Exhibit 10.2

 

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Textron Financial Corporation, Subsidiary of Textron Inc.

 

WHOLESALE SECURITY AGREEMENT

 

This Wholesale Security Agreement (this “Agreement”) is entered into, as of the
date set forth below, by the debtor identified below (“Debtor”) and Textron
Financial Corporation (“Secured Party”).  For purposes of this Agreement, any
party which controls, is controlled by, or is under common control with Debtor
or Secured Party, shall be deemed an affiliate of Debtor or Secured Party, as
appropriate.

 

1.                                       Grant of Security Interest; Description
of Collateral.

 

Debtor grants to Secured Party and its affiliates a security interest in the
following property (collectively, the “Collateral”):

 

See Attached Exhibit A

 

2.                                       Promise to Pay.

 

Debtor promises to pay to Secured Party the original invoice cost (“Invoice
Cost”) of each item of Collateral financed or refinanced for Debtor by Secured
Party pursuant to terms letters, finance plans or otherwise (in all cases, a
“Finance Plan”), together with interest and charges on the Invoice Cost as
specified in the applicable Finance Plan and this Agreement (collectively, the
“Total Debt”).  All payments hereunder and under each Finance Plan shall be made
payable to Secured Party and delivered to the address specified by Secured Party
from time to time.  Each payment received from Debtor by Secured Party shall be
applied:  first, to the portion of the Total Debt attributable to items of
Collateral which have been disposed of by Debtor, in the order in which such
items of Collateral were invoiced to Debtor (the “Order of Invoicing”); second,
to the portion of the Total Debt then due and owing attributable to other items
of Collateral in their Order of Invoicing; and, third, the excess, if any, shall
be held by Secured Party as security for the payment of all other obligations of
Debtor and/or its affiliates secured by the Collateral.  With respect to any
particular item of Collateral, payments received by Secured Party from Debtor
which are allocable thereto shall be applied:  first, to accrued and unpaid late
charges and interest owing hereunder and under any applicable Finance Plan with
respect to such item of Collateral; and, second, to the then outstanding Invoice
Cost of such item of Collateral.

 

3.                                       Obligations Secured by the Collateral.

 

Each item of Collateral shall secure the payment and performance by Debtor
and/or its affiliates of all present and future indebtedness and obligations of
Debtor and/or its affiliates, of every kind and nature whatsoever, owing to
Secured Party and/or its affiliates.  Debtor acknowledges that Secured Party
shall be entitled to a purchase money security interest in the items of
Collateral financed by Secured Party for Debtor and agrees that the extent of
Secured Party’s purchase money priority in any such item of Collateral shall be
determined, at any time, by reference to the unpaid Total Debt attributable to
such item of Collateral.

 

4.                                       Collateral to Remain Personal Property;
Location of Collateral.

 

Debtor agrees that the Collateral shall at all times remain personal property,
shall not become affixed to or form a part of any real estate, and shall be
located at Debtor’s place(s) of business set forth below.  Debtor shall not
remove any of the Collateral from such location(s) (including moving any of the
Collateral between or among such locations) or change its principal place of
business without the prior written consent of Secured Party.

 

5.                                       Disclaimer of Warranties; Unconditional
Nature of Obligations.

 

DEBTOR HEREBY ACKNOWLEDGES AND AGREES THAT:  (a) SECURED PARTY IS NOT THE
MANUFACTURER OR THE SELLER OF THE COLLATERAL; AND (b) SECURED PARTY HAS NOT MADE
ANY WARRANTY OR REPRESENTATION WITH RESPECT TO THE COLLATERAL OF ANY NATURE OR
KIND WHATSOEVER, EITHER EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, THE
MERCHANTABILITY OF THE COLLATERAL, ITS FITNESS FOR A PARTICULAR PURPOSE, ITS
COMPLIANCE WITH APPLICABLE LAWS AND REGULATIONS OR ITS NON-INFRINGEMENT OF THE
RIGHTS OF OTHERS.  Debtor agrees that it shall give notice to Secured Party of
any defect or non-conformity in any shipment of the Collateral financed by
Secured Party, or any claim of a right to reject or revoke acceptance of such
Collateral for any reason, no later than five (5) days after delivery of such
Collateral.  NOTWITHSTANDING SUCH NOTICE, DEBTOR AGREES THAT ITS OBLIGATIONS TO
SECURED PARTY WITH RESPECT TO SUCH COLLATERAL SHALL BE ABSOLUTE AND
UNCONDITIONAL AT ALL TIMES AFTER SECURED PARTY HAS ADVANCED OR COMMITTED TO
ADVANCE ALL OR ANY PART OF THE INVOICE COST OF SUCH COLLATERAL TO THE SELLER
THEREOF.

 

6.                                       Debtor’s Representations, Warranties
and Agreements.

 

Debtor represents and warrants to Secured Party that:  Debtor lawfully possesses
and owns each item of Collateral financed or refinanced by Secured Party for
Debtor; except for the security interest granted hereby, the Collateral is free
from, and will remain free from, all liens, claims, security interests or other
encumbrances; no financing statement covering the Collateral or its proceeds is
on file in favor of any party other than Secured Party; all information supplied
and statements made by Debtor in any financial or accounting statement or
application for credit delivered to Secured Party at any time is, or shall be,
true, correct, complete and genuine when delivered and there has been no
material adverse change in the Debtor’s credit worthiness, financial position or
in the information provided by Debtor to Secured Party in the credit application
or otherwise from the date of submission of such information through the date of
Debtor’s signing of this Agreement.  Debtor agrees:  to defend, at Debtor’s own
expense, any action, proceeding or claim affecting the Collateral; to pay
attorneys’ fees and all other expenses incurred by Secured Party in enforcing
its rights after Debtor’s default hereunder; to pay promptly all taxes,
assessments, license fees and other public or private charges when levied or
assessed against the Collateral, this Agreement, any Finance Plan or payments to
be made in connection therewith (such obligation shall survive the termination
of this Agreement); that if a certificate of title is required by law with
respect to any item of Collateral, Debtor shall obtain such certificate and
shall note the security interest of Secured Party thereon and, in any event,
shall do everything necessary or expedient to preserve or perfect the security
interest of Secured Party therein; that Debtor will not misuse, fail to keep in
good repair, secrete or, except as herein expressly permitted, rent, lend,
encumber or otherwise transfer any of the Collateral, or use the Collateral for
any purpose other than for display or demonstration on Debtor’s premises without
the prior written consent of Secured Party; and that Secured Party may enter
upon Debtor’s premises at any reasonable time to inspect the Collateral and
Debtor’s books and records pertaining to the Collateral with the full
cooperation and assistance of Debtor.

 

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7.                                       Disposition of Collateral by Debtor;
Release of Lien.

 

Debtor is a merchant engaged in the business of selling the Collateral and other
personal property of a kind similar to the Collateral.  Both Debtor and Secured
Party intend for Debtor to sell the Collateral, but only in the ordinary course
of its business as Debtor normally sells such Collateral.  Therefore, Debtor may
sell any item of Collateral provided that:  (a) Debtor is not in default
hereunder, (b) the price obtained for such item of Collateral is not less than
the unpaid Total Debt attributable thereto and (c) Debtor holds all of the
proceeds of any such sale in trust for, and promptly remits the unpaid Invoice
Cost of such item of Collateral to, Secured Party.  Debtor acknowledges that
Secured Party may extend financial accommodations, in an amount equal to all or
a portion of the Debtor’s sales price, to the purchaser or lessee of an item of
Collateral from Debtor.  In such a case, the unpaid Invoice Cost of such item of
Collateral and the amount to be financed by Secured Party may be offset against
one another to determine the amount payable by or to Debtor.

 

8.                                       Insurance and Risk of Loss.

 

At all times during the term of this Agreement, Debtor shall bear the entire
risk of loss or destruction of, or damage to, the Collateral.  Debtor will
procure and continuously maintain “all risk” property insurance covering each
item of Collateral for the full replacement value thereof, plus such other
insurance as Secured Party may reasonably specify from time to time.  Each
policy of insurance shall contain a standard Lender’s Loss Payable Endorsement
in favor of Secured Party, providing for, among other things, thirty (30) days
prior written notice to Secured Party of any cancellation, non-renewal or
modification of such coverage.  Secured Party’s acceptance of policies in lesser
amounts in one instance shall not be a waiver of Debtor’s obligations hereunder
in any other instances.

 

9.                                       Events of Default; Acceleration.

 

Debtor and Secured Party acknowledge that time is of the essence in this
Agreement.  The following are events of default under this Agreement permitting
Secured Party to take such action under Paragraph 10 of this Agreement as
Secured Party deems necessary:

 

(a)                                any of Debtor’s obligations owing to Secured
Party and/or any affiliate of Secured Party under this Agreement, any Finance
Plan or any other agreement are not paid or performed as required; provided,
that, so long as such default does not involve a misrepresentation or false
statement, the Debtor shall have (x) five (5) business days to cure a default
based upon a failure to pay any amount when due (including, without limitation,
principal, interest, fees and/or expenses) and (y) twenty (20) business days to
cure any other default if such default is able to be cured. Any cure period
shall commence upon the date such payment or performance is due;

 

(b)                             Default by Debtor or any guarantor or other
party liable for any of Debtor’s and/or its affiliates’ obligations to Secured
Party in the payment of any other material indebtedness for borrowed money or
default in the observance or performance of any material covenant or condition
(including, without limitation, any financial covenants) contained in any
agreement or instrument evidencing, securing, or relating to any such
indebtedness (including, without limitation, any Event of Default under the
Other Credit Facility (hereafter defined));

 

(c)                                there occurs a default by any affiliate of
Debtor under any agreement with Secured Party and/or any affiliate of Secured
Party;

 

(d)                               any sale or other disposition of the
Collateral is made by Debtor other than in compliance with Paragraph 7 hereof;

 

(e)                                Debtor breaches any material (as determined
by Secured Party in its reasonable discretion) representation, warranty or
covenant contained herein or in any other instrument or agreement delivered by
Debtor to Secured Party or any affiliate of Secured Party in connection with
this Agreement or any other transaction;

 

(f)                                  Debtor dies, ceases to do business as a
going concern or there occurs a material change in the ownership or management
of Debtor’s business;

 

(g)                               any substantial part (as determined by Secured
Party in its reasonable discretion) of the Collateral is lost, damaged or
destroyed and Debtor fails to pay to Secured Party, within five (5) days
thereafter, the unpaid Invoice Cost of such Collateral;

 

(h)                               Debtor becomes insolvent or bankrupt; makes an
assignment for the benefit of creditors or consents to the appointment of a
trustee or receiver; a trustee or a receiver is appointed for Debtor or for a
substantial part of its property without its consent and such trustee or
receiver is not removed within a period of thirty (30) days; bankruptcy,
reorganization or insolvency proceedings are instituted by or against Debtor
and, if instituted against Debtor, are not dismissed within a period of thirty
(30) days; or if any of the foregoing occurs with respect to any guarantor or
other party liable for any of Debtor’s and/or its affiliates obligations to
Secured Party and/or its affiliates;

 

(i)                                   all or any part of the Collateral is
attached, levied or seized upon in any proceeding and such process is not
discharged within ten (10) days;

 

(j)                                   Secured Party believes in good faith that
the prospect of payment or performance of Debtor’s and/or its affiliates
obligations to Secured Party and/or its affiliates is impaired, whether by
reason of a material adverse change in the business prospects or financial
condition of Debtor or otherwise, or, in good faith, believes that the
Collateral is insufficient security for Debtor’s obligations to Secured Party;

 

(k)                                any guarantor, surety or endorser for any of
Debtor’s and/or its affiliates obligations to Secured Party and/or its
affiliates dies, defaults in any obligation or liability owing to Secured Party
or any affiliate of Secured Party, or any guaranty of the obligations secured
hereby is terminated; or

 

(l)

 

without the prior written consent of Secured Party, the covenants in the
financing arrangement agented by Bank of America or its affiliates (or any
successor agent) (the “Other Credit Facility”) shall be materially different (as
determined by Secured Party in its reasonable discretion) than the financial
covenants set forth on Schedule 9(l) hereof (the “Agreed Financial Covenants”).
For the avoidance of doubt and without limiting the generality of the foregoing
sentence, any (x) termination or expiration of the Other Credit Facility and/or
(y) refinancing of the Other Credit Facility (if such new credit facility does
not contain the Agreed Financial Covenants (or other financial covenants which
are not materially different than the Agreed Financial Covenants)) without the
prior written consent of Secured Party shall be considered an additional event
of default.

