SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 19,
1998
STRUCTURAL DYNAMICS RESEARCH CORPORATION
(Exact name of Registrant as specified in its Charter)
Ohio 0-16230 31-0733928
(State or other (Commission File No.) (IRS Employer
jurisdiction of Identification Number)
incorporation)
2000 Eastman Drive, Milford, Ohio 45150
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (513) 576-2400
N/A
(Former name or former address, if changed since last report)<PAGE>
Item 2. Acquisition or Disposition of Assets.
On October 14, 1998, the shareholders of Imageware Corp.
("Imageware") adopted an Agreement of Merger and Plan of
Reorganization by and among Imageware, Structural Dynamics
Research Corporation ("SDRC") and SDRC Acquisition Corporation, a
Michigan corporation wholly-owned by SDRC (the "Imageware Merger
Agreement"). Pursuant to the Imageware Merger Agreement,
effective as of November 19, 1998, SDRC Acquisition Corporation
merged with and into Imageware. At the effective date of the
merger, the Imageware shareholders received, in the aggregate,
$30,585,000 in cash in exchange for all of the shares of Imageware
issued and outstanding on the effective date of the merger.
Imageware is a developer of free form surface modeling and 3D
inspection software tools for the automotive, aerospace and
consumer products industries. SDRC intends to integrate
Imageware's surfacing technologies into I-DEAS software, while
improving its stand-alone capabilities and links to other CAD
systems.
Item 7. Financial Statements and Exhibits.
(a) Financial statements of business acquired.
Not required.
(b) Proforma financial information.
Not required.
(c) Exhibits
Exhibit No. Description
1 Agreement of Merger and Plan of Reorganization dated as
of October 14, 1998 by and among Imageware Corp.,
Structural Dynamics Research Corporation, and
SDRC Acquisition Corporation.
________________________
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned thereunto duly authorized.
STRUCTURAL DYNAMICS
RESEARCH CORPORATION
Date: November 19, 1998 By: /s/Thomas F. Eberle
Thomas F. Eberle
Assistant Secretary
AGREEMENT OF MERGER
AND PLAN OF REORGANIZATION
by and among
IMAGEWARE CORP.,
STRUCTURAL DYNAMICS RESEARCH CORPORATION,
and
SDRC ACQUISITION CORPORATION
__________________, 1998
TABLE OF CONTENTS
ARTICLE I DEFINITIONS
ARTICLE II THE MERGER
Section 2.1 Transfer of Property and Liabilities
Section 2.2 Surviving Corporation
Section 2.3 Principal Office
Section 2.4 State Law
ARTICLE III CONVERSION OF SHARES
Section 3.1 Merger Consideration; Exercise
Price of Stock Options
Section 3.2 Payment; Surrender of Certificates and
Acknowledgments
Section 3.3 Dissenting Shares
Section 3.4 Stock Options
Section 3.5 Conversion of Subsidiary Shares
Section 3.6 Escrow Funds
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF IMAGEWARE
Section 4.1 Organization and Good Standing;
Qualification
Section 4.2 Capitalization
Section 4.3 Transactions in Capital Stock
Section 4.4 Continuity of Business Enterprise
Section 4.5 Corporate Records
Section 4.6 Authorization and Validity
Section 4.7 No Violation
Section 4.8 Consents
Section 4.9 Financial Statements
Section 4.10 Liabilities and Obligations
Section 4.11 Employee Matters
Section 4.12 Employee Benefit Plans
Section 4.13 Absence of Certain Changes
Section 4.14 Title; Leased Assets
Section 4.15 Commitments
Section 4.16 Insurance
Section 4.17 Intellectual Property
Section 4.18 Taxes
Section 4.19 Compliance with Laws
Section 4.20 Finder's Fee
Section 4.21 Litigation
Section 4.22 Condition of Fixed Assets
Section 4.23 Banking Relations
Section 4.24 Ownership Interests of Interested
Persons; Affiliations
Section 4.25 Investments in Competitors
Section 4.26 Environmental Matters
Section 4.27 Certain Payments
Section 4.28 International Business Matters
Section 4.29 Maintenance and Enhancement Agreements
Section 4.30 Full Disclosure
Section 4.31 Year 2000
ARTICLE V [RESERVED]
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF SDRC
Section 6.1 Organization and Good Standing
Section 6.2 Authorization and Validity
Section 6.3 No Violation
Section 6.4 Consents
Section 6.5 Disclosure
Section 6.6 Funds
Section 6.7 Litigation
ARTICLE VII COVENANTS OF IMAGEWARE
Section 7.1 Consummation of Agreement
Section 7.2 Business Operations
Section 7.3 Access
Section 7.4 Notification of Certain Matters
Section 7.5 Approvals of Third Parties
Section 7.6 Employee Matters
Section 7.7 Contracts
Section 7.8 Capital Assets; Payments of Liabilities
Section 7.9 Mortgages, Liens and Guaranties
Section 7.10 Acquisition Proposals
Section 7.11 Distributions and Repurchases
Section 7.12 Shareholder Approval
Section 7.13 Tax Files
Section 7.14 Amendment of Schedules
Section 7.15 Termination of Dassault Systems Contract
Section 7.16 Termination of 401k Plans
Section 7.17 Termination of Employees
ARTICLE VIII COVENANTS OF SDRC
Section 8.1 Consummation of Agreement
Section 8.2 Approvals of Third Parties
Section 8.3 Identification of Terminated Employees
ARTICLE IX COVENANTS OF ALL PARTIES
Section 9.1 Hart Scott Rodino Notification
Section 9.2 Key Employee Employment Agreements
ARTICLE X CONDITIONS PRECEDENT OF SDRC
Section 10.1 Representations and Warranties
Section 10.2 Covenants
Section 10.3 Proceedings
Section 10.4 No Material Adverse Change
Section 10.5 Dissenter's Rights
Section 10.6 Government Approvals and Required Consents
Section 10.7 Closing Deliveries
Section 10.8 Resolution of Ford Patent Dispute
Section 10.9 Finalized Financial Statements
ARTICLE XI CONDITIONS PRECEDENT OF IMAGEWARE
Section 11.1 Representations and Warranties
Section 11.2 Covenants
Section 11.3 Proceedings
Section 11.4 Government Approvals and Required Consents
Section 11.5 Closing Deliveries
Section 11.6 Shareholder Approval
ARTICLE XII CLOSING DELIVERIES
Section 12.1 Time of the Closing
Section 12.2 Deliveries of Imageware
Section 12.3 Deliveries of SDRC
ARTICLE XIII EFFECTIVENESS OF CERTAIN PROVISIONS
OF IMAGEWARE'S ARTICLES
ARTICLE XIV EFFECTIVE DATE OF MERGER
ARTICLE XV INDEMNIFICATION
Section 15.1 Indemnification Obligation of Imageware
Section 15.2 Procedure for Indemnification
Section 15.3 Use of Escrow Funds
Section 15.4 Limitations on Indemnification
Section 15.5 Tax Benefits; Insurance Proceeds
ARTICLE XVI PUBLICITY
ARTICLE XVII TERMINATION
Section 17.1 Termination
Section 17.2 Effect of Termination
ARTICLE XVIII NONDISCLOSURE OF CONFIDENTIAL INFORMATION
Section 18.1 Nondisclosure
Section 18.2 Damages
ARTICLE XIX MISCELLANEOUS
Section 19.1 Entire Agreement, Modification and Waiver
Section 19.2 Consents
Section 19.3 Assignment
Section 19.4 Parties In Interest; No Third Party
Beneficiaries
Section 19.5 Severability
Section 19.6 Survival of Representations, Warranties
and Covenants
Section 19.7 Governing Law
Section 19.8 Captions
Section 19.9 Gender and Number
Section 19.10 Notice
Section 19.11 Choice of Forum
Section 19.12 No Waiver; Remedies
Section 19.13 Counterparts
Section 19.14 Costs, Expenses and Legal Fees
AGREEMENT OF MERGER AND PLAN OF REORGANIZATION
This Agreement of Merger and Plan of Reorganization (hereinafter
referred to as the "Agreement") is made this ______ day of
______________, 1998 by and among Imageware Corp., a Michigan
corporation with principal offices located at 121 West Washington,
Suite 400, Ann Arbor, Michigan 48104 (hereinafter referred to as
"Imageware"); Structural Dynamics Research Corporation, an Ohio
corporation with principal offices at 2000 Eastman Drive, Milford,
Ohio 45150 (hereinafter referred to as "SDRC"); and SDRC
Acquisition Corporation, a Michigan corporation wholly-owned by
SDRC (hereinafter referred to as "Subsidiary").
WITNESSETH:
WHEREAS, the parties wish to effect a transaction under the
authority and provisions of the corporation law of Michigan
pursuant to which at the effective date, as defined herein,
Subsidiary will be merged with and into Imageware (such merger is
referred to herein as the "Merger");
NOW THEREFORE, in consideration of the mutual promises and
covenants contained herein, the parties agree as follows:
ARTICLE I
DEFINITIONS
Certain General Definitions. In addition to all other terms
defined elsewhere in this Agreement, the following terms shall
have the meanings set forth below:
(a) "actual knowledge", "have no actual knowledge of, "do not
actually know of" and similar phrases shall mean (i) in the case
of a natural person, the actual conscious awareness, or not, as
the context requires, of the particular fact by such person, and
(ii) in the case of an entity, the actual conscious awareness, or
not, as the context requires, of the particular fact by any
director or executive officer of such entity.
(b) "Affiliate" with respect to any person shall mean a person
that directly or indirectly through one or more intermediaries,
controls, or is controlled by or is under common control with,
such person.
(c) "best knowledge", "have no knowledge of", "do not know of"
or "to the knowledge of" and similar phrases shall mean (i) in the
case of a natural person, the particular fact was known, or not
known, as the context requires, to such person after reasonable
investigation and inquiry by such person, and (ii) in the case of
an entity, the particular fact was known, or not known, as the
context requires, to any director or executive officer of such
entity after reasonable investigation and inquiry.
(d) "Confidential Information" shall mean all trade secrets
and other confidential and/or proprietary information of the
particular person, including information derived from reports,
investigations, research, work in progress, codes, marketing and
sales programs, financial projections, cost summaries, pricing
formulae, contract analyses, financial information, projections,
confidential filings with any state or federal agency, and all
other confidential concepts, methods of doing business, ideas,
materials or information prepared or performed for, by or on
behalf of such person by its employees, officers, directors,
agents, representatives, or consultants.
(e) "director" shall mean, in the case of an entity, a member
of the Board of Directors of such entity.
(f) "Environmental Laws" shall mean any laws or regulations
pertaining to health or the environment, as in effect on the date
hereof and the Effective Date, including without limitation (i)
the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 (42 U.S.C. sections 9601 et seq.), as amended
(including without limitation as amended pursuant to the Superfund
Amendments and Reauthorization Act of 1986), and regulations
promulgated thereunder, (ii) the Resource Conservation and
Recovery Act of 1976 (42 U.S.C. sections 6901 et seq., as amended), and
regulations promulgated thereunder, (iii) statutes, rules or
regulations, whether federal, state or local, applicable to
Imageware's assets or operations that relate to asbestos or
polychlorinated biphenyls, and (iv) the provisions contained in
any similar state statutes or regulations relating to
environmental matters applicable to Imageware's assets or
operations.
(g) "ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended.
(h) "executive officer" shall mean, in the case of an entity,
any officer elected or appointed by the Board of Directors of such
entity.
(i) "Imageware Capital Stock" shall mean the shares of capital
stock of Imageware, including all series of common and preferred
stock, which are authorized, issued and outstanding as of the
Effective Date.
(j) "Imageware Disclosure Schedules" shall mean the schedules
of exceptions and other disclosures attached hereto as of the date
hereof or otherwise delivered by Imageware to SDRC, as such may be
amended or supplemented from time to time pursuant to the
provisions hereof. The information contained in the Imageware
Disclosure Schedules is labeled to correspond with the Section
numbers of this Agreement; provided, however, that the disclosure
of any matter in the Imageware Disclosure Schedules, as may be
amended or supplemented, shall be deemed to be a disclosure for
all purposes of this Agreement.
(k) "Indemnifiable Claims" shall have the meaning given such
term in Section 15.1 of this Agreement.
(l) "Internal Revenue Code" shall mean the Internal Revenue
Code of 1986, as amended.
(m) "IRS" shall mean the Internal Revenue Service of the
United States Department of the Treasury.
(n) "Material Adverse Effect" shall mean a material adverse
effect on the applicable party's business, operations, condition
(financial or otherwise) or results of operations, taken as a
whole, in consideration of all relevant facts and circumstances.
(o) "ordinary course of business" shall mean the usual and
customary way in which the applicable party has conducted its
business in the past.
(p) "person" shall mean any natural person, corporation,
partnership, joint venture, limited liability company,
association, group, organization or other entity.
