Exhibit 10(q)
ASSUMPTION AGREEMENT
THIS ASSUMPTION AGREEMENT (this "Agreement") dated as of
January 2, 1997 is made by and among First Commercial Bank, an Alabama state
banking corporation (the "Lender"), Cavalier Homes, Inc., a Delaware corporation
("Cavalier Homes"), and the other entities whom are presently Borrowers under
that certain Revolving, Warehouse and Term Loan Agreement dated as of February
17, 1994, as heretofore amended (Cavalier Homes and such other Borrowers being
herein referred to as the "Borrowers"), and Cavalier Manufacturing, Inc., a
Delaware corporation ("CMI"), and Cavalier Industries, Inc., a Delaware
corporation ("CII") (each an "Assuming Entity" and collectively, the "Assuming
Entities").
R E C I T A L S :
Lender and Cavalier Homes, Cavalier Homes of Alabama, Inc., an
Alabama corporation ("CHA"), Cavalier Town & Country of Texas, Inc., a Texas
corporation (formerly Cavalier Homes of Texas, Inc.) ("CT&C"), Star Industries,
Inc., a Delaware corporation ("Star"), Buccaneer Homes of Alabama, Inc., an
Alabama corporation ("BHA"), Brigadier Homes of North Carolina, Inc., a North
Carolina corporation ("BHNC"), Mansion Homes, Inc., a North Carolina corporation
("Mansion"), Homestead Homes, Inc., a Georgia corporation ("Homestead"), and
Cavalier Acceptance Corporation, an Alabama corporation ("Cavalier Acceptance"),
as Borrowers, have heretofore entered into a Revolving, Warehouse and Term Loan
Agreement dated as of February 17, 1994, as amended by that certain First
Amendment to Revolving, Warehouse and Term Loan Agreement dated March 14, 1996
(as the same has been amended to and including the date hereof, the "Loan
Agreement"). Capitalized terms used in this Agreement, unless otherwise defined
herein, will have the meanings given to them in the Loan Agreement.
Under the terms of the Loan Agreement, as amended, Lender has
agreed to lend to Borrowers up to $5,000,000 on a revolving basis (the
"Revolving Loan Commitment") and to Cavalier Acceptance, one of the Borrowers,
up to $18,000,000 pursuant to a warehouse and term loan facility, but solely on
the terms and conditions specified in the Loan Agreement.
Pursuant to an internal reorganization of Cavalier Homes and
certain entities controlled by it, among other things, (i) Star has been
dissolved, effective as of December 30, 1996, and Cavalier Homes, as its sole
stockholder, has assumed all of Star's liabilities and obligations to Lender,
including, without limitation, the Loan Agreement, the Revolving Note and the
other Obligations, (ii) CHA, CT&C, Riverchase Homes, Inc., an Alabama
corporation, and BHA have merged, effective as of January 1, 1997, with and into
CMI, a wholly-owned subsidiary of Cavalier Homes, with CMI assuming all the
liabilities and obligations of such merging entities, including, without
limitation, all of CHA's, CT&C's and BHA's liabilities and obligations to Lender
under the Loan Agreement, the Revolving Loan and the other Obligations, and
(iii) Homestead, Astro Mfg., Co., Inc., a Pennsylvania corporation, BHNC and
Mansion have merged, effective as of January 1, 1997, with and into CII, a
wholly-owned subsidiary of Cavalier Homes, with CII assuming all the liabilities
and obligations of such merging entities, including, without limitation, all of
Homestead's, BHNC's and Mansion's obligations to Lender under the Loan
Agreement, the Revolving Loan and the other Obligations.
Each of the Assuming Entities desires to become obligated as a
Borrower, jointly and severally, with Cavalier Homes and the other Borrowers,
with respect to the Loan Agreement, the Revolving Loan and the other Obligations
and to take all other action necessary to become a Borrower and a Participating
Subsidiary (as such term is hereinafter defined) under the Loan Agreement, and
to cause all of Assuming Entity's Accounts, Inventory and other specified
assets, whether now owned or hereafter acquired, to be included in the
Collateral, as defined in the Loan Agreement.
NOW, THEREFORE, in consideration of the foregoing recitals and
the mutual agreements herein set forth, and to induce Lender to make Advances
under the Loan Agreement, and in further consideration of the substantial
material benefit to accrue to each of the Assuming Entities from Advances made
and to be made by Lender under the Revolving Loan, the parties hereto agree as
follows:
1. Each of the Assuming Entities hereby assumes and agrees
that it is and shall be fully liable, jointly and severally with the other
Borrowers, for the Obligations, and all covenants, agreements, warranties and
representations with respect to the Revolving Loan set forth in the Loan
Agreement and the Revolving Note, and hereby agrees that it is and shall be a
party to, and a Borrower under the terms of, the Loan Agreement, the Revolving
Note, and the other Loan Documents, with the same force and effect as would be
the case if Assuming Entity had been named as a Borrower in and had executed and
delivered the Loan Agreement, the Revolving Note, and the other Loan Documents
to Lender at Closing; provided, however, that its liability with respect to the
Obligations shall be limited to an amount equal to the greater of (i) 95% of
Assuming Entity's Net Worth (as hereinafter defined) from time to time; or (ii)
the amount that in a legal proceeding brought within the applicable limitations
period is determined by the final, non-appealable order of a court having
jurisdiction over the issue and the applicable parties to be the amount of value
given by Lender, or received by Assuming Entity, in exchange for the obligations
of Assuming Entity under this Agreement and the Loan Agreement. As used in this
Section 1, "Net Worth" shall mean (x) the fair value of the property of the
Assuming Entity from time to time (taking into consideration the value, if any,
of rights of subrogation, contribution and indemnity), minus (y) the total
liabilities of Assuming Entity (including contingent liabilities [discounted in
appropriate instances], but excluding liabilities of the Assuming Entity under
this Agreement and the Loan Agreement) from time to time.
2. As security for the prompt satisfaction of all Obligations,
each of the Assuming Entities hereby assigns, transfers and conveys to Lender
all of such Assuming Entity's right, title and interest in and to, and grants
Lender a lien on and a security interest in, all amounts that may be owing from
time to time by Lender to Assuming Entity in any capacity, including, without
limitation, any balance or share belonging to Assuming Entity, of any deposit or
other account with Lender, which lien and security interest shall be independent
of any right of set-off which Lender may have.
3. As further security for the prompt satisfaction of all
Obligations, in addition to any other or further security provided under the
Loan Agreement or any of the Security Documents, each of the Assuming Entities
hereby assigns to Lender all of such Assuming Entity's right, title and interest
in and to, and grants Lender a lien upon and security interest in, all of the
following, wherever located, whether now owned or hereafter acquired, together
with all replacements therefor and proceeds (including, without limitation,
insurance proceeds) thereof (all of which shall constitute original Collateral
under this Agreement and the Loan Agreement):
a. Accounts;
b. Chattel Paper;
c. Contracts;
d. Contract Rights;
e. Documents;
f. Eligible Contracts;
g. General Intangibles;
h. Instruments;
i. Inventory;
j. Rights as seller of Goods and rights to
returned, repossessed or reclaimed Goods;
and
k. All Records pertaining to any of the
Collateral.
4. The foregoing liens shall be first and prior liens except
for Permitted Liens. The Collateral and all of each Assuming Entity's other
property of any kind held by Lender shall stand as one general, continuing
collateral security for all Obligations and may be retained by Lender until all
Obligations have been satisfied in full and Lender's commitment to lend under
the Loan Agreement has been terminated.
5. Each of the Assuming Entities acknowledges that it has had
full and complete access to the underlying papers relating to the Obligations
and all other papers executed by any person in connection with the Obligations,
has reviewed them and is fully aware of the meaning and effect of their
contents. Each of the Assuming Entities is fully informed of all circumstances
that bear upon the risks of executing this Agreement and which a diligent
inquiry would reveal. Each of the Assuming Entities has adequate means to obtain
from the Borrowers on a continuing basis information concerning the financial
condition of any or all of the Borrowers and is not depending on Lender to
provide such information, now or in the future. Each of the Assuming Entities
agrees that Lender shall have no obligation to advise or notify it or to provide
it with any data or information. The execution and delivery of this Agreement is
not a condition precedent (and Lender has not in any way implied that the
execution of this agreement is a condition precedent) to Lender's making,
extending or modifying any loan or any other financial accommodation to or for
such Assuming Entity otherwise than under the Loan Agreement.
6. Each of the Assuming Entities hereby unconditionally agrees
to pay and perform all of the Obligations, whether now existing or hereafter
incurred or arising (subject to the proviso of Section 1 above).
7. Each of the Assuming Entities hereby specifically
acknowledges and agrees, without limiting the generality of the other provisions
of this Agreement, to be bound by the terms and conditions specified in the Loan
Agreement, as the same may be amended, including, without limitation, agreements
whereby such Assuming Entity appoints Cavalier Homes as its agent and
attorney-in-fact to act on its behalf for all purposes of the Loan Agreement and
the other Loan Documents.
8. Each of the Assuming Entities hereby agrees that the
obligations and liabilities of such Assuming Entity with respect to the
Obligations are joint and several, continuing, absolute and unconditional
(subject to the proviso of Section 1 above). Without limiting the generality of
the foregoing, the obligations and liabilities of each of the Assuming Entities
with respect to the Revolving Loan and the Revolving Note or under the Security
Documents executed by such Assuming Entity shall not be released, discharged,
impaired, modified or in any way affected by (a) the invalidity or
unenforceability of any Loan Document, (b) the failure of the Lender to give
Assuming Entity a copy of any notice given to the Borrowers or any of them, (c)
any modification, amendment or supplement of any obligation, covenant or
agreement contained in any Loan Document, (d) any compromise, settlement,
release or termination of any obligation, covenant or agreement in any loan
document, (e) any waiver of payment, performance or observance by or in favor of
the Borrowers or any of them of any obligation, covenant or agreement under any
Loan Document, (f) any consent, extension, indulgence or other action or
inaction, or any exercise or non-exercise of any right, remedy or privilege with
respect to any Loan Document, (g) the extension of time for payment or
performance of any of the Obligations, (h) the release or discharge of Lender's
claims against any collateral now or at any time hereafter securing any of the
Obligations, the other Borrowers, or any of them, by operation of law or
otherwise or (i) any other matter that might otherwise be raised in avoidance
of, or in defense against an action to enforce, the obligations of each such
Assuming Entity under this Agreement, the Loan Agreement, the Revolving Note or
any other Loan Document.
9. Each of the Assuming Entities covenants and agrees with
Lender as follows:
(a) Such Assuming Entity will not without Lender's
consent (i) sell, lease, transfer or otherwise dispose of, in a single
transaction or a series of related transactions, the whole of its
business or assets or such part thereof as in the opinion of Lender
constitutes a substantial portion thereof; or (ii) liquidate, wind up
or dissolve, or enter into any consolidation, merger, syndication or
other combination or engage in any other reorganization or
recapitalization; provided, however, that Assuming Entity may sell,
lease, transfer or dispose of all or any portion of its business or
assets to any other Consolidated Entity or Consolidated Entities or to
any Borrower or merge into or consolidate with any other Borrower or
one or more of the Consolidated Entities, so long as the entity to
which such business or assets are sold, leased, transferred or disposed
of or which survives or results from any such merger or consolidation
is a Borrower under the Loan Agreement.
(b) Such Assuming Entity will not incur, create,
assume or permit to exist any lien upon any of its properties or assets
of any character, real, personal or mixed, whether now owned or
hereafter acquired, other than liens that constitute Permitted Liens.
