Document:

Exhibit 10.12

 

 

SECOND
AMENDED AND RESTATED CREDIT AGREEMENT

 

Dated as of July 1, 2005

 

Among

 

THE FINANCIAL INSTITUTIONS NAMED HEREIN,

 

as the Lenders;

 

BANK OF AMERICA, N.A.,

 

as the Administrative Agent;

 

GENERAL ELECTRIC CAPITAL CORPORATION,

 

as the Syndication Agent;

 

FLEETWOOD ENTERPRISES, INC.,

 

as a Guarantor;

 

and

 

FLEETWOOD HOLDINGS INC., and certain of its
Subsidiaries,

 

and

 

FLEETWOOD RETAIL CORP., and certain of its
Subsidiaries,

 

as the Borrowers.

 

 

TABLE OF CONTENTS

 

	
  ARTICLE 1 LOANS AND LETTERS OF CREDIT

  	
   

  
	
   

  	
   

  	
   

  
	
  1.1

  	
  Total Facility

  	
   

  
	
  1.2

  	
  Revolving Loans.

  	
   

  
	
  1.3

  	
  Term Loan.

  	
   

  
	
  1.4

  	
  Letters of Credit.

  	
   

  
	
  1.5

  	
  Bank Products

  	
   

  
	
  1.6

  	
  Joint and Several Obligations; Contribution Rights.

  	
   

  
	
  1.7

  	
  Borrowing Agency Provisions.

  	
   

  
	
  1.8

  	
  Senior Indebtedness

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 2 INTEREST AND FEES

  	
   

  
	
   

  	
   

  	
   

  
	
  2.1

  	
  Interest.

  	
   

  
	
  2.2

  	
  Continuation and Conversion Elections.

  	
   

  
	
  2.3

  	
  Maximum Interest Rate

  	
   

  
	
  2.4

  	
  Closing Fee

  	
   

  
	
  2.5

  	
  Unused Line Fee

  	
   

  
	
  2.6

  	
  Letter of Credit Fee

  	
   

  
	
  2.7

  	
  [RESERVED].

  	
   

  
	
  2.8

  	
  Substitution of Property

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 3 PAYMENTS AND PREPAYMENTS

  	
   

  
	
   

  	
   

  	
   

  
	
  3.1

  	
  Revolving Loans

  	
   

  
	
  3.2

  	
  Termination of Facility

  	
   

  
	
  3.3

  	
  Repayment of the Term Loan.

  	
   

  
	
  3.4

  	
  Prepayments of the Loans.

  	
   

  
	
  3.5

  	
  LIBOR Rate Loan Prepayments

  	
   

  
	
  3.6

  	
  Payments by the Borrowers.

  	
   

  
	
  3.7

  	
  Payments as Revolving Loans

  	
   

  
	
  3.8

  	
  Apportionment, Application and Reversal of Payments

  	
   

  
	
  3.9

  	
  Indemnity for Returned Payments

  	
   

  
	
  3.10

  	
  The Agent’s and Lenders’ Books and Records; Monthly Statements

  	
   

  
	
  3.11

  	
  Release of FRC Borrower

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 4 TAXES, YIELD PROTECTION AND
  ILLEGALITY

  	
   

  
	
   

  	
   

  	
   

  
	
  4.1

  	
  Taxes.

  	
   

  
	
  4.2

  	
  Illegality.

  	
   

  
	
  4.3

  	
  Increased Costs and Reduction of Return.

  	
   

  
	
  4.4

  	
  Funding Losses

  	
   

  
	
  4.5

  	
  Inability to Determine Rates

  	
   

  
	
  4.6

  	
  Certificates of the Agent.

  	
   

  
	
  4.7

  	
  Survival

  	
   

  

 

i

 

	
  ARTICLE 5 BOOKS AND RECORDS; FINANCIAL
  INFORMATION; NOTICES

  	
   

  
	
   

  	
   

  	
   

  
	
  5.1

  	
  Books and Records

  	
   

  
	
  5.2

  	
  Financial Information

  	
   

  
	
  5.3

  	
  Notices to the Lenders

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 6 GENERAL WARRANTIES AND REPRESENTATIONS

  	
   

  
	
   

  	
   

  	
   

  
	
  6.1

  	
  Authorization, Validity, and Enforceability of this Agreement and the
  Loan Documents

  	
   

  
	
  6.2

  	
  Validity and Priority of Security Interest

  	
   

  
	
  6.3

  	
  Organization and Qualification

  	
   

  
	
  6.4

  	
  Corporate Name; Prior Transactions

  	
   

  
	
  6.5

  	
  Subsidiaries and Affiliates

  	
   

  
	
  6.6

  	
  Financial Statements and Projections.

  	
   

  
	
  6.7

  	
  Capitalization

  	
   

  
	
  6.8

  	
  Solvency

  	
   

  
	
  6.9

  	
  Debt

  	
   

  
	
  6.10

  	
  Distributions

  	
   

  
	
  6.11

  	
  Real Estate; Leases

  	
   

  
	
  6.12

  	
  Proprietary Rights

  	
   

  
	
  6.13

  	
  Trade Names

  	
   

  
	
  6.14

  	
  Litigation

  	
   

  
	
  6.15

  	
  Labor Disputes

  	
   

  
	
  6.16

  	
  Environmental Laws

  	
   

  
	
  6.17

  	
  No Violation of Law

  	
   

  
	
  6.18

  	
  No Default

  	
   

  
	
  6.19

  	
  ERISA Compliance

  	
   

  
	
  6.20

  	
  Taxes

  	
   

  
	
  6.21

  	
  Regulated Entities

  	
   

  
	
  6.22

  	
  Use of Proceeds; Margin Regulations

  	
   

  
	
  6.23

  	
  Copyrights, Patents, Trademarks and Licenses, etc.

  	
   

  
	
  6.24

  	
  No Material Adverse Change

  	
   

  
	
  6.25

  	
  Full Disclosure

  	
   

  
	
  6.26

  	
  Material Agreements

  	
   

  
	
  6.27

  	
  Bank Accounts

  	
   

  
	
  6.28

  	
  Governmental Authorization

  	
   

  
	
  6.29

  	
  Senior Indebtedness

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 7 AFFIRMATIVE AND NEGATIVE
  COVENANTS

  	
   

  
	
   

  	
   

  	
   

  
	
  7.1

  	
  Taxes and Other Obligations

  	
   

  
	
  7.2

  	
  Legal Existence and Good Standing

  	
   

  
	
  7.3

  	
  Compliance with Law and Agreements; Maintenance of Licenses

  	
   

  
	
  7.4

  	
  Maintenance of Property; Inspection of Property.

  	
   

  
	
  7.5

  	
  Insurance.

  	
   

  
	
  7.6

  	
  Insurance and Condemnation Proceeds

  	
   

  

 

ii

 

	
  7.7

  	
  Environmental Laws.

  	
   

  
	
  7.8

  	
  Compliance with ERISA

  	
   

  
	
  7.9

  	
  Mergers, Consolidations or Sales

  	
   

  
	
  7.10

  	
  Distributions; Capital Change; Restricted
  Investments

  	
   

  
	
  7.11

  	
  Transactions Affecting Collateral or
  Obligations

  	
   

  
	
  7.12

  	
  Guaranties

  	
   

  
	
  7.13

  	
  Debt

  	
   

  
	
  7.14

  	
  Prepayment

  	
   

  
	
  7.15

  	
  Transactions with Affiliates

  	
   

  
	
  7.16

  	
  Investment Banking and Finder’s Fees

  	
   

  
	
  7.17

  	
  Business Conducted

  	
   

  
	
  7.18

  	
  Liens

  	
   

  
	
  7.19

  	
  Sale and Leaseback Transactions

  	
   

  
	
  7.20

  	
  New Subsidiaries

  	
   

  
	
  7.21

  	
  Fiscal Year

  	
   

  
	
  7.22

  	
  Capital Expenditures

  	
   

  
	
  7.23

  	
  [RESERVED].

  	
   

  
	
  7.24

  	
  Minimum EBITDA

  	
   

  
	
  7.25

  	
  Bank Accounts

  	
   

  
	
  7.26

  	
  Contribution of Management Fees

  	
   

  
	
  7.27

  	
  Use of Proceeds

  	
   

  
	
  7.28

  	
  Further Assurances; Mortgages.

  	
   

  
	
  7.29

  	
  Subordinated Debt; Trust Securities.

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 8 CONDITIONS OF LENDING

  	
   

  
	
   

  	
   

  	
   

  
	
  8.1

  	
  Conditions Precedent to Making of Loans on
  the Closing Date

  	
   

  
	
  8.2

  	
  Conditions Precedent to Each Loan

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 9 DEFAULT; REMEDIES

  	
   

  
	
   

  	
   

  	
   

  
	
  9.1

  	
  Events of Default

  	
   

  
	
  9.2

  	
  Remedies.

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 10 TERM AND TERMINATION

  	
   

  
	
   

  	
   

  	
   

  
	
  10.1

  	
  Term and Termination

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 11 AMENDMENTS; WAIVERS;
  PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS

  	
   

  
	
   

  	
   

  	
   

  
	
  11.1

  	
  Amendments and Waivers.

  	
   

  
	
  11.2

  	
  Assignments; Participations.

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 12 THE AGENT

  	
   

  
	
   

  	
   

  	
   

  
	
  12.1

  	
  Appointment and Authorization

  	
   

  
	
  12.2

  	
  Delegation of Duties

  	
   

  

 

iii

 

	
  12.3

  	
  Liability of the Agent

  	
   

  
	
  12.4

  	
  Reliance by the Agent

  	
   

  
	
  12.5

  	
  Notice of Default

  	
   

  
	
  12.6

  	
  Credit Decision

  	
   

  
	
  12.7

  	
  Indemnification

  	
   

  
	
  12.8

  	
  The Agent in Individual Capacity

  	
   

  
	
  12.9

  	
  Successor Agent

  	
   

  
	
  12.10

  	
  Withholding Tax.

  	
   

  
	
  12.11

  	
  Collateral Matters.

  	
   

  
	
  12.12

  	
  Restrictions on Actions by Lenders; Sharing
  of Payments.

  	
   

  
	
  12.13

  	
  Agency for Perfection

  	
   

  
	
  12.14

  	
  Payments by the Agent to Lenders

  	
   

  
	
  12.15

  	
  Settlement.

  	
   

  
	
  12.16

  	
  Letters of Credit; Intra-Lender Issues.

  	
   

  
	
  12.17

  	
  Concerning the Collateral and the Related
  Loan Documents

  	
   

  
	
  12.18

  	
  Field Audit and Examination Reports;
  Disclaimer by Lenders

  	
   

  
	
  12.19

  	
  Relation Among Lenders

  	
   

  
	
  12.20

  	
  Co-Agents

  	
   

  
	
  12.21

  	
  Collateral Priority

  	
   

  
	
  12.22

  	
  Foreclosure/Environmental Reports

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 13 MISCELLANEOUS

  	
   

  
	
   

  	
   

  	
   

  
	
  13.1

  	
  No Waivers; Cumulative Remedies

  	
   

  
	
  13.2

  	
  Severability

  	
   

  
	
  13.3

  	
  Governing Law; Choice of Forum; Service of Process.

  	
   

  
	
  13.4

  	
  WAIVER
  OF JURY TRIAL

  	
   

  
	
  13.5

  	
  Survival of Representations and Warranties

  	
   

  
	
  13.6

  	
  Other Security and Guaranties

  	
   

  
	
  13.7

  	
  Fees
  and Expenses

  	
   

  
	
  13.8

  	
  Notices

  	
   

  
	
  13.9

  	
  Waiver of Notices

  	
   

  
	
  13.10

  	
  Binding Effect

  	
   

  
	
  13.11

  	
  Indemnity of the Agent and the Lenders by the Borrower.

  	
   

  
	
  13.12

  	
  Limitation of Liability

  	
   

  
	
  13.13

  	
  Final Agreement

  	
   

  
	
  13.14

  	
  Counterparts

  	
   

  
	
  13.15

  	
  Captions

  	
   

  
	
  13.16

  	
  Right of Setoff

  	
   

  
	
  13.17

  	
  Confidentiality.

  	
   

  
	
  13.18

  	
  Conflicts with Other Loan Documents

  	
   

  
	
  13.19

  	
  Reinstatement

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 14 GUARANTY

  	
   

  
	
   

  	
   

  	
   

  
	
  14.1

  	
  Guaranty

  	
   

  

 

iv

 

ANNEXES, EXHIBITS AND SCHEDULES

 

	
  ANNEX A

  	
  –

  	
  DEFINED TERMS

  
	
   

  	
   

  	
   

  
	
  EXHIBIT A-1

  	
  –

  	
  FORM OF REVOLVING LOAN NOTE

  
	
   

  	
   

  	
   

  
	
  EXHIBIT A-2

  	
  –

  	
  FORM OF TERM LOAN NOTE

  
	
   

  	
   

  	
   

  
	
  EXHIBIT B

  	
  –

  	
  FORM OF BORROWING BASE CERTIFICATE

  
	
   

  	
   

  	
   

  
	
  EXHIBIT C

  	
  –

  	
  FINANCIAL STATEMENTS

  
	
   

  	
   

  	
   

  
	
  EXHIBIT D

  	
  –

  	
  FORM OF NOTICE OF BORROWING

  
	
   

  	
   

  	
   

  
	
  EXHIBIT E

  	
  –

  	
  FORM OF NOTICE OF CONTINUATION/CONVERSION

  
	
   

  	
   

  	
   

  
	
  EXHIBIT F

  	
  –

  	
  FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT

  
	
   

  	
   

  	
   

  
	
  SCHEDULE 1.2 – LENDERS’ COMMITMENTS (ANNEX A – DEFINED
  TERMS)

  
	
   

  	
   

  	
   

  
	
  SCHEDULE 6.9 – DEBT

  
	
   

  	
   

  	
   

  
	
  SCHEDULE 6.11 (ADDENDUM) – REAL ESTATE(MORTGAGES); LEASES

  
	
   

  	
   

  	
   

  
	
  SCHEDULE 6.14  –
  LITIGATION

  
	
   

  	
   

  	
   

  
	
  SCHEDULE 6.27 – BANK ACCOUNTS

  
	
   

  	
   

  	
   

  
	
  SCHEDULE 7.12 – GUARANTIES

  

 

v

 

SECOND
AMENDED AND RESTATED CREDIT AGREEMENT

 

This SECOND AMENDED AND
RESTATED CREDIT AGREEMENT, dated as of July 1, 2005 (this “Agreement”),
among the financial institutions from time to time parties hereto (such
financial institutions, together with their respective successors and assigns,
are referred to hereinafter each individually as a “Lender” and
collectively as the “Lenders”); BANK OF AMERICA, N.A., with an office at
55 South Lake Avenue, Suite 900, Pasadena, California 91101, as the
administrative agent for the Lenders (in its capacity as administrative agent,
the “Agent”); GENERAL ELECTRIC CAPITAL CORPORATION, as the syndication
agent for the Lenders (the “Syndication Agent”); FLEETWOOD ENTERPRISES, INC., a
Delaware corporation (“Fleetwood”), as a Guarantor; FLEETWOOD HOLDINGS
INC., a Delaware corporation (“Holdings”); FLEETWOOD RETAIL CORP., a
Delaware corporation (“Retail”); and those Subsidiaries of Holdings and
Retail set forth on the signature pages hereto or which become parties
hereto hereafter in accordance with the requirements of this Agreement (each of
Holdings, Retail and each such Subsidiary individually, a “Borrower”
and, collectively, the “Borrowers”). 
Capitalized terms used in this Agreement and not otherwise defined
herein shall have the meanings ascribed thereto in Annex A, which is
attached hereto and incorporated herein; the rules of construction
contained therein shall govern the interpretation of this Agreement, and all
Annexes, Exhibits and Schedules attached hereto are incorporated herein by
reference.

 

W I  T  N  E  S
S  E  T  H:

 

WHEREAS, the Existing Credit
Agreement amended and restated the Original Credit Agreement in its entirety on
May 14, 2004.

 

WHEREAS, pursuant to the
Existing Credit Agreement the Existing Lenders have extended credit in the form
of, among other things, Existing Loans.

 

WHEREAS, the Borrowers have
requested the Lenders continue to make available to the Borrowers a revolving
line of credit for loans and letters of credit in an aggregate amount not to
exceed $215,000,000 and to make a term loan to FMC in the aggregate principal
amount of $22,000,000, and which extension of credit the Borrowers will use for
the purposes permitted hereunder;

 

WHEREAS, Holdings, Retail and
their respective Subsidiaries are wholly-owned Subsidiaries of Fleetwood and
all Borrowers are engaged in an inter-related business enterprise with an
identity of interests, and accordingly the financing provided hereunder will
directly and indirectly benefit each of the Borrowers;

 

WHEREAS, neither Holdings or
its Subsidiaries nor Retail or its Subsidiaries would be able to obtain
sufficient working capital financing for their respective businesses unless the
individual FMC Borrowers and FRC Borrowers were jointly and severally liable
for the obligations of FMC or FRC, as applicable, and unless Fleetwood
guarantees the obligations of all Borrowers;

 

WHEREAS, FMC manufactures
goods, a portion of which is sold to FRC, and therefore the financing extended
hereunder benefits both FMC and FRC;

 

 

WHEREAS, the Loan Parties
desire that (a) Lenders continue the Existing Loans and Existing
Commitments as Revolving Loans and Revolving Credit Commitments hereunder and (b) Lenders
agree to amend and restate the Original Credit Agreement (as the same has been
previously amended and restated by the Existing Credit Agreement) in its
entirety for the purpose of making the amendments reflected herein.

 

WHEREAS, Lenders have agreed to
amend and restate the Original Credit Agreement (as the same has been
previously amended and restated by the Existing Credit Agreement) in its
entirety for the purpose of making the amendments reflected herein, which
amendment and restatement shall become effective on the Closing Date upon satisfaction
of the conditions precedent set forth herein.

 

WHEREAS, the Term Lenders have
agreed to make a term loan to FMC upon the terms and conditions set forth in
this Agreement.

 

WHEREAS, Borrowers desire to
continue to guarantee and secure all of the Obligations hereunder and under the
other Loan Documents to the extent so guaranteed and secured under the Existing
Credit Agreement and the Loan Documents, as in effect prior to the date hereof,
and as further provided herein.

 

WHEREAS, the Guarantors have
agreed to continue to guarantee and secure the Obligations hereunder and under
the other Loan Documents to the extent so guaranteed and secured under the
Existing Credit Agreement and the Loan Documents, as in effect prior to the
date hereof, and as further provided herein.

 

NOW, THEREFORE, in
consideration of the mutual conditions and agreements set forth in this
Agreement, and for good and valuable consideration, the receipt of which is
hereby acknowledged, the Lenders, the Agent, Fleetwood and the Borrowers hereby
agree as follows:

 

ARTICLE 1

LOANS AND LETTERS OF CREDIT

 

1.1                                 Total Facility.  Subject to all of the terms and conditions of
this Agreement, the Lenders agree to make available a total credit facility of
up to $212,000,000 (the “Total Facility”) to the Borrowers from time to
time during the term of this Agreement; provided that the Total Facility
shall be increased to a total amount of up to $237,000,000 for the period from
and including December 1 through and including April 30 of each
calendar year.  The Total Facility shall
be composed of a revolving line of credit consisting of Revolving Loans and
Letters of Credit and the Term Loan described herein.  On the Closing Date, the Lenders (directly or
through funding and settlement by the Agent) shall purchase and assume the
Revolving Credit Commitments (as defined in the Existing Credit Agreement) and
the Existing Loans from the Existing Lenders at par, free and clear of adverse
claims, participations or other encumbrances, which Existing Commitments and
Existing Loans and the Existing Credit Agreement shall be (immediately upon
such purchase and assumption by the Lenders) amended and restated in their
entirety as more particularly described herein, and neither the Loan Parties
nor the Lenders shall be subject to or bound by any of the terms or provisions
of the Existing

 

2

 

Credit Agreement (other than such terms or provisions
that are to survive termination of the Existing Credit Agreement or the payment
of the Obligations as provided by the express terms of the Existing Credit
Agreement) and shall only be subject to or bound by the terms and provisions of
this Agreement in respect of the Revolving Credit Commitments, Loans, other
Obligations and the transactions contemplated hereby, as set forth herein.  The parties acknowledge and agree that this
Agreement and the other Loan Documents do not constitute a novation, payment
and reborrowing or termination of the obligations under the Existing Credit Agreement
and that all such obligations are in all respects continued and outstanding as
obligations under this Agreement and the Notes with only the terms being
modified from and after the Closing Date as provided in this Agreement, the
Notes and the other Loan Documents.

 

1.2                                 Revolving Loans.

 

(a)                                  (i)                                     Amounts.  Subject to the satisfaction of the conditions
precedent set forth in Article 8, and except for Non-Ratable Loans
and Agent Advances, each Revolving Credit Lender severally, but not jointly,
agrees, upon a Borrower’s request from time to time on any Business Day during
the period from the Closing Date to the Termination Date, to make revolving
loans (the “Revolving Loans”) to the Borrowers in aggregate amounts
not to exceed such Lender’s Pro Rata Share of the Aggregate Availability. The
Revolving Credit Lenders, however, in their unanimous discretion, may elect to
make Revolving Loans or issue or arrange to have issued Letters of Credit in
excess of the Aggregate Borrowing Bases or the Borrowing Base of FMC or FRC, as
applicable, on one or more occasions, but if they do so, neither the Agent nor
the Revolving Credit Lenders shall be deemed thereby to have changed the limits
of the Borrowing Base of FMC or FRC, or the Aggregate Borrowing Bases or to be obligated
to exceed such limits on any other occasion.

 

(ii)                                  At the request of any Revolving
Credit Lender, each of the FMC Borrowers and each of the FRC Borrowers shall
execute and deliver to such Lender a single note to evidence the Revolving
Loans of that Lender.  Each note shall be
in the principal amount of the Revolving Credit Lender’s Pro Rata Share of the
Revolving Credit Commitments, dated the date hereof and substantially in the
form of Exhibit A-1 (each such note, together with any new note
issued pursuant to Section 11.2 upon the assignment of any portion
of any Revolving Credit Lender’s Revolving Loans and Revolving Credit
Commitment a “Revolving Loan Note” and, collectively, the “Revolving
Loan Notes”).  Each Revolving Loan
Note shall represent the obligation of each of FMC and FRC to pay the amount of
such Revolving Credit Lender’s Pro Rata Share of the Revolving Credit
Commitments, or, if less, such Revolving Credit Lender’s Pro Rata Share of the
aggregate unpaid principal amount of all Revolving Loans to FMC or FRC, as
applicable, together with interest thereon as prescribed in Section 1.2.  The entire unpaid balance of the Revolving
Loans and all other non-contingent Obligations shall be immediately due and
payable in full in immediately available funds on the Termination Date.

 

3

 

(b)                                 Procedure for Borrowing.

 

(i)                                     Each Borrowing shall be made upon a
Borrower’s irrevocable written notice delivered to the Agent in the form of a
notice of borrowing (“Notice of Borrowing”), which must be received by
the Agent prior to (i) 10:00 a.m. (Los Angeles time) three Business
Days prior to the requested Funding Date, in the case of LIBOR Rate Loans and (ii) 10:00 a.m.
(Los Angeles time) on the requested Funding Date, in the case of Base Rate
Loans, specifying:

 

(1)                                  the amount of the Borrowing, which
in the case of a LIBOR Rate Loan must equal or exceed $1,000,000 (and
increments of $500,000 in excess of such amount);

 

(2)                                  the requested Funding Date, which
must be a Business Day;

 

(3)                                  whether the Revolving Loans
requested are to be Base Rate Revolving Loans or LIBOR Rate Loans (and if not
specified, it shall be deemed a request for a Base Rate Revolving Loan); and

 

(4)                                  the duration of the Interest Period
for LIBOR Rate Loans (and if not specified, it shall be deemed a request for an
Interest Period of one month);

 

provided,
however, that with respect to the Borrowings to be made on the Initial
Funding Date, such Borrowings will consist of Base Rate Revolving Loans only.

 

(ii)                                  In lieu of delivering a Notice of
Borrowing, a Borrower may give the Agent telephonic notice of such request for
advances to its Designated Account on or before the deadline set forth
above.  The Agent at all times shall be
entitled to rely on such telephonic notice in making such Revolving Loans,
regardless of whether any written confirmation is received.

 

(iii)                               The Borrowers shall have no right to
request a LIBOR Rate Loan while a Default or Event of Default has occurred and
is continuing.

 

(c)                                  Reliance upon Authority. 
Prior to the Closing Date, the Borrowers shall deliver to the Agent a
notice setting forth the accounts of each of FMC and FRC (each, a “Designated
Account”) to which the Agent is authorized to transfer the proceeds of the
Revolving Loans requested hereunder by each of FMC and FRC.  Any of FMC and FRC may designate a
replacement account from time to time by written notice.  All such Designated Accounts must be
reasonably satisfactory to the Agent. 
The Agent is entitled to rely conclusively on any person’s request for
Revolving Loans on behalf of any Borrower, so long as the proceeds thereof are
to be transferred to the applicable Designated Account.  The Agent has no duty to verify the identity
of any individual representing himself or herself as a person authorized by any
Borrower to make such requests on its behalf.

 

4

 

(d)                                 No Liability. 
The Agent shall not incur any liability to the Borrowers as a result of
acting upon any notice referred to in Sections 1.2(b) and (c),
which the Agent believes in good faith to have been given by an officer or
other person duly authorized by the applicable Borrower to request Revolving
Loans on its behalf.  The crediting of
Revolving Loans to the applicable Designated Account conclusively establishes
the obligation of the applicable Borrowers to repay such Revolving Loans as
provided herein.

 

(e)                                  Notice Irrevocable. 
Any Notice of Borrowing (or telephonic notice in lieu thereof) made
pursuant to Section 1.2(b) shall be irrevocable.  A Borrower shall be bound to borrow the funds
requested therein in accordance therewith.

 

(f)                                    The Agent’s Election. 
Promptly after receipt of a Notice of Borrowing (or telephonic notice in
lieu thereof), the Agent shall elect to have the terms of Section 1.2(g) or
the terms of Section 1.2(h) apply to such requested
Borrowing.  If the Bank declines in its
sole discretion to make a Non-Ratable Loan pursuant to Section 1.2(h),
the terms of Section 1.2(g) shall apply to the requested
Borrowing.

 

(g)                                 Making of Revolving Loans. 
If the Agent elects to have the terms of this Section 1.2(g) apply
to a requested Borrowing, then promptly after receipt of a Notice of Borrowing
or telephonic notice in lieu thereof, the Agent shall notify the Revolving
Credit Lenders by telecopy, telephone or e-mail of the requested
Borrowing.  Each Revolving Credit Lender
shall transfer its Pro Rata Share of the requested Borrowing to the Agent in
immediately available funds, to the account from time to time designated by the
Agent, not later than 12:00 noon (Los Angeles time) on the applicable Funding
Date.  After the Agent’s receipt of all
proceeds of such Revolving Loans, the Agent shall make the proceeds of such
Revolving Loans available to the applicable Borrower on the applicable Funding
Date by transferring same day funds to the Designated Account of the applicable
Borrower; provided, however, that the amount of Revolving Loans
so made to FMC or FRC on any date shall not exceed its Availability on such
date, unless all of the Revolving Credit Lenders otherwise agree.

 

(h)                                 Making of Non-Ratable Loans.

 

(i)                                     If the Agent elects, with the
consent of the Bank, to have the terms of this Section 1.2(h) apply
to a requested Borrowing, the Bank shall make a Revolving Loan in the amount of
that Borrowing available to the applicable Borrower on the applicable Funding
Date by transferring same day funds to such Borrower’s Designated Account.  Each Revolving Loan made solely by the Bank
pursuant to this Section is herein referred to as a “Non-Ratable Loan”,
and such Revolving Loans are collectively referred to as the “Non-Ratable
Loans.”  Each Non-Ratable Loan shall
be subject to all the terms and conditions applicable to other Revolving Loans
except that all payments thereon shall be payable to the Bank solely for its
own account.  The aggregate amount of
Non-

 

5

 

Ratable
Loans outstanding at any time shall not exceed $10,000,000.  The Agent shall not request the Bank to make
any Non-Ratable Loan if (1) the Agent has received written notice from any
Revolving Credit Lender that one or more of the applicable conditions precedent
set forth in Article 8 will not be satisfied on the requested
Funding Date for the applicable Borrowing, and such conditions have not been
waived in accordance with this Agreement or (2) the requested Borrowing by
FMC or FRC would exceed its Availability on that Funding Date.

 

(ii)                                  The Non-Ratable Loans shall be
secured by the Agent’s Liens in and to the Collateral and shall constitute Base
Rate Revolving Loans and Obligations hereunder.

 

(i)                                     The Agent Advances.

 

(i)                                     Subject to the limitations set forth
below, the Agent is authorized by the Borrowers and the Revolving Credit
Lenders, from time to time in the Agent’s sole discretion, (A) after the
occurrence of a Default or an Event of Default, or (B) at any time that
any of the other conditions precedent set forth in Article 8 have
not been satisfied, to make Base Rate Revolving Loans to the Borrowers on
behalf of the Revolving Credit Lenders in an aggregate amount outstanding at
any time not to exceed $7,500,000 which the Agent, in its reasonable business
judgment, deems necessary or desirable (1) to preserve or protect the
Collateral, or any portion thereof, (2) to enhance the likelihood of, or
maximize the amount of, repayment of the Loans and other Obligations, or (3) to
pay any other amount chargeable to the Borrowers pursuant to the terms of this
Agreement, including costs, fees and expenses as described in Section 13.7
(any of such advances are herein referred to as “Agent Advances”); provided,
that (x) in no event shall the Aggregate Revolver Outstandings at any time
exceed the aggregate Revolving Credit Commitments and (y) the Majority Lenders
may at any time revoke the Agent’s authorization to make Agent Advances.  Any such revocation must be in writing and
shall become effective prospectively upon the Agent’s receipt thereof.

 

(ii)                                  Agent Advances shall be secured by
the Agent’s Liens in and to the Collateral and shall constitute Base Rate
Revolving Loans and Obligations hereunder.

 

1.3                                 Term Loan.

 

(a)                                  Amount of Term Loan. 
Each Term Lender severally agrees to make a term loan (any such term
loan being referred to as a “Lender Term Loan” and such term loans being
referred to collectively as the “Term Loan”) to FMC on the Closing Date,
upon the satisfaction of the conditions precedent set forth in Article 8,
in an amount equal to such Term Lender’s Pro Rata Share of $22,000,000.  The Term Loan shall initially be a Base Rate
Loan.

 

6

 

(b)                                 Making of Term Loan. 
Each Lender Term Loan shall be made available by each Term Lender to the
Agent in same day funds, to the Agent’s designated account, not later than
12:00 noon (Los Angeles time) on the Closing Date.  After the Agent’s receipt of the proceeds of
such Term Loan, upon satisfaction of the conditions precedent set forth in Article 8,
the Agent shall make the proceeds of such Term Loan available to FMC on such
date by transferring same day funds equal to the proceeds of such Term Loan
received by the Agent to FMC’s Designated Account or as FMC shall otherwise
instruct in writing.

 

(c)                                  Term Loan Notes. 
At the request of any Term Lender, FMC shall execute and deliver to
Agent on behalf of each Term Lender, on the Closing Date, a promissory note,
substantially in the form of Exhibit A-2 attached hereto and made a
part hereof (such promissory notes, together with any new notes issued pursuant
to Section 11.2 upon the assignment of any portion of any Lender
Term Loan, being hereinafter referred to collectively as the “Term Loan
Notes” and each of such promissory notes being hereinafter referred to
individually as a “Term Loan Note”). 
The Term Loan Notes, if any, shall evidence the Lender Term Loan of each
Term Lender in an original principal amount equal to that Term Lender’s Pro
Rata Share of $22,000,000 and with other appropriate insertions.  Each Term Loan Note, if any, shall be dated
the Closing Date and shall mature on the Stated Termination Date.  Each payment shall be payable to the Agent
for the account of the applicable Term Lender. 
The Term Loan shall be payable in full on the earlier of (x) the date on
which this Agreement is terminated for any reason and (y) the date the
Revolving Credit Commitments are terminated or have expired.  Payment or prepayment of the Term Loan may
not be reborrowed.

 

1.4                                 Letters of Credit.

 

(a)                                  Agreement to Issue or Cause to Issue. 
Subject to the terms and conditions of this Agreement, the Agent agrees (i) to
cause the Letter of Credit Issuer to issue for the account of a Borrower one or
more commercial/documentary and standby letters of credit (“Letter of Credit”)
and/or (ii) to provide credit support or other enhancement to a Letter of
Credit Issuer acceptable to the Agent, which issues a Letter of Credit for the
account of a Borrower (any such credit support or enhancement being herein
referred to as a “Credit Support”) from time to time during the term of
this Agreement.

 

(b)                                 Amounts; Outside Expiration Date. 
The Agent shall not have any obligation to issue or cause to be issued
any Letter of Credit or to provide Credit Support for any Letter of Credit at
any time if: (i) the maximum face amount of the requested Letter of Credit
is greater than the Unused Letter of Credit Subfacility at such time; (ii) the
maximum undrawn amount of the requested Letter of Credit and all commissions,
fees, and charges due from the Borrowers in connection with the opening thereof
would exceed the Aggregate Availability at such time; or, as to any Letter of
Credit issued for the account of FMC, would exceed the Availability of FMC at
that time or, as to any Letter of Credit issued

 

7

 

for
the account of FRC, would exceed the Availability of FRC at that time, or (iii) such
Letter of Credit has an expiration date less than 30 days prior to the Stated
Termination Date or more than 12 months from the date of issuance for standby
letters of credit and 180 days for documentary letters of credit.  With respect to any Letter of Credit which
contains any “evergreen” or automatic renewal provision, each Lender shall be
deemed to have consented to any such extension or renewal unless any Revolving
Credit Lender shall have provided to the Agent written notice that it declines
to consent to any such extension or renewal at least thirty (30) days prior to
the date on which the Letter of Credit Issuer is entitled to decline to extend
or renew the Letter of Credit.  If all of
the requirements of this Section 1.4 are met and no Default or
Event of Default has occurred and is continuing, no Lender shall decline to
consent to any such extension or renewal.

 

(c)                                  Other Conditions. 
In addition to conditions precedent contained in Article 8,
the obligation of the Agent to cause to be issued any Letter of Credit or to
provide Credit Support for any Letter of Credit is subject to the following
conditions precedent having been satisfied in a manner reasonably satisfactory
to the Agent:

 

(i)                                     The applicable Borrower shall have
delivered to the Letter of Credit Issuer, at such times and in such manner as
such Letter of Credit Issuer may prescribe, an application in form and
substance satisfactory to such Letter of Credit Issuer and reasonably
satisfactory to the Agent for the issuance of the Letter of Credit and such
other documents as may be required pursuant to the terms thereof, and the form,
terms and purpose of the proposed Letter of Credit shall be reasonably satisfactory
to the Agent and the Letter of Credit Issuer; and

 

(ii)                                  As of the date of issuance, no order
of any court, arbitrator or Governmental Authority shall purport by its terms
to enjoin or restrain money center banks generally from issuing letters of
credit of the type and in the amount of the proposed Letter of Credit, and no
law, rule or regulation applicable to money center banks generally and no
request or directive (whether or not having the force of law) from any
Governmental Authority with jurisdiction over money center banks generally
shall prohibit, or request that the proposed Letter of Credit Issuer refrain
from, the issuance of letters of credit generally or the issuance of such
Letters of Credit.

 

(d)                                 Issuance of Letters of Credit.

 

(i)                                     Request for Issuance. 
A Borrower must notify the Agent of a requested Letter of Credit at
least three (3) Business Days prior to the proposed issuance date.  Such notice shall be irrevocable and must
specify the original face amount of the Letter of Credit requested, the
Business Day of issuance of such requested Letter of Credit, whether such
Letter of Credit may be drawn in a single or in partial draws, the Business Day
on which the requested Letter of Credit is to expire, the purpose for which
such Letter of Credit is to be issued, and the

 

8

 

beneficiary
of the requested Letter of Credit.  The
Borrower shall attach to such notice the proposed form of the Letter of Credit.

 

(ii)                                  Responsibilities of the Agent; Issuance. 
As of the Business Day immediately preceding the requested issuance date
of the Letter of Credit, the Agent shall determine the amount of the applicable
Unused Letter of Credit Subfacility, the Availability of FMC or FRC, as
applicable and the Aggregate Availability. 
If (i) the face amount of the requested Letter of Credit is less
than the Unused Letter of Credit Subfacility and (ii) the amount of such
requested Letter of Credit and all commissions, fees, and charges due from the
Borrower in connection with the opening thereof would not exceed the
Availability of FMC or FRC, as applicable, the Agent shall cause the Letter of
Credit Issuer to issue the requested Letter of Credit on the requested issuance
date so long as the other conditions hereof are met.

 

(iii)                               No Extensions or Amendment. 
The Agent shall not be obligated to cause the Letter of Credit Issuer to
extend or amend any Letter of Credit issued pursuant hereto unless the
requirements of this Section 1.4 are met as though a new Letter of
Credit were being requested and issued.

 

(e)                                  Payments Pursuant to Letters of
Credit.  Each of FMC or FRC, as applicable, agrees to
reimburse immediately the Letter of Credit Issuer for any draw under any Letter
of Credit issued for its benefit and the Agent for the account of the Revolving
Credit Lenders upon any payment pursuant to any Credit Support, and to pay the
Letter of Credit Issuer the amount of all other charges and fees payable to the
Letter of Credit Issuer in connection with any Letter of Credit immediately
when due, irrespective of any claim, setoff, defense or other right which any
Borrower may have at any time against the Letter of Credit Issuer or any other
Person.  Each drawing under any Letter of
Credit shall constitute a request by the applicable Borrower to the Agent for a
Borrowing of a Base Rate Revolving Loan in the amount of such drawing.  The Funding Date with respect to such
borrowing shall be the date of such drawing.

 

(f)                                    Indemnification; Exoneration; Power
of Attorney.

 

(i)                                     Indemnification. 
In addition to amounts payable as elsewhere provided in this Section 1.4,
each of FMC, FRC and Fleetwood agrees to protect, indemnify, pay and save the
Lenders and the Agent harmless from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and expenses (including reasonable
attorneys’ fees) which any Lender or the Agent (other than a Lender in its
capacity as Letter of Credit Issuer) may incur or be subject to as a
consequence, direct or indirect, of the issuance of any Letter of Credit or the
provision of any Credit Support or enhancement in connection therewith.  The Borrowers’ obligations under this Section shall
survive payment of all other Obligations.

 

9

 

(ii)                                  Assumption of Risk by the Borrowers. 
As among the Borrowers, the Lenders, and the Agent but subject to subsection (iv) below,
the Borrowers assume all risks of the acts and omissions of, or misuse of any
of the Letters of Credit by, the respective beneficiaries of such Letters of
Credit.  In furtherance and not in
limitation of the foregoing, subject to subsection (iv) below,
the Lenders and the Agent shall not be responsible for:  (A) the form, validity, sufficiency,
accuracy, genuineness or legal effect of any document submitted by any Person
in connection with the application for and issuance of and presentation of
drafts with respect to any of the Letters of Credit, even if it should prove to
be in any or all respects invalid, insufficient, inaccurate, fraudulent or
forged; (B) the validity or sufficiency of any instrument transferring or
assigning or purporting to transfer or assign any Letter of Credit or the
rights or benefits thereunder or proceeds thereof, in whole or in part, which
may prove to be invalid or ineffective for any reason; (C) the failure of
the beneficiary of any Letter of Credit to comply duly with conditions required
in order to draw upon such Letter of Credit; (D) errors, omissions,
interruptions, or delays in transmission or delivery of any messages, by mail,
cable, telegraph, telex or otherwise, whether or not they be in cipher; (E) errors
in interpretation of technical terms; (F) any loss or delay in the
transmission or otherwise of any document required in order to make a drawing under
any Letter of Credit or of the proceeds thereof; (G) the misapplication by
the beneficiary of any Letter of Credit of the proceeds of any drawing under
such Letter of Credit; (H) any consequences arising from causes beyond the
control of the Lenders or the Agent, including any act or omission, whether
rightful or wrongful, of any present or future de  jure or de
facto Governmental Authority; or (I) the Letter of Credit Issuer’s honor
of a draw for which the draw or any certificate fails to comply in any respect
with the terms of the Letter of Credit. 
None of the foregoing shall affect, impair or prevent the vesting of any
rights or powers of the Agent or any Lender under this Section 1.4(f).

 

(iii)                               Exoneration. 
Without limiting the foregoing, no action or omission whatsoever by the
Agent or any Lender with respect to any Letter of Credit issued hereunder
(excluding any Lender in its capacity as a Letter of Credit Issuer) shall
result in any liability of the Agent and/or Lender to any Borrower, or relieve
any Borrower of any of its obligations hereunder to any such Person.

 

(iv)                              Rights Against Letter of Credit
Issuer.  Nothing contained in this Agreement is
intended to limit a Borrower’s rights, if any, with respect to the Letter of
Credit Issuer which arise as a result of the letter of credit application and
related documents executed by and between such Borrower and the Letter of
Credit.

 

(v)                                 Account Party. 
Each Borrower hereby authorizes and directs any Letter of Credit Issuer
to name such Borrower as the “Account Party” therein and to deliver to the
Agent all instruments, documents and other writings and property received by
the Letter of Credit Issuer pursuant to the Letter of Credit, and to accept and
rely upon the Agent’s instructions and agreements with

 

10

 

respect
to all matters arising in connection with the Letter of Credit or the
application therefor.

 

(g)                                 Supporting Letter of Credit; Cash
Collateral.  If, notwithstanding the provisions of Section 1.4(b) and
Section 10.1, any Letter of Credit or Credit Support is outstanding
upon the termination of this Agreement, then upon such termination FMC or FRC
as applicable, shall deposit with the Agent, for the ratable benefit of the
Agent and the Revolving Credit Lenders, with respect to each Letter of Credit
or Credit Support then outstanding, cash (“Cash Collateral”) or a
standby letter of credit (a “Supporting Letter of Credit”) in form and
substance satisfactory to the Agent, issued by an issuer satisfactory to the
Agent, in each case in an amount equal to the greatest amount for which such
Letter of Credit or such Credit Support may be drawn plus any fees and expenses
associated with such Letter of Credit or such Credit Support, under which
Supporting Letter of Credit the Agent is entitled to draw amounts necessary to
reimburse the Agent and the Revolving Credit Lenders for payments to be made by
the Agent and the Revolving Credit Lenders under such Letter of Credit or
Credit Support and any fees and expenses associated with such Letter of Credit
or Credit Support.  Such Supporting
Letter of Credit and/or Cash Collateral shall be held by the Agent, for the
ratable benefit of the Agent and the Revolving Credit Lenders, as security for,
and to provide for the payment of, the aggregate undrawn amount of such Letters
of Credit or such Credit Support remaining outstanding.

 

1.5                                 Bank Products.  A Borrower may request and the Agent may, in
its sole and absolute discretion, arrange for a Borrower to obtain from the
Bank or the Bank’s Affiliates Bank Products although no Borrower is required to
do so.  If Bank Products so requested by
a Borrower are provided by an Affiliate of the Bank, each Borrower agrees to
indemnify and hold the Agent, the Bank and the Lenders harmless from any and
all costs and obligations now or hereafter incurred by the Agent, the Bank or
any of the Lenders which arise from any indemnity given by the Agent to its
Affiliates related to such Bank Products; provided, however,
nothing contained herein is intended to limit the Borrower’s rights, with
respect to the Bank or its Affiliates, if any, which arise as a result of the
execution of documents by and between such Borrower and the Bank which relate
to Bank Products.  The agreement
contained in this Section shall survive termination of this
Agreement.  Each Borrower acknowledges
and agrees that the obtaining of Bank Products from the Bank or the Bank’s
Affiliates (a) is in the sole and absolute discretion of the Bank or the
Bank’s Affiliates, and (b) is subject to all rules and regulations of
the Bank or the Bank’s Affiliates.

 

1.6                                 Joint and Several Obligations;
Contribution Rights.

 

(a)                                  All Obligations of FMC shall be the
joint and several Obligations of the FMC Borrowers and all Obligations of FRC
shall be the joint and several Obligations of the FRC Borrowers, regardless of
which Borrower actually receives any Loans or other extensions of credit under
the Loan Documents, the amount received by any Borrower or the manner in which
any Borrower, the Agent or any Lender accounts for such Loans and other
extensions of credit.

 

11

 

(b)                                 To the extent that any Borrower is a
guarantor or a surety as a result of the joint and several obligations
hereunder, such Obligations and the Liens securing such Obligations shall not
be released or impaired by any action or inaction on the part of the Agent or
any Lender which would otherwise constitute the release of a surety.  Without limiting the generality of the foregoing,
the liability of any Borrower under this Agreement shall not be affected or
impaired in any manner by, (i) the failure of any Person to become or
remain a Borrower or guarantor or the failure of the Agent or any Lender to
preserve, protect or enforce any right to require any Person to become or
remain a Borrower or guarantor, (ii) any taking, failure to take, failure
to create, perfect or ensure the priority of, or exchange, release or
termination or lapse of any Lien securing any Obligations, or any taking,
failure to take, release or amendment or waiver of or consent to departure from
any other guaranty of, any of the Obligations, (iii) any manner or order
of sale or other enforcement of any Lien securing any of the Obligations or any
manner or order of application of the proceeds of any such Lien to the payment
of the Obligations or any failure to enforce any Lien or to apply any proceeds
thereof, (iv) any furnishing, exchange, substitution or release of any
collateral securing the Obligations, or any failure to perfect any Lien in any
of the collateral securing the Obligations, or (v) any other circumstance
which might otherwise constitute a defense (except the final payment in full)
available to, or a discharge of, a surety or guarantor.

 

(c)                                  To the extent that any Borrower is a
guarantor or a surety as a result of the joint and several obligations
hereunder, the liability of each such Borrower under this Agreement shall
remain valid and enforceable and shall not be subject to any reduction, limitation,
impairment, discharge or termination for any reason (other than final payment
in full of the Obligations), including the occurrence of any of the following,
whether or not such Borrower shall have had notice or knowledge of any of them:  (i) any failure or omission to assert or
enforce or agreement or election not to assert or enforce, or the stay or
enjoining, by order of court, by operation of law or otherwise, of the exercise
or enforcement of, any claim or demand or any right, power or remedy (whether
arising under the Loan Documents, at law, in equity or otherwise) with respect
to the Obligations or any agreement relating thereto, or with respect to any
other guaranty of or security for the payment of the Obligations; (ii) any
rescission, waiver, amendment or modification of, or any consent to departure
from, any of the terms or provisions (including provisions relating to Events
of Default) of the Credit Agreement, any of the other Loan Documents or any
agreement or instrument executed pursuant thereto, or of any other guaranty or
security for the Obligations, in each case whether or not in accordance with
the terms of this Agreement, such Loan Document or any agreement relating to
such other guaranty or security; (iii) the Obligations, or any agreement
relating thereto, at any time being found to be illegal, invalid or
unenforceable in any respect; (iv) the application of payments received
from any source to the payment of any liability other than the Obligations,
even though the Lenders might have elected to apply such payment to any part or
all of the Obligations; (v) any consent by any Lender or the Agent to the
change, reorganization or termination of the corporate structure or existence

 

12

 

of
any other Borrower, or any other Person and to any corresponding restructuring
of the Obligations; (vi) any failure to perfect or continue perfection of
a security interest in any collateral which secures any of the Obligations; (vii) any
defenses (except the defense of final payment in full), set-offs or
counterclaims which any Borrower, any guarantor or any other Person may allege
or assert against the Agent or any Lender in respect of the Obligations,
including, for example, failure of consideration, breach of warranty, statute
of frauds, statute of limitations, accord and satisfaction and usury; and (viii) any
other act or thing or omission, or delay to do any other act or thing, which
may or might in any manner or to any extent vary the risk of any Borrower as an
obligor in respect of the Obligations.

 

(d)                                 To
the extent that any Borrower is a guarantor or a surety as a result of the
joint and several obligations hereunder, to the maximum extent permitted by
law, each such Borrower hereby waives and agrees not to assert or take
advantage of:  (i) any defense now
existing or hereafter arising based upon any legal disability or other defense
of any other Borrower or any guarantor or other Person, or by reason of the
cessation or limitation of the liability of any other Borrower or any guarantor
or other Person from any cause other than full payment and performance of all
obligations due under this Agreement or any of the other Loan Documents; (ii) any
defense based upon any lack of authority of the officers, directors, partners
or agents acting or purporting to act on behalf of any other Borrower or any
guarantor or other Person, or any defect in the formation of any other Borrower
or any guarantor or other Person; (iii) the unenforceability or invalidity
of any security or guaranty or the lack of perfection or continuing perfection,
or failure of priority of any security for the Obligations; (iv) any and
all rights and defenses arising out of an election of remedies by the Agent or
any Lender, even though that election
of remedies, such as a nonjudicial foreclosure with respect to security for an
Obligation, has destroyed such Borrower’s rights of subrogation and
reimbursement against the principal by the operation of Section 580d of
the California Code of Civil Procedure or otherwise; (v) any defense based
upon any failure to disclose to such Borrower any information concerning the
financial condition of any other Borrower or any guarantor or other Person or
any other circumstances bearing on the ability of any other Borrower or any
guarantor or other Person to pay and perform all obligations due under this
Agreement or any of the other Loan Documents; (vi) any failure by the
Agent or any Lender to give notice to any Borrower or any guarantor or other
Person of the sale or other disposition of security, and any defect in notice
given by the Agent or any Lender in connection with any such sale or
disposition of security; (vii) any failure of the Agent or any Lender to
comply with applicable laws in connection with the sale or disposition of
security, including, without limitation, any failure by the Lender to conduct a
commercially reasonable sale or other disposition of such security; (viii) any
defense based upon any statute or rule of law which provides that the obligation
of a surety must be neither larger in amount nor in any other respects more
burdensome than that of a principal, or that reduces a surety’s or guarantor’s
obligations in proportion to the principal’s obligation; (ix) any use of
cash collateral under Section 363 of the Bankruptcy Code; (x) any
defense based upon an election by the Agent or any

 

13

 

Lender,
in any proceeding instituted under the Bankruptcy Code, of the application of Section 1111(b)(2) of
the Bankruptcy Code or any successor statute; (xi) any defense based upon
any borrowing or any grant of a security interest under Section 364 of the
Bankruptcy Code; (xii) any right of subrogation, any right to enforce any
remedy which the Agent or any Lender may have against any other Borrower or any
guarantor or other Person and any right to participate in, or benefit from, any
security now or hereafter held by the Agent or any Lender for the Obligations;
(xiii) presentment, demand, protest and notice of any kind, including
notice of acceptance of this Agreement and of the existence, creation or
incurring of new or additional Obligations; (xiv) the benefit of any
statute of limitations affecting the liability of any other Borrower or any
guarantor or other Person, enforcement of this Agreement or any other Loan
Documents, the liability of any Borrower hereunder or the enforcement hereof;
(xv) all notices of intention to accelerate and/or notice of acceleration
of the Obligations; (xvi) relief from any applicable valuation or
appraisement laws; (xvii) any other action by the Agent or any Lender,
whether authorized by this Agreement or otherwise, or any omission by the Agent
or any Lender or other failure of the Agent or any Lender to pursue, or delay
in pursuing, any other remedy in its power; (xviii) any and all claims and/or
rights of counterclaim, recoupment, setoff or offset; and (xix) any
defense based upon the application of the proceeds of a Loan for purposes other
than the purposes represented by the Borrowers or intended or understood by the
Agent or any Lender or any Borrower. 
Each Borrower agrees that the payment and performance of all Obligations
or any part thereof or other act which tolls any statute of limitations
applicable to this Agreement or the other Loan Documents shall similarly
operate to toll the statute of limitations applicable to such Borrower’s
liability hereunder.  Without limiting
the generality of the foregoing or any other provision hereof, each Borrower
further waives any and all rights and defenses that such Borrower may have
because the debt of the Borrowers is secured by real property of other
Borrowers; this means, among other things, that:  (1) the Lenders may collect from such
Borrower without first foreclosing on any real or personal property collateral
pledged by any other Borrower, (2) if the Agent or any Lender forecloses
on any real property collateral pledged by any other Borrower, then (A) the
amount of the debt may be reduced only by the price for which that collateral
is sold at the foreclosure sale, even if the collateral is worth more than the
sale price, and (B) the Agent or any Lender may collect from such Borrower
even if the Agent or any Lender, by foreclosing on the real property
collateral, has destroyed any right such Borrower may have to collect from any
other Borrower.  The foregoing sentence
is an unconditional and irrevocable waiver of any rights and defenses each
Borrower may have because the Obligations are secured by real property of any
other Borrower.  Each Borrower
acknowledges and agrees that California Civil Code Section 2856 authorizes
and validates waivers of a guarantor’s rights of subrogation and reimbursement
and waivers of certain other rights and defenses available to a guarantor under
California law.  Based on the preceding
sentence and without limiting the generality of the foregoing waivers contained
in this subparagraph or any other provision hereof, each Borrower expressly
waives to the extent

 

14

 

permitted
by law any and all rights and defenses (except the defense of indefeasible
final payment in full), including without limitation any rights of subrogation,
reimbursement, indemnification and contribution (except contribution pursuant to
this Agreement), which might otherwise be available to such Borrower under
California Civil Code Sections 2787 to 2855, inclusive, 2899 and 3433 and under
California Code of Civil Procedure Sections 580a, 580b, 580d and 726 (or any of
such sections), or any other jurisdiction to the extent the same are applicable
to this Agreement or the agreements, covenants or obligations of any Borrower
hereunder.

