SECOND AMENDMENT TO AMENDED AND RESTATED AGREEMENT FOR WHOLESALE FINANCING (Finished Goods - Shared Credit Facility)
SECOND
AMENDMENT TO
AMENDED
AND RESTATED AGREEMENT FOR WHOLESALE FINANCING
(Finished
Goods - Shared Credit Facility)
This
Second Amendment to Amended and Restated Agreement for Wholesale Financing
(“Amendment”) is made as of this 19th
day of
January, 2006, by and between TEXTRON FINANCIAL CORPORATION, a Delaware
corporation (“Secured Party”); and Palm
Harbor Homes, Inc.,
a
Florida corporation, Palm
Harbor Manufacturing, L.P.,
a Texas
limited partnership, Palm
Harbor Homes I L.P.,
a Texas
limited partnership, and Palm Harbor Marketing, Inc., a Nevada corporation
(jointly and severally, individually and collectively, “Borrowers”).
WITNESSETH
THAT:
WHEREAS,
the Secured Party and Borrowers are parties to a certain Amended and Restated
Agreement for Wholesale Financing, Finished Goods-Shared Credit Facility dated
May 25, 2004, as amended by a certain First Amendment dated as of June 30,
2005
(as amended, the “Agreement”); and
WHEREAS,
the parties hereto desire to amend certain of the terms of the Agreement.
NOW
THEREFORE, in consideration of the premises and the mutual obligations
hereinafter contained, and for other good and valuable consideration, the
receipt whereof is hereby acknowledged, the parties hereto agree as follows:
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1.
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All
capitalized terms used and not otherwise defined herein shall have
the
same meanings provided therefore in the Agreement.
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2.
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Section
7 of the Agreement is hereby amended by inserting immediately at
the end
thereof as a new paragraph the following:
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“Anything
contained herein to the contrary notwithstanding, no Advance shall be funded
hereunder by the Administrative Agent or any Lender when (i) the Collateral
Coverage is greater than point eight to one (.8:1) or (ii) (A) the Collateral
Coverage is greater than point seven to one (.7:1) but less than or equal to
point eight to one (.8:1) and (B) (x) the then aggregate outstanding principal
amount of Advances is, or the aggregate outstanding principal amount of Advances
after giving effect to such Advance request would be, greater than $50,000,000
or (y) after giving effect to such Advance request, the Collateral Coverage
would be greater than point eight to one (.8:1). The foregoing limitation shall
be calculated quarterly or, at the request of Borrowers, more frequently to
the
extent that Borrowers make such request in order to qualify for greater capacity
to obtain Advances under the foregoing limitation. For purposes of this
paragraph, “Collateral Coverage” means, as of any relevant date of
determination, the ratio of (i) the aggregate outstanding principal amount
of
Advances, to (ii) the aggregate invoice amount of, without duplication, all
of
Borrowers’ inventory of completed manufactured or modular homes (i.e. the amount
of “Finished Goods” as listed on Borrowers’ financial statements from time to
time).”
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3.
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Effective
as of December 1, 2005, Section 10 of the Agreement is hereby amended
by:
(A) deleting the words “Prime Rate from time to time in effect” in clause
(a) of the first paragraph thereof and inserting in their place the
words
“Prime Rate from time to time in effect plus six tenths of a percent
(.6%)” and (B) deleting the words “Prime Rate from time to time in effect”
in clause (i) of the second paragraph thereof and inserting in their
place
the words “Prime Rate from time to time in effect plus
six tenths of a percent (.6%).”
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4.
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Section
14 of the Agreement is hereby amended and restated in its entirety
to read
as follows:
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“14.
Grant
of Security Interest.
In
order to secure the payment and performance by PHHI of all present and future
indebtedness and obligations of PHHI hereunder or in any other agreement entered
into in connection herewith, whether direct or indirect, primary or secondary,
absolute or contingent, or otherwise, including but not limited to the Advances
owing from PHHI, the payment of all interest and finance charges accrued thereon
and all fees, charges and expenses hereunder in respect thereof, PHHI hereby
grants to the Administrative Agent on behalf of the Lenders a security interest
in all of its right, title and interest in and to (a) all of its inventory
of
completed manufactured or modular homes, wherever located, in which PHHI now
or
hereafter has rights, including, without limitation, all installed or related
appliances or products; all present and future attachments, accessories and
accessions thereto; all fixtures in respect thereof; and all instruments,
accounts, and chattel paper relating thereto; (b) all books and records of
PHHI
relating to or referring to any of the foregoing; and (c) all proceeds of any
of
the foregoing (collectively, the “PHHI
General Collateral”).
In
order
to secure the payment and performance by PHMLP of all present and future
indebtedness and obligations of PHMLP hereunder or in any other agreement
entered into in connection herewith, whether direct or indirect, primary or
secondary, absolute or contingent, or otherwise, including but not limited
to
the Advances owing from PHMLP, the payment of all interest and finance charges
accrued thereon and all fees, charges and expenses hereunder in respect thereof,
PHMLP hereby grants to the Administrative Agent on behalf of the Lenders a
security interest in all of its right, title and interest in and to (A) all
of
its inventory of completed manufactured or modular homes, wherever located,
in
which PHHI now or hereafter has rights, including, without limitation, all
installed or related appliances or products; all present and future attachments,
accessories and accessions thereto; all fixtures in respect thereof; and all
instruments, accounts, and chattel paper relating thereto; (B) all books and
records of PHHI relating to or referring to any of the foregoing; and (C) all
proceeds of any of the foregoing (collectively, the “PHMLP
General Collateral”).
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In
order
to secure the payment and performance by PHHLP of all present and future
indebtedness and obligations of PHHLP hereunder or in any other agreement
entered into in connection herewith, whether direct or indirect, primary or
secondary, absolute or contingent, or otherwise, including but not limited
to
the Advances owing from PHHLP, the payment of all interest and finance charges
accrued thereon and all fees, charges and expenses hereunder in respect thereof,
PHHLP hereby grants to the Administrative Agent on behalf of the Lenders a
security interest in all of its right, title and interest in and to (AA) all
of
its inventory of completed manufactured or modular homes, wherever located,
in
which PHHI now or hereafter has rights, including, without limitation, all
installed or related appliances or products; all present and future attachments,
accessories and accessions thereto; all fixtures in respect thereof; and all
instruments, accounts, and chattel paper relating thereto; (BB) all books and
records of PHHI relating to or referring to any of the foregoing; and (CC)
all
proceeds of any of the foregoing (collectively, the “PHHLP General Collateral”).
In
order
to secure the payment and performance by PHMI of all present and future
indebtedness and obligations of PHMI hereunder or in any other agreement entered
into in connection herewith, whether direct or indirect, primary or secondary,
absolute or contingent, or otherwise, including but not limited to the Advances
owing from PHMI, the payment of all interest and finance charges accrued thereon
and all fees, charges and expenses hereunder in respect thereof, PHMI hereby
grants to the Administrative Agent on behalf of the Lenders a security interest
in all of its right, title and interest in and to (AAA) all of its inventory
of
completed manufactured or modular homes, wherever located, in which PHHI now
or
hereafter has rights, including, without limitation, all installed or related
appliances or products; all present and future attachments, accessories and
accessions thereto; all fixtures in respect thereof; and all instruments,
accounts, and chattel paper relating thereto; (BBB) all books and records of
PHHI relating to or referring to any of the foregoing; and (CCC) all proceeds
of
any of the foregoing (collectively, the “PHMI
General Collateral”).
PHHLP
Purchase Money Collateral, PHMI Purchase Money Collateral, PHHI General
Collateral, PHMLP General Collateral, PHHLP General Collateral and PHMI General
Collateral are referred to herein, collectively, as the “Collateral.”
For
the avoidance of doubt, the Collateral shall secure all obligations of all
of
the Borrowers hereunder or in any other agreements entered into by anyone or
more of them in connection herewith. All of terms used in this Section 14 for
which meanings are provided in the Uniform Commercial Code of the applicable
state are used herein with such meanings.
