-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TYd/Zkdw/BJBl6qM+hnQsFt7JZwfuxcD9/GgnRbtc83UtQZFDBKLizaW8n9ZSFXe 4nzgrcyOxCSxTP+vJAOvWw== 0000912057-01-542770.txt : 20020412 0000912057-01-542770.hdr.sgml : 20020412 ACCESSION NUMBER: 0000912057-01-542770 CONFORMED SUBMISSION TYPE: S-3/A PUBLIC DOCUMENT COUNT: 17 FILED AS OF DATE: 20011211 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FLEETWOOD CAPITAL TRUST II CENTRAL INDEX KEY: 0001142411 STANDARD INDUSTRIAL CLASSIFICATION: MOBILE HOMES [2451] FILING VALUES: FORM TYPE: S-3/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-62850-01 FILM NUMBER: 1811321 BUSINESS ADDRESS: STREET 1: 3125 MYERS STREET CITY: RIVERSIDE STATE: CA ZIP: 92503 BUSINESS PHONE: 9093513500 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FLEETWOOD ENTERPRISES INC/DE/ CENTRAL INDEX KEY: 0000314132 STANDARD INDUSTRIAL CLASSIFICATION: MOTOR HOMES [3716] IRS NUMBER: 951948322 STATE OF INCORPORATION: DE FISCAL YEAR END: 0425 FILING VALUES: FORM TYPE: S-3/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-62850 FILM NUMBER: 1811319 BUSINESS ADDRESS: STREET 1: 3125 MYERS ST STREET 2: P O BOX 7638 CITY: RIVERSIDE STATE: CA ZIP: 92503 BUSINESS PHONE: 9093513798 MAIL ADDRESS: STREET 1: 3125 MYERS ST CITY: RIVERSIDE STATE: CA ZIP: 92503 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FLEETWOOD CAPITAL TRUST III CENTRAL INDEX KEY: 0001163391 STANDARD INDUSTRIAL CLASSIFICATION: MOBILE HOMES [2451] IRS NUMBER: 330990159 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-62850-02 FILM NUMBER: 1811320 BUSINESS ADDRESS: STREET 1: 4 PARK PLAZA STREET 2: C/O GIBSON DUN & CRUTCHER LLP CITY: IRVINE STATE: CA ZIP: 92614 BUSINESS PHONE: 9494514314 MAIL ADDRESS: STREET 1: 3125 MYERS STREET CITY: RIVERSIDE STATE: CA ZIP: 92503 S-3/A 1 a2065680zs-3a.txt FORM S-3/A AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 11, 2001 (S-3 REGISTRATION NO. 333-62850/S-4 REGISTRATION NO. 333-62838) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------------------------------ AMENDMENT NO. 4 TO FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 (with respect to the 9.5% Convertible Trust III Preferred Securities being offered for cash and the related issuance of 9.5% Convertible Trust III Subordinated Debentures and the Guarantee being issued in connection with the cash offer) ------------------------------------------------ AMENDMENT NO. 4 TO FORM S-4 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 (with respect to the 9.5% Convertible Trust II Preferred Securities being offered for exchange and the related issuance of 9.5% Convertible Trust II Subordinated Debentures and the Guarantee being issued in connection with the exchange offer) ------------------------------------------------ FLEETWOOD ENTERPRISES, INC. FLEETWOOD CAPITAL TRUST II FLEETWOOD CAPITAL TRUST III (Exact Name of Registrant as specified in its charter) DELAWARE 95-1948322 DELAWARE 33-6305591 DELAWARE 33-0990159 (State or other jurisdiction of incorporation or (I.R.S. Employer Identification Number) organization)
3125 MYERS STREET RIVERSIDE, CALIFORNIA 92503 (909) 351-3500 (Address, including Zip Code, and Telephone Number, including Area Code, of Registrant's principal executive offices) NELSON W. POTTER PRESIDENT AND CHIEF EXECUTIVE OFFICER FLEETWOOD ENTERPRISES, INC. 3125 MYERS STREET RIVERSIDE, CALIFORNIA 92503 (909) 351-3500 (Name, Address, including Zip Code, and Telephone Number, including Area Code, of agent for service) ------------------------------------------------ COPY TO: LEONARD J. MCGILL WINTHROP B. CONRAD, JR. GIBSON, DUNN & CRUTCHER LLP DAVIS POLK & WARDWELL JAMBOREE CENTER 450 LEXINGTON AVENUE 4 PARK PLAZA, SUITE 1700 NEW YORK, NY 10017 IRVINE, CA 92614 TELEPHONE: (212) 450-4000 TELEPHONE: (949) 451-3800 FACSIMILE: (212) 450-3800 FACSIMILE: (949) 451-4220
------------------------------------------------ APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after the effective date of this Registration Statement. If the securities being registered on this Form are to be offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. / / If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / / If this Form is filed a post-effective amendment filed pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / / ------------------------------------------------ CALCULATION OF REGISTRATION FEE
TITLE OF EACH CLASS OF AMOUNT TO MAXIMUM OFFERING PRICE PER MAXIMUM AGGREGATE OFFERING AMOUNT OF SECURITIES TO BE REGISTERED BE REGISTERED UNIT PRICE REGISTRATION FEE 9.5% Convertible Trust II Preferred Securities of Fleetwood Capital Trust II due February 15, 2013 (the "exchange preferred securities")..................... $37,950,000 100% $37,950,000(1) $9,487.50(2)(12) 9.5% Convertible Trust III Preferred Securities of Fleetwood Capital Trust III due February 15, 2013(3) (the "cash offer preferred securities")..... $150,000,000 100% $150,000,000(4) $37,467.55(12)(15) 9.5% Convertible Trust II Subordinated Debentures due February 15, 2013 (the "exchange debentures")(5).................. $37,950,000 -- -- -- 9.5% Convertible Trust III Subordinated Debentures due February 15, 2013 (the "cash offer debentures")(6)...... $150,000,000 -- -- -- Common Stock, par value $1.00 per share(7)(8)...................... 15,623,442 -- -- --(9) Common Stock, par value $1.00 per share(7)(10)..................... 3,994,687 $9.41 $37,590,000 $12,690.94(12)(14) Exchange Preferred Securities Guarantee(11).................... -- -- -- -- Cash Offer Preferred Securities Guarantee(13)....................
(1) Pursuant to Rule 457(f)(1) under the Securities Act of 1933, this amount is the market value as of December 6, 2001 of the maximum amount of 6% Convertible Trust Preferred Securities (the "existing preferred securities") that may be received by Fleetwood Capital Trust II from tendering holders in the exchange offer. (2) The registration fee has been calculated pursuant to Rule 457(f) under the Securities Act of 1933 using the higher filing fee rate in effect at the time of the initial filing of this registration statement. (3) We are registering an additional amount of exchange preferred securities to be offered for cash to prospective investors and holders of existing preferred securities who participate in the exchange offer. (4) Estimated solely for purposes of calculating the registration fee pursuant to Rule 457(o) under the Securities Act of 1933. (5) 9.5% Convertible Trust II Subordinated Debentures due February 15, 2013 (the "exchange debentures") will be issued to Fleetwood Capital Trust II in connection with the exchange preferred securities. These exchange debentures may be distributed, under certain circumstances, to the holders of exchange preferred securities for no additional consideration. (6) 9.5% Convertible Trust III Subordinated Debentures due February 15, 2013 (the "cash offer debentures") will be issued to Fleetwood Capital Trust III in connection with the cash offer preferred securities. These cash offer debentures may be distributed, under certain circumstances, to the holders of cash offer preferred securities for no additional consideration. (7) Includes the associated Preferred Share Purchase Rights issued under the Rights Agreement dated as of September 15, 1998, as amended on April 30, 2001, by and between Fleetwood Enterprises, Inc. and Fleet National Bank, f/k/a BankBoston, N.A., as Rights Agent. (8) Includes up to 15,623,442 shares of common stock that may be issued upon conversion of the (i) exchange debentures and the exchange preferred securities and (ii) the cash offer debentures and the cash offer preferred securities, based on a conversion price equal to $12.03 per share, which is the conversion price based on the last reported sales price of $10.46 for our common stock on the New York Stock Exchange on December 7, 2001. Also includes such additional indeterminate number of shares of common stock as may be issued pursuant to anti-dilution adjustments. (9) No additional consideration shall be received for the common stock issuable upon conversion of the exchange preferred securities, the cash offer preferred securities or pursuant to anti-dilution adjustments and therefore no registration fee is required pursuant to Rule 457 under the Securities Act. (10) Includes up to 3,994,687 shares of common stock that may be issued through February 15, 2004 as payment of interest on the exchange debentures and the cash offer debentures and distributions on the exchange preferred securities and the cash offer preferred securities, based on shares valued at 90% of $10.46 per share, the last reported sales price of our common stock on the New York Stock Exchange on December 7, 2001. Also includes such additional indeterminate number of shares of common stock as may be issued as payment of interest and distributions pursuant to changes in the sales price of our common stock. (11) Includes the rights of holders of the exchange preferred securities under the exchange guarantee agreement entered into by Fleetwood Enterprises, Inc., relating to the exchange preferred securities. No additional consideration will be received for the Exchange Preferred Securities Guarantee and therefore no registration fee is required pursuant to Rule 457 under the Securities Act of 1933. (12) Previously paid. On June 12, 2001 and August 3, 2001 the Registrant paid $46,250 and $9,250, respectively, in respect of filing fees hereunder. Accordingly, no additional filing fee is payable herewith, except as set forth in footnotes (14) and (15) below. (13) Includes the rights of holders of the cash offer preferred securities under the cash offer guarantee agreement entered into by Fleetwood Enterprises, Inc. relating to the cash offer preferred securities. No additional consideration will be received for the Cash Offer Preferred Securities Guarantee and therefore, no registration fee is required pursuant to Rule 457 under the Securities Act of 1933. (14) Of the aggregate fee of $12,690.94 payable with respect to the common stock, $9,250 has previously been paid, and $3,440.94 is paid herewith. The Registrant paid a filing fee of $9,250 on August 3, 2001 in respect of 2,464,695 shares as payment of interest on the exchange debentures and cash offer debentures, calculated in the manner described in footnote (10), based on the last reported sales price of the Registrant's common stock on August 1, 2001, which was $16.68 per share. The additional filing fee of $3,440.94 for the additional 1,529,992 shares being registered hereby is based on a decreased offering price per unit of $9.41 on December 7, 2001, rather than $15.01, which represents 90% of the closing price on August 1, 2001 of $16.68, calculated in the manner described in footnote (10). This $3,440.94 filing fee for the incremental shares has been added to the filing fee of $9,250 paid on August 3, 2000 and has been calculated using the lower filing fee rate currently in effect. (15) Of the aggregate fee of $46,955.05 payable with respect to the preferred securities being registered hereby, $46,250 has been previously paid, and $705.05 is paid herewith. The Registrant paid a filing fee of $46,250 on June 12, 2001 in respect of an aggregate liquidation amount of $185,000,000 in convertible trust preferred securities, calculated at the higher filing fee rate in effect at the time of such filing. In respect of the incremental $2,950,000 in aggregate liquidation amount of convertible trust preferred securities being registered hereby, we are paying an additional filing fee of $705.05, calculated using the lower filing fee rate currently in effect, which amount is reflected in the $37,467.55 fee disclosed in the table. ------------------------------------------------ THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- THE INFORMATION IN THIS PROSPECTUS MAY CHANGE. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES, AND WE ARE NOT SOLICITING OFFERS TO BUY THESE SECURITIES, IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED. AMENDED PRELIMINARY PROSPECTUS (SUBJECT TO COMPLETION) ISSUED DECEMBER 11, 2001 [LOGO] AMENDED EXCHANGE OFFER OF 9.5% CONVERTIBLE TRUST II PREFERRED SECURITIES DUE FEBRUARY 15, 2013 OF FLEETWOOD CAPITAL TRUST II FOR UP TO $86.25 MILLION IN AGGREGATE LIQUIDATION AMOUNT OF THE 6% CONVERTIBLE TRUST PREFERRED SECURITIES DUE FEBRUARY 15, 2028 OF FLEETWOOD CAPITAL TRUST AND AMENDED CASH OFFER OF 9.5% CONVERTIBLE TRUST III PREFERRED SECURITIES DUE FEBRUARY 15, 2013 OF FLEETWOOD CAPITAL TRUST III If you elect to participate in the exchange offer, you will receive from us $22 in liquidation amount of the 9.5% Convertible Trust II Preferred Securities due February 15, 2013 of Fleetwood Capital Trust II, referred to as the "exchange preferred securities," for each $50 in liquidation amount of a maximum of $86.25 million in aggregate liquidation amount of the outstanding 6% Convertible Trust Preferred Securities due February 15, 2028 of Fleetwood Capital Trust, referred to as the "existing preferred securities." We are also offering investors the right to purchase up to an aggregate of $150.0 million in liquidation amount of "cash offer preferred securities" for cash. The cash offer preferred securities will be substantially identical to the exchange preferred securities except that the cash offer preferred securities will have a different conversion price and a different liquidation amount, and will be issued by a different trust. The exchange preferred securities and the cash offer preferred securities are collectively referred to as the "new preferred securities." The exchange offer was commenced on December 5, 2001 and amended on December 11, 2001. The exchange offer will expire at 5:00 p.m., New York City Time, on January 4, 2002, unless we extend it. The cash offer is not conditioned upon a minimum number of cash offer preferred securities being sold. The placement agent has agreed to use its best efforts to sell the cash offer preferred securities. The cash offer is also not conditioned upon consummation of the exchange offer. The cash offer is expected to close prior to the expiration of the exchange offer. The exchange offer is subject to a number of conditions, including there being tendered in the exchange offer, and not withdrawn, a minimum of $50.0 million in aggregate liquidation amount of existing preferred securities and the receipt of proceeds in the cash offer in an amount equal to at least 30% of the aggregate liquidation amount of the existing preferred securities tendered and accepted for exchange in the exchange offer. The exchange preferred securities will be convertible into shares of our common stock in the manner described in this prospectus at an initial conversion price that is equal to the higher of: - the equivalent of a 15% premium over the daily volume-weighted average of the closing prices of our common stock for each of the five trading days immediately preceding the fourth trading day prior to the exchange offer expiration date, or - $8.63 per share, subject to adjustment. The cash offer preferred securities will be convertible into shares of our common stock at any time prior to maturity in the manner described in this prospectus at an initial conversion price that is equal to the higher of: - the equivalent of a 15% premium over the closing price of our common stock on the day that we price the cash offer, or - $8.63 per share, subject to adjustment. The distributions on the new preferred securities will be paid in cash or, at our election, prior to February 15, 2004, in our common stock. At any time after February 15, 2004, we may cause the payment of distributions on the new preferred securities to be deferred for up to 20 consecutive quarterly periods in the manner described in this prospectus. We may cause all or some of the new preferred securities to be redeemed at any time on or after February 15, 2004, at the applicable redemption price plus any accumulated and unpaid distributions, on the terms and conditions described in this prospectus. Prior to February 15, 2004, if our common stock price exceeds specific targets described in this prospectus, we may cause the new preferred securities to be redeemed for a price of 100% of the liquidation amount per exchange preferred security, plus any accumulated and unpaid distributions. In the case of such redemption prior to February 15, 2004, we will cause additional distributions to be paid in cash or common stock, at our election, in an amount equal to the total distributions payable on the new preferred securities through February 15, 2004, less any distributions that have actually been paid on any new preferred securities that are converted following the notice of redemption and prior to the date of redemption. Our common stock is traded on the New York Stock Exchange and the Pacific Stock Exchange under the symbol "FLE." On December 10, 2001, the last reported sales price for our common stock on the New York Stock Exchange was $9.25 per share. We first mailed a preliminary prospectus and a letter of transmittal on December 5, 2001. PLEASE SEE THE SECTION TITLED "RISK FACTORS," BEGINNING ON PAGE 25 OF THIS PROSPECTUS, FOR A DISCUSSION OF FACTORS THAT YOU SHOULD CONSIDER BEFORE YOU DECIDE TO PARTICIPATE IN THE EXCHANGE OFFER OR PURCHASE CASH OFFER PREFERRED SECURITIES. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. -------------------------- THE DEALER MANAGER FOR THE EXCHANGE OFFER: BANC OF AMERICA SECURITIES LLC ------------------ This prospectus is dated THIS PROSPECTUS INCORPORATES IMPORTANT BUSINESS AND FINANCIAL INFORMATION ABOUT THE REGISTRANTS THAT IS NOT INCLUDED IN OR DELIVERED WITH THE DOCUMENT, WHICH INFORMATION IS AVAILABLE WITHOUT CHARGE TO SECURITY HOLDERS UPON WRITTEN OR ORAL REQUEST BY CALLING OUR INFORMATION AGENT, D.F. KING & CO., INC., TOLL-FREE AT (800) 290-6428 OR BY WRITING TO D.F. KING & CO., INC., 77 WATER STREET, 20TH FLOOR, NEW YORK, NEW YORK 10005. TO OBTAIN TIMELY DELIVERY, SECURITY HOLDERS WISHING TO PARTICIPATE IN THE EXCHANGE OFFER MUST REQUEST THE INFORMATION NO LATER THAN DECEMBER 27, 2001, FIVE BUSINESS DAYS BEFORE THE DATE THEY MUST MAKE THEIR INVESTMENT DECISION. You should rely only on the information incorporated by reference or provided in this prospectus or any prospectus supplement. We have not authorized anyone else to provide you with different information. We are not making an offer of these preferred securities in any state where the offer is not permitted. You should not assume the information in this prospectus or any prospectus supplement is accurate as of any date other than the date on the front of those documents. TABLE OF CONTENTS
PAGE -------- Summary..................................................... 4 Comparison of Terms of New Preferred Securities and Existing Preferred Securities......................... 15 Summary Financial Data...................................... 24 Risk Factors................................................ 25 Risks Relating to Our Business............................ 25 Risks Relating to the Exchange Offer, the Cash Offer, the New Preferred Securities and Our Common Stock.................................... 34 Special Note Regarding Forward-Looking Statements........... 40 Use of Proceeds............................................. 41 Price Range of Common Stock................................. 42 Dividend Policy............................................. 42 Capitalization.............................................. 42 Selected Consolidated Financial Data........................ 44 Management's Discussion and Analysis........................ 46 Fiscal 2001 Compared to Fiscal 2000....................... 48 Fiscal 2000 Compared to Fiscal 1999....................... 51 Liquidity and Capital Resources........................... 53 Recent Developments....................................... 54 New Accounting Pronouncements............................. 60 Business.................................................... 62 General................................................... 62 Manufactured Housing...................................... 62 Manufactured Housing--Retail.............................. 63 Recreational Vehicles..................................... 64 Competitive Advantages.................................... 66 Our Business Strategy..................................... 67 Sales and Distribution of Our Products.................... 68 Financing of Our Products................................. 69 Our Principal Properties.................................. 70 Competition in Our Business............................... 70
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PAGE -------- Regulatory Issues Applicable to Our Business and Products................................................ 71 Our Intellectual Property................................. 71 Our Relationship with Our Employees....................... 72 Legal Proceedings in Which We Are Involved................ 72 The Exchange Offer.......................................... 74 Terms of the Exchange Offer; Reasons for the Exchange Offer; Period for Tendering Existing Preferred Securities...... 74 Minimum Conditions........................................ 75 Expiration Date........................................... 75 Extensions; Amendments.................................... 75 Procedures for Tendering Existing Preferred Securities.... 76 Our Interpretations Are Binding........................... 77 Acceptance of Existing Preferred Securities for Exchange; Delivery of Exchange Preferred Securities............... 78 Guaranteed Delivery Procedures............................ 79 Withdrawal Rights......................................... 79 Conditions for Completion of the Exchange Offer........... 80 Legal Limitation.......................................... 81 Fees and Expenses......................................... 81 Exchange Agent............................................ 83 Consequences of Exchanging or Failing to Exchange Existing Preferred Securities.................................... 83 Cash Offer for Cash Offer Preferred Securities.............. 84 Fleetwood Capital Trust..................................... 85 Fleetwood Capital Trust II and Fleetwood Capital Trust III....................................................... 86 Description of Preferred Securities......................... 88 Description of the New Preferred Securities............... 88 Description of the New Preferred Securities Guarantees.... 112 Description of the New Debentures......................... 116 Relationship Among the New Preferred Securities, the New Debentures and the New Preferred Securities Guarantee... 128 Description of the Existing Preferred Securities, Existing Debentures and the Existing Preferred Securities Guarantee............................................... 130 Description of Our Capital Stock............................ 133 Capital Stock............................................. 133 Rights.................................................... 133 Warrants.................................................. 134 United States Federal Income Tax Considerations............. 135 Classification of the New Debentures...................... 135 Classification of the New Trusts.......................... 136 Treatment of Exchange Offer............................... 136 Tax Treatment of the Ownership and Disposition of New Preferred Securities and Common Stock................... 136 Non-U.S. Holders.......................................... 140 Plan of Distribution........................................ 142 Identity and Background of Filing Persons and Security Ownership of Certain Beneficial Owners and Management..... 144 Legal Matters............................................... 147 Experts..................................................... 147 Where You Can Find Additional Information................... 147
3 SUMMARY This summary does not contain all the information you should consider before exchanging your existing preferred securities for the exchange preferred securities or investing in cash offer preferred securities. You should read this entire prospectus carefully. Unless otherwise indicated, "we," "us," "our" and similar terms refer to Fleetwood Enterprises, Inc. Throughout this prospectus, we use the term "fiscal," as it applies to a year, to represent the fiscal year ending on the last Sunday in April. When we refer to a specific fiscal year, the year reference is to the calendar year in which the fiscal year ends. For example, "fiscal 2001" represents the fiscal year that ended on April 29, 2001. Similarly, our fiscal quarters end on the last Sunday of each of the months of July, October, January and April. FLEETWOOD ENTERPRISES, INC. We are the nation's largest manufacturer of recreational vehicles, including motor homes, travel trailers, folding trailers and slide-in truck campers, and one of the nation's largest producers and retailers of manufactured housing. In fiscal 2001 and the fiscal quarter ended July 29, 2001, we sold 60,225 and 13,006 recreational vehicles, respectively. In calendar 2000, we had a 23% share of the overall recreational vehicle market, consisting of a 22% share of the motor home market, a 19% share of the travel trailer market and a 40% share of the folding trailer market. We believe our market share has declined in calendar 2001 in each of the motor home and travel trailer markets. In fiscal 2001 and the fiscal quarter ended July 29, 2001, we shipped 36,201 and 7,769 manufactured homes, respectively, and were the second largest producer of HUD-Code homes in the United States in terms of units sold. In calendar 2000, we also had a 3% share of the single-family housing market and an 18% share of the manufactured housing market. In fiscal 2001, we generated consolidated revenues of $2.53 billion and incurred a net loss of $284 million, and in the first quarter of fiscal 2002 we had consolidated revenues of $564.1 million and incurred a net loss of $11.1 million. The losses were due primarily to significantly reduced sales volume in both manufactured housing and recreational vehicles caused by reduced consumer demand and other charges related to goodwill impairment, restructuring and downsizing initiatives. Our manufacturing activities are conducted in 16 states within the U.S., and to a much lesser extent in Canada. In addition, we operate five supply companies that provide components for our manufactured housing and recreational vehicle operations, while also generating outside sales. Our business began in 1950 in producing manufactured homes. We entered the recreational vehicle business in 1964. In fiscal 1999, we entered the manufactured housing retail business through a combination of key acquisitions and internal development of new retail sales centers. At July 29, 2001, we operated 156 retail sales locations in 25 states, and were one of the four largest retailers of manufactured homes in the United States. Our principal executive offices are located at 3125 Myers Street in Riverside, California 92503, and our telephone number is (909) 351-3500. Fleetwood Capital Trust, Fleetwood Capital Trust II and Fleetwood Capital Trust III are wholly owned subsidiaries of ours and, accordingly, we are deemed an affiliate of each of these entities, which are also affiliates of each other. FLEETWOOD CAPITAL TRUST Fleetwood Capital Trust, referred to as the "existing trust," is a Delaware statutory business trust. The existing trust was organized in 1998 for the sole purpose of issuing the existing preferred securities and the existing common securities and investing the proceeds of that issuance in an equivalent principal amount of 6% Convertible Subordinated Debentures due February 15, 2028, also referred to as the "existing debentures." The existing trust's assets consist principally of the existing debentures and payments under the existing debentures are its sole source of revenue. The principal executive offices 4 of the existing trust are located at 3125 Myers Street in Riverside, California 92503, and its telephone number is (909) 351-3500. FLEETWOOD CAPITAL TRUST II Fleetwood Capital Trust II, referred to as "Trust II," is a Delaware statutory business trust. Trust II was organized in 2001 for the purposes of issuing exchange preferred securities in exchange for the existing preferred securities, issuing and selling its common securities to us, purchasing and owning the 9.5% Convertible Trust II Subordinated Debentures due February 15, 2013, which are referred to as the "exchange debentures," and engaging in any other lawful business or activity that may be engaged in by a business trust formed under the Delaware Business Trust Act. Trust II's assets will consist principally of the exchange debentures and payments under the exchange debentures will be its sole source of revenue. The principal executive offices of Trust II are located at 3125 Myers Street in Riverside, California 92503, and its telephone number is (909) 351-3500. FLEETWOOD CAPITAL TRUST III Fleetwood Capital Trust III, referred to as "Trust III," is a Delaware statutory business trust. Trust III was organized in 2001 for the purposes of issuing and selling the cash offer preferred securities, issuing and selling its common securities to us, purchasing and owning the 9.5% Convertible Trust III Subordinated Debentures due February 15, 2013, which are referred to as the "cash offer debentures," (the exchange debentures and the cash offer debentures are referred to collectively as the "new debentures") and engaging in any other lawful business or activity that may be engaged in by a business trust formed under the Delaware Business Trust Act. Trust III's assets will consist principally of the cash offer debentures and payments under the cash offer debentures will be its sole source of revenue. The principal executive offices of Trust III are located at 3125 Myers Street in Riverside, California 92503, and its telephone number is (909) 351-3500. Trust II and Trust III are collectively referred to as the "new trusts." RATINGS DOWNGRADE On November 16, 2001, Moody's Investors Services, Inc. announced that it had lowered its rating on our senior implied debt from B1 to B2, and on our existing preferred securities from B3 to Caa3, with a negative rating outlook. On December 6, 2001, Standard and Poor's announced that it had lowered our corporate credit rating from BB+ to BB-, and Fleetwood Capital Trust's corporate credit rating from B+ to D, with a negative rating outlook. These actions could result in lower trading prices for the existing preferred securities, and could also result in any capital that we might raise in the future being more expensive or more difficult to raise. OUR REFINANCING PLAN We are offering to exchange the exchange preferred securities for the existing preferred securities, and we are also offering to sell up to $150.0 million in aggregate liquidation amount of cash offer preferred securities for cash. We are making the exchange offer and the cash offer to enhance liquidity and to improve our balance sheet by increasing shareholders' equity, which will increase our capacity to carry senior debt. If we raise only the minimum amount in our cash offer necessary to consummate the exchange offer, we will have also reduced the outstanding aggregate liquidation amount of our trust preferred securities. Our trust preferred securities include the existing preferred securities and will include the exchange preferred securities and the cash offer preferred securities. The trust preferred securities are classified on our balance sheet as minority interest. Upon consummation of the exchange offer, and assuming we (1) accept a maximum of $86.25 million in aggregate liquidation amount of existing preferred securities 5 for tender in the exchange offer (thereby issuing $37.95 million in exchange preferred securities), and (2) receive proceeds in the cash offer in an amount equal to 30% of the aggregate liquidation amount of the existing preferred securities tendered and accepted for exchange in the exchange offer, then the aggregate liquidation amount of trust preferred securities will be reduced from $287.5 million to $265.1 million. If the exchange offer is fully subscribed, we will have enhanced our shareholders' equity by approximately $28.1 million. We may however raise in the cash offer more than the minimum proceeds required as one of the conditions to the exchange offer, or we may consummate the cash offer without consummating the exchange offer, which would result in an increase in the outstanding liquidation amount of trust preferred securities. If we raise $150.0 million in the cash offer and accept $86.25 million in aggregate liquidation amount of existing preferred securities for exchange in the exchange offer, the outstanding aggregate liquidation amount of trust preferred securities would increase to $389.2 million. If we consummate the exchange offer, we intend to use a portion of the proceeds from the cash offer to pay the taxes we expect to incur as a result of the cancellation of the existing debentures that support the existing preferred securities tendered and accepted for exchange in the exchange offer. We will also use a portion of the proceeds to pay the fees and expenses incurred in connection with the exchange offer and the cash offer. We will use the remainder of the proceeds from the cash offer, if any, for general corporate purposes, including the repayment of corporate indebtedness. As a result of a recent amendment to our senior secured facility, we have agreed to contribute one half of the amount raised in the cash offer to our manufacturing company subsidiaries, after allowing for expenses of the offers and taxes incurred in connection with the exchange offer, with one half of the amount contributed being used to pay down the term loan up to $24.0 million, and the balance of that contributed amount being then applied to pay down the revolving loan. If $86.25 million in aggregate liquidation amount of the existing preferred securities are tendered and accepted for exchange, we anticipate incurring a tax liability of approximately $18.0 million. In the event that the conditions to the exchange offer are not satisfied or we do not otherwise consummate the exchange offer, we nonetheless expect to consummate the cash offer and will use all proceeds received in the cash offer, after payment of fees and expenses, for general corporate purposes, including the repayment of corporate indebtedness. The effect of the exchange offer on our cash flow will be positive, assuming we raise only the minimum amount in our cash offer, which is a condition to the exchange offer. If we raise more than the minimum amount, or if we do not consummate the exchange offer but we do consummate the cash offer, our cash balance will increase; however, the effect on our cash earnings in future periods may be negative. However, in any of the circumstances described in the two previous sentences, we anticipate that the effect of either or both of the exchange offer or the cash offer on our balance sheet will be to provide us with greater flexibility in executing our strategic plan and exploring financing opportunities in the future, by enhancing liquidity and increasing our capacity to carry senior debt. The exchange offer and the cash offer are an integral part of a larger program to restructure our debt obligations and to improve liquidity and enhance our balance sheet. As part of this program, on July 27, 2001, we entered into a new senior secured facility funded by a syndicate of banks led by Bank of America. We used part of the proceeds of this facility to retire our senior unsecured notes payable to The Prudential Insurance Company of America, with whom we had previously entered into a forbearance agreement with respect to certain defaults under covenants governing these notes. The new senior secured facility with the syndicate of banks led by Bank of America was funded on July 30, 2001. The senior secured facility, as amended, is structured as a three-year, syndicated revolving credit facility of $190 million with an additional two-year term loan of $30 million. The borrowers under the facilities are substantially all of our subsidiaries and we are a guarantor of the senior secured facility. The revolving credit facility and the related guaranties are secured by 6 substantially all of our and our subsidiaries' existing and future assets, excluding assets securing the term loan (upon which a second priority lien secures the revolving credit facility), assets of our retail subsidiaries subject to a floor plan financing agreement with another lender, those assets at our retail subsidiaries' sites managed by a third party, and the cash value of our company-owned life insurance. The term loan is secured by first priority liens on real estate owned by certain of our manufacturing subsidiaries, stock in our folding trailer subsidiary and the future fixed assets of our folding trailer subsidiary, as well as a second lien on the assets securing the revolving credit facility. Under the revolving credit facility, letters of credit totaling up to $75 million may be issued. Revolving loans bear interest, at our option, at a base rate of Bank of America's prime rate or one, two or three month LIBOR, plus a margin. For purposes of determining the interest rate under the revolving credit facility, the applicable margin is adjusted monthly, based on our liquidity and a fixed charge coverage test, within a range of 0.0% to 1.5% for prime rate loans and within a range of 2.25% to 3.75% for LIBOR rate loans. Borrowings under the term loan initially bear interest at Bank of America's prime rate plus 3% for the first year of the loan, with escalations and amortizations for the remainder of the term. We are required to pay a monthly facility fee for any unused portion of the revolving credit facility and for outstanding letters of credit, such fees to be based upon our liquidity margin then in effect. Our senior secured facility contains a number of affirmative and negative covenants, including covenants requiring the maintenance of specified financial ratios and compliance with certain financial tests. The senior secured facility has been amended to enable us to comply with certain of these covenants in the near future. In amending the terms of the facility, our lenders have agreed to replace the existing EBITDA covenant with a new covenant based on the projected amount of our free cash flow, and also to amend the definition of the fixed charge coverage ratio in the existing fixed charge coverage ratio covenant. The interest rates on our LIBOR rate loans and prime rate loans have also been increased by 0.5% for a period of at least 90 days post-closing, while remaining within the interest rate ranges indicated above. In addition, under the amended senior secured facility we are required to contribute one half of the proceeds raised in the cash offer to our manufacturing company subsidiaries, after allowing for expenses of the offers and taxes incurred in connection with the exchange offer, with half of the amount contributed being used to pay down the term loan up to $24 million, and the balance of that contributed amount being then applied to pay down the revolving loan. Please read the section titled "Use of Proceeds," beginning on page 41 of this prospectus for more information. On July 27, 2001, concurrent with the closing of the senior secured facility, we designated an initial borrowing of $83 million. At the close of business on July 30, 2001, the funding date, after the posting of bank clearings and application of a portion of our cash reserves, the net outstanding loan was $55.6 million. As of October 28, 2001, the net outstanding loan was $66.0 million. The net borrowings plus our cash reserves were applied as follows: - to retire the $68 million remaining principal balance of the Prudential notes, along with payment of accrued interest and a yield maintenance penalty; - to reduce the outstanding retail flooring liability to Conseco Finance Servicing Corp. to approximately $40 million; and - to secure standby letters of credit that primarily underwrite self-insured workers' compensation programs at manufacturing plants in various states. At October 28, 2001, gross excess availability was approximately $90 million. After consideration of the $50 million required minimum excess availability, approximately $40 million was available to be used for general corporate purposes. 7 OUR EXCHANGE OFFER We have summarized the terms of the exchange offer in this section. Before you decide whether to tender your existing preferred securities in this offer, you should read the detailed description of the offer under "The Exchange Offer" and of the exchange preferred securities under "Description of Preferred Securities" for further information. Terms of the Exchange Offer.......................... We are offering up to an aggregate of $37.95 million in liquidation amount of 9.5% Convertible Trust II Preferred Securities due February 15, 2013 for up to an aggregate of $86.25 million of the $287.5 million in liquidation amount of outstanding 6% Convertible Trust Preferred Securities due February 15, 2028. We are offering to exchange $22 in liquidation amount of exchange preferred securities for each $50 in liquidation amount of existing preferred securities. You may tender all, some or none of your existing preferred securities. We will pay distributions on the exchange preferred securities in cash or, at our election, prior to February 15, 2004, in shares of our common stock, par value $1.00 per share. Conversion Price..................................... The exchange preferred securities will be convertible into shares of our common stock at any time prior to maturity at an initial conversion price that is equal to the higher of: - the equivalent of a 15% premium over the daily volume-weighed average of the closing prices of our common stock for each of the five trading days immediately preceding the fourth trading day prior to the exchange offer expiration date, or - $8.63 per share, subject to adjustment. Solely for purposes of illustration, the initial conversion price would be $12.56 per share if it were calculated as the equivalent of a 15% premium over the daily volume-weighed average of the closing prices of our common stock for each of the five trading days immediately preceding December 10, 2001. The following table illustrates the number of shares of our common stock that would be issuable upon conversion of each $22 in liquidation amount of exchange preferred securities for a range of conversion prices, calculated as the equivalent of a 15% premium over a range of sale prices for our common stock, including the closing sale price per share of $9.25 for our common stock on December 10, 2001. This table is for purposes of illustration only. The conversion price may exceed
8 $17.83 per share, but may not be less than $8.63 per share.
SHARES OF FLE COMMON STOCK ISSUED FOR EACH $22 LIQUIDATION PRICE OF FLE CONVERSION AMOUNT OF CONVERTED EXCHANGE COMMON STOCK PRICE PREFERRED SECURITIES - ------------------------ ------------------------ ------------------------------- $5.50 $8.63 2.55 7.50 8.63 2.55 9.25 10.64 2.07 9.50 10.93 2.01 10.50 12.08 1.82 11.50 13.23 1.66 13.50 15.53 1.42 15.50 17.83 1.23
To ascertain the conversion price to be used four days prior to the expiration date of the exchange offer, holders may call (800) 290-6428. Expiration Date; Extension; Termination.............. The exchange offer was commenced on December 5, 2001 and amended on December 11, 2001. The exchange offer and withdrawal rights will expire at 5:00 p.m., New York City Time, on January 4, 2002, or any subsequent date to which we extend it. We may extend the expiration date for any reason. In the case of any extension, we will issue a press release or other public announcement no later than 9:00 a.m., New York City Time, on the next business day after the previously scheduled expiration date. You must tender your existing preferred securities prior to this date if you wish to participate in the offer. We have the right to: - extend the period during which the exchange offer is open and retain all tendered existing preferred securities, subject to your right to withdraw your tendered preferred securities, or - waive any condition or otherwise amend the terms of the exchange offer in any respect, other than the condition that the registration statement be declared effective. Acceptance of Existing Preferred Securities for Exchange; Pro Rata Acceptance........................ Once all of the conditions to the exchange offer are satisfied or waived, we will accept, promptly after the expiration date, up to $86.25 million in aggregate liquidation amount of existing preferred securities properly tendered, and will issue the exchange preferred securities promptly after acceptance of the existing preferred securities. If existing preferred securities in an aggregate liquidation amount of more than $86.25 million are validly tendered, we will only accept them for
9 exchange on a pro rata basis, in an aggregate liquidation amount per holder equal to: - a fraction, the numerator of which is the total liquidation amount of existing preferred securities validly tendered for exchange by such holder and the denominator of which is the aggregate liquidation amount of all existing preferred securities tendered by all holders, multiplied by - $86.25 million. Conditions to the Exchange Offer..................... The exchange offer is subject to: - the registration statement and any post-effective amendment to the registration statement covering the exchange preferred securities being effective under the Securities Act of 1933; - an aggregate liquidation amount of a minimum of $50.0 million of existing preferred securities being tendered into the exchange offer and not withdrawn; - the receipt of proceeds in the sale of cash offer preferred securities being purchased in our cash offer, described below, in an amount equal to at least 30% of the aggregate liquidation amount of existing preferred securities tendered and accepted for exchange in the exchange offer; and - other customary conditions. Please read the section titled "The Exchange Offer--Conditions for Completion of The Exchange Offer," beginning on page 80 of this prospectus, for more information. Withdrawal Rights.................................... You may withdraw a tender of your existing preferred securities at any time before the exchange offer expires by delivering a written notice of withdrawal to The Bank of New York, the exchange agent, before the expiration date. If you change your mind, you may retender your existing preferred securities by again following the exchange offer procedures before the exchange offer expires. You may also withdraw a tender of your existing preferred securities after the expiration of 40 business days from the commencement date of the exchange offer if your tender has not yet been accepted for payment. Procedures for Tendering Existing Preferred Securities........................................... If you hold existing preferred securities through a broker, dealer, commercial bank, trust company or other nominee, you should contact that person promptly if you wish to tender your existing preferred securities. Tenders of your existing
10 preferred securities will be effected by book-entry transfers through The Depository Trust Company. If you hold your existing preferred securities through a broker, dealer, commercial bank, trust company or other nominee, you may also comply with the procedures for guaranteed delivery. Please do not send letters of transmittal to us. You should send those letters to The Bank of New York, the exchange agent. The exchange agent can answer your questions regarding how to tender your existing preferred securities. Distributions........................................ Distributions on the exchange preferred securities will be payable, in cash or, at our election, prior to February 15, 2004, in our common stock, payable on February 15, May 15, August 15 and November 15 of each year, beginning February 15, 2002. We cannot determine at this time whether we will elect to cause distributions to be paid on our exchange preferred securities in shares of our common stock. However, if our business environment and our operating results do not significantly improve from those we have recently experienced, we would likely find it necessary to do so as early as the February 2002 distribution. Exchange Agent....................................... The Bank of New York. Information Agent.................................... D.F. King & Co., Inc. For information regarding the exchange offer, please call toll-free at (800) 290-6428. Dealer Manager....................................... Banc of America Securities LLC. Risk Factors......................................... You should consider carefully the matters described under "Risk Factors," beginning on page 25 of this prospectus, as well as other information set forth in this prospectus and in the letter of transmittal. Deciding Whether to Participate in the Exchange Offer....................................... Neither we nor our officers or directors make any recommendation as to whether you should tender or refrain from tendering all or any portion of your existing preferred securities in the exchange offer. Further, we have not authorized anyone to make any such recommendation. You must make your own decision as to whether to tender your existing preferred securities in the exchange offer and, if so, the aggregate amount of existing preferred securities to tender after reading this prospectus and the letter of transmittal and consulting with your advisers, if any, based on your own financial position and requirements. If you decide to tender all or a portion of your existing preferred securities
11 in the exchange offer, upon the consummation of the exchange offer and the acceptance of your existing preferred securities, any accrued but unpaid distributions, or any distributions that would otherwise be due and payable on the existing preferred securities that you tendered and which were accepted for exchange, shall not be required to be paid by us or the existing trust and any other rights you may have under the terms of your tendered existing preferred securities will terminate. Consequences of Not Exchanging Existing Preferred Securities........................................... If you do not exchange your existing preferred securities in the exchange offer, our obligation to make payments that are distributed to you as holders of the existing preferred securities will be subordinated to our obligation to make payments that are distributed to holders of the exchange preferred securities. Further, the liquidity of the trading market for existing preferred securities not tendered for exchange, or tendered for exchange but not accepted, could be adversely affected to the extent that existing preferred securities are tendered and accepted for exchange in the exchange offer. In addition, we have the right to elect to defer distributions on our existing preferred securities, including deferrals for up to twenty consecutive quarters. On October 30, 2001, we elected to defer distributions on our existing preferred securities due to be made on November 15, 2001. If our business environment and our operating results do not significantly improve from those we have recently experienced, we would likely find it necessary to defer distributions on our existing preferred securities through at least August 15, 2002. Even though our board of directors has discontinued the payment of dividends on our common stock for the foreseeable future, these deferrals of distributions on our existing preferred securities would further prevent us from declaring or paying any dividends during the period of such deferrals. Tax Consequences..................................... Please see the section titled "United States Federal Income Tax Considerations," beginning on page 135 of this prospectus.
12 OUR CASH OFFER THE TERMS OF THE EXCHANGE PREFERRED SECURITIES AND THE CASH OFFER PREFERRED SECURITIES ARE SUBSTANTIALLY IDENTICAL, EXCEPT THAT THE CASH OFFER PREFERRED SECURITIES WILL HAVE A DIFFERENT CONVERSION PRICE AND A DIFFERENT LIQUIDATION AMOUNT, AND WILL BE ISSUED BY TRUST III INSTEAD OF TRUST II. Cash Offer for Cash Offer Preferred Securities....... We will offer cash offer preferred securities for cash pursuant to the cash offer, which will close prior to the expiration date for the exchange offer. The discussion under the section titled "Cash Offer For Cash Offer Preferred Securities," beginning on page 84 of this prospectus, provides further information regarding the cash offer. Conversion Price..................................... The cash offer preferred securities will be convertible into shares of our common stock at any time prior to maturity at an initial conversion price that will be equal to the higher of: - the equivalent of a 15% premium over the closing price of our common stock on the day that we price the cash offer, or - $8.63 per share, subject to adjustment. Solely for purposes of illustration, the initial conversion price would be $10.64 per share if it were calculated as the equivalent of a 15% premium over the closing price of our common stock on December 10, 2001. The following table illustrates the number of shares of our common stock that would be issuable upon conversion of each $50 in liquidation amount of cash offer preferred securities for a range of conversion prices, calculated as the equivalent of a 15% premium over a range of closing sale prices for our common stock, including the closing sale price per share for our common stock on December 10, 2001. This table is for purposes of illustration only. The conversion price may exceed $17.83, but may not be less than $8.63 per share.
SHARES OF FLE COMMON STOCK ISSUED FOR EACH $50 LIQUIDATION CONVERSION AMOUNT OF CONVERTED CASH OFFER PRICE OF FLE COMMON STOCK PRICE PREFERRED SECURITIES - ------------------------- ------------------------ ------------------------------- $5.50 $8.63 5.79 7.50 8.63 5.79 9.25 10.64 4.70 9.50 10.93 4.57 10.50 12.08 4.14 11.50 13.23 3.78 13.50 15.53 3.23 15.50 17.83 2.80
13 Use of Proceeds...................................... We will not receive any proceeds from the exchange offer. If we consummate the exchange offer, we will use a portion of the proceeds from the cash offer to pay taxes we expect to incur as a result of consummation of the exchange offer, together with the fees and expenses we will incur as a result of the exchange offer and cash offer. We will use the remainder of the proceeds from the cash offer, if any, for general corporate purposes, including the repayment of corporate indebtedness. If we do not consummate the exchange offer for any reason, we will use the proceeds from the cash offer, after the payment of fees and expenses incurred in connection with the cash offer, for general corporate purposes, including the repayment of corporate indebtedness. As a result of a recent amendment to our senior secured facility, we have agreed to contribute one half of the amount raised in the cash offer to our manufacturing company subsidiaries, after allowing for expenses of the offers and taxes incurred in connection with the exchange offer, with half of the contributed amount being used to pay down the term loan up to $24.0 million, and the balance of that contributed amount being then applied to pay down the revolving loan. Placement Agent...................................... Banc of America Securities LLC. Banc of America Securities LLC's duties as placement agent are undertaken on a best efforts basis only. Banc of America Securities LLC is not making a commitment to take or purchase cash offer preferred securities from us and has not assured us that these securities will be placed successfully in the cash offer. Conditions to the Cash Offer......................... The cash offer is subject to certain customary conditions but is not subject to a minimum number of cash offer preferred securities being sold in the cash offer or the consummation of the exchange offer.
14 COMPARISON OF TERMS OF NEW PREFERRED SECURITIES AND EXISTING PREFERRED SECURITIES The following is a brief summary of the terms of the new preferred securities and existing preferred securities. For a more complete description, see the section titled "Description of Preferred Securities--Description of the New Preferred Securities," beginning on page 88 of this prospectus.
NEW PREFERRED SECURITIES EXISTING PREFERRED SECURITIES --------------------------------- --------------------------------- Title.................... The exchange preferred securities 6% Convertible Trust Preferred will be called the 9.5% Securities due February 15, 2028. Convertible Trust II Preferred Securities due February 15, 2013. The cash offer preferred securities will be called the 9.5% Convertible Trust III Preferred Securities due February 15, 2013. Preferred Securities..... Up to an aggregate of An aggregate of $287.5 million in $37.95 million in liquidation liquidation amount and 5,750,000 amount and 1,725,000 in number of in number, of existing preferred exchange preferred securities to securities. Each existing be issued in the exchange offer, preferred security represents a and up to an aggregate of preferred undivided beneficial $150.0 million in liquidation interest in the assets of the amount and 3,000,000 in number of issuer. cash offer preferred securities to be issued in the cash offer. Each new preferred security represents a preferred undivided beneficial interest in the assets of the applicable issuer. Issuer................... In the case of the exchange Fleetwood Capital Trust, a preferred securities, Fleetwood Delaware business trust. The Capital Trust II, a Delaware address of the existing trust's business trust. The address of principal office is c/o Fleetwood Trust II's principal office is Enterprises, Inc., 3125 Myers c/o Fleetwood Enterprises, Inc., Street, Riverside, California 3125 Myers Street in Riverside, 92503, and its telephone number California 92503, and its is (909) 351-3500. telephone number is (909) 351-3500. In the case of the cash offer preferred securities, Fleetwood Capital Trust III, a Delaware business trust. The address of Trust III's principal office is c/o Fleetwood Enterprises, Inc. 3125 Myers Street in Riverside, California 92503, and its telephone number is (909) 351-3500. Common Securities........ Each new trust will issue its new The existing trust issued its common securities to us. The new existing common securities to us. common securities represent The existing common securities common undivided beneficial represent common undivided interests in the assets of the beneficial interests in the applicable new trust. We will own assets of the trust. We own all all of the new common securities. of the existing common securities.
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NEW PREFERRED SECURITIES EXISTING PREFERRED SECURITIES --------------------------------- --------------------------------- Debentures............... Trust II will exchange its The existing trust used the exchange preferred securities and proceeds from the sale of the use any existing preferred existing preferred securities to securities it receives in the purchase from us the 6% exchange offer to purchase from Convertible Subordinated us the 9.5% Convertible Trust II Debentures due February 15, 2028. Subordinated Debentures due The existing debentures have the February 15, 2013. Trust III will same financial terms as the sell its cash offer preferred existing preferred securities, securities and use the proceeds including conversion rights. to purchase from us the 9.5% Convertible Trust III Subordinated Debentures due February 15, 2013. Each series of 9.5% Convertible Subordinated Debentures will be substantially identical except that the two series will have different conversion prices and will be issued under different new indentures. Each new trust will also use the proceeds from the sale of its new common securities to us to purchase from us additional 9.5% Convertible Subordinated Debentures due February 15, 2013 of the applicable series. Each series of new debentures will have the same financial terms as the applicable new preferred securities, including conversion rights. Distributions............ Distributions on the new Distributions on the existing preferred securities will be preferred securities are payable payable in cash or, at our in cash at a rate of 6% per year election, prior to February 15, of the liquidation amount of $50 2004, in our common stock, at a per existing preferred security. rate of 9.5% per year of the Distributions are payable liquidation amount of $22 per quarterly in arrears on February exchange preferred security and 15, May 15, August 15 and $50 per cash offer preferred November 15 of each year, unless security. Holders of the we defer interest payments on the applicable new preferred existing debentures. securities will be given notice of an election to pay interest in our common stock instead of cash no later than the relevant record date, which will be the 15th day before the relevant distribution payment date. WE CANNOT BE CERTAIN AT THIS TIME WHETHER WE WILL ELECT TO CAUSE DISTRIBUTIONS TO BE PAID ON OUR NEW PREFERRED SECURITIES IN SHARES OF OUR COMMON STOCK. HOWEVER, IN LIGHT OF OUR BUSINESS ENVIRONMENT AND RECENT OPERATING RESULTS, WE CURRENTLY
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NEW PREFERRED SECURITIES EXISTING PREFERRED SECURITIES --------------------------------- --------------------------------- ANTICIPATE THAT WE WILL FIND IT NECESSARY TO DO SO AS EARLY AS THE FEBRUARY 2002 DISTRIBUTION. While we intend to deduct interest paid on the new debentures, as a result of our having the right for financial reporting purposes to elect to pay interest in shares of our common stock, the interest payments may not be deductible by us for income tax purposes. For a more detailed discussion, see the section titled "United States Federal Income Tax Considerations--Tax Treatment of the Ownership and Disposition of New Preferred Securities and Common Stock--Original Issue Discount and Stated Interest on the New Preferred Securities," beginning on page 137 of this prospectus. If we cause distributions to be paid in our common stock, the shares of common stock will be valued at 90% of the average of the closing prices for the five trading days immediately preceding the second trading day prior to the distribution payment date. Distributions will be payable quarterly in arrears on February 15, May 15, August 15 and November 15 of each year, commencing February 15, 2002, unless we defer interest payments on the applicable series of new debentures. Distribution Deferral.... Same terms for the new preferred We can, on one or more occasions, securities and new debentures as defer interest payments on the for the existing preferred existing debentures for up to 20 securities and existing consecutive quarterly periods debentures, except that we may unless we are in default in the not defer interest payments on payment of interest on the the new debentures or debentures. Interest payments are distributions on the new not due and payable on the preferred securities prior to existing debentures during a February 15, 2004. deferral period. We cannot, however, defer interest payments beyond the maturity date of the existing debentures, which is February 15, 2028. If we defer interest payments on the existing debentures, the existing trust defers distribution payments on the existing preferred securities and the existing common
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NEW PREFERRED SECURITIES EXISTING PREFERRED SECURITIES --------------------------------- --------------------------------- securities. During a deferral period, distributions continue to accumulate on the existing preferred securities. Additional cash distributions will accumulate on any deferred distributions. Compounded interest accrues on any deferred interest payments. While interest payments on the existing debentures are deferred, we are generally not permitted to pay any dividend on or purchase any shares of our capital stock or pay on debt that is equal with or junior in rank to the existing debentures. On October 30, 2001, we elected to defer distributions on our existing preferred securities due to be made on November 15, 2001. In light of our business environment and recent operating results, we currently anticipate that we will find it necessary to defer distributions on our existing preferred securities through at least August 15, 2002. Even though our board of directors has discontinued the payment of dividends on our common stock for the foreseeable future, these deferrals of distributions on our existing preferred securities would further prevent us from declaring or paying any dividends during the period of such deferrals. Conversion Into Common Stock.................... Unless we have redeemed the Unless we redeem the existing applicable series of new debentures, you have the right to debentures, you will have the convert your existing preferred right to convert your new securities into shares of our preferred securities into shares common stock at any time prior to of our common stock at any time maturity. The conversion price on prior to maturity. The initial December 7, 2001 was $48.72 per conversion price of the exchange share of our common stock, which preferred securities to be issued is equivalent to a conversion in the exchange offer will be rate of 1.03 shares of our common equal to the higher of: stock for each existing preferred - the equivalent of a 15% premium security. This conversion price over the daily volume weighted remains subject to further average of the closing prices adjustment. of our common stock for each of the five trading days immediately preceding
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NEW PREFERRED SECURITIES EXISTING PREFERRED SECURITIES --------------------------------- --------------------------------- the fourth trading day prior to the exchange offer expiration date, or - $8.63 per share, subject to adjustment under the same provisions that require adjustment of the conversion price of the existing preferred securities. The initial conversion price of the cash offer preferred securities to be issued in the cash offer will be equal to the higher of: - the equivalent of a 15% premium over the closing price of our common stock on the day that we price the cash offer, or - $8.63 per share, subject to adjustment under the same provisions that require adjustment of the conversion price of the existing preferred securities. Ranking.................. The new preferred securities The existing preferred securities represent preferred undivided represent preferred undivided beneficial interests in the beneficial interests in the assets of the applicable new assets of the existing trust, trust, which will consist of the which consist of the existing applicable series of new debentures. Our payment debentures. Our payment obligations under the existing obligations under the new debentures are subordinated to debentures are subordinated to our payment obligations under our our payment obligations under our senior debt, including our senior debt, but senior to our obligations under the exchange obligations under the existing debentures and the exchange debentures and the existing preferred securities guarantee. preferred securities guarantee. They are also effectively We have pledged most of our subordinated to all indebtedness assets to fully secure our senior and other liabilities of our debt lenders. Our payment subsidiaries, including obligations under the new intercompany liabilities to the debentures are also effectively extent that the instruments subordinated to all indebtedness governing these intercompany and other liabilities of our liabilities provide for subsidiaries, including subordination. intercompany liabilities to the extent that the instruments governing these intercompany liabilities provide for subordination. The new debentures will rank equally with each other. Optional Redemption............... Each new trust will redeem all of The existing trust will redeem its outstanding new preferred all of its outstanding existing securities and new common preferred securities and existing securities when the applicable common securities when the series of new debentures are paid existing debentures are paid at at maturity on February 15, maturity on
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NEW PREFERRED SECURITIES EXISTING PREFERRED SECURITIES --------------------------------- --------------------------------- 2013. In addition, we can make February 15, 2028. In addition, each new trust redeem all or some we can make the existing trust of its new preferred securities redeem all or some of the at any time on or after existing preferred securities at February 15, 2004 by redeeming any time on or after February 15, the related series of new 2001, by redeeming the existing debentures at the applicable debentures at the applicable redemption price, plus any redemption price, plus any accrued and unpaid distributions, accrued and unpaid distributions, upon not less then 30 but not upon not less than 30 but not more than 60 days' notice. We can more than 60 days' notice. make each new trust redeem all or some of its new preferred securities prior to February 15, 2004 only if our common stock price has exceeded 200% of the conversion price for at least 20 days during a 30-day trading period ending five trading days prior to the notice of redemption. This notice of redemption must be delivered not more than 30 and not less than 15 days prior to the date of redemption. Special Event Redemption or Distribution.......... Same terms for the new preferred Upon the occurrence of a tax securities and new debentures as event described below, we may for the existing preferred redeem all outstanding existing securities and existing debentures at a redemption price debentures, except that the equal to 100% of the principal non-deductibility of interest amount of the existing debentures payments on the existing plus accrued and unpaid interest debentures will not constitute a to the redemption date (and thus tax event. cause the redemption of the existing preferred securities at that price). Upon the occurrence of a tax event, we may, alternatively, elect to pay additional interest to the existing trust so that the distributions to holders of the existing preferred securities are not reduced because of the tax event. In addition, if a tax event or a change in law that could require the trust to register as an investment company under the Investment Company Act of 1940 occurs, we may generally cause the existing trust to be dissolved and, after satisfaction of liabilities to creditors of the existing trust, cause the existing debentures to be distributed to the holders of the existing preferred securities.
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NEW PREFERRED SECURITIES EXISTING PREFERRED SECURITIES --------------------------------- --------------------------------- A tax event generally means specified tax changes that could result in: - the trust being subject to United States federal income taxes or more than a de minimis amount of other governmental charges, or - the non-deductibility of interest payments on the existing debentures. Additional Redemption.... Prior to February 15, 2004, we None. may elect to redeem each series of new debentures, and therefore cause the related new trust to redeem the corresponding new preferred securities, for a price equal to 100% of the liquidation amount per new preferred security, if our common stock price has exceeded 200% of the conversion price for at least 20 trading days during a 30-day trading period ending five trading days prior to the notice of redemption. Prior to the redemption date, holders of the applicable new preferred securities will have the right to convert their new preferred securities, and therefore the corresponding series of new debentures, into shares of our common stock at the conversion price in effect at the time. In the case of such a redemption prior to February 15, 2004, we will pay additional interest, and the applicable new trust will make corresponding distribution payments, in cash or common stock, at our election, in an amount equal to the total distributions payable on those new preferred securities through February 15, 2004, less any interest actually paid prior to the date of conversion. Liquidation Preference............... If a new trust is liquidated and If the existing trust is the applicable series of new liquidated and the exchange debentures are not distributed to debentures are not distributed to you, you will generally be you, you will generally be entitled to receive: entitled to receive $50 per - $22 per exchange preferred existing preferred security plus any accumulated and unpaid distributions
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NEW PREFERRED SECURITIES EXISTING PREFERRED SECURITIES --------------------------------- --------------------------------- security plus any accumulated on each existing preferred and unpaid distributions on security you hold. each exchange preferred security you hold; or - $50 per cash offer preferred security plus any accumulated and unpaid distributions on each cash offer preferred security you hold. The Guarantee............ We will guarantee each new We have guaranteed the existing trust's payment obligations on trust's payment obligations on its new preferred securities on the existing preferred securities the same terms as the terms on to the extent described in this which we have guaranteed the prospectus. Under the existing existing trust's obligations on preferred securities guarantee, the existing preferred we guarantee the existing trust's securities, except that: payment obligations, but only to - the new preferred securities the extent that the existing guarantees will cover both trust has sufficient funds to distribution payments in cash make payments on the existing and in our common stock, since preferred securities. If we do we have the option to pay not make payments on the existing interest on the new debentures debentures, the existing trust in cash or, at our election, will not have sufficient funds to prior to February 15, 2004, in make payments on the existing our common stock; and preferred securities, in which - our obligations under the new case you will be unable to rely preferred securities on the guarantee for payment. Our guarantees are senior to our obligations under the existing obligations under the existing preferred securities guarantee debentures and the existing are subordinated to our payment preferred securities obligations under our senior guarantee. debt, including our obligations under the exchange debentures and the exchange preferred securities guarantee. They are also effectively subordinated to all indebtedness and other liabilities of our subsidiaries, including intercompany liabilities. Form of Preferred Securities............... Same form as for the existing The existing preferred securities preferred securities. are represented by a global certificate registered in the name of Cede & Co., as nominee of The Depository Trust Company. Voting Rights............ Same terms for the new preferred Generally, you will not have any securities and new debentures as voting rights as a holder of for the existing preferred existing preferred securities. securities and existing However, if an event of default debentures. under the existing indenture governing the existing debentures occurs and is continuing, the holders of 25% of the aggregate liquidation amount of the outstanding existing preferred
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NEW PREFERRED SECURITIES EXISTING PREFERRED SECURITIES --------------------------------- --------------------------------- securities may direct the property trustee, one of the trustees of the existing trust, to declare the principal and interest on the existing debentures immediately due and payable and thus cause payment to be made to the holders of existing preferred securities. If the property trustee fails to enforce its rights under the existing debentures, or the guarantee trustee fails to enforce its rights under the existing preferred securities guarantee, a holder of existing preferred securities may institute a proceeding directly against us to enforce these rights without first instituting any legal proceeding against any other person or entity. Listing.................. The new preferred securities are The existing preferred securities expected to trade in the trade in the over-the-counter over-the-counter market. market.
23 SUMMARY FINANCIAL DATA The following is a summary of our selected consolidated financial data for each of the fiscal years in the five-year period ended April 29, 2001 and for each of the fiscal quarters ended July 30, 2000 and July 29, 2001. You should read this summary together with the selected consolidated financial data provided in this prospectus on pages 44 and 45, our financial statements and accompanying notes which are incorporated into this prospectus by reference, and our management's discussion and analysis of our operations contained in this prospectus and in the reports containing our financial statements.
FISCAL QUARTER ENDED FISCAL YEAR(1) ----------------------- -------------------------------------------------------------- JULY 30, JULY 29, 1997 1998 1999 2000 2001 2000 2001 ---------- ---------- ---------- ---------- ---------- ---------- ---------- (DOLLARS IN THOUSANDS) OPERATING DATA: Net sales..................... $2,945,777 $3,121,278 $3,555,519 $3,769,534 $2,531,463 $ 720,121 $ 564,132 Operating income (loss)....... 139,559 170,195 190,311 162,176 (307,626) (24,078) (9,613) Income (loss) before cumulative effect of accounting change........... 124,830 111,044 118,269 94,598 (272,814) (19,941) (11,127) Net income (loss) for diluted earnings per share.......... 124,830 108,545 107,121 83,494 (283,990) (31,117) (11,127) Earnings (loss) per share--diluted.............. 3.19 3.01 2.94 2.41 (8.67) (.95) (.34) ---------- ---------- ---------- ---------- ---------- ---------- ---------- BALANCE SHEET DATA AT END OF PERIOD: Total assets.................. $ 871,547 $1,129,480 $1,531,184 $1,536,693 $1,142,461 $1,524,759 $1,102,891 Total liabilities............. 428,452 465,954 656,981 664,388 568,813 688,863 540,337 Existing Preferred Securities.................. -- 287,500 287,500 287,500 287,500 287,500 287,500 Shareholders' equity.......... 443,095 376,026 586,703 584,805 286,148 548,396 275,054 OTHER DATA: Gross profit margin........... 17.6% 18.3% 20.5% 21.0% 19.0% 20.4% 19.6% Operating income (loss) margin...................... 4.7% 5.5% 5.4% 4.3% (12.2)% (3.3)% (1.7)% Depreciation and amortization................ $ 27,579 $ 27,799 $ 31,841 $ 35,080 $ 36,546 $ 8,942 $ 6,892 Capital expenditures.......... 56,184 37,809 49,757 55,078 36,921 8,759 3,186 EBITDA(2)..................... 167,138 197,994 222,152 197,256 (271,080) (15,136) (2,721) Cash flows from operations.... 85,138 118,152 114,522 (4,757) 15,520 (46,398) 66,779 Cash flows from investing activities.................. 292,821 (231,613) (121,767) 92,516 25,722 23,355 (2,729) Cash flows from financing activities.................. (355,644) 104,310 5,110 (69,715) (47,201) 31,031 (50,046) Ratio of earnings to fixed charges(3)(4)............... 37.4x 24.3x 7.5x 5.3x -- -- --
- ------------------------------ (1) We use a fiscal year ending on the last Sunday of April in each year. (2) EBITDA is defined as operating income plus depreciation and amortization expense. While EBITDA should not be considered as a substitute for net income, cash flows from operating activities, or other income statement data or cash flow statement data prepared in accordance with Generally Accepted Accounting Principles, or GAAP, or as a measure of profitability or liquidity, our management understands that EBITDA is customarily used as a measurement in evaluating companies. If EBITDA for fiscal 2001 were adjusted to include an add-back for goodwill impairment of $165.9 million and other asset impairment charges of $22.6 million, both of which were non-cash charges, the adjusted EBITDA would have been $(82.6) million for fiscal 2001. However, these impairment charges are not included in any of the EBITDA figures reported in the table. (3) The ratio of earnings to fixed charges is unaudited for all periods presented. For purposes of computing these ratios, earnings represent income before income taxes, minority interest, discontinued operations and cumulative effect of changes in accounting principles and fixed charges less distributions on existing preferred securities of Fleetwood Capital Trust. Fixed charges include all interest expense and distributions on the existing preferred securities. (4) Our ratios of earnings to fixed charges for the fiscal year ended April 29, 2001 and the fiscal quarters ended July 30, 2000 and July 29, 2001 were not meaningful since earnings were inadequate to cover fixed charges by $336.8 million, $30.9 million and $18.5 million, respectively. Similarly, after giving effect to each of the exchange offer and cash offer, the pro forma ratios of earnings to fixed charges for fiscal 2001 and the fiscal quarter ended July 29, 2001 are not meaningful since, on a pro forma basis, earnings during these periods would have been inadequate to cover fixed charges by $349.2 million and $21.6 million, respectively. 24 RISK FACTORS YOU SHOULD CAREFULLY CONSIDER THE RISKS DESCRIBED BELOW BEFORE YOU DECIDE TO EXCHANGE YOUR EXISTING PREFERRED SECURITIES FOR EXCHANGE PREFERRED SECURITIES OR TO BUY CASH OFFER PREFERRED SECURITIES. THE RISKS AND UNCERTAINTIES DESCRIBED BELOW ARE THE ONES THAT WE BELIEVE TO BE MATERIAL AT THIS TIME. IF ANY OF THE FOLLOWING RISKS ACTUALLY OCCUR, THEY COULD MATERIALLY ADVERSELY AFFECT OUR BUSINESS, FINANCIAL CONDITION OR OPERATING RESULTS. IN THAT CASE, THE TRADING PRICE OF OUR COMMON STOCK AND THE EXISTING PREFERRED SECURITIES COULD DECLINE. RISKS RELATING TO OUR BUSINESS WE MAY BE UNABLE TO COMPLY WITH FINANCIAL CONVENANTS CONTAINED IN OUR SENIOR DEBT INSTRUMENTS, INCLUDING OUR AMENDED SENIOR SECURED FACILITY, WHICH MAY RESULT IN A DEFAULT UNDER OUR DEBT OBLIGATIONS. We recently amended our new senior secured facility because we believed we would not be able to comply with one of its covenants. In the future, if our operating results deteriorate significantly due to worsening business or economic conditions then, as had also been the case with our senior unsecured notes payable to The Prudential Insurance Company of America, which were repaid using a portion of the proceeds from our new senior secured facility, we will breach covenants under our amended senior secured facility, resulting in a default under the facility. Our amended senior secured facility is funded by a syndicate of banks led by the Bank of America and requires us to maintain particular financial ratios and meet specific financial tests. In amending the terms of our new facility, our lenders agreed to replace the existing EBITDA covenant with a new covenant based on the amount of our free cash flow, and to also amend the definition of the fixed charge coverage ratio in another one of our covenants. In return for amending these covenants, the lenders have increased the interest rates on our LIBOR rate and prime rate loans by 0.5% for a period of at least 90 days. We can give you no assurances, however, that any future discussions with our lenders under similar circumstances will be successful on acceptable terms if our operating results deteriorate significantly from the levels that we have recently experienced. A breach of any of the financial covenants contained in our senior debt instruments, including our covenant to generate sufficient earnings, can result in a default under our new senior secured facility, and also under our retail floor plan debt with Conseco Finance Servicing Corp. In the event of a future default under our debt obligations, we cannot assure you that our lenders will agree to forbear from enforcing any remedies otherwise available to them or that they will grant us waivers or amend our covenants. Our new facility also ranks senior to the new preferred securities, and is secured by substantially all of our assets, except for some of our inventories that are used to secure our Conseco debt, and the cash value of our company-owned life insurance. The terms of our new facility prohibit all payments by us in connection with the existing preferred securities and the new preferred securities while we are in default under the facility. Upon the occurrence of an event of default under our senior secured facility, our lenders could elect to declare all amounts outstanding under the facility, together with accrued interest, to be immediately due and payable and that could result in our seeking protection from our creditors through bankruptcy proceedings or otherwise. A default under our senior secured facility could also cause a default under our retail floor plan debt with Conseco. If we were unable to repay all outstanding amounts under our senior debt, the lenders could proceed against our assets, and any proceeds realized upon the sale of assets would be used first to satisfy all amounts outstanding under our senior debt, and thereafter, any of our other liabilities, including liabilities relating to the new preferred securities and the existing preferred securities. We have pledged substantially all of our assets to fully secure our senior debt lenders. If we default under our senior secured facility, our senior debt lenders could foreclose on our assets. In addition, we may be prevented from borrowing additional amounts under our other existing credit agreements, including our retail inventory floor plan facility. 25 IF WE ARE UNABLE TO PAY OUR DEBT OBLIGATIONS WHEN DUE, WE COULD BE IN DEFAULT UNDER OUR NEW DEBT AGREEMENTS AND OUR LENDERS COULD ACCELERATE OUR DEBT OR TAKE OTHER ACTIONS WHICH COULD RESTRICT OUR ABILITY TO OPERATE, OR NECESSITATE OUR SEEKING PROTECTION FROM OUR CREDITORS THROUGH BANKRUPTCY PROCEEDINGS OR OTHERWISE. Future cash flows may not be adequate to meet our debt obligations, resulting in default. As indicated earlier, in July 2001, we entered into a senior secured facility with Bank of America for a three-year revolving loan of up to $190 million and a two-year term loan of $30 million. Recently, this facility was amended because we believed that we would not be able to comply with one of its covenants, which would have put us in default. Nonetheless, a default under the amended senior secured facility or our other debt obligations could result in lender actions which might: - restrict our investment in working capital and capital expenditures; - limit our ability to react to changes in market conditions due to a lack of resources to develop new products; - hamper the marketing of our products due to a lack of funds to support advertising expenditures; - increase our risk of not surviving an extended downturn in the business compared to other competitors whose capital structures are less highly leveraged; - restrict our ability to merge, acquire or sell properties; and - cause us to seek protection from our creditors through bankruptcy proceedings or otherwise. WE HAVE HAD SIGNIFICANT LOSSES IN RECENT QUARTERS AND WE MAY NOT BE ABLE TO REGAIN PROFITABILITY IN THE FORESEEABLE FUTURE, WHICH COULD CAUSE US TO LIMIT FUTURE CAPITAL EXPENDITURES AND ALSO RESULT IN A FAILURE TO IMPLEMENT OUR BUSINESS AND FINANCE STRATEGIES OR MEET OUR OBLIGATIONS WHEN DUE. We had net losses totaling approximately $284 million for the fiscal year ended April 29, 2001, after having had net income of $83.5 million and $107.1 million, respectively, for the fiscal years ended April 30, 2000 and April 25, 1999. For our fiscal quarter ended July 29, 2001, we had a net loss of $11.1 million. Continued losses will reduce our liquidity and may cause us to reduce our expenditures on capital improvements, machinery and equipment, and research and development. This could have a negative effect on our ability to maintain production schedules, manufacture products of high quality, and develop and manufacture new products that will achieve market acceptance. This could, in turn, have a negative effect on our sales and earnings. In addition, we will not receive any tax benefit from our interest payments on the new debentures, whether these payments are made in cash or, at our election, prior to February 15, 2004, in our common stock. If we continue to suffer losses, we will be unable to implement our business and financial strategies or meet our obligations when due. Our losses for fiscal 2001 and the first quarter of fiscal 2002 were principally caused by: - reduced demand in the manufactured housing and recreational vehicle industries; - excess capacity; - excess retail inventories; - some wholesale and retail lenders abandoning the manufactured housing market; - remaining retail lenders tightening credit standards in the manufactured housing market; - relatively high interest rates for manufactured homes as opposed to site-built homes; - competition with resellers of repossessed manufactured homes; and - weaker general economic conditions, stock market declines, and declining consumer confidence. 26 We cannot assure you that the conditions that have resulted in our substantial losses in fiscal 2001 and the first quarter of fiscal 2002 will not continue through the remainder of fiscal 2002 and beyond. Our losses in fiscal 2001 were also caused in part by: - charges related to the impairment of goodwill that originated with our acquisitions of retail housing businesses in prior years, some of which we are now closing or downsizing; and - downsizing initiatives within our manufacturing and retail housing businesses, including asset impairment charges, writedown of idled manufacturing facilities, employee severance payments and plant closing costs. REDUCED AVAILABILITY OF FINANCING FOR OUR RETAILERS OR CUSTOMERS WOULD CONTINUE TO AFFECT OUR SALES VOLUME. Our retailers, as well as retail buyers of our products, generally secure financing from third party lenders, which have been adversely affected by the current lending environment. For example, Associates First Capital Corporation, which had been a very important lender for our retailers in the 1990s, announced in January 2000 that it was discontinuing its manufactured housing finance business. Similarly, Conseco Finance Corp., the largest manufactured housing lender, has also been affected by the harsh lending environment, suffering from adverse loan experience, higher funding costs and liquidity issues. As a result of these changes, if third party financing were to become unavailable or were to be further restricted, this could have a material adverse effect on our results of operations. Reduced availability of such financing and higher interest rates are currently having an adverse effect on the manufactured housing business and our housing sales. These factors are dependent on the lending practices of financial institutions, governmental policies and economic conditions, all of which are largely beyond our control. For example, floor-plan lenders have tightened credit as a result of the events of September 11, 2001. With respect to our housing business, most states classify manufactured homes as personal property rather than as real property for purposes of taxation, lien perfection and length of loan terms. Interest rates for manufactured homes are generally higher and the terms of the loans shorter than for site-built homes. As the industry is now experiencing, financing for the purchase of manufactured homes is sometimes more difficult to obtain than conventional home mortgages. There can be no assurance that affordable wholesale or retail financing for either manufactured homes or recreational vehicles will continue to be available on a widespread basis. EXCESS INVENTORIES OF OUR PRODUCTS AMONG RETAILERS COULD CONTINUE TO HAVE A NEGATIVE EFFECT ON OUR SALES VOLUME AND PROFIT MARGINS. The level of manufactured housing and recreational vehicle retail inventories and the existence of repossessed homes in the market can have a significant impact on manufacturing shipments and operating results, as evidenced in the manufactured housing industry during the past year. For example, due to the rapid over-expansion of the retail distribution network in the manufactured housing industry, retailers' overstocking based on inflated expectations of future business and excessive wholesale financing, there is currently an imbalance among the number of retail dealers, industry retail inventories and consumer demand for manufactured homes. Considering current retail demand, it is estimated that there may be as much as a six month supply of manufactured homes in retailer inventories industry-wide. The recent deterioration in the availability of retail financing has already extended the inventory adjustment period beyond what was originally expected. Competition from repossessed homes has further extended this inventory adjustment period. More liberal lending standards in the past resulted in loans to less-qualified customers. Many of these customers are now defaulting on these loans and the lenders are repossessing the customers' homes and reselling them, thereby increasing competition for manufacturers of new homes. If these trends were to continue, or if retail demand were to significantly weaken further, the inventory overhang could result in intense price 27 competition and pressure on profit margins within the industry and could have an adverse impact on our operating results. THE MANUFACTURED HOUSING AND RECREATIONAL VEHICLE INDUSTRIES ARE HIGHLY COMPETITIVE AND SOME OF OUR COMPETITORS HAVE STRONGER BALANCE SHEETS AND CASH FLOW, AS WELL AS GREATER ACCESS TO CAPITAL, THAN WE DO. THE RELATIVE STRENGTH OF OUR COMPETITORS COULD RESULT IN DECREASED SALES VOLUME AND EARNINGS FOR US, WHICH COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR RESULTS OF OPERATIONS AND FINANCIAL CONDITION. The manufactured housing industry is highly competitive. As of December 31, 2000, there were approximately 70 manufacturers of homes and approximately 8,900 retail sales centers. The 10 largest manufacturers accounted for approximately 79% of the wholesale manufactured housing market in calendar 2000, including our sales, which represented 18% percent of the market. The manufactured housing retail market is much more fragmented, with the five largest companies accounting for approximately 26% of the market in calendar 2000. Competition with other housing manufacturers on both the manufacturing and retail levels is based primarily on price, product features, reputation for service and quality, retail inventory, sales promotions, merchandising and the terms and availability of wholesale and retail customer financing. Recent growth in manufacturing capacity in the southern United States has increased competition at both the manufacturing and retail levels and has resulted in both regional and national competitors increasing their presence in the region. Overproduction of manufactured housing in this region could lead to greater competition and result in decreased margins, which could have a material adverse effect on our results of operations. In addition, manufactured homes compete with new and existing site-built homes, apartments, townhouses and condominiums. The supply of such housing has increased in recent years with the increased availability of construction financing, and this reduces the demand for manufactured homes. Manufactured homes also compete with resales of homes that have been repossessed by financial institutions as a result of credit defaults by dealers or customers. Repossession rates for manufactured homes have increased recently and there can be no assurance that repossession rates will not continue to increase, thereby adversely affecting our sales volume and profit margins. The manufactured housing industry, as well as the site-built housing development industry, have experienced consolidations in recent years, which could result in the emergence of competitors, including developers of site-built homes, that are larger than us and have greater financial resources than we have. This could adversely affect our business. The recreational vehicle market is also highly competitive. Sales from the five largest manufacturers represented approximately 59% of the market in calendar 2000, including our sales, which represented 23.3% of the market. However, we believe our share of the recreational vehicle market has declined in calender 2001 as a result of our lower market share in each of the motor home and travel trailer markets. Competitive pressures, especially in the entry-level segment of the recreational vehicle market for travel trailers, have recently resulted in a reduction of profit margins. Sustained increases in competitive pressures could have a material adverse effect on our results of operations. There can be no assurance that existing or new competitors will not develop products that are superior to our recreational vehicles or that achieve better consumer acceptance, thereby adversely affecting our sales volume and profit margins. OUR BUSINESS IS CYCLICAL AND THIS CAN LEAD TO FLUCTUATIONS IN OUR OPERATING RESULTS. The industries in which we operate are highly cyclical and there can be substantial fluctuations in our manufacturing shipments and operating results, and the results for any prior period may not be indicative of results for any future period. Companies within both the manufactured housing and 28 recreational vehicle industries are subject to volatility in operating results due to external factors such as economic, demographic and political changes. Factors affecting the manufactured housing industry include: - interest rates and the availability of financing, both of which have had a particularly adverse effect on our business in the past year; - defaults by retail customers resulting in repossessions, which have also had a particularly adverse effect on our business since the beginning of fiscal 2001; - inventory levels, which have had an adverse effect on our business since the beginning of fiscal 2001; - availability of manufactured home sites; - employment trends; - consumer confidence; and - general economic conditions. Factors affecting the recreational vehicle industry include: - overall consumer confidence and the level of discretionary consumer spending, which have had an adverse effect on our business since the beginning of fiscal 2001 and which have had a further negative effect since the events of September 11, 2001; - inventory levels, which have had an adverse effect on our business since the beginning of fiscal 2001; - general economic conditions; - interest rates; - employment trends; and - fuel availability and prices. We cannot assure you that the factors that are currently adversely affecting our business will not continue to have an adverse effect through fiscal 2002 and beyond. OUR BUSINESS IS SEASONAL, AND THIS LEADS TO FLUCTUATIONS IN SALES, PRODUCTION AND NET INCOME. We have experienced, and expect to continue to experience, significant variability in sales, production and net income as a result of seasonality in our businesses. Demand in both the manufactured housing and recreational vehicle industries generally declines during the winter season, while sales and profits are generally highest during the spring and summer months. In addition, unusually severe weather conditions in some markets may delay the timing of purchases and shipments from one quarter to another. WE HAVE REPLACED SOME OF OUR MANUFACTURED HOUSING RETAILERS, AND SOME OF OUR RETAILERS HAVE BEEN ACQUIRED. THIS MAY LEAD TO A DECREASE IN OUR SALES VOLUME AND A LOSS OF OUR MARKET SHARE. Our market share in the manufactured housing market, based on unit shipments, declined from 21.6% in calendar 1994 to 18.0% in calendar 2000. The reason for this change was, in part, our reduction of the number of our retail distribution points from approximately 1,800 to 1,300 during the period from January 1994 through July 29, 2001, in order to concentrate on larger dealers that share our approach towards merchandising and customer satisfaction. We have also, from time to time in the past, lost significant retailers that were acquired by competitors. Such acquisitions can reduce our retail 29 distribution network and market share, as these retail outlets may choose not to sell our products. There can be no assurance that we will be able to adequately replace retailers acquired by competitors if they cease selling our manufactured homes, or that we will be able to maintain our sales volume or market share in these competitive markets. WE ESTABLISHED A NETWORK OF COMPANY-OWNED RETAIL STORES, WHICH HAS REQUIRED SIGNIFICANT RESTRUCTURING AND DOWNSIZING, BUT WE MAY NOT SUCCEED IN RESTRUCTURING THIS NEW BUSINESS IN A SATISFACTORY MANNER AND MAKING IT PROFITABLE. We responded to the retail consolidation in the manufactured housing sector, beginning in fiscal 1998, by forming our own retail business and establishing a network of company-owned stores to replace distribution points lost to competitors. We made numerous acquisitions between June 1998 and August 2001, the largest of which was the purchase of HomeUSA in August 1998, comprising 65 stores. We also originated more than 100 "greenfield" locations, which are locations that we have started ourselves rather than through the acquisitions of existing operations of third parties. The combination of the two strategies carried us to a high of 244 stores in November 2000. Since its inception, this business segment has operated at a loss, and as the retail market for manufactured housing has slowed, the losses have grown. During fiscal 2001, we implemented a downsizing strategy to better match our retail capacity to market demand. By assigning management of some of our locations to third parties, and closing and selling other locations, we reduced the number of stores that we own to 156 at the end of the first quarter of fiscal 2002. These actions have resulted in restructuring charges and other costs including severance payments to employees. Given existing industry conditions and the performance of this new business to date, there can be no assurance that we will be able to complete the restructuring of our retail network as a successful and profitable part of our manufactured housing group in the future, or that it will become an important or successful part of our business strategy. In addition, we may have to undergo additional downsizing of this business depending on the length of time that the current factors affecting our business continue to have a negative impact. CHANGES IN CONSUMER PREFERENCES FOR OUR PRODUCTS OR OUR FAILURE TO GAUGE THOSE PREFERENCES COULD LEAD TO REDUCED SALES AND ADDITIONAL COSTS. We cannot be certain that historical consumer preferences for our products in general, and recreational vehicles in particular, will remain unchanged. We believe that the introduction of new features, designs and models will be critical to the future success of our recreational vehicle operations. Delays in the introduction of new models or product features, or a lack of market acceptance of new features, designs or models could have a material adverse effect on our business. For example, we may incur significant additional costs in designing or redesigning models that are not accepted in the marketplace. Products may not be accepted for a number of reasons, including changes in consumer preferences, or our failure to properly gauge consumer preferences. We cannot be certain that new product introductions will not reduce revenues from existing models and adversely affect our results of operations. There can be no assurance that any of these new models or products will be introduced to the market on time or that they will be successful when introduced. IF THE FREQUENCY AND SIZE OF PRODUCT LIABILITY AND OTHER CLAIMS AGAINST US, INCLUDING WRONGFUL DEATH, RISES, OUR BUSINESS, RESULTS OF OPERATIONS AND FINANCIAL CONDITION MAY BE HARMED. We are frequently subject, in the ordinary course of business, to litigation involving product liability and other claims, including wrongful death, against us related to personal injury and warranties. We partially self-insure our product liability claims and purchase excess product liability insurance in the commercial insurance market. We cannot be certain that our insurance coverage will be sufficient to cover all future claims against us. Any increase in the frequency and size of these claims, as compared to our experience in prior years, may cause the premium that we are required to pay for insurance to 30 rise significantly. It may also increase the amounts we pay in punitive damages, not all of which are covered by our insurance. We are also presently party to actions in litigation that the plaintiffs are seeking to have certified as class actions, and actions where a subclass of plaintiffs has been certified. If any of these actions is certified as a class action and decided in a manner adverse to us, the resulting liability may be significant. These factors may have a material adverse effect on our results of operations and financial condition. In addition, if these claims rise to a level of frequency or size that is significantly higher than in the case of similar claims made against our competitors, our reputation and business will be harmed. For a more detailed discussion of some of the legal proceedings we are involved in, please see the section titled "Business--Legal Proceedings in Which We Are Involved," beginning on page 72 of this prospectus. WHEN WE INTRODUCE NEW PRODUCTS WE MAY INCUR EXPENSES THAT WE DID NOT ANTICIPATE, SUCH AS RECALL EXPENSES, RESULTING IN REDUCED EARNINGS. The introduction of new models is critical to our future success, particularly in our recreational vehicle business. We may incur unexpected expenses, however, when we introduce new models. For example, we may experience unexpected engineering or design flaws that will force a recall of a new product. In addition, we may make business decisions that include offering incentives to stimulate the sales of products not accepted by the market. The costs resulting from these types of problems could be substantial, and would have a significant adverse effect on our earnings. FUEL SHORTAGES, OR HIGHER PRICES FOR FUEL, COULD HAVE A NEGATIVE EFFECT ON SALES OF RECREATIONAL VEHICLES. Gasoline or diesel fuel is required for the operation of motor homes and most vehicles used to tow travel trailers and folding trailers. There can be no assurance that the supply of these petroleum products will continue uninterrupted, that rationing will not be imposed or that the price of or tax on these petroleum products will not significantly increase in the future. The increase in gasoline prices and speculation about potential fuel shortages appear to have had an unfavorable effect on consumer demand for motor homes in the past, thereby having an adverse effect on our sales volume. IF WE DO NOT SUCCESSFULLY UPGRADE OUR COMPUTER SYSTEMS, WE WILL LOSE SALES TO THOSE OF OUR COMPETITORS THAT HAVE MORE SOPHISTICATED AND BETTER INTEGRATED SYSTEMS THAN US. Our computer systems are not as sophisticated as those that are currently available, and are not fully integrated. We are in the process of upgrading our computer systems, but we are in the early stages of this process. We must update our computer systems if we are to remain competitive in our industry. Competitors with more sophisticated and fully integrated computer systems will have efficiencies that may lead to lower costs and faster delivery schedules, and that may make it difficult for us to compete with them. We will be required to expend significant resources to fully implement a system suitable for a business as large and complex as ours. It is possible that the cost of building a computer system of this nature will be higher than budgeted, and that the system, when built, will not work as originally planned. This would increase our costs and disrupt our business. THE MARKET FOR OUR MANUFACTURED HOMES IS HEAVILY CONCENTRATED IN THE SOUTHERN PART OF THE UNITED STATES, AND A CONTINUED DECLINE IN DEMAND IN THAT AREA COULD HAVE A MATERIAL NEGATIVE EFFECT ON SALES. The market for our manufactured homes is geographically concentrated, with the top 15 states accounting for over 67% of the industry's total shipments in calendar 2000. The southern United States accounts for a significant portion of our manufactured housing sales. As is the case with our other markets, we have experienced a downturn in economic conditions in the southern states, and a continuing downturn in this region that is worse than that of other regions could have a disproportionately material adverse effect on our results of operations. There can be no assurance that the demand for manufactured homes will not continue to decline in the southern United States or 31 other areas in which we experience high product sales and any such decline could have a material adverse effect on our results of operations. CHANGES IN ZONING REGULATIONS COULD AFFECT THE NUMBER OF SITES AVAILABLE FOR OUR MANUFACTURED HOMES, AND ZONING REGULATIONS COULD AFFECT THE MARKET FOR OUR NEW PRODUCTS, BOTH OF WHICH COULD AFFECT OUR SALES. Any limitation on the growth of the number of sites available for manufactured homes, or on the operation of manufactured housing communities, could adversely affect our sales. In addition, new product opportunities that we may wish to pursue for our manufactured housing business could cause us to encounter new zoning regulations and affect the potential market for these new products. Manufactured housing communities and individual home placements are subject to local zoning ordinances and other local regulations relating to utility service and construction of roadways. In the past, there has been resistance by property owners to the adoption of zoning ordinances permitting the location of manufactured homes in residential areas, and we believe that this resistance has adversely affected the growth of the industry. The inability of the manufactured home industry to change these zoning ordinances could have a material adverse effect on our results of operations and we cannot be certain that manufactured homes will receive widespread acceptance or that localities will adopt zoning ordinances permitting the location of manufactured homes. POWER OUTAGES MAY ADVERSELY AFFECT OUR CALIFORNIA FACILITIES. We conduct substantial operations in the state of California and rely on a continuous power supply to do so. The deregulation of the energy industry instituted in 1996 by the California government has in the past resulted in shortages in wholesale electricity supplies and this has led to power outages. If our electricity supply is interrupted in the future, we may be unable to supply products to our customers on a timely basis, and this would have a negative effect on our sales. WE MAY NOT BE ABLE TO OBTAIN FINANCING IN THE FUTURE, INCLUDING ANY REFINANCING REQUIRED UPON EXPIRATION OF OUR TWO-YEAR TERM LOAN INCLUDED IN THE SENIOR SECURED FACILITY, AND THE TERMS OF ANY FUTURE FINANCINGS MAY LIMIT OUR ABILITY TO MANAGE OUR BUSINESS. DIFFICULTIES IN OBTAINING FINANCING ON FAVORABLE TERMS WILL HAVE A NEGATIVE EFFECT ON OUR ABILITY TO EXECUTE OUR BUSINESS STRATEGY. Our operations require significant amounts of cash. In addition to capital available under the senior secured credit facility, whether or not the exchange offer is completed, we anticipate that we will be required to seek additional capital in the future. There can be no assurance that we will be able to obtain any future financings on acceptable terms, if at all. For instance, the senior secured facility contains a $30 million two-year term loan that will require refinancing within two years, with partial amortization beginning at the start of the second year. Further, on November 16, 2001, Moody's Investors Services, Inc. announced that it had lowered its rating on our senior implied debt from B1 to B2, and on our existing preferred securities from B3 to Caa3, with a negative rating outlook. In announcing the lowered ratings, Moody's stated that its action reflected the continuing erosion in our operating performance due to a protracted decline in the manufactured housing industry and a similar slowdown in the recreational vehicle business, and that the negative outlook reflects the highly uncertain intermediate-term outlook for demand in the manufactured housing and recreational vehicle markets. On December 6, 2001, Standard and Poor's announced that it had lowered our corporate credit rating from BB+ to BB-, and Fleetwood Capital Trust's corporate credit rating from B+ to D, with a negative rating outlook. In announcing the lowered ratings, Standard and Poor's cited our materially weakened business position due to continued, very competitive business conditions in both our manufactured housing and recreational vehicle business segments, and our constrained financial profile, as reflected by the granting of security to our lenders and the recent discontinuation and deferral of our common dividends and existing preferred security distributions, respectively. Standard and Poor's attributed its negative outlook to the prospects 32 for continued weak performance within both of our primary business segments and the vulnerability of our corporate credit ratings to further downgrades. These actions could result in lower trading prices for the existing preferred securities, and could also result in any capital that we might raise in the future being more expensive or more difficult to raise. If we are unable to obtain alternative or additional financing arrangements in the future, or if we cannot obtain financing on acceptable terms, we may not be able to execute our business strategy. Moreover, the terms of any such additional financing may restrict our financial flexibility, including the debt we may incur in the future, or may restrict our ability to manage our business as we had intended. OUR REPURCHASE AGREEMENTS WITH FLOOR PLAN LENDERS COULD RESULT IN INCREASED COSTS. In accordance with customary practice in the manufactured housing and recreational vehicle industries, we enter into repurchase agreements with various financial institutions pursuant to which we agree, in the event of a default by an independent retailer in its obligation to these credit sources, to repurchase product at declining prices over the term of the agreements, typically 12 to 18 months. The difference between the gross repurchase price and the price at which the repurchased product can then be resold, which is typically at a discount to the original sale price, is an expense to us. Thus, if we were obligated to repurchase a substantially greater number of manufactured homes or recreational vehicles in the future, this would increase our costs, which could have a negative effect on our earnings. During fiscal 2001, we repurchased 333 manufactured homes and 308 recreational vehicles, at an aggregate gross purchase price to us of $15.0 million, compared to repurchases of 220 manufactured homes and 176 recreational vehicles, at an aggregate purchase price to us of $9.9 million for fiscal 2000. During the first quarter of fiscal 2002, we repurchased 43 manufactured homes and 22 recreational vehicles, at an aggregate gross purchase price to us of $3.3 million, compared to repurchases of 91 manufactured homes and 88 recreational vehicles, at an aggregate purchase price to us of $3.6 million for the first quarter of fiscal 2001. INCREASED COSTS, INCLUDING LABOR COSTS AND COSTS OF COMPONENT PARTS, AND CHANGES IN LABOR RATES AND PRACTICES COULD REDUCE OUR OPERATING INCOME. Our results of operations may be significantly affected by the availability and pricing of manufacturing components and labor, as well as changes in labor rates and practices. Although we attempt to offset the effect of any escalation in components and labor costs by increasing the sales prices of our products, we cannot be certain that we will be able to do so without it having an adverse impact on the demand for our products. Changes in labor rates and practices, including changes resulting from union activity, could significantly affect our costs and thereby reduce our operating income. If we cannot successfully offset increases in our manufacturing costs, this could have a material adverse impact on our margins, operating income and cash flows. Even if we were able to offset higher manufacturing costs by increasing the sales prices of our products, the realization of any such increases often lags behind the rise in manufacturing costs, especially in our manufactured housing operations, due in part to our commitment to give our retailers price protection with respect to previously placed customer orders. FOR SOME OF OUR COMPONENTS, WE DEPEND ON A SMALL GROUP OF SUPPLIERS, AND THE LOSS OF ANY OF THESE SUPPLIERS COULD AFFECT OUR ABILITY TO OBTAIN COMPONENTS AT COMPETITIVE PRICES, WHICH WOULD DECREASE OUR MARGINS. Most recreational vehicle and manufactured home components are readily available from a variety of sources. However, a few components are produced by only a small group of quality suppliers that have the capacity to supply large quantities on a national basis. Primarily, this occurs in the case of gasoline-powered motor home chassis, where Ford Motor Company is the dominant supplier. Shortages, production delays or work stoppages by the employees of such suppliers could have a 33 material adverse effect on our sales. If we cannot obtain an adequate chassis supply, this could result in a decrease in our sales and earnings. RISKS RELATING TO THE EXCHANGE OFFER, THE CASH OFFER, THE NEW PREFERRED SECURITIES AND OUR COMMON STOCK THE NEW PREFERRED SECURITIES AND NEW PREFERRED SECURITIES GUARANTEES ARE SUBORDINATED TO OUR SENIOR DEBT, BUT SENIOR IN PAYMENT TO THE EXISTING PREFERRED SECURITIES AND THE EXISTING PREFERRED SECURITIES GUARANTEE. The new preferred securities and new preferred securities guarantees are senior to the existing preferred securities and the existing preferred securities guarantee, but will be unsecured and subordinated in right of payment to our senior debt, including our senior secured facility. They are also effectively subordinated to all indebtedness and other liabilities of our subsidiaries, including intercompany liabilities to the extent that the instruments governing these intercompany liabilities provide for subordination. The new preferred securities and new preferred securities guarantees may also be subordinated to any debt we may issue in the future. As a result of this subordination, in the event of our liquidation or insolvency, a payment default with respect to our senior debt, a covenant default with respect to our senior debt, or an acceleration of the new preferred securities due to an event of default, our assets will be available to pay obligations on the new preferred securities only after all senior debt has been paid in full, and there may not be sufficient assets remaining to pay amounts due on any or all of the new preferred securities then outstanding. As of July 29, 2001, we had approximately $144 million of outstanding senior debt at the parent level and, in addition, our financial statements reflected liabilities of our subsidiaries of $170 million, of which $85 million were accounts payable, excluding amounts due to employees, interest bearing debt and reserves. Neither we nor our subsidiaries are prohibited under the new indentures from incurring additional debt. DISTRIBUTIONS ON OUR NEW PREFERRED SECURITIES AND EXISTING PREFERRED SECURITIES DEPEND ON OUR RECEIVING DISTRIBUTIONS FROM OUR SUBSIDIARIES. The new preferred securities are obligations exclusively of Fleetwood Capital Trust II and Fleetwood Capital Trust III, as the case may be, and, as a result of the new preferred securities guarantees, of us. Substantially all of our operations are conducted through our subsidiaries and substantially all of our earnings and cash flows were generated by our subsidiaries. As a result, our cash flow and our ability to service our debt, including the new preferred securities, is dependent on the earnings of our subsidiaries. In addition, we are dependent on the distribution of our subsidiaries' earnings, loans and other payments by our subsidiaries to us. Our subsidiaries are separate and distinct legal entities. They have no obligation to pay any amounts due on the new preferred securities or to provide us with funds for our payment obligations, whether by dividends, distributions, loans or other payments. In addition, any payment of dividends, distributions, loans or advances by our subsidiaries to us could be subject to statutory or contractual restrictions, including restrictive covenants contained in our senior secured facility. Payments to us by our subsidiaries will also be contingent upon our subsidiaries' earnings and business considerations. IF AN ACTIVE MARKET FOR THE EXCHANGE PREFERRED SECURITIES FAILS TO DEVELOP OR IS NOT SUSTAINED, THE TRADING PRICE AND LIQUIDITY OF THE EXCHANGE PREFERRED SECURITIES COULD BE MATERIALLY ADVERSELY AFFECTED. Prior to the offering, there has been no trading market for the exchange preferred securities. The dealer manager, Banc of America Securities LLC, has advised us that it currently intends to make a market in the exchange preferred securities. However, Banc of America Securities LLC is not obligated to make a market and may discontinue this market making activity at any time without notice. The 34 liquidity of the trading market for the exchange preferred securities will depend in part on the level of participation of the holders of existing preferred securities in the exchange offer. The greater the participation in the exchange offer, the greater the liquidity of the trading market for the exchange preferred securities and the lesser the liquidity of the trading market for the existing preferred securities not tendered in the exchange offer. The liquidity of the trading market for the exchange preferred securities may also be adversely affected by the issuance of the cash offer preferred securities, especially if the number of cash offer preferred securities is substantially larger than the number of exchange offer preferred securities. In addition, market making activity by Banc of America Securities LLC will be subject to the limits imposed by the Securities Act of 1933 and the Securities Exchange Act of 1934 and disclosed in this prospectus. As a result, we cannot assure you that any market for the exchange preferred securities will develop or, if one does develop, that it will be maintained. If an active market for the exchange preferred securities fails to develop or be sustained, the trading price and liquidity of the exchange preferred securities could be materially adversely affected. IF AN ACTIVE MARKET FOR THE CASH OFFER PREFERRED SECURITIES FAILS TO DEVELOP OR IS NOT SUSTAINED, THE TRADING PRICE AND LIQUIDITY OF THE CASH OFFER PREFERRED SECURITIES COULD BE MATERIALLY ADVERSELY AFFECTED. Prior to the offering, there has been no trading market for the cash offer preferred securities. The placement agent, Banc of America Securities LLC, has advised us that it currently intends to make a market in the cash offer preferred securities. However, Banc of America Securities LLC is not obligated to make a market and may discontinue this market making activity at any time without notice. In addition, market making activity by Banc of America Securities LLC will be subject to the limits imposed by the Securities Act of 1933 and the Securities Exchange Act of 1934 and disclosed in this prospectus. As a result, we cannot assure you that any market for the cash offer preferred securities will develop or, if one does develop, that it will be maintained. If an active market for the cash offer preferred securities fails to develop or be sustained, the trading price and liquidity of the cash offer preferred securities could be materially adversely affected. In addition, to the extent that the cash offer is less than fully subscribed, the liquidity of the cash offer preferred securities purchased in the cash offer may be adversely affected. THE MARKET PRICE OF OUR COMMON STOCK HAS BEEN DEPRESSED, AND MAY DECLINE FURTHER. THIS DECLINE WOULD AFFECT THE VALUE OF THE COMMON STOCK YOU RECEIVE UPON CONVERSION OF THE NEW PREFERRED SECURITIES OR AS PAYMENT OF DISTRIBUTIONS ON THE NEW PREFERRED SECURITIES. THIS DECLINE COULD ALSO ADVERSELY AFFECT THE TRADING PRICE OF THE NEW PREFERRED SECURITIES. WE EXPECT THE TRADING PRICE OF THE NEW PREFERRED SECURITIES TO BE HIGHLY VOLATILE. The market price of our common stock has fluctuated significantly and generally declined, from a market price of $47.44 per share on March 6, 1998 to $8.15 per share on April 6, 2001. The market price of our common stock may decline further as a result of a number of factors, including our ability to pay principal and interest on our debt when due and the recent downgrade in our debt ratings by Moody's and Standard and Poor's. Because the new preferred securities are convertible into common stock, and because we may cause distributions on the new preferred securities to be paid in common stock beginning as early as the distribution for February 2002, volatility or depressed prices for our common stock could have a similar effect on the price of our new preferred securities. On October 30, 2001, we elected to defer distributions on our existing preferred securities due to be made on November 15, 2001. In light of our business environment and recent operating results, we currently anticipate that we will find it necessary to defer distributions on our existing preferred securities through at least August 15, 2002. Even though our board of directors has discontinued the payment of dividends on our common stock for the foreseeable future, these deferrals of distributions on our existing preferred securities would further prevent us from declaring or paying any dividends during the 35 period of such deferrals. Other factors resulting in fluctuations in the market price of our common stock, and hence of the exchange preferred securities, include: - actual and anticipated variations in our operating results; - general economic and market conditions; - interest rates, which directly impact the price of our exchange preferred securities and indirectly affect the price of our common stock; - general conditions, including changes in demand, in the manufactured housing and recreational vehicle industries; - future issuances of our common stock, including issuances of common stock in payment of interest on our new debentures and payment of distributions on the new preferred securities or upon conversion of our new preferred securities, which could have a dilutive effect on our per share results of operations and otherwise cause the market price of our common stock to decline; - perceptions of the strengths and weaknesses of the manufactured housing and recreational vehicle industries; - developments in our relationships with our customers and/or suppliers; - announcements of alliances, mergers or other relationships by or between our competitors and/or our suppliers and customers; - announcements and the introduction of new products and models by us or our competitors and the success or failure of these new products and models; - developments related to regulatory and zoning regulations; and - the effects of the exchange offer and cash offer. We expect this volatility to continue in the future. In addition, any shortfall or changes in our revenue, gross margins, earnings or other financial results could also cause the price of our common stock to fluctuate significantly. In recent years, the stock market in general has experienced extreme price and volume fluctuations that have particularly affected the manufactured housing and recreational vehicle industries and that may be unrelated to the operating performance of the companies within these industries. These broad market fluctuations may adversely affect the market price of our common stock and new preferred securities. Volatility in the price of stocks of companies in our industries has been particularly high. IF THE CLOSING PRICE OF OUR COMMON STOCK DECLINES BELOW $7.50 PER SHARE ON THE DAY THAT WE PRICE THE CASH OFFER, THE CONVERSION PRICE FOR THE CASH OFFER PREFERRED SECURITIES WILL REPRESENT MORE THAN A 15% PREMIUM OVER THE CLOSING PRICE OF OUR COMMON STOCK ON THAT DATE. We have set a minimum conversion price of $8.63 per share for the cash offer preferred securities. If the market price of our common stock declines so that the closing price of our common stock on the day that we price the cash offer is below $7.50 per share, the minimum conversion price of $8.63 will be the initial conversion price for the exchange preferred securities. This conversion price will represent a premium of more than 15% over the closing price of our common stock on the day that we price the cash offer. 36 IF THE MARKET PRICE OF OUR COMMON STOCK DECLINES DURING THE COURSE OF THE EXCHANGE OFFER, THE CONVERSION PRICE FOR THE EXCHANGE PREFERRED SECURITIES MAY REPRESENT MORE THAN A 15% PREMIUM OVER THE DAILY VOLUME-WEIGHTED AVERAGE OF THE CLOSING PRICES OF THE COMMON STOCK FOR EACH OF THE FIVE TRADING DAYS IMMEDIATELY PRECEDING THE FOURTH TRADING DAY PRIOR TO THE EXCHANGE OFFER EXPIRATION DATE. We have set a minimum conversion price of $8.63 per share for the exchange preferred securities. If, in the course of the exchange offer, the market price of our common stock declines so that the daily volume-weighted average of the closing prices of our common stock for each of the five trading days immediately preceding the fourth trading day prior to the exchange offer expiration date is below $7.50 per share, the minimum conversion price of $8.63 will be the initial conversion price for the exchange preferred securities. This conversion price will represent a premium of more than 15% over the daily volume-weighted average of the closing prices of the common stock for each of the five trading days immediately preceding the fourth trading day prior to the exchange offer expiration date. THE LIQUIDITY OF THE MARKET FOR EXISTING PREFERRED SECURITIES THAT ARE NOT EXCHANGED IN THE EXCHANGE OFFER WILL BE LIMITED AND SPORADIC. The existing preferred securities are currently traded over-the-counter. Accordingly, trading in the existing preferred securities has been limited and sporadic. Any existing preferred securities tendered and accepted for exchange in the exchange offer will reduce the aggregate number of existing preferred securities outstanding. Consequently, any existing trading market for the existing preferred securities that remain outstanding after the exchange offer will be even more limited and sporadic. IF WE ISSUE CASH OFFER PREFERRED SECURITIES IN THE CASH OFFER BUT THE EXCHANGE OFFER IS NOT CONSUMMATED, THIS MAY REDUCE THE LIQUIDITY OF THE MARKET FOR THE EXISTING PREFERRED SECURITIES. The cash offer is not subject to, and is expected to close before, the consummation of the exchange offer. If the minimum conditions to the exchange offer are not satisfied and we withdraw the exchange offer, we still expect to issue cash offer preferred securities for cash in the cash offer. Accordingly, there will be cash offer preferred securities on the market. Trading in the existing preferred securities in the over-the-counter market has been limited and sporadic. The introduction of our cash offer preferred securities may reduce the liquidity of the trading market for the existing preferred securities. WE MAY NOT ACCEPT FOR EXCHANGE ALL OF A HOLDER'S VALIDLY TENDERED EXISTING PREFERRED SECURITIES, AND WE MAY NOT MAKE AN OFFER IN THE FUTURE FOR THE EXISTING PREFERRED SECURITIES THAT REMAIN OUTSTANDING FOLLOWING THIS EXCHANGE OFFER. We will accept for exchange validly tendered existing preferred securities in an aggregate liquidation amount of up to $86.25 million of the $287.5 million in aggregate liquidation amount of outstanding existing preferred securities, assuming all conditions to the exchange offer are satisfied. To the extent that the aggregate liquidation amount of existing preferred securities tendered for exchange exceeds $86.25 million, we will accept existing preferred securities for exchange on a pro rata basis. Therefore, we cannot assure you that we will accept for exchange all of your validly tendered existing preferred securities. Upon completion of the exchange offer, there will remain at least $201.25 million in aggregate liquidation amount of existing preferred securities that have not been accepted for exchange. We do not know whether, in the future, we will make another offer to exchange these outstanding existing preferred securities. Holders of these securities will therefore be subject to the risks relating to existing preferred securities outlined in this section of the prospectus, including the risk that the liquidity of the market for them will be limited and sporadic and the risk that we may elect to defer payment of distributions on existing preferred securities for up to an additional nineteen consecutive quarters, having already deferred payment of distributions due to be made on November 15, 2001. 37 THE EXCHANGE OFFER MAY NOT REPRESENT A FAIR VALUATION OF THE EXISTING PREFERRED SECURITIES. Our board of directors has made no determination that the exchange offer represents a fair valuation of the existing preferred securities. We have not obtained a fairness opinion from any financial advisor about the fairness of the exchange offer to you or us. We cannot assure you that if you tender your existing preferred securities you will receive more value than if you had chosen to keep them. WE MAY NOT BE ABLE TO MEET PAYMENT OBLIGATIONS ON THE NEW PREFERRED SECURITIES OR OUR EXISTING PREFERRED SECURITIES WHEN DUE, AND WE MAY ELECT TO CONTINUE TO DEFER MAKING DISTRIBUTIONS ON THE EXISTING PREFERRED SECURITIES. Our cash resources may not be sufficient to meet the payment obligations on the new preferred securities. As of July 29, 2001, we had approximately $144 million of outstanding senior debt at the parent level and in addition our financial statements reflected liabilities of our subsidiaries of $170 million, of which $85 million were accounts payable, excluding amounts due to employees, interest bearing debt and reserves. Our ability to meet the payment obligations on the new preferred securities, and to meet our other financial obligations, depends on our operating performance, the availability of cash flow, the availability of new sources of funding, the state of the financial markets and other factors, many of which are beyond our control. We may not be able to generate enough cash flow to meet our payment obligations on existing debt. For instance, we suffered a loss of $284 million in our combined operations for fiscal 2001 and a loss of $11.1 million in combined operations for the first quarter of fiscal 2002, and we may continue to suffer losses. Similarly, our ratio of earnings to fixed charges for fiscal 2001 and the first quarter of fiscal 2002 were not meaningful since earnings were inadequate to cover fixed charges by $336.8 million and $18.5 million, respectively. Accordingly, we cannot assure you that we will be able to meet our payment obligations on the new preferred securities when they become due. Our existing preferred securities are subject to the same risks that we may be unable to meet our payment obligations when due, as reflected by our current deferral of distributions on the existing preferred securities. Further, they are ranked junior in right of payment to the new preferred securities. In addition, we have the right to elect to defer distributions on our existing preferred securities, including deferrals for up to twenty consecutive quarters. On October 30, 2001, we elected to defer distributions on our existing preferred securities due to be made on November 15, 2001. If our business environment and our operating results do not significantly improve from those we have recently experienced, we would likely find it necessary to defer distributions on our existing preferred securities through at least August 15, 2002. Even though our board of directors has discontinued the payment of dividends on our common stock for the foreseeable future, these deferrals of distributions on our existing preferred securities would further prevent us from declaring or paying any dividends during the period of such deferrals. WE EXPECT TO USE PART OF THE PROCEEDS FROM THE SALE OF THE CASH OFFER PREFERRED SECURITIES TO PAY TAXES RESULTING FROM THE EXCHANGE OFFER AND THE PROCEEDS WILL, TO THAT EXTENT, BE UNAVAILABLE FOR USE IN OUR BUSINESS OPERATIONS. We expect the exchange of exchange preferred securities for existing preferred securities to result in a tax liability to us, as a result of the taxable income generated by the cancellation of existing debentures supporting the existing preferred securities tendered into the exchange offer. If a maximum of $86.25 million in aggregate liquidation amount of existing preferred securities are exchanged for exchange preferred securities, we anticipate incurring a tax liability of approximately $18.0 million. The proceeds from the cash offer will be applied first to pay this expected tax liability, after allowing for expenses incurred in connection with the offers, with one half of the amount being contributed to our manufacturing company subsidiaries, one half of which contributed amount will be used to pay down 38 our term loan up to $24.0 million, with the balance of that contributed amount, if any, being applied to the revolving loan under our amended senior secured credit facility. The remainder of the proceeds from the cash offer, if any, will be used in the operation of our business. Accordingly, the proceeds from the sale of the cash offer preferred securities may not result in any benefit to our business operations. IF WE BECOME INSOLVENT, A COURT MAY VOID OUR NEW GUARANTEES IN RESPECT OF THE NEW PREFERRED SECURITIES OR SUBORDINATE THE NEW GUARANTEES TO OUR OTHER OBLIGATIONS, AND A COURT MAY ALSO PROVIDE THAT THE AMOUNT OF YOUR CLAIM WILL BE LESS THAN THE LIQUIDATION AMOUNT PER NEW PREFERRED SECURITY. Under the federal bankruptcy law and comparable provisions of state fraudulent transfer laws, if a court were to find that, at the time we, as guarantor of the new preferred securities, incurred the debt evidenced by our new guarantees, we: - were insolvent or rendered insolvent by reason of such incurrence; were engaged in a business or transaction for which our remaining assets constituted unreasonably small capital; or intended to incur, or believed that we would incur, debts beyond our ability to pay such debts as they mature; and - received less than reasonably equivalent value or fair consideration for the incurrence of such debt; then the court could void the new guarantees, or claims by holders of the securities under those new guarantees could be subordinated to all of our other debts except the new preferred securities. In addition, any payment by us under our new guarantees could be required to be returned to us, or to a fund for the benefit of our creditors. The measures of insolvency for purposes of the above will vary depending on the law applied in any proceeding. Generally, however, a guarantor would be considered insolvent if: - the sum of its debts, including contingent liabilities, was greater than the saleable value of all of its assets at a fair valuation; or - the present fair saleable value of its assets was less than the amount that would be required to pay its probable liability on its existing debts, including contingent liabilities, as they become absolute and mature; or - it could not pay its debts as they become due. In addition, if we become insolvent, a court may provide that the amount of your claim will be less than the liquidation amount per new preferred security, which is $22 in the case of an exchange preferred security and $50 in the case of a cash offer preferred security. THE EXISTING PREFERRED SECURITIES WILL BE SUBORDINATED TO THE NEW PREFERRED SECURITIES. The existing preferred securities are unsecured obligations and rank in right of payment behind: - all of our existing and future senior debt at the parent level, aggregating $144 million as of July 29, 2001, which included the notes payable to Prudential, and in addition our financial statements reflected liabilities of our subsidiaries of $170 million, of which $85 million were accounts payable, excluding amounts due to employees, interest bearing debt and reserves; - up to an aggregate of $37.95 million in liquidation amount of exchange preferred securities that may be issued in the exchange offer, and the offer of up to $150.0 million in cash offer preferred securities. Also, the existing preferred securities are effectively subordinated to the liabilities of our subsidiaries, including intercompany liabilities to the extent that the instruments governing these 39 intercompany liabilities provide for subordination. The existing preferred securities may also be subordinated to any debt we may issue in the future. We may not make any distributions to holders of, or purchase, redeem or otherwise retire, the existing preferred securities, if payments on any of our senior debt or the distributions to holders of the new preferred securities are not made when due. The owners of our senior debt and new preferred securities will be entitled to receive payment of all amounts due to them before the owners of the existing preferred securities upon any payment or distribution of our assets to our creditors upon our liquidation or other insolvency or reorganization proceedings. SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS This prospectus, including the sections entitled "Summary" and "Risk Factors," contains forward-looking information. This forward-looking information is subject to risks and uncertainties including the factors listed under "Risk Factors," as well as elsewhere in this prospectus. In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "expects," "intends," "plans," "anticipates," "believes," "estimates," "predicts," "potential" or "continue," or the negative of these terms or other comparable terminology. These statements are only predictions and may be inaccurate. Actual events or results may differ materially. In evaluating these statements, you should specifically consider various factors, including the risks outlined under "Risk Factors." These factors may cause our actual results to differ materially from any forward-looking statement. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. The forward-looking statements made in connection with the exchange offer pursuant to the registration statement or the Tender Offer Statement on Schedule TO-I/A are not and have not been protected under the Securities Litigation Reform Act. Furthermore, any references to the safe harbor for forward-looking statements made in reports that are incorporated by reference into this prospectus and filed pursuant to the Securities Exchange Act of 1934, are specifically not incorporated into this registration statement with respect to the exchange offer. 40 USE OF PROCEEDS We will not receive any proceeds from the exchange offer. If we consummate the exchange offer, we will use a portion of the proceeds from the sale of cash offer preferred securities to pay taxes that we expect to incur as a result of consummation of the exchange offer, together with the fees and expenses we will incur as a result of the exchange offer. Assuming that existing preferred securities in an aggregate liquidation amount of $86.25 million are exchanged in the exchange offer, which is the maximum amount that we can accept for exchange in the exchange offer, we anticipate incurring a tax liability of $18.0 million as a result of the taxable income generated by the cancellation of existing debentures supporting the existing preferred securities accepted for exchange. Assuming that cash offer preferred securities are sold in the cash offer having an aggregate liquidation amount equal to 30% of the aggregate liquidation amount of the existing preferred securities tendered and accepted for exchange in the exchange offer, we will use a portion of the proceeds from the sale of that percentage amount in order to settle the expected tax liability resulting from consummation of the exchange offer. We will use any proceeds from the sale of cash offer preferred securities in excess of that percentage for general corporate purposes, including the repayment of corporate indebtedness. We expect to consummate the cash offer even if we do not consummate the exchange offer, since the cash offer is not conditioned upon consummation of the exchange offer or the sale of a minimum number of cash offer preferred securities. In that event, and after payment of fees and expenses incurred in connection with the cash offer, we will use any remaining proceeds from the sale of cash offer preferred securities for general corporate purposes, including the repayment of corporate indebtedness. In addition, as a result of a recent amendment to our senior secured facility, we have agreed to contribute one half of the amount raised in the cash offer to our manufacturing company subsidiaries, after allowing for expenses of the offers and taxes incurred in connection with the exchange offer, with one half of the contributed amount being used to pay down the term loan up to $24 million, and the balance of that contributed amount being then applied to pay down the revolving loan. These payments will not reduce the amount of the commitment on the revolving loan but the first $6 million applied to the revolving loan will permanently reduce the amount available to borrow under the plant, property and equipment sub-facility. Further, if the exchange offer is not completed by February 28, 2002, then the amount of the cash proceeds that we are required to contribute to our manufacturing company subsidiaries for application as described above would be reduced to 43% of the proceeds of the cash offer, after allowing for expenses of $10.0 million but adding back the $20.0 million allowance for anticipated taxes that would have otherwise been generated in connection with the exchange offer. 41 PRICE RANGE OF COMMON STOCK The following table lists the high and low intra-day sales prices for our common stock during the past two fiscal years as reported on the New York Stock Exchange Composite Tape, along with information on dividends declared per share during the same periods. Our common stock is listed on the New York Stock Exchange and the Pacific Stock Exchange and trades on various regional exchanges (Ticker Symbol: FLE). Call options are traded on the American Stock Exchange.
DIVIDENDS QUARTER HIGH LOW DECLARED - ------- -------- -------- --------- Fiscal 2000 First Quarter.................................... $29.25 $22.00 $0.19 Second Quarter................................... 23.69 18.00 0.19 Third Quarter.................................... 23.13 15.94 0.19 Fourth Quarter................................... 17.25 14.00 0.19 Fiscal 2001 First Quarter.................................... $15.81 $12.94 $0.19 Second Quarter................................... 14.94 10.56 0.19 Third Quarter.................................... 16.00 8.69 0.04 Fourth Quarter................................... 15.05 8.10 0.04 Fiscal 2002 First Quarter.................................... $15.55 $15.25 $0.04 Second Quarter................................... 17.25 9.12 0.04 Third Quarter (through December 10, 2001)........ 13.40 9.25 0.00
On October 28, 2001, there were approximately 1,271 shareholders of record of our common stock. DIVIDEND POLICY The declaration and payment of dividends on our common stock is at the discretion of our board of directors and depends on our results of operations, financial condition, capital requirements and such other factors as our board of directors deems relevant. In December 2000, our board of directors approved a reduction in the quarterly dividend from $0.19 per share to $0.04 per share. Our board of directors has subsequently discontinued the payment of dividends on our common stock for the foreseeable future. We have the right to elect to defer distributions for up to twenty consecutive quarters on our existing preferred securities and on October 30, 2001 we elected to defer distributions due to be made on November 15, 2001. If our business environment and our operating results do not significantly improve from those we have recently experienced, we would likely find it necessary to defer distributions on our existing preferred securities through at least August 15, 2002. Even though our board of directors has discontinued the payment of dividends on our common stock for the foreseeable future, these deferrals of distributions on our existing preferred securities would further prevent us from declaring or paying any dividends during the period of such deferrals. CAPITALIZATION The following table sets forth our unaudited consolidated capitalization: - at July 29, 2001, on an actual basis; and - as adjusted to: - give effect to the issuance of the exchange preferred securities in the exchange offer on the assumption that $86.25 million in aggregate liquidation amount of the outstanding existing preferred securities were validly tendered and accepted for exchange, after deducting fees to the dealer manager and estimated expenses; 42 - give effect to the issuance and receipt of approximately $141.5 million in cash proceeds from the sale of cash offer preferred securities, after deducting fees of the placement agent and estimated expenses; - reflect an increase to capital surplus of $28.1 million on the assumed early extinguishment of $86.25 million in aggregate liquidation amount of the outstanding existing preferred securities, net of $37.95 million in aggregate liquidation amount of exchange preferred securities issuable in the exchange offer, taxes imputed to us and the write-off of certain capitalized costs; and - to reflect drawdowns under the senior secured facility and the application of proceeds to pay down a portion of the Conseco senior debt and pay off all of the Prudential senior debt. To the extent that existing preferred securities are not validly tendered or accepted in the exchange offer, the amount attributed to the exchange preferred securities would decrease and the amount attributed to the existing preferred securities would increase. The financial data at July 29, 2001 in the following table are derived from our unaudited financial statements for the thirteen weeks then ended.
JULY 29, 2001 ------------------------ ACTUAL AS ADJUSTED ---------- ----------- (IN THOUSANDS) Short-term indebtedness: Retail flooring liability................................. 60,030 60,030 Motor home chassis inventory financing.................... -- -- Senior unsecured notes payable(1)......................... 68,188 68,188 Total short-term indebtedness........................... $ 128,218 $ 128,218 Long-term debt (less current portion)....................... -- -- Total indebtedness...................................... $ 540,337 $ 553,489 9.5% Convertible Trust II Preferred Securities due 2013 (exchange preferred securities)(2)........................ $ $ 37,950 9.5% Convertible Trust III Preferred Securities due 2013 (cash offer preferred securities)(2)...................... $ -- $ 150,000 6% Convertible Trust Preferred Securities due 2028 (existing preferred securities)(2).................................. 287,500 201,250 Shareholders' equity: Preferred stock, par value $1.00 per share, 10,000,000 shares authorized, none issued and outstanding.......... $ -- $ -- Common stock, par value $1.00 per share, 75,000,000 shares authorized, 32,740,000 issued and outstanding(3)........ 32,759 32,759 Capital surplus(4)........................................ 194,762 222,903 Retained earnings......................................... 49,774 49,774 Accumulated other comprehensive income (loss)............. (2,241) (2,241) Total shareholders' equity.............................. 275,054 303,195 Total capitalization.................................... $1,102,891 $1,245,884
- ------------------------------ (1) At July 29, 2001, because we were in violation of some of the balance sheet covenants related to our senior unsecured notes payable to Prudential, we classified those notes as short-term indebtedness. These notes were paid off in full on July 30, 2001. (2) We report our operations and those of our subsidiaries on a consolidated basis. Consequently, the existing preferred securities and new preferred securities are reported on our balance sheet as company-obligated mandatorily redeemable convertible preferred securities of Fleetwood Capital Trust, Fleetwood Capital Trust II or Fleetwood Capital Trust III, as the case may be, in respect of the debentures that we have issued or will issue to the existing trust and the new trusts, as the case may be. (3) Outstanding shares exclude the shares reserved for issuance upon conversion of the existing preferred securities and the new preferred securities, payment of interest on the new preferred securities and 2,439,167 shares exercisable under our stock option and purchase plans. In addition, on October 25, 2001 we completed the private placement of 2,209,945 unregistered shares of our common stock. See the section titled "Management's Discussion and Analysis--Recent Developments--Private Placement," beginning on page 46 of this prospectus. (4) The increase to capital surplus of $28.1 million reflects the reduction in the stated value of the existing preferred securities, net of $37.95 million in aggregate liquidation amount of exchange preferred securities issuable in the exchange offer, taxes imputed to us and the write-off of certain capitalized costs, as a result of the early extinguishment of $86.25 million in aggregate liquidation amount of outstanding existing preferred securities. This amount is excluded from net income (loss) and included in income available to common shareholders in a manner similar to a preferred stock dividend. 43 SELECTED CONSOLIDATED FINANCIAL DATA The consolidated operating data for the three years in the period ended April 29, 2001 and the balance sheet data at April 29, 2001 and April 30, 2000 are derived from our consolidated financial statements audited by Arthur Andersen LLP, independent public accountants, which are incorporated by reference in this prospectus. The consolidated operating data for the fiscal quarters ended July 29, 2001 and July 30, 2000 and the balance sheet data at July 29, 2001 and July 30, 2000 are derived from our unaudited interim condensed financial statements, which are incorporated by reference in this prospectus. Please refer to the complete consolidated financial statements and related notes incorporated by reference in this prospectus for more information. The consolidated operating data for the fiscal years ended April 26, 1998 and April 27, 1997 and the balance sheet data at April 25, 1999, April 26, 1998 and April 27, 1997, have been derived from our consolidated financial statements audited by Arthur Andersen LLP that are not included or incorporated by reference in this prospectus. Specific reclassifications have been made in the financial data below in order to more clearly present the distributions on the existing preferred securities as a minority interest in the existing preferred securities of Fleetwood Capital Trust. The distributions were previously included in other income in our consolidated financial statements incorporated by reference in this prospectus. These results are not necessarily indicative of the results that may be expected for future periods and have been adjusted to reflect Emerging Issues Task Force No. 00-10 "Accounting for Shipping and Handling Costs" and No. 00-14 "Accounting for Certain Sales Incentives," which we adopted in the fourth quarter of fiscal 2001.
FISCAL QUARTER ENDED FISCAL YEAR(1) ----------------------- -------------------------------------------------------------- JULY 30, JULY 29, 1997 1998 1999 2000 2001 2000 2001 ---------- ---------- ---------- ---------- ---------- ---------- ---------- (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) OPERATING DATA: Net sales Manufactured housing........ $1,490,084 $1,550,926 $1,631,076 $1,517,681 $ 981,366 $ 317,499 $ 216,232 Recreational vehicles....... 1,402,890 1,525,216 1,735,016 1,921,604 1,206,790 317,514 266,308 Housing--retail............. --(2) -- 332,309 591,895 552,904 157,554 108,511 Supply operations, corporate and other................. 52,803 47,660 48,306 54,253 35,413 9,335 8,393 Adjustments and eliminations.............. --(2) (2,524) (191,188) (315,899) (245,010) (81,781) (35,312) ---------- ---------- ---------- ---------- ---------- ---------- ---------- $2,945,777 $3,121,278 $3,555,519 $3,769,534 $2,531,463 $ 720,121 $ 564,132 ---------- ---------- ---------- ---------- ---------- ---------- ---------- Income (loss) from continuing operations before income taxes, minority interest, discontinued operations and cumulative effect of accounting change........... $ 147,050 $ 178,885 $ 196,415 $ 159,059 $ (319,231) $ (26,567) $ (14,164) Benefit (provision) for income taxes....................... (56,998) (67,841) (78,146) (64,461) 57,575 9,413 5,826 Minority interest in Fleetwood Capital Trust, net of income taxes....................... -- (2,499) (11,148) (11,104) (11,158) (2,787) (2,789) Income (loss) from continuing operations.................. 90,052 108,545 107,121 83,494 (272,814) (19,941) (11,127) Income from discontinued operations, net of income taxes....................... 34,778 -- -- -- -- -- -- Income (loss) before cumulative effect of accounting change........... 124,830 108,545 107,121 83,494 (272,814) (19,941) (11,127) Cumulative effect of accounting change, net of income taxes................ -- -- -- -- (11,176) (11,176) -- Net income (loss) for basic earnings per share.......... 124,830 108,545 107,121 83,494 (283,990) (31,117) (11,127) Effect of dilutive securities: Minority interest in Fleetwood Capital Trust... -- 2,499 11,148 11,104 --(3) --(3) --(3) Net income (loss) for diluted earnings per share.......... 124,830 111,044 118,269 94,598 (283,990) (31,117) (11,127)
44
FISCAL QUARTER ENDED FISCAL YEAR(1) ----------------------- -------------------------------------------------------------- JULY 30, JULY 29, 1997 1998 1999 2000 2001 2000 2001 ---------- ---------- ---------- ---------- ---------- ---------- ---------- (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) Earnings (loss) per share-- diluted: Continuing operations....... 2.30 3.01 2.94 2.41 (8.33) (.61) (.34) Discontinued operations, net of income taxes........... .89 -- -- -- -- -- -- Cumulative effect of accounting change, net of income taxes.............. -- -- -- -- (.34) (.34) -- Net income (loss) per share... $ 3.19 $ 3.01 $ 2.94 $ 2.41 $ (8.67) $ (.95) $ (.34) ---------- ---------- ---------- ---------- ---------- ---------- ---------- Weighted average common shares--diluted............. 39,162 36,933 40,171 39,194 32,755 32,758 32,756 ---------- ---------- ---------- ---------- ---------- ---------- ---------- BALANCE SHEET DATA AT END OF PERIOD: Cash and investments.......... $ 110,434 $ 305,722 $ 267,133 $ 135,142 $ 73,103 $ 110,675 $ 87,551 Property, plant and equipment, net......................... 278,331 277,211 303,934 312,067 294,813 309,876 292,062 Total assets.................. 871,547 1,129,480 1,531,184 1,536,693 1,142,461 1,524,759 1,102,891 Total liabilities............. 428,452 465,954 656,981 664,388 568,813 688,863 540,337 Capital Trust Preferred Securities.................. -- 287,500 287,500 287,500 287,500 287,500 287,500 Shareholders' equity.......... 443,095 376,026 586,703 584,805 286,148 548,396 275,054 OTHER DATA: Gross profit margin........... 17.6% 18.3% 20.5% 21.0% 19.0% 20.4% 19.6% Operating income (loss) margin...................... 4.7% 5.5% 5.4% 4.3% (12.2)% (3.3)% (1.7)% Depreciation and amortization................ $ 27,579 $ 27,799 $ 31,841 $ 35,080 $ 36,546 $ 8,942 $ 6,892 Capital expenditures.......... 56,184 37,809 49,757 55,078 36,921 8,759 3,186 EBITDA(4)..................... 167,138 197,994 222,152 197,256 (271,080) (15,136) (2,721) Cash flows from operations.... 85,138 118,152 114,522 (4,757) 15,520 (46,398) 66,779 Cash flows from investing activities.................. 292,821 (231,613) (121,767) 92,516 25,722 23,355 (2,729) Cash flows from financing activities.................. (355,644) 104,310 5,110 (69,715) (47,201) 31,031 (50,046) Ratio of earnings to fixed charges(5)(6)............... 37.4x 24.3x 7.5x 5.3x -- -- --
- ------------------------------ (1) We use a fiscal year ending on the last Sunday of April in each year. (2) Prior to fiscal 1998, we did not report retail sales and adjustments and eliminations as separate segments or line items. (3) The effect of the distributions on preferred securities was anti-dilutive in the fiscal year ended April 29, 2001 and the fiscal quarters ended July 30, 2000 and July 29, 2001 and was, therefore, not added back to determine diluted earnings (loss). (4) EBITDA is defined as operating income plus depreciation and amortization expense. While EBITDA should not be considered as a substitute for net income, cash flows from operating activities, or other income statement data or cash flow statement data prepared in accordance with Generally Accepted Accounting Principles, or GAAP, or as a measure of profitability or liquidity, our management understands that EBITDA is customarily used as a measurement in evaluating companies. If EBITDA for fiscal 2001 were adjusted to include an add-back for goodwill impairment of $165.9 million and other asset impairment charges of $22.6 million, both of which were non-cash charges, the adjusted EBITDA would have been $(82.6) million for fiscal 2001. However, these impairment charges are not included in any of the EBITDA figures reported in the table. (5) The ratio of earnings to fixed charges is unaudited for all periods presented. For purposes of computing these ratios, earnings represent income before income taxes, minority interest, discontinued operations and cumulative effect of changes in accounting principles and fixed charges less distributions on existing preferred securities of Fleetwood Capital Trust. Fixed charges include all interest expense and distributions on the existing preferred securities. (6) Our ratios of earnings to fixed charges for the fiscal year ended April 29, 2001 and the fiscal quarters ended July 30, 2000 and July 29, 2001 were not meaningful since earnings were inadequate to cover fixed charges by $336.8 million, $30.9 million and $18.5 million, respectively. Similarly, after giving effect to each of the exchange offer and cash offer, the pro forma ratios of earnings to fixed charges for fiscal 2001 and the fiscal quarter ended July 29, 2001 are not meaningful since, on a pro forma basis, earnings during these periods would have been inadequate to cover fixed charges by $349.2 million and $21.6 million, respectively. Because the new trusts are wholly-owned, special purpose subsidiaries with no independent operations, separate financial statements for the new trusts are not included in this prospectus. Any assets generated by the new trusts, such as assets from the sale of the cash offer preferred securities, are paid to us to purchase our new debentures, and any liabilities incurred by the new trusts are effectively fully and unconditionally guaranteed by us. Accordingly, our financial statements should provide all necessary and material information regarding the assets, liabilities and operations of the new trusts. 45 MANAGEMENT'S DISCUSSION AND ANALYSIS THIRTEEN WEEKS ENDED JULY 29, 2001 COMPARED TO THE THIRTEEN WEEKS ENDED JULY 30, 2000 CONSOLIDATED RESULTS We incurred a net loss in the first quarter of fiscal 2001 of $11.1 million or 34 cents per diluted share compared to a loss of $31.1 million or 95 cents per diluted share in last fiscal year's first quarter. The loss in the current period primarily resulted from a 22% decrease in sales, along with an erosion in gross profit margin from 20.4% to 19.6%. Partially offsetting the lower sales and reduced margin was a 24% decline in operating expenses before other charges. In addition, last year's loss included restructuring and impairment charges of $13.5 million and an $11.2 million (after tax) charge for the cumulative effect of a change in accounting policy related to revenue recognition. In terms of earnings per share for the prior fiscal year, the restructuring and impairment charges and the cumulative effect of the change in accounting amounted to 27 cents and 34 cents, respectively. Consolidated revenues fell $156.0 million to $564.1 million compared to $720.1 million in last fiscal year's first quarter. All business segments experienced lower sales due to weak market conditions, with the housing business suffering additional adverse effects from restrictive financing. Manufacturing gross margin fell from 18.1% to 17.6% mainly due to lower recreational vehicle margins. Gross profit for the recreational vehicle segment declined from 13.4% to 10.8% of sales in the current fiscal year, due to higher freight and direct labor costs resulting from new product introductions. Gross margins for the manufactured housing segment improved from 22.5% to 25.3% due to lower material costs. Operating expenses decreased $51.3 million to $119.9 million, and fell as a percentage of sales from 23.8% to 21.3%. The dollar decrease was primarily due to lower sales, downsizing of manufacturing and retail operations and the absence of $13.5 million of other charges related to restructuring and impairment from the prior fiscal year. Selling expenses decreased $17.9 million, or 26%, due to lower warranty and advertising costs. General and administrative expenses declined $19.9 million and decreased as a percentage of sales from 12.1% to 12.0% due to staff reductions resulting from manufacturing plant and retail store closures. Non-operating expense rose $2.1 million to $4.6 million, mainly due to higher interest expense on the unsecured debt and lower investment income. Included in the $3.9 million of interest on senior unsecured notes payable was $2.3 million for yield maintenance charges related to executing the new loan agreement with Bank of America on July 27, 2001, and the early retirement of the senior unsecured notes on July 30, 2001. Investment income was down 49% from the prior fiscal year as a result of lower interest rates and lower invested balances. MANUFACTURED HOUSING Gross manufacturing revenues of $216.2 million were off 32% from the prior fiscal year and included $34.7 million of intercompany sales to our company-owned retail home centers. Manufacturing unit volume declined 35% to 7,769 homes, but the number of sections was off a lesser 32% to 14,082 due to the continuing shift in sales mix toward multi-section homes. Multi-section homes represented 78% of factory sales versus 70% last fiscal year. Sales volume was below the prior fiscal year because of a weaker manufactured housing market, which has been adversely affected by excessive retail inventories, competition from repossessed units and restrictive retail financing conditions. During the past 30 months, lenders have increased credit standards and down payment requirements for retail buyers. These actions, combined with an increase in interest rates, have eliminated many potential buyers of manufactured homes. We anticipate that 46 industry wholesale shipments will continue to be weak until the current inventory imbalance is resolved, the timing of which depends on the availability and terms of retail financing. Operating income, before elimination of intercompany profit, increased from $2.1 million to $16.2 million, and operating margin rose from less than 0.7% to 7.5% of sales. Excluding asset impairment charges from the prior fiscal year's results, operating margin for the housing group would have been 3.6% of sales. Last fiscal year, asset impairment charges related to plant closings reduced operating earnings by $9.4 million. The increase to earnings, despite the decline in volume due to the aforementioned weak market conditions, was due to improved gross margin and reduced operating expenses. Gross profit margin for the housing group improved from 22.5% to 25.3% of sales, mainly as a result of lower raw material costs. More efficient material usage and improved product pricing contributed to the higher gross margin. Housing group operating costs, excluding the asset impairment charge, fell 35% as a result of reductions in product warranty costs and advertising expenses. RETAIL HOUSING OPERATIONS Retail housing revenues decreased 31% to $108.5 million in the first fiscal quarter. Last fiscal year, sales were adjusted downward by approximately $18.0 million due to a change in accounting for credit retail sales. Also as a result of the accounting change, we incurred a one-time cumulative charge against earnings of $11.2 million after taxes. Unit sales from Fleetwood retail stores declined from last fiscal year by about 29% to 2,646 homes. The retail division incurred an operating loss of $12.0 million for the current fiscal quarter compared to a loss of $5.4 million a year ago. The increased operating loss was the result of a weak market environment and lower gross margins stemming from competitive conditions and discounting aged inventory. Operating expenses declined 23% due to lower volume, store closures and reduced staffing. Interest expense on inventory financing decreased by 50% from $3.0 million to $1.5 million, reflecting the 37% drop in inventories and lower interest rates. The retail housing segment was operating 156 stores at the end of July 2001 compared to 240 at the end of July 2000. RECREATIONAL VEHICLES Recreational vehicle sales declined 16% to $266.3 million compared to $317.5 million for last fiscal year's first quarter. Travel trailer revenues were $106.6 million, down $35.3 million or 25% on a 28% decline in unit volume, reflecting weak market conditions and a delayed introduction of new fifth-wheel floor plans. Motor home revenues for the quarter fell 9% to $134.1 million on a 16% drop in shipments. Deliveries of Class A products rose 8% to 1,572 units while Class C shipments fell 73% to 161 units, reflecting the closure of two Class C manufacturing plants toward the end of the fourth fiscal quarter and the related lag in achieving full production in the facility to which the product was transferred. Folding trailer sales fell 10% to $25.7 million on a 19% dip in unit volume. The disproportionate drop in folding trailer shipments to revenues reflects the introduction of the larger, higher-priced Caravan into the sales mix since last July. The recreational vehicle group incurred an operating loss of $17.8 million in the first fiscal quarter compared to a loss of $13.3 million a year ago. The $4.5 million increase was primarily caused by the decline in sales and gross profit margin erosion, largely due to lower travel trailer margins. Operating expenses declined $9.3 million and decreased from 17.6% of sales to 17.5% in the current fiscal year. The largest decline was in employee compensation due to staff reductions resulting from downsizing efforts. 47 SUPPLY OPERATIONS The supply group contributed first fiscal quarter revenues of $7.8 million compared to $8.5 million a year ago. Operating income remained constant at $2.2 million despite lower sales due to improved gross margins resulting from lower cost of materials as a percentage of sales. FISCAL 2001 COMPARED TO FISCAL 2000 CONSOLIDATED RESULTS We incurred a net loss in fiscal 2001 of $284 million or $8.67 per diluted share, the majority of which was attributable to other charges related to goodwill impairment, restructuring and downsizing initiatives. This compares with a profit of $83.5 million or $2.41 per diluted share for fiscal 2000. The loss also stems from significantly reduced sales volume in both manufactured housing and recreational vehicles caused by a weak market environment. A change in accounting for credit retail housing sales, which was adopted in the first quarter, also contributed to the loss. In terms of fiscal 2001 earnings per share, the impairment of goodwill, other charges and the cumulative effect of the change in accounting amounted to approximately $5.63 and $0.34, respectively. We incurred a $165.9 million non-cash charge in fiscal 2001 related to the impairment of goodwill that originated with acquisitions of retail housing businesses in prior fiscal years. In addition, we recorded other charges totaling $34.9 million, which were related to the downsizing of manufactured housing, recreational vehicle and retail housing operations. The latter category included $13.3 million for asset impairment charges related to downsizing of the retail housing business and $9.4 million for the write-down of manufacturing facilities, as well as employee severance payments and other plant closing costs. Consolidated revenues fell 33% to $2.53 billion in fiscal 2001 compared to $3.77 billion in the prior fiscal year. Fiscal 2000 included 53 weeks compared to 52 weeks in fiscal 2001. The revenue decline reflects continued market weakness in the demand for both recreational vehicles and manufactured housing. Gross profit margin in fiscal 2001 declined to 19% of sales from 21% in fiscal 2000, reflecting lower manufacturing and retail margins. Manufacturing gross margin fell to 17.2% of sales compared to fiscal 2000's 19.3% margin. Lower recreational vehicle gross margins were only partially offset by improved margins from manufactured housing. Gross margins were adversely impacted by higher direct labor wage and benefits and inefficiencies due to lower volume. Reduced retail housing margins reflect very competitive market conditions and declining industry sales, as well as a $7.5 million inventory write-down to net realizable value. Operating expenses in fiscal 2001, excluding other charges, declined $42 million or 7% from the prior fiscal year to $588 million. As a percentage of sales, however, these costs rose from 16.7% in fiscal 2000 to 23.1% in fiscal 2001 due to lower sales. Selling expenses declined 11% to $247 million in fiscal 2001, but rose as a percentage of sales from 7.4% to 9.8% on the lower sales volume. Most of the dollar reduction in selling costs resulted from reduced expenditures for advertising, sales compensation and product warranty and service costs. The bulk of these cost reductions occurred within the manufactured housing segment. These reductions can be attributed not only to volume, but enhanced cost controls. General and administrative expenses declined 4% to $341 million in fiscal 2001, but rose as a percentage of sales from 9.3% to 13.4%. Reduced costs in the manufacturing sector were partially offset by higher expenses for the retail housing business, which was in an expansion mode until mid-fiscal 2001. Most of the reduction in general and administrative costs stems from lower profit-based incentive compensation and reduced staffing levels. 48 Fiscal 2001's non-operating expenses of $11.6 million were significantly higher than fiscal 2000's $3.1 million, mainly due to higher interest expense and lower investment income. Interest expense was higher due to additional short-term and long-term borrowings and higher interest rates. Investment income was down 28% from fiscal 2000 as a result of reduced invested balances. Our effective income tax rate declined from 40.5% in fiscal 2000 to 18% in fiscal 2001. The decrease primarily reflects the impact of the impairment of goodwill, which is not deductible for tax purposes. MANUFACTURED HOUSING Gross manufacturing revenues of $981.4 million for fiscal 2001 were off 35% from fiscal 2000, and included $243 million of intercompany sales to retail home centers owned by us. Manufacturing unit volume declined 39% from fiscal 2000 to 36,201 homes from 59,458 homes, but the number of sections was off a lesser 36% for the same period to 63,944 sections from 99,329 sections, due to the continuing shift in sales mix toward multi-section homes. Multi-section homes represented 74% of factory sales in fiscal 2001 versus 64% in fiscal 2000. The lower housing volume reflects a weak manufactured housing market that has deteriorated over the past year. During the past two years, the industry has been adversely affected by excessive retail inventories and restrictive retail financing conditions. Lenders have imposed more stringent credit standards, higher down payment requirements for retail buyers and higher spreads between their cost of funds and retail financing rates. Additionally, several key lenders have reduced their financing budgets, which has limited the amount of funding available to the industry. These actions, compounded with higher interest rates, have eliminated many potential buyers of manufactured homes. We anticipate that industry wholesale shipments will continue to be weak until the current inventory imbalance is resolved, the timing of which depends largely on the availability and terms of retail financing. Housing operating income, before the adjustment for intercompany manufacturing profit, declined 67% from $83.8 million in fiscal 2000 to $27.4 million in fiscal 2001, and operating margin fell from 5.5% to 2.8% of sales. Most of the decline was volume-related. About $12 million or 21% of the profit decline resulted from other restructuring and impairment charges related to plant closings and downsizing initiatives. Excluding these other charges, operating margin for the housing group was 4% in fiscal 2001. The other charges for fiscal 2001 included $9.4 million for the write-down of plant facilities, $2.1 million for employee severance benefits and $700,000 of other costs. Gross profit margin for the housing group improved slightly in fiscal 2001 from 21.5% to 22.8% of sales as a result of lower raw material costs. More efficient material usage, improved product pricing and lower lumber costs all contributed to the higher gross margin percentage. Housing group operating costs, excluding the other charges, fell 25%, mainly as a result of lower product warranty and service costs, reduced selling expenses and lower employee compensation. Compensation costs reflect lower profit-based incentive compensation and staffing reductions resulting from downsizing efforts. RETAIL HOUSING OPERATIONS The retail housing division generated revenues of $553 million in fiscal 2001, 7% less than fiscal 2000 revenues. Unit sales from our retail stores fell 12% in fiscal 2001 to 12,752 homes. As a result of a change in accounting for retail credit sales, we incurred a one-time cumulative charge against earnings of $11.2 million after taxes. We had 188 retail stores in operation at the end of fiscal 2001 compared to 243 in the prior fiscal year's end. The retail division incurred an operating loss of $77.1 million compared to a nominal profit of $3.8 million in fiscal 2000. The current year loss includes asset impairment charges totaling $13.3 million related to downsizing initiatives. Earnings were also adversely affected by a $7.5 million inventory write-down in fiscal 2001, which increased cost of sales 49 and reduced the gross profit margin. Excluding these unusual charges, the larger operating loss in fiscal 2001 was due to the weaker market environment and lower gross margins stemming from extremely competitive market conditions, along with higher overhead costs related to the expansion of retail locations in the early part of the fiscal year. Interest expense on inventory financing increased from $10.8 million to $11.3 million for fiscal 2001 due to higher interest rates. RECREATIONAL VEHICLES Recreational vehicle sales declined 37% to $1.2 billion in fiscal year 2001 compared to $1.9 billion for the prior fiscal year, primarily as a result of sharply lower motor home sales. Motor home revenues fell 47% from $1.2 billion to $638 million in fiscal 2001, on a 50% drop in shipments from 16,294 units to 8,148 units. This drop mainly reflects softening retail demand and high dealer inventories at the beginning of the fiscal 2001. Sales were also weaker for towable recreational vehicle products. In the towable recreational vehicle categories, travel trailer sales declined 25% from $599 million in fiscal 2000 to $452 million in fiscal 2001 and folding trailer sales eased down 9% from $129 million to $117 million for the same period. Fiscal 2001 unit shipments for travel trailers and folding trailers were 32,987 and 19,090 respectively, representing decreases of 21% and 13%, respectively. The recreational vehicle group incurred a $73.1 million operating loss for fiscal 2001, mainly as a result of the significant decline in sales and slimmer gross margins. Other significant factors that influenced results included inefficiencies from lower operating rates, inventory writedowns, increased dealer incentives implemented to stimulate sales and higher than normal operating costs for the motor home division. Also, the recreational vehicle group incurred non-recurring costs related to a plant closing and other downsizing initiatives, which totaled $6.4 million for fiscal 2001. Gross profit margin declined sharply to 12.3% of sales from 17.2% in fiscal 2000, largely due to lower motor home and travel trailer margins. Both motor homes and travel trailers experienced higher raw material and direct labor costs, which reflect unfavorable product mix changes, higher wage and benefit costs and production inefficiencies at lower volume levels. Recreational vehicle operating costs for fiscal 2000 were 2% lower than operating costs for fiscal 2000, mainly due to reduced selling expenses related to the decline in volume. General and administrative expenses for the recreational vehicle group were 8% below expenses for fiscal 2000, mainly due to staffing reductions and lower levels of profit-based management incentive compensation. SUPPLY OPERATIONS Our supply group contributed revenues of $33 million in fiscal 2001 compared to $50 million in fiscal 2000. Operating income fell 70% to $6.1 million mainly due to reduced sales volume, which was adversely affected by lower internal sales and declining external sales to the heavy truck building industry. GOODWILL AND ASSET IMPAIRMENT Conditions in the manufactured housing market have been in a state of decline for the past two fiscal years, but further deteriorated in the last two quarters of fiscal 2001. Excess retail locations and inventory, combined with tightened consumer credit standards and high consumer repossession levels, resulted in lower sales volume as well as retail store closings. This prompted the evaluation of the recoverability of goodwill. Based on the evaluation, a $165.9 million impairment to reduce the value of goodwill related to prior acquisitions of retail businesses was recorded in fiscal 2001. The impairment was measured by calculating the fair value of each retail location based on discounted future cash flows using a 9.5% discount rate for 15 years and comparing the result to the carrying amount of the goodwill. The excess of the carrying amount over fair value was recorded as a charge. Some of the factors considered in the determination of the 15 years were: 50 - the effect of market and economic conditions on the business; - the ease of entering and exiting the business; - the sensitivity to interest rates and financing availability; and - sustainability of the factors that contributed to paying the seller an amount in excess of book value. We also reduced the amortization period for goodwill from 40 years to 15 years. The effect of this change was to increase the net loss in fiscal 2001 by $887,000 or $0.03 per share. In addition, we evaluated the net book values of 10 closed manufactured housing plants, four recreational vehicle plants, one retail housing administrative office and all of the active and closed retail sales centers. We determined that the net book values of five of the manufacturing housing plants, the retail housing administrative office and 98 retail sales centers exceeded estimated future cash flows. In the first quarter of fiscal 2001 we recognized a $9.4 million impairment charge related to the five housing plants. In the third quarter of fiscal 2001 we recorded a long-lived asset impairment charge of $10.6 million related to the retail housing administrative office and in the fourth quarter we recorded a $2.7 million charge in connection with the sale of retail stores. FISCAL 2000 COMPARED TO FISCAL 1999 CONSOLIDATED RESULTS Earnings for fiscal 2000 declined 22% to $83.5 million or $2.41 per diluted share compared to $107.1 million and $2.94 per diluted share for the prior fiscal year. The earnings contraction mainly reflects reduced profits from our housing business as a result of weakening demand for manufactured housing. An increase in non-operating expenses also contributed to the earnings decline. Consolidated operating income fell 15% to $162 million compared to $190 million in fiscal 1999, largely as a result of an 18% decrease in combined housing profits from manufacturing and retail operations. A 5% decrease in recreational vehicle earnings and a significant increase in health insurance costs also reduced operating income. Revenues for fiscal 2000 rose 6% to an all-time high of $3.77 billion compared to $3.56 billion in fiscal 1999. This revenue growth resulted from healthy sales of recreational vehicles and the continuing expansion of our retail housing business. Gross profit margin for fiscal 2000 rose to 21% from 20.5% for the prior fiscal year, primarily due to the favorable effect of the growing retail housing business. The retail operation generally carries higher gross margins, and there was a positive impact on the consolidated gross profit percentage with the addition of retail gross profits combined with the elimination of intercompany manufacturing sales to retail. Manufacturing gross margin declined slightly from 19.7% to 19.3% of sales as a result of lower recreational vehicle margins. Operating expenses rose 17% to $630 million, and also increased as a percentage of sales from 15.1% to 16.7%. The rapidly expanding retail housing business accounted for about $60 million or 64% of the increase in operating costs in fiscal 2000. Selling expenses rose 11% to $278 million, with the retail housing operation accounting for about 44% of the increase. Higher selling costs were incurred in manufacturing operations for sales promotion and product warranty and service. General and administrative expenses of $352 million were up 23%, primarily due to the addition of $52 million in retail costs, which represented about 78% of the overall increase. The increase attributable to manufacturing was primarily due to higher costs for employee health benefits, casualty insurance and recreational vehicle product development activities. Most of the rise in the "Corporate and other" operating loss as shown in the business segment information was attributable to the cost increases in 51 health benefits and casualty insurance. As a percentage of sales, selling expenses increased from 7.1% to 7.4% and general and administrative expenses rose from 8% to 9.3%. Non-operating items totaled a net expense of $3.1 million compared to net income of $6.1 million for the prior fiscal year. The change was mainly caused by a 33% reduction in investment income and a $4.5 million increase in interest expense on retail inventory floor plan financing. Investment income was lower because of reduced cash balances available for investment purposes. The rise in interest expense on inventory financing largely reflected the growth in retail inventories associated with the expansion of retail operations. Our effective income tax rate rose from approximately 39.8% in fiscal 1999 to 40.5% in fiscal 2000. The increase primarily reflected the impact of the amortization of goodwill recorded in conjunction with retail acquisitions, which is not deductible for tax purposes. The impact of the higher tax rate on earnings per share amounted to approximately three cents per share. MANUFACTURED HOUSING Factory sales of manufactured housing declined 7% to $1.52 billion in fiscal 2000 from the prior fiscal year's record $1.63 billion. Sales figures include intercompany sales to our retail housing division of $312 million in fiscal 2000 and $187 million in fiscal 1999. Factory shipments for the year were off 10% to 59,458 homes. Weak market conditions in the manufactured housing industry reduced sales volume and factory operating efficiencies in fiscal 2000. Industry wholesale shipments to retailers declined since May 1999, mainly as a result of too much manufacturing and retail capacity and excess inventories in the retail sector. The imbalance between supply and demand was exacerbated by unfavorable developments in the financing area. During fiscal 2000, lenders increased credit standards and down payment requirements for retail buyers. These actions and higher interest rates prevented many potential buyers from purchasing manufactured homes. Operating income for our housing group, before the adjustment for intercompany manufacturing profit, declined 16% in fiscal 2000 to $83.8 million due to the lower sales volume. Gross profit margin improved slightly from 21.4% to 21.5% of sales, mainly as a result of modest selling price increases and stable raw material costs. As a percentage of sales, operating income in fiscal 2000 was slightly below 5.5% compared to over 6.1% in fiscal 1999. RECREATIONAL VEHICLES Recreational vehicle revenues in fiscal 2000 were up 11% to a record $1.92 billion. As a result of a healthy market environment, all three of our recreational vehicle divisions posted record sales in fiscal 2000. Motor home sales increased 13% to a new high of $1.19 billion, as shipments rose 9% to 16,294 units. Towable recreational vehicle products also performed well in fiscal 2000, with travel trailer sales rising 8% to $599 million and folding trailer sales also increasing 8% to $129 million. Travel trailer shipments were up 9% to 41,936 units, while folding trailer unit volume increased 3% to 21,890. Recreational vehicle operating income in fiscal 2000 was $104.1 million, off 5% from the prior fiscal years record $109.9 million. As a percentage of sales, operating income fell from 6.3% to 5.4% due to lower gross profit margins and higher selling costs. Gross margins were adversely affected by changes in product mix within the motor home and travel trailer divisions, reflecting increased sales of competitively-priced products with lower profit margins. This change mainly reflects our decision to expand our product offerings to include lower-priced entry-level travel trailers and Class C motor homes, both of which represent a significant and growing part of the market. The rise in recreational 52 vehicle selling expenses was mainly driven by higher product warranty costs for all recreational vehicle divisions and motor home sales promotion programs. SUPPLY OPERATIONS Revenue for our supply group rose 15% to $50 million in fiscal 2000, up from $44 million in fiscal 1999. The increase mainly reflects higher sales from fiberglass manufacturing operations. Operating income of $20.5 million in fiscal 2000 was up 26% from fiscal 1999 as a result of the higher fiberglass sales, as well as volume increases related to imported parts and components. RETAIL HOUSING OPERATIONS Fleetwood's retail housing division recorded revenues of $592 million in fiscal 2000 on the sale of 14,528 homes relative to revenues of $332 million on the sale of 8,255 homes in fiscal 1999. Operating income, before interest expense on inventory floor plan financing, declined to $3.8 million from $4.9 million in fiscal 1999. Although sales volume improved with the continuing expansion in the number of retail outlets, profits were constrained by the challenging market environment and higher operating costs. As expected, higher operating costs were incurred for new store openings and the building of infrastructure and systems for this new business. The retail business commenced operations in fiscal 1999, and grew rapidly to 244 retail sales centers as of November 2000. Interest expense for inventory financing, a non-operating expense, increased to $10.8 million in fiscal 2000 from $6.3 million in fiscal 1999. LIQUIDITY AND CAPITAL RESOURCES We have historically relied upon internally generated cash flows to satisfy working capital needs and to fund capital expenditures. In recent periods, however, we have accessed external funding sources to supplement internal cash flows. Cash totaling $66.8 million was generated from operating activities during the first quarter of fiscal 2002 compared to cash used of $46.4 million for the first quarter of fiscal 2001. The increased cash flow from operations resulted primarily from a $50.3 million refund of Federal taxes paid in prior periods. In addition, a $12.2 million reduction in inventories in the first quarter contributed to the positive cash flow. Cash provided from operating activities totaled $15.5 million in fiscal 2001, compared to a use of $4.8 million in fiscal 2000. Decreases to receivables ($146 million) and inventories ($90 million), largely a result of the decline in volume, were the primary sources of cash from operating activities in fiscal 2001. Cash and cash equivalents increased from $73.1 million as of the end of fiscal 2001 to $87.6 million at the end of the first quarter of fiscal 2002. The increase in cash and cash equivalents occurred despite reducing retail inventory financing by $25.8 million, paying $11.8 million of principal to Prudential and paying off the $11.1 million balance due on motor home chassis financing. Additional cash outlays during the first quarter of fiscal 2002 included $1.3 million in dividends to shareholders, distributions on the existing preferred securities of $4.3 million and $3.2 million in capital expenditures. Dividends during the first quarter of fiscal 2001 were $6.2 million, distributions on the existing preferred securities amounted to $4.3 million and capital expenditures totaled $8.8 million. Cash and cash equivalents declined from $135.1 million as of April 30, 2000, to $73.1 million at the end of fiscal 2001. The reduced level of cash and cash equivalents during this period primarily resulted from the loss from operations of $58.9 million, adjusted for non-cash charges. Other significant cash outlays during fiscal 2001 included $36.9 million for capital expenditures, $43.3 million in paydowns of retail inventory financing, $17.3 million in distributions on existing preferred securities and $15.1 million in dividends to holders of our common stock. As discussed in greater detail below in the section entitled "Management's Discussion and Analysis--Recent Developments--Senior Debt Refinancing," beginning on page 56 of this prospectus, we entered into a new senior secured facility. We used a portion of the proceeds from this facility to 53 retire our senior notes payable to Prudential and to reduce our existing inventory flooring liability to $40 million at July 30, 2001. We also expect to use proceeds from this facility to support our future working capital needs. The revolving credit facility and term loan are collateralized by substantially all of our existing and future acquired assets and those of our subsidiaries and impose various restrictions and compliance with financial covenants upon us and our subsidiaries. As a condition of the loan, we are subject to cash dominion under which most cash receipts will be swept daily as payment against the revolver. In addition, we will utilize zero-balance bank disbursement accounts to which advances on the line of credit will be deposited to cover checks clearing each day. Because the balance of the bank disbursement account returns to zero at the end of each day the outstanding checks will be reflected as a liability. The outstanding check liability will be combined with any positive cash balance accounts to reflect a net book overdraft or a net cash balance for financial reporting. The senior secured facility provides funding for the purchase of retail housing inventory at stores we own in seven states. The majority of the retail housing inventory is intended to be financed through one or more wholesale floor plan arrangements. Simultaneous with the signing of the senior secured facility, we entered into a new floor plan agreement with Conseco. We believe that the combination of the senior secured facility and the floor plan financing will provide sufficient capital to sustain and ultimately expand the retail housing business. In addition to liquidity from the senior secured facility, as a result of the significant net loss in fiscal 2001, we received $50 million from a Federal tax refund late in the first quarter of fiscal 2002. We will continue to explore other possible offerings of junior capital if our management determines that funding will be available from these sources on acceptable terms, although we cannot give you any assurance that such funds will be available on acceptable terms, or at all. We believe the combination of estimated future cash flows from operations, the tax refund, available lines of credit and the $20 million of proceeds from the recent sale of our common stock will be sufficient to satisfy our foreseeable cash requirements for the next 12 months, including up to $35 million for capital expenditures. If conditions deteriorate significantly, however, we may find it necessary to raise additional cash. We may conserve cash by causing distributions to be paid on our new preferred securities in shares of our common stock, and by electing to defer distributions on our existing preferred securities for up to an additional nineteen consecutive quarters, having already deferred payment of distributions due to be made on November 15, 2001. When we defer distributions on our existing preferred securities, we are also prevented from declaring or paying dividends on our common stock during the period of the deferral. In light of our business environment and recent operating results, we currently anticipate that we will find it necessary to defer distributions on our existing preferred securities through at least August 15, 2002. Even though our board of directors has discontinued the payment of dividends on our common stock for the foreseeable future, these deferrals of distributions on our existing preferred securities would further prevent us from declaring or paying any dividends during the period of such deferrals. We cannot be certain at this time whether we will elect to cause distributions to be paid on our new preferred securities in shares of our common stock. However, in light of our business environment and recent operating results, we currently anticipate that we will find it necessary to do so as early as the February 2002 distributions on our new preferred securities. RECENT DEVELOPMENTS PRELIMINARY EARNINGS RESULTS On December 10, 2001, we announced results for the second quarter and first six months of fiscal 2002. We reported a net loss for the second quarter of fiscal 2002 of $12.3 million, or $0.38 per diluted 54 share. The loss included an accrual of $8.3 million for the pending settlements of two class-action lawsuits, and also reflected reduced sales volume in both our recreational vehicle and manufactured housing businesses. We lost $3.4 million, or 10 cents per diluted share, in the second quarter of fiscal 2001. For the first six months of fiscal 2002, we incurred a net loss of $23.5 million, or $0.72 per diluted share. This compares with a loss of $34.5 million, or $1.05 per diluted share, for the corresponding period in fiscal 2001, which included a one-time cumulative charge to earnings of $11.2 million after taxes, or 34 cents per diluted share, related to a change in accounting for retail housing credit sales. Consolidated revenues for the second quarter of fiscal 2002 totaled $591 million, down 21% from $749 million in the second quarter of fiscal 2001. Six-month revenues also fell 21% to $1.15 billion for the first half of fiscal 2002, from $1.47 billion for the first half of fiscal 2001. The manufacturing division of our manufactured housing group showed profits of $16.6 million during the second quarter of fiscal 2002, up 11% from the corresponding quarter of the prior fiscal year, but the retail division lost $8.9 million, compared with $6.1 million for the corresponding quarter in the prior year, due to a 51% drop in sales. The sales decline was largely due to our actions to rightsize this division for the current market environment by closing or selling stores, or by transferring management responsibility to a third party. Manufactured housing revenues in the second quarter of fiscal 2002 fell 27% to $285.6 million, from $391.0 million in the corresponding quarter of the prior fiscal year. Housing revenues included $198.0 million of wholesale factory sales and $87.6 million of retail sales from company-owned sales centers, compared with $211.4 million and $179.6 million, respectively, in the second quarter of the prior fiscal year. Gross manufacturing revenues declined to $240.1 million for the second quarter of fiscal 2002 from $284.3 million in the same quarter of fiscal 2001. For the second quarter of fiscal 2002, gross manufacturing revenues included $42.1 million of intercompany sales to company-owned stores. Manufacturing unit volume for the quarter declined 18% from volume for the same period in the prior fiscal year, to 8,703 homes, and homes sold at our company-owned retail stores in the quarter declined 45% over the corresponding quarter in fiscal 2001 to 2,212. For the first half of fiscal 2002, manufactured housing revenues were down 27% to $575.6 million, from $785.1 million in the corresponding period of the prior fiscal year. Revenues included $379.5 million of wholesale factory sales and $196.1 million of sales to company-owned stores, down from $448.0 million and $337.1 million respectively in the first half of the prior fiscal year. Gross manufacturing revenues, including intercompany sales, were $456.3 million for the first half of fiscal 2002 compared with $601.8 million for the first half of fiscal 2001. Unit shipments from manufacturing plants declined 27% to 16,472 for the first half of fiscal 2002 over the corresponding period for the prior year, while company-owned retail store sales dropped by 37% to 4,858 for the first half of fiscal 2002 over the corresponding period for fiscal 2001. Our recreational vehicle group showed an operating loss of $10.1 million for the second quarter of fiscal 2002, compared to a loss of $139,000 for the corresponding quarter of the prior fiscal year, due principally to a decline in sales of travel trailers. Revenues for the recreational vehicle group were down 15% for the second quarter of fiscal 2002 to $297 million, from $349 million for the same period of the prior fiscal year. Motor home sales for the second quarter of fiscal 2002 declined to $172 million from $189 million for the same period in the prior fiscal year. In the towable category, travel trailer and folding trailer sales declined to $93 million and $32 million, respectively, for the second quarter of fiscal 2002, compared to $128 million and $33 million, respectively, for the same quarter in the prior fiscal year. For the first half of fiscal 2002, revenues for the recreational vehicle group declined 16% to $563.2 million compared to $666.8 million for the first half of the prior fiscal year. Motor home revenues fell 55 to $306 million in the first half of fiscal 2002 versus $336 million in the first half of fiscal 2001. Travel trailer sales declined to $200 million from $270 million for the corresponding period in the prior fiscal year, while folding trailer revenues dropped slightly to $58 million from last fiscal year's $62 million. RATING ANNOUNCEMENTS On November 16, 2001, Moody's Investors Services, Inc. announced that it had lowered its rating on our senior implied debt from B1 to B2, and on our existing preferred securities from B3 to Caa3, with a negative rating outlook. In announcing the lowered ratings, Moody's stated that its action reflected the continuing erosion in our operating performance due to a protracted decline in the manufactured housing industry and a similar slowdown in the recreational vehicle business, and that the negative outlook reflects the highly uncertain intermediate-term outlook for demand in the manufactured housing and recreational vehicle markets. On December 6, 2001, Standard and Poor's announced that it had lowered our corporate credit rating from BB+ to BB-, and Fleetwood Capital Trust's corporate credit rating from B+ to D, with a negative rating outlook. In announcing the lowered ratings, Standard and Poor's cited our materially weakened business position due to continued, very competitive business conditions in both our manufactured housing and recreational vehicle business segments, and our constrained financial profile, as reflected by the granting of security to our lenders and the recent discontinuation and deferral of our common dividends and existing preferred security distributions, respectively. Standard and Poor's attributed its negative outlook to the prospects for continued weak performance within both of our primary business segments and the vulnerability of our corporate credit ratings to further downgrades. These actions could result in lower trading prices for the existing preferred securities, and could also result in any capital that we might raise in the future being more expensive or more difficult to raise. BUSINESS OUTLOOK We do not expect to operate profitably during the third quarter of fiscal 2002. In addition to the normal seasonal weakness, results for the third quarter are expected to be adversely affected by continuing softness in the manufactured housing and recreational vehicle markets. For more than two years, the manufactured housing industry has been impacted by excess capacity, high retail inventories and a slowing of retail sales caused by restrictive financing conditions. Encouraging progress has occurred with respect to reducing industry inventory levels and production capacity, but significant improvements in market conditions are unlikely until the inventory imbalance is fully resolved. Within the recreational vehicle sector, retail demand for motor homes began to soften late in fiscal 2000 and dealers began to reduce their relatively high inventories to more appropriate levels for the existing market conditions. This led to a slowdown in factory shipments, which has persisted through the first half of fiscal 2002. Retail and wholesale demand has also slowed for towable recreational vehicle products. The rate of decline in travel trailer shipments began about one year ago, and has accelerated over the past six months. Prior to the tragic events of September 11, 2001, consumer confidence was softening. Subsequent to the terrorist attacks, a further decline in the economy affected our businesses, especially the recreational vehicle market. Until the economy and consumer demand improves, we cannot predict when recreational vehicle sales will show meaningful improvement. We expect that lower recreational vehicle volume levels experienced in the first half of fiscal 2002 will continue in the third quarter. We believe that the combination of reduced sales and margin pressure will have a noticeable adverse impact on RV group profitability in the third quarter. SENIOR DEBT REFINANCING As part of a larger program to restructure our debt obligations and to improve liquidity and enhance our balance sheet, on July 27, 2001 we entered into a new senior secured facility funded by a syndicate of banks led by Bank of America. We used part of the proceeds of this facility to retire our 56 senior unsecured notes payable to The Prudential Insurance Company of America, with whom we had previously entered into a forbearance agreement with respect to defaults under certain covenants governing these notes. The new senior secured facility was funded on July 30, 2001. As amended, the facility is structured as a three-year, syndicated revolving credit facility of $190 million with an additional two-year term loan of $30 million. The borrowers under the facilities are substantially all of our subsidiaries and we are a guarantor of the senior secured facility. The revolving credit facility and the related guaranties are secured by substantially all of our and our subsidiaries' existing and future assets, excluding assets securing the term loan (upon which a second priority lien secures the revolving credit facility), assets of our retail subsidiaries subject to a floor plan financing agreement with another lender, those assets at our retail subsidiaries' sites managed by a third party, and the cash value of our company-owned life insurance. The term loan is secured by first priority liens on real estate owned by certain of our manufacturing subsidiaries, stock in our folding trailer subsidiary and the current and future fixed assets of our folding trailer subsidiary, as well as a second lien on the assets securing the revolving credit facility. Under the revolving credit facility, letters of credit totaling up to $75 million may be issued. Advances under the revolving credit facility are available based on our subsidiaries' accounts receivable, inventories, real estate and equipment subject to certain exclusions for aged accounts, slow moving inventory and other similar items. Borrowing availability under the revolving credit facility is further limited by required minimum excess availability under the facility. The minimum excess availability required as of the July 27, 2001 closing date was $80 million, reducing immediately thereafter to $50 million. This required minimum excess availability will be further reduced to $30 million if we maintain certain financial ratio requirements for prescribed periods. The applicable minimum excess availability requirement must be met at all times, except during any period in which we have met liquidity requirements and obtain the lowest interest rate margin available under the revolving credit facility, during which periods the minimum excess availability requirements will not be tested. Revolving loans bear interest, at our option, at a base rate of Bank of America's prime rate or one, two or three month LIBOR, plus a margin. For purposes of determining the interest rate under the revolving credit facility, the applicable margin is adjusted monthly, based on our liquidity and a fixed charge coverage test, within a range of 0% to 1.5% for prime rate loans and within a range of 2.25% to 3.75% for LIBOR rate loans. Borrowings under the term loan initially bear interest at Bank of America's prime rate plus 3% for the first year of the loan, with escalations and amortizations for the remainder of the term. We are required to pay a monthly facility fee for any unused portion of the revolving credit facility and for outstanding letters of credit, such fees to be based upon our liquidity margin then in effect. Our senior secured facility contains a number of affirmative and negative covenants. These covenants place restrictions on the operation of our businesses, and if our business environment or operating results do not significantly improve over the levels that we have recently experienced, we will breach covenants under our senior secured facility, resulting in a default under the facility. We and our lenders have amended our senior secured facility to enable us to comply with certain of these covenants in the near future. In amending the terms of the facility, our lenders agreed to replace the existing EBITDA covenant with a new covenant based on the projected amount of our free cash flow, and also to amend the definition of the fixed charge coverage ratio in the existing fixed charge coverage ratio covenant. The interest rates on our LIBOR rate loans and prime rate loans have also been increased by 0.5% for a period of at least 90 days post-closing, while remaining within the interest rate ranges indicated above. The covenants governing our amended senior secured facility include the following: - CAPITAL EXPENDITURES. We and our subsidiaries have agreed not to make or incur any capital expenditure if, after giving effect to the expenditure, the aggregate amount of all capital 57 expenditures by us and our subsidiaries, on a consolidated basis, including the capitalized amount of all capital leases and the principal amount of all purchase money debt incurred in connection with the capital leases, would exceed $35 million in fiscal 2002, $31.3 million in fiscal 2003 or $34.5 million in fiscal 2004; - FIXED CHARGE COVERAGE RATIO. We have agreed to maintain, on a consolidated and rolling four-fiscal-quarter basis, 1.10:1.00 for the period ending October 27, 2002, 1.15:1.00 for the period ending January 26, 2003, and 1.25:1.00 for the period ending April 27, 2003 and for each rolling four-fiscal-quarter period thereafter; - FREE CASH FLOW. Starting on October 28, 2001, we have agreed to maintain, on a consolidated basis, free cash flow of at least $(5) million for the fiscal quarter ended October 28, 2001, $(21) million for the two fiscal quarters ended January 27, 2002, $(14) million for the three fiscal quarters ended April 28, 2002, and $(3) million for the four fiscal quarters ended July 28, 2002 and for each rolling four-fiscal-quarter period thereafter; - MINIMUM AVAILABILITY. We have agreed to maintain, at all times, a minimum availability under the senior secured facility of $50 million in funds, as determined on a weekly basis. On or after January 1, 2002, if Bank of America, N.A., as agent to our lenders, requires us to determine minimum availability on a daily basis, we have agreed to maintain a minimum availability of $40 million or $45 million, depending on the day of the week that the minimum availability is calculated; - DEBT. We and our subsidiaries have agreed, subject to certain narrow and limited exceptions, not to incur or maintain any debt or voluntarily prepay any debt; - PAYMENTS ON SUBORDINATED DEBT; TRUST PREFERRED SECURITIES. We have agreed not to, and will not permit any of our subsidiaries to: - make any payments or prepayments with respect to obligations subordinated to the obligations under our senior secured facility; PROVIDED, HOWEVER, we may make payments in accordance with the existing debentures and the new debentures as long as no default or event of default has occurred and is continuing on the date of payment, both before and after giving effect to such payment, and as long as we have not exercised our option to defer payments in accordance with the existing debentures or new debentures; or - amend or otherwise modify the terms of the existing debentures, the new debentures, the existing preferred securities, the new preferred securities, the existing preferred securities guarantee or the new preferred securities guarantees; PROVIDED, HOWEVER, we may enter into the proposed exchange offer subject to specific conditions and subject to other terms of the exchange offer being acceptable to holders of a majority of the debt under our senior secured facility; - OTHER RESTRICTIONS ON DISTRIBUTIONS. We and our subsidiaries have agreed not to declare or make, or incur any liability to make, any distribution, other than: - distributions by our subsidiaries to us that allow us to make payments of interest on the existing debentures to the existing trust, which, in turn, may pay distributions on the existing preferred securities; PROVIDED, THAT, there is no default or event of default that has occurred and is continuing under our senior secured facility, both before and after giving effect to the distribution, and we have not given notice to defer payments under the existing debentures; - distributions by our subsidiaries to us that allow us to make payments of interest on the new debentures to the new trusts, which, in turn, may pay distributions on the new preferred securities; PROVIDED, THAT, there is no default or event of default that has occurred and is continuing under our senior secured facility, both before and after giving effect to the 58 distribution, and we have not given notice to defer payments under the applicable new debentures; - distributions by our subsidiaries to us, including certain intercompany loans and retention of management fees, to pay consolidated taxes, employee related expenses and up to $6 million in other general corporate overhead and operating expenses per fiscal year; - cash dividends on our common stock that do not exceed $0.04 per fiscal quarter; PROVIDED, THAT, there is no default or event of default that has occurred and is continuing under our senior secured facility, both before and after giving effect to the dividend payment; - payments of management fees by our subsidiaries to us, consistent with any agreement in existence prior to July 27, 2001; - distributions by our subsidiaries to us that allowed us to pay our debt obligations to The Prudential Insurance Company of America and Pruco Life Insurance Company; and - purchases of existing preferred securities by the existing trust or exchange preferred securities by the new trust to effect an exchange offer; - RESTRICTED INVESTMENTS. We and our subsidiaries have also agreed not to declare or make, or incur any liability to make, among other things, any investment, other than certain: - hedge agreements with some of our lenders; - loans or advances by some of our subsidiaries that, in the aggregate, do not exceed $10,000,000 during the term of our senior secured facility; - advances by Fleetwood Retail Corp. to some of our subsidiaries for operating expenses that the subsidiaries have an obligation to reimburse and the aggregate amount of which is restricted to $1 million at any time; - capital contributions, loans or advances by us to some of our subsidiaries that, in the aggregate, may not exceed $4 million during the term of our senior secured facility; - additional capital contributions, loans or advances by us to some of our subsidiaries that may exceed the above $4 million limitation; PROVIDED, THAT, there is no default or event of default that has occurred and is continuing under our senior secured facility, both before and after giving effect to the capital contribution, and the average amount of liquidity for each of the three most recent calendar months minus the capital contribution is at least $80 million; and - USE OF PROCEEDS. We may not use proceeds from the revolving credit facility to pay down our term loan obligations if an event of default has occurred and is continuing under our senior secured facility and, in certain circumstances, if we are unable to maintain specific minimum liquidity and availability requirements. We also recently amended our senior secured facility to provide that half of the amount raised in the cash offer, after allowing for expenses and anticipated taxes of the exchange offer of $30.0 million, would be contributed to our manufacturing company subsidiaries, with half of the amount of that contribution, or $24.0 million, whichever is less, to be applied to pay down the term loan, with the balance of the amount contributed being then applied to pay down the revolving loan. These payments will not reduce the amount of the commitment on the revolving loan but the first $6 million applied to the revolving loan will permanently reduce the amount available to borrow under the plant, property and equipment sub-facility. Further, if the exchange offer is not completed by February 28, 2002, then the amount of the cash proceeds that we are required to contribute to our manufacturing company subsidiaries for application as described above would be reduced to 43% of the proceeds of the cash 59 offer, after allowing for expenses of $10.0 million but adding back the $20.0 million allowance for anticipated taxes that would have otherwise been generated in connection with the exchange offer. On July 27, 2001, concurrent with the closing of the senior secured facility, we designated an initial borrowing of $83 million. At the close of business on July 30, 2001, the funding date, after the posting of bank clearings and application of a portion of our cash reserves, the net outstanding loan was $55.6 million. As of October 28, 2001, the net outstanding loan was $66.0 million. The net borrowings plus our cash reserves were applied as follows: - to retire the $68 million remaining principal balance of the Prudential notes, along with payment of interest and a yield maintenance penalty; - to reduce the outstanding retail flooring liability to Conseco Finance Servicing Corp. to approximately $40 million; and - to secure standby letters of credit that primarily underwrite self-insured workers' compensation programs at manufacturing plants in various states. At October 28, 2001, gross excess availability was approximately $90 million. After consideration of the $50 million required minimum excess availability, approximately $40 million was available to be used for general corporate purposes. PRIVATE PLACEMENT On October 25, 2001, we completed the private placement of 2,209,945 unregistered shares of our common stock with Acqua Wellington Private Placement Fund, Ltd. for gross proceeds of $20.0 million. We plan to use the proceeds of the sale for general corporate purposes. We have granted registration rights to the investor and on November 19, 2001, we filed a registration statement to register such shares under the Securities Act for resale by the investor. NEW ACCOUNTING PRONOUNCEMENTS During the first quarter of fiscal 2001, the Emerging Issues Task Force (EITF) issued pronouncement No. 00-14 "Accounting for Certain Sales Incentives." EITF No. 00-14 addresses the recognition, measurement and statement of earnings classification of various sales incentives such as coupons, rebates and other discounts and we adopted this pronouncement during the fourth quarter of fiscal 2001. As a result, some of our sales incentives that were previously accounted for as selling expenses were treated as a reduction in revenue. During the second quarter of fiscal 2001, the EITF also issued pronouncement No. 00-10 "Accounting for Shipping and Handling Fees and Costs." EITF No. 00-10 governs the accounting treatment and classification of our delivery revenues and some of our delivery expenses and was also adopted by us during the fourth quarter of fiscal 2001. The adoption of this EITF affected the classification of revenues from shipments to customers and specific expenses related to shipping and handling of our product and did not affect our net income (loss). Sales figures as reported above in the section entitled "Management's Discussion and Analysis--Fiscal 2001 Compared to Fiscal 2000," beginning on page 48 of this prospectus, have been adjusted to incorporate EITF No. 00-10 and EITF No. 00-14. The net effect has been an overall increase in reported sales figures of approximately 1% for fiscal 2001 and 2% for fiscal 2000. Sales figures reported elsewhere in this prospectus have been adjusted to incorporate EITF No. 00-10 and EITF No. 00-14. In June 1998, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standard (SFAS) No. 133, "Accounting for Derivative Instruments and Hedging Activities." SFAS No. 133 requires companies to record derivatives on the balance sheet as assets or liabilities measured at fair value. Effective as of fiscal 2002, we have adopted SFAS No. 133 and concurrently (as 60 permitted by SFAS No. 133) have reclassified our held-to-maturity investment portfolio to an available-for-sale portfolio. The adoption of SFAS No. 133 has not had a material impact on our results of operations or financial condition. In June 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible Assets." SFAS No. 142 addresses financial accounting and reporting for acquired goodwill and other intangible assets and was adopted by us effective April 30, 2001. The statement requires that goodwill not be amortized but instead be tested at least annually for impairment and expensed against earnings when the implied fair value of a reporting unit, including goodwill, is less than its carrying amount. We are permitted six months from the adoption date to complete a preliminary review of goodwill for impairment and will record any necessary adjustments prior to the end of fiscal 2002. We engaged outside consultants to assist with the determination of the estimated fair value for our two reporting units with goodwill. Based on preliminary findings, it is likely that the estimated fair value of one of the reporting units, retail housing, may be less than its carrying amount. Although it is not possible at this time to determine whether the impairment is substantial, it is likely that this process will result in a non-cash writedown. We would expect to finalize this process in the fourth quarter of fiscal 2002. In the future, we will evaluate the estimated fair value of the two subject reporting units at the end of each fiscal year and whenever circumstances dictate that a review should be completed. 61 BUSINESS GENERAL We are the nation's largest manufacturer of recreational vehicles, including motor homes, travel trailers, folding trailers and slide-in truck campers, and one of the nation's largest producers and retailers of manufactured housing. For the fiscal year ended April 29, 2001 and the fiscal quarter ended July 29, 2001, we sold 60,225 and 13,006 recreational vehicles, respectively. In calendar 2000, we had a 23% share of the overall recreational vehicle market, consisting of a 22% share of the motor home market, a 19% share of the travel trailer market and a 40% share of the folding trailer market. We believe our share of the recreational vehicle market has declined in calendar 2001 as a result of our lower market share in each of the motor home and travel trailer markets. For the fiscal year ended April 29, 2001 and the fiscal quarter ended July 29, 2001, we shipped 36,201 and 7,769 manufactured homes, respectively, and were the second largest producer of HUD-Code homes in the United States in terms of units sold. In calendar 2000, we also had a 3% share of the single-family housing market and an 18% share of the manufactured housing market. MANUFACTURED HOUSING INDUSTRY OVERVIEW. A manufactured home is a single-family house constructed entirely in a factory environment rather than at the home site, and is constructed in accordance with HUD construction and safety standards. There are two basic categories of manufactured housing: single-section and multi-section. The manufactured housing industry has grown significantly since 1991. According to the Manufactured Housing Institute, domestic shipments increased from 170,713 homes in calendar 1991 to 372,843 homes in calendar 1998, before declining to 250,550 in calendar 2000. Total retail sales increased from approximately $4.7 billion in calendar 1991 to more than $12 billion in calendar 2000. In addition, the manufactured housing industry's share of new single-family housing increased significantly, from about 17% in calendar 1991 to 24% in calendar 1997, before declining to 17% in calendar 2000. We believe that the growth in the last decade resulted from increasing consumer acceptance of and preference for manufactured housing, which was driven by the following: - improved product quality and design, and enhanced features; - the significant disparity in the average price per square foot between site-built housing and manufactured housing; - favorable demographic and regional economic trends; - improving business practices in the manufactured home retail industry; and - increased attractiveness of financing terms available to manufactured housing retailers and consumers. As acceptance of manufactured housing has increased among higher income buyers, demand has shifted toward larger, multi-section homes, which accounted for 64% of industry shipments in calendar 2000, up from 47% in calendar 1991. The overall industry decline over the past two calendar years reflects excessive retail inventories and constricted availability of retail financing. Approximately 68% of the manufactured homes produced in the United States are placed on individually owned lots. The balance are located on leased sites in manufactured housing communities. Most manufactured housing is sold in rural regions and towns outside of major urban areas. Today's manufactured homes offer customers similar quality to many site-built homes at a much more affordable price. Manufactured homes are constructed in a factory environment utilizing assembly line techniques, which allows for volume purchases of materials and components and more efficient use of labor. The quality of manufactured homes has increased significantly over the past 20 years, as manufactured home producers offer most of the amenities of site-built housing and generally build 62 homes with the same materials as site-built homes. Many features associated with new site-built homes are included in manufactured homes, such as central heating, name brand appliances, carpeting, cabinets, walk-in closets, vaulted ceilings, wall coverings and porches. In addition, optional features include such amenities as fireplaces, wet bars, spa tubs and garages, as well as retailer-installed options such as central air conditioning and furniture packages. The manufactured housing industry is cyclical, and is affected by general economic conditions and consumer confidence. It has also, however, been adversely affected for the past two years by excess capacity, high retail inventories and a slowing of retail sales. This has largely been caused by restrictive financing conditions. High inventories have also been caused by the rapid over-expansion of the retail distribution network and retailers' inflated expectation of future business. With respect to financing conditions, interest rates are generally higher and the terms of loans shorter than for site-built homes. In addition, some lenders have abandoned the business of extending loans to finance the purchase of manufactured homes. Thus, financing for manufactured homes has become more expensive and more difficult to obtain than financing for site-built homes. Similarly, a large number of defaults on loans that were previously made by retail lenders to less-qualified applicants has resulted in an excessive number of repossessions, and manufacturers must compete with resellers of these repossessed homes. Further, relatively higher interest rates in the first quarter of calendar 2001 contributed to a decrease in consumer demand for new manufactured housing. Industry manufacturing and retail capacity have been reduced in response to this inventory imbalance, but we expect weak market conditions will continue until the retail imbalance is resolved, and this will depend to a large degree on the continued availability of retail financing, as well as on a reduction in the number of retail dealers. OUR MANUFACTURED HOUSING BUSINESS. We are the second largest producer of HUD-Code manufactured housing in the United States in terms of units sold, and distribute our products through a network of approximately 1,300 retailers in 48 states. At the end of the first quarter of fiscal 2002, we operated 156 retail locations under the name Fleetwood Retail Corp., with the balance of approximately 1,150 locations owned and operated by independent retailers. In calendar 2000, approximately 88% of our manufactured homes were shipped to retailers in the 20 states with the highest retail sales, including Texas, North Carolina, Georgia, Florida and Tennessee. Our share of the manufactured housing market, based on shipments to retailers, was 18% in calendar 2000 and we are a leading producer of both single-section and multi-section manufactured homes. We held a 17% share of the single-section manufactured housing market in calendar 2000, as measured by shipments to retailers. Our single-section homes range in size from 550 square feet to 1,290 square feet. For the fiscal year ended April 29, 2001, our average single-section home retailed for approximately $23,000 (excluding land costs), and single-section homes represented approximately 26% of our manufactured housing unit shipments. Our single-section homes are designed for the affordable housing market that includes first-time, retiree and value-oriented buyers. We held an 18% share of the multi-section manufactured housing market in calendar 2000, as measured by shipments to retailers. Our multi-section homes range in size from 930 square feet to 2,340 square feet. For the fiscal year ended April 29, 2001, our multi-section homes sold for an average retail price of approximately $41,000 (excluding land costs), and multi-section homes represented approximately 74% of our manufactured housing unit shipments. MANUFACTURED HOUSING--RETAIL INDUSTRY OVERVIEW. With the exception of several vertically integrated entities, most companies in the manufactured housing industry, including us, traditionally marketed their homes through independent retailers. In recent years, however, a few manufactured housing producers began to acquire retailers. These acquisitions occurred for a variety of reasons, including manufacturers' desire to control retail distribution and upgrade marketing and merchandising efforts, including brand name development. Additionally, a number of financial consolidators and residential developers have entered 63 the manufactured housing industry by acquiring retailers. For instance, in the first half of calendar 1998, some of our competing manufacturers acquired several of our important retailers, which collectively accounted for approximately $277 million in purchases from us. These developments created a risk that independent distribution channels for our homes would not be as readily available as they had been in the past. One factor leading to the current imbalance between retail inventories and consumer demand in the manufactured housing industry is the large number of retail dealers, each of which must maintain adequate inventory at its dealer location to appeal to potential customers. A further reduction in the number of financially weaker dealers likely would be a factor in resolving this retail imbalance. In addition, the acquisition of retailers by manufactured housing producers may result in an increase in the number of retail outlets having an exclusive relationship with a particular manufacturer. OUR MANUFACTURED HOUSING--RETAIL BUSINESS. In order to protect our distribution channels and to take advantage of business opportunities in the manufactured housing retail industry, we acquired HomeUSA, Inc., the nation's largest independent retailer of manufactured homes. In addition, we completed several other acquisitions of independent retailers between June 1998 and August 2001. We also expanded our company-owned retail network through the development of new "greenfield" locations. The combination of these two strategies carried us to a high of 244 stores in November 2000. Since then, as the retail market for manufactured housing has continued to slow down and losses in our retail operation have risen, we have implemented a downsizing strategy to better match our retail capacity to market demand. By assigning retail store operations of particular locations to a third party and closing and selling other locations, we reduced the number of stores that we operate to 156 at the end of the first quarter of fiscal 2002. We expect that these downsizing efforts will extend into fiscal 2002 until we achieve a target level of about 150 stores. RECREATIONAL VEHICLES INDUSTRY OVERVIEW. Recreational vehicles include motor homes, travel trailers, folding trailers and slide-in truck campers. Recreational vehicles are either driven or towed and are primarily used for vacations, camping trips and other leisure activities. A motor home is a self-propelled mobile unit used primarily as a temporary dwelling during vacation and camping trips. It consists of a truck or bus chassis with a living unit built onto it. The living area and driver's compartment on Class A models are designed and produced by the recreational vehicle manufacturer. Motor homes are classified by the Recreational Vehicle Industry Association (RVIA) into three categories: Class A, Class B and Class C. Conventional, or Class A, motor homes are constructed directly on medium-duty truck chassis which include the engine and drive train components. They are fully self-contained, typically include a driver area and kitchen, bathroom, dining and sleeping accommodations for four to eight people, and have such optional features as air conditioning, an auxiliary power generator and home electronics such as a stereo, television and VCR. Class B models are panel-type trucks to which sleeping, kitchen and toilet facilities are added. These models also have a top extension added to them for more head room. Since we do not manufacture Class B motor homes, the Class B motor home comparison is not included in this prospectus. Compact, or Class C, models are mini motor homes, built on a cut-away van-type chassis, onto which the manufacturer constructs a living area with access to the driver's compartment. Class C models have basically the same features and options as Class A products. RVIA reported factory shipments of 41,000 Class A motor homes and 16,500 Class C motor homes for calendar 2000. These figures compare to shipments of 23,500 Class A motor homes and 15,200 Class C motor homes as reported by RVIA for calendar 1991. There are numerous competitors and potential competitors in this industry. The five largest manufacturers, including us, represented approximately 69% of the combined Class A and Class C motor home markets for calendar 2000. Our 64 sales represented approximately 22% of the combined Class A and Class C markets for calendar 2000. However, we believe our motor home market share has declined in calendar 2001. There are two major classes of towable recreational vehicles: travel trailers and folding trailers. Travel trailers are designed to be towed by pickup trucks, vans or other tow vehicles, and are similar to motor homes in use and features. Typically, travel trailers include sleeping, eating and bathroom facilities and are self-contained units with their own lighting, heating, refrigeration, fresh water storage tanks and sewage holding tanks so that they can be used for short periods without being attached to utilities. RVIA identifies travel trailers as being either conventional or fifth-wheel trailers. For calendar 2000, RVIA reported factory shipments of 114,500 conventional trailers and 62,300 fifth-wheel trailers, compared to shipments of 49,300 and 28,300, respectively, for calendar 1991. The five largest manufacturers in calendar 2000, including us, represented approximately 61% of the total travel trailer market. The other major class of towable recreational vehicles, folding trailers, are smaller and lighter than their travel trailer counterparts and are consequently less expensive and easier to tow. Folding trailers typically include sleeping and eating facilities, fresh water storage and either a built-in icebox or a refrigerator. RVIA reported shipments of 51,300 folding trailers in calendar 2000, which number was significantly higher than the 33,900 shipments in calendar 1991. Of all of the markets for recreational vehicles, the folding trailer market is the most concentrated, with the five largest manufacturers, including us, holding almost 84% of the market in calendar 2000. Slide-in truck campers represent another class of towable recreational vehicles, but have a less significant presence in the towable sector. Slide-in truck campers are similar to travel trailers in terms of use and features, but are designed to fit in the bed of a pickup truck. For calendar 2000, RVIA reported factory shipments of 11,100 slide-in truck campers, compared to shipments of 9,600 for calendar 1991. Sales of recreational vehicles tend to be a leading economic indicator, and indeed sales started to decline when the stock market began to show signs of weakness late in fiscal 2000. Dealers began to reduce inventories of motor homes at that time. Demand for towable recreational vehicles also began to soften in early fiscal 2001. Recreational vehicles typically are a discretionary purchase for consumers, and sales are therefore affected principally by general economic conditions and consumer confidence, and to a lesser extent by fuel availability and prices. Retail financing conditions have historically been a somewhat less significant factor affecting the recreational vehicle industry than the manufactured housing industry since the finance industry has continued to participate in this market at substantially the same levels as previously. In addition, purchasers of recreational vehicles generally present a more affluent profile than purchasers of manufactured homes, such that purchasers of recreational vehicles are more likely to obtain satisfactory financing and are less likely to default on their loans than are purchasers of manufactured homes. OUR RECREATIONAL VEHICLE BUSINESS. We are the leading producer of recreational vehicles in the United States and distribute our products through a network of approximately 1,140 independent retailers in 49 states and Canada. In calendar 2000, approximately 80% of our recreational vehicles were shipped to retailers in the 25 states with the highest retail sales, including California, Texas, Michigan, Florida and Ohio. In the same period, we were the market share leader in terms of units sold in all but one of the top 25 recreational vehicle states. However, we believe our market share has declined in calendar 2001 in each of the motor home and travel trailer markets. Our total unit sales for Class A motor homes and Class C motor homes were 11,100, 16,000 and 14,400, which represented a market share of 19%, 24% and 24% for the calendar years 2000, 1999 and 1998, respectively. We manufacture motor homes under the brand names FLAIR, STORM, TERRA, FIESTA, BOUNDER, PACE ARROW, SOUTHWIND, PACE ARROW VISION, EXPEDITION, BOUNDER DIESEL, DISCOVERY, REVOLUTION, AMERICAN TRADITION, AMERICAN DREAM, AMERICAN EAGLE, AMERICAN HERITAGE, TIOGA and JAMBOREE. Our Class A motor 65 homes are available in a variety of models ranging in length from 25 to 45 feet and retail for an average price of approximately $118,000. Class C units are available in various models ranging in length from 19 to 31 feet and retail for an average price of approximately $54,000. For calendar 2000, four of the industry's 10 top-selling Class A motor homes were manufactured by us, as well as two of the top five Class C motor homes. We manufacture a variety of travel trailers under the PROWLER, TERRY, WILDERNESS, MALLARD, PIONEER and AVION brand names. Most of our travel trailers are 8 feet wide, vary in length from 18 to 39 feet (including trailer hitch) and retail for an average price of approximately $17,500. For calendar 2000, three of the industry's five top-selling travel trailers were manufactured by us. We are the largest manufacturer of folding trailers under the industry-leading trademarks, Coleman-Registered Trademark- and Coleman Parallelogram with Lantern Logo-Registered Trademark-. Our folding trailers range in length from 17 to 26 feet when deployed and retail for an average price of approximately $7,350. We also produce slide-in truck campers at one of our travel trailer factories under the brand names CARIBOU, ELKHORN and ANGLER. Most of our slide-in truck campers vary in length from 8 to 11 feet and retail for an average price of approximately $13,000. COMPETITIVE ADVANTAGES We believe that we have specific competitive advantages as described below. COMMITMENT TO QUALITY AND CUSTOMER SATISFACTION. Our quality improvement process focuses on increasing customer satisfaction by improving the quality and design of Fleetwood products and enhancing the customer's shopping experience. In this regard, we have developed a number of ongoing processes, including: - designing our products with materials that frequently exceed government requirements and industry standards; - training both our employees and our retailers' employees in customer satisfaction techniques and quality improvement procedures; - providing additional services, such as comprehensive training of our retailers' employees and contractors regarding proper installation techniques for manufactured homes; - offering some of the most extensive warranties in the manufactured housing and recreational vehicle industries; and - responding quickly and effectively to customer inquiries and concerns. We use independent consumer surveys to determine whether retail customers are satisfied with the quality of our products and the level of service provided by us and the retailer. An independent consumer research firm conducts telephone surveys and communicates customer responses to our manufacturing entities and retailers to reinforce quality performance and minimize customer problems. Each year, specific customer satisfaction goals are established for our manufacturing operations and independent retailers. Retailers who meet these performance standards are recognized with our Circle of Excellence Award, and our manufacturing centers are similarly honored for meeting targeted levels of customer satisfaction. We believe that these efforts have resulted in increased awareness by our employees and retailers of the importance of product quality and service, which in turn has significantly improved our customer satisfaction ratings. FOCUS ON ENGINEERING AND INNOVATIVE PRODUCT DEVELOPMENT. We conduct our product development activities on a national basis for recreational vehicles and on a regional basis, in order to reflect regional preferences and trends, for manufactured housing. As a result of our approach to product development in our manufactured housing business, for instance, we have introduced multi-story housing in some urban communities in select regions. During fiscal 2001, our recreational vehicle group 66 invested significant time and resources into the redesign and reengineering of our product development function. With the assistance of an outside consulting firm, specializing in the Product Development Process (PDP) that is patterned largely after methodologies employed by Japanese automobile manufacturers, we undertook a comprehensive review of our approach to the development of new products. Upon completion of the review, the consulting firm issued a broad set of recommendations calling for comprehensive changes to our approach. To ensure successful implementation of the recommendations, we recruited and employed the seasoned consultant that headed up the outside team, leveraging his significant automotive experience. We have appointed this individual to the position of vice president of recreational vehicle product development, with overall responsibility for both travel trailer and motor home product development functions. Our new system, which is currently being phased in, is designed to facilitate a faster response to market changes. Under this system, product development projects will be carefully evaluated throughout the process from a business perspective, and we are developing new products and product enhancements through an integrated approach that involves cross-functional teams including engineering, manufacturing and marketing personnel. We also integrate feedback received through our customer surveys into our product development process. As a result, we believe that we are able to proactively design and manufacture products that address both industry trends and specific customer requirements in an efficient, cost-effective and timely manner. The system is designed to enforce the disciplines required to deliver quality products. Amounts spent on engineering and product development totaled approximately $19 million for fiscal 2001 and $22 million for fiscal 2000. EXPERIENCED MANAGEMENT TEAM. We and our manufactured housing and recreational vehicle group's benefit from the significant experience of our senior managers, many of whom have over 20 years of operating expertise with us. As previously noted, both of our core businesses are subject to significant cyclical swings, similar to the one we are presently experiencing. Current circumstances in our industries are not unlike those encountered in previous downturns in the 1979-80 and 1990-91 periods. Many of our managers have previously executed through times such as these and possess valuable know-how and skills that are uniquely suited to our current challenges. OUR BUSINESS STRATEGY Our goals are to enhance our position as the leading provider of affordable, high quality manufactured homes and recreational vehicles, to sustain long-term profitable growth, and to enhance shareholder value by generating returns in excess of our cost of capital. The key components of our business strategy are described below. PROVIDING THE BEST PRODUCT AND VALUE PROPOSITION TO OUR CUSTOMER. We remain committed to consistently offering the highest quality product at an attractive value that is not necessarily price driven. Recognizing the differences between the buyer populations of each of the segments of our business, but not differences in expectations of high quality standards, we aim to achieve the value proposition by focusing on the individual needs and preferences of the buyer populations at different price points by product and at scale. We employ our competitive advantages of commitment to loyalty and satisfaction at the front-end of the consumer experience in areas such as design and quality manufacturing as evidenced by our thorough customer service and warranty follow-up practices. We also believe that we are effective at controlling cost factors despite high quality standards because of our critical mass at the production level in such areas as volume cost absorption, purchasing efficiencies, and a leverageable fixed infrastructure. Our focus on engineering and innovative product development enables us to design and produce products that address ever-changing consumer preferences at the business unit level for recreational vehicles and at the regional factory floor for manufactured housing. For example, because of the affluence of the recreational vehicle buyer and the discretionary nature of the recreational vehicle purchase, the design process is critical and is embedded throughout the development, manufacturing and marketing cycle and those costs are absorbed over 67 significant unit volumes because of the economies of our market penetration and volumes. Our customers expect consistency and quality because of the brand reputation and awareness in the market of our products. Finally, we believe that the customer's experience with our products remains consistent through changing economic and social cycles because of the depth and background of our management who have extraordinary experience at managing in different environments and quickly responding to change. UPGRADING AND EXPANDING OUR RETAIL DISTRIBUTION NETWORKS. Since 1991, we have reduced the number of independent retail distribution centers approved to sell our manufactured housing products from approximately 1,800 to about 1,300 at July 29, 2001. We believe that this action has allowed us to focus our efforts on larger retailers that share our approach to merchandising homes and customer satisfaction. Historically, we have not focused on exclusive retailer arrangements and most retailers sold competitive lines; however, in recent years, we have developed exclusive retailer arrangements. Currently, approximately 56% of our manufactured housing retailers are exclusive, up from approximately 30% five years ago. During fiscal 2000, our housing group introduced the Pinnacle Retailer Program, which is designed to encourage more exclusive retailer relationships. This program includes a number of attractive retailer incentives, including funding for signage and additional marketing support not available to non-exclusive retailers. We have increased our efforts to develop and implement retail "best practices" for our retailers through our sponsored training programs and manuals. Topics of recent training seminars have included professional selling techniques and proper home installation procedures. We actively seek to expand our manufactured housing retail network by adding retailers that meet our criteria. With respect to recreational vehicles, we are actively implementing "best practices" across our retail network and developing programs to increase the share of our products sold by independent retailers. This last initiative also includes increasing the number of exclusive recreational vehicle retailers. In addition, we have developed private label recreational vehicle programs to expand retail sales through distribution channels that traditionally have not sold recreational vehicles. PROMOTING AND EXPANDING RECOGNITION OF THE "FLEETWOOD" BRAND NAME. We seek to expand consumer awareness of the "Fleetwood" name in both our manufactured housing and recreational vehicle operations. Beginning in fiscal 1997, we began working with selected manufactured housing retailers to develop "Fleetwood Home Centers," which exclusively carry our products, have consistent signage identifying the location as a Fleetwood Home Center and meet our highest standards for home presentation and customer satisfaction. As of July 29, 2001, we had facilitated the opening of 140 Fleetwood Home Centers, 78 of which were owned by us. We have promoted the Fleetwood Homes "Quality for Life" theme through a major national advertising campaign, including television, radio, direct marketing, print, billboards and outdoor advertising. In the recreational vehicle group, we have leading brand names in each segment. However, we seek to promote each individual brand as a part of the Fleetwood family of recreational vehicles. As an example, we are sponsoring a NASCAR driver and team, Dale Jarrett and the Robert Yates Racing Team. As part of the sponsorship arrangement, we have our logo on Dale Jarrett's race car and equipment. We have also been involved in other NASCAR promotions and believe that the large NASCAR audience, estimated at 90 million, aligns with our targeted customer categories for recreational vehicles. SALES AND DISTRIBUTION OF OUR PRODUCTS Consistent with industry practice, we have historically marketed our products through many independent retailers, none of which individually accounted for a material part of our total sales. We expect this industry practice to continue with respect to recreational vehicles. However, the acquisition activity in recent years in the retail sector of the manufactured housing industry has prompted us to modify our manufactured housing sales and distribution strategies. We have responded to this industry 68 trend by upgrading our manufactured home retail distribution network, developing alternatives to replace retailers purchased by competitors, and promoting and expanding recognition of the Fleetwood brand name through exclusive "Fleetwood Home Centers" and through our own retail strategies, including acquisitions and the opening of stores owned by us. Our entry into the manufactured housing retail business required that we maintain an inventory of finished homes for purposes of display and immediate sale to retail homebuyers. This is a distinct departure from our manufacturing policy of building homes to order and not maintaining factory inventories of completed homes. Largely as a result of the move into the retail business, inventories increased sharply during fiscal 2000, rising from $257 million at April 25, 1999 to $343 million at April 30, 2000. Reflecting weaker market conditions, inventories declined to $273 million at April 29, 2001. At July 29, 2001, inventories declined to $261 million. As part of the sales process, we offer purchasers of our recreational vehicles comprehensive one-year warranties against defects in materials and workmanship, excluding only particular components separately warranted by a supplier. The warranty period for motor homes is one year or until the unit has been driven 15,000 miles, whichever occurs first, except for structural items, which are covered for three years. Our recreational vehicle group has recently installed an electronic dealer communications network that facilitates the processing of product warranty claims and parts ordering. With respect to manufactured homes, our warranty now covers a two-year period, and includes coverage for factory-installed appliances. Prior to March 1, 2000, our home warranty covered a one-year period, except for structural, plumbing, heating and electrical systems, which were covered for five years. Beginning in fiscal 2001, we have been offering an optional three-year extended warranty service contract under the name "Fleetguard" for our home buyers who wish to purchase it. Our annual expenses for product warranties and service were approximately $132 million for the fiscal year ended April 29, 2001, $151 million for the fiscal year ended April 30, 2000, $28 million for the fiscal quarter ended July 29, 2001 and $38 million for the fiscal quarter ended July 30, 2000. We believe that our warranty program is an investment that enhances our reputation for quality and reliability. FINANCING OF OUR PRODUCTS Sales of recreational vehicles and manufactured housing are generally made to retailers under commitments by financial institutions that have agreed to finance retailer purchases. Product financing for recreational vehicles is currently readily available from a variety of sources including commercial banks, savings and loan institutions, credit unions and consumer finance companies. With respect to manufactured housing, wholesale and retail financing has historically been provided by similar lending sources, although highly concentrated with a few very large institutions. Our experience is that Conseco Finance Corp., GreenPoint Financial Corp. and Associates First Capital Corporation provided approximately two-thirds of our retail financing and our management believes that this level of lender concentration is representative of the manufactured housing industry. Associates, which had been a very important lender for our retailers during the 1990s, announced in January 2000 that it was discontinuing its manufactured housing finance business. In addition, several other smaller lenders have exited the business during the past 18 months. Conseco, which acquired Green Tree Financial Corp. and is the largest manufactured housing lender, has recently been affected by adverse loan experience, higher funding costs and liquidity issues. Repossessions have increased in past months due to the fact that some lenders had made loans 18 to 36 months earlier to less qualified applicants, and a significant number of these borrowers had begun to default on their loans, resulting in a large number of repossessions of these homes. The result has been a reduction in Conseco's manufactured housing finance volume, along with less favorable financing terms for wholesale and retail borrowers. Therefore, manufactured housing lenders in general have recently experienced higher loan losses and a more difficult funding environment. Access to the asset-backed securities market as a source of funding similarly has been constricted and the cost of funds has risen sharply. Lenders have reacted by tightening credit standards for manufactured housing borrowers and by increasing interest rate spreads 69 significantly. These unfavorable developments have created a very restrictive retail financing environment which in turn has constrained sales activity at both the wholesale and retail levels. The adverse economic impact of the events of September 11, 2001 have contributed to these unfavorable developments and have caused floor-plan lenders, for example, to tighten credit. Until May 1996, we owned Fleetwood Credit Corp., which provided a substantial portion of the wholesale and retail financing for sales of our recreational vehicles. We sold Fleetwood Credit Corp. to Associates in May 1996. In connection with the sale, an agreement was signed to assure continuing cooperation between us and Associates and to facilitate wholesale and retail financing for our retailers and customers. Early in calendar 1999, Fleetwood Credit Corp. was sold by Associates to Bank of America. We agreed to an assignment of the operating agreement to the new owner. Under the agreement, we agreed not to promote any other finance company's recreational vehicle financing programs so long as Fleetwood Credit Corp. remains competitive, as defined in the agreement. OUR PRINCIPAL PROPERTIES We own our executive offices which are located at 3125 Myers Street in Riverside, California. The corporate administrative offices, which occupy 173,500 square feet, are situated on parcels of land owned by us, totaling approximately 18.1 acres. Our manufactured housing regional offices are located in California, Florida and Texas and occupy a total of 16,400 square feet of leased office space. We also own additional property and buildings utilized for manufacturing, research and development and administrative purposes, which, for the most part, are owned by us. At July 29, 2001, we operated 156 retail sales locations in 25 states, of which 15 were owned and 141 were leased from third parties. For the fiscal year ended April 29, 2001 and for the fiscal quarter ended July 29, 2001, the lease expense related to these properties was approximately $13 million and $1 million, respectively. At July 29, 2001, we had 56 active facilities, 52 of which were manufacturing operations (28 manufactured housing, 13 travel trailers, 5 motor homes, 1 folding trailer and 5 supply) and 4 that were service facilities (2 manufactured housing and 2 motor homes). One of the motor home service facilities in Riverside, California is currently being converted for partial use as a manufacturing operation. At the end of fiscal 2000, we had 63 active facilities, 61 of which were manufacturing operations (36 manufactured housing, 14 travel trailers, 5 motor homes, 1 folding trailer and 5 supply) and 2 motor home service facilities. We also had 20 idle manufactured housing facilities at the end of fiscal 2001 and 10 idle facilities, including a deactivated service facility, at the end of fiscal 2000. During fiscal 2001, active manufacturing capacity for the manufactured housing group was reduced by the closure of facilities in Alma, Georgia; Douglas, Georgia; Pearson, Georgia; Lexington, Mississippi; Mooresville, North Carolina; Roxboro, North Carolina; Waco, Texas and Rocky Mount, Virginia; and a facility in Cushing, Oklahoma that had been previously leased was idled. Capacity in the recreational vehicle group was downsized by the closure of travel trailer facilities in Omaha, Nebraska and Winchester, Virginia, and a motor home facility in Decatur, Indiana. During the year, an idle travel trailer facility in Longview, Texas was activated to produce the Avion product previously built in Omaha, Nebraska, an idle motor home service facility in Paxinos, Pennsylvania was activated as an addition to manufacturing capacity and an idle motor home manufacturing facility in Riverside, California was activated as a combination manufacturing/service facility. An idle manufactured housing facility in Hamilton, Alabama, and a building previously used as a motor home service facility in Riverside, California, were sold during fiscal 2001. COMPETITION IN OUR BUSINESS The manufactured housing industry is highly competitive. For calendar 2000, there were approximately 70 manufacturers, with the 10 largest companies accounting for 79% of the market, 70 including our sales which represented 18% of the market. Manufactured homes compete with new and existing site-built homes, apartments, townhomes and condominiums. Competition exists on both the manufacturing and retail levels and is based primarily on price, product features, reputation for service and quality, depth of field inventory, sales promotions, merchandising, and the terms and availability of dealer and retail customer financing. Recent growth in the manufactured housing market in the southern United States has increased competition at both the manufacturing and retail levels and has resulted in both regional and national competitors increasing their presence in the region. The recreational vehicle market is also highly competitive and we have numerous competitors and potential competitors in this industry. The five largest manufacturers represented approximately 59% of the market in calendar 2000, including our sales, which represented 23% of the market. However, we believe our share of the recreational vehicle market has declined in calendar 2001 as a result of our lower market share in each of the motor home and travel trailer markets. There can be no assurance that either existing or new competitors, will not develop products that are superior to our recreational vehicles or achieve better consumer acceptance. REGULATORY ISSUES APPLICABLE TO OUR BUSINESS AND PRODUCTS Our manufactured housing operations are subject to provisions of the Housing and Community Development Act of 1974, under which the U.S. Department of Housing and Urban Development establishes construction and safety standards for manufactured homes, and also may require manufactured housing producers to send notifications to customers of noncompliance with standards or to repair or replace manufactured homes that contain specific hazards or defects. Our recreational vehicle operations are subject to a variety of Federal, state and local regulations, including the National Traffic and Motor Vehicle Safety Act, under which the National Highway Traffic Safety Administration may require manufacturers to recall recreational vehicles that contain safety-related defects, and numerous state consumer protection laws and regulations relating to the operation of motor vehicles, including so-called "Lemon Laws." Amendments to any of these regulations and the implementation of new regulations could significantly increase the costs of manufacturing, purchasing, operating or selling our products and could have a material adverse effect on our results of operations. Our failure to comply with present or future regulations could result in fines being imposed on us, potential civil and criminal liability, suspension of sales or production, or cessation of operations. In addition, a major product recall could have a material adverse effect on our results of operations. Certain U.S. tax laws currently afford favorable tax treatment for the purchase and sale of recreational vehicles that are used as the equivalent of second homes. These laws and regulations have historically been amended frequently, and it is likely that further amendments and additional regulations will be applicable to us and our products in the future. Amendments to these laws and regulations and the implementation of new regulations could have a material adverse effect on our results of operations. Our operations are subject to a variety of Federal and state environmental regulations relating to the use, generation, storage, treatment, emission and disposal of hazardous materials and wastes and noise pollution. Although we believe that we are currently in material compliance with applicable environmental regulations, our failure to comply with present or future regulations could result in fines being imposed on us, potential civil and criminal liability, suspension of production or operations, alterations to the manufacturing process, or costly cleanup or capital expenditures. OUR INTELLECTUAL PROPERTY FLEETWOOD, FLEETWOOD HOMES and the principal brand and series names utilized by us in connection with our recreational vehicles and manufactured homes are registered trademarks of ours. The trademarks Coleman-Registered Trademark- and Coleman Parallelogram with Lantern Logo-Registered Trademark- are utilized by us in connection with our folding trailers, in accordance with a license from The Coleman Company, Inc., which extends 71 through June 2005 with an option in our favor to renew through June 2010. We have no reason to believe that a further extension cannot be obtained. We believe that our trademarks and trade names are significant to our business, and vigorously protect them against infringement. Aside from design patents on some of the distinctive features of our most prominent motor home models and patents on certain unique features of our recreational vehicles, we have not typically obtained patent protection on our products. In addition to our trademarks and patents, we have developed numerous trade secrets in connection with the design, manufacture, sales and marketing of our products. We believe that these trade secrets are of great significance to our business success and take reasonable steps to prevent their disclosure to competitors. OUR RELATIONSHIP WITH OUR EMPLOYEES As of July 29, 2001, we and our subsidiaries had approximately 14,000 employees. Most full-time employees are provided with paid annual vacations, group life insurance, medical and hospitalization benefits, a retirement plan and other fringe benefits. Approximately 550 of these employees hold management or supervisory positions. As of July 29, 2001, collective bargaining agreements were in effect at two of our manufacturing locations covering a total of approximately 1,000 employees. Expiration dates for these agreements are in September 2003 and October 2005. Except for employees at these plants, none of our other employees are represented by a certified labor organization. In recent years, we have experienced labor union organizing activity at several other manufacturing locations, but employees at all these locations voted against union representation. LEGAL PROCEEDINGS IN WHICH WE ARE INVOLVED We are a defendant in a class action in the case of MCMANUS V. FLEETWOOD ENTERPRISES, INC., which was filed on April 9, 1999 and is pending in the U.S. District Court for the Western District of Texas, San Antonio Division. The complaint attempts to establish a class of purchasers of our Class A motor homes for the model years 1994-1999 and makes claims with respect to the alleged breach of express and implied warranties, negligent misrepresentation, fraudulent concealment, and violation of various state statutes in connection with the ability of such motor homes to tow an automobile or other vehicle or cargo. On September 24, 2001, the court certified a subclass of Texas residents who purchased a subject motor home from a Texas dealer and who still own the motor home. We appealed this certification to the 5th Circuit Court of Appeals on October 4, 2001, which appeal was accepted on October 26, 2001, and expect that a hearing on this matter will be scheduled within 8 or 9 months. We continue to deny the material allegations in the complaint while asserting a vigorous defense to that end. It is not possible at this time to properly assess the risk of an adverse verdict or the magnitude of possible exposure. As discussed in our Annual Report on Form 10-K for fiscal 2000, we initiated a recall under the National Highway Traffic Safety Act with respect to approximately 3,400 of our luxury American Coach Class A motor homes because owners of some of the motor homes had experienced front-tire blowouts, several of which have resulted in accidents and serious injuries, including deaths. Under the recall, we provided two new larger capacity front tires to owners of the motor homes, adjusted the weight distribution on the front axle of some motor homes to correct a weight imbalance and provided reinforcement of consumer education about the importance of proper tire maintenance, especially with respect to proper tire pressure. Insurance subrogation lawsuits have been filed with respect to three of the accidents involving motor homes subject to the recall, and several claims with respect to such accidents have been resolved. Plaintiffs filed the case of CINCINATTI INSURANCE CO. V. FLEETWOOD ENTERPRISES, INC. on February 21, 2001 in the Circuit Court for Madison County, Kentucky, requesting compensatory damages and litigation expenses. Similarly, in ENGLAND V. FLEETWOOD ENTERPRISES, INC., filed on April 16, 2001 in the U.S. District Court in South Dakota, Western Division, the plaintiffs requested 72 compensatory damages, litigation expenses and attorneys' fees. PROGRESSIVE INSURANCE/ALDERMAN V. FLEETWOOD ENTERPRISES, INC., was also filed on July 27, 2001 in Guadelupe County, New Mexico, Fourth Judicial District Court, seeking compensatory damages, litigation expenses and attorneys' fees. In addition, two lawsuits have been filed concerning an accident involving two motor homes not involved in the recall that resulted in two deaths allegedly caused by a front-tire blowout in one of the motor homes. WRIGHT V. FLEETWOOD MOTOR HOMES OF INDIANA, INC., was filed on February 25, 2000 in the District Court of Johnson County, Texas, and was brought by the plaintiffs who owned the motor home that had the alleged blowout. We subsequently settled this case on May 17, 2001. The other plaintiff filed suit on July 23, 2001 in the case of BEELDENS, ETC., ET AL., V. FLEETWOOD MOTOR HOMES OF INDIANA, INC., ET AL., in the District Court of Johnson County, Texas, seeking compensatory damages, litigation expenses and attorneys' fees. In addition, a further lawsuit, MEL AND JOY LAYDEN V. FLEETWOOD ENTERPRISES, INC. AND FLEETWOOD MOTOR HOMES OF INDIANA, INC., was filed recently in the Circuit Superior Court of Marion County, Indiana, on October 12, 2001, alleging that the front tire failure of a motor home was the cause of a traffic accident and seeking damages. We expect to provide a vigorous defense to the insurance subrogation lawsuits, and believe that they and any remaining claims related to the other accidents are covered by adequate insurance. On February 21, 2000, we and two of our subsidiaries were served with a purported class action filed on behalf of nine present or former associates of our Idaho manufactured housing facility. The complaint in the matter of BRISTOW ET AL., V. FLEETWOOD ENTERPRISES, INC. ET AL., was filed in the U.S. District Court in Idaho and alleges that, as a result of our management incentive pay system and other policies, associates have been permitted or encouraged to work off the clock and through lunch and rest breaks and that overtime pay claims have been suppressed in violation of the Federal Fair Labor Standards Act and state laws. The plaintiffs were attempting to establish a national class action and are requesting compensatory damages, litigation expenses and injunctive relief requiring us to pay overtime rates and keep accurate records. On February 20, 2001, the Magistrate Judge conditionally certified a class of plaintiffs comprised of certain production associates and supervisors of our housing and recreational vehicle groups. During July 2001, notice of the action was issued to potential class members. While we continue to deny the material allegations in the complaint and assert a vigorous defense, we are in discussions regarding a pending settlement, which would include a possible cash payment of up to $7.35 million. On August 14, 2000, another purported class action complaint was filed by Ms. Bristow along with a Jane Doe alleging sexual harassment. On January 19, 2001, an amended complaint, entitled BOGEN, ET AL., V. FLEETWOOD ENTERPRISES, INC., was filed in the U.S. District Court in Idaho by six plaintiffs, including Ms. Bristow, alleging gender discrimination and sexual harassment as a result of a sexually hostile environment at four manufacturing centers. The plaintiffs are attempting to establish a national class action and are requesting compensatory and punitive damages, litigation expenses and attorneys' fees. While we continue to deny the material allegations in the amended complaint and plan to assert a vigorous defense, we are in discussions regarding a pending settlement, which would include a possible cash payment of up to $1.0 million. We are also subject to other litigation from time to time in the ordinary course of business. Our liability under some of this litigation is covered in whole or in part by insurance. Although the amount of any liability with respect to such claims and litigation over and above our insurance coverage cannot presently be determined, in the opinion of our management such liability is not expected to have a material adverse effect on our financial condition or results of operations. 73 THE EXCHANGE OFFER TERMS OF THE EXCHANGE OFFER; REASONS FOR THE EXCHANGE OFFER; PERIOD FOR TENDERING EXISTING PREFERRED SECURITIES We are offering to exchange $22 in liquidation amount of exchange preferred securities for each $50 in liquidation amount of a maximum of $86.25 million in aggregate liquidation amount of existing preferred securities that are validly tendered on the terms and subject to the conditions set forth in this prospectus and in the accompanying letter of transmittal. If existing preferred securities in an aggregate liquidation amount of more than $86.25 million are validly tendered, we will accept for exchange validly tendered existing preferred securities on a pro rata basis, subject to the other terms and conditions in this prospectus. Therefore, the entire aggregate liquidation amount of existing preferred securities that you may tender in the exchange offer may not be accepted for exchange even if it is validly tendered. Holders must tender existing preferred securities in a liquidation amount of $50 and any integral multiple of $50. You may tender all, some or none of your existing preferred securities. The exchange offer will be open for twenty business days from commencement of the offer, unless extended by us. The exchange offer is not being made to, and we will not accept tenders for exchange from, holders of existing preferred securities in any jurisdiction in which the exchange offer or the acceptance of the offer would not be in compliance with the securities or blue sky laws of that jurisdiction. Our board of directors and officers do not make any recommendation to the holders of existing preferred securities as to whether or not to tender all or any portion of their existing preferred securities. In addition, we have not authorized anyone to make any recommendation. You must make your own decision whether to tender your existing preferred securities and, if so, the amount of existing preferred securities to tender. We are making the exchange offer and the cash offer to enhance liquidity and to improve our balance sheet by increasing shareholders' equity, which will increase our capacity to carry senior debt. If we raise only the minimum amount in our cash offer necessary to consummate the exchange offer, we will have also reduced the outstanding aggregate liquidation amount of our trust preferred securities. Our trust preferred securities include the existing preferred securities and will include the new preferred securities. The trust preferred securities are classified on our balance sheet as minority interest. Upon consummation of the exchange offer, and assuming we (1) accept a maximum of $86.25 million in aggregate liquidation amount of existing preferred securities for tender in the exchange offer, and (2) receive proceeds in the cash offer in an amount equal to 30% of the aggregate liquidation amount of the existing preferred securities tendered and accepted for exchange in the exchange offer, then the aggregate liquidation amount of trust preferred securities will be reduced from $287.5 million to $265.1 million. If the exchange offer is fully subscribed, we will have enhanced our shareholders' equity by approximately $28.1 million. We may however raise in the cash offer more than the minimum proceeds required as one of the conditions to the exchange offer, or we may consummate the cash offer without consummating the exchange offer, which would result in an increase in the outstanding liquidation amount of trust preferred securities. If we raise $150.0 million in the cash offer and accept $86.25 million in aggregate liquidation amount of existing preferred securities for exchange in the exchange offer, the outstanding aggregate liquidation amount of trust preferred securities would increase to $389.2 million. If we consummate the exchange offer, we intend to use a portion of the proceeds from the cash offer to pay the taxes we expect to incur as a result of the cancellation of the existing debentures that support the existing preferred securities tendered and accepted for exchange in the exchange offer. We will also use a portion of the proceeds to pay the fees and expenses incurred in connection with the exchange offer and the cash offer. We will use the remainder of the proceeds from the cash offer, if any, for general corporate purposes, including the possible repayment of corporate indebtedness. If 74 $86.25 million in aggregate liquidation amount of the existing preferred securities are tendered and accepted for exchange, we anticipate incurring a tax liability of approximately $18.0 million. In the event that the conditions to the exchange offer are not satisfied or we do not otherwise consummate the exchange offer, we nonetheless expect to consummate the cash offer and will use all proceeds received in the cash offer, after payment of fees and expenses, for general corporate purposes, including the repayment of corporate indebtedness. The effect of the exchange offer on our cash flow will be positive, assuming we raise only the minimum amount in our cash offer, which is a condition to the exchange offer. If we raise more than the minimum amount, or if we do not consummate the exchange offer but we do consummate the cash offer, our cash balance will increase; however, the effect on our cash earnings in future periods may be negative. However, in any of the circumstances described in the two previous sentences, we anticipate that the effect of either or both of the exchange offer or the cash offer on our balance sheet will be to provide us with greater flexibility in executing our strategic plan and exploring financing opportunities in the future, by enhancing liquidity and increasing our capacity to carry senior debt. MINIMUM CONDITIONS The exchange offer is subject to there being tendered in the exchange offer, and not withdrawn, a minimum of $50.0 million in aggregate liquidation amount of existing preferred securities. The exchange offer is also subject to the receipt of proceeds in the cash offer of cash offer preferred securities in an amount equal to at least 30% of the aggregate liquidation amount of the existing preferred securities tendered and accepted for exchange in the exchange offer. If an aggregate liquidation amount of a minimum of $50.0 million of existing preferred securities is tendered and accepted for exchange, and assuming we raise only $15.0 million in the cash offer, which would be 30% of the aggregate liquidation amount of existing preferred securities tendered and accepted for exchange in the exchange offer, we will have reduced our aggregate liquidation amount of outstanding trust preferred securities by approximately $13.0 million and enhanced our shareholders' equity by approximately $16.3 million. However, if we raise $150.0 million in proceeds from the sale of the cash offer preferred securities and we accept $86.25 million in aggregate liquidation amount of existing preferred securities for exchange in the exchange offer, our aggregate liquidation amount of outstanding trust preferred securities would increase by $101.7 million to $389.2 million and our shareholders' equity would be enhanced by approximately $28.1 million. EXPIRATION DATE The expiration date for the exchange offer is 5:00 p.m., New York City Time, on January 4, 2002, unless we extend the exchange offer. We may extend this expiration date for any reason. The last date and time on which tenders will be accepted, whether at 5:00 p.m., New York City Time, on January 4, 2002 or at 5:00 p.m., New York City Time, on any later date to which the exchange offer may be extended, is referred to as the expiration date. EXTENSIONS; AMENDMENTS We expressly reserve the right, in our discretion, for any reason to: - delay the acceptance of existing preferred securities for exchange, - extend the time period during which the exchange offer is open, by giving oral or written notice of an extension to the holders of existing preferred securities in the manner described below. During any extension, all existing preferred securities previously tendered and not withdrawn will remain subject to the exchange offer, and - amend the terms of the exchange offer other than the condition that the registration statement becomes effective under the Securities Act. 75 If we consider an amendment to the exchange offer to be material, or if we waive a material condition of the exchange offer, we will promptly disclose the amendment in a prospectus supplement, and if required by law, we will extend the exchange offer for a period of 5 to 10 business days. We will give oral or written notice of any extension, amendment, non-acceptance or termination to the holders of the existing preferred securities as promptly as practicable. In the case of any extension, we will issue a press release or other public announcement no later than 9:00 a.m., New York City Time, on the next business day after the previously scheduled expiration date. PROCEDURES FOR TENDERING EXISTING PREFERRED SECURITIES Your tender to us of existing preferred securities and our acceptance of your tender will constitute a binding agreement between you and us upon the terms and subject to the conditions set forth in this prospectus and in the accompanying letter of transmittal. TENDER OF EXISTING PREFERRED SECURITIES HELD THROUGH A CUSTODIAN. If you are a beneficial holder of the existing preferred securities that are held of record by a custodian bank, depository institution, broker, dealer, trust company or other nominee, you must instruct the custodian to tender the existing preferred securities on your behalf. Your custodian will provide you with their instruction letter which you must use to give these instructions. Any beneficial owner of existing preferred securities held of record by The Depository Trust Company, also referred to as the DTC, or its nominee, through authority granted by DTC may direct the DTC participant, through which the beneficial owner's existing preferred securities are held in DTC, to tender on the beneficial owner's behalf. TENDER OF EXISTING PREFERRED SECURITIES HELD THROUGH DTC. To effectively tender existing preferred securities that are held through DTC, DTC participants should transmit their acceptance through the Automated Tender Offer Program, or ATOP, for which the transaction will be eligible, and DTC will then edit and verify the acceptance and send an agent's message to the exchange agent for its acceptance. Delivery of tendered existing preferred securities must be made to the exchange agent pursuant to the book-entry delivery procedures set forth below or the tendering DTC participant must comply with the guaranteed delivery procedures set forth below. No letters of transmittal will be required to tender existing preferred securities through ATOP. In addition, the exchange agent must receive: - a completed and signed letter of transmittal or an electronic confirmation pursuant to DTC's ATOP system indicating the liquidation amount of existing preferred securities to be tendered and any other documents, if any, required by the letter of transmittal, and - prior to the expiration date, a confirmation of book-entry transfer of such existing preferred securities into the exchange agent's account at DTC, in accordance with the procedure for book-entry transfer described below, or - the holder must comply with the guaranteed delivery procedures described below. Your existing preferred securities must be tendered by book-entry transfer. The exchange agent will establish an account with respect to the existing preferred securities at DTC for purposes of the exchange offer within two business days after the commencement of the exchange offer. Any financial institution that is a participant in DTC must make book-entry delivery of existing preferred securities by having DTC transfer such existing preferred securities into the exchange agent's account at DTC in accordance with DTC's procedures for transfer. Although your existing preferred securities will be tendered through the DTC facility, the letter of transmittal, or facsimile, or an electronic confirmation pursuant to DTC's ATOP system, with any required signature guarantees and any other required documents, if any, must be transmitted to and received or confirmed by the exchange agent at its address set forth in the section titled "The Exchange Offer--Exchange Agent," beginning on page 75 of this prospectus, prior to 5:00 p.m., New York City Time, on the expiration date. You or your broker 76 must ensure that the exchange agent receives an agent's message from DTC confirming the book-entry transfer of your existing preferred securities. An agent's message is a message transmitted by DTC and received by the exchange agent that forms a part of the book-entry confirmation that states that DTC has received an express acknowledgment from the DTC participant tendering the shares that such participant agrees to be bound by the terms of the letter of transmittal. Delivery of documents to DTC in accordance with its procedures does not constitute delivery to the exchange agent. If you are an institution that is a participant in DTC's book-entry transfer facility, you should follow the same procedures that are applicable to persons holding existing preferred securities through a financial institution. Do not send letters of transmittal or other exchange offer documents to us, Banc of America Securities LLC, or D.F. King & Co., Inc., the information agent. It is your responsibility that all necessary materials get to the exchange agent before the expiration date. If the exchange agent does not receive all of the required materials before the expiration date, your existing preferred securities will not be validly tendered. Any existing preferred securities not accepted for exchange for any reason will be returned without expense to the tendering holder as promptly as practicable after the expiration or termination of the exchange offer. We will have accepted the validity of tendered existing preferred securities if and when we give oral or written notice to The Bank of New York, the exchange agent. The exchange agent will act as the new trust's agent for purposes of receiving the exchange preferred securities from us. If we do not accept any tendered existing preferred securities for exchange because of an invalid tender or the occurrence of any other event, The Bank of New York will return those existing preferred securities to you, without expense, promptly after the expiration date via book-entry transfer through DTC. OUR INTERPRETATIONS ARE BINDING We will determine, in our sole discretion, all questions as to the validity, form, eligibility and acceptance of existing preferred securities tendered for exchange. Our determination will be final and binding. We reserve the absolute right to reject any and all tenders of any particular existing preferred securities not properly tendered or to not accept any particular existing preferred security which acceptance might, in our judgment or our counsel's judgment, be unlawful. We also reserve the absolute right to waive any defects or irregularities or conditions of the exchange offer as to any particular existing preferred securities either before or after the expiration date, including the right to waive the ineligibility of any holder who seeks to tender existing preferred securities in the exchange offer. All conditions will be waived or satisfied prior to the expiration date and we will either issue exchange preferred securities in return for tendered existing preferred securities or return the tendered existing preferred securities, promptly after the termination or withdrawal of the exchange offer. Our interpretation of the terms and conditions of the exchange offer as to any particular existing preferred security either before or after the expiration date, including the letter of transmittal and the instructions to such letter of transmittal, will be final and binding on all parties. Unless waived, any defects or irregularities in connection with tenders of existing preferred securities for exchange must be cured within such reasonable period of time as we shall determine. Neither we, the exchange agent nor any other person shall be under any duty to give notification of any defect or irregularity with respect to any tender of existing preferred securities for exchange, nor shall any of them incur any liability for failure to give such notification. 77 ACCEPTANCE OF EXISTING PREFERRED SECURITIES FOR EXCHANGE; DELIVERY OF EXCHANGE PREFERRED SECURITIES Once all of the conditions to the exchange offer are satisfied or waived, we will accept, promptly after the expiration date, up to $86.25 million in aggregate liquidation amount of existing preferred securities properly tendered, and will issue the exchange preferred securities promptly after acceptance of the existing preferred securities. If existing preferred securities in an aggregate liquidation amount of more than $86.25 million are validly tendered, they will only be accepted for exchange on a pro rata basis, in an aggregate liquidation amount per holder equal to: - a fraction, the numerator of which is the aggregate liquidation amount of existing preferred securities validly tendered for exchange by such holder and the denominator of which is the aggregate liquidation amount of all existing preferred securities validly tendered by all holders, multiplied by - $86.25 million. The discussion under the section titled "The Exchange Offer--Conditions for Completion of the Exchange Offer," beginning on page 80 of this prospectus, provides further information regarding the conditions to the exchange offer. For purposes of the exchange offer, we shall be deemed to have accepted properly tendered existing preferred securities for exchange when, as and if we have given oral or written notice to the exchange agent, with written confirmation of any oral notice to be given promptly after giving such notice. For each $50 liquidation amount of existing preferred securities accepted for exchange, the holder of such existing preferred security will receive an exchange security having a liquidation amount of $22. The exchange preferred securities will bear interest from the issue date. Existing preferred securities accepted for exchange will cease to accrue interest from and after the date of consummation of the exchange offer. Holders of existing preferred securities whose existing preferred securities are accepted for exchange will not receive any payment in respect of accrued interest on those existing preferred securities. In all cases, issuance of exchange preferred securities for existing preferred securities that are accepted for exchange in the offer will be made only after timely receipt by the exchange agent of: - a timely book-entry confirmation of such existing preferred securities into the exchange agent's account at the book-entry transfer facility, - a properly completed and duly executed letter of transmittal or an electronic confirmation of the submitting holder's acceptance through DTC's ATOP system, and - all other required documents, if any. If we do not accept any tendered existing preferred securities for any reason set forth in the terms and conditions of the exchange offer, or if existing preferred securities are submitted for a greater liquidation amount than the holder desires to exchange, the unaccepted or non-exchanged existing preferred securities tendered by book-entry transfer into the exchange agent's account at the book-entry transfer facility will be returned in accordance with the book-entry procedures described above, and the existing preferred securities that are not exchange preferred securities will be credited to an account maintained with DTC, as promptly as practicable after the expiration or termination of the exchange offer. Any validly tendered existing preferred securities acquired in the exchange offer will be retired and will not be reissuable. 78 GUARANTEED DELIVERY PROCEDURES If you desire to tender your existing preferred securities and you cannot complete the procedures for book-entry transfer set forth above on a timely basis, you may still tender your existing preferred securities if: - your tender is made through an eligible institution, - prior to the expiration date, the exchange agent received from the eligible institution a properly completed and duly executed letter of transmittal, or a facsimile of such letter of transmittal or an electronic confirmation pursuant to DTC's ATOP system, and notice of guaranteed delivery, substantially in the form provided by us, by facsimile transmission, mail or hand delivery, that: - sets forth the name and address of the holder of existing preferred securities and the amount of existing preferred securities tendered, - states that the tender is being made thereby, and - guarantees that within three New York Stock Exchange trading days after the expiration date a book-entry confirmation and any other documents required by the letter of transmittal, if any, will be deposited by the eligible institution with the exchange agent; and - book-entry confirmation and all other documents, if any, required by the letter of transmittal are received by the exchange agent within three New York Stock Exchange trading days after the expiration date. WITHDRAWAL RIGHTS You may withdraw your tender of existing preferred securities at any time prior to 5:00 p.m., New York City Time, on the expiration date. You may also withdraw a tender of your existing preferred securities after the expiration of 40 business days from the commencement date of the exchange offer if your tender has not yet been accepted for exchange. For a withdrawal to be effective, the exchange agent must receive a written notice of withdrawal at the address or, in the case of eligible institutions, at the facsimile number, set forth under the section titled "The Exchange Offer--Exchange Agent," beginning on page 83 of this prospectus, prior to 5:00 p.m., New York City Time, on the expiration date. Any notice of withdrawal must: - specify the name of the person who tendered the existing preferred securities to be withdrawn; - specify the existing preferred securities to be withdrawn, if not all of the existing preferred securities tendered by the holder; - contain a statement that you are withdrawing your election to have your existing preferred securities exchanged; - be signed by the holder in the same manner as the original signature on the letter of transmittal by which the existing preferred securities were tendered, including any required signature guarantees; and - specify, on the notice of withdrawal, the name and number of the account at DTC to be credited with the withdrawn existing preferred securities and otherwise comply with the procedures of such facility, if you tendered your existing preferred securities in accordance with the procedure for book-entry transfer described above. Any existing preferred securities that have been tendered for exchange, but which are not exchanged for any reason, will be credited to an account maintained with the book-entry transfer facility for the existing preferred securities, as soon as practicable after withdrawal, rejection of tender or termination of the exchange offer. Properly withdrawn existing preferred securities may be 79 retendered by following the procedures described under "Procedures for Tendering Existing Preferred Securities" above at any time on or prior to 5:00 p.m., New York City Time, on the expiration date. CONDITIONS FOR COMPLETION OF THE EXCHANGE OFFER We will not accept existing preferred securities for exchange and may terminate or not complete the exchange offer if: - the registration statement and any post-effective amendment to the registration statement covering the exchange preferred securities is not effective under the Securities Act; - an aggregate liquidation amount of a minimum of $50.0 million of existing preferred securities is not tendered into the exchange offer without being withdrawn; and - we do not receive cash proceeds from the sale of cash offer preferred securities in our cash offer in an amount equal to at least 30% of the aggregate liquidation amount of existing preferred securities tendered and accepted for exchange in the exchange offer. We may not accept existing preferred securities for exchange and may terminate or not complete the exchange offer if: - any action, proceeding or litigation seeking to enjoin, make illegal or delay completion of the exchange offer or otherwise relating in any manner to the exchange offer is instituted or threatened; - any order, stay, judgment or decree is issued by any court, government, governmental authority or other regulatory or administrative authority and is in effect, or any statute, rule, regulation, governmental order or injunction shall have been proposed, enacted, enforced or deemed applicable to the exchange offer, any of which would or might restrain, prohibit or delay completion of the exchange offer or impair the contemplated benefits of the exchange offer to us; - any of the following occurs and the adverse effect of such occurrence shall, in our reasonable judgment, be continuing: - any general suspension of trading in, or limitation on prices for, securities on any national securities exchange or in the over-the-counter market in the United States; - any extraordinary or material adverse change in U.S. financial markets generally, including, without limitation, a decline of at least twenty percent in either the Dow Jones Average of Industrial stocks or the Standard & Poor's 500 Index from December 5, 2001; - a declaration of a banking moratorium or any suspension of payments in respect of banks in the United States; - any limitation, whether or not mandatory, by any governmental entity on, or any other event that would reasonably be expected to materially adversely affect, the extension of credit by banks or other lending institutions; - a commencement of a war or other national or international calamity directly or indirectly involving the United States, which would reasonably be expected to affect materially and adversely, or to delay materially, the completion of the exchange offer; or - if any of the situations described above existed at the time of commencement of the exchange offer and that situation deteriorates materially after commencement of the exchange offer; - any tender or exchange offer, other than this exchange offer by us, with respect to some or all of our outstanding common stock or any merger, acquisition or other business combination proposal involving us shall have been proposed, announced or made by any person or entity; 80 - any event or events occur that have resulted or may result, in our judgment, in an actual or threatened change in the business condition, income, operations, stock ownership or prospects of us and our subsidiaries, taken as a whole; - as the term "group" is used in Section 13(d)(3) of the Securities Exchange Act, - any person, entity or group acquires more than 5% of our outstanding shares of common stock, other than a person, entity or group that had publicly disclosed such ownership with the Securities and Exchange Commission, or SEC, prior to December 5, 2001, - any such person, entity or group that had publicly disclosed such ownership prior to such date shall acquire additional common stock constituting more than 2% of our outstanding shares, or - any new group shall have been formed that beneficially owns more than five percent of our outstanding shares of common stock, that in our judgment in any such case, and regardless of the circumstances, makes it inadvisable to proceed with the exchange offer or with such acceptance for exchange of existing preferred securities. If any of the above events occur, we may: - terminate the exchange offer and as promptly as practicable return all tendered existing preferred securities to tendering security holders; - extend the exchange offer and, subject to the withdrawal rights described in "The Exchange Offer--Withdrawal Rights" on page 79, retain all tendered existing preferred securities until the extended exchange offer expires; - amend the terms of the exchange offer, which may result in an extension of the period of time for which the exchange offer is kept open; or - waive the unsatisfied condition and, subject to any requirement to extend the period of time during which the exchange offer is open, complete the exchange offer. LEGAL LIMITATION The above conditions are for our sole benefit. We may assert these conditions with respect to all or any portion of the exchange offer regardless of the circumstances giving rise to them. We may waive, in our discretion, any condition, in whole or in part, at any time prior to the expiration date of the exchange offer. Our failure at any time to exercise our rights under any of the above conditions does not represent a waiver of these rights. Each right is an ongoing right that may be asserted at any time prior to the expiration date of the exchange offer. Any determination by us concerning the conditions described above will be final and binding upon all parties. If a stop order issued by the SEC is threatened or in effect with respect to the registration statement of which this document is a part, or with respect to the qualification of the new indenture under the Trust Indenture Act of 1939, we will not: - accept for exchange any existing preferred securities tendered, or - issue any exchange preferred securities in exchange for any existing preferred securities. FEES AND EXPENSES Banc of America Securities LLC is acting as the dealer manager in connection with the exchange offer. Banc of America Securities LLC will receive a fee in the manner described below for its services as dealer manager, in addition to being reimbursed for its reasonable out-of-pocket expenses, including attorneys' fees, incurred in connection with the exchange offer. The fees will be payable if and when the exchange offer is completed. 81 Banc of America Securities LLC will receive a fee in the amount of 1.25% of the aggregate liquidation amount of existing preferred securities tendered for exchange, which will amount to approximately $1.08 million, assuming an aggregate of $86.25 million in liquidation amount of existing preferred securities is tendered. We have agreed to indemnify Banc of America Securities LLC against specified liabilities relating to or arising out of the offer, including civil liabilities under the federal securities laws, and to contribute to payments that Banc of America Securities LLC may be required to make in respect thereof. However, in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. Banc of America Securities LLC may, from time to time, hold existing preferred securities, exchange preferred securities, cash offer preferred securities and our common stock in its proprietary accounts, and to the extent it owns existing preferred securities in these accounts at the time of the exchange offer, Banc of America Securities LLC may tender these existing preferred securities. We have retained D.F. King & Co., Inc. to act as the information agent and The Bank of New York to act as the exchange agent in connection with the exchange offer. The information agent may contact holders of existing preferred securities by mail, telephone, facsimile transmission and personal interviews and may request brokers, dealers and other nominee stockholders to forward materials relating to the exchange offer to beneficial owners. The information agent and the exchange agent each will receive reasonable compensation for their respective services, will be reimbursed for reasonable out-of-pocket expenses and will be indemnified against liabilities in connection with their services, including liabilities under the federal securities laws. Neither the information agent nor the exchange agent has been retained to make solicitations or recommendations. The fees they receive will not be based on the liquidation amount of existing preferred securities tendered under the exchange offer. We will not pay any fees or commissions to any broker or dealer or any other person, other than Banc of America Securities LLC, for soliciting tenders of existing preferred securities under the exchange offer. Brokers, dealers, commercial banks and trust companies will, upon request, be reimbursed by us for reasonable and necessary costs and expenses incurred by them in forwarding materials to their customers. The cash expenses to be incurred in connection with the exchange offer will be paid by us. We estimate these expenses in the aggregate to be approximately $2.175 million. 82 EXCHANGE AGENT The Bank of New York has been appointed as the exchange agent for the exchange offer. All executed letters of transmittal should be directed to the exchange agent at the address set forth below. Questions, requests for assistance, requests for additional copies of this prospectus or of the letter of transmittal and requests for notices of guaranteed delivery should be directed to the exchange agent addressed as follows: The Bank of New York, Exchange Agent By Hand or Mail: The Bank of New York 15 Broad Street, 16th Floor New York, New York 10286 Attention: Ms. Carolle Montriul Reorganization Unit By Facsimile Transmission (for Eligible Institutions only): (212) 235-2261 Attention: Ms. Carolle Montriul For Information or Confirmation by Telephone call: (212) 235-2354 If you deliver the letter of transmittal to an address other than as set forth above or transmit instructions via facsimile other than as set forth above, then such delivery or transmission does not constitute a valid delivery of the letter of transmittal. CONSEQUENCES OF EXCHANGING OR FAILING TO EXCHANGE EXISTING PREFERRED SECURITIES If you tender your existing preferred securities for exchange you will not be obligated to pay any related transfer taxes. If you do not exchange your existing preferred securities in the exchange offer, our obligation to make payments that are distributed to you as holders of the existing preferred securities will be subordinated to our obligation to make payments that are distributed to holders of the exchange preferred securities. Further, the liquidity of the trading market for existing preferred securities not tendered for exchange, or tendered for exchange but not accepted, could be adversely affected to the extent that existing preferred securities are tendered and accepted for exchange in the exchange offer. In addition, we have the right to elect to defer distributions on our existing preferred securities, including deferrals for up to twenty consecutive quarters. On October 30, 2001, we elected to defer the distributions on our existing preferred securities due to be made on November 15, 2001. If our business environment and our operating results do not significantly improve from those we have recently experienced, we would likely find it necessary to defer distributions on our existing preferred securities through at least August 15, 2002. Even though our board of directors has discontinued the payment of dividends on our common stock for the foreseeable future, these deferrals of distributions on our existing preferred securities would further prevent us from declaring or paying any dividends during the period of such deferrals. 83 CASH OFFER FOR CASH OFFER PREFERRED SECURITIES In addition to the exchange offer, we will offer cash offer preferred securities for cash, which we refer to as the "cash offer." The cash offer preferred securities are substantially identical to the exchange preferred securities as described in the section titled "Description of Preferred Securities--Description of the New Preferred Securities," beginning on page 88 of this prospectus, except that the cash offer preferred securities will have a different conversion price and a different liquidation amount, and will be issued by a different trust. Banc of America Securities LLC is the placement agent for the cash offer and is undertaking its duties on a best efforts basis only. Banc of America Securities LLC is not making a commitment to purchase cash offer preferred securities from us and has not assured us that these securities will be placed successfully in the cash offer. Offers to purchase cash offer preferred securities must be in denominations of liquidation amount of $50 and any integral multiple of $50. The exchange offer is subject to the receipt of proceeds in the cash offer of cash offer preferred securities in an amount equal to at least 30% of the aggregate liquidation amount of the existing preferred securities tendered and accepted for exchange in the exchange offer. The cash offer is not subject to a minimum number of cash offer preferred securities being sold in the cash offer or the consummation of the exchange offer. The cash offer is expected to close prior to the expiration date of the exchange offer. You may indicate your interest in purchasing cash offer preferred securities by contacting Banc of America Securities LLC directly at (212) 583-8206 or (888) 292-0070 (toll-free). 84 FLEETWOOD CAPITAL TRUST Fleetwood Capital Trust, which is referred to as the existing trust, is a statutory business trust formed under the Delaware Business Trust Act. It was created under a trust agreement between us and the existing trust's initial trustees, and the filing of a certificate of trust with the Secretary of State of Delaware. The trust agreement was amended and restated in its entirety on February 10, 1998. The existing trust was organized for the sole purpose of issuing the existing preferred securities and the existing common securities and investing the proceeds of that issuance in an equivalent amount of convertible subordinated debentures, referred to as the existing debentures. We issued the existing debentures under an indenture dated February 10, 1998, referred to as the existing indenture, between us and The Bank of New York, as indenture trustee. We guaranteed the payment of distributions and other payments on the existing preferred securities to the extent that we had made corresponding interest and other payments, as and to the extent set forth in a guarantee agreement dated February 10, 1998. The trust agreement, the existing indenture and the existing preferred securities guarantee are qualified under the Trust Indenture Act of 1939. The capital stock of the existing trust consists of the existing preferred securities and the existing common securities, collectively referred to as the "existing trust securities." We have acquired existing common securities in an amount equal to approximately 3% of the total capital of the existing trust and we directly own all of the issued and outstanding existing common securities. The rights of the holders of the existing trust securities are as set forth in the trust agreement, the Delaware Business Trust Act and the Trust Indenture Act. The trust agreement does not permit the existing trust to borrow money or make any investment other than in the existing debentures. In the existing indenture we have agreed to pay for: - all debts, obligations, costs and expenses of the existing trust, other than with respect to the existing trust securities, and - all costs and expenses of the existing trust, including: - the fees and expenses of the trustees, and - any income taxes, duties and other governmental charges, and all costs and expenses related to these charges, to which the existing trust may become subject, except for United States withholding taxes. The existing trust has five trustees. Three of them, referred to as administrative trustees, are employees or officers of or are otherwise affiliated with us. The Bank of New York (Delaware) is the existing trust's Delaware Trustee and The Bank of New York is the property trustee. Also, for purposes of compliance with the Trust Indenture Act, The Bank of New York acts as guarantee trustee under the guarantee and as debenture trustee under the existing indenture. We, as the holder of all of the existing common securities, have the right to appoint, remove or replace any of the trustees and to increase or decrease the number of trustees. The existing trust has a term of approximately 30 years but may terminate earlier as provided in the trust agreement. The property trustee has legal title to and holds the existing debentures for the benefit of the existing trust and the holders of the existing trust securities, and the property trustee has the power to exercise all rights, powers and privileges under the existing indenture as the holder of the existing debentures. In addition, the property trustee maintains exclusive control of a segregated non-interest bearing "property account" to hold all payments made in respect of the existing debentures for the benefit of the holders of the existing trust securities. The property trustee will, as soon as practicable, make distributions and payments on liquidation, redemption and otherwise to the holders of the existing trust securities out of funds from the property account. The guarantee trustee holds the guarantee for the benefit of the holders of the existing preferred securities. The rights of the holders of the existing preferred securities, including economic rights, rights to information and voting rights, are set forth in the trust agreement, the Delaware Business Trust Act 85 and the Trust Indenture Act. For financial reporting purposes, the existing trust is treated as a subsidiary of ours and, accordingly, the financial statements of the existing trust are included in our consolidated financial statements as a minority interest. Under GAAP, the existing preferred securities are shown in our balance sheet entitled "Company-obligated mandatorily redeemable convertible preferred securities of Fleetwood Capital Trust holding solely 6% Convertible Subordinated Debentures of the Company" and appropriate disclosures about the existing preferred securities, the existing preferred securities guarantee and the existing debentures are included in the notes to our consolidated financial statements. For financial reporting purposes, we record distributions payable on the existing preferred securities as a minority interest in the consolidated statements of operations. FLEETWOOD CAPITAL TRUST II AND FLEETWOOD CAPITAL TRUST III Each of Fleetwood Capital Trust II and Fleetwood Capital Trust III is a statutory business trust formed under the Delaware Business Trust Act. We refer to these trusts as the new trusts. Each new trust was created under a trust agreement between us and the new trust's initial trustees, and the filing of a certificate of trust with the Secretary of State of Delaware. Each new trust agreement will be amended and restated in its entirety as of the date the new trust initially issues the applicable new preferred securities and the description of the new trusts and the new trust agreements included in this prospectus contemplates this amendment and restatement. Each new trust agreement will be qualified as an indenture under the Trust Indenture Act. The capital stock of each new trust consists of the applicable new preferred securities and the applicable new common securities, collectively referred to as the "new trust securities." We will acquire new common securities in an amount equal to approximately 3% of the total capital of each new trust and will initially own, directly or indirectly, all of the issued and outstanding new common securities of each new trust. Each new trust's assets consist principally of the applicable series of new debentures and payments under the new debentures are its sole revenue. Each new trust exists for the purposes of: - issuing exchange preferred securities in exchange for the existing preferred securities, in the case of Trust II, or issuing cash offer preferred securities for cash, in the case of Trust III; - issuing and selling its new common securities to us; - purchasing and owning the applicable series of new debentures; and - engaging in any other lawful business or activity that may be engaged in by a business trust formed under the Delaware Business Trust Act. The rights of the holders of the new trust securities are as set forth in the new trust agreements for Trust II and Trust III, as applicable, the Delaware Business Trust Act and the Trust Indenture Act. The new trust agreements do not permit the new trusts to borrow money or make any investment other than in the applicable series of new debentures. We have agreed to pay for: - all debts and obligations of each new trust, other than with respect to the new trust securities; and - all costs and expenses of each new trust, including: - the fees and expenses of each new trust's new trustees, and - any income taxes, duties and other governmental charges, and all costs and expenses related to these charges, to which each new trust may become subject, which shall not include United States withholding taxes but shall include liabilities imposed on the trust as withholding agent. Each new trust will initially have five trustees. In each case, three of them, referred to as administrative trustees, are employees or officers of or otherwise affiliated with us. Initially, The Bank of New York (Delaware) will serve as each new trust's Delaware trustee and The Bank of New York 86 will serve as each new trust's property trustee. Also, for the purpose of compliance with the Trust Indenture Act, The Bank of New York will act as guarantee trustee under the exchange preferred securities guarantee, under the cash offer preferred securities guarantee and as indenture trustee under the exchange indenture and the cash offer indenture, collectively referred to as the "new indentures." We, as the direct or indirect holder of all the new common securities, will have the right to appoint, remove or replace any of the new trustees and to increase or decrease the number of new trustees in each new trust. Each new trust has a term of approximately 17 years but may terminate earlier as provided in the applicable new trust agreement. In each case, the property trustee will hold the applicable series of new debentures for the benefit of the holders of the new trust securities, and will have the power to exercise all rights, powers and privileges under the new indentures as the holder of the applicable series of new debentures. In addition, the property trustee will maintain exclusive control of a segregated non-interest bearing "property account" to hold all payments made in respect of the applicable series of new debentures for the benefit of the holders of the new trust securities. The property trustee will, as soon as practicable, make distributions and payments on liquidation, redemption and otherwise to the holders of the new trust securities out of funds from the property account. The guarantee trustee of Trust II will hold the exchange preferred securities guarantee for the benefit of the holders of the exchange preferred securities. The guarantee trustee of Trust III will hold the cash offer preferred securities guarantee for the benefit of the holders of the cash offer preferred securities. We will pay all fees and expenses related to the new trusts and the offering of the new trust securities. For financial reporting purposes, the new trusts are treated as our subsidiaries and, accordingly, the financial statements of each new trust are included in our consolidated financial statements as a minority interest. Under GAAP, the exchange preferred securities will be shown in our balance sheet entitled "Company-obligated mandatorily redeemable convertible preferred securities of Fleetwood Capital Trust II holding solely 9.5% Convertible Trust II Subordinated Debentures of the Company" and the cash offer preferred securities will be shown on our balance sheet entittled "Company-obligated mandatorily redeemable convertible preferred securities of Fleetwood Capital Trust III holding solely 9.5% Convertible Trust III Subordinated Debentures of the Company." Appropriate disclosures about the exchange preferred securities, the exchange preferred securities guarantee, the exchange debentures, the cash offer preferred securities, the cash offer preferred securities guarantee and the cash offer debentures will be included in the notes to our consolidated financial statements. For financial reporting purposes, we will record distributions payable on the new preferred securities as a minority interest in the consolidated statements of operations. 87 DESCRIPTION OF PREFERRED SECURITIES DESCRIPTION OF THE NEW PREFERRED SECURITIES Each new trust will issue the applicable new preferred securities pursuant to the terms of the applicable new trust agreement. Each new trust agreement incorporates by reference the terms of the Delaware Business Trust Act and the Trust Indenture Act. The Bank of New York, as property trustee, will act as indenture trustee in each new trust agreement for the new preferred securities for purposes of compliance with the Trust Indenture Act. The terms of the new preferred securities include those stated in the applicable new trust agreement and those made part of the new trust agreement by the Trust Indenture Act and the Delaware Business Trust Act. The new trust agreements are substantially identical except for certain provisions which are described below. We have summarized the material provisions of the new trust agreements and the new preferred securities below. This summary may omit a term or provision that you would consider important. For a complete description of the exchange preferred securities and the cash offer preferred securities, we encourage you to read the new trust agreements. We have filed a form of each new trust agreement with the SEC. GENERAL The new trust agreements authorize the applicable new trust to issue the applicable new preferred securities and new common securities. The applicable new preferred securities represent preferred undivided beneficial interests in the assets of the applicable new trust. The applicable new common securities represent common undivided beneficial interests in the assets of the applicable new trust. We will own all the new common securities in each new trust. The new preferred securities and the new common securities issued by the applicable new trust will rank equal with each other, and will generally have equivalent terms. Payments on the applicable new common securities will be made on a pro rata basis with the applicable new preferred securities. However, the terms of the new preferred securities and the new common securities will differ in the following two respects: - if an event of default under either new trust agreement occurs and is continuing, the rights of the holders of the new common securities of the applicable new trust to payments in respect of periodic distributions and payments upon liquidation, redemption and otherwise will be subordinated to the rights of the holders of the new preferred securities of that new trust; and - the holders of the new common securities will have the exclusive right to appoint, remove or replace the trustees and to increase or decrease the number of trustees. The new trusts may not: - issue any securities other than the applicable new preferred securities and the applicable new common securities, - incur any indebtedness, or - make any investment other than in the applicable series of new debentures. In each new trust, the property trustee will own and hold the applicable series of new debentures as trust assets for the benefit of the holders of the applicable new preferred securities and the new common securities. We will guarantee the payment of distributions and payments on redemption or liquidation of the applicable new trust on a subordinated basis, but only if, and to the extent, we have made corresponding payments to the new trust on the applicable series of new debentures. Please read the section titled "Description of Preferred Securities--Description of the New Preferred Securities Guarantees," beginning on page 112 of this prospectus, for a more detailed discussion. DISTRIBUTIONS If you purchase exchange preferred securities, you will be entitled to receive distributions at an annual rate of 9.5% of the stated liquidation amount of $22 per exchange preferred security. If you purchase cash offer preferred securities, you will be entitled to receive distributions at an annual rate of 88 9.5% of the stated liquidation amount of $50 per cash offer preferred security. Distributions will be paid in cash or, at our election, prior to February 15, 2004, in our common stock. Holders of the applicable new preferred securities will be given notice of our election to pay interest in common stock instead of cash no later than the relevant record date, which will be the 15th day before the relevant distribution payment date. If distributions are paid in common stock, the shares of common stock will be valued at 90% of the average of the closing prices for the five trading days immediately preceding the second trading day prior to the distribution payment date. Our ability to pay any distributions in shares of our common stock is contingent on satisfaction of certain conditions. See the section titled "Description of Preferred Securities--Description of the New Preferred Securities--Conditions to Distributions in Common Stock," beginning on page 91 of this prospectus. In this prospectus, when we refer to "distributions," we are also referring to additional redemption distributions, if any. To the extent permitted by applicable law, distributions in arrears for more than one quarter will accumulate additional distributions at the annual rate of 9.5%, compounded quarterly. We use the term "distributions" in this prospectus to mean the quarterly distributions and any additional distributions, unless we state otherwise. The amount of distributions payable for any period will be computed on the basis of a 360-day year of twelve 30-day months and, for any period of less than a full calendar month, the actual number of days elapsed in that month. Distributions are cumulative, will accumulate from the date of original issuance of the applicable new preferred securities, and will be payable quarterly in arrears on February 15, May 15, August 15 and November 15 of each year, commencing February 15, 2002 unless we defer interest payments on the applicable series of new debentures, as described below. Distributions will be made by the property trustee for each new trust, except as otherwise described below. OPTION TO DEFER DISTRIBUTIONS At any time after February 15, 2004, we may, on one or more occasions, defer interest payments on the applicable series of new debentures for up to 20 consecutive quarterly periods, unless an event of default with respect to those debentures has occurred and is continuing. Interest payments will not be due and payable on the applicable series of new debentures during a deferral period. If we defer interest payments on a series of new debentures, the applicable new trust will defer distribution payments on the applicable new preferred securities and the applicable new common securities. Distributions will continue to accumulate on the applicable new preferred securities and the applicable new common securities at an annual rate of 9.5% of the applicable liquidation amount during a deferral period. Also, additional distributions will accumulate on any deferred distributions at the annual rate of 9.5%, compounded quarterly. Additional distributions will only accumulate, however, to the extent permitted by applicable law, but not at a rate greater than the rate at which interest is then accruing on the applicable series of new debentures. We will be subject to restrictions during a deferral period on our ability to pay dividends on, take other payments with respect to, or redeem, purchase or acquire our capital stock or to make payments on, or repay, repurchase or redeem other debt securities that are equal with or junior to the new debentures. For a more detailed discussion please read the section titled "Description of Preferred Securities--Description of the New Debentures--Option to Extend Interest Payment Period," beginning on page 120 of this prospectus. Because we have the right to defer payments of interest on the new debentures after February 15, 2004, the new debentures will be considered to have been issued with original issue discount. The holders of new debentures will thus be required to accrue their pro rata share of original issue discount, even in the absence of cash distributions with respect to the new debentures. For a more detailed discussion, see the section titled "United States Federal Income Tax Considerations--Tax Treatment of the Ownership and Disposition of New Preferred Securities and Common Stock--Original Issue Discount and Stated Interest on the New Preferred Securities," beginning on page 137 of this prospectus. 89 We may extend a deferral period prior to the period's termination. We may not, however, extend a deferral period, including all previous and further extensions of the period, beyond 20 consecutive quarterly interest periods or beyond the maturity date of the applicable series of new debentures. A deferral period may not end on a date other than a distribution payment date. Once a deferral period ends and we make all payments due on the applicable series of new debentures, we can commence a new deferral period. We may also prepay all or any portion of the interest accrued during a deferral period at any time. Consequently, there could be multiple deferral periods of varying lengths throughout the term of a series of new debentures. Please read the section titled "Description of Preferred Securities--Description of the New Debentures--Option to Extend Interest Payment Period," beginning on page 120 of this prospectus, for a more detailed discussion. If distributions are deferred, the property trustee will pay the deferred distributions and, to the extent permitted by law, interest accrued on the distributions, to holders of record of the applicable new preferred securities as they appear on the books and records of the applicable new trust at the close of business on the record date for the distribution payment date upon which the deferral period terminates. PAYMENT OF DISTRIBUTIONS Each new trust must pay distributions on the applicable new preferred securities on the distribution payment dates to the extent that the property trustee has cash or common stock on hand to make distributions. The only funds or common stock the property trustee will have to distribute to the holders of the applicable new preferred securities will be from payments received from us on the applicable series of new debentures. If we do not make interest payments on the new debentures, the property trustee will not have funds or common stock available to make distributions to you on the applicable new preferred securities. If and to the extent that we make interest payments on a series of new debentures, the property trustee is obligated to make distributions on the applicable new preferred securities and new common securities on a pro rata basis. We will guarantee the payment of distributions and other payments on the new preferred securities on a subordinated basis, but only if, and to the extent that, we have made corresponding payments to the applicable new trust on the applicable series of new debentures and, as a result, the property trustee has funds available to make distributions on the applicable new preferred securities. Please read the section titled "Description of Preferred Securities--Description of the New Preferred Securities Guarantees," beginning on page 112 of this prospectus, for a more detailed discussion. METHOD OF PAYMENT OF DISTRIBUTIONS Each new trust will pay distributions to the holders of the applicable new preferred securities as they appear on the books and records of the applicable new trust on the relevant record date, which will be the 15th day before the relevant distribution payment date. If the applicable new trust fails to punctually pay distributions on the applicable new preferred securities on any distribution payment date as a result of our failure to make the corresponding interest payments on the applicable series of new debentures, then the distributions will no longer be payable to the registered holders of the applicable new preferred securities on the relevant record date for those new preferred securities. The new trust will instead make any such defaulted distribution payments to the registered holders of the applicable new preferred securities on a special record date established by the administrative trustees. The special record date will correspond to the special record date or other specified date determined in accordance with the applicable new indenture. Distributions will not be payable on any distribution payment date falling within a deferral period unless we have elected to make a full or partial payment of interest accrued on the applicable series of new debentures on that distribution payment date. The property trustee will pay distributions on the applicable new preferred securities out of payments received on the applicable series of new debentures and held for the benefit of the holders of 90 the applicable new preferred securities and the applicable new common securities. Subject to any applicable laws and regulations and the provisions of the applicable new trust agreement, each such payment with respect to the applicable new preferred securities will be made as described under the section titled "Description of Preferred Securities--Description of the New Preferred Securities--Book-Entry Only Issuance; The Depository Trust Company," beginning on page 108 of this prospectus. The property trustee will pay any cash distributions on new preferred securities that are not in book-entry form at the option of the applicable new trust by check mailed to the address of the holder entitled to it as it appears on the register or by wire transfer to an account in the United States appropriately designated by the holder entitled to it, prior to the record date for the corresponding distribution payment date. Any distribution payments in common stock on new preferred securities that are not in book-entry form will be made by mailing a stock certificate to the address of the holder entitled to those payments as it appears on the register. A holder of new preferred securities having an aggregate liquidation amount of $1,000,000 or more may instruct the applicable new trust to make the payment by wire transfer. If a distribution payment date is not a business day, the applicable new trust will make distributions on: - the next succeeding day that is a business day without any interest or other payment in respect of any such delay, or - the immediately preceding business day, if the next succeeding day that is a business day is in the next succeeding calendar year, in each case with the same force and effect as if the distribution was made on the date it was originally payable. A "business day" is a day other than: - a Saturday or Sunday; - a day on which banking institutions in New York City are authorized or required by law or executive order to remain closed; or - a day on which the property trustee's corporate trust office or the debenture trustee's corporate trust office is closed for business. The payment dates and record dates for the new preferred securities will be the same as the payment dates and record dates for the applicable series of new debentures. CONDITIONS TO DISTRIBUTIONS IN COMMON STOCK We may elect to pay distributions by delivery of shares of our common stock if and only if the following conditions shall have been satisfied: - the shares of our common stock deliverable in payment of the distribution shall have a fair market value that is not less than the value of the distribution as of the applicable interest payment date (with respect to interest distributions) or conversion date (with respect to additional redemption distributions). In making this determination, the fair market value of shares of our common stock shall be determined by us and shall be equal to 90% of the average of the Closing Prices (as defined in the section titled "Description of Preferred Securities--Description of the New Preferred Securities--Fundamental Change," beginning on page 95 of this prospectus) for each of the five consecutive trading days immediately preceding the second trading day prior to the applicable interest payment date or conversion date; - distributions shall be paid only in cash in the event any shares of our common stock to be issued for the payment of the distribution (1) require registration under any federal securities law before such shares may be freely transferable without being subject to any transfer restrictions under the Securities Act upon issuance and if such registration is not completed or does not become effective prior to the applicable interest payment date (with respect to interest distributions) or conversion date (with respect to additional redemption distributions), and/or 91 (2) require registration with or approval of any governmental authority under any state law or other federal law before such shares may be validly issued or delivered upon issuance and if such registration is not completed or does not become effective or such approval is not obtained prior to the applicable interest payment date (with respect to interest distributions) or conversion date (with respect to additional redemption distributions); - our common stock is, or shall have been, approved for quotation on the Nasdaq National Market or listing on the New York Stock Exchange, in either case, prior to the applicable interest payment date (with respect to interest distributions) or conversion date (with respect to additional redemption distributions); and - all shares of our common stock which may be issued with respect to the payment of the distribution will be issued out of our authorized but unissued common stock and, will upon issuance, be duly and validly issued and fully paid and non-assessable and free of any preemptive rights. If all of the conditions set forth in the bullets immediately above are not satisfied in accordance with the terms thereof, we will be required to pay distributions in cash only. CONVERSION RIGHTS Holders of new preferred securities may convert them into shares of our common stock at any time prior to: - the close of business on February 15, 2013, or - in the case of new preferred securities called for redemption, the close of business on the business day prior to the redemption date. The exchange preferred securities will be convertible into common stock at an initial conversion price that is equal to the higher of: - the equivalent of a 15% premium over the daily volume-weighted average of the closing prices of our common stock for each of the five trading days immediately preceding the fourth trading day prior to the exchange offer expiration date, or - $8.63 per share, subject to adjustment. The cash offer preferred securities will be convertible into common stock at an initial conversion price that is equal to the higher of: - the equivalent of a 15% premium over the closing price of our common stock on the day that we price the cash offer, or - $8.63 per share, subject to adjustment. The daily volume-weighted average of the closing prices shall mean the daily volume-weighted average of the closing prices of our common stock, based on a trading day from 9:00 a.m. to 4:00 p.m., on the New York Stock Exchange as reported by Bloomberg Financial. We will notify holders of the applicable conversion price after such determination. The initial conversion price is subject to adjustment as described under the sections titled "Description of Preferred Securities--Description of the New Preferred Securities--Conversion Price Adjustments--General" and "--Fundamental Change" set forth below. Accumulated distributions will not be paid on new preferred securities that are converted into shares of our common stock, except that holders of new preferred securities at the close of business on a record date for a distribution will receive the distribution on the distribution payment date even though the new preferred securities are converted after the record date but on or prior to the 92 distribution payment date. We will make no payment or allowance for distributions on the shares of our common stock issued upon conversion of new preferred securities, except to the extent that the shares are held of record on the record date for any such distributions. Each conversion will be deemed to have been effected immediately prior to the close of business on the date on which the related conversion notice was received by the conversion agent. If you wish to exercise your conversion right, you must surrender your new preferred securities together with an irrevocable conversion notice to the applicable property trustee, as conversion agent. The conversion agent will, as soon as practicable, exchange your new preferred securities for an equivalent principal amount of new debentures and promptly convert those new debentures into shares of our common stock. You may obtain copies of the required form of the conversion notice from the conversion agent. If a book-entry system for the applicable new preferred securities is in effect, however, procedures for converting the new preferred securities into shares of our common stock will differ. Please read the section titled "Description of Preferred Securities--Description of the New Preferred Securities--Book-Entry Only Issuance; The Depository Trust Company," beginning on page 108 of this prospectus. We will not issue any fractional shares of our common stock as a result of any conversion of new preferred securities. We will pay cash in lieu of a fractional share of common stock. The cash payment will be based on the current market price of our common stock on the date the new preferred securities are surrendered for conversion or, if not a trading day, on the next trading day. CONVERSION PRICE ADJUSTMENTS The conversion price of the exchange preferred securities and the conversion price of the cash offer preferred securities are subject to adjustment for some events, including: (1) the issuance of shares of our common stock as a dividend or distribution on our common stock; (2) any subdivision, combination or reclassification of shares of our common stock; (3) the issuance to all holders of shares of our common stock of certain rights or warrants to subscribe for or purchase shares of our common stock at less than the then current market price; (4) the distribution to all holders of our common stock of shares of our capital stock, other than our common stock, evidences of our indebtedness and/or other assets, including preferred securities, but excluding: - any rights or warrants referred to in (3) above, - any rights or warrants to acquire any capital stock of any entity other than us or any of our subsidiaries, - any dividends or distributions in connection with our liquidation, dissolution or winding-up, - any dividends or distributions payable solely in cash that may from time to time be fixed by our board of directors, and - any dividends or distributions referred to in (1) or (2) above; (5) dividends or distributions to all holders of our common stock consisting solely of cash, excluding: - any cash dividends to the extent that the aggregate cash dividends per share of our common stock in any consecutive 12-month period do not exceed the greater of (1) the amount per share of our common stock of the cash dividends paid on our common stock in the immediately preceding 12-month period, to the extent that such dividends for the immediately preceding 12-month period did not require an adjustment of the conversion price pursuant to this bullet (as adjusted to reflect subdivisions or combinations of our 93 common stock), and (2) 15% of the average of the current market price of our common stock for 10 consecutive trading days prior to the date of declaration of such dividend, and - any dividend or distribution in connection with our liquidation, dissolution or winding-up or a redemption of any rights issued under a rights agreement; provided that no adjustment will be made pursuant to this bullet if that distribution would otherwise constitute a fundamental change and be reflected in a resulting adjustment described below; and (6) payment to holders of our common stock in respect of a tender or exchange offer by us or any of our subsidiaries for shares of our common stock in excess of 110% of the current market price of our common stock as of the trading day next succeeding the last date tenders or exchanges may be made in the tender or exchange offer. If any adjustment is required by (5) above as a result of a distribution that is a dividend described in the first bullet of (5) above, that adjustment would be based upon the amount by which the distribution exceeds the amount of the dividend permitted to be excluded pursuant to the first bullet of (5). If an adjustment is required to be made as described in (5) above as a result of a distribution that is not such a dividend, such adjustment would be based upon the full amount of such distribution. Any adjustment required by (6) above would be calculated based upon the amount by which the aggregate consideration paid for our common stock acquired in the tender or exchange offer exceeds 110% of the value of such shares based on the first reported sale price of our common stock on the trading day next succeeding the last date tenders or exchanges may be made in the tender or exchange offer. In the case of certain dividends or distributions, instead of adjusting the conversion price, we may provide that upon the conversion of the applicable new preferred securities, the holder converting such new preferred securities will receive, in addition to the shares of our common stock (if any) to which the holder is entitled, the cash, preferred securities or other property that the holder would have received if it had, immediately prior to the record date for such dividend or distribution, converted its new preferred securities into shares of our common stock. If any action would require adjustments of the conversion price under more than one of the provisions described above, only one adjustment will be made and that adjustment will be the amount of adjustment that has the highest absolute value to the holders of the exchange preferred securities. No adjustment in the conversion price will be required unless the adjustment would require a change of at least 1% in the conversion price then in effect. However, any adjustment that would otherwise be required to be made will be carried forward and taken into account in any subsequent adjustment. There will be no adjustment of the conversion price in the event of the issuance of rights pursuant to a stockholder rights plan or similar plan or the repurchase or redemption of those rights or the issuance of common stock, options or other preferred securities under any officer, director or employee benefit plan in existence on the date of this prospectus. From time to time we may, to the extent permitted by law, reduce the conversion price by any amount for any period of at least 20 business days, in which case we will give at least 15 days' notice of the reduction. In addition, we have the option to make reductions in the conversion price, in addition to those described above, as we deem advisable to avoid or diminish any income tax to holders of our common stock resulting from any dividend or distribution of stock (or rights to acquire stock) or from any event treated as such for tax purposes. Please read the section titled "United States Federal Income Tax Considerations--Tax Treatment of the Ownership and Disposition of New Preferred Securities and Common Stock--Adjustment of Conversion Price," beginning on page 139 of this prospectus, for a more detailed discussion. Except as stated above, the conversion price will not be adjusted for the issuance of our common stock or any preferred securities convertible into or exchangeable for our common stock or carrying the right to purchase our common stock or any preferred securities convertible into or exchangeable for our common stock. 94 FUNDAMENTAL CHANGE If we are a party to any transaction or series of transactions that results in shares of our common stock being converted into the right to receive, or being exchanged for, securities, cash or other property of a third party, the conversion price of either the exchange offer preferred securities or the cash offer preferred securities, as applicable, may be adjusted as described below. In the event we are a party to: - any recapitalization or reclassification of our common stock, other than a change in par value or a change from par value to no par value or from no par value to par value, or as a result of a subdivision or combination of our common stock; - any consolidation or merger with or into another corporation, other than a merger that does not result in a reclassification, conversion, exchange or cancellation of our outstanding common stock; - any sale or transfer of all or substantially all of our assets; or - any compulsory share exchange; in each case, as a result of which shares of our common stock will be converted into the right to receive other securities, cash or other property, then we will ensure that appropriate provision is made so that the holder of each new preferred security then outstanding will have the right thereafter to convert the applicable new preferred securities only into: - in the case of any transaction other than a transaction involving a Common Stock Fundamental Change (as defined below), the kind and amount of the securities, cash or other property that would have been receivable upon the consummation of the transaction by a holder of the number of shares of our common stock issuable upon conversion of such new preferred securities immediately prior to the transaction, or - in the case of a transaction involving a Common Stock Fundamental Change, shares of common stock of the kind received by holders of our common stock as a result of the Common Stock Fundamental Change, but in each case after giving effect to any adjustment discussed below relating to a Fundamental Change if the transaction constitutes a Fundamental Change. If any Fundamental Change occurs, the applicable conversion price in effect will be adjusted immediately after the Fundamental Change as follows: - in the case of a Non-Stock Fundamental Change (as defined below), the conversion price per share of our common stock immediately following such Non-Stock Fundamental Change will be the lower of: - the conversion price in effect immediately prior to such Non-Stock Fundamental Change, but after giving effect to any other adjustments effected pursuant to the preceding paragraphs; and - the result obtained by multiplying the greater of the Applicable Price (as defined below) or the then applicable Reference Market Price (as defined below) by a fraction of which the numerator will be 100.0 and the denominator will be an amount based on the date such Non-Stock Fundamental Change occurs. For the period beginning on the date of issuance of the applicable new preferred securities and ending February 14, 2003, the denominator will be 109.50, and the denominator will decrease by 1.583 during each successive 12-month period; provided, that the denominator shall in no event be less than 100.0; and - in the case of a Common Stock Fundamental Change, the conversion price per share of our common stock immediately following the Common Stock Fundamental Change will be the conversion price in effect immediately prior to the Common Stock Fundamental Change, but after giving effect to any other adjustments effected pursuant to the preceding paragraphs, multiplied by a fraction, the numerator of which is the Purchaser Stock Price (as defined below) and the denominator of which is the Applicable Price. 