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EXHIBIT - (c)(2)
STOCK OPTION AGREEMENT
Stock Option Agreement (this "Agreement") dated as of April 15, 1998,
between Xxxxx plc, a United Kingdom public limited company ("Parent"), and
Simulation Sciences Inc., a Delaware corporation ("Company").
Recitals
A. Concurrently herewith, Parent, S Acquisition Corp., a Delaware
corporation and an indirect wholly-owned subsidiary of Parent ("Purchaser"), S
Sub Corp., a Delaware corporation and a wholly-owned subsidiary of Purchaser
("Merger Sub"), and the Company are entering into an Agreement and Plan of
Merger (the "Merger Agreement"), pursuant to which Purchaser has agreed to make
a tender offer (the "Offer") for all outstanding shares of Common Stock at
$10.00 per share (the "Offer Price"), net to the seller in cash, to be followed
by a merger of Merger Sub with and into the Company.
B. As a condition to the willingness of Parent to enter into the Merger
Agreement, Parent has required that the Company agree, and in order to induce
Parent to enter into the Merger Agreement, the Company has agreed, to grant to
Parent the option set forth herein to purchase authorized but unissued shares of
Company Common Stock;
In consideration of the mutual covenants and agreements contained herein
and other good and valuable consideration, the adequacy of which is hereby
acknowledged, and intending to be legally bound hereby, the parties hereto agree
as follows:
1. Definitions. Capitalized terms used but not defined herein shall have
the same meanings as in the Merger Agreement.
2. Grant of Option. Subject to the terms and conditions set forth
herein, the Company hereby grants to Parent an option (the "Option") to purchase
authorized and unissued shares of Company Common Stock in an aggregate amount up
to 15% of the Company's issued and outstanding shares of Company Common Stock as
of the date hereof (the "Option Shares") (subject to Section 8), at a price per
share equal to $10.00 (the "Purchase Price") payable in cash as provided in
Section 4 hereof.
3. Exercise of Option. (a) Parent may exercise the Option, in whole or
in part, at any time or from time to time during the period (the "Option
Exercise Period") commencing from the time a Purchase Event (as defined below)
shall have occurred and terminating 5:00 p.m. New York time on the date which is
180 days following the occurrence of the Purchase Event (the "Termination
Date"), whereupon the Option, to the extent it shall not have been exercised,
shall terminate and be of no further force and effect. If the Option cannot be
exercised prior to the Termination Date as a result of any injunction, order or
similar restraint issued by a court of competent jurisdiction, the Option
Exercise Period shall terminate on the later of (i) the Termination Date and
(ii) the 10th business day after such injunction, order or restraint shall have
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been dissolved or shall have become permanent and no longer subject to appeal,
as the case may be, but in no event later than 18 months after the occurrence of
a Purchase Event.
(b) This Agreement shall terminate, if but only if no Purchase Event
shall have occurred prior thereto, upon the occurrence of any of the following,
as applicable:
(i) the date on which Purchaser purchases all shares of Company
Common Stock tendered and not withdrawn pursuant to the Offer; or
(ii) upon the termination of the Merger Agreement pursuant to its
terms (subject to clause (c) of this Section 3).
(c) As used herein, a "Purchase Event" shall have occurred if the
Merger Agreement shall have been terminated by the Company or Parent
under Section 6.6(b), 8.1(e)(iii) or 8.1(c) as the case may be.
(d) As used herein, the terms "Beneficial Ownership," "Beneficial Owner"
and "Beneficially Own" shall have the meanings ascribed to them in Rule 13d-3
under the Exchange Act. As used herein, "person" shall have the meaning
specified in Sections 3(a)(9) and 13(d)(3) of the Exchange Act.
(e) Whenever Parent wishes to exercise the Option, it shall deliver to
the Company a written notice (a "Notice of Exercise") (the date of receipt of
which being herein referred to as the "Notice Date") specifying (i) the total
number of shares it intends to purchase pursuant to such exercise, and (ii) a
place and date not earlier than two business days nor later than 60 calendar
days from the Notice Date for the closing of such purchase (a "Closing Date");
provided that if any closing of the purchase and sale pursuant to the Option (a
"Closing") cannot be consummated by reason of any applicable law (including,
without limitation, the Xxxx-Xxxxx Xxxxxx Antitrust Improvements Act of 1976
("HSR"), the period of time that otherwise would run from the Notice Date
pursuant to this sentence shall run instead from the date on which such
restriction on consummation has expired or been terminated; and provided further
that, without limiting the foregoing, if prior notification to or approval of
any governmental authority (including, without limitation, under HSR, is
required in connection with such purchase, Parent and, if applicable, the
Company shall promptly file the required notice or application for approval and
shall expeditiously process the same (and the Company shall cooperate with
Parent in the filing of any such notice or application and the obtaining of any
such approval), and the period of time that otherwise would run from the Notice
Date pursuant to this sentence shall run instead from the date on which, as the
case may be, (i) any required notification period has expired or been terminated
or (ii) such approval has been obtained, and in either event, any requisite
waiting period has passed.
(f) In the event (i) Parent receives official notice that an approval of
any governmental authority required for the purchase of Option Shares would not
be issued or granted or (ii) the Closing Date shall not have occurred within 18
months after the related Notice Date due to the failure to obtain any such
required approval (including expiration of any required
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waiting period under HSR), Parent shall be entitled to exercise its right as set
forth in Section 7 or, to the extent legally permitted, to exercise the Option
in connection with the resale of Option Shares pursuant to a registration
statement as provided in Section 8. The provisions of this Section 3 and Section
6 shall apply with appropriate adjustments to any such exercise.
4. Payment and Delivery of Certificates. (a) At each Closing, Parent
shall pay to the Company the aggregate Purchase Price for the Option Shares
purchased at such Closing pursuant to the exercise of the Option in immediately
available funds by wire transfer to a bank account designated not later than one
business day prior to the Closing Date for such Closing by the Company.
(b) At such Closing, simultaneously with the delivery of the aggregate
Purchase Price as provided in Section 4(a) hereof, the Company shall deliver to
Parent a certificate or certificates representing the number of Option Shares
then being purchased by Parent, registered in the name of Parent or as
designated in writing by Parent, which Option Shares shall be fully paid and
nonassessable and free and clear of all liens, claims, charges and encumbrances
of any kind whatsoever.
(c) If at the time of issuance of any Option Shares pursuant to any
exercise of the Option, the Company shall have issued any share purchase rights
or similar securities ("Rights") to holders of any class of Company Common
Stock, then, subject to the terms and conditions of any plan governing such
Rights, each such Option Share shall also represent rights with terms
substantially the same as and at least as favorable to Parent as those issued to
other holders of Company Common Stock.
(d) Certificates for Option Shares delivered at any Closing hereunder
shall be endorsed with a restrictive legend, which shall read substantially as
follows:
"The shares represented by this certificate are subject to certain
provisions of an agreement between the registered holder hereof and
Simulation Sciences Inc., a copy of which is on file at the principal
office of Simulation Sciences Inc., and to resale restrictions arising
under the Securities Act of 1933, as amended, and any applicable state
securities laws. A copy of such agreement will be provided to the holder
hereof without charge upon receipt by Simulation Sciences Inc. of a
written request therefor."
It is understood and agreed that the above legend shall be removed by delivery
of substitute certificate(s) without such legend in connection with a transfer
or sale if (i) the Company has been furnished with an opinion of counsel,
reasonably satisfactory to counsel for the Company, that such transfer or sale
will not violate the Securities Act or applicable securities laws of any state
or (ii) such transfer or sale shall have been registered and qualified pursuant
to the Securities Act and any applicable state securities laws.
5. Representations and Warranties; Covenants. (a) The Company hereby
represents and warrants to Parent that (i) the Company has full corporate right,
power and authority to execute and deliver this Agreement and to perform all of
its obligations hereunder; (ii) such
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execution, delivery and performance have been duly authorized by the Board of
Directors of the Company, and no other corporate proceedings are necessary
therefor; (iii) this Agreement has been duly and validly executed and delivered
by the Company; and (iv) the Company has taken all necessary corporate action to
authorize and reserve and permit it to issue, and at all times from the date
hereof through the date of the exercise in full or the expiration or termination
of the Option, shall have reserved for issuance upon exercise of the Option, a
number of shares of Company Common Stock equal to 15% of the Company's issued
and outstanding Common Stock as of the date hereof (subject to adjustment as
provided herein), all of which, upon issuance in accordance with the terms of
this Agreement, shall be duly authorized, validly issued, fully paid and
nonassessable and shall be delivered free and clear of all claims, liens,
encumbrances and security interests and not subject to any preemptive rights of
any stockholder of the Company.
(b) Parent hereby represents and warrants to the Company that (i) Parent
has full corporate right, power and authority to execute and deliver this
Agreement and to perform all of its obligations hereunder; (ii) such execution,
delivery and performance have been duly authorized by all requisite corporate
action by Parent, and no other corporate proceedings are necessary therefor;
(iii) this Agreement has been duly and validly executed and delivered by Parent
and represents a valid and legally binding obligation of Parent, enforceable
against Parent in accordance with its terms; and (iv) any Company Common Stock
acquired by Parent upon exercise of the Option will not be transferred or
otherwise disposed of except in compliance with the Securities Act.
(c) the Company hereby covenants that any rights agreement, plan or
other instrument which may be adopted or entered into governing any Rights
(collectively, the "Rights Agreement") shall provide that neither the ownership
or exercise of the Option or any portion thereof nor the purchase or ownership
of any of the Option Shares, in and of itself, shall trigger any of the
provisions of the Rights Agreement.
6. Adjustment upon Changes in Capitalization. In the event of any change
in Company Common Stock by reason of stock dividends, split-ups,
recapitalizations or the like, the type and number of shares subject to the
Option and the Purchase Price shall be adjusted appropriately. In the event that
the Company enters into a merger with another company in which the shares of
Company Common Stock are converted into the right to receive cash, securities or
other property, then the Company will make appropriate provision so that the
Option will be adjusted so that it becomes an option to acquire the cash,
securities or other property that the holder thereof would have received in such
merger if it had exercised the Option immediately prior to such merger.
7. Repurchase. (a) If, during the Option Exercise Period, a notice of
exercise has been given but the related Closing has not occurred, at the option
of the Company exercised by written notice delivered to Parent not less than two
Business Days prior to date scheduled for such Closing during the period from
the Notice Date to the Closing Date (the "Repurchase Period"), the Company shall
repurchase the Option in its entirety from Parent together with all
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(but not less than all) Option Shares previously purchased by Parent pursuant
thereto with respect to which Parent then has Beneficial Ownership, at a price
equal to the sum of:
(i) In the case of Options as to which Option Shares have not
been issued, the difference between (A) the "Market/Tender Offer Price"
for shares of Company Common Stock (defined as the higher of (x) the
highest price per share at which a tender or exchange offer has been
made and not withdrawn for shares of Company Common Stock during the
Option Exercise Period or (y) the highest closing price per share of
Company Common Stock as reported by the NASDAQ National Market for any
day within that portion of the Repurchase Period which precedes the date
the Company gives notice of the required repurchase under this Section
7) and (B) the Purchase Price (subject to adjustment as provided in
Section 6), multiplied by the number of Option Shares with respect to
which the Option has not been exercised or has been exercised but the
related Closing has not occurred, but only if such Market/Tender Offer
Price is greater than such exercise price; and
(ii) In the case of Option Shares, the greater of the
Market/Tender Offer Price and the Purchase Price paid for any Option
Shares acquired upon exercise of the Option, multiplied by the number of
Option Shares so acquired.
(b) In the event the Company exercises its rights under this Section 7,
the Company shall, within three business days thereafter, pay the required
amount to Parent by wire transfer of immediately available funds to an account
designated by Parent, and Parent shall surrender to the Company the Option and
the certificates evidencing any Option Shares acquired thereunder with respect
to which Parent then has Beneficial Ownership
(c) In determining the Market/Tender Offer Price, the value of any
consideration other than cash shall be determined by an independent nationally
recognized investment banking firm mutually selected by Parent and the Company.
8. Limitation on Total Profit. If at any time from the date hereof,
Parent or any of Parent's affiliates effects a sale, transfer or other
disposition of the Option Shares or any rights or options therein (a "Sale")
then Parent shall cause to be paid to the Company (in cash or in the form of the
other consideration, if any, received pursuant to the Sale), the amount by
which: (i) the Proceeds of such Sale, together with the proceeds of all previous
Sales, exceed by more than $14,250,000 (ii) the aggregate Purchase price paid,
if any, with respect to the Option Shares subject to such Sale or Sales. For
purposes of this Section, the "Proceeds" of a Sale shall mean the aggregate
amount of the proceeds (in cash or in kind) paid to Parent or any of its
affiliates pursuant to such Sale, including without limitation pursuant to
Section 7 hereof (with any non-cash proceeds being valued at the fair market
value thereof). This Option shall not be transferable by Parent, except to a
direct or indirect wholly-owned subsidiary of Parent who agrees to be bound by
the terms hereof applicable to Parent.
9. Registration Rights; Listing. (a) At any time after a Closing, the
Company shall, if requested by any holder or Beneficial Owner of Option Shares
(each a "Holder"), as
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expeditiously as possible file a registration statement on a form for general
use under the Securities Act if necessary in order to permit the sale or other
disposition of Option Shares in accordance the intended method of sale or other
disposition requested by any such Holder. Each such Holder shall provide all
information reasonably requested by the Company for inclusion in any
registration statement to be filed hereunder. The Company shall use its
reasonable efforts to cause such registration statement first to become
effective and then to remain effective for such period not in excess of 180 days
from the day such registration statement first becomes effective as may be
reasonably necessary to effect such sales or other dispositions. The
registration effected under this Section 9(a) shall be at the Company's expense
except for underwriting commissions and the fees and disbursements of such
Holders' counsel attributable to the registration of such Option Shares. In no
event shall the Company be required to effect more than one registration
hereunder. The filing or effectiveness of any registration statement required
hereunder may be delayed (and use of a prospectus thereunder may be suspended)
for such period of time (not to exceed 90 days) as may reasonably be required to
comply with applicable law, facilitate any public distribution by the Company of
Company Common Stock, if a special audit of the Company would otherwise be
required in connection therewith during which the Company is in possession of
material information concerning it, its business affairs or a material
transaction in each case the public disclosure of which could have a material
adverse effect on the Company or significantly disrupt such material
transaction. If requested by any such Holder in connection with such
registration, the Company shall become a party to any underwriting agreement
relating to the sale of such shares on terms and including obligations and
indemnities which are customary for parties similarly situated. Upon receiving
any request for registration under this Section 9(a) from any Holder, the
Company agrees to send a copy thereof to any other person known to the Company
to be entitled to registration rights under this Section 9(a), in each case by
promptly mailing the same, postage prepaid, to the address of record of the
persons entitled to receive such copies.
(b) If Company Common Stock or any other securities to be acquired upon
exercise of the Option are then listed on any national securities exchange, the
Company, upon the request of Parent, will promptly file an application to list
the Option Shares or other securities to be acquired upon exercise of the Option
on all such exchanges and will use its best efforts to obtain approval of such
listings as soon as practicable.
10. Survival. The representations, warranties, covenants and agreements
of the parties hereto shall survive any Closing.
11. Severability. Any term, provision, covenant or restriction contained
in this Agreement held by a court or other governmental authority of competent
jurisdiction to be invalid, void or unenforceable shall be ineffective to the
extent of such invalidity, voidness or unenforceability, but neither the
remaining terms, provisions, covenants or restrictions contained in this
Agreement nor the validity or enforceability thereof in any other jurisdiction
shall be affected or impaired thereby. Any term, provision, covenant or
restriction contained in this Agreement that is so found to be so broad as to be
unenforceable shall be interpreted to be as broad as is enforceable.
