UNITED STATES
SECURITIES & EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
---------
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 27, 1997
-------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ---------- to ----------
Commission File Number 1-9792
Cavalier Homes, Inc.
-------------------------------
(Exact name of Registrant as specified in its charter)
Delaware 63-0949734
- ------------------ --------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
Highway 41 North & Cavalier Road, Addison, Alabama 35540
--------------------------------------------------------------
(Address of principal executive offices)
(Zip Code)
(205) 747-1575
------------------
(Registrant's telephone number, including area code)
--------------------------
(Former name, former address and former fiscal year, if changed since last year)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
---
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the close of the latest practicable date.
Class Outstanding at August 11, 1997
- --------------------------- -----------------------------
Common Stock $.10 Par Value 12,283,127 Shares
-1-
<PAGE>
CAVALIER HOMES, INC. AND SUBSIDIARIES
INDEX
Page No.
Part I. Financial Information (Unaudited)
Consolidated Condensed Balance Sheets - 3
June 27, 1997 and December 31, 1996
Consolidated Condensed Statements of Income - 4
Thirteen and Twenty-Six Weeks ended June 27, 1997
and June 28, 1996
Consolidated Condensed Statements of Cash Flows - 5
Twenty-Six Weeks ended June 27, 1997 and
June 28, 1996
Notes to Consolidated Condensed Financial 6
Statements
Management's Discussion and Analysis of Financial 9
Condition and Results of Operations
Part II.Other Information
Item 4. Submission of Matters to a Vote of 13
Security Holders
Item 5. Other Matters 13
Item 6. Exhibits 14
Signatures 16
Certain items in the report that follows are marked with an asterisk (*),
indicating that they are subject to the "Safe Harbor" Statement under the
Private Securities Litigation Reform Act of 1995 found on page 15 of this
report.
-2-
<PAGE>
<TABLE>
<CAPTION>
CAVALIER HOMES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in Thousands)
(UNAUDITED)
<S> <C> <C>
June 27, December 31,
ASSETS 1997 1996
CURRENT ASSETS: ---------- ------------
Cash and cash equivalents $ 9,992 $ 24,529
Marketable securities available for sale - 1,097
Accounts receivable, less allowance for
losses of $800 21,661 3,046
Notes and installment contracts receivable - current 1,609 1,086
Inventories 15,331 12,394
Deferred income taxes 4,745 4,663
Other current assets 997 2,475
---------- ----------
Total current assets 54,335 49,290
---------- ----------
PROPERTY, PLANT AND EQUIPMENT (Net) 27,140 24,760
---------- ----------
INSTALLMENT CONTRACTS RECEIVABLE, less
allowance for credit losses of $1,175 (1997)
and $941 (1996) 42,664 34,504
---------- ----------
GOODWILL, less accumulated amortization of
$711 (1997) and $588 (1996) 3,003 3,126
---------- ----------
OTHER ASSETS 4,267 3,894
---------- ----------
$ 131,409 $ 115,574
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ 1,808 $ 951
Accounts payable 10,556 7,916
Amounts payable under dealer incentive programs 9,666 10,937
Accrued wages and related withholdings 2,866 1,652
Accrued incentive compensation 2,036 2,615
Estimated warranties 7,000 7,000
Accrued insurance 1,775 2,023
Other accrued expenses 8,136 7,722
---------- ----------
Total current liabilities 43,843 40,816
---------- ----------
DEFERRED INCOME TAXES 1,070 1,035
---------- ----------
LONG-TERM DEBT 10,747 4,918
---------- ----------
STOCKHOLDERS' EQUITY:
Series A Junior Participating Preferred Stock, $.01 par value;
200,000 shares authorized, none issued
Preferred stock, $.01 par value;
300,000 shares authorized, none issued
Common stock, $.10 par value; authorized
50,000,000 shares; issued 12,257,260 (1997)
and 12,169,128 (1996) shares 1,226 1,217
Additional paid-in capital 32,081 31,057
Retained earnings 42,442 36,531
---------- ----------
Total stockholders' equity 75,749 68,805
---------- ----------
$ 131,409 $ 115,574
========== ==========
See Notes to Consolidated Condensed Financial Statements
-3-
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CAVALIER HOMES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Dollars in Thousands Except Per Share Amounts)
(UNAUDITED)
<S> <C> <C> <C> <C>
Thirteen Weeks Ended Twenty-Six Weeks Ended
-------------------- ----------------------
June 27, June 28, June 27, June 28,
1997 1996 1997 1996
REVENUES: ---------- ---------- ---------- ----------
Net sales $ 90,479 $ 90,838 $ 166,237 $ 165,622
Financial services 1,296 772 2,438 1,392
---------- ---------- ---------- ----------
91,775 91,610 168,675 167,014
---------- ---------- ---------- ----------
COST OF SALES 74,746 74,643 136,676 136,456
SELLING, GENERAL AND ADMINISTRATIVE:
Manufacturing 10,544 10,675 19,901 19,332
Financial services 712 508 1,358 867
---------- ---------- ---------- ----------
86,002 85,826 157,935 156,655
---------- ---------- ---------- ----------
OPERATING PROFIT 5,773 5,784 10,740 10,359
---------- ---------- ---------- ----------
OTHER INCOME(EXPENSE):
Interest expense:
Manufacturing (35) (4) (79) (20)
Financial services (221) (127) (323) (243)
Other, net 397 229 685 564
---------- ---------- ---------- ----------
141 98 283 301
---------- ---------- ---------- ----------
INCOME BEFORE INCOME TAXES 5,914 5,882 11,023 10,660
---------- ---------- ---------- ----------
INCOME TAXES 2,357 2,357 4,380 4,264
---------- ---------- ---------- ----------
NET INCOME $ 3,557 $ 3,525 $ 6,643 $ 6,396
========== ========== ========== ==========
NET INCOME PER SHARE $ .29 $ .29 $ .54 $ 0.53
========== ========== ========== ==========
WEIGHTED AVERAGE SHARES OUTSTANDING 12,413,503 12,263,996 12,404,261 12,128,577
========== ========== ========== ==========
See Notes to Consolidated Condensed Financial Statements
-4-
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CAVALIER HOMES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(UNAUDITED)
<S> <C> <C>
Twenty-Six Weeks Ended
----------------------
June 27, June 28,
1997 1996
---------- ----------
OPERATING ACTIVITIES:
Net income $ 6,643 $ 6,396
Adjustments to reconcile net income to net cash used
in operating activities:
Depreciation and amortization 2,091 1,763
Provision for credit losses and repurchase commitments 234 133
Gain on sale of property, plant and equipment (15) (12)
Equity in earnings of equity investments (187) (200)
Compensation related to issuance of stock options 72 55
Changes in assets and liabilities provided (used) cash, net of
effects of acquisitions:
Accounts receivable (18,615) (17,954)
Inventories (1,900) (2,357)
Accounts payable 1,818 5,229
Amounts payable under dealer incentive programs (1,271) 1,617
Estimated warranties - 629
Other assets and liabilities 2,125 2,441
--------- ---------
Net cash used in operating activities (9,005) (2,260)
--------- ---------
INVESTING ACTIVITIES:
Proceeds from the sale of property, plant and equipment 28 54
Net cash paid in connection with acquisitions (871) (370)
Capital expenditures (4,032) (4,155)
Distribution from equity investments 248 194
Proceeds from sale or maturity of marketable securities 1,097 1,475
Purchases and originations of notes and installment contracts (10,934) (8,825)
Principal collected on notes and installment contracts 2,017 1,348
--------- ---------
Net cash used in investing activities (12,447) (10,279)
--------- ---------
FINANCING ACTIVITIES:
Proceeds from long-term borrowings 7,552 1,005
Payments on long-term debt (866) (465)
Cash dividends paid (731) (549)
Proceeds from exercise of stock options 4 3,453
Proceeds from dividend reinvestment and stock purchase plans 956 -
--------- ---------
Net cash provided by financing activities 6,915 3,444
--------- ---------
NET DECREASE IN CASH AND CASH EQUIVALENTS (14,537) (9,095)
--------- ---------
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 24,529 21,005
--------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 9,992 $ 11,910
========= =========
See Notes to Consolidated Condensed Financial Statements
-5-
</TABLE>
<PAGE>
PART I.
CAVALIER HOMES, INC. AND SUBSIDIARIES
Notes to Consolidated Condensed Financial Statements
For the Thirteen and Twenty-Six Week Periods Ended June 27, 1997
and June 28, 1996
(Dollars in Thousands except per share amounts)
1. BASIS OF PRESENTATION
The accompanying consolidated condensed financial statements
have been prepared in compliance with Form 10-Q instructions and
thus do not include all of the information and footnotes required
by generally accepted accounting principles for complete
financial statements. In the opinion of the Company, these
statements contain all adjustments necessary to present fairly
the Company's financial position as of June 27, 1997, and the
results of its operations for the thirteen and twenty-six week
periods ended June 27, 1997 and June 28, 1996, and its cash flows
for the twenty-six week periods ended June 27, 1997 and June 28,
1996. All adjustments are of a normal recurring nature.
The results of operations for the thirteen and twenty-six weeks
ended June 27, 1997 are not necessarily indicative of the results
to be expected for the full year.
Inventories consist primarily of raw materials and are stated at
the lower of cost (first-in, first-out method) or market.
Certain amounts from the 1996 periods have been reclassified to
conform to the 1997 period presentation. These reclassifications
had no effect on results of operations or stockholders' equity.
Net income per share is computed by dividing net income by the
weighted average number of shares of common stock outstanding
during the thirteen and twenty-six week periods after giving
effect to the equivalent shares which are issuable upon the
exercise of stock options determined by the treasury stock method
in accordance with APB No. 15.
In June 1997, the Company purchased substantially all of the
assets and assumed certain existing liabilities of Pacer Homes,
Inc. for a net cash payment of $871.
2. ACCOUNTING STANDARDS NOT YET ADOPTED
During February 1997, the Financial Accounting Standards Board
("FASB") issued Statement of Financial Accounting Standards
("SFAS") No. 128, Earnings per Share, which will become effective
for all financial statements issued for periods ending after
December 15, 1997, including interim periods. SFAS No. 128
provides for the presentation of basic and diluted earnings per
share on the face of the financial statements and supersedes
Accounting Principles Board (APB) Opinion No. 15, Earnings per
Share. SFAS No. 128 requires the restatement of earnings per
share for prior periods presented after its effective date. SFAS
No. 128 does not have a material effect upon the thirteen and
twenty-six week periods ended June 27, 1997 and June 28, 1996.
However, the impact on other prior periods has not yet been
determined.
The FASB issued SFAS No. 131, Disclosures about Segments of an
Enterprise and Related Information, in June 1997, which
supersedes Statement 14, Financial Reporting for Segments of a
Business Enterprise. SFAS No. 131 modifies previous annual
segment reporting and requires selected segment information in
quarterly reports. Statement No. 131 requires that a public
company report a measure of segment profit or loss, certain
specific revenue and expense items and segment assets. It
requires reconciliations of total segment revenues, total segment
profit or loss, total segment assets and other amounts disclosed
for segments to corresponding amounts in the company's
general-purpose financial statements. The Statement also provides
for entity-wide disclosures about the products and services a
company provides, the material countries in which it holds assets
and reports revenue and its major customers. SFAS No. 131
requires that companies disclose segment data based upon how
company management determines resource allocations to segments
-6-
<PAGE>
PART I.
CAVALIER HOMES, INC. AND SUBSIDIARIES
Notes to Consolidated Condensed Financial Statements
For the Thirteen and Twenty-Six Week Periods Ended June 27, 1997
and June 28, 1996
(Dollars in Thousands except per share amounts)
2. ACCOUNTING STANDARDS NOT YET ADOPTED (continued)
and measures segments' performance. This Statement is effective
for financial statements issued for fiscal years beginning after
December 15, 1997. The adoption of the provisions of this
Statement will result only in increased disclosures on segment
information and will not impact the amounts in the financial
statements.
3. SUPPLEMENTAL CASH FLOW DISCLOSURES
Twenty-Six Weeks Ended
----------------------
June 27, June 28,
1997 1996
-------- --------
Cash paid for: Interest $ 364 $ 284
Income taxes $ 3,619 $ 3,462
4. CREDIT ARRANGEMENTS
The Company has a $23,000 revolving, warehouse and term-loan
agreement (the "Credit Facility") with its primary bank, whose
president is a director of the Company. The Credit Facility
contains a revolving line of credit which provides for borrowings
(including letters of credit) of up to 80% and 50% of the
Company's eligible (as defined) accounts receivable and
inventories, respectively, up to a maximum of $5,000. Interest is
payable under the revolving line of credit at the bank's prime
rate (8.5% at June 27, 1997).
The warehouse and term-loan agreement contained in the Credit
Facility provide for borrowings of up to 80% of the Company's
eligible (as defined) installment sale contracts, up to a maximum
of $18,000. Interest on term notes is fixed for a period of five
years from issuance at a rate based on the weekly average yield
on five-year treasury securities averaged over the preceding 13
weeks, plus 2%, and floats for the remaining two years at a rate
(subject to certain limits) equal to the bank's prime rate plus
.75%. The warehouse component of the Credit Facility provides for
borrowings of up to $2,000 with interest payable at the bank's
prime rate plus 1%. However, in no event may the aggregate
outstanding borrowings under the warehouse and term-loan
agreement exceed $18,000.
The Credit Facility contains certain restrictive
covenants, which limit the aggregate of dividend payments and
purchases of treasury stock to 50% of consolidated net income for
the two most recent years. Amounts outstanding under the Credit
Facility are secured by the accounts receivable and inventories
of the Company, loans purchased and originated by Cavalier
Acceptance Corporation, the Company's wholly owned finance
subsidiary, and the capital stock of certain of the Company's
consolidated subsidiaries. The bank's commitment under the Credit
Facility will expire in April of 1998.
As of June 27, 1997, the Company had $9,137 borrowed under the
Credit Facility.
5. STOCKHOLDERS' EQUITY
A five-for-four stock split of the Company's common stock which
was effected in the form of a 25% stock dividend was distributed
on November 15, 1996 to stockholders of record on October 31,
1996. All historical dividends and net income per share amounts
have been adjusted for the stock split.
-7-
<PAGE>
PART I.
CAVALIER HOMES, INC. AND SUBSIDIARIES
Notes to Consolidated Condensed Financial Statements
For the Thirteen and Twenty-Six Week Periods Ended June 27, 1997
and June 28, 1996
(Dollars in Thousands except per share amounts)
5. STOCKHOLDERS' EQUITY (continued)
Cash dividends were paid during this quarter and the previous
three quarters as follows (all amounts are per share):
Split Adjusted
Record Date Payment Date Dividend Paid
----------- ------------ -------------
April 30, 1997 May 15, 1997 $ .030
January 31, 1997 February 14, 1997 $ .030
October 31, 1996 November 15, 1996 $ .030
July 31, 1996 August 15, 1996 $ .024
6. COMMITMENTS AND CONTINGENCIES
It is a customary practice in the manufactured housing industry
to enter into repurchase and other recourse agreements with
lending institutions which have provided wholesale floor plan
financing to dealers. Substantially all of the Company's sales
are made to dealers located primarily in the southeast, southwest
and midwest regions of the United States pursuant to repurchase
agreements with lending institutions. These agreements generally
provide for repurchase of the Company's products from the lending
institutions for the balance due them in the event of
repossession upon a dealer's default. Although the Company is
contingently liable for approximately $90,000 at June 27, 1997,
such contingency is reduced by the resale value of the homes
which may be required to be repurchased. Losses under these
agreements have not been significant in the past, and management
expects no material loss in excess of the allowance provided of
$800. *
The Company's workmen's compensation, product liability and
general liability insurance coverages are provided under incurred
loss, retrospectively rated premium plans. Under these plans, the
Company incurs insurance expenses based upon various rates
applied to current payroll costs and sales. Annually, such
insurance expenses are adjusted by the carrier for loss
experience factors subject to minimum and maximum premium
calculations. At June 27, 1997, the Company was contingently
liable for future retrospective premium adjustments up to a
maximum of $7,300 in the event that additional losses are
reported related to prior periods.