 

(e)                                  Each Borrower is fully aware of the
financial condition of the FRC Borrowers or the FMC Borrowers, as applicable,
and is executing and delivering this Agreement based solely upon such Borrower’s
own independent investigation of all matters pertinent hereto and is not
relying in any manner upon any representation or statement by the Agent or any
Lender.  Each Borrower hereby assumes
full responsibility for obtaining any additional information concerning the
financial condition of the FRC Borrowers, the FMC Borrowers or any other
guarantor or their respective properties, financial condition and prospects and
any other matter pertinent hereto as such Borrower may desire, and such
Borrower is not relying upon or expecting the Agent or any Lender to furnish to
such Borrower any information now or hereafter in the possession of the Agent
or any Lender concerning the same or any other matter.  By executing this Agreement, each Borrower
knowingly accepts the full range of risks encompassed within a contract of this
type, which risks such Borrower acknowledges. 
No Borrower shall have the right to require the Agent or any Lender to
obtain or disclose any information with respect to the Obligations, the
financial condition or prospects of any Borrower, the ability of any Borrower
to pay or perform the Obligations, the existence, perfection, priority or
enforceability of any collateral security for any or all of the Obligations,
the existence or enforceability of any other guaranties of all or any part of
the Obligations, any action or non-action on the part of the Agent or any
Lender, any Borrower or any other Person, or any other event, occurrence,
condition or circumstance whatsoever.

 

(f)                                    To the extent that any Borrower is a
guarantor or a surety as a result of the joint and several obligations
hereunder, the Obligations of each such FMC Borrower and each such FRC Borrower
shall be limited in amount to an amount not to exceed the maximum amount of
such obligations and liabilities that can be made or assumed by such Borrower
without rendering such obligation or liability void or voidable under
applicable laws relating to fraudulent conveyance, fraudulent transfer or
similar laws affecting the rights of creditors generally, in each case giving
effect to all liabilities of such Borrower other than any liabilities in
respect of intercompany indebtedness to the extent that it would be discharged
in the amount paid by such Borrower hereunder and giving effect to all rights
of subrogation, contribution, reimbursement, indemnity or similar rights
pursuant to applicable law or any agreement (the “Maximum Liability”).

 

15

 

(g)                           (i)                                     Each
FMC Borrower hereby agrees that to the extent that an FMC Borrower makes any
payment on behalf of FMC, such FMC Borrower shall be entitled to seek and
receive contribution and indemnification from and to be reimbursed by each
other FMC Borrower in an amount equal to a fraction of such payment, the
numerator of which is the Maximum Liability of the FMC Borrower making the
payment and the denominator of which is the Maximum Liability of all FMC
Borrowers as of the date of determination. 
Each FMC Borrower’s right of contribution shall be subject to the terms
and conditions of Section 1.6(h). 
The provisions of this Section 1.6(g)(i) shall in no
respect limit the obligations and liabilities of any FMC Borrower to the
Lenders and each FMC Borrower shall remain liable to the Lenders for the full
amount of its liabilities hereunder.

 

(ii)                                  Each
FRC Borrower hereby agrees that to the extent that an FRC Borrower makes any
payment on behalf of FRC, such FRC Borrower shall be entitled to seek and
receive contribution and indemnification from and to be reimbursed by each
other FRC Borrower in an amount equal to a fraction of such payment, the
numerator of which is the Maximum Liability of the FRC Borrower making the payment
and the denominator of which is the Maximum Liability of all FRC Borrowers as
of the date of determination.  Each FRC
Borrower’s right of contribution shall be subject to the terms and conditions
of Section 1.6(h).  The
provisions of this Section 1.6(g)(ii) shall in no respect
limit the obligations and liabilities of any FRC Borrower to the Lenders and
each FRC Borrower shall remain liable to the Lenders for the full amount of its
liabilities hereunder.

 

(h)                                 No
FMC Borrower or FRC Borrower shall be entitled to be subrogated to any of the
rights of the Agent or any Lender against or any other FMC Borrower or FRC
Borrower or any collateral security or guarantee or right to offset held by the
Agent or any Lender for the payment of the Obligations of FMC or FRC, as the
case may be, nor shall any FMC Borrower or FRC Borrower seek or be entitled to
seek any contribution or reimbursement from or any other FMC Borrower or FRC
Borrower in respect of payments made by such Borrower hereunder, until all
amounts owing to the Agent or any Lender on account of the Obligations of FMC
or FRC, as the case may be, are paid in full, no Letter of Credit shall be
outstanding and the Revolving Credit Commitments are terminated or have
expired.  If any amount shall be paid to any
FMC Borrower or FRC Borrower on account of such subrogation rights at any time
not permitted hereunder, such amount shall be held by such Borrower in trust
for the Agent and the Lenders, segregated from other funds of such Borrower,
and shall, forthwith upon receipt, be turned over to the Agent in the exact
form received (duly endorsed to the Agent, if required), to be applied against
the Obligations, whether matured or unmatured, in such order as the Agent may
determine.

 

1.7                                 Borrowing Agency Provisions.

 

(a)                                  At the request of, and solely as an
accommodation to, Borrowers, the Lenders have agreed to make the Loans to, and
to issue Letters of Credit for the FMC Borrowers and the FRC Borrowers on a
joint and several basis as co-

 

16

 

borrowers.  In order to facilitate the co-borrowing
arrangement, each FMC Borrower hereby irrevocably designates Holdings to be its
agent and attorney-in-fact for purposes of the Loan Documents, and each FRC
Borrower hereby irrevocably designates Retail to be its agent and
attorney-in-fact for purposes of the Loan Documents, and each of them hereby
irrevocably authorizes such agent in such capacity to take such actions on
behalf of the applicable FMC Borrower or FRC Borrower, as the case may be, and
to exercise such powers under this Agreement and the other Loan Documents on
such Borrower’s behalf as may otherwise be exercised by such Borrower, together
with such powers as are incidental thereto, including without limitation to borrow
Loans, to execute and deliver Notices of Borrowing, Notices of
Conversion/Continuation, requests for Letters of Credit, Borrowing Base
Certificates and such other documents, instruments and certificates required by
the Loan Documents in connection with any Borrowing or repayment of the Loans,
to borrow, repay, reborrow, convert and continue Loans and to receive proceeds
of Loans and to give all other notices and consents hereunder.  Each Borrower further irrevocably authorizes
the Agent to act on all such documents, instruments and certificates delivered
by such agents and attorneys-in-fact, and to pay over and credit the proceeds
of any Loans so requested to the Designated Account of FMC or FRC, as
applicable.  Each of Holdings and Retail
hereby accepts the appointment to act as agent and attorney in fact for the FMC
Borrowers and the FRC Borrowers, as the case may be.  The Agent and each Lender shall be entitled
to rely absolutely on the appointment and authorization of Holdings to act on
behalf of the FMC Borrowers and of Retail to act on behalf of the FRC Borrowers
with respect to all matters relating to this Agreement and the other Loan
Documents, whether or not any provision of this Agreement or any other Loan
Documents specifically provides that action may or shall be taken by Holdings
or Retail on behalf of the FMC Borrowers or the FRC Borrowers.  The Agent and the Lenders may give all
notices to any FMC Borrower to Holdings and to any FRC Borrower to Retail.  Each Borrower agrees that each notice, election,
representation and warranty, covenant, agreement and undertaking made on its
behalf by Holdings or Retail, as the case may be, shall be deemed for all
purposes to have been made by such Borrower and shall be binding upon and
enforceable against such Borrower to the same extent as if the same had been
made directly by such Borrower.

 

(b)                                 All Borrowers acknowledge and agree
that the Borrowers are engaged in an integrated operation that requires
financing on the basis of credit availability to each Borrower, that the
co-borrowing arrangement has been established at the request of the Borrowers,
and that each Borrower expects to derive, directly or indirectly, benefit from
such credit availability to the other Borrowers.  Neither the Agent nor the Letter of Credit
Issuer nor any Lender shall incur any liability to Borrowers or any other Loan
Party as a result of the co-borrowing arrangement established by this Agreement
and shall not have any liability or responsibility to the Borrowers to inquire
into the allocation, apportionment or use of the proceeds of any Loans or
extensions of credit hereunder.  To
induce the Agent, the Letter of Credit Issuer and the Lenders to establish this
co-borrowing arrangement and in consideration thereof, each

 

17

 

Borrower
hereby indemnifies the Agent, the Letter of Credit Issuer and the Lenders, and
their respective successors and assigns, and agrees to hold each of them
harmless from any and all liabilities, expenses, losses, damages and claims
asserted against them by any Person arising from or incurred by reason of the
handling of the financing arrangements of the Borrowers as provided in this
Agreement, any reliance by the Agent, the Letter of Credit Issuer or any Lender
on any document, request or instruction given by the agents designated by the
FMC Borrowers and the FRC Borrowers herein to act on their behalf or any other
action taken by the Agent, the Letter of Credit Issuer or the Lenders with
respect to the co-borrowing arrangement; provided, however, that
no Borrower shall have an obligation to indemnify any of the Agent, the Letter
of Credit Issuer or any Lender under this Section 1.7 with respect
to any liabilities finally determined by a court of competent jurisdiction to
have resulted primarily from the gross negligence or willful misconduct of such
indemnified party.  The agreements of the
Borrowers contained in this Section 1.7 shall survive payment of
all other Obligations.

 

1.8                                 Senior Indebtedness.  All Obligations of Fleetwood under this
Agreement and the other Loan Documents, and all rights of contribution,
indemnity, subrogation and reimbursement relating to the Obligations of any
Loan Party with respect to Fleetwood, are “Senior Indebtedness” under the 2003
Subordinated Debentures.  All Obligations
of Fleetwood under this Agreement and the other Loan Documents to the extent
such Obligations are (A) liabilities of Fleetwood for borrowed money or
under any reimbursement obligation relating to a letter of credit, surety bond
or similar instrument, or (B) liabilities of Fleetwood evidenced by a
bond, note, debenture or similar instrument, or (C) liabilities of others
described in the preceding clauses (A) and (B) that Fleetwood has
guaranteed or that are otherwise its legal liability, or (D) deferrals
renewals, extensions or refundings of any liability of the types referred to in
clauses (A), (B) and (C) above, are “Senior Indebtedness” under the
Subordinated Debentures, the New Subordinated Debentures and Fleetwood’s
guaranty of the Trust Securities.

 

ARTICLE 2

INTEREST AND FEES

 

2.1                                 Interest.

 

(a)                                  Interest Rates. 
All outstanding Obligations shall bear interest on the unpaid principal
amount thereof (including, to the extent permitted by law, on interest thereon
not paid when due) from the date made until paid in full in cash at a rate
determined by reference to the Base Rate or the LIBOR Rate plus the Applicable
Margin, but not to exceed the Maximum Rate. 
If at any time Loans are outstanding with respect to which a Borrower
has not delivered to the Agent a notice specifying the basis for determining
the interest rate applicable thereto in accordance herewith, those Loans shall
bear interest at a rate determined by reference to the Base Rate until notice
to the contrary has been given to the Agent in accordance with this Agreement
and such notice has become effective. 
Except as otherwise provided herein, the outstanding Obligations shall
bear interest as follows:

 

18

 

(i)                                     For each Base Rate Lender Term Loan
at a fluctuating per annum rate equal to the Base Rate plus the Applicable
Margin;

 

(ii)                                  For all Base Rate Revolving Loans
and other Obligations (other than Base Rate Lender Term Loans and LIBOR Rate
Loans) at a fluctuating per annum rate equal to the Base Rate plus the
Applicable Margin;

 

(iii)                               For all LIBOR Lender Term Loans at a
per annum rate equal to the LIBOR Rate plus the Applicable Margin; and

 

(iv)                              For all LIBOR Revolving Loans at a
per annum rate equal to the LIBOR Rate plus the Applicable Margin.

 

Each change in
the Base Rate shall be reflected in the interest rate applicable to Base Rate
Loans as of the effective date of such change. 
All interest charges shall be computed on the basis of a year of 360 days
and actual days elapsed (which results in more interest being paid than if
computed on the basis of a 365-day year). 
The applicable Borrowers shall pay to the Agent, for the ratable benefit
of the applicable Lenders, interest accrued on all Base Rate Loans in arrears
on the first day of each month hereafter and on the Termination date.  The Borrowers shall pay to the Agent, for the
ratable benefit of Lenders, interest on all LIBOR Rate Loans in arrears on each
LIBOR Interest Payment Date.

 

(b)                                 Default Rate. 
If any Default or Event of Default occurs and is continuing and the
Agent or the Majority Lenders in their discretion so elect, then, from the date
that the Agent gives written notice to Holdings and FRC of the Agents’ or the
Majority Lenders’ election and so long as such Default or Event of Default is
continuing, all of the Obligations shall bear interest at the Default Rate
applicable thereto; provided that from the date of the occurrence of an
Event of Default under Section 9.1(a) with respect to any Term Loan
Obligation, the Term Loan Obligations shall automatically bear interest at the
Default Rate applicable thereto so long as any such Event of Default is
continuing.

 

2.2                                 Continuation and Conversion
Elections.

 

(a)                                  FMC or FRC may:

 

(i)                                     elect, as of any Business Day, in
the case of Base Rate Revolving Loans to convert any such Base Rate Revolving
Loans (or any part thereof in an amount not less than $1,000,000, or that is in
an integral multiple of $500,000 in excess thereof) into LIBOR Rate Loans; or

 

(ii)                                  elect, as of any Business Day, in
the case of Base Rate Lender Term Loans to convert any such Base Rate Lender
Term Loans (or any part thereof in an amount not less than $1,000,000, or that
is in an integral multiple of $500,000 in excess thereof) into LIBOR Rate
Loans; or

 

19

 

(iii)                               elect, as of the last day of the
applicable Interest Period, to continue any LIBOR Rate Loans having Interest
Periods expiring on such day (or any part thereof in an amount not less than
$1,000,000, or that is in an integral multiple of $500,000 in excess thereof);

 

provided,
that if at any time the aggregate amount of LIBOR Rate Loans in respect of any
Borrowing is reduced, by payment, prepayment, or conversion of part thereof to
be less than $1,000,000, such LIBOR Rate Loans shall automatically convert into
Base Rate Loans; provided  further that if the notice shall fail
to specify the duration of the Interest Period, such Interest Period shall be
one month.

 

(b)                                 FMC or FRC shall deliver a notice of
continuation/conversion (“Notice of Continuation/Conversion”) to the
Agent not later than 10:00 a.m. (Los Angeles time) at least three (3) Business
Days in advance of the Continuation/Conversion Date, if the Loans are to be converted
into or continued as LIBOR Rate Loans and specifying:

 

(i)                                     the proposed Continuation/Conversion
Date;

 

(ii)                                  the aggregate amount of Loans to be
converted or renewed;

 

(iii)                               the type of Loans resulting from the
proposed conversion or continuation; and

 

(iv)                              the duration of the requested
Interest Period, provided, however, the Borrowers may not select
an Interest Period that ends after the Stated Termination Date.

 

(c)                                  If upon the expiration of any
Interest Period applicable to LIBOR Rate Loans, FMC or FRC, as the case may be,
has failed to select timely a new Interest Period to be applicable to LIBOR
Rate Loans or if any Default or Event of Default then exists, the applicable
Borrower(s) shall be deemed to have elected to convert such LIBOR Rate Loans
into Base Rate Loans effective as of the expiration date of such Interest
Period.

 

(d)                                 The Agent will promptly notify each
Lender of its receipt of a Notice of Continuation/Conversion.  All conversions and continuations shall be
made ratably according to the respective outstanding principal amounts of the
Loans with respect to which the notice was given held by each Lender.

 

(e)                                  There may not be more than seven (7) different
LIBOR Rate Loans in effect hereunder at any time.

 

2.3                                 Maximum Interest Rate.  In no event shall any interest rate provided
for hereunder exceed the maximum rate legally chargeable by any Lender under
applicable law for such Lender with respect to loans of the type provided for
hereunder (the “Maximum Rate”). 
If, in any month, any interest rate, absent such limitation, would have
exceeded the Maximum Rate, then the interest rate for that month shall be the
Maximum Rate, and, if in future months, that

 

20

 

interest rate would otherwise be less than the Maximum
Rate, then that interest rate shall remain at the Maximum Rate until such time
as the amount of interest paid hereunder equals the amount of interest which
would have been paid if the same had not been limited by the Maximum Rate.  In the event that, upon payment in full of
the Obligations, the total amount of interest paid or accrued under the terms
of this Agreement is less than the total amount of interest which would, but
for this Section 2.3, have been paid or accrued if the interest
rate otherwise set forth in this Agreement had at all times been in effect,
then the Borrowers shall, to the extent permitted by applicable law, pay the
Agent, for the account of the Lenders, an amount equal to the excess of (a) the
lesser of (i) the amount of interest which would have been charged if the
Maximum Rate had, at all times, been in effect or (ii) the amount of
interest which would have accrued had the interest rate otherwise set forth in
this Agreement, at all times, been in effect over (b) the amount of
interest actually paid or accrued under this Agreement.  If a court of competent jurisdiction
determines that the Agent and/or any Lender has received interest and other
charges hereunder in excess of the Maximum Rate, such excess shall be deemed
received on account of, and shall automatically be applied to reduce, the
Obligations other than interest, in the inverse order of maturity, and if there
are no Obligations outstanding, the Agent and/or such Lender shall refund to
the applicable Borrower(s) such excess.

 

2.4                                 Closing Fee.  The Borrowers, jointly and severally, agree
to pay the Agent on the Closing Date a closing fee (the “Closing Fee”)
as set forth in the Fee Letter.

 

2.5                                 Unused Line Fee.  On the first day of each month and on the
Termination Date the Borrowers, jointly and severally, agree to pay to the
Agent, for the account of the Revolving Credit Lenders, in accordance with
their respective Pro Rata Shares, an unused line fee (the “Unused Line Fee”)
equal to percentage per annum set forth in the definition of Applicable Margin
times the amount by which the Maximum Revolver Amount exceeded the sum of the
average daily outstanding amount of Revolving Loans and the average daily
undrawn face amount of outstanding Letters of Credit, during the immediately
preceding month or shorter period if calculated for the first month hereafter
or on the Termination Date.  The Unused
Line Fee shall be computed on the basis of a 360-day year for the actual number
of days elapsed.  All principal payments
received by the Agent shall be deemed to be credited to the applicable
Borrowers’ Loan Account immediately upon receipt for purposes of calculating
the Unused Line Fee pursuant to this Section 2.5.

 

2.6                                 Letter of Credit Fee.  FMC or FRC, as applicable, agree to pay to
the Agent, for the account of the Revolving Credit Lenders, in accordance with
their respective Pro Rata Shares, for each Letter of Credit, a fee (the “Letter
of Credit Fee”) equal to the percentage per annum set forth in the
definition of Applicable Margin times the undrawn face amount of each Letter of
Credit and to the Agent for the benefit of the Letter of Credit Issuer a
fronting fee of one-eighth of one percent (0.125%) per annum of the undrawn
face amount of each Letter of Credit, and to the Letter of Credit Issuer, all
out-of-pocket costs, fees and expenses incurred by the Letter of Credit Issuer
in connection with the application for, processing of, issuance of, or
amendment to any Letter of Credit.  The
Letter of Credit Fee shall be payable monthly in arrears on the first day of
each month following any month in which a Letter of Credit is outstanding and
on the Termination Date.  The Letter of
Credit Fee shall be computed on the basis of a 360-day year for the actual
number of days elapsed.

 

21

 

2.7                                 [RESERVED].

 

2.8                                 Substitution
of Property.  Borrowers
may from time to time provide substitute real property collateral (the “Substituted
Property”) for any real property Collateral; provided that for each
such substitution (a “Property Substitution”) the following conditions
are satisfied with respect to such Property Substitution and the applicable
Substituted Property:

 

(a)                                  no Default or Event of Default has
occurred and is continuing both before and after giving effect to such Property
Substitution;

 

(b)                                 the Flexibility Conditions are
satisfied as of the date of and both before and immediately after giving effect
to such Property Substitution;

 

(c)                                  the applicable Substituted Property
is free and clear of all Liens other than Liens described in clauses (a), (b) and
(e) of the definition of Permitted Liens;

 

(d)                                 Agent shall have received an
appraisal (in form and substance and by an appraiser reasonably satisfactory to
Agent) for the applicable Substituted Property (the “Substituted Property
Appraisal”), dated no more than six (6) months prior to the date of
such Property Substitution;

 

(e)                                  the appraised value of the
applicable Substituted Property, as set forth in the Substituted Property Appraisal
be equal to or greater than the value, as reasonably determined by Agent, of
the portion of the Collateral being replaced (the “Replaced Property”);

 

(f)                                    Agent shall have received each of
the following:

 

(i)                                     a fully executed Mortgage (the “Substituted
Property Mortgage”) with respect to each parcel of the Substituted
Property, in substantially the form of the Mortgages delivered on or prior to
the Closing Date, with such modifications thereto as shall be advisable and are
reasonably acceptable to the Agent with respect to the local jurisdictions in
which the Substitute Property is located;

 

(ii)                                  an ALTA extended coverage title
policy or policies, in form and substance and in amounts and with such
endorsements as are reasonably acceptable to the Agent, with respect to each
Substituted Property Mortgage;

 

(iii)                               duly executed UCC-3 Termination
Statements or such other instruments or evidence, in form and substance
satisfactory to the Agent, as shall be necessary to terminate and satisfy all
Liens, if any, on the Substituted Property; and

 

(iv)                              to the extent reasonably requested
by the Agent or the Majority Lenders, environmental audits, surveys, title
reports and any other document reasonably requested by the Agent, the Majority
Lenders or any

 

22

 

Lender,
as applicable, with respect to the Substituted Property, in each case in form
and substance satisfactory to the Agent, the Majority Lenders and such Lender,
as applicable; and

 

(v)                                 opinions of counsel for the Borrower
which is the owner of the Substituted Property as the Agent shall reasonably
request, in a form, scope and substance reasonably satisfactory to the Agent
and its counsel;

 

(g)                                 Borrowers shall have paid all
reasonable costs related to such Property Substitution, including, but not
limited to, reasonable attorney’s fees or fees related to appraisers, and
consultants, filing fees and the cost of ALTA extended coverage title policies
for the Substituted Property required above, in connection with any request for
Property Substitution, and as a condition to such substitution, Borrowers shall
have provided evidence to Agent that Borrowers have paid, or made arrangement
satisfactory to Agent for the payment of, all such costs which became due and
payable prior to or concurrently with such Property Substitution; and

 

(h)                                 Borrowers shall execute such other
documents and agreements as Agent may require to encumber the Substituted
Property and amend the Loan Documents to reflect the replacement of the
Substitute Property for the Replaced Property; and

 

(i)                                     no default or event of default has
occurred and is continuing both before and after giving effect to such Property
Substitution under the terms of any Subordinated Debt.

 

Upon a
substitution of Substituted Property pursuant to the provisions of this Section 2.8,
all Liens on the Replaced Property in favor of the Agent for the benefit of
itself and the Lenders shall be released and the Lenders hereby authorize the
Agent to execute such documents and take such further action as reasonably
requested by the Borrowers or determined by the Agent, in furtherance of this Section 2.8.  For the avoidance of doubt, following the
substitution of any Replaced Property with any Substituted Property in
accordance with this Section 2.8, such Replaced Property shall no
longer constitute Mortgaged Property, Term Loan Collateral or Real Estate
Subfacility Assets for any purpose under this Agreement and Schedule 6.11
shall be deemed modified accordingly.

 

ARTICLE 3

PAYMENTS AND PREPAYMENTS

 

3.1                                 Revolving Loans.  FMC or FRC shall repay the outstanding
principal balance of the Revolving Loans made to it, plus all accrued but
unpaid interest thereon, on the Termination Date.  A Borrower may prepay Revolving Loans at any
time, and reborrow subject to the terms of this Agreement.  In addition, and without limiting the
generality of the foregoing, upon demand FMC or FRC, as applicable, shall pay
to the Agent, for account of the Revolving Credit Lenders, the amount, without
duplication, by which its Aggregate Revolver Outstandings exceeds the lesser of
its Borrowing Base or the Maximum Revolver Amount.

 

23

 

3.2                                 Termination of Facility.  The Borrowers may terminate this Agreement
upon at least thirty days’ notice to the Agent and the Lenders, upon (a) the
payment in full of all outstanding Revolving Loans, together with accrued
interest thereon, and the cancellation and return of all outstanding Letters of
Credit (or the provision of Cash Collateral or a Supporting Letter of Credit in
accordance with Section 1.4(g) above), (b)  the
prepayment in full of the Term Loan, together with accrued interest thereon, (c) the
payment of the early termination fee set forth below, (d) the payment in
full in cash of all reimbursable expenses and other Obligations, and (e) with
respect to any LIBOR Rate Loans prepaid, payment of the amounts due under Section 4.4,
if any.  If this Agreement is terminated
prior to the first anniversary of the First Amendment and Restatement Date,
whether pursuant to this Section 3.2 or pursuant to Section 9.2,
Borrowers shall pay to the Agent, for the accounts of the Lenders, in
proportion to their respective Pro Rata Shares, an early termination fee equal
to one percent (1%) of the Total Facility. 
If this Agreement is terminated on or after the first anniversary of the
First Amendment and Restatement Date but prior to the second anniversary of the
First Amendment and Restatement Date, whether pursuant to this Section 3.2
or pursuant to Section 9.2, Borrowers shall pay to the Agent, for
the accounts of the Lenders, in proportion to their respective Pro Rata Shares,
an early termination fee equal to one-half of one percent (0.5%) of the Total
Facility.  No early termination fee shall
be payable if this Agreement is terminated after the second anniversary of the
First Amendment and Restatement Date. 
The foregoing notwithstanding, no early termination fee shall be payable
hereunder in connection with a refinancing of the Obligations with a credit
facility arranged or provided by another lending department of the Agent.

 

3.3                                 Repayment of the Term Loan.

 

(a)                                  Amortization of Term Loan.

 

(i)                                     On the first day of each Fiscal
Quarter commencing October 31, 2005, FMC agrees to repay the principal
amount of the Term Loan in an amount equal to $785,715.00.

 

(ii)                                  On the Stated Termination Date, FMC
agrees to repay the outstanding principal amount of and all accrued and unpaid
interest on the Term Loan.

 

(b)                                 Term Lenders. 
FMC agrees to repay the principal of the Term Loan to the Agent, for the
account of the Lenders as set forth in Section 1.3.

 

(c)                                  Application of Prepayments. 
Any prepayments of the Term Loan hereunder shall be applied first,
to the repayment of the Term Loan required pursuant to Section 3.3(a)(ii),
and second, to the repayment of the Term Loan required pursuant to Section 3.3(a)(i) in
inverse order of maturity.

 

3.4                                 Prepayments of the Loans.

 

(a)                                  FMC may prepay the principal of the
Term Loan in whole or in part, at any time and from time to time upon at least
5 Business Days’ prior written notice to the Agent and the Term Lenders.  All voluntary prepayments of

 

24

 

the
principal of the Term Loan shall be accompanied by the payment of all accrued
but unpaid interest on the Term Loan to the date of prepayment.  Amounts prepaid in respect of the Term Loan
may not be reborrowed.

 

(b)                                 Immediately upon receipt by any Loan
Party of proceeds of any disposition of Real Estate Subfacility Assets, FMC
shall repay the Revolving Loans in an amount equal to the amount advanced
against the applicable asset in calculation of the Borrowing Base, if any, and
the Maximum Real Estate Loan Amount shall be permanently reduced by such
amount.

 

(c)                                  Immediately upon any receipt by any
Loan Party of proceeds of any disposition of any Term Loan Collateral, FMC
shall repay the Term Loan in an amount equal to all such proceeds, net of (A) commissions
and other customary transaction costs, fees and expenses properly attributable
to such transaction and payable by a Loan Party in connection therewith (other
than any amounts payable to any Affiliate), (B) transfer taxes, (C) amounts
payable to holders of senior Liens (to the extent that such Liens are Permitted
Liens), if any and (D) an appropriate reserve for income taxes in
accordance with GAAP in connection therewith (the “Net Proceeds”).  After the Term Loan has been repaid in full,
any remaining Net Proceeds shall be applied to the Revolving Loans, but without
reduction of the Revolving Credit Commitments.

 

(d)                                 Immediately upon any receipt by any
Loan Party of proceeds (other than assets or other property received in
exchange for any Equipment sold, traded-in or exchanged pursuant to Section 7.9(b) hereof)
of any assets (other than Inventory sold in the ordinary course of business,
the Borrowers shall repay the Revolving Loans in an amount equal to all such
proceeds, net of (A) commissions and other customary transaction costs,
fees and expenses properly attributable to such transaction and payable by a
Loan Party in connection therewith (other than any amounts payable to any
Affiliate), (B) transfer taxes, (C) amounts payable to holders of
senior Liens (to the extent that such Liens are Permitted Liens), if any, and (D) an
appropriate reserve for income taxes in accordance with GAAP in connection
therewith (the “Net Proceeds”), but without reduction of the Revolving
Credit Commitments.

 

(e)                                  Concurrently with an FRC Borrower
Release (including, without limitation, any such FRC Borrower Release effected
upon an FRC Disposition made in compliance with Section 7.9(f)),
the Borrowers shall repay the Revolving Loans in an amount equal to the amount
advanced against the Eligible Accounts, Eligible Inventory or any other
property of the FRC Borrower being released in such FRC Borrower Release, but
without reduction of the Revolving Credit Commitments.

 

(f)                                    Concurrently with the sale of the
Capital Stock of the Identified Subsidiary, the Borrowers shall repay the
Revolving Loans in an amount equal to the amount advanced against the Eligible
Accounts and Eligible Inventory of the

 

25

 

Identified
Subsidiary, but without reduction of the Revolving Credit Commitments.

 

(g)                                 [RESERVED].

 

(h)                                 [RESERVED].

 

(i)                                     No provision contained in this Section 3.4
shall constitute a consent to an asset disposition that is otherwise not
permitted by the terms of this Agreement.

 

3.5                                 LIBOR Rate Loan Prepayments.  In connection with any prepayment, if any
LIBOR Rate Loans are prepaid prior to the expiration date of the Interest
Period applicable thereto, the applicable Borrower shall pay to the Revolving
Credit Lenders the amounts described in Section 4.4.

 

3.6                                 Payments by the Borrowers.

 

(a)                                  All payments to be made by the
Borrowers shall be made without set-off, recoupment or counterclaim.  Except as otherwise expressly provided
herein, all payments by the Borrowers shall be made to the Agent for the
account of the Revolving Credit Lenders or Term Lenders, as applicable, at the
account designated by the Agent and shall be made in Dollars and in immediately
available funds, no later than 12:00 noon (Los Angeles time) on the date
specified herein.  Any payment received
by the Agent after such time shall be deemed (for purposes of calculating
interest only) to have been received on the following Business Day and any
applicable interest shall continue to accrue.

 

(b)                                 Subject to the provisions set forth
in the definition of “Interest Period”, whenever any payment is due on a
day other than a Business Day, such payment shall be due on the following
Business Day, and such extension of time shall in such case be included in the
computation of interest or fees, as the case may be.

 

3.7                                 Payments as Revolving Loans.  At the election of the Agent, all payments of
principal of or interest on the Revolving Loans, reimbursement obligations in
connection with Letters of Credit and Credit Support for Letters of Credit,
fees, premiums, reimbursable expenses and other sums payable hereunder (other
than the Term Loan) may be paid from the proceeds of Revolving Loans made
hereunder.  Proceeds of Revolving Loans
may be used to make payments of the Term Loan Obligations only if: (a) for
payments of the Term Loan Obligations under Section 3.3(a)(i), no Event of
Default has occurred and is continuing, and (b) for payments of Term Loan
Obligations under Section 3.3(a)(ii), (x) no Event of Default has occurred
and is continuing, and (y) a Minimum Liquidity Event, as of the date of such
prepayment, shall not have occurred, after giving effect to such
prepayment.  Each Borrower hereby
irrevocably authorizes the Agent to charge the applicable Loan Account for the
purpose of paying all amounts from time to time due from FMC and FRC or any FMC
Borrower or FRC Borrower and agrees that all such amounts charged shall
constitute Revolving Loans (including Non-Ratable Loans and Agent Advances).

 

26

 

3.8                                 Apportionment, Application and
Reversal of Payments. 
Principal and interest payments shall be apportioned ratably among the
Lenders (according to the unpaid principal balance of the Loans to which such
payments relate held by each Lender). 
All payments shall be remitted to the Agent and all such payments not
relating to principal or interest of specific Loans, or not constituting
payment of specific fees, and all proceeds of Accounts, or except as set forth
below with respect to Term Loan Collateral, other Collateral received by the
Agent, shall be applied, ratably, subject to the provisions of this Agreement, first,
to pay any fees, indemnities, or expense reimbursements (other than amounts
related to Bank Products) then due to the Agent or the Lenders from the
applicable Borrower; second, to pay interest due from such Borrower in
respect of all Loans, including Non-Ratable Loans and Agent Advances; third,
to pay or prepay principal of the Non-Ratable Loans and Agent Advances owed by
such Borrower; fourth, to pay or prepay principal of the Revolving Loans
(other than Non-Ratable Loans and Agent Advances) and unpaid reimbursement
obligations in respect of Letters of Credit; fifth, if an Event of
Default has occurred and is continuing to pay an amount to the Agent equal to
all outstanding Letter of Credit Obligations of such Borrower to be held as
cash collateral for such Obligations; sixth, to pay or prepay principal
of the Term Loan owed by such Borrower; seventh, to the payment of any
other Obligation (other than amounts related to Bank Products) due to the Agent
or any Lender by such Borrower and eighth, to pay any fees, indemnities
or expense reimbursements related to Bank Products due to the Agent from the
applicable Borrower.  Notwithstanding the
foregoing, until the Term Loan has been paid in full, proceeds of the Term Loan
Collateral shall be applied first to pay any fees, indemnities or
expense reimbursements relating to the Term Loan or the Term Loan Collateral then
due to the Agent or the Lenders from FMC; second, to pay interest due
from FMC in respect to the Term Loan; third, to pay or prepay principal
of the Term Loan; and fourth, to all other Obligations in accordance
with the preceding sentence.  Notwithstanding
anything to the contrary contained in this Agreement, unless so directed by the
applicable Borrower, or unless an Event of Default has occurred and is
continuing, neither the Agent nor any Lender shall apply any payments which it
receives to any LIBOR Rate Loan, except (a) on the expiration date of the
Interest Period applicable to any such LIBOR Rate Loan, or (b) in the
event, and only to the extent, that there are no outstanding Base Rate Loans
and, in any event, the applicable Borrower shall pay LIBOR breakage losses in
accordance with Section 4.4. 
Upon the occurrence and during the continuation of an Event of Default
and, prior thereto in order to correct any error, the Agent and the Lenders
shall have the continuing and exclusive right to apply and reverse and reapply
any and all such proceeds and payments to any portion of the Obligations.

 

3.9                                 Indemnity for Returned Payments.  If after receipt of any payment which is
applied to the payment of all or any part of the Obligations, the Agent, any
Lender, the Bank or any Affiliate of the Bank is for any reason compelled to
surrender such payment or proceeds to any Person because such payment or
application of proceeds is invalidated, declared fraudulent, set aside,
determined to be void or voidable as a preference, impermissible setoff, or a
diversion of trust funds, or for any other reason, then the Obligations or part
thereof intended to be satisfied shall be revived and continued and this
Agreement shall continue in full force as if such payment or proceeds had not
been received by the Agent, such Lender, the Bank or any Affiliate of the Bank
and the Borrowers shall be liable to pay to the Agent and the Lenders, and
hereby indemnify the Agent and the Lenders and hold the Agent and the Lenders
harmless for the amount of such payment or proceeds surrendered.  The provisions of this Section 3.9
shall be and remain effective notwithstanding any contrary action which may
have been taken by the

 

27

 

Agent or any Lender, the Bank or any Affiliate of the
Bank in reliance upon such payment or application of proceeds, and any such
contrary action so taken shall be without prejudice to the Agent’s and the
Lenders’ rights under this Agreement and shall be deemed to have been
conditioned upon such payment or application of proceeds having become final
and irrevocable.  The provisions of this Section 3.9
shall survive the termination of this Agreement.

 

3.10                           The Agent’s and Lenders’ Books and
Records; Monthly Statements. 
The Agent shall record the principal amount of the Loans owing to each
Lender, the undrawn face amount of all outstanding Letters of Credit and the
aggregate amount of unpaid reimbursement obligations outstanding with respect
to the Letters of Credit from time to time on its books.  In addition, each Lender may note the date
and amount of each payment or prepayment of principal of such Lender’s Loans in
its books and records.  Failure by the
Agent or any Lender to make such notation shall not affect the obligations of
the applicable Borrower with respect to the Loans or the Letters of
Credit.  Each Borrower agrees that the
Agent’s and each Lender’s books and records showing the Obligations and the
transactions pursuant to this Agreement and the other Loan Documents shall be
admissible in any action or proceeding arising therefrom, and shall constitute
rebuttably presumptive proof thereof, irrespective of whether any Obligation is
also evidenced by a promissory note or other instrument.  The Agent will provide to the Borrowers a
monthly statement of Loans, payments, and other transactions pursuant to this
Agreement.  Such statement shall be
deemed correct, accurate, and binding on the Borrowers and an account stated
(except for reversals and reapplications of payments made as provided in Section 3.8
and corrections of errors discovered by the Agent), unless the Borrowers notify
the Agent in writing to the contrary within thirty (30) days after such
statement is rendered.  In the event a
timely written notice of objections is given by the Borrowers, only the items
to which exception is expressly made will be considered to be disputed by the
Borrowers.

 

3.11                           Release of FRC Borrower.  Provided that no Default or Event of Default
has occurred and is continuing (or would occur or exist as a result of or
following the release of an FRC Borrower pursuant to this Section 3.11),
Fleetwood shall have the right, subject to the provisions of this Section 3.11,
to obtain a release of an FRC Borrower (each, an “FRC Borrower Release”)
from its Obligations under this Agreement and the other Loan Documents
(including without limitation, in connection with any FRC Disposition).  In the event Fleetwood seeks to obtain an FRC
Borrower Release, the Agent shall release such FRC Borrower (each a “Released
FRC Borrower”) from this Agreement and the other Loan Documents, but only
upon satisfaction of all of the following conditions:

 

(a)                                  Any request for an FRC Borrower
Release shall be made in writing to the Agent no less than five (5) Business
Days prior to the date of the requested FRC Borrower Release;

 

(b)                                 the FRC Borrowers make any payment
required pursuant to Section 3.4(e) in connection with such
FRC Borrower Release;

 

(c)                                  the FRC Borrowers shall pay all of
the Agent’s reasonable costs and expenses, including counsel fees and
disbursements, incurred in connection with the FRC Borrower Release and the
review and approval of the documents and information required to be delivered
in connection therewith; and

 

28

 

(d)                                 the FRC Borrowers shall deliver to
the Agent simultaneously with the request referred to in clause (a) above,
an FRC Borrowing Base Certificate signed by an Authorized Officer of FRC,
representing and certifying the pro forma calculations after giving effect to
the proposed FRC Borrower Release.

 

Upon the
release of an FRC Borrower pursuant to the provisions of this Section 3.11,
at the request of such FRC Borrower, all Liens granted by such FRC Borrower
pursuant to the Loan Documents shall also be released provided that
Borrowers have provided Agent with release documents in form and substance
reasonably satisfactory to Agent.

 

ARTICLE 4

TAXES, YIELD
PROTECTION AND ILLEGALITY

 

4.1                                 Taxes.

 

(a)                                  Any and all payments by the Borrowers
to each Lender or the Agent under this Agreement and any other Loan Document
shall be made free and clear of, and without deduction or withholding for any
Taxes.  In addition, the Borrowers shall
pay all Other Taxes.

 

(b)                                 Each Borrower agrees to indemnify
and hold harmless each Lender and the Agent for the full amount of Taxes or
Other Taxes (including any Taxes or Other Taxes imposed by any jurisdiction on
amounts payable under this Section) paid by any Lender or the Agent and any
liability (including penalties, interest, additions to tax and expenses)
arising therefrom or with respect thereto, whether or not such Taxes or Other
Taxes were correctly or legally asserted. 
Payment under this indemnification shall be made within 30 days after
the date such Lender or the Agent makes written demand therefor.

 

(c)                                  If a Borrower shall be required by
law to deduct or withhold any Taxes or Other Taxes from or in respect of any
sum payable hereunder to any Lender or the Agent, then:

 

(i)                                     the sum payable shall be increased
as necessary so that after making all required deductions and withholdings
(including deductions and withholdings applicable to additional sums payable
under this Section) such Lender or the Agent, as the case may be, receives an
amount equal to the sum it would have received had no such deductions or
withholdings been made;

 

(ii)                                  such Borrower shall make such
deductions and withholdings;

 

(iii)                               such Borrower shall pay the full
amount deducted or withheld to the relevant taxing authority or other authority
in accordance with applicable law; and

 

(iv)                              such Borrower shall also pay to each
Lender or the Agent for the account of such Lender, at the time interest is
paid, all additional amounts

 

29

 

which
the respective Lender specifies as necessary to preserve the after-tax yield
such Lender would have received if such Taxes or Other Taxes had not been
imposed.

 

(d)                                 At the Agent’s request, within 30
days after the date of any payment by a Borrower of Taxes or Other Taxes, such
Borrower shall furnish the Agent the original or a certified copy of a receipt
evidencing payment thereof, or other evidence of payment satisfactory to the
Agent.  If any Borrower determines in good
faith that a reasonable basis exists for contesting any Taxes or Other Taxes,
at the request of such Borrower, the relevant Lender shall cooperate with such
Borrower in challenging such Tax or Other Tax at such Borrower’s expense (but
shall have no obligation to disclose any confidential information with respect
to such Lender).  No Lender shall have
any obligation to contest any Tax or Other Tax, except to cooperate with the
Borrowers in any contest requested by a Borrower as provided herein.  If any Lender becomes aware that it has
received a refund for any Tax or Other Tax for which a payment has been made to
it by the Borrowers under this Section, which in the good faith judgment of
such Lender is allocable to such payment, the amount of such refund shall be
paid to the applicable Borrower(s) to the extent that such Borrower(s) have
paid in full the payments required by this Section 4.1

 

(e)                                  If a Borrower is required to pay
additional amounts to any Lender or the Agent pursuant to subsection (c) of
this Section, then such Lender shall use reasonable efforts (consistent with
legal and regulatory restrictions) to change the jurisdiction of its lending
office so as to eliminate any such additional payment by such Borrower which
may thereafter accrue, if such change in the judgment of such Lender is not
otherwise disadvantageous to such Lender.

 

4.2                                 Illegality.

 

(a)                                  If any Revolving Credit Lender
determines that the introduction of any Requirement of Law, or any change in
any Requirement of Law, or in the interpretation or administration of any Requirement
of Law, has made it unlawful, or that any central bank or other Governmental
Authority has asserted that it is unlawful, for any Revolving Credit Lender or
its applicable lending office to make LIBOR Rate Loans, then, on notice thereof
by that Revolving Credit Lender to the Borrowers through the Agent, any
obligation of that Revolving Credit Lender to make LIBOR Rate Loans shall be
suspended until that Revolving Credit Lender notifies the Agent and the
Borrowers that the circumstances giving rise to such determination no longer
exist.

 

(b)                                 If a Revolving Credit Lender
determines that it is unlawful to maintain any LIBOR Rate Loan, the Borrowers
shall, upon receipt of notice of such fact and demand from such Revolving
Credit Lender (with a copy to the Agent), prepay in full such LIBOR Rate Loans
of that Revolving Credit Lender then outstanding, together with interest
accrued thereon and amounts required under Section 4.4, either on
the last day of the Interest Period thereof, if that

 

30

 

Revolving
Credit Lender may lawfully continue to maintain such LIBOR Rate Loans to such
day, or immediately, if that Revolving Credit Lender may not lawfully continue
to maintain such LIBOR Rate Loans.  If
the Borrowers are required to so prepay any LIBOR Rate Loans, then concurrently
with such prepayment, the applicable Borrower shall borrow from the affected
Revolving Credit Lender, in the amount of such repayment, a Base Rate Loan.

 

4.3                                 Increased Costs and Reduction of
Return.

 

(a)                                  If any Lender determines that due to
either (i) the introduction of any Requirement of Law, or any change in
any Requirement of Law, or any change in the interpretation of any Requirement
of Law or (ii) the compliance by that Lender with any guideline or request
from any central bank or other Governmental Authority (whether or not having
the force of law), there shall be any increase in the cost to such Lender of
agreeing to make or making, funding or maintaining any LIBOR Rate Loans, then the
Borrowers shall be liable for, and shall from time to time, upon demand (with a
copy of such demand to be sent to the Agent), pay to the Agent for the account
of such Lender, additional amounts as are sufficient to compensate such Lender
for such increased costs.

 

(b)                                 If any Lender shall have determined
that (i) the introduction of any Capital Adequacy Regulation, (ii) any
change in any Capital Adequacy Regulation, (iii) any change in the
interpretation or administration of any Capital Adequacy Regulation by any
central bank or other Governmental Authority charged with the interpretation or
administration thereof, or (iv) compliance by such Lender or any
corporation or other entity controlling such Lender with any Capital Adequacy
Regulation, affects or would affect the amount of capital required or expected
to be maintained by such Lender or any corporation or other entity controlling
such Lender and (taking into consideration such Lender’s or such corporation’s
or other entity’s policies with respect to capital adequacy and such Lender’s
desired return on capital) determines that the amount of such capital is
increased as a consequence of its Revolving Credit Commitments, Loans, credits
or obligations under this Agreement, then, upon demand of such Lender to the
Borrowers through the Agent, the Borrowers shall pay to such Lender, from time
to time as specified by such Lender, additional amounts sufficient to
compensate such Lender for such increase.

 

4.4                                 Funding Losses.  FMC or FRC, as the case may be, shall
reimburse each Revolving Credit Lender and hold each Revolving Credit Lender
harmless from any loss or expense which such Lender may sustain or incur as a
consequence of:

 

(a)                                  the failure of the applicable
Borrower(s) to make on a timely basis any payment of principal of any LIBOR
Rate Loan;

 

(b)                                 the failure of the applicable
Borrower(s) to borrow, continue or convert a Loan after such Borrower has given
(or is deemed to have given) a Notice of Borrowing or a Notice of
Continuation/Conversion; or

 

31

 

(c)                                  the prepayment or other payment
(including after acceleration thereof) of any LIBOR Rate Loans on a day that is
not the last day of the relevant Interest Period;

 

including any
such loss of anticipated profit and any loss or expense arising from the
liquidation or reemployment of funds obtained by it to maintain its LIBOR Rate
Loans or from fees payable to terminate the deposits from which such funds were
obtained.  The Borrowers shall also pay
any customary administrative fees charged by any Lender in connection with the
foregoing.

 

4.5                                 Inability to Determine Rates.  If the Agent determines that for any reason
adequate and reasonable means do not exist for determining the LIBOR Rate for
any requested Interest Period with respect to a proposed LIBOR Rate Loan, or
that the LIBOR Rate for any requested Interest Period with respect to a
proposed LIBOR Rate Loan does not adequately and fairly reflect the cost to the
Revolving Credit Lenders of funding such Loan, the Agent will promptly so
notify the Borrowers and each Revolving Credit Lender.  Thereafter, the obligation of the Revolving
Credit Lenders to make or maintain LIBOR Rate Loans hereunder shall be
suspended until the Agent revokes such notice in writing; and the Agent shall
promptly deliver such notice after it determines that the reason for such
suspension no longer exists.  Upon
receipt of such notice of suspension, Borrowers may revoke any Notice of
Borrowing or Notice of Continuation/Conversion then submitted by it.  If the applicable Borrower does not revoke
such Notice, the Revolving Credit Lenders shall make, convert or continue the
Loans, as proposed by the applicable Borrower, in the amount specified in the
applicable notice submitted by such Borrower, but such Loans shall be made,
converted or continued as Base Rate Loans instead of LIBOR Rate Loans.

 

4.6                                 Certificates of the Agent.

 

(a)                                  If
any Lender claims reimbursement or compensation under this Article 4
(an “Affected Lender”), the Agent shall determine the amount thereof and
shall deliver to the Borrowers (with a copy to the Affected Lender) a
certificate setting forth in reasonable detail the amount payable to the
Affected Lender, and such certificate shall be conclusive and binding on the
Borrowers in the absence of manifest or demonstrable error.

 

(b)                                 Without
limiting its obligations to reimburse an Affected Lender for compensation
theretofore claimed by an Affected Lender pursuant to this Article 4,
Borrowers may, within 60 days following any demand by an Affected Lender,
request that one or more Persons that are Eligible Assignees and that are
approved by the Administrative Agent (which approval shall not be unreasonably
withheld) purchase all (but not part) of the Affected Lender’s then outstanding
Loans, and assume its Pro Rata Share of the Revolving Credit Commitments and
its obligations hereunder; provided that such request may not be made, and the
Administrative Agent and the Lenders shall have no obligations under this Section 4.6(b),
if and to the extent that the basis for any such reimbursement or compensation
with respect to such Affected Lender is, in the judgment of the Administrative
Agent, applicable to the Required Lenders or has resulted or could reasonably
be expected to result in any claim for reimbursement or compensation

 

32

 

under this Article 4 by the Required Lenders.  If one or more such Eligible Assignees so
agree in writing (each, an “Assuming Lender,” and collectively, the “Assuming
Lenders”), the Affected Lender shall assign its Pro Rata Share of the
Revolving Credit Commitments, together with the outstanding Revolving Loans, to
the Assuming Lender or Assuming Lenders in accordance with Section 11.2.  On the date of any such assignment, the
Affected Lender which is being so replaced shall cease to be a “Lender” for all
purposes of this Agreement and shall receive (x) from the Assuming Lender or
Assuming Lenders the principal amount of its outstanding Loans and (y) from
Borrowers all interest and fees accrued and then unpaid with respect to such
Loans, together with any other amounts then payable to such Lender by
Borrowers.

 

4.7                                 Survival.  The agreements and obligations of the
Borrowers in this Article 4 shall survive the payment of all other
Obligations.

 

ARTICLE 5

BOOKS AND RECORDS;
FINANCIAL INFORMATION; NOTICES

 

5.1                                 Books and Records.  Fleetwood shall, and shall cause each of its
Subsidiaries to maintain, at all times, correct and complete books, records and
accounts in which complete, correct and timely entries are made of its
transactions in accordance with GAAP applied consistently with the audited
Financial Statements required to be delivered pursuant to Section 5.2(a).  Fleetwood shall, and shall cause each of its
Subsidiaries to, by means of appropriate entries, reflect in such accounts and
in all Financial Statements proper liabilities and reserves for all taxes and
proper provision for depreciation and amortization of property and bad debts,
all in accordance with GAAP.  Fleetwood
shall, and shall cause each Loan Party to maintain at all times books and
records pertaining to the Collateral in such detail, form and scope as the
Agent or any Lender shall reasonably require, including, but not limited to,
records of (a) all payments received and all credits and extensions
granted with respect to the Accounts; (b) the return, rejection,
repossession, stoppage in transit, loss, damage, or destruction of any
Inventory; and (c) all other dealings affecting the Collateral in any
material respect.

 

5.2                                 Financial Information.  Fleetwood shall, and shall cause each of its
Subsidiaries to promptly furnish to each Lender, all such financial information
as the Agent shall reasonably request. 
Without limiting the foregoing, Fleetwood and the Borrowers will furnish
to the Agent, in sufficient copies for distribution by the Agent to each
Lender, in such detail as the Agent or the Lenders shall request, the
following:

 

(a)                                  As soon as available, but in any
event not later than ninety (90) days after the close of each Fiscal Year,
consolidated audited and consolidating (by Business Unit) unaudited balance
sheets, and income statements, cash flow statements and changes in stockholders’
equity for Fleetwood and its Subsidiaries for such Fiscal Year, and the
accompanying notes thereto, setting forth in each case in comparative form
figures for the previous Fiscal Year, all in reasonable detail, fairly
presenting the financial position and the results of operations of Fleetwood
and its consolidated Subsidiaries as at the date thereof and for the Fiscal
Year then ended, and prepared in accordance with GAAP.  Such statements

 

33

 

shall
be examined in accordance with generally accepted auditing standards by and, in
the case of such statements performed on a consolidated basis, accompanied by a
report thereon unqualified in any respect of independent certified public
accountants selected by Fleetwood and reasonably satisfactory to the Agent.  Fleetwood and the Borrowers hereby authorize
the Agent to communicate directly with their certified public accountants and,
by this provision, authorize those accountants to disclose to the Agent any and
all financial statements and other supporting financial documents and schedules
relating to Fleetwood and its Subsidiaries and to discuss directly with the
Agent, in the presence of Fleetwood, the finances and affairs of Fleetwood and
its Subsidiaries; provided that Fleetwood shall not be required to
provide consolidating cash flow statements and changes in stockholders’ equity.

 

(b)                                 As soon as available, but in any
event not later than forty-five (45) days after the end of the first three
Fiscal Quarters of any Fiscal Year, consolidated and consolidating (by Business
Unit) unaudited balance sheets of Fleetwood and its consolidated Subsidiaries
as at the end of such Fiscal Quarter, and consolidated and consolidating (by
Business Unit) unaudited income statements and cash flow statements for
Fleetwood and its consolidated Subsidiaries for such Fiscal Quarter and for the
period from the beginning of the Fiscal Year to the end of such Fiscal Quarter,
all in reasonable detail, fairly presenting the financial position and results
of operations of Fleetwood and its consolidated Subsidiaries as at the date
thereof and for such periods, and, in each case, in comparable form, figures
for the corresponding period in the prior Fiscal Year and in the budget of
Fleetwood and its Subsidiaries, and prepared in accordance with GAAP applied
consistently with the audited Financial Statements required to be delivered
pursuant to Section 5.2(a). 
Fleetwood shall certify by a certificate signed by its chief financial
officer that all such statements have been prepared in accordance with GAAP and
present fairly the financial position of Fleetwood and its Subsidiaries as at
the dates thereof and its results of operations for the periods then ended,
subject to normal year-end adjustments and to the absence of footnotes required
by GAAP; provided that Fleetwood shall not be required to provide
consolidating cash flow statements and changes in stockholders’ equity.

 

(c)                                  As soon as available, but in any
event no later than 30 days after the end of each fiscal month (other than any
month which is also the end of a Fiscal Quarter), consolidated and
consolidating (by Business Unit) unaudited balance sheets of Fleetwood and its
consolidated Subsidiaries as at the end of such fiscal month, and consolidated
and consolidating (by Business Unit) unaudited income statements and
consolidated unaudited cash flow statements for Fleetwood and its consolidated
Subsidiaries for such fiscal month and for the period from the beginning of the
Fiscal Year to the end of such fiscal month, all in reasonable detail, fairly presenting
the financial position and results of operations of Fleetwood and its
consolidated Subsidiaries as at the date thereof and for such periods, and, in
each case, in comparable form, figures for the corresponding period in the
budget of Fleetwood and its Subsidiaries and for the corresponding

 

34

 

period
in the prior Fiscal Year, and prepared in accordance with GAAP applied
consistently with the audited Financial Statements required to be delivered
pursuant to Section 5.2(a). 
Fleetwood shall certify by a certificate signed by its chief financial
officer or chief accounting officer that all such statements have been prepared
in accordance with GAAP and present fairly the financial position of Fleetwood
and its Subsidiaries as at the dates thereof and its results of operations for
the periods then ended, subject to normal year-end adjustments and the absence
of footnotes required by GAAP; provided that Fleetwood shall not be
required to provide consolidating cash flow statements and changes in
stockholders’ equity.

 

(d)                                 With each of the audited Financial
Statements delivered pursuant to Section 5.2(a), a certificate of
the independent certified public accountants that examined such statement to
the effect that they have reviewed and are familiar with this Agreement and
that, in examining such Financial Statements, they did not become aware of any
fact or condition which then constituted a Default or Event of Default with
respect to a financial covenant, except for those, if any, described in
reasonable detail in such certificate.

 

(e)                                  With each of the annual audited
Financial Statements delivered pursuant to Section 5.2(a), and
within forty-five (45) days after the end of each Fiscal Quarter, a certificate
of the chief financial officer, vice president-treasurer or vice
president-controller of Fleetwood setting forth in reasonable detail the
calculations required to establish that Fleetwood and its Subsidiaries were in
compliance with the covenants set forth in Sections 7.22 and 7.24
during the period covered in such Financial Statements and as at the end
thereof.  Within thirty (30) days after
the end of each fiscal month, a certificate of the chief financial officer,
vice president-treasurer or vice president-controller of Fleetwood setting
forth in reasonable detail the calculations required to establish whether a
Minimum Liquidity Event shall have occurred as set forth in Section 7.24.  Within forty-five (45) days after the end of
each Fiscal Quarter, a certificate of the chief financial officer, vice
president-treasurer or vice president-controller of Fleetwood stating that,
except as explained in reasonable detail in such certificate, (A) all of
the representations and warranties of the Loan Parties contained in this
Agreement and the other Loan Documents are correct and complete in all material
respects as at the date of such certificate as if made at such time, except for
those that speak as of a particular date, which shall have been true and
correct as of such date, (B) the Loan Parties are, at the date of such
certificate, in compliance in all material respects with all of their
respective covenants and agreements in this Agreement and the other Loan
Documents, (C) no Default or Event of Default then exists or existed
during the period covered by the Financial Statements for such Fiscal Quarter, (D) describing
and analyzing in reasonable detail all material trends, changes, and
developments in each and all Financial Statements; and (E) explaining the
variances of the figures in the corresponding Latest Projections and prior
Fiscal Year financial statements.  If any
such certificate discloses that a representation or warranty is not correct or
complete, or that a covenant has not been complied with, or that a Default or

 

35

 

Event
of Default existed or exists, such certificate shall set forth what action Loan
Parties have taken or propose to take with respect thereto.

 

(f)                                    No sooner than sixty (60) days prior
to and not more than thirty (30) days after the beginning of each Fiscal Year,
annual forecasts (to include forecasted consolidated and consolidating (by
Business Unit) balance sheets and income statements and consolidated cash flow
statements) for Fleetwood and its Subsidiaries as at the end of and for each
quarter of such Fiscal Year.

 

(g)                                 Promptly after filing with the PBGC
and the IRS, a copy of each annual report or other material filing filed with
respect to each Plan of Fleetwood and its Subsidiaries.

 

(h)                                 Promptly upon the filing thereof,
copies of all reports, if any, to or other documents filed by Fleetwood or any
of its Subsidiaries with the Securities and Exchange Commission under the
Exchange Act, and all reports, notices, or statements sent or received by
Fleetwood or any of its Subsidiaries to or from the holders of any equity
interests of Fleetwood or any of its Subsidiaries (other than routine
non-material correspondence sent by shareholders of Fleetwood to Fleetwood) or
any such Subsidiary or of any Debt of Fleetwood or any of its Subsidiaries
registered under the Securities Act or to or from the trustee under any
indenture under which the same is issued.

 

(i)                                     As soon as available, but in any
event not later than 15 days after any Loan Party’s receipt thereof, a copy of
all management reports and management letters prepared for any Loan Party by
any independent certified public accountants.

 

(j)                                     Promptly after their preparation,
copies of any and all proxy statements, financial statements, and reports which
Fleetwood makes available to its shareholders.

 

(k)                                  If requested by the Agent, promptly
after filing with the IRS, a copy of each tax return filed by Fleetwood or by
any of its Subsidiaries.

 

(l)                                     No later than Wednesday of each
week, a schedule of the Borrowers’ Accounts created, credits given, cash
collected and other adjustments to Accounts since the last schedule, together
with a Borrowing Base Certificate as of the end of the preceding week (a “Weekly
Borrowing Base Certificate”) and all supporting information in accordance
with Section 9 of the Security Agreement.

 

(m)                               Not later than the 15th day after
each Fiscal Quarter, a report, in form and substance satisfactory to the Agent,
with respect to the Repurchase Obligations.

 

(n)                                 [RESERVED].

 

36

 

(o)                                 Such additional information as any
Agent and/or any Lender may from time to time reasonably request regarding the
financial and business affairs of Fleetwood or any Subsidiary.

 

5.3                                 Notices to the Lenders.  Fleetwood or the Borrowers shall notify the
Agent and the Lenders in writing of the following matters at the following
times:

 

(a)                                  Promptly, and, in any event, within
two (2) Business Days, after becoming aware of any Default or Event of
Default;

 

(b)                                 Promptly, and, in any event, within
two (2) Business Days, after becoming aware of the assertion by the holder
of any Capital Stock of Fleetwood or of any Subsidiary or the holder of any
Debt of Fleetwood or any Subsidiary in a face amount in excess of $1,000,000
that a default exists with respect thereto or that Fleetwood or such Subsidiary
is not in compliance with the terms thereof, or the threat or commencement by
such holder of any enforcement action because of such asserted default or
non-compliance; and promptly, but, in any event within two (2) Business
Days, after becoming aware of the assertion that any Repurchase Obligations of
$500,000 or more payable in cash shall have become due and payable;

 

(c)                                  Promptly, and, in any event, within
two (2) Business Days, after becoming aware of any event or circumstance
(other than general economic trends) which could reasonably be expected to have
a Material Adverse Effect;

 

(d)                                 Promptly, and, in any event, within
two (2) Business Days, after becoming aware of any pending or threatened
action, suit, or proceeding, by any Person, or any pending or threatened
investigation by a Governmental Authority, which if adversely determined would
reasonably be expected to have a Material Adverse Effect;

 

(e)                                  Promptly, and, in any event, within
two (2) Business Days, after becoming aware of any pending or threatened
strike, work stoppage, unfair labor practice claim, or other labor dispute
affecting Fleetwood or any of its Subsidiaries in a manner which could
reasonably be expected to have a Material Adverse Effect;

 

(f)                                    Promptly, and, in any event, within
two (2) Business Days, after becoming aware of any violation of any law,
statute, regulation, or ordinance of a Governmental Authority affecting
Fleetwood or any Subsidiary which could reasonably be expected to have a
Material Adverse Effect;

 

(g)                                 Promptly, and, in any event, within
two (2) Business Days, after receipt of any notice of any violation by
Fleetwood or any of its Subsidiaries of any Environmental Law which could
reasonably be expected to have a Material Adverse Effect or that any
Governmental Authority has asserted in writing that Fleetwood or any Subsidiary
is not in compliance in any material respect with any

 

37

 

Environmental
Law or is investigating Fleetwood’s or such Subsidiary’s compliance therewith;

 

(h)                                 Promptly, and, in any event, within
two (2) Business Days, after receipt of any written notice that Fleetwood
or any of its Subsidiaries is or may be liable to any Person as a result of the
Release or threatened Release of any Contaminant or that Fleetwood or any
Subsidiary is subject to investigation by any Governmental Authority evaluating
whether any remedial action is needed to respond to the Release or threatened
Release of any Contaminant which, in either case, is reasonably likely to give
rise to liability in excess of $1,000,000;

 

(i)                                     Promptly, and, in any event, within
two (2) Business Days, after receipt of any written notice of the
imposition of any Environmental Lien against any property of Fleetwood or any
of its Subsidiaries;

 

(j)                                     Any change in any Loan Party’s name,
state of organization, locations of Collateral, or form of organization, trade
names under which it will sell Inventory or create Accounts, or to which
instruments in payment of Accounts may be made payable, in each case at least
thirty (30) days prior thereto;

 

(k)                                  Within ten (10) Business Days
after Fleetwood or any ERISA Affiliate knows or has reason to know, that an
ERISA Event or a prohibited transaction (as defined in Sections 406 of ERISA
and 4975 of the Code) has occurred, and, when known, any action taken or
threatened by the IRS, the DOL or the PBGC with respect thereto;

 

(l)                                     Upon request, or, in the event that
such filing reflects a significant change with respect to the matters covered
thereby, within three (3) Business Days after the filing thereof with the
PBGC, the DOL or the IRS, as applicable, copies of the following:  (i) each annual report (form 5500
series), including Schedule B thereto, filed with the PBGC, the DOL or the
IRS with respect to each Plan, (ii) a copy of each funding waiver request
filed with the PBGC, the DOL or the IRS with respect to any Plan and all
communications received by Fleetwood or any ERISA Affiliate from the PBGC, the
DOL or the IRS with respect to such request, and (iii) a copy of each
other filing or notice filed with the PBGC, the DOL or the IRS, with respect to
each Plan by either Fleetwood or any ERISA Affiliate;

 

(m)                               Upon request, copies of each
actuarial report for any Plan or Multi-employer Plan and annual report for any
Multi-employer Plan; and within three (3) Business Days after receipt
thereof by Fleetwood or any ERISA Affiliate, copies of the following:  (i) any notices of the PBGC’s intention
to terminate a Plan or to have a trustee appointed to administer such Plan; (ii) any
favorable or unfavorable determination letter from the IRS regarding the
qualification of a Plan under Section 401(a) of the Code; or (iii) any
notice from a Multi-employer Plan regarding the imposition of withdrawal
liability;

 

38

 

(n)                                 Within three (3) Business Days
after the occurrence thereof: (i) any changes in the benefits of any
existing Plan which increase the annual costs of Fleetwood and its Subsidiaries
with respect thereto by an amount in excess of $1,000,000 or the establishment
of any new Plan or the commencement of contributions to any Plan to which
Fleetwood or any ERISA Affiliate was not previously contributing; or (ii) any
failure by Fleetwood or any ERISA Affiliate to make a required installment or
any other required payment under Section 412 of the Code on or before the
due date for such installment or payment; or

 

(o)                                 Within three (3) Business Days
after Fleetwood or any ERISA Affiliate knows or has reason to know that any of
the following events has or will occur:  (i) a
Multi-employer Plan has been or will be terminated; (ii) the administrator
or plan sponsor of a Multi-employer Plan intends to terminate a Multi-employer
Plan; or (iii) the PBGC has instituted or will institute proceedings under
Section 4042 of ERISA to terminate a Multi-employer Plan.

 

Each notice
given under this Section shall describe the subject matter thereof in
reasonable detail, and shall set forth the action that Fleetwood, its
Subsidiary, or any ERISA Affiliate, as applicable, has taken or proposes to
take with respect thereto.

 

ARTICLE 6

GENERAL WARRANTIES AND REPRESENTATIONS

 

Fleetwood and the Borrowers
warrant and represent to the Agent and the Lenders that except as hereafter
disclosed to and accepted by the Agent and the Majority Lenders in writing:

 

6.1                                 Authorization, Validity, and
Enforceability of this Agreement and the Loan Documents.  Each Loan Party has the power and authority
to execute, deliver and perform this Agreement and the other Loan Documents to
which it is a party, to incur the Obligations, and to grant to the Agent Liens
upon and security interests in the Collateral. 
Each Loan Party has taken all necessary action (including obtaining
approval of its stockholders if necessary) to authorize its execution,
delivery, and performance of this Agreement and the other Loan Documents to
which it is a party.  This Agreement and
the other Loan Documents to which it is a party have been duly executed and
delivered by each Loan Party which is a party thereto, and constitute the
legal, valid and binding obligations of such Loan Party, enforceable against it
in accordance with their respective terms, subject to the effect of bankruptcy,
insolvency, moratorium and other laws affecting the rights of creditors
generally and to the effect of general principles of equity.  Each Loan Party’s execution, delivery, and
performance of this Agreement and the other Loan Documents to which it is a
party do not and will not conflict with, or constitute a violation or breach
of, or result in the imposition of any Lien upon the property of Fleetwood or
any of its Subsidiaries, by reason of the terms of (a) any material
contract, mortgage, lease, agreement, indenture, or instrument to which
Fleetwood or any of its Subsidiaries is a party or which is binding upon it,
the breach of which could reasonably be expected to result in a Material
Adverse Effect, (b) any Requirement of Law applicable to Fleetwood or any
of its Subsidiaries, the violation of which could reasonably be expected to
result in a Material Adverse Effect or (c) the certificate or
articles of incorporation or by-laws or

 

39

 

the limited liability company or limited partnership
agreement (or other organizational documents) of Fleetwood or any of its
Subsidiaries.

 

6.2                                 Validity and Priority of Security
Interest.  The
provisions of this Agreement, the Mortgages, and the other Loan Documents (upon
recordation thereof) create legal and valid Liens on all the Collateral in
favor of the Agent, for the ratable benefit of the Agent and the Revolving
Credit Lenders or the Term Lenders, as the case may be, and, when properly
filed and, where applicable recorded, such Liens constitute perfected and
continuing Liens on all the Collateral, having priority over all other Liens on
the Collateral (except for Permitted Liens) securing all the Obligations, and
enforceable against the Loan Parties and all third parties.  The Liens on the Collateral constitute first
priority perfected Liens in favor of the Agent, for the ratable benefit of the
Agent and the Lenders, except in each case for Permitted Liens; provided that,
as between the Lenders, the Liens created on the Collateral other than the Term
Loan Collateral constitute (x) first priority, perfected Liens in favor of the
Agent, for the ratable benefit of the Agent and the Revolving Credit Lenders,
and (y) second priority, perfected Liens in favor of the Agent, for the ratable
benefit of the Agent and the Term Lenders, and the Liens created on the Term
Loan Collateral constitute (x) first priority, perfected Liens in favor of the
Agent, for the ratable benefit of the Agent and the Term Lenders, and (y)
second priority, perfected Liens in favor of the Agent, for the ratable benefit
of the Agent and the Revolving Credit Lenders.

 

6.3                                 Organization and Qualification.  Each Loan Party (a) is duly organized or
incorporated and validly existing in good standing under the laws of the state
of its organization or incorporation, (b) is qualified to do business and
is in good standing in the jurisdictions set forth on Schedule 6.3
to the Existing Credit Agreement, as amended prior to the Closing Date, which
are the only jurisdictions in which qualification is material to the conduct of
its business and (c) has all requisite power and authority to conduct its
business and to own its property.

 

6.4                                 Corporate Name; Prior Transactions.  Except as set forth on Schedule 6.4
to the Existing Credit Agreement, as amended prior to the Closing Date, no Loan
Party has, during the five (5) years prior to the Closing Date, been known
by or used any other corporate or fictitious name, or been a party to any
merger or consolidation, or acquired all or substantially all of the assets of
any Person, or acquired any of its property outside of the ordinary course of
business.

 

6.5                                 Subsidiaries and Affiliates.  Schedule 6.5 to the Existing
Credit Agreement, as amended prior to the Closing Date, and as the same may be
amended after the Closing Date with the consent of the Agent (such consent not
to be unreasonably withheld), is a correct and complete list of the name and
relationship to Fleetwood of each and all of its Subsidiaries and, to the
knowledge of Fleetwood and the Borrowers, their other Affiliates.  Each Subsidiary which is not a Loan Party is (a) duly
incorporated or organized and validly existing in good standing under the laws
of its state of incorporation or organization set forth on Schedule 6.5
to the Existing Credit Agreement, as amended prior to the Closing Date, and as
same may be amended after the Closing Date with the consent of the Agent (such
consent not to be unreasonably withheld), and (b) qualified to do business
and in good standing in each jurisdiction in which the failure to so qualify or
be in good standing would reasonably be expected to have a material adverse
effect on any such Subsidiary’s business, operations,

 

40

 

property, or condition (financial or otherwise) and (c) has
all requisite power and authority to conduct its business and own its property.

 

6.6                                 Financial Statements and Projections.

 

(a)                                  Fleetwood has delivered to the Agent
and the Lenders the audited balance sheet and related statements of income,
retained earnings, cash flows, and changes in stockholders equity for Fleetwood
and its consolidated Subsidiaries as of April 25, 2004, and for the Fiscal
Year then ended, accompanied by the report thereon of its independent certified
public accountants, Ernst & Young. 
Fleetwood has also delivered to the Agent and the Lenders the unaudited
balance sheet and related statements of income and cash flows for Fleetwood and
its consolidated Subsidiaries as of the Fiscal Quarter ending January 23,
2005.  Such financial statements are
attached hereto as Exhibit C. 
All such financial statements have been prepared in accordance with GAAP
and present accurately and fairly in all material respects the financial position
of Fleetwood and its consolidated Subsidiaries as at the dates thereof and
their results of operations for the periods then ended, subject in the case of
the unaudited statements to normal year end audit adjustments and to the
omission of footnotes required by GAAP.

 

(b)                                 The Latest Projections when
submitted to the Lenders as required herein represent the good faith estimate
by the Borrowers of the future financial performance of Fleetwood and its
consolidated Subsidiaries for the periods set forth therein.  The Latest Projections have been prepared on
the basis of the assumptions set forth therein, which the Borrowers believe are
fair and reasonable in light of current and reasonably foreseeable business
conditions at the time submitted to the Lenders.

 

6.7                                 Capitalization.  Schedule 6.7 to the Existing
Credit Agreement, as amended prior to the Closing Date, sets forth, as of the
First Amendment and Restatement Date or of such amendment, the capitalization
of Fleetwood and its Subsidiaries and all of the authorized and issued Capital
Stock of each such Person.  All
outstanding Capital Stock has been validly issued, and is fully paid and
non-assessable.  All of the Capital Stock
of Subsidiaries is owned, beneficially and of record, by the Person set forth
on such Schedule 6.7 to the Existing Credit Agreement, as amended
prior to the Closing Date.

 

6.8                                 Solvency.  Each of Fleetwood, Holdings and Retail is,
and upon the incurrence of any Obligations by such Loan Party will be,
Solvent.  Each of FMC, taken as a whole,
and FRC, taken as a whole, is, and upon the incurrence of any Obligations by
any Loan Party will be Solvent.

 

6.9                                 Debt.  After giving effect to the Revolving Loans
outstanding as of and the making of the Term Loan on the Closing Date,
Fleetwood and its Subsidiaries have no Debt on the Closing Date, except (a) the
Obligations, (b) the Subordinated Debt existing on the Closing Date in an
amount (including principal and accrued but unpaid interest) of not more than
$375,000,000, and the Trust Securities in relation thereto also outstanding on
the Closing Date, (c) Debt described on Schedule 6.9 hereto, (d) Floor
Plan Debt incurred in accordance with

 

41

 

Section 7.13, (e) Debt
outstanding under any Warehouse Financing Lines of Credit incurred in
accordance with Section 7.13, (g) Guaranties entered into in
accordance with Section 7.12 and (h) other Debt in an
aggregate amount of not more than $5,000,000.

 

6.10                           Distributions.  Since June 12, 2001, no Distribution has
been declared, paid, or made upon or in respect of any Capital Stock or other
securities of Fleetwood or any of its Subsidiaries, except as permitted by Section 7.10.

 

6.11                           Real Estate; Leases.  Schedule 6.11 sets forth, as of
the First Amendment and Restatement Date, a correct and complete list of all
Real Estate owned in fee simple by Fleetwood or any of its Subsidiaries, all
leases and subleases of real or personal property held by Fleetwood or any of
its Subsidiaries as lessee or sublessee (other than leases of personal property
as to which Fleetwood or any of its Subsidiaries is lessee or sublessee for
which the value of such personal property covered by such lease in the
aggregate is less than $500,000), and all leases and subleases of real or
personal property held by Fleetwood or any of its Subsidiaries as lessor, or
sublessor.  Each of such leases and
subleases is valid and enforceable in accordance with its terms and is in full
force and effect, and to the knowledge of Fleetwood and the Borrowers no
material default by any party to any such lease or sublease exists.  Fleetwood and its Subsidiaries have good and
marketable title in fee simple to the Real Estate identified on Schedule 6.11
to the Existing Credit Agreement, as amended prior to the Closing Date, as
owned by Fleetwood or any of its Subsidiaries, or valid leasehold interests in
all Real Estate designated therein as “leased” by Fleetwood or any of its
Subsidiaries and Fleetwood and its Subsidiaries have good, indefeasible, and
merchantable title to all of its other property reflected on the most recent
Financial Statements delivered to the Agent and the Lenders, except as disposed
of in the ordinary course of business or as otherwise permitted by Section 7.9
since the date thereof, free of all Liens except Permitted Liens.

 

6.12                           Proprietary Rights.  Schedule 6.12 to the Existing
Credit Agreement, as amended prior to the Closing Date, and as the same may be
amended after the Closing Date with the consent of the Agent (such consent not
to be unreasonably withheld), sets forth a correct and complete list of all of
the Proprietary Rights of the Loan Parties that are material to the conduct of
the businesses of the Loan Parties (other than commercially available third
party software).  As of the Closing Date,
none of such Proprietary Rights is subject to any licensing agreement or
similar arrangement except as set forth on Schedule 6.12 to the
Existing Credit Agreement, as amended prior to the Closing Date, and as the
same may be amended after the Closing Date with the consent of the Agent (such
consent not to be unreasonably withheld). 
To the knowledge of Fleetwood and the Borrowers, none of the Proprietary
Rights infringes on or conflicts with any other Person’s property, and, to the
knowledge of Fleetwood and the Borrowers no other Person’s property infringes
on or conflicts with such Proprietary Rights, except in each case where such
infringement or conflict could not reasonably be expected to result in a
Material Adverse Effect.  The Proprietary
Rights described on Schedule 6.12 to the Existing Credit Agreement,
as amended prior to the Closing Date, and as the same may be amended after the
Closing Date with the consent of the Agent (such consent not to be unreasonably
withheld), constitute all of the property of such type material to the current
and anticipated future conduct of the business of the Loan Parties.

 

42

 

6.13                           Trade Names.  All trade names or styles under which any
Loan Party will sell Inventory or create Accounts, or to which instruments in
payment of Accounts may be made payable, are listed on Schedule 6.13
to the Existing Credit Agreement, as amended prior to the Closing Date.

 

6.14                           Litigation.  Except as set forth on Schedule 6.14
to the Existing Credit Agreement, as amended prior to the Closing Date, and as
the same may be amended after the Closing Date with the consent of the Agent
(such consent not to be unreasonably withheld), there is no pending, or to the
best knowledge of Fleetwood and the Borrowers threatened, action, suit,
proceeding, or counterclaim by any Person, or to the best knowledge of
Fleetwood and the Borrowers, investigation by any Governmental Authority, which
could reasonably be expected to have a Material Adverse Effect.

 

6.15                           Labor Disputes.  Except as set forth on Schedule 6.15
to the Existing Credit Agreement, as amended prior to the Closing Date, as of
the First Amendment and Restatement Date or the date of such amendment (a) there
is no collective bargaining agreement or other labor contract covering
employees of Fleetwood or any of its Subsidiaries, (b) no such collective
bargaining agreement or other labor contract is scheduled to expire during the
term of this Agreement, (c) no union or other labor organization is
seeking to organize, or to be recognized as, a collective bargaining unit of
employees of Fleetwood or any of its Subsidiaries or for any similar purpose,
and (d) there is no pending or (to the best knowledge of the Borrowers)
threatened, strike, work stoppage, material unfair labor practice claim, or
other material labor dispute against or affecting Fleetwood or its Subsidiaries
or their employees.

 

6.16                           Environmental Laws.  Except as otherwise disclosed on Schedule 6.16
to the Existing Credit Agreement, as amended prior to the Closing Date:

 

(a)                                  Fleetwood and its Subsidiaries have
complied in all material respects with all Environmental Laws and neither
Fleetwood nor any Subsidiary nor any of its presently owned real property or
presently conducted operations, nor its previously owned real property or prior
operations, is subject to any enforcement order from or liability agreement
with any Governmental Authority or private Person respecting (i) compliance
with any Environmental Law or (ii) any potential liabilities and costs or
remedial action arising from the Release or threatened Release of a
Contaminant.

 

(b)                                 Fleetwood and its Subsidiaries have
obtained all permits necessary for their current operations under Environmental
Laws, the absence of which could reasonably be expected to have a Material
Adverse Effect, and all such permits are in good standing and Fleetwood and its
Subsidiaries are in compliance with all material terms and conditions of such
permits.

 

(c)                                  Neither Fleetwood nor any of its
Subsidiaries, nor, to the best knowledge of Fleetwood and the Borrowers, any of
its predecessors in interest, has stored, treated or disposed of any hazardous
waste in violation of applicable law, except for any such violation as could
not reasonably be expected to have a Material Adverse Effect.

 

43

 

(d)                                 Neither Fleetwood nor any of its
Subsidiaries has, as of the Closing Date, received any summons, complaint,
order or similar written notice indicating that it is not currently in
compliance with, or that any Governmental Authority is investigating its
compliance with, any Environmental Laws or that it is or may be liable to any
other Person as a result of a Release or threatened Release of a Contaminant.

 

(e)                                  To the best knowledge of Fleetwood
and the Borrowers, as of the Closing Date, none of the present or past
operations of Fleetwood and its Subsidiaries is the subject of any
investigation by any Governmental Authority evaluating whether any remedial action
is needed to respond to a Release or threatened Release of a Contaminant.

 

(f)                                    There is not now, nor to the best
knowledge of Fleetwood and the Borrowers has there ever been on or in the Real
Estate:

 

(i)                                     any underground storage tanks or
other than those maintained and/or closed in compliance in all material
respects with applicable laws or surface impoundments,

 

(ii)                                  any asbestos-containing material
that is friable, except such as has been removed in compliance in all material
respects with Environmental Laws, or

 

(iii)                               any polychlorinated biphenyls (PCBs)
used in hydraulic oils, electrical transformers or other equipment, other than
those maintained in compliance in all material respects with Environmental
Laws.

 

(g)                                 Neither Fleetwood nor any of its
Subsidiaries has filed any notice under any requirement of Environmental Law
reporting a spill or accidental and unpermitted Release or discharge of a
Contaminant into the environment.

 

(h)                                 Neither Fleetwood nor any of its
Subsidiaries has entered into any negotiations or settlement agreements with
any Person (including the prior owner of its property) imposing material
obligations or liabilities on Fleetwood or any of its Subsidiaries with respect
to any remedial action in response to the Release of a Contaminant or
environmentally related claim.

 

(i)                                     None of the products currently
manufactured, distributed or sold by Fleetwood or any of its Subsidiaries
contain asbestos containing material.

 

(j)                                     No Environmental Lien has attached
to the Real Estate.

 

6.17                           No Violation of Law.  Neither Fleetwood nor any of its Subsidiaries
is in violation of any law, statute, regulation, ordinance, judgment, order, or
decree applicable to it which violation could reasonably be expected to have a
Material Adverse Effect.

 

44

 

6.18                           No Default.  Neither Fleetwood nor any of its Subsidiaries
is in default with respect to any note, indenture, loan agreement, mortgage,
lease, deed, or other agreement to which Fleetwood or such Subsidiary is a
party or by which it is bound, which default could reasonably be expected to
have a Material Adverse Effect.

 

6.19                           ERISA Compliance.  Except as specifically disclosed in Schedule 6.19
to the Existing Credit Agreement, as amended prior to the Closing Date:

 

(a)                                  Each Plan is in compliance in all
material respects with the applicable provisions of ERISA, the Code and other
federal or state law.  Each Plan which is
intended to qualify under Section 401(a) of the Code has received a
favorable determination letter from the IRS and to the best knowledge of
Fleetwood and the Borrowers, nothing has occurred which would cause the loss of
such qualification.  Fleetwood and each
ERISA Affiliate has made all required contributions to any Plan subject to Section 412
of the Code, and no application for a funding waiver or an extension of any
amortization period pursuant to Section 412 of the Code has been made with
respect to any Plan.

 

(b)                                 There are no pending or, to the best
knowledge of Fleetwood and Borrowers, threatened claims, actions or lawsuits,
or action by any Governmental Authority, with respect to any Plan which has
resulted or could reasonably be expected to result in a Material Adverse
Effect.  There has been no prohibited
transaction or violation of the fiduciary responsibility rules with
respect to any Plan which has resulted or could reasonably be expected to
result in a Material Adverse Effect.

 

(c)                                  (i) No ERISA Event has occurred
or is reasonably expected to occur; (ii) no Pension Plan has any Unfunded
Pension Liability; (iii) neither Fleetwood nor any ERISA Affiliate has
incurred, or reasonably expects to incur, any liability under Title IV of ERISA
with respect to any Pension Plan (other than premiums due and not delinquent
under Section 4007 of ERISA); (iv) neither Fleetwood nor any ERISA
Affiliate has incurred, or reasonably expects to incur, any liability (and no
event has occurred which, with the giving of notice under Section 4219 of
ERISA, would result in such liability) under Section 4201 or 4243 of ERISA
with respect to a Multi-employer Plan; and (v) neither Fleetwood nor any
ERISA Affiliate has engaged in a transaction that could be subject to Section 4069
or 4212(c) of ERISA.

 

6.20                           Taxes.  Fleetwood and its Subsidiaries have filed all
federal income and other material federal, provincial, state and other tax
returns required by law to be filed, and have paid all federal income and other
material taxes, assessments, fees and other governmental charges levied or
imposed upon them or their properties, income or assets otherwise due and
payable unless such unpaid taxes and assessments would constitute a Permitted
Lien or are being contested in good faith by appropriate proceedings.  Fleetwood and its Subsidiaries have withheld
and paid over all taxes required to have been withheld and paid over, and
complied in all material respects with all information reporting requirements
in connection with amounts paid or owing, to any employee, creditor,
independent contractor or other third party.

 

45

 

6.21                           Regulated Entities.  None of Fleetwood, any Person controlling
Fleetwood, or any Subsidiary, is an “Investment Company” within the meaning of
the Investment Company Act of 1940.  No
Loan Party is subject to regulation under the Public Utility Holding Company
Act of 1935, the Federal Power Act, the Interstate Commerce Act, any state
public utilities code or law, or any other federal or state statute or
regulation limiting its ability to incur indebtedness.

 

6.22                           Use of Proceeds; Margin Regulations.  The proceeds of the Loans are to be used
solely for the repayment of Debt, working capital and other general corporate
purposes.  Neither Fleetwood nor any
Subsidiary is engaged in the business of purchasing or selling Margin Stock or
extending credit for the purpose of purchasing or carrying Margin Stock.

 

6.23                           Copyrights, Patents, Trademarks and
Licenses, etc.  Each Loan Party owns or is licensed or
otherwise has the right to use all of the patents, trademarks, service marks,
trade names, copyrights, contractual franchises, licenses, rights of way,
authorizations and other rights that are reasonably necessary for the operation
of its businesses, without known conflict in any material respect with the
rights of any other Person.  To the
knowledge of Fleetwood and the Borrowers, no slogan or other advertising
device, product, process, method, substance, part or other material now
employed, or now contemplated to be employed, by Fleetwood or any Subsidiary
infringes upon any rights held by any other Person in any manner that could
reasonably be expected to result in a Material Adverse Effect.  No claim or litigation regarding any of the
foregoing is pending or, to the knowledge of Fleetwood and the Borrowers,
threatened, and to the knowledge of Fleetwood and the Borrowers no patent,
invention, device, application, principle or any statute, law, rule,
regulation, standard or code is pending or, to the knowledge of Fleetwood and
the Borrowers, proposed, which, in either case, could reasonably be expected to
have a Material Adverse Effect.

 

6.24                           No Material Adverse Change.  No Material Adverse Effect has occurred since
April 27, 2003.

 

6.25                           Full Disclosure.  None of the representations or warranties
made by Fleetwood or any Subsidiary in the Loan Documents as of the date such
representations and warranties are made or deemed made, and none of the
statements contained in any exhibit, report, written statement or certificate
furnished by or on behalf of Fleetwood or any Subsidiary in connection with the
Loan Documents (including the offering and disclosure materials delivered by or
on behalf of Fleetwood or any of its Subsidiaries to the Lenders prior to the
Closing Date), contains any untrue statement of a material fact or, when
considered as a whole, omits any material fact required to be stated therein or
necessary to make the statements made therein, in light of the circumstances
under which they are made, not misleading as of the time when made or
delivered.

 

6.26                           Material Agreements.  There are no agreements, contracts and other
documents that are material to Fleetwood and its Subsidiaries other than the
Material Contracts.

 

6.27                           Bank Accounts.  Schedule 6.27 to the Existing
Credit Agreement, as amended prior to the Closing Date, contains a complete and
accurate list of all bank accounts maintained by any Loan Party with any bank
or other financial institution.

 

46

 

6.28                           Governmental Authorization.  No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority or other Person is necessary or required in connection
with the execution, delivery or performance by, or enforcement against,
Fleetwood or any of its Subsidiaries of this Agreement or any other Loan
Document.

 

6.29                           Senior Indebtedness.  All Obligations of Fleetwood under the Loan
Documents are “Senior Indebtedness” under the 2003 Subordinated
Debentures.  All Obligations of Fleetwood
under this Agreement and the other Loan Documents to the extent such
Obligations are (A) liabilities of Fleetwood for borrowed money or under
any reimbursement obligation relating to a letter of credit, surety bond or
similar instrument, or (B) liabilities of Fleetwood evidenced by a bond,
note, debenture or similar instrument, or (C) liabilities of others
described in the preceding clauses (A) and (B) that Fleetwood has
guaranteed or that are otherwise its legal liability, or (D) deferrals
renewals, extensions or refundings of any liability of the types referred to in
clauses (A), (B) and (C) above, are “Senior Indebtedness” under the
Subordinated Debentures, the New Subordinated Debentures and Fleetwood’s
guaranty of the Trust Securities.

 

ARTICLE 7

AFFIRMATIVE AND
NEGATIVE COVENANTS

 

Fleetwood and the Borrowers
covenant to the Agent and each Lender that so long as any of the Obligations
remain outstanding or this Agreement is in effect:

 

7.1                                 Taxes and Other Obligations.  Fleetwood shall, and shall cause each of its
Subsidiaries to, (a) file when due (subject to any extensions thereof) all
tax returns and other reports which it is required to file; (b) pay, or
provide for the payment, when due (subject to permitted extensions), of all
material taxes, fees, assessments and other governmental charges against it or
upon its property, income and franchises, make all required withholding and
other tax deposits, and establish adequate reserves for the payment of all such
items, and provide to the Agent and the Lenders, upon request, satisfactory
evidence of its timely compliance with the foregoing; and (c) pay when due
all Debt owed by it and all claims of materialmen, mechanics, carriers,
warehousemen, landlords, processors and other like Persons, and all other
indebtedness owed by it if failure to pay such Debt or such claims would
otherwise result in an Event of Default and perform and discharge in a timely
manner all other obligations undertaken by it; provided, however,
so long as Fleetwood has notified the Agent in writing, neither Fleetwood nor
any of its Subsidiaries need pay any amount pursuant to clauses (b) or (c) above
(i) it is contesting in good faith by appropriate proceedings diligently
pursued, (ii) as to which Fleetwood or its Subsidiary, as the case may be,
has established proper reserves as required under GAAP, and (iii) the
nonpayment of which does not result in the imposition of a Lien (other than a
Permitted Lien).

 

7.2                                 Legal Existence and Good Standing.  Fleetwood shall, and shall cause each other
Loan Party to, maintain its legal existence (except as permitted by Section 7.9)
and its qualification and good standing in all jurisdictions in which the
failure to maintain such existence and qualification or good standing would
reasonably be expected to have a Material Adverse Effect.

 

47

 

7.3                                 Compliance with Law and Agreements;
Maintenance of Licenses. 
Fleetwood shall comply, and shall cause each Subsidiary to comply, in
all material respects with all Requirements of Law of any Governmental
Authority having jurisdiction over it or its business (including the Federal
Fair Labor Standards Act and all Environmental Laws).  Fleetwood shall, and shall cause each of its
Subsidiaries to, obtain and maintain all licenses, permits, franchises, and
governmental authorizations necessary to own its property and to conduct its
business as conducted on the Closing Date, except where the failure to obtain
or maintain such licenses, franchises and governmental authorizations could not
reasonably be expected to have a Material Adverse Effect.  Fleetwood shall not, and shall not permit any
of its Subsidiaries to, modify, amend or alter its certificate or articles of
incorporation, or its limited liability company operating agreement, limited
partnership agreement or other organizational documents, as applicable, other
than in a manner which does not adversely affect the rights of the Lenders or
the Agent.

 

7.4                                 Maintenance of Property; Inspection
of Property.

 

(a)                                  Fleetwood shall, and shall cause
each of its Subsidiaries to, maintain all of its property necessary and useful
in the conduct of its business, in good operating condition and repair,
ordinary wear and tear excepted and except where the failure to maintain any
such property would not reasonably be expected to have a Material Adverse
Effect.

 

(b)                                 Fleetwood shall, and shall cause
each of the Loan Parties to, permit representatives and independent contractors
of the Agent (at the expense of the Borrowers and not to exceed two (2) times
per year unless an Event of Default has occurred and is continuing) to visit
and inspect any of its properties, to examine its corporate, financial and
operating records, and make copies thereof or abstracts therefrom and to
discuss its affairs, finances and accounts with its directors, officers and
independent public accountants (and, in the case of discussions with the
Borrowers’ accountants, with the Borrowers present), at such reasonable times
during normal business hours and as soon as may be reasonably desired, upon
reasonable advance; provided, however, that representatives and
independent contractors of each Lender may, at such Lender’s own expense,
accompany the Agent’s representatives and independent contractors on such
visits and inspections.  Notwithstanding
the foregoing, when an Event of Default exists, the Agent or any Lender may do
any of the foregoing at the expense of the Borrowers at any time during normal
business hours and without advance notice.

 

7.5                                 Insurance.

 

(a)                                  Fleetwood shall maintain, and shall
cause each of its Subsidiaries to maintain, with financially sound and
reputable insurers having a rating of at least A+ or better by Best Rating
Guide, insurance against loss or damage by fire with extended coverage; theft,
burglary, pilferage and loss in transit; public liability and third party
property damage; larceny, embezzlement or other criminal liability; business
interruption; public liability and third party property damage; and such other
hazards or of such other types as is customary for Persons engaged

 

48

 

in
the same or similar business, in amounts customary for Persons engaged in the
same or similar business, and under policies acceptable to the Agent and the
Majority Lenders.  Without limiting the
foregoing, in the event that any improved Real Estate covered by the Mortgages
is determined to be located within an area that has been identified by the
Director of the Federal Emergency Management Agency as a Special Flood Hazard
Area (“SFHA”), the applicable Loan Party shall purchase and maintain
flood insurance on the improved Real Estate and any Equipment and Inventory
located on such Real Estate to the extent required by applicable law.  The amount of said flood insurance will be
reasonably determined by the Agent, and shall, at a minimum, comply with
applicable federal regulations as required by the Flood Disaster Protection Act
of 1973, as amended.  Except as otherwise
approved by the Agent, the Loan Parties shall also maintain flood insurance for
all Inventory and Equipment which is, at any time, located in a SFHA.

 

(b)                                 Fleetwood shall cause the Agent, for
the ratable benefit of the Agent and the Lenders, to be named as secured party
or mortgagee and sole loss payee or additional insured, in a manner acceptable
to the Agent.  Each policy of insurance
shall contain a clause or endorsement requiring the insurer to give not less
than thirty (30) days’ prior written notice to the Agent in the event of
cancellation of the policy for any reason whatsoever and a clause or
endorsement stating that the interest of the Agent shall not be impaired or
invalidated by any act or neglect of Fleetwood or any of its Subsidiaries or
the owner of any Real Estate for purposes more hazardous than are permitted by
such policy.  All premiums for such
insurance shall be paid by Fleetwood and its Subsidiaries when due, and
certificates of insurance and, if requested by the Agent or any Lender,
photocopies of the policies, shall be delivered to the Agent, in each case in
sufficient quantity for distribution by the Agent to each of the Lenders.  If Fleetwood and its Subsidiaries fail to
procure such insurance or to pay the premiums therefor when due, the Agent may,
and at the direction of the Majority Lenders shall, do so from the proceeds of
Revolving Loans.

 

7.6                                 Insurance and Condemnation Proceeds.  The Borrowers shall promptly notify the Agent
and the Lenders of any material loss, damage, or destruction to the Collateral,
whether or not covered by insurance.  The
Agent is hereby authorized to collect all insurance and condemnation proceeds
in respect of Collateral directly and to apply or remit them as follows:

 

(a)                                  With respect to insurance and
condemnation proceeds relating to Collateral other than Fixed Assets, after
deducting from such proceeds the reasonable expenses, if any, incurred by the
Agent in the collection or handling thereof, the Agent shall apply such
proceeds to the Revolving Loans.

 

(b)                                 With respect to insurance and
condemnation proceeds relating to Collateral consisting of Fixed Assets, the
Agent shall permit or require the Loan Parties to use such proceeds, or any
part thereof, to replace, repair, restore or rebuild the relevant Fixed Assets
in a diligent and expeditious manner with materials and workmanship of
substantially the same quality as existed before the

 

49

 

loss,
damage or destruction so long as (1) no Default or Event of Default has
occurred and is continuing and (2) the Loan Parties first (i) provide
the Agent and the Majority Lenders with plans and specifications for any such
repair or restoration which shall be reasonably satisfactory to the Majority
Lenders (such satisfaction not to be unreasonably withheld or delayed) and (ii) demonstrate
to the reasonable satisfaction of the Majority Lenders (such satisfaction not
to be unreasonably withheld or delayed) that the funds available to it will be
sufficient to complete such project in the manner provided therein.  In all other circumstances, the Agent shall
hold all such insurance and condemnation proceeds as Collateral or, if directed
by the Majority Lenders, apply such insurance and condemnation proceeds (a) if
such Fixed Assets are Term Loan Collateral, to the Term Loan or (b) otherwise,
to the Revolving Loans (but without reduction of the Revolving Loan
Commitments).  Notwithstanding the
foregoing, no insurance or condemnation proceeds relating to the Term Loan
Collateral may be used to replace, repair, restore or rebuild without the prior
written consent of Majority Term Lenders (such consent not be unreasonably
withheld or delayed).

 

7.7                                 Environmental Laws.

 

(a)                                  Fleetwood shall, and shall cause
each of its Subsidiaries to, conduct its business in compliance in all material
respects with all Environmental Laws applicable to it, including those relating
to the generation, handling, use, storage, and disposal of any
Contaminant.  Fleetwood shall, and shall
cause each of its Subsidiaries to, take prompt and appropriate action to
respond to any non-compliance with Environmental Laws and shall regularly
report to the Agent on such responses to any material non-compliance with
Environmental Laws.

 

(b)                                 Without limiting the generality of
the foregoing, Fleetwood shall submit to the Agent and the Lenders annually,
commencing on the first Anniversary Date, and on each Anniversary Date
thereafter, an update of the status of each environmental compliance or
liability issue.  The Agent or any Lender
may request copies of technical reports prepared by Fleetwood or any of its
Subsidiaries and its communications with any Governmental Authority to
determine whether Fleetwood or any of its Subsidiaries is proceeding reasonably
to correct, cure or contest in good faith any alleged non-compliance or
environmental liability.  Fleetwood
shall, at the Agent’s or the Majority Lenders’ request and at the Borrowers’
expense, (i) retain an independent environmental engineer acceptable to
the Agent to evaluate the site, including tests if appropriate, where the
non-compliance or alleged non-compliance with Environmental Laws has occurred
and prepare and deliver to the Agent, in sufficient quantity for distribution
by the Agent to the Lenders, a report setting forth the results of such
evaluation, a proposed plan for responding to any environmental problems
described therein, and an estimate of the costs thereof, and (ii) provide
to the Agent and the Lenders a supplemental report of such engineer whenever
the scope of the environmental problems, or the response thereto or the estimated
costs thereof, shall increase in any material respect.

 

50

 

(c)                                  The Agent and its representatives
will have the right at any reasonable time to enter and visit the Real Estate
and any other place where any property of any Loan Party is located (such right
limited to twice within any twelve (12) month period or any time following
notice of any notice of any non-compliance with Environmental Law) for the
purposes of observing the Real Estate, taking and removing soil or groundwater
samples, and conducting tests on any part of the Real Estate.  The Agent is under no duty, however, to visit
or observe the Real Estate or to conduct tests, and any such acts by the Agent
will be solely for the purposes of protecting the Agent’s Liens and preserving
the Agent and the Lenders’ rights under the Loan Documents.  No site visit, observation or testing by the
Agent and the Lenders will result in a waiver of any default or impose any
liability on the Agent or the Lenders. 
In no event will any site visit, observation or testing by the Agent be
a representation that hazardous substances are or are not present in, on or
under the Real Estate, or that there has been or will be compliance with any
Environmental Law.  Neither Fleetwood nor
any of its Subsidiaries nor any other party is entitled to rely on any site
visit, observation or testing by the Agent. 
The Agent and the Lenders owe no duty of care to protect Fleetwood or
any of its Subsidiaries or any other party against, or to inform Fleetwood or
any of its Subsidiaries or any other party of, any hazardous substances or any
other adverse condition affecting the Real Estate.  The Agent may in its discretion disclose to
Fleetwood or to any other party if so required by law any report or findings
made as a result of, or in connection with, any site visit, observation or
testing by the Agent.  Fleetwood and the
Borrowers understand and agree that the Agent makes no warranty or representation
to any Loan Party or any other party regarding the truth, accuracy or
completeness of any such report or findings that may be disclosed.  Fleetwood and the Borrowers also understands
that depending on the results of any site visit, observation or testing by the
Agent and disclosed to Fleetwood, Fleetwood or its Subsidiary may have a legal
obligation to notify one or more environmental agencies of the results, that
such reporting requirements are site-specific, and are to be evaluated by or
its Subsidiary without advice or assistance from the Agent.  In each instance, the Agent will give
Fleetwood reasonable notice before entering the Real Estate or any other place
the Agent is permitted to enter under this Section 7.7(c).  The Agent will make reasonable efforts to
avoid interfering with the use of the Real Estate or any other property in
exercising any rights provided hereunder.

 

7.8                                 Compliance with ERISA.  Fleetwood shall, and shall cause each of its
ERISA Affiliates to:  (a) maintain
each Plan in compliance in all material respects with the applicable provisions
of ERISA, the Code and other federal or state law; (b) cause each Plan
which is qualified under Section 401(a) of the Code to maintain such
qualification; (c) make all required contributions to any Plan subject to Section 412
of the Code; (d) not engage in a prohibited transaction or violation of
the fiduciary responsibility rules which prohibited transaction or
violation of fiduciary responsibility rules, together with all other prohibited
transactions and violations of fiduciary responsibility rules, has resulted or
could reasonably be expected to result in a Material Adverse Effect; and (e) not
engage in a transaction that could be subject to Section 4069 or 4212(c) of
ERISA.

 

51

 

7.9                                 Mergers, Consolidations or Sales.  Neither Fleetwood nor any of its Subsidiaries
shall enter into any transaction of merger, reorganization, or consolidation,
or transfer, sell, assign, lease, or otherwise dispose of all or any part of
its property, or wind up, liquidate or dissolve, or agree to do any of the
foregoing, except

 

(a)                                  sales of Inventory in the ordinary
course of its business;

 

(b)                                 sales, trade-ins, exchanges or other
dispositions of Equipment in the ordinary course of business that are obsolete
or no longer used or useable by the applicable Person in its business with an
orderly liquidation value not to exceed $5,000,000 in any Fiscal Year;

 

(c)                                  on no less than 10 days’ prior
notice to the Agent (unless a shorter period is acceptable to the Agent in its
sole discretion), any FMC Borrower may merge with and into any other FMC
Borrower and any FRC Borrower may merge with and into any other FRC Borrower, provided,
however, that all Liens of the Agent shall remain unimpaired, and the
surviving Borrower shall execute and deliver to the Agent such documents and
agreements as the Agent may reasonably request to evidence the continued
liability for the Obligations of the disappearing Borrower and the Liens
securing such Obligations;

 

(d)                                 sales, trade-ins, exchanges or other
dispositions of assets by Fleetwood or any of its Subsidiaries (other than Term
Loan Collateral or any other real property Collateral) with an orderly
liquidation value not to exceed $5,000,000 in the aggregate for the period
commencing on the First Amendment and Restatement Date through and including
the Termination Date;

 

(e)                                  sale for fair market value of the
assets described on Schedule 7.9 as “Assets held for Sale” if (1) at
least 50% of the proceeds are received in cash and applied to the Obligations
in accordance with Section 3.4 and any non-cash consideration
received by any Loan Party shall constitute additional Collateral hereunder, in
which the Agent shall have a duly perfected Lien; and (2) after giving
effect to such disposition, no Default or Event of Default exists;

 

(f)                                    (A) any sale or other
disposition by Fleetwood or any Borrower of Home One Credit Corp. or all or
substantially all of the property of Home One Credit Corp. (including, without
limitation, Home One Funding I and each other Finance Co.) (a “Finance Co.
Disposition”) or (B) any sale or other disposition by Fleetwood or any
Borrower of FRC of all or substantially all of the property of FRC (a “FRC
Disposition”); provided that the following conditions are satisfied:

 

(i)                                     in each case, any guaranty provided
or Lien granted by Fleetwood (or any Person that shall remain a Subsidiary of
Fleetwood after such sale or other disposition) in respect of any obligations
under any Debt of any Subsidiary so sold or otherwise so disposed of (or whose
property shall have been otherwise disposed of) shall be fully and
unconditionally released;

 

52

 

(ii)                                  in the case of any FRC Disposition,
(x) the FRC Borrowers shall make any payment required pursuant to Section 3.4(e) in
connection with the corresponding FRC Borrower Release solely with the proceeds
of the FRC Disposition and the Finance Co. Disposition; (y) the FRC Borrowers
shall prepay in full all Debt (other than intercompany Debt incurred in
accordance with Section 7.13(g) through (m), inclusive, and (p))
incurred by such FRC Borrowers, including without limitation, any Floor Plan
Debt of any Subsidiary incurred in accordance with Section 7.13(n)
solely with the proceeds of the FRC Disposition and the Finance Co.
Disposition; and (z) the FRC Borrowers shall repay in full (whether by
prepayment of intercompany loans or by Distribution but, in any event, solely
with the proceeds of the FRC Disposition and the Finance Co. Disposition) all
amounts advanced to such FRC Borrowers from Fleetwood or any other Subsidiary
of Fleetwood to such FRC Borrowers (in accordance with Section 7.10(c)(i),
Section 7.10(c)(iii)  and Section 7.13(g) through
(m), inclusive, and (p) or otherwise) after the Closing Date.

 

(iii)                               in the case of any Finance Co.
Disposition, (x) Finance Co. shall prepay in full all Debt (other than
intercompany Debt incurred in accordance with Section 7.13(g) through
(m), inclusive, and (p)) incurred by Finance Co., including without limitation,
any Debt of any Subsidiary of Fleetwood outstanding under any Warehouse
Financing Lines of Credit incurred in accordance with Section 7.13(u)
solely with the proceeds of the Finance Co. Disposition; and (y) the Finance
Co. shall repay in full (whether by prepayment of intercompany loans or by
Distribution but, in any event, solely with the proceeds of the Finance Co.
Disposition) all amounts advanced to such FRC Borrowers from Fleetwood or any
other Subsidiary of Fleetwood to such FRC Borrowers (in accordance with Section 7.10(c)(iii),
Section 7.10(c)(vii), Section 7.10(viii), Section 7.10(c)(x)
and Section 7.13(g) through (m), inclusive, and (p)
or otherwise) after the Closing Date.

 

(g)                                 any Excluded Subsidiary may be wound
up and dissolved or sell any of its assets;

 

(h)                                 sale/leaseback transactions with
respect to Real Estate and Equipment permitted by Section 7.19;

 

(i)                                     any sale or other disposition by
Fleetwood or any Borrower of property that does not constitute Collateral
(other than a Finance Co. Disposition or a FRC Disposition, each of which, for
the avoidance of doubt, may be made in accordance with Section 7.9(f) above),
provided that the Flexibility Conditions are satisfied as of the date of
and both before and immediately after giving effect to such sale or other
disposition.

 

53

 

(j)                                     sale of Term Loan Collateral for at
least fair market value, provided, however, that (x) the sales
price for any Term Loan Collateral must be greater than eighty percent (80%) of
the Appraised Orderly Liquidation Value for such Term Loan Collateral; and (y)
all proceeds shall be in cash and shall be applied to repay the Loans as
required by Section 3.4(c); and

 

(k)                                  any loss, damage, or destruction to
Fleetwood’s assets, in so far as the insurance and/or condemnation proceeds
received by Fleetwood in connection thereof are applied in accordance with Section 7.6.

 

All Equipment purchased under this paragraph shall be free and clear of
all Liens except Liens under clauses (a) and (b) of the definition of
Permitted Liens.

 

7.10                           Distributions;
Capital Change; Restricted Investments. 
Neither Fleetwood nor any of its Subsidiaries shall:

 

(a)                                  directly or indirectly declare or
make, or incur any liability to make, any Distribution, except (i) Distributions
to Holdings by any of its Subsidiaries, Distributions to Retail by any of its
Subsidiaries, or Distributions by any FMC Borrower or FRC Borrower to another
FMC Borrower or FRC Borrower which is its parent; (ii) so long as no
Default or Event of Default has occurred and is continuing on the date of the
payment thereof, both before and after giving effect to such payment, the
Borrowers may make Distributions to Fleetwood (or make intercompany loans
permitted to be paid pursuant to Section 7.13(h) or retain
management fees to the extent permitted to be paid pursuant to Section 7.26)
to pay, and Fleetwood may pay, a cash Dividend on the common stock of Fleetwood
in aggregate amounts not in excess of $.04 per share of its outstanding common
stock in any Fiscal Quarter; (iii) so long as no Default or Event of
Default has occurred and is continuing on the date of the payment thereof, both
before and after giving effect to such payment, the Borrowers may make
Distributions to Fleetwood (or make intercompany loans permitted to be paid
pursuant to Section 7.13(h) or retain management fees to the
extent permitted pursuant to Section 7.26) to make the payments
permitted pursuant to Section 7.29 hereof; (iv) subject to the
subordination provisions contained in each of the Subordinated Debentures, the
New Subordinated Debentures, and the 2003 Subordinated Debentures, as
applicable, Fleetwood may make payments in respect of the Subordinated
Debentures, the New Subordinated Debentures, and the 2003 Subordinated
Debentures, and Fleetwood Trust may make related Distributions in connection
therewith, subject to the limitations of Section 7.29 hereof; (v) Subsidiaries
of Fleetwood may make Distributions to Fleetwood (or make intercompany loans
permitted to be paid pursuant to Section 7.13(h) or retain
management fees to the extent permitted pursuant to Section 7.26)
to pay when due (x) consolidated taxes, employee related expenses
(including salaries, wages, bonuses, fringe benefits, health benefits, workers
compensation insurance premiums and claims, retirement plan contributions and
related expenses (including payments with respect to the COLI Policies), and
manager’s in training reimbursements), marketing and product development,
capital expenditures and

 

54

 

products’
liability payments, in a manner consistent with past practices and (y) an
additional aggregate amount in any Fiscal Year not to exceed $6,000,000 to fund
other general corporate overhead and operating expenses; (vi) Subsidiaries
of Fleetwood may pay management fees to Fleetwood consistent with those
agreements in existence on the First Amendment and Restatement- Date; (vii) Fleetwood
Trust may acquire the Trust Securities in an exchange to the extent permitted
by Section 7.29; (viii) Borrowers may make Distributions to Fleetwood
or any Excluded Subsidiary of assets or proceeds of sales of assets to the
extent such assets do not in either case constitute Collateral; provided
that the Flexibility Conditions are satisfied as of the date of and both before
and immediately after giving effect to such Distribution; (ix) with
respect to any Debt incurred pursuant to Section 7.13(m), the
proceeds of which were received by any Borrower from Fleetwood, any such
Borrower may prepay such Debt pursuant to and subject to the limitations of Section 7.14(d) hereof;
and (x) with respect to any Debt required to be prepaid or Distributions
required to be made, in each case, in accordance with Section 7.9(f)(ii) or
Section 7.9(f)(iii), the proceeds of any FRC Disposition or any
Finance Co. Disposition (x) may be distributed by Fleetwood or any Subsidiary
thereof to Fleetwood or any Subsidiary thereof and (y) may be used to prepay
such Floor Plan Debt or Debt outstanding under any Warehouse Lines of Credit.

 

(b)                                 make any change in its capital structure
which could reasonably be expected to have a Material Adverse Effect; or

 

(c)                                  make any Restricted Investment other
than Hedge Agreements with a Lender, except  that (i) Fleetwood
may make capital contributions to Holdings or Retail; (ii) any FMC Borrower
may make contributions, loans or advances to any other FMC Borrower and any FRC
Borrower may make contributions, loans or advances to any other FRC Borrower; (iii) any
Borrower may make loans or advances to Fleetwood or any Subsidiary only to the
extent permitted by Section 7.13; (iv) the FMC Borrowers may
make loans or advances to the FRC Borrowers and the FRC Borrowers may make
loans or advances to the FMC Borrowers; provided that the aggregate
amount of all such loans and advances does not exceed $10,000,000 at any one
time outstanding; (v) Retail may make advances to the Excluded Retail
Subsidiaries for operating expenses that such Excluded Subsidiaries have an
obligation to reimburse; provided that the aggregate amount of all such
advances outstanding at any time does not exceed $2,000,000; (vi) any
Excluded Subsidiary may make contributions, loans or advances to any other
Excluded Subsidiary; (vii) Fleetwood may make advances to the Excluded
Subsidiaries for operating expenses that such Excluded Subsidiaries have an
obligation to reimburse; provided that the aggregate amount of all such
advances outstanding at any time does not exceed $2,000,000; (viii) Fleetwood
may make capital contributions, loans or advances to the Excluded Subsidiaries
in an aggregate amount not to exceed $4,000,000 for the period commencing on
the First Amendment and Restatement Date and ending on the Termination Date; (ix) Fleetwood
may make advances to any Borrower after the Closing Date; and
(x) Fleetwood may make additional capital contributions,

 

55

 

loans
or advances to the Excluded Subsidiaries (prior to any Finance Co. Disposition,
including Finance Co., but otherwise excluding Finance Co.) in excess of those
permitted under clause (viii) hereof in an aggregate amount, for the
period commencing on the First Amendment and Restatement Date and ending on the
Termination Date, not to exceed $50,000,000 plus (A) $10,000,000 from and
after July 31, 2005 and (B) an additional $10,000,000 from and after July 31,
2006; provided that (x) the Flexibility Conditions are satisfied as
of the date of and both before and immediately after giving effect to such
capital contribution, loan or advance and (y) the proceeds of any
Restricted Investments in Finance Co. under this clause (x) are used by Finance
Co. or any Financing Joint Venture primarily for the purpose of (I) funding
loans to retail customers who are purchasing products manufactured by Fleetwood
or its Subsidiaries from Fleetwood, Subsidiaries of Fleetwood or independent
dealers who are, as of the date of the funding of the loan to the applicable
retail customers, purchasing from Fleetwood or its Subsidiaries new products
manufactured by Fleetwood or its Subsidiaries or (II) refinancing or
restructuring loans to retail customers described in clause (I) of this clause
(x).

 

7.11                           Transactions Affecting Collateral or
Obligations.  Neither
Fleetwood nor any of its Subsidiaries shall enter into any transaction which
would be reasonably expected to have a Material Adverse Effect.

 

7.12                           Guaranties.  Neither Fleetwood nor any of its Subsidiaries
shall make, issue, or become liable on any Guaranty, except (a) Guaranties
of the Obligations in favor of the Agent; (b) Repurchase Obligations of Fleetwood
incurred in the ordinary course of business consistent with past practices and
customary in the industry; (c) Guaranties existing on the date hereof and
described on Schedule 7.12 hereto; (d) unsecured Guaranties by
Fleetwood and FRC of the obligations of the Excluded Retail Subsidiaries to the
Floor Plan Lenders on terms and conditions satisfactory to Majority Lenders;
provided that such Guaranties shall be released in accordance with Section 7.9(f);
(e) Fleetwood’s unsecured Guaranty of the Trust Securities; (f) Letters
of Credit issued for the account of a Borrower to support obligations of
Fleetwood and its Subsidiaries for worker’s compensation and similar claims and
insurance liabilities; (g) Guaranties by Fleetwood of the obligations of
Finance Co. pursuant to a Warehouse Financing Line of Credit; provided
that (x) the aggregate amount of such Warehouse Financing Line of Credit
shall not exceed $175,000,000 at any time; (y) the Flexibility Conditions
are satisfied as of the date of and both before and immediately after giving
effect to the issuance of such Guaranty; and (z) such Guaranties shall be
released in accordance with Section 7.9(f); (h) endorsements
for collection or deposits in the ordinary course of business; (i) Fleetwood’s
unsecured guaranty of the Franchisee Obligations pursuant to one or more
Franchisee Guaranties, provided that Fleetwood shall give notice of any
claim upon any such guaranty (and any payment thereon) if the amount of any
such past or present claim or claims, in the aggregate, exceeds $5,000,000 for
the period commencing on the First Amendment and Restatement Date and ending on
the Termination Date; (j) Fleetwood’s unsecured guaranty of up to $1,000,000 of
the RCI Obligations, provided that Fleetwood shall give notice of any
claim by RCI upon such guaranty (and any payment thereon) if the amount of any
such past or present claim or claims, in the aggregate, exceeds $500,000 for
the period commencing on the First Amendment and Restatement Date and ending on
the Termination Date; (k) Fleetwood’s unsecured guaranty of

 

56

 

up to $2,500,000 of the Texas Landlord
Obligations, provided that Fleetwood shall give notice of any claim upon
such guaranty (and any payment thereon) if the amount of any such past or
present claim or claims, in the aggregate, exceeds $500,000 for the period
commencing on the First Amendment and Restatement Date and ending on the
Termination Date; (l) Fleetwood’s unsecured guaranty of up to $5,000,000 pursuant
to the Wells Fargo Guaranty and Support Agreement, provided that
Fleetwood shall give notice of any claim upon such guaranty (and any payment
thereon) if the amount of any such past or present claim or claims, in the
aggregate, exceeds $500,000 for the period commencing on the First Amendment
and Restatement Date and ending on the Termination Date; and (m) other
Guaranties in an aggregate amount not to exceed $5,000,000 at any time in
effect.

 

7.13                           Debt.  Neither Fleetwood nor any of its Subsidiaries
shall incur or maintain any Debt, other than:

 

(a)                                  the Obligations;

 

(b)                                 the Subordinated Debt;

 

(c)                                  Debt existing on the Closing Date
described on Schedule 6.9 hereto;

 

(d)                                 Capital Leases of Equipment and
purchase money secured Debt incurred to purchase Equipment provided that

 

(i)                                     Liens securing the same attach only
to the Equipment acquired by the incurrence of such Debt and proceeds thereof,
and

 

(ii)                                  the aggregate amount of such Debt
(including Capital Leases, and including, without limitation, any such Capital
Leases listed on Schedule 6.9 hereto) outstanding does not exceed
$20,000,000 at any time;

 

(e)                                  Capital Leases of Equipment or Real
Estate entered into in connection with sale\leaseback transactions permitted
pursuant to Section 7.19; provided that Liens securing the
same attach only to the Equipment or Real Estate subject to the applicable
Capital Lease;

 

(f)                                    Debt evidencing a refunding, renewal
or extension of the Debt permitted under Section 7.13(d), Section 7.13(n),
Section 7.13(s), Section 7.13 (u), or described on Schedule 6.9
hereto; provided that:

 

(i)                                     the principal amount thereof is not
increased,

 

(ii)                                  the Liens, if any, securing such
refunded, renewed or extended Debt do not attach to any assets in addition to
those assets, if any, securing the Debt to be refunded, renewed or extended,

 

(iii)                               no Person that is not an obligor or
guarantor of such Debt as of the Closing Date shall become an obligor or
guarantor thereof,

 

57

 

(iv)                              the terms of such refunding, renewal
or extension are no less favorable in any material respect to Fleetwood, its
Subsidiary, the Agent or the Lenders than the original Debt; and

 

(v)                                 in the case of such Debt incurred in
connection with any refunding, renewal or extension of Debt originally incurred
pursuant to Section 7.13(d) Section 7.13(n), Section 7.13(s),
or Section 7.13(u), as applicable (and irregardless of whether such
Debt appears on Schedule 6.9 hereto), such continuing Debt
otherwise complies with the terms and conditions of Section 7.13(d),
Section 7.13(n), Section 7.13(s) or Section 7.13(u),
as applicable, and, in each case, meets the requirements of any of the defined
terms in such Sections.

 

(g)                                 Debt of any FMC Borrower to another
FMC Borrower or of a FRC Borrower to another FRC Borrower evidenced by a master
intercompany note pledged to the Agent;

 

(h)                                 Debt of Fleetwood to any Borrower provided,
that (i) on the date of the advance of the proceeds of such Debt,
such Borrower would be permitted to make a Distribution pursuant to Section 7.10(a)(ii),
(iii), or (v); and (ii) such Debt is evidenced by a promissory note
pledged to the Agent;

 

(i)                                     Debt of any Excluded Subsidiary to
Fleetwood; provided that (i) such loan is permitted pursuant to Section 7.10(c)(vii),
(viii) or (ix) and (ii) such Debt is evidenced by a
promissory note pledged to the Agent;

 

(j)                                     Debt of any FMC Borrower to any FRC
Borrower and Debt of any FRC Borrower to any FMC Borrower; provided that
(i) such loan is permitted pursuant to Section 7.10(c)(iv) and
(ii) such Debt is evidenced by a promissory note pledged to the Agent;

 

(k)                                  Debt of an Excluded Retail
Subsidiary to Retail; provided that (i) such loan is permitted
pursuant to Section 7.10(c)(v); and (ii) such Debt is
evidenced by a promissory note pledged to the Agent;

 

(l)                                     Debt of any Excluded Subsidiary to
another Excluded Subsidiary;

 

(m)                               Debt of an FMC Borrower to Fleetwood
or any Subsidiary (other than an FRC Borrower, an FMC Borrower or an Excluded
Subsidiary), or Debt of an FRC Borrower to Fleetwood or any Subsidiary (other
than an FMC Borrower, an FRC Borrower or an Excluded Subsidiary), in each case
that is evidenced by a master intercompany note pledged to the Agent, and
subordinated to the payment in full of the Obligations on terms satisfactory to
the Majority Lenders;

 

(n)                                 Floor Plan Debt of the Excluded
Retail Subsidiaries; provided that such Debt shall be prepaid in full in
accordance with Section 7.9(f).

 

(o)                                 Guaranties permitted by Section 7.12
and any Debt arising upon such contingent obligations becoming absolute and
matured;

 

58

 

(p)                                 Debt of any FMC Borrower to
Fleetwood Canada which loans are evidenced by an intercompany note pledged to
the Agent and subordinated to payment in full of the Obligations on terms
satisfactory to the Majority Lenders provided that the aggregate amount
of all such Debt to all FMC Borrowers outstanding does not exceed the amount of
the Borrowing Base attributable to the Accounts of Fleetwood Canada;

 

(q)                                 obligations under Hedge Agreements
with any Lender;

 

(r)                                    Debt arising from rights of
indemnity or contribution with respect to payments under the Loan Documents;

 

(s)                                  mortgage Debt of Fleetwood or any
Borrower; provided that (x) such mortgage Debt is secured solely by
Liens which attach only to property that does not constitute Collateral, and
(y) the Flexibility Conditions are satisfied as of the date of and both
before and immediately after giving effect to the incurrence of such mortgage
Debt;

 

(t)                                    Debt of Fleetwood the proceeds of
which are applied solely for the purpose of paying benefits to employees or
former employees who are participants in non-qualified benefit plans of
Fleetwood and its Subsidiaries which are supported by the COLI Policies; provided
that (x) such Debt is secured solely by Liens which attach only to the
COLI Policies; and (y) the Flexibility Conditions are satisfied as of the
date of and both before and immediately after giving effect to the incurrence
of such Debt;

 

(u)                                 Debt of Finance Co. incurred in
connection with one or more Warehouse Financing Lines of Credit; provided
that (x) the aggregate principal amount of all such Warehouse Financing
Lines of Credit shall not, in the aggregate (including any such Debt set forth
on Schedule 6.9 hereto), exceed $175,000,000, and (y) the
Flexibility Conditions are satisfied as of the date of and both before and
immediately after giving effect to the incurrence of such Debt; provided
further that such Debt shall be prepaid in full in accordance with Section 7.9(f);
and

 

(v)                                 other unsecured Debt not to exceed
$3,000,000 in the aggregate for all Loan Parties.

 

7.14                           Prepayment.  Neither Fleetwood nor any of its Subsidiaries
shall voluntarily prepay any Debt, except the Obligations in accordance with
the terms of this Agreement; provided that (a) (i) the
Excluded Retail Subsidiaries may prepay the Floor Plan Debt and any
intercompany Debt and (ii) any of Fleetwood or its Subsidiaries may prepay
Debt incurred pursuant to Sections 7.13(g) through (l), inclusive,
and Section 7.13(p); (b) Fleetwood and its Subsidiaries may
prepay Debt, including, without limitation, Capital Leases, being refinanced
pursuant to Section 7.13(f) hereof; (c) (i) so long
as the Flexibility Conditions are satisfied as of the date of and both before
and immediately after giving effect to such prepayment, Fleetwood and its
Subsidiaries may prepay (A) any Capital Leases, so long as the

 

59

 

acquisition of any property in connection
with the prepayment of such Capital Lease would not constitute a Restricted
Investment and (B) any Debt incurred pursuant to Section 7.13
and (ii) so long as the Flexibility Conditions are satisfied as of the
date of and both before and immediately after giving effect to such prepayment,
Fleetwood and its Subsidiaries may prepay any Debt not otherwise permitted to
be prepaid pursuant to this Section 7.14 in an aggregate amount not
to exceed $1,000,000; (d) so long as the Flexibility Conditions are satisfied
as of the date of and both before and immediately after giving effect to such
prepayment, any Borrower make prepayments to Fleetwood of Debt incurred
pursuant to Section 7.13(m), the proceeds of which were received by
such Borrower from Fleetwood; (e) so long as no Default or Event of
Default has occurred and is continuing on the date of the payment thereof, both
before and after giving effect to such payment, Fleetwood, or Fleetwood Trust,
as applicable, may, on or prior to December 31, 2004, either (I) call for
redemption, prepay or repurchase and cancel all or a portion of the
Subordinated Debentures, the New Subordinated Debentures, the 2003 Subordinated
Debentures or the Trust Securities or (II) pay a solicitation, conversion, or
other inducement fee to induce the holders of the Trust Securities to convert
the Trust Securities pursuant to the terms thereof or to induce the holders of
the 2003 Subordinated Debentures to convert the 2003 Subordinated Debentures
pursuant to the terms thereof; provided that the amount of such
prepayment or repurchase does not exceed, in the case of clauses (I) and (II)
above combined, $100,000,000 and, in the case of clause (II) above, a sublimit
of $8,000,000; and provided  further that contemporaneously
therewith either (A) in the case of prepayments in respect of the
Subordinated Debentures or the New Subordinated Debentures made pursuant to
clause (I) above, the Fleetwood Trust uses such proceeds to prepay or
repurchase and cancel those Trust Securities having the same liquidation amount
as the principal amount of such Subordinated Debentures or the New Subordinated
Debentures underlying such Trust Securities or (B) in the case of clause
(II) above, the holders of the Trust Securities or the 2003 Subordinated
Debentures, as applicable, together with, in the case of any payments to any
holder of Trust Securities, the Fleetwood Trust, otherwise comply with the
requirements upon conversion set forth in the Subordinated Debentures, the New
Subordinated Debentures, the 2003 Subordinated Debentures and the Trust
Securities, as applicable; and (f) the proceeds of any FRC Disposition or
any Finance Co. Disposition (x) may be distributed by Fleetwood or any
Subsidiary thereof to Fleetwood or any Subsidiary thereof (whether by prepayment
of intercompany loan or by Distribution) and (y) may be used to prepay Floor
Plan Debt or Debt outstanding under any Warehouse Lines of Credit in accordance
with Section 7.9(f)(ii) or Section 7.9(f)(iii).

 

7.15                           Transactions with Affiliates.  Except as set forth below, neither Fleetwood
nor any of its Subsidiaries shall sell, transfer, distribute, or pay any money
or property, including, but not limited to, any fees or expenses of any nature
(including, but not limited to, any fees or expenses for management services),
to any Affiliate, or lend or advance money or property to any Affiliate, or
except as permitted in Sections 7.10 and 7.14 invest in (by capital
contribution or otherwise) or purchase or repurchase any Capital Stock or
indebtedness, or any property, of any Affiliate, or except as permitted in Section 7.12,
become liable on any Guaranty of the indebtedness, dividends, or other
obligations of any Affiliate. 
Notwithstanding the foregoing but subject to the limitations set forth
in Sections 7.9, 7.10, 7.12, and 7.13, (i) any
Loan Party may engage in transactions with any other Loan Party in the ordinary
course of business consistent with past practices; (ii) while no Event of
Default has occurred and is continuing, any Loan Party may engage in
transactions with any Affiliate (other than a Loan Party) in the ordinary
course of

 

60

 

business consistent with past practices, and
in the case of transactions with Affiliates other than Excluded Subsidiaries,
in amounts and upon terms fully disclosed to the Agent and the Lenders, and no
less favorable to Loan Parties than would be obtained in a comparable arm’s-length
transaction with a third party who is not an Affiliate; and (iii) Fleetwood
and its Subsidiaries may engage in transactions with Finance Co. in the
ordinary course of business and on terms no less favorable to the Loan Parties
than would be obtained in a comparable arm’s-length transaction with a third
party who is not an Affiliate.  All sales
of Inventory by FMC to any FRC Borrower shall be on terms no less favorable to
FRC Borrowers than would be obtained in an arm’s length transaction with a
Person which is not an Affiliate.  The
foregoing restrictions shall not apply to (a) reasonable and customary
fees paid to, and customary indemnification of, members of the board of
directors (or similar governing body) of Fleetwood and its Subsidiaries and (b) compensation
arrangements for officers and other employees of Fleetwood and its Subsidiaries
entered into in the ordinary course of business.

 

7.16                           Investment Banking and Finder’s Fees.  Neither Fleetwood nor any of its Subsidiaries
shall pay or agree to pay, or reimburse any other party with respect to, any
investment banking or similar or related fee, underwriter’s fee, finder’s fee,
or broker’s fee to any Person in connection with this Agreement.  The Borrowers shall defend and indemnify the
Agent and the Lenders against and hold them harmless from all claims of any
Person that the Borrower is obligated to pay for any such fees, and all costs
and expenses (including attorneys’ fees) incurred by the Agent and/or any
Lender in connection therewith.

 

7.17                           Business Conducted.  Fleetwood shall not and shall not permit any
of its Subsidiaries to, engage directly or indirectly, in any line of business
other than the businesses in which it is engaged on the Closing Date and
businesses reasonably related thereto.

 

7.18                           Liens.  Neither Fleetwood nor any of its Subsidiaries
shall create, incur, assume, or permit to exist any Lien on any property now
owned or hereafter acquired by any of them, except Permitted Liens.

 

7.19                           Sale and Leaseback Transactions.  Neither Fleetwood nor any of its Subsidiaries
shall, directly or indirectly, enter into any arrangement with any Person
providing for Fleetwood or such Subsidiary to lease or rent property that
Fleetwood or such Subsidiary has sold or will sell or otherwise transfer to
such Person, except that:

 

(a)                                  a Borrower may sell Real Estate
owned by it (other than Term Loan Collateral) and lease such Real Estate if (i) the
terms and conditions of such sale and leaseback are approved by Majority
Lenders and (ii) the proceeds of such sale are applied to the Obligations
in accordance with Section 3.4;

 

(b)                                 a Borrower may sell Real Estate that
is Term Loan Collateral and that is owned by it and lease such Real Estate if (i) the
Net Proceeds are an amount in excess of eighty percent (80%) of the Appraised
Orderly Liquidation Value for such Term Loan Collateral, (ii) the terms and
conditions of such sale and leaseback are approved by Required Term Lenders and
(iii) the proceeds of such sale are applied to the Obligations in
accordance with Section 3.4; and

 

61

 

(c)                                  a Borrower may sell Equipment owned
by it and lease such Equipment if (i) the terms and conditions of such
sale and leaseback are approved by Majority Lenders (ii) the proceeds of
such sale are applied to the Obligations in accordance with Section 3.4;
and (iii) the aggregate Net Proceeds of such sale and all previous sales
pursuant to this Section 7.19(b) do not exceed $25,000,000.

 

7.20                           New Subsidiaries.  Without the prior written consent of the
Agent, Fleetwood shall not, directly or indirectly, organize, create, acquire
or permit to exist any subsidiary other (i) than those listed on Schedule 6.5
to the Existing Credit Agreement, as amended prior to the Closing Date, as the
same may be amended from time to time with the consent of the Agent (not to be
unreasonably withheld) and (ii) Inactive Subsidiaries.

 

7.21                           Fiscal Year.  Fleetwood shall not, and shall not permit any
of its Subsidiaries to, change its Fiscal Year, except that the Fiscal
Year of FRC may be changed so that it is the same as the Fiscal Year of
Fleetwood.

 

7.22                           Capital Expenditures.  Neither Fleetwood nor any of its Subsidiaries
shall make or incur any Capital Expenditure if, after giving effect thereto,
the aggregate amount of all Capital Expenditures by Fleetwood and its
Subsidiaries on a consolidated basis (including the capitalized amount of all
Capital Leases and the principal amount of all Purchase Money Debt incurred in
connection therewith) would exceed $40,000,000 in any Fiscal Year; provided
that to the extent the actual amount of Capital Expenditures made in the Fiscal
Year ended April 2004 was less than or equal to $40,000,000, such
differential, up to $10,000,000 (the “Initial Capital Expenditure Excess”),
may be carried forward to (but only to) the Fiscal Year ended April 2005; provided
further that to the extent
the amount of Capital Expenditures permitted to be made in the Fiscal Year
ended April 2005 and any Fiscal Year thereafter (each “Year 1”)
pursuant to this clause exceeds the aggregate amount of Capital Expenditures
actually made during such Fiscal Year, such excess amount, up to $20,000,000
(the “Standard Capital Expenditure Excess”), may be carried forward to
(but only to) the next succeeding Fiscal Year (each “Year 2”) (any such
amount to be certified to the Administrative Agent in the compliance
certificate delivered for the last Fiscal Quarter of Year 1 pursuant to Section 5.1(e));
provided further that any Capital Expenditures made in any Fiscal Year
will first be attributed to the $40,000,000 permitted pursuant to this Section 7.22
without regard to any carried forward Initial Capital Expenditure Excess or
Standard Capital Expenditure Excess and thereafter to any carried forward
Standard Capital Expenditure Excess;.

 

7.23                           [RESERVED].

 

7.24                           Minimum EBITDA.  If a Minimum Liquidity Event shall occur as
of the end of any calendar month, as indicated in any compliance certificate
delivered pursuant to Section 5.2(e), Fleetwood shall be required
to have maintained EBITDA for the most recent period of single or consecutive
Fiscal Quarters (for which an annual or quarterly compliance certificate has
been delivered pursuant to Section 5.2(e)) specified below and ended on
the last day of each Fiscal Quarter set forth below of not less than the amount
set forth below opposite each such period:

 

62

 

	
  Period
  Ending

  	
   

  	
  EBITDA

  	
   

  
	
  Four Fiscal Quarters ended on the last
  Sunday in January 2005

  	
   

  	
  $

  	
  15,700,000

  	
   

  
	
  Single Fiscal Quarter ended on the last
  Sunday in April 2005

  	
   

  	
  $

  	
  (7,500,000

  	
  )

  
	
  Two Fiscal Quarters ended on the last
  Sunday in July 2005

  	
   

  	
  $

  	
  14,500,000

  	
   

  
	
  Three Fiscal Quarters ended on the last
  Sunday in October 2005

  	
   

  	
  $

  	
  29,200,000

  	
   

  
	
  Four Fiscal Quarters ended on the last
  Sunday in January 2006

  	
   

  	
  $

  	
  30,325,000

  	
   

  
	
  Four Fiscal Quarters ended on the last
  Sunday in April 2006 and each last Sunday in each July, October, January and
  April thereafter

  	
   

  	
  $

  	
  51,750,000

  	
   

  

 

7.25                           Bank Accounts.  The Borrowers shall establish and maintain a
cash management system reasonably acceptable to the Agent, including (a) arrangements
satisfactory to the Administrative Agent to transfer funds to the
Administrative Agent for application to the Obligations on a daily basis, or on
such other basis as the Administrative Agent agrees, and, (b) Blocked
Account Agreements satisfactory to the Administrative Agent in respect of
accounts over which the Administrative Agent shall have control (within the
meaning of the UCC).

 

7.26                           Contribution of Management Fees.  On the date of receipt by Fleetwood of any
management fees from any of its Subsidiaries, Fleetwood shall make a capital
contribution to FMC in the amount of such management fees so received less the
amount on such day of Distributions by the Borrowers to Fleetwood that would be
permitted pursuant to Section 7.10(a)(ii), (iii), or (iv).

 

7.27                           Use of Proceeds.  The Borrowers shall not, and shall not suffer
or permit any of their Subsidiaries to, use any portion of the Loan proceeds,
directly or indirectly, (i) to purchase or carry Margin Stock, (ii) to
repay or otherwise refinance indebtedness of Fleetwood or any of its
Subsidiaries or others incurred to purchase or carry Margin Stock, (iii) to
extend credit for the purpose of purchasing or carrying any Margin Stock, or (iv) to
acquire any security in any transaction that is subject to Section 13 or
14 of the Exchange Act.  The proceeds of
the Revolving Loans shall not be used to pay the Term Loan Obligations unless
(x) for payments of the Term Loan Obligations under Section 3.3(a)(i),
no Event of Default has occurred and is continuing, and (y) for payments of
Term Loan Obligations under Section 3.3(a)(ii), (A) no Event
of Default has occurred and is continuing, and (B) a Minimum Liquidity
Event, as of the date of such prepayment shall not have occurred, after giving
effect to such prepayment.

 

7.28                           Further Assurances; Mortgages.

 

(a)                                  Fleetwood shall, and shall cause
each of its Subsidiaries to, execute and deliver, or cause to be executed and
delivered, to the Agent and/or the Lenders such documents and agreements, and
shall take or cause to be taken such

 

63

 

actions,
as the Agent or any Lender may, from time to time, reasonably request to carry
out the terms and conditions of this Agreement and the other Loan Documents.

 

(b)                                 [RESERVED].

 

(c)                                  If Fleetwood forms any new
Subsidiary that is not an Excluded Subsidiary or if any Inactive Subsidiary
becomes an active Subsidiary which owns assets in excess of $250,000 or has
revenues in excess of $1,000,000 in any Fiscal Year, the Borrowers shall cause such
Subsidiary to either become an FMC Borrower or FRC Borrower hereunder by
delivering a counterpart to this Agreement and to each other Loan Document to
which an FMC Borrower or an FRC Borrower, as the case may be, is a party or
become a Guarantor by delivering a counterpart to the Subsidiary Guaranty and
to each other Loan Document to which a Guarantor which is a Subsidiary is a
party, together with such evidences of authority, opinions and other documents
and instruments as the Agent may reasonably request; provided that no
such Subsidiary may become an FRC Borrower or an FMC Borrower without the prior
written consent of the Required Lenders.

 

7.29                           Subordinated Debt; Trust Securities.

 

(a)                                  Fleetwood will not, and will not
permit any of its Subsidiaries to, amend, supplement or otherwise modify the
terms of the Subordinated Debentures, the New Subordinated Debentures or the
2003 Subordinated Debentures, or any Guaranty thereof, or the Trust Securities
or any Guaranty thereof or add any Guaranty of any other Credit Party.

 

(b)                                 Fleetwood will not, and will not
permit any of its Subsidiaries to, make any cash payments or prepayments with
respect to the Subordinated Debentures or the New Subordinated Debentures other
than, subject to the subordination provisions contained therein, (A) mandatory
payments of interest (including any additional amounts on the Subordinated
Debentures and the New Subordinated Debentures) when due under the terms of the
Subordinated Debentures and the New Subordinated Debentures, respectively (in
each case, without acceleration), (B) fees, indemnification payments,
expense reimbursements and other customary payments made to any trustee,
conversion agent, transfer agent, exchange agent, paying agent, depositary or
custodian for the Subordinated Debentures, the New Subordinated Debentures or
the Trust Securities, or any agent or counsel for any of the foregoing, (C) mandatory
prepayments in respect of fractional shares upon conversion of the Subordinated
Debentures or the New Subordinated Debentures, as applicable, (D) any
other mandatory payments of principal and/or interest (including any additional
amounts) required under the terms of the indenture under which the Subordinated
Debentures and the New Subordinated Debentures, as applicable, are issued and (E) so
long as no Default or Event of Default has occurred and is continuing on the
date of the payment thereof, both before and after giving effect to such

 

64

 

payment,
Fleetwood may make the payments and/or pay the fees described in Section 7.14
hereof.

 

(c)                                  Fleetwood will not, and will not
permit any of its Subsidiaries to, make any cash payments or prepayments with
respect to the 2003 Subordinated Debentures other than, subject to the subordination
provisions contained therein, (A) mandatory payments of interest
(including any additional amounts on the 2003 Subordinated Debentures and any
Fleetwood common stock issued upon conversion thereof) when due under the terms
of the 2003 Subordinated Debentures (without acceleration), (B) mandatory
payments in respect of fractional shares upon conversion of 2003 Subordinated
Debentures, (C) mandatory payments to satisfy repurchase obligations with
respect to 2003 Subordinated Debentures upon a change of control (as defined in
the indenture under which the 2003 Subordinated Debentures are issued), (D) fees,
indemnification payments, expense reimbursements and other customary payments
made to any trustee, conversion agent, transfer agent, exchange agent, paying
agent, depositary or custodian for the 2003 Subordinated Debentures or any
agent or counsel for any of the foregoing, (E) payment of customary fees
and expenses related to registering for resale under the Securities Act of 1933
the 2003 Subordinated Debentures and the Fleetwood common stock into which such
debentures are convertible and (F) any other mandatory payments of
principal and/or interest (including any additional amounts) or mandatory
repurchase payments required under the terms of the indenture under which the
2003 Subordinated Debentures are issued.

 

ARTICLE 8

CONDITIONS OF LENDING

 

8.1                                 Conditions Precedent to Making of
Loans on the Closing Date. 
The obligation of the Lenders to make any additional Revolving Loans and
the Term Loan on the Closing Date, and the obligation of the Agent to cause the
Letter of Credit Issuer to issue any Letter of Credit, are subject to the
following conditions precedent having been satisfied in a manner satisfactory
to the Agent and each Lender:

 

(a)                                  This Agreement and the other Loan
Documents, including each Mortgage to be delivered on the Closing Date, shall
have been executed by each party thereto and the Loan Parties shall have
performed and complied in all material respects with all covenants, agreements
and conditions contained herein and the other Loan Documents which are required
to be performed or complied with by the Loan Parties before or on the Closing
Date.

 

(b)                                 [RESERVED].

 

(c)                                  All representations and warranties
made hereunder and in the other Loan Documents shall be true and correct as if
made on such date.

 

65

 

(d)                                 No Default or Event of Default shall
have occurred and be continuing after giving effect to the Loans to be made and
the Letters of Credit to be issued on the Initial Funding Date.

 

(e)                                  The Agent and the Lenders shall have
received such opinions of counsel for Fleetwood and its Subsidiaries as the
Agent or any Lender shall reasonably request, each such opinion to be in a
form, scope, and substance reasonably satisfactory to the Agent, the Lenders,
and their respective counsel.

 

(f)                                    [RESERVED].

 

(g)                                 The Agent shall have received:

 

(i)                                     acknowledgment copies of proper
financing statements, or amendments thereof, duly filed on or before the Closing
Date under the UCC of all jurisdictions that the Agent may deem necessary or
desirable in order to perfect and/or continue the Agent’s Liens; or shall have
received duly executed financing statements from all Loan Parties for all such
jurisdictions;

 

(ii)                                  duly executed UCC-3 Termination
Statements or such other instruments or evidence, in form and substance
satisfactory to the Agent, as shall be necessary to terminate and satisfy all
Liens on the Property of Fleetwood and its Subsidiaries except Permitted Liens;

 

(iii)                               duly executed security agreements
with respect to all Proprietary Rights for recording in the United States
Patent and Trademark Office;

 

(iv)                              certificates for the Capital Stock
pledged pursuant to the Pledge Agreement together with undated stock powers
duly endorsed in blank; and

 

(v)                                 all intercompany notes payable to
any Loan Party duly endorsed in blank.

 

(h)                                 The Borrowers shall have paid all
fees and expenses of the Agent and the Attorney Costs incurred in connection
with any of the Loan Documents and the transactions contemplated thereby to the
extent invoiced.

 

(i)                                     Fleetwood and the Borrowers shall
have paid all fees due and owing to the Agent and the Lenders on the Closing
Date (including all fees under the Fee Letter).

 

(j)                                     The Agent shall have received
evidence, in form, scope, and substance, reasonably satisfactory to the Agent,
of all insurance coverage as required by this Agreement.

 

66

 

(k)                                  The Agent and the Lenders shall have
had an opportunity, if they so choose, to examine the books of account and
other records and files of Fleetwood and its Subsidiaries and to make copies
thereof, and to conduct a pre-closing audit which shall include, without
limitation, verification of Inventory, Accounts, and the Borrowing Bases, and
the results of such examination and audit shall have been satisfactory to the
Agent and the Lenders in all respects.

 

(l)                                     All proceedings taken in connection
with the execution of this Agreement, the Term Notes, all other Loan Documents
and all documents and papers relating thereto shall be satisfactory in form,
scope, and substance to the Agent and the Lenders.

 

(m)                               No material adverse change, in the
opinion of the Lenders, shall have occurred, in the assets, liabilities,
business, financial condition, or results of operations of Fleetwood and its
Subsidiaries.

 

(n)                                 There shall exist no action, suit,
investigation, litigation, or proceeding pending or, to the knowledge of
Fleetwood and the Borrowers or any Lender, threatened in any court or before
any arbitrator or Governmental Authority that (i) could reasonably be
expected to have a material adverse effect on any Borrower’s assets,
liabilities, business, or financial condition, or results of operations or
which could impair any Borrower’s ability to perform satisfactorily under the
Loan Documents or repay the Obligations, or (ii) could reasonably be
expected to materially and adversely affect the Loan Documents or the
transactions contemplated thereby.

 

(o)                                 With respect to each parcel of Real
Estate listed on the Addendum to Schedule 6.11 attached hereto and
identified thereon as Mortgaged Property, (i) such Mortgaged Property
(other than Mortgaged Property designated thereon as Term Loan Collateral)
shall have, in the aggregate, an appraised value, as set forth in the
Appraisals, of at least $70,000,000, (ii) such Mortgaged Property
designated thereon as Term Loan Collateral shall have, in the aggregate, an
appraised value, as set forth in the Appraisals, of at least $35,000,000, (iii) such
Mortgaged Property that is subject to any Existing Mortgage shall remain
subject to such Existing Mortgages and (iv) Fleetwood and/or the
applicable Loan Party shall have delivered to the Agent and the Collateral
Agent (A) duly executed and acknowledged amendments to or amendment and
restatements of the Existing Mortgages or in the case of any Mortgaged Property
in which any such Mortgaged Property was not subject to an Existing Mortgage, a
new Mortgage (each a “Mortgage Amendment” and, collectively, the “Mortgage
Amendments”), in each case to the extent necessary under applicable law, in
the reasonable judgment of the Agent, to continue and maintain the
enforceability, perfection and priority of the Existing Mortgages or such new Mortgages
from and after the Closing Date (or, in the case of any Mortgaged Property in
which no Existing Mortgage was in existence immediately prior to the Closing
Date, to effect the enforceability, perfection and priority of the Mortgage
Amendment from and after the Closing Date) in proper form for recording in all
appropriate places in all

 

67

 

applicable
jurisdictions, (B) title policies (or endorsements to the Existing
Mortgage Title Policies) as reasonably requested by the Agent, assuring the
Agent that such Mortgages constitute first priority mortgage liens subject only
to Permitted Liens under clauses (a), (b), (d) and (e) of the
definition of Permitted Liens, and (C) if requested by the Agent, opinions
of counsel as to such matters as reasonably requested by the Agent; provided
that any opinions of local counsel to be delivered in connection with the
amendment of any Mortgage on the Closing Date shall be delivered on or prior to
the date which is sixty (60) days following the Closing Date, unless such
period is extended by the Agent.

 

(p)                                 Lenders shall be satisfied that each
Borrower is adequately capitalized, that the fair saleable value of its assets
will exceed its liabilities at closing, and that each Borrower will have
sufficient working capital to pay its debts as they become due.

 

(q)                                 Fleetwood and its Subsidiaries shall
have obtained all governmental and third party consents and approvals as may be
necessary or appropriate in connection with the Loan Documents and the
transactions contemplated thereby.

 

(r)                                    The Lenders shall be satisfied with
all environmental aspects relating to Borrowers and their business, including
all environmental reports as may be required by the Lenders.

 

(s)                                  [RESERVED].

 

(t)                                    The Agent shall have entered into an
intercreditor agreement with each Floor Plan Lender, or any amendment to any
existing Intercreditor Agreement reasonably requested by the Agent, in form,
scope and substance satisfactory to the Lenders, with respect to their
respective rights and remedies.

 

(u)                                 [RESERVED].

 

(v)                                 Without limiting the generality of
the items described above, any other documents or other items reasonably
requested by the Agent or any Lender.

 

(w)                               [RESERVED].

 

(x)                                   The Agent and the applicable Loan
Party shall have executed and delivered notices of assignment of the Accounts
of the Loan Parties to such Persons designated by the Agent.

 

The acceptance by any Borrower of any Loans made or Letters of Credit
issued on the Initial Funding Date shall be deemed to be a representation and
warranty made by Fleetwood and the Borrowers to the effect that all of the
conditions precedent to the making of such Loans or the issuance of such
Letters of Credit set forth in clauses (a), (b), (c), (d), (h), (i),
(n), (q), (s) and (x) have been satisfied, and that no material adverse change
has occurred since April 27, 2003, except as disclosed by Fleetwood
publicly in the assets, liabilities, business, financial condition

 

68

 

or results of operations of Fleetwood and its Subsidiaries, with the
same effect as delivery to the Agent and the Lenders of a certificate signed by
a Responsible Officer of the Borrowers, dated the Initial Funding Date, to such
effect.

 

Execution and delivery to the Agent by a Lender of a counterpart of
this Agreement shall be deemed confirmation by such Lender that (i) all
conditions precedent in this Section 8.1 have been fulfilled to the
satisfaction of such Lender, (ii) the decision of such Lender to execute
and deliver to the Agent an executed counterpart of this Agreement was made by
such Lender independently and without reliance on the Agent or any other Lender
as to the satisfaction of any condition precedent set forth in this Section 8.1,
and (iii) all documents sent to such Lender for approval consent, or
satisfaction were acceptable to such Lender.

 

8.2                                 Conditions Precedent to Each Loan.  The obligation of the Lenders to make each
Loan, including any additional Revolving Loans and the Term Loan on the Closing
Date, and the obligation of the Agent to cause the Letter of Credit Issuer to
issue any Letter of Credit shall be subject to the further conditions precedent
that on and as of the date of any such extension of credit:

 

(a)                                  The following statements shall be
true, and the acceptance by any Borrower of any extension of credit shall be
deemed to be a statement to the effect set forth in clauses (i), (ii) and
(iii) with the same effect as the delivery to the Agent and the
Lenders of a certificate signed by a Responsible Officer, dated the date of
such extension of credit, stating that:

 

(i)                                     The representations and warranties
contained in this Agreement and the other Loan Documents are correct in all
material respects on and as of the date of such extension of credit as though
made on and as of such date, other than any such representation or warranty
which relates to a specified prior date and except to the extent the Agent and
the Lenders have been notified in writing by the Borrowers that any
representation or warranty is not correct and the Majority Lenders have
explicitly waived in writing compliance with such representation or warranty;
and

 

(ii)                                  No event has occurred and is
continuing, or would result from such extension of credit, which constitutes a
Default or an Event of Default; and

 

(iii)                               No event has occurred and is
continuing, or would result from such extension of credit, which has had or
would have a Material Adverse Effect.

 

(b)                                 No such Borrowing shall exceed
Aggregate Availability; provided, however, that the foregoing
conditions precedent are not conditions to each Revolving Credit Lender
participating in or reimbursing the Bank or the Agent for such Lenders’ Pro
Rata Share of any Non-Ratable Loan or Agent Advance made in accordance with the
provisions of Sections 1.2(h) and (i).

 

69

 

ARTICLE 9

DEFAULT; REMEDIES

 

9.1                                 Events of Default.  It shall constitute an event of default (“Event
of Default”) if any one or more of the following shall occur for any
reason:

 

(a)                                  any failure by any Borrower to pay (i) the
principal of or interest or premium on any of the Obligations when due, whether
upon demand or otherwise, or (ii) any fee or other amount owing hereunder
within 3 Business Days after such amount is due;

 

(b)                                 any representation or warranty made
or deemed made by Fleetwood or the Borrowers in this Agreement or by any Loan
Party in any of the other Loan Documents, any Financial Statement, or any
certificate furnished by any Loan Party at any time to the Agent or any Lender
shall prove to be untrue in any material respect as of the date on which made,
deemed made, or furnished;

 

(c)                                  (i) any default shall occur in
the observance or performance of any of the covenants and agreements contained
in Sections 5.2(l), 7.2, 7.5, 7.9 through 7.30, or Section 11 of the
Security Agreement, (ii) any default shall occur in the observance or
performance of any of the covenants and agreements contained in Section 5.2
(other than Section 5.2(l)) or Section 5.3 and such
default shall continue for 5 Business Days or more; or (iii) any default
shall occur in the observance or performance of any of the other covenants or
agreements contained in any other Section of this Agreement or any other
Loan Document, or any other agreement entered into at any time to which
Fleetwood or any Subsidiary and the Agent or any Lender are party (including in
respect of any Bank Products) and such default shall continue for 30 days or
more;

 

(d)                                 any failure to pay any principal of
or premium or interest on any Debt (other than the Obligations) of Fleetwood or
any of its Subsidiaries or of Fleetwood Trust in an outstanding principal
amount which exceeds $5,000,000, or under any agreement or instrument under or
pursuant to which any such Debt may have been issued, created, assumed, or
guaranteed by Fleetwood or any of its Subsidiaries or of Fleetwood Trust, and
such failure to pay shall continue for more than the period of grace, if any,
therein specified; or any default shall occur with respect to any Debt (other
than the Obligations) of Fleetwood or any of its Subsidiaries or of Fleetwood
Trust in an outstanding principal amount which exceeds $5,000,000, or under any
agreement or instrument under or pursuant to which any such Debt may have been
issued, created, assumed, or guaranteed by Fleetwood or any of its Subsidiaries
or Fleetwood Trust, and such default shall continue for more than the period of
grace, if any, therein specified, if the effect thereof (with or without the
giving of notice or further lapse of time or both) is to accelerate, or to
permit the holders of any such Debt to accelerate, the maturity of any such
Debt; or any such Debt shall be declared due and payable or be required to be
prepaid (other than by a regularly scheduled required prepayment) prior to the
stated maturity thereof;

 

70

 

(e)                                  Fleetwood or any of its Subsidiaries
(other than an Inactive Subsidiary or any other immaterial Excluded Subsidiary)
shall (i) file a voluntary petition in bankruptcy or file a voluntary
petition or an answer or otherwise commence any action or proceeding seeking
reorganization, arrangement or readjustment of its debts or for any other
relief under the Bankruptcy Code, as amended, or under any other bankruptcy or
insolvency act or law, state or federal, now or hereafter existing, or consent
to, approve of, or acquiesce in, any such petition, action or proceeding; (ii) apply
for or acquiesce in the appointment of a receiver, assignee, liquidator,
sequestrator, custodian, monitor, trustee or similar officer for it or for all
or any part of its property; (iii) make an assignment for the benefit of
creditors; or (iv) be unable generally to pay its debts as they become
due;

 

(f)                                    an involuntary petition shall be
filed or an action or proceeding otherwise commenced seeking reorganization,
arrangement, consolidation or readjustment of the debts of Fleetwood or any of
its Subsidiaries (other than an Inactive Subsidiary or any other immaterial
Excluded Subsidiary) or for any other relief under the Bankruptcy Code, as
amended, or under any other bankruptcy or insolvency act or law, state or
federal, now or hereafter existing and such petition or proceeding shall not be
dismissed within 60 days after the filing or commencement thereof or an order
of relief shall be entered with respect thereto;

 

(g)                                 a receiver, assignee, liquidator,
sequestrator custodian, monitor, trustee or similar officer for Fleetwood or
any of its Subsidiaries or for all or any part of its property shall be
appointed or a warrant of attachment, execution or similar process shall be
issued against any part of the property of Fleetwood or any of its
Subsidiaries;

 

(h)                                 except as expressly permitted under
this Agreement, Fleetwood or any of its Subsidiaries shall file a certificate
of dissolution under applicable state law or shall be liquidated, dissolved or
wound-up or shall commence or have commenced against it any action or
proceeding for dissolution, winding-up or liquidation, or shall take any
corporate action in furtherance thereof;

 

(i)                                     all or any material part of the
property of Fleetwood or any of its Subsidiaries shall be nationalized,
expropriated or condemned, seized or otherwise appropriated, or custody or
control of such property or of Fleetwood or such Subsidiary shall be assumed by
any Governmental Authority or any court of competent jurisdiction at the
instance of any Governmental Authority, except where contested in good faith by
proper proceedings diligently pursued where a stay of enforcement is in effect;

 

(j)                                     any Loan Document shall be
terminated (except in accordance with its terms), revoked or declared void or
invalid or unenforceable or challenged by any Loan Party;

 

71

 

(k)                                  one or more judgments, orders,
decrees or arbitration awards is entered against Fleetwood or any of its
Subsidiaries involving in the aggregate liability (to the extent not covered by
independent third-party insurance as to which the insurer has not denied
coverage) as to any single or related or unrelated series of transactions,
incidents or conditions, of $5,000,000 or more, and the same shall remain
unsatisfied, unvacated and unstayed pending appeal for a period of
thirty (30) days after the entry thereof;

 

(l)                                     any loss, theft, damage or
destruction of any item or items of Collateral or other property of Fleetwood
or any of its Subsidiaries occurs which could reasonably be expected to cause a
Material Adverse Effect and is not adequately covered by insurance;

 

(m)                               there is filed against Fleetwood or
any of its Subsidiaries any action, suit or proceeding under any federal or
state racketeering statute (including the Racketeer Influenced and Corrupt
Organization Act of 1970), which action, suit or proceeding (i) is not
dismissed within one hundred twenty (120) days, and (ii) would reasonably
be expected to result in the confiscation or forfeiture of any material portion
of the Collateral;

 

(n)                                 for any reason other than the
failure of the Agent to take any action available to it to maintain perfection
of the Agent’s Liens pursuant to the Loan Documents, any Loan Document ceases
to be in full force and effect in accordance with its terms or, except for any
Lien released in accordance with the Loan Documents, any Lien with respect to
any material portion of the Collateral intended to be secured thereby ceases to
be, or is not, valid, perfected and prior to all other Liens (other than
Permitted Liens) or is terminated, revoked or declared void;

 

(o)                                 an ERISA Event shall occur with
respect to a Pension Plan or Multi-employer Plan which has resulted or could
reasonably be expected to result in liability of Fleetwood or any ERISA
Affiliate under Title IV of ERISA to the Pension Plan, Multi-employer Plan or
the PBGC in an aggregate amount in excess of $10,000,000; (ii) the
aggregate amount of Unfunded Pension Liability among all Pension Plans at any
time exceeds $10,000,000; or (iii) Fleetwood or any ERISA Affiliate shall
fail to pay when due, after the expiration of any applicable grace period, any
installment payment with respect to its withdrawal liability under Section 4201
of ERISA under a Multi-employer Plan in an aggregate amount in excess of
$10,000,000;

 

(p)                                 there occurs a Change of Control; or

 

(q)                                 there occurs an event having a
Material Adverse Effect.

 

9.2                                 Remedies.

 

(a)                                  If a Default or an Event of Default
exists, the Agent may, in its discretion, and shall, at the direction of the
Majority Lenders, do one or more of

 

72

 

the
following at any time or times and in any order, without notice to or demand on
the Borrowers:  (i) reduce the
Maximum Revolver Amount, or the advance rates against Eligible Accounts and/or
Eligible Inventory and/or Real Estate Subfacility Assets used in computing the
Borrowing Base, or reduce one or more of the other elements used in computing
the Borrowing Base; (ii) restrict the amount of or refuse to make
Revolving Loans; and (iii) restrict or refuse to provide Letters of Credit
or Credit Support.  If an Event of
Default exists, the Agent shall, at the direction of the Majority Lenders, do
one or more of the following, in addition to the actions described in the
preceding sentence, at any time or times and in any order, without notice to or
demand on the Borrowers:  (A) terminate
the Revolving Credit Commitments and this Agreement; (B) declare any or
all Obligations to be immediately due and payable; provided, however,
that upon the occurrence of any Event of Default described in Sections 9.1(e),
9.1(f), 9.1(g), or 9.1(h), the Revolving Credit
Commitments shall automatically and immediately expire and all Obligations
shall automatically become immediately due and payable without notice or demand
of any kind; (C) require the Borrowers to cash collateralize all
outstanding Letter of Credit Obligations; and (D) pursue its other rights
and remedies under the Loan Documents and applicable law.

 

(b)                                 If an Event of Default has occurred
and is continuing:  (i) the Agent
shall have for the benefit of the Lenders, in addition to all other rights of
the Agent and the Lenders, the rights and remedies of a secured party under the
Loan Documents and the UCC; (ii) the Agent may, at any time, take
possession of the Collateral and keep it on any Loan Party’s premises, at no
cost to the Agent or any Lender, or remove any part of it to such other place
or places as the Agent may desire, or the Borrowers shall, upon the Agent’s
demand, at the Borrowers’ cost, assemble the Collateral and make it available
to the Agent at a place reasonably convenient to the Agent; and (iii) the
Agent may sell and deliver any Collateral at public or private sales, for cash,
upon credit or otherwise, at such prices and upon such terms as the Agent deems
advisable, in its sole discretion, and may, if the Agent deems it reasonable,
postpone or adjourn any sale of the Collateral by an announcement at the time
and place of sale or of such postponed or adjourned sale without giving a new
notice of sale.  Without in any way
requiring notice to be given in the following manner, each Borrower agrees that
any notice by the Agent of sale, disposition or other intended action hereunder
or in connection herewith, whether required by the UCC or otherwise, shall
constitute reasonable notice to such Borrower if such notice is delivered
personally or by overnight courier against receipt, at least five (5) Business
Days prior to such action to the Borrowers’ address specified in or pursuant to
Section 13.8.  If any
Collateral is sold on terms other than payment in full at the time of sale, no
credit shall be given against the Obligations until the Agent or the Lenders
receive payment, and if the buyer defaults in payment, the Agent may resell the
Collateral without further notice to the Borrowers.  In the event the Agent seeks to take
possession of all or any portion of the Collateral by judicial process, each
Borrower irrevocably waives:  (A) the
posting of any bond, surety or security with respect thereto which might
otherwise be required; (B) any

 

73

 

demand
for possession prior to the commencement of any suit or action to recover the
Collateral; and (C) any requirement that the Agent retain possession and
not dispose of any Collateral until after trial or final judgment.  Each Borrower agrees that the Agent has no
obligation to preserve rights to the Collateral or marshal any Collateral for
the benefit of any Person.  The Agent is
hereby granted a license or other right to use, without charge, each Borrower’s
and Fleetwood’s labels, patents, copyrights, name, trade secrets, trade names,
trademarks, and advertising matter, or any similar property, in completing
production of, advertising or selling any Collateral, and each Borrower’s and
Fleetwood’s rights under all licenses and all franchise agreements shall inure
to the Agent’s benefit for such purpose. 
The proceeds of sale shall be applied first to all expenses of sale,
including attorneys’ fees, and then to the Obligations.  The Agent will return any excess to the
Borrowers and the Borrowers shall remain liable for any deficiency.

 

(c)                                  If an Event of Default occurs, each
Borrower hereby waives to the greatest extent permitted by applicable law all
rights to notice and hearing prior to the exercise by the Agent of the Agent’s
rights to repossess the Collateral without judicial process or to reply, attach
or levy upon the Collateral without notice or hearing.

 

(d)                                 [RESERVED].

 

ARTICLE 10

TERM AND TERMINATION

 

10.1                           Term and Termination.  The term of this Agreement shall end on the
Stated Termination Date unless sooner terminated in accordance with the terms
hereof.  The Agent upon direction from
the Majority Lenders may terminate this Agreement without notice upon the
occurrence of an Event of Default.  Upon
the effective date of termination of this Agreement for any reason whatsoever,
all Obligations (including all unpaid principal, accrued and unpaid interest
and any accrued and unpaid fees) shall become immediately due and payable and
the Borrowers shall immediately arrange for the cancellation and return of
Letters of Credit then outstanding. 
Notwithstanding the termination of this Agreement, until all Obligations
are indefeasibly paid and performed in full in cash, the Borrowers shall remain
bound by the terms of this Agreement and shall not be relieved of any of their
Obligations hereunder or under any other Loan Document, and the Agent and the
Lenders shall retain all their rights and remedies hereunder (including the
Agent’s Liens in and all rights and remedies with respect to all then existing
and after-arising Collateral).

 

ARTICLE 11

AMENDMENTS; WAIVERS; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS

 

11.1                           Amendments and Waivers.

 

(a)                                  No amendment or waiver of any
provision of this Agreement or any other Loan Document, and no consent with
respect to any departure by any Loan Party therefrom, shall be effective unless
the same shall be in writing and

 

74

 

signed
by the Majority Lenders (or by the Agent at the written request of the Majority
Lenders), Fleetwood and the Borrowers and then any such waiver or consent shall
be effective only in the specific instance and for the specific purpose for
which given; provided, however,

 

(i)            no such waiver, amendment, or consent shall, unless in
writing and signed by all the Lenders, Fleetwood and the Borrowers and
acknowledged by the Agent, do any of the following:

 

(A)                              change the percentage of the
Revolving Credit Commitments or of the aggregate unpaid principal amount of the
Loans which is required for the Lenders or any of them to take any action
hereunder;

 

(B)                                amend this Section or any
provision of this Agreement providing for consent or other action by all
Lenders;

 

(C)                                release any Guaranties of the Obligations
except in connection with the disposition of the capital stock of a Loan Party
or Subsidiary that is not prohibited hereby;

 

(D)                               change the definitions of “Majority
Lenders” or “Required Lenders”;

 

(E)                                 permit the Agent to contractually
subordinate its Lien on any Collateral to any other Lien, except as permitted
by the Credit Agreement;

 

(F)                                 increase the amount of Agent
Advances permitted pursuant to Section 1.2(i); or

 

(G)                                amend Section 3.8;

 

(ii)                                  no such waiver, amendment, or
consent shall, unless in writing and signed by all the Term Lenders and the
Majority Revolving Lenders, Fleetwood and the Borrowers and acknowledged by the
Agent, do any of the following:

 

(A)                              postpone or delay any date fixed by
this Agreement or any other Loan Document for any payment of principal,
interest, fees or other amounts due to the Term Lenders (or any of them)
hereunder or under any other Loan Document;

 

(B)                                reduce the principal of, or the rate
of interest specified herein on any Lender Term Loan, or any fees or other
amounts payable to the Term Lenders hereunder or under any other Loan Document;

 

75

 

(C)                                release any Term Loan Collateral
other than as permitted by Section 2.8, Section 7.9 or Section 12.11
(provided that the Term Loan Collateral may be released with the consent of the
Term Lenders); or

 

(D)                               change the definitions of “Majority
Term Lenders” or “Required Term Lenders”;

 

(iii)                               no such waiver, amendment, or
consent shall, unless in writing and signed by all the Revolving Credit Lenders
and the Majority Term Lenders, Fleetwood and the Borrowers and acknowledged by
the Agent, do any of the following:

 

(A)                              increase or extend the Revolving
Credit Commitment of any Revolving Credit Lender;

 

(B)                                postpone or delay any date fixed by
this Agreement or any other Loan Document for any payment of principal,
interest, fees or other amounts due to the Revolving Credit Lenders (or any of
them) hereunder or under any other Loan Document;

 

(C)                                reduce the principal of, or the rate
of interest specified herein on any Loan, or any fees or other amounts payable
to the Revolving Credit Lenders hereunder or under any other Loan Document;

 

(D)                               increase any of the percentages or
other amounts or limits set forth in the definition of the Borrowing Base (or
introduce new categories of property as components of the Borrowing Base), provided
that, for the avoidance of doubt, the Agent may establish Reserves from time to
time in its reasonable credit judgment;

 

(E)                                 release any Collateral (other than
Term Loan Collateral), except as permitted by Section 2.8, Section 7.9
or Section 12.11;

 

(F)                                 change the definitions of “Majority
Revolving Lenders” or “Required Revolving Lenders”; or

 

(G)                                increase the Maximum Revolver
Amount, the Maximum Inventory Loan Amount, the Maximum Real Estate Loan Amount
or the Unused Letter of Credit Subfacility; and

 

(iv)                              no such waiver, amendment, or
consent shall, unless in writing and signed by the Required Lenders, Fleetwood
and the Borrowers and acknowledged by the Agent, amend Article 12;

 

76

 

provided,
however, the Agent may, in its sole discretion and notwithstanding the
limitations contained in clauses (iii)(D) and (G) above
and any other terms of this Agreement, make Agent Advances in accordance with Section 1.2(i) or
Section 13.19 and, provided  further, that no
amendment, waiver or consent shall, unless in writing and signed by the Agent,
affect the rights or duties of the Agent under this Agreement or any other Loan
Document; and provided  further, that Schedule 1.2
hereto (Revolving Credit Commitments) may be amended from time to time by the
Agent alone to reflect assignments of Revolving Credit Commitments in
accordance herewith.

 

(b)                                 If, in connection with any proposed
amendment, waiver or consent (a “Proposed Change”):

 

(i)                                     requiring the consent of all
Lenders, the consent of Majority Lenders is obtained, but the consent of other
Lenders is not obtained (any such Lender whose consent is not obtained as
described in this clause (i) and in clause (ii) below being referred
to as a “Non-Consenting Lender”), or

 

(ii)                                  requiring the consent of Required
Lenders, the consent of Majority Lenders is obtained,

 

then, so long
as the Agent is not a Non-Consenting Lender, at the Borrowers’ request, the
Agent or an Eligible Assignee shall have the right (but not the obligation)
with the Agent’s approval, to purchase from the Non-Consenting Lenders, and the
Non-Consenting Lenders agree that they shall sell, all the Non-Consenting Lenders’
Revolving Credit Commitments and Loans for an amount equal to the principal
balances thereof and all accrued interest and fees with respect thereto through
the date of sale pursuant to Assignment and Acceptance Agreement(s), without
premium or discount.

 

11.2                           Assignments; Participations.

 

(a)                                  Any Lender may, with the written
consent of the Agent and, so long as no Default or Event of Default then
exists, Fleetwood (which consents of the Agent and Fleetwood shall not be
unreasonably withheld), assign and delegate to one or more Eligible Assignees (provided
that no consent shall be required in connection with any assignment and
delegation by a Lender to an Affiliate of such Lender) (each an “Assignee”)
all, or any ratable part of all, of the Loans, the Commitments and the other
rights and obligations of such Lender hereunder, in a minimum amount of (x)
$5,000,000 (or, if less, the entire amount of such Lender’s Loan or Commitment
or other rights and obligations, as applicable) for the Term Loan and (y) $10,000,000
(or, if less, the entire amount of such Lender’s Loan or Commitment or other
rights and obligations, as applicable) for Revolving Commitments (provided
that, unless either (I) an assignor Lender has assigned and delegated
all of its Loans and Commitments or (II) an assignor’s Commitment as of the
Closing Date was less than $10,000,000 for the Term Loan or $20,000,000 for the
Revolving Commitments, no such assignment and/or delegation shall be permitted
unless, after giving effect thereto, such assignor Lender retains a Commitment
in a minimum amount of (x) $5,000,000 for the

 

77

 

Term
Loan and (y) $10,000,000 for Revolving Commitments); provided, however,
that the Borrowers and the Agent may continue to deal solely and directly with
such Lender in connection with the interest so assigned to an Assignee until (i) written
notice of such assignment, together with payment instructions, addresses and
related information with respect to the Assignee, shall have been given to the
Borrowers and the Agent by such Lender and the Assignee; (ii) such Lender
and its Assignee shall have delivered to the Borrowers and the Agent an
Assignment and Acceptance in the form of Exhibit F (“Assignment
and Acceptance”) together with any note or notes subject to such assignment
and (iii) the assignor Lender or Assignee has paid to the Agent a
processing fee in the amount of $3,500; and provided  further that
no Lender may assign all, or any ratable part of all, of the Loans, the Commitments
and the other rights and obligations of such Lender hereunder unless it shall
simultaneously assign a ratable portion of each of its Revolving Credit
Commitments, Revolving Loans and Term Loans hereunder.  The Borrowers agree to promptly execute and
deliver new promissory notes and replacement promissory notes as reasonably
requested by the Agent to evidence assignments of the Revolving Credit
Commitments in accordance herewith.

 

(b)                                 From and after the date that the
Agent notifies the assignor Lender that it has received an executed Assignment
and Acceptance and payment of the above-referenced processing fee, (i) the
Assignee thereunder shall be a party hereto and, to the extent that rights and
obligations, including, but not limited to, the obligation to participate in
Letters of Credit and Credit Support have been assigned to it pursuant to such
Assignment and Acceptance, shall have the rights and obligations of a Lender
under the Loan Documents, and (ii) the assignor Lender shall, to the
extent that rights and obligations hereunder and under the other Loan Documents
have been assigned by it pursuant to such Assignment and Acceptance, relinquish
its rights and be released from its obligations under this Agreement (and in
the case of an Assignment and Acceptance covering all or the remaining portion
of an assigning Lender’s rights and obligations under this Agreement, such
Lender shall cease to be a party hereto).

 

(c)                                  By executing and delivering an
Assignment and Acceptance, the assigning Lender thereunder and the Assignee
thereunder confirm to and agree with each other and the other parties hereto as
follows:  (i) other than as provided
in such Assignment and Acceptance, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other Loan Document furnished
pursuant hereto or the attachment, perfection, or priority of any Lien granted
by any Loan Party to the Agent or any Lender in the Collateral; (ii) such
assigning Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of Fleetwood or any of
its Subsidiaries or the performance or observance by any Loan Party of any of
its obligations under this Agreement or any other Loan Document furnished
pursuant hereto; (iii) such

 

78

 

Assignee
confirms that it has received a copy of this Agreement, together with such
other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into such Assignment and Acceptance; (iv) such
Assignee will, independently and without reliance upon the Agent, such
assigning Lender or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement; (v) such
Assignee appoints and authorizes the Agent to take such action as agent on its
behalf and to exercise such powers under this Agreement as are delegated to the
Agent by the terms hereof, together with such powers, including the
discretionary rights and incidental power, as are reasonably incidental
thereto; and (vi) such Assignee agrees that it will perform in accordance
with their terms all of the obligations which by the terms of this Agreement
are required to be performed by it as a Lender.

 

(d)                                 Immediately upon satisfaction of the
requirements of Section 11.2(a), this Agreement shall be deemed to
be amended to the extent, but only to the extent, necessary to reflect the
addition of the Assignee and the resulting adjustment of the Revolving Credit
Commitments arising therefrom.  The
Revolving Credit Commitment allocated to each Assignee shall reduce such
Revolving Credit Commitments of the assigning Lender pro  tanto.

 

(e)                                  Any Lender may at any time sell to
one or more commercial banks, financial institutions, or other Persons not
Affiliates of any Loan Party (a “Participant”) participating interests
in any Loans, the Revolving Credit Commitment of that Lender and the other
interests of that Lender (the “originating Lender”) hereunder and under
the other Loan Documents; provided, however, that (i) the
originating Lender’s obligations under this Agreement shall remain unchanged, (ii) the
originating Lender shall remain solely responsible for the performance of such
obligations, (iii) the Borrowers and the Agent shall continue to deal
solely and directly with the originating Lender in connection with the
originating Lender’s rights and obligations under this Agreement and the other
Loan Documents, and (iv) no Lender shall transfer or grant any
participating interest under which the Participant has rights to approve any
amendment to, or any consent or waiver with respect to, this Agreement or any
other Loan Document except the matters set forth in Section 11.1(a) (i),
(ii) and (iii) with respect to the Loans in which such
Participant has an interest, and all amounts payable by the Borrowers hereunder
shall be determined as if such Lender had not sold such participation; except
that, if amounts outstanding under this Agreement are due and unpaid, or shall
have become due and payable upon the occurrence of an Event of Default, each
Participant shall be deemed to have the right of set-off in respect of its
participating interest in amounts owing under this Agreement to the same extent
and subject to the same limitation as if the amount of its participating
interest were owing directly to it as a Lender under this Agreement.

 

(f)                                    Notwithstanding any other provision
in this Agreement, any Lender may at any time create a security interest in, or
pledge, all or any portion

 

79

 

of
its rights under and interest in this Agreement in favor of any Federal Reserve
Bank in accordance with Regulation A of the FRB or U.S. Treasury Regulation 31
CFR §203.14, and such Federal Reserve Bank may enforce such pledge or security
interest in any manner permitted under applicable law.

 

ARTICLE 12

THE AGENT

 

12.1                           Appointment and Authorization.  Each Lender hereby designates and appoints
Bank as its Agent under this Agreement and the other Loan Documents and each
Lender hereby irrevocably authorizes the Agent to take such action on its
behalf under the provisions of this Agreement and each other Loan Document and
to exercise such powers and perform such duties as are expressly delegated to
it by the terms of this Agreement or any other Loan Document, together with
such powers as are reasonably incidental thereto.  The Agent agrees to act as such on the express
conditions contained in this Article 12.  The provisions of this Article 12
are solely for the benefit of the Agent and the Lenders and no Loan Party shall
have no rights as a third party beneficiary of any of the provisions contained
herein.  Notwithstanding any provision to
the contrary contained elsewhere in this Agreement or in any other Loan
Document, the Agent shall not have any duties or responsibilities, except those
expressly set forth herein, nor shall the Agent have or be deemed to have any
fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the Agent.  Without limiting the generality of the
foregoing sentence, the use of the term “agent” in this Agreement with
reference to the Agent is not intended to connote any fiduciary or other
implied (or express) obligations arising under agency doctrine of any
applicable law.  Instead, such term is
used merely as a matter of market custom, and is intended to create or reflect
only an administrative relationship between independent contracting
parties.  Except as expressly otherwise
provided in this Agreement, the Agent shall have and may use its sole
discretion with respect to exercising or refraining from exercising any
discretionary rights or taking or refraining from taking any actions which the
Agent is expressly entitled to take or assert under this Agreement and the
other Loan Documents, including (a) the determination of the applicability
of ineligibility criteria with respect to the calculation of the Borrowing
Base, (b) the making of Agent Advances pursuant to Section 1.2(i),
and (c) the exercise of remedies pursuant to Section 9.2, and
any action so taken or not taken shall be deemed consented to by the Lenders.

 

12.2                           Delegation of Duties.  The Agent may execute any of its duties under
this Agreement or any other Loan Document by or through agents, employees or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties.  The
Agent shall not be responsible for the negligence or misconduct of any agent or
attorney-in-fact that it selects as long as such selection was made without
gross negligence or willful misconduct.

 

12.3                           Liability of the Agent.  None of the Agent-Related Persons shall (i) be
liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful
misconduct), or (ii) be responsible in any manner to any of the Lenders
for any recital, statement, representation or warranty made by the Borrower or
any

 

80

 

Subsidiary or Affiliate of Fleetwood, or any
officer thereof, contained in this Agreement or in any other Loan Document, or
in any certificate, report, statement or other document referred to or provided
for in, or received by the Agent under or in connection with, this Agreement or
any other Loan Document, or the validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Loan Document, or
for any failure of any Loan Party or any other party to any Loan Document to
perform its obligations hereunder or thereunder.  No Agent-Related Person shall be under any
obligation to any Lender to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this
Agreement or any other Loan Document, or to inspect the properties, books or
records of Fleetwood or any of its Subsidiaries or Affiliates.

 

12.4                           Reliance by the Agent.  The Agent shall be entitled to rely, and
shall be fully protected in relying, upon any writing, resolution, notice,
consent, certificate, affidavit, letter, telegram, facsimile, telex or
telephone message, statement or other document or conversation believed by it
to be genuine and correct and to have been signed, sent or made by the proper
Person or Persons, and upon advice and statements of legal counsel (including
counsel to the Borrowers), independent accountants and other experts selected
by the Agent. The Agent shall be fully justified in failing or refusing to take
any action under this Agreement or any other Loan Document unless it shall
first receive such advice or concurrence of the Majority Lenders as it deems
appropriate and, if it so requests, it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense which may
be incurred by it by reason of taking or continuing to take any such
action.  The Agent shall in all cases be
fully protected in acting, or in refraining from acting, under this Agreement
or any other Loan Document in accordance with a request or consent of the
Majority Lenders (or all Lenders if so required by Section 11.1)
and such request and any action taken or failure to act pursuant thereto shall
be binding upon all of the Lenders.

 

12.5                           Notice of Default.  The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default,
unless the Agent shall have received written notice from a Lender or the
Borrowers referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a “notice of default.”  The Agent will notify the Lenders of its
receipt of any such notice.  The Agent
shall take such action with respect to such Default or Event of Default as may
be requested by the Majority Lenders in accordance with Section 9; provided,
however, that unless and until the Agent has received any such request,
the Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it
shall deem advisable.

 

12.6                           Credit Decision.  Each Lender acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that
no act by the Agent hereinafter taken, including any review of the affairs of
Fleetwood, its Subsidiaries and its Affiliates, shall be deemed to constitute
any representation or warranty by any Agent-Related Person to any Lender.  Each Lender represents to the Agent that it
has, independently and without reliance upon any Agent-Related Person and based
on such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, prospects, operations,
property, financial and other condition and creditworthiness of Fleetwood, its
Subsidiaries and its Affiliates, and all applicable bank regulatory laws
relating to the transactions contemplated hereby, and made its own decision to
enter into this Agreement and to

 

81

 

extend credit to the Borrowers.  Each Lender also represents that it will,
independently and without reliance upon any Agent-Related Person and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or
not taking action under this Agreement and the other Loan Documents, and to
make such investigations as it deems necessary to inform itself as to the
business, prospects, operations, property, financial and other condition and
creditworthiness of the Borrower.  Except
for notices, reports and other documents expressly herein required to be
furnished to the Lenders by the Agent, the Agent shall not have any duty or
responsibility to provide any Lender with any credit or other information
concerning the business, prospects, operations, property, financial and other
condition or creditworthiness of Fleetwood or any of its Subsidiaries which may
come into the possession of any of the Agent-Related Persons.

 

12.7                           Indemnification.  Whether or not the transactions contemplated
hereby are consummated, the Lenders shall indemnify upon demand the Agent-Related
Persons (to the extent not reimbursed by or on behalf of the Borrowers and
without limiting the obligation of the Borrowers to do so), in accordance with
their Pro Rata Shares, from and against any and all Indemnified Liabilities as
such term is defined in Section 13.11; provided, however,
that no Lender shall be liable for the payment to the Agent-Related Persons of
any portion of such Indemnified Liabilities resulting solely from such Person’s
gross negligence or willful misconduct. 
Without limitation of the foregoing, each Lender shall reimburse the
Agent upon demand for its Pro Rata Share of any costs or out-of-pocket expenses
(including Attorney Costs) incurred by the Agent in connection with the
preparation, execution, delivery, administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement,
any other Loan Document, or any document contemplated by or referred to herein,
to the extent that the Agent is not reimbursed for such expenses by or on
behalf of the Borrowers.  The undertaking
in this Section shall survive the payment of all Obligations hereunder and
the resignation or replacement of the Agent.

 

12.8                           The Agent in Individual Capacity.  The Bank and its Affiliates may make loans
to, issue letters of credit for the account of, accept deposits from, acquire
equity interests in and generally engage in any kind of banking, trust,
financial advisory, underwriting or other business with Fleetwood and its
Subsidiaries and Affiliates as though the Bank were not the Agent hereunder and
without notice to or consent of the Lenders. 
The Bank or its Affiliates may receive information regarding Fleetwood,
its Subsidiaries, its Affiliates and Account Debtors (including information
that may be subject to confidentiality obligations in favor of a Loan Party or
such Subsidiary) and acknowledge that the Agent and the Bank shall be under no
obligation to provide such information to them. 
With respect to its Loans, the Bank shall have the same rights and
powers under this Agreement as any other Lender and may exercise the same as
though it were not the Agent, and the terms “Lender” and “Lenders” include the
Bank in its individual capacity.

 

12.9                           Successor Agent.  The Agent may resign as Agent upon at least
30 days’ prior notice to the Lenders and the Borrowers, such resignation to be
effective upon the acceptance of a successor agent to its appointment as
Agent.  In the event the Bank sells all
of its Revolving Credit Commitment and Revolving Loans as part of a sale,
transfer or other disposition by the Bank of substantially all of its loan
portfolio, the Bank shall resign as Agent

 

82

 

and such purchaser or transferee shall become
the successor Agent hereunder.  Subject
to the foregoing, if the Agent resigns under this Agreement, the Majority
Lenders shall appoint from among the Lenders a successor agent for the
Lenders.  If no successor agent is
appointed prior to the effective date of the resignation of the Agent, the
Agent may appoint, after consulting with the Lenders and the Borrowers, a
successor agent from among the Lenders. 
Upon the acceptance of its appointment as successor agent hereunder,
such successor agent shall succeed to all the rights, powers and duties of the
retiring Agent and the term “Agent” shall mean such successor agent and
the retiring Agent’s appointment, powers and duties as the Agent shall be
terminated.  After any retiring Agent’s
resignation hereunder as the Agent, the provisions of this Article 12
shall continue to inure to its benefit as to any actions taken or omitted to be
taken by it while it was the Agent under this Agreement.

 

12.10                     Withholding Tax.

 

(a)                                  If any Lender is a “foreign
corporation, partnership or trust” within the meaning of the Code and such
Lender claims exemption from, or a reduction of, U.S. withholding tax under
Sections 1441 or 1442 of the Code, such Lender agrees with and in favor of the
Borrowers or the Agent, to deliver to the Borrowers, with a copy to the Agent:

 

(i)                                     if such Lender claims an exemption
from, or a reduction of, withholding tax under a United States of America tax
treaty, properly completed IRS Forms W-8BEN and W-8ECI before the payment of
any interest in the first calendar year and before the payment of any interest
in each third succeeding calendar year during which interest may be paid under
this Agreement;

 

(ii)                                  if such Lender claims that interest
paid under this Agreement is exempt from United States of America withholding
tax because it is effectively connected with a United States of America trade
or business of such Lender, two properly completed and executed copies of IRS Form W-8ECI
before the payment of any interest is due in the first taxable year of such
Lender and in each succeeding taxable year of such Lender during which interest
may be paid under this Agreement, and IRS Form W-9; and

 

(iii)                               such other form or forms as may be
required under the Code or other laws of the United States of America as a
condition to exemption from, or reduction of, United States of America
withholding tax.

 

Such Lender
agrees to promptly notify the Borrowers and the Agent of any change in
circumstances which would modify or render invalid any claimed exemption or
reduction.

 

(b)                                 If any Lender claims exemption from,
or reduction of, withholding tax under a United States of America tax treaty by
providing IRS Form FW-8BEN and such Lender sells, assigns, grants a
participation in, or otherwise transfers all or part of the Obligations owing
to such Lender, such Lender agrees to notify the Borrowers and the Agent of the
percentage amount in which it is no

 

83

 

longer
the beneficial owner of Obligations of the Borrowers to such Lender.  To the extent of such percentage amount, the
Borrowers and the Agent will treat such Lender’s IRS Form W-8BEN as no
longer valid.

 

(c)                                  If any Lender claiming exemption
from United States of America withholding tax by filing IRS Form W-8ECI
with the Agent sells, assigns, grants a participation in, or otherwise
transfers all or part of the Obligations owing to such Lender, such Lender
agrees to undertake sole responsibility for complying with the withholding tax
requirements imposed by Sections 1441 and 1442 of the Code.

 

(d)                                 If any Lender is entitled to a
reduction in the applicable withholding tax, the Borrowers may withhold from
any interest payment to such Lender an amount equivalent to the applicable
withholding tax after taking into account such reduction.  If the forms or other documentation required
by subsection (a) of this Section are not delivered to
the Borrowers, then the Borrowers may withhold from any interest payment to
such Lender not providing such forms or other documentation an amount
equivalent to the applicable withholding tax.

 

(e)                                  If the IRS or any other Governmental
Authority of the United States of America or other jurisdiction asserts a claim
that the Borrowers or the Agent did not properly withhold tax from amounts paid
to or for the account of any Lender (because the appropriate form was not
delivered, was not properly executed, or because such Lender failed to notify
the Borrowers or the Agent of a change in circumstances which rendered the
exemption from, or reduction of, withholding tax ineffective, or for any other
reason) such Lender shall indemnify the Borrowers or the Agent as the case may
be, fully for all amounts paid, directly or indirectly, by the Borrowers or the
Agent as tax or otherwise, including penalties and interest, and including any
taxes imposed by any jurisdiction on the amounts payable to the Borrowers or
the Agent under this Section, together with all costs and expenses (including
Attorney Costs).  The obligation of the
Lenders under this subsection shall survive the payment of all Obligations
and the resignation or replacement of the Agent.

 

12.11                     Collateral Matters.

 

(a)                                  The Lenders hereby irrevocably
authorize the Agent, at its option and in its sole discretion, to release any
Agent’s Liens upon any Collateral (i) upon the termination of the
Revolving Credit Commitments and payment and satisfaction in full by the
Borrowers of all Loans and reimbursement obligations in respect of Letters of
Credit and Credit Support, and the termination of all outstanding Letters of
Credit (whether or not any of such obligations are due) and all other
Obligations; (ii) constituting property being sold or disposed of if the
Borrowers certify to the Agent that the sale or disposition is made in
compliance with Section 7.9, or Section 7.19 (and the
Agent may rely conclusively on any such certificate, without further inquiry)
and the proceeds are applied to the 

 

84

 

Obligations
to the extent required by this Agreement; (iii) constituting property in
which a Loan Party owned no interest at the time the Lien was granted or at any
time thereafter; (iv) constituting property leased to a Loan Party under a
lease which has expired or been terminated in a transaction permitted under
this Agreement; (v) constituting property subject to a Capital Lease or
purchase money Debt permitted by this Agreement if required by the lender or
lessor; (vi) constituting property owned by an FRC Borrower that is
released in compliance with the provisions of Section 3.11; or (vii) any
real property constituting Replaced Property (as such term is defined in Section 2.8);
provided that the conditions to release set forth in such Section 2.8
have been satisfied.  In addition (a) any
Guaranty may be released if the Guarantor is sold in a transaction permitted
under this Agreement, (b) Liens on Collateral (other than Term Loan
Collateral) may be released with the consent of the Revolving Credit Lenders
and the Majority Term Lenders and (c) Liens on the Term Loan Collateral
may be released with the consent of only the Term Lenders.  Except as provided above, the Agent will not
release any of the Agent’s Liens without the prior written authorization of the
Lenders; provided that the Agent may, in its discretion, release the
Agent’s Liens on Collateral (other than Term Loan Collateral) valued in the
aggregate not in excess of $3,000,000 during each Fiscal Year without the prior
written authorization of the Lenders and the Agent may release the Agent’s
Liens on Collateral (other than Term Loan Collateral) valued in the aggregate
not in excess of $5,000,000 during each Fiscal Year with the prior written
authorization of Majority Lenders.  Upon
request by the Agent or the Borrowers at any time, the Lenders will confirm in
writing the Agent’s authority to release any Agent’s Liens upon particular
types or items of Collateral or any Guaranty pursuant to this Section 12.11.

 

(b)                                 Upon receipt by the Agent of an
authorization, if any, required pursuant to Section 12.11(a) from
the Lenders of the Agent’s authority to release Agent’s Liens upon particular
types or items of Collateral or any Guaranty, and upon at least 3 Business Days
prior written request by the Borrowers, the Agent shall (and is hereby
irrevocably authorized by the Lenders to) execute such documents as may be
necessary to evidence the release of the Agent’s Liens upon such Collateral or
any Guaranty; provided, however, that (i) the Agent shall
not be required to execute any such document on terms which, in the Agent’s
opinion, would expose the Agent to liability or create any obligation or entail
any consequence other than the release of such Liens without recourse or
warranty, and (ii) such release shall not in any manner discharge, affect
or impair the Obligations or any Liens (other than those expressly being
released) upon (or obligations of the Loan Parties in respect of) all interests
retained by the Loan Parties, including the proceeds of any sale, all of which
shall continue to constitute part of the Collateral.

 

(c)                                  The Agent shall have no obligation
whatsoever to any of the Lenders to assure that the Collateral exists or is
owned by any Loan Party or is cared for, protected or insured or has been
encumbered, or that the Agent’s Liens have been properly or sufficiently or
lawfully created, perfected, protected or 

 

85

 

enforced
or are entitled to any particular priority, or to exercise at all or in any
particular manner or under any duty of care, disclosure or fidelity, or to
continue exercising, any of the rights, authorities and powers granted or
available to the Agent pursuant to any of the Loan Documents, it being
understood and agreed that in respect of the Collateral, or any act, omission
or event related thereto, the Agent may act in any manner it may deem
appropriate, in its sole discretion given the Agent’s own interest in the
Collateral in its capacity as one of the Lenders and that the Agent shall have
no other duty or liability whatsoever to any Lender as to any of the foregoing.

 

12.12                     Restrictions
on Actions by Lenders; Sharing of Payments.

 

(a)                                  Each of the Lenders agrees that it
shall not, without the express consent of all Lenders, and that it shall, to
the extent it is lawfully entitled to do so, upon the request of all Lenders,
set off against the Obligations, any amounts owing by such Lender to any Loan
Party or any accounts of any Loan Party now or hereafter maintained with such
Lender.  Each of the Lenders further
agrees that it shall not, unless specifically requested to do so by the Agent,
take or cause to be taken any action to enforce its rights under this Agreement
or against any Loan Party, including the commencement of any legal or equitable
proceedings, to foreclose any Lien on, or otherwise enforce any security
interest in, any of the Collateral.

 

(b)                                 If at any time or times any Lender
shall receive (i) by payment, foreclosure, setoff or otherwise, any
proceeds of Collateral or any payments with respect to the Obligations to such
Lender arising under, or relating to, this Agreement or the other Loan
Documents, except for any such proceeds or payments received by such Lender
from the Agent pursuant to the terms of this Agreement, or (ii) payments
from the Agent in excess of such Lender’s Pro Rata Share of all such
distributions by the Agent, such Lender shall promptly (1) turn the same
over to the Agent, in kind, and with such endorsements as may be required to
negotiate the same to the Agent, or in same day funds, as applicable, for the
account of all of the Lenders and for application to the Obligations in
accordance with the applicable provisions of this Agreement, or (2) purchase,
without recourse or warranty, an undivided interest and participation in the
Obligations owed to the other Lenders so that such excess payment received
shall be applied ratably as among the Lenders in accordance with their Pro Rata
Shares; provided, however, that if all or part of such excess
payment received by the purchasing party is thereafter recovered from it, those
purchases of participations shall be rescinded in whole or in part, as
applicable, and the applicable portion of the purchase price paid therefor
shall be returned to such purchasing party, but without interest except to the
extent that such purchasing party is required to pay interest in connection
with the recovery of the excess payment.

 

12.13                     Agency for Perfection.  Each Lender hereby appoints each other Lender
as agent for the purpose of perfecting the Lenders’ security interest in assets
which, in accordance with Article 9 of the UCC can be perfected by
possession.  Should any Lender (other
than the 

 

86

 

Agent) obtain
possession of any such Collateral, such Lender shall notify the Agent thereof,
and, promptly upon the Agent’s request therefor shall deliver such Collateral
to the Agent or in accordance with the Agent’s instructions.

 

12.14                     Payments
by the Agent to Lenders.  All
payments to be made by the Agent to the Lenders shall be made by bank wire
transfer or internal transfer of immediately available funds to each Lender
pursuant to wire transfer instructions delivered in writing to the Agent on or
prior to the Initial Funding Date (or if such Lender is an Assignee, on the
applicable Assignment and Acceptance), or pursuant to such other wire transfer
instructions as each party may designate for itself by written notice to the
Agent.  Concurrently with each such
payment, the Agent shall identify whether such payment (or any portion thereof)
represents principal, premium or interest on the Revolving Loans, the Term Loan
or otherwise.  Unless the Agent receives
notice from the Borrowers prior to the date on which any payment is due to the
Lenders that the Borrowers will not make such payment in full as and when
required, the Agent may assume that the Borrowers have made such payment in
full to the Agent on such date in immediately available funds and the Agent may
(but shall not be so required), in reliance upon such assumption, distribute to
each Lender on such due date an amount equal to the amount then due such
Lender.  If and to the extent the
Borrowers have not made such payment in full to the Agent, each Lender shall
repay to the Agent on demand such amount distributed to such Lender, together
with interest thereon at the Federal Funds Rate for each day from the date such
amount is distributed to such Lender until the date repaid.

 

12.15                     Settlement.

 

(a)                                                                                  (i)                                     Each
Lender’s funded portion of the Revolving Loans is intended by the Lenders to be
equal at all times to such Lender’s Pro Rata Share of the outstanding Revolving
Loans.  Notwithstanding such agreement,
the Agent, the Bank, and the other Lenders agree (which agreement shall not be
for the benefit of or enforceable by the Borrowers) that in order to facilitate
the administration of this Agreement and the other Loan Documents, settlement
among them as to the Revolving Loans, the Non-Ratable Loans and Agent Advances
shall take place on a periodic basis in accordance with the following
provisions:

 

(ii)                                  The Agent shall request settlement (“Settlement”)
with the Lenders on at least a weekly basis, or on a more frequent basis at the
Agent’s election, (A) on behalf of the Bank, with respect to each
outstanding Non-Ratable Loan, (B) for itself, with respect to each Agent
Advance, and (C) with respect to collections received, in each case, by
notifying the Lenders of such requested Settlement by telecopy, telephone or
other similar form of transmission, of such requested Settlement, no later than
11:00 a.m. (Los Angeles time) on the date of such requested Settlement
(the “Settlement Date”).  Each
Lender (other than the Bank, in the case of Non-Ratable Loans and the Agent in
the case of Agent Advances) shall transfer the amount of such Lender’s Pro Rata
Share of the outstanding principal amount of the Non-Ratable Loans and Agent
Advances with respect to each Settlement to the Agent, to Agent’s account, not
later than 1:00 p.m. (Los Angeles time), on the Settlement Date applicable
thereto.  Settlements 

 

87

 

may
occur during the continuation of a Default or an Event of Default and whether
or not the applicable conditions precedent set forth in Article 8
have then been satisfied.  Such amounts
made available to the Agent shall be applied against the amounts of the
applicable Non-Ratable Loan or Agent Advance and, together with the portion of
such Non-Ratable Loan or Agent Advance representing the Bank’s Pro Rata Share
thereof, shall constitute Revolving Loans of such Lenders.  If any such amount is not transferred to the
Agent by any Lender on the Settlement Date applicable thereto, the Agent shall
be entitled to recover such amount on demand from such Lender together with
interest thereon at the Federal Funds Rate for the first three (3) days
from and after the Settlement Date and thereafter at the Interest Rate then
applicable to the Revolving Loans (A) on behalf of the Bank, with respect
to each outstanding Non-Ratable Loan, and (B) for itself, with respect to
each Agent Advance.

 

(iii)                               Notwithstanding the foregoing, not
more than one (1) Business Day after demand is made by the Agent (whether
before or after the occurrence of a Default or an Event of Default and
regardless of whether the Agent has requested a Settlement with respect to a
Non-Ratable Loan or Agent Advance), each other Lender (A) shall
irrevocably and unconditionally purchase and receive from the Bank or the
Agent, as applicable, without recourse or warranty, an undivided interest and
participation in such Non-Ratable Loan or Agent Advance equal to such Lender’s
Pro Rata Share of such Non-Ratable Loan or Agent Advance and (B) if
Settlement has not previously occurred with respect to such Non-Ratable Loans
or Agent Advances, upon demand by Bank or the Agent, as applicable, shall pay
to Bank or the Agent, as applicable, as the purchase price of such
participation an amount equal to one-hundred percent (100%) of such Lender’s Pro
Rata Share of such Non-Ratable Loans or Agent Advances.  If such amount is not in fact made available
to the Agent by any Lender, the Agent shall be entitled to recover such amount
on demand from such Lender together with interest thereon at the Federal Funds
Rate for the first three (3) days from and after such demand and
thereafter at the Interest Rate then applicable to Base Rate Revolving Loans.

 

(iv)                              From and after the date, if any, on
which any Lender purchases an undivided interest and participation in any
Non-Ratable Loan or Agent Advance pursuant to clause (iii) above,
the Agent shall promptly distribute to such Lender, such Lender’s Pro Rata
Share of all payments of principal and interest and all proceeds of Collateral
received by the Agent in respect of such Non-Ratable Loan or Agent Advance.

 

(v)                                 Between Settlement Dates, the Agent,
to the extent no Agent Advances are outstanding, may pay over to the Bank any
payments received by the Agent, which in accordance with the terms of this
Agreement would be applied to the reduction of the Revolving Loans, for
application to the Bank’s Revolving Loans including Non-Ratable Loans.  If, as of any Settlement Date, collections
received since the then immediately preceding Settlement Date have been applied
to the Bank’s Revolving Loans (other than to Non-Ratable 

 

88

 

Loans
or Agent Advances in which such Lender has not yet funded its purchase of a
participation pursuant to clause (iii) above), as provided for in the
previous sentence, the Bank shall pay to the Agent for the accounts of the
Lenders, to be applied to the outstanding Revolving Loans of such Lenders, an
amount such that each Lender shall, upon receipt of such amount, have, as of
such Settlement Date, its Pro Rata Share of the Revolving Loans.  During the period between Settlement Dates,
the Bank with respect to Non-Ratable Loans, the Agent with respect to Agent
Advances, and each Lender with respect to the Revolving Loans other than
Non-Ratable Loans and Agent Advances, shall be entitled to interest at the
applicable rate or rates payable under this Agreement on the actual average
daily amount of funds employed by the Bank, the Agent and the other Lenders.

 

(vi)                              Unless the Agent has received
written notice from a Borrower or a Lender to the contrary, the Agent may
assume that the applicable conditions precedent set forth in Article 8
have been satisfied and the requested Borrowing will not exceed Availability on
any Funding Date for a Revolving Loan or Non-Ratable Loan.

 

(b)                                 Lenders’ Failure to Perform. 
All Revolving Loans (other than Non-Ratable Loans and Agent Advances)
shall be made by the Lenders simultaneously and in accordance with their Pro
Rata Shares.  It is understood that (i) no
Lender shall be responsible for any failure by any other Lender to perform its
obligation to make any Revolving Loans hereunder, nor shall any Revolving
Credit Commitment of any Lender be increased or decreased as a result of any
failure by any other Lender to perform its obligation to make any Revolving
Loans hereunder, (ii) no failure by any Lender to perform its obligation
to make any Revolving Loans hereunder shall excuse any other Lender from its
obligation to make any Revolving Loans hereunder, and (iii) the obligations
of each Lender hereunder shall be several, not joint and several.

 

(c)                                  Defaulting Lenders. 
Unless the Agent receives notice from a Lender on or prior to the
Initial Funding Date or, with respect to any Borrowing after the Initial
Funding Date, at least one Business Day prior to the date of such Borrowing,
that such Lender will not make available as and when required hereunder to the
Agent that Lender’s Pro Rata Share of a Borrowing, the Agent may assume that
each Lender has made such amount available to the Agent in immediately
available funds on the Funding Date. 
Furthermore, the Agent may, in reliance upon such assumption, make
available to the Borrower on such date a corresponding amount.  If any Lender has not transferred its full
Pro Rata Share to the Agent in immediately available funds and the Agent has
transferred corresponding amount to the applicable Borrower on the Business Day
following such Funding Date that Lender shall make such amount available to the
Agent, together with interest at the Federal Funds Rate for that day.  A notice by the Agent submitted to any Lender
with respect to amounts owing shall be conclusive, absent manifest error.  If each Lender’s full Pro Rata Share is
transferred to the Agent as required, the amount transferred to the Agent shall
constitute that Lender’s Revolving Loan for all purposes of this
Agreement.  If 

 

89

 

that
amount is not transferred to the Agent on the Business Day following the
Funding Date, the Agent will notify the Borrowers of such failure to fund and,
upon demand by the Agent, the Borrowers shall pay such amount to the Agent for
the Agent’s account, together with interest thereon for each day elapsed since
the date of such Borrowing, at a rate per annum equal to the Interest Rate
applicable at the time to the Revolving Loans comprising that particular
Borrowing.  The failure of any Lender to
make any Revolving Loan on any Funding Date (any such Lender, prior to the cure
of such failure, being hereinafter referred to as a “Defaulting Lender”)
shall not relieve any other Lender of its obligation hereunder to make a
Revolving Loan on that Funding Date.  No
Lender shall be responsible for any other Lender’s failure to advance such
other Lenders’ Pro Rata Share of any Borrowing.

 

(d)                                 Retention of Defaulting Lender’s
Payments.  The Agent shall not be obligated to transfer
to a Defaulting Lender any payments made by any Borrower to the Agent for the
Defaulting Lender’s benefit; nor shall a Defaulting Lender be entitled to the
sharing of any payments hereunder. 
Amounts payable to a Defaulting Lender shall instead be paid to or
retained by the Agent.  In its
discretion, the Agent may loan any Borrower the amount of all such payments
received or retained by it for the account of such Defaulting Lender.  Any amounts so loaned to any Borrower shall
bear interest at the rate applicable to Base Rate Revolving Loans and for all
other purposes of this Agreement shall be treated as if they were Revolving
Loans, provided, however, that for purposes of voting or
consenting to matters with respect to the Loan Documents and determining Pro
Rata Shares, such Defaulting Lender shall be deemed not to be a “Lender”.  Until a Defaulting Lender cures its failure
to fund its Pro Rata Share of any Borrowing (A) such Defaulting Lender
shall not be entitled to any portion of the Unused Line Fee and (B) the
Unused Line Fee shall accrue in favor of the Lenders which have funded their
respective Pro Rata Shares of such requested Borrowing and shall be allocated
among such performing Lenders ratably based upon their relative Revolving
Credit Commitments.  This Section shall
remain effective with respect to such Lender until such time as the Defaulting
Lender shall no longer be in default of any of its obligations under this
Agreement.  The terms of this Section shall
not be construed to increase or otherwise affect the Revolving Credit
Commitment of any Lender, or relieve or excuse the performance by the Borrowers
of their duties and obligations hereunder.

 

(e)                                  Removal of Defaulting Lender. 
At the Borrowers’ request, the Agent or an Eligible Assignee reasonably
acceptable to the Agent and the Borrowers shall have the right (but not the
obligation) to purchase from any Defaulting Lender, and each Defaulting Lender
shall, upon such request, sell and assign to the Agent or such Eligible
Assignee, all of the Defaulting Lender’s outstanding Revolving Credit
Commitments hereunder.  Such sale shall
be consummated promptly after the Agent has arranged for a purchase by the
Agent or an Eligible Assignee pursuant to an Assignment and Acceptance, and at
a price equal to the outstanding principal balance of the Defaulting Lender’s
Loans, plus accrued interest and fees, without premium or discount.  Any such purchase from 

 

90

 

a
Defaulting Lender shall not effect a release of such Defaulting Lender from any
claim suit or liability hereunder or under any Loan Document.

 

12.16                     Letters of
Credit; Intra-Lender Issues.

 

(a)                                  Notice of Letter of Credit Balance. 
On each Settlement Date the Agent shall notify each Lender of the
issuance of all Letters of Credit since the prior Settlement Date.

 

(b)                                 Participations in Letters of Credit.

 

(i)                                     Purchase of Participations. 
Immediately upon issuance of any Letter of Credit in accordance with Section 1.4(d),
each Revolving Credit Lender shall be deemed to have irrevocably and
unconditionally purchased and received without recourse or warranty, an
undivided interest and participation equal to such Lender’s Pro Rata Share of
the face amount of such Letter of Credit or the Credit Support provided through
the Agent to the Letter of Credit Issuer, if not the Bank, in connection with
the issuance of such Letter of Credit (including all obligations of the
Borrowers with respect thereto, and any security therefor or guaranty
pertaining thereto).

 

(ii)                                  Sharing of Reimbursement Obligation
Payments.  Whenever the Agent receives a payment from
any Borrower on account of reimbursement obligations in respect of a Letter of
Credit or Credit Support as to which the Agent has previously received for the
account of the Letter of Credit Issuer thereof payment from a Revolving Credit
Lender, the Agent shall promptly pay to such Revolving Credit Lender such
Revolving Credit Lender’s Pro Rata Share of such payment from such
Borrower.  Each such payment shall be
made by the Agent on the next Settlement Date.

 

(iii)                               Documentation. 
Upon the request of any Revolving Credit Lender, the Agent shall furnish
to such Revolving Credit Lender copies of any Letter of Credit, Credit Support
for any Letter of Credit, reimbursement agreements executed in connection
therewith, applications for any Letter of Credit, and such other documentation
as may reasonably be requested by such Revolving Credit Lender.

 

(iv)                              Obligations Irrevocable. 
The obligations of each Revolving Credit Lender to make payments to the
Agent with respect to any Letter of Credit or with respect to their
participation therein or with respect to any Credit Support for any Letter of
Credit or with respect to the Revolving Loans made as a result of a drawing
under a Letter of Credit and the obligations of the Borrower for whose account
the Letter of Credit or Credit Support was issued to make payments to the
Agent, for the account of the Revolving Credit Lenders, shall be irrevocable
and shall not be subject to any qualification or exception whatsoever,
including any of the following circumstances:

 

91

 

(1)                                  any lack of validity or
enforceability of this Agreement or any of the other Loan Documents;

 

(2)                                  the existence of any claim, setoff,
defense or other right which any Borrower may have at any time against a
beneficiary named in a Letter of Credit or any transferee of any Letter of
Credit (or any Person for whom any such transferee may be acting), any
Revolving Credit Lender, the Agent, the issuer of such Letter of Credit, or any
other Person, whether in connection with this Agreement, any Letter of Credit,
the transactions contemplated herein or any unrelated transactions (including
any underlying transactions between any Borrower or any other Person and the
beneficiary named in any Letter of Credit);

 

(3)                                  any draft, certificate or any other
document presented under the Letter of Credit proving to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;

 

(4)                                  the surrender or impairment of any
security for the performance or observance of any of the terms of any of the
Loan Documents;

 

(5)                                  the occurrence of any Default or
Event of Default; or

 

(6)                                  the failure of any Borrower to
satisfy the applicable conditions precedent set forth in Article 8.

 

(c)                                  Recovery or Avoidance of Payments;
Refund of Payments In Error.  In the event
any payment by or on behalf of any Borrower received by the Agent with respect
to any Letter of Credit or Credit Support provided for any Letter of Credit and
distributed by the Agent to the Revolving Credit Lenders on account of their
respective participations therein is thereafter set aside, avoided or recovered
from the Agent in connection with any receivership, liquidation or bankruptcy
proceeding, the Revolving Credit Lenders shall, upon demand by the Agent, pay
to the Agent their respective Pro Rata Shares of such amount set aside, avoided
or recovered, together with interest at the rate required to be paid by the
Agent upon the amount required to be repaid by it.  Unless the Agent receives notice from the Borrowers
prior to the date on which any payment is due to the Revolving Credit Lenders
that the Borrowers will not make such payment in full as and when required, the
Agent may assume that the Borrowers have made such payment in full to the Agent
on such date in immediately available funds and the Agent may (but shall not be
so required), in reliance upon such assumption, distribute to each Revolving
Credit Lender on such due date an amount equal to the amount then due such
Revolving Credit Lender.  If and to the
extent the Borrowers have not made such payment in full to the Agent, each
Revolving Credit Lender shall repay to the Agent on demand such amount
distributed to 

 

92

 

such
Revolving Credit Lender, together with interest thereon at the Federal Funds
Rate for each day from the date such amount is distributed to such Revolving
Credit Lender until the date repaid.

 

(d)                                 Indemnification by Lenders. 
To the extent not reimbursed by the Borrowers and without limiting the
obligations of the Borrowers hereunder, the Revolving Credit Lenders agree to
indemnify the Letter of Credit Issuer ratably in accordance with their
respective Pro Rata Shares, for any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses (including
attorneys’ fees) or disbursements of any kind and nature whatsoever that may be
imposed on, incurred by or asserted against the Letter of Credit Issuer in any
way relating to or arising out of any Letter of Credit or the transactions
contemplated thereby or any action taken or omitted by the Letter of Credit
Issuer under any Letter of Credit or any Loan Document in connection therewith;
provided that no Revolving Credit Lender shall be liable for any of the
foregoing to the extent it arises from the gross negligence or willful
misconduct of the Person to be indemnified. 
Without limitation of the foregoing, each Revolving Credit Lender agrees
to reimburse the Letter of Credit Issuer promptly upon demand for its Pro Rata
Share of any costs or expenses payable by the Borrowers to the Letter of Credit
Issuer, to the extent that the Letter of Credit Issuer is not promptly
reimbursed for such costs and expenses by the Borrowers.  The agreement contained in this Section shall
survive payment in full of all other Obligations.

 

12.17                     Concerning the Collateral and
the Related Loan Documents.  Each
Lender authorizes and directs the Agent to enter into the other Loan Documents
and the Intercreditor Agreement, for the ratable benefit and obligation of the
Agent and the Lenders.  Each Lender
agrees that any action taken by the Agent, Majority Lenders or Required
Lenders, as applicable, in accordance with the terms of this Agreement or the
other Loan Documents, and the exercise by the Agent, the Majority Lenders, or
the Required Lenders, as applicable, of their respective powers set forth
therein or herein, together with such other powers that are reasonably
incidental thereto, shall be binding upon all of the Lenders.  The Lenders acknowledge that the Revolving
Loans, Term Loans, Agent Advances, Non-Ratable Loans, Hedge Agreements, Bank
Products and all interest, fees and expenses hereunder constitute one Debt,
secured pari  passu by all of the Collateral.

 

12.18                     Field Audit
and Examination Reports; Disclaimer by Lenders.  By signing this Agreement, each Lender:

 

(a)                                  is deemed to have requested that the
Agent furnish such Lender, promptly after it becomes available, a copy of each
field audit or examination report (each a “Report” and collectively, “Reports”)
prepared by or on behalf of the Agent;

 

(b)                                 expressly agrees and acknowledges
that neither the Bank nor the Agent (i) makes any representation or
warranty as to the accuracy of any Report, or (ii) shall be liable for any
information contained in any Report;

 

93

 

(c)                                  expressly agrees and acknowledges
that the Reports are not comprehensive audits or examinations, that the Agent
or the Bank or other party performing any audit or examination will inspect
only specific information regarding the Borrowers and will rely significantly
upon the Borrowers’ books and records, as well as on representations of the
Borrowers’ personnel;

 

(d)                                 agrees to keep all Reports
confidential and strictly for its internal use, and not to distribute except to
its participants, or use any Report in any other manner in accordance with the
provisions of Section 13.17; and

 

(e)                                  without limiting the generality of
any other indemnification provision contained in this Agreement, agrees:  (i) to hold the Agent and any such other
Lender preparing a Report harmless from any action the indemnifying Lender may
take or conclusion the indemnifying Lender may reach or draw from any Report in
connection with any loans or other credit accommodations that the indemnifying
Lender has made or may make to any Borrower, or the indemnifying Lender’s
participation in, or the indemnifying Lender’s purchase of, a loan or loans of
any Borrower; and (ii) to pay and protect, and indemnify, defend and hold
the Agent and any such other Lender preparing a Report harmless from and
against, the claims, actions, proceedings, damages, costs, expenses and other
amounts (including Attorney Costs) incurred by the Agent and any such other Lender
preparing a Report as the direct or indirect result of any third parties who
might obtain all or part of any Report through the indemnifying Lender.

 

12.19                     Relation Among Lenders.  The Lenders are not partners or co-venturers,
and no Lender shall be liable for the acts or omissions of, or (except as
otherwise set forth herein in case of the Agent) authorized to act for, any
other Lender.

 

12.20                     Co-Agents.  None of the Lenders identified on the facing page or
signature pages of this Agreement as a “co-agent” shall have any right,
power, obligation, liability, responsibility or duty under this Agreement other
than those applicable to all Lenders as such. 
Without limiting the foregoing, none of the Lenders so identified as a “co-agent”
shall have or be deemed to have any fiduciary relationship with any
Lender.  Each Lender acknowledges that it
has not relied, and will not rely, on any of the Lenders so identified in
deciding to enter into this Agreement or in taking or not taking action
hereunder.

 

12.21                     Collateral Priority.  The Lenders hereby agree that, as between the
Lenders, the Liens created on the Collateral other than the Term Loan
Collateral constitute (x) first priority, perfected Liens in favor of the
Agent, for the ratable benefit of the Agent and the Revolving Credit Lenders,
and (y) second priority, perfected Liens in favor of the Agent, for the ratable
benefit of the Agent and the Term Lenders, and the Liens created on the Term
Loan Collateral constitute (x) first priority, perfected Liens in favor of the
Agent, for the ratable benefit of the Agent and the Term Lenders, and (y)
second priority, perfected Liens in favor of the Agent, for the ratable benefit
of the Agent and the Revolving Credit Lenders, except in each case for
Permitted Liens.

 

94

 

12.22                     Foreclosure/Environmental
Reports.  Unless otherwise agreed by
all Lenders, Agent will not foreclose on any real property Collateral unless,
prior to such foreclosure Agent and the Lenders have received an environmental
report, which report shall be reasonably acceptable in form and substance to
Agent and Required Lenders, from an environmental consultant, selected by
Agent.  Borrower shall pay the costs of
obtaining any such environmental report.

 

ARTICLE 13

MISCELLANEOUS

 

13.1                           No Waivers;
Cumulative Remedies. 
No failure by the Agent or any Lender to exercise any right, remedy, or
option under this Agreement or any present or future supplement thereto, or in
any other agreement between or among the Borrowers (or any of them), the Loan
Parties (or any of them) and the Agent and/or any Lender, or delay by the Agent
or any Lender in exercising the same, will operate as a waiver thereof.  No waiver by the Agent or any Lender will be
effective unless it is in writing, and then only to the extent specifically
stated.  No waiver by the Agent or the
Lenders on any occasion shall affect or diminish the Agent’s and each Lender’s
rights thereafter to require strict performance by the Borrowers of any
provision of this Agreement or by any Loan Party of any provision of any Loan
Document.  The Agent and the Lenders may
proceed directly to collect the Obligations without any prior recourse to the
Collateral.  The Agent’s and each Lender’s
rights under this Agreement will be cumulative and not exclusive of any other
right or remedy which the Agent or any Lender may have.

 

13.2                           Severability.  The illegality or unenforceability of any
provision of this Agreement or any Loan Document or any instrument or agreement
required hereunder shall not in any way affect or impair the legality or
enforceability of the remaining provisions of this Agreement or any instrument
or agreement required hereunder.

 

13.3                           Governing Law; Choice
of Forum; Service of Process.

 

(a)                                  THIS AGREEMENT SHALL BE INTERPRETED
AND THE RIGHTS AND LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE
WITH THE INTERNAL LAWS (AS OPPOSED TO THE CONFLICT OF LAWS PROVISIONS PROVIDED
THAT ISSUES WITH RESPECT TO CREATION, PERFECTION OR ENFORCEMENT OF LIENS UNDER ARTICLE 9
OF THE UCC MAY GIVE EFFECT TO APPLICABLE CHOICE OR CONFLICT OF LAW RULES
SET FORTH IN ARTICLE 9 OF THE UCC) OF THE STATE OF CALIFORNIA; PROVIDED
THAT THE AGENT AND THE LENDERS SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL
LAW.

 

(b)                                 ANY LEGAL ACTION OR PROCEEDING WITH
RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE
COURTS OF THE STATE OF CALIFORNIA OR OF THE UNITED STATES OF AMERICA LOCATED IN
LOS ANGELES COUNTY, 

 

95

 

CALIFORNIA, AND BY
EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE BORROWERS, THE AGENT AND
THE LENDERS CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE
NON-EXCLUSIVE PERSONAL JURISDICTION OF THOSE COURTS.  EACH OF THE BORROWERS, THE AGENT AND THE
LENDERS IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING
OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW
OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH
JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO.  NOTWITHSTANDING THE FOREGOING:  (1) THE AGENT AND THE LENDERS SHALL HAVE
THE RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST ANY LOAN PARTY OR ITS
PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION THE AGENT OR THE LENDERS DEEM
NECESSARY OR APPROPRIATE IN ORDER TO REALIZE ON THE COLLATERAL OR OTHER
SECURITY FOR THE OBLIGATIONS AND (2) EACH OF THE PARTIES HERETO
ACKNOWLEDGES THAT ANY APPEALS FROM THE COURTS DESCRIBED IN THE IMMEDIATELY
PRECEDING SENTENCE MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE THOSE
JURISDICTIONS.

 

(c)                                  FLEETWOOD AND EACH BORROWER HEREBY
WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL
SUCH SERVICE OF PROCESS MAY BE MADE BY PERSONAL DELIVERY OR OVERNIGHT
COURIER DIRECTED TO FLEETWOOD AND EACH THE BORROWERS AT ITS ADDRESS SET FORTH
IN SECTION 13.8 AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED
FIVE (5) DAYS AFTER THE SAME SHALL HAVE BEEN SO DEPOSITED IN THE U.S.
MAILS POSTAGE PREPAID.  NOTHING CONTAINED
HEREIN SHALL AFFECT THE RIGHT OF AGENT OR THE LENDERS TO SERVE LEGAL PROCESS BY
ANY OTHER MANNER PERMITTED BY LAW.

 

13.4                           WAIVER
OF JURY TRIAL. 
FLEETWOOD, EACH BORROWER, THE LENDERS AND THE AGENT EACH IRREVOCABLY
WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER
LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY
ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES
AGAINST ANY OTHER PARTY OR ANY AGENT-RELATED PERSON, PARTICIPANT OR ASSIGNEE,
WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. FLEETWOOD,
EACH BORROWER, THE LENDERS AND THE AGENT EACH AGREE THAT ANY SUCH CLAIM OR
CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY.  WITHOUT LIMITING THE FOREGOING, THE PARTIES
FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY
OPERATION OF THIS 

 

96

 

SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH
SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS
AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF.  THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE
OTHER LOAN DOCUMENTS.

 

13.5                           Survival of
Representations and Warranties.  All of the representations and warranties
contained in this Agreement shall survive the execution, delivery, and
acceptance thereof by the parties, notwithstanding any investigation by the
Agent or the Lenders or their respective agents.

 

13.6                           Other Security and Guaranties.  The Agent, may, without notice or demand and
without affecting the Borrowers’ obligations hereunder, from time to time:  (a) take from any Person and hold
collateral (other than the Collateral) for the payment of all or any part of
the Obligations and exchange, enforce or release such collateral or any part
thereof; and (b) accept and hold any endorsement or guaranty of payment of
all or any part of the Obligations and release or substitute any such endorser
or guarantor, or any Person who has given any Lien in any other collateral as
security for the payment of all or any part of the Obligations, or any other
Person in any way obligated to pay all or any part of the Obligations.

 

13.7                           Fees
and Expenses.  The
Borrowers agree jointly and severally to pay to the Agent, for its benefit, on
demand, all costs and expenses that the Agent pays or incurs in connection with
the negotiation, preparation, syndication, consummation, administration,
enforcement, and termination of this Agreement or any of the other Loan
Documents, including: (a) Attorney Costs; (b) reasonable
out-of-pocket costs and expenses (including reasonable attorneys’ and
paralegals’ fees and disbursements) for any amendment, supplement, waiver,
consent, or subsequent closing in connection with the Loan Documents and the
transactions contemplated thereby; (c) reasonable out-of-pocket costs and
expenses of lien and title searches and title insurance; (d) taxes, fees
and other charges for recording the Mortgages, filing financing statements and
continuations, and other actions to perfect, protect, and continue the Agent’s
Liens (including reasonable out-of-pocket costs and expenses paid or incurred
by the Agent in connection with the consummation of Agreement); (e) sums
paid or incurred to pay any amount or take any action required of any Loan
Party under the Loan Documents that it fails to pay or take; (f) reasonable
out-of-pocket costs of appraisals performed in accordance with the provisions
hereof, inspections, and verifications of the Collateral, including travel,
lodging, and meals for inspections of the Collateral and the Loan Parties’
operations by the Agent plus the Agent’s then customary charge for field
examinations and audits and the preparation of reports thereof (such charge is
currently $750 per day (or portion thereof) for each Person retained or
employed by the Agent with respect to each field examination or audit); and (g) reasonable
out-of-pocket costs and expenses of forwarding loan proceeds, collecting checks
and other items of payment, and establishing and maintaining Payment Accounts
and lock boxes, and reasonable out-of-pocket costs and expenses of preserving
and protecting the Collateral.  In
addition, the Borrowers jointly and severally agree to pay costs and expenses
incurred by the Agents (including Attorneys’ Costs) to the Agents, for their
benefit, on demand, and to the other Lenders for their benefit, on demand, and
all reasonable fees, expenses and disbursements incurred by such other Lenders
for one law firm retained by such other Lenders as a group, in each case, paid

 

97

 

or incurred to obtain payment of the Obligations, enforce the Agent’s
Liens, sell or otherwise realize upon the Collateral, and otherwise enforce the
provisions of the Loan Documents, or to defend any claims made or threatened
against the Agent or any Lender arising out of the transactions contemplated
hereby (including preparations for and consultations concerning any such
matters).  The foregoing shall not be
construed to limit any other provisions of the Loan Documents regarding costs
and expenses to be paid by the Borrowers or any other Loan Party.  All of the foregoing costs and expenses shall
be charged to the Borrowers’ Loan Account as Revolving Loans as described in Section 3.7.

 

13.8                           Notices.  Except as otherwise provided herein, all
notices, demands and requests that any party is required or elects to give to
any other shall be in writing, or by a telecommunications device capable of
creating a written record, and any such notice shall become effective (a) upon
personal delivery thereof, including, but not limited to, delivery by overnight
mail and courier service, (b) five (5) days after it shall have been
mailed by United States mail, first class, certified or registered, with
postage prepaid, or (c) in the case of notice by such a telecommunications
device, when receipt is confirmed, in each case addressed to the party to be
notified as follows:

 

If to the
Agent or to the Bank:

Bank of America, N.A.

55 South Lake Avenue, Suite 900

Pasadena, California  91101

Attention:  John C. McNamara

Telecopy No.:  (626) 397-1273/1274

 

with copies
to:

Latham & Watkins

633 West Fifth Street, Suite 4000

Los Angeles, California  90071

Attention:  Glen B. Collyer, Esq.

Telecopy No.:  (213) 891-8763

 

If to
Fleetwood or any Borrower:

Fleetwood Holdings Inc.

Fleetwood Enterprises, Inc.

Fleetwood Retail Corp., Inc.

3125 Myers Street

Riverside, California  92503

Attention:  Chief Financial Officer

Telecopy No.:  (909)  351-3373

Attention:  General Counsel

Telecopy No.:  (909) 351-3776

 

98

 

with copies
to:

Gibson, Dunn & Crutcher LLP

333 South Grand Avenue

Los Angeles, California  90071-3197

Attention:  Jeff Hudson, Esq.

Telecopy No.:  (213) 229-6332

 

or to such
other address as each party may designate for itself by like notice.  Failure or delay in delivering copies of any
notice, demand, request, consent, approval, declaration or other communication
to the persons designated above to receive copies shall not adversely affect
the effectiveness of such notice, demand, request, consent, approval,
declaration or other communication.

 

13.9                           Waiver of Notices.  Unless otherwise expressly provided herein,
each Borrower waives presentment, and notice of demand or dishonor and protest
as to any instrument, notice of intent to accelerate the Obligations and notice
of acceleration of the Obligations, as well as any and all other notices to
which it might otherwise be entitled.  No
notice to or demand on any Borrower which the Agent or any Lender may elect to
give shall entitle any Borrower to any or further notice or demand in the same,
similar or other circumstances.

 

13.10                     Binding Effect.  The provisions of this Agreement shall be
binding upon and inure to the benefit of the respective representatives,
successors, and assigns of the parties hereto; provided, however,
that no interest herein may be assigned by any Borrower without prior written
consent of the Agent and each Lender. 
The rights and benefits of the Agent and the Lenders hereunder shall, if
such Persons so agree, inure to any party acquiring any interest in the
Obligations or any part thereof.

 

13.11                     Indemnity of the Agent
and the Lenders by the Borrower.

 

(a)                                  The Borrowers jointly and severally
agree to defend, indemnify and hold the Agent-Related Persons, and each Lender
and each of its respective officers, directors, employees, counsel,
representatives, agents and attorneys-in-fact (each, an “Indemnified Person”)
harmless from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, charges, expenses and
disbursements (including Attorney Costs) of any kind or nature whatsoever which
may at any time (including at any time following repayment of the Loans and the
termination, resignation or replacement of the Agent or replacement of any
Lender) be imposed on, incurred by or asserted against any such Person in any
way relating to or arising out of this Agreement or any document contemplated
by or referred to herein, or the transactions contemplated hereby, or any
action taken or omitted by any such Person under or in connection with any of
the foregoing, including with respect to any investigation, litigation or
proceeding (including any Insolvency Proceeding or appellate proceeding)
related to or arising out of this Agreement, any other Loan Document, or the
Loans or the use of the proceeds thereof, whether or not 

 

99

 

any Indemnified
Person is a party thereto (all the foregoing, collectively, the “Indemnified
Liabilities”); provided, that the Borrowers shall have no obligation
hereunder to any Indemnified Person with respect to Indemnified Liabilities to
the extent finally determined by a court of competent jurisdiction to have
resulted from the gross negligence or willful misconduct of such Indemnified
Person. The agreements in this Section shall survive payment of all other
Obligations.

 

(b)                                 The Borrowers agree to indemnify,
defend and hold harmless the Agent and the Lenders from any loss or liability
directly or indirectly arising out of the use, generation, manufacture,
production, storage, release, threatened release, discharge, disposal or
presence of a hazardous substance relating to any Loan Party’s operations,
business or property.  This indemnity
will apply whether the hazardous substance is on, under or about any Loan Party’s
property or operations or property leased to any Loan Party’s.  The indemnity includes but is not limited to
Attorneys Costs.  The indemnity extends
to the Agent and the Lenders, their parents, affiliates, subsidiaries and all
of their directors, officers, employees, agents, successors, attorneys and
assigns.  “Hazardous substances” means
any substance, material or waste that is or becomes designated or regulated as “toxic,”
“hazardous,” “pollutant,” or “contaminant” or a similar designation or
regulation under any federal, state or local law (whether under common law,
statute, regulation or otherwise) or judicial or administrative interpretation
of such, including petroleum or natural gas. 
This indemnity will survive repayment of all other Obligations.

 

13.12                     Limitation of Liability.  NO CLAIM MAY BE MADE BY FLEETWOOD, ANY
BORROWER, ANY LENDER OR OTHER PERSON AGAINST THE AGENT, ANY LENDER, OR THE
AFFILIATES, DIRECTORS, OFFICERS, EMPLOYEES, COUNSEL, REPRESENTATIVES, AGENTS OR
ATTORNEYS-IN-FACT OF ANY OF THEM FOR ANY SPECIAL, INDIRECT, CONSEQUENTIAL OR
PUNITIVE DAMAGES IN RESPECT OF ANY CLAIM FOR BREACH OF CONTRACT OR ANY OTHER
THEORY OF LIABILITY ARISING OUT OF OR RELATED TO THE TRANSACTIONS CONTEMPLATED
BY THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY ACT, OMISSION OR EVENT
OCCURRING IN CONNECTION THEREWITH, AND FLEETWOOD, EACH BORROWER AND EACH LENDER
HEREBY WAIVE, RELEASE AND AGREE NOT TO SUE UPON ANY CLAIM FOR SUCH DAMAGES,
WHETHER OR NOT ACCRUED AND WHETHER OR NOT KNOWN OR SUSPECTED TO EXIST IN ITS
FAVOR.

 

13.13                     Final Agreement.  This Agreement and the other Loan Documents
are intended by Fleetwood, each Borrower, the Agent and the Lenders to be the
final, complete, and exclusive expression of the agreement between them.  This Agreement supersedes any and all prior
oral or written agreements relating to the subject matter hereof except for the
Fee Letter.  No modification, rescission,
waiver, release, or amendment of any provision of this Agreement or any other
Loan Document shall be made, except by a written agreement signed by the
Borrowers and a duly authorized officer of each of the Agent and the requisite
Lenders.

 

100

 

13.14                     Counterparts.  This Agreement may be executed in any number
of counterparts, and by the Agent, each Lender, Fleetwood and the Borrower in
separate counterparts, each of which shall be an original, but all of which
shall together constitute one and the same agreement; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the
same document.

 

13.15                     Captions.  The captions contained in this Agreement are
for convenience of reference only, are without substantive meaning and should
not be construed to modify, enlarge, or restrict any provision.

 

13.16                     Right of Setoff.  In addition to any rights and remedies of the
Lenders provided by law, if an Event of Default exists or the Loans have been
accelerated, each Lender is authorized at any time and from time to time,
without prior notice to Fleetwood or the Borrowers, any such notice being
waived by Fleetwood and the Borrowers to the fullest extent permitted by law,
to set off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held by, and other indebtedness at any time
owing by, such Lender or any Affiliate of such Lender to or for the credit or
the account of Fleetwood and the Borrowers against any and all Obligations
owing to such Lender, now or hereafter existing, irrespective of whether or not
the Agent or such Lender shall have made demand under this Agreement or any
Loan Document and although such Obligations may be contingent or unmatured.  Each Lender agrees promptly to notify the
Borrowers and the Agent after any such set-off and application made by such
Lender; provided, however, that the failure to give such notice
shall not affect the validity of such set-off and application.  NOTWITHSTANDING THE FOREGOING, NO LENDER SHALL
EXERCISE ANY RIGHT OF SET-OFF, BANKER’S LIEN, OR THE LIKE AGAINST ANY DEPOSIT
ACCOUNT OR PROPERTY OF FLEETWOOD OR ANY LOAN PARTY HELD OR MAINTAINED BY SUCH
LENDER WITHOUT THE PRIOR WRITTEN UNANIMOUS CONSENT OF THE LENDERS.

 

13.17                     Confidentiality.

 

(a)                                  Fleetwood and each Borrower hereby
consents that the Agent and each Lender may issue and disseminate to the public
general information describing the credit accommodation entered into pursuant
to this Agreement, including the name and address of Fleetwood or the Borrowers
and a general description of the business of Fleetwood and its Subsidiaries and
may use Fleetwood’s and the Borrowers’ names in advertising and other
promotional material.

 

(b)                                 Each Lender severally agrees to take
normal and reasonable precautions and exercise due care to maintain the
confidentiality of all non-public financial information provided to the Lenders
and relating to Fleetwood or any Borrower, non-public information relating to
major transactions not in the ordinary course of business and to be entered
into by Fleetwood or any Borrower, and all other information identified as “confidential”
or “secret” by Fleetwood or the Borrowers and provided to the Agent or such
Lender by or on behalf of the Borrowers, under this Agreement or any other Loan
Document, except to the 

 

101

 

extent that such
information (i) was or becomes generally available to the public other
than as a result of disclosure by the Agent or such Lender, or (ii) was or
becomes available on a nonconfidential basis from a source other than Fleetwood
or the Borrowers, provided that such source is not bound by a
confidentiality agreement with Fleetwood or the Borrowers known to the Agent or
such Lender; provided, however, that the Agent and any Lender may
disclose such information (1) at the request or pursuant to any
requirement of any Governmental Authority to which the Agent or such Lender is
subject or in connection with an examination of the Agent or such Lender by any
such Governmental Authority; (2) pursuant to subpoena or other court
process; (3) when required to do so in accordance with the provisions of
any applicable Requirement of Law; (4) to the extent reasonably required
in connection with any litigation or proceeding (including, but not limited to,
any bankruptcy proceeding) to which the Agent, any Lender or their respective
Affiliates may be party involving any Loan Document, any Loan Party or the use
of the proceeds of the Loans; (5) to the extent reasonably required in
connection with the exercise of any remedy hereunder or under any other Loan
Document; (6) to the Agent’s or such Lender’s independent auditors,
accountants, attorneys and other professional advisors; (7) to any
prospective Participant or Assignee under any Assignment and Acceptance, actual
or potential, provided that such prospective Participant or Assignee
agrees to keep such information confidential to the same extent required of the
Agent and the Lenders hereunder; (8) as expressly permitted under the
terms of any other document or agreement regarding confidentiality to which
Fleetwood or any Borrower is party or is deemed party with the Agent or such
Lender, and (9) to its Affiliates.

 

13.18                     Conflicts
with Other Loan Documents. 
Unless otherwise expressly provided in this Agreement (or in another
Loan Document by specific reference to the applicable provision contained in
this Agreement), if any provision contained in this Agreement conflicts with any
provision of any other Loan Document, the provision contained in this Agreement
shall govern and control.

 

13.19                     Reinstatement.  To the maximum extent permitted by law, this
Agreement, and the Obligations, shall continue to be effective or be
reinstated, as the case may be, if at any time any amount received by any Agent
or Lender in respect of the Obligations is rescinded or must otherwise be
restored or returned by any such Person upon the insolvency, administration,
bankruptcy, dissolution, liquidation or reorganization of any Borrower or any
other Person or upon the appointment of any receiver, intervenor, conservator,
trustee or similar official for any Borrower or any other Person or any
substantial part of its assets, or otherwise, all as though such payments had
not been made.

 

ARTICLE 14

GUARANTY

 

14.1                           Guaranty.  Each of Fleetwood, FMC and FRC hereby
absolutely and unconditionally guarantees the punctual payment when due,
whether at stated maturity, by acceleration or otherwise, of all Obligations of
each Borrower, now outstanding or hereafter 

 

102

 

arising under or in connection with this Agreement or any other Loan
Document, whether for principal of any Loan or the interest thereon (including
any interest which accrues after the filing of any proceeding in bankruptcy, or
would have accrued but for such filing) or Letters of Credit or liabilities
thereunder or for fees, taxes, additional compensation, expense reimbursements,
indemnification or otherwise as provided in this Agreement and the other Loan
Documents, pursuant to, subject to, and limited by the terms and conditions of
the Fleetwood Guaranty, the FMC Guaranty and the FRC Guaranty, respectively,
and the terms and conditions of each of the Fleetwood Guaranty, the FMC
Guaranty and the FRC Guaranty are hereby incorporated by reference.

 

[Signatures on Following Page]

 

103

 

IN WITNESS
WHEREOF, the parties have entered into this Credit Agreement on the date first
above written.

 

	
  “FMC BORROWERS”

  	
   

  	
  FLEETWOOD HOLDINGS INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FLEETWOOD HOMES OF ARIZONA, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FLEETWOOD HOMES OF CALIFORNIA,

  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FLEETWOOD HOMES OF FLORIDA, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FLEETWOOD HOMES OF GEORGIA, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FLEETWOOD HOMES OF IDAHO, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FLEETWOOD HOMES OF INDIANA, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FLEETWOOD HOMES OF KENTUCKY,

  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FLEETWOOD HOMES OF NORTH

  CAROLINA, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FLEETWOOD HOMES OF OREGON, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FLEETWOOD HOMES OF

  PENNSYLVANIA, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FLEETWOOD HOMES OF TENNESSEE,

  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FLEETWOOD HOMES OF TEXAS, L.P.

  
	
   

  	
   

  	
  By:          FLEETWOOD GENERAL PARTNER

  
	
   

  	
   

  	
  OF TEXAS, INC.,
  its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FLEETWOOD HOMES OF VIRGINIA, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FLEETWOOD HOMES OF WASHINGTON,

  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FLEETWOOD MOTOR HOMES OF

  CALIFORNIA, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FLEETWOOD MOTOR HOMES OF

  INDIANA, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FLEETWOOD MOTOR HOMES OF

  PENNSYLVANIA, INC.

  

 

S-1

 

	
   

  	
   

  	
  FLEETWOOD TRAVEL TRAILERS OF

  CALIFORNIA, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FLEETWOOD TRAVEL TRAILERS OF

  INDIANA, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FLEETWOOD TRAVEL TRAILERS OF

  KENTUCKY, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FLEETWOOD TRAVEL TRAILERS OF

  MARYLAND, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FLEETWOOD TRAVEL TRAILERS OF

  OHIO, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FLEETWOOD TRAVEL TRAILERS OF

  OREGON, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FLEETWOOD TRAVEL TRAILERS OF

  TEXAS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FLEETWOOD FOLDING TRAILERS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  GOLD SHIELD, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  GOLD SHIELD OF INDIANA, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  HAUSER LAKE LUMBER OPERATION,

  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  CONTINENTAL LUMBER PRODUCTS,

  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FLEETWOOD GENERAL PARTNER OF TEXAS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FLEETWOOD HOMES INVESTMENT, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  BOYD R. PLOWMAN

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Boyd
  R. Plowman

  
	
   

  	
   

  	
  Title:

  	
  Executive
  Vice President and Chief

  Financial Officer

  

 

S-2

 

	
  “FRC BORROWERS”

  	
   

  	
  FLEETWOOD RETAIL CORP.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FLEETWOOD RETAIL CORP. OF

  CALIFORNIA

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FLEETWOOD RETAIL CORP. OF

  IDAHO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FLEETWOOD RETAIL CORP. OF

  KENTUCKY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FLEETWOOD RETAIL CORP. OF

  MISSISSIPPI

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FLEETWOOD RETAIL CORP. OF

  NORTH CAROLINA

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FLEETWOOD RETAIL CORP. OF

  OREGON

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FLEETWOOD RETAIL CORP. OF

  VIRGINIA

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  BOYD R. PLOWMAN

  
	
   

  	
   

  	
  Name:

  	
  Boyd
  R. Plowman

  
	
   

  	
   

  	
  Title:

  	
  Executive
  Vice President and Chief

  Financial Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  “GUARANTOR”

  	
   

  	
  FLEETWOOD ENTERPRISES, INC., as the

  Guarantor

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  BOYD R. PLOWMAN

  
	
   

  	
   

  	
  Name:

  	
  Boyd
  R. Plowman

  
	
   

  	
   

  	
  Title:

  	
  Executive
  Vice President and Chief

  Financial Officer

  
					

 

S-3

 

	
  “AGENT”

  	
   

  	
  BANK OF AMERICA, N.A., as the Agent

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ JOHN MCNAMARA

  
	
   

  	
   

  	
   

  	
  John McNamara, Vice President

  

 

S-4

 

	
  “LENDERS”

  	
   

  	
  BANK OF AMERICA, N.A., as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ JOHN MCNAMARA

  
	
   

  	
   

  	
   

  	
  John
  McNamara, Vice President

  	
   

  

 

S-5

 

	
  “LENDERS”

  	
   

  	
  GENERAL ELECTRIC CAPITAL 

  CORPORATION., as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ KEITH ALEXANDER

  
	
   

  	
   

  	
   

  	
  Keith Alexander, Vice President

  

 

S-6

 

	
  “LENDERS”

  	
   

  	
  WELLS FARGO FOOTHILL, INC. fka

  FOOTHILL CAPITAL CORPORATION, as a

  Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ JUAN BARRERA

  
	
   

  	
   

  	
   

  	
  Juan Barrera, Vice President

  

 

S-7

 

	
  “LENDERS”

  	
   

  	
  THE CIT GROUP/BUSINESS CREDIT, INC., 

  as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ THOMAS H. HOPKINS

  
	
   

  	
   

  	
   

  	
  Thomas H. Hopkins, Vice President

  

 

S-8

 

	
  “LENDERS”

  	
   

  	
  TEXTRON FINANCIAL CORPORATION, as

  a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ RALPH J. INFANTE

  
	
   

  	
   

  	
   

  	
  Ralph J. Infante, Vice President

  

 

S-9

 

ANNEX
A

to

Credit Agreement

 

Definitions

 

Capitalized
terms used in the Loan Documents shall have the following respective meanings
(unless otherwise defined therein), and all section references in the
following definitions shall refer to sections of the Agreement:

 

“2003
Subordinated Debentures” means $100,000,000 in original principal amount of
unsecured, convertible senior subordinated debentures issued by Fleetwood on December 22,
2003 on terms and conditions as in effect on such date.

 

 “Accounts” means, as to any Person, all
of such Person’s now owned or hereafter acquired or arising accounts, as
defined in the UCC, including any rights to payment for the sale or lease of
goods or rendition of services, whether or not they have been earned by
performance.

 

“Account
Debtor” means each Person obligated in any way on or in connection with an
Account.

 

“ACH
Transactions” means any cash management or related services including the
automatic clearinghouse transfer of funds by the Bank for the account of any Loan
Party pursuant to agreement or overdrafts.

 

“ADI”
means Associated Dealers, Inc. or any Person which acquires all of the
Inventory at any locations of an FRC Borrower pursuant to the ADI Agreement.

 

“ADI
Agreement” means that certain Operating Agreement dated as of January 2001
between Retail and ADI

 

“Adjusted
Net Earnings from Operations” means, with respect to any fiscal period the
net income of Fleetwood and its consolidated Subsidiaries after provision for
income taxes for such fiscal period, as determined in accordance with GAAP and
reported on the Financial Statements for such period, excluding any and all of
the following included in such net income: 
(a) gain or loss arising from the sale of any capital assets; (b) gain
arising from any write-up or any loss from any write down in the book value of
any asset; (c) earnings of any Person, substantially all the assets of
which have been acquired by Fleetwood or any of its Subsidiaries in any manner,
to the extent realized by such other Person prior to the date of acquisition; (d) earnings
of any Person in which any Person other than Fleetwood or any of its
Subsidiaries has an ownership interest unless (and only to the extent) such
earnings shall actually have been received by Fleetwood or any of its Subsidiaries
in the form of cash distributions; (e) earnings of any Person to which
assets of Fleetwood or any of its Subsidiaries shall have been sold,
transferred or disposed of, or into which any Subsidiary shall have been
merged, or which has been a party with Fleetwood or any of its Subsidiaries to
any consolidation or other form of reorganization, prior to the date of such
transaction; (f) gain arising from the acquisition of debt or equity
securities of Fleetwood or any of its Subsidiaries or from cancellation or
forgiveness of Debt; (g) gain (or loss) arising from extraordinary items,
as determined in accordance with 

 

A-1

 

GAAP, or from
any other non-recurring items; (h) interest income; (i) other income
not earned from operations; (j) any write-down or write-off of goodwill
under FAS 142; (k) any non-cash adjustment required as a result of a
change in GAAP that occurs after the Closing Date; and (l) write-downs of
Fixed Assets (other than Eligible Real Estate or Term Loan Collateral) or good
will that requires a write-down in accordance with GAAP; and (m) expenses
arising as a result of fees paid to the Agent or the Lenders pursuant to Section 2.7
of the Agreement.

 

“Affected
Lender” has the meaning specified in Section 4.6(a).

 

“Affiliate”
means, as to any Person, any other Person which, directly or indirectly, is in
control of, is controlled by, or is under common control with, such Person or
which owns, directly or indirectly, ten percent (10%) or more of the
outstanding equity interest of such Person. 
A Person shall be deemed to control another Person if the controlling
Person possesses, directly or indirectly, the power to direct or cause the
direction of the management and policies of the other Person, whether through
the ownership of voting securities, by contract, or otherwise.

 

“Agents”
means the Administrative Agent and the Syndication Agent.

 

“Agent
Advances” has the meaning specified in Section 1.2(i).

 

“Agent Fee
Letter” means that certain fee letter dated March 2, 2005, between the
Agent and Fleetwood.

 

“Agent’s
Liens” means the Liens in the Collateral granted to the Agent, for the
benefit of the Lenders, Bank, and the Agent pursuant to the Loan Documents.

 

“Agent-Related
Persons” means the Agent, together with its Affiliates, and the officers,
directors, employees, counsel, representatives, agents and attorneys-in-fact of
the Agent and such Affiliates.

 

“Agents”
means the Agent.

 

“Aggregate
Availability” means, at any time, (a) the lesser of (i) the
Maximum Revolver Amount or (ii) the Aggregate Borrowing Bases, minus
(b) Reserves other than Reserves deducted in the calculation of the
Borrowing Bases, minus (c) in each case, the Aggregate Revolver
Outstandings.

 

“Aggregate
Borrowing Bases” means, at any time, the Borrowing Base of FMC plus
the Borrowing Base of FRC.

 

“Aggregate
Revolver Outstandings” means, at any date of determination:  the sum of the following for all Borrowers: (a) the
unpaid balance of Revolving Loans, (b) the aggregate amount of Pending
Revolving Loans, (c) one hundred percent (100%) of the aggregate undrawn
face amount of all outstanding Letters of Credit, and (d) the aggregate
amount of any unpaid reimbursement obligations in respect of Letters of Credit;
provided that for purposes of determining Availability of FMC or FRC,
the forgoing shall be determined solely with respect to FMC or FRC, as
applicable.

 

A-2

 

“Agreement”
means the Credit Agreement to which this Annex A is attached, as from
time to time amended, supplemented, modified or restated.

 

“Anniversary
Date” means each anniversary of the First Amendment and Restatement Date.

 

“Annual
Appraisal Date” means each Anniversary Date.

 

“Applicable Margin” means with respect to the Revolving Loans,
the Term Loan, all other Obligations, the Unused Line Fee and the Letter of
Credit Fee, a rate per annum corresponding to the Levels set forth below
opposite the Fixed Charge Coverage Ratio set forth below determined for the four-Fiscal
Quarter Period ended as of the end of the most recent Fiscal Quarter; provided
that (a) the Applicable Margin in respect of the Fiscal Quarters ended
January, 2005 and April, 2005 shall be set at Level V; (b) the Applicable
Margin calculated in respect of the Fiscal Quarter ended July, 2005 shall be
determined for the two-Fiscal Quarter Periods ended as of the last date of such
just completed Fiscal Quarter; and (c) the Applicable Margin calculated in
respect of the Fiscal Quarter ended October, 2005 shall be determined for the
three-Fiscal Quarter Periods ended as of the last date of such just completed
Fiscal Quarter.  Adjustments in
Applicable Margins shall be determined by reference to the following grid:

 

Fixed Charge Coverage Ratio:

 

	
  If Fixed Charge Coverage Ratio is:

  	
   

  	
  Level

  
	
  Greater than
  or equal to 1.30:1.00

  	
   

  	
  Level I

  
	
  Greater than
  or equal to 1.10:1.00, but less than 1.30:1.00

  	
   

  	
  Level II

  
	
  Greater than
  or equal to 0.75:1.00, but less than 1.10:1.00

  	
   

  	
  Level III

  
	
  Greater than
  or equal to 0.40:1.00, but less than 0.75:1.00

  	
   

  	
  Level IV

  
	
  Less than
  0.40:1.00

  	
   

  	
  Level V

  

 

Low to High

 

	
   

  	
   

  	
  Applicable Margins

  	
   

  
	
   

  	
   

  	
  Level I

  	
   

  	
  Level II

  	
   

  	
  Level III

  	
   

  	
  Level IV

  	
   

  	
  Level V

  	
   

  
	
  Base Rate Lender Term Loans

  	
   

  	
  0.50

  	
  %

  	
  0.50

  	
  %

  	
  0.75

  	
  %

  	
  1.00

  	
  %

  	
  1.25

  	
  %

  
	
  LIBOR Lender Term Loans

  	
   

  	
  2.50

  	
  %

  	
  2.75

  	
  %

  	
  3.00

  	
  %

  	
  3.25

  	
  %

  	
  3.50

  	
  %

  
	
  Base Rate Revolving Loans

  	
   

  	
  0.00

  	
  %

  	
  0.00

  	
  %

  	
  0.25

  	
  %

  	
  0.50

  	
  %

  	
  0.75

  	
  %

  
	
  LIBOR Revolving Loans

  	
   

  	
  2.00

  	
  %

  	
  2.25

  	
  %

  	
  2.50

  	
  %

  	
  2.75

  	
  %

  	
  3.00

  	
  %

  
	
  Unused Line Fees

  	
   

  	
  0.25

  	
  %

  	
  0.375

  	
  %

  	
  0.375

  	
  %

  	
  0.50

  	
  %

  	
  0.50

  	
  %

  
	
  Letter of Credit Fees

  	
   

  	
  1.75

  	
  %

  	
  2.00

  	
  %

  	
  2.25

  	
  %

  	
  2.50

  	
  %

  	
  2.50

  	
  %

  

 

All
adjustments in the Applicable Margin shall be based on the unaudited Financial
Statements delivered pursuant to Section 5.2(b) and shall be
implemented on the first day of the calendar month commencing at least 5 days
after the date of delivery to the Lenders of the Financial Statements
evidencing the need for an adjustment, provided, however, that if
the Applicable Margins are adjusted at the end of any Fiscal Year based upon
unaudited Financial Statements delivered pursuant to Section 5.2(b) and
if Fixed Charge Coverage Ratio determined from the audited Financial Statements
for such Fiscal Year requires an adjustment in the Applicable Margins that
would result in higher Applicable Margins, then the Applicable Margins shall be

 

A-3

 

adjusted
retroactively based on such audited Financial Statements and any increased
amount owed by the Borrowers as a result thereof shall be paid on the next
applicable payment date.  Failure to
timely deliver any Financial Statements shall, in addition to any other remedy
provided for in this Agreement, result in an increase in the Applicable Margins
to the highest level set forth in the foregoing grid, until the first day of
the first calendar month following the delivery of those Financial Statements
demonstrating that such an increase is not required.  If a Default or Event of Default has occurred
and is continuing at the time any reduction in the Applicable Margins is to be
implemented, such reduction shall not occur.

 

“Appraisal”
means an appraisal in form and substance and by an appraiser reasonably
satisfactory to Agent, dated not more than fifteen months prior to the Closing
Date.

 

“Appraised
Orderly Liquidation Value” means the orderly liquidation value of any property
set forth in any Appraisal delivered in connection with this Agreement or the
Security Agreement.

 

“Assigned
Contracts” means, collectively, all of the Loan Parties’ rights and
remedies under, and all moneys and claims for money due or to become due to any
Loan Party under those contracts set forth on Schedule 1.1, and any
other material contracts, and any and all amendments, supplements, extensions,
and renewals thereof including all rights and claims of any Loan Party now or
hereafter existing:  (i) under any
insurance, indemnities, warranties, and guarantees provided for or arising out
of or in connection with any of the foregoing agreements; (ii) for any
damages arising out of or for breach or default under or in connection with any
of the foregoing contracts; (iii) to all other amounts from time to time
paid or payable under or in connection with any of the foregoing agreements; or
(iv) to exercise or enforce any and all covenants, remedies, powers and
privileges thereunder.

 

“Assignee”
has the meaning specified in Section 11.2(a).

 

“Assignment
and Acceptance” has the meaning specified in Section 11.2(a).

 

“Assuming
Lender” has the meaning specified in Section 4.6(b).

 

“Attorney
Costs” means and includes all reasonable fees, expenses and disbursements
of any law firm or other counsel engaged by the Agent and, without duplication,
the reasonably allocated costs and expenses of internal legal services of the
Agent.

 

“Availability”
means, as to FMC or FRC, as applicable, at any time (a) the lesser of the
Maximum Revolver Amount minus the Aggregate Revolver Outstandings or (ii) its
Borrowing Base minus the Aggregate Revolver Outstandings attributable to FMC or
FRC, as applicable, minus (b) Reserves attributable to FRC or FMC, as
applicable, other than Reserves deducted in calculating its Borrowing Base.

 

“Bank”
means Bank of America, N.A., a national banking association, or any successor
entity thereto.

 

“Bank
Products” means any one or more of the following types of services or
facilities extended to Fleetwood or any of its Subsidiaries by the Bank or any
affiliate of the 

 

A-4

 

Bank in
reliance on the Bank’s agreement to indemnify such affiliate:  (i) credit cards; (ii) ACH
Transactions; (iii) cash management, including controlled disbursement
services; and (iv) Hedge Agreements.

 

“Bank
Product Reserves” means all reserves which the Agent from time to time
establishes in its reasonable discretion for the Bank Products then provided or
outstanding.

 

“Bankruptcy
Code” means Title 11 of the United States Code (11 U.S.C. § 101 et
seq.).

 

“Base Rate”
means, for any day, the rate of interest in effect for such day as publicly
announced from time to time by the Bank in Charlotte, North Carolina as its “prime
rate” (the “prime rate” being a rate set by the Bank based upon various factors
including the Bank’s costs and desired return, general economic conditions and
other factors, and is used as a reference point for pricing some loans, which
may be priced at, above, or below such announced rate).  Any change in the prime rate announced by the
Bank shall take effect at the opening of business on the day specified in the
public announcement of such change.  Each
Interest Rate based upon the Base Rate shall be adjusted simultaneously with
any change in the Base Rate.

 

“Base Rate
Loans” means the Base Rate Revolving Loans and the Base Rate Lender Term
Loans.

 

“Base Rate
Revolving Loan” means a Revolving Loan during any period in which it bears
interest based on the Base Rate.

 

“Base Rate
Lender Term Loan” means any portion of a Lender Term Loan during any period
in which such portion bears interest based on the Base Rate.

 

“Bi-Annual
Appraisal Date” means the Anniversary Date immediately following the First
Amendment and Restatement Date and, thereafter, every other Anniversary Date
commencing on the third anniversary of the First Amendment and Restatement
Date.

 

“Blocked
Account Agreement” means an agreement among a Borrower, the Agent and a
Clearing Bank, in form and substance reasonably satisfactory to the Agent,
concerning the collection of payments which represent the proceeds of Accounts
or of any other Collateral.

 

“Borrower
Liquidity” means, for any calendar month, the sum of (a) the average
daily Aggregate Availability during such calendar month plus (b) the
average daily Qualified Cash Equivalents held by the Borrowers.

 

“Borrowers”
has the meaning given that term in the preamble to the Agreement.

 

“Borrowing”
means a borrowing hereunder consisting of Revolving Loans or the Term Loan made
on the same day by the Lenders to a Borrower or by Bank in the case of a
Borrowing funded by Non-Ratable Loans or by the Agent in the case of a
Borrowing consisting of an Agent Advance, or the issuance of Letters of Credit
hereunder.

 

A-5

 

“Borrowing
Base” means, with respect to FMC or FRC, as applicable, an amount equal to (a) the
sum of (i) eighty-five percent (85%) of the Net Amount of its Eligible
Accounts, plus (ii) the lesser of (A) the sum of (1) fifty
percent (50%) of its Eligible Inventory, valued at the lower of cost on a
first-in, first-out basis or market (other than motor home chassis) and (2) eighty
percent (80%) of its Eligible Inventory, valued at the lower of cost on a first-in,
first-out basis or market, consisting of motor home chassis, (B) eighty-five
percent (85%) of the appraised orderly liquidation value of its Eligible
Inventory, or (C) the Maximum Inventory Loan Amount, plus (iii) the
lesser of (A) seventy-five percent (75%) of the appraised fair market
value of its Real Estate Subfacility Assets subject to a Mortgage and (B) the
Maximum Real Estate Loan Amount minus (b) Reserves from time to
time established by the Agent in its reasonable credit judgment.  Notwithstanding anything to the contrary in
the Loan Documents, (i) the amount advanced against the Accounts and
Inventory of Fleetwood Folding Trailer shall not exceed $8,000,000 and (ii) the
amount advanced against the aggregate manufactured housing Inventory of FMC and
FRC shall not exceed the lesser of (A) $25,000,000 for both FMC and FRC
combined and (B) 30% of the Borrowing Base attributable to aggregate
Eligible Inventory of FMC and FRC.

 

“Borrowing
Base Certificate” means a certificate by a Responsible Officer of FMC or
FRC, as applicable, substantially in the form of Exhibit B (or
another form acceptable to the Agent) setting forth the calculation of the
respective Borrowing Base, including a calculation of each component thereof,
all in such detail as shall be reasonably satisfactory to the Agent.  All calculations of the Borrowing Base in
connection with the preparation of any Borrowing Base Certificate shall
originally be made by FMC or FRC, as applicable and certified to the Agent; provided,
that the Agent shall have the right to review and adjust, in the exercise of
its reasonable credit judgment, any such calculation (1) to reflect its
reasonable estimate of declines in value of any of the Collateral described
therein, and (2) to the extent that such calculation is not in accordance
with this Agreement.

