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h:\FWD\GFI-CA.doc
UNSECURED REVOLVING CREDIT AGREEMENT
This Unsecured Revolving Credit Agreement (the "Agreement") is
made as of January ______, 1997, between GRANITE FINANCIAL, INC.,
a Delaware corporation ("Borrower") and COLORADO NATIONAL BANK, a
national banking association ("Bank").
RECITALS:
i. Borrower and Bank have entered into that certain Loan and
Security Agreement dated January ____, 1997 among Borrower,
CoreStates Bank, N.A., as agent, Bank as a Lender and the
other financial institutions named therein (as it may be
supplemented, amended, extended or replaced from time to
time, herein called the "Warehouse Line Agreement");
ii. Borrower has requested that Bank make available to Borrower
an unsecured revolving line of credit in the amount of
$2,000,000 for working capital purposes due to timing
differences between lease originations and warehousing or
securitization or sale; and
iii. Bank is willing to make available such line of credit as
requested by Borrower, upon and subject to the terms and
conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants contained in this Agreement, Borrower and Bank
agree as follows:
1.TERMS OF BORROWING
1.01 Revolving Credit Line. Subject to the following terms and
conditions, Bank agrees to make a line of credit available
to Borrower (the "Revolving Credit Line") in the maximum
amount of $2,000,000 (the "Maximum Line") or, if less, the
amount of the Borrowing Base (defined below), pursuant to
which Bank will make loans to Borrower (each an "Advance")
in such amounts as Borrower may request from time to time,
the proceeds of which shall be used for general short-term
working capital. The aggregate outstanding principal balance
of all Advances made hereunder may not exceed the Maximum
Line. Amounts borrowed under the Revolving Credit Line may
be repaid prior to the Termination Date (defined below)
without penalty and may be reborrowed subject to the terms
hereof.
Bank's commitment to make Advances hereunder is subject to
the conditions in Section 3 below and the following
limitations:
a. Bank's commitment to lend hereunder terminates on
the earlier of (i) January 31, 1998, (ii) such date
Bank is no longer a Lender under the Warehouse Line
Agreement, or (iii) the date of any termination under
Section 7 below (the "Termination Date");
b. Bank shall not be obligated to make any Advance
which would cause the outstanding principal balance of
the Revolving Credit Line (the "Line Balance") to
exceed the Maximum Line or, if less, the Borrowing
Base; and
c. Bank shall not be obligated to make any Advance if
an Event of Default, as defined in Section 7 below, or
an event which, with the giving of notice or lapse of
time, or both, would become an Event of Default
(a "Potential Default"), has occurred and has not been
cured by Borrower or waived by Bank.
1.02 Line Note. Borrower's indebtedness to Bank for amounts
borrowed under the Revolving Credit Line and for interest
accrued thereon shall be evidenced by Borrower's promissory
note to Bank, on Bank's standard form for commercial
promissory notes and otherwise satisfactory to Bank, in the
principal amount of the Maximum Line (the "Line Note").
1.03 Interest. Borrower agrees to pay interest on the Line
Balance from time to time as provided herein. Interest will
accrue on the daily outstanding Line Balance at a
fluctuating rate per annum equal at all times to the sum of
the Reference Rate plus three fourths of one percent
(0.75%), which rate will change when and as the Reference
Rate changes. "Reference Rate" means the rate of interest
per annum announced publicly from time to time as Bank's
"reference rate", which may be a rate at, above or below the
rate or rates at which Bank lends to other parties and it is
not necessarily the lowest rate charged by Bank on
commercial loans. Accrued interest shall be due and payable
(i) on the first day of each month, (ii) at maturity of the
Line Note and (iii) on demand after such maturity. After
the occurrence of an Event of Default or after maturity or
any acceleration of maturity of the Line Note, at Bank's
option, the interest rate applicable to the Line Balance may
be increased as provided in the Line Note and Borrower
agrees to pay any such increased interest. Interest shall be
computed using the actual number of days in the period for
which such computation is made and a per diem rate equal to
1/360 of the fluctuating rate per annum.
