SECOND AMENDMENT TO
REVOLVING, WAREHOUSE AND TERM LOAN AGREEMENT
THIS SECOND AMENDMENT (this "Amendment") to Revolving,
Warehouse and Term Loan Agreement made by and among Cavalier Homes, Inc., a
Delaware corporation ("Cavalier Homes"), Cavalier Manufacturing, Inc., a
Delaware corporation ("CMI"), Cavalier Industries, Inc., a Delaware corporation
("CII"), Belmont Homes, Inc., a Mississippi corporation ("Belmont"), Delta
Homes, Inc., a Mississippi corporation ("Delta"), Spirit Homes, Inc., an
Arkansas corporation ("Spirit"), Bellcrest Homes, Inc., a Georgia corporation
("Bellcrest"), and Cavalier Acceptance Corporation, an Alabama corporation
("Cavalier Acceptance") (collectively, the "Participating Subsidiaries";
Cavalier Homes and the Participating Subsidiaries, together with all entities
who hereafter become Participating Subsidiaries or Participating Partnerships,
being sometimes collectively referred to as the "Borrowers"), and First
Commercial Bank, an Alabama state banking corporation ("Lender"), is dated as of
the 1st day of June, 1998.
R E C I T A L S :
Cavalier Homes, the Initial Participating Subsidiaries (as
defined in the Agreement hereinafter defined) and Lender entered into that
certain Revolving, Warehouse and Term Loan Agreement dated as of February 17,
1994, as amended by that certain First Amendment to Revolving, Warehouse and
Term Loan Agreement dated as of March 14, 1996 (as heretofore amended the
"Agreement"), pursuant to which Lender made available, subject to the terms and
conditions thereof, to such Borrowers, a revolving loan in the maximum principal
amount of up to $5,000,000 (the "Revolving Loan"), and to Cavalier Acceptance, a
warehouse and term loan facility of up to $18,000,000 (the "Warehouse Loan" and
the "Term Loans", respectively).
Pursuant to that certain Assumption Agreement dated as of
January 2, 1997, by and among CMI, CII, Cavalier Homes (for itself and as agent
for the other Borrowers) and Lender, CMI and CII became obligated as Borrowers,
jointly and severally, with the other Participating Subsidiaries and Cavalier
Homes with respect to the Agreement, the Revolving Loan and the other
Obligations (as defined in the Agreement).
Pursuant to that certain Assumption Agreement dated as of June
1, 1998, by and among Belmont, Delta, Spirit, Bellcrest, Cavalier Homes (for
itself and as agent for the other Borrowers) and Lender, Belmont, Delta, Spirit
and Bellcrest became obligated as Borrowers, jointly and severally, with the
other Participating Subsidiaries and Cavalier Homes with respect to the
Agreement, the Revolving Loan and the other Obligations.
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The Revolving Loan is currently evidenced by that certain
Revolving Note in the original principal amount of $5,000,000 dated February 17,
1994, as amended by that certain Revolving Note Modification Agreement dated as
of March 14, 1996 (as heretofore amended, the "Revolving Note"), and the
Warehouse Loan is currently evidenced by that certain Warehouse Note in the
original principal amount of $2,000,000 dated February 17, 1994, as amended by
that certain Warehousing Note Modification Agreement dated as of March 14, 1996
(as heretofore amended, the "Warehouse Note").
Borrowers have requested that Lender agree to extend the
availability of Advances under the Revolving Loan and the Warehouse Loan to
April 15, 2000, to increase the maximum aggregate principal amount available to
the Borrowers under the Revolving Loan to $10,000,000, and to increase the
maximum aggregate principal amount available to Cavalier Acceptance under
Article III of the Agreement from $18,000,000 to $25,000,000, and Lender is
willing to do so, but only on the express condition, among others, that
Borrowers enter into this Amendment, pursuant to which the Agreement shall be
amended and modified.
NOW, THEREFORE, the parties hereto do hereby agree, each with
the other, as follows:
1. If not otherwise defined herein or the context shall not
expressly indicate otherwise, all capitalized terms which are used herein shall
have their respective meanings given to them in the Agreement.
2. Schedule I of the Agreement is hereby amended to add the
following definitions thereto:
"Banking Day" with respect to LIBOR Rate Loans means
a day on which banks are open for the general conduct of
business in London, England and the state in which Lender has
its main office, and on which dealings in Dollars are carried
on in the offshore interbank market; and with respect to the
Floating Rate Loans, means a day on which Lender is open for
the general conduct of business at its main office.
"Base LIBOR Rate" for any Interest Period means the
rate per annum equal to the quotient of (a) the rate for
deposits in U.S. Dollars for a period of the applicable
Interest Period which appears on Telerate Page 3750
("USD-LIBOR- BBA") as of 11:00 a.m. London time on the day
that is two Banking Days preceding the first day of the
applicable Interest Period, for a deposit amount corresponding
to the amount of the LIBOR Rate Loan to be outstanding during
such Interest Period, divided by (b) a number equal to 1.00
minus the aggregate of the rates (expressed as a decimal
fraction) of the Reserve Requirement current on the date two
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Banking Days prior to the beginning of such Interest Period.
If the rate described in clause (a), above, does not appear on
Telerate Page 3750, the rate under (a), above, will be the
rate (stated as an annual percentage rate rounded upward to
the nearest one-sixteenth of one percent) determined by
Lender, in its reasonable judgment, to be the rate at which
Lender would acquire Dollar deposits in the London, England
interbank eurodollar market for delivery on the first day of
such Interest Period for the number of days comprised therein
and in an amount equal to the amount of the LIBOR Rate Loan to
be outstanding during such Interest Period. The Base LIBOR
Rate calculated in this manner shall be adjusted upward to the
nearest one-hundredth of one percent. The Base LIBOR Rate
shall be adjusted automatically, upward or downward, as the
case may be, on and as of the effective date of any change in
the Reserve Requirement.
"Borrowing Date" means any date on which Borrower(s)
receive or propose to receive an Advance under the Revolving
Loan or the Warehouse Loan pursuant to this Agreement.
"Borrowing Notice" or "Request for Advance" means an
irrevocable written (including facsimile), telex or telephonic
notice, in substantially the form of Exhibit B or Exhibit B-1,
as appropriate, to the Agreement, by the appropriate
Borrower(s), to Lender specifying (A) that the notice relates
to making a new Advance under the Revolving Loan or the
Warehouse Loan, as the case may be, (B) the Borrowing Date,
(C) the amounts of Floating Rate Loans and LIBOR Rate Loans
comprising such new Advance and (D) the commencement date and
duration of the Interest Period applicable to any such LIBOR
Rate Loan.
"Dollars" and "$" each mean United States Dollars.
"Floating Rate" means (i) with respect to the
Revolving Loan, the Revolving Rate, and (ii) with respect to
the Warehouse Loan, the Warehouse Rate.
"Floating Rate Loan" means (i) with respect to the
Revolving Loan, an Advance thereon or part of the Revolving
Loan with an interest rate based on the Floating Rate, and
(ii) with respect to the Warehouse Loan, an Advance thereon or
part of the Warehouse Loan with an interest rate based on the
Floating Rate.
"Governmental Authority" means any nation or
government, any state and any political subdivision thereof,
and any entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to
government, which has or asserts jurisdiction over Lender, any
Borrower, or over the property of any of them.
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"Green Tree Contract" means Chattel Paper
underwritten by Cavalier Acceptance in conformity with the
Green Tree Underwriting Guidelines.
"Green Tree Underwriting Guidelines" means those
underwriting guidelines set forth on Exhibit A to Schedule 1
to this Agreement.
"Interest Period" with respect to a LIBOR Rate Loan
means a LIBOR Rate Interest Period, as such period may be
shortened upon suspension of the LIBOR Rate option under
Sections 2.5.13, 2.5.14, 3.6(A).13 or 3.6(A).14.
"Lending Installation" means any office, branch,
subsidiary or affiliate of Lender or any Participant.
"LIBOR Rate" means the Base LIBOR Rate plus 250 basis
points (2.50%). The LIBOR Rate shall be adjusted
automatically, upward or downward, as the case may be, on and
as of the effective date of any change in the Base LIBOR Rate
resulting from a change in the Reserve Requirement.
"LIBOR Rate Interest Period" means a period of three
months (90 days), or such longer or shorter period as Cavalier
Homes, on behalf of itself and the other Borrowers, and Lender
may agree from time to time. A month means a period of thirty
(30) days. If any LIBOR Interest Period would otherwise end on
a day which is not a Banking Day, the LIBOR Rate Interest
Period shall end on the next Banking Day.
"LIBOR Rate Loan" means an Advance under the
Revolving Loan or the Warehouse Loan, as applicable, with an
interest rate based on the Base LIBOR Rate.
"Local Time" means the time of day at Lender's main
office.
"Rate Selection Notice" means an irrevocable written
(including facsimile), telex or telephonic notice, in
substantially the form of Exhibit B or Exhibit B-1, as
appropriate, to the Agreement, by the appropriate Borrower(s),
to Lender specifying (a) that the notice relates to the
selection of a rate option for the outstanding Revolving Loan
or Warehouse Loan, as the case may be, pursuant to Section
2.5.3 or 3.6(A).3, as the case may be, (b) the effective date
of such selection (c) the amounts, individual and in the
aggregate, of any Floating Rate Loans and LIBOR Rate Loans
comprising the selection and (d) the commencement date and the
duration of the Interest Period applicable to any LIBOR Rate.
