the aggregate, $1,000,000, upon any of its real property, now owned
or leased or hereafter acquired or leased, except for Permitted Liens, unless
such Borrower gives Lender thirty (30) days notice of its intent to grant such
lien and Lender expressly consents in writing thereto.
(G) Neither Cavalier Homes nor any Consolidated Entity will
become liable, directly or indirectly, as guarantor or otherwise for any
obligation of any other Person, except for guarantees existing and disclosed to
Lender prior to Closing and endorsements of commercial paper for deposit or
collection in the ordinary course of business; provided, however, that with
respect to dealers selling Inventory manufactured by any Borrower, Cavalier
Homes may guaranty up to $75,000 in principal amount of lines of credit used for
such dealer to purchase such Inventory.
(H) Neither Cavalier Homes nor any Consolidated Entity will
incur, create, assume, or permit to exist any Indebtedness except:
(1) The Loans;
(2) Loans obtained by Cavalier Homes from the
First National Bank of ▇▇▇▇▇▇▇▇ not to
exceed $1,000,000 in aggregate principal
amount;
(3) Existing Indebtedness as set forth in
Exhibit I, attached hereto and incorporated
herein, to the extent shown on such Exhibit
I to be permitted to exist after the
Closing;
(4) Trade indebtedness incurred in the ordinary
course of business;
(5) Contingent Indebtedness permitted by Section
7.2(G); and
(6) Indebtedness secured by Permitted Liens and
lease obligations not to exceed, in the
aggregate, $18,000,000 (with such
Indebtedness and lease obligations not to
exceed $50,000 for Cavalier Acceptance); as
used in this paragraph, the term "lease"
means a lease that is not reflected on a
Consolidated balance sheet of Cavalier Homes
and the Consolidated Entities and should not
be so reflected under General Accepted
Accounting Principles; provided, however
that notwithstanding the foregoing, Cavalier
Homes may incur up to $25,000,000 in
additional Indebtedness to purchase
inventory for its retail manufactured
housing sales operations, which Indebtedness
may be secured by a lien on said inventory
in favor of such floor plan lender(s).
(7) Up to $25,000,000 of unsecured, convertible
subordinated debentures issued by Cavalier
Homes, provided that (i) the holders of such
Indebtedness agree in favor of Lender and
other creditors (collectively, the "Senior
Creditors") that the rights of such holders
shall be junior and subordinate to the
payment rights of the Senior Creditors and
(ii) the documents evidencing such
Indebtedness contain such additional
provisions regarding Lender's right to prior
payment and priority as may be acceptable
to Lender in its discretion.
(I) Cavalier Homes will not declare or pay any dividends, or
make any other payments or distributions on account of its capital stock, or any
payments to redeem, purchase or retire any of its capital stock, which exceed,
in the aggregate for all such payments, fifty percent (50%) of the average of
its Consolidated net income determined under General Accepted Accounting
Principles, consistently applied, by Cavalier Homes, for the two most recent
fiscal years preceding the period to which such dividends or distributions
relate, nor make any assignment or transfer of Accounts, Chattel Paper, or,
other than in the ordinary course of business, of Inventory.
(J) Other than any Consolidated Entity, neither Cavalier
Homes nor any Consolidated Entity will form any Subsidiary, or Controlled
Partnership, or make any investment in or make any loan in the nature of any
investment to any Person, which, in the aggregate, exceed $1,050,000.
(K) Neither Cavalier Homes nor any Consolidated Entity will
make any loan or advance to any of their respective officers, shareholders,
directors or employees except for business travel and similar temporary advances
in the ordinary course of business, nor pay salary to executive and management
personnel aggregating in excess of the Borrowers' compensation formula, as
previously disclosed to Lender and as in effect as of December 31, 1999.
(L) Neither Cavalier Homes nor any Consolidated Entity will
pay, in an aggregate amount in any fiscal year of Cavalier Homes (commencing
with the current fiscal year of Cavalier Homes), lease obligations in excess of
$5,000,000; as used in this paragraph, the term "lease" means a lease that is
not reflected on a Consolidated balance sheet of Cavalier Homes and the
Consolidated Entities and should not be so reflected under Generally Accepted
Accounting Principles.
(M) Neither Cavalier Homes nor any Consolidated Entity will
purchase or otherwise invest in or hold securities, non-operating real estate or
other non-operating assets, except:
(1) Direct obligations of the United States
of America;
(2) The present investment as of the Closing in
any such assets;
(3) Investments described in the memorandum
dated July 12, 1994 (a copy of which is
incorporated as Exhibit L to the Agreement)
with respect to the corporate bonds rated
Baa or better in paragraph 1 of said
memorandum, and the equity investments
described in paragraph 2 of said memorandum
so long as such equity investments do not
exceed, at any time, more than 40% of all
investments described in this Section
7.2(M);
(4) Operating assets that hereafter become
non-operating assets; and
(5) Equity investments, made in the reasonable
discretion of Cavalier Homes, in an annual
aggregate amount not to exceed $500,000.
(N) Neither Cavalier Homes nor any Consolidated Entity will
enter into any sale-leaseback transaction.
(O) [Intentionally omitted.]
(P) Neither Cavalier Homes nor any Consolidated Entity will
furnish to Lender any certificate or other document that will contain any untrue
statement of material fact or that will omit to state a material fact necessary
to make it not misleading in light of the circumstances under which it was
furnished.
(Q) Neither Cavalier Homes nor any Consolidated Entity will
directly or indirectly apply any part of the proceeds of any of the Loans to the
purchasing or carrying of any "margin stock" within the meaning of Regulation U
or any regulations, interpretations or rulings thereunder.
(R) Neither Cavalier Homes nor any Consolidated Entity will
treat, store, handle, discharge, or dispose of any Hazardous Materials except in
compliance with all Environmental Laws.
(S) Neither Cavalier Homes nor any Consolidated Entity will
enter into any transaction or series of transactions where any Affiliate,
officer, director or shareholder of Cavalier Homes or any Consolidated Entity or
any family member or Affiliate of the foregoing, is a counter-party to such
transaction or series of transactions; unless such transaction is on the same
terms as those available to unaffiliated Persons on an "arms-length" basis;
provided, however, that this covenant is not intended to prohibit or impede
Cavalier Homes use of, or transfers among the Borrowers of, working capital
within its Consolidated group.
(T) Neither Cavalier Homes nor any Consolidated Entity will
enter into any agreement whereby title to any of Cavalier Homes's or the
Consolidated Entity's inventory passes to any transferee prior to delivery by
Cavalier Homes or the Consolidated Entity.
(U) Neither Cavalier Homes, nor the Consolidated Entities,
will make capital expenditures for any fiscal year in excess of $15,000,000 in
the aggregate.
7.3 Financial Covenants.
(A) Cavalier Homes will maintain at all times:
(1) Consolidated Net Working Capital of at least
$15,000,000 and a ratio of Current Assets to
Current Liabilities of not less than 1.17 to
1.0.
(2) The sum of (A) Consolidated Tangible Net
Worth, plus (B) (i) in fiscal year 2000, the
treasury stock purchased by Cavalier Homes
in year 2000, valued at cost, and (ii) in
fiscal year 2001, the treasury stock
purchased by Cavalier Homes in years 2000
and 2001, valued at cost, must not be less
than $90,000,000 at all times. In addition
to the requirements specified above,
Cavalier Homes's minimum Consolidated
Tangible Net Worth requirement shall be
automatically increased by the net proceeds
received by Cavalier Homes in connection
with any issuance or conversion of capital
stock.
(3) A ratio of Consolidated Liabilities to
Consolidated Tangible Net Worth of not more
than 2.0 to 1.0;
(4) A ratio of Consolidated Cash Flow (measured
on a historical basis) to Debt Service of
not less than 1.75 to 1.00; and
7.4 Interpretation and Consolidation. Except as otherwise
expressly provided in this Article VII, each Borrower shall also cause and
require each of the Consolidated Entities to observe and perform the covenants
and agreements of this Article VII that are to be observed and performed by such
Borrower, regardless of whether any such covenant expressly refers to the
Consolidated Entities. All financial covenants set forth in Section 7.3 shall be
computed on a Consolidated basis for Cavalier Homes and the Consolidated
Entities. In addition, all calculations required to be made in connection with
any numerical or dollar limitations set forth in this Article VII shall be made
on a combined or Consolidated basis for Cavalier Homes and the Consolidated
Entities, in accordance with Generally Accepted Accounting Principles, but after
elimination of intercompany items.
ARTICLE VIII
ADDITIONAL COVENANTS OF CAVALIER ACCEPTANCE
Cavalier Acceptance does hereby covenant and agree with Lender that, so
long as any of the Obligations remains unsatisfied or any commitments hereunder
remain outstanding, and thereafter until this Agreement is terminated in
writing, it will comply at all times with the covenants set forth in Article VII
hereof and the following additional covenants:
8.1 Affirmative Covenants.
(A) Cavalier Acceptance will use the proceeds of the Term
Loans only for the purposes set forth in Section 3.8, and will furnish to Lender
such evidence as it may reasonably require with respect to such use.
(B) Cavalier Acceptance will furnish to Lender:
(1) Within thirty (30) days after the close of
each calendar month:
(i) An income statement of Cavalier
Acceptance for such period; and
(ii) A balance sheet of Cavalier
Acceptance as of the end of such
period,
all in reasonable detail, subject to year-
end audit adjustments;
(2) Contemporaneously with each monthly and
year-end financial report required for
Cavalier Acceptance by this Section 8.1(B),
and at any additional time in Lender's
discretion or when any material
deterioration in the Contracts Borrowing
Base would be disclosed thereby, a
Compliance Certificate, wherein in addition
to the financial information reported in
such Compliance Certificate, the president
or chief financial officer of Cavalier
Acceptance shall certify that he has
individually reviewed the provisions of this
Agreement and that a review of the
activities of Cavalier Acceptance during
such fiscal year or monthly period, as the
case may be, has been made by or under the
supervision of the signer of such
certificate with a view to determining
whether Cavalier Acceptance has kept,
observed, performed and fulfilled all its
obligations under this Agreement, and that,
to the best of his knowledge, Cavalier
Acceptance has observed and performed each
and every undertaking contained in this
Agreement and is not at the time in Default
in the observance or performance of any of
the terms and conditions hereof or, if
Cavalier Acceptance shall be so in Default,
specifying all such Defaults and Events of
Default of which he may have knowledge;
(3) Contemporaneously with each Compliance
Certificate for the Term Loans, a report as
of the end of such month, in such form and
detail as shall be satisfactory to Lender,
of the then Eligible Contracts certified by
Cavalier Acceptance's president or chief
financial officer to be complete and
correct; and
(4) Contemporaneously with each Compliance
Certificate for the Term Loans, a
delinquency report and repossession status
report with respect to all of Cavalier
Acceptance's Chattel Paper, whether Eligible
Contracts or not, each such report in such
form and detail as shall be satisfactory to
Lender.