1.04 Repayment of Principal. Borrower agrees to repay all
Advances made hereunder. The Line Balance will be due and
payable in full at the maturity of the Line Note, which will
be January 31, 1998 subject to acceleration upon the
occurrence of an Event of Default.
1.05 Borrowing Base and Related Definitions. The "Borrowing
Base" means from time to time an amount equal to 100% of the
present value (using the current interest rate under Section
1.03 above) of the total remaining payments due Borrower
under any and all Unencumbered Leases (as defined below)
owned and held by Borrower in the ordinary course of
business as shown on the most recent Borrowing Base
Certificate (defined below) delivered to Bank. "Borrowing
Base Certificate" means a certificate showing the
calculation of the Borrowing Base and the amount of the Line
Balance executed by an appropriate officer of Borrower in
the form attached as Exhibit A or otherwise in a form
satisfactory to Bank. "Lease" means any lease or purported
lease under which Borrower is lessor or of which Borrower
has received assignment directly from the original lessor,
now existing or hereafter arising, including but not limited
to all schedules, amendments, addenda and riders to any such
lease, together with all sums due or to become due
thereunder, all claims for damages arising out of a breach
thereof, and all rights of Borrower to terminate said lease,
to perform thereunder and to compel performance of the terms
thereof. "Lease Documents" means, with respect to any
Lease, all material documents connected therewith which are,
or would be, necessary for the enforcement of such Lease,
including without limitation all options to purchase the
relevant equipment, consents by landlords or other persons,
guaranties, notes, certificates of acceptance, copies of
invoices for all equipment subject thereto and assignments
from the original lessor, if any. "Unencumbered Lease"
means any Lease and the related Lease Documents that are not
subject to any assignment, lien, pledge, security interest
or other encumbrance to any other party or person.
1.06 Method of Borrowing. Requests for Advances may be submitted
by Borrower in writing or by telephone. Bank shall be
entitled to honor any such request it reasonably believes to
be genuine, whether or not the person making the request is
named as an authorized person in any corporate resolution or
instruction furnished Bank by Borrower. Advances shall be
disbursed only by deposit to a demand deposit account
maintained by Borrower at Bank. Proceeds of an Advance
shall be disbursed on the Banking Day (as defined in the
Colorado Uniform Commercial Code) Bank receives Borrower's
request if such request is received before 2:00 p.m. Denver
time on such day, and on the next Banking Day if received at
or after 2:00 p.m. on such day, and in either case the
conditions of Section 3 are met.
1.07 Letters of Credit. In the event and to the extent Bank
issues a letter of credit (an "L/C") on behalf of Borrower
under the Revolving Credit Line in lieu of an advance, the
Maximum Line shall be considered utilized by the amount of
such L/C. Borrower shall pay fees for any such L/C at the
time of issuance according to Bank's schedule of fees
relating to letters of credit in effect from time to time;
and Borrower shall execute Bank's then current standard form
application and agreement for such L/C. Amounts drawn under
any such L/C and honored by Bank but not immediately
reimbursed by Borrower to Bank shall become an Advance
hereunder in such amount at such time evidenced by the Line
Note and subject to all the terms of this Agreement, whether
or not any Event of Default or Potential Default has
occurred. No such L/C shall expire later than the
Termination Date.
1.08 Quarterly Rest Period. Notwithstanding that the Line
Balance is not due in full until maturity, during each
calendar quarter Borrower agrees to reduce the Line Balance
to zero and refrain from reborrowing for a period of fifteen
(15) consecutive days commencing at a time selected by
Borrower during each calendar quarter.
2.REPRESENTATIONS AND WARRANTIES
To induce Bank to enter into this Agreement, Borrower
represents and warrants as follows:
2.01 Incorporation. Borrower is a corporation duly organized,
validly existing, and in good standing under the laws of the
State indicated at the beginning of this Agreement, and
Borrower is duly qualified or licensed and in good standing
to do business as a foreign corporation in all jurisdictions
in which the nature of Borrower's business requires
qualification.
2.02 Borrower's Authorization. The execution, delivery and
performance by Borrower of this Agreement, the Line Note and
any other documents required by the Bank in connection with
this Agreement are within Borrower's corporate powers, have
been authorized by all necessary corporate action and do not
and will not contravene Borrower's Articles of Incorporation
or Bylaws, violate any provision of law or result in a
breach of or default under any other agreement to which
Borrower is a party.
