FIRST AMENDMENT TO
AMENDED AND RESTATED REVOLVING
AND TERM LOAN AGREEMENT
THIS FIRST AMENDMENT TO AMENDED AND RESTATED REVOLVING AND
TERM LOAN AGREEMENT (this "Amendment"), made by and among Cavalier Homes, Inc.,
a Delaware corporation ("Cavalier Homes"), Quality Housing Supply, LLC, a
Delaware limited liability company, Cavalier Manufacturing, Inc., a Delaware
corporation, Cavalier Industries, Inc., a Delaware corporation, Delta Homes,
Inc., a Mississippi corporation, Cavalier Enterprises, Inc., a Delaware
corporation, Cavalier Associated Retailers, Inc., a Delaware corporation,
Quality Certified Insurance Services, Inc., an Alabama corporation, Cavalier
Asset Management, Inc., a Delaware corporation, Cavalier Manufacturing Asset
Co., Inc., a Delaware corporation, Cavalier Industries Asset Co., Inc., a
Delaware corporation, Cavalier Enterprises Asset Co., Inc., a Delaware
corporation, Cavalier Real Estate Co., Inc., a Delaware corporation, and
Cavalier Acceptance Corporation, an Alabama corporation ("Cavalier Acceptance")
(collectively, the "Initial Participating Subsidiaries"; Cavalier Homes and the
Initial Participating Subsidiaries, together with all entities who hereafter
become Participating Subsidiaries or Participating Partnerships, being
hereinafter sometimes collectively referred to as the "Borrowers"), and First
Commercial Bank, an Alabama state banking corporation ("Lender"), is dated as of
the 29th day of September, 2000.
R E C I T A L S :
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WHEREAS, Cavalier Homes, the Initial Participating
Subsidiaries and Lender entered into that certain Amended and Restated Revolving
and Term Loan Agreement dated as of March 31, 2000 (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
$35,000,000 (the "Revolving Loan"), and to Cavalier Acceptance, a term loan
facility of up to $35,000,000 (the "Term Loans"); provided, however, that the
collective outstanding balances of the Revolving Loan and all of the Term Loans
may not exceed $35,000,000;
WHEREAS, the Agreement amended and restated in its entirety
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 further amended by that
certain Second Amendment to Revolving, Warehouse and Term Loan Agreement dated
as of June 1, 1998, by and among Cavalier Homes and certain of the Initial
Participating Subsidiaries;
WHEREAS, the Revolving Loan is currently evidenced by that
certain Amended and Restated Revolving Note in the original principal amount of
$35,000,000 dated as of March 31, 2000 (the "Revolving Note"); and
WHEREAS, Borrowers have requested that Lender agree to amend
certain covenants contained in the Agreement and to extend the maturity date of
the Revolving Loan from April 15, 2002 to April 15, 2003, 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, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto do
hereby agree, each with the other, as follows:
1. Unless otherwise defined herein or unless the context
shall expressly indicate otherwise, all capitalized terms which are used herein
shall have their respective meanings given to them in the Agreement.
2. Section 2.1(A)(1)(a) of the Agreement is hereby
amended and restated in its entirety to read as follows:
"(1)(a) the Revolving Loan Commitment minus (b) the aggregate
outstanding principal balance of all Term Loans, or"
3. In Section 3.1(A) of the Agreement, the term
"$35,000,000" is hereby replaced with the term "the Revolving Loan Commitment".
4. Section 4.5(C) of the Agreement is hereby amended and
restated in its entirety to read as follows:
"(C) No material adverse change shall have occurred in the
financial condition of Cavalier Homes or Cavalier Acceptance;
provided, however, that solely for purposes of this subsection
4.5(C), the results of operations of Cavalier Homes and
Cavalier Acceptance shall not be deemed to be a material
adverse change so long as Cavalier Homes and Cavalier
Acceptance are in compliance with the Financial Covenants set
forth in Sections 7.3 and 8.3 of the Agreement;"
5. Section 6.1(K) of the Agreement is hereby amended
to add the following language to the end of the subsection following the words
"Financial Statements to the date hereof;":
"provided that for the purposes solely of this subsection (K),
the results of operations of Cavalier Homes and the
Consolidated Entities shall not be deemed to be a material
adverse change so long as Cavalier Homes is in compliance with
the Financial Covenants set forth in Section 7.3 of the
Agreement."
6. Section 6.2(Q) of the Agreement is hereby amended by
inserting the phrase "or Section 7.2(H) below" after the words "Exhibit I".
7. Section 7.1(C)(1) of the Agreement is hereby amended
and restated in its entirety to read as follows:
"(C) Cavalier Homes will furnish to Lender:
(1) Within fifteen (15) days after the close of
each calendar month, unless waived in
writing by Lender, and within thirty (30)
days after the close of each calendar
quarter:
(i) A Consolidated and consolidating
income statement of Cavalier Homes
and the Consolidated Entities for
such period; and
(ii) A Consolidated and consolidating
balance sheet of Cavalier Homes and
the Consolidated Entities as of the
end of such period
all in reasonable detail, subject to year-
end audit adjustments;"
8. Section 7.1(M) of the Agreement is hereby amended
by adding the following language at the end of the subsection:
";provided that for the purposes solely of this subsection
(M), the results of operations of Cavalier Homes and the
Consolidated Entities shall not be deemed to be a material
adverse change so long as Cavalier Homes is in compliance with
the Financial Covenants set forth in Section 7.3 of the
Agreement."
9. Section 7.2(C) of the Agreement is hereby amended and
restated in its entirety to read as follows:
"(C) Unless the proceeds of such sale are paid to Lender
pursuant to this Agreement, neither Cavalier Homes nor any
Consolidated Entity will sell, or enter into any agreement to
sell, any of its Accounts or Eligible Contracts; provided,
however that until further notice to the contrary from Lender,
Cavalier Acceptance shall be permitted to sell Eligible
Contracts in the ordinary course of business."
10. Section 7.2(G) of the Agreement is hereby amended and
restated in its entirety to read as follows:
"(G) Neither Cavalier Homes nor any Consolidated Entity will
become liable, directly or indirectly, as guarantor or
otherwise for any obligation of any other Person, except for
(i) guarantees existing and disclosed to Lender prior to
Closing, (ii) endorsements of commercial paper for deposit or
collection in the ordinary course of business, (iii)
repurchase agreements entered into in the ordinary course of
business providing for repurchase obligations of Cavalier
Homes of the sort customarily undertaken by manufacturers of
manufactured housing, and (iv) guaranties or Indebtedness
described or set forth in Section 7.2(H) below; provided,
however, that with respect to dealers selling Inventory
manufactured by any Borrower, Cavalier Homes may guaranty up
to $75,000 in principal amount of lines of credit used for
such dealer to purchase Inventory."
11. Effective as of January 1, 2001, Section 7.2(H)(6)
of the Agreement is hereby amended and restated in its entirety to read as
follows:
"(6) Indebtedness secured by Permitted Liens and lease
obligations not to exceed, in the aggregate, $18,000,000
(with such Indebtedness and lease obligations not to exceed
$50,000 for Cavalier Acceptance); as used in this paragraph,
the term "lease" means a lease that is not reflected on a
Consolidated balance sheet of Cavalier Homes and the
Consolidated Entities and should not be so reflected under
General Accepted Accounting Principles; provided, however
that notwithstanding the foregoing, Cavalier Homes may
incur up to $6,000,000 in additional Indebtedness to
purchase inventory for its retail manufactured housing sales
operations, which Indebtedness may be secured by a lien on
said inventory in favor of such floor plan lender(s)."