The Company is a party to various legal proceedings incidental
to its business. In the opinion of management, the ultimate
liability, if any, with respect to these proceedings is not
presently expected to materially affect the financial position or
results of operations of the Company; however, the ultimate
resolution of these matters could result in losses in excess of
current estimates. *
The Company and its equity partner have jointly and severally
guaranteed a revolving note, with a balance of $700 at June 27,
1997, of the limited liability company in which the Company owns
a 50% interest. The guaranty is limited to 60% of the outstanding
principal balance up to a maximum guaranty of $600.
The Company and certain of its equity partners have jointly
and severally guaranteed certain short-term debt of the limited
liability company in which the company owns a one-third interest.
The guaranty is limited to 33% of the outstanding debt up to a
maximum guaranty of $333. At June 27, 1997, there is no amount
outstanding under this guaranty.
- ---------------------------------------
* See Safe Harbor Statement on page 15.
-8-
<PAGE>
PART I.
CAVALIER HOMES, INC. AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations
June 27, 1997
GENERAL
The principal business of the Company since its inception has been the design,
production and sale of manufactured homes. In the first quarter of 1992, the
Company, through its wholly owned subsidiary, Cavalier Acceptance Corporation
("CAC"), commenced retail installment sale financing operations, and by the end
of 1993, these operations had become significant enough to require segment
reporting by the Company.
The Company's business is cyclical and seasonal and is influenced by many of the
same economic and demographic factors that affect the housing market as a whole.
According to the Manufactured Housing Institute, the manufactured housing
industry posted gains in shipments from 1992 through 1996, with approximate
total annual shipments of 211,000 (1992) increasing to 363,000 (1996), and with
the greatest gains occurring in the southeastern United States. The Company
conducts a substantial portion of its business in the southeastern United States
and attributes past years' strong shipment growth to a reduction of alternative
housing, increased availability of retail financing, increased consumer
confidence and continuing strength in the national economy. The Company has
increased its production capacity to better take advantage of the growth in the
industry, increasing the number of manufacturing facilities from four at the end
of 1992 to fourteen at June 27, 1997. The fourteenth manufacturing facility was
added in June 1997 when the Company purchased substantially all of the assets
and assumed certain existing liabilities of Pacer Homes, Inc., a manufacturer in
Texas, which is a growing market for the Company and the industry.
The manufactured housing industry has, over the past several years, experienced
increases in both the number of retail dealers and manufacturing capacity, which
the Company believes is currently resulting in fewer home deliveries, higher
dealer inventories, lower order backlogs and increased price competition.
Industry statistics reflect a decrease in home shipments of 3.3% through May
1997. Additionally, many of the Company's market areas experienced unusually wet
weather during portions of this period, delaying many retail deliveries by its
dealers. The Company is uncertain at this time as to what effect these factors
will have on sales and earnings during the balance of 1997 and thereafter. *
RESULTS OF OPERATIONS
The following tables set forth, for the periods and dates indicated, certain
financial and operating data, including, as applicable, the percentage of net
sales or total revenue:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME SUMMARY For the Thirteen Weeks Ended
(Dollars in Thousands) -------------------------------------------------------------------------
June 27, 1997 June 28, 1996 Difference
-------------------------- ----------------------- ------------------
Net Sales $ 90,479 100.0% $ 90,838 100.0% $ (359) -0.4%
Cost of Sales 74,746 82.6% 74,643 82.2% 103 0.1%
---------- ------ ---------- ------ ---------
Gross Profit on Sales $ 15,733 17.4% 16,195 17.8% $ (462) -2.9%
========== ========== =========
Net Sales $ 90,479 $ 90,838 $ (359) -0.4%
Financial Services 1,296 772 524 67.9%
---------- ---------- ---------
Total Revenue $ 91,775 100.0% 91,610 100.0% $ 165 0.2%
========== ========== ========
Selling, General
and Administrative $ 11,256 12.3% $ 11,183 12.2% $ 73 0.7%
Operating Profit $ 5,773 6.3% $ 5,784 6.3% $ (11) -0.2%
Net Income $ 3,557 3.9% $ 3,525 3.8% $ 32 0.9%
</TABLE>
- ---------------------------------------
* See Safe Harbor Statement on page 15.
-9-
<PAGE>
PART I.
CAVALIER HOMES, INC. AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations
June 27, 1997
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME SUMMARY For the Twenty-Six Weeks Ended
(Dollars in Thousands) ----------------------------------------------------------------------------
June 27, 1997 June 28, 1996 Difference
-------------------------- ------------------------ --------------------
Net Sales $ 166,237 100.0% $ 165,622 100.0% $ 615 0.4%
Cost of Sales 136,676 82.2% $ 136,456 82.4% 220 0.2%
----------- ------ ----------- ------ -------
Gross Profit on Sales $ 29,561 17.8% $ 29,166 17.6% 395 1.4%
=========== =========== =======
Net Sales $ 166,237 $ 165,622 $ 615 0.4%
Financial Services 2,438 1,392 $ 1,046 75.1%
----------- ----------- -------
Total Revenue $ 168,675 100.0% $ 167,014 100.0% $ 1,661 1.0%
=========== =========== =======
Selling, General
and Administrative $ 21,259 12.6% $ 20,199 12.1% $ 1,060 5.2%
Operating Profit $ 10,740 6.4% $ 10,359 6.2% $ 381 3.7%
Net Income $ 6,643 3.9% $ 6,396 3.8% $ 247 3.9%
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
OPERATING DATA SUMMARY For the Thirteen Weeks For the Twenty-Six
(Dollars in Thousands) Ended Weeks Ended
------------------------- -------------------------
June 27, June 28, June 27, June 28,
1997 1996 1997 1996
------------------------- -------------------------
Installment Loan Originations $ 4,628 $ 5,105 $ 10,491 $ 8,825
Capital Expenditures $ 2,781 $ 2,674 $ 4,032 $ 4,155
Home Shipments 3,696 3,826 6,780 6,965
Floor Section Shipments 5,342 5,439 9,817 9,886
Independent Exclusive Dealers 134 100 134 100
Home Manufacturing Facilities 14 11 14 11
</TABLE>
Net Sales. Net sales of manufactured homes for the thirteen week period ended
June 27, 1997, declined $359,000 or .4% as compared to the second quarter of
1996, and the Company experienced a moderate increase in net sales of
approximately $615,000 for the twenty-six week period ended June 27, 1997 over
the comparable period in 1996. The Company believes the slight decline in net
sales for the second quarter and the slowdown in the rate of increase in net
sales for the year-to-date period is due to increased competitive factors in the
industry caused by the growth over the last several years in the number of
dealers operating in the industry and increased manufacturing capacity,
resulting in a build-up of dealer inventories, reduced order backlogs and
increased price competition. In addition, many of the Company's markets
experienced unusually wet weather during portions of this period. Homes sold for
the second quarter and year-to-date decreased slightly by 130 homes and 185
homes, respectively. As part of the Company's marketing program, the exclusive
dealer distribution system has grown to 134 independent exclusive dealers, up
from 115 dealers at the end of 1996. The Company's product mix continues to
shift from single-section homes to multi-section homes. During the thirteen and
twenty-six weeks ended June 27, 1997, 45% of the Company's homes sold were
multi-section homes compared to 42% for the previous year's comparable period.
Financial Services Revenue. The increases in current period financial services
revenue (primarily interest income on retail installment contracts) during the
current thirteen and twenty-six week periods of $524,000 and $1,046,000, or
67.9% and 75.1%, respectively, over the comparable periods in the previous year
are primarily attributable to the growth of the Company's loan portfolio to $45
million, an increase of 68.6% over the June 1996 loan portfolio of $27 million.
Selling, General and Administrative. The growth in selling, general and
administrative expense during the current thirteen and twenty-six week periods
of $73,000 and $1,060,000, respectively, over the previous year's comparable
periods is primarily attributable to increased expenses due to the addition of
personnel, the opening and expansion of manufacturing facilities and increased
administrative expenses of the financial services segment, offset by a reduction
in performance based incentive compensation.
-10-
<PAGE>
PART I.
CAVALIER HOMES, INC. AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations
June 27, 1997
Net Income. Net income per share during the current thirteen and twenty-six week
periods was $.29 and $.54, respectively, compared to $.29 and $.53 from the
previous year's comparable periods. Net income per share has been adjusted for
all previous stock splits effected by the Company.
LIQUIDITY AND CAPITAL RESOURCES
The following table sets forth certain items relating to the measurement of
liquidity and capital resources from the Company's consolidated condensed
financial statements for the dates indicated:
<TABLE>
<CAPTION>
<S> <C> <C>
BALANCE SHEET SUMMARY Balances as of
(Dollars in Thousands) -----------------------------------------
June 27, 1997 December 31, 1996
------------------ ------------------
Cash and Cash Equivalents $ 9,992 $ 24,529
Accounts Receivable $ 21,661 $ 3,046
Working Capital $ 10,492 $ 8,474
Current Ratio 1.2 to 1 1.2 to 1
Long-Term Debt $ 10,747 $ 4,918
Ratio of Long-Term Debt to Equity 1 to 7 1 to 14
Installment Loan Portfolio $ 44,998 $ 36,425
</TABLE>
Working capital increased by approximately $2 million from December 31, 1996 to
June 27, 1997, primarily due to earnings during the period reduced by capital
expenditures and originations of installment contracts by CAC which were offset
by long-term debt borrowings.
The increase in accounts receivable from December 31, 1996 to June 27, 1997, is
a normal seasonal occurrence. As is customary for the Company, most of its
manufacturing operations are idle during the final two weeks of the year for
vacations, holidays and reduced product demand, and during this time, the
Company collects the majority of its outstanding receivables.
The Company's primary business segment is the production and sale of
manufactured housing. In 1992, the Company began the operations of CAC to fund
installment sale contracts to the retail customers of the Company's independent
exclusive dealers. As the operations of CAC expanded, in February 1994, the
Company entered into a credit facility with its primary lender (the "Credit
Facility") (see footnote 4 to the consolidated condensed financial statements
included herein) to provide additional funds for CAC's growth. As of June 27,
1997, the Company's portfolio of installment sale contracts had grown to
approximately $45 million and had been funded primarily with internally
generated working capital, borrowings under the Credit Facility and a portion of
the net proceeds from an offering of the Company's common stock during 1994.
Since entering into the Credit Facility, the Company has had aggregate
borrowings of $11.7 million in order to continue to fund the operations of CAC
and to reduce the interest rate risk of the Company's loan portfolio. The
Company expects to continue to borrow funds under the Credit Facility to finance
the continuing operations and growth of CAC.* On March 14, 1996, the Company
executed an amendment to the Credit Facility which increased the maximum
available borrowings under the warehouse and term-loan agreements contained in
the Credit Facility to $18 million from the previous limit of $8 million. The
amendment increased the total amount of available borrowings under the Credit
Facility (including the revolving line of credit) to $23 million from $13
million. In addition to the increase in available borrowings under the Credit
Facility, the interest rate on prospective borrowings under the term-loan
portion of the agreement was reduced by .40%.
- ---------------------------------------
* See Safe Harbor Statement on page 15.
-11-
<PAGE>
PART I.
CAVALIER HOMES, INC. AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations
June 27, 1997
The Company's growth strategy currently includes the continued expansion of the
financial services segment of its business. Accordingly, it is likely that the
Company will incur additional debt, or other forms of financing, in order to
continue to fund such growth.* The Company currently believes that existing cash
and investment balances and funds available under the Credit Facility, together
with cash provided by operations, will be adequate to fund the Company's
operations and expansion plans for the next twelve months; however, there can be
no assurance to this effect.* In order to provide additional funds for continued
pursuit of the Company's growth strategies and for operations, the Company may
incur, from time to time, additional short and long-term bank indebtedness and
may issue, in public or private transactions, its equity and debt securities,
the availability and terms of which may depend upon market and other
conditions.* The Company may also engage in other transactions, such as selling
or securitizing portions of its installment loan portfolio, that are designed to
facilitate the ability of the Company to originate an increased volume of loans
and to reduce the Company's exposure to interest rate fluctuations.* There can
be no assurance that such possible additional financing, or the aforementioned
transactions involving the Company's installment loan portfolio, will be
available on terms acceptable to the Company; if they are not, the Company may
be forced to curtail the expansion of its financial services business and to
alter its growth strategies.
The Company's capital expenditures were approximately $4.0 million for the
twenty-six weeks ended June 27, 1997, as compared to $4.2 million for the
comparable period of 1996. Capital expenditures during these periods included
normal property, plant and equipment additions and replacements and the
continued expansion and modernization of certain of the Company's manufacturing
facilities.
RECENT ANNOUNCEMENT
As reflected in Item 5 below, on August 4, 1997, the Company announced that it
is engaged in discussions with Belmont Homes, Inc. (NASDAQ/NM:BHIX) regarding a
possible strategic combination with Belmont. Under the terms tentatively being
discussed, each common share of Belmont would be converted at a fixed exchange
ratio equal to 0.80 common shares of the Company for each Belmont share owned in
a tax-free reorganization accounted for as a pooling-of-interests.
Belmont Homes, Inc. is subject to the informational requirements of the
Securities Exchange Act of 1934 (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Copies of such reports,
proxy statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, Judiciary Plaza,
450 Fifth Street, N.W., Washington D.C. 20549 and at the following Regional
Offices of the Commission: Seven World Trade Center, 13th Floor, New York, New
York 10048 and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such material can be obtained at prescribed rates from
the Public Reference Section of the Commission, 450 Fifth Street, N.W.,
Washington, D.C. 20549. The Commission also maintains a site on the World Wide
Web at http://www.sec.gov that contains reports, proxy statements and other
information regarding registrants that file electronically with the Commission.
The common stock of Belmont is quoted on the Nasdaq National Market, and such
reports, proxy statements and other information can also be inspected at the
offices of Nasdaq, 1735 K Street, Washington, D.C. 20006. The Company makes no
representation and assumes no responsibility for the accuracy or completeness of
any such reports, proxy statements or other information.
The Boards of Directors of the two companies have not yet met to approve the
possible combination. There can be no assurance that an agreement regarding such
a strategic combination with Belmont will be executed, that the terms of such
agreement will be acceptable to all parties or that the transaction will be
consummated. There can also be no representation or assurance made as to the
possible impact of the potential strategic combination on the consolidated
financial condition and results of operations of the Company should such a
strategic combination occur.
- ---------------------------------------
* See Safe Harbor Statement on page 15.
-12-
<PAGE>
PART II.
CAVALIER HOMES, INC. AND SUBSIDIARIES
Other Information
June 27,1997
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company's Annual Meeting of Stockholders was held on May 14,
1997. Each person who was then serving as a member of the Board
of Directors was re-elected for another year. The votes for each
nominee were cast as follows:
Shares Voting
-------------------------------
For Against Withheld
--- ------- ---------
Barry B. Donnell 9,999,779 -0- 510,549
David A. Roberson 9,997,370 -0- 512,958
Michael R. Murphy 9,993,658 -0- 516,670
Thomas A. Broughton, III 9,980,933 -0- 529,395
John W Lowe 9,977,160 -0- 533,168
Lee Roy Jordan 9,979,683 -0- 530,645
Gerald W. Moore 9,973,975 -0- 536,353
The stockholders ratified the Board of Directors' appointment of
Deloitte & Touche LLP as Independent Certified Public Accountants
for the Company. The appointment was ratified by a vote of
10,480,417 shares for, 13,907 shares against and 16,004
abstentions.
The stockholders voted to amend the Amended and Restated
Certificate of Incorporation to increase the number of authorized
shares of Common Stock of the Company from 15,000,000 to
50,000,000. The amendment was approved by a vote of 8,395,992
shares for, 1,967,481 shares against and 146,855 abstentions.
ITEM 5 OTHER MATTERS
On August 4, 1997, the Company announced that it is engaged in
discussions with Belmont Homes, Inc. (NASDAQ/NM:BHIX) regarding a
possible strategic combination with Belmont. Under the terms
tentatively being discussed, each common share of Belmont would
be converted at a fixed exchange ratio equal to 0.80 common
shares of the Company for each Belmont share owned in a tax-free
reorganization accounted for as a pooling-of-interests. The
Boards of Directors of the two companies have not yet met to
approve the possible combination. There can be no assurance that
an agreement will be executed, that the terms of any such
agreement will be acceptable to all parties or that the
transaction will be consummated.