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"Regulation D" means Regulation D of the Board of
Governors of the Federal Reserve System as now or from time to
time hereafter in effect, and shall include any successor or
other regulation or official interpretation of said Board of
Governors relating to reserve requirements applicable to
member banks of the Federal Reserve System.
"Requirement of Law" for any person or entity means
the certificate of incorporation and by-laws or other
organization or governing documents of such person or entity
and any law, treaty, rule or regulation, or determination of
an arbitrator or a court or other Governmental Authority, in
each case applicable to or binding upon such person or entity
or any of its property or to which such person or entity or
any of its property is subject.
"Reserve Requirements" with respect to an Interest
Period means the weighted average during the Interest Period
of the maximum aggregate reserve requirement (including all
basic, supplemental, marginal, emergency and other reserves
and taking into account any transitional adjustments or other
scheduled changes in reserve requirements during the Interest
Period) which is imposed under Regulation D or by any other
Governmental Authority having jurisdiction with respect
thereto and which is applicable to the class of banks of which
Lender is a member, for LIBOR Rate Loan purposes, on
"eurocurrency liabilities", as that term is defined in
Regulation D or by any such Governmental Authority.
3. Schedule I of the Agreement is hereby further amended to
delete the definition of "$18,000,000 Loan" therefrom in its entirety and to
substitute the following definition of "$25,000,000 Loan" therefor:
"$25,000,000 Loan" means the aggregate unpaid
principal balance of all Advances made pursuant to Article III
of the Agreement, whether in the form of the Warehouse Loan or
Term Loan(s).
4. Schedule I of the Agreement is hereby further amended to
restate the definitions of "Contracts Borrowing Base" and "Eligible Contract" to
read in their entireties as follows:
"Contracts Borrowing Base" means, at any time, with
respect to the $25,000,000 Loan, the amount computed on the
Compliance Certificate for the $25,000,000 Loan most recently
delivered to, and accepted by, Lender in accordance with the
Agreement and equal to the aggregate of:
(A) Eighty percent (80%) of the aggregate outstanding
principal balance of Eligible Contracts that are rated higher
than a C-Rated Contract from a credit-quality standpoint (that
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is, that are rated "A" or "B" from a credit-quality
standpoint); plus
(B) Seventy percent (70%) of the aggregate outstanding
principal balance of Eligible Contracts that are C-Rated
Contracts; plus
(C) Seventy percent (70%) of the aggregate outstanding
principal balance of Eligible Contracts that are Green Tree
Contracts.
Provided, however, no more than fifteen percent (15%) of the
total Contracts Borrowing Base may be comprised of C-rated
Contracts.
"Eligible Contract" means, at any time, Chattel Paper
upon which lender has a property perfected security interest
and that conforms and continues to conform to each and all of
the following conditions:
(A) The representations contained in Section 6.2 and Section
6.3 of the Agreement are true and correct in all respects with
respect to the Chattel Paper;
(B) The Chattel Paper arose out of the retail sale of a new
home manufactured by one of the Borrowers or the sale of a
manufactured home repossessed by Cavalier Acceptance;
(C) The Chattel Paper evidences the obligation of a retail
customer to repay Indebtedness incurred to purchase a new home
manufactured by one of the Borrowers or the sale of a
manufactured home repossessed by Cavalier Acceptance;
(D) The Chattel Paper has been duly assigned to, and is owned
by, Cavalier Acceptance;
(E) The Chattel Paper is not more than ninety (90) days past
due in payment and the Chattel Paper has not been re-dated;
(F) The Chattel Paper evidences an amount financed not in
excess of $70,000;
(G) The portfolio index score used by Cavalier Acceptance to
underwrite such Chattel Paper was not less than 70; provided,
however, that for Chattel Paper originated after March 14,
1996, up to fifteen percent (15%) of all such Chattel Paper
may have a portfolio index score of (a) at least 56, but less
than 70 or (b) such other credit score which causes such
Chattel Paper to be rated a C-Rated Contract from a
credit-quality standpoint (or the equivalent score or rating,
as the case may be, under the Fair Xxxxx credit scoring
system, as such equivalence is determined by Lender in its
sole discretion); provided, further, however, that GreenTree
Contracts need only meet or exceed the Green Tree Underwriting
Guidelines to satisfy this clause (G);
(H) The Chattel Paper was funded by Cavalier Acceptance on or
after January 1, 1994; and
(I) The Chattel Paper has been reviewed and approved by Lender
in its sole discretion.
In the event of any dispute under the foregoing criteria about
whether Chattel Paper is or has ceased to be an Eligible Contract, the sole
decision and discretion of Lender shall control.
5. Schedule I of the Agreement is hereby further amended by
amending and restating the definition of "Loan Termination Date" in its entirety
to read as follows:
"Loan Termination Date" means, (i) with respect to
the Revolving Loan, the earliest of (A) April 15, 2000 or (B)
upon demand by Lender; (ii) with respect to the Warehouse
Loan, the earliest of (A) April 15, 2000 or (B) the date to
which the maturity of the Warehouse Note may be accelerated
pursuant to Section 9.2 of the Agreement; and (iii) with
respect to any Term Loan, the earlier of (A) the maturity date
of the applicable Term Note or (B) the date to which the
maturity of the applicable Term Note may be accelerated
pursuant to Section 9.2 of the Agreement.
6. Schedule I of the Agreement is hereby further amended by
deleting the term "5,000,000" from the definition of "Revolving Loan Commitment"
and substituting the term "$10,000,000" therefor.
7. Schedule I of the Agreement is hereby further amended by
amending and restating the definitions of "Revolving Rate" and "Warehouse Rate"
in their entireties to read as follows:
"Revolving Rate" means the per annum rate of interest
equal to the Prime Rate in effect from time to time until
maturity of the Revolving Note, and two percent (2.00%) above
the Prime Rate in effect from time to time after maturity of
the Revolving Note, whether by demand, acceleration or
otherwise. Each time the Prime Rate shall change, the
Revolving Rate shall change concurrently with such change in
the Prime Rate.
"Warehouse Rate" means the per annum rate of interest
equal to the Prime Rate in effect from time to time until
maturity of the Warehouse Note, and two percent (2.00%) above
the Prime Rate in effect from time to time after maturity of
the Warehouse Note, whether by demand, acceleration or
otherwise. Each time the Prime Rate shall change, the
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Warehouse Rate shall change concurrently with such change in
the Prime Rate.
8. To increase the standard for reporting litigation and other
claims pending against Cavalier Homes and the other Borrowers, Section 6.1(I)
and Section 7.1(J)(1) are each amended and restated in their entireties to read
as follows:
Section 6.1(I): Except as disclosed in the footnotes to the
Financial Statements delivered to Lender, or in Exhibit
II.6.1(I) attached hereto and incorporated herein, and except
for matters in which an insurer has accepted the defense
without reservation of rights, there is no pending order,
notice, claim, litigation, proceeding or investigation against
or affecting Cavalier Homes or any Consolidated Entity, except
such order, notice, claim, litigation, proceeding or
investigation that, in the good-faith judgment of management
of Cavalier Homes or such Consolidated Entity, is not
reasonably likely to result in an adverse decision that would
require the payment of $1,000,000 or more;
Section 7.1(J)(1): Any litigation or proceeding (other than
matters in which an insurer has accepted the defense without
reservation of rights) in which it is a party, except any such
litigation or proceeding where in the good-faith judgment of
management of Cavalier Homes or such Consolidated Entity, such
matter is not reasonably likely to result in an adverse
decision that would require the payment of $1,000,000 or more;
and
9. The Agreement and the Schedules and Exhibits thereto are
hereby amended (i) by deleting the term "$18,000,000 Loan" therefrom in each
place such term appears and substituting the term "$25,000,000 Loan" in lieu
thereof and (ii) by deleting the term "$18,000,000" therefrom in each place such
term appears and substituting the term "$25,000,000" in lieu thereof, and (iii)
by incorporating Exhibit A to Schedule I (setting forth the Green Tree
Underwriting Guidelines).
10. Section 2.5 of the Agreement is hereby amended and
restated to read in its entirety as follows:
2.5 Revolving Loan Borrowing Procedures, Interest Rates,
Payments of Interest and Related Provisions.
2.5.1 Borrowing Notices.
(A) Cavalier Homes, on behalf of itself and the other
Borrowers, will give Lender an appropriate Borrowing
Notice not later than 10:00 a.m. Local Time three (3)
Banking Days prior to the Borrowing Date for LIBOR
Rate Loans and not later than 10:00 a.m. Local Time
on the Borrowing Date for Floating Rate Loans.
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A Borrowing Notice is deemed to be given when
actually received by Lender at its Commercial Loan
Department.
(B) Once given to Lender, except as provided in
Section 2.5.14 or unless Lender shall otherwise
consent, such Borrowing Notice shall not thereafter
be revocable by Borrowers.
(C) On the Borrowing Date, if all terms and
conditions of this Agreement have been complied with,
Lender shall make available the requested Advance of
the Revolving Loan.