95 However, in the event of a Common Stock Fundamental Change in which: - 100% of the value of the consideration received by a holder of our common stock is shares of common stock of the successor, acquirer or other third party (and cash, if any, paid with respect to any fractional interests in the shares of common stock resulting from the Common Stock Fundamental Change), and - all of our common stock will have been exchanged for, converted into, or acquired for, shares of common stock (and cash, if any, with respect to fractional interests) of the successor, acquirer or other third party, the conversion price per share of our common stock immediately following the Common Stock Fundamental Change will be the conversion price in effect immediately prior to the Common Stock Fundamental Change divided by the number of shares of common stock of the successor, acquirer, or other third party received by a holder of one share of our common stock as a result of the Common Stock Fundamental Change. Depending upon whether a Fundamental Change is a Non-Stock Fundamental Change or a Common Stock Fundamental Change, a holder may receive significantly different consideration upon conversion of the new preferred securities. For example, in the event of a Non-Stock Fundamental Change, the holder has the right to convert new preferred securities into the kind and amount of the securities, cash or other property as is determined by the number of shares of our common stock that would have been receivable upon conversion of new preferred securities at the conversion price as adjusted in the manner described above. However, in the event of a Common Stock Fundamental Change in which less than 100% of the value of the consideration received by a holder of our common stock is common stock of the successor, acquirer or other third party, a holder of new preferred securities who converts the new preferred securities following the Common Stock Fundamental Change will receive consideration in the form of that common stock only. A holder who converted the new preferred securities prior to the Common Stock Fundamental Change would have received consideration in the form of that common stock as well as any other securities or assets (which may include cash) received by holders of our common stock in the transaction. The conversion price adjustments described above are designed, in some circumstances, to reduce the conversion price that would be applicable in Fundamental Change transactions where all or substantially all of our common stock is converted into securities, cash, or property and not more than 50% of the value received by the holders of our common stock consists of stock listed or admitted for listing subject to notice of issuance on a national securities exchange or quoted on the NASDAQ National Market of the NASDAQ Stock Market, Inc. (a Non-Stock Fundamental Change, as defined below). This reduction would result in an increase in the amount of the securities, cash or property into which each new preferred security is convertible over that which would have been obtained in the absence of those conversion price adjustments. However, the maximum amount of the increase will be limited in cases where the relevant Applicable Price is lower than the applicable Reference Market Price. In a Common Stock Fundamental Change transaction, the adjustments described above are designed to provide in effect that: - where our common stock is converted partly into that listed or NASDAQ National Market-traded common stock and partly into other securities, cash, or property, each new preferred security will be convertible solely into a number of shares of that common stock determined so that the initial value of such shares (measured as described in the definition of Purchaser Stock Price below) equals the value of the shares of our common stock into which that new preferred security was convertible immediately before the transaction (measured as described above), and - where our common stock is converted solely into that listed or NASDAQ National Market-traded common stock, each new preferred security will be convertible into the same number of 96 shares of the common stock receivable by a holder of the number of shares of our common stock into which that new preferred security was convertible immediately before that transaction. In determining the amount and type of consideration received by a holder of our common stock in the event of a Fundamental Change, we will disregard consideration received by a holder of our common stock pursuant to a statutory right of appraisal. The term "Applicable Price" means: - in the case of a Non-Stock Fundamental Change in which the holders of our common stock receive only cash, the amount of cash receivable by a holder of one share of our common stock; and - in the case of any other Fundamental Change, the average of the Closing Prices (as defined below) for one share of our common stock during the 10 trading days immediately prior to the record date for the determination of the holders of our common stock entitled to receive cash, securities, property or other assets in connection with that Fundamental Change or, if there is no record date, prior to the date on which the holders of our common stock will have the right to receive such cash, securities, property or other assets. The term "Closing Price" means on any day, the last reported sales price on that day or, if no sales take place on that day, the average of the reported closing bid and asked prices on that day, in each case on the New York Stock Exchange, or, if the common stock is not listed or admitted to trading on the New York Stock Exchange, on the principal national securities exchange or quotation system on which the common stock is listed or admitted to trading or, if not quoted or listed or admitted to trading on any national securities exchange or quotation system, the average of the closing bid and asked prices of the common stock in the over-the-counter market on that day as reported by the National Quotation Bureau Incorporated, or a similarly generally accepted reporting service or, if not available in that manner, as furnished by any New York Stock Exchange member firm, selected by us under the new indenture for that purpose. The term "Common Stock Fundamental Change" means any Fundamental Change in which more than 50% of the value, as determined in good faith by our board of directors, of the consideration received by holders of our common stock consists of shares of common stock that for each of the 10 consecutive trading days immediately prior to the Fundamental Change has been admitted for listing or admitted for listing subject to notice of issuance on a national securities exchange or quoted on the NASDAQ National Market; provided, however, that a Fundamental Change will not be a Common Stock Fundamental Change unless either: - we continue to exist after the occurrence of that Fundamental Change and the outstanding new preferred securities continue to exist as outstanding new preferred securities, or - the outstanding new preferred securities continue to exist as new preferred securities and are convertible into shares of common stock of our successor. The term "Fundamental Change" means the occurrence of any transaction or event or series of transactions or events, pursuant to which all or substantially all of our common stock is exchanged for, converted into, acquired for or constitutes solely the right to receive cash, securities, property or other assets (whether by means of an exchange offer, liquidation, tender offer, consolidation, merger, combination, reclassification, recapitalization or otherwise). However, in the case of any of these series of transactions or events, for purposes of adjustment of the conversion price, the Fundamental Change will be deemed to have occurred when substantially all of our common stock has been exchanged for, converted into, or acquired for or constitutes solely the right to receive cash, securities, property or other assets but the adjustment will be based upon the consideration that the holders of our common stock received in the transaction or event as a result of which more than 50% of the our common stock shall have been exchanged for, converted into or acquired for, or shall constitute solely the right to receive cash, securities, properties or other assets. 97 The term "Non-Stock Fundamental Change" means any Fundamental Change other than a Common Stock Fundamental Change. The term "Purchaser Stock Price" means, with respect to any Common Stock Fundamental Change, the average of the Closing Prices for one share of common stock received by holders of our common stock in the Common Stock Fundamental Change during the 10 trading days immediately prior to the record date for the determination of the holders of our common stock entitled to receive such shares of common stock or, if there is no record date, prior to the date upon which the holders of our common stock will have the right to receive the shares of common stock. The term "Reference Market Price" with respect to an adjustment of the conversion price of the exchange preferred securities will initially mean two-thirds of the last reported sale price per share of our common stock on the New York Stock Exchange on the fourth trading day prior to the exchange offer expiration date. In the event of any adjustment to the conversion price other than as a result of a Fundamental Change, the Reference Market Price will also be adjusted so that the ratio of the Reference Market Price to the conversion price after giving effect to any adjustment will always be the same as the ratio of the initial Reference Market Price to the initial conversion price of the exchange preferred securities. The term "Reference Market Price" with respect to an adjustment of the conversion price of the cash offer preferred securities, will initially mean two-thirds of the last reported sale price per share of our common stock on the New York Stock Exchange on the day we price the cash offer. In the event of any adjustment to the conversion price other than as a result of a Fundamental Change, the Reference Market Price will also be adjusted so that the ratio of the Reference Market Price to the conversion price after giving effect to any adjustment will always be the same as the ratio of the initial Reference Market Price to the initial conversion price of the cash offer preferred securities. Conversions of the new preferred securities may be effected by delivering them to the office or agency maintained by us for that purpose. Conversion price adjustments may, in specified circumstances, result in constructive distributions that could be taxable as dividends under the Internal Revenue Code of 1986, as amended, to holders of the applicable new preferred securities or, in the case of a failure to make those adjustments, to holders of our common stock issued upon conversion of the applicable new preferred securities. Please read the section titled "United States Federal Income Tax Considerations--Tax Treatment of the Ownership and Disposition of New Preferred Securities and Common Stock--Adjustment of Conversion Price," beginning on page 139 of this prospectus, for a more detailed discussion. We could, in the future, enter into certain transactions, including certain recapitalizations or distributions, that would not constitute a Fundamental Change, but that would increase the amount of our consolidated indebtedness or reduce the amount of our shareholders' equity. OPTIONAL REDEMPTION Each series of new debentures matures on February 15, 2013. In addition, we have the option to redeem each series of new debentures: - in whole or in part, at any time on or after February 15, 2004; - in whole but not in part, prior to February 15, 2004, if our common stock price has exceeded 200% of the conversion price for at least 20 trading days during a 30-day trading period ending five trading days prior to the notice of redemption; and - in whole but not in part, at any time, under specified circumstances, upon the occurrence of a tax event as described below. Upon the repayment of the applicable series of new debentures, whether at stated maturity or upon redemption, the proceeds from the repayment will simultaneously be applied to redeem applicable new preferred securities and applicable new common securities having an aggregate 98 liquidation amount equal to the aggregate principal amount of the new debentures repaid or redeemed at the applicable redemption price, plus accumulated and unpaid distributions. However, except in the case of redemption upon maturity of the new debentures and redemption prior to February 15, 2004, holders of the applicable new preferred securities and new common securities will be given not less than 30 nor more than 60 days' notice of the redemption. The applicable redemption price per $22 in liquidation amount of exchange preferred securities will be equal to the redemption price per $22 in liquidation amount of exchange debentures and the applicable redemption price per $50 in liquidation amount of cash offer preferred securities will be equal to the redemption price per $50 in liquidation amount of cash offer debentures. Please read the section titled "Description of Preferred Securities--Description of the New Debentures--Optional Redemption," beginning on page 119 of this prospectus, for a more detailed discussion. If fewer than all of the outstanding exchange preferred securities or cash offer preferred securities, as the case may be, and related new common securities are to be redeemed, such applicable securities will be redeemed on a pro rata basis and, in that case, the redemption of applicable new preferred securities will be made as described under "Description of Preferred Securities--Description of the New Preferred Securities--Book-Entry Only Issuance; The Depository Trust Company," beginning on page 108 of this prospectus. However, if an event of default under the applicable new trust agreement has occurred and is continuing, the applicable new preferred securities will have a priority over the new common securities with respect to the payment of the redemption price. In the case of redemption prior to February 15, 2004, notice must be delivered not more than 30 and not less than 15 days prior to the date of redemption. Prior to the redemption date, holders of the applicable new preferred securities will have the right to convert their new preferred securities into shares of our common stock at the conversion price in effect at the time. If we deliver a notice of redemption to exercise our right to redeem the applicable series of new debentures at any time prior to February 15, 2004 and a holder of those debentures converts its new debentures into shares of our common stock during the period following a notice of redemption and prior to the redemption date, then we will pay such holder an additional redemption distribution. In the case of such a redemption prior to February 15, 2004, we will pay additional interest in cash or our common stock, at our election, in an amount equal to the total distributions payable on the applicable new preferred securities through February 15, 2004, less any interest actually paid prior to the date of conversion. Our ability to pay any additional redemption distribution in shares of our common stock is contingent on satisfaction of certain conditions. See the section titled "Description of Preferred Securities--Description of the New Preferred Securities--Conditions to Distributions in Common Stock," beginning on page 91 of this prospectus. In this prospectus, when we refer to "distributions," we are also referring to additional redemption distributions, if any. SPECIAL EVENT DISTRIBUTION; TAX EVENT REDEMPTION A "tax event" occurs if the administrative trustees receive an opinion of nationally recognized independent tax counsel experienced in these matters to the effect that as a result of: - any amendment to, or change, including any announced prospective change, in the laws or any regulations thereunder, of the United States or any political subdivision or taxing authority of the United States or any political subdivision, - any amendment to, or change in, an interpretation or application of any such laws or regulations by any legislative body, court or governmental or regulatory agency or authority, including the enactment of any legislation and the publication of any judicial decision or regulatory determination, or 99 - any official interpretation or pronouncement by any legislative body, court or governmental or regulatory agency or authority that provides for a position with respect to such laws or regulations that differs from its previously generally accepted position, in each case on or after the date of this prospectus, there is more than an insubstantial risk that: - the applicable new trust is, or will be within 90 days of the date of the opinion, subject to federal income tax with respect to interest accrued or received on the applicable series of new debentures, or - the applicable new trust is, or will be within 90 days of the date of the opinion, subject to more than a de minimis amount of other taxes, duties or other governmental charges. An "investment company event" occurs if the administrative trustees receive an opinion of a nationally recognized independent counsel experienced in these matters to the effect that, as a result of the occurrence of a change in law or regulation or a change in interpretation or application of law or regulation by any legislative body, court, governmental agency or regulatory authority, there is more than an insubstantial risk that the applicable new trust is or will be considered an investment company that is required to be registered under the Investment Company Act of 1940. If a tax event or investment company event has occurred and is continuing, at any time, the applicable new trust may, with our prior written consent, unless the applicable series of new debentures are redeemed in the limited circumstances described below, be dissolved. As a result, after satisfaction of liabilities to creditors of the new trust, if any, new debentures of the applicable series with: - an aggregate principal amount equal to the aggregate stated liquidation amount of, - an interest rate identical to the annual rate of distributions on, and - accrued and unpaid interest equal to accumulated and unpaid distributions on, the applicable new preferred securities and applicable new common securities outstanding at that time would be distributed to the holders of the applicable new preferred securities and applicable new common securities in liquidation of their interests in the applicable new trust, on a pro rata basis, within 90 days following the occurrence of the tax event or investment company event. However, in the case of a tax event, as a condition of the dissolution and distribution, the administrative trustees will have received an opinion of nationally recognized independent tax counsel experienced in these matters, which opinion may rely on published revenue rulings of the Internal Revenue Service, to the effect that the holders of the applicable new preferred securities will not recognize any gain or loss for federal income tax purposes as a result of the dissolution and distribution of the applicable series of new debentures. If, at the time, the applicable new trust has the opportunity to eliminate, within the 90-day period, the tax event or investment company event by taking some ministerial action, such as filing a form or making an election, or pursuing some other similar reasonable measure that in our sole judgment would not adversely affect the applicable new trust, the holders of the applicable new preferred securities, or us, and will involve no material cost, the applicable new trust will pursue that measure instead of dissolving itself. Further, if, in the case of a tax event, the administrative trustees have been informed by nationally recognized independent tax counsel experienced in these matters that they cannot deliver an opinion to the effect that the holders of the applicable new preferred securities will not recognize any gain or loss for federal income tax purposes as a result of the dissolution and distribution of such new debentures, we will have the right, upon not less than 30 nor more than 60 days' notice, to redeem the new debentures. In that event, we can redeem the applicable series of new debentures, in whole but not in part, for cash at a redemption price equal to 100% of their principal amount plus accrued and unpaid interest to the redemption date, within 90 days following the occurrence of the tax event. Promptly following the redemption, the applicable new preferred securities will be redeemed by the applicable new trust at a redemption price equal to the liquidation amount of the applicable new preferred securities plus accumulated and unpaid distributions. However, if, at the time, either we or the 100 applicable new trust has the opportunity to eliminate, within the 90-day period, the tax event by taking some ministerial action, such as filing a form or making an election, or pursuing some other similar reasonable measure that in our sole judgment would not adversely affect the applicable new trust, the holders of the applicable new preferred securities, or us, and will involve no material costs, we or the applicable new trust will pursue that measure instead of redeeming the applicable series of new debentures and the applicable new preferred securities. If we decline to consent to a dissolution of the applicable new trust and distribution of the applicable series of new debentures or decline to redeem the applicable series of new debentures as described above, the applicable preferred securities will remain outstanding and we may be obligated to pay additional interest described under the section titled "Description of Preferred Securities--Description of the New Debentures--Additional Interest," beginning on page 122 of this prospectus. After the date fixed for any distribution of new debentures upon dissolution of the applicable new trust: - the applicable new preferred securities will no longer be deemed to be outstanding, - the depository or its nominee, as the record holder of the global certificates, will receive a registered global certificate or certificates representing the applicable series of new debentures to be delivered upon such distribution, and - any certificates representing new preferred securities not held by the depository or its nominee will be deemed to represent the applicable series of new debentures having an aggregate principal amount equal to the aggregate stated liquidation amount of the applicable new preferred securities, with an interest rate identical to the annual rate of distributions on, and accrued and unpaid interest equal to accumulated and unpaid distributions on, these new preferred securities, until the certificates are presented to us or our agent for transfer, exchange or reissuance. We cannot give you any assurance as to the market price for the new debentures that may be distributed in exchange for such preferred securities if a dissolution and liquidation of a new trust were to occur. Accordingly, the new debentures that you may subsequently receive on dissolution and liquidation of a new trust may trade at a discount to the price of the applicable new preferred securities exchanged. If the applicable series of new debentures is distributed to the holders of the applicable new preferred securities upon the dissolution of the applicable new trust, we will use our reasonable best efforts to list such new debentures on the New York Stock Exchange or on another national securities exchange or similar organization. PROCEDURES FOR REDEMPTION BY A NEW TRUST After February 15, 2004, a new trust may not redeem fewer than all of the outstanding applicable new preferred securities unless all accumulated and unpaid distributions have been or contemporaneously are paid on all of that trust's new preferred securities for all quarterly distribution periods terminating on or prior to the date of redemption. If the applicable new trust gives notice of redemption in respect of new preferred securities, which notice will be irrevocable, then on the redemption date, provided that we have paid to the property trustee a sufficient amount of cash in connection with the related redemption of the applicable series of new debentures, this new trust will irrevocably deposit with the depository funds sufficient to pay the applicable redemption price and irrevocable instructions and authority to pay the redemption price to the holders of the applicable new preferred securities. Please read the section titled "Description of Preferred Securities--Description of the New Preferred Securities--Book-Entry Only Issuance; The Depository Trust Company," beginning on page 108 of this prospectus. If notice of redemption shall have been given and funds deposited as required, then, on the date fixed for redemption, distributions will cease to accumulate and all rights of holders of the applicable 101 new preferred securities called for redemption will cease, except for the right of holders of the applicable new preferred securities to receive the redemption price and all accumulated and unpaid distributions. In the event of a redemption prior to February 15, 2004, holders that convert their new preferred securities after the applicable notice of redemption is given will receive distributions in an amount equal to the total distributions payable on their new preferred securities through February 15, 2004, less any distributions actually paid on those new preferred securities prior to the date of conversion. If the redemption date is not a business day, then payment of the redemption price payable on that date will be made on the next succeeding day that is a business day, and without any interest or other payment in respect of any such delay. If that business day falls in the next calendar year, however, the payment will be made on the immediately preceding business day. In the event that we or the applicable new trust, pursuant to the applicable new preferred securities guarantee described in the section titled "Description of Preferred Securities--Description of the New Preferred Securities Guarantee," improperly withhold or refuse to pay the applicable redemption price, then distributions on the applicable new preferred securities will continue to accumulate at the then applicable rate, from the original redemption date to the date the redemption price is actually paid. Under these circumstances, the actual payment date will be considered the date fixed for redemption for purposes of calculating the redemption price. In the event that fewer than all of the outstanding applicable new preferred securities and applicable new common securities are to be redeemed, then the new preferred securities and new common securities will be redeemed on a pro rata basis and, in that case, the redemption of the applicable new preferred securities will be made as described in the section titled "Description of Preferred Securities--Description of the New Preferred Securities--Book-Entry Only Issuance; The Depository Trust Company," beginning on page 108 of this prospectus. In the event of any redemption in part, the applicable new trust will not: - issue, register the transfer of, or exchange, any certificated security during a period beginning at the opening of business 15 days before any applicable new securities are selected for redemption and ending at the close of business on the earliest date on which the relevant notice of redemption is deemed to have been given to all holders of those new preferred securities to be redeemed, or - register the transfer of, or exchange, any certificated preferred securities selected for redemption, in whole or in part, except for the unredeemed portion of any certificated preferred securities being redeemed in part. Subject to the provisions described above and applicable law, including United States federal securities laws, we or any of our subsidiaries may at any time, and from time to time, purchase outstanding new preferred securities by tender, in the open market or by private agreement. LIQUIDATION DISTRIBUTION UPON DISSOLUTION In the event of any voluntary or involuntary dissolution of a new trust, the then holders of the applicable new preferred securities will be entitled to receive out of the assets of that new trust, after satisfaction of liabilities to creditors, distributions in an amount equal to the aggregate of the stated liquidation amount of $22 per exchange preferred security or $50 per cash offer preferred security, as the case may be, plus accumulated and unpaid distributions to the date of payment unless, in connection with the liquidation, the applicable series of new debentures in an aggregate stated principal amount equal to the aggregate stated liquidation amount of, with an interest rate identical to, the annual rate of distributions on, and accrued and unpaid interest equal to accumulated and unpaid distributions on, the applicable new preferred securities, have been distributed on a pro rata basis to the holders of those new preferred securities and new common securities. 102 If, upon any dissolution, the liquidation distribution can be paid only in part because the applicable new trust has insufficient assets available to pay in full the aggregate liquidation distribution, then the amounts payable directly by the new trust on the applicable new preferred securities shall be paid on a pro rata basis. The holders of the applicable new common securities will be entitled to receive distributions upon any such dissolution pro rata with the holders of the new preferred securities, except that if an event of default under the applicable new trust agreement has occurred and is continuing, the applicable new preferred securities will have priority over the applicable new common securities. Each new trust will dissolve: - on February 15, 2018, the expiration of its term, - upon our bankruptcy or the bankruptcy of the holder of its new common securities, - upon the filing of a certificate of dissolution or its equivalent with respect to us or the holder of its new common securities, after obtaining the consent of the holders of at least a majority in liquidation amount of its new preferred securities and new common securities voting together as a single class, to the filing of a certificate of cancellation with respect to the new trust, or the revocation of our charter and the expiration of 90 days after the date of revocation without a reinstatement of the charter, - upon the occurrence of a tax event or investment company event except in the limited circumstance described in the section titled "Description of Preferred Securities--Description of the New Preferred Securities--Special Event Distribution; Tax Event Redemption," beginning on page 99 of this prospectus, - upon the entry of a decree of a judicial dissolution of us or the new trust, - upon the redemption of all of the its new preferred securities and new common securities, or - upon the conversion of all of its outstanding new preferred securities pursuant to the new trust agreement. EVENTS OF DEFAULT An event of default under the new indentures constitutes an event of default under the related new trust agreements. Pursuant to the new trust agreements, the holder of new common securities will be deemed to have waived any event of default with respect to the new common securities until all events of default with respect to the applicable new preferred securities have been cured, waived or otherwise eliminated. Until all events of default with respect to the applicable new preferred securities have been cured, waived, or otherwise eliminated, the property trustee will be deemed to be acting solely on behalf of the holders of the applicable new preferred securities and only the holders of the applicable new preferred securities will have the right to direct the property trustee with respect to specific matters under such new trust agreement, and therefore such new indenture. If the property trustee fails to enforce its rights under the applicable series of new debentures, holders of applicable new preferred securities, to the fullest extent permitted by law, may institute a legal proceeding against us to enforce the property trustee's rights under the exchange debentures. However, if an event of default has occurred and is continuing under the new trust agreement and the event is attributable to our failure to pay interest or principal on the applicable series of new debentures on the date the interest or principal is otherwise payable, or in the case of redemption, the redemption date, a holder of the applicable new preferred securities may institute a direct action for enforcement of payment to the holder directly of the principal of or interest on the applicable series of new debentures having an aggregate principal amount equal to the aggregate liquidation amount of the applicable new preferred securities of the holder on or after the respective due date specified in such new debentures. In connection with that direct action, we will remain obligated to pay the principal or interest on the applicable new debentures and will be subrogated to the rights of such holders of new 103 preferred securities under the new trust agreement to the extent of any payment made by us to such holder of new preferred securities in the direct action. The holders of the applicable series of new preferred securities will not be able to exercise directly any other remedy available to the holders of new debentures. The property trustee is required to notify holders of the applicable new preferred securities, within 90 days of an event of default under the applicable new trust agreement, of all defaults with respect to the applicable new preferred securities actually known to the property trustee. Except in the case of a default in the payment of principal or interest, or in the case of a redemption, the property trustee may withhold that notice if the board of directors, the executive committee, a trust committee of directors or the property trustee itself determines in good faith that the withholding of notice is in the interests of the holders of the applicable new preferred securities. Upon the occurrence of an event of default under the applicable new trust agreement, the property trustee as the sole holder of the applicable series of new debentures will have the right under the applicable new indenture to declare the principal of and interest on such new debentures to be immediately due and payable. We and each new trust are required to provide to each property trustee annually an officer's certificate as to our compliance with all conditions and covenants under the new trust agreement. VOTING RIGHTS Except as described below, under the Delaware Business Trust Act, the Trust Indenture Act and under the section titled "Description of Preferred Securities--Description of the New Preferred Securities Guarantee--Modification of the New Preferred Guarantee; Assignment," and as otherwise required by law and the applicable new trust agreement, the holders of the applicable new preferred securities will have no voting rights. In the event that we elect to defer payments of interest on any series of new debentures, as described in the section titled "Description of Preferred Securities--Description of the New Preferred Securities--Distributions," the holders of the applicable new preferred securities do not have the right to appoint a special representative or trustee to protect their interests. Subject to the requirement that the trustees of a new trust obtain a tax opinion under specific circumstances described below, the holders of a majority in aggregate liquidation amount of the applicable new preferred securities have the right to direct the time, method and place of conducting any proceeding for any remedy available to the property trustee, or the exercise of any trust or power conferred upon the property trustee under the applicable new trust agreement, as long as the holders giving such direction have given the property trustee indemnification or security acceptable to it. This includes the right to direct the property trustee, as holder of the applicable series of new debentures, to: - exercise the remedies available under the applicable new indenture, - waive any past event of default under the applicable new indenture and its consequences, to the extent they can be waived, - exercise any right to rescind or annul a declaration that the principal of the applicable series of new debentures shall be due and payable, or - consent to any amendments, modifications or termination of the applicable new indenture or series of new debentures requiring the consent of the holders of those debentures. However, if an event of default has occurred and is continuing under the applicable new indenture, the holders of 25% of the aggregate liquidation amount of the applicable new preferred securities then outstanding may direct the property trustee to declare the principal and interest of the applicable series of new debentures immediately due and payable. 104 Where a consent or action under the applicable new indenture would require the consent of: (1) holders of the applicable series of new debentures representing a specified percentage greater than a majority in principal amount of the applicable series of new debentures, or (2) each holder of new debentures affected by the consent, no such consent will be given by the property trustee without the prior consent of, in the case of (1) above, holders of the applicable new preferred securities representing at least that specified percentage of the aggregate liquidation amount of such new preferred securities, or, in the case of (2) above, each holder of new preferred securities affected by the consent. The property trustee will notify all holders of the applicable new preferred securities of any notice of default received from the applicable indenture trustee with respect to the applicable series of new debentures. The notice will state that the event of default under the applicable new indenture also constitutes an event of default under the applicable new trust agreement. Except with respect to directing the time, method and place of conducting a proceeding for a remedy, the property trustee will not take any of the actions described above unless it has obtained an opinion of nationally recognized tax counsel experienced in these matters to the effect that, following those actions, the new trust will be classified as a grantor trust for United States federal income tax purposes and each holder will be treated as owning an undivided beneficial interest in the applicable series of new debentures. In the event that the consent of the property trustee, as the holder of the applicable series of new debentures, is required under the applicable new indenture with respect to any amendment, modification or termination of such indenture, the property trustee will request the direction of the holders of the applicable new preferred securities and new common securities with respect to that amendment, modification or termination and will vote with respect to that amendment, modification or termination as directed by a majority in liquidation amount of the applicable new preferred securities and new common securities voting together as a single class. However, where a consent under the applicable new indenture would require the consent of holders of the applicable series of new debentures representing a specified percentage greater than a majority in principal amount of such series of new debentures, the property trustee may only give such consent at the direction of the holders representing such specified percentage in liquidation amount of the applicable new preferred securities and new common securities. The property trustee will be under no obligation to take any such action in accordance with the directions of the holders of the applicable new preferred securities and new common securities unless each of the new trustees has obtained an opinion of nationally recognized tax counsel experienced in those matters to the effect that for United States federal income tax purposes, the new trust will not be classified as other than a grantor trust. A waiver of an event of default under the applicable new indenture will constitute a waiver of the corresponding event of default under the applicable new trust agreement. Any required approval or direction of holders of the applicable new preferred securities may be given at a separate meeting of holders of such new preferred securities convened for that purpose, at a meeting of all of the holders of the applicable new preferred securities and new common securities, or pursuant to written consent. The administrative trustees will cause a notice of any meeting at which holders of the applicable new preferred securities are entitled to vote, or of any matter upon which action by written consent of those holders is to be taken, to be mailed to each holder of record of the applicable new preferred securities. Each notice will include a statement setting forth: - the date of the meeting or the date by which the action is to be taken, - a description of any resolution proposed for adoption at such meeting on which such holders are entitled to vote or of such matter upon which written consent is sought, and - instructions for the delivery of proxies or consents. 105 No vote or consent of the holders of new preferred securities will be required for the applicable new trust to redeem and cancel the applicable new preferred securities or distribute the applicable series of new debentures in accordance with the applicable new trust agreement. Notwithstanding that holders of new preferred securities are entitled to vote or consent under any of the circumstances described above, any of the new preferred securities that are owned at that time by us or by an affiliate of ours, will not be entitled to vote or consent and will, for purposes of such vote or consent, be treated as if they were not outstanding. The procedures by which holders of new preferred securities in book-entry form may exercise their voting rights are described in the section titled "Description of Preferred Securities--Description of the New Preferred Securities--Book-Entry Only Issuance; The Depository Trust Company," beginning on page 108 of this prospectus. Holders of new preferred securities will have no rights to increase or decrease the number of the new trustees, or to appoint or remove trustees, who may be appointed, removed or replaced solely by us as the indirect or direct holder of all of the new common securities of the applicable new trust. MODIFICATION OF THE NEW TRUST AGREEMENTS The administrative trustees (and under specific circumstances the property trustee or the Delaware trustee) may modify and amend the applicable new trust agreement, provided that if any proposed amendment provides for, or the administrative trustees otherwise propose to effect: - any action that would adversely affect the powers, preferences or special rights of the applicable new preferred securities or new common securities, whether by way of amendment to the applicable new trust agreement or otherwise, or - the dissolution, winding-up or termination of the applicable new trust other than pursuant to the terms of the applicable new trust agreement, then the holders of the applicable new preferred securities and new common securities voting together as a single class will be entitled to vote on the amendment or proposal and the amendment or proposal will not be effective except with the approval of at least two-thirds in liquidation amount of the new preferred securities and new common securities affected by it, voting together as a single class. If any amendment or proposal referred to in the first bullet above would adversely affect only the new preferred securities or the new common securities, then only the affected class will be entitled to vote on the amendment or proposal and the amendment or proposal will not be effective except with the approval of at least two-thirds in liquidation amount of the new preferred securities or the new common securities, as the case may be. Notwithstanding the foregoing, no amendment or modification may be made to the applicable new trust agreement if the amendment or modification would: - cause the new trust to be classified for United States federal income tax purposes as other than a grantor trust, - reduce or otherwise adversely affect the powers of the property trustee in contravention of the Trust Indenture Act, or - cause the new trust to be deemed an "investment company" which is required to be registered under the Investment Company Act. MERGERS, CONSOLIDATIONS OR AMALGAMATIONS The new trusts may not consolidate, amalgamate, merge with or into, or be replaced by, or convey, transfer or lease their respective properties and assets substantially as an entirety to, any corporation or 106 other body, except as described below or as otherwise provided in the applicable new trust agreement. Each new trust may, with the consent of a majority of the administrative trustees and without the consent of the holders of the applicable new preferred securities and new common securities, the property trustee or the Delaware trustee, consolidate, amalgamate, merge with or into, or be replaced by a trust organized as such under the laws of any state of the United States, provided that: - if the new trust is not the survivor, the successor entity either - expressly assumes all of the obligations of the new trust under the applicable new preferred securities and new common securities, or - substitutes for such new preferred securities other preferred securities having substantially the same terms as the applicable new preferred securities, so long as the successor preferred securities rank the same as the applicable new preferred securities rank with respect to distributions and payments upon liquidation, redemption and otherwise, - if the new trust is not the survivor, we expressly acknowledge or appoint a trustee of the successor entity possessing the same powers and duties as the property trustee as the holder of the applicable series of new debentures, - the applicable new preferred securities or any successor preferred securities are listed, or any successor preferred securities will be listed upon notification of issuance, on any national securities exchange or with another organization on which those new preferred securities are then listed or quoted, - the merger, consolidation, amalgamation or replacement does not cause the applicable new preferred securities, including any successor preferred securities, to be downgraded by any nationally recognized statistical rating organizations, - the merger, consolidation, amalgamation or replacement does not adversely affect the rights, preferences and privileges of the holders of the applicable new preferred securities and new common securities, including any successor preferred securities, in any material respect (other than with respect to any dilution of the holders' interest in the new entity, if any), - the successor entity has a purpose substantially identical to that of the new trust, - prior to the merger, consolidation, amalgamation or replacement, we have received an opinion of a nationally recognized independent counsel to the new trust experienced in these matters to the effect that: - the merger, consolidation, amalgamation or replacement does not adversely affect the rights, preferences and privileges of the holders of the applicable new preferred securities and the applicable new common securities, including any successor preferred securities, in any material respect (other than with respect to any dilution of the holders' interest in the new entity), - following the merger, consolidation, amalgamation or replacement, neither the new trust nor the successor entity, if any, will be required to register as an investment company under the Investment Company Act, - following the merger, consolidation, amalgamation or replacement, the new trust, or the successor entity, will be treated as a grantor trust for United States federal income tax purposes, and - if the new trust is not the survivor, we guarantee the obligations of the successor entity under the successor preferred securities at least to the extent provided by the new preferred securities guarantee. 107 Notwithstanding the general provisions described above, a new trust will not, except with the consent of holders of 100% in liquidation amount of the applicable new preferred securities and new common securities, consolidate, amalgamate, merge with or into, or be replaced by any other entity or permit any other entity to consolidate, amalgamate, merge with or into, or replace it, if the consolidation, amalgamation, merger or replacement would cause the new trust or the successor entity to be classified as other than a grantor trust for United States federal income tax purposes. BOOK-ENTRY ONLY ISSUANCE; THE DEPOSITORY TRUST COMPANY The new preferred securities will be issued in the form of registered preferred securities in global form. Each global security will be deposited with, or on behalf of, The Depository Trust Company, or DTC, and registered in the name of Cede & Co., as nominee of DTC. DTC is a limited-purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act. DTC holds securities that its direct participants deposit with DTC. DTC also facilitates the settlement among direct participants of securities transactions, such as transfers and pledges, in deposited securities through electronic computerized book-entry changes in direct participants' accounts, thereby eliminating the need for physical movement of securities certificates. Direct participants include securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations. DTC is owned by a number of its direct participants and by the New York Stock Exchange, Inc., the American Stock Exchange LLC, and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to indirect participants, such as securities brokers and dealers, banks and trust companies that clear transactions through or maintain a custodial relationship with a direct participant, either directly or indirectly. The rules applicable to DTC and its direct and indirect participants are on file with the SEC. Purchases of new preferred securities under the DTC system must be made by or through direct participants, which will receive a credit for the applicable new preferred securities on DTC's records. The ownership interest of each actual purchaser of each new preferred security, to which we refer in this prospectus as the beneficial owner, is in turn to be recorded on the direct and indirect participants' records. Beneficial owners will not receive written confirmation from DTC of their purchases, but are expected to receive written confirmations providing details of the transactions, as well as periodic statements of their holdings, from the direct or indirect participant through which the beneficial owner purchased new preferred securities. Transfers of ownership interests in the new preferred securities are to be accomplished by entries made on the books of direct and indirect participants acting on behalf of beneficial owners. Beneficial owners will not receive certificates representing their ownership interests in the applicable new preferred securities, except in the event that use of the book-entry system for such new preferred securities is discontinued or in certain other limited circumstances. So long as DTC, or its nominee, is the registered owner or holder of a global security, DTC or such nominee, as the case may be, will be considered the sole owner or holder of the new preferred securities represented thereby for all purposes under the applicable new trust agreement and the applicable new preferred securities. No beneficial owner of an interest in a global certificate will be able to transfer that interest except in accordance with DTC's applicable procedures, in addition to those provided for under the applicable new trust agreement. Transfers between participants in DTC will be effected in the ordinary way in accordance with DTC rules and will be settled in same-day funds. If a holder requires physical delivery of new preferred securities in fully registered, certificated form for any reason, including to sell new preferred securities to persons in states which require such delivery of the new preferred securities or to pledge the new 108 preferred securities, the holder must transfer its interest in the global security in accordance with the normal procedures of DTC and the procedures set forth in the applicable new trust agreement. To facilitate subsequent transfers, all new preferred securities deposited by direct participants with DTC are registered in the name of Cede & Co. The deposit of new preferred securities with DTC and their registration in the name of Cede & Co. do not effect any change in beneficial ownership. DTC has no knowledge of the actual beneficial owners of the new preferred securities; DTC's records reflect only the identity of the direct participants to whose account such new preferred securities are credited, which may or may not be the beneficial owners. The direct and indirect participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to direct participants, by direct participants to indirect participants and by direct and indirect participants to beneficial owners will be governed by arrangements among them, subject to any statutory or regulatory requirements that may be in effect from time to time. Redemption notices in respect of new preferred securities held in book-entry form will be sent to DTC. If less than all of the applicable new preferred securities are being redeemed, DTC will reduce the amount of the interest of each direct participant in such new preferred securities in accordance with its procedures. Although voting with respect to the new preferred securities is limited, in those cases where a vote is required, neither DTC nor Cede & Co. will itself consent or vote with respect to any new preferred securities. Under its usual procedures, DTC would mail an omnibus proxy to the applicable new trust as soon as possible after the record date. The omnibus proxy assigns the consenting or voting rights of Cede & Co. to those direct participants to whose accounts new preferred securities are credited on the record date (identified in a listing attached to the omnibus proxy). Any distribution payments in cash or redemption proceeds on the new preferred securities held in book-entry form will be made to Cede & Co. in immediately available funds. DTC's practice is to credit direct participants' accounts on the relevant payment date in accordance with their respective holdings shown on DTC's records unless DTC has reason to believe that it will not receive payments on such payment date. Payments by participants to beneficial owners will be governed by standing instructions and customary practices, as is the case with preferred securities held for the account of customers in bearer form or registered in "street name," and such payments will be the responsibility of the participant and not of DTC, the applicable new trust or us, subject to any statutory or regulatory requirements to the contrary that may be in effect from time to time. Payment of distributions or redemption proceeds to Cede & Co. is the responsibility of the applicable new trust, disbursement of such payments to direct participants is the responsibility of DTC, and disbursement of such payments to the beneficial owners is the responsibility of direct and indirect participants. Although DTC has agreed to the procedures described above in order to facilitate transfers of interests in the global new preferred securities among participants of DTC, DTC is under no obligation to perform or continue to perform these procedures, and these procedures may be discontinued at any time. None of us, the new trusts, the indenture trustee or the new trustees will have any responsibility for the performance by Cede & Co., DTC or its participants or indirect participants under the rules and procedures governing DTC. DTC may discontinue providing its services as securities depository with respect to the new preferred securities at any time by giving reasonable notice to the applicable new trust. Under those circumstances, in the event that a successor securities depository is not obtained, new preferred securities certificates are required to be printed and delivered. Additionally, the administrative trustees (with our consent) may decide to discontinue use of the system of book-entry transfers through DTC (or any successor depository) with respect to the new preferred securities. In that event, certificates for the applicable new preferred securities will be printed and 109 delivered. In each of the above circumstances, if no paying agent has previously been appointed, we will appoint a paying agent with respect to the applicable new preferred securities. Except as described herein, a beneficial owner in a global new preferred securities certificate will not be entitled to receive physical delivery of new preferred securities. Accordingly, each beneficial owner must rely on the procedures of DTC to exercise any rights under the new preferred securities. The information in this section and elsewhere in this prospectus concerning DTC and DTC's book-entry system has been obtained from sources that we and the new trusts believe to be reliable, but neither we nor the new trusts take responsibility for the accuracy of this information. PAYMENTS IN RESPECT OF THE NEW PREFERRED SECURITIES Payments in respect of the new preferred securities will be made to DTC, which will credit the relevant accounts at DTC on the applicable distribution dates or, in the case of certificated new preferred securities, the payments will be made by check mailed to the address of the holder entitled to the payments as the address will appear on the register. DISCONTINUANCE OF THE DEPOSITORY'S SERVICES DTC is under no obligation to provide services as depository for the global new preferred securities and may discontinue providing those services at any time. None of us, the new trusts, the indenture trustees nor the trustees of the new trusts will have any responsibility for the performance by DTC or its direct or indirect participants under the rules and procedures governing DTC. In the event that: - DTC notifies the applicable new trust that it is unwilling or unable to continue as a depository for a global new preferred security and no successor depository has been appointed within 90 days of that new trust being notified, or - in a new trust's sole discretion, the new trust executes and delivers to the property trustee an order to the effect that a global new preferred security shall be so exchangeable, the new trust will prepare and deliver certificates for the new preferred securities in exchange for beneficial interests in the global new preferred security. Any global new preferred security that is exchangeable as described in the preceding sentence will be exchangeable for new preferred securities registered in such names as the depository will direct. We expect that those instructions will be based upon directions received by the depository from its participants with respect to ownership of beneficial interests in the global new preferred security. In addition, if an event of default has occurred and is continuing with respect to applicable new preferred securities or if DTC ceases to be a clearing agency registered as such under the Securities Exchange Act, a beneficial owner in a global new preferred security certificate will receive in exchange for its beneficial interest an equivalent amount of new preferred securities in certificated form, upon request and in accordance with the terms of the applicable new trust agreement. INFORMATION CONCERNING THE PROPERTY TRUSTEE, TRANSFER AGENT, REGISTRAR AND PAYING AGENT, AND CONVERSION AGENT The Bank of New York will initially act as property trustee, transfer agent, registrar and paying agent, and conversion agent for the new preferred securities, but the applicable new trust may designate an additional or substitute transfer agent, registrar and paying agent, or conversion agent. The paying agent will be permitted to resign as paying agent upon 30 days' written notice to the administrative trustees. In the event that The Bank of New York will no longer be the paying agent, the 110 applicable new trust will appoint a successor to act as paying agent (which must be a bank or trust company). In the event that the new preferred securities do not remain in book-entry-only form, registration of transfers of new preferred securities will be effected without charge by or on behalf of the applicable new trust, but upon payment of any tax or other governmental charges that may be imposed in connection with the transfer and/or the giving of such indemnity as the applicable new trust may require with respect to the transfer. Exchanges of new preferred securities for the applicable series of new debentures will be effected without charge by or on behalf of the applicable new trust, but upon payment of any tax or other governmental charges which may be imposed and/or the giving of such indemnity as such new trust may require with respect to the exchange in connection with the issuance of any new debentures in the name of any person other than the registered holder of the new preferred security for which the new debenture is being exchanged or for any reason other than the exchange. The applicable new trust will not be required to register or cause to be registered the transfer of new preferred securities after the new preferred securities have been called for redemption or exchange. The property trustee, prior to the occurrence of a default with respect to the new preferred securities or new common securities and after the curing of any defaults that may have occurred, undertakes to perform only the duties that are specifically set forth in the applicable new trust agreement and, after default, will exercise the same degree of care as a prudent individual would exercise in the conduct of his or her own affairs. Subject to these provisions, the property trustee is under no obligation to exercise any of the powers vested in it by the applicable new trust agreement at the request of any holder of the applicable new preferred securities, unless it is offered indemnity satisfactory to it by the holder against the costs, expenses and liabilities that it might incur. The holders of new preferred securities will not be required to offer such indemnity in the event that those holders, by exercising their voting rights, direct the property trustee to take any action it is empowered to take under the applicable new trust agreement following an event of default under the applicable new trust agreement. The property trustee also serves as trustee under the new preferred securities guarantees and the new indentures. We may maintain banking and other commercial relationships with the property trustee and its affiliates in the ordinary course of business. GOVERNING LAW Delaware law will govern the new trust agreements and the new preferred securities. MISCELLANEOUS The administrative trustees are authorized and directed to conduct the affairs of and to operate the new trusts in such a way so that: - the new trusts will not be required to register as an "investment company" under the Investment Company Act, - the new trusts will not be characterized as other than a grantor trust for United States federal income tax purposes, and - the new debentures will be treated as our indebtedness for United States federal income tax purposes. In this connection, we and the administrative trustees are authorized to take any action, not inconsistent with applicable law or the new trust agreements, that each of us and the administrative trustees determine in our respective discretion to be necessary or desirable to achieve that end, as long as the action does not adversely affect the interests of the holders of new preferred securities or vary the terms or the new preferred securities. 111 The holders of the new preferred securities have no preemptive rights. DESCRIPTION OF THE NEW PREFERRED SECURITIES GUARANTEES We have summarized below the material provisions of the guarantees that we will execute and deliver, from time to time, for the benefit of the holders of the new preferred securities. This summary may omit a term or provision that you would consider important. For complete descriptions of the new preferred securities guarantees, we encourage you to read the guarantees, forms of which are filed with the SEC. Each new preferred securities guarantee incorporates by reference the terms of the Trust Indenture Act. Each new preferred securities guarantee will be qualified under the Trust Indenture Act. The Bank of New York, as the guarantee trustee, will hold each new preferred securities guarantee for the benefit of the holders of the applicable new preferred securities. GENERAL To the extent described below, we will agree to pay the following amounts in full if they are not paid by the applicable new trust: - any accumulated and unpaid distributions that are required to be paid on the new preferred securities to the extent we have made corresponding payments on the applicable series of new debentures to the property trustee; - the amount payable upon redemption of the applicable new preferred securities, to the extent we have made corresponding payments on the applicable series of new debentures to the property trustee; and - upon a liquidation of the new trust, the lesser of: - the aggregate of the liquidation amount and all accumulated and unpaid distributions on the applicable new preferred securities to the date of payment, to the extent the new trust has funds available for those payments, and - the amount of assets of the new trust remaining available for distribution to holders of the applicable new preferred securities. We may satisfy our obligation to make a guarantee payment by either making payments directly to the holders of applicable new preferred securities or by causing the applicable new trust to make the payments to them. Each new preferred securities guarantee is a guarantee from the time of issuance of the applicable new preferred securities. We will be obligated to make the guarantee payments when due, regardless of any defense, right of set-off or counterclaim that the applicable new trust may have or assert. The new preferred securities guarantees do not cover any payment of distributions and other payments on the new preferred securities when the applicable new trust does not have sufficient funds to make those distributions or other payments. If we do not make interest payments on the new debentures of the applicable series held by the property trustee, the applicable new trust will not pay distributions on the new preferred securities and will not have funds available for those payments. Please read the section titled "Description of Preferred Securities--Description of the New Debentures--Our Covenants Applicable to the New Debentures," beginning on page 125 of this prospectus, for a more detailed description. We have also agreed to irrevocably guarantee the obligations of each new trust with respect to the new common securities to the same extent as the guarantee with respect to the new preferred securities, except that if an event of default under the applicable new indenture has occurred and is continuing, holders of new preferred securities will have priority over holders of new common securities with respect to distributions and payments on liquidation, redemption or otherwise. 112 MODIFICATION OF THE NEW PREFERRED SECURITIES GUARANTEES; ASSIGNMENT We may amend each new preferred securities guarantee without the consent of any holder of new preferred securities if the amendment does not adversely affect the rights of the holders in any material respect. In all other cases, we may amend the applicable new preferred securities guarantee only with the prior approval of the holders of at least two-thirds in aggregate stated liquidation amount of the outstanding applicable new preferred securities. All guarantees and agreements contained in the applicable new preferred securities guarantee will bind our successors, assigns, receivers, trustees and representatives and will inure to the benefit of the holders of the applicable new preferred securities then outstanding. Except in connection with any merger or consolidation of us with or into another entity or any sale, transfer or lease of our assets to another entity permitted under the applicable new indenture, we may not assign our rights or delegate our obligations under the applicable new preferred securities guarantee without the prior approval of the holders of at least two-thirds of the aggregate stated liquidation amount of the related new preferred securities then outstanding. TERMINATION Each new preferred securities guarantee will terminate upon: - full payment of the redemption price of, plus accumulated and unpaid distributions on, all applicable new preferred securities, - distribution of the applicable series of new debentures held by the applicable new trust to the holders of the applicable new preferred securities or the conversion, if applicable, of all of the applicable new preferred securities into our common stock or other preferred securities, or - full payment of the amounts payable upon liquidation of the applicable new trust. Each new preferred securities guarantee will continue to be effective or will be reinstated if at any time any holder of the applicable new preferred securities must repay any amounts paid on those new preferred securities or under such new preferred securities guarantee. EVENTS OF DEFAULT An event of default under the new preferred securities guarantee will occur upon: - our failure to perform any of our payment or other obligations under such new preferred securities guarantee, or - our failure to deliver common stock or other applicable preferred securities upon an appropriate election by the holder or holders of the applicable new preferred securities to convert such new preferred securities into shares of our common stock or other applicable preferred securities, as the case may be. In each new preferred securities guarantee, we will agree that, so long as the applicable new preferred securities remain outstanding, we will not make the payments and distributions described below if: - we have elected to defer interest payments on the applicable series of new debentures and that deferral period is continuing, - we are in default with respect to our payment or other obligations under such new preferred securities guarantee, - any event of default under the applicable new trust agreement has occurred, or 113 - any event has occurred and is continuing that, with the giving of notice or the lapse of time or both, would constitute an event of default under the applicable new indenture. In the above circumstances, we will agree that we will not: - declare or pay dividends on, or make distributions with respect to, or redeem, purchase or acquire, or make a liquidation payment with respect to, any of our capital stock, other than: (1) purchases or acquisitions of shares of our capital stock (or capital stock equivalents) relating to existing benefit plans (or any options or other instruments issued under those plans) or relating to any existing contract or security requiring us to purchase shares of our capital stock (or capital stock equivalents), (2) purchases of shares of our capital stock (or capital stock equivalents) from our officers, directors or employees or those of our subsidiaries under existing employment agreements or upon termination of employment or retirement, (3) as a result of a reclassification, combination or subdivision of our capital stock or the exchange or conversion of one class or series of our capital stock for another class or series of our capital stock, (4) dividends or distributions of shares of common stock on common stock, (5) the purchase of fractional interests in shares of our capital stock pursuant to the conversion or exchange provisions of the capital stock or any security being converted or exchanged into the capital stock, (6) purchases or other acquisitions of common stock relating to an existing dividend reinvestment or other similar plan, (7) any dividend or distribution of capital stock (or capital stock equivalents) relating to an existing stockholders rights plan, or the issuance of stock under any such plan in the future, or the redemption or repurchase of any such rights under the plan, or - guarantee payments with respect to any of (1) through (7) above; - make any payment of interest, principal or premium, if any, on or repay, repurchase or redeem any debt issued by us that rank PARI PASSU with or junior to the applicable series of new debentures; or - make any guarantee payments with respect to the two bullets above, other than pursuant to the new preferred securities guarantees or our guarantees of the new common securities. We will provide to the guarantee trustee, in the form of an officer's certificate or otherwise, evidence of compliance with any conditions provided for in the applicable new preferred securities guarantee. The guarantee trustee will notify holders of the applicable new preferred securities, within 90 days of any event of default under the applicable new preferred securities guarantee, of all defaults known to the guarantee trustee. However, under some circumstances, the guarantee trustee may withhold the notice if it determines in good faith that the withholding of notice is in the interests of the holders of these new preferred securities. The holders of a majority in liquidation amount of the applicable new preferred securities have the right to direct the time, method and place of conducting any proceeding for any remedy available to the guarantee trustee or to direct the exercise of any trust or power the guarantee trustee has under the applicable new preferred securities guarantee. If the guarantee trustee fails to enforce the applicable new preferred securities guarantee, any holder of applicable new preferred securities may institute a legal proceeding directly against us to enforce the guarantee trustee's rights, without first instituting a legal proceeding against the applicable new trust, the guarantee trustee or any other 114 person or entity. We will waive any right or remedy to require that any action be brought first against the applicable new trust or any other person or entity before proceeding directly against us. SUBORDINATED STATUS OF THE NEW PREFERRED SECURITIES GUARANTEES Our obligation under the new preferred securities guarantees to make guarantee payments will be unsecured and will rank: - subordinate and junior in right of payment to all our senior debt, - pari passu in right of payment with the most senior preferred or preference stock issued by us now or in the future, if any, with any guarantee entered into by us relating to any preferred or preference stock of any of our affiliates, with the new debentures and with one another and, - senior in right of payment to: - our common stock, and - the existing debentures and the existing preferred securities guarantee. The term "senior debt" means: (1) any liability of ours: - for borrowed money or under any reimbursement obligation relating to a letter of credit, surety bond or similar instrument, - evidenced by a bond, note, debenture or similar instrument, - for obligations to pay the deferred purchase price of property or services, except trade accounts payable arising in the ordinary course of business, - for the payment of money relating to a capitalized lease obligation, or - for the payment of money under any swap agreement; (2) any liability of others described in (1) that we have guaranteed or that is otherwise our legal liability; and (3) any deferral, renewal, extension or refunding of any liability of the types referred to in (1) and (2) above. However, senior debt will not include: - the existing debentures or the existing preferred securities guarantee; - the new debentures; - the new preferred securities guarantees; - any other indebtedness or guarantees between or among us and our affiliates, unless the instrument creating or evidencing those obligations expressly provides otherwise; or - any liabilities made equal or subordinate to the new debentures by their terms. Our obligations under the new preferred securities guarantees will be effectively junior to all debt and other liabilities and preferred stock of our subsidiaries. By your acceptance of the new preferred securities, you agree to the subordination provisions and other terms of the applicable new preferred securities guarantee. The new indenture does not limit or prohibit us from incurring liabilities that will be senior in right of payment to the new preferred securities guarantees. Upon our bankruptcy, liquidation or winding-up, our obligations under the new preferred securities guarantees will rank junior to all of our 115 other liabilities, except as described above. In those circumstances, funds may not be available for payment under the new preferred securities guarantees. We will deposit each preferred securities guarantee with the guarantee trustee to be held for the benefit of the holders of the applicable preferred securities. The guarantee trustee will have the right to enforce the applicable new preferred securities guarantee on behalf of those holders. Each new preferred securities guarantee will constitute a guarantee of payment and not merely of collection. This means that you may institute a legal proceeding directly against us to enforce the rights of the guarantee trustee under the applicable new preferred securities guarantee without first instituting a legal proceeding against any other person or entity. Please read the section titled "Description of Preferred Securities--Description of the New Preferred Securities Guarantee--Events of Default," beginning on page 113 of this prospectus, for a more detailed description. INFORMATION CONCERNING THE GUARANTEE TRUSTEE The guarantee trustee, prior to the occurrence of a default with respect to the applicable new preferred securities guarantee, will perform only those duties specifically given to it in that new preferred securities guarantee. After default, the guarantee trustee will exercise the same degree of care as a prudent individual would exercise in the conduct of his or her own affairs. The guarantee trustee will become obligated to exercise any of its powers under the applicable new preferred securities guarantee at the request of any holder of the applicable new preferred securities only if it is offered indemnity satisfactory to it against the costs, expenses and liabilities that it might incur. The guarantee trustee also serves as property trustee and indenture trustee. DESCRIPTION OF THE NEW DEBENTURES We will issue the exchange debentures and the cash offer debentures under separate new indentures between us and The Bank of New York, as indenture trustee. Each new indenture will be qualified under the Trust Indenture Act. The terms of each series of new debentures include those stated in the applicable new indenture and those made part of that new indenture by the Trust Indenture Act. The financial terms for the new debentures are the same as those for the applicable new preferred securities, including the right to convert to shares of common stock. We have summarized the material terms of the new indentures and the new debentures below. This summary may omit a term or provision that you would consider important. For a complete description of the new debentures, we encourage you to read the applicable new indenture. We have filed a form of each new indenture with the SEC. You may receive new debentures if we exercise our right to terminate the applicable new trust. Therefore, you should carefully review all the information regarding the new debentures contained in this prospectus. Please read the section titled "Description of Preferred Securities--Description of the New Preferred Securities--Special Event Distribution; Tax Event Redemption," beginning on page 99 of this prospectus. If you receive new debentures, we will use our best efforts to have the new debentures listed on the New York Stock Exchange or on another national securities exchange or similar organization. GENERAL The new debentures will be unsecured and rank junior and subordinate in right of payment to all of our senior debt. The exchange debentures will be limited in aggregate principal amount to approximately $39.12 million, which is the sum of: - the aggregate stated liquidation amount of the outstanding exchange preferred securities, and - the capital contributed by us in exchange for the new common securities. 116 The cash offer debentures will be limited in aggregate principal amount to approximately $154.6 million, which is the sum of: - the aggregate stated liquidation amount of the outstanding cash offer preferred securities, and - the capital contributed by us in exchange for the new common securities. The new debentures will not be subject to a sinking fund provision. The entire principal amount of each series of new debentures will mature and become due and payable, together with any accrued and unpaid interest, if any, on February 15, 2013. If a series of new debentures is distributed to the holders of the applicable new preferred securities in liquidation of their interests in the applicable new trust, those new debentures will, unless held in certificated form, initially be issued as a global security. As described in the section titled "Description of Preferred Securities--Description of the New Debentures--Book-Entry and Settlement," under specific limited circumstances, a series of new debentures may be issued in certificate form in exchange for a global security. In the event that the exchange debentures are issued in certificated form, they will be in denominations of $22 and integral multiples of $22. In the event that the cash offer debentures are issued in certificated form they will be issued in denominations of $50 and integral multiples of $50. The new debentures may be transferred or exchanged at the corporate trust office of the indenture trustee in New York, New York. Payments on new debentures issued as a global security will be made to DTC, a successor depository or, in the event that no depository is used, to a paying agent for the new debentures. In the event new debentures are issued in certificated form, principal and interest will be payable, the transfer of the new debentures will be registrable and the new debentures will be new debentures of the same series in other denominations of a like aggregate principal amount at the corporate trust office of the indenture trustee in New York, New York. However, payment of interest may be made at our option by check mailed to the address of the holder entitled thereto or by wire transfer to an account in the United States appropriately designated by the holder prior to the record date for the corresponding interest payment date. Notwithstanding that provision, so long as the holder of any new debentures is the property trustee, the payment of principal and interest, if in cash, on the new debentures held by the property trustee will be made by wire transfer at the place and to the account in the United States designated by the property trustee. SUBORDINATION Payment of principal of, or any premium and interest on, the new debentures will generally be subordinated in right of payment to the prior payment in full of all of our current and future senior debt. In addition, payments of principal and interest on the new debentures will be effectively junior to all debt and other liabilities and preferred stock of our subsidiaries. We may make no payment of principal (including redemption payments) of, or any premium or interest on, the new debentures if: - we are in default of our obligation to pay principal of, or any premium, sinking funds, or interest on, any of our senior debt, or - the maturity of any senior debt has been accelerated because of a default. This restriction on payment will continue until the default is cured or waived or ceases to exist, or until we have discharged or paid the accelerated senior debt in full. If our assets are distributed upon any dissolution, winding-up, liquidation or reorganization: - all senior debt will first be paid in full before any payment on account of the principal of, or any premium or interest on, the new debentures is made, 117 - any payment or distribution of our assets to which the holders of the new debentures would be entitled except for the subordination provisions of the applicable new indenture will be paid directly to the holders of our senior debt, to the extent necessary to make payment in full of all remaining unpaid senior debt, after giving effect to any concurrent payment or distribution to the holders of the senior debt, and - in the event that, notwithstanding the provisions described above, any payment or distribution of our assets is received by the applicable property trustee or the holders of any of the new debentures before all of our senior debt is paid in full, the payment or distribution will be paid over to those holders of senior debt for application to the payment of all the remaining unpaid senior debt until all the senior debt has been paid in full, after giving effect to any concurrent payment or distribution to the holders of the senior debt. Subject to the payment in full of all senior debt upon any such distribution of our assets, the holders of the new debentures will be subrogated to the rights of the holders of the senior debt to receive payments or distributions of our cash, property or preferred securities applicable to senior debt until the principal of, and any premium and interest on, the new debentures will be paid in full. As a result of this subordination, in the event of any distribution of our assets upon dissolution, winding-up, liquidation, reorganization or other similar proceedings: - holders of our senior debt will be paid in full before payments may be made on the new debentures and the holders of new debentures will be required to pay over their share of the distribution, to the extent it related to the new debentures, to the holders of senior debt until all the senior debt is paid in full, and - our creditors who are neither holders of new debentures nor holders of senior debt may recover less, on a proportionate basis, than holders of senior debt and may recover more, ratably, than the holders of the new debentures. As a result, payments to the holders of new debentures may be reduced or eliminated. These subordination provisions will not apply to any money and new preferred securities held in trust pursuant to the discharge, defeasance and covenant defeasance provisions of the new indentures. The term "senior debt" means: (1) any liability of ours: - for borrowed money or under any reimbursement obligation relating to a letter of credit, surety bond or similar instrument, - evidenced by a bond, note, debenture or similar instrument, - for obligations to pay the deferred purchase price of property or services, except trade accounts payable arising in the ordinary course of business, - for the payment of money relating to a capitalized lease obligation, or - for the payment of money under any swap agreement; (2) any liability of others described in (1) that we have guaranteed or that is otherwise our legal liability; and (3) any deferral, renewal, extension or refunding of any liability of the types referred to in (1) and (2) above. However, senior debt will not include: - the existing debentures or the existing preferred securities guarantee; - the new debentures; - the new preferred securities guarantees; - any other indebtedness or guarantees between or among us and our affiliates unless the instrument creating or evidencing those obligations expressly provides otherwise; or - any liabilities made equal or subordinate to the new debentures by their terms. 118 Our obligations under the new debentures will be effectively junior to all debt and other liabilities and preferred stock of our subsidiaries. The new indentures do not limit the amount of senior debt that we may incur. As a result of the subordination of the new debentures, if we became insolvent, holders of new debentures may receive less on a proportionate basis than other creditors. OPTIONAL REDEMPTION We will have the right to redeem the new debentures, in whole or in part, from time to time, on or after February 15, 2004, upon not less than 30 nor more than 60 days' notice, at the following redemption prices (expressed as percentages of the principal amount of the new debentures) together with accrued and unpaid interest, including, to the extent permitted by applicable law, compound interest to, but excluding, the redemption date, if redeemed during the 12-month period beginning:
REDEMPTION YEAR PRICE - ---- ----------- 2004........................................................ 106.333% 2005........................................................ 104.750% 2006........................................................ 103.167% 2007........................................................ 101.583% 2008 and thereafter......................................... 100.000%
If we redeem the new debentures on any date in the period beginning on any record date and ending on the next February 15, May 15, August 15 or November 15, accrued and unpaid interest will be payable to holders of record on the relevant record date. Prior to February 15, 2004, we also have the right to redeem the new debentures in certain circumstances when our common stock price has exceeded 200% of our conversion price for a specified period of time. Please read the section titled "Description of Preferred Securities--Description of the New Preferred Securities--Optional Redemption," beginning on page 98 of this prospectus, for a more detailed discussion. We will also have the right to redeem the new debentures in some circumstances upon the occurrence of a tax event. Please read the section titled "Description of Preferred Securities--Description of the New Preferred Securities--Special Event Distribution; Tax Event Redemption," beginning on page 99 of this prospectus, for a more detailed discussion. So long as the corresponding new preferred securities and new common securities are outstanding, the applicable new trust will use the proceeds from the redemption of any of the applicable new debentures to redeem the applicable new preferred securities and the new common securities. We may not redeem any new debentures unless all accrued and unpaid interest has been paid in full on all outstanding new debentures of the applicable series for all quarterly interest payment periods terminating on or prior to the date of notice of redemption. If a partial redemption of the new preferred securities resulting from a partial redemption of the applicable new debentures would result in the delisting of those new preferred securities from any national securities exchange on which those new preferred securities are then listed, we may only redeem the applicable new debentures in whole. INTEREST Each new debenture bears interest at the annual rate of 9.5% from the first date of issuance, payable quarterly in arrears on February 15, May 15, August 15, and November 15 of each year, commencing February 15, 2002. We will pay interest in cash or, at our election, prior to February 15, 2004, in our common stock. If we elect to pay interest in shares of our common stock, the shares of 119 common stock will be valued at 90% of the average of the closing prices for the five trading days immediately preceding the second trading day prior to the interest payment date. Interest will generally be paid to the person in whose name the new debenture is registered at the close of business on the business day next preceding an interest payment date. We will provide notice of our election to pay interest in common stock instead of cash no later than the record date prior to such interest payment date. The record date with respect to each interest payment date will be 15 days prior to the related interest payment date. The amount of interest payable for any period will be computed on the basis of a 360-day year of twelve 30-day months and, for any period of less than a full calendar month, the actual number of days elapsed in such 30-day month. If an interest payment date is not a business day, interest will be paid on: - the next succeeding day that is a business day without any interest or other payment in respect of any such delay, or - the immediately preceding business day, if the next succeeding day that is a business day is in the next succeeding calendar year, in each case with the same force and effect as if the interest was paid on the date it was originally payable. OPTION TO EXTEND INTEREST PAYMENT PERIOD So long as we are not in default on the payment of interest on the new debentures, we have the right at any time after February 15, 2004, and from time to time after that date, during the term of the applicable new debentures, to defer interest payments for up to 20 consecutive quarterly periods. At the end of each deferral period, we will pay all interest then accrued and unpaid, together with interest on that interest at the stated annual rate, which is 9.5%, compounded quarterly, to the extent permitted by applicable law. During any deferral period, we will not: - declare or pay dividends on, make any distribution with respect to, or redeem, purchase, acquire or make a liquidation payment with respect to, any of our capital stock, other than: (1) purchases or acquisitions of shares of our capital stock (or capital stock equivalents) relating to benefit plans (or any options or other instruments issued under those plans) or relating to any contract or security requiring us to purchase shares of our capital stock (or capital stock equivalents); (2) purchases of shares of our capital stock (or capital stock equivalents) from our officers, directors or employees or those of our subsidiaries under existing employment agreements or upon termination of employment or retirement; (3) as a result of a reclassification, combination or subdivision of our capital stock or the exchange or conversion of one class or series of our capital stock for another class or series of our capital stock; (4) dividends or distributions of shares of common stock on common stock; (5) the purchase of fractional interests in shares of our capital stock pursuant to the conversion or exchange provisions of the capital stock or any security being converted or exchanged into the capital stock; (6) dividends or distribution in shares of our capital stock of the same class on which the dividend or distribution is being made and conversions or exchanges of common stock of one class into common stock of another class; 120 (7) purchases or other acquisitions of common stock relating to a dividend reinvestment or other similar plan; (8) any dividend or distribution of capital stock (or capital stock equivalents) relating to a stockholders' rights plan, or the issuance of stock under any such plan in the future, or the redemption or repurchase of rights under the plan; or (9) guarantee payments made with respect to any of (1) through (8) above; - make any payment of interest, principal or premium, if any, on or repay, repurchase or redeem any debt securities issued by us that rank PARI PASSU with or junior to the new debentures; or - make any guarantee payments with respect to the two bullets above, other than pursuant to the new preferred securities guarantees or our guarantees of the new common securities. We may extend a deferral period prior to the period's termination. We may not, however, extend a deferral period, including all previous and further extensions of the period, beyond 20 consecutive quarterly interest periods, or beyond the maturity of the new debentures. A deferral period may not end on a date other than an interest payment date. Upon the termination of any deferral period and the payment of all amounts then due on the applicable new debentures, we may commence a new deferral period, on the terms described in this section. No interest will be due or payable on those applicable new debentures during a deferral period, except at the end of the period. We must give the property trustee, the administrative trustees and the indenture trustee of each new trust and each new indenture notice of our election to begin a deferral period at least one business day prior to the earliest of: - the date the distribution on the applicable new preferred securities would have otherwise been payable, - the date the administrative trustees are required to give notice to the New York Stock Exchange, the NASDAQ National Market or other applicable self-regulatory organization or to holders of the applicable new preferred securities of the record date, or - the date the distribution is payable, but in any event not less than one business day prior to the record date. The indenture trustee will give notice of our election to begin a deferral period to the holders of the applicable new debentures, and the administrative trustees will give notice of our election to the holders of the applicable new preferred securities. CONVERSION OF THE NEW DEBENTURES Holders of the new debentures may convert them into our common stock at any time prior to: - the close of business on February 15, 2013, or - the close of business on the business day prior to the redemption date, in the case of new debentures called for redemption, at the initial conversion price, subject to the conversion price adjustments described in the section titled "Description of Preferred Securities--Description of the New Preferred Securities--Conversion Rights," beginning on page 92 of this prospectus. The new trusts have agreed not to convert new debentures held by them except pursuant to a notice of conversion delivered to the conversion agent by an applicable holder of new preferred securities or new common securities. Upon surrender of a new preferred security to the conversion agent for conversion, the applicable new trust will distribute the applicable new debentures to the conversion agent on behalf of the holder 121 of the applicable new preferred securities so converted. Upon such delivery, the conversion agent will convert the new debentures to our common stock on behalf of the holder. Our delivery to the holders of the new debentures, through the conversion agent, of the fixed number of shares of our common stock into which the new debentures are convertible, together with the cash payment, if any, in lieu of fractional shares, will be deemed to satisfy our obligation to pay the principal amount of the new debentures so converted, and the accrued and unpaid interest, including compounded interest, accrued on the new debentures at the time of the conversion. If any new debenture is surrendered for conversion after the close of business on a record date for payment of interest and on or before the corresponding interest payment date, then, notwithstanding such conversion, the interest payable on the interest payment date with respect to the new debenture will be paid to the applicable new trust, which will distribute that interest to the holder of the applicable new preferred securities or new common securities at the close of business on the record date, or to such other person in whose name the new debentures are registered at the close of business on the record date, as the case may be. We will make no payment or allowance for distributions on the shares of our common stock issued upon such conversion, except to the extent that such shares of our common stock are held of record on the record date for any such distributions. Each conversion will be deemed to have been effected immediately prior to the close of business on the day on which the related conversion notice was received by the conversion agent. ADDITIONAL REDEMPTION Prior to February 15, 2004, we may elect to redeem the new debentures if the price of our common stock has exceeded 200% of the conversion price for at least 20 trading days during a 30-day trading period ending five trading days prior to the notice of redemption. We must give the holders of the new debentures and the applicable indenture trustee notice of the redemption not more than 30 and not less than 15 days before the date of redemption. In the case of such a redemption prior to February 15, 2004, we will pay additional interest in cash or common stock, at our election, on new debentures converted after the notice of redemption. This additional interest will be in an amount equal to the total disbributions on the applicable new preferred securities through February 15, 2004, less any interest actually paid prior to the date of conversion. Our ability to pay any distributions in shares of our common stock is contingent on satisfaction of certain conditions. See the section titled "Description of Preferred Securities--Description of the New Preferred Securities--Conditions to Distributions in Common Stock," beginning on page 91 of this prospectus. COMPOUNDED INTEREST Payments of compounded interest, if any, on the new debentures held by the new trusts, will make funds available for the payment of additional distributions on distributions in arrears in respect of the new preferred securities, pursuant to the terms of those new preferred securities and to the extent permitted by law. ADDITIONAL INTEREST If at any time when the property trustee of a new trust is the holder of any new debentures, the applicable new trust or the applicable property trustee is required to pay any taxes, duties, assessments or governmental charges of whatever nature other than withholding taxes imposed on distributions to holders of new preferred securities, imposed by the United States, or any other taxing authority, then we will pay as additional interest on the applicable series of new debentures held by the property trustee, to the extent permitted by applicable law, the additional amounts required so that the net amounts received and retained by the applicable new trust and the property trustee after paying those 122 taxes, duties, assessments or other governmental charges will be equal to the amounts the applicable new trust and the property trustee would have received had no such taxes, duties, assessments or other governmental charges been imposed. EVENTS OF DEFAULT IN THE NEW INDENTURES If any new indenture event of default occurs and is continuing, the applicable property trustee, as the holder of the applicable series of new debentures, or the holders of not less than 25% in principal amount of the outstanding applicable series of new debentures, may declare the principal of and the interest on the applicable series of new debentures to be due and payable. The following are events of default with respect to the new debentures: - failure to pay interest on the new debentures for 30 days past the date specified for payment; - failure to pay principal of or any premium, if any, on any new debenture when due; - failure by us to deliver shares of our common stock upon an appropriate election by a holder of new debentures to convert those new debentures; - failure to comply with any other covenant or warranty in the new indentures for a period after 90 days after written notice to us by the applicable indenture trustee or the holders of at least 25% in aggregate principal amount of the applicable series of new debentures then outstanding; - the dissolution, winding-up or termination of the applicable new trust, except in connection with the distribution of the applicable series of new debentures to the holders of applicable new preferred securities and new common securities in liquidation of the new trust: - upon the occurrence of a tax event or an investment company event, - upon the redemption of all outstanding applicable new preferred securities, - upon the conversion of all outstanding applicable new preferred securities, or - in connection with specific mergers, consolidations or amalgamations permitted by the new trust agreements; or - certain events of bankruptcy, insolvency or reorganization of us. An event of default under the new indentures also constitutes an event of default under the new trust agreements. The holders of new preferred securities under specific circumstances have the right to direct the applicable property trustee to exercise its rights as the holder of the applicable series of new debentures, which are described in the sections titled "Description of Preferred Securities--Description of the New Preferred Securities--Events of Default" and "--Voting Rights." Notwithstanding the provisions described above, a holder of new preferred securities may directly institute a proceeding against us for enforcement of payment to that holder of interest or principal if: - an event of default under the new trust agreements has occurred and is continuing, and - that event is attributable to our failure to pay interest or principal on the applicable series of new debentures on the date the interest or principal is otherwise payable or, in the case of redemption, the redemption date. In any such proceeding, we will be subrogated to the rights of the holder under the applicable new trust agreement to the extent of any payment we make to the holder in the proceeding. The holders of the applicable new preferred securities will not be able to exercise directly any other remedy available to the holders of the the applicable series of new debentures. 123 BOOK-ENTRY AND SETTLEMENT If any new debentures are distributed to holders of new preferred securities, the new debentures will, except under the limited circumstances described below, be issued in the form of one or more global certificates, which we refer to as global debentures, registered in the name of the depository or its nominee. Except under the limited circumstances described below, new debentures represented by the applicable global debenture will not be exchangeable for, and will not otherwise be issuable as, new debentures in definitive form. The global debentures may not be transferred except by the depository to a nominee of the depository, or by a nominee of the depository to the depository or another nominee of the depository or to a successor depository or its nominee. The laws of some jurisdictions may require that particular purchasers of preferred securities take physical delivery of such preferred securities in definitive form. Such laws may impair the ability to transfer or pledge beneficial interests in a global debenture. Except as provided below, owners of beneficial interests in a global debenture will not be entitled to receive physical delivery of the applicable new debentures in definitive form and will not be considered the holders (as defined in the new indentures) of new debentures for any purpose under the new indenture and no global debenture representing new debentures will be exchangeable, except for another global debenture of like denomination and tenor to be registered in the name of the depository or its nominee or a successor depository or its nominee. Accordingly, each beneficial owner must rely on the procedures of the depository or if that person is not a participant, on the procedures of the participant or indirect participant through which that person owns its interest to exercise any rights of a holder under the new indenture. THE DEPOSITORY If new debentures are distributed to holders of new preferred securities in liquidation of the interests of those holders in the new trusts, DTC will act as securities depository for the applicable new debentures. For a description of DTC and the specific terms of the depository arrangements, please read the section titled "Description of Preferred Securities--Description of the New Preferred Securities--Book-Entry Only Issuance; The Depository Trust Company," beginning on page 108 of this prospectus. As of the date of this prospectus, the description in that section of DTC's book-entry system and DTC's practices as they relate to purchases, transfers, notices and payments with respect to the new preferred securities apply in all material respects to any debt obligations represented by one or more global debentures held by DTC. We may appoint a successor to DTC or any successor depository in the event that DTC or its successor depository is unable or unwilling to continue as a depository for the global debentures. None of us, the new trusts, the property trustees, the indenture trustees, any paying agent, any transfer agent or any other agent of ours or the indenture trustees will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests in global debentures for the new debentures or for maintaining, supervising or reviewing any records relating to those beneficial ownership interests. DISCONTINUANCE OF THE DEPOSITORY'S SERVICES DTC is under no obligation to provide services as depository for the global debenture and may discontinue providing those services at any time. Neither we, the new trusts, the indenture trustees nor the trustees of the new trusts will have any responsibility for the performance by DTC or its participants or indirect participants under the rules and procedures governing DTC. 124 In the event that: - DTC notifies us that it is unwilling or unable to continue as a depository for the global debenture and no successor depository has been appointed within 90 days of us being notified, or - in our sole discretion, we execute and deliver to the indenture trustees an order to the effect that the applicable global debenture shall be so exchangeable, we will prepare and deliver certificates for the applicable series of new debentures in exchange for beneficial interests in the applicable global debenture. Any global debenture that is exchangeable as described in the preceding sentence will be exchangeable for new debentures registered in such names as the depository will direct. We expect that those instructions will be based upon directions received by the depository from its participants with respect to ownership of beneficial interests in the global debenture. In addition, if an event of default has occurred and is continuing with respect to the new debentures or if DTC ceases to be a clearing agency registered as such under the Securities Exchange Act, a beneficial owner in a global exchange debenture certificate will receive in exchange for its beneficial interest an equivalent amount of the applicable series of new debentures in certificated form, upon request and in accordance with the terms of a supplemental new indenture. OUR COVENANTS APPLICABLE TO THE NEW DEBENTURES The new indentures do not limit the amount of indebtedness, guarantees or lease obligations that we may incur. They do not contain provisions that would give holders of the new debentures the right to require us to repurchase their new debentures in the event of a decline in the credit rating of our debt securities resulting from a takeover, recapitalization or similar restructuring. In each new indenture we will agree that, so long as any series of new debentures are outstanding, if: - an event of default has occurred and is continuing, or an event of default has occurred that, with the giving of notice or the lapse of time or both, would constitute an event of default, or - we are in default on our guarantee payments or other payment obligations under the applicable new preferred securities guarantee, then we will not: - declare or pay dividends on, make any distribution with respect to, or redeem, purchase, acquire or make a liquidation payment with respect to any of our capital stock, other than: (1) purchases or acquisitions of shares of our common stock relating to employee benefit plans or relating to any existing contract or security requiring us to purchase shares of our common stock; (2) as a result of a reclassification of our capital stock or the exchange or conversion of one class or series of our capital stock for another class or series of our capital stock; (3) the purchase of fractional interests in shares of our capital stock pursuant to the conversion or exchange provisions of the capital stock or the security being converted or exchanged; or (4) making guarantee payments with respect to (1) through (3) above; and - make any payment of interest, principal or premium, if any, on or repay, repurchase or redeem any debt securities issued by us that rank equally with or junior to the applicable series of new debentures. 125 We may, however, declare and pay a stock dividend where the dividend stock is the same stock as that on which the dividend is paid. So long as the applicable new preferred securities and new common securities remain outstanding, we will agree to: - directly or indirectly maintain 100% ownership of the new common securities of each of the new trust, provided that any permitted successor of ours under the applicable new indenture may succeed to our ownership of the new common securities; - not cause, as sponsor of the new trusts, or permit, as the holder of the new common securities, the termination, dissolution or winding-up of the new trusts, except in connection with a distribution of the applicable series of new debentures under the applicable new trust agreement and in connection with certain mergers, consolidations or amalgamations as permitted by the new trust agreement; and - use our reasonable efforts to cause each new trust to: - remain a statutory business trust, except in connection with the distribution of new debentures to the holders of new preferred securities and new common securities in liquidation of the applicable new trust, the redemption of all of the applicable new preferred securities and new common securities, or certain mergers, consolidations or amalgamations, as permitted by the applicable new trust agreement, and - continue to be classified as a grantor trust for United States federal income tax purposes. We will be required to provide annually to each indenture trustee a certificate as to whether or not we are in compliance with all the conditions and covenants under each applicable new indenture. CONSOLIDATION, MERGER AND SALE We will agree under the new indentures that we will consolidate with or merge into any entity or dispose of all or substantially all of our properties and assets only if: - we are the continuing corporation; - if we are not the continuing corporation, the successor is a corporation organized and existing under the laws of any United States jurisdiction and assumes all of our obligations under the applicable new indenture; and - in either case, immediately after giving effect to the transaction, no event of default under the applicable new indenture or the applicable new trust agreement, and no event which, after notice or lapse of time or both, would become an event of default, has occurred and is continuing. MODIFICATIONS AND WAIVERS We and the applicable indenture trustee may amend the new indentures from time to time if the holders of a majority in principal amount of the applicable outstanding new debentures consent to it. Without the consent of the holder of each applicable outstanding new debenture affected, however, no amendment or supplement of the applicable indenture may: - change the stated maturity of the principal of, or any premium or installment of interest on, the applicable new debentures, - reduce the principal amount of any exchange debentures or any redemption premium on the applicable new debentures, - reduce the rate or extend the time for payment of interest on the applicable new debentures, 126 - change any place where, or the currency in which, the applicable series of new debentures or interest on them is payable, - impair the right to institute suit to enforce the payment of the applicable series of new debentures on or after the stated maturity of those debentures (as extended under the terms of the exchange debentures), - make any change that adversely affects the right to convert the applicable new debentures, - reduce the percentage of the applicable series of new debentures whose holders must consent to a modification, amendment or waiver, - reduce the requirements for a quorum or voting at a meeting of holders of the applicable series of new debentures, or - modify any of the provisions of the applicable new indenture relating to subordination of the applicable series of new debentures or the definition of senior debt in a manner adverse to the holders of the applicable series of new debentures. If either of the new trusts or either of the property trustees hold new debentures, no amendment, modification or waiver that requires approval of holders of a certain percentage in principal amount of the applicable outstanding series of new debentures will be effective as to those new debentures, without the approval of the holders of at least the same percentage of aggregate liquidation amount of the applicable outstanding new preferred securities and new common securities. We and the indenture trustee may amend or supplement each new indenture without the consent of the holders of any new debentures of a series issued under such new indenture: - to add to the events of default or our covenants for the benefit of the holders of the new debentures of that series, and - to cure any ambiguity or correct or supplement any provision in the new indenture that may be defective or inconsistent with other provisions in the new indenture, or to make any other provisions with respect to matters or questions arising under the new indenture that are not inconsistent with the provisions of the new indenture, in each case without adversely affecting the interests of the holders of new debentures of that series. The holders of at least two-thirds in aggregate principal amount of the outstanding series of new debentures may, on behalf of the holders of all of the new debentures of that series, waive any past default, except a default: - in the payment of principal, premium, if any, or interest on the series of new debentures, and - in respect of a covenant or provision that cannot be modified or amended without the consent of the holder of each outstanding new debenture of that series. However, while any of the applicable new preferred securities are outstanding, the new indentures will not permit the waiver of any event of default with respect to the applicable series of new debentures without the consent of holders of at least two-thirds in aggregate liquidation amount of the applicable new preferred securities then outstanding. SATISFACTION AND DISCHARGE Upon our direction, either or both of the new indentures shall cease to be of further effect with respect to the applicable series of new debentures, except for the survival of provisions relating to 127 conversion and registration of transfer or exchange of the applicable series of new debentures, and the obligation to pay additional amounts to the extent described below, when: - either: - an entire series of outstanding new debentures has been delivered to the applicable indenture trustee for cancellation, subject to specific exceptions, or - all applicable new debentures have become due and payable or will become due and payable at their stated maturity within one year or are to be called for redemption within one year, and we have deposited, in trust, funds in United States dollars with respect to the new debentures in an amount sufficient to pay the entire indebtedness on the new debentures in respect of principal (and premium, if any) and interest, including additional payments, if any, to the date of the deposit, if the new debentures have become due and payable, or to the maturity of the new debentures, as the case may be; and - we have paid all other sums payable under the applicable new indenture with respect to the new debentures. GOVERNING LAW New York law will govern the new indentures and the new debentures. MISCELLANEOUS We may maintain banking and other commercial relationships with each indenture trustee and its affiliates in the ordinary course of business. We will pay all fees and expenses related to: - the offering of the new preferred securities and the new debentures, - the organization, maintenance and dissolution of the new trusts, - the retention of the property trustee for each trust, and - the enforcement by the property trustee of the rights of the holders of the new preferred securities. We will fully and unconditionally guarantee the payment of these fees and expenses. RELATIONSHIP AMONG THE NEW PREFERRED SECURITIES, THE NEW DEBENTURES AND THE NEW PREFERRED SECURITIES GUARANTEE When taken together, the terms of the applicable new preferred securities, the applicable new debentures, the applicable new trust agreement and the applicable new preferred securities guarantee provide a full, irrevocable and unconditional guarantee by us of the payments due on the applicable series of new preferred securities. No single document standing alone or operating in conjunction with fewer than all the other documents constitutes the applicable full guarantee. The following summary briefly explains the interrelationship between the applicable new preferred securities, the applicable new debentures and the applicable new preferred securities guarantee. 128 THE APPLICABLE NEW TRUST WILL BE ABLE TO MAKE PAYMENTS ON THE APPLICABLE NEW PREFERRED SECURITIES IF WE MAKE PAYMENTS ON THE APPLICABLE NEW DEBENTURES As long as we make payments of interest and other payments when due on the applicable new debentures, the applicable new trust will have sufficient funds to make distribution and other payments when due on the applicable preferred securities for the following reasons: - the new trust will hold applicable new debentures in an aggregate principal amount equal to the aggregate stated liquidation amount of the applicable new preferred securities and the applicable new common securities; - the interest rate and the interest and other payment dates on the applicable new debentures will match the distribution rate and distribution and other payment dates for the applicable new preferred securities; - we have agreed to pay for all of each new trust's debt and obligations, other than with respect to each new trust's new preferred securities and new common securities, and costs and expenses, including the fees and expenses of the new trustees, except for United States withholding taxes; and - the new trustees may not cause or permit each new trust to engage in any activity that is not consistent with its limited purposes. WE WILL GUARANTEE THAT PAYMENTS WILL BE MADE ON THE APPLICABLE NEW PREFERRED SECURITIES IF WE MAKE PAYMENTS ON THE APPLICABLE NEW DEBENTURES If we make interest or other payments on the applicable new debentures, the property trustee will be obligated to make corresponding distributions or other payments on the applicable new preferred securities. We will guarantee, on a subordinated basis, such payments if the applicable new trust fails to make them. If we do not make interest payments on the applicable series of new debentures purchased by the applicable new trust, such new trust will not have sufficient funds to pay distributions on the applicable new preferred securities. The applicable preferred securities guarantees only cover the payment of distribution and other payments on the new preferred securities if and to the extent that we have made corresponding payments on the new debentures. The applicable guarantee trustee will have the right to enforce the new preferred securities guarantee on behalf of the holders of the applicable new preferred securities if we fail to make any required guarantee payments. If the guarantee trustee fails to enforce the applicable new preferred securities guarantee, the guarantee provides a mechanism whereby the holders of the applicable new preferred securities may direct the guarantee trustee to enforce its rights under the guarantee. If the guarantee trustee fails to enforce the applicable new preferred securities guarantee, you may institute a legal proceeding directly against us to enforce the guarantee trustee's rights under the applicable new securities guarantee without first instituting a legal proceeding against the applicable new trust, the guarantee trustee, or any other person or entity. Please read the section titled "Description of Preferred Securities--Description of the New Preferred Securities Guarantees," beginning on page 112 of this prospectus, for a more detailed discussion. THE PROPERTY TRUSTEE MAY INSTITUTE LEGAL PROCEEDINGS AGAINST US IF WE FAIL TO MAKE PAYMENTS ON THE NEW DEBENTURES If we do not make interest or other payments on the new debentures when due (taking account of any deferral period), the new trust agreements provide a mechanism whereby a holder of the applicable new preferred securities, using the procedures described in the sections titled "Description of Preferred Securities--Description of the New Preferred Securities--Voting Rights" and "--Book-Entry Only Issuance; The Depository Trust Company," may direct the property trustee to enforce its rights under the applicable series of new debentures. Notwithstanding these provisions, in such circumstances, a holder of new preferred securities may institute a legal proceeding directly against us for payment on 129 or after the respective due dates specified in the applicable series of new debentures. In connection with that proceeding, we will remain obligated to pay the principal or interest on the applicable series of new debentures and will be subrogated to the rights of the holder of applicable series of new preferred securities to the extent of any payment made by us to that holder of exchange preferred securities in the proceeding. Please read the section titled "Description of Preferred Securities--Description of the New Preferred Securities," beginning on page 88 of this prospectus, for a more detailed discussion. IN THE EVENT OF ANY DISSOLUTION OF A NEW TRUST, EACH HOLDER OF THE APPLICABLE NEW PREFERRED SECURITIES OR NEW COMMON SECURITIES WILL BE ENTITLED TO RECEIVE NEW DEBENTURES OR DISTRIBUTIONS FROM THE APPLICABLE NEW TRUST In the event of any voluntary or involuntary dissolution of a new trust, the then holders of the applicable new preferred securities or the new common securities will be entitled to receive, after satisfaction of liabilities to creditors, distributions in an amount equal to the aggregate of the stated liquidation amount of $22 per exchange preferred security, or distributions in an amount equal to the aggregate of the stated liquidation amount of $50 per cash offer preferred security plus accumulated and unpaid distributions to the date of payment unless, in connection with the liquidation, the applicable new debentures in an aggregate stated principal amount equal to the aggregate stated liquidation amount of, with an interest rate identical to, the annual rate of distributions on, and accrued and unpaid interest equal to accumulated and unpaid distributions on, the applicable new preferred securities, have been distributed on a pro rata basis to the holders of the applicable new preferred securities and the new common securities. Upon any voluntary or involuntary liquidation or bankruptcy of us, the applicable property trustee, as holder of the applicable series of new debentures, would be subordinated in right of payment to all senior debt as set forth in the new indentures, but entitled to receive payment in full of principal (and premium, if any) and interest, before any of the holders of our existing debentures and existing preferred securities guarantee, and our stockholders receive payments or distributions. Because we will be the guarantor under the new preferred securities guarantees and will agree to pay for all costs, expenses and liabilities of the new trusts, the positions of a holder of new preferred securities and a holder of new debentures relative to other creditors and to our stockholders in the event of our liquidation or bankruptcy are expected to be substantially the same. DESCRIPTION OF THE EXISTING PREFERRED SECURITIES, EXISTING DEBENTURES AND THE EXISTING PREFERRED SECURITIES GUARANTEE The existing preferred securities were issued by the existing trust under a trust agreement amended and restated as of February 10, 1998. We own all of the existing common securities representing common undivided beneficial interests in the assets of the existing trust. The existing trust was organized for the sole purpose of issuing the existing preferred securities and the existing common securities and investing the proceeds of that issuance in an equivalent amount of convertible subordinated debentures, referred to as the existing debentures. We issued the existing debentures under the existing indenture, dated as of February 10, 1998, between us and The Bank of New York, as indenture trustee. We guaranteed the payment of distributions and other payments on the existing preferred securities to the extent that we had made corresponding interest and other payments, as and to the extent set forth in a guarantee agreement dated as of February 10, 1998. The existing preferred securities, existing common securities, trust agreement, debentures, existing indenture and existing preferred securities guarantee referred to above are respectively identical, in all material respects, to the new preferred securities, new common securities, new trust agreements, new indentures and new preferred securities guarantee described in the sections titled "Fleetwood Capital Trust II and Fleetwood Capital Trust III," "Description of Preferred Securities--Description of the New Preferred Securities," "Description of Preferred Securities--Description of the New Preferred 130 Securities Guarantees" and "Description of Preferred Securities--Description of the New Debentures," except in the following respects: - DISTRIBUTION/INTEREST RATE. Distributions on the new preferred securities, and corresponding interest payments on the new debentures, are payable at an annual rate of 9.5%, whereas distributions on the existing preferred securities, and corresponding interest payments on the existing debentures, are payable at an annual rate of 6%. - DISTRIBUTION/INTEREST PAYMENTS. Distributions on the new preferred securities, and corresponding interest payments on the new debentures, may be in cash or, at our election, prior to February 15, 2004, in our common stock at a rate of 9.5% per year of the liquidation amount of $22 per exchange preferred security and at a rate of 9.5% per year of the liquidation amount of $50 per cash offer preferred security, whereas distributions on the existing preferred securities, and corresponding interest payments on the existing debentures, will only be in cash. - LIQUIDATION AMOUNT PER PREFERRED SECURITY. The liquidation amount per exchange preferred security is $22 and the liquidation amount per cash offer preferred security is $50, whereas the liquidation amount per existing preferred security is $50. - CONVERSION PRICE. The exchange preferred securities, and the corresponding exchange debentures, are convertible into our common stock at an initial conversion price that is the higher of: - the equivalent of a 15% premium over the daily volume-weighted average of the closing prices of our common stock for each of the five trading days immediately preceding the fourth trading day prior to the exchange offer expiration date, or - $8.63 per share, subject to adjustment. The cash offer preferred securities and the corresponding cash offer debentures, are convertible into our common stock at an initial conversion price that is the higher of: - the equivalent of a 15% premium on the closing price of our common stock on the day that we price the cash offer, or - $8.63 per share, subject to adjustment. The existing preferred securities, and the corresponding existing debentures, are convertible into our common stock at an initial conversion price of $48.72 per share of our common stock, which is equivalent to a conversion rate of 1.03 shares of our common stock for each existing preferred security, subject to the same provisions that require adjustment of the conversion price for the new preferred securities and the new debentures. The conversion price of the existing preferred securities on December 7, 2001 was $48.72 per share of common stock, which is equivalent to a conversion rate of 1.03 shares of common stock for each existing preferred security. This conversion price remains subject to further adjustment. - OPTIONAL REDEMPTION. Prior to February 15, 2004, we also have the right to redeem the new debentures under specific circumstances when our common stock price has exceeded 200% of our conversion price for a specified period, whereas there is no such right with respect to the existing debentures or existing preferred securities. Please read the section titled "Description of Preferred Securities--Description of the New Preferred Securities--Optional Redemption," beginning on page 98 of this prospectus, for a more detailed discussion. - OPTIONAL REDEMPTION. We may redeem the new debentures on or after February 15, 2004, in whole or in part, on not less than 30 but not more than 60 days' notice, at the redemption prices set forth in the section titled "Description of Preferred Securities--Description of the New 131 Debentures--Optional Redemption," beginning on page 119 of this prospectus. We may redeem the existing debentures on or after February 15, 2001, in whole or in part, subject to the same notice requirement that applies to optional redemption of the exchange debentures, at the redemption prices below:
REDEMPTION YEAR PRICE - ---- ----------- 2001........................................................ 103.75% 2002........................................................ 103.00% 2003........................................................ 102.25% 2004........................................................ 101.50% 2005........................................................ 100.75% 2006 and thereafter......................................... 100.00%
- SUBORDINATION/RANKING. The new preferred securities guarantees and the new debentures are senior in right of payment to the existing preferred securities guarantee and the existing debentures. Currently, there is no established trading market for the existing preferred securities and the new preferred securities. 132 DESCRIPTION OF OUR CAPITAL STOCK CAPITAL STOCK Our authorized capital stock consists of 75,000,000 shares of common stock and 10,000,000 shares of preferred stock, each with a par value of $1.00 per share. At October 31, 2001, we had outstanding: - 34,969,141 shares of common stock (as well as the same number of "rights" to purchase junior participating preferred shares under the terms of our rights plan discussed below); - exercisable stock options to purchase an aggregate of approximately 2,467,609 shares of our common stock; - warrants to purchase up to an aggregate of 150,000 shares of our common stock; - no shares of preferred stock; and - an aggregate of approximately $287.5 million in liquidation amount of existing preferred securities. Holders of these existing preferred securities have the right to convert their securities into an aggregate of 5,901,053 shares of our common stock, subject to adjustment. Subject to the rights of holders of our existing preferred securities, our common stock holders are entitled to receive dividends if and when they are declared by our board of directors from legally available funds and, in the event of liquidation, to receive pro rata all assets remaining after payment of all obligations. Each holder of our common stock is entitled to one vote for each share held and to cumulate his votes for the election of directors. Our stockholders do not have preemptive rights. The authorized shares of our preferred stock are issuable, without further stockholder approval, in one or more series as determined by our board of directors. Our board of directors also determines the voting rights, designations, powers, preferences, and the relative participating, optional or other rights of each series of our stock, as well as any qualifications, limitations or restrictions. Our certificate of incorporation provides for a classified board of directors, approximately one-third of which is elected annually for a three-year term. Our certificate of incorporation also requires a vote of holders of at least 80% of our voting stock to adopt or modify our bylaws, or to approve a merger, a sale of substantially all of our assets or certain other transactions between us and any other corporation holding directly or indirectly more than 5% of our voting stock, unless the merger, sale or other transaction was approved by our board of directors prior to the other corporation's acquisition of more than 5% of our voting stock. The above provisions cannot be changed unless the change is approved by the affirmative vote of at least 80% of our voting stock. EquiServe, L.P. is the transfer agent and registrar for our common stock. RIGHTS On September 15, 1998, our board of directors declared a dividend distribution on each then outstanding share of our common stock of one right to acquire one one-thousandth of a share of our series A junior participating preferred stock at an exercise price of $160.00, subject to adjustment. These rights are also issued with any shares of our common stock that are issued after the initial dividend distribution and before the occurrence of specified events. The rights may only be exercised: - 10 days after public announcement that a person or group of affiliated persons has acquired or obtained the right to acquire beneficial ownership of 15% or more of our outstanding common stock; 133 - 10 business days after commencement of a tender offer or exchange offer that would result in a person or group of affiliated persons beneficially owning 15% or more of our common stock; or - 10 business days after our board of directors determines that any person, alone or together with its affiliates and associates, has become the beneficial owner of an amount of our common stock that our board determines to be substantial, which amount shall in no event be less than 15% of our shares of common stock outstanding, and at least a majority of our board of directors who are not officers, after reasonable inquiry and investigation, determine that such beneficial ownership is for the purpose of greenmail or is reasonably likely to cause a material adverse impact on us (any such person being referred to as an "acquiring person"). If a party acquires 15% or more of our outstanding shares of common stock in accordance with certain defined terms or our board of directors determines that any person has become an acquiring person, each right will entitle its holder to purchase, at the right's then current exercise price, a number of shares of our common stock having a market value of twice the right's then current exercise price. The rights do not have voting or dividend rights and expire on September 15, 2008, if not redeemed, exchanged or tendered prior to this date. The rights may be redeemed in whole, but not in part, by us at a price of $0.002 per right at any time prior to the earlier of: - the expiration of the rights; - 10 days following a person or group's acquisition of 15% or more of our outstanding common stock; or - our board of directors' determination of a person to be an acquiring person. If we are acquired, under certain circumstances each right entitles the holder to purchase, at the right's then current exercise price, a number of the acquiring company's common shares having a market value of twice the right's then current exercise price. Unless and until the rights become exercisable, the rights trade only with our shares of common stock and are represented by the stock certificates representing our common stock. If the rights become exercisable, separate certificates representing the rights will be delivered to the holders of our common stock at that time, and the rights will then trade separately from our shares of common stock. Upon conversion of the new preferred securities and existing preferred securities, the holders of these securities will receive, in addition to the common stock issuable upon such conversion, the rights that would have attached to the shares of our common stock if the rights had not become separated from the common stock. The rights will not become exercisable or separately tradable as a result of this offering. WARRANTS On August 30, 2001, we issued common stock warrants to our business consultant covering the right to purchase up to 150,000 shares of our common stock through a private placement, subject to upward or downward adjustment. The warrants do not have voting or dividend rights and are exercisable at any time from the date of issuance until they expire on January 2, 2005. We have granted registration rights to the business consultant and on November 19, 2001, we filed a registration statement to register for resale under the Securities Act the shares underlying the warrants. 134 UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS In the opinion of Gibson, Dunn & Crutcher LLP, counsel to us and the new trusts, the following discussion sets forth the material United States federal income tax consequences relating to the exchange offer and the ownership and disposition of the new preferred securities and common stock received upon a conversion of new preferred securities by holders that receive their exchange preferred securities in the exchange offer or purchase their cash offer preferred securities in the cash offer. This discussion does not address all aspects of United States federal income taxation that may be relevant to certain types of holders subject to special treatment under the Code, or the effect of any applicable state, local or foreign tax laws. The discussion assumes that the existing preferred securities are held, and the new preferred securities will be held, as "capital assets" within the meaning of Section 1221 of the Internal Revenue Code of 1986, as amended (the "Code"). This discussion is based upon provisions of the Code, the Treasury Regulations, and judicial and administrative interpretations of the Code and Treasury Regulations, all as in effect as of the date hereof, and all of which are subject to change (possibly on a retroactive basis) or different interpretation. There can be no assurance that the Internal Revenue Service (the "Service") will not challenge one or more of the tax consequences described herein, and we have not obtained, nor do we intend to obtain, a ruling from the Service with respect to the federal income tax consequences of the exchange offer, the treatment of the new debentures as debt for federal income tax purposes, or whether the new trusts will be classified as grantor trusts for federal income tax purposes. Investors considering the exchange of existing preferred securities in the exchange offer or the purchase of cash offer preferred securities in the cash offer are urged to consult their own tax advisors to determine their particular tax consequences of the exchange offer and the ownership and disposition of the new preferred securities under federal and applicable state, local and foreign tax laws. If a partnership (including for this purpose any entity treated as a partnership for U.S. tax purposes) is a beneficial owner of the new preferred securities or the shares of our common stock into which the new preferred securities are converted, the treatment of a partner in the partnership will depend on the status of the partner and upon the activities of the partnership. A holder of new preferred securities that is a partnership and partners in such partnership should consult their tax advisors about the U.S. federal income tax consequences of holding and disposing of the new preferred securities or the shares of our common stock into which the new preferred securities are converted. As used herein, a "U.S. holder" means a beneficial holder of existing preferred securities, exchange preferred securities received in the exchange offer, or cash offer preferred securities purchased in the cash offer that is a citizen or resident (within the meaning of Section 7701(b) of the Code) of the United States, a corporation or other entity taxed as a corporation for federal income tax purposes formed under the laws of the United States or any political subdivision thereof, an estate, the income of which is subject to United States federal income taxation regardless of its source, and a trust subject to the primary supervision of a court within the United States and the control of a United States fiduciary as described in Section 7701(a)(30) of the Code or any other person whose income or gain with respect to a new debenture is effectively connected with the conduct of a United States trade or business. A "non-U.S. holder" is any holder other than a U.S. holder. CLASSIFICATION OF THE NEW DEBENTURES In connection with the issuance of new preferred securities, Gibson, Dunn & Crutcher LLP, counsel to us and the new trusts, will render its opinion that the new debentures will be classified for United States federal income tax purposes as indebtedness under current law. We, the new trusts, and the holders of the new preferred securities (by acceptance of a beneficial interest in a new preferred security) will agree to treat the new debentures as indebtedness and the new preferred securities as evidences of a beneficial ownership interest in the new debentures for all United States federal income 135 tax purposes. No assurance can be given, however, that such position will not be challenged by the Service. The remainder of this discussion assumes that the new debentures will be classified for United States federal income tax purposes as indebtedness. No portion of the amounts received on the new preferred securities will be eligible for the dividends-received deduction. CLASSIFICATION OF THE NEW TRUSTS In connection with the issuance of the new preferred securities, Gibson, Dunn & Crutcher LLP, counsel to us and the new trusts, will render its opinion that, under then current law and assuming full compliance with the terms of the new trust agreements and the new indentures (and certain other documents), and based on certain facts and assumptions contained in such opinion, the new trusts will be classified for United States federal income tax purposes as grantor trusts and not as partnerships or as associations taxable as corporations. Accordingly, each holder of new preferred securities will be considered the owner of a pro rata portion of the new debentures held by the new trusts and will be required to include in gross income its pro rata share of income paid or accrued on the new debentures. TREATMENT OF EXCHANGE OFFER As discussed above under "Classification of the New Trusts," each holder of new preferred securities will be considered the owner of a pro rata portion of the new debentures. Similarly, each holder of existing preferred securities is considered the owner of a pro rata portion of the existing debentures. Thus, the exchange of existing preferred securities for exchange preferred securities pursuant to the exchange offer will be treated for United States federal income tax purposes as an exchange of existing debentures for exchange debentures. The tax treatment of a U.S. holder's exchange of existing debentures for exchange debentures pursuant to the exchange offer will depend on whether that exchange is treated as a recapitalization. The exchange will be treated as a recapitalization only if both the existing debentures and the exchange debentures constitute "securities" within the meaning of the provisions of the Code governing reorganizations. This, in turn, depends upon the facts and circumstances surrounding the origin and nature of these debt instruments and upon the interpretation of numerous judicial decisions. Based on these considerations, we believe that the exchange offer will be treated as a recapitalization for United States federal income tax purposes. As such, a U.S. holder will not recognize gain or loss on the exchange. A U.S. holder's tax basis in the exchange preferred securities and in its pro rata share of the underlying exchange debentures will equal the U.S. holder's adjusted tax basis in the existing preferred securities and in its pro rata share of the underlying existing debentures. The U.S. holder's holding period for the exchange preferred securities and for its pro rata share of the underlying exchange debentures will include the period in which the U.S. holder held the existing preferred securities and its pro rata share of the underlying existing debentures. A non-U.S. holder generally will not recognize gain or loss for United States federal income tax purposes on the exchange of existing debentures for exchange debentures, irrespective of whether gain or income realized on the disposition of exchange debentures or our common stock acquired upon a conversion is effectively connected with the non-U.S. holder's conduct of a United States trade or business, as described in "Non-U.S. Holders." TAX TREATMENT OF THE OWNERSHIP AND DISPOSITION OF NEW PREFERRED SECURITIES AND COMMON STOCK The following discussion is a summary of the principal United States federal income tax consequences resulting from the ownership and disposition of new preferred securities and common stock by U.S. holders. 136 ORIGINAL ISSUE DISCOUNT AND STATED INTEREST ON THE NEW PREFERRED SECURITIES We anticipate that the new debentures (whether acquired in the exchange or acquired in the cash offer) will be issued with original issue discount on account of our ability to defer the payment of interest at any time after February 15, 2004, and from time to time after that date during the term of the new debentures. The amount of original issue discount on a debt instrument generally is equal to the difference between the stated redemption price at maturity of the debt instrument and the debt instrument's issue price. The stated redemption price at maturity of a debt instrument will equal the sum of all amounts provided under the debt instrument, regardless of whether denominated as principal or interest, other than "qualified stated interest" payments. For such purposes, "qualified stated interest" generally means stated interest that is "unconditionally payable" in cash or property, other than debt instruments of the issuer, at least annually at a single fixed rate. Interest is considered to be "unconditionally payable" only if reasonable legal remedies exist to compel timely payment or the debt instrument otherwise provides terms and conditions that make the likelihood of late payment (other than late payment that occurs within a reasonable grace period) or nonpayment a "remote contingency." Under the new indentures, we have the right, at any time after February 15, 2004, and from time to time after that date during the term of the new debentures, to defer payments of interest by extending the interest payment period for a period not exceeding 20 consecutive quarterly periods with respect to each extension period. See the section titled "Description of Preferred Securities--Description of the New Debentures--Option to Extend Interest Payment Period," beginning on page 120 of this prospectus. While we do not currently intend to defer interest payments on the new debentures, we have nevertheless determined that the likelihood of exercise of such right to defer is not remote, thereby causing all stated interest on the new debentures to fail to be unconditionally payable and, therefore, to fail to qualify as "qualified stated interest." As a result, all stated interest will be added to the new debentures' stated redemption price at maturity for purposes of computing the amount of original issue discount on the new debentures. A U.S. holder, other than a holder with amortizable bond premium, must include any original issue discount on the new debentures as ordinary interest income as it accrues (potentially in advance of the receipt of any cash payments attributable to such income) in accordance with a constant yield method based on a compounding of interest, regardless of such U.S. holder's regular method of tax accounting. A U.S. holder may elect to include all interest that accrues or is to be paid on the new debentures in income under the constant yield method applicable to original issue discount, subject to limitations and exceptions. Because the stated interest (whether paid in cash at any time or, at our election, prior to February 15, 2004, in our common stock) paid in each quarterly period pursuant to the terms of the new debentures is generally expected to equal the amount of original issue discount required to be taken into account for such quarterly period, the timing of a holder's income inclusions with respect to the new debentures under the original issue discount rules is not expected to differ materially from the timing of cash received. Nevertheless, in the event that we exercise our right to defer payments of interest on the new debentures, a holder will still be required to include original issue discount into income on a constant yield method notwithstanding that we will not make any distributions on the new preferred securities during such extension period. AMORTIZABLE BOND PREMIUM Under the amortizable bond premium rule, a holder that "purchases" a debt instrument at a premium does not include any original issue discount in income. The exchange of existing debentures 137 for exchange debentures will be such a "purchase," and a U.S. holder may have amortizable bond premium with respect to the holder's beneficial interest in the exchange debentures acquired in the exchange. A U.S. holder will have amortizable bond premium if the holder's basis in its pro rata share of the underlying exchange debentures immediately after the exchange exceeds the sum of all amounts payable on the exchange debentures (other than payments of qualified stated interest) after the exchange date. As discussed above under the section titled "Treatment of Exchange Offer," a U.S. holder will receive a tax basis in the exchange debentures equal to the U.S. holder's adjusted tax basis in the existing debentures exchanged for the exchange debentures. A holder's basis in the exchange debentures for purposes of determining the amount of amortizable bond premium will be this carryover basis reduced by an amount equal to the value of the conversion option a holder possesses with respect to the exchange debentures. If a holder has amortizable bond premium, it can make an election to amortize the premium by offsetting interest income with bond premium in the holder's timely filed federal income tax return for the first taxable year to which the holder desires the election to apply. The holder should attach to the return a statement that the holder is making such an election under Section 171 of the Code. In general, a holder with amortizable bond premium amortizes the premium by offsetting the interest allocable to an accrual period with the bond premium allocable to the accrual period. Bond premium is allocable to an accrual period under the constant yield method. MARKET DISCOUNT A debt instrument will be considered to be a market discount instrument if the stated redemption price at maturity of the debt instrument at the time of acquisition exceeds the initial tax basis of the debt instrument immediately after its acquisition by the holder by more than 1/4 of 1% of the stated redemption price of the debt instrument multiplied by the number of complete years to maturity (after the holder acquired the debt instrument). For U.S. holders that acquire exchange debentures pursuant to the exchange offer, accrued market discount on existing debentures will carry over to the exchange debentures received in the exchange offer. Any gain recognized on the receipt of payments on or disposition of exchange debentures will be treated as ordinary income to the extent that this gain does not exceed the accrued market discount on the exchange debentures. A U.S. holder that exchanges existing debentures for exchange debentures pursuant to the exchange offer will have unaccrued market discount on the exchange debentures only if the existing debentures exchanged by the U.S. holder had market discount and only if the U.S. holder's tax basis in the exchange debentures immediately after the exchange is less than the issue price of the exchange debentures. The amount of the unaccrued market discount in such case would be the excess of the issue price of the exchange debentures over the sum of the U.S. holder's tax basis in the exchange debentures immediately after the exchange and the accrued market discount on the existing debentures not previously included in the holder's gross income and which carries over to the exchange debentures. DISTRIBUTION OF NEW DEBENTURES TO HOLDERS OF THE NEW PREFERRED SECURITIES Under current law, a distribution by the new trusts of the new debentures will be nontaxable as described under the section titled "Description of Preferred Securities--Description of the New Preferred Securities--Special Event Distribution; Tax Event Redemption," beginning on page 99 of this prospectus, and will result in the holder receiving directly its pro rata share of the new debentures previously held indirectly through the applicable new trust, with a holding period and tax basis equal to the holding period and adjusted tax basis such holder was considered to have had in its pro rata share of the underlying new debentures prior to such distribution. If, however, the new trusts were 138 characterized for United States federal income tax purposes as associations taxable as corporations at the time of their dissolution, the distribution of the new debentures would constitute a taxable event to holders of new preferred securities and a holder's holding period for the new debentures would begin on the date the new debentures were received. DISPOSITION OF THE NEW PREFERRED SECURITIES Upon a sale, new or other disposition of the new preferred securities (including a distribution of cash in redemption of a holder's new preferred securities upon redemption or repayment of the underlying new debentures, but excluding the distribution of new debentures), a holder will be considered to have disposed of all or part of its pro rata share of the new debentures, and will recognize gain or loss equal to the difference between the amount realized and the holder's adjusted tax basis in its pro rata share of the underlying new debentures deemed disposed. A holder's adjusted tax basis in the new debentures will generally equal its initial purchase price of the existing preferred securities, if the exchange preferred securities are acquired in the exchange, or the initial purchase price of the cash offer preferred securities, if the cash offer preferred securities are acquired in the cash offer. A holder's adjusted tax basis (generally its initial purchase price) will be increased by any accrued and unpaid original issue discount. Such gain or loss will be long-term capital gain or loss if the new preferred securities have been held by the holder for more than one year. The new preferred securities may trade at a price that does not fully reflect the value of accrued but unpaid interest with respect to the underlying new debentures. A holder that uses the accrual method of accounting (and a cash method holder if the new debentures are issued with original issue discount) and that disposes of its new preferred securities between record dates for payments of distributions thereon will nevertheless be required to include in income accrued but unpaid interest on the new debentures through the date of disposition, and to add such amount to its adjusted tax basis in its pro rata share of the underlying new debentures deemed disposed. Accordingly, such a holder will recognize a capital loss to the extent the selling price (which may not fully reflect the value of accrued but unpaid interest) is less than the holder's adjusted tax basis (which will include accrued but unpaid interest). Subject to certain limited exceptions, capital losses cannot be applied to offset ordinary income for United States federal income tax purposes. CONVERSION OF THE NEW PREFERRED SECURITIES TO OUR COMMON STOCK A holder of new preferred securities will not recognize income, gain or loss upon the conversion through the conversion agent of new debentures into our common stock, except with respect to any amount treated as paid with respect to interest. A holder of new preferred securities will, however, recognize gain upon the receipt of cash in lieu of a fractional share of our common stock equal to the amount of cash received less such holder's tax basis in such fractional share. Such holder's tax basis in our common stock received upon conversion will be equal to such holder's tax basis in the new preferred securities delivered to the conversion agent for exchange, less the basis allocated to any fractional share for which cash is received. Such holder's holding period in our common stock received upon conversion will generally include the holder's holding period of the new preferred securities delivered to the conversion agent for exchange, except with respect to our common stock received in respect of interest, the holding period of which will generally begin the day following receipt. ADJUSTMENT OF CONVERSION PRICE Treasury Regulations promulgated under section 305 of the Code would treat holders of new preferred securities as having received a constructive distribution from us in certain events pursuant to which the conversion price of the new debentures is adjusted. Thus, under certain circumstances, a reduction in the conversion price for the new debentures may result in deemed dividend income to holders of new preferred securities to the extent of our current or accumulated earnings and profits, if 139 any. Holders of new preferred securities are advised to consult their tax advisors as to the income tax consequences of adjustments in the conversion rate of new preferred securities. COMMON STOCK Distributions, if any, paid on our common stock after a conversion, to the extent made from our current or accumulated earnings and profits, will be included in a U.S. holder's income as ordinary income as they are paid. Gain or loss realized on a sale or exchange of common stock will equal the difference between the amount realized on such sale or exchange and the holder's adjusted tax basis in such stock. Such gain or loss will generally be long-term capital gain or loss if the U.S. holder's holding period in the common stock is more than one year. However, under the market discount rules, any gain recognized by a U.S. holder will be ordinary income to the extent of the accrued market discount that has not previously been included in income. For these purposes, any market discount that the U.S. holder had in the existing preferred securities that carried over to the new preferred securities, and has not been previously included in income, will be considered to be market discount with respect to the common stock. NON-U.S. HOLDERS The following summary discusses the United States federal income tax consequences to non-U.S. holders. We will not withhold on payments of principal and interest to you on the new debentures, provided that: (a) you do not actually (or constructively) own 10% or more of the total combined voting power of all classes of our voting stock within the meaning of the Code and the Treasury Regulations; (b) you are not a controlled foreign corporation that is related to us through stock ownership; (c) you are not a bank whose receipt of interest on the new debentures is described in section 881(c)(3)(A) Code; and (d) either (A) you provide your name and address on an IRS Form W-8BEN, and certify, under penalty of perjury, that you are not a United States person or (B) a financial institution holding the new preferred securities on your behalf certifies, under penalty of perjury, that it has received an IRS Form W-8BEN from the beneficial owner and provides us with a copy. We will withhold tax at a rate of 30% on the dividends paid on the shares of our common stock acquired upon a conversion. You may reduce the 30% withholding tax applicable to you on dividends if you provide us with a properly executed IRS Form W-8BEN claiming a reduction of or an exemption from withholding under an applicable tax treaty. Any gain or income realized on the disposition of a new preferred security, or our common stock acquired upon a conversion generally will not be subject to United States federal income or withholding tax unless: (a) that gain or income is effectively connected with your conduct of a trade or business in the United States; (b) you are an individual who is present in the United States for 183 days or more in the taxable year of that disposition, and certain other conditions are met; or (c) we are or have been a "U.S. real property holding corporation" for United States federal income tax purposes. We believe that it is unlikely that we are or will become a "U.S. real property holding corporation" for United States federal income tax purposes. If we were or became a U.S. real property holding corporation, so long as our common stock continues to be regularly traded on an established securities market, you would not be subject to U.S. federal income tax on the disposition of a new preferred security or our common stock if you held at all times less than 5% of the total outstanding new preferred securities or shares of our common stock, respectively. 140 Special rules may apply to you if you are a "controlled foreign corporation," "passive foreign investment company" or "foreign personal holding company" and are subject to special treatment under the Code. If you are such an entity, you should consult your own tax advisor to determine the United States federal, state, local and other tax consequences that may be relevant to you. INFORMATION REPORTING AND BACKUP WITHHOLDING If you are a non-U.S. holder, no backup withholding will be required with respect to payments made by us if a statement described above under "Non-U.S. Holders" has been received and we do not have actual knowledge or reason to know that you are a U.S. holder. Amounts withheld under the backup withholding rules may be allowed as a refund or a credit against your United States federal income tax liability provided the required information is furnished to the IRS. 141 PLAN OF DISTRIBUTION We have engaged Banc of America Securities LLC as the dealer manager in connection with our offer to exchange an aggregate of up to $37.95 million in liquidation amount of exchange preferred securities for up to $86.25 million in aggregate liquidation amount of existing preferred securities. We have also engaged Banc of America Securities LLC to use its best efforts to find purchasers for any or all of the $150.0 million of cash offer preferred securities to be issued by us pursuant to the cash offer. Banc of America Securities LLC is not making a commitment to take or purchase cash offer preferred securities from us and has not assured us that these securities will be placed successfully in the cash offer. The purchase price for the cash offer preferred securities is 100% of the liquidation amount of the cash offer preferred securities, plus accrued distributions, if any, from the original issue date. As compensation for its services as dealer manager, we are paying Banc of America Securities LLC a dealer manager fee in connection with the exchange offer which is discussed in the section titled "The Exchange Offer--Fees and Expenses," beginning on page 81 of this prospectus. As compensation for its services as placement agent, we are paying Banc of America Securities LLC a placement agent fee of 5% of the aggregate liquidation amount of cash offer preferred securities sold in the cash offer. We have entered into a dealer manager agreement with Banc of America Securities LLC in connection with the exchange offer. We have also entered into a distribution agreement with Banc of America Securities LLC in connection with the cash offer. The dealer manager agreement provides that the obligations of Banc of America Securities LLC are subject to the fulfillment of certain customary conditions precedent and other conditions precedent, including the tender, without being withdrawn, of an aggregate liquidation amount of a minimum of $50.0 million of existing preferred securities pursuant to the exchange offer and the purchase, pursuant to the cash offer, of cash offer preferred securities having an aggregate liquidation amount equal to at least 30% of the aggregate liquidation amount of the existing preferred securities tendered and accepted for exchange in the exchange offer. See the section titled "The Exchange Offer--Conditions for Completion of the Exchange Offer," beginning on page 80 of this prospectus. We intend to offer the cash offer preferred securities in the cash offer on a best efforts basis to investors. The cash offer is not conditioned upon a minimum number of cash offer preferred securities being sold nor upon consummation of the exchange offer. Each of the dealer manager agreement and the distribution agreement provides that we will indemnify Banc of America Securities LLC against specific liabilities, including liabilities under the Securities Act. As a further condition to the obligations of Banc of America Securities LLC under each of the dealer manager agreement and the distribution agreement, all of our executive officers and directors have entered into lock-up agreements with Banc of America Securities LLC. Under those agreements, our executive officers and directors may not, without the prior written consent of Banc of America Securities LLC, which consent may be withheld in its sole discretion, directly or indirectly sell, offer, contract or grant any option to sell (including any short sale), pledge, transfer, establish an open "put equivalent position" within the meaning of Rule 16a-1(h) under the Securities Exchange Act or otherwise dispose of any rights to, or interests in, any shares of our common stock, any options or warrants to acquire any shares of our common stock or any preferred securities convertible into, exercisable for or exchangeable for shares of our common stock owned as of the date of this prospectus or subsequently owned either of record or beneficially by them, or publicly announce the intention to do any of the actions described above, for a period commencing on the date of this prospectus and continuing through the close of trading on the date 90 days after that date. However, Banc of America Securities LLC, may, in its sole discretion and at any time without notice, release all or any portion of the preferred securities subject to lock-up agreements. 142 In addition, we and each new trust have agreed that during the period commencing on the date of this prospectus and continuing through the close of trading on the date 90 days after that date, we will not, nor will we publicly announce our intention to, without the prior written consent of Banc of America Securities LLC, which consent may be withheld in its sole discretion, issue, directly or indirectly sell, offer, contract or grant any option to sell (including any short sale), pledge, transfer or otherwise dispose of any rights to, or interests in, any shares of our common stock, any options or warrants to acquire any shares of our common stock or any preferred securities convertible into, exercisable for or exchangeable for shares of our common stock, other than our issuance and sale of new preferred securities in this offering, the issuance of shares of our common stock upon the exercise of outstanding options or warrants and the grant of options to purchase shares of common stock under our existing employee stock option, stock ownership or equity incentive plans, or the issuance of shares of common stock upon conversion of the existing preferred securities, the exchange preferred securities and the cash offer preferred securities. We have also agreed not to enter into any transaction, including a derivative transaction, having an economic effect similar to that of a sale of any of our shares or any of our preferred securities that are substantially similar to the shares or which are convertible into, exercisable for or exchangeable for, or represent the right to receive, shares or preferred securities that are substantially similar to the shares, subject to certain exceptions, without the prior consent of Banc of America Securities LLC. Prior to this offering, there has been no market for the new preferred securities. We have been advised by Banc of America Securities LLC that it presently intends to make a market in the new preferred securities as permitted by applicable laws and regulations. Banc of America Securities LLC has no obligation, however, to make a market in the new preferred securities and may discontinue market making at any time without notice. As a result, we can give you no assurance regarding the liquidity of the new preferred securities or trading markets for the new preferred securities. We have been advised by Banc of America Securities LLC that certain persons participating in this offering may engage in transactions, including stabilizing bids that may have the effect of stabilizing or maintaining the market price of the new preferred securities. Stabilization bids are bids for, or the purchase of, new preferred securities on behalf of Banc of America Securities LLC for the purpose of fixing or maintaining the price of the new preferred securities. This offering is being made in compliance with the requirements of "Direct Participation Programs" of the provisions of Rule 2810 of the National Association of Securities Dealers, Inc. Conduct Rules. Accordingly, sales will not be made to a discretionary account without the prior written consent of a purchaser. On July 27, 2001 we entered into a senior secured facility funded by a syndicate of banks for which Bank of America, N.A., acts as agent. This senior secured facility was amended on December 4, 2001 and December 7, 2001. Bank of America, N.A., is an affiliate of Banc of America Securities LLC. See the section titled "Management's Discussion and Analysis--Recent Developments--Senior Debt Refinancing," beginning on page 56 of this prospectus. 143 IDENTITY AND BACKGROUND OF FILING PERSONS AND SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth specific information as of October 31, 2001 (except as noted otherwise) regarding ownership of our shares of common stock by: - each of our executive officers or directors, and - each of the new trust's trustees. Unless otherwise stated, the address of each of the foregoing persons is c/o Fleetwood Enterprises, Inc., 3125 Myers Street in Riverside, California 92503. None of the persons listed below owns any of the existing preferred securities.
AMOUNT AND NATURE OF PERCENT OF BENEFICIAL OUTSTANDING NAME AND ADDRESS TITLE OWNERSHIP(1) SHARES(2) - ---------------- ---------------------------------------- ------------- ------------- Glenn F. Kummer(3).......... Chairman of the Board 755,000 2.2% Nelson W. Potter(4)......... President, Chief Executive Officer and 253,000 * Director Douglas M. Lawson(5)........ Director 26,000 * Walter F. Beran(6).......... Director 33,510 * Dr. James L. Doti(7)........ Director 24,658 * Thomas Pitcher(8)........... Director 17,037 * Paul D. Borghesani(9)....... Director 14,188 * Loren K. Carroll(10)........ Director 16,188 * David S. Engelman(11)....... Director 15,688 * John T. Montford(12)........ Director 12,927 * Margaret S. Dano(13)........ Director 8,000 * Charles A. Wilkinson(14).... Executive Vice President--Operations 40,500 * Boyd R. Plowman(15)......... Senior Vice President--Finance, Chief 31,000 * Financial Officer, Assistant Secretary and Regular Trustee for Fleetwood Capital Trust II and Fleetwood Capital Trust III Forrest D. Theobald(16)..... Vice President--General Counsel and 1,010 * Secretary Lyle N. Larkin(17).......... Vice President--Treasurer and Assistant 82,500 * Secretary Todd L. Inlander............ Vice President--Information Technology 0 0 James F. Smith(18).......... Vice President--Controller 6,000 * Larry L. Mace(19)........... Vice President--Administration and 54,500 * Supply Subsidiaries The Bank of New York ....... Delaware Trustee for Fleetwood Capital 0 0 (Delaware) Trust II and Fleetwood Capital Trust 101 Barclay Street III 21 West New York, NY 10286
- -------------------------- * Less than 1 percent 144 (1) Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission. Unless otherwise noted, and subject to applicable community property laws, each individual has sole voting and investment power with respect to the shares indicated. Shares of common stock subject to options currently exercisable or exercisable within 60 days after October 31, 2001, are deemed outstanding for computing the share amount and the percentage ownership of the person holding such stock options, but are not deemed outstanding for computing the percentage of any other person. (2) Applicable percentage of ownership is based on 34,969,141 shares of our common stock outstanding on October 31, 2001. (3) Includes 705,000 shares subject to options held by Mr. Kummer that are currently exercisable or will become exercisable within 60 days of October 31, 2001. Mr. Kummer, as sole trustee, holds the voting and dispositive power of 50,000 shares held in The Glenn F. Kummer Trust. (4) Includes 250,000 shares subject to options held by Mr. Potter that are currently exercisable or will become exercisable within 60 days of October 31, 2001. Mr. Nelson shares the voting and dispositive power of 1,000 shares with his wife as joint tenant, and shares the voting and dispositive power of 2,000 shares with Ms. Nelson as co-trustee, in The Potter Family Trust. (5) Includes 24,000 shares subject to options held by Mr. Lawson that are currently exercisable or will become exercisable within 60 days of October 31, 2001. (6) Includes 22,510 shares subject to options held by Mr. Beran that are currently exercisable or will become exercisable within 60 days of October 31, 2001. Mr. Beran individually holds 3,000 shares in a pension plan and shares the voting and dispositive power of 4,000 shares with his wife as co-trustee of The Beran Family Trust. (7) Includes 18,658 shares subject to options held by Dr. Doti that are currently exercisable or will become exercisable within 60 days of October 31, 2001. Dr. Doti holds 2,000 shares in The James & Lynne Pierson Doti Revocable Living Trust, for which he holds, as sole trustee, the voting and dispositive power of these shares. (8) Includes 12,537 shares subject to options held by Mr. Pitcher that are currently exercisable or will become exercisable within 60 days of October 31, 2001. (9) Includes 9,688 shares subject to options held by Mr. Borghesani that are currently exercisable or will become exercisable within 60 days of October 31, 2001. Mr. Borghesani jointly holds with his wife the voting and dispositive power of 500 shares of common stock. (10) Includes 9,688 shares subject to options held by Mr. Carroll that are currently exercisable or will become exercisable within 60 days of October 31, 2001. Mr. Carroll shares with his wife, as a tenant in common, the voting and dispositive power of 2,500 shares of common stock. (11) Includes 9,688 shares subject to options held by Mr. Engelman that are currently exercisable or will become exercisable within 60 days of October 31, 2001. (12) Includes 12,887 shares subject to options held by Mr. Montford that are currently exercisable or will become exercisable within 60 days of October 31, 2001. (13) Includes 4,000 shares subject to options held by Ms. Dano that are currently exercisable or will become exercisable within 60 days of October 31, 2001. (14) Includes 40,500 shares subject to options held by Mr. Wilkinson that are currently exercisable or will become exercisable within 60 days of October 31, 2001. (15) Includes 26,000 shares subject to options held by Mr. Plowman that are currently exercisable or will become exercisable within 60 days of October 31, 2001. Mr. Plowman jointly holds with his wife the voting and dispositive power of 5,000 shares of common stock. (16) Includes 1,000 shares subject to options held by Mr. Theobald that are currently exercisable or will become exercisable within 60 days of October 31, 2001. Mr. Theobald jointly holds with his wife the voting and dispositive power of 10 shares of common stock. 145 (17) Includes 80,500 shares subject to options held by Mr. Larkin that are currently exercisable or will become exercisable within 60 days of October 31, 2001. (18) Includes 4,000 shares subject to options held by Mr. Smith that are currently exercisable or will become exercisable within 60 days of October 31, 2001. (19) Includes 51,500 shares subject to options held by Mr. Mace that are currently exercisable or will become exercisable within 60 days of October 31, 2001. 146 LEGAL MATTERS Certain legal matters with respect to the validity of the new preferred securities have been passed upon for us and the new trusts by Morris, Nichols, Arsht & Tunnell, special Delaware counsel to us and each of the new trusts. Certain legal matters with respect to the validity of the new preferred securities guarantee, the cash offer preferred securities guarantee and our common stock issuable upon conversion of the new preferred securities and certain United States federal income taxation matters have been passed upon for us and each of the new trusts by Gibson, Dunn & Crutcher LLP, Orange County, California, special counsel to us and each of the new trusts. Certain legal matters will be passed upon for the dealer manager and placement agent by Davis Polk & Wardwell, New York, New York. EXPERTS The consolidated financial statements and schedule included in our annual report on Form 10-K, as amended, for the fiscal year ended April 29, 2001 and incorporated by reference in this prospectus and elsewhere in the registration statement have been audited by Arthur Andersen LLP, independent public accountants, as indicated in their reports with respect thereto, and are included herein in reliance upon the authority of said firm as experts in accounting and auditing in giving said reports. WHERE YOU CAN FIND ADDITIONAL INFORMATION We file reports, proxy statements and other information with the SEC, in accordance with the Exchange Act. You may read and copy the registration statement, the documents that we incorporate by reference into the prospectus, the Tender Offer Statement on Schedule TO-I, as well as our other reports, proxy statements and other information filed by us at the public reference facilities maintained by the SEC at Room 1024, 45 Fifth Street, N.W., Washington, D.C. 20549 and at the SEC's regional offices located at 233 Broadway, 16th Floor, Woolworth Building, New York, New York 10279-1803 and 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. You may obtain copies from the public reference room by calling the SEC at 1-800-SEC-0330. In addition, we are required to file electronic copies of these materials with the SEC through the SEC's EDGAR system. You may access the information we file with the SEC over the Internet at the SEC's web site at http://www.sec.gov. The SEC allows us to "incorporate by reference" the information we filed with them, which means that we can disclose important information by referring you to those documents. The information incorporated by reference is considered to be a part of this prospectus, and information that we file later with the SEC will automatically update and supersede this information. We incorporate by reference the documents listed below and any future filings made by us with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act until our offering is complete: - Current Report on Form 8-K, filed on December 6, 2001; - Current Report on Form 8-K, filed on November 8, 2001; - Current Report on Form 8-K, filed on October 26, 2001; - Quarterly Report on Form 10-Q for the fiscal quarter ended July 29, 2001; - Current Report on Form 8-K, filed on May 30, 2001; - Annual Report on Form 10-K, as amended, for the fiscal year ended April 29, 2001; - Registration Statement on Form 8-A, filed on October 28, 1998; and - The description of our common stock contained in our Registration Statement on Form S-4/A, filed on June 25, 1998. You may request a copy of these filings, at no cost to you, by writing or telephoning us at the following address: Investor Relations Department, Fleetwood Enterprises, Inc., 3125 Myers Street, Riverside, California 92503, (909) 351-3500. The forward-looking statements made in connection with the exchange offer pursuant to the registration statement or the Tender Offer Statement on Schedule TO-I are not and have not been protected under the Securities Litigation Reform Act. Futhermore, any references to the safe harbor for forward-looking statements made in reports that are incorporated by reference into this prospectus and filed pursuant to the Securities Exchange Act of 1934 are specifically not incorporated into this registration statement with respect to the exchange offer. 147 The Exchange Agent: THE BANK OF NEW YORK By Hand or Mail: The Bank of New York 15 Broad Street, 16th Floor New York, New York 10286 Attn: Carolle Montriul By Facsimile Transmission (For Eligible Institutions Only): (212) 235-2261 For Information or Confirmation by Telephone: (212) 235-2354 The Information Agent: D.F. KING & CO., INC. 77 Water Street, 20th Floor New York, New York 10005 Banks and Brokers Call Collect: (212) 269-5550 All Others Call Toll Free: (800) 290-6428 Any questions or requests for assistance or additional copies of this prospectus and the letter of transmittal may be directed to the information agent at its telephone number and location set forth above. You may also contact your broker, dealer, commercial bank or trust company or other nominee for assistance concerning the exchange offer. The dealer manager for the exchange offer: BANC OF AMERICA SECURITIES LLC 9 West 57th Street New York, New York 10019 (212) 583-8000 Call Toll Free: (888) 583-8900 PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS INDEMNIFICATION OF DIRECTORS AND OFFICERS OF FLEETWOOD ENTERPRISES, INC. Fleetwood Enterprises, Inc. is a Delaware corporation. Section 145(a) of the DGCL provides that a Delaware corporation may 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 Fleetwood Enterprises) by reason of the fact that such person is or was a director, officer, employee or agent of Fleetwood Enterprises, or is or was serving at the request of Fleetwood Enterprises as a director, officer, employee or agent of another corporation or enterprise, against expenses, judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of Fleetwood Enterprises, and, with respect to any criminal action or proceeding, had no cause to believe his or her conduct was unlawful. Section 145(b) of the DGCL provides that a Delaware corporation may 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 Fleetwood Enterprises to procure a judgment in its favor by reason of the fact that such person acted in any of the capacities set forth above, against expenses actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit if he or she acted under similar standards, except that no indemnification may be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable for negligence or misconduct in the performance of his or her duty to Fleetwood Enterprises unless and only to the extent that the court in which such action or suit was brought shall determine that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to be indemnified for such expenses which the court shall deem proper. Section 145 of the DGCL further provides that to the extent a director or officer of a corporation has been successful in the defense of any action, suit or proceeding referred to in subsections (a) and (b) or in the defense of any claim, issue or matter therein, such officer or director shall be indemnified against expenses actually and reasonably incurred by him or her in connection therewith; that indemnification provided for by Section 145 shall not be deemed exclusive of any other rights to which the indemnified party may be entitled; and that Fleetwood Enterprises may purchase and maintain insurance on behalf of a director or officer of Fleetwood Enterprises against any liability asserted against such officer or director and incurred by him or her in any such capacity or arising out of his or her status as such, whether or not Fleetwood Enterprises would have the power to indemnify him or her against such liabilities under Section 145. Fleetwood Enterprises' Charter contains no provisions regarding indemnification of officers and directors. Fleetwood Enterprises' Bylaws provide that the corporation shall, to the fullest extent permitted by law, 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 (including a derivative action) by reason of the fact that he is or was a director or officer of Fleetwood Enterprises, or is or was serving at the request of the corporation as a director, officer, employee 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 Fleetwood Enterprises, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The Bylaws authorize the advance of expenses in certain II-1 circumstances and authorize the corporation to provide indemnification or advancement of expenses to any person, by agreement or otherwise, on such terms and conditions as the board of directors may approve. The Bylaws also authorize Fleetwood Enterprises to purchase and maintain insurance on behalf of a director, officer, employee, agent of Fleetwood Enterprises or a person acting at the request of Fleetwood Enterprises as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise or as a member of any committee or similar body against any liability incurred by him in any such capacity whether or not the corporation would have the power to indemnify him. In addition to the indemnification provisions in Fleetwood Enterprises' Bylaws, Fleetwood Enterprises has entered into indemnity agreements with individuals serving as officers of the corporation. Therein, Fleetwood Enterprises has agreed to pay on behalf of the officer and his executors, administrators or assigns, any amount which he is or becomes legally obligated to pay because of any act or omission or neglect or breach of duty, including any actual or alleged error or misstatement or misleading statement, which he commits or suffers while acting in his capacity as officer of the corporation and solely because of his being an officer. Fleetwood Enterprises has agreed to pay damages, judgments, settlements and costs, costs of investigation, costs of defense of legal actions, claims or proceedings and appeals therefrom, and costs of attachment or similar bonds. Fleetwood Enterprises has also agreed that if it shall not pay within a set period of time after written claim, the officer may bring suit against Fleetwood Enterprises and shall be entitled to be paid for prosecuting such claim. Fleetwood Enterprises has not agreed to pay fines or fees imposed by law or payments which it is prohibited by applicable law form paying as indemnity and has not agreed to make any payment in connection with a claim made against the officer for which payment was made to the officer under an insurance policy, for which the officer is entitled to indemnity otherwise than under the agreement, and which is based upon the officer gaining any personal profit or advantage to which he was not legally entitled, in addition certain other payments. INDEMNIFICATION OF TRUSTEES, DIRECTORS AND OFFICERS OF FLEETWOOD CAPITAL TRUST II AND FLEETWOOD CAPITAL TRUST III Each Declaration of Trust II and Trust III provides that no Trustee of the new trusts, affiliate of any Trustee of the new trusts, or any officers, directors, shareholders, members, partners, employees, representatives or agent of any Trustee of the new trusts, or any employee or agent of the new trusts or its affiliates (each an "Indemnified Person") shall be liable, responsible or accountable in damages or otherwise to the new trusts or any officer, director, trustee, shareholder, partner, member, representative, employee or agent of the new trusts or its affiliates or any holder of the new trust securities for any loss, damage or claim incurred by reason of any act or omission performed or omitted by such Indemnified Person in good faith on behalf of the new trusts and in a manner such Indemnified Person reasonably believed to be within the scope of the authority conferred on such Indemnified Person by the Declaration or by law, except that an Indemnified Person shall be liable for any such loss, damage or claim incurred by reason of such Indemnified Person's negligence or willful misconduct (except as otherwise provided, in the case of the Property Trustee, in the Trust Indenture Act) with respect to such acts or omissions. Each Declaration of Trust II and Trust III also provides that to the fullest extent permitted by applicable law, Fleetwood Enterprises shall indemnify and hold harmless each Indemnified Person from and against any loss, damage, liability, tax, penalty, expense or claim of any kind or nature whatsoever incurred by such Indemnified Person by reason of the creation, operation or termination of the new trusts or any act or omission performed or omitted by such Indemnified Person in good faith on behalf of the new trusts and in a manner such Indemnified Person reasonably believed to be within the scope of authority conferred on such Indemnified Person by the Declaration, except that no Indemnified Person shall be entitled to be indemnified in respect of any loss, damage or claim incurred by such Indemnified Person by reason of negligence or willful misconduct with respect to such acts or omissions. II-2 The Declaration further provides that to the fullest extent permitted by applicable law, expenses (including legal fees and expenses) incurred by an Indemnified Person in defending any claim, demand, action, suit or proceeding shall, from time to time, be advanced by Fleetwood Enterprises prior to the final disposition of such claim, demand, action, suit or proceeding upon receipt by Fleetwood Enterprises of an undertaking by or on behalf of the Indemnified Person to repay such amount if it shall be determined that the Indemnified Person is not entitled to be indemnified under the Declaration. ITEM 21. EXHIBITS. The following exhibits are filed as part of this Registration Statement:
NUMBER DESCRIPTION - ------ ------------------------------------------------------------ 1.1 Form of Amended and Restated Dealer Manager Agreement with Banc of America Securities LLC. 1.2 Form of Distribution Agreement with Banc of America Securities LLC. 4.1 Rights Agreement dated September 15, 1998, as amended on April 30, 2001, by and between Fleetwood Enterprises, Inc. and Fleet National Bank, f/k/a BankBoston, N.A., (incorporated by reference to Fleetwood Enterprises, Inc.'s Current Reports on Form 8-K filed on November 10, 1998 and May 30, 2001). 4.2 Amended and Restated Declaration of Trust of Fleetwood Capital Trust dated as of February 10, 1998, by and among Fleetwood Enterprises, Inc. and individual trustees of the Trust (incorporated by reference to Fleetwood Enterprises, Inc.'s Registration Statement on Form S-4 filed April 9, 1998). 4.3 Declaration of Trust of Fleetwood Capital Trust II dated as of June 7, 2001, by and among Fleetwood Enterprises, Inc. and the individual trustees of such Trust.* 4.4 Form of Amended and Restated Declaration of Trust of Fleetwood Capital Trust II, by and among Fleetwood Enterprises, Inc. and the individual trustees of such Trust.* 4.5 Declaration of Trust of Fleetwood Capital Trust III, dated as of December 7, 2001, by and among Fleetwood Enterprises, Inc. and the individual trustees of such Trust.* 4.6 Form of Amended and Restated Declaration of Trust of Fleetwood Capital Trust III, by and among Fleetwood Enterprises, Inc. and the individual trustees of such Trust.* 4.7 Indenture dated as of February 10, 1998, by and between Fleetwood Enterprises, Inc. and The Bank of New York, as Trustee, used in connection with Fleetwood Enterprises Inc.'s 6% Convertible Subordinated Debentures due 2028 (incorporated by reference to Fleetwood Enterprises Inc.'s Registration Statement on Form S-4 filed April 9, 1998). 4.8 Form of Indenture by and between Fleetwood Enterprises, Inc. and The Bank of New York, as Trustee, used in connection with Fleetwood Enterprises Inc.'s 9.5% Convertible Trust II Subordinated Debentures due February 15, 2013. 4.9 Form of Indenture by and between Fleetwood Enterprises, Inc. and The Bank of New York, as Trustee, used in connection with Fleetwood Enterprises, Inc.'s 9.5% Convertible Trust III Subordinated Debentures due February 15, 2013. 4.10 Preferred Securities Guarantee Agreement dated as of February 10, 1998, by and between Fleetwood Enterprises, Inc. and The Bank of New York, as preferred guarantee trustee (incorporated by reference to Fleetwood Enterprises Inc.'s Registration Statement on Form S-4 filed April 9, 1998). 4.11 Form of Preferred Securities Guarantee Agreement, by and between Fleetwood Enterprises Inc. and The Bank of New York, as preferred guarantee trustee.* 4.12 Form of Cash Offer Preferred Securities Guarantee Agreement, by and between Fleetwood Enterprises, Inc. and The Bank of New York, as preferred guarantee trustee.*
II-3
NUMBER DESCRIPTION - ------ ------------------------------------------------------------ 4.13 Form of Common Securities Guarantee Agreement, by Fleetwood Enterprises, Inc. in favor of the holders of the common securities of Fleetwood Capital Trust II.* 4.14 Form of Cash Offer Common Securities Guarantee Agreement, by Fleetwood Enterprises, Inc. in favor of the holders of the common securities of Fleetwood Capital Trust III.* 4.15 Form of 6% Convertible Trust Preferred Security due February 15, 2028 (included in the Amended and Restated Declaration of Trust filed as Exhibit 4.2 hereto). 4.16 Form of 6% Convertible Subordinated Debenture due February 15, 2028 (included in the Indenture filed as Exhibit 4.7 hereto). 4.17 Form of 9.5% Convertible Trust II Subordinated Debenture due February 15, 2013 (included in the Form of Indenture filed as Exhibit 4.8 hereto). 4.18 Form of 9.5% Convertible Trust II Preferred Security due February 15, 2013 (included in the Form of Amended and Restated Declaration of Trust filed as Exhibit 4.4 hereto). 4.19 Form of 9.5% Convertible Trust III Subordinated Debenture due February 15, 2013 (included in the Form of Indenture filed as Exhibit 4.9 hereto). 4.20 Form of 9.5% Convertible Trust III Preferred Security due February 15, 2013 (included in the Form of Amended and Restated Declaration of Trust filed as Exhibit 4.6 hereto). 4.21 Registration Rights Agreement dated February 10, 1998, by and among Fleetwood Capital Trust, Fleetwood Enterprises Inc. and PaineWebber Incorporated (incorporated by reference to Fleetwood Enterprises Inc.'s Annual Report on Form 10-K for the year ended April 26, 1998). 5.1 Opinion of Morris, Nichols, Arsht & Tunnell as to the validity of certain of the securities being registered. 5.2 Opinion of Gibson, Dunn & Crutcher LLP as to the validity of certain of the securities being registered. 8.1 Opinion of Gibson, Dunn & Crutcher LLP as to certain tax matters. 12.1 Statement setting forth computation of ratio of earnings to fixed charges. 15.1 Letter of Arthur Andersen LLP regarding unaudited interim financial information.* 23.1 Consent of Morris, Nichols, Arsht & Tunnell (included in Exhibit 5.1). 23.2 Consent of Gibson, Dunn & Crutcher LLP (included in Exhibits 5.2 and 8.1). 23.3 Consent of Arthur Andersen LLP. 24.1 Powers of Attorney.* 25.1 Statement of Eligibility and Qualification on Form T-l of The Bank of New York, as Trustee, with respect to the 9.5% Convertible Trust II Preferred Securities due February 15, 2013. 25.2 Statement of Eligibility and Qualification on Form T-l of The Bank of New York, as Trustee, with respect to the 9.5% Convertible Trust II Subordinated Debentures due February 15, 2013. 25.3 Statement of Eligibility and Qualification on Form T-l of The Bank of New York, as Trustee, with respect to the Guarantee of 9.5% Convertible Trust II Preferred Securities due February 15, 2013. 25.4 Statement of Eligibility and Qualification on Form T-1 of The Bank of New York, as Trustee, with respect to the 9.5% Convertible Trust III Preferred Securities due February 15, 2013. 25.5 Statement of Eligibility and Qualification on Form T-1 of The Bank of New York, as Trustee, with respect to the 9.5% Convertible Trust III Subordinated Debentures due February 15, 2013.