(q) "Schedules" shall mean the Imageware Disclosure Schedules.
(r) "Tax Returns" shall include all federal, state, local or
foreign income, excise, corporate, franchise, property, sales,
use, payroll, withholding, provider, environmental, duties, value
added and other tax returns (including information returns).
ARTICLE II
THE MERGER
Transfer of Property and Liabilities. Upon the Effective Date (as
defined below) of the Merger, the separate existence of Subsidiary
shall cease; all of the outstanding shares of Imageware Capital
Stock shall be exchanged for and converted into the right to
receive a portion of the Merger Consideration as determined in
accordance with the Articles of Incorporation of Imageware in
effect immediately prior to the Effective Date, as further
provided in Section 3.1; and upon the filing of the appropriate
Certificate of Merger with the Secretary of State of Michigan,
title to all real estate and other property and rights owned by
each of Imageware and Subsidiary shall be vested in the Surviving
Corporation (as defined below) without reversion or impairment and
the Surviving Corporation shall have all liabilities of each of
Imageware and Subsidiary, all in accordance with Section 450.1724
the Michigan Business Corporation Act. As used in this Agreement,
the term "Surviving Corporation" shall mean Imageware, as the
surviving corporation in the Merger.
Surviving Corporation. Following the Merger, the existence of the
Surviving Corporation shall continue unaffected and unimpaired by
the Merger, with all the rights, privileges, immunities and
powers, subject to all of the duties and liabilities of a
corporation organized under the laws of the State of Michigan.
The officers and directors of Subsidiary immediately prior to the
Effective Date shall be the officers and directors of the
Surviving Corporation. The Articles of Incorporation of
Subsidiary, attached hereto as Exhibit 2.2(i), and Bylaws of
Subsidiary, attached hereto as Exhibit 2.2(ii), as of the
Effective Date, shall be the amended and restated Articles of
Incorporation and Bylaws of the Surviving Corporation from and
after the Effective Date, and shall not be changed in any manner
by the Merger.
Principal Office. Following the Effective Date, the principal
office of the Surviving Corporation shall be located in Milford,
Clermont County, Ohio.
State Law. The Surviving Corporation shall be a Michigan
corporation, governed in all respects by the corporate laws of the
State of Michigan.
ARTICLE III
CONVERSION OF SHARES
Merger Consideration; Exercise Price of Stock Options.
Merger Consideration. On the Effective Date, all of the
shares of Imageware Capital Stock and all outstanding Stock
Options (as defined below) shall, in the aggregate, without any
action on the part of the Surviving Corporation or any holder of
such shares, be converted by the Merger into the right to receive
a total of $31,000,000 in cash (the "Merger Consideration"), less
all amounts (including all legal fees, costs and expenses) paid by
SDRC at the Closing on behalf of Imageware to Ford Global
Technologies in connection with the agreement described in Section
10.8 and all amounts paid by Imageware prior to the Closing in
connection with any Indemnifiable Claims, subject to the
provisions of Section 3.6 and any other adjustment described in
this Article III. Each individual share of Imageware Capital
Stock, including those issued prior to the Effective Date under
Stock Options as described in Section 3.4., shall be converted
into the right to receive cash in such amount as determined in
accordance with the Articles of Incorporation of Imageware in
effect immediately prior to the Effective Date. Each Stock Option
outstanding on the Effective Date shall be converted into the
right to receive cash in an amount equal to the product of (a) the
portion of the Merger Consideration payable for one share of
Imageware Capital Stock in accordance with the preceding sentence,
less the reductions for the exercise price applicable income,
Social Security and other payroll tax or Section 1441 withholding
requirements as described in Section 3.4, and (b) the number of
shares of Imageware Capital Stock purchasable under such Stock
Option.
Exercise Price. The aggregate exercise price either paid by
holders of Stock Options electing to exercising such Stock
Options or withheld from holders of Stock Options pursuant to
clause (a) of Section 3.1.1 shall be referred to as the "Exercise
Price." In addition to the right to receive a portion of the
Merger Consideration as described in Section 3.1.1, each
individual share of Imageware Capital Stock and each individual
share of Imageware Capital Stock purchasable under each Stock
Option shall be converted into the right to receive cash equal to
the Exercise Price divided by the total number of shares of
Imageware Capital Stock, including those issued prior to the
Effective Date under Stock Options as described in Section 3.4,
plus the total number of shares of Imageware Capital Stock
purchasable under all outstanding Stock Options, subject in all
respects to the Articles of Incorporation of Imageware in effect
immediately prior to the Effective Date.
Payment of Merger Consideration and Exercise Price. The
Merger Consideration and Exercise Price shall be delivered by SDRC
to Fifth Third Bank, Cincinnati, Ohio, on or prior to the Closing
Date and delivered to holders of Imageware Capital Stock and
holders of Stock Options in accordance with Section 3.2 of this
Agreement.
Payment; Surrender of Certificates and Acknowledgments. At
the Closing, each holder of a certificate or certificates for
shares of Imageware Capital Stock and each holder of a Stock
Option executing an Acknowledgment (defined below), shall
surrender the same duly transmitted to Fifth Third Bank,
Cincinnati, Ohio (the "Disbursing Agent") (or in lieu of
surrendering such certificates in the case of lost, stolen,
destroyed or mislaid certificates, upon execution of such
documentation as may be reasonably required by the Disbursing
Agent), whereupon such holder shall receive in exchange therefor
cash as described in Section 3.1. Until so surrendered, each
outstanding certificate that prior to the time the Merger becomes
effective represented shares of Imageware Capital Stock (other
than certificates formerly representing Dissenting Shares) and
each Acknowledgment shall be deemed for all corporate purposes to
evidence the right to receive cash as described in Section 3.1, or
in the case of Dissenting Shares, the fair value of such
Dissenting Shares; provided, however, that cash otherwise payable
with respect to shares of Imageware Capital Stock or Stock Options
shall be paid with respect to such shares only when the
certificate or certificates formerly evidencing any such shares of
Imageware Capital Stock or such Acknowledgment, as applicable,
shall have been so surrendered (or in lieu of surrendering such
certificates in the case of lost, stolen, destroyed or mislaid
certificates, upon execution of such documentation as may be
reasonably required by the Disbursing Agent), and, thereupon, any
such cash shall be paid, without interest, to the holder entitled
thereto. Unless otherwise required by operation of any applicable
escheat or similar law related to unclaimed funds, any portion of
the Merger Consideration which remains undistributed two (2) years
after the Effective Date shall be delivered to SDRC by the
Disbursing Agent and any holders of shares of Imageware Capital
Stock or outstanding Stock Options who have not theretofore
complied with the provisions of this Article III shall thereafter
look only to SDRC for the payment of any Merger Consideration to
which they are entitled pursuant to this Article III.
Dissenting Shares.
(a) Notwithstanding anything in this Agreement to
the contrary, if Sections 450.1762 through 450.1774, inclusive, of
the Michigan Business Corporation Act shall be applicable to the
Merger, shares of Imageware Capital Stock which are held by
holders who have not voted such shares in favor of the Merger and
who have delivered notice of their intent to demand payment for
their shares if the Merger is effectuated in accordance with the
requirements of Section 450.1765 of the Michigan Business
Corporation Act ("Dissenting Shares") shall not be converted into
or represent a right to receive a portion of the Merger
Consideration pursuant to Section 3.1 hereof, but the holders
thereof shall be entitled only to such rights as are granted by
Sections 450.1762 through 450.1774, inclusive, of the Michigan
Business Corporation Act. Each holder of Dissenting Shares who
becomes entitled to payment for such shares pursuant to Sections
450.1762 through 450.1774, inclusive, of the Michigan Business
Corporation Act shall receive payment therefor from the Surviving
Corporation in accordance with the Michigan Business Corporation
Act.
(b) Imageware shall give SDRC (i) prompt notice of
any written demand for payment and any other instrument served
pursuant Section 450.1767 of the Michigan Business Corporation Act
received by Imageware, and (ii) the opportunity to direct all
negotiations and proceedings with respect to demands for payment
under such negotiations and proceedings with respect to demands
for payment under such Sections 450.1762 through 450.1774,
inclusive, of the Michigan Business Corporation Act. Imageware
shall not, except with the prior written consent of SDRC, which
shall not be unreasonably withheld, voluntarily make any payment
with respect to any demand for payment by a holder of Dissenting
Shares or offer to settle or settle any such demand.
Stock Options. Each stock option (a "Stock Option") or
portion thereof granted prior to the Effective Date under the 1994
Imageware Corp. Nonstatutory Stock Option Plan, the Imageware
Corporation 1996 Stock Option Plan or any other stock option
agreement set forth in the Imageware Disclosure Schedules
(collectively, the "Option Plans") which is outstanding and
unexercised on the day prior to the Effective Date, whether or not
fully vested, shall be made fully vested and exercisable as of the
day prior to the Effective Date so that the holder thereof shall
be entitled to exercise such Stock Option to purchase the number
of shares of Imageware Capital Stock subject to such Stock Option.
The shares of Imageware Capital Stock issued pursuant to any such
Stock Option shall entitle the holder thereof to receive cash
payment for such shares of Imageware Capital Stock as provided in
Section 3.1 hereof. In the alternative, the holder of an
exercisable Stock Option may tender such Stock Option for cash
payment pursuant to Section 3.1 hereof, except that the amount
payable to such holder shall be reduced by the exercise price of
such Stock Option and applicable income, social security and any
other payroll tax or Section 1441 withholding requirements.
Imageware shall obtain from each holder of a Stock Option an
acknowledgment and agreement (an "Acknowledgment") to the terms of
this Section 3.4 and that such holder has no further claims
pursuant to the Option Plans or any Stock Option granted
thereunder. As of the Effective Date, the Option Plans shall be
terminated and each Stock Option granted pursuant thereto, whether
or not exercised or tendered, shall be cancelled.
Conversion of Subsidiary Shares. On the Effective Date, each
issued and outstanding share of common stock of Subsidiary,
without par value, shall, by virtue of the Merger and without any
action on the part of the holders thereof, be converted into and
become one (1) fully paid and nonassessable share of common stock,
without par value, of the Surviving Corporation.
Escrow Funds. At the Closing, SDRC shall deposit $1,000,000
of the Merger Consideration, less all amounts (including all legal
fees, costs and expenses) paid by SDRC at the Closing on behalf of
Imageware to Ford Global Technologies in connection with the
agreement described in Section 10.8 (the "Escrow Amount"), into an
interest-bearing account maintained at Fifth Third Bank,
Cincinnati, Ohio, with all interest earned thereon to accrue to
the holders of Imageware Capital Stock and holders of Stock
Options pursuant to an escrow agreement to be executed at the
Closing, substantially in the form attached hereto as Exhibit 3.6
(the "Escrow Agreement"). The Escrow Amount shall provide the sole
and exclusive source of funds out of which claims by SDRC for
indemnification under this Agreement may be satisfied and claims
by SDRC for continuing amounts owed to Ford Global Technologies in
connection with the agreement described in Section 10.8. The
Escrow Amount shall be held until the date that is six months
after the Closing Date (the "Escrow Period"), whereupon the Escrow
Amount, less any amount for which SDRC has provided notice
pursuant to Article XV of its claim for indemnification or other
payments, shall be released from escrow and paid to the holders of
Imageware Capital Stock and holders of Stock Options in the same
manner as provided in this Article III with respect to the portion
of the Merger Consideration disbursed on the Closing Date.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF IMAGEWARE
Imageware represents and warrants to SDRC that, except as may
be set forth in the Imageware Disclosure Schedules, the following
are true and correct as of the date hereof:
Organization and Good Standing; Qualification. Imageware is
a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is
incorporated, with all requisite corporate power and authority to
carry on the business in which it is engaged, to own the
properties it owns, to execute and deliver this Agreement and,
subject to approval by the holders of Imageware Capital Stock, to
consummate the transactions contemplated hereby. Imageware is
duly qualified and licensed to do business in only those
jurisdictions listed in the Imageware Disclosure Schedules.
Imageware has assets, employees or offices in only those states
listed in the Imageware Disclosure Schedules.
Capitalization. A full and complete description of the
Imageware Capital Stock as of the date hereof, and a true and
accurate copy of Imageware's stock ledger as of the date hereof,
are set forth in the Imageware Disclosure Schedules. The stock
ledger set forth in the Imageware Disclosure Schedules lists all
record owners of Imageware Capital Stock and all holders of Stock
Options. Each outstanding share of Imageware Capital Stock has
been, or will be on the Effective Date, legally and validly issued
and is, or will be on the Effective Date, fully paid and
nonassessable. No shares of Imageware Capital Stock are owned by
Imageware in treasury. No shares of Imageware Capital Stock have
been issued or disposed of in violation of the preemptive rights,
rights of first refusal or similar rights of any of Imageware's
stockholders. Imageware has no bonds, debentures, notes or other
obligations the holders of which have the right to vote (or are
convertible into or exercisable for securities having the right to
vote) with holders of shares of Imageware Capital Stock on any
matter.
