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): December 31,
1997
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 December 22, 1997, the shareholders of Lookout Drafting,
Inc.("LDI") adopted an Agreement of Merger and Plan of
Reorganization by and among LDI, Young Family Special 1996 Trust, an
Ohio trust existing under an Irrevocable Trust Agreement dated
January 25, 1996 by and between Craig S. Young as grantor and Robert
W. Buechner as trustee , Structural Dynamics Research Corporation
("SDRC") and SDRC Acquisition Corporation (the "LDI Merger
Agreement"). Pursuant to the LDI Merger Agreement, effective as of
December 31, 1997, LDI merged with and into SDRC Acquisition
Corporation, a wholly-owned subsidiary of SDRC, and the Articles of
Incorporation were amended to change its name to SDRC/CASE, Inc. At
the effective date of the merger, the LDI shareholders received, in
the aggregate, 1,350,000 shares of SDRC Common Stock in exchange for
all of the shares of LDI issued and outstanding on the effective
date of the merger. This acquisition will be accounted for under
the pooling of interests method.
LDI develops and licenses engineering drafting software programs.
Pursuant to the LDI Merger Agreement, SDRC acquired all of the
assets of the business owned by LDI which include, but are not
limited to, personal property and equipment, employees, intellectual
property, accounts receivable and contracts. SDRC intends to use
the LDI assets to further strengthen and expand its I-DEA'S TM
offering.
On December 22, 1997, the shareholders of Computer Aided Systems for
Engineering, Inc. ("CASE") adopted an Agreement of Merger and Plan
of Reorganization by and among CASE, James D. Young, the sole
shareholder of CASE, Structural Dynamics Research Corporation
("SDRC") and SDRC Acquisition Corporation, an Ohio corporation, as
amended, (the "CASE Merger Agreement"). Pursuant to the CASE Merger
Agreement, effective as of December 31, 1997, CASE merged with and
into SDRC Acquisition Corporation. At the effective date of the
merger, the CASE shareholder received, in the aggregate, 150,000
shares of SDRC Common Stock in exchange for all of the shares of
CASE issued and outstanding on the effective date of the merger.
This acquisition will be accounted for under the pooling of
interests method.
CASE maintains, enhances and sublicenses engineering drafting
software programs which are developed and licensed to CASE by LDI.
Pursuant to the CASE Merger Agreement, SDRC acquired all of the
assets of the business owned by CASE which include, but are not
limited to, personal property and equipment, employees, intellectual
property, accounts receivable and contracts. SDRC intends to use
the CASE assets to further strengthen and expand its I-DEA'S TM
offering.
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
2.1 Agreement of Merger and Plan of Reorganization dated as
of December 22, 1997 by and among Structural Dynamics
Research Corporation, Lookout Drafting, Inc, The Young
Family Special 1996 Trust, and SDRC Acquisition Corporation,
as amended.
2.2 Agreement of Merger and Plan of Reorganization dated as
of December 22, 1997 by and among Structural Dynamics
Research Corporation, Computer Aided Systems for
Engineering, Inc., James D. Young and SDRC Acquisition
Corporation, as amended
________________________
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: January 8, 1998 By: /s/Thomas F. Eberle
Thomas F. Eberle
Assistant Secretary
Exhibit 2.1
AGREEMENT OF MERGER
AND PLAN OF REORGANIZATION
This Agreement of Merger and Plan of Reorganization
(hereinafter referred to as the "Agreement") is made this 22nd day
of December, 1997 by and among Lookout Drafting, Inc., a Nevada
corporation with principal offices located at 663 Lookout Road,
Zephyr Cove, Nevada 89448 (hereinafter referred to as "LDI"); Young
Family Special 1996 Trust, an Ohio trust existing under an
Irrevocable Trust Agreement dated January 25, 1996 by and between
Craig S. Young as grantor and Robert W. Buechner as trustee
(referred to herein as "Shareholder"); 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, an Ohio corporation
wholly-owned by SDRC (hereinafter referred to as the "Surviving
Corporation").
WITNESSETH:
WHEREAS, the parties wish to effect a transaction under the
authority and provisions of the corporation law of Ohio and the
corporation law of Nevada pursuant to which at the effective date,
as defined herein, LDI will be merged with and into the Surviving
Corporation (such merger is referred to herein as the "Merger"); and
WHEREAS, for federal income tax purposes, the parties intend
the Merger to qualify as a reorganization within the meaning of
Sections 368(a)(1)(A) and 368(a)(2)(D) of the Internal Revenue Code
of 1986, as amended (the "Code").
NOW THEREFORE, in consideration of the mutual promises and
covenants contained herein, the parties agree as follows:
ARTICLE 1
THE MERGER
Section 1.1 Transfer of Property and Liabilities. Upon
the Effective Date (as defined in Article 9 hereof) of the Merger,
the separate existence of LDI shall cease; all of the outstanding
shares of common stock, without par value of LDI ("LDI Common
Stock") shall be exchanged for and converted into shares of the
common stock without par value of SDRC ("SDRC Common Stock"), as
hereinafter provided; and upon the filing of the appropriate
Certificate of Merger with the Secretary of State of Ohio and
Articles of Merger with the Secretary of State of Nevada, the
Surviving Corporation shall possess all of the rights, privileges,
immunities, powers and purposes, and all of the property, real and
personal, causes of action and every other asset of LDI, and shall
assume and be liable for all of the liabilities, obligations and
penalties of LDI, in accordance with the General Corporation Law of
the State of Ohio and the Nevada Revised Statutes.
Section 1.2 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 Ohio. The
officers and directors of the Surviving Corporation immediately
prior to the Effective Date shall continue as the officers and
directors of the Surviving Corporation. The Articles of
Incorporation and Code of Regulations of the Surviving Corporation,
as of the Effective Date, shall continue in full force and effect,
and shall not be changed in any manner by the Merger except that
Article First of the Articles of Incorporation of the Surviving
Corporation shall be amended to read in its entirety as follows:
"FIRST: The name of the Corporation shall be SDRC/CASE, Inc."
Section 1.3 Principal Office. Following the Effective
Date, the principal office of the Surviving Corporation shall be
located in Milford, Clermont County, Ohio.
Section 1.4 State Law. The Surviving Corporation shall be
an Ohio corporation, governed in all respects by the corporate laws
of the State of Ohio.
Section 1.5 Agreement with Secretary of State. The
Surviving Corporation shall file with the Secretary of State of
Nevada an agreement to the following effect (and if acceptable to
the Secretary of State of Nevada, this Agreement when filed as part
of the Articles of Merger shall constitute such agreement):
Section 1.5.1 Service of Process. The Surviving
Corporation may be served with process in Nevada in any proceeding
for the enforcement of an obligation of the Surviving Corporation
and in any proceeding for the enforcement of the rights of a
dissenting shareholder of LDI against the Surviving Corporation.
Section 1.5.2 Appointment of Agent. The Surviving
Corporation irrevocably appoints the Secretary of State of Nevada as
its agent to accept service of process in any proceeding and such
service of process may be forwarded to:
John A. Mongelluzzo
Vice President, General Counsel and Secretary
Structural Dynamics Research Corporation
2000 Eastman Drive
Milford, Ohio 45150-2789
Section 1.5.3 Dissenting Shareholders. The Surviving
Corporation will promptly pay to the dissenting shareholders of LDI
the amount, if any, to which they are entitled under Sections
92A.300 to 92A.500, inclusive, of the Nevada Revised Statutes with
respect to the rights of dissenting shareholders.
ARTICLE 2
CONVERSION OF SHARES
Section 2.1 Merger Consideration. All of the shares of LDI
Common Stock issued and outstanding as of the close of business on
the business date immediately prior to the Effective Date 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 shares of SDRC Common Stock without par value ("SDRC Common
Stock"). A total of 1,350,000 shares (the "Shares") of SDRC Common
Stock shall be issued by SDRC. Each individual share of LDI Common
Stock issued and outstanding as of the close of business on the
business date immediately prior to the Effective Date shall be
converted into that number of shares of SDRC Common Stock equal to
the total number of shares of SDRC Common Stock to be issued in the
Merger as provided above divided by the total number of shares of
LDI Common Stock issued and outstanding as of the close of business
on the business date immediately prior to the Effective Date;
provided, however, that no fractional shares of SDRC Common Stock
shall be issued pursuant to the Merger and in lieu thereof cash
shall be paid for fractional shares that would otherwise be issued,
in accordance with Section 2.4 below.
Section 2.2 Private Placement of Securities. The Shares
have not been registered under the Securities Act of 1933 or any
applicable state securities laws, but will be issued pursuant to
Regulation D promulgated under the Securities Act of 1933. SDRC's
obligation to issue such shares upon consummation of the Merger is
contingent upon the execution and delivery by each of the
shareholders of LDI of an Investment Agreement (the "Investment
Agreement") in the form appended hereto as Exhibit 2.2 and the
receipt of assurances satisfactory to SDRC that each of the
shareholders of LDI is an "accredited investor" as such term is
defined by the rules of the Securities and Exchange Commission under
the Securities Act of 1933. The Shares will be subject to the
restrictions on transfer contained in the Investment Agreement and
certificates representing such shares shall bear an appropriate
legend to the effect that such shares are subject to the terms of
the Investment Agreement.
Section 2.3 Exchange of Certificates. After the Effective
Date, each holder of a certificate or certificates for shares of LDI
Common Stock, upon surrender of the same duly transmitted to SDRC's
stock transfer agent (or in lieu of surrendering such certificates
in the LDI of lost, stolen, destroyed or mislaid certificates, upon
execution of such documentation as may be reasonably required by
SDRC's stock transfer agent), shall be entitled to receive in
exchange therefor a certificate or certificates representing the
number of whole shares of SDRC Common Stock into which such holder's
shares of LDI Common Stock shall have been converted by the Merger
plus a cash payment for any fraction of a share to which the holder
is entitled, in lieu of such fraction of a share, equal in amount to
the product resulting from multiplying such fraction by the
Applicable Value Per Share of SDRC Common Stock. Until so
surrendered, each outstanding certificate that prior to the time the
Merger becomes effective represented shares of LDI Common Stock
shall be deemed for all corporate purposes to evidence ownership of
the number of full shares of SDRC Common Stock into which the same
shall have been converted; provided, however, that dividends or
distributions otherwise payable with respect to shares of SDRC
Common Stock into which LDI Common Stock shall have been so
converted shall be paid with respect to such shares only when the
certificate or certificates evidencing any such shares of LDI
Common Stock shall have been so surrendered (or in lieu of
surrendering such certificates in the LDI of lost, stolen, destroyed
or mislaid certificates, upon execution of such documentation as may
be reasonably required by SDRC), and, thereupon, any such dividends
and distributions shall be paid, without interest, to the holder
entitled thereto, subject however to the operation of any applicable
escheat or similar laws relating to unclaimed funds.
Section 2.4 Dissenting Shares.
(a) Notwithstanding anything in this Agreement to the
contrary, if Sections 92A.300 to 92A.500, inclusive, of the Nevada
Revised Statutes shall be applicable to the Merger, shares of LDI
Common Stock that are issued and outstanding immediately prior to
the Effective Date and which are held by shareholders who have
delivered notice of their intent to demand payment for their shares
if the Merger is effectuated and who do not vote their shares in
favor of the proposed action in the manner required by Nevada
Revised Statutes Section 92A.420 ("Dissenting Shares") shall not be
converted into or represent a right to receive shares of SDRC Common
Stock pursuant to Section 2.1 hereof, but the holders thereof shall
be entitled only to such rights as are granted by Sections 92A.300
to 92A.500, inclusive, of the Nevada Revised Statutes. Each holder
of Dissenting Shares who becomes entitled to payment for such shares
pursuant to Sections 92A.300 to 92A.500, inclusive, of the Nevada
Revised Statutes shall receive payment therefor from the Surviving
Corporation in accordance with the Nevada Revised Statutes.
(b) LDI shall give SDRC (i) prompt notice of any
written demand for payment and any other instrument served pursuant
to Sections 92A.300 to 92A.500, inclusive, of the Nevada Revised
Statutes received by LDI, 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 92A.300 to 92A.500, inclusive, of the
Nevada Revised Statutes. LDI shall not, except with the prior
written consent of SDRC, voluntarily make any payment with respect
to any demand for payment by a Dissenting Shareholder or offer to
settle or settle any such demand.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF LDI
LDI and Shareholder each hereby represents and warrants to SDRC
and to the Surviving Corporation as follows:
Section 3.1 Organization and Good Standing. LDI is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Nevada, and duly authorized to carry
on the business presently conducted by it. LDI is qualified to do
business in the jurisdictions listed on Schedule 3.1 and is not
required to be qualified to do business in any other jurisdiction
where the failure to be so qualified would have a Material Adverse
Effect on LDI.
Section 3.2 Capitalization. As of the date of this
Agreement, LDI's authorized capital stock consists of 25,000 shares
of common stock, without par value per share, of which 100 shares
are issued and outstanding, fully paid and nonassessable. LDI has
no outstanding stock and no outstanding options, warrants or other
rights entitling another person to acquire any securities of LDI of
any kind. Shareholder is the sole shareholder of LDI.
Section 3.3 Subsidiaries. LDI does not have any direct or
indirect subsidiaries and is not a party to any joint ventures
(referred to herein as "Subsidiaries").
Section 3.4 Financial Statements. LDI has previously
furnished to SDRC its unaudited financial statements as of December
31, 1996, 1995 and 1994 together with unaudited financial statements
for the six month period ended June 30, 1997 (collectively, the
"Financial Statements"). Except as set forth on Schedule 3.4, the
Financial Statements fairly present the financial condition of LDI
as of said dates and the results of its operations for the periods
then ended, in conformity with generally accepted accounting
principles, consistently applied, and there are no material
liabilities, obligations or indebtedness of LDI required to be
disclosed in the Financial Statements other than the liabilities,
obligations or indebtedness disclosed therein (including footnotes).
Section 3.5 Title. Except where the result would not
have a Material Adverse Effect on LDI, LDI has good and marketable
title to all of the properties and assets reflected in the Financial
Statements as of the latest balance sheet contained in the Financial
Statements, and which are still owned by it, and LDI has good and
marketable title to all properties and assets acquired by it after
such date and still owned by it, subject to (i) any liens and
encumbrances that do not materially adversely impair the use of the
property, (ii) statutory liens for taxes not yet due and payable and
(iii) minor defects and irregularities in title that do not
materially adversely impair the use of the property.
Section 3.6 Accounts Receivable. Schedule 3.6 includes an
accurate aging schedule of all of the accounts receivable reflected
on LDI's latest balance sheet included in the Financial Statements.
The net accounts receivable (net of any accounts receivable reserve)
reflected on the latest balance sheet included in the Financial
Statements due from any party other than SDRC will be fully
collectible after such date in the ordinary course of business using
reasonable business methods in light of the nature of the business.
Section 3.7 Real Property. LDI does not own any real
estate. All of LDI's leases of real property are listed on Schedule
3.7, and except as set forth on Schedule 3.7, LDI's leases of real
property are all assignable and do not contain change of control
provisions. With respect to all real estate leased by LDI: (i) LDI
is the owner and holder of the entire interest in the leasehold
estates purported to be granted by such leases; (ii) LDI is not in
material default under any lease and each lease constitutes a valid
and binding obligation of the respective parties thereto; and (iii)
there are no material declared defaults currently existing, LDI has
not received any notices of material default, and, to the knowledge
of LDI, no events have occurred that with notice, the lapse of time
or both, would constitute a material default under any of the real
estate leases to which LDI is a party.
Section 3.8 Environmental Matters. Except as disclosed on
Schedule 3.8: (i) the property and assets of LDI and the operations
conducted thereon by LDI (aa) do not materially violate any
applicable federal, state or local environmental law, regulation or
ordinance (each hereinafter an "Environmental Law"), including by
way of illustration and not by way of limitation, the Clean Air
Act, the Federal Water Pollution Control Act of 1972, the Resource
Conservation and Recovery Act of 1976, the Comprehensive
Environmental Response Compensation and Liability Act of 1980, and
the Toxic Substances Control Act (including any amendments or
extensions thereof, and rules, regulations, standards or guidelines
pursuant to any Environmental Laws) and all other environmental
standards or requirements, and (bb) are not subject to any existing,
pending or, to the knowledge of LDI, threatened investigation,
inquiry or proceeding by any governmental authority or to any
remedial obligations under any Environmental Law; (ii) all notices,
permits, licenses or similar authorizations, if any, required to be
obtained or filed under any Environmental Law in connection with the
use of the real properties and assets of LDI, including, without
limitation, past or present treatment, storage, disposal or release
of any or all petroleum products, underground storage tanks, and all
Hazardous Substances (as such term is hereinafter defined) into the
environment, have been obtained or filed; (iii) no Hazardous
Substances have been disposed of or otherwise released by LDI or, to
the knowledge of LDI, by others on or to the real properties on
which the operations of LDI are conducted except in strict
compliance with Environmental Laws; and (iv) LDI does not have
contingent liability in connection with the release of any Hazardous
Substances into the environment. "Hazardous Substances" shall mean
any toxic or hazardous or noxious substance, material or waste which
is regulated by any local government authority having jurisdiction
over the real properties of or used by LDI, the States of Ohio or
Nevada or the United States government, including, but not limited
to (i) asbestos or any asbestos containing material of any kind or
character which is now or may become friable and polychlorinated
biphenyls ("PCB's") as regulated by the Toxic Substance Control Act,
15 U.S.C.A. Section 2601 et seq., or materials or substances designated as
"hazardous substances" pursuant to Section 311 of the Clean Water
Act, 33 U.S.C.A. Section 1251 et seq., defined as "hazardous waste"
pursuant to Section 1004 of the Resource Conservation and Recovery
Act, 42 U.S.C.A. Section 6901 et. seq., or defined as "hazardous
substances" pursuant to Section 101 of the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C.A.
Section 9601 et. seq.
Except as disclosed on Schedule 3.8, no notice of any violation
of any Environmental Laws has been received by LDI concerning the
real properties leased by LDI, and, to the knowledge of LDI, there
are no existing or pending requirements of any governmental
authority relating to environmental matters requiring any remedial
action or other work, repairs, construction or capital expenditures
with respect to the real properties. To its knowledge, LDI has not
been named as a "potentially responsible party" in connection with
any litigation, investigation or similar matter, and LDI does not
know of any matter in which LDI may be so named.
Section 3.9 Absence of Material Adverse Changes. Except as
disclosed on Schedule 3.9: (i) since December 31, 1996, there have
been no changes which would have a Material Adverse Effect on the
financial condition, operations or business of LDI; and (ii) neither
LDI's chief executive officer nor its chief financial officer is
aware of any events which have occurred since December 31, 1996 or
which are reasonably certain to occur in the future and which
reasonably can be expected to result in any Material Adverse Effect
on the financial condition, operations or business of LDI.
Section 3.1 Material Customer. LDI's only material
customer is SDRC.
Section 3.11 Absence of Undisclosed Liabilities. Except to
the extent reflected or reserved against on LDI's latest balance
sheet included in the Financial Statements or as set forth on any of
the Schedules to this Agreement, LDI does not have any undisclosed
liabilities or obligations (secured, unsecured, contingent or
otherwise) of a nature customarily reflected on a corporate balance
sheet prepared in accordance with generally accepted accounting
principles.
Section 3.12 Litigation. Except as disclosed on Schedule
3.12 hereto, there are no actions, suits, proceedings,
investigations or assessments of any kind pending before any court,
administrative agency, arbitration association, or other regulatory
body, or to the knowledge of LDI, threatened against LDI which if
successful might result in any Material Adverse Effect on LDI or
which questions the validity or legality of this Agreement or of any
action taken or to be taken by LDI in connection with this
Agreement.
Section 3.13 Taxes. Except to the extent reserved against
on the latest balance sheet included in the Financial Statements
and/or as set forth on Schedule 3.13, LDI has (i) timely filed all
tax returns, schedules, declarations, and tax-related documents
(collectively, "Returns") required to be filed by any and all
jurisdictions to which it is or has been subject; (ii) timely paid
in full any taxes, interest and penalties with respect thereto,
subject to audit of the taxing authorities by such jurisdictions and
timely made any deposits of tax required by taxing jurisdictions;
(iii) fully accrued on its books an amount sufficient to pay all
taxes not yet due for any completed taxable period; (iv) made timely
payments of the taxes required to be deducted and withheld from the
wages paid to employees; and (v) otherwise satisfied, in all
material respects, all legal requirements applicable to it with
respect to all aforementioned obligations to taxing jurisdictions.
All Returns filed by LDI correctly reflect in all material respects
its income, expenses, deductions, credits and loss carryovers and
the taxes due and are otherwise accurate and complete in all
material respects. LDI has delivered to SDRC true and complete
copies of all federal income tax returns of LDI for each of the
taxable years ended 1994, 1995 and 1996. The most recent period for
which an assessment can no longer be made by the IRS with respect to
federal income tax obligations of LDI is for the fiscal year ended
1991. Except as set forth on Schedule 3.14, LDI has not experienced
an audit of any of the Returns, and LDI has no knowledge that an
audit of any of the Returns is in progress and has no reason to
believe that any such audit is contemplated. There are no other
pending questions received by LDI from any taxing authority relating
to, or claims asserted for (or to the knowledge of LDI any basis
therefor), taxes or assessments of LDI. For purposes of this
Section, "tax" and "taxes" (when not modified by other words such as
"income" or "franchise") shall include all income, gross receipts,
franchise, excise, real and personal property, and other taxes
imposed by any federal, state, municipal, local, or other
governmental agency, including assessments in the nature of taxes.
Section 3.14 Contracts, Agreements and Commitments. Except
as disclosed on Schedule 3.14, as of the date hereof, LDI is not a
party to any material contract, agreement or commitment, oral or
written, which is to be performed in whole or in part at or after
the date of this Agreement with remaining commitments by or to LDI
of $50,000 or more. Except as set forth on Schedule 3.14, there is
no breach or violation of, or default under any material contract,
agreement or commitment, and no event has occurred which, with
notice or lapse of time or both, would constitute a breach,
violation or default, or give rise to a right of termination,
modification, cancellation, prepayment or acceleration under any
such contract, agreement or commitment.
Section 3.15 Intellectual Property.
(a) Schedule 3.15 contains a complete and accurate
list of all of LDI's Intellectual Property, as defined herein.
Schedule 3.15 also contains a complete and accurate list of all
third-party owned software incorporated into any LDI product.
Except as set forth in Schedule 3.15, LDI owns all right, title and
interest in and to, or holds valid licenses, if any, in and to the
Intellectual Property. Schedule 3.15 sets forth a list of all
software products currently marketed by LDI, 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 LDI with respect to each such product.
Except as described on Schedule 3.15, none of the software products
marketed by LDI has entered the public domain or otherwise lacks
intellectual property protection.
(b) Except as set forth on Schedule 3.15, LDI has not,
as of and since the date upon which it acquired any of the
Intellectual Property, (i) transferred, conveyed, sold, assigned,
pledged, mortgaged or granted a security interest in any of the
Intellectual Property to any third party, (ii) entered into any
license, franchise or other agreement with respect to any of the
Intellectual Property with any third person, or (iii) otherwise
encumbered any of the Intellectual Property. LDI has maintained and
enforced its rights in the Intellectual Property in accordance with
its customary practices in order to safeguard the secrecy of all
aspects of the Intellectual Property that are considered to be trade
secrets.
(c) The conduct of the business of LDI as currently
conducted does not, to LDI's knowledge, conflict, misappropriate or
infringe in any way with any intellectual property right of any
third party that, individually or in the aggregate, is reasonably
likely to have a Material Adverse Effect on LDI's business, and
there is no claim, suit, action or proceeding pending or, to the
knowledge of LDI, threatened against LDI (i) alleging that use of
the Intellectual Property or any intellectual property licenses
conflicts or infringes in any way with any third party's
intellectual property rights, or (ii) challenging LDI's ownership of
or right to use or the validity of any Intellectual Property. To
LDI's knowledge, there are no conflicts, misappropriations,
infringements or other violations by any third party of any of the
Intellectual Property owned by or licensed by or to LDI.
(d) Each copyright registration, patent and trademark
registration and each application therefor listed in Schedule 3.15
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. LDI has taken all of the proper
precautions to maintain the secrecy of its Intellectual Property
that are considered to be trade secrets, and to protect their trade
secrets from disclosure to the full extent required under applicable
law. Except as set forth in Schedule 3.15, there have been no
failures in complying with such requirements and no Copyright,
Patent or Trademark, each as defined herein, has lapsed and there
has been no cancellation or abandonment thereof.
(e) Neither LDI nor any other person has, to the
knowledge of LDI, 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 or any intellectual property licenses
associated with the Intellectual Property.
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 originating with LDI or as
"work for hire" created by or on behalf of LDI, research in
progress, inventions or invention disclosures (whether patentable or
unpatentable) and drawings, schematics, blueprints, flow sheets,
designs and models; (b) all copyrights, copyright registrations,
copyrights 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").
Section 3.16 Business Operation. Since December 31, 1996,
LDI has been operating in the ordinary course of business, has not
made any changes in its capital or corporate structures, nor any
material changes in its methods of business operation and has not
provided any increases in employee salaries or benefits or made a
commitment to change the compensation of any employee, other than in
the ordinary course. Except as set forth on Schedule 3.16, since
December 31, 1996, LDI has not declared or paid any dividends nor
made any distributions of any other kind to its shareholders.
Section 3.17 LDI's Employees and Employee Benefit Plans.
Schedule 3.17 contains a complete and accurate list and a brief
description of each employee contract and each plan or arrangement,
including the total number of LDI shares authorized to be issued
under each such contract, plan or arrangement, which provides any of
the following benefits: bonus, profit sharing, employee stock
ownership, stock option, stock appreciation right, stock grant,
phantom stock, pension, retirement, insurance, medical,
hospitalization, dental, disability, vacation, workers'
compensation, unemployment, deferred or incentive compensation,
severance or any other benefit, including, without limitation, each
"employee pension benefit plan" within the meaning of Section 3(2)
of ERISA, and "employee welfare benefit plan" within the meaning of
Section 3(1) of ERISA (collectively, "Benefit Plans") with respect
to any one or more of the employees or former employees of LDI. To
the extent the Benefit Plans have been reduced to writing, complete
and accurate copies of all the Benefit Plans have been delivered to
SDRC. In the event a Benefit Plan is not in written form, Schedule
3.17 includes a complete and accurate description of such Benefit
Plan. LDI is not and never has been obligated to make contributions
to any multi-employer plan within the meaning of Section 3(37) of
ERISA and there exist no unfunded liabilities under any of the
Benefit Plans. Schedule 3.17 also includes an accurate and complete
list of each employee of LDI with each employee's job title and
annual compensation set forth next to each employee's name. Since
December 31, 1996, other than in the ordinary course of business,
there has been no change in the compensation payable to such
employees. Except as otherwise set forth in Schedule 3.17, LDI has
not promised to provide and is not providing any medical or life
insurance benefits to former employees or any other persons other
than current employees. LDI has previously delivered to SDRC copies
of all executory employment agreements.
Section 3.18 Compliance of Plans with ERISA and Code.
3.18.1 Compliance. If any of the Benefit Plans were
to be terminated, LDI would not have any material liability with
respect to any Benefit Plan other than for amounts already paid or
provided for. All Benefit Plans comply in all material respects
with all applicable laws and regulations including the requirements
of the Code that the Benefit Plans be non-discriminatory with regard
to coverage, availability of benefits and amount and level of
benefits. Each Benefit Plan has received a favorable determination
letter from the Internal Revenue Service ("IRS"), each of which is
current, that such Benefit Plan meets the requirements of Section
401(a) of the Code. There is no "excess reserve" with respect to
any Benefit Plan under Section 419(A)(f)(7)(C) of the Code. Each
participant and beneficiary under each of the Benefit Plans, and
each of their spouses and dependents, has received (i) all notices
and reports required by ERISA within the required deadlines, and
(ii) adequate and timely notice of all elections and options
permitted under the Benefit Plans. All required contributions have
been made to each of the Benefit Plans.
3.18.2 Violations. LDI has not engaged in any
transaction which could result in a material liability under Section
409 of ERISA or Section 4975 of the Code. The execution and
delivery of this Agreement will not cause the termination of any of
the Benefit Plans, involve any prohibited transaction within the
meaning of Section 406 of ERISA or Section 4975 of the Code, nor
constitute a breach of fiduciary responsibility with respect to the
Benefit Plans.
3.18.3 Documents. LDI has delivered to SDRC: (i) all
determination letters issued by the IRS within the past five years
with respect to the Benefit Plans, and the requests therefor; (ii)
any and all documents submitted by LDI to the IRS or the Department
of Labor ("DOL") with respect to the Benefit Plans during the past
five years; (iii) any document relating to the Benefit Plans or the
participation of LDI therein, or the benefits provided thereunder
that create liability with respect thereto; and (iv) any documents
received by LDI from the IRS or the DOL challenging or raising
questions regarding the compliance of any Benefit Plan with the
Code, ERISA or any other applicable law.
Section 3.19 Labor and Employment Matters. LDI is not a
party to any collective bargaining agreement. No person or party
(including, but not limited to, governmental agencies of any kind)
has any valid or enforceable claim or any basis for any valid and
enforceable action or proceeding against LDI arising out of any
federal and/or state equal employment opportunity statutes,
ordinances or regulations, including, but not limited to, those
pertaining to race, age, religion, gender, sexual harassment and all
other similar claims. To the knowledge of LDI, LDI's employees are
United States citizens or are otherwise fully and properly
authorized to work on a permanent basis in the United States.
Section 3.20 Overtime, Back Wages, Vacation and Minimum
Wages. Except as set forth on Schedule 3.20 or as reflected in the
latest balance sheet included in the Financial Statements, no
present or former employee of LDI has any valid and enforceable
claim (whether under federal or state law) under any employment
agreement, or otherwise, on account of or for (i) overtime pay,
other than overtime pay for the current payroll period, (ii) wages
or salary for any period other than the current payroll period,
(iii) vacation or time off (or pay in lieu thereof), other than that
earned in respect of the previous twelve months, or (iv) any
violation of any statute, ordinance or regulation relating to
minimum wages or maximum hours of work.
Section 3.21 Discrimination, Occupational Safety and Other
Statutes and Regulations. Except as set forth on Schedule 3.21, no
person or party (including, but not limited to, governmental
agencies of any kind) has any valid and enforceable claim, or any
basis for any valid and enforceable action or proceeding against LDI
arising out of any material breach or violation by LDI of any
statute, ordinance or regulation relating to discrimination in
employment or employment practices or occupational safety and health
standards (including without limitation, the Occupational Safety and
Health Act, the Fair Labor Standards Act, Title VII of the Civil
Rights Act of 1964, the Age Discrimination in Employment Act of
1967, the Americans with Disabilities Act (except to the extent such
act deals with physical facilities) or the Family and Medical Leave
Act).
Section 3.22 LDI's Insurance Policies. Schedule 3.22
contains an accurate and complete list of each insurance policy
currently providing coverage for the assets of LDI, its directors,
officers and all employees. LDI has at all times maintained
liability coverage with financially sound and reputable insurance
carriers in amounts which are reasonable in light of the business of
LDI and its claims experience. LDI has no knowledge that any
insurance carriers presently providing insurance coverage to LDI
intend to cancel or refuse to renew such policies or materially
increase the premiums payable for coverage comparable to present
coverage, except for premium increases to be generally applicable;
nor does LDI have any knowledge that any such insurance carriers
intend to require LDI to implement material changes in its present
operating facilities or methods or products as a condition to
maintaining insurance.
Section 3.23 Bank Matters. Set forth on Schedule 3.23 is
a list of each bank account, including the name and address of the
bank and the account number, maintained by LDI. The list identifies
each person who has signature power with respect to each such
account. Schedule 3.23 also contains a list of all bank loans held
by LDI, including the name and address of the bank, the loan number,
the original loan amount and all balances due. LDI has previously
provided SDRC with copies of all documentation with respect to any
bank loans.
Section 3.24 Securities Laws and Regulations. Except as
set forth on Schedule 3.24, all of the LDI Common Stock previously
issued was issued in full compliance with all federal and state
securities laws and all regulations promulgated thereunder.
Section 3.25 Minute Books and Stock Record Books. The
minute books of LDI contain complete and accurate records of all
official meetings and other corporate actions of its shareholders
and its Board of Directors, including, but not limited to, any
committees of its Board of Directors. The stock record books of LDI
contain complete and accurate records of all transactions involving
the issuance or transfer of equity securities of LDI.
Section 3.26 Brokers' Fees. LDI (i) has not, directly or
indirectly, dealt with any broker or finder in connection with this
transaction and (ii) has not incurred or will not incur any
obligation for any broker's or finder's fee or commission in
connection with the transactions provided for in this Agreement.
Section 3.27 Private Placement of Securities. LDI shall
cooperate as reasonably requested by SDRC in connection with
complying with the provisions of Regulation D promulgated under the
Securities Act of 1933 in the issuance of shares of SDRC Common
Stock to the shareholders of LDI in the Merger. To the knowledge of
LDI, each of the shareholders of LDI is an "accredited investor" as
such term is defined by rules of the Securities and Exchange
Commission under the Securities Act of 1933.
Section 3.28 Tax Matters. Neither LDI nor its affiliates
or shareholders have taken or agreed to take any action that would
prevent the Merger from constituting a transaction qualifying as a
reorganization under Sections 368(a)(1)(A) and 368(a)(2)(D) of the
Code.
Section 3.29 Corporate Power and Authorization. The
directors of LDI, by resolution adopted by the vote of the directors
at a meeting duly called and held in accordance with applicable law,
have duly approved this Agreement, and have directed that this
Agreement be submitted to a vote of LDI's shareholders at a special
meeting of shareholders to be called for that purpose, all in
accordance with and as required by law and in accordance with the
Articles of Incorporation and Bylaws of LDI. LDI has the corporate
power and authority to enter into this Agreement and to carry out
its obligations hereunder subject to certain required regulatory and
shareholder approvals. This Agreement, when executed and delivered,
will have been duly authorized and will constitute valid and binding
obligations of LDI, enforceable in accordance with their respective
terms, except to the extent that (i) enforceability thereof may be
limited by insolvency, reorganization, liquidation, bankruptcy,
readjustment of debt or other laws of general application relating
to or affecting the enforcement of creditors' rights, and (ii) the
availability of certain remedies may be precluded by general
principles of equity, subject, however, to the receipt of requisite
regulatory approvals and the approval of LDI's shareholders.
Section 3.30 No Violation. Except as set forth on Schedule
3.30, neither the execution of this Agreement, nor the consummation
of the transactions contemplated hereby, (i) conflicts with, results
in a breach of, violates or constitutes a material default under,
LDI's Articles of Incorporation or Bylaws or any federal, state or
local law, statute, ordinance, rule, regulation or court or
administrative order, or any agreement, arrangement or commitment to
which LDI, or any of its property is subject or bound; (ii) results
in the creation of or gives any person the right to create any lien,
charge, encumbrance, security agreement or any other rights of
others or other adverse interest upon any material right, property
or asset belonging to LDI other than such rights as may be given
dissenting shareholders of LDI pursuant to Nevada law; (iii)
terminates or gives any person the right to terminate, amend,
abandon or refuse to perform any material agreement, arrangement or
commitment to which LDI is a party or by which LDI's rights,
properties or assets are subject or bound; or (iv) accelerates or
modifies, or gives any party thereto the right to accelerate or
modify, the time within which, or the terms according to which, LDI
is to perform any duties or obligations or receive any rights or
benefits under any material agreements, arrangements or commitments.
For purposes of subparagraphs (iii) and (iv) immediately preceding,
material agreements, arrangements or commitments exclude agreements,
arrangements or commitments having a term expiring less than six
months from the date of this Agreement or which do not require the
expenditure of more than $20,000 (but shall include all agreements,
arrangements or commitments pursuant to which credit has been
extended by LDI).
Section 3.31 International Business Matters. LDI does not
engage in any international business except through SDRC.
Section 3.32 Maintenance and Enhancement Agreements.
Except as set forth on Schedule 3.32, LDI has not orally or in
writing committed to provide selective special enhancements to any
of its software products for any LDI customers other than SDRC or to
provide special or increased maintenance obligations to any of its
customers other than SDRC.
Section 3.33 Full Disclosure. No representation or
warranty made by LDI in this Agreement or any Schedule or Exhibit
hereto and no statement or certificate or memorandum furnished or to
be furnished by LDI pursuant hereto or in connection with the
transactions covered hereby contains or will contain any untrue
statement of a material fact, or omit any material fact, the
omission of which would be misleading.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SDRC
SDRC hereby represents and warrants to LDI and to Shareholder,
their heirs, successors and assigns as follows:
Section 4.1 Organization and Good Standing. Each of SDRC
and the Surviving Corporation is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Ohio, and is duly authorized to carry on the business presently
conducted by it.
Section 4.2 Capitalization. SDRC's authorized capital
stock consists of 100,000,000 shares of common stock, no par value,
of which 35,655,143 shares were issued and outstanding as of the
close of business on the last business day prior to the date of this
Agreement, all of which were fully paid and nonassessable.
Section 4.3 Corporate Power and Authorization. The Board
of Directors of SDRC, by resolution adopted by a vote of the
directors at a meeting duly called and held in accordance with
applicable law, has duly approved this Agreement, all in accordance
with and as required by law and in accordance with the Articles of
Incorporation and Code of Regulations of SDRC. SDRC has the
corporate power and authority to enter into this Agreement and to
carry out its obligations hereunder subject to certain required
regulatory approvals. This Agreement, when executed and delivered,
will be duly authorized and will constitute a valid and binding
obligation of SDRC, enforceable in accordance with its terms, except
to the extent that (i) enforceability thereof may be limited by
insolvency, reorganization, liquidation, bankruptcy, readjustment of
debt or other laws of general application relating to or affecting
the enforcement of creditors' rights, and (ii) the availability of
certain remedies may be precluded by general principles of equity,
subject, however, to the receipt of requisite regulatory approvals.
Upon the formation of Surviving Corporation, SDRC as the sole
shareholder of Surviving Corporation, shall cause the board of
directors and the sole shareholder to approve the Merger and shall
cause the Surviving Corporation to meet all of its obligations in
connection with the Merger as set forth in this Agreement.
Section 4.4 No Violation. Neither the execution of this
Agreement, nor the consummation of the transactions contemplated
hereby, (i) conflicts with, results in a breach of, violates or
constitutes a material default under SDRC's Articles of
Incorporation or Code of Regulations or any federal, state or local
law, statute, ordinance, rule, regulation or court or administrative
order, or any agreement, arrangement, or commitment, to which SDRC
or any of its property is subject or bound; (ii) results in the
creation of or gives any person the right to create any lien,
charge, encumbrance, security agreement or any other rights of
others or other adverse interest upon any material right, property
or asset belonging to SDRC; (iii) terminates or gives any person the
right to terminate, amend, abandon, or refuse to perform any
material agreement, arrangement or commitment to which LDI is a
party or by which SDRC's rights, properties or assets are subject or
bound; or (iv) accelerates or modifies, or gives any party thereto
the right to accelerate or modify, the time within which, or the
terms according to which, SDRC is to perform any duties or
obligations or receive any rights or benefits under any material
agreements, arrangements or commitments.
Section 4.5 Shares to be Issued. The shares of SDRC Common
Stock to be issued and delivered pursuant to this Agreement will,
when so issued, be duly and validly issued, fully paid and
nonassessable.
Section 4.6 SEC Filings. SDRC has delivered to LDI true
and complete copies of its (i) Annual Report on Form 10-K for the
year ended December 31, 1996 as filed with the Securities and
Exchange Commission ("SEC"), and its Annual Report to Shareholders
for such year; (ii) proxy statements relating to SDRC's meeting of
shareholders held on April 29, 1997; and (iii) all other reports,
statements and registration statements (including Quarterly Reports
on Form 10-Q and Current Reports on Form 8-K) filed by SDRC with the
SEC since December 31, 1996 (collectively, the "SEC Filings"). As
of their respective dates, the SEC Filings (including all exhibits
and schedules thereto and documents incorporated by reference
therein) complied as to form in all material respects with the
applicable laws and rules and regulations of the SEC and did not
contain any untrue statement of material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which
they were made, not misleading. The financial statements of SDRC
and its subsidiaries included or incorporated by reference in the
SEC Filings (including the related notes and schedules) have been
prepared in accordance with generally accepted accounting principles
applied on a consistent basis during the periods involved (except as
may be indicated in the notes thereto) and fairly present the
consolidated assets, liabilities and financial position of SDRC and
its consolidated subsidiaries as of the dates thereof and the
consolidated results of their operations and changes in financial
position for the periods then ended (subject, in the LDI of any
unaudited interim financial statements, to normal year-end
adjustments).
Section 4.7 No Material Adverse Change. Except as
disclosed in the SEC Filings filed with the SEC through the date of
this Agreement, since September 30, 1997, there has been no change
in, and no event, occurrence or development in the business of SDRC,
the Surviving Corporation or any of the SDRC subsidiaries that,
taken together with other events, occurrences and developments with
respect to such business, has had or would reasonably be expected to
have a Material Adverse Effect on SDRC or the ability of SDRC to
consummate the transactions contemplated hereby.
Section 4.8 Current Plans or Intentions. To the knowledge
of SDRC neither SDRC nor any of its subsidiaries, affiliates or
shareholders has taken or agreed to take any action that would
prevent the Merger from constituting a transaction qualifying as a
reorganization under Sections 368(a)(1)(A) and 368(a)(2)(D) of the
Code and SDRC does not have any current plan or intention to take
any of the following actions within the twelve month period
immediately following the Effective Date:
(a) liquidate the Surviving Corporation;
(b) merge the Surviving Corporation with or into
another corporation, except if the Surviving Corporation is the
surviving corporation;
(c) cause the Surviving Corporation or any Surviving
Corporation Subsidiary to sell or otherwise dispose of any of its
assets to any entity other than the Surviving Corporation or a
Surviving Corporation Subsidiary, with the following exceptions: (i)
sales or dispositions in the ordinary course of business, or (ii)
sales or dispositions which would not violate the "substantially
all" test as defined in Rev. Proc. 77-37, 1977-2 568 Section 3.01;
(d) dispose of any stock of the Surviving Corporation
except for transfers to corporations controlled by SDRC, as defined
in Section 368(c) of the Code, or cause the Surviving Corporation to
issue shares of its stock to anyone other than SDRC that would
result in SDRC losing 80% control of the Surviving Corporation, as
defined in Section 368(c) of the Code.
For purposes of this Section 4.8, the term "Surviving
Corporation Subsidiary" shall mean any entity with respect to which
the Surviving Corporation or another Surviving Corporation
Subsidiary (so defined), at the time of the occurrence of the event
described in this Section 4.8, owns stock that possesses at least
80% of the total voting power of such entity and has a value equal
to at least 80% of the total value of the stock of such entity.
Section 4.9 Litigation. Except as disclosed in SDRC's SEC
Filings, there are no actions, suits, proceedings, investigations or
assessments of any kind pending before any court, administrative
agency, arbitration association, or other regulatory body, or to the
knowledge of SDRC, threatened against SDRC or any of its
subsidiaries which if successful might have a Material Adverse
Effect or which questions the validity or legality of this Agreement
or of any action taken or to be taken by SDRC or the Surviving
Corporation in connection with this Agreement.
Section 4.10 Brokers' Fees. SDRC has not (i) directly or
indirectly, dealt with any broker or finder in connection with this
transaction and (ii) has not incurred or will not incur any
obligation for any broker's or finder's fee or commission in
connection with the transactions provided for in this Agreement.
Section 4.11 Governmental Authorities; Consents. Except for
the filing of the Certificate of Merger and the Articles of Merger
with the Secretaries of State of the States of Ohio and Nevada, SDRC
is not required to submit any notice, report or other filing with
any governmental authority in connection with the execution or
delivery by it of this Agreement, the Certificate of Merger or the
Articles of Merger or the consummation of the transactions
contemplated hereby or thereby. No approval or authorization of any
governmental or regulatory authority or any other party or person
(except the approval of the Agreement of Merger and Plan of
Reorganization by the shareholders of LDI and Surviving Corporation)
is required to be obtained by SDRC or Surviving Corporation in
connection with their execution, delivery and performance of this
Agreement, the Certificate of Merger or the Articles of Merger or
the transactions contemplated hereby or thereby.
Section 4.12 Full Disclosure. No representation or
warranty made by SDRC in this Agreement or exhibit hereto and no
statement or certificate or memorandum furnished or to be furnished
by SDRC pursuant hereto or in connection with the transactions
covered hereby contains or will contain any untrue statement of a
material fact, or omit any material fact, the omission of which
would be misleading.
ARTICLE 5
COVENANTS
Section 5.1 Cooperation. Each of the parties hereto shall
cooperate with the other party in all reasonable respects, and shall
take all other steps necessary to carry out and consummate the
transactions contemplated by this Agreement at the earliest
practicable time including, without limitation, the filing of
applications, notices and other documents with, and obtaining
approval from, appropriate governmental regulatory agencies.
Section 5.2 Access to Information. LDI has permitted SDRC,
its officers, employees, accountants, agents and attorneys, and SDRC
has permitted LDI, its officers, employees, accountants, agents and
attorneys, to have reasonable access during business hours to their
respective books, records and properties for the purpose of making
a detailed examination or updating and amplifying prior examinations
of the financial condition, assets, liabilities, legal compliance,
affairs and the conduct of the business of LDI or SDRC, as the case
may be, and permitting one another to undertake a complete due
diligence investigation to its satisfaction provided, however, that
any such due diligence investigation by SDRC or LDI shall not
relieve SDRC or LDI from any responsibility or liability for any
material misrepresentation or material breach of warranty hereunder
discovered in the course of or subsequent to such investigation and
prior to the Effective Date.
Section 5.3 Conduct of the Business Until the Effective
Date. Except for actions contemplated hereby or taken with the
prior written consent of SDRC and LDI, SDRC and LDI will, from the
date of this Agreement until the Effective Date, conduct their
business only in the ordinary course and consistent with past
practices, and LDI will refrain from taking any action which would
result in a material breach of any representation and warranty made
by LDI herein. During the period from the date of this Agreement to
the Effective Date, LDI shall not without prior written consent from
SDRC, which consent will not be unreasonably withheld or delayed,
(1) license, sell or otherwise dispose of any asset, property or
intellectual property rights, in any form, in whole or in part; (2)
except for payroll and related employee benefit payments, make any
individual disbursements, commitments or purchases in excess of
$10,000; and (3) Subchapter S "triple A" end of year distributions
to Shareholder in accordance with LDI's past practices, provided
that such distributions shall not deplete the total combined cash of
LDI and Computer Aided Systems for Engineering, Inc. ("CASE") to
less than $200,000 as of the Effective Date.
Section 5.4 Capital Structure and Dividends. From the date
of this Agreement until the Effective Date, LDI will not issue any
long term debt or additional securities of any kind or warrants or
options to purchase any of such securities. As of the date of this
Agreement, LDI shall take no actions which change or affect its
capital structure; nor shall LDI, without the prior written consent
of SDRC, except as set forth on Schedule 5.4, pay any dividends or
make any distributions on LDI's stock.
Section 5.5 No Other Negotiations. From the date of this
Agreement until the Effective Date, LDI agrees that neither it, nor
any officer, director, employee or agent on its behalf will initiate
or hold discussions, negotiate or bargain with or entertain offers
from any other party concerning the acquisition or change in control
of LDI, however structured. In the event LDI receives an
unsolicited offer relating to the type of transaction contemplated
hereby, LDI shall immediately notify SDRC in writing of the
existence and contents of the offer, the identity of the offeror,
and shall provide SDRC with a copy of the offer and any related
correspondence. LDI shall immediately inform the offeror of the
existence of this Agreement and LDI shall reject such offer.
Section 5.6 Private Placement of Securities. SDRC and LDI
shall use reasonable efforts to meet the requirements of Regulation
D promulgated under the Securities Act of 1933 in order to
accomplish the issuance of shares of SDRC Common Stock to the
shareholders of LDI in the Merger. SDRC's obligation to consummate
the Merger is contingent upon the satisfaction of all of the
conditions required by Regulation D, the execution and delivery of
an Investor Agreement in the form appended hereto as Exhibit 2.2 by
each of the shareholders of LDI on or before the Effective Date, and
delivery to SDRC of evidence satisfactory to SDRC that each of the
shareholders of LDI is an "accredited investor" as such term is
defined by the rules of the Securities and Exchange Commission under
the Securities Act of 1933.
Section 5.7 Employee Matters.
(a) Subject to the following agreements, after the
Effective Date SDRC shall have the right to continue, amend or
terminate any or all of the Benefit Plans (as defined in Section
3.17) in accordance with the terms thereof and subject to any
limitation arising under applicable law. Until SDRC shall take such
action, however, such Benefit Plans shall continue in force for the
benefit of present and former employees of LDI who have any present
or future entitlement to benefits under any of the Benefit Plans
("LDI Employees").
(b) SDRC will honor the obligations of LDI with
respect to vested rights under Benefit Plans and agreements of LDI
relating to LDI Employees in accordance with the terms of such
vested rights and subject to the provisions of Section 5.7(a).
(c) SDRC will credit all employees of LDI with all
service with LDI for purposes of eligibility to participate,
eligibility for benefits, calculation of benefits and vesting under
any of the Surviving Corporation's or SDRC's existing or future
employee benefit plans, programs or arrangements under which the
right to or the amount of benefits is based on service of such
employees.
(d) This Section 5.7 is an agreement solely between
LDI and SDRC. Nothing in this Section 5.7, whether express or
implied, confers upon any employee of LDI or SDRC or any other
person, any rights or remedies, including, but not limited to: (i)
any right to employment or recall, (ii) any right to continued
employment for any specified period, or (iii) any right to claim any
particular compensation, benefit or aggregate of benefits, of any
kind or nature whatsoever, as a result of this Section 5.7.
(e) SDRC acknowledges that in 1998 LDI would but for
the Merger make a substantial voluntary contribution to its profit
sharing plan for the benefit of its employees with respect to the
year 1997. SDRC hereby covenants and agrees to make such voluntary
contribution in the maximum amount permitted by law, not to exceed
$30,000, no later than March 15, 1998.
Section 5.8 Tax and Accounting Treatment. LDI and SDRC
shall use reasonable efforts to cause the Merger to qualify, and
shall not take any actions which could prevent the Merger from
qualifying, for pooling-of-interests accounting treatment and as a
"reorganization" pursuant to Sections 368(a)(1)(A) and 368(a)(2)(D)
of the Code that would be tax free to the shareholders of LDI.
