LIMITED CREDIT GUARANTY AGREEMENT
(Lamraft L.P.)
(Letter of Credit Facility)
Dated July 15, 1997
by
CAVALIER HOMES, INC.
in favor of
FIRST COMMERCIAL BANK
TABLE OF CONTENTS
Page
Parties..................................................................... 1
Recitals.................................................................... 1
ARTICLE I
Provisions of General Application
SECTION 1.01 Definitions......................................... 1
SECTION 1.02 Accounting Principles............................... 4
SECTION 1.03 Action Taken Directly or Indirectly................. 4
SECTION 1.04 Governing Law....................................... 4
SECTION 1.05 General Provisions of Construction.................. 4
SECTION 1.06 Effect of Headings and Table of Contents............ 5
ARTICLE II
Guaranty
SECTION 2.01 Guaranty of Obligations............................. 5
SECTION 2.02 Character of Obligations Hereunder.................. 6
ARTICLE III
Waivers; Termination; No Subrogation
SECTION 3.01 Waivers............................................. 9
SECTION 3.02 Termination......................................... 10
SECTION 3.03 No Right of Subrogation. ........................... 10
ARTICLE IV
Business Covenants
SECTION 4.01 Affirmative Covenants............................... 11
SECTION 4.02 Information as to Guarantor......................... 11
ARTICLE V
Representations, Warranties and Agreements
SECTION 5.01 Financial Condition................................. 12
SECTION 5.02 Full Disclosure..................................... 13
SECTION 5.03 Pending Litigation; No Defaults..................... 13
SECTION 5.04 Title to Properties................................. 13
SECTION 5.05 No Defaults......................................... 13
SECTION 5.06 Governmental Consent................................ 13
SECTION 5.07 Compliance with Law................................. 13
SECTION 5.08 Restrictions on Guarantor........................... 14
SECTION 5.09 Maintenance of Tax Exemption........................ 14
SECTION 5.10 Indemnification..................................... 14
SECTION 5.11 Survival of Representations, Warranties
and Covenants....................................... 15
ARTICLE VI
Events of Default and Remedies
SECTION 6.01 Events of Default................................... 15
SECTION 6.02 Remedies............................................ 17
SECTION 6.03 Rights and Remedies of Credit Obligor in
the Event of Bankruptcy, Etc. of Guarantor.......... 17
SECTION 6.04 Agreement to Pay Attorneys' Fees.................... 18
SECTION 6.05 Waiver of Past Defaults............................. 18
SECTION 6.06 No Additional Waiver Implied by One Waiver.......... 18
SECTION 6.07 Remedies Subject to Applicable Law.................. 18
ARTICLE VII
Subordination Agreement.................. 18
ARTICLE VIII
Provisions of General Application
SECTION 8.01 Jurisdiction........................................ 20
SECTION 8.02 Benefit of the Agreement............................ 21
SECTION 8.03 Notices............................................. 21
SECTION 8.04 Reproduction of Documents........................... 21
SECTION 8.05 Survival............................................ 22
SECTION 8.06 Successors and Assigns.............................. 22
SECTION 8.07 Effective Date of Agreement......................... 22
SECTION 8.08 Entire Agreement; Counterparts...................... 22
SECTION 8.09 Severability........................................ 22
SECTION 8.10 Date For Identification Purposes Only............... 22
SECTION 8.11 Exceptions to Covenants............................. 23
Testimonium................................................................. 24
Signatures.................................................................. 24
LIMITED CREDIT GUARANTY AGREEMENT
THIS AGREEMENT is executed July 15, 1997, by CAVALIER HOMES, INC., a
Delaware corporation (the "Guarantor"), and FIRST COMMERCIAL BANK, a state
banking corporation (the "Credit Obligor"), as lender and secured party.
Recitals
The Guarantor has an interest in Lamraft L.P., a Texas limited
partnership (the "Borrower").
The Borrower has applied to the Credit Obligor for the issuance of an
irrevocable, direct pay, letter of credit to secure $3,000,000 Adjustable Rate
Industrial Development Revenue Bonds, Series 1997 (Lamraft L.P. Project), dated
July 15, 1997, to be issued by the Hillsboro Industrial Development Corporation
to finance an industrial manufacturing project for use by the Borrower and
certain other Persons (as defined herein) related to the Borrower.
The Credit Obligor has agreed to issue the letter of credit (the
"Letter of Credit") for the benefit of the Borrower, for such purposes, upon the
terms and conditions and subject to the conditions precedent set forth in that
certain Credit Agreement of even date between the Borrower and the Credit
Obligor (the "Credit Agreement").
The assumption of the obligations of the Guarantor hereunder will
result in direct financial benefits to the Guarantor.
Agreement
NOW THEREFORE, in consideration of the foregoing Recitals and to induce
the Credit Obligor to enter into the Credit Agreement and to issue the Letter of
Credit, the Guarantor hereby covenants and agrees as follows:
ARTICLE I
Provisions of General Application
SECTION 1.01 Definitions
For all purposes of this Agreement, except as otherwise expressly
provided or unless the context otherwise requires:
"Bond Documents" shall mean collectively each of the following
documents as any of the same may at any time be amended, supplemented or
restated:
(a) the Indenture,
(b) the Loan Agreement,
(c) Remarketing Agreement with respect to the Bonds among
the Issuer, Borrower, Trustee, and First Commercial
Bank, as remarketing agent.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral" shall mean all properties and interests in properties of
the Borrower which secure the Credit Obligor Indebtedness or are variously
defined, referenced or described as "Collateral" in any of the Credit Obligor
Financing Documents.
"Credit Agreement" shall have the meaning assigned in the recitals
hereto.
"Credit Guaranty" shall mean collectively the Limited Credit Guaranty
Agreements dated as of July 15, 1997 from the Guarantors to the Credit Obligor.
"Credit Obligor Financing Documents" shall mean collectively the Credit
Agreement, the Credit Guaranty, the Deed of Trust, as all said documents are
defined in the Recitals hereto, and any and all amendments or supplements to any
thereof.
"Credit Obligor Indebtedness" shall mean all indebtedness and other
amounts at any time to be paid to Credit Obligor by the Borrower or any Obligor
(as defined in the Credit Agreement) or any affiliate of any thereof under the
Credit Obligor Financing Documents.