(C) Cavalier Acceptance will, at its sole expense, when
requested to do so by Lender, cause its independent certified public accountants
(which shall be acceptable to Lender) to provide such audit confirmation
relating to the Eligible Contracts as may reasonably be required by Lender.
(D) So long as any Eligible Contract constitutes Collateral
hereunder, (i) Cavalier Acceptance agrees, as trustee for Lender and without
compensation by Lender, to service all Eligible Contracts and to use its best
efforts to effect collection of all amounts payable thereunder as they become
due; (ii) Cavalier Acceptance shall perform such duties exclusively, unless
Lender shall give written approval otherwise; and (iii) upon demand by Lender,
after an Event of Default, Cavalier Acceptance shall notify each purchaser under
an Eligible Contract of the assignment to Lender of the Eligible Contract under
which he is obligated, including in such notice instructions that the purchaser
shall make all payments on the Eligible Contract to Lender, or its
subcontracting servicing agent, as Lender shall direct.
8.2 Negative Covenants.
(A) Unless reasonably determined by Cavalier Acceptance to be
in its and Lender's best interest, Cavalier Acceptance will not compromise,
extend, release, or adjust payments on any Eligible Contract or related
documentation, accept a conveyance of pledged property in full or partial
satisfaction of any Eligible Contract, or release any security interest securing
any Eligible Contract.
(B) Cavalier Acceptance will not transfer, sell, assign or
deliver any Eligible Contract pledged to Lender to any person, corporation,
partnership, association or trust other than Lender.
(C) Cavalier Acceptance will not grant, create, incur,
permit, assume or suffer to exist any mortgage, pledge, lien, security interest
or other encumbrance of any kind upon any Eligible Contract now or hereafter
pledged to Lender, unless and until such Eligible Contract has been released
from the security interest granted to Lender, except for (x) liens granted to
Lender to secure the Notes and the Loans and (y) such non-consensual liens as
may be deemed to arise as a matter of law.
(D) Unless reasonably determined by Cavalier Acceptance to be
in its and Lender's best interest, Cavalier Acceptance will not modify or waive
any term of any pledged Eligible Contract or release any obligor.
8.3 Financial Covenants. (A) Cavalier Acceptance will maintain at
all times:
(i) Net Working Capital in the following minimum amount:
During 2000 and thereafter...........$ 500,000.00;
(ii) Tangible Net Worth in the following minimum amount:
During 2000 and thereafter...........$1,000,000.00;
(iii) A ratio of Liabilities to Tangible Net Worth of not
more than 3.0 to 1.0;
(iv) A Contracts Borrowing Base such that the aggregate
outstanding principal amount of all Term Loans will
not, at any time, exceed the Contracts Borrowing
Base;
(v) An Average Repossession Ratio less than the following
maximum percentages:
March 31, 2000 and thereafter less than 2.30%;
(vi) A ratio of Loan Loss Reserves (after deduction of
losses for the then-current period) to the
then-outstanding principal balance of Cavalier
Acceptance's loan portfolio of not less than 2.00%.
ARTICLE IX
DEFAULT
9.1 Events of Default. The occurrence of any one or more of the
following events shall constitute a Default or an Event of Default hereunder:
(A) Any Borrower shall fail to pay when due any installment
of principal under any of the Loans, or any interest or fee payable under this
Agreement or any Security Document or other Loan Document; provided, however,
that a payment default described in this clause (A) shall not constitute an
Event of Default unless such payment default shall not have been cured within
ten (10) days of written notice thereof from the Lender and, provided, further,
however, that the foregoing proviso shall not apply during any calendar year if
two (2) such defaulted payments shall previously have occurred in such calendar
year.
(B) (1) Any Borrower shall fail to observe or perform any of
its covenants contained in Sections 7.1(A), 7.1(E), 7.1(M), 7.2(A); or
(2) Any Borrower or any Consolidated Entity shall fail to
observe or perform any other obligation to be observed or performed by it
hereunder (other than any obligation of Cavalier Acceptance under Section 8.3
hereof), or under any of the Notes to which it is a party or under any of the
other Loan Documents, and such failure shall continue for fifteen (15) days
after the earlier of: (i) written notice of such failure from Lender; or (ii)
Lender is notified or should have been notified of such failure pursuant to the
provisions of Section 7.1(M).
(C) Any Borrower or any Consolidated Entity shall (1) fail to
pay when due any Indebtedness (other than the Loans) to Lender; or (2) fail to
pay any Indebtedness of more than $50,000 due any third Persons (other than any
Indebtedness involving bona fide disputes of less than $250,000) and such
failure shall continue beyond any applicable grace period and shall not be cured
within fifteen (15) days after written notice thereof from Lender to Cavalier
Homes.
(D) Any financial statement, representation, warranty or
certificate made or furnished by any Borrower or any Consolidated Entity to
Lender in connection with this Agreement, or as inducement to Lender to enter
into this Agreement, or in any separate statement or document to be delivered
hereunder to Lender: (1) shall be materially false, incorrect, or incomplete
when made; or (2) shall become materially false or incorrect and remain so for
fifteen (15) days after the earlier of: (1) written notice from Lender; or (2)
Lender is notified or should have been notified pursuant to the provisions of
Section 7.1(M).
(E) Any Borrower or any Consolidated Entity shall admit its
inability to pay its debts as they mature, or shall make an assignment for the
benefit of itself or any of its creditors.
(F) Proceedings in bankruptcy, or for reorganization of any
Borrower or any Consolidated Entity, or for the readjustment of any of their
respective debts, under the federal Bankruptcy Code, as amended, or any part
thereof, or under any other Law, whether state or federal, for the relief of
debtors, now or hereafter existing, shall be commenced by any Borrower or any
Consolidated Entity or shall be commenced against any Borrower or any
Consolidated Entity and shall not be discharged within thirty (30) days of its
commencement.
(G) A receiver, trustee or conservator shall be appointed for
any Borrower or any Consolidated Entity or for any substantial part of their
respective assets, or any proceedings shall be instituted for the dissolution or
the full or partial liquidation of any Borrower or any Consolidated Entity, and
such receiver, trustee or conservator shall not be discharged within thirty (30)
days of his appointment, or such proceedings shall not be discharged within
thirty (30) days of its commencement, or any Borrower or any Consolidated Entity
shall discontinue business or materially change the nature of its business.
(H) Any Borrower or any Consolidated Entity shall suffer
final judgments for payment of money aggregating in excess of $250,000 and shall
not discharge the same within a period of thirty (30) days unless, pending
further proceedings, execution has been effectively stayed.
(I) A creditor of any Borrower or any Consolidated Entity
shall obtain possession of any substantial part of the Collateral by any means,
including, without limitation, levy, distraint, replevin or self- help.
(J) The validity or enforceability of this Agreement, any of
the Notes, or any other Loan Document shall be contested by any Borrower or any
Consolidated Entity or any of them shall deny that it has any or further
liability or obligation hereunder or thereunder.
(K) Any Pension Plan shall fail to meet the minimum funding
standards of Section 302 of ERISA as now in effect or hereafter amended.
(L) A criminal investigation is commenced and results in an
indictment with respect to any Borrower or any Consolidated Entity.
(M) Any property of any Borrower or any Consolidated Entity
is seized by a governmental authority, or a forfeiture proceeding is commenced
against Borrower or any Consolidated Entity, or any property of any Borrower or
any Consolidated Entity.
(N) Any default or event of default shall occur under any of
the other Loan Documents.
9.2 Acceleration. Immediately and without notice upon the
occurrence of an Event of Default specified in the foregoing Sections 9.1(E),
9.1(F) or 9.1(G) or at Lender's option upon the occurrence of any other Event of
Default, all Obligations, whether hereunder or otherwise, shall immediately
become due and payable without further action of any kind on Lender's part.
9.3 Remedies. After the occurrence of any Event of Default, Lender
shall have, in addition to the rights and remedies given to it by this Agreement
or any other Loan Document, all those allowed by all applicable Law, including,
without limitation, the Uniform Commercial Code as enacted in any jurisdiction
in which any Borrower or any Collateral may be located. No right or remedy
conferred upon Lender in this Agreement is intended to be exclusive of any other
right or remedy contained in the Notes, this Agreement, or in any other Loan
Document, and every such right or remedy shall be cumulative in addition to
every other right or remedy contained herein or therein or now or hereafter
available to Lender pursuant to applicable Law, in equity or otherwise. Without
limiting the generality of the foregoing, Lender may immediately, without demand
of performance and without other notice (except as specifically required by this
Agreement or the other Loan Documents, or as required by Law and which cannot be
waived) or demand whatsoever to Borrowers, all of which are hereby expressly
waived, and without advertisement, sell at public or private sale or otherwise
realize upon, the whole or, from time to time, any part of the Collateral, or
any interest which any Borrower may have therein. After deducting from the
proceeds of sale or other disposition of the Collateral all expenses (including
all reasonable expenses for legal services), Lender shall apply such proceeds
toward the satisfaction of the Obligations in such order as Lender may elect.
