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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 26, 1996
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SCIENTIFIC SOFTWARE-INTERCOMP, INC.
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(Exact name of Registrant as specified in its charter)
Colorado 0-4882 84-0581776
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File No.) Identification No.)
1801 California Street, Suite 295, Denver, Colorado 80202
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(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (303) 292-1111
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Not Applicable
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(Former name, former address and former fiscal year,
if changed since last report)
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Items 1-4. Not Applicable.
Item 5. Other Events.
On April 26, 1996, the Registrant issued a $5,000,000
Promissory Note to Lindner Dividend Fund, A Series of Lindner Investments
("Lindner"), in exchange for $5,000,000 cash and issued a $1,500,000 Promissory
Note to Renaissance Capital Partners II, Ltd. ("Renaissance") in exchange for
the surrender by Renaissance of the Registrant's outstanding convertible
debentures in the principal amount of $1,500,000. In addition, the remaining
convertible debentures of the Registrant held by Renaissance in the principal
amount of $250,000 were surrendered by Renaissance in exchange for the issuance
of 282,218 shares of the Registrant's common stock. The Promissory Notes are
subject to the terms of a Loan Agreement among the Registrant, Lindner and
Renaissance dated April 26, 1996.
The Promissory Notes bear interest at the rate of seven
percent per annum payable semi-annually on the last days of October and April
beginning October 31, 1996. The principal of and any unpaid interest on the
Promissory Notes will be due and payable in full on April 30, 2001.
The Promissory Notes are secured on a pro rata basis between
Lindner and Renaissance by (a) a first-priority lien on substantially all the
assets of the Registrant and its subsidiaries except for accounts receivable
due from non-U.S. customers and (b) a second-priority lien on such accounts.
In connection with the issuance of the Promissory Notes, the
Registrant (a) issued to Lindner a five-year non-detachable Warrant to purchase
1,500,000 shares of the Registrant's common stock for $3.00 per share and (b)
issued to Renaissance a five-year non-detachable right to purchase 450,000
shares of the Registrant's common stock for $3.00 per share. The foregoing
exercise price is subject to conventional anti-dilution adjustments. So long
as the corresponding Promissory Note remains outstanding, the purchase right
can be exercised only by a reduction of the principal amount of the
corresponding Promissory Note to the extent of the exercise price. The stock
purchase rights are callable by the Registrant at such time as the Registrant's
common stock is selling for at least $6.00 per share.
The proceeds of the Promissory Notes will be utilized by the
Registrant solely for the repayment of debt, to provide capital for continued
development of software products, to fund the acquisition of computer hardware
and to provide working capital for the general operating purposes of the
Registrant.
On April 26, 1996 the company also repaid an existing
$2,870,000 line of credit with Bank One Colorado, N.A. and established a new
one year line of credit with Bank One, and Export-Import Bank of the United
States for $1,500,000. Such line of credit will be utilized for working
capital purposes and for the issuance of letters of credit for bid guarantees,
performance bonds and advance payment guarantees in connection with the
Registrant's software business. The line of credit is secured by
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a first-priority lien on accounts receivable due from non-U.S. customers and a
second priority lien on substantially all the assets of the Registrant and its
subsidiaries.
Item 6. Not Applicable.
Item 7. Financial Statements and Exhibits.
(a)-(b). Not Applicable.
(c) Exhibits.
4.1 Loan Agreement dated April 26, 1996.
Item 8. Not Applicable.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
SCIENTIFIC SOFTWARE-INTERCOMP, INC.
Date: May 1, 1996 By: /S/ GEORGE STEEL
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George Steel, President
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EXHIBIT INDEX
Exhibit
No. Description Page
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4.1 Loan Agreement dated 4/26/96
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LOAN AGREEMENT
THIS LOAN AGREEMENT ("Agreement") is entered into this 26th day of
April, 1996, by and between SCIENTIFIC SOFTWARE-INTERCOMP, INC., a Colorado
corporation ("SSI"), and LINDNER DIVIDEND FUND, A SERIES OF LINDNER
INVESTMENTS, a Massachusetts business trust ("Lindner"), and RENAISSANCE
CAPITAL PARTNERS II, LTD., a Texas limited partnership ("Renaissance"),
(Lindner and Renaissance being collectively referred to as the "Lenders").
To induce the Lenders to extend credit to SSI and for other good and
valuable consideration, the receipt and sufficiency of which are acknowledged
hereby, the parties hereto agree as follows, intending to be bound legally:
SECTION 1. - THE LOANS.
1.1 Description of the Loans.
(a) Lindner Loan. On the Closing Date, and subject to the
terms, conditions, covenants and other provisions of this Agreement, Lindner
shall loan to SSI the principal amount of $5,000,000 (the "Lindner Loan"), to
be evidenced by SSI's promissory note in the form attached hereto as Exhibit A
(the "Lindner Note"). The principal amount from time to time outstanding on the
Lindner Loan shall bear interest at seven percent per annum payable
semi-annually on the last days of October and April beginning October 31, 1996.
Any past due principal and interest thereunder shall bear interest at 12
percent per annum from the date payment thereof shall have become due until the
same have been fully discharged by payment. The principal of and any unpaid
interest on the Lindner Loan shall be due and payable in full on April 30,
2001.
(b) Renaissance Loan. On the Closing Date, and subject to
the terms, conditions, covenants and other provisions of this Agreement,
Renaissance shall loan to SSI the principal amount of $1,500,000 (the
"Renaissance Loan"), to be evidenced by SSI's promissory note in the form
attached hereto as Exhibit B (the "Renaissance Note"). The principal amount
from time to time outstanding on the Renaissance Loan shall bear interest at
seven percent per annum payable semi-annually on the last days of October and
April beginning October 31, 1996. Any past due principal and interest
thereunder shall bear interest at 12 percent per annum from the date payment
thereof shall have become due until the same have been fully discharged by
payment. The principal of and any unpaid interest on the Renaissance Loan
shall be due and payable in full on April 30, 2001. The Lindner Loan and the
Renaissance Loan are hereinafter sometimes referred to collectively as the
"Loans."
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1.2 Security. All payments due on the Lindner Loan and the
Renaissance Loan and the performance of the covenants set forth in this
Agreement and the related documents and instruments shall be secured pari passu
by a first-priority perfected security interest or assignment of lien, as the
case may be, in and upon all of SSI's, and all of Scientific Software-Intercomp
(U.K.) Limited's ("SSI-UK") properties and assets, including computer software
and programs, now owned or existing and hereafter acquired or arising and
wherever located, and all the proceeds thereof (all of the foregoing herein
called the "Collateral"), other than SSI's and SSI-UK's (i) accounts receivable
due from non-United States domiciled customers and clients and (ii) their
inventories, if any, intended to be sold outside of the U.S., but not to
include any computer software or programs. Bank One, Boulder, N.A. ("Bank
One") shall have a first-priority security interest and the Lenders shall have
a second-priority security interest in the property set forth in the foregoing
clauses (i) and (ii) other than such property of Intercomp Resource Development
& Engineering (Canada) Limited upon which another bank holds a security
interest. SSI shall execute, acknowledge and deliver to the Lenders such
instruments, security agreements, security agreement-pledges, including the
Security Agreement attached hereto as Exhibit E, statements, assignments,
consents, financing statements and other documents (the "Security Documents")
as may reasonably be required to enforce, grant to the Lenders and perfect and
protect such security interests in the Collateral.
1.3 Prepayments. SSI, at its option, without notice, premium or
penalty may prepay the Notes pari passu in full at any time or from time to
time in whole or in part provided that such prepayment may be made only at such
time or times as the closing bid or sale price of SSI common stock for each of
the last thirty trading days prior thereto has been at least 200 percent of the
Exercise Price of the Stock Purchase Right described in Section 2 below, as
defined therein. Any such prepayment shall be applied first to accrued
interest, then to the discharge of any expenses for which the Lenders may be
entitled to receive reimbursement and the balance remaining shall be applied to
the reduction of principal of the Notes. Any partial prepayment shall be in an
amount of not less than $250,000.
1.4 Payments. All payments of principal of and interest on the
Notes shall be made to Lindner and Renaissance at their offices set forth on
the signature page hereof, or such other place as they from time to time may
designate in writing. Whenever any payment of principal of or interest on any
of the Notes shall be due on a day which is not a business day, the date for
payment thereof shall be extended to the next succeeding business day.
SECTION 2. - STOCK PURCHASE RIGHTS.
On the Closing Date SSI shall issue and deliver to Lindner a warrant
(the "Lindner Warrant") exercisable on or before April 30, 2001 to purchase
1,500,000 shares of common stock of SSI at $3.00 per share and shall deliver to
Renaissance a conversion right (the "Renaissance Conversion Right") exercisable
on or before April 30, 2001 to purchase 450,000 shares of common stock of SSI
at $3.00 per share (collectively, the "Stock Purchase Rights"). The Stock
Purchase Rights of Lindner and Renaissance shall be deemed to be attached to
the Lindner Note and to the Renaissance
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Note, respectively, and so long as the Lindner Loan or the Renaissance Loan is
outstanding, the Stock Purchase Right with respect thereto may not be
transferred independent of and separate from a transfer of the Note deemed
attached thereto. So long as the Renaissance Loan is outstanding, the
Renaissance Conversion Right shall be exercised only by a reduction of the
Renaissance Loan in an amount equal to the aggregate purchase price of the
shares of SSI common stock to be acquired by such exercise. So long as the
Lindner Loan is outstanding, the Lindner Conversion Right shall be exercised
only by a reduction of the Lindner Loan in an amount equal to the aggregate
purchase price of the shares of SSI common stock to be acquired by such
exercise. The form and the terms and conditions of the Stock Purchase Rights
are set forth as Exhibits C and D attached hereto. On the Closing Date the
Company and the Lenders shall also enter into the Registration Rights Agreement
with respect to the common stock of SSI underlying the Stock Purchase Rights in
the form attached hereto as Exhibit F.
SECTION 3. - REPRESENTATIONS AND WARRANTIES.
SSI represents and warrants for the benefit of the Lenders that:
3.1 Organization, Standing, Etc. SSI is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Colorado and has all requisite corporate power and authority (including without
limitation all requisite licenses, permits, consents and authorizations) to own
and operate its properties and to carry on its business as now conducted and as
proposed to be conducted. SSI has all requisite corporate power and authority
to enter into and perform all of its obligations under this Agreement, the
Notes, the Security Documents and the Stock Purchase Rights and to carry out
the transactions contemplated hereby or thereby. No consent of SSI's
shareholders or of any holder of any indebtedness of SSI, other than Bank One,
is required as a condition to the performance of this Agreement. This
Agreement, the Notes, the Security Documents and the Stock Purchase Rights, and
the instruments contemplated thereby, when duly executed and delivered in
accordance with this Agreement, will constitute legal, valid and binding
obligations of SSI in accordance with their respective terms. The execution,
delivery and performance of this Agreement does not (a) require any approval or
consent on the part of, or filing, registration or qualification with, any
governmental body, federal, state or local, except: (i) as contemplated by
Exhibit E relating to the Registration Rights Agreement, (ii) the filing of the
Security Documents as contemplated by Section 1.3, or (iii) any reports or
schedules required to be filed with the Securities and Exchange Commission
pursuant to the Securities Exchange Act of 1934 (the "Exchange Act") or (b)
contravene (i) the Articles of Incorporation or Bylaws of SSI, or (ii) any
applicable law or contractual restrictions binding on or affecting SSI, or (c)
result in or require the creation of any lien other than the Permitted Liens.
3.2 Qualification. SSI is duly qualified and in good standing as a
foreign corporation authorized to do business in each jurisdiction in which the
nature of its activities or the character of the properties it owns or leases
makes such qualification necessary and in which the failure so to qualify would
have a material adverse effect on SSI.
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3.3 Solvency. SSI after giving effect to the transactions
contemplated hereby will be solvent, is and will be able to pay its debts as
they become due and has and will have capital sufficient to carry on its
business, and will own property having a value greater than the amount required
to pay its debts and obligations.
3.4 Tax Returns and Payments. SSI has filed all tax returns
required by law to be filed by it and has paid all taxes shown to be due and
payable on such returns and all assessments and other governmental charges
levied upon SSI and any of its properties, assets, income or franchises which
are due and payable, except for those in an aggregate amount of not more than
$500,000 which shall be paid out of the proceeds of the Loans, and other than
those presently payable without penalty or interest and those the amount or the
validity of which are currently being contested in good faith by appropriate
proceedings.
3.5 Investment or Holding Company. Neither SSI nor any subsidiary
of SSI is an "investment company" or a company "controlled" by an "investment
company" within the meaning of the Investment Company Act of 1940, as amended.
Neither SSI nor any subsidiary is a "holding company" or a "subsidiary company"
of a "holding company," or an "affiliate" of a "holding company" as such terms
are used in the Public Utility Holding Company Act of 1935, as amended, and
neither SSI nor any subsidiary is subject to any obligations, duties or
liabilities thereunder.
3.6 Environmental Matters. SSI does not own or operate any real
property and has not done so within more than the previous ten years. SSI has
never received any notice that it is subject to any claim or investigation
with respect to contamination or hazardous materials.
3.7 Litigation, Etc. Except as set forth in Schedule 3.7, there
is no action, proceeding or investigation pending or, to the knowledge of SSI,
threatened (or any reasonable basis therefor known to SSI) which (a) questions
the validity of this Agreement, the Notes, the Security Documents or the Stock
Purchase Rights or any action taken or to be taken pursuant to this Agreement,
the Notes, the Security Documents or the Stock Purchase Rights or (b) could
reasonably be expected to result in any material adverse change in the
business, operations, affairs, prospects, condition (financial or other),
properties or assets of SSI.
3.8 Use of Proceeds. The proceeds of the Loans will be used by
SSI solely for the repayment of outstanding debt to Bank One, provide capital
for continued development of software products, fund the acquisition of
computer hardware and provide working capital for general operating purposes of
SSI. Without limiting the generality of the foregoing, the proceeds of the
Loans may not be utilized in connection with, including in settlement of, the
lawsuit against SSI and others pending in the United States District Court for
the District of Colorado brought by Marshall Wolf without the prior written
consent of Lindner.
3.9 Liens and Security Interests. Other than with respect to the
lien in favor of Bank One described in Section 1.2 (the "Permitted Lien"), the
security interests and
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liens to be granted to the Lenders hereunder will constitute at all times
valid, perfected and enforceable first-priority security interests and liens in
favor of the Lenders in all jurisdictions subject to no prior or superior lien,
security interest or other encumbrance. Before funding the Loans, SSI will have
taken, or will have participated with the Lenders, in taking all necessary
action (including making all necessary filings) to provide the Lenders with
first-priority perfected security interests and liens in the Collateral other
than that with respect to the Permitted Lien under the laws of all applicable
jurisdictions.
3.10 Financial Statement and Form 10-K. The financial statements
set forth in the Form 10-K of SSI for the year ended December 31, 1995 (the
"10-K") furnished to the Lenders fairly present the financial position of SSI
as of that date and the results of its operations and the changes in its
financial position for the year ended thereon in conformity with generally
accepted accounting principles consistently applied. To the best of SSI's
knowledge, except as set forth in the 10-K, SSI does not have any material
contingent obligations, liabilities for taxes, long-term leases or unusual
forward or long-term commitments not disclosed by, or reserved against, in the
financial statements set forth in the 10-K or set forth in this Agreement and
the Schedules hereto. Since December 31, 1995 there has been no material
adverse change in the financial position of SSI other than as a result of
losses incurred in the ordinary course of its business. The 10-K complies in
all material respects with all securities laws and regulations applicable
thereto except as set forth in Schedule 3.10.
3.11 Capitalization. The 10-K sets forth the authorized and the
issued and outstanding capital stock of SSI. All of the issued and outstanding
shares of the capital stock of SSI have been duly authorized, validly issued
and are fully paid and nonassessable. Except as set forth in the 10-K and
Schedule 3.11 hereto and except for the Stock Purchase Rights, there are no
outstanding subscriptions, oral or written contracts, commitments,
understandings, convertible or exchangeable securities, options, warrants,
calls or other rights by which SSI is or may be bound to issue, sell, exchange
or otherwise dispose of, or to purchase, redeem or otherwise acquire, shares
of, or securities convertible into or exchangeable for, the capital stock of
SSI.
3.12 Regulation U. SSI 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).
3.13 Renaissance Conversion. SSI and Renaissance have agreed that
upon the Closing Date Renaissance shall (a) exchange $250,000 of the SSI
Convertible Debentures held by it for 282,218 shares of SSI common stock and
(b) exchange the remaining $1,500,000 of the SSI Convertible Debentures held by
it for the Renaissance Note and the Renaissance Conversion Right.
3.14 Compliance with ERISA. To the beset of SSI's knowledge, it (i)
has not engaged in any transaction in connection with which it is liable for a
civil penalty under the Employee Retirement Income Security Act of 1974 or for
a tax under Section 4975 of the Internal Revenue Code of 1986 which would have
a material adverse effect on SSI, (ii) has no liability to the Pension Benefit
Guaranty Corporation (the "PBGC") and
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there is no event or condition with respect to any employee benefit plan of SSI
which presents a risk of termination of such plan by the PBGC under
circumstances which would result in any liability to SSI which would have a
material adverse effect on it, and (iii) is not in default of any amount
presently due from it to any employee benefit plan.
3.15 Disclosure. Neither this Agreement nor any other document,
certificate or instrument furnished or to be furnished to the Lenders by or on
behalf of SSI in connection with the transactions contemplated by this
Agreement knowingly contains any untrue statement of a material fact or omits
to state a material fact necessary in order to make the statements contained
herein or therein not misleading.
SECTION 4. - CLOSING, DELIVERY OF THE NOTES AND WARRANTS.
The Closing (the "Closing") shall take place on April 26, 1996, or on
such other business day thereafter as may be agreed upon by SSI and the Lenders
(the "Closing Date"). At the Closing, SSI will deliver to the Lenders the
Notes dated the Closing Date together with the Stock Purchase Rights and other
documents and instruments specified in Section 5 hereof and otherwise as
contemplated hereby, against the delivery by Lindner to SSI of immediately
available funds in the amount of the Lindner Loan and the delivery by
Renaissance to SSI of the SSI Convertible Debenture held by Renaissance as set
forth in Section 3.13. At the Closing, SSI and the Lenders will also enter
into the Registration Rights Agreement.
SECTION 5. - CONDITIONS TO BORROWINGS.
The Lenders' obligations to make the Loans on the Closing Date are
subject to the performance by SSI of all of its obligations under this
Agreement and to the fulfillment to the Lenders' satisfaction, prior to the
funding of the Loans, of the following conditions:
5.1 Representations and Warranties. The representations and
warranties of SSI contained in this Agreement, the Security Documents and all
certificates in connection herewith shall be true and correct in all material
respects on and as of the Closing Date.
5.2 Opinions of Counsel. The Lenders shall have received a
favorable opinion dated the Closing Date in substance and form to the
reasonable satisfaction of the Lenders from Cohen Brame & Smith Professional
Corporation, counsel for SSI, with respect to the matters set forth in Sections
3.1, 3.2, 3.7 and 3.9 of this Agreement.
5.3 No Actions Pending. There shall be no suit, action,
investigation, inquiry or other proceeding by any governmental authority or any
other person or any other legal or administrative proceeding pending or, to the
knowledge of SSI threatened, which questions the validity or legality of this
Agreement, the Notes, the Security Documents or the Stock Purchase Rights or
seeks damages in connection with any of the foregoing.
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5.4 Security Documents. The Lenders shall have received the
Security Documents and such evidence of filings, acknowledgments or acceptances
of any such documents as Lenders may reasonably request in order to establish
their first priority security interests and liens in the Collateral, other than
the Collateral which is to be subject to the Permitted Lien with respect to
which the Lenders shall obtain second priority security interests and liens as
soon as practicable after the Closing Date.
5.5 Renaissance Conversion. The exchange of SSI and Renaissance
set forth in Section 3.13(a) shall have been completed.
SECTION 6. - AFFIRMATIVE COVENANTS.
SSI covenants that from and after the date of this Agreement through
the Closing Date and thereafter so long as either of the Notes is outstanding.
6.1 Financial Statements. SSI shall deliver (in duplicate) to the
Lenders:
(a) As soon as available, but in any event not later than
105 days after the close of each fiscal year of SSI, the annual financial
statements of SSI in substantially the same form as those in the 10-K reported
on by regionally or nationally recognized independent certified public
accountants selected by SSI and prepared in accordance with generally accepted
accounting principles applied on a basis consistently maintained throughout the
period involved;
(b) Within sixty days after the close of each of the first
three quarters in each fiscal year of SSI, the financial statements of SSI in
substantially the same form as those in SSI's Form 10-Q filed or required to be
filed by it for such quarter with the Securities and Exchange Commission,
prepared in accordance with generally accepted accounting principles applied on
a basis consistent with the audited financial statements of SSI for the
immediately preceding fiscal year and consistently maintained throughout the
period involved and the immediately preceding period(s), subject to normal
year-end audit adjustments;
(c) Simultaneously with each delivery of the financial
statements described in Sections 6.1(a) and (b) a Compliance Certificate
executed by the chief financial officer of SSI stating (i) that a review of the
activities of SSI during the immediately preceding fiscal quarter has been made
with a view to determining whether SSI has kept, observed, performed and
fulfilled all of SSI's covenants and conditions under this Agreement and (ii)
that, to the best of his knowledge and belief, SSI has during such period kept,
observed, performed and fulfilled each and every covenant and condition
contained in this Agreement and the Security Documents and SSI is not at that
time in violation of any of the material terms and conditions contained herein
or therein, showing in reasonable detail the calculations supporting such
statements in respect of Sections 7.2 through 7.5 hereof, or, if SSI shall be
in violation of any such terms and conditions or shall have been or be in
default, specifying all such violations or defaults and the nature and status
thereof;
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(d) Within five days after the same are sent, copies of
all financial statements, reports, notices and proxy statements which SSI sends
to its stockholders; copies of all press releases and other statements
generally made available by SSI to the public concerning material developments
in the business of SSI; and copies of all regular, periodic and special reports
and registration statements (and all amendments and supplements thereto) filed
or required to be filed by SSI with the Securities and Exchange Commission or
with any securities exchange or market on which any of its securities are
listed or traded;
(e) So long as the Notes remain outstanding, SSI shall,
during any period in which SSI is not subject to or in compliance with, Section
13 or 15(d) of the Exchange Act, make available at SSI's expense promptly upon
the request of any holder of a Note, to such holder the information specified
in Rule 144A(d)(4) under the Securities Act of 1933, as amended (the
"Securities Act"); and
(f) Such other material financial information and such
other material information concerning the affairs of SSI as may from time to
time be made generally available to SSI's shareholders or other creditors.
6.2 Conduct of Business and Maintenance of Existence. SSI will
(a) continue to engage in the general businesses presently operated by SSI, (b)
maintain its corporate existence and good standing in each jurisdiction in
which it is required to be qualified, (c) keep and maintain all franchises,
licenses and properties useful and necessary in the conduct of its business in
good order and condition, and (d) duly observe and conform to all requirements
of law relative to the conduct of its business or the operation of its
properties or assets if such failure duly to observe and conform to such
requirements would have a material adverse effect on the business, operations,
property or financial condition of SSI.
6.3 Inspection of Property; Books and Records; Discussions. SSI
will (a) permit representatives of each Lender to visit and inspect any of its
properties and examine and make abstracts from any of its books and records at
any reasonable time and as often as may reasonably be desired, and (b) at
reasonable intervals and upon reasonable notice discuss with representatives of
each Lender the business, operations, affairs, prospects, properties and
financial and other condition of SSI. In addition to the foregoing each Lender
or its representatives shall have the right to audit, review and examine,
semi-annually, the books and records of SSI pertaining to the Collateral.
6.4 Notices. SSI will promptly give notice to the Lenders:
(a) of the occurrence of any Event of Default within five
days of the occurrence thereof unless such Event of Default has been cured or
waived;
(b) of any litigation or proceeding affecting SSI (i) in
which the amount claimed is $100,000 or more and not covered by insurance, or
(ii) in which injunctive or similar relief is sought which if obtained would
have a material adverse effect on the business, operations, affairs, prospects,
financial condition, properties, assets or liabilities of SSI;
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(c) of the voluntary or involuntary bankruptcy of, or any
assignment for the benefit of creditors or the seeking of any relief under any
bankruptcy or similar laws by, SSI; and
(d) of any acquisitions of any assets which require
further action by SSI or the Lenders to perfect a lien thereon or a security
interest therein in accordance with this Agreement.
6.5 Further Assurances. SSI, at any time and from time to time,
will execute and deliver such further instruments and take such further action
as may reasonably be requested by the Lenders in order to cure any defects in
the execution and delivery of, or to comply with or accomplish the covenants
and agreements contained in, this Agreement, the Notes or the Security
Documents.
6.6 Renaissance Conversion Right and Rule 144. In the event of a
transfer by Renaissance of SSI common stock acquired by exercise of the
Renaissance Conversion Right, the purchase of which common stock has been paid
for by reduction of the Renaissance Loan, SSI shall treat the holding period of
such common stock for purposes of Rule 144 under the Securities Act as
including the periods of time the SSI Convertible Debentures and the
Renaissance Note were held by Renaissance.
SECTION 7. - NEGATIVE COVENANTS.
SSI covenants that from and after the date of this Agreement and for as
long as any of the Notes is outstanding it will not, directly or indirectly,
without the prior written consent of Lindner:
7.1 Limitation on Liens. Create, incur, assume or permit or
suffer to exist any lien that is not junior to the liens created by this
Agreement and the Security Documents upon any of its property, assets, income
or profits, whether now owned or held or hereafter acquired except:
(a) Liens for taxes not yet due or which are being
contested in good faith and by appropriate proceedings;
(b) Carriers', warehousemen's, mechanics', landlords',
materialmen's, repairmen's, vendors' or other like liens arising in the
ordinary course of business and which are not overdue for a period of more than
thirty days or, if so overdue, which are being contested in good faith and by
appropriate proceedings;
(c) Pledges or deposits to secure the payment of workers
compensation, unemployment insurance and other social security benefits;
(d) Deposits to secure the performance of bids, contracts
(other than for borrowed money), leases, statutory obligations, surety and
appeal bonds, performance bonds and other obligations of a like nature, in each
case incurred in the ordinary course of SSI's business; and
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(e) The Permitted Lien.
7.2 Current Ratio. Permit, or suffer to exist, the ratio of
current assets of SSI to current liabilities of SSI to be less than 1.0 to 1.0
as of the end of any fiscal quarter. For such purpose, current assets and
current liabilities shall be determined in accordance with generally accepted
accounting principles.
7.3 Tangible Net Worth. Permit, or suffer to exist, the tangible
net worth of SSI, to be less than ($3,000,000) as of the end of any fiscal
quarter. For such purposes, tangible net worth shall mean stockholders equity
(including preferred stock) less capitalized software, all as determined in
accordance with generally accepted accounting principles.
7.4 Ratio of Debt to Net Worth. Permit, or suffer to exist, the
ratio of its liabilities to stockholders' equity (including preferred stock) to
be greater than 3.0 to 1.0 as of the end of any fiscal quarter. For such
purposes, liabilities and stockholders equity (including preferred stock) shall
be determined in accordance with generally accepted accounting principles.
7.5 Cash Flow. Permit, or suffer to exist, its cash flow to be
negative for any fiscal year. For such purpose, cash flow shall mean net
income after taxes, exclusive of extraordinary gains and income, plus
depreciation and amortization and less amounts of research and development
costs which are capitalized, all as determined in accordance with generally
accepted accounting principles.
7.6 Restricted Payments. So long as any Notes are outstanding,
declare or pay any dividends (other than stock dividends) on any of the common
or preferred stock or any other equity security of SSI; make any other
distribution on any of the common or preferred stock or any other equity
security of SSI or set aside any funds or other assets for any such purpose; or
purchase, redeem, decrease or otherwise acquire any shares of the common or
preferred stock or any other equity security of SSI.
7.7 Other Indebtedness. SSI shall not incur any other
indebtedness for borrowed money other than (i) the indebtedness set forth on
Schedule 7.7 hereto and replacements thereof, and (ii) additional indebtedness
in an amount not to exceed $1,000,000 incurred on or before October 31, 1996 on
terms and conditions no more favorable to the lender thereof than the terms and
conditions of the Loans.
SECTION 8. - EVENTS OF DEFAULT.
The following conditions or events shall constitute an Event of
Default:
(a) if SSI shall default in the payment of any principal
of or on any of the Notes when the same become due and payable, whether at
maturity or at a date declared due or otherwise; or
10
<PAGE> 11
(b) if SSI shall default in the payment of any interest on
the Notes when due or declared due and such default shall continue for ten days
after SSI's receipt of written notice thereof from either of the Lenders; or
(c) if SSI shall default in the performance of or
compliance with any of the covenants, terms or agreements contained in this
Agreement, any of the Security Documents or other instruments or documents now
or hereafter executed in connection herewith or therewith and such default
shall continue for thirty days after SSI's receipt of written notice of such
default from either of the Lenders; or
(d) if any representation or warranty made in writing by
or on behalf of SSI in this Agreement or in any instrument furnished in
compliance with or in reference to this Agreement or otherwise in connection
with the transactions contemplated by this Agreement shall prove to be false or
incorrect in any material respect on the date as of which made; or
(e) if SSI shall default in any payment of principal or
interest on its indebtedness to Bank One or on any other indebtedness replacing
its indebtedness to Bank One and such default shall have caused the
acceleration of the payment of such indebtedness, and such default, event or
condition shall continue for more than the period of grace, if any, specified
therein and shall not have been waived or cured pursuant thereto; or
(f) if SSI shall (i) file, or consent by answer or
otherwise to the filing against it of, a petition for relief or reorganization
or arrangement or any other petition in bankruptcy, for liquidation or to take
advantage of any bankruptcy or insolvency law of any jurisdiction, (ii) make an
assignment for the benefit of its creditors, (iii) consent to the appointment
of a custodian, receiver, trustee or other officer with similar powers with
respect to it or with respect to any substantial part of its property, (iv) be
adjudicated insolvent or be liquidated, or (v) take corporate action for the
purpose of any of the foregoing; or
(g) if a court of competent jurisdiction shall enter an
order appointing, without the consent of SSI, a custodian, receiver, trustee or
other officer with similar powers with respect to it or with respect to any
substantial part of its property, or if an order for relief shall be entered in
any case or proceeding for liquidation or reorganization or otherwise to take
advantage of any bankruptcy or insolvency law of any jurisdiction, or ordering
the dissolution, winding up or liquidation of SSI, or if any petition for any
such relief shall be filed against SSI and such petition shall not be dismissed
within sixty days; or
(h) if a final judgment shall be rendered against SSI
which, with other outstanding final judgments against SSI, to the extent not
covered by insurance, exceeds in the aggregate $100,000 and if, within thirty
days after entry thereof, such judgment shall not have been discharged or
execution thereof stayed pending appeal, or if, within thirty days after the
expiration of any such stay, such judgment shall not have been discharged; or
11
<PAGE> 12
(i) an event of default shall occur under any of the
Security Documents.
SECTION 10. - REMEDIES ON DEFAULT, ETC.
(a) Optional Acceleration. Upon the occurrence of any
Event of Default, the holder of a Note, at its option, without notice to SSI,
may declare the principal of and interest accrued on the Note to be forthwith
due and payable, whereupon the same shall become due and payable without any
presentment, demand, protest, notice of protest, notice of intent to
accelerate, notice of acceleration or notice of any kind (except notice
required pursuant to this Agreement or otherwise by law), all of which are
hereby waived; provided, however, that the holder shall give telegraphic or
written notice to SSI promptly after taking any such action.
(b) Additional Remedies. In case any one or more Events
of Default shall occur and be continuing, the holder of a Note may proceed to
protect and enforce the rights of such holder by an action at law, suit in
equity or other appropriate proceeding, whether for the specific performance of
any agreement contained herein or in the Notes and the Security Documents, or
for an injunction against a violation of any of the terms hereof or thereof, or
otherwise. No course of dealing and no delay on the part of any holder of the
Notes in exercising any right, power or remedy shall operate as a waiver
thereof or otherwise prejudice such holder's rights, powers or remedies. No
right, power or remedy conferred by this Agreement or by the Notes and the
Security Documents upon any holder thereof shall be exclusive of any other
right, power or remedy referred to herein or therein or now or hereafter
available at law, in equity, by statute or otherwise.
SECTION 11. - EXPENSES.
SSI will pay, if an Event of Default occurs, all costs of collection,
including, without limitation, reasonable fees, expenses and disbursements of
counsel employed in connection with any and all collection efforts as a result
thereof.
SECTION 12. - REPRESENTATIONS AND WARRANTIES OF LENDERS.
Each of the Lenders represents and warrants to SSI as follows:
12.1 Experience. The Lender is experienced in evaluating and
investing in companies such as SSI. The Lender has a pre-existing substantial
investment in SSI. By reason of such relationship and of the Lender's business
and financial experience and the business and financial experience of the
Lender's professional advisors, the Lender can be reasonably assumed to have
the capacity to protect its own interests in connection with its acquisition of
the Note and Stock Purchase Right. The Lender has had an opportunity to
discuss SSI's business and financial affairs with its management.
12.2 Investment. The Lender is acquiring the Stock Purchase Right
for investment for its own account and not with the view to, or for resale in
connection with, any distribution thereof with meaning of the Securities Act of
1933, as amended
12
<PAGE> 13
(the "Act"). The Lender understands that the Stock Purchase Right and the
shares of SSI to be acquired by exercise of the Stock Purchase Right have not
been registered under the Act or any state securities law by reason of
specified exemptions from the registration provisions of the Act and such state
securities laws which depend upon, among other things, the bona fide nature of
its investment intent as expressed herein. The Lender acknowledges that the
Stock Purchase Right and the Shares of SSI acquired by exercise of the Stock
Purchase Right must be held indefinitely unless they are subsequently
registered under the Act or qualified under applicable state securities laws or
an exemption from such registration or qualification is available.
12.3 Rule 144A. Lindner represents and warrants that it is a
qualified institutional buyer pursuant to Rule 144A under the Act.
SECTION 13. - NOTICES, ETC.
Except as otherwise provided in this Agreement, notices and other
communications under this Agreement shall be in writing and shall be delivered,
or mailed by registered or certified mail, return receipt requested, postage
prepaid, addressed, (a) if to a Lender, at the address set forth next to
Lender's signature or at such other address as the Lender shall have furnished
to SSI in writing, or (b) if to any other holder of a Note, at such address as
such other holder shall have furnished to SSI in writing, or until any such
other holder so furnishes to SSI an address, then to and at the address of the
last holder of the Note who has furnished an address to SSI or (c) if to SSI,
at the address of SSI, as set forth on the signature page hereto, to the
attention of its President, or at such other address, or to the attention of
such other officer, as SSI shall have furnished to the Lenders and each such
other holder in writing. All notices and other communications given to any
party hereto in accordance with the provisions of this Agreement shall be
deemed to have been given upon delivery, when delivered by hand, and three days
after being deposited in the U.S. mail, when delivered by mail.
SECTION 14. - MISCELLANEOUS.
(a) Successors. This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the respective successors and
assigns of the parties hereto, whether so expressed or not, and, in particular,
shall inure to the benefit of and be enforceable by any holder or holders of
the Notes.
(b) Entire Agreement. This Agreement and the Exhibits
hereto embody the entire agreement and understanding between the Lenders and
SSI and supersede all prior agreements and understandings relating to the
subject matter hereof.
(c) Governing Law. This Agreement, the Notes, the
Security Documents and the Stock Purchase Rights shall be construed and
enforced in accordance with and governed by the laws of the State of Colorado.
In case any one or more of the provisions contained in this Agreement or in any
of the Notes, the Security Documents or the Stock Purchase Rights or any other
documents executed in connection therewith or herewith should be invalid,
illegal or unenforceable in any respect, the
13
<PAGE> 14
validity, legality and enforceability of the remaining provisions contained
herein and therein shall not be affected in any way thereby.
(d) No Waiver; Cumulative Remedies. No failure to
exercise and no delay in exercising on the part of the Lenders any right, power
or privilege hereunder shall operate as a waiver thereof; nor shall any single
or partial exercise of any right, power or privilege hereunder preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein provided are cumulative and not
exclusive of any rights or remedies provided by law or in any other agreement.
(e) Counterparts. This Agreement may be executed by
facsimile signature in any number of counterparts and all of such counterparts
taken together shall be deemed to constitute one and the same instrument.
(f) Controlling Document. In the event of actual conflict
in the terms and provisions of this Agreement, the Notes, the Security
Documents and the Stock Purchase Rights, the terms and provisions of this
Agreement shall control.
IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute and deliver this Agreement as of the date first
above written.
LINDNER DIVIDEND FUND, RENAISSANCE CAPITAL
A SERIES OF LINDNER INVESTMENTS PARTNERS II, LTD.
By: Renaissance Capital Group, Inc.,
Managing General Partner
By: /S/ By: /S/
--------------------------------- ------------------------------------
Name: Larry Callahan Name: Elroy G. Roelke
------------------------------- ----------------------------------
Title: Vice President Title: Senior Vice President
------------------------------ ---------------------------------
Address: 7711 Carondelet, Suite 700 Address: 8080 N. Central Expressway
St. Louis, MO 63105 Suite 210/LB59
Dallas, TX 75206
SCIENTIFIC SOFTWARE-INTERCOMP,
INC.
By: /S/
---------------------------------
Name: George Steel
-------------------------------
Title: President
------------------------------
Address: 1801 California St., #295
Denver, CO 80202
14
<PAGE> 15
SCHEDULE 3.7
Marshall Wolf, on his behalf and on behalf of all others
similarly situated vs. E.A. Breitenbach, R.J. Hottovy, Jimmy L. Duckworth, and
Scientific Software-Intercomp, Inc. On October 6, 1995 a complaint was filed
in the United States District Court for the District of Colorado alleging that
the Defendants, who include the President and Chief Executive Officer of SSI,
its Chief Financial Officer and a former Executive Vice President, violated
Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated
thereunder in issuing financial reports for the first three quarters of SSI's
1994 fiscal year which failed to comply with generally accepted accounting
principles with respect to revenues recognized from SSI's contracts with value
added resellers. The Plaintiff seeks to have the Court determine that the
lawsuit constitutes a proper class action on behalf of all persons who
purchased stock of SSI during the period from May 20, 1994 through July 10,
1995, with certain exclusions. SSI's independent auditors, Ehrhardt Keefe
Steiner & Hottman PC, have issued a report to SSI that the revenues from such
contracts were recognized in accordance with generally accepted accounting
principles with the exception of a $70,000 overstatement of revenue in the
first quarter of 1994 which exception they have concluded was immaterial
assuming that the remaining elements of such quarterly report were in
accordance with generally accepted accounting principles. Based thereon, SSI
believes that the claim is without merit and it is the intention of SSI and the
other Defendants to vigorously defend the claim.
Securities and Exchange Commission Investigation. In October
1995 the Securities and Exchange Commission ("SEC") issued an Order Directing
Private Investigation concerning SSI. While the Order is not specific as to
the focus of the investigation, it is believed that the investigation may
relate to SSI's public disclosures and the underlying financial accounting
records and policies, as well as internal accounting controls. SSI is
cooperating fully with the SEC.
Hein + Associates LLP Accounting Fees. The accounting firm of
Hein + Associates LLP ("Hein"), which resigned as the independent auditors of
SSI effective June 30, 1995, has asserted that SSI is liable to Hein in the
amount of approximately $90,000 for work performed in connection with the audit
of SSI's financial statements for the year ended December 31, 1994, which audit
Hein did not complete prior to its resignation. SSI has denied any such
liability because the payments it has made to Hein for its 1994 audit work
substantially exceeded Hein's quoted fee and because Hein did not complete the
audit and did not comply with professional auditing standards in connection
with its resignation. In the event that Hein commences a suit to collect the
amount allegedly owed to them, SSI intends to vigorously defend the claim and
to assert counterclaims.
Arbitration Number 70T 181 0038 96 D; Kinesix, a division of
Scientific Software-Intercomp, Inc. - and- Kinesix (Europe) Ltd., an English
Company - Houston, Texas. SSI, through Kinesix, a division of SSI, entered
into a Territory Distributor Agreement with Kinesix (Europe) Ltd. ("KEL"). The
Distributor Agreement required under most circumstances a decision from the
American Arbitration Association ("AAA")
<PAGE> 16
before its termination could be effective. On March 4, 1996, SSI commenced
arbitration seeking declaration of termination of the Distributor Agreement and
money due SSI in excess of $200,000. Thereafter, KEL in writing advised its
customer base that it had ceased to trade in Kinesix products. As a result of
this action by KEL and pursuant to the Distributor Agreement, SSI has declared
the Distributor Agreement terminated without the requirement of arbitration.
In the interim, on April 1, 1996, KEL filed an answer and counterclaim with the
AAA. The counterclaim asserts claims for breach of contract, violation of the
Business Opportunity Act of Texas, Article 5069-1601 et seq., deceptive trade
practices under the Texas Consumer Protection Act, fraud and negligent
misrepresentation. KEL asserts its damages exceed $1 million without
substantiation. The Territory Distributor Agreement was amended several times
and it appears in connection with the third amendment KEL waived some of the
claims it now asserts. In the opinion of management, KEL is asserting these
claims in an attempt to avoid its obligations to SSI and any damages KEL may
have suffered are more than offset by the money due SSI from KEL.
Philip H. Halstead v. Scientific Software-Intercomp, Inc., a
Colorado corporation; E.A. Breitenbach, Dennis J. Graue, and Ronald J.
Hottovy, Denver District Court, Colorado, Case No. 95 CV 5558.
Mr. Halstead, a former Vice President for SSI's E&P Consulting
Division, has asserted a claim pursuant to the Colorado Wage Statute, C.R.S.
Section 8-4-101, et seq. seeking claims to additional bonuses in excess of
$100,000, penalties and attorneys' fees. SSI has met with Mr. Halstead and
paid all bonuses it believes are due Mr. Halstead. Although it appears Mr.
Halstead's claims have been resolved, Mr. Halstead's absence from the
continental United States has delayed completing resolution of this matter.
2
<PAGE> 17
SCHEDULE 3.10
The Form 10-K of Scientific Software-Intercomp, Inc. for 1995 contains
the attached explanation with regard to its financial statements for 1993
included therein.
<PAGE> 18
REPORT OF HEIN + ASSOCIATES LLP
This report is a copy of a previously issued Hein + Associates LLP audit
report. Hein + Associates LLP resigned as Company auditors on June 30, 1995,
has not withdrawn its opinion for 1993, but has declined to reissue this
report. The 1993 financial statements included in this report are the same as
the audited financial statements previously filed in the Form 10-K for that
year. In the opinion of management, no events have occurred that would require
any change to the financial statements covered by the report.
Hein + Associates LLP declined to reissue its report initially unless it was
paid disputed audit fees for 1994 and subsequently reiterated its decline
without explanation.
The Board of Directors and Stockholders
Scientific Software-Intercomp, Inc.
Denver, Colorado
We have audited the accompanying consolidated balance sheet of Scientific
Software-Intercomp, Inc. and subsidiaries as of December 31, 1993, and the
related consolidated statements of operations, stockholders' equity and cash
flows for the year then ended. Our audit also included the financial statement
schedules as of and for the year ended December 31, 1993 listed in the Index at
Item 8. These financial statements and schedules are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements and schedules based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Scientific
Software-Intercomp, Inc. and subsidiaries as of December 31, 1993, and the
results of their operations and their cash flows for the year then ended, in
conformity with generally accepted accounting principles. Also, in our
opinion, the related financial statement schedules, when considered in relation
to the basic financial statements taken as a whole, present fairly in all
material respects the information set forth therein.
HEIN + ASSOCIATES
Certified Public Accountants
Denver, Colorado
March 21, 1994
31
<PAGE> 19
SCHEDULE 3.11
SSI stock options granted subsequent to December 31, 1995:
AS OF
25-Mar-96
CURRENT ST PRICE 2.75
Type
1=ISO
2=N
<TABLE>
<CAPTION>
- ------------------------------------------------------------------
25-Mar-96 Summary
- ------------------------------------------------------------------
Date of # of Exercise
Name Grant Shares Price/Sh.
- ------------------------------------------------------------------
<S> <C> <C> <C>
2 Baksi 04-Jan-96 1,250 $2.6875
2 Baksi 04-Jan-96 1,250 $2.6875
2 Bayless 04-Jan-96 1,000 $2.6875
2 Bidaux 04-Jan-96 1,250 $2.6875
2 Bidaux 04-Jan-96 1,250 $2.6875
2 Bidaux 04-Jan-96 1,250 $2.6875
2 Bidaux 04-Jan-96 1,250 $2.6875
2 DeLage 04-Jan-96 1,250 $2.6875
2 DeLage 04-Jan-96 1,250 $2.6875
2 Mossbarger 04-Jan-96 1,000 $2.6875
2 Sivinski 04-Jan-96 1,250 $2.6875
2 Sivinski 04-Jan-96 1,250 $2.6875
2 Sivinski 04-Jan-96 1,250 $2.6875
2 Sivinski 04-Jan-96 1,250 $2.6875
2 Steel 15-Jan-96 25,000 $2.875
2 Steel 15-Jan-96 25,000 $2.875
2 Steel 15-Jan-96 25,000 $2.875
2 Steel 15-Jan-96 25,000 $2.875
</TABLE>
<PAGE> 20
SCHEDULE 7.7
Indebtedness of:
(i) Scientific Software-Intercomp, Inc. ("SSI") to Bank
One, Boulder, N.A. in the principal amount of
$1,500,000.
(ii) Scientific Software-Intercomp (U.K.) Limited, a
wholly-owned subsidiary of SSI, to Lloyds Bank in the
amount of $300,000.
(iii) Intercomp Resource Development & Engineering (Canada)
Limited, a wholly-owned subsidiary of SSI, to Bank of
Hong Kong in the amount of $150,000.
<PAGE> 21
EXHIBIT A
PROMISSORY NOTE
$5,000,000 Denver, Colorado
April ___, 1996
FOR VALUE RECEIVED, the undersigned (Borrower) promises to pay
LINDNER DIVIDEND FUND, A SERIES OF LINDNER INVESTMENTS, or order (Note Holder),
the principal sum of Five Million Dollars ($5,000,000), with interest on the
unpaid principal balance from the date hereof until paid at the rate of seven
percent per annum. Principal and interest shall be payable at 7711 Carondelet,
Suite 700, St. Louis, Missouri 63105, or such other place as the Note Holder
may designate, in semi-annual payments of interest only due on the last days of
October and April of each year, beginning October 31, 1996. Such payments
shall continue until the entire indebtedness evidenced by this Note is fully
paid; provided, however, if not sooner paid, the entire principal amount
outstanding and accrued interest thereon, shall be due and payable on April 30,
2001.
Payments received for application to this Note shall be
applied first to the payment of accrued interest at the increased rate
specified below, if any; second, to accrued interest first specified above; and
the balance applied in reduction of the principal amount hereof.
<PAGE> 22
If any payment required by this Note is not paid when due or
upon the occurrence of any Event of Default as defined in that Loan Agreement
of even date among Borrower, Note Holder and Renaissance Capital Partners II,
Ltd., the entire principal amount outstanding and accrued interest thereon
shall become due and payable at the option of the Note Holder (Acceleration).
To exercise this option, the Note Holder shall give Borrower notice of
Acceleration specifying the amount of the nonpayment or Event of Default. To
reinstate the terms of this Note as they were immediately before the notice of
Acceleration, the Borrower (i) shall pay the amount of any nonpayment specified
in the notice on or within ten days after such notice, and (ii) shall cure any
Event of Default specified in the notice on or within the period provided
therefor in the Loan Agreement. Unless so reinstated the indebtedness shall
bear interest at the increased rate of 12 percent per annum from the date
notice of Acceleration is given. The Note Holder shall be entitled to collect
all reasonable costs and expenses of collection and/or suit, including, but not
limited to reasonable attorneys' fees.
Borrower may prepay the principal amount outstanding under
this Note, in whole or in part, in a minimum amount of not less than $250,000,
at any time and from time to time without penalty, provided such prepayments
are made pari passu with prepayments of Borrower's certain promissory note of
even date in the original principal amount of $1,500,000 payable to Renaissance
Capital Partners II, Ltd. and provided such prepayments may be made only at
such time or times as the closing bid or sale price of the common stock of
Borrower for each of the last thirty trading days prior
2
<PAGE> 23
thereto has been at least two hundred percent of the Exercise Price of, and as
defined in, the Warrant issued in connection with and deemed to be attached to
this Note.
Presentment, notice of dishonor, and protest are hereby waived
by Borrower.
Any notice to Borrower provided for in this Note shall be in
writing and shall be given and be effective upon (1) delivery to Borrower or
(2) three days after mailing such notice by certified mail, return receipt
requested, addressed to Borrower at the Borrower's address stated below, or to
such other address as Borrower may designate by notice to the Note Holder.
The indebtedness evidenced by this Note is secured by a
Security Agreement of even date, and until released such Security Agreement
contains additional rights of the Note Holder. Such rights may cause
Acceleration of the indebtedness evidenced by this Note. Reference is made to
the Security Agreement for such additional terms.
SCIENTIFIC SOFTWARE-INTERCOMP, INC.
By:
-----------------------------------
President
Borrower's address: 1801 California Street, #295
Denver, Colorado 80202
3
<PAGE> 24
EXHIBIT C
This Warrant and the shares of stock purchasable upon the exercise thereof have
not been registered under the Securities Act of 1933, as amended (the "Act"),
or applicable state securities laws ("State Acts"). Except as provided herein,
neither this Warrant nor any of the shares of Common Stock purchasable upon the
exercise hereof may be sold, assigned, transferred, distributed or offered for
transfer or sale in the absence of an effective registration statement covering
such securities under the Act and applicable State Acts or an opinion of
counsel satisfactory to Scientific Software-Intercomp, Inc. that such
registration is not required by the Act or such State Acts.
Void after 5:00 P.M., Denver Time, on April 30, 2001; or upon the acquisition,
merger or consolidation of the Company by or with another company in which the
Company is not the survivor (including a reverse-triangular merger in which the
Company becomes a wholly-owned subsidiary), whichever shall occur first.
Warrant to Purchase
1,500,000 Shares of
Common Stock, No
Par Value
WARRANT TO PURCHASE COMMON STOCK
OF
SCIENTIFIC SOFTWARE-INTERCOMP, INC.
This Is To Certify That, FOR VALUE RECEIVED, LINDNER DIVIDEND
FUND, A SERIES OF LINDNER INVESTMENTS, a Massachusetts business trust, or
registered assigns ("Holder"), is entitled to purchase, subject to the
provisions of this Warrant, from SCIENTIFIC SOFTWARE-INTERCOMP, INC., a
Colorado corporation ("Company"), 1,500,000 shares of common stock, no par
value per share, of the Company ("Common Stock") at a purchase price per share
of $3.00. The number of shares of Common Stock to be received upon the exercise
of this Warrant and the price to be paid for a share of Common Stock may be
adjusted from time to time as hereinafter set forth. The shares of Common
Stock deliverable upon such exercise, and as adjusted from time to time, are
hereinafter sometimes referred to as "Warrant Stock" and the exercise price of
a share of Common Stock in effect at any time and as adjusted from time to time
is hereinafter sometimes referred to as the "Exercise Price."
(a) Exercise of Warrant. This Warrant may be exercised in
whole or in part at any time on or after the date hereof, but no later than the
earlier of (1) 5:00 P.M., Denver Time, on April 30, 2001 or if that is a day on
which banking
1
<PAGE> 25
institutions are authorized by law to close, then on the next succeeding day
which shall not be such a day; or (2) the acquisition, merger or consolidation
of the Company by or with another corporation in which the Company is not the
survivor (including a reverse-triangular merger in which the Company becomes a
wholly-owned subsidiary). The Warrant shall be exercised by presentation and
surrender hereof to the Company or at the office of its stock transfer agent,
if any, with the Purchase Form annexed hereto duly executed and accompanied by
full cash payment of the Exercise Price for the shares purchased, together with
any federal and state taxes applicable upon such exercise except that if at the
time of exercise the Company is indebted to the Holder, the Exercise Price
shall be paid by a reduction of such indebtedness equal to the amount of such
payment. If this Warrant should be exercised in part only, the Company shall,
upon surrender of this Warrant for cancellation, execute and deliver a new
Warrant evidencing the right of the Holder to purchase the balance of the
shares purchasable hereunder. Upon receipt by the Company of this Warrant at
the office or agency of the Company, in proper form for exercise, the Holder
shall be deemed to be the holder of record of the shares of Common Stock
issuable upon such exercise, notwithstanding that the stock transfer books of
the Company shall then be closed or that certificates representing such shares
of Common Stock shall not then be actually delivered to the Holder.
(b) Reservation of Shares. The Company hereby agrees that
at all times there shall be reserved for issuance and delivery upon exercise of
this Warrant such number of shares of its Common Stock as shall be required for
issuance or delivery upon exercise of this Warrant and that the par value of
such shares will at all times be less than the applicable Exercise Price.
(c) Fractional Shares. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant. With respect to any fraction of a share called for upon any exercise
hereof, the Company shall pay to the Holder an amount in cash equal to such
fraction multiplied by the current market value of such fractional share,
determined as follows:
(1) If the Common Stock is listed on a national
securities exchange or admitted to unlisted trading privileges
on such exchange, the current value shall be the last reported
sale price of the Common Stock on such exchange on the last
business day prior to the date of exercise of this Warrant or,
if no such sale is made on such day, the average closing bid
and asked prices for such day on such exchange; or
(2) If the Common Stock is not so listed or
admitted to unlisted trading privileges, the current value
shall be the mean of the last reported bid and asked prices
reported by the National Quotation Bureau, Inc. on the last
business day prior to the date of the exercise of this
Warrant; or
(3) If the Common Stock is not so listed or
admitted to unlisted trading privileges and bid and asked
prices are not so reported, the current value shall be an
amount determined in such reasonable manner as
2
<PAGE> 26
may be prescribed by the Board of Directors of the Company,
such determination to be final and binding on the Holder.
(d) Assignment or Loss of Warrant. This Warrant shall be
assignable. Any assignment of this Warrant shall be made by surrender of this
Warrant to the Company or at the office of its stock transfer agent, if any,
with the Assignment Form annexed hereto duly executed and funds sufficient to
pay any transfer tax. Upon any assignment of this Warrant as aforesaid, the
Company shall, without charge, execute and deliver a new Warrant of like tenor
registered in the name of the assignee named in such Assignment Form entitling
the assignee to purchase the number of shares of Common Stock purchasable
hereunder (or under the portion hereof so assigned) and, in the event this
Warrant shall be assigned in part, shall execute and deliver to the Holder
hereof a new Warrant registered in the name of the Holder entitling it to
purchase the balance of the number of shares of Common Stock purchasable
hereunder, and this Warrant shall promptly be cancelled. This Warrant may be
combined with other Warrants which carry the same rights upon presentation
hereof at the office of the Company or at the office of its stock transfer
agent, if any, together with a written notice specifying the name and
denominations in which new Warrants are to be issued and signed by the Holder
hereof. Upon receipt by the Company of evidence satisfactory to it of the
loss, theft, or destruction or mutilation of this Warrant, and (in case of
loss, theft or destruction) of satisfactory indemnification, and upon surrender
and cancellation of this Warrant, if mutilated, the Company will execute and
deliver a new Warrant of like tenor and date. Any such new Warrant executed
and delivered shall constitute an additional contractual obligation on the part
of the Company, whether or not this Warrant so lost, stolen, destroyed, or
mutilated shall be at any time enforceable by anyone. Notwithstanding anything
to the contrary contained in the foregoing, this Warrant may not be transferred
independent of and separate from a transfer of the Promissory Note of the
Company of even date herewith in the original principal amount of $5,000,000
payable to the initial Holder with respect to which Promissory Note this
Warrant shall be deemed to be attached.
(e) Rights of the Holder. The Holder shall not, by virtue
hereof, be entitled to any rights of a stockholder in the Company, either at
law or equity, and the rights of the Holder are limited to those expressly in
the Warrant and are not enforceable against the Company, except to the extent
set forth herein. Notwithstanding the foregoing, the Holder shall be entitled
to receive all notices sent to stockholders in the Company and all financial
information sent to stockholders or debentureholders of the Company.
(f) Anti-Dilution Provisions.
(1) Adjustment of Number of Shares. In the event
the Company shall at any time issue Common Stock or
convertible securities by way of dividend or other
distribution on any stock of the Company or subdivide or
combine the outstanding shares of Common Stock, the Exercise
Price shall be proportionately decreased in the case of such
issuance (on the day following the date fixed for determining
stockholders
3
<PAGE> 27
entitled to receive such dividend or other distribution) or
decreased in the case of such subdivision or increased in the
case of such combination (on the date that such subdivision or
combination shall become effective).
(2) No Adjustment for Small Amounts. Anything in
this Section (f) to the contrary notwithstanding, the Company
shall not be required to give effect to any adjustment in the
Exercise Price unless and until the net effect of one or more
adjustments, determined as above provided, shall have required
a change of the Exercise Price by at least one cent, but when
the cumulative net effect of more than one adjustment so
determined shall be to change the actual Exercise Price by at
least one cent, such change in the Exercise Price shall
thereupon be given effect.
(3) Number of Shares Adjusted. Upon any
adjustment of the Exercise Price, the holder of this Warrant
shall thereafter (until another such adjustment) be entitled
to purchase, at the new Exercise Price, the number of shares,
calculated to the nearest full share, obtained by multiplying
the number of shares of Common Stock issuable upon exercise of
this Warrant immediately prior to such adjustment by the
Exercise Price in effect immediately prior to such adjustment
and dividing the product so obtained by the new Exercise
Price.
(4) Common Stock Defined. Whenever reference is
made in this Section (f) to the shares of Common Stock, the
term "Common Stock" shall mean the Common Stock of the Company
of the class authorized as of the date hereof and any other
class of stock ranking on a parity with such Common Stock.
However, subject to the provisions of Section (l) hereof,
shares issuable upon exercise hereof shall include only shares
of the class designated as Common Stock of the Company as of
the date hereof.
(g) Sale Below Exercise Price. If and whenever the
Company shall issue or sell any shares of its Common Stock (as defined in
Section (f)(4) above) for a consideration per share less than the Exercise
Price at such time, then, forthwith upon such issue or sale, the Exercise Price
shall be reduced to the price (calculated to the nearest cent) determined by
dividing (1) an amount equal to the sum of (aa) the number of shares of Common
Stock outstanding immediately prior to such issue or sale multiplied by the
then existing Exercise Price, and (bb) the consideration, if any, received by
the Company upon such issue or sale, by (2) an amount equal to the sum of (aa)
the number of shares of Common Stock outstanding immediately prior to such
issue or sale and (bb) the number of shares of Common Stock thus issued or
sold. Notwithstanding anything to the contrary contained above in this
Section, this Section shall not apply to (i) the grant or exercise of options
to acquire Common Stock by employees of the Company or any subsidiary thereof
and, the transfer of Common Stock to any retirement plan for the employees of
the Company or any subsidiary thereof or any other transfer of Common Stock to
employees and consultants of the Company or any subsidiary thereof which is
compensatory in nature, and (ii) any single
4
<PAGE> 28
issuance of Common Stock of less than 10,000 shares until the aggregate of such
small single issuances exceeds five percent of the Common Stock then
outstanding.
(h) Certain Issuances. For the purpose of Section (g),
the following shall also be applicable:
(i) In case at any time the Company shall grant
any rights to subscribe for or to purchase, or any options for
the purchase of, Common Stock or any stock or securities
convertible into or exchangeable for Common Stock (such
convertible or exchangeable stock or securities being herein
called "Convertible Securities"), whether or not such rights
or options or the right to convert or exchange any such
Convertible Securities are immediately exercisable, and the
price per share at which Common Stock is issuable upon the
exercise of such rights or options or upon conversion or
exchange of such Convertible Securities (determined by
dividing (aa) the total amount, if any, received or receivable
by the Company as consideration for granting of such rights or
options, plus the minimum aggregate amount of additional
consideration payable to the Company upon the exercise of such
right or options, plus, in the case of such rights or options
which relate to Convertible Securities, the minimum aggregate
amount of additional consideration, if any, payable upon the
issue or sale of such Convertible Securities and upon the
conversion or exchange thereof, by (bb) the total maximum
number of shares of Common Stock issuable upon the exercise of
such rights or options or upon the conversion or exchange of
all such Convertible Securities issuable upon the exercise of
such rights or options) shall be less than the Exercise Price
in effect immediately prior to the time of the granting of
such rights or options (or less than the market price
determined as of the date of granting such rights or options,
as the case may be), then the total maximum number of shares
of Common Stock issuable upon the exercise of rights or
options or upon conversion or exchange of the total maximum
amount of such Convertible Securities issuable upon the
exercise of such rights or options shall (as of the date of
granting of such rights or options) be deemed to have been
issued for such price per share. No further adjustments of
the Exercise Price shall be made upon the actual issue of such
Common Stock or of such Convertible Securities upon exercise
of such rights or options or upon the actual issue of such
Common Stock upon conversion or exchange of such Convertible
Securities.
(ii) In case any shares of Common Stock or
Convertible Securities or any rights or options to purchase
any such Common Stock or Convertible Securities shall be
issued or sold for cash, the consideration received therefor
shall be deemed to be the actual amount received by the
Company therefor, deducting therefrom any expenses incurred or
any underwriting commissions or concessions paid or allowed by
the Company in connection therewith. In case any shares of
Common Stock or
5
<PAGE> 29
Convertible Securities or any rights or options to purchase
any such Common Stock or Convertible Securities shall be
issued or sold for a consideration other than cash, the amount
of the consideration other than cash received by the Company
shall be deemed to be the fair value of such consideration as
determined by the Board of Directors of the Company, deducting
therefrom any expenses incurred or any underwriting
commissions or concessions paid or allowed by the Company in
connection therewith.
(i) Registration Under the Securities Act of 1933. The
Company has entered into a Registration Rights Agreement dated April ____, 1996
with respect to Common Stock acquired by exercise of this Warrant, a copy of
which is on file at the principal office of the Company and may be obtained
from the Company. Such Registration Rights Agreement provides for "piggy-back"
and demand registration rights under the Act for such Common Stock pursuant to
the terms and conditions set forth in such Agreement.
(j) Officer's Certificate. Whenever the Exercise Price
shall be adjusted as required by the provisions of Sections (f) and (g) hereof,
the Company shall forthwith file in the custody of its Secretary or an
Assistant Secretary at its principal office, and with its stock transfer agent,
if any, an officer's certificate showing the adjusted Exercise Price determined
as herein provided and setting forth in reasonable detail the facts requiring
such adjustment. Each such officer's certificate shall be made available at
all reasonable times for inspection by the Holder and the Company shall,
forthwith after each such adjustment, deliver a copy of such certificate to the
Holder. With the exception of manifest error on the face of such certificate,
such certificate shall be conclusive as to the correctness of such adjustment.
(k) Notices to Warrant Holder. So long as this Warrant
shall be outstanding and unexercised (i) if the Company shall pay any dividend
or make any distribution upon the Common Stock or (ii) if the Company shall
offer to the holders of all of the issued and outstanding Common Stock for
subscription or purchase by them any shares of stock of any class (other than
Common Stock) or any other rights or (iii) if any capital reorganization of
the Company, reclassification of the capital stock of the Company,
consolidation or merger of the Company with or into another corporation, sale,
lease or transfer of all or substantially all of the property and assets of the
Company to another corporation, or voluntary or involuntary dissolution,
liquidation or winding up of the Company shall be effected, then, in any such
case, the Company shall cause to be delivered to the Holder, at least ten days
prior to the date referred to in (y) or (z) below, as the case may be, a notice
containing a brief description of the proposed action and stating the date on
which (x) a record is to be taken for the purpose of such dividend,
distribution or rights, or (y) such reclassification, reorganization,
consolidation, merger, conveyance, lease, dissolution, liquidation or winding
up is to take place and the date, if any, to be fixed, as of which the holders
of Common Stock of record shall be entitled to exchange their shares of Common
Stock for securities or other property deliverable upon such transaction.
6
<PAGE> 30
(l) Reclassification, Reorganization, Etc. In case of
any, reclassification or capital reorganization of outstanding shares of Common
Stock of the Company (other than a change in par value, or from par value to no
par value, or from no par value to par value, or as a result of an issuance of
Common Stock by way of dividend or other distribution or of a subdivision or
combination), the Company shall cause effective provision to be made so that
the Holder shall have the right thereafter, by exercising this Warrant, to
purchase the kind and amount of shares of stock and other securities and
property receivable upon such reclassification or capital reorganization. Any
such provision shall include provision for adjustments which shall be as nearly
equivalent as may be practicable to the adjustments provided for in this
Warrant. The foregoing provisions of this Section (l) shall similarly apply to
successive reclassifications or capital reorganizations of Common Stock.
(m) Transfer to Comply with the Securities Act of 1933.
(1) This Warrant and the Warrant Stock or any
other security issued or issuable upon exercise of this
Warrant shall not be sold or transferred except in compliance
with the Act or an exemption thereunder and then only against
receipt by the Company of an agreement of such person to
comply with the provisions of this Section (m) with respect to
any resale or other disposition of such securities.
(2) The Company may cause the following legend
(in addition to any legend required under applicable state
securities laws) to be set forth on each certificate
representing Warrant Stock or any other security issued or
issuable upon exercise of this Warrant pursuant to Section (l)
hereof, unless counsel for the Company is of the opinion as to
any such certificate that such legend is unnecessary:
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE
SECURITIES AND EXCHANGE COMMISSION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
APPLICABLE STATE SECURITIES LAWS ("STATE ACTS").
EXCEPT AS PROVIDED HEREIN, THESE SECURITIES MAY NOT BE
SOLD, ASSIGNED, PLEDGED, DISTRIBUTED, TRANSFERRED OR
OFFERED FOR SALE EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT COVERING THEM UNDER THE ACT AND
APPLICABLE STATE ACTS, UNLESS IT IS DETERMINED BY THE
OPINION OF COUNSEL ACCEPTABLE TO SCIENTIFIC
SOFTWARE-INTERCOMP, INC. THAT SUCH REGISTRATION IS
NOT REQUIRED BY THE ACT OR SUCH STATE ACTS.
7
<PAGE> 31
(n) Optional Redemption. The Company shall have the right
at any time and from time to time to redeem this Warrant by the payment of $.01
for each share of Common Stock which may be acquired by exercise of this
Warrant upon twenty days' prior notice to the Holder provided that the closing
bid or sale price of the Common Stock, as determined pursuant to Section (c)
hereof, for each of the last thirty trading days prior to the date of such
notice shall have been at least 200 percent of the Exercise Price on the date
of such notice. Any exercise of such right by the Company shall be
accomplished pro rata with respect to all Warrants initially issued by the
Company on the date of the initial issuance of this Warrant (or any comparable
predecessor Warrant) and with respect to the Conversion Rights initially issued
by the Company on the same date. Notwithstanding anything to the contrary
contained herein or in the Promissory Note of the Company of even date
herewith, in the event of any prepayment by the Company of such Promissory Note
in whole or in part, the Company shall exercise the foregoing right to redeem
this Warrant to the same pro rata extent as the pro rata extent of such
prepayment.
(o) Applicable Law. This Warrant shall be governed by and
construed in accordance with the laws of the State of Colorado.
(p) Notices. Any notice to be given under this Warrant
shall be in writing mailed to the Holder at the address thereof furnished by
the Holder to the Company and shall be mailed by prepaid certified or
registered mail, with such notice deemed to have been given on the third day
following such mailing.
IN WITNESS WHEREOF, Scientific Software-Intercomp, Inc., a
Colorado corporation, has caused this Warrant to be signed by its duly
authorized officers under its corporate seal and this Warrant to be dated April
____, 1996.
SCIENTIFIC SOFTWARE-INTERCOMP, INC.
(S E A L) By:
------------------------------------
President
DATE:
---------------------------
ATTEST:
- ----------------------------------
Secretary
8
<PAGE> 32
PURCHASE FORM
Dated: ____________, 19__
The undersigned hereby irrevocably elects to exercise the
within Warrant to the extent of purchasing _______ shares of Common Stock and
hereby makes payment of $_______ in payment of the actual exercise price
thereof.
---------------
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name:
--------------------------------------------------------------------------
(Please type or print in block letters)
Address:
------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Signature:
---------------------------------------------------------------------
---------------
ASSIGNMENT FORM
FOR VALUE RECEIVED, __________________________ hereby sells,
assigns and transfers unto
Name:
--------------------------------------------------------------------------
(Please type or print in block letters)
Address:
------------------------------------------------------------------------
- --------------------------------------------------------------------------------
the right to purchase Common Stock represented by this Warrant to the extent of
__________ shares as to which such right is exercisable and does hereby
irrevocably constitute and appoint ____________________________________________
_____________________________________ attorney, to transfer the same on the
books of the Company with full power of substitution in the premises.
Signature:
-------------------------------
Dated: ____________, 19__
<PAGE> 33
EXHIBIT D
This Stock Purchase Right and the shares of stock purchasable upon the exercise
thereof have not been registered under the Securities Act of 1933, as amended
(the "Act"), or applicable state securities laws ("State Acts"). Except as
provided herein, neither this Stock Purchase Right nor any of the shares of
Common Stock purchasable upon the exercise hereof may be sold, assigned,
transferred, distributed or offered for transfer or sale in the absence of an
effective registration statement covering such securities under the Act and
applicable State Acts or an opinion of counsel satisfactory to Scientific
Software-Intercomp, Inc. that such registration is not required by the Act or
such State Acts.
Void after 5:00 P.M., Denver Time, on April 30, 2001; or upon the acquisition,
merger or consolidation of the Company by or with another company in which the
Company is not the survivor (including a reverse-triangular merger in which the
Company becomes a wholly-owned subsidiary), whichever shall occur first.
Stock Purchase Right
450,000 Shares of
Common Stock, No
Par Value
RIGHT TO PURCHASE COMMON STOCK
OF
SCIENTIFIC SOFTWARE-INTERCOMP, INC.
This Is To Certify That, FOR VALUE RECEIVED, RENAISSANCE
CAPITAL PARTNERS II, LTD., or registered assigns ("Holder"), is entitled to
purchase, subject to the provisions of this Stock Purchase Right, from
SCIENTIFIC SOFTWARE-INTERCOMP, INC., a Colorado corporation ("Company"),
450,000 shares of common stock, no par value per share, of the Company ("Common
Stock") at a purchase price per share of $3.00. The number of shares of Common
Stock to be received upon the exercise of this Stock Purchase Right and the
price to be paid for a share of Common Stock may be adjusted from time to time
as hereinafter set forth. The shares of Common Stock deliverable upon such
exercise, and as adjusted from time to time, are hereinafter sometimes referred
to as "Stock Purchase Right Stock" and the exercise price of a share of Common
Stock in effect at any time and as adjusted from time to time is hereinafter
sometimes referred to as the "Exercise Price."
<PAGE> 34
(a) Exercise of Stock Purchase Right. This Stock Purchase
Right may be exercised in whole or in part at any time on or after the date
hereof, but no later than the earlier of (1) 5:00 P.M., Denver Time, on April
30, 2001 or if that is a day on which banking institutions are authorized by
law to close, then on the next succeeding day which shall not be such a day; or
(2) the acquisition, merger or consolidation of the Company by or with another
corporation in which the Company is not the survivor (including a
reverse-triangular merger in which the Company becomes a wholly-owned
subsidiary). The Stock Purchase Right shall be exercised by presentation and
surrender hereof to the Company or at the office of its stock transfer agent,
if any, with the Purchase Form annexed hereto duly executed and accompanied by
full cash payment of the Exercise Price for the shares purchased, together with
any federal and state taxes applicable upon such exercise except that if at the
time of exercise the Company is indebted to the Holder, the Exercise Price
shall be paid in whole or in part by a reduction of such indebtedness equal to
the amount of such payment. If this Stock Purchase Right should be exercised
in part only, the Company shall, upon surrender of this Stock Purchase Right
for cancellation, execute and deliver a new Stock Purchase Right evidencing the
right of the Holder to purchase the balance of the shares purchasable
hereunder. Upon receipt by the Company of this Stock Purchase Right at the
office or agency of the Company, in proper form for exercise, the Holder shall
be deemed to be the holder of record of the shares of Common Stock issuable
upon such exercise, notwithstanding that the stock transfer books of the
Company shall then be closed or that certificates representing such shares of
Common Stock shall not then be actually delivered to the Holder.
(b) Reservation of Shares. The Company hereby agrees that
at all times there shall be reserved for issuance and delivery upon exercise of
this Stock Purchase Right such number of shares of its Common Stock as shall be
required for issuance or delivery upon exercise of this Stock Purchase Right
and that the par value of such shares will at all times be less than the
applicable Exercise Price.
(c) Fractional Shares. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this Stock
Purchase Right. With respect to any fraction of a share called for upon any
exercise hereof, the Company shall pay to the Holder an amount in cash equal to
such fraction multiplied by the current market value of such fractional share,
determined as follows:
(1) If the Common Stock is listed on a national
securities exchange or admitted to unlisted trading privileges
on such exchange, the current value shall be the last reported
sale price of the Common Stock on such exchange on the last
business day prior to the date of exercise of this Stock
Purchase Right or, if no such sale is made on such day, the
average closing bid and asked prices for such day on such
exchange; or
2
<PAGE> 35
(2) If the Common Stock is not so listed or
admitted to unlisted trading privileges, the current value
shall be the mean of the last reported bid and asked prices
reported by the National Quotation Bureau, Inc. on the last
business day prior to the date of the exercise of this Stock
Purchase Right; or
(3) If the Common Stock is not so listed or
admitted to unlisted trading privileges and bid and asked
prices are not so reported, the current value shall be an
amount determined in such reasonable manner as may be
prescribed by the Board of Directors of the Company, such
determination to be final and binding on the Holder.
(d) Assignment or Loss of Stock Purchase Right. This
Stock Purchase Right shall be assignable. Any assignment of this Stock
Purchase Right shall be made by surrender of this Stock Purchase Right to the
Company or at the office of its stock transfer agent, if any, with the
Assignment Form annexed hereto duly executed and funds sufficient to pay any
transfer tax. Upon any assignment of this Stock Purchase Right as aforesaid,
the Company shall, without charge, execute and deliver a new Stock Purchase
Right of like tenor registered in the name of the assignee named in such
Assignment Form entitling the assignee to purchase the number of shares of
Common Stock purchasable hereunder (or under the portion hereof so assigned)
and, in the event this Stock Purchase Right shall be assigned in part, shall
execute and deliver to the Holder hereof a new Stock Purchase Right registered
in the name of the Holder entitling it to purchase the balance of the number of
shares of Common Stock purchasable hereunder, and this Stock Purchase Right
shall promptly be cancelled. This Stock Purchase Right may be combined with
other Stock Purchase Rights which carry the same rights upon presentation
hereof at the office of the Company or at the office of its stock transfer
agent, if any, together with a written notice specifying the name and
denominations in which new Stock Purchase Rights are to be issued and signed by
the Holder hereof. Upon receipt by the Company of evidence satisfactory to it
of the loss, theft, or destruction or mutilation of this Stock Purchase Right,
and (in case of loss, theft or destruction) of satisfactory indemnification,
and upon surrender and cancellation of this Stock Purchase Right, if mutilated,
the Company will execute and deliver a new Stock Purchase Right of like tenor
and date. Any such new Stock Purchase Right executed and delivered shall
constitute an additional contractual obligation on the part of the Company,
whether or not this Stock Purchase Right so lost, stolen, destroyed, or
mutilated shall be at any time enforceable by anyone. Notwithstanding anything
to the contrary contained in the foregoing, this Stock Purchase Right may not
be transferred independent of and separate from a transfer of the Promissory
Note of the Company of even date herewith in the original principal amount of
$1,500,000 payable to the initial Holder with respect to which Promissory Note
this Stock Purchase Right shall be deemed to be attached.
3
<PAGE> 36
(e) Rights of the Holder. The Holder shall not, by virtue
hereof, be entitled to any rights of a stockholder in the Company, either at
law or equity, and the rights of the Holder are limited to those expressly in
the Stock Purchase Right and are not enforceable against the Company, except to
the extent set forth herein. Notwithstanding the foregoing, the Holder shall
be entitled to receive all notices sent to stockholders in the Company and all
financial information sent to stockholders or debentureholders of the Company.
(f) Anti-Dilution Provisions.
(1) Adjustment of Number of Shares. In the event
the Company shall at any time issue Common Stock or
convertible securities by way of dividend or other
distribution on any stock of the Company or subdivide or
combine the outstanding shares of Common Stock, the Exercise
Price shall be proportionately decreased in the case of such
issuance (on the day following the date fixed for determining
stockholders entitled to receive such dividend or other
distribution) or decreased in the case of such subdivision or
increased in the case of such combination (on the date that
such subdivision or combination shall become effective).
(2) No Adjustment for Small Amounts. Anything in
this Section (f) to the contrary notwithstanding, the Company
shall not be required to give effect to any adjustment in the
Exercise Price unless and until the net effect of one or more
adjustments, determined as above provided, shall have required
a change of the Exercise Price by at least one cent, but when
the cumulative net effect of more than one adjustment so
determined shall be to change the actual Exercise Price by at
least one cent, such change in the Exercise Price shall
thereupon be given effect.
(3) Number of Shares Adjusted. Upon any
adjustment of the Exercise Price, the holder of this Stock
Purchase Right shall thereafter (until another such
adjustment) be entitled to purchase, at the new Exercise
Price, the number of shares, calculated to the nearest full
share, obtained by multiplying the number of shares of Common
Stock issuable upon exercise of this Stock Purchase Right
immediately prior to such adjustment by the Exercise Price in
effect immediately prior to such adjustment and dividing the
product so obtained by the new Exercise Price.
(4) Common Stock Defined. Whenever reference is
made in this Section (f) to the shares of Common Stock, the
term "Common Stock" shall mean the Common Stock of the Company
of the class authorized as of the date hereof and any other
class of stock ranking on a parity with such Common Stock.
However, subject to the provisions of Section (l) hereof,
shares issuable upon exercise hereof shall include only
4
<PAGE> 37
shares of the class designated as Common Stock of the Company
as of the date hereof.
(g) Sale Below Exercise Price. If and whenever the
Company shall issue or sell any shares of its Common Stock (as defined in
Section (f)(4) above) for a consideration per share less than the Exercise
Price at such time, then, forthwith upon such issue or sale, the Exercise Price
shall be reduced to the price (calculated to the nearest cent) determined by
dividing (1) an amount equal to the sum of (aa) the number of shares of Common
Stock outstanding immediately prior to such issue or sale multiplied by the
then existing Exercise Price, and (bb) the consideration, if any, received by
the Company upon such issue or sale, by (2) an amount equal to the sum of (aa)
the number of shares of Common Stock outstanding immediately prior to such
issue or sale and (bb) the number of shares of Common Stock thus issued or
sold. Notwithstanding anything to the contrary contained above in this
Section, this Section shall not apply to (i) the grant or exercise of options
to acquire Common Stock by employees of the Company or any subsidiary thereof
and, the transfer of Common Stock to any retirement plan for the employees of
the Company or any subsidiary thereof or any other transfer of Common Stock to
employees and consultants of the Company or any subsidiary thereof which is
compensatory in nature, and (ii) any single issuance of Common Stock of less
than 10,000 shares until the aggregate of such small single issuances exceeds
five percent of the Common Stock then outstanding.
(h) Certain Issuances. For the purpose of Section (g),
the following shall also be applicable:
(i) In case at any time the Company shall grant
any rights to subscribe for or to purchase, or any options for
the purchase of, Common Stock or any stock or securities
convertible into or exchangeable for Common Stock (such
convertible or exchangeable stock or securities being herein
called "Convertible Securities"), whether or not such rights
or options or the right to convert or exchange any such
Convertible Securities are immediately exercisable, and the
price per share at which Common Stock is issuable upon the
exercise of such rights or options or upon conversion or
exchange of such Convertible Securities (determined by
dividing (aa) the total amount, if any, received or receivable
by the Company as consideration for granting of such rights or
options, plus the minimum aggregate amount of additional
consideration payable to the Company upon the exercise of such
right or options, plus, in the case of such rights or options
which relate to Convertible Securities, the minimum aggregate
amount of additional consideration, if any, payable upon the
issue or sale of such Convertible Securities and upon the
conversion or exchange thereof, by (bb) the total maximum
number of shares of Common Stock issuable
5
<PAGE> 38
upon the exercise of such rights or options or upon the
conversion or exchange of all such Convertible Securities
issuable upon the exercise of such rights or options) shall be
less than the Exercise Price in effect immediately prior to
the time of the granting of such rights or options (or less
than the market price determined as of the date of granting
such rights or options, as the case may be), then the total
maximum number of shares of Common Stock issuable upon the
exercise of rights or options or upon conversion or exchange
of the total maximum amount of such Convertible Securities
issuable upon the exercise of such rights or options shall (as
of the date of granting of such rights or options) be deemed
to have been issued for such price per share. No further
adjustments of the Exercise Price shall be made upon the
actual issue of such Common Stock or of such Convertible
Securities upon exercise of such rights or options or upon the
actual issue of such Common Stock upon conversion or exchange
of such Convertible Securities.
(ii) In case any shares of Common Stock or
Convertible Securities or any rights or options to purchase
any such Common Stock or Convertible Securities shall be
issued or sold for cash, the consideration received therefor
shall be deemed to be the actual amount received by the
Company therefor, deducting therefrom any expenses incurred or
any underwriting commissions or concessions paid or allowed by
the Company in connection therewith. In case any shares of
Common Stock or Convertible Securities or any rights or
options to purchase any such Common Stock or Convertible
Securities shall be issued or sold for a consideration other
than cash, the amount of the consideration other than cash
received by the Company shall be deemed to be the fair value
of such consideration as determined by the Board of Directors
of the Company, deducting therefrom any expenses incurred or
any underwriting commissions or concessions paid or allowed by
the Company in connection therewith.
(i) Registration Under the Securities Act of 1933. The
Company has entered into a Registration Rights Agreement dated April ____, 1996
with respect to Common Stock acquired by exercise of this Stock Purchase Right,
a copy of which is on file at the principal office of the Company and may be
obtained from the Company. Such Registration Rights Agreement provides for
"piggy-back" and demand registration rights under the Act for such Common Stock
pursuant to the terms and conditions set forth in such Agreement.
(j) Officer's Certificate. Whenever the Exercise Price
shall be adjusted as required by the provisions of Sections (f) and (g) hereof,
the Company shall forthwith file in the custody of its Secretary or an
Assistant Secretary at its principal office, and with its stock transfer agent,
if any, an officer's certificate showing the adjusted Exercise Price determined
as herein provided and setting forth in reasonable
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<PAGE> 39
detail the facts requiring such adjustment. Each such officer's certificate
shall be made available at all reasonable times for inspection by the Holder
and the Company shall, forthwith after each such adjustment, deliver a copy of
such certificate to the Holder. With the exception of manifest error on the
face of such certificate, such certificate shall be conclusive as to the
correctness of such adjustment.
(k) Notices to Stock Purchase Right Holder. So long as
this Stock Purchase Right shall be outstanding and unexercised (i) if the
Company shall pay any dividend or make any distribution upon the Common Stock
or (ii) if the Company shall offer to the holders of all of the issued and
outstanding Common Stock for subscription or purchase by them any shares of
stock of any class (other than Common Stock) or any other rights or (iii) if
any capital reorganization of the Company, reclassification of the capital
stock of the Company, consolidation or merger of the Company with or into
another corporation, sale, lease or transfer of all or substantially all of the
property and assets of the Company to another corporation, or voluntary or
involuntary dissolution, liquidation or winding up of the Company shall be
effected, then, in any such case, the Company shall cause to be delivered to
the Holder, at least ten days prior to the date referred to in (y) or (z)
below, as the case may be, a notice containing a brief description of the
proposed action and stating the date on which (x) a record is to be taken for
the purpose of such dividend, distribution or rights, or (y) such
reclassification, reorganization, consolidation, merger, conveyance, lease,
dissolution, liquidation or winding up is to take place and the date, if any,
to be fixed, as of which the holders of Common Stock of record shall be
entitled to exchange their shares of Common Stock for securities or other
property deliverable upon such transaction.
(l) Reclassification, Reorganization, Etc. In case of
any, reclassification or capital reorganization of outstanding shares of Common
Stock of the Company (other than a change in par value, or from par value to no
par value, or from no par value to par value, or as a result of an issuance of
Common Stock by way of dividend or other distribution or of a subdivision or
combination), the Company shall cause effective provision to be made so that
the Holder shall have the right thereafter, by exercising this Stock Purchase
Right, to purchase the kind and amount of shares of stock and other securities
and property receivable upon such reclassification or capital reorganization.
Any such provision shall include provision for adjustments which shall be as
nearly equivalent as may be practicable to the adjustments provided for in this
Stock Purchase Right. The foregoing provisions of this Section (l) shall
similarly apply to successive reclassifications or capital reorganizations of
Common Stock.
(m) Transfer to Comply with the Securities Act of 1933.
(1) This Stock Purchase Right and the Stock
Purchase Right Stock or any other security issued or issuable
upon exercise of this Stock Purchase Right shall not be sold
or transferred except in compliance with the Act or an
exemption thereunder and then only against receipt by the
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<PAGE> 40
Company of an agreement of such person to comply with the
provisions of this Section (m) with respect to any resale or
other disposition of such securities.
(2) The Company may cause the following legend
(in addition to any legend required under applicable state
securities laws) to be set forth on each certificate
representing Stock Purchase Right Stock or any other security
issued or issuable upon exercise of this Stock Purchase Right
pursuant to Section (l) hereof, unless counsel for the Company
is of the opinion as to any such certificate that such legend
is unnecessary:
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE
SECURITIES AND EXCHANGE COMMISSION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
APPLICABLE STATE SECURITIES LAWS ("STATE ACTS").
EXCEPT AS PROVIDED HEREIN, THESE SECURITIES MAY NOT BE
SOLD, ASSIGNED, PLEDGED, DISTRIBUTED, TRANSFERRED OR
OFFERED FOR SALE EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT COVERING THEM UNDER THE ACT
AND APPLICABLE STATE ACTS, UNLESS IT IS DETERMINED BY
THE OPINION OF COUNSEL ACCEPTABLE TO SCIENTIFIC
SOFTWARE-INTERCOMP, INC. THAT SUCH REGISTRATION IS
NOT REQUIRED BY THE ACT OR SUCH STATE ACTS.
(n) Optional Redemption. The Company shall have the right
at any time and from time to time to redeem this Stock Purchase Right by the
payment of $.01 for each share of Common Stock which may be acquired by
exercise of this Stock Purchase Right upon twenty days' prior notice to the
Holder provided that the closing bid or sale price of the Common Stock, as
determined pursuant to Section (c) hereof, for each of the last thirty trading
days prior to the date of such notice shall have been at least 200 percent of
the Exercise Price on the date of such notice. Any exercise of such right by
the Company shall be accomplished pro rata with respect to all Stock Purchase
Rights initially issued by the Company on the date of the initial issuance of
this Stock Purchase Right (or any comparable predecessor Stock Purchase Right)
and with respect to the Conversion Rights initially issued by the Company on
the same date. Notwithstanding anything to the contrary contained herein or in
the Promissory Note of the Company of even date herewith, in the event of any
prepayment by the Company of such Promissory Note in whole or in part, the
Company shall exercise the foregoing
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<PAGE> 41
right to redeem this Stock Purchase Right to the same pro rata extent as the
pro rata extent of such prepayment.
(o) Applicable Law. This Stock Purchase Right shall be
governed by and construed in accordance with the laws of the State of Colorado.
(p) Notices. Any notice to be given under this Stock
Purchase Right shall be in writing mailed to the Holder at the address thereof
furnished by the Holder to the Company and shall be mailed by prepaid certified
or registered mail, with such notice deemed to have been given on the third day
following such mailing.
IN WITNESS WHEREOF, Scientific Software-Intercomp, Inc., a
Colorado corporation, has caused this Stock Purchase Right to be signed by its
duly authorized officers under its corporate seal and this Stock Purchase Right
to be dated April ____, 1996.
SCIENTIFIC SOFTWARE-INTERCOMP, INC.
(S E A L) By:
------------------------------------
President
DATE:
---------------------------
ATTEST:
- ----------------------------------
Secretary
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<PAGE> 42
PURCHASE FORM
Dated: ____________, 19__
The undersigned hereby irrevocably elects to exercise the
within Warrant to the extent of purchasing _______ shares of Common Stock and
hereby makes payment of $_______ in payment of the actual exercise price
thereof.
---------------
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name:
--------------------------------------------------------------------------
(Please type or print in block letters)
Address:
------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Signature:
---------------------------------------------------------------------
---------------
ASSIGNMENT FORM
FOR VALUE RECEIVED, __________________________ hereby sells,
assigns and transfers unto
Name:
--------------------------------------------------------------------------
(Please type or print in block letters)
Address:
------------------------------------------------------------------------
- --------------------------------------------------------------------------------
the right to purchase Common Stock represented by this Warrant to the extent of
__________ shares as to which such right is exercisable and does hereby
irrevocably constitute and appoint ____________________________________________
_____________________________________ attorney, to transfer the same on the
books of the Company with full power of substitution in the premises.
Signature:
-------------------------------
Dated: ____________, 19__
<PAGE> 43
EXHIBIT E
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (the "Agreement"), dated as of April ___, 1996,
is made by SCIENTIFIC SOFTWARE-INTERCOMP, INC., a Colorado corporation,
Scientific Software-Intercomp (U.K.) Limited, a United Kingdom corporation
(together along with their successors and assigns, the "Grantor"), in favor of
LINDNER FUNDS ("Lindner") and RENAISSANCE CAPITAL PARTNERS II, LTD.
("Renaissance") (Lindner and Renaissance being collectively referred to as the
"Secured Party").
PRELIMINARY STATEMENT. Secured Party is making a loan to Grantor in
the aggregate sum of SIX MILLION FIVE HUNDRED THOUSAND AND NO/100 DOLLARS
($6,500,000.00) consisting of a loan from Lindner of $5,000,000 (the "Lindner
Loan") and a loan from Renaissance of $1,500,000 (the "Renaissance Loan"),
pursuant to those two promissory notes of even date herewith in the original
principal amounts of $5,000,000 and $1,500,000, executed by Grantor and payable
as provided therein to the order of Lindner and Renaissance, respectively; and
As used herein, the term "Notes" shall mean the Lindner Note and the
Renaissance Note, and the term "Loans" shall mean the Lindner Loan and
Renaissance Loan to Grantor described herein which are evidenced by the Notes.
The Lindner Note and the Renaissance Note are being executed pursuant
to that certain loan agreement of even date herewith executed by Grantor and
Secured Party ("Loan Agreement").
NOW, THEREFORE, in consideration of the premises and in order to secure
the Loans, the Grantor hereby agrees as follows:
SECTION 1. Defined Terms and Related Matters.
(a) The capitalized terms used herein which are defined in
the Notes and Loan Agreement and not otherwise defined herein shall have the
meanings specified therein.
<PAGE> 44
(b) The words "hereof," "herein" and "hereunder" and words
of similar import when used in this Agreement shall refer to this Agreement as
a whole and not to any particular provision of this Agreement.
(c) Unless otherwise defined herein or in the Notes or
Loan Agreement, the terms defined in Article 9 of the Uniform Commercial Code as
enacted in the State of Colorado are used herein as therein defined.
SECTION 2. Grant of Security. The Grantor hereby assigns and pledges
to the Secured Party, and hereby grants to the Secured Party, a security
interest in, all of the property described in subsections (a) through (g) of
this Section 2 owned by Grantor, has any right, title or interest (the
"Collateral"):
(a) All equipment, motor vehicles, machinery, chattels,
parts, furniture, furnishings, fixtures and supplies of every nature and
description whatsoever, presently existing, now owned or hereafter acquired or
created and wherever located, all accessions, additions and improvements
thereto and substitutions therefor, whether or not the same shall be deemed to
be affixed to real property, and all rights under or arising out of present or
future contracts relating to the foregoing and in any event, all equipment
within the meaning of the Uniform Commercial Code in effect in any applicable
jurisdiction (any and all of the foregoing being the "Equipment");
(b) All presently existing or hereafter acquired or
created accounts, accounts receivable, contract rights, notes, drafts,
acceptances, chattel paper, leases and writings evidencing a monetary
obligation or a security interest in or a lease of goods, all rights to receive
the payment of money or other considerations under present or future contracts
or by virtue of products sold or leased, services rendered, loans and advances
made or other considerations given, whether or not earned by performance and
whether or not evidenced by or set forth in or arising out of any present or
future chattel paper, note, draft, lease, acceptance, writing, bond, insurance
policy, instrument, document or general intangible, and all extensions and
renewals of any thereof, all rights under or arising out of present or future
contracts, agreements or general intangibles, including all payments under
licensing agreements or arrangements, all right, title and interest in
merchandise which gave rise to any or all of the foregoing, including all
goods, all claims or causes of action now existing or hereafter arising in
connection with or under any agreement or document or by operation of law or
otherwise, all collateral security of any kind (including real property
mortgages) given by any person with respect to any of the foregoing, including
in any event all accounts, instruments and chattel paper within the meaning of
the Uniform Commercial Code in effect in any applicable jurisdiction (any and
all of the foregoing being the "Accounts, Instruments and Chattel Paper");
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<PAGE> 45
(c) All right, title and interest in and to all inventory
in all of its forms, wherever located, now or hereafter existing and whether
acquired by purchase, merger or otherwise, and all goods, and work in process
therefor, all finished goods thereof and all materials used or consumed in the
manufacture, development, packing, shipping, advertising, selling, leasing or
production thereof, including in any event all inventory within the meaning of
the Uniform Commercial Code in effect in any applicable jurisdiction, goods in
which an interest is held in mass or a joint or other interest or right of any
kind and goods which are returned to or repossessed, and all accessions thereto
and contracts with respect thereto and all documents of title evidencing or
representing any part thereof, and products and proceeds thereof (any and all
such inventory, accessions, contracts, documents of title, products and
proceeds being the "Inventory");
(d) All general intangibles of every nature, whether
presently existing or hereafter acquired or created, including, without
limitation, all books, correspondence, credit files, records, computer
software, computer programs, computer tapes, cards and other papers and
documents in possession or control, claims, choses in action, judgments,
trademarks, licensing agreements, royalty payments, copyrights, service names,
service marks, logos, goodwill, all amounts received as an award in or
settlement of a suit in damages, deposit accounts, interests in joint ventures
or general or limited partnerships and in any event, all general intangibles
within the meaning of the Uniform Commercial Code in effect in any applicable
jurisdiction (any and all of the foregoing being the "General Intangibles");
(e) All rights now owned or hereafter acquired or created,
to payment under a contract not yet earned by performance and not yet evidenced
by an Account, Instrument or Chattel Paper ("Contract Rights" and together with
Accounts, Instruments, Chattel Paper and General Intangibles herein
collectively called the "Receivables");
(f) All documents, instruments and chattel paper of every
nature, whether now existing or hereafter acquired or created, and in any event
all documents within the meaning of the Uniform Commercial Code in effect in
any applicable jurisdiction ("Documents"); and
(g) The proceeds, in cash or otherwise, of the Collateral
described in the foregoing clauses (a), (b), (c), (d), (e) and (f) (including,
without limitation, the proceeds of any sale or other disposition of such
Collateral and all insurance proceeds of any kind [whether or not the Secured
Party is the loss payee under the applicable insurance policy] paid at any time
in connection with such Collateral), all liens (whether possessory,
contractual, statutory or otherwise) with respect to such Collateral, and all
rights, remedies and claims (whether in
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<PAGE> 46
the nature of indemnities, warranties, guaranties or otherwise) with respect to
such Collateral, in any case whether now existing or hereafter at any time or
from time to time arising. The inclusion of proceeds in this Agreement does
not authorize the Grantor to sell, dispose of or otherwise use the Collateral
in any manner not specifically authorized hereby.
SECTION 3. Security for Obligations. The Security interest granted
hereby is to secure (i) the payment of the Notes and any and all extensions,
renewals and rearrangements thereof, executed on behalf of Grantor and payable
to the order of Secured Party in the manner as therein provided, (ii)
performance and observance of all covenants, conditions and obligations of
Grantor contained herein or in the Loan Agreement or in any other document
securing or executed in connection with the Notes, whether for principal,
interest fees, expenses or otherwise, and (iii) the payment of any and all
other indebtedness and liabilities whatsoever of the Grantor to Secured Party
whether direct or indirect, absolute or contingent, due or to become due and
whether now existing or hereafter arising and howsoever evidenced or acquired,
whether joint or several (all of which are hereinafter sometimes called the
"Obligations"). Grantor acknowledges that the security interest hereby granted
shall secure all future advances as well as any and all other obligations and
liabilities of Grantor to Secured Party whether now in existence or hereafter
arising.
SECTION 4. Grantor Remains Liable. Anything herein to the contrary
notwithstanding, (a) the Grantor shall remain liable under the contracts and
agreements included in the Collateral to the extent set forth therein to
perform all of its duties and obligations thereunder to the same extent as if
this Agreement had not been executed, (b) the exercise by the Secured Party of
any of the rights hereunder shall not release the Grantor from any of their
duties or obligations under the contracts and agreements included in the
Collateral and (c) the Secured Party shall not have any obligation or liability
under the contracts and agreements included in the Collateral by reason of this
Agreement, nor shall the Secured Party be obligated to perform any of the
obligations or duties of the Grantor as applicable, thereunder or to take any
action to collect or enforce any claim for payment assigned hereunder.
SECTION 5. Representations and Warranties. The Grantor hereby
represents and warrants as follows:
(a) All of the Equipment and Inventory is located at the
places specified in Schedule I hereto. The principal places of business and
principal executive offices of the Grantor are set forth on Schedule I.
Grantor will promptly notify the Secured Party of any change of its name,
corporate structure, or the address of its principal place of business and
principal executive office.
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<PAGE> 47
(b) Except as set forth in Schedule II, all records
concerning the Grantor's Receivables and all originals of all chattel paper
which evidence Receivables are and will remain located at the principal
executive offices listed in Section 5(a).
(c) Other than the lien to Bank One, Boulder, N.A., 1800
Broadway, P.O. Box 59, Boulder, Colorado 80306 ("Bank One") described in the
Loan Agreement (the "Permitted Lien"), the Grantor owns the Collateral free and
clear of any lien, security interest, charge or encumbrance except for the
liens and security interests in favor of Secured Party. Except as may be
approved by Secured Party in writing, no effective financing statement or other
instrument similar in effect covering all or any part of the Collateral is or
will be on file in any recording office, except as may be filed in favor of the
Secured Party and except for the Permitted Lien.
(d) Upon the making of all filings and the taking of all
other actions necessary to perfect the security interests created hereby,
including, without limitation, those actions specified in Section 6(a) below,
this Agreement will create a valid first priority security interest in the
Collateral (subject only to the Permitted Lien) securing the payment and
performance of the Obligations.
(e) Other than the filings and other actions described in
Section 6 to perfect the security interests created by this Agreement and
except as set forth in Section 6(d), no authorization, approval or other action
by, and no notice to or filing with, any governmental authority or regulatory
body, is required for the perfection of or the exercise by the Secured Party of
the rights and remedies of the Secured Party hereunder.
(f) This Agreement is, and all other documents and
agreements executed in connection therewith, when delivered will be the legal,
valid and binding obligations of Grantor, enforceable against such party in
accordance with their respective terms, except as enforceability may be (i)
limited by applicable bankruptcy, reorganization, insolvency, moratorium or
other similar laws of general application relating to the enforcement of
creditors' rights generally and (ii) subject to the general effect of general
principles of equity.
(g) Scientific Software-Intercomp, Inc. ("SSI") provides
funding for Scientific Software- Intercomp (UK) Limited ("SSI-UK") necessary
for the conduct of its business. This Agreement has been entered into in good
faith for the purposes of facilitiating the carrying on of SSI-UK's business
and for its benefit and this Agreement has been entered into to insure
continued support from SSI to SSI-UK.
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<PAGE> 48
SECTION 6. Further Assurances.
(a) The Grantor authorizes the Secured Party to file
financing statements (Form UCC-1) and other security documents executed by such
parties in such offices and locations as are necessary in the opinion of the
Secured Party to perfect the security interests granted herein. The Grantor
further agrees that from time to time, at the expense of the Grantor, the
Grantor will promptly execute and deliver all further instruments and
documents, and take all further action that may be reasonably necessary or
desirable, or that the Secured Party may reasonably request, in order to
protect any security interests granted or purported to be granted hereby and to
perfect any security interests granted hereby or to enable the Secured Party to
exercise and enforce its rights and remedies hereunder with respect to any of
the Collateral.
(b) The Grantor authorizes the Secured Party to file a
carbon, photographic or other reproduction of this Agreement (and the attached
Consents to Pledge) as a financing statement or to file one or more financing
or continuation statements, and amendments thereto, relative to all or any part
of the Collateral without the signature of any such parties where permitted by
law.
(c) The Grantor will furnish to the Secured Party from
time to time statements and schedules further identifying and describing the
Collateral and such other reports in connection with the Collateral as the
Secured Party may reasonably request, all in reasonable detail.
(d) Notwithstanding anything to the contrary contained in
this Agreement, the security interest of the Secured Party in that part of the
Collateral which is subject to the Permitted Lien shall be established as soon
as practicable.
SECTION 7. As to Equipment. The Grantor shall:
(a) keep the Equipment at the places therefor specified in
Section 5(a), or at such other locations in jurisdictions where all action
required by Section 6 shall have been taken with respect to the Equipment
(collectively the "Notified Equipment Locations");
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<PAGE> 49
(b) cause the Equipment to be maintained and preserved in
good operating condition, ordinary wear and tear excepted. The Grantor shall
promptly furnish to the Secured Party a statement respecting any material loss
or damage to any of the Equipment;
(c) pay promptly when due all property and other taxes,
assessments and governmental charges or levies imposed upon, and all claims
(including claims for labor, materials and supplies) against, the Equipment,
except to the extent the validity thereof is being contested in good faith by
appropriate proceedings; and
(d) upon at least three business day's prior oral notice,
permit representatives of Secured Party at any time during normal business
hours to inspect the Equipment.
SECTION 8. As to Receivables. The Grantor shall:
(a) retain its principal place of business and
principal executive offices or the offices where it keeps records concerning
the Receivables, and all originals of all Chattel Paper which evidence
Receivables, at the location or locations therefor specified in Section 5(a) or
at such other locations in jurisdictions where all action required by Section 6
shall have been taken with respect to the Receivables unless notice of any
change in such location has been given to Secured Party at least thirty days
prior thereto. The Grantor will hold and preserve such records and Chattel
Paper and, upon at least one business day's prior oral notice, will permit
representatives of Secured Party at any time during normal business hours to
inspect and make abstracts from and photocopies of such records and Chattel
Paper; and
(b) except as otherwise provided in this subsection (b),
continue to collect, at its own expense, all amounts due or to become due to it
under the Receivables. In connection with such collections, the Grantor may
take such action as the Grantor may deem necessary or advisable to enforce
collection of the Receivables; provided, however, that the Secured Party shall
have the right, at any time after the occurrence of an Event of Default, to
notify the account debtors or obligors under any Receivables of the assignment
of such Receivables to the Secured Party and to direct such account debtors or
obligors to make payment of all amounts due or to become due to the Grantor
thereunder directly to the Secured Party and, upon such notification and at the
expense of the Grantor, to enforce collection of any such Receivables, and to
adjust, settle or compromise the amount or payment thereof, in the same manner
and to the
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<PAGE> 50
same extent as the Grantor might have done. After receipt by the Grantor of
the notice from the Secured Party referred to in the preceding sentence, (i)
all amounts and proceeds (including Instruments) received by the Grantor in
respect of the Receivables shall be received in trust for the benefit of the
Secured Party hereunder, shall be segregated from other funds of the Grantor
and shall be forthwith paid over to the Secured Party in the same form as so
received (with any necessary indorsement) to be held as cash collateral and
either (A) released to the Grantor, so long as no Event of Default shall have
occurred and be continuing or (B) if any Event of Default shall have occurred
and be continuing, applied as provided by Section 15 (b), and (ii) the Grantor
shall not adjust, settle or compromise the amount or payment of any Receivable,
or release wholly or partly any account debtor or obligor thereof, or allow any
credit or discount thereon. Notwithstanding the foregoing the rights of the
Secured Party with respect to the Receivables are subject to the Permitted Lien
and to the provisions of the Intercreditor Agreement with the holder of the
Permitted Lien of even date herewith.
SECTION 9. As to Inventory. The Grantor shall:
(a) keep the Inventory (other than Inventory sold in the
ordinary course of business) at the places specified in Section 5(a) and at
such other locations in jurisdictions where all action required by Section 6
shall have been taken with respect to the Inventory (collectively the "Notified
Inventory Locations");
(b) pay promptly when due all property and other taxes,
assessments and governmental charges or levies imposed upon, and all claims
(including claims for labor, materials and supplies) against, the Inventory,
except to the extent the validity thereof is being contested in good faith and
by proper proceedings; and
(c) upon at least three business day's prior oral notice,
permit representatives of Secured Party at any time during normal business
hours to inspect the Inventory.
SECTION 10. Insurance.
(a) The Grantor shall at its own expense maintain
reasonable amounts and types of insurance with respect to the Equipment in such
amounts, against such risks, in such form and with such insurers, as shall be
satisfactory to the Secured Party from time to time. The Grantor shall
forthwith take or cause to be taken such
8
<PAGE> 51
reasonable actions as are necessary or desirable, or that the Secured Party may
request, to assure that each policy (i) shall provide for all losses (except
for losses of less than $1,000 per occurrence) to be paid to the Secured Party
and the Grantor, as their interests may appear, (ii) shall name the Grantor and
the Secured Party as insured parties thereunder (without any representation or
warranty by or obligation upon the Secured Party) as their interests may appear
and (iii) shall provide that at least ten days' prior written notice of
cancellation or of lapse shall be given to the Secured Party by the insurer.
The Grantor shall, if so requested by the Secured Party, deliver to the Secured
Party original or duplicate policies of such insurance and, as often as the
Secured Party may reasonably request, a report of a reputable insurance broker
with respect to such insurance. Further, the Grantor shall, at the request of
the Secured Party, duly execute and deliver instruments of assignment of such
insurance policies to comply with the requirements of Section 6 and cause the
respective insurers to acknowledge notice of such assignment.
(b) Upon the occurrence and during the continuance of any
Event of Default and the actual or constructive total loss of any Equipment,
all insurance payments in respect of such Equipment shall be paid to and
applied by the Secured Party as specified in section 15(b).
SECTION 11. Transfers and Other Liens. Grantor shall not:
(a) Sell, assign (by operation of law or otherwise) or
otherwise dispose of any of the Collateral except in the ordinary course of
business; or
(b) Create or suffer to exist any lien, security interest
or other charge or encumbrance upon or with respect to any of the Collateral to
secure the Indebtedness of any Person other than the Permitted Lien.
SECTION 12. Secured Party Appointed Attorney-in-Fact. The Grantor
hereby irrevocably appoints the Secured Party, effective upon the occurrence of
an Event of Default, the Grantor's attorney-in-fact, with full authority in the
place and stead of such Grantor and in the name of the Grantor, the Secured
Party or otherwise, from time to time in the Secured Party's discretion, to
take any action and to execute any instrument which the Secured Party may deem
necessary or advisable to accomplish the purposes of this Agreement, including,
without limitation:
(a) to ask, demand, collect, sue for, recover, compound,
receive and give acquittance and receipts for moneys due and to become due
under or in respect of any of the Collateral,
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<PAGE> 52
(b) to receive, indorse and collect any drafts or other
instruments, documents and chattel paper in connection with clause (a) above,
and
(c) to file any claims or take any action or institute any
proceedings which the Secured Party may deem necessary or desirable for the
collection of any of the Collateral or otherwise to enforce the rights of the
Secured Party, including, without limitation, the collection of royalties or
other compensation due under any license, with respect to any of the
Collateral.
SECTION 13. Secured Party May Perform. If the Grantor fails to
perform any agreement contained herein, the Secured Party may itself perform,
or cause performance of, such agreement, and the expenses of the Secured Party
incurred in connection therewith shall be payable by the Grantor under Section
16(b).
SECTION 14. The Secured Party's Duties. The powers conferred on the
Secured Party hereunder are solely to protect its interest in the Collateral
and shall not impose any duty upon the Secured Party to exercise any such
powers. Except for the safe custody of any Collateral in its possession and
the accounting for moneys actually received by it hereunder, the Secured Party
shall not have any duty as to any Collateral or as to the taking of any
necessary steps to preserve rights against prior parties or any other rights
pertaining to any Collateral.
SECTION 15. Remedies. If any Event of Default shall have occurred and
be continuing:
(a) The Secured Party may exercise in respect of the
Collateral, in addition to other rights and remedies provided for herein or
otherwise available to it, all the rights and remedies of a secured party on
default under the Uniform Commercial Code (the "Code") (whether or not the Code
applies to the affected Collateral) and in addition thereto and cumulative
thereof, the following rights: the right to sell, lease or otherwise dispose of
the Collateral and the right to take possession of the Collateral, and for that
purpose, the Secured Party may enter upon any premises on which the Collateral
may be situated and remove the same therefrom and/or may render the Collateral
inoperable; the Secured Party may require the Grantor to, and the Grantor
hereby agrees that it will, at its expense and upon the request of the Secured
Party, forthwith assemble all or part of the Collateral and all documents
relating to the Collateral as directed by the Secured Party and make the
Collateral available to the Secured Party at a place to be designated by the
Secured Party; without notice except as specified below, sell the Collateral in
one or more parcels at public or private sale, at any of the Secured Party's
offices or elsewhere, for cash, on credit or for future delivery,
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<PAGE> 53
and upon such other terms as the Secured Party may deem commercially
reasonable. The Grantor agrees that, to the extent notice of sale shall be
required by law, at least ten days' notice to the Grantor of the time and place
of any public sale or the time after which any private sale is to be made shall
constitute reasonable notification. The Secured Party shall not be obligated
to make any sale of Collateral regardless of notice of sale having been given.
The Secured Party may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may, without
further notice, be made at the time and place to which it was so adjourned.
(b) All cash proceeds received by the Secured Party in
respect of any sale of, collection from, or other realization upon all or any
part of the Collateral shall be applied by the Secured Party against the
Obligations of the Grantor to the Secured Party. Any surplus of such cash or
cash proceeds held by the Secured Party and remaining after payment and
performance in full of all the Obligations shall be paid over to the Grantor or
to whomsoever may be lawfully entitled to receive such surplus.
(c) All rights and remedies of the Secured Party
expressed herein are in addition to all other rights and remedies possessed by
the Secured Party in the Loan Documents and any other agreement or instrument
relating to the obligations.
SECTION 16. Indemnity, Expenses and Interest.
(a) The Grantor agrees to indemnify the Secured Party from
and against any and all claims, losses and liabilities growing out of or
resulting from this Agreement (including, without limitation, enforcement of
this Agreement), except claims, losses or liabilities resulting from the gross
negligence or willful misconduct of the Secured Party.
(b) The Grantor agrees upon demand to pay to the Secured
Party the amount of any and all reasonable expenses, including the reasonable
fees and disbursements of its counsel and of any experts and agents, which the
Secured Party may incur in connection with (i) the administration of this
Agreement, (ii) the custody, preservation, use or operation of, or the sale of,
collection from, or other realization upon, any of the Collateral, (iii) the
exercise or enforcement of any of the rights of the Secured Party hereunder or
(iv) the failure by the Grantor to perform or observe any of the provisions
hereof.
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<PAGE> 54
(c) The Grantor agrees to pay interest on any expenses or
other sums due to the Secured Party hereunder that are not paid when due at a
rate per annum equal to 12 percent per annum.
SECTION 17. Amendments, Etc. No amendment or waiver of any provision
of this Agreement nor consent to any departure by the Grantor herefrom shall in
any event be effective unless the same shall be in writing and signed by the
Secured Party, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
SECTION 18. Addresses for Notices. Except as otherwise expressly
provided herein, all notices and other communications provided for hereunder
shall be in writing or by telex, telegraph or cable and mailed or sent or
delivered as to the Grantor, to 1801 California Street, #295, Denver, Colorado
80202, and as to Secured Party, to Lindner Funds, c/o Ryback Management
Corporation, 7711 Carondelet, Suite 700, St. Louis, Missouri 63105, and
Renaissance Capital Partners II Ltd., 8080 North Central Expressway, Suite
210/LB 59, Dallas, Texas 75206, or as to each party at such other address as
shall be designated by such party in a written notice to each other party. All
such notices and other communications shall be effective when deposited in the
mails first class, postage prepaid, and in the case of notice by telex,
telegram or cable delivered to the telegraph company, addressed as aforesaid
and upon receipt of an answer back.
SECTION 19. Security Interest Absolute. All rights of the Secured
Party, all obligations of the Grantor hereunder and the security interests
hereunder shall, to the extent permitted by applicable law, be absolute and
unconditional except for the Permitted Lien, irrespective of:
(a) any lack of validity or enforceability of the Loan
Agreement, the Notes or any of the other Loan Documents;
(b) any change in the time, manner or place of payment of,
or in any other term of, all or any of the Obligations or any other amendment
or waiver of or any consent to any departure from the Loan Agreement, the Notes
or any of the other Loan Documents;
(c) any exchange, release or non-perfection of any other
collateral, or any release or amendment or waiver of or consent to departure
from any guaranty, for all or any of the obligations; or
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<PAGE> 55
(d) any other circumstance which might otherwise
constitute a defense available to, or a discharge of, the Grantor in respect of
the Obligations.
SECTION 20. Continuing Security Interest. This Agreement shall create
a continuing security interest in the Collateral and shall (a) remain in full
force and effect until full payment and performance of the Obligations, (b) be
binding upon the Grantor, its successors and assigns and (c) inure to the
benefit of the Secured Party and its successors, transferees and assigns.
Without limiting the generality of the foregoing clause (c), the Secured Party
may assign or otherwise transfer any of their respective rights under this
Agreement to any other Person, and such Person shall thereupon become vested
with all the benefits in respect thereof granted herein or otherwise to the
Secured Party.
SECTION 21. Waiver of Marshalling. All rights of marshalling of
assets of the Grantor, including any such right with respect to the Collateral,
are hereby waived by the Grantor.
SECTION 22. Limitation by Law. All rights, remedies and powers
provided in this Agreement may be exercised only to the extent that the
exercise thereof does not violate any applicable provision of law, and all the
provisions of this Agreement are intended to be subject to all applicable
mandatory provisions of law which may be controlling and to be limited to the
extent necessary so that they will not render this Agreement invalid,
unenforceable, in whole or in part, or not entitled to be recorded, registered
or filed under the provisions of any applicable law.
SECTION 23. Termination of Agreement. Upon the full payment and
performance of the Obligations, this Agreement shall terminate and be of no
further force and effect and the Secured Party shall, at the request and the
expense of the Grantor, execute and deliver to the Grantor such documents and
instruments reasonably requested by the Grantor to evidence the release of the
security interests created by this Agreement; provided, however,
notwithstanding the termination of, and the release of the security interests
created by, this Agreement, the obligations of the Grantor and the rights of
the Secured Party under Sections 4 and 16 shall survive such termination and
release.
SECTION 24. Survival of Representations and Warranties. All
representations and warranties contained in this Agreement or made in writing
by or on behalf of the Grantor in connection herewith shall survive the
execution and delivery of this Agreement and repayment and performance of the
obligations. Any investigation by the Secured Party shall not diminish in any
respect whatsoever its rights to rely on such representations and warranties.
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<PAGE> 56
SECTION 25. Separability. Should any clause, sentence, paragraph,
subsection or Section of this Agreement be judicially declared to be invalid,
unenforceable or void, such decision will not have the effect of invalidating
or voiding the remainder of this Agreement, and the parties hereto agree that
the part or parts of this Agreement so held to be invalid, unenforceable or
void will be deemed to have been stricken herefrom by the parties hereto, and
the remainder will have the same force and effectiveness as if such stricken
part or parts had never been included herein.
SECTION 26. Captions. The captions in this Agreement have been
inserted for convenience only and shall be given no substantive meaning or
significance whatever in construing the terms and provisions of this Agreement.
SECTION 27. No Waiver; Remedies. No failure on the part of the
Secured Party to exercise, and no delay in exercising, any right hereunder
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
not exclusive of any remedies provided by law.
SECTION 28. Execution in Counterparts. This Agreement may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
SECTION 29. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF COLORADO, EXCEPT TO THE
EXTENT THAT REMEDIES HEREUNDER IN RESPECT OF ANY PARTICULAR COLLATERAL ARE
GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF COLORADO. THE
PARTIES HERETO AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH
THIS AGREEMENT SHALL BE TRIED AND LITIGATED ONLY IN THE LOCAL, STATE OR FEDERAL
COURTS LOCATED WITHIN THE CITY AND COUNTY OF DENVER, COLORADO, AND EACH PARTY
WAIVES ANY RIGHT IT MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR
TO OBJECT TO SUCH VENUE.
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IN WITNESS WHEREOF, the Grantor has caused this Agreement to be duly
executed and delivered by its officers thereunto duly authorized as of the date
first above written.
SCIENTIFIC SOFTWARE-INTERCOMP, INC.,
a Colorado corporation
By:
------------------------------------
Name:
----------------------------------
Title:
--------------------------------
SCIENTIFIC SOFTWARE-INTERCOMP
(U.K.) LIMITED,
a United Kingdom corporation
By:
------------------------------------
Name:
----------------------------------
Title:
--------------------------------
15
<PAGE> 58
SCHEDULE I
TO
SECURITY AGREEMENT
Locations of Equipment and Inventory:
Location
Scientific Software-Intercomp, Inc.
1801 California Street, Suite 295
Denver, Colorado 80202
Scientific Software-Intercomp, Inc.
10333 Richmond Avenue, Suite 1100
Houston, Texas 77042-4122
Kinesix
9800 Richmond Avenue, Suite 750
Houston, Texas 77042
London Office
Monarch House
Crabtree Office Village
Eversley Way, Egham
Surrey, TW20 8R4 UK
<PAGE> 59
SCHEDULE II
TO
SECURITY AGREEMENT
Location of Records which Evidence Receivables
Other than Principal Executive Office of the Grantor:
Scientific Software-Intercomp, Inc.
1801 California Street, Suite 295
Denver, Colorado 80202
Scientific Software-Intercomp, Inc.
10333 Richmond Avenue, Suite 1100
Houston, Texas 77042-4122
Kinesix
9800 Richmond Avenue, Suite 750
Houston, Texas 77042
London Office
Monarch House
Crabtree Office Village
Eversley Way, Egham
Surrey, TW20 8R4 UK
<PAGE> 60
EXHIBIT F
SCIENTIFIC SOFTWARE-INTERCOMP, INC.
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and
entered into on April 26, 1996, by and among SCIENTIFIC SOFTWARE-INTERCOMP,
INC., a Colorado Corporation ("SSI"), and LINDNER DIVIDEND FUND, A SERIES OF
LINDNER INVESTMENTS, a Massachusetts business trust ("Lindner"), and
RENAISSANCE CAPITAL PARTNERS II, LTD., a Texas limited partnership
("Renaissance"), Lindner and Renaissance being collectively referred to herein
as the "Investors".
WITNESSETH:
WHEREAS, the parties hereto have entered into a Loan Agreement of even
date herewith (the "Loan Agreement") pursuant to which the Company will issue
and the Investors will acquire promissory notes to be issued by the Company
pursuant to the Loan Agreement; and
WHEREAS, in connection with acquiring the promissory notes of the
Company the Investors are also acquiring certain stock purchase rights (the
"Stock Purchase Rights") with respect to shares of the Company's voting common
stock, no par value (the "Common Stock"), with the Stock Purchase Rights of
Lindner entitling it to purchase up to 1,500,000 shares of Common Stock and the
Stock Purchase Rights of Renaissance entitling it to purchase up to 450,000
shares of Common Stock, all on such terms and conditions as provided in the
Loan Agreement and other documents relating thereto; and
WHEREAS, the Company has agreed to provide to the Investors certain
registration rights set forth herein to induce the Investors to enter into the
Loan Agreement and the execution of this Agreement by the parties hereto is a
condition to the obligations of the Company and the Investors under the Loan
Agreement;
ACCORDINGLY, for and in consideration of the mutual promises,
covenants, representations and warranties contained herein and on the terms and
conditions set forth herein, the parties hereto do hereby agree as follows:
1. DEFINITIONS
1.1 Definitions.
For purposes of this Agreement:
a. The terms "register," "registered," and "registration" refer
to a registration effected by preparing and filing a registration statement or
similar document in compliance with the Securities Act of 1933, as amended (the
"Act"), and the declaration or ordering of the effectiveness of such
registration statement or document;
b. The term "Registrable Securities" means (i) the Common Stock
of the Company issuable or issued upon exercise of the Stock Purchase Rights,
(ii) any Common Stock of the Company issued or issuable with respect to the
Common Stock referred to in clause (i) above (or
<PAGE> 61
issuable upon the conversion or exercise of any warrant, right or other
security which is issued or issuable with respect to the Common Stock referred
to in clause (i) above) by way of stock dividend; any other distribution with
respect to or in exchange for, or in replacement of Common Stock; stock split;
or in connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization;
c. The number of shares of "Registrable Securities then
outstanding" shall be an amount equal to the number of shares of Common Stock
outstanding which have been issued or are issuable pursuant to the exercise of
the Stock Purchase Rights; and
d. The term "Holder" means the Investors and any assignee thereof
and any person owning or having the right to acquire Registrable Securities in
accordance with the provisions hereof.
2. SECURITIES SUBJECT TO THIS AGREEMENT
2.1 Securities.
The securities entitled to the benefits of this Agreement are the
Registrable Securities but, with respect to any particular Registrable
Security, only if and so long as such a security continues to be a "Restricted
Security." A Registrable Security ceases to be a "Restricted Security" when (i)
it has been effectively registered under the Act and disposed of in accordance
with the registration statement covering it, (ii) it is distributed to the
public pursuant to Rule 144 under the Act, or (iii) it has otherwise been
transferred and a new certificate or other evidence of ownership for it not
bearing a restrictive legend and not subject to any stop transfer order
lawfully has been delivered by or on behalf of the Company to the Holder along
with an opinion of counsel to the Company reasonably satisfactory to the Holder
thereof to the effect that no other restriction on transfer exists.
3. REGISTRATION RIGHTS
3.1 Demand for Registration.
a. The Company hereby agrees to register, subject to the terms
and conditions set forth herein, all or any portion of the Registrable
Securities if at any time it shall receive a written request from the Holders
of at least twenty percent in the aggregate of the Registrable Securities then
outstanding that the Company file with the Securities and Exchange Commission
(the "SEC") a registration statement under the Act covering the registration of
at least ten percent of the Registrable Securities then outstanding. The
Company shall, within ten days of its receipt thereof, give written notice of
such request to all Holders at the last known address of each such Holder
maintained by the Company or the Company's transfer agent. The Holders shall
have 15 days from the receipt of such notice by the Company to request that all
or a portion of their respective Registrable Securities be included in such
registration. The Company hereby agrees, subject to the limitations hereof, to
use its best efforts to effect as soon as reasonably possible, and in any event
(if legally possible, and as allowed by the SEC, and if no factor outside the
Company's reasonable control prevents it) within ninety days of the receipt of
the initial written
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registration request, to effect the registration under the Act of all
Registrable Securities which the Holders have requested.
b. If the Holders initiating the registration request hereunder
("Initiating Holders") intend to distribute the Registrable Securities covered
by their request by means of an underwriting, they shall select the managing
underwriter or underwriters, subject to the approval of the Company, which
approval shall not be unreasonably withheld, and shall so advise the Company as
a part of their request made pursuant to this Agreement, and the Company shall
include such information in the written notice to the other Holders. In such
event, the right of any Holder to include Registrable Securities in such
registration shall be conditioned upon such holder's participation in such
underwriting and the inclusion of such holder's Registrable Securities in the
underwriting (unless otherwise mutually agreed by such Holder, the Company, the
underwriter and a majority in interest of the Initiating Holders and unless
limited to the extent provided herein). All Holders proposing to distribute
their securities through such underwriting shall (together with the Company as
provided in Section 3.3e) enter into an underwriting agreement in customary
form with the underwriter or underwriters selected for such underwriting by
mutual agreement of the Company and a majority in interest of the Initiating
Holders, which agreement shall not be unreasonably withheld. Notwithstanding
any other provision of this Section 3.1, if the underwriter advises the
Initiating Holders and the Company in writing that marketing factors require a
limitation of the number of shares to be underwritten, then the Initiating
Holder shall so advise all Holders of Registrable Securities which would
otherwise be underwritten pursuant hereto, and the number of shares of
Registrable Securities that may be included in the underwriting shall be
allocated on a pro rata basis among all Holders that have requested to
participate in such registration including the Initiating Holders.
c. Notwithstanding any provision to the contrary set forth
herein, the parties hereto hereby acknowledge and agree that the Company shall
be obligated to effect only two registrations pursuant to this Section 3.1
(counting for this purpose only registrations which have been declared or
ordered effective and pursuant to which securities have been sold).
3.2 "Piggy-Back" Registration.
If, but without any obligation to do so, the Company from time to time
proposes to register any of its capital stock or other securities under the Act
in connection with the public offering of such securities for its own account
or for the account of its security holders exercising any registration rights,
other than Holders of Registrable Securities pursuant to Section 3.1 (a
"Piggy-Back Registration Statement") and other than (i) a registration relating
solely to the sale of securities to participants in a Company stock plan or
employee benefit plan, (ii) a registration relating solely to an SEC Rule 145
transaction or any rule adopted by the SEC in substitution thereof or in
amendment thereto, or (iii) a registration on any form which does not permit
secondary sales, the Holders of Registrable Securities shall be entitled to
include all or any portion of their Registrable Securities in such registration
(and related underwritten offering, if any) on the following terms and
conditions:
a. The Company shall give written notice of such proposed
registration to each Holder of Registrable Securities, and each Holder shall
have the right to request, by written notice
3
<PAGE> 63
given to the Company within twenty days of the date that such written notice
was given by the Company to such Holder, that a specific number of Registrable
Securities held by such Holder will be included in the Piggy-Back Registration
Statement (and related underwritten offering, if any);
b. If the Piggy-Back Registration Statement relates to an
underwritten offering, the notice given to each Holder shall specify the name
or names of the managing underwriter or underwriters for such offering. In
addition such notice shall also specify the number of securities to be
registered for the account of the Company and for the account of its
shareholders other than the Holders of Registrable Securities, if any;
c. If the Piggy-Back Registration Statement relates to an
underwritten offering, each Holder of Registrable Securities to be included
therein must agree (x) to sell such Holder's Registrable Securities on the same
basis as provided in the underwriting arrangement approved by the Company, and
(y) to timely complete and execute all customary questionnaires, powers of
attorney, indemnities, hold-back and lock-up agreements, underwriting
agreements and other documents required under the terms of such underwriting
arrangements or by the SEC or by any state securities regulatory body;
d. If the managing underwriter for the underwritten offering
under the Piggy-Back Registration Statement determines in good faith that
inclusion of all or any portion of the Registrable Securities in such offering
would adversely affect the ability of the underwriters for such offering to
sell all of the securities requested to be included for sale in such offering
at the best price obtainable therefor, the aggregate number of Registrable
Securities that may be sold by the Holders shall be limited to such number of
Registrable Securities, if any, that the managing underwriter or underwriters
determine may be included therein without such adverse effect as provided
below. If the number of securities proposed to be sold in such underwritten
offering exceeds the number of securities that may be sold in such offering,
there shall be included in the offering, first, up to the maximum number of
securities to be sold by the Company for its own account and second, as to the
balance, if any, the number of shares of Registrable Securities and shares of
other selling stockholders that may be so included shall be allocated among the
Holders and other selling stockholders requesting inclusion of shares pro rata
on the basis of the number of shares of Registrable Securities and other shares
held by such Holders and other selling stockholders; provided, however, so that
such allocation shall not operate to reduce the aggregate number of Registrable
Securities and other shares to be included in such registration, if any Holder
or other selling stockholder does not request inclusion of the maximum number
of shares of Registrable
4
<PAGE> 64
Securities and other shares allocated to him pursuant to the above-described
procedure, the remaining portion of his allocation shall be reallocated among
those requesting Holders and other selling stockholders whose allocations did
not satisfy their requests pro rata on the basis of the number of shares of
Registrable Securities and other shares held by such Holders and other selling
stockholders and this procedure shall be repeated until all of the shares of
Registrable Securities and other shares which may be included in the
registration on behalf of the Holders and other selling stockholders have been
so allocated. The Company shall not limit the number of Registrable Securities
to be included in a Piggy-Back Registration in order to include shares held by
stockholders with no registration rights or to include any shares of stock
issued to employees, officers, directors or consultants pursuant to any Company
benefit plan or otherwise; and
e. Holders of Registrable Securities shall have the right to
withdraw their Registrable Securities from the Piggy-Back Registration
Statement, but if the same relates to an underwritten offering, they may only
do so during the time period and on the terms agreed upon among the
underwriters for such underwritten offering and the Holders of Registrable
Securities.
3.3 Obligations of the Company.
Whenever required under this Section 3 to effect the registration of
any Registrable Securities, the Company shall use its best efforts to effect
such registration to permit the sale of such Registrable Securities in
accordance with the intended plan of distribution thereof, and pursuant
thereto, the Company shall, as expeditiously as reasonably possible:
a. Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use its best lawful efforts to cause
such registration statement to become effective, and keep such registration
statement effective until all such Registrable Securities have been
distributed, and or until 120 days have elapsed since such registration
statement became effective (subject to extension of this period for a period of
time equal to the period the Holder refrains from selling any securities
included in such registration at the request of the underwriter and as provided
below);
b. Prepare and file with the SEC such amendments and supplements
to such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
5
<PAGE> 65
Act with respect to the disposition of all securities covered by such
registration statement, or until 120 days have elapsed since such registration
statement became effective (subject to the extension of this period for a
period of time equal to the period the Holder refrains from selling any
securities included in such registration at the request of the underwriter and
as provided below);
c. Furnish to the Holders such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Act, and such other documents as they may reasonably request in order to
facilitate the disposition of Registrable Securities owned by them;
d. Use its best lawful efforts to register and qualify the
securities covered by such registration statement under such securities or Blue
Sky laws of such jurisdictions as shall be reasonably requested by the Holders,
provided that the Company shall not be required in connection therewith or as a
condition thereto to qualify as a broker-dealer in any states or jurisdictions
or to do business or to file a general consent to service of process in any
such states or jurisdictions unless the Company is already subject to service
in such jurisdiction;
e. In the event of any underwritten public offering, enter into
and perform its obligations under an underwriting agreement with the managing
underwriter of such offering, in usual and customary form reasonably
satisfactory to the Company and the Holders of a majority of the Registrable
Securities to be included in such offering. Each Holder participating in such
underwriting shall also enter into and perform its obligations under such an
agreement;
f. Notify each Holder of Registrable Securities covered by such
registration statement, at any time when a prospectus relating thereto and
covered by such registration statement is required to be delivered under the
Act, of the happening of any event as a result of which the prospectus included
in such registration statement, as then in effect, includes an untrue statement
of a material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in the light
of the circumstances then existing;
g. In the event of the notification provided for in Section
3.3(f) above, the Company shall use its best efforts to prepare and file with
the SEC (and to provide copies thereof to the Holders) as soon as reasonably
possible an amended prospectus complying with the Act, and the period during
which the prospectus referred to in the notice
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<PAGE> 66
provided for in Section 3.3(f) above cannot be used and the time period prior
to the use of the amended prospectus referred to in this Section 3.3(g), shall
not be counted in the 120 day period of this Section 3.3;
h. Otherwise use its best efforts to comply with all applicable
rules and regulations of the SEC, and make available to its security holders,
as soon as reasonably practicable, an earnings statement covering the period of
at least 12 months, but not more than 18 months, beginning with the first month
after the effective date of the registration statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the Act;
i. Promptly notify the selling Holders and the managing
underwriter, if any, and (if requested by any such person) confirm such advice
in writing:
(1) when the prospectus or any supplement or
post-effective amendment has been filed, and, with respect to the
registration statement or any post-effective amendment, when the same
has become effective,
(2) of any request by the SEC for amendments or
supplements to the registration statement or the prospectus or for
additional information,
(3) of the issuance by the SEC of any stop order
suspending the effectiveness of the registration statement or the
initiation of any proceedings for that purpose, and
(4) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Registrable
Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose;
j. Make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of the registration statement at the
earliest possible time;
k. Promptly prior to the filing of any document which is to be
incorporated by reference into the registration statement or the prospectus
(after initial filing of the registration statement) provide copies of such
document to counsel to the selling Holders and to the managing underwriter, if
any;
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l. Furnish to the selling Holders and the managing underwriter,
if any, without charge, at least one signed copy of the registration statement
and any amendments thereto, including financial statements and schedules, all
documents incorporated therein by reference and all exhibits (including those
incorporated by reference);
m. Cooperate with the selling Holders and the managing
underwriter, if any, to facilitate the timely preparation and delivery of
certificates not bearing any restrictive legends representing the Registrable
Securities to be sold and cause such Registrable Securities to be in such
denominations and registered in such names as the managing underwriter may
request at least three business days prior to any sale of Registrable
Securities to the underwriters;
n. Use its best efforts to cause the Registrable Securities
covered by the registration statement to be registered with or approved by such
other governmental agencies or authorities as may be necessary to enable the
seller or sellers thereof or the underwriters, if any, to consummate the
disposition of such Registrable Securities;
o. Enter into such reasonable agreements and do anything else
reasonably necessary or advisable in order to expedite or facilitate the
disposition of such Registrable Securities; and
p. Use its best efforts to list all Common Stock covered by the
registration statement on such securities exchange on which any of the Common
Stock is then listed or, if the Company's Common Stock is not then quoted on
NASDAQ or listed on any national securities exchange, use its best efforts to
have such Common Stock covered by such registration statement quoted on NASDAQ
or, at the option of the Company, listed on a national securities exchange.
3.4 Furnish Information.
a. It shall be a condition precedent to the obligations of the
Company to take any action pursuant to this Section 3 that the selling Holders
shall furnish to the Company any and all information reasonably requested by
the Company, its officers, directors, employees, agents or representatives, the
underwriter or underwriters, if any, and the SEC or any other governmental
regulatory agency, including but not limited to (i) such information regarding
themselves, the Registrable Securities held by them, and the intended method of
disposition of such securities, as shall be required to effect the registration
of their Registrable Securities, and (ii) the identity of and compensation to
be paid to any proposed underwriter to be employed in connection therewith.
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b. In connection with the preparation of filing of each
registration statement registering Registrable Securities under the Act, the
Company shall give the Holders of Registrable Securities on whose behalf such
Registrable Securities are to be registered and their underwriters, if any, and
their respective counsel and accountants, at such Holder's sole cost and
expense (except as otherwise set forth herein), such access to, and the right
to make copies of, the Company's records and documents and such opportunities
to discuss the business of the Company with its officers and the independent
public accountants who have certified its financial statements as shall be
reasonably necessary in the opinion of such Holders and such underwriters or
their respective counsel, to conduct a reasonable investigation within the
meaning of the Act.
3.5 Expenses of Demand Registration.
a. Except as set forth below, all expenses, other than
underwriting discounts and commissions incurred in connection with the demand
registration pursuant to Section 3.1 above, including, without limitation, all
registration, filing and qualification fees, printers' and accounting fees,
fees and disbursements of counsel for the Company and the underwriters,
exclusive of the fees and disbursements of counsel for the selling Holders,
shall be borne by the Company; provided, however, that the Company shall not be
required to pay for any expenses of any registration proceeding which was
commenced pursuant to Section 3.1 if the registration request is subsequently
withdrawn at the written request of the Holders of the majority of the
Registrable Securities subject to such registration. In the event of such a
withdrawal of registration, all Holders shall bear the reasonable expenses of
registration, and reimburse the Company for all reasonable expenses incurred by
the Company in connection therewith (except the Company's overhead expenses and
expenses related to the use of time by the Company's officers, directors and
employees in effecting such registration), on a pro rata basis based upon the
number of shares of Registrable Securities requested to be included in such
registration by each such Holder and such registration proceeding shall not be
counted as a requested registration pursuant to Section 3.1.
b. Notwithstanding the foregoing, if at the time of such
withdrawal of the registration, the Holders have learned of a material adverse
change in the condition or business of the Company from that known by the
Initiating Holders at the time of their registration request, then the Holders
shall not be required to pay any of such expenses incurred by the Company, such
registration shall not be counted as a requested registration pursuant to
Section 3.1 and such Holders shall retain all of their rights pursuant to
Section 3.1 of this Agreement.
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3.6 Expenses of Piggy-Back Registration.
The Company shall bear and pay all expenses attributable to the
inclusion of the Holders' Registrable Securities in any registration, filing or
qualification of Registrable Securities pursuant to Section 3.2 including,
without limitation, such Holder's incremental portion of all reasonable
registration, filing, and qualification fees, printers' and accounting fees,
fees and disbursements of counsel of the Company, but exclusive of the fees and
disbursements of counsel for the selling Holders. Each Holder shall bear the
expenses of any underwriting discounts and commissions, if any, attributable to
the sale of his shares of Common Stock in connection with such Piggy-Back
Registrations.
3.7 Indemnification.
In the event that any Registrable Securities are included in a
registration statement under this Section 3:
a. To the extent permitted by law, the Company will indemnity and
hold harmless each Holder, the officers and directors of each Holder, any
underwriter (as defined in the Act) for such Holder and each person, if any,
who controls such Holder or underwriter within the meaning of the Act or the
Securities Exchange Act of 1934, as amended (the "1934 Act"), against any
losses, claims, damages, liabilities (joint or several) and any legal or other
costs and expenses reasonably incurred by them in connection with investigating
or defending any such loss, claim, damage or liability, or action to which they
may become subject under the Act, or other federal or state securities law,
insofar as such losses, claims, damages, costs, expenses or liabilities (or
actions in respect thereto arise out of or are based upon any of the following
statements, omissions or violations (collectively a "Violation"): (i) any
untrue statement or alleged untrue statement of a material fact with respect to
the Company or its securities contained in a registration statement, including
any preliminary prospectus or final prospectus contained therein or any
amendments or supplements thereto, (ii) the omission or alleged omission to
state therein a material fact with respect to the Company or its securities
required to be stated therein, or necessary to make the statements therein not
misleading, or (iii) any violation or alleged violation by the Company of the
Act, any federal or state securities law or any rule or regulation promulgated
thereunder. Notwithstanding the foregoing, the indemnity agreement contained
in this Section 3.7(a) shall not apply and the Company shall not be liable (i)
in any such case for any such loss, claim, damage, costs, expenses, liability,
or action to the extent that it arises out of or is based upon a Violation
which occurs in reliance upon and
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in conformity with written information furnished expressly for use in
connection with such registration by any such Holder, underwriter or
controlling person, or (ii) for amounts paid in settlement of any such loss,
claim, damage, liability, or action if such settlement is effected without the
prior written consent of the Company, which consent shall not be unreasonably
withheld.
b. To the extent permitted by law, each Holder who participates
in a registration pursuant to the terms and conditions of this Agreement shall
indemnity and hold harmless the Company, each of its directors and officers who
have signed the registration statement, each person, if any, who controls the
Company within the meaning of the Act, each of the Company's employees, agents
and representatives, any underwriter and any other Holder selling securities in
such registration statement or any of its directors or officers, or any person
who controls such Holder, against any losses, claims, damages, costs, expenses,
liabilities (joint or several) to which the Company or any such director,
officer, controlling person, employee, agent, representative, or underwriter,
or controlling person or other such Holder or director or officer thereof or of
said controlling person may become subject, under the Act, the 1934 Act or
other federal or state law, only insofar as such losses, claims, damages,
costs, expenses or liabilities or actions in respect thereto arise out of or
are based upon any Violation, in each case to the extent and only to the extent
that such violation occurs in reliance upon and in conformity with written
information furnished by such Holder expressly for use in connection with such
registration; and each such Holder will reimburse any legal or other expenses
reasonably incurred by the Company or any such director, officer, employee,
representative, controlling person, underwriter or controlling person, other
Holder, officer or director thereof or of any controlling person in connection
with investigating or defending any such loss, claim, damage, liability, or
action; provided, however, that the indemnity agreement contained in this
Section 3.7(b) shall not apply to amounts paid in settlement of any such loss,
claim, damage, costs, expenses, liability or action if such settlement is
effected without the prior written consent of the Holder, which consent shall
not be unreasonably withheld.
c. Promptly after receipt by an indemnified party under this
Section 3.7 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect
thereof is to be made against any indemnifying party under this Section 3.7,
deliver to the indemnifying party a written notice of the commencement thereof
and the indemnifying party shall have the right to participate in, and, to the
extent the indemnifying party so desires, jointly with any other indemnifying
party similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
have the
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right to retain its own counsel, with the fees and expenses to be paid by the
indemnifying party, if representation of such indemnified party by the counsel
retained by the indemnifying party would be inappropriate due to actual or
potential differing interests between such indemnified party and any other
party represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action shall not relieve the indemnifying party of its
obligations under this Section 3.7, except to the extent that the failure
results in a failure of actual notice to the indemnifying party and such
indemnifying party is materially prejudiced in its ability to defend such
action solely as a result of the failure to give such notice.
d. If the indemnification provided for in this Section 3.7 is
held by a court of competent jurisdiction to be unavailable to an indemnified
party under this Section in respect of any losses, claims, damages, costs,
expenses, liabilities or actions referred to herein, then each indemnifying
party, in lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified party as a result of such losses,
claims, damages, costs, expenses, liabilities or actions in such proportion as
is appropriate to reflect the relative fault of the indemnifying party on the
one hand and of the indemnified party on the other in connection with the
Violation that resulted in such losses, claims, damages, costs, expenses,
liabilities or actions. The relative fault of the indemnifying party on the
one hand and of the indemnified party on the other shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of the material fact or the omission to state a material fact relates
to information supplied by the indemnifying party or by the indemnified party,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The Company on the one hand and the Holders on the other hand agree
that it would not be just and equitable if contribution pursuant to this
Section 3.7 were determined by a pro rata allocation or by any other method of
allocation which does not take account of the equitable considerations referred
to in the immediately preceding paragraph. The amount paid or payable by an
indemnified party as a result of losses, claims, damages, costs, expenses,
liabilities and actions referred to in the immediately preceding paragraph
shall be deemed to include, subject to the limitations set forth above, any
reasonable legal or other expenses incurred by such indemnified party in
connection with defending any such action or claim. Notwithstanding the
provisions of this Section 3.7, the Holders shall not be required to contribute
any amount in excess of the amount by which the total price at which the
securities were sold by such indemnified Holder and distributed to the public
exceeds the amount of any damages which such Holder has otherwise been
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required to pay by reason of such Violation. No person guilty of fraudulent
misrepresentations (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who is not guilty of such fraudulent
misrepresentation.
3.8 Reports Under Securities Exchange Act of 1934.
With a view to making available to the Holders the benefits of Rule 144
promulgated under the Act and any other rule or regulation of the SEC that may
at any time permit a Holder to sell securities of the Company to the public
without registration or pursuant to a registration on Form S-3, if applicable,
the Company agrees to use its best lawful efforts to:
a. Make and keep public information regarding the Company
available, as those terms are understood and defined in SEC Rule 144, at all
times;
b. Take such action, including the continued registration of its
Common Stock under Section 12 of the 1934 Act, as is necessary to enable the
Holders to trade their Registrable Securities on a public market;
c. File with the SEC in a timely manner all reports and other
documents required of the Company under the Act and the 1934 Act;
d. Furnish to any Holder, so long as the Holder owns any
Registrable Securities, forthwith upon request (1) a written statement by the
Company, if true, that it has complied with the reporting requirements of SEC
Rule 144, the Act and the 1934 Act (at any time after it has become subject to
such reporting requirements), or that it qualifies as a registrant whose
securities may be resold pursuant to Form S-3 (at any time after it so
qualifies), (ii) a copy of the most recent annual or quarterly report of the
Company and such other SEC reports and documents so filed by the Company, and
(iii) such other information (but not any opinion of counsel) as may be
reasonably requested by any Holder seeking to avail himself of any rule or
regulation of the SEC which permits the selling of any such securities without
registration or pursuant to such form.
3.9 Assignment of Registration Rights.
The right to cause the Company to register Registrable Securities
pursuant to this Section 3 may be assigned by the Investors to any transferee
or assignee of the Registrable Securities; provided that the Company is, within
a
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reasonable time after such transfer, furnished with written notice of the name
and address of such transferee or assignee and the Registrable Securities with
respect to which such registration rights are being assigned; and provided,
further, that such assignment shall be effective only if immediately following
such transfer the further disposition of the Registrable Securities by the
transferee or assignee is restricted under the Act; it being the intention that
so long as an Investor holds any Registrable Securities hereunder, either
Investor or its transferee or assignee may exercise the demand rights to
registration and piggy-back registration rights hereunder. Other than as set
forth above, the parties hereto hereby agree that the registration rights
hereunder shall not be transferable or assigned and any contemplated transfer
or assignment in contravention of this Agreement shall be deemed null and void
and of no effect whatsoever.
3.10 Other Matters.
Each Holder of Registrable Securities hereby agrees by acquisition of
such Registrable Securities that, upon receipt of any notice from the Company
of the happening of any event which makes any statement made in the
registration statement, the prospectus or any document incorporated therein by
reference, untrue in any material respect or which requires the making of any
changes in the registration statement, the prospectus or any document
incorporated therein by reference, in order to make the statements therein not
misleading in any material respect, such Holder will forthwith discontinue
disposition of Registrable Securities under the prospectus related to the
applicable registration statement until such holder's receipt of the copies of
the supplemented or amended prospectus, or until it is advised in writing by
the Company that the use of the prospectus may be resumed, and has received
copies of any additional or supplemental filings which are incorporated by
reference in the prospectus. In the event the Company shall give any such
notice, the 120-day period referred to in Section 3.3 shall be extended by the
number of days during the period from the date of such notice to the date when
the Holder has received the copies of the supplemented or amended prospectus or
has been advised in writing by the Company that the use of the prospectus may
be resumed.
4. MISCELLANEOUS
4.1 Successors and Assigns.
Subject to the terms and conditions of this Agreement, the rights and
obligations set forth herein shall inure to the benefit of and be binding upon
the respective successor and assigns of the parties. Nothing in this
Agreement,
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express or implied, is intended to confer upon any party other than the parties
hereto or their respective successors and assigns any rights, remedies,
obligations or liabilities under or by this Agreement. The rights and powers
of the Investors are granted to the Investors as owners of the Registrable
Securities. Consequently, the parties agree that such rights and powers exist
separately and distinctly with respect to each share of the Registrable
Securities and as to each such share, unless otherwise specified in this
Agreement, shall pass with it so that any owner of any of the Registrable
Securities, whether becoming such by transfer, assignment, operation of law or
otherwise, shall have all of the rights and powers of the Investors hereunder,
and shall be entitled to exercise them in full, with or without the agreement
or consent of other such owners, and no transfer or assignment shall divest an
Investor or any subsequent owner of such rights and powers unless all shares of
Registrable Securities owned by such Investors are transferred or assigned.
4.2 Notices.
Unless otherwise provided, any notice required or permitted under this
Agreement shall be given in writing and shall be deemed effective upon personal
delivery to the party to be notified, telefax or telecopy communication when
confirmed in writing on the same day, or three days after deposit with the
United States mail, by registered or certified mail, postage prepaid and
addressed to the party to be notified at the address indicated for such party
on the signature page hereof, or at such other address as such party may
designate by advance written notice to the other parties.
4.3 Amendments and Waivers.
Any term of this Agreement may be amended and the observance of any
term of this Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively), only with the written
consent of the Company and the Holders of a majority of the Registrable
Securities. Any amendment or waiver effected in accordance with this paragraph
shall be binding upon each Holder of any Registrable Securities at the time
outstanding, each future Holder of all such securities, and the Company.
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4.4 Enforcement.
The Investors and the Company shall be entitled to enforce their rights
under this Agreement specifically (without posting a bond or other security),
to recover damages by reason of any breach of any provision of this Agreement
and to exercise all of their rights existing in their favor. The parties
hereto hereby agree and acknowledge that money damages may not be an adequate
remedy for any breach of the provisions of this Agreement, and that the
Investors and the Company may in their sole discretion apply to any court of
law or equity of competent jurisdiction for specific performance and/or
injunctive relief in order to enforce or prevent any violation of the
provisions of this Agreement. In addition, upon the occurrence of a material
breach by the Company or by the Investors, the breaching party agrees to pay
and shall pay all costs and expenses (including prevailing party's attorneys'
fees and expenses) reasonably incurred in connection with the preservation and
enforcement of such party's rights hereunder.
4.5 Titles, Subtitles and Table of Contents.
The titles, subtitles and table of contents used in this Agreement are
used for convenience only and are not to be considered in construing or
interpreting this Agreement.
4.6 Severability.
If one or more provisions of this Agreement are held to be
unenforceable under applicable law, such provision shall be excluded from this
Agreement and the balance of the Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.
4.7 Entire Agreement.
Except as otherwise expressly set forth herein, this Agreement embodies
the complete agreement and understanding among the parties hereto with respect
to the subject matter hereof and thereof and supersedes and preempts any prior
understandings, agreements or representations by or among the parties, written
or oral, which may have related to the subject matter hereof in any way.
4.8 Counterparts.
This Agreement may be executed by facsimile in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
4.9 Governing Law.
This agreement shall be governed by and construed under the laws of the
State of Colorado except insofar as and to the extent that the laws of the
United States of America shall have application.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
INVESTORS COMPANY
- --------- -------
LINDNER DIVIDEND FUND, SCIENTIFIC SOFTWARE-INTERCOMP, INC.
A SERIES OF LINDNER INVESTMENTS
By: By:
------------------------------- -----------------------------------
Name: President
-----------------------------
Title:
----------------------------
RENAISSANCE CAPITAL PARTNERS II
By: Renaissance Capital Group, Inc.,
Its Managing General Partner
By:
---------------------------------
President
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