Section 5.9 SEC Reports. SDRC agrees to provide to LDI
copies of all reports and other documents filed with the SEC by it
and between the date hereof and the Effective Date within five days
after the date such reports or other documents are filed with the
SEC.
Section 5.10 Shareholder Approval. LDI shall call a
meeting of its shareholders 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 LDI 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.
Section 5.11 Sales of SDRC Common Stock. In order that
SDRC may account for the Merger as a pooling of interests, LDI shall
use its best efforts to cause the directors and officers of LDI and
other affiliates not to sell any shares of SDRC Common Stock until
after SDRC has filed with the SEC financial results for at least 30
days of the combined operations of SDRC and LDI. SDRC hereby
covenants and agrees to file its routine first quarter 1998 earnings
press release with the SEC as an exhibit to a Form 8-K as soon as is
practicable after it issues such press release and in any event not
later than April 30, 1998.
Section 5.12 Tax Files. LDI shall maintain and make
available to SDRC all of its files, working papers and Returns
associated with the federal income tax obligations of LDI for the
earliest fiscal year for which unused net operating loss carry
forwards exist through 1997, inclusive.
ARTICLE 6
CONDITIONS PRECEDENT TO CLOSING
Section 6.1 Conditions to the Obligations of Each of the
Parties. The obligation of each of the parties hereto to consummate
the transaction provided for herein is subject to the fulfillment on
or prior to the Effective Date of each of the following conditions:
Section 6.1.1 Corporate Approvals. The shareholders of
LDI and Surviving Corporation each shall have duly approved and
adopted this Agreement and the Merger in accordance with and as
required by law and in accordance with each company's charter and
bylaws or code of regulations.
Section 6.1.2 Governmental Approvals. All necessary
governmental and regulatory orders, consents, clearance and
approvals and requirements shall have been secured and satisfied and
all applicable waiting periods expired for the consummation of the
transaction contemplated hereby.
Section 6.1.3 Private Placement of Securities. SDRC
shall have complied with Regulation D promulgated by the SEC under
the 1933 Act to enable SDRC to issue the Shares as restricted
securities to the shareholders of LDI in the Merger under the
private placement exemption of the 1933 Act. On or before the
Effective Date, each of the shareholders of LDI shall have executed
and delivered to SDRC an Investment Agreement in the form appended
hereto as Exhibit 2.2.
Section 6.1.4 Tax Opinion. Counsel for SDRC, shall
have delivered an opinion to both LDI and SDRC, satisfactory to both
parties, that the transaction contemplated hereby will be treated
for tax purposes as a tax-free exchange of stock pursuant to the
Code.
Section 6.1.5 Employment of LDI Employees. Prior to
the Effective Date, SDRC shall have identified those employees of
LDI which shall be retained by SDRC.
Section 6.1.6 No Orders. The consummation of the
Merger or the transactions contemplated hereby shall not have been
restrained, enjoined, or prohibited by any court or governmental
authority of competent jurisdiction, and there shall be no action or
proceeding pending which seeks such relief.
Section 6.1.7 Other Merging Closing. Concurrently
with the closing of the Merger on the Effective Date, the merger of
CASE into the Surviving Corporation shall also have closed and
become effective.
Section 6.2 Conditions to the Obligations of SDRC. The
obligation of SDRC to consummate the transaction provided for herein
is subject to fulfillment at or prior to the Effective Date of each
of the following conditions unless waived by SDRC in a writing
delivered to LDI which specifically refers to the condition or
conditions being waived:
Section 6.2.1 Representations and Warranties. All of
the representations and warranties of LDI set forth in Article 3 of
this Agreement shall be true and correct in all material respects at
and as of the respective dates set forth with respect to each, as of
the date of this Agreement and at and as of the Effective Date as if
each such representation and warranty was given on and as of the
Effective Date (except (i) that any such representation and warranty
made as of a specified date shall only need to have been true in all
material respects on and as of such date, and (ii) that any
liability or potential liability which accrues to LDI as a result of
its compliance with any other Covenants or Conditions to Closing
specified in this Agreement shall not constitute a breach of any
LDI's representations and warranties, hereunder).
Section 6.2.2 LDI's Covenants. LDI shall have
performed all covenants and obligations required by this Agreement
to be performed by it on or before the Effective Date.
Section 6.2.3 Financial Statements. LDI shall have
delivered to SDRC unaudited financial statements for the year ended
December 31, 1996 prior to the Effective Date and SDRC shall have
caused its independent public accountants to have reviewed such
unaudited 1996 financial statements and LDI's unaudited financial
statements as of the end of the month immediately preceding the
Effective Date, performed such other auditing procedures as may be
requested by SDRC and reported that it is not aware of any material
modifications that should be made in order for such financial
statements to be in substantial conformity with generally accepted
accounting principles and to accurately state LDI's financial
condition and results of operations as of the respective dates
thereof.
Section 6.2.4 Pooling of Interests. SDRC shall have
received assurances satisfactory to it that the transaction
contemplated hereby may be accounted for as a pooling-of-interests,
the SEC shall have raised no objection to such accounting treatment
and SDRC shall have received on or before the Effective Date a
letter from Price Waterhouse, L.L.P. supporting the pooling-of-interests
accounting treatment for the Merger. In addition, Clark,
Schaefer, Hackett & Co. shall have issued, prior to the Effective
Date, a letter indicating that LDI is a poolable entity.
Section 6.2.5 Dissenter's Rights. The holders of not
more than 10% of the outstanding shares of LDI Common Stock shall
have exercised dissenter's rights in connection with the
shareholders' vote taken on the Merger.
Section 6.2.6 Merger of CASE Into Surviving
Corporation. Prior to the Effective Date, CASE shall have been
merged into or otherwise acquired in its entirety by Surviving
Corporation.
Section 6.2.7 Opinion of LDI's Corporate Counsel.
Counsel for LDI, shall have delivered to SDRC a customary opinion of
counsel dated the Effective Date, in the form attached hereto as
Exhibit 6.2.7.
Section 6.2.8 Personal Guaranty by Principals. On or
before the Effective Date, Craig S. Young shall have executed and
delivered to SDRC a personal guaranty of LDI's obligations under
Article 3 of this Agreement, such personal guaranty to be in the
form appended hereto as Exhibit 6.2.8.
Section 6.2.9 Consents. On or before the Effective
Date, LDI shall have delivered to SDRC evidence satisfactory to it
of receipt or anticipated receipt of all material consents, licenses
and authorizations from all customers, lessors, licensors,
government agencies and any other persons or organizations, the
consent, license or authorization of which are necessary to permit
SDRC to continue LDI's business after the Effective Date.
Section 6.2.10 Closing Documents. Prior to the Effective
Date, LDI shall have delivered to SDRC all of the following:
(a) certificates of the Chief Executive Officer
and the Chief Financial Officer of LDI, dated as of the date of the
Effective Date, stating that the conditions precedent set forth in
Sections 6.2.1 and 6.2.2 above have been satisfied;
(b) copies of the third party and governmental
consents and approvals and of the authorizations referred to in
Section 6.2.9 above;
(c) LDI's minute books, stock transfer records,
corporate seal and other materials related to LDI's corporate
administration;
(d) a copy of the Articles of Incorporation of
LDI as amended to date, certified by the Secretary of State in each
jurisdiction in which such corporation exists, and a Certificate of
Good Standing of LDI from the Secretary of State in each
jurisdiction in which such corporation exists evidencing the good
standing of LDI in such jurisdiction;
(e) a copy of each of (i) the text of the
resolutions adopted by the board of directors of LDI authorizing the
execution, delivery and performance of this Agreement and the
Articles of Merger, (ii) the text of the resolutions adopted by the
shareholders of LDI authorizing the execution, delivery and
performance of this Agreement and the Articles of Merger and the
consummation of all of the transactions contemplated by this
Agreement and the Articles of Merger, and (iii) the bylaws of LDI;
along with certificates executed on behalf of LDI 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;
(f) incumbency certificates executed on behalf of
LDI by its corporate secretary certifying the signature and office
of each officer executing this Agreement and the Articles of Merger;
(g) a personal guaranty as referred to in Section
6.2.8;
(h) an Investment Agreement in the form appended
hereto as Exhibit 2.2 duly executed by each of the shareholders of
LDI;
(i) such other documents, instruments and
certificates as SDRC may reasonably request.
Section 6.3 Conditions to the Obligations of LDI. The
obligation of LDI to consummate the transaction provided for herein
is subject to the fulfillment at or prior to the Effective Date of
each of the following conditions unless waived by LDI in a writing
delivered to SDRC which specifically refers to the condition or
conditions being waived:
Section 6.3.1 Representations and Warranties. All of
the representations and warranties of SDRC set forth in Article 4 of
this Agreement shall be true and correct in all material respects at
and as of the respective dates set forth with respect to each, as of
the date of this Agreement and at and as of the Effective Date as if
each such representation and warranty was given on and as of the
Effective Date (except that any such representation and warranty
given as of a specified date shall only need to have been true in
all material respects on and as of such date).
Section 6.3.2 SDRC's Covenants. SDRC shall have
performed all covenants and obligations required by this Agreement
to be performed on or before the Effective Date.
Section 6.3.3 Opinion of SDRC's Counsel. Counsel for
SDRC, shall have delivered to LDI a customary opinion of counsel
dated the Effective Date, in the form attached hereto as Exhibit
6.3.3.
Section 6.3.4 Closing Documents. Prior to the Effective
Date, SDRC shall have delivered to LDI all of the following:
(a) certificates of the Chief Executive Officer
and the Chief Financial Officer of SDRC dated as of the date of the
Effective Date, stating that the conditions precedent set forth in
Sections 6.3.1 and 6.3.2 above have been satisfied;
(b) copies of the third party and governmental
consents and approvals and of the authorizations referred to in
Section 6.2.9 above;
(c) a copy of the Articles of Incorporation of
SDRC and Surviving Corporation, as amended to date, certified by the
Secretary of State of the State of Ohio, and a Certificate of Good
Standing of SDRC and Surviving Corporation from the Secretary of the
State of Ohio evidencing the good standing of SDRC and Surviving
Corporation;
(d) a copy of each of (i) the text of the
resolutions adopted by the boards of directors of SDRC and Surviving
Corporation authorizing the execution, delivery and performance of
this Agreement and the Articles of Merger and the consummation of
all of the transactions contemplated by this Agreement and the
Articles of Merger, (ii) the text of the resolutions adopted by the
sole shareholder of Surviving Corporation authorizing the execution,
delivery and performance of this Agreement and the Articles of
Merger and the consummation of all of the transactions contemplated
by this Agreement and the Articles of Merger, and (iii) the codes of
regulations of SDRC and Surviving Corporation; along with
certificates executed on behalf of SDRC and Surviving Corporation by
their respective corporate secretaries certifying to LDI that such
copies are true, correct and complete copies of such resolutions and
codes of regulations were duly adopted and have not been amended or
rescinded;
(e) incumbency certificates executed on behalf of
SDRC and Surviving Corporation by their respective corporate
secretaries certifying the signature and office of each officer
executing this Agreement and/or the Articles of Merger; and
(f) such other documents, instruments and
certificates as LDI may reasonably request.
ARTICLE 7
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 party; provided,
however, that in the case of an announcement which SDRC may be
required by law, by any governmental agency or by the Nasdaq
National Market to make, issue or release, such action by SDRC
without the prior approval by the other parties shall not constitute
a breach of this Section.
ARTICLE 8
TERMINATION
Section 8.1 Circumstances of Termination. This Agreement may
be terminated (notwithstanding approval of the shareholders of LDI):
(i) By the mutual consent in writing of SDRC and LDI;
(ii) By SDRC if any condition provided in Section 6.1
or 6.2 hereof has not been materially satisfied or waived on or
before the Effective Date;
(iii) By LDI if any condition provided in Section 6.1
or 6.3 has not been materially satisfied or waived on or before the
Effective Date;
(iv) By either SDRC or LDI if the merger contemplated
by this Agreement is not fully and legally consummated by February
28, 1998.
Section 8.2 Effect of Termination. In the event of a
termination of this Agreement pursuant to Section 8.1 hereof, each
party shall pay the costs and expenses incurred by it in connection
with this Agreement and no party (or any of its officers, directors
or shareholders) shall be liable to any other party for any costs,
expenses, damage or loss of anticipated profits hereunder.
ARTICLE 9
EFFECTIVE DATE OF MERGER
After adoption and approval of this Agreement by the
shareholders of LDI in accordance with the requirements of
applicable law, and upon satisfaction of each of the conditions set
forth in Article 6 (unless waived 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),
and at such time as shall be agreed upon in writing by LDI and SDRC
(if no such agreement has been reached, then on the day of the
meeting of shareholders of LDI at which this Agreement is approved),
a Certificate of Merger shall be submitted for filing with the
Secretary of State of Ohio and the Articles of Merger shall be
submitted for filing with the Secretary of State of Nevada. The
date of the later of such filings, or at such other date as the
parties may agree upon in writing pursuant to applicable law, is
referred to in this Agreement as the "Effective Date." The
Effective Date shall not be extended beyond February 28, 1998
without the written consent of LDI.
