TABLE OF CONTENTS

 

		Page
ARTICLE 1 LOANS AND LETTERS OF CREDIT		3
1.1	Total Facility	3
1.2	Revolving Loans	4
1.3	[RESERVED]	7
1.4	Letters of Credit	7
1.5	Bank Products	12
1.6	Joint and Several Obligations; Contribution Rights	12
1.7	Borrowing Agency Provisions	17
1.8	Senior Indebtedness	19
ARTICLE 2 INTEREST AND FEES		19
2.1	Interest	19
2.2	[RESERVED]	20
2.3	Maximum Interest Rate	20
2.4	Closing Fee	20
2.5	Unused Line Fee	20
2.6	Letter of Credit Fee	20
2.7	Agency Fee	21
ARTICLE 3 PAYMENTS AND PREPAYMENTS		21
3.1	[RESERVED]	21
3.2	Termination of Facility	21
3.3	Reduction or Termination of Revolving Loan Commitments	21
3.4	Repayment and Prepayment of the Revolving Loans	21
3.5	[RESERVED]	23
3.6	Payments by the Borrowers	23
3.7	Payments as Revolving Loans	24
3.8	Apportionment, Application and Reversal of Payments	24
3.9	Indemnity for Returned Payments	24
3.10	The Agent’s and Lenders’ Books and Records; Monthly Statements	25
ARTICLE 4 TAXES, YIELD PROTECTION, ILLEGALITY AND SUPER-PRIORITY		25
4.1	Taxes	25
4.2	[RESERVED]	26
4.3	Increased Costs and Reduction of Return	27
4.4	Funding Losses	27
4.5	[RESERVED]	27
4.6	Certificates of the Agent	27
4.7	Super Priority Nature of Obligations and Lenders’ Liens	28
4.8	Payment of Obligations	30
4.9	No Discharge; Survival of Claims	30

 

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		Page
4.10	Release	30
4.11	Waiver of any Priming Rights	31
4.12	Survival	31
ARTICLE 5 BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES		31
5.1	Books and Records	31
5.2	Financial Information	31
5.3	Notices to the Lenders	35
ARTICLE 6 GENERAL WARRANTIES AND REPRESENTATIONS		38
6.1	Authorization, Validity, and Enforceability of this Agreement and the Loan Documents	38
6.2	Validity and Priority of Security Interest	39
6.3	Organization and Qualification	39
6.4	Corporate Name; Prior Transactions	39
6.5	Subsidiaries and Affiliates	40
6.6	Financial Statements and Projections	40
6.7	Capitalization	41
6.8	[RESERVED]	41
6.9	Debt	41
6.10	Distributions	41
6.11	Real Estate; Leases	41
6.12	Proprietary Rights	41
6.13	Trade Names	42
6.14	Litigation	42
6.15	Labor Disputes	42
6.16	Environmental Laws	42
6.17	No Violation of Law	44
6.18	No Default	44
6.19	ERISA Compliance	44
6.20	Taxes	45
6.21	Regulated Entities	45
6.22	Use of Proceeds; Margin Regulations	45
6.23	Copyrights, Patents, Trademarks and Licenses, etc.	46
6.24	No Material Adverse Change	46
6.25	Full Disclosure	47
6.26	Material Agreements	47
6.27	Bank Accounts	47
6.28	Governmental Authorization	47
6.29	Senior Indebtedness	47
6.30	Reorganization Matters	48
ARTICLE 7 AFFIRMATIVE AND NEGATIVE COVENANTS		48
7.1	Taxes and Other Obligations	49

 

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		Page
7.2	Legal Existence and Good Standing	49
7.3	Compliance with Law and Agreements; Maintenance of Licenses	49
7.4	Maintenance of Property; Inspection of Property	50
7.5	Insurance	50
7.6	Insurance and Condemnation Proceeds	51
7.7	Environmental Laws	52
7.8	Compliance with ERISA	53
7.9	Mergers, Consolidations or Sales	53
7.10	Distributions; Capital Change; Restricted Investments	55
7.11	Transactions Affecting Collateral or Obligations	56
7.12	Guaranties	56
7.13	Debt	57
7.14	Prepayment; Repayment	59
7.15	Transactions with Affiliates	60
7.16	Investment Banking and Finder’s Fees	60
7.17	Business Conducted	60
7.18	Liens	60
7.19	Sale and Leaseback Transactions	61
7.20	New Subsidiaries	61
7.21	Fiscal Year	61
7.22	Budget Covenants	61
7.23	Closing Date Encumbered Real Estate Asset	62
7.24	[RESERVED]	62
7.25	Bank Accounts	62
7.26	Contribution of Management Fees	64
7.27	Use of Proceeds	64
7.28	Further Assurances	64
7.29	2008 Senior Secured Debentures; Subordinated Debt; Trust Securities	65
7.30	Inventory Appraisal	65
7.31	Reclamation Claims	66
7.32	Chapter 11 Claims	66
ARTICLE 8 CONDITIONS OF LENDING		66
8.1	Conditions Precedent to Making of Loans on the Closing Date	66
8.2	Conditions Precedent to Each Loan	70
ARTICLE 9 DEFAULT; REMEDIES		71
9.1	Events of Default	71
9.2	Remedies	77
ARTICLE 10 TERM AND TERMINATION		79
10.1	Term and Termination	79

 

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		Page
ARTICLE 11 AMENDMENTS; WAIVERS; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS		79
11.1	Amendments and Waivers	79
11.2	Assignments; Participations	82
ARTICLE 12 THE AGENT		84
12.1	Appointment and Authorization	84
12.2	Delegation of Duties	85
12.3	Liability of the Agent	85
12.4	Reliance by the Agent	85
12.5	Notice of Default	85
12.6	Credit Decision	86
12.7	Indemnification	86
12.8	The Agent in Individual Capacity	87
12.9	Successor Agent	87
12.10	Withholding Tax	87
12.11	Collateral Matters	89
12.12	Restrictions on Actions by Lenders; Sharing of Payments	90
12.13	Agency for Perfection	91
12.14	Payments by the Agent to Lenders	91
12.15	Settlement	92
12.16	Letters of Credit; Intra-Lender Issues	96
12.17	Concerning the Collateral and the Related Loan Documents	98
12.18	Field Audit and Examination Reports; Disclaimer by Lenders	98
12.19	Relation Among Lenders	99
12.20	Co-Agents	99
12.21	[RESERVED]	99
12.22	Foreclosure/Environmental Reports	99
ARTICLE 13 MISCELLANEOUS		99
13.1	No Waivers; Cumulative Remedies	99
13.2	Severability	100
13.3	Governing Law; Choice of Forum; Service of Process	100
13.4	WAIVER OF JURY TRIAL	101
13.5	Survival of Representations and Warranties	101
13.6	Other Security and Guaranties	101
13.7	Fees and Expenses	102
13.8	Notices	103
13.9	Waiver of Notices	104
13.10	Binding Effect	104
13.11	Indemnity of the Agent and the Lenders by the Borrower	104
13.12	Limitation of Liability	105
13.13	Final Agreement	105
13.14	Counterparts	105

 

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		Page
13.15	Captions	105
13.16	Right of Setoff	105
13.17	Confidentiality	106
13.18	Conflicts with Other Loan Documents	107
13.19	Reinstatement	107
13.20	Parties Including Trustees; Bankruptcy Court Proceedings	107
ARTICLE 14 GUARANTY		108
14.1	Guaranty	108

 

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ANNEXES, EXHIBITS AND SCHEDULES

 

ANNEX A	-	DEFINED TERMS
EXHIBIT A	-	FORM OF REVOLVING LOAN NOTE
EXHIBIT B	-	FINANCIAL STATEMENTS
EXHIBIT C	-	FORM OF NOTICE OF BORROWING
EXHIBIT D	-	FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT
EXHIBIT E	-	FORM OF INTERIM ORDER

 

SCHEDULE 1.1 — ASSIGNED CONTRACTS (ANNEX A — DEFINED TERMS)

SCHEDULE 1.2 — LENDERS’ COMMITMENTS (ANNEX A — DEFINED TERMS)

SCHEDULE 6.3 — ORGANIZATIONS AND QUALIFICATIONS

SCHEDULE 6.4 — CORPORATE NAMES; PRIOR TRANSACTIONS

SCHEDULE 6.5 — SUBSIDIARIES AND AFFILIATES

SCHEDULE 6.6 — PROJECTIONS

SCHEDULE 6.7 — CAPITALIZATION

SCHEDULE 6.9 — DEBT

SCHEDULE 6.11— REAL ESTATE(MORTGAGES); LEASES

SCHEDULE 6.12 — PROPRIETARY RIGHTS

SCHEDULE 6.13 — TRADE NAMES

SCHEDULE 6.14 — LITIGATION

 

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SCHEDULE 6.15 — UNION CONTRACTS

SCHEDULE 6.16 — ENVIRONMENTAL LAW

SCHEDULE 6.18 — SPECIFIED DEFAULTS

SCHEDULE 6.19 — ERISA COMPLIANCE

SCHEDULE 6.27 — BANK ACCOUNTS

SCHEDULE 7.12 — GUARANTIES

SCHEDULE 7.13(u) — LIFE INSURANCE POLICIES

SCHEDULE 8.1(u) — FIRST DAY ORDERS

SCHEDULE A — COLI POLICIES

 

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FOURTH AMENDED AND RESTATED SENIOR SECURED, SUPER-PRIORITY

DEBTOR-IN-POSSESSION CREDIT AGREEMENT

 

This FOURTH AMENDED AND RESTATED SENIOR SECURED, SUPER-PRIORITY DEBTOR-IN-POSSESSION CREDIT AGREEMENT, dated as of April 1, 2009 (this “ Agreement ”), among the financial institutions from time to time parties hereto (such financial institutions, together with their respective successors and assigns, are referred to hereinafter each individually as a “ Lender ” and collectively as the “ Lenders ”); BANK OF AMERICA, N.A., with an office at 55 South Lake Avenue, Suite 900, Pasadena, California 91101, as the administrative agent for the Lenders (in its capacity as administrative agent, the “ Agent ”); FLEETWOOD ENTERPRISES, INC., a Delaware corporation (“ Fleetwood ”), as debtor and debtor-in-possession, as a Guarantor; FLEETWOOD HOLDINGS INC., a Delaware corporation (“ Holdings ”), as debtor and debtor-in-possession; and those Subsidiaries of Holdings and Fleetwood set forth on the signature pages hereto or which become parties hereto hereafter in accordance with the requirements of this Agreement, as debtors and debtors-in-possession (each of Holdings and each such Subsidiary individually, a “ Borrower ” and, collectively, the “ Borrowers ”).  Capitalized terms used in this Agreement and not otherwise defined herein shall have the meanings ascribed thereto in Annex A , which is attached hereto and incorporated herein; the rules of construction contained therein shall govern the interpretation of this Agreement, and all Annexes, Exhibits and Schedules attached hereto are incorporated herein by reference.

 

W   I   T   N   E   S   S   E   T   H :

 

WHEREAS, the First Amended and Restated Credit Agreement amended and restated the Original Credit Agreement in its entirety on May 14, 2004;

 

WHEREAS, the Second Amended and Restated Credit Agreement amended and restated the First Amended and Restated Credit Agreement in its entirety on July 1, 2005;

 

WHEREAS, the Third Amended and Restated Credit Agreement amended and restated the Second Amended and Restated Credit Agreement in its entirety on January 5, 2007;

 

WHEREAS, on March 10, 2009 (the “ Petition Date ”), each of the Borrowers commenced a Chapter 11 Case, as administratively consolidated with other affiliates of Fleetwood that are not Loan Parties at Chapter 11 Case No. 09-14254-MJ (each, a “ Chapter 11 Case ” and, collectively, the “ Chapter 11 Cases ”), by filing separate voluntary petitions for reorganization under Chapter 11, 11 U.S.C. 101 et seq. (the “ Bankruptcy Code ”), with the United States Bankruptcy Court for the Central District of California, Riverside Division (the “ Bankruptcy Court ”), and Fleetwood, Fleetwood International Inc., a California corporation (“ Fleetwood International ”), and the Borrowers continue to operate their businesses and manage their properties as debtors-in-possession pursuant to Section 1107(b) and 1108 of the Bankruptcy Code;

 

WHEREAS, prior to the Petition Date, pursuant to the Third Amended and Restated Credit Agreement, the Letter of Credit Issuer has extended credit in the form of the Existing Letters of Credit but as of the Petition Date there are no Revolving Loans outstanding thereunder;

 

 

WHEREAS, the Borrowers have requested the Lenders continue to make available to the Borrowers a revolving line of credit for loans and letters of credit in an aggregate amount not to exceed eighty million Dollars ($80,000,000) (with respect to Letters of Credit, further subject to an Unused Letter of Credit Subfacility maximum of sixty-five million Dollars ($65,000,000) ) pursuant to a senior secured, super-priority revolving credit facility which may be available from time to time on a revolving basis after the date of entry of the Interim Order as provided herein, which extension of credit the Borrowers will use for the purposes permitted hereunder and the Lenders are willing to extend such credit to the Borrowers in accordance with and on the term and conditions set forth herein;

 

WHEREAS, all of the Borrowers are direct or indirect wholly-owned Subsidiaries of Fleetwood and all of the Borrowers are engaged in an inter-related business enterprise with an identity of interests, and accordingly the financing provided hereunder will directly and indirectly benefit each of the Borrowers and facilitate the administration of the Chapter 11 Cases and their loan relationship with the Agent and the Lenders, all to the mutual benefit of the Borrowers;

 

WHEREAS, none of the Borrowers would be able to obtain sufficient working capital financing for their respective businesses unless the individual Borrowers were jointly and severally liable for the obligations of all Borrowers, and unless Fleetwood guarantees the obligations of all Borrowers;

 

WHEREAS, each Loan Party acknowledges that it will receive substantial direct and indirect benefits by reason of the making of the Loans and other financial accommodations to the Borrowers as provided in this Agreement;

 

WHEREAS, the Agent’s and the Lenders’ willingness to extend financial accommodations to the Borrowers, and to administer the Loan Parties’ collateral security therefore, on a combined basis as more fully set forth in this Agreement, is done solely as an accommodation to the Loan Parties and at the Loan Parties’ request and in furtherance of the Loan Parties’ mutual and collective enterprise;

 

WHEREAS, the Loan Parties desire that (a) the Letter of Credit Issuer continue to honor its obligations under the Existing Letters of Credit, (b) the Lenders continue the Existing Commitments as modified into the Revolving Credit Commitments hereunder and (c) the Lenders agree to amend and restate the Original Credit Agreement (as the same has been previously amended and restated by the First Amended and Restated Credit Agreement, the Second Amended and Restated Credit Agreement and the Third Amended and Restated Credit Agreement) in its entirety for the purpose of making the amendments reflected herein, which amendment and restatement shall become effective on the Closing Date upon satisfaction of the conditions precedent set forth herein and the Lenders and Letter of Credit Issuer have agreed to the foregoing;

 

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WHEREAS, the Borrowers desire to continue to guarantee and secure all of the Obligations hereunder and under the other Loan Documents to the extent so guaranteed and secured under the Third Amended and Restated Credit Agreement and the Loan Documents, as in effect prior to the date hereof, and as further provided herein;

 

WHEREAS, all of the claims of the Agent and the Lenders against the Borrowers and Guarantors hereunder and pursuant to the Applicable Order shall be subject to the Carve-Out and the Exceptions, but in each case only to the extent provided in Section 4.7 hereof and the Applicable Order; and

 

WHEREAS, the Guarantors have agreed to continue to guarantee and secure the Obligations hereunder and under the other Loan Documents to the extent so guaranteed and secured under the Third Amended and Restated Credit Agreement and the Loan Documents, as in effect prior to the date hereof, and as further provided herein.

 

NOW, THEREFORE, in consideration of the mutual conditions and agreements set forth in this Agreement, and for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Lenders, the Agent, Fleetwood and the Borrowers hereby agree as follows:

 

ARTICLE 1

LOANS AND LETTERS OF CREDIT

 

1.1          Total Facility .  Subject to all of the terms and conditions of this Agreement, the Lenders agree to make available a total credit facility of up to eighty million Dollars ($80,000,000) (the “ Total Facility ”) to the Borrowers from time to time during the term of this Agreement.  The Total Facility shall be composed of a revolving line of credit consisting of Revolving Loans and Letters of Credit.  On the Closing Date (and effective as of the execution hereof by each Lender), the Lenders (directly or through funding and settlement by the Agent) shall purchase and assume the Existing Commitments at par, free and clear of adverse claims, participations or other encumbrances, which Existing Commitments and the Third Amended and Restated Credit Agreement shall be (immediately upon such purchase and assumption by the Lenders) amended and restated in their entirety as the Revolving Credit Commitments and this Agreement, respectively, as more particularly described herein, and neither the Loan Parties nor the Lenders shall be subject to or bound by any of the terms or provisions of the Third Amended and Restated Credit Agreement (other than such terms or provisions that are to survive termination of the Third Amended and Restated Credit Agreement or the payment of the Obligations as provided by the express terms of the Third Amended and Restated Credit Agreement) and shall only be subject to or bound by the terms and provisions of this Agreement in respect of the Revolving Credit Commitments, Loans, other Obligations and the transactions contemplated hereby, as set forth herein.  The parties acknowledge and agree that the Letter of Credit Issuer shall continue to honor its obligations under the Existing Letters of Credit as if such Existing Letters of Credit had been requested under and issued pursuant to the terms of this Agreement.  The parties acknowledge and agree that this Agreement and the other Loan Documents do not constitute a novation, payment and reborrowing or termination of the obligations under the Third Amended and Restated Credit Agreement and that all such obligations are in all respects continued and outstanding as obligations under this Agreement and

 

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the Revolving Loan Notes with only the terms being modified from and after the Closing Date as provided in this Agreement, the Revolving Loan Notes and the other Loan Documents.   All references in the Revolving Loan Notes and the other Loan Documents to (i) the “Credit Agreement” shall be deemed to include references to this Agreement and (ii) the “Lenders” or a “Lender” or to the “Agent” shall mean such terms as defined in this Agreement.  By its execution hereof, each Lender consents to the amendment, amendment and restatement, replacement or other modification to any other Loan Document being so amended, amended and restated, replaced or otherwise modified on the date hereof or on or prior to the Closing Date in the form approved by the Agent.

 

1.2             Revolving Loans .

 

(a)            (i)               Amounts .  Subject to the satisfaction of the conditions precedent set forth in Article 8 , and except for Non-Ratable Loans and Agent Advances, each Revolving Credit Lender severally, but not jointly, agrees, upon a Borrower’s request from time to time on any Business Day during the period from the Closing Date to the Termination Date, to make revolving loans (the “ Revolving Loans ”) to the Borrowers (x) in an aggregate amount not to exceed the disbursements set forth in the Approved Budget for the applicable Measurement Period plus the excess in cash expenditures that would be permitted without violating the budget covenant set forth in Section 7.22(b)  (for the avoidance of doubt, it being understood and agreed that the presence of any “basket” or “carve-out” set forth in any negative covenant contained in Section 7 shall not be, and shall not be deemed to be, an approval or acceptance by the Agent or any Lender of any Line Item in any Approved Budget, or portion thereof, related to cash expenditures of the type described in such “basket” or “carve-out,” which shall remain subject to the approval rights of Agent and the Required Lenders with respect to each Approved Budget as set forth herein and in the Applicable Order) and (y) in aggregate principal amounts such that after giving effect to such Revolving Loans, such Lender’s Pro Rata Share of the Aggregate Revolver Outstandings shall not exceed such Lender’s Pro Rata Share of the Availability.  Subject to the terms of the Interim Order, the Revolving Credit Lenders, however, in their unanimous discretion, may elect to make Revolving Loans or issue or arrange to have issued Letters of Credit in excess of the Borrowing Base on one or more occasions, but if they do so, neither the Agent nor the Revolving Credit Lenders shall be deemed thereby to have changed the limits of the Borrowing Base, or to be obligated to exceed such limits on any other occasion.

 

(ii)              At the request of any Revolving Credit Lender, each of the Borrowers shall execute and deliver to such Lender a single note to evidence the Revolving Loans of that Lender.  Each note shall be in the principal amount of the Revolving Credit Lender’s Pro Rata Share of the Revolving Credit Commitments, dated the date hereof and substantially in the form of Exhibit A (each such note, together with any new note issued pursuant to Section 11.2 upon the assignment of any portion of any Revolving Credit Lender’s Revolving Loans and Revolving Credit Commitment a “ Revolving Loan Note ” and, collectively, the “ Revolving

 

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Loan Notes ”).  Each Revolving Loan Note shall represent the obligation of FMC to pay the amount of such Revolving Credit Lender’s Pro Rata Share of the Revolving Credit Commitments, or, if less, such Revolving Credit Lender’s Pro Rata Share of the aggregate unpaid principal amount of all Revolving Loans to FMC together with interest thereon as prescribed in Section 2.1 .  The entire unpaid balance of the Revolving Loans and all other non-contingent Obligations shall be immediately due and payable in full in immediately available funds on the Termination Date.

 

(b)            Procedure for Borrowing .

 

(i)             Subject to Section 1.1 , each Borrowing shall be made upon a Borrower’s irrevocable written notice delivered to the Agent in the form of a notice of borrowing (“ Notice of Borrowing ”), which must be received by the Agent prior to 10:00 a.m. (Los Angeles time) on the requested Funding Date, in the case of Base Rate Loans, specifying:

 

(1)            the amount of the Borrowing; and

 

(2)            the requested Funding Date, which must be a Business Day.

 

(ii)            In lieu of delivering a Notice of Borrowing, a Borrower may give the Agent telephonic notice of such request for advances to its Designated Account on or before the deadline set forth above.  The Agent at all times shall be entitled to rely on such telephonic notice in making such Revolving Loans, regardless of whether any written confirmation is received.

 

(c)            Reliance upon Authority .  Prior to the Closing Date, the Borrowers shall deliver to the Agent a notice setting forth the accounts of FMC (each, a “ Designated Account ”) to which the Agent is authorized to transfer the proceeds of the Revolving Loans requested hereunder by the Borrowers.  The Borrowers may designate a replacement account from time to time by written notice.  All such Designated Accounts must be reasonably satisfactory to the Agent.  The Agent is entitled to rely conclusively on any person’s request for Revolving Loans on behalf of any Borrower, so long as the proceeds thereof are to be transferred to the applicable Designated Account.  The Agent has no duty to verify the identity of any individual representing himself or herself as a person authorized by any Borrower to make such requests on its behalf.

 

(d)            No Liability .  The Agent shall not incur any liability to the Borrowers as a result of acting upon any notice referred to in Sections 1.2(b)  and (c) , which the Agent believes in good faith to have been given by an officer or other person duly authorized by the applicable Borrower to request Revolving Loans on its behalf.  The crediting of Revolving Loans to the applicable Designated Account conclusively establishes the obligation of the applicable Borrowers to repay such Revolving Loans as provided herein.

 

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(e)            Notice Irrevocable .  Any Notice of Borrowing (or telephonic notice in lieu thereof) made pursuant to Section 1.2(b)  shall be irrevocable.  A Borrower shall be bound to borrow the funds requested therein in accordance therewith.

 

(f)             The Agent’s Election .  Promptly after receipt of a Notice of Borrowing (or telephonic notice in lieu thereof), the Agent shall elect to have the terms of Section 1.2(g)  or the terms of Section 1.2(h)  apply to such requested Borrowing.  If the Bank declines in its sole discretion to make a Non-Ratable Loan pursuant to Section 1.2(h) , the terms of Section 1.2(g)  shall apply to the requested Borrowing.

 

(g)            Making of Revolving Loans .  If the Agent elects to have the terms of this Section 1.2(g)  apply to a requested Borrowing, then promptly after receipt of a Notice of Borrowing (or telephonic notice in lieu thereof), the Agent shall notify the Revolving Credit Lenders by telecopy, telephone or e-mail of the requested Borrowing.  Each Revolving Credit Lender shall transfer its Pro Rata Share of the requested Borrowing to the Agent in immediately available funds, to the account from time to time designated by the Agent, not later than 12:00 noon (Los Angeles time) on the applicable Funding Date.  After the Agent’s receipt of all proceeds of such Revolving Loans, the Agent shall make the proceeds of such Revolving Loans available to the applicable Borrower on the applicable Funding Date by transferring same day funds to the Designated Account of the applicable Borrower; provided , however , that the amount of Revolving Loans so made on any date shall not exceed Availability on such date, unless all of the Revolving Credit Lenders otherwise agree.

 

(h)            Making of Non-Ratable Loans .

 

(i)             If the Agent elects, with the consent of the Bank, to have the terms of this Section 1.2(h)  apply to a requested Borrowing, the Bank shall make a Revolving Loan in the amount of that Borrowing available to the applicable Borrower on the applicable Funding Date by transferring same day funds to such Borrower’s Designated Account.  Each Revolving Loan made solely by the Bank pursuant to this Section 1.2(h)  is herein referred to as a “ Non-Ratable Loan ,” and such Revolving Loans are collectively referred to as the “ Non-Ratable Loans .”  Each Non-Ratable Loan shall be subject to all the terms and conditions applicable to other Revolving Loans except that all payments thereon shall be payable to the Bank solely for its own account.  The aggregate amount of Non-Ratable Loans outstanding at any time shall not exceed two million Dollars ($2,000,000).  The Agent shall not request the Bank to make any Non-Ratable Loan if (1) the Agent has received written notice from any Revolving Credit Lender that one or more of the applicable conditions precedent set forth in Article 8 will not be satisfied on the requested Funding Date for the applicable Borrowing, and such conditions have not been waived in accordance with this Agreement or (2) the requested Borrowing would exceed Availability on that Funding Date.

 

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(ii)            The Non-Ratable Loans shall be secured by the Agent’s Liens in and to the Collateral and shall constitute Revolving Loans and Obligations hereunder.

 

(i)              The Agent Advances .

 

(i)             Subject to the limitations set forth below and with the consent of the Required Lenders, the Agent is authorized by the Borrowers and the Revolving Credit Lenders, from time to time in the Agent’s sole discretion, (A) after the occurrence of a Default or an Event of Default, or (B) at any time that any of the other conditions precedent set forth in Article 8 have not been satisfied, to make Revolving Loans to the Borrowers on behalf of the Revolving Credit Lenders in an aggregate amount outstanding at any time not to exceed five million Dollars ($5,000,000) which the Agent, in its reasonable business judgment, deems necessary or desirable (1) to preserve or protect the Collateral, or any portion thereof, (2) to enhance the likelihood of, or maximize the amount of, repayment of the Loans and other Obligations, or (3) to pay any other amount chargeable to the Borrowers pursuant to the terms of this Agreement, including costs, fees and expenses as described in Section 13.7 (any of such advances are herein referred to as “ Agent Advances ”); provided , that (x) in no event shall the Aggregate Revolver Outstandings (which shall include, for the avoidance of doubt, the Agent Advances) at any time exceed the Maximum Amount and (y) the Required Lenders may at any time revoke the Agent’s authorization to make Agent Advances.  Any such revocation must be in writing and shall become effective prospectively upon the Agent’s receipt thereof.

 

(ii)            Agent Advances shall be secured by the Agent’s Liens in and to the Collateral and shall constitute Revolving Loans and Obligations hereunder.

 

1.3            [ RESERVED ].

 

1.4            Letters of Credit .

 

(a)             Agreement to Issue or Cause to Issue .  Subject to the terms and conditions of this Agreement and, in any event, subject to Section 1.4(b) (including, without limitation, the requirement that the maximum face amount of the requested Letter of Credit is not greater than the Unused Letter of Credit Subfacility at such time), the Agent agrees (i) to cause the Letter of Credit Issuer to continue to honor its obligations under the Existing Letters of Credit and to issue for the account of a Borrower one or more additional commercial/documentary and standby letters of credit (each a “ Letter of Credit ”) unless otherwise agreed to by the Agent and the Required Lenders, limited to (x) Existing Letters of Credit, as the same may be extended, amended or modified from time to time in accordance with the terms hereof so long as the face amount thereof is not increased other than in connection with subclause (i)(y)  or the proviso below and (y) an additional amount of $150,000 of additional Letters of Credit and/or increases in the face

 

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amount of Existing Letters of Credit solely for the purpose of supporting manufacturing licensing in connection with the commencement of shipping activities into a state in which Fleetwood and the Borrowers do not presently ship and (ii) to provide credit support or other enhancement to a Letter of Credit Issuer acceptable to the Agent, which issues a Letter of Credit that complies with clause (i)  above for the account of a Borrower (any such credit support or enhancement being herein referred to as a “ Credit Support ”) from time to time during the term of this Agreement; provided that, notwithstanding the foregoing, amendments, modifications and/or increases in the face amount of Existing Letters of Credit shall be permitted to the extent mandated by a state in order to continue with workers’ compensation self insurance programs.   With respect to each Existing Letter of Credit, each shall be deemed to have been requested and issued pursuant to this Agreement, and the obligations of Section 1.4(b)  through (d)  of this Agreement shall be been deemed to have been satisfied with respect to each such Existing Letters of Credit.

 

(b)            Amounts; Outside Expiration Date .  The Agent shall not have any obligation to issue or cause to be issued any Letter of Credit or to provide Credit Support for any Letter of Credit at any time if: (i) the maximum face amount of the requested Letter of Credit is greater than the Unused Letter of Credit Subfacility at such time; (ii) the maximum undrawn amount of the requested Letter of Credit and all commissions, fees, and charges due from the Borrowers in connection with the opening thereof would exceed the Availability at such time; or (iii) the requested Letter of Credit has an expiration date less than thirty (30) days prior to the Stated Termination Date or more than twelve (12) months from the date of issuance for standby letters of credit and one hundred and eighty (180) days for documentary letters of credit.  With respect to any Letter of Credit which contains any “evergreen” or automatic renewal provision, each Lender shall be deemed to have consented to any such extension or renewal unless any Revolving Credit Lender shall have provided to the Agent written notice that it declines to consent to any such extension or renewal at least thirty (30) days (the “ Letter of Credit Lender Indication Date ”) prior to the date on which the Letter of Credit Issuer is entitled to decline to extend or renew the Letter of Credit (the “ Letter of Credit Issuer Indication Date ”).  Regardless of whether the requirements of this Section 1.4 are met and regardless of whether a Default or Event of Default has occurred and is continuing, a Lender may decline, in its sole judgment, to consent to any extension or renewal of any Letter of Credit, including, without limitation, with respect to any Letter of Credit containing “evergreen” or automatic renewal provisions.  With respect to any Letter of Credit with “evergreen” or automatic renewal provisions, upon the receipt of an instruction by the Required Lenders to not grant any extension or renewal with respect to such Letter of Credit (which instruction must be provided to the Letter of Credit Issuer at least five (5) Business Days in advance of the Letter of Credit Issuer Date and a copy of such instruction must be promptly delivered to the Borrowers), the Agent shall cause the Letter of Credit Issuer to exercise any rights to terminate such Letter of Credit, as set forth therein.

 

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(c)             Other Conditions .  In addition to conditions precedent contained in Article 8 , the obligation of the Agent to cause to be issued any Letter of Credit or to provide Credit Support for any Letter of Credit is subject to the following conditions precedent having been satisfied in a manner reasonably satisfactory to the Agent:

 

(i)             The applicable Borrower shall have delivered to the Letter of Credit Issuer, at such times and in such manner as such Letter of Credit Issuer may prescribe, an application in form and substance satisfactory to such Letter of Credit Issuer and reasonably satisfactory to the Agent for the issuance of the Letter of Credit and such other documents as may be required pursuant to the terms thereof, and the form, terms and purpose of the requested Letter of Credit shall be reasonably satisfactory to the Agent and the Letter of Credit Issuer; and

 

(ii)            As of the date of issuance, no order of any court, arbitrator or Governmental Authority shall purport by its terms to enjoin or restrain money center banks generally from issuing letters of credit of the type and in the amount of the proposed Letter of Credit, and no law, rule or regulation applicable to money center banks generally and no request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over money center banks generally shall prohibit, or request that the proposed Letter of Credit Issuer refrain from, the issuance of letters of credit generally or the issuance of the requested Letter of Credit.

 

(d)            Issuance of Letters of Credit .

 

(i)             Request for Issuance .  A Borrower must notify the Agent of a requested Letter of Credit at least three (3) Business Days prior to the proposed issuance date.  Such notice shall be irrevocable and must specify (A) the original face amount of the Letter of Credit requested, (B) the Business Day of issuance of such requested Letter of Credit, (C) whether such Letter of Credit may be drawn in a single or in partial draws, (D) the Business Day on which the requested Letter of Credit is to expire, (E) the purpose for which such Letter of Credit is to be issued, and (F) the beneficiary of the requested Letter of Credit.  The Borrower shall attach to such notice the proposed form of the Letter of Credit.

 

(ii)            Responsibilities of the Agent; Issuance .  As of the Business Day immediately preceding the requested issuance date of the Letter of Credit, the Agent shall determine the amount of the applicable Unused Letter of Credit Subfacility and the Availability.  If (A) the face amount of the requested Letter of Credit is less than the Unused Letter of Credit Subfacility and (B) the amount of such requested Letter of Credit and all commissions, fees, and charges due from the Borrower in connection with the opening thereof would not exceed the Availability, the Agent shall cause the Letter of Credit Issuer to issue the requested Letter of Credit on the requested issuance date so long as the other conditions hereof are met.

 

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(iii)           No Extensions or Amendment .  The Agent shall not be obligated to cause the Letter of Credit Issuer to extend or amend any Letter of Credit issued pursuant hereto unless the requirements of this Section 1.4 are met as though a new Letter of Credit were being requested and issued.

 

(e)             Payments Pursuant to Letters of Credit .  FMC agrees to reimburse immediately the Letter of Credit Issuer for any draw under any Letter of Credit issued for its benefit and the Agent for the account of the Revolving Credit Lenders upon any payment pursuant to any Credit Support, and to pay the Letter of Credit Issuer the amount of all other charges and fees payable to the Letter of Credit Issuer in connection with any Letter of Credit immediately when due, irrespective of any claim, setoff, defense or other right which any Borrower may have at any time against the Letter of Credit Issuer or any other Person.  Each drawing under any Letter of Credit shall constitute a request by the applicable Borrower to the Agent for a Borrowing of a Revolving Loan in the amount of such drawing.  The Funding Date with respect to such borrowing shall be the date of such drawing.

 

(f)             Indemnification; Exoneration; Power of Attorney .

 

(i)             Indemnification .  In addition to amounts payable as elsewhere provided in this Section 1.4 , each of FMC and Fleetwood agrees to protect, indemnify, pay and save the Lenders and the Agent harmless from and against any and all claims, demands, liabilities, damages, losses, costs, charges and expenses (including reasonable attorneys’ fees) which any Lender or the Agent (other than a Lender in its capacity as Letter of Credit Issuer) may incur or be subject to as a consequence, direct or indirect, of the issuance of any Letter of Credit or the provision of any Credit Support or enhancement in connection therewith.  The Borrowers’ obligations under this Section 1.4 shall survive payment of all other Obligations.

 

(ii)            Assumption of Risk by the Borrowers .  As among the Borrowers, the Lenders, and the Agent but subject to subsection (iv) below, the Borrowers assume all risks of the acts and omissions of, or misuse of any of the Letters of Credit by, the respective beneficiaries of such Letters of Credit.  In furtherance and not in limitation of the foregoing, subject to subsection (iv)  below, the Lenders and the Agent shall not be responsible for:  (A) the form, validity, sufficiency, accuracy, genuineness or legal effect of any document submitted by any Person in connection with the application for and issuance of and presentation of drafts with respect to any Letter of Credit, even if it should prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent or forged; (B) the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign any Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason; (C) the failure of the beneficiary of any Letter of Credit to comply duly with conditions required in order to draw upon such Letter of Credit; (D) errors, omissions, interruptions, or delays in transmission or

 

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delivery of any messages, by mail, cable, telegraph, telex or otherwise, whether or not they be in cipher; (E) errors in interpretation of technical terms; (F) any loss or delay in the transmission or otherwise of any document required in order to make a drawing under any Letter of Credit or of the proceeds thereof; (G) the misapplication by the beneficiary of any Letter of Credit of the proceeds of any drawing under such Letter of Credit; (H) any consequences arising from causes beyond the control of the Lenders or the Agent, including any act or omission, whether rightful or wrongful, of any present or future de jure or de facto Governmental Authority; or (I) the Letter of Credit Issuer’s honor of a draw for which the draw or any certificate fails to comply in any respect with the terms of the Letter of Credit.  None of the foregoing shall affect, impair or prevent the vesting of any rights or powers of the Agent or any Lender under this Section 1.4(f) .

 

(iii)           Exoneration .  Without limiting the foregoing, no action or omission whatsoever by the Agent or any Lender with respect to any Letter of Credit issued hereunder (excluding any Lender in its capacity as a Letter of Credit Issuer) shall result in any liability of the Agent and/or Lender to any Borrower, or relieve any Borrower of any of its obligations hereunder to any such Person.

 

(iv)           Rights Against Letter of Credit Issuer .  Nothing contained in this Agreement is intended to limit a Borrower’s rights, if any, with respect to the Letter of Credit Issuer which arise as a result of the letter of credit application and related documents executed by and between such Borrower and the Letter of Credit.

