WAIVER AND FORBEARANCE AGREEMENT
Exhibit 10.1
THIS WAIVER AND FORBEARANCE AGREEMENT (this “Agreement”) to the Credit Agreement (as
defined below), dated as of October 5, 2009, is entered into among CHAMPION HOME BUILDERS CO., a
Michigan corporation (the “Borrower”), CHAMPION ENTERPRISES, INC., a Michigan corporation
(the “Parent”), certain of the Lenders (such capitalized term and other capitalized terms
used in this preamble and the recitals below to have the meanings set forth in, or are defined by
reference in Article I below), CREDIT SUISSE, CAYMAN ISLANDS BRANCH, as the Administrative
Agent (in such capacity, the “Administrative Agent”), and, solely for purposes of
Articles VI and VII, each Obligor signatory hereto.
WITNESSETH:
WHEREAS, the Borrower, the Parent, the Lenders and the Administrative Agent are all parties to
the Amended and Restated Credit Agreement, dated as of April 7, 2006 (as amended or otherwise
modified prior to the date hereof, the “Credit Agreement”);
WHEREAS, the Borrower has requested that the Lenders waive certain provisions of the Credit
Agreement;
WHEREAS, the Borrower has also informed the Lenders and the Administrative Agent that Events
of Default have occurred under Section 9.1.1 of the Credit Agreement by reason of the Borrower’s
failure to pay principal installments of the Loans, as well as interest with respect to the Loans
and Letter of Credit fees and Commitment Fees due with respect to the applicable payment dates as
of the end of September 2009 (the “Specified Events of Default”), and as a result of the
failure by the Borrower to be in compliance with such requirements of the Credit Agreement, the
Lenders and the Administrative Agent are entitled to exercise at any time all of their rights and
remedies and to commence enforcement and collection actions under the Credit Agreement, the other
Loan Documents and applicable law;
WHEREAS, the Borrower has requested that the Required Lenders agree, in lieu of immediately
exercising such rights and remedies and commencing such actions, to implement a forbearance period
during which, among other things, the Borrower would be afforded an opportunity to formulate and
propose a comprehensive restructuring with respect to its Obligations; and
WHEREAS, the Required Lenders have agreed to the requested waiver and forbearance, but only
upon the terms and subject to the conditions expressly set forth in this Agreement, and without any
advance understanding or agreement by the Required Lenders or any Lender or the Administrative
Agent to consent to, or grant a waiver to permit, the implementation of any restructuring proposal
or the consummation of any transaction for which such consent or waiver would be required under the
Credit Agreement or the other Loan Documents (including without limitation, this Agreement);
NOW THEREFORE, in consideration of the premises and for other good and valuable consideration
the receipt of which is hereby acknowledged, the parties hereto hereby covenant and agree as
follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Certain Definitions. The following terms when used in this Agreement
shall have the following meanings (such meanings to be equally applicable to the singular and
plural forms thereof):
“Agreement” is defined in the preamble.
“Borrower” is defined in the preamble.
“Credit Agreement” is defined in the first recital.
“Effective Date” is defined in Article IV.
“Enforcement Actions” means, collectively, all of the rights, remedies, enforcement
actions and collection actions that the Lenders and/or the Administrative Agent are entitled to
exercise under the Credit Agreement (including, without limitation, under Sections 9.2 and 9.3
thereof) or the other Loan Documents or applicable law (including directing the Collateral Trustee
to take any of such actions).
“Forbearance Period” means the period from and including the Effective Date to and
including the expiration time on the Forbearance Period Termination Date.
“Forbearance Period Termination Date” means the first to occur of (a) 2:00 p.m., New
York time, on October 30, 2009, (b) the moment any representation or warranty made by any Obligor
in this Agreement shall prove to have been untrue, inaccurate or incomplete in any material respect
on or as of the date made or deemed made, (c) the moment any Obligor shall fail in any material
respect to perform, as and when required, any of their respective covenants or other obligations
set forth in this Agreement, (d) the moment any Obligor shall take any action to challenge
(including without limitation, to assert in writing any challenge to) the validity or
enforceability of this Agreement, the Credit Agreement or any other Loan Documents or any provision
hereof or thereof and (e) the moment any Default or Event of Default other than a Specified Events
of Default shall occur and be continuing.