Any remainder of the proceeds after satisfaction in full of the Obligations
shall be distributed as required by applicable Law. Notice of any sale or other
disposition shall be given to Cavalier Homes on behalf of Borrowers at least
five (5) days before the time of any intended public sale or of the time after
which any intended private sale or other disposition of the Collateral is to be
made, which Borrowers hereby agree shall be reasonable notice of such sale or
other disposition. Borrowers shall be jointly and severally liable for any
deficiency. Each Borrower agrees to assemble, or to cause to be assembled, at
its own expense, the Collateral at such place or places as Lender shall
designate. At any such sale or other disposition, Lender may, to the extent
permissible under applicable Law, purchase the whole or any part of the
Collateral, free from any right of redemption on the part of any Borrower, which
right is hereby waived and released. Without limiting the generality of any of
the rights and remedies conferred upon Lender under this paragraph, Lender may,
to the full extent permitted by applicable Law:
(A) Refuse to extend further Advances under any of the Loans
or convert or permit to be converted any portion of the Revolving Loan to a Term
Loan;
(B) Enter upon any Borrower's premises, exclude therefrom any
Borrower or any Affiliate thereof, and take immediate possession of the
Collateral, either personally or by means of a receiver appointed by a court of
competent jurisdiction, using all necessary force to do so;
(C) At Lender's option, use, operate, manage and control the
Collateral in any lawful manner;
(D) Collect and receive all rents, income, revenue, earnings,
issues and profits therefrom;
(E) Maintain, repair, renovate, alter or remove the
Collateral as Lender may determine in its sole discretion; and
(F) Collect all Accounts in Lender's or any Borrower's name
and take control of any cash or non-cash proceeds of any or all of the
Collateral;
(G) Enforce payment of any Accounts, prosecute any action or
proceeding with respect to Accounts, extend the time of payment of any and all
Accounts, make allowances and adjustments with respect thereto and to issue
credits in the name of the Lender or any Borrower;
(H) Settle, compromise, extend, renew, release, terminate or
discharge, in whole or in part, any Account or deal with the same as Lender may
deem advisable; and
(I) Require any Borrower to open all mail only in the
presence of a representative of the Lender, who make take therefrom any
remittance on any of the Collateral.
9.4 Right of Set-Off. Upon the occurrence of any Event of
Default, Lender may, and is hereby authorized by each Borrower, at any time and
from time to time, to the fullest extent permitted by applicable Law, and
without advance notice to any Borrower (any such notice being expressly waived
by each Borrower), set-off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held and any other
Indebtedness at any time owing by Lender to, or for the credit or the account
of, any Borrower against any or all of the Obligations of Borrowers now or
hereafter existing whether or not such Obligations have matured and irrespective
of whether Lender has exercised any other rights that it has or may have with
respect to such Obligations, including without limitation, any acceleration
rights. The aforesaid right of set-off may be exercised by Lender against
Borrowers or any of the Consolidated Entities or against any trustee in
bankruptcy, debtor in possession, assignee for the benefit of the creditors,
receiver, or execution, judgment or attachment creditor of Borrowers or any of
the Consolidated Entities, or such trustee in bankruptcy, debtor in possession,
assignee for the benefit of creditors, receiver, or execution, judgment or
attachment creditor, notwithstanding the fact that such right of set-off shall
not have been exercised by Lender prior to the making, filing or issuance, or
service upon Lender of, or of notice of, any such petition; assignment for the
benefit of creditors; appointment or application for the appointment of a
receiver; or issuance of execution, subpoena, order or warrant. Lender agrees to
promptly notify Cavalier Homes on behalf of Borrowers after any such set- off
and application, provided that the failure to give such notice shall not affect
the validity of such set-off and application. The rights of Lender under this
Section 9.4, Section 9.5 and Section 9.6 are in addition to the other rights and
remedies (including, without limitation, any other rights of set-off) which
Lender may have.
9.5 Demand Obligations. All of the Obligations (other than
the Term Loan(s)) of Borrowers shall be due and payable in full upon demand made
by Lender, whether or not any Event of Default has occurred and whether or not
Lender reasonably deems itself to be insecure. Demand may be made at any time or
without reason. The enumeration in Section 9.1 hereof of certain Events of
Default, and the enumeration of certain remedies available to Lender upon an
Event of Default (as described in Sections 9.2, 9.3 and 9.4 hereof), does not in
any way limit the right of Lender to otherwise demand payment in the absence of
the occurrence of any Event of Default. Demand is not thereby qualified or in
any way relative in nature.
9.6 Special Remedies. Upon the occurrence of any Event of Default,
in addition to all rights and remedies provided for in Article IX hereof, each
Borrower agrees that Lender shall have the following rights with respect to the
Collateral, and each will take all such steps as to permit Lender to realize the
benefit of such rights and as may be directed by Lender in connection therewith,
including, without limitation, the following:
(A) Lender or any other Person serving as any Borrower's
attorney-in-fact under Section 5.8 of this Agreement shall have, in addition to
the powers set forth in Section 5.8 or otherwise, the following rights and
powers: (i) to initiate contact with any Person with respect to the transfer and
vesting in Lender of the Collateral pledged to Lender, and to request and to
receive confirmation from any Person that all rights of any Borrower with
respect to such Collateral may be transferred to and exercised by Lender; (ii)
to notify any and all other third parties as may be deemed necessary or
desirable in order to insure a smooth and efficient transition of the Accocess
and Eligible Contracts pledged to Lender from any Borrower to Lender, including,
without limitation, the furnishing by any third parties of computer services,
tax services, insurance services, escrow services or similar services to any
Borrower in connection with its servicing activities of loans included in the
Collateral; (iii) to exercise all or any of any Borrower's rights and remedies
with respect to its Accounts and its Eligible Contracts pledged to Lender,
including, without limitation, the right to settle, adjust, compromise, extend,
renew, discharge, terminate or release any thereof, either in whole or in part,
or to sell, assign, transfer, take control of, use and/or dispose of, in any
manner, all or any part of the Collateral; and (iv) to do all acts and things
necessary, in the sole judgment of Lender, to permit Lender to enjoy the benefit
of its security interest in the Collateral.
(B) Each Borrower agrees to cooperate fully with Lender in
connection with any and all steps taken by Lender under Article IX of this
Agreement, including, without limitation, the execution and delivery to Lender
and/or to third parties, such additional documents, notices, certificates and
the like as to permit the vesting in and transfer to Lender of the benefit of
its rights in and to the Collateral, including, without limitation, the Accounts
and Eligible Contracts pledged to Lender.
ARTICLE X
MISCELLANEOUS
10.1 Construction. The provisions of this Agreement shall be in
addition to those of any guaranty, pledge or security agreement, note or other
evidence of liability held by Lender, all of which are incorporated herein and
shall be construed as complementary to each other. Nothing herein contained
shall prevent Lender from enforcing any or all other notes, guaranties, pledges
or security agreements in accordance with their respective terms.
10.2 Further Assurances. From time to time, each Borrower will
execute and deliver to Lender such additional documents and will provide such
additional information as Lender may reasonably require to carry out the terms
of this Agreement and be informed of the status and affairs of Borrowers and the
Consolidated Entities. Each Borrower will take any and all actions as reasonably
requested by Lender to ensure that Lender enjoys the full benefits of the
security intended to be granted hereunder and under the Security Documents and
the other Loan Documents.
10.3 Indemnity. Borrowers hereby agree to jointly and severally
indemnify Lender and its officers, directors, agents and attorneys against, and
to jointly and severally hold Lender and all such other persons harmless from,
any claims, demands, liabilities, costs, damages, and judgments (including,
without limitation, liability under any Environmental Laws and costs of defense
and attorneys' fees) resulting from any representation or warranty made by any
Borrower or on any Borrower's behalf pursuant to Article VI of this Agreement
having been false or inaccurate when made (including, without limitation, each
time that an Advance under any of the Loans is requested or made) or becoming
and remaining false or inaccurate thereafter, or resulting from any Borrower's
breach of any of the covenants set forth in Article VII or Article VIII of this
Agreement. This agreement of indemnity shall be a continuing agreement and shall
survive payment of the Loans and termination of this Agreement and the
Obligations hereunder.
10.4 Enforcement and Waiver by Lender. Lender shall have the right
at all times to enforce the provisions of this Agreement, each of the Notes, and
the other Loan Documents in strict accordance with the terms hereof and thereof,
notwithstanding any conduct or custom on Lender's part in refraining from so
doing at any time or times. Lender's failure at any time or times to enforce its
rights under such provisions, strictly in accordance with the same, shall not be
construed as having created a custom in any way or manner contrary to specific
provisions of this Agreement or as having in any way or manner modified or
waived the same. All rights and remedies of Lender are cumulative and concurrent
and the exercise of one right or remedy shall not be deemed a waiver or release
of any other right or remedy.
10.5 Expenses of Lender. Borrowers will, on demand, jointly and
severally reimburse Lender for all expenses, including the fees and expenses of
legal counsel for Lender, reasonably incurred in connection with the
preparation, administration, amendment, modification, renewal, extension, or
enforcement of this Agreement and the other Loan Documents and any other
documents related to this Agreement and the collection or attempted collection
of the Loans and the Notes; provided, however, that Borrowers' obligation to
reimburse Lender for the legal fees (but not including the out-of-pocket
expenses incurred by legal counsel for Lender) incurred in the initial
preparation of these documents shall be limited to $17,500.00. If Borrowers
should fail to pay any such expenses, Lender may, but shall not be obligated to,
make such payment by making an Advance under the Revolving Loan Commitment for
such purpose, without notice to Borrowers. Any amounts paid or advanced by
Lender under this Section or under any of the Security Documents shall bear
interest at the rate specified for Advances under the Revolving Loan Commitment.
The obligation of Borrowers under this Section to pay all expenses incurred by
Lender shall survive payment of the Obligations and termination of this
Agreement.
10.6 Notices. Any notices or consents required or permitted by this
Agreement shall be in writing and shall be deemed delivered if delivered in
person or if sent by first class mail, postage prepaid, return receipt
requested, or telegraph, or facsimile, as follows, unless such address is
changed by written notice hereunder:
(A) If to any Borrower:
Cavalier Homes, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇ Blvd.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile # (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
with a copy to:
▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile # (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇ ▇▇▇▇, Esq.