2.03 Litigation. There is no pending or threatened action,
claim, investigation, lawsuit or proceeding against or
affecting Borrower before any court, governmental agency,
arbitrator or arbitration panel, which if decided adversely
to Borrower would have a material adverse affect on the
financial condition or operations of Borrower or in any
event which claims or involves an amount exceeding $100,000
("Material Litigation").
2.04 Financial Condition. The balance sheet of Borrower as at
October 31, 1996, and the related statements of income and
retained earnings for the period then ended, copies of which
have been furnished to Bank, fairly present the financial
condition of Borrower as at such date and the results of the
operations of Borrower for the period ended on such date,
all in accordance with generally accepted accounting
principles ("GAAP") applied on a consistent basis, subject
to year-end audit adjustments and omission of footnote
disclosures, and since October 31, 1996 there has been no
material adverse change in such condition or operations.
2.05 Valid Obligations. This Agreement constitutes, and the Line
Note when delivered hereunder will be, a legal, valid and
binding obligation of Borrower, enforceable against Borrower
in accordance with its respective terms.
2.06 Taxes. Borrower (i) has filed all tax reports and returns
required to be filed, including but not limited to reports
and returns concerning income, franchise, employment, sales
and use, and property taxes; (ii) has paid all of its tax
liabilities which were due on or prior to the date hereof;
and (iii) is not aware of any pending investigation by any
taxing authority or of any pending assessments or
adjustments which would materially increase its tax
liability.
2.07 Regulation U. Borrower is not engaged in the business of
extending credit for the purpose of purchasing or carrying
margin stock (within the meaning of Regulation U issued by
the Board of Governors of the Federal Reserve System), and
no proceeds of any Advance will be used to purchase or carry
any margin stock or to extend credit to others for the
purpose of purchasing or carrying any margin stock.
2.08 Disclosure. No information, exhibit or report furnished by
Borrower to Bank in connection with the negotiation of this
Agreement contains any material misstatement of fact or
omitted to state a material fact necessary to make the
statement contained therein not misleading.
2.09 Environmental Compliance. The ownership and operation of
Borrower's properties have been and are in compliance with
all applicable federal, state, and local environmental
protection and hazardous waste disposal statutes and
regulations. Borrower has not received any notice of claim
under or violation of any such laws affecting Borrower's
properties.
3.CONDITIONS PRECEDENT
3.01 Conditions Precedent to Initial Advance. The obligation of
Bank to make its initial Advance hereunder is subject to the
condition precedent that Bank shall have received on or
before the day of such Advance the following, each in form
and substance satisfactory to Bank:
i. the Line Note duly executed by Borrower;
ii. copies of the Articles of Incorporation and By-laws
of Borrower, each certified by the Secretary of Borrower
to be a true and correct copy thereof, including all
amendments thereto, if any;
iii. certified copies of the resolutions of the Board
of Directors of Borrower approving this Agreement and the
Line Note, and of all documents evidencing other
necessary corporate action and governmental approvals, if
any, with respect to this Agreement and the Line Note;
iv. a certificate of the Secretary of Borrower
certifying the names and true signatures of the officers
of Borrower authorized to sign this Agreement and the
Line Note; and
v.a certificate of the Secretary of State of the State in
which Borrower is incorporated certifying that Borrower
is a corporation duly organized and in good standing
under the laws of such State.
3.02 Conditions Precedent to All Advances. The obligation of
Bank to make each Advance (including the initial Advance)
shall be subject to the further conditions precedent that on
the date of such Advance:
i. the following statements shall be true:
(a) the representations and warranties
contained in Section 2 are correct on and as of
the date of such Advance as though made on and as
of such date; and
(b) no event has occurred and is continuing,
or would result from such Advance, which
constitutes an Event of Default or Potential
Default;
and Bank may request a certificate of an officer of
Borrower stating the foregoing;
ii. Bank shall have received such other approvals,
opinions or documents as Bank may reasonably request;
and
iii. Bank's legal counsel is reasonably satisfied as to
all legal matters incident to the making of such
Advance.