(c) Any action taken or attempted to be taken by
Assuming Entity in violation of the provisions of clause (a) above and
any lien incurred, created, assumed or permitted to exist in violation
of the provisions of clause (b) above shall be null, void and of no
force or effect whatsoever.
(d) Such Assuming Entity will execute such financing
statements (including amendments thereto and continuation statements
thereof), in form satisfactory to Lender as Lender may from time to
time specify; pay, or reimburse Lender for paying, all costs and taxes
of filing or recording the same in such public offices as Lender may
designate; deliver such of the Collateral which in the sole judgment of
Lender is best perfected by possession, to Lender or its designated
agent or bailee; and take such other steps as Lender may from time to
time direct, including, without limitation, the noting of Lender's lien
on the Collateral and on any certificates of title therefor, all to
perfect Lender's security interest in the Collateral.
(e) Such Assuming Entity will deliver immediately to
Lender any Chattel Paper or Instruments arising out of the Collateral
usually, but not exclusively, as proceeds. Further, Assuming Entity
hereby agrees that such Chattel Paper or Instruments constitute
original Collateral rather than proceeds; but if proceeds, then
Lender's security interest created by this Agreement in the Chattel
Paper or Instruments shall not be claimed merely as proceeds.
(f) Such Assuming Entity will comply with all of the
obligations, requirements and restrictions in the covenants contained
in Article VII of the Loan Agreement, to the extent they are now
applicable, or may hereafter be amended to be applicable, to a Borrower
that is a Participating Subsidiary.
(g) Such Assuming Entity shall, promptly upon demand
by Lender therefor upon the occurrence and during the continuance of an
Event of Default, execute and deliver to Lender from time to time such
security agreements and other collateral documents, together with any
related financing statements and other instruments, as Lender may
request granting to Lender a lien on any or all real property,
Accounts, Chattel Paper, Contracts, Contract Rights, Documents, General
Intangibles, Instruments, Inventory, rights as seller of Goods and
rights to returned, repossessed or reclaimed Goods, and all Records
pertaining to any of the Collateral of Assuming Entity, all as
collateral security for the Obligations, it being understood and agreed
that the rights of Lender under this clause (g) shall be in addition
to, and cumulative of, all other rights of the Lender under the terms
of the Loan Agreement to require collateral as security for the
Obligations. Any lien granted under this Agreement or under Article V
of the Loan Agreement by Assuming Entity shall secure the Obligations
only to the extent that Assuming Entity is liable therefor under the
terms of this Agreement and the Loan Agreement.
(h) Such Assuming Entity will not exercise any rights
that it may acquire by way of subrogation under this Agreement or any
Subrogation and Contribution Agreement or by any payment made hereunder
or under any of the other Loan Documents or otherwise, until all the
Obligations have been paid in full and the Loan Agreement has been
terminated. If any amount shall be paid to Assuming Entity on account
of any such subrogation rights at any time when all of the Obligations
shall not have been paid in full and the Loan Agreement terminated,
such amount shall be held in trust for the benefit of the Lender and
shall be paid forthwith to the Lender to be credited and applied upon
the Obligations, whether matured or unmatured, in accordance with the
terms of the Loan Documents.
(i) Such Assuming Entity will not amend or waive any
provision of the Subrogation and Contribution Agreement entered into by
Assuming Entities and Borrowers nor consent to any departure by
Borrowers or any other Participating Subsidiary or Participating
Partnership from such Subrogation and Contribution Agreement or from
any similar Subrogation and Contribution Agreements executed by other
Participating Subsidiaries and Participating Partnerships, without
having obtained the prior written consent of Lender to such amendment,
waiver or consent.
10. Each of the Assuming Entities agrees that it is, and for
all purposes of the Loan Agreement, the Revolving Note and the other Loan
Documents shall be, a Borrower and a Participating Subsidiary.
