Document:

Exhibit 10.1

 

Execution Copy

 

AMENDED AND RESTATED CREDIT AGREEMENT

 

Dated as of May 14, 2004

 

Among

 

THE FINANCIAL INSTITUTIONS NAMED HEREIN,

 

as the Lenders;

 

BANK OF AMERICA, N.A.,

 

as the Administrative 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

  	
  [RESERVED].

  	
   

  
	
  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

  	
  Release of Certain Collateral

  	
   

  
	
  2.8

  	
  Substitution of Property

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  3 PAYMENTS AND PREPAYMENTS

  	
   

  
	
   

  	
   

  	
   

  
	
  3.1

  	
  Revolving Loans

  	
   

  
	
  3.2

  	
  Termination of Facility

  	
   

  
	
  3.3

  	
  [RESERVED].

  	
   

  
	
  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 Initial Funding 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

  	
  -

  	
  FORM OF
  REVOLVING 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 1.3
  – EXCLUDED RETAIL SUBSIDIARIES

  
	
   

  	
   

  	
   

  
	
  SCHEDULE 6.3
  – ORGANIZATION AND QUALIFICATIONS

  
	
   

  	
   

  	
   

  
	
  SCHEDULE 6.4
  – CORPORATE NAMES; PRIOR TRANSACTIONS

  
	
   

  	
   

  	
   

  
	
  SCHEDULE 6.5
  – SUBSIDIARIES AND AFFILIATES

  
	
   

  	
   

  	
   

  
	
  SCHEDULE 6.7
  – CAPITALIZATION

  
	
   

  	
   

  	
   

  
	
  SCHEDULE 6.9
  – DEBT

  
	
   

  	
   

  	
   

  
	
  SCHEDULE
  6.11 – REAL ESTATE(MORTGAGES); LEASES

  
	
   

  	
   

  	
   

  
	
  SCHEDULE
  6.12 – PROPRIETARY RIGHTS

  
	
   

  	
   

  	
   

  
	
  SCHEDULE
  6.13 – TRADE NAMES

  
	
   

  	
   

  	
   

  
	
  SCHEDULE
  6.14 – LITIGATION

  
	
   

  	
   

  	
   

  
	
  SCHEDULE
  6.15 – UNION CONTRACTS; LABOR DISPUTES

  
	
   

  	
   

  	
   

  
	
  SCHEDULE
  6.16 – ENVIRONMENTAL LAW

  
	
   

  	
   

  	
   

  
	
  SCHEDULE
  6.19 – ERISA COMPLIANCE

  
	
   

  	
   

  	
   

  
	
  SCHEDULE
  6.27 – BANK ACCOUNTS

  
	
   

  	
   

  	
   

  
	
  SCHEDULE
  7.12 – GUARANTIES

  
	
   

  	
   

  	
   

  
	
  SCHEDULE A –
  COLI POLICIES

  
					

 

v

 

AMENDED AND RESTATED CREDIT AGREEMENT

 

This AMENDED
AND RESTATED CREDIT AGREEMENT, dated as of May 14, 2004 (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”); 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, 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 $150,000,000, 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 Loans and Revolving Credit Commitments
hereunder and (b) Lenders agree to amend and restate 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 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, 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.

 

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.

 

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 $150,000,000
(the “Total Facility”) to the Borrowers from time to time during the
term of this Agreement.  The Total
Facility shall be composed of a revolving line of credit consisting of
Revolving Loans and Letters of Credit 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 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.

 

2

 

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; provided that on the date of such request, and giving pro forma effect to such request, the
aggregate amount advanced pursuant to this Section 1.2(a)(i) against the
aggregate manufactured housing Inventory of FMC and FRC shall not exceed 25% of
the Aggregate Availability (the “Manufactured Housing Inventory Limit”).
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 or
the Manufactured Housing Inventory Limit, 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 the Manufactured
Housing Inventory Limit 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.

 

(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

 

3

 

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.