“Lender Party” means each Lender, the Administrative Agent, the Collateral Trustee and
any Issuer, and each of their respective present or former subsidiaries, affiliates, advisors,
employees, attorneys, agents, officers, directors and representatives and their respective
predecessors, successors, transferees and assigns.
“Specified Events of Default” is defined in the second recital.
-2-
SECTION 1.2. Other Definitions. Terms for which meanings are provided in the Credit
Agreement are, unless otherwise defined herein or the context otherwise requires, used in this
Agreement with such meanings.
ARTICLE II
LIMITED WAIVER TO CREDIT AGREEMENT
Subject to the occurrence of the Effective Date, certain limited provisions of the Credit
Agreement are hereby waived in accordance with this Article II. Except as expressly so waived in
this Article II, the Credit Agreement shall continue in full force and effect.
SECTION 2.1. Limited Waivers as to Section 8.4(d) and (e). The Required Lenders
hereby waive, until 2:00 p.m., New York time, on October 30, 2009, the requirement that the Parent
and the Borrower comply with the provisions of Sections 8.4(d) and 8.4(e) of the Credit Agreement
for the second and third Fiscal Quarters of 2009.
ARTICLE III
SPECIFIED EVENTS OF DEFAULT, FORBEARANCE
AND LIMITATION ON PERMITTED ACTIONS
AND LIMITATION ON PERMITTED ACTIONS
SECTION 3.1. Specified Events of Default. Each Obligor acknowledges and agrees that
(a) the Specified Events of Default have occurred and continue to exist as of the Effective Date,
and (b) absent the agreement of the Required Lenders to forbear from taking Enforcement Actions,
the occurrence and continuance of the Specified Events of Default entitles the Administrative
Agent, the Collateral Trustee and/or the Lenders to at any time take Enforcement Actions.
SECTION 3.2. Forbearance Period. Subject to the terms and conditions of this
Agreement, the Lenders and the Administrative Agent agree to forbear from taking any Enforcement
Action as a result of the occurrence and continuance of the Specified Events of Default, during the
period from and including the Effective Date until the Forbearance Period Termination Date;
provided, however, that the foregoing shall not limit any action taken by the
Administrative Agent, the Collateral Trustee or the Lenders to perfect, maintain or defend the Lien
of the Collateral Trustee and the Secured Parties in the Collateral (as defined in the Pledge and
Security Agreement) against claims of third parties or any Obligor.
SECTION 3.3. No Waiver; Limitation on Forbearance; Limitation on Permitted Actions under
Credit Agreement and on Other Actions. Each Obligor acknowledges and agrees that,
notwithstanding the agreement of the Lenders and the Administrative Agent to forbear from taking
Enforcement Actions during the Forbearance Period in respect of the Specified Events of Default,
(a) such forbearance shall not constitute a waiver of the occurrence or the continuance of any
Event of Default, and each such Event of Default which has occurred shall continue to exist after
the Effective Date unless and until cured or waived by the Required Lenders (with the
Administrative Agent and the Lenders expressly reserving the right to exercise any and all rights
and remedies after termination of the Forbearance Period), (b) nothing contained in this
-3-
Agreement shall be construed to limit or affect the right of any Lender Party to bring or
maintain during the Forbearance Period any action to enforce or interpret any provision of this
Agreement, or to file or record instruments of public record (or take other action) to perfect or
further protect the liens and security interests granted by the Obligors to the Lender Parties, (c)
the Borrower’s right to obtain Borrowings pursuant to Article II of the Credit Agreement is
suspended (except the Borrower shall be permitted to continue Loans, or convert Loans into, LIBO
Rate Loans with an Interest Period of one month), and (d) no bonuses or retention payments shall be
paid to employees (other than those with respect to which the Obligors are obligated to make
payment under the Obligors’ management incentive compensation bonus plans in effect prior to
October 1, 2009 for their plant and Star Fleet operations in an amount not to exceed $700,000) and
no transfers of cash or other assets shall be made (including payments to vendors) outside the
ordinary course of business consistent with past practice.
SECTION 3.4. Enforcement Actions After Forbearance Period. Each Obligor acknowledges
and agrees that, on the Forbearance Period Termination Date, the agreement of the Lenders and the
Administrative Agent to forbear from taking any Enforcement Action in respect of the Specified
Events of Default shall cease and be of no further force or effect, and the Lender Parties shall be
entitled to immediately take Enforcement Actions under the Credit Agreement, the other Loan
Documents and applicable law, all without further notice or demand, in respect of the Specified
Events of Default.
ARTICLE IV
CONDITIONS TO EFFECTIVENESS
SECTION 4.1. Conditions to Effectiveness. This Agreement shall become effective upon
the prior or simultaneous satisfaction of each of the following conditions in a manner reasonably
satisfactory to the Administrative Agent (the date when all such conditions are so satisfied being
the “Effective Date”):
SECTION 4.2. Counterparts. The Administrative Agent shall have received counterparts
hereof executed on behalf of the Borrower, each other Obligor, the Required Lenders and the
Administrative Agent.
SECTION 4.3. Costs and Expenses, etc. The Administrative Agent shall have received
all fees, costs and expenses due and payable pursuant to Section 12.3 of the Credit Agreement
(including without limitation the fees and expenses of Xxxxxxx Xxxx & Xxxxxxxxx LLP, special New
York restructuring counsel to the Administrative Agent), if then invoiced.
SECTION 4.4. Certificate of Authorized Officer. The Borrower shall have delivered a
certificate of an Authorized Officer, solely in his or her capacity as an Authorized Officer of the
Borrower and not in his or her individual capacity, certifying that, both immediately before and
after giving effect to this Agreement on the Effective Date, the statements set forth in Article V
hereof are true and correct.
SECTION 4.5. Satisfactory Legal Form. The Administrative Agent and its counsel shall
have received all information, and such counterpart originals or such certified or other copies of
-4-
such materials, as the Administrative Agent or its counsel may reasonably request, and all
legal matters incident to the effectiveness of this Agreement shall be satisfactory to the
Administrative Agent and its counsel. All documents executed or submitted pursuant hereto or in
connection herewith shall be reasonably satisfactory in form and substance to the Administrative
Agent and its counsel.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
To induce the Lenders to enter into this Agreement, the Obligors represent and warrant to the
Lenders as set forth below.
SECTION 5.1. Validity, etc. This Agreement and the Credit Agreement (after giving
effect to this Agreement) each constitutes the legal, valid and binding obligation of such
applicable Obligor enforceable in accordance with its terms subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or
affecting creditors’ rights generally, general equitable principles (whether considered in a
proceeding in equity or at law) and an implied covenant of good faith and fair dealing.
SECTION 5.2. Representations and Warranties, etc. Both before and after giving
effect to this Agreement, the statements set forth in clause (a) of Section 5.3.1, and other than
with respect to the Specified Events of Default, the statements set forth in clause (b) of Section
5.3.1, in each case of the Credit Agreement, are true and correct.
SECTION 5.3. Amount of Obligations. Each Obligor acknowledges, represents and agrees
that, (a) as of the close of business on September 30, 2009, the Obligations include, without
limitation, the amounts set forth on Schedule 5.3 attached hereto on account of the outstanding
unpaid amount of principal of, accrued and unpaid interest on, and fees and other obligations with
respect to or in connection with, the Loans and outstanding Letters of Credit and (b) such Obligor
is not disputing, and shall not dispute, the amount of such Obligations and has no right of setoff,
counterclaim or other defense with respect to its obligations to repay such Obligations in full in
cash.
SECTION 5.4. Validity of Obligations. Each Obligor acknowledges and agrees that (a)
such Obligor is truly and justly indebted to the applicable Lender Parties for the Obligations,
without defense, counterclaim or offset of any kind, and such Obligor ratifies and reaffirms the
validity, enforceability and binding nature of such Obligations, (b) such Obligor has no claim,
right or cause of action of any kind against any Lender Party in connection with the Obligations,
the Credit Agreement and the other Loan Documents, or the transactions contemplated hereby or
thereby and (c) each Lender Party has heretofore properly performed and satisfied in a timely
manner all of its obligations under or in connection with the Loan Documents.
-5-
ARTICLE VI
CONFIRMATIONS AND COVENANTS
SECTION 6.1. Guarantees, Security Interest, Continued Effectiveness. Each Obligor
hereby reaffirms, as of the Effective Date, that immediately after giving effect to this Agreement
(a) the covenants and agreements made by such Obligor contained in each Loan Document to which it
is a party, (b) with respect to each Obligor party to a Guaranty, its guarantee of payment of the
Obligations pursuant to such Guaranty and (c) with respect to each Obligor party to the Pledge and
Security Agreement or a Mortgage, its pledges and other grants of Liens in respect of the
Obligations pursuant to any such Loan Document, in each case, as such covenants, agreements and
other provisions are modified by and are subject to the forbearance created by this Agreement.