11. Assuming Entities, Borrowers and Lender hereby agree that
Exhibits II.6.1(B), II.6.1(D), II.6.1(I), II.7.2(G), F, G, H, I, J, and K to the
Loan Agreement are hereby supplemented by the respective Supplements attached
hereto which relate to the Assuming Entities.
12. This Agreement shall bind each Assuming Entity's
successors and assigns and shall inure to the benefit of, and be enforceable by,
Lender and its successors and assigns. This Agreement may only be waived,
modified or amended by a written instrument signed by the party against which
the enforcement thereof is sought. This Agreement shall in all respects be
governed by, and construed in accordance with, the laws of the State of Alabama,
without regard to such state's rules regarding conflicts of law. If any term of
this Agreement shall be invalid or unenforceable, the remainder of this
Agreement shall remain in full force and effect. This Agreement may be executed
in counterparts, each of which shall be deemed an original, but all of which
shall constitute one agreement. This Agreement and the other Loan Documents
constitute the entire agreement of the parties with respect to the subject
matter hereof and supersede any inconsistent agreement with respects to the
subject matter hereof and thereof.
Initial (Cavalier Homes, for itself Initial (Lender) Initial (CMI)
and as agent for the other Borrowers)
Initial (CII)
13. JURISDICTION; WAIVERS.
(A) JURY WAIVER. EACH OF THE ASSUMING ENTITIES,
BORROWERS AND LENDER HEREBY:
(1) IRREVOCABLY AND UNCONDITIONALLY WAIVES
THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING OR
COUNTERCLAIM OF ANY TYPE AS TO ANY MATTER ARISING DIRECTLY OR
INDIRECTLY OUT OF OR WITH RESPECT TO THIS AGREEMENT, THE LOAN
AGREEMENT, THE NOTES, THE OTHER LOAN DOCUMENTS OR ANY OTHER DOCUMENT
EXECUTED IN CONNECTION HEREWITH OR THEREWITH; AND
(2) AGREES THAT ANY OF THEM MAY FILE A COPY
OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE
KNOWING, VOLUNTARY AND BARGAINED-FOR AGREEMENT BETWEEN THE PARTIES
IRREVOCABLY TO WAIVE TRIAL BY JURY,AND THAT ANY DISPUTE OR CONTROVERSY
OF ANY KIND WHATSOEVER BETWEEN THEM SHALL INSTEAD BE TRIED IN A COURT
OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.
(B) CONSENT TO JURISDICTION; WAIVER OF VENUE.
EACH OF THE ASSUMING ENTITIES, BORROWERS AND LENDER HEREBY:
(1) KNOWINGLY AND VOLUNTARILY CONSENTS TO
THE PERSONAL JURISDICTION OF ANY COURT OF COMPETENT SUBJECT MATTER
JURISDICTION (WHETHER STATE OR FEDERAL) HOLDING IN BIRMINGHAM,
JEFFERSON COUNTY, ALABAMA, FOR THE DETERMINATION OF ANY CLAIM OR
CONTROVERSY ARISING UNDER OR IN CONNECTION WITH THIS AGREEMENT,
THE LOAN AGREEMENT, THE NOTES OR ANY OTHER LOAN DOCUMENT, OR ANY
OTHER DOCUMENT EXECUTED IN CONNECTION
HEREWITH OR THEREWITH; AND KNOWINGLY AND VOLUNTARILY WAIVES ANY
OBJECTION TO THE EXERCISE OF PERSONAL JURISDICTION OVER IT BY SAID
COURTS ON THE GROUND THAT IT DOES NOT HAVE THE REQUISITE MINIMUM
CONTACTS WITH THE STATE OF ALABAMA OR THAT EXERCISE OF SUCH
JURISDICTION OTHERWISE FAILS TO MEET THE REQUIREMENTS OF MINIMUM