 

(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

 

4

 

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-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

 

5

 

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           [RESERVED].

 

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

 

6

 

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 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

 

7

 

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 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

 

8

 

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.

 

(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.

 

9

 

(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 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

 

10

 

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.

 

(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

 

11

 

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 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

 

12

 

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 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

 

13

 

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 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

 

14

 

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”).

 

(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.

 

15

 

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-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

 

16

 

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 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

 

17

 

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.

 

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 Revolving Credit Lenders, interest
accrued on all Loans in arrears on the first day of each month hereafter and on
the Termination 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.

 

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 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;

 

18

 

(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 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.

 

19

 

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.

 

2.7           Release of Certain Collateral.  As soon as reasonably practicable
following the Closing Date (the “Release Date”), Agent, acting for and
on behalf of itself and the Lenders, shall release (the “Property Release”)
the Lien in favor of the Agent for the benefit of the Lenders on the Real
Estate identified as Release Property on Schedule 6.11 hereof; provided
that as of the date of the Property Release, the following conditions are
satisfied:

 

(a)           no Default or Event
of Default has occurred and is continuing as of the date of the Release Date,
both before and after giving effect to the Property Release;

 

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

 

(c)           the Agent shall have
received an appraisal or appraisals (in form and substance and by an appraiser
reasonably satisfactory to Agent) for the parcels of Real Estate covered by
Existing Mortgages that are not being released (such appraisal or appraisals,
collectively, the “Appraisal” and such parcels, the “Appraised
Parcels”), dated no more than fifteen (15) months prior to the Closing
Date;

 

20

 

(d)           the Appraised
Parcels shall have an appraised value, as set forth in the Appraisals, of at
least $50,000,000; and

 

(e)           each of the Mortgage
Amendments, together with each of the endorsements, legal opinions and other
documents described in Section 7.28(b), shall have been delivered to the
Agent and the Collateral Agent as required pursuant to Section 7.28(b)
hereof.

 

On the Release
Date, if the conditions set forth in this Section 2.7 are satisfied, all
Liens on the Release Property in favor of the Agent for the benefit of 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 2.7.

 

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 as of the Closing Date, with such modifications thereto as shall be
advisable with respect to the local jurisdictions in which the Substitute
Property is located;

 

21

 

(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 Lender, as applicable, with respect to
the Substituted Property; 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.

 

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.

 

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

 

22

 

Credit Lenders, the amount,
without duplication, by which its Aggregate Revolver Outstandings exceeds the
lesser of its Borrowing Base or the Maximum Revolver Amount.

 

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
payment of the early termination fee set forth below, (c) the payment in full
in cash of all reimbursable expenses and other Obligations, and (d) 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 Closing 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 Closing Date
but prior to the second anniversary of the Closing 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 Closing 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           [RESERVED].

 

3.4           Prepayments of the Loans.

 

(a)           [RESERVED].

 

(b)           [RESERVED].

 

(c)           [RESERVED].

 

(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.

 

23

 

(e)           Concurrently with an
FRC Borrower Release, the Borrowers shall repay the Revolving Loans in an
amount equal the amount advanced against the Eligible Accounts and Eligible
Inventory 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 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, 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 may be
paid from the proceeds of Revolving Loans made hereunder.  Each Borrower hereby irrevocably authorizes
the Agent to charge the applicable

 

24

 

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).

 

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 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 the payment of any other
Obligation (other than amounts related to Bank Products) due to the Agent or
any Lender by such Borrower and seventh, to pay any fees, indemnities or
expense reimbursements related to Bank Products due to the Agent from the
applicable Borrower.  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 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

 

25

 

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.  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

 

(d)           the FRC Borrowers
shall deliver to the Agent simultaneously with the request referred to in
clause (a) above, an FRC Borrowing Base Certificate

 

26

 

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 which the respective Lender
specifies as necessary to preserve the after-tax yield

 

27

 

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 Revolving Credit Lender
may lawfully continue to maintain such LIBOR Rate

 

28

 

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

 

29

 

(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

 

30

 

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

 

31

 

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

 

32

 

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

 

33

 

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].

 

34

 

(o)           Such additional
information as the 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

 

35

 

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;

 

36

 

(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

 

37

 

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,
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 (a) on the
Collateral constitute first priority perfected Liens in favor of the Agent, for
the ratable benefit of the Agent and the Revolving Credit Lenders, except for
Permitted Liens.

 

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 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,
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, 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, 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, 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
27, 2003, 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

 

38

 

sheet and
related statements of income and cash flows for Fleetwood and its consolidated
Subsidiaries as of the Fiscal Quarter ending January 25, 2004.  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 sets forth, as of the Closing Date, 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.

 

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.  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 not more than $350,000,000, and the
Trust Securities in relation thereto also outstanding on the Closing Date, (c)
Debt described on Schedule 6.9, and (d) 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 Closing 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

 

39

 

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 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, 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, 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, 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.

 

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.

 

6.14         Litigation.  Except as set forth on Schedule 6.14,
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, as of the Closing Date (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.

 

40

 

6.16         Environmental Laws.  Except as otherwise disclosed on Schedule 6.16:

 

(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.

 

(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

 

41

 

(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.

 

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:

 

(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.

 

42

 

(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.

 

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

 

43

 

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
contains as of the Closing Date a complete and accurate list of all bank
accounts maintained by any Loan Party with any bank or other financial
institution.

 

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:

 

44

 

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.

 

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.

 

45

 

(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 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

 

46

 

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 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 apply such insurance and condemnation proceeds to the Revolving
Loans (but without reduction of the Revolving Credit Commitments).

 

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.

 

47

 

(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.

 

(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

 

48

 

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.

 

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 with an orderly
liquidation value not to exceed $5,000,000 in the aggregate;

 

(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

 

49

 

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)            [RESERVED]

 

(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; and

 

(i)            any sale or other disposition by
Fleetwood or any Borrower of property that does not constitute Collateral, 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.

 

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

 

50

 

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 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 Closing Date;
and (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; and (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;

 

(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 during the term of this Agreement;
(ix) Fleetwood may make advances to any Borrower

 

51

 

after the Closing Date; and
(x) Fleetwood may make additional capital contributions, loans or advances
to the Excluded Subsidiaries (including Finance Co.) in excess of those
permitted under clause (viii) hereof in an aggregate amount, during the
term of this Agreement, 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; (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; (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; (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; (h) endorsements for collection or deposits
in the ordinary course of business; and (i) 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 which is not to be repaid with the proceeds of
the Loans made on the Initial Funding Date;

 

52

 

(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) 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;
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,

 

(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), 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;

 

53

 

(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;

 

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

 

(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

 

54

 

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), 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; 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 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; 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
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

 

55

 

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.

 

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 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.

 

56

 

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 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)           [RESERVED]; and

 

(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 and Majority
Lenders, Fleetwood shall not, directly or indirectly, organize, create, acquire
or permit to exist any Subsidiary other (i) than those listed on Schedule
6.5, 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

 

57

 

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 four consecutive Fiscal Quarters (for which an annual
or quarterly compliance certificate has been delivered pursuant to Section
5.2(e)) ended on the last day of each Fiscal Quarter set forth below of
not less than the amount set forth below opposite each such fiscal quarter:

 

	
  Period Ending

  	
   

  	
  EBITDA

  	
   

  
	
  On the last Sunday in April 2004

  	
   

  	
  $

  	
  51,000,000

  	
   

  
	
  On the last Sunday in July 2004

  	
   

  	
  $

  	
  52,000,000

  	
   

  
	
  On the last Sunday in October 2004

  	
   

  	
  $

  	
  55,000,000

  	
   

  
	
  On the last Sunday in January 2005

  	
   

  	
  $

  	
  58,000,000

  	
   

  
	
  On the last Sunday in April 2005

  	
   

  	
  $

  	
  62,000,000

  	
   

  
	
  Thereafter

  	
   

  	
  $

  	
  65,000,000

  	
   

  

 

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.

 

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

 

58

 

Lenders such documents and agreements, and
shall take or cause to be taken such 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)           With respect to each parcel of Real
Estate listed on Schedule 6.11 identified as Mortgaged Property,
(i) such Mortgaged Property shall have, in the aggregate, an appraised
value, as set forth in the Appraisals, of at least $50,000,000, (ii) such
Mortgaged Property shall remain subject to all Existing Mortgages and (iii)
within 60 days after the Closing Date, Fleetwood and/or the applicable Loan
Party shall deliver 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
Existing Mortgage has previously been released, a replacement 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 from and after the Closing Date (or, in
the case of any Mortgaged Property in which any Existing Mortgage has
previously been released, 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 applicable jurisdictions,
(B) endorsements to the Existing Mortgage Title Policies as reasonably
requested by the Agent, assuring the Agent that such Mortgages continue to
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.

 

(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

 

59

 

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
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.

 

60

 

ARTICLE 8

CONDITIONS OF LENDING

 

8.1           Conditions Precedent to Making of Loans
on the Initial Funding Date.  The
obligation of the Lenders to make the initial Revolving Loans, 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 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.

 

(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;

 

61

 

(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.

 

(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, 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)           [RESERVED].

 

62

 

(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 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

 

63

 

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 the initial Revolving Loans on the Initial Funding 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).

 

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;

 

64

 

(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 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, 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 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, 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;

 

(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

 

65

 

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;

 

(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

 

66

 

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 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 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 

 

67

 

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 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

 

68

 

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 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

 

69

 

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);

 

(G)             amend Section 3.8; or

 

(ii)           [RESERVED];

 

(iii)          no such waiver,
amendment, or consent shall, unless in writing and signed by all the Revolving
Credit 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 set
forth in the definition of the Borrowing Base;

 

(E)             release any Collateral, except as
permitted by Section 2.7, Section 2.8, Section 7.9 or Section
12.11;

 

(F)             [RESERVED]; or

 

70

 

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

 

(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;

 

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 Revolving Credit Commitments and the
other rights and obligations of such Lender hereunder, in a minimum amount of
$10,000,000 (provided  that, unless an assignor Lender has
assigned and delegated all of its Revolving Credit Commitments, no such
assignment and/or delegation shall be permitted unless,

 

71

 

after giving effect thereto, such assignor
Lender retains a Revolving Credit Commitment in a minimum amount of
$10,000,000; 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.  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 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

 

72

 

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 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.

 

73

 

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 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

 

74

 

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 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,

 

75

 

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 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

 

76

 

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 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

 

77

 

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 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;

 

78

 

(vi) constituting property owned by an
FRC Borrower that is released in compliance with the provisions of Section
3.11; (vii) any real property constituting Released Property (as such
term is defined in Section 2.7), provided that the
conditions to release set forth in such Section 2.7 have been satisfied;
or (viii) 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 any Guaranty may be released if
the Guarantor is sold in a transaction permitted under this Agreement.  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 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 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 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

 

79

 

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 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

 

80

 

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 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 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

 

81

 

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 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

 

82

 

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 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

 

83

 

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

 

84

 

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:

 

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

 

85

 

(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 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.

 

86

 

(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, 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;

 

(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

 

87

 

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 the Liens
created under the Collateral Documents constitute first priority, perfected
Liens in favor of the Agent, for the ratable benefit of the Agent and the
Revolving Credit Lenders, except for Permitted Liens.

 

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.

 

88

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, 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

 

89

 

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
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

 

90

 

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 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.

 

91

 

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

 

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

 

92

 

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 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

 

93

 

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.

 

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.

 

94

 

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
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

 

95

 

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 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]

 

96

 

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 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

 

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 aggregate
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 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.

 

“Agent” means the Bank, solely in its capacity as agent for the
Lenders, and any successor agent.

 

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

 

“Agent Fee Letter” means that certain fee letter dated the date
hereof, 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

 

A-2

 

determining Availability of FMC or FRC, the forgoing shall be
determined solely with respect to FMC or FRC, as applicable.

 

“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 Closing Date.

 

“Annual Appraisal Date” means each Anniversary Date.

 

“Applicable Margin” means with respect to the Revolving Loans,
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 Quarter ended July, 2004 shall
be set at Level III; (b) the Applicable Margin calculated in respect of the
Fiscal Quarter ended October, 2004 shall be determined for the single-Fiscal
Quarter Period ended as of the last date of such just completed Fiscal Quarter;
(c) the Applicable Margin calculated in respect of the Fiscal Quarter ended
January, 2005 shall be determined for the two-Fiscal Quarter Periods ended as
of the last date of such just completed Fiscal Quarter; and (d) the Applicable
Margin calculated in respect of the Fiscal Quarter ended April, 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

  
	
  Less than 0.75:1.00

  	
   

  	
   

  	
  Level IV

  

 

Low to High

 

	
   

  	
   

  	
  Applicable
  Margins

  	
   

  
	
   

  	
   

  	
  Level I

  	
   

  	
  Level II

  	
   

  	
  Level III

  	
   

  	
  Level IV

  	
   

  
	
  Base Rate Revolving Loans

  	
   

  	
  0.00

  	
  %

  	
  0.00

  	
  %

  	
  0.25

  	
  %

  	
  0.50

  	
  %

  
	
  LIBOR Revolving Loans

  	
   

  	
  2.00

  	
  %

  	
  2.25

  	
  %

  	
  2.50

  	
  %

  	
  2.75

  	
  %

  
	
  Unused Line Fees

  	
   

  	
  0.25

  	
  %

  	
  0.375

  	
  %

  	
  0.375

  	
  %

  	
  0.50

  	
  %

  
	
  Letter of Credit Fees

  	
   

  	
  1.75

  	
  %

  	
  2.00

  	
  %

  	
  2.25

  	
  %

  	
  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

 

A-3

 

Margins that would result in higher Applicable Margins, then the
Applicable Margins shall be 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” has the meaning provided in Section 2.7(c).

 

“Appraised Parcels” has the meaning provided in Section 2.7(c).

 

“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 Bank in reliance on the Bank’s agreement to
indemnify such affiliate:  (i) credit
cards; (ii) ACH

 

A-4

 

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.

 

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

 

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

 

“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

 

A-5

 

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, 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 shall not exceed $10,000,000.

 

“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 of even date herewith 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 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.

 

A-6

 

“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.

 

“COLI Policies” means those insurance policies identified on Schedule A.

 

“Collateral” means all of the Loan Parties’ personal property,
any real property listed on Schedule 6.11 and identified as
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.

 

“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.

 

A-7

 

“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 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.

 

A-8

 

“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 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;

 

A-9

 

(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 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;

 

A-10

 

(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;

 

(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.

 

A-11

 

“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;

 

(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;

 

A-12

 

(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.

 

“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.

 

“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

 

A-13

 

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 Agreement;
(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 as an “Excluded Subsidiary”.

 

“Existing Credit Agreement” means that  certain
Credit Agreement dated as of the Original Closing Date, by and among Fleetwood,
the Borrowers, the Lenders, and the Agent, as amended by that certain First
Amendment to Credit Agreement and Consent of Guarantors dated as of December 4, 2001,
that certain Second Amendment to Credit Agreement and Security Agreement and
Consent of Guarantors dated as of December 4, 2001, that certain Third
Amendment to Credit Agreement and Consent of Guarantors dated as of December 7, 2001,
that certain Fourth Amendment to Credit Agreement and Consent of Guarantors
dated as of July 12, 2002, that certain Fifth Amendment to Credit
Agreement and Consent of Guarantors dated as of January 24, 2003,
that certain Sixth Amendment to Credit Agreement and Consent of Guarantors
dated as of March 25, 2003, that certain Seventh Amendment and
Consent of Guarantors dated as of July 21, 2003, that certain Eighth
Amendment and Consent of Guarantors

 

A-14

 

dated as of December 15, 2003 and that certain Ninth Amendment and
Consent of Guarantors dated as of January 27, 2004.

 

“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.

 

A-15

 

“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.

 

“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-16

 

“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 Guaranty dated as of the Closing Date
from FMC to the Agent, for its benefit and the benefit of the Lenders.

 

“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

 

A-17

 

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 Guaranty” means the 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.

 

“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.

 

“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,

 

A-18

 

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.

 

“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 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

 

A-19

 

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.

 

“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.

 

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

 

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

 

A-20

 

“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 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 Loan” means a Revolving Loan during any period in
which it 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),

 

A-21

 

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.

 

“Loan Documents” means this Agreement, the Revolving 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%.

 

“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 $85,000,000 for both of
FMC and FRC combined.

 

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

 

A-22

 

“Maximum Revolver Amount” means $150,000,000.

 

“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 or (b) the Borrowers (collectively) have Borrower Liquidity of
$60,000,000 or less for the calendar month immediately preceding such
calculation date.

 

“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
Schedule 6.11.

 

“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.

 

“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
aggregate 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).

 

A-23

 

“Notes” means the Revolving 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.

 

“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.

 

“Parent Guaranty” means the Parent Guaranty dated as of the
Closing 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.

 

A-24

 

“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 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;

 

(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;

 

A-25

 

(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, securing
the Debt identified on Schedule 6.9 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 at any time outstanding;

 

(j)                                     Liens
on assets of the Excluded Retail Subsidiaries securing Floor Plan Debt
permitted hereunder;

 

(k)                                  deposits
by Retail and/or the Excluded Retail Subsidiaries in a reserve account with the
Floor Plan Lender;

 

(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); and

 

(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.

 

A-26

 

“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
hereto, 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 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.

 

“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.

 

“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.

 

“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.

 

“Release Property” means the Real Estate identified as such on Schedule 6.11.

 

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

 

“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.

 

A-27

 

“Required Lenders” means at any time Lenders whose Pro Rata
Shares aggregate more than 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 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 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;

 

A-28

 

(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 of the
Original Closing 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

 

(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

 

A-29

 

(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 Subsidiary Guaranty dated as of
the Closing 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.

 

“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 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

 

A-30

 

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.

 

“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, and (iii) the date the Agreement is
otherwise terminated for any reason whatsoever pursuant to the terms of the
Agreement.

 

“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 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) the line of
credit outstanding under that 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 (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

 

A-31

 

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).

 

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.

 

A-32

 

(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.

 

(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-33Exhibit 10.2

 

 

FOURTH AMENDMENT TO WHOLESALE SECURITY
AGREEMENT

 

THIS FOURTH AMENDMENT TO WHOLESALE SECURITY AGREEMENT (“Amendment”) is
made as of the 14th day of May 2004 by and between TEXTRON FINANCIAL
CORPORATION, a Delaware corporation (“Secured Party”); and the undersigned
(jointly and severally, individually and collectively, “Debtor”).

 

WITNESSETH THAT:

 

WHEREAS, the Secured Party and Debtor are
parties to a certain Wholesale Security Agreement dated August 21, 2002,
as may have been previously amended, modified or supplemented (the
“Agreement”); and

 

WHEREAS, the parties hereto desire to amend
certain of the terms of the Agreement;

 

NOW THEREFORE, in consideration of the
premises and the mutual obligations hereinafter contained, and for other good
and valuable consideration, the receipt whereof is hereby acknowledged, the
parties hereto agree as follows:

 

1.                                       All capitalized terms used and not otherwise
defined herein shall have the same meanings provided therefore in the
Agreement.

 

2.                                       Paragraph 6.1 of the Agreement is hereby
amended and restated in its entirety to read as follows:

 

Debtor represents, warrants, covenants,
agrees and acknowledges that Debtor receives good and valuable benefit and
consideration from its relationship with Fleetwood Enterprises, Inc., and as
such represents, warrants, covenants, agrees and acknowledges the failure of
Fleetwood Enterprises, Inc., to maintain the following financial covenant shall
be an Event of Default hereunder:

 

(a)                                  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) of the Other Credit Facility,
Fleetwood shall be required to have maintained EBITDA for the most recent
period of four consecutive Fiscal Quarters (for which an annual or quarterly
compliance certificate has been delivered pursuant to Section 5.2(e)
of the Other Credit Facility) ended on the last day of each Fiscal Quarter set
forth below of not less than the amount set forth below opposite each such
fiscal quarter:

 

	
  MINIMUM
  EBITDA

  	
   

  	
  Period Ending

  
	
   

  	
   

  	
   

  
	
  $51,000,000

  	
   

  	
  On the last Sunday in
  April 2004

  
	
  $52,000,000

  	
   

  	
  On the last Sunday in
  July 2004

  
	
  $55,000,000

  	
   

  	
  On the last Sunday in
  October 2004

  
	
  $58,000,000

  	
   

  	
  On the last Sunday in
  January 2005

  
	
  $62,000,000

  	
   

  	
  On the last Sunday in
  April 2005

  
	
  $65,000,000

  	
   

  	
  Thereafter

  

 

“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 or (b) the Borrowers (collectively) have
Borrower Liquidity of $60,000,000 or less for the calendar month immediately
preceding such calculation date.

 

 

(b)                                 Notwithstanding
anything contained elsewhere herein, capitalized terms in Sections 6.1(a)
hereof shall have the meanings ascribed to them in the Other Credit Facility
(defined in Section 9(l) of this Agreement), as amended, in the form of
such Other Credit Facility and amendments thereto as the same have been filed
by Fleetwood Enterprises, Inc. with the Securities and Exchange Commission
prior to the date hereof.

 

Not later than forty-five calendar days after the last day of each
fiscal quarter, or ninety calendar days after the last day of each fiscal year,
Fleetwood Enterprises, Inc. shall submit to Secured Party a certificate stating
that Debtor is in compliance with each of the foregoing representations,
covenants, and warranties (or, if applicable, disclosing any non-compliance
therewith) and shall show such supporting information as Secured Party may
reasonably request. Each certificate shall be in form and substance reasonably
satisfactory to Secured Party and signed by the chief financial officer or
chief accounting officer of Fleetwood Enterprises, Inc. (or such other officer
if acceptable to Secured Party in its sole discretion). The amounts and
calculations referred to above shall be determined as set forth in Sections
6.1(a) or in the definitions of defined terms contained therein, or otherwise
in accordance with generally accepted accounting principles consistently
applied, excepting only as such principles may be modified above, and Textron’s
calculations shall be conclusive absent manifest error.”

 

3.                                       The Agreement is further amended by deleting
Schedule 9(L) and substituting in lieu thereof the Revised
Schedule 9(L) attached hereto and incorporated herein by this reference.

 

4.                                       Except as amended hereby, the Agreement
shall remain in full force and effect, and is in all respects hereby ratified
and affirmed.

 

5.                                       This Amendment, and the rights and duties of
the parties hereunder, shall be governed by and construed in accordance with
the internal laws of the State of Rhode Island, without regard to such
jurisdiction’s principles of conflicts of laws. If any provision of this
Amendment is determined to be illegal, invalid or unenforceable, such provision
shall be fully severable and the remaining provisions shall remain in full
force and effect and shall be construed without giving effect to the illegal, invalid
or unenforceable provisions.

 

6.                                       This Amendment may be executed in any number
of counterparts, each of which when so executed and delivered shall be an
original, but all of which together shall constitute one and the same
instrument, and a facsimile signature shall suffice as original for all
purposes.