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Borrowers
shall, on or prior to the date hereof, deliver to the Administrative Agent
on
behalf of the Lenders, a cash deposit (the “Cash
Deposit”)
of
$10,000,000 to be held as additional Collateral and hereby grant to the
Administrative Agent on behalf of the Lenders a security interest in the Cash
Deposit and all interest, investments and proceeds in respect thereof to secure
the payment and performance by Borrowers of all present and future indebtedness
and obligations of Borrowers hereunder or in any other agreement entered into
in
connection herewith, whether direct or indirect, primary or secondary, absolute
or contingent, or otherwise, including but not limited to the Advances owing
from anyone or more of the Borrowers, the payment of all interest and finance
charges accrued thereon and all fees, charges and expenses hereunder in respect
thereof. The Cash Deposit shall be held by the Administrative Agent on behalf
of
the Lenders in an account owned by and under the control of the Administrative
Agent and may be commingled with other funds of the Administrative Agent. The
Borrowers shall have no access to the Cash Deposit or the right to direct any
investments thereof. The Administrative Agent is under no obligation to invest
any of the Cash Deposit but may do so in its sole discretion. The Borrowers
are
entitled to no proceeds or interest earned in respect of the investment of
the
Cash Deposit by the Administrative Agent (all of such proceeds to be retained
by
the Administrative Agent in consideration of its undertaking to pay interest
to
the Borrowers on the Cash Deposit as set forth in the next sentence). The
Administrative Agent agrees to pay to the Borrowers, quarterly in arrears for
so
long as no Event of Default shall exist, interest on the balance of the Cash
Deposit held by the Administrative Agent accrued at the Prime Rate from time
to
time in effect (based on the actual days that the Cash Deposit is held by the
Administrative Agent and a year of 365 days). When, at any time, the aggregate
outstanding amount of the Advances shall be less than $50,000,000 and provided
that no Default or Event of Default shall then exist, the Administrative Agent
shall pay to the Borrowers an amount of the Cash Deposit such that the remaining
balance of the Cash Deposit shall equal $5,000,000; such payment to be made
reasonably promptly after the aggregate outstanding amount of the Advances
shall
have decreased below the $50,000,000 threshold. Neither the Administrative
Agent
nor the Lenders shall be obligated to make any Advance to anyone or more of
the
Borrowers if, after giving effect thereto, the aggregate outstanding principal
balance of the Advances would exceed $50,000,000 unless the Cash Deposit being
held by the Administrative Agent equals $10,000,000. If the Administrative
Agent
and Lenders shall make Advances to anyone or more of the Borrowers such that
the
$50,000,000 threshold is exceeded without having the full $10,000,0000 as the
Cash Deposit, the Administrative Agent shall deliver a written demand to the
Borrowers to pay to the Administrative Agent sufficient moneys in immediately
available funds such that the Cash Deposit shall equal $10,000,000; the failure
of the Borrowers to do so within five (5) Business Days of receiving such
written demand shall constitute an immediate Event of Default. Any calculation
of the Cash Deposit for purposes of this Agreement shall exclude accrued
interest or investment gains or losses. For the avoidance of doubt, the
Administrative Agent shall have, with respect to the Cash Deposit, all of the
rights and remedies of a secured party under the Uniform Commercial Code of
the
State whose laws govern this Agreement and all of the rights and remedies
otherwise provided for under applicable law.”
For
the
avoidance of doubt, by the amendment and restatement of Section 14 of the
Agreement as set forth above, the Borrowers intend to grant, and hereby grant,
to the Administrative Agent on behalf of the Lenders a security interest in
all
of the Collateral (as defined above) to secure all of the obligations of all
of
the Borrowers hereunder or in any other agreements entered into by anyone or
more of them in connection with the Agreement and/or this Amendment.
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5.
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Section
17 of the Agreement is hereby amended by inserting as a new clause
(t), in
the correct alphabetical order, the following:
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“(t)
such
Borrower will promptly provide written notice to the Administrative Agent of
any
default or Event of Default under the CountryPlace Warehouse/Securitization
Facility.”
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6.
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Section
22.1 of the Agreement is hereby amended by deleting clauses (n) and
(o)
thereof.
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7.