The Board of Directors has declared its regular quarterly cash
dividend of $.03 per share payable on August 15, 1997 to
stockholders of record on July 31, 1997.
-13-
<PAGE>
PART II.
CAVALIER HOMES, INC. AND SUBSIDIARIES
Other Information
June 27, 1997
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
The exhibits required to be filed with this report are listed
below. The Company will furnish upon request the exhibit listed
upon the receipt of $15.00 per exhibit, plus $.50 per page, to
cover the cost to the Company of providing the exhibit.
(a) (3) Articles of Incorporation and By-laws.
(a) The Amended and Restated Certificate of
Incorporation of the Company, filed as Exhibit
3(a) to the Company's Annual Report on Form
10-K for the year ended December 31, 1993, is
incorporated herein by reference.
(b) Amendment to the Amended and Restated
Certificate of Incorporation of the Company.
(c) The Certificate of Designation of Series A
Junior Participating Preferred Stock of
Cavalier Homes, Inc. as filed with the Office
of the Delaware Secretary of State on October
24, 1996 and filed as Exhibit A to Exhibit 4 to
the Company's Registration Statement on Form
8-A filed on October 30, 1996, is incorporated
herein by reference.
(d) The Amended and Restated By-laws of the
Company.
(4) Instruments Defining the Rights of Security
Holders.
(a) Articles four, six, seven, eight and nine of
the Company's Amended and Restated Certificate
of Incorporation, as amended, included in
Exhibit 3(a) and 3(b) above.
(b) Article II, Sections 2.1 through 2.18; Article
III, Sections 3.1 and 3.2; Article IV, Sections
4.1 and 4.3; Article VI, Sections 6.1 through
6.5; Article VIII, Sections 8.1 and 8.2; and
Article IX of the Company's Amended and
Restated By-laws, included in Exhibit 3(d)
above.
(c) Rights Agreement between Cavalier Homes, Inc.
and ChaseMellon Shareholder Services, LLC,
filed as Exhibit 4 to the Company's Current
Report on Form 8-K dated October 30, 1996, is
incorporated herein by reference.
(10) Material Contracts.
(a) Guaranty Agreement between SouthTrust Bank
of Alabama and Cavalier Homes, Inc. dated June
20, 1997, relating to guaranty of payments by
Quality Housing Supply, LLC.
(b) Guaranty Agreement between AmSouth Bank of
Alabama and Cavalier Homes, Inc. dated June
11, 1997, relating to guaranty of payments by
Ridge Pointe Manufacturing, LLC.
(11) Computation of Net Income per Common Share.
(27) Article 5 - Financial Data Schedule for Form 10-Q
submitted as Exhibit 27 as an EDGAR filing only.
(b) The Company did not file a Current Report on Form
8-K during the quarter for which this report was
filed.
-14-
<PAGE>
PART II.
CAVALIER HOMES, INC. AND SUBSIDIARIES
Other Information
June 27, 1997
"Safe Harbor" Statement under the Private Securities Litigation Reform Act
of 1995:
With the exception of historical factual information, the matters and statements
discussed, made or incorporated by reference in this Quarterly Report on Form
10-Q (including statements regarding trends in the industry and the business and
growth and financing strategies of the Company), as well as those statements
specifically designated with an asterisk (*), constitute forward-looking
statements, contain the words "believes," "anticipates," "expects," and words of
similar import, are based upon current expectations and are made pursuant to the
safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
Such forward-looking statements and words involve known and unknown assumptions,
risks, uncertainties and other factors which may cause the actual results,
performance or achievements of the Company to be materially different from any
future results, performance, or achievements expressed or implied by such
forward-looking statements or words. Such assumptions, risks, uncertainties and
factors include those associated with general economic and business conditions;
manufactured housing and retail consumer financing industry trends, cyclicality
and seasonality; availability of consumer and dealer financing; changes and
volatility and uncertainty in interest rates; the sufficiency of reserves
established for installment contract receivables; warranty, product liability,
workers' compensation and other litigation arising in the course of the
Company's manufacturing and financial services business; contingent repurchase
and guaranty obligations; dependence on key personnel and favorable
relationships with employees; demographic changes; whether the current and
emerging generations of retirees will have the same interest in purchasing
manufactured homes; competition; raw material and labor costs and availability;
import protection and regulation; relationships with and dependence on
customers, distributors and dealers; changes in the business strategy or
development plans of the Company; the availability, terms and deployment of
capital; changes in or the failure to comply with government regulations; and
the inability or failure to identify or consummate successful acquisitions or to
assimilate the operations of any acquired businesses with those of the Company;
and other assumptions, risks uncertainties and factors reflected from time to
time in the Company's filings with the Securities and Exchange Commission. The
Company expressly disclaims any obligation to update any forward-looking
statements as a result of developments occurring after the filing of this
report.
-15-
<PAGE>
PART II.
CAVALIER HOMES, INC. AND SUBSIDIARIES
Other Information
June 27, 1997
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Cavalier Homes, Inc.
--------------------
Registrant
Date: August 11, 1997 /s/ David A.Roberson
--------------- ---------------------
David A. Roberson - President
and Chief Executive Officer
Date: August 11, 1997 /s/ Michael R. Murphy
--------------- ---------------------
Michael R. Murphy -
Chief Financial Officer (Principal
Financial and Accounting Officer)
-16-
<PAGE>
CERTIFICATE OF AMENDMENT
TO THE
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
CAVALIER HOMES, INC.
In accordance with the provisions of Sections 103 and 242 of the
General Corporation Law of the State of Delaware, Cavalier Homes, Inc., a
Delaware corporation (the "Corporation"), does hereby certify as follows:
1. Article 4 of the Amended and Restated Certificate of
Incorporation of the Corporation shall be amended by replacing the first
paragraph of Article 4 with the following:
4. The total number of shares of stock which the corporation
shall have authority to issue is 50,500,000; 50,000,000 of the
authorized shares shall be Common Stock, $.10 par value each; and
500,000 of the authorized shares shall be Preferred Stock, $.01 par
value each.
2. The foregoing amendment to the Amended and Restated Certificate
of Incorporation of the Corporation has been duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, Cavalier Homes, Inc. has caused this certificate
to be signed by Barry B. Donnell, its Chairman of the Board, and attested by
Michael R. Murphy, its Secretary, as of the ____ day of May, 1997.
CAVALIER HOMES, INC.
By:---------------------------
Barry B. Donnell
Its Chairman of the Board
ATTEST:
By:---------------------------
Michael R. Murphy
Its Secretary
AMENDED AND RESTATED
B Y - L A W S
OF
CAVALIER HOMES, INC.
A Delaware Corporation
<PAGE>
TABLE OF CONTENTS
ARTICLE I OFFICES
Section 1.1 Registered Office..........................................1
Section 1.2 Additional Offices.........................................1
Section 1.3 Books and Records..........................................1
ARTICLE II MEETINGS OF STOCKHOLDERS
Section 2.1 Place of Meeting...........................................1
Section 2.2 Annual Meetings............................................1
Section 2.3 Notice of Annual Meetings..................................1
Section 2.4 Notice of Stockholder Business and Nominations.............2
Section 2.5 Procedure for Election of Directors........................4
Section 2.6 Special Meetings...........................................4
Section 2.7 Notice of Special Meetings.................................4
Section 2.8 Business at Special Meetings...............................4
Section 2.9 List of Stockholders.......................................4
Section 2.10Record Date................................................4
Section 2.11Quorum.....................................................5
Section 2.12Voting.....................................................5
Section 2.13Proxies....................................................6
Section 2.14Inspectors of Elections; Opening and Closing the Polls.....6
Section 2.15Postponement, Cancellation and Conduct of Meetings.........6
Section 2.16Record Date for Action by Written Consent..................7
Section 2.17Inspectors of Written Consent..............................7
Section 2.18Effectiveness of Written Consent...........................7
ARTICLE III DIRECTORS
Section 3.1 Number and Term............................................8
Section 3.2 Vacancies; Removal.........................................8
Section 3.3 Powers.....................................................8
Section 3.4 Place of Meetings..........................................8
Section 3.5 Annual Meetings............................................9
Section 3.6 Regular Meetings...........................................9
Section 3.7 Special Meetings...........................................9
Section 3.8 Quorum; Telephone Meetings.................................9
Section 3.9 Action by Consent..........................................9
Section 3.10Committees.................................................9
Section 3.11Minutes of Committees.....................................10
Section 3.12Compensation..............................................10
Section 3.13Conflict of Interest......................................10
Section 3.14Presumption of Assent.....................................11
ARTICLE IV NOTICES
Section 4.1 Notice to Stockholders....................................11
Section 4.2 Notice to Directors.......................................11
Section 4.3 Waiver of Notice..........................................12
ARTICLE V OFFICERS
Section 5.1 Officers..................................................12
Section 5.2 Compensation..............................................13
Section 5.3 Election and Term of Office...............................13
Section 5.4 Removal...................................................13
Section 5.5 Vacancies.................................................13
Section 5.6 Duties of Officers........................................13
ARTICLE VI CERTIFICATES OF STOCK
Section 6.1 Certificates..............................................15
Section 6.2 Signatures................................................15
Section 6.3 Lost, Stolen or Destroyed Certificates....................15
Section 6.4 Transfer of Stock.........................................16
Section 6.5 Registered Stockholders...................................16
ARTICLE VII INDEMNIFICATION
Section 7.1 Indemnification in Actions Arising Out of Capacity as
Officer, Directors, Employee or Agent...........................16
Section 7.2 Indemnification in Actions by or in Right of Corporation..17
Section 7.3 Indemnification When Successful on Merits or Otherwise....17
Section 7.4 Determination of Meeting Applicable Standard..............17
Section 7.5 Payment of Expenses in Advance of Disposition of Action...17
Section 7.6 Nonexclusivity of Article.................................18
Section 7.7 Insurance.................................................18
Section 7.8 Constituent Corporations..................................18
Section 7.9 Definitions...............................................18
ARTICLE VIII GENERAL PROVISIONS
Section 8.1 Dividends.................................................19
Section 8.2 Reserves..................................................19
Section 8.3 Checks....................................................19
Section 8.4 Fiscal Year...............................................19
Section 8.5 Seal......................................................19
Section 8.6 Contracts.................................................19
Section 8.7 Voting of Corporation's Securities........................20
Section 8.8 Procedure.................................................20
Section 8.9 Resignations..............................................20
ARTICLE IX AMENDMENT OF BY-LAWS
HISTORY OF BY-LAWS
<PAGE>
BY-LAWS OF
CAVALIER HOMES, INC.
A Delaware Corporation
ARTICLE I
OFFICES
Section I.1 Registered Office. The registered office shall be in
the City of Wilmington, County of New Castle, State of Delaware.
Section I.2 Additional Offices. The principal office of the
corporation shall be located in Addison, Alabama. The corporation may also have
offices at such other places both within and without the State of Delaware as
the board of directors may from time to time determine or the business of the
corporation may require.
Section I.3 Books and Records. Books and records of the corporation
may be kept outside the State of Delaware at such place or places as may from
time to time be designated by the board of directors.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section II.1 Place of Meeting. All meetings of the stockholders for
the election of directors shall be held at such place either within or without
the State of Delaware as shall be designated from time to time by the board of
directors and stated in the notice of the meeting. Meetings of stockholders for
any other purpose may be held at such time and place, within or without the
State of Delaware, as shall be stated in the notice of the meeting.
Section II.2 Annual Meetings. The annual meeting of stockholders of
the corporation shall be held on such date and at such place and time as may be
fixed by resolution of the Board of Directors. At the annual meeting, the
stockholders shall elect a board of directors and transact such other business
as may properly be brought before the meeting.
Section II.3 Notice of Annual Meetings. Unless otherwise required by
law, written notice of the annual meeting stating the place, date and hour of
the meeting shall be given to each stockholder entitled to vote at such meeting
not less than ten (10) nor more than sixty (60) days before the date of the
meeting. Such further notice shall be given as may be required by law.
Section II.4 Notice of Stockholder Business and Nominations.
(a) Annual Meetings of Stockholders. (1) Nominations of
persons for election to the board of directors of the corporation and the
proposal of business to be considered by the stockholders may be made at an
annual meeting of stockholders (A) pursuant to the corporation's notice of
meeting, (B) by or at the direction of the board of directors or (C) by any
stockholder of the corporation who was a stockholder of record at the time of
giving of notice provided for in this by-law, who is entitled to vote at the
meeting and who complies with the notice procedures set forth in this by-law.
(2) For nominations or other business to be
properly brought before an annual meeting by a stockholder pursuant to clause
(C) of Paragraph (a)(1) of this by-law, the stockholder must have given timely
notice thereof in writing to the secretary of the corporation and such other
business must be otherwise be a proper matter for stockholder action. To be
timely, a stockholder's notice shall be delivered to the secretary at the
principal executive offices of the corporation not later than the close of
business on the sixtieth (60th) day nor earlier than the close of business on
the ninetieth (90th) day prior to the first anniversary of the preceding year's
annual meeting; provided, however, that in the event that the date of the annual
meeting is more than thirty (30) days before or more than sixty (60) days after
such anniversary date, notice by the stockholder to be timely must be so
delivered not earlier than the close of business on the ninetieth (90th) day
prior to such annual meeting and not later than the close of business on the
later of the sixtieth (60th) day prior to such annual meeting or the tenth
(10th) day following the day on which public announcement of the date of such
meeting is first made by the corporation. In no event shall the public
announcement of an adjournment of an annual meeting commence a new time period
for the giving of a stockholder's notice as described above. Such stockholder's
notice shall set forth (A) as to each person whom the stockholder proposes to
nominate for election or re-election as a director all information relating to
such person that is required to be disclosed in solicitations of proxies for
election of directors in an election contest, or is otherwise required to be
disclosed in solicitations of proxies for election of directors in an election
contest, or is otherwise required, in each case pursuant to Regulation 14A under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and Rule
14a-11 thereunder (including such person's written consent to being named in the
proxy statement as a nominee and to serving as a director if elected); (B) as to
any other business that the stockholder proposes to bring before the meeting, a
brief description of the business desired to be brought before the meeting, the
reasons for conducting such business at the meeting and any material interest in
such business of such stockholder and the beneficial owner, if any, on whose
behalf the proposal is made; and (C) as to the stockholder giving the notice and
the beneficial owner, if any, on whose behalf the nomination or proposal is made
(i) the name and address of such stockholder, as they appear on the
corporation's books, and of such beneficial owner and (ii) the class and number
of shares of the corporation which are owned beneficially and of record by such
stockholder and beneficial owner.
(3) Notwithstanding anything in the second sentence of
paragraph (a)(2) of this by-law to the contrary, in the event that the number of
directors to be elected to the board of directors of the corporation is
increased and there is no public announcement by the corporation naming all of
the nominees for director or specifying the size of the increased board of
directors at least seventy (70) days prior to the first anniversary of the
preceding year's annual meeting, a stockholder's notice required by this by-law
shall also be considered timely, but only with respect to nominees for any new
positions created by such increase, if it shall be delivered to the secretary at
the principal executive offices of the corporation not later than the close of
business on the tenth (10th) day following the day on which such public
announcement is first made by the corporation.
(b) Special Meetings of Stockholders. Only such business shall be
conducted at a special meeting of stockholders as shall have been brought before
the meeting pursuant to the corporation's notice of meeting. Nominations of
persons for election to the board of directors may be made at a special meeting
of stockholders at which directors are to be elected pursuant to the
corporation's notice of meeting (A) by or at the direction of the board of
directors or (B) provided that the board of directors has determined that
directors shall be elected at such meeting, by any stockholder of the
corporation who is a stockholder of record at the time of giving of notice
provided for in this by-law, who shall be entitled to vote at the meeting and
who complies with the notice procedures set forth in this by-law. In the event
the corporation calls a special meeting of stockholders for the purpose of
electing one or more directors to the board of directors, any such stockholder
may nominate a person or persons (as the case may be), for election to such
position(s) as specified in the corporation's notice of meeting, if the
stockholder's notice required by paragraph (a)(2) of this by-law shall be
delivered to the secretary at the principal executive offices of the corporation
not earlier than the close of business on the ninetieth (90th) day prior to such
special meeting and not later than the close of business on the later of the
sixtieth (60th) day prior to such special meeting or the tenth (10th) day
following the day on which public announcement is first made of the date of the
special meeting and of the nominees proposed by the board of directors to be
elected at such meeting. In no event shall the public announcement of an
adjournment of a special meeting commence a new time period for the giving of a
stockholder's notice as described above.