Transactions in Capital Stock. Imageware has not acquired
any Imageware Capital Stock since January 1, 1994. Except for
Stock Options existing under the Option Plans and except Series A
and Series B Preferred shares of Imageware Capital Stock, there
exist no options, warrants, subscriptions or other rights to
purchase, or securities convertible into or exchangeable for, any
of the authorized or outstanding securities of Imageware, and no
option, warrant, call, conversion right or commitment of any kind
exists which obligates Imageware to issue any of its authorized
but unissued capital stock. Imageware has no obligation
(contingent or otherwise) to purchase, redeem or otherwise acquire
any of its equity securities or any interests therein or, except
in connection with Stock Options existing under the Option Plans,
Series A and Series B Preferred Shares of Imageware Capital Stock,
and Class B Common Shares of Imageware Capital Stock, to pay any
dividend or make any distribution in respect thereof.
Continuity of Business Enterprise. There has not been any
sale, distribution or spin-off of significant assets of Imageware
or any of its Affiliates other than in the ordinary course of
business within the two years preceding the date of this
Agreement.
Corporate Records. The copies of the Articles of
Incorporation and Bylaws, and all amendments thereto, of Imageware
that have been delivered or made available to SDRC are true,
correct and complete copies thereof, as in effect on the date
hereof. To the best knowledge of Imageware, the minute books of
Imageware, copies of which have been delivered or made available
to SDRC, contain accurate minutes of all material meetings of, and
accurate consents to all material actions taken without meetings
by, the Board of Directors (and any committees thereof) and the
stockholders of Imageware since its formation.
Authorization and Validity. The execution, delivery and
performance by Imageware of this Agreement and the other
agreements contemplated hereby, and the consummation of the
transactions contemplated hereby and thereby, have been duly
authorized by Imageware's Board of Directors. This Agreement has
been duly executed and delivered by Imageware and constitutes the
legal, valid and binding obligation of Imageware enforceable
against Imageware in accordance with its terms, except as may be
limited by applicable bankruptcy, insolvency or similar laws
affecting creditors' rights generally or the availability of
equitable remedies. Except for approval by the holders of
Imageware Capital Stock in accordance with applicable law and its
Articles of Incorporation and Bylaws, no other corporate approval
on the part of Imageware is necessary to the consummation of the
transactions contemplated hereby.
No Violation. Neither the execution, delivery or performance
of this Agreement or the other agreements contemplated hereby nor
the consummation of the transactions contemplated hereby or
thereby will (a) subject to approval by the holders of Imageware
Capital Stock, conflict with, or result in a violation or breach
of the terms, conditions or provisions of, or constitute a default
under, the Articles of Incorporation or Bylaws of Imageware, (b)
conflict with, or result in a violation or breach of the terms,
conditions or provisions of, or constitute a default under, any
material agreement, indenture or other instrument under which
Imageware is bound or to which any of the assets of Imageware are
subject, or result in the creation or imposition of any material
security interest, lien, charge or encumbrance upon any of the
assets of Imageware or (c) violate or conflict with any judgment,
decree, order, statute, rule or regulation of any court or any
public, governmental or regulatory agency or body.
Consents. Except for the applicable requirements of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended,
and the rules and regulations promulgated thereunder (the "HSR
Act"), and except for the filing of the Certificate of Merger with
the Secretary of State of Michigan, Imageware is not required to
obtain any material consent, authorization, approval, permit or
license of, or submit any filing with, any governmental body or
authority, any lender or lessor or any other person or entity in
connection with, the execution, delivery and performance of this
Agreement or the other agreements contemplated under this
Agreement.
Financial Statements. Imageware has furnished to SDRC its
draft audited consolidated balance sheet and related audited
statements of operations, shareholders' equity and cash flow for
its prior full fiscal year ended December 31, 1997 and its
unaudited consolidated balance sheet dated as of June 30, 1998
(the "Imageware Balance Sheet" and the date thereof shall be
referred to as the "Imageware Balance Sheet Date") (collectively,
with the related notes thereto, the "Financial Statements"),
copies of which are included in the Imageware Disclosure
Schedules. The Financial Statements fairly present in all
material respects the financial condition and results of
operations of Imageware as of the dates and for the periods
indicated and have been prepared in conformity with U.S. generally
accepted accounting principles (subject to normal year-end
adjustments and the absence of notes for any unaudited interim
financial statement for any interim periods presented) applied on
a consistent basis with prior periods, except as otherwise
indicated in the Financial Statements or the notes thereto.
Liabilities and Obligations. To the best knowledge of
Imageware, the Financial Statements reflect all liabilities of
Imageware, accrued, contingent or otherwise that would be required
to be reflected on a balance sheet, or in the notes thereto,
prepared in accordance with generally accepted accounting
principles, except for liabilities and obligations incurred in the
ordinary course of business since the Imageware Balance Sheet
Date. To the best knowledge of Imageware, except as set forth in
the Financial Statements, Imageware is not obligated in any way to
provide funds in connection with any guarantee of, or to assume,
any debt, obligation or dividend of any other person, corporation,
association, partnership, limited liability company, joint
venture, trust or other entity. Imageware does not know of any
valid basis for the assertion of any other material claims against
it or any other material liabilities of any nature.
Employee Matters.
Cash Compensation. The Imageware Disclosure Schedules contain
a complete and accurate list of the names, titles and annual cash
compensation as of September 30, 1998, including without
limitation wages, salaries, bonuses (discretionary and formula)
and other cash compensation (the "Cash Compensation") of all
employees of Imageware. In addition, except as contemplated in
Section 7.11 of this Agreement, the Imageware Disclosure Schedules
contain, or Imageware has previously provided to SDRC, a complete
and accurate description of (i) all increases in Cash Compensation
of employees of Imageware during the current fiscal year and (ii)
any promised increases in Cash Compensation of employees of
Imageware that have not yet been effected.
Compensation Plans. The Imageware Disclosure Schedules
contain a complete and accurate list of all compensation plans,
arrangements or practices (the "Compensation Plans") sponsored by
Imageware or to which Imageware contributes on behalf of its
employees. The Compensation Plans include, without limitation,
all plans, arrangements or practices that provide for severance
pay, deferred compensation, incentive, bonus or performance
awards, and stock ownership or stock options. Imageware has
provided or made available to SDRC a copy of each written
Compensation Plan and a written description of each unwritten
Compensation Plan. Each of the unwritten Compensation Plans, if
any, can be terminated or amended at will by Imageware.
Employment Agreements. As of the date hereof, except for
Imageware's standard employment agreement, a copy of which
previously has been delivered to SDRC, Imageware is a party to
only those employment agreements, including without limitation
employee leasing agreements, employee services agreements and
consulting agreements ("Employment Agreements"), listed in the
Imageware Disclosure Schedules.
Employee Policies and Procedures. The Imageware Disclosure
Schedules contain a complete and accurate list of all employee
manuals and all material policies, procedures and work-related
rules (the "Employee Policies and Procedures") that apply to
employees of Imageware. Imageware has provided or made available
to SDRC a copy of all written Employee Policies and Procedures and
a written description of all material unwritten Employee Policies
and Procedures.
Unwritten Amendments. No material unwritten amendments have
been made, whether by oral communication, pattern of conduct or
otherwise, with respect to any Compensation Plans or Employee
Policies and Procedures.
Labor Compliance. Imageware has been and is in compliance in
all material respects with all applicable laws, rules, regulations
and ordinances respecting employment and employment practices,
terms and conditions of employment and wages and hours. As of the
date hereof, Imageware is not liable for any arrears of wages or
penalties for failure to comply with any of the foregoing. To the
best knowledge of Imageware, Imageware has not engaged in any
unfair labor practice or discriminated on the basis of race,
color, religion, sex, national origin, age, disability or handicap
in its employment conditions or practices. There are no (i)
unfair labor practice charges or complaints or racial, color,
religious, sex, national origin, age, disability or handicap
discrimination charges or complaints pending or, to the actual
knowledge of Imageware, threatened against Imageware before any
federal, state or local court, board, department, commission or
agency or (ii) existing or, to the actual knowledge of Imageware,
threatened labor strikes, disputes, grievances, controversies or
other labor troubles affecting Imageware.
Unions. As of the date hereof, Imageware is not a party to
any agreement with any union, labor organization or collective
bargaining unit. Only those employees of Imageware listed in the
Imageware Disclosure Schedules are represented by a union, labor
organization or collective bargaining unit. To the actual
knowledge of Imageware, no other employees of Imageware have
threatened to organize or join a union, labor organization or
collective bargaining unit.
Aliens. To the best knowledge of Imageware, all employees of
Imageware residing in the United States are citizens of, or are
authorized in accordance with federal immigration laws to be
employed in, the United States.
Employee Benefit Plans.
Identification. To the best knowledge of Imageware, the
Imageware Disclosure Schedules contain a complete and accurate
list of all employee benefit plans (within the meaning of Section
3(3) of ERISA) sponsored by Imageware or to which Imageware
contributes on behalf of its employees and all employee benefit
plans previously sponsored or contributed to on behalf of its
employees (the "Benefit Plans"). With respect to each Benefit
Plan and to the extent applicable, Imageware has provided or made
available to SDRC copies of all plan documents, IRS opinion
letters, determination letters, pending determination letter
applications, trust instruments, insurance contracts,
administrative services contracts, annual reports, actuarial
valuations, summary plan descriptions, summaries of material
modifications, administrative forms and other documents that
constitute a part of or are incident to the administration of the
Benefit Plans. In addition, Imageware has provided or made
available to SDRC a written description of all existing practices
engaged in by Imageware that constitute Benefit Plans. Subject to
the requirements of the Internal Revenue Code and ERISA, each of
the Benefit Plans can be terminated or amended at will by
Imageware. No unwritten amendment exists with respect to any
Benefit Plan.
Administration. Each Benefit Plan has been administered and
maintained in compliance in all material respects with all
applicable laws, rules and regulations.
Examinations. Imageware has not received any notice that any
Benefit Plan is currently the subject of an audit, investigation,
enforcement action or other similar proceeding conducted by any
state or federal agency.
Prohibited Transactions. No prohibited transactions (within
the meaning of Section 4975 of the Internal Revenue Code or
Sections 406 and 407 of ERISA) have occurred with respect to any
Benefit Plan.
Claims and Litigation. No pending or, to the actual
knowledge of Imageware, threatened, claims, suits or other
proceedings exist with respect to any Benefit Plan other than
normal benefit claims filed by participants or beneficiaries.
Qualification. Imageware has received a favorable
determination letter or ruling from the IRS for each of the
Benefit Plans intended to be qualified within the meaning of
Section 401(a) of the Internal Revenue Code and/or tax-exempt
within the meaning of Section 501 (a) of the Internal Revenue
Code. No proceedings exist or, to the actual knowledge of
Imageware, have been threatened that could result in the
revocation of any such favorable determination letter or ruling.
Excise Taxes. Neither Imageware nor any member of a
controlled group of corporations or a group of trades or
businesses under common control (as defined in Sections 414(b) and
(c), respectively, of the Internal Revenue Code) has any liability
to pay excise taxes with respect to any Benefit Plan under
applicable provisions of the Code or ERISA.
PBGC. None of the Benefit Plans is subject to the
requirements of Title IV of ERISA.
Retirees. Imageware has no obligation or commitment to
provide medical, dental or life insurance benefits to or on behalf
of any of its employees who may retire or any of its former
employees who have retired except as may be required pursuant to
the continuation of coverage provisions of Section 4980B of the
Internal Revenue Code and Sections 601 through 608 of ERISA.