 

(v)            Account Party .  Each Borrower hereby authorizes and directs any Letter of Credit Issuer to name such Borrower as the “Account Party” therein and to deliver to the Agent all instruments, documents and other writings and property received by the Letter of Credit Issuer pursuant to the Letter of Credit, and to accept and rely upon the Agent’s instructions and agreements with respect to all matters arising in connection with the Letter of Credit or the application therefor.

 

(g)            Supporting Letter of Credit; Cash Collateral .  If, notwithstanding the provisions of Section 1.4(b)  and Section 10.1 , any Letter of Credit or Credit Support is outstanding upon the termination of this Agreement, then upon such termination FMC shall deposit with the Agent, for the ratable benefit of the Agent and the Revolving Credit Lenders, with respect to each Letter of Credit or Credit Support then outstanding, cash (“ Cash Collateral ”) or a standby letter of credit (a “ Supporting Letter of Credit ”) in form and substance satisfactory to the Agent, issued by an issuer satisfactory to the Agent, in each case in an amount equal to the greatest amount for which such Letter of Credit or such Credit Support may be drawn plus any fees and expenses associated with such Letter of Credit or such Credit Support, under which Supporting Letter of Credit the Agent is entitled to draw amounts necessary to reimburse the Agent and the Revolving Credit Lenders for payments to be made by the Agent and the Revolving Credit Lenders under

 

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such Letter of Credit or Credit Support and any fees and expenses associated with such Letter of Credit or Credit Support.  Such Supporting Letter of Credit and/or Cash Collateral shall be held by the Agent, for the ratable benefit of the Agent and the Revolving Credit Lenders, as security for, and to provide for the payment of, the aggregate undrawn amount of such Letters of Credit or such Credit Support remaining outstanding.

 

1.5            Bank Products .  A Borrower may request and the Agent may, in its sole and absolute discretion, arrange for a Borrower to obtain from the Bank or the Bank’s Affiliates Bank Products although no Borrower is required to do so.  If Bank Products so requested by a Borrower are provided by an Affiliate of the Bank, each Borrower agrees to indemnify and hold the Agent, the Bank and the Lenders harmless from any and all costs and obligations now or hereafter incurred by the Agent, the Bank or any of the Lenders which arise from any indemnity given by the Agent to its Affiliates related to such Bank Products; provided , however , nothing contained herein is intended to limit the Borrower’s rights, with respect to the Bank or its Affiliates, if any, which arise as a result of the execution of documents by and between such Borrower and the Bank which relate to Bank Products.  The agreement contained in this Section 1.5 shall survive termination of this Agreement.  Each Borrower acknowledges and agrees that the obtaining of Bank Products from the Bank or the Bank’s Affiliates (a) is in the sole and absolute discretion of the Bank or the Bank’s Affiliates, and (b) is subject to all rules and regulations of the Bank or the Bank’s Affiliates.

 

1.6            Joint and Several Obligations; Contribution Rights .

 

(a)            All Obligations of FMC shall be the joint and several Obligations of the Loan Parties, regardless of (i) which Loan Party actually receives any Loans or other extensions of credit under the Loan Documents, (ii) the amount received by any Loan Party or (iii) the manner in which any Loan Party, the Agent or any Lender accounts for such Loans and other extensions of credit.

 

(b)            To the extent that any Loan Party is a guarantor or a surety as a result of the joint and several obligations hereunder, such Obligations and the Liens securing such Obligations shall not be released or impaired by any action or inaction on the part of the Agent or any Lender which would otherwise constitute the release of a surety.  Without limiting the generality of the foregoing, the liability of any Loan Party under this Agreement shall not be affected or impaired in any manner by (i) the failure of any Person to become or remain a Loan Party or guarantor or the failure of the Agent or any Lender to preserve, protect or enforce any right to require any Person to become or remain a Loan Party or guarantor, (ii) any taking, failure to take, failure to create, perfect or ensure the priority of, or exchange, release or termination or lapse of any Lien securing any Obligations, or any taking, failure to take, release or amendment or waiver of or consent to departure from any other guaranty of, any of the Obligations, (iii) any manner or order of sale or other enforcement of any Lien securing any of the Obligations or any manner or order of application of the proceeds of any such Lien to the payment of the Obligations or any failure to enforce any Lien or to apply any proceeds thereof, (iv) any furnishing, exchange, substitution or release of any

 

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collateral securing the Obligations, or any failure to perfect any Lien in any of the collateral securing the Obligations, or (v) any other circumstance which might otherwise constitute a defense (except the final payment in full) available to, or a discharge of, a surety or guarantor.

 

(c)            To the extent that any Loan Party is a guarantor or a surety as a result of the joint and several obligations hereunder, the liability of each such Loan Party under this Agreement shall remain valid and enforceable and shall not be subject to any reduction, limitation, impairment, discharge or termination for any reason (other than final payment in full of the Obligations), including the occurrence of any of the following, whether or not such Loan Party shall have had notice or knowledge of any of them:  (i) any failure or omission to assert or enforce or agreement or election not to assert or enforce, or the stay or enjoining, by order of court, by operation of law or otherwise, of the exercise or enforcement of, any claim or demand or any right, power or remedy (whether arising under the Loan Documents, at law, in equity or otherwise) with respect to the Obligations or any agreement relating thereto, or with respect to any other guaranty of or security for the payment of the Obligations; (ii) any rescission, waiver, amendment or modification of, or any consent to departure from, any of the terms or provisions (including provisions relating to Events of Default) of this Agreement, any of the other Loan Documents or any agreement or instrument executed pursuant thereto, or of any other guaranty or security for the Obligations, in each case whether or not in accordance with the terms of this Agreement, such Loan Document or any agreement relating to such other guaranty or security; (iii) the Obligations, or any agreement relating thereto, at any time being found to be illegal, invalid or unenforceable in any respect; (iv) the application of payments received from any source to the payment of any liability other than the Obligations, even though the Lenders might have elected to apply such payment to any part or all of the Obligations; (v) any consent by any Lender or the Agent to the change, reorganization or termination of the corporate structure or existence of any other Loan Party, or any other Person and to any corresponding restructuring of the Obligations; (vi) any failure to perfect or continue perfection of a security interest in any collateral which secures any of the Obligations; (vii) any defenses (except the defense of final payment in full), set-offs or counterclaims which any Loan Party, any guarantor or any other Person may allege or assert against the Agent or any Lender in respect of the Obligations, including, for example, failure of consideration, breach of warranty, statute of frauds, statute of limitations, accord and satisfaction and usury; and (viii) any other act or thing or omission, or delay to do any other act or thing, which may or might in any manner or to any extent vary the risk of any Loan Party as an obligor in respect of the Obligations.

 

(d)            To the extent that any Loan Party is a guarantor or a surety as a result of the joint and several obligations hereunder, to the maximum extent permitted by law, each such Loan Party hereby waives and agrees not to assert or take advantage of:  (i) any defense now existing or hereafter arising based upon any legal disability or other defense of any other Loan Party or any guarantor or other Person, or by reason of the cessation or limitation of the liability of any other

 

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Loan Party or any guarantor or other Person from any cause other than full payment and performance of all obligations due under this Agreement or any of the other Loan Documents; (ii) any defense based upon any lack of authority of the officers, directors, partners or agents acting or purporting to act on behalf of any other Loan Party or any guarantor or other Person, or any defect in the formation of any other Loan Party or any guarantor or other Person; (iii) the unenforceability or invalidity of any security or guaranty or the lack of perfection or continuing perfection, or failure of priority of any security for the Obligations; (iv) any and all rights and defenses arising out of an election of remedies by the Agent or any Lender, even though that election of remedies, such as a nonjudicial foreclosure with respect to security for an Obligation, has destroyed such Loan Party’s rights of subrogation and reimbursement against the principal by the operation of Section 580d of the California Code of Civil Procedure or otherwise; (v) any defense based upon any failure to disclose to such Loan Party any information concerning the financial condition of any other Loan Party or any guarantor or other Person or any other circumstances bearing on the ability of any other Loan Party or any guarantor or other Person to pay and perform all obligations due under this Agreement or any of the other Loan Documents; (vi) any failure by the Agent or any Lender to give notice to any Loan Party or any guarantor or other Person of the sale or other disposition of security, and any defect in notice given by the Agent or any Lender in connection with any such sale or disposition of security; (vii) any failure of the Agent or any Lender to comply with applicable laws in connection with the sale or disposition of security, including, without limitation, any failure by the Lender to conduct a commercially reasonable sale or other disposition of such security; (viii) any defense based upon any statute or rule of law which provides that the obligation of a surety must be neither larger in amount nor in any other respects more burdensome than that of a principal, or that reduces a surety’s or guarantor’s obligations in proportion to the principal’s obligation; (ix) any use of Cash Collateral under Section 363 of the Bankruptcy Code; (x) any defense based upon an election by the Agent or any Lender, in any proceeding instituted under the Bankruptcy Code, of the application of Section 1111(b)(2) of the Bankruptcy Code or any successor statute; (xi) any defense based upon any borrowing or any grant of a security interest under Section 364 of the Bankruptcy Code; (xii) any right of subrogation, any right to enforce any remedy which the Agent or any Lender may have against any other Loan Party or any guarantor or other Person and any right to participate in, or benefit from, any security now or hereafter held by the Agent or any Lender for the Obligations; (xiii) presentment, demand, protest and notice of any kind, including notice of acceptance of this Agreement and of the existence, creation or incurring of new or additional Obligations; (xiv) the benefit of any statute of limitations affecting the liability of any other Loan Party or any guarantor or other Person, enforcement of this Agreement or any other Loan Documents, the liability of any Loan Party hereunder or the enforcement hereof; (xv) all notices of intention to accelerate and/or notice of acceleration of the Obligations; (xvi) relief from any applicable valuation or appraisement laws; (xvii) any other action by the Agent or any Lender, whether authorized by this Agreement or otherwise, or any omission by the Agent or any Lender or other

 

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failure of the Agent or any Lender to pursue, or delay in pursuing, any other remedy in its power; (xviii) any and all claims and/or rights of counterclaim, recoupment, setoff or offset; and (xix) any defense based upon the application of the proceeds of a Loan for purposes other than the purposes represented by the Loan Parties or intended or understood by the Agent or any Lender or any Loan Party.  Each Loan Party agrees that the payment and performance of all Obligations or any part thereof or other act which tolls any statute of limitations applicable to this Agreement or the other Loan Documents shall similarly operate to toll the statute of limitations applicable to such Loan Party’s liability hereunder.  Without limiting the generality of the foregoing or any other provision hereof, each Loan Party further waives any and all rights and defenses that such Loan Party may have because the debt of the Loan Parties is secured by real property of other Loan Parties; this means, among other things, that:  (1) the Lenders may collect from such Loan Party without first foreclosing on any real or personal property collateral pledged by any other Loan Party, (2) if the Agent or any Lender forecloses on any real property collateral pledged by any other Loan Party, then (A) the amount of the debt may be reduced only by the price for which that collateral is sold at the foreclosure sale, even if the collateral is worth more than the sale price, and (B) the Agent or any Lender may collect from such Loan Party even if the Agent or any Lender, by foreclosing on the real property collateral, has destroyed any right such Loan Party may have to collect from any other Loan Party.  The foregoing sentence is an unconditional and irrevocable waiver of any rights and defenses each Loan Party may have because the Obligations are secured by real property of any other Loan Party.  Each Loan Party acknowledges and agrees that California Civil Code Section 2856 authorizes and validates waivers of a guarantor’s rights of subrogation and reimbursement and waivers of certain other rights and defenses available to a guarantor under California law.  Based on the preceding sentence and without limiting the generality of the foregoing waivers contained in this subparagraph or any other provision hereof, each Loan Party expressly waives to the extent permitted by law any and all rights and defenses (except the defense of indefeasible final payment in full), including without limitation any rights of subrogation, reimbursement, indemnification and contribution (except contribution pursuant to this Agreement), which might otherwise be available to such Loan Party under California Civil Code Sections 2787 to 2855, inclusive, 2899 and 3433 and under California Code of Civil Procedure Sections 580a, 580b, 580d and 726 (or any of such sections), or any other jurisdiction to the extent the same are applicable to this Agreement or the agreements, covenants or obligations of any Loan Party hereunder.

 

(e)            Each Loan Party is fully aware of the financial condition of the Loan Parties, and is executing and delivering this Agreement based solely upon such Loan Party’s own independent investigation of all matters pertinent hereto and is not relying in any manner upon any representation or statement by the Agent or any Lender.  Each Loan Party hereby assumes full responsibility for obtaining any additional information concerning the financial condition of the Loan Parties or any other guarantor or their respective properties, financial condition and prospects and any other matter pertinent hereto as such Loan Party

 

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may desire, and such Loan Party is not relying upon or expecting the Agent or any Lender to furnish to such Loan Party any information now or hereafter in the possession of the Agent or any Lender concerning the same or any other matter.  By executing this Agreement, each Loan Party knowingly accepts the full range of risks encompassed within a contract of this type, which risks such Loan Party acknowledges.  No Loan Party shall have the right to require the Agent or any Lender to obtain or disclose any information with respect to the Obligations, the financial condition or prospects of any Loan Party, the ability of any Loan Party to pay or perform the Obligations, the existence, perfection, priority or enforceability of any collateral security for any or all of the Obligations, the existence or enforceability of any other guaranties of all or any part of the Obligations, any action or non-action on the part of the Agent or any Lender, any Loan Party or any other Person, or any other event, occurrence, condition or circumstance whatsoever.

 

(f)             To the extent that any Loan Party is a guarantor or a surety as a result of the joint and several obligations hereunder, the Obligations of each such Loan Party shall be limited in amount to an amount not to exceed the maximum amount of such obligations and liabilities that can be made or assumed by such Loan Party without rendering such obligation or liability void or voidable under applicable laws relating to fraudulent conveyance, fraudulent transfer or similar laws affecting the rights of creditors generally, in each case giving effect to all liabilities of such Loan Party other than any liabilities in respect of intercompany indebtedness to the extent that it would be discharged in the amount paid by such Loan Party hereunder and giving effect to all rights of subrogation, contribution, reimbursement, indemnity or similar rights pursuant to applicable law or any agreement (the “ Maximum Liability ”).

 

(g)            Each Loan Party hereby agrees that to the extent that a Loan Party makes any payment on behalf of FMC, such Loan Party shall be entitled to seek and receive contribution and indemnification from and to be reimbursed by each other Loan Party in an amount equal to a fraction of such payment, the numerator of which is the Maximum Liability of the Loan Party making the payment and the denominator of which is the Maximum Liability of all Loan Parties as of the date of determination.  Each Loan Party’s right of contribution shall be subject to the terms and conditions of Section 1.6(h) .  The provisions of this Section 1.6(g)  shall in no respect limit the obligations and liabilities of any Loan Party to the Lenders and each Loan Party shall remain liable to the Lenders for the full amount of its liabilities hereunder.

 

(h)            No Loan Party shall be entitled to be subrogated to any of the rights of the Agent or any Lender against or any other Loan Party or any collateral security or guarantee or right to offset held by the Agent or any Lender for the payment of the Obligations, nor shall any Loan Party seek or be entitled to seek any contribution or reimbursement from or any other Loan Party in respect of payments made by such Loan Party hereunder, until all amounts owing to the Agent or any Lender on account of the Obligations are paid in full, no Letter of

 

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Credit shall be outstanding and the Revolving Credit Commitments are terminated or have expired.  If any amount shall be paid to any Loan Party on account of such subrogation rights at any time not permitted hereunder, such amount shall be held by such Loan Party in trust for the Agent and the Lenders, segregated from other funds of such Loan Party, and shall, forthwith upon receipt, be turned over to the Agent in the exact form received (duly endorsed to the Agent, if required), to be applied against the Obligations, whether matured or unmatured, in such order as the Agent may determine.

 

(i)             In the event that all or any part of the Obligations at any time are secured by any one or more deeds of trust, security deeds or mortgages creating or granting Liens on any interests in Real Estate, each of the Loan Parties authorizes the Agent and the Lenders, upon the occurrence of and during the continuance of any Event of Default, at their sole option, without notice or demand and without affecting any Obligations, the enforceability of the Obligations under the Loan Documents, or the validity or enforceability of any Liens of the Agent or the Lenders on any collateral securing the Obligations, to foreclose any or all of such deeds of trust, security deeds or mortgages by judicial or nonjudicial sale, subject to compliance with the notice provisions hereof.  Insofar as the Liens created by the Loan Documents secure the Obligations of other Persons, each of the Loan Parties expressly waives, to the maximum extent permitted by applicable law, any defenses to the enforcement of the Loan Documents or any Liens created or granted by the Loan Documents or to the recovery by the Agent or the Lenders against the Borrowers, any other Loan Party or any other Person liable therefor of any deficiency after a judicial or nonjudicial foreclosure or sale, even though such a foreclosure or sale may impair the subrogation rights of such Loan Party and may preclude any of them from obtaining reimbursement or contribution from any other Person.

 

1.7            Borrowing Agency Provisions .

 

(a)            At the request of, and solely as an accommodation to, the Borrowers, the Lenders have agreed to make the Loans to, and to issue Letters of Credit for the Borrowers on a joint and several basis as co-borrowers.  In order to facilitate the co-borrowing arrangement, each Borrower hereby irrevocably designates Holdings to be its agent and attorney-in-fact for purposes of the Loan Documents, and each of them hereby irrevocably authorizes such agent in such capacity to take such actions on behalf of the applicable Borrower and to exercise such powers under this Agreement and the other Loan Documents on such Borrower’s behalf as may otherwise be exercised by such Borrower, together with such powers as are incidental thereto, including without limitation to borrow Loans, to execute and deliver Notices of Borrowing, requests for Letters of Credit, Borrowing Base Certificates and such other documents, instruments and certificates required by the Loan Documents in connection with any Borrowing or repayment of the Loans, to borrow, repay and reborrow Loans and to receive proceeds of Loans and to give all other notices and consents hereunder.  Each Borrower further irrevocably authorizes the Agent to act on all such documents,

 

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instruments and certificates delivered by Holdings as agent and attorney-in-fact, and to pay over and credit the proceeds of any Loans so requested to the Designated Account of Holdings and hereby accepts the appointment of Holdings to act as agent and attorney-in-fact for the Borrowers.  The Agent and each Lender shall be entitled to rely absolutely on the appointment and authorization of Holdings to act on behalf of the Borrowers with respect to all matters relating to this Agreement and the other Loan Documents, whether or not any provision of this Agreement or any other Loan Documents specifically provides that action may or shall be taken by Holdings on behalf of the Borrowers.  The Agent and the Lenders may give all notices to any Borrower to Holdings.  Each Borrower agrees that each notice, election, representation and warranty, covenant, agreement and undertaking made on its behalf by Holdings shall be deemed for all purposes to have been made by such Borrower and shall be binding upon and enforceable against such Borrower to the same extent as if the same had been made directly by such Borrower.