(B) If to Lender:
First Commercial Bank
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile #(▇▇▇) ▇▇▇-▇▇▇▇
Attention: Mr. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇ Rose & White, LLP
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile #(▇▇▇) ▇▇▇-▇▇▇▇
Attention: J. ▇▇▇▇▇ ▇▇▇▇▇▇▇, Esquire
10.7 Indemnity, Waiver and Release by Borrowers. To the maximum
extent permitted by applicable Law, each Borrower and each Consolidated Entity:
(A) Protects, indemnifies, and holds Lender (including any
Participant) and its employees, agents, representatives, officers, directors and
assigns, harmless against and of any and all liabilities, costs and expenses
(including attorney's fees, court costs and expenses), judgments, damages,
claims, demands, actions or proceedings by whomever asserted (including, but not
limited to, retail customers with respect to the Chattel Paper constituting
Collateral under this Agreement, any person or persons who prosecute or defend
any actions or proceedings as representative of or on behalf of a class or
interest group or any government instrumentality, body, agency, department,
commission or any administrative body or agency having jurisdiction pursuant to
any applicable statute, rule, regulation, order or decree) arising out of,
connected with, or resulting from any claim or defense against the dealer
selling the goods which gave rise to the applicable Chattel Paper, or against
Cavalier Acceptance or any other Borrower, whether such claim or defense arises
out of the Chattel Paper or the underlying sale of the home or otherwise, and
whether the claim or defense is asserted in connection with the Lender's (or any
Participant's) attempting to collect the Chattel Paper or otherwise;
(B) Waives protest of all commercial paper at any time held
by Lender on which any Borrower is any way liable;
(C) Except as the same may herein be specifically granted,
waives notice of acceleration and of intention to accelerate;
(D) Waives notice and opportunity to be heard, after
acceleration in the manner provided in Section 9.2, before exercise by Lender of
the remedies of self-help, set-off, or of other summary procedures permitted by
any applicable Law or by any agreement with any Borrower or any Consolidated
Entity, and except where required hereby or by any applicable Law which
requirement cannot be waived, notice of any other action taken by Lender; and
(E) Releases Lender and its officers, attorneys, agents and
employees from all claims for loss or damage caused by any act or omission on
the part of any of them except gross negligence or willful misconduct.
10.8 Reliance on this Agreement. There are no third-party
beneficiaries, other than Borrowers or Lender, to this Agreement or any of the
other Loan Documents. All conditions to Lender's obligations to make Advances
under this Agreement are imposed solely and exclusively for Lender's benefit.
Neither Borrowers nor any other Person shall have standing to require
satisfaction of any such condition or be entitled to assume that Lender will
refuse to make Advances in the absence of strict compliance with any or all of
such conditions, and neither Borrower nor any other Person or entity shall,
under any circumstances, be deemed to be a beneficiary of any conditions hereof,
any or all of which conditions may be waived freely, in whole or part by Lender
in its sole discretion at any time if Lender deems it advisable to do so. The
parties expressly agree that whenever notice is required to be given as a
condition precedent of the exercise of any right of Lender hereunder any failure
by Lender to give such notice shall result only in Lender's inability to
exercise such right in the absence of such notice and shall be of no other
consequence whatsoever and give rise to no claim against Lender. This Agreement
shall not benefit and may not be relied upon by, any Person other than Borrowers
and Lender. Nothing in this Agreement or otherwise creates an obligation on
Lender's part to advise Borrowers or any other Person of whether any Advances
are available except upon an actual and bona fide request therefor.
10.9 Participation. Notwithstanding any other provision of this
Agreement, Borrowers understand that Lender may enter into participation
agreements with Participants whereby Lender will allocate certain percentages of
its commitment to them. Borrowers acknowledge that, for the convenience of all
parties, this Agreement is being entered into with Lender only and that its
Obligations hereunder are undertaken for the benefit of, and as an inducement to
any such Participant as well as Lender, and Borrowers hereby grant to each such
Participant, to the extent of its participation in any of the Loans, the right
to set off deposit accounts maintained by any Borrower with such Participant.
Each Borrower authorizes Lender to disclose financial and other information
regarding such Borrower to Participants and potential Participants.
10.10 No Partnership or Joint Venture. Notwithstanding anything to
the contrary herein contained or implied, Lender, by this Agreement or by any
action pursuant hereto or thereto, shall not be deemed a partner, joint venturer
or participant in the venture of Borrowers, and Borrowers hereby jointly and
severally indemnify and agree to defend Lender harmless (including, without
limitation, the payment of attorneys' fees) from any and all damages resulting
from such allegation or construction of the parties' relationship. The
requirements herein, and the restrictions imposed in this Agreement, are solely
for the protection and benefit of Lender and shall not be construed to create
any obligation on behalf of Lender to supervise, warn or disclose matters to any
Borrower.
10.11 Governing Law. This Agreement is entered into and performable
in Jefferson County, Alabama and the substantive Laws of the United States and
the State of Alabama, without giving effect to its principles of conflict of
laws, shall govern the construction of this Agreement and the documents executed
and delivered pursuant hereto, and the rights and remedies of the parties hereto
and thereto, except to the extent that the location of any Collateral in a state
or jurisdiction other than Alabama requires that the perfection of Lender's
security interest hereunder, and the enforcement of certain of Lender's remedies
with respect to the Collateral, be governed by the laws of such other state or
jurisdiction.
--------
Initial
(Lender)
--------
Initial
(Cavalier Homes on
behalf of each Borrower)
10.12 JURISDICTION; WAIVERS.
(A) JURY WAIVER. EACH BORROWER AND LENDER HEREBY EACH:
(1) IRREVOCABLY AND UNCONDITIONALLY WAIVES THE
RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING OR COUNTERCLAIM OF ANY TYPE
AS TO ANY MATTER ARISING DIRECTLY OR INDIRECTLY OUT OF OR WITH RESPECT TO THIS
AGREEMENT, THE NOTES, THE OTHER LOAN DOCUMENTS OR ANY OTHER DOCUMENT EXECUTED IN
CONNECTION HEREWITH OR THEREWITH; AND
(2) AGREES THAT ANY OF THEM MAY FILE A COPY OF
THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE KNOWING, VOLUNTARY AND
BARGAINED-FOR AGREEMENT BETWEEN AND AMONG THE PARTIES IRREVOCABLY TO WAIVE TRIAL
BY JURY, AND THAT ANY DISPUTE OR CONTROVERSY OF ANY KIND WHATSOEVER BETWEEN THEM
SHALL INSTEAD BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING
WITHOUT A JURY.
(B) CONSENT TO JURISDICTION ; WAIVER OF VENUE. EACH
BORROWER AND LENDER HEREBY EACH:
(1) KNOWINGLY AND VOLUNTARILY CONSENTS TO THE
PERSONAL JURISDICTION OF ANY COURT OF COMPETENT SUBJECT MATTER JURISDICTION
(WHETHER STATE OR FEDERAL) HOLDING IN BIRMINGHAM, JEFFERSON COUNTY, ALABAMA, FOR
THE DETERMINATION OF ANY CLAIM OR CONTROVERSY ARISING UNDER OR IN CONNECTION
WITH THIS AGREEMENT, THE NOTES OR ANY OTHER LOAN DOCUMENT, OR ANY OTHER DOCUMENT
EXECUTED IN CONNECTION HEREWITH OR THEREWITH; AND KNOWINGLY AND VOLUNTARILY
WAIVES ANY OBJECTION TO THE EXERCISE OF PERSONAL JURISDICTION OVER IT OR ANY OF
THEM BY SAID COURTS ON THE GROUND THAT IT OR ANY OF THEM DOES NOT HAVE THE
REQUISITE MINIMUM CONTACTS WITH THE STATE OF ALABAMA OR THAT EXERCISE OF SUCH
JURISDICTION OTHERWISE FAILS TO MEET THE REQUIREMENTS OF MINIMUM CONTACTS OR DUE
PROCESS UNDER THE CONSTITUTION OF THE UNITED STATES OR THE STATE OF ALABAMA; AND
AGREES THAT SERVICE OF PROCESS ON IT OR ANY OF THEM AT ITS ADDRESS SET FORTH IN
SECTION 10.6 OF THE AGREEMENT IN ACCORDANCE WITH THE PROVISIONS OF THE ALABAMA
RULES OF CIVIL PROCEDURE WILL BE SUFFICIENT NOTICE OF ANY PROCEEDING AGAINST ANY
OF IT OR ANY OF THEM IN ANY SUCH COURT, AND WAIVES ANY REQUIREMENT OF OTHER OR
ADDITIONAL SERVICE OF PROCESS OR NOTICE OF ANY SUCH PROCEEDING; AND FURTHER
AGREES THAT EXERCISE OF JURISDICTION OVER IT OR ANY OF THEM BY COURTS HOLDING IN
BIRMINGHAM, JEFFERSON COUNTY, ALABAMA SHALL BE IN ADDITION TO, AND NOT IN LIEU
OF, THE EXERCISE OF JURISDICTION OVER IT OR ANY OF THEM BY ANY OTHER COURT OF
COMPETENT JURISDICTION, WHETHER WITHIN OR WITHOUT THE STATE OF ALABAMA; AND
(2) KNOWINGLY AND VOLUNTARILY WAIVES ANY
OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY ACTION OR
PROCEEDING AGAINST IT OR ANY OF THEM IN ANY COURT MENTIONED HEREINABOVE OR THAT
SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT AND AGREES NOT TO
PLEAD OR CLAIM THE SAME.
10.13 Binding Effect, Assignment. This Agreement shall inure to the
benefit of, and shall be binding upon, the respective successors and permitted
assigns of the parties hereto. No Borrower has the right to assign any of its
rights or obligations hereunder without Lender's prior written consent.