 

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If Debtor is in default hereunder, the indebtedness herein described and all
other debts then owing by Debtor to Secured Party and/or its affiliates under
this Agreement or any other present or future agreement shall, if Secured Party
or any such affiliate shall so elect, become immediately due and payable.

 

10.                                 Secured Party’s Remedies After Default;
Consent to Enter Premises.

 

Upon a default hereunder, and then and at any time thereafter, Secured Party
shall have all of the rights and remedies of a secured party under the Uniform
Commercial Code and any other applicable laws, including the right to collect
from Debtor any deficiency remaining after disposition of the Collateral. 
Debtor agrees that Secured Party may, by itself or through an agent, without
notice to any person and without judicial process of any kind, but without
breaching the peace, enter into any premises or upon any land owned, leased or
otherwise under the apparent control of Debtor where Secured Party believes the
Collateral may be, and disassemble, render unusable and/or repossess all or any
items of the Collateral. Debtor expressly waives all rights to possession of the
Collateral after default and all claims for injuries suffered through or loss
caused by such entering and/or repossession by Secured Party.  Debtor shall,
upon demand by Secured Party, assemble the Collateral and return it to Secured
Party at a place designated by Secured Party.  Secured Party will give Debtor
reasonable notice of the time and place of any public sale of the Collateral or
of the time after which any private sale of the Collateral or any other intended
disposition thereof is to be made.  The requirement of reasonable notice shall
be met if such notice is mailed to the notice address of Debtor shown herein at
least ten (10) days before the time of the sale or other disposition of the
Collateral.  Debtor agrees that the repurchase of any item of Collateral by the
manufacturer or any distributor thereof shall constitute a commercially
reasonable private sale of the Collateral by Secured Party, if the price
obtained is equal to:  (a) the then outstanding Invoice Cost of such item of
Collateral, minus (b) amounts incurred, if any, to restore such item of
Collateral to the equivalent of unused condition.  Expenses of retaking,
holding, preparing for sale, selling and the like shall include attorney’s fees
and other reasonable legal expenses.  Debtor understands that Secured Party’s
rights are cumulative and not alternative.

 

11.                                 Waiver of Defaults; Agreement Inclusive.

 

Secured Party may, in its sole discretion, waive a default or cure a default at
Debtor’s expense.  Any such waiver in any particular instance or any waiver of a
particular default shall not be a waiver of any other defaults at the same time
or at any other time.  No modification or change in this Agreement, or
supplement hereto, shall bind Secured Party unless in writing and signed by an
authorized officer of Secured Party.

 

12.                                 Financing Statements; Financial Information.

 

Debtor shall execute all financing statements or other instruments which Secured
Party reasonably deems to be necessary or appropriate to protect and perfect its
security interest in the Collateral.  Debtor authorizes Secured Party to file a
financing statement with respect to the Collateral signed only by Secured Party
and/or to file a reproduction of this Agreement or a reproduction of a financing
statement.  Debtor will deliver to Secured Party, within ninety (90) days after
the close of each fiscal year of Debtor, Debtor’s balance sheet and statement of
income (“Financial Statements”), certified by a recognized firm of certified
public accountants as having been prepared in accordance with generally accepted
accounting principles and as presenting fairly the financial condition of Debtor
as of the date thereof and for the period then ended.  Upon request, Debtor will
deliver to Secured Party, within ninety (90) days after the close of each fiscal
quarter of the Debtor, copies of Debtor’s quarterly Financial Statements
certified by the chief financial officer of Debtor as presenting fairly the
financial condition of Debtor as of the date thereof and for the period then
ended.