Absence of Certain Changes. Except as expressly contemplated
by this Agreement or the other agreements contemplated hereby,
since the Imageware Balance Sheet Date, Imageware has not:
(a) suffered a Material Adverse Effect, whether or
not caused by any deliberate act or omission of Imageware;
(b) contracted for the purchase of any capital asset
having a cost in excess of $20,000 or made any single capital
expenditure in excess of $20,000;
(c) incurred any indebtedness for borrowed money
(other than short-term borrowing in the ordinary course of
business), or issued or sold any debt securities;
(d) incurred or discharged any material liabilities
or obligations except in the ordinary course of business;
(e) paid any amount on any indebtedness prior to the
due date, forgiven or canceled any claims or any debt in excess of
$20,000, or released or waived any material rights or claims
except in the ordinary course of business;
(f) mortgaged, pledged or subjected to any security
interest, lien, lease or other charge or encumbrance any of its
material properties or assets (other than statutory liens arising
in the ordinary course of business or other liens that do not
materially detract from the value or interfere with the use of
such properties or assets);
(g) suffered any damage or destruction to or loss of
any assets (whether or not covered by insurance) that has,
individually or in the aggregate, resulted in a Material Adverse
Effect;
(h) acquired or disposed of any assets having an
aggregate value in excess of $20,000, except in the ordinary
course of business;
(i) written up or written down the carrying value of
any of its material assets, other than accounts receivable in the
ordinary course of business;
(j) changed the costing system or depreciation
methods of accounting for its assets in any material respect;
(k) lost or terminated any employee, customer or
supplier that has, individually or in the aggregate, resulted in a
Material Adverse Effect;
(l) increased the compensation of any director,
officer, key employee or consultant (except pursuant to Section
7.11, by the granting of stock options as previously disclosed to
SDRC, in the ordinary course of business consistent with past
practice, or pursuant to an Employment Agreement listed in the
Imageware Disclosure Schedules);
(m) increased the compensation of any employee
(except pursuant to Section 7.11, by the granting of stock options
as previously disclosed to SDRC, in the ordinary course of
business consistent with past practice, or pursuant to an
Employment Agreement listed in the Imageware Disclosure Schedules)
or hired any new employee who is expected to receive annualized
compensation of at least $100,000;
(n) loaned any material amount of money to any
employee, officer, director or stockholder;
(o) formed or acquired or disposed of any interest
in any corporation, partnership, joint venture or other entity;
(p) redeemed, purchased or otherwise acquired, or
sold, granted or otherwise disposed of, or agreed or otherwise
become obligated to redeem purchase or otherwise acquire, sell,
grant or otherwise dispose of, directly or indirectly, any of its
capital stock or securities or any rights to acquire such capital
stock or securities (except for Stock Options granted under the
Option Plans and except for stock dividends issued in accordance
with Imageware's Articles of Incorporation), or agreed to change
the terms and conditions of any such capital stock, securities or
rights (except for such changes which have been reflected in
amendments to Imageware's Articles of Incorporation), or declared
or paid any distribution, payment or dividend of any kind on any
of the Imageware Capital Stock (except pursuant to Section 7.11
and except for stock dividends issued in accordance with
Imageware's Articles of Incorporation);
(q) entered into any agreement providing for total
payments in excess of $20,000 in any 12 month period with any
person or group, or modified or amended in any material respect
the terms of any such existing agreement, except in the ordinary
course of business;
(r) entered into, adopted or amended any Benefit
Plan, except as contemplated hereby or the other agreements
contemplated hereby; or
(s) entered into any other commitment or transaction
or experienced any other event that will, to the best knowledge of
Imageware, materially interfere with its performance under this
Agreement or any other agreements or document executed or to be
executed pursuant to this Agreement, or otherwise has,
individually or in the aggregate, resulted in a Material Adverse
Effect.
Title; Leased Assets.
Real Property. Imageware does not own any interest (other
than leasehold interests described in the Imageware Disclosure
Schedules) in real property. The leased real property described
in the Imageware Disclosure Schedules is sufficient for the
conduct of Imageware's business.
Personal Property. Imageware has title to all the personal
property (excluding Intellectual Property) Imageware purports to
own, including that personal property reflected in the Financial
Statements (collectively, the "Personal Property"). The Personal
Property and any personal property leased by Imageware is
sufficient for the conduct of Imageware's business. On the
Effective Date, Imageware's interest in the Personal Property
shall be free and clear of all security interests, liens, claims
and encumbrances, other than statutory liens arising in the
ordinary course of business or other liens that do not materially
detract from the value or interfere with the use of such
properties or assets.
Leases. The Imageware Disclosure Schedules set forth a list
of (i) all leases of real property and (ii) all leases of personal
property involving rental payments within any 12 month period in
excess of $20,000, in either case to which Imageware is a party,
either as lessor or lessee. All such leases are valid and
enforceable in accordance with their respective terms except as
may be limited by applicable bankruptcy, insolvency or similar
laws affecting creditors' rights generally or the availability of
equitable remedies.
Commitments.
Commitments; Defaults. Any of the following to which
Imageware is a party or is bound by, or which the assets or the
business of Imageware are bound by, whether or not in writing, are
listed in the Imageware Disclosure Schedules (collectively
"Commitments"):
(a) any partnership or joint venture agreement;
(b) any guaranty or suretyship, indemnification or
contribution agreement or performance bond, other than those
arising in the ordinary course of business;
(c) any debt instrument, loan agreement or other
obligation relating to indebtedness for borrowed money or money
lent or to be lent to another;
(d) any contract to purchase real property;
(f) any agreement with dealers or sales or
commission agents, public relations or advertising agencies,
accountants or attorneys (other than in connection with this
Agreement and the transactions contemplated hereby) involving
total payments within any 12 month period in excess of $20,000 and
which is not terminable on 30 days' notice or without penalty;
(g) any agreement for the acquisition of services,
supplies, equipment, inventory, fixtures or other personal
property involving payments in any twelve month period of more
than $20,000 in the aggregate;
(h) any powers of attorney;
(i) any contracts containing noncompetition
covenants;
(j) any agreement providing for the purchase from a
supplier of all or substantially all of the requirements of
Imageware of a particular product or service; or
(k) any other agreement or commitment not made in
the ordinary course of business and that is material to the
business, operations, condition (financial or otherwise) or
results of operations of Imageware.
True, correct and complete copies of all written Commitments, and
true, correct and complete written descriptions of all oral
Commitments, have heretofore been or will be delivered or made
available to SDRC upon SDRC's reasonable request. To Imageware's
best knowledge, there are no existing or asserted defaults, events
of default or events, occurrences, acts or omissions that, with
the giving of notice or lapse of time or both, would constitute
defaults by Imageware or any other party to a Commitment which
would result in a Material Adverse Effect on Imageware, and, to
the best knowledge of Imageware, no penalties have been incurred
nor are amendments pending with respect to the Commitments. The
Commitments are in full force and effect and are valid and
enforceable obligations of Imageware and, to the best knowledge of
Imageware, the other parties thereto in accordance with their
respective terms, and no material defenses, off-sets or
counterclaims have been asserted or, to the best knowledge of
Imageware, may be made by any party thereto (other than
Imageware), nor has Imageware waived any material rights
thereunder.
No Cancellation or Termination of Commitment. Imageware has
not received notice of any plan or intention of any other party to
any Commitment to exercise any right to cancel or terminate any
Commitment, and Imageware does not have actual knowledge of any
fact that would justify the exercise of such a right; and
Imageware does not currently contemplate, or have actual knowledge
that any other party currently contemplates, any amendment or
change to any Commitment.
Insurance. Imageware carries property, liability, workers'
compensation and such other types of insurance pursuant to the
insurance policies listed in the Imageware Disclosure Schedules
(the "Insurance Policies"). The Insurance Policies are all
insurance policies relating to the assets, business, properties,
employees, officers or directors of Imageware. All of the
Insurance Policies are issued by insurers of recognized
responsibility, and, to the actual knowledge of Imageware, are
valid and enforceable policies, except as may be limited by
applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally or the availability of equitable
remedies. True, complete and correct copies of all Insurance
Policies have been provided or made available to SDRC. Imageware
has not received any notice or other communication from any issuer
of any Insurance Policy canceling such policy, materially
increasing any deductibles or retained amounts thereunder, or
materially increasing the annual or other premiums payable
thereunder and, to the actual knowledge of Imageware, no such
cancellation or increase of deductibles, retainages or premiums is
threatened. There are no material outstanding claims, settlements
or premiums owed against any Insurance Policy, or if there are,
Imageware has given all notices or has presented all potential or
actual claims under any Insurance Policy in due and timely
fashion. The Imageware Disclosure Schedules set forth a list of
all claims under any Insurance Policy in excess of $100,000 per
occurrence filed by Imageware during the immediately preceding
three-year period.
Intellectual Property.
(a) The Imageware Disclosure Schedules contain a
complete and accurate list or description of all Intellectual
Property, as defined herein, used in any way by Imageware
including a complete and accurate list of all third-party owned
Intellectual Property incorporated into any Imageware product or
otherwise used by Imageware (except for third-party owned
Intellectual Property used internally that is commercially
available). Imageware owns all right, title and interest in and
to, or holds valid licenses to use, the Intellectual Property
described in the Imageware Disclosure Schedules. The Imageware
Disclosure Schedules set forth a list of all software products
currently marketed by Imageware, or marketed within the three year
period prior to the date of this Agreement, and identifies the
source or method of intellectual property protection utilized or
relied upon by Imageware with respect to each such product. None
of the software products marketed by Imageware has entered the
public domain or otherwise lacks intellectual property protection.
(b) Imageware has not, as of and since the date upon
which it acquired or obtained the right to use any of the
Intellectual Property described in the Imageware Disclosure
Schedules, (i) transferred, conveyed, sold, assigned, pledged,
mortgaged or granted a security interest in any such Intellectual
Property to any third party other than in the ordinary course,
consistent with past practice, (ii) entered into any license,
franchise or other agreement with respect to any such Intellectual
Property with any third person, or (iii) otherwise encumbered any
such Intellectual Property. Imageware has taken reasonable
measures to maintain and enforce its rights in the Intellectual
Property described in the Imageware Disclosure Schedules in
accordance with its customary practices in order to safeguard the
secrecy of all aspects of such Intellectual Property that it
considers to be trade secrets.
(c) The conduct of the business of Imageware as
currently conducted does not conflict with, misappropriate or
infringe on the rights of any third party in any Intellectual
Property, nor is there any claim, suit, action or proceeding
pending or, to the knowledge of Imageware, threatened, against
Imageware (i) alleging that use by Imageware of the Intellectual
Property described in the Imageware Disclosure Schedules conflicts
with or infringes on the rights of any third party, or (ii)
challenging Imageware's ownership of or right to use, or the
validity of, any Intellectual Property described in the Imageware
Disclosure Schedules. There are no conflicts, misappropriations,
infringements or other violations by any third party with respect
to the rights, title or interest of Imageware in and to any of the
Intellectual Property described in the Imageware Disclosure
Schedules.
(d) Each Copyright, Patent and Trademark, each as
defined herein, listed in the Imageware Disclosure Schedules is
valid, subsisting and in proper form, and has been duly
maintained, including the submission of all necessary filings in
accordance with the legal and administrative requirements of the
appropriate jurisdictions. Imageware has taken all of the proper
precautions to maintain the secrecy of the Intellectual Property
described in the Imageware Disclosure Schedules that it considers
to be trade secrets, and to protect its trade secrets from
disclosure to the full extent required under applicable law.
There have been no failures in complying with such requirements
and no Copyright, Patent or Trademark has lapsed and there has
been no cancellation or abandonment thereof.
(e) Neither Imageware nor any other person has
granted any release, covenant not to sue, or non-assertion
assurance or entered into any indemnification or settlement
agreement with any person with respect to any part of the
Intellectual Property described in the Imageware Disclosure
Schedules.
For the purpose of this Agreement, "Intellectual Property"
shall be defined as (a) all know-how, show-how, confidential or
proprietary technical information, trade secrets, designs,
processes, computer software or databases, research in progress,
inventions or invention disclosures (whether patentable or
unpatentable), and any similar items, documents or information,
drawings, schematics, blueprints, flow sheets, designs and models;
(b) all copyrights, copyright registrations, mask works and
copyright applications (the "Copyrights"); (c) all patents, patent
applications, patents pending, patent disclosures on inventions
and all patents issued upon said patent applications or based upon
such disclosures (the "Patents"); and (d) all registered and
unregistered trade names, trademarks, service marks, product
designations, corporate names, trade dress, logos, slogans,
designs and general intangibles of like nature, together with all
registrations and recordings and all applications for registration
therefor and all translations, adaptations, derivatives and
combinations thereof (the "Trademarks").
Taxes.
Filing of Tax Returns. Imageware has duly and timely filed
(in accordance with any extensions duly granted by the appropriate
governmental agency, if applicable) with the appropriate
governmental agencies all Tax Returns and reports required to be
filed by the United States or any state or any political
subdivision thereof or any foreign jurisdiction. All such Tax
Returns or reports are complete and accurate in all material
respects and properly reflect the taxes of Imageware for the
periods covered thereby. True and correct copies of such Tax
Returns for the past five taxable years have heretofore been
delivered or made available to SDRC.
Payment of Taxes. Except for such items as Imageware may be
disputing in good faith by proceedings in compliance with
applicable law, each of which is described in the Imageware
Disclosure Schedules, (i) Imageware has paid all taxes, penalties,
assessments and interest that have become due with respect to any
Tax Returns that it has filed and has properly accrued on its
books and records for all of the same that have not yet become
due, and (ii) Imageware is not delinquent in the payment of any
tax, assessment or governmental charge.
No Pending Deficiencies, Delinquencies, Assessments or
Audits. Imageware has not received any notice that any tax
deficiency or delinquency has been asserted against Imageware. To
the best knowledge of Imageware, there is no unpaid assessment,
proposal for additional taxes, deficiency or delinquency in the
payment of any of the taxes of Imageware that is likely to be
asserted by any taxing authority. There is no taxing authority
audit of Imageware pending or, to the actual knowledge of
Imageware, threatened, and the results of any completed audits are
properly reflected in the Financial Statements. Imageware has not
violated any federal, state, local or foreign tax law which
violation is likely to result in a Material Adverse Effect on
Imageware.
No Extension of Limitation Period. Imageware has not granted
an extension to any taxing authority of the limitation period
during which any tax liability may be assessed or collected.
Withholding Requirements Satisfied. All monies required to
be withheld by Imageware and paid to governmental agencies for all
income, social security, unemployment insurance, sales, excise,
use, and other taxes have been collected or withheld and have been
or will be paid, as they become due, to the respective
governmental agencies.
Collapsible Corporation. Imageware has not at any time
consented to have the provisions of Section 341(f)(2) of the
Internal Revenue Code apply to it.
Boycotts. To the best knowledge of Imageware, Imageware has
not at any time participated in or cooperated with any
international boycott as defined in Section 999 of the Internal
Revenue Code.
Parachute Payments. No payment required or contemplated to
be made by Imageware will be characterized as an "excess parachute
payment" within the meaning of Section 280(b)(1) of the Internal
Revenue Code.
S Corporation. Imageware has not made an election to be
taxed as an "S" corporation under Section 1362(a) of the Internal
Revenue Code.
Personal Service Corporation. Imageware is not a personal
service corporation subject to the provisions of Section 269A of
the Internal Revenue Code.
Personal Holding Company. Imageware is not or has not been a
personal holding company within the meaning of Section 542 of the
Internal Revenue Code.
Compliance with Laws. Imageware has complied in all material
respects with all applicable domestic and foreign laws and
regulations and has filed with the proper authorities all
necessary statements and reports except where the failure to so
comply or file would not, individually or in the aggregate, result
in a Material Adverse Effect on Imageware. To the best knowledge
of Imageware, there are no existing violations by Imageware of any
federal, state or local law or regulation that are likely to,
individually or in the aggregate, result in a Material Adverse
Effect on Imageware. Imageware possesses all material licenses,
franchises, permits and governmental authorizations necessary for
the conduct of Imageware's business as now conducted, all of which
are listed (with expiration dates, if applicable) in the Imageware
Disclosure Schedules. The transactions contemplated by this
Agreement will not result in a default under or a breach or
violation of, or adversely affect the rights and benefits afforded
by any such material licenses, franchises, permits or government
authorizations, except for any such default, breach or violation
that would not, individually or in the aggregate, have a Material
Adverse Effect on Imageware. Since January 1, 1994, Imageware has
not received any notice from any federal, state or other
governmental authority or agency having jurisdiction over its
properties or activities, or any insurance body, that its
operations or any of its properties, facilities, equipment, or
business practices fail to comply with any applicable law,
ordinance, regulation, building or zoning law, except where
failure to so comply would not, individually or in the aggregate,
have a Material Adverse Effect on Imageware.
Finder's Fee. Imageware has not incurred any obligation for
any finder's, broker's or agent's fee in connection with the
transactions contemplated hereby.
Litigation. There are no legal actions or administrative
proceedings or investigations instituted or, to the actual
knowledge of Imageware or any of its Vice Presidents or
controller, threatened against Imageware, either affecting or that
could affect the outstanding shares of Imageware Capital Stock,
any of the assets of Imageware, or the operation, business,
condition (financial or otherwise), or results of operations of
Imageware which (i) if, successful, are likely to, individually or
in the aggregate, have a Material Adverse Effect on Imageware or
(ii) are likely to adversely affect the ability of Imageware to
effect the transactions contemplated hereby. Imageware is not (a)
subject to any continuing court or administrative order, judgment,
writ, injunction or decree applicable specifically to Imageware or
to its business, assets, operations or employees or (b) in default
with respect to any such order, judgment, writ, injunction or
decree.
Condition of Fixed Assets. All of the structures and
equipment reflected in the Financial Statements and used by
Imageware in its business are, taken as a whole, in good operating
condition, subject to normal wear and tear, are regularly
maintained and Imageware has no actual knowledge of any latent
defects therein.
Banking Relations. Set forth in the Imageware Disclosure
Schedules is a complete and accurate list of all material
borrowing and investing arrangements that Imageware has with any
bank or other financial institution, indicating with respect to
each relationship the type of arrangement maintained (such as
checking account, borrowing arrangements, safe deposit box, or
similar arrangements) and the person or persons authorized in
respect thereof.
Ownership Interests of Interested Persons; Affiliations. No
executive officer or director of Imageware, or their respective
spouses or children, owns directly or indirectly, on an individual
or joint basis, in excess of a 10% equity interest in, has a
compensation or other financial arrangement with, or serves as an
officer or director of, any customer or supplier of Imageware or
any organization that has a material contract or arrangement with
Imageware.
Investments in Competitors. Neither Imageware nor any
executive officer or director of Imageware, their respective
spouses or children, owns directly or indirectly in excess of a
10% equity interest or has any material investment in any person
that is a competitor of Imageware.
Environmental Matters. Neither Imageware nor any of its
assets are currently in violation of, or subject to any existing,
pending or, to the actual knowledge of Imageware, threatened,
investigation or inquiry by any governmental authority or to any
remedial obligations under, any Environmental Laws, which would
have a Material Adverse Effect on Imageware.
Certain Payments. Neither Imageware nor any director,
officer or, to the best knowledge of Imageware, employee of
Imageware acting for or on behalf of Imageware, has paid or caused
to be paid, directly or indirectly, in connection with the
business of Imageware:
(a) to any government or agency thereof or any agent
of any supplier or customer any bribe, kick-back or other similar
payment; or
(b) any contribution to any political party or
candidate (other than from personal funds of directors, officers
or employees not reimbursed by their respective employers or as
otherwise permitted by applicable law).
International Business Matters.
(a) All material contracts and agreements between
Imageware and any foreign parties required to be registered with
or approved by a regulatory authority in any foreign jurisdiction
in which Imageware does business is duly registered and/or
approved;
(b) The Imageware Disclosure Schedules contain a
complete list of Imageware's non-U.S. subsidiaries (the "Foreign
Subsidiaries"), including their respective names and jurisdictions
of incorporation, and a list of all other non-U.S. jurisdictions
in which Imageware is authorized to do business. The Foreign
Subsidiaries are properly incorporated and authorized to do
business their respective jurisdictions of incorporation;
(c) The sale of Imageware's products in any foreign
jurisdiction is not restricted by any United States export laws
and/or any regulations promulgated thereunder, and Imageware
conducts its international sales in full compliance with all
applicable export laws and regulations except where any failure to
comply would not result in a Material Adverse Effect on Imageware,
and Imageware has provided SDRC with, or made available to SDRC,
all documents, records or other evidence related to the
classification of Imageware's software under applicable United
States export laws and regulations.
Maintenance and Enhancement Agreements. Imageware has not
orally or in writing committed to provide enhancements to any of
its software products for particular Imageware customers or to
provide special or increased maintenance obligations to any of its
customers outside the ordinary course of its business.
Full Disclosure. No representation or warranty made by
Imageware in this Agreement or any Schedule or Exhibit hereto and
no statement or certificate furnished or to be furnished by
Imageware pursuant hereto or in connection with the transactions
covered hereby contains or will contain any statement of a
material fact intended to be untrue, or intentionally omits or
will omit any material fact, the omission of which would be
misleading.
Year 2000. Imageware has reviewed (i) each of its software
products and (ii) all third-party software incorporated into any
product of Imageware or distributed by Imageware, that could be
adversely affected by an inability to recognize and perform
properly date sensitive functions involving dates prior to and
after December 31, 1999 (the "Year 2000 Problem"). Imageware has
developed or is developing a detailed plan and time line to
address the Year 2000 Problem in a timely manner. To the best of
Imageware's knowledge, the Year 2000 Problem will not result in
any Material Adverse Effect on Imageware, or affect the
performance of any product of Imageware in any manner which could
reasonably be expected to result in a Material Adverse Effect on
Imageware. Included within the Imageware Disclosure Schedules is
a description of the standard method used by Imageware to address
the Year 2000 Problem and a list of all material non-standard
contracts, agreements, understandings or other Commitments of
Imageware pursuant to which Imageware has made any representation,
warranty or covenant related in any way to the Year 2000 Problem.
ARTICLE V
[RESERVED]
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF SDRC
SDRC represents and warrants to Imageware that the following
are true and correct as of the date hereof:
Organization and Good Standing. Each of SDRC and Subsidiary
is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is
incorporated.
Authorization and Validity. The execution, delivery and
performance by SDRC and Subsidiary of this Agreement and the other
agreements contemplated hereby, and the consummation of the
transactions contemplated hereby and thereby, have been duly
authorized by the respective Boards of Directors of each of SDRC
and Subsidiary, and by SDRC as the sole shareholder of Subsidiary.
This Agreement has been duly executed and delivered by each of
SDRC and Subsidiary and constitutes the legal, valid and binding
obligation of each of SDRC and Subsidiary enforceable against each
of them in accordance with its terms, except as may be limited by
applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally or the availability of equitable
remedies. No other corporate approval on the part of either SDRC
or Subsidiary is necessary to the consummation of the transactions
contemplated hereby.
No Violation. Neither the execution, delivery or performance
of this Agreement or the other agreements contemplated hereby nor
the consummation of the transactions contemplated hereby or
thereby will (a) conflict with, or result in a violation or breach
of the terms, conditions or provisions of, or constitute a default
under, the Articles of Incorporation or Code of Regulations or
Bylaws, as applicable, of either SDRC or Subsidiary, (b) conflict
with, or result in a violation or breach of the terms, conditions
or provisions of, or constitute a default under, any material
agreement, indenture or other instrument under which either SDRC
or Subsidiary is bound or to which any of the assets of either of
them are subject, or result in the creation or imposition of any
material security interest, lien, charge or encumbrance upon any
of the assets of SDRC or Subsidiary or (c) violate or conflict
with any judgment, decree, order, statute, rule or regulation of
any court or any public, governmental or regulatory agency or
body.
Consents. Except for the applicable requirements of the HSR
Act, and except for the filing of the Certificate of Merger with
the Secretary of State of Michigan, neither SDRC nor Subsidiary is
required to obtain any material consent, authorization, approval,
permit or license of, or submit any filing with, any governmental
body or authority, any lender or lessor or any other person or
entity in connection with, the execution, delivery and performance
of this Agreement or the other agreements contemplated under this
Agreement.
Disclosure. No representation or warranty made by SDRC or
Subsidiary in this Agreement or any Schedule or Exhibit hereto and
no statement or certificate furnished or to be furnished by SDRC
or Subsidiary pursuant hereto or in connection with the
transactions covered hereby contains or will contain any statement
of a material fact intended to be untrue, or intentionally omits
or will omit any material fact, the omission of which would be
misleading.
Funds. SDRC has and will have on the Effective Date
sufficient funds available to consummate the transactions
contemplated hereby.
Litigation. There are no legal actions or administrative
proceedings or investigations instituted or, to the actual
knowledge of SDRC or Subsidiary, threatened against SDRC or
Subsidiary, either affecting or that could affect SDRC or
Subsidiary which (i) if successful, are likely to, individually or
in the aggregate, have a Material Adverse Effect on SDRC, or (ii)
are likely to adversely affect the ability of SDRC or Subsidiary
to effect the transactions contemplated hereby. Neither SDRC nor
Subsidiary is (a) subject to any material continuing court or
administrative order, judgment, writ, injunction or decree
specifically applicable to itself or to its business, assets,
operations or employees, or (b) in default with respect to any
such material order, judgment, writ, injunction or decree.
ARTICLE VII
COVENANTS OF IMAGEWARE
Imageware agrees that between the date hereof and the
Effective Date:
Consummation of Agreement. Imageware shall use all
commercially reasonable efforts, and cooperate with all other
parties, to cause the consummation of the transactions
contemplated hereby in accordance with their terms and conditions;
provided, however, that this covenant shall not require Imageware
to make any expenditures that are not expressly set forth in this
Agreement or otherwise contemplated herein..
Business Operations. Except as contemplated in this
Agreement or as otherwise authorized by SDRC, Imageware shall
operate its business in the ordinary course. Imageware shall use
its best efforts to preserve the business of Imageware intact.
Imageware shall not knowingly take any action that would,
individually or in the aggregate, result in a Material Adverse
Effect on Imageware. Imageware shall use its best efforts to
preserve intact its relationships with customers, suppliers,
employees and others having significant business relations with
it, unless doing so would impair its goodwill or result,
individually or in the aggregate, in a Material Adverse Effect on
Imageware. Except as contemplated in this Agreement or as
otherwise authorized by SDRC, Imageware shall collect its
receivables and pay its trade payables in the ordinary course of
business consistent with past practice.
Access. Imageware shall, at reasonable times during normal
business hours and on reasonable notice, permit SDRC and its
authorized representatives reasonable access to, and make
available for inspection, all of the assets and business of
Imageware, including, upon SDRC's reasonable request, employees,
Imageware's information about its customers and suppliers, and
permit SDRC and its authorized representatives to inspect and, at
SDRC's sole cost and expense, make copies of all documents,
records and information with respect to the affairs of Imageware
as SDRC and its representatives may request, all for the purpose
of permitting SDRC to conduct a customary due diligence
investigation on, and otherwise become familiar with, the business
and assets and liabilities of Imageware. SDRC, in the exercise of
its rights described in this Section 7.3, shall not unduly
interfere with the operation of Imageware's business.
Notification of Certain Matters. Imageware shall promptly
inform SDRC in writing of (a) any notice of other communication
relating to a default, or an event that with notice or lapse of
time or both would become a default, received by Imageware
subsequent to the date of this Agreement and prior to the
Effective Date under any Commitment material to Imageware's
condition (financial or otherwise), operations, assets,
liabilities or business and to which it is subject; or (b) any
material adverse change in Imageware's condition (financial or
otherwise), operations, assets, liabilities or business.
Approvals of Third Parties. Imageware shall use its best
efforts, and cooperate with all other parties, to secure, as soon
as practicable after the date hereof, all necessary material
approvals and consents of any governmental authorities (including
HSR approval) and other third parties to the consummation of the
transactions contemplated hereby, including, without limitation,
all necessary material approvals and consents required under any
real property and personal property leases; provided, however,
that this covenant shall not require Imageware to make any
substantial expenditures that are not expressly set forth in this
Agreement.
Employee Matters. Imageware shall not, without the prior
written approval of SDRC, except as required by law or as
expressly set forth in this Agreement:
(a) increase the Cash Compensation of any employee
of Imageware (except pursuant to Section 7.11, in the ordinary
course of business consistent with past practice or pursuant to an
Employment Agreement listed in the Imageware Disclosure
Schedules);
(b) adopt, amend or terminate any Compensation Plan;
(c) adopt, amend or terminate any Employment
Agreement;
(d) adopt, amend or terminate any Employee Policies
and Procedures;
(e) adopt, amend or terminate any Benefit Plan;
(f) take any action that could deplete the assets of
any Benefit Plan, other than payment of benefits in the ordinary
course to participants and beneficiaries;
(g) fail to pay any premium or contribution due or
with respect to any Benefit Plan;
(h) fail to file any material return or report with
respect to any Benefit Plan;
(i) institute, settle or dismiss any employment
litigation except as will likely not, individually or in the
aggregate, result in a Material Adverse Effect on Imageware; or
(j) enter into, modify, amend or terminate any
agreement with any union, labor organization or collective
bargaining unit.
Contracts. Except with SDRC's prior written consent,
Imageware shall not assume or enter into any contract, lease,
license, obligation, indebtedness, commitment, purchase or sale
that is material to Imageware's business except in the ordinary
course of business, nor will it waive any material right or cancel
any material contract, debt or claim.
Capital Assets; Payments of Liabilities. Imageware shall
not, without the prior written approval of SDRC, (a) acquire or
dispose of any capital asset having a fair market value of $50,000
or more, or acquire or dispose of any capital asset outside of the
ordinary course of business or (b) discharge or satisfy any lien
or encumbrance or pay or perform any obligation or liability other
than (i) liabilities and obligations reflected in the Financial
Statements or (ii) current liabilities and obligations incurred in
the usual and ordinary course of business since the Imageware
Balance Sheet Date.
Mortgages, Liens and Guaranties. Imageware shall not,
without the prior written approval of SDRC, enter into or assume
any mortgage, pledge, conditional sale or other title retention
agreement, permit any security interest, lien, encumbrance or
claim of any kind to attach to any of its material assets (other
than statutory liens arising in the ordinary course of business
and other liens that do not materially detract from the value or
interfere with the use of such assets), whether now owned or
hereafter acquired, or guarantee or otherwise become contingently
liable for any obligation of another, except obligations arising
by reason of endorsement for collection, cash management and other
similar transactions in the ordinary course of business, or make
any capital contribution or investment in any unaffiliated person.
Acquisition Proposals. Imageware agrees (a) that from and
after the date of this Agreement and until the Effective Date,
neither Imageware nor any of its officers and directors shall, and
Imageware shall direct and use its best efforts to cause
Imageware's employees, agents and representatives not to,
initiate, solicit or encourage, directly or indirectly, any
inquiries or the making or implementation of any proposal or offer
(including, without limitation, any proposal or offer to its
stockholders) with respect to a merger, acquisition, consolidation
or similar transaction involving, or any purchase of, all or any
significant portion of the assets or any equity securities of,
Imageware (any such proposal or offer being hereinafter referred
to as an "Acquisition Proposal") or engage in any negotiations
concerning, or provide any confidential information or data to, or
have any discussions with, any person relating to an Acquisition
Proposal; (b) that Imageware will immediately cease and cause to
be terminated any existing activities, discussions or negotiations
with any parties conducted heretofore with respect to any of the
foregoing and each will take the necessary steps to inform the
individuals or entities referred to in the first sentence hereof
of the obligations undertaken herein; and (c) that Imageware will
notify SDRC immediately if any Acquisition Proposed is received
by, any such information is requested from, or any such
negotiations or discussions are sought to be initiated or
continued with, Imageware; provided, however, that nothing
contained in this Section 7.10 shall prohibit the Board of
Directors of Imageware or its representatives from furnishing
information to, or entering into discussions or negotiations with,
any person or entity that makes an unsolicited bona fide proposal
to engage in an Acquisition Proposal transaction which the Board
of Directors of Imageware in good faith determines could
reasonably be expected to result in a financially superior
transaction for the shareholders of Imageware as compared to the
Merger and the transactions contemplated thereby, if the Board of
Directors determines that such action is required based on its
fiduciary duties to shareholders imposed by law.
Distributions and Repurchases. Except for dividends to be
declared to satisfy all outstanding obligations with respect to
Imageware's Class B Common Stock and Preferred Series A and B
Stock, and except for dividends and/or bonus payments to be
declared or paid in an amount not to exceed the aggregate exercise
price of all outstanding Stock Options, no distribution, payment
or dividend of any kind will be declared or paid by Imageware on
or in connection with Imageware Capital Stock, nor will any
repurchase of Imageware Capital Stock be approved or effected.
Shareholder Approval. Imageware shall call a meeting of
its shareholders in accordance with applicable law and its
Articles of Incorporation and Bylaws for the purpose of voting
upon this Agreement and the Merger, and shall schedule such
meeting based on consultation with SDRC. The Board of Directors
of Imageware shall recommend approval of this Agreement and the
Merger, and use its best efforts (including, without limitation,
soliciting proxies for such approvals) to obtain such shareholder
approval, subject to the fiduciary duties of the Board of
Directors under applicable law.
Tax Files. Imageware shall maintain and make available to
SDRC, in accordance with the terms of Section 7.3, all of its
files, working papers and Returns associated with the federal
income tax obligations of Imageware for the earliest fiscal year
for which unused net operating loss carry forwards exist through
1997, inclusive.
Amendment of Schedules. Imageware agrees that, with respect
to the representations and warranties of such party contained in
this Agreement, such party shall have the continuing obligation
until the Effective Date to supplement or amend promptly the
Imageware Disclosure Schedules with respect to any matter that
would have been or would be required to be set forth or described
in the Imageware Disclosure Schedules in order to not breach any
representation, warranty or covenant of such party contained
herein except for such matters that would not reasonably be
expected, individually or in the aggregate, to have a Material
Adverse Effect on Imageware; provided that, no material amendment
or supplement to an Imageware Disclosure Schedule may be made
unless SDRC consents to such amendment or supplement. When used
in this Agreement, the Imageware Disclosure Schedules shall be
deemed to mean the Imageware Disclosure Schedules as may be
amended or supplemented pursuant hereto from time to time.
Termination of Dassault Systems Contract. Imageware shall
take any and all action and execute any and all documents or other
instruments necessary to terminate that certain CAA Original
Software Development and License Agreement, dated November 15,
1995, between Imageware and Dassault Systems, S.A., on such
express terms as approved by SDRC prior to the date hereof.
Imageware shall deliver all evidence of such termination as may be
reasonably requested by SDRC.
Termination of 401k Plans. Notwithstanding any term or
provision of this Agreement to the contrary, upon reasonable
request of SDRC not less than five days prior to the Closing Date,
Imageware's Board of Directors shall adopt a resolution
terminating, prior to the Effective Date, any 401k plan in effect
prior to the Effective Date, and shall deliver all evidence of
such termination as may be reasonably requested by SDRC.
Termination of Employees. Imageware shall use its best
efforts to terminate the employment as of or prior to the
Effective Date of each employee of Imageware identified by SDRC
pursuant to Section 8.3. Such termination shall comply in all
material respects with applicable law, and shall be in accordance
with the reasonable instructions of SDRC as to the method, timing
and terms or conditions of such termination.
ARTICLE VIII
COVENANTS OF SDRC
SDRC agrees that between the date hereof and the Effective
Date:
Consummation of Agreement. SDRC shall, and shall cause
Subsidiary to, use all commercially reasonable efforts, and
cooperate with all other parties, to cause the consummation of the
transactions contemplated hereby in accordance with their terms
and conditions; provided, however, that this covenant shall not
require SDRC to make any expenditures that are not expressly set
forth in this Agreement or otherwise contemplated herein.
Approvals of Third Parties. SDRC shall use its best efforts,
and cooperate with all other parties, to secure, as soon as
practicable after the date hereof, all necessary material
approvals and consents of any governmental authorities (including
HSR approval) and other third parties to the consummation of the
transactions contemplated hereby; provided, however, that this
covenant shall not require SDRC to make any substantial
expenditures that are not expressly set forth in this Agreement.
Identification of Terminated Employees. Within 15 days of
the date of this Agreement, SDRC shall provide Imageware with a
list of employees of Imageware which SDRC does not wish to retain
after the Effective Date to enable Imageware to comply with its
obligations under Section 7.17.
ARTICLE IX
COVENANTS OF ALL PARTIES
SDRC and Imageware agree as follows:
Hart Scott Rodino Notification. The parties hereto shall
cooperate in preparing and filing, as soon as practicable after
execution of this Agreement, all necessary Pre-Merger Notification
Reports under the HSR Act with the United States Federal Trade
Commission ("FTC") and the Antitrust Division of the United States
Justice Department ("Antitrust Division"). The parties shall also
cooperate in providing any additional information requested by the
FTC or Antitrust Division in connection with such Pre-Merger
Notification Reports. The filing fee payable to the FTC and/or the
Antitrust Division shall be borne by SDRC.
Key Employee Employment Agreements. Each employee of
Imageware who is identified by SDRC as a key employee shall enter
into a Key Employee Employment Agreement in a form acceptable to
SDRC (the "Key Employee Employment Agreements") not less than five
days prior to the date on which Imageware intends to hold a
meeting of its shareholders pursuant to Section 7.12. Imageware
shall notify SDRC of such date not less than 15 days prior
thereto. Imageware shall use its best efforts to terminate all
other employment agreements with such identified employees by
mutual consent without any liability on the part of the Surviving
Corporation therefor.
ARTICLE X
CONDITIONS PRECEDENT OF SDRC
Except as may be waived in writing by SDRC and Subsidiary,
the obligations of SDRC and Subsidiary hereunder are subject to
the fulfillment at or prior to the Closing Date of each of the
following conditions:
Representations and Warranties. Giving full effect to the
Imageware Disclosure Schedules, the representations and warranties
of Imageware contained herein shall have been true and correct in
all respects when initially made and (except for representations
and warranties made as of a specified date) shall be true and
correct as of the Effective Date except for inaccuracies that
would not reasonably be expected individually or in the aggregate
to have a Material Adverse Effect on Imageware.
Covenants. Imageware shall have performed and complied in
all material respects with all covenants required by this
Agreement to be performed and complied with by Imageware prior to
the Effective Date.
Proceedings. No action, proceeding or order shall have been
threatened orally or in writing by any court or governmental body
or agency, or asserted, instituted or entered by any court or
governmental body or agency, which would restrain or prohibit the
carrying out of the transactions contemplated hereby.
No Material Adverse Change. No material adverse change in
the condition (financial or otherwise), operations, assets,
liabilities or business of Imageware, taken as a whole, shall have
occurred since the Imageware Balance Sheet Date, whether or not
such change shall have been caused by the deliberate act or
omission of Imageware.
Dissenter's Rights. The holders of not more than 10% of the
outstanding shares of Imageware Capital Stock entitled to vote
shall have exercised dissenter's rights in connection with
stockholder approval of the Merger.
Government Approvals and Required Consents. The waiting
period applicable to the consummation of the Merger under the
Hart-Scott-Rodino Act shall have expired or been terminated and
Imageware shall have obtained all necessary material government
and other material third party approvals and consents.
Closing Deliveries. SDRC shall have received all documents
and agreements, duly executed and delivered in form reasonably
satisfactory to SDRC, referred to in Section 12.2.
Resolution of Ford Patent Dispute. Imageware shall have (i)
finalized and entered into an agreement with Ford Global
Technologies resolving any and all claims of and/or disputes with
Ford Global Technologies concerning possible infringement by
Imageware of certain intellectual property of Ford Global
Technologies, (ii) consulted with SDRC and kept SDRC informed of
all negotiations, correspondence, proposals and other matters
related thereto, (iii) prior to having entered such agreement,
shall have provided SDRC and its counsel and other advisers the
opportunity to review and comment on such agreement, and (iv)
received the prior written approval of SDRC, which approval shall
be in the sole discretion of SDRC.
Finalized Financial Statements. Imageware shall have
delivered its audited consolidated balance sheet and related
audited statements of operations, shareholders' equity and cash
flow for its full fiscal year ended December 31, 1997 in final
audited form, fully completed and audited by its independent
accountants, not less than five days prior to the Closing.
ARTICLE XI
CONDITIONS PRECEDENT OF IMAGEWARE
Except as may be waived in writing by Imageware, the
obligations of Imageware hereunder are subject to fulfillment at
or prior to the Closing Date of each of the following conditions:
Representations and Warranties. The representations and
warranties of SDRC contained herein shall be true and correct when
initially made and (except for representations and warranties made
as of a specified date) shall be true and correct as of the
Effective Date except for inaccuracies that would not reasonably
be expected individually or in the aggregate to have a Material
Adverse Effect on SDRC.
Covenants. SDRC shall have performed and complied in all
material respects with all covenants and conditions required by
this Agreement to be performed and complied with by it prior to
the Effective Date.
Proceedings. No action, proceeding or order shall have been
threatened orally or in writing by any court or governmental body
or agency, or asserted, instituted or entered by any court or
governmental body or agency, which would restrain or prohibit the
carrying out of the transactions contemplated hereby.
Government Approvals and Required Consents. The waiting
period applicable to the consummation of the Merger under the
Hart-Scott-Rodino Act shall have expired or been terminated and
SDRC shall have obtained all necessary government and other
material third party approvals and consents.
Closing Deliveries. Imageware shall have received all
documents and agreements, duly executed and delivered in form
reasonably satisfactory to Imageware, referred to in Section 12.3.
Shareholder Approval. This Merger Agreement and the
transactions contemplated hereby shall have been approved by the
requisite vote of holders of Imageware Capital Stock.
ARTICLE XII
CLOSING DELIVERIES
Time of the Closing. After adoption and approval of this
Agreement by the shareholders of Imageware in accordance with the
requirements of applicable law, and upon satisfaction of each of
the conditions to each party's performance hereunder (unless
waived by such party in accordance with this Agreement) and in the
absence of any facts that would give any party hereto a right to
terminate this Agreement (which right has not been waived), the
closing for the transactions contemplated hereby (the "Closing")
shall be three days after the later of expiration of the pre-merger notification
period under the HSR Act or receipt of
approval by the holders of shares of Imageware Capital Stock
entitled to vote on the Merger as described in Section 7.12 (the
"Closing Date"). The Closing shall take place at the offices of
Dinsmore & Shohl LLP, 1900 Chemed Center, 255 East Fifth Street,
Cincinnati, Ohio 45202.
Deliveries of Imageware. At or prior to the Closing Date,
Imageware shall deliver to SDRC, the following, all of which shall
be in a form reasonably satisfactory to SDRC and its counsel:
(a) a certificate from the President of Imageware
and dated the Effective Date, as to the truth and correctness of
the representations and warranties of Imageware contained herein
(giving full effect to the Imageware Disclosure Schedules) on and
as of the Effective Date (except for representations and
warranties made as of a specified date);
(b) a certificate from the President of Imageware,
dated the Effective Date, (i) as to the performance of and
compliance in all material respects by Imageware with all
covenants contained herein on and as of the Effective Date, and
(ii) certifying that all conditions precedent of Imageware to the
Closing have been satisfied;
(c) Imageware's minute books, stock transfer
records, corporate seal and other materials related to Imageware's
corporate administration;
(d) a copy of the Articles of Incorporation of
Imageware as amended to date, certified by the Secretary of State
of Michigan, and a Certificate of Good Standing of Imageware from
the Secretary of State of Michigan evidencing the good standing of
Imageware;
(e) a copy of each of (i) the text of the
resolutions adopted by the board of directors of Imageware
authorizing the execution, delivery and performance of this
Agreement and the Certificate of Merger and the consummation of
all of the transactions contemplated by this Agreement and the
Certificate of Merger, (ii) the text of the resolutions adopted by
the shareholders of Imageware authorizing the execution, delivery
and performance of this Agreement and the Certificate of Merger
and the consummation of all of the transactions contemplated by
this Agreement and the Certificate of Merger, and (iii) the bylaws
of Imageware; along with certificates executed on behalf of
Imageware by its corporate secretary certifying to SDRC that such
copies are true, correct and complete copies of such resolutions
and bylaws, respectively, and that such resolutions and bylaws
were duly adopted and have not been amended or rescinded; and
(f) incumbency certificates executed on behalf of
Imageware by its corporate secretary certifying the signature and
office of each officer executing this Agreement and the
Certificate of Merger;
(g) an opinion of Baker & McKenzie and/or Conlin,
McKenrey & Philbrick, P.C., counsel to Imageware, dated as of the
Closing Date, in form and substance reasonably satisfactory to
SDRC, to the aggregate effect set forth in Exhibit 12.2(g)(i), and
(ii) Baker & McKenzie concerning the intellectual property of
Imageware, dated as of the Closing Date, in substantially the form
set forth in Exhibit 12.2(g)(ii);
(h) the resignations of the directors and officers
of Imageware as requested by SDRC;
(i) an executed Key Employee Employment Agreement
between SDRC and each employee identified pursuant to Section 9.2;
(j) an executed Certificate of Merger necessary to
effect the Merger; and
(k) such other instrument or instruments of transfer
prepared by SDRC as shall be necessary or appropriate, as SDRC or
its counsel shall reasonably request, to carry out and effect the
purpose and intent of this Agreement.
Deliveries of SDRC. At or prior to the Closing Date, SDRC
shall deliver to Imageware, the following, all of which shall be
in a form reasonably satisfactory to Imageware and its counsel;
(a) a certificate of the President or any Vice
President of SDRC dated the Effective Date as to the truth and
correctness of the representations and warranties of SDRC
contained herein on and as of the Effective Date (except for
representations and warranties made as of a specified date);
(b) a certificate of the President or any Vice
President of SDRC dated the Effective Date, (i) as to the
performance and compliance by SDRC with all covenants contained
herein on and as of the Effective Date and (ii) certifying that
all conditions precedent of SDRC to the Closing have been
satisfied;
(c) a copy of the Articles of Incorporation of SDRC
and Subsidiary, as amended to date, certified by the Secretaries
of State of the States of Ohio and Michigan, and a Certificate of
Good Standing of SDRC and Subsidiary from the Secretaries of the
States of Ohio and Michigan evidencing the good standing of SDRC
and Subsidiary;
(d) a copy of each of (i) the text of the
resolutions adopted by the boards of directors of SDRC and
Subsidiary authorizing the execution, delivery and performance of
this Agreement and the Certificate of Merger and the consummation
of all of the transactions contemplated by this Agreement and the
Certificate of Merger, (ii) the text of the resolutions adopted by
the sole shareholder of Subsidiary authorizing the execution,
delivery and performance of this Agreement and the Certificate of
Merger and the consummation of all of the transactions
contemplated by this Agreement and the Certificate of Merger, and
(iii) the Code of Regulations of SDRC and Bylaws of Subsidiary;
along with certificates executed on behalf of SDRC and Subsidiary
by their respective corporate secretaries certifying to Imageware
that such copies are true, correct and complete copies of such
resolutions and Code of Regulations and Bylaws, as applicable, and
that such Resolutions, Code of Regulations and Bylaws were duly
adopted and have not been amended or rescinded; and
(e) incumbency certificates executed on behalf of
SDRC and Subsidiary by their respective corporate secretaries
certifying the signature and office of each officer executing this
Agreement and/or the Certificate of Merger;
(f) an opinion of Dinsmore & Shohl LLP, counsel to
SDRC, dated as of the Closing Date, in form and substance
reasonably satisfactory to Imageware, to the effect set forth in
Exhibit 12.3(f);
(g) an executed Certificate of Merger necessary to
effect the Merger; and
(h) such other instrument or instruments of transfer
prepared by Imageware as shall be necessary or appropriate, as
Imageware or its counsel shall reasonably request, to carry out
and effect the purpose and intent of this Agreement.
ARTICLE XIII
EFFECTIVENESS OF CERTAIN PROVISIONS OF IMAGEWARE'S ARTICLES
SDRC agrees that (i) all rights to indemnification existing
in favor directors, officers, employees or agents of Imageware and
its subsidiaries as provided in Imageware's articles of
incorporation or bylaws in effect immediately prior to the
Effective Date shall survive the Merger and shall continue in full
force and effect for a period of three years from the Effective
Date, and (ii) SDRC shall cause Surviving Corporation to perform
the obligations referred to in clause (i) above.
ARTICLE XIV
EFFECTIVE DATE OF MERGER
The Merger shall become effective upon the submission for
filing with the Secretary of State of Michigan of a properly
executed Certificate of Merger or at such other time as may be
specified therein. The date of such filing, or such other date as
the parties may specify in the Certificate of Merger, is referred
to in this Agreement as the "Effective Date."
ARTICLE XV
INDEMNIFICATION
Indemnification Obligation of Imageware. In the event SDRC
and/or the Surviving Corporation incurs any expenses, losses,
damages, deficiencies or costs resulting from (i) any intentional
breach by Imageware of any representation, warranty or covenant
made by Imageware in this Agreement, (ii) any misrepresentation or
breach, regardless of whether such misrepresentation or breach is
intentional, of the representations and warranties contained in
Section 4.2 of this Agreement, (iii) any and all claims of James
Crow (including all legal fees, costs and expenses), (iv) any and
all claims of Philippe Chiappinelli (including all legal fees,
costs and expenses), (v) any and all claims arising out of or in
connection with claims set forth as item B(4) of Schedule 4.21 of
the Imageware Disclosure Schedules (including all legal fees,
costs and expenses) and (vi) to the extent not paid by SDRC on the
Closing Date, the agreement between Imageware and Ford Global
Technologies described in Section 10.8 (including all legal fees,
costs and expenses) (items (i) through (vi) collectively, the
"Indemnifiable Claims"), SDRC and/or the Surviving Corporation
shall be entitled to be indemnified and held harmless against such
expenses, losses, damages, deficiencies, and/or costs.
Procedure for Indemnification. In connection with any claim
for indemnification by SDRC or the Surviving Corporation
hereunder, the procedure set forth below shall be followed:
(a) SDRC or the Surviving Corporation shall give to
the Representative (as such term is defined below) prompt written
notice of any claim, suit, judgment or matter for which indemnity
may be sought after SDRC or the Surviving Corporation receives
written notice thereof. The indemnification period provided for
herein shall be tolled for a particular claim for the period
beginning on the date the Representative receives written notice
of that claim until the final resolution of such claim. If, in
the good faith opinion of SDRC or the Surviving Corporation, a
specific occurrence may reasonably give rise to a claim in the
future, SDRC or the Surviving Corporation may give notice thereof
to the Representative and such notice shall be sufficient and the
right to make a claim for indemnification arising thereunder
shall, for a period of one year from the date of such notice,
survive any prior termination of the Escrow Period until the final
resolution of such claim.
(b) The Representative shall have the right to
adjust or settle any claim, suit or judgment coming within the
scope of this indemnity obligation and shall have the right to
control any litigation related thereto. Either party hereto
desiring to participate in the handling of any such claim, suit or
judgment being handled by the other party shall have the right, at
its expense and with its counsel, to join with the other party and
participate fully in the defense of any such claim or interest.
(c) SDRC, the Surviving Corporation and the
Representative shall cooperate in the defense of any such claim or
litigation and each shall make available all books and records
which are relevant in connection with such claim or litigation.
(d) SDRC and Imageware hereby mutually appoint
Lawrence A. Mueller to act as the representative of Imageware's
shareholders for purposes of this Article (the "Representative").
Use of Escrow Funds. In the event that SDRC shall be
entitled to indemnification hereunder, SDRC shall satisfy such
obligation by applying such portion of the Escrow Amount equal to
the indemnification obligation until the entire Escrow Amount has
been so applied, all in accordance with the Escrow Agreement.