 

(b)            All Borrowers acknowledge and agree that the Borrowers are engaged in an integrated operation that requires financing on the basis of credit availability to each Borrower, that the co-borrowing arrangement has been established at the request of the Borrowers, and that each Borrower expects to derive, directly or indirectly, benefit from such credit availability to the other Borrowers.  Neither the Agent nor the Letter of Credit Issuer nor any Lender shall incur any liability to Borrowers or any other Loan Party as a result of the co-borrowing arrangement established by this Agreement and shall not have any liability or responsibility to the Borrowers to inquire into the allocation, apportionment or use of the proceeds of any Loans or extensions of credit hereunder.  To induce the Agent, the Letter of Credit Issuer and the Lenders to establish this co-borrowing arrangement and in consideration thereof, each Borrower hereby indemnifies the Agent, the Letter of Credit Issuer and the Lenders, and their respective successors and assigns, and agrees to hold each of them harmless from any and all liabilities, expenses, losses, damages and claims asserted against them by any Person arising from or incurred by reason of the handling of the financing arrangements of the Borrowers as provided in this Agreement, any reliance by the Agent, the Letter of Credit Issuer or any Lender on any document, request or instruction given by the agents designated by the Borrowers herein to act on their behalf or any other action taken by the Agent, the Letter of Credit Issuer or the Lenders with respect to the co-borrowing arrangement; provided , however , that no Borrower shall have an obligation to indemnify any of the Agent, the Letter of Credit Issuer or any Lender under this Section 1.7 with respect to any liabilities finally determined by a court of competent jurisdiction to have resulted primarily from the gross negligence or willful misconduct of such indemnified party.  The agreements of the Borrowers contained in this Section 1.7 shall survive payment of all other Obligations.

 

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1.8            Senior Indebtedness .  All Obligations of Fleetwood under this Agreement and the other Loan Documents, and all rights of contribution, indemnity, subrogation and reimbursement relating to the Obligations of any Loan Party with respect to Fleetwood, are “Senior Indebtedness” under the 2003 Subordinated Debentures.  All Obligations of Fleetwood under this Agreement and the other Loan Documents to the extent such Obligations are (A) liabilities of Fleetwood for borrowed money or under any reimbursement obligation relating to a letter of credit, surety bond or similar instrument, or (B) liabilities of Fleetwood evidenced by a bond, note, debenture or similar instrument, or (C) liabilities of others described in the preceding clauses (A)  and (B)  that Fleetwood has guaranteed or that are otherwise its legal liability, or (D) deferrals renewals, extensions or refundings of any liability of the types referred to in clauses (A) , (B)  and (C)  above, are “Senior Indebtedness” under the 1998 Subordinated Debentures and Fleetwood’s guaranty of the Trust Securities.  All Obligations of Fleetwood and its Subsidiaries under this Agreement and the other Loan Documents, and all rights of contribution, indemnity, subrogation and reimbursement relating to the Obligations of any Loan Party with respect to Fleetwood and any other Obligations of Fleetwood and its Subsidiaries secured by any Loan Documents (including, without limitation, all debts, liabilities and obligations now or hereafter arising from or in connection with Bank Products), (i) are “Senior Debt” and “Designated Senior Debt” under the 2008 Senior Secured Debentures and “Priority Lien Debt” under the 2008 Intercreditor Agreement and (ii) were permitted by the indenture governing the 2008 Senior Secured Debentures and the 2008 Intercreditor Agreement to be incurred and secured under and pursuant to the Loan Documents.

 

ARTICLE 2

INTEREST AND FEES

 

2.1            Interest .

 

(a)            Interest Rates.   All outstanding Revolving Loans shall bear interest on the unpaid principal amount thereof (including, to the extent permitted by law, on interest thereon not paid when due) from the date made until paid in full in cash at a rate determined by reference to the Base Rate plus the Applicable Margin, but not to exceed the Maximum Rate.  Except as otherwise provided herein, the principal amount of all other outstanding Obligations shall bear interest from the due date thereof until paid in full at a fluctuating per annum rate equal to the Base Rate plus the Applicable Margin.  Each change in the Base Rate shall be reflected in the interest rate applicable to Base Rate Loans as of the effective date of such change.  All interest charges shall be computed on the basis of a year of three hundred and sixty (360) days and actual days elapsed (which results in more interest being paid than if computed on the basis of a three hundred and sixty-five (365)-day year).  The applicable Borrowers shall pay to the Agent, for the ratable benefit of the applicable Lenders, interest accrued on all Base Rate Loans in arrears on the first day of each month hereafter and on the Termination Date.

 

(b)            Default Rate .  If any Default or Event of Default occurs and is continuing and the Agent or the Required Lenders in their discretion so elect, then, without further notice, motion or application to, hearing before, or order from the Bankruptcy Court, from the date that the Agent gives written notice to Holdings of the Agents’ or the Required Lenders’ election and so long as such Default or Event of Default is continuing, all of the Obligations shall bear interest at the Default Rate applicable thereto to the fullest extent permitted by applicable law.

 

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2.2            [RESERVED].

 

2.3            Maximum Interest Rate .  In no event shall any interest rate provided for hereunder exceed the maximum rate legally chargeable by any Lender under applicable law for such Lender with respect to loans of the type provided for hereunder (the “ Maximum Rate ”).  If, in any month, any interest rate, absent such limitation, would have exceeded the Maximum Rate, then the interest rate for that month shall be the Maximum Rate, and, if in future months, that interest rate would otherwise be less than the Maximum Rate, then that interest rate shall remain at the Maximum Rate until such time as the amount of interest paid hereunder equals the amount of interest which would have been paid if the same had not been limited by the Maximum Rate.  In the event that, upon payment in full of the Obligations, the total amount of interest paid or accrued under the terms of this Agreement is less than the total amount of interest which would, but for this Section 2.3 , have been paid or accrued if the interest rate otherwise set forth in this Agreement had at all times been in effect, then the Borrowers shall, to the extent permitted by applicable law, pay the Agent, for the account of the Lenders, an amount equal to the excess of (a) the lesser of (i) the amount of interest which would have been charged if the Maximum Rate had, at all times, been in effect or (ii) the amount of interest which would have accrued had the interest rate otherwise set forth in this Agreement, at all times, been in effect over (b) the amount of interest actually paid or accrued under this Agreement.  If a court of competent jurisdiction determines that the Agent and/or any Lender has received interest and other charges hereunder in excess of the Maximum Rate, such excess shall be deemed received on account of, and shall automatically be applied to reduce, the Obligations other than interest, in the inverse order of maturity, and if there are no Obligations outstanding, the Agent and/or such Lender shall refund to the applicable Borrower(s) such excess.

 

2.4            Closing Fee .  The Borrowers, jointly and severally, agree to pay the Agent on the Closing Date a closing fee (the “ Closing Fee ”) as set forth in the Fee Letter.  The Borrowers hereby authorize the Agent to charge the Loan Account in an amount equal to the Closing Fee set forth in such Fee Letter.

 

2.5            Unused Line Fee .  On the first day of each month and on the Termination Date the Borrowers, jointly and severally, agree to pay to the Agent, for the account of the Revolving Credit Lenders, in accordance with their respective Pro Rata Shares, an unused line fee (the “ Unused Line Fee ”) equal to one half of one percent (0.5%) per annum times the amount by which the Maximum Amount exceeded the sum of the average daily outstanding amount of Revolving Loans and the average daily undrawn face amount of outstanding Letters of Credit, during the immediately preceding month or shorter period if calculated for the first month hereafter or on the Termination Date.  The Unused Line Fee shall be computed on the basis of a 360-day year for the actual number of days elapsed.  All principal payments received by the Agent shall be deemed to be credited to the applicable Borrowers’ Loan Account immediately upon receipt for purposes of calculating the Unused Line Fee pursuant to this Section 2.5 .

 

2.6            Letter of Credit Fee .  FMC agrees to pay (a) to the Agent, for the account of the Revolving Credit Lenders, in accordance with their respective Pro Rata Shares, for each Letter of Credit, a fee (the “ Letter of Credit Fee ”) equal to six percent (6.0%) per annum times the undrawn face amount of each Letter of Credit, (b) to the Agent for the benefit of the Letter of Credit Issuer a fronting fee of one-eighth of one percent (0.125%) per annum of the undrawn

 

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face amount of each Letter of Credit, and (c) to the Letter of Credit Issuer, all out-of-pocket costs, fees and expenses incurred by the Letter of Credit Issuer in connection with the application for, processing of, issuance of, or amendment to any Letter of Credit.  The Letter of Credit Fee shall be payable monthly in arrears on the first day of each month following any month in which a Letter of Credit is outstanding and on the Termination Date.  The Letter of Credit Fee shall be computed on the basis of a three hundred and sixty (360)-day year for the actual number of days elapsed.

 

2.7            Agency Fee .  The Borrowers, jointly and severally, agree to pay the Agent an administrative agency fee (the “ Agency Fee ”) as set forth in the Fee Letter.  The Borrowers hereby authorize the Agent to charge the Loan Account in an amount equal to the Agency Fee set forth in such Fee Letter.

 

ARTICLE 3

PAYMENTS AND PREPAYMENTS

 

3.1            [RESERVED].

 

3.2            Termination of Facility .  The Borrowers may terminate this Agreement upon at least thirty (30) days’ notice to the Agent and the Lenders, upon (a) the payment in full in cash of all outstanding Revolving Loans, together with accrued interest thereon, and the cancellation and return of all outstanding Letters of Credit (or the provision of Cash Collateral or a Supporting Letter of Credit in accordance with Section 1.4(g)  above), and (b) the payment in full in cash of all reimbursable expenses and other Obligations.

 

3.3            Reduction or Termination of Revolving Loan Commitments .

 

(a)            The Borrowers shall have the right, upon not less than three (3) Business Days’ prior written notice to the Agent, to terminate in whole or from time to time permanently reduce in part the unused portion of the Revolving Loan Commitments; provided , that after giving effect thereto and to any prepayments of the Revolving Loans made on the effective date thereof, the Aggregate Revolver Outstandings would not exceed the aggregate Revolving Loan Commitments then in effect.  Any notice of termination given by Borrowers shall be irrevocable.

 

(b)            The Agent will promptly notify the Revolving Credit Lenders of any reduction in the Revolving Loan Commitments under this Section 3.3 .  Upon any reduction of the Revolving Loan Commitments, the Revolving Loan Commitment of each Revolving Credit Lender shall be reduced by such Revolving Credit Lender’s Pro Rata Share of such reduction amount.

 

3.4            Repayment and Prepayment of the Revolving Loans; Reduction of Maximum Real Estate Loan Amount; Reduction of Maximum Amount .

 

(a)            FMC shall repay the outstanding principal balance of the Revolving Loans made to it, plus all accrued but unpaid interest thereon, on the Termination Date.  Any Borrower may prepay Revolving Loans at any time and from time to time in whole or in part, and reborrow subject to the terms of this Agreement.  In

 

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addition, and without limiting the generality of the foregoing, upon demand FMC shall pay to the Agent, for account of the Revolving Credit Lenders, the amount, without duplication, by which the Aggregate Revolver Outstanding exceeds the lesser of the Borrowing Base or the Maximum Amount.

 

(b)            Immediately upon receipt by any Loan Party of proceeds of any disposition of Mortgaged Property, (i) FMC shall repay the Revolving Loans in an amount equal to the lesser of (x) the Modified Net Proceeds of the sale of such Mortgaged Property and (y) the aggregate principal amount of the then outstanding Revolving Loans and (ii) the Maximum Real Estate Loan Amount (for the avoidance of doubt, the amount applicable both prior to or following the entry by the Bankruptcy Court of the Bidding Procedures Order) shall be permanently reduced by an amount equal to the sum of (X) the amount, if any, attributed to such Mortgaged Property in the calculation of the Borrowing Base at the time of its sale and (Y) twenty five percent (25%) of the excess of (I) the Modified Net Proceeds of the sale of such Mortgaged Property (or, in the case of a disposition of any Mortgaged Property as a portion of the assets disposed of in a disposition made in accordance with the Bidding Procedures Order, the appraised value (used in calculation of the most recent Borrowing Base) of such Mortgaged Property), over (II) the amount attributed to such Mortgaged Property in the calculation of the Borrowing Base.

 

(c)            Immediately upon any receipt by any Loan Party of proceeds of any disposition of any assets (excluding with respect to (i) Mortgaged Property, (ii) assets or other property received in exchange for any Equipment sold, traded-in or exchanged pursuant to Section 7.9(b)  hereof and (iii) Inventory sold in the ordinary course of business), the Borrowers shall repay the Revolving Loans in an amount equal to all proceeds of such dispositions, net of (A) commissions and other customary transaction costs, fees and expenses properly attributable to such transaction and payable by a Loan Party in connection therewith (other than any amounts payable to any Affiliate), (B) transfer taxes, (C) amounts payable to holders of senior Liens (to the extent that such Liens are Permitted Liens), if any and (D) an appropriate reserve for income taxes in accordance with GAAP in connection therewith (the “ Net Proceeds ”), but without reduction of the Revolving Credit Commitments.

 

(d)            Following the sale of any Mortgaged Property or at any other time, in the event that the maximum amount of Debt that may be incurred hereunder from time to time that is permitted by the 2008 Senior Secured Debentures (without regard to that portion of any maximum amount calculated by reference to the Borrowing Base and without regard to any separate “carve-outs” or “caps” on Obligations under Bank Products or Hedge Agreements set forth therein) is reduced in accordance with the terms of the 2008 Senior Secured Debentures and, thereafter, such maximum amount does not exceed the Maximum Amount by seven million five hundred thousand Dollars ($7,500,000) (the amount of such deficiency, the “ Senior Cap Deficiency Amount ”), the Borrowers shall immediately repay the Revolving Loans (and the Maximum Amount shall be permanently reduced) in an amount equal to the Senior Cap Deficiency Amount.

 

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(e)            In addition to the requirements of Sections 3.4(b) and 3.4(c)  above, in the event that all or substantially all of either the Manufactured Homes Division or the Motor Homes Division (but not, for the avoidance of doubt, the Fleetwood Travel Trailers Division) is disposed of, then, immediately upon receipt by any Loan Party of proceeds of any such disposition, (a) the Maximum Amount shall be permanently reduced by an amount equal to (i) the aggregate amount attributed to the Eligible Accounts, Eligible Inventory and Real Estate Subfacility Assets included in the calculation of the Borrowing Base at the time of such sale which were disposed of in connection with such disposition less (ii) the face amount of all Letters of Credit mandated by a state with respect to such division’s workers’ compensation self insurance programs which remain outstanding as Obligations of the remaining Loan Parties under this Credit Agreement after giving effect to such disposition, but only if and for so long as such Letters of Credit remain outstanding and are cash collateralized with the proceeds of such disposition in an amount equal to one hundred five percent (105%) of the undrawn face amount thereof (it being understood and agreed that the Maximum Amount will be further reduced from time to time to extent such Letters of Credit no longer remain outstanding or are no longer so cash collateralized) , and (b) the Unused Letter of Credit Subfacility shall be permanently reduced by any amount equal to the aggregate face amount of Letters of Credit that no longer remain outstanding under this Credit Agreement after giving effect to such disposition .

 

(f)             No provision contained in this Section 3.4 shall constitute a consent to an asset disposition that is otherwise not permitted by the terms of this Agreement.

 

3.5            [RESERVED].

 

3.6            Payments by the Borrowers .

 

(a)            All payments to be made by the Borrowers shall be made without set-off, recoupment or counterclaim.  Except as otherwise expressly provided herein, all payments by the Borrowers shall be made to the Agent for the account of the Revolving Credit Lenders at the account designated by the Agent and shall be made in Dollars and in immediately available funds, no later than 12:00 noon (Los Angeles time) on the date specified herein.  Any payment received by the Agent after such time shall be deemed (for purposes of calculating interest only) to have been received on the following Business Day and any applicable interest shall continue to accrue during such extension.

 

(b)            Whenever any payment is due on a day other than a Business Day, such payment shall be due on the following Business Day, and such extension of time shall in such case be included in the computation of interest or fees, as the case may be.

 

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3.7            Payments as Revolving Loans .  At the election of the Agent, all payments of principal of or interest on the Revolving Loans, reimbursement obligations in connection with Letters of Credit and Credit Support for Letters of Credit, fees, premiums, reimbursable expenses and other sums and Obligations payable hereunder may be paid from the proceeds of Revolving Loans made hereunder.  Each Loan Party hereby irrevocably authorizes the Agent to charge the applicable Loan Account for the purpose of paying all amounts from time to time due from FMC or any Loan Party hereunder, under any other Loan Document or under the Applicable Order and agrees that all such amounts charged shall constitute Revolving Loans (including Non-Ratable Loans and Agent Advances).

 

3.8            Apportionment, Application and Reversal of Payments .  Principal and interest payments shall be apportioned ratably among the Lenders (according to the unpaid principal balance of the Loans to which such payments relate held by each Lender).  All payments shall be remitted to the Agent and all such payments not relating to principal or interest of specific Loans, or not constituting payment of specific fees, and all proceeds of Accounts, or other Collateral received by the Agent, shall be applied, ratably, subject to the provisions of this Agreement, first , to pay any fees, indemnities, or expense reimbursements (other than amounts related to Bank Products) then due to the Agent or the Lenders from the Borrowers; second , to pay interest due from such Borrower in respect of all Loans, including Non-Ratable Loans and Agent Advances; third , to pay or prepay principal of the Non-Ratable Loans and Agent Advances owed by the Borrowers; fourth , to pay or prepay principal of the Revolving Loans (other than Non-Ratable Loans and Agent Advances) and unpaid reimbursement obligations in respect of Letters of Credit; fifth , if an Event of Default has occurred and is continuing to pay an amount to the Agent equal to all outstanding Letter of Credit Obligations of the Borrowers to be held as Cash Collateral for such Obligations; sixth , to the payment of any other Obligation (other than amounts related to Bank Products) due to the Agent or any Lender by the Borrowers and seventh , to pay any fees, indemnities or expense reimbursements related to Bank Products due to the Agent from the Borrowers.  Upon the occurrence and during the continuation of an Event of Default and, prior thereto in order to correct any error, the Agent and the Lenders shall have the continuing and exclusive right to apply and reverse and reapply any and all such proceeds and payments to any portion of the Obligations.  Notwithstanding any provision contained in this Section 3.8 , in the event of any conflict between this Agreement and the Applicable Order, the terms and provisions of the Applicable Order shall control and govern.