"Deed of Trust" shall mean the Deed of Trust, Security Agreement and
Fixture Filing dated as of July 15, 1997, by the Borrower to the Credit Obligor.
"Default" shall mean an event or condition the occurrence of which
would, with or without the lapse of time or the giving of notice or both, be an
Event of Default.
"Event of Default" shall mean an event as defined in Article VI.
"Financing Documents" shall mean collectively the Bond Documents and
the Credit Documents.
"Financing Participants" shall mean the parties to the Financing
Documents.
"Guarantor" means Cavalier Homes, Inc., and the respective successors
and assigns thereof.
"Guarantor Indebtedness" shall mean all indebtedness and other amounts
at any time to be paid by the Borrower or any Obligor (as defined in the Credit
Agreement) or any affiliate of any thereof to the Guarantor.
"Guarantors" means collectively the following and the respective heirs,
executors, administrators and assigns thereof:
(i) ▇▇▇ ▇▇▇ ▇▇▇▇▇▇,
(ii) Cavalier Homes, Inc.,
(iii) Patriot Homes, Inc.,
(iv) ▇▇▇▇▇▇ Operating Company, and ▇▇▇▇▇▇ Homes Corporation
(v) Southern Energy Homes, Inc.
"Indenture" shall mean the Trust Indenture dated as of July 15, 1997
between the Issuer and the Trustee with respect to the Bonds.
"Issuer" shall mean the Hillsboro Industrial Development Corporation,
and any successor to its functions.
"Letter of Credit" means the Irrevocable Letter of Credit No. 921 dated
the date of delivery thereof, issued by the Credit Obligor for the benefit of
the Borrower pursuant to the Credit Agreement.
"Lien" shall mean any interest in Property securing an obligation owed
to, or a claim by, a Person other than the owner of the Property, whether such
interest is based on the common law, statute or contract, and including but not
limited to the security interest or lien arising from a mortgage, encumbrance,
pledge, conditional sale or trust receipt or a lease assignment or bailment for
security purposes. For the purposes of this Agreement, the Guarantor shall be
deemed to be the owner of any Property which it has acquired or holds or hold
subject to a conditional sale agreement, financing lease or other arrangement
pursuant to which title to the Property has been retained by or vested in some
other person for security purposes.
"Loan Agreement" shall mean the Loan Agreement dated as of July 15,
1997 between the Issuer and the Borrower with respect to the Project.
"Material Adverse Effect" shall mean any act or circumstance or event
which (i) causes an Event of Default or Default, (ii) otherwise might be
material and adverse to the financial condition or business operations of the
Guarantor or (iii) would adversely affect the validity or enforceability of any
of the Financing Documents or any of the papers executed in connection
therewith.
"Maximum Guaranteed Percentage" shall mean twenty-four percent (24%).
"Person" shall mean and include an individual, a partnership, a joint
venture, a corporation, an association, a trust, an unincorporated organization
and a government or any department, agency or political subdivision thereof.
"Project" shall mean the real and personal property described in the
Deed of Trust, Loan Agreement and Indenture as the "Project".
"Property" shall mean any interest in any kind of property or asset,
whether real, personal or mixed, or tangible or intangible.
"Tribunal" shall mean any state, commonwealth, federal, foreign,
district, territorial, or other court or governmental department, board, bureau,
agency or instrumentality having jurisdiction over Guarantor.
SECTION 1.02 Accounting Principles
The Guarantor shall maintain books and records in accordance with
generally accepted accounting principles ("GAAP" as defined in the Credit
Agreement) consistently applied.
SECTION 1.03 Action Taken Directly or Indirectly
Where any provision in this Agreement refers to action to be taken by
any Person, or which such Person is prohibited from taking, such provision shall
be applicable whether such action is taken directly or indirectly by such
Person.
SECTION 1.04 Governing Law
This Agreement shall be governed by and construed in accordance with
the laws of the State of Alabama.
SECTION 1.05 General Provisions of Construction
(1) Capitalized terms used herein without definition shall have the
meaning assigned to them in the Indenture or the Credit Agreement.
(2) Singular terms shall include the plural as well as the singular,
and vice versa.
(3) All references in this instrument to designated "Articles",
"Sections" and other subdivisions are to the designated Articles, Sections and
subdivisions of this instrument as originally executed.
(4) The terms "herein", "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
Article, Section or other subdivision.
SECTION 1.06 Effect of Headings and Table of Contents
The Article and Section headings herein and in the Table of Contents
are for convenience only and shall not affect the construction hereof.
ARTICLE II
Guaranty
SECTION 2.01 Guaranty of Obligations
(a) Subject to and limited by the provisions of subsection 2.01(d)
hereof, the Guarantor hereby absolutely and unconditionally guarantees the
punctual payment when due (whether at stated maturity, by acceleration or call
for redemption or otherwise), in lawful money of the United States of America,
of all of the following (collectively the "Obligations"):
(1) all letter of credit commissions, fees, charges and costs
becoming due and payable under the Credit Agreement in accordance with
the terms thereof;
(2) all amounts becoming due and payable under the Credit
Agreement in accordance with the terms thereof as reimbursement of
amounts paid by the Credit Obligor under the Letter of Credit;
(3) all late charges and all interest on late payments
becoming due and payable under the Credit Agreement in accordance with
the terms thereof;
(4) all amounts becoming due and payable under the Credit
Agreement in accordance with the terms thereof upon the occurrence and
continuance of an Event of Default under the Credit Agreement;
(5) all amounts becoming due and payable under the Credit
Agreement as reimbursement of increased costs to the Credit Obligor
caused by changes in laws or regulations or in the interpretation
thereof;
(6) all other amounts becoming due and payable by the Borrower
under the Credit Agreement;
(7) all amounts becoming due and payable by the Borrower under
the terms of the Deed of Trust (including but not limited to
reimbursement for advancements made by the Credit Obligor under this
Deed of Trust) and any other security agreements, guarantees, mortgages
or other documents now or hereafter evidencing or securing the
Borrower's performance of its obligations under the Credit Agreement;
and
(8) all other indebtedness, obligations (including obligations
of performance) and liabilities of the Borrower to the Credit Obligor
of every kind and description whatsoever, direct or indirect, absolute
or contingent, due or to become due, now existing or hereafter
incurred, contracted or arising, or acquired by the Credit Obligor from
any source, joint or several, liquidated or unliquidated, regardless of
how they arise or by what agreement or instrument they may be evidenced
or whether they are evidenced by any agreement or instrument, and
whether incurred as maker, endorser, surety, guarantor or otherwise,
and any and all extensions, restatements, and renewals of any of the
same; and
(9) all renewals and extensions of any or all the obligations
of the Borrower described in paragraphs (1) through (8) above
(including without limitation any renewal or extension of, and any
substitute for, the Letter of Credit), whether or not any renewal or
extension agreement is executed in connection therewith.
(b) The guaranty set forth in this Section is an absolute and
irrevocable guaranty of payment and not of collectibility or performance and is
in no way conditioned or contingent upon any attempt to collect from the
Borrower or any other Person, or to realize upon any Property subject to the
Lien of the Indenture or the Deed of Trust, or upon any other direct or indirect
security for the Bonds or the Obligations, or resort to any other remedies.
(c) Each default in payment of any amount of the Obligations shall give
rise to a separate cause of action hereunder and separate suits may be brought
hereunder as each cause of action arises.
(d) By acceptance hereof, the Credit Obligor covenants and agrees that,
anything herein or in the Financing Documents to the contrary notwithstanding,
the obligations of, and recourse against, the Guarantor for payment of any
amounts pursuant to this Agreement shall be limited to and shall not exceed the
Maximum Guaranteed Percentage of such amounts, as determined on the basis of the
aggregate amounts described in Section 2.01(a) or otherwise due hereunder which
are outstanding at the time demand for payment thereof is made in accordance
herewith, without regard to or taking into account any demand upon, or payment
or contribution by, any other Financing Participant with respect to such
amounts.
SECTION 2.02 Character of Obligations Hereunder
(a) All obligations of the Guarantor under this Agreement are
unconditional, primary, absolute and irrevocable under any and all
circumstances. Without limiting the generality of the foregoing, to the fullest
extent permitted under applicable law, the obligations of the Guarantor
hereunder shall not be subject to or impaired by:
(i) any inability or failure on the part of any party thereto
to perform or comply with the Financing Documents or the Bonds;
(ii) any invalidity or irregularity in any statutory or other
proceedings relating to the formation or existence of any of the
Financing Participants, to the issuance of the Bonds or to the
execution and delivery of any Financing Document;
(iii) any invalidity or unenforceability of, or any
impairment, modification or release of liability of any party under, or
any impossibility, impracticability, illegality or frustration of
performance by any party of, any of the Financing Documents or the
Bonds, for any reason whatsoever, including, without limitation, any
decision by any court invalidating or otherwise affecting the
obligations of any party under or in connection with any of the
Financing Documents or the Bonds;
(iv) any inability or failure on the part of any of the
Financing Participants to perform or comply with any of the Financing
Documents;
(v) any invalidity or unenforceability of, or any impairment,
modification or release of liability of the Guarantor under, or any
impossibility, impracticability, illegality or frustration of
performance by the Guarantor of this Agreement;
(vi) the voluntary or involuntary liquidation, dissolution,
merger, consolidation, sale or other disposition of all or
substantially all of the assets, marshalling of assets and liabilities,
receivership, insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization, moratorium, arrangement, composition with
creditors or readjustment of debt of, or other similar proceedings
affecting, any of the Financing Participants;
(vii) any waiver, consent, extension, indulgence or other
action or inaction in respect of any Financing Document or the Bonds,
including any modification, amendment or supplement to any of the
foregoing, the renewal or extension of the Bonds, the release of any
Property subject to the Lien of the Indenture or the Deed of Trust, or
the Loan Agreement or any other similar act;
(viii) any right of setoff, counterclaim or defense, or any
act, omission or breach on the part of the Borrower, the Credit Obligor
or the Guarantor or any of the other Financing Participants;
(ix) any claim whatsoever against the Borrower or the Issuer
or any of the other Financing Participants;
(x) any defect in the title, compliance with specifications,
value, condition, design, operation, merchantability, quality,
durability or suitability of, consequences of use or misuse of, or
unfitness for use of, the Project or any part thereof, any abandonment,
destruction, noncompletion, requisition, condemnation, foreclosure of
or damage to the Project or any part thereof, or any event of force
majeure relating to the Project or any part thereof;
(xi) any breach of any representation or warranty relating to
the Bonds or the Project;
(xii) any release, extinguishment or satisfaction of the
Borrower's obligations to make payments of Obligations until there have
been paid to the Credit Obligor in lawful currency of the United States
an amount sufficient to pay all Obligations (including interest on
overdue amounts of Obligations including, to the extent permitted by
applicable law, interest) that would have been due and owing to the
Credit Obligor by the Borrower had the Borrower's obligations not been
so released, extinguished or satisfied;
(xiii) the failure to give notice to the Guarantor of the
occurrence of any default or event of default under the Bonds or any of
the Financing Documents;
(xiv) the compromise, settlement, release or termination of
any or all of the obligations, covenants or agreements of any of the
parties to any of the Financing Documents under the Bonds or the
Financing Documents;
(xv) any assignment, pledge or mortgage of all or any part
of the interest of any of the Financing Participants in the Project or
the Collateral;
(xvi) any waiver of the payment, performance or observance by
any of the Financing Participants of any obligation, agreement or
covenant of any of them contained in the Bonds or the Financing
Documents;
(xvii) the extension of the time for payment of any amount of
the Obligations or any part thereof or of the time for performance of
any other obligations, agreements or covenants of any of the Financing
Participants under the Bonds or the Financing Documents;
(xviii) the modification or amendment (whether material or
otherwise) of any obligation, agreement or covenant contained in the
Bonds or the Financing Documents;
(xix) any failure, omission, or delay on the part of any of
the Financing Participants to enforce, assert or exercise any right,
power or remedy conferred upon any of them by the Bonds or the
Financing Documents;
(xx) the bankruptcy, insolvency, reorganization, appointment
of a receiver for, or dissolution of any of the Financing Participants,
or the entering by any or all of them into an agreement of composition
with creditors, or the making by any or all of them of an assignment
for the benefit of creditors;
(xxi) any rights of set-off, recoupment, counterclaim or other
defense, whether similar or dissimilar to the foregoing, which the
Guarantor might otherwise have against any of the Financing
Participants or any other person;
(xxii) the default or failure of any one or more of the
Financing Participants to perform fully any obligation, covenant or
agreement contained in the Bonds or the Financing Documents;
(xxiii) the release or discharge of any one or more of the
Financing Participants by operation of law, to the extent that such
release or discharge may be lawfully avoided, from the performance or
observance of any agreement or covenant contained in the Bonds or the
Financing Documents;
(xxiv) the invalidity or unenforceability of the Bonds or
the Financing Documents or of any provision of such instruments; or
(xxv) any other matter that might otherwise be raised in
avoidance of, or in defense against, an action to enforce the
obligations of the Guarantor under this Agreement.