(c) General. (1) Only such persons who are nominated in accordance
with the procedures set forth in this by-law shall be eligible to serve as
directors and only such business shall be conducted at a meeting of stockholders
as shall have been brought before the meeting in accordance with the procedures
set forth in this by-law. Except as otherwise provided by law, the certificate
of incorporation or these by-laws, the chairman of the meeting shall have the
power and duty to determine whether a nomination or any business proposed to be
brought before the meeting was made or proposed, as the case may be, in
accordance with the procedures set forth in this by-law; and, if any proposed
nomination or business is not in compliance with this by-law, to declare that
such defective proposal or nomination shall be disregarded.
(2) For purposes of this by-law, "public announcement" shall
mean disclosure in a press release reported by the Dow Jones News Service,
Associated Press or comparable national news service or in a document publicly
filed by the corporation with the Securities and Exchange Commission pursuant to
Section 13, 14 or 15(d) of the Exchange Act.
(3) Notwithstanding the foregoing provisions of this by-law, a
stockholder shall also comply with all applicable requirements of the Exchange
Act and the rules and regulations thereunder with respect to the matters set
forth in this by-law. Nothing in this by-law shall be deemed to affect any
rights (i) of stockholders to request inclusion of proposals in the
corporation's proxy statement pursuant to Rule 14a-8 under the Exchange Act or
(ii) of the holders of any series of Preferred Stock to elect directors under
specified circumstances.
Section II.5 Procedure for Election of Directors.
Except as otherwise provided by the certificate of incorporation of the
corporation, election of directors at all meetings of the stockholders at which
directors are to be elected shall be by ballot.
Section II.6 Special Meetings. Special meetings of the stockholders,
for any purpose or purposes, unless otherwise prescribed by statute or by the
certificate of incorporation, may be called by the president and shall be called
by the president or secretary at the request in writing of a majority of the
total number of directors which the corporation would have if there were no
vacancies (the "Whole Board"). Such request shall state the purpose or purposes
of the proposed meeting.
Section II.7 Notice of Special Meetings. Unless otherwise required
by law, written notice of a special meeting stating the place, date and hour of
the meeting and the purpose or purposes for which the meeting is called, shall
be given not less than ten (10) nor more than sixty (60) days before the date of
the meeting to each stockholder entitled to vote at such meeting. Such further
notice shall be given as may be required by law.
Section II.8 Business at Special Meetings. Business
transacted at any special meeting of stockholders shall be limited to the
purposes stated in the notice.
Section II.9 List of Stockholders. The officer who has charge of the
stock ledger of the corporation shall prepare and make, at least ten (10) days
before every meeting of stockholders, a complete list of the stockholders
entitled to vote at the meeting, arranged in alphabetical order, and showing the
address of each stockholder and the number of shares registered in the name of
each stockholder. Such list shall be open to the examination of any stockholder,
for any purpose germane to the meeting, during ordinary business hours, for a
period of at least ten (10) days prior to the meeting, either at a place within
the city where the meeting is to be held, which place shall be specified in the
notice of the meeting, or, if not so specified, at the place where the meeting
is to be held. The list shall also be produced and kept at the time and place of
the meeting during the whole time thereof, and may be inspected by any
stockholder who is present. The original stock transfer books shall be prima
facie evidence as to who are the stockholders entitled to examine such list or
stock ledger or to vote, in person or by proxy, at any meeting of stockholders.
Except as otherwise required by law, failure to comply with the requirements of
this section shall not affect the validity of any action taken at such meeting.
Section II.10 Record Date Section. In order that the corporation
may determine the stockholders entitled to notice of or to vote at any meeting
of stockholders or any adjournment thereof, or allotment of any rights or the
stockholders entitled to exercise any rights of any change, conversion or
exchange of stock, or for the purpose of any other lawful action, the board of
directors may fix a record date, which record date shall not precede the
date upon which the resolution fixing the record date is adopted by the board
of directors, and which record date shall not be more than sixty (60) nor less
than ten (10) days before the date of such meeting. If no record date is fixed
by the board of directors, the record date for determining stockholders entitled
to notice of or to vote at a meeting of stockholders shall be at the close of
business on the day next preceding the day on which notice is given, or, if
notice is waived, at the close of business on the day next preceding the day on
which the meeting is held. A determination of stockholders of record entitled
to notice of or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting; provided, however, that the board of directors may
fix a new record date for the adjourned meeting.
Section II.11 Quorum. Except as otherwise provided by law or the
corporation's certificate of incorporation, the holders of a majority of the
total votes (as determined in the manner provided in Section 2.12 below) of all
classes of the stock issued and outstanding and entitled to vote thereat (the
"Voting Stock") (all such classes being aggregated together as a single class
for purposes of determining a quorum under this Section 2.11), present in person
or represented by proxy, shall constitute a quorum at all meetings of the
stockholders for the transaction of business except that when specified business
is to be voted on by a class or series of stock voting as a class, the holders
of a majority of the shares of such class or series shall constitute a quorum of
such class or series for the transaction for such business. At any meeting of
stockholders, whether annual or special, or any adjournment thereof, including
any such meeting at which a quorum shall not be present or represented, the
chairman of the meeting or a majority of the stockholders entitled to vote
thereat, present in person or represented by proxy, shall have power to adjourn
the meeting from time to time, without notice other than announcement at the
meeting. At such adjourned meeting at which a quorum shall be present or
represented any business may be transacted which might have been transacted at
the meeting as originally notified. If the adjournment is for more than thirty
(30) days, or if after the adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the meeting. The stockholders present
at a duly called meeting at which a quorum is present may continue to transact
business until adjournment, notwithstanding the withdrawal of enough
stockholders to leave less than a quorum.
Section II.12 Voting. Unless otherwise provided in the certificate
of incorporation of the corporation, and subject to the provisions of the
General Corporation Law of the State of Delaware concerning the fixing of a date
for determination of stockholders of record, each stockholder shall be entitled
to one vote for each share of capital stock held by such stockholder. When a
quorum is present at any meeting, the vote of the holders of a majority of the
"total votes" of the stock present in person or represented by proxy at such
meeting shall decide any question, other than the election of directors, brought
before such meeting, unless the question is one upon which by express provision
of the statutes or of the certificate of incorporation a different vote is
required in which case such express provision shall govern and control the
decision of such question. All classes of stock of the corporation will vote
together as a single class on all matters coming before the stockholders, except
as otherwise provided by the General Corporation Law of the State of Delaware or
by the certificate of incorporation. For purposes of these by-laws, "total
votes" shall be determined (i) by multiplying the number of shares of each class
of stock entitled to vote by the number of votes for each share of such class as
authorized by the certificate of incorporation (or in the absence of such
express authorization in the certificate of incorporation, the number of votes
for each share as provided by the General Corporation Law of the State of
Delaware), and (ii) by totaling the sum of the votes of each class as determined
in (i), which shall produce the number of "total votes." Subject to the
provisions of the certificate of incorporation and to the rights of the holders
of any series of Preferred Stock to elect directors under specified
circumstances, all elections of directors by the stockholders of the corporation
shall be by plurality vote of the "total votes."
Section II.13 Proxies. At all meetings of stockholders, a
stockholder may vote by proxy executed in writing (or in such manner prescribed
by the General Corporation Law of the State of Delaware) by the stockholder, or
by his duly authorized attorney-in-fact. No proxy shall be voted or acted upon
after three (3) years from its date, unless the proxy provides for a longer
period.
Section II.14 Inspectors of Elections; Opening and Closing
The board of directors by resolution shall appoint one or more inspectors,
which inspector or inspectors may include individuals who serve the corporation
in other capacities, including, without limitation, as officers, employees,
agents or representatives, to act at the meetings of stockholders and make a
written report thereof. One or more persons may be designated as alternate
inspectors to replace any inspector who fails to act. If no inspector or
alternate has been appointed to act or is able to act at a meeting of
stockholders, the chairman of the meeting shall appoint one or more inspectors
to act at the meeting. Each inspector, before discharging his or her duties,
shall take and sign an oath faithfully to execute the duties of inspector with
strict impartiality and according to the best of his or her ability. The
inspectors shall have the duties prescribed by law. The chairman of the meeting
shall fix and announce at the meeting the date and time of the opening and the
closing of the polls for each matter upon which the stockholders will vote at a
meeting.
Section II.15 Postponement,Cancellation and Conduct of Meetings.
Any previously scheduled meeting of the stockholders may be postponed, and
(unless the certificate of incorporation otherwise provides) any special meeting
of the stockholders may be canceled, by resolution of the board of directors
upon public notice given prior to the date previously scheduled for such meeting
of stockholders. The board of directors may to the extent not prohibited by law
adopt by resolution such rules and regulations for the conduct of meetings of
stockholders as it shall deem appropriate. Except to the extent inconsistent
with such rules and regulations as adopted by the board of directors, the
chairman of any meeting of stockholders shall have the right and authority to
prescribe such rules, regulations and procedures and to do all such acts as, in
the judgment of such chairman, are appropriate for the proper conduct of the
meeting. Such rules, regulations or procedures, whether adopted by the board of
directors or prescribed by the chairman of the meeting, may to the extent not
prohibited by law include, without limitation, the following: (i) the
establishment of an agenda or order of business for the meeting; (ii) rules and
procedures for maintaining order at the meeting and the safety of those present;
(iii) limitations on attendance at or participation in the meeting to
stockholders of record of the corporation, their duly authorized and constituted
proxies or such other persons as the chairman of the meeting shall determine;
(iv) restrictions on entry to the meeting after the time fixed for the
commencement thereof; and (v) limitations on the time allotted to questions or
comments by participants. Unless, and to the extent, determined by the board of
directors or the chairman of the meeting, meetings of stockholders shall not be
required to be held in accordance with the rules of parliamentary procedure.
Section II.16 Record Date for Action by Written Consent.
In order that the corporation may determine the stockholders entitled to
consent to corporate action in writing without a meeting, the board of directors
may fix a record date, which record date shall not precede the date upon which
the resolution fixing the record date is adopted by the board of directors, and
which date shall not be more than ten (10) days after the date upon which the
resolution fixing the record date is adopted by the board of directors. Any
stockholder of record seeking to have the stockholders authorize or take
corporate action by written consent shall, by written notice to the secretary,
request the board of directors to fix a record date. The board of directors
shall promptly, but in all events within ten (10) days after the date on which
such a request is received, adopt a resolution fixing the record date. If no
record date has been fixed by the board of directors within ten (10) days of the
date on which such a request is received, the record date for determining
stockholders entitled to consent to corporate action in writing without a
meeting, when no prior action by the board of directors is required by
applicable law, shall be the first date on which a signed written consent
setting forth the action taken or proposed to be taken is delivered to the
corporation by delivery to its registered office in Delaware, its principal
place of business or to any officer or agent of the corporation having custody
of the book in which proceedings of meetings of stockholders are recorded.
Delivery made to the corporation's registered office shall be by hand or by
certified or registered mail, return receipt requested. If no record date has
been fixed by the board of directors and prior action by the board of directors
is required by applicable law, the record date for determining stockholders
entitled to consent to corporate action in writing without a meeting shall be at
the close of business on the date on which the board of directors adopts the
resolution taking such prior action.
Section II.17 Inspectors of Written Consent.
In the event of the delivery, in the manner provided by Section 2.16, to
the corporation of the requisite written consent or consents to take corporate
action and/or any related revocation or revocations, the corporation shall
engage nationally recognized independent inspectors of elections for the purpose
of promptly performing a ministerial review of the validity of the consents and
revocations. For the purpose of permitting the inspectors to perform such
review, no action by written consent without a meeting shall be effective until
such date as the independent inspectors certify to the corporation that the
consents delivered to the corporation in accordance with Section 2.16 represent
at least the minimum number of votes that would be necessary to take the
corporate action. Nothing contained in this paragraph shall in any way be
construed to suggest or imply that the board of directors or any stockholder
shall not be entitled to contest the validity of any consent or revocation
thereof, whether before or after such certification by the independent
inspectors, or to take any other action (including, without limitation, the
commencement, prosecution or defense of any litigation with respect thereto, and
the seeking of injunctive relief in such litigation).
Section II.18 Effectiveness of Written Consent.
Every written consent shall bear the date of signature of each stockholder
who signs the consent and no written consent shall be effective to take the
corporate action referred to therein unless, within sixty (60) days of the date
the earliest dated written consent was received in accordance with Section 2.16,
a written consent or consents signed by a sufficient number of holders to take
such action are delivered to the corporation in the manner prescribed in Section
2.16.
ARTICLE III
DIRECTORS
Section III.1 Number and Term. The number of directors which shall
constitute the Whole Board shall be not less than one nor more than ten, the
exact number to be determined by resolution of a majority of the Whole Board,
subject to the rights of the holders of any series of Preferred Stock to elect
directors in specified circumstances. The number of directors may be increased
or decreased from time to time in the manner provided by the by-laws for the
amendment thereof, but no decrease shall have the effect of shortening the term
of any incumbent director. Any director whose term of office has expired shall
continue to hold office until his successor shall be elected and qualify.
Section III.2 Vacancies; Removal. Subject to the certificate of
incorporation of the corporation, vacancies and newly created directorships
resulting from any increase in the authorized number of directors may be filled
by a majority of the directors then in office, though less than a quorum, or by
a sole remaining director, and the directors so chosen shall hold office until
the next annual election and until their successors are duly elected and shall
qualify, unless sooner removed. If there are no directors in office, then an
election of directors may be held in the manner provided by statute. If, at the
time of filling any vacancy or any newly created directorship, the directors
then in office shall constitute less than a majority of the Whole Board (as
constituted immediately prior to any such increase), the Court of Chancery may,
upon application of any stockholder or stockholders holding at least ten percent
(10%) of the total number of the shares at the time outstanding having the right
to vote for such directors, summarily order an election to be held to fill any
such vacancies or newly created directorships, or to replace the directors
chosen by the directors then in office. Subject to the rights of the holders of
any series of Preferred Stock with respect to such series of Preferred Stock,
any director, or the entire board of directors, may be removed from office at
any time, with or without cause, by the holders of a majority of shares of the
corporation then entitled to vote generally in the election of directors. The
holder of each share of capital stock entitled to vote thereon shall be entitled
to cast the same number of votes as the holder of such shares is entitled to
cast generally in the election of each director.
Section III.3 Powers. The business and operations of the corporation
shall be managed by or under the direction of its board of directors which may
exercise all such powers of the corporation and do all such lawful acts and
things as are not by statute or by the certificate of incorporation or by these
by-laws required to be exercised or done by the stockholders.
Section III.4 Place of Meetings. The board of directors of the
corporation may hold meetings, both regular and special, either within or
outside the State of Delaware.
Section III.5 Annual Meetings.
The first meeting of each newly elected board of directors shall be held at
the same place as the annual meeting of the stockholders immediately following
the adjournment thereof, and no notice of such meeting shall be necessary to the
newly elected directors in order legally to constitute the meeting, provided a
quorum shall be present. In the event of the failure of the board of directors
to hold such meeting at the same place as the annual meeting of the stockholders
immediately following the adjournment thereof, the meeting may be held at such
time and place as shall be specified in a notice given as hereinafter provided
for special meetings of the board of directors, or as shall be specified in a
written waiver signed by all of the directors.
Section III.6 Regular Meetings. Regular meetings of the board of
directors may be held without notice at such time and at such place as shall
from time to time be determined by the board.
Section III.7 Special Meetings.
Special meetings of the board may be called by the chairman of the board or the
president on one (1) days' notice to each director, delivered in the manner
provided in Section 4.2 of these by-laws; special meetings shall be called by
the chairman of the board or the president in like manner and on like notice
upon the written request of two (2) directors.
Section III.8 Quorum; Telephone Meetings. At all meetings of the
board, a majority of the directors then constituting the total number of the
board, but not less than two (2) directors except when a board of one (1)
director is authorized and acting, then one director, shall constitute a quorum
for the transaction of business and the act of a majority of the directors
present at any meeting at which there is a quorum shall be the act of the board
of directors, except as may be otherwise specifically provided by statute or by
the certificate of incorporation. If a quorum shall not be present at any
meeting of the board of directors the directors present thereat may adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present. Any director may participate in any
meeting of the board of directors or a committee of the board of directors by
means of conference telephone or similar communications equipment by means of
which all persons participating in such meeting can hear each other, and
participation in a meeting pursuant to the provisions of this Section 3.8 shall
constitute presence in person at such meeting.
Section III.9 Action by Consent. Unless otherwise restricted by the
certificate of incorporation or these by-laws, any action required or permitted
to be taken at any meeting of the board of directors or of any committee thereof
may be taken without a meeting, if all members of the board or committee, as the
case may be, consent thereto in writing, and the writing or writings are filed
with the minutes of proceedings of the board or committee.
Section III.10 Committees. The board of directors may, by resolution
passed by a majority of the Whole Board, designate one or more committees, each
committee to consist of one or more of the directors of the corporation. The
board may designate one or more directors as alternate members of any committee,
who may replace any absent or disqualified member at any meeting of the
committee. In the absence or disqualification of a member of a committee, the
member or members thereof present at any meeting and not disqualified from
voting, whether or not such member or members constitute a quorum, may
unanimously appoint another member of the board of directors to act at the
meeting in the place of any such absent or disqualified member. Any such
committee, to the extent provided in the resolution of the board of directors,
shall have and may exercise the powers and authority of the board of directors
in the management of the business and operations of the corporation, and may
authorize the seal of the corporation to be affixed to all papers which may
require it; but no such committee shall have the power or authority in reference
to amending the certificate of incorporation (except that a committee may, to
the extent authorized in any resolution or resolutions providing for the
issuance of shares of stock adopted by the board of directors as provided in
Section 151(a) of the General Corporation Law of the State of Delaware, or any
successor provision thereto, fix the designation and any of the preferences or
rights of such shares relating to dividends, redemption, dissolution, any
distribution of assets of the corporation or the conversion into, or the
exchange of such shares for, shares of any other class or classes or any other
series of the same or any other class or classes of stock of the corporation or
fix the number of shares of any series of stock or authorize the increase or
decrease of the shares of any series), adopting an agreement of merger or
consolidation, recommending to the stockholders the sale, lease or exchange of
all or substantially all of the corporation's property and assets, recommending
to the stockholders a dissolution of the corporation or a revocation of a
dissolution, or amending the by-laws of the corporation; and, unless the
resolution or the certificate of incorporation expressly so provides, no such
committee shall have the power or authority to declare a dividend or to
authorize the issuance of stock, or to adopt a certificate of ownership and
merger pursuant to Section 253 of the General Corporation Law of the State of
Delaware, or any successor provision thereto. Such committee or committees shall
have such name or names as may be determined from time to time by resolution
adopted by the board of directors.
Section III.11 Minutes of Committees. Each committee shall keep
regular minutes of its meetings and report the same to the board of directors
when required.
Section III.12 Compensation. Unless otherwise restricted by the
certificate of incorporation, the board of directors shall have the authority to
fix the compensation of directors. The directors may be paid their expenses, if
any, of attendance at each meeting of the board of directors and may be paid a
fixed sum for attendance at each meeting of the board of directors or a stated
salary as director. No such payment shall preclude any other compensation for
directors nor shall it preclude any director from serving the corporation in any
other capacity and receiving compensation therefor. Members of special or
standing committees may be allowed like compensation for attending committee
meetings.
Section III.13 Conflict of Interest.
(a) No contract or other transaction between the corporation and one
or more of its directors or officers, or between the corporation and any other
corporation, partnership, association or other organization in which one or more
of the corporation's directors or officers are directors or officers or have a
financial interest, shall be void or voidable solely for such reason, or solely
because such director or directors or officer or officers are present at or
participates in the meeting of the board of directors or a committee thereof
which authorizes or approves the contract or transaction, or solely because such
director's or directors' votes are counted for such purpose, if (1) the material
facts as to such director's or directors' relationships or interests and as to
the contract or transaction are disclosed or are known to the board of directors
or the committee, and the board or committee in good faith authorizes the
contract or transaction by the affirmative votes of a majority of the
disinterested directors, even though the disinterested directors be less than a
quorum; or (2) the material facts as to such director's or directors'
relationships or interests as to the contract or transaction are disclosed or
are known to the stockholders entitled to vote thereon, and the contract or
transaction is specifically approved in good faith by vote of the stockholders;
or (3) the contract or transaction is fair as to the corporation as of the time
it is authorized, approved or ratified, by the board of directors, a committee
thereof, or the stockholders.
(b) Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the board of directors or of a committee
which authorizes the contract or transaction.
Section III.14 Presumption of Assent Section III.14 Presumption of
Assent. A director of the corporation who is present at a meeting of the board
of directors at which action on any corporate matter is taken shall be presumed
to have assented to the action taken unless his dissent shall be entered in the
minutes of the meeting or unless he shall file his written dissent to such
action with the person acting as the secretary of the meeting before the
adjournment thereof or shall forward such dissent by registered mail to the
secretary of the corporation immediately after the adjournment of the meeting.
Such right to dissent shall not apply to a director who voted in favor of such
action.
ARTICLE IV
NOTICES
Section IV.1 Notice to Stockholders. Whenever, under the provisions
of applicable law or of the certificate of incorporation or of these by-laws,
notice is required to be given to any stockholder, it shall not be construed to
mean personal notice only, but such notice may be given in writing, by mail,
addressed to such stockholder, at such stockholder's address as it appears on
the records of the corporation, with postage thereon prepaid, and such notice
shall be deemed to be given at the time when the same shall be deposited in the
United States mail.
Section IV.2 Notice to Directors. Whenever, under the provisions of
applicable law or of the certificate of incorporation or of these by-laws,
notice is required to be given to any director, it shall be delivered by the
chairman of the board, the president or the secretary to such director within
the time provided in Section 3.7 of these by-laws. Such notice either (i) may be
in writing (A) delivered personally, (B) delivered by mailing to a director at
such director's address as it appears in the records of the corporation, (C)
delivered by telecopier or other means of electronic facsimile transmission or
(D) delivered by telegram or (ii) may be oral given either in person or by
telephone. If mailed, such notice shall be deemed to be delivered when deposited
in the United States mail, so addressed, with postage thereon prepaid. If by
telecopier or other electronic means of facsimile transmittal, such notice shall
be deemed delivered upon completion of transmittal from the sender thereof,
provided that it shall have been directed to such a place as is reasonably
calculated to cause actual receipt of such notice by such director. If by
telegram, such notice shall be deemed to be delivered when the telegram is
delivered to the telegraph company, provided that the notice shall have been
directed to such a place as is reasonably calculated to cause actual receipt of
such notice by such director. Neither the business to be transacted at, nor the
purpose of, any regular or special meeting of the board of directors need be
specified in any notice of such meeting, except for amendments to these by-laws,
as provided under Article IX.
Section IV.3 Waiver of Notice. Whenever any notice is required to be
given under the provisions of the General Corporation Law of the State of
Delaware or of the certificate of incorporation or of these by-laws to a
stockholder or director, a waiver thereof in writing, signed by the person or
persons entitled to said notice, whether before or after the time stated therein
or the time of any meeting, shall be deemed equivalent to giving such notice.
Attendance of a person at a meeting shall constitute a waiver of notice of such
meeting, except when the person attends a meeting for the express purpose of
objecting, at the beginning of the meeting, to the transaction of any business
because the meeting is not lawfully called or convened. Neither the business to
be transacted at, nor the purpose of, any regular or special meeting of the
stockholders, directors, or members of a committee of directors need be
specified in any written waiver of notice unless so required by statute or the
certificate of incorporation.
ARTICLE V
OFFICERS
Section V.1 Officers. The elected officers of the corporation shall
be a chairman of the board, a president, a secretary, a treasurer and such other
officers (including, without limitation, a chief financial officer) as the board
of directors from time to time may deem proper. All officers elected by the
board of directors shall each have such powers and duties as generally pertain
to their respective offices, subject to the specific provisions of this Article
V. Such officers shall also have such powers and duties as from time to time may
be conferred by the board of directors or any committee thereof. The board of
directors may from time to time elect such other officers (including one or more
assistant vice presidents, assistant secretaries, assistant treasurers and
assistant controllers) and such agents, as may be necessary or desirable for the
conduct of the business of the corporation. Any committee of the board of
directors may from time to time elect, or the chairman of the board or the
president may appoint, officers and assistant officers (including one or more
assistant vice presidents, assistant secretaries, assistant treasurers and
assistant controllers, but excluding the chairman of the board, president,
secretary, treasurer, chief financial officer and other senior elected officers
which shall be elected solely by the board of directors) as may be necessary or
desirable for the conduct of the business of the corporation. Such other
officers and agents shall have such duties and shall hold their offices for such
terms as shall be provided in these by-laws or as may be prescribed by the board
of directors or such committee or by the chairman of the board or the president,
as the case may be. Any number of offices may be held by the same person unless
the certificate of incorporation otherwise provides.
Section V.2 Compensation. The salaries and other compensation of all
elected officers of the corporation shall be fixed from time to time by the
board of directors, and no officer shall be prevented from receiving such
compensation by reason of the fact that he is also a director of the
corporation.
Section V.3 Election and Term of Office. The elected officers of the
corporation shall be elected annually by the board of directors at the regular
meeting of the board of directors held on the date of the annual meeting of the
stockholders. If the election of officers shall not be held at such meeting,
such election shall be held as soon thereafter as convenient. Each officer shall
hold office until his successor shall have been duly elected and shall have
qualified or until his death or until he shall resign or be removed from office.
Section V.4 Removal. Any officer elected, or agent appointed, by the
board of directors may be removed, with or without cause, by the affirmative
vote of a majority of the Whole Board. Any officer elected by a committee of the
board of directors may be removed by the affirmative vote of a majority of said
committee or the Whole Board, with or without cause. Any officer or agent
appointed by the chairman of the board or the president may be removed by such
officer or the affirmative vote of a majority of the Whole Board or a committee
thereof, with or without cause. No elected officer or other officer or agent
shall have any contractual rights against the corporation for compensation by
virtue of such officer's or agent's election or appointment beyond the date of
the election or appointment of his successor, his death, his resignation or his
removal, whichever event shall first occur, except as otherwise provided in an
employment contract or under an employee benefit or deferred compensation plan.
Section V.5 Vacancies. A newly created elected office and a vacancy
in any elected office because of death, resignation, or removal may be filled by
the board of directors for the unexpired portion of the term at any meeting of
the board of directors. Any vacancy in an office appointed by the chairman of
the board or the president because of death, resignation, or removal may be
filled by the chairman of the board or the president.
Section V.6 Duties of Officers. The officers of the corporation, if
and when elected by the board of directors of the corporation, shall have the
following duties:
(a) Chairman of the Board. The chairman of the board shall, subject
to the direction of the board of directors, supervise and control the business
and affairs of the corporation. He shall, when present, preside at all meetings
of the stockholders and of the board of directors. He may sign certificates for
shares of the corporation and deeds, mortgages, bonds, contracts or other
instruments on behalf of the corporation, except where required by law to be
otherwise signed and executed and except where the signing and execution thereof
shall be expressly delegated by the board of directors to some other officer or
agent of the corporation. In general, he shall perform all duties incident to
the office of chairman of the board and such other duties as may be prescribed
by the board of directors.
(b) President. The president shall be the chief executive and chief
administrative officer of the corporation and shall have general and active
management of such areas and divisions of the business of the corporation as may
be designated by the board of directors or by the chairman of the board. The
president of the corporation shall carry into effect the orders of the chairman
of the board and the board of directors. In the absence of the chairman of the
board or in the event of his death or inability to act, the president shall
perform the duties of the chairman of the board, and when so acting shall have
all the powers of and be subject to all the restrictions upon the chairman of
the board. The president may sign certificates for shares of the corporation and
deeds, mortgages, bonds, contracts or other instruments on behalf of the
corporation except where required by law to be otherwise signed and executed and
except where the signing and execution thereof shall be expressly delegated by
the board of directors to some other officer or agent of the corporation. In
general, the president shall perform all duties incident to the office of
president and such other duties as may be prescribed by the board of directors
or the chairman of the board.
(c) Vice Presidents. In the absence of the president or in the event
of the president's death or inability to act, the vice president (or in the
event there be more than one vice president, the vice presidents in the order
determined by the board of directors) shall perform the duties of the president,
and when so acting, shall have all the powers of and be subject to all the
restrictions upon the president. Any vice president shall perform such other
duties as from time to time may be assigned to the vice president by the
chairman of the board, the president or the board of directors.
(d) Secretary. The secretary shall keep the minutes of the
proceedings of the stockholders and of the board of directors in one or more
books provided for that purpose; see that all notices are duly given in
accordance with the provisions of these by-laws or as required by law; be
custodian of the corporate records and of the seal of the corporation; see that
the seal of the corporation is affixed to all appropriate documents, the
execution of which on behalf of the corporation under its seal is duly
authorized; keep a register of the post office address of each stockholder which
shall be furnished to the secretary by such stockholder; sign with the chairman
of the board, the president or the treasurer certificates for shares of the
corporation, the issuance of which shall have been authorized by resolution of
the board of directors; have general charge of the stock transfer books of the
corporation; and in general perform all duties incident to the office of
secretary and such other duties as from time to time may be assigned to the
secretary by the chairman of the board, the president, or the board of
directors. If there is no treasurer of the corporation, the secretary shall
assume the authority and duties of treasurer.
(e) Treasurer. If there is a treasurer of the corporation, he shall
have charge and custody of and be responsible for all funds and securities of
the corporation, receive and give receipts for moneys due and payable to the
corporation from any source whatsoever, and deposit all such moneys in the name
of the corporation in such banks, trust companies or other depositaries as may
be designated by the board of directors, and in general perform all of the
duties incident to the office of treasurer and such other duties as from time to
time may be assigned to the treasurer by the chairman of the board, president,
or the board of directors. The treasurer may sign certificates for shares of the
corporation. If required by the board of directors, the treasurer shall give a
bond for the faithful discharge of such treasurer's duties in such sum and with
such surety or sureties as the board of directors shall determine.
(f) Assistant Secretaries and Assistant Treasurers. The assistant
secretary, or if there shall be more than one, the assistant secretaries in the
order determined by the board of directors, shall, in the absence or disability
of the secretary, perform the duties and exercise the powers of the secretary.
The assistant treasurer, or, if there shall be more than one, the assistant
treasurers in the order determined by the board of directors, shall, in the
absence or disability of the treasurer, perform the duties and exercise the
powers of the treasurer. The board of directors may require any assistant
treasurer to give a bond for the faithful discharge of such assistant
treasurer's duties in such sums and with such surety or sureties as the board of
directors shall determine. The assistant secretaries and assistant treasurers
shall all perform such other duties as shall be assigned to them by the
secretary and treasurer, respectively, or by the chairman of the board, the
president, or the board of directors.
ARTICLE VI
CERTIFICATES OF STOCK
Section VI.1 Certificates. Every holder of stock in the corporation
shall be entitled to have a certificate, signed by, or in the name of the
corporation by, the chairman of the board of directors or the president or a
vice president, and by the treasurer or an assistant treasurer or the secretary
or an assistant secretary of the corporation, certifying the number of shares
owned by such holder of stock in the corporation. Certificates may be issued for
partly paid shares and in such case upon the face or back of the certificates
issued to represent any such partly paid shares, the total amount of the
consideration to be paid therefor and the amount paid thereon shall be stated.
If the corporation shall be authorized to issue more than one class of stock or
more than one series of any class, the powers, designations, preferences and
relative, participating, optional or other special rights of each class of stock
or series thereof and the qualifications, limitations or restrictions of such
preferences and/or rights shall be set forth in full or summarized on the face
or back of the certificate which the corporation shall issue to represent such
class or series of stock, provided that, except as otherwise provided in Section
202 of the General Corporation Law of the State of Delaware, in lieu of the
foregoing requirements, there may be set forth on the face or back of the
certificate which the corporation shall issue to represent such class or series
of stock, a statement that the corporation will furnish without charge to each
stockholder who so requests the powers, designations, preferences and relative,
participating, optional or other special rights of each class of stock or series
thereof and the qualifications, limitations or restrictions of such preferences
and/or rights.