 

“Business
Day” means (a) any day that is not a Saturday, Sunday, or a day on
which banks in Los Angeles, California or Charlotte, North Carolina are
required or permitted to be closed, and (b) with respect to all notices,
determinations, fundings and payments in connection with the LIBOR Rate or
LIBOR Rate Loans, any day that is a Business Day pursuant to clause (a) above
and that is also a day on which trading in Dollars is carried on by and between
banks in the London interbank market.

 

“Business
Unit” means (a) for purposes of Section 5.2(c), Section 5.2(f) and
Section 8.1(o), (i) the FMC Borrowers and (ii) the FRC
Borrowers; and (b) for all other purposes, (i) the FMC Borrowers, (ii) the
FRC Borrowers; (iii) Fleetwood Folding Trailer, (iv) the Excluded
Retail Subsidiaries; (v) the Excluded Subsidiaries (other than the
Excluded Retail Subsidiaries); and (vi) Fleetwood.

 

“Canadian
Security Agreement” means the Canadian Security Agreement, dated as of the
Original Closing Date between Fleetwood Canada and the Agent for the benefit of
the Agent and the Lenders.

 

“Capital
Adequacy Regulation” means any guideline, request or directive of any
central bank or other Governmental Authority, or any other law, rule or
regulation, whether or 

 

A-6

 

not having the
force of law, in each case, regarding capital adequacy of any bank or of any
corporation controlling a bank.

 

“Capital
Expenditures” means all payments due during any relevant period (whether or
not paid during any fiscal period) in respect of the cost of any fixed asset or
improvement, or replacement, substitution, or addition thereto, which has a
useful life of more than one year, including, without limitation, those costs
arising in connection with the direct or indirect acquisition of such asset by
way of increased product or service charges or in connection with a Capital
Lease.

 

“Capital
Stock” means any and all shares, interests, participations or other equivalents
(however designated) of capital stock or other equity interests, any and all
equivalent ownership interests in a Person (other than a corporation) and any
and all warrants, rights, options to purchase or other rights to acquire any of
the foregoing.

 

“Capital
Lease” of a Person means any lease of property by such Person which, in
accordance with GAAP, should be reflected as a capital lease on the balance
sheet of such Person.

 

“Cash
Collateral” has the meaning specified in Section 1.4(g).

 

“Change of
Control” means either (i) a change shall occur in the Board of
Directors of Fleetwood so that a majority of the Board of Directors of
Fleetwood ceases to consist of the individuals who constituted the Board of
Directors of Fleetwood on the Closing Date (or individuals whose election or
nomination for election was approved by a vote of more than 50% of the
directors then in office who either were directors of Fleetwood on the Closing
Date or whose election or nomination for election previously was so approved);
or (ii) any Person or Group (within the meaning of Rule 13d-3
of the Securities and Exchange Commission), shall become or be the owner,
directly or indirectly, beneficially or of record, of shares representing more
than 20% of the aggregate ordinary voting power represented by the issued and
outstanding Capital Stock of Fleetwood on a fully diluted basis; or (iii) except
as permitted hereunder, any Loan Party (other than Fleetwood) ceases to be a
direct or indirect wholly-owned Subsidiary of Fleetwood; or (iv) a “change
of control” as such term is defined in the indenture under which 2003
Subordinated Debentures are issued.

 

“Chattel
Paper” means, as to any Person, all of such Person’s now owned or hereafter
acquired chattel paper, as defined in the UCC, including electronic chattel
paper.

 

“Clearing
Bank” means the Bank or any other banking institution with which a Payment
Account has been established pursuant to a Blocked Account Agreement.

 

“Closing Date”
means the date of this Agreement.

 

“Closing Fee”
has the meaning specified in Section 2.4.

 

“Code”
means the Internal Revenue Code of 1986.

 

A-7

 

“COLI
Policies” means those insurance policies identified on Schedule A
to the Existing Credit Agreement, as amended prior to the Closing Date.

 

“Collateral”
means all of the Loan Parties’ personal property, any Mortgaged Property, and
all other assets of any Person (other than the COLI Policies), from time to
time subject to the Agent’s Liens securing payment or performance of the
Obligations.

 

“Commitment”
means, at any time with respect to a Lender, the principal amount set forth
beside such Lender’s name under the heading “Commitment” on Schedule 1.2
attached to the Agreements or on the signature page of the Assignment and
Acceptance pursuant to which such Lender became a Lender hereunder in
accordance with the provisions of Section 11.2, as such Commitment
may be adjusted from time to time in accordance with the provisions of Section 11.2,
and “Commitments” means, collectively the aggregate amount of the
commitments of all of the Lenders.

 

“Contaminant”
means any waste, pollutant, hazardous substance, toxic substance, hazardous
waste, special waste, petroleum or petroleum-derived substance or waste,
asbestos in any form or condition, polychlorinated biphenyls (“PCBs”),
or any constituent of any such substance or waste.

 

“Continuation/Conversion
Date” means the date on which a Loan is converted into or continued as a
LIBOR Rate Loan.

 

“Contribution
Agreement” means the Contribution, Indemnity and Subrogation Agreement,
dated as of the Original Closing Date, among the Loan Parties.

 

“Copyright”
has the meaning specified in Copyright Security Agreement.

 

“Copyright
Security Agreement” means the Copyright Security Agreement, dated as of the
Original Closing Date, executed and delivered by a Loan Party to the Agent, for
the benefit of the Agent and the Lenders, to evidence and perfect the Agent’s
security interest in such Loan Party’s present and future copyrights and
related licenses and rights.

 

“Credit
Support” has the meaning specified in Section 1.4(a).

 

“Daily
Borrowing Base Certificate” has the meaning specified in the proviso to Section 5.2(l).

 

“Debt”
means, with respect to any Person and without duplication, all liabilities,
obligations and indebtedness of such Person to any other Person, of any kind or
nature, now or hereafter owing, arising, due or payable, howsoever evidenced,
created, incurred, acquired or owing, whether primary, secondary, direct, contingent,
fixed or otherwise, consisting of indebtedness for borrowed money or the
deferred purchase price of property, excluding trade payables incurred in the
ordinary course of business, but including (a) all Obligations; (b) all
obligations and liabilities of any other Person secured by any Lien on the such
Person’s property, even though such Person shall not have assumed or become
liable for the payment thereof; provided, however, that all such
obligations and liabilities which are limited in recourse to such property
shall be included in Debt only to the extent of the book value of such property
as would 

 

A-8

 

be shown on a
balance sheet of such Person prepared in accordance with GAAP; (c) all
obligations or liabilities created or arising under any Capital Lease or
conditional sale or other title retention agreement with respect to property
used or acquired by such Person, even if the rights and remedies of the lessor,
seller or lender thereunder are limited to repossession of such property; provided,
however, that all such obligations and liabilities which are limited in
recourse to such property shall be included in Debt only to the extent of the
book value of such property as would be shown on a balance sheet of such Person
prepared in accordance with GAAP; (d) all obligations and liabilities
under Guaranties; (e) the present value (discounted at the Base Rate) of
lease payments due under synthetic leases; and (f) all obligations and
liabilities under any preferred stock (including the Trust Securities) or
similar securities.

 

“Default”
means any event or circumstance which, with the giving of notice, the lapse of
time, or both, would (if not cured, waived, or otherwise remedied during such
time) constitute an Event of Default.

 

“Default Rate”
means a fluctuating per annum interest rate at all times equal to the sum of (a) the
otherwise applicable Interest Rate plus (b) two percent (2%) per
annum.  Each Default Rate shall be
adjusted simultaneously with any change in the applicable Interest Rate.  In addition, the Default Rate shall result in
an increase in the Letter of Credit Fee by 2 percentage points per annum during
any period for which the Default Rate is applied.

 

“Defaulting
Lender” has the meaning specified in Section 12.15(c).

 

“Designated
Account” has the meaning specified in Section 1.2(c).

 

“Distribution”
means, in respect of any Person: (a) the payment or making of any dividend
or other distribution of property in respect of Capital Stock of such Person,
other than distributions in Capital Stock of the same class; or (b) the
redemption or other acquisition by such Person of its Capital Stock.

 

“Documents”
means, with respect to any Person, all documents as such term is defined in the
UCC, including bills of lading, warehouse receipts or other documents of title,
now owned or hereafter acquired by such Person.

 

“DOL”
means the United States Department of Labor or any successor department or
agency.

 

“Dollar”
and “$” means dollars in the lawful currency of the United States.  Unless otherwise specified, all payments
under the Agreements shall be made in Dollars.

 

“EBITDA”
means, with respect to any fiscal period, Adjusted Net Earnings from
Operations, plus, to the extent deducted in the determination of
Adjusted Net Earnings from Operations for that fiscal period, interest
expenses, Federal, state, local and foreign income taxes, depreciation and
amortization.

 

“Eligible Accounts”
means, with respect to FMC or FRC, as applicable, the Accounts of FMC (which
for purposes of this definition only shall include Fleetwood Canada) or FRC, as
applicable, which the Agent in the exercise of its reasonable commercial
discretion 

 

A-9

 

determines to
be Eligible Accounts.  Without limiting
the discretion of the Agent to establish other criteria of ineligibility,
Eligible Accounts shall not, unless the Agent in its sole discretion elects
(which discretion cannot be exercised without the consent of all Lenders),
include any Account:

 

(a)                                  with
respect to which more than 60 days have elapsed since the date of the original
invoice therefor;

 

(b)                                 with
respect to which any of the representations, warranties, covenants, and
agreements contained in the Security Agreement are incorrect or have been
breached;

 

(c)                                  with
respect to which Account (or any other Account due from such Account Debtor),
in whole or in part, two or more checks, promissory notes, drafts, trade
acceptances or other instruments for the payment of money have been received,
presented for payment and returned uncollected for any reason within any six
month period;

 

(d)                                 which
represents a progress billing (as hereinafter defined); for the purposes
hereof, “progress billing” means any invoice for goods sold or leased or
services rendered under a contract or agreement pursuant to which the Account
Debtor’s obligation to pay such invoice is conditioned upon a Borrower’s
completion of any further performance under the contract or agreement;

 

(e)                                  with
respect to which any one or more of the following events has occurred to the
Account Debtor on such Account:  death or
judicial declaration of incompetency of an Account Debtor who is an individual;
the filing by or against the Account Debtor of a request or petition for liquidation,
reorganization, arrangement, adjustment of debts, adjudication as a bankrupt,
winding-up, or other relief under the bankruptcy, insolvency, or similar laws
of the United States, any state or territory thereof, or any foreign
jurisdiction, now or hereafter in effect; the making of any general assignment
by the Account Debtor for the benefit of creditors; the appointment of a
receiver or trustee for the Account Debtor or for any of the assets of the
Account Debtor, including, without limitation, the appointment of or taking
possession by a “custodian,” as defined in the Bankruptcy Code; the institution
by or against the Account Debtor of any other type of insolvency proceeding
(under the bankruptcy laws of the United States or otherwise) or of any formal
or informal proceeding for the dissolution or liquidation of, settlement of
claims against, or winding up of affairs of, the Account Debtor; the sale,
assignment, or transfer of all or any material part of the assets of the
Account Debtor (unless the transferee is, in the Agent’s judgment, able to
pay); the nonpayment generally by the Account Debtor of its debts as they
become due; or the cessation of the business of the Account Debtor as a going
concern;

 

(f)                                    if
fifty percent (50%) or more of the aggregate Dollar amount of outstanding
Accounts owed at such time by the Account Debtor thereon is classified as
ineligible under clause (a) above;

 

(g)                                 owed
by an Account Debtor which: (i) does not maintain its chief executive
office in the United States of America or Canada (other than the Province of
Newfoundland); or (ii) is not organized under the laws of the United
States of America or 

 

A-10

 

Canada or any
state or province thereof; or (iii) is the government of any foreign
country or sovereign state, or of any state, province, municipality, or other
political subdivision thereof, or of any department, agency, public
corporation, or other instrumentality thereof; except to the extent that such
Account is secured or payable by a letter of credit satisfactory to the Agent
in its discretion;

 

(h)                                 owed
by an Account Debtor which is an Affiliate or employee of Fleetwood or any of
its Subsidiaries;

 

(i)                                     except
as provided in clause (k) below, with respect to which either the
perfection, enforceability, or validity of the Agent’s Liens in such Account,
or the Agent’s right or ability to obtain direct payment to the Agent of the
proceeds of such Account, is governed by any federal, state, or local statutory
requirements other than those of the UCC;

 

(j)                                     owed
by an Account Debtor to which Fleetwood or any of its Subsidiaries, is indebted
in any way, or which is subject to any right of setoff or recoupment by the
Account Debtor, unless the Account Debtor has entered into an agreement
acceptable to the Agent to waive setoff rights; or if the Account Debtor
thereon has disputed liability or made any claim with respect to any other
Account due from such Account Debtor; but in each such case only to the extent
of such indebtedness, setoff, recoupment, dispute, or claim;

 

(k)                                  owed
by the government of the United States of America, or any department, agency,
public corporation, or other instrumentality thereof, unless the Federal
Assignment of Claims Act of 1940, as amended (31 U.S.C. § 3727 et  seq.),
and any other steps necessary or desirable to perfect the Agent’s Liens
therein, have been complied with to the Agent’s satisfaction with respect to
such Account;

 

(l)                                     owed
by any state, municipality, or other political subdivision of the United States
of America, or any department, agency, public corporation, or other
instrumentality thereof and as to which the Agent determines that its Lien
therein is not or cannot be perfected;

 

(m)                               which
represents a sale on a bill-and-hold, guaranteed sale, sale and return, sale on
approval, consignment, or other repurchase or return basis;

 

(n)                                 which
is evidenced by a promissory note or other instrument or by chattel paper;

 

(o)                                 if
the Agent believes, in the exercise of its reasonable commercial judgment, that
such Account may not be collected for any reason;

 

(p)                                 with
respect to which the Account Debtor is located in any state requiring the
filing of a Notice of Business Activities Report or similar report in order to
permit a Borrower to seek judicial enforcement in such State of payment of such
Account, unless such Borrower has qualified to do business in such state or has
filed a Notice of Business Activities Report or equivalent report for the then
current year;

 

A-11

 

(q)                                 which
arises out of a sale not made in the ordinary course of a Borrower’s business;

 

(r)                                    with
respect to which the goods giving rise to such Account have not been shipped
and delivered to and accepted by the Account Debtor or the services giving rise
to such Account have not been performed by a Borrower, and, if applicable,
accepted by the Account Debtor, or the Account Debtor revokes its acceptance of
such goods or services;

 

(s)                                  owed
by an Account Debtor which is obligated to FMC, FRC or Fleetwood, as applicable
respecting Accounts the aggregate unpaid balance of which exceeds ten percent
(10%) of the aggregate unpaid balance of all Accounts owed to FMC, FRC or
Fleetwood, as applicable at such time by all of the Account Debtors, but only
to the extent of such excess;

 

(t)                                    which
is not subject to a first priority and perfected security interest securing the
Revolving Loans in favor of the Agent for the benefit of the Lenders; and

 

(u)                                 an
Account representing a dealer rebate or other sales program accrual.

 

If any Account
at any time ceases to be an Eligible Account, then such Account shall promptly
be excluded from the calculation of Eligible Accounts.

 

“Eligible
Assignee” means (a) a commercial bank, commercial finance company or other
asset based lender, having total assets in excess of $1,000,000,000; (b) any
Lender listed on the signature page of this Agreement; (c) any
Affiliate of any Lender; and (d) if an Event of Default has occurred and
is continuing, any Person reasonably acceptable to the Agent.

 

“Eligible
Inventory” means, with respect to FMC or FRC, as applicable, Inventory,
which the Agent, in its reasonable commercial discretion, determines to be
Eligible Inventory.  Without limiting the
discretion of the Agent to establish other criteria of ineligibility, Eligible
Inventory shall not, unless the Agent in its sole discretion elects (which
discretion cannot be exercised without the consent of all Lenders), include any
Inventory:

 

(a)                                  that
is not owned by the applicable Borrower;

 

(b)                                 that
is not subject to the Agent’s Liens, which are perfected as to such Inventory,
or that are subject to any other Lien whatsoever (other than the Liens
described in clauses (a) or (d) of the definition of Permitted
Liens provided that such Permitted Liens (i) are junior in priority
to the Agent’s Liens or subject to Reserves and (ii) do not impair
directly or indirectly the ability of the Agent to realize on or obtain the
full benefit of the Collateral);

 

(c)                                  that
does not consist of finished goods or raw materials;

 

(d)                                 that
consists of work-in-process, chemicals, samples, prototypes, supplies, or
packing and shipping materials;

 

A-12

 

(e)                                  that
is not in good condition, is defective or unmerchantable, or does not meet all
standards imposed by any Governmental Authority having regulatory authority
over such goods, their use or sale;

 

(f)                                    that
is obsolete;

 

(g)                                 that
is located outside the United States of America (or that is in-transit from
vendors or suppliers);

 

(h)                                 that
is located in a public warehouse or in possession of a bailee or in a facility
leased by the Borrower, if the warehouseman, the bailee or the lessor has not
delivered to the Agent, a subordination or landlord agreement in form and
substance satisfactory to the Agent or if a Reserve for rents or storage
charges has not been established for Inventory at that location;

 

(i)                                     that
contains or bears any Proprietary Rights licensed to a Borrower by any Person,
if the Agent is not satisfied that it may sell or otherwise dispose of such
Inventory in accordance with the terms of the Security Agreement and Section 9.2
without infringing the rights of the licensor of such Proprietary Rights or
violating any contract with such licensor (and without payment of any royalties
other than any royalties due with respect to the sale or disposition of such
Inventory pursuant to the existing license agreement), and as to which the
applicable Borrower has not delivered to the Agent a consent or sublicense
agreement from such licensor in form and substance acceptable to the Agent if
requested;

 

(j)                                     that
is not reflected in the details of a current inventory report delivered to the
Agent; or

 

(k)                                  that
is Inventory placed on consignment, including any Inventory transferred to ADI.

 

If any
Inventory at any time ceases to be Eligible Inventory, such Inventory shall
promptly be excluded from the calculation of Eligible Inventory.

 

“Eligible
Real Estate” means the Real Estate of FMC and Fleetwood which the Agent in
the exercise of its reasonable commercial discretion determines to be Eligible
Real Estate.  Without limiting the
discretion of the Agent to establish other criteria of ineligibility, Eligible
Real Estate shall not, unless the Agent in its sole discretion elects (which
discretion cannot be exercised without the consent of Majority Lenders),
include any Real Estate:

 

(a)                                  that
is not owned in fee simple by FMC or Fleetwood and listed on Schedule B,
hereto;

 

(b)                                 that
is not subject to a recorded Mortgage which creates a first priority Lien to
secure the Revolving Loans or that are subject to any other Lien whatsoever
(other than the Liens securing the Term Loan and the Liens described in clauses
(a), (d) or (e) of the definition of Permitted Liens provided
that all such Liens are (i) junior in priority to the Agent’s Liens
securing the Revolving Loans or subject to Reserves and (ii) do not impair
directly or indirectly the ability of the Agent to realize on or obtain the
full benefit of the Collateral);

 

A-13

 

(c)                                  that
is not marketable;

 

(d)                                 that
has not been appraised by an appraiser satisfactory to the Agent;

 

(e)                                  that
is located outside the United States; or

 

(f)                                    that
is subject to a lease or sublease in favor of any Person if the tenant or
subtenant, as the case may be, has not delivered to the Agent a subordination
and attornment agreement in form and substance satisfactory to the Agent.

 

If any Real
Estate at any time ceases to be Eligible Real Estate, such Real Estate shall
promptly be excluded from the calculation of Eligible Real Estate.

 

“Environmental
Claims” means all claims, however asserted, by any Governmental Authority
or other Person alleging potential liability or responsibility for violation of
any Environmental Law, or for a Release or injury to the environment.

 

“Environmental Compliance Reserve”
means any reserve which the Agent establishes in its reasonable discretion
after prior written notice to the Borrowers from time to time for amounts that
are reasonably likely to be expended by Fleetwood or any of its Subsidiaries in
order for such Person and its operations and property (a) to comply with
any notice from a Governmental Authority asserting material non-compliance with
Environmental Laws, or (b) to correct any such material non-compliance
identified in a report delivered to the Agent and the Lenders pursuant to Section 7.7.

 

“Environmental
Laws” means all federal, state or local laws, statutes, common law duties,
rules, regulations, ordinances and codes, together with all administrative
orders, directed duties, licenses, authorizations and permits of, and
agreements with, any Governmental Authority, in each case relating to
environmental, health, safety and land use matters.

 

“Environmental Lien”
means a Lien in favor of any Governmental Authority for (a) any liability
under Environmental Laws, or (b) damages arising from, or costs incurred
by such Governmental Authority in response to, a Release or threatened Release
of a Contaminant into the environment.

 

“Equipment”
means, with respect to any Person, all of such Person’s now owned and hereafter
acquired machinery, equipment, furniture, furnishings, fixtures, and other
tangible personal property (except Inventory), including embedded software,
motor vehicles with respect to which a certificate of title has been issued,
aircraft, dies, tools, jigs, molds and office equipment, as well as all of such
types of property leased by such Person and all of such Person’s rights and
interests with respect thereto under such leases (including, without
limitation, options to purchase); together with all present and future
additions and accessions thereto, replacements therefor, component and
auxiliary parts and supplies used or to be used in connection therewith, and
all substitutes for any of the foregoing, and all manuals, drawings,
instructions, warranties and rights with respect thereto; wherever any of the
foregoing is located.

 

“ERISA”
means the Employee Retirement Income Security Act of 1974, and regulations
promulgated thereunder.

 

A-14

 

“ERISA
Affiliate” means any trade or business (whether or not incorporated) under
common control with Fleetwood or any of its Subsidiaries within the meaning of Section 414(b) or
(c) of the Code (and Sections 414(m) and (o) of the Code for purposes of
provisions relating to Section 412 of the Code).

 

“ERISA
Event” means (a) a Reportable Event with respect to a Pension Plan, (b) a
withdrawal by Fleetwood or any ERISA Affiliate from a Pension Plan subject to Section 4063
of ERISA during a plan year in which it was a substantial employer (as defined
in Section 4001(a)(2) of ERISA) or a cessation of operations which is
treated as such a withdrawal under Section 4062(e) of ERISA, (c) a
complete or partial withdrawal by Fleetwood or any ERISA Affiliate from a
Multi-employer Plan or notification that a Multi-employer Plan is in
reorganization, (d) the filing of a notice of intent to terminate, the
treatment of a Plan amendment as a termination under Section 4041 or 4041A
of ERISA, or the commencement of proceedings by the PBGC to terminate a Pension
Plan or Multi-employer Plan, (e) the occurrence of an event or condition
which might reasonably be expected to constitute grounds under Section 4042
of ERISA for the termination of, or the appointment of a trustee to administer,
any Pension Plan or Multi-employer Plan, or (f) the imposition of any
material liability under Title IV of ERISA, other than for PBGC premiums due
but not delinquent under Section 4007 of ERISA, upon Fleetwood or any
ERISA Affiliate.

 

“Event of Default”
has the meaning specified in Section 9.1.

 

“Exchange
Act” means the Securities Exchange Act of 1934 and the rules and
regulations promulgated thereunder.

 

“Excluded
Retail Subsidiary” means each direct and indirect Subsidiary of FRC which
is a retailer of manufactured housing products and is either (i) listed on
Schedule 1.3 to the Existing Credit Agreement, as amended prior to
the Closing Date; (ii) formed or acquired by Fleetwood or any direct or
indirect Subsidiary of FRC after the Closing Date; or (iii) a Released FRC
Borrower.

 

“Excluded
Subsidiaries” means, collectively, Finance Co., Fleetwood Trust, Fleetwood
Foreign Sales Corp., a U.S. Virgin Islands corporation, Gibraltar Insurance
Company Ltd., a Bermuda corporation, National Home Shield Insurance Agency, Inc.,
Home Sentry Insurance Agency of Alabama, Inc., the Inactive Subsidiaries,
the Excluded Retail Subsidiaries and any other Subsidiary of Fleetwood acquired
or formed after the Closing Date and identified on Schedule 6.5 to
the Existing Credit Agreement, as amended prior to the Closing Date, as an “Excluded
Subsidiary”.

 

“Existing Credit Agreement” means that certain
Amended and Restated Credit Agreement dated as of the First Amendment and
Restatement Date, by and among Fleetwood, the Borrowers, the Lenders, and the
Agent, and the other parties thereto, as amended by that certain First
Amendment to Credit Agreement and Consent of Guarantors dated as of June 4,
2004, as amended by that certain Second Amendment to Credit Agreement and
Consent of Guarantors dated as of November 29, 2004, and as amended by
that certain Third Amendment to Credit Agreement and Consent of Guarantors
dated as of March 2, 2005.

 

A-15

 

“Existing Commitments” means the “Revolving
Credit Commitments” as defined in the Existing Credit Agreement which are
outstanding on the Amendment and Restatement Closing Date immediately prior to
the effectiveness of this Agreement.

 

“Existing Lenders” means the “Lenders”
as defined in the Existing Credit Agreement.

 

“Existing Loans” means “Loans” as
defined in the Existing Credit Agreement which are outstanding on the Closing
Date immediately prior to the effectiveness of this Agreement.

 

“Existing
Mortgages” means “Mortgages” as defined in the Existing Credit Agreement
which were filed in connection with the Existing Credit Agreement.

 

“Existing
Mortgage Title Policies” means the existing mortgage title policies
insuring that the Existing Mortgages constitute first priority mortgage liens
subject only to Permitted Liens under clauses (a), (b), (d) and (e) of
the definition of “Permitted Liens” under the Existing Credit Agreement.

 

“FDIC”
means the Federal Deposit Insurance Corporation, and any Governmental Authority
succeeding to any of its principal functions.

 

“Federal
Funds Rate” means, for any day, the rate per annum (rounded upwards, if
necessary, to the nearest 1/100  of 1%) equal to the weighted average
of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Business Day next
succeeding such day; provided that (a) if such day is not a
Business Day, the Federal Funds Rate for such day shall be such rate on such
transactions on the next preceding Business Day as so published on the next
succeeding Business Day, and (b) if no such rate is so published on such next
succeeding Business Day, the Federal Funds Rate for such day shall be the
average rate charged to the Bank on such day on such transactions as determined
by the Agent.

 

“Federal
Reserve Board” means the Board of Governors of the Federal Reserve System or
any successor thereto.

 

“Fee
Letters” means the Agent Fee Letter and the separate fee letters, if any,
dated the date hereof, between the Agent and each of the Lenders.

 

“Finance
Co.” means Home One Credit Corp., a wholly-owned Subsidiary, Home One Funding
I, a wholly-owned subsidiary of Home One Credit Corp. and/or, in either case,
any bankruptcy remote special purpose company that is a wholly-owned Subsidiary
thereof, which has entered into, or may enter into, one or more joint ventures
to provide financing to customers of FRC and its Subsidiaries.

 

“Finance
Co. Disposition” has the meaning specified in Section 7.9(f).

 

A-16

 

“Financial
Statements” means, according to the context in which it is used, the financial
statements referred to in Sections 5.2 and 6.6 or any other
financial statements required to be given to the Lenders pursuant to this
Agreement.

 

“First
Amendment and Restatement Date” means May 14, 2004.

 

“Fiscal
Quarter” means any fiscal quarter of any Fiscal Year.

 

“Fiscal
Year” means Fleetwood’s fiscal year for financial accounting purposes,
which currently ends on the last Sunday in April.

 

“Fixed
Assets” means, as to any Person, the Equipment and Real Estate of such
Person.

 

“Fixed
Charge Coverage Ratio” means, with respect to any fiscal period, the ratio
of EBITDA to Fixed Charges.

 

“Fixed
Charges” means, with respect to any fiscal period, for Fleetwood on a
consolidated basis, without duplication (a) interest expense paid in cash;
(b) Capital Expenditures (excluding Capital Expenditures funded with Debt
other than the Revolving Loans); (c) scheduled principal payments of Debt;
(d) Distributions paid in cash by Fleetwood or the Fleetwood Trust; and (e) without
duplication of clause (d), payments made in cash on Subordinated Debt.

 

“Fleetwood”
has the meaning given such term in the preamble.

 

“Fleetwood
Canada” means Fleetwood Canada Ltd., an Ontario corporation.

 

“Fleetwood
Folding Trailer” means Fleetwood Folding Trailers, Inc., a Delaware
corporation.

 

“Fleetwood
Liquidity” means, for any calendar month or thirty day period, as
applicable, the sum of (a) the average daily Aggregate Availability during
such calendar month or thirty day period, as applicable, plus (b) the
average daily Qualified Cash Equivalents held by the Loan Parties.

 

“Fleetwood
Trust” means any or all (as the context requires) of Fleetwood Capital
Trust and Fleetwood Capital Trust II, each a business trust organized under the
laws of the State of Delaware, whose sole assets, collectively, consist of the
Subordinated Debentures and the New Subordinated Debentures.

 

“Flexibility
Conditions” means as of any date and with respect to any transaction, (a) no
Default or Event of Default has occurred and is continuing as of such date both
before and after giving effect to such transaction, (b) Fleetwood
Liquidity for the thirty day period ending as of the date of the applicable
transaction, is greater than $90,000,000 both before and after giving effect to
such transaction; and (c) Borrower Liquidity for the thirty day period
ending as of the date of the applicable transaction, is greater than
$60,000,000 both before and after giving effect to such transaction.

 

A-17

 

“Floor Plan
Debt” means Debt of an Excluded Retail Subsidiary to a Floor Plan Lender,
which shall be on terms and conditions satisfactory to the Agent and the
Majority Lenders (it being acknowledged and agreed that (a) the Floor Plan
Debt provided by Textron Financial Corporation as of the date hereof has a
permitted commitment of up to $30,000,000 and (b) any amendment of any
Floor Plan Debt that is made solely to conform any financial covenants
contained in such Floor Plan Debt to the financial covenants set forth in Sections
7.22 through 7.24, inclusive, shall be deemed satisfactory to the
Agent and the Majority Lenders).

 

“Floor Plan
Lender” means Textron Financial Corporation, Bombardier Capital, Inc.
and/or any other lender of Floor Plan Debt acceptable to the Agent and the
Majority Lenders.

 

“FMC”
means, collectively and jointly and severally, the FMC Borrowers.

 

“FMC
Borrowers” means each of the following in their capacities as
Borrowers:  Holdings, Fleetwood Homes of
Arizona, Inc., an Arizona corporation, Fleetwood Homes of California, Inc.,
a California corporation, Fleetwood Homes of Florida, Inc., a Florida
corporation, Fleetwood Homes of Georgia, Inc., a Georgia corporation,
Fleetwood Homes of Idaho, Inc., an Idaho corporation, Fleetwood Homes of
Indiana, Inc., an Indiana corporation, Fleetwood Homes of Kentucky, Inc.,
a Kentucky corporation, Fleetwood Homes of North Carolina, Inc., a North
Carolina corporation, Fleetwood Homes of Oregon, Inc., an Oregon
corporation, Fleetwood Homes of Pennsylvania, Inc., a Pennsylvania
corporation, Fleetwood Homes of Tennessee, Inc., a Tennessee corporation,
Fleetwood Homes of Texas, L.P., a Texas limited partnership, Fleetwood Homes of
Virginia, Inc., a Virginia corporation, Fleetwood Homes of Washington, Inc.,
a Washington corporation, Fleetwood Motor Homes of California, Inc., a
California corporation, Fleetwood Motor Homes of Indiana, Inc., an Indiana
corporation, Fleetwood Motor Homes of Pennsylvania, Inc., a Pennsylvania
corporation, Fleetwood Travel Trailers of California, Inc., a California
corporation, Fleetwood Travel Trailers of Indiana, Inc., an Indiana
corporation, Fleetwood Travel Trailers of Kentucky, Inc., a Kentucky
corporation, Fleetwood Travel Trailers of Maryland, Inc., a Maryland
corporation, Fleetwood Travel Trailers of Ohio, Inc., an Ohio corporation,
Fleetwood Travel Trailers of Oregon, Inc., an Oregon corporation,
Fleetwood Travel Trailers of Texas, Inc., a Texas corporation, Fleetwood
Folding Trailers, Gold Shield, Inc., a California corporation, Gold Shield
of Indiana, Inc., an Indiana corporation, Hauser Lake Lumber Operation, Inc.,
an Idaho corporation, Continental Lumber Products, Inc., a California
corporation, Fleetwood General Partner of Texas, Inc., a Delaware
corporation, Fleetwood Homes Investment, Inc., a California corporation,
and their permitted successors and assigns.

 

“FMC
Guaranty” means the Second Amended and Restated Guaranty dated as of the
Closing Date from FMC to the Agent, for its benefit and the benefit of the
Lenders.

 

 “Franchise Agreement” means any
agreement between FVC and any Franchisee pursuant to which such Franchisee
shall have acquired a franchise to operate one or more franchises entitling
such Person to sell vacation club memberships to the public as further set
forth in any such Franchise Agreement.; provided that the Franchise
Agreement and other documents executed by FVC in connection therewith are
reasonably satisfactory in form and substance to the Agent (it being understood
that should Agent grant its consent to a form of 

 

A-18

 

Franchise
Agreement, such agreement may, thereafter, be utilized by FVC with respect to
entering into additional Franchisee Agreements until the occurrence and during
the continuation of any Event of Default).

 

“Franchisee”
means any Person that shall have acquired a franchise to operate one or more
franchises entitling such Person to sell memberships to the public in the “Fleetwood
Vacation Club” as further set forth in any Franchise Agreement.

 

“Franchisee
Guaranty” means any unsecured guaranty of any Franchise Obligations granted
by Fleetwood to any Franchisee; provided that the documents executed by
Fleetwood in connection with such Franchisee Guaranty are reasonably
satisfactory in form and substance to the Agent (it being understood that
should Agent grant its consent to a form of Franchisee Guaranty, such form may,
thereafter, be utilized by Fleetwood with respect to entering into additional
Franchisee Guaranties until the occurrence and during the continuation of any
Event of Default).

 

“Franchisee
Obligations” means any obligations owing by FVC to any Franchisee in
connection with any Franchise Agreement.

 

“FRC”
means, collectively and jointly and severally, the FRC Borrowers.

 

“FRC
Borrowers” means each of the following in their capacities as Borrowers:
Retail, Fleetwood Retail Corp. of California, a California corporation,
Fleetwood Retail Corp. of Idaho, an Idaho corporation, Fleetwood Retail Corp.
of Kentucky, a Kentucky corporation, Fleetwood Retail Corp. of Mississippi, a
Mississippi corporation, Fleetwood Retail Corp. of North Carolina, a North
Carolina corporation, Fleetwood Retail Corp. of Oregon, an Oregon corporation,
and Fleetwood Retail Corp. of Virginia, a Virginia corporation and any other
Subsidiary of Retail which becomes a Borrower hereunder in accordance with Section 7.28,
and their permitted successors and assigns.

 

“FRC
Borrower Release” has the meaning specified in Section 3.11.

 

“FRC
Disposition” has the meaning specified in Section 7.9(f).

 

“FRC
Guaranty” means the Second Amended and Restated Guaranty dated as of the
Closing Date from FRC to the Agent, for its benefit and the benefit of the
Lenders.

 

“Funding
Date” means the date on which a Borrowing occurs.

 

“FVC”
means FVC, Inc.

 

“GAAP”
means generally accepted accounting principles and practices set forth from
time to time in the opinions and pronouncements of the Accounting Principles
Board and the American Institute of Certified Public Accountants and statements
and pronouncements of the Financial Accounting Standards Board (or agencies
with similar functions of comparable stature and authority within the U.S.
accounting profession), which, in the case of Section 7.24, shall
be as are applicable to the circumstances as of the Closing Date.

 

A-19

 

“General
Intangibles” means, with respect to any Person, all of such Person’s now
owned or hereafter acquired general intangibles, choses in action and causes of
action and all other intangible personal property of such Person of every kind
and nature (other than Accounts), including, without limitation, all contract
rights, payment intangibles, Proprietary Rights, corporate or other business
records, inventions, designs, blueprints, plans, specifications, patents,
patent applications, trademarks, service marks, trade names, trade secrets,
goodwill, copyrights, computer software, customer lists, registrations,
licenses, franchises, tax refund claims, any funds which may become due to such
Person in connection with the termination of any Plan or other employee benefit
plan or any rights thereto and any other amounts payable to such Person from
any Plan or other employee benefit plan, rights and claims against carriers and
shippers, rights to indemnification, business interruption insurance and
proceeds thereof, property, casualty or any similar type of insurance and any
proceeds thereof, proceeds of insurance covering the lives of key employees on
which such Person is beneficiary, rights to receive dividends, distributions,
cash, Instruments and other property in respect of or in exchange for pledged
equity interests or Investment Property and any letter of credit, guarantee,
claim, security interest or other security held by or granted to such Person.

 

“Governmental
Authority” means any nation or government, any state or other political
subdivision thereof, any central bank (or similar monetary or regulatory
authority) thereof, any entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government, and any
corporation or other entity owned or controlled, through stock or capital
ownership or otherwise, by any of the foregoing.

 

“Guarantors”
means, collectively, Fleetwood, Fleetwood Canada and Fleetwood International
Inc., a California corporation, and any Subsidiary of Fleetwood which becomes a
Guarantor in accordance with the requirements of this Agreement.

 

“Guaranty”
means, with respect to any Person, all obligations of such Person which in any
manner directly or indirectly guarantee or assure, or in effect guarantee or
assure, the payment or performance of any indebtedness, dividend or other
obligations of any other Person (the “guaranteed obligations”), or
assure or in effect assure the holder of the guaranteed obligations against
loss in respect thereof, including any such obligations incurred through an
agreement, contingent or otherwise: (a) to purchase the guaranteed
obligations or any property constituting security therefor; (b) to advance
or supply funds for the purchase or payment of the guaranteed obligations or to
maintain a working capital or other balance sheet condition; or (c) to
lease property or to purchase any debt or equity securities or other property
or services.

 

“Hedge
Agreement” means, with respect to any Person, any and all transactions,
agreements or documents now existing or hereafter entered into, which provide
for an interest rate, credit, commodity or equity swap, cap, floor, collar,
forward foreign exchange transaction, currency swap, cross currency rate swap,
currency option, or any combination of, or option with respect to, these or
similar transactions, for the purpose of hedging such Person’s exposure to
fluctuations in interest or exchange rates, loan, credit exchange, security or
currency valuations or commodity prices.

 

“Holdings”
has the meaning given such term in the preamble.

 

A-20

 

“Identified
Subsidiary” means that Subsidiary identified in the side letter dated July 27,
2001 from Fleetwood to the Agent.

 

“Inactive
Subsidiaries” means, collectively, Expression Homes Corporation, a Delaware
corporation, Fleetwood Homes of Mississippi, Inc., a Mississippi
corporation, Fleetwood Homes of Oklahoma, Inc., an Oklahoma corporation,
Fleetwood Travel Trailers of Nebraska, Inc., a Nebraska corporation,
Fleetwood Travel Trailers of Virginia, Inc., a Virginia corporation,
Fleetwood Retail Investment Corp., a California corporation, C.V. Aluminum, Inc.,
a California corporation, Fleetwood Holidays, Inc., a Florida corporation,
and GSF Installation Co., a California corporation and any other Subsidiary
formed from time to time after the Closing Date, so long as such other
Subsidiaries, in the aggregate own assets of less than $250,000 and have
revenues of less than $1,000,000.

 

“Initial
Funding Date” shall mean the date of the funding of the initial Revolving
Loans or the initial Term Loan, as applicable, under this Agreement, amended
and restated as of the date hereof.

 

“Instruments”
means, with respect to any Person, all instruments as such term is defined in
the UCC, now owned or hereafter acquired by such Person.

 

“Intercreditor
Agreements” means (a) the Intercreditor Agreement dated as of August 21,
2002 between Textron Financial Corporation and the Agent, as it may be amended,
supplemented or otherwise modified from time to time with the consent of the
Majority Lenders, (b) the Intercreditor Agreement dated as of November 24,
2003, between Bombardier Capital, Inc. and the Agent, as it may be
amended, supplemented or otherwise modified from time to time with the consent
of the Majority Lenders and (c) any other intercreditor agreement with any
other Floor Plan Lender entered into by the Agent, with the consent of the Majority
Lenders.

 

“Interest
Period” means, as to any LIBOR Rate Loan, the period commencing on the
Funding Date of such Loan or on the Continuation/Conversion Date on which the
Loan is converted into or continued as a LIBOR Rate Loan, and ending on the
date one, two, three or six months thereafter as selected by the Borrower in
its Notice of Borrowing, in the form attached hereto as Exhibit D,
or Notice of Continuation/Conversion, in the form attached hereto as Exhibit E,
provided that:

 

(a)                                  if
any Interest Period would otherwise end on a day that is not a Business Day,
that Interest Period shall be extended to the following Business Day unless the
result of such extension would be to carry such Interest Period into another
calendar month, in which event such Interest Period shall end on the preceding
Business Day;

 

(b)                                 any
Interest Period pertaining to a LIBOR Rate Loan that begins on the last
Business Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period)
shall end on the last Business Day of the calendar month at the end of such
Interest Period; and

 

(c)                                  no
Interest Period shall extend beyond the Stated Termination Date.

 

A-21

 

“Interest Rate”
means each or any of the interest rates, including the Default Rate, set forth
in Section 2.1.

 

“Inventory”
means, with respect to any Person, all of such Person’s now owned and hereafter
acquired inventory, goods and merchandise, wherever located, to be furnished
under any contract of service or held for sale or lease, all returned goods,
raw materials, work-in-process, finished goods (including embedded software),
other materials and supplies of any kind, nature or description which are used
or consumed in such Person’s business or used in connection with the packing,
shipping, advertising, selling or finishing of such goods, merchandise, and all
documents of title or other Documents representing them.

 

“Investment
Property” means, with respect to any Person, all of such Person’s right
title and interest in and to any and all: (a) securities whether
certificated or uncertificated; (b) securities entitlements; (c) securities
accounts; (d) commodity contracts; or (e) commodity accounts.

 

“IRS”
means the Internal Revenue Service and any Governmental Authority succeeding to
any of its principal functions under the Code.

 

“Latest
Projections” means the projections most recently received by the Agent
pursuant to Section 5.2(f) of the Existing Credit Facility or
this Agreement.

 

“Lender”
and “Lenders” have the meanings specified in the introductory paragraph
hereof and shall include any Revolving Credit Lender and the Agent to the
extent of any Agent Advance outstanding and the Bank to the extent of any
Non-Ratable Loan outstanding; provided that no such Agent Advance or
Non-Ratable Loan shall be taken into account in determining any Lender’s Pro
Rata Share.

 

“Lender
Term Loan” has the meaning specified in Section 1.3(a).

 

“Letter of Credit”
has the meaning specified in Section 1.4(a).

 

“Letter of
Credit Fee” has the meaning specified in Section 2.6.

 

“Letter of
Credit Issuer” means the Bank, any Affiliate of the Bank or any other
financial institution that issues any Letter of Credit pursuant to this
Agreement.

 

“LIBOR Rate”
means, for any Interest Period, with respect to LIBOR Rate Loans, the rate of
interest per annum determined pursuant to the following formula:

 

	
  LIBOR Rate

  	
  =

  	
  Offshore Base Rate

  	
   

  	
   

  
	
   

  	
   

  	
  1.00 - Eurodollar Reserve Percentage

  	
   

  	
   

  

 

Where,

 

“Offshore
Base Rate” means the rate per annum appearing on Telerate Page 3750
(or any successor page) as the London interbank offered rate for deposits in
Dollars at approximately 11:00 a.m. (London time) two Business Days prior
to the first day of such Interest Period for a term comparable to such Interest
Period.  If for any 

 

A-22

 

reason such
rate is not available, the Offshore Base Rate shall be, for any Interest
Period, the rate per annum appearing on Reuters Screen LIBO Page as the
London interbank offered rate for deposits in Dollars at approximately 11:00 a.m.
(London time) two Business Days prior to the first day of such Interest Period
for a term comparable to such Interest Period; provided, however,
if more than one rate is specified on Reuters Screen LIBO Page, the applicable
rate shall be the arithmetic mean of all such rates.  If for any reason none of the foregoing rates
is available, the Offshore Base Rate shall be, for any Interest Period, the
rate per annum determined by the Agent as the rate of interest at which dollar
deposits in the approximate amount of the LIBOR Rate Loan comprising part of
such Borrowing would be offered by the Bank’s London Branch to major banks in
the offshore dollar market at their request at or about 11:00 a.m. (London
time) two Business Days prior to the first day of such Interest Period for a
term comparable to such Interest Period.

 

“Eurodollar
Reserve Percentage” means, for any day during any Interest Period, the
reserve percentage (expressed as a decimal, rounded upward to the next 1/100th
of 1%) in effect on such day applicable to member banks under regulations
issued from time to time by the Federal Reserve Board for determining the
maximum reserve requirement (including any emergency, supplemental or other
marginal reserve requirement) with respect to Eurocurrency funding (currently
referred to as “Eurocurrency liabilities”).  The Offshore Rate for each outstanding LIBOR
Rate Loan shall be adjusted automatically as of the effective date of any
change in the Eurodollar Reserve Percentage.

 

“LIBOR Rate
Loans” means, collectively, the LIBOR Revolving Loans and the LIBOR Lender
Term Loans.

 

“LIBOR
Revolving Loan” means a Revolving Loan during any period in which it bears
interest based on the LIBOR Rate.

 

“LIBOR
Lender Term Loan” means any portion of a Lender Term Loan during any period
in which such portion bears interest based on the LIBOR Rate.

 

“Lien”
means:  (a) 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 a security interest, charge, claim, or lien arising
from a mortgage, deed of trust, encumbrance, pledge, hypothecation, assignment,
deposit arrangement, agreement, security agreement, conditional sale or trust
receipt or a lease, consignment or bailment for security purposes; (b) to
the extent not included under clause (a), any reservation, exception, encroachment,
easement, right-of-way, covenant, condition, restriction, lease or other title
exception or encumbrance affecting property; and (c) any contingent or
other agreement to provide any of the foregoing.

 

“Loan
Account” means, as applicable the loan account of FMC or FRC, each of which
accounts shall be maintained by the Agent.

 

A-23

 

“Loan
Documents” means this Agreement, the Revolving Notes, the Term Loan Notes,
the Patent and Trademark Agreements, the Copyright Security Agreement, the
Security Agreement, the Canadian Security Agreement, the Pledge Agreement, the
Mortgages, the Parent Guaranty, FMC Guaranty, the FRC Guaranty, the Subsidiary
Guaranty, the Contribution Agreement, the Intercreditor Agreements, any Hedge
Agreement entered into with a Lender and any other agreements, instruments, and
documents heretofore, now or hereafter evidencing, securing, guaranteeing or
otherwise relating to the Obligations, the Collateral, or any other aspect of the
transactions contemplated by this Agreement.

 

“Loan
Parties” means collectively, the Borrowers and the Guarantors.

 

“Loans”
means, collectively, all loans and advances provided for in Article 1.

 

“Majority
Lenders” means at any date of determination Lenders whose Pro Rata Shares
aggregate more than 50%.

 

“Majority
Revolving Lenders” means at any time Revolving Credit Lenders whose Pro
Rata Shares aggregate more than 50%.

 

“Majority
Term Lenders” means at any time Term Lenders whose Pro Rata Shares aggregate
more than 50%.

 

“Manufactured
Housing Inventory Limit” has the meaning provided in Section 1.2(a)(i).

 

“Margin
Stock” means “margin stock” as such term is defined in Regulation T, U or X
of the Federal Reserve Board.

 

“Material
Adverse Effect” means (a) a material adverse change in, or a material
adverse effect upon, the operations, business, properties, or condition
(financial or otherwise) of Fleetwood and its Subsidiaries, taken as a whole, (b) a
material impairment of the ability of a Borrower or any Affiliate of a Borrower
to perform under any Loan Document to which it is a party; or (c) a
material adverse effect upon the legality, validity, binding effect or
enforceability against any Loan Party of any Loan Document to which it is a
party.

 

“Material
Contracts” means the agreements, contracts and other documents as filed
with the Securities Exchange Commission as exhibits to Fleetwood’s Form 10-K
for the fiscal year ended April 27, 2003, Form 10-Q for the
quarterly period ended January 25, 2004, and any of Fleetwood’s Forms 10-K
or Forms 10-Q filed after the date hereof, in each case, in accordance
with Item 601(b)(4) and Item 601(b)(10) (or their equivalents) of
Regulation S-K, as promulgated under the Securities Exchange Act of 1934 as
amended.

 

“Maximum
Inventory Loan Amount” means (i) from and including May 1 through
and including November 30 of each calendar year, $110,000,000 and (ii) from
and including December 1 through and including April 30 of each
calendar year, $135,000,000 in each case for both FMC and FRC combined.

 

“Maximum
Rate” has the meaning specified in Section 2.3.

 

A-24

 

“Maximum
Real Estate Loan Amount” means $15,000,000, reducing on the first day of
each Fiscal Quarter commencing October 31, 2005 by an amount equal to
$750,000, and as further reduced from time to time pursuant to Section 3.4(b).

 

“Maximum
Revolver Amount” means $190,000,000; provided that the Maximum Revolver
Amount shall be $215,000,000 during the period from and including December 1
through and including April 30 of each calendar year.

 

“Minimum
Liquidity Event” means, as of any calculation date, either (a) Fleetwood,
on a consolidated basis, has Fleetwood Liquidity of $90,000,000 or less for the
calendar month immediately preceding such calculation date, (b) the
Borrowers (collectively) have Borrower Liquidity of $60,000,000 or less for the
calendar month immediately preceding such calculation date or (c) for the
calendar month immediately preceding such calculation date, the average daily
Aggregate Availability during such calendar month was $20,000,000 or less.

 

“Mortgages”
means and includes any and all of the mortgages, deeds of trust, deeds to
secure debt, assignments and other instruments executed and delivered by any
Loan Party to or for the benefit of the Agent by which the Agent, on behalf of
the Lenders, acquires a Lien on the Real Estate or a collateral assignment of a
Loan Party’s interest under leases of Real Estate, and all amendments,
modifications and supplements thereto.

 

“Mortgage
Amendment” has the meaning provided in Section 7.28(b).

 

“Mortgaged
Property” means the Real Estate identified as such on the Addendum to Schedule 6.11
attached hereto (as substituted pursuant to Section 2.8 from time
to time).  For the avoidance of doubt,
following the substitution of any Replaced Property with any Substituted
Property in accordance with Section 2.8, such Replaced Property shall no
longer constitute Mortgaged Property for any purpose hereunder and Schedule 6.11
shall be deemed modified accordingly.

 

“Multi-employer
Plan” means a “multi-employer plan” as defined in Section 4001(a)(3) of
ERISA which is or was at any time during the current year or the immediately
preceding six (6) years contributed to by Fleetwood or any ERISA
Affiliate.

 

“Net Amount
of Eligible Accounts” means, at any time, the gross amount of Eligible
Accounts less sales, excise or similar taxes, and less returns, discounts,
claims, credits allowances, accrued rebates, offsets, deductions, counterclaims,
disputes and other defenses of any nature at any time issued, owing, granted,
outstanding, available or claimed.

 

“Net
Proceeds” has the meaning specified in Section 3.4(d).

 

“New
Capital Proceeds” means the amount of cash proceeds received by Fleetwood
after the Closing Date from issuance of its Capital Stock, net of (A) commissions
and other customary transaction costs, fees and expenses properly attributable
to such transaction and payable by a Loan Party in connection therewith (other
than any amounts payable to an Affiliate), (B) transfer taxes payable in
connection with such transaction, and (C) an appropriate reserve for
income taxes in accordance with GAAP in connection therewith.

 

A-25

 

“New Lender”
has the meaning specified in Section 13.19.

 

“New Lender
Effective Date” has the meaning specified in Section 13.19.

 

“New
Subordinated Debentures” means unsecured, convertible subordinated
debentures issued by Fleetwood on January 10, 2002, in an original
principal amount not to exceed $40,000,000.

 

“Non-Consenting
Lender” has the meaning specified in Section 11.1(c)(i).

 

“Non-Ratable
Loan” and “Non-Ratable Loans” have the meanings specified in Section 1.2(h).

 

“Notes”
means the Revolving Loan Notes and the Term Loan Notes.

 

“Notice of
Borrowing” has the meaning specified in Section 1.2(b).

 

“Notice of
Continuation/Conversion” has the meaning specified in Section 2.2(b).

 

“Obligations”
means, with respect to any Loan Party, all present and future loans, advances,
liabilities, obligations, covenants, duties, and debts owing by such Loan Party
to the Agent and/or any Lender, arising under or pursuant to this Agreement or
any of the other Loan Documents, whether or not evidenced by any note, or other
instrument or document, whether arising from an extension of credit, opening of
a letter of credit, acceptance, loan, guaranty, indemnification or otherwise,
whether direct or indirect, absolute or contingent, due or to become due,
primary or secondary, as principal or guarantor, and including all principal,
interest, (including any interest which accrues after the filing of a
proceeding under the Bankruptcy Code or which would have accrued but for such
filing) charges, expenses, fees, attorneys’ fees, filing fees and any other
sums chargeable to the Borrowers hereunder or under any of the other Loan
Documents.  “Obligations” includes,
without limitation, (a) all debts, liabilities, and obligations now or
hereafter arising from or in connection with the Letters of Credit and (b) all
debts, liabilities and obligations now or hereafter arising from or in
connection with Bank Products.

 

“Original
Closing Date” means July 27, 2001.

 

“Original
Credit Agreement” means that certain Credit Agreement dated as of the Original
Closing Date, by and among Fleetwood, the Borrowers, the Lenders, the Agent and
the other parties thereto, as amended.

 

“Other
Taxes” means any with respect to any Lender or the Agent present or future
stamp or documentary taxes or any other excise or property taxes, charges or
similar levies which arise from any payment made hereunder or from the
execution, delivery or registration of, or otherwise with respect to, this
Agreement or any other Loan Documents but excluding, in the case of each Lender
and the Agent, such taxes (including income, franchise or branch profits taxes)
as are imposed on or measured by the Agent’s or each Lender’s net income in any
jurisdiction (whether federal, state or local and including any political
subdivision thereof) under the laws of which such Lender or the Agent, as the
case may be, is organized or maintains a lending office.

 

A-26

 

“Parent
Guaranty” means the Second Amended and Restated Parent Guaranty dated as of
the First Amendment and Restatement Date from Fleetwood to the Agent, for its
benefit and the benefit of the Lenders.

 

“Participant”
means any Person who shall have been granted the right by any Lender to
participate in the financing provided by such Lender under this Agreement and
the other Loan Documents, and who shall have entered into a participation
agreement in form and substance satisfactory to such Lender.

 

“Patent”
has the meaning specified in Patent and Trademark Agreements.

 

“Patent and Trademark Agreements”
means collectively, the Patent Security Agreement(s) and the Trademark Security
Agreement(s), executed and delivered by any Loan Party to the Agent to evidence
and perfect the Agent’s security interest in the present and future patents,
trademarks, and related licenses and rights of such Loan Party, for the benefit
of the Agent and the Lenders.

 

“Payment
Account” means each bank account established pursuant to the Security
Agreement, to which the proceeds of Accounts and other Collateral are deposited
or credited, and which is maintained in the name of the Agent or of FMC, FRC or
any other Loan Party, as applicable, as the Agent may determine, on terms
acceptable to the Agent.

 

“PBGC”
means the Pension Benefit Guaranty Corporation or any Governmental Authority
succeeding to the functions thereof.

 

“Pending
Revolving Loans” means, at any time, the aggregate principal amount of all
Revolving Loans requested in any Notice of Borrowing received by the Agent
which have not yet been advanced.

 

“Pension
Plan” means a pension plan (as defined in Section 3(2) of ERISA)
subject to Title IV of ERISA which Fleetwood or any ERISA Affiliate sponsors,
maintains, or to which it makes, is making, or is obligated to make
contributions, or in the case of a Multi-employer Plan has made contributions
at any time during the immediately preceding six (6) plan years.

 

“Permitted Liens”
means:

 

(a)                                  Liens
for taxes not delinquent or statutory Liens for taxes in an amount not to
exceed $3,000,000 provided that the payment of such taxes which are due and
payable is being contested in good faith and by appropriate proceedings
diligently pursued and as to which adequate financial reserves have been
established on books and records of Fleetwood and its Subsidiaries and a stay
of enforcement of any such Lien is in effect;

 

(b)                                 the
Agent’s Liens;

 

(c)                                  Liens
consisting of deposits made in the ordinary course of business in connection
with, or to secure payment of, obligations under worker’s 

 

A-27

 

compensation,
unemployment insurance, social security and other similar laws, or to secure
the performance of bids, tenders or contracts (other than for the repayment of
Debt) or to secure indemnity, performance or other similar bonds for the performance
of bids, tenders or contracts (other than for the repayment of Debt) or to
secure statutory obligations (other than liens arising under ERISA or
Environmental Liens) or surety or appeal bonds, or to secure indemnity,
performance or other similar bonds;

 

(d)                                 Liens
securing the claims or demands of materialmen, mechanics, carriers,
warehousemen, landlords and other like Persons, provided that if any
such Lien arises from the nonpayment of such claims or demand when due, such
claims or demands do not exceed $1,000,000 in the aggregate at any time;

 

(e)                                  Liens
constituting encumbrances in the nature of reservations, exceptions,
encroachments, easements, rights of way, covenants running with the land, and
other similar title exceptions or encumbrances affecting any Real Estate; provided
that they do not in the aggregate materially detract from the value of the Real
Estate or materially interfere with its use in the ordinary conduct of the
Borrower’s business;

 

(f)                                    Liens
arising from judgments and attachments in connection with court proceedings provided
that the attachment or enforcement of such Liens would not result in an Event
of Default hereunder and such Liens are being contested in good faith by
appropriate proceedings, adequate reserves have been set aside and no material
Property is subject to a material risk of imminent loss or forfeiture and a
stay of execution pending appeal or proceeding for review is in effect;

 

(g)                                 Liens
on the assets of any Loan Party described on Schedule 6.9 hereto
securing the Debt identified on Schedule 6.9 hereto as “Secured
Debt” and refinancings, renewals and extensions thereof permitted pursuant to Section 7.13(f);

 

(h)                                 Interests
of lessors under operating leases;

 

(i)                                     other
Liens securing Debt not in excess of $1,000,000 in the aggregate at any time
outstanding;

 

(j)                                     Liens
on assets of the Excluded Retail Subsidiaries securing Floor Plan Debt
permitted hereunder; provided that such Liens shall be released in
accordance with Section 7.9(f);

 

(k)                                  deposits
by Retail and/or the Excluded Retail Subsidiaries in a reserve account with the
Floor Plan Lender; provided that such Liens shall be released in
accordance with Section 7.9(f);

 

(l)                                     Liens
on assets of the Excluded Subsidiaries, as long as the holder of such Lien has
no recourse to any Loan Party or its assets;

 

(m)                               Liens
securing Debt permitted under Section 7.13(d), (e), (s),
(t), and (u); provided that such Liens securing
Debt permitted under Section 7.13 (u) shall be released in
accordance with Section 7.9(f); and

 

A-28

 

(n)                                 bankers
liens and rights of set off with respect to customary depositary arrangements
entered into in the ordinary conduct of business.

 

“Permitted
Released Collateral” has the meaning provided in Section 2.7(d).

 

“Person”
means any individual, sole proprietorship, partnership, limited liability
company, joint venture, trust, unincorporated organization, association,
corporation, Governmental Authority, or any other entity.

 

“Plan”
means an employee benefit plan (as defined in Section 3(3) of ERISA)
which Fleetwood or any ERISA Affiliate sponsors or maintains or to which
Fleetwood or any ERISA Affiliate makes, is making, or is obligated to make
contributions and includes any Pension Plan.

 

“Pledge
Agreement” means the Pledge Agreement dated as of the Original Closing Date
by the Loan Parties in favor of the Agent, for the benefit of the Agent and the
Lenders.

 

“Property
Release” has the meaning provided in Section 2.7.

 

“Property
Substitution” has the meaning provided in Section 2.8.

 

“Proprietary
Rights” means, as to any Person, all of such Person’s now owned and
hereafter arising or acquired:  licenses,
franchises, permits, patents, patent rights, copyrights, works which are the
subject matter of copyrights, trademarks, service marks, trade names, trade
styles, patent, trademark and service mark applications, and all licenses and
rights related to any of the foregoing, including those patents, trademarks,
service marks, trade names and copyrights set forth on Schedule 6.12
to the Existing Credit Agreement, as amended prior to the Closing Date, and all
other rights under any of the foregoing, all extensions, renewals, reissues,
divisions, continuations, and continuations-in-part of any of the foregoing,
and all rights to sue for past, present and future infringement of any of the
foregoing.

 

“Pro Rata
Share” of a Lender means (a) with respect to all provisions relating
to Revolving Loans or Letters of Credit or the Revolving Credit Commitments, a
fraction (expressed as a percentage), the numerator of which is the amount of
such Lender’s Revolving Credit Commitment and the denominator of which is the
Revolving Credit Commitments of all Lenders, or if no Revolving Credit
Commitment is outstanding, a fraction (expressed as a percentage), the
numerator of which is the Aggregate Revolver Outstandings owed to such Lender
and the denominator of which is the Aggregate Revolver Outstandings; (b) with
respect to all provisions relating to the Term Loan, a fraction (expressed as a
percentage), the numerator of which is the outstanding Lender Term Loan of such
Term Lender and the denominator of which is the outstanding Term Loan; and (c) otherwise,
a fraction (expressed as a percentage), the numerator of which is the amount of
such Lender’s Revolving Credit Commitment plus the outstanding Lender Term
Loans of such Lender and the denominator of which is the Revolving Credit
Commitments of all Lenders plus the outstanding Term Loan, or if no Revolving
Credit Commitment is outstanding, a fraction (expressed as a percentage), the
numerator of which is the Aggregate Revolver Outstandings of such Lender plus
the outstanding Lender Term Loans of 

 

A-29

 

such Lender
and the denominator of which is the Aggregate Revolver Outstandings and the
outstanding Term Loan.

 

“Qualified
Cash Equivalents” means, as of any date for any Person, the balance of cash
and marketable securities held by such Person in the United States on such
date, which cash and marketable securities are held in an account with the
Agent and are subject to a first priority, perfected Lien in favor of the Agent
and the use of which is not otherwise restricted, by law or by agreement.

 

“RCI
Obligations” means any obligations of FVC owing to Resort Condominiums
International, LLC, or its affiliates in respect of payment for services
rendered by Resort Condominiums International, LLC or its affiliates, to FVC or
its affiliates.

 

“Real
Estate” means, as to any Person, all of such Person’s now or hereafter
owned or leased estates in real property, including, without limitation, all
fees, leaseholds and future interests, together with all of such Person’s now
or hereafter owned or leased interests in the improvements thereon, the fixtures
attached thereto and the easements appurtenant thereto.

 

“Real
Estate Subfacility Assets” means the Real Estate identified as such on the
Addendum to Schedule 6.11 attached hereto (as substituted pursuant
to Section 2.8 from time to time). 
For the avoidance of doubt, following the substitution of any Replaced
Property with any Substituted Property in accordance with Section 2.8,
such Replaced Property shall no longer constitute Real Estate Subfacility
Assets for any purpose hereunder and Schedule 6.11 shall be deemed
modified accordingly.

 

“Release”
means a release, spill, emission, leaking, pumping, injection, deposit,
disposal, discharge, dispersal, leaching or migration of a Contaminant into the
indoor or outdoor environment or into or out of any Real Estate or other
property, including the movement of Contaminants through or in the air, soil,
surface water, groundwater or Real Estate or other property.

 

“Release
Date” has the meaning provided in Section 2.7.

 

“Released
FRC Borrower” has the meaning specified in Section 3.11.

 

“Replaced
Property” has the meaning provided in Section 2.8.

 

“Reportable
Event” means, any of the events set forth in Section 4043(b) of
ERISA or the regulations thereunder, other than any such event for which the 30-day
notice requirement under ERISA has been waived in regulations issued by the
PBGC.

 

“Repurchase
Obligations” means the liabilities of Fleetwood to retail floor plan
lenders to repurchase Inventory sold by FMC to retail dealers.

 

“Required
Lenders” means at any time Lenders whose Pro Rata Shares aggregate more
than 66-2/3%.

 

A-30

 

“Required
Revolving Lenders” means at any time Revolving Credit Lenders whose Pro
Rata Shares aggregate more than 66-2/3%.

 

“Required
Term Lenders” means at any time when there are two or fewer Term Lenders,
all Term Lenders, and at all other times, Term Lenders whose Pro Rata Shares
aggregate at least 66-2/3%.

 

“Requirement
of Law” means, as to any Person, any law (statutory or common), treaty, rule or
regulation or determination of an arbitrator or of a Governmental Authority, in
each case applicable to or binding upon the Person or any of its property or to
which the Person or any of its property is subject.

 

“Reserves”
means reserves that limit the availability of credit hereunder, consisting of
reserves against Availability, Aggregate Availability, Eligible Accounts, or
Eligible Inventory or Real Estate Subfacility Assets established by the Agent
in good faith from time to time in the Agent’s reasonable credit judgment.  Without limiting the generality of the
foregoing, the following reserves shall be deemed to be a reasonable exercise
of the Agent’s credit judgment:  (a) Bank
Product Reserves, (b) reserves for rent at leased locations subject to
statutory or contractual landlord liens, and where the Agent has not received
an acceptable agreement from the landlord, in an amount equal to three months
rent for each such location, (c) Environmental Compliance Reserves, and (d) warehousemen’s
or bailees’ charges in an amount equal to three months charges due to such
warehouseman or bailee.

 

“Responsible
Officer” means, as to any Loan Party, the chief executive officer or the
president, or any other officer having substantially the same authority and
responsibility; or, with respect to compliance with financial covenants and the
preparation of the Borrowing Base Certificate, the chief financial officer,
vice president-treasurer or vice president-controller, or any other officer of
such Loan Party having substantially the same authority and responsibility.

 

“Restricted Investment”
means any acquisition of property in exchange for cash or other property,
whether in the form of an acquisition of stock, Debt, or other indebtedness or
obligation, or the purchase or acquisition of any other property, or a loan,
advance, capital contribution, or subscription, except the following:  (a) acquisitions of (i) Equipment
to be used in the business so long as the acquisition costs thereof constitute
Capital Expenditures permitted hereunder and (ii) Real Estate to be used
in the business so long as the acquisition costs are deemed “Capital
Expenditures” for purposes of Section 7.22 hereof, and, in each
case, if financed, are financed in amounts not in excess of the amounts
permitted hereby; (b) acquisitions of Inventory in the ordinary course of
business; (c) acquisitions of current assets acquired in the ordinary
course of business; (d) direct obligations of the United States of
America, or any agency thereof, or obligations guaranteed by the United States
of America, provided that such obligations mature within one year from
the date of acquisition thereof; (e) acquisitions of certificates of
deposit maturing within one year from the date of acquisition, bankers’ acceptances,
Eurodollar bank deposits, or overnight bank deposits, in each case issued by,
created by, or with a bank or trust company organized under the laws of the
United States of America or any state thereof having capital and surplus
aggregating at least $100,000,000; (f) acquisitions of commercial paper
given a rating of “A2” or better by Standard & Poor’s Corporation or “P2”
or better by Moody’s Investors Service, Inc. and maturing not more than 90

 

A-31

 

days from the
date of creation thereof; (g) Hedge Agreements; (h) extensions of
credit in the nature of accounts receivable or notes receivable arising from
the sale or lease of goods or services in the ordinary course of business; (i) any
assets received in satisfaction of judgments against third parties, foreclosure
of Liens or good faith settlement of litigation, disputes or debts; (j)
operating leases in the ordinary course of business; (k) licenses in the
ordinary course of business consistent with past practices and (l) intercompany
Debt of Subsidiaries of Fleetwood otherwise permitted under this Agreement.

 

“Retail”
has the meaning given such term in the preamble.

 

“Revolving
Credit Commitment” means, at any time with respect to a Lender, the principal
amount set forth beside such Lender’s name under the heading “Revolving
Credit Commitment” on Schedule 1.2 attached to the Agreement or
on the signature page of the Assignment and Acceptance pursuant to which
such Lender became a Lender hereunder in accordance with the provisions of Section 11.2,
as such Revolving Credit Commitment may be adjusted from time to time in
accordance with the provisions of Section 11.2 and Section 13.19,
and “Revolving Credit Commitments” means, collectively, the aggregate
amount of the commitments of all Lenders.

 

“Revolving
Credit Lender” means any Lender which has a Revolving Credit Commitment or,
if the Revolving Credit Commitments have been terminated, any Lender which has
any Revolving Loan outstanding or any participation interest in any outstanding
Letter of Credit.

 

“Revolving
Loans” has the meaning specified in Section 1.2 and includes
each Agent Advance and Non-Ratable Loan.

 

“Revolving
Loan Note” and “Revolving Loan Notes” have the meanings specified in
Section 1.2(a)(ii).

 

“Securities
Act” means the Securities Act of 1933 and the rules and regulations
promulgated thereunder.

 

“Security
Agreement” means the Security Agreement dated of the First Amendment and
Restatement Date among the Loan Parties and the Agent for the benefit of the
Agent and the Lenders.

 

“Settlement”
and “Settlement Date” have the meanings specified in Section 12.15(a)(ii).

 

“Solvent”
means, when used with respect to any Person, that at the time of determination:

 

(a)                                  the
assets of such Person (including any contribution rights under any Loan
Document), at a fair valuation, are in excess of the total amount of its debts
(including contingent liabilities); and

 

A-32

 

(b)                                 the
present fair saleable value of its assets is greater than its probable
liability on its existing debts as such debts become absolute and matured; and

 

(c)                                  it
is then able and expects to be able to pay its debts (including contingent
debts and other commitments) as they mature; and

 

(d)                                 it
has capital sufficient to carry on its business as conducted and as proposed to
be conducted.

 

For purposes
of determining whether a Person is Solvent, the amount of any contingent
liability shall be computed as the amount that, in light of all the facts and
circumstances existing at such time, represents the amount that can reasonably
be expected to become an actual or matured liability.

 

“Stated
Termination Date” means July 31, 2007.

 

“Subordinated
Debentures” means Fleetwood’s 6% Convertible Subordinated Debentures due February 15,
2028 in the original principal amount of $296,400,000.

 

“Subordinated
Debt” means the unsecured Debt from time to time outstanding under the
Subordinated Debentures, the New Subordinated Debentures, the 2003 Subordinated
Debentures and the maximum liability of Fleetwood on any subordinated Guaranty
of the Trust Securities.

 

“Subsidiary”
of a Person means any corporation, association, partnership, limited liability
company, joint venture or other business entity of which more than fifty
percent (50%) of the voting Capital Stock, is owned or controlled directly or
indirectly by the Person, or one or more of the Subsidiaries of the Person, or
a combination thereof.  Unless the
context otherwise clearly requires, references herein to a “Subsidiary” refer
to a Subsidiary of Fleetwood.

 

“Subsidiary
Guaranty” means the Second Amended and Restated Subsidiary Guaranty dated
as of the First Amendment and Restatement Date from Subsidiaries of Fleetwood
(other than the Borrowers and the Excluded Subsidiaries) to the Agent, for its
benefit and the benefit of the Lenders.

 

“Substituted
Property” has the meaning provided in Section 2.8.

 

“Substituted
Property Appraisal” has the meaning provided in Section 2.8(d).

 

“Supporting
Letter of Credit” has the meanings specified in Section 1.4(g).

 

“Supporting
Obligations” means all supporting obligations as such term is defined in
the UCC.

 

“Syndication
Agent” means General Electric Capital Corporation.

 

“Taxes”
means, with respect to any Lender or the Agent, any and all present or future
taxes, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect

 

A-33

 

thereto,
excluding, in the case of each Lender and the Agent, (i) such taxes
(including income, franchise or branch profits taxes) as are imposed on or
measured by the Agent’s or each Lender’s net income in any jurisdiction
(whether federal, state or local and including any political subdivision
thereof) under the laws of which such Lender or the Agent, as the case may be,
is organized or maintains a lending office or (ii) in the case of any
Lender that is a “foreign corporation, partnership or trust” within the meaning
of the Code, any withholding tax that is imposed on amounts payable to such
Lender at the time such Lender becomes a party hereto (or designates a new
lending office) or is attributable to such Lender’s failure (other than as a
result of the introduction of any Requirement of Law or any change in any Requirement
of Law or in the interpretation or administration of any Requirement of Law) to
comply with Section 12.10, except to the extent that such Lender
(or its assignor, if any) was entitled, at the time of the designation or a new
lending office (or assignment), to receive additional amounts from the
Borrowers with respect to such withholding taxes pursuant to Article IV
hereof.

 

“Term
Lender” means a Lender which has made a Lender Term Loan, as long as any
portion of such Lender Term Loan is outstanding.

 

“Term Loan”
has the meaning specified in Section 1.3(a).

 

“Term Loan
Collateral” means the Real Estate identified as such on the Addendum to Schedule 6.11
attached hereto (as substituted pursuant to Section 2.8 from time
to time).  For the avoidance of doubt,
following the substitution of any Replaced Property with any Substituted
Property in accordance with Section 2.8, such Replaced Property shall no
longer constitute Term Loan Collateral for any purpose hereunder and Schedule 6.11
shall be deemed modified accordingly.

 

“Termination
Date” means the earliest to occur of (i) the Stated Termination Date, (ii) the
date the Total Facility is terminated either by the Borrowers pursuant to Section 3.2
or by the Majority Lenders pursuant to Section 9.2, (iii) the
date the Agreement is otherwise terminated for any reason whatsoever pursuant
to the terms of the Agreement and (iv) the date the Revolving Credit
Commitments are terminated or have expired.

 

“Texas
Landlord Obligations” means the Obligations of FRC under that certain lease
executed on December 16, 2004 and effective on December 10, 2004, by
and between FRC and Caroline Partners, Ltd.

 

“Total Facility”
has the meaning specified in Section 1.1.

 

“Trademark”
has the meaning specified in Patent and Trademark Agreements.

 

“Trust
Securities” means, collectively, (a) the 6% Convertible Trust
Preferred Securities issued by Fleetwood Trust in February 1998 with a
liquidation preference of $50 per share, guaranteed on a subordinated unsecured
basis by Fleetwood, (b) any convertible preferred securities issued by
Fleetwood Trust in exchange therefore to the extent and only to the extent that
issuance of such securities is permitted under this Agreement, (c) any
additional securities issued by Fleetwood Trust concurrently with, and having
the same terms as, the securities issued in such exchange to the extent and
only to the extent that issuance of such securities is permitted under this
Agreement, (d) the 6% Convertible Trust Common Securities issued by
Fleetwood 

 

A-34

 

Trust to
Fleetwood in February 1998, (e) the convertible preferred securities
issued by Fleetwood Trust concurrently with the issuance of the New
Subordinated Debentures.

 

“UCC”
means the Uniform Commercial Code, as in effect from time to time, of the State
of California or of any other state the laws of which are required as a result
thereof to be applied in connection with the issues of perfection, continuation
or enforcement of security interests.

 

“Unfunded
Pension Liability” means the excess of a Plan’s benefit liabilities under Section 4001(a)(16)
of ERISA, over the current value of that Plan’s assets, determined in
accordance with the assumptions used for funding the Pension Plan pursuant to Section 412
of the Code for the applicable plan year.

 

“Unused
Letter of Credit Subfacility” means an amount equal to $75,000,000 minus
the sum of (a) the aggregate undrawn amount of all outstanding Letters of
Credit plus, without duplication, (b) the aggregate unpaid
reimbursement obligations with respect to all Letters of Credit.

 

“Unused
Line Fee” has the meaning specified in Section 2.5.

 

“Warehouse
Financing Line of Credit” means (a) (I) the line of credit outstanding
under that certain Master Loan and Security Agreement dated as of December 23,
2003, by and between Home One Funding I, as borrower, and Greenwich Capital
Finance Products, Inc., as lender and (II) the line of credit outstanding
under that certain Warehousing Credit and Security Agreement (Manufactured
Housing), dated as of September __, 2004, by and between HomeOne Credit
Corp., a Delaware corporation, as borrower, and Residential Funding
Corporation, a Delaware corporation as lender and (b) any other line of
credit entered into by Finance Co., the proceeds of which are used solely to
either (i) fund loans to retail customers who are purchasing products
manufactured by Fleetwood or its Subsidiaries (or non-Fleetwood product
in the case of resales by Fleetwood or its Subsidiaries of trade-ins, repossessed
homes or other previously owned homes) from (A) Fleetwood, (B) Subsidiaries
of Fleetwood or (C) independent dealers who are, as of the date of the
funding of the loan to the applicable retain customer, purchasing from
Fleetwood or its Subsidiaries new products manufactured by Fleetwood or its
Subsidiaries, or (ii) refinance or restructure loans to retail customers
described in clause (a) of this definition; provided that the
documents and other agreements executed by Fleetwood in connection with such
Warehouse Financing Line of Credit are reasonably satisfactory in form and
substance to the Agent.

 

“Weekly
Borrowing Base Certificate” has the meaning specified in Section 5.2(l).

 

“Wells Fargo
Guaranty and Support Agreement” means that certain
guaranty and support agreement, dated as of                        ,
2005, by Fleetwood Enterprises Inc., a Delaware corporation, to and for the
benefit of Wells Fargo Funding, Inc., a Minnesota corporation pursuant to
which Fleetwood Enterprises, Inc. has guaranteed the timely payment of any
amounts owing under the Instruments (as defined in the Wells Fargo Guaranty and
Support Agreement).

 

A-35

 

Accounting Terms.  Any accounting term used in the Agreement
shall have, unless otherwise specifically provided herein, the meaning
customarily given in accordance with GAAP, and all financial computations in
the Agreement shall be computed, unless otherwise specifically provided
therein, in accordance with GAAP as consistently applied and using the same
method for inventory valuation as used in the preparation of the Financial
Statements.

 

Interpretive
Provisions.

 

(a)                                  The
meanings of defined terms are equally applicable to the singular and plural
forms of the defined terms.

 

(b)                                 The
words “hereof,” “herein,” “hereunder” and similar words refer to the Agreement
as a whole and not to any particular provision of the Agreement; and
Subsection, Section, Schedule and Exhibit references are to the
Agreement unless otherwise specified.

 

(c)                                  (i)                                     The
term “documents” includes any and all instruments, documents, agreements,
certificates, indentures, notices and other writings, however evidenced.

 

(ii)                                  The
term “including” is not limiting and means “including without limitation.”

 

(iii)                               In
the computation of periods of time from a specified date to a later specified
date, the word “from” means “from and including,” the words “to” and “until”
each mean “to but excluding” and the word “through” means “to and including.”

 

(iv)                              The
word “or” is not exclusive.

 

(d)                                 Unless
otherwise expressly provided herein, (i) references to agreements
(including the Agreement) and other contractual instruments shall be deemed to
include all subsequent amendments and other modifications thereto, but only to
the extent such amendments and other modifications are not prohibited by the
terms of any Loan Document, and (ii) references to any statute or
regulation are to be construed as including all statutory and regulatory
provisions consolidating, amending, replacing, supplementing or interpreting
the statute or regulation.

 

(e)                                  The
captions and headings of the Agreement and other Loan Documents are for
convenience of reference only and shall not affect the interpretation of the
Agreement.

 

(f)                                    The
Agreement and other Loan Documents may use several different limitations, tests
or measurements to regulate the same or similar matters.  All such limitations, tests and measurements
are cumulative and shall each be performed in accordance with their terms.

 

(g)                                 For
purposes of Section 9.1, a breach of a financial covenant contained
in Sections 7.22 or 7.24 shall be deemed to have occurred as of any
date of determination thereof by the Agent or as of the last day of any
specified measuring period, regardless of when the Financial Statements
reflecting such breach are delivered to the Agent.

 

A-36

 

(h)                                 The
Agreement and the other Loan Documents are the result of negotiations among and
have been reviewed by counsel to the Agent, Fleetwood, the Borrowers and the
other parties, and are the products of all parties.  Accordingly, they shall not be construed
against the Lenders or the Agent merely because of the Agent’s or Lenders’
involvement in their preparation.

 

A-37Exhibit 10.14

 

EMPLOYMENT
AGREEMENT

 

This Employment Agreement (this “Agreement”)
is effective as of March 8, 2005 (the “Effective Date”), and is entered
into by and between Elden L. Smith,
an individual (“Executive”), and Fleetwood Enterprises, Inc., a Delaware
corporation (the “Company”).

 

R E C I T A L S

 

WHEREAS, by entering into this Agreement, the
terms of Executive’s employment with the Company shall be governed by the terms
and conditions of this Agreement and any prior agreement between Executive and
the Company or any of the Company’s affiliated entities relating to Executive’s
employment with the Company or any of its affiliated entities shall be
superseded by the terms of this Agreement except to the extent set forth
herein.

 

NOW, THEREFORE, in consideration of the
foregoing, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties hereto, the parties
hereto agree as follows:

 

A G R E E M E N T

 

1.                                      Employment.  As of the Effective Date, the Company hereby
employs Executive to serve in the capacity of President and Chief Executive
Officer..  The Company’s Board of
Directors (the “Board”) may provide other designations of title to Executive as
the Board, in their discretion, may deem appropriate.

 

Executive agrees to perform the duties and
functions as assigned  by the Board of
Directors.  Except for legal holidays,
vacations and absences due to temporary illness, Executive shall devote his
time, attention and energies to the business of the Company on a full-time
basis.  Executive represents and warrants
to the Company that he is under no restriction, limitation or other prohibition
to perform his duties as described herein.

 

2.                                      Employment Compensation And Benefits.

 

(a)                                  Base Salary.  Executive’s initial base salary shall be at
the annual rate of eight hundred seventy three thousand (Dollars) ($873,000.00)
(the “Base Salary”), which shall be payable at least as frequently as monthly
and subject to deductions and withholdings required by applicable law and as
customary in respect of the Company’s salaried employees.  The Company, on the basis of Executive’s
performance and the Company’s financial success and progress, shall review this
salary level at least annually.

 

(b)                                 Incentive Compensation.  As additional compensation to provide
incentives for Executive to extend efforts which will assist in increasing the
profits of the Company, Executive shall be eligible to receive incentive
compensation based on achieving individual and organizational performance
objectives in accordance with the terms and conditions of the

 

 

Company’s management
compensation plan, implemented at the beginning of fiscal year 2002, and as may
be modified from time to time.

 

(c)                                  Vacation.  Executive shall be entitled to four weeks of
vacation in accordance with the Company’s vacation policies in effect during
the term of this Agreement.

 

(d)                                 Expense
Reimbursement.  The Company shall
reimburse Executive for all reasonable amounts actually expended by Executive
in the course of performing his duties for the Company and in accordance with
any Company-established guidelines where Executive tenders receipts or other
documentation reasonably substantiating the amounts as required by the Company.

 

(e)                                  Other Benefits.  Except as otherwise provided in this
Agreement, Executive shall be entitled to receive all of the rights, benefits
and privileges under any retirement, pension, profit-sharing, group medical
insurance, group dental insurance, group-term life insurance, disability
insurance and other employee benefit plan or program of the Company which may
be now in effect or hereafter adopted, to the extent that Executive is eligible
under the provisions thereof.

 

3.                                      Termination.

 

(a)                                  At Will.  The Company shall employ Executive at will,
and either Executive or the Company may terminate Executive’s employment with
the Company at any time and for any reason, with or without cause.

 

(b)                                 Qualifying
Termination.  Executive’s termination
shall be considered a “Qualifying Termination” unless:

 

(i)                                     Executive
voluntarily terminates his employment with the Company and its affiliated
companies.  Executive, however, shall not
be considered to have voluntarily terminated his employment with the Company
and its affiliated companies if his overall targeted total cash compensation
(base salary plus targeted short term bonus), (TCC), is reduced or adversely
modified in any material respect (unless the reduction or modification
applies generally to similarly situated executives in the Company) or his
position is modified or changed so that he is no longer an officer of the
Company and he elects to terminate his employment within sixty (60) days
following such reduction, modification or change.

 

(ii)                                  The termination is on
account of Executive’s death or Disability. 
“Disability” shall mean a physical or mental incapacity as a result of
which Executive becomes unable to continue the performance of his
responsibilities for the Company and its affiliated companies and which, at
least three (3) months after its commencement, is determined to be total
and permanent by a physician agreed to by the Company and Executive, or in the
event of Executive’s inability to designate a physician, his legal
representative.  In the absence of
agreement between the Company and Executive, each party shall nominate a
qualified physician and the two physicians so nominated shall select a third
physician who shall make the determination as to Disability.

 

2

 

(iii)                               Executive is
involuntarily terminated for “Cause.” 
For this purpose, “Cause” shall include but not be limited to:

 

(a)                                  Executive’s refusal
to comply with a lawful instruction of the Board or Executive’s immediate
supervisor, which refusal is not remedied by Executive within a reasonable
period of time after his receipt of written notice from the Company identifying
the refusal;

 

(b)                                 Executive’s engaging
in gross misconduct;

 

(c)                                  Executive’s act or
acts of personal dishonesty which result in Executive’s personal enrichment at
the expense of the Company or any of its affiliated companies; or

 

(d)                                 Executive’s conviction
of any misdemeanor involving an act of moral turpitude or any felony; or

 

(e)                                  Executive’s failure
to perform his duties in a satisfactory manner. 
Executive must be provided written notice of the unsatisfactory
performance and provided at least ninety (90) days to improve his performance.

 

(iv)                              Executive ceases to be
employed by the Company due to the sale or acquisition of all of the equity
interests in, or substantially all of the assets of, a subsidiary or division
of the Company with which Executive is affiliated, or in connection with the
merger of such a subsidiary or division, and this Agreement is assumed in
writing or by operation of law by such acquiring or surviving person or entity
or an affiliate thereof.

 

(c)                                  Return of Materials.  In the event of any termination of
Executive’s employment for any reason whatsoever, Executive shall promptly
deliver to the Company all Company property, including, but not limited to,
documents, data, and other information pertaining to Confidential Information,
as defined below.  Executive shall not
take with him any documents or other information, or any reproduction, summary or
excerpt thereof, containing or pertaining to any Confidential Information.

 

4.                                      Change in Control.

 

(a)                                  Statement of
Purpose.  The Company believes that
it is in the best interest of the Company and its stockholders to foster
Executive’s objectivity in making decisions with respect to any pending or
threatened Change in Control of the Company and to ensure that the Company will
have the continued dedication and availability of Executive, notwithstanding
the possibility, threat or occurrence of a Change in Control.  The Company believes that these goals can
best be accomplished by alleviating certain of the risks and uncertainties with
regard to Executive’s financial and professional security that would be created
by a pending or threatened Change in Control and that inevitably would distract
Executive and could impair his ability to objectively perform his duties for
and on behalf of the Company. 
Accordingly, the Company believes that it is appropriate and in the best
interest of the Company and its stockholders to provide to Executive compensation
arrangements upon a Change in Control that lessen Executive’s financial risks
and uncertainties and that are reasonably competitive with those of other
corporations.  The purpose of this
provision is to provide that, in the event of a “Change in Control,” Executive
may become entitled to receive certain additional benefits, as described
herein, in the event of his termination under specified circumstances.

 

3

 

(b)                                 Definition of
Change in Control.  As used in this
Agreement, the phrase “Change in Control” shall mean:

 

(i)                                     The acquisition
(other than from the Company) by any person, entity or “group,” within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”) (excluding, for this
purpose, the Company or its subsidiaries, or any executive benefit plan of the
Company or its subsidiaries which acquires beneficial ownership of voting
securities of the Company), of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of twenty-five percent (25%) or more of
either the then-outstanding shares of common stock or the combined voting power
of the Company’s then-outstanding voting securities entitled to vote generally
in the election of directors; or

 

(ii)                                  Individuals who, as
of the date hereof, constitute the Board of Directors of the Company (as of the
date hereof the “Incumbent Board”) cease for any reason to constitute at least
a majority of the Board of Directors of the Company, provided that any person
becoming a director subsequent to the date hereof whose election, or nomination
for election by the Company’s stockholders, is or was approved by a vote of at
least a majority of the directors then comprising the Incumbent Board (other
than an election or nomination of an individual whose initial assumption of
office is in connection with an actual or threatened election contest relating
to the election of the Directors of the Company) shall be, for purposes of this
Agreement, considered as though such person were a member of the Incumbent
Board; or

 

(iii)                               Approval by the
stockholders of the Company of a reorganization, merger or consolidation with
any other person, entity or corporation, other than

 

(x)                                   a merger or consolidation
which would result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of another entity)
more than fifty percent (50%) of the combined voting power of the voting
securities of the Company or such other entity outstanding immediately after
such merger or consolidation, or

 

(y)                                 a merger or
consolidation effected to implement a recapitalization of the Company (or
similar transaction) in which no person acquires twenty-five percent (25%) or
more of the combined voting power of the Company’s then outstanding voting
securities; or

 

(iv)                              Approval by the
stockholders of the Company of a plan of complete liquidation of the Company or
an agreement for the sale or other disposition by the Company of all or
substantially all of the Company’s assets.

 

(c)                                  Certain
Terminations Following Change in Control. 
If, within twelve (12) months following a Change in Control, the
employment of Executive is terminated (i) by the Company, other than for
Cause or by reason of Executive’s death, or Disability or retirement, or (ii) by
Executive for Good Reason, such termination shall be conclusively considered a “Qualifying
Termination” based on Change in Control. 
“Good Reason” means, following a Change in Control,

 

4

 

the occurrence of a change in
Executive’s compensation; health insurance or retirement benefits; job
authority, duties or responsibilities; or location of employment, which in any
such cases is materially adverse to Executive.

 

5.                                      Severance Payment and Benefits.

 

(a)                                  If Executive’s
employment is terminated as a result of a Qualifying Termination as defined in
Sections 3b and 4(c) in conjunction with a Change of Control, and if
Executive delivers a fully-executed release and waiver of all claims against
the Company, then, upon expiration of any applicable revocation period
contained in the release and waiver, the Company shall pay or provide Executive
the following Severance Payment and benefits based on Executive’s eligibility
as described below:

 

(i)                                     As eligible,
Executive shall receive the Severance Payment, as defined below, which shall be
payable in twenty four (24) equal monthly installments beginning on the first
day of the first full month and continuing on the first day of each month
thereafter during the Severance Period. 
The Severance Payment is in lieu of any severance payment benefits which
otherwise may at that time be available under the Company’s applicable policies
and Executive shall be entitled to receive whatever additional severance
payment benefits, if any, for which he may qualify according to the provisions
of this Agreement regarding Change in Control.

 

As used herein, “Monthly Severance Payment”
shall mean the monthly installment amount of the Base Salary of Executive at
the time of Executive’s termination plus the monthly average of the short-term
incentive payments (bonus) actually paid to Executive during the twelve (12)
months immediately preceding Executive’s termination.

 

Each Monthly Severance Payment shall be
subject to deductions and withholdings required by applicable law.  As used herein, “Severance Period” shall mean
that period beginning upon Executive’s Qualifying Termination and ending upon
the lapse thereafter of the number of months equal to the number of Monthly
Severance Payments.

 

(ii)                                  During the Severance
Period and to the extent reasonably practicable, Executive shall be entitled to
receive benefits comparable to those which had been made available to him
(including his family) under the Associate Healthcare Management Plan before
the Qualifying Termination.  To the
extent reasonably practicable, these benefits shall be continued to Executive
in a comparable manner, at a comparable cost and at a comparable level as
provided to Executive (including his family) immediately prior to the
Qualifying Termination.  In some cases,
benefits may be converted to a reasonably similar private plan – provided that
the Company pays all additional costs associated with conversion.  The provision of these benefits shall be
earlier terminated or reduced, as applicable, if and to the extent Executive
receives comparable benefits as a result of concurrent coverage through another
program.  Participation in all other
benefits plans including group life insurance, personal accident insurance, and
disability insurance, etc., will cease as of the date of termination.

 

5

 

(iii)                               Any and all of Executive’s
unvested stock options shall immediately become fully vested and exercisable
according to the terms and conditions contained in the equity incentive plan(s)
pursuant to which such options were granted.

 

(b)                                 In the event that
Executive becomes entitled to receive a Severance Payment in accordance with
the provisions of this Section 5(b), and if such Severance Payment and any
other benefits or payments (including transfers of property) that Executive
receives, or is to receive, pursuant to this Agreement or any other agreement,
plan or arrangement with the Company in connection with a Change in Control of
the Company (“Other Benefits”) shall be subject to the tax imposed pursuant to Section 4999,
or any successor thereto, of the Internal Revenue Code of 1986, as amended,
(the “Code”) or any comparable provision of state law (an “Excise Tax”), the
following rules shall apply:

 

(i)                                     The Company shall
pay to Executive, within thirty (30) days after the Executive’s Qualifying
Termination, an additional amount (the “Gross-Up Payment”) such that the net
amount retained by Executive, after deduction of any Excise Tax with respect to
the Severance Payment or the Other Benefits and any federal, state, and local
income tax, FICA tax, and Excise Tax upon such Gross-Up Payment, is equal to
the amount that would have been retained by Executive if such Excise Tax were
not applicable.  It is intended that
Executive shall not suffer any loss or expense resulting from the assessment of
any Excise Tax or the Company’s reimbursement of Executive for payment of any
such Excise Tax.

 

(ii)                                  For purposes of
determining whether any of the Severance Payments or Other Benefits will be
subject to an Excise Tax and the amount of such Excise Tax, (i) any other
payments or benefits received or to be received by Executive in connection with
a Change in Control of the Company or Executive’s termination of employment
(whether pursuant to the terms of this Agreement or any other plan, arrangement
or agreement with the Company, any person whose actions result in a Change in
Control or any person affiliated with the Company or such person) shall be
treated as “parachute payments” within the meaning of Section 280G(b)(2) of
the Code (or any successor thereto), and all “excess parachute payments” within
the meaning of Section 280G(b)(1) of the Code (or any successor
thereto) shall be treated as subject to the Excise Tax, unless in the opinion
of tax counsel selected by the Company’s independent auditors and acceptable to
Executive such other payments or benefits (in whole or in part) do not
constitute parachute payments, or such excess parachute payments (in whole or
in part) represent reasonable compensation for services actually rendered
within the meaning of Section 280G(b)(4) of the Code (or any
successor thereto), (ii) the amount of the Severance Payments and Other
Benefits which shall be treated as subject to the Excise Tax shall be equal to
the lesser of (A) the total amount of the Severance Payments or Other
Benefits or (B) the amount of excess parachute payments within the meaning
of Sections 280G(b)(1) and (4) of the Code (or any successor or
successors thereto), after applying clause (i), above, and (iii), the value of
any non-cash benefits or any deferred payment or benefit shall be determined by
the Company’s independent auditors in accordance with the principles of
Sections 280G(d)(3) and (4) of the Code (or any successor or
successors thereto).

 

(iii)                               For purposes of
determining the amount of the Gross-Up Payment, Executive shall be deemed to
pay federal income taxes at the highest marginal rate of federal income
taxation in the calendar year in which the Gross-Up Payment is to be made and
state and

 

6

 

local income
taxes at the highest marginal rates of taxation in the state and locality of
Executive’s residence on the date of the Executive’s Qualifying Termination,
net of the maximum reduction in federal income taxes which could be obtained
from deduction of such state and local taxes.

 

(iv)                              In the event that the
Excise Tax is subsequently determined to be less than the amount taken into
account hereunder at the time of the Executive’s Qualifying Termination, the
Executive shall repay to the Company, at the time that the amount of such
reduction in Excise Tax is finally determined, the portion of the Gross-Up
Payment attributable to such reduction plus interest on the amount of such
repayment at the rate provided in Section 1274(b)(2)(B) of the Code
(or any successor thereto) (the “Applicable Rate”).  In the event that the Excise Tax is
determined to exceed the amount taken into account hereunder at the time of
such Qualifying Termination (including by reason of any payment the existence
or amount of which cannot be determined at the time of the Gross-Up Payment),
the Company shall make an additional Gross-Up Payment in respect of such excess
(plus interest, determined at the Applicable Rate, payable with respect to such
excess) at the time that the amount of such excess is finally determined.

 

6.                                      Nondisclosure
of Confidential Information.  Executive acknowledges that during the term of his employment with the Company, he
will have access to and become acquainted with information of a confidential,
proprietary or secret nature which is or may be either applicable to, or
related in any way to, the present or future business of the Company, the
research and development or investigation of the Company, or the business of
any customer of the Company (“Confidential Information”).  For example, Confidential Information
includes, but is not limited to, devices, secret inventions, processes and
compilations of information, records, specifications, designs, plans,
proposals, software, codes, marketing and sales programs, financial projections,
cost summaries, pricing formula, and all concepts or ideas, materials or
information related to the business, products or sales of the Company and its customers and vendors.  Executive shall not disclose any Confidential Information, directly or indirectly,
or use such information in any way, either during the term of this Agreement or
at any time thereafter, except as required in the course of employment with the
Company.  Executive also agrees to comply with the Company’s
policies and regulations, as established from time to time for the protection
of its Confidential Information, including, for example, executing the Company’s
standard confidentiality agreements. 
This section shall survive termination of this Agreement.

 

7.                                      Non-Solicitation.  Executive agrees that so long as he is
employed by the Company and for a period of twenty-four (24) months after
termination of his employment for any reason, he shall not (a) directly or
indirectly solicit, induce or attempt to solicit or induce any employee of the
Company or any of its affiliated companies to discontinue his employment with
the Company; (b) usurp any opportunity of the Company or any of its
affiliated companies of which Executive became aware during his tenure at the
Company or which is made available to him on the basis of the belief that
Executive is still employed by the Company; or (c) directly or indirectly
solicit or induce or attempt to influence any person or business that is an
account, customer or client of the Company or any of its affiliated companies
to restrict or cancel the business of any such account, customer or client with
the Company or any of its affiliated companies.  This section shall survive
termination of this Agreement.

 

7

 

8.                                      Successors.

 

(a)                                  This Agreement is
personal to Executive, and without the prior written consent of the Company
shall not be assignable by Executive other than by will or the laws of descent
and distribution.  This Agreement shall
inure to the benefit of and be enforceable by Executive’s legal
representatives.

 

(b)                                 The rights and
obligations of the Company under this Agreement shall inure to the benefit of
and shall be binding upon the successors and assigns of the Company.

 

9.                                      Governing
Law.  This Agreement is made and
entered into in the State of California, and the internal laws of California
shall govern its validity and interpretation in the performance by the parties
hereto of their respective duties and obligations hereunder.

 

10.                               Modifications.  This Agreement may be amended or modified
only by an instrument in writing executed by all of the parties hereto.

 

11.                               Entire
Agreement.  Except as otherwise
set forth herein, this Agreement supersedes any and all prior written or oral
agreements between Executive and the Company, including but not limited to any
and all employment agreements and change in control agreements.  This Agreement contains the entire
understanding of the parties hereto with respect to the terms and conditions of
Executive’s employment with the Company; provided, however, that
this Agreement is not intended to supersede any agreements that Executive may
previously have entered into regarding the protection of trade secrets and
confidential information.

 

12.                               Dispute
Resolution

 

(a)                                  Any controversy or
dispute between the parties involving the construction, interpretation,
application or performance of the terms, covenants, or conditions of this
Agreement, the employment of Executive or in any way arising under this
Agreement (a “Covered Dispute”) shall, on demand by either of the parties be
referenced pursuant to the procedures described in California Code of Civil
Procedure (“CCP”) Sections 638, et seq.,
as they may be amended from time to time (or such procedures as nearly the same
as may be available under the laws of California, the “Reference Procedures”),
to a retired Judge from the superior court of California for the County of
Riverside (the “Venue County”) for a decision.

 

(b)                                 The Reference
Procedures shall be commenced by a joint stipulation filed in the Venue County
Court or by either party filing in the superior court of Venue County a motion
pursuant to CCP Section 638 (or such procedures as nearly the same as may
be available under the laws of California, a “Motion”).  The referee shall be a Judge from the list of
retired superior court Judges from the Venue County who have made themselves
available for trial or settlement of civil litigation under said Reference
Procedures.  If the parties hereto are
unable to agree on the designation of a particular retired superior court Judge
of the Venue County, or the designated Judge is unavailable or unable to serve
in such capacity, request shall be made that the Presiding or Assistant
Presiding Judge of the superior court of the Venue County appoint as referee a
retired superior court Judge from the aforementioned list.

 

(c)                                  Except as hereafter
agreed by the parties, the referee shall apply the internal law of the State of
California in deciding the issues submitted hereunder.  Each of the parties reserves its

 

8

 

respective
rights to allege and assert in such pleadings all claims, causes of action,
contentions and defenses which it may have arising out of or relating to the
general subject matter of the Covered Dispute that is being determined pursuant
to the Reference Procedures.  Reasonable
notice of any motions before the referee shall be given, and all matters shall
be set at the convenience of the referee. 
Discovery shall be conducted as the parties agree or as allowed by the
referee.  Unless waived by each of the
parties, a reporter shall be present at all proceedings before the
referee.  By agreeing to this procedure,
the parties expressly waive their right to a jury trial.

 

(d)                                 It is the parties’
intention by this Section 12 that all issues of fact and law and all
matters of a legal and equitable nature related to any Covered Dispute will be
submitted for determination by a referee designated as provided herein.  Accordingly, the parties hereby stipulate
that a referee designated as provided herein shall have all powers of a Judge
of the superior court including, without limitation, the power to grant
equitable and interlocutory and permanent injunctive relief.

 

(e)                                  Each of the parties
specifically consents and agrees to (i) the exercise of jurisdiction over
his person by a referee designated as provided herein with respect to any and
all Covered Disputes; (ii) the personal jurisdiction of the California
courts with respect to any appeal or review of the decision of any such
referee, and (iii) venue for any dispute subject to this Section 12
shall be in the County of Riverside.

 

(f)                                    Each of the parties
acknowledges that the decision by a referee designated as provided herein shall
be a basis for a judgment as provided in CCP Section 644 and shall be
subject to exception and review as provided in CCP Section 645, or such
procedures as nearly the same as may be available under the laws of California.

 

(g)                                 The Company shall pay
all fees and costs incurred by Executive in connection with the Reference
Procedures for a Covered Dispute other than attorneys’ fees incurred by
Executive.

 

13.                               Notices.  Any notice or communications required or
permitted to be given to the parties hereto shall be delivered personally or be
sent by United States registered or certified mail, postage prepaid and return
receipt requested, and addressed or delivered as follows, or at such other
addresses the party addressed may have substituted by notice pursuant to this
Section:

 

	
   

  	
  To the
  Company:

  	
   

  	
  To
  Executive:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Fleetwood
  Enterprises, Inc.

  	
   

  	
  Elden L.
  Smith

  
	
   

  	
  3125 Myers
  Street

  	
   

  	
  76-940
  Avenida Fernando

  
	
   

  	
  Riverside,
  California 92503-5527

  	
   

  	
  La Quinta,
  CA 92253

  
	
   

  	
  Attn:
  General Counsel

  	
   

  	
   

  

 

14.                               Captions.  The captions of this Agreement are inserted
for convenience and do not constitute a part hereof.

 

15.                               Severability.  In case any one or more of the provisions
contained in this Agreement shall for any reason be held to be invalid, illegal
or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of this Agreement, but
this Agreement shall be construed as if such invalid, illegal or unenforceable
provision had never been contained herein and there shall be deemed substituted
for such invalid, illegal or unenforceable provision such other provision as

 

9

 

will most nearly accomplish the
intent of the parties to the extent permitted by the applicable law.  In case this Agreement, or any one or more of
the provisions hereof, shall be held to be invalid, illegal or unenforceable
within any governmental jurisdiction or subdivision thereof, this Agreement or
any such provision thereof shall not as a consequence thereof be deemed to be
invalid, illegal or unenforceable in any other governmental jurisdiction or
subdivision thereof.

 

16.                               Counterparts.  This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which shall
together constitute one in the same Agreement.

 

IN WITNESS WHEREOF, the parties hereto have
caused this Agreement to be duly executed and delivered effective as of the day
and year first written above.

 

 

	
   

  	
  /s/ Elden L. Smith

  	
   

  
	
   

  	
  Elden L. Smith

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  FLEETWOOD ENTERPRISES, INC.,

  
	
   

  	
  a Delaware corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ 
  Thomas B. Pitcher

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name: Thomas B. Pitcher

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title: Chairman of the Board of Fleetwood

  Enterprises, Inc.

  
					

 

10

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