 

3.9            Indemnity for Returned Payments .  If after receipt of any payment which is applied to the payment of all or any part of the Obligations, the Agent, any Lender, the Bank or any Affiliate of the Bank is for any reason compelled to surrender such payment or proceeds to any Person because such payment or application of proceeds is invalidated, declared fraudulent, set aside, determined to be void or voidable as a preference, impermissible setoff, or a diversion of trust funds, or for any other reason, then the Obligations or part thereof intended to be satisfied shall be revived and continued and this Agreement shall continue in full force as if such payment or proceeds had not been received by the Agent, such Lender, the Bank or any Affiliate of the Bank and the Borrowers shall be liable to pay to the Agent and the Lenders, and hereby indemnify the Agent and the Lenders and hold the Agent and the Lenders harmless for the amount of such payment or proceeds surrendered.  The provisions of this Section 3.9 shall be and remain effective notwithstanding any contrary action which may have been taken by the Agent or any Lender, the Bank or any Affiliate of the Bank in reliance upon such payment or

 

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application of proceeds, and any such contrary action so taken shall be without prejudice to the Agent’s and the Lenders’ rights under this Agreement and shall be deemed to have been conditioned upon such payment or application of proceeds having become final and irrevocable.  The provisions of this Section 3.9 shall survive the termination of this Agreement.

 

3.10          The Agent’s and Lenders’ Books and Records; Monthly Statements .  The Agent shall record the principal amount of the Loans owing to each Lender, the undrawn face amount of all outstanding Letters of Credit and the aggregate amount of unpaid reimbursement obligations outstanding with respect to the Letters of Credit from time to time on its books.  In addition, each Lender may note the date and amount of each payment or prepayment of principal of such Lender’s Loans in its books and records.  Failure by the Agent or any Lender to make such notation shall not affect the obligations of the applicable Borrower with respect to the Loans or the Letters of Credit.  Each Borrower agrees that the Agent’s and each Lender’s books and records showing the Obligations and the transactions pursuant to this Agreement and the other Loan Documents shall be admissible in any action or proceeding arising therefrom, and shall constitute rebuttably presumptive proof thereof, irrespective of whether any Obligation is also evidenced by a promissory note or other instrument.  The Agent will provide to the Borrowers a monthly statement of Loans, payments, and other transactions pursuant to this Agreement.  Such statement shall be deemed correct, accurate, and binding on the Borrowers and an account stated (except for reversals and reapplications of payments made as provided in Section 3.8 and corrections of errors discovered by the Agent), unless the Borrowers notify the Agent in writing to the contrary within thirty (30) days after such statement is rendered.  In the event a timely written notice of objections is given by the Borrowers, only the items to which exception is expressly made will be considered to be disputed by the Borrowers.

 

ARTICLE 4

TAXES, YIELD PROTECTION, ILLEGALITY AND SUPER-PRIORITY

 

4.1            Taxes .

 

(a)            Any and all payments by the Borrowers to each Lender or the Agent under this Agreement and any other Loan Document shall be made free and clear of, and without deduction or withholding for any Taxes.  In addition, the Borrowers shall pay all Other Taxes in accordance with applicable law.

 

(b)            Each Borrower agrees to indemnify and hold harmless each Lender and the Agent for the full amount of Taxes or Other Taxes (including any Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this Section 4.1 ) paid by any Lender or the Agent and any liability (including penalties, interest, additions to tax and expenses) arising therefrom or with respect thereto, whether or not such Taxes or Other Taxes were correctly or legally asserted.  Payment under this indemnification shall be made within thirty (30) days after the date such Lender or the Agent makes written demand therefor.

 

(c)            If a Borrower shall be required by law to deduct or withhold any Taxes or Other Taxes from or in respect of any sum payable hereunder to any Lender or the Agent, then:

 

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(i)             the sum payable shall be increased as necessary so that after making all required deductions and withholdings (including deductions and withholdings applicable to additional sums payable under this Section 4.1 ) such Lender or the Agent, as the case may be, receives an amount equal to the sum it would have received had no such deductions or withholdings been made;

 

(ii)            such Borrower shall make such deductions and withholdings;

 

(iii)           such Borrower shall pay the full amount deducted or withheld to the relevant taxing authority or other authority in accordance with applicable law; and

 

(iv)           such Borrower shall also pay to each Lender or the Agent for the account of such Lender, at the time interest is paid, all additional amounts which the respective Lender specifies as necessary to preserve the after-tax yield such Lender would have received if such Taxes or Other Taxes had not been imposed.

 

(d)            At the Agent’s request, within thirty (30) days after the date of any payment by a Borrower of Taxes or Other Taxes, such Borrower shall furnish the Agent the original or a certified copy of a receipt evidencing payment thereof, or other evidence of payment satisfactory to the Agent.  If any Borrower determines in good faith that a reasonable basis exists for contesting any Taxes or Other Taxes, at the request of such Borrower, the relevant Lender shall cooperate with such Borrower in challenging such Tax or Other Tax at such Borrower’s expense (but shall have no obligation to disclose any confidential information with respect to such Lender).  No Lender shall have any obligation to contest any Tax or Other Tax, except to cooperate with the Borrowers in any contest requested by a Borrower as provided herein.  If any Lender becomes aware that it has received a refund for any Tax or Other Tax for which a payment has been made to it by the Borrowers under this Section 4.1 , which in the good faith judgment of such Lender is allocable to such payment, the amount of such refund shall be paid to the applicable Borrower(s) to the extent that such Borrower(s) have paid in full the payments required by this Section 4.1 .

 

(e)            If a Borrower is required to pay additional amounts to any Lender or the Agent pursuant to subsection (c) of this Section 4.1 , then such Lender shall use reasonable efforts (consistent with legal and regulatory restrictions) to change the jurisdiction of its lending office so as to eliminate any such additional payment by such Borrower which may thereafter accrue, if such change in the judgment of such Lender is not otherwise disadvantageous to such Lender.

 

4.2            [RESERVED].

 

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4.3            Increased Costs and Reduction of Return .  If any Lender shall have determined that (i) the introduction of any Capital Adequacy Regulation, (ii) any change in any Capital Adequacy Regulation, (iii) any change in the interpretation or administration of any Capital Adequacy Regulation by any central bank or other Governmental Authority charged with the interpretation or administration thereof, or (iv) compliance by such Lender or any corporation or other entity controlling such Lender with any Capital Adequacy Regulation, affects or would affect the amount of capital required or expected to be maintained by such Lender or any corporation or other entity controlling such Lender and (taking into consideration such Lender’s or such corporation’s or other entity’s policies with respect to capital adequacy and such Lender’s desired return on capital) determines that the amount of such capital is increased as a consequence of its Revolving Credit Commitments, Loans, credits or obligations under this Agreement, then, promptly upon demand of such Lender to the Borrowers through the Agent, the Borrowers shall pay to such Lender, from time to time as specified by such Lender, additional amounts sufficient to compensate such Lender for such increase.

 

4.4            Funding Losses .  FMC shall reimburse each Revolving Credit Lender and hold each Revolving Credit Lender harmless from any loss or expense which such Lender may sustain or incur as a consequence of the failure of the applicable Borrower(s) to borrow a Loan after such Borrower has given (or is deemed to have given) a Notice of Borrowing.  The Borrowers shall also pay any customary administrative fees charged by any Lender in connection with the foregoing.

 

4.5            [RESERVED].

 

4.6            Certificates of the Agent .

 

(a)            If any Lender claims reimbursement or compensation under this Article 4 (an “ Affected Lender ”), the Agent shall determine the amount thereof and shall deliver to the Borrowers (with a copy to the Affected Lender) a certificate setting forth in reasonable detail the amount payable to the Affected Lender, and such certificate shall be conclusive and binding on the Borrowers in the absence of manifest or demonstrable error.

 

(b)            Without limiting its obligations to reimburse an Affected Lender for compensation theretofore claimed by an Affected Lender pursuant to this Article 4 , Borrowers may, within sixty (60) days following any demand by an Affected Lender, request that one or more Persons that are Eligible Assignees and that are approved by the Agent (which approval shall not be unreasonably withheld) purchase all (but not part) of the Affected Lender’s then outstanding Loans, and assume its Pro Rata Share of the Revolving Credit Commitments and its obligations hereunder; provided that such request may not be made, and the Agent and the Lenders shall have no obligations under this Section 4.6(b ), if and to the extent that the basis for any such reimbursement or compensation with respect to such Affected Lender is, in the judgment of the Agent, applicable to the Required Lenders or has resulted or could reasonably be expected to result in any claim for reimbursement or compensation under this Article 4 by the Required Lenders.  If one or more such Eligible Assignees so agree in writing (each, an “ Assuming Lender ,” and collectively, the “ Assuming Lenders ”), the Affected Lender shall assign its Pro Rata Share of the Revolving Credit Commitments, together with the

 

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outstanding Revolving Loans, to the Assuming Lender or Assuming Lenders in accordance with Section 11.2 .  On the date of any such assignment, the Affected Lender which is being so replaced shall cease to be a “Lender” for all purposes of this Agreement and shall receive (x) from the Assuming Lender or Assuming Lenders the principal amount of its outstanding Loans and (y) from Borrowers all interest and fees accrued and then unpaid with respect to such Loans, together with any other amounts then payable to such Lender by Borrowers.

 

4.7            Super Priority Nature of Obligations and Lenders’ Liens .

 

(a)            All Obligations shall constitute administrative expenses of the Loan Parties in the Chapter 11 Cases, with administrative priority and senior secured status under Sections 364(c) and 364(d) of the Bankruptcy Code as set forth in the Interim Order and the Final Order.  The adequate protection Liens granted to the Bank on behalf of itself and the Existing Lenders under the Third Amended and Restated Credit Agreement shall be rolled up and replaced with the Liens granted in connection with this Agreement and in each case such Liens shall be subject to the Carve-Out and the Exceptions as provided herein.

 

(b)            Subject to the Carve-Out and any other amounts expressly provided for in the Interim Order and the Final Order, the administrative claim in connection with the Obligations shall have priority over all other costs and expenses of the kinds specified in, or ordered pursuant to, Sections 105, 326, 328, 330, 331, 503(b), 506(c), 507(a), 507(b), 546(c), 726, 1114 or any other provision of the Bankruptcy Code or otherwise, and shall at all times be senior to the rights of the Loan Parties, the Loan Parties’ estates, and any successor trustee or estate representative in the Chapter 11 Cases or any subsequent proceeding or case under the Bankruptcy Code.  The Liens granted to the Lenders on the Collateral owned by the Loan Parties, and the priorities accorded to the Obligations shall have the priority and senior secured status afforded by Sections 364(c) and 364(d)(l) of the Bankruptcy Code (all as more fully set forth in the Interim Order and Final Order) senior to all claims and interests (including, without limitation, the Trust Estate Liens) other than the Exceptions.  All of the Liens granted to the Agent on behalf of itself and on behalf of the Existing Lenders with respect to the Third Amended and Restated Credit Agreement (including, without limitation, the adequate protection liens granted to the Agent on behalf of itself and on behalf of the Existing Lenders (together with all Obligations (as defined in the Third Amended and Restated Credit Agreement), including, without limitation, all indemnity, reimbursement and other contingent obligations under the Third Amended and Restated Credit Agreement that may or may not yet have been identified or asserted)) shall be rolled up and replaced with the Liens granted in connection with this Agreement and, in each case, such Liens and contingent obligations shall be subject to the Carve-Out and the Exceptions.

 

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(c)           The Agent’s Liens on the Collateral owned by the Loan Parties and the Agent’s and the Lenders’ respective administrative claims under Sections 364(c)(l) and 364(d) of the Bankruptcy Code afforded the Obligations shall also have priority over any claims arising under Section 506(c) of the Bankruptcy Code subject and subordinate only to (i) the Carve-Out and (ii) the Exceptions; provided , that the Carve-Out shall not include any fees and disbursements for the investigation of, preparation for, or commencement or prosecution of, any claims or proceedings against (x) the Agent or the Lenders or their claims or security interests in or Liens on, the Collateral whether under this Agreement or any other Loan Document and (y) any agent or lender under the Third Amended and Restated Credit Agreement or their claims or security interests in connection with the Third Amended and Restated Credit Agreement or any of the loan documents or instruments entered into in connection therewith other than fees or disbursements of the Committee in connection with such an investigation in an amount not to exceed ten thousand Dollars $(10,000).  Any payment or reimbursement made either directly by the Agent or any Lender at any time, or by or on behalf of the Debtors on or after the occurrence of an Event of Default or the Termination Date, in respect of any Post-Trigger Claims shall permanently reduce the Carve-Out Cap on a dollar-for-dollar basis.  The Agent’s and the Lenders’ obligation to fund or otherwise pay any fees or expenses under the Carve-Out shall be added to and made a part of the Obligations, secured by the Collateral, and entitle the Agent and the Lenders to all of the rights, claims, liens, priorities and protections under this Applicable Order, the Loan Documents, the Bankruptcy Code or applicable law.  Payment of any fees or expenses under the Carve-Out, whether by or on behalf of the Agent or any Lender, shall not and shall not be deemed to reduce the Obligations, and shall not and shall not be deemed to subordinate any of the Agent’s and the Lenders’ liens and security interests in the Collateral or their Superpriority Claims (as defined in the Applicable Order) to any junior pre- or post-petition lien, interest or claim in favor of any other party.  Except as otherwise provided herein with respect to the Carve-Out, the Agent and the Lenders shall not, under any circumstance, be responsible for the direct payment or reimbursement of any fees or disbursements of any professionals incurred in connection with the Chapter 11 Cases under any chapter of the Bankruptcy Code, and nothing in this Interim Order shall be construed to obligate the Agent or any Lender in any way, to pay compensation to or to reimburse expenses of any professional, or to ensure that the Borrowers have sufficient funds to pay such compensation or reimbursement.

 

(d)           Except as set forth herein or in the Final Order, no other claim having a priority superior or pari passu to that granted to the Agent and the Lenders by the Final Order shall be granted or approved while any Obligations under this Agreement remain outstanding.  Except for the Carve-Out, no costs or expenses of administration shall be imposed against the Agent, the Lenders or any of the Collateral or the Agent and any of the Lenders under the Third Amended and Restated Credit Agreement or the Collateral (as defined in the Third Amended and Restated Credit Agreement) under Sections 105, 506(c) or 552 of the Bankruptcy Code, or otherwise, and each of the Borrowers hereby waives for itself and on behalf of its estate in bankruptcy, any and all rights under Sections 105, 506(c) or 552, or otherwise, to assert or impose or seek to assert or impose, any such costs or expenses of administration against the Agent or the Lenders or the Agent or the Lenders under the Third Amended and Restated Credit Agreement.

 

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4.8         Payment of Obligations .  Upon the maturity (whether by acceleration or otherwise) of any of the Obligations under this Agreement or any of the other Loan Documents, the Lenders shall be entitled to immediate payment of such Obligations without further application to or order of the Bankruptcy Court.

 

4.9         No Discharge; Survival of Claims .  Each Loan Party agrees that (a) the Obligations (and all liens securing such Obligations) hereunder shall not be discharged or released by the entry of an order confirming a plan of reorganization in any Chapter 11 Case (and each Loan Party pursuant to Section 1141(d)(4) of the Bankruptcy Code, hereby waives any such discharge or release) and (ii) the super-priority administrative claim granted to the Agent and the Lenders pursuant to the Interim Order and Final Order and described in Section 4.7 , and the Liens granted to the Agent pursuant to the Interim Order and Final Order and described in Section 4.7 , shall not be affected in any manner by the entry of an order confirming a plan of reorganization in any Chapter 11 Case, upon any conversion to a case under Chapter 7 of the Bankruptcy Code, or upon dismissal of any bankruptcy case.

 

4.10       Release .  Each Loan Party hereby acknowledges, effective upon entry of the Final Order, that the Loan Parties and any of their Subsidiaries have no defense, counterclaim, offset, recoupment, cross-complaint, claim or demand of any kind or nature whatsoever that can be asserted to reduce or eliminate all or any part of the Loan Parties’ or their Subsidiaries’ liability to repay the Agent or any Lender as provided in this Agreement or in the Third Amended and Restated Credit Agreement or to seek affirmative relief or damages of any kind or nature from the Agent or any Lender.  The Loan Parties, on behalf of their bankruptcy estates, and on behalf of all their successors, assigns, Subsidiaries and any Affiliates and any Person acting for and on behalf of, or claiming through them, hereby fully, finally and forever releases and discharges the Agent and the Lenders and all of the Agent’s and the Lenders’ past and present officers, directors, servants, agents, attorneys, other professionals, assigns, heirs, parents, subsidiaries, and each Person acting for or on behalf of any of them (collectively, the “ Released Parties ”) of and from any and all actions, causes of action, demands, suits, claims, liabilities, Liens, lawsuits, adverse consequences, amounts paid in settlement, costs, damages, debts, deficiencies, diminution in value, disbursements, expenses, losses and other obligations of any kind or nature whatsoever, whether in law, equity or otherwise (including, without limitation, those arising under Sections 541 through 550 of the Bankruptcy Code and interest or other carrying costs, penalties, legal, accounting and other professional fees and expenses, and incidental, consequential and punitive damages payable to third parties), whether known or unknown, fixed or contingent, direct, indirect, or derivative, asserted or unasserted, foreseen or unforeseen, suspected or unsuspected, existing on or prior to the Closing Date against any of the Released Parties, whether held in a personal or representative capacity, and which are based on any act, fact, event or omission or other matter, cause or thing occurring at or from any time prior to and including the date hereof in any way, directly or indirectly arising out of, connected with or relating to this Agreement, the Interim Order, the Final Order, the transactions contemplated thereby, the Third Amended and Restated Credit Agreement and the transactions contemplated thereby, the parties’ Prepetition and Postpetition relationship, and all other agreements, certificates, instruments and other documents and statements (whether written or oral) related to any of the foregoing.

 

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4.11       Waiver of any Priming Rights .  Upon the Closing Date, and on behalf of themselves and their estates, and for so long as any Obligations shall be outstanding, each Loan Party hereby irrevocably waives any right, pursuant to Sections 364(c) or 364(d) of the Bankruptcy Code or otherwise, to grant any Lien of equal or greater priority than the Liens securing the Obligations, or to approve a claim of equal or greater priority than the Obligations.

 

4.12       Survival .  The agreements and obligations of the Borrowers in this Article 4 shall survive the payment of all other Obligations.

 

ARTICLE 5

BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES

 

5.1         Books and Records .  Fleetwood shall, and shall cause each of its Subsidiaries to maintain, at all times, correct and complete books, records and accounts in which complete, correct and timely entries are made of its transactions in accordance with GAAP applied consistently with the audited Financial Statements required to be delivered pursuant to Section 5.2(a) .  Fleetwood shall, and shall cause each of its Subsidiaries to, by means of appropriate entries, reflect in such accounts and in all Financial Statements proper liabilities and reserves for all taxes and proper provision for depreciation and amortization of property and bad debts, all in accordance with GAAP.  Fleetwood shall, and shall cause each Loan Party to maintain at all times books and records pertaining to the Collateral in such detail, form and scope as the Agent or any Lender shall reasonably require, including, but not limited to, records of (a) all payments received and all credits and extensions granted with respect to the Accounts; (b) the return, rejection, repossession, stoppage in transit, loss, damage, or destruction of any Inventory; and (c) all other dealings affecting the Collateral in any material respect.