ARTICLE 10
CERTAIN LIMITATIONS ON LIABILITIES
Section 10.1 Survival of Representations and Warranties.
The representations and warranties of LDI in Article 3 above and of
SDRC in Article 4 above shall survive the Effective Date and the
consummation of the Merger until the later of the close of business
on (i) March 31, 1999, or (ii) the date audited consolidated
financial statements of SDRC for the year 1998 are filed with the
Securities and Exchange Commission by SDRC (the "Survival Period").
No claims or causes of action arising out of any breach or alleged
breach of such representations and warranties by either party may be
asserted unless (i) during the Survival Period, written notice of
such breach or alleged breach is served upon the party alleged to
have breached, and (ii) if the parties are unable to amicably settle
such claim, a suit or other legal proceeding is commenced within 12
months after the end of the Survival Period.
Section 10.2 Basket Provision. Neither party shall be
liable to the other party for any individual breach or alleged
breach of its representations and warranties set forth in this
Agreement for which the damages resulting therefrom, when aggregated
together with any damages resulting
from any breaches of the representations and warranties in the
merger agreement relating to the merger of CASE into Surviving
Corporation, would not exceed a combined total of $100,000, provided
that if such cumulative aggregate amount of damages attributable to
all breaches or alleged breaches of a party's representations and
warranties do exceed $100,000, then such party shall be fully liable
for all damages attributable to all such breaches.
Section 10.3 Dollar Limitation. Neither LDI nor
Shareholder shall be liable to SDRC or Surviving Corporation in the
event of any breach or breaches of any representations or warranties
set forth in the Agreement in a cumulative aggregate amount in
excess of a dollar amount equal to the number of Shares issued in
the Merger multiplied by the closing per share price of SDRC Common
Stock on The Nasdaq National Market on the Effective Date.
ARTICLE 11
MISCELLANEOUS
Section 11.1 Headings. The subject headings of the
sections, paragraphs and subparagraphs of this Agreement are
included for purposes of convenience only, and shall not affect the
construction or interpretation of any of its provisions.
Section 11.2 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, including without limitation the Offer
Letter, representations and understandings of the parties; provided,
however, the Confidentiality Agreement between LDI and SDRC relating
to the Merger shall survive until the Effective Date. 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.
Section 11.3 Knowledge. For purposes of this Agreement,
"knowledge" or "best knowledge" means the actual knowledge of
current members of the board of directors and officers of LDI, as
such knowledge has been obtained in the normal conduct of the
business and following a reasonable investigation by such
individuals.
Section 11.4 Material Adverse Effects. As used in this
Agreement, the term "Material Adverse Effect" with respect to any
party means any single or a series of related conditions, events,
changes or occurrences that have or may reasonably be expected to
have a financially adverse effect on the business, operations,
results of operations and/or financial condition of such party and
its subsidiaries, if any, taken as a whole, in the amount of
$100,000 or more.
Section 11.5 Consents. Where any consent or waiver of SDRC
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 LDI is required or
requested hereunder, Craig S. Young, President of LDI, shall be the
authorized person to provide any such consent or waiver.
Section 11.6 Counterparts. This Agreement may be executed
simultaneously in one or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one
and the same instrument.
Section 11.7 Further Assurances. At any time and from time
to time after the Effective Date, each party will execute such
additional instruments and take such actions as may be reasonably
requested by the other party to confirm or perfect title to any
property transferred hereunder or otherwise to carry out the intent
and purposes of this Agreement.
Section 11.8 Assignment. This Agreement shall be binding
on, and shall inure to the benefit of, the parties to it and their
respective heirs, legal representatives, successors and assigns;
provided, however, that any assignment by either party of its rights
under this Agreement without written consent of the other party
shall be void.
Section 11.9 Effect of Certain Actions. No action taken
pursuant to or related to this Agreement, including without
limitation any investigation by or on behalf of any party, shall be
deemed to constitute a waiver by the party taking such action of
compliance with any representation, warrant, condition or agreement
contained herein.
Section 11.10 Notices. All notices, requests, demands and
other communications under this Agreement shall be in writing and
shall be deemed to have been duly given on the date of service if
served personally on the party (including, without limitation,
service by overnight courier service) to whom notice is to be given,
or on the third day after mailing if mailed to the party to whom
notice is to be given, by first class mail, registered or certified,
postage prepaid, at the address set forth below, or on the date of
service if delivered by facsimile to the facsimile number set forth
below, which facsimile is confirmed within three days by deposit of
a copy of such notice in first class mail, registered or certified,
postage prepaid at the address set forth below. Any party may
change its address for purposes of this paragraph by giving the
other parties written notice of the new address in the manner set
forth above.
If to SDRC:
Structural Dynamics Research Corporation
2000 Eastman Drive
Milford, Ohio 45150
Fax No. (513) 576-2049
Attn: John A. Mongelluzzo
Copy to:
Dinsmore & Shohl LLP
1900 Chemed Center
255 East Fifth Street
Cincinnati, Ohio 45202
Attn: Charles F. Hertlein, Jr.
If to LDI:
Lookout Drafting, Inc.
d/b/a Computer Aided Systems for Engineering
663 Lookout Road
P.O. Box 11819
Zephyr Cove, Nevada 89448
Attn: Craig S. Young
Copy to:
Keating, Meuthing & Klekamp
1800 Provident Tower
One East Fourth Street
Cincinnati, OH 45202
Attn: Robert E. Coletti
Copy to:
Young Family Special 1996 Trust
Suite 1405
105 East Fourth Street
Cincinnati, OH 45202
Attn: Robert W. Buechner
Section 11.11 Governing Law. This Agreement shall be governed
by and construed in accordance with laws of the State of Ohio,
without reference to its principles governing conflicts of law.
IN WITNESS WHEREOF, the parties to this Agreement have duly
executed it as of the date set forth above.
LOOKOUT DRAFTING, INC.
By:/s/ Craig S. Young
Its: President
SDRC ACQUISITION CORPORATION
By: /s/ Thomas F. Eberle
Its: President
STRUCTURAL DYNAMICS RESEARCH CORPORATION
By:/s/ Thomas F. Eberle
Its: Assistant Secretary
YOUNG FAMILY SPECIAL 1996 TRUST
By:/s/ Robert W. Buechner
Its: Trustee
<PAGE>
EXHIBIT LIST
Exhibit Description
2.2 Investment Agreement
3.29 Tax Opinion
6.2.7 Form of Opinion of LDI's Corporate Counsel
6.2.8 Personal Guaranty of Craig S. Young
6.3.3 Form of Opinion of SDRC's Corporate Counsel
SCHEDULES
Schedule Description
3.1 Jurisdictions in which Qualified to do
Business
3.4 Financial Statement Exceptions
3.6 Accounts Receivable
3.7 Real Property
3.8 Environmental Matters
3.9 Absence of Material Adverse Changes
3.12 Litigation
3.13 Taxes
3.14 Contracts, Agreements and Commitments
3.15 Intellectual Property
3.16 Dividends Paid
3.17 Employees and Employee Plans
3.20 Employee Claims
3.21 Discrimination
3.22 Insurance Policies
3.23 Bank Accounts and Loans
3.24 Stock Issuances
3.30 Violations
3.32 Software Maintenance Agreements
5.4 Permitted Distributions
Exhibit 2.2
AGREEMENT OF MERGER
AND PLAN OF REORGANIZATION
This Agreement of Merger and Plan of Reorganization
(hereinafter referred to as the "Agreement") is made this 22nd day
of December, 1997 by and among Computer Aided Systems for
Engineering, Inc., an Ohio corporation, with principal offices
located at 2000 Eastman Drive, Milford, Ohio 45150 (hereinafter
referred to as "CASE"); James D. Young, an Ohio resident and the
sole shareholder of CASE (referred to herein as "Shareholder");
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, an Ohio corporation wholly-owned by SDRC (hereinafter
referred to as the "Surviving Corporation").
WITNESSETH:
WHEREAS, the parties wish to effect a transaction under the
authority and provisions of the corporation law of Ohio pursuant to
which at the effective date, as defined herein, CASE will be merged
with and into the Surviving Corporation (such merger is referred to
herein as the "Merger"); and
WHEREAS, for federal income tax purposes, the parties intend
the Merger to qualify as a reorganization within the meaning of
Sections 368(a)(1)(A) and 368(a)(2)(D) of the Internal Revenue Code
of 1986, as amended (the "Code").
NOW THEREFORE, in consideration of the mutual promises and
covenants contained herein, the parties agree as follows:
ARTICLE 1
THE MERGER
Section 1.1 Transfer of Property and Liabilities. Upon
the Effective Date (as defined in Article 9 hereof) of the Merger,
the separate existence of CASE shall cease; all of the outstanding
shares of common stock, without par value of CASE ("CASE Common
Stock") shall be exchanged for and converted into shares of the
common stock without par value of SDRC ("SDRC Common Stock"), as
hereinafter provided; and upon the filing of the appropriate
Certificate of Merger with the Secretary of State of Ohio, the
Surviving Corporation shall possess all of the rights, privileges,
immunities, powers and purposes, and all of the property, real and
personal, causes of action and every other asset of CASE, and shall
assume and be liable for all of the liabilities, obligations and
penalties of CASE, in accordance with the General Corporation Law of
the State of Ohio.
Section 1.2 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 Ohio. The
officers and directors of the Surviving Corporation immediately
prior to the Effective Date shall continue as the officers and
directors of the Surviving Corporation. The Articles of
Incorporation and Code of Regulations of the Surviving Corporation,
as of the Effective Date, shall continue in full force and effect,
and shall not be changed in any manner by the Merger.
Section 1.3 Principal Office. Following the Effective
Date, the principal office of the Surviving Corporation shall be
located in Milford, Clermont County, Ohio.
Section 1.4 State Law. The Surviving Corporation shall be
an Ohio corporation, governed in all respects by the corporate laws
of the State of Ohio.
ARTICLE 2
CONVERSION OF SHARES
Section 2.1 Merger Consideration. All of the shares of
CASE Common Stock issued and outstanding as of the close of business
on the business date immediately prior to the Effective Date 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 shares of SDRC Common Stock without par value ("SDRC Common
Stock"). A total of 150,000 shares (the "Shares") of SDRC Common
Stock shall be issued by SDRC. Each individual share of CASE Common
Stock issued and outstanding as of the close of business on the
business date immediately prior to the Effective Date shall be
converted into that number of shares of SDRC Common Stock equal to
the total number of shares of SDRC Common Stock to be issued in the
Merger as provided above divided by the total number of shares of
CASE Common Stock issued and outstanding as of the close of business
on the business date immediately prior to the Effective Date;
provided, however, that no fractional shares of SDRC Common Stock
shall be issued pursuant to the Merger and in lieu thereof cash
shall be paid for fractional shares that would otherwise be issued,
in accordance with Section 2.4 below.
Section 2.2 Private Placement of Securities. The Shares
have not been registered under the Securities Act of 1933 or any
applicable state securities laws, but will be issued pursuant to
Regulation D promulgated under the Securities Act of 1933. SDRC's
obligation to issue such shares upon consummation of the Merger is
contingent upon the execution and delivery by each of the
shareholders of CASE of an Investment Agreement (the "Investment
Agreement") in the form appended hereto as Exhibit 2.2 and the
receipt of assurances satisfactory to SDRC that each of the
shareholders of CASE is an "accredited investor" as such term is
defined by the rules of the Securities and Exchange Commission under
the Securities Act of 1933. The Shares will be subject to the
restrictions on transfer contained in the Investment Agreement and
certificates representing such shares shall bear an appropriate
legend to the effect that such shares are subject to the terms of
the Investment Agreement.
Section 2.3 Exchange of Certificates. After the Effective
Date, each holder of a certificate or certificates for shares of
CASE Common Stock, upon surrender of the same duly transmitted to
SDRC's stock transfer 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 SDRC's stock transfer agent), shall be
entitled to receive in exchange therefor a certificate or
certificates representing the number of whole shares of SDRC Common
Stock into which such holder's shares of CASE Common Stock shall
have been converted by the Merger plus a cash payment for any
fraction of a share to which the holder is entitled, in lieu of such
fraction of a share, equal in amount to the product resulting from
multiplying such fraction by the Applicable Value Per Share of SDRC
Common Stock. Until so surrendered, each outstanding certificate
that prior to the time the Merger becomes effective represented
shares of CASE Common Stock shall be deemed for all corporate
purposes to evidence ownership of the number of full shares of SDRC
Common Stock into which the same shall have been converted;
provided, however, that dividends or distributions otherwise payable
with respect to shares of SDRC Common Stock into which CASE Common
Stock shall have been so converted shall be paid with respect to
such shares only when the certificate or certificates evidencing
any such shares of CASE Common Stock 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 SDRC), and,
thereupon, any such dividends and distributions shall be paid,
without interest, to the holder entitled thereto, subject however to
the operation of any applicable escheat or similar laws relating to
unclaimed funds.
