10-K

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549
FORM 10-K

(Mark One) x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the fiscal year ended April 24, 2005
	OR
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________________ to __________________

Commission file number 1-7699

FLEETWOOD ENTERPRISES, INC.

(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

Delaware	95-1948322
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)
3125 Myers Street, Riverside, California (Address of Principal Executive Offices)	92503-5527 (Zip Code)

Registrant’s telephone number, including area code: (951) 351-3500

Securities registered pursuant to Section 12(b) of the Act:

	Title of each class	Name of each exchange on which registered
Common stock, $1 par value		New York Stock Exchange, Inc. Pacific Exchange, Inc.
Preferred share purchase rights		New York Stock Exchange, Inc. Pacific Exchange, Inc.

Securities registered pursuant to Section 12(g) of the Act:

None

(Title of class)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of the Form 10-K or any amendment to this Form 10-K. o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes x No

The aggregate market value of common stock held by non-affiliates computed by reference to the price at which the common stock was last sold as of the last business day of the registrant’s most recently completed second fiscal quarter was $692,099,454.

Common stock outstanding on July 1, 2005: 56,132,690 shares

Documents incorporated by reference:

To the extent indicated herein, portions of the registrant’s Proxy Statement with respect to its 2005 Annual Meeting, which will be filed no later than 120 days after the close of the registrant’s fiscal year ended April 24, 2005, are incorporated by reference into Part III, Items 10, 11, 12 and 13 of this Form 10-K.

FLEETWOOD ENTERPRISES, INC.

PART I

Unless otherwise indicated, “we,” “us,” “our,” “Fleetwood,” the “Company” and similar terms refer to Fleetwood Enterprises, Inc. Throughout this report, we use the term “fiscal,” as it applies to a year, to represent the fiscal year ending on the last Sunday in April of that year.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Statements used in this report, including the sections entitled “Business Outlook” and “Risk Factors,” that relate to future plans, events, financial results or performance are forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995. These statements are based on the beliefs of the Company’s management as well as assumptions made by it, and information currently available to it. 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 forward-looking 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 factors listed under “Risk Factors,” as well as elsewhere in this report and in other SEC filings. These risk factors include, without limitation, the following items:

·the cyclical nature of both the manufactured housing and recreational vehicle industries;

·ongoing weakness in the manufactured housing market;

·continued acceptance of Fleetwood’s products;

·the potential impact on demand for Fleetwood’s products as a result of declining consumer confidence;

·the effect of global tensions on consumer confidence;

·expenses and uncertainties associated with the manufacturing and introduction of new products;

·the future availability of manufactured housing retail financing as well as housing and RV wholesale financing;

·exposure to interest rate and market changes affecting certain assets and liabilities;

·availability and pricing of raw materials;

·changes in retail inventory levels in the manufactured housing and recreational vehicle industries;

·competitive pricing pressures;

·the ability to attract and retain quality dealers, executive officers and other personnel;

·the Company’s ability to successfully meet its ongoing obligations with respect to Section 404 of the Sarbanes-Oxley Act; and

·the Company’s ability to obtain financing needed in order to execute its business strategies.

Although management believes that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements, and actual results, events or performance may differ materially. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this report. Fleetwood undertakes no obligation to publicly release the results of any revisions to these forward-looking statements that may arise from changing circumstances or unanticipated events.

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Item 1. Business

General

Fleetwood is one of the nation’s leaders in producing both recreational vehicles and manufactured housing.

In fiscal 2005, we sold 50,746 recreational vehicles. In calendar 2004, we held a 15.3 percent share of the overall recreational vehicle market, consisting of a 17.9 percent share of the motor home market and a 14.4% share of the towable market. The towable market is represented by an 11.7 percent share of the travel trailer market and a 38.2 percent share of the folding trailer market. For calendar year 2004, our folding trailer division was the leader in market share in that segment, while our motor home business was in second position and the travel trailer division in third position.

For fiscal 2005, we shipped 23,962 manufactured homes and were the second largest producer of HUD-Code homes in the United States in terms of units sold. HUD-Code homes are homes manufactured in accordance with regulations published by the Federal Department of Housing and Urban Development. In calendar 2004, the manufactured housing industry had a 7.5 percent share of the single-family housing starts. We had a 17.6 percent share of the manufactured housing wholesale market.

We operate four supply companies that provide components for the recreational vehicle and housing operations, while also generating outside sales.

Our business began in 1950 producing travel trailers and quickly evolved to what are now termed manufactured homes. We re-entered the recreational vehicle business with the acquisition of a travel trailer operation in 1964. Our manufacturing activities are conducted in 16 states within the U.S., and to a much lesser extent in Canada. We distribute our manufactured products primarily through a network of independent dealers throughout the United States and Canada. In fiscal 1999, we entered the manufactured housing retail business through a combination of key acquisitions and internal development of new retail sales centers. We later established a financial services subsidiary to provide finance and insurance products to the retail operation. In March 2005, we announced that the retail and finance businesses were to be sold so we could focus on our core businesses, RV and housing manufacturing. The retail and finance businesses have been presented as discontinued operations throughout this annual report on Form 10-K.

This annual report, and each of our other periodic and current reports, including any amendments, are available, free of charge, on our website, www.fleetwood.com, as soon as reasonably practicable after such material is electronically filed with, or furnished to, the Securities and Exchange Commission. The information contained on our website is not incorporated by reference into this annual report on Form 10-K and should not be considered part of this report.

The following table sets forth revenues by business segment and the relative contribution of these revenues to total revenues for the past three fiscal years. Information with respect to operating income (loss) and identifiable assets by industry segment is shown in the Notes to Consolidated Financial Statements in Item 8 of Part II of this Form 10-K.

	Fiscal years ended April
	2005			%		2004			%		2003			%
	(Amounts in thousands)
Recreational vehicles:
Motor homes	$	1,097,091		46	%	$	1,104,624		47	%	$	918,742		44	%
Towables	562,791			24		674,609			28		563,853			27
	1,659,882			70		1,779,233			75		1,482,595			71
Housing Group	785,547			33		657,388			28		667,087			32
Supply Group	57,020			2		41,120			2		37,178			2
Intercompany sales	(127,737		)	(5	)	(117,135		)	(5	)	(115,903		)	(5	)
	$	2,374,712		100	%	$	2,360,606		100	%	$	2,070,957		100	%

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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 motorized mobile unit that can be used as a temporary dwelling during vacation and camping trips as well as to support a variety of lifestyle activities, including outdoor recreation such as hunting and fishing, both on and off road racing and tailgating at assorted local and national events. In many cases a motor home is utilized for extended travel and is often considered a second home. It consists of a truck or bus chassis with a living unit built onto it. The driver’s compartment (on Class A models) and living area are designed and produced by the recreational vehicle manufacturer. Motor homes are classified by the Recreation Vehicle Industry Association (RVIA) into three categories: Class A, Class B and Class C. Class A motor homes are constructed directly on medium-duty truck chassis that include the engine and drive train components. They are fully self-contained, typically including a driver area and kitchen, dining, bathroom 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 DVD player. Approximately 46 percent of Class A units are diesel-powered. Class B models, which comprise a small segment of the market, are panel-type trucks to which kitchen, sleeping and toilet facilities are added. Many of these models also have a top extension added to them for more headroom. Class C models are classified as mini motor homes, which are 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, but the chassis manufacturer’s original dashboard and front cab section are retained.

RVIA reported factory shipments of 46,300 Class A motor homes and 23,000 Class C motor homes for calendar 2004. These figures compare with shipments of 41,500 Class A motor homes and 18,300 Class C motor homes in calendar 2003. There are numerous competitors in this industry. However, the five largest manufacturers, including Fleetwood, represented approximately 69 percent of the combined Class A and Class C motor home retail market in calendar 2004.

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, kitchen, dining 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. Fifth-wheel trailers extend over the bed of their tow vehicles and are hitched to the bed of the truck. For calendar 2004, RVIA reported factory shipments of 163,600 conventional trailers and 91,000 fifth-wheel trailers, compared with shipments of 139,800 and 74,600, respectively, for calendar 2003. The five largest manufacturers in calendar 2004, including Fleetwood, represented approximately 70 percent of the total travel trailer retail market. 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 34,100 folding trailers in calendar 2004, in contrast to 35,700 shipments in calendar 2003. Of all of the markets for recreational vehicles, the folding trailer market is the most concentrated, with the five largest manufacturers, including Fleetwood, holding 89 percent of the retail market in calendar 2004.

Sales of recreational vehicles tend to be a leading economic indicator and, along with the stock market, recreational vehicle shipment growth rebounded post September 11, 2001, stimulated by low interest rates and a heightened awareness by consumers of the benefits of the RV lifestyle. Based on recent

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RVIA forecasts, recreational vehicle shipments are expected to decrease about 4 percent during calendar 2005 from the quarter-century peak set in calendar 2004 of 370,000 units. We believe that a decline in consumer confidence resulting from international hostilities, high gas prices and an uncertain stock market could put significant downward pressure on the current calendar year industry forecast. 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 the price of fuel. Retail financing conditions have historically been less of a factor affecting the recreational vehicle industry than the manufactured housing business. Purchasers of recreational vehicles generally have proven to have an overall greater ability to obtain necessary credit than customers of the manufactured housing industry.

Our Recreational Vehicle Business

We have been one of the nation’s leaders in producing recreational vehicles since 1973 and distribute our products through a network of approximately 1,300 independent retailers in 49 states and Canada. In calendar 2004, approximately 83 percent of our recreational vehicles were shipped to retailers in the 25 states with the highest retail sales, including California, Texas, Florida, Michigan and Ohio. We were the market share leader in terms of units sold in three of the top 25 recreational vehicle states. Our retail market share and industry unit sales for each of the three segments in which we participated for the last three calendar years are as follows:

	Calendar Year
	2004				2003				2002
	Industry Retails	Fleetwood Share			Industry Retails	Fleetwood Share			Industry Retails	Fleetwood Share
Motor homes
Class A	41,482		20.9	%	39,489		21.2	%	36,880		20.8	%
Class C	19,656		11.7		17,016		9.9		15,532		10.1
Total motor homes	61,138		17.9		56,505		17.8		52,412		17.7
Travel trailers
Conventional	144,917		14.2		129,882		14.8		117,515		16.5
Fifth-wheel	80,141		7.0		68,904		8.7		60,692		7.4
Total travel trailers	225,058		11.7		198,786		12.7		178,207		13.4
Folding trailers	28,696		38.2		30,920		41.6		36,064		42.7

Source: Statistical Surveys, Inc.

Fleetwood’s overall motor home market share has consistently increased over the last three calendar years. This has been driven mainly by new, innovative Class A diesel products and high-line Class A gas products partially offset by market share erosion in entry and mid-level Class A gas products. Additionally, the Company has renewed its focus on the Class C market as evidenced by the market share growth during calendar 2004. Our continued focus on supplying the marketplace with innovative products with the appropriate value proposition has resulted in our market share improvements. Such innovations in the last twelve months include the introduction of an 84 inch ceiling in several additional product lines and the introduction of a full-wall slide motor home. Our Class C market share has improved significantly from 2003 to 2004, primarily due to refocusing efforts to expand Class C distribution through our existing dealers and commercial rental customers. In addition, we have recently added capacity for East Coast production of Class C products in order to increase our market share in that region.

Fleetwood is represented in motor homes by the Jamboree, Tioga, Terra, Fiesta, Flair, Storm, Bounder, Southwind, Pace Arrow, Bounder Diesel, Expedition, Discovery, Providence, Excursion, Revolution, American Tradition, American Eagle and American Heritage brands. Our Class A motor homes range in length from 26 to 45 feet and have an average retail price of approximately $168,000. Class C units range in length from

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22 to 31 feet and have an average retail price of approximately $74,000. For calendar 2004, four of the industry’s ten top-selling Class A motor homes were manufactured by Fleetwood, as well as two of the ten top-selling Class C motor homes.

Over the past three calendar years, Fleetwood’s travel trailer market share has declined from 13.4 percent to 11.7 percent due to increased competition in the travel trailer industry, our lack of participation in a few growing market segments, including the luxury and hybrid segments, and declining volume in our core Prowler, Terry, and Wilderness products due to the lack of acceptance by the customer of the products’ value proposition. In early fiscal 2004, we entered the sports utility segment with our Gearbox activity support vehicle, as well as, in fiscal 2005, introduced several new, innovative floorplans in the hybrid and ultralight product categories. This summer we will be introducing completely redesigned core products that have enhanced features and benefits at a more competitive price. We believe that with these new products, combined with more under development, our market share position should improve.

We manufacture a variety of travel trailers under the Pioneer, Mallard, Wilderness, Prowler, Terry, Gearbox, Pegasus, Orbit, Pride, and Triumph nameplates. Our travel trailers are generally 8 feet wide, vary in length from 18 to 39 feet (including trailer hitch) and have an average retail price of approximately $24,000. For calendar 2004, two of the industry’s ten top-selling travel trailers were manufactured by us.

We are the largest manufacturer of folding trailers, which we sell under the Fleetwood brand name. Our folding trailers range in length from 17 to 27 feet when deployed, and have an average retail price of approximately $9,140. For calendar 2004, three of the industry’s ten top-selling folding trailer brands were manufactured by us.

Manufactured Housing

Industry Overview

A manufactured home is a single-family house that is constructed in accordance with HUD construction and safety standards in a factory environment rather than at the home site. There are two basic categories of manufactured housing: single-section and multi-section. The manufactured housing industry grew significantly from 1991 to 1998, but has retrenched since then. According to the Manufactured Housing Institute (MHI), domestic shipments increased from 170,713 homes in calendar 1991 to 372,843 homes in calendar 1998, before declining to 130,802 in calendar 2004. In addition, the manufactured housing industry’s share of new single-family housing starts increased significantly, from about 17 percent in calendar 1991 to 24 percent in calendar 1997, before declining to 7.5 percent in calendar 2004. We believe that the growth during the 1990s resulted from the increased availability of financing and also in large part from increasing consumer acceptance of manufactured housing, which were driven by the following:

·improved product quality and design, and enhanced features;

·a significant difference in the average price per square foot between site-built housing and manufactured housing;

·favorable demographic and regional economic trends;

·increased attractiveness of financing terms available to manufactured housing dealers and consumers in 1991 through 1998; and

·liberal credit underwriting due to competition among retail lenders for more volume.

Today’s manufactured homes offer customers quality similar to many site-built homes at a 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 producers

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generally build with the same materials as site-built homes. In addition, many features associated with 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. Also, optional features include such amenities as fireplaces, wet bars and spa tubs, as well as retailer-installed options such as central air conditioning, garages and furniture packages.

As acceptance of manufactured housing has increased among higher-income buyers and financing for single-section homes has become more scarce, demand has shifted toward larger, multi-section homes, which accounted for 74 percent of industry shipments in calendar 2004, up from 47 percent in calendar 1991. This contributed to an overall increase in total retail sales from approximately $4.7 billion in calendar 1991 to more than $7.2 billion in calendar 2004.

More than half 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. Due to zoning restrictions, most manufactured housing is sold in rural regions and towns outside of major urban areas.

The manufactured housing industry is cyclical, and is affected by general economic conditions and consumer confidence. For the last four years, the industry has been burdened by excess manufacturing and retailing capacity, high dealer inventories, competition from repossessed units being resold at greatly distressed prices and a slowing of retail sales. This imbalance between capacity and inventories on one hand and retail demand on the other has largely been caused by the reversal of loose credit practices, which artificially stimulated demand during the late 1990s until replaced by the current restrictive financing conditions. Prior rapid overexpansion of the retail distribution network and dealers’ inflated expectations of future business also contributed to the imbalance.

With respect to the retail financing of manufactured housing, interest rates are generally higher and the terms of loans shorter than for site-built homes. In addition, some lenders have stopped extending loans to finance the purchase of manufactured homes, including four national lenders that have exited the business since the last half of fiscal 2002. This has had the effect of making financing for manufactured homes even more expensive and more difficult to obtain relative to financing for site-built homes, which in turn has enjoyed a period of sustained low interest rates and generous credit requirements.

Retail financing was a significant factor in the expansion of the industry, particularly toward the latter part of the 1990’s growth cycle, when competitive retail lenders employed relatively liberal underwriting standards to capture more business. Although a major catalyst in fueling higher sales volume through 1998, the lower standards have given rise to an abnormally high rate of defaults and repossessions. In turn, retail lenders have responded by sharply curtailing the availability of financing to our retail customers and elevating underwriting standards to overly restrictive levels. At the same time, manufacturers have found themselves competing for the sale of new homes with resellers of these repossessed homes. Due to the difficult environment for chattel financing nationwide, the industry has been trending toward more “land and home” or mortgage-type financing. Chattel financing is personal property financing secured only by the home and not by the underlying land on which the home is sited.

Industry shipments in calendar years 2002 and 2003 were negatively impacted by legislation passed in Texas, a state which accounted for 11 percent of industry shipments in calendar year 2001, that required mortgage-type or “land and home” financing instead of chattel financing, which had been the industry norm, especially for the purchase of single-section homes. The chattel financing process is simpler for customers, well understood by dealers, and faster to process than mortgage-type lending. As a result, industry shipments in Texas fell 28 percent in 2002 and 30 percent in 2003, compared to a drop in shipments for the industry nationwide of 13 percent and 22 percent, respectively. New legislation was passed in Texas in 2003 that substantially eased the negative impact on chattel financing, although the market has remained depressed and the closures of plants and dealers seem to have precluded a quick recovery.

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Another industry development affecting wholesale sales volume was the announcement in March 2002 by Conseco Finance Servicing Corp. (Conseco), the largest wholesale floorplan lender, that it would stop approving and funding new floorplan requests. Then another large wholesale lender, Deutsche Financial Services (Deutsche), announced in October 2002 it was exiting the business. Independent retailers generally finance their inventory purchases with wholesale floorplan financing provided by lending institutions. Despite some disruption to the industry, generally there has been sufficient wholesale floorplan financing available through other lenders to fill the vacuum created by the Conseco and Deutsche departures. More recently, the manufactured housing finance groups of two other national lenders, Transamerica and Bombardier, have been acquired by General Electric Corp., although this has not yet had an impact on lending volumes.

Industry manufacturing and retail capacity have been reduced significantly in response to the financing environment and the related inventory imbalance. More than half of the retail lending capacity available in 2000 has exited the business including, most recently, Chase Manhattan Mortgage Finance (Chase), which announced its decision to exit the industry in May 2004. Although a number of significant lenders have entered the market since late 2003, the volume of financing is still insufficient and has not yet translated into higher shipments. Ultimately, the reasonable availability of retail financing will be the key to an industry recovery. MHI projects that calendar 2005 will, however, show a 6 percent improvement over 2004 shipments.

Our Manufactured Housing Business

We are the second largest producer of HUD-Code manufactured housing in the United States in terms of units shipped by us to dealers, and we distribute our products through a network of approximately 1,320 dealers in 46 states. At the end of fiscal 2005, we operated 135 retail locations under the name Fleetwood Retail Corp., with the balance owned and operated by independent dealers. In calendar 2004, approximately 82 percent of our manufactured homes were shipped to dealers in the 20 states with the highest shipments to dealers, including Florida, Texas, California, North Carolina and Tennessee. We are a leading producer of both single-section and multi-section manufactured homes, and our share of the manufactured housing market, based upon shipments to dealers, was 17.6 percent in calendar 2004.

	Calendar Year Shipments
	2004					2003					2002
	Shipments			%		Shipments			%		Shipments			%
Industry shipments
Single-section		33,985		26	%		26,238		20	%		37,155		22	%
Multi-section		96,817		74			104,699		80			131,336		78
Total		130,802		100	%		130,937		100	%		168,491		100	%
Fleetwood shipments
Single-section		7,717		33	%		3,393		17	%		4,901		20	%
Multi-section		15,327		67			16,260		83			20,131		80
Total		23,044		100	%		19,653		100	%		25,032		100	%
Fleetwood share of shipments
Single-section		22.7	%				12.9	%				13.2	%
Multi-section		15.8					15.5					15.3
Total		17.6	%				15.0	%				14.9	%

Source: Manufactured Housing Institute

We held a 22.7 percent share of the single-section manufactured housing market in calendar 2004, as measured by shipments to dealers. Our single-section homes generally range in size from 530 square feet to 1,290 square feet. The average single-section home retailed for approximately $27,700 (excluding land

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costs) and represented approximately 33 percent of our manufactured housing unit shipments in calendar 2004. Our single-section homes are designed for the affordable housing market, which includes first-time, retiree and value-oriented buyers. We had a disproportionately high share of the increase in single-section sales in calendar 2004 because of our relationships with government agencies on emergency relief projects and manufactured housing community operators.

We held a 15.8 percent share of the multi-section manufactured housing market in calendar 2004, as measured by shipments to dealers. Our multi-section homes, which generally range in size from 750 square feet to 3,420 square feet, sold for an average retail price of approximately $52,000 (excluding land costs) and represented approximately 67 percent of our manufactured housing unit shipments in calendar 2004.

Supply Operations and Other Businesses

During fiscal 2005, our supply manufacturing operations included two fiberglass and manufacturing companies producing various composite plastic components and a lumber re-manufacturing operation. The lumber operation was sold in the third quarter of fiscal 2005. These businesses provide a reliable source of quality components for our principal manufacturing businesses, while also generating outside sales. In fiscal 2005, approximately 36 percent of the product volume of these manufacturing operations was used internally, and the remaining 64 percent was sold to third parties. The supply operations also include a lumber brokerage operation and a component import distribution business, each of which provides our manufactured housing and recreational vehicle businesses with reliable sources of quality raw materials and components.

Discontinued Operations

Retail Housing and Financial Services

The manufactured housing retail industry generated over $7.1 billion in sales in calendar 2004 and is highly fragmented, with approximately 8,000 retailers. Most manufactured housing dealers are independently owned by private companies operating a single sales center. Until 1997, Fleetwood and most other manufacturers, with the exception of a few vertically integrated entities, marketed their manufactured homes exclusively through independent dealers. At that time, however, certain manufactured housing producers began to acquire dealers with the objective of exercising greater control over retail distribution and upgrading marketing and merchandising practices, including brand name development. Additionally, some financial consolidators and residential developers entered the manufactured housing business by acquiring dealers.

In the latter part of calendar 1997 and during the first half of calendar 1998, two competing manufacturers acquired several of our important dealers, which collectively accounted for about 25 percent of our distribution network in terms of volume. In order to protect our distribution channels and to take advantage of business opportunities in the manufactured housing retail industry, in 1998 we acquired HomeUSA, Inc., then the nation’s largest independent dealer of manufactured homes. In addition, we completed several other acquisitions of independent dealers during fiscal 1999 and fiscal 2000. We also expanded our Company-owned retail network through the development of “greenfield” locations, which are locations that we started ourselves rather than through acquisition of existing operations. The combination of these two strategies carried us to a high of 244 stores in November 2000. We also established a financial services subsidiary, HomeOne Credit Corp. (HomeOne), to provide finance and insurance products to our retail operations as part of a vertically integrated housing strategy. Since then, as the retail market for manufactured housing has continued to slow down and losses in our retail operation have risen, we implemented a downsizing strategy to better match our retail capacity to market demand. We reduced the number of stores that we operate to 135 at the end of fiscal 2005. In March 2005, we announced our intention to exit the manufactured housing retail and financial services businesses and

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focus on our core manufacturing activities. The retail housing and related financial services operations have been designated as held-for-sale and presented as discontinued operations.

Competition in Our Business

The recreational vehicle market is highly competitive, with numerous participants. The five largest manufacturers represented approximately 70 percent of the retail market in calendar 2004, including our sales, which represented 15.3 percent of the total market. For calendar 2004, we held a 17.9 percent share of the motor home market, an 11.7 percent share of the travel trailer market and a 38.2 percent share of the folding trailer market.

The manufactured housing industry is also highly competitive. For calendar 2004, there were approximately 66 manufacturers, with the 10 largest companies accounting for approximately 80 percent of the retail market, including our sales, which represented 17.4 percent of the retail market. Manufactured homes compete with used and repossessed manufactured homes, new and existing site-built homes, apartments, townhomes and condominiums. Competition exists at both the wholesale and retail levels and is based primarily on price, product features, reputation for service and quality, merchandising, and availability and cost of dealer and retail customer financing. Growth in the manufactured housing market in the southern United States during the 1990s increased competition at both the wholesale and retail levels and resulted in both regional and national competitors increasing their presence in the region.

Competitive Advantages

We believe that we have certain competitive advantages as described below.

We have a leadership position in both the recreational vehicle and manufactured housing industries

We have had leading positions in both the recreational vehicle and manufactured housing industry for many years. We have a widely diversified market position in the recreational vehicle industry and are one of the largest players in each segment of the industry, including motor homes, travel trailers and folding trailers. In addition, we are the second largest producer of HUD-Code manufactured housing in the United States. Both the recreational vehicle and manufactured housing industries are relatively fragmented, and our scale and market leadership provide a number of competitive advantages compared to smaller players in each industry, including the areas of purchasing efficiencies and service and warranty support.

We have highly regarded dealer networks in each of our segments

Our dealer network includes many of the largest and most successful retailers in the recreational vehicle and manufactured housing industries. We strive to develop and implement “best practices” among our dealers through training programs and manuals. We have a comprehensive dealer agreement for all of our recreational vehicle dealers (endorsed by the Recreation Vehicle Dealers Association) that requires the dealer to meet criteria in regard to sales and stocking requirements and customer satisfaction goals. In the manufactured housing business, approximately 39 percent of our distribution points (including Company-owned stores) are exclusive, reflecting our strategic focus on the Pinnacle Retailer Program, which is designed to encourage more exclusive dealer relationships.

We have proven engineering and innovative product development capabilities

Fleetwood conducts product development activities on a national basis for recreational vehicles and on a regional basis for manufactured housing in order to reflect regional preferences and trends. Under both approaches, projects are carefully evaluated throughout the entire product development process. We develop innovative new products and product enhancements through an integrated approach that includes

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retail customer and dealer surveys, market research, engineering, sales and manufacturing, and our suppliers. As a result, we are able to proactively design and manufacture quality products that address both industry trends and specific customer requirements in an efficient, cost-effective and timely manner.

We deliver high-quality products and customer service

We promote customer loyalty through the design of quality products and the delivery of a satisfying customer experience before, during and after the sale. 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 both government requirements and industry standards;

·training both our employees and our dealers’ employees in customer satisfaction techniques and quality improvement procedures;

·providing additional services, such as comprehensive training of our dealers’ employees and contractors regarding proper installation techniques for manufactured homes;

·offering 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 our dealers. An independent consumer research firm conducts telephone surveys and communicates customer responses to our manufacturing entities and dealers to reinforce quality performance and minimize customer problems. Each year, specific customer satisfaction goals are established for our manufacturing operations and independent dealers. Dealers 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 of the importance of product quality and service.

We are led by an experienced management team whose interests are aligned with those of our shareholders

Both our manufactured housing and recreational vehicle groups benefit from the significant experience of our management. We have also recently enhanced our management team with the addition of seasoned industry veterans in key leadership positions who further strengthen our organization. All of our senior management team receive a portion of their annual compensation through equity incentives and a significant portion of cash compensation based on operating performance, directly aligning their interests with those of our shareholders.

Our Business Strategy

Our goals are to enhance our position as a leading provider of affordable, high-quality recreational vehicles and manufactured homes, to sustain long-term profitable growth and to enhance shareholder value. The key components of our business strategy are described below.

Focus on manufacturing operations

We recently announced plans to sell our manufactured housing retail and financial services businesses. Our vertically integrated approach to the manufactured housing business came as a result of a strategic objective to protect our distribution channels and to take advantage of business opportunities

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within the manufactured housing retail and finance industries. Subsequent to that decision, we experienced a significant industry-wide decline in the market for manufactured housing. Our decision to exit these businesses is intended to stem losses sustained in our retail operations. We believe that realigning our current objectives with our traditional focus on manufacturing operations and wholesale distribution channels in both our manufactured housing and in our recreational vehicle businesses will provide us with enhanced ability to regain our industry-leading position within both businesses.

Create value for our shareholders through a dedicated focus on increasing profitability

We seek to create value for our shareholders by growing revenues, containing costs, increasing efficiencies and optimizing existing assets. With ongoing organization and cost-structure changes, we believe we are poised for future growth and are making significant progress towards sustained profitability.

Provide the best product and value proposition to our customers

Our goal is to consistently offer the highest quality product at an attractive value that is not exclusively price-driven. We seek to achieve the value proposition by focusing on the needs and preferences of our buyer populations at different price points by product. We believe we are also effective at controlling cost factors while maintaining high quality standards because of our economies of scale, purchasing efficiencies, and a leverageable fixed infrastructure. Our focus on engineering and innovative product development translates into products that meet ever-changing consumer preferences at the business unit level for recreational vehicles and at the regional level for manufactured housing. For example, we believe the design process is critical and is embedded throughout the development, manufacturing and marketing cycle. Those costs are absorbed over significant unit volumes and result in acceptable per-unit costs because of our market penetration and volumes. Our customers for both recreational vehicles and manufactured housing expect consistency and quality because of the brand reputation and awareness of our products in the market. Finally, we believe that the customers’ experience with our products remains consistent through changing economic and sociological cycles because of the depth and background of our management team, which has experience functioning in different environments.

Increase market share in targeted product segments

We are one of the nation’s leaders in both recreational vehicle and manufactured housing sales, and have been in a leadership position for over 30 years. In recreational vehicles, our motor home market share has shown improvement during calendar years 2003 and 2004 after losing share in 2001 and 2002. The increase in market share is mainly due to the Class A and Class C product innovations that added many features. In late 2004, we introduced a new full-wall slide-out for one of our product lines, with plans to expand the technology to others soon. Our underlying technology, which is currently only available from Fleetwood, will be introduced on other models in 2005, and has been positively received by dealers and customers. In addition, we have refreshed most of the core motor home brands, adding floorplans with up to four slide-outs, as well as other features such as increased ceiling height and upgraded appliances and chassis performance. Consumer and dealer response to the new products has been positive. Additionally, we recently opened up a new Class C manufacturing facility on the East Coast, which will allow us to cost-effectively produce products for that geographic region and is expected to enhance our Class C market share. Finally, our entrance into the sports utility segment with our Gearbox activity support vehicle, several new innovative ultralight and hybrid travel trailer floorplans and the future introductions of completely redesigned core products later this summer is expected to drive market share recovery in the travel trailer segment.

In manufactured housing, we increased market share during calendar 2004 by aggressively developing our distribution network of independent retailers and park operators, and also by continuing to offer innovative product. As the number of retail outlets for manufactured housing has declined year over year,

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our retail distribution points increased from about 1,250 last year to approximately 1,320 this year. In terms of product, we won two design awards from the Manufactured Housing Institute this year, including an award for Concept Modular Home Design. In the future we will increase our focus on regional designs for our manufactured homes, and we will also increase our commitment to the growing market for modular homes, which are built to local and regional building codes as opposed to the federal HUD code.

Sales and Distribution of Our Products

Consistent with industry practice, we have historically marketed our products through many independent dealers, 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 the late 1990s in the retail sector of the manufactured housing industry prompted us to modify our manufactured housing sales and distribution strategies. We responded to this industry trend by upgrading our manufactured home retail distribution network, developing alternatives to replace dealers 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 built and owned by us. Largely as a result of the move into the retail business, our gross inventories increased sharply to $343 million at April 2000. Reflecting weaker market conditions and a reduction in the number of Company-owned stores, gross inventories have declined to $102 million at the end of April 2005, and in March 2005 we announced our intention to divest our retail operations and return to our prior strategy of wholesaling only to independent dealers.

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 certain 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. Since model year 2005, the travel trailer warranty is also now for 12 months, while all folding trailer warranties cover 12 months on most parts and manufacturing-related defects. The warranty period for travel trailer products had been two years prior to model year 2005. Our RV Group has installed an electronic dealer communications network that facilitates the processing of product warranty claims and parts ordering. With respect to manufactured homes, our warranty also now covers a one-year period, and includes coverage for factory-installed appliances. Between March 2000 and December 2002, our home warranty covered a two-year period. Company-wide annual direct and indirect expenses for product warranties and service were approximately $131 million for fiscal 2005, $103 million for fiscal 2004, and $118 million for fiscal 2003. 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 dealers under commitments by financial institutions that have agreed to finance dealer purchases. Consumer 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 large institutions and by the finance affiliates of certain vertically integrated manufacturers/retailers.

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 First Capital Corporation (Associates) in May 1996. In connection with the sale, an agreement was signed to assure continuing cooperation between Associates and us and to facilitate wholesale and retail financing for our retailers and customers. Early in calendar 1999, Fleetwood Credit Corp. was sold by

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Associates to Bank of America. We consented to an assignment of the operating agreement to the new owner. Under the agreement, we agreed to certain limitations on our involvement in recreational vehicle financing programs until May 2006.

Manufactured housing lenders have experienced higher loan losses and a more difficult funding environment over the last several years. Repossessions increased due to the fact that some lenders had made loans in earlier periods to less-qualified applicants, and a significant number of these borrowers had begun to default on their loans. Access to the asset-backed securities market as a source of funding similarly has been constricted and the cost of funds has risen sharply. As a result, lenders reacted by tightening credit standards for manufactured housing borrowers, by significantly increasing interest rates and in some cases by exiting the business.

Chase announced in May 2004 that it was discontinuing its manufactured housing finance business. This announcement followed the previously announced exits from the retail finance business by Associates, Bombardier Capital, Inc., Conseco, CIT Group Inc. and GreenPoint. In addition, several other smaller lenders have exited the business during the past three to four years. These unfavorable developments created a very restrictive retail financing environment, which in turn constrained sales activity at both the wholesale and retail levels.

Both U.S. Bancorp and GreenTree, which was acquired out of the Conseco bankruptcy by a consortium of investment funds, have begun to provide manufactured housing retail financing. Depending on the extent of financing actually made available by these or other lenders in the future, it is possible that these new sources of financing could begin to moderate the effect of the restrictive retail financing environment that has challenged the manufactured housing industry in recent years.

Conseco, also the largest wholesale inventory lender, announced in March 2002 it would exit that business, and in October 2002, Deutsche, another large housing wholesale floorplan lender, announced it was exiting the business. Since the announcements by Conseco and Deutsche, dealer transitions to other floorplan lenders were orderly and we experienced relatively little difficulty finding alternative sources of inventory financing for most of our dealers, including Company-owned stores. Despite some disruption to the industry, generally, there has been sufficient wholesale floorplan financing available through other lenders to fill the vacuum created by the Conseco and Deutsche departures. More recently, the manufactured housing finance groups of two other national lenders, Transamerica and Bombardier, have been acquired by General Electric Corp., although this has not yet had an impact on lending volumes.

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 (HUD) 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 certain 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 (NHTSA) 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.” In 2002, the Transportation Recall Enhancement Accountability Documentation Act was approved by Congress and administered by the NHTSA. Under this rule, motor vehicle manufacturers (automotive, truck and RV) and motor vehicle equipment manufacturers are required to report information and submit documents relating to customer complaints, warranty claims, field reports, injuries, property damage and deaths. This information may assist NHTSA to promptly identify defects related to motor vehicle safety. Fleetwood has implemented systems and processes to meet these reporting requirements.

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Our Intellectual Property

Fleetwood®, Fleetwood Homes®, Fleetwood RV® and the principal brand and series names we use in connection with our recreational vehicles and manufactured homes are registered trademarks of ours. We believe that our trademarks and trade names are significant to our business, and we vigorously protect them against infringement. Aside from design patents on certain distinctive features of our most prominent motor home models, 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 we will take reasonable steps to prevent their disclosure to competitors.

Our Relationship with Our Employees

As of April 24, 2005, we had approximately 12,700 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 700 of these employees hold management or supervisory positions.

As of April 24, 2005, collective bargaining agreements were in effect at two of our manufacturing locations covering a total of approximately 840 employees. The expiration dates for these agreements are in October 2008 and September 2007. Except for employees at these two plants, none of our other employees are represented by a certified labor organization. In the past, we have experienced labor union organization activity at several manufacturing locations. However, in recent years we have not experienced any significant labor union organizing activity.

Risks Relating to Our Business

If any of the following risks actually occur, they could materially adversely affect our business, financial condition or operating results.

We have had significant losses in the last five fiscal years and it is possible that we may not be able to regain profitability in the foreseeable future. This could cause us to limit future capital expenditures and also increase the difficulty of implementing our business and finance strategies or meeting our obligations when due.

We had net losses totaling $162 million, $22 million, $71 million, $162 million, and $284 million for fiscal years 2005, 2004, 2003, 2002 and 2001, respectively. Continued losses may 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. If we continue to suffer losses, we could be unable to implement our business and financial strategies or meet our obligations when due. Our losses in recent fiscal years were partially caused by the following conditions:

·reduced demand in the manufactured housing and, during certain periods, recreational vehicle industries;

·low utilization of capacity, particularly in our manufactured housing and towable plants;

·certain wholesale and retail lenders abandoning the manufactured housing market;

·restrictive lending standards in the manufactured housing market by the remaining retail lenders;

·relatively high interest rates for manufactured homes as opposed to site-built homes;

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·competition with resellers of repossessed manufactured homes;

·weaker general economic conditions, stock market declines, and diminished consumer confidence;

·excess retail inventories primarily in our RV distribution network;

·unforeseen manufacturing complexities resulting from the introduction of new products, primarily in the travel trailer segment; and

·lack of market acceptance of certain new products.

We cannot provide assurance that the conditions that have resulted in our substantial losses in fiscal years 2001 through 2005 will not continue in fiscal 2006 and beyond.

In addition to the foregoing conditions, actions we took in response to the circumstances that contributed significantly to the losses included:

·charges in fiscal 2002 related to the impairment of goodwill that originated with our acquisitions of retail housing businesses in prior years, some of which have been closed or downsized;

·downsizing initiatives within all our businesses, including asset impairment charges, write down of idle manufacturing facilities, employee severance payments and plant closing costs; and

·impairment charges in fiscal 2005 related to the decision to exit the retail and financial services businesses and present their results as discontinued operations.

We may be unable to comply in the future with financial covenants contained in our senior secured credit facility, which could result in a default under our debt obligations, and our lenders could accelerate our debt or take other actions which could restrict our ability to operate.

In May 2004, we announced the early renewal and extension of our secured credit facility with Bank of America. If our liquidity and our operating results deteriorate significantly due to business or economic conditions, we may breach covenants under the amended and restated facility, resulting in a default. We were required to amend the facility in March 2005 and reset a financial covenant in order to avoid a covenant breach. In addition, we were recently required to obtain a waiver of a covenant default from Greenwich Capital relating to our warehouse line for HomeOne Credit Corp.

Under the senior secured facility agreement, as amended, we are not subject to a financial performance covenant except in the event that our average monthly liquidity, defined as cash, cash equivalents and unused borrowing capacity, falls below $90 million on a consolidated basis or $60 million within the borrowing subsidiaries. Under these circumstances, we are required to meet a designated cumulative EBITDA requirement that has been restated to reflect the current outlook for earnings. A breach of the covenants could result in a default under this facility, as well as a cross-default in our 5% convertible senior subordinated debentures, our retail floorplan facility with Textron Financial Corp. (Textron) and our capital lease obligations. In addition, our HomeOne Credit Corp. subsidiary’s warehouse line of credit with Greenwich Capital contains financial covenants that apply to HomeOne and the parent company, which as indicated above we recently breached. In the event of a future default under our debt obligations, we cannot be certain that our lenders will agree to forebear from enforcing any remedies otherwise available to them or that they will grant us further waivers or amend our covenants.