(D) If requested by Lender, Cavalier, on behalf of
itself and the other Borrowers, shall deliver to
Lender, not later than 12:00 noon Local Time on the
Borrowing Date, written confirmation (substantially
in the form of Exhibit B) of any oral Borrowing
Notice. Cavalier shall certify to the accuracy of the
information set forth thereon.
2.5.2 Interest Rate. Unless Borrowers shall have elected a
LIBOR Rate for all or a portion of the Advance of the
Revolving Loan as provided in Section 2.5.3 hereof, the
aggregate unpaid principal amount of each Advance of the
Revolving Loan shall bear interest at a rate equal to the
Floating Rate with respect to the Revolving Loan.
2.5.3 Election of LIBOR Rate.
(A) Subject to the provisions of Sections 2.5.4,
2.5.13, 2.5.14 and 2.7, Cavalier Homes, on behalf of
itself and the other Borrowers, may elect to pay
interest on all or part of an Advance of the
Revolving Loan or the Revolving Loan at the LIBOR
Rate for an Interest Period by giving Lender
(1) An appropriate Borrowing Notice
specifying a LIBOR Rate not later
than 10:00 a.m. Local Time three (3)
Banking Days prior to the Borrowing
Date (in the case of a new Advance);
or
(2) An appropriate Rate Selection Notice
specifying a LIBOR Rate not later
than 10:00 a.m. Local Time three (3)
Banking Days prior to the first day
of the new Interest Period (in the
case of the outstanding LIBOR Rate
Loan); or
(3) An appropriate Rate Selection Notice
specifying a LIBOR Rate not later
than 10:00 a.m. Local Time three (3)
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Banking Days prior to the first day
of the Interest Period (in the case
of the conversion of any outstanding
Floating Rate Loan to a LIBOR Rate
Loan).
(B) (1) Borrowers may obtain estimates of
the interest rates on which the Base
LIBOR Rate is calculated by
telephoning Lender's rate desk on
any day Lender is open for business.
Borrowers may obtain quotations of
the interest rates on which the Base
LIBOR Rate is calculated by
telephoning Lender's rate desk
between 9:00 a.m. and 10:00 a.m.
Local Time on any Banking Day. A
Rate Selection Notice is deemed
given when actually received by
Lender at its Commercial Loan
Department. If the Rate Selection
Notice is initially given in
writing, it shall be given in
substantially the form of Exhibit B
hereto. If the Rate Selection
Notice is given in writing, Cavalier
Homes, on behalf of itself and the
other Borrowers, shall certify to
the accuracy of the information set
forth thereon. If Borrowers fail to
select a new rate option by giving a
Rate Selection Notice by 10:00 a.m.
Local Time on the appropriate
Banking Day pursuant to the
provisions of Section 2.5.3 hereof,
the Revolving Loan or that portion
of the Revolving Loan covered by the
expiring LIBOR Rate option shall be
a Floating Rate Loan on and after
the last day of the Interest Period
until the Revolving Loan is paid or
until the effective date of a new
Rate Selection Notice pursuant to
this section, whichever is the first
to occur.
(2) If requested by Lender, Cavalier
Homes, on behalf of itself and the
other Borrowers, shall deliver to
Lender, not later than 12:00 noon
Local Time on the first day of the
Interest Period, written
confirmation (substantially in the
form of Exhibit B hereto) of any
oral Rate Selection Notice. Cavalier
Homes shall certify to the accuracy
of the information set forth
thereon.
2.5.4 Restrictions on Interest Periods and Conversion to LIBOR
Rate. Each new Advance of the Revolving Loan shall be in an
amount of at least $500,000 and in an integral multiple of
$100,000 if a LIBOR Rate Loan and that part of each Floating
Rate Loan or LIBOR Rate Loan which is converted to, or
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continued as, a LIBOR Rate Loan, shall be in an amount of at
least $500,000 and shall be in an integral multiple of
$100,000. No Interest Period may extend beyond the Loan
Termination Date of the Revolving Loan. Borrowers may not
elect a LIBOR Rate if, on the effective date of such election,
there exists an Event of Default.
2.5.5 Interest Basis and Payment Dates.
(A) Interest at the rates determined according to
Sections 2.5.2 and 2.5.3 shall be calculated on the
basis of a 360-day year and the actual number of days
elapsed. Interest shall accrue on the unpaid
principal balance of all Advances of the Revolving
Loan at the applicable rate from and including the
date the Advance is made to (but not including) the
date of any payment on the Revolving Loan if payment
is received by Lender prior to 2:00 p.m. Local Time
and if not received by such time, then through and
including the date payment is received.
(B) All interest accrued on each Floating Rate Loan
made under this Article II shall be payable monthly
on the first (1st) day of each calendar month; and
all interest accrued on each LIBOR Rate Loan made
under this Article II shall be payable on the last
day of the applicable LIBOR Rate Interest Period, and
if such LIBOR Rate Interest Period exceeds three (3)
months, interest accrued on such LIBOR Rate Loan also
shall be payable on the date which is three (3)
months after the first day of the applicable LIBOR
Rate Interest Period. If not sooner paid in
accordance with the subsection 2.5.5(B), all accrued
but unpaid interest on the Revolving Loan shall be
due and payable on the Loan Termination Date of the
Revolving Loan.
(C) If any scheduled payment is late ten (10) days or
more, Borrowers agree to pay a late charge equal to
five percent (5%) of the amount of the payment which
is late, but not more than the maximum amount allowed
by applicable Law (the "Late Charge"). This
subparagraph does not extend any payment due date
expressly stated in the Agreement or any Loan
Document and does not in any way prevent or estop
Lender from requiring that payments be made by
Borrowers strictly when due. Unless accepted by
Lender, and unless accompanied by all other amounts
then due to Lender, the tender of such payment by
Borrowers does not cure the Event of Default arising
from the payment default upon which such Late Charge
was assessed.
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(D) If, at any time, the rate of interest accruing on
any Advance of the Revolving Loan or the Late Charge
shall be deemed by any competent court of law,
governmental agency or tribunal to exceed the maximum
rate of interest permitted by any applicable Laws,
then, for such time as such interest rate or Late
Charge, as applicable, would be deemed excessive, its
application shall be suspended and there shall be
charged instead on any such Advance the maximum rate
of interest permissible under such Laws, and any
excess interest or charges actually collected by
Lender shall be credited as a partial prepayment of
principal.
(E) The Floating Rate shall change contemporaneously
with each change in the Revolving Rate.
2.5.6 Method of Payment. Each payment (including any
prepayment) of principal of and interest on the Revolving Loan
and each payment of Borrowers' reimbursement or
indemnification obligations under Sections 2.5.8, 2.5.10,
2.5.11 or 10.3 or any other provision hereunder, shall be made
to Lender without set-off or counterclaim in Dollars in
immediately available funds at Lender's main office (or, in
the case of LIBOR Rate Loans at such other Lending
Installation, if any, as may be specified in a notice to
Cavalier Homes by Lender) by 2:00 p.m. Local Time on the date
when payment is due.
2.5.7 Application of Payments. Any payment received by Lender
from Borrowers, or any of them, with respect to the Revolving
Loan or with no particular Obligation specified, will be
applied by Lender to all obligations of Borrowers to Lender
under the Revolving Note or this Agreement, with each such
payment to be applied in the following order unless Lender, at
its option, designates a different order from time to time:
first to any sums (other than principal or interest) then due,
next to interest, and the remainder (if any) to principal,
with the most recent Advances of principal under the Revolving
Loan to be paid first.
2.5.8 Optional Prepayments. Borrowers may, at any time and
from time to time, with respect to the Revolving Loan, prepay
any Floating Rate Loan, in whole or in part, without premium
or penalty. Payment of principal owing upon any LIBOR Rate
Loan, in whole or in part, is permitted only on the last day
of the applicable Interest Period. If, notwithstanding the
provisions of this section, a LIBOR Rate Loan is prepaid for
any reason other than demand by Lender for payment, Borrowers,
jointly and severally, shall indemnify Lender on demand for
any loss incurred thereby, including any loss in liquidating
or employing deposits acquired to fund or maintain the LIBOR
Rate Loan.
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2.5.9 Lending Installations. Lender and any Participant may
book LIBOR Rate Loans at any Lending Installation selected by
it, and may change the Lending Installation from time to time.
All terms of this Agreement shall apply to any such Lending
Installation.
2.5.10 Failure to Pay or Borrow on Certain Dates; Taxes.
(A) If any payment of a LIBOR Rate Loan occurs on a
date which is not the last day of an Interest Period,
or if a LIBOR Rate Loan is not made on the date
specified in the Borrowing Notice or Rate Selection
Notice for any reason other than default of Lender or
a Participant, Borrowers, jointly and severally,
shall upon demand indemnify Lender and each
Participant for any costs incurred by Lender and each
Participant resulting therefrom, including any loss
in liquidating as employing deposits acquired to fund
or maintain the LIBOR Rate Loan.
(B) If and to the extent that any deduction is
required by law to be made from any payment to Lender
under this Agreement or the Revolving Note on account
of present or future taxes of any nature whatsoever
imposed within the United States of America by any
Governmental Authority, Borrowers shall make the
deduction for the account of Lender and make timely
payment thereof to the appropriate Governmental
Authority. Borrowers shall confirm any payment of
such taxes by sending official tax receipts or
certified copies thereof to Lender promptly after
payment.
2.5.11 Increased Cost and Reduced Return.
(A) If after the date hereof the adoption of any
applicable Requirement of Law or any change therein,
or any change in the interpretation or administration
thereof by any Governmental Authority, central bank
or comparable agency charged with the interpretation
or administration thereof, or compliance by Lender or
any Participant (or any of their applicable Lending
Installations) with any request or directive (whether
or not having the force of law) of any such
Governmental Authority, central bank or comparable
agency:
(1) shall subject Lender or any
Participant (or any of their
applicable Lending Installations) to
any tax, duty or other charge with
respect to LIBOR Rate Loans, the
Revolving Note or any of their
obligation to make or maintain LIBOR
Rate Loans, or shall change the
basis of taxation of payments to
Lender or any Participant (or
12
any of their applicable Lending
Installation) of the principal of or
interest on the LIBOR Rate Loans or
any other amounts due under this
Agreement in respect of LIBOR Rate
Loans or any of their obligation
to make or maintain the LIBOR Rate
Loans (except for changes in the
rate of tax on the overall net
income of Lender, any Participant or
any of their applicable Lending
Installations); or
(2) shall impose, modify or deem
applicable any reserve, special
deposit or similar requirement
(including, without limitation, any
such requirement imposed by the
Board of Governors of the Federal
Reserve System, but excluding with
respect to any LIBOR Rate Loan any
such requirement included in the
applicable Reserve Requirement in
calculating the Base LIBOR Rate for
such loan) against assets of,
deposits with or for the account of,
or credit extended by, Lender or any
Participant (or any of their
applicable Lending Installations) or
on the London, England interbank
eurodollar market, or any other
condition affecting the LIBOR Rate
Loans, the Revolving Note or
Lender's or any Participant's
obligation to make or maintain LIBOR
Rate Loans;
and the result of any of the foregoing is to increase the cost
to Lender or any Participant (or any of their applicable
Lending Installations) of making or maintaining a LIBOR Rate
Loan (except to the extent such increased costs are already
included in the determination of the applicable interest
rate), or to reduce the amount of any sum received or
receivable by Lender of any Participant (or any of their
applicable Lending Installations) under this Agreement or
under the Revolving Note with respect thereto, or otherwise to
reduce the net yield to Lender or any Participant on the Loan
by a material amount, then, within the time period specified
in Section 2.5.12 hereof and upon delivery to Cavalier Homes
of a certificate complying with Section 2.5.12 hereof,
Borrowers shall pay to Lender such additional amount or
amounts as will compensate Lender and the affected
Participants for such increased cost or reduction.
(B) If after the date hereof Lender or any
Participant shall have reasonably determined that the
adoption of any applicable Requirement of Law
regarding capital adequacy, or any change therein, or
any change in the interpretation or administration
thereof by any Governmental Authority, central bank
or comparable agency charged with the interpretation
13
or administration thereof, or compliance by Lender or
any Participant (or any of their Lending
Installations) with any request or directive
regarding capital adequacy (whether or not having the
force of law) of any such Governmental Authority,
central bank or comparable agency, has reduced the
rate of return on capital of Lender (or any person or
entity controlling Lender) or any Participant as a
consequence of Lender's or such Participant's
obligations hereunder to a level below that which
Lender (or such person or entity) or such
Participant would have achieved but for such
adoption, change, compliance, request or directive by
a material amount, then from time to time, within the
time specified in Section 2.15.12 hereof, Borrowers
shall pay to Lender and such Participant such
additional amount or amounts as will compensate
Lender (or such person or entity) and such
Participant for such reduction.
(C) Lender will promptly notify Cavalier Homes of any
event of which it has knowledge, occurring after the
date hereof, which will entitle Lender or any
Participant to compensation pursuant to this Section
2.5.11 and will designate a different Lending
Installation if such designation will avoid the need
for, or reduce the amount of, such compensation and
will not, in the reasonable judgment of Lender,
expose Lender or any Participant to additional
liability, costs or reduction in rate of return.
Determinations by Lender and any Participant for
purposes of this Section 2.5.11 of the effect of the
adoption of any applicable Requirement of Law, or any
change therein, or any change in the interpretation
or administration thereof by any Governmental
Authority, central bank or comparable agency charged
with the interpretation or administration thereof, of
compliance by Lender or any Participant (or their
applicable Lending Installations) with any request or
directive (whether or not having the force of law) of
any such Governmental Authority, central bank or
comparable agency on its costs of making or
maintaining the Revolving Loan or on amounts
receivable by it in respect of the Revolving Loan,
and of the additional amounts required to compensate
Lender and any Participant in respect of any
increased costs or reduction in rate of return, shall
be conclusive, provided that such determinations are
made on a reasonable basis and are supported by a
certificate complying with Section 2.5.12 hereof.
2.5.12 Lender's Certificates; Survival of Indemnity. A
certificate of Lender, any Participant, or any Lending
Installation, as to the amounts due under Sections 2.5.8,
2.5.10 or 2.5.11 and all other determinations by any of them
pursuant thereto, shall, in the absence of manifest error and
so long as made on any reasonable basis, be presumed to be
14
correct. Determination of amounts payable under such sections
in connection with a LIBOR Rate Loan shall be calculated as
though Lender, the affected Participants, or the affected
Lending Installation funded the LIBOR Rate Loan through the
purchase of a deposit of the type, amount and maturity
corresponding to the deposit used as a reference in
determining the applicable Base LIBOR Rate for such loan. The
amount specified in the certificate shall be payable at the
end of the applicable Interest Period or within 15 days after
receipt by Cavalier Homes of the certificate, whichever is
later. In determining amounts owed, any reasonable averaging
and attribution methods may be used, which methods shall be
specified in the certificate or other documentation
accompanying the demand for payment. The obligations of
Borrowers under Sections 2.5.8, 2.5.10 and 2.5.11 shall
survive payment of the Revolving Loan and termination of this
Agreement, but such obligations shall terminate two years
after the date the Revolving Note is paid in full unless,
prior to the end of such two-year period, Lender or any
Participant shall have given Cavalier Homes notice that claim
is made under any of such sections and the approximate amount
of such claim.
2.5.13 Illegality Affecting LIBOR Rate Loans. If, on or after
the date of this Agreement, the adoption of any applicable
Requirement of Law, or any change therein, or any change in
the interpretation or administration thereof by any
Governmental Authority, central bank or comparable agency
charged with the interpretation or administration thereof, or
compliance by Lender or any Participant (or any of their
applicable Lending Installations) with any request or
directive (whether or not having the force of law) of any such
Governmental Authority, central bank or comparable agency
shall make it unlawful or impossible for Lender or any
Participant (or any of their applicable Lending Installations)
to make, maintain or fund LIBOR Rate Loans, Lender shall so
notify Cavalier Homes, whereupon until Lender notifies
Cavalier Homes that the circumstances giving rise to such
suspension no longer exist, the obligation of Lender and any
Participant to make or maintain LIBOR Rate Loans shall be
suspended. As a result of such suspension, the Advances of the
Revolving Loan shall instead accrue interest at the Floating
Rate. Before giving any notice pursuant to this section,
Lender and each affected Participant shall designate a
different Lending Installation for the LIBOR Rate Loans if
such designation will avoid the need for giving such notice
and will not, in the judgment of Lender, be otherwise
disadvantageous to Lender or any Participant.
2.5.14 Availability of Interest Rate; Basis for Determining
Interest Rate Inadequate or Unfair. If on or prior to the
first day of any Interest Period for any LIBOR Rate Loan:
15
(A) Lender or any Participant determines or is
advised that deposits in Dollars (in the applicable
amounts) are not being offered in the relevant market
for such Interest Period, or
(B) Lender or any Participant determines that the
LIBOR Rate will not adequately and fairly reflect the
cost to Lender or such Participant of funding the
LIBOR Rate Loan for such Interest Period,
Lender shall forthwith give notice thereof to Cavalier Homes,
whereupon until Lender notifies Cavalier Homes that the
circumstances giving rise to such suspension no longer exist,
the obligation to make or maintain LIBOR Rate Loans shall be
suspended. Unless Cavalier Homes notifies Lender at least two
Banking Days before the date of any Advance of the Revolving
Loan for which a Borrowing Notice has previously been given
that the Borrowers elect not to borrow, as a result of such
suspension, such Advances shall instead accrue interest at the
Floating Rate.
11. Section 2.10 of the Agreement is hereby amended and
restated to read in its entirety as follows:
2.10 Commitment and Non-Usage Fees for the Revolving Loan. At
Closing and upon the renewal (if applicable) of the Revolving
Loan, Borrowers shall pay the Commitment Fee (or if at
renewal, such other commitment fee as shall be mutually agreed
upon by Cavalier Homes and Lender) for the Revolving Loan. In
addition, Borrowers shall pay to Lender a non-usage fee (the
"Non-Usage Fee") equal to one-quarter of one percent (.0025)
times the Unused Line Amount (as hereinafter defined). As used
in this Section 2.10, the term "Unused Line Amount" shall mean
the amount by which the maximum Revolving Loan Commitment
(which is $10,000,000 as of June 1, 1998) exceeds the average
outstanding principal balance of the Revolving Loan for the
preceding 12-month period. The Unused Line Amount and
Non-Usage Fee shall be computed on April 15, 1999 for the
preceding 12-month period ended April 15, 1999, and again on
each subsequent April 15 for the preceding 12-month period
then ended. The Non-Usage Fee shall be payable each May 15
following the April 15 computation date. If Borrowers do not
pay any Non-Usage Fee to Lender upon written demand, Lender,
at its option may, but shall not be required to, and without
further notice or demand upon Borrowers, make an Advance on
the Revolving Loan for the purpose of paying to Lender the
amount of such Non-Usage Fee. Any such Advance so made by
Lender shall for all purposes under the Agreement be treated
as an Advance under the Revolving Loan Commitment, and the
amount of any such Advance shall be included as part of the
unpaid principal balance of the Revolving Loan. Alternatively,
Lender, at its option may, but shall not be required to, and
16
without further notice or demand upon any of the Borrowers,
charge against any deposit account of any of the Borrowers all
or any part of the Non-Usage Fee due hereunder.