Section 2.4 Dissenting Shares.
(a) Notwithstanding anything in this Agreement to the
contrary, shares of CASE Common Stock that are issued and
outstanding immediately prior to the Effective Date and which are
held by shareholders who have delivered notice of their intent to
demand payment for their shares if the Merger is effectuated and who
do not vote their shares in favor of the proposed Merger
("Dissenting Shares") shall not be converted into or represent a
right to receive shares of SDRC Common Stock pursuant to Section 2.1
hereof, but the holders thereof shall be entitled only to such
rights as are granted by Sections 1701.84 and 1701.85 of the Ohio
Revised Statutes. Each holder of Dissenting Shares who becomes
entitled to payment for such shares pursuant to Sections 1701.84 and
1701.85, of the Ohio Revised Statutes shall receive payment therefor
from the Surviving Corporation in accordance with the Ohio Revised
Statutes.
(b) CASE shall give SDRC (i) prompt notice of any
written demand for payment and any other instrument served pursuant
to Sections 1701.84 and 1701.85, of the Ohio Revised Statutes
received by CASE, 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 1701.84 and 1701.85 of the Ohio Revised
Statutes. CASE shall not, except with the prior written consent of
SDRC, voluntarily make any payment with respect to any demand for
payment by a Dissenting Shareholder or offer to settle or settle any
such demand.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF CASE
CASE and Shareholder each hereby represents and warrants to
SDRC and to the Surviving Corporation as follows:
Section 3.1 Organization and Good Standing. CASE is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Ohio, and duly authorized to carry on
the business presently conducted by it. CASE is qualified to do
business in the jurisdictions listed on Schedule 3.1 and is not
required to be qualified to do business in any other jurisdiction
where the failure to be so qualified would have a Material Adverse
Effect on CASE.
Section 3.2 Capitalization. As of the date of this
Agreement, CASE's authorized capital stock consists of 750 shares of
common stock, without par value per share, of which 100 shares are
issued and outstanding, fully paid and nonassessable. CASE has no
outstanding stock and no outstanding options, warrants or other
rights entitling another person to acquire any securities of CASE of
any kind. Shareholder is the sole shareholder of CASE.
Section 3.3 Subsidiaries. CASE does not have any direct or
indirect subsidiaries and is not a party to any joint ventures
(referred to herein as "Subsidiaries").
Section 3.4 Financial Statements. CASE has previously
furnished to SDRC its unaudited financial statements as of December
31, 1996, 1995 and 1994 together with unaudited financial statements
for the six month period ended June 30, 1997 (collectively, the
"Financial Statements"). Except as set forth on Schedule 3.4, the
Financial Statements fairly present the financial condition of CASE
as of said dates and the results of its operations for the periods
then ended, in conformity with generally accepted accounting
principles, consistently applied, and there are no material
liabilities, obligations or indebtedness of CASE required to be
disclosed in the Financial Statements other than the liabilities,
obligations or indebtedness disclosed therein (including footnotes).
Section 3.5 Title. Except where the result would not
have a Material Adverse Effect on CASE, CASE has good and marketable
title to all of the properties and assets reflected in the Financial
Statements as of the latest balance sheet contained in the Financial
Statements, and which are still owned by it, and CASE has good and
marketable title to all properties and assets acquired by it after
such date and still owned by it, subject to (i) any liens and
encumbrances that do not materially adversely impair the use of the
property, (ii) statutory liens for taxes not yet due and payable and
(iii) minor defects and irregularities in title that do not
materially adversely impair the use of the property.
Section 3.6 Accounts Receivable. Schedule 3.6 includes an
accurate aging schedule of all of the accounts receivable reflected
on CASE's latest balance sheet included in the Financial Statements.
The net accounts receivable (net of any accounts receivable reserve)
reflected on the latest balance sheet included in the Financial
Statements due from any party other than SDRC will be fully
collectible after such date in the ordinary course of business using
reasonable business methods in light of the nature of the business.
Section 3.7 Real Property. CASE does not own any real
estate. All of CASE's leases of real property are listed on
Schedule 3.7, and except as set forth on Schedule 3.7, CASE's
leases of real property are all assignable and do not contain change
of control provisions. With respect to all real estate leased by
CASE: (i) CASE is the owner and holder of the entire interest in the
leasehold estates purported to be granted by such leases; (ii) CASE
is not in material default under any lease and each lease
constitutes a valid and binding obligation of the respective parties
thereto; and (iii) there are no material declared defaults currently
existing, CASE has not received any notices of material default,
and, to the knowledge of CASE, no events have occurred that with
notice, the lapse of time or both, would constitute a material
default under any of the real estate leases to which CASE is a
party.
Section 3.8 Environmental Matters. Except as disclosed on
Schedule 3.8: (i) the property and assets of CASE and the
operations conducted thereon by CASE (aa) do not materially violate
any applicable federal, state or local environmental law, regulation
or ordinance (each hereinafter an "Environmental Law"), including by
way of illustration and not by way of limitation, the Clean Air
Act, the Federal Water Pollution Control Act of 1972, the Resource
Conservation and Recovery Act of 1976, the Comprehensive
Environmental Response Compensation and Liability Act of 1980, and
the Toxic Substances Control Act (including any amendments or
extensions thereof, and rules, regulations, standards or guidelines
pursuant to any Environmental Laws) and all other environmental
standards or requirements, and (bb) are not subject to any existing,
pending or, to the knowledge of CASE, threatened investigation,
inquiry or proceeding by any governmental authority or to any
remedial obligations under any Environmental Law; (ii) all notices,
permits, licenses or similar authorizations, if any, required to be
obtained or filed under any Environmental Law in connection with the
use of the real properties and assets of CASE, including, without
limitation, past or present treatment, storage, disposal or release
of any or all petroleum products, underground storage tanks, and all
Hazardous Substances (as such term is hereinafter defined) into the
environment, have been obtained or filed; (iii) no Hazardous
Substances have been disposed of or otherwise released by CASE or,
to the knowledge of CASE, by others on or to the real properties on
which the operations of CASE are conducted except in strict
compliance with Environmental Laws; and (iv) CASE does not have
contingent liability in connection with the release of any Hazardous
Substances into the environment. "Hazardous Substances" shall mean
any toxic or hazardous or noxious substance, material or waste which
is regulated by any local government authority having jurisdiction
over the real properties of or used by CASE, the State of Ohio or
the United States government, including, but not limited to (i)
asbestos or any asbestos containing material of any kind or
character which is now or may become friable and polychlorinated
biphenyls ("PCB's") as regulated by the Toxic Substance Control Act,
15 U.S.C.A. Section 2601 et seq., or materials or substances designated as
"hazardous substances" pursuant to Section 311 of the Clean Water
Act, 33 U.S.C.A. Section1251 et seq., defined as "hazardous waste"
pursuant to Section 1004 of the Resource Conservation and Recovery
Act, 42 U.S.C.A. Section 6901 et. seq., or defined as "hazardous
substances" pursuant to Section 101 of the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C.A.
Section 9601 et. seq.
Except as disclosed on Schedule 3.8, no notice of any violation
of any Environmental Laws has been received by CASE concerning the
real properties leased by CASE, and, to the knowledge of CASE, there
are no existing or pending requirements of any governmental
authority relating to environmental matters requiring any remedial
action or other work, repairs, construction or capital expenditures
with respect to the real properties. To its knowledge, CASE has not
been named as a "potentially responsible party" in connection with
any litigation, investigation or similar matter, and CASE does not
know of any matter in which CASE may be so named.
Section 3.9 Absence of Material Adverse Changes. Except as
disclosed on Schedule 3.9: (i) since December 31, 1996, there have
been no changes which would have a Material Adverse Effect on the
financial condition, operations or business of CASE; and (ii)
neither CASE's chief executive officer nor its chief financial
officer is aware of any events which have occurred since December
31, 1996 or which are reasonably certain to occur in the future and
which reasonably can be expected to result in any Material Adverse
Effect on the financial condition, operations or business of CASE.
Section 3.10 Material Customer. CASE's only material
customer is Lookout Drafting, Inc. ("LDI").
Section 3.11 Absence of Undisclosed Liabilities. Except
to the extent reflected or reserved against on CASE's latest balance
sheet included in the Financial Statements or as set forth on any of
the Schedules to this Agreement, CASE does not have any undisclosed
liabilities or obligations (secured, unsecured, contingent or
otherwise) of a nature customarily reflected on a corporate balance
sheet prepared in accordance with generally accepted accounting
principles.
Section 3.12 Litigation. Except as disclosed on Schedule
3.12 hereto, there are no actions, suits, proceedings,
investigations or assessments of any kind pending before any court,
administrative agency, arbitration association, or other regulatory
body, or to the knowledge of CASE, threatened against CASE which if
successful might result in any Material Adverse Effect on CASE or
which questions the validity or legality of this Agreement or of any
action taken or to be taken by CASE in connection with this
Agreement.
Section 3.13 Taxes. Except to the extent reserved against
on the latest balance sheet included in the Financial Statements
and/or as set forth on Schedule 3.13, CASE has (i) timely filed all
tax returns, schedules, declarations, and tax-related documents
(collectively, "Returns") required to be filed by any and all
jurisdictions to which it is or has been subject; (ii) timely paid
in full any taxes, interest and penalties with respect thereto,
subject to audit of the taxing authorities by such jurisdictions and
timely made any deposits of tax required by taxing jurisdictions;
(iii) fully accrued on its books an amount sufficient to pay all
taxes not yet due for any completed taxable period; (iv) made timely
payments of the taxes required to be deducted and withheld from the
wages paid to employees; and (v) otherwise satisfied, in all
material respects, all legal requirements applicable to it with
respect to all aforementioned obligations to taxing jurisdictions.
All Returns filed by CASE correctly reflect in all material respects
its income, expenses, deductions, credits and loss carryovers and
the taxes due and are otherwise accurate and complete in all
material respects. CASE has delivered to SDRC true and complete
copies of all federal income tax returns of CASE for each of the
taxable years ended 1994, 1995 and 1996. The most recent period for
which an assessment can no longer be made by the IRS with respect to
federal income tax obligations of CASE is for the fiscal year ended
1991. Except as set forth on Schedule 3.13, CASE has not
experienced an audit of any of the Returns, and CASE has no
knowledge that an audit of any of the Returns is in progress and has
no reason to believe that any such audit is contemplated. There are
no other pending questions received by CASE from any taxing
authority relating to, or claims asserted for (or to the knowledge
of CASE any basis therefor), taxes or assessments of CASE. For
purposes of this Section, "tax" and "taxes" (when not modified by
other words such as "income" or "franchise") shall include all
income, gross receipts, franchise, excise, real and personal
property, and other taxes imposed by any federal, state, municipal,
local, or other governmental agency, including assessments in the
nature of taxes.
Section 3.14 Contracts, Agreements and Commitments. Except
as disclosed on Schedule 3.14, as of the date hereof, CASE is not a
party to any material contract, agreement or commitment, oral or
written, which is to be performed in whole or in part at or after
the date of this Agreement with remaining commitments by or to CASE
of $50,000 or more. Except as set forth on Schedule 3.14, there is
no breach or violation of, or default under any material contract,
agreement or commitment, and no event has occurred which, with
notice or lapse of time or both, would constitute a breach,
violation or default, or give rise to a right of termination,
modification, cancellation, prepayment or acceleration under any
such contract, agreement or commitment.
Section 3.15 Intellectual Property.
(a) Schedule 3.15 contains a complete and accurate
list of all of CASE's Intellectual Property, as defined herein.
Schedule 3.15 also contains a complete and accurate list of all
third-party owned software incorporated into any CASE product.
Except as set forth in Schedule 3.15, CASE owns all right, title and
interest in and to, or holds valid licenses, if any, in and to the
Intellectual Property. Schedule 3.15 sets forth a list of all
software products currently marketed by CASE, 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 CASE with respect to each such product.
Except as described on Schedule 3.15, none of the software products
marketed by CASE has entered the public domain or otherwise lacks
intellectual property protection.
(b) Except as set forth on Schedule 3.15, CASE has
not, as of and since the date upon which it acquired any of the
Intellectual Property, (i) transferred, conveyed, sold, assigned,
pledged, mortgaged or granted a security interest in any of the
Intellectual Property to any third party, (ii) entered into any
license, franchise or other agreement with respect to any of the
Intellectual Property with any third person, or (iii) otherwise
encumbered any of the Intellectual Property. CASE has maintained
and enforced its rights in the Intellectual Property in accordance
with its customary practices in order to safeguard the secrecy of
all aspects of the Intellectual Property that are considered to be
trade secrets.
