EXHIBIT 1
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AGREEMENT AND PLAN OF MERGER
Dated as of May 23, 2001
among
ELECTRONIC DATA SYSTEMS CORPORATION,
EMERALD ACQUISITION CORPORATION I
and
STRUCTURAL DYNAMICS RESEARCH CORPORATION
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TABLE OF CONTENTS
ARTICLE I
THE MERGER
Section 1.01. The Merger........................................ 1
Section 1.02. Closing........................................... 1
Section 1.03. Effective Time.................................... 2
Section 1.04. Effects........................................... 2
Section 1.05. Articles of Incorporation and Bylaws.............. 2
Section 1.06. Directors......................................... 2
Section 1.07. Officers.......................................... 2
ARTICLE II
EFFECT ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
Section 2.01. Effect on Capital Stock........................... 3
Section 2.02. Exchange of Certificates.......................... 4
ARTICLE III
Representations and Warranties of the Company
Section 3.01. Organization, Standing and Power.................. 6
Section 3.02. Capital Structure................................. 6
Section 3.03. Authority; Execution and Delivery; Enforceability. 8
Section 3.04. No Conflicts; Consents............................ 8
Section 3.05. SEC Documents; Undisclosed Liabilities............ 9
Section 3.06. Information Supplied.............................. 10
Section 3.07. Absence of Certain Changes or Events.............. 11
Section 3.08. Taxes............................................. 13
Section 3.09. No Undisclosed Material Liabilities............... 15
Section 3.10. Pension and Benefit Plans; ERISA.................. 15
Section 3.11. Labor Matters..................................... 17
Section 3.12. Litigation........................................ 18
Section 3.13. Compliance with Applicable Laws................... 19
Section 3.14. Environmental Matters............................. 19
Section 3.15. Contracts......................................... 20
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Section 3.16. Brokers; Fees and Expenses........................... 22
Section 3.17. Opinion of Financial Advisor......................... 22
Section 3.18. Potential Conflicts of Interest...................... 22
Section 3.19. Intellectual Property................................ 23
Section 3.20. Software............................................. 25
Section 3.21. Title to Properties.................................. 26
Section 3.22. Insurance............................................ 26
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Section 4.01. Organization, Standing and Power..................... 27
Section 4.02. Sub.................................................. 27
Section 4.03. Authority; Execution and Delivery; Enforceability.... 27
Section 4.04. No Conflicts; Consents............................... 27
Section 4.05. Information Supplied................................. 28
Section 4.06. Brokers.............................................. 28
Section 4.07. Financing............................................ 28
Section 4.08. Litigation........................................... 29
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 5.01. Conduct of Business.................................... 29
Section 5.02. No Solicitation........................................ 31
ARTICLE VI
ADDITIONAL AGREEMENTS
Section 6.01. Preparation of Proxy Statement; Stockholders Meeting. 33
Section 6.02. Access to Information; Confidentiality............... 34
Section 6.03. Reasonable Best Efforts; Notification................ 34
Section 6.04. Stock Options........................................ 35
Section 6.05. Indemnification...................................... 37
Section 6.06. Fees and Expenses.................................... 39
Section 6.07. Public Announcements................................. 39
Section 6.08. Employee Benefits.................................... 39
Section 6.09. Further Assurances................................... 40
Section 6.10. Antitrust Filings.................................... 40
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ARTICLE VII
CONDITIONS PRECEDENT
Section 7.01. Conditions to Each Party's Obligation to Effect the Merger. 41
Section 7.02. Additional Conditions to Obligations of Parent and Sub..... 41
Section 7.03. Additional Conditions to Obligations of the Company........ 42
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
Section 8.01. Termination............................................... 42
Section 8.02. Effect of Termination..................................... 45
Section 8.03. Amendment................................................. 45
Section 8.04. Extension; Waiver......................................... 45
Section 8.05. Procedure for Termination, Amendment, Extension or Waiver. 45
ARTICLE IX
GENERAL PROVISIONS
Section 9.01. Nonsurvival of Representations and Warranties............. 46
Section 9.02. Notices................................................... 46
Section 9.03. Definitions............................................... 47
Section 9.04. Interpretation............................................ 48
Section 9.05. Severability.............................................. 48
Section 9.06. Counterparts.............................................. 49
Section 9.07. Entire Agreement; No Third-Party Beneficiaries............ 49
Section 9.08. Governing Law............................................. 49
Section 9.09. Assignment................................................ 49
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INDEX OF DEFINED TERMS
Term Section
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affiliate........................... 9.03
Agreement........................... Preamble
Appraisal Statute................... 2.01(d)
Antitrust Division.................. 6.10
business day........................ 9.03
Certificate of Merger............... 1.03
Certificates........................ 2.02(b)
Closing............................. 1.02
Closing Date........................ 1.02
Code................................ 2.02(g)
Company............................. Preamble
Company Board....................... 3.02(b)
Company Bylaws...................... 3.01
Company Charter..................... 3.01
Company Common Stock................ 2.01(b)
Company Disclosure Letter........... 3.01
Company Employee.................... 6.08
Company Employee Benefit Plans...... 3.10(a)
Company ERISA Affiliate............. 3.10(a)
Company's Foreign Knowledge......... 9.03
Company Material Adverse Effect..... 9.03
Company Pension Plan................ 3.10(a)
Company Right....................... 3.02(a)
Company Rights Agreement............ 3.02(a)
Company SEC Documents............... 3.05(a)
Company Stock Option................ 6.04(d)
Company Stock Plans................. 6.04(d)
Company Stockholder Approval........ 3.03(a)
Company Stockholders Meeting........ 6.01(b)
Company Takeover Proposal........... 5.02(c)
Confidentiality Agreement........... 6.02(b)
Consent............................. 3.04(b)
Contract............................ 3.02(a)
Dissent Shares...................... 2.01(d)
Effective Time...................... 1.03
Employed Intellectual Property...... 3.l9(a)
Environmental Laws.................. 3.14
Environmental Liabilities........... 3.14
ERISA............................... 3.10(a)
Exchange Act........................ 3.04(b)
Exchange Fund....................... 2.02(a)
Expenses............................ 6.06(b)
FTC................................. 6.10
Filed Company SEC Documents......... 3.07
Foreign Benefit Plan................ 3.10(g)
GAAP................................ 3.05(a)
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Term Section
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Governmental Entity................. 3.04(b)
HSR Act............................. 3.04(b)
Hazardous Materials................. 3.14
in the ordinary course of business.. 9.03
Indemnified Liabilities............. 6.05(a)
Indemnified Parties................. 6.05(a)
Indemnified Party................... 6.05(a)
Intellectual Property............... 3.19(a)
IRS................................. 3.08(e)
Judgment............................ 3.04(a)
Law................................. 3.04(a)
Licensed Software................... 3.20(a)
Liens............................... 3.04(a)
Material Contracts.................. 3.15(b)
Material Representations............ 7.02(a)
Merger.............................. Recitals
Merger Consideration................ 2.01(c)(ii)
Ohio Law............................ 1.01
Option Agreement.................... Recitals
Owned Software...................... 3.20(a)
Parent.............................. Preamble
Parent Benefit Plan................. 6.08
Parent Material Adverse Effect...... 4.04(a)
Paying Agent........................ 2.02(a)
Permits............................. 3.13(b)
person.............................. 9.03
Proxy Statement..................... 3.04(b)
Representatives..................... 5.02(a)
Restraint........................... 8.01(b)
Rights Agent........................ 3.02(a)
SEC................................. 3.04(b)
Securities Act...................... 3.05(a)
Software............................ 3.20(a)
Sub................................. Preamble
Subsidiary.......................... 3.01
Superior Company Proposal........... 5.02(c)
Surviving Corporation............... 1.01
Tax Return.......................... 3.08(k)
Taxes............................... 3.08(k)
Termination Fee..................... 6.06(b)
Transactions........................ 3.03(a)
Voting Agreement.................... Recitals
Warrants............................ 3.02(a)
Year 2000 Compliant................. 3.20(g)
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AGREEMENT AND PLAN OF MERGER dated as of May 23, 2001 (this "Agreement")
among ELECTRONIC DATA SYSTEMS CORPORATION, a Delaware corporation ("Parent"),
EMERALD ACQUISITION CORPORATION I, an Ohio corporation and a direct wholly owned
subsidiary of Parent ("Sub"), and STRUCTURAL DYNAMICS RESEARCH CORPORATION, an
Ohio corporation (the "Company").
WHEREAS, the respective Boards of Directors of Parent, Sub and the Company
have approved and determined to be in the best interests of their respective
stockholders the merger of Sub with and into the Company (the "Merger") upon the
terms and subject to the conditions of this Agreement; and
WHEREAS, contemporaneously with the execution and delivery of this
Agreement, as a condition and inducement to Parent's willingness to enter into
this Agreement, the Company and Parent are entering into a Stock Option
Agreement dated as of the date hereof in the form attached as Exhibit A (the
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"Option Agreement");
WHEREAS, contemporaneously with the execution and delivery of this
Agreement, as a condition and inducement to Parent's willingness to enter into
this Agreement, Parent and certain stockholders of the Company are entering into
a voting agreement (the "Voting Agreement"), pursuant to which, among other
things, such stockholders have agreed to vote their shares of Company Common
Stock (as hereinafter defined) in favor of the approval of this Agreement and
the Merger; and
NOW, THEREFORE, in consideration of the foregoing and the representations,
warranties, covenants and other terms contained in this Agreement, the parties
hereto, intending to be legally bound hereby, agree as follows:
ARTICLE I
THE MERGER
Section 1.01. The Merger.
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On the terms and subject to the conditions set forth in this Agreement, and
in accordance with Title 17 of the Ohio Revised Code (the "Ohio Law"), Sub shall
be merged with and into the Company at the Effective Time. At the Effective
Time, the separate corporate existence of Sub shall cease and the Company shall
continue as the surviving corporation (as such, the "Surviving Corporation") and
a wholly owned subsidiary of Parent.
Section 1.02. Closing.
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Unless this Agreement shall have been terminated and the transactions
contemplated hereby shall have been abandoned pursuant to Article VIII, and
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subject to the satisfaction or waiver of all of the conditions set forth in
Article VII, the closing (the "Closing") of the Merger shall take place at the
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offices of Xxxxx Xxxxx L.L.P., 0000 Xxxx Xxxxxx, Xxxxxx, Xxxxx 00000 at 10:00
a.m. on the
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second business day following the satisfaction (or, to the extent permitted by
Law, waiver) of the conditions set forth in Section 7.01 (other than those
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conditions that by their nature are to be satisfied at the Closing, but subject
to the fulfillment or, to the extent permitted by Law, waiver of those
conditions), or at such other place, time and date as shall be agreed in writing
between Parent and the Company. The date on which the Closing occurs is referred
to in this Agreement as the "Closing Date."
Section 1.03. Effective Time.
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Prior to the Closing, the Company shall prepare, and on the Closing Date
the Company shall file with the Secretary of State of the State of Ohio, a
certificate of merger (the "Certificate of Merger") executed in accordance with
the relevant provisions of the Ohio Law and shall make all other filings or
recordings required under the Ohio Law. The Merger shall become effective at
such time as the Certificate of Merger is duly filed with such Secretary of
State or at such other time as Parent and the Company shall agree and specify in
the Certificate of Merger (the time the Merger becomes effective being the
"Effective Time").
Section 1.04. Effects.
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The Merger shall have the effects set forth in (S)1701.82 of the Ohio Law.
Section 1.05. Articles of Incorporation and Bylaws.
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(a) The Articles of Incorporation of Sub, as in effect immediately
prior to the Effective Time, shall be amended at the Effective Time to change
the corporate name set forth therein to "Structural Dynamics Research
Corporation" and, as so amended, shall be the Articles of Incorporation of the
Surviving Corporation until thereafter changed or amended in accordance with the
provisions thereof and applicable Law.
(b) The Code of Regulations of Sub as in effect immediately prior to
the Effective Time shall be the Code of Regulations of the Surviving Corporation
until thereafter changed or amended in accordance with the provisions thereof
and the provisions of the Articles of Incorporation of the Surviving Corporation
and applicable Law.
Section 1.06. Directors.
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The directors of Sub immediately prior to the Effective Time shall be the
directors of the Surviving Corporation, until the earlier of their resignation
or removal or until their respective successors are duly elected and qualified,
as the case may be.
Section 1.07. Officers.
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The officers of the Company immediately prior to the Effective Time shall
be the officers of the Surviving Corporation, until the earlier of their
resignation or removal or until their respective successors are duly elected and
qualified, as the case may be.
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ARTICLE II
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EFFECT ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
Section 2.01. Effect on Capital Stock.
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At the Effective Time, by virtue of the Merger and without any action on
the part of the holder of any shares of capital stock of the Company or Sub:
(a) Capital Stock of Sub. Each issued and outstanding share of capital
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stock of Sub shall be converted into and become one fully paid and nonassessable
share of common stock, par value $.01 per share, of the Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent-Owned Stock. Each share
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of Class A Common Stock, no par value, of the Company, including the associated
Company Rights (the "Company Common Stock") issued and outstanding immediately
prior to the Effective Time that is owned by the Company, Parent or Sub shall no
longer be outstanding and shall automatically be canceled and retired and shall
cease to exist, and no cash or other consideration shall be delivered or
deliverable in exchange therefor.
(c) Conversion of Company Common Stock.
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(i) Subject to Sections 2.01(b) and 2.01(d), each issued and
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outstanding share of Company Common Stock shall be converted into the right
to receive an amount in cash equal to $25, without interest, less any
required withholding taxes, upon surrender and exchange of the Certificate
representing such share.
(ii) The cash payable upon the conversion of a share of Company
Common Stock pursuant to this Section 2.01(c) is referred to as the "Merger
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Consideration." As of the Effective Time, all such shares of Company Common
Stock shall no longer be outstanding and shall automatically be canceled
and retired and shall cease to exist, and each holder of a Certificate
representing any such shares of Company Common Stock shall cease to have
any rights with respect thereto, except the right to receive the Merger
Consideration, without interest, less any required withholding taxes, upon
surrender of such Certificate in accordance with Section 2.02.
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(d) Appraisal Rights. Notwithstanding anything in this Agreement to
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the contrary, shares ("Dissent Shares") of Company Common Stock that are
outstanding immediately prior to the Effective Time and that are held by any
person who is entitled to dissent from and properly dissents from this Agreement
pursuant to, and who complies in all respects with, (S)1701.85 of the Ohio Law,
in each case to the extent applicable (the "Appraisal Statute"), shall not be
converted into a right to receive the Merger Consideration as provided in
Section 2.01(c), but rather the holders of Dissent Shares shall be entitled to
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the right to receive payment of the appraised value of such Dissent Shares in
accordance with the Appraisal Statute; provided, however, that if any such
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holder shall fail to perfect or otherwise shall waive, withdraw or lose the
right to receive payment of the appraised value under the Appraisal Statute,
then the right of such holder to be paid the appraised value of such holder's
Dissent Shares shall cease and such Dissent Shares shall be deemed to have been
converted as of the Effective Time into, and to have become exchangeable solely
for, the right to receive the Merger Consideration, without interest, as
provided in Section 2.01(c). The Company shall give prompt notice to Parent of
any objections or demands received by the Company for appraisal of Company
Common Stock pursuant to the Appraisal Statute, and Parent shall have the right
to direct all negotiations and proceedings with respect to such objections or
demands. Neither the Company nor the Surviving Corporation shall, without the
prior written consent of Parent, make any payment with respect to, or settle or
offer to settle, any such objections or demands, or agree to do any of the
foregoing.
Section 2.02. Exchange of Certificates.
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(a) Paying Agent. Prior to the Effective Time, Parent shall
select a bank or trust company reasonably acceptable to the Company to act as
paying agent (the "Paying Agent") for the payment of the Merger Consideration
upon surrender of Certificates. The Surviving Corporation shall, and Parent
shall cause the Surviving Corporation to, provide to the Paying Agent on a
timely basis, as and when needed after the Effective Time, cash necessary to pay
for the shares of Company Common Stock converted into the right to receive the
Merger Consideration pursuant to Section 2.01(c) (such cash being hereinafter
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referred to as the "Exchange Fund"). The expenses of the Paying Agent shall not
be paid from the Exchange Fund, but shall be paid directly by the Surviving
Corporation.
(b) Exchange Procedure. As soon as reasonably practicable
after the Effective Time, Parent shall cause the Paying Agent to mail to each
holder of record of a certificate or certificates (the "Certificates") that
immediately prior to the Effective Time represented outstanding shares of
Company Common Stock whose shares were converted into the right to receive the
Merger Consideration pursuant to Section 2.01(c), (i) a letter of transmittal
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(which shall specify that delivery shall be effected, and risk of loss and title
to the Certificates shall pass, only upon delivery of the Certificates to the
Paying Agent and shall be in such form and have such other provisions as Parent
may reasonably specify) and (ii) instructions for use in effecting the surrender
of the Certificates in exchange for the Merger Consideration. Upon surrender of
a Certificate for cancellation to the Paying Agent or to such other agent or
agents as may be appointed by Parent, together with such letter of transmittal,
duly executed, and such other documents as may reasonably be required pursuant
to such instructions, the holder of such Certificate shall be entitled to
receive in exchange therefor cash in an amount equal to the product of (A) the
number of shares of Company Common Stock theretofore represented by such
Certificate and (B) the Merger Consideration, and the Certificate so surrendered
shall forthwith be canceled. In the event of a transfer of ownership of Company
Common Stock that is not registered in the transfer records of the Company,
payment may be made to a person other than the person in whose name the
Certificate so surrendered is registered, if such Certificate shall be properly
endorsed or otherwise be in proper form for transfer and the person requesting
such payment shall pay any transfer or other taxes required by reason of the
payment to a person other than the registered holder of such Certificate or
establish to the
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satisfaction of Parent that such tax has been paid or is not applicable. No
interest shall be paid or shall accrue on the cash payable upon surrender of any
Certificate.
(c) No Further Ownership Rights in Company Common Stock; Transfer
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Books. The Merger Consideration paid in accordance with the terms of this
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Article II upon conversion of any shares of Company Common Stock shall be deemed
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to have been paid in full satisfaction of all rights pertaining to such shares
of Company Common Stock, subject, however, to the Surviving Corporation's
obligation to pay any dividends or make any other distributions with a record
date prior to the Effective Time that may have been declared or made by the
Company on such shares of Company Common Stock in accordance with the terms of
this Agreement and which remain unpaid at the Effective Time, and after the
Effective Time there shall be no further registration of transfers on the stock
transfer books of the Surviving Corporation of shares of Company Common Stock
that were outstanding immediately prior to the Effective Time. If, after the
Effective Time, any Certificates are presented to the Surviving Corporation or
the Paying Agent for any reason, they shall be canceled and exchanged as
provided in this Article II.
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(d) Termination of Exchange Fund. Any portion of the Exchange Fund
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(including any interest or other income received by the Paying Agent in respect
thereof that has not previously been distributed pursuant to Section 2.02(f))
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that remains undistributed to the holders of Company Common Stock for 180 days
after the Effective Time shall be delivered to the Surviving Corporation, upon
demand, and any holder of Company Common Stock who has not theretofore complied
with this Article II shall thereafter look only to the Surviving Corporation for
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payment of such holder's claim for the Merger Consideration.
(e) No Liability. None of Parent, Sub, the Company, the Surviving
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Corporation or the Paying Agent shall be liable to any person in respect of any
payments or distributions payable from the Exchange Fund delivered to a public
official pursuant to any applicable abandoned property, escheat or similar Law.
If any Certificate has not been surrendered prior to five years after the
Effective Time (or immediately prior to such earlier date on which the Merger
Consideration in respect of such Certificate would otherwise escheat to or
become the property of any Governmental Entity), any amounts payable in respect
of such Certificate shall, to the extent permitted by applicable Law, become the
property of the Surviving Corporation, free and clear of all claims or interests
of any person previously entitled thereto.
(f) Investment of Exchange Fund. The Paying Agent shall invest any
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cash included in the Exchange Fund, as directed by the Surviving Corporation, on
a daily basis. Any interest and other income resulting from such investments
shall be payable to the Surviving Corporation on demand.
(g) Withholding Rights. Parent, Sub or the Surviving Corporation shall
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be entitled to deduct and withhold, or cause the Paying Agent to deduct and
withhold, from the consideration otherwise payable to any holder of Company
Common Stock pursuant to this Agreement, such amounts as may be required to be
deducted and withheld with respect to the making of such payment under the
Internal Revenue Code of 1986, as amended (the "Code"), or under any provision
of state, local or foreign tax Law. To the extent that amounts are so deducted
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and withheld by Parent, Sub or the Surviving Corporation, such deducted and
withheld amounts shall be treated for all purposes of this Agreement as having
been paid to the holder of the shares of Company Common Stock in respect of
which such deduction and withholding was made by Parent, Sub or the Surviving
Corporation.
(h) Lost Certificates. If any Certificate shall have been lost, stolen
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or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if required by
the Surviving Corporation, the posting by such person of a bond, in such
reasonable amount as the Surviving Corporation may direct, as indemnity against
any claim that may be made against Parent or the Surviving Corporation with
respect to such Certificate, the Paying Agent will pay, in exchange for such
lost, stolen or destroyed Certificate, the Merger Consideration to be paid in
respect of the shares of Company Common Stock represented by such Certificate,
as contemplated by this Article II.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Sub as follows:
Section 3.01. Organization, Standing and Power.
--------------------------------
Each of the Company and the Company's Subsidiaries is a corporation,
partnership or limited liability company duly organized, validly existing and in
good standing (with respect to the jurisdictions that recognize the concept of
good standing) under the laws of the state of its incorporation or organization
and has all requisite corporate power and authority necessary to enable it to
own, lease or otherwise hold its properties and assets and to conduct its
business as currently conducted. Each of the Company and the Company's
Subsidiaries is duly qualified to do business in each jurisdiction where the
nature of its business or its ownership or leasing of its properties make such
qualification necessary, except where the failure to so qualify, individually or
in the aggregate, has not had or would not reasonably be expected to have a
Company Material Adverse Effect. The Company has delivered to Parent true,
correct and complete copies of the articles of incorporation of the Company, as
amended to the date of this Agreement (as so amended, the "Company Charter"),
and the Code of Regulations of the Company, as amended to the date of this
Agreement (as so amended, the "Company Bylaws"). The Company Charter and the
Company Bylaws are in full force and effect. The Company is not in violation of
any provision of the Company Charter or the Company Bylaws. All Subsidiaries of
the Company and their respective jurisdictions of incorporation are identified
in the Company's Annual Report on Form 10-K for the year ended December 31, 2000
or in Section 3.01 of the letter dated as of the date of this Agreement from the
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Company to Parent and Sub (the "Company Disclosure Letter").
Section 3.02. Capital Structure.
-----------------
The authorized capital stock of the Company consists of 100,000,000 shares
of Company Common Stock. At the close of business on May 22, 2001, (i)
35,930,666 shares of Company
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Common Stock were issued and outstanding, (ii) 3,831,794 shares of Company
Common Stock were held by the Company in its treasury, (iii) 8,702,902 shares of
Company Common Stock were subject to issuance upon exercise of outstanding
Company Stock Options under the Company Stock Plans, (iv) 412 shares of Company
Common Stock were subject to issuance upon exercise of outstanding warrants at a
weighted average exercise price of $12.13 per share (the "Warrants"), (v)
1,053,349 additional shares of Company Common Stock were reserved for issuance
pursuant to the Company Stock Plans and (vi) 35,763 shares outstanding under the
Structural Dynamics Research Corporation Stock Purchase Plan, and (vii) one
common share purchase right (a "Company Right") for each share of Common Stock
outstanding was issued and outstanding in accordance with that certain Rights
Agreement (the "Company Rights Agreement"), dated as of August 10, 1998, between
the Company and Xxxxxx Trust and Savings Bank, as Rights Agent (the "Rights
Agent"), and one-half of a share of Company Common Stock was reserved for
issuance pursuant to the exercise of each Company Right. Except as set forth
above and except for changes since May 22, 2001 resulting from the exercise of
stock options outstanding on such date or the issuance of Company Common Stock
under the Structural Dynamics Research Corporation Stock Purchase Plan, at the
close of business on the date of this Agreement, no shares of capital stock or
other voting securities of the Company were issued, reserved for issuance or
outstanding. All outstanding shares of Company capital stock are, and all such
shares that may be issued prior to the Effective Time will be when issued, duly
authorized, validly issued, fully paid and nonassessable and not subject to or
issued in violation of any purchase option, call option, right of first refusal,
preemptive right, subscription right or any similar right under any provision of
the Ohio Law, the Company Charter, the Company Bylaws or any contract, lease,
license, indenture, note, bond, agreement, permit, concession, franchise or
other instrument (a "Contract") to which the Company is a party or otherwise
bound. Neither Parent nor Sub nor any of its "Affiliates" or "Associates" is or
will become an "Acquiring Person" (each as defined in the Company Rights
Agreement) by reason of this Agreement, the Option Agreement, the Merger or any
of the other Transactions, and neither a "Distribution Date" nor a "Stock
Acquisition Date" (as defined in the Company Rights Agreement) will occur by
reason of this Agreement, the Option Agreement, the Merger or any of the other
Transactions. Except as set forth above and on Section 3.02 of the Company
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Disclosure Letter, all outstanding shares of capital stock of the Subsidiaries
of the Company are owned by the Company or a direct or indirect wholly owned
Subsidiary of the Company, free and clear of all liens, charges, encumbrances,
claims and options of any nature. Except as set forth above and on Section 3.02
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of the Company Disclosure Letter, as of the date of this Agreement, there are
not any options, warrants, calls, rights, convertible or exchangeable
securities, units, commitments, Contracts, arrangements or undertakings to which
the Company or a Subsidiary of the Company is a party or by which the Company or
a Subsidiary of the Company is bound (x) obligating the Company or a Subsidiary
of the Company to issue, deliver or sell, or cause to be issued, delivered or
sold, additional shares of capital stock or other equity interests in, or any
security convertible or exercisable for or exchangeable into any capital stock
of or other equity interest in, the Company or a Subsidiary of the Company or
(y) obligating the Company or a Subsidiary of the Company to issue, grant,
extend or enter into any such option, warrant, call, right, security, unit,
commitment, Contract, arrangement or undertaking. As of the date of this
Agreement, there are not any outstanding contractual obligations of the Company
or a Subsidiary of the Company to repurchase, redeem or otherwise acquire any
shares of capital stock of the Company or a Subsidiary of the Company, except as
to unvested shares of Company Common
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Stock repurchasable by the Company, at the purchase price paid per share, upon
the termination of service of the holders of those shares pursuant to the terms
of the Company Stock Option Plans. Except as contemplated in connection with the
execution of this Agreement, there are no shareholder agreements, voting trusts
or other agreements or understandings to which the Company or a Subsidiary of
the Company is a party or to which it is bound relating to the holding, voting
or disposition of any shares of capital stock of the Company or a Subsidiary of
the Company.
Section 3.03. Authority; Execution and Delivery; Enforceability.
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(a) The Company has all requisite corporate power and authority
to execute, deliver and perform this Agreement and the Option Agreement and to
consummate the transactions contemplated hereby and thereby (the
"Transactions"). The execution, delivery and performance by the Company of this
Agreement and the Option Agreement and the consummation by the Company of the
Transactions have been duly authorized by all necessary corporate and
stockholder action on the part of the Company, subject to receipt of the Company
Stockholder Approval required by applicable Law. The Company has duly executed
and delivered this Agreement and the Option Agreement, and assuming the due
authorization, execution and delivery of this Agreement and the Option Agreement
by Parent and Sub, each of this Agreement and the Option Agreement constitutes
its legal, valid and binding obligation, enforceable against the Company in
accordance with its terms, except as that enforceability may be limited by any
applicable bankruptcy, insolvency, reorganization, moratorium or similar Laws
affecting the enforcement of creditor's rights generally and the application of
general principles of equity (regardless of whether that enforceability is
considered in a proceeding at law or in equity). The affirmative vote of the
holders of 66-2/3% of the outstanding shares of Company Common Stock (the
"Company Stockholder Approval") is the only vote of any class or series of the
Company's capital stock required to approve the Merger, adopt this Agreement and
consummate the Transactions.
(b) The Company Board has duly adopted resolutions, in each
case by a unanimous vote of all members of the Company Board, (i) approving and
declaring the advisability of this Agreement, the Option Agreement, the Merger
and the other Transactions in accordance with the applicable provisions of the
Ohio Law, (ii) determining that the terms of the Merger and the other
Transactions are fair to and in the best interests of the Company and its
stockholders and (iii) recommending that the holders of Company Common Stock
approve and adopt this Agreement and the Merger. Such resolutions are sufficient
to render inapplicable to Parent and Sub, and this Agreement, the Option
Agreement, the Merger and the other Transactions the provisions of Chapter 1704
of the Ohio Law. No other state takeover statute or similar statute or
regulation applies or purports to apply to the Company with respect to this
Agreement, the Option Agreement, the Merger or any other Transaction.
Section 3.04. No Conflicts; Consents.
----------------------
(a) Except as set forth in Section 3.04 of the Company
------------
Disclosure Letter, the execution, delivery and performance by the Company of
this Agreement and the Option Agreement do not, and the consummation of the
Merger and the other Transactions and compliance with the terms of this
Agreement and the Option Agreement will not, (i) conflict with or result in any
8
violation of any provision of the Company Charter or the Company Bylaws, (ii)
subject to the filings and other matters referred to in Section 3.04(b),
---------------
conflict with, or result in any violation of or default (with or without notice
or lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to loss of a material benefit
under, or to increased, additional, accelerated or guaranteed rights or
entitlements of any person under, or result in the creation of any pledge, lien,
charge, mortgage, encumbrance or security interest of any kind or nature
whatsoever (collectively, "Liens") upon any of the properties or assets of the
Company under, or require the consent of any person under, any provision of any
Contract to which the Company is a party or by which any of its properties or
assets is bound or affected or (iii) subject to the filings and other matters
referred to in Section 3.04(b), conflict with or result in any violation of any
---------------
domestic or, to the Company's Foreign Knowledge, foreign judgment, verdict, jury
award, injunction, order or decree ("Judgment") or domestic or, to the Company's
Foreign Knowledge, foreign statute, law (including common law), ordinance, rule
or regulation ("Law") applicable to the Company or its properties or assets,
except in the case of clauses (ii) and (iii) above, for such matters as,
individually or in the aggregate, could not reasonably be expected to have a
Company Material Adverse Effect.
(b) No consent, approval, license, permit, order or
authorization ("Consent") of, or registration, declaration or filing with, or
notice to, or Permit from, any federal, state, local or, to the Company's
Foreign Knowledge, foreign government or any court of competent jurisdiction,
administrative agency or commission or other governmental authority or
instrumentality, domestic or, to the Company's Foreign Knowledge, foreign (a
"Governmental Entity") is required to be obtained or made by or with respect to
the Company in connection with the execution, delivery and performance of this
Agreement or the Option Agreement or the consummation of the Merger and the
other Transactions, other than (i) the filing with the Securities and Exchange
Commission (the "SEC") of (A) a proxy statement relating to the Company
Stockholder Approval (the "Proxy Statement") and (B) such reports under Section
13 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as
may be required in connection with this Agreement, the Option Agreement, Merger
and the other Transactions, (ii) the filing of the Certificate of Merger with
the Secretary of State of the State of Ohio and appropriate documents with the
relevant authorities of the other jurisdictions in which the Company is
qualified to do business, (iii) such filings as may be required in connection
with the Taxes described in Section 6.08, (iv) the filing of a premerger
------------
notification report under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended (the "HSR Act") and the expiration or termination of the
applicable waiting period thereunder, (v) filings under state securities Laws,
(vi) to the Company's Foreign Knowledge, such filings and approvals as may be
required by any foreign premerger notification, securities, corporate or other
Law and (vii) such other items as, individually or in the aggregate, would not
reasonably be expected to have a Company Material Adverse Effect.
Section 3.05. SEC Documents; Undisclosed Liabilities.
--------------------------------------
(a) The Company has timely filed all required reports,
schedules, forms, statements and other documents with the SEC relating to
periods commencing on or after December 31, 1998 (such reports, schedules,
forms, statements and other documents being hereinafter referred to as the
"Company SEC Documents"). Except as set forth on Section 3.05(a)
---------------
9
of the Company Disclosure Letter, as of their respective dates, the Company SEC
Documents complied in all material respects with the requirements of the
Exchange Act or the Securities Act of 1933, as amended (the "Securities Act"),
as the case may be, and the rules and regulations of the SEC promulgated
thereunder applicable to such Company SEC Documents, and none of the Company SEC
Documents as of such dates contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. The consolidated financial statements of the
Company included in the Company SEC Documents comply as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto, have been prepared in accordance
with generally accepted accounting principles in the United States ("GAAP")
(except, in the case of unaudited quarterly statements, as permitted by Form 10-
Q of the SEC) applied on a consistent basis during the periods involved (except
as may otherwise be indicated in the notes thereto) and fairly present in all
material respects the financial position of the Company as of the dates thereof
and the results of its operations and cash flows for the periods then ended
(subject, in the case of unaudited quarterly statements, to normal year-end
audit adjustments).
(b) Except as set forth in the most recent financial statements
included in the Filed Company SEC Documents (as defined in Section 3.07) and as
set forth on Section 3.05(b) of the Company Disclosure Letter, the Company has
---------------
no liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) which would be required to be reflected in the
Company's financial statements, and there is no existing condition, situation or
set of circumstances that would reasonably be expected to result in such a
liability or obligation (including any claims, whether or not asserted, for
royalty payments), that, individually or in the aggregate, would reasonably be
expected to have a Company Material Adverse Effect.
Section 3.06. Information Supplied.
--------------------
Subject to Parent's and Sub's fulfillment of their obligations with
respect thereto, the Proxy Statement will contain (or will be amended in a
timely manner so as to contain) all information which is required to be included
therein in accordance with the Exchange Act and the rules and regulations
thereunder and any other applicable Law and will conform in all material
respects with the requirements of the Exchange Act and any other applicable Law;
and the Proxy Statement (or any amendment or supplement thereto) will not, at
the respective times they are filed with the SEC or published, sent or given to
the Company's stockholders, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading or, at the time of the Company Stockholders
Meeting, omit to state any material fact necessary to correct any statement in
any earlier communication with respect to the solicitation of proxies for the
Company Stockholders Meeting which shall have become false or misleading in any
material respect in light of the circumstances under which made. Notwithstanding
the foregoing, no representation or warranty is hereby made by the Company with
respect to any information supplied by Parent or Sub in writing for inclusion
in, or with respect to Parent or Sub information derived from Parent's public
SEC filings which is included or incorporated by reference in the Proxy
Statement.
10
Section 3.07. Absence of Certain Changes or Events.
------------------------------------
Except as disclosed in the Company SEC Documents filed and publicly
available prior to the date of this Agreement (the "Filed Company SEC
Documents") or in Section 3.07 of the Company Disclosure Letter, since December
------------
31, 2000, the Company has conducted its business only in the ordinary course of
business, and there has not been:
(a) any event, change, occurrence, effect or development that,
individually or in the aggregate, has had or would reasonably be expected to
have a Company Material Adverse Effect;
(b) any declaration, setting aside or payment of any dividend or other
distribution (whether in cash, stock, property or otherwise) with respect to any
Company capital stock or any repurchase, redemption or other acquisition by the
Company or any Subsidiary of the Company of any capital stock or other equity
securities of, or other ownership interests in, the Company or any Subsidiary of
the Company, except as to unvested shares of Company Common Stock repurchasable
by the Company, at the purchase price paid per share, upon the termination of
service of the holders of those shares pursuant to the Company Stock Option
Plans;
(c) any split, combination or reclassification of any Company capital
stock or any issuance of or the authorization of any issuance of any other
securities in respect of, in lieu of or in substitution for, shares of Company
capital stock;
(d) (i) any grant by the Company or any Subsidiary of the Company to
any director, officer or employee of the Company or any Subsidiary of the
Company of any increase in compensation, bonus or other benefits, except, with
respect to employees who are not officers and directors of the Company or any of
its Subsidiaries, normal increases in the ordinary course of business or in
connection with the hiring or promotion of any such employee, (ii) any grant by
the Company or any Subsidiary of the Company to any such director, officer or
employee of any increase in severance, change of control or termination pay
benefits, or (iii) any entry by the Company or any Subsidiary of the Company
into, or any amendment of, any employment, consulting, deferred compensation,
indemnification, severance, change of control or termination agreement or
arrangement with any such director, officer or employee, except, with respect to
employees that are not officers and directors of the Company, in the ordinary
course of business;
(e) any change in accounting methods, principles or practices by the
Company or any Subsidiary of the Company, except for such changes as may have
been required by a change in GAAP;
(f) any (i) material elections with respect to Taxes by the Company or
any Subsidiary of the Company, (ii) settlement or compromise by the Company or
any Subsidiary of the Company of any material Tax liability or refund or (iii)
assessment of a material Tax against the Company or any Subsidiary of the
Company by any Governmental Entity;
11
(g) any amendment of any term of any outstanding security of the
Company or any Subsidiary of the Company that would materially increase the
obligations of the Company or any Subsidiary of the Company under such security;
(h) any incurrence, assumption or guarantee by the Company or any
Subsidiary of the Company of any indebtedness for borrowed money, other than in
the ordinary course of business;
(i) any creation or assumption by the Company or any Subsidiary of the
Company of any material Lien on any material asset of the Company or any
Subsidiary of the Company, other than in the ordinary course of business;
(j) any making of any loan, advance or capital contribution to or
investment in any person by the Company or any Subsidiary of the Company other
than (i) in connection with any acquisition or capital expenditure permitted by
Section 5.01, or (ii) loans or advances to employees of the Company or any
Subsidiary of the Company made in the ordinary course of business and (iii)
transactions between the Company and one or more of its wholly-owned
Subsidiaries;
(k) (i) any acquisition by the Company or any Subsidiary of the Company
by merging or consolidating with, or by purchasing a substantial equity interest
in or a substantial portion of the assets of, or by any other manner, any
business or any corporation, partnership, joint venture, association or other
business organization or division thereof or any acquisition by the Company or
any Subsidiary of the Company of any assets (other than inventory) that are
material to the Company, (ii) any sale, lease, license, encumbrance or other
disposition of material assets of the Company or any Subsidiary of the Company,
other than sales of products to customers in the ordinary course of business,
(iii) any incurrence of capital expenditures by the Company or any Subsidiary of
the Company other than in the ordinary course of business, or (iv) any
modification, amendment, assignment, termination or relinquishment by the
Company or any Subsidiary of the Company of any Contract, license or other right
that, individually or in the aggregate with all such modifications, amendments,
assignments, terminations and relinquishments, would reasonably be expected to
have a Company Material Adverse Effect;
(l) any damage, destruction or loss (whether or not covered by
insurance) with respect to any assets of the Company or any Subsidiary of the
Company that, individually or in the aggregate, has had or would reasonably be
expected to have a Company Material Adverse Effect;
(m) any entry by the Company or any Subsidiary of the Company into any
commitment or transaction material to the Company (other than commitments or
transactions entered into in the ordinary course of business);
(n) as of the date hereof, any revaluation by the Company or any
Subsidiary of the Company of any of its material assets, including but not
limited to writing down the value of inventory or writing off notes or accounts
receivable other than in the ordinary course of business; or
12
(o) any agreement, commitment or undertaking to take any action
referred to in Sections 3.07(a) through 3.07(n).
---------------- -------
Section 3.08. Taxes.
-----
(a) Each of the Company, each of its Subsidiaries and any affiliated,
consolidated, combined, unitary or similar group of which the Company or any of
its Subsidiaries is or was a member has (i) duly filed on a timely basis (taking
into account any extensions) all Tax Returns (as hereinafter defined) required
to be filed or sent by or with respect to it other than Tax Returns that would
report immaterial Tax liability and as to which the failure to file would not
itself give rise to material Tax liability or penalty, and all such Tax Returns
are complete and accurate in all material respects, (ii) duly paid or deposited
on a timely basis all material Taxes (as hereinafter defined) that are shown to
be due and payable on or with respect to such Tax Returns, and all material
Taxes that are otherwise due and payable (except for audit adjustments not
material in the aggregate or to the extent that liability therefor is reserved
for in the Company's most recent audited financial statements) for which the
Company or any of its Subsidiaries may be liable, (iii) established reserves
that are adequate for the payment of all material Taxes not yet due and payable
with respect to the results of operations of the Company and its Subsidiaries
through the date hereof, and (iv) complied in all material respects with all
applicable laws, rules and regulations relating to the reporting, payment and
withholding of material Taxes that are required to be withheld from payments to
employees, independent contractors, creditors, shareholders or any other third
party;
(b) Except as set forth on Section 3.08(b) of the Company Disclosure
---------------
Letter, no audits or other administrative proceedings or court proceedings are
presently pending, or to the knowledge of the Company threatened, with regard to
any Taxes for which the Company or any of its Subsidiaries would be liable in an
amount reasonably expected to exceed $100,000, and no material deficiency (to
the extent remaining unsatisfied) for any Taxes has been proposed, asserted or
assessed in writing (whether by examination report or prior to completion of
examination by means of notices of proposed adjustment or other similar written
requests or notices) against the Company or any of its Subsidiaries by any
taxing authority with respect to any period;
(c) Except as set forth in Schedule 3.08 of the Company Disclosure
-------------
Letter, neither the Company nor any of its Subsidiaries is a party to an
agreement that provides for the payment of any amount that would constitute a
"parachute payment" within the meaning of Section 280G of the Code or that would
constitute compensation whose deductibility is limited under Section 162(m) of
the Code;
(d) To the knowledge of the Company, no material reassessments (for
property or ad valorem Tax purposes) of any material assets or any material
property owned or leased by the Company or any of its Subsidiaries have been
proposed in writing by any taxing authority;
(e) Except as set forth on Section 3.08(e) of the Company Disclosure
---------------
Letter, neither the Company nor any of its Subsidiaries has agreed to make any
adjustment pursuant to section 481(a) of the Code (or any predecessor provision)
by reason of any change in any accounting
13
method of the Company or any of its Subsidiaries, and neither the Company nor
any of its Subsidiaries has any application pending with any taxing authority
requesting permission for any material changes in any accounting method of the
Company or any of its Subsidiaries. To the knowledge of the Company, neither the
Internal Revenue Service ("IRS") nor any other taxing authority has proposed in
writing, and neither the Company nor any of its Subsidiaries is otherwise
required to make, any such material adjustment or change in accounting method;
(f) Except as set forth on Section 3.08(f) of the Company Disclosure
---------------
Letter, neither the Company, nor, to the knowledge of the Company, any member of
its affiliated group that joins in the consolidated federal income tax return
(i) has been a member of any other affiliated group that filed a consolidated
federal income tax return or (ii) has assumed, or agreed to indemnify against,
the liability for Taxes of any person other than a person that is a present or
former member (or predecessor of such a member in the case of the acquisition of
such predecessor by such member) of the affiliated group of which the Company is
the common parent;
(g) No material assets of any Subsidiaries which are "foreign
corporations" within the meaning of the Code are, or at any time within the past
five years have been, located within the United States or utilized in connection
with the conduct of a United States trade or business within the meaning of
Section 864 of the Code;
(h) No closing agreement or agreements pursuant to Section 7121 of the
Code or any similar provision of any state, local or foreign law has been
entered into by or with respect to the Company or any Subsidiary which requires
the Company or any Subsidiary to include any item of income in, or exclude any
item of deduction from, any Tax Return which is due after the Effective Time;
(i) As of the date hereof, the Company has not requested any rulings
from any taxing authority, and there are no outstanding subpoenas or unsatisfied
written requests from any taxing authority for information with respect to Taxes
of the Company or any Subsidiary;
(j) Except as set forth on Section 3.08(j) of the Company Disclosure
---------------
Letter, there are no outstanding agreements or waivers that would extend the
statutory period in which a taxing authority may assess or collect a material
amount of Tax against the Company or any Subsidiary;
(k) None of the Subsidiaries currently has, or will have as of the
Effective Time, any overall foreign loss accounts or separate limitation loss
accounts within the meaning of Section 904 of the Code and the Treasury
Regulations thereunder; and
(l) Notwithstanding anything to the contrary herein, any
representation or warranty made in this Section 3.08 insofar as it applies to
the Specified Countries, is qualified by the Company's Foreign Knowledge.
For purposes of this Agreement, "Tax" (and, with correlative meaning,
"Taxes") means any U.S. federal, state, local or foreign net income, alternative
or add-on minimum tax, gross
14
income, gross receipts, sales, use, ad valorem, value added, transfer,
franchise, profits, license, withholding, payroll, employment, excise,
production, severance, stamp, occupation, premium, property, environmental or
windfall profit tax, custom, duty or other tax, governmental fee or other like
assessment or charge of any kind whatsoever, together with any interest and/or
any penalty, addition to tax or additional amount imposed by any taxing
authority.
"Tax Return" (and with correlative meaning, "Tax Returns") means all
returns, declarations, reports, estimates, information returns and statements
relating to Taxes, including any schedule or attachment thereto, and including
any amendment thereto.
Section 3.09. No Undisclosed Material Liabilities.
-----------------------------------
Except as disclosed in the Filed Company SEC Documents or as set forth in
Section 3.09 of the Company Disclosure Letter, as of the date hereof, there are
------------
no liabilities of the Company or any of its Subsidiaries of any kind whatsoever,
whether accrued, contingent, absolute, determined, determinable or otherwise,
that individually or in the aggregate, would reasonably be expected to have a
Company Material Adverse Effect, other than: (i) liabilities adequately provided
for on the balance sheet of the Company dated as of March 31, 2001 (including
the notes thereto) contained in the Company's Quarterly Report on Form 10-Q for
the quarter ended March 31, 2001 and (ii) liabilities under this Agreement.
Section 3.10. Pension and Benefit Plans; ERISA.
--------------------------------
(a) Schedule 3.10(a) of the Company Disclosure Letter contains a true
----------------
and complete list of each "employee pension benefit plan" (as defined in Section
3(2) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) (hereinafter a "Company Pension Plan"), "employee welfare benefit
plan" (as defined in Section 3(l) of ERISA), stock option, stock purchase,
restricted stock, phantom stock or other equity-based incentive plan, deferred
compensation plan or arrangement, and other employee fringe benefit plan or
arrangement maintained, contributed to or required to be maintained or
contributed to by the Company, any of its Subsidiaries or any other person or
entity that, together with the Company, is treated as a single employer under
Section 414(b), (c), (m) or (o) of the Code (each a "Company ERISA Affiliate")
for the benefit of any present or former officers, employees, directors or
independent contractors of the Company or any the Company ERISA Affiliate (all
the foregoing being herein referred collectively as "Company Employee Benefit
Plans"). The Company has made available to Parent true, complete and correct
copies of (1) each of the Company Employee Benefit Plans and amendments thereto,
(2) the three most recent annual reports on Form 5500 filed with the Internal
Revenue Service with respect to each of the Company Employee Benefit Plans (if
any such report was required by applicable law), (3) the most recent summary
plan description and any summaries of material modification for each of the
Company Employee Benefit Plans for which such a summary plan description is
required by applicable law and (4) each trust agreement and insurance or annuity
contract relating to the Company Employee Benefit Plans.
15
(b) Each Company Employee Benefit Plan has been administered in all
material respects with its terms. The Company, the Company ERISA Affiliates and
all Company Employee Benefit Plans are in material compliance with the
applicable provisions of ERISA,the Code and all applicable state laws. Except as
disclosed in Section 3.10(b) of the Company Disclosure Letter and except for
---------------
those instances to the contrary which will not, either individually or in the
aggregate, be material, all reports, returns, notices and similar documents with
respect to the Company Employee Benefit Plans required to be filed with any
governmental agency or distributed to any Company Employee Benefit Plan
participant have been duly, timely and accurately filed or distributed. Except
as disclosed in Section 3.10(b) of the Company Disclosure Letter, there are no
---------------
termination proceedings or, to the knowledge of the Company, investigations by
any governmental agency or other claims (except claims for benefits payable in
the normal operation of Company Employee Benefit Plans), suits or proceedings
against or involving any of the Company Employee Benefit Plans or asserting any
rights or claims to benefits under any of the Company Employee Benefits Plans
that would reasonably be expected to give rise to any material liability, and
there are not any facts to the Company's knowledge that would reasonably be
expected to give rise to any material liability in the event of any such
investigation, claim, suit or proceeding. To the Company's knowledge, no
prohibited transactions (as defined in ERISA Section 406 or Code Section 4975)
and no violations of ERISA Section 407 for which an applicable statutory or
administrative exemption does not exist and for which the Company or any Company
ERISA Affiliate would reasonably be expected to be subject to any liability have
occurred with respect to any Company Employee Benefit Plans.
(c) Except as disclosed in Section 3.10(c) of the Company Disclosure
---------------
Letter, none of the Company Pension Plans is subject to Title IV of ERISA and
none of the Company or any Company ERISA Affiliate has maintained or been
required to contribute to a plan that is subject to Title IV of ERISA during the
past six years.
(d) Except as disclosed in Section 3.10(d) of the Company Disclosure
---------------
Letter, each Company Pension Plan intended to be qualified has been the subject
of a determination letter from the Internal Revenue Service to the effect that
such Company Pension Plan is qualified and exempt from Federal income taxes
under Sections 401(a) and 501(a), respectively, of the Code; no such
determination letter has been revoked, and, to the knowledge of the Company,
revocation has not been threatened; and since the effective date of its most
recent determination letter such Company Pension Plan has been timely amended if
and to the extent necessary to remain so qualified and has not been amended in
any respect that might adversely affect its qualification or materially increase
its cost. The Company has made available to Parent a copy of the most recent
determination letter received from the Internal Revenue Service with respect to
each the Company Pension Plan for which such a letter has been issued, as well
as a copy of any pending application for a determination letter.
(e) Except as disclosed on Section 3.10(e) of the Company Disclosure
---------------
Letter, neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will, alone or together
with other events, (i) result in any material payment becoming due to any
employee or group of employees of the Company or any of its Subsidiaries;
16
(ii) materially increase any benefits otherwise payable under any Company
Employee Benefit Plan or Company Pension Plan or (iii) except as otherwise
provided in Section 6.04 of this Agreement, result in the acceleration of the
------------
time of payment or vesting of any such benefits. Except as disclosed on Section
-------
3.10(e) of the Company Disclosure Letter or in the Filed Company SEC Documents,
-------
there are no severance agreements or employment agreements between the Company
or any of its Subsidiaries and any employee of the Company or such Subsidiary
except as otherwise provided in Section 6.04 of this Agreement. True and correct
copies of all such severance agreements and employment agreements have been made
available to Parent. Except as set forth on Section 3.10(e) of the Company
---------------
Disclosure Letter, neither the Company nor any of its Subsidiaries has any
consulting agreement or arrangement with any natural person involving
compensation in excess of $200,000 except as are terminable upon one month's
notice or less.
(f) Except as disclosed on Section 3.10(f) of the Company Disclosure
---------------
Letter and except for the securities issued or issuable under the Company Stock
Plans, no stock or other security issued by the Company or any of its
subsidiaries forms or has formed a material part of the assets of any the
Company Employee Benefit Plan or the Company Pension Plan.
(g) Except as set forth on Section 3.10(g) of the Company Disclosure
---------------
Letter, with respect to each Company Employee Benefit Plan that is not subject
to United States law (a "Foreign Benefit Plan"), to the Company's Foreign
Knowledge: (i) all employer and employee contributions to each Foreign Benefit
Plan required by law or by the terms of such Foreign Benefit Plan have been
made, or, if applicable, accrued in accordance with normal accounting practices
and a pro rata contribution for the period prior to and including the Effective
Time has been made or accrued; (ii) the fair market value of the assets of each
funded Foreign Benefit Plan, the liability of each insurer for any Foreign
Benefit Plan funded through insurance or the book reserve established for any
Foreign Benefit Plan, together with any accrued contributions, is sufficient to
procure or provide for the benefits determined on any ongoing basis (actual or
contingent) accrued to the Effective Time with respect to all current and former
participants under such Foreign Benefit Plan according to the actuarial
assumptions and valuations most recently used to determine employer
contributions to such Foreign Benefit Plan, and none of the Transactions shall
cause such assets or insurance obligations to be less than such benefit
obligations; and (iii) each Foreign Benefit Plan required to be registered has
been registered and has been maintained in good standing with applicable
regulatory authorities. To the Company's Foreign Knowledge, each Foreign Benefit
Plan is now and always has been operated in material compliance with all
applicable non-United States laws.
(h) No Company Employee Benefit Plan provides, nor does the Company, or
any Company ERISA Affiliate have an obligation to provide, medical, life or
other welfare benefits (whether or not insured) with respect to current or
former employees after retirement or other termination of service, other than as
required pursuant to Section 4980B of the Code.
Section 3.11. Labor Matters. Except as set forth on Section 3.11 of the
------------- ------------
Company Disclosure Letter or in the Filed Company SEC Documents:
(a) Neither the Company nor any of its Subsidiaries is a party to any
collective bargaining agreement or other labor agreement with any labor union or
organization, and to the
17
Company's knowledge, currently there is no current union that claims to
represent employees of the Company or any of its Subsidiaries, nor does the
Company know of any activity or proceeding of any labor organization (or
representative thereof) or employee group (or representative thereof) to
organize any such employees;
(b) There is no unfair labor practice charge or grievance arising out
of a collective bargaining agreement or other grievance procedure against the
Company or any of its Subsidiaries pending, or, to the knowledge of the Company,
threatened, that, individually or in the aggregate, has or would reasonably be
expected to have a Company Material Adverse Effect;
(c) Except as set forth on Section 3.11(c) of the Company Disclosure
---------------
Letter, there is no complaint, lawsuit or proceeding in any forum by or on
behalf of any present or former employee, any applicant for employment or any
classes of the foregoing alleging breach of any express or implied contract of
employment, any law or regulation governing employment or the termination
thereof or other discriminatory, wrongful or tortious conduct in connection with
the employment relationship against the Company or any of its Subsidiaries
pending, or, to the knowledge of the Company, threatened, that, individually or
in the aggregate, has had or would reasonably be expected to have a Company
Material Adverse Effect;
(d) There is no strike, dispute, slowdown, work stoppage or lockout
pending, or, to the knowledge of the Company, threatened, against or involving
the Company or any of its Subsidiaries that, individually or in the aggregate,
has had or would reasonably be expected to have a Company Material Adverse
Effect;
(e) The Company and each of its Subsidiaries are in compliance with
all applicable laws respecting employment and employment practices, terms and
conditions of employment, wages, hours of work and occupational safety and
health, except for non-compliance that, individually or in the aggregate, does
not have and would not be reasonably likely to have a Company Material Adverse
Effect; and
(f) As of the date hereof, there is no proceeding, claim, suit, action
or governmental investigation pending or, to the knowledge of the Company,
threatened, in respect to which any current or former director, officer,
employee or agent of the Company or any of its Subsidiaries is or may be
entitled to claim indemnification from the Company or any of its Subsidiaries
pursuant to the Company Charter or Company Bylaws or any provision of the
comparable charter or organizational documents of any of its Subsidiaries, as
provided in any indemnification agreement to which the Company or any Subsidiary
of the Company is a party or pursuant to applicable Law that, individually or in
the aggregate, has had or would reasonably be expected to have a Company
Material Adverse Effect.
Section 3.12. Litigation.
----------
Except as set forth on Section 3.12 of the Company Disclosure Letter, there
------------
is no suit, action, proceeding or investigation pending against, or to the
knowledge of the Company, threatened against
18
or affecting, the Company or any Subsidiary of the Company or any of their
respective properties or any Company Employee Benefit Plan before any
arbitrator, court or other Governmental Entity (and the Company is not aware of
any basis for any such suit, action, proceeding or investigation) that,
individually or in the aggregate, would reasonably be expected to have a Company
Material Adverse Effect. As of the date hereof, there are no suits, claims,
actions, proceedings or investigations pending or, to the knowledge of the
Company, threatened, seeking to prevent, hinder, modify or challenge the
transactions contemplated by this Agreement. Neither the Company nor any
Subsidiary of the Company is subject to any outstanding Judgment against the
Company or any Subsidiary of the Company or naming the Company or any Subsidiary
of the Company as a party that, individually or in the aggregate, would
reasonably be expected to have a Company Material Adverse Effect.
Section 3.13. Compliance with Applicable Laws.
-------------------------------
(a) Except as disclosed in the Filed Company SEC Documents or on
Section 3.13 of the Company Disclosure Letter, the Company and its Subsidiaries,
------------
and their operations are being conducted in compliance with all applicable Laws,
except for such failures to comply as, individually or in the aggregate, would
not reasonably be expected to have a Company Material Adverse Effect. Except as
set forth in the Filed Company SEC Documents or on Section 3.13 of the Company
------------
Disclosure Letter, neither the Company nor any Subsidiary of the Company has
received any written notice during the two years prior to the date hereof: (i)
of any administrative, civil or criminal investigation or audit (other than Tax
audits) by any Governmental Entity relating to the Company or any Subsidiary of
the Company or (ii) from any Governmental Entity alleging that the Company or
any Subsidiary of the Company is not in compliance in any material respect with
any applicable Law.
(b) The Company and its Subsidiaries have in effect all approvals,
authorizations, certificates, filings, franchises, licenses, notices, permits
and rights of or with all Governmental Entities ("Permits") necessary for them
to own, lease or otherwise hold and to operate their properties and assets and
to carry on their business and operations as now conducted, except for the
Permits, the absence of which, individually or in the aggregate, has not had and
would not reasonably be expected to have a Company Material Adverse Effect.
There have occurred no defaults under, or violations of, any such Permit, except
for such defaults and violations that, individually and in the aggregate, have
not had and would not reasonably be expected to have a Company Material Adverse
Effect. The Merger would not, in and of itself, cause the revocation or
cancellation of any such Permit that, individually or in the aggregate, would
reasonably be expected to have a Company Material Adverse Effect.
Section 3.14. Environmental Matters.
---------------------
Except disclosed in the Filed Company SEC Documents or Section 3.14 of
------------
the Company Disclosure Letter, (i) the operations of the Company and its
Subsidiaries have been and are in material compliance with all Environmental
Laws (as defined below), and possess and are in material compliance with all
permits, licenses and other authorizations required by Environmental Laws, (ii)
there are no pending or, to the knowledge of the Company, threatened, actions,
notices
19
of violation or investigations under or pursuant to Environmental Laws against
the Company or its Subsidiaries or involving any real property currently or, to
the knowledge of the Company, formerly owned, operated or leased by the Company
or its Subsidiaries, or for which the Company or any of its Subsidiaries has
assumed responsibility for environmental claims, (iii) the Company and its
Subsidiaries are not subject to any Environmental Liabilities (as defined
below), and, to the knowledge of the Company, no facts, circumstances or
conditions relating to, arising from, associated with or attributable to any
real property currently or, to the knowledge of the Company, formerly owned,
operated or leased by the Company or its Subsidiaries, or for which the Company
or any of its Subsidiaries has assumed responsibility for environmental claims,
or operations thereon would reasonably be expected to result in material
Environmental Liabilities, (iv) all real property owned and to the knowledge of
the Company, all real property operated or leased by the Company or its
Subsidiaries is free of contamination from Hazardous Material (as defined below)
that would have an adverse effect on human health or the environment or require
remediation under Environmental Laws and (v) there is not now, nor, to the
knowledge of the Company, has there been in the past, on, in or under any real
property owned, leased or operated by the Company or any of its predecessors any
(A) underground storage tanks regulated pursuant to 40 C.F.R. Part 280 or
delegated state programs (B) asbestos-containing materials or (C)
polychlorinated biphenyls.
As used in this Agreement, "Environmental Laws" means any and all
federal, state, foreign, interstate, local or municipal laws, rules, orders,
regulations, statutes, ordinances, codes, decisions, injunctions, orders,
decrees, requirements of any Governmental Entity, any and all common law
requirements, rules and bases of liability regulating, relating to or imposing
liability or standards of conduct concerning pollution, Hazardous Materials or
protection of human health, safety, natural resources or the environment and
includes the Comprehensive Environmental Response, Compensation and Liability
Act, 42 U.S.C. (S) 9601 et seq., as such law has been amended or supplemented,
-- ---
and the regulations promulgated pursuant thereto, and all analogous state or
local statutes. As used in this Agreement, "Environmental Liabilities" with
respect to any person means any and all liabilities or relating to such person
or any of its Subsidiaries (including any entity which is, in whole or in part,
a predecessor of such person or any of such Subsidiaries), whether vested or
unvested, contingent or fixed, actual or potential, known or unknown, which (i)
arise under or relate to matters covered by Environmental Laws and (ii) relate
to actions occurring or conditions existing on or prior to the Closing Date. As
used in this Agreement, "Hazardous Materials" means any materials, wastes, or
substances defined, listed, classified or regulated as hazardous, toxic or
dangerous in or under any Environmental Laws and includes petroleum, petroleum
products, asbestos, urea formaldehyde, radioactive materials, radiofrequency and
polychlorinated biphenyls.
Section 3.15. Contracts.
---------
(a) Section 3.15(a) of the Company Disclosure Letter sets forth a
---------------
correct and complete list of each of the following Contracts to which the
Company or any Subsidiary of the Company is a party or by which the Company or
any Subsidiary of the Company or any of their respective properties or assets
are or may be bound:
(i) any Contracts to sell products or to provide services
(including without
20
limitation licensing, maintenance, consulting, development, training and support
agreements) with the Company's 20 largest customers by revenue for the year
ended December 31, 2000;
(ii) the five largest distribution or reseller Contracts by
revenue for the year ended December 31, 2000;
(iii) any material Contracts granting a right of first refusal or
first negotiation or containing most favored customer/nation or price
redetermination provisions or change of control provisions;
(iv) any Contracts that provide for exclusive rights or that purport
to limit, curtail, or restrict the ability of the Company or any of its
Subsidiaries to compete in any geographic area or line of business or with any
person or to solicit any customers or employees in any material respect;
(v) any Contracts for the acquisition, sale or lease of material
properties or assets of the Company (by merger, purchase or sale of assets or
stock or otherwise) entered into since January 1, 1999, involving aggregate
consideration of $10.0 million or more;
(vi) any loan or credit agreements, mortgages, indentures or other
agreements or instruments evidencing indebtedness for borrowed money by the
Company or any of its Subsidiaries in excess of $500,000 or any such agreement
pursuant to which indebtedness for borrowed money in excess of $500,000 may be
incurred,
(vii) any Contracts that would be required to be filed as an exhibit
to a Form 10-K filed by the Company with the SEC on the date hereof that have
not been filed or incorporated by reference as an exhibit to a Filed Company SEC
Document;
(viii) any other Contracts that involve total annual payments of
more than $750,000 or aggregate payments over the life thereof of $2.0 million
or which, together with all other Contracts to or with the same party or
affiliated parties, involve more than such amounts;
(ix) any other Contract that is material to the business, assets,
condition (financial or otherwise), prospects or results of the operations of
the Company; and
(x) any commitments and agreements to enter into any of the
foregoing.
(b) The Company has heretofore made available to Parent true, correct
and complete copies, or (in the case of oral Contracts) written descriptions of
all of the material terms thereof, of all Contracts identified or required to be
identified in Section 3.15(a) hereto (collectively, the "Material Contracts")
---------------
(c) Each of the Material Contracts constitutes the valid and legally
binding obligation of the Company or its Subsidiaries, enforceable in accordance
with its terms, and is in full
21
force and effect. There is no default under any Material Contract either by the
Company or, to the Company's knowledge, by any other party thereto, and no event
has occurred that with the lapse of time or the giving of notice or both would
constitute a default thereunder by the Company or, to the Company's knowledge,
any other party. No party to any such Material Contract has given notice to the
Company of or made a claim against the Company with respect to any breach or
default thereunder.
(d) Except as set forth on Section 3.15(d) of the Company Disclosure
---------------
Letter, neither the Company nor any of its Subsidiaries has, during the period
from January 1, 2000 to the date hereof, lost, or been notified that it will
lose or suffer diminution in its relationship with any material customer. To the
knowledge of the Company, as of the date hereof no representative of any
customer has notified the Company or any of its Subsidiaries that, in the event
of a change of control of the Company such as contemplated by this Agreement,
the Company or any Subsidiary would lose or suffer diminution in its
relationship with any such customer.
(e) Except as disclosed in the Filed Company SEC Documents or as set
forth on Section 3.15(e) of the Company Disclosure Letter, there are no
---------------
transactions or arrangements between the Company or any of its Subsidiaries and
(i) any director or officer of the Company or any Subsidiary or any person
affiliated or related to any such director or officer or (ii) any other person
or entity controlling or under common control with the Company.
Section 3.16. Brokers; Fees and Expenses.
--------------------------
No broker, investment banker, financial advisor or other person, other than
Sonenshine Pastor & Co. LLC and Bear Xxxxxxx & Co. Inc., the fees and expenses
of which will be paid by the Company, is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission in connection with the
Merger and the other Transactions based upon arrangements made by or on behalf
of the Company. The Company has furnished to Parent a true and complete copy of
all agreements between the Company and Sonenshine Pastor & Co. LLC and Bear
Xxxxxxx & Co. Inc. relating to the Merger and the other Transactions.
Section 3.17. Opinion of Financial Advisor.
----------------------------
The Company has received the opinion of Bear Xxxxxxx & Co. Inc., dated the
date of this Agreement, to the effect that, as of such date, the consideration
to be received in the Merger by the holders of Company Common Stock is fair to
the holders of Company Common Stock from a financial point of view.
Section 3.18. Potential Conflicts of Interest.
-------------------------------
Except as disclosed in the Filed Company SEC Documents or set forth in
Section 3.18 of the Company Disclosure Letter, there have been no transactions,
------------
agreements, arrangements or understandings between the Company, on the one hand,
and its affiliates, on the other hand, that would be required to be disclosed
under Item 404 of Regulation S-K under the Securities Act.
22
Section 3.19. Intellectual Property.
---------------------
(a) Except as set forth on Section 3.19(a) of the Company Disclosure
---------------
Letter, the Company and its Subsidiaries own all right, title and interest in,
to and under, free and clear of any Lien or any other material restriction, and
have the valid and enforceable right to use and fully and completely assign,
transfer and convey, or have a valid license to: all U.S. and foreign patents,
inventions (patentable or unpatentable), know-how, trade secrets, and all other
tangible or intangible confidential or proprietary technical and business
information, copyrights (registered or unregistered), computer software and
programs of any kind or nature (including, but not limited to, any and all
object code, source code, firmware, program and/or programming tools),
trademarks (registered or unregistered), service marks (registered or
unregistered), trade names, trade dress, and all patent applications, trademark
and/or service xxxx applications and/or registrations, and copyright
applications for any of the foregoing, as well as any and all goodwill
symbolized by and/or associated with any of the foregoing (collectively,
"Intellectual Property"), currently used or planned to be used in products
currently under development and reasonably necessary to carry on the business
and/or planned business of the Company and/or its Subsidiaries, as well as all
rights to any and all income, royalties, revenues, damages, payments previously,
now or hereafter due and/or payable under or with respect to any of the
foregoing Intellectual Property owned by the Company and/or its Subsidiaries,
including, without limitation, the right to all past, present and future causes
of action for violating any rights relating to any of the foregoing Intellectual
Property owned by the Company and/or its Subsidiaries including, but not limited
to, infringement, unfair competition, misappropriation and/or dilution (all
rights included in this Section 3.19(a) collectively "Employed Intellectual
---------------
Property").
(b) The activities, products and services of the Company and its
Subsidiaries have not and do not infringe upon, misappropriate, dilute (in the
case of trademarks), and/or to the knowledge of the Company, otherwise violate,
or constitute the unauthorized use of, the Intellectual Property of any other
person. There are no allegations, threats, claims or lawsuits pending, or for
which notice has been provided to the Company, or to the knowledge of the
Company alleging that the Company's or any of its Subsidiaries' activities,
products or services infringe upon, misappropriate, dilute (in the case of
trademarks), and/or otherwise violate, or constitute the unauthorized use of,
any other person's Intellectual Property; or (ii) challenging the Company's or
any of its Subsidiaries' ownership of, right to use, right to assign or license,
the validity or enforceability of, or any license or other agreement relating
to, any Employed Intellectual Property. Except as set forth on Section 3.19(b)
---------------
of the Company Disclosure Letter, to the knowledge of the Company, there is no
basis to conclude that any third party has, is, and/or is planning to, infringe
upon, misappropriate, dilute (in the case of trademarks), and/or otherwise
violate, of any Employed Intellectual Property owned by the Company and/or its
Subsidiaries.
(c) Except for consents required under certain Contracts, the
consummation of the Merger and the other Transactions will not result in the
loss, dilution (in the case of trademarks), and/or diminution, of any rights of
the Company and its Subsidiaries to any of the Employed Intellectual Property
nor impose any additional burdens (whether financial or otherwise on the use
thereof. Except for consents required under certain Contracts, the Merger would
not result in any
23
material loss, or dilutions (in the case of trademarks), and/or diminution of
any material rights of the Company to any of the Employed Intellectual Property
nor impose any additional burdens (whether financial or otherwise) on the use
thereof.
(d) The Company and its Subsidiaries have a standard practice of
obtaining and to the Company's knowledge have obtained from each employee and
independent contractor a written agreement under which each such person is
obligated to disclose, transfer and fully assign to the Company, without the
receipt by such person of any additional value therefor (other than such
person's contract, employment, normal salary and benefits), any inventions,
developments and discoveries, and/or Intellectual Property, which during the
period of employment or engagement with or by the Company or its Subsidiaries he
or she makes or conceives of either solely or jointly with others, that relate
to any subject matter with which his or her work for the Company or its
Subsidiaries may be concerned, or relate to or are connected with the present or
anticipated business, products, services or projects of the Company or its
Subsidiaries, or involve the use of the Company's or its Subsidiaries' time,
materials or facilities. The Company and its Subsidiaries have a standard
practice of obtaining and to the Company's knowledge have obtained legally
binding written agreements from all employees, independent contractors and third
persons with whom the Company and its Subsidiaries have shared material
confidential and/or proprietary information: (i) of the Company or its
Subsidiaries, or (ii) received from others which the Company or its Subsidiaries
are obligated to treat as confidential, which agreements require such employees
and third parties to keep such information confidential. To the knowledge of the
Company, none of the employees of the Company or its Subsidiaries are obligated
under any contract (including licenses, covenants or commitments of any nature)
or other agreement, or subject to any judgment, decree or order of any court or
administrative agency, that would interfere with their duties to the Company or
its Subsidiaries or that would conflict with the business of the Company or its
Subsidiaries. Other than third party rights licensed to the Company or that the
Company licenses to third parties or any non-assertions or covenants not to xxx
from a third party to the Company, no entity other than the Company or one of
its Subsidiaries possesses any current, future, or contingent rights to any of
the Employed Intellectual Property owned by the Company and/or its Subsidiaries.
Except as set forth on Section 3.19(d) of the Company Disclosure Letter, the
---------------
Company and its Subsidiaries have a standard practice of obtaining and to the
Company's knowledge have obtained from all persons who are not employees and who
have created any portion of, or otherwise had any rights in or to, the Employed
Intellectual Property that is owned by the Company or its Subsidiaries, valid
and enforceable written assignments of any and all such intellectual property or
other rights to the Company. Except for (A) executable code only software
licenses granted in the ordinary course of business and (B) limited source code
software licenses granted in the ordinary course of business to promote
exchanges of technical information used to make the Company's products
compatible with those of other companies and source code escrow agreements
entered into in the ordinary course of business, the Company has not granted any
material licenses or other material rights, of any kind or nature, in or to any
of the Employed Intellectual Property that is owned by the Company or its
Subsidiaries to any third party. The Company has not taken any action to
jeopardize its trade secrets in any of its material software products. With
respect to any Intellectual Property licensed to the Company or its Subsidiaries
and material to the operation of the Company's business, (x) the Company is not
in material breach of any agreement related thereto, (y) no license is subject
to
24
expiration or termination as long as all required payments are made and as
long as the Company obeys the scope of the license and confidentiality
provisions expressed therein.
Section 3.20. Software.
--------
(a) "Owned Software" shall mean all computer programs and/or software
programs (including, but not limited to, all source code, object code, firmware,
programming tools and/or documentation), including without limitation, computer
programs used by the Company in the planning, development, testing and/or
acceptance phase, owned by the Company or any Subsidiary of the Company.
"Licensed Software" shall mean all material computer programs (including, but
not limited to, all source code, object code, firmware, and/or documentation)
licensed to the Company or any Subsidiary of the Company by any third party
(other than any off-the-shelf computer program that is so licensed under a
shrink wrap license) (the Licensed Software and the Owned Software, the
"Software").
(b) Except as set forth on Section 3.20(b) of the Company Disclosure
---------------
Letter, except for Licensed Software incorporated into the Company's products
free and clear of any obligation on the part of the Company except for payments
(which are up to date) and confidentiality, the Company, directly or through its
Subsidiaries, owns all right, title and interest, and has good, marketable and
exclusive title in, to and under, and the valid power and right to sell,
license, lease, transfer, assign, convey, use and otherwise exploit, all of the
Owned Software and all copyrights therefor, free and clear of all Liens. The
Company, directly or through its Subsidiaries, is in actual possession of or has
necessary control over: (i) the source code and object code for each computer
program included in the Owned Software; and (ii) the object code and, to the
extent required for the use of the Software as currently used in the Company's
business or as currently offered to the Company's customers or potential
customers, the source code, for each computer program included in the Licensed
Software. The Company, directly or through its Subsidiaries, is in possession of
or has necessary control over all documentation (including, without limitation,
all related engineering specifications, program flow charts, installation and
user manuals) and know-how required for the use and revision of the Software as
currently used, or which is being designed and/or developed, in the Company's
business or as currently offered to the Company's customers or potential
customers except where the failure to do so would not reasonably be expected to
have a Company Material Adverse Effect. The Software constitutes all of the
computer programs necessary to conduct the Company's and its Subsidiaries'
business as now conducted. Other than pursuant to agreements entered into in the
ordinary course of business, no person other than the Company and its
Subsidiaries has any material right or interest of any kind or nature in or with
respect to the Owned Software or any portion thereof or any rights to sell,
license, lease, transfer, use or otherwise exploit the Owned Software or any
portion thereof. The Company and its Subsidiaries have made use of all copies of
the Licensed Software in their possession as permitted by the respective license
agreements in all material respects.
(c) Since the Company and its Subsidiaries have owned the Owned
Software, the Company and its Subsidiaries have disclosed source code to the
Owned Software only pursuant to written confidentiality terms that reasonably
protect the Company's rights in such Owned Software.
25
To the knowledge of the Company, except as disclosed in accordance with such
confidentiality agreements or valid source code escrow agreements, no person
(other than Company and its Subsidiaries) is in possession of any source code
for any computer program included in the Owned Software or has any rights to the
same.
(d) Except as set forth on Section 3.20(d) of the Company Disclosure
---------------
Letter, neither the Company or any Subsidiary of the Company is obligated to
support or maintain any of the Owned Software except pursuant to agreements
terminable by the Company on a periodic basis and that provide for periodic
payments to the Company for such services.
(e) The Owned Software and all software products of the Company and
its Subsidiaries function in accordance with their documentation in all material
respects. Neither the Company nor any Subsidiary of the Company is in material
breach of any license to the Owned Software
(f) None of the Owned Software or any software products of the Company
or its Subsidiaries contain any time bomb, trojan horse, back door, drop dead
device, or any other code that would interfere with the normal operation of the
same, would allow circumvention of security controls for the same, or that is
intended to cause damage to hardware, software or data (except as disclosed in
the documentation for the same.
(g) The Owned Software is Year 2000 Compliant and does not use
windowing or any other Year 2000 remediation technique that is subject to
expiration within 10 years of the date of this Agreement. For purposes of this
Agreement, "Year 2000 Compliant" means that neither performance nor
functionality will be adversely affected by dates prior to, during or after the
year 2000 and that the year 2000 will be recognized as a leap year.
Section 3.21. Title to Properties.
-------------------
Each of the Company and its Subsidiaries has good and marketable title to,
or valid leasehold interests in, all its properties and assets, free and clear
of all Liens, except for defects in title, easements, restrictive covenants and
similar encumbrances or impediments that, individually or in the aggregate,
would not reasonably be expected to have a Company Material Adverse Effect.
Each of the Company and its Subsidiaries has complied in all material respects
with the terms of all leases to which it is in occupancy, and all such leases
are in full force and effect.
Section 3.22. Insurance.
---------
The Company maintains insurance coverage reasonably adequate for the
operation of the business of the Company and its Subsidiaries, and the
Transactions contemplated in this Agreement will not materially adversely affect
such coverage.
26
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Sub, jointly and severally, represent and warrant to the Company
as follows:
Section 4.01. Organization, Standing and Power.
--------------------------------
Each of Parent and Sub is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction in which it is organized
and has full corporate power and authority necessary to enable it to own, lease
or otherwise hold its properties and assets and to conduct its businesses as
presently conducted.
Section 4.02. Sub.
---
Since the date of its incorporation, Sub has not carried on any business or
conducted any operations other than the execution of this Agreement, the
performance of its obligations hereunder and matters ancillary thereto. Sub is
a wholly owned subsidiary of Parent.
Section 4.03. Authority; Execution and Delivery; Enforceability.
-------------------------------------------------
Each of Parent and Sub has all requisite corporate power and authority to
execute, deliver and perform this Agreement and the Option Agreement and to
consummate the Transactions. The execution, delivery and performance by each of
Parent and Sub of this Agreement and the Option Agreement and the consummation
by it of the Transactions have been duly authorized by all necessary corporate
and stockholder action on the part of Parent and Sub. Parent, as sole
stockholder of Sub, has adopted this Agreement and the Option Agreement. Each
of Parent and Sub has duly executed and delivered this Agreement and the Option
Agreement, and, assuming due authorization, execution and delivery of this
Agreement and the Option Agreement by the Company, each of this Agreement and
the Option Agreement constitutes its legal, valid and binding obligation,
enforceable against it in accordance with its terms, except as that
enforceability may be limited by any applicable bankruptcy, insolvency,
reorganization, moratorium or similar Laws affecting the enforcement of
creditor's rights generally and the application of general principles of equity
(regardless of whether that enforceability is considered in a proceeding at law
or in equity). The affirmative vote of the holders of 66-2/3% of the
outstanding shares of common stock of Sub is the only vote of Sub's capital
stock required to approve the Merger and adopt this Agreement.
Section 4.04. No Conflicts; Consents.
----------------------
(a) The execution, delivery and performance by each of Parent and Sub
of this Agreement do not, and the consummation of the Merger and the other
Transactions and compliance with the terms of this Agreement will not, conflict
with, or result in any violation of or default (with or without notice or lapse
of time, or both) under, any provision of (i) the charter or organizational
documents of Parent or any of its Subsidiaries, (ii) any Contract to which
Parent or any of its Subsidiaries is a party or by which any of their respective
properties or assets is bound or (iii) subject
27
to the filings and other matters referred to in Section 4.04(b), any Judgment
---------------
or Law applicable to Parent or any of its Subsidiaries or their respective
properties or assets, subject in the case of clauses (ii) and (iii) above, for
such matters as, individually or in the aggregate, would not reasonably be
expected to have a material adverse effect on (a) the ability of Parent or Sub
to perform its obligations under this Agreement and the Option Agreement or (b)
the ability of Parent or Sub to consummate the Merger and the other Transactions
(any of the foregoing, a "Parent Material Adverse Effect").
(b) No Consent of, or registration, declaration or filing with, or
notice to, or Permit from any Governmental Entity is required to be obtained or
made by or with respect to Parent or any of its subsidiaries in connection with
the execution, delivery and performance of this Agreement or the consummation of
the Transactions, other than (i) the filing with the SEC of such reports under
the Exchange Act as may be required in connection with this Agreement, the
Option Agreement, the Merger and the other Transactions, (ii) the filing of the
Certificate of Merger with the Secretary of State of the State of Ohio, (iii)
such filings as may be required in connection with the Taxes described in
Section 6.08, (iv) the filing of a premerger notification report under the HSR
------------
Act and the expiration or termination of the applicable waiting period with
respect thereto, (v) filings under state securities Laws, (vi) such filings and
approvals as may be required by any foreign premerger notification, securities,
corporate or other law and (vii) such other items as, individually or in the
aggregate, would not reasonably be expected to have a Parent Material Adverse
Effect.
Section 4.05. Information Supplied.
--------------------
None of the information supplied or to be supplied by Parent or Sub for
inclusion or incorporation by reference in, or which may be deemed to be
incorporated by reference in, the Proxy Statement will, at the time the Proxy
Statement is filed with the SEC or published, sent or given to the Company's
stockholders, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they are made, not
misleading. If any time prior to the Effective Time any event with respect to
Parent or Sub, or with respect to any information supplied by Parent or Sub for
inclusion in the Proxy Statement, shall occur which is required to be described
in an amendment of, or a supplement to, such document, Parent or Sub shall so
describe the event to the Company.
Section 4.06. Brokers.
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No broker, investment banker, financial advisor or other person, other than
Xxxxxxxxx & Co., LLC and Dresdner Kleinwort Xxxxxxxxxxx, is entitled to any
broker's, finder's, financial advisor's or other similar fee or commission in
connection with Merger and the other Transactions based upon arrangements made
by or on behalf of Parent.
Section 4.07. Financing.
---------
Parent and Sub have available (through cash on hand and existing committed
credit arrangements) all of the funds necessary for the acquisition of all
shares of Common Stock pursuant to the Merger, and to perform their respective
obligations under this Agreement.
28
Section 4.08. Litigation.
----------
As of the date hereof, there is no suit, action, proceeding or
investigation pending against, or to the knowledge of Parent threatened against
or affecting, Parent or any of its subsidiaries before any Governmental Entity
that questions the validity of this Agreement or the Option Agreement or any
action to be taken by Parent or Sub in connection with the consummation of the
Transactions or would otherwise prevent or delay the consummation of the
Transactions.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 5.01. Conduct of Business.
-------------------
(a) Conduct of Business by the Company. Except for matters set forth in
----------------------------------
Section 5.01(a) of the Company Disclosure Letter or otherwise expressly
---------------
permitted by this Agreement, from the date of this Agreement to the Effective
Time, each of the Company and its Subsidiaries shall conduct its business in the
usual, regular and ordinary course of business and in substantially the same
manner as previously conducted and use its reasonable best efforts to preserve
intact its current business organization, keep available the services of its
current officers and employees and keep its relationships with customers,
suppliers, licensors, licensees, distributors and others having business
dealings with them to the end that its goodwill and ongoing business shall be
unimpaired at the Effective Time. Each of the Company and its Subsidiaries shall
maintain its assets and all parts thereof in as good working order and condition
as at present, ordinary wear and tear excepted, consistent with past practice,
and shall maintain in full force and effect current insurance policies or other
comparable insurance coverage with respect to the assets and potential
liabilities thereof. In addition, and without limiting the generality of the
foregoing, except for matters set forth in Section 5.01(a) of the Company
---------------
Disclosure Letter or conduct otherwise expressly permitted by this Agreement,
from the date of this Agreement to the Effective Time, the Company shall not and
it shall not permit any of its Subsidiaries to do any of the following without
the prior written consent of Parent:
(i) (A) declare, set aside or pay any dividends on, or make any other
distributions (whether in cash, stock, property or otherwise) in respect
of, any of its capital stock, (B) split, combine or reclassify any of its
capital stock or issue or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its capital stock
or (C) purchase, redeem or otherwise acquire any shares of capital stock of
the Company or any other securities thereof or any rights, warrants or
options to acquire any such shares or other securities except for the
repurchase of unvested shares of Company Common Stock, at the purchase
price paid per share, upon the termination of service of the holders of
those shares pursuant to the Company Stock Option Plans;
(ii) issue, deliver, sell, grant, pledge, transfer or otherwise
encumber or dispose of or subject to any Lien (A) any shares of its capital
stock, (B) any securities convertible into or exchangeable for, or any
options, warrants, commitments or rights of any
29
kind to acquire, any such shares, voting securities or convertible or
exchangeable securities or (C) any "phantom" stock, "phantom" stock rights,
stock appreciation rights or stock-based performance units, other than the
issuance of Company Common Stock upon the exercise of Company Stock Options
and Warrants outstanding on the date of this Agreement and in accordance
with their terms as in effect on the date of this Agreement or pursuant to
the provisions of the Structural Dynamics Research Corporation Stock
Purchase Plan;
(iii) amend the Company Charter or the Company Bylaws;
(iv) acquire or agree to acquire (A) by merging or consolidating with, or
by purchasing a substantial equity interest in or all or a substantial
portion of the assets of, or by any other manner, any business or any
corporation, partnership, company, limited liability company, joint
venture, association or other business organization or division thereof or
(B) any assets that, individually or in the aggregate, are in excess of $1
million, except purchases of inventory in the ordinary course of business;
(v) (A) grant to any employee, officer or director of the Company or
any of its Subsidiaries any increase in compensation or pay any bonus,
except to the extent required under employment agreements in effect as of
the date of the most recent audited financial statements included in the
Filed Company SEC Documents, (B) grant to any employee, officer or director
of the Company or any of its Subsidiaries any increase in severance, change
of control or termination pay, except to the extent required under any
agreement in effect as of the date of the most recent audited financial
statements included in the Filed Company SEC Documents, (C) establish,
adopt, enter into or amend any collective bargaining agreement, other labor
union agreement or Company Employee Benefit Plan, or (D) take any action to
accelerate any rights or benefits except as required pursuant to Section
6.04 of this Agreement, take any action to fund or in any other way secure
the payment of compensation or benefits under any Company Benefit Agreement
or Company Benefit Plan, or make any material determinations not in the
ordinary course of business, under any collective bargaining agreement,
labor union agreement or Company Employee Benefit Plan;
(vi) make any change in accounting methods, principles or practices
affecting the reported assets, liabilities or results of operations of the
Company or any of its Subsidiaries, except as required by a change in GAAP;
(vii) sell, lease (as lessor), license, encumber or otherwise
dispose of or subject to any Lien any properties or assets that,
individually or in the aggregate, are in excess of $500,000, except sales
of inventory and excess or obsolete assets in the ordinary course of
business;
(viii) (A) incur, assume or prepay any indebtedness for borrowed
money or guarantee, endorse or otherwise become liable or responsible
(whether directly, contingently or otherwise) for any indebtedness or
obligation of another person or issue or sell any debt securities or
warrants or other rights to acquire any debt securities of the Company,
except for short-term borrowings incurred in the ordinary course of
business not to exceed $1.0
30
million, or (B) make or forgive any loans, advances or capital
contributions to, or investments in, any other person;
(ix) make or agree to make any new capital expenditure or
expenditures that, individually or in the aggregate, are in excess of $1.0
million in any calendar quarter;
(x) make or change any material Tax election or settle or
compromise any material Tax liability or refund;
(xi) (A) pay, discharge, settle or satisfy any claims, liabilities,
obligations or litigation, other than the payment, discharge, settlement or
satisfaction, in the ordinary course of business or in accordance with
their terms, of liabilities reflected or reserved against in the most
recent consolidated financial statements (or the notes thereto) of the
Company included in the Filed Company SEC Documents or incurred since the
date of such financial statements in the ordinary course of business or (B)
cancel any indebtedness that is material, individually or in the aggregate,
to the Company, or waive any claims or rights of substantial value;
(xii) adopt a plan or agreement of, or resolutions providing for or
authorizing, complete or partial liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or other reorganization;
(xiii) make, enter into or renew, extend, amend, modify, or waive any
provisions of any Material Contract or relinquish or waive any rights
under, or agree to the termination of, any Material Contract, except in the
ordinary course of business;
(xiv) permit any material insurance policy naming it as a
beneficiary or a loss payable payee to lapse, be cancelled or expire unless
a new policy with substantially identical coverage is in effect as of the
date of lapse, cancellation or expiration; or
(xv) authorize, or commit or agree to take, any of the foregoing
actions.
(b) Advice of Changes. The Company shall promptly advise Parent of any
-----------------
change or event that has had or could reasonably be expected to have a Company
Material Adverse Effect.
Section 5.02. No Solicitation.
---------------
(a) The Company and its Subsidiaries and each of their respective
affiliates, directors, officers, employees, agents and representatives
(including without limitation any investment banker, financial advisor,
attorney, accountant or other representative) (collectively, its
"Representatives") shall cease immediately any discussions or negotiations with
any parties that may be ongoing with respect to any Company Takeover Proposal
(as hereinafter defined). From the date hereof until the earlier of the
termination of this Agreement or the Effective Time, the Company will not and
will not permit its Subsidiaries to (whether directly or indirectly through
their
31
Representatives), and the Company shall cause its and its Subsidiaries'
Representatives not to, directly or indirectly, (i) solicit, initiate or
knowingly encourage any inquiries relating to, or the submission of, any Company
Takeover Proposal, (ii) participate in any discussions or negotiations regarding
any Company Takeover Proposal, or, in connection with any Company Takeover
Proposal, furnish to any person any information or data with respect to or
access to the properties of the Company, or any of its Subsidiaries, or take any
other action to facilitate the making of any proposal that constitutes or may
reasonably be expected to lead to any Company Takeover Proposal or (iii) enter
into any agreement with respect to any Company Takeover Proposal.
Notwithstanding the foregoing, the Company or the Company Board shall be
permitted to furnish information with respect to the Company and its
Subsidiaries and participate in discussions or negotiations regarding an
unsolicited bona fide Company Takeover Proposal if, and only to the extent that
the Company Board determines in good faith that (A) such disclosure or
participation is required in order to satisfy the Company Board's fiduciary
duties to the Company's stockholders under applicable Law and (B) such Company
Takeover Proposal could reasonably be expected to result in a Superior Company
Proposal, in which case neither the Company nor its Subsidiaries will disclose
any information to such person without entering into a customary confidentiality
agreement containing confidentiality provisions not materially less favorable to
the Company than those contained in the Confidentiality Agreement (as
hereinafter defined); provided, however, that such confidentiality agreement
shall not prohibit the presentation of a Company Takeover Proposal to Parent.
The Company shall promptly (but in no case later than 24 hours after actual
receipt by an officer of the Company) provide Parent with a copy of any written
Company Takeover Proposal received and a written statement with respect to any
non-written Company Takeover Proposal received, which statement shall include
the identity of the person initiating such discussions and the material terms
thereof. The Company shall keep Parent informed on a current basis of the status
and material terms of any such inquiries or Company Takeover Proposals and any
material developments with respect to any discussions regarding any Company
Takeover Proposal.
(b) Nothing contained in Section 5.02(a) shall prohibit the Company or the
---------------
Company Board from (i) taking and disclosing to the Company's stockholders a
position contemplated by Rule 14e-2(a) promulgated under the Exchange Act (or
any similar communications) in connection with the making or amendment of a
tender offer or exchange offer or (ii) making any disclosure to the Company's
stockholders required by applicable Law, provided that the Company Board shall
not recommend that the stockholders of the Company tender their shares of
Company Common Stock in connection with any such tender or exchange offer unless
the Company Board shall have determined in good faith, after consultation with
an independent financial advisor and outside counsel, that the relevant Company
Takeover Proposal constitutes a Superior Company Proposal.
(c) For purposes of this Agreement:
"Company Takeover Proposal" means any inquiry, proposal or offer
(other than by Parent, Sub or any of their affiliates) for (i) a merger,
consolidation, share exchange, dissolution, recapitalization, liquidation
or other business combination involving the Company, (ii) the acquisition
by any person in any manner, directly or indirectly, of a
32
number of shares of any class of equity securities of the Company equal to
or greater than 20% of the number of such shares outstanding before such
acquisition or (iii) the acquisition by any person in any manner, directly
or indirectly, of assets that generate or constitute 20% or more of the net
revenues, net income or assets of the Company and its Subsidiaries on a
consolidated basis, in each case other than the Transactions.
"Superior Company Proposal" means any bona fide written Company
Takeover Proposal made by a third party or parties (other than by Parent,
Sub or any of their affiliates) to acquire directly or indirectly (i) all
the equity securities or (ii) the assets of the Company substantially as an
entirety, which the Company Board determines in good faith (after
consultation with an independent financial advisor and outside counsel),
taking into account all legal, financial, regulatory and other aspects of
the proposal (including any conditions to such proposal, the anticipated
timing of the closing thereof, the risk of nonconsummation, the ability of
the person making such proposal to finance the transaction contemplated
thereby and any required consents, filings and approvals of any
Governmental Entity or other person) that the Company Board determines in
good faith to be relevant and the person making such proposal, (x) would,
if consummated, be more favorable, from a financial point of view, to the
holders of Company Common Stock than the Transactions and (y) is reasonably
capable of being completed, taking into account all legal, financial,
regulatory and other aspects of such proposal.
ARTICLE VI
ADDITIONAL AGREEMENTS
Section 6.01. Preparation of Proxy Statement; Stockholders Meeting.
----------------------------------------------------
(a) As soon as practicable after the execution of this Agreement, and in
no event later than 10 days after the date hereof, the Company shall prepare and
file with the SEC the Proxy Statement in preliminary form, and each of the
Company and Parent shall use its reasonable best efforts to respond as promptly
as practicable to any comments of the SEC with respect thereto. The Company
shall notify Parent promptly of the receipt of any comments from the SEC or its
staff and of any request by the SEC or its staff for amendments or supplements
to the Proxy Statement or for additional information and shall supply Parent
with copies of all correspondence between the Company or any of its
representatives, on the one hand, and the SEC or its staff, on the other hand,
with respect to the Proxy Statement. The Company will advise Parent, promptly
after it receives notice thereof, of the time when the Proxy Statement has been
cleared by the SEC. The Company shall also permit representatives of Parent to
participate in any telephone call with the SEC which discusses comments made by
the staff. If at any time prior to receipt of the Company Stockholder Approval
there shall occur any event that should be set forth in an amendment or
supplement to the Proxy Statement, the Company shall promptly prepare and mail
to its stockholders such an amendment or supplement. No filing of, or amendment
to, the Proxy Statement will be made by the Company without providing Parent the
opportunity to review and comment thereon. The Company shall not mail any Proxy
Statement, or any amendment or supplement thereto, to which Parent
33
reasonably objects. The Company shall use its reasonable best efforts to cause
the Proxy Statement to be mailed to the Company's stockholders as promptly as
practicable after filing with the SEC.
(b) The Company shall, as soon as practicable following the date of this
Agreement, duly call, give notice of, convene and hold a meeting of its
stockholders (the "Company Stockholders Meeting") for the purpose of seeking the
Company Stockholder Approval. The Company shall, through the Company Board,
recommend to its stockholders that they give the Company Stockholder Approval.
Section 6.02. Access to Information; Confidentiality.
--------------------------------------
(a) Except to the extent it would expressly violate applicable Law, the
Company shall, and shall cause its Subsidiaries to, afford to Parent, and to
Parent's officers, employees, accountants, counsel, financial advisors and other
representatives, access during reasonable business hours during the period prior
to the Effective Time to (i) all of the Company's and its Subsidiaries'
properties, books, contracts, commitments, personnel and records and other
information and business documents, (ii) the Company's independent accountants
and (iii) the premises of the Company and its Subsidiaries for the purpose of
inspecting the books and records of the Company and its Subsidiaries and/or
performing environmental assessments, provided that access to the premises shall
be permitted only with the prior consent of the Company (which consent shall not
be unreasonably withheld or delayed). Except to the extent it would expressly
violate applicable Law, during the period prior to the Effective Time, Parent
will have the full cooperation of the Company in confirming the nature of the
relationships between the Company and its Subsidiaries and their customers,
contractors and suppliers, including whether or not such relationships are
satisfactory and whether or not such relationships are expected to continue
after the Merger. The Company shall have the right to have one or more
representatives present at all times of any such inspections, interviews and
communications conducted by Parent or its representatives.
(b) Neither any investigation conducted by Parent or its representatives
pursuant to this Section 6.02 nor the results thereof shall affect any
------------
representation or warranty of the Company contained in this Agreement or the
ability of Parent to rely thereon. All information exchanged pursuant to this
Section 6.02 shall be subject to the confidentiality agreement dated February
------------
23, 2001, between the Company and Parent (the "Confidentiality Agreement").
Section 6.03. Reasonable Best Efforts; Notification.
-------------------------------------
(a) Upon the terms and subject to the conditions set forth in this
Agreement, each of the parties shall use all reasonable best efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, and to assist
and cooperate with the other parties in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner
practicable, the Merger and the other Transactions, including (i) determining
whether any action by or in respect of or filing with any Governmental Entities
is required or any actions, consents, approvals or waivers are required to be
obtained from third parties in connection with the Transactions, (ii) the
obtaining of all necessary actions or nonactions, waivers, consents and
approvals from Governmental Entities and the making of all necessary
registrations and filings (including filings with Governmental
34
Entities, if any) and the taking of all reasonable steps as may be necessary to
obtain an approval or waiver from, or to avoid an action or proceeding by, any
Governmental Entity, (iii) the obtaining of all necessary consents, approvals or
waivers from third parties, (iv) the defending of any lawsuits or other legal
proceedings, whether judicial or administrative, challenging this Agreement or
the consummation of the Transactions, including seeking to have any stay or
temporary restraining order entered by any court or other Governmental Entity
vacated or reversed and (v) the execution and delivery of any additional
instruments necessary to consummate the Transactions and to fully carry out the
purposes of this Agreement. Nothing in this Agreement shall be deemed to require
Parent to waive any rights or agree to any limitation on its operations or to
dispose of any asset or collection of assets of the Company, Parent or any of
their respective Subsidiaries or affiliates.
(b) The Company shall give prompt notice to Parent, and Parent or Sub
shall give prompt notice to the Company, of (i) any representation or warranty
made by it contained in this Agreement becoming untrue or inaccurate in any
material respect, (ii) the failure by it to comply with or satisfy in any
material respect any covenant, condition or agreement to be complied with or
satisfied by it under this Agreement, (iii) any notice or other communication it
receives from any person alleging that the consent of such person is or may be
required in connection with the Transactions, (iv) any notice or other
communication it receives from any Governmental Entity in connection with the
Transactions or (v) any action, suit, claim, investigation or proceeding
commenced or, to its knowledge, threatened against, relating to or involving or
otherwise affecting it that, if pending on the date of this Agreement, would
have been required to have been disclosed pursuant to Section 3.12 or 4.08, as
------------ ----
applicable, or that relate to the consummation of the Transactions; provided,
however, that no such notification shall affect the representations, warranties,
covenants or agreements of the parties or the conditions to the obligations of
the parties under this Agreement.
Section 6.04. Stock Options.
-------------
(a) Vested Company Stock Options Other Than Director Company Stock
--------------------------------------------------------------
Options. As soon as practicable following the date of this Agreement, the
-------
Company Board (or, if appropriate, any committee administering the Company Stock
Plans) shall adopt such resolutions or take such other actions as are required
to provide that (i) each Company Stock Option (other than a Director Company
Stock Option) which is outstanding and vested at or immediately prior to the
Effective Time shall be canceled, with the holder thereof becoming entitled to
receive an amount of cash in respect of such Company Stock Option equal to the
product of (A) the excess, if any, of (x) the Merger Consideration over (y) the
exercise price per share of Company Common Stock subject to such Company Stock
Option and (B) the number of vested shares of Company Common Stock subject to
such Company Stock Option immediately prior to its cancellation.
(b) Unvested Company Stock Options Other Than Director Company Stock
----------------------------------------------------------------
Options. As soon as practicable following the date of this Agreement, the
-------
Company Board (or, if appropriate, any committee administering the Company Stock
Plans) shall adopt resolutions providing that each outstanding Company Stock
Option that is not vested at or immediately prior to the Effective Time and does
not vest by its terms upon a change of control arising from the
35
transaction contemplated in this Agreement, shall be canceled, with the holder
thereof becoming entitled to receive, in the sole and absolute discretion of the
Parent, either:
(i) an amount of cash in respect of such Company Stock Option equal to
the product of (A) the excess, if any, of (x) the Merger Consideration over (y)
the exercise price per share of Company Common Stock subject to such Company
Stock Option and (B) the number of unvested shares of Company Common Stock
subject to such Company Stock Option immediately prior to its cancellation, or
(ii) an amount of cash equal to 25% of the amount described in (i)
immediately above, and a Parent Stock Option with a Black-Scholes value equal to
75% of the amount described in (i) immediately above.
(c) Director Company Stock Options. As soon as practicable following
-------------------------------
the date of this Agreement, the Company Board (or, if appropriate, any committee
administering the Company Stock Plans) shall adopt resolutions providing that
each outstanding Director Company Stock Option, whether or not vested, shall be
canceled, with the holder thereof becoming entitled to receive an amount of cash
in respect of such Director Company Stock Option equal to: the product of (A)
the excess, if any, of (x) the Merger Consideration over (y) the exercise price
per share of the Company Common Stock subject to the Director Company Stock
Option and (B) the number of shares of Company Common Stock subject to such
Director Company Stock Option immediately prior to its cancellation.
(d) Notwithstanding anything in this Agreement to the contrary, Parent
shall have no obligation to provide any holder of any Company Stock Option,
whether vested or unvested, with the consideration described in this Section
6.04 unless and until such holder executes a legally enforceable waiver approved
by Parent, which approval shall not be unreasonably withheld, which evidences
the holder's voluntary release of any and all interests and claims arising from
or associated with any and all Company Stock Options.
(e) In this Agreement:
"Company Stock Option" means any option to purchase Company Common
Stock granted under any Company Stock Plans.
"Company Stock Plans" means the Company's (i) 1991 Employee Stock
Option Plan, (ii) 1994 Long-Term Stock Incentive Plan, (iii) 1996
Directors' Nonstatutory Stock Option Plan, (iv) SDRC/T.D. Technologies,
Inc. 1996 Incentive Stock Option Plan, (v) SDRC/T.D. Technologies, Inc.
1996 Nonstatutory Stock Option Plan for Founding Ex-Employees, (vi)
SDRC/CAMAX Systems, Inc. 1987 Non-Qualified Stock Option Plan, (vii)
SDRC/Print Control Co. 1987 Incentive Stock Option Plan, and (viii)
SDRC/CAMAX Manufacturing Technologies, Inc. 1985 Long-Term Incentive Stock
Option Plan.
36
"Director Company Stock Option" means an option to purchase Company
Common Stock granted to a Director of the Company pursuant to the 1996
Directors' Nonstatutory Stock Option Plan.
"Parent Stock Option" means an option granted by Parent to a former
holder of a wholly or partially unvested Company Stock Option which
entitles such former holder to purchase shares of Parent's common stock
pursuant to a stock option plan established or maintained by Parent which
(i) has an exercise price equal to the fair market value of Parent's common
stock on the Effective Date, (ii) vests in 25% increments each anniversary
of the Effective Date, and (iii) has an option term of ten years following
the Effective Time.
(f) Parent shall issue all Parent Stock Options as contemplated by
this Section 6.04 on the usual and customary terms and conditions it imposes
------------
upon its similarly situated employees, taking into consideration applicable tax,
securities and other local Laws.
Section 6.05. Indemnification.
---------------
(a) After the Effective Time, (i) Parent shall, and shall cause the
Surviving Corporation to, indemnify each person who is now, or has been at any
time prior to the Effective Time, a director or officer of the Company or any of
its Subsidiaries (individually, an "Indemnified Party" and, collectively, the
"Indemnified Parties"), to the fullest extent permitted by law, with respect to
any liability, loss, damage, judgment, fine, penalty, amount paid in settlement
or compromise with the approval of the Company (which approval shall not be
unreasonably withheld or delayed), cost or expense (including reasonable fees
and expenses of legal counsel) incurred in connection with any threatened or
actual action, suit or proceeding based on, or arising out of, the fact that
such person is or was a director or officer of the Company or any of the
Company's Subsidiaries ("Indemnified Liabilities"), in each case, to the fullest
extent that Parent, the Company or such the Subsidiary is permitted under
applicable Law to so indemnify; Parent will cause the Surviving Corporation to
fulfill and honor in all respects the obligations of the Company pursuant to any
indemnification agreements between the Company and any of the Indemnified
Parties in effect immediately prior to the Effective Time (and Parent and the
Surviving Corporation shall also advance expenses as incurred to the fullest
extent permitted under applicable Law, provided that the Indemnified Party to
whom expenses are advanced provides an undertaking to repay such advances if it
is ultimately determined that such Indemnified Party is not entitled to
indemnification). Any Indemnified Party desiring to claim indemnification under
this Section 6.05(a), upon learning of any such claim, action, suit, proceeding
---------------
or investigation, shall promptly notify Parent and the Surviving Corporation
(but the failure so to notify shall not relieve the indemnifying party from any
liability which it may have under this Section 6.05(a) except to the extent
---------------
such failure materially prejudices such indemnifying party), and shall deliver
to Parent and the Surviving Corporation all undertakings required under
applicable Law. After Parent's receipt of such notice with respect to any such
claim, action, suit, proceeding or investigation, Parent shall have the right to
assume and direct, or cause the Surviving Corporation to assume and direct, all
aspects of the defense thereof, including settlement (provided however that the
Indemnified Person shall first consent in writing to any such settlement, which
consent shall not be unreasonably withheld), and the Indemnified Party shall
37
cooperate in the vigorous defense of any such matter. In no event shall Parent
or the Surviving Corporation be liable for any settlement effected without its
prior written consent. Without limiting any of the rights of any of the
Indemnified Parties set forth in the other provisions of this Section 6.05, for
a period of six years after the Effective Time, to the extent there is any
claim, action, suit, proceeding or investigation (whether arising before or
after the Effective Time) against or involving any Indemnified Party that arises
out of or pertains to any action or omission (or alleged action or omission) in
his or her capacity as a director, officer, employee, principal stockholder,
fiduciary or agent of the Company or any of its Subsidiaries or benefit plans
occurring prior to the Effective Time, such Indemnified Party shall be entitled
to be represented by counsel and following the Effective Time (i) any counsel
retained by the Indemnified Parties shall be reasonably satisfactory to the
Surviving Corporation and Parent, and (ii) the Surviving Corporation and Parent
shall pay as incurred the reasonable fees and expenses of such counsel, promptly
after statements therefor are received. The rights to indemnification under this
Section 6.05(a) shall continue in full force and effect for a period of six
---------------
years from the Effective Time; provided, however, that all rights to
indemnification in respect of any Indemnified Liabilities asserted or made
within such period shall continue until the final disposition of such
Indemnified Liabilities.
(b) For a period of six years after the Effective Time, Parent shall
cause to be maintained in effect policies of directors' and officers' insurance,
for the benefit of those persons who are covered by the Company's and the
Company's Subsidiaries' directors' and officers' liability insurance at the
Effective Time, providing coverage with respect to matters occurring prior to
the Effective Time that is at least equal to the coverage provided under the
Company's current directors' and officers' liability insurance policies, to the
extent that such liability insurance can be maintained at an annual cost to
Parent not greater than 200 percent of the premium for the Company directors'
and officers' liability insurance as of the date of this Agreement; provided,
however, that if such insurance cannot be so maintained at or below such cost,
Parent shall maintain as much of such insurance as can be so maintained at a
cost equal to 200 percent of the current annual premiums of the Company for such
insurance. The foregoing provisions shall not in any way restrict or preclude
any sale, liquidation or dissolution of any subsidiary of Parent at any time
after the Effective Time. Parent agrees to pay all expenses (including fees and
expenses of counsel) that may be incurred by any Indemnified Party in
successfully enforcing the indemnity or other obligations under this Section
-------
6.05.
----
(c) In the event Parent or the Surviving Corporation or any of their
successors or assigns (i) consolidates with or merges into any other person and
is not the continuing or surviving corporation or entity of such consolidation
or merger or (ii) transfers or conveys all or substantially all of its
properties and assets to any person, then, and in each such case, proper
provision shall be made so that the successors and assigns of Parent or the
Surviving Corporation shall assume the obligations set forth in this Section
-------
6.05.
----
(d) The provisions of this Section 6.05 are (i) intended to be for the
------------
benefit of, and to be enforceable by, each Indemnified Party, his or her heirs
and his or her representatives and (ii) in addition to, and not in substitution
for, any other rights to indemnification or contribution that
38
any such person may have by Law, contract or otherwise including without
limitation under the Company's Articles of Incorporation or Regulations.
Section 6.06. Fees and Expenses.
-----------------
(a) Except as provided in this Section 6.06, all fees and expenses
incurred in connection with this Agreement, the Option Agreement, the Merger and
the other Transactions shall be paid by the party incurring such fees or
expenses, whether or not the Merger is consummated.
(b) In the event that this Agreement is terminated (i) by Parent or the
Company pursuant to Section 8.01(b)(i) or Section 8.01(b)(iii) or by Parent
pursuant to Section 8.01(d)(i) and at or prior to such termination the Company
has received one or more Company Takeover Proposals that at the time of such
termination have not been absolutely and unconditionally withdrawn or abandoned;
(ii) by the Company pursuant to Section 8.01(c)(ii); or (iii) by Parent pursuant
to Section 8.01(d)(ii) or 8.01(d)(iii), then promptly after such termination the
Company shall pay Parent a fee of $30.0 million (the "Termination Fee") together
with all documented out-of-pocket costs and expenses of Parent and Sub,
including without limitation, financing fees, fees and expenses of counsel,
accountants, investment bankers and other advisors, filing fees and printing
expenses up to a maximum of $2.0 million (the "Expenses"). Except as otherwise
provided, any amount to be paid by the Company to Parent hereunder shall be paid
within three business days after the Company's receipt of written notice of
termination of this Agreement by wire transfer of same day funds; provided,
however, that the amount to be paid pursuant to subparagraph (ii) above shall be
paid simultaneously with, and be a necessary condition to, termination of this
Agreement by the Company pursuant to Section 8.01(c)(ii). In addition, if this
Agreement is terminated by either Parent or the Company pursuant to Section
8.01(b)(iii) and at the time of such termination Parent is not in material
breach of this Agreement, and if the Company shall, within 12 months after such
termination, enter into an agreement with respect to a Company Takeover
Proposal, then the Company shall pay the Termination Fee and Expenses (if not
theretofore paid) concurrently with entering into any such agreement.
Section 6.07. Public Announcements.
--------------------
Parent and Sub, on the one hand, and the Company, on the other hand, shall
consult with each other before issuing, and provide each other the opportunity
to review and comment upon, any press release or other public statements with
respect to the Merger and the other Transactions and shall not issue any such
press release or make any such public statement prior to such consultation,
except after reasonable attempts to provide notice have been undertaken and
except as otherwise required by applicable Law.
Section 6.08. Employee Benefits.
-----------------
For purposes of all employee benefit plans, programs and arrangements
maintained by or contributed to by Parent and its Subsidiaries (including, after
the Closing, the Surviving Corporation), for which the Company's and its
Subsidiaries' employees are eligible for participation ("Parent Benefit Plan"),
Parent shall, or shall cause its Subsidiaries to, cause each such plan,
39
program or arrangement to treat the prior service with the Company and its
affiliates of each person who is an employee or former employee of the Company
or its Subsidiaries immediately prior to the Closing (a "Company Employee") as
service rendered to Parent or its Subsidiaries, as the case may be, for purposes
of eligibility to participate in and vesting thereunder (but not benefit
accrual) to the same extent such service is recognized under corresponding
plans, programs or arrangements of the Company or its affiliates prior to the
Closing; provided, however, that each such employee shall be given credit for
his or her service with the Company or any of its Subsidiaries prior to the
Effective Time for purposes of determining the amount of vacation to which such
employee is entitled in accordance with Parent's policies following the
Effective Time; provided, further, that such crediting of service shall not
operate to duplicate any benefit or the funding of such benefit. Company
Employees shall also be given credit for any deductible or co-payment amounts
paid in respect of the plan year in which the Closing occurs, to the extent
that, following the Closing, they participate in any other plan for which
deductibles or co-payments are required. Parent shall also cause each Parent
Benefit Plan to waive any preexisting condition limitation that was waived under
the terms of any Company Benefit Plan immediately prior to the Closing and apply
any waiting period limitations that would otherwise be applicable to a Company
Employee on or after the Closing in a manner consistent with the way Parent
would treat similarly situated employees of Parent taking into consideration the
service such Company Employees had with the Company.
Section 6.09. Further Assurances.
------------------
At and after the Effective Time, the officers and directors of the
Surviving Corporation shall be authorized to execute and deliver, in the name
and on behalf of the Company or Sub, any deeds, bills of sale, assignments or
assurances and to take and do, in the name and on behalf of the Company or Sub,
any other actions and things to vest, perfect or confirm of record or otherwise
in the Surviving Corporation any and all right, title and interest in, to and
under any of the rights, properties or assets of the Company and its
Subsidiaries acquired or to be acquired by the Surviving Corporation as a result
of, or in connection with, the Merger.
Section 6.10. Antitrust Filings.
-----------------
Subject to the terms and conditions hereof, each of the Company and Parent
will promptly file or cause to be filed with the Federal Trade Commission (the
"FTC") and the Antitrust Division of the Department of Justice (the "Antitrust
Division") notification and report forms pursuant to the HSR Act relating to the
Merger and the other Transactions. The Company and Parent shall promptly
respond to any request for additional information or documentary material by the
FTC or the Antitrust Division and shall cooperate with each other in order to
ensure that all waiting periods (and any extension thereof) applicable to the
consummation of the Merger and the other Transactions under the HSR Act expire
or are terminated as promptly as practicable. The Company and Parent shall also
cooperate and consult with one another in obtaining any consents required
pursuant to the Laws of any foreign jurisdiction relating to antitrust matters
or competition.
40
ARTICLE VII
CONDITIONS PRECEDENT
Section 7.01. Conditions to Each Party's Obligation to Effect the Merger.
----------------------------------------------------------
The respective obligation of each party to effect the Merger is subject to
the satisfaction or, if permitted by applicable Law, waiver on or prior to the
Closing Date of the following conditions:
(a) Stockholder Approval. The Company shall have obtained the
---------------------
Company Stockholder Approval.
(b) No Injunctions or Restraints. No temporary restraining order,
-----------------------------
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Merger shall be in effect; provided, however, that prior to
asserting this condition, subject to Section 6.03, the party asserting such
------------
condition shall have used its reasonable best efforts to prevent the entry of
any such injunction or other order and to appeal as promptly as possible any
such injunction or other order that may be entered.
(c) Statutory Restraints. No statute, code or regulation shall
---------------------
have been enacted or promulgated by any Governmental Entity that prohibits
consummation of the Merger.
(d) Other Approvals. The waiting period applicable to the
----------------
consummation of the Merger under the HSR Act shall have expired or been
terminated and all filings required to be made prior to the Effective Time with,
and all consents, approvals, permits and authorizations required to be obtained
prior to the Effective Time from, any Governmental Entity in connection with the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby shall have been made or obtained (as the case
may be), except where the failure to obtain such consents, approvals, permits
and authorizations would not individually or in the aggregate be reasonably
likely to result in a Parent Material Adverse Effect (assuming the Merger has
taken place) or to materially adversely affect the consummation of the Merger,
and no such consent, approval, permit or authorization shall impose terms or
conditions that would have, or would be reasonably likely to have, a Parent
Material Adverse Effect (assuming the Merger has taken place).
Section 7.02. Additional Conditions to Obligations of Parent and Sub. The
------------------------------------------------------
obligations of Parent and Sub to effect the Merger are also subject to the
following:
(a) Representations and Warranties. Each representation and warranty
------------------------------
of the Company contained in this Agreement (i) shall have been true and correct
as of the date of this Agreement and (ii) shall be true and correct on and as of
the Closing Date with the same force and effect as if made on and as of the
Closing Date (provided that, other than with respect to the representations and
warranties contained in Section 3.02, the last sentence of Section 3.03(a),
Section 3.03(b), Section 3.05, Section 3.07, Section 3.14, Section 3.16 and
Section 3.17 (collectively, the "Material Representations"), for purposes of
determining the accuracy of such representations and
41
warranties for purposes of this clause (ii), all "Company Material Adverse
Effect" qualifications and other qualifications based on the word "material" or
similar phrases contained in such representations and warranties shall be
disregarded) except, for purposes of clauses (i) and (ii) above, (A) in each
case, or in the aggregate, as does not constitute a Company Material Adverse
Effect, provided, however, that the exception in this clause (A) shall be
inapplicable to representations and warranties contained in the Material
Representations, (B) for changes contemplated by this Agreement, and (C) for
those representations and warranties which address matters only as of a
particular date (which representations shall have been true and correct (subject
to the qualifications as set forth in the preceding clause (A) as of such
particular date), and Parent shall have received a certificate of an executive
officer of the Company to that effect.
(b) Agreements and Covenants. The Company shall have performed or
------------------------
complied in all material respects with all agreements and covenants required by
this Agreement to be performed and complied with by it on or prior to the
Closing Date, and Parent shall have received a certificate of an executive
officer of the Company to that effect.
(c) No Company Material Adverse Effect. From the date of this
----------------------------------
Agreement through and including the Effective Time, no event or events shall
have occurred which, individually or in the aggregate, has had or would
reasonably be expected to have a Company Material Adverse Effect.
Section 7.03. Additional Conditions to Obligations of the Company. The
---------------------------------------------------
obligations of the Company to effect the Merger are also subject to the
following conditions:
(a) Representations and Warranties. Each of the representations of
------------------------------
Parent and Sub contained in this Agreement that are qualified as to materiality
or Parent Material Adverse Effect shall be true and correct in all respects, and
the representations and warranties of Parent and Sub contained in this Agreement
that are not so qualified shall be true and correct in all material respects as
of the Closing Date, as though made on and as of the Closing Date (provided that
those representations and warranties which address matters only as of a
particular date shall be true and correct as of such date), and Parent shall
have received a certificate of an executive officer of the Company to that
effect.
(b) Agreements and Covenants. Parent and Sub shall have performed or
------------------------
complied in all material respects with all agreements and covenants required by
this Agreement to be performed and complied with by it on or prior to the
Closing Date, and Parent shall have received a certificate of an executive
officer of the Company to that effect.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
Section 8.01. Termination.
-----------
This Agreement may be terminated at any time prior to the Effective
Time, whether before
42
or after the Company Stockholder Approval:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company:
(i) if the Merger shall not have been consummated by November 30,
2001; provided, however, that the right to terminate this Agreement under this
Section 8.01(b)(i) shall not be available to any party whose breach of any
------------------
representation or warranty or failure to fulfill any covenant or agreement under
this Agreement has been the cause of or resulted in the failure of the Merger to
occur on or before such date;
(ii) if a statute, rule or executive order shall have been enacted,
entered or promulgated and shall then be in effect prohibiting the Transactions
contemplated hereby on the terms contemplated by this Agreement or if any
Governmental Entity order, decree, ruling or other action shall then be in
effect which permanently enjoins, restrains or otherwise prohibits the
consummation of the Merger and such order, decree, ruling or other action shall
have become final and nonappealable (collectively, a "Restraint"); provided,
that the party seeking to terminate this Agreement pursuant to this Section
-------
8.01(b)(ii) shall have used reasonable best efforts to prevent the entry of and
-----------
to remove such Restraint; or
(iii) if the Company Stockholders Meeting shall have been held and
the Company Stockholder Approval shall not have been obtained at such meeting or
any adjournment thereof;
(c) by the Company:
(i) if Parent or Sub shall have breached or failed to perform in any
material respect any of their respective representations, warranties, covenants
or other agreements contained in this Agreement or if any representation or
warranty of Parent or Sub shall have become untrue, and such breach or failure
would, if uncured, cause the conditions in Section 7.03(a) or 7.03(b) not to be
satisfied, and such breach or failure either is not capable of being cured or,
if it is capable of being cured, has not been cured within 20 business days
following written notice to Parent from the Company of such breach or failure;
provided, however, that the Company may not terminate this Agreement pursuant to
this Section 8.01(c)(i) if the Company is then in material breach of any
------------------
representation, warranty or covenant contained in this Agreement;
(ii) if prior to the Company Stockholder Approval, (A) the Company
Board determines in good faith, after consultation with an outside financial
advisor and outside counsel to the Company, that a Company Takeover Proposal
constitutes a Superior Company Proposal and that the pursuit of such Superior
Company Proposal is required in order for the Company Board to fulfill its
fiduciary obligations to the stockholders of the Company under applicable Law,
(B) the Company, at the direction of the Company Board, notifies Parent in
writing that it intends to enter into an agreement with respect to such Superior
Company Proposal, which
43
notification identifies the person making the Superior Company Proposal and
attaches the most current version of such agreement (or a complete and accurate
description of all material terms and conditions thereof), (C) Parent does not
make, within three business days of receipt of the Company's written
notification of its intention to enter into a binding agreement for a Superior
Company Proposal, an offer that the Company Board determines, in good faith
after consultation with an outside financial advisor, is at least as favorable
to the stockholders of the Company as such Superior Company Proposal, it being
understood that the Company shall not enter into any such binding agreement
during such three-business day period and (D) the Company concurrently with such
termination pursuant to this clause (c)(ii) pays to Parent in same day funds the
Termination Fee and Expenses (as provided in Section 6.06). The Company agrees
------------
to notify Parent promptly if its intention to enter into a written agreement
referred to in its notification shall change at any time after giving effect to
such notification; or
(d) by Parent or Sub:
(i) (A) if there shall be a breach or failure of any representation
or warranty of the Company in this Agreement, and such breach or failure, if
uncured, would cause the condition set forth in Section 7.02(a) not to be
satisfied, and (B) there shall be a breach or failure by the Company of any of
its covenants or agreements contained in this Agreement, and such breach or
failure, if uncured, would cause the condition set forth in Section 7.02(b) not
to be satisfied, and, in each case, such breach either is not capable of being
cured or, if it is capable of being cured, has not been cured within 20 business
days following written notice to the Company from Parent of such breach or
failure; provided, however, that neither Parent nor Sub may terminate this
Agreement pursuant to this Section 8.01(d)(i) if Parent or Sub is then in
------------------
material breach of any representation, warranty or covenant contained in this
Agreement;
(ii) if (A) the Company Board (or any committee thereof) withdraws or
modifies its approval or recommendation of this Agreement, the Merger or the
other Transactions in a manner adverse to Parent, (B) the Company Board (or any
committee thereof) shall have recommended to the stockholders of the Company any
Company Takeover Proposal, or (in any Schedule 14D-9 filed by the Company in
response to a Company Takeover Proposal in accordance with the time periods
prescribed thereunder) shall have either failed to recommend against acceptance
of any Company Takeover Proposal by the stockholders of the Company or taken no
position with respect to acceptance of such Company Takeover Proposal by the
stockholders of the Company, (C) the Company fails to call or hold the Company
Stockholder Meeting in accordance with Section 6.01, (D) the Company Board fails
------------
to mail the Proxy Statement to its stockholders within a reasonable period of
time after the Proxy Statement shall have been available for mailing, (E) the
Company Board (or any committee thereof) shall have resolved to do any of the
foregoing, or (F) the Company enters into an agreement with respect to a Company
Takeover Proposal;
(iii) if the Company shall have (i) exempted for purposes of Chapter
1704 of the Ohio Law any acquisition of shares of Company Common Stock by any
person or "group" (as defined in Section 13(d)(3) of the Exchange Act), other
than Parent, Sub or their affiliates, or (ii) amended (or agreed to amend) the
Company Rights Agreement or redeemed (or agreed to redeem)
44
the outstanding Company Rights thereunder for the purpose of exempting an
acquisition of shares of Company Common Stock (other than pursuant to this
Agreement) from the Company Rights Agreement and the Company Rights.
Section 8.02. Effect of Termination.
---------------------
In the event of termination of this Agreement by either the Company or
Parent or Sub as provided in Section 8.01, this Agreement shall forthwith become
------------
void and have no effect, without any liability or obligation on the part of
Parent, Sub or the Company, other than as provided by Section 6.06, this Section
------------ -------
8.02 and Article IX, which provisions shall survive such termination, and except
---- ----------
that nothing in this Section 8.02 shall relieve a party from liability for fraud
------------
or liability for the willful breach by a party of any representation, warranty,
covenant or agreement set forth in this Agreement and such party shall be fully
liable for any and all liabilities and damages incurred or suffered by the other
party as a result of any such breach.
Section 8.03. Amendment.
---------
Subject to Section 6.09, this Agreement may be amended, supplemented or
------------
modified by the parties at any time before or after receipt of the Company
Stockholder Approval only by an instrument in writing signed on behalf of each
of the parties; provided, however, that after receipt of the Company Stockholder
Approval, there shall be made no amendment, supplement or modification that by
Law requires further approval by the stockholders of the Company without the
further approval of such stockholders.
Section 8.04. Extension; Waiver.
-----------------
At any time prior to the Effective Time, (a) the parties may extend the
time for the performance of any of the obligations or other acts of the other
parties, (b) each party may waive any inaccuracies in the representations and
warranties of another party contained in this Agreement or in any document
delivered pursuant to this Agreement or (c) subject to the proviso of Section
-------
8.03, each party may waive compliance with any of the covenants, agreements or
----
conditions of another party contained in this Agreement. Any agreement on the
part of a party to any such extension or waiver shall be valid only if set forth
in an instrument in writing signed on behalf of such party. The failure of any
party to this Agreement to assert any of its rights under this Agreement or
otherwise shall not constitute a waiver of such rights.
Section 8.05. Procedure for Termination, Amendment, Extension or Waiver.
---------------------------------------------------------
A termination of this Agreement pursuant to Section 8.01, an amendment,
------------
modification or supplement of this Agreement pursuant to Section 8.03 or an
------------
extension or waiver pursuant to Section 8.04 shall, in order to be effective,
------------
require in the case of Parent, Sub or the Company, action by its Board of
Directors or the duly authorized designee of its Board of Directors.
45
ARTICLE IX
GENERAL PROVISIONS
Section 9.01. Nonsurvival of Representations and Warranties.
---------------------------------------------
None of the representations and warranties in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the Effective
Time. This Section 9.01 shall not limit any covenant or agreement of the
------------
parties which by its terms contemplates performance after the Effective Time.
Section 9.02. Notices.
-------
All notices, requests, claims, demands and other communications under this
Agreement shall be in writing and shall be deemed given upon receipt (or upon
the next succeeding business day if received after 5 p.m. local time on a
business day or if received on a Saturday, Sunday or United States holiday) by
the parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
(a) if to Parent or Sub, to:
Electronic Data Systems Corporation
0000 Xxxxxx Xxxxx
Xxxxx, Xxxxx 00000
Attention: General Counsel
with a copy to:
Xxxxx Xxxxx L.L.P.
0000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxx X. Xxxxx
(b) if to the Company, to:
Structural Dynamics Research Corporation
0000 Xxxxxxx Xxxxx
Xxxxxxx, Xxxx 00000
Attention: General Counsel
46
with a copy to:
Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP
Xxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxx
Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP
Two Embarcadero Place
0000 Xxxx Xxxx
Xxxx Xxxxx, XX 00000
Attention: Xxx X. Xxxxxx
Xxxxxxxx & Shohl LLP
000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxxx, Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx, Xx.
Section 9.03. Definitions.
-----------
For purposes of this Agreement:
An "affiliate," when used with reference to any person, shall have the
meaning ascribed to such term in Rule 12b-2 of the Exchange Act, as in
effect on the date of this Agreement.
A "business day" means any day other than Saturday, Sunday or any
other day on which banks in the City of New York are required or permitted
by applicable Law to close.
Whenever a representation or warranty is qualified by the "Company's
Foreign Knowledge", insofar as the representation or warranty relates to
the Specified Countries, such representation or warranty shall be qualified
by the actual knowledge of the Company's chief executive officer, chief
operating officer, chief financial officer, chief accounting officer, chief
legal officer international vice president, international controller, or
the country manager and country controller (however denominated or titled)
of such Specified Country, but the representation or warranty as it relates
to all other countries shall not be qualified by the knowledge of any
person.
A "Company Material Adverse Effect" means a material adverse effect on
(i) the business, operations, assets, condition (financial or otherwise),
or results of operations of the Company, (ii) the ability of the Company to
perform its obligations under this Agreement or (iii) the ability of the
Company to consummate the Merger and the other Transactions; provided,
however, that effects relating to (a) economies in general, (b) the
Company's industry in general, (c) the securities markets in general or (d)
the announcement of the
47
Transactions contemplated hereby, shall not be deemed to constitute a
Company Material Adverse Effect or be considered in determining whether a
Company Material Adverse Effect has occurred.
"in the ordinary course of business," with respect to any action,
means such action is:
(a) consistent with the past custom and practices of such
person and is taken in the ordinary course of the normal day-to-day
operations of such person; and
(b) not required to be authorized by the Board of Directors of
such person.
A "person" means any individual, firm, corporation, partnership,
company, limited liability company, trust, joint venture, association,
Governmental Entity or other entity of any kind.
"Specified Countries" means Austria, Germany, France, Italy, The
Netherlands, Spain, Sweden, Switzerland and the United Kingdom.
A "Subsidiary" of any person means any other person of which (i) such
person or any subsidiary thereof is a general partner, (ii) such person
and/or one or more of its subsidiaries holds voting power to elect a
majority of the board of directors or others performing similar functions
or (iii) such person, directly or indirectly, owns or controls more than
50% of the equity interests of such other person.
Words and terms used in this Agreement which are defined in other
Sections of this Agreement are used throughout this Agreement as therein
defined.
Section 9.04. Interpretation.
--------------
When a reference is made in this Agreement to a Section or an Article, such
reference shall be to a Section or Article of this Agreement unless otherwise
indicated. The table of contents and headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include," "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation."
Section 9.05. Severability.
------------
If any term or other provision of this Agreement is invalid, illegal or
incapable of being enforced by any rule or Law, or public policy, all other
terms and provisions of this Agreement shall nevertheless remain in full force
and effect so long as the economic and legal substance of the Transactions is
not affected in any manner materially adverse to any party. Upon such
determination that any term or other provision is invalid, illegal or incapable
of being enforced, the parties hereto
48
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that the Transactions are fulfilled to the extent possible.
Section 9.06. Counterparts.
------------
This Agreement may be executed in one or more counterparts, all of which
shall be considered one and the same agreement, and shall become effective when
one or more counterparts have been signed by each of the parties and delivered
to the other parties.
Section 9.07. Entire Agreement; No Third-Party Beneficiaries.
----------------------------------------------
This Agreement, taken together with the Company Disclosure Letter and the
Option Agreement, (a) constitutes the entire agreement, and supersedes all prior
agreements and understandings, both written and oral, among the parties with
respect to the Transactions and (b) except for the provisions of Article II and
----------
Section 6.05, is not intended to confer upon any person other than the parties
------------
hereto any rights, remedies, obligations or liabilities.
Section 9.08. Governing Law.
-------------
The validity and interpretation of this Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware, without
reference to the conflict of laws principles thereof; except that the
effectiveness of the Merger, and other matters relating to the Company and its
Board of Directors which are required to be governed by the laws of the State of
Ohio, shall be governed by, and construed in accordance with, the laws of the
State of Ohio.
Section 9.09. Assignment.
----------
Neither this Agreement nor any of the rights, interests or obligations
under this Agreement shall be assigned, in whole or in part, by operation of law
or otherwise by any of the parties without the prior written consent of the
other parties. Any purported assignment without such consent shall be void.
Subject to the preceding sentences, this Agreement will be binding upon, inure
to the benefit of, and be enforceable by, the parties and their respective
successors and assigns.
49
IN WITNESS WHEREOF, Parent, Sub and the Company have duly executed this
Agreement, all as of the date first written above.
ELECTRONIC DATA SYSTEMS CORPORATION
By:/s/ Xxxxx X. Xxxxx
-------------------------------------
Xxxxx X. Xxxxx
Chief Fianncial Officer
EMERALD ACQUISITION CORPORATION I
By: /s/ Xxxxx X. Xxxxx
-------------------------------------
Xxxxx X. Xxxxx
Authorized Officer
STRUCTURAL DYNAMICS RESEARCH CORPORATION
By: /s/ Xxxxxxx Xxxxxx
-------------------------------------
Xxxxxxx Xxxxxx
Chairman and Chief Executive Officer
50