(b) The Guarantor acknowledges that this Agreement is executed for the
benefit of the Credit Obligor and that the Credit Agreement and the Letter of
Credit will be executed and delivered in reliance on this Agreement. No act of
commission or omission of any kind at any time on the part of the Credit Obligor
in respect of any matter whatsoever shall in any way affect or impair any right,
power or benefit of the Credit Obligor under this Agreement and, to the extent
permitted by applicable law, no setoff, claim, reduction, diminution of any
obligation, or any defense of any kind or nature which the Guarantor may have
against the Credit Obligor shall be available against the Credit Obligor in any
suit or action brought by the Credit Obligor to enforce any right, power or
benefit under this Agreement.
ARTICLE III
Waivers; Termination; No Subrogation
SECTION 3.01 Waivers
(a) The Guarantor hereby waives all of the following and all defenses,
counterclaims, or offsets which the Guarantor may have by reason thereof: (1)
notice of acceptance hereof, notice of any action taken or omitted in reliance
hereon, notice of any defaults by the Borrower in the payment of any such sums,
and notice of the creation, renewal, or accrual of any liability of the
Borrower, (2) any presentment, demand, notice or protest of any kind, (3) any
right (i) to have joined any of the other Financing Participants with the
Guarantor in any suit brought against the Guarantor on this Agreement, (ii) to
require the Credit Obligor to forthwith bring suit against any of the other
Financing Participants, and (iii) to require that the Credit Obligor obtain any
judgment against any of the other Financing Participants in connection with the
enforcement of any rights against the Guarantor hereunder, and (4) any other act
or thing (including without limitation alteration of the Bonds or the Financing
Documents or debt evidenced thereby or security therefor), or omission or delay
to do any other act or thing which may, by operation of law or otherwise, in any
manner or to any extent vary the risk of the Guarantor or which might otherwise
operate as a discharge of the Guarantor.
(b) The Guarantor hereby waives, as to the enforcement of this
Agreement, (1) all rights of exemption that the Guarantor may have under the
constitution and laws of any state as to any levy on and sale of property and
(2) presentation and demand for payment (or protest of nonpayment) of
Obligations or any part thereof.
SECTION 3.02 Termination
(a) The guaranties set forth in this Agreement shall remain in full
force and effect without reference to future changes in conditions, including,
to the extent permitted by applicable law, changes in law, until the Credit
Obligor shall have been indefeasibly paid in full any and all sums due under the
terms and provisions of the Obligations and the Financing Documents, and until
such sums are not subject to rescission or repayment upon any bankruptcy,
insolvency, arrangement, reorganization, moratorium, receivership or similar
proceeding affecting the Issuer, the Borrower, the Guarantor, or any of the
other Financing Participants.
(b) In the event any payment on the Obligations (whether such payment
is remitted by the Issuer, the Borrower, any Guarantor or any other person, from
realization on collateral, through setoff or otherwise) must be refunded, paid
over or otherwise released by the Credit Obligor as a result of such payment
being (1) a preference or fraudulent transfer under the Bankruptcy Code of 1978,
as amended, or other state or federal law or (2) disallowed as a permanent and
irrevocable payment on the Obligations for any other reason, then in each such
event this Agreement shall thereupon, ipso facto, be reinstated and revived to
the full extent of such refunded, paid over or released payment.
SECTION 3.03 No Right of Subrogation.
The Guarantor will not exercise any rights of subrogation which the
Guarantor may have unless and until this Agreement shall have been terminated as
provided in Section 3.02. If any payment is made to the Guarantor with respect
to any payments due by the Guarantor under this Agreement at any time prior to
such termination of this Agreement, he will be paid forthwith to the Credit
Obligor to be applied to installments due or coming due under the Obligations in
the order and the manner provided in the Credit Agreement or otherwise
determined by the Credit Obligor.
ARTICLE IV
Business Covenants
SECTION 4.01 Affirmative Covenants
The Guarantor covenants that so long as this Agreement is in effect,
the Guarantor shall
(a) Payment of Indebtedness, Taxes, etc. (i) Pay all indebtedness and
obligations of the Guarantor promptly and in accordance with normal terms where
failure to pay would have a Material Adverse Effect, and (ii) pay and discharge
or cause to be paid or discharged promptly all taxes, assessments and
governmental charges or levies imposed upon the Guarantor or upon his income and
profits, or upon any of his Property, real, personal or mixed, or upon any part
thereof, before the same shall become in default, as well as all lawful claims
for labor, materials and supplies or otherwise, which, if unpaid, might become a
lien upon such properties or any part thereof where failure to pay would have a
Material Adverse Effect; provided, however, that the Guarantor shall not be
required to pay and discharge any such tax, assessment, charge, levy or claim so
long as the validity thereof shall be contested in good faith by appropriate
proceedings.
(b) Accounts, Financial Information. The Guarantor will maintain proper
books of record and account, in which full and correct entries will be made, in
accordance with generally accepted accounting principles, of all business and
affairs of the Guarantor. The Guarantor shall furnish to the Credit Obligor with
reasonable promptness (1) annual financial statements of the Guarantor prepared
and audited by certified public accountants in accordance with generally
accepted accounting principles, and (2) such other information regarding the
operations, business affairs and financial condition of the Guarantor as the
Credit Obligor may reasonably request.
(c) Legal Existence. The Guarantor will maintain and preserve its legal
existence and will not voluntarily dissolve without first discharging its
obligations under this Agreement.