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Section
27 of the Agreement is hereby amended by deleting the words “a term of
three (3) years from the date hereof’ and inserting in their place the
words “a term through and including March 31, 2009”. Section 27 of the
Agreement is hereby further amended by: (i) deleting the words “if the
effective date of termination shall occur on or prior to the first
anniversary of the date of this Agreement” and inserting in their place
the words “if the effective date of termination shall occur on or prior to
March 31, 2007”; (ii) deleting the words “if the effective date of
termination shall occur after the first anniversary of the date of
this
Agreement and on or prior to the second anniversary of the date of
this
Agreement” and inserting in their place the words “if the effective date
of termination shall occur after March 31, 2007 and on or prior to
March
31, 2008”; and (iii) deleting the words “if the effective date of
termination shall occur after the second anniversary of the date
of this
Agreement and on or prior to the Maturity Date” and inserting in their
place the words “if the effective date of termination shall occur after
March 31, 2008 and on or prior to the Maturity Date”.
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8.
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Section
29.15 of the Agreement is hereby amended by making the last sentence
thereof ineffective going forward as of December 1, 2005.
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9.
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Section
37.1 of the Agreement is hereby amended and restated in its entirety
to
read as follows:
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“37.1
Covenants.
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(a)
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Operating
Cash Flow.
Borrowers covenant that Consolidated Net Cash Provided by Operating
Activities, as determined as of the end of and in respect of each
fiscal
year of the Borrowers (commencing with the fiscal year of the Borrowers
ending on March 31, 2006), will not be less than an amount which
(i) shall
be mutually agreeable among Borrowers and Lenders and (ii) shall
not be
less than (A) negative Fifty Million Dollars (-$50,000,000) for fiscal
year ending March 31, 2006 and (B) negative Twenty Five Million Dollars
(-$25,000,000) for fiscal year ending March 31, 2007 and for every
consecutive fiscal year ending thereafter.
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(b)
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Minimum
Liquidity.
Borrowers covenant that they will maintain as of the last day of
each
fiscal quarter ending on or after June 30, 2005, a Liquidity Amount
of not
less than $25,000,000.
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(c)
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Minimum
Profitability.
Borrowers covenant that they will achieve as of the last day of each
fiscal quarter an aggregate consolidated net income after tax for
the
respective periods set forth below, as follows (i) in respect of
the
fiscal quarter ending June 30, 2005, not less than $1,500,000; (ii)
in
respect of the two consecutive fiscal quarters ending September 30,
2005,
not less than $1,750,000; (iii) in respect of the three consecutive
fiscal
quarters ending December 31, 2005, not less than $5,000,000; and
(iv) in
respect of the four consecutive fiscal quarters ending as of the
last day
of each fiscal quarter ending on and after March 31, 2006, not less
than
$7,500,000.
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(d)
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Minimum
Inventory Turn.
Borrowers covenant that they will maintain as of the last day of
each
fiscal quarter ending on or after June 30, 2005, a ratio of (a) Borrowers’
Cost of Goods Sold, to (b) Average Inventory, for such fiscal quarter,
of
not less than two point seventy five to one (2.75:1).
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(e)
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Minimum
Tangible Net Worth.
Borrowers covenant that they will maintain a Tangible Net Worth (i)
as of
the fiscal quarter ending on March 31, 2006, of not less than One
Hundred
Forty Million Dollars ($140,000,000) and (ii) as of the last day
of each
fiscal quarter ending on or after June 30, 2006, of not less than
One
Hundred Fifty Million Dollars ($150,000,000).
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(f)
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Incurrence
of Additional Indebtedness.
Borrowers shall not borrow or incur any liability in respect of borrowed
money indebtedness (including, without limitation, loans, notes,
bonds or
repurchase obligations in respect of any securitizations), financing
leases, liabilities for the deferred purchase price of property (excluding
accounts payable arising in the ordinary course of business but including
all liabilities created or arising under any conditional sale or
other
title retention agreement with respect to any such property), liabilities
in respect of interest rate swamps or similar instruments or any
guaranties in respect of any of the foregoing, in each case unless
the
Majority Lenders shall have (prior to the incurrence thereof) consented
to
the same, in writing (which consent shall not be unreasonably withheld
or
delayed). For the avoidance of doubt, the above restriction (i) does
not
apply to CountryPlace Mortgage, Ltd. or any other party other than
Borrowers and (ii) does not restrict Borrowers’ ability to incur
liabilities in respect of letters of credit or capitalized leases.
In
connection with any request by the Borrowers to incur additional
indebtedness otherwise prohibited by this clause (f) and as to which
the
Borrowers request that the Administrative Agent release or subordinate
any
portion of the Collateral in favor of another Lender or other party,
the
Administrative Agent shall not unreasonably withhold or delay the
granting
of such request; provided that (i) no default or Event or Default
has
occurred and is continuing under this Agreement or any other agreement;
(ii) no default or Event of Default would arise under this Agreement
or
any other agreement as a result of such incurrence of additional
indebtedness; and (iii) the Administrative Agent determines, in its
sole
discretion, that, after giving effect to such request, the value
of the
Collateral as to which the Administrative Agent possesses a first
priority
security interest would be satisfactory to fully support and secure
(including with an adequate collateral cushion as the Administrative
Agent
may determine) the amount of the Total Credit Line and all of the
Borrowers’ covenant requirements and other obligations under this
Agreement and all other agreements.”
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10.
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The
definition of “Intangibles” as set forth in Section 37.2 of the Agreement
is hereby amended by inserting immediately after the word “affiliates” and
before the semicolon the following:
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“(other
than accounts receivable due from Borrowers’ Bank Source Mortgage affiliate)”
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11.
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Upon
execution of this Amendment, Borrowers shall pay to Textron Financial
a
closing fee of $105,000 (representing a closing fee of $210,000 less
a
credit of $105,000 from the previous closing fee paid by Borrowers),
which
shall be earned in full upon Textron Financial’s entering into this
Amendment.
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12.
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Upon
execution of this Amendment by all parties, the Administrative Agent
shall
return to Borrowers the amount of the Cash Deposit, plus any accrued
and
unpaid interest thereon, then held by the Administrative Agent and,
effective upon such return, the last paragraph of Section 14 of the
Agreement shall no longer apply going forward. The parties acknowledge
and
agree that, as of the date hereof, the amount of the Cash Deposit
held by
the Administrative Agent, excluding any accrued and unpaid interest,
is
$5,000,000.
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13.
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Except
as amended hereby, the Agreement shall remain in full force and effect,
and is in all respects hereby ratified and affirmed.
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14.
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If
any provision of this Amendment is determined to be illegal, invalid
or
unenforceable, such provision shall be fully severable and the remaining
provisions shall remain in full force and effect and shall be construed
without giving effect to the illegal, invalid or unenforceable provisions.
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15.
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This
Amendment may be executed in any number of counterparts, each of
which
when so executed and delivered shall be an original, but all of which
together shall constitute one and the same instrument, and a facsimile
signature shall suffice as an original for all purposes.
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SIGNATURES
ON FOLLOWING PAGE
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IN
WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed
by
their duly authorized officer or representative as of the day and year first
above written.
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BORROWERS:
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SECURED
PARTY:
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PALM
HARBOR HOMES, INC.
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TEXTRON
FINANCIAL
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By:
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/s/
Xxxxx Xxxxxx
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By:
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/s/
Xxxxx Xxxxxxxx
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Name:
Xxxxx Xxxxxx
Title:
President
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Name:
Xxxxx Xxxxxxxx
Title:
Sr. VP, Operations and Credit
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PALM
HARBOR HOME I L.P.
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By:
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Palm
Harbor G.P., Inc.
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Its:
General Partner
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By:
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/s/
Xxxxx Xxxxxx
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Name:
Xxxxx Xxxxxx
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Title:
President
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PALM
HARBOR MARKETING, INC.
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By:
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/s/
Xxxxx Xxxxxx
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Name:
Xxxxx Xxxxxx
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Title:
President
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PALM
HARBOR MANUFACTURING, L.P.
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By:
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Palm
Harbor GenPar, LLC
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Its:
General Partner
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By:
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/s/
Xxxxx Xxxxxx
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Name:
Xxxxx Xxxxxx
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Title:
President
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