SCHEDULE 14A
SCHEDULE 14A INFORMATION
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Section 240.14a-12
Structural Dynamics Research Corporation
(Name of Registrant as Specified In Its Charter)
N/A
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
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Act Rule 14a-6(i)(3).
[ ] Fee computed on a table below per Exchange Act Rules
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STRUCTURAL DYNAMICS RESEARCH CORPORATION
2000 Eastman Drive
Milford, Ohio 45150
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
APRIL 30, 1996
TO THE SHAREHOLDERS OF STRUCTURAL DYNAMICS RESEARCH CORPORATION:
You are cordially invited to attend the Annual Meeting of the
Shareholders of Structural Dynamics Research Corporation to be
held on April 30, 1996 at 2:00 P.M. at the Company's offices, 2000
Eastman Drive, Milford, Ohio 45150, for the purpose of considering
and acting on the following:
i. Election of four Class I directors to serve until the 1998
Annual Meeting.
ii. Adoption of amendments to the Company's Amended Code of
Regulations to provide for separate offices of Chairman of the
Board, President and Chief Executive Officer, to clarify the
authority of the Board of Directors to delegate authority with
respect to each such office, and otherwise to update the Amended
Code of Regulations.
iii. Approval and adoption of the Structural Dynamics Research
Corporation 1996 Directors' Non-Discretionary Stock Plan to
replace the existing plan which expires in 1996.
iv. Approval of an amendment to the Company's 1994 Long-Term
Stock Incentive Plan to permit the estate of a deceased plan
participant or a participant who resigns due to ill-health or
disability to exercise options or other incentive awards for up to
18 months from the cessation of employment and in the event of
termination for other reasons to permit such exercise for up to 60
days from the date of termination.
v. Ratification of the appointment of Price Waterhouse LLP as the
independent auditors of the Company for 1996.
vi. Transaction of such other business as may properly come before
the meeting or any adjournment thereof.
Shareholders of record at the close of business on March 12, 1996
will be entitled to vote at the meeting.
By Order of the Board of Directors
John A. Mongelluzzo
Secretary
March 26, 1996
IMPORTANT
A proxy statement and proxy are submitted herewith. As a
shareholder, you are urged to complete and mail the proxy promptly
whether or not you plan to attend this Annual Meeting in person.
The enclosed envelope for return of proxy requires no postage if
mailed in the U.S.A. Shareholders attending the meeting may
personally vote on all matters which are considered in which event
their signed proxies are revoked. It is important that your
shares be voted. In order to avoid the additional expense to the
Company of further solicitation, we ask your cooperation in
mailing your proxy promptly.
STRUCTURAL DYNAMICS RESEARCH CORPORATION
2000 Eastman Drive
Milford, Ohio 45150 March 26, 1996
PROXY STATEMENT
The enclosed form of proxy is being solicited on behalf of the
Board of Directors of Structural Dynamics Research Corporation
(also referred to as "SDRC" or the "Company") for the Annual
Meeting of Shareholders to be held on April 30, 1996. Each of the
___________ shares of Common Stock, without par value, outstanding
on March 12, 1996, the record date of the meeting, is entitled to
one vote on all matters coming before the meeting. Only
shareholders of record on the books of the Company at the close of
business on March 12, 1996 will be entitled to vote at the meeting
either in person or by proxy. The Company has hired Morrow & Co.,
Inc. to assist it in soliciting proxies. This Proxy Statement is
being mailed to shareholders on or about March 26, 1996.
The shares represented by all properly executed proxies which are
sent to the Company will be voted as designated and each not
designated will be voted affirmatively. Each person granting a
proxy may revoke it by giving notice to the Company's Secretary in
writing or in open meeting at any time before it is voted.
Proxies will be solicited principally by mail, but may also be
solicited by directors, officers and other regular employees of
the Company who will receive no compensation therefor in addition
to their regular salaries. Brokers and others who hold stock in
trust will be asked to send proxy materials to the beneficial
owners of the stock, and the Company will reimburse them for their
expenses. The expense of soliciting proxies will be borne by the
Company.
The Annual Report of the Company for the fiscal year ended
December 31, 1995 is enclosed with this Proxy Statement.
ELECTION OF DIRECTORS
In October, 1995, Ted H. McCourtney resigned as a director of the
Company, and in February, 1996 Robert P. Henderson informed the
Company of his decision not to seek re-election to the Board after
his term expires at the 1996 Annual Meeting. Both Mr. McCourtney
and Mr. Henderson joined the Board in 1986. The Company is
grateful for their many years of valuable service as directors.
As a result of their leaving, after the 1996 Annual Meeting the
Board will be comprised of Class I, consisting of four directors,
and Class II, consisting of three directors, with no vacancies.
Four directors of Class I are to be elected to hold office until
the 1998 Annual Meeting of Shareholders. It is the intention of
the individuals named in the proxy to vote for the election of
only the four nominees designated for Class I directorships. Only
the maximum of four Class I directors may be elected. The Company
is not currently aware of any potential candidates who may be
nominated at or prior to the meeting, and in no event will the
proxies solicited hereby be voted for other than the four nominees
designated for Class I directorships.
The nominees, William P. Conlin, Albert F. Peter, Bannus B. Hudson
and Arthur B. Sims, are currently serving as members of the Board
of Directors. While management has no reason to believe that any
of the nominees will, prior to the date of the meeting, refuse or
be unable to accept the nominations, should any nominee so refuse
or become unable to accept, the proxies will be voted for the
election of such substitute nominee, if any, as may be recommended
by the Board of Directors. Nominees receiving the four highest
totals of votes cast in the election will be elected as directors.
Proxies in the form solicited hereby which are returned to the
Company will be voted in favor of the four nominees specified
above unless otherwise instructed by the shareholders.
Abstentions and shares not voted by brokers and other entities
holding shares on behalf of beneficial owners will not be counted
and will have no effect on the outcome of the election.
Information with respect to each of the four nominees is as
follows:
CLASS I DIRECTORS
(Terms Expire in 1996)
WILLIAM P. CONLIN, Chairman of the Board of the Company since
February, 1995. Before retiring in November 1993, Mr. Conlin
served as President of CalComp, Inc., a subsidiary of Lockheed
Corporation (a manufacturer and distributor of computer graphics
products), a position he held from 1983 to 1993. Mr. Conlin is
also a director of Syntellect Incorporated. Mr. Conlin is 62
years of age and has been a director of the Company since April,
1993.
ALBERT F. PETER, President and Chief Executive Officer of the
Company since February, 1995. Mr. Peter joined the Company in
1967 and served in various capacities until his election to the
office of Vice President, a position he held until his retirement
in December, 1991. In November, 1994 Mr. Peter was named acting
chief executive officer of the Company and served in that position
until his election as President and Chief Executive Officer in
February, 1995. Mr. Peter is 53 years of age and has been a
director of the Company since July, 1983.
BANNUS B. HUDSON, former President and Chief Executive Officer of
The United States Shoe Corporation, having served in such
capacities for more than five years, until May, 1995. Mr. Hudson
is also a director of The Ohio National Life Insurance Company.
Mr. Hudson is 50 years of age and has been a director of the
Company since July, 1995.
ARTHUR B. SIMS, Chairman of the Board and Chief Executive Officer
of 3D Systems Corporation, (developer, manufacturer and marketer
of rapid prototyping systems) since August, 1993 and Chief
Executive Officer of its California subsidiary since September,
1991. For one year prior to that he was the President and Chief
Executive Officer of Quadratron Systems, Incorporated (a developer
and marketer of office automation software). Mr. Sims is 58 years
of age and has been a director of the Company since July, 1995.
The following sets forth similar information with respect to
incumbent directors in Class II of the Board of Directors who are
not nominees for election at this Annual Meeting of Shareholders:
CLASS II DIRECTORS
(Terms Expire in 1997)
JOHN E. McDOWELL, Partner in the Cincinnati law firm of Dinsmore &
Shohl and counsel to the Company since its inception. Mr.
McDowell also served as Secretary of the Company from 1967 until
1983. Mr. McDowell is 68 years of age and has been a director of
the Company since October, 1967.
JAMES W. NETHERCOTT, retired Senior Vice President, chief
financial officer and a director of The Procter & Gamble Company
(a diversified consumer products manufacturer), having served in
all three capacities from 1979 until his retirement in 1991. Mr.
Nethercott is also a director of The Ohio National Life Insurance
Company. Mr. Nethercott is 68 years of age and has been a
director of the Company since February, 1995.
GILBERT R. WHITAKER, JR., Professor of Business Economics and
Provost and Executive Vice President for Academic Affairs Emeritus
of the University of Michigan since September, 1995. Prior to
that Dr. Whitaker held various academic and administrative
positions with the University of Michigan School of Business
Administration and with the University of Michigan for over 15
years. Dr. Whitaker is also a director of Johnson Controls, Inc.,
Lincoln National Corporation, and the Handleman Company. Dr.
Whitaker is 64 years of age and has been a director of the Company
since July, 1988.
BOARD OF DIRECTORS MEETINGS AND COMMITTEES
In the fiscal year ended December 31, 1995, the Board of Directors
met on ten occasions. Each incumbent director during the last
fiscal year attended 75% or more of the aggregate of (i) the total
number of meetings of the Board of Directors (held during the
period for which he has been a director) and (ii) the total number
of meetings held by all committees of the Board on which he served
(during the periods that he served).
During 1995 the Board of Directors undertook a thorough review of
its internal governance practices and committee structure. As a
result of this review, the Board adopted written Board of
Directors Guidelines on Corporate Governance Issues (the
"Corporate Governance Guidelines"), reorganized the committee
structure, and adopted written charters for each committee. Among
other provisions, the Corporate Governance Guidelines specify that
only outside directors may serve on the committees.
The Company has an Audit Committee of the Board of Directors,
which held five meetings during 1995. The Audit Committee
recommends to the entire Board of Directors the independent
auditors to be employed by the Company, consults with the
independent auditors with respect to their audit plans, reviews
the independent auditors' audit report and any management letters
issued by the auditors, and consults with the independent auditors
with regard to financial reporting and the adequacy of internal
controls. The present members of the Audit Committee are Messrs.
Nethercott (Chairman), McDowell, Henderson and Conlin.
The Company has a Compensation Committee of the Board of
Directors, which held five meetings during 1995. The Compensation
Committee recommends to the entire Board of Directors the
compensation arrangements for the Chief Executive Officer,
determines the compensation of the corporate officers of the
Company, administers the Company's stock option plans, and
reviews proposed changes in management organization. The present
members of the Compensation Committee are Messrs. Hudson
(Chairman) and Conlin and Dr. Whitaker.
The Board of Directors established a Nominating and Director
Affairs Committee in February, 1995 and named as its members
Messrs. Henderson (Chairman), Conlin and McDowell. This Committee
met twice during 1995. The functions of this Committee are to
recommend corporate governance policies, to lead the annual self-evaluation
of the Board and to periodically seek out qualified
candidates for election to the Board and to make recommendations
to the whole Board with respect to nominees. The Committee also
makes recommendations as to exercise of the Board's authority to
determine the number of its members, within the limits provided by
the Company's Amended Code of Regulations. Shareholders wishing
to communicate with the Nominating and Director Affairs Committee
concerning potential director candidates may do so by
corresponding with the Company's Secretary, John A. Mongelluzzo,
and including the name and biographical data of the individual
being suggested.