 

5.2         Financial Information .  Fleetwood shall, and shall cause each of its Subsidiaries to promptly furnish to each Lender, all such financial information as the Agent shall reasonably request.  Without limiting the foregoing, Fleetwood and the Borrowers will furnish to the Agent, in sufficient copies for distribution by the Agent to each Lender, in such detail as the Agent or the Lenders shall request, the following:

 

(a)         As soon as available, but in any event not later than ninety (90) days after the close of each Fiscal Year, consolidated audited balance sheets, and income statements, cash flow statements and changes in stockholders’ equity for Fleetwood and its Subsidiaries for such Fiscal Year, and the accompanying notes thereto, setting forth in each case in comparative form figures for the previous Fiscal Year, all in reasonable detail, fairly presenting the financial position and the results of operations of Fleetwood and its consolidated Subsidiaries as at the date thereof and for the Fiscal Year then ended, and prepared in accordance with GAAP.  Such statements shall be examined in accordance with generally accepted auditing standards by and, in the case of such statements performed on a consolidated basis, accompanied by a report thereon unqualified in any respect of independent certified public accountants selected by Fleetwood and reasonably

 

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satisfactory to the Agent.  Fleetwood and the Borrowers hereby authorize the Agent to communicate directly with their certified public accountants and, by this provision, authorize those accountants to disclose to the Agent any and all financial statements and other supporting financial documents and schedules relating to Fleetwood and its Subsidiaries and to discuss directly with the Agent, in the presence of Fleetwood, the finances and affairs of Fleetwood and its Subsidiaries.

 

(b)         As soon as available, but in any event not later than forty-five (45) days after the end of the first three Fiscal Quarters of any Fiscal Year, consolidated unaudited balance sheets of Fleetwood and its consolidated Subsidiaries as at the end of such Fiscal Quarter, and consolidated unaudited income statements and cash flow statements for Fleetwood and its consolidated Subsidiaries for such Fiscal Quarter and for the period from the beginning of the Fiscal Year to the end of such Fiscal Quarter, all in reasonable detail, fairly presenting the financial position and results of operations of Fleetwood and its consolidated Subsidiaries as at the date thereof and for such periods, and, in each case, in comparable form, figures for the corresponding period in the prior Fiscal Year, and prepared in accordance with GAAP applied consistently with the audited Financial Statements required to be delivered pursuant to Section 5.2(a) .  Fleetwood shall certify by a certificate signed by its chief financial officer or chief accounting officer that all such statements have been prepared in accordance with GAAP and present fairly the financial position of Fleetwood and its Subsidiaries as at the dates thereof and its results of operations for the periods then ended, subject to normal year-end adjustments and to the absence of footnotes required by GAAP.

 

(c)         As soon as available, but in any event no later than thirty (30) days (or, in the case of the first fiscal month after the end of each Fiscal Year, sixty (60) days) after the end of each fiscal month (other than any month which is also the end of a Fiscal Quarter) after the Closing Date beginning with fiscal month ending April 30, 2009, consolidated unaudited balance sheets of Fleetwood and its consolidated Subsidiaries as at the end of such fiscal month, and consolidated unaudited income statements and consolidated unaudited cash flow statements for Fleetwood and its consolidated Subsidiaries for such fiscal month and for the period from the beginning of the Fiscal Year to the end of such fiscal month, all in reasonable detail, fairly presenting the financial position and results of operations of Fleetwood and its consolidated Subsidiaries as at the date thereof and for such periods, and, in each case, in comparable form, figures for the corresponding period in the prior Fiscal Year, and prepared in accordance with GAAP applied consistently with the audited Financial Statements required to be delivered pursuant to Section 5.2(a) ; provided that for fiscal month ending April 30, 2009, such financial statements shall be for the period beginning March 10, 2009 and ending April 30, 2009.  Fleetwood shall certify by a certificate signed by its chief financial officer or chief accounting officer that all such statements have been prepared in accordance with GAAP and present fairly the financial position of Fleetwood and its Subsidiaries as at the dates thereof and its results of operations for the periods then ended, subject to normal year-end adjustments and the absence of footnotes required by GAAP.

 

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(d)         With each of the audited Financial Statements delivered pursuant to Section 5.2(a) , a certificate of the independent certified public accountants that examined such statement to the effect that they have reviewed and are familiar with this Agreement and that, in examining such Financial Statements, they did not become aware of any fact or condition which then constituted a Default or Event of Default with respect to any covenant, except for those, if any, described in reasonable detail in such certificate.

 

(e)         Within forty-five (45) days after the end of each Fiscal Quarter, a certificate of the chief financial officer, chief accounting officer, vice president-treasurer or vice president-controller of Fleetwood stating that, except as explained in reasonable detail in such certificate, (A) all of the representations and warranties of the Loan Parties contained in this Agreement and the other Loan Documents are correct and complete in all material respects as at the date of such certificate as if made at such time, except for those that speak as of a particular date, which shall have been true and correct as of such date, (B) the Loan Parties are, at the date of such certificate, in compliance in all material respects with all of their respective covenants and agreements in this Agreement and the other Loan Documents, (C) no Default or Event of Default then exists or existed during the period covered by the Financial Statements for such Fiscal Quarter, (D) describing and analyzing in reasonable detail all material trends, changes, and developments in each and all Financial Statements; and (E) explaining the variances of the figures in the corresponding Projections and prior Fiscal Year financial statements.  If any such certificate discloses that a representation or warranty is not correct or complete, or that a covenant has not been complied with, or that a Default or Event of Default existed or exists, such certificate shall set forth what action Loan Parties have taken or propose to take with respect thereto.

 

(f)          No sooner than sixty (60) days prior to and not more than thirty (30) days after the beginning of each Fiscal Year, annual forecasts (to include forecasted consolidated balance sheets, income statements and consolidated cash flow statements) for Fleetwood and its Subsidiaries as at the end of and for each quarter of such Fiscal Year.

 

(g)         A copy of each annual report or other filing filed with the PBGC or the IRS with respect to each Plan of Fleetwood and its Subsidiaries (A) upon the request of the Agent or (B) in the event such filing reflects a significant change with respect to the matters covered thereby, within three (3) Business Days after the filing thereof.

 

(h)         If requested by the Agent, promptly upon the filing thereof, copies of all reports, if any, to or other documents filed by Fleetwood or any of its Subsidiaries with the Securities and Exchange Commission under the Exchange Act, and all reports, notices, or statements sent or received by Fleetwood or any of

 

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its Subsidiaries to or from the holders of any equity interests of Fleetwood or any of its Subsidiaries (other than routine non-material correspondence sent by shareholders of Fleetwood to Fleetwood) or any such Subsidiary or of any Debt of Fleetwood or any of its Subsidiaries registered under the Securities Act or to or from the trustee under any indenture under which the same is issued.

 

(i)          As soon as available, but in any event not later than fifteen (15) days after any Loan Party’s receipt thereof, a copy of all management reports and management letters prepared for any Loan Party by any independent certified public accountants.

 

(j)          If requested by the Agent, promptly after their preparation, copies of any and all proxy statements, financial statements, and reports which Fleetwood makes available to its shareholders.

 

(k)         If requested by the Agent, promptly after filing with the IRS, a copy of each tax return filed by Fleetwood or by any of its Subsidiaries.

 

(l)          No later than Wednesday of each week, a schedule of the Borrowers’ Accounts created, credits given, cash collected and other adjustments to Accounts since the last schedule, together with a Borrowing Base Certificate as of the end of the preceding week (a “ Weekly Borrowing Base Certificate ”) and all supporting information in accordance with Section 9 of the Security Agreement.

 

(m)        Not later than fifteen (15) days after each Fiscal Quarter, a report, in form and substance satisfactory to the Agent, with respect to the Repurchase Obligations.

 

(n)         [RESERVED].

 

(o)         Such additional information as any Agent and/or any Lender may from time to time reasonably request regarding the financial and business affairs of Fleetwood or any Subsidiary.

 

(p)         Concurrent with the delivery of each Weekly Borrowing Base Certificate delivered immediately prior the commencement of each fiscal month in accordance with Section 5.2(l) , a report listing forecasted Availability for such fiscal month and each of the next two subsequent fiscal months thereafter in a form reasonably satisfactory to the Agent.

 

(q)         Promptly following delivery or service thereof, copies of all monthly reports, projections, or other information respecting the Borrowers’ or any Subsidiary of any Borrower’s business or financial condition or prospects as well as all pleadings, motions, applications and judicial information filed by or on behalf of the Borrowers with the Bankruptcy Court or provided by or to the U.S. Trustee (or any monitor or interim receiver, if any, appointed in any Chapter 11 Case) or the Committee, at the time such document is filed with the Bankruptcy Court, or provided by or, to the U.S. Trustee (or any monitor or interim receiver, if any, appointed in any Chapter 11 Case) or the Committee.

 

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(r)          On the date of this Agreement and no later than by Thursday of the first Measurement Period and each subsequent Measurement Period thereafter, a thirteen week cash flow budget covering such week and the immediately following twelve weeks in form and substance satisfactory to the Agent and the Required Lenders.

 

(s)         By the end of the day four (4) Business Days following the last day of each Measurement Period, a report stating whether the Borrowers are in compliance with the conditions set forth in Section 7.22 together with supporting detail reasonably acceptable to the Agent, which supporting detail shall include, without limitation, statements of weekly and cumulative variances for the applicable six (6) Measurement Period testing period in any Line Item for expenditures.

 

(t)          By the end of the day four (4) Business Days following the Closing Date and, thereafter, concurrent with the delivery of each Weekly Borrowing Base Certificate delivered immediately prior the commencement of each fiscal month in accordance with Section 5.2(l) , a current report listing (i) the date of expiration for all then outstanding Letters of Credit, (ii) with respect to each such Letter of Credit that contains “evergreen” or automatic renewal provisions, the Letter of Credit Lender Indication Date and the Letter of Credit Issuer Indication Date (in each case as defined in Section 1.4(b) ), (iii) the status of completion (including approximate percentage of completion) of each underlying project (and phases thereof) in respect of which the beneficiary of any Letter of Credit has issued of a letter of credit, surety bond, indemnity, performance or other similar bond or instrument for the benefit of any Loan Party, (iv) the estimated date of completion each such underlying project (and phase thereof), (v) a description of anticipated additional projects (and phases thereof) the effect of which is to increase the exposure of the Letter of Credit Issuer under outstanding Letters of Credit in respect of which the beneficiary thereof has issued of a letter of credit, surety bond indemnity, performance or other similar bond or instrument for the benefit of any Loan Party and (vi) the Borrowers’ calculation of the face amount of any Letter of Credit in excess of the amount necessary to cause the beneficiary thereof to issue the letters of credit, surety bonds, indemnity, performance or other similar bonds or instrument for the benefit of any Loan Party then outstanding or otherwise anticipated to be necessary in connection with the existing and anticipated additional projects (and phases thereof) described in clauses (iii), (iv) and (v) above.

 

5.3          Notices to the Lenders .  Fleetwood or the Borrowers shall notify the Agent and the Lenders in writing of the following matters at the following times:

 

(a)         Promptly, and, in any event, within two (2) Business Days, after becoming aware of any Default or Event of Default;

 

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(b)         Promptly, and, in any event, within two (2) Business Days, after becoming aware of the assertion by the holder of any Capital Stock of Fleetwood or of any Subsidiary or the holder of any Debt of Fleetwood or any Subsidiary in a face amount in excess of one million Dollars ($1,000,000) that a default exists with respect thereto or that Fleetwood or such Subsidiary is not in compliance with the terms thereof, or the threat or commencement by such holder of any enforcement action because of such asserted default or non-compliance; and promptly, but, in any event within two (2) Business Days, after becoming aware of the assertion that any Repurchase Obligations of five hundred thousand Dollars ($500,000) or more payable in cash shall have become due and payable;

 

(c)         Promptly, and, in any event, within two (2) Business Days, after becoming aware of any event or circumstance (other than general economic trends) which could reasonably be expected to have a Material Adverse Effect;

 

(d)         Promptly, and, in any event, within two (2) Business Days, after becoming aware of any pending or threatened action, suit, or proceeding, by any Person, or any pending or threatened investigation by a Governmental Authority, other than in connection with the Chapter 11 Cases, which if adversely determined would reasonably be expected to have a Material Adverse Effect;

 

(e)         Promptly, and, in any event, within two (2) Business Days, after becoming aware of any pending or threatened strike, work stoppage, unfair labor practice claim, or other labor dispute affecting Fleetwood or any of its Subsidiaries in a manner which could reasonably be expected to have a Material Adverse Effect;

 

(f)          Promptly, and, in any event, within two (2) Business Days, after becoming aware of any violation of any law, statute, regulation, or ordinance of a Governmental Authority affecting Fleetwood or any Subsidiary which could reasonably be expected to have a Material Adverse Effect;

 

(g)         Promptly, and, in any event, within two (2) Business Days, after receipt of any notice of any violation by Fleetwood or any of its Subsidiaries of any Environmental Law which could reasonably be expected to have a Material Adverse Effect or that any Governmental Authority has asserted in writing that Fleetwood or any Subsidiary is not in compliance in any material respect with any Environmental Law or is investigating Fleetwood’s or such Subsidiary’s compliance therewith;

 

(h)         Promptly, and, in any event, within two (2) Business Days, after receipt of any written notice that Fleetwood or any of its Subsidiaries is or may be liable to any Person as a result of the Release or threatened Release of any Contaminant or that Fleetwood or any Subsidiary is subject to investigation by any Governmental Authority evaluating whether any remedial action is needed to respond to the Release or threatened Release of any Contaminant which, in either case, is reasonably likely to give rise to liability in excess of one million Dollars ($1,000,000);

 

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(i)          Promptly, and, in any event, within two (2) Business Days, after receipt of any written notice of the imposition of any Environmental Lien against any property of Fleetwood or any of its Subsidiaries;

 

(j)          Any change in any Loan Party’s name, state of organization, locations of Collateral, or form of organization, trade names under which it will sell Inventory or create Accounts, or to which instruments in payment of Accounts may be made payable, in each case at least thirty (30) days prior thereto;

 

(k)         Within ten (10) Business Days after Fleetwood or any ERISA Affiliate knows or has reason to know, that an ERISA Event or a prohibited transaction (as defined in Sections 406 of ERISA and 4975 of the Code) has occurred, and, when known, any action taken or threatened by the IRS, the DOL or the PBGC with respect thereto;

 

(l)          Upon request, or, in the event that such filing reflects a significant change with respect to the matters covered thereby, within three (3) Business Days after the filing thereof with the PBGC, the DOL or the IRS, as applicable, copies of the following:  (i) each annual report (form 5500 series), including Schedule B thereto, filed with the PBGC, the DOL or the IRS with respect to each Plan, (ii) a copy of each funding waiver request filed with the PBGC, the DOL or the IRS with respect to any Plan and all communications received by Fleetwood or any ERISA Affiliate from the PBGC, the DOL or the IRS with respect to such request, and (iii) a copy of each other filing or notice filed with the PBGC, the DOL or the IRS, with respect to each Plan by either Fleetwood or any ERISA Affiliate;

 

(m)        Upon request, copies of each actuarial report for any Plan or Multi-employer Plan and annual report for any Multi-employer Plan; and within three (3) Business Days after receipt thereof by Fleetwood or any ERISA Affiliate, copies of the following:  (i) any notices of the PBGC’s intention to terminate a Plan or to have a trustee appointed to administer such Plan; (ii) any favorable or unfavorable determination letter from the IRS regarding the qualification of a Plan under Section 401(a) of the Code; or (iii) any notice from a Multi-employer Plan regarding the imposition of withdrawal liability;

 

(n)         Within three (3) Business Days after the occurrence thereof: (i) any changes in the benefits of any existing Plan which increase the annual costs of Fleetwood and its Subsidiaries with respect thereto by an amount in excess of one million Dollars ($1,000,000) or the establishment of any new Plan or the commencement of contributions to any Plan to which Fleetwood or any ERISA Affiliate was not previously contributing; or (ii) any failure by Fleetwood or any ERISA Affiliate to make a required installment or any other required payment under Section 412 of the Code on or before the due date for such installment or payment;

 

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(o)         Within three (3) Business Days after Fleetwood or any ERISA Affiliate knows or has reason to know that any of the following events has or will occur:  (i) a Multi-employer Plan has been or will be terminated; (ii) the administrator or plan sponsor of a Multi-employer Plan intends to terminate a Multi-employer Plan; or (iii) the PBGC has instituted or will institute proceedings under Section 4042 of ERISA to terminate a Multi-employer Plan; or

 

(p)         On or prior to the date that is five (5) Business Days prior to the date any Loan Party is intended to enter into (i) any reimbursement obligation relating to a letter of credit, surety bond or similar instrument   in respect of which (A) such Loan Party is to be an “obligor” and any third party is to be an “obligee” and (B) such obligee is intended to be the beneficiary under an existing or newly requested Letter of Credit; or (ii) any other transaction or series of related transactions the effect of which is to increase the exposure of the Letter of Credit Issuer or any Lender hereunder under any existing or newly requested Letter of Credit (for the avoidance of doubt, regardless of whether the Borrowers intend to seek an increase in the face amount of any existing Letter of Credit otherwise in accordance with the terms hereof).

 

Each notice given under this Section 5.3 shall describe the subject matter thereof in reasonable detail, and shall set forth the action that Fleetwood, its Subsidiary, or any ERISA Affiliate, as applicable, has taken or proposes to take with respect thereto.