(d) Further Assurances. On request of the Credit Obligor, promptly
correct any defect, error or omission which may be discovered in any of the
Financing Documents or in the contents of any of the papers executed in
connection therewith or in the execution or acknowledgement thereof, and
execute, acknowledge and deliver such further instruments and do such further
acts as may be necessary or as may be requested by the Credit Obligor to carry
out more effectively the purposes of this Agreement and the Financing Documents.
SECTION 4.02 Information as to Guarantor
Financial and Business Information. The Guarantor shall deliver to the
Credit Obligor:
(a) Notice of Default or Event of Default. Immediately upon
becoming aware of the existence of any condition or event which
constitutes a default or an event of default under any Financing
Document, a written notice specifying the nature and period of
existence thereof and what action the Guarantor is taking or proposes
to take with respect thereto;
(b) Notice of Claimed Default. Immediately upon becoming aware
that the holder of any evidence of indebtedness or security of the
Guarantor has given notice or taken any other action with respect to a
claimed default or event of default thereunder which would cause a
default or event of default which would have a Material Adverse Effect,
a written notice specifying the notice given or action taken by such
holder and the nature of the claimed default or event of default and
what action the Guarantor are taking or proposes to take with respect
thereto;
(c) Requested Information. With reasonable promptness, such
data and information as from time to time may be reasonably requested;
(d) Notice of Litigation. Immediately upon becoming aware of
the existence of any proceedings before any Tribunal involving the
Guarantor which involves the probability of any final judgment or
liability against such Guarantor in an amount which would have a
Material Adverse Effect, a written notice specifying the nature thereof
and what action such Guarantor is taking and proposes to take with
respect thereto; and
(e) Notice from Regulatory Agencies. Promptly upon receipt
thereof, information with respect to and copies of any notices received
from federal or state regulatory agencies or any Tribunal relating to
an order, ruling, statute or other law or information which might have
a Material Adverse Effect on the franchises, permits, licenses, or
rights, or the condition, financial or otherwise, of the Guarantor.
ARTICLE V
Representations, Warranties and Agreements
The Guarantor represents, warrants and agrees that:
SECTION 5.01 Financial Condition
Since the date of application to the Credit Obligor for the Letter of
Credit, (i) there has been no change in the business, prospects, profits,
Properties or condition (financial or otherwise) of the Guarantor, except
changes in the ordinary course of business, none of which individually or in the
aggregate has a Material Adverse Effect, (ii) the Guarantor has not incurred any
material liability which has a Material Adverse Effect, and (iii) there exists
no default under the provisions of any instrument evidencing any such
liabilities or under any agreement relating thereto which would have a Material
Adverse Effect.
SECTION 5.02 Full Disclosure
No written statement furnished by the Guarantor to the Credit Obligor
contains any untrue statement of a material fact or omits to state a material
fact necessary to make the statements contained therein or herein not
misleading. There is no fact which the Guarantor has not disclosed to the Credit
Obligor in writing which has a Material Adverse Effect or, so far as the
Guarantor can now foresee, will have a Material Adverse Effect.
SECTION 5.03 Pending Litigation; No Defaults
There are no proceedings pending, or, to the knowledge of the
Guarantor, threatened, against or affecting the Guarantor in any court or before
any governmental authority or arbitration board or Tribunal which involve the
possibility of a Material Adverse Effect or the ability of the Guarantor to
perform this Agreement. The Guarantor is not in default with respect to any
order of any court, governmental authority, arbitration board or Tribunal which
would have a Material Adverse Effect.
SECTION 5.04 Title to Properties
The Guarantor has good and marketable title to the Properties thereof.
SECTION 5.05 No Defaults
No event has occurred and no conditions exist which would, in any
material respect, upon the issuance of the Letter of Credit, constitute (i) a
default under any note or other evidence of indebtedness or under any agreement
of the Guarantor if the effect of such default would have a Material Adverse
Effect or (ii) a default or event of default under the Financing Documents or
any of them, and the Guarantor is not in violation in any material respect of
any term of any agreement or other instrument to which he is a party or by which
he may be bound that would have a Material Adverse Effect.
SECTION 5.06 Governmental Consent
No consent, approval or authorization of, or filing, registration or
qualification with, any governmental authority on the part of the Guarantor is
required in connection with the execution and delivery of the Financing
Documents to which the Guarantor is a party.
SECTION 5.07 Compliance with Law
The Guarantor:
(a) is not in violation of any laws, ordinances, governmental
rules or regulations to which Guarantor is subject, or
(b) has not failed to obtain any licenses, permits, franchises
or other governmental authorizations necessary to the ownership of the
Property, or to the conduct of the business, of Guarantor, which
violation or failure to obtain would have a Material Adverse Effect.
SECTION 5.08 Restrictions on Guarantor
The Guarantor is not a party to any contract or agreement which
requires consent of any creditor of the Guarantor other than the Credit Obligor
or other party thereto to the right or ability of the Guarantor to incur debt or
guarantee indebtedness hereunder.
SECTION 5.09 Maintenance of Tax Exemption
The Guarantor represents that he has not taken any action, and he knows
of no action that any other Person has taken, which would cause interest on the
Bonds to be includible in the gross income of the holder thereof for federal
income tax purposes, and covenant that he will not take any action or omit to
take any action at any time, which action or omission would result in the loss
of the exemption from federal income taxation of the interest on the Bonds;
provided that no such representation or covenant is made with respect to any
Bonds for any period during which they are held by a "substantial user" or a
"related person" as those terms are used in Section 147 of the Code. The
Guarantor further represents that he will not take or omit to take any action,
or permit any Person to take any action or omit to take any action, which action
or omission will in any way cause the proceeds from the sale of the Bonds to be
applied, or result in such proceeds being applied, in any manner other than as
provided in the Financing Documents
SECTION 5.10 Indemnification
(a) The Guarantor will indemnify and hold harmless the Credit Obligor
and each Person, if any, who controls the Credit Obligor within the meaning of
Section 15 of the Securities Act of 1933, as amended, (the Credit Obligor and
any such person being in this Section collectively called a "Holder") against
any and all losses, claims, damages or liabilities, joint and several, or
actions in respect thereof, to which any Holder may become subject under any
statute or common law or otherwise, insofar as such losses, claims, damages or
liabilities, or actions in respect thereof, arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact contained in
this Agreement, including the financial statements referred to herein, or any
omission or alleged omission to state herein a material fact necessary in order
to make the statements herein not misleading; and will reimburse any Holder for
all legal or other expenses reasonably incurred by such Holder in connection
with defending any such action or claim.
(b) If any such action or claim shall be brought or asserted against
any Holder and in respect of which indemnity may be sought from the Guarantor,
such Holder shall promptly notify the Guarantor in writing and the Guarantor
shall assume the defense thereof, including the employment of counsel and the
payment of all expenses. Any Holder shall have the right to employ separate
counsel in any such action and participate in the defense thereof, but the fees
and expenses of such counsel shall be at the expense of such Holder unless (a)
the employment thereof at the expense of Guarantor has been specifically
authorized by the Guarantor in writing, (b) the Guarantor have failed to assume
the defense and to employ counsel, or (c) the named parties to any such action
(including any impleaded parties) include both such Holder and the Guarantor,
and such Holder shall have been advised by such counsel that there may be one or
more legal defenses available to it which are different from or additional to
those available to the Guarantor (in which case, if such Holder notifies the
Guarantor in writing that it elects to employ separate counsel at the Guarantor'
expense, the Guarantor shall not have the right to assume the defense of such
action on behalf of such Holder, it being understood, however, that the
Guarantor shall not, in connection with any one such action or separate but
substantially similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances, be liable for the reasonable fees
and expenses of more than one separate firm of attorneys for all such Holders,
which firm shall be designated in writing by such Holders). Each Holder, as a
condition of such indemnity, shall use its best efforts to cooperate with the
Guarantor in the defense of any such action or claim. The Guarantor shall not be
liable for any settlement of any such action effected without their written
consent, but if settled with the written consent of the Guarantor, or if there
be a final judgment for the plaintiff in any such action, the Guarantor agrees
to indemnify and hold harmless any such Holder from and against any loss or
liability by reason of such settlement or judgment.
SECTION 5.11 Survival of Representations, Warranties and Covenants
The representations, warranties and covenants of the Guarantor
contained in this Agreement, and any other document, instrument and agreement
referred to or contemplated by this Agreement, shall remain operative and in
full force and effect regardless of (i) any investigation made by or on behalf
of the Borrower, any Holder or any other Person, or (ii) delivery of, and
payment for, the Bonds.
ARTICLE VI
Events of Default and Remedies
SECTION 6.01 Events of Default
An "Event of Default" shall exist under this Agreement if any of the
following occurs and is continuing (whatever the reason for such event and
whether it shall be voluntary or involuntary or be effected by operation of law
or pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(a) Particular Covenant Defaults. The Guarantor fails to
perform or observe any covenant or agreement contained in Section 2.01
for a period of five Business Days after notification by the Credit
Obligor of such failure;
(b) Other Defaults. The Guarantor fails to comply with any
other provision of this Agreement, and such failure continues for a
period of thirty days after written notification by the Credit Obligor
of such failure;
(c) Warranties or Representations. Any warranty,
representation or other statement by or on behalf of the Guarantor
contained in this Agreement, or in any instrument furnished in
compliance with or in reference to this Agreement, is false or
misleading in any material respect and action which eliminates such
falsity or misleading character is not completed for a period of thirty
days after written notification by the Credit Obligor of such false or
misleading statement;
(d) Default on Other Indebtedness. Default by the Guarantor in
any payment of any obligation for money received as an advance (or any
obligation under any conditional sale or other title retention
agreement or any obligation issued or assumed as full or partial
payment for property whether or not secured by purchase money lien or
any obligation under notes payable or drafts accepted representing
extensions of credit) beyond any grace period provided with respect
thereto, or default in the performance of any other agreement, term or
condition contained in any agreement under which such obligation is
created (or any other default under any such agreement which shall
occur and be continuing beyond any period of grace provided with
respect thereto), if the effect of such default would have a Material
Adverse Effect, and such default shall remain uncured for a period of
ten days after the Guarantor has notice thereof;
(e) Involuntary Bankruptcy Proceedings. A receiver, liquidator
or trustee of the Guarantor, or of any of his Property, is appointed by
court order and such order remains in effect for more than sixty days,
or an order or decree for relief in an involuntary bankruptcy case is
entered with respect to the Guarantor, or any of his Property is
sequestered by court order and such order remains in effect for more
than sixty days, or a petition is filed against the Guarantor under any
bankruptcy, reorganization, arrangement, insolvency, readjustment of
debt, dissolution or liquidation law of any jurisdiction, whether now
or hereafter in effect, and is not dismissed within sixty days after
such filing;
(f) Voluntary Petitions. The Guarantor files a petition in
voluntary bankruptcy or seeking relief under any provision of any
bankruptcy, reorganization, arrangement, insolvency, readjustment of
debt, dissolution or liquidation law of any jurisdiction, whether now
or hereafter in effect, or consents to the filing of any petition
against him under any such law;
(g) General Assignment for Benefit of Creditors, etc. The
Guarantor makes a general assignment for the benefit of his creditors,
or is unable to pay his debts generally as they become due, or consents
to the appointment of a receiver, trustee or liquidator of the
Guarantor, or of all or any part of his Property;
(h) Undischarged Final Judgments or Settlements. One or more
final judgments shall be entered against the Guarantor, or the
Guarantor shall enter into settlement of any litigation, which
judgments and settlements are not covered by insurance, and which
judgments and settlements will have a Material Adverse Effect on the
Guarantor; or
(i) Other Defaults. The occurrence of an event of default
under any of the other Financing Documents and the expiration of the
applicable grace period, if any, specified therein.
SECTION 6.02 Remedies
If an Event of Default exists, the Credit Obligor may proceed to
protect its rights by suit in equity, action at law or other appropriate
proceedings, whether for the specific performance of any covenant or agreement
of the Guarantor herein contained or in aid of the exercise of any power or
remedy granted to the Credit Obligor under any of the other Financing Documents.
The Credit Obligor may proceed directly against the Guarantor hereunder without
resorting to any other remedies which it may have and without proceeding against
any other security held by the Credit Obligor.
SECTION 6.03 Rights and Remedies of Credit Obligor in the Event of
Bankruptcy, Etc. of Guarantor
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, composition or other judicial
proceeding, or any general assignment for the benefit of creditors, relative to
the Guarantor, the Credit Obligor (irrespective of whether there has been a
default under this Agreement or any of the other Financing Documents) shall be
entitled and empowered to intervene in such proceedings, to file and prove a
claim or claims for the whole amount owing and unpaid and to file such other
papers or documents as may be necessary or advisable in order to have the claims
of the Credit Obligor (including any claim for reasonable compensation to the
Credit Obligor, its agents, attorneys and counsel, and for reimbursement of all
expenses and liabilities reasonably incurred, and all advances made, by the
Credit Obligor except as a result of its negligence or bad faith) allowed in
such judicial proceedings, to collect and receive any moneys or other property
payable or deliverable on any such claims, and to take such other action therein
as the Credit Obligor may deem necessary or appropriate to protect its
interests.
SECTION 6.04 Agreement to Pay Attorneys' Fees
In the event the Guarantor should default under any of the provisions
of this Agreement and the Credit Obligor should employ attorneys or incur other
expenses for the collection of any payments due hereunder or the enforcement of
performance or observance of any agreement or covenant on the part of the
Guarantor herein contained, the Guarantor will on demand therefor pay to the
Credit Obligor the reasonable fees of such attorneys and such other reasonable
expenses so incurred.
SECTION 6.05 Waiver of Past Defaults
The Credit Obligor may waive any past default hereunder and its
consequences. Upon any such waiver, such default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been cured for every
purpose of this Agreement but no such waiver shall extend to any subsequent or
other default or impair any right consequent thereon.
SECTION 6.06 No Additional Waiver Implied by One Waiver
If any agreement contained in this Agreement should be breached by the
Guarantor and thereafter waived by the Credit Obligor, such waiver shall be
limited to the particular breach so waived and shall not be deemed to waive any
other breach hereunder.
SECTION 6.07 Remedies Subject to Applicable Law
All rights, remedies and powers provided by this Article may be
exercised only to the extent the exercise thereof does not violate any
applicable provision of law in the premises, and all the provisions of this
Article are intended to be subject to all applicable mandatory provisions of law
which may be controlling in the premises and to be limited to the extent
necessary so that they will not render this Agreement invalid or unenforceable.
ARTICLE VII
Subordination Agreement
The Guarantor does hereby covenant and agree:
(a) That payment of the Guarantor Indebtedness when due and
payable in each month shall be and hereby is fully subordinated in
priority to the prior payment to Credit Obligor of the Credit Obligor
Indebtedness when due and payable in each month, provided, however,
that so long as no event of default exists under the Credit Obligor
Financing Documents the Guarantor may receive payment of the Guarantor
Indebtedness when due and payable (but not in advance of originally
scheduled due dates).
(b) That anything in any other contract, agreement or
instrument to the contrary notwithstanding, (a) all right, title and
interest of the Guarantor in and to the Collateral shall be and hereby
are fully subordinated in priority to the right, title and interest of
Credit Obligor in and to the Collateral as provided in the Credit
Obligor Financing Documents without regard to the respective dates on
which any of such interests were created and (b) that the claim of
Credit Obligor upon all the Collateral shall be and hereby is prior and
superior for all purposes to that of the Guarantor therein.
(c) Upon the occurrence of a default under any agreement or
document evidencing, providing for, or securing the Guarantor
Indebtedness or if the Guarantor Indebtedness shall become or be
declared immediately due and payable, then an event of default shall be
deemed to have simultaneously occurred under the Credit Obligor
Indebtedness and the Credit Obligor Financing Documents and the same
shall also become immediately due and payable, notwithstanding any
inconsistent terms in any document or instrument relating to any of the
foregoing. The Guarantor shall not, without the prior written consent
of Credit Obligor, accelerate the maturity of, or institute any
proceedings to enforce, any of the Guarantor Indebtedness.
(d) Upon the occurrence and continuation of an event of
default under any agreement or document evidencing, providing for, or
securing the Guarantor Indebtedness or the Credit Obligor Financing
Indebtedness, Credit Obligor shall first be entitled to receive all
proceeds and revenues from the Collateral when and as the same become
available, in payment in full of all Credit Obligor Indebtedness prior
to any of such proceeds or revenues being distributed to the Guarantor.
If, before the conditions for defeasance and termination of the Credit
Obligor Financing Documents shall have been satisfied in full, the
Guarantor should receive any payment or amount in violation of this
Agreement, or in the event that any payment or distribution of any
assets of the Borrower of any kind or character (whether in cash,
property or securities), shall be received by the Guarantor in
violation of this Agreement, such payment, amount or distribution shall
be held in trust for the benefit of, and shall be paid over upon demand
to, Credit Obligor or its representative for application to the payment
of the Credit Obligor Indebtedness until the Credit Obligor Financing
Documents shall have been defeased and terminated as provided therein.
(e) Upon any payment or distribution of any of the assets of
the Borrower of any kind or character upon any dissolution, winding up,
total or partial liquidation, or reorganization of the Borrower,
whether in voluntary or involuntary bankruptcy, insolvency,
reorganization or receivership proceedings or upon an assignment for
the benefit of creditors or any other marshalling of assets and
liabilities of the Borrower or otherwise, or upon the acceleration or
maturity of the Credit Obligor Indebtedness and/or the Guarantor
Indebtedness: (a) Credit Obligor shall first be entitled to receive all
such assets in payment in full of the Credit Obligor Indebtedness
before the Guarantor is entitled to receive any amount of such assets;
and (b) any payment or distribution of any of the assets of the
Borrower of any kind or character (whether in cash, property or
securities) to which the Guarantor would be entitled except for the
provisions of this Agreement shall be paid or delivered by the person
making such payment or distribution, whether a trustee in bankruptcy,
receiver, liquidating trustee, other custodian, agent or other person,
directly to Credit Obligor or its representative, to the extent
necessary to pay in full all indebtedness owed thereto, before any
payment or distribution of such assets is made to the Guarantor.