EXECUTIVE COMPENSATION
Summary
The following table is a summary of certain information concerning
the compensation awarded or paid to, or earned by, the Company's
chief executive officer and each of the Company's other four most
highly compensated executive officers who held office as of the
end of 1995 (the "named executives") during each of the last three
fiscal years:
<PAGE>
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards
------------------- ------------
Securities
Name and Principal Underlying All Other
Position Year Salary ($) Bonus ($) Options Compensation (1)
- ------------------- ---- ---------- --------- ---------- ----------------
<S> <C> <C> <C> <C> <C>
Albert F. Peter 1995 300,000 350,000 75,000 shs. 2,321 (3)
President and Chief 1994 23,864 -- 10,000 shs. (2) 22,500 (3)
Executive Officer 1993 -- -- 10,000 shs. (2) 23,500 (3)
John A. Mongelluzzo 1995 134,000 100,000 15,000 shs. 4,257 (4)
Vice President, 1994 113,503 -- 15,000 shs. 3,513 (4)
Secretary, and 1993 102,601 -- 14,000 shs. 225 (4)
General Counsel
Martin A. Neads 1995 206,313 170,000 15,000 shs. 104,498 (5)
Vice President - 1994 151,873 -- 55,000 shs. 5,101 (5)
SDRC Operations 1993 -- -- -- --
Martin D. Schussel 1995 147,633 120,000 22,000 shs. 6,306 (6)
Vice President - 1994 -- -- -- --
Product Development 1993 -- -- -- --
Jeffrey J. Vorholt 1995 154,568 120,000 15,000 shs. 5,065 (7)
Vice President, 1994 -- -- -- --
Chief Financial 1993 -- -- -- --
Officer and
Treasurer
___________________________
FN
<PAGE>
(1) All amounts shown include amounts contributed by the Company
pursuant to the Company's Tax Deferred Capital Accumulation
(401(k)) Plan, except in the case of Mr. Peter, who does not
participate, and Mr. Neads who was not eligible to participate in
1994. Participants in the Company's 401(k) plan may elect to
reduce their salaries by no less than 1% per month and no greater
than 15% per year and to have such amount contributed to their
accounts in this plan. They may also make other voluntary
contributions from time to time. With respect to any fiscal year,
the Company may elect to partially match employee contributions.
Such matching contributions may be either in cash or in shares of
the Company's Common Stock. The Company elected to make such
contributions for the years 1995 and 1994 but not 1993. The
Company's contributions in 1995 and 1994 were made in the form of
Common Stock. Amounts in this plan become available for payout
upon termination or retirement only.
(2) Consists of stock options granted to Mr. Peter in his
capacity as a non-employee director, pursuant to the Company's
Directors' Non-Discretionary Stock Option Plan, prior to his
election as President and Chief Executive Officer.
(3) Consists of director's fees paid to Mr. Peter in his capacity
as a non-employee director prior to his election as President and
Chief Executive Officer, and $2,321 which was a term life
insurance premium for insurance benefiting the named executive.
(4) Includes, for 1995, 1994 and 1993, respectively, $4,121,
$3,405, and $0 representing the Company 401(k) plan contributions,
and $136, $108 and $225, which were term life insurance premiums
paid by the Company for insurance benefiting the named executive.
(5) Consists of contributions to the Company's executive pension
plan for United Kingdom employees, and includes, for 1995, $4,586
representing the Company's 401(k) plan contribution and $1,402
which was a term life insurance premium for insurance benefiting
the named executive. Also includes, for 1995, $70,835 in payment
of costs associated with Mr. Neads' relocation from England to the
United States and $27,675 in payment of the private school tuition
costs of Mr. Neads' children which the Company reimburses under
the employment arrangement with Mr. Neads. See "Executive
Compensation -- Employment Agreement."
(6) Includes, for 1995, $4,837 representing the Company's 401(k)
plan contribution, and $1,469, which was a term life insurance
premium paid by the Company for insurance benefiting the named
executive.
(7) Includes, for 1995, $4,500 representing the Company's 401(k)
plan contribution, and $565, which was a term life insurance
premiums paid by the Company for insurance benefiting the named
executive.
</FN>
/TABLE
<PAGE>
Stock Options
The following table sets forth information regarding stock
options granted to the named executives during 1995:
<TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
<CAPTION>
Potential Realizable Value
at Assumed Annual Rates of
Stock Price Appreciation for
Individual Grants Option Term
--------------------- ----------------------------
% of Total
Number of Options
Securities Granted to Exercise
Underlying Employees of Base
Options in Fiscal Price Expiration
Name Granted #(1) Year ($/Sh.) Date 5% ($) 10% ($)
- ------------------ ------------ ----------- ------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Albert F. Peter 75,000 8.1 6.3125 2/2/2005 297,742 754,537
John A. Mongelluzzo 15,000 1.6 6.3125 2/2/2005 59,548 150,907
Martin A. Neads 15,000 1.6 6.3125 2/2/2005 59,548 150,907
Martin D. Schussel 10,000 1.1 6.3125 2/2/2005 39,699 100,605
12,000 1.3 12.1875 4/18/2005 91,976 233,085
Jeffrey J. Vorholt 15,000 1.6 6.3125 2/2/2005 59,548 150,907
__________________________
<FN>
(1) All such options first become exercisable as to 33% of the
shares covered after the end of the first year after the date of
grant, as to 67% of the shares covered after the end of two years,
and are exercisable in full after the end of three years. The option
exercise price is not adjustable over the 10-year term of the options
except due to stock splits and similar occurrences affecting all
outstanding stock.
</FN>
/TABLE
<PAGE>
The following table sets forth information regarding stock options
exercised by the named executives during 1995 and the value of
unexercised in-the-money options held by the named parties as of
December 31, 1995:
<TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options at
Options at FY-End (#) FY-End ($)
--------------------------- ---------------------------
Shares
Acquired
on Value
Exercise Realized
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
- ------------------ -------- --------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Albert F. Peter 0 0 30,000 75,000 422,500 1,654,688
John A. Mongelluzzo 0 0 64,530 29,670 827,405 563,783
Martin A. Neads 0 0 100,180 60,100 1,182,424 1,206,819
Martin D. Schussel 0 0 61,240 32,660 1,032,896 581,435
Jeffrey J. Vorholt 0 0 4,950 25,050 114,469 563,344
</TABLE>
<PAGE>
Compensation of Directors
During the year ended December 31, 1995, the Company's outside
directors (those directors who are not employees of the Company)
were compensated for their services as directors at the rate of
$15,000 per year. In addition, directors received $1,500 for each
Board of Directors meeting and $750 for each committee meeting
they attended, and individuals who served as committee chairmen
received an additional $250 per committee meeting attended.
Currently, the Chairman of the Board, a non-executive position,
receives an additional $10,000 per month. The Company does not
additionally compensate employee directors. All directors are
reimbursed for all expenses incurred in connection with attendance
at meetings of the Board and the performance of Board duties.
In addition, outside directors currently receive stock options
under the Structural Dynamics Research Corporation Directors' Non-Discretionary
Stock Option Plan (the "Directors' Plan"). The
Directors' Plan provides that upon their initial election or
appointment, non-employee directors are automatically issued
options to purchase 16,000 shares of the Company's Common Stock
and that at every annual organizational meeting of directors each
then-serving director will receive an additional option to
purchase 10,000 shares. All options granted under the Directors'
Plan have a five year term and an exercise price equal to 100% of
the fair market value of the Common Stock on the date of issuance.
Options are not exercisable at all for six months after their
issuance, at which time they become exercisable as to 50% of the
shares covered. After 12 months, they become exercisable in full
until expiration. The Directors' Plan expires in July, 1996.
Employment Agreement
In November, 1994, Martin A. Neads, who was then Vice President
and General Manager - European Operations, was asked to relocate
to the Company's headquarters in the United States and to assume
the position of Senior Vice President - SDRC Operations. The
Company agreed to pay all expenses incurred in connection with Mr.
Neads' relocation from England. The Company also agreed to pay
the school tuition costs of Mr. Neads' children and to pay the
airfare for two return trips to England for his family during the
first three years of his assignment in the United States. The
arrangement with Mr. Neads also provides that, although Mr. Neads
is to remain an "at will" employee of the Company, in the event
Mr. Neads is terminated by the Company for reasons other than
cause (defined as gross misconduct, theft, etc.) while he is on
assignment in the United States, he will be given a severance
benefit equal to 12 months of his annual pay (defined as base
salary plus the prior year's bonus).
Severance Compensation Agreements
In order to minimize distraction in circumstances arising from the
possibility of a change in control, the Company has entered into
severance compensation agreements with each of the named
executives, as well as other executive officers of the Company,
which provide for the payment of severance compensation in the
event the employment of the named executive or other officer is
terminated by the Company within two years following a change in
control of the Company other than due to death or disability or
for cause, or if the executive terminates his or her employment
for "good reason." Good reason is defined in detail in the
agreements and generally exists if there is a material change in
the terms and conditions of the executive's employment. The
severance benefits payable under these agreements are equal to
250% of the sum of the prior year's base salary and annual bonus
target.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors of the
Company has furnished the following report on executive
compensation:
Overview and Philosophy
The Compensation Committee of the Board of Directors (the
"Compensation Committee") is comprised of three non-employee
directors of the Company. No member of the Compensation Committee
has any insider or interlocking relationship with the Company, as
these terms are defined in applicable rules and regulations of the
Securities and Exchange Commission. The Compensation Committee is
responsible for developing and recommending the Company's
executive compensation principles, policies and programs to the
Board of Directors. In addition, the Compensation Committee
recommends to the Board of Directors on an annual basis the
compensation to be paid to the Chief Executive Officer and, with
advice from the Chief Executive Officer, determines the amount
paid to each of the other executive officers of the Company,
including the named executives.
The Compensation Committee works with an outside compensation
consultant and supports its compensation decisions by analysis of
published surveys and special studies undertaken periodically.
The Company's compensation programs are designed to provide its
executive officers with market competitive salaries and the
opportunity to earn incentive compensation related to performance
expectations identified by the Board. The objectives of the
Company's executive compensation program as developed by the
Compensation Committee in 1995 are to:
Provide a direct link between executive officer compensation and
the interests of the Company's shareholders by making a
significant portion of executive officer compensation dependent
upon the financial performance of the Company and the price
performance of the Company's Common Stock.
Support the achievement of the Company's annual and long-term
goals and objectives as determined annually by the Board.
Establish base salaries targeted at a median level for
comparable positions within a comparison group of companies, with
incentive opportunities designed to pay total compensation well
above average for outstanding performance.
Provide opportunities for equity ownership based on competitive
levels, corporate/segment performance, share price performance,
and share dilution considerations.