4.AFFIRMATIVE COVENANTS
So long as the Line Note or any indebtedness of Borrower to Bank
remains unpaid or Bank has any commitment to lend hereunder,
Borrower will:
4.01 Accounting Records. Maintain adequate books and accounting
records in accordance with GAAP, consistently applied,
reflecting all financial transactions of Borrower.
4.02 Inspections. At any reasonable time and from time to time,
permit any agents or representatives of Bank to examine and
make copies of and abstracts from records and books of
account of Borrower, to visit and inspect the properties of
Borrower and to discuss the affairs, finances and accounts
of Borrower with any of its officers or directors.
4.03 Maintenance of Property. Maintain and preserve all of its
properties and assets necessary or useful in the performance
of its business in good working order, repair and condition,
ordinary wear and tear excepted.
4.04 Insurance. Maintain insurance with responsible and
reputable insurance companies in such amounts and covering
such risks as is usually and customarily carried by
companies engaged in similar businesses and owning similar
properties, including, but not limited to, public liability,
property damage and worker's compensation, and deliver to
Bank, at Bank's request, schedules setting forth all
insurance then in effect and copies of such policies or
certificates of insurance.
4.05 Payment of Taxes, Liens. Pay and discharge, before the same
become delinquent, (i) all taxes, assessments and
governmental charges or levies imposed upon Borrower or upon
its property, and (ii) all lawful claims which, if unpaid,
might by law become a lien upon its property, except any
thereof which is being contested in good faith and by
appropriate proceedings.
4.06 Compliance with Laws. Comply in all material respects with
all applicable laws, rules, regulations and orders of any
government authority, non-compliance with which would
materially adversely affect its business or credit.
4.07 Corporate Existence. Preserve and maintain its corporate
existence and rights and franchises in its State of
incorporation, and all licenses necessary to do business;
and qualify and remain qualified and in good standing as a
foreign corporation in each jurisdiction in which such
qualification is necessary in view of its operation or
ownership of its properties.
4.08 Reporting. Furnish Bank the following as soon as available
and in any event:
i.Within thirty (30) days after the end of each month, a
Borrowing Base Certificate for any month in which any
Advance is outstanding; and
ii. From time to time such other information as Bank
may reasonably request.
4.09 Financial Condition. Maintain the financial condition of
Borrower, determined in accordance with GAAP, so that its
Borrowing Base is not less than the Line Balance at any
time.
4.10 Deposit Accounts. Maintain a material deposit account at
Bank.
4.11 Notice of Significant Events. Promptly notify Bank in
writing of 1) the occurrence of any Event of Default or
Potential Default; 2) any change in its name, address, form of
entity, or organizational or capital structure; or 3) the
threat of or commencement of any Material Litigation.
5.NEGATIVE COVENANTS
So long as the Line Note or any indebtedness of Borrower to Bank
remains unpaid or Bank has any commitment to lend hereunder,
without the prior written consent of Bank, Borrower will not:
5.01 Use of Funds. Use any of the amounts loaned to it by Bank
pursuant to this Agreement for any purpose except for
general short-term working capital; or
5.02 Nature of Business. Materially change the scope or nature
of its business.
6.DEFAULT
If any of the following events shall occur, it shall be an
event of default ("Event of Default"):
6.01 Non-Payment. Borrower fails to pay any principal of the
Line Note or any other sums payable by Borrower to Bank
pursuant to this Agreement when due, or Borrower fails to
pay any interest on the Line Note within five (5) days after
any such interest is due;
6.02 Representations. Any representation or warranty made by
Borrower herein or in connection herewith proves to have
been incorrect in any material respect when made;
6.03 Breach of Negative Covenants. Borrower fails to observe or
comply with any of the covenants in Section 5 of this
Agreement;
6.04 Breach of Covenants. Borrower fails to perform or observe
any other term, covenant or agreement contained in this
Agreement (other than those referred to in Section 6.01 and
6.03) and such failure has not been cured within ten (10)
days after Bank has notified Borrower of such failure;
6.05 Default on Other Debt. Borrower shall fail to pay any Debt
of Borrower (other than Debt evidenced by the Line Note) or
any interest or premium thereon when due (whether by
scheduled maturity, required prepayment, acceleration,
demand or otherwise), including any Debt under the Warehouse
Line Agreement, and such failure shall continue after the
applicable grace period, if any, specified in the agreement
or instrument relating to such Debt; or any other default or
event under any agreement or instrument relating to any such
Debt shall occur and shall continue after the applicable
grace period, if any, specified in such agreement or
instrument, if the effect of such default or event is to
accelerate, or to permit the acceleration of, the maturity
of such Debt; or any such Debt shall be declared to be due
and payable, or required to be prepaid (other than by a
regularly scheduled required prepayment), prior to the
stated maturity thereof;
6.06 Insolvency. Borrower shall generally not pay its debts as
such debts become due, or shall admit in writing its
inability to pay its debts generally, or shall make a
general assignment for the benefit of creditors; or any
proceeding shall be instituted by or against Borrower
seeking to adjudicate it a bankrupt or insolvent, or seeking
liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief, or composition of it or its
debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of
an order for relief or the appointment of a receiver,
trustee, or other similar official for it or for any
substantial part of its property and, if instituted against
Borrower, shall remain undismissed for a period of thirty
days; or Borrower shall take any corporate action to
authorize any of the actions set forth above in this
subsection;
6.07 Judgments. Any judgment or order for the payment of money
in excess of $100,000 shall be rendered against Borrower and
either (i) enforcement proceedings shall have been commenced
by any creditor upon such judgment or order or (ii) there
shall be any period of 10 consecutive days during which a
stay of enforcement of such judgment or order, by reason of
a pending appeal or otherwise, shall not be in effect;
6.08 Change in Management. Borrower's current Chief Executive
Officer ceases to be employed by Borrower in such capacity,
or the responsibility or authority of such officer is
materially reduced; or
6.09 Change in Control. Any person, entity or group of persons
acting together (not including the current principal
shareholder(s) of Borrower) acquires a sufficient number of
the shares of Borrower's voting common stock to enable such
acquiring person, entity or group to elect a majority of
Borrower's Board of Directors.
7.REMEDIES
Upon the occurrence of any Event of Default, Bank shall have the
right by notice to Borrower:
7.01 Further Loans. To terminate its commitment to make
Advances;
7.02 Acceleration. To declare the Line Balance and all interest
accrued thereon and all other amounts payable under this
Agreement to be immediately due and payable whereupon all
such indebtedness of Borrower to Bank shall become and be
immediately due and payable without presentment, demand,
protest or further notice of any kind, all of which are
hereby expressly waived by Borrower; and
7.03 Pledge of Leases. To request that Borrower deliver, pledge
and assign to Bank such numbers of Unencumbered Leases then
owned and held by Borrower as shall secure repayment of the
Line Balance to the satisfaction of Bank; and
7.04 Other Rights. To exercise any other rights or remedies
available to it whether at law or in equity.
8.MISCELLANEOUS
8.01 Waiver; Amendments. No waiver by Bank or any amendment of
any provision of this Agreement, nor any consent of Bank to
any failure to comply with the terms hereof by Borrower,
shall be effective unless made in writing and signed by
Bank. No waiver by Bank of any default or of any right to
enforce this Agreement shall operate as a waiver of any
other default, or of the same default on a future occasion,
or of the right to enforce this Agreement on any future
occasion. No delay in or discontinuance of the enforcement
of this Agreement, nor the acceptance by Bank of
installments of principal or interest after the occurrence
of any Event of Default, shall operate as a waiver of any
default.
8.02 Rights Cumulative. The rights and remedies herein provided
are cumulative and not exclusive of any rights or remedies
afforded by any promissory note or other agreement executed
in connection herewith, or provided by law. Bank's remedies
may be exercised concurrently or separately, in any order,
and the election of one remedy shall not be deemed a waiver
of any other remedy.
8.03 Expenses. Borrower will pay to Bank on demand all expenses,
including reasonable fees and expenses of attorneys, paid or
incurred by Bank in connection with the making or collection
of Advances made pursuant to this Agreement, or the
protection, preservation or enforcement of Bank's rights
hereunder.