(f) No right of Credit Obligor to enforce the subordination
provided herein shall at any time or in any way be prejudiced or
impaired by (a) any act or failure to act on the part of Credit
Obligor, or (b) any noncompliance by Credit Obligor with the terms of
any documents or instruments executed in connection with the Credit
Obligor Financing Documents (regardless of any knowledge thereof that
Credit Obligor may have or be charged with), or (c) any action Credit
Obligor may take or refrain from taking with respect to the Credit
Obligor Indebtedness or any security therefor, including without
limitation any modification of the terms of the Credit Obligor
Financing Documents or the granting or effecting of any release or
settlement with respect to the Credit Obligor Indebtedness or any
security therefor. Any waiver by Credit Obligor of any breach hereof by
the Guarantor or any indulgence by Credit Obligor to the Guarantor
shall apply only to the separate occasion thereof and shall not affect
the continuing obligation of the Guarantor hereunder.
(g) The Guarantor hereby agrees to execute and deliver to
Credit Obligor at its request such other, further or additional
agreements, requests, demands, notices, powers of attorney or other
writings as, in the sole discretion or opinion of Credit Obligor, may
be necessary or convenient in order to carry out the intent and purpose
hereof, or to effectuate this Agreement.
ARTICLE VIII
Provisions of General Application
SECTION 8.01 Jurisdiction
The Guarantor irrevocably (a) agrees that any suit, action or other
legal proceeding arising out of this Agreement may be brought in the courts of
record of the State of Alabama or the courts of the United States located in the
State of Alabama; (b) consents to the jurisdiction of each such court in any
such suit, action or proceeding, and (c) waives any objection which the
Guarantor may have to trial by jury or to the laying of venue of any such suit,
action or proceeding in any of such courts.
SECTION 8.02 Benefit of the Agreement
This Agreement is entered into by the Guarantor for the benefit of the
Credit Obligor. The Guarantor agrees to pay all reasonable and necessary costs,
expenses and fees, including all reasonable attorneys' fees, which may be
incurred by the Credit Obligor in enforcing or attempting to enforce this
Agreement pursuant to the provisions hereof, whether the same shall be enforced
by suit or otherwise.
SECTION 8.03 Notices
(a) Any request, demand, authorization, direction, notice, consent, or
other document provided or permitted by this Agreement to be made upon, given or
furnished to, or filed with, the Guarantor or the Credit Obligor shall be
sufficient for every purpose hereunder if in writing and (except as otherwise
provided in this Agreement) either (i) delivered personally to the party or, if
such party is not an individual, to an officer, or other legal representative of
the party to whom the same is directed (provided that any document delivered
personally to the Credit Obligor must be delivered at its Principal Office
during normal business hours) at the addresses specified below, or (ii) mailed
by first-class, registered or certified mail, postage prepaid to the addresses
specified below; provided either party may change the address for receiving any
such notice or document by giving notice of the change to the other party as
provided in this Section:
Cavalier Homes, Inc.
Highway ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
First Commercial Bank
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Commercial Lending
(b) Any such notice or other document shall be deemed delivered when
actually received by the party to whom directed (or, if such party is not an
individual, to an officer, or other legal representative of the party) at the
address specified pursuant to this Section, or, if sent by mail, 3 days after
such notice or document is deposited in the United States mail, proper postage
prepaid, addressed as provided above.
SECTION 8.04 Reproduction of Documents
The Guarantor hereby agrees that any Financing Document and all
documents relating thereto, including, without limitation, (a) supplements,
consents, waivers and modifications which may hereafter be executed, (b)
documents received by the Credit Obligor at any closing of any purchase of the
Bonds and (c) financial statements, certificates and other information
previously or hereafter furnished to the Credit Obligor, may be reproduced by
the Credit Obligor by any photographic, photostatic, microfilm, microcard,
miniature photographic or other similar process and they may destroy any
original document so reproduced. To the extent permitted by law, the Guarantor
agrees and stipulates that any such reproduction shall be admissible in evidence
as the original itself in any judicial or administrative proceeding (whether or
not the original is in existence and whether or not such reproduction was made
by them in the regular course of business) and that any enlargement, facsimile
or further reproduction of such reproduction shall likewise be admissible in
evidence.
SECTION 8.05 Survival
All warranties, representations and covenants made by the Guarantor
herein or on any certificate or other instrument delivered by or on behalf of
the Guarantor under this Agreement shall be considered to have been relied upon
by the Credit Obligor regardless of any investigation made by it or on its
behalf. All statements in any such certificate or other instrument shall
constitute warranties and representations by the Guarantor hereunder.
SECTION 8.06 Successors and Assigns
The terms of this Agreement shall inure to the benefit of and be
binding upon the heirs, executors, administrators, successors and assigns of
each of the parties.
SECTION 8.07 Effective Date of Agreement
of Agreement
The obligations of the Guarantor hereunder shall arise absolutely and
unconditionally when the Credit Agreement shall have been executed and
delivered.
SECTION 8.08 Entire Agreement; Counterparts
This Agreement constitutes the entire agreement, and supersedes all
prior agreements and understandings, both written and oral, between the parties
with respect to the subject matter hereof and may be executed simultaneously in
several counterparts, each of which shall be deemed an original, and all of
which together shall constitute one and the same instrument.
SECTION 8.09 Severability
The invalidity or unenforceability of any one or more phrases,
sentences, clauses or sections contained in this Agreement shall not affect the
validity or enforceability of the remaining portions of this Agreement, or any
part thereof.
SECTION 8.10 Date For Identification Purposes Only
The date of this Agreement is for identification purposes only and is
not intended to indicate that this Agreement was executed on such date.
SECTION 8.11 Exceptions to Covenants
The Guarantor shall not be deemed to be permitted to take any action or
fail to take any action which is permitted as an exception to any of the
covenants contained herein or which is within the permissible limits of any of
the covenants contained herein if such action or omission would result in the
breach of any other covenant contained herein.
IN WITNESS WHEREOF, the Guarantor has caused this Agreement to be
executed under seal in its name and on its behalf by officers thereof duly
authorized thereunto, and the Credit Obligor has executed this Agreement by
causing its name to be hereunto subscribed by one of its duly authorized
officers, all as of the day and year first above written.
CAVALIER HOMES, INC.
By:
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Its
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S E A L
Attest:
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Its:
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Accepted:
FIRST COMMERCIAL BANK
By:
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Its
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