 

ARTICLE 6

GENERAL WARRANTIES AND REPRESENTATIONS

 

Fleetwood and the Borrowers warrant and represent to the Agent and the Lenders that except as hereafter disclosed to and accepted by the Agent and the Required Lenders in writing:

 

6.1         Authorization, Validity, and Enforceability of this Agreement and the Loan Documents .  Upon the entry by the Bankruptcy Court of the Interim Order (or the Final Order, when applicable), each Loan Party has the power and authority to execute, deliver and perform this Agreement and the other Loan Documents to which it is a party, to incur the Obligations, and to grant to the Agent Liens upon and security interests in the Collateral.  Each Loan Party has taken all necessary action (including obtaining approval of its stockholders if necessary) to authorize its execution, delivery, and performance of this Agreement and the other Loan Documents to which it is a party.  Subject to the entry of the Interim Order (or the Final Order, when applicable) by the Bankruptcy Court, this Agreement and the other Loan Documents to which it is a party have been duly executed and delivered by each Loan Party which is a party thereto, and constitutes the legal, valid and binding obligations of such Loan Party, enforceable against it in accordance with their respective terms, subject to the effect of bankruptcy, insolvency, moratorium and other laws affecting the rights of creditors generally and to the effect of general principles of equity.  Upon entry by the Bankruptcy Court of the Interim Order (or the Final Order, when applicable), each Loan Party’s execution, delivery, and performance of this Agreement and the other Loan Documents to which it is a party do not and will not conflict with, or constitute a violation or breach of, or result in the imposition of any Lien upon the property of

 

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Fleetwood or any of its Subsidiaries, by reason of the terms of (a) except as prohibited or excused by the Applicable Order or by reason of commencement of the Chapter 11 Cases, any material contract, mortgage, lease, agreement, indenture, or instrument to which Fleetwood or any of its Subsidiaries is a party or which is binding upon it, the breach of which could reasonably be expected to result in a Material Adverse Effect, (b) any Requirement of Law applicable to Fleetwood or any of its Subsidiaries, the violation of which could reasonably be expected to result in a Material Adverse Effect or (c) the certificate or articles of incorporation or by-laws or the limited liability company or limited partnership agreement (or other organizational documents) of Fleetwood or any of its Subsidiaries.

 

6.2         Validity and Priority of Security Interest .  Upon the entry by the Bankruptcy Court of the Interim Order (or the Final Order, when applicable), the provisions of this Agreement, the Mortgages, and the other Loan Documents (upon recordation thereof) create legal and valid Liens on all the Collateral in favor of the Agent for the ratable benefit of the Agent and the Revolving Credit Lenders and such Liens constitute perfected and continuing Liens on all the Collateral, having priority over all other Liens on the Collateral (subject to the Carve-Out and the Exceptions) securing all the Obligations, and enforceable against the Loan Parties and all third parties.  Upon the entry by the Bankruptcy Court of the Interim Order (or the Final Order, when applicable), the Liens on the Collateral shall constitute super-priority perfected Liens in favor of the Agent, for the ratable benefit of the Agent and the Lenders, except, in each case, (i) subject to the Exceptions, (ii) subject to the Carve-Out and (iii) to the extent permitted by the Security Agreement.  All of the Liens granted to the Agent on behalf of itself and on behalf of the Existing Lenders with respect to the Third Amended and Restated Credit Agreement (including, without limitation, the adequate protection liens granted to the Agent on behalf of itself and on behalf of the Existing Lenders (together with all Obligations (as defined in the Third Amended and Restated Credit Agreement), including, without limitation, all indemnity, reimbursement and other contingent obligations under the Third Amended and Restated Credit Agreement that may or may not yet have been identified or asserted)) shall be rolled up and replaced with the Liens granted in connection with this Agreement and, in each case, such Liens and contingent obligations shall be subject to the Carve-Out and the Exceptions.

 

6.3         Organization and Qualification .  Each Loan Party (a) is duly organized or incorporated and validly existing in good standing (except by reason of the commencement of the Chapter 11 Cases) under the laws of the state of its organization or incorporation, (b) is qualified to do business and is in good standing (except by reason of the commencement of the Chapter 11 Cases) in the jurisdictions set forth on Schedule 6.3 hereto which are the only jurisdictions in which qualification is material to the conduct of its business and (c) subject to the entry of the Interim Order (or the Final Order, when applicable) by the Bankruptcy Court and compliance with any applicable conditions of the Bankruptcy Code, has all requisite power and authority to conduct its business and to own its property.

 

6.4         Corporate Name; Prior Transactions .  Except as set forth on Schedule 6.4 hereto no Loan Party has, during the five (5) years prior to the Closing Date, been known by or used any other corporate or fictitious name, or been a party to any merger or consolidation, or acquired all or substantially all of the assets of any Person, or acquired any of its property outside of the ordinary course of business.

 

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6.5          Subsidiaries and Affiliates .  Schedule 6.5 hereto, and as the same may be amended after the Closing Date with the consent of the Agent (such consent not to be unreasonably withheld, conditioned or delayed), is a correct and complete list of the name and relationship to Fleetwood of each and all of its Subsidiaries and, to the knowledge of Fleetwood and the Borrowers, their other Affiliates.  Each Subsidiary which is not a Loan Party is (a) duly incorporated or organized and validly existing in good standing (except by reason of the commencement of the Chapter 11 Cases) under the laws of its state of incorporation or organization set forth on Schedule 6.5 hereto, and as the same may be amended after the Closing Date with the consent of the Agent (such consent not to be unreasonably withheld, conditioned or delayed), and (b) qualified to do business and in good standing in each jurisdiction in which the failure to so qualify or be in good standing (except by reason of the commencement of the Chapter 11 Cases) would reasonably be expected to have a material adverse effect on any such Subsidiary’s business, operations, property, or condition (financial or otherwise) and (c) has all requisite power and authority to conduct its business and own its property.  The aggregate amount of assets owned by the Subsidiaries of Fleetwood that are identified as Inactive Subsidiaries as of the Closing Date on Schedule 6.5 is less than two hundred and fifty thousand Dollars ($250,000), the revenues of each Subsidiary of Fleetwood that is identified as an Inactive Subsidiary as of the Closing Date on Schedule 6.5 is less than one million Dollars ($1,000,000) and none of the assets owned by the Subsidiaries of Fleetwood that are identified as Inactive Subsidiaries or Excluded Subsidiaries on Schedule 6.5 are included in the calculation of the Borrowing Base pursuant to this Agreement.

 

6.6          Financial Statements and Projections .

 

(a)            Fleetwood has delivered to the Agent and the Lenders the audited balance sheet and related statements of income, retained earnings, cash flows, and changes in stockholders equity for Fleetwood and its consolidated Subsidiaries as of April 28, 2008, accompanied by the report thereon of its independent certified public accountants, Ernst & Young.  Fleetwood has also delivered to the Agent and the Lenders the unaudited balance sheet and related statements of income and cash flows for Fleetwood and its consolidated Subsidiaries as of the fiscal month ending January 31, 2009.  Such financial statements are attached hereto as Exhibit B .  All such financial statements have been prepared in accordance with GAAP and present accurately and fairly in all material respects the financial position of Fleetwood and its consolidated Subsidiaries as at the dates thereof and their results of operations for the periods then ended, subject in the case of the unaudited statements to normal year end audit adjustments and to the omission of footnotes required by GAAP.

 

(b)            The Projections submitted to the Lenders on the date hereof and attached hereto as Schedule 6.6 represent the good faith estimate by the Borrowers of the future financial performance of Fleetwood and its consolidated Subsidiaries for the periods set forth therein.  Such Projections have been prepared on the basis of the assumptions set forth therein, which the Borrowers believe are fair and reasonable in light of current and reasonably foreseeable business conditions at the time submitted to the Lenders but include future payments of known contingent liabilities disclosed to the Lenders.

 

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6.7          Capitalization .  Schedule 6.7 hereto sets forth the capitalization of Fleetwood and its Subsidiaries and all of the authorized and issued Capital Stock of each such Person.  All outstanding Capital Stock has been validly issued, and is fully paid and non-assessable.  All of the Capital Stock of Subsidiaries is owned, beneficially and of record, by the Person set forth on such Schedule 6.7 .

 

6.8          [RESERVED].

 

6.9          Debt .  Fleetwood and its Subsidiaries have no Debt on the Closing Date, except (a) the Obligations, (b) the Subordinated Debt and the 2008 Senior Secured Debentures, in an aggregate original principal amount outstanding on the Closing Date of not more than two hundred and forty-two million six hundred thousand Dollars ($242,600,000), and the Trust Securities also outstanding on the Closing Date, (c) the 2008 Mortgage Debt, (d) Debt described on Schedule 6.9 hereto (which includes Permitted Life Insurance Policy Debt), (e) Guaranties entered into in accordance with Section 7.12 and (f) other Debt in an aggregate amount of not more than five million Dollars ($5,000,000).

 

6.10        Distributions .  Since June 12, 2001, no Distribution has been declared, paid, or made upon or in respect of any Capital Stock or other securities of Fleetwood or any of its Subsidiaries, except as permitted by Section 7.10 .

 

6.11        Real Estate; Leases .  Schedule 6.11 (i) sets forth, as of the Closing Date, a correct and complete list of all Real Estate owned in fee simple by Fleetwood or any of its Subsidiaries, all leases and subleases of real or personal property held by Fleetwood or any of its Subsidiaries as lessee or sublessee (other than leases of personal property as to which Fleetwood or any of its Subsidiaries is lessee or sublessee for which the value of such personal property covered by such lease in the aggregate is less than five hundred thousand Dollars ($500,000)), and all leases and subleases of real or personal property held by Fleetwood or any of its Subsidiaries as lessor, or sublessor and (ii) accurately identifies all idle and non-idle Existing Real Estate Subfacility Assets, all idle and non-idle Additional Real Estate Subfacility Assets, the Closing Date Encumbered Real Estate Asset, Real Estate assets owned by the entities constituting the Fleetwood Travel Trailers Division, Real Estate assets owned by the entities constituting the Manufactured Homes Division and Real Estate assets owned by the entities constituting the Motor Homes Division.  Each of such leases and subleases is valid and enforceable in accordance with its terms and is in full force and effect, and to the knowledge of Fleetwood and the Borrowers no material default by any party to any such lease or sublease exists.  Fleetwood and its Subsidiaries have good and marketable title in fee simple to the Real Estate identified on Schedule 6.11 as owned by Fleetwood or any of its Subsidiaries, or valid leasehold interests in all Real Estate designated therein as “leased” by Fleetwood or any of its Subsidiaries and Fleetwood and its Subsidiaries have good, indefeasible, and merchantable title to all of its other property reflected on the most recent Financial Statements delivered to the Agent and the Lenders, except as disposed of in the ordinary course of business or as otherwise permitted by Section 7.9 since the date thereof, free of all Liens except Permitted Liens.

 

6.12        Proprietary Rights .  Schedule 6.12 hereto and as the same may be amended after the Closing Date with the consent of the Agent (such consent not to be unreasonably withheld, conditioned or delayed), sets forth a correct and complete list of all of the Proprietary

 

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Rights of the Loan Parties that are material to the conduct of the businesses of the Loan Parties (other than commercially available third party software).  As of the Closing Date, none of such Proprietary Rights is subject to any licensing agreement or similar arrangement except as set forth on Schedule 6.12 and as the same may be amended after the Closing Date with the consent of the Agent (such consent not to be unreasonably withheld).  To the knowledge of Fleetwood and the Borrowers, none of the Proprietary Rights infringes on or conflicts with any other Person’s property, and, to the knowledge of Fleetwood and the Borrowers no other Person’s property infringes on or conflicts with such Proprietary Rights, except in each case where such infringement or conflict could not reasonably be expected to result in a Material Adverse Effect.  The Proprietary Rights described on Schedule 6.12 and as the same may be amended after the Closing Date with the consent of the Agent (such consent not to be unreasonably withheld), constitute all of the property of such type material to the current and anticipated future conduct of the business of the Loan Parties.

 

6.13        Trade Names .  All material trade names or styles under which any Loan Party will sell Inventory or create Accounts, or to which instruments in payment of Accounts may be made payable, are listed on Schedule 6.13 hereto.

 

6.14        Litigation .  Other than the Chapter 11 Cases and except as set forth on Schedule 6.14 and as the same may be amended after the Closing Date with the consent of the Agent (such consent not to be unreasonably withheld), there is no pending, or to the best knowledge of Fleetwood and the Borrowers threatened, action, suit, proceeding, or counterclaim by any Person, or to the best knowledge of Fleetwood and the Borrowers, investigation by any Governmental Authority, which could reasonably be expected to have a Material Adverse Effect.

 

6.15        Labor Disputes .  Except as set forth on Schedule 6.15 hereto (a) there is no collective bargaining agreement or other labor contract covering employees of Fleetwood or any of its Subsidiaries, (b) no such collective bargaining agreement or other labor contract is scheduled to expire during the term of this Agreement, (c) no union or other labor organization is seeking to organize, or to be recognized as, a collective bargaining unit of employees of Fleetwood or any of its Subsidiaries or for any similar purpose, and (d) there is no pending or (to the best knowledge of the Borrowers) threatened, strike, work stoppage, material unfair labor practice claim, or other material labor dispute against or affecting Fleetwood or its Subsidiaries or their employees.

 

6.16        Environmental Laws .  Except as otherwise disclosed on Schedule 6.16 hereto:

 

(a)            Fleetwood and its Subsidiaries have complied in all material respects with all Environmental Laws and neither Fleetwood nor any Subsidiary nor any of its presently owned real property or presently conducted operations, nor its previously owned real property or prior operations, is subject to any enforcement order from or liability agreement with any Governmental Authority or private Person respecting (i) compliance with any Environmental Law or (ii) any potential liabilities and costs or remedial action arising from the Release or threatened Release of a Contaminant.

 

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(b)          Fleetwood and its Subsidiaries have obtained all permits necessary for their current operations under Environmental Laws, the absence of which could reasonably be expected to have a Material Adverse Effect, and all such permits are in good standing and Fleetwood and its Subsidiaries are in compliance with all material terms and conditions of such permits.

 

(c)          Neither Fleetwood nor any of its Subsidiaries, nor, to the best knowledge of Fleetwood and the Borrowers, any of its predecessors in interest, has stored, treated or disposed of any hazardous waste in violation of applicable law, except for any such violation as could not reasonably be expected to have a Material Adverse Effect.

 

(d)          Neither Fleetwood nor any of its Subsidiaries has, as of the Closing Date, received any summons, complaint, order or similar written notice indicating that it is not currently in compliance with, or that any Governmental Authority is investigating its compliance with, any Environmental Laws or that it is or may be liable to any other Person as a result of a Release or threatened Release of a Contaminant.

 

(e)          To the best knowledge of Fleetwood and the Borrowers, as of the Closing Date, none of the present or past operations of Fleetwood and its Subsidiaries is the subject of any investigation by any Governmental Authority evaluating whether any remedial action is needed to respond to a Release or threatened Release of a Contaminant.

 

(f)           There is not now, nor to the best knowledge of Fleetwood and the Borrowers has there ever been on or in the Real Estate currently owned or leased by Fleetwood and its Subsidiaries:

 

(i)               any underground storage tanks or other than those maintained and/or closed in compliance in all material respects with applicable laws or surface impoundments,

 

(ii)              any asbestos-containing material that is friable, except such as has been removed in compliance in all material respects with Environmental Laws, or

 

(iii)             any polychlorinated biphenyls (PCBs) used in hydraulic oils, electrical transformers or other equipment, other than those maintained in compliance in all material respects with Environmental Laws.

 

(g)          Neither Fleetwood nor any of its Subsidiaries has filed any notice under any requirement of Environmental Law reporting a spill or accidental and unpermitted Release or discharge of a Contaminant into the environment.

 

(h)          Neither Fleetwood nor any of its Subsidiaries has entered into any negotiations or settlement agreements with any Person (including the prior owner of its property) imposing material obligations or liabilities on Fleetwood or any of its Subsidiaries with respect to any remedial action in response to the Release of a Contaminant or environmentally related claim.

 

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(i)           None of the products currently manufactured, distributed or sold by Fleetwood or any of its Subsidiaries contain asbestos containing material.

 

(j)           No Environmental Lien has attached to the Real Estate owned or leased by Fleetwood and its Subsidiaries.

 

6.17          No Violation of Law .  Neither Fleetwood nor any of its Subsidiaries is in violation of any law, statute, regulation, ordinance, judgment, order, or decree applicable to it which violation could reasonably be expected to have a Material Adverse Effect.

 

6.18          No Default .  Except for defaults and cross-defaults arising solely by reason of filing the Chapter 11 Cases, and defaults and cross-defaults set forth on Schedule 6.18 , neither Fleetwood nor any of its Subsidiaries is in default with respect to any note, indenture, loan agreement, mortgage, lease, deed, or other agreement to which Fleetwood or such Subsidiary is a party or by which it is bound, which default could reasonably be expected to have a Material Adverse Effect (other than merely a Material Adverse Effect on the financial condition of the Fleetwood or its Subsidiary arising solely by reason of the creation of an unsecured prepetition claim).

 

6.19            ERISA Compliance .  Except as specifically disclosed in Schedule 6.19 hereto:

 

(a)          Each Plan is in compliance in all material respects with the applicable provisions of ERISA, the Code and other federal or state law.  Each Plan which is intended to qualify under Section 401(a) of the Code has received a favorable determination letter from the IRS and to the best knowledge of Fleetwood and the Borrowers, nothing has occurred which would cause the loss of such qualification.  Fleetwood and each ERISA Affiliate has made all required contributions to any Plan subject to Section 412 of the Code, and no application for a funding waiver or an extension of any amortization period pursuant to Section 412 of the Code has been made with respect to any Plan.

 

(b)          There are no pending or, to the best knowledge of Fleetwood and Borrowers, threatened claims, actions or lawsuits, or action by any Governmental Authority, with respect to any Plan which has resulted or could reasonably be expected to result in a Material Adverse Effect.  There has been no prohibited transaction or violation of the fiduciary responsibility rules with respect to any Plan which has resulted or could reasonably be expected to result in a Material Adverse Effect.

 

(c)          (i) Other than an ERISA Event consisting of either the filing of the Chapter 11 Cases or the liquidation of any Loan Party subject to the Chapter 11 Cases, no ERISA Event has occurred or is reasonably expected to occur; (ii) no Pension Plan has any Unfunded Pension Liability; (iii) neither Fleetwood nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability under

 

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Title IV of ERISA with respect to any Pension Plan (other than premiums due and not delinquent under Section 4007 of ERISA); (iv) neither Fleetwood nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability (and no event has occurred which, with the giving of notice under Section 4219 of ERISA, would result in such liability) under Section 4201 or 4243 of ERISA with respect to a Multi-employer Plan; and (v) neither Fleetwood nor any ERISA Affiliate has engaged in a transaction that could be subject to Section 4069 or 4212(c) of ERISA.

 

6.20        Taxes .  Fleetwood and its Subsidiaries have filed all federal income and other material federal, provincial, state and other tax returns required by law to be filed, and have paid all federal income and other material taxes, assessments, fees and other governmental charges levied or imposed upon them or their properties, income or assets otherwise due and payable unless such unpaid taxes and assessments would constitute a Permitted Lien or are being contested in good faith by appropriate proceedings.  Fleetwood and its Subsidiaries have withheld and paid over all taxes required to have been withheld and paid over, and complied in all material respects with all information reporting requirements in connection with amounts paid or owing, to any employee, creditor, independent contractor or other third party.