SECTION 6.2. Validity, etc. Each Obligor (other than the Borrower) hereby represents
and warrants, as of the Effective Date, that immediately after giving effect to this Agreement,
each Loan Document, in each case as modified by and subject to the forbearance created by this
Agreement (where applicable and whether directly or indirectly), to which it is a party continues
to be a legal, valid and binding obligation of such Obligor, enforceable against such party in
accordance with its terms subject to the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting creditors’ rights
generally, general equitable principles (whether considered in a proceeding in equity or at law)
and an implied covenant of good faith and fair dealing.
SECTION 6.3. Representations and Warranties, etc. Each Obligor (other than the
Borrower) hereby represents and warrants, as of the Effective Date, that before and after giving
effect to this Agreement, as modified by and subject to the forbearance created by this Agreement,
the representations and warranties set forth in each Loan Document to which such Obligor is a party
are, in each case, true and correct (a) in the case of representations and warranties not qualified
by references to “materiality” or a Material Adverse Effect, in all material respects and (b)
otherwise, in all respects, in each case with the same effect as if then made (unless stated to
relate solely to an earlier date, in which case such representations and warranties shall be true
and correct in all material respects as of such earlier date).
ARTICLE VII
MISCELLANEOUS
SECTION 7.1. Cross-References. References in this Agreement to any Article or
Section are, unless otherwise specified, to such Article or Section of this Agreement.
SECTION 7.2. Loan Document Pursuant to Credit Agreement. This Agreement is a Loan
Document executed pursuant to the Credit Agreement and shall (unless otherwise expressly indicated
therein) be construed, administered and applied in accordance with all of the terms and
-6-
provisions of the Credit Agreement, subject to the waiver and forbearance created by this
Agreement, including Articles X and XII thereof.
SECTION 7.3. Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and assigns.
SECTION 7.4. Counterparts. This Agreement may be executed by the parties hereto in
several counterparts, each of which when executed and delivered shall be an original and all of
which shall constitute together but one and the same agreement. Delivery of an executed
counterpart of a signature page to this Agreement by facsimile (or other electronic transmission)
shall be effective as delivery of a manually executed counterpart of this Agreement.
SECTION 7.5. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK IN THE SAME MANNER AS PROVIDED FOR IN
THE CREDIT AGREEMENT.
SECTION 7.6. Full Force and Effect; Limited Waiver and Forbearance. Except as
expressly so waived in Article II hereof, all of the representations, warranties, terms, covenants,
conditions and other provisions of the Credit Agreement and the Loan Documents shall remain
unchanged and shall continue to be, and shall remain, in full force and effect in accordance with
their respective terms. The waiver and forbearance set forth herein shall be limited precisely as
provided for herein to the provisions expressly waived and the defaults expressly forbeared herein
and shall not be deemed to be an amendment to, waiver of, consent to or modification of any other
term or provision of the Credit Agreement or any other Loan Document or of any transaction or
further or future action on the part of any Obligor which would require the consent of any of the
Lenders under the Credit Agreement or any of the Loan Documents.
SECTION 7.7. No Waiver. This Agreement is not, and shall not be deemed to be, a
waiver or a consent to any Event of Default, event with which the giving of notice or lapse of time
or both may result in an Event of Default, or other non-compliance now existing or hereafter
arising under the Credit Agreement and the other Loan Documents, except as expressly provided for
in Article II hereof.
SECTION 7.8. Obligor Releases/Damages and Liability Limitations. Although each
Lender and the Administrative Agent each regards its conduct as proper and does not believe that
any Obligor has any claim, right, cause of action, offset or defense against such Lender, the
Administrative Agent, any Issuer or any other Lender Party in connection with the execution,
delivery, performance and ongoing administration of, or the transactions contemplated by, the
Credit Agreement and the other Loan Documents, each Lender, the Administrative Agent and each
Obligor agree to eliminate any possibility that any past conduct, conditions, acts, omissions,
events, circumstances or matters of any kind whatsoever could impair or otherwise affect any
rights, interests, contracts or remedies of the Lenders, the Administrative Agent or any other
Lender Party. Therefore, each Obligor, on behalf of itself and its employees, agents, officers,
directors, representatives, predecessors, successors, transferees and assigns, unconditionally,
freely, voluntarily and, after consultation with counsel and becoming fully and adequately informed
as to the relevant facts, circumstances and consequences, knowingly releases, waives
-7-
and forever discharges (and further agrees not to allege, claim or pursue) (a) any and all
liabilities, indebtedness and obligations, whether known or unknown, of any kind whatsoever of any
Lender Party to any Obligor, except for any obligations remaining to be respectively performed by
the Lenders as expressly set forth in this Agreement, the Credit Agreement and the other Loan
Documents, (b) any legal, equitable or other obligations of any kind whatsoever, whether known or
unknown, of any Lender Party to any Obligor (and any rights of any Obligor against any Lender
Party) other than any such obligations expressly set forth in this Agreement, the Credit Agreement
and the other Loan Documents, (c) any and all claims, whether known or unknown, under any oral or
implied agreement with (or obligation or undertaking of any kind whatsoever of) any Lender Party
which is different from or in addition to the express terms of this Agreement, the Credit Agreement
and the other Loan Documents and (d) all other claims, rights, causes of action, counterclaims or
defenses of any kind whatsoever, in contract or in tort, in law or in equity, whether known or
unknown, direct or derivative, which such Obligor or any predecessor, successor or assign might
otherwise have or may have against any Lender Party on account of any conduct, condition, act,
omission, event, contract, liability, obligation, demand, covenant, promise, indebtedness, claim,
right, cause of action, suit, damage, defense, circumstance or matter of any kind whatsoever which
existed, arose or occurred at any time prior to the Effective Date. The Obligors further
understand and agree that none of the Lenders, the Administrative Agent, any Issuer or any other
Lender Party shall at any time, whether heretofore, on or as of the Effective Date or thereafter,
be liable or responsible for any special, consequential, punitive, incidental, exemplary or other
similar damages or claims arising in any way out of the Loan Documents, the transactions
contemplated thereby or any action taken or not taken in connection therewith. Each Lender Party
hereby further agrees that the Administrative Agent shall not have any liability or responsibility
whatsoever, and shall be fully protected and exculpated from and against, any action taken or not
taken by it at the direction of the Required Lenders.
[signature pages follow]
-8-
IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the
date first above written.
| CHAMPION HOME BUILDERS CO. |
||||
| By | ||||
| Name: | ||||
| Title: | ||||
| CHAMPION ENTERPRISES, INC. |
||||
| By | ||||
| Name: | ||||
| Title: | ||||
| Solely for purposes of Articles VI and
VII, each of the undersigned Obligors: CHAMPION ENTERPRISES MANAGEMENT CO. |
||||
| By | ||||
| Name: | ||||
| Title: | ||||
| CHAMPION RETAIL, INC. |
||||
| By | ||||
| Name: | ||||
| Title: | ||||
| HIGHLAND ACQUISITION CORP. |
||||
| By | ||||
| Name: | ||||
| Title: | ||||
Signature Pages to Waiver and Forbearance Agreement
| HIGHLAND MANUFACTURING COMPANY LLC |
||||
| By | ||||
| Name: | ||||
| Title: | ||||
| HOMES OF MERIT, INC. |
||||
| By | ||||
| Name: | ||||
| Title: | ||||
| NEW ERA BUILDING SYSTEMS, INC. |
||||
| By | ||||
| Name: | ||||
| Title: | ||||
| NORTH AMERICAN HOUSING CORP. |
||||
| By | ||||
| Name: | ||||
| Title: | ||||
| XXXXXX HOMES, INC. |
||||
| By | ||||
| Name: | ||||
| Title: | ||||
| SAN XXXX ADVANTAGE HOMES, INC. |
||||
| By | ||||
| Name: | ||||
| Title: | ||||
Signature Pages to Waiver and Forbearance Agreement
| STAR FLEET, INC. |
||||
| By | ||||
| Name: | ||||
| Title: | ||||
| WESTERN HOMES CORPORATION |
||||
| By | ||||
| Name: | ||||
| Title: | ||||
Signature Pages to Waiver and Forbearance Agreement
| CREDIT SUISSE, CAYMAN ISLANDS BRANCH, as Administrative
Agent |
||||
| By | ||||
| Name: | ||||
| Title: | ||||
| CREDIT SUISSE, CAYMAN ISLANDS BRANCH, as a Lender |
||||
| By | ||||
| Name: | ||||
| Title: | ||||
Signature Pages to Waiver and Forbearance Agreement