Our credit facility ranks senior to the senior convertible subordinated debentures and the convertible subordinated debentures. Our credit facility is secured by substantially all of our assets, except for some inventories that are used to secure floorplan arrangements, the cash value of our Company-owned life insurance, certain fixed assets, including some of our real property, and housing retail finance receivables (chattel loans and/or mortgages). Upon the occurrence of an event of default, our lenders could elect to declare all amounts outstanding under the facility, together with accrued interest, to be immediately due and payable. A default under our senior secured facility could also cause a default under our retail

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floorplan debt with Textron and our 5% convertible senior subordinated debentures. If we were unable to repay all outstanding balances, 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 our convertible securities. In addition, we may be prevented from borrowing additional amounts under our other existing credit agreements, including any retail inventory floorplan facilities.

In March 2005, the Company’s financial services subsidiary, HomeOne, renewed and extended an agreement with Greenwich Capital Financial Products, Inc. (Greenwich) that provides up to $75 million in warehouse funding. The warehouse line of credit expires on March 15, 2006. Collateral for borrowings under the facility is manufactured housing consumer loans originated by HomeOne. The availability of financing under the facility is dependent on a number of factors, including the borrowing base represented by the loans pledged to Greenwich. The Company and HomeOne agreed to guarantee the facility in an aggregate amount not to exceed 10 percent of the amount of principal and interest outstanding. The Company’s guaranty includes financial and other covenants, including maintenance of specified levels of tangible net worth, total indebtedness to tangible net worth and liquidity. In anticipation that the Company would not be able to comply with certain of these covenant requirements commencing in June 2005, Greenwich agreed to amend the covenant requirements to levels that the Company expects will be achievable. In the event that the Company failed to sell the loan portfolio and subsequently breached the covenant, the resultant default would also cause the secured credit facility, the Textron retail flooring liability, the 5% convertible senior subordinated debentures and our capital lease obligations to be in technical default.

Lender actions in the event of default 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 our businesses 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.

Reduced availability of financing for our retailers or retail customers, particularly in our manufactured housing business, could continue to affect our sales volume.

Our dealers, as well as retail buyers of our products, generally secure financing from third party lenders, which, in the case of manufactured housing, have been negatively affected by adverse loan experience. For example, Conseco, Associates, Chase and GreenPoint, which had been very important lenders for customers of our dealers in the 1990s, have withdrawn from the manufactured housing finance business. Reduced availability of such financing and higher interest rates are currently having an adverse effect on the manufactured housing business and our housing sales. 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. Availability of financing is dependent on the lending practices of financial institutions, financial markets, governmental policies and economic conditions, all of which are largely beyond our control. For example, floorplan lenders have tightened credit availability, Conseco and Deutsche have exited that business in the manufactured housing industry and Transamerica and Bombardier’s manufactured housing wholesale finance businesses have been acquired by General Electric Corp. In addition, quasi-governmental agencies such as Fannie Mae and Freddie Mac, which are important purchasers of loans from financial institutions, have tightened standards relating to the manufactured housing loans that they will buy. Most states classify manufactured homes as personal property rather than real property for

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purposes of taxation and lien perfection. Interest rates for manufactured homes are generally higher and the terms of the loans shorter than for site-built homes. In the current environment, financing for the purchase of manufactured homes is often 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.

Our repurchase agreements with floorplan 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, 18 or 24 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, represents a financial expense to us. Thus, if we were obligated to repurchase a large number of manufactured homes or recreational vehicles in the future, this would increase our costs, which could have a negative effect on our earnings. Tightened credit standards by lenders and more aggressive attempts to accelerate collection of outstanding accounts with dealers could result in defaults by dealers and consequent repurchase obligations on our part that may be higher than has historically been the case. During fiscal 2005, we repurchased 85 manufactured homes and 89 recreational vehicles at an aggregate gross purchase price to us of $6.3 million, incurring a loss upon resale of about $1.2 million, compared to repurchases of 76 manufactured homes and 101 recreational vehicles at an aggregate purchase price of $3.7 million, incurring a loss upon resale of about $600,000 during fiscal 2004.

Excess inventories of our products among retailers and repossessions 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 five years. The continuing 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-creditworthy customers, many of whom have defaulted on these loans. Lenders are repossessing the customers’ homes and reselling them at prices significantly below the retail price of a new home, thereby increasing competition for manufacturers of new homes. This situation was exacerbated by the bankruptcy filings of Oakwood Homes and Conseco in 2003, which led both companies to sell large numbers of repossessed homes for cash at distressed prices at auctions or at wholesale, rather than to attempt to refinance the defaulted loans. These circumstances led to an increase in recent years in the number of available repossessed homes and to a further deterioration in the price of these homes. These trends appear to have stabilized; however, if these trends were to deteriorate once more, or if retail demand were to significantly weaken, the resulting inventory overhang could result in price competition and further pressure on profit margins within the industry and could have an adverse impact on our operating results.

We may not be able to obtain financing in the future, and the terms of any future financings may limit our ability to manage our business. Difficulties in obtaining financing on favorable terms would have a negative effect on our ability to execute our business strategy.

In addition to capital available under the senior secured credit facility, we anticipate that we may be required to seek additional capital in the future, including financing necessary to fund capital expenditure needs in our recreational vehicle business. There can be no assurance that we will be able to obtain future financings on acceptable terms, if at all.

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Further, in November 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 then outstanding convertible trust preferred securities from B3 to Caa3, with a negative rating outlook. At the time, 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 slowdown in the recreational vehicle business, and that the negative outlook reflected the highly uncertain intermediate-term outlook for demand in the manufactured housing and recreational vehicle markets. In December 2001, Standard and Poor’s announced that it had lowered our corporate credit rating from BB+ to BB-, and the rating on our then outstanding convertible trust preferred securities from B+ to D, with a negative rating outlook. At the time, Standard and Poor’s cited our materially weakened business position due to a continuation of 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 discontinuation and deferral of our common dividends and existing convertible trust 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, combined with our recent significant losses, could result in any capital that we might need 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 strategies. 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.

Although we have indicated we intend to sell our HomeOne Credit finance subsidiary, we may continue to incur additional losses related to that subsidiary as we continue to operate the business and build its loan portfolio, including losses relating to defaults and delinquencies, and we will be required to bear a greater portion of that risk than certain of our competitors since we did not securitize our loans in the secondary market.

We have limited recent experience operating a consumer finance business. We previously originated loans for our recreational vehicle business through our Fleetwood Credit Corp. subsidiary, but we sold that subsidiary in 1996. We had not originated or serviced manufactured housing loans prior to 2001. Our ability to build our loan portfolio in connection with this new consumer finance business has depended in part upon our ability to compete with established lenders, and to effectively market our consumer finance services to buyers of our manufactured homes, in the same unfavorable economic conditions that have caused experienced consumer finance companies to exit the manufactured housing business.

We have now indicated we intend to exit our consumer finance business, but we may continue to incur losses as we continue to operate the business and develop our loan portfolio. Many purchasers of manufactured homes may be deemed to be relatively high credit risks due to various factors, including the lack of or impaired credit histories and limited financial resources. Accordingly, the loans we originate may bear relatively high interest rates and may involve higher than average default and delinquency rates and servicing costs. In the event that we foreclose on delinquent loans, our ability to sell the underlying collateral to recover or mitigate our loan losses will be subject to market valuations of the collateral. These valuations may be affected by factors such as the amount of available inventory of manufactured homes in the market, the availability and terms of consumer financing and general economic conditions.

In addition, we are exposed to fluctuations in interest rates and do not currently use interest rate swaps, futures contracts, options on futures or other types of derivative financial instruments to decrease such exposure. An increase in interest rates could result in an increase in our interest expense and a decrease of the fair market value of our finance loan receivables.

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Moreover, due to our limited operating history and, as a result of the relatively small scale of our lending portfolio, our non-participation in the housing securitization market, we have not been in a position to sell our loans in the asset-backed securities market. As a result, we have been required to bear a larger portion of the risk of loss on the financing agreements. Also as a result, if we should endeavor to sell the loans as whole loans, our lack of experience in the whole loan sale market may impact the proceeds we receive from whole loan sales transactions. These conditions could negatively affect our cash flow or result in losses at our consumer finance business.

Prepayments of our receivables, whether due to refinancing, repayments or foreclosures, in excess of management’s estimate could also result in reduced future cash flow due to the resulting loss of net interest income on such prepaid receivables. Prepayments can result from a variety of factors, all of which are beyond our control, including changes in interest rates and general economic conditions.

The foregoing risks become more acute in any economic slowdown or recession. Periods of economic slowdown or recession may be accompanied by decreased demand for consumer credit and declining asset values. Delinquencies, foreclosures and losses generally increase during economic slowdowns or recessions. Loss of employment, increases in cost-of-living, increases in rents on leased land for homes in manufactured housing communities or other adverse economic conditions would likely impair the ability of our consumer borrowers to meet their payment obligations, which could impair our ability to continue to fund our finance operations.

The recreational vehicle and manufactured housing industries are highly competitive and some of our competitors have stronger balance sheets and cash flows, 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, 2004, there were approximately 66 manufacturers of homes and fewer than 8,000 retail sales centers. Based on retail sales, the 10 largest manufacturers accounted for approximately 80 percent of the retail manufactured housing market in calendar 2004, including our sales, which represented 17.4 percent of the market. The manufactured housing retail market is much more fragmented.

Competition with other housing manufacturers on both the wholesale and retail levels is based primarily on price, product features, reputation for service and quality, retail inventory, merchandising, and the terms and availability of wholesale and retail customer financing. Growth in manufacturing capacity during the 1990s increased competition at both the manufacturing and retail levels and resulted in both regional and national competitors increasing their presence in the markets in which we compete. Overproduction of manufactured housing in these regions 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 low-rate mortgage financing, reducing 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 in recent years 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, has experienced consolidation in recent years, which could result in the emergence of competitors, including developers of site-built homes, that are larger than we are and have greater financial resources than we

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have. For example, the large conglomerate Berkshire Hathaway has acquired two of our competitors, Clayton Homes and Oakwood Homes. This combination could ultimately strengthen competition in the industry and adversely affect our business.

The recreational vehicle market is also highly competitive. Sales from the five largest manufacturers represented approximately 70 percent of the retail market in calendar 2004, including our sales, which represented 15.3 percent of the market. Competitive pressures, especially in the entry-level segment of the recreational vehicle market for travel trailers, have 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 businesses are 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, retail sales 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 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 for manufactured housing products;

·defaults by retail customers resulting in repossessions;

·inventory levels, which have also negatively impacted our business;

·availability of manufactured home sites;

·commodity prices;

·unemployment trends;

·international tensions and hostilities;

·consumer confidence; and

·general economic conditions.

Factors affecting the recreational vehicle industry include:

·overall consumer confidence and the level of discretionary consumer spending;

·general economic conditions;

·interest rates;

·international tensions and hostilities;

·unemployment trends;

·fuel availability and prices; and

·commodity prices.

We cannot provide assurance that the factors that are currently adversely affecting our business will not continue to have an adverse effect beyond the present time.

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Our businesses are seasonal, and this leads to fluctuations in sales, production and operating results.

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 for manufactured housing and, particularly, recreational vehicles generally declines during the winter season, while sales and profits in both industries 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 established a network of Company-owned retail stores that has required significant restructuring and downsizing, but our efforts did not succeed in making it profitable. We are now attempting to sell the business, and will incur losses and restructuring charges as a result.

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 acquisition of existing operations. 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 2002, 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 operate to 135 at March 31, 2005. These actions have resulted in goodwill impairment and restructuring charges and other costs, including severance payments to employees.

Given existing industry conditions and the performance of this new business to date, we have indicated that we intend to seek one or more buyers for the business. We are taking this action in order to eliminate the losses we continue to incur in our retail operations, and to enable us to return to our traditional focus on manufacturing operations and wholesale distribution in both our manufactured housing and in our recreational vehicle businesses. There can be no assurance that we will be able to complete the sale of our retail network on reasonable terms or at all. In addition, we will be required to incur substantial restructuring charges, and the business may incur greater losses pending its eventual sale.

We have replaced some of our manufactured housing dealers, and in the past some of our dealers have been acquired. We also announced our exit from the retail business, and these Company-owned stores represent 16 percent of our sales. This may lead to a decrease in our sales volume and a loss of market share.

Our market share in the manufactured housing market, based on unit shipments, declined from 21.6 percent in calendar 1994 to a low of 14.9 percent in 2002 before improving to 17.6 percent in calendar 2004. The reason for this change was, in part, our reduction of the number of independent retail distribution points from approximately 1,800 to 1,200 during the period from January 1994 through April 2005, in order to concentrate on more sophisticated dealers that share our approach towards merchandising and customer satisfaction. We have also, from time to time in the past, lost significant dealers that were acquired by competitors. Such acquisitions can reduce our retail distribution network and market share, as the competitors may choose not to sell our products. Although our market share rose to 17.6 percent in calendar 2004, there can be no assurance that we will be able to adequately replace the volume sold by our own retail stores or dealers acquired by competitors if they cease selling our manufactured homes, or that we will be able to maintain our sales volume or market share.

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Changes in consumer preferences for our products or our failure to gauge those preferences could lead to reduced sales and additional costs.

We believe that historical consumer preferences for our products in general, and recreational vehicles in particular, are likely to change over time. We further 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 may also experience production difficulties, such as inefficiencies in purchasing and increased labor costs, as we introduce new models. 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 there is a rise in the frequency and size of product liability and other claims against us, including wrongful death, our business, results of operations and financial condition may be harmed.

We are frequently subject, in the ordinary course of business, to litigation involving products liability and other claims, including wrongful death, against us related to personal injury and warranties. We partially self-insure our products liability claims and purchase excess products 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 premiums that we are required to pay for insurance to rise significantly. It may also increase the amounts we pay in punitive damages, which may not be covered by our insurance. We are also presently party to actions in litigation that the plaintiffs are seeking to have certified as class actions. If any of these actions is 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 similar claims made against our competitors, our reputation and business will be harmed.

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 have additional costs when we introduce new models, such as initial labor or purchasing inefficiencies, but we may also incur unexpected expenses. 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 adequately accepted by the market, or to stimulate sales of older or obsolete models. The costs resulting from these types of problems could be substantial and 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. Particularly in view of increased international tensions and increased global demand for oil, 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. Increases in gasoline prices and speculation about potential fuel shortages have had an unfavorable effect on consumer demand for recreational vehicles from time to time in the past, which then had a material adverse effect on our sales volume, and may do so in the future.

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Increases in the price of oil also can result in significant increases in the price of many of the components in our products, which may have a negative impact on margins or sales volumes.

If we do not successfully upgrade our computer systems, we may lose sales to those of our competitors that have more sophisticated and better integrated systems than we do.

Some of 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 still in the relatively early stages of this process. Competitors with more sophisticated and fully integrated computer systems may have efficiencies that will 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 completed, will not perform 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 percent of the industry’s total retail sales in calendar 2004. The southern and south central 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 these regions, and a continuing downturn in these regions that is worse than that of other regions and 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 and south central United States or 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 effect change in these zoning ordinances could have a material adverse effect on our results of operations and we cannot be certain that manufactured homes will receive more widespread acceptance or that additional localities will adopt zoning ordinances permitting the location of manufactured homes.

Increased costs, including costs of component parts and labor costs, potentially impacted by 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 mitigate the effect of any cost escalation in components and labor costs by negotiating with current or new suppliers and by increasing productivity or, where necessary, 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 competitiveness

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of our products and, therefore, our sales volume. 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.

We depend on a small group of suppliers for some of our components, and the loss of any of these suppliers could affect our ability to obtain components at competitive prices, which would decrease our sales or margins.

Most recreational vehicle and manufactured home commodity components are readily available from a variety of sources. However, a few proprietary or specialty components are produced by a small group of quality suppliers that have the capacity to support our requirements on a national basis. Primarily, this situation occurs in the case of motor home chassis, where Spartan and Freightliner supply diesel powered chassis and Workhorse Custom Chassis and Ford Motor Company are the dominant suppliers of Class A gas chassis and Ford Motor Company is the dominant supplier of Class C chassis. Shortages, production delays or work stoppages by the employees of such suppliers could have a 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.

The market price of our common stock has been volatile, and may decline again in the future.

The market price of our common stock has fluctuated significantly in recent years and generally declined, from a closing price of $45.04 per share on March 6, 1998, to a low of $2.57 per share on August 9, 2002. The market price of our common stock may continue to fluctuate as a result of a number of factors. Factors that could cause fluctuations in the market price of our common stock include:

·actual and anticipated variations in our operating results;

·general economic and market conditions;

·interest rates;

·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 connection with financing activities, conversion of the convertible trust preferred securities or the existing convertible senior subordinated debentures, or upon exercise of stock options, any of which could have a dilutive effect on our earnings per share 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;

·our ability to pay principal and interest on our debt when due;

·developments in our relationships with our lenders, customers, and/or suppliers;

·announcements of alliances, mergers or other relationships by or among our competitors and/or our suppliers and customers;

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·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 regulations, including zoning regulations;

·further downgrades of our corporate credit ratings of our senior implied debt or of specific securities; and

·changes in senior management.

In addition, in recent years the stock market in general has experienced extreme price and volume fluctuations that have 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 also adversely affect the market price of our common stock.

We do not pay dividends on our common stock, and under the terms of the documents governing the Convertible Trust Preferred Securities, we are currently deferring payment of dividends on those securities.

On October 30, 2001, we elected to defer distributions due to be made on November 15, 2001 on the Convertible Trust Preferred Securities and we have subsequently elected to defer all subsequent quarterly distributions to date. In light of our business environment and recent operating results, we currently anticipate that we will find it prudent to defer distributions on the Convertible Trust Preferred Securities for the foreseeable future, subject to the terms in the governing documents. We have the option to continue to defer payment of the distributions for a period that extends up to and including the dividend payment due on August 15, 2006. The deferral of distributions on the Convertible Trust Preferred Securities prevent us from declaring or paying any dividends on our common stock during the period of such deferrals. Additionally, even if we choose to resume cash distributions on the Convertible Trust Preferred Securities in the future, we may choose not to pay dividends on our common stock.

Amendments of the regulations governing our businesses could have a material impact on our operations.

Both our recreational vehicle and manufactured housing businesses are subject to extensive federal and state regulations, including construction and safety standards for manufactured homes and safety and consumer protection laws relating to recreational vehicles. 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, 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 noise pollution and the use, generation, storage, treatment, emission and disposal of hazardous materials and wastes. 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, potential civil and criminal liability, suspension of production or operations, alterations to the manufacturing process, costly cleanup or capital expenditures.

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Failure to achieve and maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act could have an adverse effect on our business and stock price.

Section 404 of the Sarbanes-Oxley Act requires us to evaluate annually the effectiveness of our internal controls over financial reporting as of the end of each fiscal year and to include a management report assessing the effectiveness of our internal controls over financial reporting in our annual report. Section 404 also requires our independent registered public accounting firm to attest to, and report on, management’s assessment of our internal controls over financial reporting. If we fail to maintain the adequacy of our internal controls, as such standards are modified, supplemented or amended from time to time, we cannot assure you that we will be able to conclude in the future that we have effective internal controls over financial reporting in accordance with Section 404. If we fail to maintain a system of effective internal controls, it could have an adverse effect on our business and stock price.

Item 2. Properties

We own our executive offices, which are located at 3125 Myers Street in Riverside, California. The corporate administrative offices, which occupy 201,000 square feet, are situated on parcels of land owned by us, totaling approximately 18.1 acres. Regional, sales and service offices located in North Carolina, Tennessee, Texas and Virginia occupy a total of 59,800 square feet of leased office space. The following table describes additional property and buildings utilized for manufacturing, research and development and administrative purposes as of April 24, 2005. For the most part, these properties and buildings are owned by the Company, except as noted below, and we believe they are suitable and adequate for our purposes. We have granted a security interest in some of these properties to our lenders under the senior secured credit facility.

Facility and Location	Approximate Acreage		Approximate Square Footage
Plants Producing Manufactured Housing:
Glendale, Arizona		36.3		126,000
Riverside, California		18.8		104,500
Woodland, California		15.8		145,600
Auburndale, Florida		15.6		102,700
Alma, Georgia		23.6		98,700
Douglas, Georgia		20.7		140,100
Pearson, Georgia		16.2		144,200
Willacoochee, Georgia		33.2		138,300
Nampa, Idaho		19.8		157,000
Garrett, Indiana		22.1		124,500
Benton, Kentucky		22.4		114,100
Pembroke, North Carolina		32.4		135,600
Woodburn, Oregon		22.4		200,600
Elizabethtown, Pennsylvania		19.7		116,800
Gallatin, Tennessee		18.2		197,700
Lafayette, Tennessee		43.3		133,000
Belton, Texas		20.8		164,600
Waco, Texas		18.3		125,900
Waco, Texas		13.0		120,600
Rocky Mount, Virginia		26.3		135,000
Woodland, Washington		22.4		169,600

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Plants Producing Recreational Vehicles:
Motor Homes:
Riverside, California	45.2	293,900
Decatur, Indiana	91.6	473,900
Decatur, Indiana	25.3	184,700
Paxinos, Pennsylvania	123.4	380,200
Paxinos, Pennsylvania	7.1	39,600
Travel Trailers:
Rialto, California(1)	18.8	111,700
Crawfordsville, Indiana(2)	14.4	143,300
Campbellsville, Kentucky	20.0	51,900
Williamsport, Maryland	33.6	86,500
LaGrande, Oregon	40.6	97,300
Pendleton, Oregon	21.2	202,300
Longview, Texas	46.7	313,100
Longview, Texas	10.2	12,100
Lindsay, Ontario, Canada	9.2	145,600
Lindsay, Ontario, Canada	19.0	73,200
Folding Trailers:
Somerset, Pennsylvania(3)	42.6	392,500
Plants Producing Components:
Fontana, California	11.3	83,000
Riverside, California	10.0	111,000
Decatur, Indiana	16.5	250,900
Motor Home Service Facilities:
Decatur, Indiana	34.8	179,500
Riverside, California	11.9	157,800
Division Offices and Research and Development Facilities:
Riverside, California	21.9	234,100

(1)Includes 4.0 acres and a 28,100 square foot building leased from an unaffiliated third party.

(2)Includes a 17,800 square foot building leased from an unaffiliated third party.

(3)Includes a 40,000 square foot building leased from an unaffiliated third party.

Retail Properties

At the end of fiscal 2005, we operated 135 retail sales locations in 21 states, of which 18 are owned and 117 are leased from third parties. An additional 22 retail sales locations are leased or subleased to a large dealer of which four are owned and 18 are leased from third parties. The current lease obligation related to these properties is approximately $8.6 million, of which $5.7 million has been prepaid.

Idle Facilities

There were 26 idle manufacturing facilities at the end of fiscal 2005 and 24 at the end of fiscal 2004. During fiscal 2005, active manufacturing capacities were reduced by the closure of five facilities; two travel trailer and three housing manufacturing plants. Two idle housing facilities in Lexington, Mississippi, and an idle RV facility in Chico, California, were sold during the year.

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The following Company-owned manufacturing facilities were not in operation as of April 24, 2005.

Facility and Location	Approximate Acreage		Approximate Square Footage
Alma, Georgia(3)		20.0		137,200
Broxton, Georgia		20.0		137,200
Douglas, Georgia(1)		22.1		251,100
Fitzgerald, Georgia		18.6		124,400
Pearson, Georgia		13.3		133,200
Nampa, Idaho(4)		11.4		74,300
Garrett, Indiana(3)		20.4		104,900
Hancock, Maryland(3)		21.3		118,400
Lexington, Mississippi		20.0		119,800
Lumberton, North Carolina		52.0		122,400
Pembroke, North Carolina(2)		—		73,500
Roxboro, North Carolina(1)		20.0		112,600
Roxboro, North Carolina(4)		31.8		114,800
Bowling Green, Ohio(4)		1.8		23,200
Edgerton, Ohio(3)		30.3		94,300
Cushing, Oklahoma		15.2		71,800
Woodburn, Oregon		29.2		56,500
Elizabethtown, Pennsylvania(3)		17.5		89,600
Westmoreland, Tennessee		38.6		165,100
Westmoreland, Tennessee(1)		20.6		124,400
Belton, Texas		32.6		120,000
Longview, Texas		15.3		111,200
Waco, Texas		8.6		87,600
Waco, Texas(1)		19.8		104,300
Wichita Falls, Texas		31.5		127,300
Rocky Mount, Virginia		13.8		83,400

(1)Manufacturing facility partially used for housing service operations.

(2)Acreage shared with active manufacturing facility in Pembroke, North Carolina.

(3)Manufacturing facility deactivated in fiscal 2005.

(4)Properties subleased to a third party.

Item 3. Legal Proceedings

The Company filed a complaint in state court in Kansas, in the 18^th Judicial District, District Court, Sedgewick County, Civil Department, against The Coleman Company, Inc. (Coleman) in connection with a dispute over the use of the “Coleman” brand name. The lawsuit sought declaratory and injunctive relief. On June 6, 2003, Coleman filed an answer and counterclaimed alleging various counts, including breach of contract and trademark infringement. On November 17, 2004, after a hearing, the Court granted our request for a permanent injunction against Coleman prohibiting Coleman from licensing the Coleman name for recreational vehicles to companies other than Fleetwood, although Coleman will again seek to challenge that ruling in a hearing scheduled for July 12, 2005. At the conclusion of trial, on December 16, 2004, the jury awarded monetary damages against Fleetwood on Coleman’s counterclaim in the amount of $5.2 million. On January 21, 2005, the Court granted Coleman’s request for treble damages, making the total amount of the award approximately $14.6 million. A charge to record this award is reflected in the

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Company’s results for the third fiscal quarter of 2005. Payment will be stayed pending Fleetwood’s appeal, which has now been filed. Pending the appeal, Fleetwood was required to post a letter of credit for $18 million, representing the full amount of the judgment plus an allowance for attorneys’ fees and interest. The Company will pursue all available appellate remedies.

Fleetwood is also subject to other litigation from time to time in the ordinary course of business. The Company’s 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 currently 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.

Item 4. Submission of Matters to a Vote of Security Holders

No matters were submitted to a vote of the shareholders of the Company during the fourth quarter of fiscal year 2005.

Executive Officers of the Registrant

Name	Title	Age
Elden L. Smith	President and Chief Executive Officer	65
Christopher J. Braun	Executive Vice President—RV Group	45
Charles E. Lott	Executive Vice President—Housing Group	57
Boyd R. Plowman	Executive Vice President and Chief Financial Officer	61
Todd L. Inlander	Senior Vice President and Chief Information Officer	40
Larry L. Mace	Senior Vice President—Supply and Materials	62
Leonard J. McGill	Senior Vice President, General Counsel and Secretary	47
Andrew M. Griffiths	Vice President, Controller and Chief Accounting Officer	39
Lyle N. Larkin	Vice President, Treasurer and Assistant Secretary	60
John R. Moore	Vice President—Human Resources	44
James F. Smith	Vice President	57

Elden L. Smith returned to Fleetwood in March 2005 as President and Chief Executive Officer after a seven-year retirement. Before retiring, he had worked for the Company for almost 30 years, serving as the executive in charge of the RV Group from 1973 until 1997.

Christopher J. Braun joined the Company as Senior Vice President—RV Group in May 2003. He was promoted to Executive Vice President in 2004. Until he joined Fleetwood, he had been employed at PACCAR, Inc. since 1987. From 2001 to 2003, he was Assistant General Manager for the Kenworth Truck Division. His responsibilities included sales and marketing for the North American organization, as well as operations. He served as the Director of Operations for Kenworth from 1999 to 2001, with full responsibility for four Kenworth Truck manufacturing plants in North America.

Charles E. Lott rejoined Fleetwood in his current position in April 2005. Before retiring in 2002, he was a vice president, heading up the Housing Group’s Eastern Region, a position he had held since 1997. He has worked for Fleetwood for all but six years of his 32-year career in the manufactured housing industry.

Boyd R. Plowman was named Senior Vice President and Chief Financial Officer in October 2000, and was promoted to Executive Vice President in December 2001. He rejoined the Company in 1997 as Vice President-Retail Housing as well as the Senior Vice President and Chief Financial Officer of its subsidiary, Fleetwood Retail Corp. Prior to that, he was President and Chief Executive Officer of Lee & Associates Commercial Real Estate Services/Inland Empire from 1990 to 1997. He first joined the Company in 1969, and had been Chief Financial Officer for 14 years before leaving Fleetwood in 1987.

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Todd L. Inlanderwas named Vice President—Information Technology and Chief Information Officer in September 2000. Previously, he had been a consultant with Arthur Andersen’s Los Angeles office since 1992. He was promoted to his current position in September 2004.

Larry L. Mace was named to his current position in November 2003. He is responsible for Fleetwood’s four supply subsidiaries, Fleetwood’s import operations, corporate materials negotiations as well as various administrative functions at Fleetwood’s Riverside headquarters. Mace has worked for Fleetwood for the past 30 years and has held a number of managerial positions in the Company, including purchasing positions at both the plant and corporate levels. Before his promotion, he had been Vice President—Purchasing, Supply Operations and Administration.

Leonard J. McGill was named Senior Vice President, General Counsel and Secretary in April 2005. He joined the Company in February 2002 as Vice President—Deputy General Counsel, and in November 2003 was promoted to Senior Vice President-Corporate Finance and Chief Governance Officer. Previously, he had been a corporate and securities attorney with the international law firm of Gibson, Dunn & Crutcher LLP from 1987 to 1993 and from 1999 to 2002, and from 1993 to 1999 he was in private practice with the law firm of Day, Campbell & McGill. He graduated from the Georgetown University Law Center with a Juris Doctor, magna cum laude, in 1986.

Andrew M. Griffiths joined Fleetwood in 2004 as Vice President—Controller and Chief Accounting Officer. From 2002 to 2004, he was a Managing Director with PricewaterhouseCoopers. Previously, he had 15 years experience with Arthur Andersen, becoming a partner in 1999.

Lyle N. Larkin was hired by Fleetwood in 1979 as a Controller in the RV Group and has served in his current position of Treasurer since 1990. He was promoted to Vice President in July 1998.

John R. Moore joined Fleetwood in July 2000 as the Human Resources Manager for the RV Group. In December 2001 he assumed full responsibility for the Human Resources Department as Director—Human Resources. He was promoted to his current position in May 2002. Before joining Fleetwood, Moore had 16 years of human resources experience in various manufacturing companies, including eight years at the Patterson-Kelly Division of Harsco Corp., followed by one year at Hendrickson Trailer Suspension Systems just before his employment by Fleetwood.

James F. Smith joined Fleetwood in 1977 as Assistant Controller in the Housing Group. He was named RV Group Controller in 1987, and appointed as Vice President—Controller and Chief Accounting Officer in February 2001. He was named Vice President—Towable Operations in February 2004 and moved to his current position six months later.

Other information required by Item 10 is incorporated herein by reference from the Company’s definitive Proxy Statement for the Company’s 2005 annual shareholders’ meeting to be filed with the Securities and Exchange Commission no later than 120 days after April 24, 2005.

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PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

The following table lists the high and low intraday sales prices for our common stock during the past two fiscal years as reported on the New York Stock Exchange Composite Tape. There were no dividends declared per share during the same periods. Our common stock is listed on the New York and the Pacific Stock Exchanges and trades on various regional exchanges (Ticker Symbol: FLE). Call and put options are traded on the American Stock Exchange and the Chicago Board Options Exchange.

Quarter	High		Low
Fiscal 2004
First Quarter	$	11.25	$	4.83
Second Quarter	11.61		8.47
Third Quarter	12.70		8.72
Fourth Quarter	16.06		11.75
Fiscal 2005
First Quarter	16.14		12.22
Second Quarter	15.60		10.82
Third Quarter	14.49		9.17
Fourth Quarter	10.18		7.81

On July 1, 2005, there were approximately 1,100 shareholders of record of our common stock.

Dividend Policy

On October 30, 2001, the Company announced that it would discontinue the payment of dividends after the previously declared dividend payment on November 14, 2001. Dividends until such time had been paid quarterly. This decision was made in conjunction with an election to defer the distribution on our existing 6% convertible trust preferred securities due to be made on November 15, 2001. When we defer a distribution on the 6% convertible trust preferred securities, we are prevented from declaring or paying dividends on our common stock during the period of deferral. Any future resumption of dividends and distributions on the 6% securities would be at the discretion of our Board of Directors, and is not currently contemplated, although distributions on the 6% securities can only be deferred until November 2006.

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Equity Compensation Plan Information

The following table provides information as of April 24, 2005, for compensation plans under which equity securities may be issued.

Plan Category	(a) Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants & Rights		(b) Weighted-Average Exercise Price of Outstanding Options, Warrants & Rights			(c) Number of Securities Remaining Available For Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column(a))
Equity Compensation Plans Approved by Shareholders(1)		5,674,074		$	14.26		1,335,325
Equity Compensation Plans Not Requiring Approval by Shareholders:
Options(2)		79,000		8.91			—
Total		5,753,074					1,335,325

(1)Includes securities available for future issuance under shareholder approved compensation plans other than upon the exercise of an option, warrant or right, as follows:

The Company’s Amended and Restated 1992 Stock-Based Incentive Compensation Plan presently provides that awards may be granted in the form of shares of common stock to replace all or a portion of compensation (other than base salary) that could otherwise become payable to any employee. A limit of 990,000 shares of common stock is imposed on stock awards. In addition, the Plan provides that awards may be made in shares of restricted stock, up to an aggregate of 600,000 shares.

(2)Reflects stock options awarded as an inducement to becoming an employee of the Company to Elden L. Smith effective March 8, 2005.

Material Features of Equity Compensation Plans Not Approved by Shareholders

The Company granted options to acquire 79,000 shares of common stock, pursuant to the Elden L. Smith Stock Option Plan and Agreement, effective March 8, 2005, to Elden L. Smith as an inducement to his becoming an employee of the Company. Mr. Smith became President and Chief Executive Officer of Fleetwood on that date. Pursuant to the Agreement, the options generally may not be transferred except in limited circumstances for estate planning purposes. The options vest according to the following schedule: one-third on the first anniversary of the effective date; one-third on the second anniversary; and one-third on the third anniversary. The exercise price is $8.91 per share, and the options expire if unexercised on March 8, 2015. In the event of a change in control, the options may be exercised in full if adequate provision is not otherwise made for replacement awards or other consideration.

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Item 6. Selected Financial Data

Five-Year Summary of Selected Financial Data

	Fiscal Years Ended April
	2005			2004			2003			2002			2001
	(Amounts in thousands, except per share data)
Net sales	$	2,374,712		$	2,360,606		$	2,070,957		$	1,952,285		$	1,978,559
Operating income (loss)	$	(43,538	)	$	78,869		$	25,377		$	(25,049	)	$	(230,104	)
Income (loss) from continuing operations before income taxes and cumulative effect of accounting change	$	(71,226	)	$	35,807		$	(12,355	)	$	(56,700	)	$	(248,383	)
Benefit (provision) for income taxes	(1,351		)	(18,449		)	(4,502		)	44,621			63,942
Income (loss) from continuing operations before cumulative effect of accounting change	(72,577		)	17,358			(16,857		)	(12,079		)	(184,441		)
Discontinued operations	(88,882		)	(39,619		)	(53,882		)	(69,214		)	(88,373		)
Cumulative effect of accounting change, net of income taxes	—			—			—			(80,635		)	(11,176		)
Net loss	$	(161,459	)	$	(22,261	)	$	(70,739	)	$	(161,928	)	$	(283,990	)
Net loss attributable to common shareholders, basic and diluted	$	(161,459	)	$	(22,261	)	$	(70,739	)	$	(132,525	)	$	(283,990	)
Earnings (loss) per common share—diluted:
Income (loss) from continuing operations before cumulative effect of accounting change	$	(1.31	)	$	.44		$	(.47	)	$	(.35	)	$	(5.63	)
After-tax difference on exchange of convertible trust preferred securities	—			—			—			.86			—
Discontinued operations	(1.61		)	(1.01		)	(1.50		)	(2.04		)	(2.70		)
Cumulative effect of accounting change, net of income taxes	—			—			—			(2.37		)	(.34		)
Net loss per common share	$	(2.92	)	$	(.57	)	$	(1.97	)	$	(3.90	)	$	(8.67	)
Weighted average common shares—diluted	55,332			39,342			35,869			33,942			32,755
Balance sheet data at end of period:
Cash and marketable investments	$	45,476		$	123,822		$	69,776		$	111,147		$	73,103
Property, plant and equipment, net	232,125			229,638			225,410			232,145			249,272
Total assets	1,010,247			1,075,709			954,094			1,015,700			1,135,753
Long-term debt	319,088			374,950			406,262			412,646			300,068
Total liabilities	884,791			829,427			843,126			840,957			849,605
Shareholders’ equity	125,456			246,282			110,968			174,743			286,148

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	Fiscal Years Ended April
	2005			2004			2003			2002			2001
	(Amounts in thousands)
Other Data:
Gross profit margin	16.6		%	17.7		%	18.1		%	19.2		%	19.5		%
Operating income (loss) margin	(1.8		)%	3.3		%	1.2		%	(1.3		)%	(11.7		)%
Depreciation and amortization	$	23,573		$	24,580		$	25,634		$	26,172		$	29,148
Capital expenditures	35,284			27,727			19,857			20,473			36,921
Cash flow from operations	(59,909		)	(3,175		)	26,104			27,793			99,637
Cash flow from discontinued operations	(37,337		)	(45,519		)	(59,621		)	(54,931		)	(131,720		)
Cash flow from investing activities	47,013			(89,924		)	37,335			(62,851		)	26,372
Cash flow from financing activities	40,910			119,733			(550		)	80,453			(248		)

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Selected Segment Data

	Fiscal Years Ended April
	2005			2004			2003			2002			2001
	(Dollars in thousands)
OPERATING REVENUES:
RV Group
Motor homes	$	1,097,091		$	1,104,624		$	918,742		$	716,734		$	637,833
Towables(1)	562,791			674,609			563,853			496,170			568,957
	1,659,882			1,779,233			1,482,595			1,212,904			1,206,790
Housing Group	785,547			657,388			667,087			842,536			981,366
Supply Group	57,020			41,120			37,178			34,032			32,992
Intercompany sales	(127,737		)	(117,135		)	(115,903		)	(137,187		)	(242,589		)
	$	2,374,712		$	2,360,606		$	2,070,957		$	1,952,285		$	1,978,559
OPERATING INCOME (LOSS):
RV Group	$	(39,169	)	$	58,146		$	35,355		$	(36,837	)	$	(71,463	)
Housing Group	6,387			5,440			(13,479		)	17,172			27,263
Supply Group	3,816			6,065			2,079			8,868			6,033
Corporate and other	(14,572		)	9,218			1,422			(14,252		)	(191,937		)
	$	(43,538	)	$	78,869		$	25,377		$	(25,049	)	$	(230,104	)
UNITS SOLD:
RV Group
Motor homes	10,566			11,203			9,935			8,366			8,148
Towables(1)	40,180			48,894			47,134			45,209			52,077
	50,746			60,097			57,069			53,575			60,225
Housing Group
Single-section	7,524			4,627			4,203			6,863			9,426
Multi-section	16,438			16,232			17,973			23,193			26,775
	23,962			20,859			22,176			30,056			36,201
Less intercompany	(3,486		)	(3,414		)	(3,790		)	(4,886		)	(8,657		)
	20,476			17,445			18,386			25,170			27,544

Intercompany units sold represent Housing Group sales to the retail business, which is a discontinued operation held-for-sale. Units sold by the retail business were:

Retail
Single-section	1,079	1,164	916	1,903	3,667
Multi-section	3,078	3,563	4,088	5,835	9,085
	4,157	4,727	5,004	7,738	12,752

(1)Includes sales of slide-in truck camper units in fiscal years ended 2001 through 2004.