10.14 Termination. The terms and provisions of this Agreement shall
continue in effect until the Obligations shall have been fully paid and
performed, and Lender shall have no further obligation whatsoever to make any
Advances under any of the Loans, issue any Letters of Credit or extend any other
credit or accommodation, and Lender and Borrowers terminate this Agreement in
writing. Following any termination (if applicable), the terms and provisions of
this Agreement (excluding any obligation to lend or other commitment hereunder
made by Lender), and all of the covenants and promises of Borrowers hereunder,
shall be automatically reinstated if at any time all or any part of any payment
made upon the Obligations is rescinded or must for any reason be returned to the
Person making such payment, whether due to insolvency, bankruptcy, dissolution,
appointment of a custodian or receiver, or any other reason whatsoever, all as
though such payment had not been made.
10.15 Obligations Unconditional and Absolute. Borrowers hereby
acknowledge and agree that their liability to Lender with respect to the
Obligations are continuing, absolute, unconditional and, except for the Term
Loans, joint and several (subject to the provisions of Section 2.1(D) of this
Agreement). Notwithstanding the generality of the foregoing, each Borrower's
liability upon the Obligations shall remain in full force and effect, and shall
not be affected, discharged, impaired or modified in any manner whatsoever due
to (a) the invalidity or unenforceability of any of the Loan Documents executed
by any other Person, (b) any Borrower's failure to receive any notice given by
Lender to any other Person, (c) any modification, amendment or supplement of any
covenant or agreement contained in any of the Loan Documents executed by any
third Person, (d) any compromise, settlement, release or termination of any
promise, agreement or other liability contained in any of the Notes or any of
the other Loan Documents, (e) any waiver granted by Lender with respect to the
payment, performance or observance of any promise or agreement contained under
any of the Loan Documents, (f) any accommodation, extension, action or inaction
(including any exercise or non-exercise of any right or remedy) with respect to
any of the Loan Documents, (g) the extension of maturity for the payment or
performance of any of the Obligations due from any Borrower or other third
Person, or (h) the release, discharge, non-perfection or impairment of Lender's
claims or rights against any Collateral now or at any time hereafter securing
any of the Obligations, or the release or discharge of any of Lender's claims or
rights against any Borrower, guarantor or third Person liable upon the
Obligations, whether any such release, discharge or impairment occurs due to
operation of law, action or inaction by Lender, or otherwise.
10.16 Entire Agreement, Amendments. This Agreement, including the
Schedules and Exhibits hereto, all of which are hereby incorporated herein by
reference, the other Loan Documents and all other documents executed and
delivered pursuant hereto, constitute the entire agreement between the parties,
and may be amended only by a writing signed on behalf of each party.
10.17 Severability. If any provision of this Agreement, the Notes,
or the other Loan Documents shall be held invalid under any applicable Law, such
invalidity shall not affect any other provision of this Agreement or such other
instrument or agreement that can be given effect without the invalid provision,
and, to this end, the provisions hereof are severable.
10.18 Headings. The table of contents and article, section,
paragraph and subparagraph headings hereof are inserted for convenience of
reference only, and shall not alter, define, or be used in construing the text
of such articles, sections, paragraphs or subparagraphs.
10.19 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute but one and the same instrument.
10.20 Seal. This Agreement is intended to take effect as an
instrument under seal.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective duly authorized officers as of the
day and year first above written.
BORROWERS:
CAVALIER HOMES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------ [L.S.]
Its: Vice President
------------------------------------------------
QUALITY HOUSING SUPPLY, LLC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------ [L.S.]
Its: Secretary
------------------------------------------------
CAVALIER MANUFACTURING,INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------ [L.S.]
Its: Vice President
------------------------------------------------
CAVALIER INDUSTRIES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------ [L.S.]
Its: President
------------------------------------------------
DELTA HOMES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------ [L.S.]
Its: Vice President
------------------------------------------------
CAVALIER ENTERPRISES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------ [L.S.]
Its: Vice President
------------------------------------------------
CAVALIER ASSOCIATED RETAILERS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------ [L.S.]
Its: Vice President
------------------------------------------------
QUALITY CERTIFIED INSURANCE SERVICES, INC.
By: /s/ June ▇. ▇▇▇▇▇▇
------------------------------------------ [L.S.]
Its: Secretary
------------------------------------------------
CAVALIER ASSET MANAGEMENT, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------ [L.S.]
Its: President
------------------------------------------------
CAVALIER MANUFACTURING ASSET CO., INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------ [L.S.]
Its: Vice President
------------------------------------------------
CAVALIER INDUSTRIES ASSET CO., INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------ [L.S.]
Its: Vice President
------------------------------------------------
CAVALIER ENTERPRISES ASSET CO., INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------ [L.S.]
Its: Vice President
------------------------------------------------
CAVALIER REAL ESTATE CO., INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------ [L.S.]
Its: President
------------------------------------------------
CAVALIER ACCEPTANCE CORPORATION
By: /s/ June ▇. ▇▇▇▇▇▇
------------------------------------------ [L.S.]
Its: Secretary
------------------------------------------------
LENDER:
FIRST COMMERCIAL BANK
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------------ [L.S.]
Its: Vice President
------------------------------------------------
SCHEDULE I
DEFINED TERMS
"Accounts", "Chattel Paper", "Contracts", "Documents",
"Equipment", "Fixtures", "General Intangibles", "Goods", "Instruments",
"Inventory" and other terms not specifically defined in the Agreement shall have
the same respective meanings as are given to those terms in the Uniform
Commercial Code as currently adopted and in effect in the State of Alabama on
the date of the Agreement.
"Account Debtor" means any Person for which any Borrower holds
any right to payment arising from a bona fide outright sale or lease of Goods or
for services rendered by such Borrower to that Person.
"Advance" means each loan of money or credit made to one or
more of the Borrowers by Lender under the Agreement.
"Affiliate" shall mean any Person (A) which directly or
indirectly through one or more intermediaries controls, or is controlled by, or
is under common control with, any Borrower, or (B) five percent (5%) or more of
the equity interest of which is held beneficially or of record by any Borrower.
The term "control" means the possession, directly or indirectly, of the power to
cause the direction of the management and policies of a Person, whether through
the ownership of voting securities, by contract or otherwise.
"Agreement" means this Revolving and Term Loan Agreement, as
may be amended or supplemented from time to time.
"Allocated Eligible Contracts" shall have the meaning ascribed
thereto in Section 3.1 of the Agreement.
"Assignment of Life Insurance" means the assignment of the
Insurance Policy as Collateral dated February 17, 1994, duly authorized and
previously executed by Cavalier Homes, as such Assignment of Life Insurance may
have heretofore been amended and may be hereafter supplemented or amended.
"Assumption Agreement" means each Assumption Agreement duly
authorized and executed by each Subsidiary and Controlled Partnership that is to
become a Participating Subsidiary or a Participating Partnership after Closing
and substantially in the form of Exhibit E to the Agreement, as each such
Assumption Agreement may be thereafter supplemented or amended, and "Assumption
Agreements" means all of them, collectively.
"Average Repossession Ratio" means the ratio of (A) the total
number of repossession for the current fiscal year, divided by the number of
months then-ended, to (B) the sum of the number of loans outstanding on the last
day of each month, divided by the number of months then-ended.
"Banking Day" with respect to LIBOR Rate Loans means a day on
which banks are open for the general conduct of business in London, England and
the state in which Lender has its main office, and on which dealings in Dollars
are carried on in the offshore interbank market; and with respect to the
Floating Rate Loans, means a day on which Lender is open for the general conduct
of business at its main office.
"Base LIBOR Rate" for any Interest Period means the rate per
annum equal to the quotient of (a) the rate for deposits in U.S. Dollars for a
period of the applicable Interest Period which appears on Telerate Page 3750
("USD-LIBOR- BBA") as of 11:00 a.m. London time on the day that is two Banking
Days
preceding the first day of the applicable Interest Period, for a deposit amount
corresponding to the amount of the LIBOR Rate Loan to be outstanding during such
Interest Period, divided by (b) a number equal to 1.00 minus the aggregate of
the rates (expressed as a decimal fraction) of the Reserve Requirement current
on the date two Banking Days prior to the beginning of such Interest Period. If
the rate described in clause (a), above, does not appear on Telerate Page 3750,
the rate under (a), above, will be the rate (stated as an annual percentage rate
rounded upward to the nearest one-sixteenth of one percent) determined by
Lender, in its reasonable judgment, to be the rate at which Lender would acquire
Dollar deposits in the London, England interbank eurodollar market for delivery
on the first day of such Interest Period for the number of days comprised
therein and in an amount equal to the amount of the LIBOR Rate Loan to be
outstanding during such Interest Period. The Base LIBOR Rate calculated in this
manner shall be adjusted upward to the nearest one-hundredth of one percent. The
Base LIBOR Rate shall be adjusted automatically, upward or downward, as the case
may be, on and as of the effective date of any change in the Reserve
Requirement.
"Benefit Plan" means any employee welfare benefit plan as
defined in Section 3(1) of ERISA or any employee pension benefit plan as defined
in Section 2(2) of ERISA.
"Borrower" means each of Cavalier Homes, Inc., a Delaware
corporation, Quality Housing Supply, LLC, a Delaware limited liability company,
Cavalier Manufacturing, Inc., a Delaware corporation, Cavalier Industries, Inc.,
a Delaware corporation, Delta Homes, Inc., a Mississippi corporation, Cavalier
Enterprises, Inc., a Delaware corporation, Cavalier Associated Retailers, Inc.,
a Delaware corporation, Quality Certified Insurance Services, Inc., an Alabama
corporation, Cavalier Asset Management, Inc., a Delaware corporation, Cavalier
Manufacturing Asset Co., Inc., a Delaware corporation, Cavalier Industries Asset
Co., Inc., a Delaware corporation, Cavalier Enterprises Asset Co., Inc., a
Delaware corporation, Cavalier Real Estate Co., Inc., a Delaware corporation,
and Cavalier Acceptance Corporation, an Alabama corporation, and the entities
that become Participating Subsidiaries and Participating Partnerships after
Closing, and "Borrowers" means all of them, collectively.