 

6.21        Regulated Entities .  None of Fleetwood, any Person controlling Fleetwood, or any Subsidiary, is an “Investment Company” within the meaning of the Investment Company Act of 1940.  No Loan Party is subject to regulation under the Public Utility Holding Company Act of 1935, the Federal Power Act, the Interstate Commerce Act, any state public utilities code or law, or any other federal or state statute or regulation limiting its ability to incur indebtedness.

 

6.22        Use of Proceeds; Margin Regulations .  The proceeds of the Loans are to be used solely to (i) pay fees in connection with the senior secured, super-priority revolving credit facility set forth in this Agreement, (ii) issue and/or maintain Letters of Credit in accordance with Section 1.4 , (iii) provide Credit Support in connection with such Letters of Credit, (iv) fund the ongoing post-petition working capital needs and other general corporate purposes of the Borrowers, (v) pay expenses constituting the Carve-Out and (vi) fund the payment of such pre-petition and other out of the ordinary course of business expenses of the Borrowers as may be approved by the Bankruptcy Court, including permitted capital expenditures, priority employee wage claims, and expenses associated with the assumption of executory contracts and unexpired leases, in each case in amounts not to exceed in any weekly period the amounts in the Approved Budget subject to any variances permitted by Section 7.22(b)  of this Agreement (for the avoidance of doubt, it being understood and agreed that the presence of any “basket” or “carve-out” set forth in any negative covenant contained in Section 7 shall not be, and shall not be deemed to be, an approval or acceptance by the Agent or any Lender of any Line Item in any Approved Budget, or portion thereof, related to cash expenditures of the type described in such “basket” or “carve-out,” which shall remain subject to the approval rights of Agent and the Required Lenders with respect to each Approved Budget as set forth herein and in the Applicable Order).  The proceeds of the Loans are not to be used for: (a) the payment of interest and principal with respect to any Debt (other than Debt incurred under this Agreement), including, without limitation, the Subordinated Debt, the 2008 Senior Secured Debentures or the 2008 Mortgage Debt, (b) to finance in any way any adversary action, suit, arbitration, proceeding, application, motion or other litigation of any type relating to or in connection with the Third

 

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Amended and Restated Credit Agreement or any of the loan documents or in instruments entered into in connection therewith, including, without limitation, any challenges to the Obligations (as defined in the Third Amended and Restated Credit Agreement) under the Third Amended and Restated Credit Agreement, or the validity, perfection, priority, or enforceability of any Lien securing such claims or any payment made thereunder, (c) to finance in any way any action, suit, arbitration, proceeding, application, motion or other litigation of any type adverse to the interests of the Agent and the Lenders or their rights and remedies under this Agreement, the other Loan Documents, the Interim Order or the Final Order, (d) to make any distribution under a plan of reorganization in any of the Chapter 11 Cases without the prior written consent of the Agent and the Required Lenders and (e) to make any payment (in the aggregate, together with all other such payments) in excess of three hundred thousand Dollars ($300,000) in settlement of any claim, action or proceeding, before any court, arbitrator or other governmental body without the prior written consent of the Agent and the Required Lenders; provided that nothing in this subclause (e)  shall prevent the Borrowers from assuming or curing executory contracts and unexpired leases subject to an order of the Bankruptcy Court if otherwise permitted hereunder.  Neither Fleetwood nor any Subsidiary is engaged in the business of purchasing or selling Margin Stock or extending credit for the purpose of purchasing or carrying Margin Stock.

 

6.23        Copyrights, Patents, Trademarks and Licenses, etc.   Each Loan Party owns or is licensed or otherwise has the right to use all of the patents, trademarks, service marks, trade names, copyrights, contractual franchises, licenses, rights of way, authorizations and other rights that are reasonably necessary for the operation of its businesses, without known conflict in any material respect with the rights of any other Person.  To the knowledge of Fleetwood and the Borrowers, no slogan or other advertising device, product, process, method, substance, part or other material now employed, or now contemplated to be employed, by Fleetwood or any Subsidiary infringes upon any rights held by any other Person in any manner that could reasonably be expected to result in a Material Adverse Effect.  No claim or litigation regarding any of the foregoing is pending or, to the knowledge of Fleetwood and the Borrowers, threatened, and to the knowledge of Fleetwood and the Borrowers no patent, invention, device, application, principle or any statute, law, rule, regulation, standard or code is pending or, to the knowledge of Fleetwood and the Borrowers, proposed, which, in either case, could reasonably be expected to have a Material Adverse Effect.

 

6.24        No Material Adverse Change .  Other than the commencement of the Chapter 11 Cases and other than the cessation of existence or operations of, the winding up of or the dissolution of or sale of assets of the Fleetwood Travel Trailers Division, no Material Adverse Effect has occurred since January 31, 2008; provided that it is understood and agreed that for purposes solely of this Section 6.24 and the delivery of any certificate signed by a Responsible Officer to the effect, or substantially to the effect, that (i) the representations and warranties contained in this Agreement are correct in all material respects, (ii) no event has occurred and is continuing which constitutes a Default or an Event of Default, or (iii) no event has occurred and is continuing which has had or would have a Material Adverse Effect (and not, for the avoidance of doubt any other provisions hereunder, including without limitation, Section 9.1(m)  and whether or not the Agent or Lenders can assert a Default or Event of Default has occurred or is continuing thereunder).

 

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6.25        Full Disclosure .  None of the representations or warranties made by Fleetwood or any Subsidiary in the Loan Documents as of the date such representations and warranties are made or deemed made, and none of the statements contained in any exhibit, report, written statement or certificate furnished by or on behalf of Fleetwood or any Subsidiary in connection with the Loan Documents (including the offering and disclosure materials delivered by or on behalf of Fleetwood or any of its Subsidiaries to the Lenders prior to the Closing Date), contains any untrue statement of a material fact or, when considered as a whole, omits any material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances under which they are made, not misleading as of the time when made or delivered.

 

6.26        Material Agreements .  There are no agreements, contracts and other documents that are material to Fleetwood and its Subsidiaries other than the Material Contracts.

 

6.27        Bank Accounts .  Schedule 6.27 hereto contains a complete and accurate list of all bank accounts maintained by any Loan Party with any bank or other financial institution.  The Borrowers acknowledge and agree that Schedule 6.27 is substantially the same as the Borrowers’ Prepetition cash management system as approved by the Cash Management Order and that such system, including all accounts established thereto, shall continue to govern the rights of the respective parties thereto, and shall be applicable under this Agreement, subject to any modifications contemplated in the Cash Management Order.

 

6.28        Governmental Authorization .  Upon the entry of the Interim Order (or the Final Order, when applicable) and except for filings expressly contemplated by the Loan Documents, no approval, consent, exemption, authorization, or other action by, or notice to, or filing with, any Governmental Authority or other Person is necessary or required in connection with the execution, delivery or performance by, or enforcement against, Fleetwood or any of its Subsidiaries of this Agreement or any other Loan Document.

 

6.29        Senior Indebtedness .  All Obligations of Fleetwood under the Loan Documents are “Senior Indebtedness” under the 2003 Subordinated Debentures.  All Obligations of Fleetwood under this Agreement and the other Loan Documents to the extent such Obligations are (A) liabilities of Fleetwood for borrowed money or under any reimbursement obligation relating to a letter of credit, surety bond or similar instrument, or (B) liabilities of Fleetwood evidenced by a bond, note, debenture or similar instrument, or (C) liabilities of others described in the preceding clauses (A)  and (B)  that Fleetwood has guaranteed or that are otherwise its legal liability, or (D) deferrals renewals, extensions or refundings of any liability of the types referred to in clauses (A) , (B)  and (C)  above, are “Senior Indebtedness” under the 1998 Subordinated Debentures and Fleetwood’s guaranty of the Trust Securities.  All Obligations of Fleetwood and its Subsidiaries under this Agreement and the other Loan Documents, and all rights of contribution, indemnity, subrogation and reimbursement relating to the Obligations of any Loan Party with respect to Fleetwood and any other Obligations of Fleetwood and its Subsidiaries secured by any Loan Documents (including, without limitation, all debts, liabilities and obligations now or hereafter arising from or in connection with Bank Products), (i) are “Senior Debt” and “Designated Senior Debt” under the 2008 Senior Secured Debentures and “Priority Lien Debt” under the 2008 Intercreditor Agreement and (ii) were permitted by the indenture

 

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governing the 2008 Senior Secured Debentures and the 2008 Intercreditor Agreement to be incurred and secured under and pursuant to the Loan Documents.

 

6.30        Reorganization Matters .

 

(a)            The Chapter 11 Cases were commenced on the Petition Date in accordance with applicable law and proper notice thereof and the hearings for the approval of the Interim Order and Final Order has been given.  The Loan Parties shall give, on a timely basis as specified in the Interim Order or the Final Order, as applicable, all notices required to be given to all parties specified in the Interim Order or Final Order, as applicable.

 

(b)            After the entry of the Interim Order, and pursuant to and to the extent permitted in the Interim Order and the Final Order, the Obligations will constitute allowed administrative expense claims in the Chapter 11 Cases having priority over all administrative expense claims and unsecured claims against the Loan Parties now existing or hereafter arising, of any kind whatsoever, including, without limitation, all Trust Estate Liens, all administrative expense claims of the kind specified in Sections 105, 326, 330, 331, 503(b), 506(c), 507(a), 507(b), 546(c), 726, 1114 or any other provision of the Bankruptcy Code or otherwise, as provided under Section 364(c)(l) of the Bankruptcy Code, subject, as to priority only, to (i) the Carve-Out and (ii) the Exceptions.

 

(c)            After the entry of the Interim Order and pursuant to and to the extent provided in the Interim Order and the Final Order, the Obligations will be secured by a valid and perfected first priority Lien on all of the Collateral at all times senior to the Trust Estate Liens and subject, as to priority only, to (i) the Carve-Out and (ii) the Exceptions.

 

(d)            The Interim Order (with respect to the period prior to entry of the Final Order) or the Final Order (with respect to the period on and after entry of the Final Order), as the case may be, will be in full force and effect has not been reversed, stayed, modified or amended without the consent of the Agent.

 

(e)            Notwithstanding the provisions of Section 362 of the Bankruptcy Code, and subject to the applicable provisions of the Applicable Order upon the maturity (whether by acceleration or otherwise) of any of the Obligations, the Agent and the Lenders shall be entitled to immediate payment of such Obligations and, upon five (5) Business Days’ prior written notice to the Borrowers, to enforce the remedies provided for hereunder or under applicable law, without further application to or order by the Bankruptcy Court.

 

ARTICLE 7

AFFIRMATIVE AND NEGATIVE COVENANTS

 

Fleetwood and the Borrowers covenant to the Agent and each Lender that until the payment in full in cash of all of the Obligations:

 

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7.1            Taxes and Other Obligations .  Except as prohibited or excused by the Interim Order with respect to the period prior to the entry of the Final Order and the Final Order with respect to the period on and after entry of the Final Order, the Bankruptcy Code or by reason of commencement of the Chapter 11 Cases, Fleetwood shall, and shall cause each of its Subsidiaries to, (a) file when due (subject to any extensions thereof) all tax returns and other reports which it is required to file; (b) pay, or provide for the payment, when due (subject to permitted extensions), of all material taxes, fees, assessments and other governmental charges against it or upon its property, income and franchises, make all required withholding and other tax deposits, and establish adequate reserves for the payment of all such items, and provide to the Agent and the Lenders, upon request, satisfactory evidence of its timely compliance with the foregoing; and (c) pay when due all Debt owed by it and all claims of materialmen, mechanics, carriers, warehousemen, landlords, processors and other like Persons, and all other indebtedness owed by it if failure to pay such Debt or such claims would otherwise result in an Event of Default and perform and discharge in a timely manner all other obligations undertaken by it; provided , however , so long as Fleetwood has notified the Agent in writing, neither Fleetwood nor any of its Subsidiaries need pay any amount pursuant to clauses (b)  or (c)  above (i) it is contesting in good faith by appropriate proceedings diligently pursued, (ii) as to which Fleetwood or its Subsidiary, as the case may be, has established proper reserves as required under GAAP, and (iii) the nonpayment of which does not result in the imposition of a Lien (other than a Permitted Lien).

 

7.2            Legal Existence and Good Standing .  Except as occasioned by the Chapter 11 Cases, Fleetwood shall, and shall cause each other Loan Party to, maintain its legal existence (except as permitted by Section 7.9 ) and, except during the pendancy of the Chapter 11 Cases, its qualification and good standing in all jurisdictions in which the failure to maintain such existence and qualification or good standing would reasonably be expected to have a Material Adverse Effect.

 

7.3            Compliance with Law and Agreements; Maintenance of Licenses .  Except as prohibited or excused by the Interim Order with respect to the period prior to the entry of the Final Order and the Final Order with respect to the period on and after entry of the Final Order, the Bankruptcy Code or by reason of commencement of the Chapter 11 Cases, Fleetwood shall comply, and shall cause each Subsidiary to comply, in all material respects with all Requirements of Law of any Governmental Authority having jurisdiction over it or its business (including the Federal Fair Labor Standards Act and all Environmental Laws).  Except as prohibited or excused by the Interim Order with respect to the period prior to the entry of the Final Order and the Final Order with respect to the period on and after entry of the Final Order, the Bankruptcy Code or by reason of commencement of the Chapter 11 Cases, Fleetwood shall, and shall cause each of its Subsidiaries to, obtain and maintain all licenses, permits, franchises, and governmental authorizations necessary to own its property and to conduct its business as conducted on the Closing Date, except where the failure to obtain or maintain such licenses, franchises and governmental authorizations could not reasonably be expected to have a Material Adverse Effect.  Fleetwood shall not, and shall not permit any of its Subsidiaries to, modify, amend or alter its certificate or articles of incorporation, or its limited liability company operating agreement, limited partnership agreement or other organizational documents, as applicable, other than in a manner which does not adversely affect the rights of the Lenders or the Agent.

 

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7.4                                  Maintenance of Property; Inspection of Property .

 

(a)                                   Fleetwood shall, and shall cause each of its Subsidiaries to, maintain all of its property necessary and useful in the conduct of its business, in good operating condition and repair, ordinary wear and tear excepted and except where the failure to maintain any such property would not reasonably be expected to have a Material Adverse Effect.

 

(b)                                  Fleetwood shall, and shall cause each of the Loan Parties to, permit representatives and independent contractors of the Agent (at the expense of the Borrowers and not to exceed two (2) times per year unless an Event of Default has occurred and is continuing) to visit and inspect any of its properties, to examine its corporate, financial and operating records, and make copies thereof or abstracts therefrom and to discuss its affairs, finances and accounts with its directors, officers and independent public accountants (and, in the case of discussions with the Borrowers’ accountants, with the Borrowers present), at such reasonable times during normal business hours and as soon as may be reasonably desired, upon reasonable advance; provided , however , that representatives and independent contractors of each Lender may, at such Lender’s own expense, accompany the Agent’s representatives and independent contractors on such visits and inspections.  Notwithstanding the foregoing, when an Event of Default exists, the Agent or any Lender may do any of the foregoing at the expense of the Borrowers at any time during normal business hours and without advance notice.

 

7.5                                  Insurance .

 

(a)                                   Fleetwood shall maintain, and shall cause each of its Subsidiaries to maintain, with financially sound and reputable insurers having a rating of at least A+ or better by Best Rating Guide, insurance against loss or damage by fire with extended coverage; theft, burglary, pilferage and loss in transit; public liability and third party property damage; larceny, embezzlement or other criminal liability; business interruption; public liability and third party property damage; and such other hazards or of such other types as is customary for Persons engaged in the same or similar business, in amounts customary for Persons engaged in the same or similar business, and under policies acceptable to the Agent and the Required Lenders.  Without limiting the foregoing, in the event that any improved Real Estate covered by the Mortgages is determined to be located within an area that has been identified by the Director of the Federal Emergency Management Agency as a Special Flood Hazard Area (“ SFHA ”), the applicable Loan Party shall purchase and maintain flood insurance on the improved Real Estate and any Equipment and Inventory located on such Real Estate to the extent required by applicable law.  The amount of said flood insurance will be reasonably determined by the Agent, and shall, at a minimum, comply with applicable federal regulations as required by the Flood Disaster Protection Act of 1973, as amended.  Except as otherwise approved by the Agent, the Loan Parties shall also maintain flood insurance for all Inventory and Equipment which is, at any time, located in a SFHA.

 

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(b)                                  Fleetwood shall cause the Agent, for the ratable benefit of the Agent and the Lenders, to be named as secured party or mortgagee and sole loss payee or additional insured (subject to a provision, in form and substance reasonably acceptable to the Agent, that as to Mortgaged Property, the trustee or agent for the 2008 Senior Secured Debentures may be named as a subordinate secured party or mortgagee and loss payee or additional insured), with respect to insurance policies to the extent of their coverage of Collateral, in a manner acceptable to the Agent.  Each policy of insurance shall contain a clause or endorsement requiring the insurer to give not less than thirty (30) days’ prior written notice to the Agent in the event of cancellation of the policy for any reason whatsoever and a clause or endorsement stating that the interest of the Agent shall not be impaired or invalidated by any act or neglect of Fleetwood or any of its Subsidiaries or the owner of any Real Estate for purposes more hazardous than are permitted by such policy.  All premiums for such insurance shall be paid by Fleetwood and its Subsidiaries when due, and certificates of insurance and, if requested by the Agent or any Lender, photocopies of the policies, shall be delivered to the Agent, in each case in sufficient quantity for distribution by the Agent to each of the Lenders.  If Fleetwood and its Subsidiaries fail to procure such insurance or to pay the premiums therefor when due, the Agent may, and at the direction of the Required Lenders shall, do so from the proceeds of Revolving Loans.

 

7.6                                  Insurance and Condemnation Proceeds .  The Borrowers shall promptly notify the Agent and the Lenders of any material loss, damage, or destruction to the Collateral, whether or not covered by insurance.  The Agent is hereby authorized to collect all insurance and condemnation proceeds in respect of Collateral directly and to apply or remit them as follows:

 

(a)                                   With respect to insurance and condemnation proceeds relating to Collateral other than Fixed Assets, after deducting from such proceeds the reasonable expenses, if any, incurred by the Agent in the collection or handling thereof, the Agent shall apply such proceeds to the Revolving Loans.

 

(b)                                  With respect to insurance and condemnation proceeds relating to Collateral consisting of Fixed Assets, the Agent shall permit or require the Loan Parties to use such proceeds, or any part thereof, to replace, repair, restore or rebuild the relevant Fixed Assets in a diligent and expeditious manner with materials and workmanship of substantially the same quality as existed before the loss, damage or destruction so long as (1) no Default or Event of Default has occurred and is continuing and (2) the Loan Parties first (i) provide the Agent and the Required Lenders with plans and specifications for any such repair or restoration which shall be reasonably satisfactory to the Required Lenders (such satisfaction not to be unreasonably withheld or delayed) and (ii) demonstrate to the reason