Achieve and maintain desired levels of Common Stock ownership
within the executive officer group; desired levels of Common Stock
ownership are amounts valued at three times the salary level for
the Chief Executive Officer and two times or one time the salary
level for other executive officers of the Company. The Company's
1994 Long-Term Stock Incentive Plan is designed to provide
opportunities for ownership through retention of shares obtained
through the exercise of options.
Provide compensation plans and arrangements that encourage
stability of employment for better-performing executives.
The Compensation Committee's executive compensation policies seek
to provide an opportunity for compensation, that varies with
performance, which compares favorably to levels provided to
executives within a comparative group of companies engaged in high
technology businesses. These companies are generally either
competitive with or complementary to the Company's business and
are generally of comparable size, business characteristics and
complexity (the "Comparative Group"). All of the companies in the
Comparative Group whose shares are traded on the Nasdaq National
Market are included in the Nasdaq Computer and Data Processing
Services Stocks Index (see "Executive Compensation--Financial
Performance"). The Comparative Group also includes certain
companies whose shares are traded on other exchanges, and are
therefore not included in such index, but are nevertheless
considered to be comparable to the Company for this purpose.
The Compensation Committee developed an executive compensation
strategy which targets total direct compensation (base salary plus
annual incentives plus long-term incentives) at competitive levels
compared to the Comparative Group in a manner which directly links
the interests of the Company's executives and its shareholders and
focuses executives on sustainable long-term growth. Individual
compensation levels recommended by the Compensation Committee vary
significantly among the Company's executive officers and from year
to year, because such levels also are based in major part on
annual and long-term corporate performance, as well as on
individual performance. The Compensation Committee assigns more
weight to long-term corporate performance for higher level
executives and more weight to annual corporate and individual
performance for lower level executives in determining the
compensation level of any individual executive officer.
Compensation of Executive Officers
The compensation of executive officers of the Company includes (i)
base salary, (ii) annual incentive cash bonuses, and (iii) long-term incentive
compensation currently in the form of stock
options. Bonuses and stock options (collectively, "Incentive
Compensation") may represent between one-third and two-thirds of
an executive officer's potential annual compensation, depending
upon the position. In general, the proportion of an executive
officer's compensation that is Incentive Compensation increases
with the level of responsibility of the officer. Executive
officers also receive various benefits, such as 401(K) and medical
plans, generally available to all employees of the Company.
Base Salaries
The Compensation Committee seeks to set base salaries for the
Company's executive officers at levels which are competitive with
median levels for executives with similar roles and
responsibilities within the Comparative Group. In setting annual
salaries for individuals, the Compensation Committee first
considers the compensation paid for similar positions within the
Comparative Group and the executive's level and scope of
responsibility as a benchmark reference. It then considers
individual performance of the executive. The Compensation
Committee primarily considers individual performance against
expectations in developing its salary increase recommendations.
Because target levels of revenues and pre-tax income for fiscal
year 1995 were not only met but significantly exceeded, salary
increases were granted to named executives in 1995.
Annual Incentive Bonuses
Working with an outside compensation consultant and analyzing the
total executive compensation components of the Comparative Group,
the Compensation Committee developed through 1995 an Executive
Incentive Compensation Plan ('EIC Plan"). The EIC Plan was
approved by the Board of Directors at its regular meeting in
February, 1996. Under the EIC Plan, the Compensation Committee
recommends to the Board of Directors an aggregate target cash
bonus amount for incentive-eligible executives. A target bonus
pool will be established based upon specific performance measures
approved by the Board of Directors, which will include a test of
reasonableness for incentive compensation as a percentage of pre-tax income of
the Company.
Each year the Board establishes three levels of achievement for
EIC Plan performance goals - threshold, target and outstanding.
Generally, at performance levels below the threshhold, no bonuses
are payable. The target bonus pool is determined by the sum of
individual participants' awards at target performance levels.
Individual bonuses at target may range from 10% to 60% of base
annual salary at target. Upon reaching the threshold performance
goals, a participant will be eligible for up to 50% of his or her
target bonus. Actual bonus payments will be interpolated between
threshold (50%), target (100%) and outstanding (150% - 200%) and
will not exceed 200% of the target bonus.
Applying the basic principles of the EIC Plan retroactively to
1995 Company and individual performances, the Compensation
Committee recommended and the Board of Directors approved
substantial bonuses for the named executives and other key
executives representing an outstanding level of performance in
1995. (See "Executive Compensation -- Summary Compensation
Table.")
Option Grants
The Company's 1994 Long-Term Stock Incentive Plan authorizes the
Compensation Committee to award stock options and restricted stock
to key executives. Stock option grants are designed to align the
long-term interests of the Company's executives with those of its
shareholders by directly linking executive compensation to
shareholder interest, as well as enabling executives to develop
and maintain significant long-term equity ownership positions.
The number of options granted to an executive is a function of the
executive's level of responsibility and grants for similar
positions made by the companies within the Comparative Group.
Variance from these numbers are based upon the Compensation
Committee's reasoned expectation of the executive's future
contribution to the Company. Generally, the Compensation
Committee grants non-statutory options early in each fiscal year
at an exercise price equal to the fair market value of Company
Common Stock on the date of grant. Option grants are designed to
enable key executives to achieve and maintain the stock ownership
guidelines established for key executives over a five year period
of time.
Chief Executive Officer Compensation
The compensation of Albert F. Peter, President and Chief Executive
Officer of the Company is recommended to the Board of Directors by
the Compensation Committee based upon similar basic objectives and
principles described above for the other senior executives. Based
upon the Company's financial performance in achieving record
revenue and operating income before extraordinary items of over
$22,000,000 in 1995 compared to operating losses of nearly
$2,000,000 in fiscal 1994, and Mr. Peter's major contributions to
these results as well as reorganizing and refocusing of the
Company's management, the bonus recommended by the Compensation
Committee and awarded by the Board of Directors for 1995 was
$350,000, approximately 117% of 1995 salary, representing
achievement of the outstanding level of performance. A stock
option grant of 75,000 shares of Common Stock was made to Mr.
Peter in 1995 consistent with the Compensation Committee's long-term incentive
guidelines and was based upon the Compensation
Committee's expectations of Mr. Peter's future contributions to
the success of the Company.
William P. Conlin Bannus B. Hudson Gilbert R. Whitaker, Jr.
FINANCIAL PERFORMANCE
The following graph summarizes the cumulative return on $100
invested in the Company's Common Stock, the S&P 500 Stock Index
and the Nasdaq Computer and Data Processing Services Stocks Index
over a five year period as calculated by the Center for Research
in Security Prices at the University of Chicago.
<PAGE>
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
CRSP Total Returns
Index for: 12/31/90 12/31/91 12/31/92 12/31/93 12/30/94 12/29/95
SDRC Stock 100.0 227.5 86.3 135.3 42.2 230.4
S&P 500 Stocks 100.0 130.7 140.7 154.4 156.5 215.4
Nasdaq Computer
and Data
Processing Stocks 100.0 201.5 216.8 229.5 278.7 425.1
Notes:
A. The lines represent monthly index levels derived from compounded
daily returns that include all dividends.
B. The indexes are reweighted daily, using the market capitalization
on the previous trading day.
C. If the monthly interval, based on the fiscal year-end, is not a trading
day, the preceding trading day is used.
D. The index level for all series was set to $100.0 on 12/31/90.
<PAGE>
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Certain Beneficial Owners
Under Section 13(d) of the Securities Exchange Act of 1934 and the
rules promulgated thereunder, a beneficial owner of a security is
any person who directly or indirectly has or shares voting power
or investment power over such security. Such beneficial owner
under this definition need not enjoy the economic benefit of such
securities. The following shareholders are known by the Company
to be the beneficial owners of 5% or more of the Company's Common
Stock as of December 31, 1995:
Amount and
Title of Name and Address of Nature of Percent
Class Beneficial Owner Ownership of Class
- -------- ------------------- ------------ --------
Common State of Wisconsin 1,920,000(1) 6.34%
Stock Investment Board
P.O. Box 7842
Madison, WI 53707
Common Soros Fund 1,712,700(2) 5.65%
Stock Management
c/o Stephen
M. Vine, Esq.
Akin, Gump, Strauss
Hauer & Feld, L.L.P.
399 Park Avenue
New York, NY 10022
Common Nicholas-Applegate 2,054,569(3) 6.78%
Stock Capital Management
600 West Broadway
29th Floor
San Diego, CA 92101
___________________
(1) The information in the above table and in this footnote was
obtained from a Schedule 13G filed by such shareholder. According
to the Schedule 13G, such shareholder has the sole power to vote
and to direct the disposition of all such shares.
(2) The information in the above table and in this footnote was
obtained from a Schedule 13D filed by such shareholder. According
to the Schedule 13D, such shareholder has the sole power to direct
the disposition of 757,700 of such shares and may be deemed to
have the ability to acquire voting and dispositive power with
respect to 955,000 of such shares.
(3) The information in the above table and in this footnote was
obtained from a Schedule 13G filed by such shareholder. According
to the Schedule 13G, such shareholder has the sole power to vote
1,442,431 of such shares and the shared power to vote 35 of such
shares. The type of voting power held with respect to the other
shares listed above is not specified in the Schedule 13G. Such
shareholder has the sole power to direct the disposition of all
such shares.
Management
The following table sets forth the beneficial ownership of the
Company's Common Stock by its directors, the named executives, and
all directors and executive officers as a group, as of March ___,
1996:
<TABLE>
<CAPTION>
Amount and
Title of Name of Nature of Percent
Class Beneficial Owner Ownership(1) of Class(2)
- -------- ---------------- ------------ ----------
<S> <C> <C> <C>
Common William P. Conlin 43,900 shs.(3) _____%
Stock
Common Albert F. Peter 237,291 shs.(4) _____%
Stock
Common Robert P. 81,540 shs.(5) _____%
Stock Henderson
Common Bannus B. Hudson 18,000 shs.(6) _____%
Stock
Common John E. McDowell 95,800 shs.(7) _____%
Stock
Common James W. 17,589 shs.(8) _____%
Stock Nethercott
Common Arthur B. Sims 8,000 shs.(9) _____%
Stock
Common Gilbert R. 58,000 shs.(10) _____%
Stock Whitaker, Jr.
Common John A. 81,697 shs.(11) _____%
Stock Mongelluzzo
Common Martin A. Neads 95,882 shs.(12) _____%
Stock
Common Martin D. Schussel 84,196 shs.(13) _____%
Stock
Common Jeffrey J. Vorholt 14,539 shs.(14) _____%
Stock
Common All directors and 836,466 shs.(15) _____%
Stock Executive Officers
as a Group (13
Persons)
__________________________________
<FN>
(1) The persons and entities named in the above table have sole
voting and investment power with respect to all shares of Common
Stock shown as beneficially owned by them, subject to community
property laws where applicable and the information contained in
other footnotes to this table. For purposes of this table, stock
options are considered to be currently exercisable if by their
terms they may be exercised as of the date of mailing of this
Proxy Statement or if they become exercisable within 60 days
thereafter.
(2) These percentages assume the exercise of certain currently
exercisable stock options, which options have not in fact been
exercised.
(3) Includes 7,900 shares held of record or beneficially by Mr.
Conlin and 36,000 shares which are issuable upon the exercise of
currently exercisable, but unexercised stock options.
(4) Includes 142,205 shares held of record by Mr. Peter; 6,000
shares held of record by Mr. Peter as custodian for his children;
29,680 shares held of record by Mr. Peter's wife; 4,656 shares
held by Mr. Peter's wife as a joint tenant with other members of
her family; and 54,750 shares which are issuable upon the exercise
of currently exercisable, but unexercised stock options.
(5) Includes 31,540 shares held of record by Mr. Henderson and
50,000 shares which are issuable upon the exercise of currently
exercisable, but unexercised stock options.
(6) Includes 10,000 shares held of record by Mr. Hudson and 8,000
shares which are issuable upon the exercise of currently
exercisable, but unexercised stock options.
(7) Includes 13,600 shares held of record by Mr. McDowell; 32,200
shares held of record by Mr. McDowell's wife (including 1,600
shares held in trust for the benefit of their grandchildren); and
50,000 shares which are issuable upon the exercise of currently
exercisable, but unexercised stock options.
(8) Includes 17,589 shares held of record by Mr. Nethercott which
are issuable upon the exercise of currently exercisable, but
unexercised stock options.
(9) Includes 8,000 shares held of record by Mr. Sims which are
issuable upon the exercise of currently exercisable, but
unexercised stock options.
(10) Includes 13,000 shares held of record by Dr. Whitaker and
45,000 shares which are issuable upon the exercise of currently
exercisable, but unexercised stock options.
(11) Includes 3,539 shares held of record or beneficially by Mr.
Vorholt; and 9,900 shares which are issuable upon the exercise of
currently exercisable but unexercised stock options.
(12) Includes 5,782 shares held of record or beneficially by Mr.
Neads and 90,100 shares which are issuable upon the exercise of
currently exercisable, but unexercised stock options.
(13) Includes 8,336 shares held of record or beneficially by Mr.
Schussel and 75,860 shares which are issuable upon the exercise of
currently exercisable, but unexercised stock options.
(14) Includes 2,489 shares held beneficially by Mr. Mongelluzzo
and 8 shares held in Trust for his children and 79,200 shares
which are issuable upon the exercise of currently exercisable, but
unexercised stock options.
(15) Includes a total of 524,399 shares which are issuable upon
the exercise of currently exercisable, but unexercised stock
options.
</FN>
</TABLE>
AMENDMENTS TO THE COMPANY'S AMENDED CODE OF REGULATIONS
In February, 1996, the Board of Directors of the Company adopted a
resolution setting forth proposed amendments to the Company's
Amended Code of Regulations (the "Regulations") intended to
conform the Regulations to the Company's current governance
practices. The proposed amendments would allow the Board, in its
discretion, flexibility in the distribution of the duties and
responsibilities of the Company's executive officers and would
increase the number of regularly scheduled Board meetings each
year. The text of the proposed amendments is contained on Exhibit
A attached to this Proxy Statement and reference is made to
Exhibit A for all particulars.
In October, 1995, the Board of Directors of the Company adopted
the "Structural Dynamics Research Corporation Board of Directors
Guidelines on Corporate Governance Issues" (the "Corporate
Governance Guidelines"). The Corporate Governance Guidelines were
developed to help the Board more efficiently and effectively
govern itself and manage the affairs of the Company.
Specifically, the Corporate Governance Guidelines provide: (i)
for more flexibility in the Board's selection of its Chairman and
the Company's Chief Executive Officer, (ii) for meetings and
executive sessions of outside directors, (iii) for an increased
number of Board meetings and specific rules governing those
meetings, (iv) that only outside directors are to serve on Board
committees and that each committee will have clearly defined
powers and responsibilities, (v) that the Board will have complete
access to the Company's management, (vi) that the Board's
performance is to be measured annually, with guidelines for such
evaluation, (vii) that the outside directors will evaluate the
Chief Executive Officer annually, and (viii) for various other
management goals and methods of achieving them.
Certain of the concepts embodied in the Corporate Governance
Guidelines require that amendments be made to the Regulations.
For example, as presently written, the Regulations mandate that
the "Chairman of the Board shall be the Chief Executive Officer
and active head of the Corporation, and in the recesses of the
Board of Directors shall jointly with the President have general
control and management of all of its business and affairs, the
division of executive duties and responsibilities to be in the
discretion and prerogative of the Chairman of the Board - Chief
Executive Officer" (emphasis added). The current Regulations also
grant the Chairman of the Board - Chief Executive Officer full
authority to delegate the specific duties and responsibilities of
the President.
The Board has concluded that a corporation of the Company's size
and nature would be best served by allowing for more flexibility
in determining the scope of responsibilities to be allocated to
any one specific officer of the Company at any time and by
retaining in the Board of Directors the ultimate authority and
responsibility for determining the Company's management structure.
To that end, the Board recommends that the Regulations be amended
to allow the Board to determine whether any two offices in the
Company may be held by the same person at once and that the Board
be granted the discretion to prescribe the duties for which each
officer of the Company shall generally be responsible.
In addition, the Corporate Governance Guidelines provide for an
increase in the frequency of regular Board meetings each year. As
a result, the Board recommends that the number of annual Board
meetings prescribed by the Regulations be increased from four to
five.
The affirmative vote of the holders of shares entitling them to
exercise a majority of the voting power of the Company is required
to adopt the resolution to amend the Regulations. Proxies will be
voted in favor of the following resolution unless otherwise
instructed by the shareholders. Abstentions and shares not voted
by brokers and other entities holding shares on behalf of
beneficial owners will have the same effect as a vote against the
resolution to amend the Regulations. The Board of Directors
recommends the adoption of the resolution.
The resolution states:
RESOLVED, that the Company's Amended Code of Regulations be, and
it hereby is, amended as set forth in Exhibit A.
APPROVAL AND ADOPTION OF THE STRUCTURAL DYNAMICS RESEARCH
CORPORATION 1996 DIRECTORS' NON-DISCRETIONARY STOCK PLAN
A portion of the compensation of the non-employee directors of the
Company is provided by the Structural Dynamics Research
Corporation Directors' Non-Discretionary Stock Option Plan (the
"Directors' Plan") as described above, see "Executive Compensation
- -- Compensation of Directors." The Directors' Plan, which has
been in effect since 1986, will expire in July, 1996.
Accordingly, the Company's Board of Directors, in February, 1996,
approved the "Structural Dynamics Research Corporation 1996
Directors' Non-Discretionary Stock Plan" (the "1996 Directors'
Plan") and directed that the 1996 Directors' Plan be presented to
the shareholders for their approval and adoption.
The 1996 Directors' Plan provides for non-discretionary option
issuances to non-employee directors, of which the Company
currently has six. It also provides a feature by which non-employee directors
may elect to receive restricted stock grants in
lieu of their regular cash compensation. Its stated purpose is to
provide a material incentive for the continued services of the
Company's directors and to enhance the Company's ability to
continue to attract, and thereafter to retain, qualified
individuals to serve on the Board of Directors.
The following information is a brief summary of certain provisions
of the 1996 Directors' Plan. The 1996 Directors' Plan is
substantially the same as the Directors' Plan currently in effect
except for the feature which permits directors to elect to receive
their regular cash compensation in the form of restricted stock.
Other specific changes are also noted in the summary below. The
complete text of the 1996 Directors' Plan is attached to this
Proxy Statement as Exhibit B and reference is made to Exhibit B
for all particulars.
The 1996 Directors' Plan will become effective immediately upon
the expiration of the current Directors' Plan, provided that it is
approved and adopted by the shareholders of the Company. If it is
not approved and adopted prior to December 31, 1996, the 1996
Directors' Plan will have no force or effect. If approved, the
1996 Directors' Plan will terminate on May 1, 2006. The Board of
Directors may terminate the 1996 Directors' Plan at any time;
however, any outstanding unexercised options will continue to be
exercisable in accordance with their terms.
The 1996 Directors' Plan provides that upon their initial election
or appointment, non-employee directors are automatically issued
options to purchase 10,000 shares of the Company's Common Stock
(the "Initial Option Grant"). By comparison, the current
Directors' Plan provides for a grant of an option to purchase
16,000 shares upon initial election or appointment to the Board.
In addition, at every annual organizational meeting of directors,
each then-serving director will receive an additional option to
purchase 10,000 shares (the "Annual Option Grant"), except that
the number of shares subject to the first Annual Option Grant
issued to a director who has served on the Board for less than one
year shall be prorated such that such director shall receive an
option to purchase only a percentage of 10,000 shares commensurate
with the actual portion of the year he or she served on the Board.
All options granted under the 1996 Directors' Plan have a five
year term and an exercise price equal to 100% of fair market value
of the Common Stock on the date of issuance. Options are not
exercisable at all for the first six months from the date of
issuance, at which time they become exercisable as to 50% of the
shares covered. After options have been outstanding for at least
12 months, they are exercisable as to 100% of the shares covered
until termination. Shares covered by an option which is no longer
exercisable with respect to such shares shall again be available
for grant of options under the 1996 Directors' Plan. Options
granted under the 1996 Directors' Plan are nonqualified options
for federal tax purposes.
Not more than 1,000,000 shares of the Company's Common Stock, in
the aggregate, will be made available for options under the 1996
Directors' Plan. The number of shares subject to each Initial
Option Grant and each Annual Option Grant to be made under the
1996 Directors' Plan are not subject to adjustment to reflect
stock splits, stock dividends, etc., which occur prior to such
Initial Option Grant or Annual Option Grant. The current
Directors' Plan required such adjustments. However, appropriate
adjustments in the number of shares covered by outstanding options
and the option price of such shares will be made to give effect to
changes in the Company's capitalization pursuant to stock splits,
stock dividends, etc.
Options issued under the 1996 Directors' Plan are not assignable
or transferable. However, in the event of death of a director or
the resignation by a director by reason of disability or ill-health, the former
director or his or her representatives may, at
any time up to and including the expiration date, exercise any of
the unexercised options or parts thereof, which have been
outstanding for at least six months from the date of grant, for
the full option term. In the event of resignation for reasons
other than disability or ill-health, or failure to be re-elected
other than by change of control, the former director may exercise
all or any part of his or her options which have become
exercisable as of the date of resignation or non re-election at
any time within the sixty day period following the resignation or
non re-election date.
It is impossible at the present time to indicate specifically the
names of persons to whom future options will be granted, or the
aggregate numbers of shares, within the limitations of the 1996
Directors' Plan, to be covered by such options. The following
table represents options which would have been received by or
allocated to each of the listed directors for the last completed
fiscal year if the 1996 Directors' Plan had then been in effect.
NEW PLAN BENEFITS
Shares
Underlying
Name and Position Options
- --------------------- -----------------
William P. Conlin, 10,000
Director
Bannus B. Hudson, 7,973
Director
John E. McDowell, 10,000
Director
James W. Nethercott, 10,000
Director
Arthur B. Sims, 7,480
Director
Gilbert R. Whitaker, 10,000
Jr., Director
The Company currently pays its non-employee directors an annual
retainer in the amount of $15,000 per year plus additional amounts
for meetings attended. The 1996 Directors' Plan includes a
feature that was not part of the former plan but which has become
quite common in other companies, the ability of a director to
elect to receive part or all of the annual retainer in the form of
stock rather than cash. Under the 1996 Directors' Plan, a
director may elect on or before October 31 of any year to receive
either 25%, 50%, 75% or 100% of his or her annual retainer
payable during the next calendar year in the form of stock. Any
such stock will be issuable on the date of the regular
organizational meeting of the Board of Directors following the
annual meeting of shareholders in the year following the year in
which the election is made. An election to receive stock with
respect to any particular year is irrevocable.
The affirmative vote of the holders of a majority of the Company's
Common Stock present in person or by proxy at the Annual Meeting
and entitled to vote is required to adopt the resolution to adopt
the 1996 Directors' Plan. Proxies will be voted in favor of the
following resolution unless otherwise instructed by the
shareholders. Abstentions and shares not voted by brokers and
other entities holding shares on behalf of beneficial owners will
not be counted and will have no effect on the outcome of the
proposal. The Board of Directors recommends the adoption of the
resolution.
The resolution states:
RESOLVED, that the Structural Dynamics Research Corporation 1996
Directors' Non-Discretionary Stock Plan in its entirety be, and it
hereby is, adopted as set forth in Exhibit B.
APPROVAL OF AN AMENDMENT TO THE COMPANY'S 1994
LONG-TERM STOCK INCENTIVE PLAN
The Structural Dynamics Research Corporation 1994 Long-Term Stock
Incentive Plan (the "1994 Plan") was approved and adopted by the
shareholders of the Company on March 16, 1994. The overall
purpose of the 1994 Plan is to provide a material incentive for
the continued services of those key employees of the Company and
its subsidiaries who make significant contributions toward the
Company's success and development, to encourage those key
employees to increase their ownership interest in the Company, and
to attract and retain, as executives and employees, individuals of
exceptional ability. The 1994 Plan permits the award of such
incentives to key employees of the Company through grants of
nonqualified and incentive stock options and other stock based
incentives, including stock appreciation rights and restricted
stock awards.
Summary of 1994 Plan
The options granted under the 1994 Plan may be either "incentive
options" or "nonqualified options" for federal tax purposes. An
incentive option is one that meets the provisions of Section 422
of the Internal Revenue Code of 1986. Any option not designated
as an incentive option is a nonqualified option. To date, all
options granted under the 1994 Plan have been nonqualified
options.
The 1994 Plan is administered by a committee of the Board of
Directors. The Board's Compensation Committee currently performs
this function. It selects the key employee participants, decides
the type of each option, the number of shares with respect to
which options are granted, and the option price for such shares
subject to the terms of the 1994 Plan. There are no predetermined
performance measures or other criteria for determining the number
of options to be granted to participants. The term "key employee"
refers to any employee of the Company and its subsidiaries who in
the opinion of the Board has demonstrated a capacity for
contributing in a substantial measure to the success of the
Company and its subsidiaries.
The maximum aggregate number of shares of Common Stock subject to
Stock Incentives that may be granted to participants in the 1994
Plan shall be the sum of 4% of the Company's issued and
outstanding Common Stock at January 1 of each of the calendar
years from 1994 through 1998, plus any unused shares and any
forfeited shares; provided, however, that the number of shares
with respect to which Stock Incentives may be granted in any one
calendar year shall not exceed 4% of the Company's issued and
outstanding Common Stock on January 1 of that year plus any unused
shares and any forfeited shares.
The maximum amount of Common Stock with respect to which Stock
Incentives may be granted to any person during any calendar year
shall be 250,000 shares; provided, however, that in the event of
a grant made to a recipient upon the recipient's initial hiring by
the Company, such limitation shall be increased to 500,000 shares.
The number of shares of Common Stock which may be granted under
the 1994 Plan as Stock Awards in any calendar year shall not
exceed 5% of the total number of shares available under the 1994
Plan for the year in question. Appropriate adjustments in the
number of shares which can be issued, the number of shares covered
by outstanding options, and the option price of such shares will
be made to give effect to changes in the Company's capitalization
(stock splits, stock dividends, etc.).
The option price for any option granted under the 1994 Plan may
not be less than 100% of the fair market value of the Company's
Common Stock on the date the option is granted. However, an
incentive option granted to a person who, on the date of grant,
owns 10% or more of the shares of voting stock of the Company or
its subsidiaries must have an option price of not less than 110%
of the fair market value of the Company's Common Stock on the date
the option is granted.
Options granted to a key employee participant under the 1994 Plan
are exercisable in full or in part not less than six months after
the date the Option is granted, or may become exercisable in one
or more installments at such later time or times as the Stock
Option Committee shall determine.
The 1994 Plan contains a provision to the effect that
notwithstanding the vesting schedules described above, if a change
in control of the Company occurs, as defined in the 1994 Plan,
any options under the 1994 Plan that have been outstanding for
over six months will become immediately exercisable in full.
No determination has been made with respect to future recipients
of options under the 1994 Plan. It is impossible at the present
time to indicate specifically the names and positions of persons
to whom future options will be granted, or the number of shares,
within the limitations of the 1994 Plan, to be covered by such
options.
The proceeds of the sale of stock under the 1994 Plan constitute
general funds of the Company and may be used by it for any
purpose.
On March 12, 1996, the closing price of the Company's Common Stock
in the over-the-counter market was $_________ per share.
Summary of Proposed Revisions to 1994 Plan
The following is a brief summary of the proposed revisions to the
1994 Plan. This summary is qualified in its entirety by reference
to Exhibit C.
As presently constituted, the 1994 Plan provides that each Option
or SAR granted thereunder shall be exercisable during the life of
the optionee or grantee only by the optionee or grantee and, after
the optionee's or grantee's death, only by the optionee's or
grantee's estate or by a person who acquired the right to exercise
the Option or SAR by will or the laws of descent and distribution.
Any Option or SAR, to the extent it shall not have been exercised,
terminates 30 days after the optionee or grantee ceases to be an
employee of the Company, unless the optionee or grantee ceases to
be an employee of the Company due to resignation with the consent
of the Committee, death, incapacity or retirement under a
retirement plan of the Company. Specifically, if the optionee or
grantee ceases to be an employee of the Company because of
resignation with the consent of the Committee, the Option or SAR
terminates three months after the optionee or grantee ceases to be
an employee; if the optionee or grantee ceases to be an employee
by reason of death, incapacity or retirement under a retirement
plan of the Company, or if the optionee or grantee should die
during the three month period referred to in the preceding
sentence, the Option or SAR terminates 15 months after the
optionee or grantee ceases to be an employee.
The Board of Directors has concluded that the 30 day post-termination period
during which Options and SARs may be exercised
is unduly restrictive and that the 15 month limitation on exercise
of Options and SARs in the event of death or disability may result
in inequitable treatment of surviving family members of deceased
employees and of employees who resign due to ill-health or
disability. The Board of Directors accordingly approved an
amendment to the relevant provisions of the 1994 Plan, subject to
shareholder approval, that would eliminate such treatment. The
amendment basically provides that the standard 30 day period for
exercise following termination is to be extended to 60 days and
that the estate of a deceased plan participant or a participant
who resigns due to ill-health or disability may exercise options
or other incentive awards for up to 18 months from the date of
such death or resignation, or for the full terms thereof,
whichever is shorter.
The portions of the 1994 Plan proposed for amendment are
Paragraphs 5(c) and 6(c). Paragraphs 5(c) and 6(c) in their
present form and as proposed to be amended are reproduced on
Exhibit C appended to this Proxy Statement. As noted, the
foregoing discussion is qualified in its entirety by reference to
Exhibit C.
The affirmative vote of the holders of a majority of the Company's
Common Stock present in person or by proxy at the Annual Meeting
and entitled to vote is required to adopt the resolution to amend
the 1994 Plan. Proxies will be voted in favor of the following
resolution unless otherwise instructed by the shareholders.
Abstentions and shares not voted by brokers and other entities
holding shares on behalf of beneficial owners will not be counted
and will have no effect on the outcome of the proposal. The Board
of Directors recommends the adoption of the resolution.
The resolution states:
RESOLVED, that the Structural Dynamics Research Corporation 1994
Long-Term Stock Incentive Plan in its entirety be, and it hereby
is, amended as set forth in Exhibit C.
ELECTION OF AUDITORS
The accounting firm of Price Waterhouse LLP is presently serving
as the Company's independent accounting firm as recommended by the
Audit Committee. Price Waterhouse LLP also served as the
Company's independent auditors with respect to the Company's
financial statements for the fiscal year ended December 31, 1995.
Representatives of Price Waterhouse LLP are expected to be present
at the Annual Meeting. They will have an opportunity to make a
statement if they desire to do so and will be available to respond
to appropriate questions. The affirmative vote of a majority of
the Company's Common Stock present in person or by proxy at the
Annual Meeting and entitled to vote is required to adopt the
resolution. Action by shareholders is not required by law in the
appointment of independent auditors, but their appointment is
submitted by the Board of Directors in order to give the
shareholders a voice in the selection of auditors. If the
resolution is rejected by the shareholders, the Board of Directors
will reconsider its choice of Price Waterhouse LLP as the
Company's independent auditors. Proxies in the form solicited
hereby which are returned to the Company will be voted in favor of
the resolution unless otherwise instructed by the shareholders.
Abstentions will have the same effect as votes cast against the
resolution, provided such shares are properly present at the
meeting in person or by proxy. Shares not voted by brokers and
other entities holding shares on behalf of beneficial owners will
have no effect on the outcome of the proposal. The Board of
Directors recommends the adoption of the resolution.
The resolution states:
RESOLVED, that shareholders of the Company hereby ratify the
action of the Board of Directors in retaining Price Waterhouse LLP
as the independent auditors of the Company for 1996.
Resignation of Former Auditors
Prior to October 26, 1994, KPMG Peat Marwick LLP ("KPMG") was the
Company's principal independent accounting firm. On that date
KPMG resigned such position. Prior to its resignation, KPMG had
been engaged to audit the Company's financial statements since
1982. Neither of KPMG's reports on the Company's financial
statements for each of the past two years as of the time of the
resignation (1993 and 1992) contained an adverse opinion or a
disclaimer of opinion, or were qualified or modified as to
uncertainty, audit scope or accounting principles.
In its letter of resignation dated October 26, 1994, KPMG advised
the Company that matters had come to its attention which raised
serious questions as to its ability to rely on management's
representations. Furthermore, in its letter, KPMG stated that
these matters resulted in a loss of confidence by KPMG in
representations made to it by management and impaired its ability
to conduct an examination in accordance with generally accepted
auditing standards. In addition, KPMG advised the Company that
information had come to its attention that it concluded materially
impacted the fairness or reliability of previously issued audit
reports on consolidated financial statements; due to KPMG's
resignation, the issue was not resolved to KPMG's satisfaction
prior to its resignation. Specifically, KPMG advised the Company
that its auditors' reports on the consolidated financial
statements of the Company for the years ended December 31, 1991,
December 31, 1992 and December 31, 1993 should no longer be relied
upon. Such letter may be deemed to express a disagreement
("disagreement") between KPMG and the Company within the meaning
of Item 304(a) of Regulation S-K promulgated by the Securities and
Exchange Commission.
