REVOLVING CREDIT AGREEMENT
March 4, 1998
Xx. Xxxxx X. Xxxxxxx, President
Nobility Homes, Inc.
0000 X. X. 0xx XX
Xxxxx, XX 00000
Dear Xx. Xxxxxxx:
The following agreement is provided in an effort to clarify the terms,
conditions and covenants relative to the $2,500,000 Line of Credit ("Line"),
which was provided your organization by SunTrust Bank, North Central Florida. If
requested by Nobility Homes, Inc., SunTrust Bank will increase the line to
$4,000,000.00, provided however, that Nobility Homes, Inc. is not in default of
any loan covenants. Nobility Homes, Inc. agrees to execute all necessary
documents relative to increasing the line of credit. This agreement shall
supersede the previous agreement dated March 27, 1997. The Line is offered
subject to the following terms, conditions and covenants.
A. TERMS OF LINE
1. Borrower: Advances under the line shall be made to Nobility Homes, Inc.
("Borrower"), which shall be responsible for the repayment of the
advances.
2. Amount of Line: The maximum amount of the Line shall be Two Million, Five
Hundred Thousand and No/100 Dollars ($2,500,000.00).
3. Purpose: Advances under the Line are to be used for general short-term
working capital requirements which occur in the normal course of
Borrower's business.
4. Term of Line: The Line shall be represented and evidenced by a promissory
note or notes, payable on demand of the Bank. The Bank's obligation to
advance under this Line of Credit Commitment shall expire on demand and
shall be subject to the Borrower's continued banking relationship with the
Bank, as well as the continued satisfactory financial condition of the
Borrower, in the opinion of the Bank.
5. Interest Rate: Advances under the Line shall bear and accrue interest at a
rate per annum which is defined as SunTrust Banks', Inc. Prime Rate minus
1/2% (loan rate today would be 8.00%). Interest shall be due and payable
monthly. Rate basis is floating, with adjustments made the day of change.
5.1 Calculation of Interest: All interest under the Note or hereunder shall be
calculated on the basis of a 360-day year for the actual number of days
elapsed in an interest period (actual/360 method), unless the Bank shall
otherwise elect.
6. Advances: The sums contemplated to be advanced may be repaid and re-
advanced pursuant to the terms hereof, so long as this agreement remains
in effect. The advances may be repaid in whole or in part at any time
without prepayment, premium, penalty, or fee whatsoever.
7. Line of Credit Paydown: During the term of this commitment, the outstand-
ings under the Line shall be paid down to a balance not to exceed One and
No/100 Dollars ($1.00) for thirty (30) consecutive days.
8. Loan Security: The advances shall be extended on an unsecured basis; how-
ever, the Borrower shall not, without the prior written consent of the
Bank, permit or suffer to exist any lien, charge, encumbrance, or security
interest in or upon the Borrower's business assets, with the exception of
floor plan lines of credit occurring in the normal course of business, in
as much as they do not adversely impact the financial covenants detailed
in this agreement.
B. REQUIREMENTS AND CONDITIONS OF LINE
1. Financial Information: Borrower shall maintain books and records in
accordance with generally accepted accounting principles and shall furnish
to the Bank the following periodic financial information:
(a) Quarterly Reports. Within 45 days after the end of each calendar
quarter, an income statement and a balance sheet prepared in
accordance with generally accepted accounting principles, certified
by the chief financial officer or president of Borrower as being true
and accurate;
(b) Annual Reports. Within 90 days after the end of each fiscal year, an
income statement and a reconciliation of surplus statement of the
Borrower for such year, and a balance sheet as of the end of such
year, prepared in accordance with generally accepted auditing
standards certified by independent certified public accountants of
recognized standing selected by the Borrower and satisfactory to the
Bank; and
(c) No Default Certificates. Together with each report required by Sub-
section (a) and (c), shall submit a certificate of its president or
chief financial officer that no Default or Event of Default then
exists or if a Default or Event of Default exists, the nature and
duration thereof and the Borrower's intention with respect thereto.
In addition, in the event of a default, the Borrower's independent
auditors (if applicable) shall include, within its audit report, a
statement that, in the course of such audit, it discovered any
circumstances which it believes constitutes a Default or Event of
Default and if it discovered any such circumstances, the nature and
duration thereof.
If the Borrower has Subsidiaries, the financial statements required
above shall be consolidated and, if required by the Bank, consolidating
form for the Borrower and all Subsidiaries required by generally
accepted accounting principles to be consolidated for financial
reporting purposes, and/or,
(d) Other Information. In addition to the financial statements required
herein, the bank reserves the right to require other or additional
financial or other information concerning the Borrower and/or its
Subsidiaries.
2. Conditions Precedent to Borrowing. Prior to any Advance of the proceeds of
any Loan, the following conditions shall have been satisfied, in the sole
opinion of the Bank and its counsel:
2.1 Conditions Precedent to Each Advance. The following conditions shall have
been satisfied prior to any advance, in the sole opinion of the Bank and
its counsel:
(a) Advance Request. Automatic advances under the line of credit to cover
cash shortfalls in the Borrower's depository accounts with Bank as
provided under the automatic sweep service currently in place with
Bank are permitted. In the event of the need for a manual advance
under the line, the Borrower shall deliver to the Bank a written
request for Advance signed by an authorized officer of the firm as
stated in the corporate resolutions.
(b) No Default. No default shall have occurred and be continuing or will
occur upon the making of the Advance in question.
(c) No Adverse Change. There shall have been no material adverse change
in the condition, financial or otherwise, of the Borrower or any
Subsidiary from such condition as it existed on the date of the most
recent financial statements of Borrower delivered prior to date
hereof.
C. COVENANTS OF THE BORROWER
The Borrower covenants and agrees that from the date hereof and until payment in
full of the Indebtedness and the formal termination of this Agreement, unless
the Bank shall otherwise consent in writing, the Borrower and each Subsidiary:
1. Use of Loan Proceeds. Shall use the proceeds of the Loan only for the
commercial purposes permitted herein or otherwise permitted by the Bank
and furnish the bank all evidence that it may reasonably require with
respect to such use.
2. Insurance. Shall maintain such liability insurance, workers' compensation
insurance, and casualty insurance as may be required by law, customary and
usual for prudent businesses in its industry or as may be reasonably
required by the Bank.
3. Payment of Taxes, Etc. Shall pay before delinquent all of its debts and
taxes except that the Bank shall not unreasonably withhold its consent to
nonpayment of taxes being actively contested in accordance with law
(provided that the Bank may require bonding or other assurances).
4. Compliance; Hazardous Materials. Shall strictly comply with all laws,
regulations, ordinances and other legal requirements, specifically includ-
ing, without limitation, ERISA, all securities laws and all laws relating
to hazardous materials and the environment. Unless approved in writing by
the Bank, neither the Borrower nor any Subsidiary shall engage in the
storage, manufacture, disposition, processing, handling, use or trans-
portation of any hazardous or toxic materials, whether or not in
compliance with applicable laws and regulations.
5. Change in Business. Shall not enter into any business which is sub-
stantially different from the business or businesses in which it is
presently engaged.
6. Sale of Business. Shall maintain its corporate existence, good standing
and necessary qualifications to do business and shall not sell, lease,
assign or otherwise dispose of any substantial portion of its assets
(other than sales of obsolete or worn-out equipment and sales of Inventory
in the ordinary course of business). Change in the principal ownership of
the Firm will cause the Line to become immediately due and payable.
7. Financial Covenants. At all times, the Borrower shall be in compliance
with the following financial covenants on a consolidated basis:
(a) The tangible net worth of the Borrower shall not be less than
$5,500,000 at the end of any fiscal quarter;
For purposes of this Agreement, the term "tangible net worth" shall be
the net worth of an Entity according to generally accepted accounting
principles less any write-up of assets subsequent to October 31, 1993;
deferred assets other than prepaid insurance and prepaid taxes;
patents, copyrights, trademarks, trade names, non-compete agreements,
franchises and other intangibles; goodwill or other amounts
representing the excess of the purchase price of assets or stock over
the value assigned thereto on the books of such Entity; unamortized
debt discount and expense; and any other amounts categorized as
intangibles under generally accepted accounting principles.
(b) The ratio of current assets of the Borrower to current liabilities
shall not be less than 2.0:1 as at the end of the fiscal quarter;
(c) All financial terms used herein shall have the meanings assigned to
them under generally accepted accounting principles unless another
meaning shall be specified.
8. Events of Default. Each of the following shall constitute an Event of
Default along with any events of default as contained with the promissory
note:
(a) Any representation or warranty made by the Borrower or any other
party to any Loan Document (other than the Bank) herein or therein or
in any certificate or report furnished in connection herewith or
therewith shall prove to have been untrue or incorrect in any
material respect when made; or
(b) There shall occur any default by the Borrower in the payment, when
due, of any principal of or interest on the Note, any amounts due
hereunder or any other Loan Document or any other Indebtedness (not
cured within the grace period provided in such Note or in the
document or instrument evidencing such Indebtedness);
(c) There shall occur any default by the Borrower or any other party to
any Loan Document (other than the Bank) in the performance of any
agreement, covenant or obligation contained in this Agreement or such
Loan Document not provided for elsewhere and such default is not
cured within any grace period provided in this Agreement or such
other loan Document;
(d) The Borrower or any Subsidiary shall (i) voluntarily liquidate or
terminate operations or apply for or consent to the appointment of,
or the taking of possession by, a receiver, custodian, trustee or
liquidator or such Person or of all or of a substantial part of its
assets, (ii) admit in writing its inability, or be generally unable,
to pay its debts as the debts become due, (iii) make a general
assignment for the benefit of its creditors, (iv) commence a
voluntary case under the federal Bankruptcy Code (as now or hereafter
in effect), (v) file a petition seeking to take advantage of any
other law relating to bankruptcy, insolvency; or
(e) Without its application, approval or consent, a proceeding shall be
commenced, in any court of competent jurisdiction, seeking in respect
of such Person any remedy under the federal Bankruptcy Code, the
liquidation, reorganization, dissolution, winding-up, or composition
or readjustment of debt, the appointment of a trustee, receiver,
liquidator or the like of such Person, or of all or any substantial
part of the assets of such Person, or other like relief under any law
relating to bankruptcy, insolvency, reorganization, winding-up, or
composition or adjustment of debts.
9. Remedies. If any Default shall occur, the Bank may, without notice to the
Borrower, at its option, withhold further Advances to the Borrower of
proceeds of the Loans. Should any Event of Default occur and not be cured
upon demand following delivery of written notice from the bank to the
Borrower complete upon hand or overnight delivery or upon facsimile
delivery or mailing by certified mail, return receipt requested, the Bank
may declare any or all Indebtedness to be immediately due and payable,
bring suit against the Borrower to collect the Indebtedness, exercise any
remedy available to the Bank hereunder and take any action or exercise any
remedy provided herein or in any other Loan Document or under applicable
law. No remedy shall be exclusive of other remedies or impair the right of
the Bank to exercise any other remedies.
10. Severability No failure on the part of the Bank to exercise, and no delay
in exercising, any right hereunder or under any other Loan Document shall
operate as a waiver thereof, nor shall any single or partial exercise of
any right hereunder preclude any other or further exercise thereof or the
exercise of any other right. The remedies herein provided are cumulative
and are in addition to any other remedies provided by law, any Loan
Document or otherwise.
10.1. Notices. Any notice or other communication hereunder to any party hereto
shall be by hand delivery, overnight delivery, facsimile, telegram, telex
or registered certified mail and unless otherwise provided herein shall be
deemed to have been given or made when delivered, telegraphed, telexed,
faxed or deposited in the mails, postage prepaid, addressed to the party
at its address specified below (or at any other address that the party may
hereafter specify to the other parties in writing):
The Bank: SunTrust Bank, North Central Florida
Corporate Lending Division
000 X. Xxxxxx Xxxxxxx Xxxx.
Xxxxx, XX 00000
The Borrower: Nobility Homes, Inc.
0000 X. X. 0xx Xxxxxx
Xxxxx, XX 00000
10.2 Valid Existence and Power. The Borrower and each subsidiary is a corpora-
tion duly organized, validly existing and in good standing under the laws
of the State of Florida and is duly qualified or licensed to transact
business in all places where the failure to be so qualified would have a
material adverse effect on it. The Borrower and each other Entity which is
a party to any Loan Document (other than the Bank) has the power to make
and perform the Loan Documents executed by it and all such instruments
will constitute the legal, valid and binding obligations of such Entity,
enforceable in accordance with their respective terms, subject only to
bankruptcy and similar laws affecting creditors' rights generally.
11. Survival of Representations. All representations and warranties made
herein shall survive the making of the loans hereunder and the delivery of
the Notes, and shall continue in full force and effect so long as any
Indebtedness is outstanding, there exists any commitment by the Bank to
the Borrower, and until this Agreement is formally terminated in writing.
12. Commitment Expiration: This commitment shall expire unless it has been
accepted in writing and the acceptance received by the undersigned on or
before March 16, 1998.
Please indicate your acceptance of this commitment and the terms and conditions
contained herein by executing your acceptance immediately below and returning
one executed copy of the Commitment Letter and Agreement to the Bank.
We would like to express our appreciation for the opportunity you have given us
to meet your financial needs, and look forward to an ongoing mutually
satisfactory relationship.
Sincerely,
Xxxxx X. Xxxxxxxx
Vice President
Corporate Lending Division
LMT/lr
BORROWER'S ACCEPTANCE OF COMMITMENT AND AGREEMENT
The above Revolving Credit Agreement is hereby accepted on the terms and
conditions outlined therein.
Nobility Homes, Inc.
By: __________________________________
Xxxxx X. Xxxxxxx, President
Date: _______________________________