CONTACTS OR DUE PROCESS UNDER THE CONSTITUTION OF THE UNITED STATES OR
THE STATE OF ALABAMA; AND AGREES THAT SERVICE OF PROCESS ON IT AT ITS
ADDRESS SET FORTH BELOW, OR IN SECTION 10.6 OF THE LOAN AGREEMENT, IN
ACCORDANCE WITH THE PROVISIONS OF THE ALABAMA RULES OF CIVIL PROCEDURE
WILL BE SUFFICIENT NOTICE OF ANY PROCEEDING AGAINST ANY OF THE
UNDERSIGNED IN ANY SUCH COURT, AND WAIVES ANY REQUIREMENT OF OTHER OR
ADDITIONAL SERVICE OF PROCESS OR NOTICE OF ANY SUCH PROCEEDING; AND
FURTHER AGREES THAT EXERCISE OF JURISDICTION OVER IT BY COURTS HOLDING
IN BIRMINGHAM, JEFFERSON COUNTY, ALABAMA SHALL BE IN ADDITION TO, AND
NOT IN LIEU OF, THE EXERCISE OF JURISDICTION OVER IT BY ANY OTHER COURT
OF COMPETENT JURISDICTION, WHETHER WITHIN OR WITHOUT THE STATE OF
ALABAMA; AND
(2) KNOWINGLY AND VOLUNTARILY WAIVES ANY
OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY
ACTION OR PROCEEDING AGAINST IT IN ANY COURT MENTIONED HEREINABOVE
OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT
AND AGREES NOT TO PLEAD OR CLAIM THE SAME.
14. Each of the Assuming Entities and the other Borrowers, jointly and
severally, agree to pay directly or reimburse Lender, on demand, for all of
Lender's expenses, including the reasonable fees and expenses of its legal
counsel, UCC filing fees and similar expenses, incurred in connection with the
preparation, amendment, modification or enforcement of this Agreement or the
Loan Agreement, and the collection or attempted collection of the Notes.
IN WITNESS WHEREOF, this Agreement has been executed by the parties
hereto as of the day and year first written above.
ASSUMING ENTITIES:
CAVALIER MANUFACTURING, INC.
By: [L.S.]
Name:
Its:
Address:
Taxpayer Identification #:
CAVALIER INDUSTRIES, INC.
By: [L.S.]
Name:
Its:
Address:
Taxpayer Identification #:
BORROWERS:
CAVALIER HOMES, INC.
for itself and as agent for the other Borrowers
By: [L.S.]
Name:
Its:
LENDER:
FIRST COMMERCIAL BANK
By: [L.S.]
Its:
SUPPLEMENT TO EXHIBIT II.6.1(B)
Other Corporate and Fictitious Names
[Information to be provided by Borrowers.]
SUPPLEMENT TO EXHIBIT II.6.1(D)
Mergers, Acquisitions, and Certain Changes
[Information to be provided by Borrowers.]
SUPPLEMENT TO EXHIBIT II.6.1(I)
Claims, Litigation*
[Information to be provided by Borrowers.]
*Claims not covered by insurance
SUPPLEMENT TO EXHIBIT II.7.2(G)
Existing Guaranties
[Information to be provided by Borrowers.]
SUPPLEMENT TO EXHIBIT F
Existing Liens
[Information to be provided by Borrowers.]
SUPPLEMENT TO EXHIBIT G
Qualification to do Business
[Information to be provided by Borrowers.]
SUPPLEMENT TO EXHIBIT H
Places of Business
[Information to be provided by Borrowers.]
Locations of Collateral
[Information to be provided by Borrowers.]
SUPPLEMENT TO EXHIBIT I
Existing Indebtedness
[Information to be provided by Borrowers.]
SUPPLEMENT TO EXHIBIT J
State of Incorporation of Consolidated Entities
[Information to be provided by Borrowers.]
SUPPLEMENT TO EXHIBIT K
Cavalier Homes' Ownership of Consolidated Entities
[Information to be provided by Borrowers.]