In its Current Report on Form 8-K first disclosing KPMG's
resignation, the Company stated that during its two most recent
fiscal years (and the subsequent interim period preceding October
26, 1994), there were no disagreements between the Company and
KPMG on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure,
which disagreements, if not resolved to the satisfaction of KPMG,
would have caused it to make reference to the subject matter of
such disagreements in connection with its reports. In a letter
dated November 10, 1994, KPMG stated that it had read the
Company's Form 8-K and agreed with the statements contained
therein except the statement that there were no disagreements on
any matter of accounting principles or practices. The KPMG letter
then stated that "On October 7, 1992, in connection with our
timely review of the Form 10-Q for the quarter ended September 30,
1992, we informed Structural Dynamics Research Corporation that if
it did not reverse revenue that it had recognized during the
quarter ended September 30, 1992 relating to a certain transaction
with Hewlett Packard that we would inform the audit committee of
Structural Dynamics Research Corporation that we believed that
material transaction had been accounted for in a manner that was
inconsistent with generally accepted accounting principles. The
accounting for that transaction ultimately was resolved to our
satisfaction." The Company subsequently filed a copy of KPMG's
November 10, 1994 letter as an exhibit to the Form 8-K and further
reported that it agreed with the facts described in the letter but
that, because the matter had been resolved to KPMG's satisfaction,
SDRC had not, at the time it originally filed the Form 8-K,
considered the matter to have constituted a disagreement within
the meaning of Item 304 of Regulation S-K.
Following the resignation of KPMG, the Company engaged Price
Waterhouse LLP to serve as its principal independent accounting
firm. The Company had not consulted with Price Waterhouse LLP
regarding any matter during the years 1992 and 1993 or during the
interim period in 1994 prior to KPMG's resignation.
1997 SHAREHOLDER PROPOSALS
In order for any shareholder proposals for the 1997 Annual Meeting
of Shareholders to be eligible for inclusion at the meeting, they
must be received by the Secretary of the Company at 2000 Eastman
Drive, Milford, Ohio 45150, prior to November 26, 1996.
OTHER MATTERS
The Company has retained Morrow & Co., Inc., a professional
solicitation firm, to assist in soliciting proxies for a fee
estimated at $5,500. Morrow & Co., Inc. will use approximately 30
people to solicit proxies on behalf of the Company.
The Board of Directors does not know of any other business to be
presented to the meeting and does not intend to bring other
matters before the meeting. However, if other matters properly
come before the meeting, it is intended that the persons named in
the accompanying proxy will vote thereon according to their best
judgment in the interests of the Company.
By Order of the Board of Directors
John A. Mongelluzzo
Secretary<PAGE>
EXHIBIT A
AMENDMENTS TO THE
AMENDED CODE OF REGULATIONS OF STRUCTURAL
DYNAMICS RESEARCH CORPORATION
The text of the proposed amendments to the Company's Amended Code
of Regulations is set forth below. Proposed additions to the text
are double underlined, and proposed deletions are lined through.
Article I, Section 3. Special Meetings. Special meetings of the
shareholders may be called by any of the following:
(1) The ^ Chief Executive Officer , or, in the case of
absence of the ^ Chief Executive Officer,
in order of
preference, either the Chairman of the Board (if such officer is
not also the Chief Executive
Officer), the President (if
such officer is not also the Chief Executive Officer) , or ^
SDRC Operations;
Article I, Section 4. Notice of Meetings. Notice of each annual
or special meeting of the shareholders shall be given in writing
either by the Chairman of the Board, the President, the Vice
President- ^ SDRC Operations , or the Secretary, not less
than seven (7) days before the meeting. Any shareholder may, at
any time, waive any notice required to be given under these
Regulations.
Article I, Section 6. Organization. The ^ Chief Executive
Officer of the Corporation shall preside at all meetings of
the Shareholders. In the absence of the ^ Chief Executive
Officer, in order of preference, either the Chairman of the Board
(if such officer is not also the Chief Executive Officer), the
President (if such officer is not also the Chief Executive
Officer), or the Vice President-SDRC Operations of the
Corporation shall preside and shall have all of the powers herein
conferred upon the^ Chief Executive Officer when acting as
presiding officer of the meeting. ^The Secretary of the
Corporation shall act as secretary of all meetings of the
shareholders, but in the absence of the Secretary, the presiding
officer may appoint any person to act as secretary of the meeting.
Article II, Section 4. Meetings. The Board of Directors shall
meet at least ^ five times a year and at such place,
either within or without the State of Ohio, as may be fixed, from
time to time, by said Board of Directors. Until otherwise so
fixed, one such meeting shall be held immediately after the annual
meeting of the shareholders at the office of the Corporation, or
at such other place as may be fixed by the Board of Directors.
Article II, Section 5. Call and Notice of Meetings. Meetings of
the Board of Directors may be called at any time by the Chairman
of the Board, the President, the Chief Executive Officer, the Vice
President- ^ SDRC Operations or in the absence of both the
Chairman of the Board and the President, the and shall be called
by the Chairman of the Board, the President or the Vice President-^
SDRC Operations upon the request of a majority of the
members of the Board of Directors. The Board of Directors shall
decide what notice, if any, and the length of time prior to such
meeting such notice shall be given. Attendance at any meeting
shall operate as a waiver of notice. Any meeting at which all
Directors are present shall be a valid meeting whether notice
thereof was given or not and any business may be transacted at
such a meeting.
Meetings of the Board of Directors, and meetings of any committee
thereof, may be held through any communications equipment if all
persons participating can hear each other and participation in a
meeting held through communications equipment shall constitute
presence at such a meeting and such a meeting shall be a valid
meeting whether notice thereof was given or not and any business
may be transacted at such a meeting.
Article II, Section 8. Indemnification. The Corporation shall
indemnify each director and each officer of the Corporation, and
each person employed by the Corporation who serves at the written
request of the Chairman of the Board of the Corporation as a
director, trustee, or officer of another corporation, domestic or
foreign, non-profit or for profit, partnership, joint venture,
trust or other enterprise, to the full extent permitted by Ohio
law. The term "officer" as used in this Section shall include the
Chief Executive Officer , Chairman of the Board and the Vice
Chairman of the Board if such offices are filled, the President,
each Vice President, the Treasurer, the Secretary, and any other
person who is specifically designated as an "officer" within the
operation of this Section by action of the Board of Directors.
The Corporation may indemnify assistant officers, employees and
others by action of the Board of Directors to the extent permitted
by Ohio law.
Article III, Section 1. Number. The officers of the Corporation
shall be a Chairman of the Board, a President, a Chief
Executive Officer, one or more Vice Presidents, a Secretary
and a Treasurer. Any two or more of ^ such ^
offices may be held , in the discretion of the Board of
Directors, by the same person, but no officer shall execute,
acknowledge or verify any instrument in more than one capacity if
such instrument is required to be executed, acknowledged or
verified by two or more officers.
Article IV, Section 1. The Chairman of the Board. The Chairman of
the Board ^ chair all meetings of the Board of Directors, ^
and shall perform ^ all of those ^ functions, duties
and responsibilities incident to the office of Chairman of
the Board ^, as may be required or authorized by law and
delegated to him or her by the Board of Directors from time to
time .
Article IV, Section 2. President. The President shall be an
executive officer of the Corporation and perform all of those
functions, duties and responsibilities incident to the office of
President as required or authorized by law and delegated to him
or her by ^ the Board of Directors from time to time .
Article IV, Section 3.* Chief Executive Officer. The Chief
Executive Officer shall be responsible for the general control and
management of all of the Company's business and affairs in the
recesses of the Board of Directors. He shall establish plans and
policies, subject to the approval of the Board of Directors, to
further both short-term and long-range objectives. The Chief
Executive Officer shall represent the Company before major
customers, the financial community and the public, and shall carry
out any additional responsibilities that the Board of Directors
may designate from time to time.
Article V, Committees. The Board of Directors may provide for
such standing committees or special committees, with alternates,
as it may deem advisable, and may discontinue any committee at any
time. Each such committee shall be comprised of such persons
and shall have such powers and perform such duties not
inconsistent with law as may be ^ prescribed by the Board
of Directors from time to time in accordance with Ohio law.
Each Committee shall be chaired by a member thereof meeting such
qualifications as the Board of Directors may promulgate. Each
Committee shall operate in accordance with such rules of
governance as the Board of Directors may promulgate from time to
time in accordance with Ohio law.
______________________
* Former Sections 3-8 of Article IV would be renumbered as
Sections 4-9. The text of these sections would not be changed.
<PAGE>
EXHIBIT B
STRUCTURAL DYNAMICS RESEARCH CORPORATION 1996
DIRECTORS' NON-DISCRETIONARY STOCK PLAN
1. Name and Purpose. The purpose of this Plan, which shall be
known as the "Structural Dynamics Research Corporation 1996
Directors' Non-Discretionary Stock Plan" (hereafter referred to as
the "Plan") to advance the interests of Structural Dynamics
Research Corporation (the "Company") by providing material
incentives for the continued services of the Non-Employee
Directors and by enhancing the Company's ability to attract, and
thereafter to retain, qualified individuals to serve on the
Company's Board of Directors.
2. Definitions. For purposes of this Plan, the following terms
when capitalized shall have the meaning designated herein unless a
different meaning is plainly required by the context. Where
applicable, the masculine pronoun shall mean or include the
feminine and the singular shall include the plural.
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Company" shall mean Structural Dynamics Research
Corporation.
(c) "Effective Date" shall mean the date on which this Plan, in
its present form, shall become effective, as provided in Paragraph
17 below.
(d) "Fair Market Value" of the Company's common stock on a
certain date shall be the mean of the highest and lowest quoted
selling prices of such stock on the composite tape of the Nasdaq
National Market on the date specified, or if the Company's common
stock was not traded on such exchange on such date, on the next
preceding date on which the common stock was traded.
(e) "Non-Employee Director" shall mean a director who is not also
an employee of the Company.
(f) "Optionee" shall mean a Non-Employee Director who receives
stock options granted under this Plan.
(g) "Plan" shall mean the Structural Dynamics Research
Corporation 1996 Directors' Non-Discretionary Stock Plan.
(h) "Subsidiary" shall mean an affiliated employer during any
period that 50% or more of its common stock or, in the case of a
partnership, 50% or more of the capital interest thereof is owned
directly or indirectly by the Company or during any period that it
is a member with the Company in a controlled group of corporations
or is otherwise under common control with the Company within the
meaning of Section 414(b) and (c) of the Internal Revenue Code of
1986, as amended.
3. Administration.
(a) The Plan shall be administered by the Board.
The Company shall issue to the Non-Employee Directors stock
options under, and in accordance with, the provisions of the Plan.
Each option issued shall be evidenced by a stock option agreement
in such form and containing such provisions not inconsistent with
the provisions of the Plan as the Board from time to time shall
approve.
The Board shall have authority to construe and interpret such
option agreements; to impose such limitations and restrictions as
are deemed necessary or advisable by counsel for the Company so
that compliance with the Federal securities laws and with the
securities laws of the various states may be assured; and to make
all other determinations necessary or advisable for administering
this Plan. A decision by a majority of the Board shall govern all
actions of the Board; such decision may be made either at a
meeting of the Board at which a majority of the members are
present or without a meeting by a writing signed by a majority of
the Board. All decisions and interpretations made by the Board
shall be binding and conclusive on all Optionees, their legal
representatives and beneficiaries.
The Board may designate any officers or employees of the Company
or its Subsidiaries to assist the Board in the administration of
this Plan and to execute documents on its behalf, and the Board
may delegate to them such other ministerial and limited
discretionary duties, as it sees fit.
4. Shares Subject to the Plan.
(a) The shares to be issued and delivered by the Company upon
exercise of options issued under this Plan are shares of the
Company's common stock without par value, which may be either
authorized but unissued shares or treasury shares, in the
discretion of the Board.
(b) The aggregate number of shares of the Company's common stock
which may be issued under this Plan shall not exceed 1,000,000
shares; subject, however, to the adjustment provided in Paragraph
10 in the event of stock splits, stock dividends, exchanges of
shares, or the like occurring after the Effective Date. No stock
option may be granted under this Plan which could cause such
maximum limit to be exceeded.
(c) Shares covered by an option which is no longer exercisable
with respect to such shares shall again be available for grant of
options under this Plan.
5. Terms of Options. Options issued under this Plan shall
contain the following terms and conditions:
(a) Option price: The option price per share of common stock
shall be equal to the Fair Market Value of the Company's common
stock on the Effective Date of the issuance of such option.
(b) Time and amount of option issuances: Upon election or
appointment to the Board Non-Employee Directors shall
automatically be issued an option to purchase 10,000 shares of the
Company's common stock (the "Initial Option Grant"). In addition,
at every annual organizational meeting of directors commencing at
the regular organizational meeting in 1997, the Non-Employee
Directors then serving on the Board shall receive an automatic
issuance of an option to purchase 10,000 shares of the Company's
common stock (the "Annual Option Grant"); provided that, the
number of shares subject to Annual Option Grants issued to Non-Employee
Directors who have not yet served a full year on the
Board shall be prorated such that those Non-Employee Directors
shall receive an option to purchase only a percentage of 10,000
shares commensurate with the actual portion of the year that such
director served on the Board.
(c) Period within which option may be exercised: Each option
issued to Optionees under the plan shall terminate at the
expiration of five years from the Effective Date of the issuance
of such option.
In addition none of the option shares covered by an option issued
to an Optionee shall be exercisable until the expiration of six
months from the Effective Date of the issuance of such option.
After the expiration of six months, not more than the following
percentages of each option issued to an Optionee may be exercised
prior to the expiration of the following number of months after
the date of the issuance of such option:
MONTHS AFTER EFFECTIVE DATE OF ISSUANCE PERCENTAGE OF OPTION
SHARES ELIGIBLE FOR
EXERCISE
Less than 6 0%
At least 6 but less than 12 50%
At least 12 but not more than 60 100%
(d) Non-transferability: Termination of Service as a Non-Employee
Director: No option issued under this Plan shall be assignable or
transferable. In the event a Non-Employee Director ceases to serve
the Company as such, then the former Non-Employee Director shall
have the following time periods within which to exercise
unexercised options or parts thereof, held by him or her in the
following described circumstances:
(i) In the event of death, the representative or representatives
of the former Non-Employee Director's estate may, subject to the
prescribed schedule in Paragraph 5(c) above, exercise at any time
and from time to time up to and including the option expiration
date, any of the unexercised options or parts thereof which have
been outstanding for at least six months from the date of grant.
(ii) In the event of resignation by a Non-Employee Director by
reason of disability or ill-health, the former Non-Employee
Director may, subject to the prescribed schedule in Paragraph 5(c)
above, exercise at any time and from time to time up to and
including the option expiration date, any of the unexercised
options or parts thereof which have been outstanding for at least
six months from the date of grant.
(iii) In the event of resignation for reasons other than
disability or ill-health, or failure to be re-elected other than
by a change of control as defined in Paragraph 13, the former Non-Employee
Director may exercise all or any part of his or her
options which have become exercisable as of the date of
resignation or non re-election at any time or from time to time
within the period of 60 days following the resignation or non re-election date.
(e) Partial exercise: Unless otherwise provided in the option
agreement, any exercise of an option issued under this Plan may be
made in whole or in part.
6. Period for Issuing Options. No option shall be issued under
this Plan subsequent to May 1, 2006.
7. Method of Exercise. An option issued under this Plan may be
exercised by written notice to the Company, signed by the
Optionee, or by such other person as is entitled to exercise such
option. The notice of exercise shall state the number of shares
in respect of which the option is being exercised, and shall be
accompanied by payment of the full option price for such shares,
made in one of the following manners: (a) cash; (b) free and
clear shares of the Company's common stock, which shall be valued
at the Fair Market Value of such shares on the date of such
transfer; or (c) any combination of (a) and (b). A certificate or
certificates for the shares of common stock of the Company
purchased through the exercise of an option shall be issued as
soon as practical after the exercise of the option and payment
therefor.
8. Rights as a Shareholder. During the option period no person
entitled to exercise any option granted under this Plan shall have
any of the rights or privileges of a shareholder with respect to
any shares of stock issuable upon exercise of such option until
certificates representing such shares shall have been issued and
delivered.
9. Implied Consent of Optionees. Every Optionee, by his or her
acceptance of an option under this Plan, shall be deemed to have
consented to be bound, on his or her own behalf and on behalf of
his or her heirs, assigns, and legal representatives, by all of
the terms and conditions of this Plan.
10. Adjustments to Reflect Capital Changes. The following
adjustments shall be made to reflect changes in the capitalization
of the Company:
(a) Recapitalization: The number of shares subject to each
Initial Option Grant and each Annual Option Grant to be made under
the Plan are not subject to adjustment to reflect stock splits,
stock dividends, etc., which occur prior to such Initial Option
Grant or Annual Option Grant. However, the number and kind of
shares subject to outstanding stock options and/or grants of
Restricted Stock and the exercise price for such shares (in the
case of options) shall be appropriately adjusted to reflect any
stock dividend, stock split, combination or exchange of shares,
merger, consolidation or other change in capitalization with a
similar substantive effect upon the Plan or the options granted
under the Plan. The Board shall have the power to determine the
amount of the adjustment to be made in each case.
(b) Certain Reorganizations: After any reorganization, merger or
consolidation in which the Company is the surviving corporation,
each Optionee shall, at no additional cost, be entitled upon any
exercise of an option to receive (subject to any required action
by shareholders), in lieu of the number of shares of the Company
common stock exercisable pursuant to such option, the number and
class of shares of stock or other securities to which such
Optionee would have been entitled pursuant to the terms of the
reorganization, merger or consolidation if, at the time of such
reorganization, merger or consolidation, such Optionee had been
the holder of record of a number of shares of stock equal to the
total number of shares covered by such option. Comparable rights
shall accrue to each Optionee in the event of successive
reorganizations, mergers or consolidations of the character
described above.
(c) Options to Purchase Stock of Acquired Companies: After any
reorganization, merger or consolidation in which the Company or a
Subsidiary of the Company shall be a surviving corporation, the
Board shall issue substituted options under the provisions of the
Plan, pursuant to section 425 of the Internal Revenue Code,
replacing old options granted under a Plan of another party to the
reorganization, merger or consolidation whose stock subject to the
old options may no longer be issued following such merger or
consolidation. The foregoing adjustments and manner of
application of the foregoing provisions shall be determined by the
Board in its sole discretion. Any such adjustments may provide
for the elimination of any fractional shares which might otherwise
become subject to any options. Shares of common stock underlying
such substituted options shall be in addition to and shall not
diminish the number of shares of common stock available for stock
option grants.
11. Stock In Lieu of Fees. Non-Employee Directors shall have the
right to elect to receive shares of the Company's common stock in
lieu of the receipt of the annual retainer fee otherwise payable
to them in accordance with the following terms and conditions:
(a) Irrevocable Election: On or before October 31 of any year, a
Non-Employee Director may, in writing, elect to receive either
25%, 50%, 75% or 100% of his or her annual director's retainer fee
payable in the next calendar year in the form of the Company's
common stock rather than cash. Such election shall be irrevocable
with respect to the year to which it applies. Such election shall
only apply to annual director's retainer fees and not to per-meeting fees or
to expense reimbursements.
(b) Grant of Stock: On the date of the annual Board
organizational meeting held after the annual shareholders' meeting
in the calendar year following any such election, the Company
shall issue to an electing director that number of shares of its
common stock equal to the percentage elected by the director of
the total annual director's retainer fees otherwise payable for
that year, divided by the per share Fair Market Value of the
Company's common stock.
12. Acceleration. In the event of change of control as defined
in paragraph 13, any options which have then been outstanding for
at least six months held by an Optionee shall be immediately
exercisable (without regard to any limitation imposed by the Plan
or the Board at the time the option is granted, which permits all
or any part of the option to be exercised only after the lapse of
time).
13. Change of Control.
(a) A "change of control" shall be deemed to have occurred if:
(i) without prior approval of the Board, any "person" becomes a
beneficial owner, directly or indirectly, of securities of the
Company representing 20% or more of the combined voting power of
the Company's then outstanding securities; or
(ii) without prior approval of the Board, as a result of, or in
connection with, or within two years following, a tender or
exchange offer for the voting stock of the Company, a merger or
other business combination to which the Company is a party, the
sale or other disposition of all or substantially all of the
assets of the Company, a reorganization of the Company, or a proxy
contest in connection with the election of members of the Board,
the persons who were directors of the Company immediately prior to
any of such transactions cease to constitute a majority of the
Board or of the board of directors of any successor to the Company
(except for resignations due to death, disability or normal
retirement).
(b) A person shall be deemed the "beneficial owner" of any
securities:
(i) which such person or any of its Affiliates or Associates
beneficially owns, directly or indirectly; or
(ii) which such person or any of its Affiliates or Associates
has, directly or indirectly, (1) the right to acquire (whether
such right is exercisable immediately or only after the passage of
time), pursuant to any agreement, arrangement or understanding or
upon the exercise of conversion rights, exchange rights, warrants
or options, or otherwise, or (2) the right to vote pursuant to any
agreement, arrangement or understanding; or
(iii) which are beneficially owned, directly or indirectly, by
any other person with which such person or any of its Affiliates
or Associates has any agreement, arrangement or understanding for
the purpose of acquiring, holding, voting or disposing of any
securities.
(c) A "person" shall mean any individual, firm, company,
partnership, other entity or group.
(d) The terms "Affiliate" or "Associate" shall have the
respective meanings ascribed to such terms in Rule 12b-2 of the
General Rules and Regulations promulgated by the Securities and
Exchange Commission under the Securities Exchange Act of 1934, as
in effect on the date the Plan is approved by the shareholders of
the Company and becomes effective.
14. Company Responsibility. All expenses of this Plan, including
the cost of maintaining records, shall be borne by the Company.
The Company shall have no responsibility or liability (other than
under applicable securities laws) for any act or thing done or
left undone with respect to the price, time, quantity, or other
conditions and circumstances of the purchase of shares under the
terms of the Plan, so long as the Company acts in good faith.
15. Securities Laws. The Board shall take all necessary or
appropriate actions to ensure that all option issuances and all
exercises thereof under this Plan are in full compliance with all
Federal and state securities laws.
16. Amendment and Termination. Unless earlier terminated by the
Board of Directors of the Company, this Plan shall terminate on
May 1, 2006. The Board of Directors of the Company may terminate
this Plan at any time, and may amend the Plan at any time or from
time to time, without obtaining any approval of the Company's
shareholders; except that the Plan may not be amended without
shareholder approval (1) to increase the aggregate number of
shares issuable under the Plan (excepting proportionate
adjustments made under Paragraph 10 to give effect to stock
splits, etc.); (2) to change the number of shares which may be
granted to Optionees under the provisions of paragraph 5(B)
(excepting proportionate adjustments made under Paragraph 10); (3)
to change the option price of optioned stock (excepting
proportionate adjustments made under Paragraph 10); (4) to change
the required option price per share of common stock covered by an
option granted under this Plan pursuant to subparagraph 5(a); (5)
to extend the time within which options may be granted or the time
within which a granted option may be exercised; or (6) to change,
without the consent of the Optionee (or his or her, or his or her
estate's, legal representative), any option previously granted to
him or her under the Plan; and such amendments shall not be made
more than once every six months other than to comport with changes
in the Internal Revenue Code or the rules thereunder. If the Plan
is terminated, any unexercised option shall continue to be
exercisable in accordance with its terms.
17. Effective Date. This Plan shall become effective as of the
date the Company's existing Directors' Non-Discretionary Stock
Option Plan expires, if the Plan is approved and adopted by
majority vote of the shareholders of the Company; provided that
such adoption and approval must occur prior to December 31, 1996 .
If not so approved and adopted, this Plan shall be of no force and
effect.
<PAGE>
EXHIBIT C
AMENDMENTS TO PARAGRAPHS 5(c) AND 6(c) OF THE
STRUCTURAL DYNAMICS RESEARCH CORPORATION
1994 LONG-TERM STOCK INCENTIVE PLAN
Present Paragraph 5(c)
(c) Each Option shall be exercisable during the life of the
optionee only by the optionee and, after the optionee's death,
only by the optionee's estate or by a person who acquired the
right to exercise the Option by will or the laws of descent and
distribution. An Option, to the extent that it shall not have
been exercised, shall terminate at the close of business on the
thirtieth day following the date the optionee ceases to be an
employee of the Company or a Subsidiary, unless the optionee
ceases to be an employee because of resignation with the consent
of the Committee (which consent may be given before or after
resignation), or by reason of death, incapacity or retirement
under a retirement plan of the Company or a Subsidiary. Except as
provided in the next sentence, if the optionee ceases to be an
employee by reason of such resignation, the Option shall terminate
three months after the optionee ceases to be an employee. If the
optionee ceases to be an employee by reason of such death,
incapacity or retirement, or if the optionee should die during the
three-month period referred to in the preceding sentence, the
Option shall terminate fifteen months after the optionee ceases to
be an employee. Where an Option is exercised more than three
months after the optionee ceased to be an employee, the Option may
be exercised only to the extent it could have been exercised on
the date three months after the optionee ceased to be an employee.
A leave of absence for military or governmental service or for
other purposes shall not, if approved by the Committee, be deemed
a termination of employment within the meaning of this paragraph
(c). Notwithstanding the foregoing provisions of this paragraph
(c) or any other provisions of this Plan, no Option shall be
exercisable after expiration of the term for which the Option was
granted, which shall in no event exceed ten years.
Paragraph 5(c) As Proposed to be Amended
(c) Each Option shall be exercisable during the life of the
optionee only by the optionee and, after the optionee's death,
only by the optionee's estate or by a person who acquired the
right to exercise the Option by will or the laws of descent and
distribution. An Option, to the extent that it shall not have
been exercised, shall terminate at the close of business on the
sixtieth day following the date the optionee ceases to be an
employee of the Company or a Subsidiary, unless the optionee
ceases to be an employee because of resignation with the consent
of the Committee (which consent may be given before or after
resignation), or by reason of death, incapacity or retirement
under a retirement plan of the Company or a Subsidiary. If the
optionee ceases to be an employee by reason of such resignation or
retirement, the Option shall terminate 18 months after the
optionee ceases to be an employee. If the optionee ceases to be
an employee by reason of death or incapacity, any unexercised
Option or portion thereof shall terminate 18 months after such
death or incapacity, or at the Option's stated expiration date,
whichever is earlier. Any Option that is exercisable hereunder
after the date an optionee ceases to be an employee of the Company
for any reason may be exercised only to the extent it could have
been exercised as of the date the optionee ceases to be an
employee. A leave of absence for military or governmental service
or for other purposes shall not, if approved by the Committee, be
deemed a termination of employment within the meaning of this
paragraph (c). Notwithstanding the foregoing provisions of this
paragraph (c) or any other provisions of this Plan, no Option
shall be exercisable after expiration of the term for which the
Option was granted, which shall in no event exceed ten years.
Present Paragraph 6(c)
(c) Each SAR shall be exercisable during the life of the grantee
only by the grantee and, after the grantee's death, only by the
grantee's estate or by a person who acquired the right to exercise
the SAR by will or the laws of descent and distribution. A SAR,
to the extent that it shall not have been exercised, shall
terminate at the close of business on the thirtieth day following
the date the grantee ceases to be an employee of the Company or a
Subsidiary, unless the grantee ceases to be an employee because of
resignation with the consent of the Committee (which consent may
be given before or after resignation), or by reason of death,
incapacity or retirement under a retirement plan of the Company or
a Subsidiary. Except as provided in the next sentence, if the
grantee ceases to be an employee by reason of such resignation,
the SAR shall terminate three months after the grantee ceases to
be an employee. If the grantee ceases to be an employee by reason
of such death, incapacity or retirement, or if the grantee should
die during the three-month period referred to in the preceding
sentence, the SAR shall terminate fifteen months after the grantee
ceases to be an employee. A leave of absence for military or
governmental service or for other purposes shall not, if approved
by the Committee, be deemed a termination of employment within the
meaning of this paragraph (c).
Paragraph 6(c) as Proposed to be Amended
(c) Each SAR shall be exercisable during the life of the grantee
only by the grantee and, after the grantee's death, only by the
grantee's estate or by a person who acquired the right to exercise
the SAR by will or the laws of descent and distribution. A SAR,
to the extent that it shall not have been exercised, shall
terminate at the close of business on the sixtieth day following
the date the grantee ceases to be an employee of the Company or a
Subsidiary, unless the grantee ceases to be an employee because of
resignation with the consent of the Committee (which consent may
be given before or after resignation), or by reason of death,
incapacity or retirement under a retirement plan of the Company or
a Subsidiary. If the grantee ceases to be an employee by reason
of such resignation or retirement, the SAR shall terminate three
months after the grantee ceases to be an employee. If the grantee
ceases to be an employee by reason of death or incapacity, any
unexercised SAR or portion thereof shall terminate 18 months after
such death or incapacity, or at the SAR's stated expiration date,
whichever is earlier. Any SAR that is exercisable hereunder after
the grantee ceases to be an employee of the Company for any reason
may be exercised only to the extent it could have been exercised
on the date the grantee ceases to be an employee of the Company.
A leave of absence for military or governmental service or for
other purposes shall not, if approved by the Committee, be deemed
a termination of employment within the meaning of this paragraph
(c).
<PAGE>
Proxy
Structural Dynamics Research Corporation
2000 Eastman Drive
Milford, Ohio 45150
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints John A. Mongelluzzo and Jeffrey J.
Vorholt, and each of them, with full power of substitution, as
proxies to vote, as designated below, for and in the name of the
undersigned all shares of stock of Structural Dynamics Research
Corporation which the undersigned is entitled to vote at the
Annual Meeting of the Shareholders of said Company scheduled to be
held on April 30, 1996 at 2:00 p.m. at the Company's offices, 2000
Eastman Drive, Milford, Ohio 45150 or at any adjournment or recess
thereof.
Please mark X in the appropriate box. The Board of Directors
recommends a FOR vote on each proposal.
1. ELECTION OF CLASS I DIRECTORS.
___ FOR all nominees listed below ___ WITHHOLD AUTHORITY
(except as marked to the contrary below)
WILLIAM P. CONLIN, ALBERT F. PETER, BANNUS B. HUDSON, ARTHUR B.
SIMS
(INSTRUCTION: To withhold authority to vote for any individual
nominee, write the nominee's name on the space provided below)
_________________________________________________________________
2. Approval of the adoption of amendments to the Company's
Amended Code of Regulations to provide for separate offices of
Chairman of the Board, President and Chief Executive Officer, to
clarify the authority of the Board of Directors to delegate
authority with respect to each such office, and otherwise to
update the Amended Code of Regulations.
____ FOR ____ ABSTAIN ____ AGAINST
3. Approval of the adoption of the Structural Dynamics Research
Corporation 1996 Directors' Non-Discretionary Stock Plan to
replace the existing plan which expires in 1996.
____ FOR ____ ABSTAIN ____ AGAINST
4. An amendment to the Company's 1994 Long-Term Stock Incentive
Plan to permit the estate of a deceased plan participant or a
participant who resigns due to ill-health or disability to
exercise options or other incentive awards for up to 18 months
from the cessation of employment and in the event of termination
for other reasons to permit such exercise for up to 60 days from
the date of termination.
____ FOR ____ ABSTAIN ____ AGAINST
5. APPROVAL of the appointment of Price Waterhouse LLP as the
independent auditors of the Company for 1996.
____ FOR ____ ABSTAIN ____ AGAINST
6. In their discretion, the proxies are authorized to vote upon
such other business as may properly come before the meeting or any
adjournment thereof.
This proxy when properly executed will be voted in the manner
directed herein by the undersigned shareholder. If no direction
is made, this proxy will be voted FOR the election of Directors
and FOR the proposals in paragraphs 2, 3, 4 and 5.
ALL FORMER PROXIES ARE HEREBY REVOKED.
NUMBER OF SHARES ______________
_______________________________
(Signature of Shareholder)
_______________________________
(Signature of Shareholder)
(Please sign exactly as your name
appears hereon. All joint owners
should sign. When signing in a
fiduciary capacity or as a
corporate officer, please give your
full title as such)
Dated: _______________, 1996