 

13.                                 Miscellaneous.

 

Any provisions hereof contrary to, prohibited by, or invalid under applicable
law, shall be inapplicable hereto, deemed omitted herefrom, and shall not
invalidate the remaining provisions hereof.  Secured Party may establish a
credit limit for Debtor in an aggregate amount not to exceed Twenty Million and
00/100 Dollars ($20,000,000); provided, that, Secured Party may adjust such
credit limit from time to time in its sole discretion.  Such credit limit will
not constitute a committed line of credit. It is the intention of Secured Party
not to charge interest pursuant to the Finance Plans at a rate in excess of the
highest rate permitted by applicable law.  In making such determination,
interest on any outstanding loan amount shall be spread over the entire period
that such loan amount is outstanding.  Any such excess charges paid by Debtor to
Secured Party shall be applied to reduce the applicable loan amount outstanding
or refunded to Debtor, as appropriate.  Debtor acknowledges receipt of a true
copy hereof and waives notice of Secured Party’s acceptance hereof.  If Debtor
is a corporation, Debtor represents that this Agreement is executed pursuant to
authority of its Board of Directors and constitutes the valid and binding
obligation of Debtor.  If more than one party executes this Agreement as Debtor,
their obligations under this Agreement are joint and several.  Debtor may not
assign its rights or delegate its obligations hereunder without the prior
written consent of Secured Party.  All notices hereunder shall be in writing and
delivered or sent to the respective addresses set forth herein, or such other
address as either Secured Party or Debtor may hereafter designate to the other. 
This Agreement shall be governed by, and construed in accordance with, the laws
of the State of Rhode Island, without reference to applicable conflict of law
principles.  Each of the parties hereto consents to the non-exclusive
jurisdiction of Rhode Island courts in connection with the resolution of any
disputes concerning the matters contemplated herein.

 

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                The parties hereto have executed this Agreement as of August 21,
2002.

 

SECURED PARTY:

 

DEBTOR:

 

 

 

TEXTRON FINANCIAL CORPORATION, for itself and as agent for its affiliates

 

FLEETWOOD RETAIL CORP. OF ARKANSAS, an Arkansas corporation

 

 

FLEETWOOD RETAIL CORP. OF GEORGIA, a Georgia corporation

 

 

FLEETWOOD RETAIL CORP. OF ILLINOIS, a Illinois corporation

By:

    /s/  CINDI RUTLEDGE

 

FLEETWOOD RETAIL CORP. OF KANSAS, a Delaware corporation

Print Name:

CINDI RUTLEDGE

 

FLEETWOOD RETAIL CORP. OF LOUISIANA, a Louisiana corporation

Print Title:

AVP

 

FLEETWOOD RETAIL CORPORATION OF MISSOURI, a Missouri corporation

 

 

FLEETWOOD RETAIL CORP. OF OHIO, a Ohio corporation

 

 

FLEETWOOD HOME CENTERS OF NEVADA, INC., a Nevada corporation

 

 

FLEETWOOD RETAIL CORP. OF OKLAHOMA, a Oklahoma corporation

 

 

FLEETWOOD RETAIL CORP. OF SOUTH CAROLINA, a South Carolina corporation

 

 

FLEETWOOD RETAIL CORP. OF WEST VIRGINIA, a West Virginia corporation

 

 

FLEETWOOD RETAIL CORP. OF WASHINGTON, a Delaware corporation

 

 

 

 

 

By:

  /s/        : BOYD R. PLOWMAN

 

 

Print Name:

BOYD R. PLOWMAN

 

 

Print Title:

AS SR. V.P. FOR EACH OF THE FOREGOING DEBTORS

 

 

 

Secured Party’s address for notices:

P.O. Box 3090
Alpharetta, GA 30023

 

WITNESS FOR DEBTORS SIGNATURE:

 

 

 

 

 

Name:

 

Debtor’s  trade names (if any):

 

Home Address:

 

 

 

 

 

 

 

 

 

Debtor’s principal place of business and address for notices:

Debtor’s other places of business where the collateral may be located:

 

 

 

 

Street:

3125 MYERS STREET

Street:

SEE EXHIBIT B

 

City:

RIVERSIDE

State:

CA

City:

 

 

County:

 

Zip:

92503

County:

 

Zip:

 

 

 

 

 

Name (s) of Debtor’s other  partner(s) (if applicable):

Street:

 

 

 

City:

 

 

 

County:

 

Zip:

 

 

 

 

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