REVOLVING CREDIT AGREEMENT
November 28, 1995
▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
Nobility Homes, Inc.
▇▇▇▇ ▇. ▇. ▇▇▇ ▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Dear ▇▇. ▇▇▇▇▇▇▇:
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 (F/K/A SunBank/ North Central Florida). This agreement
shall supersede the previous agreement dated January 6, 1994 and the
modification of such on June 22, 1995. 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 April 1, 1996 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 shall be the Borrower's choice of
(a) the Bank's Prime Rate, which is defined as that rate of interest
announced from time to time by the Bank as its Prime Rate or (b) the
London interbank offering rate (LIBOR) as calculated on a daily rate
basis plus 250 basis points. In either event, interest shall be due
and payable monthly. Both rate basis are 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
outstandings 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; however, 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
Subsection (a) and (b), 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 including, 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 transportation 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
substantially 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 networth 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 1.5:1 as at the end of the fiscal
quarter;
(c) The current assets of the Borrower shall exceed its current
liabilities by at least $2,500,000 as at the end of each fiscal
quarter;
(d) 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:
(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) Any other obligation now or hereafter owed by the Borrower or
any Subsidiary to the Bank shall be in default and not cured within
any period of grace provided therein or any such Entity shall be in
default under any obligation in excess of $75,000. owed to any other
obligee, which default entitles the obligee to accelerate any such
obligations or exercise other remedies with respect thereto;
(d) 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 in this Section 12
and such default is not cured within any grace period provided in
this Agreement or such other loan Document; or
(e) 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,
(f) 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 within thirty (30) days following delivery of
written notice 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 (if not earlier demanded), 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.
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.
10.3 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
▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
The Borrower: Nobility Homes, Inc.
▇▇▇▇ ▇. ▇. ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
10.4 Valid Existence and Power. The Borrower and each subsidiary is a
corporation 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. Commitment Expiration: This commitment shall expire unless it has
been accepted in writing and the acceptance received by the
undersigned on or before December 15, 1995.
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 be of service, and look forward to an ongoing mutually
satisfactory relationship.
Sincerely,
SunTrust Bank, North Central Florida
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Vice President
Page 8 of 8
Nobility Homes, Inc.
November 28, 1995
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: _________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
Date: