J:Legal\BHS Files\SSI\SSI-LOI4.doc
EXHIBIT B (18 PAGES)
March 27, 1998
CONFIDENTIAL
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Scientific Software-Intercomp, Inc.
0000 Xxxxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Attention: Mr. Xxxxxx Xxxxx, President and CEO
Re: Letter Agreement ("Agreement") for the acquisition
of Scientific Software-Intercomp, Inc.
Dear Mr. Xxxxx:
Based upon our discussions and our review of certain information that you
have provided to us to date, Xxxxx Xxxxxx Incorporated (the "Company"),
through one or more of its direct or indirect subsidiaries, desires to acquire
all of the issued and outstanding common stock of Scientific
Software-Intercomp, Inc., a Colorado corporation (together with its
subsidiaries, "SSI") by merger, share exchange, tender offer or otherwise.
Capitalized terms used but not otherwise defined in this Agreement shall have
the meanings attributed to them in Section 6 below. Based on the mutual
benefits and obligations of the parties and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties, intending to be legally bound, agree as follows:
1. Acquisition.
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a. Price. Subject to the negotiation and execution of a definitive
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acquisition agreement (containing the terms referred to herein) and any other
necessary documentation (collectively, the "Definitive Agreement") and the
other terms and conditions set forth herein, the Company will acquire all of
the issued and outstanding common stock of SSI for the SSI Stock Price paid in
U.S. dollars.
Scientific Software-Intercomp, Inc. Confidential
March 27, 1998
Page 17
b. Expected Closing; Termination. The Company desires to close the
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acquisition as soon as reasonably practicable, which Closing should occur
shortly after any meeting of shareholders of SSI required to approve the
transaction. Notwithstanding anything stated herein to the contrary, if the
Closing has not occurred on or before September 30, 1998, then either party
thereafter shall be entitled to terminate this Agreement by written notice to
the other; provided, that a termination shall not release or relieve any
obligations or liabilities accrued as of the effective date of termination,
including, but not limited to, any obligations under Sections 5(b) and 7(d)
hereof.
c. Assumptions. The proposed consideration to be paid in the
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transaction and the Company's agreement to proceed with the transaction is
based on the following assumptions:
(i) No assets of SSI have been disposed of since December 31, 1997 to
the date hereof, other than sales of inventory in the ordinary course of
business, and no assets other than sales of inventory in the ordinary course
of business and the assets comprising the Pipeline Simulation Division of SSI
shall be disposed of from the date of signing to closing. In addition, the
Company has assumed that ownership of all assets of SSI, including (without
limitation) technology, patents and intellectual property, necessary for the
operation of the SSI's business will remain with SSI following consummation of
the Definitive Agreement.
(ii) At Closing, SSI will not have any indebtedness or balances due
to or from any of its shareholders or their respective affiliates.
(iii) Neither party will owe fees or commissions to any investment
banking, brokerage or finder's firm (other than the Xxxxxxx Fee), and that if
any such fees or commissions arise out of this transaction, they will result
in an appropriate reduction of the purchase price.
(iv) The Net Working Capital of SSI reflected on an unaudited
consolidated balance sheet as of date no earlier than seven days prior to
Closing will be no less than the Net Working Capital amount reflected on SSI's
December 31, 1997 unaudited consolidated balance sheet previously furnished
(the "Unaudited Balance Sheet"), less $500,000; provided, that for purposes of
this Section 1(c)(iv), Net Working Capital (and any change therein) at
December 31, 1997 and at Closing excludes (i) the assets of SSI's Pipeline
Simulation Division to be sold to LICENERGY, Inc. but includes the proceeds to
be received by SSI from the sale of its Pipeline Simulation Division to the
extent retained, (ii) the Xxxxxxx Fee, and (iii) any part of the Xxxxxxx Debt
and the Renaissance Debt (including any accrued interest thereon).
(v) The Unaudited Balance Sheet and the related consolidated
statement of income for the fiscal year then ended, as heretofore delivered to
the Company, and the unaudited balance sheet described in Section 1(c)(iv)
above, present, and will present, fairly the financial position of SSI and its
consolidated subsidiaries as of the respective dates of those balance sheets
and the results of their operations for the period then ended and have been
prepared in accordance with generally accepted accounting principles applied
on a consistent basis; provided, that, in the case of the balance sheet
described in Section 1(c)(iv), the balance sheet is subject to normal year-end
adjustments and the absence of footnotes. As of December 31, 1997, there were
no material liabilities, direct or indirect, fixed or contingent, of the
Company or any of its consolidated subsidiaries that are not reflected in the
Unaudited Balance Sheet or in the notes thereto. Other than as set forth in
filings made with the U.S. Securities and Exchange Commission (or on Schedule
I hereto), there has been since December 31, 1997 no Material Adverse Change
in (or a Material Adverse Discovery regarding) SSI and its subsidiaries on a
consolidated basis.
(vi) SSI will not have any short- or long-term debt for borrowed
money at closing (other than the Xxxxxxx Debt (subject to Section 2(b)(vii)),
the Renaissance Debt (reduced as set forth in Section 2(b)(viii)), the
Halliburton Preferred Stock (subject to Section 2(a)(i)), and the Bank One
Debt (subject to Section 2(b)(ix)), and SSI will not incur any additional
long-term lease obligations beyond those described in the financial statements
previously provided to the Company.
(vii) SSI will consummate the sale of its Pipeline Simulation
Division to LICENERGY, Inc. and receive at least $1,500,000 in cash proceeds
from the sale pursuant to and in accordance with the terms of the Asset
Purchase Agreement dated as of March 1, 1998 among SSI, Xxxxxxx, Inc.,
Scientific Software-Intercomp UK, Ltd. and LICENERGY, Inc., without material
amendment or modification.
The Company will require further due diligence to determine a definitive
acquisition structure (i.e. whether the transaction would be a merger, share
exchange, tender offer or other transaction); however, it is our expectation
at this time that one of the Company's direct or indirect subsidiaries would
be the acquiror. The Company may elect to transaction structure in its
discretion.
2. Terms and Conditions.
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a. Significant Events. Within 15 days after execution of this
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Agreement, SSI shall approach Halliburton Company ("Halliburton") to request
one of the following from Halliburton:
(i) an agreement from Halliburton to accept not more than $2,400,000
from SSI, at or before the Closing, in full payment for and satisfaction of
the acquisition or termination of all rights, interests and benefits that
Halliburton may have under or to the Halliburton Preferred Stock and any other
SSI capital stock, and any other right or interest that Halliburton may have
in or to SSI or its assets ("Halliburton Buy-Out");
(ii) an agreement from Halliburton to accept from SSI a promissory
note due April 21, 2004 in the principal amount of $4,000,000, without
interest, at or before the Closing, in full satisfaction of the acquisition or
termination of all rights, interests and benefits that Halliburton may have
under or to the Halliburton Preferred Stock and any other SSI capital stock,
and any other right or interest that Halliburton may have in or to SSI or its
assets ("Halliburton Exchange Note"); or
(iii) a written consent or other enforceable document from
Halliburton to amend the SSI Articles of Incorporation with regard to the
rights of the Series A Preferred Stock of SSI, which would be amended to
clarify that the holder of any Series A Preferred Stock would only have one
right: the right to have the shares of Series A Preferred Stock redeemed at
any time on or after April 21, 2004, for $5.00 per share, and such amendment
would clarify that the holder of the Series A Preferred Stock would have no
other rights to require SSI to repurchase the Series A Preferred Stock or have
any other rights whatsoever to acquire or to require the repurchase by SSI of
any security of SSI or any assets of SSI. If Halliburton provides such
written consent or other enforceable document, an amendment to the SSI
Articles of Incorporation, which is satisfactory to the Company, must be filed
in the appropriate records of the Secretary of State for the State of Colorado
(in accordance with all applicable laws and regulations and in accordance with
all of SSI's corporate charter documents and bylaws, as amended) prior to the
Closing ("Halliburton Amendment").
It is acknowledged and agreed that if Halliburton fails or refuses to
enter into either of the Halliburton Buy-Out, the Halliburton Exchange Note or
the Halliburton Amendment described above, then the SSI Stock Price
automatically shall be reduced to $0.30 per share, without any further action
by or notice to any person or party. Notwithstanding the immediately
preceding sentence, if Halliburton agrees to accept between $2,400,000 and
$4,000,000 from SSI, at or before the Closing, in full payment for and
satisfaction of the acquisition or termination of all rights, interests and
benefits that Halliburton may have under or to the Halliburton Preferred Stock
and any other SSI capital stock, and any other right or interest that
Halliburton may have in or to SSI or its assets, then SSI and the Company
agree to negotiate in good faith an appropriate adjustment to the SSI Stock
Price between $.30 and $.50.
b. Additional Conditions. The procurement of Company financing would
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not be a condition of the transaction. However, the transaction and related
transactions would be subject to the following conditions (and to the extent
that the following are not completed to Company's satisfaction, then the
Company shall have the right to terminate this Agreement upon written notice
to SSI):
(i) the absence of any legal restraint, challenge or prohibition that
would prevent the consummation of the acquisition under applicable law;
(ii) the receipt of all material permits, approvals, filings and
consents required to be obtained or made, and all waiting periods required to
expire for consummation of the transaction having been obtained, made or
expired;
(iii) the receipt of all consents required for the acquisition under
any material contract, agreement or license to which SSI is a party; except
for those consents that are not obtained prior to closing that in the
aggregate would not have a Material Adverse Effect;
(iv) the absence of any material litigation or proceedings against
SSI or challenging the transaction;
(v) the compliance with covenants and continued validity of the
representations and warranties to be set forth in the Definitive Agreement;
(vi) all patents and patent applications, copyrights, trade secrets
and other intellectual property rights owned or used by SSI that have not
heretofore been assigned to SSI by the employees, consultants and agents of
SSI shall have been assigned to SSI or the Company's designee;
(vii) prior to Closing, the Xxxxxxx and Renaissance Loan Agreement
(and all corresponding promissory notes, security documents, stock warrants
and related instruments) shall have been amended to provide that (i) the
Xxxxxxx Debt has been reduced at Closing to no more than (and that Xxxxxxx has
forgiven all indebtedness, including accrued interest, of SSI above)
$1,400,000, which will be paid in full at Closing, and (ii) that Xxxxxxx shall
have no right to acquire any shares of stock (common or preferred) of SSI
(including, but not limited to, any further rights under the Xxxxxxx Warrant);
(viii) prior to Closing, the Xxxxxxx and Renaissance Loan Agreement
(and all corresponding promissory notes, security documents, stock warrants
and related instruments) shall have been amended to provide that (i) the
Renaissance Debt has been reduced at Closing to no more than (and that
Renaissance has forgiven all indebtedness, including accrued interest, of SSI
above) $1,300,000, plus simple interest following the Closing of no more than
7% per annum, (ii) the Renaissance Debt will mature and become payable on July
1, 1999 and (iii) Renaissance shall have no right to acquire any shares of
stock (common or preferred) of SSI (including, but not limited to, any further
rights under the Renaissance Warrant);
(ix) at or prior to Closing, the Bank One Debt must be fully paid and
discharged and any security interests or rights of Bank One in SSI or any of
its assets must be fully released and discharged;
(x) on and prior to Closing, there must not have been any Material
Adverse Change or Material Adverse Discovery;
(xi) to the extent required by law and SSI's Articles of
Incorporation and Bylaws, the shareholders of SSI shall have approved the
transaction;
(xii) any real property of SSI (whether owned or under lease) would
be subject to appropriate pre-closing environmental audits at the Company's
cost; and
(xiii) the assumptions in Section 1(c) above shall be true.
3. Documentation.
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a. Definitive Agreement. The acquisition by the Company of SSI would
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be subject to the negotiation of the Definitive Agreement (containing the
terms referred to herein), executed and agreed to by the Company's designated
subsidiary(ies) and SSI. As SSI might expect, the Company will seek to have
the Definitive Agreement contain provisions that it considers to be customary
for transactions of this type.
b. Definitive Agreement Terms. Although the Company reserves the
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right to introduce other provisions, the Company believes the draft agreements
proposed by the Company will include (without limitation) the following:
(i) Representations and warranties that the Company considers
customary and usual, in particular representations regarding ownership of
property and share capital, authority to enter into and consummate the
transactions, tax matters, more current financial statements, the existence of
contracts and absence of loss of rights as a result of the transaction,
absence of adverse changes, compliance with laws and no defaults, litigation,
environmental matters, intellectual property, labor and employee benefit
matters and contingent liabilities.
(ii) Affirmative and negative covenants to assure that no material
transaction occurs between signing and closing that is outside the ordinary
course of business or that would limit or impair the Company's ability to
operate SSI after the Closing.
(iii) The Definitive Agreement would provide that each party would
use reasonable efforts to obtain any necessary or desirable governmental
approvals, but would not require any party to take any action to obtain such
governmental approvals other than required filings and applications and
responding to appropriate information requests.
(iv) The Definitive Agreement would also otherwise reflect the terms
and provisions set forth herein, unless the parties mutually agree otherwise.
4. Due Diligence.
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a. Continued Due Diligence. Although the Company has reviewed some
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of the information that you have provided to the Company to date regarding
SSI's business, the Company will require the opportunity to engage in a more
complete review of SSI's business and its assets, liabilities and operations
before Closing. Changes in documentation could be required as a result of the
due diligence process. In addition, if there is a Material Adverse Discovery,
the Company will have the right to negotiate a reduced purchase price or to
terminate this Agreement.
b. Supplying of Information. Between the date hereof and the
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Closing, SSI shall provide the Company and its representatives with full
access at all reasonable times to the assets and employees of SSI and complete
and accurate information as the Company may reasonably request in cooperation
with any review, investigation or examination of the books and records,
accounts, contracts, properties, assets, operations and facilities of or
relating to records, accounts, contracts, properties, assets, operations and
facilities of or relating to SSI for purposes of consummating the transactions
contemplated by this Agreement. In connection therewith, SSI shall direct and
authorize SSI's independent public accountants to make available to the
Company and to the independent public accountants representing the Company all
working papers pertaining to the examination and audit by such accountants for
SSI. In connection therewith, SSI shall, with reasonable notice and under its
supervision, permit the Company to contact and meet with the employees of SSI,
such are involved in SSI at such place or places and at such times as
reasonably designated by the Company. SSI shall permit the Company to make
copies of the information relating to SSI contained in the books, file and
records of SSI. Any data and information obtained by the Company from SSI
shall be kept confidential and shall be returned to SSI upon its written
request if for any reason the sale of SSI to the Company does not close on the
Closing Date.
5. Other Agreements.
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a. No-Shop.
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(i) Each party agrees to negotiate in good faith to conclude a
transaction as outlined in this Agreement. Either party may terminate this
Agreement on or after September 30, 1998, for any reason whatsoever (subject
to Section 1(b) above). Additionally, SSI agrees that (A) prior to
termination, neither it nor any of its direct or indirect subsidiaries shall,
and each of them shall not permit any of its officers, directors, employees,
agents or representatives (including, without limitation, any investment
banker, attorney or accountant retained by it or any of its subsidiaries) to,
solicit or encourage (including by way of furnishing confidential or
non-public information), directly or indirectly, any inquiry, proposal or
offer with respect to a merger, consolidation or similar transaction
involving, or any purchase of all or a material part of the assets on a
consolidated basis or the capital stock of, SSI (any such proposal or offer
being hereinafter referred to as an "Acquisition Proposal") or engage in any
negotiations concerning an Acquisition Proposal; and (B) each of them will
immediately cease and cause to be terminated any existing negotiations with
any parties conducted heretofore with respect to any of the foregoing;
provided that nothing contained in this Section 5 shall prevent SSI or its
Board of Directors providing information (pursuant to a confidentiality
agreement in reasonably customary form) to, or engaging in any negotiations or
discussions with, any person or entity who has made an unsolicited bona fide
Acquisition Proposal that is superior to the proposal described in this
Agreement, and is reasonably capable of being financed, if the Board of
Directors of SSI, after consultation with its outside legal counsel,
determines that the failure to do so would be inconsistent with its fiduciary
or other legal obligations to its stockholders or creditors.
(ii) Prior to taking any action referred to in Section 5(a)(i), if
SSI intends to participate in any such discussions or negotiations or provide
any such information to any such third party, SSI shall give the Company
reasonable prior notice in writing of such action. SSI shall promptly notify
the Company in writing of any such requests for such information or the
receipt of any Acquisition Proposal, including the identity of the person or
group engaging in such discussions or negotiations, requesting such
information or making such Acquisition Proposal, and the material terms and
conditions of any Acquisition Proposal.
(iii) Nothing in this Section 5 shall permit SSI to enter into any
agreement with respect to an Acquisition Proposal prior to termination of this
Agreement, it being agreed that prior to that date, SSI will not enter into
any agreement with any person or entity that provides for, or in any way
facilitates, an Acquisition Proposal, other than a confidentiality agreement
in reasonably customary form.
b. BREAK-UP FEE. SSI ACKNOWLEDGES THAT THE COMPANY HAS INVESTED, AND
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CONTINUES TO INVEST, TIME, ENERGY, AND RESOURCES INVESTIGATING AND NEGOTIATING
AN ACQUISITION OF SSI. FOR THIS REASON, IF (1) A MAJORITY OF THE BUSINESS OR
EQUITY OF SSI IS SOLD OR TRANSFERRED (THROUGH A SALE OF STOCK OF SSI, A SALE
OF ASSETS, A MERGER, A SHARE EXCHANGE OR OTHER FORM OF TRANSACTION) TO ANY
PERSON, ENTITY, GROUP, ASSOCIATION OR PARTY WITHIN 12 MONTHS AFTER TERMINATION
OF THIS AGREEMENT OR THE DEFINITIVE AGREEMENT, AS THE CASE MAY BE, OR (2) THE
COMPANY'S ACQUISITION OF SSI IS NOT COMPLETED ON OR BEFORE SEPTEMBER 30, 1998
BECAUSE OF (a) ANY BREACH BY SSI OF ITS OBLIGATIONS PURSUANT TO THIS
AGREEMENT, (b) THE FAILURE OF ANY CONDITION HEREOF IN SSI'S CONTROL, (C) ANY
ACTION TAKEN BY SSI AS CONTEMPLATED BY SECTION 5(A) AND(D) ANY ACQUISITION
PROPOSAL, THEN SSI SHALL PAY TO THE COMPANY A ONE-TIME PAYMENT OF $500,000
("BREAK-UP FEE"), AS FULL AND COMPLETE LIQUIDATED DAMAGES IN SATISFACTION OF
ALL RIGHTS AND CLAIMS OF THE COMPANY, REGARDLESS OF THE NEGLIGENCE, STRICT
LIABILITY, BREACH OF WARRANTY, BREACH OF CONTRACT OR OTHER FAULT OR
RESPONSIBILITY OF ANY PARTY OR PERSON. NOTWITHSTANDING THE IMMEDIATELY
PRECEDING SENTENCE, IF THIS AGREEMENT OR THE DEFINITIVE AGREEMENT, AS THE CASE
MAY BE, IS TERMINATED BY THE COMPANY BECAUSE OF A FAILURE OF A CONDITION NOT
IN SSI'S CONTROL, THEN THE BREAK-UP FEE WILL BE REDUCED TO (X) $250,000 IF
SSI IS ACQUIRED BY A THIRD PARTY (OTHER THAN HALLIBURTON) FOR EQUIVALENT
CONSIDERATION BETWEEN $1 AND $1,000,000 LESS THAN THE CONSIDERATION OFFERED BY
THE COMPANY PURSUANT TO THIS AGREEMENT OR THE DEFINITIVE AGREEMENT, AS THE
CASE MAY BE, OR (Y) $0 IF SSI IS ACQUIRED BY A THIRD PARTY (OTHER THAN
HALLIBURTON) FOR EQUIVALENT CONSIDERATION MORE THAN $1,000,000 LESS THAN THE
CONSIDERATION OFFERED BY THE COMPANY PURSUANT TO THIS AGREEMENT OR THE
DEFINITIVE AGREEMENT, AS THE CASE MAY BE. EACH OF THE PARTIES FURTHER
STIPULATE AND AGREE THAT THE BREAK-UP FEE IS REASONABLE IN LIGHT OF THE
ANTICIPATED OR ACTUAL HARM THAT WOULD BE CAUSED BY SUCH A BREACH OF SECTION
5(A) ABOVE OR BY SUCH AN ALTERNATIVE SALE, THE DIFFICULTIES OF PROOF OF LOSS
AND THE INCONVENIENCE OR NON-FEASIBILITY OF OTHERWISE OBTAINING AN ADEQUATE
REMEDY. THE PARTIES ALSO AGREE THAT THE BREAK-UP FEE SET FORTH IN THIS
SECTION 5(B) CONSTITUTES LIQUIDATED DAMAGES FOR LOSS OF A BARGAIN, AND NOT A
PENALTY. SSI FURTHER AGREES THAT FOR THE PURPOSES OF THIS SECTION 5(B), THE
TAKING BY SSI OF ANY OF THE ACTIONS PROHIBITED IN SECTION 5(A) SHALL BE A
DEEMED BREACH OF SECTION 5(A) BY SSI. IF A COURT DETERMINES THAT THE PAYMENT
OF ANY FEE SET FORTH IN THIS SECTION 5 IS UNENFORCEABLE FOR ANY REASON, IN
LIEU OF SUCH BREAK-UP FEE, SSI SHALL PAY TO THE COMPANY SUCH PAYMENTS UNDER
THIS SECTION 5(B) THE COMPANY'S ACTUAL DAMAGES (INCLUDING, WITHOUT LIMITATION,
ITS OUT-OF-POCKET EXPENSES, INDIRECT AND CONSEQUENTIAL DAMAGES AND LOST
OPPORTUNITIES), AS DETERMINED BY THE COURT.
c. Prior to the Closing, except as may be approved by the Company in
writing, SSI shall, and shall cause each of its subsidiaries to:
(i) continue to operate its business in ordinary course and
consistent with past practices;
(ii) utilize its good faith best efforts to preserve the value of its
business including its relationships with its customers and its employees;
(iii) permit the Company to inspect all of its records and to consult
with its officers, employees, attorneys and agents for the purpose of
determining the accuracy of the representations and warranties herein and in
the definitive Agreement;
(iv) give prompt notice to the Company of what it, in good faith,
believes to be any material occurrence in its business;
(v) except for distributions by SSI subsidiaries to SSI, not make any
distribution to its shareholders or acquire any of its capital stock; except
for loans among SSI and its subsidiaries, not make any loan (except the normal
advancement of employee expenses); and not issue any securities or any rights
to acquire any securities;
(vi) not enter into any employment contract, change employer
compensation, otherwise pay additional amounts to employees or adopt or amend
employee benefit plans and not make any capital expenditure or incur any other
form of debt or liability in excess of $10,000;
(vii) not enter into any agreement which is not terminable without
penalty upon 30 days (or less) notice to the other party(ies) thereto;
(viii) not dispose of any of its assets, except with respect to the
sale of inventory sold in the ordinary course of it business and except for
the sale of the SSI Pipeline Simulation Division pursuant to Section
1(c)(vii);
(ix) promptly notify the Company of any lawsuits, claims, proceedings
or investigations that are threatened or commenced against SSI (or any
subsidiary of SSI); and
(x) maintain all of its policies of insurance in full force and
effect.
d. SSI shall use its best efforts to secure the approvals described
in Section 2(b)(xi) as soon as possible. SSI shall utilize its good faith
best efforts to call a meeting of its shareholders within 120 days after the
date hereof and file a proxy statement with the Securities and Exchange
Commission as soon as practicable for the purpose of the approval of the
acquisition by the shareholders of SSI, and SSI shall indemnify the Company
with respect to any liability arising under such proxy statement except with
respect to any liability relating to any information provided therefor by the
Company.
6. Definitions.
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As used in this Agreement, the following capitalized terms shall have the
meanings given to them in this Section 6:
"Bank One Debt" means the amounts owed under the Bank One Loan Documents,
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which shall not be more than $400,000 for borrowed money and $230,000 under
letters of credit as of the Closing Date.
"Bank One Loan Documents" means that certain Borrower Agreement dated
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December 17, 1997, between Bank One, Colorado, N.A., as Lender, and Scientific
Software-Intercomp, Inc., as Borrower, relating to a loan for pre-export
working capital, together with a promissory note dated November 30, 1997,
executed by SSI, as payor, and made payable to the order of Bank One,
Colorado, N.A., in the current principal sum of $650,000.
"Closing" means the closing and consummation of the transactions
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contemplated herein and the Definitive Agreement, pursuant to which all of the
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issued and outstanding common stock of SSI shall be acquired by the Company
(or its designated subsidiary) pursuant to the terms and provisions hereof and
of the Definitive Agreement.
"Closing Date" means the date on which the Closing occurs.
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"Halliburton Preferred Stock" means the 800,000 shares of Series A
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Preferred Stock of SSI, which SSI represents to the Company assumes for
purposes of this Agreement are (i) owned and held by Halliburton Company, free
of any claims or encumbrances, and (ii) constitute all of the issued and
outstanding shares of Series A Preferred Stock of SSI.
"Xxxxxxx Debt" means the amounts owed to Xxxxxxx Dividend Fund, a series
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of Xxxxxxx Investments ("Xxxxxxx") under the Xxxxxxx and Renaissance Loan
Documents, which, as a condition to Company obligations under this Agreement,
shall be no more than $1,400,000 as of the Closing Date.
"Xxxxxxx Renaissance Loan Documents" means that certain Loan Agreement
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dated April 26, 1996, between SSI, Xxxxxxx Dividend Fund, a series of Xxxxxxx
Investments ("Xxxxxxx"), and Renaissance Capital Partners II Ltd.
("Renaissance"), providing for (i) a loan by Xxxxxxx to SSI in the original
principal amount of $5,000,000, bearing interest at 7% per annum payable
semi-annually on the last days of October and April, evidenced by that certain
Promissory Note dated April 26, 1996, in the original principal amount of
$5,000,000, payable to the order of Xxxxxxx, and (ii) a loan by Renaissance to
SSI in the original principal amount of $1,500,000, bearing 7% interest per
annum payable semi-annually on the last days of October and April, as
evidenced by that certain Promissory Note dated April 26, 1996, payable to the
order of Renaissance, in the original principal sum of $1,500,000.
"Xxxxxxx Warrant" means that certain Warrant to Purchase Common Stock of
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SSI dated April 26, 1996, from SSI to Xxxxxxx, granting Xxxxxxx the right to
purchase 1,500,000 shares of common stock of SSI at a purchase price of $3.00
per share.
"Material Adverse Change" means an event, occurrence or change in facts
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or circumstances, or any combination of events, occurrences or changes in
facts or circumstances, that, individually or in the aggregate, have or could
reasonably be expected to have a Material Adverse Effect, except for the items
excluded from the definition of Material Adverse Discovery.
"Material Adverse Discovery" means a discovery of an event, occurrence,
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fact or circumstance or combination of events, occurrences, facts or
circumstances, in any case existing on the date hereof or at any time prior to
the Closing relating to SSI or the business of SSI that the Company learns of,
or discovers, prior to the Closing, that, individually or in the aggregate,
adversely affect or could reasonably be expected to adversely affect SSI or
its business (including the results of operations, financial condition or
prospects of its business) or the assets of SSI, in an amount of US$500,000 or
greater except (a) for matters described with reasonable specificity (i)
herein, (ii) in SSI's Annual Report on Form 10-K for the year ended December
31, 1996 as filed with the Securities and Exchange Commission or (iii) in
SSI's 1997 unaudited consolidated financial statements previously furnished to
the Company and (b) for the effects disclosed by SSI to the Company of
accounting for the Pipeline Simulation Division as a discontinued operation.
Operating losses in the ordinary course of business will not constitute a
Material Adverse Change, or Material Adverse Discovery or Material Adverse
Effect unless the losses result in Net Working Capital not satisfying the
provisions of Section 1(c)(iv).
"Material Adverse Effect" means a material adverse effect on the (i)
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condition, financial or otherwise, of SSI or its business (including the
results of operations, financial condition or prospects of its business) and
the assets and liabilities of SSI, taken as a whole, or (ii) the enforcement
or validity of this Agreement.
"Net Working Capital" means an amount equal to the sum of all current
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assets of SSI (including, but not limited to, all inventory, accounts,
receivables, prepaid expenses, work in progress and prepaid contracts) less
the sum of all current liabilities of SSI (including, but not limited to, any
accounts payable, allowances for doubtful accounts, warranty reserves and such
reserves or accruals relating to SSI's business required by generally accepted
accounting principles).
"Renaissance Debt" means the amounts owed to Renaissance Capital Partners
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II Ltd. ("Renaissance") under the Xxxxxxx and Renaissance Loan Documents,
which, as a condition to Company's obligations under this Agreement, shall be
no more than $1,300,000 as of the Closing Date.
"Renaissance Warrant" means that certain Warrant to Purchase Common Stock
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of SSI dated April 26, 1996, from SSI to Renaissance, granting Renaissance the
right to purchase 450,000 shares of common stock of SSI at a purchase price of
$3.00 per share.
"Xxxxxxx Fee" means the $350,000 to be owed to Xxxxxxx & Company
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International as a result of the Closing, which is the aggregate consideration
--
that will be owed to Xxxxxxx & Company International in connection with the
transactions contemplated under this Agreement, pursuant to the terms of that
Letter Agreement between SSI and Xxxxxxx & Company International dated August
5, 1997.
"SSI Stock Price" means, subject to the adjustments described in Section
----------------
2(a) hereof or otherwise mutually agreed on by the parties, $0.50 per share
for the 8,878,000 shares of common stock of SSI and, to the extent available,
not more than 15,000 additional shares of stock which may be exercised before
closing at an exercise price of less than $0.50.
7. Miscellaneous.
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a. Binding Agreements. Although this Agreement contemplates a
-------------------
further definitive agreement of the parties, this Agreement is intended to be
a legally binding agreement for the acquisition of SSI, subject to the
conditions set forth herein.
b. Entireties. This Agreement constitutes the entire agreement and
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supersedes all other prior agreements and undertakings, both written and oral,
among the parties, or any of them, with respect to the subject matter thereof.
c. Notices. All notices, requests, demands and other communications
-------
made in connection with this Agreement shall be in writing and shall be deemed
to have been duly given on the date delivered, if delivered personally, by
overnight delivery service or sent by facsimile machine (with written
confirmation of receipt given in the same manner as notices in this Section
7(b)) to the persons identified below, addressed as follows:
If to the Company, to:
Xxxxx Xxxxxx Incorporated
0000 Xxxxx Xxxx
Xxxxxxx, Xxxxx 00000
Attention: Xxxx X. Xxxxxxx
Telecopy: (000) 000-0000
with a copy to:
Xxxxx Xxxxxx Solutions
00000 Xxxxxx Xxxxxxxxx
Xxxxxxx, Xxxxx 00000
Attention: Division Legal Counsel
Telecopy: (000) 000-0000
and a copy to:
X. Xxxxx Xxxxxxxx, Xx.
Xxxxx & Xxxxx, L.L.P.
Xxx Xxxxx Xxxxx
000 Xxxxxxxxx
Xxxxxxx, Xxxxx 00000-4995
Telecopy: (000) 000-0000
If to SSI, to:
Scientific Software-Intercomp, Inc.
000 00xx
Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx Xxxxx
Telecopy: (000) 000-0000
with a copy to:
Xxxxx X. Xxxxx
Xxxxx Xxxx & Xxxxx, X.X.
0000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Telecopy: (000) 000-0000
d. Expenses. Each party to this Agreement shall pay its own costs
--------
and expenses (including all legal, accounting, broker, finder and investment
banker fees) relating to this Agreement, the negotiations leading up to this
Agreement and, except as otherwise provided herein, the transactions
contemplated by this Agreement.
e. Publicity. Until the business day after the Closing Date and
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except for any public disclosure that the Company or SSI in good faith believe
is required by law or applicable stock exchange rules (in which case the
disclosing party will use reasonable efforts to consult with the
non-disclosing party prior to such disclosure), neither party shall issue any
press release or make any public statement regarding the transactions
contemplated hereby, without the prior written approval of the other party
which will not be unreasonably withheld or delayed.
f. Governing Law. This Agreement shall be governed by, and construed
-------------
in accordance with, the laws of Texas as to all matters, including matters of
validity, construction, effect, performance and remedies, without regard to
the law of conflicts of laws.
g. Waivers. Waiver of any term or condition of this Agreement by any
-------
party shall only be effective if in writing and shall not be construed as a
waiver of any subsequent breach or failure of the same term or condition, or a
waiver of any other term or condition of this Agreement.
h. Counterparts. This Agreement may be executed in one or more
------------
counterparts (including execution and delivery by facsimile transmission), and
by the different parties hereto in separate counterparts, each of which when
executed shall be deemed to be an original but all of which shall constitute
one and the same agreement.
If the foregoing sets forth your understanding of the agreement of the
parties hereto, please evidence your acceptance of and agreement to all of the
foregoing terms and provisions of this Agreement by executing a copy of this
Agreement in the space provided below.
Very truly yours,
XXXXX XXXXXX INCORPORATED
/s/ Xxxxxx X. Xxxxxxxx
Xxxxxx X. Xxxxxxxx
Senior Vice President
AGREED TO AND
ACCEPTED AS OF THE
27TH DAY OF MARCH, 1998, BY:
SCIENTIFIC SOFTWARE-INTERCOMP, INC.
BY: /S/ XXXXXX XXXXX
------------------
NAME: XXXXXX XXXXX
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TITLE: PRESIDENT & C.E.O.
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SCHEDULE 1
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NONE