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Overview

Fleetwood is one of the nation’s leaders in producing both recreational vehicles and manufactured housing. The RV Group sold 50,746 and 60,097 recreational vehicles in fiscal 2005 and 2004, respectively. In calendar 2004, we had a 15.3 percent share of the overall recreational vehicle retail market, consisting of a 17.9 percent share of the motor home market, an 11.7 percent share of the travel trailer market and a 38.2 percent share of the folding trailer market. The Housing Group produced and shipped 23,962 and 20,859 manufactured homes in fiscal 2005 and 2004, respectively, and was the second largest producer of HUD-Code homes in the United States in terms of units sold. The Supply Group operates three supply companies that provide components for our manufactured housing and recreational vehicle operations, while also generating outside sales.

Our business began in 1950 producing travel trailers and quickly evolved to what are now termed manufactured homes. We re-entered the recreational vehicle business with the acquisition of a travel trailer operation in 1964. Our manufacturing activities are conducted in 16 states within the U.S., and to a much lesser extent in Canada. We distribute our manufactured products primarily through a network of independent dealers throughout the United States and Canada. In fiscal 1999, we entered the manufactured housing retail business through a combination of acquisitions and internal development of new retail sales centers. We later established a financial services subsidiary to provide finance and insurance products to the retail operation. In March 2005, we announced our intention to exit the retail and finance businesses. These businesses have been presented as discontinued operations throughout this annual report on Form 10-K.

Critical Accounting Policies

Our financial statements are prepared in accordance with U.S. generally accepted accounting principles. This requires us to make estimates and assumptions that affect the amounts reported in the financial statements and notes. We evaluate these estimates and assumptions on an ongoing basis and use historical experience factors and various other assumptions that we believe are reasonable under the circumstances. The results of these estimates form the basis for making judgments about the carrying values of assets and liabilities. Actual results could differ from these estimates under different assumptions or conditions.

The following is a list of the accounting policies that we believe reflect our more significant judgments and estimates, and that could potentially result in materially different results under different assumptions and conditions.

Revenue Recognition

Revenue for manufacturing operations is generally recorded when all of the following conditions have been met:

·an order for a product has been received from a dealer;

·written or verbal approval for payment has been received from the dealer’s flooring institution;

·a common carrier signs the delivery ticket accepting responsibility for the product as agent for the dealer; and

·the product is removed from Fleetwood’s property for delivery to the dealer who placed the order.

Most manufacturing sales are made on cash terms, with most dealers financing their purchases under flooring arrangements with banks or finance companies. Products are not ordinarily sold on consignment; dealers do not ordinarily have the right to return products; and dealers are typically responsible for interest

36

costs to floorplan lenders. On average, we receive payments from floorplan lenders on products sold to independent dealers within 15 days of the invoice date.

Warranty

Fleetwood provides customers of our products with a warranty covering defects in material or workmanship for periods ranging from one to two years, with longer warranties on certain structural components. We record a liability based on our best estimate of the amounts necessary to settle future and existing claims on products sold as of the balance sheet date. Factors we use in estimating the warranty liability include a history of units sold to customers, the average cost incurred to repair a unit and a profile of the distribution of warranty expenditures over the warranty period. A significant increase in dealer shop rates, the cost of parts or the frequency of claims could have a material adverse impact on our operating results for the period or periods in which such claims or additional costs materialize.

Insurance Reserves

Generally, we are self-insured for health benefit, workers’ compensation, products liability and personal injury insurance. Under these plans, liabilities are recognized for claims incurred (including those incurred but not reported), changes in the reserves related to prior claims and an administration fee. At the time a claim is filed, a liability is estimated to settle the claim. The liability for workers’ compensation claims is guided by state statute. Factors considered in establishing the estimated liability for products liability and personal injury claims are the nature of the claim, the geographical region in which the claim originated, loss history, severity of the claim, the professional judgment of our legal counsel, and inflation. Any material change in the aforementioned factors could have an adverse impact on our operating results. We maintain excess liability insurance with outside insurance carriers to minimize our risks related to catastrophic claims.

Deferred Taxes

Deferred tax assets and liabilities are determined based on temporary differences between income and expenses reported for financial reporting and tax reporting. We are required to record a valuation allowance to reduce our net deferred tax assets to the amount that we believe is more likely than not to be realized. In assessing the need for a valuation allowance, we historically have considered all positive and negative evidence, including scheduled reversals of deferred tax liabilities, prudent and feasible tax planning strategies, projected future taxable income and recent financial performance. Since we have had cumulative losses in recent years, the accounting guidance suggests that we should not look to future earnings to support the realizability of the net deferred tax asset. As a result, we concluded that a partial valuation allowance against our deferred tax asset was appropriate. Accordingly, in fiscal 2003, the deferred tax asset was reduced by $28.4 million to $89.8 million with a corresponding adjustment to the provision for income taxes. The book value of the net deferred tax asset was supported by the availability of various tax strategies, which, if executed, were expected to generate sufficient taxable income to realize the remaining asset. In the fourth quarter of fiscal 2004, we determined that available tax strategies were sufficient to support a deferred tax asset of $74.8 million and we recorded an adjustment to the provision for income taxes of $15 million with a corresponding reduction to the asset. The primary reason for this reduction was an increase in the market value of our convertible preferred securities of Fleetwood Capital Trust I. An improved overall financial condition combined with upward movement in our stock price had contributed to a lower discount from par value and had diminished the magnitude of unrealized taxable gains in these securities. In fiscal 2005, tax-planning strategies continue to support an asset of $74.8 million. We continue to believe that the combination of all positive and negative factors will enable us to realize the full value of the deferred tax assets; however, it is possible that the extent and availability of tax planning strategies will change over time and impact this evaluation. If, after future assessments of the realizability

37

of our deferred tax assets, we determine an adjustment is required, we would record the provision or benefit in the period of such determination.

Legal Proceedings

We are regularly involved in legal proceedings in the ordinary course of our business. Because of the uncertainties related to the outcome of the litigation and range of loss on cases other than breach of warranty, we are generally unable to make a reasonable estimate of the liability that could result from an unfavorable outcome. In other cases, including products liability (discussed above) and personal injury cases, we prepare estimates based on historical experience, the professional judgment of our legal counsel, and other assumptions that we believe are reasonable. As additional information becomes available, we reassess the potential liability related to pending litigation and revise our estimates. Such revisions and any actual liability that greatly exceeds our estimates could materially impact our results of operations and financial position.

Repurchase Commitments

Producers of recreational vehicles and manufactured housing customarily enter into repurchase agreements with lending institutions that provide wholesale floorplan financing to independent dealers. The Company’s agreements generally provide that, in the event of a default by a dealer in its obligation to these credit sources, Fleetwood will repurchase product. With most repurchase agreements, our obligation ceases when the amount for which we are contingently liable to the lending institution has been outstanding for more than 12, 18 or 24 months, depending on the terms of the agreement. The contingent liability under these agreements approximates the outstanding principal balance owed by the dealer for units subject to the repurchase agreement less any scheduled principal payments waived by the lender. Although the maximum potential contingent repurchase liability approximated $183 million for inventory at manufactured housing dealers and $479 million for inventory at RV dealers as of April 25, 2004, the risk of loss is reduced by the potential resale value of any products that are subject to repurchase, and is spread over numerous dealers and financial institutions. The gross repurchase obligation will vary depending on the season and the level of dealer inventories. Typically, the fiscal third quarter repurchase obligation will be greater than other periods due to high dealer inventories. The RV repurchase obligation is significantly more than the manufactured housing obligation due to a higher average cost per motor home and more units in dealer inventories. Past losses under these agreements have not been significant and lender repurchase demands have been funded out of working capital. In the past three fiscal years we have had the following repurchase activity:

	2005		2004		2003
	(Amounts in millions, except units)
Units	174		177		182
Repurchase amount	$	6.3	$	3.7	$	4.4
Loss recognized	$	1.2	$	0.6	$	—

Business Outlook

The extended period of robust growth in wholesale shipments for the motor home industry appears to have been interrupted. Dealer inventory levels are stabilizing at reasonable levels; consequently, third and fourth quarter shipments did not benefit from expanding dealer inventories as in the prior year. Underlying retailunit sales have also moderated and were down 7 percent in the fourth quarter, suggesting that this trend will likely extend into this year’s selling season for motor homes. Our market share remained constant in calendar 2004 and, as previously announced, we believe that the potential for further inroads in 2005 has been generated by innovations such as the full-wall slide technology and the

38

resumption of Class C motor home production in the eastern part of the U.S., enabling more cost effective distribution.

Towable shipments have been lower than expected in recent quarters. As previously discussed, a number of 2005 travel trailer products were not introduced until late in 2004. We have been unable to consistently balance content with value and have often exceeded price points sought by customers. These issues have been compounded by excess capacity, as well as products and floorplans that have been overly complex to manufacture, contributing to additional warranty costs. These factors have adversely affected the strength of our dealer distribution, particularly in the central part of the country.

Initiatives to reverse these trends have been underway for some time but progress from these actions has not materialized as soon as we had expected. Product introductions, including additions in the ultralight category, were rolled out toward the end of calendar 2004. Additional products, including an offering in the hybrid class, as well as further product rationalizations, are being released throughout 2005. We have moved aggressively to right-size capacity as well as inventories, which were close to desirable levels by year-end. Quality processes have been overhauled for the entire RV business and although improvements are already apparent in our finished products, the financial benefits will only be realized over the longer term. Finally, we have renewed our focus on dealer development activities in order to address a decline in the strength of our distribution network for travel trailers, especially in the central United States.

Our goal is to restore manufacturing efficiencies within the towable division in the near term and we believe that our efforts, over the longer term, will be rewarded by improved shipments and a rebound in market share.

Favorable demographics suggest sustainable growth will likely be realized for our RV product line through the end of the decade as baby boomers begin to reach the age brackets that historically have accounted for the bulk of retail RV sales. Additionally, younger buyers are also becoming interested in the RV lifestyle.

Conditions in the manufactured housing market have been in decline since 1999. Competition from repossessed homes, relatively high retail interest rates for manufactured housing, more stringent lending standards and a shortage of retail financing have adversely affected the industry. Industry home shipments for calendar 2004 were flat compared to the prior year, and included shipments relating to hurricane damage in the Southeast. Overall, the industry has stabilized and is even showing some early signs of improving, but market conditions by region are mixed. Some markets, typically those that were less affected by high repossession levels and retail financing losses, such as certain parts of the West and Florida, are showing signs of a sustained recovery, while more traditional manufactured housing markets, such as Texas and parts of the Southeast, continue to deteriorate.

There are indications that inventories of foreclosed homes are declining. However, we expect to continue to compete with sales of repossessed homes in weaker geographical areas in the near term. New or existing lenders have begun providing more manufactured housing retail financing, although in limited amounts and using more stringent underwriting practices and higher interest rates than a traditional site-built mortgage. Depending on the extent of the financing actually generated, it is anticipated that manufactured housing industry conditions should improve, albeit slowly. We will also continue to pursue other opportunities, such as sales to community and park operators. Longer term, the demand for affordable housing is expected to grow as a result of increased immigration and as greater numbers of baby boomers reach retirement age. Improvements in engineering and design continue to position manufactured homes as viable options in meeting the demands for affordable housing in new markets, such as suburban and inner-city sites, as well as in existing markets such as rural areas and in manufactured housing communities and parks.

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During fiscal 2006, we anticipate shifting our focus back to our core manufacturing operations. Individual businesses or regions will be provided with greater autonomy on product and operations. For manufactured housing this is likely to result in a flatter management structure than we have currently, with greater emphasis on sustainable profitability. Losses from our retail housing operations will be eliminated once this business is sold.

We now expect to incur an operating loss in the first quarter of fiscal 2006, as well as additional losses from discontinued operations. Results are expected to be influenced by moderating motor home sales, ongoing travel trailer losses and additional restructuring charges, particularly in manufactured housing.

Results of Operations

The following table sets forth certain statements of operations data expressed as a percentage of net sales for the periods indicated:

	Fiscal Years Ended April
	2005		2004		2003
Net sales	100.0	%	100.0	%	100.0	%
Cost of products sold	83.4		82.3		81.9
Gross profit	16.6		17.7		18.1
Operating expenses	(17.7	)	(14.5	)	(16.9	)
Other, net	(0.8	)	0.2		(0.1	)
Operating income (loss)	(1.8	)	3.3		1.2
Other income (expense)
Investment income	0.1		0.1		0.2
Interest expense	(1.2	)	(1.8	)	(2.0	)
Other, net	(0.1	)	(0.1	)	—
Income (loss) from continuing operations before income taxes	(3.0	)	1.5		(0.6	)
Provision for income taxes	(0.1	)	(0.8	)	(0.2	)
Net income (loss) from continuing operations	(3.1	)	0.7		(0.8	)
Discontinued operations	(3.7	)	(1.7	)	(2.6	)
Net loss	(6.8	)%	(0.9	)%	(3.4	)%

Consolidated Results Fiscal Year 2005 Compared with Fiscal Year 2004

Consolidated Results:

The following table presents net loss and diluted loss per share for fiscal 2005 and 2004 (amounts in thousands, except per share data):

	Fiscal Years Ended April
	2005						2004
	Amount			% of Net Sales			Amount			% of Net Sales			Change			% Change
Net loss	$	(161,459	)		(6.8	)%	$	(22,261	)		(0.9	)%	$	(139,198	)		625.3	%
Diluted loss per share	$	(2.92	)				$	(.58	)

The increase in our net loss in fiscal 2005 was, in part, caused by the deterioration of operating results by $122.4 million compared to the prior year. This was partially offset by lower interest expense of $15.9 million due to the retirement or redemption of a portion of our 9.5% convertible subordinated debentures in transactions that straddled the end of the prior fiscal year. Following the announcement in March 2005 that we planned to sell the retail housing and financial services subsidiaries, these businesses were

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designated as discontinued operations. The loss from discontinued operations in the current year totaled $88.9 million, including non-cash impairment charges of $50.5 million to record assets held-for-sale at their fair value less costs to sell.

Net Sales

The following table presents consolidated net sales by group for fiscal 2005 and 2004 (amounts in thousands):

	2005						2004
	Amount			% of Net Sales			Amount			% of Net Sales			Change			% Change
RV Group	$	1,659,882			69.9	%	$	1,779,233			75.4	%	$	(119,351	)		(6.7	)%
Housing Group	785,547				33.1		657,388				27.8		128,159				19.5
Supply Group	57,020				2.4		41,120				1.7		15,900				38.7
Intercompany sales	(127,737		)		(5.4	)	(117,135		)		(4.9	)	(10,602		)		9.1
Net sales	$	2,374,712			100.0	%	$	2,360,606			100.0	%	$	14,106			0.6	%

Consolidated net sales increased slightly by 0.6 percent or $14.1 million. RV sales remained strong in the early part of the fiscal year but weakened during the second half of the year. The prospect of softening retail sales resulted in dealers maintaining or decreasing their inventories. This combined with a decline in market share in the towable division, contributed to a 6.7 percent decrease in RV wholesale revenues. Manufactured housing revenues increased by 19.5 percent as a result of improving industry demand in certain regional markets, higher prices, improved market share and significant sales in Florida in response to hurricane damage. Intercompany sales to the retail housing business are excluded from consolidated revenues. Revenues from both the retail and financial services businesses are presented separately as part of discontinued operations.

Consolidated Net Sales, Cost of Sales and Gross Profit

The following table presents consolidated net sales, cost of sales and gross profit for fiscal 2005 and 2004 (amounts in thousands):

	2005					2004
	Amount		% of Net Sales			Amount		% of Net Sales			Change			% Change
Net sales	$	2,374,712		100.0	%	$	2,360,606		100.0	%	$	14,106			.6	%
Cost of sales	1,979,482			83.4		1,943,147			82.3		(36,335		)		1.9
Gross profit	$	395,230		16.6	%	$	417,459		17.7	%	$	(22,229	)		(5.3	)%

Gross profit margin decreased to 16.6 percent of sales compared to 17.7 percent last year. A portion of this decline resulted from inefficiencies associated with vacillating RV production rates in the third and fourth quarters in order to adjust supply with weakening demand. However, we did not moderate RV production quickly enough in response to signs of weakening RV sales during the second and third fiscal quarters, causing disruption to production schedules throughout the remainder of the fiscal year. All areas of our business experienced rising raw material costs as prices for lumber, steel, aluminum and other commodities increased. Towable operations were significantly impacted by these increases, combined with competitive pricing pressures and increased sales incentives resulting in margin compression. Higher fuel prices also contributed to an increase in shipping costs.

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Operating Expenses

The following table presents operating expenses for fiscal 2005 and 2004 (amounts in thousands):

	Fiscal Years Ended April
	2005					2004
	Amount		% of Net Sales			Amount		% of Net Sales			Change		% Change
Selling	$	76,642		3.2	%	$	68,576		2.9	%	$	8,066		11.8	%
Warranty and service	131,290			5.5		103,194			4.4		28,096			27.2
General and administrative	212,255			9.0		171,476			7.3		40,779			23.8
Operating expenses	$	420,187		17.7	%	$	343,246		14.5	%	$	76,941		22.4	%

Higher housing sales, in conjunction with a variety of strategic ventures and marketing initiatives, accounted for most of the increase in selling expenses. Warranty expenses for the RV Group increased by $17.2 million due to higher incurred warranty costs combined with higher reserves. Housing Group warranty expenses also increased year over year since the prior year was reduced by positive reserve adjustments following a period of sustained cost reductions. General and administrative expenses increased due to increases in group health insurance expense, workers’ compensation costs, the costs of computer system upgrades and conversions, product development efforts and the costs of compliance with the Sarbanes-Oxley legislation.

Other, net

Other, net consists of litigation charges of $16.3 million, including a $14.6 million judgment in the dispute with Coleman, as well as impairment charges of $1.9 million, severance costs of $2.9 million and net gains on sale of fixed assets of $2.5 million. Other, net in fiscal 2004 consisted of net gains on sale of fixed assets of $4.6 million. The sale of the drapery facility along with two idle plants generated $4.4 million of the gain.

Other Income (Expense)

Other income (expense) decreased by $15.4 million to $(27.7) million in fiscal 2005 when compared to the previous year. Net interest expense decreased by $15.9 million primarily as a result of the conversion or redemption of the convertible preferred securities of Fleetwood Capital Trusts II and III, partially offset by the issuance of the $100 million convertible senior subordinated debentures. In the fourth quarter of fiscal 2004, we entered into various privately negotiated transactions with the holders of convertible trust preferred securities of Fleetwood Capital Trust III to convert their securities to common stock prior to their redemption dates. We paid a premium of $2.4 million in excess of interest accrued that is included in Other income (expense). A premium of $1.6 million resulted from similar transactions in the first quarter of fiscal 2005 with the holders of convertible preferred securities of Fleetwood Capital Trust II. Additionally, a charge of $1.1 million relating to previously deferred finance costs resulted from the redemption of the remainder of the Fleetwood Capital Trust II securities.

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Recreational Vehicles:

The following table presents RV Group net sales by division for fiscal 2005 and 2004 (amounts in thousands):

	2005					2004
	Amount		% of Net Sales			Amount		% of Net Sales			Change			% Change
Motor homes	$	1,097,091		66.1	%	$	1,104,624		62.1	%	$	(7,533	)		(.7	)%
Towables	562,791			33.9		674,609			37.9		(111,818		)		(16.6	)
Net sales	$	1,659,882		100.0	%	$	1,779,233		100.0	%	$	(119,351	)		(6.7	)%

In calendar 2004, our motor home market share improved slightly to 17.9 percent and retail unit sales increased by 9 percent compared to calendar 2003. However, wholesale revenues were impacted by fluctuations in dealers’ retail inventories and decreased by 0.7 percent in fiscal 2005 compared to fiscal 2004. Prior year wholesale shipments contributed to a rise in dealer inventories at that time, whereas, in the current year, dealer inventories have contracted in response to signs of a softer retail market. In fiscal 2005, the Company experienced growth in the Class C and diesel segments with market erosion in the Class A gas segment.

Towable sales are down 16.6 percent in fiscal 2005 compared to fiscal 2004. Wholesale ships in the prior fiscal year also benefited from increasing dealer inventories which, in the current year, are down slightly or are flat. Underlying retail unit sales were up by 4 percent in calendar 2004, compared to the prior year. Lost market share, particularly in the higher-priced fifth-wheel travel trailer class, has added to the deterioration in wholesale results. A continuing decline in folding trailer sales is consistent with the overall market decline for these products, although we continue to maintain dominant market share in this segment.

The RV Group incurred a $39.2 million operating loss in fiscal 2005, compared to operating income of $58.1 million in the prior fiscal year. The deterioration was mainly due to lower sales and margins in all divisions combined with the previously mentioned over production earlier in the year. Operating expenses increased from 11.1 percent of sales to 14.8 percent in the current year primarily due to higher selling costs from expanded RV market initiatives, higher warranty costs and a higher allocation of general and administrative costs.

Manufactured Housing:

The following table presents Housing Group net sales for fiscal 2005 and 2004 (amounts in thousands):

	2005					2004
	Amount		% of Net Sales			Amount		% of Net Sales			Change		% Change
Wholesale sales	$	785,547		100.0	%	$	657,388		100.0	%	$	128,159		19.5	%

Results for the Housing Group consist of factory wholesale revenues, including sales to our retail business. Transactions between these operating divisions are eliminated in consolidation, including any intercompany profit in inventory still held by the retail business. Revenues for the retail business are presented separately as part of discontinued operations.

Revenues in fiscal 2005 were up 19.5 percent from the prior year, and included $127.7 million of intercompany sales to Company-owned retail sales centers. Manufacturing unit volume increased 15 percent to 23,962 homes, and the total number of housing sections was only up 9 percent to 40,867 due

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to a shift in sales mix toward single-section homes. Multi-section homes represented 68 percent of factory shipments for the fiscal year versus 78 percent last year.

Sales volume was improved over the prior year because of significant sales in Florida in response to hurricane damage, as well as improving industry conditions in certain stronger regional markets and sales to manufactured housing community developers.

Gross profit margin of 22.2 percent of sales was unchanged from the prior year. Operating costs increased $22.2 million or 16 percent as a result of higher product warranty expenses and overhead costs. Other expenses also increased by $5.3 million compared to the prior year, primarily due to a $1.9 million impairment charge, $0.8 million of severance charges and litigation charges of $1.7 million in the current year. Overall results improved from an operating profit of $5.4 million to $6.4 million.

Supply Operations:

Including intercompany sales, our Supply Group contributed revenues of $232.8 million in fiscal 2005 compared to $209.9 million in fiscal 2004, of which $57.0 million and $41.1 million, respectively, were sales to third party customers. Operating income from sales to third party customers decreased from $6.1 million to $3.8 million primarily as a result of lower margins and a gain on the sale of the drapery operation in the prior year.

Discontinued Operations:

In March 2005, we announced our intention to exit the manufactured housing retail and financial services businesses. These businesses are presented as discontinued operations in the Company’s financial statements. Retail housing’s revenues declined 1 percent from $242.5 million to $240.7 million for fiscal 2005. Unit sales for the retail operation were down 12 percent to 4,157 homes. The average unit price increased by 12 percent to $56,181 for the current year due to the sale of more multi-section homes and less discounting of prices, and gross margins declined slightly by 0.1 percent to 19.6 percent. The retail housing business incurred an operating loss of $85.2 million in fiscal 2005, before interest expense on inventory financing, compared to an operating loss of $35.9 million last year. The current year loss includes non-cash impairment charges of $50.5 million to record assets held-for-sale at their estimated fair value less costs to sell. Interest expense on inventory financing increased slightly from $2.1 million to $2.4 million.

Discontinued operations also include the results of the financial services business. Operating losses were $0.3 million and $1.6 million in fiscal 2005 and 2004, respectively, before deducting interest expense on the warehouse line of $1.1 million in fiscal 2005. Interest expense in fiscal 2004 was not significant. The operating loss in fiscal 2005 includes non-cash charges of $0.3 million to write down loans held-for-sale to their net realizable value.

Consolidated Results Fiscal Year 2004 Compared with Fiscal Year 2003

Consolidated Results:

The following table presents net loss and diluted loss per share for fiscal 2004 and 2003 (amounts in thousands, except per share data):

	Fiscal Years Ended April
	2004						2003
	Amount			% of Net Sales			Amount			% of Net Sales			Change		% Change
Net loss	$	(22,261	)		(0.8	)%	$	(70,739	)		(3.0	)%	$	48,478		68.5	%
Diluted loss per share	$	(.58	)				$	(1.97	)				$	1.39

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Our net loss decreased by $48.5 million to $(22.3) million, primarily due to a 14 percent increase in sales and a resulting $53.5 million increase in operating income. A strong RV market, particularly in motor homes, combined with a stabilizing manufactured housing market contributed to the smaller net loss. The net losses for both fiscal 2004 and 2003 were negatively impacted by adjustments of $15 million and $28.4 million, respectively, to reduce our net deferred tax asset. The $15 million adjustment in the fourth quarter of fiscal 2004 was caused by a reduction in available tax planning opportunities. The primary reason for this reduction was an increase in the market value of our convertible trust securities of Fleetwood Capital Trust I.

Net Sales

The following table presents consolidated net sales by group for fiscal 2004 and 2003 (amounts in thousands):

	2004						2003
	Amount			% of Net Sales			Amount			% of Net Sales			Change			% Change
RV Group	$	1,779,233			75.4	%	$	1,482,595			71.6	%	$	296,638			20.0	%
Housing Group	657,388				27.8		667,087				32.2		(9,699		)		(1.5	)
Supply Group	41,120				1.7		37,178				1.8		3,942				10.6
Intercompany sales	(117,135		)		(4.9	)	(115,903		)		(5.6	)	(1,232		)		1.1
Net sales	$	2,360,606			100.0	%	$	2,070,957			100.0	%	$	289,649			14.0	%

Consolidated net sales increased by 14 percent or $289.7 million. A strong recreational vehicle market and improved motor home products drove a 20 percent sales increase in RVs, offset by a 1.5 percent decline in Housing Group revenues. The manufactured housing market continued to show signs of recovery from a prolonged slump and Housing Group revenues for our fourth quarter of fiscal 2004 increased by 20 percent compared to the prior year.

Consolidated Net Sales, Cost of Sales and Gross Profit

The following table presents consolidated net sales, cost of sales and gross profit for fiscal 2004 and 2003 (amounts in thousands):

	2004					2003
	Amount		% of Net Sales			Amount		% of Net Sales			Change			% Change
Net sales	$	2,360,606		100.0	%	$	2,070,957		100.0	%	$	289,649			14.0	%
Cost of sales	1,943,147			82.3		1,696,859			81.9		(246,288		)		(14.5	)
Gross profit	$	417,459		17.7	%	$	374,098		18.1	%	$	43,361			11.6	%

Gross profit margin fell slightly to 17.7 percent of sales compared to 18.1 percent last year. All areas of our business experienced rising raw material costs as prices for timber, steel, aluminum and other commodities increased. These material cost increases, combined with the introduction of new products, offset the positive impacts of higher pricing and a shift to higher-margin products. Overall, gross margins for RVs decreased from 14.5 percent to 14.3 percent. The Housing Group was able to manage cost increases more effectively and also benefited from improving operating efficiencies to raise gross margin by 1.3 percent to 22.2 percent.

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Operating Expenses

The following table presents operating expenses for fiscal 2004 and 2003 (amounts in thousands):

	Fiscal Years Ended April
	2004					2003
	Amount		% of Net Sales			Amount		% of Net Sales			Change			% Change
Selling	$	68,576		2.9	%	$	59,809		2.5	%	$	8,767			14.7	%
Warranty and service	103,194			4.3		118,239			5.0		(15,045		)		(12.7	)
General and administrative	171,476			7.2		165,894			7.0		803				.5
Operating expenses	$	343,246		14.5	%	$343,942			14.5	%	$	(5,475	)		(1.6	)%

Higher RV sales and enhanced marketing initiatives accounted for most of the increase in selling expenses, which remained flat as a percentage of sales. The Housing Group reduced product warranty and service expense following a reorganization of service in fiscal 2003. Warranty expenses at the RV Group increased on higher sales but still decreased as a percentage of revenue. General and administrative expenses for fiscal 2003 include $6.8 million for the legal settlement of two class action suits.

Other, net

Other, net in fiscal 2004 consisted exclusively of net gain on sale of fixed assets of $4.6 million. The sale of the drapery facility along with two idle plants generated $4.4 million of the gain. The prior year amount included $6.8 million for the settlement of two class action suits, $1.2 million of asset impairment charges, and $2.6 million of restructuring costs in the Housing Group, partially offset by net gains on the sale of fixed assets of $5.8 million related to the sale of facilities and land.

Other Income (Expense)

Other income (expense) increased by $5.3 million to $(43.0) million in fiscal 2004 when compared to the previous year. Net interest expense increased by $2.2 million as a result of the issuance of the $100 million convertible debentures combined with lower interest income. Also, in the fourth quarter of fiscal 2004, we entered into various privately negotiated transactions with the holders of convertible preferred securities of Fleetwood Capital Trust III to convert their securities to common stock prior to their redemption dates. We paid a premium of $2.4 million in excess of interest accrued that is included in Other income (expense).

Recreational Vehicles:

The following table presents RV Group net sales by division for fiscal 2004 and 2003 (amounts in thousands):

	2004					2003
	Amount		% of Net Sales			Amount		% of Net Sales			Change		% Change
Motor homes	$	1,104,624		62.1	%	$	918,742		62.0	%	$	185,882		20.2	%
Towables	674,609			37.9		563,853			38.0		110,756			19.6
Net sales	$	1,779,233		100.0	%	$	1,482,595		100.0	%	$	296,638		20.0	%

The Motor Home division’s performance was the result of improved market conditions and favorable acceptance of our mid-line diesel products and new Class A gas motor home products. For fiscal 2004, Class A diesel product shipments rose 14 percent while Class A gas and Class C shipments rose 3 percent and 29 percent, respectively. Travel trailer revenues increased 29.1 percent to $570.4 million on a

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14 percent increase in unit volume. The disproportionate increase in travel trailer revenues to shipments reflects the sales growth of larger, higher-priced floorplans in the conventional and fifth wheel products offered. Folding trailer sales declined 14.6 percent to $104 million on a 15 percent decline in unit volume.

The RV Group earned $58.1 million of operating income in fiscal 2004, compared to $35.3 million in the prior fiscal year. The $22.8 million increase in profitability was mainly due to the increase in diesel sales, which have higher selling prices and gross margins, and profit in travel trailers compared to an operating loss in the prior period as a result of higher revenues and gross margins. Operating expenses decreased from 12.2 percent of sales to 11.1 percent but increased $16.5 million in the current year primarily due to higher selling costs from expanded RV market initiatives and higher warranty costs.

Manufactured Housing:

The following table presents Housing Group net sales for fiscal 2004 and 2003 (amounts in thousands):

	2004					2003
	Amount		% of Net Sales			Amount		% of Net Sales			Change			% Change
Housing sales	$	657,388		100.0	%	$	667,087		100.0	%	$	(9,699	)		(1.5	)%

Results for the Housing Group consist of factory wholesale revenue, including sales to our retail business. Transactions between these operating divisions are eliminated in consolidation, including any intercompany profit in inventory still held by the retail business.

Revenues in fiscal 2004 were $657.4 million, down 1.5 percent from the prior year, and included $117.1 million of intercompany sales to Company-owned retail sales centers. Manufacturing unit volume declined 6 percent to 20,859 homes, but the total number of housing sections was down 8 percent to 37,443 due to a slight shift in sales mix toward single-section homes. Multi-section homes represented 78 percent of factory shipments versus 81 percent last year.

Sales volume was below the prior year because of a weaker manufactured housing market, which has been adversely affected by competition from repossessed units and restrictive retail financing conditions. In addition, the industry’s two largest retail lenders and the two largest inventory floorplan lenders exited the business.

Gross profit margin for the Housing Group increased from 20.9 percent to 22.2 percent of sales, mainly as a result of improving labor efficiencies and reducing manufacturing overhead. Operating costs declined $12.5 million or 8 percent as a result of reduced product warranty expenses. The reduction in warranty service costs is attributable to the fiscal 2003 reorganization of the service organization.

Supply Operations:

Including intercompany sales, our Supply Group contributed revenues of $209.9 million in fiscal 2004 compared to $173.9 million in fiscal 2003, of which $41.1 million and $37.2 million, respectively, were sales to third party customers. Operating income from sales to third party customers increased from $2.1 million to $6.1 million primarily as a result of a gain on the sale of the drapery operation in fiscal 2004.

Discontinued Operations:

In March 2005, we announced our intention to exit the manufactured housing retail and financial services businesses. These businesses have been presented as discontinued operations in the Company’s financial statements. Retail housing’s revenues declined 1 percent from $245.1 million to $242.5 million for fiscal 2004. Unit sales for the retail operation were down 6 percent to 4,727 homes. The average unit price

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increased by 14 percent to $50,323 for the current year due to the sale of more multi-section homes and less discounting of prices. As a result of aggressively selling aged inventory, gross margins declined from 20.1 percent in the prior year to 19.7 percent. The retail business incurred an operating loss of $35.9 million in fiscal 2004, before interest expense on inventory financing, compared to an operating loss of $49.7 million last year. The improvement mainly resulted from a 15.4 percent reduction in operating expenses. The operating expense reduction included a $9.8 million charge in the prior year for incorrect balance sheet adjusting entries related to integrating and then converting unique accounting systems from previously acquired dealers into a single system. Interest expense on inventory financing decreased slightly from $2.3 million to $2.1 million.

Liquidity and Capital Resources

We use external funding sources, including the issuance of debt and equity instruments, to supplement working capital, fund capital expenditures and meet internal cash flow requirements on an as-needed basis. Cash totaling $59.9 million was used in operating activities during fiscal 2005 compared to $3.2 million for the similar period one year ago. In fiscal 2005, the most significant use of cash related to higher inventories, which consumed $43.6 million in cash, principally due to a build up of motor home finished goods inventories. The remaining cash used in operations was primarily consumed by the loss from continuing operations, substantially reduced by items that did not impact cash such as depreciation and increases to reserves and other liabilities. In fiscal 2004, the most significant use of cash related to receivable, inventory and accounts payable working capital requirements totaling $51.0 million stemming from the 14 percent increase in revenues. The increase in other liabilities includes $14.6 million and $13.7 million for interest expense accrued but deferred on the 6% convertible trust preferred securities in fiscal 2005 and 2004, respectively.

Net cash used in discontinued operations was $37.3 million in fiscal 2005 compared to $45.5 million in fiscal 2004.

Additional cash outlays in fiscal 2005 and 2004, included $35.3 million and $27.7 million in capital expenditures, partially offset by proceeds from the sale of fixed assets totaling $10.4 million and $9.8 million, respectively.

At fiscal year end, short-term borrowings under our secured syndicated credit facility, led by Bank of America, N.A., as administrative agent, were $55.0 million. At year end, lender commitments to the facility totaled $200 million. Our borrowing capacity, however, is governed by the amount of a borrowing base, consisting of inventories and accounts receivable, that fluctuates significantly from week to week. The borrowing base is revised weekly for changes in receivables and monthly for changes in inventory balances. At the end of the fiscal year, the borrowing base totaled $179 million. After consideration of collateral reserves of $5.8 million, $46.2 million in standby letters of credit and the outstanding borrowings, unused borrowing capacity was approximately $70.5 million. Subsequent to fiscal year end, the Company posted an additional letter of credit of $18 million related to the Coleman judgment, pending the Company’s appeal of this litigation. Long-term debt increased by approximately $6.8 million, primarily as a result of a capital lease on our new paint facilities.

As a result of the above-mentioned changes, cash and marketable investments declined $78.3 million from $123.8 million as of April 25, 2004, to $45.5 million as of April 24, 2005.

Credit Agreements

During May 2004, our credit facility was renewed and extended until July 31, 2007. The amended and restated agreement provided for a revolving credit line for up to $150 million limited by the available borrowing base of eligible accounts receivable and inventories. On March 2, 2005, we entered into an amendment to the revolving credit facility. The results of our third quarter ended January 23, 2005 were such

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that we would have been out of compliance with the previous version of the financial performance covenant in the facility, and the amendment addressed that covenant issue.

Further, however, the amended facility provides greater borrowing flexibility by raising the overall limit on borrowings to $175 million from $150 million, with an additional seasonal increase from October to April to $200 million. In addition, a limitation on borrowing against inventory within our asset borrowing base has been raised from $85 million to $110 million, with a seasonal increase to $135 million for the December through April time period. Subsequent to the fiscal year end, the borrowing base was supplemented by $15 million of additional real estate collateral provided to the bank group. Borrowings are secured by receivables, inventory and certain other assets, primarily real estate, and will be used for working capital and general corporate purposes.

The original facility was subject to a financial performance covenant only in the event that our average monthly liquidity, defined as cash, cash equivalents and unused borrowing capacity, fell below certain established limits. The new facility retained the same liquidity requirements, with one minor modification, but the financial performance covenants were reset.

In consideration for the amendments, including the increased amount of the line and enhancements to the borrowing base, we paid an aggregate of $501,000 in fees. The interest rate for revolving loans under the line was increased slightly, but may be reduced to prior levels in future quarters based on improvements in a fixed charge coverage ratio.

Subsequent to fiscal 2005 year-end, in July 2005, the agreement governing the credit facility was further amended and restated, to incorporate prior amendments and increase total loan commitments to accommodate the previous $15 million addition to the revolver borrowing base and fund a new term loan collateralized by real estate in the amount of $22 million. These additions raise total loan commitments to $212 million from May through November, with a seasonal uplift to $237 million from December through April. The loan commitments for both the addition to the revolver and the term loan reduce on the first day of each fiscal quarter beginning October 31, 2005 in the amounts of $750,000 and $785,715, respectively.

In addition, Fleetwood Enterprises, Inc. guarantees Fleetwood Retail Corp.’s floorplan obligations to Textron Financial Corporation, and the Textron agreement contains covenants that mirror the bank amendment that have been reset to conform with the new bank amendment.

In March 2005, the Company’s financial services subsidiary, HomeOne, renewed and extended an agreement with Greenwich Capital Financial Products, Inc. (Greenwich) that provides up to $75 million in warehouse funding. The warehouse line of credit expires on March 15, 2006. Collateral for borrowings under the facility is manufactured housing consumer loans originated by HomeOne. The availability of financing under the facility is dependent on a number of factors, including the borrowing base represented by the loans pledged to Greenwich. The Company and HomeOne agreed to guarantee the facility in an aggregate amount not to exceed 10 percent of the amount of principal and interest outstanding. The Company’s guaranty includes financial and other covenants, including maintenance of specified levels of tangible net worth, total indebtedness to tangible net worth and liquidity. In anticipation that the Company would not be able to comply with certain of these covenant requirements, commencing in June 2005, Greenwich agreed to amend the covenant requirements to levels that the Company expects will be achievable.

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Convertible Trust Preferred Securities

In January 2002 we completed an offer of up to an aggregate of $37.95 million in liquidation amount of new 9.5% Convertible (Trust II) Preferred Securities due February 15, 2013, in exchange for up to an aggregate of $86.25 million of the $287.5 million in liquidation amount of outstanding 6% Convertible (Trust I) Trust Preferred Securities due February 15, 2028. Each new trust preferred security issued in the exchange offer was convertible, at the option of the holder, at any time into 1.752 shares of Fleetwood common stock (i.e., a conversion price of $12.56 per common share). With 1.725 million shares of new trust preferred issued in the exchange offer, the potential dilution to common shareholders upon conversion of the new exchange offer trust preferred was 3.0 million common shares.

In conjunction with the exchange offer, we offered to sell for cash $150 million of 9.5% Convertible (Trust III) Preferred Securities due February 15, 2013. The cash offer closed on December 14, 2001. Each Trust III preferred security issued in the cash offer was convertible, at the option of the holder, at any time into 4.826 shares of Fleetwood common stock (i.e., a conversion price of $10.36 per common share). With 3.0 million shares of new trust preferred issued in the cash offer, the potential dilution to common shareholders upon conversion of the new cash offer trust preferred was 14.5 million common shares.

On March 9, 2004, the Company announced that it was calling $50 million aggregate principal amount of the Trust III preferred securities for redemption. Subsequently, on March 30, 2004, the Company called the remaining $100 million aggregate principal amount of Trust III preferred securities for redemption. Subsequently, virtually all of the holders of the Trust III preferred securities converted their securities into an aggregate of 14,478,578 shares of the Company’s common stock, including some who had entered into privately negotiated transactions with the Company to convert their securities, prior to the respective redemption dates, in exchange for a cash incentive. As a result, as of April 25, 2004, there remained 377,726 shares of Trust III preferred securities outstanding, with an aggregate principal amount of $18.9 million, and as of April 29, 2004, which was the final redemption date pursuant to the Company’s calls for redemption, there were no Trust III preferred securities outstanding.

On May 5, 2004, the Company called the Trust II preferred securities for redemption with a redemption date of June 4, 2004. Several of the holders of the Trust II preferred securities converted their holdings to shares of the Company’s common stock, including some who entered into privately negotiated transactions with the Company to convert their securities, prior to the redemption date, in exchange for a cash incentive. Accordingly, as of the June 4, 2004 redemption date, pursuant to the Company’s call for redemption, 781,065 shares of the Trust II preferred securities had been converted into an aggregate of 1,368,074 shares of the Company’s common stock, and 943,935 shares of the Trust II preferred securities were redeemed for an aggregate of $22.5 million in cash, representing $20.8 million in aggregate amount, $1.3 million in redemption premium and $104,000 in accrued but unpaid interest to the redemption date.

Dividends and Distributions

On October 30, 2001, the board of directors discontinued the payment of dividends on our common stock in conjunction with an election to defer distributions on our existing 6% convertible trust preferred securities. We have the right to elect to defer distributions for up to 20 consecutive quarters under the trust indenture governing the existing 6% convertible trust preferred securities. When we defer a distribution on the 6% convertible trust preferred securities, we are 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 presently intend to continue to defer the distribution on the Trust I Securities until August 2006, which would be the last of these consecutive quarterly distributions that could be deferred under the terms of the governing instruments. At the end of fiscal 2005, we had deferred $49.6 million, including accrued interest at 6 percent on the deferred amounts.

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Discontinued Operations

In March 2005, we announced that the manufactured housing retail and financial services businesses were to be sold. We currently expect to realize the carrying value of assets to be sold less amounts paid to settle related liabilities, including retail flooring of $37.6 million and the warehouse line of credit of $40.7 million. We also expect to incur $6-8 million of mostly cash one-time termination costs and contract termination costs in fiscal 2006 and intend to repay the portion of our secured credit facility that relates to the retail business, which stands at $43.0 million at April 24, 2005.

Other

In the opinion of management, the combination of existing cash resources, expected future cash flows from operations, and available lines of credit will be sufficient to satisfy our foreseeable cash requirements for the next 12 months, including up to $30 million for capital expenditures in fiscal 2006, to be utilized primarily for enhancements to manufacturing facilities.

Contracts and Commitments

Below is a table showing payment obligations for long-term debt, capital leases, operating leases and purchase obligations for the next five years and beyond:

	Payments Due By Period
Contractual Obligations	Total		Less than  1 year			1-3 years		3-5 years(2)			More than 5 years
	(Amounts in thousands)
Long-term debt (excluding capital lease obligations and convertible subordinated debentures)	$	101,885		$	—	$	397		$	179	$	101,309
Capital lease obligations	10,254			2,470		5,434			2,350		—
Operating leases(1)	52,232			10,765		15,136			8,915		17,416
Other long-term liabilities:
Deferred compensation and non-qualified retirement plans	38,771			5,833		10,494			7,982		14,462
Insurance reserves	32,215			32,215		—			—		—
Convertible subordinated debentures	210,142			—		—			—		210,142
Total	$	445,499		$	51,283	$	31,461		$	19,426	$	343,329

(1)Most of the Company’s retail sales locations and certain of its other facilities are leased under terms that range from monthly to 18 years. Also included in the above amounts are equipment leases. Management expects that in the normal course of business, leases will be renewed or replaced by other leases to support continuing operations.

Off-Balance Sheet Arrangements

We describe our aggregate contingent repurchase obligation in Note 16 to the Company’s financial statements and under Critical Accounting Policies in this Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in this Report.

Under the senior credit agreement, Fleetwood Enterprises, Inc. is a guarantor of the borrowings of Fleetwood Holdings, Inc. (FHI) and Fleetwood Retail Corp. (FRC). FHI includes most of the wholly owned manufacturing subsidiaries and FRC includes all the retail housing subsidiaries. Only the FRC parent company, however, and seven of the retail subsidiaries are borrowers under the loan and covered under the guarantee. In addition, Fleetwood Enterprises, Inc. guarantees FRC’s floorplan obligations to

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Textron and Bombardier Capital, Inc. pursuant to FRC’s wholesale financing agreements with the two flooring institutions.

Under the warehouse line of credit, initiated in December 2003, between HomeOne Credit Corp., our captive finance subsidiary, and Greenwich Capital Financial Products, Inc., Fleetwood Enterprises, Inc. is a limited guarantor of the borrowings.

Fleetwood Enterprises, Inc. has also entered into ten limited guarantees aggregating $4.2 million to certain obligations of certain retailers to floorplan lenders and an additional two unsecured guarantees aggregating $3.5 million for other obligations.

New Accounting Pronouncements

In November 2002, the Financial Accounting Standards Board (FASB) issued Interpretation No. 45 (FIN 45), “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others.” This interpretation specifies the disclosures to be made by a guarantor in its interim and annual financial statements concerning its obligations under certain guarantees that it has issued. FIN 45 also requires a guarantor to recognize a liability, at the inception of the guarantee, for the fair value of obligations it has undertaken in issuing the guarantee. The disclosure requirements of FIN 45 are effective for interim and annual periods ending after December 15, 2002. The initial recognition and initial measurement requirements of FIN 45 are effective prospectively for guarantees issued or modified after December 31, 2002. Accordingly, we adopted the disclosure provisions of FIN 45, which have been reflected in the accompanying consolidated financial statements. The adoption of these provisions did not have a material impact on the Company’s financial position, results of operations or cash flows.

In December 2004, the FASB issued Statement of Financial Accounting Standards No. 123R (SFAS 123R), “Share-Based Payment.” Under previous practice, the reporting entity could account for share-based payment under the provisions of Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” and disclose share-based compensation as if accounted for under the provisions of Statement of Financial Accounting Standard No. 123 (SFAS No. 123), “Accounting for Stock-Based Compensation”. Under the provisions of SFAS No. 123R, a public entity is required to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award. That cost is recognized over the period during which an employee is required to provide service in exchange for the award.

The Company expects to adopt SFAS No. 123R, effective with the beginning of fiscal 2007. Adoption of the standard is currently expected to reduce fiscal 2007 earnings by an amount consistent with the reductions shown in recent pro forma disclosures provided under the provisions of SFAS No. 123. Application of this pronouncement requires significant judgment regarding the assumptions used in the selected option pricing model, including stock price volatility and employee exercise behavior. Most of these inputs are either highly dependent on the current economic environment at the date of grant or forward-looking over the expected term of the award. As a result, the actual impact of adoption on future earnings could differ significantly from our current estimate.

In May 2003, the FASB issued SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity.” This statement establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. This statement requires an issuer to classify a financial instrument issued in the form of shares that are mandatorily redeemable—that embodies an unconditional obligation requiring the issuer to redeem them by transferring its assets at a specified or determinable date—as a liability. This statement was adopted during fiscal 2004 and had no impact on our financial reporting.

52

In January 2003, the FASB issued Interpretation No. 46 (FIN 46), “Consolidation of Variable Interest Entities,” which expands upon and strengthens existing accounting guidance concerning when a company should consolidate in its financial statements the assets, liabilities and activities of another entity. A revised Interpretation was issued in December 2003 (FIN 46R).

Prior to the issuance of FIN 46, a company generally included another entity in its consolidated financial statements only if it controlled the entity through voting interests. FIN 46 now requires a variable interest entity, as defined in FIN 46, to be consolidated by a company only if that company is subject to a majority of the risk of loss from the variable interest entity’s activities or is entitled to receive a majority of the entity’s residual returns or both. FIN 46 also requires disclosures about variable interest entities that the Company is not required to consolidate but in which it has a significant variable interest.

The Company owned three Delaware business trusts that were established for the purpose of issuing optionally redeemable convertible trust preferred securities. The obligations of the business trusts to the holders of the trust preferred securities were all supported by convertible subordinated debentures issued by Fleetwood to the respective business trusts. In the first quarter of the current fiscal year, the preferred securities of two of the trusts were either converted or redeemed, and the debentures cancelled. Under FIN 46, which was adopted by the Company as of January 25, 2004, the trust preferred securities continued to be presented as minority interests based on the fact that the Company had the ability to “call” the trust preferred securities and that no single party held a majority of the preferred securities; therefore, the Company was considered the primary beneficiary of the trusts. Under FIN 46R, which was adopted by the Company as of April 25, 2004, the call option embedded in the trust preferred securities was determined to be clearly and closely related to the underlying security. FIN 46R confirmed that the call option could no longer be separately evaluated as a determinant of the primary beneficiary of the trusts. As a result, the business trusts were now deemed to have no primary beneficiary and they were deconsolidated, resulting in the presentation of the convertible subordinated debenture obligations to the underlying trusts as a long-term liability for all years presented. Amounts previously shown in the Statements of Operations as minority interest in Fleetwood Capital Trusts I, II and III, net of taxes, were reclassified for all periods presented to interest expense, with the related tax effect included in the tax provision. Other than as indicated, the Company does not believe that the adoption of FIN 46 or FIN 46R had a material impact on the Company’s financial position, results of operations or cash flows.

In November 2004, the FASB issued SFAS No. 151, Inventory Costs—An Amendment of ARB No. 43, Chapter 4. SFAS No. 151 clarifies that abnormal amounts of idle facility expense, freight, handling costs and spoilage should be expensed as incurred and not included in overhead. Further, SFAS No. 151 requires that allocation of fixed and production facilities overhead to conversion costs should be based on normal capacity of the production facilities. The provisions in SFAS No. 151 are effective for inventory costs incurred during fiscal years beginning after June 15, 2005. The Company is currently evaluating the impact of the adoption of this standard, but does not believe that the adoption of SFAS No. 151 will have a significant effect on its results of operations or financial position.

In March 2004, the FASB approved the consensus reached on the Emerging Issues Task Force (EITF) Issue No. 03-1, The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments. It provides guidance for identifying other-than-temporarily impaired investments. EITF 03-1 also provides new disclosure requirements for investments that are deemed to be temporarily impaired. In September 2004, the FASB issued a FASB Staff Position (FSP) EITF 03-1-1 that delays the effective date of the measurement and recognition guidance in EITF 03-1 until further notice. The disclosure requirements of EITF 03-1 are effective for fiscal years ending after December 15, 2003 and are reflected herein. After the FASB reaches a final decision on the measurement and recognition provisions, the Company will evaluate the impact of the adoption of the accounting provisions of EITF 03-1.

53

In December 2003, the FASB issued SFAS No. 132 Revised (SFAS 132R), “Employers’ Disclosure about Pensions and Other Postretirement Benefits.” A revision of the pronouncement originally issued in 1998, SFAS 132R expands employers’ disclosure requirements for pension and postretirement benefits to enhance information about plan assets, obligations, benefit payments, contributions and net benefit cost. SFAS 132R does not change the accounting requirements for pensions and other postretirement benefits. This statement was implemented beginning with the fourth quarter of fiscal 2004. The Company has determined that there are no material benefits requiring disclosure under this pronouncement.

Item 7a. Quantitative and Qualitative Disclosures About Market Risk

We are exposed to market risks related to fluctuations in interest rates on marketable investments, investments underlying a Company-owned life insurance program (COLI), variable rate debt under the secured credit facility, the liability for flooring of retail housing inventories and the warehouse line of credit. With respect to the COLI program, the underlying investments are subject to both interest rate risk and equity market risk. Market related changes to our 6% convertible trust preferred securities indirectly may impact the amount of the deferred tax valuation allowance, which is currently dependent on available tax strategies, including the unrealized gains on these securities. We do not currently use interest rate swaps, futures contracts or options on futures, or other types of derivative financial instruments.

The vast majority of our marketable investments are in institutional money market funds or fixed rate securities with average original maturity dates of two weeks or less, minimizing the effect of interest rate fluctuations on their fair value.

For variable rate debt, changes in interest rates generally do not influence fair market value, but do affect future earnings and cash flows. Based upon the amount of variable rate debt outstanding at the end of the year, and holding the variable rate debt balance constant, each one percentage point increase in interest rates occurring on the first day of an annual period would result in an increase in interest expense of approximately $1.4 million. For both fixed rate loans and debt, changes in interest rates generally affect the fair market value, but not earnings or cash flows. A one percentage point increase in interest rates would result in an estimated decrease of the fair market value of finance loans receivable of $2.3 million. Other changes in fair market values as a result of interest rate changes are not currently expected to be material.

We do not believe that future market equity or interest rate risks related to our marketable investments or debt obligations will have a material impact on our results.

54

Item 8. Financial Statements and Supplementary Data

FLEETWOOD ENTERPRISES, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULE
FOR THE YEAR ENDED APRIL 24, 2005

	Page
Report of Independent Registered Public Accounting Firm		56
Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting		57
Consolidated Statements of Operations		58
Consolidated Balance Sheets		59
Consolidated Statements of Cash Flows		60
Consolidated Statements of Changes in Shareholders’ Equity		61
Notes to Consolidated Financial Statements		62
Schedule II-Consolidated Valuation and Qualifying Accounts		90

r

55

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Shareholders

Fleetwood Enterprises, Inc.

We have audited the accompanying consolidated balance sheets of Fleetwood Enterprises, Inc. as of April 24, 2005 and April 25, 2004, and the related consolidated statements of operations, changes in shareholders’ equity, and cash flows for each of the three years in the period ended April 24, 2005. Our audits also included the financial statement schedule listed in the Index at Item 15(a). These financial statements and schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Fleetwood Enterprises, Inc. at April 24, 2005 and April 25, 2004, and the consolidated results of its operations and its cash flows for each of the three years in the period ended April 24, 2005, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of Fleetwood Enterprises, Inc.’s internal control over financial reporting as of April 24, 2005 based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated July 5, 2005 expressed an unqualified opinion thereon.

	/s/ Ernst & Young LLP
Orange County, California
July 5, 2005

56

Report of Independent Registered Public Accounting Firm on
Internal Control over Financial Reporting

Board of Directors and Shareholders

Fleetwood Enterprises, Inc.

We have audited management’s assessment, included in the accompanying Management’s Report on Internal Control Over Financial Reporting, that Fleetwood Enterprises, Inc. maintained effective internal control over financial reporting as of April 24, 2005, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Fleetwood Enterprises, Inc.’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on management’s assessment and an opinion on the effectiveness of the company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, management’s assessment that Fleetwood Enterprises, Inc. maintained effective internal control over financial reporting as of April 24, 2005, is fairly stated, in all material respects, based on the COSO criteria. Also, in our opinion, Fleetwood Enterprises, Inc. maintained, in all material respects, effective internal control over financial reporting as of April 24, 2005, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Fleetwood Enterprises, Inc. as of April 24, 2005 and April 25, 2004, and the related consolidated statements of operations, changes in shareholders’ equity, and cash flows for each of the three years in the period ended April 24, 2005 and our report dated July 5, 2005 expressed an unqualified opinion thereon.

	/s/ Ernst & Young LLP
Orange County, California
July 5, 2005

57

FLEETWOOD ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share data)

	Years Ended April
	2005			2004			2003
Net sales:
RV Group	$	1,659,882		$	1,779,233		$	1,482,595
Housing Group	785,547			657,388			667,087
Supply Group	57,020			41,120			37,178
Intercompany sales	(127,737		)	(117,135		)	(115,903		)
	2,374,712			2,360,606			2,070,957
Cost of products sold	1,979,482			1,943,147			1,696,859
Gross profit	395,230			417,459			374,098
Operating expenses	420,187			343,246			343,942
Other, net	18,581			(4,656		)	4,779
	438,768			338,590			348,721
Operating income (loss)	(43,538		)	78,869			25,377
Other income (expense):
Investment income	2,385			2,626			3,369
Interest expense	(27,349		)	(43,258		)	(41,101		)
Other, net	(2,724		)	(2,430		)	—
	(27,688		)	(43,062		)	(37,732		)
Income (loss) from continuing operations before income taxes	(71,226		)	35,807			(12,355		)
Provision for income taxes	(1,351		)	(18,449		)	(4,502		)
Income (loss) from continuing operations	(72,577		)	17,358			(16,857		)
Loss from discontinued operations, net	(88,882		)	(39,619		)	(53,882		)
Net loss	$	(161,459	)	$	(22,261	)	$	(70,739	)

	Years Ended April
	2005						2004						2003
	Basic			Diluted			Basic			Diluted			Basic			Diluted
Net income (loss) per common share:
Income (loss) from continuing operations	$	(1.31	)	$	(1.31	)	$	.45		$	.44		$	(.47	)	$	(.47	)
Loss from discontinued operations	$	(1.61	)	$	(1.61	)	$	(1.03	)	$	(1.01	)	$	(1.50	)	$	(1.50	)
Net loss per common share	$	(2.92	)	$	(2.92	)	$	(.58	)	$	(.57	)	$	(1.97	)	$	(1.97	)
Weighted average common shares	55,332			55,332			38,357			39,342			35,869			35,869

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See accompanying notes to consolidated financial statements.

58

FLEETWOOD ENTERPRISES, INC.
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share data)

	April 24, 2005			April 25, 2004
ASSETS
Cash	$	6,761		$	14,090
Marketable investments	38,715			109,732
Receivables	164,609			184,687
Inventories	233,591			189,962
Deferred taxes	56,904			56,904
Assets of discontinued operations	145,784			145,553
Other current assets	23,974			20,256
Total current assets	670,338			721,184
Property, plant and equipment, net	232,125			229,638
Deferred taxes	17,859			17,859
Cash value of Company-owned life insurance	36,946			48,809
Goodwill	6,316			6,316
Other assets	46,663			51,903
Total assets	$1,010,247			$	1,075,709
LIABILITIES AND SHAREHOLDERS’ EQUITY
Accounts payable	$	75,551		$	98,804
Employee compensation and benefits	77,924			70,222
Product warranty reserve	65,143			53,921
Other short-term borrowings	56,661			5,738
Accrued interest	52,446			38,868
Liabilities of discontinued operations	78,357			26,581
Other current liabilities	88,635			77,954
Total current liabilities	494,717			372,088
Deferred compensation and retirement benefits	38,771			49,473
Insurance reserves	32,215			32,916
Long-term debt	108,946			102,159
Convertible subordinated debentures	210,142			272,791
Total liabilities	884,791			829,427
Commitments and contingencies
Shareholders’ equity:
Preferred stock, $1 par value, authorized 10,000,000 shares, none outstanding	—			—
Common stock, $1 par value, authorized 150,000,000 shares, outstanding 56,043,000 at April 24, 2005, and 52,075,000 at April 25, 2004	56,043			52,075
Additional paid-in capital	424,782			390,107
Accumulated deficit	(356,796		)	(195,337		)
Accumulated other comprehensive income (loss)	1,427			(563		)
	125,456			246,282
	$	1,010,247		$	1,075,709

See accompanying notes to consolidated financial statements.

59

FLEETWOOD ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)

	Years Ended April
	2005			2004			2003
CASH FLOWS FROM OPERATING ACTIVITIES:
(Income) loss from continuing operations	$	(72,577	)	$	17,358		$	(16,857	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation expense	22,158			18,963			20,841
Amortization of financing costs	1,418			5,617			4,793
Other asset impairment charges	1,900			—			1,242
Gain on investment securities transactions	(33		)	(39		)	(64		)
Gains on sale of property, plant and equipment	(2,512		)	(4,656		)	(5,853		)
Non-cash charge on conversion of trust preferred securities	1,134			671			—
Issuance of stock in lieu of cash for interest on trust preferred securities	—			—			4,464
Changes in assets and liabilities—
(Increase) decrease in receivables	20,078			(41,235		)	2,444
Increase in inventories	(43,629		)	(29,669		)	(32,197		)
(Increase) decrease in income tax receivable	(2,743		)	535			21,853
Decrease in deferred taxes	—			15,000			11,120
Decrease in cash value of Company-owned life insurance	11,863			6,195			6,292
Increase in other assets	(5,880		)	(8,620		)	(3,769		)
Increase (decrease) in accounts payable	(23,253		)	19,914			444
Increase (decrease) in employee compensation and benefits	(3,000		)	(8,507		)	330
Increase (decrease) in product warranty reserve	11,222			(8,216		)	(5,909		)
Increase in other liabilities	23,945			13,514			16,930
Net cash provided by (used in) operating activities	(59,909		)	(3,175		)	26,104
CASH FLOWS FROM DISCONTINUED OPERATIONS:
Loss from discontinued operations, net	(88,882		)	(39,619		)	(53,882		)
Impairment charges	51,141			—			—
Purchase of property, plant and equipment	(1,560		)	(1,710		)	(782		)
Proceeds from sales of property, plant and equipment	681			2,344			1,684
(Increase) decrease in assets of discontinued operations	(50,493		)	(17,758		)	2,243
Increase (decrease) in liabilities of discontinued operations	51,776			11,224			(8,884		)
Net cash used in discontinued operations	(37,337		)	(45,519		)	(59,621		)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of investment securities available-for-sale	(708,279		)	(839,340		)	(709,368		)
Proceeds from sale of investment securities available-for-sale	779,325			767,951			756,198
Purchases of property, plant and equipment	(33,724		)	(26,017		)	(19,075		)
Proceeds from sales of property, plant and equipment	9,691			7,482			9,580
Net cash provided by (used in) investing activities	47,013			(89,924		)	37,335
CASH FLOWS FROM FINANCING ACTIVITIES:
Common stock issued—private placement	—			24,930			—
Increase (decrease) in short-term borrowings	50,923			(10,316		)	5,642
Increase (decrease) in long-term debt	6,787			99,802			(6,384		)
Redemption of convertible subordinated debentures	(20,767		)	—			—
Proceeds from exercise of stock options	3,967			5,317			192
Net cash provided by (used in) financing activities	40,910			119,733			(550		)
Foreign currency translation adjustment	1,994			1,460			2,164
Increase (decrease) in cash	(7,329		)	(17,425		)	5,432
Cash at beginning of year	14,090			31,515			26,083
Cash at end of year	$	6,761		$	14,090		$	31,515

See accompanying notes to consolidated financial statements.

60

FLEETWOOD ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(Amounts in thousands)

											Accumulated
	Common Stock				Additional						Other				Total
	Number				Paid-In		Accumulated				Comprehensive				Shareholders’
	of Shares		Amount		Capital		Deficit				Income (Loss)				Equity
BALANCE APRIL 28, 2002		35,290	$	35,290	$	245,983		$	(102,337	)		$	(4,193	)		$	174,743
Comprehensive loss:
Net loss		—	—		—			(70,739		)		—				(70,739		)
Other comprehensive income(loss):
Foreign currency translation, net of taxes of $1,384		—	—		—			—				2,164				2,164
Investment securities, net of taxes of $21		—	—		—			—				(37		)		(37		)
Comprehensive loss																(68,612		)
Restricted stock issued		148	148		33			—				—				181
Stock options exercised (including related tax benefits)		20	20		172			—				—				192
Common stock issued for interest on trust preferred securities		477	477		3,987			—				—				4,464
BALANCE APRIL 27, 2003		35,935	35,935		250,175			(173,076		)		(2,066		)		110,968
Comprehensive loss:
Net loss		—	—		—			(22,261		)		—				(22,261		)
Other comprehensive income:
Foreign currency translation, net of taxes of $648		—	—		—			—				1,460				1,460
Investment securities, net of taxes of $25		—	—		—			—				43				43
Comprehensive loss																(20,758		)
Vesting of deferred compensation related to restricted stock issuance		—	—		142			—				—				142
Stock options exercised		810	810		4,507			—				—				5,317
Common stock issued—private placement		2,674	2,674		22,256			—				—				24,930
Conversion of trust preferred securities to common stock		12,656	12,656		113,027			—				—				125,683
BALANCE APRIL 25, 2004		52,075	52,075		390,107			(195,337		)		(563		)		246,282
Comprehensive loss:
Net loss		—	—		—			(161,459		)		—				(161,459		)
Other comprehensive income:
Foreign currency translation, net of taxes of $1,641		—	—		—			—				1,994				1,994
Investment securities, net of taxes of $2		—	—		—			—				(4		)		(4		)
Comprehensive loss																(159,469		)
Conversion of subordinated debentures to common stock		3,191	3,191		31,429			—				—				34,620
Stock options exercised		777	777		3,190			—				—				3,967
Amortization of restricted stock		—	—		56			—				—				56
BALANCE APRIL 24, 2005		56,043	$	56,043	$	424,782		$	(356,796	)		$	1,427			$	125,456

See accompanying notes to consolidated financial statements.

61

FLEETWOOD ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Fleetwood is one of the nation’s leaders in producing both recreational vehicles and manufactured housing. In addition, the Company operates three supply companies that provide components for the recreational vehicle and housing operations, while also generating outside sales.

Fleetwood’s business began in 1950 through the formation of a California corporation. The present Company was incorporated in Delaware in September 1977, and succeeded by merger to all the assets and liabilities of the predecessor company. Fleetwood conducts manufacturing activities in 16 states within the U.S., and to a much lesser extent in Canada. The Company also operates a manufactured housing retail business, Fleetwood Retail Corp. (FRC), and a financial services subsidiary, HomeOne Credit Corp. (HomeOne). These businesses were designated as discontinued operations in March 2005 following an announcement that these businesses were to be sold.

(1)Summary of Significant Accounting Policies

Principles of consolidation:

The consolidated financial statements include the accounts of Fleetwood Enterprises, Inc. and its wholly owned subsidiaries. The term “Company” or “Fleetwood” used herein means Fleetwood Enterprises, Inc. and its subsidiaries, unless otherwise indicated by the context. All material intercompany accounts and transactions have been eliminated.

Accounting period:

The Company’s fiscal year ends on the last Sunday in April. The year-end dates for the past three fiscal years were April 24, 2005, April 25, 2004, and April 27, 2003. The consolidated financial statements include the discontinued operations of FRC and HomeOne for the 12-month periods ended March 31, 2005, 2004, and 2003, in order to ensure timely preparation of the consolidated financial statements.

Use of estimates:

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Reclassification:

Certain amounts previously reported have been reclassified to conform with the 2005 presentation.

Revenue recognition:

Revenue for manufacturing operations is generally recorded when all of the following conditions have been met:

·an order for a product has been received from a dealer,

·written or verbal approval for payment has been received from the dealer’s flooring institution,

·a common carrier signs the delivery ticket accepting responsibility for the product as agent for the dealer, and

·the product is removed from Fleetwood’s property for delivery to the dealer.

62

FLEETWOOD ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Manufacturing sales are generally made for cash, with most dealers financing their purchases under flooring arrangements with banks or finance companies. Products are not sold on consignment; dealers do not have the right to return products; and dealers are typically responsible for interest charges from floorplan lenders. On average, we receive payments from floorplan lenders on products sold to independent dealers within about 15 days of the invoice date.

Amounts billed to dealers for delivery of products are recognized as revenue with the corresponding delivery expense charged to cost of sales. Also, cash sales incentives are treated as a reduction of revenue.

Dealer volume rebates and sales incentives:

Estimated costs related to dealer volume rebates and sales incentives are accrued as a reduction of revenue at the time products are sold.

Product warranty costs:

Fleetwood provides retail customers of our products with a warranty covering defects in material or workmanship for periods ranging from one to two years, with longer warranties on certain structural components. The Company records a liability based on the best estimate of the amounts necessary to settle future and existing claims on products sold as of the balance sheet date. Factors used in estimating the warranty liability include a history of units sold to customers, the average cost incurred to repair a unit and a profile of the distribution of warranty expenditures over the warranty period.

Depreciation:

Depreciation is provided using the straight-line method based on the following estimated useful lives:

·Buildings and improvements—10-40 years

·Machinery and equipment—3-15 years

Research and development costs and advertising expense:

The Company follows the policy of expensing research and development costs in the periods incurred. Expenditures for product research and development activities were $28.7 million in fiscal 2005, $21.8 million in fiscal 2004 and $19.6 million in fiscal 2003. Advertising expenditures, which were also expensed in the periods incurred, totaled $889,000 in fiscal 2005, $1.1 million in fiscal 2004 and $1.5 million in fiscal 2003.

Income taxes:

Deferred income tax assets or liabilities are computed based on the difference between the financial statement and income tax basis of assets and liabilities using the statutory marginal tax rate. Deferred income tax expenses or benefits are based on the changes in the deferred asset or liability from period to period. A valuation allowance is provided when it is more likely than not that some portion or all of the deferred tax asset will not be realized.

63

FLEETWOOD ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Stock-based incentive compensation:

The Company accounts for stock-based incentive compensation plans, which are described more fully in Note 18, using the intrinsic method under which no compensation cost is recognized for stock option grants because the options are granted at fair market value at the date of grant. Had compensation costs for these plans been determined using the fair value method, under which a compensation cost is recognized over the vesting period of the stock option based on its fair value at the date of grant, the Company’s net loss and loss per share would have been affected as indicated by the following table:

	Years Ended April
	2005			2004			2003
	(Amounts in thousands, except per share data)
Net loss, as reported	$	(161,459	)	$	(22,261	)	$	(70,739	)
Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects	(4,020		)	(4,071		)	(2,439		)
Pro forma net loss	$	(165,479	)	$	(26,332	)	$	(73,178	)
Basic loss per share, as reported	$	(2.92	)	$	(.58	)	$	(1.97	)
Basic loss per share, pro forma	$	(2.99	)	$	(.69	)	$	(2.04	)
Diluted loss per share, as reported	$	(2.92	)	$	(.57	)	$	(1.97	)
Diluted loss per share, pro forma	$	(2.99	)	$	(.67	)	$	(2.04	)

The fair value of each option granted is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions used for grants in fiscal years 2005, 2004 and 2003, respectively: risk-free interest rates of 4.0 percent for all periods presented; expected dividend yields of 0.0 percent for all periods presented; expected lives of four years for all periods presented; and an expected volatility range of 45 to 50 percent for fiscal 2005, 60 to 92 percent for fiscal 2004 and 92 percent for fiscal 2003.

Cash flow statements:

For purposes of these statements, cash includes cash on hand and cash in banks in demand deposit accounts.

Marketable investments:

All of the marketable investments of the Company are classified as available-for-sale securities. The Company does not hold investments classified as trading securities. Marketable investments classified as available-for-sale are reported on the consolidated balance sheet at their market value. The net unrealized gains or losses for these securities are reported, net of related taxes, as separate components of other comprehensive income (loss). Interest income from the securities portfolio is accrued as earned including the accretion of discounts and the amortization of premiums based on the original cost of each security. Realized gains or losses are recognized using the specific identification method.

64

FLEETWOOD ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Inventory valuation:

Inventories are valued at the lower of cost (first-in, first-out) or market. Manufacturing cost includes materials, labor and manufacturing overhead. Retail finished goods are valued at cost less intercompany manufacturing profit.

Long-lived assets:

The Company assesses the recoverability of its long-lived assets by determining whether the net book value can be recovered through projected cash flows over the remaining life. If projections indicate that the value of long-lived assets will not be recovered, an adjustment is made to reduce the asset to fair value based upon estimated recoverability upon sale, where appropriate, or other estimates of fair value such as discounting future cash flows. Cash flow projections, although subject to a degree of uncertainty, are based on trends of historical performance and management’s estimate of future performance, giving consideration to existing and anticipated competitive, market and economic conditions. Long-lived assets classified as held for sale, including assets in discontinued operations, are measured at the lower of their carrying amount or fair value less costs to sell. The Company ceases to depreciate any long-lived assets held for sale.

Discontinued operations:

Assets and liabilities expected to be sold or extinguished are presented separately on the consolidated balance sheets as assets or liabilities from discontinued operations. When components of the Company are classified as held for sale, the results of operations of the components are presented separately in discontinued operations, net, for current and prior periods, with results reported in the period in which they occur.

Goodwill:

Goodwill is not amortized but is 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 (see Note 8).

Insurance reserves:

Insurance reserves primarily represent estimated liabilities for products liability and workers’ compensation claims. Workers’ compensation reserves mainly consist of estimated case reserves on known claims, as well as a factor for incurred but not reported claims. Products liability reserves include both case reserves on known claims as well as estimated liabilities for claims that have not been reported. Products liability reserves include estimated amounts for unpaid claims and claim adjustment expenses, which are based on historical experience and independent actuarial calculations.

Foreign currency translation:

Exchange adjustments resulting from foreign currency transactions are recognized currently in income, whereas adjustments resulting from the translation of non-U.S. functional currency financial statements are reflected in other comprehensive income (loss) as a separate component of shareholders’ equity. The assets and liabilities of the Canadian operation are translated to U.S. dollars at current exchange rates. Revenues and expenses are translated at the average exchange rates for the year. Gains or losses on foreign currency transactions in fiscal years 2005, 2004 and 2003 were not material.

65

FLEETWOOD ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

New accounting pronouncements:

In November 2002, the Financial Accounting Standards Board (FASB) issued Interpretation No. 45 (FIN 45), “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others.” This interpretation specifies the disclosures to be made by a guarantor in its interim and annual financial statements concerning its obligations under certain guarantees that it has issued. FIN 45 also requires a guarantor to recognize a liability, at the inception of the guarantee, for the fair value of obligations it has undertaken in issuing the guarantee. The disclosure requirements of FIN 45 are effective for interim and annual periods ending after December 15, 2002. The initial recognition and initial measurement requirements of FIN 45 are effective prospectively for guarantees issued or modified after December 31, 2002. Accordingly, we adopted the disclosure provisions of FIN 45, which have been reflected in the accompanying consolidated financial statements. The adoption of these provisions did not have a material impact on the Company’s financial position, results of operations or cash flows.

In December 2004, the FASB issued Statement of Financial Accounting Standards No. 123R (SFAS 123R), “Share-Based Payment.” Under previous practice, the reporting entity could account for share-based payment under the provisions of Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” and disclose share-based compensation as if accounted for under the provisions of Statement of Financial Accounting Standard No. 123 (SFAS No. 123), “Accounting for Stock-Based Compensation”. Under the provisions of SFAS No. 123R, a public entity is required to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award. That cost is recognized over the period during which an employee is required to provide service in exchange for the award.

The Company expects to adopt SFAS No. 123R, effective with the beginning of fiscal 2007. Adoption of the standard is currently expected to reduce fiscal 2007 earnings by an amount consistent with the reductions shown in recent pro forma disclosures provided under the provisions of SFAS No. 123. Application of this pronouncement requires significant judgment regarding the assumptions used in the selected option pricing model, including stock price volatility and employee exercise behavior. Most of these inputs are either highly dependent on the current economic environment at the date of grant or forward-looking over the expected term of the award. As a result, the actual impact of adoption on future earnings could differ significantly from our current estimate.

In May 2003, the FASB issued SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity.” This statement establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. This statement requires an issuer to classify a financial instrument issued in the form of shares that are mandatorily redeemable—that embodies an unconditional obligation requiring the issuer to redeem them by transferring its assets at a specified or determinable date—as a liability. This statement was adopted during fiscal 2004 and had no impact on our financial reporting.

In January 2003, the FASB issued Interpretation No. 46 (FIN 46), “Consolidation of Variable Interest Entities,” which expands upon and strengthens existing accounting guidance concerning when a company should consolidate in its financial statements the assets, liabilities and activities of another entity. A revised Interpretation was issued in December 2003 (FIN 46R).

Prior to the issuance of FIN 46, a company generally included another entity in its consolidated financial statements only if it controlled the entity through voting interests. FIN 46 now requires a variable

66

FLEETWOOD ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

interest entity, as defined in FIN 46, to be consolidated by a company only if that company is subject to a majority of the risk of loss from the variable interest entity’s activities or is entitled to receive a majority of the entity’s residual returns or both. FIN 46 also requires disclosures about variable interest entities that the Company is not required to consolidate but in which it has a significant variable interest.

The Company owned three Delaware business trusts that were established for the purpose of issuing optionally redeemable convertible trust preferred securities. The obligations of the business trusts to the holders of the trust preferred securities were all supported by convertible subordinated debentures issued by Fleetwood to the respective business trusts. In the first quarter of the current fiscal year, the preferred securities of two of the trusts were either converted or redeemed, and the debentures cancelled. Under FIN 46, which was adopted by the Company as of January 25, 2004, the trust preferred securities continued to be presented as minority interests based on the fact that the Company had the ability to “call” the trust preferred securities and that no single party held a majority of the preferred securities; therefore, the Company was considered the primary beneficiary of the trusts. Under FIN 46R, which was adopted by the Company as of April 25, 2004, the call option embedded in the trust preferred securities was determined to be clearly and closely related to the underlying security. FIN 46R confirmed that the call option could no longer be separately evaluated as a determinant of the primary beneficiary of the trusts. As a result, the business trusts were now deemed to have no primary beneficiary and they were deconsolidated, resulting in the presentation of the convertible subordinated debenture obligations to the underlying trusts as a long-term liability for all years presented. Amounts previously shown in the Statements of Operations as minority interest in Fleetwood Capital Trusts I, II and III, net of taxes, were reclassified for all periods presented to interest expense, with the related tax effect included in the tax provision. Other than as indicated, the Company does not believe that the adoption of FIN 46 or FIN 46R had a material impact on the Company’s financial position, results of operations or cash flows.

In November 2004, the FASB issued SFAS No. 151, Inventory Costs—An Amendment of ARB No. 43, Chapter 4. SFAS No. 151 clarifies that abnormal amounts of idle facility expense, freight, handling costs and spoilage should be expensed as incurred and not included in overhead. Further, SFAS No. 151 requires that allocation of fixed and production facilities overhead to conversion costs should be based on normal capacity of the production facilities. The provisions in SFAS No. 151 are effective for inventory costs incurred during fiscal years beginning after June 15, 2005. The Company is currently evaluating the impact of the adoption of this standard, but does not believe that the adoption of SFAS No. 151 will have a significant effect on its results of operations or financial position.

In March 2004, the FASB approved the consensus reached on the Emerging Issues Task Force (EITF) Issue No. 03-1, The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments. It provides guidance for identifying other-than-temporarily impaired investments. EITF 03-1 also provides new disclosure requirements for investments that are deemed to be temporarily impaired. In September 2004, the FASB issued a FASB Staff Position (FSP) EITF 03-1-1 that delays the effective date of the measurement and recognition guidance in EITF 03-1 until further notice. The disclosure requirements of EITF 03-1 are effective for fiscal years ending after December 15, 2003 and are reflected herein. After the FASB reaches a final decision on the measurement and recognition provisions, the Company will evaluate the impact of the adoption of the accounting provisions of EITF 03-1.

In December 2003, the FASB issued SFAS No. 132 Revised (SFAS 132R), “Employers’ Disclosure about Pensions and Other Postretirement Benefits.” A revision of the pronouncement originally issued in 1998, SFAS 132R expands employers’ disclosure requirements for pension and postretirement benefits to enhance information about plan assets, obligations, benefit payments, contributions and net benefit cost.

67

FLEETWOOD ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

SFAS 132R does not change the accounting requirements for pensions and other postretirement benefits. This statement was implemented beginning with the fourth quarter of fiscal 2004. The Company has determined that there are no material benefits requiring disclosure under this pronouncement.

(2)Supplemental Financial Information

Earnings Per Share

Basic earnings per share are computed by dividing income available to common shareholders by the weighted average number of common shares outstanding. The effect of stock options and convertible securities was anti-dilutive in fiscal 2005, 2004 and 2003, and was, therefore, not considered when determining diluted earnings (loss).

The table below shows the calculation components of both basic and diluted earnings per share for each of the three fiscal years in the period ended April 24, 2005 (amounts in thousands):

	2005			2004			2003
Income (loss) from continuing operations	$	(72,577	)	$	17,358		$	(16,857	)
Loss from discontinued operations	(88,882		)	(39,619		)	(53,882		)
Net loss	$	(161,459	)	$	(22,261	)	$	(70,739	)
Weighted average shares outstanding used for basic income (loss) per share	55,332			38,357			35,869
Effect of dilutive employee stock options	—			985			—
Weighted average shares outstanding used for dilutive income (loss) per share	55,332			39,342			35,869

Anti-dilutive securities outstanding as of the fiscal years ended April 24, 2005, April 25, 2004 and April 27, 2003 are as follows (amounts in thousands):

	2005	2004	2003
Options and warrants	5,753	5,963	6,645
Convertible subordinated debentures	4,131	8,975	21,631
Convertible senior subordinated debentures	8,503	8,503	—

Common stock reserved for future issuance at April 24, 2005 was 18,387 shares.

Investment Income

Investment income for fiscal years 2005, 2004 and 2003 consisted of the following:

	2005			2004			2003
	(Amounts in thousands)
Interest income	$	2,394		$	2,632		$	3,350
Gross realized gains on investments	34			35			76
Gross realized losses on investments	—			(1		)	(20		)
Investment management fees	(43		)	(40		)	(37		)
	$	2,385		$	2,626		$	3,369

68

FLEETWOOD ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Inventories

Inventories at April 24, 2005 and April 25, 2004, consist of the following:

	2005		2004
	(Amounts in thousands)
Manufacturing inventory
Raw materials	$	139,520	$	121,285
Work in process	40,736		32,505
Finished goods	53,335		36,172
	$	233,591	$	189,962

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 Workhorse Custom Chassis is the dominant supplier of Class A gas chassis and Ford Motor Company is the dominant supplier of Class C chassis. Shortages, production delays or work stoppages by the employees of such suppliers could have a 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.

Warranty Reserves

Changes in the Company’s product warranty liability during the fiscal years ended April 24, 2005 and April 25, 2004, are as follows:

	2005			2004
	(Amounts in thousands)
Balance at beginning of year	$	53,921		$	62,137
Warranties issued and changes in the estimated liability during the period	102,210			67,644
Settlements made during the period	(90,988		)	(75,860		)
Balance at end of year	$	65,143		$	53,921

Consolidated Insurance Subsidiary

The insurance subsidiary was formed primarily for the purpose of insuring products liability risks of the parent company and its subsidiaries. Condensed financial information as of and for the fiscal years ended April 24, 2005, April 25, 2004, and April 27, 2003, for this subsidiary, excluding intercompany eliminations, is as follows:

	2005			2004			2003
	(Amounts in thousands)
Insurance subsidiary:
Cash and investments	$	19,330		$	18,595		$	16,179
Other assets	19,385			20,489			20,695
Reserves for losses	33,353			33,166			30,996
Other liabilities	2,988			3,084			1,944
Net premiums	7,672			5,401			5,218
Underwriting loss	(716		)	(867		)	(2,675		)
Investment income	429			349			537

69

FLEETWOOD ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Other Current Liabilities

Other current liabilities as of April 24, 2005 and April 25, 2004, consist of the following:

	2005			2004
	(Amounts in thousands)
Dealer rebates		$	16,261		$	14,202
Accrued selling program expenses		15,710			13,467
Accrued litigation settlements		21,015			3,190
Retail customer deposits		6,345			8,325
Other		29,304			38,770
		$	88,635		$	77,954

Accumulated Other Comprehensive Loss

The following reflects the balances and activity, net of income taxes, for the components of accumulated other comprehensive loss for the periods:

	Foreign Currency Items			Unrealized Gains (Losses) on Securities				Accumulated Other Comprehensive Loss
	(Amounts in thousands)
Balance April 28, 2002	$	(4,233	)		$	40			$	(4,193	)
Foreign currency translation adjustment	2,164				—				2,164
Unrealized holding losses	—				(1		)		(1		)
Reclassification adjustment for gains included in net income, net of income taxes of $20	—				(36		)		(36		)
Net	2,164				(37		)		2,127
Balance April 27, 2003	(2,069		)		3				(2,066		)
Foreign currency translation adjustment	1,460				—				1,460
Unrealized holding gains	—				64				64
Reclassification adjustment for gains included in net income, net of income taxes of $13	—				(21		)		(21		)
Net	1,460				43				1,503
Balance April 25, 2004	(609		)		46				(563		)
Foreign currency translation adjustment	1,994				—				1,994
Unrealized holding gains	—				28				14
Reclassification adjustment for gains included in net income, net of income taxes of $2	—				(32		)		(18		)
Net	1,994				(4		)		1,990
Balance April 24, 2005	$	1,385			$	42			$	1,427

70

FLEETWOOD ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Supplementary Cash Flow Disclosures

Supplemental cash flow disclosures for each of the three fiscal years in the period ended April 24, 2005, are as follows:

	2005		2004		2003
	(Amounts in thousands)
Interest paid	$	11,817	$	27,827	$	21,560
Income taxes paid	$	4,845	$	5,738	$	3,439

(3)Industry Segment Information

The Company conducts operations principally in two industries, recreational vehicles and manufactured housing. The Company is organized into four segments: the RV Group, the Housing Group, the Supply Group and Corporate.

The RV Group, which consists of the motor home and towable divisions, is a manufacturer and wholesaler of recreational vehicles, primarily selling products to a network of independent dealers. The Housing Group is a manufacturer and wholesaler of manufactured homes, selling products to a combination of independent dealers and Company-owned stores of the retail housing business. The retail business along with the financial services business are included in discontinued operations and have been excluded from the industry segment information. Identifiable assets exclude assets from the retail and financial services businesses of $145.8 million, $145.6 million, and $128.4 million for fiscal years 2005, 2004, and 2003, respectively. Information about those businesses can be found in Note 11. The Supply Group operations provide fiberglass, parts, lumber and other components to our primary businesses while also generating outside sales. The operations of the Company’s wholly owned insurance subsidiary have been included in the Corporate segment because the impact on consolidated operating income is not material. Intercompany sales and profits have been eliminated from the reported segment information.

71

FLEETWOOD ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Operating income (loss) is total revenue less cost of sales, operating expenses and other, net. The adjustments and eliminations include intercompany revenues of the Housing and Supply Groups and revenues of the wholly owned insurance subsidiary included in Corporate, as well as the elimination of intercompany profits on inventories held by the retail business. None of the following items have been included in the computation of operating income (loss) for the individual operating segments: certain corporate expenses, non-operating income and expenses and income taxes. Goodwill for the acquisition of the folding trailer division was included in total assets of the RV Group. Identifiable assets are those assets used in the operation of each industry segment. Corporate assets primarily consist of cash, investments, deferred tax benefits, cash value of Company-owned life insurance, other assets and some idle facilities. Information with respect to industry segments as of April 24, 2005, April 25, 2004, and April 27, 2003, and for each of the years then ended is set forth as follows:

	RV Group			Housing Group			Supply Group		Corporate and Other			Adjustments and  Eliminations				Total
	(Amounts in thousands)
2005
Operating revenues	$	1,659,882		$	785,547		$	232,846	$	7,672			$	(311,235	)	$	2,374,712
Operating income (loss)	$	(39,169	)	$	6,387		$	3,816	$	(14,616	)		$	44		$	(43,538	)
Identifiable assets	$	465,245		$	212,251		$	42,526	$	144,441			$	—		$	864,463
Depreciation	7,647			6,802			1,527		6,182				—			22,158
Amortization	—			—			—		1,418				—			1,418
Capital expenditures	23,979			4,707			1,233		3,805				—			33,724
2004
Operating revenues	$	1,779,233		$	657,388		$	209,909	$	5,401			$	(291,325	)	$	2,360,606
Operating income	$	58,146		$	5,440		$	6,065	$	7,587			$	1,631		$	78,869
Identifiable assets	$	406,568		$	211,694		$	39,435	$	272,459			$	—		$	930,156
Depreciation	6,521			7,366			1,595		3,481				—			18,963
Amortization	—			—			—		5,617				—			5,617
Capital expenditures	17,983			1,062			695		6,277				—			26,017
2003
Operating revenues	$	1,482,595		$	667,087		$	173,915	$	5,218			$	(257,858	)	$	2,070,957
Operating income (loss)	$	35,355		$	(13,479	)	$	2,079	$	(4,178	)		$	5,600		$	25,377
Identifiable assets	$	352,009		$	203,456		$	37,868	$	232,332			$	—		$	825,665
Depreciation	7,510			8,456			1,652		3,223				—			20,841
Amortization	—			—			—		4,793				—			4,793
Capital expenditures	7,602			2,656			1,104		7,713				—			19,075

72

FLEETWOOD ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(4)Other, net

Other, net includes gains on sale of fixed assets, write-down of impaired assets, restructuring and severance and other for fiscal years 2005, 2004 and 2003 as follows:

	2005			2004			2003
	(Amounts in thousands)
Gains on sale of fixed assets, net	$(2,512		)	$	(4,656	)	$	(5,853	)
Write-down of impaired assets	1,900			—			1,242
Restructuring and severance	2,871			—			2,590
Other	16,322			—			6,800
	$	18,581		$	(4,656	)	$	4,779

Gains on Sale of Fixed Assets, net

During fiscal 2005, four facilities, including three that were idle, with a carrying value of $5.9 million, were sold, generating most of the gain on sale for the year of $2.5 million. During fiscal 2004, three facilities, including two that were idle, with a carrying value of $2.0 million were sold, generating most of the gain on sale for the year of $4.7 million. During fiscal 2003, three facilities, including two that were idle, with a carrying value of $2.6 million were sold, resulting in a gain of $2.6 million. Also sold during 2003 were three parcels of land with an aggregate carrying value of $900,000, resulting in a gain of $4.4 million. Other miscellaneous disposals accounted for the remaining net loss on sale of $1.1 million.

Write Down of Impaired Assets

In fiscal 2005 and 2003, the Company determined that the net book value of certain closed manufacturing facilities and retail locations exceeded net realizable value. In fiscal 2005, the write down of assets related to two idle manufacturing facilities. In fiscal 2003, the write down of assets generally related to retail housing operations resulting from the decision to close certain retail sales centers and to transfer the management responsibility of others to an unrelated third party. Net realizable values were determined based on estimated recoverability upon sale, where appropriate, or other estimates of fair value such as discounting estimated future cash flows. The Company recorded a pre-tax charge for asset impairment of $1.9 million and $1.2 million during fiscal years 2005 and 2003, respectively.

Restructuring and Severance Charges

During fiscal 2005, the Company recorded severance charges of $2.9 million related to changes or reductions in personnel. During fiscal 2003, the Company recorded pre-tax restructuring charges of $2.6 million related to a reduction of the workforce in the Housing Group wherein the Company eliminated 51 management and administrative positions and 611 production assembly workers in the Housing Group.

Other:

During fiscal 2005, the Company recorded legal charges of $16.3 million, primarily related to the dispute with The Coleman Company, Inc. During fiscal 2003, the Company recorded $6.8 million of legal charges related to two class action lawsuits.

73

FLEETWOOD ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(5)Marketable Investments

The Company has a cash management program that provides for the investment of excess cash balances primarily in short-term money market and debt instruments. Investments consist of non-equity type investments stated at market value.

The following is a summary of investment securities:

	Amortized Cost		Gross Unrealized Gains			Gross Unrealized Losses				Estimated Fair Value
	(Amounts in thousands)
April 24, 2005
Available-for-Sale Securities:
U.S. corporate debt securities	$	3,716		$	30		$	—		$	3,746
Foreign corporate debt securities	13,849			34			(1		)	13,882
Institutional money market funds	11,392			—			—			11,392
Bankers’ acceptances	9,695			—			—			9,695
	$	38,652		$	64		$	(1	)	$	38,715
April 25, 2004
Available-for-Sale Securities:
U.S. corporate debt securities	$	3,731		$	44		$	—		$	3,775
Foreign corporate debt securities	13,446			36			(4		)	13,478
Institutional money market funds	81,475			—			—			81,475
Bankers’ acceptances	11,004			—			—			11,004
	$	109,656		$	80		$	(4	)	$	109,732

By contractual maturity, all marketable investments at April 24, 2005, are due in one year or less.

(6)Income Taxes

Deferred tax assets and liabilities are determined based on temporary differences between income and expenses reported for financial reporting and tax reporting. We are required to record a valuation allowance to reduce our net deferred tax assets to the amount that we believe is more likely than not to be realized. In assessing the need for a valuation allowance, we historically have considered all positive and negative evidence, including scheduled reversals of deferred tax liabilities, prudent and feasible tax planning strategies, projected future taxable income and recent financial performance. Since we have had cumulative losses in recent years, the accounting guidance suggests that we should not look to future earnings to support the realizability of the net deferred tax asset. As a result, we concluded that a partial valuation allowance against our deferred tax asset was appropriate. Accordingly, in fiscal 2003, the deferred tax asset was reduced by $28.4 million to $89.8 million with a corresponding adjustment to the provision for income taxes. The book value of the net deferred tax asset was supported by the availability of various tax strategies which, if executed, were expected to generate sufficient taxable income to realize the remaining asset. In the fourth quarter of fiscal 2004, we determined that available tax strategies were sufficient to support a deferred tax asset of $74.8 million and we recorded an adjustment to the provision for income taxes of $15 million with a corresponding reduction to the asset. In fiscal 2005, the Company recorded an increase in deferred tax assets of $65.8 million, which was fully offset by a corresponding increase to the valuation allowance. The increase in the valuation allowance that is attributable to discontinued operations is $34,664, $16,178 and $20,732 in fiscal 2005, 2004 and 2003, respectively. In fiscal

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FLEETWOOD ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2005, tax planning strategies continue to support an asset of $74.8 million. We continue to believe that the combination of all positive and negative factors will enable us to realize the full value of the deferred tax assets; however, it is possible that the extent and availability of tax-planning strategies will change over time and impact this evaluation. If, after future assessments of the realizability of our deferred tax assets, we determine an adjustment is required, we would record the provision or benefit in the period of such determination.

The benefit (provision) for income taxes on continuing operations for the last three fiscal years is summarized below:

	2005			2004			2003
	(Amounts in thousands)
Current:
U.S. Federal	$	—		$	—		$	—
Foreign	1,712			(1,185		)	(1,012		)
State	(3,063		)	(2,264		)	(2,013		)
	(1,351		)	(3,449		)	(3,025		)
Deferred, principally Federal:
Deferred tax valuation allowance	(31,105		)	(6,963		)	(7,668		)
Tax loss carryforward	9,055			6,645			13,719
Insurance reserves	1,917			2,348			1,927
Deferred compensation and benefits	(3,596		)	(1,286		)	2,381
Product warranty reserves	3,153			(1,521		)	(3,962		)
Dealer volume rebates	198			(1,220		)	1,225
Depreciation	(3,479		)	(1,750		)	(1,028		)
Restructuring accruals	22,279			5,403			2,595
Other financial accruals	1,578			(16,656		)	(10,666		)
	—			(15,000		)	(1,477		)
	$	(1,351	)	$	(18,449	)	$	(4,502	)

The benefit (provision) for income taxes on continuing operations computed by applying the Federal statutory rate to loss before taxes is reconciled to the actual benefit (provision) for the last three fiscal years as follows:

	2005					2004					2003
	Amount			%		Amount			%		Amount			%
	(Amounts in thousands)
Income (loss) from continuing operations before (provision) benefit for income taxes:
U.S. Federal	$	(65,748	)	92.3	%	$	32,704		91.3	%	$	(15,058	)	121.9	%
Foreign	(5,478		)	7.7		3,103			8.7		2,703			(21.9	)
	$	(71,226	)	100.0	%	$	35,807		100.0	%	$	(12,355	)	100.0	%
Computed statutory tax	$	24,929		35.0	%	$	(12,532	)	(35.0	)%	$	4,324		35.0	%
Valuation allowance	(31,105		)	(43.7	)	(6,963		)	(19.4	)	(7,668		)	(62.1	)
Foreign benefit of loss carryback	1,712			2.4		—			—		—			—
State income taxes, net	(1,991		)	(2.8	)	(1,472		)	(4.1	)	(1,308		)	(10.6	)
Other items, net	5,104			7.2		2,518			7.0		150			1.2
	$	(1,351	)	(1.9	)%	$	(18,449	)	(51.5	)%	$	(4,502	)	(36.4	)%

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FLEETWOOD ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The components of the Company’s deferred tax assets at April 24, 2005 and April 25, 2004, were as follows:

	2005			2004
	(Amounts in thousands)
Tax loss carryforward	$	73,403		$	41,277
Insurance reserves	18,560			16,448
Deferred compensation and benefits	23,135			26,436
Product warranty reserves	22,037			18,724
Dealer volume rebates	1,947			1,358
Depreciation	6,982			7,919
Restructuring accruals	31,156			6,445
Other financial accruals	14,853			7,697
	192,073			126,304
Valuation allowance	(117,310		)	(51,541		)
	$	74,763		$	74,763

At April 24, 2005, the Company had a Federal net operating loss carryforward of approximately $187.9 million. The Federal net operating loss carryforward begins to expire in 2023. In addition, the Company has related state net operating loss carryforwards with varying expiration dates.

(7)Property, Plant and Equipment, net

Property, plant and equipment is stated at cost, net of accumulated depreciation, and consists of the following:

	2005			2004
	(Amounts in thousands)
Land	$	18,385		$	18,517
Buildings and improvements	273,619			263,756
Machinery and equipment	163,284			153,503
Idle facilities, net of accumulated depreciation	25,957			36,270
	481,245			472,046
Less accumulated depreciation	(249,120		)	(242,408		)
	$	232,125		$	229,638

Idle facilities included closed plants and certain other properties that are not in current use by the Company. There were 26 idle plant facilities at the end of fiscal 2005 and 24 at the end of fiscal 2004. Of the current 26 idle facilities, six are being held for sale and have a net book value of $5.5 million, with the remaining facilities being held for future use. During fiscal 2005, five facilities were deactivated and four facilities were sold.

The carrying value of idle facilities was $26.0 million at April 24, 2005, and $36.3 million at April 25, 2004, net of accumulated depreciation of $28.3 million and $33.2 million, respectively. In the opinion of management, the carrying values of idle facilities are not in excess of net realizable value.

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FLEETWOOD ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(8)Goodwill

Goodwill relates to a previous acquisition of the folding trailer operation and amounts to $6.3 million at April 24, 2005, and April 25, 2004. The estimated fair value of the folding trailer operation is evaluated at the end of each year or whenever circumstances dictate that a review should be completed. Based on our review at year-end, it was determined that folding trailer’s estimated fair value exceeded its carrying value, including goodwill, resulting in no impairment.

(9)Retirement and Deferred Compensation Plans

The Company has qualified defined contribution (DC) retirement plans covering most employees. There are no prior service costs associated with these plans. The Company follows the policy of funding qualified retirement plan contributions as earned. The Company also maintains non-qualified plans to accrue retirement benefits subject to Internal Revenue Code limitations. During fiscal 2003, the Company terminated three DC plans that covered the majority of its employees: a 401(k) plan that previously included the employees at Fleetwood Retail Corp, a money purchase plan for workers at the manufacturing subsidiaries and a profit-sharing plan for employees at the Company’s headquarters. All assets and participant accounts associated with the terminated plans were transferred to a new single 401(k) plan, with no loss of benefits. In addition, the Company established a new non-qualified Deferred Compensation Alternative (DCA) plan that serves as a retirement vehicle for after-tax contributions in excess of IRS limitations. The costs associated with these retirement plans are summarized as follows:

	Qualified DC Plans		Non-Qualified Plans			Total
	(Amounts in thousands)
2005	$	15,052		$	4,403	$	19,455
2004	15,575			3,253		18,828
2003	18,775			4,506		23,281

The Company also sponsors one defined benefit plan assumed in connection with the acquisition of Fleetwood Folding Trailers, Inc. in 1989. The plan covers over 500 participants and has approximately $5.9 million in assets. Plan assets are held in trust and are invested in equity and fixed income securities. The funding policy is set to meet statutory minimum funding requirements plus such additional amounts as the Company may determine to be appropriate. Plan assets for determining minimum funding requirements are valued by recognizing 20 percent of the difference between actual and expected investment income each year. On this basis, the plan is 80 percent funded with respect to benefits earned under the plan. The plan is approximately fully funded on a market-value basis.

In addition to non-qualified retirement plans, the Company has a non-qualified deferred compensation plan that allows for the voluntary deferral of a portion of managers’ compensation. With the exception of the new DCA plan, where returns are dictated by a portfolio of investments selected by the individual, participant balances in the various non-qualified plans are credited with interest at a rate set at the discretion of the Company which, for the three years ended April 2004, was the prime rate as published by a major U.S. bank. To enhance security for the benefits payable under these plans, excluding the DCA plan, the Company has established a “Rabbi Trust,” funded with Company-owned life insurance (COLI) policies on the lives of participants. The assets of the trust are not generally available to the Company or its creditors, except to pay benefits or in the event of the Company’s insolvency. No premium payments were made in fiscal years 2005, 2004 or 2003. In fiscal 2005 and 2004, respectively, $12.4 million and $7.8 million was borrowed from the trust in the form of policy loans to pay participant benefits. The liability for benefits

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FLEETWOOD ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

accrued under the non-qualified plans at the end of fiscal 2005 and fiscal 2004 totaled $38.8 million and $49.5 million, respectively. The cash values of the related trust assets reflected in the accompanying balance sheets were $36.9 million and $48.8 million, respectively, at those same dates.

In response to recent Federal legislation that created Internal Revenue Code Section 409A, effective as of January 1, 2005, the Company amended the two non-qualified retirement plans along with the non-qualified deferred compensation plan to prohibit any further contributions or deferrals. By virtue of this amendment, these plans will not be subject to rules established by the new law, relating primarily to the distribution of participant balances. In addition, on the same date, the Company established a new 2005 Deferred Compensation Plan, primarily to accommodate retirement profit sharing contributions in excess of IRS limitations. All contributions to the new plan will be subject to the provisions of the new legislation.

(10)Post-retirement Health Care Benefits

The Company provides health care benefits to certain retired employees from retirement age to when they become eligible for Medicare coverage. Employees become eligible for benefits after meeting certain age and service requirements. The cost of providing retiree health care benefits is actuarially determined and accrued over the service period of the active employee group.

The components of the net periodic post-retirement benefit cost are as follows (amounts in thousands):

	2005			2004			2003
Service cost—benefits earned during the year	$	445		$	381		$	270
Interest cost on projected benefit obligation	712			658			596
Recognized net actuarial gain or loss	1,103			738			637
Amortization of unrecognized prior service cost	(1,515		)	(917		)	(917		)
Net periodic postretirement benefit cost	$	745		$	860		$	586

The changes in the benefit obligation and the unfunded status of the post-retirement benefit plan are as follows (amounts in thousands):

	April 24, 2005			April 25, 2004
Change in projected post-retirement benefit obligation:
Projected benefit obligation at beginning of year	$	11,721		$	11,231
Service cost	445			381
Interest cost	712			658
Actuarial (gain) loss	(1,034		)	4,219
Net benefits paid	(391		)	(1,064		)
Plan amendments	291			(3,704		)
Projected benefit obligation at end of year	$	11,744		$	11,721
Funded status	$	11,744		$	11,721
Unrecognized net actuarial loss	(9,626		)	(11,763		)
Unrecognized prior service cost	2,886			4,693
Accrued postretirement benefits	$	5,004		$	4,651

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FLEETWOOD ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The discount rate was 5.50 percent and 6.25 percent in fiscal years 2005 and 2004, respectively. The assumed health care cost trend rate begins at 9.50 percent and reduces over six years to an ultimate level of 5.00 percent per year. A 1.00 percent increase in the assumed health care cost trend rate would increase the total service cost and interest cost by $107,000 and the accumulated post-retirement benefit obligation (APBO) by $885,000. A 1.00 percent decrease in the assumed health care cost trend rate would decrease the total service cost and interest cost by $97,000 and the APBO by $806,000.

(11)Discontinued Operations

On March 30, 2005, the Company announced plans to exit its manufactured housing retail and financial services businesses and expects to complete these plans within one year. The decision to exit these businesses is intended to stem losses sustained in the retail operations. Returning to a traditional focus on manufacturing operations is intended to contribute to the Company’s transaction towards sustained profitability. Assets and liabilities expected to be sold or extinguished have been reclassified to current assets and liabilities from discontinued operations, respectively, and consist of the following:

	2005		2004
	(Amounts in thousands)
Current assets from discontinued operations:
Inventories	$	74,000	$	72,848
Property, plant and equipment, net	916		29,414
Finance loans receivable	70,868		43,291
	$	145,784	$	145,553
Current liabilities from discontinued operations:
Retail flooring liabilities	$	37,608	$	21,868
Warehouse line of credit	40,749		4,713
	$	78,357	$	26,581

Retail flooring liability represents amounts borrowed by Company-owned retail sales centers to finance inventory purchases of manufactured homes. The entire amount outstanding at April 24, 2005, was financed under agreements with two national floorplan lenders that provide for a security interest in the units financed and repayment at the time the units are sold. Amounts outstanding bear interest at rates ranging from prime rate plus 0.75 percent to prime plus 3.00 percent, depending upon the age of the inventory being financed. For unsold units, mandatory curtailment payments that reduce the balance outstanding are due in various increments and at various intervals, beginning at one year and extending up to 21 or 24 months, at which time the obligation is due in full. One of the floorplan agreements includes cross-default provisions tied to the covenants in the senior secured credit facility. Borrowings would be repaid in full upon the sale of the underlying inventory collateral.

On December 30, 2003, our financial services subsidiary, HomeOne, entered into a Master Loan and Security Agreement with Greenwich Capital Financial Products, Inc. (Greenwich) that provides up to $75 million in warehouse funding. The warehouse line of credit, which was extended and renewed, expires on March 15, 2006. Collateral for borrowings under the facility is manufactured housing consumer loans originated by HomeOne. The availability of financing under the facility is dependent on a number of factors, including the borrowing base represented by the loans pledged to Greenwich. The advance rate for eligible loans varies between 72% and 80% of the principal amount of the loans, depending on the weighted average credit scores of the borrowers under loans and the interest rate selected by HomeOne.

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FLEETWOOD ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Available interest rates charged by Greenwich currently vary from 2.00% to 2.50% over LIBOR. As the selected interest rate decreases, so does the available advance rate. The Company and HomeOne agreed to guarantee the facility in an aggregate amount not to exceed 10 percent of the amount of principal and interest outstanding. The Company’s guaranty includes financial and other covenants, including maintenance of specified levels of tangible net worth, total indebtedness to tangible net worth and liquidity. In anticipation that the Company would not be able to comply with certain of these covenant requirements commencing in June 2005, Greenwich agreed to amend the covenant requirements to levels that the Company expects will be achievable. At the end of fiscal 2005 and 2004, HomeOne had borrowings of $40.7 million and $4.7 million, respectively, under this facility. Borrowings will be repaid in full upon the sale of the underlying loan collateral.

The carrying value of assets from discontinued operations have been reduced by non-cash impairment charges in fiscal 2005, based on current expectations of proceeds from the eventual sale. Operating results of these businesses, including impairment charges, are classified as discontinued operations for all periods presented. Discontinued operations, net for fiscal years 2005, 2004 and 2003 consist of the following:

	2005		2004		2003
	(Amounts in thousands)
Revenues	$	248,754	$247,382		$247,336
Net loss before impairment charges
Retail	$	36,733	$	37,952	$	51,813
Financial services	1,008		1,667		2,069
Impairment charges
Loss on retail long-lived assets	38,396		—		—
Retail inventory write-down	12,411		—		—
Finance loans receivable write-down	334		—		—
Discontinued operations, net	$	88,882	$	39,619	$	53,882

The net loss before impairment charges includes interest expense on the retail flooring liability and the warehouse line of credit, which are required to be repaid upon sale of their related collateral, of $3,520, $2,117 and $2,285, in fiscal 2005, 2004 and 2003, respectively. The Company expects to incur ongoing operating losses until the disposition of the businesses is complete.  Additional costs and charges could be incurred, including one-time termination costs and contract termination costs currently estimated to be $6-8 million. Due to the significant operating losses incurred by our discontinued operations, no benefit for income taxes has been provided for their operating losses.

(12)Other Short-term Borrowings

Secured Credit Facility

On July 27, 2001, the Company entered into an agreement for a senior secured credit facility to be funded by a syndicate of lenders led by Bank of America. As amended, the senior secured credit facility was structured as a three-year revolving credit line for up to $190 million plus a $30 million two-year term loan. Prior to fiscal 2005, various amendments to the credit agreement were executed mainly to redefine several financial performance covenants and to reset financial covenants to preempt possible covenant defaults. The structure of the resultant facility contained customary affirmative and negative covenants including an EBITDA (earnings before interest, taxes, depreciation and amortization) covenant and a

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FLEETWOOD ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

covenant to maintain liquidity, as defined, at specified levels. The term loan was repaid in full and eliminated from the facility, along with a property, plant and equipment subfacility.

In May of 2004, the Company announced the early renewal and extension of the credit facility to July 31, 2007, under a fully underwritten arrangement with Bank of America. The terms of the amended and restated agreement provided for an increase of $20 million in the amount of the facility, to a commitment level of $150 million. Among other changes was the elimination of a previous requirement for the Company to maintain $30 million in unused borrowing capacity, which directly enhanced our borrowing availability. The requirement for excess “boot” collateral, held in the form of a security interest in real estate was also reduced from $75 million to $50 million.

Under the new agreement, the Company is not subject to a financial performance covenant, except in the case that average monthly liquidity, defined as cash, cash equivalents and unused borrowing capacity, falls below $60 million within the borrowing subsidiaries or $90 million including the parent company. Under these circumstances the Company is required to meet a designated cumulative EBITDA requirement. In addition, pricing under the new facility was reduced in all areas, including lower fees for letters of credit, unused facility fees and generally lower interest charges on borrowings. Simultaneous with the signing of the agreement, the Company paid closing and administrative fees to the bank of $499,000.

In conjunction with the restatement of the credit agreement, Fleetwood executed covenant amendments to the flooring finance agreement with Textron Financial Corp. that mirror the new bank agreement.

On March 2, 2005, Fleetwood and the lending syndicate for its secured credit facility entered into an amendment to the facility that expanded the revolving credit line, improved seasonal financial flexibility and addressed a potential shortfall against the EBITDA covenant. The third quarter’s results were such that the Company would have been out of compliance with the previous version of the covenant. Further, the amended facility provided greater borrowing flexibility by raising the overall limit on borrowings from $150 million to $175 million, with an additional seasonal increase from October through April to $200 million. In addition, a limitation on borrowing against inventory within the Company’s asset borrowing base was raised from $85 million to $110 million, with a seasonal increase to $135 million for the December through April time period. A provision was added to supplement the borrowing base by an additional $15 million once Fleetwood provided additional real estate collateral to the bank group, which the Company did subsequent to the end of the fiscal year, in late May 2005.

The balance outstanding on the revolver as reflected on the balance sheet at the end of fiscal 2005 and 2004 in other short-term borrowings was $55.0 million and $5.7 million, respectively. The revolving credit line bears interest, at our option, at variable rates based on either Bank of America’s prime rate or one, two or three month LIBOR. As amended, the facility is secured by virtually all of the Company’s receivables and a significant portion of its inventories and personal property, plus, at April 24, 2005, $50 million in appraised value of real estate. Advances under the revolving credit line are limited by the available borrowing base of eligible accounts receivable and inventories. The borrowing base is revised weekly for changes in receivables and monthly for changes in inventory balances. At April 24, 2005, the borrowing base totaled $179 million. After consideration of collateral reserves of $5.8 million, $46.2 million in standby letters of credit and the outstanding borrowings, unused borrowing capacity was approximately $70.5 million. Subsequent to April 24, 2005, an additional letter of credit for $18 million was posted by the Company in relation to the Coleman judgment, pending the Company’s appeal of this litigation.

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FLEETWOOD ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Subsequent to fiscal 2005 year-end in July 2005, the agreement governing the credit facility was further amended and restated to incorporate prior amendments and increase total loan commitments to accommodate the previous $15 million addition to the revolver borrowing base and fund a new term loan collateralized by real estate in the amount of $22 million. These additions raise total loan commitments to $212 million from May through November, with a seasonal uplift to $237 million from December through April. The loan commitments for both the addition to the revolver and the term loan are reduced on the first day of each fiscal quarter beginning October 31, 2005 in the amounts of $750,000 and $785,715, respectively. Under the amended facility, real estate with an approximate appraised value of $108 million is pledged as security.

The weighted average interest rate on these short-term borrowings was 7.0 percent and 5.0 percent at the end of fiscal 2005 and 2004, respectively.

(13)Long-term Debt

At April 24, 2005, and April 25, 2004, long-term debt consisted of the following:

	2005		2004
	(Amounts in thousands)
5% Convertible senior subordinated debentures	$	100,000	$	100,000
Other	8,946		2,159
	$	108,946	$	102,159

On December 22, 2003, the Company completed the sale of $100 million aggregate principal amount of 5% convertible senior subordinated debentures due in 2023. Interest on the debentures is payable semi-annually at the rate of 5.00%. The debentures are convertible, under certain circumstances, into the Company’s common stock at an initial conversion rate of 85.034 shares per $1,000 principal amount of debentures, equivalent to an initial conversion price of $11.76 per share of common stock.

Holders of the debentures have the ability to require the Company to repurchase the debentures, in whole or in part, on December 15, 2008, December 15, 2013 and December 15, 2018. The repurchase price is 100 percent of the principal amount of the debentures plus accrued and unpaid interest. The Company may, at its option, elect to pay the repurchase price in cash, its common stock or a combination of cash and its common stock. The Company has the option to redeem the debentures after December 15, 2008, in whole or in part, for cash, at a price equal to 100 percent of the principal amount plus accrued and unpaid interest. Subsequent to the end of fiscal 2004, the debentures and the common stock potentially issuable upon conversion of the debentures were registered for resale under the Securities Act of 1933.

The Company used a portion of the net proceeds of the offering to repay amounts outstanding under its senior secured credit facility and for the redemption of a portion of the 9.5% convertible subordinated debentures, and used the remainder for working capital and other general corporate purposes.

(14)Convertible Subordinated Debentures

The Company has owned three Delaware business trusts that each issued a separate series of optionally redeemable convertible trust preferred securities, convertible into shares of the Company’s common stock. The combined proceeds from the sale of the transactions and from the purchase by the Company of the common shares of the business trusts were tendered to the Company in exchange for separate series of convertible subordinated debentures. These debentures represent the sole assets of the

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FLEETWOOD ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

business trusts. Under FIN 46R, “Consolidation of Variable Interest Entities,” the business trusts are deemed to have no primary beneficiary and, although wholly owned by the Company, are not to be consolidated. As a result, the convertible subordinated debentures, issued by the Company, are presented as a long-term liability. The Company called the securities held by two of the trusts for redemption and entered into a series of transactions (described below) that spanned our fiscal 2004 year end. As of June 4, 2004, all of the outstanding securities held by two of the trusts were redeemed for cash or were converted into common stock. These transactions are more fully described below and the securities and amounts outstanding as of April 24, 2005, are summarized in the following table (dollar amounts in thousands):

Series	Convertible Subordinated Debentures Outstanding	Number of Trust Preferred Securities Outstanding	Par Value Per Share	Aggregate Amount of Trust Preferred Securities Outstanding	Maturity	Interest Rate	Conversion Price
Trust I	$210,142	4,025,000	$50	$201,250	2028	6%	$48.72 or 1.02627 shares of common stock per share of Trust I Securities

During fiscal 1998, Fleetwood Capital Trust (Trust I), a Delaware business trust wholly owned by the Company, completed a $287.5 million private placement of 5,750,000 shares of 6% Convertible Trust Preferred Securities due February 15, 2028 (Trust I Securities) with a liquidation value of $50 per security. The combined proceeds from the transaction and from the purchase by the Company of the common shares of Trust I were tendered to the Company in exchange for 6% Convertible Subordinated Debentures due February 15, 2028 (Trust I Debentures) in the aggregate principal amount of $296.4 million. In a subsequent exchange offer, described below, the number of Trust I Securities outstanding was reduced to 4,025,000 and the aggregate principal amount outstanding was reduced to $201,250,000.

Distributions on the Trust I Securities are cumulative and are paid quarterly in arrears at an annual rate of 6 percent. The Company has the option to defer payment of the distributions for an extended period of up to 20 consecutive quarters, so long as the Company is not in default in the payment of interest on the debentures and discontinues the payment of dividends on common stock while the deferral is in effect. Considered together, the undertakings under the trust, the related indentures and guarantees and the convertible subordinated debentures constitute a full and unconditional guarantee by the Company of the trust’s obligations under the securities. Beginning with the third quarter of fiscal 2002, the Company elected to defer the quarterly distributions on the Trust I Securities. The total amount deferred, including accrued interest, was $49.6 million at the end of fiscal 2005. The Company presently intends to continue to defer the distribution on the Trust I Securities through August 2006, which would be the last of these consecutive quarterly distributions that could be deferred under the terms of the governing instruments. During a period of distribution deferral, the Company is prevented from declaring or paying dividends on the common stock.

The Trust I Securities are convertible, at the option of the holder, at any time at the rate of 1.02627 shares of Fleetwood common stock (i.e., a conversion price of $48.72 per common share), subject to adjustment in certain circumstances. Since February 15, 2001, the Trust I Debentures have been redeemable in whole or in part, at the option of the Company, at a price equal to a premium currently 100.75 percent of the principal amount plus accrued and unpaid interest, declining annually to par if redeemed on or after February 15, 2006. The Trust I Securities are subject to mandatory redemption to the extent of any early redemption of the Trust I Debentures and upon maturity of the Trust I Debentures on February 15, 2028.

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FLEETWOOD ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In December 2001, Fleetwood Capital Trust III (Trust III), also a Delaware business trust wholly owned by the Company, completed a $150.0 million private placement of 3,000,000 shares of 9.5% Convertible Trust III Preferred Securities due February 15, 2013 (Trust III Securities) with a face value of $50 per share. The combined proceeds from the transaction and from the purchase by the Company of the common shares of Trust III were tendered to the Company in exchange for 9.5% Convertible Trust III Subordinated Debentures due February 15, 2013 (Trust III Debentures) in the aggregate principal amount of $154.6 million.

On March 9, 2004, the Company announced that it was calling $50 million aggregate principal amount of the Trust III Securities for redemption. On March 30, 2004, the Company called the remaining $100 million aggregate principal amount of Trust III Securities for redemption. Subsequently, virtually all of the holders of the Trust III Securities converted their securities into an aggregate of 14,478,578 shares of the Company’s common stock, including some who had entered into privately negotiated transactions with the Company to convert their securities, prior to the respective redemption dates, in exchange for a cash incentive. As a result, as of the end of fiscal 2004, April 25, 2004, there remained 377,726 shares of Trust III Securities outstanding, with an aggregate principal amount of $18.9 million, and as of April 29, 2004, which was the final redemption date pursuant to the Company’s calls for redemption, there were no Trust III Securities outstanding.

In January 2002, Fleetwood Capital Trust II (Trust II), another wholly owned Delaware business trust, issued 1,725,000 shares of 9.5% Convertible Trust II Preferred Securities due February 15, 2013 (Trust II Securities) with a face value of $22 per share and an aggregate liquidation value of $37.95 million to Trust I Securities holders in exchange for 1,725,000 shares of Trust I Securities with a $50 face value and an aggregate liquidation value of $86.25 million. The Trust I Securities and the proceeds from the purchase by the Company of the common shares of Trust II were tendered to the Company in exchange for new 9.5% Convertible Subordinated Debentures due February 15, 2013 (Trust II Debentures) in the amount of $39.12 million. In turn, the Company tendered the $86.25 million of Trust I securities to Trust I to be retired in exchange for the cancellation of a like amount of Trust I Debentures.

On May 5, 2004, the Company called the Trust II Securities for redemption with a redemption date of June 4, 2004. Several of the holders of the Trust II Securities converted their holdings to shares of the Company’s common stock, including some who entered into privately negotiated transactions with the Company to convert their securities, prior to the redemption date, in exchange for a cash incentive. Accordingly, as of the June 4, 2004, redemption date, pursuant to the Company’s call for redemption, 781,065 shares of the Trust II Securities had been converted into an aggregate of 1,368,074 shares of the Company’s common stock, and 943,935 shares of the Trust II Securities were redeemed for an aggregate of $22.2 million in cash, representing $20.8 million in aggregate principal amount, $1.3 million in redemption premium and $104,000 in accrued but unpaid interest to the redemption date.

84

FLEETWOOD ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(15)Fair Value of Financial Instruments

The Company has estimated the fair value of its financial instruments as of April 24, 2005, and April 25, 2004, based on relevant market information or using management estimates of discounted cash flows. The book and estimated fair values of financial instruments include those set out below or are discussed in Note 5 (amounts in thousands):

	April 24, 2005				April 25, 2004
	Book Value		Estimated Fair Value		Book Value		Estimated Fair Value
Cash	$	6,761	$	6,761	$	14,090	$	14,090
Cash value of Company-owned life insurance	36,946		36,946		48,809		48,809
Investments in unconsolidated subsidiaries	8,892		8,892		14,705		14,705
Other short-term borrowings	56,661		56,661		5,738		5,738
Long-term debt	108,946		114,775		102,159		161,159
Convertible subordinated debentures	210,142		117,912		272,791		229,053

(16)Commitments and Contingencies

Repurchase Commitments

Producers of recreational vehicles and manufactured housing customarily enter into repurchase agreements with lending institutions that provide wholesale floorplan financing to independent dealers. The Company’s agreements generally provide that, in the event of a default by a dealer in its obligation to these credit sources, Fleetwood will repurchase product. With most repurchase agreements our obligation ceases when the amount for which we are contingently liable to the lending institution has been outstanding for more than 12, 18 or 24 months, depending on the terms of the agreement. The contingent liability under these agreements approximates the outstanding principal balance owed by the dealer for units subject to the repurchase agreement, less any scheduled principal payments waived by the lender. Although the maximum potential contingent repurchase liability approximated $183 million for inventory at manufactured housing dealers and $479 million for inventory at RV dealers as of April 25, 2004, the risk of loss is reduced by the potential resale value of any products that are subject to repurchase, and is spread over numerous dealers and financial institutions. The gross repurchase obligation will vary depending on the season and the level of dealer inventories. Typically, the repurchase obligation for the third fiscal quarter will be greater than other periods due to high dealer inventories. The RV repurchase obligation is significantly more than the manufactured housing obligation due to a higher average cost per motor home and more units in dealer inventories. Past losses under these agreements have not been significant and lender repurchase demands have been funded out of working capital.

In the past three fiscal years we have had the following repurchase activity:

	2005		2004		2003
	(Amounts in millions)
Units	174		177		182
Repurchase amount	$	6.3	$	3.7	$	4.4
Loss recognized	$	1.2	$	0.6	$	—

Legal Proceedings

The Company filed a complaint in state court in Kansas, in the 18^th Judicial District, District Court, Sedgewick County, Civil Department, against The Coleman Company, Inc. (Coleman) in connection with

85

FLEETWOOD ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

a dispute over the use of the “Coleman” brand name. The lawsuit sought declaratory and injunctive relief. On June 6, 2003, Coleman filed an answer and counterclaimed against us alleging various counts, including breach of contract and trademark infringement. On November 17, 2004, after a hearing, the Court granted our request for a permanent injunction against Coleman prohibiting Coleman from licensing the Coleman name for recreational vehicles to companies other than Fleetwood, although Coleman will again seek to challenge that ruling in a hearing scheduled for July 12, 2005. At the conclusion of trial, on December 16, 2004, the jury awarded monetary damages against Fleetwood on Coleman’s counterclaim in the amount of $5.2 million. On January 21, 2005, the Court granted Coleman’s request for treble damages, making the total amount of the award approximately $14.6 million. A charge to record this award is reflected in the Company’s results for the third fiscal quarter of 2005. Payment will be stayed pending Fleetwood’s appeal, which has now been filed. Pending the appeal, Fleetwood was required to post a letter of credit for $18 million, representing the full amount of the judgment plus an allowance for attorneys’ fees and interest. The Company will pursue all available appellate remedies.

The Company is also subject to other litigation from time to time in the ordinary course of business. The Company’s 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 currently 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.

Other

Fleetwood Enterprises, Inc. has entered into ten limited guarantees aggregating $4.2 million to certain obligations of certain retailers to floorplan lenders and an additional two unsecured guarantees aggregating $3.5 million for other obligations.

(17)Leases

Most of the Company’s retail sales locations and certain of its other facilities and equipment are leased under terms that range from monthly to 18 years.

The following is a schedule by years of future minimum rental payments required under operating and capital leases that have initial or remaining noncancelable lease terms in excess of one year as of April 24, 2005 (amounts in thousands):

	Minimum Rental Payments
Fiscal Year	Operating			Capital
2006		$	9,167		$	2,231
2007		8,515			3,409
2008		6,622			2,025
2009		5,306			2,002
2010		3,609			348
Later years		17,416			—
Total minimum lease payments*		$	50,635		$	10,015

*Minimum payments have not been reduced by minimum sublease rentals of $2,453 due in the future.

86

FLEETWOOD ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Rental expense for the last three fiscal years was as follows:

	2005			2004			2003
	(Amounts in thousands)
Rental expense	$	4,360		$	11,967		$	12,518
Less: Sublease rental income	(971		)	(632		)	(780		)
	$	3,389		$	11,335		$	11,738

(18)Stock-Based Incentive Compensation Plans

Under the Company’s Amended and Restated 1992 Stock-Based Incentive Compensation Plan, as amended, stock options may be granted to officers and other key employees of the Company for the purchase of up to 9,900,000 shares of the Company’s common stock. Expiration dates for the options may not exceed 10 years from the date of grant and options typically vest over a three year period. Under a separate plan for non-employee directors, up to 400,000 shares have been authorized for distribution of options. Automatic grants are made annually under this plan.

The following is a summary of the stock option activity for employees and non-employee directors for the last three fiscal years.

	2005					2004					2003
	Shares		Wtd. Avg. Exercise Price			Shares		Wtd. Avg. Exercise Price			Shares		Wtd. Avg. Exercise Price
Outstanding at beginning of year	5,812,945			$	13.37	6,494,952			$	13.06	4,166,408			$	18.82
Granted	1,112,200			12.55		667,400			11.68		2,610,598			4.21
Exercised	(777,086	)		5.11		(811,062	)		6.56		(20,200	)		9.13
Forfeited	(394,985	)		15.51		(538,345	)		17.85		(261,854	)		16.80
Outstanding at end of year	5,753,074			$	14.18	5,812,945			$	13.37	6,494,952			$	13.06
Exercisable at end of year	4,281,775			$	15.88	3,618,300			$	17.40	3,401,866			$	20.21
Weighted average fair value of options granted				$	4.82				$	6.00				$	2.82

The following table summarizes information about stock options outstanding and exercisable as of the current fiscal year end:

Range of Exercise Price	Number Outstanding as of 4/24/05	Wtd. Avg. Remaining Contractual Life		Wtd. Avg. Exercise Price			Number Exercisable as of 4/24/05	Wtd. Avg. Exercise Price of Exercisable Options
$3.17 - $3.17	973,262		7.61		$	3.17	603,920		$	3.17
$6.94 - $8.91	856,246		8.30		$	7.82	350,329		$	7.24
$9.01 - $10.45	855,883		4.85		$	9.30	850,750		$	9.30
$10.70 - $13.53	831,234		6.19		$	12.24	623,993		$	12.23
$13.85 - $14.86	853,350		5.02		$	14.77	469,684		$	14.72
$14.98 - $28.63	1,046,109		2.71		$	27.10	1,046,109		$	27.10
$28.79 - $39.63	336,990		3.11		$	37.81	336,990		$	37.81

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FLEETWOOD ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(19)Stockholder Rights Plan

On September 15, 1998, the Company’s Board of Directors adopted a new stockholder rights agreement to replace the previous plan that expired on November 9, 1998, granting certain new rights to holders of the Company’s common stock. Under the new plan, which was effective November 10, 1998, one right was granted for each share of common stock held as of November 9, 1998, and one right will be granted for each share subsequently issued. Each right entitles the holder, in a hostile takeover scenario and after paying the exercise price (currently $160), to purchase Fleetwood common stock having a market value equal to two times the exercise price. Also, if the Company is merged into another corporation, or if 50 percent or more of the Company’s assets are sold, then rightholders are entitled, upon payment of the exercise price, to buy common shares of the acquiring corporation at a 50 percent discount from their then current market value. In either case, these rights are not available to the acquiring party. However, these exercise features will not be activated if the acquiring party makes an offer to acquire all of the Company’s outstanding shares at a price that is judged by the Board of Directors to be fair to all Fleetwood shareholders. The rights may be redeemed by the Company under certain circumstances at the rate of $0.02 per right. The shareholder rights plan dated September 15, 1998, was amended effective April 30, 2001, and again effective December 31, 2002. The rights will expire on November 9, 2008.

(20)Results by Quarter (Unaudited)

The unaudited results by quarter for fiscal years 2005 and 2004 are shown below (amounts in thousands, except per share data):

Fiscal Year Ended April 2005:	First Quarter			Second Quarter			Third Quarter			Fourth Quarter
Number of weeks in the quarter	13			13			13			13
Revenues	$	659,429		$	645,933		$	509,161		$	560,189
Gross profit	121,256			120,980			77,812			75,182
Operating income (loss)	22,515			22,124			(39,073		)	(49,104		)
Income (loss) from continuing operations(1)	12,452			15,338			(44,534		)	(55,833		)
Discontinued operations, net	(6,900		)	(7,203		)	(10,155		)	(64,624		)
Net income (loss) used for basic and diluted earnings (loss) per common share	$	5,552		$	8,135		$	(54,689	)	$	(120,457	)
Earnings (loss) per common share(2):
Basic	$	.10		$	.15		$	(.99	)	$	(2.16	)
Diluted	$	.09		$	.12		$	(.99	)	$	(2.16	)
Weighted average common shares:
Basic	54,670			55,419			55,492			55,749
Diluted	64,286			65,657			55,492			55,749

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FLEETWOOD ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Fiscal Year Ended April 2004:	First Quarter			Second Quarter			Third Quarter			Fourth Quarter
Number of weeks in the quarter	13			13			13			13
Revenues	$	587,643		$	603,904		$	529,365		$	639,694
Gross profit	104,333			110,336			92,119			110,671
Operating income	22,354			24,029			9,414			23,072
Income (loss) from continuing operations	11,409			13,067			(1,708		)	(5,409		)
Discontinued operations, net	(9,493		)	(9,309		)	(8,463		)	(12,354		)
Net income (loss) used for basic and diluted earnings (loss) per common share	$	1,916		$	3,758		$	(10,171	)	$	(17,764	)
Earnings (loss) per common share(2):
Basic	$	.05		$	.10		$	(.26	)	$	(.42	)
Diluted	$	.05		$	.10		$	(.26	)	$	(.42	)
Weighted average common shares:
Basic	35,935			36,124			38,871			42,497
Diluted	36,669			37,116			38,871			42,497

(1)During the fourth fiscal quarter of 2005, the Company recorded an additional charge of $1.1 million to write-off costs associated with the redemption of the Trust II Securities. Since this transaction occurred in the first fiscal quarter, income (loss) from continuing operations before income taxes has been adjusted to more correctly include the charge in that quarter rather than the fourth.

(2)Net earnings (loss) per share is computed independently for each of the quarters presented and the summation of quarterly amounts does not equal the total net earnings (loss) per share reported for the year.

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Schedule II—Valuation and Qualifying Accounts

	Balance at  beginning of year			Additions   charged to   costs and expenses			Payment or  utilization				Balance at  end of year
Fiscal year ended April 24, 2005:
Product warranty reserves		$	53,921		$	102,210		$	(90,988	)		$	65,143
Insurance reserves		32,916			36,509			(37,210		)		32,215
Fiscal year ended April 25, 2004:
Product warranty reserves		$	62,137		$	67,644		$	(75,860	)		$	53,921
Insurance reserves		30,344			34,554			(31,982		)		32,916
Fiscal year ended April 27, 2003:
Product warranty reserves		$	68,046		$	72,169		$	(78,078	)		$	62,137
Insurance reserves		25,080			34,350			(29,086		)		30,344

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None

Item 9A. Controls and Procedures

Disclosure and Controls and Procedures.

As of the end of the period covered by this report, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective in timely alerting them to material information required to be included in the Company’s periodic filings with the Securities and Exchange Commission.

Management’s Report on Internal Control over Financial Reporting.

Management of the Company is responsible for establishing and maintaining effective internal control over financial reporting and for the assessment of the effectiveness of internal control over financial reporting. The Company’s internal control over financial reporting is a process designed, as defined in Rule 13a-15(f) under the Securities and Exchange Act of 1934, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with generally accepted accounting principles.

The Company’s internal control over financial reporting is supported by written policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the Company’s assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of the Company’s management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the consolidated financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that

90

controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In connection with the preparation of the Company’s annual consolidated financial statements, management of the Company has undertaken an assessment of the effectiveness of the Company’s internal control over financial reporting based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“the COSO Framework”). Management’s assessment included an evaluation of the design of the Company’s internal control over financial reporting and testing of the operational effectiveness of the Company’s internal control over financial reporting.

Based on this assessment, management has concluded that the Company’s internal control over financial reporting was effective as of April 24, 2005.

Ernst & Young LLP, the independent registered public accounting firm that audited the Company’s consolidated financial statements included in this Annual Report on Form 10-K, has issued an attestation report included herein, on management’s assessment of internal control over financial reporting.

Item 9B. Other Information

An operating agreement with Associated Dealers, Inc. (ADI) was amended in the fourth quarter of fiscal 2005 to essentially provide that ADI will now lease certain manufactured housing dealership locations from the Company and operate them as an independent dealer. Previously, ADI had operated these facilities under a subsidized management agreement. The current arrangement can be terminated by either party with a 90-day notice.

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PART III

Item 10. Directors and Executive Officers of the Registrant

Code of Ethics

We have adopted a written Code of Ethics that applies to our chief executive officer, chief financial officer, corporate controller and treasurer, and other senior financial officers performing similar functions who are identified from time to time by the chief executive officer. We have also adopted a broader Code of Conduct which is applicable to all employees, including financial officers. The Code of Ethics for senior financial officers and the Code of Conduct for all employees are posted on our website, www.fleetwood.com. They can be accessed under the “Company Information” page by clicking on the “Corporate Governance” heading. Any amendments to, or waivers for executive officers or directors of, these ethic codes will be disclosed on our website promptly following the date of such amendment or waiver.

Except for information concerning the Company’s executive officers which is included under the caption “Executive Officers of the Company” following Part I, Item 4 of this report, other information required by Item 10 is incorporated herein by reference from the Company’s definitive Proxy Statement for the Company’s 2005 annual shareholders’ meeting to be filed with the Securities and Exchange Commission no later than 120 days after April 24, 2005.

Item 11. Executive Compensation

The information required by Item 11 is incorporated herein by reference from the Company’s definitive Proxy Statement for the Company’s 2005 annual shareholders’ meeting to be filed with the Securities and Exchange Commission no later than 120 days after April 24, 2005.

Item 12. Security Ownership of Certain Beneficial Owners and Management

The information required by Item 12 is incorporated herein by reference from the Company’s definitive Proxy Statement for the Company’s 2005 annual shareholders’ meeting to be filed with the Securities and Exchange Commission no later than 120 days after April 24, 2005. However, the equity compensation plan information required by Item 201(d) of Regulation S-K is provided at Item 5, above.

Item 13. Certain Relationships and Related Transactions

The information required by Item 13 is incorporated herein by reference from the Company’s definitive Proxy Statement for the Company’s 2005 annual shareholders’ meeting to be filed with the Securities and Exchange Commission no later than 120 days after April 24, 2005.

Item 14. Principal Accountant Fees and Services.

The information required by Item 14 is incorporated herein by reference from the Company’s definitive Proxy Statement for the Company’s 2005 annual shareholders’ meeting to be filed with the Securities and Exchange Commission no later than 120 days after April 24, 2005.

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PART IV

Item 15. Exhibits and Financial Statement Schedules

(a)	Financial Statements
	(1)	Report of Independent Registered Public Accounting Firm
		Financial Statements included in Part II of this report:
		Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting
		Consolidated Statements of Operations for each of the three years in the period ended April 24, 2005
		Consolidated Balance Sheets at April 24, 2005, and April 25, 2004
		Consolidated Statements of Cash Flows for each of the three years in the period ended April 24, 2005
		Consolidated Statements of Changes in Shareholders’ Equity for each of the three years in the period ended April 24, 2005
		Notes to Consolidated Financial Statements
	(2)	Financial Statement Schedules
		Schedule II—Valuation and Qualifying Accounts
			All other schedules are omitted because they are not applicable or the required information is shown in the consolidated financial statements or notes thereto.
(b)	Exhibits and Index to Exhibits:
		3.1	Restated Certificate of Incorporation.(1)
		3.2	Amendment to Restated Certificate of Incorporation.(2)
		3.3	Amendment to Restated Certificate of Incorporation, as amended.
		3.4	Restated Bylaws of the Company.(2)
		3.5	Amendment and Restatement of Article VII of Bylaws.(3)
		3.6	Amendment and Restatement of Section 3.02 of Bylaws.(10)
		4.1	Rights Agreement dated as of September 15, 1998, between the Company and the First National Bank of Boston.(4)
		4.2	Amendment to Rights Agreement dated as of April 30, 2001, between Fleet National Bank (f/k/a First National Bank of Boston) and the Company.(5)
		4.3	Amendment No. 2 to Rights Agreement, dated as of December 31, 2002, by and between the Registrant and EquiServe Trust Company, N.A.(6)
		4.4	Amended Certificate of Designation, Preferences and Rights of Series A Junior Participating Preferred Stock.(3)
		4.5	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.(7)
		4.6	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.(7)
		4.7	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.(7)
		4.8	Indenture dated as of December 22, 2003 between the Company and The Bank of New York, as trustee.(17)
		10.1	Form of employment agreement between the Company and senior executive officers.(3)*

93

10.2	Form of employment agreement re: change in control between the Company and senior officers.(3)*
10.3	Amended and Restated Deferred Compensation Plan.(8)*
10.4	Amended and Restated Supplemental Benefit Plan.(8)*
10.5	2005 Deferred Compensation Plan(11)*
10.6	Amended and Restated Benefit Restoration Plan.(8)*
10.7	Amended and Restated 1992 Stock-Based Incentive Compensation Plan.(9)*
10.8	Amended and Restated 1992 Non-Employee Director Stock Option Plan.(9)*
10.9	Operating Agreement between Fleetwood Enterprises, Inc. and Fleetwood Credit Corp.(8)
10.10	Form of Indemnification Agreement.(3)*
10.11	Description of amendments to terms of certain executive compensation of Fleetwood Enterprises, Inc.(18)*
10.12	Second Amended and Restated Credit Agreement dated as of July 1, 2005, among the Company, Fleetwood Holdings, Inc. and its subsidiaries, Fleetwood Retail Corp. and its subsidiaries, the banks and other financial institutions signatory thereto, and Bank of America, N.A., as administrative agent and collateral agent.
10.13	Alternative Form Non-Qualified Stock Option Agreement for 1992 Stock-Based Incentive Compensation Plan.(19)*
10.14	Employment agreement between the Company and Elden L. Smith as of March 8, 2005*.
10.15	Description of Director Compensation.(19)*
10.16	Elden L. Smith Stock Option Plan and Agreement.*
10.17	Form of Employment Agreement between the Company and certain senior executive officers, adopted July 2002.(12)*
10.18	Form Non-Qualified Stock Option Agreement for 1992 Non-Employee Director Stock Option Plan.(19)*
10.19	2002 Long-Term Performance Plan.(15)*
10.20	Form Non-Qualified Stock Option Agreement for 1992 Stock-Based Incentive Compensation Plan.(19)*
10.21	Wholesale Security Agreement dated August 21, 2002, among Textron Financial Corp. and several of the Company’s indirect wholly owned retail housing subsidiaries.(16)
10.22	Sixth Amendment dated as of March 2, 2005 to Wholesale Security Agreement dated August 21, 2002 among Textron Financial Corp. and several of the Company’s indirect wholly owned retail housing subsidiaries.(14)
10.23	Master Loan and Security Agreement dated as of December 30, 2003, among the Company, HomeOne Credit Corp. and Greenwich Capital Financial Products, Inc. as Lender.(9)
10.24	Amendment dated as of March 15, 2005 to Master Loan and Security Agreement among the Company, HomeOne Credit Corp. and Greenwich Capital Financial Products, Inc. as Lender.(13)
11	Statement of Computation of Per Share Earnings. All information required by Exhibit 11 is presented in Note 2 of the Company’s Consolidated Financial Statements in accordance with the provisions of SFAS No. 128.
21	Subsidiaries of the Registrant.
23	Consent of Independent Registered Public Accounting Firm
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

94

31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32	Certifications of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*       Management contract or compensatory plan or arrangement.

(1)   Incorporated by reference to the Company’s 10-K Annual Report, Commission file number 1-7699, for the year ended April 28, 1985.

(2)   Incorporated by reference to the Company’s 10-K Annual Report, Commission file number 1-7699, for the year ended April 26, 1987.

(3)   Incorporated by reference to the Company’s 10-K Annual Report for the year ended April 29, 2001.

(4)   Incorporated by reference to the Company’s Registration Statement on Form 8-A on October 28, 1998.

(5)   Incorporated by reference to the Company’s Report on Form 8-K filed on May 30, 2001.

(6)   Incorporated by reference to the Company’s Report on Form 8-K filed on January 10, 2003.

(7)   Incorporated by reference to the Company’s Registration Statement on Form S-4 filed April 9, 1998.

(8)   Incorporated by reference to the Company’s 10-K Annual Report, Commission file number 1-7699, for the year ended April 28, 1996.

(9)   Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended January 25, 2004.

(10) Incorporated by reference to the Company’s 10-K Annual Report, for the year ended April 27, 2003.

(11) Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended January 23, 2005.

(12) Incorporated by reference to the Company’s 10-K Annual Report for the year ended April 28, 2002.

(13) Incorporated by reference to the Company’s Report as Form 8-K filed March 16, 2005.

(14) Incorporated by reference to the Company’s Report on Form 8-K filed March 8, 2005.

(15) Incorporated by reference to the Company’s 10-Q Quarterly Report for the quarter ended October 27, 2002.

(16) Incorporated by reference to the Company’s Report on Form 8-K filed on March 27, 2003.

(17) Incorporated by reference to the Company’s Report on Form 8-K filed December 23, 2003.

(18) Incorporated by reference to the Company’s Report on Form 8-K filed December 17, 2004.

(19) Incorporated by reference to the Company’s Report on Form 8-K filed September 16, 2004.

95

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	FLEETWOOD ENTERPRISES, INC.
	REGISTRANT
	By	/s/  BOYD R. PLOWMAN
			Boyd R. Plowman
			Executive Vice President
			and Chief Financial Officer
Date: July 7, 2005

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

							Signature		Title		Date
/s/  THOMAS B. PITCHER								Chairman of the Board		July 7, 2005
					Thomas B. Pitcher
/s/  ELDEN L. SMITH								President, Chief Executive		July 7, 2005
				Elden L. Smith				Officer and Director (Principal Executive Officer)
/s/  BOYD R. PLOWMAN								Executive Vice President,		July 7, 2005
			Boyd R. Plowman					Chief Financial Officer and Assistant Secretary (Principal Financial Officer)
/s/  ANDREW M. GRIFFITHS								Vice President-Controller and		July 7, 2005
	Andrew M. Griffiths							Chief Accounting Officer (Principal Accounting Officer)
/s/  PAUL D. BORGHESANI								Director		July 7, 2005
						Paul D. Borghesani
/s/  LOREN K. CARROLL								Director		July 7, 2005
		Loren K. Carroll

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/s/  MARGARET S. DANO								Director	July 7, 2005
		Margaret S. Dano
/s/  JAMES L. DOTI								Director	July 7, 2005
				James L. Doti
/s/  DAVID S. ENGELMAN								Director	July 7, 2005
					David S. Engelman
/s/  J. MICHAEL HAGAN								Director	July 7, 2005
	J. Michael Hagan
/s/  DOUGLAS M. LAWSON								Director	July 7, 2005
			Douglas M. Lawson
/s/  JOHN T. MONTFORD								Director	July 7, 2005
							John T. Montford
/s/  DANIEL D. VILLANUEVA								Director	July 7, 2005
						Daniel D. Villanueva

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EX-3.3

Exhibit 3.3

CERTIFICATE OF AMENDMENT

OF

RESTATED CERTIFICATE OF INCORPORATION

OF

FLEETWOOD ENTERPRISES, INC.,

a Delaware corporation

It is hereby certified that:

1.     The name of the corporation is Fleetwood Enterprises, Inc. (the “Corporation”).

2.The Restated Certificate of Incorporation of the Corporation is hereby amended by deleting the FOURTH Article thereof and by substituting in lieu thereof the following new FOURTH article:

“FOURTH:  The Corporation shall be authorized to issue two classes of shares of stock to be designated, respectively, “Preferred Stock” and “Common Stock”; the total number of shares which the Corporation shall have authority to issue is one hundred sixty million (160,000,000); the total number of shares of Preferred Stock shall be ten million (10,000,000) and each such shares shall have a par value of one dollar ($1.00); and the total number of shares of Common Stock shall be one hundred fifty million (150,000,000) and each such share shall have a par value of one dollar ($1.00).

Shares of Preferred Stock may be issued from time to time in one or more series. The Board of Directors is hereby authorized to fix the voting rights, designations, powers, preferences and the relative, participating, optional or other rights, if any, and the qualifications, limitations or restrictions thereof, of any wholly unissued series of Preferred Stock; and to fix the number of shares constituting such series, and to increase or decrease the number of shares of any such series (but not below the number of shares thereof then outstanding).”

3.The amendment of the Restated Certificate of Incorporation herein certified has been duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware.

IN WITNESS WHEREOF, this Certificate of Amendment has been duly executed by a duly authorized officer of the Corporation on the 12th day of April, 2004.

FLEETWOOD ENTERPRISES, INC.
By:	/s/ Leonard J. McGill
Name:	Leonard J. McGill
Title:	Sr. Vice President—Corporate Finance Officer & Chief Governance Officer

EX-10.12

Exhibit 10.12

SECOND AMENDED AND RESTATED CREDIT AGREEMENT

Dated as of July 1, 2005

Among

THE FINANCIAL INSTITUTIONS NAMED HEREIN,

as the Lenders;

BANK OF AMERICA, N.A.,

as the Administrative Agent;

GENERAL ELECTRIC CAPITAL CORPORATION,

as the Syndication Agent;

FLEETWOOD ENTERPRISES, INC.,

as a Guarantor;

and

FLEETWOOD HOLDINGS INC., and certain of its Subsidiaries,

and

FLEETWOOD RETAIL CORP., and certain of its Subsidiaries,

as the Borrowers.

TABLE OF CONTENTS

ARTICLE 1 LOANS AND LETTERS OF CREDIT
1.1	Total Facility
1.2	Revolving Loans.
1.3	Term Loan.
1.4	Letters of Credit.
1.5	Bank Products
1.6	Joint and Several Obligations; Contribution Rights.
1.7	Borrowing Agency Provisions.
1.8	Senior Indebtedness
ARTICLE 2 INTEREST AND FEES
2.1	Interest.
2.2	Continuation and Conversion Elections.
2.3	Maximum Interest Rate
2.4	Closing Fee
2.5	Unused Line Fee
2.6	Letter of Credit Fee
2.7	[RESERVED].
2.8	Substitution of Property
ARTICLE 3 PAYMENTS AND PREPAYMENTS
3.1	Revolving Loans
3.2	Termination of Facility
3.3	Repayment of the Term Loan.
3.4	Prepayments of the Loans.
3.5	LIBOR Rate Loan Prepayments
3.6	Payments by the Borrowers.
3.7	Payments as Revolving Loans
3.8	Apportionment, Application and Reversal of Payments
3.9	Indemnity for Returned Payments
3.10	The Agent’s and Lenders’ Books and Records; Monthly Statements
3.11	Release of FRC Borrower
ARTICLE 4 TAXES, YIELD PROTECTION AND ILLEGALITY
4.1	Taxes.
4.2	Illegality.
4.3	Increased Costs and Reduction of Return.
4.4	Funding Losses
4.5	Inability to Determine Rates
4.6	Certificates of the Agent.
4.7	Survival

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ARTICLE 5 BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES
5.1	Books and Records
5.2	Financial Information
5.3	Notices to the Lenders
ARTICLE 6 GENERAL WARRANTIES AND REPRESENTATIONS
6.1	Authorization, Validity, and Enforceability of this Agreement and the Loan Documents
6.2	Validity and Priority of Security Interest
6.3	Organization and Qualification
6.4	Corporate Name; Prior Transactions
6.5	Subsidiaries and Affiliates
6.6	Financial Statements and Projections.
6.7	Capitalization
6.8	Solvency
6.9	Debt
6.10	Distributions
6.11	Real Estate; Leases
6.12	Proprietary Rights
6.13	Trade Names
6.14	Litigation
6.15	Labor Disputes
6.16	Environmental Laws
6.17	No Violation of Law
6.18	No Default
6.19	ERISA Compliance
6.20	Taxes
6.21	Regulated Entities
6.22	Use of Proceeds; Margin Regulations
6.23	Copyrights, Patents, Trademarks and Licenses, etc.
6.24	No Material Adverse Change
6.25	Full Disclosure
6.26	Material Agreements
6.27	Bank Accounts
6.28	Governmental Authorization
6.29	Senior Indebtedness
ARTICLE 7 AFFIRMATIVE AND NEGATIVE COVENANTS
7.1	Taxes and Other Obligations
7.2	Legal Existence and Good Standing
7.3	Compliance with Law and Agreements; Maintenance of Licenses
7.4	Maintenance of Property; Inspection of Property.
7.5	Insurance.
7.6	Insurance and Condemnation Proceeds

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7.7	Environmental Laws.
7.8	Compliance with ERISA
7.9	Mergers, Consolidations or Sales
7.10	Distributions; Capital Change; Restricted Investments
7.11	Transactions Affecting Collateral or Obligations
7.12	Guaranties
7.13	Debt
7.14	Prepayment
7.15	Transactions with Affiliates
7.16	Investment Banking and Finder’s Fees
7.17	Business Conducted
7.18	Liens
7.19	Sale and Leaseback Transactions
7.20	New Subsidiaries
7.21	Fiscal Year
7.22	Capital Expenditures
7.23	[RESERVED].
7.24	Minimum EBITDA
7.25	Bank Accounts
7.26	Contribution of Management Fees
7.27	Use of Proceeds
7.28	Further Assurances; Mortgages.
7.29	Subordinated Debt; Trust Securities.
ARTICLE 8 CONDITIONS OF LENDING
8.1	Conditions Precedent to Making of Loans on the Closing Date
8.2	Conditions Precedent to Each Loan
ARTICLE 9 DEFAULT; REMEDIES
9.1	Events of Default
9.2	Remedies.
ARTICLE 10 TERM AND TERMINATION
10.1	Term and Termination
ARTICLE 11 AMENDMENTS; WAIVERS; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS
11.1	Amendments and Waivers.
11.2	Assignments; Participations.
ARTICLE 12 THE AGENT
12.1	Appointment and Authorization
12.2	Delegation of Duties

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12.3	Liability of the Agent
12.4	Reliance by the Agent
12.5	Notice of Default
12.6	Credit Decision
12.7	Indemnification
12.8	The Agent in Individual Capacity
12.9	Successor Agent
12.10	Withholding Tax.
12.11	Collateral Matters.
12.12	Restrictions on Actions by Lenders; Sharing of Payments.
12.13	Agency for Perfection
12.14	Payments by the Agent to Lenders
12.15	Settlement.
12.16	Letters of Credit; Intra-Lender Issues.
12.17	Concerning the Collateral and the Related Loan Documents
12.18	Field Audit and Examination Reports; Disclaimer by Lenders
12.19	Relation Among Lenders
12.20	Co-Agents
12.21	Collateral Priority
12.22	Foreclosure/Environmental Reports
ARTICLE 13 MISCELLANEOUS
13.1	No Waivers; Cumulative Remedies
13.2	Severability
13.3	Governing Law; Choice of Forum; Service of Process.
13.4	WAIVER OF JURY TRIAL
13.5	Survival of Representations and Warranties
13.6	Other Security and Guaranties
13.7	Fees and Expenses
13.8	Notices
13.9	Waiver of Notices
13.10	Binding Effect
13.11	Indemnity of the Agent and the Lenders by the Borrower.
13.12	Limitation of Liability
13.13	Final Agreement
13.14	Counterparts
13.15	Captions
13.16	Right of Setoff
13.17	Confidentiality.
13.18	Conflicts with Other Loan Documents
13.19	Reinstatement
ARTICLE 14 GUARANTY
14.1	Guaranty

iv

ANNEXES, EXHIBITS AND SCHEDULES

ANNEX A	–	DEFINED TERMS
EXHIBIT A-1	–	FORM OF REVOLVING LOAN NOTE
EXHIBIT A-2	–	FORM OF TERM LOAN NOTE
EXHIBIT B	–	FORM OF BORROWING BASE CERTIFICATE
EXHIBIT C	–	FINANCIAL STATEMENTS
EXHIBIT D	–	FORM OF NOTICE OF BORROWING
EXHIBIT E	–	FORM OF NOTICE OF CONTINUATION/CONVERSION
EXHIBIT F	–	FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT
SCHEDULE 1.2 – LENDERS’ COMMITMENTS (ANNEX A – DEFINED TERMS)
SCHEDULE 6.9 – DEBT
SCHEDULE 6.11 (ADDENDUM) – REAL ESTATE(MORTGAGES); LEASES
SCHEDULE 6.14  – LITIGATION
SCHEDULE 6.27 – BANK ACCOUNTS
SCHEDULE 7.12 – GUARANTIES

v

SECOND AMENDED AND RESTATED CREDIT AGREEMENT

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

W I T N E S S E T H:

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

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

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

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

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

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

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

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

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

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

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

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

ARTICLE 1

LOANS AND LETTERS OF CREDIT

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

2

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

1.2Revolving Loans.

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

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

3

(b)Procedure for Borrowing.

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

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

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

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

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

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

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

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

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

4

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

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

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

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

(h)Making of Non-Ratable Loans.

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

5

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

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

(i)The Agent Advances.

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

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

1.3Term Loan.

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

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

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

1.4Letters of Credit.

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

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

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

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

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

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

(d)Issuance of Letters of Credit.

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

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

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

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

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

(f)Indemnification; Exoneration; Power of Attorney.

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

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

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

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

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

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

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

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

1.6Joint and Several Obligations; Contribution Rights.

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

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

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

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

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

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

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

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

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

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

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

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

1.7Borrowing Agency Provisions.

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

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

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

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

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

ARTICLE 2

INTEREST AND FEES

2.1Interest.

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

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

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

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

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

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

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

2.2Continuation and Conversion Elections.

(a)FMC or FRC may:

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

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

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

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

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

(i)the proposed Continuation/Conversion Date;

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

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

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

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

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

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

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

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

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

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

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

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2.7[RESERVED].

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

ARTICLE 3

PAYMENTS AND PREPAYMENTS

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

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

3.3Repayment of the Term Loan.

(a)Amortization of Term Loan.

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

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

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

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

3.4Prepayments of the Loans.

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

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

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

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

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

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

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

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

(g)[RESERVED].

(h)[RESERVED].

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

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

3.6Payments by the Borrowers.

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

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

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

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

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

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

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

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

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

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

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

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

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

ARTICLE 4

TAXES, YIELD PROTECTION AND ILLEGALITY

4.1Taxes.

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

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

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

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

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

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

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

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

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

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

4.2Illegality.

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

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

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

4.3Increased Costs and Reduction of Return.

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

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

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

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

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

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

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

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

4.6Certificates of the Agent.

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

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

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

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

ARTICLE 5

BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(n)[RESERVED].

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

ARTICLE 6

GENERAL WARRANTIES AND REPRESENTATIONS

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

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

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

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

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

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

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

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

6.6Financial Statements and Projections.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

ARTICLE 7

AFFIRMATIVE AND NEGATIVE COVENANTS

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

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

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

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

7.4Maintenance of Property; Inspection of Property.

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

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

7.5Insurance.

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

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

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

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

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

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

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

7.7Environmental Laws.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(a)the Obligations;

(b)the Subordinated Debt;

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

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

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

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

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

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

(i)the principal amount thereof is not increased,

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(q)obligations under Hedge Agreements with any Lender;

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

7.23[RESERVED].

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

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Period Ending	EBITDA
Four Fiscal Quarters ended on the last Sunday in January 2005	$	15,700,000
Single Fiscal Quarter ended on the last Sunday in April 2005	$	(7,500,000	)
Two Fiscal Quarters ended on the last Sunday in July 2005	$	14,500,000
Three Fiscal Quarters ended on the last Sunday in October 2005	$	29,200,000
Four Fiscal Quarters ended on the last Sunday in January 2006	$	30,325,000
Four Fiscal Quarters ended on the last Sunday in April 2006 and each last Sunday in each July, October, January and April thereafter	$	51,750,000

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

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

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

7.28Further Assurances; Mortgages.

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

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

(b)[RESERVED].

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

7.29Subordinated Debt; Trust Securities.

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

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

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

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

ARTICLE 8
CONDITIONS OF LENDING

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

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

(b)[RESERVED].

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

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

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

(f)[RESERVED].

(g)The Agent shall have received:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(s)[RESERVED].

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

(u)[RESERVED].

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

(w)[RESERVED].

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

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

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

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

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

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

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

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

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

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

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ARTICLE 9

DEFAULT; REMEDIES

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(p)there occurs a Change of Control; or

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

9.2Remedies.

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

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

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

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

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

(d)[RESERVED].

ARTICLE 10
TERM AND TERMINATION

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

ARTICLE 11
AMENDMENTS; WAIVERS; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS

11.1Amendments and Waivers.

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

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

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

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

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

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

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

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

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

(G)amend Section 3.8;

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

11.2Assignments; Participations.

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

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

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

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

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

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

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

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

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

ARTICLE 12
THE AGENT

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

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

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

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

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

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

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

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

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

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

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

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

12.10Withholding Tax.

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

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

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

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

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

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

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

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

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

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

12.11Collateral Matters.

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

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

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

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

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

12.12Restrictions on Actions by Lenders; Sharing of Payments.

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

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

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

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

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

12.15Settlement.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

12.16Letters of Credit; Intra-Lender Issues.

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

(b)Participations in Letters of Credit.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

ARTICLE 13
MISCELLANEOUS

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

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

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

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

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

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

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

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

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

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

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

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

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

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

If to the Agent or to the Bank:

Bank of America, N.A.
55 South Lake Avenue, Suite 900
Pasadena, California  91101
Attention:  John C. McNamara
Telecopy No.:  (626) 397-1273/1274

with copies to:

Latham & Watkins
633 West Fifth Street, Suite 4000
Los Angeles, California  90071
Attention:  Glen B. Collyer, Esq.
Telecopy No.:  (213) 891-8763

If to Fleetwood or any Borrower:

Fleetwood Holdings Inc.
Fleetwood Enterprises, Inc.
Fleetwood Retail Corp., Inc.
3125 Myers Street
Riverside, California  92503
Attention:  Chief Financial Officer
Telecopy No.:  (909)  351-3373
Attention:  General Counsel
Telecopy No.:  (909) 351-3776

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with copies to:

Gibson, Dunn & Crutcher LLP
333 South Grand Avenue
Los Angeles, California  90071-3197
Attention:  Jeff Hudson, Esq.
Telecopy No.:  (213) 229-6332

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

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

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

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

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

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

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

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

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

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

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

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

13.17Confidentiality.

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

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

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

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

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

ARTICLE 14
GUARANTY

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

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

[Signatures on Following Page]

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

“FMC BORROWERS”	FLEETWOOD HOLDINGS INC.
	FLEETWOOD HOMES OF ARIZONA, INC.
	FLEETWOOD HOMES OF CALIFORNIA, INC.
	FLEETWOOD HOMES OF FLORIDA, INC.
	FLEETWOOD HOMES OF GEORGIA, INC.
	FLEETWOOD HOMES OF IDAHO, INC.
	FLEETWOOD HOMES OF INDIANA, INC.
	FLEETWOOD HOMES OF KENTUCKY, INC.
	FLEETWOOD HOMES OF NORTH CAROLINA, INC.
	FLEETWOOD HOMES OF OREGON, INC.
	FLEETWOOD HOMES OF PENNSYLVANIA, INC.
	FLEETWOOD HOMES OF TENNESSEE, INC.
	FLEETWOOD HOMES OF TEXAS, L.P.
	By:          FLEETWOOD GENERAL PARTNER
	OF TEXAS, INC., its General Partner
	FLEETWOOD HOMES OF VIRGINIA, INC.
	FLEETWOOD HOMES OF WASHINGTON, INC.
	FLEETWOOD MOTOR HOMES OF CALIFORNIA, INC.
	FLEETWOOD MOTOR HOMES OF INDIANA, INC.
	FLEETWOOD MOTOR HOMES OF PENNSYLVANIA, INC.

S-1

FLEETWOOD TRAVEL TRAILERS OF CALIFORNIA, INC.
FLEETWOOD TRAVEL TRAILERS OF INDIANA, INC.
FLEETWOOD TRAVEL TRAILERS OF KENTUCKY, INC.
FLEETWOOD TRAVEL TRAILERS OF MARYLAND, INC.
FLEETWOOD TRAVEL TRAILERS OF OHIO, INC.
FLEETWOOD TRAVEL TRAILERS OF OREGON, INC.
FLEETWOOD TRAVEL TRAILERS OF TEXAS, INC.
FLEETWOOD FOLDING TRAILERS, INC.
GOLD SHIELD, INC.
GOLD SHIELD OF INDIANA, INC.
HAUSER LAKE LUMBER OPERATION, INC.
CONTINENTAL LUMBER PRODUCTS, INC.
FLEETWOOD GENERAL PARTNER OF TEXAS, INC.
FLEETWOOD HOMES INVESTMENT, INC.
By:	/s/ BOYD R. PLOWMAN
Name:	Boyd R. Plowman
Title:	Executive Vice President and Chief Financial Officer

S-2

“FRC BORROWERS”	FLEETWOOD RETAIL CORP.
	FLEETWOOD RETAIL CORP. OF CALIFORNIA
	FLEETWOOD RETAIL CORP. OF IDAHO
	FLEETWOOD RETAIL CORP. OF KENTUCKY
	FLEETWOOD RETAIL CORP. OF MISSISSIPPI
	FLEETWOOD RETAIL CORP. OF NORTH CAROLINA
	FLEETWOOD RETAIL CORP. OF OREGON
	FLEETWOOD RETAIL CORP. OF VIRGINIA
	By:		/s/ BOYD R. PLOWMAN
	Name:		Boyd R. Plowman
	Title:		Executive Vice President and Chief Financial Officer
“GUARANTOR”	FLEETWOOD ENTERPRISES, INC., as the Guarantor
	By:	/s/ BOYD R. PLOWMAN
	Name:	Boyd R. Plowman
	Title:	Executive Vice President and Chief Financial Officer

S-3

“AGENT”	BANK OF AMERICA, N.A., as the Agent
	By:	/s/ JOHN MCNAMARA
		John McNamara, Vice President

S-4

“LENDERS”	BANK OF AMERICA, N.A., as a Lender
	By:	/s/ JOHN MCNAMARA
		John McNamara, Vice President

S-5

“LENDERS”	GENERAL ELECTRIC CAPITAL CORPORATION., as a Lender
	By:	/s/ KEITH ALEXANDER
		Keith Alexander, Vice President

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“LENDERS”	WELLS FARGO FOOTHILL, INC. fka FOOTHILL CAPITAL CORPORATION, as a Lender
	By:	/s/ JUAN BARRERA
		Juan Barrera, Vice President

S-7

“LENDERS”	THE CIT GROUP/BUSINESS CREDIT, INC., as a Lender
	By:	/s/ THOMAS H. HOPKINS
		Thomas H. Hopkins, Vice President

S-8

“LENDERS”	TEXTRON FINANCIAL CORPORATION, as a Lender
	By:	/s/ RALPH J. INFANTE
		Ralph J. Infante, Vice President

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ANNEX A

to
Credit Agreement

Definitions

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

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

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

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

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

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

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

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

A-1

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

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

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

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

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

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

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

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

“Agents” means the Agent.

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

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

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

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

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

“Annual Appraisal Date” means each Anniversary Date.

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

Fixed Charge Coverage Ratio:

If Fixed Charge Coverage Ratio is:	Level
Greater than or equal to 1.30:1.00	Level I
Greater than or equal to 1.10:1.00, butless than 1.30:1.00	Level II
Greater than or equal to 0.75:1.00, butless than 1.10:1.00	Level III
Greater than or equal to 0.40:1.00, butless than 0.75:1.00	Level IV
Less than 0.40:1.00	Level V

Low to High

	Applicable Margins
	Level I		Level II		Level III		Level IV		Level V
Base Rate Lender Term Loans	0.50	%	0.50	%	0.75	%	1.00	%	1.25	%
LIBOR Lender Term Loans	2.50	%	2.75	%	3.00	%	3.25	%	3.50	%
Base Rate Revolving Loans	0.00	%	0.00	%	0.25	%	0.50	%	0.75	%
LIBOR Revolving Loans	2.00	%	2.25	%	2.50	%	2.75	%	3.00	%
Unused Line Fees	0.25	%	0.375	%	0.375	%	0.50	%	0.50	%
Letter of Credit Fees	1.75	%	2.00	%	2.25	%	2.50	%	2.50	%

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

“Closing Date” means the date of this Agreement.

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

“Code” means the Internal Revenue Code of 1986.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(f)that is obsolete;

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

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

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

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

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

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

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

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

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

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(c)that is not marketable;

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

“FVC” means FVC, Inc.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

LIBOR Rate	=	Offshore Base Rate
		1.00 - Eurodollar Reserve Percentage

Where,

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

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

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

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

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

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

“Lien” means:  (a) any interest in property securing an obligation owed to, or a claim by, a Person other than the owner of the property, whether such interest is based on the common law, statute, or contract, and including a security interest, charge, claim, or lien arising from a mortgage, deed of trust, encumbrance, pledge, hypothecation, assignment, deposit arrangement, agreement, security agreement, conditional sale or trust receipt or a lease, consignment or bailment for security purposes; (b) to the extent not included under clause (a), any reservation, exception, encroachment, easement, right-of-way, covenant, condition, restriction, lease or other title exception or encumbrance affecting property; and (c) any contingent or other agreement to provide any of the foregoing.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

“Notes” means the Revolving Loan Notes and the Term Loan Notes.

“Notice of Borrowing” has the meaning specified in Section 1.2(b).

“Notice of Continuation/Conversion” has the meaning specified in Section 2.2(b).

“Obligations” means, with respect to any Loan Party, all present and future loans, advances, liabilities, obligations, covenants, duties, and debts owing by such Loan Party to the Agent and/or any Lender, arising under or pursuant to this Agreement or any of the other Loan Documents, whether or not evidenced by any note, or other instrument or document, whether arising from an extension of credit, opening of a letter of credit, acceptance, loan, guaranty, indemnification or otherwise, whether direct or indirect, absolute or contingent, due or to become due, primary or secondary, as principal or guarantor, and including all principal, interest, (including any interest which accrues after the filing of a proceeding under the Bankruptcy Code or which would have accrued but for such filing) charges, expenses, fees, attorneys’ fees, filing fees and any other sums chargeable to the Borrowers hereunder or under any of the other Loan Documents.  “Obligations” includes, without limitation, (a) all debts, liabilities, and obligations now or hereafter arising from or in connection with the Letters of Credit and (b) all debts, liabilities and obligations now or hereafter arising from or in connection with Bank Products.

“Original Closing Date” means July 27, 2001.

“Original Credit Agreement” means that certain Credit Agreement dated as of the Original Closing Date, by and among Fleetwood, the Borrowers, the Lenders, the Agent and the other parties thereto, as amended.

“Other Taxes” means any with respect to any Lender or the Agent present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies which arise from any payment made hereunder or from the execution, delivery or registration of, or otherwise with respect to, this Agreement or any other Loan Documents but excluding, in the case of each Lender and the Agent, such taxes (including income, franchise or branch profits taxes) as are imposed on or measured by the Agent’s or each Lender’s net income in any jurisdiction (whether federal, state or local and including any political subdivision thereof) under the laws of which such Lender or the Agent, as the case may be, is organized or maintains a lending office.

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“Parent Guaranty” means the Second Amended and Restated Parent Guaranty dated as of the First Amendment and Restatement Date from Fleetwood to the Agent, for its benefit and the benefit of the Lenders.

“Participant” means any Person who shall have been granted the right by any Lender to participate in the financing provided by such Lender under this Agreement and the other Loan Documents, and who shall have entered into a participation agreement in form and substance satisfactory to such Lender.

“Patent” has the meaning specified in Patent and Trademark Agreements.

“Patent and Trademark Agreements” means collectively, the Patent Security Agreement(s) and the Trademark Security Agreement(s), executed and delivered by any Loan Party to the Agent to evidence and perfect the Agent’s security interest in the present and future patents, trademarks, and related licenses and rights of such Loan Party, for the benefit of the Agent and the Lenders.

“Payment Account” means each bank account established pursuant to the Security Agreement, to which the proceeds of Accounts and other Collateral are deposited or credited, and which is maintained in the name of the Agent or of FMC, FRC or any other Loan Party, as applicable, as the Agent may determine, on terms acceptable to the Agent.

“PBGC” means the Pension Benefit Guaranty Corporation or any Governmental Authority succeeding to the functions thereof.

“Pending Revolving Loans” means, at any time, the aggregate principal amount of all Revolving Loans requested in any Notice of Borrowing received by the Agent which have not yet been advanced.

“Pension Plan” means a pension plan (as defined in Section 3(2) of ERISA) subject to Title IV of ERISA which Fleetwood or any ERISA Affiliate sponsors, maintains, or to which it makes, is making, or is obligated to make contributions, or in the case of a Multi-employer Plan has made contributions at any time during the immediately preceding six (6) plan years.

“Permitted Liens” means:

(a)Liens for taxes not delinquent or statutory Liens for taxes in an amount not to exceed $3,000,000 provided that the payment of such taxes which are due and payable is being contested in good faith and by appropriate proceedings diligently pursued and as to which adequate financial reserves have been established on books and records of Fleetwood and its Subsidiaries and a stay of enforcement of any such Lien is in effect;

(b)the Agent’s Liens;

(c)Liens consisting of deposits made in the ordinary course of business in connection with, or to secure payment of, obligations under worker’s

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compensation, unemployment insurance, social security and other similar laws, or to secure the performance of bids, tenders or contracts (other than for the repayment of Debt) or to secure indemnity, performance or other similar bonds for the performance of bids, tenders or contracts (other than for the repayment of Debt) or to secure statutory obligations (other than liens arising under ERISA or Environmental Liens) or surety or appeal bonds, or to secure indemnity, performance or other similar bonds;

(d)Liens securing the claims or demands of materialmen, mechanics, carriers, warehousemen, landlords and other like Persons, provided that if any such Lien arises from the nonpayment of such claims or demand when due, such claims or demands do not exceed $1,000,000 in the aggregate at any time;

(e)Liens constituting encumbrances in the nature of reservations, exceptions, encroachments, easements, rights of way, covenants running with the land, and other similar title exceptions or encumbrances affecting any Real Estate; provided that they do not in the aggregate materially detract from the value of the Real Estate or materially interfere with its use in the ordinary conduct of the Borrower’s business;

(f)Liens arising from judgments and attachments in connection with court proceedings provided that the attachment or enforcement of such Liens would not result in an Event of Default hereunder and such Liens are being contested in good faith by appropriate proceedings, adequate reserves have been set aside and no material Property is subject to a material risk of imminent loss or forfeiture and a stay of execution pending appeal or proceeding for review is in effect;

(g)Liens on the assets of any Loan Party described on Schedule 6.9 hereto securing the Debt identified on Schedule 6.9 hereto as “Secured Debt” and refinancings, renewals and extensions thereof permitted pursuant to Section 7.13(f);

(h)Interests of lessors under operating leases;

(i)other Liens securing Debt not in excess of $1,000,000 in the aggregate at any time outstanding;

(j)Liens on assets of the Excluded Retail Subsidiaries securing Floor Plan Debt permitted hereunder; provided that such Liens shall be released in accordance with Section 7.9(f);

(k)deposits by Retail and/or the Excluded Retail Subsidiaries in a reserve account with the Floor Plan Lender; provided that such Liens shall be released in accordance with Section 7.9(f);

(l)Liens on assets of the Excluded Subsidiaries, as long as the holder of such Lien has no recourse to any Loan Party or its assets;

(m)Liens securing Debt permitted under Section 7.13(d), (e), (s), (t), and (u); provided that such Liens securing Debt permitted under Section 7.13 (u) shall be released in accordance with Section 7.9(f); and

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(n)bankers liens and rights of set off with respect to customary depositary arrangements entered into in the ordinary conduct of business.

“Permitted Released Collateral” has the meaning provided in Section 2.7(d).

“Person” means any individual, sole proprietorship, partnership, limited liability company, joint venture, trust, unincorporated organization, association, corporation, Governmental Authority, or any other entity.

“Plan” means an employee benefit plan (as defined in Section 3(3) of ERISA) which Fleetwood or any ERISA Affiliate sponsors or maintains or to which Fleetwood or any ERISA Affiliate makes, is making, or is obligated to make contributions and includes any Pension Plan.

“Pledge Agreement” means the Pledge Agreement dated as of the Original Closing Date by the Loan Parties in favor of the Agent, for the benefit of the Agent and the Lenders.

“Property Release” has the meaning provided in Section 2.7.

“Property Substitution” has the meaning provided in Section 2.8.

“Proprietary Rights” means, as to any Person, all of such Person’s now owned and hereafter arising or acquired:  licenses, franchises, permits, patents, patent rights, copyrights, works which are the subject matter of copyrights, trademarks, service marks, trade names, trade styles, patent, trademark and service mark applications, and all licenses and rights related to any of the foregoing, including those patents, trademarks, service marks, trade names and copyrights set forth on Schedule 6.12 to the Existing Credit Agreement, as amended prior to the Closing Date, and all other rights under any of the foregoing, all extensions, renewals, reissues, divisions, continuations, and continuations-in-part of any of the foregoing, and all rights to sue for past, present and future infringement of any of the foregoing.

“Pro Rata Share” of a Lender means (a) with respect to all provisions relating to Revolving Loans or Letters of Credit or the Revolving Credit Commitments, a fraction (expressed as a percentage), the numerator of which is the amount of such Lender’s Revolving Credit Commitment and the denominator of which is the Revolving Credit Commitments of all Lenders, or if no Revolving Credit Commitment is outstanding, a fraction (expressed as a percentage), the numerator of which is the Aggregate Revolver Outstandings owed to such Lender and the denominator of which is the Aggregate Revolver Outstandings; (b) with respect to all provisions relating to the Term Loan, a fraction (expressed as a percentage), the numerator of which is the outstanding Lender Term Loan of such Term Lender and the denominator of which is the outstanding Term Loan; and (c) otherwise, a fraction (expressed as a percentage), the numerator of which is the amount of such Lender’s Revolving Credit Commitment plus the outstanding Lender Term Loans of such Lender and the denominator of which is the Revolving Credit Commitments of all Lenders plus the outstanding Term Loan, or if no Revolving Credit Commitment is outstanding, a fraction (expressed as a percentage), the numerator of which is the Aggregate Revolver Outstandings of such Lender plus the outstanding Lender Term Loans of

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such Lender and the denominator of which is the Aggregate Revolver Outstandings and the outstanding Term Loan.

“Qualified Cash Equivalents” means, as of any date for any Person, the balance of cash and marketable securities held by such Person in the United States on such date, which cash and marketable securities are held in an account with the Agent and are subject to a first priority, perfected Lien in favor of the Agent and the use of which is not otherwise restricted, by law or by agreement.

“RCI Obligations” means any obligations of FVC owing to Resort Condominiums International, LLC, or its affiliates in respect of payment for services rendered by Resort Condominiums International, LLC or its affiliates, to FVC or its affiliates.

“Real Estate” means, as to any Person, all of such Person’s now or hereafter owned or leased estates in real property, including, without limitation, all fees, leaseholds and future interests, together with all of such Person’s now or hereafter owned or leased interests in the improvements thereon, the fixtures attached thereto and the easements appurtenant thereto.

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

“Release” means a release, spill, emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching or migration of a Contaminant into the indoor or outdoor environment or into or out of any Real Estate or other property, including the movement of Contaminants through or in the air, soil, surface water, groundwater or Real Estate or other property.

“Release Date” has the meaning provided in Section 2.7.

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

“Replaced Property” has the meaning provided in Section 2.8.

“Reportable Event” means, any of the events set forth in Section 4043(b) of ERISA or the regulations thereunder, other than any such event for which the 30-day notice requirement under ERISA has been waived in regulations issued by the PBGC.

“Repurchase Obligations” means the liabilities of Fleetwood to retail floor plan lenders to repurchase Inventory sold by FMC to retail dealers.

“Required Lenders” means at any time Lenders whose Pro Rata Shares aggregate more than 66-2/3%.

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“Required Revolving Lenders” means at any time Revolving Credit Lenders whose Pro Rata Shares aggregate more than 66-2/3%.

“Required Term Lenders” means at any time when there are two or fewer Term Lenders, all Term Lenders, and at all other times, Term Lenders whose Pro Rata Shares aggregate at least 66-2/3%.

“Requirement of Law” means, as to any Person, any law (statutory or common), treaty, rule or regulation or determination of an arbitrator or of a Governmental Authority, in each case applicable to or binding upon the Person or any of its property or to which the Person or any of its property is subject.

“Reserves” means reserves that limit the availability of credit hereunder, consisting of reserves against Availability, Aggregate Availability, Eligible Accounts, or Eligible Inventory or Real Estate Subfacility Assets established by the Agent in good faith from time to time in the Agent’s reasonable credit judgment.  Without limiting the generality of the foregoing, the following reserves shall be deemed to be a reasonable exercise of the Agent’s credit judgment:  (a) Bank Product Reserves, (b) reserves for rent at leased locations subject to statutory or contractual landlord liens, and where the Agent has not received an acceptable agreement from the landlord, in an amount equal to three months rent for each such location, (c) Environmental Compliance Reserves, and (d) warehousemen’s or bailees’ charges in an amount equal to three months charges due to such warehouseman or bailee.

“Responsible Officer” means, as to any Loan Party, the chief executive officer or the president, or any other officer having substantially the same authority and responsibility; or, with respect to compliance with financial covenants and the preparation of the Borrowing Base Certificate, the chief financial officer, vice president-treasurer or vice president-controller, or any other officer of such Loan Party having substantially the same authority and responsibility.

“Restricted Investment” means any acquisition of property in exchange for cash or other property, whether in the form of an acquisition of stock, Debt, or other indebtedness or obligation, or the purchase or acquisition of any other property, or a loan, advance, capital contribution, or subscription, except the following:  (a) acquisitions of (i) Equipment to be used in the business so long as the acquisition costs thereof constitute Capital Expenditures permitted hereunder and (ii) Real Estate to be used in the business so long as the acquisition costs are deemed “Capital Expenditures” for purposes of Section 7.22 hereof, and, in each case, if financed, are financed in amounts not in excess of the amounts permitted hereby; (b) acquisitions of Inventory in the ordinary course of business; (c) acquisitions of current assets acquired in the ordinary course of business; (d) direct obligations of the United States of America, or any agency thereof, or obligations guaranteed by the United States of America, provided that such obligations mature within one year from the date of acquisition thereof; (e) acquisitions of certificates of deposit maturing within one year from the date of acquisition, bankers’ acceptances, Eurodollar bank deposits, or overnight bank deposits, in each case issued by, created by, or with a bank or trust company organized under the laws of the United States of America or any state thereof having capital and surplus aggregating at least $100,000,000; (f) acquisitions of commercial paper given a rating of “A2” or better by Standard & Poor’s Corporation or “P2” or better by Moody’s Investors Service, Inc. and maturing not more than 90

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days from the date of creation thereof; (g) Hedge Agreements; (h) extensions of credit in the nature of accounts receivable or notes receivable arising from the sale or lease of goods or services in the ordinary course of business; (i) any assets received in satisfaction of judgments against third parties, foreclosure of Liens or good faith settlement of litigation, disputes or debts; (j) operating leases in the ordinary course of business; (k) licenses in the ordinary course of business consistent with past practices and (l) intercompany Debt of Subsidiaries of Fleetwood otherwise permitted under this Agreement.

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

“Revolving Credit Commitment” means, at any time with respect to a Lender, the principal amount set forth beside such Lender’s name under the heading “Revolving Credit Commitment” on Schedule 1.2 attached to the Agreement or on the signature page of the Assignment and Acceptance pursuant to which such Lender became a Lender hereunder in accordance with the provisions of Section 11.2, as such Revolving Credit Commitment may be adjusted from time to time in accordance with the provisions of Section 11.2 and Section 13.19, and “Revolving Credit Commitments” means, collectively, the aggregate amount of the commitments of all Lenders.

“Revolving Credit Lender” means any Lender which has a Revolving Credit Commitment or, if the Revolving Credit Commitments have been terminated, any Lender which has any Revolving Loan outstanding or any participation interest in any outstanding Letter of Credit.

“Revolving Loans” has the meaning specified in Section 1.2 and includes each Agent Advance and Non-Ratable Loan.

“Revolving Loan Note” and “Revolving Loan Notes” have the meanings specified in Section 1.2(a)(ii).

“Securities Act” means the Securities Act of 1933 and the rules and regulations promulgated thereunder.

“Security Agreement” means the Security Agreement dated of the First Amendment and Restatement Date among the Loan Parties and the Agent for the benefit of the Agent and the Lenders.

“Settlement” and “Settlement Date” have the meanings specified in Section 12.15(a)(ii).

“Solvent” means, when used with respect to any Person, that at the time of determination:

(a)the assets of such Person (including any contribution rights under any Loan Document), at a fair valuation, are in excess of the total amount of its debts (including contingent liabilities); and

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(b)the present fair saleable value of its assets is greater than its probable liability on its existing debts as such debts become absolute and matured; and

(c)it is then able and expects to be able to pay its debts (including contingent debts and other commitments) as they mature; and

(d)it has capital sufficient to carry on its business as conducted and as proposed to be conducted.

For purposes of determining whether a Person is Solvent, the amount of any contingent liability shall be computed as the amount that, in light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.

“Stated Termination Date” means July 31, 2007.

“Subordinated Debentures” means Fleetwood’s 6% Convertible Subordinated Debentures due February 15, 2028 in the original principal amount of $296,400,000.

“Subordinated Debt” means the unsecured Debt from time to time outstanding under the Subordinated Debentures, the New Subordinated Debentures, the 2003 Subordinated Debentures and the maximum liability of Fleetwood on any subordinated Guaranty of the Trust Securities.

“Subsidiary” of a Person means any corporation, association, partnership, limited liability company, joint venture or other business entity of which more than fifty percent (50%) of the voting Capital Stock, is owned or controlled directly or indirectly by the Person, or one or more of the Subsidiaries of the Person, or a combination thereof.  Unless the context otherwise clearly requires, references herein to a “Subsidiary” refer to a Subsidiary of Fleetwood.

“Subsidiary Guaranty” means the Second Amended and Restated Subsidiary Guaranty dated as of the First Amendment and Restatement Date from Subsidiaries of Fleetwood (other than the Borrowers and the Excluded Subsidiaries) to the Agent, for its benefit and the benefit of the Lenders.

“Substituted Property” has the meaning provided in Section 2.8.

“Substituted Property Appraisal” has the meaning provided in Section 2.8(d).

“Supporting Letter of Credit” has the meanings specified in Section 1.4(g).

“Supporting Obligations” means all supporting obligations as such term is defined in the UCC.

“Syndication Agent” means General Electric Capital Corporation.

“Taxes” means, with respect to any Lender or the Agent, any and all present or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities with respect

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thereto, excluding, in the case of each Lender and the Agent, (i) such taxes (including income, franchise or branch profits taxes) as are imposed on or measured by the Agent’s or each Lender’s net income in any jurisdiction (whether federal, state or local and including any political subdivision thereof) under the laws of which such Lender or the Agent, as the case may be, is organized or maintains a lending office or (ii) in the case of any Lender that is a “foreign corporation, partnership or trust” within the meaning of the Code, any withholding tax that is imposed on amounts payable to such Lender at the time such Lender becomes a party hereto (or designates a new lending office) or is attributable to such Lender’s failure (other than as a result of the introduction of any Requirement of Law or any change in any Requirement of Law or in the interpretation or administration of any Requirement of Law) to comply with Section 12.10, except to the extent that such Lender (or its assignor, if any) was entitled, at the time of the designation or a new lending office (or assignment), to receive additional amounts from the Borrowers with respect to such withholding taxes pursuant to Article IV hereof.

“Term Lender” means a Lender which has made a Lender Term Loan, as long as any portion of such Lender Term Loan is outstanding.

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

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

“Termination Date” means the earliest to occur of (i) the Stated Termination Date, (ii) the date the Total Facility is terminated either by the Borrowers pursuant to Section 3.2 or by the Majority Lenders pursuant to Section 9.2, (iii) the date the Agreement is otherwise terminated for any reason whatsoever pursuant to the terms of the Agreement and (iv) the date the Revolving Credit Commitments are terminated or have expired.

“Texas Landlord Obligations” means the Obligations of FRC under that certain lease executed on December 16, 2004 and effective on December 10, 2004, by and between FRC and Caroline Partners, Ltd.

“Total Facility” has the meaning specified in Section 1.1.

“Trademark” has the meaning specified in Patent and Trademark Agreements.

“Trust Securities” means, collectively, (a) the 6% Convertible Trust Preferred Securities issued by Fleetwood Trust in February 1998 with a liquidation preference of $50 per share, guaranteed on a subordinated unsecured basis by Fleetwood, (b) any convertible preferred securities issued by Fleetwood Trust in exchange therefore to the extent and only to the extent that issuance of such securities is permitted under this Agreement, (c) any additional securities issued by Fleetwood Trust concurrently with, and having the same terms as, the securities issued in such exchange to the extent and only to the extent that issuance of such securities is permitted under this Agreement, (d) the 6% Convertible Trust Common Securities issued by Fleetwood

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Trust to Fleetwood in February 1998, (e) the convertible preferred securities issued by Fleetwood Trust concurrently with the issuance of the New Subordinated Debentures.

“UCC” means the Uniform Commercial Code, as in effect from time to time, of the State of California or of any other state the laws of which are required as a result thereof to be applied in connection with the issues of perfection, continuation or enforcement of security interests.

“Unfunded Pension Liability” means the excess of a Plan’s benefit liabilities under Section 4001(a)(16) of ERISA, over the current value of that Plan’s assets, determined in accordance with the assumptions used for funding the Pension Plan pursuant to Section 412 of the Code for the applicable plan year.

“Unused Letter of Credit Subfacility” means an amount equal to $75,000,000 minus the sum of (a) the aggregate undrawn amount of all outstanding Letters of Credit plus, without duplication, (b) the aggregate unpaid reimbursement obligations with respect to all Letters of Credit.

“Unused Line Fee” has the meaning specified in Section 2.5.

“Warehouse Financing Line of Credit” means (a) (I) the line of credit outstanding under that certain Master Loan and Security Agreement dated as of December 23, 2003, by and between Home One Funding I, as borrower, and Greenwich Capital Finance Products, Inc., as lender and (II) the line of credit outstanding under that certain Warehousing Credit and Security Agreement (Manufactured Housing), dated as of September __, 2004, by and between HomeOne Credit Corp., a Delaware corporation, as borrower, and Residential Funding Corporation, a Delaware corporation as lender and (b) any other line of credit entered into by Finance Co., the proceeds of which are used solely to either (i) fund loans to retail customers who are purchasing products manufactured by Fleetwood or its Subsidiaries (or non-Fleetwood product in the case of resales by Fleetwood or its Subsidiaries of trade-ins, repossessed homes or other previously owned homes) from (A) Fleetwood, (B) Subsidiaries of Fleetwood or (C) independent dealers who are, as of the date of the funding of the loan to the applicable retain customer, purchasing from Fleetwood or its Subsidiaries new products manufactured by Fleetwood or its Subsidiaries, or (ii) refinance or restructure loans to retail customers described in clause (a) of this definition; provided that the documents and other agreements executed by Fleetwood in connection with such Warehouse Financing Line of Credit are reasonably satisfactory in form and substance to the Agent.

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

“Wells Fargo Guaranty and Support Agreement” means that certain guaranty and support agreement, dated as of                        , 2005, by Fleetwood Enterprises Inc., a Delaware corporation, to and for the benefit of Wells Fargo Funding, Inc., a Minnesota corporation pursuant to which Fleetwood Enterprises, Inc. has guaranteed the timely payment of any amounts owing under the Instruments (as defined in the Wells Fargo Guaranty and Support Agreement).

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Accounting Terms.  Any accounting term used in the Agreement shall have, unless otherwise specifically provided herein, the meaning customarily given in accordance with GAAP, and all financial computations in the Agreement shall be computed, unless otherwise specifically provided therein, in accordance with GAAP as consistently applied and using the same method for inventory valuation as used in the preparation of the Financial Statements.

Interpretive Provisions.

(a)The meanings of defined terms are equally applicable to the singular and plural forms of the defined terms.

(b)The words “hereof,” “herein,” “hereunder” and similar words refer to the Agreement as a whole and not to any particular provision of the Agreement; and Subsection, Section, Schedule and Exhibit references are to the Agreement unless otherwise specified.

(c)(i)The term “documents” includes any and all instruments, documents, agreements, certificates, indentures, notices and other writings, however evidenced.

(ii)The term “including” is not limiting and means “including without limitation.”

(iii)In the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including,” the words “to” and “until” each mean “to but excluding” and the word “through” means “to and including.”

(iv)The word “or” is not exclusive.

(d)Unless otherwise expressly provided herein, (i) references to agreements (including the Agreement) and other contractual instruments shall be deemed to include all subsequent amendments and other modifications thereto, but only to the extent such amendments and other modifications are not prohibited by the terms of any Loan Document, and (ii) references to any statute or regulation are to be construed as including all statutory and regulatory provisions consolidating, amending, replacing, supplementing or interpreting the statute or regulation.

(e)The captions and headings of the Agreement and other Loan Documents are for convenience of reference only and shall not affect the interpretation of the Agreement.

(f)The Agreement and other Loan Documents may use several different limitations, tests or measurements to regulate the same or similar matters.  All such limitations, tests and measurements are cumulative and shall each be performed in accordance with their terms.

(g)For purposes of Section 9.1, a breach of a financial covenant contained in Sections 7.22 or 7.24 shall be deemed to have occurred as of any date of determination thereof by the Agent or as of the last day of any specified measuring period, regardless of when the Financial Statements reflecting such breach are delivered to the Agent.

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(h)The Agreement and the other Loan Documents are the result of negotiations among and have been reviewed by counsel to the Agent, Fleetwood, the Borrowers and the other parties, and are the products of all parties.  Accordingly, they shall not be construed against the Lenders or the Agent merely because of the Agent’s or Lenders’ involvement in their preparation.

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EX-10.14

Exhibit 10.14

EMPLOYMENT AGREEMENT

This Employment Agreement (this “Agreement”) is effective as of March 8, 2005 (the “Effective Date”), and is entered into by and between Elden L. Smith, an individual (“Executive”), and Fleetwood Enterprises, Inc., a Delaware corporation (the “Company”).

R E C I T A L S

WHEREAS, by entering into this Agreement, the terms of Executive’s employment with the Company shall be governed by the terms and conditions of this Agreement and any prior agreement between Executive and the Company or any of the Company’s affiliated entities relating to Executive’s employment with the Company or any of its affiliated entities shall be superseded by the terms of this Agreement except to the extent set forth herein.

NOW, THEREFORE, in consideration of the foregoing, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties hereto, the parties hereto agree as follows:

A G R E E M E N T

1.Employment.  As of the Effective Date, the Company hereby employs Executive to serve in the capacity of President and Chief Executive Officer..  The Company’s Board of Directors (the “Board”) may provide other designations of title to Executive as the Board, in their discretion, may deem appropriate.

Executive agrees to perform the duties and functions as assigned  by the Board of Directors.  Except for legal holidays, vacations and absences due to temporary illness, Executive shall devote his time, attention and energies to the business of the Company on a full-time basis.  Executive represents and warrants to the Company that he is under no restriction, limitation or other prohibition to perform his duties as described herein.

2.Employment Compensation And Benefits.

(a)Base Salary.  Executive’s initial base salary shall be at the annual rate of eight hundred seventy three thousand (Dollars) ($873,000.00) (the “Base Salary”), which shall be payable at least as frequently as monthly and subject to deductions and withholdings required by applicable law and as customary in respect of the Company’s salaried employees.  The Company, on the basis of Executive’s performance and the Company’s financial success and progress, shall review this salary level at least annually.

(b)Incentive Compensation.  As additional compensation to provide incentives for Executive to extend efforts which will assist in increasing the profits of the Company, Executive shall be eligible to receive incentive compensation based on achieving individual and organizational performance objectives in accordance with the terms and conditions of the

Company’s management compensation plan, implemented at the beginning of fiscal year 2002, and as may be modified from time to time.

(c)Vacation.  Executive shall be entitled to four weeks of vacation in accordance with the Company’s vacation policies in effect during the term of this Agreement.

(d)Expense Reimbursement.  The Company shall reimburse Executive for all reasonable amounts actually expended by Executive in the course of performing his duties for the Company and in accordance with any Company-established guidelines where Executive tenders receipts or other documentation reasonably substantiating the amounts as required by the Company.

(e)Other Benefits.  Except as otherwise provided in this Agreement, Executive shall be entitled to receive all of the rights, benefits and privileges under any retirement, pension, profit-sharing, group medical insurance, group dental insurance, group-term life insurance, disability insurance and other employee benefit plan or program of the Company which may be now in effect or hereafter adopted, to the extent that Executive is eligible under the provisions thereof.

3.Termination.

(a)At Will.  The Company shall employ Executive at will, and either Executive or the Company may terminate Executive’s employment with the Company at any time and for any reason, with or without cause.

(b)Qualifying Termination.  Executive’s termination shall be considered a “Qualifying Termination” unless:

(i)Executive voluntarily terminates his employment with the Company and its affiliated companies.  Executive, however, shall not be considered to have voluntarily terminated his employment with the Company and its affiliated companies if his overall targeted total cash compensation (base salary plus targeted short term bonus), (TCC), is reduced or adversely modified in any material respect (unless the reduction or modification applies generally to similarly situated executives in the Company) or his position is modified or changed so that he is no longer an officer of the Company and he elects to terminate his employment within sixty (60) days following such reduction, modification or change.

(ii)The termination is on account of Executive’s death or Disability.  “Disability” shall mean a physical or mental incapacity as a result of which Executive becomes unable to continue the performance of his responsibilities for the Company and its affiliated companies and which, at least three (3) months after its commencement, is determined to be total and permanent by a physician agreed to by the Company and Executive, or in the event of Executive’s inability to designate a physician, his legal representative.  In the absence of agreement between the Company and Executive, each party shall nominate a qualified physician and the two physicians so nominated shall select a third physician who shall make the determination as to Disability.

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(iii)Executive is involuntarily terminated for “Cause.”  For this purpose, “Cause” shall include but not be limited to:

(a)Executive’s refusal to comply with a lawful instruction of the Board or Executive’s immediate supervisor, which refusal is not remedied by Executive within a reasonable period of time after his receipt of written notice from the Company identifying the refusal;

(b)Executive’s engaging in gross misconduct;

(c)Executive’s act or acts of personal dishonesty which result in Executive’s personal enrichment at the expense of the Company or any of its affiliated companies; or

(d)Executive’s conviction of any misdemeanor involving an act of moral turpitude or any felony; or

(e)Executive’s failure to perform his duties in a satisfactory manner.  Executive must be provided written notice of the unsatisfactory performance and provided at least ninety (90) days to improve his performance.

(iv)Executive ceases to be employed by the Company due to the sale or acquisition of all of the equity interests in, or substantially all of the assets of, a subsidiary or division of the Company with which Executive is affiliated, or in connection with the merger of such a subsidiary or division, and this Agreement is assumed in writing or by operation of law by such acquiring or surviving person or entity or an affiliate thereof.

(c)Return of Materials.In the event of any termination of Executive’s employment for any reason whatsoever, Executive shall promptly deliver to the Company all Company property, including, but not limited to, documents, data, and other information pertaining to Confidential Information, as defined below.  Executive shall not take with him any documents or other information, or any reproduction, summary or excerpt thereof, containing or pertaining to any Confidential Information.

4.Change in Control.

(a)Statement of Purpose.  The Company believes that it is in the best interest of the Company and its stockholders to foster Executive’s objectivity in making decisions with respect to any pending or threatened Change in Control of the Company and to ensure that the Company will have the continued dedication and availability of Executive, notwithstanding the possibility, threat or occurrence of a Change in Control.  The Company believes that these goals can best be accomplished by alleviating certain of the risks and uncertainties with regard to Executive’s financial and professional security that would be created by a pending or threatened Change in Control and that inevitably would distract Executive and could impair his ability to objectively perform his duties for and on behalf of the Company.  Accordingly, the Company believes that it is appropriate and in the best interest of the Company and its stockholders to provide to Executive compensation arrangements upon a Change in Control that lessen Executive’s financial risks and uncertainties and that are reasonably competitive with those of other corporations.  The purpose of this provision is to provide that, in the event of a “Change in Control,” Executive may become entitled to receive certain additional benefits, as described herein, in the event of his termination under specified circumstances.

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(b)Definition of Change in Control.  As used in this Agreement, the phrase “Change in Control” shall mean:

(i)The acquisition (other than from the Company) by any person, entity or “group,” within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (excluding, for this purpose, the Company or its subsidiaries, or any executive benefit plan of the Company or its subsidiaries which acquires beneficial ownership of voting securities of the Company), of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of twenty-five percent (25%) or more of either the then-outstanding shares of common stock or the combined voting power of the Company’s then-outstanding voting securities entitled to vote generally in the election of directors; or

(ii)Individuals who, as of the date hereof, constitute the Board of Directors of the Company (as of the date hereof the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board of Directors of the Company, provided that any person becoming a director subsequent to the date hereof whose election, or nomination for election by the Company’s stockholders, is or was approved by a vote of at least a majority of the directors then comprising the Incumbent Board (other than an election or nomination of an individual whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of the Directors of the Company) shall be, for purposes of this Agreement, considered as though such person were a member of the Incumbent Board; or

(iii)Approval by the stockholders of the Company of a reorganization, merger or consolidation with any other person, entity or corporation, other than

(x)a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of another entity) more than fifty percent (50%) of the combined voting power of the voting securities of the Company or such other entity outstanding immediately after such merger or consolidation, or

(y)a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no person acquires twenty-five percent (25%) or more of the combined voting power of the Company’s then outstanding voting securities; or

(iv)Approval by the stockholders of the Company of a plan of complete liquidation of the Company or an agreement for the sale or other disposition by the Company of all or substantially all of the Company’s assets.

(c)Certain Terminations Following Change in Control.  If, within twelve (12) months following a Change in Control, the employment of Executive is terminated (i) by the Company, other than for Cause or by reason of Executive’s death, or Disability or retirement, or (ii) by Executive for Good Reason, such termination shall be conclusively considered a “Qualifying Termination” based on Change in Control.  “Good Reason” means, following a Change in Control,

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the occurrence of a change in Executive’s compensation; health insurance or retirement benefits; job authority, duties or responsibilities; or location of employment, which in any such cases is materially adverse to Executive.

5.Severance Payment and Benefits.

(a)If Executive’s employment is terminated as a result of a Qualifying Termination as defined in Sections 3b and 4(c) in conjunction with a Change of Control, and if Executive delivers a fully-executed release and waiver of all claims against the Company, then, upon expiration of any applicable revocation period contained in the release and waiver, the Company shall pay or provide Executive the following Severance Payment and benefits based on Executive’s eligibility as described below:

(i)As eligible, Executive shall receive the Severance Payment, as defined below, which shall be payable in twenty four (24) equal monthly installments beginning on the first day of the first full month and continuing on the first day of each month thereafter during the Severance Period.  The Severance Payment is in lieu of any severance payment benefits which otherwise may at that time be available under the Company’s applicable policies and Executive shall be entitled to receive whatever additional severance payment benefits, if any, for which he may qualify according to the provisions of this Agreement regarding Change in Control.

As used herein, “Monthly Severance Payment” shall mean the monthly installment amount of the Base Salary of Executive at the time of Executive’s termination plus the monthly average of the short-term incentive payments (bonus) actually paid to Executive during the twelve (12) months immediately preceding Executive’s termination.

Each Monthly Severance Payment shall be subject to deductions and withholdings required by applicable law.  As used herein, “Severance Period” shall mean that period beginning upon Executive’s Qualifying Termination and ending upon the lapse thereafter of the number of months equal to the number of Monthly Severance Payments.

(ii)During the Severance Period and to the extent reasonably practicable, Executive shall be entitled to receive benefits comparable to those which had been made available to him (including his family) under the Associate Healthcare Management Plan before the Qualifying Termination.  To the extent reasonably practicable, these benefits shall be continued to Executive in a comparable manner, at a comparable cost and at a comparable level as provided to Executive (including his family) immediately prior to the Qualifying Termination.  In some cases, benefits may be converted to a reasonably similar private plan – provided that the Company pays all additional costs associated with conversion.  The provision of these benefits shall be earlier terminated or reduced, as applicable, if and to the extent Executive receives comparable benefits as a result of concurrent coverage through another program.  Participation in all other benefits plans including group life insurance, personal accident insurance, and disability insurance, etc., will cease as of the date of termination.

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(iii)Any and all of Executive’s unvested stock options shall immediately become fully vested and exercisable according to the terms and conditions contained in the equity incentive plan(s) pursuant to which such options were granted.

(b)In the event that Executive becomes entitled to receive a Severance Payment in accordance with the provisions of this Section 5(b), and if such Severance Payment and any other benefits or payments (including transfers of property) that Executive receives, or is to receive, pursuant to this Agreement or any other agreement, plan or arrangement with the Company in connection with a Change in Control of the Company (“Other Benefits”) shall be subject to the tax imposed pursuant to Section 4999, or any successor thereto, of the Internal Revenue Code of 1986, as amended, (the “Code”) or any comparable provision of state law (an “Excise Tax”), the following rules shall apply:

(i)The Company shall pay to Executive, within thirty (30) days after the Executive’s Qualifying Termination, an additional amount (the “Gross-Up Payment”) such that the net amount retained by Executive, after deduction of any Excise Tax with respect to the Severance Payment or the Other Benefits and any federal, state, and local income tax, FICA tax, and Excise Tax upon such Gross-Up Payment, is equal to the amount that would have been retained by Executive if such Excise Tax were not applicable.  It is intended that Executive shall not suffer any loss or expense resulting from the assessment of any Excise Tax or the Company’s reimbursement of Executive for payment of any such Excise Tax.

(ii)For purposes of determining whether any of the Severance Payments or Other Benefits will be subject to an Excise Tax and the amount of such Excise Tax, (i) any other payments or benefits received or to be received by Executive in connection with a Change in Control of the Company or Executive’s termination of employment (whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company, any person whose actions result in a Change in Control or any person affiliated with the Company or such person) shall be treated as “parachute payments” within the meaning of Section 280G(b)(2) of the Code (or any successor thereto), and all “excess parachute payments” within the meaning of Section 280G(b)(1) of the Code (or any successor thereto) shall be treated as subject to the Excise Tax, unless in the opinion of tax counsel selected by the Company’s independent auditors and acceptable to Executive such other payments or benefits (in whole or in part) do not constitute parachute payments, or such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered within the meaning of Section 280G(b)(4) of the Code (or any successor thereto), (ii) the amount of the Severance Payments and Other Benefits which shall be treated as subject to the Excise Tax shall be equal to the lesser of (A) the total amount of the Severance Payments or Other Benefits or (B) the amount of excess parachute payments within the meaning of Sections 280G(b)(1) and (4) of the Code (or any successor or successors thereto), after applying clause (i), above, and (iii), the value of any non-cash benefits or any deferred payment or benefit shall be determined by the Company’s independent auditors in accordance with the principles of Sections 280G(d)(3) and (4) of the Code (or any successor or successors thereto).

(iii)For purposes of determining the amount of the Gross-Up Payment, Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made and state and

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local income taxes at the highest marginal rates of taxation in the state and locality of Executive’s residence on the date of the Executive’s Qualifying Termination, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.

(iv)In the event that the Excise Tax is subsequently determined to be less than the amount taken into account hereunder at the time of the Executive’s Qualifying Termination, the Executive shall repay to the Company, at the time that the amount of such reduction in Excise Tax is finally determined, the portion of the Gross-Up Payment attributable to such reduction plus interest on the amount of such repayment at the rate provided in Section 1274(b)(2)(B) of the Code (or any successor thereto) (the “Applicable Rate”).  In the event that the Excise Tax is determined to exceed the amount taken into account hereunder at the time of such Qualifying Termination (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall make an additional Gross-Up Payment in respect of such excess (plus interest, determined at the Applicable Rate, payable with respect to such excess) at the time that the amount of such excess is finally determined.

6.Nondisclosure of Confidential Information.  Executive acknowledges that during the term of his employment with the Company, he will have access to and become acquainted with information of a confidential, proprietary or secret nature which is or may be either applicable to, or related in any way to, the present or future business of the Company, the research and development or investigation of the Company, or the business of any customer of the Company (“Confidential Information”).  For example, Confidential Information includes, but is not limited to, devices, secret inventions, processes and compilations of information, records, specifications, designs, plans, proposals, software, codes, marketing and sales programs, financial projections, cost summaries, pricing formula, and all concepts or ideas, materials or information related to the business, products or sales of the Company and its customers and vendors.  Executive shall not disclose any Confidential Information, directly or indirectly, or use such information in any way, either during the term of this Agreement or at any time thereafter, except as required in the course of employment with the Company.  Executive also agrees to comply with the Company’s policies and regulations, as established from time to time for the protection of its Confidential Information, including, for example, executing the Company’s standard confidentiality agreements.  This section shall survive termination of this Agreement.

7.Non-Solicitation.  Executive agrees that so long as he is employed by the Company and for a period of twenty-four (24) months after termination of his employment for any reason, he shall not (a) directly or indirectly solicit, induce or attempt to solicit or induce any employee of the Company or any of its affiliated companies to discontinue his employment with the Company; (b) usurp any opportunity of the Company or any of its affiliated companies of which Executive became aware during his tenure at the Company or which is made available to him on the basis of the belief that Executive is still employed by the Company; or (c) directly or indirectly solicit or induce or attempt to influence any person or business that is an account, customer or client of the Company or any of its affiliated companies to restrict or cancel the business of any such account, customer or client with the Company or any of its affiliated companies.  This section shall survive termination of this Agreement.

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8.Successors.

(a)This Agreement is personal to Executive, and without the prior written consent of the Company shall not be assignable by Executive other than by will or the laws of descent and distribution.  This Agreement shall inure to the benefit of and be enforceable by Executive’s legal representatives.

(b)The rights and obligations of the Company under this Agreement shall inure to the benefit of and shall be binding upon the successors and assigns of the Company.

9.Governing Law.  This Agreement is made and entered into in the State of California, and the internal laws of California shall govern its validity and interpretation in the performance by the parties hereto of their respective duties and obligations hereunder.

10.Modifications.  This Agreement may be amended or modified only by an instrument in writing executed by all of the parties hereto.

11.Entire Agreement.  Except as otherwise set forth herein, this Agreement supersedes any and all prior written or oral agreements between Executive and the Company, including but not limited to any and all employment agreements and change in control agreements.  This Agreement contains the entire understanding of the parties hereto with respect to the terms and conditions of Executive’s employment with the Company; provided, however, that this Agreement is not intended to supersede any agreements that Executive may previously have entered into regarding the protection of trade secrets and confidential information.

12.Dispute Resolution

(a)Any controversy or dispute between the parties involving the construction, interpretation, application or performance of the terms, covenants, or conditions of this Agreement, the employment of Executive or in any way arising under this Agreement (a “Covered Dispute”) shall, on demand by either of the parties be referenced pursuant to the procedures described in California Code of Civil Procedure (“CCP”) Sections 638, et seq., as they may be amended from time to time (or such procedures as nearly the same as may be available under the laws of California, the “Reference Procedures”), to a retired Judge from the superior court of California for the County of Riverside (the “Venue County”) for a decision.

(b)The Reference Procedures shall be commenced by a joint stipulation filed in the Venue County Court or by either party filing in the superior court of Venue County a motion pursuant to CCP Section 638 (or such procedures as nearly the same as may be available under the laws of California, a “Motion”).  The referee shall be a Judge from the list of retired superior court Judges from the Venue County who have made themselves available for trial or settlement of civil litigation under said Reference Procedures.  If the parties hereto are unable to agree on the designation of a particular retired superior court Judge of the Venue County, or the designated Judge is unavailable or unable to serve in such capacity, request shall be made that the Presiding or Assistant Presiding Judge of the superior court of the Venue County appoint as referee a retired superior court Judge from the aforementioned list.

(c)Except as hereafter agreed by the parties, the referee shall apply the internal law of the State of California in deciding the issues submitted hereunder.  Each of the parties reserves its

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respective rights to allege and assert in such pleadings all claims, causes of action, contentions and defenses which it may have arising out of or relating to the general subject matter of the Covered Dispute that is being determined pursuant to the Reference Procedures.  Reasonable notice of any motions before the referee shall be given, and all matters shall be set at the convenience of the referee.  Discovery shall be conducted as the parties agree or as allowed by the referee.  Unless waived by each of the parties, a reporter shall be present at all proceedings before the referee.  By agreeing to this procedure, the parties expressly waive their right to a jury trial.

(d)It is the parties’ intention by this Section 12 that all issues of fact and law and all matters of a legal and equitable nature related to any Covered Dispute will be submitted for determination by a referee designated as provided herein.  Accordingly, the parties hereby stipulate that a referee designated as provided herein shall have all powers of a Judge of the superior court including, without limitation, the power to grant equitable and interlocutory and permanent injunctive relief.

(e)Each of the parties specifically consents and agrees to (i) the exercise of jurisdiction over his person by a referee designated as provided herein with respect to any and all Covered Disputes; (ii) the personal jurisdiction of the California courts with respect to any appeal or review of the decision of any such referee, and (iii) venue for any dispute subject to this Section 12 shall be in the County of Riverside.

(f)Each of the parties acknowledges that the decision by a referee designated as provided herein shall be a basis for a judgment as provided in CCP Section 644 and shall be subject to exception and review as provided in CCP Section 645, or such procedures as nearly the same as may be available under the laws of California.

(g)The Company shall pay all fees and costs incurred by Executive in connection with the Reference Procedures for a Covered Dispute other than attorneys’ fees incurred by Executive.

13.Notices.  Any notice or communications required or permitted to be given to the parties hereto shall be delivered personally or be sent by United States registered or certified mail, postage prepaid and return receipt requested, and addressed or delivered as follows, or at such other addresses the party addressed may have substituted by notice pursuant to this Section:

To the Company:	To Executive:
Fleetwood Enterprises, Inc.	Elden L. Smith
3125 Myers Street	76-940 Avenida Fernando
Riverside, California 92503-5527	La Quinta, CA 92253
Attn: General Counsel

14.Captions.  The captions of this Agreement are inserted for convenience and do not constitute a part hereof.

15.Severability.  In case any one or more of the provisions contained in this Agreement shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement, but this Agreement shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein and there shall be deemed substituted for such invalid, illegal or unenforceable provision such other provision as

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will most nearly accomplish the intent of the parties to the extent permitted by the applicable law.  In case this Agreement, or any one or more of the provisions hereof, shall be held to be invalid, illegal or unenforceable within any governmental jurisdiction or subdivision thereof, this Agreement or any such provision thereof shall not as a consequence thereof be deemed to be invalid, illegal or unenforceable in any other governmental jurisdiction or subdivision thereof.

16.Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which shall together constitute one in the same Agreement.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered effective as of the day and year first written above.

/s/ Elden L. Smith
Elden L. Smith
FLEETWOOD ENTERPRISES, INC.,
a Delaware corporation
By:	/s/  Thomas B. Pitcher
	Name: Thomas B. Pitcher
	Title: Chairman of the Board of Fleetwood Enterprises, Inc.

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EX-10.16

Exhibit 10.16

FLEETWOOD ENTERPRISES, INC.
ELDEN L. SMITH STOCK OPTION PLAN AND AGREEMENT

THIS STOCK OPTION PLAN AND AGREEMENT (this “Agreement”) is made effective as of March 8, 2005 (the “Grant Date”), by and between FLEETWOOD ENTERPRISES, INC., a Delaware corporation (the “Company”), and Elden L. Smith (“Optionee”).

A.  The Company and Optionee have entered into that certain Employment Agreement dated as of [the Grant Date] pertaining to Optionee’s appointment to the office of President and Chief Executive Officer (the “Employment Agreement”).

B.  As a part of Optionee’s appointment, and effective on the Grant Date, the Company has granted to Optionee a nonstatutory stock option (the “Option”) to purchase shares of the common stock of the Company (the “Common Stock”) on the terms and conditions set forth herein. This Agreement memorializes the terms and conditions upon which the board of directors of the Company (the “Board”) granted the Option to Optionee.

NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

AGREEMENT

1.  Grant of Option.  Optionee may, at Optionee’s election and upon the terms and conditions set forth herein, purchase all or any part of an aggregate of 79,000 shares of Common Stock (the “Optioned Shares”) at the price per share equal to $8.91 (the “Option Price”). The Option Price equals the closing price of the Common Stock on the Grant Date.

2.  Vesting Schedule.  The Option shall vest and become exercisable according to the following vesting schedule:

Stock Options granted by this Agreement shall, as provided in more detail in the Plan, be exercisable as follows:

A.One-third of the options granted hereby shall become exercisable twelve months from the date hereof; one-third of the options granted hereby shall become exercisable twenty-four months from the date hereof; and one-third of the options granted hereby shall become exercisable thirty-six months from the date hereof, in each case assuming that Optionee has been continuously employed by the Company, a subsidiary or affiliate during such periods.  Fractional options will not be granted.  If the total number of options granted hereby is not divisible evenly by three, options exercisable after the first twelve months hereof, and after the second twelve months hereof, if necessary, shall be increased by one, respectively, so that options covering the three periods equal the total number of options granted hereby.

B.Once exercisable, Options generally expire if not exercised upon the earlier to occur of (i) the periods specified in Section 5 of this Plan, or (ii) ten years after the date of grant of such Option.  For this Option Grant, however, the Plan is modified as described on Annex A delivered to you with this Agreement.

3.  Exercise of Option.

(a)Extent of Exercise.  The Option may be exercised at the time or after installments vest as specified in Section 2 to this Agreement with respect to all or part of the Optioned Shares covered by such vested installments, subject to the further restrictions contained in this Agreement. In the event that Optionee

exercises the Option for less than the full number of Optioned Shares included within a vested installment, Optionee shall be entitled to exercise the Option (in one or more subsequent increments) for the balance of the Optioned Shares included in said vested installment; provided, however, that in no event shall Optionee be entitled to exercise the Option for fractional shares of Common Stock or for a number of shares exceeding the maximum number of Optioned Shares.

(b)Procedure.  The Option shall be deemed to be exercised when the Secretary of the Company receives written notice of exercise from or on behalf of Optionee, together with payment of the applicable Option Price and any amounts required under Section 3(c). The Option Price shall be payable upon exercise in (i) legal tender of the United States; or (ii) such other consideration as the Company may deem acceptable in any particular instance; provided, however, that the Company may, in its discretion and to the extent permitted by applicable law, including Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), allow exercise of the Option in a broker-assisted or similar transaction in which the Option Price and any amounts required under Section 3(c) are not received by the Company until promptly after exercise.

(c)Withholding Taxes.  Whenever shares of Common Stock are to be issued upon exercise of the Option, the Company shall have the right to require Optionee to remit to the Company an amount sufficient to satisfy any federal, state and local withholding tax requirements prior to such issuance. The Company may, in its discretion, allow satisfaction of tax withholding requirements by accepting delivery of Common Stock.

4.Term of Option.  Unless earlier terminated as provided in Section 5, the Option shall automatically expire and terminate, and thereby become unexercisable, on the tenth (10th) anniversary of the Grant Date.

5.Effect of Termination.

(a)  Termination for Cause.  In the event of termination of Optionee’s employment for Cause, this Option, whether vested or unvested, shall terminate and expire as of the date of termination. For purposes hereof, “Cause” shall be as defined in the Employment Agreement.

(b)  Death.  In the event of the death of Optionee during the term of the Option, Options will expire and become unexercisable as of the earlier of (A) the date the options expire in accordance with their terms or (B) one year after the date of death, and the vesting of all or any portion of any options that had not become exercisable on or prior to the date of death will be accelerated.  In the event of the death of Optionee while he is an employee of the Company or within the period after termination of such status during which he is permitted to exercise the Option, the Option may be exercised by any person or persons designated by Optionee on a beneficiary designation form adopted by the Company for such purpose or, if there is no effective beneficiary designation form on file with the Company, by the executors or administrators of Optionee’s estate or by any person or persons who shall have acquired the Option directly from Optionee by his will or the applicable laws of descent and distribution.

(c)  Disability.  In the event of Disability of Optionee during the term of the Option, Options will expire and become unexercisable as of the earlier of (A) the date the Options expire in accordance with their terms or (B) one year after the date of termination and the vesting of all or any portion of any Options that had not become exercisable on or prior to the date of retirement will continue on the same schedule as before without acceleration.  For purposes hereof, “Disability” shall be as defined in Optionee’s Employment Agreement.(d)  Normal Retirement.  In the event of the normal retirement of Optionee, during the term of the Option, Options will expire and become unexercisable as of the earlier of (A) the date the Options expire in accordance with their terms or (B) three years after the date of retirement, and the vesting of all or any portion of any Options that had not become exercisable on or prior to the date of retirement will be accelerated.  “Normal Retirement” means the Optionee’s employment with the Company has terminated and the Optionee has reached age 65.

(e)  Early Retiremen.t Upon Early Retirement (defined below), Options will expire and become unexercisable as of the earlier of (A) the date the Options expire in accordance with their terms or (B) two

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years after the date of retirement, and the vesting of all or any portion of any Options that had not become exercisable on or prior to the date of retirement will continue on the same schedule as before without acceleration.  “Early Retirement” means the Optionee’s employment with the Company has terminated and the Optionee has reached age 55 and either (a) the Optionee’s age plus years of service equals at least 70 if the Optionee has had no break in employment or (b) the Optionee’s age plus years of service equals at least 75 if the Optionee has had a break in service.

(f)  Other Terminations.  In the event of all other terminations of employment, Options will expire and become unexercisable as of the earlier of (A) the date the Options expire in accordance with their terms or (B) 90 days after the date of termination, and all Options that are unvested at the date of termination will be terminated and forfeited..

6.  Anti-Dilution Adjustments.  If the outstanding shares of Common Stock of the Company are increased, decreased, changed into or exchanged for a different number or kind of shares of the Company through reorganization, recapitalization, reclassification, stock dividend, stock split or reverse stock split, upon authorization of the Board or the Compensation Committee of the Board (the “Committee”), an appropriate and proportionate adjustment shall be made in the number or kind of Optioned Shares and the Option Price; provided, however, that no such adjustment need be made if, upon the advice of counsel, the Board or the Committee determines that such adjustment may result in the receipt of federally taxable income to Optionee, to holders of other derivative securities of the Company or holders of Common Stock or other classes of the Company’s securities.

7.  Change in Control.

(a)  Effect of Change in Control.  As of the effective time and date of any Change in Control, this Option (whether or not vested) will automatically terminate unless: (i) provision is made in writing in connection with such transaction for the continuance and assumption of this Option, or for the substitution for such new awards covering the securities of a successor entity or an affiliate thereof, with appropriate adjustments as to the number and kind of securities and exercise prices or other measurement criteria, in which event this Option will continue or be replaced, as the case may be, in the manner and under the terms so provided; or (ii) the Board otherwise provides in writing for such adjustments as it deems appropriate in the terms and conditions of this Option (whether or not vested), including, without limitation, (A) accelerating the vesting of this Option, and/or (B) providing for the cancellation of this Option and its automatic conversion into the right to receive the securities, cash or other consideration that a holder of the shares underlying this Option would have been entitled to receive upon consummation of such Change in Control had such shares been issued and outstanding immediately prior to the effective date and time of the Change in Control (net of the appropriate option exercise prices). If, pursuant to the foregoing provisions of this Section 7(a), this Option terminates by reason of the occurrence of a Change in Control without provision for any of the action(s) described in clause (i) or (ii) hereof, then subject to Section 4 of this Agreement, the Optionee will have the right, at such time prior to the consummation of the Change in Control as the Board designates, to exercise or receive the full benefit of this Option to the full extent not theretofore exercised, including any installments which have not yet become vested.

(b)  Definition of Change in Control.  A “Change in Control” shall be as defined in the Employment Agreement.

8.  Delivery of Certificates.  As soon as practicable after any proper exercise of the Option in accordance with the provisions of this Agreement, the Company shall deliver to Optionee at the main office of the Company, or such other place as shall be mutually acceptable, a certificate or certificates representing such shares of Common Stock to which Optionee is entitled upon exercise of the Option.

9.  No Rights in Shares Before Issuance and Delivery.  Neither Optionee, his estate nor his transferees by will or the laws of descent and distribution shall be, or have any rights or privileges of, a stockholder of the Company with respect to any shares issuable upon exercise of the Option, unless and until certificates representing such shares shall have been issued and delivered. No adjustment will be made for a dividend or their rights where the record date is prior to the date such stock certificates are issued.

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10.  Nonassignability.  The Option is not assignable or transferable by Optionee except by will, by the laws of descent and distribution, pursuant to a qualified domestic relations order, or, in the discretion of the Company and under circumstances that would not adversely affect the interests of the Company, pursuant to a transfer for estate planning purposes or pursuant to a nominal transfer that does not result in a change in beneficial ownership. The transfer by a Participant to a trust created by the Participant for the benefit of the Participant or the Participant’s family which is revocable at any and all times during the Participant’s lifetime by the Participant and as to which the Participant is the sole acting Trustee during his or her lifetime, will ordinarily not be deemed to be a transfer for purposes of the Plan.Any permitted transfer of the Option shall not prevent or otherwise modify termination of the Option and its vesting following Optionee’s termination of employment (as provided in Section 5 above) or in connection with a Change in Control (as provided in Section 7 above). During the lifetime of Optionee, the Option shall be exercisable only by Optionee (or Optionee’s permitted transferee(s)) or his or their guardian or legal representative.

11.  Certain Representations and Warranties.   Optionee expressly acknowledges, represents and agrees as follows:

(a)  If Optionee proposes to transfer all or any part of the Option or the Optioned Shares or uses Common Stock of the Company to pay the Option Price, Optionee has been advised to consult with a competent tax advisor regarding the applicable tax consequences prior to making such transfer or utilizing such Common Stock to exercise the Option;

(b)  Optionee has been advised to consult with a competent federal securities law advisor as to the reporting obligations and potential liability for profits under Section 16 of the Exchange Act with respect to the granting, exercise and transfer of the Option; and

(c)  Optionee hereby represents, warrants, acknowledges and covenants to the Company that Optionee is, and upon exercise of the Option will be, acquiring the Option and the Optioned Shares for his own account, not as nominee or agent, for investment and not with a view to, or for resale in connection with, any distribution or public offering thereof within the meaning of the Securities Act of 1933, as amended (the “Securities Act”). Optionee does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participation to any third person with respect to the Option or any of the Optioned Shares.

12.  No Employment Rights or Obligations.   This Agreement does not confer upon Optionee any right to continue as an employee of the Company or one of its subsidiaries, nor does it limit in any way the right of the Company or a subsidiary to terminate Optionee’s services to the Company or the subsidiary at any time, with or without cause. Unless otherwise set forth in a written agreement binding upon the Company or the subsidiary, Optionee’s employment by the Company or a subsidiary is “at will.” Any questions as to whether and when there has been a termination of Optionee’s employment, the reason (if any) for such termination, and/or the consequences thereof under the terms of this Agreement, shall be determined by the Board in its sole discretion, and the Board’s determination thereof shall be final, binding and conclusive.

13.  Governing Law.   This Agreement shall be governed by, interpreted under, and construed and enforced in accordance with the internal laws, and not the laws pertaining to conflicts or choice or laws, of the State of California applicable to agreements made and to be performed wholly within the State of California.

14.  Agreement Binding on Successors.   The terms of this Agreement shall be binding upon the executors, administrators, heirs, successors, transferees and assigns of Optionee.

15.  Necessary Acts.  Optionee agrees to perform all acts and execute and deliver any documents that may be reasonably necessary to carry out the provisions of this Agreement, including but not limited to all acts and documents related to compliance with federal and/or state securities and/or tax laws.

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16.  Restrictions Under Applicable Laws and Regulations.

(a)  Government Approvals.  If at any time the Company determines, in its discretion, that the listing, registration or qualification of the Optioned Shares upon any securities exchange or interdealer quotation system or under any federal, state or foreign law, or the consent or approval of any government or regulatory body, is necessary or desirable as a condition of, or in connection with, the granting of this Option or the issuance of the Optioned Shares, this Option may not be exercised as a whole or in part unless and until such listing, registration, qualification, consent or approval has been effected or obtained free of any conditions not acceptable to the Company. During the term of this Option, the Company will use its reasonable efforts to seek to obtain from the appropriate governmental and regulatory agencies any requisite qualifications, consents, approvals or authorizations in order to issue the Optioned Shares. The inability of the Company to obtain any such qualifications, consents, approvals or authorizations will relieve the Company of any liability in respect of the nonissuance or sale of the Optioned Shares.

(b)  No Registration Obligation; Recipient Representations.  The Company will be under no obligation to register or qualify the issuance of the Option or the Optioned Shares under the Securities Act or applicable state securities laws. Unless the issuance of the Optioned Shares has been registered under the Securities Act, and qualified or registered under applicable state securities laws, the Company shall be under no obligation to issue the Optioned Shares unless they may be issued pursuant to applicable exemptions from such registration or qualification requirements. In connection with any such exempt issuance, the Company may require Optionee to provide a written representation and undertaking to the Company, satisfactory in form and scope to the Company, that the Optionee is acquiring the Optioned Shares for his own account as an investment and not with a view to, or for sale in connection with, the distribution of the Optioned Shares, and that he will make no transfer of the same except in compliance with any rules and regulations in force at the time of such transfer under the Securities Act, and other applicable law, and that if the Optioned Shares are issued without registration, a legend to this effect (together with any other legends deemed appropriate by the Company) may be endorsed upon the Optioned Shares, and to the effect of any additional representations that are appropriate in light of applicable securities laws and rules. The Company may also order its transfer agent to stop transfers of such shares. The Company may also require the Optionee to provide the Company such information and other documents as the Company may request in order to satisfy the Company as to the investment sophistication and experience of the Optionee and as to any other conditions for compliance with any such exemptions from registration or qualification.

17.  Lock-Up Agreements.  The Optionee agrees as a condition to receipt of the Option that, in connection with any public offering by the Company of its equity securities and upon the request of the Company and the principal underwriter (if any) in such public offering, any Optioned Shares acquired or that may be acquired upon exercise or vesting of this Option may not be sold, offered for sale, encumbered, or otherwise disposed of or subjected to any transaction that will involve any sales of securities of the Company, without the prior written consent of the Company or such underwriter, as the case may be, for a period of not more than 365 days after the effective date of the registration statement for such public offering. The Optionee will, if requested by the Company or the principal underwriter, enter into a separate agreement to the effect of this Section 17.

18.  Interpretation.  Headings herein are for convenience of reference only, do not constitute a part of the Agreement, and will not affect the meaning or interpretation of the Agreement. References herein to Sections are references to the referenced Section hereof, unless otherwise specified.

19.  Severability.  Should any provision of this Agreement be held to be unenforceable or invalid for any reason, the remaining portions or provisions of this Agreement shall be unaffected by such holding.

20.  Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall be deemed one instrument.

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IN WITNESS WHEREOF, the Company and Optionee have executed this Agreement effective as of the Grant Date.

FLEETWOOD ENTERPRISES, INC.,		OPTIONEE
a Delaware corporation
By:	/s/ Leonard J. McGill	/s/ Elden L. Smith
	Leonard J. McGill	Elden L. Smith
	Sr. Vice President and General Counsel

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EX-21

EXHIBIT 21

SUBSIDIARIES OF THE REGISTRANT

At April 24, 2005, the Registrant had the following subsidiary companies, all of which are directly or indirectly wholly owned unless otherwise indicated in the footnotes:

Company	Jurisdiction of Incorporation
Subsidiaries producing manufactured housing:
Fleetwood Homes of Arizona, Inc.	Arizona
Fleetwood Homes of California, Inc.	California
Fleetwood Homes of Florida, Inc.	Florida
Fleetwood Homes of Georgia, Inc.	Georgia
Fleetwood Homes of Idaho, Inc.	Idaho
Fleetwood Homes of Indiana, Inc.	Indiana
Fleetwood Homes of Kentucky, Inc.	Kentucky
Fleetwood Homes of Mississippi, Inc.(1)	Mississippi
Fleetwood Homes of North Carolina, Inc.	North Carolina
Fleetwood Homes of Oklahoma, Inc.(1)	Oklahoma
Fleetwood Homes of Oregon, Inc.	Oregon
Fleetwood Homes of Pennsylvania, Inc.	Pennsylvania
Fleetwood Homes of Tennessee, Inc.	Tennessee
Fleetwood Homes of Texas, LP	Texas
Fleetwood Homes of Virginia, Inc.	Virginia
Fleetwood Homes of Washington, Inc.	Washington
Subsidiaries producing motor homes:
Fleetwood Motor Homes of California, Inc.	California
Fleetwood Motor Homes of Indiana, Inc.	Indiana
Fleetwood Motor Homes of Pennsylvania, Inc.	Pennsylvania
Subsidiaries producing travel trailers:
Fleetwood Travel Trailers of California, Inc.	California
Fleetwood Travel Trailers of Indiana, Inc.	Indiana
Fleetwood Travel Trailers of Kentucky, Inc.	Kentucky
Fleetwood Travel Trailers of Maryland, Inc.	Maryland
Fleetwood Travel Trailers of Nebraska, Inc.(1)	Nebraska
Fleetwood Travel Trailers of Ohio, Inc.	Ohio
Fleetwood Travel Trailers of Oregon, Inc.	Oregon
Fleetwood Travel Trailers of Texas, Inc.	Texas
Fleetwood Travel Trailers of Virginia, Inc.(1)	Virginia
Fleetwood Canada Ltd.(2)	Ontario, Canada
Subsidiary producing folding trailers:
Fleetwood Folding Trailers, Inc.	Delaware
Supply subsidiaries:
Gold Shield, Inc.	California
Gold Shield of Indiana, Inc.	Indiana
Hauser Lake Lumber Operation, Inc.(1)	Idaho
Subsidiaries involved in manufactured housing retail business:
Expression Homes Corporation(1)(3)	Delaware
Fleetwood Retail Corp.	Delaware
Fleetwood Retail Investment Corp.(1)	California
Fleetwood Retail Corp. of Alabama(4)	Delaware
Fleetwood Retail Corp. of Arizona(4)	Arizona

Fleetwood Retail Corp. of Arkansas(4)	Arkansas
Fleetwood Retail Corp. of California(4)	California
Fleetwood Retail Corp. of Colorado(4)	Colorado
Fleetwood Retail Corp. of Florida(4)	Florida
Fleetwood Retail Corp. of Georgia(4)	Georgia
Fleetwood Retail Corp. of Idaho(4)	Idaho
Fleetwood Retail Corp. of Illinois(4)	Illinois
Fleetwood Retail Corp. of Kansas(4)	Delaware
Fleetwood Retail Corp. of Kentucky(4)	Kentucky
Fleetwood Retail Corp. of Louisiana(4)	Louisiana
Fleetwood Retail Corp. of Michigan(4)	Michigan
Fleetwood Retail Corp. of Mississippi(4)	Mississippi
Fleetwood Retail Corporation of Missouri(4)	Missouri
Fleetwood Home Centers of Nevada, Inc.(4)	Nevada
Fleetwood Retail Corp. of New Mexico(4)	New Mexico
Fleetwood Retail Corp. of North Carolina(4)	North Carolina
Fleetwood Retail Corp. of Ohio(4)	Ohio
Fleetwood Retail Corp. of Oklahoma(4)	Oklahoma
Fleetwood Retail Corp. of Oregon(4)	Oregon
Fleetwood Retail Corp. of South Carolina(4)	South Carolina
Fleetwood Retail Corp. of Tennessee(4)	Tennessee
Fleetwood Home Centers of Texas, Inc.(4)	Texas
Fleetwood Retail Corp. of Virginia(4)	Virginia
Fleetwood Retail Corp. of Washington(4)	Delaware
Fleetwood Retail Corp. of West Virginia(4)	West Virginia
Other subsidiaries:
Continental Lumber Products, Inc.	California
C.V. Aluminum, Inc.(1)	California
Fleetwood Capital Trust I	Delaware
Fleetwood General Partner of Texas, Inc.(6)	Delaware
Fleetwood Holdings, Inc.	Delaware
Fleetwood Holidays, Inc.(1)	Florida
Fleetwood Homes Investment, Inc.(6)	California
Fleetwood Housing International, Inc.	Delaware
Fleetwood International, Inc.	California
Fleetwood Vacation Club, Inc.	Delaware
FVC Management Co., Inc.(7)	Delaware
Gibraltar Insurance Company, Ltd.	Bermuda
GSF Installation Co.(1)	California
HomeOne Credit Corp.	Delaware
Home Sentry Insurance Agency, Inc.(5)	Texas
National Home Shield Insurance Agency of Alabama, Inc.(5)	Alabama

(1)Wholly owned subsidiary inactive at April 24, 2005.

(2)Wholly owned subsidiary of Fleetwood International, Inc.

(3)Wholly owned subsidiary of Fleetwood Retail Investment Corp.

(4)Wholly owned subsidiary of Fleetwood Retail Corp.

(5)Wholly owned subsidiary of HomeOne Credit Corp.

(6)Partners of Fleetwood Homes of Texas, LP.

(7)Wholly owned subsidiary of Fleetwood Vacation Club, Inc.

EX-23

Exhibit 23

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the Registration Statements Form S-8 No. 333-124790, pertaining to the Fleetwood Enterprises, Inc. Elden L. Smith Stock Option Plan and Agreement, Form S-8 No. 333-101543, pertaining to the Fleetwood Enterprises, Inc. Amended and Restated 1992 Stock-Based Incentive Compensation Plan, the 1992 Non-Employee Director Stock Option Plan and the Edward B. Caudill Stock Option Plan and Agreement, Form S-8 No. 333-37544 and Form S-8 No. 333-55824, pertaining to the Fleetwood Enterprises, Inc. Amended and Restated 1992 Stock-Based Incentive Compensation Plan and the 1992 Non-Employee Director Stock Option Plan, Form S-8 No. 333-15167, pertaining to the Fleetwood, Inc. Amended and Restated 1992 Stock-Based Incentive Compensation Plan, Form S-3 No. 333-73678, pertaining to the registration of 2,359,954 shares of Fleetwood Enterprises, Inc. Common Stock, Form S-3 No. 333-102585, pertaining to the registration of 40,000,000 shares of Fleetwood Enterprises, Inc. Common Stock, and Form S-3 No. 333-113730, pertaining to the registration of convertible subordinated debentures and underlying shares of Fleetwood Enterprises, Inc. Common Stock of our reports dated July 5, 2005, with respect to the consolidated financial statements and schedule of Fleetwood Enterprises, Inc., Fleetwood Enterprises, Inc. management’s assessment of the effectiveness of internal control over financial reporting, and the effectiveness of internal control over financial reporting of Fleetwood Enterprises, Inc., included in this Annual Report (Form 10-K) for the year ended April 24, 2005.

	/s/ Ernst & Young LLP
Orange County, California
July 5, 2005

EX-31.1

Exhibit 31.1

Certification

I, Elden L. Smith, certify that:

1.I have reviewed this annual report on Form 10-K of Fleetwood Enterprises, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

	/s/  ELDEN L. SMITH
	Elden L. Smith
	Chief Executive Officer
Date: July 7, 2005

EX-31.2

Exhibit 31.2

Certification

I, Boyd R. Plowman, certify that:

1.I have reviewed this annual report on Form 10-K of Fleetwood Enterprises, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

	/s/  BOYD R. PLOWMAN
	Boyd R. Plowman
	Chief Financial Officer
Date: July 7, 2005

EX-32

EXHIBIT 32

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Each of the undersigned hereby certifies, in his capacity as an officer of Fleetwood Enterprises, Inc. (the “Company”), for purposes of 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

·the Annual Report of the Company on Form 10-K for the period ended April 24, 2005 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

·the information contained in such report fairly presents, in all material respects, the financial condition and results of operations of the Company.

	By	/s/  ELDEN L. SMITH
		Elden L. Smith
		President and Chief Executive Officer
	By	/s/  BOYD R. PLOWMAN
		Boyd R. Plowman
		Executive Vice President and Chief Financial Officer
July 7, 2005