12. Section 3.1 of the Agreement is hereby amended and
restated in its entirety to read as follows:
3.1 General Terms of the Warehouse Loan and Term Loans.
(A) Subject to the terms hereof, Lender will lend to
Cavalier Acceptance, from time to time until the Loan
Termination Date for the Warehouse Loan, such sums in
integral multiples of $500,000 as Cavalier Acceptance
may request, but which shall not exceed, in aggregate
principal amount at any one time outstanding, the
lesser of:
(1) (a) $25,000,000 minus (b) the
aggregate outstanding principal
balance of all Terms Loans, or
(2) the Contracts Borrowing Base.
The above-described revolving line of credit made available to
Cavalier Acceptance is referred to in this Agreement as the
"Warehouse Loan." Subject to the provisions of subsection (C)
below, indebtedness outstanding under the Warehouse Loan may
be converted to a Term Loan; provided, however, that the
maximum principal amount outstanding under the Warehouse Loan
and all Term Loans shall not exceed $25,000,000 (the
outstanding principal balance of the Warehouse Loan and all
Term Loans is herein referred to, in the aggregate, as the
"$25,000,000 Loan").
(B) Subject to the terms hereof, Cavalier Acceptance
may borrow, repay without penalty or premium, and
reborrow under the Warehouse Loan, from the date of
this Agreement until the Loan Termination Date for
the Warehouse Loan. If at any time the unpaid
principal balance of the Warehouse Loan exceeds the
amount Cavalier Acceptance could borrow at such time
under the formula set forth in (A) above, Cavalier
Acceptance shall immediately and without demand pay
such sums to Lender, in multiples of $10,000 to the
extent necessary to reduce the Warehouse Loan to an
amount which Cavalier Acceptance could borrow at that
time under such formula.
(C) Until the Loan Termination Date for the Warehouse
Loan, and so long as no Event of Default shall have
occurred and be continuing, and subject to the
satisfaction of all conditions precedent contained in
17
Article IV, indebtedness owing under the Warehouse
Loan may, in a minimum principal amount of
$2,000,000, be converted to a Term Loan. The Eligible
Contracts delivered by Cavalier Acceptance to Lender
with respect to each Term Loan shall for certain
purposes hereunder be allocated to such Term Loan
(the "Allocated Eligible Contracts"); provided,
however, that no more than fifteen percent (15%) of
the Eligible Contracts allocated to any applicable
Term Loan shall be C-Rated Contracts.
(D) If at any time the unpaid principal balance of
any Term Loan shall exceed eighty percent (80%) of
the aggregate outstanding principal balance of the
Allocated Eligible Contracts for such Term Loan, then
Cavalier Acceptance shall have thirty (30) days
within which to (i) substitute a replacement Eligible
Contract to increase the aggregate outstanding
balance of the Allocated Eligible Contracts for such
Term Loan, and/or (2) pay such sums to Lender, in
multiples of $10,000, all as necessary to assure that
the outstanding principal balance of such Term Loan
is not more than eighty percent (80%) of the
aggregate outstanding principal balance of the
Allocated Eligible Contracts for such Term Loan;
provided, however, that with respect to any such
Allocated Eligible Contracts which are Green Tree
Contracts, Cavalier Acceptance agrees that the
loan-to-value threshold (at which Cavalier Acceptance
must either substitute a new Eligible Contract or
repay principal owing on the Term Loan) shall be
seventy percent (70%) rather than eighty percent
(80%).
13. Section 3.5 of the Agreement is hereby amended and
restated to read in its entirety as follows:
3.5 Prepayment. The Term Loan(s) may be prepaid, in full or in
part, upon not less than thirty (30) days notice if such
prepayment is voluntary; provided, however, that a prepayment
premium (the "Premium") shall be payable on the Excess Amount
(as hereinafter defined) if such prepayment(s) (whether
voluntary or mandatory) should occur within three (3) years
from the date of the applicable Term Note(s) which evidences
the Term Loan(s) upon which such prepayment has been made, as
follows: (1) until the first anniversary date of the Term
Note, the Premium shall be equal to one and one-half percent
(1.50%) times the Excess Amount; (2) from the first
anniversary date of the Term Note until the third anniversary
date thereof, the premium shall be equal to one percent
(1.00%) times the Excess Amount; and (3) from and after the
third anniversary date of each Term Note, there shall be no
Premium payable upon any prepayment of such Term Loan. As used
herein, the "Excess Amount" means the amount by which the
principal prepayments made on any Term Note, measured on an
annual basis for the applicable Prepayment Period (as
hereinafter defined), shall exceed (A) the
18
outstanding principal balance on the first day of the
Prepayment Period times (B) ten percent (10%). As used herein,
the "Prepayment Period" (x) means the period beginning on the
date of the applicable Term Note and continuing until (but not
including) the first anniversary date of such Term Note and
(y) on and after the first such anniversary date, means the
period commencing on such anniversary date and continuing
until (but not including) the next anniversary date. For
example, if the outstanding principal balance of a Term Note
on the first day of the Year-One Prepayment Period is
$5,000,000, then ten percent (10%) of such amount would be
equal to $500,000, which would be the amount of principal that
could be prepaid during the Year-One Prepayment Period without
payment of any Premium. If the amount prepaid during the
Year-One Prepayment Period for such loan was $750,000, then
the Excess Amount would be $250,000 ($750,000 - 500,000), and
the applicable Premium would be equal to$3,750.00 (1.5% times
$250,000).
For partial prepayments, Lender on each April 15 shall
calculate the amount of Premium due on each Term Note for the
most recently-ended Prepayment Period occurring on or before
said April 15, and the amount of such premium shall be payable
by Cavalier Acceptance each May 15, following the April 15
computation date. For prepayments in full, the premiums shall
be computed and payable on the date of prepayment. In addition
to the prepayments specified under Section 3.1(D), the
$25,000,000 Loan shall be subject to certain mandatory
prepayments in the event that Cavalier Acceptance shall have
received prepayments to it of Chattel Paper which constitutes
Collateral under this Agreement (regardless of whether such
Chattel Paper is classified as an Eligible Contract), as
follows: (1) In the event that Cavalier Acceptance shall
receive a principal prepayment upon an Allocated Eligible
Contract, then 80% of the amount of such prepayment shall be
due to Lender as a prepayment to Lender of the Term Loan to
which such Allocated Eligible Contract was allocated; and (2)
in the event that Cavalier Acceptance should receive a
prepayment of any other Chattel Paper constituting Collateral
under this Agreement, then the full amount of such prepayment
shall be due to Lender as a prepayment to be applied by Lender
to such Indebtedness outstanding upon the $25,000,000 Loan as
Lender may elect.
14. Section 3.6(A) of the Agreement is hereby amended and
restated to read in its entirety as follows:
3.6(A) Warehouse Loan Borrowing Procedures, Interest Rates,
Payments of Interest and Related Provisions.
3.6(A).1 Borrowing Notices.
(A) Cavalier Acceptance will give Lender an
appropriate Borrowing Notice not later than 10:00
a.m. Local Time three (3) Banking Days prior to the
19
the Borrowing Date for LIBOR Rate Loans and not later
than 10:00 a.m. Local Time on the Borrowing Date for
Floating Rate Loans. A Borrowing Notice is deemed to
be given when actually received by Lender at its
Commercial Loan Department.
(B) Once given to Lender, except as provided in
Section 3.6(A).14 or unless Lender shall otherwise
consent, such Borrowing Notice shall not thereafter
be revocable by Cavalier Acceptance.
(C) On the Borrowing Date, if all terms and
conditions of this Agreement have been complied with,
Lender shall make available the requested Advance of
the Warehouse Loan.
(D) If requested by Lender, Cavalier Acceptance shall
deliver to Lender, not later than 12:00 noon Local
Time on the Borrowing Date, written confirmation
(substantially in the form of Exhibit B- 1) of any
oral Borrowing Notice. Cavalier Acceptance shall
certify to the accuracy of the information set forth
thereon.
3.6(A).2 Interest Rate. Unless Cavalier Acceptance shall have
elected a LIBOR Rate for all or a portion of the Advance of
the Warehouse Loan as provided in Section 3.6(A).3 hereof, the
aggregate unpaid principal amount of each Advance of the
Warehouse Loan shall bear interest at a rate equal to the
Floating Rate with respect to the Warehouse Loan.
3.6(A).3 Election of LIBOR Rate.
(A) Subject to the provisions of Sections 3.6(A).4,
3.6(A).13, 3.6(A).14 and 3.8, Cavalier Acceptance may
elect to pay interest on all or part of an Advance of
the Warehouse Loan or the Warehouse Loan at the LIBOR
Rate for an Interest Period by giving Lender
(1) An appropriate Borrowing Notice
specifying a LIBOR Rate not later
than 10:00 a.m. Local Time three (3)
Banking Days prior to the Borrowing
Date (in the case of a new Advance);
or
(2) An appropriate Rate Selection Notice
specifying a LIBOR Rate not later
than 10:00 a.m. Local Time three (3)
Banking Days prior to the first day
of the new Interest Period (in the
case of the outstanding LIBOR Rate
Loan); or
20
(3) An appropriate Rate Selection Notice
specifying a LIBOR Rate not later
than 10:00 a.m. Local Time three (3)
Banking Days prior to the first day
of the Interest Period (in the case
of the conversion of any outstanding
Floating Rate Loan to a LIBOR Rate
Loan).
(B) (1) Cavalier Acceptance may obtain
estimates of the interest rates on
which the Base LIBOR Rate is
calculated by telephoning Lender's
rate desk on any day Lender is open
for business. Cavalier Acceptance
may obtain quotations of the
interest rates on which the Base
LIBOR Rate is calculated by
telephoning Lender's rate desk
between 9:00 a.m. and 10:00 a.m.
Local Time on any Banking Day. A
Rate Selection Notice is deemed
given when actually received by
Lender at its Commercial Loan
Department. If the Rate Selection
Notice is initially given in
writing, it shal be given in
substantially the form of Exhibit
B-1 hereto. If the Rate Selection
Notice is given in writing, Cavalier
Acceptance shall certify to the
accuracy of the information set
forth thereon. If Cavalier
Acceptance fails to select a new
rate option by giving a Rate
Selection Notice by 10:00 a.m. Local
Time on the appropriate Banking Day
Day pursuant to the provisions of
Section 3.6 (A).3 hereof, the
Warehouse Loan or that portion of
the Warehouse Loan covered by the
expiring LIBOR Rate option shall be
a Floating Rate Loan on and after
the last day of the Interest Period
until the Warehouse Loan is paid or
until the effective date of a new
Rate Selection Notice pursuant to
this section, whichever is the first
to occur.
(2) If requested by Lender, Cavalier
Acceptance shall deliver to Lender,
not later than 12:00 noon Local Time
on the first day of the Interest
Period, written confirmation
(substantially in the form of
Exhibit B- 1 hereto) of any oral
Rate Selection Notice. Cavalier
Acceptance shall certify to the
accuracy of the information set
forth thereon.
3.6(A).4 Restrictions on Interest Periods and Conversion to
LIBOR Rate. Each new Advance of the Warehouse Loan shall be in
an amount of at least $500,000 and in an integral multiple of
$100,000 if a LIBOR Rate Loan and that part of each Floating
21
Rate Loan or LIBOR Rate Loan which is converted to, or
continued as, a LIBOR Rate Loan, shall be in an amount of at
least $500,000 and shall be in an integral multiple of
$100,000. No Interest Period may extend beyond the Loan
Termination Date of the Warehouse Loan. Cavalier Acceptance
may not elect a LIBOR Rate if, on the effective date of such
election, there exists an Event of Default.
3.6(A).5 Interest Basis and Payment Dates.
(A) Interest at the rates determined according to
Sections 3.6(A).2 and 3.6(A).3 shall be calculated on
the basis of a 360-day year and the actual number of
days elapsed. Interest shall accrue on the unpaid
principal balance of all Advances of the Warehouse
Loan at the applicable rate from and including the
date the Advance is made to (but not including) the
date of any payment on the Warehouse Loan if payment
is received by Lender prior to 2:00 p.m. Local Time
and if not received by such time, then through and
including the date payment is received.
(B) All interest accrued on each Floating Rate Loan
made under this Article III shall be payable monthly
on the first (1st) day of each calendar month; and
all interest accrued on each LIBOR Rate Loan made
under this Article III shall be payable on the last
day of the applicable LIBOR Rate Interest Period, and
if such LIBOR Rate Interest Period exceeds three (3)
months, interest accrued on such LIBOR Rate Loan also
shall be payable on the date which is three (3)
months after the first day of the applicable LIBOR
Rate Interest Period. If not sooner paid in
accordance with the subsection 3.6(A).5(B), all
accrued but unpaid interest on the Warehouse Loan
shall be due and payable on the Loan Termination Date
of the Warehouse Loan.
(C) If any scheduled payment is late ten (10) days or
more, Cavalier Acceptance agrees to pay a late charge
equal to five percent (5%) of the amount of the
payment which is late, but not more than the maximum
amount allowed by applicable Law (the "Late Charge").
This subparagraph does not extend any payment due
date expressly stated in the Agreement or any Loan
Document and does not in any way prevent or estop
Lender from requiring that payments be made by
Cavalier Acceptance strictly when due. Unless
accepted by Lender, and unless accompanied by all
other amounts then due to Lender, the tender of such
payment by Cavalier Acceptance does not cure the
Event of Default arising from the payment default
upon which such Late Charge was assessed.
22
(D) If, at any time, the rate of interest accruing on
any Advance of the Warehouse Loan or the Late Charge
shall be deemed by any competent court of law,
governmental agency or tribunal to exceed the maximum
rate of interest permitted by any applicable Laws,
then, for such time as such interest rate or Late
Charge, as applicable, would be deemed excessive, its
application shall be suspended and there shall be
charged instead on any such Advance the maximum rate
of interest permissible under such Laws, and any
excess interest or charges actually collected by
Lender shall be credited as a partial prepayment of
principal.
(E) The Floating Rate shall change contemporaneously
with each change in the Warehouse Rate.
3.6(A).6 Method of Payment. Each payment (including any
prepayment) of principal of and interest on the Warehouse Loan
and each payment of Cavalier Acceptance's reimbursement or
indemnification obligations under Sections 3.6(A).8,
3.6(A).10, 3.6(A).11 or 10.3 or any other provision hereunder,
shall be made to Lender without set-off or counterclaim in
Dollars in immediately available funds at Lender's main office
(or, in the case of LIBOR Rate Loans at such other Lending
Installation, if any, as may be specified in a notice to
Cavalier Acceptance by Lender) by 2:00 p.m. Local Time on the
date when payment is due.
3.6(A).7 Application of Payments. Any payment received by
Lender from Cavalier Acceptance with respect to the Warehouse
Loan or with no particular Obligation specified, will be
applied by Lender to all obligations of Cavalier Acceptance to
Lender under the Warehouse Note or this Agreement, with each
such payment to be applied in the following order unless
Lender, at its option, designates a different order from time
to time: first to any sums (other than principal or interest)
then due, next to interest, and the remainder (if any) to
principal, with the most recent Advances under the Warehouse
Note of principal to be paid first.
3.6(A).8 Optional Prepayments. Cavalier Acceptance
--------------------
may, at anytime and from time to time, with respect to the
Warehouse Loan, prepay any Floating Rate Loan, in whole or in
part, without premium or penalty. Payment of principal owing
upon any LIBOR Rate Loan, in whole or in part, is permitted
only on the last day of the applicable Interest Period. If,
notwithstanding the provisions of this section, a LIBOR Rate
Loan is prepaid for any reason other than demand by Lender for
payment, Cavalier Acceptance shall indemnify Lender on demand
for any loss incurred thereby, including any loss in
liquidating or employing deposits acquired to fund or maintain
the LIBOR Rate Loan.
23
3.6(A).9 Lending Installations. Lender and any Participant may
book LIBOR Rate Loans at any Lending Installation selected by
it, and may change the Lending Installation from time to time.
All terms of this Agreement shall apply to any such Lending
Installation.
3.6(A).10 Failure to Pay or Borrow on Certain Dates;
Taxes.
(A) If any payment of a LIBOR Rate Loan occurs on a
date which is not the last day of an Interest Period,
or if a LIBOR Rate Loan is not made on the date
specified in the applicable Borrowing Notice or Rate
Selection Notice for any reason other than default of
Lender or a Participant, Cavalier Acceptance shall
upon demand indemnify Lender and each Participant for
any costs incurred by Lender and each Participant
resulting therefrom, including any loss in
liquidating as employing deposits acquired to fund or
maintain the LIBOR Rate Loan.
(B) If and to the extent that any deduction is
required by law to be made from any payment to Lender
under this Agreement or the Warehouse Note on account
of present or future taxes of any nature whatsoever
imposed within the United States of America by any
Governmental Authority, Cavalier Acceptance shall
make the deduction for the account of Lender and make
timely payment thereof to the appropriate
Governmental Authority. Cavalier Acceptance shall
confirm any payment of such taxes by sending official
tax receipts or certified copies thereof to Lender
promptly after payment.
3.6(A).11 Increased Cost and Reduced Return.