12. Section 7.2(I) of the Agreement is hereby amended and
restated in its entirety to read as follows:
"(I) Cavalier Homes will not declare or pay any dividends, or
make any other payments or distributions on account of its
capital stock, or any payments to redeem, purchase or retire
any of its capital stock, which exceed, in the aggregate for
all such payments, fifty percent (50%) of the average of its
Consolidated net income determined under Generally Accepted
Accounting Principals, consistently applied, by Cavalier
Homes, for the two most recent fiscal years preceding the
period to which such dividends or distributions relate, nor
make any assignment or transfer of Accounts, Chattel Paper,
other than in accordance with Section 7.2(C), or, other than
in the ordinary course of business, of Inventory."
13. Section 7.2(J) of the Agreement is hereby amended and
restated in its entirety to read as follows:
"(J) Other than any Consolidated Entity, neither Cavalier
Homes nor any Consolidated Entity will form any
Subsidiary, or Controlled Partnership, or make any investment
in or make any loan in the nature of any investment to any
Person, which, in the aggregate, exceed $3,000,000."
14. Section 7.2(M)(5) of the Agreement is hereby amended
and restated in its entirety to read as follows:
"(5) Equity investments, made in the reasonable discretion
of Cavalier Homes, in an annual aggregate amount not to exceed
$750,000;"
15. A new Section 7.2(M)(6) is hereby added to the
Agreement to read as follows:
"(6) certificates of deposit that are held with Lender so long
as Lender's rates are competitive with the rates offered
by other lenders and commercial paper rated Baa or better."
16. Section 7.2(U) of the Agreement is hereby amended and
restated in its entirety to read as follows:
"(U) Cavalier Homes and the Consolidated Entities will not
make capital expenditures for any fiscal year in excess of
$10,000,000 in the aggregate."
17. Section 7.3(A)(2) of the Agreement is hereby amended
and restated in its entirety to read as follows:
"(2) The sum of (A) and (B) below must at all times equal
or exceed $65,000,000:
(A) Consolidated Tangible Net Worth, plus
(B) (i) in fiscal year 2000, the treasury
stock purchased by Cavalier Homes in year 2000, valued at
cost, and
(ii) in fiscal year 2001, the treasury
stock purchased by Cavalier Homes in years 2000 and 2001,
valued at cost."
18. Section 7.3(A)(4) of the Agreement is hereby amended
and restated in its entirety to read as follows:
"(4) A ratio of Consolidated Cash Flow (measured on a
historical basis) to Debt Service of not less than 1.75
to 1.00 commencing for the year ending December 31, 2001 and
continuing for every subsequent year thereafter."
19. Section 8.2(A) of the Agreement is hereby amended
to add the following language to the end of the subsection following the
words "securing any Eligible Contract":
"; provided that the sole effect of a violation by Cavalier
Acceptance of this Section 8.2(A) shall result in the Eligible
Contract at issue ceasing to be deemed an "Eligible Contract"
for the purposes of this Agreement so long as no sums due
under the Revolving Loan have been converted to a Term Loan
based on said Eligible Contract."
20. Section 8.2(B) of the Agreement is hereby amended and
restated in its entirety to read as follows:
"Except as permitted by Section 7.2(C), Cavalier Acceptance
will not transfer, sell, assign or deliver any Eligible
Contract pledged to Lender to any person, corporation,
partnership, association or trust other than Lender."
21. Schedule I of the Agreement is hereby amended to
amend and restate the definition of "Cash Flow" in its entirety as follows:
"Cash Flow" means, as to any Person, the aggregate of:
(A) net income after taxes (or the net deficit,
as applicable) plus
(B) amounts that have been deducted for
(i) amortization of intangible assets, and (ii) depreciation
and depletion; all as shown by the income statement of such
Person, calculated in accordance with Generally Accepted
Accounting Principals."
22. Section 9.5 of the Agreement, any references to
Section 9.5 contained in the Agreement, and the last sentence of section 2.4 of
the agreement, are hereby deleted in their entirety. Schedule I of the Agreement
is hereby amended to amend and restate the definition of "Loan Termination Date"
in its entirety as follows:
"Loan Termination Date" means, (i) with respect to the
Revolving Loan, the earlier of (A) April 15, 2003 or (B)
the date to which the maturity of the Revolving Note may be
accelerated pursuant to Section 9.2 of the Agreement; and
(ii) 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."
23. Schedule I of the Agreement is hereby amended to
amend and restate the definition of "Revolving Loan Commitment" in its
entirety as follows:
"Revolving Loan Commitment" means the Lender's commitment to
lend to Borrowers up to the sum of $35,000,000 in principal
amount outstanding from time to time pursuant to Article II
of the Agreement, and subject to, the terms of the Agreement;
provided that if at any time the sum of (A) and (B) below
is less than $85,000,000, the Revolving Loan Commitment
shall be automatically adjusted to be Thirty-five percent
(35%) of the sum of (A) and (B) below:
(A) Consolidated Tangible Net Worth, plus
(B) (i) in fiscal year 2000, the treasury
stock purchased by Cavalier Homes in year 2000, valued at
cost, and
(ii) in fiscal year 2001, the treasury
stock purchased by Cavalier Homes in years 2000 and 2001,
valued at cost."
24. Schedule I of the Agreement is hereby amended to amend the
definition of "Financial Statements" by replacing the figure "December 31, 1998"
with the figure "December 31, 1999".
25. Schedule I of the Agreement is amended to amend and
restate the definition of "LIBOR Rate" in its entirety as follows:
"LIBOR Rate" means: (a) so long as the sum of (A) and (B)
below exceeds $77,000,000, the Base LIBOR Rate plus 200 basis
points (2.00%); and (b) at any time when the sum of (A) and
(B) is equal to or less than $77,000,000, the Base LIBOR
Rate plus 250 basis points (2.50%):
(A) Consolidated Tangible Net Worth, plus
(B) (i) in fiscal year 2000, the treasury
stock purchased by Cavalier Homes in year 2000, valued at
cost, and
(ii) in fiscal year 2001, the treasury
stock purchased by Cavalier Homes in years 2000 and 2001,
valued at cost."
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 or, in the case of a required adjustment based on
Consolidated Tangible Net Worth, the LIBOR Rate shall be adjusted on
the first day of the month immediately following receipt by Lender of
the monthly financial reports required by Section 7.2(B) of the
Agreement."
26. Schedule I of the Agreement is hereby amended to
amend and restate the definition of "Revolving Rate" in its entirety as
follows:
"Revolving Rate" means, until maturity of the Revolving
Note: (a) so long as the sum of (A) and (B) below exceeds
$77,000,000, the per annum rate of interest equal to
one-half of one percent (0.50%) below the Prime Rate in effect
from time to time; and (b) at any time when the sum of (A)
and (B) is equal to or less than $77,000,000, the per annum
rate of interest equal to the Prime Rate in effect from time
to time, and, after maturity of the Revolving Note, 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:
(A) Consolidated Tangible Net Worth, plus
(B) (i) in fiscal year 2000, the treasury
stock purchased by Cavalier Homes in year 2000, valued at
cost, and
(ii) in fiscal year 2001, the treasury
stock purchased by Cavalier Homes in years 2000 and 2001,
valued at cost."
Each time the Prime Rate shall change, the Revolving Rate shall change
concurrently with such change in the Prime Rate, or, in the case of a required
adjustment based on Consolidated Tangible Net Worth, the Prime Rate shall be
adjusted on the first day of the month immediately following receipt by Lender
of the monthly financial reports required by Section 7.2(B) of the Agreement."
27. Schedule I of the Agreement is hereby amended to amend the
definition of "Five Year Treasury" by amending and restating the penultimate
sentence thereof to read as follows:
"The Five Year Treasury on March 27, 2000 was 6.504%."
28. Schedule I of the Agreement is hereby amended to amend the
definition of "Prime Rate" by amending and restating the penultimate sentence
thereof to read as follows:
"The Prime Rate on the date of the Agreement is
9.00%."
29. Schedule II6.1(B) of the Agreement is hereby amended
to add the items set forth on Exhibit A hereto.
30. Schedule II.6.1(D) of the Agreement is hereby amended
to add the items set forth on Exhibit A hereto.
31. Exhibit C-1 of the Agreement is hereby amended by
amending and restating subsection (2) thereof as set forth on Exhibit A.
32. Exhibit C of the Agreement is hereby amended by
amending and restating subsection (2) thereof as set forth on Exhibit A hereto.
33. Exhibit F of the Agreement is hereby amended to add
the items set forth on Exhibit A hereto.
34. Exhibit I is hereby amended to add the items set
forth on Exhibit A hereto.
35. Prior to the execution of this Amendment, Borrowers have
paid to Lender all Non-Usage Fees due to be paid under the Agreement prior to
this Amendment. In connection with this Amendment, Lender acknowledges its
receipt of a Commitment Fee from Cavalier Homes equal to one-eighth of one
percent (1/8%) of the Revolving Loan Commitment ($43,750). Each of the Borrowers
acknowledges that such Commitment Fee has been fully-earned by Lender and is
non-refundable.
36. As conditions to the effectiveness of this Amendment,
Borrowers shall have delivered to Lender such documentation as may be requested
by Lender, or its counsel, to satisfy Lender that this Amendment has been duly
authorized, executed and delivered on behalf of each Borrower, constitutes the
valid and binding obligations of each Borrower, and is entitled to the security
of the Agreement and the Security Documents.
37. Notwithstanding the execution of this Amendment, all of
the indebtedness evidenced by each of the Notes 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 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 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 is
and shall remain secured by the Collateral described in the Agreement and in the
Security Documents and (ii) Cavalier Homes specifically, in its capacity as
guarantor under those certain Continuing Guaranty Agreements dated February 17,
1994, March 14, 1996, June 1, 1998 and March 31, 2000, 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 shall in no way be
modified, altered or impaired by this Amendment.
38. Borrowers, jointly and severally, hereby represent and
warrant to Lender that (a) the officers of each Borrower executing this
Amendment have been duly authorized to do so and such amendment and the
Agreement are valid and binding upon each Borrower which is a party thereto in
every respect, enforceable in accordance with their terms, (b) except as set
forth on Schedule I hereto, each and every representation and warranty set forth
in Article VI of the Agreement is true and correct as of the date hereof, 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.
39. 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.
40. This Amendment shall inure to and be binding upon
and enforceable by Borrowers and Lender and their respective successors and
assigns.
41. 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. The parties agree that any facsimile signature of any party on any
counterpart original of this Amendment shall be deemed to be an original
signature of such party for all purposes and shall fully bind the party whose
facsimile signature appears on the counterpart original.
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/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ [L.S.]
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Its: Vice President
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QUALITY HOUSING SUPPLY, LLC
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ [L.S.]
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Its: Secretary
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CAVALIER MANUFACTURING, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ [L.S.]
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Its: Vice President
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CAVALIER INDUSTRIES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ [L.S.]
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Its: Secretary
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DELTA HOMES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ [L.S.]
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Its: Secretary
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CAVALIER ENTERPRISES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ [L.S.]
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Its: Secretary
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CAVALIER ASSOCIATED RETAILERS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ [L.S.]
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Its: Secretary
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QUALITY CERTIFIED INSURANCE
SERVICES, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ [L.S.]
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Its: Director
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CAVALIER ASSET MANAGEMENT, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ [L.S.]
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Its: Secretary
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CAVALIER MANUFACTURING ASSET
CO., INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ [L.S.]
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Its: Secretary
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CAVALIER INDUSTRIES ASSET CO., INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ [L.S.]
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Its: Secretary
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CAVALIER ENTERPRISES ASSET CO., INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ [L.S.]
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Its: Secretary
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CAVALIER REAL ESTATE CO., INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ [L.S.]
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Its: Secretary
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CAVALIER ACCEPTANCE CORPORATION
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇ [L.S.]
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Its: Secretary
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LENDER:
FIRST COMMERCIAL BANK
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇▇ [L.S.]
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Its: Vice President
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