 

IN WITNESS WHEREOF, the parties hereto have
caused this amendment to be executed by their duly authorized officer or
representative as of the day and year first above written.

 

 

	
  SECURED PARTY:

  	
  DEBTOR:

  

 

 

	
  TEXTRON FINANCIAL CORPORATION,
  for itself and as

  	
  FLEETWOOD RETAIL CORP. OF
  ARKANSAS,

  
	
  agent for its affiliates

  	
  an Arkansas corporation

  
	
   

  	
  FLEETWOOD RETAIL CORP. OF
  GEORGIA,

  
	
   

  	
  a Georgia corporation

  
	
  By:

  	
  FLEETWOOD RETAIL CORP. OF
  ILLINOIS,

  
	
  /s/ Brian Courtney

  	
   

  	
  a Illinois corporation

  
	
  Print Name: Brian Courtney

  	
  FLEETWOOD RETAIL CORP. OF
  KANSAS,

  
	
  Print Title: VP, Large Ticket
  Division

  	
  a Delaware corporation

  
	
   

  	
  FLEETWOOD RETAIL CORP. OF
  LOUISIANA,

  
	
   

  	
  a Louisiana corporation

  
	
   

  	
  FLEETWOOD RETAIL CORPORATION
  OF MISSOURI,

  
	
   

  	
  a Missouri corporation

  
	
   

  	
  FLEETWOOD RETAIL CORP. OF
  OHIO,

  
	
   

  	
  a Ohio corporation

  
	
   

  	
  FLEETWOOD HOME CENTERS OF
  NEVADA, INC.,

  
	
   

  	
  a Nevada corporation

  
	
   

  	
  FLEETWOOD RETAIL CORP. OF
  OKLAHOMA,

  
	
   

  	
  a Oklahoma corporation

  
	
   

  	
  FLEETWOOD RETAIL CORP. OF
  SOUTH CAROLINA,

  
	
   

  	
  a South Carolina corporation

  
	
   

  	
  FLEETWOOD RETAIL CORP. OF WEST
  VIRGINIA,

  
	
   

  	
  a West Virginia corporation

  
	
   

  	
  FLEETWOOD RETAIL CORP. OF
  WASHINGTON,

  
	
   

  	
  a Delaware corporation

  
	
   

  	
   

  
	
  Secured Party’s address for
  notices:

  	
   

  
	
  P.O. Box 3090

  	
   

  
	
  Alpharetta, GA 30023

  	
  By:

  	
  /s/  Boyd R. Plowman

  	
   

  
	
   

  	
  Print Name: BOYD R.
  PLOWMAN

  
	
   

  	
  Print Title: AS
  EXECUTIVE  V.P.

  
	
   

  	
  FOR EACH OF THE FOREGOING
  DEBTORS

  
					

 

 

REVISED
SCHEDULE 9(L)

 

Capitalized terms not defined in this
Schedule shall have the meaning ascribed to them in the Other Credit
Facility.

 

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) of the Other Credit Facility
(as such term is defined in the Agreement), Fleetwood shall be required to have
maintained EBITDA for the most recent period of four consecutive Fiscal
Quarters (for which an annual or quarterly compliance certificate has been
delivered pursuant to Section 5.2(e) of the Other Credit Facility)
ended on the last day of each Fiscal Quarter set forth below of not less than
the amount set forth below opposite each such fiscal quarter:

 

	
  MINIMUM
  EBITDA

  	
   

  	
  Period Ending

  
	
   

  	
   

  	
   

  
	
  $51,000,000

  	
   

  	
  On the last Sunday in
  April 2004

  
	
  $52,000,000

  	
   

  	
  On the last Sunday in
  July 2004

  
	
  $55,000,000

  	
   

  	
  On the last Sunday in
  October 2004

  
	
  $58,000,000

  	
   

  	
  On the last Sunday in
  January 2005

  
	
  $62,000,000

  	
   

  	
  On the last Sunday in
  April 2005

  
	
  $65,000,000

  	
   

  	
  Thereafter

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