(A) If after the date hereof the adoption of any
applicable Requirement of Law or any change therein,
or any change in the interpretation or administration
thereof by any Governmental Authority, central bank
or comparable agency charged with the interpretation
or administration thereof, or compliance by Lender or
any Participant (or any of their applicable Lending
Installations) with any request or directive (whether
or not having the force of law) of any such
Governmental Authority, central bank or comparable
agency:
(1) shall subject Lender or any
Participant (or any of their
applicable Lending Installations) to
any tax, duty or other charge with
respect to LIBOR Rate Loans, the
Revolving Note or any of their
obligation to make or maintain LIBOR
Rate Loans, or shall
24
change the basis of taxation of
payments to Lender or any
Participant (or any of their
applicable Lending Installation) of
the principal of or interest on the
LIBOR Rate Loans or any other
amounts due under this Agreement in
respect of LIBOR Rate Loans or any
of their obligation to make or
maintain the LIBOR Rate Loans
(except for changes in the rate of
tax on the overall net income of
Lender, any Participant or any of
their applicable Lending
Installations); or
(2) shall impose, modify or deem
applicable any reserve, special
deposit or similar requirement
(including, without limitation, any
such requirement imposed by the
Board of Governors of the Federal
Reserve System, but excluding with
respect to any LIBOR Rate Loan any
such requirement included in the
applicable Reserve Requirement in
calculating the Base LIBOR Rate for
such loan) against assets of,
deposits with or for the account of,
or credit extended by, Lender or any
Participant (or any of their
applicable Lending Installations) or
on the London, England interbank
eurodollar market, or any other
condition affecting the LIBOR Rate
Loans, the Revolving Note or
Lender's or any Participant's
obligation to make or maintain LIBOR
Rate Loans;
and the result of any of the foregoing is to increase
the cost to Lender or any Participant (or any of
their applicable Lending Installations) of making or
maintaining a LIBOR Rate Loan (except to the extent
such increased costs are already included in the
determination of the applicable interest rate), or to
reduce the amount of any sum received or receivable
by Lender of any Participant (or any of their
applicable Lending Installations) under this
Agreement or under the Warehouse Note with respect
thereto, or otherwise to reduce the net yield to
Lender or any Participant on the Loan by a material
amount, then, within the time period specified in
Section 3.6(A).12 hereof and upon delivery to
Cavalier Acceptance of a certificate complying with
Section 3.6(A).12 hereof, Cavalier Acceptance shall
pay to Lender such additional amount or amounts as
will compensate Lender and the affected Participants
for such increased cost or reduction.
(B) If after the date hereof Lender or any
Participant shall have reasonably determined that the
adoption of any applicable Requirement of
25
Law regarding capital adequacy, or any
change therein, or any change in the interpretation
or administration thereof by any Governmental
Authority, central bank or comparable agency charged
with the interpretation or administration thereof, or
compliance by Lender or any Participant (or any of
their Lending Installations) with any request or
directive regarding capital adequacy (whether or not
having the force of law) of any such Governmental
Authority, central bank or comparable agency, has
reduced the rate of return on capital of Lender (or
any person or entity controlling Lender) or any
Participant as a consequence of Lender's or such
Participant's obligations hereunder to a level below
that which Lender (or such person or entity) or such
Participant would have achieved but for such
adoption, change, compliance, request or directive by
a material amount, then from time to time, within the
time specified in Section 3.6(A).12 hereof, Cavalier
Acceptance shall pay to Lender and such Participant
such additional amount or amounts as will compensate
Lender (or such person or entity) and such
Participant for such reduction.
(C) Lender will promptly notify Cavalier Acceptance
of any event of which it has knowledge, occurring
after the date hereof, which will entitle Lender or
any Participant to compensation pursuant to this
Section 3.6(A).11 and will designate a different
Lending Installation if such designation will avoid
the need for, or reduce the amount of, such
compensation and will not, in the reasonable judgment
of Lender, expose Lender or any Participant to
additional liability, costs or reduction in rate of
return. Determinations by Lender and any Participant
for purposes of this Section 3.6(A).11 of the effect
of the adoption of any applicable Requirement of Law,
or any change therein, or any change in the
interpretation or administration thereof by any
Governmental Authority, central bank or comparable
agency charged with the interpretation or
administration thereof, of compliance by Lender or
any Participant (or their applicable Lending
Installations) with any request or directive (whether
or not having the force of law) of any such
Governmental Authority, central bank or comparable
agency on its costs of making or maintaining the
Warehouse Loan or on amounts receivable by it in
respect of the Warehouse Loan, and of the additional
amounts required to compensate Lender and any
Participant in respect of any increased costs or
reduction in rate of return, shall be conclusive,
provided that such determinations are made on a
reasonable basis and are supported by a certificate
complying with Section 3.6(A).12 hereof.
26
3.6(A).12 Lender's Certificates; Survival of Indemnity. A
certificate of Lender, any Participant, or any Lending
Installation, as to the amounts due under Sections 3.6(A).8,
3.6(A).10 or 3.6(A).11 and all other determinations by any of
them pursuant thereto, shall, in the absence of manifest error
and so long as made on any reasonable basis, be presumed to be
correct. Determination of amounts payable under such sections
in connection with a LIBOR Rate Loan shall be calculated as
though Lender, the affected Participants, or the affected
Lending Installation funded the LIBOR Rate Loan through the
purchase of a deposit of the type, amount and maturity
corresponding to the deposit used as a reference in
determining the applicable Base LIBOR Rate for such loan. The
amount specified in the certificate shall be payable at the
end of the applicable Interest Period or within 15 days after
receipt by Cavalier Acceptance of the certificate, whichever
is later. In determining amounts owed, any reasonable
averaging and attribution methods may be used, which methods
shall be specified in the certificate or other documentation
accompanying the demand for payment. The obligations of
Cavalier Acceptance under Sections 3.6(A).8, 3.6(A).10 and
3.6(A).11 shall survive payment of the Warehouse Loan and
termination of this Agreement, but such obligations shall
terminate two years after the date the Warehouse Note is paid
in full unless, prior to the end of such two-year period,
Lender or any Participant shall have given Cavalier Acceptance
notice that claim is made under any of such sections and the
approximate amount of such claim.
3.6(A).13 Illegality Affecting LIBOR Rate Loans. If, on or
after the date of this Agreement, the adoption of any
applicable Requirement of Law, or any change therein, or any
change in the interpretation or administration thereof by any
Governmental Authority, central bank or comparable agency
charged with the interpretation or administration thereof, or
compliance by Lender or any Participant (or any of their
applicable Lending Installations) with any request or
directive (whether or not having the force of law) of any such
Governmental Authority, central bank or comparable agency
shall make it unlawful or impossible for Lender or any
Participant (or any of their applicable Lending Installations)
to make, maintain or fund LIBOR Rate Loans, Lender shall so
notify the Cavalier Acceptance, whereupon until Lender
notifies Cavalier Acceptance that the circumstances giving
rise to such suspension no longer exist, the obligation of
Lender and any Participant to make or maintain LIBOR Rate
Loans shall be suspended. As a result of such suspension, the
Advances of the Warehouse Loan shall instead accrue interest
at the Floating Rate. Before giving any notice pursuant to
this section, Lender and each affected Participant shall
designate a different Lending Installation for the LIBOR Rate
Loans if such designation will avoid the need for giving such
notice and will not, in the judgment of Lender, be otherwise
disadvantageous to Lender or any Participant.
27
3.6(A).14 Availability of Interest Rate; Basis for Determining
Interest Rate Inadequate or Unfair. If on or prior to the
first day of any Interest Period for any LIBOR Rate Loan:
(A) Lender or any Participant determines or is
advised that deposits in Dollars (in the applicable
amounts) are not being offered in the relevant market
for such Interest Period, or
(B) Lender or any Participant determines that the
LIBOR Rate will not adequately and fairly reflect the
cost to Lender or such Participant of funding the
LIBOR Rate Loan for such Interest Period,
Lender shall forthwith give notice thereof to Cavalier
Acceptance, whereupon until Lender notifies Cavalier
Acceptance that the circumstances giving rise to such
suspension no longer exist, the obligation to make or maintain
LIBOR Rate Loans shall be suspended. Unless Cavalier
Acceptance notifies Lender at least two Banking Days before
the date of any Advance of the Warehouse Loan for which a
Borrowing Notice has previously been given that Cavalier
Acceptance elects not to borrow, as a result of such
suspension, such Advances shall instead accrue interest at the
Floating Rate.
15. Section 3.6(B)(1) of the Agreement is hereby amended by
deleting the first sentence thereof in its entirety and substituting the
following sentences in lieu thereof:
Interest on the principal balance of each Term Loan,
from time to time outstanding, will be payable at a rate (the
"Term Rate") that will be fixed for five years at the per
annum rate of interest equal to (x) 240 basis points (2.40%)
above the Five Year Treasury in the case of Term Loans
converted from the Warehouse Loan prior to March 14, 1996, (y)
200 basis points (2.00%) above the Five Year Treasury in the
case of Term Loans converted from the Warehouse Loan on or
after March 14, 1996, but prior to June 1, 1998, or (z) 195
basis points (1.95%) above the Five Year Treasury in the case
of Term Loans converted from the Warehouse Loan on or after
June 1, 1998.