Limitations on Indemnification. Notwithstanding the
provisions of Sections 15.1, 15.2, and 15.3, (a) SDRC shall not be
entitled to indemnification hereunder with respect to any
Indemnifiable Claim unless SDRC gives the Representative notice of
a claim for indemnification within the Escrow Period, (b) no claim
for indemnification with respect to an Indemnifiable Claim
described in clauses (iii), (iv) or (v) of Section 15.1 may be
made by SDRC unless and until the amount to which SDRC is entitled
with respect to any individual claim equals or exceeds $25,000,
whereupon SDRC shall be entitled to indemnification only to the
extent such claim exceeds $25,000, and (c) SDRC shall not be
entitled to any indemnification whatsoever in excess of the Escrow
Amount or for any reason other than in connection with an
Indemnifiable Claim.
Tax Benefits; Insurance Proceeds. The total amount of any
indemnity payments owed by Imageware to SDRC pursuant to this
Agreement shall be reduced by any correlative tax benefit received
by SDRC or the net proceeds received by SDRC with respect to
recovery from third parties or insurance proceeds, and such
correlative insurance benefit shall be net of the insurance
premium, if any, that becomes due as a result of such claim.
ARTICLE XVI
PUBLICITY
All notices to third parties and all other parties concerning
the transactions contemplated by this Agreement shall be jointly
planned and coordinated by and between the parties. None of the
parties shall cause or authorize any such notice or publicity
without the prior written approval of the other parties; provided,
however, that in the case of an announcement which may be required
by law, by any governmental agency or by the Nasdaq National
Market, such action by one party without the prior approval by the
other parties shall not constitute a breach of this Article XVI so
long as the announcing party used all reasonable efforts to
consult with the other parties and to obtain their consent in a
timely manner.
ARTICLE XVII
TERMINATION
Termination. This Agreement may be terminated and the Merger
may be abandoned:
at any time prior to the Effective Date by agreement of all
parties;
at any time prior to the Effective Date by SDRC if any
representation or warranty of Imageware contained in this
Agreement (giving full effect to the Imageware Disclosure
Schedules) or in any certificate or other document executed and
delivered by Imageware pursuant to this Agreement is or becomes
untrue or breached, except as could not reasonably be expected,
individually or in the aggregate, to have a Material Adverse
Effect on Imageware, or if Imageware fails to comply in any
material respect with any covenant or agreement contained herein,
and any such misrepresentation, noncompliance or breach is not
cured, waived or eliminated within 20 days after receipt of
written notice thereof;
at any time prior to the Effective Date by Imageware if any
representation or warranty of SDRC contained in this Agreement or
in any certificate or other document executed and delivered by
SDRC pursuant to this Agreement is or becomes untrue except as
would not materially effect SDRC's or Subsidiary's ability to
consummate the Merger and other transactions contemplated
hereunder, or if SDRC fails to comply in any material respect with
any covenant or agreement contained herein, and any such
misrepresentation, noncompliance or breach is not cured, waived or
eliminated within 20 days after receipt of written notice thereof;
by SDRC or Imageware if the Merger shall not have been
consummated by December 31, 1998, unless the failure to consummate
the Merger by such date (i) shall be due to the failure of the
party seeking to terminate this Agreement to have fulfilled any of
its obligations under this Agreement, or (ii) is due to the
continuance of a waiting period or lack of an approval required
under or an injunction or equivalent thereof entered based upon
the HSR Act, in which case neither party may rely upon this
Section 17.1.4 to terminate this Agreement until the six month
anniversary of the date of this Agreement.
by Imageware, if there is an Acquisition Proposal which the
Board of Directors in good faith determines would represent a
financially superior transaction for the shareholders of Imageware
as compared with the Merger and the Board of Directors determines
that terminating this Agreement is required in order for the Board
of Directors to comply with its fiduciary duties to shareholders
imposed by law;
by Imageware, if the meeting of holders of Imageware Capital
Stock called to approve this Agreement and the transactions
contemplated hereby in accordance with Section 7.12 shall have
been concluded without having obtained the vote of holders of
Imageware Capital Stock sufficient for the requisite shareholder
approval of this Agreement;
by SDRC or Imageware, if any court of competent jurisdiction
shall have issued, enacted, entered, promulgated or enforced any
order, judgment, decree, injunction or ruling which restrains,
enjoins or otherwise prohibits the Merger and such order,
judgement, decree, injunction or ruling shall have become final
and nonappealable.
Effect of Termination. In the event of a termination of this
Agreement under Sections 17.1.1 or 17.1.7, each party hereto shall
stand fully released and discharged of any and all obligations
under this Agreement; provided, however, that Sections 17.2, 19.7
and 19.14 and Article XVIII shall survive the termination. In the
event this Agreement is terminated for any other reason, the
parties shall each be entitled to pursue, exercise and enforce any
and all remedies, rights, powers and privileges available at law
or in equity .
ARTICLE XVIII
NONDISCLOSURE OF CONFIDENTIAL INFORMATION
Nondisclosure. The parties hereto recognize and acknowledge
that they had in the past, currently have, and in the future may
possibly have, access to certain Confidential Information of one
or more other parties that is valuable, special and unique assets
of such other party's or respective businesses. Imageware and
SDRC agree that they will not disclose such Confidential
Information to any person, firm, corporation, association or other
entity for any purpose or reason whatsoever, except (a) to their
respective authorized representatives and (b) to their respective
counsel and other advisers and (c) material customers of SDRC,
provided that such advisers (other than counsel) and material
customers of SDRC agree to the confidentiality provisions hereof,
unless (i) such information becomes available to or known by the
public generally through no fault of the party holding such
Confidential Information of another party, (ii) disclosure is
required by law or the order of any governmental authority under
color of law, provided, that prior to disclosing any information
pursuant hereto, the party holding such Confidential Information
of another party shall, if possible, give prior written notice
thereof to such other party with respect to which such
Confidential Information pertains and provide such other party
with the opportunity to contest such disclosure, (iii) the
disclosing party reasonably believes that such disclosure is
required in connection with the defense of a lawsuit against the
disclosing party, or (iv) the disclosing party is the sole and
exclusive owner of such Confidential Information as a result of
the Merger or otherwise. Nothing herein shall be construed as
prohibiting any party from pursuing any other available remedy for
such breach or threatened breach, including the recovery of
damages.
Damages. Because of the difficulty of measuring economic
losses as a result of the breach of the foregoing covenants, and
because of the immediate and irreparable damage that would be
caused for which they would have no other adequate remedy, the
parties hereto agree that, in the event of a breach by any of them
of the foregoing covenant, the covenant may each be enforced
against them by injunctions and restraining orders.
ARTICLE XIX
MISCELLANEOUS
Entire Agreement, Modification and Waiver. This Agreement
constitutes the entire agreement between the parties pertaining to
its subject matter and supersedes all prior and contemporaneous
agreements, representations and understandings, both written and
oral, among the parties with respect to the subject matter hereof.
No supplement, modification or amendment of this Agreement shall
be binding unless executed in writing by all the parties. No
waiver of any of the provisions of this Agreement shall be deemed
or shall constitute, a waiver of any other provision, whether or
not similar, nor shall any waiver constitute a continuing waiver.
No waiver shall be binding unless executed in writing by the party
making the waiver.
Consents. Where any consent or waiver of SDRC, Subsidiary or
the Surviving Corporation is required or requested hereunder, John
A. Mongelluzzo, Vice President, Secretary and General Counsel of
SDRC, shall be the authorized person to provide any such consent
or waiver. Where any consent or waiver of Imageware is required
or requested hereunder, Lawrence A. Mueller, Chief Executive
Officer and President of Imageware, shall be the authorized person
to provide any such consent or waiver. The waiver of any of the
terms and conditions of this Agreement shall not be construed as a
waiver of any other terms and conditions hereof.
Assignment. Neither this Agreement nor any right created
hereby or in any agreement entered into in connection with the
transactions contemplated hereby shall be assignable by any party
hereto, except by SDRC, Subsidiary or the Surviving Corporation to
a wholly owned subsidiary of SDRC; provided that any such
assignment shall not relieve SDRC, Subsidiary or the Surviving
Corporation of its obligations hereunder.
Parties In Interest; No Third Party Beneficiaries. Except as
otherwise provided herein, the terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the
respective heirs, legal representatives, successors and assigns of
the parties hereto. Neither this Agreement nor any other
agreement contemplated hereby shall be deemed to confer upon any
person not a party hereto or thereto any rights or remedies
hereunder or thereunder.
Severability. If any provision of this Agreement is held to
be illegal, invalid or unenforceable under present or future laws
effective during the term hereof, such provision shall be fully
severable and this Agreement shall be construed and enforced as if
such illegal, invalid or unenforceable provision never comprised a
part hereof; and the remaining provisions hereof shall remain in
full force and effect and shall not be affected by the illegal,
invalid or unenforceable provision or by its severance therefrom.
Furthermore, in lieu of such illegal, invalid or unenforceable
provision, there shall be added automatically as part of this
Agreement a provision as similar in its terms to such illegal,
invalid or unenforceable provision as may be possible and be
legal, valid and enforceable.
Survival of Representations, Warranties and Covenants. The
representations, warranties and covenants contained herein shall
survive the Effective Date until expiration of the Escrow Period
and all statements contained in any certificate, exhibit or
closing delivery delivered by or on behalf of Imageware or SDRC
pursuant to this Agreement shall be deemed to have been
representations and warranties by Imageware or SDRC, as
applicable.
Governing Law. This agreement and the rights and obligations
of the parties hereto shall be governed by and construed and
enforced in accordance with the substantive laws (but not the
rules governing conflicts of laws) of the State of Ohio.
Captions. The captions in this Agreement are for convenience
of reference only and shall not limit or otherwise affect any of
the terms or provisions hereof.
Gender and Number. When the context requires, the gender of
all words used herein shall include the masculine, feminine and
neuter and the number of all words shall include the singular and
plural.
Notice. Whenever this Agreement requires or permits any
notice, request, or demand from one party to another, the notice,
request, or demand must be in writing to be effective and shall be
deemed to be delivered and received (i) if personally delivered or
if delivered by telex, telegram, facsimile or courier service,
when actually received by the party to whom notice is sent or (ii)
if delivered by mail, upon receipt by the party to whom notice is
sent by mail, postage prepaid, certified or registered, return
receipt requested, addressed to the appropriate party or parties,
at the address of such party set forth below (or at such other
address as such party may designate by written notice to all other
parties in accordance herewith):
If to SDRC or
Subsidiary: Structural Dynamics Research
Corporation
2000 Eastman Drive
Milford, Ohio 45150
Fax No.: (513) 576-2049
Attn.: Thomas F. Eberle, Esq.
with a copy to: Dinsmore & Shohl LLP
1900 Chemed Center
255 East Fifth Street
Cincinnati, Ohio 45202
Fax No.: (513) 977-8141
Attn: Charles F. Hertlein, Jr., Esq.
If to Imageware: Imageware Corp.
121 West Washington, Suite 400
Ann Arbor, Michigan 48104
Fax No.: (734) 994-9135
Attn: Larry A. Mueller
with a copy to: Baker & McKenzie
One Prudential Plaza
130 East Randolph Drive
Chicago, Illinois 60601
Fax No.: (312) 861-2899
Attn: Philip F. Suse
Choice of Forum. Each of the parties hereto shall be subject
to the in personam jurisdiction of any state or federal court
located in Hamilton County, State of Ohio.
No Waiver; Remedies. No party hereto shall by any act
(except by written instrument pursuant to Section 19.1 hereof),
delay, indulgence, omission or otherwise be deemed to have waived
any right or remedy hereunder or to have acquiesced in any default
in or breach of any of the terms and conditions hereof. No
failure to exercise, nor any delay in exercising, on the part of
any party hereto, any right, power or privilege hereunder shall
operate as a waiver thereof. No single or partial exercise of any
right, power or privilege hereunder shall preclude any other or
further exercise thereof or the exercise of any other right, power
or privilege. Except as expressly limited in Article XV, no
remedy set forth in this Agreement or otherwise conferred upon or
reserved to any party shall be considered exclusive of any other
remedy available to any party, but the same shall be distinct,
separate and cumulative and may be exercised from time to time as
often as occasion may arise or as may be deemed expedient.
Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, and all
of which together shall constitute one and the same instrument.
Costs, Expenses and Legal Fees. Whether or not the
transactions contemplated hereby are consummated, each party
hereto shall bear its own costs and expenses (including attorneys'
fees) incurred in connection with the transactions contemplated
herein.
IN WITNESS WHEREOF, the parties hereto have duly executed
this Agreement as of the date first written above.
IMAGEWARE CORP.
By:/S/____________________________
Its:______________________________
SDRC ACQUISITION CORPORATION
By:/S/____________________________
Its:______________________________
STRUCTURAL DYNAMICS RESEARCH CORPORATION
By:/S/____________________________
Its:______________________________
