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Bankone, Changein Terms Agreement

This is an actual contract by Scientific Software Intercomp.

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Sectors: Computer Software and Services
Governing Law: New York, View New York State Laws
Effective Date: October 15, 1995
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LOAN AGREEMENT


Borrower: SCIENTIFIC SOFTWARE - INTERCOMP, INC. Lender: BANK ONE, COLORADO, N.A.
A COLORADO CORPORATION DOWNTOWN BOULDER BANKING CENTER
1801 CALIFORNIA STREET, SUITE 295 2696 SOUTH COLORADO BOULEVARD
Denver, CO 80202-2699 DENVER, CO 80222


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THIS LOAN AGREEMENT BETWEEN SCIENTIFIC SOFTWARE-INTERCOMP, INC., A COLORADO CORPORATION ("BORROWER") AND BANK ONE, COLORADO, N.A. ("LENDER") IS MADE AND EXECUTED ON THE FOLLOWING TERMS AND CONDITIONS. BORROWER HAS RECEIVED PRIOR COMMERCIAL LOANS FROM LENDER OR LOANS AND OTHER FINANCIAL ACCOMMODATIONS, INCLUDING THOSE WHICH MAY BE DESCRIBED ON ANY EXHIBIT OR SCHEDULE ATTACHED TO THIS AGREEMENT. ALL SUCH LOANS AND FINANCIAL ACCOMMODATIONS, TOGETHER WITH ALL FUTURE LOANS AND FINANCIAL ACCOMMODATIONS FROM LENDER TO BORROWER, ARE REFERRED TO IN THIS AGREEMENT INDIVIDUALLY AS THE "LOAN" AND COLLECTIVELY AS THE "LOANS." BORROWER UNDERSTANDS AND AGREES THAT: (A) IN GRANTING, RENEWING, OR EXTENDING ANY LOAN, LENDER IS RELYING UPON BORROWER'S REPRESENTATIONS, WARRANTIES, AND AGREEMENTS, AS SET FORTH IN THIS AGREEMENT, (B) THE GRANTING, RENEWING, OR EXTENDING OF AN LOAN BY LEADER AT ALL TIMES SHALL BE SUBJECT TO LENDER'S SOLE JUDGMENT AND DISCRETION; AND (C) ALL SUCH LOANS SHALL BE AND SHALL REMAIN SUBJECT TO THE FOLLOWING TERMS AND CONDITIONS OF THIS AGREEMENT.


TERM. This Agreement shall be effective as of OCTOBER 15, 1995 and shall continue thereafter until all indebtedness of Borrower to Lender has been performed in full and the parties terminate this Agreement in writing.


DEFINITIONS. The following words shall have the following meanings when used in this Agreement. Terms not otherwise defined in this Agreement shall have the meanings attributed to such terms in the Uniform Commercial Code. All reference to dollar amounts shall mean amounts in lawful money of the United States of America.


AGREEMENT. The word "Agreement" means this Loan Agreement, as this Loan Agreement may be amended or modified from time, together with all exhibits and schedules attached to this Loan Agreement from time to time.


ACCOUNT. The word "Account" means a trade account, account receivable, or other right to payment for goods or services rendered owing to borrower (or to a third party grantor acceptable to Lender).


ACCOUNT DEBTOR. The words "Account Debtor" mean the person or entity obligated upon an Account.


ADJUSTED NET INCOME. The words "Adjusted Net Income" mean net income after taxes plus depreciation, amortization, lease expense, and interest expense.


ADVANCE. The word "Advance" means a disbursement of Loan funds under this Agreement.


BORROWER. The word "Borrower" means SCIENTIFIC SOFTWARE-INTERCOMP, INC., A COLORADO CORPORATION. The word "Borrower" also includes, as applicable, all subsidiaries and affiliates of Borrower as provided below in the paragraph titled "Subsidiaries and Affiliates".


BORROWING BASE. The words "Borrowing Base" mean, as determined by Lender from time to time, the lesser of:


(1) $63,000.00 or 75% of Borrower's eligible domestic accounts receivable until November 15, 1995; $500,000.00 or 75% of Borrower's eligible domestic accounts receivable, at November 16, 1995 and thereafter, as calculated on a monthly Borrowing Base and Compliance Certificate in the form attached as Exhibit "A".


(2) The lesser of $4,500,000.00, the value of the export working capital guarantee made by Export-Import Bank of the U.S. or 90% of Borrower's eligible export accounts receivable, as calculated on a Borrowing Base and Compliance Certificate in the form attached as Exhibit "A".


CERCLA. The word "CERCLA" means the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended.


CASH FLOW. The words "Cash Flow" mean net income after taxes, and exclusive of extraordinary gains and income, plus depreciation and amortization, less any amounts of R&D capitalized on the balance sheet.


COLLATERAL. The word "Collateral" means and includes without limitation all property and assets granted as collateral security for a Loan, whether real or personal property, whether granted directly or indirectly, whether granted now or in the future, and whether granted in the form of a security interest, mortgage, deed of trust, assignment, pledge chattel mortgage, chattel trust, factor's lien, equipment trust, conditional sale, trust receipt, lien, charge, lien or title retention contract, lease or consignment intended as a security device, or any other security or lien interest whatsoever whether created by law, contract, or otherwise.


DEBT. The word "Debt" means all of Borrowers liabilities.


ELIGIBLE ACCOUNTS. The words "Eligible Domestic Accounts" mean, at any time, those accounts originating from sales within the United States. The words "Eligible Foreign Accounts" mean,


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at any time, only those accounts which are insured by export credit insurance acceptable to Lender, backed by letters of credit or from sales funded by the Export-Import Bank of the U.S. or the World Bank. The net amount of any Eligible Account against which Borrower may borrow shall exclude all returns, discounts,credits, and offsets of any nature. Unless otherwise agreed to by Lender in writing, Eligible Accounts do not include:


(a) Accounts with respect to which the Account Debtor is an officer, an employee or agent of Borrower.


(b) Accounts with respect to which the Account Debtor is a subsidiary of, or affiliated with or related to Borrower or its shareholders, officers, or directors.


(c) Accounts with respect to which goods are placed on consignment, guaranteed sale, or other terms by reason of which the payment by the Account Debtor may be conditional.


(d) Accounts with respect to which Borrower is or may become liable to the Account Debtor for goods sold or services rendered by the Account Debtor to Borrower.


(e) Accounts which are subject to dispute, counterclaim, or setoff.


(f) Accounts with respect to which the goods have not been shipped or delivered, or the services have not been rendered, to the Account Debtor, except for fees for maintenance services, and except for partially completed milestone performance contracts.


(g) Accounts of any Account debtor who has filed or has had filed against it a petition in bankruptcy or an application for relief under any provision of any state or federal bankruptcy, insolvency, or debtor-in-relief acts; or who has had appointed a trustee, custodian, or received for the assets of such Account Debtor; or who has made an assignment for the benefit of creditors or has become insolvent or fails generally to pay its debts (including its payrolls) as such debts become due.


(h) Accounts with respect to which the Account Debtor is the United States Government or any department or agency of the United States.


(i) Accounts which are unpaid more than 90 days after the customer's acceptance or 150 days after invoice or shipment, whichever occurs earlier.


ERISA. The word "ERISA" means the Employee Retirement Income Security Act of 1974, as amended.


EVENT OF DEFAULT. The words "Event of Default" mean and include any of the Events of Default set forth below in the section titled "EVENTS OF DEFAULT."


GRANTOR. The word "Grantor" means and includes each and all the persons or entities granting a Security interest in any Collateral for the Indebtedness, including without limitation all Borrowers granting such a Security Interest.


GUARANTOR. The word "Guarantor" means and includes without limitation, each and all of the guarantors, sureties, and accommodation parties in connection with any indebtedness.


INDEBTEDNESS. The word "Indebtedness" means and includes without limitation all Loans, together with all other obligations, debts and liabilities of Borrower to Lender, or any one or more of them, as well as all claims by Lender against Borrower, or any one or more of them; whether now or hereafter existing, voluntary or involuntary, due or not due, absolute or contingent, liquidated or unliquidated; whether Borrower may be liable individually or jointly with others; whether Borrower may be obligated as a guarantor, surety, or otherwise; whether recovery upon such Indebtedness may be or hereafter may become barred by any statute of limitations; and whether such Indebtedness may be or hereafter may become otherwise unenforceable.


LENDER. The word "Lender" means BANK ONE, COLORADO, N.A., its successors and assigns.


LIQUID ASSETS. The words "Liquid Assets" mean Borrower's cash on hand, plus government obligations with maturities less than 365 days, plus Borrower's receivables.


LOAN. The word "Loan" or "Loans" means and includes any and all commercial loans and financial accommodations from Lender to Borrower, whether now or hereafter existing, and however evidenced, including without limitation: (1) a $633,000.00 revolving Line of Credit to issue standby letters of credit, at an interest rate of Bank One, Colorado, N.A. Prime Rate plus 2.50%, which will reduce to an available amount of $500,000.00 on November 16, 1995; and (2) a $4,500,000.00 export revolving Line of Credit to finance international related working capital needs and issue U.S. Dollar and foreign currency standby letters of credit to support international sales, at an interest rate of Bank One, Colorado, N.A. Prime plus 1.50%.


NOTE. The word "Note" means Borrower's and any cosigners' promissory note or notes, if any, evidencing Borrower's Loan obligations in favor of Lender, as well as any substitute, replacement or refinancing note or notes therefor.


RELATED DOCUMENTS. The words "Related Documents" mean and include without limitation all promissory notes, credit agreements, loan agreements, guaranties, security agreements, mortgages, deeds of trust, and all other instruments, agreements and documents, whether now or hereafter existing, executed in connection with the Indebtedness.


SECURITY AGREEMENT. The words "Security Agreement" mean and include without limitation any agreements, promises, covenants, arrangements, understandings or other agreements, whether created by law, contract, or otherwise, evidencing, governing, representing, or creating a Security interest.


SECURITY INTEREST. The words "Security Interest" mean and include without limitation any type of collateral security, whether in the form of a lien charge, mortgage, deed of trust, assignment, pledge, chattel mortgage, chattel trust, factor's lien, equipment trust, conditional sale, trust receipt, lien or title retention contract, lease or consignment intended as a security device, or any other security or lien interest whatsoever, whether created by law, contract, or otherwise.


SARA. The word "SARA" means the Superfund Amendments and Reauthorization Act of 1986 as now or hereafter amended.


SUBORDINATED DEBT. The words "Subordinated Debt" mean indebtedness and liabilities of Borrower which have been subordinated by written agreement to indebtedness owed by Borrower to Lender in form


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3 and substance acceptable to Lender.


TANGIBLE NET WORTH. The words "Tangible Net Worth" mean Borrower's total assets excluding all intangible assets (i.e., goodwill, trademarks, patents, copyrights, organizational expenses, and similar intangible items, but including leaseholds and leasehold improvements) less total Debt.


WORKING CAPITAL. The words "Working Capital" mean Borrower's current assets, excluding prepaid expenses, less Borrower's current liabilities.


LINE OF CREDIT. Lender agrees to make advances to Borrower and issue standby letters of credit on Borrower's behalf from time to time from the date of this Agreement to the maturity date of any line of credit, provided the aggregate amount of such Advances or issued standby letters of credit outstanding at any time does not exceed the Borrowing Base. For Borrowing Base purposes, standby letters of credit denominated in foreign currencies will be marked up by 20% to cover currency fluctuations unless hedged with a forward option currency contract. Any letters of credit prior to the date of shipment of the Items covered by the subject letter of credit are excluded from the borrowing availability. Disbursements shall not be made to finance the cost of manufacturing or selling of those Items which are to be sold on terms other than those set forth in Item (7) the Loan Authorization Agreement (Exhibit B, and also referred to as Annex A). Disbursements shall not be made (a) except for the purpose of enabling the Borrower to finance the cost of manufacturing or selling the Items, and (b) after the Availability Date set forth in item (10) of the Authorization Agreement. Within the foregoing limits, Borrower may borrow, partially or wholly prepay, and reborrow under this Agreement as follows.


CONDITIONS PRECEDENT TO EACH ADVANCE. Lender's obligation to make any
Advance to or for the account of Borrower and to issue standby letters
of credit under this Agreement is subject to the following conditions
precedent, with all documents, instruments, opinions, reports, and
other items required under this Agreement to be in form and substance
satisfactory to Lender:


(a) Lender shall have received evidence that this Agreement and all
Related Documents have been duly authorized, executed, and delivered by
Borrower to Lender.


(b) Lender shall have received such documents, and, if an Event of
Default has occurred, such opinion of counsel or supplemental opinion
as Lender may request.


(c) The security interests in the Collateral shall have been duly
authorized, created, and perfected with first lien priority and shall
be in full force and effect.


(d) All guaranties required by Lender for the Lines of Credit shall
been executed by each Guarantor, delivered to Lender, and be in full
force and effect.

(e) Lender shall have received a 90% guarantee acceptable to Lender
from the Export-Import Bank of the U.S. for Lender's export revolving
line of credit to Borrower. The lack of this guarantee would also
preclude Lender from extending the domestic revolving line of credit
(Facility #1).


(f) Lender, at its option and for its sole benefit, shall have
conducted an audit of Borrower's Accounts, Inventory, books, records,
and operations, and Lender shall be satisfied as to their condition.


(g) Borrower shall have paid or will pay to Lender all fees, costs and
expenses specified in this Agreement and the Related Documents as are
then due and payable. Lender will not impose any charge on Borrower in
connection with this Loan Agreement and the Note(s) other than
reasonable fees charged by the Lender in accordance with normal
commercial lending practices.


(h) There shall not exist at the time of any Advance a condition which
would constitute an Event of Default under this Agreement.


MAKING LOAN ADVANCES. Advances under the credit facility are restricted solely to the export revolving line of credit guaranteed by the Export-Import Bank of the U.S. Advances, as well as directions for payment from Borrower's accounts, may be requested orally or in writing by authorized persons. Lender may, but need not, require that all oral requests be confirmed in writing. Each Advance shall be conclusively deemed to have been made at the request of and for the benefit of Borrower (a) when credited to any deposit account of Borrower maintained with Lender or (b) when advanced in accordance with the instructions of an authorized person. Lender, at its option, may set a cutoff time, after which all requests for Advances will be treated as having been requested on the next succeeding Business Day.


MANDATORY LOAN REPAYMENTS/ADDITIONAL COLLATERAL. If at any time the
aggregate principal amount of the outstanding Advances plus issued
standby letters of credit shall exceed the applicable Borrowing Base,
Borrower, immediately upon written or oral notice from Lender shall
either (a) pay to Lender an amount equal to the difference between the
outstanding principal balance of the Advances plus issued letters of
credit and the Borrowing Base or (b) furnish additional security to
Lender, in form and amount satisfactory to Lender and the Export-
Import Bank of the U.S.


LOAN ACCOUNT. Lender shall maintain on its books a record of account
in which Lender shall make entries for each Advance and such other
debits and credits as shall be appropriate with the credit facility.
Lender shall provide Borrower with periodic statements of Borrower's
accounts, which statements will be considered to be correct and
conclusively binding on Borrower unless Borrower notifies Lender to
the contrary with thirty (30) days after Borrower's receipt of any
such statement which Borrower deems to be incorrect.


OPERATING ACCOUNT. Borrower shall utilize a regular operating account with Lender.


COLLATERAL. To secure payment of the Lines of Credit and performance of all other Loans, obligations and duties owed by Borrower to lender, Borrower (and others, if required) shall grant to Lender Security Interests in such property and assets as Lender may require (the "Collateral"), including without limitation Borrower's present and future Accounts, contract rights, general intangibles, proprietary software, equipment, inventory and assignment of credit insurance. Lender's Security Interests in the Collateral shall be continuing liens and shall include the proceeds and products of the Collateral, including without limitation the proceeds of any insurance. With respect to the Collateral, Borrower agrees and represents and warrants to Lender:


PERFECTION OF SECURITY INTEREST. Borrower agrees to execute such financing statements and to take whatever other actions are requested by Lender to perfect and continue Lender's Security Interests in the Collateral. Upon request of Lender, Borrower will deliver to Lender any and all of the documents evidencing or constituting the Collateral, and Borrower will note Lender's interest upon any all chattel paper if not delivered to Lender for possession by Lender.


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Contemporaneous with the execution of this Agreement, Borrower will execute one or more UCC financing statements and any similar statements as may be required by applicable law, and will file such financing statements and all such similar statements in the appropriate location or locations. Borrower hereby appoints Lender as its irrevocable attorney-in-fact for the purpose of executing any documents necessary to perfect or to continue any Security Interest. Lender may, at any time, and without further authorization from Borrower, file a carbon, photograph, facsimile, or other reproduction of any financing statement for use as a financing statement. Borrower will reimburse Lender for all expenses for the perfection, termination, and the continuation of the perfection of Lender's security interest in the Collateral. Borrower promptly will notify Lender of any change in Borrower's name including any change to the assumed business names of Borrower. Borrower also will promptly notify Lender of any change in Borrower's Employer Identification Number. Borrower further agrees to notify Lender in writing prior to any change in address or location of Borrower's principal governance office or should Borrower merge or consolidate with any other entity.


COLLATERAL RECORDS. Borrower does now, and at all times hereafter
shall, keep correct and accurate records of the Collateral, all of
which records shall be available to Lender or Lender's representative
upon demand for inspection and copying at any reasonable time. With
respect to the Accounts, Borrower agrees to keep and maintain such
records as Lender may require, including without limitation
information concerning Eligible Accounts and Account balances and
agings. With respect to Inventory and Work in Progress, Borrower agrees
to keep and maintain such records as Lender may require, including
without limitation records itemizing and describing the kind, type,
quality and quantity of Inventory and Work in Progress, Borrower's
costs and selling prices, and the monthly withdrawals and additions to
Inventory and Work in Progress. The following is an accurate and
complete list of all locations at which Borrower keeps or maintains
business records concerning Borrower's Accounts, Inventory and Work in
Progress: 1801 CALIFORNIA STREET, SUITE 295, DENVER, COLORADO 80202;
10333 RICHMOND AVENUE, SUITE 1000, HOUSTON, TEXAS 77042.


COLLATERAL SCHEDULES. Concurrently with the execution and delivery of
this Agreement, Borrower shall execute and deliver to Lender schedules
of Accounts and Eligible Accounts, in form and substance satisfactory
to the Lender. Thereafter Borrower shall execute and deliver to Lender
such supplemental schedules of Eligible Accounts and such other
matters and information relating to the Accounts as Lender may
request.


REPRESENTATIONS AND WARRANTIES CONCERNING ACCOUNTS. With respect to
the Accounts, Borrower represents and warrants to Lender: (a) Each
Account represented by Borrower to be an Eligible Account for purposes
of this Agreement conforms to the requirements of the definition of an
Eligible Account; (b) All Account information listed on schedules
delivered to Lender will be true and correct, subject to immaterial
variance; (c) Borrower has good and marketable title to Accounts due
and collectible outside the United States; such accounts support
exports originating from the United States; and proceeds from the
collection of such accounts are remitted to the United States on a
bi-monthly basis; (d) Lender, its assigns, or agents shall have the
right at any time and at Borrower's expense to inspect, examine, and
audit Borrower's records and to confirm with Account Debtors the
accuracy of such Accounts.
REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to Lender as of the date of this Agreement and as of the date of each disbursement of Loan proceeds:


ORGANIZATION. Borrower is a corporation which is duly organized, validly existing, and in good standing where incorporated. Borrower has the full power and authority to own its properties and to transact the business in which it is presently engaged or presently proposes to engage. Borrower also is duly qualified as a foreign corporation and is in good standing in all states in which the failure to so qualify would have a material adverse effect on its businesses or financial condition.


AUTHORIZATION. The execution, delivery, and performance of this Agreement and all Related Documents by Borrower, to the extent to be executed, delivered or performed by Borrower, have been duly authorized by all necessary action by Borrower within two (2) days after the date of this Agreement; do not require the consent or approval of any other person, regulatory authority or governmental body; and do not conflict with, result in a violation of, or constitute a default under (a) any provision of its articles of incorporation, operating agreement, or any other agreement or other instrument binding upon Borrower or (b) any law, governmental regulation, court decree, or order applicable to Borrower.


FINANCIAL INFORMATION. Each financial statement of Borrower supplied to Lender truly and completely disclosed Borrower's financial condition as of the date of the statement, and there has been no material adverse change in Borrower's financial condition subsequent to the date of the most recent financial statement supplied to Lender. Borrower has no material contingent obligations except as disclosed in such financial statements.


LEGAL EFFECT. This Agreement constitutes, and any instrument or agreement required hereunder to be given by Borrower when delivered will constitute, legal, valid and binding obligations of Borrower enforceable against Borrower in accordance with their respective terms.


PROPERTIES. Except as contemplated by this Agreement or as previously disclosed in Borrower's financial statements or in writing to Lender and as accepted by Lender, and except for property tax liens for taxes not presently due and payable, Borrower owns and has good title to all of Borrower's properties free and clear of all Security interests, and has not executed any security documents or financing statements relating to such properties. All of Borrower's properties are titled in Borrower's legal name, and Borrower has not used, or filed a financing statement under, any other name for at least the last five (5) years.


LITIGATION AND CLAIMS. No litigation, claim, investigation, administrative proceeding or similar action (including those for unpaid taxes) against Borrower is pending or threatened, and no other event has occurred which may materially adversely affect Borrower's financial condition or properties, other than litigation, claims, or other events, if any, that have been disclosed to and acknowledged by Lender in writing.


TAXES. To the best of Borrower's knowledge, all tax returns and reports of Borrower that are or were required to be filed, have been filed, and all taxes, assessments and other governmental charges have been paid in full, except those presently being or to be contested by Borrower in good faith in the ordinary course of business and for which adequate reserves have been provided.


LIEN PRIORITY. Unless otherwise previously disclosed to Lender in writing, Borrower has not entered into or granted any Security Agreements, or permitted the filing or attachment of any Security Interest on or affecting any of the Collateral directly or indirectly securing repayment of Borrower's Loan and Note, that would be prior or that may in any way be superior to Lender's Security Interests and rights in and to such Collateral.


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BINDING EFFECT. This Agreement, the Note and all Security Agreements directly or indirectly securing repayment of Borrower's Loan and Note are binding upon Borrower as well as upon Borrower's, successors, representatives and assigns, and are legally enforceable in accordance with their respective terms.


COMMERCIAL PURPOSES. Borrower intends to use the Loan proceeds solely for business or commercial related purposes.


EMPLOYEE BENEFIT PLANS. Each employee benefit plan as to which Borrower may have any liability complies in all material respects with all applicable requirements of law and regulations, and (i) no Reportable Event nor Prohibited Transaction (as defined in ERISA) has occurred with respect to any such plan, (ii) Borrower has not withdrawn from any such plan or initiated steps to do so, and (iii) no steps have been taken to terminate any such plan.


INVESTMENT COMPANY ACT. Borrower is not an "investment company" or a co
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