16. Section 3.10 of the Agreement (which was added by the
First Amendment to the Agreement) is hereby amended and restated to read in its
entirety as follows:
3.10 Non-Usage Fees for $25,000,000 Loan. Cavalier Acceptance
shall pay to Lender a non-usage fee (the "Non-Usage Fee")
equal to one-quarter of one percent (.0025) of the Unused
Commitment Amount (as hereinafter defined). As used in this
Section 3.10, the term "Unused Commitment Amount"
28
shall mean the amount by which the maximum Warehouse
and Term Loan Commitment (which is $25,000,000 as of June 1,
1998) exceeds the average outstanding principal balance of the
$25,000,000 Loan for the preceding 12-month period. The Unused
Commitment Amount and the Non-Usage Fee shall be computed on
April 15, 1999 for the 12-month period ended April 15, 1999
and again on each subsequent April 15 for the preceding
12-month period then ended. If Cavalier Acceptance does not
pay any Non-Usage Fee when due, Lender at its option may, but
shall not be required to, and without further notice or demand
upon Cavalier Acceptance, make an Advance on the Warehouse
Loan for the purpose of paying to Lender the amount of such
Non-Usage Fee, any such Advance so made by Lender shall for
all purposes under the Agreement be treated as an Advance
under the Warehouse and Term Loan Commitment, and the amount
of any such Advance shall be included as part of the unpaid
balance of the Warehouse Loan. Alternatively, Lender, at its
option may, but shall not be required to, and without further
notice or demand upon Cavalier Acceptance charge against any
deposit account of Cavalier Acceptance all or any part of the
Non-Usage Fee due hereunder.
17. Sections 4.3(B) and (C) of the Agreement are hereby
amended and restated in their entireties to read as follows:
(B) The original principal amount of any Term Note
shall not be less than $2,000,000;
(C) The original principal amount of any Term Note
shall not exceed the Contracts Borrowing Base for the
Allocated Eligible Contracts furnished to and
accepted as collateral for such Term Note by Lender;
18. Section 7.2(L) of the Agreement is hereby amended to
delete the term "$2,000,000" therefrom and to substitute the term "$3,000,000"
in lieu thereof, with the intended effect of such change being to increase the
maximum "lease" (as defined therein) obligations from $2,000,000 to $3,000,000
in any fiscal year of Cavalier Homes.
19. Section 7.2(U) is hereby amended and restated in its
entirety to read as follows:
Neither Cavalier Homes, nor the Consolidated
Entities, will make capital expenditures for any fiscal year
in excess of $14,000,000 in the aggregate.
20. Section 7.2(H) of the Agreement is hereby to delete the
term "$2,500,000" from subsection (6) thereof and to substitute the term
"$10,000,000" in lieu thereof;
29
21. Exhibits B, B-1, C, and C-1 of the Agreement are hereby
amended and restated in their entireties to read in the form of Annex B, Annex
B-1, Annex C and Annex C-1 attached hereto.
22. Prior to the execution of this Amendment, Borrowers have
paid to Lender all Usage Fees and Non-Usage Fees due to be paid under the
Agreement prior to this Amendment. In connection with this Amendment, Lender
acknowledges its receipt of (i) a Commitment Fee from Cavalier Homes equal to
one-quarter of one percent (.0025) of the Revolving Loan Commitment ($25,000.00)
and (ii) a Commitment Fee from Cavalier Acceptance equal to three- sixteenths of
one percent (.001875) of the aggregate Warehouse and Term Loan Commitment
($46,875.00). Each of the Borrowers acknowledges that such Commitment Fees have
been fully- earned by Lender and are non-refundable.
23. As conditions to the effectiveness of this Amendment,
Borrowers shall have delivered to Lender: (a) a Second Revolving Note
Modification Agreement in the form of Exhibit A hereto, duly executed (the
"Revolving Note Modification") (b) a Second Warehouse Note Modification
Agreement in the form of Exhibit B hereto, duly executed (the "Warehouse Note
Modification") (the Revolving Note Modification and the Warehouse Note
Modification are sometimes hereinafter referred to collectively as the "Note
Modifications"); (c) a written opinion of legal counsel for Borrowers, dated as
of the date of this Amendment and addressed to Lender, in the form of Exhibit C
hereto; (d) such UCC-1 financing statements and amendments to existing UCC-1
financing statements as Lender may request; and (e) such additional
documentation (including, but not limited to, a certificate of the corporate
secretary or assistant secretary of each Borrower in the form of Exhibit D
hereto, certifying as to incumbency and signatures of the officers of such
Borrower signing this Amendment and the Note Modifications and each other
document delivered pursuant hereto, together with a copy of resolutions of such
Borrower's board of directors and/or shareholders authorizing the execution,
delivery and performance of this Amendment and the Note Modifications and the
Agreement and the Notes as amended thereby) as may be requested by Lender, or
its counsel, to satisfy Lender that this Amendment and the Note Modifications
have been duly authorized, executed and delivered on behalf of each Borrower
that is a party thereto, constitute the valid and binding obligations thereof,
and that the Notes as amended are entitled to the security of the Agreement and
the Security Documents.
24. Notwithstanding the execution of this Amendment, all of
the indebtedness evidenced by each of the Notes (as amended and increased by the
Note Modifications) shall remain in full force and effect, and any Collateral
described in any agreement providing security for any Obligation of the
Borrowers or any of them so defined to include the Notes, or any of them, shall
remain subject to the liens, pledges, security interests and assignments of any
such agreements as security for the indebtedness evidenced by each of the Notes,
the Obligations, and all other indebtedness described therein; nothing contained
in this Amendment or in the Note Modifications shall be construed to constitute
a novation of any of the indebtedness evidenced by the Notes or to release,
satisfy, discharge or otherwise affect or impair in any manner whatsoever (a)
the validity or enforceability of any of the indebtedness evidenced by the
Notes; (b) the liens, pledges, security interests, assignments and conveyances
effected by the Agreement, the Security Documents and any other agreement
securing any of the Notes, or the priority thereof; (c) the
30
liability of any maker, endorser, surety, guarantor or other Person that may now
or hereafter be liable under or on account of any of the Notes or any agreement
securing any or all of the Notes; or (d) any other security or instrument now or
hereafter held by Lender as security for or as evidence of any of the
above-described indebtedness. Without in any way limiting the foregoing, (i)
each Borrower acknowledges and agrees that the indebtedness evidenced by each of
the Notes as amended and/or increased pursuant to the Note Modifications is and
shall remain secured by the Collateral described in the Agreement, each
Assumption Agreement and in the Security Documents and (ii) Cavalier Homes
specifically, in its capacity as guarantor under that certain Continuing
Guaranty Agreements dated February 17, 1994 and March 14, 1996 by Cavalier Homes
in favor of Lender (the "Guaranty Agreements"), acknowledges and agrees that the
"Liabilities" (as defined in the Guaranty Agreements) of Cavalier Acceptance
which are unconditionally guaranteed by Cavalier Homes include the $25,000,000
Loan.
25. 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 and UCC filing fees and
expenses, incurred in connection with the preparation, amendment, modification
or enforcement of this Amendment or the Agreement, and the collection or
attempted collection of the Notes.
26. Borrowers, jointly and severally, hereby represent and
warrant to Lender that (a) the officers of each Borrower executing this
Amendment and the Note Modifications have been duly authorized to do so and such
amendments and the Agreement and the Notes, as amended thereby, are valid and
binding upon each Borrower which is a party thereto in every respect,
enforceable in accordance with their terms, (b) each and every representation
and warranty set forth in Article VI of the Agreement is true and correct as of
the date hereof except as set forth on Exhibit E attached hereto, and (c) no
Event of Default, nor any event that, upon notice or lapse of time or both,
would constitute an Event of Default, has occurred and is continuing.
27. Unless otherwise expressly modified or amended hereby, all
terms and conditions of the Agreement shall remain in full force and effect, and
the same, as amended hereby, are hereby ratified and confirmed in all respects.
28. This Amendment shall inure to and be binding upon and
enforceable by Borrowers and Lender and their respective successors and assigns.
29. This Amendment may be executed in one or more
counterparts, each of which when executed and delivered shall constitute an
original. All such counterparts shall together be deemed to be one and the same
instrument.
31
IN WITNESS WHEREOF, the parties hereto have duly executed this
Amendment, by and through their respective duly authorized officers as of the
day and year first above written.
BORROWERS:
CAVALIER HOMES, INC.
By:/s/ XXXXXXX X. XXXXXX [L.S.]
_______________________________________
Its: VP
_______________________________________
CAVALIER MANUFACTURING, INC.
By:/s/ XXXXXXX X. XXXXXX [L.S.]
_______________________________________
Its: VP
_______________________________________
CAVALIER INDUSTRIES, INC.
By:/s/ XXXXXXX X. XXXXXX [L.S.]
_______________________________________
Its: VP
_______________________________________
BELMONT HOMES, INC.
By:/s/ XXXXXXX X. XXXXXX [L.S.]
_______________________________________
Its: VP
_______________________________________
DELTA HOMES, INC.
By:/s/ XXXXXXX X. XXXXXX [L.S.]
_______________________________________
Its: VP
_______________________________________
32
SPIRIT HOMES, INC.
By:/s/ XXXXXXX X. XXXXXX [L.S.]
_______________________________________
Its: VP
_______________________________________
BELLCREST HOMES, INC.
By:/s/ XXXXXXX X. XXXXXX [L.S.]
_______________________________________
Its: VP
_______________________________________
CAVALIER ACCEPTANCE CORPORATION
By: /s/ XXXXX X. XXXXXX, XX. [L.S.]
_______________________________________
Its: President
_______________________________________
LENDER:
FIRST COMMERCIAL BANK
By: /s/ XXX XXXXXXXX [L.S.]
_______________________________________
Its Vice President
_______________________________________