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NUMBER DESCRIPTION - ------ ------------------------------------------------------------ 25.6 Statement of Eligibility and Qualification on Form T-1 of The Bank of New York, as Trustee, with respect to the Guarantee of 9.5% Convertible Trust III Preferred Securities due February 15, 2013. 99.1 Form of Letter of Transmittal.* 99.2 Form of Notice of Guaranteed Delivery.* 99.3 Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and other Nominees.* 99.4 Form of Letter to Clients.* 99.5 Form of Fleetwood Enterprises, Inc. Letter to Holders of Existing Preferred Securities and The Depository Trust Company.* 99.6 Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9.* 99.7 Form of Letter of Transmittal for the Amended Exchange Offer. 99.8 Form of Notice of Guaranteed Delivery for the Amended Exchange Offer.* 99.9 Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and other Nominees for the Amended Exchange Offer.* 99.10 Form of Letter to Clients for the Amended Exchange Offer.* 99.11 Form of Fleetwood Enterprises, Inc. Letter to Holders of Existing Preferred Securities and The Depository Trust Company for the Amended Exchange Offer.* 99.12 Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 for the Amended Exchange Offer.*
- ------------------------ * Previously filed. ITEM 22. UNDERTAKINGS. (a) The undersigned Registrants each hereby undertake to respond to requests for information that is incorporated by reference into the Prospectus pursuant to Item 4, 10(b), 11 or 13 of Form S-4, within one business day of receipt of such request, and to send the incorporated documents by first-class mail or equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement throughout the date responding to the request. (b) The undersigned Registrants each hereby undertake to supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective. (c) Fleetwood Enterprises, Inc. hereby undertakes that, for purposes of determining any liability under the Securities Act, each filing of Fleetwood Enterprises Inc.'s annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of any employee benefit plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial BONA FIDE offering thereof. (d) Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrants pursuant to the foregoing provisions, or otherwise, the registrants have each been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrants of expenses incurred or paid by a director, officer or controlling person of the registrants in the successful defense of any action, suit or proceeding) is asserted by such II-5 director, officer or controlling person in connection with the securities being registered, the registrants will, unless in the opinion of their counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by them is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. (e) The undersigned registrants each hereby undertake: (1) to file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act; (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement. (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; PROVIDED, HOWEVER, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the registration statement is on Form S-3, Form S-8 or Form F-3, and the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the Commission by Fleetwood Enterprises pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial BONA FIDE offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. II-6 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, Fleetwood Capital Trust II certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and Form S-4 and has duly caused this Amendment No. 4 to the Registration Statement on Form S-4 and Amendment No. 4 to the Registration Statement on Form S-3 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Riverside, State of California, on December 11, 2001. FLEETWOOD CAPITAL TRUST II By: /s/ BOYD R. PLOWMAN ---------------------------------------------- Boyd R. Plowman REGULAR TRUSTEE
Pursuant to the requirements of the Securities Act of 1933, as amended, Fleetwood Capital Trust III certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and Form S-4 and has duly caused this Amendment No. 4 to the Registration Statement on Form S-4 and Amendment No. 4 to the Registration Statement on Form S-3 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Riverside, State of California, on December 11, 2001. FLEETWOOD CAPITAL TRUST III By: /s/ BOYD R. PLOWMAN ---------------------------------------------- Boyd R. Plowman REGULAR TRUSTEE
II-7 Pursuant to the requirements of the Securities Act of 1933, as amended, Fleetwood Enterprises, Inc. certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and Form S-4 and has duly caused this Amendment No. 4 to the Registration Statement on Form S-4 and Amendment No. 4 to the Registration Statement on Form S-3 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Riverside, State of California, on December 11, 2001. FLEETWOOD ENTERPRISES, INC. By: /s/ BOYD R. PLOWMAN ---------------------------------------------- Boyd R. Plowman SENIOR VICE PRESIDENT--FINANCE AND CHIEF FINANCIAL OFFICER
Pursuant to the requirements of the Securities Act of 1933, this Amendment No. 4 to the Registration Statement on Form S-4 and Amendment No. 4 to the Registration Statement on Form S-3 has been signed by the following persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE --------- ----- ---- /s/ GLENN F. KUMMER --------------------------------- Chairman of the Board December 11, 2001 Glenn F. Kummer* /s/ NELSON W. POTTER President and Chief Executive --------------------------------- Officer and Director (Principal December 11, 2001 Nelson W. Potter* Executive Officer) Senior Vice President--Finance, /s/ BOYD R. PLOWMAN Chief Financial Officer and --------------------------------- Assistant Secretary (Principal December 11, 2001 Boyd R. Plowman* Financial and Accounting Officer) /s/ THOMAS B. PITCHER --------------------------------- Director December 11, 2001 Thomas B. Pitcher* /s/ DOUGLAS M. LAWSON --------------------------------- Director December 11, 2001 Douglas M. Lawson* /s/ WALTER F. BERAN --------------------------------- Director December 11, 2001 Walter F. Beran*
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SIGNATURE TITLE DATE --------- ----- ---- /s/ LOREN K. CARROLL --------------------------------- Director December 11, 2001 Loren K. Carroll* /s/ DAVID S. ENGELMAN --------------------------------- Director December 11, 2001 David S. Engelman* /s/ JAMES L. DOTI --------------------------------- Director December 11, 2001 James L. Doti* /s/ PAUL D. BORGHESANI --------------------------------- Director December 11, 2001 Paul D. Borghesani* /s/ JOHN T. MONTFORD --------------------------------- Director December 11, 2001 John T. Montford* /s/ MARGARET S. DANO --------------------------------- Director December 11, 2001 Margaret S. Dano*
/s/ FORREST D. THEOBALD By: --------------------------------- ATTORNEY IN FACT * By authority of powers of attorney filed with this registration statement.
II-9 EXHIBIT INDEX
NUMBER DESCRIPTION - ------ ------------------------------------------------------------ 1.1 Form of Amended and Restated Dealer Manager Agreement with Banc of America Securities LLC. 1.2 Form of Distribution Agreement with Banc of America Securities LLC. 4.1 Rights Agreement dated September 15, 1998, as amended on April 30, 2001, by and between Fleetwood Enterprises, Inc. and Fleet National Bank, f/k/a BankBoston, N.A., (incorporated by reference to Fleetwood Enterprises, Inc.'s Current Reports on Form 8-K filed on November 10, 1998 and May 30, 2001). 4.2 Amended and Restated Declaration of Trust of Fleetwood Capital Trust dated as of February 10, 1998, by and among Fleetwood Enterprises, Inc. and individual trustees of the Trust (incorporated by reference to Fleetwood Enterprises, Inc.'s Registration Statement on Form S-4 filed April 9, 1998). 4.3 Declaration of Trust of Fleetwood Capital Trust II dated as of June 7, 2001, by and among Fleetwood Enterprises, Inc. and the individual trustees of such Trust.* 4.4 Form of Amended and Restated Declaration of Trust of Fleetwood Capital Trust II, by and among Fleetwood Enterprises, Inc. and the individual trustees of such Trust.* 4.5 Declaration of Trust of Fleetwood Capital Trust III, dated as of December 7, 2001, by and among Fleetwood Enterprises, Inc. and the individual trustees of such Trust.* 4.6 Form of Amended and Restated Declaration of Trust of Fleetwood Capital Trust III, by and among Fleetwood Enterprises, Inc. and the individual trustees of such Trust.* 4.7 Indenture dated as of February 10, 1998, by and between Fleetwood Enterprises, Inc. and The Bank of New York, as Trustee, used in connection with Fleetwood Enterprises Inc.'s 6% Convertible Subordinated Debentures due 2028 (incorporated by reference to Fleetwood Enterprises Inc.'s Registration Statement on Form S-4 filed April 9, 1998). 4.8 Form of Indenture by and between Fleetwood Enterprises, Inc. and The Bank of New York, as Trustee, used in connection with Fleetwood Enterprises Inc.'s 9.5% Convertible Trust II Subordinated Debentures due February 15, 2013. 4.9 Form of Indenture by and between Fleetwood Enterprises, Inc. and The Bank of New York, as Trustee, used in connection with Fleetwood Enterprises, Inc.'s 9.5% Convertible Trust III Subordinated Debentures due February 15, 2013. 4.10 Preferred Securities Guarantee Agreement dated as of February 10, 1998, by and between Fleetwood Enterprises, Inc. and The Bank of New York, as preferred guarantee trustee (incorporated by reference to Fleetwood Enterprises Inc.'s Registration Statement on Form S-4 filed April 9, 1998). 4.11 Form of Preferred Securities Guarantee Agreement, by and between Fleetwood Enterprises Inc. and The Bank of New York, as preferred guarantee trustee.* 4.12 Form of Cash Offer Preferred Securities Guarantee Agreement, by and between Fleetwood Enterprises, Inc. and The Bank of New York, as preferred guarantee trustee.* 4.13 Form of Common Securities Guarantee Agreement, by Fleetwood Enterprises, Inc. in favor of the holders of the common securities of Fleetwood Capital Trust II.* 4.14 Form of Cash Offer Common Securities Guarantee Agreement, by Fleetwood Enterprises, Inc. in favor of the holders of the common securities of Fleetwood Capital Trust III.* 4.15 Form of 6% Convertible Trust Preferred Security due February 15, 2028 (included in the Amended and Restated Declaration of Trust filed as Exhibit 4.2 hereto). 4.16 Form of 6% Convertible Subordinated Debenture due February 15, 2028 (included in the Indenture filed as Exhibit 4.7 hereto).
NUMBER DESCRIPTION - ------ ------------------------------------------------------------ 4.17 Form of 9.5% Convertible Trust II Subordinated Debenture due February 15, 2013 (included in the Form of Indenture filed as Exhibit 4.8 hereto). 4.18 Form of 9.5% Convertible Trust II Preferred Security due February 15, 2013 (included in the Form of Amended and Restated Declaration of Trust filed as Exhibit 4.4 hereto). 4.19 Form of 9.5% Convertible Trust III Subordinated Debenture due February 15, 2013 (included in the Form of Indenture filed as Exhibit 4.9 hereto). 4.20 Form of 9.5% Convertible Trust III Preferred Security due February 15, 2013 (included in the Form of Amended and Restated Declaration of Trust filed as Exhibit 4.6 hereto). 4.21 Registration Rights Agreement dated February 10, 1998, by and among Fleetwood Capital Trust, Fleetwood Enterprises Inc. and PaineWebber Incorporated (incorporated by reference to Fleetwood Enterprises Inc.'s Annual Report on Form 10-K for the year ended April 26, 1998). 5.1 Opinion of Morris, Nichols, Arsht & Tunnell as to the validity of certain of the securities being registered. 5.2 Opinion of Gibson, Dunn & Crutcher LLP as to the validity of certain of the securities being registered. 8.1 Opinion of Gibson, Dunn & Crutcher LLP as to certain tax matters. 12.1 Statement setting forth computation of ratio of earnings to fixed charges. 15.1 Letter of Arthur Andersen LLP regarding unaudited interim financial information.* 23.1 Consent of Morris, Nichols, Arsht & Tunnell (included in Exhibit 5.1). 23.2 Consent of Gibson, Dunn & Crutcher LLP (included in Exhibits 5.2 and 8.1). 23.3 Consent of Arthur Andersen LLP. 24.1 Powers of Attorney.* 25.1 Statement of Eligibility and Qualification on Form T-l of The Bank of New York, as Trustee, with respect to the 9.5% Convertible Trust II Preferred Securities due February 15, 2013. 25.2 Statement of Eligibility and Qualification on Form T-l of The Bank of New York, as Trustee, with respect to the 9.5% Convertible Trust II Subordinated Debentures due February 15, 2013. 25.3 Statement of Eligibility and Qualification on Form T-l of The Bank of New York, as Trustee, with respect to the Guarantee of 9.5% Convertible Trust II Preferred Securities due February 15, 2013. 25.4 Statement of Eligibility and Qualification on Form T-1 of The Bank of New York, as Trustee, with respect to the 9.5% Convertible Trust III Preferred Securities due February 15, 2013. 25.5 Statement of Eligibility and Qualification on Form T-1 of The Bank of New York, as Trustee, with respect to the 9.5% Convertible Trust III Subordinated Debentures due February 15, 2013. 25.6 Statement of Eligibility and Qualification on Form T-1 of The Bank of New York, as Trustee, with respect to the Guarantee of 9.5% Convertible Trust III Preferred Securities due February 15, 2013. 99.1 Form of Letter of Transmittal.* 99.2 Form of Notice of Guaranteed Delivery.* 99.3 Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and other Nominees.* 99.4 Form of Letter to Clients.*
NUMBER DESCRIPTION - ------ ------------------------------------------------------------ 99.5 Form of Fleetwood Enterprises, Inc. Letter to Holders of Existing Preferred Securities and The Depository Trust Company.* 99.6 Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9.* 99.7 Form of Letter of Transmittal for the Amended Exchange Offer. 99.8 Form of Notice of Guaranteed Delivery for the Amended Exchange Offer.* 99.9 Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and other Nominees for the Amended Exchange Offer.* 99.10 Form of Letter to Clients for the Amended Exchange Offer.* 99.11 Form of Fleetwood Enterprises, Inc. Letter to Holders of Existing Preferred Securities and The Depository Trust Company for the Amended Exchange Offer.* 99.12 Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 for the Amended Exchange Offer.*
- ------------------------ * Filed previously. EX-1.1 3 a2065672zex-1_1.txt EXHIBIT 1.1 Exhibit 1.1 FLEETWOOD ENTERPRISES, INC., FLEETWOOD CAPITAL TRUST II and BANC OF AMERICA SECURITIES LLC Amended Dealer Manager Agreement dated as of December , 2001 ---- AMENDED DEALER MANAGER AGREEMENT December , 2001 --- BANC OF AMERICA SECURITIES LLC 9 West 57th Street New York, New York 10019 Ladies and Gentlemen: On the date hereof, the existing Dealer Manager Agreement dated December 5, 2001 by and between Fleetwood Enterprises Inc., a Delaware corporation (the "Company"), Fleetwood Capital Trust II (the "Trust") and Banc of America Securities LLC shall be and is hereby amended and restated in its entirety as set forth herein. 1. INTRODUCTORY. The Company is to offer to exchange up to $___ million in aggregate liquidation amount of___%Convertible Trust II Preferred Securities due February 15, 2013 (the "Exchange Securities") of the Trust for up to $86.25 million in aggregate liquidation amount of the outstanding 6% Convertible Trust Preferred Securities due February 15, 2028 (the "Existing Securities") of Fleetwood Capital Trust (the "Existing Trust"). For each $50.0 in liquidation amount of Existing Securities accepted for exchange, the holder of such Existing Securities will receive $22.0 in liquidation amount of Exchange Securities, subject to the terms and conditions set forth in the Prospectus (as hereinafter defined). The Exchange Securities will be guaranteed by a guarantee (the "Guarantee") by the Company to the extent described in the Prospectus. The exchange offer described above and in the Prospectus is herein referred to as the "Exchange Offer." In connection with the Exchange Offer, the Company will deposit in the Trust as trust assets its ___% Convertible Trust II Subordinated Debentures due February 15, 2013 (the "Debentures") issued pursuant to an Indenture (the "Indenture") between the Company and the Trustee (as defined in the Indenture) and the Trust will transfer to the Company the Exchange Securities and its common securities (the "Common Securities"), as set forth in the Prospectus. 2. ENGAGEMENT AS DEALER MANAGER. By this Dealer Manager Agreement (the "Agreement"), each of the Company and the Trust hereby engages and appoints you as the exclusive dealer manager (the "Dealer Manager") for the Exchange Offer and authorizes you to act as such in connection with the Exchange Offer. As Dealer Manager you agree, in accordance with your customary practice, to perform in connection with the Exchange Offer those services as are customarily performed by investment banking concerns in connection with similar offers, including, without limitation, using all reasonable efforts to solicit from individuals and institutions the tender of Existing Securities pursuant to and in accordance with the terms and conditions of the Exchange Offer. You shall act as an independent contractor in connection with the Exchange Offer with duties solely to the Company and the Trust and nothing herein contained shall constitute you as an agent of the Company or the Trust in connection with the solicitation of such Existing Securities pursuant to and in accordance with the terms and conditions of the Exchange Offer; PROVIDED, HOWEVER, that the Company hereby authorizes the Dealer Manager, and/or one or more registered brokers or dealers chosen by the Dealer Manager, to act as the Company's agent in making the Exchange Offer to residents of any jurisdiction in which such agent designation may be necessary to comply with applicable law. Nothing in this Agreement shall constitute the Dealer Manager a partner or joint venturer with the Trust, the Company or any of its subsidiaries. On the basis of the representations and warranties and agreements of each of the Company and the Trust contained herein and subject to and in accordance with the terms and conditions hereof and of the Exchange Offer, the Dealer Manager agrees to act in such capacity. 3. REGISTRATION STATEMENT, PROSPECTUS AND OFFERING MATERIALS. (a) The Company and the Trust have prepared and filed with the Securities and Exchange Commission (the "Commission"), under the Securities Act of 1933, as amended, and the rules and regulations of the Commission promulgated thereunder (collectively, the "Securities Act"), a combined registration statement on Form S- 4 (Reg. No. 333-62838) and Form S-3 (Reg. No. 333-62850), including a Prospectus (as hereinafter defined), covering the registration of the Exchange Securities, the Guarantee, the Debentures, the shares of the common stock, par value $1.00 per share of the Company (the "Fleetwood Common Stock"), issuable upon conversion of the Exchange Securities and the Debentures (the "Conversion Shares"), and the shares of Fleetwood Common Stock (the "Interest Shares" and together with the "Conversion Shares", the "Shares") that may be issued solely at the Company's option as payment of interest on the Debentures in accordance with the terms of the Indenture. The term "Registration Statement," as used in this Agreement, shall mean such registration statement, including the exhibits thereto and any documents incorporated by reference therein, in the form in which it becomes effective and, in the event of any amendment or supplement thereto or the filing of any abbreviated registration statement pursuant to Rule 462(b) of the Securities Act relating thereto after the effective date of such registration statement, shall also mean (from and after the effectiveness of such abbreviated 2 registration statement) such registration statement as so amended or supplemented, together with any such abbreviated registration statement. The final prospectus included in the Registration Statement (including any documents incorporated in the Prospectus by reference) is herein called the "Prospectus," except that if the final prospectus furnished to the Dealer Manager for use in connection with the Exchange Offer differs from the prospectus set forth in the Registration Statement (whether or not such prospectus is required to be filed pursuant to Rule 424(b)), the term "Prospectus" shall refer to the final prospectus furnished to the Dealer Manager for such use. The terms "supplement" and "amendment" or "supplemented" and "amended" as used herein with respect to the Prospectus shall include all documents deemed to be incorporated by reference in the Prospectus that are filed subsequent to the date of the Prospectus and prior to the termination of the Exchange Offer by the Company with the Commission pursuant to the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder (the "Exchange Act"). (b) The Company and the Trust have prepared and filed, or agree that prior to or on the date of commencement of the Exchange Offer (the "Commencement Date") they will file, with the Commission under the Exchange Act a Tender Offer Statement on Schedule TO with respect to the Exchange Offer, including the exhibits thereto and any documents incorporated by reference therein. The term "Schedule TO" as used in this Agreement shall mean such Tender Offer Statement on Schedule TO, including any amendment or supplement thereto. (c) The Registration Statement, the Prospectus, Schedule TO, the related letters from the Dealer Manager to securities brokers, dealers, commercial banks, trust companies and other nominees, letters to beneficial owners of Existing Securities, letters of transmittal, notice of guaranteed delivery and any newspaper announcements, press releases and other offering materials and information the Company may use, prepare, approve, publicly disseminate, provide to registered or beneficial holders of Existing Securities or authorize for use in connection with the Exchange Offer are herein collectively referred to as the "Exchange Offer Materials." 4. USE OF EXCHANGE OFFER MATERIALS. (a) The Exchange Offer Materials have been or will be prepared and approved by, and are the sole responsibility of, the Company and the Trust. The Company shall, to the extent permitted by law, use its best efforts to disseminate the Exchange Offer Materials to each registered holder of any Existing Securities, as soon as practicable after the Commencement Date, pursuant to Rule 13e-4 under the Exchange Act and comply in all material respects with its obligations thereunder. Thereafter, to the extent practicable until three days prior to the expiration date of the Exchange Offer, the Company shall use its best efforts to cause copies of such Exchange Offer Materials and a return 3 envelope to be mailed to each person who becomes a holder of record of any Existing Securities. The Company and the Trust acknowledge and agree that you may use the Exchange Offer Materials as specified herein without assuming any responsibility for independent verification on your part and the Company and the Trust represent and warrant to you that you may rely on the accuracy and completeness of any information delivered to you by or on behalf of the Company or the Trust without assuming any responsibility for independent verification of such information or without performing or receiving any appraisal or evaluation of the assets or liabilities of the Company or the Trust. (b) The Company and the Trust agree to provide you with as many copies as you may reasonably request of the Exchange Offer Materials. The Company and the Trust agree that within a reasonable time prior to using or filing with any federal, state or other governmental or regulatory agency or instrumentality (an "Other Agency"), including the National Association of Securities Dealers Inc. (the "NASD"), of any Exchange Offer Materials, it will submit copies of such materials to you and your counsel and will give reasonable consideration to you and your counsel's comments, if any, thereon. The Company and the Trust agree prior to the termination of the Exchange Offer, before amending or supplementing the Registration Statement, or the Prospectus, to furnish copies of drafts to, and consult with, the Dealer Manager and its counsel within a reasonable time in advance of filing with the Commission of any amendment or supplement to the Registration Statement, the Prospectus or the other Exchange Offer Materials. Neither the Company nor the Trust shall file any such amendment or supplement to which the Dealer Manager shall reasonably object. (c) The Company has furnished or shall use its best efforts to furnish to you, or cause the transfer agents or registrars for the Existing Securities to furnish to you, as soon as practicable after the date hereof (to the extent not previously furnished), cards or lists in reasonable quantities or copies thereof showing the names of persons who were the holders of record or, to the extent available, the beneficial owners of the Existing Securities as of a recent date, together with their addresses and the number of Existing Securities held by them. Additionally, the Company and the Trust shall update, or cause the transfer agents or registrars referred to above to update, such information from time to time during the term of this Agreement as may be reasonably requested by you. Except as otherwise provided herein, you agree to use such information only in connection with the Exchange Offer. (d) The Company and the Trust authorize the Dealer Manager to use the Exchange Offer Materials in connection with the Exchange Offer and for such period of time as any such materials are required by law to be delivered in connection therewith. The Dealer Manager shall not have any obligation to cause 4 any Exchange Offer Materials to be transmitted generally to the holders of Existing Securities. (e) The Company and the Trust authorize the Dealer Manager to communicate with any information agent (the "Information Agent") or exchange agent (the "Exchange Agent") appointed by the Company or the Trust to act in such capacity in connection with the Exchange Offer. The Company and the Trust will arrange for the Exchange Agent to advise you, as necessary and at least daily, as to such matters relating to the Exchange Offer as you may reasonably request. (f) The Company and the Trust agree that any reference to the Dealer Manager in any Exchange Offer Materials or in any newspaper announcement or press release or other document or communication is subject to the Dealer Manager's prior consent, which consent shall not be unreasonably withheld. 5. WITHDRAWAL. In the event that either the Company or the Trust (i) uses or permits the use of, or files with the Commission or any Other Agency, any amendment or supplement to the Registration Statement and any such document (a) has not been previously submitted to you for your and your counsel's comments or (b) has been so submitted, and you or your counsel have made comments which have not been reflected in a manner reasonably satisfactory to you or your counsel; or (ii) shall have breached, in any material respect, any of its representations, warranties, agreements or covenants herein; or (iii) amend or revise the Exchange Offer in a manner not reasonably acceptable to you; then you shall be entitled upon written notice to the Company or the Trust to withdraw as Dealer Manager in connection with the Exchange Offer without any liability or penalty to you or any other indemnified person (as defined in Section 11 below) and without loss of any right to indemnification or contribution provided in Section 11 or to the payment of (x) all fees and expenses payable pursuant to Sections 6 and 7 below which have accrued through the date of such withdrawal (it being agreed that in the event of any such withdrawal, for the purpose of determining the fees payable to you pursuant to Section 6, the aggregate liquidation amount of Existing Securities tendered pursuant to the Exchange Offer as of the close of business on the date of such withdrawal which is thereafter acquired by the Trust, the Company or any of its subsidiaries or affiliates pursuant to the Exchange Offer or otherwise, shall be deemed to have been acquired as of the date of such withdrawal). 6. FEES. In connection with the Exchange Offer, the Company and the Trust, jointly and severally, agree to pay a fee to the Dealer Manager in an amount as set forth in a separate letter agreement, dated June 12, 2001, between the Company and the Dealer Manager (the "Engagement Letter"). 5 7. EXPENSES AND REIMBURSEMENT OF EXPENSES. The Company and the Trust, jointly and severally, agree to pay all costs, fees and expenses incurred in connection with the performance of their obligations hereunder and in connection with the transactions contemplated hereby, including without limitation (i) all expenses incident to the preparation, issuance, execution and delivery of the Exchange Securities, (ii) all advertising expenses related to the Exchange Offer and all fees and expenses incurred in marketing the Exchange Offer, including but not limited to road show presentations, if any, (iii) all fees and expenses of the registrar and transfer agent, the Information Agent and the Exchange Agent, (iv) all fees and expenses of the Company's and the Trust's counsel, independent public or certified public accountants and other advisors, (v) all fees, costs and expenses incurred in connection with (a) the registration or qualification of the Exchange Securities under the laws of such jurisdictions as the Dealer Manager may designate (including, without limitation, reasonable fees of counsel for the Dealer Manager and its reasonable disbursements), and (b) any filing with the NASD, (vi) all costs and expenses incurred in connection with the preparation, printing and filing under the Securities Act of the Registration Statement, the Prospectus (including financial statements, exhibits, schedules, consents and certificates of experts, and amendments and supplements thereto), and, under the Exchange Act, of the Schedule TO, (vii) all costs and expenses incurred in connection with the printing (including word processing and duplication costs), shipping, distribution and delivery of all Exchange Offer Materials (including, without limitation, any preliminary and supplemental blue sky memoranda), (viii) all costs and expenses incurred by dealers and brokers (including yourself), commercial banks, trust companies and nominees for their customary mailing and handling expenses incurred in forwarding the Exchange Offer Materials to their customers, and (ix) the fees and expenses of the trustees of the Trust under the Declaration (as hereinafter defined) (the "Trustees") or the Trustee under the Indenture, the Guarantee Trustee under the Guarantee and any agents of such trustees, and the fees, disbursements and other charges of counsel for such trustees in connection with the Indenture, the Guarantee, the Declaration and the Debentures. In addition, the Company and the Trust, jointly and severally, agree to reimburse the reasonable documented out-of-pocket expenses of the Dealer Manager incurred in connection with the Exchange Offer (including, without limitation, the reasonable documented out-of-pocket legal fees and expenses of the Dealer Manager's counsel in connection with the Exchange Offer). 8. REPRESENTATIONS, WARRANTIES AND CERTAIN AGREEMENTS OF THE COMPANY AND THE TRUST. Each of the Company and the Trust jointly and severally represents and warrants to you, and agrees with you, that as of the Commencement Date and at all times on or prior to date when the Exchange Offer is consummated (the "Closing Date"): (a) The Registration Statement, including the Prospectus, has been 6 prepared by the Company in conformity in all material respects with the requirements of the Securities Act and has been filed with the Commission as of the Commencement Date and will become effective not later than the expiration date of the Exchange Offer. Such amendments to such Registration Statement and Prospectus and such abbreviated registration statements pursuant to Rule 462(b) of the Securities Act as may have been required prior to the date hereof have been similarly prepared and filed with the Commission; and the Company will file such additional amendments to such Registration Statement and Prospectus and such abbreviated registration statements as may hereafter be required. Copies of such Registration Statement and Prospectus, including all amendments thereto and all documents incorporated by reference therein, and of any abbreviated registration statement pursuant to Rule 462(b) of the Securities Act have been or, if filed after the Commencement Date, will be, delivered or made available to you and your counsel. No stop order refusing or suspending the effectiveness of the Registration Statement or preventing or suspending the use of any Prospectus is in effect, and no proceedings for such purpose have been instituted or are pending before or are threatened by the Commission. (b) The Schedule TO has been prepared by the Company in conformity in all material respects with the requirements of the Exchange Act and has been filed with the Commission; such amendments to such Schedule TO as may have been required prior to the date hereof have been similarly prepared and filed with the Commission; and the Company will file such additional amendments to such Schedule TO as may hereafter be required. Copies of such Schedule TO, including all amendments thereto and all documents incorporated by reference therein have been or, if filed after the Commencement Date, will be, delivered or made available to you and your counsel. (c) (i) The Exchange Offer Materials, including the Registration Statement, the Prospectus and the Schedule TO, comply and, as amended or supplemented, if applicable, will comply, in all material respects, with the Securities Act, the Exchange Act and the Trust Indenture Act of 1939, as amended, and the applicable rules and regulations of the Commission thereunder (the "Trust Indenture Act"); (ii) the Registration Statement, when it becomes effective, will not contain and as amended or supplemented thereafter, if applicable, will not contain, any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; (iii) none of the Prospectus or other Exchange Offer Materials contains, and, as amended or supplemented, if applicable, will contain, any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; except that the representations and warranties set forth in this paragraph 8(c) do not apply to statements or omissions in the Exchange Offer Materials, including the Registration Statement or the Prospectus, 7 or, in each case, any amendment or supplement thereto, based upon information relating to the Dealer Manager furnished to the Company in writing by the Dealer Manager expressly for use therein; and (iv) there are no agreements, leases, contracts or other documents required to be described in the Prospectus or Schedule TO or to be filed as exhibits to the Registration Statement or Schedule TO which have not been so described or filed. (d) The documents incorporated or deemed to be incorporated by reference in the Registration Statement or the Prospectus, at the time they were or hereafter are filed with the Commission, complied and will comply in all material respects with the requirements of the Exchange Act, and, when read together with the other information in the Registration Statement or the Prospectus, as the case may be, at the time the Registration Statement and any amendments thereto become effective and at the Commencement Date and the Closing Date, as the case may be, did not and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (e) The Company has not distributed and will not distribute, prior to the later of the Closing Date and the completion of the Dealer Manager's distribution of the Exchange Securities in exchange for the Existing Securities pursuant to the Exchange Offer, any offering material in connection with the Exchange Offer other than the Exchange Offer Materials. (f) The Company and each of the Company's subsidiaries is, and at the Closing Date will be, a corporation, a limited liability company, a limited liability partnership or a statutory business trust, duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation or formation, as applicable, and has, and at the Closing Date will have, full power and authority to conduct all the activities conducted by it, to own or lease all the assets owned or leased by it and to conduct its business as described in the Prospectus; except where the failure to have such power and authority would not have a Material Adverse Effect (as hereinafter defined). The Company and each of its subsidiaries is, and at the Closing Date will be, duly licensed or qualified to do business and in good standing as a foreign corporation in all jurisdictions in which the nature of the activities conducted by it or the character of the assets owned or leased by it makes such licensing or qualification necessary, except for such failures to be licensed or qualified as would not have a material and adverse effect on the condition, financial or otherwise, or on the earnings, business, operations or prospects, whether or not arising from transactions in the ordinary course of business, of the Trust or of the Company and its subsidiaries considered as one entity (any such effect called a "Material Adverse Effect"). All of the outstanding shares of capital stock of the Company's subsidiaries have been duly authorized 8 and validly issued and are fully paid and nonassessable and are owned by the Company free and clear of all liens, encumbrances and claims whatsoever, except for those pledged shares of capital stock set forth on Schedule I of that certain Pledge Agreement by and among the Company, Fleetwood Holdings, Inc. ("Holdings"), Fleetwood Retail Corp. ("Retail") and certain subsidiaries of the Company, Holdings and Retail (collectively with the Company, Holdings and Retail, the "Pledgors"), in favor of Bank of America, N.A., as agent for the lenders that may from time to time become parties to the Bank of America Credit Agreement (as defined herein) (the "Lenders"). Complete and correct copies of the certificate of incorporation and the by-laws of the Company have been delivered to counsel to the Dealer Manager and complete and correct copies of the certificate of incorporation and of the by-laws of each of its subsidiaries set forth on Schedule A hereto and all amendments thereto have been made available to counsel to the Dealer Manager, and no changes therein will be made subsequent to the date hereof and prior to the Closing Date. (g) The Trust has been duly created and is validly existing in good standing as a business trust under the Delaware Act; all filings required under the laws of the State of Delaware with respect to the creation and valid existence of the Trust as a business trust have been made; under the Delaware Act and upon execution and delivery of the Trust's Amended and Restated Declaration of Trust in the form filed with the Registration Statement (the "Declaration"), the Trust will have the business trust power and authority to (x) own property and conduct its business, all as described in the Prospectus, (y) enter into and perform its obligations under this Agreement, and (z) issue and perform its obligations under the Exchange Securities and the Common Securities, and is not required to be authorized to do business in any jurisdiction other than Delaware; the Trust is not a party to or otherwise bound by any agreement other than those described in the Prospectus; the Trust does not have any consolidated or unconsolidated subsidiaries; the Trust is and will be treated as a consolidated subsidiary of the Company pursuant to generally accepted accounting principles; and the Trust is not and, assuming compliance by the Trust with the Declaration, will not be classified as an association taxable as a corporation for United States federal income tax purposes. (h) The Declaration has been duly and validly authorized by the Company and, when executed and delivered by the Company and the Regular Trustees (as defined in the Declaration) at the Closing Date, and assuming due authorization, execution and delivery thereof by the Property Trustee and the Delaware Trustee (as such terms are defined in the Declaration), will be the valid and binding obligation of the Company and the Regular Trustees in accordance with its terms (subject to applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and other similar laws affecting creditors' rights generally from time to time in effect and to general principles of equity, including, 9 without limitation, concepts of materiality, reasonableness, good faith and fair dealing, regardless of whether considered in a proceeding in equity or at law), and the Declaration conforms to the description thereof contained in the Prospectus. (i) Each of the Trust and the Company has all trust and corporate power, as the case may be, to enter into each of this Agreement, the Exchange Agent Agreement (as hereinafter defined) and the Information Agent Agreement (as hereinafter defined). Each of this Agreement, the Exchange Agent Agreement and the Information Agent Agreement has been duly authorized, executed and delivered by each of the Trust and the Company and upon such execution by each of the Trust and the Company (assuming the due authorization, execution and delivery of such agreement by the Dealer Manager) this Agreement will constitute the valid and binding obligations of each of the Trust and the Company enforceable against each of the Trust and the Company in accordance with the terms hereof, subject to the applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and other similar laws affecting creditors' rights generally from time to time in concepts of materiality, reasonableness, good faith and fair dealing, regardless of whether considered in a proceeding in equity or at law, and except as the enforcement of indemnification and contribution provisions hereof may be limited by applicable law. (j) The Indenture has been duly and validly authorized by the Company, will be qualified under the Trust Indenture Act not later than the expiration date of the Exchange Offer and, assuming due authorization, execution and delivery of the Indenture by the Trustee, when executed and delivered by the Company, will constitute a valid and legally binding agreement of the Company, enforceable in accordance with its terms (subject to applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and other similar laws affecting creditors' rights generally from time to time in effect and to general principles of equity, including, without limitation, concepts of materiality, reasonableness, good faith and fair dealing, regardless of whether considered in a proceeding in equity or at law); and the Indenture conforms to the description thereof contained in the Prospectus. (k) The Exchange Securities to be issued pursuant to the Exchange Offer will be duly authorized by the Declaration upon execution and delivery of the Declaration in the form filed with the Registration Statement, and, when issued and delivered by the Trust in accordance with the terms of the Declaration in exchange for Existing Securities pursuant to the Exchange Offer, will be validly issued and fully paid and non-assessable undivided beneficial interests in the assets of the Trust and will be entitled to the benefits of the Declaration. The holders of the Exchange Securities, as beneficial owners of the Trust, will be entitled to the same limitation of personal liability as that extended to stockholders of private corporations for profit organized under the General 10 Corporation Law of the State of Delaware; under the Delaware Act and the Declaration, the issuance of the Exchange Securities will not be subject to preemptive or other similar rights; and the Exchange Securities will conform to the description thereof in the Prospectus. (l) The Debentures to be deposited in the Trust as Trust assets in connection with the Exchange Offer and to be issued and delivered thereafter from time to time in accordance with the terms of the Declaration and the Indenture have been duly and validly authorized by the Company and, when executed and authenticated in accordance with the terms of the Indenture and delivered to the Trust pursuant to the terms of the Exchange Offer, will constitute valid and legally binding obligations of the Company enforceable in accordance with their terms (subject to applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and other similar laws affecting creditors' rights generally from time to time in effect and to general principles of equity, including, without limitation, concepts of materiality, reasonableness, good faith and fair dealing, regardless of whether considered in a proceeding in equity or at law); and the Debentures will be in the form contemplated by, and entitled to the benefits of, the Indenture and will conform to the description thereof contained in the Prospectus. (m) The Guarantee has been duly and validly authorized by the Company and, when executed and delivered by the Company at the Closing Date, will constitute a valid and legally binding agreement of the Company enforceable in accordance with its terms (subject to applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and other similar laws affecting creditors' rights generally from time to time in effect and to general principles of equity, including, without limitation, concepts of materiality, reasonableness, good faith and fair dealing, regardless of whether considered in a proceeding in equity or at law); and the Guarantee will conform to the description thereof contained in the Prospectus. (n) The Common Securities have been duly authorized by the Declaration and, when issued and delivered by the Trust to the Company against payment therefor in accordance with the Declaration, will be validly issued and fully paid and non-assessable undivided beneficial interests in the assets of the Trust; under the Delaware Act and the Declaration, the issuance of the Common Securities will not be subject to preemptive or other similar rights; and at the Closing Date, all of the issued and outstanding Common Securities of the Trust will be directly owned by the Company free and clear of any security interest, mortgage, pledge, lien, encumbrance, claim or equity; and the Common Securities will conform to the description thereof contained in the Prospectus. (o) The Fleetwood Common Stock conforms in all material respects to 11 the description thereof in the Prospectus. The Shares have been duly authorized and duly reserved for issuance and, upon issuance thereof upon conversion of the Exchange Securities and the Debentures or as payment of interest on the Debentures in accordance with the terms of the Exchange Securities, the Declaration, the Debentures and the Indenture, will be validly issued, fully paid and non-assessable shares of Fleetwood Common Stock and will be issued free and clear of any pledge, lien, security interest, encumbrance, claim or equitable interest and will not be subject to any preemptive rights, co-sale rights, rights of first refusal or other rights to subscribe for or purchase the Fleetwood Common Stock. (p) The descriptions in the Prospectus of the Exchange Securities, the Common Securities, the Guarantee, the Trust, the Declaration, the Indenture and the Debentures, and of the Existing Securities, the Existing Trust and the Existing Common Securities (as defined in the Prospectus), Existing Guarantee (as defined in the Prospectus) and 6% Convertible Subordinated Debentures due February 15, 2028 (the "Existing Debentures") issued in connection with the issuance of the Existing Securities, and the related indenture and declaration of trust are, and at the Closing Date will be, complete and accurate in all material respects. (q) The financial statements and schedules of the Company together with the notes thereto included or incorporated by reference in the Registration Statement and the Prospectus, and any amendments or supplements thereto, present fairly the consolidated financial condition of the Company as of the respective dates thereof and the consolidated results of operations and cash flows of the Company for the respective periods covered thereby, all in conformity with generally accepted accounting principles applied on a consistent basis throughout the entire period involved, except as otherwise disclosed in the Registration Statement and the Prospectus. The interim consolidated financial statements together with the notes thereto included or incorporated by reference in the Registration Statement and the Prospectus, and any amendments or supplements thereto, have been prepared on a basis consistent with the audited consolidated financial statements except as otherwise stated therein, and include in your opinion all adjustments, including normal recurring adjustments necessary to present fairly the financial information therein. The selected and summary consolidated financial and statistical data included in the Registration Statement and the Prospectus, and any amendments and supplements thereto, present fairly the information shown therein and have been compiled on a basis consistent with the audited financial statements presented therein. No financial statements or schedules, other than the consolidated financial statements that are included in the Registration Statement and the Prospectus, and any amendments or supplements thereto, are required to be included therein. Arthur Andersen LLP, who have reported on such financial statements and schedules, are independent accountants within the meaning of the Securities Act. 12 (r) Each of the Trust and the Company maintains a system of internal accounting control sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management's general or specific authorization; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain accountability for assets; (iii) access to assets if permitted only in accordance with management's general or specific authorization; and (iv) the recorded accountability for assets is compared with existing assets at reasonable intervals and appropriate action is taken with respect to any differences. (s) Subsequent to the respective dates as of which information is given in the Prospectus and prior to the Closing Date, except as set forth in or contemplated by the Prospectus, (i) there has not been and will not have been any (a) change in the capitalization of the Trust or material adverse change in the capitalization of the Company, or (b) any material adverse change, or any development that could reasonably be expected to result in a material adverse change, in the condition, financial or otherwise, or in the earnings, business, operations or prospects, whether or not arising from transactions in the ordinary course of business, of the Trust or the Company and its subsidiaries, considered as one entity (any such change is called a "Material Adverse Change"), (ii) neither the Trust nor the Company and its subsidiaries, considered as one entity, has incurred any material liability or obligation, indirect, direct or contingent, not in the ordinary course of business, nor has it entered into any material transaction or agreement not in the ordinary course of business, and (iii) there has been no dividend or distribution of any kind declared, paid, or made by the Trust or the Company or, except for dividends paid to the Company or other subsidiaries, any of its subsidiaries on any class of its securities, or repurchase or redemption by the Company or any of its subsidiaries of any class of capital stock. (t) Except for subsequent issuances, if any, pursuant to the Exchange Offer or the offering for cash of up to $___ million (the "Cash Offer") in aggregate liquidation amount of ___% Convertible Trust III Preferred Securities due February 15, 2013 (the "Cash Offer Securities") described in the Prospectus of Fleetwood Capital Trust III (the "Trust III") or upon issuance of capital stock or exercise of stock options or warrants pursuant to employee benefit plans described in the Prospectus, the Company has authorized, issued and outstanding capitalization set forth in the Prospectus under the caption "Capitalization"; all of the outstanding capital stock of the Company has been duly authorized and validly issued, and is fully paid and non-assessable; and the authorized capital stock of the Company conforms in all material respects to the statements relating thereto in the Registration Statement and the Prospectus. (u) Neither the Company nor the Trust has taken and neither the 13 Company nor the Trust will take, directly or indirectly, any action prohibited by Regulation M promulgated under the Exchange Act or designed to or that might reasonably be expected to cause or result in stabilization or manipulation of the price of the Common Stock to facilitate the distribution of the Exchange Securities in the Exchange Offer or the Cash Offer. (v) Neither the Company nor any of its subsidiaries is in violation of its charter or by-laws and the Trust is not in violation of the Declaration, and, except as specifically described in the Prospectus, none of the Company, any of its subsidiaries or the Trust is in default (or, with notice or lapse of time or both, would be in default) ("Default") in the performance or observance of any obligation, agreement, covenant or condition contained in the Existing Securities, the Existing Debentures, and the related indenture and guarantee, the credit agreement dated as of July 27, 2001, as amended by that certain First Amendment to Credit Agreement and Consent of Guarantors dated as of December 4, 2001, that certain Second Amendment to Credit Agreement and Security Agreement and Consent of Guarantors dated as of December 4, 2001, and that certain Third Amendment to Credit Agreement and Consent of Guarantors dated as of December 7, 2001, among the Company, as guarantor, the financial institutions named therein, as the lenders, Bank of America, N. A., as administrative agent, Citicorp USA, Inc., as documentation agent, Heller Financial, Inc., as syndication agent and Fleetwood Holdings, Inc., and certain of its subsidiaries and Fleetwood Retail Corp., and certain of its subsidiaries, as the borrowers, and the related mortgages and other security documents (the "Bank of America Credit Agreement"), or any other contract, indenture, mortgage, deed of trust, loan agreement, note, lease or other instrument to which it is a party or by which it is bound, or to which any of its respective assets or properties is subject (each, an "Existing Instrument"), except for such Defaults as would not, in the case of the Company and its subsidiaries, individually or in the aggregate, have a Material Adverse Effect. (w) At the Closing Date, the Property Trustee will be the record holder of the Debentures and no security interest, mortgage, pledge, lien, encumbrance, claim or equity will be noted thereon or on the Debenture register maintained by or on behalf of the Company. (x) The execution and delivery by the Company of, and the performance by the Company of its obligations under, this Agreement, the Indenture, the Debentures, the Declaration and the Guarantee, and the execution and delivery by the Trust of, and the performance by the Trust of its obligations under, this Agreement and the Exchange Securities, the performance by the Trust of its obligations under the Declaration and the consummation of the Exchange Offer and fulfillment of terms herein contemplated (i) will not result in any violation of the provisions of the charter or by-laws of the Company or of the Declaration, 14 (ii) will not conflict with or constitute a breach of, or Default, or a Debt Repayment Triggering Event (as defined below) under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Trust or the Company or any of its subsidiaries pursuant to, or require the consent of any other party to, any Existing Instrument, except for such conflicts, breaches, Defaults, liens, charges or encumbrances as would not, individually or in the aggregate, have a Material Adverse Effect and (iii) will not result in any violation of any law, administrative regulation or administrative or court decree applicable to the Trust, the Company or any subsidiary. As used herein, a "Debt Repayment Triggering Event" means any event or condition which gives, or with the giving of notice or lapse of time would give, the holder of any note, debenture or other evidence of indebtedness (or any person acting on such holder's behalf) the right to require the repurchase, redemption or repayment of all or a portion of such indebtedness by the Company or any of its subsidiaries except as set forth under Section 3.4 of the Bank of America Credit Agreement. (y) Neither the Trust nor the Company is, and after giving effect to the consummation of the Exchange Offer, will not be an "investment company" or an "affiliated person" of, or "promoter" or "principal underwriter" for, an "investment company," as such terms are defined in the Investment Company Act of 1940, as amended. (z) Except as set forth in the Prospectus, there are no actions, suits or proceedings pending or, to the Company's knowledge, threatened against or affecting the Trust or the Company or any of its subsidiaries or any of their respective officers in their capacity as such, before or by any federal or state court, commission, regulatory body, administrative agency or other governmental body, domestic or foreign, wherein an unfavorable ruling, decision or finding would reasonably be expected to have a Material Adverse Effect. (aa) Each of the Trust and the Company and each of its subsidiaries has, and at the Closing Date will have, (i) all governmental licenses, permits, consents, orders, approvals and other authorizations necessary to carry on its business as described in the Prospectus and (ii) complied in all respects with all laws, regulations and orders applicable to it or its business, except, in case of (i) and (ii) above, for such failures to possess or comply as would not, individually or in the aggregate, have a Material Adverse Effect, and neither the Trust, nor the Company or any subsidiary, has received any notice in writing of proceedings relating to the revocation or modification of, or non-compliance with, any such license, permit, consent, order, approval or other authorization which, singly or in the aggregate, if the subject of an unfavorable decision, ruling or finding, could have a Material Adverse Effect. (bb) No consent, approval, authorization, or order of, or any filing, 15 declaration, registration or qualification with, any court or governmental agency or body is required in connection with the authorization, issuance, transfer or delivery of the Exchange Securities by the Trust or the Guarantee and the Debentures by the Company, in connection with the consummation of the Exchange Offer, or in connection with the execution, delivery and performance of this Agreement by the Trust and the Company, except such as may be required by the Securities Act or the Exchange Act, as may be required by the securities or Blue Sky laws of the various states, and as may be required from the NASD. (cc) The Company and its subsidiaries (i) are in compliance with any and all applicable foreign, federal, state and local laws and regulations relating to the protection of human health and safety, the environment or hazardous or toxic substances or wastes, pollutants or contaminants ("ENVIRONMENTAL LAWS"), (ii) have received all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct their respective businesses and (iii) are in compliance with all terms and conditions of any such permit, license or approval, except where such noncompliance with Environmental Laws, failure to receive required permits, licenses or other approvals or failure to comply with the terms and conditions of such permits, licenses or approvals would not, singly or in the aggregate, have a material adverse effect on the Company and its subsidiaries, taken as a whole. (dd) No statement, representation, warranty or covenant made by the Trust or the Company in this Agreement, the Indenture, the Guarantee or the Declaration or made in any certificate or document required by this Agreement to be delivered to the Dealer Manager was or will be, when made, inaccurate, untrue or incorrect in any material respect. (ee) None of the Trust, the Company or any of its subsidiaries is involved in any material labor dispute nor, to the knowledge of the Trust or the Company, is any such dispute threatened which could reasonably be expected to have a Material Adverse Effect. (ff) The Company and its subsidiaries own, or are licensed or otherwise have the full right to use, all material trademarks and trade names (collectively, the "Intellectual Property Rights") which are used in or necessary for the conduct of their respective businesses as described in the Prospectus. No claims have been asserted by any person to the use of any such Intellectual Property Rights or challenging or questioning the validity or effectiveness of any such Intellectual Property Rights except such claims as would not reasonably be expected to have a Material Adverse Effect. The use, in connection with the business and operations of the Company and its subsidiaries of such Intellectual Property Rights does not, to the Company's knowledge, infringe on the rights of any person except such 16 infringements as would not reasonably be expected to have a Material Adverse Effect. (gg) Any certificate signed by any officer of the Company and delivered to the Dealer Manager or to counsel for the Dealer Manager pursuant to the terms of this Agreement shall be deemed a representation and warranty by the Company to the Dealer Manager as to the matters covered thereby. (hh) The Company maintains insurance with respect to its properties and business of the types and in amounts the Company reasonably deems adequate for its business, all of which insurance is in full force and effect. (ii) The Company has filed all material federal, state and foreign income and franchise tax returns and has paid all taxes shown as due thereon, other than taxes which are being contested in good faith and for which adequate reserves have been established in accordance with generally accepted accounting principles ("GAAP"); and the Company has no knowledge of any tax deficiency which has been or might be asserted or threatened against the Company. There are no tax returns of the Company or any of its subsidiaries that are currently being audited by state, local or federal taxing authorities or agencies (and with respect to which the Company or any subsidiary of the Company has received notice), where the findings of such audit, if adversely determined, would result in a Material Adverse Effect. (jj) The Company and the Trust have not done anything and will not do anything in connection with the Exchange Offer or the Cash Offer that is violative of Regulations G, T, U or X of the Board of Governors of the Federal Reserve System. (kk) On or prior to the Commencement Date, each of the exchange agent agreement between the Company and the Exchange Agent (the "Exchange Agent Agreement") and the information agent agreement between the Company and the Information Agent (the "Information Agent Agreement") shall be in full force and effect. (ll) The Common Stock (including the Underlying Securities) is registered pursuant to Section 12(b) of the Securities Exchange Act of 1934 (the "Exchange Act") and is listed on the New York Stock Exchange (the "NYSE") and the Pacific Stock Exchange (the "PSE"), and the Company has taken no action designed to, or likely to have the effect of, terminating the registration of the Common Stock under the Exchange Act or delisting the Common Stock from the NYSE or the PSE, nor has the Company received any notification that the Commission or the NYSE or PSE is contemplating terminating such registration or listing. 17 (mm) There are no persons with registration or other similar rights to have any equity or debt securities registered for sale under the Registration Statement. (nn) All written communications, in addition to the Schedule TO, made during the period from the first public announcement and to the earlier of either the expiration date or the Closing Date of the Exchange Offer have been or will be filed with the Commission in accordance with the Exchange Act and the Commission's rules and regulations including Rule 13e-4 under the Exchange Act. (oo) Except as set forth in the Bank of America Credit Agreement, no subsidiary of the Company is currently prohibited, directly or indirectly, from making any distribution in respect of its partnership interests, membership interests or shares of capital stock, as the case may be, from repaying to the Company any loans or advances to such subsidiary from the Company or from transferring any of such subsidiary's property or assets to the Company or any other subsidiary of the Company, except as described in the Prospectus. (pp) The Bank of America Credit Agreement has been duly and validly authorized executed and delivered by the Company, and constitutes a valid and legally binding obligation of the Company, enforceable in accordance with its terms (subject to applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and other similar laws affecting creditors' rights generally from time to time in effect and to general principles of equity, including, without limitation, concepts of materiality, reasonableness, good faith and fair dealing, regardless of whether considered in a proceeding in equity or at law); and the Bank of America Credit Agreement conforms to the description thereof contained in the Prospectus. (qq) The Trust has complied with all provisions of Section 517.075 Florida Statutes (Chapter 92-198, Laws of Florida) relating to doing business with the Government of Cuba or with any person or affiliate located in Cuba. 9. CONDITIONS TO DEALER MANAGER'S OBLIGATIONS. The obligations of the Dealer Manager hereunder are subject, as of the Commencement Date and at all times on or prior to the Closing Date, to the accuracy of the representations and warranties on the part of each of the Company and the Trust herein, to the accuracy of the statements of officers of the Company and of the Trust made pursuant to the provisions hereof, to the performance by each of the Company and the Trust of their respective obligations hereunder and to the following additional conditions: (a) You shall have received, on the Commencement Date and the 18 Closing Date, letters, dated the Commencement Date and the Closing Date as the case may be, from Arthur Andersen LLP, independent public or certified public accountants for the Company, in form and substance satisfactory to you, containing statements and information of the type ordinarily included in accountants' "comfort letters" delivered according to Statement of Auditing Standards No. 72 (or any successor bulletin), with respect to the audited and unaudited consolidated financial statements and certain financial information contained in the Registration Statement and the Prospectus. (b) For the period from and after effectiveness of this Agreement and prior to the Closing Date: (i) the Company shall have filed the Registration Statement with the Commission prior to the Commencement Date and the Registration Statement shall become effective prior to the expiration date of the Exchange Offer; and (ii) no stop order refusing or suspending the effectiveness of the Registration Statement or any post-effective amendment shall have been issued or be in effect and no proceedings for such purpose shall have been instituted or threatened by the Commission and any request for additional information shall have been complied with to the reasonable satisfaction of the Dealer Manager's counsel. (c) For the period from and after the date of this Agreement and prior to the Closing Date: (i) in the judgment of the Dealer Manager, there shall not have occurred any Material Adverse Change, or any development involving a prospective Material Adverse Change; (ii) there shall not have occurred any downgrading, nor shall any notice have been given of any intended or potential downgrading or of any review for a possible change that does not indicate the direction of the possible change, in the rating or preliminary rating accorded the Exchange Securities or of any other securities of or guaranteed by the Company or any of its subsidiaries by any "nationally recognized statistical rating organization," as such term is defined for purposes of Rule 436(g)(2) under the Securities Act; and (iii) there shall not have been (A) (1) any liability or obligations, indirect, direct or contingent, incurred by the Trust or the Company or any of its subsidiaries, that is material to the Trust or to the Company and its subsidiaries, considered as one entity, except obligations incurred in the 19 ordinary course of business, or (2) any material transaction or agreement entered into by the Trust or the Company and its subsidiaries, considered as one entity, not in the ordinary course of business, (B) any change in the capital stock or outstanding indebtedness of the Company, (C) any dividend or distribution of any kind declared, paid or made on the capital stock of the Company other than quarterly dividends declared, paid or made in the ordinary course of business, or (D) any loss or damage (whether or not insured) to the property of the Trust, the Company or any of its subsidiaries which has been sustained or will have been sustained, that either individually or in the aggregate, in the Dealer Manager's judgment, are material and adverse and that make it, in the Dealer Manager's judgment, impracticable to solicit the tender of Existing Securities pursuant to and in accordance with the terms of the Exchange Offer on the terms and in the manner contemplated in the Registration Statement. (d) On each of the Commencement Date (except with respect to clause (d)(iii) of this Section 9) and the Closing Date, you shall have received a written certificate, dated such date and executed by the Chairman of the Board or the Chief Executive Officer or the President of the Company, the Chief Financial Officer or Chief Accounting Officer of the Company, and an authorized officer of the Trust acceptable to you, to the effect set forth in clauses (b)(ii) and (c)(ii) of this Section 9 and further to the effect that: (i) the representations, warranties and covenants of each of the Company and the Trust, as the case may be, contained in this Agreement are true and correct with the same force and effect as though expressly made on and as of the Commencement Date and the Closing Date, as the case may be; (ii) each of the Company and the Trust has complied to all of its agreements hereunder and satisfied all the conditions on its part to be performed or satisfied hereunder on or prior to the Closing Date; and (iii) when the Registration Statement became effective and at all times subsequent thereto up to the date of such certificate, the Registration Statement and the Prospectus, and any amendments or supplements thereto, contained all material information required to be included therein by the Securities Act or the Exchange Act, as the case may be, and in all material respects conformed to the requirements of the Securities Act or the Exchange Act, as the case may be; the Registration Statement, and any amendment or supplement thereto, did not and does not include any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; 20 the Prospectus, and any amendment or supplement thereto, did not and does not include any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; and, since the effective date of the Registration Statement, there has occurred no event required to be set forth in an amended or supplemented Prospectus which has not been so set forth. The officers signing and delivering certificates described in this Section 9(d) on behalf of each of the Company and the Trust may rely upon the best of their knowledge as to proceedings threatened. (e) Each of the Company and the Trust shall have furnished to you on each of the Commencement Date and the Closing Date such additional certificates, opinions or other documents as you shall reasonably request (including additional certificates of officers of the Company) as to the accuracy of the representations and warranties of the Trust and the Company herein, as to the performance by the Trust and the Company of its obligations hereunder, and as to the other conditions concurrent and precedent to your obligations hereunder. (f) On the Commencement Date (except with respect to paragraphs 3, 4, 6, 13 and 14 and clause (i) of the next-to-last paragraph of EXHIBIT A) and the Closing Date, the Dealer Manager shall have received the favorable opinion of Gibson, Dunn & Crutcher LLP, special counsel for the Trust and the Company, dated as of such date, the form of which is attached as EXHIBIT A. (g) On the Commencement Date (except with respect to clause (i) of the next-to-last paragraph of EXHIBIT B) and the Closing Date, the Dealer Manager shall have received the favorable opinion of Forrest Theobald, Vice President - General Counsel and Secretary of the Company, dated as of such date, the form of which is attached as EXHIBIT B. (h) On the Commencement Date (except with respect to paragraph 6 of EXHIBIT C) and the Closing Date, the Dealer Manager shall have received the favorable opinion of Morris, Nichols, Arsht & Tunnell, special Delaware counsel to the Trust, dated as of such date, the form of which is attached as EXHIBIT C. (i) On the Commencement Date and the Closing Date, the Dealer Manager shall have received the favorable opinion of Richards, Layton & Finger, P.A., with respect to the Delaware Trustee (as defined in the Declaration), dated as of such date, the form of which is attached as EXHIBIT D. 21 (j) On the Commencement Date and the Closing Date, the Dealer Manager shall have received the favorable opinion of Gibson, Dunn & Crutcher LLP, special tax counsel to the Trust and the Company, dated as of such date, the form of which is attached as EXHIBIT E. (k) On the Commencement Date and the Closing Date, the Dealer Manager shall have received the favorable opinion of Davis Polk & Wardwell, counsel for the Dealer Manager, in form and substance satisfactory to the Dealer Manager. (l) On the date hereof, the Company shall have furnished to the Dealer Manager an agreement in the form of Annex A hereto from each director and executive officer of the Company, and such agreement shall be in full force and effect on each of the Commencement Date and the Closing Date. Each of the Company and the Trust will furnish you with such executed or conformed copies of such opinions, certificates, letters and documents as you may reasonably request. 10. COVENANTS OF THE COMPANY AND THE TRUST. Each of the Company and the Trust covenants and agrees with the Dealer Manager: (a) To use its reasonable best efforts to cause the Registration Statement, and any amendment thereof, to become effective as soon as possible but no later than the expiration date of the Exchange Offer; to use its reasonable best efforts to cause any abbreviated registration statement pursuant to Rule 462(b) of the Securities Act as may be required subsequent to the date the Registration Statement is declared effective to become effective as promptly as possible; to promptly advise the Dealer Manager in writing (i) of the receipt of any comments from the Commission relating to the Exchange Offer, (ii) when the Registration Statement, any post-effective amendment to the Registration Statement or any abbreviated Registration Statement shall have become effective, or any supplement to the Prospectus or any amended Prospectus or any amended or additional Exchange Offer Materials shall have been filed, (iii) of any request by the Commission to amend the Registration Statement or amend or supplement the Prospectus or the other Exchange Offer Materials or for additional information relating to the Exchange Offer and (iv) of (A) the issuance by the Commission of any stop order refusing or suspending the use of any of the Exchange Offer Materials or any qualification of the Exchange Securities for offering or sale in connection with the Exchange Offer in any jurisdiction, (B) the institution or threatening of any proceedings for any of such purposes, (C) the occurrence of any event which could cause the Company or the Trust to withdraw, rescind, terminate or modify the Exchange Offer or would permit the Company or the Trust to exercise any right not to accept Exchange Securities tendered pursuant to the 22 Exchange Offer, or (D) the institution of any proceedings to remove, suspend or terminate from listing or quotation the Common Stock from any securities exchange upon which it is listed for trading or included or designated for quotation, or the threatening or initiation of any proceedings for any such purposes. Each of the Company and the Trust will use its reasonable efforts to prevent the issuance of any such stop order, the issuance of any order preventing or suspending such use and the suspension of any such qualification and, if any such order is issued or qualification suspended, to obtain the lifting of such order or suspension at the earliest practicable time. (b) To comply with the Securities Act, the Exchange Act and the Trust Indenture Act in connection with the Exchange Offer, the Exchange Offer Materials and the transactions contemplated hereby and thereby, as applicable. If, at any time when the Prospectus is required by the Securities Act or the Exchange Act to be delivered in connection with the Exchange Offer, any event shall occur or condition shall exist as a result of which it is necessary, in the reasonable opinion of counsel for the Dealer Manager or counsel for the Company or the Trust, to amend the Registration Statement or amend or supplement the Prospectus or any other Exchange Offer Materials in order that the Prospectus or such other Exchange Offer Materials will not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements in the Prospectus or such other Exchange Offer Materials, in the light of the circumstances under which they were made, not misleading or if, in the reasonable opinion of either such counsel, it shall be necessary to amend the Registration Statement or amend or supplement the Prospectus or any other Exchange Offer Materials to comply with the requirements of the Securities Act or Exchange Act, the Company and the Trust will promptly prepare, file with the Commission, subject to Section 4(b) hereof, and furnish, at their own expense, to the Dealer Manager and to the dealers (whose names and addresses will be furnished to the Company and the Trust by the Dealer Manager) to which Existing Securities may have been tendered for exchange, such amendment or supplement as may be necessary to correct such untrue statement or omission or to make the Registration Statement or the Prospectus or such other Exchange Offer Materials comply with such requirements. (c) During such period beginning on the date hereof and ending on such date as in the opinion of counsel for the Dealer Manager, the Prospectus is no longer required by law to be delivered in connection with the Exchange Offer, the Company will file all documents required to be filed with the Commission pursuant to Section 13, 14 or 15 of the Exchange Act in the manner and within the time periods required by the Exchange Act. (d) To cooperate with the Dealer Manager and Dealer Manager's counsel to qualify or register the Exchange Securities for sale under (or obtain 23 exemptions from the application of) the state securities or blue sky laws or Canadian provincial Securities laws of those jurisdictions designated by the Dealer Manager; to comply with such laws and continue such qualifications, registrations and exemptions in effect so long as required for the consummation of the Exchange Offer; and in each jurisdiction in which the Exchange Securities have been so qualified, the Trust will file such statements and reports as may be required by the laws of such jurisdiction to continue such qualification in effect for a period of not less than one year from the effective date of the Registration Statement; provided that neither the Company nor the Trust shall be required to qualify as a foreign corporation or to take any action that would subject either the Company or the Trust to general service of process in any such jurisdiction where it is not presently qualified or where it would be subject to taxation as a foreign corporation. (e) To make generally available to its security holders and to the Dealer Manager an earnings statement covering a twelve-month period beginning not later than the first day of the Trust's fiscal quarter next following the effective date of the Registration Statement that satisfies the provisions of Section 11(a) of the Securities Act and the rules and regulations of the Commission thereunder. (f) To use its best efforts to advise or cause the Exchange Agent to advise the Dealer Manager at 5:00 P.M., New York City time, or promptly thereafter, daily (or more frequently if requested), by telephone or facsimile transmission, with respect to Existing Securities tendered as follows: (i) the aggregate number of Existing Securities validly tendered and represented by certificates physically held by the Exchange Agent or confirmations of receipt of book-entry transfer of Exchange Securities pursuant to the procedures set forth in the Exchange Offer Materials on such day; (ii) the aggregate liquidation amount of Existing Securities properly withdrawn on such day; and (iii) the cumulative totals of the liquidation amount of Exchange Securities in categories (i) and (ii) above. (g) During the period of 90 days from the date of the Prospectus, neither the Trust nor the Company will, without the Dealer Manager's prior written consent, directly or indirectly, offer, pledge, sell, sell any option or contract to purchase any option or contract to sell, contract to sell, grant any option to sell, establish an open "put equivalent position" within the meaning of Rule 16a-1(h) of the Exchange Act, or otherwise transfer or dispose of (i) any Exchange Securities, or any equity security convertible into or exchangeable into or exercisable for, Exchange Securities, (ii) Debentures or any debt securities substantially similar to the Debentures, (iii) any equity securities substantially similar to the Exchange Securities, except for the Debentures, Exchange Securities and the Common Securities, (iv) any preferred stock or any other security of the Company that is substantially similar to the Exchange Securities, (v) 24 any shares of any class of common stock of the Company (other than (A) shares of Fleetwood Common Stock issuable upon conversion of the Exchange Securities pursuant to the terms of the Declaration and the Indenture, for payment of interest on the Debentures at the Company's option pursuant to the terms of the Indenture, or pursuant to the exercise of options and warrants outstanding as of the date hereof, or (B) the grant of stock options or other stock-based awards (and the exercise or vesting thereof) to directors, officers and employees of the Company or its subsidiaries pursuant to any stock option, stock bonus or other stock plan or arrangement described in the Prospectus), or (vi) any other securities which are convertible into, or exercisable or exchangeable for, any of such securities; or enter into any swap or other agreement that transfers, in whole or in part, any of the economic consequences of ownership of any equity securities of the Company, the Trust or any similar trust, whether any such transaction is to be settled by delivery of equity securities of the Company, the Trust or any similar trust, cash or otherwise. For the avoidance of doubt, it is acknowledged that debt securities substantially similar to the Debentures would be debt securities that have substantially the same rate, maturity and other provisions as the Debentures. (h) Without limiting Sections 5, 7 and 12 of this Agreement, if the transactions contemplated hereby are not consummated by reason of any failure, refusal or inability on the part of the Company to perform any agreement on its part to be performed hereunder or to fulfill any condition of the obligations of the Dealer Manager hereunder, each of the Company and the Trust, jointly and severally, agrees to reimburse the Dealer Manager for all reasonable documented out-of-pocket expenses (including reasonable fees and disbursements of the Dealer Manager's counsel) incurred by the Dealer Manager in connection with the Exchange Offer. 11. INDEMNIFICATION AND CONTRIBUTION; SETTLEMENT OF LITIGATION; RELEASE. Each of the Company and the Trust jointly and severally agrees as follows: (a) Each of the Company and the Trust, jointly and severally, agrees to indemnify and hold harmless the Dealer Manager, its partners, its officers and employees, and each person, if any, who controls the Dealer Manager within the meaning of the Securities Act and the Exchange Act against any loss, claim, damage, liability or expense, as incurred, to which the Dealer Manager or such controlling person may become subject, under the Securities Act, the Exchange Act or other federal or state statutory law or regulation, or at common law or otherwise (including in settlement of any litigation, if such settlement is effected with the written consent of the Company), insofar as such loss, claim, damage, liability or expense (or actions in respect thereof as contemplated below) arises out of or is based (i) upon any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, or any amendment thereto, the Schedule TO or any Exchange Offer Materials (as amended or supplemented), 25 or the omission or alleged omission therefrom of a material fact required to be stated therein or necessary to make the statements therein not misleading; or (ii) upon any untrue statement or alleged untrue statement of a material fact contained in any preliminary prospectus or the Prospectus (or any amendment or supplement thereto), or the omission or alleged omission therefrom of a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; or (iii) in whole or in part upon any inaccuracy in the representations and warranties of the Company or the Trust contained herein; or (iv) in whole or in part upon any failure of the Company or the Trust to perform their respective obligations hereunder or under law; or (v) upon a withdrawal, rescission or modification of or a failure to make or consummate the Exchange Offer; or (vi) upon any act or failure to act or any alleged act or failure to act by the Dealer Manager in connection with, or relating in any manner to, the Exchange Securities or the Exchange Offer and which is included as part of or referred to in any loss, claim, damage, liability or action arising out of or based upon any matter covered by clause (i) or (ii) above, PROVIDED that neither the Trust nor the Company shall be liable under this clause (vi) to the extent that a court of competent jurisdiction shall have determined by a final judgment that such loss, claim, damage, liability or action resulted directly from any such acts or failures to act undertaken or omitted to be taken by the Dealer Manager through its bad faith or willful misconduct; and to reimburse the Dealer Manager and each such controlling person for any and all expenses (including the reasonable fees and disbursements of counsel chosen by the Dealer Manager) as such expenses are reasonably incurred by the Dealer Manager or such controlling person in connection with investigating, defending, settling, compromising or paying any such loss, claim, damage, liability, expense or action; PROVIDED, HOWEVER, that the foregoing indemnity agreement shall not apply to any loss, claim, damage, liability or expense to the extent, but only to the extent, arising out of or based upon any untrue statement or alleged untrue statement or omission or alleged omission made in reliance upon and in conformity with written information furnished to the Company by the Dealer Manager expressly for use in the Registration Statement, any preliminary prospectus, the Prospectus, the Schedule TO or any Exchange Offer Materials. The indemnity agreement set forth in this Section 11(a) shall be in addition to any liabilities that the Company and the Trust may otherwise have. (b) The Dealer Manager agrees to indemnify and hold harmless the Trust and the Company, each of their respective directors, each of their respective officers who signed the Registration Statement or the Schedule TO, and each person, if any, who controls the Company or the Trust within the meaning of the Securities Act or the Exchange Act, against any loss, claim, damage, liability or expense, as incurred, to which the Company or the Trust, or any such director, officer or controlling person may become subject, under the Securities Act, the Exchange Act, or other federal or state statutory law or regulation, 26 or at common law or otherwise (including in settlement of any litigation, if such settlement is effected with the written consent of the Dealer Manager), insofar as such loss, claim, damage, liability or expense (or actions in respect thereof as contemplated below) arises out of or is based upon any untrue or alleged untrue statement of a material fact contained in the Registration Statement, the Schedule TO, the Prospectus, or any Exchange Offer Materials (or, in each case, any amendment or supplement thereto), or arises out of or is based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in the Registration Statement, the Schedule TO, the Prospectus or any Exchange Offer Materials (or any amendments or supplements thereto), in reliance upon and in conformity with written information furnished to the Company by the Dealer Manager expressly for use therein; and to reimburse the Company, the Trust or any such director, officer or controlling person for any legal and other expense reasonably incurred by the Company, the Trust or any such director, officer or controlling person in connection with investigating, defending, settling, compromising or paying any such loss, claim, damage, liability, expense or action. The indemnity agreement set forth in this Section 11(b) shall be in addition to any liabilities that the Dealer Manager may otherwise have. (c) Promptly after receipt by an indemnified party under this Section 11 of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against an indemnifying party under this Section 11, notify the indemnifying party in writing of the commencement thereof, but the omission so to notify the indemnifying party will not relieve it from any liability which it may have to any indemnified party for contribution or otherwise than under the indemnity agreement contained in this Section 11 or to the extent it is not prejudiced as a proximate result of such failure. In case any such action is brought against any indemnified party and such indemnified party seeks or intends to seek indemnity from an indemnifying party, the indemnifying party will be entitled to participate in, and, to the extent that it shall elect, jointly with all other indemnifying parties similarly notified, by written notice delivered to the indemnified party promptly after receiving the aforesaid notice from such indemnified party, to assume the defense thereof with counsel reasonably satisfactory to such indemnified party; PROVIDED, HOWEVER, if the defendants in any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that a conflict may arise between the positions of the indemnifying party and the indemnified party in conducting the defense of any such action or that there may be legal defenses available to it and/or other indemnified parties which are different from or additional to those available to the indemnifying party, the indemnified party or parties shall have the right to select separate counsel to assume such legal 27 defenses and to otherwise participate in the defense of such action on behalf of such indemnified party or parties. Upon receipt of notice from the indemnifying party to such indemnified party of such indemnifying party's election so to assume the defense of such action and approval by the indemnified party of counsel, the indemnifying party will not be liable to such indemnified party under this Section 11 for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof unless (i) the indemnified party shall have employed separate counsel in accordance with the proviso to the next preceding sentence (it being understood, however, that the indemnifying party shall not be liable for the expenses of more than one separate counsel (together with local counsel), approved by the indemnifying party, representing the indemnified parties who are parties to such action) or (ii) the indemnifying party shall not have employed counsel satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice of commencement of the action, in each of which cases the fees and expenses of counsel shall be at the expense of the indemnifying party. (d) The indemnifying party under this Section 11 shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party against any loss, claim, damage, liability or expense by reason of such settlement or judgment. Notwithstanding the foregoing sentence, if at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel as contemplated by Section 11(c) hereof, the indemnifying party agrees that it shall be liable for any settlement of any proceeding effected without its written consent if (i) such settlement is entered into more than 30 days after receipt by such indemnifying party of the aforesaid request and (ii) such indemnifying party shall not have reimbursed the indemnified party in accordance with such request prior to the date of such settlement. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement, compromise or consent to the entry of judgment in any pending or threatened action, suit or proceeding in respect of which any indemnified party is or could have been a party and indemnity was or could have been sought hereunder by such indemnified party, unless such settlement, compromise or consent includes an unconditional release of such indemnified party from all liability on claims that are the subject matter of such action, suit or proceeding. (e) (i) If the indemnification provided for above is for any reason held to be unavailable to or otherwise insufficient to hold harmless an indemnified party in respect of any losses, claims, damages, liabilities or expenses referred to therein, then each indemnifying party shall contribute to the aggregate amount paid or payable by such indemnified party, as incurred, as a result of any losses, 28 claims, damages, liabilities or expenses referred to therein (i) in such proportion as is appropriate to reflect the relative benefits received by the Company and the Trust, on the one hand, and the Dealer Manager, on the other hand, from the Exchange Offer or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company and the Trust, on the one hand, and the Dealer Manager, on the other hand, in connection with the statements or omissions or inaccuracies in the representations and warranties herein or any other matter which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. The relative benefits received by the Company and the Trust, on the one hand, and the Dealer Manager, on the other hand, in connection with the Exchange Offer shall be deemed to be in the same respective proportions as the maximum aggregate liquidation amount of the Exchange Securities issuable pursuant to the Exchange Offer bears to the total Dealer Manager's fee under the Engagement Letter attributable to the Exchange Offer payable to the Dealer Manager pursuant to the Engagement Letter. The relative fault of the Company and the Trust, on the one hand, and the Dealer Manager, on the other hand, shall be determined by reference to, among other things, whether any such untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact or any such inaccurate or alleged inaccurate representation or warranty relates to information supplied by the Company or the Trust, on the one hand, or the Dealer Manager, on the other hand, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. (ii) The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include, subject to the limitations set forth in Section 11(c), any legal or other fees or expenses reasonably incurred by such party in connection with investigating or defending any action or claim. The provisions set forth in Section 11(c) with respect to notice of commencement of any action shall apply if a claim for contribution is to be made under this Section 11(e); PROVIDED, HOWEVER, that no additional notice shall be required with respect to any action for which notice has been given under Section 11(c) for purposes of indemnification. (iii) The Company, the Trust and the Dealer Manager agree that it would not be just and equitable if contribution pursuant to this Section 11(e) were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in this Section 11(e). (iv) Notwithstanding the provisions of this Section 11(e), the 29 Dealer Manager shall not be required to contribute any amount in excess of the fee received by the Dealer Manager in connection with the Exchange Offer as provided in the Engagement Letter. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this Section 11(e), each officer and employee of the Dealer Manager and each person, if any, who controls the Dealer Manager within the meaning of the Securities Act and the Exchange Act shall have the same rights to contribution as the Dealer Manager, and each director of the Company or the Trust, each officer of the Company or the Trust who signed the Registration Statement and the Schedule TO, and each person, if any, who controls the Company or the Trust within the meaning of the Securities Act and the Exchange Act shall have the same rights to contribution as the Company and the Trust. (f) With respect to the Exchange Offer (and for no other purpose), this Section 11 shall supersede the indemnity agreement attached to the Engagement Letter and with respect to the Exchange Offer (and for no other purpose) such indemnity agreement shall be of no further effect. 12. TERMINATION OF THIS AGREEMENT. (a) This Agreement shall terminate upon the earliest to occur of (i) thirty days after the expiration date of the Exchange Offer, (ii) any of the conditions specified in Section 9 has not been fulfilled as of any date such condition is required to be fulfilled pursuant to Section 9 (and the Dealer Manager shall have notified the Trust and the Company thereof), (iii) the date on which the Company and the Trust terminate or withdraw the Exchange Offer for any reason, or (iv) any modification to the business terms of the Exchange Offer in the Company's and the Trust's sole and absolute discretion that results in the Dealer Manager withdrawing pursuant to Section 5 hereof. (b) Notwithstanding termination of this Agreement pursuant to subsection (a) above, the obligations of the parties pursuant to Sections 6, 7 and 11 shall survive any termination of this Agreement. 13. REPRESENTATIONS, WARRANTIES, COVENANTS, INDEMNITIES AND AGREEMENTS TO SURVIVE DELIVERY. All representations, warranties, covenants and agreements of the Trust, the Company and the Dealer Manager herein or in certificates delivered pursuant hereto, and the indemnity and contribution agreements contained in Section 11 hereof shall remain operative and in full force and effect regardless of any investigation made by or on behalf of the Dealer Manager or any person controlling the Dealer Manager within the meaning of the Securities Act or the Exchange Act, or by or on behalf of the Trust, the Company 30 or any of their respective officers, directors or controlling persons within the meaning of the Securities Act or the Exchange Act, and shall survive the consummation of the Exchange Offer and the termination of this Agreement. 14. NOTICES. All communications hereunder shall be in writing and shall be mailed, hand delivered or telecopied and confirmed to the parties hereto as follows: If to the Dealer Manager: Banc of America Securities LLC 9 West 57th Street New York, NY 10019 Facsimile: 212-583-8457 Attention: Eric Hambleton with a copy to: Davis Polk & Wardwell 450 Lexington Avenue New York, NY 10017 Facsimile: 212-450-4800 Attention: Winthrop B. Conrad, Jr. If to the Company: Fleetwood Enterprises, Inc. 3125 Myers Street Riverside, California 92513 Facsimile: (909) 351-3776 Attention: General Counsel with a copy to: Gibson, Dunn & Crutcher LLP Jamboree Center 4 Park Plaza Irvine, CA 92614-8557 Facsimile: (949) 451-4220 Attention: Mark W. Shurtleff, Esq. If to the Trust: Fleetwood Capital Trust II 31 Regular Trustees c/o Fleetwood Enterprises, Inc. 3125 Myers Street Riverside, California 92513 Facsimile: (909) 351-3776 Attention: General Counsel with a copy to: Gibson, Dunn & Crutcher LLP Jamboree Center 4 Park Plaza Irvine, CA 92614-8557 Facsimile: (949) 451-4220 Attention: Mark W. Shurtleff, Esq. Any party hereto may change the address for receipt of communications by giving written notice to the others. 15. SUCCESSORS. This agreement will inure to the benefit of and be binding upon the parties hereto and to the benefit of the employees, agents, officers and directors and controlling persons referred to in Section 11, and in each case their respective successors, and personal representatives, and no other person will have any right or obligation hereunder. The term "successors" shall not include any holder of Existing Securities receiving Exchange Securities upon exchange of such Existing Securities merely by reason of such exchange. 16. PARTIAL UNENFORCEABILITY. The invalidity or unenforceability of any Section, paragraph or provision of this Agreement shall not affect the validity or enforceability of any other Section, paragraph or provision hereof. If any Section, paragraph or provision of this Agreement is for any reason determined to be invalid or unenforceable, there shall be deemed to be made such minor changes (and only such minor changes) as are necessary to make it valid and enforceable. 17. GOVERNING LAW PROVISIONS. (a) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN SUCH STATE. (b) Any legal suit, action or proceeding arising out of or based upon this Agreement, the Indenture, the Exchange Securities, the Exchange Offer Materials or the transactions contemplated hereby ("Related Proceedings") may be instituted in the federal courts of the United States of America located in the City 32 and County of New York or the courts of the State of New York in each case located in the City and County of New York (collectively, the "Specified Courts"), and each party irrevocably submits to the exclusive jurisdiction (except for proceedings instituted in regard to the enforcement of a judgment of any such court (a "Related Judgment"), as to which such jurisdiction is non-exclusive) of such courts in any such suit, action or proceeding. Service of any process summons notice or document by mail to such party's address set forth above shall be effective service of process for any suit, action or other proceeding brought in any such court. The parties irrevocably and unconditionally waive any objection to the laying of venue of any suit, action or other proceeding in the Specified Courts and irrevocably and unconditionally waive and agree not to plead or claim in any such court that any such suit, action or other proceeding brought in any such court has been brought in an inconvenient forum. 18. GENERAL PROVISIONS. This Agreement, together with the Engagement Letter (including all attachments or schedules thereto), constitutes the entire agreement of the parties to this Agreement and supersedes all prior written or oral and all contemporaneous oral agreements, understandings and negotiations with respect to the subject matter hereof. This Agreement may be executed in two or more counterparts, each one of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Agreement may not be amended or modified unless in writing by all of the parties hereto, and no condition herein (express or implied) may be waived unless waived in writing by each party whom the condition is meant to benefit. The descriptive headings herein are for the convenience of the parties only and shall not affect the construction or interpretation of this Agreement. Each of the parties hereto acknowledges that it is a sophisticated business person who was adequately represented by counsel during negotiations regarding the provisions hereof, including, without limitation, the indemnification and contribution provisions of Section 11 and is fully informed regarding said provisions. Each of the parties hereto further acknowledges that the provisions of Section 11 hereto fairly allocate the risks in light of the ability of the parties to investigate the Company, its affairs and its business in order to assure that adequate disclosure has been made in the Registration Statement, the Schedule TO, the Prospectus and any of the Exchange Offer Materials (and any amendments or supplements thereto), as required by the Securities Act and the Exchange Act. 33 If the foregoing is in accordance with your understanding of our agreement, kindly sign and return to the Company and the Trust the enclosed copies hereof, whereupon this instrument, along with all counterparts hereof, shall become a binding agreement in accordance with its terms. Very truly yours, FLEETWOOD ENTERPRISES, INC. By: ----------------------------------------------- Name: Title: FLEETWOOD CAPITAL TRUST II By: ----------------------------------------------- Name: Title: The foregoing Dealer Manager Agreement is hereby confirmed and accepted by the Dealer Manager in New York, New York as of the date first above written. Accepted and agreed as of the date first above written: BANC OF AMERICA SECURITIES LLC By: -------------------------------------- Name: Title: 34 EXHIBIT A FORM OF OPINION OF GIBSON, DUNN & CRUTCHER LLP PURSUANT TO SECTION 9(f) 1. The Company has been duly incorporated and is validly existing and in good standing under the laws of its jurisdiction of incorporation and has all corporate power to own, lease and operate its properties and conduct its business as described in the Registration Statement. The Company has all requisite corporate power and authority to issue the Debentures pursuant to the Indenture, to enter into the Dealer Manager Agreement, the Exchange Agent Agreement, the Information Agent Agreement, the Guarantee, the Indenture and the Declaration, to consummate the Exchange Offer, and to perform its obligations thereunder. 2. The Indenture has been duly qualified under the Trust Indenture Act, the execution and delivery of the Indenture have been duly authorized by all necessary corporate action of the Company, and the Indenture has been duly executed and delivered by the Company, and is a legal, valid, binding and enforceable agreement of the Company. 3. (i) The execution and delivery of the Debentures have been duly authorized by all necessary corporate action of the Company; (ii) the Debentures have been duly executed and delivered by the Company; (iii) the Debentures are the legal, valid, binding and enforceable obligations of the Company, entitled to the benefits of the Indenture. 4. The execution and delivery of the Declaration have been duly authorized by all necessary corporate action of the Company, and the Declaration has been duly executed and delivered by the Company. 5. The execution and delivery of the Guarantee have been duly authorized by all necessary corporate action of the Company, and the Guarantee has been duly executed and delivered by the Company, and is a legal, valid, binding and enforceable agreement of the Company. 6. The authorized, issued and outstanding capital stock of the Company (including the Fleetwood Common Stock) conforms in all material respects to the descriptions thereof set forth or incorporated by reference in the Prospectus. The form of certificate used to evidence the Fleetwood Common Stock is in due and proper form and complies with all applicable requirements of the Certificate of Incorporation and By-laws of the Company and the General Corporation Law of the State of Delaware. 7. The holders of outstanding shares of capital stock of the Company are not entitled to any preemptive rights, rights of first refusal or other similar rights, under the Certificate of Incorporation or By-Laws of the Company, the law of Delaware or to our knowledge, otherwise, to subscribe for the Exchange Securities, the Debentures or the Fleetwood Common Stock; the Fleetwood Common Stock into which the Debentures are convertible at the initial conversion price has been duly authorized by all necessary corporate action of the Company and reserved for issuance upon conversion and, upon issuance thereof on conversion of the Debentures in accordance with the terms of the Debentures and the Indenture, will be validly issued, fully paid and non-assessable and free of preemptive rights under the Certificate of Incorporation or By-laws of the Company or the General Corporation Law of the State of Delaware, or to our knowledge, otherwise and the Fleetwood Common Stock to be issued as payment of interest on the Debentures has been duly authorized by all necessary corporate action of the Company and reserved for issuance, and upon issuance as payment of interest on the Debentures in accordance with the terms of the Debentures and the Indenture, will be validly issued, fully paid and non-assessable and free of preemptive rights under the Certificate of Incorporation or By-laws of the Company or the General Corporation Law of the State of Delaware, or to our knowledge, otherwise. 8. The statements set forth (i) in the Prospectus under the headings, "The Exchange Offer", "Fleetwood Capital Trust", "Fleetwood Capital Trust II", "Fleetwood Capital Trust III", "Description of Preferred Securities", "Description of Our Capital Stock", "United States Federal Income Tax Considerations" and "Plan of Distribution" and (ii) in the Prospectus describing the Dealer Manager Agreement and Bank of America Credit Agreement, in each case insofar as such statements constitute, summaries of the legal matters, documents or legal proceedings referred to therein, fairly present and summarize in all material respects, the matter referred to therein. 9. The execution and delivery of the Dealer Manager Agreement, the Exchange Agent Agreement and the Information Agent Agreement, the performance by the Company of its obligations thereunder, [the issuance and delivery by the Company of the Debentures pursuant to the Indenture and the consummation of the Exchange Offer have been duly authorized by all necessary corporate action of the Company], and each of the Dealer Manager Agreement, the Exchange Agent Agreement, the Information Agent Agreement and the Bank of America Credit Agreement has been duly executed and delivered by, and is a valid and binding agreement of, the Company, enforceable in accordance with its terms. 2 10. Assuming the accuracy of the representations and warranties of the Dealer Manager and compliance by it of its agreements contained in the Dealer Manager Agreement, neither of the issuance of the Debentures, the Guarantee, the Exchange Securities and the Common Securities, nor the execution, delivery and performance by the Trust and the Company of their respective obligations in the Dealer Manager Agreement, the Indenture, the Debentures, the Guarantee, the Declaration, the Exchange Securities, the Common Securities, the Exchange Agent Agreement and the Information Agreement and the consummation of the Exchange Offer, do or will violate, or require any approval, authorization, consent, qualification, registration or waiver of or with any governmental authority or regulatory body of the State of New York or the United States of America under any law or regulation of the State of New York or the United States of America applicable to the Company or the Trust that is generally applicable to transactions in the nature of those contemplated by the Exchange Offer Materials, or the General Corporation Law of the State of Delaware, except for such approvals, authorizations, consents, qualifications, registrations or waivers (i) as may be required under the Securities Act, the Exchange Act, the Trust Indenture Act, (ii) as may be required under any securities or Blue Sky laws, (iii) as already have been made or obtained or (iv) that, if not made or obtained, would not have a Material Adverse Effect on the Company and its subsidiaries taken as a whole. 11. Neither the Company nor the Trust is, or after giving effect to the Exchange Offer, will be, an "investment company" within the meaning of the Investment Company Act of 1940, as amended. 12. The Registration Statement (i) has been filed under the Securities Act prior to the Commencement Date and (ii) has been declared effective by the Commission under the Securities Act. To the best knowledge of such counsel, no stop order suspending the effectiveness of the Registration Statement has been issued under the Securities Act and no proceedings for such purpose have been instituted or threatened by the Commission. Any required filing of the Prospectus and any supplement thereto pursuant to Rule 424(b) under the Securities Act has been made in the manner and within the time period required by such Rule 424(b). 13. The Registration Statement and the Prospectus, and each amendment or supplement to the Registration Statement and the Prospectus, as of the effective date of the Registration Statement (other than the financial statements and supporting schedules and other financial or statistical data included or incorporated by reference therein or in exhibits to or excluded from the Registration Statement or that part of the Registration Statement that constitutes the Form T-1, as to which no opinion need be rendered) appear on their face to comply as to form in all material respects with the applicable requirements of the Securities Act. 3 14. The Registration Statement and the Prospectus (other than the financial statements and notes thereto and related schedules and other financial and statistical data contained therein, as to which such counsel expresses no opinion), as of the time of filing with the Commission, appeared on their face to comply as to form in all material respects with the requirements of the Securities Act and the applicable rules and regulations of the Commission. 15. To such counsel's knowledge, there are no agreements, contracts, leases or documents to which the Company is a party of a character required to be described in the Registration Statement or to be filed as an exhibit to the Registration Statement which are not described therein or filed as required. 16. The Schedule TO, and each amendment or supplement thereto, and the documents required by Item 12 thereof (other than the financial statements and supporting schedules and other financial or statistical data included or incorporated by reference therein, as to which no opinion need be rendered) comply as to form as of the date it was filed in all material respects with the requirements of the Exchange Act. In addition, such counsel shall state that they have participated in conferences with officers and other representatives of the Company and the Trust, representatives of the independent auditors of the Company and with representatives of the Dealer Manager at which the contents of the Registration Statement and related matters were discussed. Such counsel may state that the purposes of its professional engagement was not to establish or confirm factual matters, that the scope of its examination of the affairs of the Company did not permit it to verify the accuracy, completeness or fairness of the statements set forth in the Registration Statement and that such counsel is not passing upon and does not assume any responsibility for the accuracy, completeness or fairness of the statements contained in the Registration Statement except to the extent set forth in paragraph 9 of above. Such counsel shall state that on the basis of the foregoing, and except for the financial statements and schedules and other financial, statistical and accounting data included or incorporated by reference in the Registration Statement and except for documents filed pursuant to the Exchange Act annexed to or incorporated by reference in the Registration Statement, as to which such counsel need not state an opinion, nothing has come to such counsel's attention which would lead them to believe (i) that either the Registration Statement, the Prospectus or other Exchange Offer Materials, at the time the Registration Statement became effective, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading or (ii) that the Prospectus and Exchange Offer Materials, as of the date of the Prospectus and at all times subsequent thereto up to and on the date of such opinion, as the case may be, contained an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in the light of the 4 circumstances under which they were made, not misleading (it being understood that such counsel need express no belief as to the financial statements or schedules or other financial or statistical data derived therefrom, included or incorporated by reference in the Registration Statement, the Prospectus, the other Exchange Offer Materials, or any amendments or supplements thereto, or as to that part of the Registration Statement that constitutes the Form T-1). The foregoing opinions are limited to the federal law of the United States of America, the law of the State of New York and the General Corporation Law of the State of Delaware. 5 EXHIBIT B FORM OF OPINION OF FORREST THEOBALD, VICE PRESIDENT-GENERAL COUNSEL AND SECRETARY OF THE COMPANY PURSUANT TO SECTION 9(g) 1. The Company and each of the Company's Significant Subsidiaries has been duly incorporated or formed and is validly existing as a corporation or business trust in good standing under the laws of the jurisdiction of its incorporation or formation, with corporate or trust power to own, lease and operate its properties and conduct its business as described in the Registration Statement and is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction in the United States where the ownership or leasing of its respective assets or the conduct of its business as described in the Prospectus requires such qualification, except where the failure to be so qualified would not, individually or in the aggregate, have a Material Adverse Effect; 2. All of the issued and outstanding capital stock of each of the Company's subsidiaries has been duly authorized and validly issued, is fully paid and non-assessable and, except as set forth in the Prospectus, is owned beneficially and of record, directly or indirectly, by the Company, free and clear of all security interests, pledges, liens, encumbrances, equities or, to the knowledge of such counsel, any pending or threatened claims; 3. The holders of outstanding shares of capital stock of the Company are not entitled to any preemptive rights, rights of first refusal or similar rights under the Certificate of Incorporation or Bylaws of the Company, the General Corporation Law of the State of Delaware, or to such counsel's knowledge, otherwise, to subscribe for the Exchange Securities, the Debentures or the Fleetwood Common Stock. 4. The statements in the Company's most recent Annual Report on Form 10-K, incorporated by reference in the Registration Statement, under the caption "Legal Proceedings in Which We Are Involved" and in the Company's most recent Quarterly Report on Form 10-Q, incorporated by reference in the Registration Statement, under the caption "Legal Proceedings," insofar as such statements constitute summaries of the legal matters, documents or proceedings referred to therein, fairly summarize in all material respects the matters referred to therein. Except as described in the Registration Statement, there is not pending or, to such counsel's knowledge, threatened any action, suit, proceeding, inquiry or investigation, before or brought by any court or governmental agency or regulatory body, to which the Company or any Significant Subsidiary or the property of the Company or any Significant Subsidiary, is subject, which might reasonably be expected to result in a Material Adverse Effect, or which might reasonably be expected to materially and adversely affect the properties or assets thereof or the consummation of the transactions contemplated in the Dealer Manager Agreement or the performance by the Company of its obligations thereunder or transactions contemplated by the Registration Statement. 5. The documents incorporated by reference in the Prospectus (except for the financial statements and other financial or statistical data, as to which such counsel expresses no opinion), as of the dates they were filed with the Commission, appear on their face to comply as to form in all material respects to the requirements of the Securities Act and the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and regulations under both such Acts 6. The execution, delivery and performance of the Documents and the consummation of the transactions contemplated in the Registration Statement (including the issuance of the Exchange Securities and the Common Securities by the Trust) and compliance by the Company and the Trust with their respective obligations under the Documents do not and will not, whether with or without the giving of notice or lapse of time or both, conflict with or constitute a breach of, or default or Debt Repayment Triggering Event under or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company or any Significant Subsidiary pursuant to the Existing Securities, the Existing Debentures, and the related indenture and guarantee, the Bank of America Credit Agreement, or any other any contract, indenture, mortgage, deed of trust, loan or credit agreement, note, lease or any other agreement or instrument, required to be filed as an exhibit to the reports of the Company filed pursuant to the Exchange Act to which the Company or any of its Significant Subsidiaries is a party or by which it or any of them may be bound, or to which any of the property or assets of the Company or any Significant Subsidiary is subject (the "Material Contracts") (except for such conflicts, breaches or defaults or liens, charges or encumbrances that would not have a Material Adverse Effect), nor will such action result in any violation of the provisions of the Certificate of Incorporation or Bylaws of the Company or any of its Significant Subsidiaries, or any applicable law, statute, rule, regulation, judgment, order, writ or decree, known to such counsel other than state securities or Blue Sky laws, of any government, government instrumentality or court, domestic or foreign, having jurisdiction over the Company or any of its Significant Subsidiaries or any of their respective properties, assets or operations. 7. To such counsel's knowledge after due inquiry and reasonable investigation, (i) no default by the Company or its Significant Subsidiaries exists in the due performance or observance of any material obligation, agreement, covenant or condition contained in any Material Contract and (ii) none of the Company or any Significant Subsidiary is in violation of any applicable law, statute, rule regulation, judgment, order, writ or decree of any government, government instrumentality or 2 court, domestic or foreign, having jurisdiction over the Company or any of its Significant Subsidiaries or any of their respective properties, assets or operations except, with respect to clauses (i) and (ii), for such defaults or violations as would not have a Material Adverse Effect. In addition, such counsel shall state that they have participated in conferences with officers and other representatives of the Company, representatives of the independent public or certified public accountants for the Company and with representatives of the Dealer Manager at which the contents of the Registration Statement, the Prospectus, and other Exchange Offer Materials and any supplements or amendments thereto, and related matters were discussed and, although such counsel is not passing upon and does not assume any responsibility for the accuracy, completeness or fairness of the statements contained in the Registration Statement, the Prospectus, or the other Exchange Offer Materials (other than as specified above), and any supplements or amendments thereto, on the basis of the foregoing, nothing has come to their attention which would lead them to believe (i) that either the Registration Statement, the Prospectus or other Exchange Offer Materials, at the time the Registration Statement became effective, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading or (ii) that the Prospectus and Exchange Offer Materials, as of the date of the Prospectus and at all times subsequent thereto up to an on the date of such opinion, as the case may be, contained an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading (it being understood that such counsel need express no belief as to the financial statements or schedules or other financial or statistical data derived therefrom, included or incorporated by reference in the Registration Statement, the Prospectus, the other Exchange Offer Materials, or any amendments or supplements thereto). In rendering such opinion, such counsel may rely (A) as to matters involving the application of laws of any jurisdiction other than the General Corporation Law of the State of Delaware, the General Corporation Law of the State of California or the federal law of the United States, to the extent they deem proper and specified in such opinion, upon the opinion (which shall be dated the Commencement Date or the Closing Date, as the case may be, shall be satisfactory in form and substance to the Dealer Manager, shall expressly state that the Dealer Manager may rely on such opinion as if it were addressed to them and shall be furnished to the Dealer Manager) of other counsel of good standing whom they believe to be reliable and who are satisfactory to counsel for the Dealer Manager; PROVIDED, HOWEVER, that such counsel shall further state that they believe that they and the Dealer Manager is justified in relying upon such opinion of other counsel, and (B) as to matters of fact, to the extent they deem proper, on certificates of responsible officers of the Company and public officials. 3 EXHIBIT C FORM OF OPINION OF MORRIS, NICHOLS, ARSHT & TUNNELL, SPECIAL COUNSEL TO THE TRUST AND THE COMPANY PURSUANT TO SECTION 9(h) 1. The Trust has been duly created and is validly existing in good standing as a business trust under the Delaware Business Trust Act, all filings required under the laws of the State of Delaware with respect to the creation and valid existence of the Trust as a business trust have been made, and the Trust has the requisite business trust power and authority to conduct its business as described in the Prospectus. 2. The Declaration constitutes a legal, valid and binding obligation of the Company and each of the Regular Trustees, and is enforceable against the Company and each of the Regular Trustees, in accordance with its terms, except as such enforceability may be limited by (A) bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or other laws of general application relating to or affecting the enforcement of creditors' rights and remedies, (B) application of equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at law) and (C) considerations of public policy or the effects of applicable law relating to fiduciary duties. 3. Under the Delaware Business Trust Act and the Declaration, the Trust has the requisite business trust power and authority (A) to perform its obligations under the Declaration, (B) issue the Exchange Securities and the Common Securities and (C) purchase and hold the Debentures. 4. The execution and delivery of the Dealer Manager Agreement and the Common Securities Purchase Agreement by the Trust and the performance of its obligations thereunder have been duly authorized by all necessary business trust action on the part of the Trust. 5. The Common Securities have been duly authorized by the Declaration for issuance, when issued, delivered and paid for in accordance with the terms of the Declaration, will be validly issued undivided beneficial interests in the assets of the Trust. 6. The Exchange Securities have been duly authorized by the Declaration for issuance and, when issued, delivered and paid for in accordance with the terms of the Declaration will be validly issued and, subject to the terms of the Declaration and the further qualifications set forth herein, fully paid and non-assessable undivided beneficial interests in the assets of the Trust. Under the Delaware Business Trust Act and the Declaration, the holders of the Exchange Securities will be entitled to the same limitation of personal liability extended to stockholders of private corporations for profit organized under the General Corporation Law of the State of Delaware. 7. Under the Delaware Business Trust Act and the Declaration, the issuance of the Exchange Securities and the Common Securities is not subject to preemptive rights. 8. The issuance and sale by the Trust of the Exchange Securities, the execution, delivery and performance by the Trust of the Dealer Manager Agreement, the consummation by the Trust of the transactions contemplated thereby and compliance by the Trust with its obligations thereunder do not (A) result in any violation of the Declaration or the Certificate of Trust or any applicable Delaware law (statutory or decisional) or any rule or regulation of any Delaware governmental agency or (B) require the approval of any Delaware governmental agency. 9. No authorization, approval, consent or order of any Delaware governmental authority or agency is required to be obtained by the Trust solely in connection with the issuance and sale of the Exchange Securities, except such as may be required under Delaware securities or Blue Sky laws. 10. Assuming that the Trust derives no income from or connected with services provided within the State of Delaware and has no assets, activities (other than maintaining the Delaware Trustee and the filing of documents with the Secretary of State of the State of Delaware) or employees in the State of Delaware, the Trust's security holders (other than holders of securities, or persons who are partners or S corporation shareholders for federal income tax purposes in such holders of securities, who reside or are domiciled in the State of Delaware or who are otherwise subject to income taxation in the State of Delaware) will have no liability for income taxes imposed by the State of Delaware solely as a result of their participation in the Trust, and the Trust will not be liable for any income tax imposed by the State of Delaware. 2 EXHIBIT D FORM OF OPINION OF RICHARDS, LAYTON & FINGER, P.A. WITH RESPECT TO THE DELAWARE TRUSTEE PURSUANT TO SECTION 9(i) 1. The BNY (DE) is duly incorporated and is validly existing in good standing as a banking corporation with banking and trust powers under the laws of the State of Delaware. 2. The BNY (DE) has the power and authority to execute, deliver and perform its obligations under each of the Original Declaration of trust and the Amended and Restated Declaration of Trust. 3. The Original Declaration of Trust has been duly authorized, executed and delivered by BNY (DE) and constitutes a legal, valid and binding agreement of BNY (DE), enforceable against BNY (DE), in accordance with its terms. 4. Assuming due authorization, execution and delivery of the Amended and Restated Declaration of Trust by each of the Sponsor, BNY (DE), the Property Trustees and the Regular Trustees, and that each of the Sponsor, the Property Trustee and the Regular Trustees has the power and authority to enter into and perform its obligations under the Amended and Restated Declaration of Trust, the Amended and Restated Declaration of Trust will constitute a legal, valid and binding agreement of BNY (DE), enforceable against BNY (DE), in accordance with its terms. 5. Neither the execution, delivery and performance by BNY (DE) of the Original Declaration of Trust and the Amended and Restated Declaration of Trust, nor the consummation by BNY (DE) of any of the transactions contemplated thereby, requires the consent, authorization, order or approval of, the giving of notice to, the registration with or the taking of any other action in respect of any governmental authority or agency under the laws of the State of Delaware or any law of the United States of America governing the banking or trust powers of BNY (DE), other than the filing of the Certificate of Trust with the Secretary of State (which Certificate of Trust has been duly filed). 6. Neither the execution, delivery and performance by BNY (DE) of the Original Declaration of Trust or the Amended and Restated Declaration of Trust, nor the consummation by BNY (DE) of any of the transactions contemplated thereby, (i) conflicts with or constitutes a breach of or default under the Certificate of Trust, the Original Declaration of Trust, the Amended and Restated Declaration of Trust, the certificate of incorporation or by-laws of BNY (DE) or, to our knowledge without independent investigation and solely in reliance on a certificate of an authorized officer of BNY (DE), any agreement, indenture or other instrument to which BNY (DE) is a party or by which it or any of its properties may be bound or (ii) violates any law, governmental rule or regulation of the State of Delaware or any federal law of the United States of America governing the banking or trust powers of BNY (DE) or, to our knowledge without independent investigation and solely in reliance on a certificate of an authorized officer of BNY (DE), any court decree of the State of Delaware applicable to BNY (DE). 2 EXHIBIT E FORM OF OPINION OF GIBSON, DUNN & CRUTCHER LLP, SPECIAL TAX COUNSEL TO THE TRUST AND THE COMPANY PURSUANT TO SECTION 9(j) 1. The Trust will be characterized as a grantor trust for U.S. federal income tax purposes and not as a partnership or as an association subject to tax as a corporation; 2. The Debentures, when issued, authenticated and delivered in accordance with the terms of the Indenture, will constitute indebtedness of the Company; and 3. The discussion set forth in the Prospectus under the caption "United States Federal Income Tax Considerations," to the extent it constitutes summaries of legal matters or legal conclusions, is accurate in all material respects. ANNEX A [Date] Banc of America Securities LLC 600 Montgomery Street San Francisco, California 94111 RE: Fleetwood Enterprises, Inc. (the "Company") Ladies & Gentlemen: The undersigned understands that the Company proposes to offer to exchange up to $___ million in aggregate liquidation amount of___% Convertible Trust Preferred Securities due February 15, 2013 (the "Exchange Securities") issued by Fleetwood Capital Trust II, a statutory business trust formed under the laws of the State of Delaware (the "Trust II") for up to $86.25 million in aggregate liquidation amount of 6% Convertible Trust Preferred Securities due February 15, 2028, for which you will act as the Dealer Manager, and a public offering of up to $___ million in aggregate liquidation amount of___% Convertible Trust Preferred Securities due February 15, 2013 (the "Cash Offer Preferred Securities") of Fleetwood Capital Trust III (the "Trust III") for which you will act as the Placement Agent (such exchange offer and cash offer hereinafter collectively referred to as the "Offering"). The undersigned recognizes that the Offering will be of benefit to the undersigned and will benefit the Company. The undersigned acknowledges that you are relying on the representations and agreements of the undersigned contained in this letter in carrying out the Offering and in entering into dealer manager and distribution agreements with the Company with respect to the Offering. In consideration of the foregoing, the undersigned hereby agrees that the undersigned will not, without the prior written consent of Banc of America Securities LLC (which consent may be withheld in its sole discretion), (i) directly or indirectly, sell, offer, contract or grant any option to sell (including without limitation any short sale), pledge, transfer, establish an open "put equivalent position" within the meaning of Rule 16a-1(h) under the Securities Exchange Act of 1934, or otherwise dispose of any Exchange Securities, any equity securities of the Company, the Trust or any similar trust, any options or warrants to acquire any such securities, or securities exchangeable or exercisable for or convertible into such securities, or (ii) enter into any swap or other agreement that transfers, in whole or in part, any of the economic consequences of ownership of any equity securities of the Company, the Trust or any similar trust (whether any such transaction described in clause (i) or (ii) above is to be settled by delivery of equity securities of the B-1 Company, the Trust or any similar trust, other securities, cash or otherwise) currently or hereafter owned either of record or beneficially (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended) by the undersigned, or publicly announce the undersigned's intention to do any of the foregoing, for a period commencing on the date hereof and continuing through the close of trading on the date 90 days after the date of the final prospectus relating to the Offering. The undersigned also agrees and consents to the entry of stop transfer instructions with the Company's transfer agent and registrar against the transfer of shares of Common Stock or securities convertible into or exchangeable or exercisable for Common Stock held by the undersigned except in compliance with the foregoing restrictions. With respect to the Offering only, the undersigned waives any registration rights relating to registration under the Securities Act of any Common Stock owned either of record or beneficially by the undersigned, including any rights to receive notice of the Offering. This agreement is irrevocable and will be binding on the undersigned and the respective successors, heirs, personal representatives, and assigns of the undersigned. - ---------------------------------- Printed Name of Holder By: ------------------------------- Signature - ---------------------------------- Printed Name of Person Signing (AND INDICATE CAPACITY OF PERSON SIGNING IF SIGNING AS CUSTODIAN, TRUSTEE, OR ON BEHALF OF AN ENTITY) B-2 EX-1.2 4 a2065672zex-1_2.txt EXHIBIT 1.2 Exhibit 1.2 FLEETWOOD ENTERPRISES, INC., FLEETWOOD CAPITAL TRUST III and BANC OF AMERICA SECURITIES LLC Distribution Agreement dated as of _____________, 2001 DISTRIBUTION AGREEMENT December , 2001 BANC OF AMERICA SECURITIES LLC 9 West 57th Street New York, New York 10019 Ladies and Gentlemen: 1. INTRODUCTORY. Fleetwood Enterprises, Inc., a Delaware corporation (the "Company") proposes to offer for sale up to $___ million in aggregate liquidation amount of ____% Convertible Trust III Preferred Securities due February 15, 2013 (the "Cash Offer Preferred Securities") of Fleetwood Capital Trust III (the "Trust"). The Cash Offer Preferred Securities will be guaranteed by a guarantee (the "Guarantee") by the Company to the extent described in the Prospectus (as hereinafter defined), and will be substantially identical in all respects to the securities (the "Exchange Securities") offered in the Company's exchange offer (the "Exchange Offer") as described in the Prospectus (as hereinafter defined) except that the Cash Offer Preferred Securities will have a different conversion price and a different liquidation amount and will be issued by a different trust. The cash offer described above and in the Prospectus (as hereinafter defined) is herein referred to as the "Cash Offer." In connection with the Cash Offer, the Company will deposit in the Trust as trust assets its ____% Convertible Trust III Subordinated Debentures due February 15, 2013 (the "Debentures") issued pursuant to an Indenture (the "Indenture") between the Company and the Trustee (as defined in the Indenture) and the Trust will transfer to the Company the proceeds from the sale of the Cash Offer Preferred Securities and its common securities (the "Common Securities"), as set forth in the Prospectus. 2. ENGAGEMENT AS PLACEMENT AGENT. By this Distribution Agreement (the "Agreement"), each of the Company and the Trust hereby engages and appoints you as the exclusive placement agent (the "Placement Agent") for the Cash Offer and authorizes you to act as such in connection with the Cash Offer. (a) Subject to the terms and conditions stated herein, the Company hereby agrees that the Cash Offer Preferred Securities issued in the Cash Offer will be sold exclusively through the Placement Agent. Accordingly, the Company agrees that it will not appoint any other agent to act on its behalf, or assist it in the placement of the Cash Offer Preferred Securities in the Cash Offer. Nothing in this Agreement shall constitute the Placement Agent a partner or joint venturer with the Trust, the Company or any of its subsidiaries. On the basis of the representations and warranties and agreements of each of the Company and the Trust contained herein and subject to and in accordance with the terms and conditions hereof and of the Cash Offer, the Placement Agent agrees to use its best efforts to obtain purchases for any and all of the Cash Offer Preferred Securities at a price of $____ per Cash Offer Preferred Security. (b) The Company shall not sell or approve the solicitation of offers for the purchase of Cash Offer Preferred Securities in excess of the amount which shall be authorized by the Company or in excess of the aggregate offering price of the Cash Offer Preferred Securities registered pursuant to the Registration Statement (as hereinafter defined). 3. REGISTRATION STATEMENT AND PROSPECTUS. (a) The Company and the Trust have prepared and filed with the Securities and Exchange Commission (the "Commission"), under the Securities Act of 1933, as amended, and the rules and regulations of the Commission promulgated thereunder (collectively, the "Securities Act"), a combined registration statement on Form S-4 (Reg. No. 333-62838) and Form S-3 (Reg. No. 333-62850), including a Prospectus (as hereinafter defined), covering the registration of the Cash Offer Preferred Securities, the Guarantee, the Debentures, the shares of the common stock, par value $1.00 per share of the Company (the "Fleetwood Common Stock"), issuable upon conversion of the Cash Offer Preferred Securities and the Debentures (the "Conversion Shares"), and the shares of Fleetwood Common Stock (the "Interest Shares" and together with the "Conversion Shares", the "Shares") that may be issued solely at the Company's option as payment of interest on the Debentures in accordance with the terms of the Indenture. The term "Registration Statement," as used in this Agreement, shall mean such registration statement, including the exhibits thereto and any documents incorporated by reference therein, in the form in which it becomes effective and, in the event of any amendment or supplement thereto or the filing of any abbreviated registration statement pursuant to Rule 462(b) of the Securities Act relating thereto after the effective date of such registration statement, shall also mean (from and after the effectiveness of such abbreviated registration statement) such registration statement as so amended or supplemented, together with any such abbreviated registration statement. The final prospectus included in the Registration Statement (including any documents incorporated in the Prospectus by reference) is herein called the "Prospectus," except that if the final prospectus furnished to the Placement Agent for use in 2 connection with the Cash Offer differs from the prospectus set forth in the Registration Statement (whether or not such prospectus is required to be filed pursuant to Rule 424(b)), the term "Prospectus" shall refer to the final prospectus furnished to the Placement Agent for such use. The terms "supplement" and "amendment" or "supplemented" and "amended" as used herein with respect to the Prospectus shall include all documents deemed to be incorporated by reference in the Prospectus that are filed subsequent to the date of the Prospectus and prior to the termination of the Cash Offer by the Company with the Commission pursuant to the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder (the "Exchange Act"). 4. USE OF THE PROSPECTUS AND REGISTRATION STATEMENT. (a) The Prospectus has been or will be prepared and approved by, and is the sole responsibility of, the Company and the Trust. The Company shall, to the extent permitted by law, use its best efforts to disseminate the Prospectus to each registered holder of any of the outstanding 6% Convertible Preferred Securities due February 15, 2028 (the "Existing Securities") of Fleetwood Capital Trust (the "Existing Trust"), as soon as practicable after the date of commencement of the Exchange (the "Commencement Date"), pursuant to Rule 13e-4 under the Exchange Act and comply in all material respects with its obligations thereunder. The Company and the Trust acknowledge and agree that you may use the Prospectus as specified herein without assuming any responsibility for independent verification on your part and the Company and the Trust represent and warrant to you that you may rely on the accuracy and completeness of any information delivered to you by or on behalf of the Company or the Trust without assuming any responsibility for independent verification of such information or without performing or receiving any appraisal or evaluation of the assets or liabilities of the Company or the Trust. (b) The Company and the Trust agree to provide you with as many copies as you may reasonably request of the Prospectus and the Registration Statement. The Company and the Trust agree that within a reasonable time prior to using or filing with any federal, state or other governmental or regulatory agency or instrumentality (an "Other Agency"), including the National Association of Securities Dealers Inc. (the "NASD"), of the Prospectus and Registration Statement, it will submit copies of such materials to you and your counsel and will give reasonable consideration to you and your counsel's comments, if any, thereon. The Company and the Trust agree prior to the termination of the Cash Offer, before amending or supplementing the Registration Statement, or the Prospectus, to furnish copies of drafts to, and consult with, the Placement Agent and its counsel within a reasonable time in advance of filing with the Commission of any amendment or supplement to the Registration Statement or the Prospectus. Neither the Company nor the Trust shall file any 3 such amendment or supplement to which the Placement Agent shall reasonably object. (c) The Company has furnished or shall use its best efforts to furnish to you, or cause the transfer agents or registrars for the Existing Securities to furnish to you, as soon as practicable after the date hereof (to the extent not previously furnished), cards or lists in reasonable quantities or copies thereof showing the names of persons who were the holders of record or, to the extent available, the beneficial owners of the Existing Securities as of a recent date, together with their addresses and the number of Existing Securities held by them. Additionally, the Company and the Trust shall update, or cause the transfer agents or registrars referred to above to update, such information from time to time during the term of this Agreement as may be reasonably requested by you. Except as otherwise provided herein, you agree to use such information only in connection with the Cash Offer. (d) The Company and the Trust authorize the Placement Agent to use the Prospectus in connection with the Cash Offer and for such period of time as any such materials are required by law to be delivered in connection therewith. (e) The Company and the Trust agree that any reference to the Placement Agent in any Prospectus or in any newspaper announcement or press release or other document or communication is subject to the Placement Agent's prior consent, which consent shall not be unreasonably withheld. 5. WITHDRAWAL. In the event that either the Company or the Trust (i) uses or permits the use of, or files with the Commission or any Other Agency, any amendment or supplement to the Registration Statement and any such document (a) has not been previously submitted to you for your and your counsel's comments or (b) has been so submitted, and you or your counsel have made comments which have not been reflected in a manner reasonably satisfactory to you or your counsel; or (ii) shall have breached, in any material respect, any of its representations, warranties, agreements or covenants herein; or (iii) amend or revise the Cash Offer in a manner not reasonably acceptable to you; then you shall be entitled upon written notice to the Company or the Trust to withdraw as Placement Agent in connection with the Cash Offer without any liability or penalty to you or any other indemnified person (as defined in Section 11 below) and without loss of any right to indemnification or contribution provided in Section 11 or to the payment of all fees and expenses payable pursuant to Sections 6 and 7 below which have accrued through the date of such withdrawal (it being agreed that in the event of any such withdrawal, for the purpose of determining the fees payable to you pursuant to Section 6, the aggregate liquidation amount of Cash Offer Preferred Securities for which indications of interest have been submitted pursuant to the Cash Offer as of the close of business on the date of 4 such withdrawal which is thereafter sold by the Trust, the Company or any of its subsidiaries or affiliates pursuant to the Cash Offer or otherwise, shall be deemed to have been sold as of the date of such withdrawal). 6. FEES. In connection with the Cash Offer, the Company and the Trust, jointly and severally, agree to pay a fee to the Placement Agent in an amount as set forth in a separate letter agreement, dated June 12, 2001, between the Company and the Placement Agent (the "Engagement Letter"). 7. EXPENSES AND REIMBURSEMENT OF EXPENSES. The Company and the Trust, jointly and severally, agree to pay all costs, fees and expenses incurred in connection with the performance of their obligations hereunder and in connection with the transactions contemplated hereby, including without limitation (i) all expenses incident to the preparation, issuance, execution and delivery of the Cash Offer Preferred Securities, (ii) all advertising expenses related to the Cash Offer and all fees and expenses incurred in marketing the Cash Offer, including but not limited to road show presentations, if any, (iii) all fees and expenses of the registrar and transfer agent, the exchange agent and the information agent, (iv) all fees and expenses of the Company's and the Trust's counsel, independent public or certified public accountants and other advisors, (v) all fees, costs and expenses incurred in connection with (a) the registration or qualification of the Cash Offer Preferred Securities under the laws of such jurisdictions as the Placement Agent may designate (including, without limitation, reasonable fees of counsel for the Placement Agent and its reasonable disbursements), and (b) any filing with the NASD, (vi) all costs and expenses incurred in connection with the preparation, printing and filing under the Securities Act of the Registration Statement and the Prospectus (including financial statements, exhibits, schedules, consents and certificates of experts, and amendments and supplements thereto), (vii) all costs and expenses incurred in connection with the printing (including word processing and duplication costs), shipping, distribution and delivery of the Prospectus and Registration Statement (including, without limitation, any preliminary and supplemental blue sky memoranda), (viii) all costs and expenses incurred by dealers and brokers (including yourself), commercial banks, trust companies and nominees for their customary mailing and handling expenses incurred in forwarding the Prospectus to their customers, and (ix) the fees and expenses of the trustees of the Trust under the Declaration (as hereinafter defined) (the "Trustees") or the Debt Trustee under the Indenture, the Guarantee Trustee under the Guarantee and any agents of such trustees, and the fees, disbursements and other charges of counsel for such trustees in connection with the Indenture, the Guarantee, the Declaration and the Debentures. In addition, the Company and the Trust, jointly and severally, agree to reimburse the reasonable documented out-of-pocket expenses of the Placement Agent incurred in connection with the Cash Offer (including, without limitation, the reasonable documented out-of-pocket 5 legal fees and expenses of the Placement Agent's counsel in connection with the Cash Offer). 8. REPRESENTATIONS, WARRANTIES AND CERTAIN AGREEMENTS OF THE COMPANY AND THE TRUST. Each of the Company and the Trust jointly and severally represents and warrants to you, and agrees with you, that as of the Commencement Date and at all times on or prior to date when the Cash Offer is consummated (the "Closing Date"): (a) The Registration Statement, including the Prospectus, has been prepared by the Company in conformity in all material respects with the requirements of the Securities Act and has been filed with the Commission as of the Commencement Date and will become effective not later than the expiration date of the Exchange Offer. Such amendments to such Registration Statement and Prospectus and such abbreviated registration statements pursuant to Rule 462(b) of the Securities Act as may have been required prior to the date hereof have been similarly prepared and filed with the Commission; and the Company will file such additional amendments to such Registration Statement and Prospectus and such abbreviated registration statements as may hereafter be required. Copies of such Registration Statement and Prospectus, including all amendments thereto and all documents incorporated by reference therein, and of any abbreviated registration statement pursuant to Rule 462(b) of the Securities Act have been or, if filed after the Commencement Date, will be, delivered or made available to you and your counsel. No stop order refusing or suspending the effectiveness of the Registration Statement or preventing or suspending the use of any Prospectus is in effect, and no proceedings for such purpose have been instituted or are pending before or are threatened by the Commission. (b) (i) The Registration Statement and the Prospectus comply and, as amended or supplemented, if applicable, will comply, in all material respects, with the Securities Act, the Exchange Act and the Trust Indenture Act of 1939, as amended, and the applicable rules and regulations of the Commission thereunder (the "Trust Indenture Act"); (ii) the Registration Statement, when it becomes effective, will not contain and as amended or supplemented thereafter, if applicable, will not contain, any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; (iii) neither the Prospectus nor the Registration Statement contains, and, as amended or supplemented, if applicable, will contain, any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; except that the representations and warranties set forth in this paragraph 8(b) do not apply to statements or omissions in the Registration Statement or the Prospectus, or, in each case, any amendment or supplement thereto, based upon information relating to the Placement Agent furnished to the 6 Company in writing by the Placement Agent expressly for use therein; and (iv) there are no agreements, leases, contracts or other documents required to be described in the Prospectus or to be filed as exhibits to the Registration Statement which have not been so described or filed. (c) The documents incorporated or deemed to be incorporated by reference in the Registration Statement or the Prospectus, at the time they were or hereafter are filed with the Commission, complied and will comply in all material respects with the requirements of the Exchange Act, and, when read together with the other information in the Registration Statement or the Prospectus, as the case may be, at the time the Registration Statement and any amendments thereto become effective and at the Commencement Date and the Closing Date, as the case may be, did not and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (d) The Company has not distributed and will not distribute, prior to the later of the Closing Date and the completion of the Placement Agent's distribution of the Cash Offer Preferred Securities pursuant to the Cash Offer, any offering material in connection with the Cash Offer other than the Prospectus. (e) The Company and each of the Company's subsidiaries is, and at the Closing Date will be, a corporation, a limited liability company, a limited liability partnership or a statutory business trust duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation or formation, as applicable, and has, and at the Closing Date will have, full power and authority to conduct all the activities conducted by it, to own or lease all the assets owned or leased by it and to conduct its business as described in the Prospectus; except where the failure to have such power and authority would not have a Material Adverse Effect (as hereinafter defined). The Company and each of its subsidiaries is, and at the Closing Date will be, duly licensed or qualified to do business and in good standing as a foreign corporation in all jurisdictions in which the nature of the activities conducted by it or the character of the assets owned or leased by it makes such licensing or qualification necessary, except for such failures to be licensed or qualified as would not have a material and adverse effect on the condition, financial or otherwise, or on the earnings, business, operations or prospects, whether or not arising from transactions in the ordinary course of business, of the Trust or of the Company and its subsidiaries considered as one entity (any such effect called a "Material Adverse Effect"). All of the outstanding shares of capital stock of the Company's subsidiaries have been duly authorized and validly issued and are fully paid and nonassessable and are owned by the Company free and clear of all liens, encumbrances and claims whatsoever, except for those pledged shares of capital stock set forth on Schedule I of that certain 7 Pledge Agreement by and among the Company, Fleetwood Holdings, Inc. ("Holdings"), Fleetwood Retail Corp. ("Retail") and certain subsidiaries of the Company, Holdings and Retail (collectively with the Company, Holdings and Retail, the "Pledgors"), in favor of Bank of America, N.A., as agent for the lenders that may from time to time become parties to the Bank of America Credit Agreement (as defined herein) (the "Lenders"). Complete and correct copies of the certificate of incorporation and the by-laws of the Company have been delivered to counsel to the Placement Agent and complete and correct copies of the certificate of incorporation and of the by-laws of each of its subsidiaries set forth on Schedule A hereto and all amendments thereto have been made available to counsel to the Placement Agent, and no changes therein will be made subsequent to the date hereof and prior to the Closing Date. (f) The Trust has been duly created and is validly existing in good standing as a business trust under the Delaware Act; all filings required under the laws of the State of Delaware with respect to the creation and valid existence of the Trust as a business trust have been made; under the Delaware Act and upon execution and delivery of the Trust's Amended and Restated Declaration of Trust in the form filed with the Registration Statement (the "Declaration"), the Trust will have the business trust power and authority to (x) own property and conduct its business, all as described in the Prospectus, (y) enter into and perform its obligations under this Agreement, and (z) issue and perform its obligations under the Cash Offer Preferred Securities and the Common Securities, and is not required to be authorized to do business in any jurisdiction other than Delaware; the Trust is not a party to or otherwise bound by any agreement other than those described in the Prospectus; the Trust does not have any consolidated or unconsolidated subsidiaries; the Trust is and will be treated as a consolidated subsidiary of the Company pursuant to generally accepted accounting principles; and the Trust is not and, assuming compliance by the Trust with the Declaration, will not be classified as an association taxable as a corporation for United States federal income tax purposes. (g) The Declaration has been duly and validly authorized by the Company and, when executed and delivered by the Company and the Regular Trustees (as defined in the Declaration) at the Closing Date, and assuming due authorization, execution and delivery thereof by the Property Trustee and the Delaware Trustee (as such terms are defined in the Declaration), will be the valid and binding obligation of the Company and the Regular Trustees in accordance with its terms (subject to applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and other similar laws affecting creditors' rights generally from time to time in effect and to general principles of equity, including, without limitation, concepts of materiality, reasonableness, good faith and fair dealing, regardless of whether considered in a proceeding in equity or at law), and the Declaration conforms to the description thereof contained in the Prospectus. 8 (h) Each of the Trust and the Company has all trust and corporate power, as the case may be, to enter into this Agreement. This Agreement has been duly authorized, executed and delivered by each of the Trust and the Company and upon such execution by each of the Trust and the Company (assuming the due authorization, execution and delivery of such agreement by the Placement Agent) this Agreement will constitute the valid and binding obligations of each of the Trust and the Company enforceable against each of the Trust and the Company in accordance with the terms hereof, subject to the applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and other similar laws affecting creditors' rights generally from time to time in concepts of materiality, reasonableness, good faith and fair dealing, regardless of whether considered in a proceeding in equity or at law, and except as the enforcement of indemnification and contribution provisions hereof may be limited by applicable law. (i) The Indenture has been duly and validly authorized by the Company, will be qualified under the Trust Indenture Act not later than the date of effectiveness of the Registration Statement and, assuming due authorization, execution and delivery of the Indenture by the Trustee, when executed and delivered by the Company, will constitute a valid and legally binding agreement of the Company, enforceable in accordance with its terms (subject to applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and other similar laws affecting creditors' rights generally from time to time in effect and to general principles of equity, including, without limitation, concepts of materiality, reasonableness, good faith and fair dealing, regardless of whether considered in a proceeding in equity or at law); and the Indenture conforms to the description thereof contained in the Prospectus. (j) The Cash Offer Preferred Securities to be issued pursuant to the Cash Offer will be duly authorized by the Declaration upon execution and delivery of the Declaration in the form filed with the Registration Statement, and, when issued and delivered by the Trust in accordance with the terms of the Declaration for cash pursuant to the Cash Offer, will be validly issued and fully paid and non- assessable undivided beneficial interests in the assets of the Trust and will be entitled to the benefits of the Declaration. The holders of the Cash Offer Preferred Securities, as beneficial owners of the Trust, will be entitled to the same limitation of personal liability as that extended to stockholders of private corporations for profit organized under the General Corporation Law of the State of Delaware; under the Delaware Act and the Declaration, the issuance of the Cash Offer Preferred Securities will not be subject to preemptive or other similar rights; and the Cash Offer Preferred Securities will conform to the description thereof in the Prospectus. (k) The Debentures to be deposited in the Trust as Trust assets in connection with the Cash Offer and to be issued and delivered thereafter from 9 time to time in accordance with the terms of the Declaration and the Indenture have been duly and validly authorized by the Company and, when executed and authenticated in accordance with the terms of the Indenture and delivered to the Trust pursuant to the terms of the Cash Offer, will constitute valid and legally binding obligations of the Company enforceable in accordance with their terms (subject to applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and other similar laws affecting creditors' rights generally from time to time in effect and to general principles of equity, including, without limitation, concepts of materiality, reasonableness, good faith and fair dealing, regardless of whether considered in a proceeding in equity or at law); and the Debentures will be in the form contemplated by, and entitled to the benefits of, the Indenture and will conform to the description thereof contained in the Prospectus. (l) The Guarantee has been duly and validly authorized by the Company and, when executed and delivered by the Company at the Closing Date, will constitute a valid and legally binding agreement of the Company enforceable in accordance with its terms (subject to applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and other similar laws affecting creditors' rights generally from time to time in effect and to general principles of equity, including, without limitation, concepts of materiality, reasonableness, good faith and fair dealing, regardless of whether considered in a proceeding in equity or at law); and the Guarantee will conform to the description thereof contained in the Prospectus. (m) The Common Securities have been duly authorized by the Declaration and, when issued and delivered by the Trust to the Company against payment therefor in accordance with the Declaration, will be validly issued and fully paid and non-assessable undivided beneficial interests in the assets of the Trust; under the Delaware Act and the Declaration, the issuance of the Common Securities will not be subject to preemptive or other similar rights; and at the Closing Date, all of the issued and outstanding Common Securities of the Trust will be directly owned by the Company free and clear of any security interest, mortgage, pledge, lien, encumbrance, claim or equity; and the Common Securities will conform to the description thereof contained in the Prospectus. (n) The Fleetwood Common Stock conforms in all material respects to the description thereof in the Prospectus. The Shares have been duly authorized and duly reserved for issuance and, upon issuance thereof upon conversion of the Cash Offer Preferred Securities and the Debentures or as payment of interest on the Debentures in accordance with the terms of the Cash Offer Preferred Securities, the Declaration, the Debentures and the Indenture, will be validly issued, fully paid and non-assessable shares of Fleetwood Common Stock and will be issued free and clear of any pledge, lien, security interest, encumbrance, claim or equitable interest and will not be subject to any preemptive rights, co-sale 10 rights, rights of first refusal or other rights to subscribe for or purchase the Fleetwood Common Stock. (o) The descriptions in the Prospectus of the Cash Offer Preferred Securities, the Common Securities, the Guarantee, the Trust, the Declaration, the Indenture and the Debentures, and of the Existing Securities, the Existing Trust and the Existing Common Securities (as defined in the Prospectus), Existing Guarantee (as defined in the Prospectus) and 6% Convertible Subordinated Debentures due February 15, 2028 (the "Existing Debentures") issued in connection with the issuance of the Existing Securities, and the related indenture and declaration of trust are, and at the Closing Date will be, complete and accurate in all material respects. (p) The financial statements and schedules of the Company together with the notes thereto included or incorporated by reference in the Registration Statement and the Prospectus, and any amendments or supplements thereto, present fairly the consolidated financial condition of the Company as of the respective dates thereof and the consolidated results of operations and cash flows of the Company for the respective periods covered thereby, all in conformity with generally accepted accounting principles applied on a consistent basis throughout the entire period involved, except as otherwise disclosed in the Registration Statement and the Prospectus. The interim consolidated financial statements together with the notes thereto included or incorporated by reference in the Registration Statement and the Prospectus, and any amendments or supplements thereto, have been prepared on a basis consistent with the audited consolidated financial statements except as otherwise stated therein, and include in your opinion all adjustments, including normal recurring adjustments necessary to present fairly the financial information therein. The selected and summary consolidated financial and statistical data included in the Registration Statement and the Prospectus, and any amendments and supplements thereto, present fairly the information shown therein and have been compiled on a basis consistent with the audited financial statements presented therein. No financial statements or schedules, other than the consolidated financial statements that are included in the Registration Statement and the Prospectus, and any amendments or supplements thereto, are required to be included therein. Arthur Andersen LLP, who have reported on such financial statements and schedules, are independent accountants within the meaning of the Securities Act. (q) Each of the Trust and the Company maintains a system of internal accounting control sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management's general or specific authorization; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain accountability for assets; (iii) access to assets if permitted only in 11 accordance with management's general or specific authorization; and (iv) the recorded accountability for assets is compared with existing assets at reasonable intervals and appropriate action is taken with respect to any differences. (r) Subsequent to the respective dates as of which information is given in the Prospectus and prior to the Closing Date, except as set forth in or contemplated by the Prospectus, (i) there has not been and will not have been any (a) change in the capitalization of the Trust or material adverse change in the capitalization of the Company, or (b) any material adverse change, or any development that could reasonably be expected to result in a material adverse change, in the condition, financial or otherwise, or in the earnings, business, operations or prospects, whether or not arising from transactions in the ordinary course of business, of the Trust or the Company and its subsidiaries, considered as one entity (any such change is called a "Material Adverse Change"), (ii) neither the Trust nor the Company and its subsidiaries, considered as one entity, has incurred any material liability or obligation, indirect, direct or contingent, not in the ordinary course of business, nor has it entered into any material transaction or agreement not in the ordinary course of business, and (iii) there has been no dividend or distribution of any kind declared, paid, or made by the Trust or the Company or, except for dividends paid to the Company or other subsidiaries, any of its subsidiaries on any class of its securities, or repurchase or redemption by the Company or any of its subsidiaries of any class of capital stock. (s) Except for subsequent issuances, if any, pursuant to the Exchange Offer or the Cash Offer or upon issuance of capital stock or exercise of stock options or warrants pursuant to employee benefit plans described in the Prospectus, the Company has authorized, issued and outstanding capitalization set forth in the Prospectus under the caption "Capitalization"; all of the outstanding capital stock of the Company has been duly authorized and validly issued, and is fully paid and non-assessable; and the authorized capital stock of the Company conforms in all material respects to the statements relating thereto in the Registration Statement and the Prospectus. (t) Neither the Company nor the Trust has taken and neither the Company nor the Trust will take, directly or indirectly, any action prohibited by Regulation M promulgated under the Exchange Act or designed to or that might reasonably be expected to cause or result in stabilization or manipulation of the price of the Common Stock to facilitate the distribution of Cash Offer Preferred Securities in the Cash Offer. (u) Neither the Company nor any of its subsidiaries is in violation of its charter or by-laws and the Trust is not in violation of the Declaration, and, except as specifically described in the Prospectus, none of the Company, any of its subsidiaries or the Trust is in default (or, with notice or lapse of time or both, 12 would be in default) ("Default") in the performance or observance of any obligation, agreement, covenant or condition contained in the Existing Securities, the Existing Debentures, and the related indenture and guarantee, the credit agreement dated as of July 27, 2001, as amended by that certain First Amendment to Credit Agreement and Consent of Guarantors dated as of December 4, 2001, that certain Second Amendment to Credit Agreement and Security Agreement and Consent of Guarantors dated as of December 4, 2001, and that certain Third Amendment to Credit Agreement and Consent of Guarantors dated as of December 7, 2001, among the Company, as guarantor, the financial institutions named therein, as the lenders, Bank of America, N. A., as administrative agent, Citicorp USA, Inc., as documentation agent, Heller Financial, Inc., as syndication agent and Fleetwood Holdings, Inc., and certain of its subsidiaries and Fleetwood Retail Corp., and certain of its subsidiaries, as the borrowers, and the related mortgages and other security documents (the "Bank of America Credit Agreement"), or any other contract, indenture, mortgage, deed of trust, loan agreement, note, lease or other instrument to which it is a party or by which it is bound, or to which any of its respective assets or properties is subject (each, an "Existing Instrument"), except for such Defaults as would not, in the case of the Company and its subsidiaries, individually or in the aggregate, have a Material Adverse Effect. (v) At the Closing Date, the Property Trustee will be the record holder of the Debentures and no security interest, mortgage, pledge, lien, encumbrance, claim or equity will be noted thereon or on the Debenture register maintained by or on behalf of the Company. (w) The execution and delivery by the Company of, and the performance by the Company of its obligations under, this Agreement, the Indenture, the Debentures, the Declaration and the Guarantee, and the execution and delivery by the Trust of, and the performance by the Trust of its obligations under, this Agreement and the Cash Offer Preferred Securities, the performance by the Trust of its obligations under the Declaration and the consummation of the Cash Offer and fulfillment of terms herein contemplated (i) will not result in any violation of the provisions of the charter or by-laws of the Company or of the Declaration, (ii) will not conflict with or constitute a breach of, or Default, or a Debt Repayment Triggering Event (as defined below) under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Trust or the Company or any of its subsidiaries pursuant to, or require the consent of any other party to, any Existing Instrument, except for such conflicts, breaches, Defaults, liens, charges or encumbrances as would not, individually or in the aggregate, have a Material Adverse Effect and (iii) will not result in any violation of any law, administrative regulation or administrative or court decree applicable to the Trust, the Company or any subsidiary. As used herein, a "Debt Repayment Triggering Event" means any event or condition which gives, or with the giving of notice or 13 lapse of time would give, the holder of any note, debenture or other evidence of indebtedness (or any person acting on such holder's behalf) the right to require the repurchase, redemption or repayment of all or a portion of such indebtedness by the Company or any of its subsidiaries except as set forth in Section 3.4 of the Bank of America Credit Agreement. (x) Neither the Trust nor the Company is, and after giving effect to the consummation of the Cash Offer, will not be an "investment company" or an "affiliated person" of, or "promoter" or "principal underwriter" for, an "investment company," as such terms are defined in the Investment Company Act of 1940, as amended. (y) Except as set forth in the Prospectus, there are no actions, suits or proceedings pending or, to the Company's knowledge, threatened against or affecting the Trust or the Company or any of its subsidiaries or any of their respective officers in their capacity as such, before or by any federal or state court, commission, regulatory body, administrative agency or other governmental body, domestic or foreign, wherein an unfavorable ruling, decision or finding would reasonably be expected to have a Material Adverse Effect. (z) Each of the Trust and the Company and each of its subsidiaries has, and at the Closing Date will have, (i) all governmental licenses, permits, consents, orders, approvals and other authorizations necessary to carry on its business as described in the Prospectus and (ii) complied in all respects with all laws, regulations and orders applicable to it or its business, except, in case of (i) and (ii) above, for such failures to possess or comply as would not, individually or in the aggregate, have a Material Adverse Effect, and neither the Trust, nor the Company or any subsidiary, has received any notice of proceedings relating to the revocation or modification of, or non-compliance with, any such license, permit, consent, order, approval or other authorization which, singly or in the aggregate, if the subject of an unfavorable decision, ruling or finding, could have a Material Adverse Effect. (aa) No consent, approval, authorization, or order of, or any filing, declaration, registration or qualification with, any court or governmental agency or body is required in connection with the authorization, issuance, transfer or delivery of the Cash Offer Preferred Securities by the Trust or the Guarantee and the Debentures by the Company, in connection with the consummation of the Cash Offer, or in connection with the execution, delivery and performance of this Agreement by the Trust and the Company, except such as may be required by the Securities Act or the Exchange Act, as may be required by the securities or Blue Sky laws of the various states, and as may be required from the NASD. 14 (bb) The Company and its subsidiaries (i) are in compliance with any and all applicable foreign, federal, state and local laws and regulations relating to the protection of human health and safety, the environment or hazardous or toxic substances or wastes, pollutants or contaminants ("ENVIRONMENTAL LAWS"), (ii) have received all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct their respective businesses and (iii) are in compliance with all terms and conditions of any such permit, license or approval, except where such noncompliance with Environmental Laws, failure to receive required permits, licenses or other approvals or failure to comply with the terms and conditions of such permits, licenses or approvals would not, singly or in the aggregate, have a material adverse effect on the Company and its subsidiaries, taken as a whole. (cc) No statement, representation, warranty or covenant made by the Trust or the Company in this Agreement, the Indenture, the Guarantee or the Declaration or made in any certificate or document required by this Agreement to be delivered to the Placement Agent was or will be, when made, inaccurate, untrue or incorrect in any material respect. (dd) None of the Trust, the Company or any of its subsidiaries is involved in any material labor dispute nor, to the knowledge of the Trust or the Company, is any such dispute threatened which could reasonably be expected to have a Material Adverse Effect. (ee) The Company and its subsidiaries own, or are licensed or otherwise have the full right to use, all material trademarks and trade names (collectively, the "Intellectual Property Rights") which are used in or necessary for the conduct of their respective businesses as described in the Prospectus. No claims have been asserted by any person to the use of any such Intellectual Property Rights or challenging or questioning the validity or effectiveness of any such Intellectual Property Rights except such claims as would not reasonably be expected to have a Material Adverse Effect. The use, in connection with the business and operations of the Company and its subsidiaries of such Intellectual Property Rights does not, to the Company's knowledge, infringe on the rights of any person except such infringements as would not reasonably be expected to have a Material Adverse Effect. (ff) Any certificate signed by any officer of the Company and delivered to the Placement Agent or to counsel for the Placement Agent pursuant to the terms of this Agreement shall be deemed a representation and warranty by the Company to the Placement Agent as to the matters covered thereby. 15 (gg) The Company maintains insurance with respect to its properties and business of the types and in amounts the Company reasonably deems adequate for its business, all of which insurance is in full force and effect. (hh) The Company has filed all material federal, state and foreign income and franchise tax returns and has paid all taxes shown as due thereon, other than taxes which are being contested in good faith and for which adequate reserves have been established in accordance with generally accepted accounting principles ("GAAP"); and the Company has no knowledge of any tax deficiency which has been or might be asserted or threatened against the Company. There are no tax returns of the Company or any of its subsidiaries that are currently being audited by state, local or federal taxing authorities or agencies (and with respect to which the Company or any subsidiary of the Company has received notice), where the findings of such audit, if adversely determined, would result in a Material Adverse Effect. (ii) The Company and the Trust have not done anything and will not do anything in connection with the Exchange Offer or the Cash Offer that is violative of Regulations G, T, U or X of the Board of Governors of the Federal Reserve System. (jj) The Common Stock (including the Underlying Securities) is registered pursuant to Section 12(b) of the Securities Exchange Act of 1934 (the "Exchange Act") and is listed on the New York Stock Exchange (the "NYSE") and the Pacific Stock Exchange (the "PSE"), and the Company has taken no action designed to, or likely to have the effect of, terminating the registration of the Common Stock under the Exchange Act or delisting the Common Stock from the NYSE or the PSE, nor has the Company received any notification that the Commission or the NYSE or PSE is contemplating terminating such registration or listing. (kk) There are no persons with registration or other similar rights to have any equity or debt securities registered for sale under the Registration Statement. (ll) All written communications made during the period from the first public announcement and to the earlier of either the expiration date of the Exchange Offer or the Closing Date of the Cash Offer have been or will be filed with the Commission in accordance with the Exchange Act and the Commission's rules and regulations including Rule 13e-4 under the Exchange Act. (mm) Except as set forth in the Bank of America Credit Agreement, no subsidiary of the Company is currently prohibited, directly or indirectly, from making any distribution in respect of its partnership interests, membership interests or shares of capital stock, as the case may be, from repaying to the 16 Company any loans or advances to such subsidiary from the Company or from transferring any of such subsidiary's property or assets to the Company or any other subsidiary of the Company, except as described in the Prospectus. (nn) The Bank of America Credit Agreement has been duly and validly authorized executed and delivered by the Company, and constitutes a valid and legally binding obligation of the Company, enforceable in accordance with its terms (subject to applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and other similar laws affecting creditors' rights generally from time to time in effect and to general principles of equity, including, without limitation, concepts of materiality, reasonableness, good faith and fair dealing, regardless of whether considered in a proceeding in equity or at law); and the Bank of America Credit Agreement conforms to the description thereof contained in the Prospectus. (oo) The Trust has complied with all provisions of Section 517.075 Florida Statutes (Chapter 92-198, Laws of Florida) relating to doing business with the Government of Cuba or with any person or affiliate located in Cuba. 9. CONDITIONS TO PLACEMENT AGENT'S OBLIGATIONS The obligations of the Placement Agent hereunder are subject, as of the Commencement Date and at all times on or prior to the Closing Date, to the accuracy of the representations and warranties on the part of each of the Company and the Trust herein, to the accuracy of the statements of officers of the Company and of the Trust made pursuant to the provisions hereof, to the performance by each of the Company and the Trust of their respective obligations hereunder and to the following additional conditions: (a) You shall have received, on the date hereof and the Closing Date, letters, dated the date hereof and the Closing Date as the case may be, from Arthur Andersen LLP, independent public or certified public accountants for the Company, in form and substance satisfactory to you, containing statements and information of the type ordinarily included in accountants' "comfort letters" delivered according to Statement of Auditing Standards No. 72 (or any successor bulletin), with respect to the audited and unaudited consolidated financial statements and certain financial information contained in the Registration Statement and the Prospectus. (b) For the period from and after effectiveness of this Agreement and prior to the Closing Date: (i) the Company shall have filed the Registration Statement with the Commission prior to the Commencement Date and the Registration Statement shall become effective prior to the execution hereof; and 17 (ii) no stop order refusing or suspending the effectiveness of the Registration Statement or any post-effective amendment shall have been issued or be in effect and no proceedings for such purpose shall have been instituted or threatened by the Commission and any request for additional information shall have been complied with to the reasonable satisfaction of the Placement Agent's counsel. (c) For the period from and after the date of this Agreement and prior to the Closing Date: (i) in the judgment of the Placement Agent, there shall not have occurred any Material Adverse Change, or any development involving a prospective Material Adverse Change; (ii) there shall not have occurred any downgrading, nor shall any notice have been given of any intended or potential downgrading or of any review for a possible change that does not indicate the direction of the possible change, in the rating or preliminary rating accorded the Cash Offer Preferred Securities or of any other securities of or guaranteed by the Company or any of its subsidiaries by any "nationally recognized statistical rating organization," as such term is defined for purposes of Rule 436(g)(2) under the Securities Act; and (iii) there shall not have been (A) (1) any liability or obligations, indirect, direct or contingent, incurred by the Trust or the Company or any of its subsidiaries, that is material to the Trust or to the Company and its subsidiaries, considered as one entity, except obligations incurred in the ordinary course of business, or (2) any material transaction or agreement entered into by the Trust or the Company and its subsidiaries, considered as one entity, not in the ordinary course of business, (B) any change in the capital stock or outstanding indebtedness of the Company, (C) any dividend or distribution of any kind declared, paid or made on the capital stock of the Company other than quarterly dividends declared, paid or made in the ordinary course of business, or (D) any loss or damage (whether or not insured) to the property of the Trust, the Company or any of its subsidiaries which has been sustained or will have been sustained, that either individually or in the aggregate, in the Placement Agent's judgment, are material and adverse and that make it, in the Placement Agent's judgment, impracticable to solicit the tender of Existing Securities pursuant to and in accordance with the terms of the Cash Offer on the terms and in the manner contemplated in the Registration Statement. 18 (d) On the Closing Date, you shall have received a written certificate, dated such date and executed by the Chairman of the Board or the Chief Executive Officer or the President of the Company, the Chief Financial Officer or Chief Accounting Officer of the Company, and an authorized officer of the Trust acceptable to you, to the effect set forth in clauses (b)(ii) and (c)(ii) of this Section 9 and further to the effect that: (i) the representations, warranties and covenants of each of the Company and the Trust, as the case may be, contained in this Agreement are true and correct with the same force and effect as though expressly made on the Closing Date; (ii) each of the Company and the Trust has complied to all of its agreements hereunder and satisfied all the conditions on its part to be performed or satisfied hereunder on or prior to the Closing Date; and (iii) when the Registration Statement became effective and at all times usbsequent thereto up to the date of such certificate, the Registration Statement and the Prospectus, and any amendments or supplements thereto, contained all material information required to be included therein by the Securities Act or the Exchange Act, as the case may be, and in all material respects conformed to the requirements of the Securities Act or the Exchange Act, as the case may be; the Registration Statement, and any amendment or supplement thereto, did not and does not include any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; the Prospectus, and any amendment or supplement thereto, did not and does not include any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; and, since the effective date of the Registration Statement, there has occurred no event required to be set forth in an amended or supplemented Prospectus which has not been so set forth. The officers signing and delivering certificates described in this Section 9(e) on behalf of each of the Company and the Trust may rely upon the best of their knowledge as to proceedings threatened. (e) Each of the Company and the Trust shall have furnished to you on the Closing Date such additional certificates, opinions or other documents as you shall reasonably request (including additional certificates of officers of the Company) as to the accuracy of the representations and warranties of the Trust and the Company herein, as to the performance by the Trust and the Company of 19 its obligations hereunder, and as to the other conditions concurrent and precedent to your obligations hereunder. (f) On the Closing Date, the Placement Agent shall have received the favorable opinion of Gibson, Dunn & Crutcher LLP, special counsel for the Trust and the Company, dated as of such date, the form of which is attached as EXHIBIT A. (g) On the Closing Date, the Placement Agent shall have received the favorable opinion of Forrest Theobald, Vice President - General Counsel and Secretary of the Company, dated as of such date, the form of which is attached as EXHIBIT B. (h) On the Closing Date, the Placement Agent shall have received the favorable opinion of Morris, Nichols, Arsht & Tunnell, special Delaware counsel to the Trust, dated as of such date, the form of which is attached as EXHIBIT C. (i) On the Closing Date, the Placement Agent shall have received the favorable opinion of Richards, Layton & Finger, P.A., with respect to the Delaware Trustee (as defined in the Declaration), dated as of such date, the form of which is attached as EXHIBIT D. (j) On the Closing Date, the Placement Agent shall have received the favorable opinion of Gibson, Dunn & Crutcher LLP, special tax counsel to the Trust and the Company, dated as of such date, the form of which is attached as EXHIBIT E. (k) On the Closing Date, the Placement Agent shall have received the favorable opinion of Davis Polk & Wardwell, counsel for the Placement Agent, in form and substance satisfactory to the Placement Agent. (l) On or prior to the date hereof, the Company shall have furnished to the Placement Agent an agreement in the form of Annex A hereto from each director and executive officer of the Company, and such agreement shall be in full force and effect on each of the Commencement Date and the Closing Date. Each of the Company and the Trust will furnish you with such executed or conformed copies of such opinions, certificates, letters and documents as you may reasonably request. 10. COVENANTS OF THE COMPANY AND THE TRUST. Each of the Company and the Trust covenants and agrees with the Placement Agent: (a) To use its reasonable best efforts to cause the Registration Statement, and any amendment thereof, to become effective as soon as possible but no later 20 than the commencement of the Cash Offer; to use its reasonable best efforts to cause any abbreviated registration statement pursuant to Rule 462(b) of the Securities Act as may be required subsequent to the date the Registration Statement is declared effective to become effective as promptly as possible; to promptly advise the Placement Agent in writing (i) of the receipt of any comments from the Commission relating to the Cash Offer, (ii) when the Registration Statement, any post-effective amendment to the Registration Statement or any abbreviated Registration Statement shall have become effective, or any supplement to the Prospectus or any amended Prospectus shall have been filed, (iii) of any request by the Commission to amend the Registration Statement or amend or supplement the Prospectus or for additional information relating to the Cash Offer and (iv) of (A) the issuance by the Commission of any stop order refusing or suspending the use of the Prospectus or any qualification of the Cash Offer Preferred Securities for offering or sale in connection with the Cash Offer in any jurisdiction, (B) the institution or threatening of any proceedings for any of such purposes, (C) the occurrence of any event which could cause the Company or the Trust to withdraw, rescind, terminate or modify the Cash Offer or would permit the Company or the Trust to exercise any right not to accept Cash Offer Preferred Securities tendered pursuant to the Cash Offer, or (D) the institution of any proceedings to remove, suspend or terminate from listing or quotation the Common Stock from any securities exchange upon which it is listed for trading or included or designated for quotation, or the threatening or initiation of any proceedings for any such purposes. Each of the Company and the Trust will use its reasonable efforts to prevent the issuance of any such stop order, the issuance of any order preventing or suspending such use and the suspension of any such qualification and, if any such order is issued or qualification suspended, to obtain the lifting of such order or suspension at the earliest practicable time. (b) To comply with the Securities Act, the Exchange Act and the Trust Indenture Act in connection with the Cash Offer, the Registration Statement, the Prospectus and the transactions contemplated hereby and thereby, as applicable. If, at any time when the Prospectus is required by the Securities Act or the Exchange Act to be delivered in connection with the Cash Offer, any event shall occur or condition shall exist as a result of which it is necessary, in the reasonable opinion of counsel for the Placement Agent or counsel for the Company or the Trust, to amend the Registration Statement or amend or supplement the Prospectus in order that the Prospectus will not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements in the Prospectus, in the light of the circumstances under which they were made, not misleading or if, in the reasonable opinion of either such counsel, it shall be necessary to amend the Registration Statement or amend or supplement the Prospectus to comply with the requirements of the Securities Act or Exchange Act, the Company and the Trust will promptly prepare, file with the Commission, subject to Section 4(b) hereof, and furnish, at their own expense, to the Placement 21 Agent and to the dealers (whose names and addresses will be furnished to the Company and the Trust by the Placement Agent) to which they are required to furnish, such amendment or supplement as may be necessary to correct such untrue statement or omission or to make the Registration Statement or the Prospectus comply with such requirements. (c) During such period beginning on the date hereof and ending on such date as in the opinion of counsel for the Placement Agent, the Prospectus is no longer required by law to be delivered in connection with the Cash Offer, the Company will file all documents required to be filed with the Commission pursuant to Section 13, 14 or 15 of the Exchange Act in the manner and within the time periods required by the Exchange Act. (d) To cooperate with the Placement Agent and Placement Agent's counsel to qualify or register the Cash Offer Preferred Securities for sale under (or obtain exemptions from the application of) the state securities or blue sky laws or Canadian provincial Securities laws of those jurisdictions designated by the Placement Agent; to comply with such laws and continue such qualifications, registrations and exemptions in effect so long as required for the consummation of the Cash Offer; and in each jurisdiction in which the Cash Offer Preferred Securities have been so qualified, the Trust will file such statements and reports as may be required by the laws of such jurisdiction to continue such qualification in effect for a period of not less than one year from the effective date of the Registration Statement; provided that neither the Company nor the Trust shall be required to qualify as a foreign corporation or to take any action that would subject either the Company or the Trust to general service of process in any such jurisdiction where it is not presently qualified or where it would be subject to taxation as a foreign corporation. (e) To make generally available to its security holders and to the Placement Agent an earnings statement covering a twelve-month period beginning not later than the first day of the Trust's fiscal quarter next following the effective date of the Registration Statement that satisfies the provisions of Section 11(a) of the Securities Act and the rules and regulations of the Commission thereunder. (f) [reserved] (g) During the period of 90 days from the date of the Prospectus, neither the Trust nor the Company will, without the Placement Agent's prior written consent, directly or indirectly, offer, pledge, sell, sell any option or contract to purchase any option or contract to sell, contract to sell, grant any option to sell, establish an open "put equivalent position" within the meaning of Rule 16a-1(h) of the Exchange Act, or otherwise transfer or dispose of (i) any Cash Offer Preferred Securities, or any equity security convertible into or exchangeable into 22 or exercisable for, Cash Offer Preferred Securities, (ii) Debentures or any debt securities substantially similar to the Debentures, (iii) any equity securities substantially similar to the Cash Offer Preferred Securities, except for the Debentures, Cash Offer Preferred Securities and the Common Securities, (iv) any preferred stock or any other security of the Company that is substantially similar to the Cash Offer Preferred Securities, (v) any shares of any class of common stock of the Company (other than (A) shares of Fleetwood Common Stock issuable upon conversion of the Cash Offer Preferred Securities pursuant to the terms of the Declaration and the Indenture, for payment of interest on the Debentures at the Company's option pursuant to the terms of the Indenture, or pursuant to the exercise of options and warrants outstanding as of the date hereof, (B) the grant of stock options or other stock-based awards (and the exercise or vesting thereof) to directors, officers and employees of the Company or its subsidiaries pursuant to any stock option, stock bonus or other stock plan or arrangement described in the Prospectus, or (vi) any other securities which are convertible into, or exercisable or exchangeable for, any of such securities; or enter into any swap or other agreement that transfers, in whole or in part, any of the economic consequences of ownership of any equity securities of the Company, the Trust or any similar trust, whether any such transaction is to be settled by delivery of equity securities of the Company, the Trust or any similar trust, cash or otherwise. For the avoidance of doubt, it is acknowledged that debt securities substantially similar to the Debentures would be debt securities that have substantially the same rate, maturity and other provisions as the Debentures. (h) Without limiting Sections 5, 7 and 12 of this Agreement, if the transactions contemplated hereby are not consummated by reason of any failure, refusal or inability on the part of the Company to perform any agreement on its part to be performed hereunder or to fulfill any condition of the obligations of the Placement Agent hereunder, each of the Company and the Trust, jointly and severally, agrees to reimburse the Placement Agent for all reasonable documented out-of-pocket expenses (including reasonable fees and disbursements of the Placement Agent's counsel) incurred by the Placement Agent in connection with the Cash Offer. 11. INDEMNIFICATION AND CONTRIBUTION; SETTLEMENT OF LITIGATION; RELEASE. Each of the Company and the Trust jointly and severally agrees as follows: (a) Each of the Company and the Trust, jointly and severally, agrees to indemnify and hold harmless the Placement Agent, its partners, its officers and employees, and each person, if any, who controls the Placement Agent within the meaning of the Securities Act and the Exchange Act against any loss, claim, damage, liability or expense, as incurred, to which the Placement Agent or such controlling person may become subject, under the Securities Act, the Exchange Act or other federal or state statutory law or regulation, or at common law or 23 otherwise (including in settlement of any litigation, if such settlement is effected with the written consent of the Company), insofar as such loss, claim, damage, liability or expense (or actions in respect thereof as contemplated below) arises out of or is based (i) upon any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement (as amended or supplemented), or the omission or alleged omission therefrom of a material fact required to be stated therein or necessary to make the statements therein not misleading; or (ii) upon any untrue statement or alleged untrue statement of a material fact contained in any preliminary prospectus or the Prospectus (or any amendment or supplement thereto), or the omission or alleged omission therefrom of a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; or (iii) in whole or in part upon any inaccuracy in the representations and warranties of the Company or the Trust contained herein; or (iv) in whole or in part upon any failure of the Company or the Trust to perform their respective obligations hereunder or under law; or (v) upon a withdrawal, rescission or modification of or a failure to make or consummate the Cash Offer; or (vi) upon any act or failure to act or any alleged act or failure to act by the Placement Agent in connection with, or relating in any manner to, the Cash Offer Preferred Securities or the Cash Offer and which is included as part of or referred to in any loss, claim, damage, liability or action arising out of or based upon any matter covered by clause (i) or (ii) above, PROVIDED that neither the Trust nor the Company shall be liable under this clause (vi) to the extent that a court of competent jurisdiction shall have determined by a final judgment that such loss, claim, damage, liability or action resulted directly from any such acts or failures to act undertaken or omitted to be taken by the Placement Agent through its bad faith or willful misconduct; and to reimburse the Placement Agent and each such controlling person for any and all expenses (including the reasonable fees and disbursements of counsel chosen by the Placement Agent) as such expenses are reasonably incurred by the Placement Agent or such controlling person in connection with investigating, defending, settling, compromising or paying any such loss, claim, damage, liability, expense or action; PROVIDED, HOWEVER, that the foregoing indemnity agreement shall not apply to any loss, claim, damage, liability or expense to the extent, but only to the extent, arising out of or based upon any untrue statement or alleged untrue statement or omission or alleged omission made in reliance upon and in conformity with written information furnished to the Company by the Placement Agent expressly for use in the Registration Statement, any preliminary prospectus or the Prospectus. The indemnity agreement set forth in this Section 11(a) shall be in addition to any liabilities that the Company and the Trust may otherwise have. (b) The Placement Agent agrees to indemnify and hold harmless the Trust and the Company, each of their respective directors, each of their respective officers who signed the Registration Statement, and each person, if any, who 24 controls the Company or the Trust within the meaning of the Securities Act or the Exchange Act, against any loss, claim, damage, liability or expense, as incurred, to which the Company or the Trust, or any such director, officer or controlling person may become subject, under the Securities Act, the Exchange Act, or other federal or state statutory law or regulation, or at common law or otherwise (including in settlement of any litigation, if such settlement is effected with the written consent of the Placement Agent), insofar as such loss, claim, damage, liability or expense (or actions in respect thereof as contemplated below) arises out of or is based upon any untrue or alleged untrue statement of a material fact contained in the Registration Statement or the Prospectus (or, in each case, any amendment or supplement thereto), or arises out of or is based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in the Registration Statement or the Prospectus (or any amendments or supplements thereto), in reliance upon and in conformity with written information furnished to the Company by the Placement Agent expressly for use therein; and to reimburse the Company, the Trust or any such director, officer or controlling person for any legal and other expense reasonably incurred by the Company, the Trust or any such director, officer or controlling person in connection with investigating, defending, settling, compromising or paying any such loss, claim, damage, liability, expense or action. The indemnity agreement set forth in this Section 11(b) shall be in addition to any liabilities that the Placement Agent may otherwise have. (c) Promptly after receipt by an indemnified party under this Section 11 of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against an indemnifying party under this Section 11, notify the indemnifying party in writing of the commencement thereof, but the omission so to notify the indemnifying party will not relieve it from any liability which it may have to any indemnified party for contribution or otherwise than under the indemnity agreement contained in this Section 11 or to the extent it is not prejudiced as a proximate result of such failure. In case any such action is brought against any indemnified party and such indemnified party seeks or intends to seek indemnity from an indemnifying party, the indemnifying party will be entitled to participate in, and, to the extent that it shall elect, jointly with all other indemnifying parties similarly notified, by written notice delivered to the indemnified party promptly after receiving the aforesaid notice from such indemnified party, to assume the defense thereof with counsel reasonably satisfactory to such indemnified party; PROVIDED, HOWEVER, if the defendants in any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that a conflict may arise between the positions of the indemnifying party and the indemnified party in conducting the defense of any such action or that there may be legal defenses 25 available to it and/or other indemnified parties which are different from or additional to those available to the indemnifying party, the indemnified party or parties shall have the right to select separate counsel to assume such legal defenses and to otherwise participate in the defense of such action on behalf of such indemnified party or parties. Upon receipt of notice from the indemnifying party to such indemnified party of such indemnifying party's election so to assume the defense of such action and approval by the indemnified party of counsel, the indemnifying party will not be liable to such indemnified party under this Section 11 for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof unless (i) the indemnified party shall have employed separate counsel in accordance with the proviso to the next preceding sentence (it being understood, however, that the indemnifying party shall not be liable for the expenses of more than one separate counsel (together with local counsel), approved by the indemnifying party, representing the indemnified parties who are parties to such action) or (ii) the indemnifying party shall not have employed counsel satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice of commencement of the action, in each of which cases the fees and expenses of counsel shall be at the expense of the indemnifying party. (d) The indemnifying party under this Section 11 shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party against any loss, claim, damage, liability or expense by reason of such settlement or judgment. Notwithstanding the foregoing sentence, if at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel as contemplated by Section 11(c) hereof, the indemnifying party agrees that it shall be liable for any settlement of any proceeding effected without its written consent if (i) such settlement is entered into more than 30 days after receipt by such indemnifying party of the aforesaid request and (ii) such indemnifying party shall not have reimbursed the indemnified party in accordance with such request prior to the date of such settlement. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement, compromise or consent to the entry of judgment in any pending or threatened action, suit or proceeding in respect of which any indemnified party is or could have been a party and indemnity was or could have been sought hereunder by such indemnified party, unless such settlement, compromise or consent includes an unconditional release of such indemnified party from all liability on claims that are the subject matter of such action, suit or proceeding. (e) (i) If the indemnification provided for above is for any reason held to be unavailable to or otherwise insufficient to hold harmless an indemnified party 26 in respect of any losses, claims, damages, liabilities or expenses referred to therein, then each indemnifying party shall contribute to the aggregate amount paid or payable by such indemnified party, as incurred, as a result of any losses, claims, damages, liabilities or expenses referred to therein (i) in such proportion as is appropriate to reflect the relative benefits received by the Company and the Trust, on the one hand, and the Placement Agent, on the other hand, from the Cash Offer or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company and the Trust, on the one hand, and the Placement Agent, on the other hand, in connection with the statements or omissions or inaccuracies in the representations and warranties herein or any other matter which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. The relative benefits received by the Company and the Trust, on the one hand, and the Placement Agent, on the other hand, in connection with the Cash Offer shall be deemed to be in the same respective proportions as the maximum aggregate liquidation amount of the Cash Offer Preferred Securities issuable pursuant to the Cash Offer bears to the total Placement Agent's fee under the Engagement Letter attributable to the Cash Offer payable to the Placement Agent pursuant to the Engagement Letter. The relative fault of the Company and the Trust, on the one hand, and the Placement Agent, on the other hand, shall be determined by reference to, among other things, whether any such untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact or any such inaccurate or alleged inaccurate representation or warranty relates to information supplied by the Company or the Trust, on the one hand, or the Placement Agent, on the other hand, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. (ii) The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include, subject to the limitations set forth in Section 11(c), any legal or other fees or expenses reasonably incurred by such party in connection with investigating or defending any action or claim. The provisions set forth in Section 11(c) with respect to notice of commencement of any action shall apply if a claim for contribution is to be made under this Section 11(e); PROVIDED, HOWEVER, that no additional notice shall be required with respect to any action for which notice has been given under Section 11(c) for purposes of indemnification. (iii) The Company, the Trust and the Placement Agent agree that it would not be just and equitable if contribution pursuant to this Section 11(e) were determined by pro rata allocation or by any other 27 method of allocation which does not take account of the equitable considerations referred to in this Section 11(e). (iv) Notwithstanding the provisions of this Section 11(e), the Placement Agent shall not be required to contribute any amount in excess of the fee received by the Placement Agent in connection with the Cash Offer as provided in the Engagement Letter. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this Section 11(e), each officer and employee of the Placement Agent and each person, if any, who controls the Placement Agent within the meaning of the Securities Act and the Exchange Act shall have the same rights to contribution as the Placement Agent, and each director of the Company or the Trust, each officer of the Company or the Trust who signed the Registration Statement, and each person, if any, who controls the Company or the Trust within the meaning of the Securities Act and the Exchange Act shall have the same rights to contribution as the Company and the Trust. (f) With respect to the Cash Offer (and for no other purpose), this Section 11 shall supersede the indemnity agreement attached to the Engagement Letter and with respect to the Cash Offer (and for no other purpose) such indemnity agreement shall be of no further effect. 12. TERMINATION OF THIS AGREEMENT. (a) This Agreement shall terminate upon the earliest to occur of (i) thirty days after the expiration date of the Exchange Offer, (ii) any of the conditions specified in Section 9 has not been fulfilled as of any date such condition is required to be fulfilled pursuant to Section 9 (and the Placement Agent shall have notified the Trust and the Company thereof), (iii) the date on which the Company and the Trust terminate or withdraw the Cash Offer for any reason, or (iv) any modification to the business terms of the Cash Offer in the Company's and the Trust's sole and absolute discretion that results in the Placement Agent withdrawing pursuant to Section 5 hereof. (b) Notwithstanding termination of this Agreement pursuant to subsection (a) above, the obligations of the parties pursuant to Sections 6, 7 and 11 shall survive any termination of this Agreement. 13. REPRESENTATIONS, WARRANTIES, COVENANTS, INDEMNITIES AND AGREEMENTS TO SURVIVE DELIVERY. All representations, warranties, covenants and agreements of the Trust, the Company and the Placement Agent herein or in certificates delivered pursuant hereto, and the indemnity and contribution 28 agreements contained in Section 11 hereof shall remain operative and in full force and effect regardless of any investigation made by or on behalf of the Placement Agent or any person controlling the Placement Agent within the meaning of the Securities Act or the Exchange Act, or by or on behalf of the Trust, the Company or any of their respective officers, directors or controlling persons within the meaning of the Securities Act or the Exchange Act, and shall survive the consummation of the Cash Offer and the termination of this Agreement. 14. NOTICES. All communications hereunder shall be in writing and shall be mailed, hand delivered or telecopied and confirmed to the parties hereto as follows: If to the Placement Agent: Banc of America Securities LLC 9 West 57th Street New York, NY 10019 Facsimile: 212-583-8457 Attention: Eric Hambleton with a copy to: Davis Polk & Wardwell 450 Lexington Avenue New York, NY 10017 Facsimile: 212-450-4800 Attention: Winthrop B. Conrad, Jr. If to the Company: Fleetwood Enterprises, Inc. 3125 Myers Street Riverside, California 92513 Facsimile: (909) 351-3776 Attention: General Counsel with a copy to: Gibson, Dunn & Crutcher LLP Jamboree Center 4 Park Plaza Irvine, CA 92614-8557 Facsimile: (949) 451-4220 Attention: Mark W. Shurtleff, Esq. 29 If to the Trust: Fleetwood Capital Trust III Regular Trustees c/o Fleetwood Enterprises, Inc. 3125 Myers Street Riverside, California 92513 Facsimile: (909) 351-3776 Attention: General Counsel with a copy to: Gibson, Dunn & Crutcher LLP Jamboree Center 4 Park Plaza Irvine, CA 92614-8557 Facsimile: (949) 451-4220 Attention: Mark W. Shurtleff, Esq. Any party hereto may change the address for receipt of communications by giving written notice to the others. 15. SUCCESSORS. This agreement will inure to the benefit of and be binding upon the parties hereto and to the benefit of the employees, agents, officers and directors and controlling persons referred to in Section 11, and in each case their respective successors, and personal representatives, and no other person will have any right or obligation hereunder. The term "successors" shall not include any holder of Existing Securities receiving Exchange Securities upon exchange of such Existing Securities merely by reason of such exchange. 16. PARTIAL UNENFORCEABILITY. The invalidity or unenforceability of any Section, paragraph or provision of this Agreement shall not affect the validity or enforceability of any other Section, paragraph or provision hereof. If any Section, paragraph or provision of this Agreement is for any reason determined to be invalid or unenforceable, there shall be deemed to be made such minor changes (and only such minor changes) as are necessary to make it valid and enforceable. 17. GOVERNING LAW PROVISIONS. (a) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN SUCH STATE. 30 (b) Any legal suit, action or proceeding arising out of or based upon this Agreement, the Indenture, the Cash Offer Preferred Securities, the Registration Statement or the Prospectus or the transactions contemplated hereby ("Related Proceedings") may be instituted in the federal courts of the United States of America located in the City and County of New York or the courts of the State of New York in each case located in the City and County of New York (collectively, the "Specified Courts"), and each party irrevocably submits to the exclusive jurisdiction (except for proceedings instituted in regard to the enforcement of a judgment of any such court (a "Related Judgment"), as to which such jurisdiction is non-exclusive) of such courts in any such suit, action or proceeding. Service of any process summons notice or document by mail to such party's address set forth above shall be effective service of process for any suit, action or other proceeding brought in any such court. The parties irrevocably and unconditionally waive any objection to the laying of venue of any suit, action or other proceeding in the Specified Courts and irrevocably and unconditionally waive and agree not to plead or claim in any such court that any such suit, action or other proceeding brought in any such court has been brought in an inconvenient forum. 18. GENERAL PROVISIONS. This Agreement, together with the Engagement Letter (including all attachments or schedules thereto) constitutes the entire agreement of the parties to this Agreement and supersedes all prior written or oral and all contemporaneous oral agreements, understandings and negotiations with respect to the subject matter hereof. This Agreement may be executed in two or more counterparts, each one of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Agreement may not be amended or modified unless in writing by all of the parties hereto, and no condition herein (express or implied) may be waived unless waived in writing by each party whom the condition is meant to benefit. The descriptive headings herein are for the convenience of the parties only and shall not affect the construction or interpretation of this Agreement. Each of the parties hereto acknowledges that it is a sophisticated business person who was adequately represented by counsel during negotiations regarding the provisions hereof, including, without limitation, the indemnification and contribution provisions of Section 11 and is fully informed regarding said provisions. Each of the parties hereto further acknowledges that the provisions of Section 11 hereto fairly allocate the risks in light of the ability of the parties to investigate the Company, its affairs and its business in order to assure that adequate disclosure has been made in the Registration Statement and the Prospectus (and any amendments or supplements thereto), as required by the Securities Act and the Exchange Act. If the foregoing is in accordance with your understanding of our agreement, kindly sign and return to the Company and the Trust the enclosed 31 copies hereof, whereupon this instrument, along with all counterparts hereof, shall become a binding agreement in accordance with its terms. Very truly yours, FLEETWOOD ENTERPRISES, INC. By: ---------------------------------- Name: Title: FLEETWOOD CAPITAL TRUST III By: ---------------------------------- Name: Title: The foregoing Distribution Agreement is hereby confirmed and accepted by the Placement Agent in New York, New York as of the date first above written. Accepted and agreed as of the date first above written: BANC OF AMERICA SECURITIES LLC By: ------------------------------ Name: Title: 32 EXHIBIT A FORM OF OPINION OF GIBSON, DUNN & CRUTCHER LLP PURSUANT TO SECTION 9(f) 1. The Company has been duly incorporated and is validly existing and in good standing under the laws of its jurisdiction of incorporation and has all corporate power to own, lease and operate its properties and conduct its business as described in the Registration Statement. The Company has all requisite corporate power and authority to issue the Debentures pursuant to the Indenture, to enter into the Distribution Agreement, the Guarantee, the Indenture and the Declaration, to consummate the Cash Offer, and to perform its obligations thereunder. 2. The Indenture has been duly qualified under the Trust Indenture Act, the execution and delivery of the Indenture have been duly authorized by all necessary corporate action of the Company, and the Indenture has been duly executed and delivered by the Company, and is a legal, valid, binding and enforceable agreement of the Company. 3. (i) The execution and delivery of the Debentures have been duly authorized by all necessary corporate action of the Company; (ii) the Debentures have been duly executed and delivered by the Company; (iii) the Debentures are the legal, valid, binding and enforceable obligations of the Company, entitled to the benefits of the Indenture. 4. The execution and delivery of the Declaration have been duly authorized by all necessary corporate action of the Company, and the Declaration has been duly executed and delivered by the Company. 5. The execution and delivery of the Guarantee have been duly authorized by all necessary corporate action of the Company, and the Guarantee has been duly executed and delivered by the Company, and is a legal, valid, binding and enforceable agreement of the Company. 6. The authorized, issued and outstanding capital stock of the Company (including the Fleetwood Common Stock) conforms to the descriptions thereof set forth or incorporated by reference in the Prospectus. The form of certificate used to evidence the Fleetwood Common Stock is in due and proper form and complies with all applicable requirements of the Certificate of Incorporation and By-laws of the Company and the General Corporation Law of the State of Delaware. 7. The holders of outstanding shares of capital stock of the Company are not entitled to any preemptive rights, rights of first refusal or other similar rights, under the Certificate of Incorporation or By-Laws of the Company, the law of Delaware or to our knowledge, otherwise, to subscribe for the Cash Offer Preferred Securities, the Debentures or the Fleetwood Common Stock; the Fleetwood Common Stock into which the Debentures are convertible at the initial conversion price has been duly authorized by all necessary corporate action of the Company and reserved for issuance upon conversion and, upon issuance thereof on conversion of the Debentures in accordance with the terms of the Debentures and the Indenture, will be validly issued, fully paid and non-assessable and free of preemptive rights under the Certificate of Incorporation or By-laws of the Company or the General Corporation Law of the State of Delaware, or to our knowledge, otherwise; and the Fleetwood Common Stock to be issued as payment of interest on the Debentures has been duly authorized by all necessary corporate action of the Company and reserved for issuance, and upon issuance as payment of interest on the Debentures in accordance with the terms of the Debentures and the Indenture, will be validly issued, fully paid and non-assessable and free of preemptive rights under the Certificate of Incorporation or By-laws of the Company or the General Corporation Law of the State of Delaware, or to our knowledge, otherwise. 8. The statements set forth (i) in the Prospectus under the headings, "The Cash Offer", "Fleetwood Capital Trust", "Fleetwood Capital Trust II", "Fleetwood Capital Trust III", "Description of Preferred Securities", "Description of Our Capital Stock", "United States Federal Income Tax Considerations" and "Plan of Distribution", and (ii) in the Prospectus describing the Distribution Agreement and Bank of America Credit Agreement, in each case insofar as such statements constitute summaries of the legal matters, documents or legal proceedings referred to therein, fairly present and summarize in all material respects, the matter referred to therein. 9. The execution and delivery of the Distribution Agreement, the performance by the Company of its obligations thereunder, [the issuance and delivery by the Company of the Debentures pursuant to the Indenture and the consummation of the Cash Offer have been duly authorized by all necessary corporate action of the Company], and each of the Distribution Agreement and the Bank of America Credit Agreement has been duly executed and delivered by, and is a valid and binding agreement of, the Company, enforceable in accordance with its terms. 10. Assuming the accuracy of the representations and warranties of the Placement Agent and compliance by it of its agreements contained in the Distribution Agreement, neither of the issuance of the Debentures, the Guarantee, the Cash Offer Preferred Securities and the Common Securities, nor the execution, 2 delivery and performance by the Trust and the Company of their respective obligations in the Distribution Agreement, the Indenture, the Debentures, the Guarantee, the Declaration, the Cash Offer Preferred Securities and the Common Securities, and the consummation of the Cash Offer, do or will violate, or require any approval, authorization, consent, qualification, registration or waiver of or with any governmental authority or regulatory body of the State of New York or the United States of America under any law or regulation of the State of New York or the United States of America applicable to the Company or the Trust that is generally applicable to transactions in the nature of those contemplated by the Registration Statement and the Prospectus, or the General Corporation Law of the State of Delaware, except for such approvals, authorizations, consents, qualifications, registrations or waivers (i) as may be required under the Securities Act, the Exchange Act, the Trust Indenture Act, (ii) as may be required under any securities or Blue Sky laws, (iii) as already have been made or obtained or (iv) that, if not made or obtained, would not have a Material Adverse Effect on the Company and its subsidiaries taken as a whole. 11. Neither the Company nor the Trust is, or after giving effect to the Cash Offer, will be, an "investment company" within the meaning of the Investment Company Act of 1940, as amended. 12. The Registration Statement (i) has been filed under the Securities Act prior to the Commencement Date and (ii) has been declared effective by the Commission under the Securities Act. To the best knowledge of such counsel, no stop order suspending the effectiveness of the Registration Statement has been issued under the Securities Act and no proceedings for such purpose have been instituted or threatened by the Commission. Any required filing of the Prospectus and any supplement thereto pursuant to Rule 424(b) under the Securities Act has been made in the manner and within the time period required by such Rule 424(b). 13. The Registration Statement and the Prospectus, and each amendment or supplement to the Registration Statement and the Prospectus, as of the effective date of the Registration Statement (other than the financial statements and supporting schedules and other financial or statistical data included or incorporated by reference therein or in exhibits to or excluded from the Registration Statement or that part of the Registration Statement that constitutes the Form T-1, as to which no opinion need be rendered) appear on their face to comply as to form in all material respects with the applicable requirements of the Securities Act. 14. The Registration Statement and the Prospectus (other than the financial statements and notes thereto and related schedules and other financial and statistical data contained therein, as to which such counsel expresses no opinion), as of the time of filing with the Commission, appeared on their face to comply as 3 to form in all material respects with the requirements of the Securities Act and the applicable rules and regulations of the Commission. 15. To such counsel's knowledge, there are no agreements, contracts, leases or documents to which the Company is a party of a character required to be described in the Registration Statement or to be filed as an exhibit to the Registration Statement which are not described therein or filed as required. 16. The Schedule TO, and each amendment or supplement thereto, and the documents required by Item 12 thereof (other than the financial statements and supporting schedules and other financial or statistical data included or incorporated by reference therein, as to which no opinion need be rendered) comply as to form as of the date it was filed in all material respects with the requirements of the Exchange Act. In addition, such counsel shall state that they have participated in conferences with officers and other representatives of the Company and the Trust, representatives of the independent auditors of the Company and with representatives of the Placement Agent at which the contents of the Registration Statement and related matters were discussed. Such counsel may state that the purposes of its professional engagement was not to establish or confirm factual matters, that the scope of its examination of the affairs of the Company did not permit it to verify the accuracy, completeness or fairness of the statements set forth in the Registration Statement and that such counsel is not passing upon and does not assume any responsibility for the accuracy, completeness or fairness of the statements contained in the Registration Statement except to the extent set forth in paragraph 9 of above. Such counsel shall state that on the basis of the foregoing, and except for the financial statements and schedules and other financial, statistical and accounting data included or incorporated by reference in the Registration Statement and except for documents filed pursuant to the Exchange Act annexed to or incorporated by reference in the Registration Statement, as to which such counsel need not state an opinion, nothing has come to such counsel's attention which would lead them to believe (i) that either the Registration Statement or the Prospectus, at the time the Registration Statement became effective, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading or (ii) that the Prospectus, as of the date of the Prospectus and at all times subsequent thereto up to and on the date of such opinion, as the case may be, contained an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading (it being understood that such counsel need express no belief as to the financial statements or schedules or other financial or statistical data derived therefrom, included or incorporated by reference in the Registration 4 Statement, the Prospectus, or any amendments or supplements thereto, or as to that part of the Registration Statement that constitutes the Form T-1). The foregoing opinions are limited to the federal law of the United States of America, the law of the State of New York and the General Corporation Law of the State of Delaware. 5 EXHIBIT B FORM OF OPINION OF FORREST THEOBALD, VICE PRESIDENT-GENERAL COUNSEL AND SECRETARY OF THE COMPANY PURSUANT TO SECTION 9(g) 1. The Company and each of the Company's Significant Subsidiaries has been duly incorporated or formed and is validly existing as a corporation or business trust in good standing under the laws of the jurisdiction of its incorporation or formation, with corporate or trust power to own, lease and operate its properties and conduct its business as described in the Registration Statement, and is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction in the United States where the ownership or leasing of its respective assets or the conduct of its business as described in the Prospectus requires such qualification, except where the failure to be so qualified would not, individually or in the aggregate, have a Material Adverse Effect; 2. All of the issued and outstanding capital stock of each of the Company's subsidiaries has been duly authorized and validly issued, is fully paid and non-assessable and, except as set forth in the Prospectus, is owned beneficially and of record, directly or indirectly, by the Company, free and clear of all security interests, pledges, liens, encumbrances, equities or, to the knowledge of such counsel, any pending or threatened claims; 3. The holders of outstanding shares of capital stock of the Company are not entitled to any preemptive rights, rights of first refusal or similar rights under the Certificate of Incorporation or Bylaws of the Company, the General Corporation Law of the State of Delaware, or to such counsel's knowledge, otherwise, to subscribe for the Cash Offer Preferred Securities, the Debentures or the Fleetwood Common Stock. 4. The statements in the Company's most recent Annual Report on Form 10-K, incorporated by reference in the Registration Statement, under the caption "Legal Proceedings in Which We Are Involved" and in the Company's most recent Quarterly Report on Form 10-Q, incorporated by reference in the Registration Statement, under the caption "Legal Proceedings," insofar as such statements constitute summaries of the legal matters, documents or proceedings referred to therein, fairly summarize in all material respects the matters referred to therein. Except as described in the Registration Statement, there is not pending or, to such counsel's knowledge, threatened any action, suit, proceeding, inquiry or investigation, before or brought by any court or governmental agency or regulatory body, to which the Company or any Significant Subsidiary or the property of the Company or any Significant Subsidiary, is subject, which might reasonably be expected to result in a Material Adverse Effect, or which might reasonably be expected to materially and adversely affect the properties or assets thereof or the consummation of the transactions contemplated in the Dealer Manager Agreement or the performance by the Company of its obligations thereunder or transactions contemplated by the Registration Statement. 5. The documents incorporated by reference in the Prospectus (except for the financial statements and other financial or statistical data, as to which such counsel expresses no opinion), as of the dates they were filed with the Commission, appear on their face to comply as to form in all material respects to the requirements of the Securities Act and the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and regulations under both such Acts. 6. The execution, delivery and performance of the Documents and the consummation of the transactions contemplated in the Registration Statement (including the issuance of the Cash Offer Preferred Securities and the Common Securities by the Trust) and compliance by the Company and the Trust with their respective obligations under the Documents do not and will not, whether with or without the giving of notice or lapse of time or both, conflict with or constitute a breach of, or default or Debt Repayment Triggering Event under or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company or any Significant Subsidiary pursuant to the Existing Securities, the Existing Debentures, and the related indenture and guarantee, the Bank of America Credit Agreement, or any other any contract, indenture, mortgage, deed of trust, loan or credit agreement, note, lease or any other agreement or instrument, required to be filed as an exhibit to the reports of the Company filed pursuant to the Exchange Act to which the Company or any of its Significant Subsidiaries is a party or by which it or any of them may be bound, or to which any of the property or assets of the Company or any Significant Subsidiary is subject (the "Material Contracts") (except for such conflicts, breaches or defaults or liens, charges or encumbrances that would not have a Material Adverse Effect), nor will such action result in any violation of the provisions of the Certificate of Incorporation or Bylaws of the Company or any of its Significant Subsidiaries, or any applicable law, statute, rule, regulation, judgment, order, writ or decree, known to such counsel other than state securities or Blue Sky laws, of any government, government instrumentality or court, domestic or foreign, having jurisdiction over the Company or any of its Significant Subsidiaries or any of their respective properties, assets or operations. 7. To such counsel's knowledge after due inquiry and reasonable investigation, (i) no default by the Company or its Significant Subsidiaries exists in the due performance or observance of any material obligation, agreement, covenant or condition contained in any Material Contract and (ii) none of the Company or any Significant Subsidiary is in violation of any applicable law, statute, rule 2 regulation, judgment, order, writ or decree of any government, government instrumentality or court, domestic or foreign, having jurisdiction over the Company or any of its Significant Subsidiaries or any of their respective properties, assets or operations except, with respect to clauses (i) and (ii), for such defaults or violations as would not have a Material Adverse Effect. In addition, such counsel shall state that they have participated in conferences with officers and other representatives of the Company, representatives of the independent public or certified public accountants for the Company and with representatives of the Placement Agent at which the contents of the Registration Statement and the Prospectus, and any supplements or amendments thereto, and related matters were discussed and, although such counsel is not passing upon and does not assume any responsibility for the accuracy, completeness or fairness of the statements contained in the Registration Statement or the Prospectus (other than as specified above), and any supplements or amendments thereto, on the basis of the foregoing, nothing has come to their attention which would lead them to believe (i) that either the Registration Statement or the Prospectus, at the time the Registration Statement became effective, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading or (ii) that the Prospectus, as of the date of the Prospectus and at all times subsequent thereto up to an on the date of such opinion, as the case may be, contained an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading (it being understood that such counsel need express no belief as to the financial statements or schedules or other financial or statistical data derived therefrom, included or incorporated by reference in the Registration Statement, the Prospectus, or any amendments or supplements thereto). In rendering such opinion, such counsel may rely (A) as to matters involving the application of laws of any jurisdiction other than the General Corporation Law of the State of Delaware, the General Corporation Law of the State of California or the federal law of the United States, to the extent they deem proper and specified in such opinion, upon the opinion (which shall be dated the Commencement Date or the Closing Date, as the case may be, shall be satisfactory in form and substance to the Placement Agent, shall expressly state that the Placement Agent may rely on such opinion as if it were addressed to them and shall be furnished to the Placement Agent) of other counsel of good standing whom they believe to be reliable and who are satisfactory to counsel for the Placement Agent; PROVIDED, HOWEVER, that such counsel shall further state that they believe that they and the Placement Agent is justified in relying upon such opinion of other counsel, and (B) as to matters of fact, to the extent they deem proper, on certificates of responsible officers of the Company and public officials. 3 EXHIBIT C FORM OF OPINION OF MORRIS, NICHOLS, ARSHT & TUNNELL, SPECIAL COUNSEL TO THE TRUST AND THE COMPANY PURSUANT TO SECTION 9(i) 1. The Trust has been duly created and is validly existing in good standing as a business trust under the Delaware Business Trust Act, all filings required under the laws of the State of Delaware with respect to the creation and valid existence of the Trust as a business trust have been made, and the Trust has the requisite business trust power and authority to conduct its business as described in the Prospectus. 2. The Declaration constitutes a legal, valid and binding obligation of the Company and each of the Regular Trustees, and is enforceable against the Company and each of the Regular Trustees, in accordance with its terms, except as such enforceability may be limited by (A) bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or other laws of general application relating to or affecting the enforcement of creditors' rights and remedies, (B) application of equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at law) and (C) considerations of public policy or the effects of applicable law relating to fiduciary duties. 3. Under the Delaware Business Trust Act and the Declaration, the Trust has the requisite business trust power and authority (A) to perform its obligations under the Declaration, (B) issue the Cash Offer Preferred Securities and the Common Securities and (C) purchase and hold the Debentures. 4. The execution and delivery of the Distribution Agreement and the Common Securities Purchase Agreement by the Trust and the performance of its obligations thereunder have been duly authorized by all necessary business trust action on the part of the Trust. 5. The Common Securities have been duly authorized by the Declaration for issuance and, when issued, delivered and paid for in accordance with the terms of the Declaration, will be validly issued undivided beneficial interests in the assets of the Trust. 6. The Cash Offer Preferred Securities have been duly authorized by the Declaration for issuance and, when issued, delivered and paid for in accordance with the terms of the Declaration will be validly issued and, subject to the terms of the Declaration and the further qualifications set forth herein, fully paid and non-assessable undivided beneficial interests in the assets of the Trust. Under the Delaware Business Trust Act and the Declaration, the holders of the Cash Offer Preferred Securities will be entitled to the same limitation of personal liability extended to stockholders of private corporations for profit organized under the General Corporation Law of the State of Delaware. 7. Under the Delaware Business Trust Act and the Declaration, the issuance of the Cash Offer Preferred Securities and the Common Securities is not subject to preemptive rights. 8. The issuance and sale by the Trust of the Cash Offer Preferred Securities, the execution, delivery and performance by the Trust of the Distribution Agreement, the consummation by the Trust of the transactions contemplated thereby and compliance by the Trust with its obligations thereunder do not (A) result in any violation of the Declaration or the Certificate of Trust or any applicable Delaware law (statutory or decisional) or any rule or regulation of any Delaware governmental agency or (B) require the approval of any Delaware governmental agency. 9. No authorization, approval, consent or order of any Delaware governmental authority or agency is required to be obtained by the Trust solely in connection with the issuance and sale of the Cash Offer Preferred Securities, except such as may be required under Delaware securities or Blue Sky laws. 10. Assuming that the Trust derives no income from or connected with services provided within the State of Delaware and has no assets, activities (other than maintaining the Delaware Trustee and the filing of documents with the Secretary of State of the State of Delaware) or employees in the State of Delaware, the Trust's security holders (other than holders of securities, or persons who are partners or S corporation shareholders for federal income tax purposes in such holders of securities, who reside or are domiciled in the State of Delaware or who are otherwise subject to income taxation in the State of Delaware) will have no liability for income taxes imposed by the State of Delaware solely as a result of their participation in the Trust, and the Trust will not be liable for any income tax imposed by the State of Delaware. 2 EXHIBIT D FORM OF OPINION OF RICHARDS, LAYTON & FINGER, P.A. WITH RESPECT TO THE DELAWARE TRUSTEE PURSUANT TO SECTION 9(i) 1. The BNY (DE) is duly incorporated and is validly existing in good standing as a banking corporation with banking and trust powers under the laws of the State of Delaware. 2. The BNY (DE) has the power and authority to execute, deliver and perform its obligations under each of the Original Declaration of Trust and the Amended and Restated Declaration of Trust. 3. The Original Declaration of Trust has been duly authorized, executed and delivered by BNY (DE) and constitutes a legal, valid and binding agreement of BNY (DE), enforceable against BNY (DE), in accordance with its terms. 4. Assuming due authorization, execution and delivery of the Amended and Restated Declaration of Trust by each of the Sponsor, BNY (DE), the Property Trustees and the Regular Trustees, and that each of the Sponsor, the Property Trustee and the Regular Trustees has the power and authority to enter into and perform its obligations under the Amended and Restated Declaration of Trust, the Amended and Restated Declaration of Trust will constitute a legal, valid and binding agreement of BNY (DE), enforceable against BNY (DE), in accordance with its terms. 5. Neither the execution, delivery and performance by BNY (DE) of the Original Declaration of Trust and the Amended and Restated Declaration of Trust, nor the consummation by BNY (DE) of any of the transactions contemplated thereby, requires the consent, authorization, order or approval of, the giving of notice to, the registration with or the taking of any other action in respect of any governmental authority or agency under the laws of the State of Delaware or any law of the United States of America governing the banking or trust powers of BNY (DE), other than the filing of the Certificate of Trust with the Secretary of State (which Certificate of Trust has been duly filed). 6. Neither the execution, delivery and performance by BNY (DE) of the Original Declaration of Trust or the Amended and Restated Declaration of Trust, nor the consummation by BNY (DE) of any of the transactions contemplated thereby, (i) conflicts with or constitutes a breach of or default under the Certificate of Trust, the Original Declaration of Trust, the Amended and Restated Declaration of Trust, the certificate of incorporation or by-laws of BNY (DE) or, to our knowledge without independent investigation and solely in reliance on a certificate of an authorized officer of BNY (DE), any agreement, indenture or other instrument to which BNY (DE) is a party or by which it or any of its properties may be bound or (ii) violates any law, governmental rule or regulation of the State of Delaware or any federal law of the United States of America governing the banking or trust powers of BNY (DE) or, to our knowledge without independent investigation and solely in reliance on a certificate of an authorized officer of BNY (DE), any court decree of the State of Delaware applicable to BNY (DE). 2 EXHIBIT E FORM OF OPINION OF GIBSON, DUNN & CRUTCHER LLP, SPECIAL TAX COUNSEL TO THE TRUST AND THE COMPANY PURSUANT TO SECTION 9(j) 1. The Trust will be characterized as a grantor trust for U.S. federal income tax purposes and not as a partnership or as an association subject to tax as a corporation; 2. The Debentures, when issued, authenticated and delivered in accordance with the terms of the Indenture, will constitute indebtedness of the Company; and 3. The discussion set forth in the Prospectus under the caption "United States Federal Income Tax Considerations," to the extent it constitutes summaries of legal matters or legal conclusions, is accurate in all material respects. ANNEX A [Date] Banc of America Securities LLC 600 Montgomery Street San Francisco, California 94111 RE: Fleetwood Enterprises, Inc. (the "Company") Ladies & Gentlemen: The undersigned understands that the Company proposes to offer to exchange up to $____ million in aggregate liquidation amount of ____% Convertible Trust Preferred Securities due February 15, 2013 (the "Exchange Securities") issued by Fleetwood Capital Trust II, a statutory business trust formed under the laws of the State of Delaware (the "Trust II") for up to $86.25 million in aggregate liquidation amount of 6% Convertible Trust Preferred Securities due February 15, 2028, for which you will act as the Dealer Manager, and a public offering of up to an ___ million in aggregate liquidation amount of ____% Convertible Trust Preferred Securities due February 15, 2013 the "Cash Offer Preferred Securities" of Fleetwood Capital Trust III (the "Trust III") for which you will act as the Placement Agent (such exchange offer and cash offer hereinafter collectively referred to as the "Offering"). The undersigned recognizes that the Offering will be of benefit to the undersigned and will benefit the Company. The undersigned acknowledges that you are relying on the representations and agreements of the undersigned contained in this letter in carrying out the Offering and in entering into dealer manager and distribution agreements with the Company with respect to the Offering. In consideration of the foregoing, the undersigned hereby agrees that the undersigned will not, without the prior written consent of Banc of America Securities LLC (which consent may be withheld in its sole discretion), (i) directly or indirectly, sell, offer, contract or grant any option to sell (including without limitation any short sale), pledge, transfer, establish an open "put equivalent position" within the meaning of Rule 16a-1(h) under the Securities Exchange Act of 1934, or otherwise dispose of any Exchange Securities, any equity securities of the Company, the Trust or any similar trust, any options or warrants to acquire any such securities, or securities exchangeable or exercisable for or convertible into such securities, or (ii) enter into any swap or other agreement that transfers, in whole or in part, any of the economic consequences of ownership of any equity securities of the Company, the Trust or any similar trust (whether any such transaction described in clause (i) or (ii) above is to be settled by delivery of equity securities of the Company, the Trust or any similar trust, other securities, cash or otherwise) currently or hereafter owned either of record or beneficially (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended) by the undersigned, or publicly announce the undersigned's intention to do any of the foregoing, for a period commencing on the date hereof and continuing through the close of trading on the date 90 days after the date of the final prospectus relating to the Offering. The undersigned also agrees and consents to the entry of stop transfer instructions with the Company's transfer agent and registrar against the transfer of shares of Common Stock or securities convertible into or exchangeable or exercisable for Common Stock held by the undersigned except in compliance with the foregoing restrictions. With respect to the Offering only, the undersigned waives any registration rights relating to registration under the Securities Act of any Common Stock owned either of record or beneficially by the undersigned, including any rights to receive notice of the Offering. This agreement is irrevocable and will be binding on the undersigned and the respective successors, heirs, personal representatives, and assigns of the undersigned. - -------------------------------------------------- Printed Name of Holder By: -------------------------------------------- Signature - -------------------------------------------------- Printed Name of Person Signing (AND INDICATE CAPACITY OF PERSON SIGNING IF SIGNING AS CUSTODIAN, TRUSTEE, OR ON BEHALF OF AN ENTITY) 2 EX-4.8 5 a2065672zex-4_8.txt EXHIBIT 4.8 EXHIBIT 4.8 - -------------------------------------------------------------------------------- FLEETWOOD ENTERPRISES, INC. TO THE BANK OF NEW YORK, not in its individual capacity, but solely as Trustee ---------------------------------- Indenture Dated as of [______________, 2002] ---------------------------------- [____]% Convertible Trust II Subordinated Debentures Due [____] - -------------------------------------------------------------------------------- TABLE OF CONTENTS
PAGES ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION............................................2 SECTION 101. DEFINITIONS..................................................................2 SECTION 102. COMPLIANCE CERTIFICATES AND OPINIONS.........................................9 SECTION 103. FORM OF DOCUMENTS DELIVERED TO TRUSTEE.......................................9 SECTION 104. ACTS OF HOLDERS; RECORD DATES...............................................10 SECTION 105. NOTICES, ETC., TO TRUSTEE AND THE COMPANY...................................11 SECTION 106. NOTICE TO HOLDERS; WAIVER...................................................12 SECTION 107. CONFLICT WITH TRUST INDENTURE ACT...........................................12 SECTION 108. EFFECT OF HEADINGS AND TABLE OF CONTENTS....................................12 SECTION 109. SUCCESSORS AND ASSIGNS......................................................12 SECTION 110. SEPARABILITY CLAUSE.........................................................12 SECTION 111. BENEFITS OF INDENTURE.......................................................13 SECTION 112. GOVERNING LAW...............................................................13 SECTION 113. LEGAL HOLIDAYS..............................................................13 ARTICLE TWO SECURITY FORMS......................................................................................13 SECTION 201. FORMS GENERALLY.............................................................13 SECTION 202. INITIAL ISSUANCE TO PROPERTY TRUSTEE........................................14 SECTION 203. GLOBAL SECURITIES...........................................................14 ARTICLE THREE THE SECURITIES....................................................................................14 SECTION 301. TITLE AND TERMS.............................................................14 SECTION 302. DENOMINATIONS...............................................................17 SECTION 303. EXECUTION, AUTHENTICATION, DELIVERY AND DATING..............................17 SECTION 304. TEMPORARY SECURITIES........................................................17 SECTION 305. REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE.........................18 (A) GENERAL.............................................................18 (B) TRANSFER PROCEDURES AND RESTRICTIONS................................19 SECTION 306. MUTILATED, DESTROYED, LOST AND STOLEN SECURITIES............................19 SECTION 307. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED..............................20 SECTION 308. PERSONS DEEMED OWNERS.......................................................21 SECTION 309. CANCELLATION................................................................21 SECTION 310. RIGHT OF SETOFF.............................................................21 SECTION 311. CUSIP NUMBERS...............................................................22 SECTION 312. EXTENSION OF INTEREST PAYMENT PERIOD; NOTICE OF EXTENSION...................22 SECTION 313. PAYING AGENT, SECURITY REGISTRAR AND CONVERSION AGENT.......................23 ARTICLE FOUR SATISFACTION AND DISCHARGE.........................................................................23 SECTION 401. SATISFACTION AND DISCHARGE OF INDENTURE.....................................23 SECTION 402. APPLICATION OF TRUST MONEY..................................................24 ARTICLE FIVE REMEDIES...........................................................................................24 i SECTION 501. EVENTS OF DEFAULT...........................................................24 SECTION 502. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT..........................25 SECTION 503. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY TRUSTEE.............26 SECTION 504. TRUSTEE MAY FILE PROOFS OF CLAIM............................................27 SECTION 505. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF SECURITIES.................28 SECTION 506. APPLICATION OF MONEY COLLECTED..............................................28 SECTION 507. LIMITATION ON SUITS.........................................................28 SECTION 508. UNCONDITIONAL RIGHT OF HOLDER TO RECEIVE PRINCIPAL AND ANY PREMIUM AND INTEREST AND TO CONVERT. ...................................29 SECTION 509. RESTORATION OF RIGHTS AND REMEDIES..........................................29 SECTION 510. RIGHTS AND REMEDIES CUMULATIVE..............................................29 SECTION 511. DELAYS OR OMISSION NOT WAIVER...............................................30 SECTION 512. CONTROL BY HOLDERS..........................................................30 SECTION 513. WAIVER OF PAST DEFAULTS.....................................................30 SECTION 514. UNDERTAKING FOR COSTS.......................................................31 SECTION 515. WAIVER OF STAY OR EXTENSION LAWS............................................31 SECTION 516. ENFORCEMENT BY HOLDERS OF PREFERRED SECURITIES..............................31 ARTICLE SIX THE TRUSTEE.........................................................................................31 SECTION 601. CERTAIN DUTIES AND RESPONSIBILITIES.........................................31 SECTION 602. NOTICE OF DEFAULTS..........................................................33 SECTION 603. CERTAIN RIGHTS OF TRUSTEE...................................................33 SECTION 604. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES......................34 SECTION 605. MAY HOLD SECURITIES.........................................................34 SECTION 606. MONEY HELD IN TRUST.........................................................34 SECTION 607. COMPENSATION AND REIMBURSEMENT..............................................34 SECTION 608. DISQUALIFICATION; CONFLICTING INTEREST......................................35 SECTION 609. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY.....................................35 SECTION 610. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR...........................35 SECTION 611. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR......................................37 SECTION 612. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS.................37 SECTION 613. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY...........................37 ARTICLE SEVEN HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY.................................................37 SECTION 701. COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF HOLDERS...................37 SECTION 702. PRESERVATION OF INFORMATION: COMMUNICATIONS TO HOLDERS......................38 SECTION 703. REPORTS BY TRUSTEE..........................................................38 SECTION 704. REPORTS BY COMPANY..........................................................38 ARTICLE EIGHT CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE..............................................39 SECTION 801. COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS........................39 SECTION 802. SUCCESSOR SUBSTITUTED.......................................................39 ii ARTICLE NINE SUPPLEMENTAL INDENTURES............................................................................40 SECTION 901. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS..........................40 SECTION 902. SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS.............................41 SECTION 903. EXECUTION OF SUPPLEMENTAL INDENTURES........................................42 SECTION 904. EFFECT OF SUPPLEMENTAL INDENTURES...........................................42 SECTION 905. CONFORMITY WITH TRUST INDENTURE ACT.........................................42 SECTION 906. REFERENCE IN SECURITIES TO SUPPLEMENTAL INDENTURES..........................42 ARTICLE TEN COVENANTS; REPRESENTATIONS AND WARRANTIES...........................................................43 SECTION 1001. PAYMENT OF PRINCIPAL AND INTEREST...........................................43 SECTION 1002. MAINTENANCE OF OFFICE OR AGENCY.............................................43 SECTION 1003. MONEY FOR SECURITY PAYMENTS TO BE HELD IN TRUST.............................43 SECTION 1004. STATEMENT AS TO COMPLIANCE..................................................44 SECTION 1005. STATEMENT BY OFFICERS AS TO DEFAULT.........................................44 SECTION 1006. LIMITATION ON DIVIDENDS; COVENANTS AS TO THE TRUST..........................44 SECTION 1007. PAYMENT OF EXPENSES OF THE TRUST............................................45 SECTION 1008. LIMITATION OF TRANSACTIONS..................................................46 SECTION 1009. LISTING OF SECURITIES.......................................................47 ARTICLE ELEVEN REDEMPTION OF SECURITIES.........................................................................47 SECTION 1101. RIGHT OF REDEMPTION.........................................................47 SECTION 1102. APPLICABILITY OF ARTICLE....................................................47 SECTION 1103. ELECTION TO REDEEM; NOTICE TO TRUSTEE.......................................47 SECTION 1104. SELECTION BY TRUSTEE OF SECURITIES TO BE REDEEMED...........................48 SECTION 1105. NOTICE OF REDEMPTION........................................................48 SECTION 1106. DEPOSIT OF REDEMPTION PRICE.................................................49 SECTION 1107. SECURITIES PAYABLE ON REDEMPTION DATE.......................................49 SECTION 1108. SECURITIES REDEEMED IN PART.................................................49 SECTION 1109. OPTIONAL REDEMPTION.........................................................50 SECTION 1110. TAX EVENT REDEMPTION........................................................52 SECTION 1111. CERTAIN LIMITATIONS ON REDEMPTION...........................................52 ARTICLE TWELVE SUBORDINATION OF SECURITIES......................................................................53 SECTION 1201. AGREEMENT TO SUBORDINATE....................................................53 SECTION 1202. DEFAULT ON SENIOR INDEBTEDNESS..............................................53 SECTION 1203. LIQUIDATION; DISSOLUTION; BANKRUPTCY........................................53 SECTION 1204. SUBROGATION.................................................................55 SECTION 1205. TRUSTEE TO EFFECTUATE SUBORDINATION.........................................55 SECTION 1206. NOTICE BY THE COMPANY.......................................................56 SECTION 1207. RIGHTS OF THE TRUSTEE; HOLDERS OF SENIOR INDEBTEDNESS.......................56 SECTION 1208. SUBORDINATION MAY NOT BE IMPAIRED...........................................57 ARTICLE THIRTEEN CONVERSION OF SECURITIES.......................................................................57 SECTION 1301. CONVERSION RIGHTS...........................................................57 SECTION 1302. CONVERSION PROCEDURES.......................................................58 SECTION 1303. CONVERSION PRICE ADJUSTMENTS................................................60 SECTION 1304. ADJUSTMENT OF CONVERSION PRICE; FUNDAMENTAL CHANGE..........................66 iii SECTION 1305. NOTICE OF ADJUSTMENTS OF CONVERSION PRICE...................................70 SECTION 1306. COMPANY TO PROVIDE STOCK....................................................71 SECTION 1307. EMPLOYEE BENEFIT PLANS......................................................72 SECTION 1308. CERTAIN ADDITIONAL RIGHTS...................................................72 SECTION 1309. [RESERVED.].................................................................73 SECTION 1310. TRUSTEE NOT RESPONSIBLE FOR DETERMINING CONVERSION PRICE OR ADJUSTMENTS.....73 ARTICLE FOURTEEN MEETINGS.......................................................................................73 SECTION 1401. PURPOSES FOR WHICH MEETINGS MAY BE CALLED...................................73 SECTION 1402. CALL, NOTICE AND PLACE OF MEETINGS..........................................73 SECTION 1403. PERSONS ENTITLED TO VOTE AT MEETINGS........................................74 SECTION 1404. QUORUM; ACTION..............................................................74 SECTION 1405. DETERMINATION OF VOTING RIGHTS; CONDUCT AND ADJOURNMENT OF MEETINGS.........75 SECTION 1406. COUNTING VOTES AND RECORDING ACTION OF MEETINGS.............................75 EXHIBIT A-1 FORM OF SECURITY...................................................................................A-1-1
- ------------------ Note: This table of contents shall not, for any purpose, be deemed to be a part of the Indenture. iv FLEETWOOD ENTERPRISES, INC. Certain Sections of this Indenture relating to Sections 310 through 318 of the Trust Indenture Act of 1939
TRUST INDENTURE ACT SECTION INDENTURE SECTION Section 310(a)(1).................... 609 (a)(2).................... 609 (a)(3).................... Not applicable (a)(4).................... Not applicable (a)(5).................... 609 (b)....................... 608, 610 Section 311(a)....................... 613 (b)....................... 613 (c)....................... Not applicable Section 312(a)....................... 701, 702(a) (b)....................... 702(b) (c)....................... 702(c) Section 313(a)....................... 703(a) (a)(4).................... 101, 1004 (b)....................... 703(a) (c)....................... 703(a) (d)....................... 703(b) Section 314(a)....................... 704 (b)....................... Not applicable (c)(1).................... 102 (c)(2).................... 102 (c)(3).................... Not applicable (d)....................... Not applicable (e)....................... 102 Section 315(a)....................... 601 (b)....................... 602 (c)....................... 601 (d)....................... 601 (e)....................... 514 Section 316(a)....................... 101 (a)(1)(A)................. 502, 512 (a)(1)(B)................. 513 (a)(2).................... Not applicable (b)....................... 508 (c)....................... 104(c) Section 317(a)(1).................... 503 (a)(2).................... 504 (b)....................... 1003 Section 318(a)....................... 107
- ------------- Note: This reconciliation and tie shall not, for any purpose, be deemed to be a part of the Indenture v INDENTURE, dated as of [_____________, 2002], between Fleetwood Enterprises, Inc., a corporation duly organized and existing under the laws of the State of Delaware ("Fleetwood" or the "Company"), having its principal office at 3125 Myers Street, Riverside, California 92503, and The Bank of New York, a New York banking corporation, not in its individual capacity but solely as trustee (the "Trustee"). RECITALS OF THE COMPANY WHEREAS, Fleetwood Capital Trust II, a Delaware statutory business trust (the "Trust") formed under the Amended and Restated Declaration of Trust among the Company, as Sponsor, The Bank of New York, not in its individual capacity but solely in its capacities as property trustee (the "Property Trustee") and Delaware trustee (the "Delaware Trustee"), and Boyd R. Plowman, Lyle L. Larkin and Nelson W. Potter, as trustees (the "Regular Trustees"), dated as of [____________, 2002] (the "Declaration"), will issue up to $37,950,000 aggregate liquidation amount of its [____]% Convertible Trust II Preferred Securities due [__________________] (the "Preferred Securities"), with a liquidation amount of $22 per Preferred Security, in exchange for up to $86,250,000 aggregate liquidation amount of 6% Convertible Trust Preferred Securities due February 15, 2028 (the "Existing Preferred Securities") issued by Fleetwood Capital Trust, a Delaware statutory business trust (the "Existing Trust"), pursuant to the Company's exchange offer (the "Exchange Offer"); WHEREAS, the trustees of the Trust, on behalf of the Trust, will execute and deliver to the Company common securities evidencing an ownership interest in the Trust (the "Common Securities"), registered in the name of the Company, in an aggregate liquidation amount equal to approximately three percent (3%) of the capitalization of the Trust, equivalent to [______] Common Securities, with a liquidation amount of $22 per Common Security and having an aggregate liquidation amount with respect to the assets of the Trust of $[_________]; WHEREAS, in exchange for the issuance by the Trust of the Preferred Securities in the Exchange Offer, the Company will issue Securities (as defined below) to the Trust in the aggregate principal amount of $[____________] and will issue an additional amount of Securities to the Trust in connection with the sale of the Common Securities to the Company; WHEREAS, the Company is guaranteeing the payment of all distributions (including Additional Interest and Compounded Interest, if any) on the Preferred Securities, payment of the Redemption Price, as applicable, and payments on liquidation with respect to the Preferred Securities, to the extent provided in the Preferred Securities Guarantee Agreement(s) (the "Preferred Securities Guarantee") between the Company and The Bank of New York, not in its individual capacity but solely in its capacity as guarantee trustee, for the benefit of the holders from time to time of the Preferred Securities; WHEREAS, the Company has duly authorized the creation of an issue of its [____]% Convertible Trust II Subordinated Debentures due [_________________] in connection with the purchase of the Common Securities and the Exchange Offer (the "Securities") of substantially the tenor and amount hereinafter set forth and, to provide therefor, the Company has duly authorized the execution and delivery of this Indenture; WHEREAS, so long as the Trust is a Holder (as defined below) of Securities and any Preferred Securities are outstanding, the Declaration provides that the holders of Preferred Securities may cause the Conversion Agent (as defined below) to (a) exchange such Preferred Securities for Securities held by the Trust and (b) immediately convert such Securities into Fleetwood Common Stock (as defined below); and WHEREAS, all things necessary to make the Securities, when executed by the Company and authenticated and delivered hereunder and duly issued by the Company, the valid obligations of the Company, and to make this Indenture a valid agreement of the Company, in accordance with their and its terms, have been done. NOW, THEREFORE, THIS INDENTURE WITNESSED: For and in consideration of the premises and the purchase of the Securities by the Holders thereof, it is mutually agreed, for the equal and proportionate benefit of all Holders of the Securities, as follows: ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION SECTION 101. DEFINITIONS. For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires: (1) the terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular; (2) all other terms used herein that are defined in the Trust Indenture Act, either directly or by reference therein, have the meanings assigned to them therein; (3) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles; and (4) the words "herein," "hereof" and "hereunder" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section, Clause or other subdivision. "Act," when used with respect to any Holder, has the meaning specified in Section 104. "Additional Interest" has the meaning specified in Section 301. "Additional Payments" means Compounded Interest and Additional Interest, if any. 2 "Additional Redemption Distribution" has the meaning specified in Section 1109. "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, "control" when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. "Agent" means any Registrar, Paying Agent, Conversion Agent or co-registrar. "Applicable Price" has the meaning specified in Section 1304(d). "Board of Directors" means either the board of directors of the Company or any duly authorized committee of that board. "Board Resolution" means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification, and delivered to the Trustee. "Business Day" means a day other than (a) a Saturday or Sunday, (b) a day on which banking institutions in The City of New York are authorized or required by law or executive order to remain closed, or (c) a day on which the Property Trustee's corporate trust office or the Trustee's Corporate Trust Office is closed for business. "Cash Offer" means the offering of up to $[__________] of Cash Offer Preferred Securities by Trust III, as such offering may be amended from time to time. "Cash Offer Common Securities" means the convertible common securities representing undivided beneficial interests in the assets of Trust III. "Cash Offer Common Securities Guarantee" means the guarantee by the Company of the payments and distributions with respect to the Cash Offer Common Securities to the extent provided in the Common Securities Guarantee Agreement to be executed and delivered by the Company for the benefit of the holders from time to time of the Cash Offer Common Securities. "Cash Offer Debentures" means the [____]% Convertible Trust III Subordinated Debentures due [_________,____] issued by the Company under a separate indenture and in connection with the Cash Offer and the purchase of Cash Offer Common Securities. "Cash Offer Preferred Securities" means the [____]% Convertible Trust III Preferred Securities Due [_________,____] to be issued by Trust III in connection with the Cash Offer. "Cash Offer Preferred Securities Guarantee" means the guarantee by the Company of the payments and distributions with respect to the Cash Offer Preferred Securities to the extent provided in that certain Cash Offer Preferred Securities Guarantee Agreement to be executed and delivered by the Company for the benefit of the holders from time to time of the Cash Offer Preferred Securities. "Change in 1940 Act Law" has the meaning specified in the Declaration. "Closing Price" has the meaning specified in Section 1304(d). "Commission" means the Securities and Exchange Commission, as from time to time constituted, created under the Securities Exchange Act of 1934, as amended, or, if at any time after the execution of this instrument such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties at such time. "Common Securities" has the meaning specified in the Recitals to this Indenture. "Common Securities Guarantee" means the common securities guarantee agreement(s) dated as of [____________, 2002], of the Sponsor in respect of the Common Securities. "Common Stock Fundamental Change" has the meaning specified in Section 1304(d). "Company" means the Person named as the "Company" in the first paragraph of this Indenture until a successor Person shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Company" shall mean such successor Person. "Company Request" or "Company Order" means a written request or order signed in the name of the Company by its Chairman of the Board, its President or a Vice President, and by its 3 Treasurer, an Assistant Treasurer, its Secretary or an Assistant Secretary, and delivered to the Trustee. "Compounded Interest" has the meaning specified in Section 312. "Conversion Agent" means the Person or Persons appointed to act on behalf of the holders of Preferred Securities and/or on behalf of the holders of Common Securities in effecting the conversion of Preferred Securities and/or Common Securities as and in the manner set forth in the Declaration and Section 1302 hereof. "Conversion Date" has the meaning specified in Section 1302. "Conversion Price" has the meaning specified in Section 1301. "Corporate Trust Office" means the principal office of The Trustee at which at any particular time its corporate trust business shall be administered and which at the date of this Indenture is at 101 Barclay Street, 21 West, New York, New York, 10286, Attention: Corporate Trust Administration. "Current Market Price" has the meaning specified in Section 1303(a)(vii). "Dealer-Manager" means Banc of America Securities LLC, as dealer-manager under the Dealer-Manager Agreement. "Dealer-Manager Agreement" means the Dealer-Manager Agreement dated as of December 5, 2001, among Banc of America Securities LLC, the Company and the Trust, as amended or supplemented from time to time. "Declaration" has the meaning specified in the Recitals to this Indenture. "Defaulted Interest" has the meaning specified in Section 307. "Delaware Trustee" has the meaning specified in the Recitals to this Indenture. "Dissolution Event" means that, as a result of the occurrence and continuation of a Special Event, the Trust is to be dissolved in accordance with the Declaration, and the Securities held by the Property Trustee are to be distributed to the holders of the Trust Securities issued by the Trust pro rata in accordance with the Declaration. "Dissolution Tax Opinion" has the meaning specified in the Declaration. "Event of Default" has the meaning specified in Section 501. "Existing Common Securities" means the common securities issued to the Company evidencing an ownership interest in the Existing Trust. 4 "Existing Common Securities Guarantee" means the guarantee by the Company of the payments and distributions with respect to the Existing Common Securities to the extent provided in the Common Securities Guarantee Agreement, dated as of February 10, 1998, executed and delivered by the Company for the benefit of the holders from time to time of the Existing Common Securities. "Existing Debentures" means the 6% Convertible Subordinated Debentures Due 2028 issued by the Company to the Existing Trust. "Existing Indenture" means the Indenture dated as of February 10, 1998 between the Company and The Bank of New York, as trustee, under which the Existing Debentures were issued. "Existing Preferred Securities Guarantee" means the guarantee by the Company of the payments and distributions with respect to the Existing Preferred Securities to the extent provided in the Preferred Securities Guarantee Agreement between the Company and The Bank of New York, not in its individual capacity but solely as guarantee trustee, dated as of February 10, 1998. "Existing Preferred Securities" has the meaning specified in the Recitals to this Indenture. "Existing Trust" has the meaning specified in the Recitals to this Indenture. "Extension Period" has the meaning specified in Section 312. "Fleetwood Common Stock" has the meaning specified in Section 1303(a)(x). "Fundamental Change" has the meaning specified in Section 1304(d). "Holder" means a Person in whose name a Security is registered in the Security Register. "Indenture" means this instrument as originally executed or as it may from time to time be supplemented or amended by one or more indentures supplemental hereto entered into pursuant to the applicable provisions hereof, including, for all purposes of this instrument and any such supplemental indenture, the provisions of the Trust Indenture Act that are deemed to be a part of and govern this instrument and any such supplemental indenture, respectively. "Interest Payment Date" has the meaning specified in Section 301. "Investment Company Event" has the meaning specified in the Declaration. "Maturity", when used with respect to any Security, means the date on which the principal of such Security becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration, call for redemption or otherwise. "90 Day Period" has the meaning specified in Section 1110. "Non-Stock Fundamental Change" has the meaning specified in Section 1304(d). "No Recognition Opinion" has the meaning specified in the Declaration. "Notice of Conversion" means the notice to be given by a holder of Preferred Securities or Common Securities to the Conversion Agent directing the Conversion Agent to exchange 5 such Preferred Securities or Common Securities for Securities and to convert such Securities into Fleetwood Common Stock on behalf of such holder. "Officers' Certificate" means a certificate signed by the Chairman of the Board, the President or a Vice President, and by the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary of the Company, and delivered to the Trustee. One of the officers signing an Officers' Certificate given pursuant to Section 1004 shall be the principal executive, financial or accounting officer of the Company. "Opinion of Counsel" means a written opinion of counsel, who may be counsel for the Company, and who shall be reasonably acceptable to the Trustee. "Outstanding," when used with respect to Securities, means, as of the date of determination, all Securities theretofore authenticated and delivered under this Indenture, EXCEPT: (i) Securities theretofore cancelled by the Trustee or delivered to the Trustee for cancellation; (ii) Securities for whose payment or redemption money in the necessary amount has been theretofore deposited with the Trustee or any Paying Agent (other than the Company) in trust or set aside and segregated in trust by the Company (if the Company shall act as its own Paying Agent) for the Holders of such Securities; provided, that if such Securities are to be redeemed, notice of such redemption has been duly given pursuant to this Indenture or provision therefor satisfactory to the Trustee has been made; and (iii) Securities which have been paid pursuant to Section 306, converted into Fleetwood Common Stock pursuant to Section 1301, or in exchange for or in lieu of which other Securities have been authenticated and delivered pursuant to this Indenture, other than any such Securities in respect of which there shall have been presented to the Trustee proof satisfactory to it that such Securities are held by a bona fide purchaser in whose hands such Securities are valid obligations of the Company; PROVIDED, HOWEVER, that upon any distribution of the Securities to the holders of the Preferred Securities in accordance with the Declaration, in determining whether the Holders of the requisite principal amount of Outstanding Securities have given any request, demand, authorization, direction, notice, consent or waiver hereunder or are present at a meeting of Holders of Securities for quorum purposes, Securities beneficially owned by the Company or any other obligor upon the Securities, or any Affiliate of the Company or such other obligor, shall be disregarded and deemed not to be Outstanding, except that, in determining whether the Trustee shall be protected in making any such determination or relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Securities which the Trustee actually knows to be so owned shall be so disregarded. "Paying Agent" means any Person authorized by the Company to pay the principal of or interest on any Securities on behalf of the Company. "Person" means any individual, corporation, company, partnership, joint venture, trust, unincorporated organization or government or any agency or political subdivision thereof. 6 "Predecessor Security" of any particular Security means every previous Security evidencing all or a portion of the same debt as that evidenced by such particular Security; and, for the purposes of this definition, any Security authenticated and delivered under Section 306 in exchange for or in lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen Security. "Preferred Securities" has the meaning specified in the Recitals to this Indenture. "Preferred Securities Guarantee" has the meaning specified in the Recitals to this Indenture. "Property Trustee" has the meaning specified in the Recitals to this Indenture. "Purchaser Stock Price" has the meaning specified in Section 1304(d). "Redemption Date", when used with respect to any Security to be redeemed, means the date fixed for such redemption by or pursuant to this Indenture. "Redemption Price", when used with respect to any Security to be redeemed, means the price at which it is to be redeemed pursuant to this Indenture. "Reference Date" has the meaning specified in Section 1303(a)(iv). "Reference Market Price" has the meaning specified in Section 1304(d). "Regular Record Date" has the meaning specified in Section 301. "Responsible Officer", when used with respect to the Trustee, means any vice president, any assistant vice president, the treasurer, any assistant treasurer, any trust officer or assistant trust officer, or any other officer of the Trustee customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject. "Securities" has the meaning specified in the Recitals to this Indenture. "Securities Act" means the Securities Act of 1933, as amended. "Securities Exchange Act" means the Securities Exchange Act of 1934, as amended. "Security Register" and "Security Registrar" have the respective meanings specified in Section 305. "Senior Indebtedness" means (a) any liability of the Company (1) for borrowed money or under any reimbursement obligation relating to a letter of credit, surety bond or similar instrument, or (2) evidenced by a bond, note, debenture or similar instrument, or (3) for obligations to pay the deferred purchase price of property or services, except trade accounts payable arising in the ordinary course of business, or (4) for the payment of money relating to a 7 capitalized lease obligation, or (5) for the payment of money under any Swap Agreement; (b) any liability of others described in the preceding clause (a) that the Company has guaranteed or that is otherwise its legal liability; (c) any deferral, renewal, extension or refunding of any liability of the types referred to in clauses (a) and (b) above, unless, in the instrument creating or evidencing any such liability referred to in clause (a) or (b) above or any such deferral, renewal, extension or refunding referred to in clause (c) above or pursuant to which the same is outstanding, it is expressly provided that such liability, deferral, renewal, extension or refunding is subordinate in right of payment to all other indebtedness of the Company or is not senior or prior in right of payment to the Securities or ranks PARI PASSU with or subordinate to the Securities in right of payment; PROVIDED that the Securities shall not constitute Senior Indebtedness; and PROVIDED, FURTHER, that Senior Indebtedness shall not include any indebtedness or guarantees between or among the Company or its affiliates, including all debt securities or guarantees in respect of those debt securities issued to any trust (including the Trust), trustee of a trust (including the Trust), partnership, limited liability company or other person affiliated with the Company that is a financing vehicle of the Company (a "Financing Entity") in connection with the issuance by such Financing Entity of preferred securities unless otherwise expressly provided in the instrument creating or evidencing such indebtedness, debt securities or guarantees, as the case may be, or pursuant to which the same is outstanding. For the avoidance of doubt, none of the Preferred Securities Guarantee, the Common Securities Guarantee, the Cash Offer Debentures, the Cash Offer Preferred Securities Guarantee, the Cash Offer Common Securities Guarantee, the Existing Debentures, the Existing Preferred Securities Guarantee or the Existing Common Securities Guarantee shall constitute Senior Indebtedness. "Special Event" means either a Tax Event or an Investment Company Event. "Special Record Date" for the payment of any Defaulted Interest means a date fixed by the Trustee pursuant to Section 307. "Stated Maturity", when used with respect to any Security or any installment of interest thereon, means the date specified in such Security as the fixed date on which the principal, together with any accrued and unpaid interest (including Compounded Interest), of such Security or such installment of interest is due and payable. "Subsidiary" of any Person means (i) a corporation more than 50% of the outstanding Voting Stock of which is owned, directly or indirectly, by such Person or by one or more other Subsidiaries of such Person or by such Person and one or more Subsidiaries thereof or (ii) any other Person (other than a corporation) in which such Person, or one or more other Subsidiaries of such Person or such Person and one or more other Subsidiaries thereof, directly or indirectly, has at least a majority ownership and power to direct the policies, management and affairs thereof. "Swap Agreement" means any financial agreement designed to manage the Company's exposure to fluctuations in interest rates or credit conditions, currency exchange rates or commodity prices, including without limitation swap agreements, option agreements, cap agreements, floor agreements, collar agreements, credit swaps and forward purchase agreements. "Tax Event" has the meaning specified in the Declaration. 8 "Trading Day" means a day on which Fleetwood Common Stock is traded on the national securities exchange or the quotation system used to determine the Current Market Price. "Trust" has the meaning specified in the Recitals to this Indenture. "Trust III" means Fleetwood Capital Trust III, a Delaware statutory business trust. "Trust Indenture Act" means the Trust Indenture Act of 1939 as in force at the date as of which this instrument was executed; PROVIDED, HOWEVER, that in the event the Trust Indenture Act of 1939 is amended after such date, "Trust Indenture Act" means, to the extent required by any such amendment, the Trust Indenture Act of 1939 as so amended. "Trustee" means the Person named as the "Trustee" in the first paragraph of this Indenture until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Trustee" shall mean such successor Trustee. "Trust Securities" means Common Securities and Preferred Securities. "Vice President", when used with respect to the Company or the Trustee, means any vice president, whether or not designated by a number or a word or words added before or after the title "vice president." "Voting Stock" of any Person means capital stock of such Person which ordinarily has voting power for the election of directors (or Persons performing similar functions) of such Person, whether at all times or only so long as no senior class of securities has such voting power by reason of any contingency. SECTION 102. COMPLIANCE CERTIFICATES AND OPINIONS. Upon any application or request by the Company to the Trustee to take any action under any provision of this Indenture, the Company shall furnish to the Trustee such certificates and opinions as may be required under the Trust Indenture Act or reasonably requested by the Trustee in connection with such application or request. Each such certificate or opinion shall be given in the form of an Officers' Certificate, if to be given by an officer of the Company, or an Opinion of Counsel, if to be given by counsel, and shall comply with the applicable requirements of the Trust Indenture Act and any other applicable requirement set forth in this Indenture. SECTION 103. FORM OF DOCUMENTS DELIVERED TO TRUSTEE. In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents. Any certificate or opinion of an officer of the Company may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to the matters upon which his certificate or opinion is based are 9 erroneous. Any such certificate or opinion of counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Company stating that the information with respect to such factual matters is in the possession of the Company, unless such counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters are erroneous. Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument. SECTION 104. ACTS OF HOLDERS; RECORD DATES. (a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by an agent duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee and, where it is hereby expressly required, to the Company. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of the Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to Section 601) conclusive in favor of the Trustee and the Company, if made in the manner provided in this Section. (b) The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by a certificate of a notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof. Where such execution is by a signer acting in a capacity other than his individual capacity, such certificate or affidavit shall also constitute sufficient proof of his authority. The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner which the Trustee or the Company, as the case may be, deems sufficient. (c) The Company may, in the circumstances permitted by the Trust Indenture Act, fix any day as the record date for the purpose of determining the Holders entitled to give or take any request, demand, authorization, direction, notice, consent, waiver or other action, or to vote on any action, authorized or permitted to be given or taken by Holders. If not set by the Company prior to the first solicitation of a Holder made by any Person in respect of any such action, or, in the case of any such vote, prior to such vote, the record date for any such action or vote shall be the 30th day (or, if later, the date of the most recent list of Holders required to be provided pursuant to Section 701) prior to such first solicitation or vote, as the case may be. With regard to any record date, only the Holders on such date (or their duly designated proxies) shall be entitled to give or take, or vote on, the relevant action. (d) The ownership of Securities shall be proved by the Security Register. 10 (e) Any request, demand, authorization, direction, notice, consent, waiver or other Act of the Holder of any Security shall bind every future Holder of the same Security and the Holder of every Security issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, omitted or suffered to be done by the Trustee or the Company in reliance thereon, whether or not notation of such action is made upon such Security. SECTION 105. NOTICES, ETC., TO TRUSTEE AND THE COMPANY. Any request, demand, authorization, direction, notice, consent, waiver or Act of Holders or other document provided or permitted by this Indenture to be made upon, given or furnished to, or filed with, (1) the Trustee by any Holder or by the Company shall be sufficient for every purpose hereunder if made, given, furnished or filed in writing to or with the Trustee at its Corporate Trust Office, Attention: Corporate Trust Trustee Administration, or (2) the Company by the Trustee or by any Holder shall be sufficient for every purpose hereunder (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to the Company addressed to it at the address of its principal office specified in the first paragraph of this instrument or at any other address previously furnished in writing to the Trustee by the Company. SECTION 106. NOTICE TO HOLDERS; WAIVER. Where this Indenture provides for notice to Holders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to each Holder affected by such event, at such Holder's address as it appears in the Security Register, not later than the latest date (if any), and not earlier than the earliest date (if any), prescribed for the giving of such notice. In any case where notice to Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. In case by reason of the suspension of regular mail service or by reason of any other cause it shall be impracticable to give such notice by mail, then such notification as shall be made with the approval of the Trustee shall constitute a sufficient notification for every purpose hereunder. SECTION 107. CONFLICT WITH TRUST INDENTURE ACT. If any provision hereof limits, qualifies or conflicts with a provision of the Trust Indenture Act that is required under the Trust Indenture Act to be a part of and govern this Indenture, the latter provision shall control. If any provision of this Indenture modifies or excludes any provision of the Trust Indenture Act that may be so modified or excluded, the latter 11 provision shall be deemed to apply to this Indenture as so modified or excluded, as the case may be. SECTION 108. EFFECT OF HEADINGS AND TABLE OF CONTENTS. The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof. SECTION 109. SUCCESSORS AND ASSIGNS. All covenants and agreements in this Indenture by the Company shall bind its successors and assigns, whether so expressed or not. SECTION 110. SEPARABILITY CLAUSE. In case any provision in this Indenture or in the Securities shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 111. BENEFITS OF INDENTURE. Nothing in this Indenture or in the Securities, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder, the holders of Senior Indebtedness, the holders of Preferred Securities (to the extent provided herein) and the Holders of Securities, any benefit or any legal or equitable right, remedy or claim under this Indenture. SECTION 112. GOVERNING LAW. THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS. SECTION 113. LEGAL HOLIDAYS. In any case where any Interest Payment Date, Redemption Date or Stated Maturity of any Security or the last date on which a Holder has the right to convert his Securities shall not be a Business Day, then (notwithstanding any other provision of this Indenture or of the Securities) payment of interest or principal or conversion of the Securities need not be made on such date, but may be made on the next succeeding Business Day (except that, if such Business Day is in the next succeeding calendar year, such Interest Payment Date, Redemption Date or Stated Maturity, as the case may be, shall be the immediately preceding Business Day) with the same force and effect as if made on the Interest Payment Date or Redemption Date, or at the Stated Maturity or on such last day for conversion, PROVIDED, that no interest shall accrue for the period from and after such Interest Payment Date, Redemption Date or Stated Maturity, as the case may be. 12 ARTICLE TWO SECURITY FORMS SECTION 201. FORMS GENERALLY. The Securities and the Trustee's certificates of authentication shall be substantially in the form of EXHIBIT A-1 which is hereby incorporated in and expressly made a part of this Indenture. The Securities may have notations, legends or endorsements required by law, stock exchange rule, agreements to which the Company is subject, if any, or usage (provided that any such notation, legend or endorsement is in a form acceptable to the Company). The Company shall furnish any such legend not contained in EXHIBIT A-1 to the Trustee in writing. Each Security shall be dated the date of its authentication. The terms and provisions of the Securities set forth in EXHIBITS A-1 are part of the terms of this Indenture and, to the extent applicable, the Company and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby. The definitive Securities shall be typewritten or printed, lithographed or engraved or produced by any combination of these methods or may be produced in any other manner permitted by the rules of any securities exchange on which the Securities may be listed, all as determined by the officers executing such Securities, as conclusively evidenced by their execution of such Securities. SECTION 202. INITIAL ISSUANCE TO PROPERTY TRUSTEE. The Securities initially issued to the Property Trustee of the Trust shall be in the form of one or more individual certificates in definitive, fully registered form without distribution coupons unless the Company determines otherwise in accordance with applicable law. SECTION 203. GLOBAL SECURITIES. Any Securities issued to holders of Preferred Securities, when and if such holders receive the Securities in lieu of Preferred Securities, shall be issued in the form of one or more global securities in definitive, fully registered form without distribution coupons with the appropriate global legend set forth in EXHIBIT A-1 hereto (a "Global Security"), which shall be (a) deposited by the Property Trustee on behalf of such holders with The Depository Trust Company (the "Depositary") or held by the Property Trustee as custodian for the Depositary and (b) registered in the name of Cede & Co., as nominee of the Depositary, or other nominee of the Depositary, pursuant to the Depositary's instructions. Members of, or participants in, the Depositary ("Participants") shall have no rights under this Indenture with respect to any such Global Security held on their behalf by the Depositary or by the Property Trustee, as the custodian of the Depositary, or under such global Security, and the Depositary will be treated by the Company, the Property Trustee and any agent of the Company or the Property Trustee as the absolute owner of such Global Security for all purposes whatsoever during such period that the Depositary, or its nominee, is the registered owner or holder of any such Global Security. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Property Trustee or any agent of the Company or the Property Trustee from 13 giving effect to any written certification, proxy or other authorization furnished by the Depositary or impair, as between the Depositary and its Participants, the operation of customary practices of such Depositary governing the exercise of the rights of a holder of a beneficial interest in any Global Security. Except as otherwise provided in Section 304, owners of beneficial interests in any Global Security will not be entitled to receive physical delivery of certificated Securities. ARTICLE THREE THE SECURITIES SECTION 301. TITLE AND TERMS. The aggregate principal amount of Securities that may be authenticated and delivered under this Indenture is initially limited to $[___________], except for Securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Securities pursuant to Sections 304, 305, 306, 906, 1108 and 1301. The Securities shall be known and designated as the Company's "[____]% Convertible Trust II Subordinated Debentures Due [_______]" issued in connection with the Exchange Offer. Their Stated Maturity shall be [___________, _____], and they shall bear interest at the rate of [___]% per annum, from [___________, 2002], or from the most recent Interest Payment Date (as defined below) to which interest has been paid or duly provided for, as the case may be, payable quarterly (subject to deferral as set forth herein), in arrears, on February 15, May 15, August 15 and November 15 (each an "Interest Payment Date") of each year, commencing February 15, 2002, until the principal thereof is paid or made available for payment. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date shall be paid, in cash or, at the Company's election, prior to February 15, 2004, in Fleetwood Common Stock to the Person in whose name a Security is registered at the close of business on the regular record date for such interest installment, which shall be the date that is 15 days prior to the Interest Payment Date (whether or not a Business Day) (the "Regular Record Date"), as the case may be, next preceding such Interest Payment Date. The Company may elect to pay such interest by delivery of shares of Fleetwood Common Stock pursuant to this Section 301 if and only if the following conditions shall have been satisfied: (1) The shares of Fleetwood Common Stock deliverable in payment of the interest shall have a fair market value as of the Interest Payment Date of not less than the interest as determined by this Section 301 hereof. For purposes of this Section 301, the fair market value of shares of Fleetwood Common Stock shall be determined by the Company and shall be equal to 90% of the average of the Closing Price for the five 14 consecutive Trading Days immediately preceding the second Trading Day prior to the Interest Payment Date. (2) Interest shall be paid only in cash in the event any shares of Fleetwood Common Stock to be issued for the payment of interest on the Securities hereunder (i) require registration under any federal securities law before such shares may be freely transferable without being subject to any transfer restrictions under the Securities Act upon issuance and if such registration is not completed or does not become effective prior to the Interest Payment Date, and/or (ii) require registration with or approval of any governmental authority under any state law or other federal law before such shares may be validly issued or delivered upon issuance and if such registration is not completed or does not become effective or such approval is not obtained prior to the Interest Payment Date; (3) The Fleetwood Common Stock is, or shall have been, approved for quotation on the Nasdaq National Market or listing on the New York Stock Exchange, in either case, prior to the Interest Payment Date; and (4) All shares of Fleetwood Common Stock which may be issued with respect to the payment of interest on the Securities will be issued out of the Company's authorized but unissued Fleetwood Common Stock and, will upon issue, be duly and validly issued and fully paid and non-assessable and free of any preemptive rights. If all of the conditions set forth in the preceding paragraph are not satisfied in accordance with the terms thereof, the interest required to be paid or duly provided for by the Company pursuant to this Section shall be paid by the Company only in cash. Holders of Securities shall be provided notice of the Company's election to pay interest in Fleetwood Common Stock instead of cash no later than the relevant Regular Record Date. Interest will compound quarterly and will accrue at the rate of [____]% per annum on any interest installment in arrears for more than one quarter or during an extension of an interest payment period as set forth in Section 312 hereof. The amount of interest payable for any period will be computed on the basis of a 360-day year of twelve 30-day months, and, for any period of less than a full calendar month, the actual number of days elapsed in such month. In the event that any date on which interest is payable on the Securities is not a Business Day, then payment of interest payable on such date will be made on the next succeeding day that is a Business Day (and without any interest or other payment in respect of any such delay), except that, if such Business Day is in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in each case with the same force and effect as if made on such date. If at any time while the Property Trustee is the Holder of any Securities, the Trust or the Property Trustee is required to pay any taxes, duties, assessments or governmental charges of whatever nature (other than withholding taxes) imposed by the United States, or any other taxing authority, then, in any such case, the Company will pay as additional interest ("Additional Interest") on the Securities held by the Property Trustee, to the extent permitted by applicable 15 law, such additional amounts as shall be required so that the net amounts received and retained by the Trust and the Property Trustee after paying such taxes, duties, assessments or other governmental charges will be equal to the amounts the Trust and the Property Trustee would have received had no such taxes, duties, assessments or other government charges been imposed. The principal of the Securities shall be payable at the office or agency of the Company in the United States maintained for such purpose and at any other office or agency maintained by the Company for such purpose in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. The interest on the Securities shall be payable, if paid in cash, at and in the same manner as the payment of principal described in the preceding sentence (PROVIDED, HOWEVER, that any such payment of interest may be made at the option of the Company by check mailed to the address of the holder entitled thereto or by wire transfer to an account in the United States appropriately designated by the holder entitled thereto prior to the record date for the corresponding interest payment date) or, if at the Company's election the interest is paid in shares of Fleetwood Common Stock, the Company shall register such shares in the name of the Holder entitled thereto. Notwithstanding the foregoing, so long as the holder of any Securities is the Property Trustee, the payment of principal on the Securities held by the Property Trustee will be made by wire transfer at such place and to such account in the United States as may be designated by the Property Trustee, and any interest (x) paid in cash shall be paid to the Property Trustee at and in the same manner as the payment of principal and (y) paid in shares of Fleetwood Common Stock shall be registered in the name of the Property Trustee or such other name as the Property Trustee shall designate in writing. The Securities shall be redeemable as provided in Article Eleven hereof. Solely for purposes of ranking and priority with respect to the Existing Debentures, the Existing Preferred Securities Guarantee and the Existing Common Securities Guarantee, the Securities shall be deemed "Senior Indebtedness," as such term is defined in the Existing Indenture, the Existing Preferred Securities Guarantee and the Existing Common Securities Guarantee, respectively. The Securities shall be subordinated in right of payment to Senior Indebtedness, as provided in Article Twelve hereof; PARI PASSU in right of payment with the Preferred Securities Guarantee, the Cash Offer Debentures and the Cash Offer Preferred Securities Guarantee; and senior and prior in right of payment to the Common Securities Guarantee, the Cash Offer Common Securities Guarantee, the Existing Debentures, the Existing Common Securities Guarantee and the Existing Preferred Securities Guarantee. The Securities shall be convertible as provided in Article Thirteen hereof. SECTION 302. DENOMINATIONS. The Securities shall be issuable only in registered form without coupons and only in denominations of $20 and integral multiples thereof. SECTION 303. EXECUTION, AUTHENTICATION, DELIVERY AND DATING. The Securities shall be executed on behalf of the Company by its Chairman of the Board, its President or one of its Vice Presidents. The signature of any of these officers on the Securities may be manual or facsimile. Securities bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Securities or did not hold such offices at the date of such Securities. 16 At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Securities executed by the Company to the Trustee for authentication, together with a Company Order, an Officers' Certificate and an Opinion of Counsel, as contemplated by Section 102, for the authentication and delivery of such Securities; and the Trustee in accordance with such Company Order shall manually authenticate and make available for delivery such Securities as in this Indenture provided and not otherwise. No Security shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose unless there appears on such Security a certificate of authentication substantially in the form provided for herein executed by the Trustee by manual signature, and such certificate upon any Security shall be conclusive evidence, and the only evidence, that such Security has been duly authenticated and delivered hereunder. SECTION 304. TEMPORARY SECURITIES. Pending the preparation of definitive Securities, the Company may execute, and upon Company Order the Trustee shall authenticate and make available for delivery, temporary Securities that are printed, lithographed, typewritten, mimeographed or otherwise produced, in any authorized denomination, substantially of the tenor of the definitive Securities in lieu of which they are issued and with such appropriate insertions, omissions, substitutions and other variations as the officers executing such Securities may determine, as conclusively evidenced by their execution of such Securities. If temporary Securities are issued, the Company will cause definitive Securities to be prepared without unreasonable delay. After the preparation of definitive Securities, the temporary Securities shall be exchangeable for definitive Securities upon surrender of the temporary Securities, at any office or agency of the Company designated pursuant to Section 1002, without charge to the Holder. Upon surrender for cancellation of any one or more temporary Securities, the Company shall execute and the Trustee shall authenticate and make available for delivery in exchange therefor a like principal amount of definitive Securities of authorized denominations. Until so exchanged, the temporary Securities shall in all respects be entitled to the same benefits under this Indenture as definitive Securities. SECTION 305. REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE. (A) GENERAL. The Company shall cause to be kept at the Corporate Trust Office of the Trustee a register (the register maintained in such office and in any other office or agency designated pursuant to Section 1002 being herein sometimes collectively referred to as the "Security Register") in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration of Securities and of transfers of Securities. The Trustee is hereby appointed "Security Registrar" for the purpose of registering Securities and transfers of Securities as herein provided. Upon surrender for registration of transfer of any Security at an office or agency of the Company designated pursuant to Section 1002 for such purpose, the Company shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, 17 one or more new Securities of any authorized denominations and of a like aggregate principal amount. At the option of the Holder, Securities may be exchanged for other Securities of any authorized denominations and of a like aggregate principal amount, upon surrender of the Securities to be exchanged at such office or agency. Whenever any Securities are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and make available for delivery, the Securities which the Holder making the exchange is entitled to receive. All Securities issued upon any registration of transfer or exchange of Securities shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Securities surrendered upon such registration of transfer or exchange. Every Security presented or surrendered for registration of transfer or for exchange shall (if so required by the Company or the Trustee) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed, by the Holder thereof or his attorney duly authorized in writing. No service charge shall be made for any registration of transfer or exchange of Securities, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Securities, other than exchanges pursuant to Section 304, 906, 1108 or 1301 not involving any transfer. The Company shall not be required (i) in the case of a partial redemption of the Securities, to issue, register the transfer of, or exchange, any Security during a period beginning at the opening of business 15 days before the day of the mailing of a notice of redemption of Securities selected for redemption under Section 1104 and ending at the close of business on the day of such mailing, or (ii) to register the transfer of or exchange any Security so selected for redemption in whole or in part, except the unredeemed portion of any Security being redeemed in part. (B) TRANSFER PROCEDURES AND RESTRICTIONS. Upon any distribution of the Securities to the holders of the Preferred Securities in accordance with the Declaration, the Company and the Trustee shall enter into a supplemental indenture pursuant to Section 901(6) to provide for transfer procedures and restrictions with respect to the Securities substantially similar to those contained in the Declaration to the extent applicable in the circumstances existing at the time of such distribution. SECTION 306. MUTILATED, DESTROYED, LOST AND STOLEN SECURITIES. If any mutilated Security is surrendered to the Trustee, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a new Security of like tenor and principal amount and bearing a number not contemporaneously outstanding. If there shall be delivered to the Company and the Trustee (i) evidence to their satisfaction of the destruction, loss or theft of any Security and (ii) such security or indemnity as 18 may be required by them to save each of them and any agent of either of them harmless, then, in the absence of notice to the Company or the Trustee that such Security has been acquired by a bona fide purchaser, the Company shall execute and the Trustee shall authenticate and deliver, in lieu of any such destroyed, lost or stolen Security, a new Security of like tenor and principal amount and bearing a number not contemporaneously outstanding. In case any such mutilated, destroyed, lost or stolen Security has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Security, pay such Security. Upon the issuance of any new Security under this Section, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith. Every new Security issued pursuant to this Section in lieu of any destroyed, lost or stolen Security shall constitute an original additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Security shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Securities duly issued hereunder. The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities. SECTION 307. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED. Interest on any Security which is payable, and is punctually paid or duly provided for, on any Interest Payment Date, shall be paid to the Person in whose name that Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date. Any interest on any Security which is payable, but is not punctually paid or duly provided for, on any Interest Payment Date (herein called "Defaulted Interest") shall forthwith cease to be payable to the Holder on the relevant Regular Record Date by virtue of having been such Holder, and such Defaulted Interest may be paid by the Company, at its election in each case, as provided in Clause (1) or (2) below: (1) The Company may elect to make payment of any Defaulted Interest to the Persons in whose names the Securities (or their respective Predecessor Securities) are registered at the close of business on a Special Record Date for the payment of such Defaulted Interest, which shall be fixed in the following manner. The Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Security and the date of the proposed payment, and at the same time the Company shall deposit with the Trustee an amount of money, or such number of shares of Fleetwood Common Stock, the value of which shall be determined as set forth in Section 301, equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest, or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money or shares of Fleetwood Common 19 Stock when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this Clause provided. Thereupon the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest, which shall be not more than 15 days and not less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company of such Special Record Date and, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first-class postage prepaid, to each Holder at his address as it appears in the Security Register, not less than 10 days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been so mailed, such Defaulted Interest shall be paid to the Persons in whose names the Securities (or their respective Predecessor Securities) are registered at the close of business on such Special Record Date and shall no longer be payable pursuant to the following Clause (2). (2) The Company may make payment of any Defaulted Interest in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities may be listed, and, if so listed, upon such notice as may be required by such exchange, if, after notice given by the Company to the Trustee of the proposed payment pursuant to this Clause, such manner of payment shall be deemed practicable by the Trustee. Subject to the foregoing provisions of this Section, each Security delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Security shall carry the rights to interest accrued and unpaid, and to accrue (including in each such case Compounded Interest), which were carried by such other Security. In the case of any Security that is converted after any Regular Record Date and on or prior to the next succeeding Interest Payment Date (other than any Security whose Maturity is prior to such Interest Payment Date), interest whose Stated Maturity is on such Interest Payment Date shall be payable on such Interest Payment Date notwithstanding such conversion, and such interest (whether or not punctually paid or duly provided for) shall be paid to the Person in whose name that Security (or one or more Predecessor Securities) is registered at the close of business on such Regular Record Date. Except as otherwise expressly provided in the immediately preceding sentence, in the case of any Security that is converted, interest whose Stated Maturity is after the date of conversion of such Security shall not be payable, and the Company shall not make nor be required to make any other payment, adjustment or allowance with respect to accrued but unpaid interest (including Additional Payments, if any) on the Securities being converted, which shall be deemed to be paid in full. SECTION 308. PERSONS DEEMED OWNERS. Prior to due presentment of a Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name such Security is registered as the owner of such Security for the purpose of receiving payment of principal of and (subject to Section 307) interest (including Additional Payments, if any) on such Security and for all other purposes whatsoever, whether or not such Security is overdue, and 20 neither the Company, the Trustee nor any agent of the Company or the Trustee shall be affected by notice to the contrary. SECTION 309. CANCELLATION. All Securities surrendered for payment, redemption, registration of transfer or exchange or conversion shall, if surrendered to any Person other than the Trustee, be delivered to the Trustee and shall be promptly cancelled by it. The Company may at any time deliver to the Trustee for cancellation any Securities previously authenticated and delivered hereunder which the Company may have acquired in any manner whatsoever, and all Securities so delivered shall be promptly cancelled by the Trustee. No Securities shall be authenticated in lieu of or in exchange for any Securities cancelled as provided in this Section, except as expressly permitted by this Indenture. All cancelled Securities held by the Trustee shall be disposed of as directed by a Company Order; PROVIDED, HOWEVER, that the Trustee shall not be required to destroy the certificates representing such cancelled Securities. SECTION 310. RIGHT OF SETOFF. Notwithstanding anything to the contrary in this Indenture, the Company shall have the right to set off any payment it is otherwise required to make hereunder to the extent the Company has theretofore made, or is concurrently on the date of such payment making, a payment under the Preferred Securities Guarantee. SECTION 311. CUSIP NUMBERS. At any time when the Securities are not held solely by the Trust, the Company shall obtain and use "CUSIP" numbers, and the Trustee shall use "CUSIP" numbers in notices of redemption as a convenience to Holders; PROVIDED, that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Securities or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Securities, and any such redemption shall not be affected by any defect in or omission of such numbers. SECTION 312. EXTENSION OF INTEREST PAYMENT PERIOD; NOTICE OF EXTENSION. (a) So long as the Company shall not be in default in the payment of interest on the Securities, the Company shall have the right, at any time on or after February 15, 2004 and from time to time thereafter during the term of the Securities, to defer payments of interest (including Additional Interest, if any) by extending any interest payment period for successive periods not exceeding 20 consecutive quarters for each such period (an "Extension Period"). To the extent permitted by applicable law, interest, the payment of which has been deferred because of the extension of the interest payment period pursuant to this Section 312, will bear interest at the per annum rate specified in Section 301 compounded quarterly for each quarter of the Extension Period ("Compounded Interest"); PROVIDED, that during an Extension Period, the Company shall be subject to the provisions of Section 1008 hereof. At the end of the Extension Period, the Company shall pay all interest then accrued and unpaid on the Securities, including any Additional Payments, that shall be payable to the Holders of the Securities in whose names the Securities are registered in the Security Register on the first Regular Record Date after the 21 end of the Extension Period. Before the termination of any Extension Period, the sCompany may further extend such period, PROVIDED, that such period together with all such further extensions thereof shall not exceed 20 consecutive quarters or extend beyond the maturity of the Securities or end other than on an Interest Payment Date. Upon the termination of any Extension Period and upon the payment of all amounts then due on the Securities, including any Additional Payments, the Company may commence a new Extension Period, subject to the foregoing requirements. No interest shall be due and payable during an Extension Period except at the end thereof. (b) The Company must give the Property Trustee, the Regular Trustees and the Trustee notice of its election to begin an Extension Period at least one Business Day prior to the earliest of (i) the date the distribution on the Preferred Securities would have been payable except for the election to begin such Extension Period or (ii) if applicable, the date the Regular Trustees are required to give notice of the Regular Record Date to the NYSE, the Nasdaq National Market or other applicable self-regulatory organization or to holders of such Preferred Securities of the record date or (iii) the date such distribution is payable, but in any event not less than one Business Day prior to the Regular Record Date. The Trustee shall give notice of the Company's election to begin an Extension Period to the holders of the Securities and the Regular Trustees shall give notice of the Company's election to the holders of the Preferred Securities. (c) The quarter in which any notice is given pursuant to paragraph (b) hereof shall be counted as one of the 20 quarters permitted in the maximum Extension Period permitted under paragraph (a) hereof. SECTION 313. PAYING AGENT, SECURITY REGISTRAR AND CONVERSION AGENT. The Trustee will initially act as Paying Agent, Security Registrar and Conversion Agent. The Company may change any Paying Agent, Security Registrar, co-registrar or Conversion Agent without prior notice. The Company or any of its Affiliates may act in any such capacity. ARTICLE FOUR SATISFACTION AND DISCHARGE SECTION 401. SATISFACTION AND DISCHARGE OF INDENTURE. On demand and at the expense of the Company, this Indenture shall cease to be of further effect (except as to the obligations to pay Additional Payments and the rights of conversion, registration of transfer or exchange of Securities herein provided for), and the Trustee, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture, when (1) either (A) all Securities theretofore authenticated and delivered (other than (i) Securities that have been destroyed, lost or stolen and that have been replaced or paid as provided in Section 306 and (ii) Securities for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust, as provided in Section 1003) have been delivered to the Trustee for cancellation; or 22 (B) all such Securities not theretofore delivered to the Trustee for cancellation (i) have become due and payable, or (ii) will become due and payable at their Stated Maturity within one year, or (iii) are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company; and the Company, in the case of (i), (ii) or (iii) above, has deposited or caused to be deposited with the Trustee as trust funds in trust for the purpose an amount in U.S. Dollars sufficient to pay and discharge the entire indebtedness on such Securities not theretofore delivered to the Trustee, for cancellation, for principal (and premium, if any) and interest (including Compounded Interest and Additional Interest, if any) to the date of such deposit (in the case of Securities which have become due and payable) or to the Stated Maturity or Redemption Date, as the case may be; (2) the Company has paid or caused to be paid all other sums payable hereunder by the Company; and (3) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with. Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Company to the Trustee under Section 607 and, if money shall have been deposited with the Trustee pursuant to subclause (B) of Clause (1) of this Section, the obligations of the Trustee under Section 402 and the last paragraph of Section 1003 shall survive. The Company will also continue to be obligated to pay Additional Payments to the extent the amount thereof exceeds the amount so deposited. SECTION 402. APPLICATION OF TRUST MONEY. Subject to the provisions of the last paragraph of Section 1003, all money deposited with the Trustee pursuant to Section 401 shall be held in trust and applied by it, in accordance with the provisions of the Securities and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of the principal and interest for whose payment such money has been deposited with the Trustee. All moneys deposited with the Trustee pursuant to Section 401 (and held by it or any Paying Agent) for the payment of Securities subsequently converted shall be returned to the Company upon Company Request. ARTICLE FIVE REMEDIES SECTION 501. EVENTS OF DEFAULT. "Event of Default," wherever used herein, means any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body): 23 (1) default in the payment of any interest on the Securities (including Additional Payments, if any, in respect thereof), when the same shall become due and payable, and continuance of such default for a period of 30 days, provided that a valid extension of an interest payment period will not constitute a default in the payment of any interest (including Additional Interest or Compounded Interest, if any) for this purpose; (2) default in the payment of the principal of or premium, if any, on any Security when due upon Maturity (whether upon redemption or otherwise); (3) failure by the Company (i) to deliver any shares of Fleetwood Common Stock upon an appropriate election by a registered holder of Securities to convert such Securities, provided that such election is made in accordance with applicable provisions of the Indenture, or (ii) if an Additional Redemption Distribution is payable, to make such payment when due; (4) default by the Company in the performance, or breach, of any other covenant or warranty of the Company in this Indenture or a Security, and continuance of such default or breach for a period of 90 days after there has been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in principal amount of the Outstanding Securities, a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a "Notice of Default" hereunder; (5) the voluntary or involuntary dissolution, winding up or termination of the Trust, except in connection with the distribution of Securities to holders of Trust Securities in liquidation of the Trust upon the occurrence of a Special Event, upon the redemption of all of the outstanding Trust Securities, upon the conversion of all the outstanding Trust Securities, or upon any merger, consolidation or amalgamation, each as permitted by the Declaration; (6) the entry by a court having jurisdiction in the premises of (A) a decree or order for relief in respect of the Company in an involuntary case or proceeding under any applicable federal or state bankruptcy, insolvency, reorganization or other similar law or (B) a decree or order adjudging the Company a bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Company under any applicable federal or state law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or of any substantial part of its property, or ordering the winding up or liquidation of its affairs, and the continuance of any such decree or order for relief or any such other decree or order unstayed and in effect for a period of 60 consecutive days; or (7) the commencement by the Company of a voluntary case or proceeding under any applicable federal or state bankruptcy, insolvency, reorganization or other similar law or of any other case or proceeding to be adjudicated a bankrupt or insolvent, or the consent by it to the entry of a decree or order for relief in respect of the Company in an involuntary case or proceeding under any applicable federal or state bankruptcy, insolvency, reorganization or other similar law or to the commencement of any 24 bankruptcy or insolvency case or proceeding against it, or the filing by it of a petition or answer or consent seeking reorganization or relief under any applicable federal or state law, or the consent by it to the filing of such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or similar official of the Company or of any substantial part of its property, or the making by it of an assignment for the benefit of creditors, or the admission by it in writing of its inability to pay its debts generally as they become due, or the taking of corporate action by the Company in furtherance of any such action. SECTION 502. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT. If an Event of Default occurs and is continuing, then the Trustee or the Holders of not less than 25% in principal amount of the Outstanding Securities may declare the principal of all the Securities, accrued and unpaid interest, if any (including any Additional Payments) and Additional Redemption Distributions, if any, thereon to be due and payable immediately, by a notice in writing to the Company (and to the Trustee if given by the Holders), and upon any such declaration such principal or such lesser amount, as the case may be, such accrued and unpaid interest and such Additional Redemption Distributions, if any, shall become immediately due and payable. At any time after Securities have been accelerated and before a judgment or decree for payment of the money due has been obtained by the Trustee as hereinafter in this Article provided, the Holders of not less than a majority in aggregate principal amount of the Outstanding Securities, by written notice to the Company and the Trustee, may rescind and annul such declaration and its consequences if (a) the Company has paid or deposited with the Trustee a sum of money sufficient to pay (i) all overdue interest on any Securities that have become due otherwise than by such declaration of acceleration and any Additional Payments with respect thereto, (ii) the principal of any premium, and any Additional Redemption Distributions on any Securities that have become due otherwise than by such declaration of acceleration and any Additional Payments with respect thereto and, to the extent permitted by applicable law, interest thereon at the rate borne by the Securities, (iii) to the extent permitted by applicable law, interest upon installments of any interest, if any, that has become due otherwise than by such declaration of acceleration and any Additional Payments with respect thereto at the rate borne by or provided for in the Securities, and (iv) all sums paid or advanced by the Trustee hereunder and the compensation, expenses, disbursements and advances of the Trustee, its agents and counsel and all other amounts due the Trustee under Section 607; and (b) all Events of Default, other than the non-payment of the principal of, any premium, interest on and any Additional Redemption Distributions on, and any Additional 25 Payments with respect to, the Securities that shall have become due solely by such declaration of acceleration, shall have been cured or waived as provided in Section 513. No such rescission shall affect any subsequent default or impair any right consequent thereon. SECTION 503. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY TRUSTEE. The Company covenants that if (1) default is made in the payment of any interest (including any Additional Payments) on any Security when such interest becomes due and payable and such default continues for a period of 30 days (provided that a valid extension of the interest payment period by the Company pursuant to this Indenture shall not constitute a default in the payment of any interest (including any Additional Payments) for this purpose), or (2) default is made in the payment of the principal of any Security at the Maturity thereof or the payment of any Additional Redemption Distributions when due, the Company will, upon demand of the Trustee, pay to the Trustee, for the benefit of the Holders of such Securities, the whole amount then due and payable on such Securities for principal, interest (including any Additional Payments and Additional Redemption Distributions) and, to the extent that payment thereof shall be legally enforceable, interest on any overdue principal, any premium and on any overdue interest (including any Additional Interest) and Additional Redemption Distributions, at the rate borne by the Securities, and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including the compensation, expenses, disbursements and advances of the Trustee, its agents and counsel and all other amounts due to the Trustee under Section 607. If the Company fails to pay the money it is required to pay the Trustee pursuant to the preceding paragraph forthwith upon the demand of the Trustee, the Trustee, in its own name and as trustee of an express trust, may institute a judicial proceeding for the collection of the money so due and unpaid, and may prosecute such proceeding to judgment or final decree, and may enforce the same against the Company or any other obligor upon the Securities and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Company or any other obligor upon the Securities, wherever situated. If an Event of Default occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy. SECTION 504. TRUSTEE MAY FILE PROOFS OF CLAIM. In case of any judicial proceeding relative to the Company (or any other obligor upon the Securities), its property or its creditors, the Trustee shall be entitled and empowered, by intervention in such proceeding or otherwise, to take any and all actions authorized under the Trust Indenture Act in order to have claims of the Holders and the Trustee allowed in any such 26 proceeding. In particular, the Trustee shall be authorized to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 607. No provision of this Indenture shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Securities or the rights of any Holder thereof or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding. SECTION 505. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF SECURITIES. All rights of action and claims under this Indenture or the Securities may be prosecuted and enforced by the Trustee without the possession of any of the Securities or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, be for the ratable benefit of the Holders of the Securities in respect of which such judgment has been recovered. SECTION 506. APPLICATION OF MONEY COLLECTED. Subject to Article Twelve, any money collected by the Trustee pursuant to this Article shall be applied in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such money on account of principal or interest (including any Additional Payments), upon presentation of the Securities and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid: FIRST: To the payment of all amounts due the Trustee under Section 607; SECOND: To the payment of the amounts then due and unpaid for principal of, any premium, interest (including any Additional Payments) and Additional Redemption Distributions on the Securities in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such Securities for principal and any premium, interest (including any Compounded Interest) and Additional Redemption Distributions, respectively; and THIRD: Any remaining amounts shall be repaid to the Company. 27 SECTION 507. LIMITATION ON SUITS. No Holder of any Security shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless (1) such Holder has previously given written notice to the Trustee of a continuing Event of Default; (2) the Holders of not less than 25% in aggregate principal amount of the Outstanding Securities shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder; (3) such Holder or Holders have offered to the Trustee indemnity satisfactory to the Trustee against the costs, expenses and liabilities to be incurred in compliance with such request; (4) the Trustee for 60 days after its receipt of such notice, request and offer of indemnity satisfactory to the Trustee has failed to institute any such proceeding; and (5) no direction inconsistent with such written request has been given to the Trustee during such 60 day period by the Holders of a majority in aggregate principal amount of the Outstanding Securities; it being understood and intended that no one or more Holders shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture to affect, disturb or prejudice the rights of any other Holders, or to obtain or to seek to obtain priority or preference over any other Holders or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all the Holders. SECTION 508. UNCONDITIONAL RIGHT OF HOLDER TO RECEIVE PRINCIPAL AND ANY PREMIUM AND INTEREST AND TO CONVERT. Notwithstanding any other provision in this Indenture, the Holder of any Security shall have the right, which is absolute and unconditional, to receive payment of the principal of, and any premium, if any, (subject to Section 307) interest (including any Additional Payments) and Additional Redemption Distributions on, such Security on the respective Stated Maturities expressed in such Security (or, in the case of redemption, on the Redemption Date) and to convert such Security in accordance with Article Thirteen and to institute suit for the enforcement of any such payment and right to convert, and such rights shall not be impaired without the consent of such Holder. SECTION 509. RESTORATION OF RIGHTS AND REMEDIES. If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such case, subject to any determination in such proceeding, the Company, the Trustee and the Holders shall 28 be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Trustee and the Holders shall continue as though no such proceeding had been instituted. SECTION 510. RIGHTS AND REMEDIES CUMULATIVE. Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities in the last paragraph of Section 306, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. SECTION 511. DELAYS OR OMISSION NOT WAIVER. No delay or omission of the Trustee or of any Holder of any Security to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be. SECTION 512. CONTROL BY HOLDERS. The Holders of a majority in aggregate principal amount of the Outstanding Securities shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee; PROVIDED, that (1) such direction shall not be in conflict with any rule of law or with this Indenture; (2) the Trustee may take any other action deemed proper by the Trustee that is not inconsistent with such direction; and (3) such direction is not unduly prejudicial to the rights of the other Holders of Securities not joining in such action. SECTION 513. WAIVER OF PAST DEFAULTS. Subject to Section 902 hereof, the Holders of not less than 66-2/3% in aggregate principal amount of the Outstanding Securities may, on behalf of the Holders of all the Securities, waive any past default hereunder and its consequences, except a default (1) in the payment of the principal of, and any premium, interest (including any Additional Payments) or Additional Redemption Distributions on, any Security 29 (unless such default has been cured and a sum sufficient to pay all matured installments of interest (including any Additional Payments), principal and Additional Redemption Distributions due otherwise than by acceleration has been deposited with the Trustee); or (2) in respect of a covenant or provision hereof which under Article Nine cannot be modified or amended without the consent of the Holder of each Outstanding Security affected. However, while any Preferred Securities are outstanding, an Event of Default with respect to the Securities may not be waived without the consent of 66-2/3% in aggregate liquidation amount of the Preferred Securities. Upon any such waiver, such default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon. SECTION 514. UNDERTAKING FOR COSTS. In any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken, suffered or omitted by it as Trustee, a court may require any party litigant in such suit to file an undertaking to pay the costs of such suit, and may assess costs against any such party litigant, in the manner and to the extent provided in the Trust Indenture Act; PROVIDED, that neither this Section nor the Trust Indenture Act shall be deemed to authorize any court to require such an undertaking or to make such an assessment in any suit instituted by the Company or the Trustee or in any suit for the enforcement of the right to receive the principal of, and any interest (including any Additional Payments) and Additional Redemption Distributions on, any Security or to convert any Security in accordance with Article Thirteen. SECTION 515. WAIVER OF STAY OR EXTENSION LAWS. The Company covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law wherever enacted, now or at any time hereafter in force, that may affect the covenants or the performance of this Indenture; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted. SECTION 516. ENFORCEMENT BY HOLDERS OF PREFERRED SECURITIES. Notwithstanding anything to the contrary contained herein, an event of default under the Declaration has occurred and is continuing and such event is attributable to the failure of the Company to pay interest, including any Additional Payments or Additional Redemption Distributions, or principal on the Securities on the date such interest, Additional Redemption Distributions and principal are otherwise payable (or in the case of redemption, the redemption date), a holder of Preferred Securities may directly institute a proceeding for enforcement of 30 payment to such holder of the principal of, or Additional Redemption Distributions and interest, including any Additional Payments, on the Securities having a principal amount equal to the aggregate liquidation amount of the Preferred Securities of such holder on or after the due date specified in the Securities. In connection with such a direct proceeding, the Company will remain obligated to pay the principal and interest on the Securities and will be subrogated to the rights of such holders of Preferred Securities under the Declaration to the extent of any payment made by the Company to such holder of Preferred Securities in such a direct proceeding. ARTICLE SIX THE TRUSTEE SECTION 601. CERTAIN DUTIES AND RESPONSIBILITIES. (a) Except during the continuance of an Event of Default, (1) the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and (2) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; but in the case of any such certificates or opinions by which any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture (but need not confirm or investigate the accuracy of mathematical calculations or other facts stated therein). (b) In the case an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs. (c) No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that (1) this Subsection shall not be construed to limit the effect of Subsection (a) of this Section; (2) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts; (3) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of a majority in principal amount of the Outstanding Securities of any 31 series, determined as provided in Sections 101, 104 and 512, relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee under this Indenture with respect to the Securities of such series. Notwithstanding the foregoing, no provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section. SECTION 602. NOTICE OF DEFAULTS. The Trustee shall give the Holders notice of any default hereunder as and to the extent provided by the Trust Indenture Act; PROVIDED, HOWEVER, that in the case of any default of the character specified in Section 501(4), no such notice to Holders shall be given until at least 30 days after the occurrence thereof. For the purpose of this Section, the term "default" means any event that is, or after notice or lapse of time or both would become, an Event of Default. SECTION 603. CERTAIN RIGHTS OF TRUSTEE. Subject to the provisions of Section 601: (a) the Trustee may conclusively rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) any request or direction of the Company mentioned herein shall be sufficiently evidenced by a Company Request or Company Order and any resolution of the Board of Directors may be sufficiently evidenced by a Board Resolution; (c) whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) shall, in the absence of bad faith on its part, rely upon an Officers' Certificate; (d) the Trustee may consult with counsel of its choice and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon; (e) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders pursuant to this Indenture, unless such Holders shall have offered to the Trustee security or indemnity 32 satisfactory to the Trustee against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction; (f) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to reasonable examination of the books, records and premises of the Company, personally or by agent or attorney at the sole cost of the Company and shall incur no liability or additional liability of any kind by reason of such inquiry or investigation; (g) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with the prior written consent of the Company and with due care by it hereunder; and (h) the Trustee shall not be liable for any action taken or omitted to be taken by it in good faith and reasonably believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Indenture, unless it shall be proven that the Trustee was negligent in ascertaining the pertinent facts. SECTION 604. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES. The recitals contained herein and in the Securities, except the Trustee's certificates of authentication, shall be taken as the statements of the Company, and the Trustee assumes no responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Securities. The Trustee shall not be accountable for the use or application by the Company of the Securities or the proceeds thereof. SECTION 605. MAY HOLD SECURITIES. The Trustee, any Paying Agent, any Security Registrar or any other agent of the Company, in its individual or any other capacity, may become the owner or pledgee of Securities and, subject to Sections 608 and 613, may otherwise deal with the Company with the same rights it would have if it were not Trustee, Paying Agent, Security Registrar, or such other agent. SECTION 606. MONEY HELD IN TRUST. Money held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law. The Trustee shall be under no liability for interest on any money received by it hereunder except as otherwise agreed in writing with the Company. SECTION 607. COMPENSATION AND REIMBURSEMENT. The Company agrees 33 (1) to pay to the Trustee from time to time such compensation as the Company and the Trustee shall from time to time agree in writing for all services rendered by it hereunder; (2) except as otherwise expressly provided herein, to reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any provision of this Indenture (including the reasonable compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable to its negligence or willful misconduct; and (3) to indemnify the Trustee, its agents and counsel and any predecessor Trustee for, and to hold it harmless against, any loss, liability or expense incurred without negligence or bad faith on its part, arising out of or in connection with the acceptance or administration of this trust, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder, including the costs and expenses of defending itself against any claim (whether asserted by the Company, or any Holder or any other Person) or liability in connection with the exercise or performance of any of its powers or duties hereunder, or in connection with enforcing the provisions of this Section, except to the extent that such loss, damage, claim, liability or expense is due to its own negligence or bad faith. The Trustee shall have a lien prior to the Securities as to all property and funds held by it hereunder for any amount owing it or any predecessor Trustee pursuant to this Section 607, except with respect to funds held in trust for the benefit of the Holders of particular Securities. When the Trustee incurs expenses or renders services in connection with an Event of Default specified in Section 501(6) or Section 501(7), the expenses (including the reasonable charges and expenses of its counsel) and the compensation for the services are intended to constitute expenses of administration under any applicable Federal or state bankruptcy, insolvency or other similar law. The provisions of this Section shall survive the termination of this Indenture. SECTION 608. DISQUALIFICATION; CONFLICTING INTEREST. If the Trustee has or shall acquire a conflicting interest within the meaning of the Trust Indenture Act, the Trustee shall either eliminate such interest or resign, to the extent and in the manner provided by, and subject to the provisions of, the Trust Indenture Act and this Indenture. SECTION 609. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY. There shall at all times be a Trustee hereunder which shall be a Person that is eligible pursuant to the Trust Indenture Act to act as such and has a combined capital and surplus of at least $50,000,000. If such Person publishes reports of condition at least annually, pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such Person shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time 34 the Trustee shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect hereinafter specified in this Article. SECTION 610. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR. (a) No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article shall become effective until the acceptance of appointment by the successor Trustee under Section 611. (b) The Trustee may resign at any time by giving written notice thereof to the Company. If an instrument of acceptance by a successor Trustee shall not have been delivered to the Trustee within 30 days after the giving of such notice of resignation, the resigning Trustee may petition, at the reasonable expense of the Company, any court of competent jurisdiction for the appointment of a successor Trustee. (c) The Trustee may be removed at any time by Act of the Holders of a majority in aggregate principal amount of the Outstanding Securities, delivered to the Trustee and to the Company. If an instrument of acceptance by a successor Trustee shall not have been delivered to the Trustee within 30 days after the giving of such notice of removal, the retiring Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee. (d) If at any time: (1) the Trustee shall fail to comply with Section 608 after written request therefor by the Company or by any Holder who has been a bona fide Holder of a Security for at least six months, or (2) the Trustee shall cease to be eligible under Section 609 and shall fail to resign after written request therefor by the Company or by any such Holder, or (3) the Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of the Trustee or of its property shall be appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, then, in any such case, (i) the Company may remove the Trustee, or (ii) subject to Section 514, any Holder who has been a bona fide Holder of a Security for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. (e) If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any cause, the Company, by a Board Resolution, shall promptly appoint a successor Trustee. If, within one year after such resignation, removal or incapability, or the occurrence of such vacancy, a successor Trustee shall be appointed by Act of the Holders of a majority in aggregate principal amount of the Outstanding Securities delivered to the Company and the retiring Trustee, 35 the successor Trustee so appointed shall, forthwith upon its acceptance of such appointment, become the successor Trustee and supersede the successor Trustee appointed by the Company. If no successor Trustee shall have been so appointed by the Company or the Holders and accepted appointment in the manner hereinafter provided, any Holder who has been a bona fide Holder of a Security for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee. (f) The Company shall give notice of each resignation and each removal of the Trustee and each appointment of a successor Trustee to all Holders in the manner provided in Section 106. Each notice shall include the name of the successor Trustee and the address of its Corporate Trust Office. SECTION 611. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR. Every successor Trustee appointed hereunder shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; PROVIDED, that on request of the Company or the successor Trustee, such retiring Trustee shall, upon payment of its charges, execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder. Upon request of any such successor Trustee, the Company shall execute any and all instruments required to more fully and certainly vest in and confirm to such successor Trustee all such rights, powers and trusts. No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this Article. SECTION 612. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS. Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to or purchasing all or substantially all the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided such corporation shall be otherwise qualified and eligible under this Article, without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any Securities shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such authentication and deliver the Securities so authenticated with the same effect as if such successor Trustee had itself authenticated such Securities. SECTION 613. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY. If and when the Trustee shall be or become a creditor of the Company (or any other obligor upon the Securities), the Trustee shall be subject to the provisions of the Trust Indenture Act regarding the collection of claims against the Company (or any such other obligor). 36 ARTICLE SEVEN HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY SECTION 701. COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF HOLDERS. The Company will furnish or cause to be furnished to the Trustee (a) semiannually, not later than February 15 and August 15 in each year, a list, in such form as the Trustee may reasonably require, of the names and addresses of the Holders as of a date not more than 15 days prior to the delivery thereof, and (b) at such other times as the Trustee may request in writing, within 30 days after the receipt by the Company of any such request, a list of similar form and content as of a date not more than 15 days prior to the time such list is furnished, EXCLUDING from any such list names and addresses received by the Trustee in its capacity as Security Registrar. SECTION 702. PRESERVATION OF INFORMATION: COMMUNICATIONS TO HOLDERS. (a) The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of Holders contained in the most recent list furnished to the Trustee as provided in Section 701 and the names and addresses of Holders received by the Trustee in its capacity as Security Registrar. The Trustee may destroy any list furnished to it as provided in Section 701 upon receipt of a new list so furnished. (b) The rights of Holders to communicate with other Holders with respect to their rights under this Indenture or under the Securities, and the corresponding rights and duties of the Trustee, shall be as provided by the Trust Indenture Act. (c) Every Holder of Securities, by receiving and holding the same, agrees with the Company and the Trustee that neither the Company nor the Trustee nor any agent of either of them shall be held accountable by reason of any disclosure of information as to names and addresses of Holders made pursuant to the Trust Indenture Act. SECTION 703. REPORTS BY TRUSTEE. (a) Within 60 days after May 15 of each year, commencing May 15, 2002, the Trustee shall transmit to Holders such reports concerning the Trustee and its actions under this Indenture as may be required pursuant to the Trust Indenture Act in the manner provided pursuant thereto. (b) A copy of each such report shall, at the time of such transmission to Holders, be filed by the Trustee with each stock exchange upon which the Securities are listed, with the Commission and with the Company. The Company will notify the Trustee when the Securities are listed on any stock exchange. 37 SECTION 704. REPORTS BY COMPANY. The Company shall file with the Trustee and the Commission, and transmit to Holders, such information, documents and other reports, and such summaries thereof, as may be required pursuant to the Trust Indenture Act at the times and in the manner provided pursuant to such Act; PROVIDED, that any such information, documents or reports required to be filed with the Commission pursuant to Section 13 or 15(d) of the Securities Exchange Act shall be filed with the Trustee within 15 days after the same is so required to be filed with the Commission. Delivery of such reports, information and documents to the Trustee is for informational purposes only and the Trustee's receipt of such shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Company's compliance with any of its covenants hereunder (as to which the Trustee is entitled to rely exclusively on Officers' Certificates). ARTICLE EIGHT CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE SECTION 801. COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS. The Company shall not consolidate with or merge with or into any other Person or, directly or indirectly, convey, transfer or lease all or substantially all of its properties and assets on a consolidated basis to any Person, unless: (1) in case the Company shall consolidate with or merge with or into another Person or convey, transfer or lease all or substantially all of its properties and assets on a consolidated basis to any Person, the Person formed by such consolidation or into which the Company is merged or the Person that acquires by conveyance, transfer or lease, all or substantially all of the properties and assets of the Company on a consolidated basis shall be a corporation organized and validly existing under the laws of the United States of America, any state thereof or the District of Columbia and shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form reasonably satisfactory to the Trustee, the due and punctual payment of the principal of, premium, if any, and interest (including Additional Payments), if any, and Additional Redemption Distributions, if any, on all the Securities outstanding under this Indenture and the performance or observance of the Company's obligations under this Indenture and the Securities outstanding hereunder on the part of the Company to be performed or observed and shall have provided for conversion rights in accordance with Article Thirteen; (2) immediately after giving effect to such transaction and treating any indebtedness which becomes an obligation of the Company or a Subsidiary as a result of such transaction as having been incurred by the Company or such Subsidiary at the time of such transaction, no Event of Default, and no event that, after notice or lapse of time or both, would become an Event of Default, shall have happened and be continuing; 38 (3) such consolidation or merger or conveyance, transfer or lease of assets of the Company is permitted under, and does not give rise to any breach or violation of, the Declaration or the Preferred Securities Guarantee; and (4) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger, conveyance, transfer or lease and, if a supplemental indenture is required in connection with such transaction, such supplemental indenture, comply with this Article and that all conditions precedent herein provided for relating to such transaction have been complied with. SECTION 802. SUCCESSOR SUBSTITUTED. Upon any consolidation of the Company with, or merger of the Company into, any other Person or any conveyance, transfer or lease of all or substantially all the properties and assets of the Company on a consolidated basis in accordance with Section 801, the successor Person formed by such consolidation or into which the Company is merged or to which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor Person had been named as the Company herein, and thereafter, except in the case of a lease, the predecessor Person shall be relieved of all obligations and covenants under this Indenture and the Securities. ARTICLE NINE SUPPLEMENTAL INDENTURES SECTION 901. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS. Without the consent of any Holders, the Company, when authorized by a Board Resolution, and the Trustee, at any time and from time to time, may enter into one or more indentures supplemental hereto, in form satisfactory to the Trustee, for any of the following purposes: (1) to evidence the succession of another Person to the Company and the assumption by any such successor of the covenants of the Company herein and in the Securities; or (2) to add to the Events of Default or the covenants of the Company for the benefit of the Holders, or to surrender any right or power herein conferred upon the Company; or (3) to make provision with respect to the conversion rights of Holders pursuant to the requirements of Article Thirteen; or (4) to cure any ambiguity, to correct or supplement any provision herein that may be inconsistent with any other provision herein, or to make any other provisions with respect to matters or questions arising under this Indenture which shall not be inconsistent with the provisions of this Indenture; PROVIDED, that such action pursuant to this clause (4) shall not adversely affect the interests of the Holders of the Securities or, 39 so long as any of the Preferred Securities shall remain outstanding, the holders of the Preferred Securities; or (5) to comply with the requirements of the Commission in order to effect or maintain the qualification of this Indenture under the Trust Indenture Act; or (6) to make provision for transfer procedures, certification, book-entry provisions, the form of restricted securities legends, if any, to be placed on Securities, and all other matters required pursuant to Section 305(b) or otherwise necessary, desirable or appropriate in connection with the issuance of Securities to holders of Preferred Securities in the event of a distribution of Securities by the Trust if a Special Event occurs and is continuing; or (7) to comply with the requirements of the New York Stock Exchange or such other national securities exchange or automated quotation system, if any, on which the Securities are then listed. SECTION 902. SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS. With the consent of the Holders of not less than a majority in aggregate principal amount of the Outstanding Securities, by Act of said Holders delivered to the Company and the Trustee, the Company, when authorized by a Board Resolution, and the Trustee may enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of modifying in any manner the rights of the Holders under this Indenture; PROVIDED, HOWEVER, that no such supplemental indenture shall, without the consent of the Holder of each Outstanding Security affected thereby, (1) change the Stated Maturity of the principal of, or premium, if any, or (except as permitted by Section 312) any installment of interest (including any Additional Payments) on, any Security, or reduce the principal amount thereof, or reduce the rate or (except as permitted by Section 312) extend the time for payment of interest thereon, or reduce any premium payable upon the redemption thereof, or reduce any Additional Redemption Distribution payable upon the conversion thereof, or change the place of payment where, or the coin or currency in which, any Security or interest thereon is payable, or impair the right to institute suit for the enforcement of any such payment on or after the Stated Maturity thereof (or, in the case of redemption, on or after the Redemption Date), or adversely affect the right to convert any Security as provided in Article Thirteen, (2) reduce the percentage in aggregate principal amount of the Outstanding Securities, the consent of whose Holders is required for any such modification or amendment or the consent of whose holders is required for any waiver under this Indenture or reduce the requirements for a quorum or voting at a meeting of Holders of the Securities, (3) modify any of the provisions of Article 12 hereof or the definition of Senior Indebtedness in a manner adverse to the Holders of the Securities, or 40 (4) modify any of the provisions of this Section or Section 513, except to increase any such percentage or to provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each Outstanding Security affected thereby; PROVIDED, that so long as any of the Preferred Securities remains outstanding, no waiver of any Event of Default shall be effective, without the prior consent of the holders of at least 66-2/3% of the aggregate liquidation amount of the outstanding Preferred Securities. It shall not be necessary for any Act of Holders under this Section to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof. The Company may, but shall not be obligated to, fix a record date for the purpose of determining the Persons entitled to consent to any indenture supplemental hereto. If a record date is fixed, the Holders on such record date, or their duly designated proxies, and only such Persons, shall be entitled to consent to such supplemental indenture, whether or not such Holders remain Holders after such record date; PROVIDED, that unless such consent shall have become effective by virtue of the requisite percentage having been obtained prior to the date which is 90 days after such record date, any such consent previously given shall automatically and without further action by any Holder be cancelled and of no further effect. SECTION 903. EXECUTION OF SUPPLEMENTAL INDENTURES. In executing, or accepting the additional trusts created by, any supplemental indenture permitted by this Article or the modifications thereby of the trusts created by this Indenture, the Trustee shall be entitled to receive, and (subject to Section 601) shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture. The Trustee may, but shall not be obligated to, enter into any such supplemental indenture that affects the Trustee's own rights, duties or immunities under this Indenture or otherwise. SECTION 904. EFFECT OF SUPPLEMENTAL INDENTURES. Upon the execution of any supplemental indenture under this Article, this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes, and every Holder of Securities theretofore or thereafter authenticated and delivered hereunder shall be bound thereby. No such supplemental indenture shall directly or indirectly modify the provisions of Article Twelve in any manner that might terminate or impair the rights of the Senior Indebtedness pursuant to such subordination provisions. SECTION 905. CONFORMITY WITH TRUST INDENTURE ACT. Every supplemental indenture executed pursuant to this Article shall conform to the requirements of the Trust Indenture Act. 41 SECTION 906. REFERENCE IN SECURITIES TO SUPPLEMENTAL INDENTURES. Securities authenticated and delivered after the execution of any supplemental indenture pursuant to this Article may, and shall if required by the Trustee, bear a notation in form approved by the Trustee as to any matter provided for in such supplemental indenture. If the Company shall so determine, new Securities so modified as to conform, in the opinion of the Trustee and the Company, to any such supplemental indenture may be prepared and executed by the Company and authenticated and delivered by the Trustee in exchange for Outstanding Securities. ARTICLE TEN COVENANTS; REPRESENTATIONS AND WARRANTIES SECTION 1001. PAYMENT OF PRINCIPAL AND INTEREST. The Company will duly and punctually pay the principal of, premium, if any, and interest (including any Additional Payments) and Additional Redemption Distributions on the Securities when due in accordance with the terms of the Securities and this Indenture. SECTION 1002. MAINTENANCE OF OFFICE OR AGENCY. The Company will maintain in the United States an office or agency where Securities may be presented or surrendered for payment, where Securities may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Company in respect of the Securities and this Indenture may be served. The Company will give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee, and the Company hereby appoints the Trustee as its agent to receive all such presentations, surrenders, notices and demands. The Company may also from time to time designate one or more other offices or agencies where the Securities may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; PROVIDED, HOWEVER, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in the United States for such purposes. The Company will give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency. SECTION 1003. MONEY FOR SECURITY PAYMENTS TO BE HELD IN TRUST. If the Company shall at any time act as its own Paying Agent, it will, on or before each due date of the principal of, or interest, or Additional Redemption Distributions on any of the Securities, segregate and hold in trust for the benefit of the Persons entitled thereto a sum (including Fleetwood Common Stock, if the Company shall have elected to pay interest in Fleetwood Common Stock pursuant to Section 301) sufficient to pay the principal, interest or Additional Redemption Distributions so becoming due until such sums shall be paid to such 42 Persons or otherwise disposed of as herein provided and will promptly notify the Trustee of its action or failure so to act. Whenever the Company shall have one or more Paying Agents, it will, prior to each due date of the principal of, or interest or Additional Redemption Distributions on, any Securities, deposit with a Paying Agent a sum (including Fleetwood Common Stock, if the Company shall have elected to pay interest in Fleetwood Common Stock pursuant to Section 301) sufficient to pay such amount, such sum to be held as provided by the Trust Indenture Act, and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee of its action or failure so to act. The Company will cause each Paying Agent other than the Trustee to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this Section, that such Paying Agent will (i) comply with the provisions of the Trust Indenture Act applicable to it as a Paying Agent and (ii) during the continuance of any default by the Company (or any other obligor upon the Securities) in the making of any payment in respect of the Securities, upon the written request of the Trustee, forthwith pay to the Trustee all sums held in trust by such Paying Agent as such. The Company may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or by Company Order direct any Paying Agent to pay, to the Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by the Company or such Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such money. Any money or Fleetwood Common Stock deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of, or interest or Additional Redemption Distributions, on any Security and remaining unclaimed for two years after such principal or interest has become due and payable shall be paid to the Company on Company Request, or (if then held by the Company) shall be discharged from such trust; and the Holder of any such Security shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money or Fleetwood Common Stock, and all liability of the Company as trustee thereof, shall thereupon cease. SECTION 1004. STATEMENT AS TO COMPLIANCE. The Company will deliver to the Trustee, within 120 days after the end of each fiscal year of the Company ending after the date hereof, an Officers' Certificate, stating whether or not, to the best knowledge of the signers thereof, the Company is in default in the performance and observance of any of the material terms, provisions and conditions of this Indenture (without regard to any period of grace or requirement of notice provided hereunder) and, if the Company shall be in default, specifying all such defaults and the nature and status thereof of which they may have knowledge. 43 SECTION 1005. STATEMENT BY OFFICERS AS TO DEFAULT. The Company shall deliver to the Trustee, as soon as possible and in any event within five (5) days after the Company becomes aware of the occurrence of any Event of Default or an event which, with notice or the lapse of time or both, would constitute an Event of Default, an Officers' Certificate setting forth the details of such Event of Default or default and the action which the Company proposes to take with respect thereto. SECTION 1006. LIMITATION ON DIVIDENDS; COVENANTS AS TO THE TRUST. (a) The Company covenants that, so long as any Securities are outstanding, if (x) there shall have occurred and be continuing an Event of Default or event that, with the giving of notice or the lapse of time or both, would constitute an Event of Default or (y) the Company shall be in default with respect to its payment of any obligations under the Preferred Securities Guarantee, then (a) the Company shall not declare or pay dividends on, make any distribution with respect to, or redeem, purchase, acquire or make a liquidation payment with respect to any of its capital stock (other than (i) purchases or acquisitions of Fleetwood Common Stock in connection with the satisfaction by the Company of its obligations under any existing employee benefit plans or future employee benefit plans established in the ordinary course or the satisfaction by the Company of its obligations pursuant to any existing contract or security requiring the Company to purchase Fleetwood Common Stock, (ii) as a result of a reclassification of the Company's capital stock or the exchange or conversion of one class or series of the Company's capital stock for another class or series of the Company's capital stock, or (iii) the purchase of fractional interests in shares of the Company's capital stock pursuant to the conversion or exchange provisions of such capital stock shares of the Company's capital stock pursuant to the conversion or exchange provisions of such capital stock or the security being converted or exchanged (or make any guarantee payments with respect to the foregoing)) and (b) the Company shall not make any payment of interest, principal or premium, if any, on or repay, repurchase or redeem any debt securities issued by the Company that rank pari passu with or junior to the Securities; PROVIDED, FURTHER, that the Company may declare and pay a stock dividend where the dividend stock is the same stock as that on which the dividend is paid. (b) The Company also covenants and agrees that, for so long as the Trust Securities remain outstanding, the Company shall (i) directly or indirectly maintain 100% ownership of the Common Securities of the Trust; PROVIDED, HOWEVER, that any permitted successor of the Company hereunder may succeed to the Company's ownership of such Common Securities, (ii) not cause, as sponsor of the Trust, or permit, as the holder of the Common Securities, the termination, dissolution or winding up of the Trust, except in connection with a distribution of Securities, as provided in the Declaration and in connection with certain mergers, consolidations or amalgamations as permitted by the Declaration, and (iii) use its reasonable efforts, consistent with the terms and provisions of the Declaration, to cause the Trust to (x) remain a statutory business trust, except in connection with the distribution of the Securities to the holders of Trust Securities in liquidation of the Trust, the redemption of all of the Trust Securities of the Trust, or certain mergers, consolidations or amalgamations, each as permitted by the Declaration, and (y) otherwise continue to be classified as a grantor trust for United States federal income tax purposes. 44 SECTION 1007. PAYMENT OF EXPENSES OF THE TRUST. In connection with the Exchange Offer and the related issuance of the Securities to the Property Trustee, the Company shall: (a) pay for all fees and expenses relating to the Exchange Offer and related issuance of the Securities and the Preferred Securities, including fees and expenses payable to the Dealer-Manager pursuant to the Dealer-Manager Agreement, and compensation of the Trustee in accordance with the provisions of Section 607; (b) be responsible for and pay for all debts and obligations (other than with respect to the Trust Securities) of the Trust, pay for all fees and expenses of the Trust (including, but not limited to, fees and expenses relating to the organization of the Trust, the sale, issuance and exchange of the Trust Securities, the fees and expenses of the Property Trustee and the Delaware Trustee, the fees and expenses relating to the operation of the Trust, including without limitation, fees and expenses of accountants, attorneys, statistical or bookkeeping services, expenses for printing and engraving and computing or accounting equipment, paying agent(s), registrar(s), transfer agent(s), duplicating, travel and telephone and other telecommunications expenses and fees and expenses incurred in connection with the acquisition, financing, and disposition of Trust assets); (c) pay for all fees and expenses related to the retention of the Property Trustee; (d) pay for all fees and expenses related to the enforcement by the Property Trustee of the rights of the holders of the Preferred Securities; and (e) pay any and all income taxes, duties and other governmental charges, and all costs and expenses relating to these charges, to which the trust may become subject, which shall not include United States withholding taxes but shall include liabilities imposed on the Trust as withholding agent. SECTION 1008. LIMITATION OF TRANSACTIONS. If the Company shall exercise its right to defer payment of interest as provided in Section 312, then during the Extension Period, (a) the Company shall not declare or pay any dividend on, make any distributions with respect to, or redeem, purchase, acquire or make a liquidation payment with respect to, any of its capital stock (other than (A) (i) purchases or acquisitions of shares of the Company's capital stock (or capital stock equivalents) in connection with the satisfaction by the Company of its obligations under any officers, directors or employee benefit plans existing on the date of hereof or future officers, direct or employee benefit plans established in the ordinary course (or any options or other instruments issued thereunder) or the satisfaction by the Company of its obligations pursuant to any contract or security requiring the Company to purchase shares of the Company's capital stock (or capital stock equivalents), (ii) purchases of shares of the Company's capital stock (or capital stock equivalents) from officers, directors or employees of the Company or its subsidiaries pursuant to employment agreements or upon termination of employment or retirement, (iii) as a result of a 45 reclassification, combination or subdivision of the Company's capital stock or the exchange or conversion of one class or series of the Company's capital stock for another class or series of the Company's capital stock, (iv) dividends or distributions of shares of common stock on common stock, (v) the purchase of fractional interests in shares of the Company's capital stock pursuant to the conversion or exchange provisions of such capital stock or any security being converted or exchanged into such capital stock, (vi) dividends or distributions in shares of its capital stock of the same class on which such dividend or distribution is being made and conversions or exchanges of common stock of one class into common shares of another class, (vii) purchases or other acquisitions of common stock in connection with a dividend reinvestment or other similar plan, or (viii) any dividend or distribution of capital stock (or capital stock equivalents) in connection with the implementation of a stockholders' rights plan, or the issuance of stock under any such plan in the future, or the redemption or repurchase of any such rights pursuant thereto, or (B) guarantee payments made with respect to any of the foregoing), (b) the Company shall not make any payment of interest, principal or premium, if any, on or repay, repurchase or redeem any debt securities issued by the Company that rank PARI PASSU with or junior to the Securities and (c) the Company shall not make any guarantee payments with respect to the foregoing (other than pursuant to the Common Securities Guarantee, the Preferred Securities Guarantee, the Cash Offer Common Securities Guarantee or the Cash Offer Preferred Securities Guarantee). SECTION 1009. LISTING OF SECURITIES If the Securities are distributed to the holders of the Preferred Securities, the Company will use its best efforts to have the Securities listed on the New York Stock Exchange or on such other national securities exchange or similar organization, if any. ARTICLE ELEVEN REDEMPTION OF SECURITIES SECTION 1101. RIGHT OF REDEMPTION. (a) The Securities may be redeemed at the election of the Company, as a whole or in part, at any time or from time to time on or after February 15, 2004, at the Redemption Prices set forth in Section 1109(b)(ii) below. The Securities may be redeemed, in whole but not in part, at the Company's option at any time before February 15, 2004 at the Redemption Price set forth in Section 1109(b)(i) below if the Closing Price of Fleetwood Common Stock has exceeded 200% of the Conversion Price for at least twenty (20) Trading Days during a 30-day Trading Day period ending five (5) Trading Days prior to the date of the notice of redemption described in Section 1105 below. (b) The Securities may be redeemed as provided in Section 1110 of this Article Eleven as a whole but not in part at the election of the Company at any time within 90 days following the occurrence of a Tax Event; PROVIDED, HOWEVER, that, subject to Section 1110 of this Article Eleven, if, at the time there is available to the Company or the Trust the opportunity to eliminate, within such 90-day period, the Tax Event by taking some ministerial action, including but not limited to filing a form or making an election, or pursuing some other similar reasonable measure, which, in the sole judgment of the Company, has or will cause no adverse effect on the Trust, the Company or the Holders of the Trust Securities and involves or will involve no material cost, then the Company or the Trust shall pursue such measure in lieu of redemption. 46 SECTION 1102. APPLICABILITY OF ARTICLE. Redemption of Securities at the election of the Company, as permitted by Section 1101, shall be made in accordance with such provision and this Article. SECTION 1103. ELECTION TO REDEEM; NOTICE TO TRUSTEE. The election of the Company to redeem Securities pursuant to Section 1101 shall be evidenced by a Board Resolution. In case of any redemption at the election of the Company, the Company shall, at least 60 days and no more than 90 days prior to the Redemption Date fixed by the Company, notify the Trustee of such Redemption Date and of the principal amount of Securities to be redeemed, and the Company shall provide the Trustee with a copy of the notice of redemption given to Holders of Securities to be redeemed pursuant to Section 1104. SECTION 1104. SELECTION BY TRUSTEE OF SECURITIES TO BE REDEEMED. If less than all the Securities are to be redeemed (unless such redemption affects only a single Security), the particular Securities to be redeemed shall be selected not more than 60 days prior to the Redemption Date by the Trustee, from the Outstanding Securities not previously called for redemption, on a pro rata basis, in portions equal to $22 (or any integral multiple thereof) of the principal amount of the Securities. The Trustee shall promptly notify the Company in writing of the Securities selected for redemption as aforesaid and, in case of any Securities selected for partial redemption as aforesaid, the principal amount thereof to be redeemed. The provisions of the two preceding paragraphs shall not apply with respect to any redemption affecting only a single Security, whether such Security is to be redeemed in whole or in part. In the case of any such redemption in part, the unredeemed portion of the principal amount of the Security shall be in an authorized denomination (which shall not be less than the minimum authorized denomination) for such Security. For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Securities shall relate, in the case of any Securities redeemed or to be redeemed only in part, to the portion of the principal amount of such Securities that has been or is to be redeemed. SECTION 1105. NOTICE OF REDEMPTION. Notice of redemption shall be given by first-class mail, postage prepaid, mailed, in the case of a redemption at any time prior to February 15, 2004, not less than 15 days nor more than 30 days before the Redemption Date and, in all other cases, not less than 30 nor more than 60 days prior to the Redemption Date, to each Holder of Securities to be redeemed, at such Holder's address appearing in the Security Register. All notices of redemption shall identify the Securities to be redeemed (including the CUSIP number) and shall state: 47 (1) the Redemption Date, (2) the Redemption Price, (3) that on the Redemption Date the Redemption Price will become due and payable upon each such Security to be redeemed and that interest thereon will cease to accrue on and after said date, (4) the place or places where such Securities are to be surrendered for payment of the Redemption Price, and (5) a description of all material conversion features. Notice of redemption of Securities to be redeemed at the election of the Company shall be given by the Company or, at the Company's request, by the Trustee in the name and at the expense of the Company. SECTION 1106. DEPOSIT OF REDEMPTION PRICE. Prior to any Redemption Date, the Company shall deposit with the Trustee or with a Paying Agent (or, if the Company is acting as its own Paying Agent, segregate and hold in trust as provided in Section 1003) an amount of money sufficient to pay the Redemption Price of, and (except if the Redemption Date shall be an Interest Payment Date) accrued interest (including Additional Payments, if any) on, all the Securities that are to be redeemed on that date. SECTION 1107. SECURITIES PAYABLE ON REDEMPTION DATE. Notice of redemption having been given as aforesaid, the Securities so to be redeemed shall, on the Redemption Date, become due and payable at the Redemption Price therein specified, and from and after such date (unless the Company shall default in the payment of the Redemption Price and accrued interest) such Securities shall cease to bear interest. Upon surrender of any such Security for redemption in accordance with said notice, such Security shall be paid by the Company at the Redemption Price, together with accrued interest (including Additional Payments, if any) to the Redemption Date; PROVIDED, HOWEVER, that installments of interest whose Stated Maturity is on or prior to the Redemption Date shall be payable to the Holders of such Securities, or one or more Predecessor Securities, registered as such at the close of business on the relevant Record Dates according to the terms and the provisions of Section 307. If any Security called for redemption shall not be so paid upon surrender thereof for redemption, the principal shall, until paid, bear interest from the Redemption Date at the rate borne by the Security. SECTION 1108. SECURITIES REDEEMED IN PART. In the event of any redemption in part, the Company shall not be required to (i) issue, register the transfer of, or exchange any Security during a period beginning at the opening of business 15 days before any selection for redemption of Securities and ending at the close of 48 business on the earliest date on which the relevant notice of redemption is deemed to have been given to all holders of Securities to be so redeemed and (ii) register the transfer of or exchange any Securities so selected for redemption, in whole or in part, except for the unredeemed portion of any Securities being redeemed in part. Any Security that is to be redeemed only in part shall be surrendered at a place of payment therefor (with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder thereof or his attorney duly authorized in writing), and the Company shall execute, and the Trustee shall authenticate and make available for delivery to the Holder of such Security without service charge, a new Security or Securities, of any authorized denomination as requested by such Holder, in aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Security so surrendered. SECTION 1109. OPTIONAL REDEMPTION. (a) Except as provided in Sections 1109(b) and 1110, the Securities shall not be subject to redemption at the option of the Company prior to February 15, 2004. (b) Subject to the provisions of this Article Eleven, the Company shall have the right to redeem the Securities (i) in whole but not in part, at the Company's option at any time before February 15, 2004 at a Redemption Price equal to 100.00% of the aggregate principal amount of the Securities if the per share price of Fleetwood Common Stock has exceeded 200% of the Conversion Price for at least 20 Trading Days during a 30-day Trading Day period ending 5 Trading Days prior to the date of the notice of redemption described in Section 1105 above, upon not less than 15 nor more than 30 days' notice to Holders of the Securities, and (ii) in whole or in part, from time to time, on or after February 15, 2004, upon not less than 30 nor more than 60 days' notice to the Holders of the Securities (which notice shall state (A) the Redemption Date, (B) whether the Additional Redemption Distribution, if any, shall be paid by the Company in cash or by delivery of Fleetwood Common Stock, (C) the procedures pursuant to which such Securities are to be surrendered for conversion and receipt of the Additional Redemption Distribution, if any, and (D) the Conversion Price then in effect), at the following prices (expressed as percentages of the principal amount of the Securities), together (except as provided below) with accrued and unpaid interest, including, to the extent permitted by applicable law, Additional Payments, if any, to, but excluding, the Redemption Date, if redeemed during the 12-month period beginning February 15:
YEAR REDEMPTION ---- ---------- 2004................................................... 106.333% 2005................................................... 104.750% 2006................................................... 103.167% 2007................................................... 101.583%
and 100% if redeemed on or after February 15, 2008. Notwithstanding the foregoing provisions of this Section 1109(b), if the Company shall redeem any Securities pursuant to 49 Section 1110 hereof on or after February 15, 2004, then the Redemption Price of such Securities shall be the Redemption Price set forth in Section 1110 and not the Redemption Price set forth in this Section 1109(b). Without limitation to the proviso to the first paragraph of Section 1107 hereof, if Securities are redeemed on any date in the period beginning on any record date and ending on the next February 15, May 15, August 15 or November 15, accrued and unpaid interest that is due and payable on such Interest Payment Date shall be payable to the Holders of record at the close of business on the relevant Regular Record Date. In the event the Company delivers a notice of redemption to exercise its right to redeem the Securities at any time prior to February 15, 2004, if a Holder of Securities converts such Securities to Fleetwood Common Stock pursuant to Article Thirteen during the period following a notice of redemption and prior to the Redemption Date, then the Company shall pay such Holder, in cash or shares of Fleetwood Common Stock, at the election of the Company, an amount equal to interest payments payable on such securities through February 15, 2004, less any interest actually paid with respect to such Securities in accordance with the provisions of Section 301 prior to the applicable Conversion Date (the "Additional Redemption Distribution"). The Company may elect to pay such Additional Redemption Distribution by delivery of shares of Fleetwood Common Stock pursuant to this Section 1109(b) if and only if the following conditions shall have been satisfied: (1) The shares of Fleetwood Common Stock deliverable in payment of the Additional Redemption Distribution shall have a fair market value as of the applicable Conversion Date of not less than the Additional Redemption Distribution as determined by this Section 1109(b). For purposes of this Section 1109(b), the fair market value of shares of Fleetwood Common Stock shall be determined by the Company and shall be equal to 90% of the average of the Closing Price for the five consecutive Trading Days immediately preceding the second Trading Day prior to the applicable Conversion Date. (2) The Additional Redemption Distribution shall be paid only in cash in the event any shares of Fleetwood Common Stock to be issued for the payment of the Additional Redemption Distribution hereunder (i) require registration under any federal securities law before such shares may be freely transferable without being subject to any transfer restrictions under the Securities Act upon issuance and if such registration is not completed or does not become effective prior to the applicable Conversion Date, and/or (ii) require registration with or approval of any governmental authority under any state law or other federal law before such shares may be validly issued or delivered upon issuance and if such registration is not completed or does not become effective or such approval is not obtained prior to the applicable Conversion Date; (3) The Fleetwood Common Stock is, or shall have been, approved for quotation on the Nasdaq National Market or listing on the New York Stock Exchange, in either case, prior to the applicable Conversion Date; and (4) All shares of Fleetwood Common Stock which may be issued with respect to the payment of the Additional Redemption Distribution will be issued out of the Company's 50 authorized but unissued Common Stock and, will upon issue, be duly and validly issued and fully paid and non-assessable and free of any preemptive rights. If all of the conditions set forth in the preceding paragraph are not satisfied in accordance with the terms thereof, the Additional Redemption Distribution required to be paid or duly provided for by the Company pursuant to this Section shall be paid by the Company only in cash. In the event of such conversion prior to February 15, 2004 during the period following a notice of redemption and prior to the Redemption Date, the Company shall issue and deliver a certificate or certificates for the number of full shares of Fleetwood Common Stock issuable upon conversion of the Securities and the Additional Redemption Distribution, if any, due on such Securities, along with any cash in respect of any fractional shares of Fleetwood Common stock otherwise issuable upon conversion or in the event that the Company elects to pay Additional Redemption Distribution, if any, in Fleetwood Common Stock instead of cash, for payment to the Holder as promptly on or after the applicable Conversion Date as practicable in accordance with the provisions of Article Thirteen. So long as any Trust Securities are outstanding, (a) the proceeds from the redemption of the Securities will be used to redeem Trust Securities having an aggregate liquidation amount equal to the aggregate principal amount of the Securities so redeemed and (b) any Additional Redemption Distributions shall be used as distributions to holders of Trust Securities that are converted prior to a redemption of Trust Securities occurring before February 15, 2004. The Redemption Price for the Securities to be redeemed shall be paid on the Redemption Date or at such earlier time as the Company determines; provided that the Company shall deposit with the Trustee an amount sufficient to pay the Redemption Price on the date such Redemption Price is to be paid. SECTION 1110. TAX EVENT REDEMPTION. If a Tax Event has occurred and is continuing, and after receiving a Dissolution Tax Opinion, the Regular Trustees shall have been informed by tax counsel rendering the Dissolution Tax Opinion that a No Recognition Opinion cannot be delivered to the Trust, then the Company shall have the right, upon not less than 30 days nor more than 60 days notice to the Holders of the Securities, to redeem the Securities, in whole or in part for cash, at a redemption price equal to 100% of the principal amount thereof plus accrued and unpaid interest thereon (including, to the extent permitted by applicable law, Additional Payments, if any) to but excluding the date of such redemption, within 90 days following the occurrence of such Tax Event (the "90-Day Period"); PROVIDED, HOWEVER, that if at the time there is available to the Company or the Trust the opportunity to eliminate, within such 90-Day Period, the Tax Event by taking some ministerial action, such as filing a form or making an election, or pursuing some other similar reasonable measure that in the sole judgment of the Company has or will cause no adverse effect on the Company, the Trust or the holders of the Trust Securities and will involve no material costs, the Company or the Trust will pursue such ministerial action in lieu of redemption. 51 SECTION 1111. CERTAIN LIMITATIONS ON REDEMPTION. (a) If a partial redemption of the Securities would result in the delisting of the Preferred Securities issued by the Trust from any national securities exchange or other organization on which the Preferred Securities are listed, the Company shall not be permitted to effect such partial redemption and may only redeem the Securities in whole. (b) The Company may not redeem any Securities unless all accrued and unpaid interest thereon (including, to the extent permitted by law, Additional Payments, if any) has been or is contemporaneously paid (or duly provided for) for all quarterly interest payment periods terminating on or prior to the date of notice of redemption. ARTICLE TWELVE SUBORDINATION OF SECURITIES SECTION 1201. AGREEMENT TO SUBORDINATE. The Company covenants and agrees, and each Holder of Securities by such Holder's acceptance thereof likewise covenants and agrees, that all Securities shall be issued subject to the provisions of this Article Twelve; and each Holder of a Security, whether upon original issue or upon transfer or assignment thereof, accepts and agrees to be bound by such provisions. The payment by the Company of the principal of, premium, if any, interest (including any Additional Payments) and Additional Redemption Distributions, if any, on all Securities issued hereunder shall, to the extent and in the manner hereinafter set forth, be subordinated and junior in right of payment to the prior payment in full of all Senior Indebtedness, whether outstanding at the date of this Indenture or thereafter incurred; PROVIDED, HOWEVER, that no provision of this Article Twelve shall prevent the occurrence of any default or Event of Default hereunder. SECTION 1202. DEFAULT ON SENIOR INDEBTEDNESS. No payment of principal (including redemption payments) of, or premium, if any, or interest (including any Additional Interest or Compound Interest) or Additional Redemption Distributions, if any, on the Securities may be made if there shall have occurred and be continuing (i) a default in the payment when due of principal of, premium, if any, sinking funds, if any, or interest, if any, on any Senior Indebtedness of the Company and any applicable grace period with respect to such default shall have ended without such default having been cured or waived or ceasing to exist or (ii) an event of default with respect to any Senior Indebtedness of the Company resulting in the acceleration of the maturity thereof without such acceleration having been rescinded or annulled. In the event that, notwithstanding the foregoing, any payment shall be received by the Trustee when such payment is prohibited by the preceding paragraph of this Section 1202, such payment shall be held in trust for the benefit of, and shall be paid over or delivered to, the holders of Senior Indebtedness or their respective representatives, or to the trustee or trustees under any indenture pursuant to which any of such Senior Indebtedness may have been issued, as their respective interests may appear, but only to the extent that the holders of the Senior Indebtedness (or their representative or representatives or a trustee) notify the Trustee within 90 days of such payment of the amounts then due and owing on the Senior Indebtedness and only 52 the amounts specified in such notice to the Trustee shall be paid to the holders of Senior Indebtedness. SECTION 1203. LIQUIDATION; DISSOLUTION; BANKRUPTCY. Upon any payment by the Company or distribution of assets of the Company of any kind or character, whether in cash, property or securities, to creditors upon any dissolution winding up, liquidation or reorganization of the Company, whether voluntary or involuntary, or in bankruptcy, insolvency, receivership or other proceedings, all amounts (including principal, premium, if any, and interest) due or to become due upon all Senior Indebtedness shall first be paid in full, or payment thereof provided for in money in accordance with its terms, before any payment is made on account of the principal (and premium, if any) or interest (including any Additional Payments) or Additional Redemption Distributions on the Securities; and upon any such dissolution winding up, liquidation or reorganization, any payment by the Company, or distribution of assets of the Company of any kind or character, whether in cash, property or securities, to which the Holders of the Securities or the Trustee would be entitled, except for the provisions of this Article Twelve, shall be paid by the Company or by any receiver, trustee in bankruptcy, liquidating trustee, agent or other Person making such payment or distribution, or by the Holders of the Securities or by the Trustee under this Indenture if received by them or it, directly to the holders of Senior Indebtedness (pro rata to such holders on the basis of the respective amounts of Senior Indebtedness held by such holders, as calculated by the Company) or their representative or representatives, or to the trustee or trustees under any indenture pursuant to which any instruments evidencing such Senior Indebtedness may have been issued, as their respective interests may appear, to the extent necessary to pay such Senior Indebtedness in full, in money or money's worth, after giving effect to any concurrent payment or distribution to or for the holders of such Senior Indebtedness, before any payment or distribution is made to the Holders of Securities or to the Trustee. In the event that, notwithstanding the foregoing, any payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities, prohibited by the foregoing, shall be received by the Trustee or the Holders of the Securities before all Senior Indebtedness is paid in full, or provision is made for such payment in money in accordance with its terms, such payment or distribution shall be held in trust for the benefit of and shall be paid over or delivered to the holders of Senior Indebtedness or their representative or representatives, or to the trustee or trustees under any indenture pursuant to which any instruments evidencing such Senior Indebtedness may have been issued, and their respective interests may appear, as calculated by the Company, for application to the payment of all Senior Indebtedness remaining unpaid to the extent necessary to pay such Senior Indebtedness in full in money in accordance with its terms, after giving effect to any concurrent payment or distribution to or for the holders of such Senior Indebtedness. For purposes of this Article Twelve, the words "cash, property or securities" shall not be deemed to include shares of stock of the Company as reorganized or readjusted, or securities of the Company or any other corporation provided for by a plan of reorganization or readjustment, the payment of which is subordinated at least to the extent provided in this Article Twelve with respect to the Securities to the payment of all Senior Indebtedness that may at the time be outstanding; PROVIDED, that (i) such Senior Indebtedness is assumed by the new corporation, if 53 any, resulting from any such reorganization or readjustment, and (ii) the rights of the holders of such Senior Indebtedness are not, without the consent of such holders, altered by such reorganization or readjustment. The consolidation of the Company with, or the merger of the Company with or into, another Person or the liquidation or dissolution of the Company following the conveyance, transfer or lease of all or substantially all its properties and assets on a consolidated basis to another Person upon the terms and conditions provided for in Article Eight hereof shall not be deemed a dissolution, winding up, liquidation or reorganization for the purposes of this Section 1203 if such other Person shall, as a part of such consolidation, merger, conveyance, transfer or lease, comply with the conditions stated in Article Eight hereof. Nothing in Section 1202 or in this Section 1203 shall apply to claims of, or payments to, the Trustee under or pursuant to Section 607 hereof. SECTION 1204. SUBROGATION. Subject to the payment in full of all Senior Indebtedness, the rights of the Holders of the Securities shall be subrogated to the rights of the holders of such Senior Indebtedness to receive payments or distributions of cash, property or securities of the Company, as the case may be, applicable to such Senior Indebtedness until the principal of (and premium, if any) and interest (including any Additional Payments) on the Securities shall be paid in full; and, for the purposes of such subrogation, no payments or distributions to the holders of such Senior Indebtedness of any cash, property or securities to which the Holders of the Securities or the Trustee would be entitled except for the provisions of this Article Twelve, and no payment over pursuant to the provisions of this Article Twelve, to or for the benefit of the holders of such Senior Indebtedness by Holders of the Securities or the Trustee, shall, as between the Company, its creditors other than holders of Senior Indebtedness, and the Holders of the Securities, be deemed to be a payment by the Company to or on account of such Senior Indebtedness. It is understood that the provisions of this Article Twelve are and are intended solely for the purposes of defining the relative rights of the Holders of the Securities, on the one hand, and the holders of such Senior Indebtedness on the other hand. Nothing contained in this Article Twelve or elsewhere in this Indenture or in the Securities is intended to or shall impair, as between the Company, its creditors other than the holders of Senior Indebtedness, and the Holders of the Securities, the obligation of the Company, which is absolute and unconditional, to pay to the Holders of the Securities the principal of (and premium, if any) and interest (including any Additional Payments) and Additional Redemption Distributions, if any, on the Securities as and when the same shall become due and payable in accordance with their terms (except as permitted by Section 312), or is intended to or shall affect the relative rights of the Holders of the Securities and creditors of the Company, as the case may be, other than the holders of Senior Indebtedness, nor shall anything herein or therein prevent the Trustee or the Holder of any Security from exercising all remedies otherwise permitted by applicable law upon default under this Indenture, subject to the rights, if any, under this Article Twelve of the holders of such Senior Indebtedness in respect of cash, property or securities of the Company, as the case may be, received upon the exercise of any such remedy. Upon any payment or distribution of assets of the Company referred to in this Article Twelve, the Trustee, subject to the provisions of Section 603, and the Holders of the Securities shall be entitled to rely conclusively upon any order or decree made by any court of competent 54 jurisdiction in which such dissolution, winding up, liquidation or reorganization proceedings are pending, or a certificate of the receiver, trustee in bankruptcy, liquidation trustee, agent or other Person making such payment or distribution, delivered to the Trustee or to the Holders of the Securities, for the purposes of ascertaining the Persons entitled to participate in such distribution, the holders of the Senior Indebtedness and other indebtedness of the Company, as the case may be, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article Twelve. SECTION 1205. TRUSTEE TO EFFECTUATE SUBORDINATION. Each Holder of Securities, by such Holder's acceptance thereof, authorizes and directs the Trustee, on such Holder's behalf, to take such action as may be necessary or appropriate to effectuate the subordination provided in this Article Twelve and appoints the Trustee as such Holder's attorney-in-fact for any and all such purposes. SECTION 1206. NOTICE BY THE COMPANY. The Company shall give prompt written notice to a Responsible Officer of the Trustee of any fact known to the Company that would prohibit the making of any payment of moneys to or by the Trustee in respect of the Securities pursuant to the provisions of this Article Twelve. Notwithstanding the provisions of this Article Twelve or any other provision of this Indenture, the Trustee shall not be charged with knowledge of the existence of any facts that would prohibit the making of any payment of moneys to or by the Trustee in respect of the Securities pursuant to the provision of this Article Twelve, unless and until a Responsible Officer of the Trustee shall have received written notice thereof at the Corporate Trust Office of the Trustee from the Company or a holder or holders of Senior Indebtedness or from any trustee therefor; and before the receipt of any such written notice, the Trustee, subject to the provisions of Section 603 hereof, shall be entitled in all respects to assume that no such facts exist; PROVIDED, HOWEVER, that if the Trustee shall not have received the notice provided for in this Section 1206 at least two Business Days prior to the date upon which by the terms hereof any money may become payable for any purpose (including, without limitation, the payment of the principal of (and premium, if any), interest (including any Additional Payments) or Additional Redemption Distributions, if any, on any Security), then, anything herein contained to the contrary notwithstanding, the Trustee shall have full power and authority to receive such money and to apply the same to the purposes for which they were received, and shall not be affected by any notice to the contrary that may be received by it within two Business Days prior to such date. The Trustee, subject to the provisions of Section 603, shall be entitled to rely on the delivery to it of a written notice by a Person representing himself to be a holder of Senior Indebtedness (or a trustee on behalf of such holder) to establish that such notice has been given by a holder of such Senior Indebtedness or a trustee on behalf of any such holder or holders. In the event that the Trustee determines in good faith that further evidence is required with respect to the right of any Person as a holder of Senior Indebtedness to participate in any payment or distribution pursuant to this Article Twelve, the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and any other facts pertinent to the right of such Person under this Article Twelve, 55 and, if such evidence is not furnished, the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment. SECTION 1207. RIGHTS OF THE TRUSTEE; HOLDERS OF SENIOR INDEBTEDNESS. The Trustee in its individual capacity shall be entitled to all the rights set forth in this Article Twelve in respect of any Senior Indebtedness at any time held by it, to the same extent as any other holder of Senior Indebtedness, and nothing in this Indenture shall deprive the Trustee of any of its rights as such holder. With respect to the holders of Senior Indebtedness of the Company, the Trustee undertakes to perform or to observe only such of its covenants and obligations as are set forth in this Article Twelve, and no implied covenants or obligations with respect to the holders of such Senior Indebtedness shall be read into this Indenture against the Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the holders of such Senior Indebtedness and, subject to the provisions of Section 603, the Trustee shall not be liable to any holder of such Senior Indebtedness if it shall pay over or deliver to Holders of Securities, the Company or any other Person money or assets to which any holder of such Senior Indebtedness shall be entitled by virtue of this Article Twelve or otherwise. With respect to the holders of Senior Indebtedness, the Trustee undertakes to perform or to observe only such of its covenants or obligations as are specifically set forth in this Article Twelve and no implied covenants or obligations with respect to holders of Senior Indebtedness shall be read into this Indenture against the Trustee. SECTION 1208. SUBORDINATION MAY NOT BE IMPAIRED. No right of any present or future holder of any Senior Indebtedness to enforce subordination as herein provided shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Company or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by the Company with the terms, provisions and covenants of this Indenture, regardless of any knowledge thereof that any such holder may have or otherwise be charged with. Without in any way limiting the generality of the foregoing paragraph, the holders of Senior Indebtedness may, at any time and from time to time, without the consent of or notice to the Trustee or the Holders of the Securities, without incurring responsibility to the holders of the Securities and without impairing or releasing the subordination provided in this Article Twelve or the obligations hereunder of the Holders of the Securities to the holders of Senior Indebtedness, do any one or more of the following: (i) change the manner, place or terms of payment or extend the time of payment of, or renew or alter, such Senior Indebtedness, or otherwise amend or supplement in any manner such Senior Indebtedness or any instrument evidencing the same or any agreement under which such Senior Indebtedness is outstanding; (ii) sell, exchange, release or otherwise deal with any property pledged, mortgaged or otherwise securing such Senior Indebtedness; (iii) release any Person liable in any manner for the collection of such Senior Indebtedness; and (iv) exercise or refrain from exercising any rights against the Company and any other Person. 56 ARTICLE THIRTEEN CONVERSION OF SECURITIES SECTION 1301. CONVERSION RIGHTS. Subject to and upon compliance with the provisions of this Article Thirteen, the Securities are convertible, at the option of the Holders, at any time prior to the close of business on [_________________] (or in the case of Securities called for redemption, prior to the close of business on the Business Day prior to the corresponding Redemption Date), into shares of Fleetwood Common Stock at an initial conversion price of $[___] per share of Fleetwood Common Stock, subject to adjustment as described in this Article Thirteen (the "Conversion Price"). A Holder of Securities may convert any portion of the principal amount of the Securities (provided that such principal amount is $22 or an integral multiple thereof) into that number of fully paid and nonassessable shares of Fleetwood Common Stock obtained by dividing the principal amount of the Securities to be converted by the Conversion Price in effect at the close of business on the Conversion Date. All calculations under this Article Thirteen shall be made to the nearest cent or to the nearest 1/100th of a share, as the case may be, with one-half of a cent and 0.005 of a share being rounded upwards to the nearest cent and 1/100th of a share, respectively. SECTION 1302. CONVERSION PROCEDURES. (a) In order to convert all or a portion of the Securities (provided that such principal amount is $22 or an integral multiple thereof) the Holder thereof shall deliver to the Conversion Agent an irrevocable notice of conversion in substantially the form appearing as part of Exhibit A-l hereto or, in the case of a notice of conversion delivered by a holder of Trust Securities, in substantially the form appearing in Exhibit A-l, as the case may be, of the Declaration (each, a "Notice of Conversion") setting forth the principal amount of Securities to be converted, together with the name or names, if other than the Holder, in which the shares of Fleetwood Common Stock should be issued upon conversion and, if such Securities are definitive Securities, surrender to the Conversion Agent the Securities to be converted, duly endorsed or assigned to the Company or in blank. In addition, a holder of Trust Securities may exercise its right under the Declaration to convert such Trust Securities into Fleetwood Common Stock by delivering to the Conversion Agent an irrevocable Notice of Conversion setting forth the number of Trust Securities to be redeemed and the other information called for by the preceding sentence and directing the Conversion Agent (i) to exchange such Trust Securities for a portion of the Securities held by the Trust (at an exchange rate of $22 principal amount of Securities for each Trust Security) and (ii) to convert such Securities as soon as practicable, on behalf of such holder, into Fleetwood Common Stock pursuant to this Article Thirteen and, if such Trust Securities are in definitive form, surrendering to the Conversion Agent such Trust Securities, duly endorsed or assigned to the Company or in blank. So long as any Trust Securities are outstanding, the Trust shall not convert any Securities except pursuant to a Notice of Conversion delivered to the Conversion Agent by a holder of Trust Securities. (b) If a Security is surrendered for conversion after the close of business on any record date for payment of interest thereon and before the opening of business on the corresponding payment date (other than a Security or portion of a Security called for redemption on a Redemption Date occurring after such record date and prior to such payment date), then, 57 notwithstanding such conversion, the interest payable on such payment date will be paid to the Trust which will distribute such interest to the holder of the applicable Trust Securities at the close of business on the record date or to such other Person in whose name such Security is registered at the close of business on such record date, as the case may be, despite such conversion, and (other than a Security or a portion of a Security called for redemption on a Redemption Date occurring after such record date and on or prior to such payment date) when so surrendered for conversion, the Security need not be accompanied by payment of an amount in cash equal to the interest payable on such payment date. Except as otherwise provided in the immediately preceding sentence, in the case of any Security that is converted, interest that would otherwise be due and payable after the date of conversion of such Security shall not be payable, and the Company shall not make nor be required to make any other payment, adjustment or allowance with respect to accrued but unpaid interest on the Securities being converted, which shall be deemed to be paid in full. Each conversion shall be deemed to have been effected immediately prior to the close of business on the day (the "Conversion Date") on which the Notice of Conversion (together with, if required by the preceding paragraph, certificates, duly endorsed or assigned to the Company or in blank, evidencing the Trust Securities or Securities, as the case may be, being surrendered for conversion) was received by the Conversion Agent from (x) a holder of the Trust Securities effecting a conversion thereof pursuant to its conversion rights under the Declaration or (y) if the Securities shall have been distributed to holders of Trust Securities following the occurrence of a Special Event, when received by the Conversion Agent from the Holder effecting the conversion thereof pursuant to its conversion rights under the Indenture, as the case may be. The Person or Persons entitled to receive the Fleetwood Common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such Fleetwood Common Stock as of the Conversion Date. As promptly as practicable on or after the Conversion Date, the Company shall issue and deliver at the office of the Conversion Agent, unless otherwise directed in the Notice of Conversion, a certificate or certificates for the number of full shares of Fleetwood Common Stock issuable upon such conversion, together with the cash payment, if any, in lieu of any fraction of any share to the Person or Persons entitled to receive the same. The Conversion Agent shall deliver such certificate or certificates to such Person or Persons. (c) The Company's delivery upon conversion of the fixed number of shares of Fleetwood Common Stock into which the Securities are convertible (together with the cash payment, if any, in lieu of fractional shares) shall be deemed to satisfy the Company's obligation to pay the principal amount at maturity of the Securities so converted and any unpaid interest (including Additional Interest) accrued on such Securities at the time of such conversion; PROVIDED, that if any Security is surrendered for conversion after the close of business on a record date for payment of interest and before the opening of business on the corresponding interest payment date, the interest payable on such interest payment date with respect to such Security shall be paid to the Trust (which will distribute such interest to the holder of the applicable Trust Securities at the close of business on such record date) or to such other person in whose name the Securities are registered at the close of business on such record date, as the case may be, despite such conversion. The Company will make no payment or allowance for distributions on the shares of Fleetwood Common Stock issued upon such conversion, except to the extent that such shares of Fleetwood Common Stock are held of record on the record date for any such distributions. Each conversion will be deemed to have been effected immediately prior to the 58 close of business on the day on which the related conversion notice was received by the Conversion Agent. (d) No fractional shares of Fleetwood Common Stock will be issued as a result of conversion, but in lieu thereof, the Company shall pay to the Conversion Agent a cash adjustment in an amount equal to the same fraction of the Closing Price of such fractional interest on the applicable Conversion Date, or, if such day is not a Trading Day, on the preceding Trading Day, and the Conversion Agent in turn will make such payment, if any, to the Holder of the Securities or the holder of the Trust Securities, as the case may be, so converted. (e) In the event of the conversion of any Security in part only, a new Security or Securities for the unconverted portion thereof will be issued in the name of the Holder thereof upon the cancellation thereof. (f) In effecting the conversion transactions described in this Section 1302, the Conversion Agent is acting as agent of the holders of Trust Securities (in the exchange of Trust Securities for Securities) and as agent of the Holders of Securities (in the conversion of Securities into Fleetwood Common Stock), as the case may be. The Conversion Agent is hereby authorized (i) to exchange Securities held by the Trust from time to time for Trust Securities in connection with the conversion of such Trust Securities in accordance with this Article Thirteen and (ii) to convert all or a portion of the Securities into Fleetwood Common Stock and thereupon to deliver such shares of Fleetwood Common Stock in accordance with the provisions of this Article Thirteen and to deliver to the Person entitled thereto a new Security or Securities for any resulting unconverted principal amount. SECTION 1303. CONVERSION PRICE ADJUSTMENTS. (a) The Conversion Price shall be adjusted from time to time as follows: (i) In case the Company shall pay or make a dividend or other distribution on Fleetwood Common Stock in shares of Fleetwood Common Stock, then the Conversion Price in effect at the opening of business on the day following the date fixed for the determination of shareholders entitled to receive such dividend or other distribution shall be reduced by multiplying such Conversion Price, by a fraction the numerator of which shall be the number of shares of Fleetwood Common Stock outstanding at the close of business on the date fixed for such determination and the denominator of which shall be the sum of such number of shares and the total number of shares constituting such dividend or other distribution, such reduction to become effective immediately after the opening of business on the day following the date fixed for such determination. For the purposes of this subparagraph (i), the number of shares of Fleetwood Common Stock at any time outstanding shall not include shares held in the treasury of the Company (except to the extent such dividend or distribution is being made with respect to such shares) but shall include shares issuable in respect of scrip certificates issued in lieu of fractions of shares of Fleetwood Common Stock. In the event that an adjustment is made pursuant to this subparagraph (i) and, thereafter, the relevant distribution or dividend is not made, the Conversion Price shall again be adjusted to be the Conversion Price that would then be in effect if no such adjustment had been made. 59 (ii) In case the outstanding shares of Fleetwood Common Stock shall be subdivided or reclassified (in a reclassification that does not constitute a Fundamental Change) into a greater number of shares of Fleetwood Common Stock, then the Conversion Price in effect at the opening of business on the day following the day upon which such subdivision becomes effective shall be proportionately reduced, and, conversely, in case the outstanding shares of Fleetwood Common Stock shall be combined into a smaller amount of shares of Fleetwood Common Stock, then the Conversion Price in effect at the opening of business on the day following the day upon which such combination becomes effective shall be proportionately increased, such reduction or increase, as the case may be, to become effective immediately after the opening of business on the day following the day upon which such subdivision or combination becomes effective. (iii) In case the Company shall issue rights or warrants to all holders of Fleetwood Common Stock entitling them (for a period expiring within 45 days after the record date fixed for a distribution of such rights or warrants) to subscribe for or purchase shares of Fleetwood Common Stock at a price per share less than the Current Market Price (as hereinafter defined) (determined as provided in subparagraph (vii) below) of Fleetwood Common Stock on the date fixed for the determination of shareholders entitled to receive such rights or warrants (other than pursuant to a dividend reinvestment or similar plan), then the Conversion Price in effect at the opening of business on the day following the date fixed for such determination shall be reduced by multiplying such Conversion Price by a fraction, the numerator of which shall be the number of shares of Fleetwood Common Stock outstanding at the close of business on the date fixed for such determination plus the number of shares of Fleetwood Common Stock which the aggregate of the offering price of the total number of shares of Fleetwood Common Stock so offered for subscription or purchase would purchase at such Current Market Price and the denominator shall be the number of shares of Fleetwood Common Stock outstanding at the close of business on the date fixed for such determination plus the number of shares of Fleetwood Common Stock so offered for subscription or purchase, such reduction to become effective immediately after the opening of business on the day following the date fixed for such determination. For the purposes of this subparagraph (iii), the number of shares of Fleetwood Common Stock at any time outstanding shall not include shares held in the treasury of the Company but shall include shares issuable in respect of scrip certificates issued in lieu of fractions of shares of Fleetwood Common Stock. The Company agrees not to issue any rights or warrants in respect of shares of Fleetwood Common Stock held in the treasury of the Company. To the extent that shares of Fleetwood Common Stock are not delivered after the expiration or redemption by the Company of such rights or warrants, the Conversion Price shall be readjusted to the Conversion Price which would then be in effect had the adjustments made in respect of the issuance of such rights or warrants been made on the basis of delivery of only the number of shares of Fleetwood Common Stock actually delivered. (iv) Subject to the second sentence of this subparagraph (iv), in case the Company shall, by dividend or otherwise, distribute to all holders of Fleetwood Common Stock (A) shares of capital stock of the Company (other than Fleetwood Common Stock), (B) evidences of indebtedness of the Company and/or (C) other assets (including 60 securities, but excluding (1) any rights or warrants referred to in subparagraph (iii) above, (2) any rights or warrants to acquire capital stock of any Person other than the Company or any subsidiary of the Company, (3) any dividends or distributions in connection with the liquidation, dissolution or winding-up of the Company, (4) any dividends or distributions payable solely in cash that may from time to time be fixed by the Board of Directors, and (5) any dividends or distributions referred to in subparagraph (i) or (ii) above, then in each case (unless the Company makes the election referred to in the next sentence) the Conversion Price shall be adjusted so that the same shall equal the price determined by multiplying the Conversion Price in effect immediately prior to the effectiveness of the Conversion Price adjustment contemplated by this subparagraph (iv) by a fraction, the numerator of which shall be the Current Market Price (determined as provided in subparagraph (vii) below) of the Fleetwood Common Stock on the date fixed for payment of such distribution (the "Reference Date"), less the fair market value on the Reference Date (as determined in good faith by the Board of Directors, whose determination shall be conclusive and shall be described in a statement filed with the Trustee) of the portion of the shares of capital stock of the Company, evidences of indebtedness or other assets so distributed (and for which an adjustment to the Conversion Price has not been made previously pursuant to the terms of this Article Thirteen) applicable to one share of Fleetwood Common Stock and the denominator shall be such Current Market Price of the Fleetwood Common Stock, such adjustment to become effective immediately prior to the opening of business on the day following the Reference Date. However, the Company may elect, in its sole discretion, in lieu of the foregoing adjustment, to make adequate provision so that each Holder of Securities shall have the right to receive upon conversion thereof the amount and kind of shares of capital stock, evidences of indebtedness or other assets such Holder would have received had such Holder converted such shares immediately prior to the Reference Date. In the event that no such dividend or distribution is so paid or made, the Conversion Price shall again be adjusted to be the Conversion Price that would then be in effect if such dividend or distribution had not occurred. If the Board of Directors determines the fair market value of any distribution for purposes of this subparagraph (iv) by reference to the actual or when issued trading market for any securities (including shares of capital stock or evidence of indebtedness of the Company) comprising such distribution, it must in doing so consider the price in such market over the period used in computing the Current Market Price of the Fleetwood Common Stock or, if shorter, the portion of such period during which a trading market for such securities existed. For purposes of this subparagraph (iv), any dividend or distribution that includes both (x) any of the items described in clauses (A), (B) or (C) of the first sentence of this subparagraph (iv) and (y) Fleetwood Common Stock or rights or warrants to subscribe for or purchase Fleetwood Common Stock of the type referred to in subparagraph (iii) shall be deemed to be (1) a dividend or distribution of shares of capital stock of the Company (other than Fleetwood Common Stock), evidences of indebtedness of the Company or other assets of the type referred to in clause (C) of the first sentence of this subparagraph (iv) (making any Conversion Price reduction required by this subparagraph (iv)) immediately followed by (2) a dividend or distribution of such Fleetwood Common Stock or rights or warrants to purchase Fleetwood Common Stock of the type referred to in subparagraph (iii) (making any further Conversion Price reduction required by subparagraph (i) or (iii) of this 61 Section 1303(a)), except (A) the Reference Date of such dividend or distribution as defined in this subparagraph (iv) shall be substituted for "the date fixed for the determination of shareholders entitled to receive such dividend or other distribution," "the date fixed for the determination of shareholders entitled to receive such rights or warrants" and "the date fixed for such determination" within the meaning of subparagraphs (i) and (iii) of this Section 1303(a) and (B) any shares of Fleetwood Common Stock included in such dividend or distribution shall not be deemed "outstanding at the close of business on the date fixed for such determination" within the meaning of subparagraph (i) of this Section 1303(a). (v) In case the Company shall, by dividend or otherwise, at any time distribute cash to all holders of Fleetwood Common Stock, excluding (A) any cash dividends on Fleetwood Common Stock to the extent that the aggregate cash dividends per share of Fleetwood Common Stock in any consecutive 12-month period do not exceed the greater of (x) the amount per share of Fleetwood Common Stock of the cash dividends paid on the Fleetwood Common Stock in the immediately preceding 12-month period, to the extent that such dividends for the immediately preceding 12-month period did not require an adjustment to the Conversion Price pursuant to this subparagraph (v) (as adjusted to reflect subdivisions or combinations of the Fleetwood Common Stock) and (y) 15% of the average of the Current Market Price of Fleetwood Common Stock for the ten consecutive Trading Days immediately prior to the date of declaration of such dividend and (B) any dividend or distribution in connection with the liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary, or any redemption of Rights (as defined in subparagraph (viii) below); PROVIDED, HOWEVER, that no adjustment shall be made pursuant to this subparagraph (v) if such distribution would otherwise constitute a Fundamental Change (as hereinafter defined), then (unless the Company makes the election referred to in the proviso following this clause), the Conversion Price shall be reduced so that the same shall equal the price determined by multiplying the Conversion Price in effect immediately prior to the effectiveness of the Conversion Price reduction contemplated by this subparagraph (v) by a fraction, the numerator of which shall be the Closing Price of a share of Fleetwood Common Stock on the date fixed for the payment of such distribution less the amount of cash so distributed (to the extent not excluded as provided above) applicable to one share of Fleetwood Common Stock, and the denominator shall be such Closing Price of Fleetwood Common Stock, such reduction to become effective immediately prior to the opening of business on the day following the date fixed for the payment of such distribution; PROVIDED, HOWEVER, that the Company may elect, in its sole discretion, in lieu of the foregoing adjustment, to make adequate provision so that each Holder of Securities shall thereafter have the right to receive upon conversion the amount of cash such Holder would have received had such Holder converted such Securities immediately prior to the record date for such distribution of cash. If any adjustment is required to be made as set forth in this subparagraph (v) as a result of a distribution that is a dividend described in clause (A) of this subparagraph (v), such adjustment will be based upon the amount by which such distribution exceeds the amount of the dividend permitted to be excluded pursuant to such clause (A) of this subparagraph (v). If an adjustment is required to be made pursuant to this subparagraph (v) as a result of a distribution that is not such a dividend, such adjustment would be based upon the full amount of such distribution. In the event 62 that an adjustment is made pursuant to this subparagraph (v) and, thereafter, the relevant distribution or dividend is not made, the Conversion Price shall again be adjusted to be the Conversion Price that would then be in effect if no such adjustment had been made. (vi) In case of the consummation of a public tender offer or public exchange offer (other than an odd lot tender offer) made by the Company or any subsidiary of the Company for Fleetwood Common Stock to the extent that the cash and fair market value (as determined in good faith by the Board of Directors, whose determination shall be conclusive and shall be described in a resolution of such Board) of any other consideration included in such payment per share of Fleetwood Common Stock at the last time (the "Expiration Time") tenders or exchanges may be made pursuant to such tender or exchange offer (as amended if applicable) exceed by more than 10% (with any smaller excess being disregarded in computing the adjustment to the Conversion Price provided in this subparagraph (vi)) the first reported sale price (on the principal national securities exchange or quotation system on which the Fleetwood Common Stock is then traded) per share of Fleetwood Common Stock on the Trading Day next succeeding the Expiration Time, then the Conversion Price shall be reduced so that the same shall equal the price determined by multiplying the Conversion Price in effect immediately prior to the Expiration Time by a fraction the numerator of which shall be the number of shares of Fleetwood Common Stock outstanding (including any tendered or exchanged shares) at the Expiration Time multiplied by the first reported sale price (on such principal exchange or quotation system) of the Fleetwood Common Stock on the Trading Day next succeeding the Expiration Time and the denominator shall be the sum of (x) the fair market value (determined as aforesaid and subject to the last sentence of this paragraph) of the aggregate consideration payable to shareholders based on the acceptance (up to any maximum specified in the terms of the tender or exchange offer) of all shares validly tendered or exchanged and not withdrawn as of the Expiration Time (the shares deemed so accepted, up to any such maximum, being referred to as the "Purchased Shares") and (y) the product of the number of shares of Fleetwood Common Stock outstanding (less any Purchased Shares) at the Expiration Time and the first reported sale price (on such principal exchange or quotation system) of the Fleetwood Common Stock on the Trading Day next succeeding the Expiration Time, such reduction to become effective immediately prior to the opening of business on the day following the Expiration Time. If an adjustment is required to be made as set forth in this subparagraph (vi), the fair market value of the aggregate consideration payable to shareholders referred to in clause (x) of the preceding sentence shall be calculated by including only that portion of such fair market value of such consideration per share of Fleetwood Common Stock which exceeds 110% of the first reported sale price (determined as aforesaid) per share of Fleetwood Common Stock on the Trading Day next succeeding the Expiration Time. (vii) For the purpose of any computation under this Article Thirteen, the "Current Market Price" of Fleetwood Common Stock on any day shall be deemed to be the average of the daily Closing Prices (as hereinafter defined) of Fleetwood Common Stock for the ten consecutive Trading Days ending on the earlier of the day in question and, if applicable, the day before the "ex" date (as defined below) with respect to the issuance or distribution requiring such computation; PROVIDED, HOWEVER, that if more than one event occurs that would require an adjustment pursuant to subparagraphs (i) through 63 (vi), inclusive, of this Section 1303(a), the Board of Directors may make such adjustments to the Closing Prices during such ten Trading Day period as it deems appropriate to effectuate the intent of the adjustments in this Section 1303, in which case any such determination by the Board of Directors shall be set forth in a Board Resolution and shall be conclusive. For purposes of this paragraph, the term "ex" date, (1) when used with respect to any issuance or distribution, means the first date on which the Fleetwood Common Stock trades regular way on the New York Stock Exchange or on such successor principal securities exchange as the Fleetwood Common Stock may be listed or in the relevant market from which the Closing Prices were obtained without the right to receive such issuance or distribution, and (2) when used with respect to any tender or exchange offer, means the first date on which the Fleetwood Common Stock trades regular way on such principal securities exchange or in such market after the Expiration Time of such offer. (viii) No adjustment in the Conversion Price shall be required pursuant to this Section 1303(a) unless the adjustment would require a change of at least 1% in the Conversion Price then in effect; PROVIDED, HOWEVER, that any adjustment that by reason of this subparagraph (viii) is not required to be made shall be carried forward and taken into account in any subsequent adjustment. In addition, anything herein to the contrary notwithstanding, no adjustment to the Conversion Price will be required in connection with the issuance of rights or other similar instruments ("Rights") pursuant to a shareholder rights plan or similar plan or the repurchase or redemption of those rights or the issuance of common stock, options or other securities under any officer, director or employee benefit plan in existence on [_________], 2002. Except as otherwise expressly provided in subparagraph (iv) above, if any action pursuant to this Section 1303 would require adjustment of the Conversion Price pursuant to more than one of the provisions described above, only one adjustment shall be made and such adjustment shall be the amount of the adjustment that has the highest absolute value to the Holders of the Securities. All calculations shall be made to the nearest cent (with one-half of a cent being rounded upward) or to the nearest 1/100th of a share (with .005 of a share being rounded upward), as the case may be. Notwithstanding anything to the contrary in this Article Thirteen, the Company from time to time may, to the extent permitted by law, reduce the Conversion Price by any amount for any period of at least 20 Business Days, in which case the Company shall give at least 15 days' notice of such reduction to the holders of Securities and the Trustee. In particular, the Company may, at its option, make such reductions in the Conversion Price in addition to those set forth in this Article Thirteen, as it considers to be advisable in order to avoid or diminish any income tax to any holder of shares of Fleetwood Common Stock resulting from any dividend or distribution of stock or issuance of rights or warrants to purchase or subscribe for stock or from any event treated as such for income tax purposes or for any other reasons. Except as otherwise provided in this Section 1303(a), the Conversion Price will not be adjusted for the issuance of Fleetwood Common Stock or any securities convertible into or exchangeable for Fleetwood Common Stock or carrying the right to purchase any of the foregoing. (ix) In any case in which this Article Thirteen provides that an adjustment shall become effective immediately after a record date for an event, the Company may defer 64 until the occurrence of such event (A) issuing to the holder of any Securities converted after such record date and before the occurrence of such event the additional shares of Fleetwood Common Stock or other securities, cash or property issuable upon such conversion by reason of the adjustment required by such event over and above the Fleetwood Common Stock issuable upon such conversion before giving effect to such adjustment and (B) paying to such holder any amount in cash in lieu of any fractional shares pursuant to this Article Thirteen. (x) For purposes of this Indenture, "Fleetwood Common Stock" includes any stock of any class of the Company that has no preference in respect of dividends or of amounts payable in the event of any voluntary or involuntary liquidation, dissolution or winding-up of the Company and which is not subject to redemption by the Company. However, subject to the provisions of this Article Thirteen, shares issuable on conversion of Securities shall include only shares of the class designated as the common stock of the Company on the date of this Indenture or shares of any class or classes resulting from any reclassification or reclassifications thereof and that have no preference in respect of dividends or of amounts payable in the event of any voluntary or involuntary liquidation, dissolution or winding-up of the Company and that are not subject to redemption by the Company; PROVIDED, HOWEVER, that if at any time there shall be more than one such resulting class, the shares of each such class then so issuable shall be substantially in the proportion that the total number of shares of such class resulting from all such reclassifications bears to the total number of shares of all such classes resulting from all such reclassifications. (b) Whenever the Conversion Price is adjusted as herein provided: (i) the Company shall compute the adjusted Conversion Price and shall prepare a certificate signed by the Chief Financial Officer or the Treasurer of the Company setting forth the adjusted Conversion Price and showing in reasonable detail the facts upon which such adjustment is based, and such certificate shall forthwith be filed with the Trustee and, if different, the transfer agent for the Preferred Securities and the Securities; and (ii) a notice stating the Conversion Price has been adjusted and setting forth the adjusted Conversion Price shall as soon as practicable be mailed by the Company to all record holders of Preferred Securities and the Securities at their last addresses as they appear upon the stock transfer books of the Company and the Trust. SECTION 1304. ADJUSTMENT OF CONVERSION PRICE; FUNDAMENTAL CHANGE. (a) In the event that the Company shall be a party to any transaction or series of transactions constituting a Fundamental Change (as hereinafter defined) (including, without limitation, (i) any recapitalization or reclassification of Fleetwood Common Stock (other than a change in par value or a change from par value to no par value or from no par value to par value, or as a result of a subdivision or combination of the Fleetwood Common Stock); (ii) any consolidation or merger of the Company with or into another corporation as a result of which holders of Fleetwood Common Stock shall be entitled to receive securities or other property or 65 assets (including cash) with respect to or in exchange for Fleetwood Common Stock (other than a merger that does not result in a reclassification, conversion, exchange or cancellation of the outstanding Fleetwood Common Stock); (iii) any sale or transfer of all or substantially all of the assets of the Company; or (iv) any compulsory share exchange) pursuant to which holders of Fleetwood Common Stock shall be entitled to receive other securities, cash or other property, then appropriate provision shall be made so that the holder of each Security then outstanding shall have the right thereafter to convert such Security only into (A) if any such transaction does not constitute a Common Stock Fundamental Change (as hereinafter defined), the kind and amount of the securities, cash or other property that would have been receivable upon such recapitalization, reclassification, consolidation, merger, sale, transfer or share exchange by a holder of the number of shares of Fleetwood Common Stock issuable upon such conversion of such Security immediately prior to such recapitalization, reclassification, consolidation, merger, sale, transfer or share exchange, after, in the case of a Non-Stock Fundamental Change, giving effect to any adjustment in the Conversion Price in accordance with subparagraph (i) of Section 1304(c), and (B) if any such transaction constitutes a Common Stock Fundamental Change (as hereinafter defined), shares of common stock of the kind received by holders of Fleetwood Common Stock as a result of such Common Stock Fundamental Change in an amount determined in accordance with subparagraph (ii) of Section 1304(c). The company formed by such consolidation or resulting from such merger or which acquires such assets or which acquires the Fleetwood Common Stock, as the case may be, shall enter into a supplemental indenture with the Trustee, reasonably satisfactory in form to the Trustee and executed and delivered to the Trustee, the provisions of which shall establish such right. Such supplemental indenture shall provide for adjustments that, for events subsequent to the effective date of such supplemental indenture, shall be as nearly equivalent as practicable to the relevant adjustments provided for in this Article Thirteen. The above provisions shall similarly apply to successive recapitalizations, reclassifications, consolidations, mergers, sales, transfers or share exchanges. (b) Notwithstanding any other provisions in this Article Thirteen to the contrary, if any Fundamental Change (as hereinafter defined) occurs, then the Conversion Price in effect will be adjusted immediately after such Fundamental Change as described below in Section 1304(c). In addition, in the event of a Common Stock Fundamental Change, each Security shall be convertible solely into common stock of the kind received by holders of Fleetwood Common Stock as the result of such Common Stock Fundamental Change as more specifically provided below in Section 1304(c). (c) For purposes of calculating any adjustment to be made pursuant to this Article Thirteen in the event of a Fundamental Change, immediately following such Fundamental Change (and for such purposes a Fundamental Change shall be deemed to occur on the earlier of (a) the occurrence of such Fundamental Change and (b) the date, if any, fixed for determination of shareholders entitled to receive the cash, securities, property or other assets distributable in such Fundamental Change to holders of the Fleetwood Common Stock): (i) in the case of a Non-Stock Fundamental Change, the Conversion Price per share of Fleetwood Common Stock immediately following such Non-Stock Fundamental Change shall be the lower of (A) the Conversion Price in effect immediately prior to such Non-Stock Fundamental Change, but after giving effect to any other adjustments effected pursuant to this Article Thirteen, and (B) the product obtained by multiplying the greater 66 of the Applicable Price (as hereinafter defined) or the then applicable Reference Market Price (as hereinafter defined) by a fraction of which the numerator shall be 100.0 and the denominator of which shall be the amount set forth below based on the date on which such Non-Stock Fundamental Change occurs. For the period beginning [_________], 2002 and ending on February 14, 2003, the denominator shall be 109.50, and for each succeeding twelve month period beginning February 15 shall be as follows:
YEAR DENOMINATOR ---- ----------- 2003....................................................... 107.916 2004....................................................... 106.333 2005....................................................... 104.750 2006....................................................... 103.167 2007....................................................... 101.583 2008 and thereafter........................................ 100.000
(ii) in the case of a Common Stock Fundamental Change, the Conversion Price per share of Fleetwood Common Stock immediately following the Common Stock Fundamental Change shall be the Conversion Price in effect immediately prior to such Common Stock Fundamental Change, but after giving effect to any other adjustments effected pursuant to this Article Thirteen, multiplied by a fraction, the numerator of which is the Purchaser Stock Price (as hereinafter defined) and the denominator of which is the Applicable Price; PROVIDED, HOWEVER, that in the event of a Common Stock Fundamental Change in which (A) 100% of the value of the consideration received by a holder of Fleetwood Common Stock is common stock of the successor, acquiror or other third party (and cash, if any, paid with respect to any fractional interests in such common stock resulting from such Common Stock Fundamental Change) and (B) all of the Fleetwood Common Stock shall have been exchanged for, converted into, or acquired for common stock (and cash, if any, with respect to fractional interests) of the successor, acquiror or other third party, the Conversion Price per share of Fleetwood Common Stock immediately following such Common Stock Fundamental Change shall be the Conversion Price in effect immediately prior to such Common Stock Fundamental Change divided by the number of shares of common stock of the successor, acquiror, or other third party received by a holder of one share of Fleetwood Common Stock as a result of such Common Stock Fundamental Change. (d) The following definitions shall apply to terms used in this Article Thirteen: "Applicable Price" means (A) in the event of a Non-Stock Fundamental Change in which the holders of Fleetwood Common Stock receive only cash, the amount of cash receivable by a holder of one share of Fleetwood Common Stock; and (B) in the event of any other Fundamental Change, the average of the Closing Prices (as hereinafter defined) for one share of Fleetwood Common Stock during the ten Trading Days immediately prior to the record date for the determination of 67 the holders of Fleetwood Common Stock entitled to receive cash, securities, property or other assets in connection with such Fundamental Change or, if there is no such record date, prior to the date upon which the holders of Fleetwood Common Stock shall have the right to receive such cash, securities, property or other assets. "Closing Price" with respect to any securities on any day shall mean the last reported sale price, regular way, on such day or, in case no such sale takes place on such day, the average of the last reported closing bid and asked prices on such day, regular way, in each case on the New York Stock Exchange or, if such security is not listed or admitted to trading on the New York Stock Exchange, on the principal national securities exchange or quotation system on which such security is quoted or listed or admitted to trading or, if not quoted or listed or admitted to trading on any national securities exchange or quotation system, the average of the closing bid and asked prices of such security in the over-the-counter market on the date in question as reported by the National Quotation Bureau Incorporated, or a similarly generally accepted reporting service or, if not so available in such manner, as furnished by any New York Stock Exchange member firm selected from time to time by the Board of Directors for that purpose or a price determined in good faith by the Board of Directors. "Common Stock Fundamental Change" means any Fundamental Change in which more than 50% of the value (as determined in good faith by the Board of Directors) of the consideration received by the holders of Fleetwood Common Stock pursuant to such transactions consists of shares of common stock that, for the ten consecutive Trading Days immediately prior to such Fundamental Change, has been admitted for listing or admitted for listing subject to notice of issuance on a national securities exchange or quoted on the Nasdaq National Market; PROVIDED, HOWEVER, that a Fundamental Change shall not be a Common Stock Fundamental Change unless either (A) the Company continues to exist after the occurrence of such Fundamental Change and the outstanding Preferred Securities continue to exist as outstanding Preferred Securities (or, if the Securities have been distributed to holders of Trust Securities following a Dissolution Event, the outstanding Securities continue to exist as outstanding Securities), or (B) the outstanding Preferred Securities continue to exist as Preferred Securities and are convertible into shares of common stock of the successor to the Company (or, if the Securities have been distributed as aforesaid, the outstanding Securities continue to exist as Securities and are convertible into shares of common stock of the successor to the Company). "Fundamental Change" means the occurrence of any transaction or event, or series of transactions or events, pursuant to which all or substantially all of the Fleetwood Common Stock shall be exchanged for, converted into, acquired for or constitutes solely the right to receive, cash, securities, property or other assets (whether by means of an exchange offer, liquidation, tender offer, consolidation, merger, combination, reclassification, recapitalization or otherwise); PROVIDED, HOWEVER, in the case of any such series of transactions or events, for purposes of 68 adjustment of the Conversion Price, such Fundamental Change shall be deemed to have occurred when substantially all of the Fleetwood Common Stock had been exchanged for, converted into, or acquired for or constitutes solely the right to receive cash, securities, property or other assets, but the adjustment shall be based upon the consideration the holders of Fleetwood Common Stock received in such transaction or event as a result of which more than 50% of the Fleetwood Common Stock shall have been exchanged for, converted into, or acquired for, or shall constitute solely the right to receive cash, securities, property or other assets. "Non-Stock Fundamental Change" means any Fundamental Change other than a Common Stock Fundamental Change. "Purchaser Stock Price" means, with respect to any Common Stock Fundamental Change, the average of the Closing Prices for one share of the common stock received by holders of Fleetwood Common Stock in such Common Stock Fundamental Change during the ten Trading Days immediately prior to the record date for the determination of the holders of Fleetwood Common Stock entitled to receive such shares of common stock or, if there is no such record date, prior to the date upon which the holders of Fleetwood Common Stock shall have the right to receive such shares of common stock. "Reference Market Price" shall initially mean $[_____] and, in the event of any adjustment to the Conversion Price other than as a result of a Fundamental Change, the Reference Market Price shall also be adjusted so that the ratio of the Reference Market Price to the Conversion Price after giving effect to any such adjustment shall always be the same as the ratio of the initial Reference Market Price of $[_____] to the initial Conversion Price of $[____]. (e) In determining the amount and type of consideration received by a holder of Fleetwood Common Stock in the event of a Fundamental Change, consideration received by a holder of Fleetwood Common Stock pursuant to a statutory right of appraisal will be disregarded. SECTION 1305. NOTICE OF ADJUSTMENTS OF CONVERSION PRICE. In case: (i) the Company shall declare a dividend (or any other distribution) on Fleetwood Common Stock that would cause an adjustment to the Conversion Price of the Securities pursuant to Section 1303 (including such an adjustment that would occur but for the terms of the first sentence of Section 1303(a)(viii) above); or (ii) the outstanding shares of Fleetwood Common Stock shall be subdivided into a greater number of shares of Fleetwood Common Stock or combined into a smaller number of shares of Fleetwood Common Stock; or (iii) the Company shall authorize the granting to the holders of Fleetwood Common Stock generally of rights or warrants (for a period expiring within 45 days after 69 the record date fixed for a distribution of such rights and warrants) to subscribe for or purchase any shares of the Company's capital stock or other capital stock of any class or of any other rights (excluding any Rights); or (iv) of any reclassification of Fleetwood Common Stock (other than a subdivision or combination of the outstanding shares of Fleetwood Common Stock), or of any consolidation, merger or share exchange to which the Company is a party and for which approval of any shareholders of the Company is required, or of the sale or transfer of all or substantially all of the assets of the Company or a compulsory share exchange; or (v) of the voluntary or involuntary dissolution, liquidation or winding-up of the Company; then the Company shall (a) if any Preferred Securities are outstanding, cause to be filed with the transfer agent for the Preferred Securities and, except in a case described in paragraph (i) above, cause to be mailed to the holders of record of the Preferred Securities, at their last addresses as they shall appear upon the stock transfer books of the Trust, or (b) if the Securities shall have been distributed to holders of the Trust Securities in accordance with the terms of the Declaration following a Dissolution Event, cause to be mailed to all Holders at their last addresses as they shall appear in the Security Register, at least 15 days prior to the applicable record or effective date hereinafter specified, a notice stating (I) the date on which a record (if any) is to be taken for the purpose of such dividend, distribution, rights or warrants or, if a record is not to be taken, the date as of which the holders of Fleetwood Common Stock of record to be entitled to such dividend, distribution, rights or warrants are to be determined or (II) the date on which such reclassification, consolidation, merger, sale, transfer, share exchange, dissolution, liquidation or winding-up is expected to become effective, and the date as of which it is expected that holders of Fleetwood Common Stock of record shall be entitled to exchange their shares of Fleetwood Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer, share exchange, dissolution, liquidation or winding-up (but no failure to mail such notice or any defect therein or in the mailing thereof shall affect the validity of the corporate action required to be specified in such notice). SECTION 1306. COMPANY TO PROVIDE STOCK. The Company shall reserve, free from preemptive rights, out of its authorized but unissued shares, sufficient shares, as determined by the Conversion Price as of the date hereof, to provide for (i) the election by the Company to pay interest in Fleetwood Common Stock pursuant to Section 301, (ii) the payment of Additional Redemption Distributions, if any, in Fleetwood Common Stock pursuant to Section 1109, and (iii) the conversion of the Securities from time to time as such Securities are presented for conversion, provided, that nothing contained herein shall be construed to preclude the Company from satisfying its obligations in respect of the conversion of Securities by delivery of repurchased shares of Fleetwood Common Stock that are held in the treasury of the Company. If any shares of Fleetwood Common Stock to be reserved for the purpose of payment of interest or Additional Redemption Distributions, if any, or conversion of Securities hereunder 70 require registration with or approval of any governmental authority under any federal or state law before such shares may be validly issued or delivered upon such payment of interest or Additional Redemption Distributions, if any, or conversion, then the Company covenants that it will in good faith and as expeditiously as possible endeavor to secure such registration or approval, as the case may be, provided, however, that nothing in this Section 1306 shall be deemed to affect in any way the obligations of the Company to convert Securities into Fleetwood Common Stock as provided in this Article Thirteen. Before taking any action that would cause an adjustment reducing the Conversion Price below the then par value, if any, of the Fleetwood Common Stock, the Company will take all corporate action that may, in the Opinion of Counsel, be necessary in order that the Company may validly and legally issue fully paid and nonassessable shares of Fleetwood Common Stock at such adjusted Conversion Price. The Company covenants that all shares of Fleetwood Common Stock that may be issued upon payment of interest or Additional Redemption Distributions, if any, or conversion of Securities will upon issue be fully paid and nonassessable by the Company and free of preemptive rights. SECTION 1307. EMPLOYEE BENEFIT PLANS. Notwithstanding the provisions of this Article Thirteen, the issuance of any shares of Fleetwood Common Stock or options or other securities pursuant to any option, warrant, right or exercisable, exchangeable or convertible security outstanding as of the date of this Indenture or pursuant to any present or future officer, director or employee benefit plan or program of the Company shall not give rise to an adjustment in the Conversion Price pursuant to this Article Thirteen. There shall also be no adjustment of the Conversion Price (i) in case of the issuance of any stock (or securities convertible into or exchangeable for stock) of the Company except as specifically described in this Article Thirteen, (ii) as the result of the issuance of Fleetwood Common Stock upon conversion of the Trust Securities or the Securities or (iii) as the result of the issuance or redemption of Rights. SECTION 1308. CERTAIN ADDITIONAL RIGHTS. In case the Company shall, by dividend or otherwise, declare or make a distribution on the Fleetwood Common Stock referred to in Section 1303(a)(iv) and (v) (including, without limitation, dividends or distributions referred to in the last sentence of Section 1303(a)(iv)), the Holder of the Securities, upon the conversion thereof subsequent to the close of business on the date fixed for the determination of stockholders entitled to receive such distribution and prior to the effectiveness of the Conversion Price adjustment in respect of such distribution, shall also be entitled to receive for each share of Fleetwood Common Stock into which the Securities are converted, the portion of the shares of Fleetwood Common Stock, rights, warrants, evidences of indebtedness, shares of capital stock, cash and assets so distributed applicable to one share of Fleetwood Common Stock; PROVIDED, HOWEVER, that, at the election of the Company (whose election shall be evidenced by a resolution of the Board of Directors) with respect to all Holders so converting, the Company may, in lieu of distributing to such Holders any portion of such distribution not consisting of cash or securities of the Company, pay such Holders an amount in 71 cash equal to the fair market value thereof (as determined in good faith by the Board of Directors, whose determination shall be conclusive and described in a resolution of the Board of Directors). If any conversion of Securities described in the immediately preceding sentence occurs prior to the payment date for a distribution to holders of Fleetwood Common Stock that the Holder of Securities so converted is entitled to receive in accordance with the immediately preceding sentence, the Company may elect (such election to be evidenced by a resolution of the Board of Directors) to distribute to such Holder a due bill for the shares of Fleetwood Common Stock, rights, warrants, evidences of indebtedness, shares of capital stock, cash or assets to which such Holder is so entitled, provided, that such due bill (a) meets any applicable requirements of the principal national securities exchange or other principal securities market on which the Fleetwood Common Stock is then traded and (b) requires payment or delivery of such shares of Fleetwood Common Stock, rights, warrants, evidences of indebtedness, shares of capital stock, cash or assets no later than the date of payment or delivery thereof to holders of shares of Fleetwood Common Stock receiving such distribution. SECTION 1309. [RESERVED.] SECTION 1310. TRUSTEE NOT RESPONSIBLE FOR DETERMINING CONVERSION PRICE OR ADJUSTMENTS. Neither the Trustee nor any Conversion Agent shall at any time be under any duty or responsibility to any Holder of any Security to determine whether any facts exist that may require any adjustment of the conversion price, or with respect to the nature or extent of any such adjustment when made, or with respect to the method employed herein or in any supplemental indenture provided to be employed, in making the same. Neither the Trustee nor any Conversion Agent shall be accountable with respect to the validity or value (or the kind of account) of any shares of Fleetwood Common Stock or of any securities or property, which may at any time be issued or delivered upon the conversion of any Security; and neither the Trustee nor any Conversion Agent makes any representation with respect thereto. Neither the Trustee nor any Conversion Agent shall be responsible for any failure of the Company to make any cash payment or to issue, transfer or deliver any shares of Fleetwood Common Stock or stock certificates or other securities or property upon the surrender of any Security for the purpose of conversion, or, except as expressly herein provided, to comply with any of the covenants of the Company contained in Article Ten or this Article Thirteen. ARTICLE FOURTEEN MEETINGS SECTION 1401. PURPOSES FOR WHICH MEETINGS MAY BE CALLED. A meeting of Holders of the Securities may be called at any time and from time to time pursuant to this Article to make, give or take any request, demand, authorization, direction, notice, consent, waiver or other Act provided by this Indenture to be made, given or taken by Holders of the Securities. 72 SECTION 1402. CALL, NOTICE AND PLACE OF MEETINGS. (1) The Trustee may at any time call a meeting of Holders of Securities for any purpose specified in Section 1401, to be held at such time and at such place in the Borough of Manhattan, The City of New York as the Trustee shall determine. Notice of every meeting of Holders of Securities, setting forth the time and the place of such meeting and in general terms the action proposed to be taken at such meeting, shall be given, in the manner provided in Section 106, not less than 21 nor more than 180 days prior to the date fixed for the meeting. (2) In case at any time the Company (by or pursuant to a Board Resolution) or the Holders of at least 10% in principal amount of the Outstanding Securities shall have requested the Trustee to call a meeting of the Holders of Securities for any purpose specified in Section 1401, by written request setting forth in reasonable detail the action proposed to be taken at the meeting, and the Trustee shall not have mailed notice of or made the first publication of the notice of such meeting within 21 days after receipt of such request (whichever shall be required pursuant to Section 106) or shall not thereafter proceed to cause the meeting to be held as provided herein, then the Company or the Holders of Securities in the amount above specified, as the case may be, may determine the time and the place in the Borough of Manhattan, The City of New York and may call such meeting for such purposes by giving notice thereof as provided in clause (1) of this Section. SECTION 1403. PERSONS ENTITLED TO VOTE AT MEETINGS. To be entitled to vote at any meeting of Holders of Securities, a Person shall be (1) a Holder of one or more Outstanding Securities, or (2) a Person appointed by an instrument in writing as proxy for a Holder or Holders of one or more Outstanding Securities by such Holder or Holders. The only Persons who shall be entitled to be present or to speak at any meeting of Holders of Securities shall be the Persons entitled to vote at such meeting and their counsel, any representatives of the Trustee and its counsel and any representatives of the Company and its counsel. SECTION 1404. QUORUM; ACTION. The Persons entitled to vote a majority in principal amount of the Outstanding Securities shall constitute a quorum for a meeting of Holders of Securities; PROVIDED, HOWEVER, that if any action is to be taken at such meeting with respect to a consent or waiver which this Indenture expressly provides may be given by the Holders of at least 66-2/3% in principal amount of the Outstanding Securities, the Persons entitled to vote 66-2/3% in principal amount of the Outstanding Securities shall constitute a quorum. In the absence of a quorum within 30 minutes after the time appointed for any such meeting, the meeting shall, if convened at the request of Holders of Securities, be dissolved. In any other case the meeting may be adjourned for a period of not less than 10 days as determined by the chairman of the meeting prior to the adjournment of such meeting. In the absence of a quorum at any such adjourned meeting, such adjourned meeting may be further adjourned for a period of not less than 10 days as determined by the chairman of the meeting prior to the adjournment of such adjourned meeting. Notice of the reconvening of any adjourned meeting shall be given as provided in Section 1402(1), except that such notice need be given only once not less than five days prior to the date on which the 73 meeting is scheduled to be reconvened. Notice of the reconvening of an adjourned meeting shall state expressly the percentage, as provided above, of the principal amount of the Outstanding Securities which shall constitute a quorum. Except as limited by the proviso to Section 902, any resolution presented to a meeting or adjourned meeting duly reconvened at which a quorum is present as aforesaid may be adopted only by the affirmative vote of the Holders of a majority in principal amount of the Outstanding Securities; PROVIDED, HOWEVER, that, except as limited by the proviso to Section 902, any resolution with respect to any consent or waiver which this Indenture expressly provides may be given by the Holders of at least 66-2/3% in principal amount of the Outstanding Securities may be adopted at a meeting or an adjourned meeting duly convened and at which a quorum is present as aforesaid only by the affirmative vote of the Holders of at least 66-2/3% in principal amount of the Outstanding Securities; and PROVIDED, FURTHER, that, except as limited by the proviso to Section 902, any resolution with respect to any request, demand, authorization, direction, notice, consent, waiver or other Act which this Indenture expressly provides may be made, given or taken by the Holders of a specified percentage, which is less than a majority, in principal amount of the Outstanding Securities may be adopted at a meeting or an adjourned meeting duly reconvened and at which a quorum is present as aforesaid by the affirmative vote of the Holders of such specified percentage in principal amount of the Outstanding Securities. Any resolution passed or decision taken at any meeting of Holders of Securities duly held in accordance with this Section shall be binding on all the Holders of Securities, whether or not such Holders were present or represented at the meeting. SECTION 1405. DETERMINATION OF VOTING RIGHTS; CONDUCT AND ADJOURNMENT OF MEETINGS. (1) Notwithstanding any other provisions of this Indenture, the Trustee may make such reasonable regulations as it may deem advisable for any meeting of Holders of Securities in regard to proof of the holding of Securities and of the appointment of proxies and in regard to the appointment and duties of inspectors of votes, the submission and examination of proxies, certificates and other evidence of the right to vote, and such other matters concerning the conduct of the meeting as it shall deem appropriate. Except as otherwise permitted or required by any such regulations, the holding of Securities shall be proved in the manner specified in Section 104 and the appointment of any proxy shall be proved in the manner specified in Section 104. Such regulations may provide that written instruments appointing proxies, regular on their face, may be presumed valid and genuine without the proof specified in Section 104 or other proof. (2) The Trustee shall, by an instrument in writing, appoint a temporary chairman of the meeting, unless the meeting shall have been called by the Company or by Holders of Securities as provided in Section 1402(2), in which case the Company or the Holders of Securities calling the meeting, as the case may be, shall in like manner appoint a temporary chairman. A permanent chairman and a permanent secretary of the meeting shall be elected by vote of the Persons entitled to vote a majority in principal amount of the Outstanding Securities represented at the meeting. 74 (3) At any meeting, each Holder of a Security or proxy shall be entitled to one vote for each $1,000 principal amount of Securities held or represented by him; PROVIDED, HOWEVER, that no vote shall be cast or counted at any meeting in respect of any Security challenged as not Outstanding and ruled by the chairman of the meeting to be not Outstanding. A Holder of a Security in a principal amount of less than $1,000 shall be entitled to a fraction of one vote which is equal to the fraction that the principal amount of such Security bears to $1,000. The chairman of the meeting shall have no right to vote, except as a Holder of a Security or proxy. (4) Any meeting of Holders of Securities duly called pursuant to Section 1402 at which a quorum is present may be adjourned from time to time by Persons entitled to vote a majority in principal amount of the Outstanding Securities represented at the meeting; and the meeting may be held as so adjourned without further notice. SECTION 1406. COUNTING VOTES AND RECORDING ACTION OF MEETINGS. The vote upon any resolution submitted to any meeting of Holders of Securities shall be by written ballots on which shall be subscribed the signatures of the Holders of Securities or of their representatives by proxy and the principal amounts and serial numbers of the Outstanding Securities held or represented by them. The permanent chairman of the meeting shall appoint two inspectors of votes who shall count all votes cast at the meeting for or against any resolution and who shall make and file with the secretary of the meeting their verified written reports in triplicate of all votes cast at the meeting. A record, at least in triplicate, of the proceedings of each meeting of Holders of Securities shall be prepared by the secretary of the meeting and there shall be attached to said record the original reports of the inspectors of votes on any vote by ballot taken thereat and affidavits by one or more persons having knowledge of the facts setting forth a copy of the notice of the meeting and showing that said notice was given as provided in Section 1402 and, if applicable, Section 1404. Each copy shall be signed and verified by the affidavits of the permanent chairman and secretary of the meeting and one such copy shall be delivered to the Company, and another to the Trustee to be preserved by the Trustee, the latter to have attached thereto the ballots voted at the meeting. Any record so signed and verified shall be conclusive evidence of the matters therein stated. 75 This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed as of the day and year first above written. FLEETWOOD ENTERPRISES, INC. By: ----------------------------------------------- Name: Title: THE BANK OF NEW YORK, not in its individual capacity but solely as Trustee By: ----------------------------------------------- Name: Title: 76 EXHIBIT A-1 FORM OF SECURITY [FORM OF FACE OF SECURITY] [Include if the Security is in global form and the Depository Trust Company is the U.S. Depositary -- UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.] [Include if the Security is in global form -- TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO BELOW.] FLEETWOOD ENTERPRISES, INC. [___]% Convertible Trust II Subordinated Debenture Due [___] No. $ ----------- ----------- CUSIP No ----------- FLEETWOOD ENTERPRISES, INC., a corporation duly organized and existing under the laws of the State of Delaware (herein called the "Company", which term includes any successor corporation under the Indenture hereinafter referred to), for value received, hereby promises to pay to _________________, or registered assigns, the principal sum [indicated on Schedule A hereof]* [of ______ Dollars** ($ )] on [_________]. - ----------------------------------- * Applicable to Global Securities only. ** Applicable to certificated Securities only. A-1-1 Interest Payment Dates: February 15, May 15, August 15 and November 15, commencing February 15, 2002 Regular Record Dates: except as otherwise provided in the Indenture, the date 15 days prior to each Interest Payment Date Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. A-1-2 IN WITNESS WHEREOF, the Company has caused this instrument to be signed manually or by facsimile by its duly authorized officer and a facsimile of its corporate seal to be affixed hereto or imprinted hereon. FLEETWOOD ENTERPRISES, INC. By: ----------------------------------------------- Name: Dated: ___________, 2002 TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Securities referred to in the within-mentioned Indenture. THE BANK OF NEW YORK, not in its individual capacity but solely as Trustee By: ----------------------------------------------- Authorized Signatory: Dated: ___________, 2002 A-1-3 [FORM OF REVERSE OF SECURITY] FLEETWOOD ENTERPRISES, INC. [___]% Convertible Trust II Subordinated Debenture Due [___] (1) INTEREST. Fleetwood Enterprises, Inc., a Delaware corporation (the "Company"), is the issuer of this [____]% Convertible Trust II Subordinated Debenture due [_________,____] (the "Security") limited in aggregate principal amount to $[_________], issued under the Indenture hereinafter referred to. The Company promises to pay interest on the Securities in cash or, at the Company's election prior to February 15, 2004, shares of Fleetwood Common Stock, from [_________], 2002 or from the most recent interest payment date to which interest has been paid or duly provided for, quarterly (subject to deferral for up to 20 consecutive quarters on or after February 15, 2004, as described in Section 3 hereof) in arrears on February 15, May 15, August 15 and November 15 of each year (each such date, an "Interest Payment Date"), commencing February 15, 2002, at the rate of [_____]% per annum (subject to increase as provided in Section 12 hereto) plus Additional Interest (as defined below), if any, until the principal hereof shall have become due and payable. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date shall be paid, in cash or, at the Company's election, prior to February 15, 2004, in shares of Fleetwood Common Stock to the Person in whose name a Security is registered at the close of business on the regular record date for such interest installment, which shall be the date that is 15 days prior to the Interest Payment Date (whether or not a Business Day) (the "Regular Record Date"), as the case may be, next preceding such Interest Payment Date. The Company may elect to pay such interest by delivery of shares of Fleetwood Common Stock pursuant to this Section 1 if and only if the following conditions shall have been satisfied: (a) The shares of Fleetwood Common Stock deliverable in payment of the interest shall have a fair market value as of the Interest Payment Date of not less than the interest as determined by this Section 1 hereof. For purposes of this Section 301, the fair market value of shares of Fleetwood Common Stock shall be determined by the Company and shall be equal to 90% of the average of the Closing Price for the five consecutive Trading Days immediately preceding the second Trading Day prior to the Interest Payment Date. (b) Interest shall be paid only in cash in the event any shares of Fleetwood Common Stock to be issued for the payment of interest on the Securities hereunder (i) require registration under any federal securities law before such shares may be freely transferable without being subject to any transfer restrictions under the Securities Act upon issuance and if such registration is not completed or does not become effective prior to the Interest Payment Date, and/or (ii) require registration with or approval of any governmental authority under any state law or other federal law before such shares may be validly issued or delivered upon issuance and if such registration is not completed or does not become effective or such approval is not obtained prior to the Interest Payment Date; A-1-4 (c) The Fleetwood Common Stock is, or shall have been, approved for quotation on the Nasdaq National Market or listing on the New York Stock Exchange, in either case, prior to the Interest Payment Date; and (d) All shares of Fleetwood Common Stock which may be issued with respect to the payment of interest on the Securities will be issued out of the Company's authorized but unissued Common Stock and, will upon issue, be duly and validly issued and fully paid and non-assessable and free of any preemptive rights. If all of the conditions set forth in the preceding paragraph are not satisfied in accordance with the terms thereof, the interest required to be paid or duly provided for by the Company pursuant to this Section shall be paid by the Company only in cash. The amount of interest payable for any period will be computed on the basis of twelve 30-day months and a 360-day year. To the extent lawful, the Company shall pay interest on overdue installments of interest (without regard to any applicable grace period) at the rate borne by the Securities, compounded quarterly. Any interest paid on this Security shall be increased to the extent necessary to pay Additional Interest as set forth in this Security. (2) ADDITIONAL INTEREST. The Company shall pay to Fleetwood Capital Trust II, a Delaware statutory business trust (and its permitted successors or assigns under the Declaration) (the "Trust"), such additional amounts as may be necessary in order that the amount of dividends or other distributions then due and payable by the Trust on the Preferred Securities that at any time remain outstanding in accordance with the terms thereof shall not be reduced as a result of any taxes, duties, assessments or governmental charges of whatever nature (other than withholding taxes) imposed by the United States or any other taxing authority ("Additional Interest"). (3) EXTENSION OF INTEREST PAYMENT PERIOD. The Company shall have the right, at any time on or after February 15, 2004 and from time to time thereafter during the term of this Security, to defer payments of interest (including Compounded Interest (as defined below), and Additional Interest, if any) by extending the interest payment period of such Security for up to 20 consecutive quarters (each an "Extension Period"). To the extent permitted by applicable law, interest, the payment of which has been deferred because of the extension of the interest payment period pursuant to Section 312 of the Indenture (as defined below), will bear interest thereon at [____]% compounded quarterly for each quarter of the Extension Period ("Compounded Interest"); provided, that during an Extension Period, the Company shall be subject to the provisions of Section 1008 of the Indenture. At the end of the Extension Period, the Company shall pay all interest then accrued and unpaid on the Securities, including any Additional Payments, that shall be payable to the holders of the Securities in whose names the Securities are registered in the Security Register ("Holders") on the first Regular Record Date after the end of the Extension Period. Before the termination of any Extension Period, the Company may further extend such period, provided that such period together with all such further extensions thereof shall not exceed 20 consecutive quarters or extend beyond the maturity of the Securities or end other than on an Interest Payment Date. Upon the termination of any Extension Period and upon the payment of all amounts then due on the Securities, including any Additional Payments, the A-1-5 Company may commence a new Extension Period, subject to the foregoing requirements. No interest shall be due and payable during an Extension Period except at the end thereof. The Company must give the Property Trustee, the Regular Trustees and the Trustee notice of its election to begin an Extension Period at least one Business Day Prior to the earliest of (i) the date the distribution on the Preferred Securities would have been payable except for the election to begin such Extension Period, or (ii) if applicable, the date the Regular Trustees are required to give notice to the New York Stock Exchange, the Nasdaq National Market or other applicable self-regulatory organization or to holders of such Preferred Securities of the record date or (iii) the date such distribution is payable, but in any event not less than one Business Day prior to the record date. The Trustee shall give notice of the Company's election to begin an Extension Period to the holders of the Securities and the Regular Trustees shall give notice of the Company's election to the holders of the Preferred Securities. The quarter in which any notice is given pursuant to the second paragraph of this Section 3 shall be counted as one of the 20 quarters permitted in the maximum Extension Period permitted under the first paragraph of this Section 3. (4) METHOD OF PAYMENT. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in the Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities (as defined in the Indenture)) is registered at the close of business on the Regular Record Date for such interest installment, which, except as otherwise provided in the Indenture, shall be the date 15 days prior to each Interest Payment Date (whether or not a Business Day) (the "Regular Record Date"), commencing February 15, 2004. Any such interest not so punctually paid or duly provided for shall forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Securities not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities may be listed, and upon such notice as may be required by such exchange, all as more fully provided in said Indenture. The principal of the Securities shall be payable at the office or agency of the Company in the United States maintained for such purpose and at any other office or agency maintained by the Company for such purpose in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. The interest on the Securities shall be payable, if paid in cash, at and in the same manner as the payment of principal described in the preceding sentence (PROVIDED, HOWEVER, that any such payment of interest may be made at the option of the Company by check mailed to the address of the holder entitled thereto or by wire transfer to an account in the United States appropriately designated by the holder entitled thereto prior to the record date for the corresponding interest payment date) or, if at the Company's election the interest is paid in shares of Fleetwood Common Stock, the Company shall register such shares in the name of the Holder entitled thereto. Notwithstanding the foregoing, so long as the holder of any Securities is the Property Trustee, the payment of principal on the Securities held by the Property Trustee will be made by wire transfer at such A-1-6 place and to such account in the United States as may be designated by the Property Trustee, and any interest (x) paid in cash shall be paid to the Property Trustee at and in the same manner as the payment of principal and (y) paid in shares of Fleetwood Common Stock shall be registered in the name of the Property Trustee or such other name as the Property Trustee shall designate in writing. If interest is paid in the form of shares of Fleetwood Common Stock prior to February 15, 2004, the interest so payable, and punctually paid or duly provided for, on any Interest Payment Date shall be paid in Fleetwood Common Stock to the Person in whose name a Security is registered at the close of business on the Regular Record Date for such Interest Payment Date (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date. The Company may elect to pay such interest by delivery of shares of Fleetwood Common Stock pursuant to Section 1 hereof if and only if the following conditions shall have been satisfied: (a) The shares of Fleetwood Common Stock deliverable in payment of the interest shall have a fair market value as of the Interest Payment Date of not less than the interest as determined by Section 1 hereof. For purposes of this Section 301, the fair market value of shares of Fleetwood Common Stock shall be determined by the Company and shall be equal to 90% of the average of the Closing Price for the five consecutive Trading Days immediately preceding the second Trading Day prior to the Interest Payment Date. (b) Interest shall be paid only in cash in the event any shares of Fleetwood Common Stock to be issued for the payment of interest on the Securities hereunder (i) require registration under any federal securities law before such shares may be freely transferable without being subject to any transfer restrictions under the Securities Act upon issuance and if such registration is not completed or does not become effective prior to the Interest Payment Date, and/or (ii) require registration with or approval of any governmental authority under any state law or other federal law before such shares may be validly issued or delivered upon issuance and if such registration is not completed or does not become effective or such approval is not obtained prior to the Interest Payment Date; (c) The Fleetwood Common Stock is, or shall have been, approved for quotation on the Nasdaq National Market or listing on the New York Stock Exchange, in either case, prior to the Interest Payment Date; and (d) All shares of Fleetwood Common Stock which may be issued with respect to the payment of interest on the Securities will be issued out of the Company's authorized but unissued Common Stock and, will upon issue, be duly and validly issued and fully paid and non-assessable and free of any preemptive rights. If all of the conditions set forth in the preceding paragraph are not satisfied in accordance with the terms thereof, the interest required to be paid or duly provided for by the Company pursuant to Section 1 hereof shall be paid by the Company only in cash. Notwithstanding the foregoing, so long as the holder of any Securities is the Property Trustee, the payment of principal and interest on the Securities held by the Property Trustee, if such payment is made in cash and not in shares of Fleetwood Common Stock, will be made by A-1-7 wire transfer at such place and to such account tin the United States as may be designated by the Property Trustee. (5) PAYING AGENT AND SECURITY REGISTRAR. The Trustee will act as Paying Agent, Security Registrar and Conversion Agent. The Company may change any Paying Agent, Security Registrar, co-registrar or Conversion Agent without prior notice. The Company or any of its Affiliates (as defined in the Indenture) may act in any such capacity. (6) INDENTURE. The Company issued the Securities under an indenture, dated as of [_________], 2002 (the "Indenture"), between the Company and The Bank of New York, not in its individual capacity but solely as Trustee (herein called the "Trustee", which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Trustee, the Company and the Holders of the Securities, and of the terms upon which the Securities are, and are to be, authenticated and delivered. The terms of the Securities include those stated in the Indenture and those made part of the Indenture by the Trust Indenture Act of 1939 (15 U.S.C. Sections 77aaa-77bbbb) ("TIA") as in effect on the date of the Indenture. The Securities are subject to, and qualified by, all such terms, certain of which are summarized herein, and Holders are referred to the Indenture and the TIA for a more complete statement of such terms. The Securities are unsecured general obligations of the Company initially limited to $[_________] in aggregate principal amount, except for such additional principal amount of Securities authenticated and delivered under the Indenture upon registration of transfer of, or in lieu of other Securities pursuant to Sections 304, 305, 306, 906, 1108 and 1301 of the Indenture, PROVIDED that additional Securities of any series of Securities authenticated and delivered under the Indenture may be authenticated and delivered thereunder at any time, having the same terms as, treated as a single class (for all purposes under this Indenture) with, such previously authenticated and delivered Securities, PROVIDED further that such additional Securities shall be authenticated and delivered to the Trust in exchange for the issuance by the Trust of additional Preferred Securities to holders of Existing Preferred Securities in exchange for Existing Preferred Securities tendered in an exchange offer. The Securities are subordinated in right of payment to all existing and future Senior Indebtedness of the Company. No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and interest and Additional Redemption Distributions, if any, on, this Security when due at the times, place and rate, and in the coin or currency, herein prescribed or to convert this Security as provided in the Indenture. Capitalized terms used herein without definition shall have the meanings given to them in the Indenture. (7) OPTIONAL REDEMPTION. The Securities are redeemable (a) in whole but not in part, at the Company's option at any time before February 15, 2004 at a Redemption Price equal to 100.00% of the aggregate principal amount of the Securities if the Closing Price of Fleetwood Common Stock has exceeded 200% of the Conversion Price for at least 20 Trading Days during a 30-day Trading Day period ending five Trading Days prior to the date of the notice of redemption described in Section 8 below, upon not less than 15 nor more than 30 days' notice to Holders of the Securities (which notice shall state (A) the Redemption Date, (B) whether the Additional Redemption Distribution, if any, shall be paid by the Company in cash or by delivery of Fleetwood Common Stock, (C) the procedures pursuant to which such Securities are to be surrendered for conversion and receipt of the Additional Redemption Distribution, if any, and A-1-8 (D) the Conversion Price then in effect), and (b), in whole or in part, at the Company's option at any time and from time to time on or after February 15, 2004, upon not less than 30 or more than 60 days' notice, at the following Redemption Prices, expressed as a percentage of the principal amount of the Securities, if redeemed during the 12-month period beginning February 15 of the applicable year set forth below:
YEAR REDEMPTION PRICE ---- ---------------- 2004................................................... 106.500% 2005................................................... 104.875% 2006................................................... 103.250% 2007................................................... 101.625% 2008 and thereafter.................................... 100.000%
plus, in each case described in clauses (a) and (b) of this sentence, accrued and unpaid interest, including Additional Payments, if any, to the Redemption Date (subject to the right of Holders of record on the relevant record date to receive interest due on the Interest Payment Date). From and after the Redemption Date, interest will cease to accrue on the Securities, or portion thereof, called for redemption. In the case of a redemption at any time prior to February 15, 2004, if a holder of Securities converts such Securities to Fleetwood Common Stock pursuant to Section 12 during the period following a notice of redemption and prior to the Redemption Date, then the Company shall pay such holder, in cash or shares of Fleetwood Common Stock, at the election of the Company, an amount equal to interest payments payable on such Securities through February 15, 2004, less any interest actually paid prior to the applicable Conversion Date. If such payment is made in shares of Fleetwood Common Stock, the amount of shares of Fleetwood Common Stock payable shall be determined in the same manner that interest payments payable in shares of Fleetwood Common Stock are determined pursuant to Section 4. (8) OPTIONAL REDEMPTION UPON TAX EVENT. The Securities are subject to redemption in whole, but not in part, at the Company's option at any time within 90 days, if a Tax Event (as defined in the Declaration) shall occur and be continuing, at a redemption price equal to 100% of the principal amount thereof plus accrued but unpaid interest thereon (including, to the extent permitted by applicable law, Additional Payments, if any) to the Redemption Date. Any redemption pursuant to this Section 8 will be made upon not less than 30 nor more than 60 days' notice. (9) NOTICE OF REDEMPTION. Notice of redemption will be mailed, in the case of a redemption at any time prior to February 15, 2004, at least 15 days but not more than 30 days before the Redemption Date and, in all other cases, at least 30 days but not more than 60 days before the Redemption Date, to each Holder of the Securities to be redeemed at his address of record. In the event of a redemption of less than all of the Securities, the Securities will be chosen for redemption by the Trustee in accordance with the Indenture. On and after the Redemption Date, interest ceases to accrue on the Securities or portions thereof called for redemption. A-1-9 If this Security is redeemed subsequent to a Regular Record Date with respect to any Interest Payment Date specified above and on or prior to such Interest Payment Date, then any accrued interest will be paid to the person in whose name this Security is registered at the close of business on such record date. (10) MANDATORY REDEMPTION. The Securities will mature on [_________,____]. There are no sinking fund payments with respect to the Securities. (11) SUBORDINATION. The payment of the principal of, premium (if any), interest on or any other amounts due on the Securities is subordinated and junior in right of payment to all existing and future Senior Indebtedness (as defined below) of the Company and senior and prior in right of payment to the Common Securities Guarantee, the Cash Offer Common Securities Guarantee, the Existing Debentures, the Existing Common Securities Guarantee and the Existing Preferred Securities Guarantee, as described in the Indenture. Each Holder, by accepting a Security, agrees to such subordination and authorizes and directs the Trustee on its behalf to take such action as may be necessary or appropriate to effectuate the subordination so provided and appoints the Trustee as its attorney-in-fact for such purpose. In addition, no payment of principal (including redemption payments) of, premium, if any, or interest (including any Additional Interest or Compounded Interest) on the Securities may be made if there shall have occurred and be continuing (i) a default in the payment when due of principal of, premium, if any, sinking funds, if any, or interest, if any, on any Senior Indebtedness of the Company and any applicable grace period with respect to such default shall have ended without such default having been cured or waived or ceasing to exist or (ii) an event of default with respect to any Senior Indebtedness of the Company resulting in the acceleration of the maturity thereof without such acceleration having been rescinded or annulled. "Senior Indebtedness" means (a) any liability of the Company (1) for borrowed money or under any reimbursement obligation relating to a letter of credit, surety bond or similar instrument, or (2) evidenced by a bond, note, debenture or similar instrument, or (3) for obligations to pay the deferred purchase price of property or services, except trade accounts payable arising in the ordinary course of business, or (4) for the payment of money relating to a capitalized lease obligation, or (5) for the payment of money under any Swap Agreement, (b) any liability of others described in the preceding clause (a) that the Company has guaranteed or that is otherwise its legal liability; and (c) any deferral, renewal, extension or refunding of any liability of the types referred to in clauses (a) and (b) above, unless, in the instrument creating or evidencing any such liability referred to in clause (a) or (b) above or any such deferral, renewal, extension or refunding referred to in clause (c) above or pursuant to which the same is outstanding, it is expressly provided that such liability, deferral, renewal, extension or refunding is subordinate in right of payment to all other indebtedness of the Company or is not senior or prior in right of payment to the Securities or ranks PARI PASSU with or subordinate to the Securities in right of payment; PROVIDED that the Securities shall not constitute Senior Indebtedness; and PROVIDED, FURTHER, that Senior Indebtedness shall not include any indebtedness or guarantees between or among the Company or its affiliates, including all debt securities or guarantees in respect of those debt securities issued to any trust (including the Trust), trustee of a trust (including the Trust), partnership, limited liability company or other person affiliated with the Company that is a financing vehicle of the Company (a "Financing Entity") in connection with the issuance by such Financing Entity of preferred securities unless otherwise expressly A-1-10 provided in the instrument creating or evidencing such indebtedness, debt securities or guarantees, as the case may be, or pursuant to which the same is outstanding. For the avoidance of doubt, none of the Preferred Securities Guarantee, the Common Securities Guarantee, the Cash Offer Debentures, the Cash Offer Preferred Securities Guarantee, the Cash Offer Common Securities Guarantee, the Existing Debentures, the Existing Preferred Securities Guarantee or the Existing Common Securities Guarantee shall constitute Senior Indebtedness. (12) CONVERSION. Subject to and in compliance with the provisions of the Indenture, the Holder of any Security has the right, exercisable at any time prior to the close of business (New York time) on the date of the Security's maturity (or, in the case of Securities called for redemption, prior to the close of business on the Business Day prior to the corresponding Redemption Date), to convert the principal amount thereof (or any portion thereof that is an integral multiple of $22) into shares of Fleetwood Common Stock at the initial conversion price of $[___] per share of Fleetwood Common Stock, subject to adjustment under certain circumstances. To convert a Security, a Holder must (1) complete and sign a conversion notice substantially in the form attached hereto, (2) surrender the Security to a Conversion Agent, (3) furnish appropriate endorsements or transfer documents if required by the Security Registrar or Conversion Agent and (4) pay any transfer or similar tax, if required. Upon conversion, no adjustment or payment will be made for interest or dividends, but if any Holder surrenders a Security for conversion after the close of business on the Regular Record Date for the payment of an installment of interest and prior to the opening of business on the next Interest Payment Date, then, notwithstanding such conversion, the interest payable on such Interest Payment Date will be paid to the Trust (which will distribute such interest to the holder of the applicable Trust Securities at the close of business on such record date) or to such other person in whose name the Securities are registered at the close of business on such record date, as the case may be, despite such conversion. In such event, such Security, when surrendered for conversion, need not be accompanied by payment of an amount equal to the interest payable on such Interest Payment Date on the portion so converted. The number of shares issuable upon conversion of a Security is determined by dividing the principal amount of the Security converted by the conversion price in effect on the Conversion Date. No fractional shares will be issued upon conversion but a cash adjustment will be made for any fractional interest. The outstanding principal amount of any Security shall be reduced by the portion of the principal amount thereof converted into shares of Common Stock. (13) REGISTRATION, TRANSFER EXCHANGE AND DENOMINATIONS. As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security is registrable in the Security Register, upon surrender of this Security for registration of transfer at the office or agency of the Company designated for such purpose, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Securities, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees. The Securities are issuable only in registered form without coupons in denominations of $22 and integral multiples thereof. No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any A-1-11 tax or other governmental charge payable in connection therewith. Prior to due presentment of this Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. In the event of redemption or conversion of this Security in part only, a new Security or Securities for the unredeemed or unconverted portion hereof will be issued in the name of the Holder hereof upon the cancellation hereof. (14) PERSONS DEEMED OWNERS. The registered Holder of a Security may be treated as its owner for all purposes. (15) UNCLAIMED MONEY. If money for the payment of principal or interest remains unclaimed for two years, the Trustee and the Paying Agent shall pay the money back to the Company at its written request. After that, Holders of Securities entitled to the money must look to the Company for payment unless an abandoned property law designates another Person and all liability of the Trustee and such Paying Agent with respect to such money shall cease. (16) DEFAULTS AND REMEDIES. The Securities shall have the Events of Default as set forth in Section 501 of the Indenture. Subject to certain limitations in the Indenture, if an Event of Default occurs and is continuing, then the Trustee or the Holders of not less than 25% in principal amount of the Outstanding Securities may declare the principal of all the Securities, and accrued and unpaid interest, if any (including any Additional Payments), and Additional Redemption Distributions, if any, thereon to be due and payable immediately, by a notice in writing to the Company (and to the Trustee if given by the Holders), and upon any such declaration such principal or such lesser amount, as the case may be, and such accrued and unpaid interest (including any Additional Payments) shall become immediately due and payable. The Holders of not less than a majority in aggregate principal amount of the Securities then outstanding by written notice to the Trustee may rescind an acceleration and its consequences if the rescission would not conflict with any judgment or decree and if all existing Events of Default have been cured or waived except nonpayment of principal or interest that has become due solely because of the acceleration. Holders may not enforce the Indenture or the Securities except as provided in the Indenture. Subject to certain limitations, Holders of a majority in aggregate principal amount of the then outstanding Securities issued under the Indenture may direct the Trustee in its exercise of any trust or power. The Company must furnish annually compliance certificates to the Trustee. The above description of Events of Default and remedies is qualified in its entirety by reference to, and subject to, the more complete description thereof contained in the Indenture. (17) AMENDMENTS, SUPPLEMENTS AND WAIVERS. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Securities under the Indenture at any time by the Company and the Trustee with the consent of the Holders of a majority in aggregate principal amount of the Securities at the time Outstanding. The Indenture also contains provisions permitting the Holders of specified percentages in aggregate principal amount of the Securities at the time Outstanding, on behalf of the Holders of all the Securities, to A-1-12 waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange heretofore or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security. (18) TRUSTEE DEALINGS WITH THE COMPANY. The Trustee, in its individual or any other capacity may become the owner or pledgee of the Securities and may otherwise deal with the Company or an Affiliate with the same rights it would have, as if it were not Trustee, subject to certain limitations provided for in the Indenture and in the TIA. Any Agent may do the same with like rights. (19) NO RECOURSE AGAINST OTHERS. A director, officer, employee or stockholder, as such, of the Company shall not have any liability for any obligations of the Company under the Securities or the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. Each Holder of the Securities by accepting a Security waives and releases all such liability. The waiver and release are part of the consideration for the issue of the Securities. (20) GOVERNING LAW. THE INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. (21) AUTHENTICATION. The Securities shall not be valid until authenticated by the manual signature of an authorized officer of the Trustee. (22) ABBREVIATIONS. Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act). The Company will furnish to any Holder of the Securities upon written request and without charge a copy of the Indenture. Request may be made to: Fleetwood Enterprises, Inc. 3125 Myers Street Riverside, CA 92503 Attn: General Counsel A-1-13 ASSIGNMENT FORM To assign this Security, fill in the form below: (I) or (we) assign and transfer this Security to - -------------------------------------------------------------------------------- (Insert assignee's social security or tax I.D. no.) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (Print or type assignee's name, address and zip code) and irrevocably appoint ------------------------------------------------------- agent to transfer this Security on the books of the Company. The agent may substitute another to act for him. Your Signature: ------------------------------------------------------ (Sign exactly as your name appears on the other side of this Security) Date: ----------------------------------- Signature Guarantee:[*] ------------------------------------------------ - --------------------- * Signature must be guaranteed by an "eligible guarantor institution" meeting the requirements of the [Registrar], which requirements include membership or participation in the Security Transfer Agent Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the [Registrar] in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act, as amended. A-1-14 (TO BE ATTACHED TO GLOBAL SECURITIES) SCHEDULE A The initial principal amount of this Global Security shall be $___________. The following increases or decreases in the principal amount of this Global Security have been made:
- ------------- ----------------- ----------------- ---------------- ------------- PRINCIPAL SIGNATURE OF AMOUNT OF AMOUNT OF AMOUNT OF THIS AUTHORIZED DATE MADE INCREASE IN DECREASE IN GLOBAL SECURITY OFFICER OF PRINCIPAL AMOUNT PRINCIPAL AMOUNT FOLLOWING SUCH TRUSTEE OR OF THIS GLOBAL OF THIS GLOBAL DECREASE OR SECURITIES SECURITY SECURITY INCREASE CUSTODIAN - ------------- ----------------- ----------------- ---------------- ------------- - ------------- ----------------- ----------------- ---------------- ------------- - ------------- ----------------- ----------------- ---------------- ------------- - ------------- ----------------- ----------------- ---------------- ------------- - ------------- ----------------- ----------------- ---------------- ------------- - ------------- ----------------- ----------------- ---------------- ------------- - ------------- ----------------- ----------------- ---------------- ------------- - ------------- ----------------- ----------------- ---------------- ------------- - ------------- ----------------- ----------------- ---------------- ------------- - ------------- ----------------- ----------------- ---------------- ------------- - ------------- ----------------- ----------------- ---------------- ------------- - ------------- ----------------- ----------------- ---------------- ------------- - ------------- ----------------- ----------------- ---------------- ------------- - ------------- ----------------- ----------------- ---------------- ------------- - ------------- ----------------- ----------------- ---------------- ------------- - ------------- ----------------- ----------------- ---------------- ------------- - ------------- ----------------- ----------------- ---------------- ------------- - ------------- ----------------- ----------------- ---------------- ------------- - ------------- ----------------- ----------------- ---------------- ------------- - ------------- ----------------- ----------------- ---------------- ------------- - ------------- ----------------- ----------------- ---------------- ------------- - ------------- ----------------- ----------------- ---------------- ------------- - ------------- ----------------- ----------------- ---------------- ------------- - ------------- ----------------- ----------------- ---------------- -------------
A-1-15 ELECTION TO CONVERT To: Fleetwood Enterprises, Inc. The undersigned owner of this Security hereby irrevocably exercises the option to convert this Security, or the portion below designated, into Common Stock of FLEETWOOD ENTERPRISES, INC. ("Fleetwood Common Stock") in accordance with the terms of the Indenture referred to in this Security, and directs that the shares issuable and deliverable upon conversion, and shares issuable and deliverable or a check issuable and deliverable in payment of Additional Redemption Distributions, if any, together with any check in payment for fractional shares, be issued in the name of and delivered to the undersigned, unless a different name has been indicated in the assignment below. If shares are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto. Dated: --------------,--------- in whole ---- Portions of Security to be converted (or integral multiples thereof): $ ---------------------------------- ------------------------------------ Signature (for conversion only) Please Print or Typewrite Name and Address, Including Zip Code, and Social Security or Other Identifying Number ------------------------------------ ------------------------------------ ------------------------------------ Signature Guarantee:[*] -------------------- - --------------------- * Signature must be guaranteed by an "eligible guarantor institution" meeting the requirements of the [Registrar], which requirements include membership or participation in the Security Transfer Agent Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the [Registrar] in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act, as amended. A-1-16 EX-4.9 6 a2065672zex-4_9.txt EXHIBIT 4.9 EXHIBIT 4.9 - -------------------------------------------------------------------------------- FLEETWOOD ENTERPRISES, INC. TO THE BANK OF NEW YORK, not in its individual capacity, but solely as Trustee ---------------------------------- Indenture Dated as of [______________, 2001] ---------------------------------- _____% Convertible Trust III Subordinated Debentures Due ____ - -------------------------------------------------------------------------------- TABLE OF CONTENTS
PAGES ----- ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION............................................2 SECTION 101. DEFINITIONS..................................................................2 SECTION 102. COMPLIANCE CERTIFICATES AND OPINIONS........................................10 SECTION 103. FORM OF DOCUMENTS DELIVERED TO TRUSTEE......................................10 SECTION 104. ACTS OF HOLDERS; RECORD DATES...............................................10 SECTION 105. NOTICES, ETC., TO TRUSTEE AND THE COMPANY...................................11 SECTION 106. NOTICE TO HOLDERS; WAIVER...................................................12 SECTION 107. CONFLICT WITH TRUST INDENTURE ACT...........................................12 SECTION 108. EFFECT OF HEADINGS AND TABLE OF CONTENTS....................................12 SECTION 109. SUCCESSORS AND ASSIGNS......................................................12 SECTION 110. SEPARABILITY CLAUSE.........................................................12 SECTION 111. BENEFITS OF INDENTURE.......................................................13 SECTION 112. GOVERNING LAW...............................................................13 SECTION 113. LEGAL HOLIDAYS..............................................................13 ARTICLE TWO SECURITY FORMS......................................................................................13 SECTION 201. FORMS GENERALLY.............................................................13 SECTION 202. INITIAL ISSUANCE TO PROPERTY TRUSTEE........................................14 SECTION 203. GLOBAL SECURITIES...........................................................14 ARTICLE THREE THE SECURITIES....................................................................................14 SECTION 301. TITLE AND TERMS.............................................................14 SECTION 302. DENOMINATIONS...............................................................17 SECTION 303. EXECUTION, AUTHENTICATION, DELIVERY AND DATING..............................17 SECTION 304. TEMPORARY SECURITIES........................................................17 SECTION 305. REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE.........................18 (A) GENERAL.............................................................18 (B) TRANSFER PROCEDURES AND RESTRICTIONS................................19 SECTION 306. MUTILATED, DESTROYED, LOST AND STOLEN SECURITIES............................19 SECTION 307. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED..............................20 SECTION 308. PERSONS DEEMED OWNERS.......................................................21 SECTION 309. CANCELLATION................................................................21 SECTION 310. RIGHT OF SETOFF.............................................................21 SECTION 311. CUSIP NUMBERS...............................................................22 SECTION 312. EXTENSION OF INTEREST PAYMENT PERIOD; NOTICE OF EXTENSION...................22 SECTION 313. PAYING AGENT, SECURITY REGISTRAR AND CONVERSION AGENT.......................23 ARTICLE FOUR SATISFACTION AND DISCHARGE.........................................................................23 SECTION 401. SATISFACTION AND DISCHARGE OF INDENTURE.....................................23 SECTION 402. APPLICATION OF TRUST MONEY..................................................24 ARTICLE FIVE REMEDIES...........................................................................................24 i SECTION 501. EVENTS OF DEFAULT...........................................................24 SECTION 502. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT..........................25 SECTION 503. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY TRUSTEE.............26 SECTION 504. TRUSTEE MAY FILE PROOFS OF CLAIM............................................27 SECTION 505. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF SECURITIES.................28 SECTION 506. APPLICATION OF MONEY COLLECTED..............................................28 SECTION 507. LIMITATION ON SUITS.........................................................28 SECTION 508. UNCONDITIONAL RIGHT OF HOLDER TO RECEIVE PRINCIPAL AND ANY PREMIUM AND INTEREST AND TO CONVERT.........................................29 SECTION 509. RESTORATION OF RIGHTS AND REMEDIES..........................................29 SECTION 510. RIGHTS AND REMEDIES CUMULATIVE..............................................29 SECTION 511. DELAYS OR OMISSION NOT WAIVER...............................................30 SECTION 512. CONTROL BY HOLDERS..........................................................30 SECTION 513. WAIVER OF PAST DEFAULTS.....................................................30 SECTION 514. UNDERTAKING FOR COSTS.......................................................31 SECTION 515. WAIVER OF STAY OR EXTENSION LAWS............................................31 SECTION 516. ENFORCEMENT BY HOLDERS OF PREFERRED SECURITIES..............................31 ARTICLE SIX THE TRUSTEE.........................................................................................31 SECTION 601. CERTAIN DUTIES AND RESPONSIBILITIES.........................................31 SECTION 602. NOTICE OF DEFAULTS..........................................................33 SECTION 603. CERTAIN RIGHTS OF TRUSTEE...................................................33 SECTION 604. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES......................34 SECTION 605. MAY HOLD SECURITIES.........................................................34 SECTION 606. MONEY HELD IN TRUST.........................................................34 SECTION 607. COMPENSATION AND REIMBURSEMENT..............................................34 SECTION 608. DISQUALIFICATION; CONFLICTING INTEREST......................................35 SECTION 609. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY.....................................35 SECTION 610. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR...........................35 SECTION 611. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR......................................37 SECTION 612. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS.................37 SECTION 613. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY...........................37 ARTICLE SEVEN HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY.................................................37 SECTION 701. COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF HOLDERS...................37 SECTION 702. PRESERVATION OF INFORMATION: COMMUNICATIONS TO HOLDERS......................38 SECTION 703. REPORTS BY TRUSTEE..........................................................38 SECTION 704. REPORTS BY COMPANY..........................................................38 ARTICLE EIGHT CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE..............................................39 SECTION 801. COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS........................39 SECTION 802. SUCCESSOR SUBSTITUTED.......................................................39 ii ARTICLE NINE SUPPLEMENTAL INDENTURES............................................................................40 SECTION 901. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS..........................40 SECTION 902. SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS.............................41 SECTION 903. EXECUTION OF SUPPLEMENTAL INDENTURES........................................42 SECTION 904. EFFECT OF SUPPLEMENTAL INDENTURES...........................................42 SECTION 905. CONFORMITY WITH TRUST INDENTURE ACT.........................................42 SECTION 906. REFERENCE IN SECURITIES TO SUPPLEMENTAL INDENTURES..........................42 ARTICLE TEN COVENANTS; REPRESENTATIONS AND WARRANTIES...........................................................43 SECTION 1001. PAYMENT OF PRINCIPAL AND INTEREST...........................................43 SECTION 1002. MAINTENANCE OF OFFICE OR AGENCY.............................................43 SECTION 1003. MONEY FOR SECURITY PAYMENTS TO BE HELD IN TRUST.............................43 SECTION 1004. STATEMENT AS TO COMPLIANCE..................................................44 SECTION 1005. STATEMENT BY OFFICERS AS TO DEFAULT.........................................44 SECTION 1006. LIMITATION ON DIVIDENDS; COVENANTS AS TO THE TRUST..........................44 SECTION 1007. PAYMENT OF EXPENSES OF THE TRUST............................................45 SECTION 1008. LIMITATION OF TRANSACTIONS..................................................46 SECTION 1009. LISTING OF SECURITIES.......................................................47 ARTICLE ELEVEN REDEMPTION OF SECURITIES.........................................................................47 SECTION 1101. RIGHT OF REDEMPTION.........................................................47 SECTION 1102. APPLICABILITY OF ARTICLE....................................................47 SECTION 1103. ELECTION TO REDEEM; NOTICE TO TRUSTEE.......................................47 SECTION 1104. SELECTION BY TRUSTEE OF SECURITIES TO BE REDEEMED...........................48 SECTION 1105. NOTICE OF REDEMPTION........................................................48 SECTION 1106. DEPOSIT OF REDEMPTION PRICE.................................................49 SECTION 1107. SECURITIES PAYABLE ON REDEMPTION DATE.......................................49 SECTION 1108. SECURITIES REDEEMED IN PART.................................................49 SECTION 1109. OPTIONAL REDEMPTION.........................................................50 SECTION 1110. TAX EVENT REDEMPTION........................................................52 SECTION 1111. CERTAIN LIMITATIONS ON REDEMPTION...........................................52 ARTICLE TWELVE SUBORDINATION OF SECURITIES......................................................................53 SECTION 1201. AGREEMENT TO SUBORDINATE....................................................53 SECTION 1202. DEFAULT ON SENIOR INDEBTEDNESS..............................................53 SECTION 1203. LIQUIDATION; DISSOLUTION; BANKRUPTCY........................................53 SECTION 1204. SUBROGATION.................................................................55 SECTION 1205. TRUSTEE TO EFFECTUATE SUBORDINATION.........................................55 SECTION 1206. NOTICE BY THE COMPANY.......................................................56 SECTION 1207. RIGHTS OF THE TRUSTEE; HOLDERS OF SENIOR INDEBTEDNESS.......................56 SECTION 1208. SUBORDINATION MAY NOT BE IMPAIRED...........................................57 ARTICLE THIRTEEN CONVERSION OF SECURITIES.......................................................................57 SECTION 1301. CONVERSION RIGHTS...........................................................57 SECTION 1302. CONVERSION PROCEDURES.......................................................58 SECTION 1303. CONVERSION PRICE ADJUSTMENTS................................................60 SECTION 1304. ADJUSTMENT OF CONVERSION PRICE; FUNDAMENTAL CHANGE..........................66 iii SECTION 1305. NOTICE OF ADJUSTMENTS OF CONVERSION PRICE...................................70 SECTION 1306. COMPANY TO PROVIDE STOCK....................................................71 SECTION 1307. EMPLOYEE BENEFIT PLANS......................................................72 SECTION 1308. CERTAIN ADDITIONAL RIGHTS...................................................72 SECTION 1309. [RESERVED.].................................................................73 SECTION 1310. TRUSTEE NOT RESPONSIBLE FOR DETERMINING CONVERSION PRICE OR ADJUSTMENTS.................................................................73 ARTICLE FOURTEEN MEETINGS.......................................................................................73 SECTION 1401. PURPOSES FOR WHICH MEETINGS MAY BE CALLED...................................73 SECTION 1402. CALL, NOTICE AND PLACE OF MEETINGS..........................................73 SECTION 1403. PERSONS ENTITLED TO VOTE AT MEETINGS........................................74 SECTION 1404. QUORUM; ACTION..............................................................74 SECTION 1405. DETERMINATION OF VOTING RIGHTS; CONDUCT AND ADJOURNMENT OF MEETINGS....................................................................75 SECTION 1406. COUNTING VOTES AND RECORDING ACTION OF MEETINGS.............................75 EXHIBIT A-1 FORM OF SECURITY...................................................................................A-1-1
- ------------------ Note: This table of contents shall not, for any purpose, be deemed to be a part of the Indenture. iv FLEETWOOD ENTERPRISES, INC. Certain Sections of this Indenture relating to Sections 310 through 318 of the Trust Indenture Act of 1939
TRUST INDENTURE ACT SECTION INDENTURE SECTION --------------------------- ----------------- ss. 310(a)(1)........................ 609 (a)(2)........................ 609 (a)(3)........................ Not applicable (a)(4)........................ Not applicable (a)(5)........................ 609 (b)........................... 608, 610 ss. 311(a)........................... 613 (b)........................... 613 (c)........................... Not applicable ss. 312(a)........................... 701, 702(a) (b)........................... 702(b) (c)........................... 702(c) ss. 313(a)........................... 703(a) (a)(4)........................ 101, 1004 (b)........................... 703(a) (c)........................... 703(a) (d)........................... 703(b) ss. 314(a)........................... 704 (b)........................... Not applicable (c)(1)........................ 102 (c)(2)........................ 102 (c)(3)........................ Not applicable (d)........................... Not applicable (e)........................... 102 ss. 315(a)........................... 601 (b)........................... 602 (c)........................... 601 (d)........................... 601 (e)........................... 514 ss. 316(a)........................... 101 (a)(1)(A)..................... 502, 512 (a)(1)(B)..................... 513 (a)(2)........................ Not applicable (b)........................... 508 (c)........................... 104(c) ss. 317(a)(1)........................ 503 (a)(2)........................ 504 (b)........................... 1003 ss. 318(a)........................... 107
- ---------- Note: This reconciliation and tie shall not, for any purpose, be deemed to be a part of the Indenture. v INDENTURE, dated as of [_____________, 2001], between Fleetwood Enterprises, Inc., a corporation duly organized and existing under the laws of the State of Delaware ("Fleetwood" or the "Company"), having its principal office at 3125 Myers Street, Riverside, California 92503, and The Bank of New York, a New York banking corporation, not in its individual capacity but solely as trustee (the "Trustee"). RECITALS OF THE COMPANY WHEREAS, Fleetwood Capital Trust III, a Delaware statutory business trust (the "Trust") formed under the Amended and Restated Declaration of Trust among the Company, as Sponsor, The Bank of New York, not in its individual capacity but solely in its capacities as property trustee (the "Property Trustee") and Delaware trustee (the "Delaware Trustee"), and Boyd R. Plowman, Lyle L. Larkin and Nelson W. Potter, as trustees (the "Regular Trustees"), dated as of [_____________, 2001] (the "Declaration"), will issue up to $____________ aggregate liquidation amount of its ____% Convertible Trust III Preferred Securities due _______________ (the "Preferred Securities"), with a liquidation amount of $50 per Preferred Security, pursuant to a cash offer (the "Cash Offer"); WHEREAS, the trustees of the Trust, on behalf of the Trust, will execute and deliver to the Company common securities evidencing an ownership interest in the Trust (the "Common Securities"), registered in the name of the Company, in an aggregate liquidation amount equal to approximately three percent (3%) of the capitalization of the Trust, equivalent to [______] Common Securities, with a liquidation amount of $50 per Common Security and having an aggregate liquidation amount with respect to the assets of the Trust of $[_________]; WHEREAS, the Trust will use the proceeds from the sale of the Preferred Securities and the Common Securities to purchase from the Company Securities (as defined below) in an aggregate principal amount of $[_________]; WHEREAS, the Company is guaranteeing the payment of all distributions (including Additional Interest and Compounded Interest, if any) on the Preferred Securities, payment of the Redemption Price, as applicable, and payments on liquidation with respect to the Preferred Securities, to the extent provided in the Preferred Securities Guarantee Agreement(s) (the "Preferred Securities Guarantee") between the Company and The Bank of New York, not in its individual capacity but solely in its capacity as guarantee trustee, for the benefit of the holders from time to time of the Preferred Securities; WHEREAS, the Company has duly authorized the creation of an issue of its ____% Convertible Trust III Subordinated Debentures due ________________ in connection with the purchase of the Common Securities and the Cash Offer (the "Securities") of substantially the tenor and amount hereinafter set forth and, to provide therefor, the Company has duly authorized the execution and delivery of this Indenture; WHEREAS, so long as the Trust is a Holder (as defined below) of Securities and any Preferred Securities are outstanding, the Declaration provides that the holders of Preferred Securities may cause the Conversion Agent (as defined below) to (a) exchange such Preferred Securities for Securities held by the Trust and (b) immediately convert such Securities into Fleetwood Common Stock (as defined below); and WHEREAS, all things necessary to make the Securities, when executed by the Company and authenticated and delivered hereunder and duly issued by the Company, the valid obligations of the Company, and to make this Indenture a valid agreement of the Company, in accordance with their and its terms, have been done. NOW, THEREFORE, THIS INDENTURE WITNESSED: For and in consideration of the premises and the purchase of the Securities by the Holders thereof, it is mutually agreed, for the equal and proportionate benefit of all Holders of the Securities, as follows: ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION SECTION 101. DEFINITIONS. For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires: (1) the terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular; (2) all other terms used herein that are defined in the Trust Indenture Act, either directly or by reference therein, have the meanings assigned to them therein; (3) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles; and (4) the words "herein," "hereof" and "hereunder" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section, Clause or other subdivision. "Act," when used with respect to any Holder, has the meaning specified in Section 104. "Additional Interest" has the meaning specified in Section 301. "Additional Payments" means Compounded Interest and Additional Interest, if any. "Additional Redemption Distribution" has the meaning specified in Section 1109. "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, "control" when used with respect to any specified 2 Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. "Agent" means any Registrar, Paying Agent, Conversion Agent or co-registrar. "Applicable Price" has the meaning specified in Section 1304(d). "Board of Directors" means either the board of directors of the Company or any duly authorized committee of that board. "Board Resolution" means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification, and delivered to the Trustee. "Business Day" means a day other than (a) a Saturday or Sunday, (b) a day on which banking institutions in The City of New York are authorized or required by law or executive order to remain closed, or (c) a day on which the Property Trustee's corporate trust office or the Trustee's Corporate Trust Office is closed for business. "Cash Offer" has the meaning specified in the Recitals to this Indenture. "Change in 1940 Act Law" has the meaning specified in the Declaration. "Closing Price" has the meaning specified in Section 1304(d). "Commission" means the Securities and Exchange Commission, as from time to time constituted, created under the Securities Exchange Act of 1934, as amended, or, if at any time after the execution of this instrument such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties at such time. "Common Securities" has the meaning specified in the Recitals to this Indenture. "Common Securities Guarantee" means the common securities guarantee agreement(s) dated as of [_______________, 2001], of the Sponsor in respect of the Common Securities. "Common Stock Fundamental Change" has the meaning specified in Section 1304(d). "Company" means the Person named as the "Company" in the first paragraph of this Indenture until a successor Person shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Company" shall mean such successor Person. "Company Request" or "Company Order" means a written request or order signed in the name of the Company by its Chairman of the Board, its President or a Vice President, and by its Treasurer, an Assistant Treasurer, its Secretary or an Assistant Secretary, and delivered to the Trustee. 3 "Compounded Interest" has the meaning specified in Section 312. "Conversion Agent" means the Person or Persons appointed to act on behalf of the holders of Preferred Securities and/or on behalf of the holders of Common Securities in effecting the conversion of Preferred Securities and/or Common Securities as and in the manner set forth in the Declaration and Section 1302 hereof. "Conversion Date" has the meaning specified in Section 1302. "Conversion Price" has the meaning specified in Section 1301. "Corporate Trust Office" means the principal office of The Trustee at which at any particular time its corporate trust business shall be administered and which at the date of this Indenture is at 101 Barclay Street, 21 West, New York, New York, 10286, Attention: Corporate Trust Administration. "Current Market Price" has the meaning specified in Section 1303(a)(vii). "Declaration" has the meaning specified in the Recitals to this Indenture. "Defaulted Interest" has the meaning specified in Section 307. "Delaware Trustee" has the meaning specified in the Recitals to this Indenture. "Dissolution Event" means that, as a result of the occurrence and continuation of a Special Event, the Trust is to be dissolved in accordance with the Declaration, and the Securities held by the Property Trustee are to be distributed to the holders of the Trust Securities issued by the Trust pro rata in accordance with the Declaration. "Dissolution Tax Opinion" has the meaning specified in the Declaration. "Distribution Agreement" means the Distribution Agreement dated as of December __, 2001, among Banc of America Securities LLC, the Company and the Trust. "Event of Default" has the meaning specified in Section 501. "Exchange Common Securities" means the common securities representing an undivided beneficial interest in the assets of Trust II. "Exchange Common Securities Guarantee" means the guarantee by the Company of the payments and distributions with respect to the Exchange Common Securities to the extent provided in the Common Securities Guarantee Agreement to be executed and delivered by the Company for the benefit of the holders from time to time of the Exchange Common Securities. "Exchange Debentures" means the ____% Convertible Trust II Subordinated Debentures due ________________ to be issued by the Company under a separate indenture and in connection with the Exchange Offer and the purchase of Exchange Common Securities. 4 "Exchange Offer" means the Company's offer to exchange up to $86,250,000 in aggregate liquidation amount of the Existing Preferred Securities for up to $37,950,000 in aggregate liquidation amount of Exchange Preferred Securities, as such offer may be amended from time to time. "Exchange Preferred Securities" means the ___% Convertible Trust II Preferred Securities Due _________________ to be issued by Trust II in connection with the Exchange Offer. "Exchange Preferred Securities Guarantee" means the guarantee by the Company of the payments and distributions with respect to the Exchange Preferred Securities to the extent provided in that certain Exchange Preferred Securities Guarantee Agreement to be executed and delivered by the Company for the benefit of the holders from time to time of the Exchange Preferred Securities. "Existing Common Securities" means the common securities issued to the Company evidencing an ownership interest in the Existing Trust. "Existing Common Securities Guarantee" means the guarantee by the Company of the payments and distributions with respect to the Existing Common Securities to the extent provided in the Common Securities Guarantee Agreement, dated as of February 10, 1998, executed and delivered by the Company for the benefit of the holders from time to time of the Existing Common Securities. "Existing Debentures" means the 6% Convertible Subordinated Debentures Due 2028 issued by the Company to the Existing Trust. "EXISTING INDENTURE" means the Indenture dated as of February 10, 1998 between the Company and The Bank of New York, as trustee, under which the Existing Debentures were issued. "Existing Preferred Securities Guarantee" means the guarantee by the Company of the payments and distributions with respect to the Existing Preferred Securities to the extent provided in the Preferred Securities Guarantee Agreement between the Company and The Bank of New York, not in its individual capacity but solely as guarantee trustee, dated as of February 10, 1998. "Existing Preferred Securities" means the 6% Convertible Trust Preferred Securities Due February 15, 2028 issued by the Existing Trust. "Existing Trust" means Fleetwood Capital Trust, a Delaware statutory business trust. "Extension Period" has the meaning specified in Section 312. "Fleetwood Common Stock" has the meaning specified in Section 1303(a)(x). "Fundamental Change" has the meaning specified in Section 1304(d). "Holder" means a Person in whose name a Security is registered in the Security Register. 5 "Indenture" means this instrument as originally executed or as it may from time to time be supplemented or amended by one or more indentures supplemental hereto entered into pursuant to the applicable provisions hereof, including, for all purposes of this instrument and any such supplemental indenture, the provisions of the Trust Indenture Act that are deemed to be a part of and govern this instrument and any such supplemental indenture, respectively. "Interest Payment Date" has the meaning specified in Section 301. "Investment Company Event" has the meaning specified in the Declaration. "Maturity", when used with respect to any Security, means the date on which the principal of such Security becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration, call for redemption or otherwise. "90 Day Period" has the meaning specified in Section 1110. "Non-Stock Fundamental Change" has the meaning specified in Section 1304(d). "No Recognition Opinion" has the meaning specified in the Declaration. "Notice of Conversion" means the notice to be given by a holder of Preferred Securities or Common Securities to the Conversion Agent directing the Conversion Agent to exchange such Preferred Securities or Common Securities for Securities and to convert such Securities into Fleetwood Common Stock on behalf of such holder. "Officers' Certificate" means a certificate signed by the Chairman of the Board, the President or a Vice President, and by the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary of the Company, and delivered to the Trustee. One of the officers signing an Officers' Certificate given pursuant to Section 1004 shall be the principal executive, financial or accounting officer of the Company. "Opinion of Counsel" means a written opinion of counsel, who may be counsel for the Company, and who shall be reasonably acceptable to the Trustee. "Outstanding," when used with respect to Securities, means, as of the date of determination, all Securities theretofore authenticated and delivered under this Indenture, EXCEPT: (i) Securities theretofore cancelled by the Trustee or delivered to the Trustee for cancellation; (ii) Securities for whose payment or redemption money in the necessary amount has been theretofore deposited with the Trustee or any Paying Agent (other than the Company) in trust or set aside and segregated in trust by the Company (if the Company shall act as its own Paying Agent) for the Holders of such Securities; provided, that if such Securities are to be redeemed, notice of such redemption has been duly given pursuant to this Indenture or provision therefor satisfactory to the Trustee has been made; and (iii) Securities which have been paid pursuant to Section 306, converted into Fleetwood Common Stock pursuant to Section 1301, or in exchange for or in lieu of which other Securities have been authenticated and delivered pursuant to this Indenture, other than any such Securities in respect of which there shall have been presented to the Trustee proof satisfactory to it that such Securities are held by a bona fide purchaser in whose hands such Securities are valid obligations of the Company; PROVIDED, HOWEVER, that upon any 6 distribution of the Securities to the holders of the Preferred Securities in accordance with the Declaration, in determining whether the Holders of the requisite principal amount of Outstanding Securities have given any request, demand, authorization, direction, notice, consent or waiver hereunder or are present at a meeting of Holders of Securities for quorum purposes, Securities beneficially owned by the Company or any other obligor upon the Securities, or any Affiliate of the Company or such other obligor, shall be disregarded and deemed not to be Outstanding, except that, in determining whether the Trustee shall be protected in making any such determination or relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Securities which the Trustee actually knows to be so owned shall be so disregarded. "Paying Agent" means any Person authorized by the Company to pay the principal of or interest on any Securities on behalf of the Company. "Person" means any individual, corporation, company, partnership, joint venture, trust, unincorporated organization or government or any agency or political subdivision thereof. "Placement Agent" means Banc of America Securities LLC, as placement agent under the Distribution Agreement. "Predecessor Security" of any particular Security means every previous Security evidencing all or a portion of the same debt as that evidenced by such particular Security; and, for the purposes of this definition, any Security authenticated and delivered under Section 306 in exchange for or in lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen Security. "Preferred Securities" has the meaning specified in the Recitals to this Indenture. "Preferred Securities Guarantee" has the meaning specified in the Recitals to this Indenture. "Property Trustee" has the meaning specified in the Recitals to this Indenture. "Purchaser Stock Price" has the meaning specified in Section 1304(d). "Redemption Date", when used with respect to any Security to be redeemed, means the date fixed for such redemption by or pursuant to this Indenture. "Redemption Price", when used with respect to any Security to be redeemed, means the price at which it is to be redeemed pursuant to this Indenture. "Reference Date" has the meaning specified in Section 1303(a)(iv). "Reference Market Price" has the meaning specified in Section 1304(d). "Regular Record Date" has the meaning specified in Section 301. 7 "Responsible Officer", when used with respect to the Trustee, means any vice president, any assistant vice president, the treasurer, any assistant treasurer, any trust officer or assistant trust officer, or any other officer of the Trustee customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject. "Securities" has the meaning specified in the Recitals to this Indenture. "Securities Act" means the Securities Act of 1933, as amended. "Securities Exchange Act" means the Securities Exchange Act of 1934, as amended. "Security Register" and "Security Registrar" have the respective meanings specified in Section 305. "Senior Indebtedness" means (a) any liability of the Company (1) for borrowed money or under any reimbursement obligation relating to a letter of credit, surety bond or similar instrument, or (2) evidenced by a bond, note, debenture or similar instrument, or (3) for obligations to pay the deferred purchase price of property or services, except trade accounts payable arising in the ordinary course of business, or (4) for the payment of money relating to a capitalized lease obligation, or (5) for the payment of money under any Swap Agreement; (b) any liability of others described in the preceding clause (a) that the Company has guaranteed or that is otherwise its legal liability; (c) any deferral, renewal, extension or refunding of any liability of the types referred to in clauses (a) and (b) above, unless, in the instrument creating or evidencing any such liability referred to in clause (a) or (b) above or any such deferral, renewal, extension or refunding referred to in clause (c) above or pursuant to which the same is outstanding, it is expressly provided that such liability, deferral, renewal, extension or refunding is subordinate in right of payment to all other indebtedness of the Company or is not senior or prior in right of payment to the Securities or ranks PARI PASSU with or subordinate to the Securities in right of payment; PROVIDED that the Securities shall not constitute Senior Indebtedness; and PROVIDED, FURTHER, that Senior Indebtedness shall not include any indebtedness or guarantees between or among the Company or its affiliates, including all debt securities or guarantees in respect of those debt securities issued to any trust (including the Trust), trustee of a trust (including the Trust), partnership, limited liability company or other person affiliated with the Company that is a financing vehicle of the Company (a "Financing Entity") in connection with the issuance by such Financing Entity of preferred securities unless otherwise expressly provided in the instrument creating or evidencing such indebtedness, debt securities or guarantees, as the case may be, or pursuant to which the same is outstanding. For the avoidance of doubt, none of the Preferred Securities Guarantee, the Common Securities Guarantee, the Exchange Debentures, the Exchange Preferred Securities Guarantee, the Exchange Common Securities Guarantee, the Existing Debentures, the Existing Preferred Securities Guarantee or the Existing Common Securities Guarantee shall constitute Senior Indebtedness. "Special Event" means either a Tax Event or an Investment Company Event. 8 "Special Record Date" for the payment of any Defaulted Interest means a date fixed by the Trustee pursuant to Section 307. "Stated Maturity", when used with respect to any Security or any installment of interest thereon, means the date specified in such Security as the fixed date on which the principal, together with any accrued and unpaid interest (including Compounded Interest), of such Security or such installment of interest is due and payable. "Subsidiary" of any Person means (i) a corporation more than 50% of the outstanding Voting Stock of which is owned, directly or indirectly, by such Person or by one or more other Subsidiaries of such Person or by such Person and one or more Subsidiaries thereof or (ii) any other Person (other than a corporation) in which such Person, or one or more other Subsidiaries of such Person or such Person and one or more other Subsidiaries thereof, directly or indirectly, has at least a majority ownership and power to direct the policies, management and affairs thereof. "Swap Agreement" means any financial agreement designed to manage the Company's exposure to fluctuations in interest rates or credit conditions, currency exchange rates or commodity prices, including without limitation swap agreements, option agreements, cap agreements, floor agreements, collar agreements, credit swaps and forward purchase agreements. "Tax Event" has the meaning specified in the Declaration. "Trading Day" means a day on which Fleetwood Common Stock is traded on the national securities exchange or the quotation system used to determine the Current Market Price. "Trust" has the meaning specified in the Recitals to this Indenture. "Trust II" means Fleetwood Capital Trust II, a Delaware statutory business trust. "Trust Indenture Act" means the Trust Indenture Act of 1939 as in force at the date as of which this instrument was executed; PROVIDED, HOWEVER, that in the event the Trust Indenture Act of 1939 is amended after such date, "Trust Indenture Act" means, to the extent required by any such amendment, the Trust Indenture Act of 1939 as so amended. "Trustee" means the Person named as the "Trustee" in the first paragraph of this Indenture until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Trustee" shall mean such successor Trustee. "Trust Securities" means Common Securities and Preferred Securities. "Vice President", when used with respect to the Company or the Trustee, means any vice president, whether or not designated by a number or a word or words added before or after the title "vice president." "Voting Stock" of any Person means capital stock of such Person which ordinarily has voting power for the election of directors (or Persons performing similar functions) of such 9 Person, whether at all times or only so long as no senior class of securities has such voting power by reason of any contingency. SECTION 102. COMPLIANCE CERTIFICATES AND OPINIONS. Upon any application or request by the Company to the Trustee to take any action under any provision of this Indenture, the Company shall furnish to the Trustee such certificates and opinions as may be required under the Trust Indenture Act or reasonably requested by the Trustee in connection with such application or request. Each such certificate or opinion shall be given in the form of an Officers' Certificate, if to be given by an officer of the Company, or an Opinion of Counsel, if to be given by counsel, and shall comply with the applicable requirements of the Trust Indenture Act and any other applicable requirement set forth in this Indenture. SECTION 103. FORM OF DOCUMENTS DELIVERED TO TRUSTEE. In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents. Any certificate or opinion of an officer of the Company may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to the matters upon which his certificate or opinion is based are erroneous. Any such certificate or opinion of counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Company stating that the information with respect to such factual matters is in the possession of the Company, unless such counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters are erroneous. Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument. SECTION 104. ACTS OF HOLDERS; RECORD DATES. (a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by an agent duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee and, where it is hereby expressly required, to the Company. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of the Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for 10 any purpose of this Indenture and (subject to Section 601) conclusive in favor of the Trustee and the Company, if made in the manner provided in this Section. (b) The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by a certificate of a notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof. Where such execution is by a signer acting in a capacity other than his individual capacity, such certificate or affidavit shall also constitute sufficient proof of his authority. The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner which the Trustee or the Company, as the case may be, deems sufficient. (c) The Company may, in the circumstances permitted by the Trust Indenture Act, fix any day as the record date for the purpose of determining the Holders entitled to give or take any request, demand, authorization, direction, notice, consent, waiver or other action, or to vote on any action, authorized or permitted to be given or taken by Holders. If not set by the Company prior to the first solicitation of a Holder made by any Person in respect of any such action, or, in the case of any such vote, prior to such vote, the record date for any such action or vote shall be the 30th day (or, if later, the date of the most recent list of Holders required to be provided pursuant to Section 701) prior to such first solicitation or vote, as the case may be. With regard to any record date, only the Holders on such date (or their duly designated proxies) shall be entitled to give or take, or vote on, the relevant action. (d) The ownership of Securities shall be proved by the Security Register. (e) Any request, demand, authorization, direction, notice, consent, waiver or other Act of the Holder of any Security shall bind every future Holder of the same Security and the Holder of every Security issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, omitted or suffered to be done by the Trustee or the Company in reliance thereon, whether or not notation of such action is made upon such Security. SECTION 105. NOTICES, ETC., TO TRUSTEE AND THE COMPANY. Any request, demand, authorization, direction, notice, consent, waiver or Act of Holders or other document provided or permitted by this Indenture to be made upon, given or furnished to, or filed with, (1) the Trustee by any Holder or by the Company shall be sufficient for every purpose hereunder if made, given, furnished or filed in writing to or with the Trustee at its Corporate Trust Office, Attention: Corporate Trust Trustee Administration, or (2) the Company by the Trustee or by any Holder shall be sufficient for every purpose hereunder (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to the Company addressed to it at the address of its principal office specified in the first paragraph of this instrument or at any other address previously furnished in writing to the Trustee by the Company. 11 SECTION 106. NOTICE TO HOLDERS; WAIVER. Where this Indenture provides for notice to Holders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to each Holder affected by such event, at such Holder's address as it appears in the Security Register, not later than the latest date (if any), and not earlier than the earliest date (if any), prescribed for the giving of such notice. In any case where notice to Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. In case by reason of the suspension of regular mail service or by reason of any other cause it shall be impracticable to give such notice by mail, then such notification as shall be made with the approval of the Trustee shall constitute a sufficient notification for every purpose hereunder. SECTION 107. CONFLICT WITH TRUST INDENTURE ACT. If any provision hereof limits, qualifies or conflicts with a provision of the Trust Indenture Act that is required under the Trust Indenture Act to be a part of and govern this Indenture, the latter provision shall control. If any provision of this Indenture modifies or excludes any provision of the Trust Indenture Act that may be so modified or excluded, the latter provision shall be deemed to apply to this Indenture as so modified or excluded, as the case may be. SECTION 108. EFFECT OF HEADINGS AND TABLE OF CONTENTS. The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof. SECTION 109. SUCCESSORS AND ASSIGNS. All covenants and agreements in this Indenture by the Company shall bind its successors and assigns, whether so expressed or not. SECTION 110. SEPARABILITY CLAUSE. In case any provision in this Indenture or in the Securities shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. 12 SECTION 111. BENEFITS OF INDENTURE. Nothing in this Indenture or in the Securities, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder, the holders of Senior Indebtedness, the holders of Preferred Securities (to the extent provided herein) and the Holders of Securities, any benefit or any legal or equitable right, remedy or claim under this Indenture. SECTION 112. GOVERNING LAW. THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS. SECTION 113. LEGAL HOLIDAYS. In any case where any Interest Payment Date, Redemption Date or Stated Maturity of any Security or the last date on which a Holder has the right to convert his Securities shall not be a Business Day, then (notwithstanding any other provision of this Indenture or of the Securities) payment of interest or principal or conversion of the Securities need not be made on such date, but may be made on the next succeeding Business Day (except that, if such Business Day is in the next succeeding calendar year, such Interest Payment Date, Redemption Date or Stated Maturity, as the case may be, shall be the immediately preceding Business Day) with the same force and effect as if made on the Interest Payment Date or Redemption Date, or at the Stated Maturity or on such last day for conversion, PROVIDED, that no interest shall accrue for the period from and after such Interest Payment Date, Redemption Date or Stated Maturity, as the case may be. ARTICLE TWO SECURITY FORMS SECTION 201. FORMS GENERALLY. The Securities and the Trustee's certificates of authentication shall be substantially in the form of EXHIBIT A-1 which is hereby incorporated in and expressly made a part of this Indenture. The Securities may have notations, legends or endorsements required by law, stock exchange rule, agreements to which the Company is subject, if any, or usage (provided that any such notation, legend or endorsement is in a form acceptable to the Company). The Company shall furnish any such legend not contained in EXHIBIT A-1 to the Trustee in writing. Each Security shall be dated the date of its authentication. The terms and provisions of the Securities set forth in EXHIBITS A-1 are part of the terms of this Indenture and, to the extent applicable, the Company and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby. The definitive Securities shall be typewritten or printed, lithographed or engraved or produced by any combination of these methods or may be produced in any other manner permitted by the rules of any securities exchange on which the Securities may be listed, all as determined by the officers executing such Securities, as conclusively evidenced by their execution of such Securities. 13 SECTION 202. INITIAL ISSUANCE TO PROPERTY TRUSTEE. The Securities initially issued to the Property Trustee of the Trust shall be in the form of one or more individual certificates in definitive, fully registered form without distribution coupons unless the Company determines otherwise in accordance with applicable law. SECTION 203. GLOBAL SECURITIES. Any Securities issued to holders of Preferred Securities, when and if such holders receive the Securities in lieu of Preferred Securities, shall be issued in the form of one or more global securities in definitive, fully registered form without distribution coupons with the appropriate global legend set forth in EXHIBIT A-1 hereto (a "Global Security"), which shall be (a) deposited by the Property Trustee on behalf of such holders with The Depository Trust Company (the "Depositary") or held by the Property Trustee as custodian for the Depositary and (b) registered in the name of Cede & Co., as nominee of the Depositary, or other nominee of the Depositary, pursuant to the Depositary's instructions. Members of, or participants in, the Depositary ("Participants") shall have no rights under this Indenture with respect to any such Global Security held on their behalf by the Depositary or by the Property Trustee, as the custodian of the Depositary, or under such global Security, and the Depositary will be treated by the Company, the Property Trustee and any agent of the Company or the Property Trustee as the absolute owner of such Global Security for all purposes whatsoever during such period that the Depositary, or its nominee, is the registered owner or holder of any such Global Security. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Property Trustee or any agent of the Company or the Property Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depositary or impair, as between the Depositary and its Participants, the operation of customary practices of such Depositary governing the exercise of the rights of a holder of a beneficial interest in any Global Security. Except as otherwise provided in Section 304, owners of beneficial interests in any Global Security will not be entitled to receive physical delivery of certificated Securities. ARTICLE THREE THE SECURITIES SECTION 301. TITLE AND TERMS. The aggregate principal amount of Securities that may be authenticated and delivered under this Indenture is initially limited to $[___________], except for Securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Securities pursuant to Sections 304, 305, 306, 906, 1108 and 1301. The Securities shall be known and designated as the Company's "_____% Convertible Trust III Subordinated Debentures Due _____" issued in connection with the Cash Offer. Their Stated Maturity shall be ______________, and they shall bear interest at the rate of _____% per annum, from [__________, 2001], or from the most recent Interest Payment Date (as defined below) to which interest has been paid or duly provided for, as the case may be, payable 14 quarterly (subject to deferral as set forth herein), in arrears, on February 15, May 15, August 15 and November 15 (each an "Interest Payment Date") of each year, commencing February 15, 2002, until the principal thereof is paid or made available for payment. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date shall be paid, in cash or, at the Company's election, prior to February 15, 2004, in Fleetwood Common Stock to the Person in whose name a Security is registered at the close of business on the regular record date for such interest installment, which shall be the date that is 15 days prior to the Interest Payment Date (whether or not a Business Day) (the "Regular Record Date"), as the case may be, next preceding such Interest Payment Date. The Company may elect to pay such interest by delivery of shares of Fleetwood Common Stock pursuant to this Section 301 if and only if the following conditions shall have been satisfied: (1) The shares of Fleetwood Common Stock deliverable in payment of the interest shall have a fair market value as of the Interest Payment Date of not less than the interest as determined by this Section 301 hereof. For purposes of this Section 301, the fair market value of shares of Fleetwood Common Stock shall be determined by the Company and shall be equal to 90% of the average of the Closing Price for the five consecutive Trading Days immediately preceding the second Trading Day prior to the Interest Payment Date. (2) Interest shall be paid only in cash in the event any shares of Fleetwood Common Stock to be issued for the payment of interest on the Securities hereunder (i) require registration under any federal securities law before such shares may be freely transferable without being subject to any transfer restrictions under the Securities Act upon issuance and if such registration is not completed or does not become effective prior to the Interest Payment Date, and/or (ii) require registration with or approval of any governmental authority under any state law or other federal law before such shares may be validly issued or delivered upon issuance and if such registration is not completed or does not become effective or such approval is not obtained prior to the Interest Payment Date; (3) The Fleetwood Common Stock is, or shall have been, approved for quotation on the Nasdaq National Market or listing on the New York Stock Exchange, in either case, prior to the Interest Payment Date; and (4) All shares of Fleetwood Common Stock which may be issued with respect to the payment of interest on the Securities will be issued out of the Company's authorized but unissued Fleetwood Common Stock and, will upon issue, be duly and validly issued and fully paid and non-assessable and free of any preemptive rights. If all of the conditions set forth in the preceding paragraph are not satisfied in accordance with the terms thereof, the interest required to be paid or duly provided for by the Company pursuant to this Section shall be paid by the Company only in cash. Holders of Securities shall be provided notice of the Company's election to pay interest in Fleetwood Common Stock instead of cash no later than the relevant Regular Record Date. 15 Interest will compound quarterly and will accrue at the rate of _____% per annum on any interest installment in arrears for more than one quarter or during an extension of an interest payment period as set forth in Section 312 hereof. The amount of interest payable for any period will be computed on the basis of a 360-day year of twelve 30-day months, and, for any period of less than a full calendar month, the actual number of days elapsed in such month. In the event that any date on which interest is payable on the Securities is not a Business Day, then payment of interest payable on such date will be made on the next succeeding day that is a Business Day (and without any interest or other payment in respect of any such delay), except that, if such Business Day is in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in each case with the same force and effect as if made on such date. If at any time while the Property Trustee is the Holder of any Securities, the Trust or the Property Trustee is required to pay any taxes, duties, assessments or governmental charges of whatever nature (other than withholding taxes) imposed by the United States, or any other taxing authority, then, in any such case, the Company will pay as additional interest ("Additional Interest") on the Securities held by the Property Trustee, to the extent permitted by applicable law, such additional amounts as shall be required so that the net amounts received and retained by the Trust and the Property Trustee after paying such taxes, duties, assessments or other governmental charges will be equal to the amounts the Trust and the Property Trustee would have received had no such taxes, duties, assessments or other government charges been imposed. The principal of the Securities shall be payable at the office or agency of the Company in the United States maintained for such purpose and at any other office or agency maintained by the Company for such purpose in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. The interest on the Securities shall be payable, if paid in cash, at and in the same manner as the payment of principal described in the preceding sentence (PROVIDED, HOWEVER, that any such payment of interest may be made at the option of the Company by check mailed to the address of the holder entitled thereto or by wire transfer to an account in the United States appropriately designated by the holder entitled thereto prior to the record date for the corresponding interest payment date) or, if at the Company's election the interest is paid in shares of Fleetwood Common Stock, the Company shall register such shares in the name of the Holder entitled thereto. Notwithstanding the foregoing, so long as the holder of any Securities is the Property Trustee, the payment of principal on the Securities held by the Property Trustee will be made by wire transfer at such place and to such account in the United States as may be designated by the Property Trustee, and any interest (x) paid in cash shall be paid to the Property Trustee at and in the same manner as the payment of principal and (y) paid in shares of Fleetwood Common Stock shall be registered in the name of the Property Trustee or such other name as the Property Trustee shall designate in writing. The Securities shall be redeemable as provided in Article Eleven hereof. Solely for purposes of ranking and priority with respect to the Existing Debentures, the Existing Preferred Securities Guarantee and the Existing Common Securities Guarantee, the Securities shall be deemed "Senior Indebtedness," as such term is defined in the Existing 16 Indenture, the Existing Preferred Securities Guarantee and the Existing Common Securities Guarantee, respectively. The Securities shall be subordinated in right of payment to Senior Indebtedness, as provided in Article Twelve hereof; PARI PASSU in right of payment with the Preferred Securities Guarantee, the Exchange Debentures and the Exchange Preferred Securities Guarantee; and senior and prior in right of payment to the Common Securities Guarantee, the Exchange Common Securities Guarantee, the Existing Debentures, the Existing Common Securities Guarantee and the Existing Preferred Securities Guarantee. The Securities shall be convertible as provided in Article Thirteen hereof. SECTION 302. DENOMINATIONS. The Securities shall be issuable only in registered form without coupons and only in denominations of $50 and integral multiples thereof. SECTION 303. EXECUTION, AUTHENTICATION, DELIVERY AND DATING. The Securities shall be executed on behalf of the Company by its Chairman of the Board, its President or one of its Vice Presidents. The signature of any of these officers on the Securities may be manual or facsimile. Securities bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Securities or did not hold such offices at the date of such Securities. At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Securities executed by the Company to the Trustee for authentication, together with a Company Order, an Officers' Certificate and an Opinion of Counsel, as contemplated by Section 102, for the authentication and delivery of such Securities; and the Trustee in accordance with such Company Order shall manually authenticate and make available for delivery such Securities as in this Indenture provided and not otherwise. No Security shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose unless there appears on such Security a certificate of authentication substantially in the form provided for herein executed by the Trustee by manual signature, and such certificate upon any Security shall be conclusive evidence, and the only evidence, that such Security has been duly authenticated and delivered hereunder. SECTION 304. TEMPORARY SECURITIES. Pending the preparation of definitive Securities, the Company may execute, and upon Company Order the Trustee shall authenticate and make available for delivery, temporary Securities that are printed, lithographed, typewritten, mimeographed or otherwise produced, in any authorized denomination, substantially of the tenor of the definitive Securities in lieu of which they are issued and with such appropriate insertions, omissions, substitutions and other 17 variations as the officers executing such Securities may determine, as conclusively evidenced by their execution of such Securities. If temporary Securities are issued, the Company will cause definitive Securities to be prepared without unreasonable delay. After the preparation of definitive Securities, the temporary Securities shall be exchangeable for definitive Securities upon surrender of the temporary Securities, at any office or agency of the Company designated pursuant to Section 1002, without charge to the Holder. Upon surrender for cancellation of any one or more temporary Securities, the Company shall execute and the Trustee shall authenticate and make available for delivery in exchange therefor a like principal amount of definitive Securities of authorized denominations. Until so exchanged, the temporary Securities shall in all respects be entitled to the same benefits under this Indenture as definitive Securities. SECTION 305. REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE. (a) GENERAL. The Company shall cause to be kept at the Corporate Trust Office of the Trustee a register (the register maintained in such office and in any other office or agency designated pursuant to Section 1002 being herein sometimes collectively referred to as the "Security Register") in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration of Securities and of transfers of Securities. The Trustee is hereby appointed "Security Registrar" for the purpose of registering Securities and transfers of Securities as herein provided. Upon surrender for registration of transfer of any Security at an office or agency of the Company designated pursuant to Section 1002 for such purpose, the Company shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Securities of any authorized denominations and of a like aggregate principal amount. At the option of the Holder, Securities may be exchanged for other Securities of any authorized denominations and of a like aggregate principal amount, upon surrender of the Securities to be exchanged at such office or agency. Whenever any Securities are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and make available for delivery, the Securities which the Holder making the exchange is entitled to receive. All Securities issued upon any registration of transfer or exchange of Securities shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Securities surrendered upon such registration of transfer or exchange. Every Security presented or surrendered for registration of transfer or for exchange shall (if so required by the Company or the Trustee) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed, by the Holder thereof or his attorney duly authorized in writing. No service charge shall be made for any registration of transfer or exchange of Securities, but the Company may require payment of a sum sufficient to cover any tax or other 18 governmental charge that may be imposed in connection with any registration of transfer or exchange of Securities, other than exchanges pursuant to Section 304, 906, 1108 or 1301 not involving any transfer. The Company shall not be required (i) in the case of a partial redemption of the Securities, to issue, register the transfer of, or exchange, any Security during a period beginning at the opening of business 15 days before the day of the mailing of a notice of redemption of Securities selected for redemption under Section 1104 and ending at the close of business on the day of such mailing, or (ii) to register the transfer of or exchange any Security so selected for redemption in whole or in part, except the unredeemed portion of any Security being redeemed in part. (b) TRANSFER PROCEDURES AND RESTRICTIONS. Upon any distribution of the Securities to the holders of the Preferred Securities in accordance with the Declaration, the Company and the Trustee shall enter into a supplemental indenture pursuant to Section 901(6) to provide for transfer procedures and restrictions with respect to the Securities substantially similar to those contained in the Declaration to the extent applicable in the circumstances existing at the time of such distribution. SECTION 306. MUTILATED, DESTROYED, LOST AND STOLEN SECURITIES. If any mutilated Security is surrendered to the Trustee, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a new Security of like tenor and principal amount and bearing a number not contemporaneously outstanding. If there shall be delivered to the Company and the Trustee (i) evidence to their satisfaction of the destruction, loss or theft of any Security and (ii) such security or indemnity as may be required by them to save each of them and any agent of either of them harmless, then, in the absence of notice to the Company or the Trustee that such Security has been acquired by a bona fide purchaser, the Company shall execute and the Trustee shall authenticate and deliver, in lieu of any such destroyed, lost or stolen Security, a new Security of like tenor and principal amount and bearing a number not contemporaneously outstanding. In case any such mutilated, destroyed, lost or stolen Security has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Security, pay such Security. Upon the issuance of any new Security under this Section, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith. Every new Security issued pursuant to this Section in lieu of any destroyed, lost or stolen Security shall constitute an original additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Security shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Securities duly issued hereunder. 19 The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities. SECTION 307. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED. Interest on any Security which is payable, and is punctually paid or duly provided for, on any Interest Payment Date, shall be paid to the Person in whose name that Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date. Any interest on any Security which is payable, but is not punctually paid or duly provided for, on any Interest Payment Date (herein called "Defaulted Interest") shall forthwith cease to be payable to the Holder on the relevant Regular Record Date by virtue of having been such Holder, and such Defaulted Interest may be paid by the Company, at its election in each case, as provided in Clause (1) or (2) below: (1) The Company may elect to make payment of any Defaulted Interest to the Persons in whose names the Securities (or their respective Predecessor Securities) are registered at the close of business on a Special Record Date for the payment of such Defaulted Interest, which shall be fixed in the following manner. The Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Security and the date of the proposed payment, and at the same time the Company shall deposit with the Trustee an amount of money, or such number of shares of Fleetwood Common Stock, the value of which shall be determined as set forth in Section 301, equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest, or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money or shares of Fleetwood Common Stock when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this Clause provided. Thereupon the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest, which shall be not more than 15 days and not less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company of such Special Record Date and, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first-class postage prepaid, to each Holder at his address as it appears in the Security Register, not less than 10 days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been so mailed, such Defaulted Interest shall be paid to the Persons in whose names the Securities (or their respective Predecessor Securities) are registered at the close of business on such Special Record Date and shall no longer be payable pursuant to the following Clause (2). (2) The Company may make payment of any Defaulted Interest in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities may be listed, and, if so listed, upon such notice as may be required by such exchange, if, after notice given by the Company to the Trustee of the proposed 20 payment pursuant to this Clause, such manner of payment shall be deemed practicable by the Trustee. Subject to the foregoing provisions of this Section, each Security delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Security shall carry the rights to interest accrued and unpaid, and to accrue (including in each such case Compounded Interest), which were carried by such other Security. In the case of any Security that is converted after any Regular Record Date and on or prior to the next succeeding Interest Payment Date (other than any Security whose Maturity is prior to such Interest Payment Date), interest whose Stated Maturity is on such Interest Payment Date shall be payable on such Interest Payment Date notwithstanding such conversion, and such interest (whether or not punctually paid or duly provided for) shall be paid to the Person in whose name that Security (or one or more Predecessor Securities) is registered at the close of business on such Regular Record Date. Except as otherwise expressly provided in the immediately preceding sentence, in the case of any Security that is converted, interest whose Stated Maturity is after the date of conversion of such Security shall not be payable, and the Company shall not make nor be required to make any other payment, adjustment or allowance with respect to accrued but unpaid interest (including Additional Payments, if any) on the Securities being converted, which shall be deemed to be paid in full. SECTION 308. PERSONS DEEMED OWNERS. Prior to due presentment of a Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name such Security is registered as the owner of such Security for the purpose of receiving payment of principal of and (subject to Section 307) interest (including Additional Payments, if any) on such Security and for all other purposes whatsoever, whether or not such Security is overdue, and neither the Company, the Trustee nor any agent of the Company or the Trustee shall be affected by notice to the contrary. SECTION 309. CANCELLATION. All Securities surrendered for payment, redemption, registration of transfer or exchange or conversion shall, if surrendered to any Person other than the Trustee, be delivered to the Trustee and shall be promptly cancelled by it. The Company may at any time deliver to the Trustee for cancellation any Securities previously authenticated and delivered hereunder which the Company may have acquired in any manner whatsoever, and all Securities so delivered shall be promptly cancelled by the Trustee. No Securities shall be authenticated in lieu of or in exchange for any Securities cancelled as provided in this Section, except as expressly permitted by this Indenture. All cancelled Securities held by the Trustee shall be disposed of as directed by a Company Order; PROVIDED, HOWEVER, that the Trustee shall not be required to destroy the certificates representing such cancelled Securities. SECTION 310. RIGHT OF SETOFF. Notwithstanding anything to the contrary in this Indenture, the Company shall have the right to set off any payment it is otherwise required to make hereunder to the extent the 21 Company has theretofore made, or is concurrently on the date of such payment making, a payment under the Preferred Securities Guarantee. SECTION 311. CUSIP NUMBERS. At any time when the Securities are not held solely by the Trust, the Company shall obtain and use "CUSIP" numbers, and the Trustee shall use "CUSIP" numbers in notices of redemption as a convenience to Holders; PROVIDED, that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Securities or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Securities, and any such redemption shall not be affected by any defect in or omission of such numbers. SECTION 312. EXTENSION OF INTEREST PAYMENT PERIOD; NOTICE OF EXTENSION. (a) So long as the Company shall not be in default in the payment of interest on the Securities, the Company shall have the right, at any time on or after February 15, 2004 and from time to time thereafter during the term of the Securities, to defer payments of interest (including Additional Interest, if any) by extending any interest payment period for successive periods not exceeding 20 consecutive quarters for each such period (an "Extension Period"). To the extent permitted by applicable law, interest, the payment of which has been deferred because of the extension of the interest payment period pursuant to this Section 312, will bear interest at the per annum rate specified in Section 301 compounded quarterly for each quarter of the Extension Period ("Compounded Interest"); PROVIDED, that during an Extension Period, the Company shall be subject to the provisions of Section 1008 hereof. At the end of the Extension Period, the Company shall pay all interest then accrued and unpaid on the Securities, including any Additional Payments, that shall be payable to the Holders of the Securities in whose names the Securities are registered in the Security Register on the first Regular Record Date after the end of the Extension Period. Before the termination of any Extension Period, the Company may further extend such period, PROVIDED, that such period together with all such further extensions thereof shall not exceed 20 consecutive quarters or extend beyond the maturity of the Securities or end other than on an Interest Payment Date. Upon the termination of any Extension Period and upon the payment of all amounts then due on the Securities, including any Additional Payments, the Company may commence a new Extension Period, subject to the foregoing requirements. No interest shall be due and payable during an Extension Period except at the end thereof. (b) The Company must give the Property Trustee, the Regular Trustees and the Trustee notice of its election to begin an Extension Period at least one Business Day prior to the earliest of (i) the date the distribution on the Preferred Securities would have been payable except for the election to begin such Extension Period or (ii) if applicable, the date the Regular Trustees are required to give notice of the Regular Record Date to the NYSE, the Nasdaq National Market or other applicable self-regulatory organization or to holders of such Preferred Securities of the record date or (iii) the date such distribution is payable, but in any event not less than one Business Day prior to the Regular Record Date. The Trustee shall give notice of the Company's election to begin an Extension Period to the holders of the Securities and the Regular Trustees shall give notice of the Company's election to the holders of the Preferred Securities. 22 (c) The quarter in which any notice is given pursuant to paragraph (b) hereof shall be counted as one of the 20 quarters permitted in the maximum Extension Period permitted under paragraph (a) hereof. SECTION 313. PAYING AGENT, SECURITY REGISTRAR AND CONVERSION AGENT. The Trustee will initially act as Paying Agent, Security Registrar and Conversion Agent. The Company may change any Paying Agent, Security Registrar, co-registrar or Conversion Agent without prior notice. The Company or any of its Affiliates may act in any such capacity. ARTICLE FOUR SATISFACTION AND DISCHARGE SECTION 401. SATISFACTION AND DISCHARGE OF INDENTURE. On demand and at the expense of the Company, this Indenture shall cease to be of further effect (except as to the obligations to pay Additional Payments and the rights of conversion, registration of transfer or exchange of Securities herein provided for), and the Trustee, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture, when (1) either (A) all Securities theretofore authenticated and delivered (other than (i) Securities that have been destroyed, lost or stolen and that have been replaced or paid as provided in Section 306 and (ii) Securities for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust, as provided in Section 1003) have been delivered to the Trustee for cancellation; or (B) all such Securities not theretofore delivered to the Trustee for cancellation (i) have become due and payable, or (ii) will become due and payable at their Stated Maturity within one year, or (iii) are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company; and the Company, in the case of (i), (ii) or (iii) above, has deposited or caused to be deposited with the Trustee as trust funds in trust for the purpose an amount in U.S. Dollars sufficient to pay and discharge the entire indebtedness on such Securities not theretofore delivered to the Trustee, for cancellation, for principal (and premium, if any) and interest (including Compounded Interest and Additional Interest, if any) to the date of such deposit (in the case of Securities which have become due and payable) or to the Stated Maturity or Redemption Date, as the case may be; (2) the Company has paid or caused to be paid all other sums payable hereunder by the Company; and 23 (3) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with. Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Company to the Trustee under Section 607 and, if money shall have been deposited with the Trustee pursuant to subclause (B) of Clause (1) of this Section, the obligations of the Trustee under Section 402 and the last paragraph of Section 1003 shall survive. The Company will also continue to be obligated to pay Additional Payments to the extent the amount thereof exceeds the amount so deposited. SECTION 402. APPLICATION OF TRUST MONEY. Subject to the provisions of the last paragraph of Section 1003, all money deposited with the Trustee pursuant to Section 401 shall be held in trust and applied by it, in accordance with the provisions of the Securities and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of the principal and interest for whose payment such money has been deposited with the Trustee. All moneys deposited with the Trustee pursuant to Section 401 (and held by it or any Paying Agent) for the payment of Securities subsequently converted shall be returned to the Company upon Company Request. ARTICLE FIVE REMEDIES SECTION 501. EVENTS OF DEFAULT. "Event of Default," wherever used herein, means any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body): (1) default in the payment of any interest on the Securities (including Additional Payments, if any, in respect thereof), when the same shall become due and payable, and continuance of such default for a period of 30 days, provided that a valid extension of an interest payment period will not constitute a default in the payment of any interest (including Additional Interest or Compounded Interest, if any) for this purpose; (2) default in the payment of the principal of or premium, if any, on any Security when due upon Maturity (whether upon redemption or otherwise); (3) failure by the Company (i) to deliver any shares of Fleetwood Common Stock upon an appropriate election by a registered holder of Securities to convert such Securities, provided that such election is made in accordance with applicable provisions of the Indenture, or (ii) if an Additional Redemption Distribution is payable, to make such payment when due; 24 (4) default by the Company in the performance, or breach, of any other covenant or warranty of the Company in this Indenture or a Security, and continuance of such default or breach for a period of 90 days after there has been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in principal amount of the Outstanding Securities, a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a "Notice of Default" hereunder; (5) the voluntary or involuntary dissolution, winding up or termination of the Trust, except in connection with the distribution of Securities to holders of Trust Securities in liquidation of the Trust upon the occurrence of a Special Event, upon the redemption of all of the outstanding Trust Securities, upon the conversion of all the outstanding Trust Securities, or upon any merger, consolidation or amalgamation, each as permitted by the Declaration; (6) the entry by a court having jurisdiction in the premises of (A) a decree or order for relief in respect of the Company in an involuntary case or proceeding under any applicable federal or state bankruptcy, insolvency, reorganization or other similar law or (B) a decree or order adjudging the Company a bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Company under any applicable federal or state law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or of any substantial part of its property, or ordering the winding up or liquidation of its affairs, and the continuance of any such decree or order for relief or any such other decree or order unstayed and in effect for a period of 60 consecutive days; or (7) the commencement by the Company of a voluntary case or proceeding under any applicable federal or state bankruptcy, insolvency, reorganization or other similar law or of any other case or proceeding to be adjudicated a bankrupt or insolvent, or the consent by it to the entry of a decree or order for relief in respect of the Company in an involuntary case or proceeding under any applicable federal or state bankruptcy, insolvency, reorganization or other similar law or to the commencement of any bankruptcy or insolvency case or proceeding against it, or the filing by it of a petition or answer or consent seeking reorganization or relief under any applicable federal or state law, or the consent by it to the filing of such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or similar official of the Company or of any substantial part of its property, or the making by it of an assignment for the benefit of creditors, or the admission by it in writing of its inability to pay its debts generally as they become due, or the taking of corporate action by the Company in furtherance of any such action. SECTION 502. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT. If an Event of Default occurs and is continuing, then the Trustee or the Holders of not less than 25% in principal amount of the Outstanding Securities may declare the principal of all the Securities, accrued and unpaid interest, if any (including any Additional Payments) and Additional Redemption Distributions, if any, thereon to be due and payable immediately, by a 25 notice in writing to the Company (and to the Trustee if given by the Holders), and upon any such declaration such principal or such lesser amount, as the case may be, such accrued and unpaid interest and such Additional Redemption Distributions, if any, shall become immediately due and payable. At any time after Securities have been accelerated and before a judgment or decree for payment of the money due has been obtained by the Trustee as hereinafter in this Article provided, the Holders of not less than a majority in aggregate principal amount of the Outstanding Securities, by written notice to the Company and the Trustee, may rescind and annul such declaration and its consequences if (a) the Company has paid or deposited with the Trustee a sum of money sufficient to pay (i) all overdue interest on any Securities that have become due otherwise than by such declaration of acceleration and any Additional Payments with respect thereto, (ii) the principal of any premium, and any Additional Redemption Distributions on any Securities that have become due otherwise than by such declaration of acceleration and any Additional Payments with respect thereto and, to the extent permitted by applicable law, interest thereon at the rate borne by the Securities, (iii) to the extent permitted by applicable law, interest upon installments of any interest, if any, that has become due otherwise than by such declaration of acceleration and any Additional Payments with respect thereto at the rate borne by or provided for in the Securities, and (iv) all sums paid or advanced by the Trustee hereunder and the compensation, expenses, disbursements and advances of the Trustee, its agents and counsel and all other amounts due the Trustee under Section 607; and (b) all Events of Default, other than the non-payment of the principal of, any premium, interest on and any Additional Redemption Distributions on, and any Additional Payments with respect to, the Securities that shall have become due solely by such declaration of acceleration, shall have been cured or waived as provided in Section 513. No such rescission shall affect any subsequent default or impair any right consequent thereon. SECTION 503. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY TRUSTEE. The Company covenants that if (1) default is made in the payment of any interest (including any Additional Payments) on any Security when such interest becomes due and payable and such default continues for a period of 30 days (provided that a valid extension of the interest payment period by the Company pursuant to this Indenture shall not constitute a default in the payment of any interest (including any Additional Payments) for this purpose), or 26 (2) default is made in the payment of the principal of any Security at the Maturity thereof or the payment of any Additional Redemption Distributions when due, the Company will, upon demand of the Trustee, pay to the Trustee, for the benefit of the Holders of such Securities, the whole amount then due and payable on such Securities for principal, interest (including any Additional Payments and Additional Redemption Distributions) and, to the extent that payment thereof shall be legally enforceable, interest on any overdue principal, any premium and on any overdue interest (including any Additional Interest) and Additional Redemption Distributions, at the rate borne by the Securities, and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including the compensation, expenses, disbursements and advances of the Trustee, its agents and counsel and all other amounts due to the Trustee under Section 607. If the Company fails to pay the money it is required to pay the Trustee pursuant to the preceding paragraph forthwith upon the demand of the Trustee, the Trustee, in its own name and as trustee of an express trust, may institute a judicial proceeding for the collection of the money so due and unpaid, and may prosecute such proceeding to judgment or final decree, and may enforce the same against the Company or any other obligor upon the Securities and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Company or any other obligor upon the Securities, wherever situated. If an Event of Default occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy. SECTION 504. TRUSTEE MAY FILE PROOFS OF CLAIM. In case of any judicial proceeding relative to the Company (or any other obligor upon the Securities), its property or its creditors, the Trustee shall be entitled and empowered, by intervention in such proceeding or otherwise, to take any and all actions authorized under the Trust Indenture Act in order to have claims of the Holders and the Trustee allowed in any such proceeding. In particular, the Trustee shall be authorized to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 607. No provision of this Indenture shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Securities or the rights of any Holder thereof or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding. 27 SECTION 505. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF SECURITIES. All rights of action and claims under this Indenture or the Securities may be prosecuted and enforced by the Trustee without the possession of any of the Securities or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, be for the ratable benefit of the Holders of the Securities in respect of which such judgment has been recovered. SECTION 506. APPLICATION OF MONEY COLLECTED. Subject to Article Twelve, any money collected by the Trustee pursuant to this Article shall be applied in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such money on account of principal or interest (including any Additional Payments), upon presentation of the Securities and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid: FIRST: To the payment of all amounts due the Trustee under Section 607; SECOND: To the payment of the amounts then due and unpaid for principal of, any premium, interest (including any Additional Payments) and Additional Redemption Distributions on the Securities in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such Securities for principal and any premium, interest (including any Compounded Interest) and Additional Redemption Distributions, respectively; and THIRD: Any remaining amounts shall be repaid to the Company. SECTION 507. LIMITATION ON SUITS. No Holder of any Security shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless (1) such Holder has previously given written notice to the Trustee of a continuing Event of Default; (2) the Holders of not less than 25% in aggregate principal amount of the Outstanding Securities shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder; (3) such Holder or Holders have offered to the Trustee indemnity satisfactory to the Trustee against the costs, expenses and liabilities to be incurred in compliance with such request; 28 (4) the Trustee for 60 days after its receipt of such notice, request and offer of indemnity satisfactory to the Trustee has failed to institute any such proceeding; and (5) no direction inconsistent with such written request has been given to the Trustee during such 60 day period by the Holders of a majority in aggregate principal amount of the Outstanding Securities; it being understood and intended that no one or more Holders shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture to affect, disturb or prejudice the rights of any other Holders, or to obtain or to seek to obtain priority or preference over any other Holders or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all the Holders. SECTION 508. UNCONDITIONAL RIGHT OF HOLDER TO RECEIVE PRINCIPAL AND ANY PREMIUM AND INTEREST AND TO CONVERT. Notwithstanding any other provision in this Indenture, the Holder of any Security shall have the right, which is absolute and unconditional, to receive payment of the principal of, and any premium, if any, (subject to Section 307) interest (including any Additional Payments) and Additional Redemption Distributions on, such Security on the respective Stated Maturities expressed in such Security (or, in the case of redemption, on the Redemption Date) and to convert such Security in accordance with Article Thirteen and to institute suit for the enforcement of any such payment and right to convert, and such rights shall not be impaired without the consent of such Holder. SECTION 509. RESTORATION OF RIGHTS AND REMEDIES. If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such case, subject to any determination in such proceeding, the Company, the Trustee and the Holders shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Trustee and the Holders shall continue as though no such proceeding had been instituted. SECTION 510. RIGHTS AND REMEDIES CUMULATIVE. Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities in the last paragraph of Section 306, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. 29 SECTION 511. DELAYS OR OMISSION NOT WAIVER. No delay or omission of the Trustee or of any Holder of any Security to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be. SECTION 512. CONTROL BY HOLDERS. The Holders of a majority in aggregate principal amount of the Outstanding Securities shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee; PROVIDED, that (1) such direction shall not be in conflict with any rule of law or with this Indenture; (2) the Trustee may take any other action deemed proper by the Trustee that is not inconsistent with such direction; and (3) such direction is not unduly prejudicial to the rights of the other Holders of Securities not joining in such action. SECTION 513. WAIVER OF PAST DEFAULTS. Subject to Section 902 hereof, the Holders of not less than 66-2/3% in aggregate principal amount of the Outstanding Securities may, on behalf of the Holders of all the Securities, waive any past default hereunder and its consequences, except a default (1) in the payment of the principal of, and any premium, interest (including any Additional Payments) or Additional Redemption Distributions on, any Security (unless such default has been cured and a sum sufficient to pay all matured installments of interest (including any Additional Payments), principal and Additional Redemption Distributions due otherwise than by acceleration has been deposited with the Trustee); or (2) in respect of a covenant or provision hereof which under Article Nine cannot be modified or amended without the consent of the Holder of each Outstanding Security affected. However, while any Preferred Securities are outstanding, an Event of Default with respect to the Securities may not be waived without the consent of 66-2/3% in aggregate liquidation amount of the Preferred Securities. Upon any such waiver, such default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon. 30 SECTION 514. UNDERTAKING FOR COSTS. In any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken, suffered or omitted by it as Trustee, a court may require any party litigant in such suit to file an undertaking to pay the costs of such suit, and may assess costs against any such party litigant, in the manner and to the extent provided in the Trust Indenture Act; PROVIDED, that neither this Section nor the Trust Indenture Act shall be deemed to authorize any court to require such an undertaking or to make such an assessment in any suit instituted by the Company or the Trustee or in any suit for the enforcement of the right to receive the principal of, and any interest (including any Additional Payments) and Additional Redemption Distributions on, any Security or to convert any Security in accordance with Article Thirteen. SECTION 515. WAIVER OF STAY OR EXTENSION LAWS. The Company covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law wherever enacted, now or at any time hereafter in force, that may affect the covenants or the performance of this Indenture; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted. SECTION 516. ENFORCEMENT BY HOLDERS OF PREFERRED SECURITIES. Notwithstanding anything to the contrary contained herein, an event of default under the Declaration has occurred and is continuing and such event is attributable to the failure of the Company to pay interest, including any Additional Payments or Additional Redemption Distributions, or principal on the Securities on the date such interest, Additional Redemption Distributions and principal are otherwise payable (or in the case of redemption, the redemption date), a holder of Preferred Securities may directly institute a proceeding for enforcement of payment to such holder of the principal of, or Additional Redemption Distributions and interest, including any Additional Payments, on the Securities having a principal amount equal to the aggregate liquidation amount of the Preferred Securities of such holder on or after the due date specified in the Securities. In connection with such a direct proceeding, the Company will remain obligated to pay the principal and interest on the Securities and will be subrogated to the rights of such holders of Preferred Securities under the Declaration to the extent of any payment made by the Company to such holder of Preferred Securities in such a direct proceeding. ARTICLE SIX THE TRUSTEE SECTION 601. CERTAIN DUTIES AND RESPONSIBILITIES. (a) Except during the continuance of an Event of Default, 31 (1) the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and (2) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; but in the case of any such certificates or opinions by which any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture (but need not confirm or investigate the accuracy of mathematical calculations or other facts stated therein). (b) In the case an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs. (c) No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that (1) this Subsection shall not be construed to limit the effect of Subsection (a) of this Section; (2) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts; (3) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of a majority in principal amount of the Outstanding Securities of any series, determined as provided in Sections 101, 104 and 512, relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee under this Indenture with respect to the Securities of such series. Notwithstanding the foregoing, no provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section. 32 SECTION 602. NOTICE OF DEFAULTS. The Trustee shall give the Holders notice of any default hereunder as and to the extent provided by the Trust Indenture Act; PROVIDED, HOWEVER, that in the case of any default of the character specified in Section 501(4), no such notice to Holders shall be given until at least 30 days after the occurrence thereof. For the purpose of this Section, the term "default" means any event that is, or after notice or lapse of time or both would become, an Event of Default. SECTION 603. CERTAIN RIGHTS OF TRUSTEE. Subject to the provisions of Section 601: (a) the Trustee may conclusively rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) any request or direction of the Company mentioned herein shall be sufficiently evidenced by a Company Request or Company Order and any resolution of the Board of Directors may be sufficiently evidenced by a Board Resolution; (c) whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) shall, in the absence of bad faith on its part, rely upon an Officers' Certificate; (d) the Trustee may consult with counsel of its choice and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon; (e) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders pursuant to this Indenture, unless such Holders shall have offered to the Trustee security or indemnity satisfactory to the Trustee against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction; (f) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to reasonable examination of the books, records and premises of the Company, personally or by agent or attorney at the sole cost of the Company and shall incur no liability or additional liability of any kind by reason of such inquiry or investigation; 33 (g) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with the prior written consent of the Company and with due care by it hereunder; and (h) the Trustee shall not be liable for any action taken or omitted to be taken by it in good faith and reasonably believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Indenture, unless it shall be proven that the Trustee was negligent in ascertaining the pertinent facts. SECTION 604. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES. The recitals contained herein and in the Securities, except the Trustee's certificates of authentication, shall be taken as the statements of the Company, and the Trustee assumes no responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Securities. The Trustee shall not be accountable for the use or application by the Company of the Securities or the proceeds thereof. SECTION 605. MAY HOLD SECURITIES. The Trustee, any Paying Agent, any Security Registrar or any other agent of the Company, in its individual or any other capacity, may become the owner or pledgee of Securities and, subject to Sections 608 and 613, may otherwise deal with the Company with the same rights it would have if it were not Trustee, Paying Agent, Security Registrar, or such other agent. SECTION 606. MONEY HELD IN TRUST. Money held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law. The Trustee shall be under no liability for interest on any money received by it hereunder except as otherwise agreed in writing with the Company. SECTION 607. COMPENSATION AND REIMBURSEMENT. The Company agrees (1) to pay to the Trustee from time to time such compensation as the Company and the Trustee shall from time to time agree in writing for all services rendered by it hereunder; (2) except as otherwise expressly provided herein, to reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any provision of this Indenture (including the reasonable compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable to its negligence or willful misconduct; and (3) to indemnify the Trustee, its agents and counsel and any predecessor Trustee for, and to hold it harmless against, any loss, liability or expense incurred without 34 negligence or bad faith on its part, arising out of or in connection with the acceptance or administration of this trust, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder, including the costs and expenses of defending itself against any claim (whether asserted by the Company, or any Holder or any other Person) or liability in connection with the exercise or performance of any of its powers or duties hereunder, or in connection with enforcing the provisions of this Section, except to the extent that such loss, damage, claim, liability or expense is due to its own negligence or bad faith. The Trustee shall have a lien prior to the Securities as to all property and funds held by it hereunder for any amount owing it or any predecessor Trustee pursuant to this Section 607, except with respect to funds held in trust for the benefit of the Holders of particular Securities. When the Trustee incurs expenses or renders services in connection with an Event of Default specified in Section 501(6) or Section 501(7), the expenses (including the reasonable charges and expenses of its counsel) and the compensation for the services are intended to constitute expenses of administration under any applicable Federal or state bankruptcy, insolvency or other similar law. The provisions of this Section shall survive the termination of this Indenture. SECTION 608. DISQUALIFICATION; CONFLICTING INTEREST. If the Trustee has or shall acquire a conflicting interest within the meaning of the Trust Indenture Act, the Trustee shall either eliminate such interest or resign, to the extent and in the manner provided by, and subject to the provisions of, the Trust Indenture Act and this Indenture. SECTION 609. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY. There shall at all times be a Trustee hereunder which shall be a Person that is eligible pursuant to the Trust Indenture Act to act as such and has a combined capital and surplus of at least $50,000,000. If such Person publishes reports of condition at least annually, pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such Person shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect hereinafter specified in this Article. SECTION 610. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR. (a) No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article shall become effective until the acceptance of appointment by the successor Trustee under Section 611. (b) The Trustee may resign at any time by giving written notice thereof to the Company. If an instrument of acceptance by a successor Trustee shall not have been delivered to the Trustee within 30 days after the giving of such notice of resignation, the 35 resigning Trustee may petition, at the reasonable expense of the Company, any court of competent jurisdiction for the appointment of a successor Trustee. (c) The Trustee may be removed at any time by Act of the Holders of a majority in aggregate principal amount of the Outstanding Securities, delivered to the Trustee and to the Company. If an instrument of acceptance by a successor Trustee shall not have been delivered to the Trustee within 30 days after the giving of such notice of removal, the retiring Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee. (d) If at any time: (1) the Trustee shall fail to comply with Section 608 after written request therefor by the Company or by any Holder who has been a bona fide Holder of a Security for at least six months, or (2) the Trustee shall cease to be eligible under Section 609 and shall fail to resign after written request therefor by the Company or by any such Holder, or (3) the Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of the Trustee or of its property shall be appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, then, in any such case, (i) the Company may remove the Trustee, or (ii) subject to Section 514, any Holder who has been a bona fide Holder of a Security for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. (e) If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any cause, the Company, by a Board Resolution, shall promptly appoint a successor Trustee. If, within one year after such resignation, removal or incapability, or the occurrence of such vacancy, a successor Trustee shall be appointed by Act of the Holders of a majority in aggregate principal amount of the Outstanding Securities delivered to the Company and the retiring Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance of such appointment, become the successor Trustee and supersede the successor Trustee appointed by the Company. If no successor Trustee shall have been so appointed by the Company or the Holders and accepted appointment in the manner hereinafter provided, any Holder who has been a bona fide Holder of a Security for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee. (f) The Company shall give notice of each resignation and each removal of the Trustee and each appointment of a successor Trustee to all Holders in the manner provided in Section 106. Each notice shall include the name of the successor Trustee and the address of its Corporate Trust Office. 36 SECTION 611. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR. Every successor Trustee appointed hereunder shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; PROVIDED, that on request of the Company or the successor Trustee, such retiring Trustee shall, upon payment of its charges, execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder. Upon request of any such successor Trustee, the Company shall execute any and all instruments required to more fully and certainly vest in and confirm to such successor Trustee all such rights, powers and trusts. No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this Article. SECTION 612. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS. Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to or purchasing all or substantially all the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided such corporation shall be otherwise qualified and eligible under this Article, without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any Securities shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such authentication and deliver the Securities so authenticated with the same effect as if such successor Trustee had itself authenticated such Securities. SECTION 613. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY. If and when the Trustee shall be or become a creditor of the Company (or any other obligor upon the Securities), the Trustee shall be subject to the provisions of the Trust Indenture Act regarding the collection of claims against the Company (or any such other obligor). ARTICLE SEVEN HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY SECTION 701. COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF HOLDERS. The Company will furnish or cause to be furnished to the Trustee (a) semiannually, not later than February 15 and August 15 in each year, a list, in such form as the Trustee may reasonably require, of the names and addresses of the Holders as of a date not more than 15 days prior to the delivery thereof, and 37 (b) at such other times as the Trustee may request in writing, within 30 days after the receipt by the Company of any such request, a list of similar form and content as of a date not more than 15 days prior to the time such list is furnished, EXCLUDING from any such list names and addresses received by the Trustee in its capacity as Security Registrar. SECTION 702. PRESERVATION OF INFORMATION: COMMUNICATIONS TO HOLDERS. (a) The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of Holders contained in the most recent list furnished to the Trustee as provided in Section 701 and the names and addresses of Holders received by the Trustee in its capacity as Security Registrar. The Trustee may destroy any list furnished to it as provided in Section 701 upon receipt of a new list so furnished. (b) The rights of Holders to communicate with other Holders with respect to their rights under this Indenture or under the Securities, and the corresponding rights and duties of the Trustee, shall be as provided by the Trust Indenture Act. (c) Every Holder of Securities, by receiving and holding the same, agrees with the Company and the Trustee that neither the Company nor the Trustee nor any agent of either of them shall be held accountable by reason of any disclosure of information as to names and addresses of Holders made pursuant to the Trust Indenture Act. SECTION 703. REPORTS BY TRUSTEE. (a) Within 60 days after May 15 of each year, commencing May 15, 2002, the Trustee shall transmit to Holders such reports concerning the Trustee and its actions under this Indenture as may be required pursuant to the Trust Indenture Act in the manner provided pursuant thereto. (b) A copy of each such report shall, at the time of such transmission to Holders, be filed by the Trustee with each stock exchange upon which the Securities are listed, with the Commission and with the Company. The Company will notify the Trustee when the Securities are listed on any stock exchange. SECTION 704. REPORTS BY COMPANY. The Company shall file with the Trustee and the Commission, and transmit to Holders, such information, documents and other reports, and such summaries thereof, as may be required pursuant to the Trust Indenture Act at the times and in the manner provided pursuant to such Act; PROVIDED, that any such information, documents or reports required to be filed with the Commission pursuant to Section 13 or 15(d) of the Securities Exchange Act shall be filed with the Trustee within 15 days after the same is so required to be filed with the Commission. Delivery of such reports, information and documents to the Trustee is for informational purposes only and the Trustee's receipt of such shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the 38 Company's compliance with any of its covenants hereunder (as to which the Trustee is entitled to rely exclusively on Officers' Certificates). ARTICLE EIGHT CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE SECTION 801. COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS. The Company shall not consolidate with or merge with or into any other Person or, directly or indirectly, convey, transfer or lease all or substantially all of its properties and assets on a consolidated basis to any Person, unless: (1) in case the Company shall consolidate with or merge with or into another Person or convey, transfer or lease all or substantially all of its properties and assets on a consolidated basis to any Person, the Person formed by such consolidation or into which the Company is merged or the Person that acquires by conveyance, transfer or lease, all or substantially all of the properties and assets of the Company on a consolidated basis shall be a corporation organized and validly existing under the laws of the United States of America, any state thereof or the District of Columbia and shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form reasonably satisfactory to the Trustee, the due and punctual payment of the principal of, premium, if any, and interest (including Additional Payments), if any, and Additional Redemption Distributions, if any, on all the Securities outstanding under this Indenture and the performance or observance of the Company's obligations under this Indenture and the Securities outstanding hereunder on the part of the Company to be performed or observed and shall have provided for conversion rights in accordance with Article Thirteen; (2) immediately after giving effect to such transaction and treating any indebtedness which becomes an obligation of the Company or a Subsidiary as a result of such transaction as having been incurred by the Company or such Subsidiary at the time of such transaction, no Event of Default, and no event that, after notice or lapse of time or both, would become an Event of Default, shall have happened and be continuing; (3) such consolidation or merger or conveyance, transfer or lease of assets of the Company is permitted under, and does not give rise to any breach or violation of, the Declaration or the Preferred Securities Guarantee; and (4) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger, conveyance, transfer or lease and, if a supplemental indenture is required in connection with such transaction, such supplemental indenture, comply with this Article and that all conditions precedent herein provided for relating to such transaction have been complied with. SECTION 802. SUCCESSOR SUBSTITUTED. Upon any consolidation of the Company with, or merger of the Company into, any other Person or any conveyance, transfer or lease of all or substantially all the properties and assets of 39 the Company on a consolidated basis in accordance with Section 801, the successor Person formed by such consolidation or into which the Company is merged or to which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor Person had been named as the Company herein, and thereafter, except in the case of a lease, the predecessor Person shall be relieved of all obligations and covenants under this Indenture and the Securities. ARTICLE NINE SUPPLEMENTAL INDENTURES SECTION 901. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS. Without the consent of any Holders, the Company, when authorized by a Board Resolution, and the Trustee, at any time and from time to time, may enter into one or more indentures supplemental hereto, in form satisfactory to the Trustee, for any of the following purposes: (1) to evidence the succession of another Person to the Company and the assumption by any such successor of the covenants of the Company herein and in the Securities; or (2) to add to the Events of Default or the covenants of the Company for the benefit of the Holders, or to surrender any right or power herein conferred upon the Company; or (3) to make provision with respect to the conversion rights of Holders pursuant to the requirements of Article Thirteen; or (4) to cure any ambiguity, to correct or supplement any provision herein that may be inconsistent with any other provision herein, or to make any other provisions with respect to matters or questions arising under this Indenture which shall not be inconsistent with the provisions of this Indenture; PROVIDED, that such action pursuant to this clause (4) shall not adversely affect the interests of the Holders of the Securities or, so long as any of the Preferred Securities shall remain outstanding, the holders of the Preferred Securities; or (5) to comply with the requirements of the Commission in order to effect or maintain the qualification of this Indenture under the Trust Indenture Act; or (6) to make provision for transfer procedures, certification, book-entry provisions, the form of restricted securities legends, if any, to be placed on Securities, and all other matters required pursuant to Section 305(b) or otherwise necessary, desirable or appropriate in connection with the issuance of Securities to holders of Preferred Securities in the event of a distribution of Securities by the Trust if a Special Event occurs and is continuing; or 40 (7) to comply with the requirements of the New York Stock Exchange or such other national securities exchange or automated quotation system, if any, on which the Securities are then listed. SECTION 902. SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS. With the consent of the Holders of not less than a majority in aggregate principal amount of the Outstanding Securities, by Act of said Holders delivered to the Company and the Trustee, the Company, when authorized by a Board Resolution, and the Trustee may enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of modifying in any manner the rights of the Holders under this Indenture; PROVIDED, HOWEVER, that no such supplemental indenture shall, without the consent of the Holder of each Outstanding Security affected thereby, (1) change the Stated Maturity of the principal of, or premium, if any, or (except as permitted by Section 312) any installment of interest (including any Additional Payments) on, any Security, or reduce the principal amount thereof, or reduce the rate or (except as permitted by Section 312) extend the time for payment of interest thereon, or reduce any premium payable upon the redemption thereof, or reduce any Additional Redemption Distribution payable upon the conversion thereof, or change the place of payment where, or the coin or currency in which, any Security or interest thereon is payable, or impair the right to institute suit for the enforcement of any such payment on or after the Stated Maturity thereof (or, in the case of redemption, on or after the Redemption Date), or adversely affect the right to convert any Security as provided in Article Thirteen, (2) reduce the percentage in aggregate principal amount of the Outstanding Securities, the consent of whose Holders is required for any such modification or amendment or the consent of whose holders is required for any waiver under this Indenture or reduce the requirements for a quorum or voting at a meeting of Holders of the Securities, (3) modify any of the provisions of Article 12 hereof or the definition of Senior Indebtedness in a manner adverse to the Holders of the Securities, or (4) modify any of the provisions of this Section or Section 513, except to increase any such percentage or to provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each Outstanding Security affected thereby; PROVIDED, that so long as any of the Preferred Securities remains outstanding, no waiver of any Event of Default shall be effective, without the prior consent of the holders of at least 66-2/3% of the aggregate liquidation amount of the outstanding Preferred Securities. It shall not be necessary for any Act of Holders under this Section to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof. 41 The Company may, but shall not be obligated to, fix a record date for the purpose of determining the Persons entitled to consent to any indenture supplemental hereto. If a record date is fixed, the Holders on such record date, or their duly designated proxies, and only such Persons, shall be entitled to consent to such supplemental indenture, whether or not such Holders remain Holders after such record date; PROVIDED, that unless such consent shall have become effective by virtue of the requisite percentage having been obtained prior to the date which is 90 days after such record date, any such consent previously given shall automatically and without further action by any Holder be cancelled and of no further effect. SECTION 903. EXECUTION OF SUPPLEMENTAL INDENTURES. In executing, or accepting the additional trusts created by, any supplemental indenture permitted by this Article or the modifications thereby of the trusts created by this Indenture, the Trustee shall be entitled to receive, and (subject to Section 601) shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture. The Trustee may, but shall not be obligated to, enter into any such supplemental indenture that affects the Trustee's own rights, duties or immunities under this Indenture or otherwise. SECTION 904. EFFECT OF SUPPLEMENTAL INDENTURES. Upon the execution of any supplemental indenture under this Article, this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes, and every Holder of Securities theretofore or thereafter authenticated and delivered hereunder shall be bound thereby. No such supplemental indenture shall directly or indirectly modify the provisions of Article Twelve in any manner that might terminate or impair the rights of the Senior Indebtedness pursuant to such subordination provisions. SECTION 905. CONFORMITY WITH TRUST INDENTURE ACT. Every supplemental indenture executed pursuant to this Article shall conform to the requirements of the Trust Indenture Act. SECTION 906. REFERENCE IN SECURITIES TO SUPPLEMENTAL INDENTURES. Securities authenticated and delivered after the execution of any supplemental indenture pursuant to this Article may, and shall if required by the Trustee, bear a notation in form approved by the Trustee as to any matter provided for in such supplemental indenture. If the Company shall so determine, new Securities so modified as to conform, in the opinion of the Trustee and the Company, to any such supplemental indenture may be prepared and executed by the Company and authenticated and delivered by the Trustee in exchange for Outstanding Securities. 42 ARTICLE TEN COVENANTS; REPRESENTATIONS AND WARRANTIES SECTION 1001. PAYMENT OF PRINCIPAL AND INTEREST. The Company will duly and punctually pay the principal of, premium, if any, and interest (including any Additional Payments) and Additional Redemption Distributions on the Securities when due in accordance with the terms of the Securities and this Indenture. SECTION 1002. MAINTENANCE OF OFFICE OR AGENCY. The Company will maintain in the United States an office or agency where Securities may be presented or surrendered for payment, where Securities may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Company in respect of the Securities and this Indenture may be served. The Company will give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee, and the Company hereby appoints the Trustee as its agent to receive all such presentations, surrenders, notices and demands. The Company may also from time to time designate one or more other offices or agencies where the Securities may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; PROVIDED, HOWEVER, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in the United States for such purposes. The Company will give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency. SECTION 1003. MONEY FOR SECURITY PAYMENTS TO BE HELD IN TRUST. If the Company shall at any time act as its own Paying Agent, it will, on or before each due date of the principal of, or interest, or Additional Redemption Distributions on any of the Securities, segregate and hold in trust for the benefit of the Persons entitled thereto a sum (including Fleetwood Common Stock, if the Company shall have elected to pay interest in Fleetwood Common Stock pursuant to Section 301) sufficient to pay the principal, interest or Additional Redemption Distributions so becoming due until such sums shall be paid to such Persons or otherwise disposed of as herein provided and will promptly notify the Trustee of its action or failure so to act. Whenever the Company shall have one or more Paying Agents, it will, prior to each due date of the principal of, or interest or Additional Redemption Distributions on, any Securities, deposit with a Paying Agent a sum (including Fleetwood Common Stock, if the Company shall have elected to pay interest in Fleetwood Common Stock pursuant to Section 301) sufficient to pay such amount, such sum to be held as provided by the Trust Indenture Act, and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee of its action or failure so to act. 43 The Company will cause each Paying Agent other than the Trustee to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this Section, that such Paying Agent will (i) comply with the provisions of the Trust Indenture Act applicable to it as a Paying Agent and (ii) during the continuance of any default by the Company (or any other obligor upon the Securities) in the making of any payment in respect of the Securities, upon the written request of the Trustee, forthwith pay to the Trustee all sums held in trust by such Paying Agent as such. The Company may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or by Company Order direct any Paying Agent to pay, to the Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by the Company or such Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such money. Any money or Fleetwood Common Stock deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of, or interest or Additional Redemption Distributions, on any Security and remaining unclaimed for two years after such principal or interest has become due and payable shall be paid to the Company on Company Request, or (if then held by the Company) shall be discharged from such trust; and the Holder of any such Security shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money or Fleetwood Common Stock, and all liability of the Company as trustee thereof, shall thereupon cease. SECTION 1004. STATEMENT AS TO COMPLIANCE. The Company will deliver to the Trustee, within 120 days after the end of each fiscal year of the Company ending after the date hereof, an Officers' Certificate, stating whether or not, to the best knowledge of the signers thereof, the Company is in default in the performance and observance of any of the material terms, provisions and conditions of this Indenture (without regard to any period of grace or requirement of notice provided hereunder) and, if the Company shall be in default, specifying all such defaults and the nature and status thereof of which they may have knowledge. SECTION 1005. STATEMENT BY OFFICERS AS TO DEFAULT. The Company shall deliver to the Trustee, as soon as possible and in any event within five (5) days after the Company becomes aware of the occurrence of any Event of Default or an event which, with notice or the lapse of time or both, would constitute an Event of Default, an Officers' Certificate setting forth the details of such Event of Default or default and the action which the Company proposes to take with respect thereto. SECTION 1006. LIMITATION ON DIVIDENDS; COVENANTS AS TO THE TRUST. (a) The Company covenants that, so long as any Securities are outstanding, if (x) there shall have occurred and be continuing an Event of Default or event that, with the giving of 44 notice or the lapse of time or both, would constitute an Event of Default or (y) the Company shall be in default with respect to its payment of any obligations under the Preferred Securities Guarantee, then (a) the Company shall not declare or pay dividends on, make any distribution with respect to, or redeem, purchase, acquire or make a liquidation payment with respect to any of its capital stock (other than (i) purchases or acquisitions of Fleetwood Common Stock in connection with the satisfaction by the Company of its obligations under any existing employee benefit plans or future employee benefit plans established in the ordinary course or the satisfaction by the Company of its obligations pursuant to any existing contract or security requiring the Company to purchase Fleetwood Common Stock, (ii) as a result of a reclassification of the Company's capital stock or the exchange or conversion of one class or series of the Company's capital stock for another class or series of the Company's capital stock, or (iii) the purchase of fractional interests in shares of the Company's capital stock pursuant to the conversion or exchange provisions of such capital stock shares of the Company's capital stock pursuant to the conversion or exchange provisions of such capital stock or the security being converted or exchanged (or make any guarantee payments with respect to the foregoing)) and (b) the Company shall not make any payment of interest, principal or premium, if any, on or repay, repurchase or redeem any debt securities issued by the Company that rank pari passu with or junior to the Securities; PROVIDED, FURTHER, that the Company may declare and pay a stock dividend where the dividend stock is the same stock as that on which the dividend is paid. (b) The Company also covenants and agrees that, for so long as the Trust Securities remain outstanding, the Company shall (i) directly or indirectly maintain 100% ownership of the Common Securities of the Trust; PROVIDED, HOWEVER, that any permitted successor of the Company hereunder may succeed to the Company's ownership of such Common Securities, (ii) not cause, as sponsor of the Trust, or permit, as the holder of the Common Securities, the termination, dissolution or winding up of the Trust, except in connection with a distribution of Securities, as provided in the Declaration and in connection with certain mergers, consolidations or amalgamations as permitted by the Declaration, and (iii) use its reasonable efforts, consistent with the terms and provisions of the Declaration, to cause the Trust to (x) remain a statutory business trust, except in connection with the distribution of the Securities to the holders of Trust Securities in liquidation of the Trust, the redemption of all of the Trust Securities of the Trust, or certain mergers, consolidations or amalgamations, each as permitted by the Declaration, and (y) otherwise continue to be classified as a grantor trust for United States federal income tax purposes. SECTION 1007. PAYMENT OF EXPENSES OF THE TRUST. In connection with the Cash Offer and the related issuance of the Securities to the Property Trustee, the Company shall: (a) pay for all fees and expenses relating to the Cash Offer and related issuance of the Securities and the Preferred Securities, including fees and expenses payable to the Placement Agent pursuant to the Distribution Agreement, and compensation of the Trustee in accordance with the provisions of Section 607; (b) be responsible for and pay for all debts and obligations (other than with respect to the Trust Securities) of the Trust, pay for all fees and expenses of the Trust (including, but not 45 limited to, fees and expenses relating to the organization of the Trust, the offering, sale and issuance of the Trust Securities, the fees and expenses of the Property Trustee and the Delaware Trustee, the fees and expenses relating to the operation of the Trust, including without limitation, fees and expenses of accountants, attorneys, statistical or bookkeeping services, expenses for printing and engraving and computing or accounting equipment, paying agent(s), registrar(s), transfer agent(s), duplicating, travel and telephone and other telecommunications expenses and fees and expenses incurred in connection with the acquisition, financing, and disposition of Trust assets); (c) pay for all fees and expenses related to the retention of the Property Trustee; (d) pay for all fees and expenses related to the enforcement by the Property Trustee of the rights of the holders of the Preferred Securities; and (e) pay any and all income taxes, duties and other governmental charges, and all costs and expenses relating to these charges, to which the trust may become subject, which shall not include United States withholding taxes but shall include liabilities imposed on the Trust as withholding agent. SECTION 1008. LIMITATION OF TRANSACTIONS. If the Company shall exercise its right to defer payment of interest as provided in Section 312, then during the Extension Period, (a) the Company shall not declare or pay any dividend on, make any distributions with respect to, or redeem, purchase, acquire or make a liquidation payment with respect to, any of its capital stock (other than (A) (i) purchases or acquisitions of shares of the Company's capital stock (or capital stock equivalents) in connection with the satisfaction by the Company of its obligations under any officers, directors or employee benefit plans existing on the date of hereof or future officers, direct or employee benefit plans established in the ordinary course (or any options or other instruments issued thereunder) or the satisfaction by the Company of its obligations pursuant to any contract or security requiring the Company to purchase shares of the Company's capital stock (or capital stock equivalents), (ii) purchases of shares of the Company's capital stock (or capital stock equivalents) from officers, directors or employees of the Company or its subsidiaries pursuant to employment agreements or upon termination of employment or retirement, (iii) as a result of a reclassification, combination or subdivision of the Company's capital stock or the exchange or conversion of one class or series of the Company's capital stock for another class or series of the Company's capital stock, (iv) dividends or distributions of shares of common stock on common stock, (v) the purchase of fractional interests in shares of the Company's capital stock pursuant to the conversion or exchange provisions of such capital stock or any security being converted or exchanged into such capital stock, (vi) dividends or distributions in shares of its capital stock of the same class on which such dividend or distribution is being made and conversions or exchanges of common stock of one class into common shares of another class, (vii) purchases or other acquisitions of common stock in connection with a dividend reinvestment or other similar plan, or (viii) any dividend or distribution of capital stock (or capital stock equivalents) in connection with the implementation of a stockholders' rights plan, or the issuance of stock under any such plan in the future, or the redemption or repurchase of any such rights pursuant thereto, or (B) guarantee payments made with respect to any of the foregoing), (b) the Company shall not 46 make any payment of interest, principal or premium, if any, on or repay, repurchase or redeem any debt securities issued by the Company that rank PARI PASSU with or junior to the Securities and (c) the Company shall not make any guarantee payments with respect to the foregoing (other than pursuant to the Common Securities Guarantee, the Preferred Securities Guarantee, the Exchange Common Securities Guarantee and the Exchange Preferred Securities Guarantee). SECTION 1009. LISTING OF SECURITIES If the Securities are distributed to the holders of the Preferred Securities, the Company will use its best efforts to have the Securities listed on the New York Stock Exchange or on such other national securities exchange or similar organization, if any. ARTICLE ELEVEN REDEMPTION OF SECURITIES SECTION 1101. RIGHT OF REDEMPTION. (a) The Securities may be redeemed at the election of the Company, as a whole or in part, at any time or from time to time on or after February 15, 2004, at the Redemption Prices set forth in Section 1109(b)(ii) below. The Securities may be redeemed, in whole but not in part, at the Company's option at any time before February 15, 2004 at the Redemption Price set forth in Section 1109(b)(i) below if the Closing Price of Fleetwood Common Stock has exceeded 200% of the Conversion Price for at least twenty (20) Trading Days during a 30-day Trading Day period ending five (5) Trading Days prior to the date of the notice of redemption described in Section 1105 below. (b) The Securities may be redeemed as provided in Section 1110 of this Article Eleven as a whole but not in part at the election of the Company at any time within 90 days following the occurrence of a Tax Event; PROVIDED, HOWEVER, that, subject to Section 1110 of this Article Eleven, if, at the time there is available to the Company or the Trust the opportunity to eliminate, within such 90-day period, the Tax Event by taking some ministerial action, including but not limited to filing a form or making an election, or pursuing some other similar reasonable measure, which, in the sole judgment of the Company, has or will cause no adverse effect on the Trust, the Company or the Holders of the Trust Securities and involves or will involve no material cost, then the Company or the Trust shall pursue such measure in lieu of redemption. SECTION 1102. APPLICABILITY OF ARTICLE. Redemption of Securities at the election of the Company, as permitted by Section 1101, shall be made in accordance with such provision and this Article. SECTION 1103. ELECTION TO REDEEM; NOTICE TO TRUSTEE. The election of the Company to redeem Securities pursuant to Section 1101 shall be evidenced by a Board Resolution. In case of any redemption at the election of the Company, the Company shall, at least 60 days and no more than 90 days prior to the Redemption Date fixed by the Company, notify the Trustee of such Redemption Date and of the principal amount of 47 Securities to be redeemed, and the Company shall provide the Trustee with a copy of the notice of redemption given to Holders of Securities to be redeemed pursuant to Section 1104. SECTION 1104. SELECTION BY TRUSTEE OF SECURITIES TO BE REDEEMED. If less than all the Securities are to be redeemed (unless such redemption affects only a single Security), the particular Securities to be redeemed shall be selected not more than 60 days prior to the Redemption Date by the Trustee, from the Outstanding Securities not previously called for redemption, on a pro rata basis, in portions equal to $50 (or any integral multiple thereof) of the principal amount of the Securities. The Trustee shall promptly notify the Company in writing of the Securities selected for redemption as aforesaid and, in case of any Securities selected for partial redemption as aforesaid, the principal amount thereof to be redeemed. The provisions of the two preceding paragraphs shall not apply with respect to any redemption affecting only a single Security, whether such Security is to be redeemed in whole or in part. In the case of any such redemption in part, the unredeemed portion of the principal amount of the Security shall be in an authorized denomination (which shall not be less than the minimum authorized denomination) for such Security. For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Securities shall relate, in the case of any Securities redeemed or to be redeemed only in part, to the portion of the principal amount of such Securities that has been or is to be redeemed. SECTION 1105. NOTICE OF REDEMPTION. Notice of redemption shall be given by first-class mail, postage prepaid, mailed, in the case of a redemption at any time prior to February 15, 2004, not less than 15 days nor more than 30 days before the Redemption Date and, in all other cases, not less than 30 nor more than 60 days prior to the Redemption Date, to each Holder of Securities to be redeemed, at such Holder's address appearing in the Security Register. All notices of redemption shall identify the Securities to be redeemed (including the CUSIP number) and shall state: (1) the Redemption Date, (2) the Redemption Price, (3) that on the Redemption Date the Redemption Price will become due and payable upon each such Security to be redeemed and that interest thereon will cease to accrue on and after said date, (4) the place or places where such Securities are to be surrendered for payment of the Redemption Price, and 48 (5) a description of all material conversion features. Notice of redemption of Securities to be redeemed at the election of the Company shall be given by the Company or, at the Company's request, by the Trustee in the name and at the expense of the Company. SECTION 1106. DEPOSIT OF REDEMPTION PRICE. Prior to any Redemption Date, the Company shall deposit with the Trustee or with a Paying Agent (or, if the Company is acting as its own Paying Agent, segregate and hold in trust as provided in Section 1003) an amount of money sufficient to pay the Redemption Price of, and (except if the Redemption Date shall be an Interest Payment Date) accrued interest (including Additional Payments, if any) on, all the Securities that are to be redeemed on that date. SECTION 1107. SECURITIES PAYABLE ON REDEMPTION DATE. Notice of redemption having been given as aforesaid, the Securities so to be redeemed shall, on the Redemption Date, become due and payable at the Redemption Price therein specified, and from and after such date (unless the Company shall default in the payment of the Redemption Price and accrued interest) such Securities shall cease to bear interest. Upon surrender of any such Security for redemption in accordance with said notice, such Security shall be paid by the Company at the Redemption Price, together with accrued interest (including Additional Payments, if any) to the Redemption Date; PROVIDED, HOWEVER, that installments of interest whose Stated Maturity is on or prior to the Redemption Date shall be payable to the Holders of such Securities, or one or more Predecessor Securities, registered as such at the close of business on the relevant Record Dates according to the terms and the provisions of Section 307. If any Security called for redemption shall not be so paid upon surrender thereof for redemption, the principal shall, until paid, bear interest from the Redemption Date at the rate borne by the Security. SECTION 1108. SECURITIES REDEEMED IN PART. In the event of any redemption in part, the Company shall not be required to (i) issue, register the transfer of, or exchange any Security during a period beginning at the opening of business 15 days before any selection for redemption of Securities and ending at the close of business on the earliest date on which the relevant notice of redemption is deemed to have been given to all holders of Securities to be so redeemed and (ii) register the transfer of or exchange any Securities so selected for redemption, in whole or in part, except for the unredeemed portion of any Securities being redeemed in part. Any Security that is to be redeemed only in part shall be surrendered at a place of payment therefor (with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder thereof or his attorney duly authorized in writing), and the Company shall execute, and the Trustee shall authenticate and make available for delivery to the Holder of such Security without service charge, a new Security or Securities, of any authorized denomination as 49 requested by such Holder, in aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Security so surrendered. SECTION 1109. OPTIONAL REDEMPTION. (a) Except as provided in Sections 1109(b) and 1110, the Securities shall not be subject to redemption at the option of the Company prior to February 15, 2004. (b) Subject to the provisions of this Article Eleven, the Company shall have the right to redeem the Securities (i) in whole but not in part, at the Company's option at any time before February 15, 2004 at a Redemption Price equal to 100.00% of the aggregate principal amount of the Securities if the per share price of Fleetwood Common Stock has exceeded 200% of the Conversion Price for at least 20 Trading Days during a 30-day Trading Day period ending 5 Trading Days prior to the date of the notice of redemption described in Section 1105 above, upon not less than 15 nor more than 30 days' notice to Holders of the Securities, and (ii) in whole or in part, from time to time, on or after February 15, 2004, upon not less than 30 nor more than 60 days' notice to the Holders of the Securities (which notice shall state (A) the Redemption Date, (B) whether the Additional Redemption Distribution, if any, shall be paid by the Company in cash or by delivery of Fleetwood Common Stock, (C) the procedures pursuant to which such Securities are to be surrendered for conversion and receipt of the Additional Redemption Distribution, if any, and (D) the Conversion Price then in effect), at the following prices (expressed as percentages of the principal amount of the Securities), together (except as provided below) with accrued and unpaid interest, including, to the extent permitted by applicable law, Additional Payments, if any, to, but excluding, the Redemption Date, if redeemed during the 12-month period beginning February 15:
YEAR REDEMPTION ---- ---------- 2004................................................... 106.333% 2005................................................... 104.750% 2006................................................... 103.167% 2007................................................... 101.583%
and 100% if redeemed on or after February 15, 2008. Notwithstanding the foregoing provisions of this Section 1109(b), if the Company shall redeem any Securities pursuant to Section 1110 hereof on or after February 15, 2004, then the Redemption Price of such Securities shall be the Redemption Price set forth in Section 1110 and not the Redemption Price set forth in this Section 1109(b). Without limitation to the proviso to the first paragraph of Section 1107 hereof, if Securities are redeemed on any date in the period beginning on any record date and ending on the next February 15, May 15, August 15 or November 15, accrued and unpaid interest that is due and payable on such Interest Payment Date shall be payable to the Holders of record at the close of business on the relevant Regular Record Date. In the event the Company delivers a notice of redemption to exercise its right to redeem the Securities at any time prior to February 15, 2004, if a Holder of Securities converts such Securities to Fleetwood Common Stock pursuant to Article Thirteen during the period following 50 a notice of redemption and prior to the Redemption Date, then the Company shall pay such Holder, in cash or shares of Fleetwood Common Stock, at the election of the Company, an amount equal to interest payments payable on such Securities through February 15, 2004, less any interest actually paid with respect to such Securities in accordance with the provisions of Section 301 prior to the applicable Conversion Date (the "Additional Redemption Distribution"). The Company may elect to pay such Additional Redemption Distribution by delivery of shares of Fleetwood Common Stock pursuant to this Section 1109(b) if and only if the following conditions shall have been satisfied: (1) The shares of Fleetwood Common Stock deliverable in payment of the Additional Redemption Distribution shall have a fair market value as of the applicable Conversion Date of not less than the Additional Redemption Distribution as determined by this Section 1109(b). For purposes of this Section 1109(b), the fair market value of shares of Fleetwood Common Stock shall be determined by the Company and shall be equal to 90% of the average of the Closing Price for the five consecutive Trading Days immediately preceding the second Trading Day prior to the applicable Conversion Date. (2) The Additional Redemption Distribution shall be paid only in cash in the event any shares of Fleetwood Common Stock to be issued for the payment of the Additional Redemption Distribution hereunder (i) require registration under any federal securities law before such shares may be freely transferable without being subject to any transfer restrictions under the Securities Act upon issuance and if such registration is not completed or does not become effective prior to the applicable Conversion Date, and/or (ii) require registration with or approval of any governmental authority under any state law or other federal law before such shares may be validly issued or delivered upon issuance and if such registration is not completed or does not become effective or such approval is not obtained prior to the applicable Conversion Date; (3) The Fleetwood Common Stock is, or shall have been, approved for quotation on the Nasdaq National Market or listing on the New York Stock Exchange, in either case, prior to the applicable Conversion Date; and (4) All shares of Fleetwood Common Stock which may be issued with respect to the payment of the Additional Redemption Distribution will be issued out of the Company's authorized but unissued Common Stock and, will upon issue, be duly and validly issued and fully paid and non-assessable and free of any preemptive rights. If all of the conditions set forth in the preceding paragraph are not satisfied in accordance with the terms thereof, the Additional Redemption Distribution required to be paid or duly provided for by the Company pursuant to this Section shall be paid by the Company only in cash. In the event of such conversion prior to February 15, 2004 during the period following a notice of redemption and prior to the Redemption Date, the Company shall issue and deliver a certificate or certificates for the number of full shares of Fleetwood Common Stock issuable upon conversion of the Securities and the Additional Redemption Distribution, if any, due on such Securities, along with any cash in respect of any fractional shares of Fleetwood Common 51 stock otherwise issuable upon conversion or in the event that the Company elects to pay Additional Redemption Distribution, if any, in Fleetwood Common Stock instead of cash, for payment to the Holder as promptly on or after the applicable Conversion Date as practicable in accordance with the provisions of Article Thirteen. So long as any Trust Securities are outstanding, (a) the proceeds from the redemption of the Securities will be used to redeem Trust Securities having an aggregate liquidation amount equal to the aggregate principal amount of the Securities so redeemed and (b) any Additional Redemption Distributions shall be used as distributions to holders of Trust Securities that are converted prior to a redemption of Trust Securities occurring before February 15, 2004. The Redemption Price for the Securities to be redeemed shall be paid on the Redemption Date or at such earlier time as the Company determines; provided that the Company shall deposit with the Trustee an amount sufficient to pay the Redemption Price on the date such Redemption Price is to be paid. SECTION 1110. TAX EVENT REDEMPTION. If a Tax Event has occurred and is continuing, and after receiving a Dissolution Tax Opinion, the Regular Trustees shall have been informed by tax counsel rendering the Dissolution Tax Opinion that a No Recognition Opinion cannot be delivered to the Trust, then the Company shall have the right, upon not less than 30 days nor more than 60 days notice to the Holders of the Securities, to redeem the Securities, in whole or in part for cash, at a redemption price equal to 100% of the principal amount thereof plus accrued and unpaid interest thereon (including, to the extent permitted by applicable law, Additional Payments, if any) to but excluding the date of such redemption, within 90 days following the occurrence of such Tax Event (the "90-Day Period"); PROVIDED, HOWEVER, that if at the time there is available to the Company or the Trust the opportunity to eliminate, within such 90-Day Period, the Tax Event by taking some ministerial action, such as filing a form or making an election, or pursuing some other similar reasonable measure that in the sole judgment of the Company has or will cause no adverse effect on the Company, the Trust or the holders of the Trust Securities and will involve no material costs, the Company or the Trust will pursue such ministerial action in lieu of redemption. SECTION 1111. CERTAIN LIMITATIONS ON REDEMPTION. (a) If a partial redemption of the Securities would result in the delisting of the Preferred Securities issued by the Trust from any national securities exchange or other organization on which the Preferred Securities are listed, the Company shall not be permitted to effect such partial redemption and may only redeem the Securities in whole. (b) The Company may not redeem any Securities unless all accrued and unpaid interest thereon (including, to the extent permitted by law, Additional Payments, if any) has been or is contemporaneously paid (or duly provided for) for all quarterly interest payment periods terminating on or prior to the date of notice of redemption. 52 ARTICLE TWELVE SUBORDINATION OF SECURITIES SECTION 1201. AGREEMENT TO SUBORDINATE. The Company covenants and agrees, and each Holder of Securities by such Holder's acceptance thereof likewise covenants and agrees, that all Securities shall be issued subject to the provisions of this Article Twelve; and each Holder of a Security, whether upon original issue or upon transfer or assignment thereof, accepts and agrees to be bound by such provisions. The payment by the Company of the principal of, premium, if any, interest (including any Additional Payments) and Additional Redemption Distributions, if any, on all Securities issued hereunder shall, to the extent and in the manner hereinafter set forth, be subordinated and junior in right of payment to the prior payment in full of all Senior Indebtedness, whether outstanding at the date of this Indenture or thereafter incurred; PROVIDED, HOWEVER, that no provision of this Article Twelve shall prevent the occurrence of any default or Event of Default hereunder. SECTION 1202. DEFAULT ON SENIOR INDEBTEDNESS. No payment of principal (including redemption payments) of, or premium, if any, or interest (including any Additional Interest or Compound Interest) or Additional Redemption Distributions, if any, on the Securities may be made if there shall have occurred and be continuing (i) a default in the payment when due of principal of, premium, if any, sinking funds, if any, or interest, if any, on any Senior Indebtedness of the Company and any applicable grace period with respect to such default shall have ended without such default having been cured or waived or ceasing to exist or (ii) an event of default with respect to any Senior Indebtedness of the Company resulting in the acceleration of the maturity thereof without such acceleration having been rescinded or annulled. In the event that, notwithstanding the foregoing, any payment shall be received by the Trustee when such payment is prohibited by the preceding paragraph of this Section 1202, such payment shall be held in trust for the benefit of, and shall be paid over or delivered to, the holders of Senior Indebtedness or their respective representatives, or to the trustee or trustees under any indenture pursuant to which any of such Senior Indebtedness may have been issued, as their respective interests may appear, but only to the extent that the holders of the Senior Indebtedness (or their representative or representatives or a trustee) notify the Trustee within 90 days of such payment of the amounts then due and owing on the Senior Indebtedness and only the amounts specified in such notice to the Trustee shall be paid to the holders of Senior Indebtedness. SECTION 1203. LIQUIDATION; DISSOLUTION; BANKRUPTCY. Upon any payment by the Company or distribution of assets of the Company of any kind or character, whether in cash, property or securities, to creditors upon any dissolution winding up, liquidation or reorganization of the Company, whether voluntary or involuntary, or in bankruptcy, insolvency, receivership or other proceedings, all amounts (including principal, premium, if any, and interest) due or to become due upon all Senior Indebtedness shall first be paid in full, or payment thereof provided for in money in accordance with its terms, before any 53 payment is made on account of the principal (and premium, if any) or interest (including any Additional Payments) or Additional Redemption Distributions on the Securities; and upon any such dissolution winding up, liquidation or reorganization, any payment by the Company, or distribution of assets of the Company of any kind or character, whether in cash, property or securities, to which the Holders of the Securities or the Trustee would be entitled, except for the provisions of this Article Twelve, shall be paid by the Company or by any receiver, trustee in bankruptcy, liquidating trustee, agent or other Person making such payment or distribution, or by the Holders of the Securities or by the Trustee under this Indenture if received by them or it, directly to the holders of Senior Indebtedness (pro rata to such holders on the basis of the respective amounts of Senior Indebtedness held by such holders, as calculated by the Company) or their representative or representatives, or to the trustee or trustees under any indenture pursuant to which any instruments evidencing such Senior Indebtedness may have been issued, as their respective interests may appear, to the extent necessary to pay such Senior Indebtedness in full, in money or money's worth, after giving effect to any concurrent payment or distribution to or for the holders of such Senior Indebtedness, before any payment or distribution is made to the Holders of Securities or to the Trustee. In the event that, notwithstanding the foregoing, any payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities, prohibited by the foregoing, shall be received by the Trustee or the Holders of the Securities before all Senior Indebtedness is paid in full, or provision is made for such payment in money in accordance with its terms, such payment or distribution shall be held in trust for the benefit of and shall be paid over or delivered to the holders of Senior Indebtedness or their representative or representatives, or to the trustee or trustees under any indenture pursuant to which any instruments evidencing such Senior Indebtedness may have been issued, and their respective interests may appear, as calculated by the Company, for application to the payment of all Senior Indebtedness remaining unpaid to the extent necessary to pay such Senior Indebtedness in full in money in accordance with its terms, after giving effect to any concurrent payment or distribution to or for the holders of such Senior Indebtedness. For purposes of this Article Twelve, the words "cash, property or securities" shall not be deemed to include shares of stock of the Company as reorganized or readjusted, or securities of the Company or any other corporation provided for by a plan of reorganization or readjustment, the payment of which is subordinated at least to the extent provided in this Article Twelve with respect to the Securities to the payment of all Senior Indebtedness that may at the time be outstanding; PROVIDED, that (i) such Senior Indebtedness is assumed by the new corporation, if any, resulting from any such reorganization or readjustment, and (ii) the rights of the holders of such Senior Indebtedness are not, without the consent of such holders, altered by such reorganization or readjustment. The consolidation of the Company with, or the merger of the Company with or into, another Person or the liquidation or dissolution of the Company following the conveyance, transfer or lease of all or substantially all its properties and assets on a consolidated basis to another Person upon the terms and conditions provided for in Article Eight hereof shall not be deemed a dissolution, winding up, liquidation or reorganization for the purposes of this Section 1203 if such other Person shall, as a part of such consolidation, merger, conveyance, transfer or lease, comply with the conditions stated in Article Eight hereof. Nothing in Section 1202 or in this Section 1203 shall apply to claims of, or payments to, the Trustee under or pursuant to Section 607 hereof. 54 SECTION 1204. SUBROGATION. Subject to the payment in full of all Senior Indebtedness, the rights of the Holders of the Securities shall be subrogated to the rights of the holders of such Senior Indebtedness to receive payments or distributions of cash, property or securities of the Company, as the case may be, applicable to such Senior Indebtedness until the principal of (and premium, if any) and interest (including any Additional Payments) on the Securities shall be paid in full; and, for the purposes of such subrogation, no payments or distributions to the holders of such Senior Indebtedness of any cash, property or securities to which the Holders of the Securities or the Trustee would be entitled except for the provisions of this Article Twelve, and no payment over pursuant to the provisions of this Article Twelve, to or for the benefit of the holders of such Senior Indebtedness by Holders of the Securities or the Trustee, shall, as between the Company, its creditors other than holders of Senior Indebtedness, and the Holders of the Securities, be deemed to be a payment by the Company to or on account of such Senior Indebtedness. It is understood that the provisions of this Article Twelve are and are intended solely for the purposes of defining the relative rights of the Holders of the Securities, on the one hand, and the holders of such Senior Indebtedness on the other hand. Nothing contained in this Article Twelve or elsewhere in this Indenture or in the Securities is intended to or shall impair, as between the Company, its creditors other than the holders of Senior Indebtedness, and the Holders of the Securities, the obligation of the Company, which is absolute and unconditional, to pay to the Holders of the Securities the principal of (and premium, if any) and interest (including any Additional Payments) and Additional Redemption Distributions, if any, on the Securities as and when the same shall become due and payable in accordance with their terms (except as permitted by Section 312), or is intended to or shall affect the relative rights of the Holders of the Securities and creditors of the Company, as the case may be, other than the holders of Senior Indebtedness, nor shall anything herein or therein prevent the Trustee or the Holder of any Security from exercising all remedies otherwise permitted by applicable law upon default under this Indenture, subject to the rights, if any, under this Article Twelve of the holders of such Senior Indebtedness in respect of cash, property or securities of the Company, as the case may be, received upon the exercise of any such remedy. Upon any payment or distribution of assets of the Company referred to in this Article Twelve, the Trustee, subject to the provisions of Section 603, and the Holders of the Securities shall be entitled to rely conclusively upon any order or decree made by any court of competent jurisdiction in which such dissolution, winding up, liquidation or reorganization proceedings are pending, or a certificate of the receiver, trustee in bankruptcy, liquidation trustee, agent or other Person making such payment or distribution, delivered to the Trustee or to the Holders of the Securities, for the purposes of ascertaining the Persons entitled to participate in such distribution, the holders of the Senior Indebtedness and other indebtedness of the Company, as the case may be, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article Twelve. SECTION 1205. TRUSTEE TO EFFECTUATE SUBORDINATION. Each Holder of Securities, by such Holder's acceptance thereof, authorizes and directs the Trustee, on such Holder's behalf, to take such action as may be necessary or appropriate to 55 effectuate the subordination provided in this Article Twelve and appoints the Trustee as such Holder's attorney-in-fact for any and all such purposes. SECTION 1206. NOTICE BY THE COMPANY. The Company shall give prompt written notice to a Responsible Officer of the Trustee of any fact known to the Company that would prohibit the making of any payment of moneys to or by the Trustee in respect of the Securities pursuant to the provisions of this Article Twelve. Notwithstanding the provisions of this Article Twelve or any other provision of this Indenture, the Trustee shall not be charged with knowledge of the existence of any facts that would prohibit the making of any payment of moneys to or by the Trustee in respect of the Securities pursuant to the provision of this Article Twelve, unless and until a Responsible Officer of the Trustee shall have received written notice thereof at the Corporate Trust Office of the Trustee from the Company or a holder or holders of Senior Indebtedness or from any trustee therefor; and before the receipt of any such written notice, the Trustee, subject to the provisions of Section 603 hereof, shall be entitled in all respects to assume that no such facts exist; PROVIDED, HOWEVER, that if the Trustee shall not have received the notice provided for in this Section 1206 at least two Business Days prior to the date upon which by the terms hereof any money may become payable for any purpose (including, without limitation, the payment of the principal of (and premium, if any), interest (including any Additional Payments) or Additional Redemption Distributions, if any, on any Security), then, anything herein contained to the contrary notwithstanding, the Trustee shall have full power and authority to receive such money and to apply the same to the purposes for which they were received, and shall not be affected by any notice to the contrary that may be received by it within two Business Days prior to such date. The Trustee, subject to the provisions of Section 603, shall be entitled to rely on the delivery to it of a written notice by a Person representing himself to be a holder of Senior Indebtedness (or a trustee on behalf of such holder) to establish that such notice has been given by a holder of such Senior Indebtedness or a trustee on behalf of any such holder or holders. In the event that the Trustee determines in good faith that further evidence is required with respect to the right of any Person as a holder of Senior Indebtedness to participate in any payment or distribution pursuant to this Article Twelve, the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and any other facts pertinent to the right of such Person under this Article Twelve, and, if such evidence is not furnished, the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment. SECTION 1207. RIGHTS OF THE TRUSTEE; HOLDERS OF SENIOR INDEBTEDNESS. The Trustee in its individual capacity shall be entitled to all the rights set forth in this Article Twelve in respect of any Senior Indebtedness at any time held by it, to the same extent as any other holder of Senior Indebtedness, and nothing in this Indenture shall deprive the Trustee of any of its rights as such holder. With respect to the holders of Senior Indebtedness of the Company, the Trustee undertakes to perform or to observe only such of its covenants and obligations as are set forth in 56 this Article Twelve, and no implied covenants or obligations with respect to the holders of such Senior Indebtedness shall be read into this Indenture against the Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the holders of such Senior Indebtedness and, subject to the provisions of Section 603, the Trustee shall not be liable to any holder of such Senior Indebtedness if it shall pay over or deliver to Holders of Securities, the Company or any other Person money or assets to which any holder of such Senior Indebtedness shall be entitled by virtue of this Article Twelve or otherwise. With respect to the holders of Senior Indebtedness, the Trustee undertakes to perform or to observe only such of its covenants or obligations as are specifically set forth in this Article Twelve and no implied covenants or obligations with respect to holders of Senior Indebtedness shall be read into this Indenture against the Trustee. SECTION 1208. SUBORDINATION MAY NOT BE IMPAIRED. No right of any present or future holder of any Senior Indebtedness to enforce subordination as herein provided shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Company or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by the Company with the terms, provisions and covenants of this Indenture, regardless of any knowledge thereof that any such holder may have or otherwise be charged with. Without in any way limiting the generality of the foregoing paragraph, the holders of Senior Indebtedness may, at any time and from time to time, without the consent of or notice to the Trustee or the Holders of the Securities, without incurring responsibility to the holders of the Securities and without impairing or releasing the subordination provided in this Article Twelve or the obligations hereunder of the Holders of the Securities to the holders of Senior Indebtedness, do any one or more of the following: (i) change the manner, place or terms of payment or extend the time of payment of, or renew or alter, such Senior Indebtedness, or otherwise amend or supplement in any manner such Senior Indebtedness or any instrument evidencing the same or any agreement under which such Senior Indebtedness is outstanding; (ii) sell, exchange, release or otherwise deal with any property pledged, mortgaged or otherwise securing such Senior Indebtedness; (iii) release any Person liable in any manner for the collection of such Senior Indebtedness; and (iv) exercise or refrain from exercising any rights against the Company and any other Person. ARTICLE THIRTEEN CONVERSION OF SECURITIES SECTION 1301. CONVERSION RIGHTS. Subject to and upon compliance with the provisions of this Article Thirteen, the Securities are convertible, at the option of the Holders, at any time prior to the close of business on ________________ (or in the case of Securities called for redemption, prior to the close of business on the Business Day prior to the corresponding Redemption Date), into shares of Fleetwood Common Stock at an initial conversion price of $[___] per share of Fleetwood Common Stock, subject to adjustment as described in this Article Thirteen (the "Conversion Price"). A Holder of Securities may convert any portion of the principal amount of the Securities (provided that such principal amount is $50 or an integral multiple thereof) into that number of 57 fully paid and nonassessable shares of Fleetwood Common Stock obtained by dividing the principal amount of the Securities to be converted by the Conversion Price in effect at the close of business on the Conversion Date. All calculations under this Article Thirteen shall be made to the nearest cent or to the nearest 1/100th of a share, as the case may be, with one-half of a cent and 0.005 of a share being rounded upwards to the nearest cent and 1/100th of a share, respectively. SECTION 1302. CONVERSION PROCEDURES. (a) In order to convert all or a portion of the Securities (provided that such principal amount is $50 or an integral multiple thereof) the Holder thereof shall deliver to the Conversion Agent an irrevocable notice of conversion in substantially the form appearing as part of Exhibit A-l hereto or, in the case of a notice of conversion delivered by a holder of Trust Securities, in substantially the form appearing in Exhibit A-l, as the case may be, of the Declaration (each, a "Notice of Conversion") setting forth the principal amount of Securities to be converted, together with the name or names, if other than the Holder, in which the shares of Fleetwood Common Stock should be issued upon conversion and, if such Securities are definitive Securities, surrender to the Conversion Agent the Securities to be converted, duly endorsed or assigned to the Company or in blank. In addition, a holder of Trust Securities may exercise its right under the Declaration to convert such Trust Securities into Fleetwood Common Stock by delivering to the Conversion Agent an irrevocable Notice of Conversion setting forth the number of Trust Securities to be redeemed and the other information called for by the preceding sentence and directing the Conversion Agent (i) to exchange such Trust Securities for a portion of the Securities held by the Trust (at an exchange rate of $50 principal amount of Securities for each Trust Security) and (ii) to convert such Securities as soon as practicable, on behalf of such holder, into Fleetwood Common Stock pursuant to this Article Thirteen and, if such Trust Securities are in definitive form, surrendering to the Conversion Agent such Trust Securities, duly endorsed or assigned to the Company or in blank. So long as any Trust Securities are outstanding, the Trust shall not convert any Securities except pursuant to a Notice of Conversion delivered to the Conversion Agent by a holder of Trust Securities. (b) If a Security is surrendered for conversion after the close of business on any record date for payment of interest thereon and before the opening of business on the corresponding payment date (other than a Security or portion of a Security called for redemption on a Redemption Date occurring after such record date and prior to such payment date), then, notwithstanding such conversion, the interest payable on such payment date will be paid to the Trust which will distribute such interest to the holder of the applicable Trust Securities at the close of business on the record date or to such other Person in whose name such Security is registered at the close of business on such record date, as the case may be, despite such conversion, and (other than a Security or a portion of a Security called for redemption on a Redemption Date occurring after such record date and on or prior to such payment date) when so surrendered for conversion, the Security need not be accompanied by payment of an amount in cash equal to the interest payable on such payment date. Except as otherwise provided in the immediately preceding sentence, in the case of any Security that is converted, interest that would otherwise be due and payable after the date of conversion of such Security shall not be payable, and the Company shall not make nor be required to make any other payment, adjustment or allowance with respect to accrued but unpaid interest on the Securities being converted, which 58 shall be deemed to be paid in full. Each conversion shall be deemed to have been effected immediately prior to the close of business on the day (the "Conversion Date") on which the Notice of Conversion (together with, if required by the preceding paragraph, certificates, duly endorsed or assigned to the Company or in blank, evidencing the Trust Securities or Securities, as the case may be, being surrendered for conversion) was received by the Conversion Agent from (x) a holder of the Trust Securities effecting a conversion thereof pursuant to its conversion rights under the Declaration or (y) if the Securities shall have been distributed to holders of Trust Securities following the occurrence of a Special Event, when received by the Conversion Agent from the Holder effecting the conversion thereof pursuant to its conversion rights under the Indenture, as the case may be. The Person or Persons entitled to receive the Fleetwood Common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such Fleetwood Common Stock as of the Conversion Date. As promptly as practicable on or after the Conversion Date, the Company shall issue and deliver at the office of the Conversion Agent, unless otherwise directed in the Notice of Conversion, a certificate or certificates for the number of full shares of Fleetwood Common Stock issuable upon such conversion, together with the cash payment, if any, in lieu of any fraction of any share to the Person or Persons entitled to receive the same. The Conversion Agent shall deliver such certificate or certificates to such Person or Persons. (c) The Company's delivery upon conversion of the fixed number of shares of Fleetwood Common Stock into which the Securities are convertible (together with the cash payment, if any, in lieu of fractional shares) shall be deemed to satisfy the Company's obligation to pay the principal amount at maturity of the Securities so converted and any unpaid interest (including Additional Interest) accrued on such Securities at the time of such conversion; PROVIDED, that if any Security is surrendered for conversion after the close of business on a record date for payment of interest and before the opening of business on the corresponding interest payment date, the interest payable on such interest payment date with respect to such Security shall be paid to the Trust (which will distribute such interest to the holder of the applicable Trust Securities at the close of business on such record date) or to such other person in whose name the Securities are registered at the close of business on such record date, as the case may be, despite such conversion. The Company will make no payment or allowance for distributions on the shares of Fleetwood Common Stock issued upon such conversion, except to the extent that such shares of Fleetwood Common Stock are held of record on the record date for any such distributions. Each conversion will be deemed to have been effected immediately prior to the close of business on the day on which the related conversion notice was received by the Conversion Agent. (d) No fractional shares of Fleetwood Common Stock will be issued as a result of conversion, but in lieu thereof, the Company shall pay to the Conversion Agent a cash adjustment in an amount equal to the same fraction of the Closing Price of such fractional interest on the applicable Conversion Date, or, if such day is not a Trading Day, on the preceding Trading Day, and the Conversion Agent in turn will make such payment, if any, to the Holder of the Securities or the holder of the Trust Securities, as the case may be, so converted. (e) In the event of the conversion of any Security in part only, a new Security or Securities for the unconverted portion thereof will be issued in the name of the Holder thereof upon the cancellation thereof. 59 (f) In effecting the conversion transactions described in this Section 1302, the Conversion Agent is acting as agent of the holders of Trust Securities (in the exchange of Trust Securities for Securities) and as agent of the Holders of Securities (in the conversion of Securities into Fleetwood Common Stock), as the case may be. The Conversion Agent is hereby authorized (i) to exchange Securities held by the Trust from time to time for Trust Securities in connection with the conversion of such Trust Securities in accordance with this Article Thirteen and (ii) to convert all or a portion of the Securities into Fleetwood Common Stock and thereupon to deliver such shares of Fleetwood Common Stock in accordance with the provisions of this Article Thirteen and to deliver to the Person entitled thereto a new Security or Securities for any resulting unconverted principal amount. SECTION 1303. CONVERSION PRICE ADJUSTMENTS. (a) The Conversion Price shall be adjusted from time to time as follows: (i) In case the Company shall pay or make a dividend or other distribution on Fleetwood Common Stock in shares of Fleetwood Common Stock, then the Conversion Price in effect at the opening of business on the day following the date fixed for the determination of shareholders entitled to receive such dividend or other distribution shall be reduced by multiplying such Conversion Price, by a fraction the numerator of which shall be the number of shares of Fleetwood Common Stock outstanding at the close of business on the date fixed for such determination and the denominator of which shall be the sum of such number of shares and the total number of shares constituting such dividend or other distribution, such reduction to become effective immediately after the opening of business on the day following the date fixed for such determination. For the purposes of this subparagraph (i), the number of shares of Fleetwood Common Stock at any time outstanding shall not include shares held in the treasury of the Company (except to the extent such dividend or distribution is being made with respect to such shares) but shall include shares issuable in respect of scrip certificates issued in lieu of fractions of shares of Fleetwood Common Stock. In the event that an adjustment is made pursuant to this subparagraph (i) and, thereafter, the relevant distribution or dividend is not made, the Conversion Price shall again be adjusted to be the Conversion Price that would then be in effect if no such adjustment had been made. (ii) In case the outstanding shares of Fleetwood Common Stock shall be subdivided or reclassified (in a reclassification that does not constitute a Fundamental Change) into a greater number of shares of Fleetwood Common Stock, then the Conversion Price in effect at the opening of business on the day following the day upon which such subdivision becomes effective shall be proportionately reduced, and, conversely, in case the outstanding shares of Fleetwood Common Stock shall be combined into a smaller amount of shares of Fleetwood Common Stock, then the Conversion Price in effect at the opening of business on the day following the day upon which such combination becomes effective shall be proportionately increased, such reduction or increase, as the case may be, to become effective immediately after the opening of business on the day following the day upon which such subdivision or combination becomes effective. 60 (iii) In case the Company shall issue rights or warrants to all holders of Fleetwood Common Stock entitling them (for a period expiring within 45 days after the record date fixed for a distribution of such rights or warrants) to subscribe for or purchase shares of Fleetwood Common Stock at a price per share less than the Current Market Price (as hereinafter defined) (determined as provided in subparagraph (vii) below) of Fleetwood Common Stock on the date fixed for the determination of shareholders entitled to receive such rights or warrants (other than pursuant to a dividend reinvestment or similar plan), then the Conversion Price in effect at the opening of business on the day following the date fixed for such determination shall be reduced by multiplying such Conversion Price by a fraction, the numerator of which shall be the number of shares of Fleetwood Common Stock outstanding at the close of business on the date fixed for such determination plus the number of shares of Fleetwood Common Stock which the aggregate of the offering price of the total number of shares of Fleetwood Common Stock so offered for subscription or purchase would purchase at such Current Market Price and the denominator shall be the number of shares of Fleetwood Common Stock outstanding at the close of business on the date fixed for such determination plus the number of shares of Fleetwood Common Stock so offered for subscription or purchase, such reduction to become effective immediately after the opening of business on the day following the date fixed for such determination. For the purposes of this subparagraph (iii), the number of shares of Fleetwood Common Stock at any time outstanding shall not include shares held in the treasury of the Company but shall include shares issuable in respect of scrip certificates issued in lieu of fractions of shares of Fleetwood Common Stock. The Company agrees not to issue any rights or warrants in respect of shares of Fleetwood Common Stock held in the treasury of the Company. To the extent that shares of Fleetwood Common Stock are not delivered after the expiration or redemption by the Company of such rights or warrants, the Conversion Price shall be readjusted to the Conversion Price which would then be in effect had the adjustments made in respect of the issuance of such rights or warrants been made on the basis of delivery of only the number of shares of Fleetwood Common Stock actually delivered. (iv) Subject to the second sentence of this subparagraph (iv), in case the Company shall, by dividend or otherwise, distribute to all holders of Fleetwood Common Stock (A) shares of capital stock of the Company (other than Fleetwood Common Stock), (B) evidences of indebtedness of the Company and/or (C) other assets (including securities, but excluding (1) any rights or warrants referred to in subparagraph (iii) above, (2) any rights or warrants to acquire capital stock of any Person other than the Company or any subsidiary of the Company, (3) any dividends or distributions in connection with the liquidation, dissolution or winding-up of the Company, (4) any dividends or distributions payable solely in cash that may from time to time be fixed by the Board of Directors, and (5) any dividends or distributions referred to in subparagraph (i) or (ii) above, then in each case (unless the Company makes the election referred to in the next sentence) the Conversion Price shall be adjusted so that the same shall equal the price determined by multiplying the Conversion Price in effect immediately prior to the effectiveness of the Conversion Price adjustment contemplated by this subparagraph (iv) by a fraction, the numerator of which shall be the Current Market Price (determined as provided in subparagraph (vii) below) of the Fleetwood Common Stock on the date fixed for payment of such distribution (the "Reference Date"), less the fair market value on the 61 Reference Date (as determined in good faith by the Board of Directors, whose determination shall be conclusive and shall be described in a statement filed with the Trustee) of the portion of the shares of capital stock of the Company, evidences of indebtedness or other assets so distributed (and for which an adjustment to the Conversion Price has not been made previously pursuant to the terms of this Article Thirteen) applicable to one share of Fleetwood Common Stock and the denominator shall be such Current Market Price of the Fleetwood Common Stock, such adjustment to become effective immediately prior to the opening of business on the day following the Reference Date. However, the Company may elect, in its sole discretion, in lieu of the foregoing adjustment, to make adequate provision so that each Holder of Securities shall have the right to receive upon conversion thereof the amount and kind of shares of capital stock, evidences of indebtedness or other assets such Holder would have received had such Holder converted such shares immediately prior to the Reference Date. In the event that no such dividend or distribution is so paid or made, the Conversion Price shall again be adjusted to be the Conversion Price that would then be in effect if such dividend or distribution had not occurred. If the Board of Directors determines the fair market value of any distribution for purposes of this subparagraph (iv) by reference to the actual or when issued trading market for any securities (including shares of capital stock or evidence of indebtedness of the Company) comprising such distribution, it must in doing so consider the price in such market over the period used in computing the Current Market Price of the Fleetwood Common Stock or, if shorter, the portion of such period during which a trading market for such securities existed. For purposes of this subparagraph (iv), any dividend or distribution that includes both (x) any of the items described in clauses (A), (B) or (C) of the first sentence of this subparagraph (iv) and (y) Fleetwood Common Stock or rights or warrants to subscribe for or purchase Fleetwood Common Stock of the type referred to in subparagraph (iii) shall be deemed to be (1) a dividend or distribution of shares of capital stock of the Company (other than Fleetwood Common Stock), evidences of indebtedness of the Company or other assets of the type referred to in clause (C) of the first sentence of this subparagraph (iv) (making any Conversion Price reduction required by this subparagraph (iv)) immediately followed by (2) a dividend or distribution of such Fleetwood Common Stock or rights or warrants to purchase Fleetwood Common Stock of the type referred to in subparagraph (iii) (making any further Conversion Price reduction required by subparagraph (i) or (iii) of this Section 1303(a)), except (A) the Reference Date of such dividend or distribution as defined in this subparagraph (iv) shall be substituted for "the date fixed for the determination of shareholders entitled to receive such dividend or other distribution," "the date fixed for the determination of shareholders entitled to receive such rights or warrants" and "the date fixed for such determination" within the meaning of subparagraphs (i) and (iii) of this Section 1303(a) and (B) any shares of Fleetwood Common Stock included in such dividend or distribution shall not be deemed "outstanding at the close of business on the date fixed for such determination" within the meaning of subparagraph (i) of this Section 1303(a). (v) In case the Company shall, by dividend or otherwise, at any time distribute cash to all holders of Fleetwood Common Stock, excluding (A) any cash dividends on Fleetwood Common Stock to the extent that the aggregate cash dividends per share of Fleetwood Common Stock in any consecutive 12-month period do not exceed the greater 62 of (x) the amount per share of Fleetwood Common Stock of the cash dividends paid on the Fleetwood Common Stock in the immediately preceding 12-month period, to the extent that such dividends for the immediately preceding 12-month period did not require an adjustment to the Conversion Price pursuant to this subparagraph (v) (as adjusted to reflect subdivisions or combinations of the Fleetwood Common Stock) and (y) 15% of the average of the Current Market Price of Fleetwood Common Stock for the ten consecutive Trading Days immediately prior to the date of declaration of such dividend and (B) any dividend or distribution in connection with the liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary, or any redemption of Rights (as defined in subparagraph (viii) below); PROVIDED, HOWEVER, that no adjustment shall be made pursuant to this subparagraph (v) if such distribution would otherwise constitute a Fundamental Change (as hereinafter defined), then (unless the Company makes the election referred to in the proviso following this clause), the Conversion Price shall be reduced so that the same shall equal the price determined by multiplying the Conversion Price in effect immediately prior to the effectiveness of the Conversion Price reduction contemplated by this subparagraph (v) by a fraction, the numerator of which shall be the Closing Price of a share of Fleetwood Common Stock on the date fixed for the payment of such distribution less the amount of cash so distributed (to the extent not excluded as provided above) applicable to one share of Fleetwood Common Stock, and the denominator shall be such Closing Price of Fleetwood Common Stock, such reduction to become effective immediately prior to the opening of business on the day following the date fixed for the payment of such distribution; PROVIDED, HOWEVER, that the Company may elect, in its sole discretion, in lieu of the foregoing adjustment, to make adequate provision so that each Holder of Securities shall thereafter have the right to receive upon conversion the amount of cash such Holder would have received had such Holder converted such Securities immediately prior to the record date for such distribution of cash. If any adjustment is required to be made as set forth in this subparagraph (v) as a result of a distribution that is a dividend described in clause (A) of this subparagraph (v), such adjustment will be based upon the amount by which such distribution exceeds the amount of the dividend permitted to be excluded pursuant to such clause (A) of this subparagraph (v). If an adjustment is required to be made pursuant to this subparagraph (v) as a result of a distribution that is not such a dividend, such adjustment would be based upon the full amount of such distribution. In the event that an adjustment is made pursuant to this subparagraph (v) and, thereafter, the relevant distribution or dividend is not made, the Conversion Price shall again be adjusted to be the Conversion Price that would then be in effect if no such adjustment had been made. (vi) In case of the consummation of a public tender offer or public exchange offer (other than an odd lot tender offer) made by the Company or any subsidiary of the Company for Fleetwood Common Stock to the extent that the cash and fair market value (as determined in good faith by the Board of Directors, whose determination shall be conclusive and shall be described in a resolution of such Board) of any other consideration included in such payment per share of Fleetwood Common Stock at the last time (the "Expiration Time") tenders or exchanges may be made pursuant to such tender or exchange offer (as amended if applicable) exceed by more than 10% (with any smaller excess being disregarded in computing the adjustment to the Conversion Price provided in this subparagraph (vi)) the first reported sale price (on the principal national securities 63 exchange or quotation system on which the Fleetwood Common Stock is then traded) per share of Fleetwood Common Stock on the Trading Day next succeeding the Expiration Time, then the Conversion Price shall be reduced so that the same shall equal the price determined by multiplying the Conversion Price in effect immediately prior to the Expiration Time by a fraction the numerator of which shall be the number of shares of Fleetwood Common Stock outstanding (including any tendered or exchanged shares) at the Expiration Time multiplied by the first reported sale price (on such principal exchange or quotation system) of the Fleetwood Common Stock on the Trading Day next succeeding the Expiration Time and the denominator shall be the sum of (x) the fair market value (determined as aforesaid and subject to the last sentence of this paragraph) of the aggregate consideration payable to shareholders based on the acceptance (up to any maximum specified in the terms of the tender or exchange offer) of all shares validly tendered or exchanged and not withdrawn as of the Expiration Time (the shares deemed so accepted, up to any such maximum, being referred to as the "Purchased Shares") and (y) the product of the number of shares of Fleetwood Common Stock outstanding (less any Purchased Shares) at the Expiration Time and the first reported sale price (on such principal exchange or quotation system) of the Fleetwood Common Stock on the Trading Day next succeeding the Expiration Time, such reduction to become effective immediately prior to the opening of business on the day following the Expiration Time. If an adjustment is required to be made as set forth in this subparagraph (vi), the fair market value of the aggregate consideration payable to shareholders referred to in clause (x) of the preceding sentence shall be calculated by including only that portion of such fair market value of such consideration per share of Fleetwood Common Stock which exceeds 110% of the first reported sale price (determined as aforesaid) per share of Fleetwood Common Stock on the Trading Day next succeeding the Expiration Time. (vii) For the purpose of any computation under this Article Thirteen, the "Current Market Price" of Fleetwood Common Stock on any day shall be deemed to be the average of the daily Closing Prices (as hereinafter defined) of Fleetwood Common Stock for the ten consecutive Trading Days ending on the earlier of the day in question and, if applicable, the day before the "ex" date (as defined below) with respect to the issuance or distribution requiring such computation; PROVIDED, HOWEVER, that if more than one event occurs that would require an adjustment pursuant to subparagraphs (i) through (vi), inclusive, of this Section 1303(a), the Board of Directors may make such adjustments to the Closing Prices during such ten Trading Day period as it deems appropriate to effectuate the intent of the adjustments in this Section 1303, in which case any such determination by the Board of Directors shall be set forth in a Board Resolution and shall be conclusive. For purposes of this paragraph, the term "ex" date, (1) when used with respect to any issuance or distribution, means the first date on which the Fleetwood Common Stock trades regular way on the New York Stock Exchange or on such successor principal securities exchange as the Fleetwood Common Stock may be listed or in the relevant market from which the Closing Prices were obtained without the right to receive such issuance or distribution, and (2) when used with respect to any tender or exchange offer, means the first date on which the Fleetwood Common Stock trades regular way on such principal securities exchange or in such market after the Expiration Time of such offer. 64 (viii) No adjustment in the Conversion Price shall be required pursuant to this Section 1303(a) unless the adjustment would require a change of at least 1% in the Conversion Price then in effect; PROVIDED, HOWEVER, that any adjustment that by reason of this subparagraph (viii) is not required to be made shall be carried forward and taken into account in any subsequent adjustment. In addition, anything herein to the contrary notwithstanding, no adjustment to the Conversion Price will be required in connection with the issuance of rights or other similar instruments ("Rights") pursuant to a shareholder rights plan or similar plan or the repurchase or redemption of those rights or the issuance of common stock, options or other securities under any officer, director or employee benefit plan in existence on [_____________], 2001. Except as otherwise expressly provided in subparagraph (iv) above, if any action pursuant to this Section 1303 would require adjustment of the Conversion Price pursuant to more than one of the provisions described above, only one adjustment shall be made and such adjustment shall be the amount of the adjustment that has the highest absolute value to the Holders of the Securities. All calculations shall be made to the nearest cent (with one-half of a cent being rounded upward) or to the nearest 1/100th of a share (with .005 of a share being rounded upward), as the case may be. Notwithstanding anything to the contrary in this Article Thirteen, the Company from time to time may, to the extent permitted by law, reduce the Conversion Price by any amount for any period of at least 20 Business Days, in which case the Company shall give at least 15 days' notice of such reduction to the holders of Securities and the Trustee. In particular, the Company may, at its option, make such reductions in the Conversion Price in addition to those set forth in this Article Thirteen, as it considers to be advisable in order to avoid or diminish any income tax to any holder of shares of Fleetwood Common Stock resulting from any dividend or distribution of stock or issuance of rights or warrants to purchase or subscribe for stock or from any event treated as such for income tax purposes or for any other reasons. Except as otherwise provided in this Section 1303(a), the Conversion Price will not be adjusted for the issuance of Fleetwood Common Stock or any securities convertible into or exchangeable for Fleetwood Common Stock or carrying the right to purchase any of the foregoing. (ix) In any case in which this Article Thirteen provides that an adjustment shall become effective immediately after a record date for an event, the Company may defer until the occurrence of such event (A) issuing to the holder of any Securities converted after such record date and before the occurrence of such event the additional shares of Fleetwood Common Stock or other securities, cash or property issuable upon such conversion by reason of the adjustment required by such event over and above the Fleetwood Common Stock issuable upon such conversion before giving effect to such adjustment and (B) paying to such holder any amount in cash in lieu of any fractional shares pursuant to this Article Thirteen. (x) For purposes of this Indenture, "Fleetwood Common Stock" includes any stock of any class of the Company that has no preference in respect of dividends or of amounts payable in the event of any voluntary or involuntary liquidation, dissolution or winding-up of the Company and which is not subject to redemption by the Company. However, subject to the provisions of this Article Thirteen, shares issuable on conversion of Securities shall include only shares of the class designated as the common stock of the 65 Company on the date of this Indenture or shares of any class or classes resulting from any reclassification or reclassifications thereof and that have no preference in respect of dividends or of amounts payable in the event of any voluntary or involuntary liquidation, dissolution or winding-up of the Company and that are not subject to redemption by the Company; PROVIDED, HOWEVER, that if at any time there shall be more than one such resulting class, the shares of each such class then so issuable shall be substantially in the proportion that the total number of shares of such class resulting from all such reclassifications bears to the total number of shares of all such classes resulting from all such reclassifications. (b) Whenever the Conversion Price is adjusted as herein provided: (i) the Company shall compute the adjusted Conversion Price and shall prepare a certificate signed by the Chief Financial Officer or the Treasurer of the Company setting forth the adjusted Conversion Price and showing in reasonable detail the facts upon which such adjustment is based, and such certificate shall forthwith be filed with the Trustee and, if different, the transfer agent for the Preferred Securities and the Securities; and (ii) a notice stating the Conversion Price has been adjusted and setting forth the adjusted Conversion Price shall as soon as practicable be mailed by the Company to all record holders of Preferred Securities and the Securities at their last addresses as they appear upon the stock transfer books of the Company and the Trust. SECTION 1304. ADJUSTMENT OF CONVERSION PRICE; FUNDAMENTAL CHANGE. (a) In the event that the Company shall be a party to any transaction or series of transactions constituting a Fundamental Change (as hereinafter defined) (including, without limitation, (i) any recapitalization or reclassification of Fleetwood Common Stock (other than a change in par value or a change from par value to no par value or from no par value to par value, or as a result of a subdivision or combination of the Fleetwood Common Stock); (ii) any consolidation or merger of the Company with or into another corporation as a result of which holders of Fleetwood Common Stock shall be entitled to receive securities or other property or assets (including cash) with respect to or in exchange for Fleetwood Common Stock (other than a merger that does not result in a reclassification, conversion, exchange or cancellation of the outstanding Fleetwood Common Stock); (iii) any sale or transfer of all or substantially all of the assets of the Company; or (iv) any compulsory share exchange) pursuant to which holders of Fleetwood Common Stock shall be entitled to receive other securities, cash or other property, then appropriate provision shall be made so that the holder of each Security then outstanding shall have the right thereafter to convert such Security only into (A) if any such transaction does not constitute a Common Stock Fundamental Change (as hereinafter defined), the kind and amount of the securities, cash or other property that would have been receivable upon such recapitalization, reclassification, consolidation, merger, sale, transfer or share exchange by a holder of the number of shares of Fleetwood Common Stock issuable upon such conversion of such Security immediately prior to such recapitalization, reclassification, consolidation, merger, sale, transfer or share exchange, after, in the case of a Non-Stock Fundamental Change, giving effect to any adjustment in the Conversion Price in accordance with subparagraph (i) of Section 66 1304(c), and (B) if any such transaction constitutes a Common Stock Fundamental Change (as hereinafter defined), shares of common stock of the kind received by holders of Fleetwood Common Stock as a result of such Common Stock Fundamental Change in an amount determined in accordance with subparagraph (ii) of Section 1304(c). The company formed by such consolidation or resulting from such merger or which acquires such assets or which acquires the Fleetwood Common Stock, as the case may be, shall enter into a supplemental indenture with the Trustee, reasonably satisfactory in form to the Trustee and executed and delivered to the Trustee, the provisions of which shall establish such right. Such supplemental indenture shall provide for adjustments that, for events subsequent to the effective date of such supplemental indenture, shall be as nearly equivalent as practicable to the relevant adjustments provided for in this Article Thirteen. The above provisions shall similarly apply to successive recapitalizations, reclassifications, consolidations, mergers, sales, transfers or share exchanges. (b) Notwithstanding any other provisions in this Article Thirteen to the contrary, if any Fundamental Change (as hereinafter defined) occurs, then the Conversion Price in effect will be adjusted immediately after such Fundamental Change as described below in Section 1304(c). In addition, in the event of a Common Stock Fundamental Change, each Security shall be convertible solely into common stock of the kind received by holders of Fleetwood Common Stock as the result of such Common Stock Fundamental Change as more specifically provided below in Section 1304(c). (c) For purposes of calculating any adjustment to be made pursuant to this Article Thirteen in the event of a Fundamental Change, immediately following such Fundamental Change (and for such purposes a Fundamental Change shall be deemed to occur on the earlier of (a) the occurrence of such Fundamental Change and (b) the date, if any, fixed for determination of shareholders entitled to receive the cash, securities, property or other assets distributable in such Fundamental Change to holders of the Fleetwood Common Stock): (i) in the case of a Non-Stock Fundamental Change, the Conversion Price per share of Fleetwood Common Stock immediately following such Non-Stock Fundamental Change shall be the lower of (A) the Conversion Price in effect immediately prior to such Non-Stock Fundamental Change, but after giving effect to any other adjustments effected pursuant to this Article Thirteen, and (B) the product obtained by multiplying the greater of the Applicable Price (as hereinafter defined) or the then applicable Reference Market Price (as hereinafter defined) by a fraction of which the numerator shall be 100.0 and the denominator of which shall be the amount set forth below based on the date on which such Non-Stock Fundamental Change occurs. For the period beginning [_________], 2001 and ending on February 14, 2003, the denominator shall be 109.70, and for each succeeding twelve-month period beginning February 15 shall be as follows:
YEAR DENOMINATOR ---- ----------- 2003............................................. 107.916 2004............................................. 106.333 2005............................................. 104.750 2006............................................. 103.167 2007............................................. 101.583 2008 and thereafter.............................. 100.000
67 (ii) in the case of a Common Stock Fundamental Change, the Conversion Price per share of Fleetwood Common Stock immediately following the Common Stock Fundamental Change shall be the Conversion Price in effect immediately prior to such Common Stock Fundamental Change, but after giving effect to any other adjustments effected pursuant to this Article Thirteen, multiplied by a fraction, the numerator of which is the Purchaser Stock Price (as hereinafter defined) and the denominator of which is the Applicable Price; PROVIDED, HOWEVER, that in the event of a Common Stock Fundamental Change in which (A) 100% of the value of the consideration received by a holder of Fleetwood Common Stock is common stock of the successor, acquiror or other third party (and cash, if any, paid with respect to any fractional interests in such common stock resulting from such Common Stock Fundamental Change) and (B) all of the Fleetwood Common Stock shall have been exchanged for, converted into, or acquired for common stock (and cash, if any, with respect to fractional interests) of the successor, acquiror or other third party, the Conversion Price per share of Fleetwood Common Stock immediately following such Common Stock Fundamental Change shall be the Conversion Price in effect immediately prior to such Common Stock Fundamental Change divided by the number of shares of common stock of the successor, acquiror, or other third party received by a holder of one share of Fleetwood Common Stock as a result of such Common Stock Fundamental Change. (d) The following definitions shall apply to terms used in this Article Thirteen: "Applicable Price" means (A) in the event of a Non-Stock Fundamental Change in which the holders of Fleetwood Common Stock receive only cash, the amount of cash receivable by a holder of one share of Fleetwood Common Stock; and (B) in the event of any other Fundamental Change, the average of the Closing Prices (as hereinafter defined) for one share of Fleetwood Common Stock during the ten Trading Days immediately prior to the record date for the determination of the holders of Fleetwood Common Stock entitled to receive cash, securities, property or other assets in connection with such Fundamental Change or, if there is no such record date, prior to the date upon which the holders of Fleetwood Common Stock shall have the right to receive such cash, securities, property or other assets. "Closing Price" with respect to any securities on any day shall mean the last reported sale price, regular way, on such day or, in case no such sale takes place on such day, the average of the last reported closing bid and asked prices on such day, regular way, in each case on the New York Stock Exchange or, if such security is not listed or admitted to trading on the New York Stock Exchange, on the principal national securities exchange or quotation system on which such security is quoted or listed or admitted to trading or, if not quoted or listed or admitted to trading on any national securities exchange or quotation system, the average of the closing bid and asked prices of such security in the over-the-counter market on the date in question as reported by the National Quotation Bureau Incorporated, or a similarly generally accepted reporting service or, if not 68 so available in such manner, as furnished by any New York Stock Exchange member firm selected from time to time by the Board of Directors for that purpose or a price determined in good faith by the Board of Directors. "Common Stock Fundamental Change" means any Fundamental Change in which more than 50% of the value (as determined in good faith by the Board of Directors) of the consideration received by the holders of Fleetwood Common Stock pursuant to such transactions consists of shares of common stock that, for the ten consecutive Trading Days immediately prior to such Fundamental Change, has been admitted for listing or admitted for listing subject to notice of issuance on a national securities exchange or quoted on the Nasdaq National Market; PROVIDED, HOWEVER, that a Fundamental Change shall not be a Common Stock Fundamental Change unless either (A) the Company continues to exist after the occurrence of such Fundamental Change and the outstanding Preferred Securities continue to exist as outstanding Preferred Securities (or, if the Securities have been distributed to holders of Trust Securities following a Dissolution Event, the outstanding Securities continue to exist as outstanding Securities), or (B) the outstanding Preferred Securities continue to exist as Preferred Securities and are convertible into shares of common stock of the successor to the Company (or, if the Securities have been distributed as aforesaid, the outstanding Securities continue to exist as Securities and are convertible into shares of common stock of the successor to the Company). "Fundamental Change" means the occurrence of any transaction or event, or series of transactions or events, pursuant to which all or substantially all of the Fleetwood Common Stock shall be exchanged for, converted into, acquired for or constitutes solely the right to receive, cash, securities, property or other assets (whether by means of an exchange offer, liquidation, tender offer, consolidation, merger, combination, reclassification, recapitalization or otherwise); PROVIDED, HOWEVER, in the case of any such series of transactions or events, for purposes of adjustment of the Conversion Price, such Fundamental Change shall be deemed to have occurred when substantially all of the Fleetwood Common Stock had been exchanged for, converted into, or acquired for or constitutes solely the right to receive cash, securities, property or other assets, but the adjustment shall be based upon the consideration the holders of Fleetwood Common Stock received in such transaction or event as a result of which more than 50% of the Fleetwood Common Stock shall have been exchanged for, converted into, or acquired for, or shall constitute solely the right to receive cash, securities, property or other assets. "Non-Stock Fundamental Change" means any Fundamental Change other than a Common Stock Fundamental Change. "Purchaser Stock Price" means, with respect to any Common Stock Fundamental Change, the average of the Closing Prices for one share of the common stock received by holders of Fleetwood Common Stock in such Common Stock Fundamental Change during the ten Trading Days immediately prior to the record date for the determination of the holders of Fleetwood 69 Common Stock entitled to receive such shares of common stock or, if there is no such record date, prior to the date upon which the holders of Fleetwood Common Stock shall have the right to receive such shares of common stock. "Reference Market Price" shall initially mean $[_____] and, in the event of any adjustment to the Conversion Price other than as a result of a Fundamental Change, the Reference Market Price shall also be adjusted so that the ratio of the Reference Market Price to the Conversion Price after giving effect to any such adjustment shall always be the same as the ratio of the initial Reference Market Price of $[_____] to the initial Conversion Price of $[____]. (e) In determining the amount and type of consideration received by a holder of Fleetwood Common Stock in the event of a Fundamental Change, consideration received by a holder of Fleetwood Common Stock pursuant to a statutory right of appraisal will be disregarded. SECTION 1305. NOTICE OF ADJUSTMENTS OF CONVERSION PRICE. In case: (i) the Company shall declare a dividend (or any other distribution) on Fleetwood Common Stock that would cause an adjustment to the Conversion Price of the Securities pursuant to Section 1303 (including such an adjustment that would occur but for the terms of the first sentence of Section 1303(a)(viii) above); or (ii) the outstanding shares of Fleetwood Common Stock shall be subdivided into a greater number of shares of Fleetwood Common Stock or combined into a smaller number of shares of Fleetwood Common Stock; or (iii) the Company shall authorize the granting to the holders of Fleetwood Common Stock generally of rights or warrants (for a period expiring within 45 days after the record date fixed for a distribution of such rights and warrants) to subscribe for or purchase any shares of the Company's capital stock or other capital stock of any class or of any other rights (excluding any Rights); or (iv) of any reclassification of Fleetwood Common Stock (other than a subdivision or combination of the outstanding shares of Fleetwood Common Stock), or of any consolidation, merger or share exchange to which the Company is a party and for which approval of any shareholders of the Company is required, or of the sale or transfer of all or substantially all of the assets of the Company or a compulsory share exchange; or (v) of the voluntary or involuntary dissolution, liquidation or winding-up of the Company; then the Company shall (a) if any Preferred Securities are outstanding, cause to be filed with the transfer agent for the Preferred Securities and, except in a case described in paragraph (i) above, cause to be mailed to the holders of record of the Preferred Securities, at their last addresses as 70 they shall appear upon the stock transfer books of the Trust, or (b) if the Securities shall have been distributed to holders of the Trust Securities in accordance with the terms of the Declaration following a Dissolution Event, cause to be mailed to all Holders at their last addresses as they shall appear in the Security Register, at least 15 days prior to the applicable record or effective date hereinafter specified, a notice stating (I) the date on which a record (if any) is to be taken for the purpose of such dividend, distribution, rights or warrants or, if a record is not to be taken, the date as of which the holders of Fleetwood Common Stock of record to be entitled to such dividend, distribution, rights or warrants are to be determined or (II) the date on which such reclassification, consolidation, merger, sale, transfer, share exchange, dissolution, liquidation or winding-up is expected to become effective, and the date as of which it is expected that holders of Fleetwood Common Stock of record shall be entitled to exchange their shares of Fleetwood Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer, share exchange, dissolution, liquidation or winding-up (but no failure to mail such notice or any defect therein or in the mailing thereof shall affect the validity of the corporate action required to be specified in such notice). SECTION 1306. COMPANY TO PROVIDE STOCK. The Company shall reserve, free from preemptive rights, out of its authorized but unissued shares, sufficient shares, as determined by the Conversion Price as of the date hereof, to provide for (i) the election by the Company to pay interest in Fleetwood Common Stock pursuant to Section 301, (ii) the payment of Additional Redemption Distributions, if any, in Fleetwood Common Stock pursuant to Section 1109, and (iii) the conversion of the Securities from time to time as such Securities are presented for conversion, provided, that nothing contained herein shall be construed to preclude the Company from satisfying its obligations in respect of the conversion of Securities by delivery of repurchased shares of Fleetwood Common Stock that are held in the treasury of the Company. If any shares of Fleetwood Common Stock to be reserved for the purpose of payment of interest or Additional Redemption Distributions, if any, or conversion of Securities hereunder require registration with or approval of any governmental authority under any federal or state law before such shares may be validly issued or delivered upon such payment of interest or Additional Redemption Distributions, if any, or conversion, then the Company covenants that it will in good faith and as expeditiously as possible endeavor to secure such registration or approval, as the case may be, provided, however, that nothing in this Section 1306 shall be deemed to affect in any way the obligations of the Company to convert Securities into Fleetwood Common Stock as provided in this Article Thirteen. Before taking any action that would cause an adjustment reducing the Conversion Price below the then par value, if any, of the Fleetwood Common Stock, the Company will take all corporate action that may, in the Opinion of Counsel, be necessary in order that the Company may validly and legally issue fully paid and nonassessable shares of Fleetwood Common Stock at such adjusted Conversion Price. The Company covenants that all shares of Fleetwood Common Stock that may be issued upon payment of interest or Additional Redemption Distributions, if any, or conversion of 71 Securities will upon issue be fully paid and nonassessable by the Company and free of preemptive rights. SECTION 1307. EMPLOYEE BENEFIT PLANS. Notwithstanding the provisions of this Article Thirteen, the issuance of any shares of Fleetwood Common Stock or options or other securities pursuant to any option, warrant, right or exercisable, exchangeable or convertible security outstanding as of the date of this Indenture or pursuant to any present or future officer, director or employee benefit plan or program of the Company shall not give rise to an adjustment in the Conversion Price pursuant to this Article Thirteen. There shall also be no adjustment of the Conversion Price (i) in case of the issuance of any stock (or securities convertible into or exchangeable for stock) of the Company except as specifically described in this Article Thirteen, (ii) as the result of the issuance of Fleetwood Common Stock upon conversion of the Trust Securities or the Securities or (iii) as the result of the issuance or redemption of Rights. SECTION 1308. CERTAIN ADDITIONAL RIGHTS. In case the Company shall, by dividend or otherwise, declare or make a distribution on the Fleetwood Common Stock referred to in Section 1303(a)(iv) and (v) (including, without limitation, dividends or distributions referred to in the last sentence of Section 1303(a)(iv)), the Holder of the Securities, upon the conversion thereof subsequent to the close of business on the date fixed for the determination of stockholders entitled to receive such distribution and prior to the effectiveness of the Conversion Price adjustment in respect of such distribution, shall also be entitled to receive for each share of Fleetwood Common Stock into which the Securities are converted, the portion of the shares of Fleetwood Common Stock, rights, warrants, evidences of indebtedness, shares of capital stock, cash and assets so distributed applicable to one share of Fleetwood Common Stock; PROVIDED, HOWEVER, that, at the election of the Company (whose election shall be evidenced by a resolution of the Board of Directors) with respect to all Holders so converting, the Company may, in lieu of distributing to such Holders any portion of such distribution not consisting of cash or securities of the Company, pay such Holders an amount in cash equal to the fair market value thereof (as determined in good faith by the Board of Directors, whose determination shall be conclusive and described in a resolution of the Board of Directors). If any conversion of Securities described in the immediately preceding sentence occurs prior to the payment date for a distribution to holders of Fleetwood Common Stock that the Holder of Securities so converted is entitled to receive in accordance with the immediately preceding sentence, the Company may elect (such election to be evidenced by a resolution of the Board of Directors) to distribute to such Holder a due bill for the shares of Fleetwood Common Stock, rights, warrants, evidences of indebtedness, shares of capital stock, cash or assets to which such Holder is so entitled, provided, that such due bill (a) meets any applicable requirements of the principal national securities exchange or other principal securities market on which the Fleetwood Common Stock is then traded and (b) requires payment or delivery of such shares of Fleetwood Common Stock, rights, warrants, evidences of indebtedness, shares of capital stock, cash or assets no later than the date of payment or delivery thereof to holders of shares of Fleetwood Common Stock receiving such distribution. 72 SECTION 1309. [RESERVED.] SECTION 1310. TRUSTEE NOT RESPONSIBLE FOR DETERMINING CONVERSION PRICE OR ADJUSTMENTS. Neither the Trustee nor any Conversion Agent shall at any time be under any duty or responsibility to any Holder of any Security to determine whether any facts exist that may require any adjustment of the conversion price, or with respect to the nature or extent of any such adjustment when made, or with respect to the method employed herein or in any supplemental indenture provided to be employed, in making the same. Neither the Trustee nor any Conversion Agent shall be accountable with respect to the validity or value (or the kind of account) of any shares of Fleetwood Common Stock or of any securities or property, which may at any time be issued or delivered upon the conversion of any Security; and neither the Trustee nor any Conversion Agent makes any representation with respect thereto. Neither the Trustee nor any Conversion Agent shall be responsible for any failure of the Company to make any cash payment or to issue, transfer or deliver any shares of Fleetwood Common Stock or stock certificates or other securities or property upon the surrender of any Security for the purpose of conversion, or, except as expressly herein provided, to comply with any of the covenants of the Company contained in Article Ten or this Article Thirteen. ARTICLE FOURTEEN MEETINGS SECTION 1401. PURPOSES FOR WHICH MEETINGS MAY BE CALLED. A meeting of Holders of the Securities may be called at any time and from time to time pursuant to this Article to make, give or take any request, demand, authorization, direction, notice, consent, waiver or other Act provided by this Indenture to be made, given or taken by Holders of the Securities. SECTION 1402. CALL, NOTICE AND PLACE OF MEETINGS. (1) The Trustee may at any time call a meeting of Holders of Securities for any purpose specified in Section 1401, to be held at such time and at such place in the Borough of Manhattan, The City of New York as the Trustee shall determine. Notice of every meeting of Holders of Securities, setting forth the time and the place of such meeting and in general terms the action proposed to be taken at such meeting, shall be given, in the manner provided in Section 106, not less than 21 nor more than 180 days prior to the date fixed for the meeting. (2) In case at any time the Company (by or pursuant to a Board Resolution) or the Holders of at least 10% in principal amount of the Outstanding Securities shall have requested the Trustee to call a meeting of the Holders of Securities for any purpose specified in Section 1401, by written request setting forth in reasonable detail the action proposed to be taken at the meeting, and the Trustee shall not have mailed notice of or made the first publication of the notice of such meeting within 21 days after receipt of such request (whichever shall be required 73 pursuant to Section 106) or shall not thereafter proceed to cause the meeting to be held as provided herein, then the Company or the Holders of Securities in the amount above specified, as the case may be, may determine the time and the place in the Borough of Manhattan, The City of New York and may call such meeting for such purposes by giving notice thereof as provided in clause (1) of this Section. SECTION 1403. PERSONS ENTITLED TO VOTE AT MEETINGS. To be entitled to vote at any meeting of Holders of Securities, a Person shall be (1) a Holder of one or more Outstanding Securities, or (2) a Person appointed by an instrument in writing as proxy for a Holder or Holders of one or more Outstanding Securities by such Holder or Holders. The only Persons who shall be entitled to be present or to speak at any meeting of Holders of Securities shall be the Persons entitled to vote at such meeting and their counsel, any representatives of the Trustee and its counsel and any representatives of the Company and its counsel. SECTION 1404. QUORUM; ACTION. The Persons entitled to vote a majority in principal amount of the Outstanding Securities shall constitute a quorum for a meeting of Holders of Securities; PROVIDED, HOWEVER, that if any action is to be taken at such meeting with respect to a consent or waiver which this Indenture expressly provides may be given by the Holders of at least 66-2/3% in principal amount of the Outstanding Securities, the Persons entitled to vote 66-2/3% in principal amount of the Outstanding Securities shall constitute a quorum. In the absence of a quorum within 30 minutes after the time appointed for any such meeting, the meeting shall, if convened at the request of Holders of Securities, be dissolved. In any other case the meeting may be adjourned for a period of not less than 10 days as determined by the chairman of the meeting prior to the adjournment of such meeting. In the absence of a quorum at any such adjourned meeting, such adjourned meeting may be further adjourned for a period of not less than 10 days as determined by the chairman of the meeting prior to the adjournment of such adjourned meeting. Notice of the reconvening of any adjourned meeting shall be given as provided in Section 1402(1), except that such notice need be given only once not less than five days prior to the date on which the meeting is scheduled to be reconvened. Notice of the reconvening of an adjourned meeting shall state expressly the percentage, as provided above, of the principal amount of the Outstanding Securities which shall constitute a quorum. Except as limited by the proviso to Section 902, any resolution presented to a meeting or adjourned meeting duly reconvened at which a quorum is present as aforesaid may be adopted only by the affirmative vote of the Holders of a majority in principal amount of the Outstanding Securities; PROVIDED, HOWEVER, that, except as limited by the proviso to Section 902, any resolution with respect to any consent or waiver which this Indenture expressly provides may be given by the Holders of at least 66-2/3% in principal amount of the Outstanding Securities may be adopted at a meeting or an adjourned meeting duly convened and at which a quorum is present as aforesaid only by the affirmative vote of the Holders of at least 66-2/3% in principal amount of the Outstanding Securities; and PROVIDED, FURTHER, that, except as limited by the proviso to Section 902, any resolution with respect to any request, demand, authorization, direction, notice, consent, waiver or other Act which this Indenture expressly provides may be 74 made, given or taken by the Holders of a specified percentage, which is less than a majority, in principal amount of the Outstanding Securities may be adopted at a meeting or an adjourned meeting duly reconvened and at which a quorum is present as aforesaid by the affirmative vote of the Holders of such specified percentage in principal amount of the Outstanding Securities. Any resolution passed or decision taken at any meeting of Holders of Securities duly held in accordance with this Section shall be binding on all the Holders of Securities, whether or not such Holders were present or represented at the meeting. SECTION 1405. DETERMINATION OF VOTING RIGHTS; CONDUCT AND ADJOURNMENT OF MEETINGS. (1) Notwithstanding any other provisions of this Indenture, the Trustee may make such reasonable regulations as it may deem advisable for any meeting of Holders of Securities in regard to proof of the holding of Securities and of the appointment of proxies and in regard to the appointment and duties of inspectors of votes, the submission and examination of proxies, certificates and other evidence of the right to vote, and such other matters concerning the conduct of the meeting as it shall deem appropriate. Except as otherwise permitted or required by any such regulations, the holding of Securities shall be proved in the manner specified in Section 104 and the appointment of any proxy shall be proved in the manner specified in Section 104. Such regulations may provide that written instruments appointing proxies, regular on their face, may be presumed valid and genuine without the proof specified in Section 104 or other proof. (2) The Trustee shall, by an instrument in writing, appoint a temporary chairman of the meeting, unless the meeting shall have been called by the Company or by Holders of Securities as provided in Section 1402(2), in which case the Company or the Holders of Securities calling the meeting, as the case may be, shall in like manner appoint a temporary chairman. A permanent chairman and a permanent secretary of the meeting shall be elected by vote of the Persons entitled to vote a majority in principal amount of the Outstanding Securities represented at the meeting. (3) At any meeting, each Holder of a Security or proxy shall be entitled to one vote for each $1,000 principal amount of Securities held or represented by him; PROVIDED, HOWEVER, that no vote shall be cast or counted at any meeting in respect of any Security challenged as not Outstanding and ruled by the chairman of the meeting to be not Outstanding. A Holder of a Security in a principal amount of less than $1,000 shall be entitled to a fraction of one vote which is equal to the fraction that the principal amount of such Security bears to $1,000. The chairman of the meeting shall have no right to vote, except as a Holder of a Security or proxy. (4) Any meeting of Holders of Securities duly called pursuant to Section 1402 at which a quorum is present may be adjourned from time to time by Persons entitled to vote a majority in principal amount of the Outstanding Securities represented at the meeting; and the meeting may be held as so adjourned without further notice. SECTION 1406. COUNTING VOTES AND RECORDING ACTION OF MEETINGS. The vote upon any resolution submitted to any meeting of Holders of Securities shall be by written ballots on which shall be subscribed the signatures of the Holders of Securities or of 75 their representatives by proxy and the principal amounts and serial numbers of the Outstanding Securities held or represented by them. The permanent chairman of the meeting shall appoint two inspectors of votes who shall count all votes cast at the meeting for or against any resolution and who shall make and file with the secretary of the meeting their verified written reports in triplicate of all votes cast at the meeting. A record, at least in triplicate, of the proceedings of each meeting of Holders of Securities shall be prepared by the secretary of the meeting and there shall be attached to said record the original reports of the inspectors of votes on any vote by ballot taken thereat and affidavits by one or more persons having knowledge of the facts setting forth a copy of the notice of the meeting and showing that said notice was given as provided in Section 1402 and, if applicable, Section 1404. Each copy shall be signed and verified by the affidavits of the permanent chairman and secretary of the meeting and one such copy shall be delivered to the Company, and another to the Trustee to be preserved by the Trustee, the latter to have attached thereto the ballots voted at the meeting. Any record so signed and verified shall be conclusive evidence of the matters therein stated. This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed as of the day and year first above written. FLEETWOOD ENTERPRISES, INC. By: ________________________________ Name: Title: THE BANK OF NEW YORK, not in its individual capacity but solely as Trustee By: ________________________________ Name: Title: 76 EXHIBIT A-1 FORM OF SECURITY [FORM OF FACE OF SECURITY] [Include if the Security is in global form and the Depository Trust Company is the U.S. Depositary -- UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.] [Include if the Security is in global form -- TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO BELOW.] FLEETWOOD ENTERPRISES, INC. _____% Convertible Trust III Subordinated Debenture Due _____ No.______ $_____ CUSIP No. _____ FLEETWOOD ENTERPRISES, INC., a corporation duly organized and existing under the laws of the State of Delaware (herein called the "Company", which term includes any successor corporation under the Indenture hereinafter referred to), for value received, hereby promises to pay to _________________, or registered assigns, the principal sum [indicated on Schedule A hereof]* [of ______ Dollars** ($______)] on [_______________]. * Applicable to Global Securities only. ** Applicable to certificated Securities only. A-1-1 Interest Payment Dates: February 15, May 15, August 15 and November 15, commencing February 15, 2002 Regular Record Dates: except as otherwise provided in the Indenture, the date 15 days prior to each Interest Payment Date Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. A-1-2 IN WITNESS WHEREOF, the Company has caused this instrument to be signed manually or by facsimile by its duly authorized officer and a facsimile of its corporate seal to be affixed hereto or imprinted hereon. FLEETWOOD ENTERPRISES, INC. By: ________________________________ Name: Dated: ___________, 2001 TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Securities referred to in the within-mentioned Indenture. THE BANK OF NEW YORK, not in its individual capacity but solely as Trustee By: ________________________________ Authorized Signatory: Dated: ___________, 2001 A-1-3 [FORM OF REVERSE OF SECURITY] FLEETWOOD ENTERPRISES, INC. _____% Convertible Trust III Subordinated Debenture Due _____ (1) INTEREST. Fleetwood Enterprises, Inc., a Delaware corporation (the "Company"), is the issuer of this ____% Convertible Trust III Subordinated Debenture due ________________ (the "Security") limited in aggregate principal amount to $[_________] issued under the Indenture hereinafter referred to. The Company promises to pay interest on the Securities in cash or, at the Company's election prior to February 15, 2004, shares of Fleetwood Common Stock, from [___________], 2001 or from the most recent interest payment date to which interest has been paid or duly provided for, quarterly (subject to deferral for up to 20 consecutive quarters on or after February 15, 2004, as described in Section 3 hereof) in arrears on February 15, May 15, August 15 and November 15 of each year (each such date, an "Interest Payment Date"), commencing February 15, 2002, at the rate of _____% per annum (subject to increase as provided in Section 12 hereto) plus Additional Interest (as defined below), if any, until the principal hereof shall have become due and payable. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date shall be paid, in cash or, at the Company's election, prior to February 15, 2004, in shares of Fleetwood Common Stock to the Person in whose name a Security is registered at the close of business on the regular record date for such interest installment, which shall be the date that is 15 days prior to the Interest Payment Date (whether or not a Business Day) (the "Regular Record Date"), as the case may be, next preceding such Interest Payment Date. The Company may elect to pay such interest by delivery of shares of Fleetwood Common Stock pursuant to this Section 1 if and only if the following conditions shall have been satisfied: (a) The shares of Fleetwood Common Stock deliverable in payment of the interest shall have a fair market value as of the Interest Payment Date of not less than the interest as determined by this Section 1 hereof. For purposes of this Section 301, the fair market value of shares of Fleetwood Common Stock shall be determined by the Company and shall be equal to 90% of the average of the Closing Price for the five consecutive Trading Days immediately preceding the second Trading Day prior to the Interest Payment Date. (b) Interest shall be paid only in cash in the event any shares of Fleetwood Common Stock to be issued for the payment of interest on the Securities hereunder (i) require registration under any federal securities law before such shares may be freely transferable without being subject to any transfer restrictions under the Securities Act upon issuance and if such registration is not completed or does not become effective prior to the Interest Payment Date, and/or (ii) require registration with or approval of any governmental authority under any state law or other federal law before such shares may be validly issued or delivered upon issuance and if such registration is not completed or does not become effective or such approval is not obtained prior to the Interest Payment Date; A-1-4 (c) The Fleetwood Common Stock is, or shall have been, approved for quotation on the Nasdaq National Market or listing on the New York Stock Exchange, in either case, prior to the Interest Payment Date; and (d) All shares of Fleetwood Common Stock which may be issued with respect to the payment of interest on the Securities will be issued out of the Company's authorized but unissued Common Stock and, will upon issue, be duly and validly issued and fully paid and non-assessable and free of any preemptive rights. If all of the conditions set forth in the preceding paragraph are not satisfied in accordance with the terms thereof, the interest required to be paid or duly provided for by the Company pursuant to this Section shall be paid by the Company only in cash. The amount of interest payable for any period will be computed on the basis of twelve 30-day months and a 360-day year. To the extent lawful, the Company shall pay interest on overdue installments of interest (without regard to any applicable grace period) at the rate borne by the Securities, compounded quarterly. Any interest paid on this Security shall be increased to the extent necessary to pay Additional Interest as set forth in this Security. (2) ADDITIONAL INTEREST. The Company shall pay to Fleetwood Capital Trust III, a Delaware statutory business trust (and its permitted successors or assigns under the Declaration) (the "Trust"), such additional amounts as may be necessary in order that the amount of dividends or other distributions then due and payable by the Trust on the Preferred Securities that at any time remain outstanding in accordance with the terms thereof shall not be reduced as a result of any taxes, duties, assessments or governmental charges of whatever nature (other than withholding taxes) imposed by the United States or any other taxing authority ("Additional Interest"). (3) EXTENSION OF INTEREST PAYMENT PERIOD. The Company shall have the right, at any time on or after February 15, 2004 and from time to time thereafter during the term of this Security, to defer payments of interest (including Compounded Interest (as defined below), and Additional Interest, if any) by extending the interest payment period of such Security for up to 20 consecutive quarters (each an "Extension Period"). To the extent permitted by applicable law, interest, the payment of which has been deferred because of the extension of the interest payment period pursuant to Section 312 of the Indenture (as defined below), will bear interest thereon at _____% compounded quarterly for each quarter of the Extension Period ("Compounded Interest"); provided, that during an Extension Period, the Company shall be subject to the provisions of Section 1008 of the Indenture. At the end of the Extension Period, the Company shall pay all interest then accrued and unpaid on the Securities, including any Additional Payments, that shall be payable to the holders of the Securities in whose names the Securities are registered in the Security Register ("Holders") on the first Regular Record Date after the end of the Extension Period. Before the termination of any Extension Period, the Company may further extend such period, provided that such period together with all such further extensions thereof shall not exceed 20 consecutive quarters or extend beyond the maturity of the Securities or end other than on an Interest Payment Date. Upon the termination of any Extension Period and upon the payment of all amounts then due on the Securities, including any Additional Payments, the A-1-5 Company may commence a new Extension Period, subject to the foregoing requirements. No interest shall be due and payable during an Extension Period except at the end thereof. The Company must give the Property Trustee, the Regular Trustees and the Trustee notice of its election to begin an Extension Period at least one Business Day Prior to the earliest of (i) the date the distribution on the Preferred Securities would have been payable except for the election to begin such Extension Period, or (ii) if applicable, the date the Regular Trustees are required to give notice to the New York Stock Exchange, the Nasdaq National Market or other applicable self-regulatory organization or to holders of such Preferred Securities of the record date or (iii) the date such distribution is payable, but in any event not less than one Business Day prior to the record date. The Trustee shall give notice of the Company's election to begin an Extension Period to the holders of the Securities and the Regular Trustees shall give notice of the Company's election to the holders of the Preferred Securities. The quarter in which any notice is given pursuant to the second paragraph of this Section 3 shall be counted as one of the 20 quarters permitted in the maximum Extension Period permitted under the first paragraph of this Section 3. (4) METHOD OF PAYMENT. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in the Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities (as defined in the Indenture)) is registered at the close of business on the Regular Record Date for such interest installment, which, except as otherwise provided in the Indenture, shall be the date 15 days prior to each Interest Payment Date (whether or not a Business Day) (the "Regular Record Date"), commencing February 15, 2004. Any such interest not so punctually paid or duly provided for shall forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Securities not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities may be listed, and upon such notice as may be required by such exchange, all as more fully provided in said Indenture. The principal of the Securities shall be payable at the office or agency of the Company in the United States maintained for such purpose and at any other office or agency maintained by the Company for such purpose in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. The interest on the Securities shall be payable, if paid in cash, at and in the same manner as the payment of principal described in the preceding sentence (PROVIDED, HOWEVER, that any such payment of interest may be made at the option of the Company by check mailed to the address of the holder entitled thereto or by wire transfer to an account in the United States appropriately designated by the holder entitled thereto prior to the record date for the corresponding interest payment date) or, if at the Company's election the interest is paid in shares of Fleetwood Common Stock, the Company shall register such shares in the name of the Holder entitled thereto. Notwithstanding the foregoing, so long as the holder of any Securities is the Property Trustee, the payment of principal on the Securities held by the Property Trustee will be made by wire transfer at such A-1-6 place and to such account in the United States as may be designated by the Property Trustee, and any interest (x) paid in cash shall be paid to the Property Trustee at and in the same manner as the payment of principal and (y) paid in shares of Fleetwood Common Stock shall be registered in the name of the Property Trustee or such other name as the Property Trustee shall designate in writing. If interest is paid in the form of shares of Fleetwood Common Stock prior to February 15, 2004, the interest so payable, and punctually paid or duly provided for, on any Interest Payment Date shall be paid in Fleetwood Common Stock to the Person in whose name a Security is registered at the close of business on the Regular Record Date for such Interest Payment Date (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date. The Company may elect to pay such interest by delivery of shares of Fleetwood Common Stock pursuant to Section 1 hereof if and only if the following conditions shall have been satisfied: (a) The shares of Fleetwood Common Stock deliverable in payment of the interest shall have a fair market value as of the Interest Payment Date of not less than the interest as determined by Section 1 hereof. For purposes of this Section 301, the fair market value of shares of Fleetwood Common Stock shall be determined by the Company and shall be equal to 90% of the average of the Closing Price for the five consecutive Trading Days immediately preceding the second Trading Day prior to the Interest Payment Date. (b) Interest shall be paid only in cash in the event any shares of Fleetwood Common Stock to be issued for the payment of interest on the Securities hereunder (i) require registration under any federal securities law before such shares may be freely transferable without being subject to any transfer restrictions under the Securities Act upon issuance and if such registration is not completed or does not become effective prior to the Interest Payment Date, and/or (ii) require registration with or approval of any governmental authority under any state law or other federal law before such shares may be validly issued or delivered upon issuance and if such registration is not completed or does not become effective or such approval is not obtained prior to the Interest Payment Date; (c) The Fleetwood Common Stock is, or shall have been, approved for quotation on the Nasdaq National Market or listing on the New York Stock Exchange, in either case, prior to the Interest Payment Date; and (d) All shares of Fleetwood Common Stock which may be issued with respect to the payment of interest on the Securities will be issued out of the Company's authorized but unissued Common Stock and, will upon issue, be duly and validly issued and fully paid and non-assessable and free of any preemptive rights. If all of the conditions set forth in the preceding paragraph are not satisfied in accordance with the terms thereof, the interest required to be paid or duly provided for by the Company pursuant to Section 1 hereof shall be paid by the Company only in cash. Notwithstanding the foregoing, so long as the holder of any Securities is the Property Trustee, the payment of principal and interest on the Securities held by the Property Trustee, if such payment is made in cash and not in shares of Fleetwood Common Stock, will be made by A-1-7 wire transfer at such place and to such account in the United States as may be designated by the Property Trustee. (5) PAYING AGENT AND SECURITY REGISTRAR. The Trustee will act as Paying Agent, Security Registrar and Conversion Agent. The Company may change any Paying Agent, Security Registrar, co-registrar or Conversion Agent without prior notice. The Company or any of its Affiliates (as defined in the Indenture) may act in any such capacity. (6) INDENTURE. The Company issued the Securities under an indenture, dated as of [__________], 2001 (the "Indenture"), between the Company and The Bank of New York, not in its individual capacity but solely as Trustee (herein called the "Trustee", which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Trustee, the Company and the Holders of the Securities, and of the terms upon which the Securities are, and are to be, authenticated and delivered. The terms of the Securities include those stated in the Indenture and those made part of the Indenture by the Trust Indenture Act of 1939 (15 U.S.C. Sections 77aaa-77bbbb) ("TIA") as in effect on the date of the Indenture. The Securities are subject to, and qualified by, all such terms, certain of which are summarized herein, and Holders are referred to the Indenture and the TIA for a more complete statement of such terms. The Securities are unsecured general obligations of the Company initially limited to $[_________] in aggregate principal amount, except for such additional principal amount of Securities authenticated and delivered under the Indenture upon registration of transfer of, or in lieu of other Securities pursuant to Sections 304, 305, 306, 906, 1108 and 1301 of the Indenture, PROVIDED that additional Securities of any series of Securities authenticated and delivered under the Indenture may be authenticated and delivered thereunder at any time, having the same terms as, treated as a single class (for all purposes under this Indenture) with, such previously authenticated and delivered Securities, PROVIDED further that such additional Securities shall be authenticated and delivered to the Trust in exchange for the issuance by the Trust of additional Preferred Securities to holders of Existing Preferred Securities in exchange for Existing Preferred Securities tendered in an exchange offer. The Securities are subordinated in right of payment to all existing and future Senior Indebtedness of the Company. No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and interest and Additional Redemption Distributions, if any, on, this Security when due at the times, place and rate, and in the coin or currency, herein prescribed or to convert this Security as provided in the Indenture. Capitalized terms used herein without definition shall have the meanings given to them in the Indenture. (7) OPTIONAL REDEMPTION. The Securities are redeemable (a) in whole but not in part, at the Company's option at any time before February 15, 2004 at a Redemption Price equal to 100.00% of the aggregate principal amount of the Securities if the Closing Price of Fleetwood Common Stock has exceeded 200% of the Conversion Price for at least 20 Trading Days during a 30-day Trading Day period ending five Trading Days prior to the date of the notice of redemption described in Section 8 below, upon not less than 15 nor more than 30 days' notice to Holders of the Securities (which notice shall state (A) the Redemption Date, (B) whether the Additional Redemption Distribution, if any, shall be paid by the Company in cash or by delivery of Fleetwood Common Stock, (C) the procedures pursuant to which such Securities are to be A-1-8 surrendered for conversion and receipt of the Additional Redemption Distribution, if any, and (D) the Conversion Price then in effect), and (b), in whole or in part, at the Company's option at any time and from time to time on or after February 15, 2004, upon not less than 30 or more than 60 days' notice, at the following Redemption Prices, expressed as a percentage of the principal amount of the Securities, if redeemed during the 12-month period beginning February 15 of the applicable year set forth below:
YEAR REDEMPTION PRICE ---- ---------------- 2004......................................... 106.500% 2005......................................... 104.875% 2006......................................... 103.250% 2007......................................... 101.625% 2008 and thereafter.......................... 100.000%
plus, in each case described in clauses (a) and (b) of this sentence, accrued and unpaid interest, including Additional Payments, if any, to the Redemption Date (subject to the right of Holders of record on the relevant record date to receive interest due on the Interest Payment Date). From and after the Redemption Date, interest will cease to accrue on the Securities, or portion thereof, called for redemption. In the case of a redemption at any time prior to February 15, 2004, if a holder of Securities converts such Securities to Fleetwood Common Stock pursuant to Section 12 during the period following a notice of redemption and prior to the Redemption Date, then the Company shall pay such holder, in cash or shares of Fleetwood Common Stock, at the election of the Company, an amount equal to interest payments payable on such Securities through February 15, 2004, less any interest actually paid prior to the applicable Conversion Date. If such payment is made in shares of Fleetwood Common Stock, the amount of shares of Fleetwood Common Stock payable shall be determined in the same manner that interest payments payable in shares of Fleetwood Common Stock are determined pursuant to Section 4. (8) OPTIONAL REDEMPTION UPON TAX EVENT. The Securities are subject to redemption in whole, but not in part, at the Company's option at any time within 90 days, if a Tax Event (as defined in the Declaration) shall occur and be continuing, at a redemption price equal to 100% of the principal amount thereof plus accrued but unpaid interest thereon (including, to the extent permitted by applicable law, Additional Payments, if any) to the Redemption Date. Any redemption pursuant to this Section 8 will be made upon not less than 30 nor more than 60 days' notice. (9) NOTICE OF REDEMPTION. Notice of redemption will be mailed, in the case of a redemption at any time prior to February 15, 2004, at least 15 days but not more than 30 days before the Redemption Date and, in all other cases, at least 30 days but not more than 60 days before the Redemption Date, to each Holder of the Securities to be redeemed at his address of record. In the event of a redemption of less than all of the Securities, the Securities will be chosen for redemption by the Trustee in accordance with the Indenture. On and after the Redemption Date, interest ceases to accrue on the Securities or portions thereof called for redemption. A-1-9 If this Security is redeemed subsequent to a Regular Record Date with respect to any Interest Payment Date specified above and on or prior to such Interest Payment Date, then any accrued interest will be paid to the person in whose name this Security is registered at the close of business on such record date. (10) MANDATORY REDEMPTION. The Securities will mature on ____________. There are no sinking fund payments with respect to the Securities. (11) SUBORDINATION. The payment of the principal of, premium (if any), interest on or any other amounts due on the Securities is subordinated and junior in right of payment to all existing and future Senior Indebtedness (as defined below) of the Company and senior and prior in right of payment to the Common Securities Guarantee, the Exchange Common Securities Guarantee, the Existing Debentures, the Existing Common Securities Guarantee and the Existing Preferred Securities Guarantee, as described in the Indenture. Each Holder, by accepting a Security, agrees to such subordination and authorizes and directs the Trustee on its behalf to take such action as may be necessary or appropriate to effectuate the subordination so provided and appoints the Trustee as its attorney-in-fact for such purpose. In addition, no payment of principal (including redemption payments) of, premium, if any, or interest (including any Additional Interest or Compounded Interest) on the Securities may be made if there shall have occurred and be continuing (i) a default in the payment when due of principal of, premium, if any, sinking funds, if any, or interest, if any, on any Senior Indebtedness of the Company and any applicable grace period with respect to such default shall have ended without such default having been cured or waived or ceasing to exist or (ii) an event of default with respect to any Senior Indebtedness of the Company resulting in the acceleration of the maturity thereof without such acceleration having been rescinded or annulled. "Senior Indebtedness" means (a) any liability of the Company (1) for borrowed money or under any reimbursement obligation relating to a letter of credit, surety bond or similar instrument, or (2) evidenced by a bond, note, debenture or similar instrument, or (3) for obligations to pay the deferred purchase price of property or services, except trade accounts payable arising in the ordinary course of business, or (4) for the payment of money relating to a capitalized lease obligation, or (5) for the payment of money under any Swap Agreement, (b) any liability of others described in the preceding clause (a) that the Company has guaranteed or that is otherwise its legal liability; and (c) any deferral, renewal, extension or refunding of any liability of the types referred to in clauses (a) and (b) above, unless, in the instrument creating or evidencing any such liability referred to in clause (a) or (b) above or any such deferral, renewal, extension or refunding referred to in clause (c) above or pursuant to which the same is outstanding, it is expressly provided that such liability, deferral, renewal, extension or refunding is subordinate in right of payment to all other indebtedness of the Company or is not senior or prior in right of payment to the Securities or ranks PARI PASSU with or subordinate to the Securities in right of payment; PROVIDED that the Securities shall not constitute Senior Indebtedness; and PROVIDED, FURTHER, that Senior Indebtedness shall not include any indebtedness or guarantees between or among the Company or its affiliates, including all debt securities or guarantees in respect of those debt securities issued to any trust (including the Trust), trustee of a trust (including the Trust), partnership, limited liability company or other person affiliated with the Company that is a financing vehicle of the Company (a "Financing Entity") in connection A-1-10 with the issuance by such Financing Entity of preferred securities unless otherwise expressly provided in the instrument creating or evidencing such indebtedness, debt securities or guarantees, as the case may be, or pursuant to which the same is outstanding. For the avoidance of doubt, none of the Preferred Securities Guarantee, the Common Securities Guarantee, the Exchange Debentures, the Exchange Preferred Securities Guarantee, the Exchange Common Securities Guarantee, the Existing Debentures, the Existing Preferred Securities Guarantee or the Existing Common Securities Guarantee shall constitute Senior Indebtedness. (12) CONVERSION. Subject to and in compliance with the provisions of the Indenture, the Holder of any Security has the right, exercisable at any time prior to the close of business (New York time) on the date of the Security's maturity (or, in the case of Securities called for redemption, prior to the close of business on the Business Day prior to the corresponding Redemption Date), to convert the principal amount thereof (or any portion thereof that is an integral multiple of $50) into shares of Fleetwood Common Stock at the initial conversion price of $[___] per share of Fleetwood Common Stock, subject to adjustment under certain circumstances. To convert a Security, a Holder must (1) complete and sign a conversion notice substantially in the form attached hereto, (2) surrender the Security to a Conversion Agent, (3) furnish appropriate endorsements or transfer documents if required by the Security Registrar or Conversion Agent and (4) pay any transfer or similar tax, if required. Upon conversion, no adjustment or payment will be made for interest or dividends, but if any Holder surrenders a Security for conversion after the close of business on the Regular Record Date for the payment of an installment of interest and prior to the opening of business on the next Interest Payment Date, then, notwithstanding such conversion, the interest payable on such Interest Payment Date will be paid to the Trust (which will distribute such interest to the holder of the applicable Trust Securities at the close of business on such record date) or to such other person in whose name the Securities are registered at the close of business on such record date, as the case may be, despite such conversion. In such event, such Security, when surrendered for conversion, need not be accompanied by payment of an amount equal to the interest payable on such Interest Payment Date on the portion so converted. The number of shares issuable upon conversion of a Security is determined by dividing the principal amount of the Security converted by the conversion price in effect on the Conversion Date. No fractional shares will be issued upon conversion but a cash adjustment will be made for any fractional interest. The outstanding principal amount of any Security shall be reduced by the portion of the principal amount thereof converted into shares of Common Stock. (13) REGISTRATION, TRANSFER EXCHANGE AND DENOMINATIONS. As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security is registrable in the Security Register, upon surrender of this Security for registration of transfer at the office or agency of the Company designated for such purpose, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Securities, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees. A-1-11 The Securities are issuable only in registered form without coupons in denominations of $50 and integral multiples thereof. No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. Prior to due presentment of this Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. In the event of redemption or conversion of this Security in part only, a new Security or Securities for the unredeemed or unconverted portion hereof will be issued in the name of the Holder hereof upon the cancellation hereof. (14) PERSONS DEEMED OWNERS. The registered Holder of a Security may be treated as its owner for all purposes. (15) UNCLAIMED MONEY. If money for the payment of principal or interest remains unclaimed for two years, the Trustee and the Paying Agent shall pay the money back to the Company at its written request. After that, Holders of Securities entitled to the money must look to the Company for payment unless an abandoned property law designates another Person and all liability of the Trustee and such Paying Agent with respect to such money shall cease. (16) DEFAULTS AND REMEDIES. The Securities shall have the Events of Default as set forth in Section 501 of the Indenture. Subject to certain limitations in the Indenture, if an Event of Default occurs and is continuing, then the Trustee or the Holders of not less than 25% in principal amount of the Outstanding Securities may declare the principal of all the Securities, and accrued and unpaid interest, if any (including any Additional Payments), and Additional Redemption Distributions, if any, thereon to be due and payable immediately, by a notice in writing to the Company (and to the Trustee if given by the Holders), and upon any such declaration such principal or such lesser amount, as the case may be, and such accrued and unpaid interest (including any Additional Payments) shall become immediately due and payable. The Holders of not less than a majority in aggregate principal amount of the Securities then outstanding by written notice to the Trustee may rescind an acceleration and its consequences if the rescission would not conflict with any judgment or decree and if all existing Events of Default have been cured or waived except nonpayment of principal or interest that has become due solely because of the acceleration. Holders may not enforce the Indenture or the Securities except as provided in the Indenture. Subject to certain limitations, Holders of a majority in aggregate principal amount of the then outstanding Securities issued under the Indenture may direct the Trustee in its exercise of any trust or power. The Company must furnish annually compliance certificates to the Trustee. The above description of Events of Default and remedies is qualified in its entirety by reference to, and subject to, the more complete description thereof contained in the Indenture. (17) AMENDMENTS, SUPPLEMENTS AND WAIVERS. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Securities under the Indenture at any time by the Company and the Trustee with the consent of the Holders of a majority in A-1-12 aggregate principal amount of the Securities at the time Outstanding. The Indenture also contains provisions permitting the Holders of specified percentages in aggregate principal amount of the Securities at the time Outstanding, on behalf of the Holders of all the Securities, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange heretofore or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security. (18) TRUSTEE DEALINGS WITH THE COMPANY. The Trustee, in its individual or any other capacity may become the owner or pledgee of the Securities and may otherwise deal with the Company or an Affiliate with the same rights it would have, as if it were not Trustee, subject to certain limitations provided for in the Indenture and in the TIA. Any Agent may do the same with like rights. (19) NO RECOURSE AGAINST OTHERS. A director, officer, employee or stockholder, as such, of the Company shall not have any liability for any obligations of the Company under the Securities or the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. Each Holder of the Securities by accepting a Security waives and releases all such liability. The waiver and release are part of the consideration for the issue of the Securities. (20) GOVERNING LAW. THE INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. (21) AUTHENTICATION. The Securities shall not be valid until authenticated by the manual signature of an authorized officer of the Trustee. (22) ABBREVIATIONS. Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act). The Company will furnish to any Holder of the Securities upon written request and without charge a copy of the Indenture. Request may be made to: Fleetwood Enterprises, Inc. 3125 Myers Street Riverside, CA 92503 Attn: General Counsel A-1-13 ASSIGNMENT FORM To assign this Security, fill in the form below: (I) or (we) assign and transfer this Security to - ------------------------------------------------------------------------------- (Insert assignee's social security or tax I.D. no.) - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- (Print or type assignee's name, address and zip code) and irrevocably appoint ______________________________________________________ agent to transfer this Security on the books of the Company. The agent may substitute another to act for him. Your Signature: ------------------------------------------------ (Sign exactly as your name appears on the other side of this Security) Date: ----------------------------------- Signature Guarantee:* ------------------------------------------------ - ------------------ * Signature must be guaranteed by an "eligible guarantor institution" meeting the requirements of the [Registrar], which requirements include membership or participation in the Security Transfer Agent Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the [Registrar] in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act, as amended. A-1-14 (TO BE ATTACHED TO GLOBAL SECURITIES) SCHEDULE A The initial principal amount of this Global Security shall be $___________. The following increases or decreases in the principal amount of this Global Security have been made:
AMOUNT OF INCREASE PRINCIPAL AMOUNT OF SIGNATURE OF DATE MADE IN PRINCIPAL AMOUNT AMOUNT OF DECREASE IN THIS GLOBAL SECURITY AUTHORIZED OFFICER OF THIS GLOBAL PRINCIPAL AMOUNT OF FOLLOWING SUCH OF TRUSTEE OR SECURITY THIS GLOBAL SECURITY DECREASE OR INCREASE SECURITIES CUSTODIAN - ------------------------- ---------------------- ----------------------- ---------------------- ---------------------- - ------------------------- ---------------------- ----------------------- ---------------------- ---------------------- - ------------------------- ---------------------- ----------------------- ---------------------- ---------------------- - ------------------------- ---------------------- ----------------------- ---------------------- ---------------------- - ------------------------- ---------------------- ----------------------- ---------------------- ---------------------- - ------------------------- ---------------------- ----------------------- ---------------------- ---------------------- - ------------------------- ---------------------- ----------------------- ---------------------- ---------------------- - ------------------------- ---------------------- ----------------------- ---------------------- ---------------------- - ------------------------- ---------------------- ----------------------- ---------------------- ---------------------- - ------------------------- ---------------------- ----------------------- ---------------------- ---------------------- - ------------------------- ---------------------- ----------------------- ---------------------- ---------------------- - ------------------------- ---------------------- ----------------------- ---------------------- ---------------------- - ------------------------- ---------------------- ----------------------- ---------------------- ---------------------- - ------------------------- ---------------------- ----------------------- ---------------------- ---------------------- - ------------------------- ---------------------- ----------------------- ---------------------- ---------------------- - ------------------------- ---------------------- ----------------------- ---------------------- ---------------------- - ------------------------- ---------------------- ----------------------- ---------------------- ---------------------- - ------------------------- ---------------------- ----------------------- ---------------------- ---------------------- - ------------------------- ---------------------- ----------------------- ---------------------- ---------------------- - ------------------------- ---------------------- ----------------------- ---------------------- ---------------------- - ------------------------- ---------------------- ----------------------- ---------------------- ---------------------- - ------------------------- ---------------------- ----------------------- ---------------------- ---------------------- - ------------------------- ---------------------- ----------------------- ---------------------- ----------------------
A-1-15 ELECTION TO CONVERT To: Fleetwood Enterprises, Inc. The undersigned owner of this Security hereby irrevocably exercises the option to convert this Security, or the portion below designated, into Common Stock of FLEETWOOD ENTERPRISES, INC. ("Fleetwood Common Stock") in accordance with the terms of the Indenture referred to in this Security, and directs that the shares issuable and deliverable upon conversion, and shares issuable and deliverable or a check issuable and deliverable in payment of Additional Redemption Distributions, if any, together with any check in payment for fractional shares, be issued in the name of and delivered to the undersigned, unless a different name has been indicated in the assignment below. If shares are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto. Dated: ___________, ____ in whole __ Portions of Security to be converted (or integral multiples thereof): $_______________________________________ ________________________________________ Signature (for conversion only) Please Print or Typewrite Name and Address, Including Zip Code, and Social Security or Other Identifying Number ________________________________________ ________________________________________ ________________________________________ Signature Guarantee:*______________________ - ------------------ * Signature must be guaranteed by an "eligible guarantor institution" meeting the requirements of the [Registrar], which requirements include membership or participation in the Security Transfer Agent Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the [Registrar] in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act, as amended. A-1-16 EX-5.1 7 a2065542zex-5_1.txt EXHIBIT 5.1 EXHIBIT 5.1 December 11, 2001 Fleetwood Capital Trust II Fleetwood Capital Trust III c/o Fleetwood Enterprises, Inc. 3125 Myers Street Riverside, California 92503 Re: Fleetwood Capital Trust II Fleetwood Capital Trust III --------------------------- Ladies and Gentlemen: We have acted as special Delaware counsel to Fleetwood Capital Trust II, a Delaware statutory business trust ("Trust II"), Fleetwood Capital Trust III, a Delaware statutory business trust ("Trust III" and collectively with Trust II, the "Trusts"), and Fleetwood Enterprises, Inc., a Delaware corporation ("Fleetwood"), in connection with certain matters relating to (i) the formation of the Trusts and (ii) the proposed issuance by each of the Trusts of Preferred Securities to beneficial owners pursuant to and as described in the Registration Statement (and the Prospectus forming a part thereof) on Forms S-3 and S-4 filed with the Securities and Exchange Commission on June 12, 2001, as amended by Amendments Nos. 1, 2, 3 and 4 thereto (as amended, the "Registration Statement"), relating to the Preferred Securities of Trust II and Trust III (collectively, the "Preferred Securities"). Capitalized terms used herein with respect to Trust II or Trust III and not otherwise herein defined are used as defined in the Amended and Restated Declaration of Trust of Trust II or Trust III, as applicable, each in the form attached as an exhibit to the Registration Statement (each, a "Form Amended and Restated Declaration of Trust"). In rendering this opinion, we have examined and relied upon copies of the following documents in the forms provided to us: the Certificate of Trust of Trust II as filed in the Office of the Secretary of State of the State of Delaware (the "State Office") on June 7, 2001 (the "Trust II Certificate of Trust"); a Declaration of Trust of Trust II dated as of June 7, 2001 (the "Trust II Original Governing Instrument"); the Certificate of Trust of Trust III as filed in the State Office on December 7, 2001 (the "Trust III Certificate of Trust"); a Declaration of Trust of Trust III dated as of December 7, 2001 (the "Trust III Original Governing Instrument"); the Form Amended and Restated Declaration of Trust of each of the Trusts; each of the forms of Fleetwood Capital Trust II Fleetwood Capital Trust III December 11, 2001 Page 2 Indenture to be entered into between Fleetwood and The Bank of New York, as Trustee, pursuant to which the relevant convertible subordinated debentures will be issued to the relevant Trust; each of the forms of Preferred Securities Guarantee Agreement to be entered into between Fleetwood and The Bank of New York, as Trustee; the Form of Amended Dealer Manager Agreement in the form attached as an exhibit to the Registration Statement, to be entered into among Fleetwood, Trust II and Bank of America Securities LLC (the "Dealer Manager Agreement"); the form of Distribution Agreement in the form attached as an exhibit to the Registration Statement to be entered into among Fleetwood, Trust III and Bank of America Securities LLC (the "Distribution Agreement"); the Registration Statement; and a certification of good standing of each of the Trusts obtained as of a recent date from the State Office. In such examinations, we have assumed the genuineness of all signatures, the conformity to original documents of all documents submitted to us as drafts or copies or forms of documents to be executed and the legal capacity of natural persons to complete the execution of documents. We have further assumed for purposes of this opinion: (i) the due formation or organization, valid existence and good standing of each entity (other than the Trusts) that is a party to any of the documents reviewed by us under the laws of the jurisdiction of its respective formation or organization; (ii) the due authorization, execution and delivery by, or on behalf of, each of the parties thereto of the above-referenced documents (including, without limitation, the due authorization, execution and delivery of an Amended and Restated Declaration of Trust of each of the Trusts in the form of the applicable Form Amended and Restated Declaration of Trust (completed, as necessary, to be in final form) (each, a "Governing Instrument"), the Dealer Manager Agreement prior to the first issuance of Preferred Securities of Trust II and the Distribution Agreement prior to the first issuance of Preferred Securities of Trust III); (iii) that no event has occurred subsequent to the filing of the Trust II Certificate of Trust, or will occur prior to the first issuance of Preferred Securities of Trust II, that would cause a dissolution or liquidation of Trust II under the Trust II Original Governing Instrument or the Governing Instrument of Trust II, as applicable; (iv) that no event has occurred subsequent to the filing of the Trust III Certificate of Trust, or will occur prior to the first issuance of Preferred Securities of Trust III, that would cause a dissolution or liquidation of Trust III under the Trust III Original Governing Instrument or the Governing Instrument of Trust III, as applicable; (v) that the activities of Trust II have been and will be conducted in accordance with the Trust II Original Governing Instrument or the Governing Instrument of Trust II, as applicable, and the Delaware Business Trust Act, 12 DEL. C. ss.ss. 3801 ET SEQ. (the "Delaware Act"); (vi) that the activities of Trust III have been and will be conducted in accordance with the Trust III Original Governing Instrument or the Governing Instrument of Trust III, as applicable, and the Delaware Act; (vii) that payment of the required consideration for the Preferred Securities of the relevant Trust has, or prior to the first issuance of Preferred Securities of the relevant Trust will have, been made in accordance with the terms and conditions of the Governing Instrument of such Trust, the Registration Statement and the Dealer Manager Agreement and the Distribution Agreement, as applicable, and that such Preferred Securities are otherwise issued and sold to the Preferred Security Holders in accordance with the terms, conditions, requirements and procedures set forth in the Governing Instrument of such Trust, the Registration Statement and the Dealer Manager Agreement and the Distribution Agreement, as applicable; and (viii) that the documents examined by us are in full force and effect, express the Fleetwood Capital Trust II Fleetwood Capital Trust III December 11, 2001 Page 3 entire understanding of the parties thereto with respect to the subject matter thereof and have not been amended, supplemented or otherwise modified, except as herein referenced. We have not reviewed any documents other than those identified above in connection with this opinion, and we have assumed that there are no other documents that are contrary to or inconsistent with the opinions expressed herein. Further, we express no opinion with respect to, and assume no responsibility for the contents of, the Registration Statement or any other offering material relating to the Preferred Securities. No opinion is expressed herein with respect to the requirements of, or compliance with, federal or state securities or blue sky laws. As to any fact material to our opinion, other than those assumed, we have relied without independent investigation on the above-referenced documents and on the accuracy, as of the date hereof, of the matters therein contained. Based on and subject to the foregoing, and limited in all respects to matters of Delaware law, it is our opinion that: 1. Each of the Trusts is a duly formed and validly existing business trust in good standing under the laws of the State of Delaware. 2. Upon issuance, the Preferred Securities each of the Trusts will constitute validly issued and, subject to the qualifications set forth in paragraph 3 below, fully paid and nonassessable beneficial interests in the assets of the relevant Trust. 3. Under the Delaware Act and the terms of the Governing Instrument of the relevant Trust, each Preferred Security Holder of such Trust, in such capacity, will be entitled to the same limitation of personal liability as that extended to stockholders of private corporations for profit organized under the General Corporation Law of the State of Delaware; provided, however, we express no opinion with respect to the liability of any Preferred Security Holder who is, was or may become a named Trustee of such Trust. Notwithstanding the foregoing, we note that, pursuant to the Governing Instrument of the relevant Trust, Preferred Security Holders may be obligated to make payments or provide indemnity or security under the circumstances set forth therein. We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the use of our name and reference to our opinion under the heading "LEGAL MATTERS" in the Prospectus forming a part thereof. In giving this consent, we do not thereby admit that we come within the category of persons whose consent is required under Section 7 of the Securities Act of 1933, as amended, or the rules and regulations of the Securities and Exchange Commission thereunder. This opinion speaks only as of the date hereof and is based on our review of the above-referenced documents and the application of Delaware law as the same exist as of the date hereof, and we undertake no obligation to update or supplement this opinion after the date hereof for the benefit of any person or entity with respect to any facts or circumstances that may Fleetwood Capital Trust II Fleetwood Capital Trust III December 11, 2001 Page 4 hereafter come to our attention or any changes in facts or law that may hereafter occur or take effect. Very truly yours, MORRIS, NICHOLS, ARSHT & TUNNELL /s/ Jonathan I. Lessner Jonathan I. Lessner EX-5.2 8 a2065542zex-5_2.txt EXHIBIT 5.2 EXHIBIT 5.2 December 11, 2001 Client No. (212) 351-4000 C 29003-00721 Fleetwood Enterprises, Inc. Fleetwood Capital Trust II Fleetwood Capital Trust III 3125 Myers Street Riverside, California 92503-5527 Re: FLEETWOOD ENTERPRISES, INC. / FLEETWOOD CAPITAL TRUST II / FLEETWOOD CAPITAL TRUST III REGISTRATION STATEMENT ON FORM S-4 (FILE NO. 333-62838) AND FORM S-3 (FILE NO. 333-62850) Ladies and Gentlemen: We have acted as special counsel to Fleetwood Enterprises, Inc., a Delaware corporation (the "Company"), Fleetwood Capital Trust II, a Delaware statutory business trust and a wholly owned subsidiary of the Company ("Trust II") and Fleetwood Capital Trust III, a Delaware statutory business trust and a wholly owned subsidiary of the Company ("Trust III" and together with Trust II, the "Trusts"), in connection with the proposed offer by the Company (the "Exchange Offer") to exchange up to $37.95 million aggregate liquidation amount of 9.5% Convertible Trust Preferred Securities due February 15, 2013 (the "Exchange Securities") of Trust II for up to $86.25 million aggregate liquidation amount of outstanding 6% Convertible Trust Preferred Securities due February 15, 2028 (the "Existing Securities") of Fleetwood Capital Trust, a Delaware statutory business trust, and the proposed offer by the Company (the "Cash Offer") to sell to investors up to $150 million aggregate liquidation amount of 9.5% Convertible Trust Preferred Securities due February 15, 2013 (the "Cash Securities" and together with the Exchange Securities, the "Securities") of Trust III for cash. In connection with the Exchange Offer, the Company will deposit in Trust II as trust assets its 9.5% Convertible Subordinated Debentures due February 15, 2013 (the "Exchange Debentures") to be issued pursuant to an Indenture to be entered into between the Company and The Bank of New York, as trustee, (the form of which filed as an exhibit to the Registration Statement, the "Exchange Indenture") and Trust II will transfer to the Company the Exchange Fleetwood Enterprises, Inc. Fleetwood Capital Trust II Fleetwood Capital Trust III December 11, 2001 Page 2 Securities and its common securities (the "Exchange Common Securities"), as set forth in the Registration Statement (as defined below). The Exchange Securities will be guaranteed (the "Exchange Preferred Guarantee") by the Company pursuant to the Exchange Preferred Guarantee Agreement (as defined below) and the Exchange Common Securities will be guaranteed (the "Exchange Common Guarantee") by the Company pursuant to the Exchange Common Guarantee Agreement (as defined below). In connection with the Cash Offer, the Company will deposit in Trust III as trust assets its 9.5% Convertible Subordinated Debentures due February 15, 2013 (the "Cash Debentures" and, together with the Exchange Debentures, the "Debentures") to be issued pursuant to an Indenture to be entered into between the Company and The Bank of New York, as trustee, (the form of which filed as an exhibit to the Registration Statement, the "Cash Indenture" and together with the Exchange Indenture, the "Indentures") and Trust III will transfer to the Company the Cash Securities and its common securities (the "Cash Common Securities" and together with the Exchange Common Securities, the "Common Securities"), as set forth in the Registration Statement (as defined below). The Cash Securities will be guaranteed (the "Cash Preferred Guarantee" and together with the Exchange Preferred Guarantee, the "Preferred Guarantees") by the Company pursuant to the Cash Preferred Guarantee Agreement (as defined below) and the Cash Common Securities will be guaranteed (the "Cash Common Guarantee" and together with the Exchange Common Guarantee, the "Common Guarantees") by the Company pursuant to the Cash Common Guarantee Agreement (as defined below). In connection with the opinions herein expressed, we have reviewed the combined Registration Statement on Form S-4 (Reg. No. 333-62838) and Form S-3 (Reg. No. 333-62850), as amended (the "Registration Statement"), covering the registration of the Securities, the Preferred Guarantees, the Debentures, the shares (the "Conversion Shares") of the common stock, par value $1.00 per share of the Company (the "Fleetwood Common Stock"), issuable upon conversion of the Securities and the Debentures, and the shares of Fleetwood Common Stock (the "Interest Shares" and together with the Conversion Shares, the "Shares") that may be issued solely at the Company's option as payment of interest on the Debentures in accordance with the terms of the Indentures. We have also reviewed the Statement on Schedule TO, filed by the Company with the Securities and Exchange Commission (the "Commission") on December 5, 2001, as amended on December 11, 2001 (the "Schedule TO"). In addition, we have examined originals, or copies certified or otherwise identified to our satisfaction, of the following: i.the form of Amended Dealer Manager Agreement in the form attached as an exhibit to the Registration Statement (the "Dealer Manager Agreement") among the Company, Trust II and Banc of America Securities LLC ("BAS"); ii.the form of Distribution Agreement in the form attached as an exhibit to the Registration Statement (the "Distribution Agreement") among the Company, Trust III and BAS, as placement agent; Fleetwood Enterprises, Inc. Fleetwood Capital Trust II Fleetwood Capital Trust III December 11, 2001 Page 3 iii.the Indentures; iv.the Declaration of Trust of Trust II, dated as of June 7, 2001 (the "Trust II Declaration"), among the Company, as sponsor, Boyd R. Plowman, as regular trustee and The Bank of New York - Delaware, as Delaware trustee, and the Declaration of Trust of Trust III, dated as of December 7, 2001 (the "Trust III Declaration" and, together with the Trust II Declaration, the "Declarations"), among the Company, as sponsor, Boyd R. Plowman, as regular trustee and The Bank of New York - Delaware, as Delaware trustee; v.the form of Amended and Restated Declarations of Trust of each of the Trusts (the "Amended Declarations") to be entered into among the Company, as sponsor, The Bank of New York - Delaware, as Delaware trustee, The Bank of New York, as property trustee, and Lyle N. Larkin, Nelson W. Potter and Boyd R. Plowman, as regular trustees; vi.the form of Common Securities Purchase Agreement to be entered into between the Company and Trust II and the form of Common Securities Purchase Agreement to be entered into between the Company and Trust III; vii.the form of Common Securities Guarantee Agreement (the "Exchange Common Guarantee Agreement"), to be entered into by the Company for the benefit of holders of the Exchange Common Securities, and the form of Common Securities Guarantee Agreement (the "Cash Common Guarantee Agreement"), to be entered into be the Company for the benefit of holders of the Cash Common Securities; viii.the form of Preferred Securities Guarantee Agreement (the "Exchange Preferred Guarantee Agreement"), to be entered into between the Company and The Bank of New York, as guarantee trustee, and the form of Preferred Securities Guarantee Agreement (the "Cash Preferred Guarantee Agreement"), to be entered into between the Company and The Bank of New York, as guarantee trustee; ix.the forms of Securities, together with the Preferred Guarantee endorsed thereon, the Common Securities, together with the Common Guarantee endorsed thereon, and the Debentures; Fleetwood Enterprises, Inc. Fleetwood Capital Trust II Fleetwood Capital Trust III December 11, 2001 Page 4 x.the Exchange Agent Agreement, dated as of December 5, 2001, between the Company and The Bank of New York, as exchange agent; xi.the Information Agent Agreement, dated as of July 23, 2001, between the Company and D.F. King & Co., Inc., as information agent; and xii.such other documents, corporate records, and other instruments as we have deemed necessary or advisable to enable us to render the opinions set forth herein. The documents described under the foregoing clauses (i) through (xi) are referred to herein as the "Documents." In rendering this opinion, we have made such inquiries and examined, among other things, originals or copies, certified or otherwise identified to our satisfaction, of such records, agreements, certificates, instruments and other documents as we have considered necessary or appropriate for purposes of this opinion. As to certain factual matters, we have relied upon the representations and warranties of the Company and the Trusts in the Dealer Manager Agreement and the Distribution Agreement, certificates of officers of the Company or certificates obtained from public officials. Further we have assumed that: a) The signatures on all documents examined by us are genuine, all individuals executing such documents had all requisite legal capacity and competency and (except in the case of documents signed on behalf of the Company) were duly authorized, the documents submitted to us as originals are authentic and the documents submitted to us as certified or reproduction copies conform to the originals; b) Each of the parties to the Documents (other than the Company) has all requisite power and authority to execute, deliver and perform its obligations under each of the Documents to which it is a party, the execution and delivery of such Documents by such party and performance of its obligations thereunder have been duly authorized by all necessary action, do not violate any law, regulation, order, judgment or decree applicable to such party, and such Documents are legal, valid and binding obligations of such party, enforceable against it in accordance with their respective terms; c) There are no agreements or understandings between or among the Company, the Trusts and other parties to the Documents, or third parties, that would expand, modify or otherwise affect the terms of the Documents or the respective rights or obligations of the parties thereunder; Fleetwood Enterprises, Inc. Fleetwood Capital Trust II Fleetwood Capital Trust III December 11, 2001 Page 5 d) The proceeds from the sale of the Cash Securities will be applied as set forth in the Registration Statement; and e) The conversion price for the Exchange Securities will be no less than $8.40 per share. Based upon the foregoing and in reliance thereon, and subject to the receipt by the Company and the Trusts from the Commission of an order declaring the Registration Statement effective, we are of the opinion that: 1. The Debentures have been duly authorized by the Company and when issued and delivered in the manner described in the Registration Statement and when executed and authenticated in accordance with the provisions of the relevant Indenture, will be duly executed and delivered by or on behalf of the Company and will be legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their terms and entitled to the benefits of the relevant Indenture. 2. The Preferred Guarantees have been duly authorized by the Company and, assuming the Securities will be legal, valid and binding obligations of the relevant Trust, enforceable against the relevant Trust in accordance with their terms, when the Preferred Guarantees have been issued and delivered in connection with the exchange of the Existing Securities or in connection with the sale of the Cash Securities pursuant to Cash Offer in the manner described in the Registration Statement and when the Securities and the Preferred Guarantees have been executed and, in the case of the Securities, authenticated, in accordance with the provisions of the relevant Amended Declaration, will be duly executed and delivered by or on behalf of the Company and will be legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their terms. 3. The Conversion Shares issuable upon conversion of the Securities and the Debentures have been duly authorized and reserved for issuance and, when delivered upon conversion in accordance with the terms of the Securities, the Debentures, the Amended Declarations and the Indentures, will be validly issued, fully paid and nonassessable. 4. The Interest Shares issuable at the Company's option as payment of interest on the Debentures have been duly authorized and reserved for issuance and, when delivered upon such payment of interest, at the Company's option and in accordance with the terms of the Debentures and the Indentures, will be validly issued, fully paid and non-assessable. The foregoing opinions are also subject to the following additional qualifications, exceptions, assumptions and limitations: Fleetwood Enterprises, Inc. Fleetwood Capital Trust II Fleetwood Capital Trust III December 11, 2001 Page 6 A. We render no opinion herein as to matters involving the laws of any jurisdiction other than the laws of the State of New York, the United States of America, and, to the limited extent set forth below, the State of Delaware. We are not admitted to practice in the State of Delaware; however, we are generally familiar with the Delaware General Corporation Law, the Delaware Constitution and the reported judicial decisions interpreting these laws as currently in effect (the "DGCL") and have made such inquiries as we consider necessary to render the opinions contained herein. This opinion is limited to the effect of the present state of the laws of the State of New York, the United States of America and the DGCL and the facts as they presently exist. We assume no obligation to revise or supplement this opinion in the event of future changes in such laws or the interpretations thereof or such facts. B. Our opinions set forth herein are subject to (i) the effect of any bankruptcy, insolvency, reorganization, moratorium, arrangement or similar laws affecting the rights and remedies of creditors' generally (including, without limitation, the effect of statutory or other laws regarding fraudulent transfers or preferential transfers), and (ii) general principles of equity, regardless of whether enforceability is considered in a proceeding in equity or at law, including without limitation concepts of materiality, reasonableness, good faith and fair dealing and the possible unavailability of specific performance, injunctive relief or other equitable remedies. C. We express no opinion regarding the effect on the enforceability of the Preferred Guarantees against the Company of any facts or circumstances occurring after the date hereof that would constitute a defense to the obligation of a surety, unless such defense has been waived effectively by the Company. D. We express no opinion regarding the effectiveness of (i) any waivers or consents relating to rights or duties owed that exist as a matter of law or unknown future rights; (ii) any waiver that is vaguely stated or does not describe the right or duty purportedly waived with reasonable specificity; (iii) provisions relating to indemnification, exculpation or contribution, to the extent such provisions may be held unenforceable as contrary to public policy or federal or state securities laws or due to the negligence or willful misconduct of the indemnified party; or (vi) any provisions that may be construed as penalties or forfeitures. Fleetwood Enterprises, Inc. Fleetwood Capital Trust II Fleetwood Capital Trust III December 11, 2001 Page 7 We hereby consent to the filing of this opinion as an exhibit to the Registration Statement, and we further consent to the use of our name under the caption "Legal Matters" in the Prospectus forming a part of said Registration Statement. In giving this consent, we do not admit that we are within the category of persons whose consent is required under Section 7 of the Securities Act of 1933, as amended, or the Rules and Regulations of the Commission promulgated thereunder. Very truly yours, /s/ GIBSON, DUNN & CRUTCHER LLP GIBSON, DUNN & CRUTCHER LLP MWS/LJM/REA/OCW/TCS EX-8.1 9 a2065542zex-8_1.txt EXHIBIT 8.1 EXHIBIT 8.1 December 11, 2001 Direct Dial Client No. (949) 451-3961 C 29003-00721 Fleetwood Enterprises, Inc. 3125 Myers Street Riverside, CA 92503 Re: FLEETWOOD CAPITAL TRUST II AND 9.5% CONVERTIBLE TRUST II SUBORDINATED DEBENTURES OF FLEETWOOD ENTERPRISES, INC., AND FLEETWOOD CAPITAL TRUST III AND 9.5% CONVERTIBLE TRUST III SUBORDINATED DEBENTURES OF FLEETWOOD ENTERPRISES, INC. Gentlemen: We have acted as tax counsel to Fleetwood Enterprises, Inc., a Delaware corporation (the "Company"), in connection with the issuance by the Company of: (i) 9.5% Convertible Trust II Subordinated Debentures, which mature on February 15, 2013 (the "Exchange Debentures"), to Fleetwood Capital Trust II, a statutory business trust created under the Delaware Business Trust Act of the State of Delaware ("Trust II"); and (ii) 9.5% Convertible Trust III Subordinated Debentures, which mature on February 15, 2013 (the "Cash Offer Debentures"), to Fleetwood Capital Trust III, a statutory business trust created under the Delaware Business Trust Act of the State of Delaware ("Trust III"). The terms of the Exchange Debentures and the Cash Offer Debentures, and a description of Trust II and Trust III, are set forth in the Registration Statements on Forms S-3/S-4 filed on June 12, 2001, as amended (the "Registration Statement") and the operative documents described therein. This opinion is based on the accuracy of the facts described and the representations made in the Registration Statement. This opinion is also based upon the assumptions that (i) the Exchange Debentures and the Cash Offer Debentures represent valid and enforceable obligations of the Company, and (ii) Trust II and Trust III will each operate in full compliance with the trust agreements and the terms of the indentures governing the Exchange Debentures and the Cash Offer Debentures ("Indenture II" and "Indenture III," respectively). Fleetwood Enterprises, Inc. Page 2 We have made such legal and factual examinations and inquiries, including an examination of originals or copies certified or otherwise identified to our satisfaction of such documents, of corporate records and other instruments as we have deemed necessary or appropriate for purposes of this opinion. We are opining herein as to the effect on the subject transaction only of the federal income tax laws of the United States, and we express no opinion with respect to the applicability thereto, or the effect thereon, of other federal, state, local, or territorial laws or the laws of any other jurisdiction. Based on the foregoing: (1) Trust II and Trust III will each be classified for U.S. federal income tax purposes as grantor trusts and not as partnerships or as associations taxable as corporations; (2) The Exchange Debentures and the Cash Offer Debentures, when issued, authenticated and delivered in accordance with the terms of Indenture II and Indenture III, respectively, will constitute indebtedness of the Company for U.S. federal income tax purposes; and (3) We confirm that the discussion set forth in the Registration Statement under the caption "United States Federal Income Tax Considerations," sets forth our opinion as to the material U.S. federal income tax considerations related to the exchange offer and the ownership and disposition of the exchange preferred securities and cash offer preferred securities, and common stock received upon a conversion of exchange preferred securities or cash offer preferred securities, by holders that receive their exchange preferred securities in the exchange offer or purchase their cash offer preferred securities in the cash offer. This opinion is based on various statutory provisions, regulations promulgated thereunder and interpretations thereof by the Internal Revenue Service and the courts having jurisdiction over such matters, all of which are subject to change either prospectively or retroactively. Any variation or difference in the facts from those set forth in the Registration Statement or the operative documents described therein may affect the conclusions stated herein. We hereby consent to the use of our name and our opinion under the caption "United States Federal Income Tax Considerations" in the Registration Statement. Very truly yours, /s/ GIBSON, DUNN & CRUTCHER LLP GIBSON, DUNN & CRUTCHER LLP SMK/pam EX-12.1 10 a2065672zex-12_1.txt EXHIBIT 12.1 EXHIBIT 12.1
FISCAL YEARS(1) ---------------------------------------------------- 1997 1998 1999 2000 2001 7/29/01 7/30/00 -------- -------- -------- -------- -------- -------- -------- (DOLLARS IN THOUSANDS) Income from continuing operations before income taxes, minority interest, discontinued operations and cumulative effect of accounting change:.............................. $147,050 $178,885 $196,415 $159,059 $(319,230) $(14,164) $ (26,567) -------- -------- -------- -------- --------- -------- --------- Plus fixed charges: Interest on all indebtedness......... 4,035 3,567 9,837 15,243 20,026 5,581 4,510 Distributions on Fleetwood Capital Trust.............................. -- 3,936 17,523 17,525 17,525 4,381 4,381 -------- -------- -------- -------- --------- -------- --------- Total fixed charges:................... 4,035 7,503 27,360 32,768 37,551 9,962 8,891 -------- -------- -------- -------- --------- -------- --------- Less distributions on Fleetwood Capital Trust:............................... -- (3,936) (17,523) (17,525) (17,525) (4,381) (4,381) Earnings:.............................. $151,085 $182,452 $206,252 $174,302 $(299,204) $ (8,583) $ (22,057) -------- -------- -------- -------- --------- -------- --------- Fixed charge ratio:.................. 37.4 24.3 7.5 5.3 --(1) --(1) --(1) -------- -------- -------- -------- --------- -------- ---------
(1) Our ratios of earnings to fixed charges for the fiscal year ended April 29, 2001 and the fiscal quarters ended July 30, 2000 and July 29, 2001 were not meaningful since earnings were inadequate to cover fixed charges by $336.8 million, $30.9 million and $18.5 million, respectively. EX-23.3 11 a2065542zex-23_3.txt EXHIBIT 23.3 EXHIBIT 23.3 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation by reference in Registration Statement Form S-3, amendment no. 4, and Form S-4, amendment no. 4, filed on December 11, 2001, of our reports dated July 30, 2001 included in Fleetwood Enterprises, Inc.'s Form 10-K for the year ended April 29, 2001, as amended, and to all references to our Firm included in these registration statements. Orange County, California December 10, 2001 EX-25.1 12 a2065672zex-25_1.txt EXHIBIT 25.1 EXHIBIT 25.1 ================================================================================ FORM T-1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) |__| --------------------------- THE BANK OF NEW YORK (Exact name of trustee as specified in its charter) New York 13-5160382 (State of incorporation (I.R.S. employer if not a U.S. national bank) identification no.) One Wall Street, New York, N.Y. 10286 (Address of principal executive offices) (Zip code) FLEETWOOD CAPITAL TRUST II (Exact name of obligor as specified in its charter) Delaware 33-6305591 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) 3125 Myers Street Riverside, California 92503 (Address of principal executive offices) (Zip code) Convertible Trust Preferred Securities (Title of the indenture securities) ================================================================================ 1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE: (A) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH IT IS SUBJECT. - -------------------------------------------------------------------------------- Name Address - -------------------------------------------------------------------------------- Superintendent of Banks of the State of 2 Rector Street, New York, N.Y. New York 10006, and Albany, N.Y. 12203 Federal Reserve Bank of New York 33 Liberty Plaza, New York, N.Y. 10045 Federal Deposit Insurance Corporation Washington, D.C. 20429 New York Clearing House Association New York, New York 10005 (B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS. Yes. 2. AFFILIATIONS WITH OBLIGOR. IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH AFFILIATION. None. 16. LIST OF EXHIBITS. EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE 7A-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17 C.F.R. 229.10(d). 1. A copy of the Organization Certificate of The Bank of New York (formerly Irving Trust Company) as now in effect, which contains the authority to commence business and a grant of powers to exercise corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1 to Form T-1 filed with Registration Statement No. 33-29637.) 4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1 filed with Registration Statement No. 33-31019.) 6. The consent of the Trustee required by Section 321(b) of the Act. 7. A copy of the latest report of condition of the Trustee published pursuant to law or to the requirements of its supervising or examining authority. -2- SIGNATURE Pursuant to the requirements of the Act, the Trustee, The Bank of New York, a corporation organized and existing under the laws of the State of New York, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in The City of New York, and State of New York, on the 11th day of December, 2001. THE BANK OF NEW YORK By: /s/ STACEY POINDEXTER ----------------------- Name: STACEY POINDEXTER Title: ASSISTANT TREASURER -3- EXHIBIT 6 CONSENT OF TRUSTEE Pursuant to the requirements of Section 321(b) of the Trust Indenture Act of 1939, we hereby consent that reports of examinations by Federal, State, Territorial, or District authorities may be furnished by such authorities to the Securities and Exchange Commission upon request therefor. THE BANK OF NEW YORK By: /s/ Stacey Poindexter ------------------------ STACEY POINDEXTER ASSISTANT TREASURER Dated: December 11, 2001 EXHIBIT 7 Consolidated Report of Condition of THE BANK OF NEW YORK of One Wall Street, New York, N.Y. 10286 And Foreign and Domestic Subsidiaries, a member of the Federal Reserve System, at the close of business March 31, 2001, published in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act.
Dollar Amounts In Thousands ASSETS Cash and balances due from depository institutions: Noninterest-bearing balances and currency and coin.. $2,811,275 Interest-bearing balances........................... 3,133,222 Securities: Held-to-maturity securities......................... 147,185 Available-for-sale securities....................... 5,403,923 Federal funds sold and Securities purchased under agreements to resell................................ 3,378,526 Loans and lease financing receivables: Loans and leases held for sale...................... 74,702 Loans and leases, net of unearned income............ 37,471,621 LESS: Allowance for loan and lease losses........... 599,061 Loans and leases, net of unearned income and allowance......................................... 36,872,560 Trading Assets......................................... 11,757,036 Premises and fixed assets (including capitalized leases)............................................. 768,795 Other real estate owned................................ 1,078 Investments in unconsolidated subsidiaries and associated companies................................ 193,126 Customers' liability to this bank on acceptances outstanding......................................... 592,118 Intangible assets...................................... Goodwill............................................ 1,300,295 Other intangible assets............................. 122,143 Other assets........................................... 3,676,375 =========== Total assets........................................... $70,232,359 =========== LIABILITIES Deposits: In domestic offices................................. $25,962,242 Noninterest-bearing................................. 10,586,346 Interest-bearing.................................... 15,395,896 In foreign offices, Edge and Agreement subsidiaries, and IBFs............................ 24,862,377 Noninterest-bearing................................. 373,085 Interest-bearing.................................... 24,489,292 Federal funds purchased and securities sold under agreements to repurchase............................ 1,446,874 Trading liabilities.................................... 2,373,361 Other borrowed money: (includes mortgage indebtedness and obligations under capitalized leases)........................... 1,381,512 Bank's liability on acceptances executed and outstanding......................................... 592,804 Subordinated notes and debentures...................... 1,646,000 Other liabilities...................................... 5,373,065 ----------- Total liabilities...................................... $63,658,235 =========== EQUITY CAPITAL Common stock........................................... 1,135,284 Surplus................................................ 1,008,773 Retained earnings...................................... 4,426,033 Accumulated other comprehensive income................. 4,034 Other equity capital components........................ 0 ----------- Total equity capital................................... 6,574,124 ----------- Total liabilities and equity capital................... $70,232,359 ===========
I, Thomas J. Mastro, Senior Vice President and Comptroller of the above-named bank do hereby declare that this Report of Condition has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true to the best of my knowledge and belief. /s/ Thomas J. Mastro, Thomas J. Mastro, Senior Vice President and Comptroller We, the undersigned directors, attest to the correctness of this Report of Condition and declare that it has been examined by us and to the best of our knowledge and belief has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true and correct. /s/ Thomas A. Renyi /s/ Gerald L. Hassell /s/ Alan R. Griffith Directors EX-25.2 13 a2065672zex-25_2.txt EXHIBIT 25.2 EXHIBIT 25.2 ================================================================================ FORM T-1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) |__| --------------------------- THE BANK OF NEW YORK (Exact name of trustee as specified in its charter) New York 13-5160382 (State of incorporation (I.R.S. employer if not a U.S. national bank) identification no.) One Wall Street, New York, N.Y. 10286 (Address of principal executive offices) (Zip code) FLEETWOOD ENTERPRISES, INC. (Exact name of obligor as specified in its charter) Delaware 95-1948322 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) 3125 Myers Street Riverside, California 92503 (Address of principal executive offices) (Zip code) Convertible Subordinated Debentures (Title of the indenture securities) ================================================================================ 1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE: (A) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH IT IS SUBJECT. - -------------------------------------------------------------------------------- Name Address - -------------------------------------------------------------------------------- Superintendent of Banks of the State of 2 Rector Street, New York, N.Y. New York 10006, and Albany, N.Y. 12203 Federal Reserve Bank of New York 33 Liberty Plaza, New York, N.Y. 10045 Federal Deposit Insurance Corporation Washington, D.C. 20429 New York Clearing House Association New York, New York 10005 (B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS. Yes. 2. AFFILIATIONS WITH OBLIGOR. IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH AFFILIATION. None. 16. LIST OF EXHIBITS. EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE 7A-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17 C.F.R. 229.10(D). 1. A copy of the Organization Certificate of The Bank of New York (formerly Irving Trust Company) as now in effect, which contains the authority to commence business and a grant of powers to exercise corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1 to Form T-1 filed with Registration Statement No. 33-29637.) 4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1 filed with Registration Statement No. 33-31019.) 6. The consent of the Trustee required by Section 321(b) of the Act. 7. A copy of the latest report of condition of the Trustee published pursuant to law or to the requirements of its supervising or examining authority. -2- SIGNATURE Pursuant to the requirements of the Act, the Trustee, The Bank of New York, a corporation organized and existing under the laws of the State of New York, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in The City of New York, and State of New York, on the 11th day of December, 2001. THE BANK OF NEW YORK By: /s/ STACEY POINDEXTER ----------------------- Name: STACEY POINDEXTER Title: ASSISTANT TREASURER -3- EXHIBIT 6 CONSENT OF TRUSTEE Pursuant to the requirements of Section 321(b) of the Trust Indenture Act of 1939, we hereby consent that reports of examinations by Federal, State, Territorial, or District authorities may be furnished by such authorities to the Securities and Exchange Commission upon request therefor. THE BANK OF NEW YORK By: /s/ Stacey Poindexter ------------------------ STACEY POINDEXTER ASSISTANT TREASURER Dated: December 11, 2001 EXHIBIT 7 Consolidated Report of Condition of THE BANK OF NEW YORK of One Wall Street, New York, N.Y. 10286 And Foreign and Domestic Subsidiaries, a member of the Federal Reserve System, at the close of business March 31, 2001, published in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act.
Dollar Amounts In Thousands ASSETS Cash and balances due from depository institutions: Noninterest-bearing balances and currency and coin.. $2,811,275 Interest-bearing balances........................... 3,133,222 Securities: Held-to-maturity securities......................... 147,185 Available-for-sale securities....................... 5,403,923 Federal funds sold and Securities purchased under agreements to resell................................ 3,378,526 Loans and lease financing receivables: Loans and leases held for sale...................... 74,702 Loans and leases, net of unearned income............ 37,471,621 LESS: Allowance for loan and lease losses........... 599,061 Loans and leases, net of unearned income and allowance......................................... 36,872,560 Trading Assets......................................... 11,757,036 Premises and fixed assets (including capitalized leases)............................................. 768,795 Other real estate owned................................ 1,078 Investments in unconsolidated subsidiaries and associated companies................................ 193,126 Customers' liability to this bank on acceptances outstanding......................................... 592,118 Intangible assets...................................... Goodwill............................................ 1,300,295 Other intangible assets............................. 122,143 Other assets........................................... 3,676,375 =========== Total assets........................................... $70,232,359 =========== LIABILITIES Deposits: In domestic offices................................. $25,962,242 Noninterest-bearing................................. 10,586,346 Interest-bearing.................................... 15,395,896 In foreign offices, Edge and Agreement subsidiaries, and IBFs............................ 24,862,377 Noninterest-bearing................................. 373,085 Interest-bearing.................................... 24,489,292 Federal funds purchased and securities sold under agreements to repurchase............................ 1,446,874 Trading liabilities.................................... 2,373,361 Other borrowed money: (includes mortgage indebtedness and obligations under capitalized leases)........................... 1,381,512 Bank's liability on acceptances executed and outstanding......................................... 592,804 Subordinated notes and debentures...................... 1,646,000 Other liabilities...................................... 5,373,065 ----------- Total liabilities...................................... $63,658,235 =========== EQUITY CAPITAL Common stock........................................... 1,135,284 Surplus................................................ 1,008,773 Retained earnings...................................... 4,426,033 Accumulated other comprehensive income................. 4,034 Other equity capital components........................ 0 ----------- Total equity capital................................... 6,574,124 ----------- Total liabilities and equity capital................... $70,232,359 ===========
I, Thomas J. Mastro, Senior Vice President and Comptroller of the above-named bank do hereby declare that this Report of Condition has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true to the best of my knowledge and belief. /s/ Thomas J. Mastro, Thomas J. Mastro, Senior Vice President and Comptroller We, the undersigned directors, attest to the correctness of this Report of Condition and declare that it has been examined by us and to the best of our knowledge and belief has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true and correct. /s/ Thomas A. Renyi /s/ Gerald L. Hassell /s/ Alan R. Griffith Directors EX-25.3 14 a2065672zex-25_3.txt EXHIBIT 25.3 EXHIBIT 25.3 ================================================================================ FORM T-1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) |__| --------------------------- THE BANK OF NEW YORK (Exact name of trustee as specified in its charter) New York 13-5160382 (State of incorporation (I.R.S. employer if not a U.S. national bank) identification no.) One Wall Street, New York, N.Y. 10286 (Address of principal executive offices) (Zip code) FLEETWOOD ENTERPRISES, INC. (Exact name of obligor as specified in its charter) Delaware 95-1948322 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) 3125 Myers Street Riverside, California 92503 (Address of principal executive offices) (Zip code) Guarantee of Convertible Trust Preferred Securities Fleetwood Capital Trust II (Title of the indenture securities) ================================================================================ 1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE: (A) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH IT IS SUBJECT. - -------------------------------------------------------------------------------- Name Address - -------------------------------------------------------------------------------- Superintendent of Banks of the State of 2 Rector Street, New York, N.Y. New York 10006, and Albany, N.Y. 12203 Federal Reserve Bank of New York 33 Liberty Plaza, New York, N.Y. 10045 Federal Deposit Insurance Corporation Washington, D.C. 20429 New York Clearing House Association New York, New York 10005 (B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS. Yes. 2. AFFILIATIONS WITH OBLIGOR. IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH AFFILIATION. None. 16. LIST OF EXHIBITS. EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE 7A-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17 C.F.R. 229.10(D). 1. A copy of the Organization Certificate of The Bank of New York (formerly Irving Trust Company) as now in effect, which contains the authority to commence business and a grant of powers to exercise corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1 to Form T-1 filed with Registration Statement No. 33-29637.) 4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1 filed with Registration Statement No. 33-31019.) 6. The consent of the Trustee required by Section 321(b) of the Act. 7. A copy of the latest report of condition of the Trustee published pursuant to law or to the requirements of its supervising or examining authority. -2- SIGNATURE Pursuant to the requirements of the Act, the Trustee, The Bank of New York, a corporation organized and existing under the laws of the State of New York, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in The City of New York, and State of New York, on the 11th day of December, 2001. THE BANK OF NEW YORK By: /s/ STACEY POINDEXTER ----------------------- Name: STACEY POINDEXTER Title: ASSISTANT TREASURER -3- EXHIBIT 6 CONSENT OF TRUSTEE Pursuant to the requirements of Section 321(b) of the Trust Indenture Act of 1939, we hereby consent that reports of examinations by Federal, State, Territorial, or District authorities may be furnished by such authorities to the Securities and Exchange Commission upon request therefor. THE BANK OF NEW YORK By: /s/ Stacey Poindexter ------------------------ STACEY POINDEXTER ASSISTANT TREASURER Dated: December 11, 2001 EXHIBIT 7 Consolidated Report of Condition of THE BANK OF NEW YORK of One Wall Street, New York, N.Y. 10286 And Foreign and Domestic Subsidiaries, a member of the Federal Reserve System, at the close of business March 31, 2001, published in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act.
Dollar Amounts In Thousands ASSETS Cash and balances due from depository institutions: Noninterest-bearing balances and currency and coin.. $2,811,275 Interest-bearing balances........................... 3,133,222 Securities: Held-to-maturity securities......................... 147,185 Available-for-sale securities....................... 5,403,923 Federal funds sold and Securities purchased under agreements to resell................................ 3,378,526 Loans and lease financing receivables: Loans and leases held for sale...................... 74,702 Loans and leases, net of unearned income............ 37,471,621 LESS: Allowance for loan and lease losses........... 599,061 Loans and leases, net of unearned income and allowance......................................... 36,872,560 Trading Assets......................................... 11,757,036 Premises and fixed assets (including capitalized leases)............................................. 768,795 Other real estate owned................................ 1,078 Investments in unconsolidated subsidiaries and associated companies................................ 193,126 Customers' liability to this bank on acceptances outstanding......................................... 592,118 Intangible assets...................................... Goodwill............................................ 1,300,295 Other intangible assets............................. 122,143 Other assets........................................... 3,676,375 =========== Total assets........................................... $70,232,359 =========== LIABILITIES Deposits: In domestic offices................................. $25,962,242 Noninterest-bearing................................. 10,586,346 Interest-bearing.................................... 15,395,896 In foreign offices, Edge and Agreement subsidiaries, and IBFs............................ 24,862,377 Noninterest-bearing................................. 373,085 Interest-bearing.................................... 24,489,292 Federal funds purchased and securities sold under agreements to repurchase............................ 1,446,874 Trading liabilities.................................... 2,373,361 Other borrowed money: (includes mortgage indebtedness and obligations under capitalized leases)........................... 1,381,512 Bank's liability on acceptances executed and outstanding......................................... 592,804 Subordinated notes and debentures...................... 1,646,000 Other liabilities...................................... 5,373,065 ----------- Total liabilities...................................... $63,658,235 =========== EQUITY CAPITAL Common stock........................................... 1,135,284 Surplus................................................ 1,008,773 Retained earnings...................................... 4,426,033 Accumulated other comprehensive income................. 4,034 Other equity capital components........................ 0 ----------- Total equity capital................................... 6,574,124 ----------- Total liabilities and equity capital................... $70,232,359 ===========
I, Thomas J. Mastro, Senior Vice President and Comptroller of the above-named bank do hereby declare that this Report of Condition has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true to the best of my knowledge and belief. /s/ Thomas J. Mastro, Thomas J. Mastro, Senior Vice President and Comptroller We, the undersigned directors, attest to the correctness of this Report of Condition and declare that it has been examined by us and to the best of our knowledge and belief has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true and correct. /s/ Thomas A. Renyi /s/ Gerald L. Hassell /s/ Alan R. Griffith Directors EX-25.4 15 a2065672zex-25_4.txt EXHIBIT 25.4 EXHIBIT 25.4 ================================================================================ FORM T-1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) |__| --------------------------- THE BANK OF NEW YORK (Exact name of trustee as specified in its charter) New York 13-5160382 (State of incorporation (I.R.S. employer if not a U.S. national bank) identification no.) One Wall Street, New York, N.Y. 10286 (Address of principal executive offices) (Zip code) FLEETWOOD CAPITAL TRUST III (Exact name of obligor as specified in its charter) Delaware 33-0990159 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) 3125 Myers Street Riverside, California 92503 (Address of principal executive offices) (Zip code) Convertible Trust Preferred Securities of Fleetwood Capital Trust III (Title of the indenture securities) ================================================================================ 1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE: (A) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH IT IS SUBJECT.
- ------------------------------------------------ -------------------------------------------- Name Address - ------------------------------------------------ -------------------------------------------- Superintendent of Banks of the State of 2 Rector Street, New York, N.Y. New York 10006, and Albany, N.Y. 12203 Federal Reserve Bank of New York 33 Liberty Plaza, New York, N.Y. 10045 Federal Deposit Insurance Corporation Washington, D.C. 20429 New York Clearing House Association New York, New York 10005
(B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS. Yes. 2. AFFILIATIONS WITH OBLIGOR. IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH AFFILIATION. None. 16. LIST OF EXHIBITS. EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE 7A-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17 C.F.R. 229.10(d). 1. A copy of the Organization Certificate of The Bank of New York (formerly Irving Trust Company) as now in effect, which contains the authority to commence business and a grant of powers to exercise corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1 to Form T-1 filed with Registration Statement No. 33-29637.) 4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1 filed with Registration Statement No. 33-31019.) 6. The consent of the Trustee required by Section 321(b) of the Act. -2- 7. A copy of the latest report of condition of the Trustee published pursuant to law or to the requirements of its supervising or examining authority. -3- SIGNATURE Pursuant to the requirements of the Act, the Trustee, The Bank of New York, a corporation organized and existing under the laws of the State of New York, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in The City of New York, and State of New York, on the 11h day of December, 2001. THE BANK OF NEW YORK By: /s/ STACEY POINDEXTER ----------------------- Name: STACEY POINDEXTER Title: ASSISTANT TREASURER -4- EXHIBIT 6 CONSENT OF TRUSTEE Pursuant to the requirements of Section 321(b) of the Trust Indenture Act of 1939, we hereby consent that reports of examinations by Federal, State, Territorial, or District authorities may be furnished by such authorities to the Securities and Exchange Commission upon request therefor. THE BANK OF NEW YORK By: /s/ Stacey Poindexter ------------------------ STACEY POINDEXTER ASSISTANT TREASURER Dated: December 11, 2001 EXHIBIT 7 - -------------------------------------------------------------------------------- Consolidated Report of Condition of THE BANK OF NEW YORK of One Wall Street, New York, N.Y. 10286 And Foreign and Domestic Subsidiaries, a member of the Federal Reserve System, at the close of business March 31, 2001, published in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act.
Dollar Amounts In Thousands ASSETS Cash and balances due from depository institutions: Noninterest-bearing balances and currency and coin ................. $ 2,811,275 Interest-bearing balances .......................................... 3,133,222 Securities: Held-to-maturity securities ........................................ 147,185 Available-for-sale securities ...................................... 5,403,923 Federal funds sold and Securities purchased under agreements to resell ............................................... 3,378,526 Loans and lease financing receivables: Loans and leases held for sale ..................................... 74,702 Loans and leases, net of unearned income ........................................................... 37,471,621 LESS: Allowance for loan and lease losses ..................................................... 599,061 Loans and leases, net of unearned income and allowance ............................................. 36,872,560 Trading Assets ........................................................ 11,757,036 Premises and fixed assets (including capitalized leases) ............................................................ 768,795 Other real estate owned ............................................... 1,078 Investments in unconsolidated subsidiaries and associated companies ............................................... 193,126 Customers' liability to this bank on acceptances outstanding ........................................................ 592,118 Intangible assets Goodwill ........................................................... 1,300,295 Other intangible assets ............................................ 122,143 Other assets .......................................................... 3,676,375 =========== Total assets .......................................................... $70,232,359 =========== LIABILITIES Deposits: In domestic offices ................................................ $25,982,242 Noninterest-bearing ................................................ 10,586,346 Interest-bearing ................................................... 15,395,896 In foreign offices, Edge and Agreement subsidiaries, and IBFs ........................................... 24,862,377 Noninterest-bearing ................................................ 373,085 Interest-bearing ................................................... 24,489,292 Federal funds purchased and securities sold under agreements to repurchase ........................................... 1,446,874 Trading liabilities ................................................... 2,373,361 Other borrowed money: (includes mortgage indebtedness and obligations under capitalized leases) .......................................... 1,381,512 Bank's liability on acceptances executed and outstanding ........................................................ 592,804 Subordinated notes and debentures ..................................... 1,646,000 Other liabilities ..................................................... 5,373,065 ----------- Total liabilities ..................................................... $63,658,235 =========== EQUITY CAPITAL Common stock .......................................................... 1,135,284 Surplus ............................................................... 1,008,773 Retained earnings ..................................................... 4,426,033 Accumulated other comprehensive income ................................ 4,034 Other equity capital components ....................................... 0 ----------- Total equity capital .................................................. 6,574,124 ----------- Total liabilities and equity capital .................................. $70,232,359 ===========
I, Thomas J. Mastro, Senior Vice President and Comptroller of the above-named bank do hereby declare that this Report of Condition has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true to the best of my knowledge and belief. /s/ THOMAS J. MASTRO -------------------- Thomas J. Mastro, Senior Vice President and Comptroller We, the undersigned directors, attest to the correctness of this Report of Condition and declare that it has been examined by us and to the best of our knowledge and belief has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true and correct. /s/ THOMAS A. RENYI ------------------------------- THOMAS A. RENYI /s/ GERALD L. HASSELL ------------------------------- GERALD L. HASSELL /s/ ALAN R. GRIFFITH ------------------------------- ALAN R. GRIFFITH Directors - -------------------------------------------------------------------------------- EX-25.5 16 a2065672zex-25_5.txt EXHIBIT 25.5 EXHIBIT 25.5 ================================================================================ FORM T-1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) |__| --------------------------- THE BANK OF NEW YORK (Exact name of trustee as specified in its charter) New York 13-5160382 (State of incorporation (I.R.S. employer if not a U.S. national bank) identification no.) One Wall Street, New York, N.Y. 10286 (Address of principal executive offices) (Zip code) FLEETWOOD ENTERPRISES, INC. (Exact name of obligor as specified in its charter) Delaware 95-1948322 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) 3125 Myers Street Riverside, California 92503 (Address of principal executive offices) (Zip code) Convertible Subordinated Debentures (Title of the indenture securities) ================================================================================ 1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE: (A) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH IT IS SUBJECT.
- ------------------------------------------------ -------------------------------------------- Name Address - ------------------------------------------------ -------------------------------------------- Superintendent of Banks of the State of 2 Rector Street, New York, N.Y. New York 10006, and Albany, N.Y. 12203 Federal Reserve Bank of New York 33 Liberty Plaza, New York, N.Y. 10045 Federal Deposit Insurance Corporation Washington, D.C. 20429 New York Clearing House Association New York, New York 10005
(B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS. Yes. 2. AFFILIATIONS WITH OBLIGOR. IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH AFFILIATION. None. 16. LIST OF EXHIBITS. EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE 7A-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17 C.F.R. 229.10(d). 1. A copy of the Organization Certificate of The Bank of New York (formerly Irving Trust Company) as now in effect, which contains the authority to commence business and a grant of powers to exercise corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1 to Form T-1 filed with Registration Statement No. 33-29637.) 4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1 filed with Registration Statement No. 33-31019.) 6. The consent of the Trustee required by Section 321(b) of the Act. -2- 7. A copy of the latest report of condition of the Trustee published pursuant to law or to the requirements of its supervising or examining authority. -3- SIGNATURE Pursuant to the requirements of the Act, the Trustee, The Bank of New York, a corporation organized and existing under the laws of the State of New York, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in The City of New York, and State of New York, on the 11th day of December, 2001. THE BANK OF NEW YORK By: /s/ STACEY POINDEXTER ----------------------- Name: STACEY POINDEXTER Title: ASSISTANT TREASURER -4- EXHIBIT 6 CONSENT OF TRUSTEE Pursuant to the requirements of Section 321(b) of the Trust Indenture Act of 1939, we hereby consent that reports of examinations by Federal, State, Territorial, or District authorities may be furnished by such authorities to the Securities and Exchange Commission upon request therefor. THE BANK OF NEW YORK By: /s/ Stacey Poindexter ------------------------ STACEY POINDEXTER ASSISTANT TREASURER Dated: December 11, 2001 EXHIBIT 7 - -------------------------------------------------------------------------------- Consolidated Report of Condition of THE BANK OF NEW YORK of One Wall Street, New York, N.Y. 10286 And Foreign and Domestic Subsidiaries, a member of the Federal Reserve System, at the close of business March 31, 2001, published in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act.
Dollar Amounts In Thousands ASSETS Cash and balances due from depository institutions: Noninterest-bearing balances and currency and coin ................. $ 2,811,275 Interest-bearing balances .......................................... 3,133,222 Securities: Held-to-maturity securities ........................................ 147,185 Available-for-sale securities ...................................... 5,403,923 Federal funds sold and Securities purchased under agreements to resell ............................................... 3,378,526 Loans and lease financing receivables: Loans and leases held for sale ..................................... 74,702 Loans and leases, net of unearned income ........................................................... 37,471,621 LESS: Allowance for loan and lease losses ..................................................... 599,061 Loans and leases, net of unearned income and allowance ............................................. 36,872,560 Trading Assets ........................................................ 11,757,036 Premises and fixed assets (including capitalized leases) ............................................................ 768,795 Other real estate owned ............................................... 1,078 Investments in unconsolidated subsidiaries and associated companies ............................................... 193,126 Customers' liability to this bank on acceptances outstanding ........................................................ 592,118 Intangible assets Goodwill ........................................................... 1,300,295 Other intangible assets ............................................ 122,143 Other assets .......................................................... 3,676,375 =========== Total assets .......................................................... $70,232,359 =========== LIABILITIES Deposits: In domestic offices ................................................ $25,982,242 Noninterest-bearing ................................................ 10,586,346 Interest-bearing ................................................... 15,395,896 In foreign offices, Edge and Agreement subsidiaries, and IBFs ........................................... 24,862,377 Noninterest-bearing ................................................ 373,085 Interest-bearing ................................................... 24,489,292 Federal funds purchased and securities sold under agreements to repurchase ........................................... 1,446,874 Trading liabilities ................................................... 2,373,361 Other borrowed money: (includes mortgage indebtedness and obligations under capitalized leases) .......................................... 1,381,512 Bank's liability on acceptances executed and outstanding ........................................................ 592,804 Subordinated notes and debentures ..................................... 1,646,000 Other liabilities ..................................................... 5,373,065 ----------- Total liabilities ..................................................... $63,658,235 =========== EQUITY CAPITAL Common stock .......................................................... 1,135,284 Surplus ............................................................... 1,008,773 Retained earnings ..................................................... 4,426,033 Accumulated other comprehensive income ................................ 4,034 Other equity capital components ....................................... 0 ----------- Total equity capital .................................................. 6,574,124 ----------- Total liabilities and equity capital .................................. $70,232,359 ===========
I, Thomas J. Mastro, Senior Vice President and Comptroller of the above-named bank do hereby declare that this Report of Condition has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true to the best of my knowledge and belief. /s/ THOMAS J. MASTRO -------------------- Thomas J. Mastro, Senior Vice President and Comptroller We, the undersigned directors, attest to the correctness of this Report of Condition and declare that it has been examined by us and to the best of our knowledge and belief has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true and correct. /s/ THOMAS A. RENYI ------------------------------- THOMAS A. RENYI /s/ GERALD L. HASSELL ------------------------------- GERALD L. HASSELL /s/ ALAN R. GRIFFITH ------------------------------- ALAN R. GRIFFITH Directors - -------------------------------------------------------------------------------- EX-25.6 17 a2065672zex-25_6.txt EXHIBIT 25.6 EXHIBIT 25.6 ================================================================================ FORM T-1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) |__| --------------------------- THE BANK OF NEW YORK (Exact name of trustee as specified in its charter) New York 13-5160382 (State of incorporation (I.R.S. employer if not a U.S. national bank) identification no.) One Wall Street, New York, N.Y. 10286 (Address of principal executive offices) (Zip code) FLEETWOOD ENTERPRISES, INC. (Exact name of obligor as specified in its charter) Delaware 33-0990159 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) 3125 Myers Street Riverside, California 92503 (Address of principal executive offices) (Zip code) Guarantee of Convertible Trust Preferred Securities of Fleetwood Capital Trust III (Title of the indenture securities) ================================================================================ 1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE: (A) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH IT IS SUBJECT.
- ------------------------------------------------ -------------------------------------------- Name Address - ------------------------------------------------ -------------------------------------------- Superintendent of Banks of the State of 2 Rector Street, New York, N.Y. New York 10006, and Albany, N.Y. 12203 Federal Reserve Bank of New York 33 Liberty Plaza, New York, N.Y. 10045 Federal Deposit Insurance Corporation Washington, D.C. 20429 New York Clearing House Association New York, New York 10005
(B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS. Yes. 2. AFFILIATIONS WITH OBLIGOR. IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH AFFILIATION. None. 16. LIST OF EXHIBITS. EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE 7A-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17 C.F.R. 229.10(d). 1. A copy of the Organization Certificate of The Bank of New York (formerly Irving Trust Company) as now in effect, which contains the authority to commence business and a grant of powers to exercise corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1 to Form T-1 filed with Registration Statement No. 33-29637.) 4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1 filed with Registration Statement No. 33-31019.) 6. The consent of the Trustee required by Section 321(b) of the Act. -2- 7. A copy of the latest report of condition of the Trustee published pursuant to law or to the requirements of its supervising or examining authority. -3- SIGNATURE Pursuant to the requirements of the Act, the Trustee, The Bank of New York, a corporation organized and existing under the laws of the State of New York, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in The City of New York, and State of New York, on the 11th day of December, 2001. THE BANK OF NEW YORK By: /s/ STACEY POINDEXTER ----------------------- Name: STACEY POINDEXTER Title: ASSISTANT TREASURER -4- EXHIBIT 6 CONSENT OF TRUSTEE Pursuant to the requirements of Section 321(b) of the Trust Indenture Act of 1939, we hereby consent that reports of examinations by Federal, State, Territorial, or District authorities may be furnished by such authorities to the Securities and Exchange Commission upon request therefor. THE BANK OF NEW YORK By: /s/ Stacey Poindexter ------------------------ STACEY POINDEXTER ASSISTANT TREASURER Dated: December 11, 2001 EXHIBIT 7 - -------------------------------------------------------------------------------- Consolidated Report of Condition of THE BANK OF NEW YORK of One Wall Street, New York, N.Y. 10286 And Foreign and Domestic Subsidiaries, a member of the Federal Reserve System, at the close of business March 31, 2001, published in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act.
Dollar Amounts In Thousands ASSETS Cash and balances due from depository institutions: Noninterest-bearing balances and currency and coin ................. $ 2,811,275 Interest-bearing balances .......................................... 3,133,222 Securities: Held-to-maturity securities ........................................ 147,185 Available-for-sale securities ...................................... 5,403,923 Federal funds sold and Securities purchased under agreements to resell ............................................... 3,378,526 Loans and lease financing receivables: Loans and leases held for sale ..................................... 74,702 Loans and leases, net of unearned income ........................................................... 37,471,621 LESS: Allowance for loan and lease losses ..................................................... 599,061 Loans and leases, net of unearned income and allowance ............................................. 36,872,560 Trading Assets ........................................................ 11,757,036 Premises and fixed assets (including capitalized leases) ............................................................ 768,795 Other real estate owned ............................................... 1,078 Investments in unconsolidated subsidiaries and associated companies ............................................... 193,126 Customers' liability to this bank on acceptances outstanding ........................................................ 592,118 Intangible assets Goodwill ........................................................... 1,300,295 Other intangible assets ............................................ 122,143 Other assets .......................................................... 3,676,375 =========== Total assets .......................................................... $70,232,359 =========== LIABILITIES Deposits: In domestic offices ................................................ $25,982,242 Noninterest-bearing ................................................ 10,586,346 Interest-bearing ................................................... 15,395,896 In foreign offices, Edge and Agreement subsidiaries, and IBFs ........................................... 24,862,377 Noninterest-bearing ................................................ 373,085 Interest-bearing ................................................... 24,489,292 Federal funds purchased and securities sold under agreements to repurchase ........................................... 1,446,874 Trading liabilities ................................................... 2,373,361 Other borrowed money: (includes mortgage indebtedness and obligations under capitalized leases) .......................................... 1,381,512 Bank's liability on acceptances executed and outstanding ........................................................ 592,804 Subordinated notes and debentures ..................................... 1,646,000 Other liabilities ..................................................... 5,373,065 ----------- Total liabilities ..................................................... $63,658,235 =========== EQUITY CAPITAL Common stock .......................................................... 1,135,284 Surplus ............................................................... 1,008,773 Retained earnings ..................................................... 4,426,033 Accumulated other comprehensive income ................................ 4,034 Other equity capital components ....................................... 0 ----------- Total equity capital .................................................. 6,574,124 ----------- Total liabilities and equity capital .................................. $70,232,359 ===========
I, Thomas J. Mastro, Senior Vice President and Comptroller of the above-named bank do hereby declare that this Report of Condition has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true to the best of my knowledge and belief. /s/ THOMAS J. MASTRO -------------------- Thomas J. Mastro, Senior Vice President and Comptroller We, the undersigned directors, attest to the correctness of this Report of Condition and declare that it has been examined by us and to the best of our knowledge and belief has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true and correct. /s/ THOMAS A. RENYI ------------------------------- THOMAS A. RENYI /s/ GERALD L. HASSELL ------------------------------- GERALD L. HASSELL /s/ ALAN R. GRIFFITH ------------------------------- ALAN R. GRIFFITH Directors - -------------------------------------------------------------------------------- EX-99.7 18 a2065672zex-99_7.txt EXHIBIT 99.7 EXHIBIT 99.7 LETTER OF TRANSMITTAL FLEETWOOD ENTERPRISES, INC. FLEETWOOD CAPITAL TRUST II AMENDED EXCHANGE OFFER OF - % CONVERTIBLE TRUST II PREFERRED SECURITIES DUE 2013 OF FLEETWOOD CAPITAL TRUST II, WHICH WILL BE REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, PRIOR TO CLOSING, FOR UP TO $86.25 MILLION IN AGGREGATE LIQUIDATION AMOUNT OF THE 6% CONVERTIBLE TRUST PREFERRED SECURITIES DUE 2028 OF FLEETWOOD CAPITAL TRUST AND AMENDED CASH OFFER OF - % CONVERTIBLE TRUST III PREFERRED SECURITIES DUE 2013 OF FLEETWOOD CAPITAL TRUST III - -------------------------------------------------------------------------------- THE EXCHANGE OFFER WAS LAUNCHED ON DECEMBER 5, 2001 AND AMENDED ON DECEMBER - , 2001. THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON JANUARY 4, 2002, UNLESS EXTENDED BY US (THE "EXPIRATION DATE"). TENDERS MAY BE WITHDRAWN PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE. - -------------------------------------------------------------------------------- DELIVERY TO: The Bank of New York, Exchange Agent BY REGISTERED BY FACSIMILE TRANSMISSION BY REGULAR MAIL AND CERTIFIED MAIL: (FOR ELIGIBLE INSTITUTIONS ONLY): OR OVERNIGHT COURIER, The Bank of New York (212) 815-6339 OR BY HAND: 101 Barclay Street--7E Attention: Ms. Carolle Montreuil The Bank of New York New York, New York 10286 FOR INFORMATION OR CONFIRMATION BY 101 Barclay Street--1st Floor Attention: Ms. Carolle Montreuil TELEPHONE CALL: New York, New York 10286 (212) 815-5920
BEFORE COMPLETING THIS LETTER OF TRANSMITTAL, YOU SHOULD READ THE LETTER OF TRANSMITTAL AND THE ACCOMPANYING INSTRUCTIONS CAREFULLY. Delivery of this instrument to an address other than as set forth above, or transmission of instructions via facsimile other than as set forth above, will not constitute a valid delivery. If a delivery is made to Fleetwood Enterprises, Inc. it will not be forwarded to the Bank of New York and therefore such delivery will not constitute a valid delivery. The undersigned acknowledges that he or she has received and reviewed the amended preliminary prospectus, dated December - , 2001 (the "Prospectus"), of Fleetwood Enterprises, Inc., a Delaware corporation ("Fleetwood"), Fleetwood Capital Trust II, a Delaware statutory business trust ("New Trust II," and together with Fleetwood, the "Company") and Fleetwood Capital Trust III, a Delaware statutory business trust ("New Trust III"), and this Letter of Transmittal (this "Letter"), which together constitute the Company's amended offer (the "Exchange Offer") to exchange an aggregate liquidation amount of New Trust II's - % Convertible Trust Preferred Securities due 2013 (the "Exchange Preferred Securities") for up to $86.25 million in aggregate liquidation amount of 6% Convertible Trust Preferred Securities due 2028 (the "Existing Preferred Securities") of Fleetwood Capital Trust (the "Existing Trust") held by the registered holders thereof (the "Holders"). Delivery of documents to the Depository Trust Company (the "Book-Entry Transfer Facility") does not constitute delivery to the Exchange Agent. For each Existing Preferred Security accepted for exchange, the Holder of such Existing Preferred Security will receive an Exchange Preferred Security having a liquidation amount equal to 44% of the liquidation amount of the surrendered Existing Preferred Security. The Exchange Preferred Securities will bear interest from the date of issuance. Accordingly, Holders of Exchange Preferred Securities on the relevant record date for the first interest payment date following the consummation of the Exchange Offer will receive interest accruing from the date of issuance. Existing Preferred Securities accepted for exchange will cease to accrue interest from and after the date of consummation of the exchange offer. Thus, holders of Existing Preferred Securities whose Existing Preferred Securities are accepted in the exchange will not receive any payment in respect of accrued but unpaid distributions on those Existing Preferred Securities through the date of consummation of the Exchange Offer. We are also offering investors the right to purchase up to an aggregate amount of $ - million in liquidation amount of - % Convertible Trust III Preferred Securities due - (the "Cash Offer Preferred Securities") for cash (the "Cash Offer"). The Cash Offer Preferred Securities and Exchange Preferred Securities constitute different series of trust preferred securities and are not fungible. See the section titled "Cash Offer for Cash Offer Preferred Securities," beginning on page of the Prospectus. This Letter is to be completed by a Holder of Existing Preferred Securities. A tender of Existing Preferred Securities is to be made by book-entry transfer to the account maintained by the Exchange Agent at the Book-Entry Transfer Facility pursuant to the procedures set forth in the section titled "The Exchange Offer--Procedures for Tendering Existing Preferred Securities," beginning on page of the Prospectus. Holders of Existing Preferred Securities who are unable to deliver confirmation of the book-entry tender of their Existing Preferred Securities into the Exchange Agent's account at the Book-Entry Transfer Facility (a "Book-Entry Confirmation") and all other documents required by this Letter to the Exchange Agent prior to 5:00 p.m., New York City Time, on the Expiration Date, must tender their Existing Preferred Securities according to the guaranteed delivery procedures set forth in the section titled "The Exchange Offer--Guaranteed Delivery Procedures," beginning on page of the Prospectus. The undersigned has completed the appropriate boxes below and signed this Letter to indicate the action the undersigned desires to take with respect to the Exchange Offer. The undersigned understands that acceptance of tendered Existing Preferred Securities by the Company for exchange will constitute a binding agreement between the undersigned and the Company upon the terms and subject to the conditions of the Exchange Offer. 2 List below the Existing Preferred Securities to which this Letter relates. If the space provided below is inadequate, the certificate numbers and liquidation amount of Existing Preferred Securities should be listed and attached on a separate signed schedule.
- ---------------------------------------------------------------------------------------------------- DESCRIPTION OF EXISTING PREFERRED SECURITIES - ---------------------------------------------------------------------------------------------------- AGGREGATE AGGREGATE LIQUIDATION LIQUIDATION AMOUNT OF AMOUNT OF NAME(S) AND ADDRESS(ES) OF EXISTING PREFERRED EXISTING PREFERRED REGISTERED HOLDER(S) SECURITIES SECURITIES (PLEASE FILL IN, IF BLANK) PRESENTLY HELD TENDERED* - ---------------------------------------------------------------------------------------------------- ---------------------------- ---------------------------- ---------------------------- ---------------------------- TOTAL - ----------------------------------------------------------------------------------------------------
* Unless otherwise indicated in this column, a Holder will be deemed to have tendered ALL of the Existing Preferred Securities represented by the Existing Preferred Securities indicated in column 2. SEE INSTRUCTIONS 1 AND 2. / / CHECK HERE IF TENDERED EXISTING PREFERRED SECURITIES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING: Name of Tendering Institution ______________________________________________ Account Number __________________ Transaction Code Number _________________ / / CHECK HERE IF TENDERED EXISTING PREFERRED SECURITIES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE THE FOLLOWING: Name(s) of Registered Holder(s) ____________________________________________ Window Ticket Number (if any) ______________________________________________ Date of Execution of Notice of Guaranteed Delivery _________________________ Name of Institution which Guaranteed Delivery ______________________________ For Book-Entry Transfer, Complete the Following: Account Number __________________ Transaction Code Number _________________ Please read the section titled "The Exchange Offer--Conditions for Completion of The Exchange Offer," beginning on page of the Prospectus. / / CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO. Name: ______________________________________________________________________ 3 Address: ___________________________________________________________________ If the undersigned is not a broker-dealer, the undersigned represents that it is not engaged in, and does not intend to engage in, a distribution of Exchange Preferred Securities. If the undersigned is a broker-dealer that will receive Exchange Preferred Securities for its own account in exchange for Existing Preferred Securities that were acquired as a result of market-making activities or other trading activities, it acknowledges that it will deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of such Exchange Preferred Securities; however, by so acknowledging and by delivering such a prospectus the undersigned will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. If the undersigned is a broker-dealer that will receive Exchange Preferred Securities, it represents that the Existing Preferred Securities to be exchanged for the Exchange Preferred Securities were acquired as a result of market-making activities or other trading activities. 4 PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY Ladies and Gentlemen: Upon the terms and subject to the conditions of the Exchange Offer, the undersigned hereby tenders to the Company the aggregate liquidation amount of Existing Preferred Securities indicated in this Letter of Transmittal. Subject to, and effective upon, the acceptance for exchange of the Existing Preferred Securities tendered hereby, the undersigned hereby sells, assigns and transfers to, or upon the order of, the Company all right, title and interest in and to such Existing Preferred Securities as are being tendered hereby. The undersigned hereby irrevocably constitutes and appoints the Exchange Agent as the undersigned's true and lawful agent and attorney-in-fact with respect to such tendered Existing Preferred Securities with full knowledge that the Exchange Agent also acts as an agent for the Company, with full power of substitution, among other things, to cause the Existing Preferred Securities to be assigned, transferred and exchanged. The undersigned hereby covenants, represents and warrants that: - the undersigned has full power and authority to tender, sell, assign and transfer the Existing Preferred Securities tendered hereby, and to acquire Exchange Preferred Securities issuable upon the exchange of such tendered Existing Preferred Securities; - when the Existing Preferred Securities are accepted for exchange, the Company will acquire good, marketable and unencumbered title thereto, free and clear of all security interests, liens, restrictions, charges, encumbrances, conditional sales agreements or other obligations relating to the sale or transfer of the Existing Preferred Securities, and not subject to any adverse claim when the same are accepted by the Company; - any Exchange Preferred Securities acquired in exchange for Existing Preferred Securities tendered hereby will have been acquired in the ordinary course of business of the person receiving such Exchange Preferred Securities, whether or not such person is the undersigned; - neither the Holder of such Existing Preferred Securities nor any such other person is participating in, intends to participate in or has an arrangement or understanding with any person to participate in the distribution of such Exchange Preferred Securities; - neither the Holder of such Existing Preferred Securities nor any such other person is an "affiliate" of the Company, as defined in Rule 405 under the Securities Act; - the undersigned agrees that tenders of Existing Preferred Securities pursuant to any of the procedures described in the accompanying instructions will constitute the undersigned's acceptance of the terms and conditions of the Exchange Offer; and - the undersigned has a "net long position," within the meaning of Rule 14e-4 promulgated under the Securities Exchange Act of 1934, in the Existing Preferred Securities or equivalent securities at least equal to the Existing Preferred Securities being tendered, and the tender of the Existing Preferred Securities complies with Rule 14e-4. The Exchange Preferred Securities issued pursuant to the Exchange Offer in exchange for the Existing Preferred Securities may be offered for resale, resold and otherwise transferred by any Holder thereof (other than any such Holder that is an "affiliate" of the Company within the meaning of Rule 405 under the Securities Act), without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that such Exchange Preferred Securities are acquired in the ordinary course of such Holder's business and such Holder has no arrangement with any person to participate in the distribution of such Exchange Preferred Securities. If the undersigned is not a broker-dealer, the undersigned represents that it is not engaged in, and does not intend to engage in, a 4 distribution of Exchange Preferred Securities and has no arrangement or understanding to participate in a distribution of Exchange Preferred Securities. If any Holder is an affiliate of the Company, is engaged in or intends to engage in or has any arrangement or understanding with respect to the distribution of the Exchange Preferred Securities to be acquired pursuant to the Exchange Offer, such Holder must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale transaction. If the undersigned is a broker-dealer that will receive Exchange Preferred Securities for its own account in exchange for Existing Preferred Securities, it represents that the Existing Preferred Securities to be exchanged for the Exchange Preferred Securities were acquired by it as a result of market-making activities or other trading activities and acknowledges that it will deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of such Exchange Preferred Securities; however, by so acknowledging and by delivering a prospectus meeting the requirements of the Securities Act, the undersigned will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. The undersigned will, upon request, execute and deliver any additional documents deemed by the Company to be necessary or desirable to complete the sale, assignment and transfer of the Existing Preferred Securities tendered hereby. All authority conferred or agreed to be conferred in this Letter and every obligation of the undersigned hereunder shall be binding upon the successors, assigns, heirs, executors, administrators, trustees in bankruptcy and legal representatives of the undersigned and shall not be affected by, and shall survive, the death or incapacity of the undersigned. This tender may be withdrawn only in accordance with the procedures set forth in the section titled "The Exchange Offer--Withdrawal Rights," beginning on page of the Prospectus. Subject to the terms and conditions of the Exchange Offer, as set forth in the Prospectus, we will accept up to $86.25 million in aggregate liquidation amount of Existing Preferred Securities that are validly tendered. If Existing Preferred Securities in an aggregate liquidation amount of more than $86.25 million are validly tendered, we will accept them for exchange on a pro rata basis, in an aggregate liquidation amount equal to (x) a fraction, the numerator of which is the aggregate liquidation amount of Existing Preferred Securities validly tendered for exchange by such Holder and the denominator of which is the aggregate liquidation amount of all Existing Preferred Securities validly tendered by all Holders, multiplied by (y) $86.25 million. Unless otherwise indicated herein in the box entitled "Special Issuance Instructions" below, please credit the account indicated above maintained at the Book-Entry Transfer Facility. THE UNDERSIGNED, BY COMPLETING THE BOX ENTITLED "DESCRIPTION OF EXISTING PREFERRED SECURITIES" ABOVE AND SIGNING THIS LETTER, WILL BE DEEMED TO HAVE TENDERED THE EXISTING PREFERRED SECURITIES AS SET FORTH IN SUCH BOX ABOVE. 5 - -------------------------------------------------------------------------------- SPECIAL ISSUANCE INSTRUCTION (SEE INSTRUCTIONS 2 AND 3) To be completed ONLY if Exchange Preferred Securities not accepted for exchange are to be returned by credit to an account maintained at the Book-Entry Transfer Facility other than the account indicated above. Issue: Exchange Preferred Securities and/or Existing Preferred Securities to: Name(s) ____________________________________________________________________ (PLEASE TYPE OR PRINT) ____________________________________________________________________________ (PLEASE TYPE OR PRINT) Address ____________________________________________________________________ ____________________________________________________________________________ (ZIP CODE) (Complete Substitute Form W-9) / / Credit unexchanged Existing Preferred Securities delivered by book-entry transfer to the Book-Entry Transfer Facility account set forth below. ____________________________________________________________________________ (BOOK-ENTRY TRANSFER FACILITY ACCOUNT NUMBER, IF APPLICABLE) IMPORTANT: THIS LETTER OR A FACSIMILE HEREOF, OR AN ELECTRONIC CONFIRMATION PURSUANT TO THE DEPOSITORY TRUST COMPANY'S ATOP SYSTEM (TOGETHER WITH A BOOK-ENTRY CONFIRMATION AND ALL OTHER REQUIRED DOCUMENTS OR THE NOTICE OF GUARANTEED DELIVERY) MUST BE RECEIVED BY THE EXCHANGE AGENT PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE. - -------------------------------------------------------------------------------- PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL CAREFULLY BEFORE COMPLETING ANY BOX ABOVE. 6 - -------------------------------------------------------------------------------- PLEASE SIGN HERE (TO BE COMPLETED BY ALL TENDERING HOLDERS) (COMPLETE ACCOMPANYING SUBSTITUTE FORM W-9 BELOW) x ---------------------------------------- ---------------------------- ---------------------------------------- ---------------------------- (SIGNATURE(S) OF OWNER(S)) (DATE)
Area Code and Telephone Number _____________________________________________ If a Holder is tendering any Existing Preferred Securities, this Letter must be signed by the registered Holder(s) as the name(s) appear(s) on the certificate(s) for the Existing Preferred Securities or by any person(s) authorized to become registered Holder(s) by endorsements and documents transmitted herewith. If signature is by a trustee, executor, administrator, guardian, officer or other person acting in a fiduciary or representative capacity, please set forth full title. SEE INSTRUCTION 2. Name(s): ___________________________________________________________________ ____________________________________________________________________________ (PLEASE TYPE OR PRINT) Capacity: __________________________________________________________________ Address: ___________________________________________________________________ ____________________________________________________________________________ (INCLUDING ZIP CODE) SIGNATURE GUARANTEE (IF REQUIRED BY INSTRUCTION 2) Signature(s) Guaranteed by an Eligible Institution:____________________________________________________ (AUTHORIZED SIGNATURE) ____________________________________________________________________________ (TITLE) ____________________________________________________________________________ (NAME AND FIRM) Dated: _____________________________________________________________________ - -------------------------------------------------------------------------------- 7 INSTRUCTIONS FORMING PART OF THE TERMS AND CONDITIONS OF THE AMENDED EXCHANGE OFFER OF - % CONVERTIBLE TRUST II PREFERRED SECURITIES DUE 2013 OF FLEETWOOD CAPITAL TRUST II, WHICH WILL BE REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, PRIOR TO CLOSING, FOR UP TO $86.25 MILLION IN AGGREGATE LIQUIDATION AMOUNT OF THE 6% CONVERTIBLE TRUST PREFERRED SECURITIES DUE 2028 OF FLEETWOOD CAPITAL TRUST AND AMENDED CASH OFFER OF - % CONVERTIBLE TRUST III PREFERRED SECURITIES DUE 2013 OF FLEETWOOD CAPITAL TRUST III 1. DELIVERY OF THIS LETTER; GUARANTEED DELIVERY PROCEDURES. This Letter, or an electronic confirmation pursuant to the Depository Trust Company's ATOP system, is to be completed by Holders of Existing Preferred Securities for tenders that are made pursuant to the procedures for delivery by book-entry transfer set forth in the section titled "The Exchange Offer--Procedures for Tendering Existing Preferred Securities," beginning on page of the Prospectus. Book-Entry Confirmation as well as a properly completed and duly executed Letter (or manually signed facsimile hereof), or an electronic confirmation pursuant to the Depository Trust Company's ATOP system, and any other required documents, including any required signature guarantees, must be received by the Exchange Agent at the address set forth herein on or prior to the Expiration Date, or the tendering Holder must comply with the guaranteed delivery procedures set forth below. The book-entry transfer of Existing Preferred Securities must be accompanied by an agent's message (an "Agent's Message") confirming that the Depository Trust Company has received express acknowledgment from the Holder that such Holder agrees to be bound by the Letter of Transmittal and that the Letter of Transmittal may be enforced against such Holder. Electronic confirmation pursuant to the Depository Trust Company's ATOP system must also include an express acknowledgment (an "Express Acknowledgment") by the Holder that such Holder has received and agreed to be bound by the Letter of Transmittal and that the Letter of Transmittal may be enforced against such Holder. Existing Preferred Securities tendered hereby must be in denominations of liquidation amount of $50 and any integral multiple thereof. Holders who cannot complete the procedure for book-entry transfer on a timely basis or who cannot deliver all other required documents to the Exchange Agent on or prior to the Expiration Date may tender their Existing Preferred Securities pursuant to the guaranteed delivery procedures set forth in the section titled "The Exchange Offer--Guaranteed Delivery Procedures," beginning on page of the Prospectus. Pursuant to such procedures, (i) such tender must be made through an Eligible Institution, (ii) prior to 5:00 p.m., New York City Time, on the Expiration Date, the Exchange Agent must receive from such Eligible Institution a properly completed and duly executed Letter (or a facsimile thereof), or an electronic confirmation pursuant to the Depository Trust Company's ATOP system, and Notice of Guaranteed Delivery, substantially in the form provided by the Company (by facsimile transmission, mail or hand delivery), setting forth the name and address of the Holder of Existing Preferred Securities and the amount of Existing Preferred Securities tendered, stating that the tender is being made thereby and guaranteeing that within three New York Stock Exchange, Inc. ("NYSE") trading days after the Expiration Date, a Book-Entry Confirmation and any other documents requested by this Letter, including any signature guarantees, an Agent's Message in the case of a book-entry transfer or an Express Acknowledgment in the case of a transfer through the ATOP system, will be deposited by the Eligible Institution with the Exchange Agent, and (iii) a Book-Entry Confirmation and all other documents required by this Letter, must be received by the Exchange Agent within three (3) NYSE trading days after the Expiration Date. 8 The delivery of the Existing Preferred Securities and all other required documents will be deemed made only when confirmed by the Exchange Agent. See the section titled "The Exchange Offer," beginning on page of the Prospectus. 2. SIGNATURES ON THIS LETTER; BOND POWERS AND ENDORSEMENTS; GUARANTEE OF SIGNATURES. If this Letter is signed by the registered Holder of the Existing Preferred Securities tendered hereby, the signature must correspond exactly with the name as it appears on a security position listing as the Holder of such Existing Preferred Securities in the Book-Entry Transfer Facility System without any change whatsoever. If any tendered Existing Preferred Securities are owned of record by two or more joint owners, all of such owners must sign this Letter. If any tendered Existing Preferred Securities are registered in different names, it will be necessary to complete, sign and submit as many separate copies of this Letter as there are different registrations. When this Letter is signed by the registered Holder or Holders of the Existing Preferred Securities specified herein and tendered hereby, no separate bond powers are required. If, however, the Exchange Preferred Securities are to be issued to a person other than the registered Holder, then separate bond powers are required. If this Letter or any bond powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing, and, unless waived by the Company, proper evidence satisfactory to the Company of their authority to so act must be submitted. Signatures on bond powers required by this Instruction 2 must be guaranteed by a firm which is a financial institution (including most banks, savings and loan associations and brokerage houses) that is a participant in the Securities Transfer Agents Medallion Program, the New York Stock Exchange Medallion Signature Program or the Stock Exchanges Medallion Program (each an "Eligible Institution"). Signatures on this Letter need not be guaranteed by an Eligible Institution, provided the Existing Preferred Securities are tendered: (i) by a registered Holder of Existing Preferred Securities (including any participant in the Book-Entry Transfer Facility system whose name appears on a security position listing as the Holder of such Existing Preferred Securities) who has not completed the box entitled "Special Issuance Instructions" on this Letter, or (ii) for the account of an Eligible Institution. 3. SPECIAL ISSUANCE INSTRUCTIONS. Holders tendering Existing Preferred Securities by book-entry transfer may request that Existing Preferred Securities not exchanged be credited to such account maintained at the Book-Entry Transfer Facility as such Holder may designate hereon. If no such instructions are given, such Existing Preferred Securities not exchanged will be credited to an account maintained with the Book-Entry Transfer Facility for the Existing Preferred Securities. In the case of issuance in a different name, separate bond powers with a guaranteed signature is required and the employer identification or social security number of the person named must also be indicated. 4. TAXPAYER IDENTIFICATION NUMBER. Federal income tax law generally requires that a tendering Holder whose Existing Preferred Securities are accepted for exchange must provide the Company (as payor) with such Holder's correct Taxpayer Identification Number ("TIN") on Substitute Form W-9 below, which in the case of a 9 tendering Holder who is an individual, is his or her social security number. If the Company is not provided with the current TIN or an adequate basis for an exemption from backup withholding, such tendering Holder may be subject to a $50 penalty imposed by the Internal Revenue Service. In addition, the Exchange Agent may be required to withhold a portion of the amount of any reportable payments made after the exchange to such tendering Holder of Exchange Preferred Securities. If backup withholding results in an overpayment of taxes, a refund may be obtained provided the required information is furnished to the Internal Revenue Service. Exempt Holders of Existing Preferred Securities (including, among others, all corporations and certain foreign individuals) are not subject to these backup withholding and reporting requirements. See the attached "Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9" (the "W-9 Guidelines") for additional instructions. To prevent backup withholding, each tendering Holder of Existing Preferred Securities must provide its correct TIN by completing the Substitute Form W-9 set forth below, certifying, under penalties of perjury, that the TIN provided is correct (or that such Holder is awaiting a TIN), that the holder is a U.S. person (including a U.S. resident alien), and that (i) the Holder is exempt from backup withholding, (ii) the Holder has not been notified by the Internal Revenue Service (the "IRS") that such Holder is subject to backup withholding as a result of a failure to report all interest or dividends or (iii) the IRS has notified the Holder that such Holder is no longer subject to backup withholding. If the tendering Holder of Existing Preferred Securities is a nonresident alien or foreign entity not subject to backup withholding, such Holder must give the Exchange Agent a completed Form W-8BEN or such other Form W-8 as may be applicable. These forms may be obtained from the Exchange Agent. If the Existing Preferred Securities are in more than one name or are not in the name of the actual owner, such Holder should consult the W-9 Guidelines for information on which TIN to report. If such Holder does not have a TIN, such Holder should consult the W-9 Guidelines for instructions on applying for a TIN, check the box in Part 3 of the Substitute Form W-9 and write "applied for" in lieu of its TIN. Note: Checking this box and writing "applied for" on the form means that such Holder has already applied for a TIN or that such Holder intends to apply for one in the near future. If the box in Part 3 of the Substitute Form W-9 is checked, the Exchange Agent will retain a portion of the reportable payments made to a Holder during the sixty (60) day period following the date of the Substitute Form W-9. If the Holder furnishes the Exchange Agent with his or her TIN within sixty (60) days of the date of the Substitute Form W-9, the Exchange Agent will remit such amounts retained during such sixty (60) day period to such Holder and no further amounts will be retained or withheld from payments made to the Holder thereafter. If, however, such Holder does not provide its TIN to the Exchange Agent within such sixty (60) day period, the Exchange Agent will remit such previously withheld amounts to the IRS as backup withholding and will withhold a portion of all reportable payments to the Holder thereafter until such Holder furnishes its TIN to the Exchange Agent. 5. TRANSFER TAXES. The Company will pay all transfer taxes, if any, applicable to the transfer of Existing Preferred Securities to it or its order pursuant to the Exchange Offer. If, however, Exchange Preferred Securities and/or substitute Existing Preferred Securities not exchanged are to be registered or issued in the name of, any person other than the registered Holder of the Existing Preferred Securities tendered hereby, or if tendered Existing Preferred Securities are registered in the name of any person other than the person signing this Letter, or if a transfer tax is imposed for any reason other than the transfer of Existing Preferred Securities to the Company or its order pursuant to the Exchange Offer, the amount of any such transfer taxes (whether imposed on the registered Holder or any other persons) will be payable by the tendering Holder. If satisfactory evidence of payment of such taxes or exemption therefrom is not submitted herewith, the amount of such transfer taxes will be billed directly to such tendering Holder. 6. WAIVER OF CONDITIONS. The Company reserves the absolute right to waive or amend, in its discretion, in whole or in part, at any time prior to 5:00 p.m., New York City Time, on the Expiration Date, satisfaction of any or all conditions enumerated in the Prospectus, which may result in an extension of the period of time for which the Exchange Offer is kept open. 10 7. NO CONDITIONAL TENDERS. No alternative, conditional, irregular or contingent tenders will be accepted. All tendering Holders of Existing Preferred Securities, by execution of this Letter, shall waive any right to receive notice of the acceptance of their Existing Preferred Securities for exchange. Neither the Company, the Exchange Agent nor any other person is obligated to give notice of any defect or irregularity with respect to any tender of Existing Preferred Securities nor shall any of them incur any liability for failure to give any such notice. 8. WITHDRAWAL RIGHTS. Tenders of Existing Preferred Securities may be withdrawn at any time prior to 5:00 p.m., New York City Time, on the Expiration Date. For a withdrawal of a tender of Existing Preferred Securities to be effective, a written notice of withdrawal must be received by the Exchange Agent at the address set forth above or, in the case of Eligible Institutions, at the facsimile number above, prior to 5:00 p.m., New York City Time, on the Expiration Date. Any such notice of withdrawal must (i) specify the name of the person having tendered the Existing Preferred Securities to be withdrawn (the "Depositor"), (ii) in the case of a tender by book-entry transfer, specify the name and number of the account at the Book-Entry Transfer Facility to be credited with the withdrawn Existing Preferred Securities and otherwise comply with the procedures of such facility, (iii) contain a statement that such Holder is withdrawing his election to have such Existing Preferred Securities exchanged, (iv) be signed by the Holder in the same manner as the original signature on the Letter by which such Existing Preferred Securities were tendered (including any required signature guarantees) or be accompanied by documents of transfer to have the Trustee with respect to the Existing Preferred Securities register the transfer of such Existing Preferred Securities in the name of the person withdrawing the tender, and (v) specify the Existing Preferred Securities to be withdrawn, if not all of the Existing Preferred Securities tendered by the Holder. All questions as to the validity, form and eligibility (including time of receipt) of such notices will be determined by the Company, whose determination shall be final and binding on all parties. Any Existing Preferred Securities so withdrawn will be deemed not to have been validly tendered for exchange for purposes of the Exchange Offer and no Exchange Preferred Securities will be issued with respect thereto unless the Existing Preferred Securities so withdrawn are validly retendered. Any Existing Preferred Securities that have been tendered for exchange but which are not exchanged for any reason will be credited into the Exchange Agent's account at the Book-Entry Transfer Facility pursuant to the book-entry transfer procedures set forth in the section titled "The Exchange Offer--Procedures for Tendering Existing Preferred Securities," beginning on page of the Prospectus, and such Existing Preferred Securities will be credited to an account maintained with the Book-Entry Transfer Facility for the Existing Preferred Securities as soon as practicable after withdrawal, rejection of tender or termination of the Exchange Offer. Properly withdrawn Existing Preferred Securities may be retendered by following the procedures described above at any time prior to 5:00 p.m., New York City Time, on the Expiration Date. Tenders of Existing Preferred Securities may also be withdrawn after the expiration of 40 business days from the commencement date of the Exchange Offer if a tender has not yet been accepted for exchange. 9. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions relating to the procedure for tendering, as well as requests for additional copies of the Prospectus and this Letter, and requests for Notices of Guaranteed Delivery and other related documents may be directed to the Information Agent, at the address and telephone number set forth on page 13 of this Letter. 11 TO BE COMPLETED BY ALL TENDERING HOLDERS (SEE INSTRUCTION 4) PAYOR'S NAME: - --------------------------------------------------------------------------------------------------------------- SUBSTITUTE PART 1--PLEASE ------------------------- FORM W-9 PROVIDE YOUR TIN IN Name Department of the Treasury THE BOX AT RIGHT AND ------------------------- Internal Revenue Service CERTIFY BY SIGNING Social Security Number Payor's Request for Taxpayer AND DATING BELOW. OR Identification Number ("TIN") ------------------------- and Certification Employer Identification Number ------------------------------------------------------------------ PART 2 CERTIFICATION--Under penalty of perjury, I certify that: (1) the number shown on this form is my correct TIN (or I am waiting for a number to be issued to me); (2) I am not subject to backup withholding either because: (a) I am exempt from backup withholding, or (b) I have not been notified by the Internal Revenue Service (the "IRS") that I am subject to backup withholding as a result of a failure to report all interest or dividends, or (c) the IRS has notified me that I am no longer subject to backup withholding; (3) I am a U.S. person (including U.S. resident alien); and (4) Any other information provided on this form is true and correct. ------------------------------------------------------------------ PART 3 Awaiting TIN / / -------------------------------------------------------------------------------------------------------------- CERTIFICATE INSTRUCTIONS--You must cross out item (2) above if you have been notified by the IRS that you are subject to backup withholding because of underreporting of interest or dividends on your tax return and you have not been notified by the IRS that you are no longer subject to backup withholding. The Internal Revenue Service does not require your consent to any provision of this document other than the certifications required to avoid backup withholding. Signature Date --------------------------------------------- ----------------------- --------------------------------------------------------------------------------------------------------------
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 3 OF SUBSTITUTE FORM W-9 - --------------------------------------------------------------------------------------------------------------- CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER I certify under penalties of perjury that a taxpayer identification number has not been issued to me, and either (a) I have mailed or delivered an application to receive a taxpayer identification number to the appropriate Internal Revenue Service Center of Social Security Administration Office or (b) I intend to mail or deliver an application in the near future. I understand that if I do not provide a taxpayer identification number by the time of the exchange, a portion of all reportable payments made to me thereafter will be withheld until I provide a number. Signature Date --------------------------------------------- ----------------------- --------------------------------------------------------------------------------------------------------------
12 THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS: The Bank of New York BY REGISTERED AND CERTIFIED MAIL: BY REGULAR MAIL OR OVERNIGHT COURIER, OR BY HAND: The Bank of New York The Bank of New York 101 Barclay Street--7E 101 Barclay Street--1st Floor New York, New York 10286 New York, New York 10286 Attention: Ms. Carolle Montreuil
By Facsimile Transmission (for Eligible Institutions only): (212) 815-6339 Attention: Ms. Carolle Montreuil For Information or Confirmation by Telephone call: (212) 815-5920 Any questions or requests for additional copies of the Prospectus or the Letter of Transmittal may be directed to the Information Agent. A holder of Existing Preferred Securities may also contact D.F. King & Co., Inc. at the telephone numbers set forth below, or such holder's broker, dealer, commercial bank, trust company or other nominee, for assistance regarding the Exchange Offer. THE INFORMATION AGENT FOR THE EXCHANGE OFFER IS: D.F. King & Co., Inc. 77 Water Street New York, New York 10005 Banks and Brokers Call Collect: (212) 269-5550 All Others, Call Toll-Free: (800) 928-0153 13 -----END PRIVACY-ENHANCED MESSAGE-----