"Borrowing Date" means any date on which Borrower(s) receive
or propose to receive an Advance under the Revolving Loan pursuant to this
Agreement.
"Borrowing Notice" or "Request for Advance" means an
irrevocable written (including facsimile), telex or telephonic notice, in
substantially the form of Exhibit B, to the Agreement, by the appropriate
Borrower(s), to Lender specifying (A) that the notice relates to making a new
Advance under the Revolving Loan, (B) the Borrowing Date, (C) the amounts of
Floating Rate Loans and LIBOR Rate Loans comprising such new Advance and (D) the
commencement date and duration of the Interest Period applicable to any such
LIBOR Rate Loan.
"Cash Flow" means, as to any Person, the aggregate of: (A) net
income after taxes (or the net deficit, as applicable) plus (B) amounts that
have been deducted for (i) amortization of intangible assets, (ii) depreciation
and depletion, and (iii) deferred taxes and expenses; all as shown by the income
statement of such Person, calculated in accordance with Generally Accepted
Accounting Principles.
"Cavalier Acceptance" means Cavalier Acceptance Corporation,
an Alabama corporation.
"Cavalier Homes" means Cavalier Homes, Inc., a Delaware
corporation.
"Charge-Off Ratio" means the sum of the total dollar amount
charged as a loan loss against the Loan Loss Reserve during the current fiscal
year of Cavalier Acceptance, divided by the then-outstanding principal balance
of Cavalier Acceptance's loan portfolio.
"Closing" means the time and place of actual execution and
delivery of the Agreement, the Revolving Note and the other Loan Documents which
are to be executed at closing.
"Closing Certificate" means a certificate, in form
satisfactory to Lender, dated as of the date of Closing, and signed on behalf of
each Borrower by the president or a vice president of such Borrower.
"Collateral" means the property and rights, and any proceeds,
in whatever form, thereof, described in Sections 5.1, 5.2, and 5.3 of the
Agreement and in the Security Documents.
"Commitment Fee" means with respect to the Revolving Loan, the
fee, due and payable and fully earned at Closing and thereafter upon renewal (if
applicable), equal to three-tenths of one percent (0.30%) multiplied by the
Revolving Loan Commitment ($105,000).
"Compliance Certificate" means (i) with respect to the
Revolving Loan a certificate in the form of Exhibit C to the Agreement,
certified by the president or chief financial officer of Cavalier Homes to be
correct, which is delivered by Cavalier Homes on behalf of Borrowers and
accepted by Lender pursuant to Section 4.1(I), Section 4.2(A) or Section
7.1(C)(3) of the Agreement and (ii) with respect to the Term Loans, a
certificate in the form of Exhibit C-1 to the Agreement, certified by the
president or chief financial officer of Cavalier Acceptance to be correct, which
is delivered by Cavalier Acceptance and accepted by Lender pursuant to Section
8.1(B) of the Agreement.
"Conseco Contract" means Chattel Paper underwritten by
Cavalier Acceptance in conformity with the Conseco Underwriting Guidelines.
"Conseco Underwriting Guidelines" means those underwriting
guidelines set forth on Exhibit A to Schedule 1 to this Agreement.
"Consolidated" refers to the consolidation of the accounts of
a Person and its Consolidated Entities on a balance sheet and statement of
income and retained earnings in accordance with Generally Accepted Accounting
Principles.
"Consolidated Entity" means any Person the financial
statements of which are appropriately consolidated with the financial statements
of Cavalier Homes under Generally Accepted Accounting Principles and
"Consolidated Entities" means all of them, collectively.
"Contracts Borrowing Base" means, at any time, with respect to
the Term Loans, the amount computed on the Compliance Certificate for the Term
Loans most recently delivered to, and accepted by, Lender in accordance with the
Agreement and equal to the aggregate of:
(A) Eighty percent (80%) of the aggregate outstanding
principal balance of Eligible Contracts that are rated higher
than a C-Rated Contract from a credit-quality standpoint (that
is, that are rated "A" or "B" from a credit- quality
standpoint); plus
(B) Seventy percent (70%) of the aggregate outstanding
principal balance of Eligible Contracts that are C-Rated
Contracts; plus
(C) Seventy percent (70%) of the aggregate outstanding
principal balance of Eligible Contracts that are Conseco
Contracts.
Provided, however, no more than fifteen percent (15%) of the
total Contracts Borrowing Base may be comprised of C-rated
Contracts.
"Controlled Partnership" means a general partnership of which
any Borrower or Subsidiary is a general partner, or a limited partnership whose
sole general partner is a Borrower and with respect to which partnership such
Borrower or Subsidiary is entitled to receive not less than 50% of the
distributions of cash made to the partners thereof, other than any preferred
cash distribution arrangement approved by Lender in writing.
"C-Rated Contract" means an Eligible Contract with a "C"
rating from a credit-quality standpoint as set forth in the proviso to subclause
(G) to the definition of Eligible Contract.
"Current Assets" and "Current Liabilities" mean, at any time,
all assets or liabilities, respectively, that, in accordance with Generally
Accepted Accounting Principles should be classified as current assets or current
liabilities, respectively, on a balance sheet of a Person.
"Debt Service" means, at any time, the sum of (i) all interest
payments for the prior twelve (12) months plus (ii) current maturities (due
within the next twelve (12) month period) of Indebtedness.
"Default" and "Event of Default" each mean the occurrence,
with respect to any of the Loans, of an event described in Section 9.1 of the
Agreement.
"Dollars" and "$" each mean United States Dollars.
"Eligible Contract" means, at any time, Chattel Paper upon
which lender has a property perfected security interest and that conforms and
continues to conform to each and all of the following conditions:
(A) The representations contained in Section 6.2 and Section
6.3 of the Agreement are true and correct in all respects with respect to the
Chattel Paper;
(B) The Chattel Paper arose out of the retail sale of a new
home manufactured by one of the Borrowers or the sale of a manufactured home
repossessed by Cavalier Acceptance;
(C) The Chattel Paper evidences the obligation of a retail
customer to repay Indebtedness incurred to purchase a new home manufactured by
one of the Borrowers or the sale of a manufactured home repossessed by Cavalier
Acceptance;
(D) The Chattel Paper has been duly assigned to, and is owned
by, Cavalier Acceptance;
(E) The Chattel Paper is not more than ninety (90) days past
due in payment and the Chattel Paper has not been re-dated;
(F) The Chattel Paper evidences an amount financed not in
excess of $70,000;
(G) The portfolio index score used by Cavalier Acceptance to
underwrite such Chattel Paper was not less than 70;
(H) The Chattel Paper was funded by Cavalier Acceptance on or
after January 1, 2000; and
(I) The Chattel Paper has been reviewed and approved by Lender
in its sole discretion.
In the event of any dispute under the foregoing criteria about
whether Chattel Paper is or has ceased to be an Eligible Contract, the sole
decision and discretion of Lender shall control.
"Environmental Laws" means the federal Comprehensive
Environmental Response Compensation and Liability Act of 1980 (CERCLA), as
amended (42 U.S.C. Sections 9601, et seq.), the Hazardous Materials
Transportation Act, as amended (49 U.S.C. Sections 1801, et seq.), the Resource
Conservation and Recovery Act (RCRA), as amended (42 U.S.C. Sections 6901, et
seq.), the Clean Water Act, as amended (33 U.S.C. Sections 1251, et seq.), the
Clean Air Act, as amended (42 U.S.C. Sections 7401, et seq.), the Toxic
Substances Control Act, as amended (15 U.S.C. Sections 2601, et seq.), the
Emergency Planning and Community Right-to-Know Act (EPCRA), as amended (42
U.S.C. Sections 11001, et seq.), and the rules and regulations adopted and
publications promulgated pursuant thereto, and the rules and regulations of the
Occupational Safety and Health Administration (OSHA) pertaining to occupational
exposure to asbestos, as amended, and any other federal, state or local
environmental law, ordinance, rule, or regulation now or hereafter in effect.
"ERISA" means the federal Employee Retirement Income Security
Act of 1974, as amended and in effect from time to time, and the regulations
promulgated by the Department of Labor or the Pension Benefit Guaranty
Corporation thereunder.
"ERISA Affiliate" means any trade or business, whether or not
incorporated, that with Borrower is a member of a group that would be treated as
a single employer for purposes of Section 414(b), (c), (m) or (o) of the
Internal Revenue Code of 1986, as amended.
"Financial Statements" means the Consolidated balance sheets
of Cavalier Homes and the Consolidated Entities as of December 31, 1998, and
Consolidated statements of income and retained earnings and Cash Flows of
Cavalier Homes and the Consolidated Entities for the years or months ended on
such dates all as furnished to Lender, and shall also mean any such balance
sheets and statements as may hereafter be furnished by any Borrower to Lender.
"Five Year Treasury" means the weekly average yield on United
States treasury securities adjusted to a constant maturity of five (5) years, as
released each Monday by the Federal Reserve Board in Release H.15. The Five Year
Treasury on March 27, 2000 was ___%.
"Fixed Assets" means, at any time, all assets (other than
Current Assets) that should, in accordance with Generally Accepted Accounting
Principles be classified as assets on a balance sheet of any Borrower.
"Floating Rate" means the Revolving Rate.
"Floating Rate Loan" means an Advance thereon or part of the
Revolving Loan with an interest rate based on the Floating Rate.
"Generally Accepted Accounting Principles" and "GAAP" each
mean generally accepted principles of accounting in effect from time to time in
the United States applied in a manner consistent with those used in preparing
such financial statements as have theretofore been furnished to Lender by
Borrowers.
"Governmental Authority" means any nation or government, any
state and any political subdivision thereof, and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, which has or asserts jurisdiction over Lender, any
Borrower, or over the property of any of them.
"Guaranty Agreement" means the guaranty of payment duly
authorized and executed by Cavalier Homes at Closing and in form satisfactory to
Lender, as such Guaranty Agreement may be hereafter amended or supplemented.
Such Guaranty Agreement shall unconditionally guarantee the repayment of all
Term Loans made by Lender to Cavalier Acceptance.
"Hazardous Materials" means any asbestos, urea formaldehyde
foam insulation, flammable explosives, radioactive materials, hazardous
materials, hazardous wastes, hazardous or toxic substances, or related or
unrelated substances or materials defined, regulated, controlled, limited or
prohibited in any Environmental Laws.
"Indebtedness" means, as to any Person, all items of
indebtedness, obligation or liability, whether matured or unmatured, liquidated
or unliquidated, direct or contingent, joint or several, including, but without
limitation:
(A) All indebtedness guaranteed, directly or indirectly, in
any manner, or endorsed (other than for collection or deposit in the ordinary
course of business) or discounted with recourse;
(B) All indebtedness in effect guaranteed, directly or
indirectly, through agreements, contingent or otherwise:
(1) to purchase such indebtedness; or
(2) to purchase, sell or lease (as lessee or lessor)
property, products, materials or supplies or to purchase or
sell services, primarily for the purpose of enabling the
debtor to make payment of such indebtedness or to assure the
owner of the indebtedness against loss; or
(3) to supply funds to or in any other manner
invest in the debtor;
(C) All indebtedness secured by (or for which the holder of
such indebtedness has a right, contingent or otherwise, to be secured by) any
mortgage, deed of trust, pledge, lien, security interest or other charge or
encumbrance upon property owned or acquired subject thereto, whether or not the
liabilities secured thereby have been assumed; and
(D) All indebtedness incurred as the lessee of Goods or
services under leases that, in accordance with Generally Accepted Accounting
Principles, should not be reflected on the lessee's balance sheet.
"Initial Participating Subsidiaries" means all of Cavalier
Homes, Inc., a Delaware corporation, Quality Housing Supply, LLC, a Delaware
limited liability company, Cavalier Manufacturing, Inc., a Delaware corporation,
Cavalier Industries, Inc., a Delaware corporation, Delta Homes, Inc., a
Mississippi corporation, Cavalier Enterprises, Inc., a Delaware corporation,
Cavalier Associated Retailers, Inc., a Delaware corporation, Quality Certified
Insurance Services, Inc., an Alabama corporation, Cavalier Asset Management,
Inc., a Delaware corporation, Cavalier Manufacturing Asset Co., Inc., a Delaware
corporation, Cavalier Industries Asset Co., Inc., a Delaware corporation,
Cavalier Enterprises Asset Co., Inc., a Delaware corporation, Cavalier Real
Estate Co., Inc., a Delaware corporation, and Cavalier Acceptance Corporation,
an Alabama corporation, collectively.
"Insurance Policy" means that certain life insurance policy in
the amount of $2,000,000 naming ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ as insured, which is assigned to
Lender as additional security for the Obligations in the Assignment of Life
Insurance.
"Interest Period" with respect to a LIBOR Rate Loan means a
LIBOR Rate Interest Period, as such period may be shortened upon suspension of
the LIBOR Rate option under Sections 2.5.13, 2.5.14, 3.6(A).13 or 3.6(A).14.
"Law" and "Laws" each mean all ordinances, statutes, rules,
regulations, orders, injunctions, judgments, writs or decrees of any government
or political subdivision or agency thereof, or any court or similar entity
established by any thereof.
"Lender" means First Commercial Bank, an Alabama state banking
corporation.
"Lending Installation" means any office, branch, subsidiary or
affiliate of Lender or any Participant.
"Letter of Credit Borrowings" means the maximum aggregate
amount that Lender could be required to pay under any drafts that conceivably
could be drawn under all Letters of Credit outstanding on such date, but does
not include drafts that have been drawn and paid.
"Letter of Credit Obligations" means (a) the Letter of Credit
Borrowings and (b) the reimbursement obligations and other obligations of
Borrowers under this Agreement with respect to drawings made on Letters of
Credit (including any obligations owing under the application or agreement
relating to any such Letter of Credit), including all principal, interest, fees
and other charges relating thereto.
"Letter of Credit" means each letter of credit issued by
Lender pursuant to Section 2.9 of the Agreement, and "Letters of Credit" means
all of them, collectively.
"Liabilities" means all Indebtedness and all other items that,
in accordance with Generally Accepted Accounting Principles, should be
classified as liabilities on a balance sheet of a Person.
"LIBOR Rate" means the Base LIBOR Rate plus 200 basis points
(2.00%). The LIBOR Rate shall be adjusted automatically, upward or downward, as
the case may be, on and as of the effective date of any change in the Base LIBOR
Rate resulting from a change in the Reserve Requirement.
"LIBOR Rate Interest Period" means a period of three months
(90 days), or such longer or shorter period as Cavalier Homes, on behalf of
itself and the other Borrowers, and Lender may agree from time to time. A month
means a period of thirty (30) days. If any LIBOR Interest Period would otherwise
end on a day which is not a Banking Day, the LIBOR Rate Interest Period shall
end on the next Banking Day.
"LIBOR Rate Loan" means an Advance under the Revolving Loan
with an interest rate based on the Base LIBOR Rate.
"Loan Documents" means the Agreement, the Revolving Note and
each Term Note, the applications for Letters of Credit, the Assumption
Agreements, the Subrogation and Contribution Agreements, the Security Documents
and all other agreements, instruments and documents executed or delivered at any
time in connection with the Obligations, or to evidence or secure any of the
Obligations, all as may be amended or supplemented from time to time.
"Loan Loss Reserve" means an allowance of reserve funds
established and maintained by Cavalier Acceptance, through charges made against
operating income, to be used for the purpose of absorbing losses from Cavalier
Acceptance's loan portfolio.
"Loans" means the Revolving Loan and all Term Loans,
collectively.
"Loan Termination Date" means, (i) with respect to the
Revolving Loan, the earliest of (A) April 15, 2002 or (B) upon demand by Lender;
and (ii) with respect to any Term Loan, the earlier of (A) the maturity date of
the applicable Term Note or (B) the date to which the maturity of the applicable
Term Note may be accelerated pursuant to Section 9.2 of the Agreement.
"Local Time" means the time of day at Lender's main office.
"Long-Term Liabilities" means Liabilities less the portion
thereof that constitutes Current Liabilities.
"Net Working Capital" means, at any time, the amount by which
Current Assets exceed Current Liabilities.
"Net Worth" means, at any time, Stockholders' Equity, less the
sum of:
(A) Any surplus resulting from any write-up of assets
subsequent to the date of Closing;
(B) Any amount at which shares of capital stock of Borrower
appear as an asset on Borrower's balance sheet; and
(C) Loans and advances to stockholders, directors, officers or
employees, of Borrower or any Affiliate.
"Notes" means the Revolving Note and all Term Notes,
collectively.
"Obligations" means the obligations, whether joint or several,
of Borrowers:
(A) To pay the principal of and interest on the Revolving Note
and the Term Note(s) in accordance with the terms thereof and to satisfy, pay
and perform the Letter of Credit Obligations and all other liabilities to
Lender, whether under the Agreement or otherwise, whether now existing or
hereafter incurred, matured or unmatured, direct or contingent, joint or
several, including any extensions, modifications, and renewals thereof and
substitutions therefor;
(B) To repay to Lender all amounts advanced by Lender under
the Agreement or under any of the Security Documents, or otherwise on behalf of
any Borrower, including, without limitation, advances for principal or interest
payments to prior secured parties, mortgagees, or lienors, or for taxes, levies,
insurance rent, repairs to or maintenance or storage of any of the Collateral;
and
(C) To reimburse Lender, on demand, for all of Lender's
expenses and costs, including the reasonable fees and expenses of its counsel,
in connection with the preparation, administration, amendment, modification, or
enforcement of the Agreement and the documents required or contemplated
hereunder, including, without limitation, any proceeding brought or threatened
to enforce payment of any of the obligations referred to in the foregoing
paragraphs (A) and (B); provided, however, that the obligation of Borrower to
reimburse Lender for the legal fees (but not including the out-of-pocket
expenses incurred by legal counsel for Lender) incurred in the initial
preparation of these documents shall be limited to $17,500.00.
"Participant" means any bank, financial institution, Affiliate
of Lender, or other entity which purchases an interest in the Revolving Note or
any Term Note from Lender at any time.
"Participating Partnership" means any Controlled Partnership
that hereafter executes and delivers to the Lender an Assumption Agreement, a
Security Agreement and all other documents necessary to assume joint and several
liability as to the Obligations arising with respect to the Revolving Loan or
any agreement or instrument executed by such Controlled Partnership in
connection therewith (to the extent of its Partnership Liabilities) and to
include all of its Accounts, Inventory and other Collateral in the Collateral.
"Participating Subsidiary" means (a) the Initial Participating
Subsidiaries and (b) any other Subsidiary that hereafter executes and delivers
to the Lender an Assumption Agreement, a Security Agreement and all other
documents ▇▇▇▇▇ to assume joint and several liability as to the Obligations
arising with respect to the Revolving Loan or any agreement or instrument
executed by such Subsidiary in connection therewith (in the maximum amount
provided for in such Assumption Agreement) and to include all of its Accounts,
Inventory and other Collateral in the Collateral.
"Partnership Liability" means, with respect to a Participating
Partnership, that part, if any, of an Advance (together with interest thereon
and fees, prepayment premiums and other charges properly attributable thereto)
that is received by and used by or for the benefit of such Participating
Partnership, as certified to Lender by Cavalier Homes, under Section 4.2, in
connection with Cavalier Homes's request for such Advance, and "Partnership
Liabilities" means the aggregate amount of all such parts of Advances that are
received by and used by or for the benefit of such Participating Partnership.
"Pension Plan" means any employee pension benefit plan, as
defined in Section 3(2) of ERISA that is subject to Section 302 of ERISA.
"Permitted Liens" means:
(A) Liens for taxes, assessments, or similar charges,
incurred in the ordinary course of business that are not yet due and payable;
(B) Pledges or deposits made in the ordinary course of
business to secure payment of workmen's compensation, or to participate in any
fund in connection with workmen's compensation, unemployment insurance, old-age
pensions or other social security programs;
(C) Liens of mechanics, materialmen, warehousemen, carriers,
or other like liens, securing obligations incurred in the ordinary course of
business that are not yet due and payable;
(D) Good faith pledges or deposits made in the ordinary course
of business to secure performance of bids, tenders, contracts (other than for
the repayment of borrowed money) or leases, not in excess of ten percent (10%)
of the aggregate amount due thereunder, or to secure statutory obligations, or
surety, appeal, indemnity, performance or other similar bonds required in the
ordinary course of business;
(E) Encumbrances consisting of zoning restrictions, easement
or other restrictions on the use of real property, none of which materially
impairs the use of such property by Borrower or any Consolidated Entity in the
operation of its business, and none of which is violated in any material respect
by existing or proposed structures or land use;
(F) Liens in favor of Lender;
(G) Existing liens set forth or described on Exhibit F to the
Agreement;
(H) Purchase money security interests granted to secure not
more than the purchase price of assets, the purchase of which does not violate
the Agreement or any instrument or document contemplated under the Agreement;
(I) Non-purchase money security interests in the real property
of any Borrower or Consolidated Entity granted to secure aggregate Indebtedness
not to exceed $1,000,000; and
(J) The following, if the validity or amount thereof is being
contested in good faith by appropriate and lawful proceedings, so long as levy
and execution thereon have been stayed and continue to be stayed and they do
not, in the aggregate, materially detract from the value of the property of any
Borrower or any Consolidated Entity or materially impair the use thereof in the
operation of its business:
(1) Claims or liens for taxes, assessments or charges
due and payable and subject to interest or penalty;
(2) Claims, liens and encumbrances upon, and defects
of title to, real or personal property, including any
attachment of personal or real property or other legal process
prior to adjudication of a dispute on the merits;
(3) Claims or liens of mechanics, materialmen,
warehousemen, carriers, or other like liens; and
(4) Adverse judgments on appeal.
"Person" means any individual, corporation, partnership,
association, joint-stock company, trust, unincorporated organization, joint
venture, court or government or political subdivision or agency thereof, and any
other legal entity.
"Pledge Agreement" means each of the assignments of the
Pledged Stock as Collateral, duly authorized and either previously executed or
to be executed at Closing by each of Cavalier Homes, Cavalier Acceptance or any
other Borrower, as applicable, and in form satisfactory to Lender, as each such
Pledge Agreement may be hereafter amended or supplemented, and "Pledge
Agreements" means all of them, collectively.
"Pledged Stock" has the meaning given to such term in the
Pledge Agreement.
"Prime Rate" means the rate of interest periodically
designated by Lender as its Prime Rate. The Prime Rate is not necessarily the
lowest interest rate charged by Lender. The Prime Rate on the date of the
Agreement is ___%.
"Rate Selection Notice" means an irrevocable written
(including facsimile), telex or telephonic notice, in substantially the form of
Exhibit B to the Agreement, by the appropriate Borrower(s), to Lender specifying
(a) that the notice relates to the selection of a rate option for the
outstanding Revolving Loan pursuant to Section 2.5.3 or 3.6(A).3, as the case
may be, (b) the effective date of such selection (c) the amounts, individual and
in the aggregate, of any Floating Rate Loans and LIBOR Rate Loans comprising the
selection and (d) the commencement date and the duration of the Interest Period
applicable to any LIBOR Rate.
"Records" means correspondence, memoranda, tapes, discs,
microfilm, microfiche, papers, books and other documents, or transcribed
information of any type, whether expressed in ordinary or machine language, and
all filing cabinets, computer hardware, and other containers in which any of the
foregoing is stored, maintained or updated.
"Regulation D" means Regulation D of the Board of Governors of
the Federal Reserve System as now or from time to time hereafter in effect, and
shall include any successor or other regulation or official interpretation of
said Board of Governors relating to reserve requirements applicable to member
banks of the Federal Reserve System.
"Regulation U" means Regulation U of the Board of Governors of
the Federal Reserve System as now or from time to time hereafter in effect and
shall include any successor or other regulation or official interpretation of
said Board of Governors relating to the extension of credit by banks for the
purpose of purchasing or carrying margin stocks applicable to member banks of
the Federal Reserve System.
"Requirement of Law" for any person or entity means the
certificate of incorporation and by- laws or other organization or governing
documents of such person or entity and any law, treaty, rule or regulation, or
determination of an arbitrator or a court or other Governmental Authority, in
each case applicable to or binding upon such person or entity or any of its
property or to which such person or entity or any of its property is
subject.
"Reserve Requirements" with respect to an Interest Period
means the weighted average during the Interest Period of the maximum aggregate
reserve requirement (including all basic, supplemental, marginal, emergency and
other reserves and taking into account any transitional adjustments or other
scheduled changes in reserve requirements during the Interest Period) which is
imposed under Regulation D or by any other Governmental Authority having
jurisdiction with respect thereto and which is applicable to the class of banks
of which Lender is a member, for LIBOR Rate Loan purposes, on "eurocurrency
liabilities", as that term is defined in Regulation D or by any such
Governmental Authority.
"Revolving Loan" means the aggregate unpaid principal balance
from time to time of all Advances made pursuant to Article II of the Agreement.
"Revolving Loan Commitment" means the Lender's commitment to
lend to Borrowers up to the sum of $35,000,000 in principal amount outstanding
from time to time pursuant to Article II of the Agreement, and subject to, the
terms of the Agreement.
"Revolving Note" means the Amended and Restated Revolving
Note, in form satisfactory to Lender, dated as of the date of this Agreement and
payable on demand, but if no demand is made, on April 15, 2002, made by each
Borrower to evidence such Borrower's joint and several obligation to repay the
Revolving Loan and the interest thereon, and includes any amendment to such note
and any promissory note given in extension or renewal of, or in substitution
for, such note.
"Revolving Rate" means the per annum rate of interest equal to
one-half of one percent (0.50%) below the Prime Rate in effect from time to time
until maturity of the Revolving Note, and two percent (2.00%) above the Prime
Rate in effect from time to time after maturity of the Revolving Note, whether
by demand, acceleration or otherwise. Each time the Prime Rate shall change, the
Revolving Rate shall change concurrently with such change in the Prime Rate.
"Security Documents" means the Pledge Agreements, the
Assignment of Life Insurance, the Guaranty Agreement, and any documents required
or contemplated under Article V of the Agreement, whether delivered at or after
the Closing, together with any other documents or agreements, now or hereinafter
in effect, which secure (A) the payment of any of the Loans or (B) the
performance of the Obligations of any Borrower thereunder.
"Stockholders' Equity" means, at any time, the sum of the
following accounts (less treasury stock carried at cost) set forth in a balance
sheet of Borrower (or, if the Borrower in question is Cavalier Homes, a
Consolidated balance sheet of the Consolidated Entities), prepared in accordance
with Generally Accepted Accounting Principles consistently applied:
(A) The par or stated value of all outstanding capital stock;
(B) Capital surplus; and
(C) Retained earnings.
"Subrogation and Contribution Agreement" means the Amended and
Restated Subrogation and Contribution Agreement duly authorized and executed at
Closing by each Borrower or duly authorized and executed thereafter by each
Subsidiary and Controlled Partnership that becomes a Participating Subsidiary or
Participating Partnership thereafter and substantially in the form of Exhibit D
to the Agreement, as each such Subrogation and Contribution Agreement may be
hereafter or thereafter supplemented or amended, and "Subrogation and
Contribution Agreements" means all of them, collectively.
"Subsidiary" means any corporation of which more than fifty
percent (50%) of the outstanding voting securities shall, at the time of
determination, be owned directly, or indirectly through one or more
intermediaries, by any Borrower.
"Tangible Net Worth" means, at any time, Stockholders' Equity
less the sum of:
(A) Any surplus resulting from any write-up of assets
subsequent to the date of the latest Financial Statements delivered to Lender
prior to Closing;
(B) Goodwill, including any amounts, however designated on a
balance sheet of any Borrower, representing the excess of the purchase price
paid for assets or stock acquired over the value assigned thereto on the books
of any Borrower;
(C) Patents, trademarks, trade names and copyrights;
(D) Any amount at which shares of capital stock of any
Borrower appear as an asset on any Borrower's balance sheet;
(E) Loans and advances to stockholders, directors, officers or
employees; and
(F) Any other amount in respect of an intangible that, in
accordance with Generally Accepted Accounting Principles, should be classified
as an asset on a balance sheet of any Borrower.
"Term Loan" means the unpaid principal balance of each term
loan made to Cavalier Acceptance pursuant to Article III of the Agreement; and
"Term Loans" means, collectively, all of such term loans made to Cavalier
Acceptance.
"Term Loan Commitment" means the Lender's commitment to make
Term Loans to Cavalier Acceptance pursuant to Article III of the Agreement and
subject to the terms and conditions of this Agreement.
"Term Note" means the promissory note of Cavalier Acceptance,
substantially in the form of Exhibit A to the Agreement, evidencing its
obligation to repay a Term Loan, and includes any amendment to such note and any
promissory note given in extension or renewal of, or in substitution for, such
note, and "Term Notes" means, collectively, all of the Term Notes so made by
Cavalier Acceptance.
"Term Rate" means the rate defined in Section 3.6(A), 3.6(B)
of the Agreement.
"UCC-1" means each financing statement to be filed pursuant to
the Uniform Commercial Code, as enacted in any state in which any of the
Collateral is located, in order to perfect Lender's lien on the Collateral.
"Usage Fee" means the fee due to Lender pursuant to Section
2.10 hereof.
EXHIBIT E
Exceptions to Representations and Warranties
See exhibits to the Assumption Agreement, as set forth below:
Supplement to Exhibit F
Supplement to Exhibit II.6.1(B)
Supplement to Exhibit II.6.1(D)
Supplement to Exhibit II.6.1(I)
Supplement to Exhibit II.7.2(G)
Supplement to Exhibit G
Supplement to Exhibit H
Supplement to Exhibit I
Supplement to Exhibit J
Supplement to Exhibit K