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12. Expenses. Each of the parties hereto shall pay all costs and
expenses incurred by it or on its behalf in connection with the transactions
contemplated hereunder, including fees and expenses of its own financial
consultants, investment bankers, accountants and counsel, except as otherwise
provided herein.
13. Entire Agreement. This Agreement, the Merger Agreement (including
the documents and the instruments referred to therein), the Confidentiality
Agreement constitute the entire agreement between the parties and supersede all
prior agreements and understandings, agreements or representations by or between
the parties, written and oral, with respect to the subject matter hereof and
thereof.
14. Successors; No Third Party Beneficiaries. The terms and conditions
of this Agreement shall inure to the benefit of and be binding upon the parties
hereto and their respective successors and assigns. Nothing in this Agreement,
expressed or implied, is intended to confer upon any party, other than the
parties hereto, and their respective successors and assigns, any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided herein.
15. Notices. All notices or other communications which are required or
permitted hereunder shall be in writing and sufficient if delivered in
accordance with Section 9.2 of the Merger Agreement (which is incorporated
herein by reference).
16. Counterparts. This Agreement may be executed in counterparts, and
each such counterpart shall be deemed to be an original instrument, but both
such counterparts together shall constitute but one agreement.
17. Further Assurances. In the event of any exercise of the Option by
Parent, the Company and Parent shall execute and deliver all other documents and
instruments and take all other action that may be reasonably necessary in order
to consummate the transactions provided for by such exercise.
18. Specific Performance. The parties hereto agree that if for any
reason Parent or the Company shall have failed to perform its obligations under
this Agreement, then either party hereto seeking to enforce this Agreement
against such non-performing party shall be entitled to specific performance and
injunctive and other equitable relief, and the parties hereto further agree to
waive any requirement for the securing or posting of any bond in connection with
the obtaining of any such injunctive or other equitable relief. This provision
is without prejudice to any other rights that either party hereto may have
against the other party hereto for any failure to perform its obligations under
this Agreement.
19. Governing Law. This Agreement shall be governed by the laws of the
State of Delaware, without giving effect to the conflict of laws principles
thereof. Each party hereby irrevocably and unconditionally consents to submit to
the exclusive jurisdiction of the courts of the State of Delaware and of the
United States of America located in the State of Delaware, for any Action (and
agrees not to commence any Action except in any such court), and further agrees
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that service of process, summons, notice or document by U.S. registered mail to
its respective address set forth in Section 9.2 of the Merger Agreement shall be
effective service of process for any Action brought against it in any such
court. Each party hereby irrevocably and unconditionally waives any objection to
the laying of venue of any Action in the courts of the State of Delaware or of
the United States of America located in the State of Delaware, and hereby
further irrevocably and unconditionally waives and agrees not to plead or claim
in any such court that any Action brought in any such court has been brought in
an inconvenient forum.
20. Section 16(b). Periods of time that otherwise would run pursuant to
this Agreement shall also be extended to the extent necessary in order to avoid
liability under Section 16(b) of the Exchange Act.
21. Waiver and Amendment. Any provision of this Agreement may be waived
at any time by the party that is entitled to the benefits of such provision.
This Agreement may not be modified, amended, altered or supplemented except upon
the execution and delivery of a written agreement executed by the parties
hereto.
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IN WITNESS WHEREOF, each of the parties hereto has executed this Option
Agreement as of the date first written above.
XXXXX PLC
By: /s/ XXXXXX X. XXXXXX
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Name: Xxxxxx X. Xxxxxx
Title: Director
SIMULATION SCIENCES INC.
By: /s/ XXXXXX X. XXXXX, XX.
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Name: Xxxxxx X. Xxxxx, Xx.
Title: Executive Vice President
Chief Financial Officer