Section VI.2 Signatures. Any of or all the signatures on the
certificate may be facsimile. In case any officer, transfer agent or registrar
who has signed or whose facsimile signature has been placed upon a certificate
shall have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the corporation with the same effect
as if such person were such officer, transfer agent or registrar at the date of
issue.
Section VI.3 Lost, Stolen or Destroyed Certificates. The board of
directors may direct a new certificate or certificates to be issued in place of
any certificate or certificates theretofore issued by the corporation alleged to
have been lost, stolen or destroyed, upon the making of an affidavit of that
fact by the person claiming the certificate of stock to be lost, stolen or
destroyed. When authorizing such issue of a new certificate or certificates, the
board of directors may, in its discretion and as a condition precedent to the
issuance thereof, require the owner of such lost, stolen or destroyed
certificate or certificates, or such owner's legal representative, to advertise
the same in such manner as it shall require and/or to give the corporation a
bond in such sum as it may direct as indemnity against any claim that may be
made against the corporation with respect to the certificate alleged to have
been lost, stolen or destroyed.
Section VI.4 Transfer of Stock. Upon surrender to the corporation or
the transfer agent of the corporation of a certificate for shares duly endorsed
or accompanied by proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books.
Section VI.5 Registered Stockholders. The corporation shall be
entitled to recognize the exclusive right of a person registered on its books as
the owner of shares to receive dividends, and to vote as such owner, and to hold
liable for calls and assessments a person registered on its books as the owner
of shares, and shall not be bound to recognize any equitable or other claim to
or interest in such share or shares on the part of any other person, whether or
not it shall have express or other notice thereof, except as otherwise provided
by the laws of the State of Delaware.
ARTICLE VII
INDEMNIFICATION OF DIRECTORS,
OFFICERS AND EMPLOYEES
Section VII.1 Indemnification in Actions Arising Out of Capacity as
Officer, Directors, Employee or Agent. The corporation shall indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending, or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the corporation) by reason of the fact that he is or was a director or
officer of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee, partner or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The corporation shall have
the power in its discretion to indemnify any employee or agent of the
corporation in the same manner as the corporation is required to indemnify its
officers and directors under this Section 7.1. The termination of any action,
suit or proceeding by judgment, order, settlement, conviction, or upon a plea of
nolo contendere or its equivalent, shall not, of itself, create a presumption
that the person did not act in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interests of the corporation, and,
with respect to any criminal action or proceeding, had reasonable cause to
believe that his conduct was unlawful.
Section VII.2 Indemnification in Actions by or in Right of
Corporation. The corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that he is or was a director or
officer, of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee, partner or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the corporation and except that no indemnification shall be
made in respect of any claim, issue, or matter as to which such person shall
have been adjudged to be able to the corporation unless and only to the extent
that the Delaware Court of Chancery or the court in which such action or suit
was brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which such court
shall deem proper. The corporation shall have the power in its discretion to
indemnify any employee or agent of the corporation in the same manner as the
corporation is required to indemnify its officers and directors under this
Section 7.2.
Section VII.3 Indemnification When Successful on Merits or
Otherwise.
To the extent that a director, officer, employee or agent of the corporation has
been successful on the merits or otherwise in defense of any action, suit or
proceeding referred to in Sections 7.1 and 7.2 of this Article VII, or in
defense of any claim, issue or matter therein, he shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
Section VII.4 Determination of Meeting Applicable Standard.
Any indemnification under Sections 7.1 and 7.2 of this Article VII (unless
ordered by a court) shall be made by the corporation only as authorized in the
specific case upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances because he has met the
applicable standard of conduct set forth in Sections 7.1 and 7.2 of this Article
VII. Such determination shall be made (a) by a majority vote of the directors
who are not parties to such action, suit or proceeding, even though less than a
quorum, or (b) if there are no such directors, or if such directors so direct,
by independent legal counsel in a written opinion, or (c) by the stockholders.
Section VII.5 Payment of Expenses in Advance of Disposition of
Action.
Expenses incurred by an officer or director in defending any civil, criminal,
administrative, or investigative action, suit, or proceeding may be paid by the
corporation in advance of the final disposition of such action, suit, or
proceeding upon receipt of an undertaking by or on behalf of such director or
officer to repay such amount if it shall ultimately be determined that he is not
entitled to be indemnified by the corporation as authorized in this Article VII.
Such expenses (including attorneys' fees) incurred by other employees and agents
may be so paid upon such terms and conditions, if any, as the board of directors
deems appropriate.
Section VII.6 Nonexclusivity of Article.
The indemnification and advancement of expenses provided by, or granted
pursuant to, this Article VII shall not be deemed exclusive of any other rights
to which those seeking indemnification or advancement of expenses may be
entitled under any by-law, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in his official capacity and as to
action in another capacity while holding such office, and shall, unless
otherwise provided when authorized or ratified, continue as to a person who has
ceased to be a director, officer, employee or agent and shall inure to the
benefit of the heirs, executors and administrators of such a person. The
indemnification provided by this Article VII shall not be exclusive of any
powers, rights, agreements or undertakings which may be legally permissible or
authorized by or under any applicable law but, notwithstanding any other
provision of this Article VII, the indemnification authorized and provided by
this Article VII shall be applicable only to the extent that such
indemnification shall not duplicate indemnity or reimbursement which such person
has received or shall receive otherwise than under this Article VII.
Section VII.7 Insurance.
The corporation may purchase and maintain insurance on behalf of any person
who is or was a director, officer, employee or agent of the corporation, or is
or was serving at the request of the corporation as a director, officer,
partner, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise against any liability asserted against him and
incurred by him in any such capacity, or arising out of his status as such,
whether or not the corporation would have the power to indemnify him against
such liability under the provisions of this Article VII or otherwise.
Section VII.8 Constituent Corporations.
For purposes of this Article VII, references to "the corporation" shall include,
in addition to this corporation, any constituent corporation ( including any
constituent of a constituent) absorbed by this corporation in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, and employees or agents, so that
any person who is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such constituent
corporation as a director, officer, partner, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, shall stand
in the same position under the provisions of this Article VII with respect to
the resulting or surviving corporation as he would have with respect to such
constituent corporation if its separate existence had continued.
Section VII.9 Definitions.
For purposes of this Article VII, the phrases "other enterprises," "fines,"
"serving at the request of the corporation" and "not opposed to the best
interests of the corporation" shall, in addition to the normal meanings of said
phrases, be deemed to include the meanings ascribed to said phrases in Section
145(i) of the General Corporation Law of the State of Delaware or any successor
provision thereto.
ARTICLE VIII
GENERAL PROVISIONS
Section VIII.1 Dividends. Dividends upon the capital stock of the
corporation, subject to the provisions of the certificate of incorporation, if
any, may be declared by the board of directors at any regular or special
meeting, pursuant to applicable law. Dividends may be paid in cash, in property,
or in shares of the capital stock, subject to the provisions of the certificate
of incorporation and applicable law. In order that the corporation may determine
the stockholders entitled to receive payment of any dividend or other
distribution, the board of directors may fix a record date, which record date
shall not precede the date upon which the resolution fixing the record date is
adopted, and which record date shall be not more than sixty (60) days prior to
such action. If no record date is fixed, the record date for determining
stockholders for any such purpose shall be at the close of business on the day
on which the board of directors adopts the resolution relating thereto.
Section VIII.2 Reserves. Before payment of any dividend, there may
be set aside out of any funds of the corporation available for dividends such
sum or sums as the directors from time to time, in their absolute discretion,
think proper as a reserve or reserves to meet contingencies, or for equalizing
dividends, or for repairing or maintaining any property of the corporation, or
for such other purpose as the directors shall think conducive to the interest of
the corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
Section VIII.3 Checks. All checks or demands for money and notes of
the corporation shall be signed by such officer or officers or such other person
or persons as the board of directors may from time to time designate.
Section VIII.4 Fiscal Year.
The fiscal year of the corporation shall be fixed by resolution of the board of
directors.
Section VIII.5 Seal. The corporate seal shall have inscribed thereon
the name of the corporation and the words "Corporate Seal" and "Delaware." The
seal may be used by causing it or a facsimile thereof to be impressed or affixed
or reproduced or otherwise.
Section VIII.6 Contracts. Except as otherwise required by law, the
certificate of incorporation or these by-laws, any contracts or other
instruments may be executed and delivered in the name and on the behalf of the
corporation by such officer of officers of the corporation as the board of
directors may from time to time direct. Such authority may be general or
confined to specific instances as the board may determine. The chairman of the
board, president or any vice president may execute bonds, contracts, deeds,
leases and other instruments to be made or executed for or on behalf of the
corporation. Subject to any restrictions imposed by the board of directors, the
chairman of the board, president or any vice president of the corporation may
delegate contractual powers to others under his jurisdiction, it being
understood, however, that any such delegation of power shall not relieve such
officer of responsibility with respect to the exercise of such delegated power.
Section VIII.7 Voting of Corporation's Securities. Unless otherwise
ordered by the board of directors, the chairman of the board, the president or
any vice president, or such other officer as may be designated by the board of
directors to act in the absence of the chairman of the board, president or any
vice president, shall have full power and authority on behalf of the corporation
to attend and to act and to vote, and to execute a proxy or proxies empowering
others to attend and to act and to vote, at any meetings of security holders of
any corporation in which the corporation may hold securities, and at such
meetings the chairman of the board, the president, any vice president, or such
other officer of the corporation, or such proxy shall possess and may exercise
any and all rights and powers incident to the ownership of such securities, and
which as the owner thereof the corporation might have possessed and exercised,
if present. The secretary or any assistant secretary may affix the corporate
seal to any such proxy or proxies so executed by the chairman of the board, the
president, any vice president, or such other officer, and attest the same. The
board of directors by resolution from time to time may confer like powers upon
any other person or persons.
Section VIII.8 Procedure. The accounts, books and records of the
corporation shall be audited upon the conclusion of each fiscal year by an
independent certified public accountant selected by the board of directors, and
it shall be duty of the board of directors to cause such audit to be done
annually.
Section VIII.9 Resignations.
Any director or any officer, whether elected or appointed, may resign at any
time by giving written notice of such resignation to the chairman of the board,
the president or the secretary, and such resignation shall be deemed to be
effective as of the close of business on the date said notice is received by the
chairman of the board, the president or the secretary, or at such later time as
is specified therein. No formal action shall be required by the board of
directors or the stockholders to make any such resignation effective.
ARTICLE IX
AMENDMENT OF BY-LAWS
These by-laws may be altered, amended, or repealed at any meeting of
the board of directors or of the stockholders, provided notice of the proposed
change was given in the notice of the meeting and, in the case of a meeting of
the board of directors, in a notice not less than two (2) days prior to the
meeting; provided, however, that, in the case of amendments by stockholders,
notwithstanding any other provisions of these by-laws or any provision of law
which might otherwise permit a lesser vote or no vote, but in addition to any
affirmative vote of the holders of any particular class or series of the capital
stock of the corporation required by law, the certificate of incorporation or
these by-laws, the affirmative vote of the holders of at least eighty percent
(80%) of the total votes of all of the then outstanding shares of the Voting
Stock, voting together as a single class, shall be required to alter, amend or
repeal any provision of these by-laws.
<PAGE>
HISTORY OF BY-LAWS
1. Amended and Restated - May 14, 1997
GUARANTY OF PAYMENT
THIS GUARANTY OF PAYMENT ("this Guaranty") is made by the undersigned (whether
one or more herein collectively called the "Guarantor") with SOUTHTRUST BANK OF
ALABAMA, NATIONAL ASSOCIATION (herein called the "Bank"), a/an _______________
bank having its principal office located at Hamilton, Alabama,:
W I T N E S S E T H:
To induce Bank to make a loan or to extend credit or make other financial
products or services available to QUALITY HOUSING SUPPLY, LLC (as hereinafter
further defined, called "Borrower"), and for the consideration set forth below,
Guarantor hereby agrees with Bank as follows:
1. This Guaranty is made for the purpose of securing to Borrower, at
Guarantor's request, one or more loans or other extensions of credit from, or a
line of credit with, or the issuance of one or more letters of credit by, or the
issuance of one or more bankers' acceptances by, or the lease of personal
property from, or the furnishing of other financial products or services by
Bank, but the amount of the loan or other financial products or services and the
terms and conditions thereof will be such as Bank, in its sole discretion, may
deem appropriate. All such loans or other financial products or services now or
hereafter provided by Bank to Borrower, and all extensions or renewals of debts
or other obligations now or at any time hereafter owing by Borrower to Bank, are
made by Bank in reliance on this Guaranty, and are the consideration for the
execution and delivery of this Guaranty by Guarantor. Each term and provision of
every promissory note or other evidence of debt, and every loan agreement,
security agreement, mortgage, deed to secure debt, deed of trust, letter of
credit reimbursement agreement, bankers' acceptance agreement, lease agreement,
and every other contract executed by Borrower and delivered to Bank, shall bind
Guarantor as if executed by Guarantor as the primary and individual obligation
of Guarantor.
2. Guarantor, jointly and severally if more than one, hereby
unconditionally guarantees to Bank the payment and performance by Borrower of
all of the Guaranteed Obligations (as hereinafter defined). This Guaranty is a
guaranty of payment and performance and not of collection. In the event Borrower
at any time defaults in the payment or performance of any of the Guaranteed
Obligations as and when the same becomes due, whether by acceleration of
maturity of the debt or obligation or otherwise, Guarantor agrees to pay such
debt or perform such obligation immediately. Upon failure of Guarantor to do so,
Bank may, in its discretion, enforce the collection of such debt or the
performance of such obligation out of Guarantor by action in any court of
competent jurisdiction, or in any other manner provided by law, the same as if
such debt or obligation were the primary and individual debt or obligation of
Guarantor, and without first seeking to enforce such debt or obligation by
action or otherwise against Borrower; or, Bank may, in its discretion, proceed
in any matter provided by law or by contract for collection of debts against
either or both Guarantor and Borrower the same as if such debts and obligations
were primarily and individually the debt of both Guarantor and Borrower, jointly
and severally. (The remainder of this paragraph applies only if this box is
marked: ) x Guarantor's liability under this Guaranty is limited to the sum of $
600,000.00 * , plus interest accrued on that sum prior to default at the rate
provided for interest on the Guaranteed Obligations and interest on that sum
after default at the rate provided for interest following default by Borrower,
plus all costs (including attorneys' fees) incurred by Bank in collecting any
sum owed by Guarantor hereunder following default by Guarantor. This limittion
of liability applies separately to each Guarantor under this Guaranty. Payments
made by Guarantor prior to default by Borrower and payments made by any other
person (including any other Guarantor) will not reduce each Guarantor's maximum
liability under this Guaranty. Guarantor agrees that Borrower's obligation to
Bank may exceed any limitation of liability of Guarantor (individually and in
the aggregate, if more than one) under this Guaranty. * or 60% of the
outstanding principal balance of any and all debts owing.
3. This is a continuing Guaranty. This Guaranty extends to all debts and
other obligations now contracted or owing by Borrower to Bank and also to all
debts and other obligations contracted or owing by Borrower to Bank in the
future at any time up to the time this Guaranty is terminated pursuant to the
provisions of this paragraph, even though from time to time and for extended
periods of time there may be no debt or obligation owed to Bank by Borrower.
Subject to the provisions which follow, Guarantor shall have the right to
terminate this Guaranty at any time effective 10 days after receipt by the then
president of Bank of written notice of Guarantor's intention to terminate this
Guaranty. Such termination will have prospective effect only and will not affect
Guarantor's obligations with respect to, and this Guaranty will remain in full
force and effect with respect to, all of the Guaranteed Obligations then due and
owing or then contracted for or existing, whether or not yet due, at the time
such notice becomes effective, and all interest then accrued or thereafter
accruing on any of the foregoing, and all expenses, including costs of
collection and attorneys' fees, with respect to such Guaranteed Obligations with
respect to this Guaranty, and all obligations described in paragraph 5.e. of
this Guaranty, whether then existing or arising in the future, and also with
respect to any subsequent loans, extensions of credit, and other financial
accommodations which, prior to receipt of such notice, Bank may have committed
to make to Borrower (regardless of whether Bank waives any default or condition
precedent to the making of such loans, extensions of credit, or other financial
accommodations), together with all interest thereon and all expenses, including
costs of collection and attorneys' fees, related thereto.
4. Guarantor's obligations under this Guaranty are secured by the following
property and/or separate agreements provided by Guarantor:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The foregoing is for ease of reference only; failure to describe any property or
any separate agreement which by its terms secures this Guaranty does not
constitute a waiver of such property or separate agreement as collateral for
Guarantor's obligations hereunder.) Guarantor hereby assigns to Bank and grants
to Bank, as additional collateral and in addition to any applicable right of set
off, a security interest in all deposit accounts now or hereafter owed to
Guarantor by Bank and all personal property of Guarantor now or hereafter in the
actual or constructive possession or control of Bank.
5. Guarantor hereby irrevocably:
a. Assents to all terms and agreement heretofore or hereafter made
by Borrower with Bank, including, but without limitation, agreements regarding
the manner of disposing of any collateral in a commercially reasonable manner
and agreements regarding the manner of giving notice and the time of giving
notice of any sale or other intended disposition of any of such collateral;
b. Consents that Bank may, without discharging Guarantor or in any
way affecting the obligations of Guarantor under this Guaranty; (i) exchange,
release or surrender to Borrower or to any guarantor or any other person, or
waive, release, subordinate, fail to perfect any lien or security interest in,
or otherwise impair, any collateral now or hereafter held as security for any of
the Guaranteed Obligations or any right of setoff against any deposit account of
Borrower; (ii) waive or delay the exercise of any of its rights or remedies
against Borrower or any other person or entity, including, without limitation,
Guarantor; (iii) with or without consideration, release Borrower or any other
person or entity, including, without limitation, any other guarantor of the
Guaranteed Obligations; (iv) renew, extend, or modify the terms of any of the
Guaranteed Obligations or of any promissory note or other instrument or
agreement evidencing the same; (v) apply payments by Borrower, Guarantor, or any
other person or entity to any of the Guaranteed Obligations in such manner and
in such order as Bank may elect; (vi) apply payments received for Borrower's
account first to pay any indebtedness of Borrower that is not guaranteed by
Guarantor, if any, before reducing the Guaranteed Obligations; and (vii) in the
event of the filing of a petition (whether voluntary or involuntary) under any
chapter of the federal Bankruptcy Code with respect to Borrower, participate in
the bankruptcy proceedings and exercise any and all rights set forth in clauses
(i) through (vi) above, including, but without limitation, voting for or against
any plan of reorganization, consenting to the use of any cash collateral,
consenting to the sale, use or lease of any collateral securing any of the
Guaranteed Obligations, and entering into any compromise or settlement regarding
the Guaranteed Obligations or any collateral therefor;
c. Waives all notices whatsoever with respect to this Guaranty or with
respect to the Guaranteed Obligations or any collateral therefor, including, but
without limitation, notice of (i) Bank's acceptance of this Guaranty or its
intention to act, or its action, in reliance hereon; (ii) the present existence
or future incurring of any of the Guaranteed Obligations or the terms or amounts
thereof or any change therein; (iii) any default by Borrower or any surety,
pledgor, grantor of any lien or security interest, or guarantor, including,
without limitation, Guarantor; (iv) the obtaining or release of any guaranty of
surety agreement (in addition to this Guaranty), or any pledge, assignment,
security agreement, mortgage, deed to secure debt, deed of trust, or other
security for any of the Guaranteed Obligations;
d. Waives demand, dishonor, protest, notice of presentment and notice of
nonpayment or dishonor with respect to any promissory note or other instrument
or agreement now or hereafter evidencing any of the Guaranteed Obligations, and
any other demands and notices, except such notices as are required by law and
cannot be waived, and waives any requirement that suit under this Guaranty be
brought within any period of time shorter than the general statute of
limitations applicable to contracts under seal;
e. Agrees that, if at any time all or any part of any payment previously
applied by Bank to any of the Guaranteed Obligations must be returned by Bank
for any reason, whether upon the claim of a preference, fraudulent transfer,
prior lien, or other claim of a creditor, debtor-in-possession, trustee in
bankruptcy or other representative of creditors of Borrower, or otherwise, and
whether by court order, administrative order, or non-judicial settlement, this
Guaranty shall continue in effect or shall be reinstated, as the case may be,
and Guarantor shall remain liable for the full amount returned as if such amount
had never been received by Bank, notwithstanding any termination of this
Guaranty (whether under paragraph 3 above or otherwise) or cancellation of any
promissory note or other instrument or agreement evidencing any of the
Guaranteed Obligations;
f. Waives acceptance of this Guaranty by Bank and agrees that this
Guaranty will be valid and binding upon Guarantor when delivered to Bank by
anyone having possession hereof after execution of this Guaranty by Guarantor;
g. Agrees that Guarantor's liability under this Guaranty is
absolute and is not conditioned on the execution of this or any similar
guaranty by any other person or upon the occurrence or nonoccurrence of any
other event;
h. Waives any right to require Bank to marshall the assets of Borrower
or any other person and agrees that Bank may proceed against any collateral
securing the Guaranteed Obligations (whether or not Guarantor or any other
person holds a lien on only a part of such collateral) and against parties
liable on any of the Guaranteed Obligations in such order as Bank may elect, the
benefit of any rule of law or equity to the contrary being hereby expressly
waived by Guarantor;
i. Agrees that the liability of Guarantor under this Guaranty shall not
be affected or impaired by, and this Guaranty shall remain fully enforceable
against Guarantor for the full amount of the Guaranteed Obligations less only
payments thereon actually received and retained by Bank irrespective of and
without reduction on account of, (i) any defense, offset, or counterclaim which
Borrower may have or assert with respect to any of the Guaranteed Obligations,
including, but without limitation, filing of a petition in bankruptcy, discharge
in bankruptcy, confirmation of a plan of reorganization (whether Bank voted for
or against such plan), composition with creditors (whether or not including
Bank), failure of consideration, breach of warranty, statue of frauds, statue of
limitations, accord and satisfaction, waiver, estoppel, release, usury, or fraud
or misrepresentation, (ii) termination of any present or future relationship
between Guarantor and Borrower or between Guarantor and any other guarantor of
any obligations of Borrower, or (iii) death, incompetency, or dissolution of
Guarantor or Borrower;
j. Agrees that Bank may, at its election, release or satisfy
of record any collateral for this Guaranty only after any applicable
preference periods have elapsed; and
k. Subordinates any right of subrogation against Borrower to Bank's
rights under the Guaranteed Obligations and agrees that Guarantor shall have no
right to any payment or reimbursement from Borrower on account of any sums paid
under this Guaranty until the Guaranteed Obligations have been paid and
discharged in full.
6. Guarantor hereby wholly subordinates all claims which Guarantor may
now or hereafter have against Borrower to all debts and other obligations which
Borrower may now or hereafter owe to Bank, and assigns all such claims to Bank
as additional collateral for the Guaranteed Obligations. This agreement of
subordination and assignment shall survive the termination of this Guaranty, and
shall remain in effect until all Guaranteed Obligations existing on the date of
such termination, whether or not then due, and all interest then accrued and
thereafter accruing thereon, together with all expenses, including collection
costs and attorneys' fees, are paid and performed in full. Until full payment
and performance are made, Guarantor agrees not to accept any payment or
satisfaction of any kind on, or any security for, any of the claims hereby
subordinated. If Guarantor should receive any such payment or security,
Guarantor agrees to deliver the same immediately to Bank in the form received,
endorsed or assigned to Bank or in blank as Bank may require, for application on
account of, or as security for, the Guaranteed Obligations. Until such payment
or security is delivered to Bank, Guarantor agrees to hold the same in trust for
Bank. If at any time any of the claims hereby subordinated is evidenced by any
promissory note, chattel paper, or other instrument or writing, Guarantor agrees
to affix to every such writing, in form and manner satisfactory to Bank, a
statement that the writing is subject to the terms of this Guaranty and, upon
request of Bank, agrees to endorse and deliver any such writing to Bank as
additional collateral for the Guaranteed Obligations. Bank will not be under any
duty to take any action in connection with any such writing and will not be
responsible in any respect in connection therewith, whether for any action it
may take or refrain from taking against prior parties thereto or otherwise,
except to use reasonable care in the custody of the writing, and except for
willful misconduct of its employees. At the request of Bank, Guarantor agrees to
cause Borrower to mark Borrower's records to indicate that the claims of
Guarantor against Borrower are subordinate to the claims of Bank against
Borrower and have been assigned to Bank as collateral. In the event Borrower at
any time defaults in the payment of any debt owing to Bank when due, whether by
acceleration of maturity or otherwise, Bank may, in its own name or that of
Guarantor, compromise, collect, sue on, and give receipt for all claims hereby
assigned by Guarantor. If Borrower files or has filed against it a petition
under any chapter of the Bankruptcy Code, Bank may file proofs of claims in its
own name with respect to the claims hereby assigned and may vote such claims in
the bankruptcy proceedings.
7. Guarantor acknowledges that the statute of limitations applicable to
this Guaranty shall begin to run only upon Guarantor's failure or refusal to pay
any of the Guaranteed Obligations following default in the payment or
performance thereof by Borrower; provided, that if subsequent to such default,
Bank reaches an agreement with Borrower on any terms causing Bank to forbear in
the enforcement of its claims against Guarantor, the statute of limitations
shall be reinstated for its full duration until Borrower again defaults.
8. Guarantor hereby consents to the jurisdiction of any state of federal
court holding in the county or district in which Bank's principal office is
located and, to the extent permitted by applicable law, waives any objection
based on venue or forum non conveniens with respect to any action instituted in
any such court and agrees that such court shall be the exclusive venue for any
action under this Guaranty or concerning or relating to the relationship between
Guarantor and Bank or the obligations of Guarantor with respect to any of the
Guaranteed Obligations, and agrees that process in any such action will be
sufficient if served on Guarantor by certified mail, return receipt requested,
or in any manner provided by law. Notwithstanding the foregoing, Bank shall have
the right to bring any action or proceeding against Guarantor or Guarantor's
property in the courts of any other jurisdiction Bank deems necessary or
appropriate in order to enforce the obligations of Guarantor under this
Guaranty.
9. Guarantor hereby agrees to pay all costs of collecting under this
Guaranty after default by Guarantor, including, but without limitation, court
costs, litigation expenses, and attorneys' fees in the amount which is 15
percent of the unpaid balance of the Guaranteed Obligations at the time of
default by Borrower, including attorneys fees incurred by Bank in connection
with any bankruptcy or other court or receivership proceedings involving
Guarantor, and in connection with any work-out of the obligations of Guarantor
to Bank hereunder, whether involving court proceedings or not. If attorneys'
fees in such amount would be prohibited by applicable law, then Guarantor agrees
to pay reasonable attorneys' fees not exceeding the maximum amount allowed by
law. Each provision of this Guaranty for the payment of attorneys' fees by
Guarantor shall be construed by reference to the provisions of this paragraph 9.
10. As used in this Guaranty, the following terms have the following
meanings:
"Borrower" means the debtor identified above in this Guaranty, together
with his, her, its or their heirs, administrators, executors, successors, and
assigns, including any resulting or surviving corporation following any merger
or any other reorganization, and also includes any debtor-in-possession or
similar entity following the filing of a petition for relief by or against
Borrower under any chapter of the federal Bankruptcy Code or in any similar
proceeding under state or federal law, and also includes any proprietorship,
partnership, corporation, trust, or other entity resulting from or arising out
of the dissolution, liquidation or change in form of business organization by
Borrower or following any change of name or domicile by Borrower.
"Guaranteed Obligations" means all debts and other obligations now
owed to Bank by Borrower, all debts and other obligations in the future owed to
Bank by Borrower, all extensions and renewals of any of such debts or
obligations, and all interest and other lawful charges on any or all of such
debts and obligations, including, but without limitation, late charges, penalty
interest, and costs of collection (including reasonable attorneys' fees) which
Borrower has agreed to pay to Bank, or for which borrower has agreed to
reimburse Bank, or for which Borrower is obligated to Bank under applicable law,
together with each and every promissory note or other instrument or writing now
or hereafter evidencing the obligation of Borrower to pay any such debt, the
interest thereon, or such other charges; whether such debts or other obligations
are now foreseen or unforeseen; whether now due or to become due in the future;
whether incurred with or without notice to Guarantor; whether arising from
contract, tort or otherwise; whether arising from an original obligation of
Borrower to Bank or from an obligation of Borrower which was purchased by Bank
from another; whether from time to time increased, or reduced, or entirely
extinguished and then reincurred; whether direct or indirect, absolute or
contingent, or secured or unsecured; whether otherwise guaranteed or not; and
whether arising out of a loan of money or other extension of credit, an
overdraft on a deposit account or line of credit account with Bank, use of a
credit card or cards, a sale or lease of goods, the issuance of a letter of
credit or bankers' acceptance, the purchase, discount, acceptance or
certification of a note, check, or draft, any combination of the foregoing, or
otherwise. The Guaranteed Obligations include, without limitation, interest and
other charges on any debt or obligation of Borrower to Bank accruing after the
filing of a petition under any chapter of the federal Bankruptcy Code by or
against Borrower and any loans or other credit or financial products or services
extended to Borrower after the filing of any such petition. The Guaranteed
Obligations specifically are not limited to debts and other obligations
contracted for or arising concurrently with or prior to the execution of this
Guaranty and are not limited in amount unless otherwise specifically set forth
in writing in this Guaranty.
11. No delay by Bank in enforcing its rights hereunder shall prejudice
Bank's rights to enforce this Guaranty. All of Bank's rights and remedies under
this Guaranty, under any other agreement, and under applicable law shall be
cumulative, and any failure of Bank to exercise any such right or remedy shall
not be construed as a waiver of the right to exercise the same or any other
right or remedy at any time, and from time to time, thereafter. No waiver by
Bank shall be effective unless made in writing by a duly authorized officer or
agent of Bank, and no waiver by Bank of any right or remedy shall constitute a
waiver of any other or future right or remedy. This Guaranty shall inure to the
benefit of Bank, its successors and assigns, and to any person to whom Bank may
grant an interest in any of the Guaranteed Obligations, and shall be binding
upon Guarantor, and his, her, its, or their respective heirs, executors,
administrators, successors, and assigns. This Guaranty shall be governed,
construed, and enforced in accordance with the substantive laws of the United
States and the state in which Bank's principal office is located, without regard
to principles of conflict of laws. This Guaranty is intended to take effect as a
document under seal.
12. This Guaranty sets forth the entire agreement and understanding of
Guarantor with respect to the subject matter hereof. Guarantor acknowledges that
no agent of Bank has made any representation which is inconsistent with any of
the terms of this Guaranty and that no officer or agent of Bank has the
authority to vary the terms of this Guaranty except in a writing signed by a
duly authorized officer of Bank. The making of the loans and providing of the
other financial services referred to in this Guaranty shall be solely in the
discretion of the Bank, and reference thereto in this Guaranty, whether in
paragraph 1 hereof or elsewhere, shall not be deemed to be a commitment by Bank
to make any loan or provide any financial service. In the event any one or more
of the provisions of this Guaranty shall be invalid, illegal or unenforceable in
any respect, the validity, legality and enforceability of the remaining
provisions of this Guaranty shall not in any way be affected or impaired
thereby. If more than one person or entity signs this Guaranty below, the
liability of such persons or entitles on this Guaranty is joint and several, and
all references to the singular in this Guaranty also include the plural. In the
event of termination of this Guaranty as to any one or more of such Guarantors,
this Guaranty shall continue in full force and effect with respect to the
remaining Guarantors. Bank may file a photocopy of this Guaranty as a financing
statement in any public office.
IN WITNESS WHEREOF, each of the Guarantors has hereunto set his or her
hand and seal, or has caused this Guaranty to be executed by its officer(s) or
partner(s) thereunto duly authorized and its corporate seal to be affixed
hereto, on the date first above written.
WINTESS(ES): GUARANTOR(S):
(Individual Guarantors sign below)
- --------------------------------- ------------------------------ (Seal)
- --------------------------------- ------------------------------ (Seal)
- --------------------------------- ------------------------------ (Seal)
- --------------------------------- ------------------------------ (Seal)
ATTEST: (Corporate or Partnership Guarantor
sign below)
Cavalier Homes, Inc. TID#63-0949734
- --------------------------------- -------------------------------------
(Corporate Seal) Title By: Michael R. Murphy Secretary
------------------------------------
Corp. Gty/Full Name Corp. Gty Title
AMSOUTH
Continuing Guaranty Agreement Date: June 11, 1997
WHEREAS, the undersigned (hereinafter referred to as the "Guarantors,"
whether one or more) have agreed to guarantee, jointly and severally, the
payment of all credit heretofore or hereafter extended and all advances
heretofore or hereafter made by AmSouth Bank of Alabama (hereinafter referred to
as the "Bank") to Ridge Pointe Mfg., L.L.C. (hereinafter referred to as the
"Borrower"), and of all other Liabilities (as hereinafter defined) of the
Borrower to the Bank.
NOW, THEREFORE, in consideration of the premises, the sum of ten dollars to
each of the Guarantors in hand paid by the Bank, and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged by
each of the Guarantors, and in order to induce the Bank to extend to the
Borrower from time to time such extensions of credit, advances and forebearances
as the Bank in its sole discretion may deem prudent and wise, the Guarantors,
jointly and severally, unconditionally and absolutely hereby guarantee the due
and punctual payment to the Bank when and as the same shall become due and
payable (whether by acceleration or otherwise) of the following (collectively,
the "Liabilities"): all indebtedness, obligations and liabilities of the
Borrower to the Bank of every kind, character and description whatsoever, direct
or indirect, absolute or contingent, due or to become due, now existing or
hereafter incurred, contracted or arising, joint or several, liquidated or
unliquidated, regardless of how they arise or by what agreement or instrument
they may be evidenced or whether they are evidenced by any agreement or
instrument, and whether incurred as maker, drawer, endorser, surety, guarantor
or otherwise, including without limitation obligations of the Borrower purchased
by the Bank, Recovered Payments, as hereinafter defined, and obligations
incurred in connection with the issuance of a letter of credit, and any and all
extensions and renewals of all or any part of the same.
The Guarantors further jointly and severally agree that, in the event the
Bank grants to the Borrower one or more extensions or renewals of any of the
Liabilities, or any part thereof, or permits or requires any other modification
in any of the terms of the Liabilities, or any part thereof, in any manner which
may be acceptable to the Bank, with or without notice to the Guarantors, this
guaranty shall, and is hereby made to extend to and cover such extended, renewed
or modified Liabilities, on whatever terms and conditions the same may be
extended, renewed or modified, and without regard to the number of times or the
manner in which the same may have been or shall be extended, renewed or
modified.
The Guarantors further jointly and severally agree (a) to pay any and all
of the Liabilities upon demand at any time after maturity thereof (whether by
acceleration or otherwise); (b) to be bound by all of the terms and provisions
appearing on the face of any instrument or agreement evidencing, securing,
guaranteeing, or executed in connection with any of the Liabilities and of any
renewal instrument or agreement (the "Loan Documents") (including any terms
waiving notice and agreeing to pay costs and expenses of collection in the event
of default) just as though the Guarantors had signed such instrument or
agreement; (c) that the Bank will not be required first to resort to the
Borrower or any other maker, endorser, surety, guarantor or other Guarantor
(each such Borrower, maker, endorser, surety, guarantor, or other Guarantor
being hereinafter individually called and "Obligor") or to the security pledged
or granted to it by any instrument or agreement, or otherwise assigned or
conveyed to it, but in case of default in the payment of any of the Liabilities
the Bank may forthwith look to the Guarantors jointly and severally for payment
under the provisions hereof; and (d) that the Bank's enforcement of the
Guarantors' obligations hereunder shall not be stayed or otherwise delayed by
any claim (including without limitation, a counterclaim) that any Obligor may
have against the Bank.
The Guarantors hereby further jointly and severally agree that the
obligations of the Guarantors hereunder are absolute, unconditional, present and
continuing guaranties of payment and not collectibility and shall not be subject
to any counterclaim, recoupment, set-off, reduction or defense based upon any
claim that the Guarantors, or any of them, may have against the Borrower or the
Bank and shall not be discharged, impaired, modified or otherwise affected by
(a) the unenforceability, non-existence, invalidity or non-perfection of (i) any
of the Liabilities, (ii) any Loan Documents, (iii) any renewal instrument or
agreement or (iv) any lien, pledge, assignment, security interest or conveyance
given as security therefor; (b) any understanding or agreement that any other
person, firm or corporation was or is to execute this agreement or any other
document evidencing, guaranteeing or securing the Liabilities, or any part
thereof; (c) Bank's resort or failure or refusal to resort to any other security
or remedy for the collection of the Liabilities, or any part thereof; (d) the
sale, exchange, release, surrender, or impairment of any collateral or other
security for the Liabilities, or any part thereof; (e) the death, insolvency or
bankruptcy of any Obligor or the failure of the Bank to file a claim against
such decreased or bankrupt Obligor's estate for such Obligor's liability or
obligation to the Bank; (f) any modification, amendment, supplement, or change
in the status or terms of any of the Liabilities or any collateral or other
security for the Liabilities, or any part thereof; (g) any default by the
Borrower in payment of any of the Liabilities; (h) any compromise, settlement,
release, discharge, termination, waiver, or extension of time for payment,
performance, or observance of, any obligation of any Obligor with respect to any
of the Liabilities; (i) the application of any payments, proceeds of collateral
or other sums to any of the Liabilities in such order as the Bank may elect; (j)
any exercise or non-exercise of any right, remedy, power, or privilege of the
Bank, with respect to any of the Liabilities or any collateral or other security
therefor; (k) any failure, omission, delay, or lack of diligence on the part of
Bank to enforce, assert, or exercise any such right, power, privilege, or
remedy; (l) any claim (including, but not limited to a counterclaim) that any
Obligor may have against the Bank; or (m) any other event, circumstance or
condition, whether or not the Guarantors, or any of the them, shall have notice
or knowledge thereof.
The Guarantors further jointly and severally agree that it shall not be
necessary for the Bank to give any Guarantor notice of or to obtain consent or
approval of any Guarantor in connection with, (a) the making of any advances or
any extensions of credit or the terms thereof, or of any renewal or extension of
or other modification with respect to the Liabilities, or any part thereof; (b)
any of the matters described in clauses (a) through (m) of the preceding
paragraph; or (c) the Bank's acceptance of and reliance on this agreement. The
terms hereof shall inure to the benefit of the successors and assigns of the
Bank and shall be binding, jointly and severally, upon the Guarantors, their
heirs, executors, administrators, successors and assigns.
Neither any failure nor any delay on the part of the Bank in exercising any
right, power or privilege under this agreement shall operate as a waiver
thereof, nor shall a single or partial exercise thereof preclude any other or
further exercise or the exercise of any other right, power or privilege. No
modification, amendment or waiver of any provision of this agreement shall be
effective unless in writing and signed by a duly authorized officer of the Bank,
and then the same shall be effective only in the specific instance and for the
purpose for which given. No notice to or demand on the Guarantors in any case
shall entitle the Guarantors to any other or further notice or demand in the
same, similar or other circumstances.
The Guarantors jointly and severally hereby agree to indemnify and hold the
Bank harmless against any loss or expense, including reasonable attorneys' fees
and disbursements, that may result from any failure of any Obligor to pay any of
the Liabilities when and as due and payable or that may be incurred by or on
behalf of the Bank in enforcing payment of any of the Liabilities against any of
the Guarantors or any of the Obligors; provided, however, that if this agreement
is subject to section 5-19-10 of the Code of Alabama 1975, attorneys' fees shall
be limited to 15% of the unpaid balance of the debt after default, and no
attorneys' fees shall be payable if the original principal amount or the
original amount financed does not exceed $300.
In addition to all liens upon, and rights of set-off against, any moneys,
securities, or other property of the Guarantors given to the Bank by law, the
Bank shall have a lien upon and a right of set-off against all deposits, moneys,
securities, and other property of any of the Guarantors now or hereafter in the
possession of, or on deposit with, the Bank, whether held in a general or
special account or deposit, for safekeeping, or otherwise; and every such lien
and right of set-off may be exercised without demand upon or notice to the
Guarantors.
Each of the Guarantors who now is or hereafter becomes an "insider," as
defined in 11 U.S.C. Section 101 (or any amendment or successor thereto or
replacement thereof), of the Borrower hereby waives and relinquishes all rights
(including without limitation rights of subrogation) that such Guarantor now has
or hereafter may have to recover from or be reimbursed by the Borrower or the
Borrower's property, or from any person, firm, or corporation that may now or
hereafter have such a right to recover from or be reimbursed by the Borrower or
the Borrower's property, any amounts paid by such Guarantor to satisfy, in whole
or in part, the Liabilities. The provisions of this paragraph are made for the
express benefit of the Borrower as well as the Bank and may be enforced
independently by the Borrower.
The Guarantors further jointly and severally agree that this agreement
shall remain in full force and effect until revoked or terminated by a written
instrument, signed by the Guarantors and delivered to the Bank and acknowledged
in writing by the Bank, and even after any such revocation or termination, shall
be and remain effective as to any Liabilities then outstanding; and that this
agreement shall not be construed as being terminated by payment in full of the
Liabilities to the Bank, if, thereafter, in the absence of written revocation or
termination by the Guarantors acknowledged by the Bank, the Borrower obtains or
incurs additional or new Liabilities. Notwithstanding the foregoing sentence,
this Continuing Guaranty Agreement and the Guarantors' obligations hereunder
shall continue to be effective or be automatically reinstated, as the case may
be, any time payment of all or any part of the Liabilities is recovered (a
"Recovered Payment") from the Bank as a result of a preference or other claim
made under any bankruptcy, insolvency, dissolution, liquidation, reorganization,
receivorship, or similar law or otherwise. The collateral, if any, securing this
Continuing Guaranty Agreement may be held by the Bank until it is satisfied that
all time periods during which the payment of all or any part of the Liabilities
may be recovered from the Bank as a result of a preference or other claim under
any bankruptcy, insolvency, dissolution, liquidation, reorganization,
receivorship, or similar law or otherwise have elapsed.
Any act or circumstance that shall toll any statute of limitations
applicable to the Liabilities, or any of them, shall also toll the statute of
limitations applicable to the Guarantors' liability for the Liabilities under
this Continuing Guaranty Agreement.
The term "Guarantors" as used herein refers to the undersigned, whether one
or more natural persons, corporations, associations, partnerships, or other
entities.
This agreement shall be governed by, and construed in accordance with,
Alabama law.
This agreement and the other Loan Documents contain the entire
understanding and agreement between the guarantors and the Bank with respect to
the obligations of the Guarantors hereunder and supersede any prior agreements,
understandings, promises, and statements with respect to such obligations.
Witness the signatures and seals of the undersigned on the day and year
first written above.
NOTICE TO COSIGNER
You are being asked to guarantee all debt of the borrower to this bank,
including all future debts of the borrower entered into with this bank prior to
the time you revoke or terminate this agreement in writing as set forth in this
agreement. Think carefully before you do. If the borrower doesn't pay the debt,
you will have to. Be sure you can afford to pay if you have to, and that you
want to accept this responsibility.
You may have to pay up to the full amount of the debt if the borrower does
not pay. You may also have to pay late fees or collection costs, which increase
this amount.
The bank can collect this debt from you without first trying to collect
from the borrower. The bank can use the same collection methods against you that
can be used against the borrower, such as suing you, garnishing your wages, etc.
If this debt is ever in default, that fact may become a part of your credit
record.
This notice is not the contract that makes you liable for the debt.
CAUTION-IT IS IMPORTANT THAT YOU THOROUGHLY READ THIS CONTRACT BEFORE YOU SIGN
IT.
Witness: Cavalier Homes, Inc. (L.S.)
Shirley Barnett By: David Roberson - President (L.S.)
- --------------- ------------------------------------------
Exhibit A
to
Continuing Guaranty Agreement
Dated: June 11, 1997
Executed By: Cavalier Homes, Inc.
In Favor of AmSouth Bank of Alabama
(the "Guaranty Agreement")
This Exhibit is attached to and made a part of the Guaranty Agreement as
fully and completely as if set forth in full therein. Terms used in this Exhibit
shall have the meaning given to them in the Guaranty Agreement.
Notwithstanding anything to the contrary contained in the Guaranty
Agreement, the liability of each Guarantor under the Guaranty Agreement is
limited to a "certain percentage" of the principal of and interest on the
Liabilities and all extensions and renewals of the Liabilities or of any portion
thereof, from time to time and at any time outstanding (but without deduction
from the amount of the Liabilities any amounts that may theretofore have been,
or that may thereafter be, paid to the Bank by any other Guarantor under the
terms of the Guaranty Agreement or any other Agreement) plus the same percentage
of any costs of collection, including, without limitation, court costs and
attorneys' fees incurred by the Bank in the collection of any of the
Liabilities. The "certain percentage" applicable to each Guarantor shall be
equal to the percentage ownership of such Guarantor in the borrower at the time
payment is requested by the Bank under the Guaranty Agreement; provided,
however, that the "certain percentage: shall not be less than THIRTY-THREE
percent (33%).
Cavalier Homes, Inc.
- -----------------------------------
David A. Roberson - President
- ---------------------------------------
<TABLE>
<CAPTION>
PART II. - EXHIBIT 11
CAVALIER HOMES, INC. AND SUBSIDIARIES
COMPUTATION OF NET INCOME PER COMMON SHARE
<S> <C> <C> <C> <C>
Thirteen Weeks Ended Twenty-six Weeks Ended
-------------------- ----------------------
June 27, June 28, June 27, June 28,
1997 1996 1997 1996
-------- -------- -------- --------
PRIMARY AND FULLY DILUTED
Net Income $ 3,557,000 $ 3,525,000 $ 6,643,000 $ 6,396,000
========== ========== ========== ==========
SHARES:
Primary
Average common shares outstanding 12,234,046 11,731,470 12,212,019 11,537,809
Dilutive effect if stock options
were exercised 179,457 532,526 192,242 590,768
---------- ---------- ---------- ----------
Average common shares outstanding
as adjusted (primary) 12,413,503 12,263,996 12,404,261 12,128,577
========== ========== ========== ==========
Fully Diluted
Average common shares outstanding 12,413,503 12,263,996 12,404,261 12,128,577
Additional dilutive effect if
stock options were excercised
(fully) - 77,948 8,501 67,361
---------- ---------- --------- ----------
Average common shares outstanding
as adjusted (fully diluted) 12,413,503 12,341,944 12,412,762 12,195,938
========== ========== ========== ==========
Primary Net Income per Common Share $ .29 $ .29 $ .54 $ .53
========== ========= ========= =========
Fully Diluted Net Income per Common Share $ .29 $ .29 $ .54 $ .52
========== ========= ========= =========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000789863
<NAME> Cavalier Homes, Inc.
<MULTIPLIER> 1,000
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-27-1997
<EXCHANGE-RATE> 1
<CASH> 9,992
<SECURITIES> 0
<RECEIVABLES> 21,661
<ALLOWANCES> 800
<INVENTORY> 15,331
<CURRENT-ASSETS> 54,335
<PP&E> 27,140
<DEPRECIATION> 10,912
<TOTAL-ASSETS> 131,409
<CURRENT-LIABILITIES> 43,843
<BONDS> 0
0
0
<COMMON> 1,226
<OTHER-SE> 74,523
<TOTAL-LIABILITY-AND-EQUITY> 131,409
<SALES> 166,237
<TOTAL-REVENUES> 168,675
<CGS> 136,676
<TOTAL-COSTS> 136,676
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 402
<INCOME-PRETAX> 11,023
<INCOME-TAX> 4,380
<INCOME-CONTINUING> 6,643
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,643
<EPS-PRIMARY> 0.54
<EPS-DILUTED> 0.54
</TABLE>