8.04 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of Borrower, Bank and their
respective successors and assigns. However, Borrower shall
not have the right to assign or otherwise transfer any
rights in or under this Agreement without Bank's prior
written consent. Bank reserves the right to sell, assign,
transfer, negotiate or grant participations in the Advances
provided for herein. In connection therewith Bank may
disclose all documents and information which Bank now has or
may hereafter acquire relating to the Advances, Borrower or
Borrower's business.
8.05 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of
Colorado.
8.06 Notices. All notices, requests and demands given to or made
upon either party must be in writing and shall be deemed to
have been given or made when personally delivered or two (2)
days after having been deposited in the United States Mail,
first class postage prepaid, addressed as follows:
If to Borrower: Granite Financial, Inc.
Attn: Xxxxxxx X. Xxxxxx
President and CEO
0000 X. 00xx Xxxxxx
Xxxxxxxxxxx, XX 00000-0000
If to Bank Colorado National Bank
Attn: Commercial Loan Department
Post Office Box 5168
Xxxxxx, XX 00000
8.07 Accounting Terms. All accounting terms not specifically
defined herein shall be construed in accordance with
generally accepted accounting principles consistently
applied, except as otherwise stated herein.
8.08 Recitals. The recitals to this Agreement and any
definitions set forth therein are made a part hereof and
incorporated in this Agreement.
8.09 Entire Agreement. The following documents contain the
entire agreement between the parties concerning the subject
matter hereof: this Agreement and the Line Note
(collectively, the "Relevant Documents"). Any
representation, understanding or promise concerning the
subject matter hereof, which is not expressly set forth in
any of the Relevant Documents, shall not be enforceable by
any party hereto or its successors or assigns. In the event
of any conflict or inconsistency between the terms of this
Agreement and the terms of any other relevant document, the
terms of this Agreement shall govern.
8.10 Severability. The unenforceability of any provision of this
Agreement shall not affect the enforceability or validity of
any other provision hereof.
8.11 JURY TRIAL WAIVER. BANK AND BORROWER EACH IRREVOCABLY
WAIVES ITS RIGHT TO A JURY TRIAL IN ANY ACTION OR PROCEEDING
OF ANY ISSUE, CLAIM, COUNTERCLAIM OR OTHER CAUSE OF ACTION,
WHETHER IN CONTRACT OR TORT, BASED UPON OR ARISING OUT OF
THIS AGREEMENT, THE CREDIT EXTENDED HEREUNDER, OR ANY OTHER
AGREEMENT OR DEALINGS RELATING TO THE SUBJECT MATTER OF THIS
AGREEMENT.
IN WITNESS WHEREOF, the parties have executed this Agreement the
date first stated above for the purposes set forth herein.
GRANITE FINANCIAL, INC. COLORADO NATIONAL BANK
By: By:
Title: Title:
EXHIBIT A
BORROWING BASE CERTIFICATE
of
GRANITE FINANCIAL, INC.
"Borrower"
As Of the Period Ending ___________________________, 199___
This Certificate is submitted to Colorado National Bank ("Bank")
in connection with the Unsecured Revolving Credit Agreement
dated as of January ____, 1997 (the "Agreement") between Bank
and Borrower. Capitalized terms used herein are defined in the
Agreement.
The undersigned hereby certifies to Bank that the undersigned is
familiar with the following financial information which has been
taken from Borrower's books and records which are complete and
accurate and that the following calculations of the Borrowing
Base and the remaining amount available under the Borrowing Base
are true and correct:
BORROWING BASE
1. Total Remaining Payments due under all
Unencumbered Leases $
2. Borrowing Base: Present Value of Line 1 using
current interest rate on Line Balance $
3. Current Line Balance (i.e. outstandings under
Revolving Credit Line) $
4. [Excess/Deficit] Borrowing Base: $
The undersigned further certifies that (a) Borrower is in
compliance with all of the covenants contained in the Agreement,
and (b) there has been no Event of Default under the Agreement
which has not been cured or waived, and no Potential Default has
occurred.
By:
Title:
Date:
