Exhibit 10.2
REVOLVING CREDIT NOTE
---------------------
(the "Note")
$2,500,000.00 DATED: APRIL 12, 2006
- --------------------------------------------------------------------------------
FOR VALUE RECEIVED, the undersigned borrower, DEER VALLEY HOMEBUILDERS,
INC., an Alabama corporation (the "Borrower") promises to pay to the order of
FIFTH THIRD BANK, a Michigan banking corporation (the "Lender"), at 201 E.
Kennedy Blvd., Suite 1800, Tampa, FL 33602 , or at such other place as Lender
may from time to time designate in writing, with payment due as provided herein
and in the Revolving Credit Loan and Security Agreement of even date herewith
(the "Credit Agreement"), the principal sum not to exceed $2,500,000.00, or so
much thereof as has been disbursed for advances hereunder.
The Interest Rate shall be a variable rate at 260 basis points (2.60%)
above the One-Month "LIBOR-Index Rate", and shall be adjusted every month on
each Interest Rate Determination Date with all such interest rate terms defined
as set forth in "ADDENDUM A" attached hereto and made a part hereof.
Principal and interest shall be due and payable as follows:
(a) To the extent accrued, interest only, as stated above, shall
be payable monthly commencing May 1, 2006, and continuing on the same day of
each month thereafter on the principal outstanding from time to time until the
loan maturity date at which time the outstanding indebtedness, whether
principal, accrued interest or otherwise, shall be due and payable in full.
(b) The principal amount evidenced hereby may be borrowed (and to
the extent any principal amount advanced hereunder is repaid by Borrower, such
sum may be borrowed again) until this Note is terminated. At no time, however,
shall the principal balance outstanding hereunder exceed $2,500,000.00.
If any payment on this Note becomes due and payable on a Saturday, Sunday
or legal holiday under the laws of the State of Florida, the maturity thereof
shall be extended to the next succeeding business day and interest thereon shall
be payable at contract rate of interest during such extension.
As provided in the Credit Agreement, the Note is to be utilized by Borrower
on a revolving credit basis for working capital requirements and a Letter of
Credit facility utilized to support letters of credit issued by Lender for the
benefit of Borrower.
This Loan facility matures one (1) year from the date hereof. If any
letters of credit supported by this Loan facility are redeemed, the amount so
redeemed is due on demand in accordance with the Credit Agreement. Upon the
occurrence of any one or more of the Events of Default specified in the Credit
Agreement or in any other document or instrument delivered in connection
therewith and following notice and the expiration of all cure periods (if any),
all amounts then remaining unpaid on this Note may be declared to be immediately
due and payable. Advances under this Note shall be requested by Borrower and
evidenced as a debit to Borrower's loan account.
Borrower may repay all or part of the principal balance at any time without
penalty. Such prepayment shall be accompanied by payment of any unpaid interest
accrued to the time of such prepayment. All payments made hereunder shall at
Lender's option first be applied to late charges, then to accrued interest, then
to principal. Permitted partial prepayments shall not affect or vary the duty
of Borrower to pay all obligations when due, and they shall not affect or impair
the right of Lender to pursue all remedies available to it hereunder, under the
security instruments securing this indebtedness, or under any other loan
documents or guaranty executed in connection herewith.
The terms and provisions of this Note are to be governed by and construed
under the laws of the State of Florida and of the United States of America, and
the rules and regulations promulgated under the authority thereof. It is the
intent of this Note that such laws shall be interpreted in such a manner that
after default the maximum rate of interest allowed to be contracted for by
applicable law as changed from time to time which is applicable to this Note
(hereinafter called the "Maximum Rate") be as great as possible.
In the event that any payment of principal or interest is not made within
ten (10) days after the date when due hereunder, it is hereby agreed that the
Lender shall have the option of collecting five percent (5%) of the amount of
each such delinquent payment; provided, however, such late fee shall not apply
to the lump sum payment of the principal on the Maturity Date or the lump sum
payment of principal upon acceleration.. Said late charge and/or interest shall
be immediately due and payable in full on demand by the Lender.
In no event shall Lender have the right to charge or collect, nor shall
Borrower be required or obligated to pay, interest or payments in the nature of
interest, which would result in interest being charged or collected at a rate in
excess of the Maximum Rate. In the event that any payment which is interest or
in the nature of interest is made by Borrower or received by Lender which would
result in the rate of interest being charged or collected by the Lender being in
excess of the Maximum Rate, then the portion of any such payment which causes
the rate of interest being charged or collected by Lender exceed the Maximum
Rate (hereinafter called the "excess sum") shall be credited as a payment of
principal. If Borrower notifies Lender in writing that Borrower elects to have
such excess sum returned to Borrower, such excess sum shall be returned to
Borrower. In the event that any such overcharge is discovered after this Note
has been paid in full, then the amount of such excess sum shall be returned to
Borrower together with interest thereon from the date such excess sum was paid
or collected at the same rate as was due Lender during such period under the
terms of this Note. All excess sums credited to principal shall be credited as
of the date paid to Lender.
The "Default Interest Rate" shall be five percent (5%) per annum above the
contract interest rate set forth above, but not exceeding 18% per annum. Upon a
failure by Borrower to repay principal upon demand by Lender made not less than
ten (10) days after the date due hereunder, Lender may declare the entire
principal and interest then remaining unpaid to be immediately due and payable
without further notice or demand, and the entire unpaid principal balance shall
bear interest at the "Default Interest Rate". In addition to the rights
described in this paragraph, Lender shall have the right to exercise all other
rights or remedies provided by law or at equity and shall specifically have the
right to recover all damages resulting from such default including, without
limitation, the right to recover the payment of all amounts owing to Lender.
Exercise of any of these options shall be without notice to Borrower, notice of
such exercise being hereby expressly waived.
Time is of the essence hereunder. In the event that this Note is collected
by law or through attorneys at law, or under advice therefrom, Borrower and any
other person liable for payment hereof, to the extent of such liability, hereby
agree to pay all costs of collection, including reasonable attorneys' fees and
costs (including charges for paralegals and others working under the direction
or supervision of Lender's attorneys) and all sales or use taxes thereon,
whether or not suit is brought, and whether incurred in connection with
collection, trial, appeal, bankruptcy or other creditor's proceedings or
otherwise.
Borrower authorizes Lender, from time to time, to debit any account that
Borrower may have with Lender in the name of Borrower, for any payment of
principal or interest past due hereunder for the amount of such payment of
principal or interest. Exercise of this right shall be optional with Lender and
the provisions of this paragraph shall not be construed as releasing Borrower
from the obligation to make payments of principal or interest according to the
terms hereof. Borrower shall have no right of setoff against the Lender under
this Note or any instrument securing this Note.
The remedies of Lender as provided herein shall be cumulative and
concurrent, and may be pursued singularly, successively, or together, at the
sole discretion of Lender. No act of omission or commission of Lender,
including specifically any failure to exercise any right, remedy or recourse,
shall be deemed to be a waiver or release of the same, such waiver or release to
be effected only through a written document executed by Lender and then only to
the extent specifically recited therein. A waiver or release with reference to
any one event shall not be construed as continuing, as a bar to, or as a waiver
of release of, any subsequent right, remedy or recourse as to a subsequent
event.
Borrower, for itself and its successors and assigns, hereby: (a) expressly
waives any presentment, demand for payment, notice of dishonor, protest, notice
of nonpayment or protest, all other forms of notice whatsoever, and diligence in
collection; (b) agrees that Lender, in order to enforce payment of this Note
against them shall not be required first to institute any suit or to exhaust any
of its remedies against any Borrower or any other person or party or to attempt
to realize on the collateral for this Note.
BORROWER AND ANY OTHER PERSON LIABLE FOR PAYMENT HEREOF, BY EXECUTING THIS
NOTE OR ANY OTHER DOCUMENT CREATING SUCH LIABILITY, WAIVE THEIR RIGHTS TO A
TRIAL BY JURY IN ANY ACTION WHETHER ARISING IN CONTRACT OR TORT, BY STATUTE OR
OTHERWISE, IN ANY WAY RELATED TO THIS NOTE. THIS PROVISION IS A MATERIAL
INDUCEMENT FOR LENDER'S EXTENDING CREDIT TO BORROWER AND NO WAIVER OR LIMITATION
OF LENDER'S RIGHTS HEREUNDER SHALL BE EFFECTIVE UNLESS IN WRITING AND MANUALLY
SIGNED ON LENDER'S BEHALF.
Borrower acknowledges that the above paragraph has been expressly bargained
for by Lender as part of the loan evidenced hereby and that, but for Borrower's
agreement and the agreement of any other person liable for payment hereof,
Lender would not have extended the loan for the term and with the interest rate
provided herein.
If more than one party shall execute this Note, the term "Borrower", as
used herein, shall mean all parties signing this Note and each of them, who
shall be jointly and severally obligated hereunder. In this Note, whenever the
context so requires, the neuter gender includes the feminine and/or masculine,
as the case may be, and the singular number includes the plural.
IN WITNESS WHEREOF, Borrower has caused this Note to be executed in its
name on the day and year first above written.
THE UNDERSIGNED ACKNOWLEDGES THAT THE LOAN EVIDENCED HEREBY IS FOR
COMMERCIAL PURPOSES ONLY AND NOT FOR PERSONAL, FAMILY OR HOUSEHOLD PURPOSES.
"BORROWER"
DEER VALLEY HOMEBUILDERS, INC.,
an Alabama corporation
By:
-----------------------------------
Joel Logan, as its President
(CORPORATE SEAL)
ADDENDUM A TO NOTE
LIBOR INDEX RATE
SECTION 1
DEFINITIONS. As used in this Addendum, the following terms shall have the
meanings set forth below:
"Bank" shall mean Fifth Third Bank and its successors and assigns.
"Borrower" shall collectively and individually refer to the maker of the
attached note dated effective April 12, 2006 ("Note"). The terms of this
Addendum are hereby incorporated into the Note and in the event of any conflict
between the terms of the Note and the terms of this Addendum, the terms of this
Addendum shall control.
"Business Day" shall mean, with respect to Interest Periods applicable to the
LIBOR Rate, a day on which the Bank is open for business and on which dealings
in U.S. dollar deposits are carried on in the London Inter-Bank Market.
"Interest Period" shall mean a period of one (1) month, provided that (i) the
initial Interest Period may be less than one month, depending on the initial
funding date and (ii) no Interest Period shall extend beyond the maturity date
of the Note.
"Interest Rate Determination Date" shall mean the date the Note is initially
funded and the first Business Day of each calendar month thereafter.
"LIBOR Rate" shall mean that rate per annum effective on any Interest Rate
Determination Date which is equal to the quotient of:
(i) the rate per annum equal to the offered rate for deposits in U.S. dollars
for a one (1) month period, which rate appears on that page of Bloomberg
reporting service, or such similar service as determined by the Bank, that
displays British Bankers' Association interest settlement rates for deposits in
U.S. Dollars, as of 11:00 A.M. (London, England time) two (2) Business Days
prior to the Interest Rate Determination Date; provided,that if no such offered
--------
rate appears on such page, the rate used for such Interest Period will be the
per annum rate of interest determined by the Bank to be the rate at which U.S.
dollar deposits for the Interest Period, are offered to the Bank in the London
Inter-Bank Market as of 11:00 A.M. (London, England time), on the day which is
two (2) Business Days prior to the Interest Rate Determination Date, divided by
(ii) a percentage equal to 1.00 minus the maximum reserve percentages (including
any emergency, supplemental, special or other marginal reserves) expressed as a
decimal (rounded upward to the next 1/100th of 1%) in effect on any day to which
the Bank is subject with respect to any LIBOR loan pursuant to regulations
issued by the Board of Governors of the Federal Reserve System with respect to
eurocurrency funding (currently referred to as "eurocurrency liabilities" under
Regulation D). This percentage will be adjusted automatically on and as of the
effective date of any change in any reserve percentage.
"Prime Rate" shall mean the publicly announced prime lending rate of the Bank
from time to time in effect, which rate may not be the lowest or best lending
rate made available by the Bank or, if the Note is governed by Subtitle 10 of
Title 12 of the Commercial Law Article of the Annotated Code of Maryland, "Prime
Rate" shall mean the Wall Street Journal Prime Rate, which is the Prime Rate
published in the "Money Rates" section of the Wall Street Journal from time to
time.
SECTION 2
INTEREST. The Borrower shall pay interest upon the unpaid principal balance of
the Note at the LIBOR Rate plus the margin provided in the Note (which principal
balance shall not include the Letter of Credit Obligations until such Letter of
Credit Obligations are drawn upon and honored by the Bank, and remain
unreimbursed by Borrower). Interest shall be due and payable as provided in the
Note and shall be calculated on the basis of a 360 day year and the actual
number of days elapsed. The interest rate shall remain fixed during each month
based upon the interest rate established pursuant to this Addendum on the
applicable Interest Rate Determination Date.
SECTION 3
ADDITIONAL COSTS. In the event that any applicable law or regulation or the
interpretation or administration thereof by any governmental authority charged
with the interpretation or administration thereof (whether or not having the
force of law) (i) shall change the basis of taxation of payments to the Bank of
any amounts payable by the Borrower hereunder (other than taxes imposed on the
overall net income of the Bank) or (ii) shall impose, modify or deem applicable
any reserve, special deposit or similar requirement against assets of, deposits
with or for the account of, or credit extended by the Bank, or (iii) shall
impose any other condition with respect to the Note, and the result of any of
the foregoing is to increase the cost to the Bank of making or maintaining the
Note or to reduce any amount receivable by the Bank hereunder, and the Bank
determines that such increased costs or reduction in amount receivable was
attributable to the LIBOR Rate basis used to establish the interest rate
hereunder, then the Borrower shall from time to time, upon demand by the Bank,
pay to the Bank additional amounts sufficient to compensate the Bank for such
increased costs (the "Additional Costs""). A detailed statement as to the amount
of such Additional Costs, prepared in good faith and submitted to the Borrower
by the Bank, shall be conclusive and binding in the absence of manifest error.
SECTION 4
UNAVAILABILITY OF DOLLAR DEPOSITS. If the Bank determines in its sole discretion
at any time (the "Determination Date") that it can no longer make, fund or
maintain LIBOR based loans for any reason, including without limitation
illegality, or the LIBOR Rate cannot be ascertained or does not accurately
reflect the Bank's cost of funds, or the Bank would be subject to Additional
Costs that cannot be recovered from the Borrower, then the Bank will notify the
Borrower and thereafter will have no obligation to make, fund or maintain LIBOR
based loans. Upon such Determination Date the Note will be converted to a
variable rate loan based upon the Prime Rate. Thereafter the interest rate on
the Note shall adjust simultaneously with any fluctuation in the Prime Rate.
DEER VALLEY HOMEBUILDERS, INC.,
an Alabama corporation
By:
----------------------------------
Joel Logan, as its President
(CORPORATE SEAL)