FOURTH AMENDMENT TO AMENDED AND RESTATED AGREEMENT FOR WHOLESALE FINANCING (Finished Goods – Shared Credit Facility)
FOURTH
AMENDMENT TO AMENDED AND RESTATED AGREEMENT FOR WHOLESALE
FINANCING
(Finished
Goods – Shared Credit Facility)
This
FOURTH Amendment to Amended and Restated Agreement for Wholesale Financing
(“Amendment”) is made as of this 30th day of May, 2008, by and between TEXTRON
FINANCIAL CORPORATION, a Delaware corporation (“Secured Party”); and Palm Harbor
Homes, Inc., a Florida corporation, Palm Harbor Manufacturing, L.P., a Texas
limited partnership, and Palm Harbor Marketing, Inc., a Nevada corporation
(jointly and severally, individually and collectively, “Borrowers”).
WITNESSETH
THAT:
WHEREAS,
the Secured Party and Borrowers are parties to a certain Amended and Restated
Agreement for Wholesale Financing, Finished Goods – Shared Credit Facility dated
May 25, 2004, as amended by a certain First Amendment dated as of June 30,
2005
and a certain Second Amendment dated as of January 19, 2006 and a certain
Third
Amendment dated as of May 29th, 2007 (as amended, the “Agreement”); and
WHEREAS,
the parties hereto desire to amend certain of the terms of the Agreement.
NOW
THEREFORE, in consideration of the premises and the mutual obligations
hereinafter contained, and for other good and valuable consideration, the
receipt whereof is hereby acknowledged, the parties hereto agree as follows:
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1.
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All
capitalized terms used and not otherwise defined herein shall have
the
same meanings provided therefore in the Agreement.
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2.
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Section
37.1 of the Agreement is hereby amended and restated in its entirety
to
read as follows:
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“37.1
Covenants.
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(a)
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Operating
Cash Flow.
Borrowers covenant that Consolidated Net Cash Provided by Operating
Activities, as determined as of the end of and in respect of each
fiscal
year of the Borrowers (commencing with the fiscal year of the Borrowers
ending on March 31, 2009), will not be less than an amount which
(i) shall
be mutually agreeable among Borrowers and Lender and (ii) shall
not be
less than (A) Fifteen Million Dollars ($15,000,000) for fiscal
year ending
March 31, 2009 and for every consecutive fiscal year ending thereafter.
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(b)
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Minimum
Inventory Turn.
Borrowers covenant that they will maintain as of the last day of
each
fiscal quarter ending on or after June 30, 2008, a ratio of (a)
Borrowers’
sum of the prior four quarters of Cost of Goods Sold, to (b) Average
Inventory, for the prior four quarters, of not less than two point
seventy-five to one (2.75:1).
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(c)
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Minimum
Tangible Net Worth.
Borrowers covenant that they will maintain a Tangible Net Worth
(i) as of
the fiscal quarter ending June 30, 2008 through December 31, 2008,
of not
less than One Hundred Ten Million Dollars ($110,000,000) and (ii)
as of
the fiscal quarter ending March 31, 2009 and thereafter, of not
less than
One Hundred Fifteen Million Dollars ($115,000,000).
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(d)
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Incurrence
of Additional Indebtedness.
Borrowers shall not borrow or incur any liability in respect of
borrowed
money indebtedness (including, without limitation, loans, notes,
bonds or
repurchase obligations in respect of any securitizations), financing
leases, liabilities for the deferred purchase price of property
(excluding
accounts payable arising in the ordinary course of business but
including
all liabilities created or arising under any conditional sale or
other
title retention agreement with respect to any such property), liabilities
in respect of interest rate swamps or similar instruments or any
guaranties in respect of any of the foregoing , in each case unless
the
Majority Lenders shall have (prior to the incurrence thereof) consented
to
the same, in writing (which consent shall not be unreasonably withheld
or
delayed). For the avoidance of doubt, the above restriction (i)
does not
apply to CountryPlace Mortgage, Ltd. or any other party other than
Borrowers and (ii) does not restrict Borrowers’ ability to incur
liabilities in respect of letters of credit or capitalized leases.
In
connection with any request by the Borrowers to incur additional
indebtedness otherwise prohibited by this clause (f) and as to
which the
Borrowers request that the Administrative Agent release or subordinate
any
portion of the Collateral in favor of another Lender or other party,
the
Administrative Agent shall not unreasonably withhold or delay the
granting
of such request; provided that (i) no default or Event or Default
has
occurred and is continuing under this Agreement or any other agreement;
(ii) no default or Event of Default would arise under this Agreement
or
any other agreement as a result of such incurrence of additional
indebtedness; and (iii) the Administrative Agent determines, in
its sole
discretion, that, after giving effect to such request, the value
of the
Collateral as to which the Administrative Agent possesses a first
priority
security interest would be satisfactory to fully support and secure
(including with an adequate collateral cushion as the Administrative
Agent
may determine) the amount of the Total Credit Line and all of the
Borrowers’ covenant requirements and other obligations under this
Agreement and all other agreements.”
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Provided
that the Borrowers meet the following two tests, which will be monitored
on a
monthly basis beginning on June 30, 2008, financial covenants “(a)”, “(b)”, and
“(c)” listed above will not be measured for the applicable fiscal quarter end.
If the Borrowers fail one or more of the tests in the first two months of
the
applicable fiscal quarter end, the applicable covenants will be in effect,
calculated, and measured for the prior fiscal quarter end. If the Borrowers
fail
one or more of the tests in the third month of the applicable fiscal quarter
end, the applicable covenants will be in effect, calculated, and measured
for
the current fiscal quarter end. The two tests shall be conducted as follows:
Test
One:
Loan
to Collateral Value.
Borrowers will maintain a Loan to Collateral value of no more than 60% as
of
June 30, 2008, 55% as of September 30, 2008, and 50% as of December 31, 2008
and
every month thereafter calculated as TFC Outstandings/Total Finished Goods
Inventory.
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Test
Two:
Minimum
Liquidity Amount.
Borrowers will maintain as of the last day of each month a Liquidity Amount
of
not less than thirty million dollars ($30,000,000.00) unless cash is used
to
redeem convertible debt, then a twenty million dollar ($20,000,000) Minimum
Liquidity Amount will be allowed through 12/31/08. Beginning on 01/01/09
and
thereafter, the thirty million dollar ($30,000,000.00) Minimum Liquidity
Amount
is required.
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3.
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Effective
as of June 1, 2008, Section 10 of the Agreement is hereby amended
by: (A)
deleting the words “Prime Rate from time to time in effect plus six tenths
of a percent (.6%)” in clause (a) of the first paragraph thereof and
inserting in their place the words “LIBOR plus 375 bps” and (B) deleting
the words “Prime Rate from time to time in effect plus 3.00%” in clause
(b) of the first paragraph thereof and inserting in their place
the words
“LIBOR plus 500 bps” and (C) deleting the words “Prime Rate from time to
time in effect plus six tenths of a percent (.6%)” in clause (i) of the
second paragraph thereof and inserting in their place the words
“LIBOR
plus 375 bps” and (D) deleting the words “Prime Rate from time to time in
effect plus 3.00%” in clause (ii) of the second paragraph thereof and
inserting in their place the words “LIBOR” plus 500 bps” and (E) deleting
the words “Prime Rate from time to time in effect plus 3.00%” in the third
paragraph thereof and inserting in their place the words “LIBOR” plus 500
bps”.
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4.
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The
Definition Appendix is hereby amended by inserting as a new definition
LIBOR, in the correct alphabetical order, the following:
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LIBOR
–
LIBOR will be based on the highest 30-Day LIBOR from the previous month.
For any
month, LIBOR shall be the highest rate of 30-Day LIBOR interest published
for
the prior month by The Wall Street Journal or such other publication as TFC
shall select from time to time.
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5.
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The
first paragraph of Section 27 of the Agreement is hereby amended
and
restated in its entirety to read as follows:
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“Termination.
This Agreement shall continue from May 25, 2004 until March 31, 2011 (the
“Term”). On the last day of such Term (the “Maturity Date”). all Commitments of
the Lenders shall. if not previously terminated. terminate and all obligations
hereunder outstanding on such last day shall mature and automatically become
due
and payable. including. without limitation. all outstanding Advances. all
accrued and unpaid interest and/or finance charges and all fees, costs and
expenses. Borrowers agree to pay all such obligations so maturing on the
Maturity Date.”
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6.
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The
Definition of Tangible Net Worth is hereby amended by adding the
words
“and prepaid expenses” after the word “Intangibles” at the end of the
sentence.
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7.
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Except
as amended hereby, the Agreement shall remain in full force and
effect.
and is in all respects hereby ratified and affirmed.
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8.
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If
any provision of this Amendment is determined to be illegal, invalid
or
unenforceable. such provision shall be fully severable and the
remaining
provisions shall remain in full force and effect and shall be construed
without giving effect to the illegal. invalid or unenforceable
provisions.
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9.
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This
Amendment may be executed in any number of counterparts, each of
which
when so executed and delivered shall be an original but all of
which
together shall constitute one and the same instrument. and a facsimile
signature shall suffice as an original for all purposes.
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-4-
IN
WITNESS WHEREOF. the parties hereto have caused this Amendment to be executed
by
their duly authorized officer or representative as of the day and year first
above written.
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BORROWERS:
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SECURED
PARTY:
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PALM
HARBOR HOMES, INC.
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TEXTRON
FINANCIAL
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By:
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/s/
Xxxxx Xxxxxx
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By:
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/s/
Xxxxx Xxxxxxxx
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Name:
Xxxxx Xxxxxx
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Name:
Xxxxx Xxxxxxxx
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Title:
President
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Title:
Sr. VP, Operations and Credit
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PALM
HARBOR MARKETING, INC.
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By:
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/s/
Xxxxx Xxxxxx
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Name:
Xxxxx Xxxxxx
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Title:
President
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PALM
HARBOR MANUFACTURING, L.P.
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By:
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Palm
Harbor GenPar, LLC
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Its:
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General
Partner
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By:
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/s/
Xxxxx Xxxxxx
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Name:
Xxxxx Xxxxxx
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Title:
President
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Distribution
Finance Group, Housing Division
00000
Xxxxx Xxxx Xxx, Xxxxx 000
Xxxxxxxxxx,
XX 00000
May
30,
2008
Palm
Harbor Homes, Inc.
Revised
Program Terms
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Borrower:
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Palm
Harbor Homes, Inc. (the “Borrower”)
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Effective
Date:
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Upon
Borrower’s acceptance of terms outlined herein, the effective date shall
be June 1, 2008.
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Advance
Rate:
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90%
of Invoice
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Credit
Limit:
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$70,000,000
(“Credit Limit”) extension of Committed facility through March 31, 2011
($50,000,000 “Senior” Component & $20,000,000 “Junior” Component). TFC
commits to provide financing to Borrower, as outlined herein, for
a 2-year
extension of commitment period, provided Borrower is not in default
with
TFC.
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Term:
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Expires
March 31, 2011
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Repayment
Terms:
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Homes
must be Paid in Full at the earlier of the retail sold date or
the
Maturity Date.
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Commitment
Fee:
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.275%
of credit limit on extended facility term, payable at
closing.
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Pricing:
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LIBOR
+ 375 bps
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Payment
Delay:
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Interest
rate charged will be based on highest 30-Day LIBOR from the previous
month. For any month, LIBOR shall be the highest rate of 30-Day
LIBOR
interest published for the prior month by The Wall Street Journal
or such
other publication as TFC shall select from time to time.
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Curtailments/Maturity:
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10
business days
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Unused
Line Fee:
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Manufactured
Homes – 10% at day 360; Due in Full at day 540 Pay down required if
>25% of invoices exceed 360 days
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Pre-payment/Early
Termination:
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1.5%
of credit limit – Before 3/31/10 1.0% of credit limit – 4/1/10-
3/31/11
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Security
Position:
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UCC
perfected first lien on finished goods and proceeds
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Additional
Debt:
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Additional
debt above $75 million with no more than $25 million secured debt
requires
TFC approval
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Financial
Covenants:
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Monthly
tests will be conducted relative to the following:
(a) Loan
to Collateral value no more than 60% at 6/30/08,55% at 9/30/08,
50% at
12/31/08 and each month thereafter.
(b) Liquidity
(Unrestricted Cash and Investments) of at least $30 million at
all times,
unless cash is used to redeem convertible debt, then a $20 million
Minimum
Liquidity requirement is allowed through 12/31/08.
Should
either of the tests above not be met, then the following financial
covenants will be required:
1) Minimum
Tangible Net Worth – $110 million from 6/30/08 through 12/31/08, $115
million at 3/31/09 and thereafter.
2) Minimum
Inventory Turnover – 2.75x as of the last day of each fiscal quarter end.
3) Year
End Operating Cash Flow Covenant (annual test) of $15 million at
3/31/09
and yearly thereafter.
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Negative
Covenants:
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Maximum
Effective Advance – 70% of previous quarter total finished goods to
qualify for $70 million credit line or 80% of previous quarter
total
finished goods to qualify for $50 million credit
line
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This
document is only an offering to Borrower. All aspects of the terms of this
proposal must be approved by TFC Management and / or TFC Credit Committee.
AGREED
& ACCEPTED: Palm Harbor Homes, Inc.
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/s/
Xxxxx Xxxxx
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5/30/08
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Xxxxx
Xxxxx
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Date
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Chief
Financial Officer
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