(c) The conduct of the business of CASE as currently
conducted does not, to CASE's knowledge, conflict, misappropriate or
infringe in any way with any intellectual property right of any
third party that, individually or in the aggregate, is reasonably
likely to have a Material Adverse Effect on CASE's business, and
there is no claim, suit, action or proceeding pending or, to the
knowledge of CASE, threatened against CASE (i) alleging that use of
the Intellectual Property or any intellectual property licenses
conflicts or infringes in any way with any third party's
intellectual property rights, or (ii) challenging CASE's ownership
of or right to use or the validity of any Intellectual Property. To
CASE's knowledge, there are no conflicts, misappropriations,
infringements or other violations by any third party of any of the
Intellectual Property owned by or licensed by or to CASE.
(d) Each copyright registration, patent and trademark
registration and each application therefor listed in Schedule 3.15
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. CASE has taken all of the proper
precautions to maintain the secrecy of its Intellectual Property
that are considered to be trade secrets, and to protect their trade
secrets from disclosure to the full extent required under applicable
law. Except as set forth in Schedule 3.15, there have been no
failures in complying with such requirements and no Copyright,
Patent or Trademark, each as defined herein, has lapsed and there
has been no cancellation or abandonment thereof.
(e) Neither CASE nor any other person has, to the
knowledge of CASE, 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 or any intellectual property licenses
associated with the Intellectual Property.
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 originating with CASE or
as "work for hire" created by or on behalf of CASE, research in
progress, inventions or invention disclosures (whether patentable or
unpatentable) and drawings, schematics, blueprints, flow sheets,
designs and models; (b) all copyrights, copyright registrations,
copyrights 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").
Section 3.16 Business Operation. Since December 31, 1996,
CASE has been operating in the ordinary course of business, has not
made any changes in its capital or corporate structures, nor any
material changes in its methods of business operation and has not
provided any increases in employee salaries or benefits or made a
commitment to change the compensation of any employee, other than in
the ordinary course. Except as set forth on Schedule 3.16, since
December 31, 1996, CASE has not declared or paid any dividends nor
made any distributions of any other kind to its shareholders.
Section 3.17 CASE's Employees and Employee Benefit Plans.
Schedule 3.17 contains a complete and accurate list and a brief
description of each employee contract and each plan or arrangement,
including the total number of CASE shares authorized to be issued
under each such contract, plan or arrangement, which provides any of
the following benefits: bonus, profit sharing, employee stock
ownership, stock option, stock appreciation right, stock grant,
phantom stock, pension, retirement, insurance, medical,
hospitalization, dental, disability, vacation, workers'
compensation, unemployment, deferred or incentive compensation,
severance or any other benefit, including, without limitation, each
"employee pension benefit plan" within the meaning of Section 3(2)
of ERISA, and "employee welfare benefit plan" within the meaning of
Section 3(1) of ERISA (collectively, "Benefit Plans") with respect
to any one or more of the employees or former employees of CASE. To
the extent the Benefit Plans have been reduced to writing, complete
and accurate copies of all the Benefit Plans have been delivered to
SDRC. In the event a Benefit Plan is not in written form, Schedule
3.17 includes a complete and accurate description of such Benefit
Plan. CASE is not and never has been obligated to make
contributions to any multi-employer plan within the meaning of
Section 3(37) of ERISA and there exist no unfunded liabilities under
any of the Benefit Plans. Schedule 3.17 also includes an accurate
and complete list of each employee of CASE with each employee's job
title and annual compensation set forth next to each employee's
name. Since December 31, 1996, other than in the ordinary course of
business, there has been no change in the compensation payable to
such employees. Except as otherwise set forth in Schedule 3.17,
CASE has not promised to provide and is not providing any medical or
life insurance benefits to former employees or any other persons
other than current employees. CASE has previously delivered to SDRC
copies of all executory employment agreements.
Section 3.18 Compliance of Plans with ERISA and Code.
3.18.1 Compliance. If any of the Benefit Plans were
to be terminated, CASE would not have any material liability with
respect to any Benefit Plan other than for amounts already paid or
provided for. All Benefit Plans comply in all material respects
with all applicable laws and regulations including the requirements
of the Code that the Benefit Plans be non-discriminatory with regard
to coverage, availability of benefits and amount and level of
benefits. Each Benefit Plan has received a favorable determination
letter from the Internal Revenue Service ("IRS"), each of which is
current, that such Benefit Plan meets the requirements of Section
401(a) of the Code. There is no "excess reserve" with respect to
any Benefit Plan under Section 419(A)(f)(7)(C) of the Code. Each
participant and beneficiary under each of the Benefit Plans, and
each of their spouses and dependents, has received (i) all notices
and reports required by ERISA within the required deadlines, and
(ii) adequate and timely notice of all elections and options
permitted under the Benefit Plans. All required contributions have
been made to each of the Benefit Plans.
3.18.2 Violations. CASE has not engaged in any
transaction which could result in a material liability under Section
409 of ERISA or Section 4975 of the Code. The execution and
delivery of this Agreement will not cause the termination of any of
the Benefit Plans, involve any prohibited transaction within the
meaning of Section 406 of ERISA or Section 4975 of the Code, nor
constitute a breach of fiduciary responsibility with respect to the
Benefit Plans.
3.18.3 Documents. CASE has delivered to SDRC: (i) all
determination letters issued by the IRS within the past five years
with respect to the Benefit Plans, and the requests therefor; (ii)
any and all documents submitted by CASE to the IRS or the Department
of Labor ("DOL") with respect to the Benefit Plans during the past
five years; (iii) any document relating to the Benefit Plans or the
participation of CASE therein, or the benefits provided thereunder
that create liability with respect thereto; and (iv) any documents
received by CASE from the IRS or the DOL challenging or raising
questions regarding the compliance of any Benefit Plan with the
Code, ERISA or any other applicable law.
Section 3.19 Labor and Employment Matters. CASE is not a
party to any collective bargaining agreement. No person or party
(including, but not limited to, governmental agencies of any kind)
has any valid or enforceable claim or any basis for any valid and
enforceable action or proceeding against CASE arising out of any
federal and/or state equal employment opportunity statutes,
ordinances or regulations, including, but not limited to, those
pertaining to race, age, religion, gender, sexual harassment and all
other similar claims. To the knowledge of CASE, CASE's employees
are United States citizens or are otherwise fully and properly
authorized to work on a permanent basis in the United States.
Section 3.20 Overtime, Back Wages, Vacation and Minimum
Wages. Except as set forth on Schedule 3.20 or as reflected in the
latest balance sheet included in the Financial Statements, no
present or former employee of CASE has any valid and enforceable
claim (whether under federal or state law) under any employment
agreement, or otherwise, on account of or for (i) overtime pay,
other than overtime pay for the current payroll period, (ii) wages
or salary for any period other than the current payroll period,
(iii) vacation or time off (or pay in lieu thereof), other than that
earned in respect of the previous twelve months, or (iv) any
violation of any statute, ordinance or regulation relating to
minimum wages or maximum hours of work.
Section 3.21 Discrimination, Occupational Safety and Other
Statutes and Regulations. Except as set forth on Schedule 3.21, no
person or party (including, but not limited to, governmental
agencies of any kind) has any valid and enforceable claim, or any
basis for any valid and enforceable action or proceeding against
CASE arising out of any material breach or violation by CASE of any
statute, ordinance or regulation relating to discrimination in
employment or employment practices or occupational safety and health
standards (including without limitation, the Occupational Safety and
Health Act, the Fair Labor Standards Act, Title VII of the Civil
Rights Act of 1964, the Age Discrimination in Employment Act of
1967, the Americans with Disabilities Act (except to the extent such
act deals with physical facilities) or the Family and Medical Leave
Act).
Section 3.22 CASE's Insurance Policies. Schedule 3.22
contains an accurate and complete list of each insurance policy
currently providing coverage for the assets of CASE, its directors,
officers and all employees. CASE has at all times maintained
liability coverage with financially sound and reputable insurance
carriers in amounts which are reasonable in light of the business of
CASE and its claims experience. CASE has no knowledge that any
insurance carriers presently providing insurance coverage to CASE
intend to cancel or refuse to renew such policies or materially
increase the premiums payable for coverage comparable to present
coverage, except for premium increases to be generally applicable;
nor does CASE have any knowledge that any such insurance carriers
intend to require CASE to implement material changes in its present
operating facilities or methods or products as a condition to
maintaining insurance.
Section 3.23 Bank Matters. Set forth on Schedule 3.23 is
a list of each bank account, including the name and address of the
bank and the account number, maintained by CASE. The list
identifies each person who has signature power with respect to each
such account. Schedule 3.23 also contains a list of all bank loans
held by CASE, including the name and address of the bank, the loan
number, the original loan amount and all balances due. CASE has
previously provided SDRC with copies of all documentation with
respect to any bank loans.
Section 3.24 Securities Laws and Regulations. Except as
set forth on Schedule 3.24, all of the CASE Common Stock previously
issued was issued in full compliance with all federal and state
securities laws and all regulations promulgated thereunder.
Section 3.25 Minute Books and Stock Record Books. The minute
books of CASE contain complete and accurate records of all official
meetings and other corporate actions of its shareholders and its
Board of Directors, including, but not limited to, any committees of
its Board of Directors. The stock record books of CASE contain
complete and accurate records of all transactions involving the
issuance or transfer of equity securities of CASE.
Section 3.26 Brokers' Fees. CASE (i) has not, directly or
indirectly, dealt with any broker or finder in connection with this
transaction and (ii) has not incurred or will not incur any
obligation for any broker's or finder's fee or commission in
connection with the transactions provided for in this Agreement.
Section 3.27 Private Placement of Securities. CASE shall
cooperate as reasonably requested by SDRC in connection with
complying with the provisions of Regulation D promulgated under the
Securities Act of 1933 in the issuance of shares of SDRC Common
Stock to the shareholders of CASE in the Merger. To the knowledge
of CASE, each of the shareholders of CASE is an "accredited
investor" as such term is defined by rules of the Securities and
Exchange Commission under the Securities Act of 1933.
Section 3.28 Tax Matters. Neither CASE nor its affiliates
or shareholders have taken or agreed to take any action that would
prevent the Merger from constituting a transaction qualifying as a
reorganization under Sections 368(a)(1)(A) and 368(a)(2)(D) of the
Code.
Section 3.29 Corporate Power and Authorization. The
directors of CASE, by resolution adopted by the vote of the
directors at a meeting duly called and held in accordance with
applicable law, have duly approved this Agreement, and have directed
that this Agreement be submitted to a vote of CASE's shareholders at
a special meeting of shareholders to be called for that purpose, all
in accordance with and as required by law and in accordance with the
Articles of Incorporation and Bylaws of CASE. CASE has the
corporate power and authority to enter into this Agreement and to
carry out its obligations hereunder subject to certain required
regulatory and shareholder approvals. This Agreement, when executed
and delivered, will have been duly authorized and will constitute
valid and binding obligations of CASE, enforceable in accordance
with their respective terms, except to the extent that (i)
enforceability thereof may be limited by insolvency, reorganization,
liquidation, bankruptcy, readjustment of debt or other laws of
general application relating to or affecting the enforcement of
creditors' rights, and (ii) the availability of certain remedies may
be precluded by general principles of equity, subject, however, to
the receipt of requisite regulatory approvals and the approval of
CASE's shareholders.
Section 3.30 No Violation. Except as set forth on Schedule
3.30, neither the execution of this Agreement, nor the consummation
of the transactions contemplated hereby, (i) conflicts with, results
in a breach of, violates or constitutes a material default under,
CASE's Articles of Incorporation or Bylaws or any federal, state or
local law, statute, ordinance, rule, regulation or court or
administrative order, or any agreement, arrangement or commitment to
which CASE, or any of its property is subject or bound; (ii) results
in the creation of or gives any person the right to create any lien,
charge, encumbrance, security agreement or any other rights of
others or other adverse interest upon any material right, property
or asset belonging to CASE other than such rights as may be given
dissenting shareholders of CASE pursuant to Ohio law; (iii)
terminates or gives any person the right to terminate, amend,
abandon or refuse to perform any material agreement, arrangement or
commitment to which CASE is a party or by which CASE's rights,
properties or assets are subject or bound; or (iv) accelerates or
modifies, or gives any party thereto the right to accelerate or
modify, the time within which, or the terms according to which, CASE
is to perform any duties or obligations or receive any rights or
benefits under any material agreements, arrangements or commitments.
For purposes of subparagraphs (iii) and (iv) immediately preceding,
material agreements, arrangements or commitments exclude agreements,
arrangements or commitments having a term expiring less than six
months from the date of this Agreement or which do not require the
expenditure of more than $20,000 (but shall include all agreements,
arrangements or commitments pursuant to which credit has been
extended by CASE).
Section 3.31 International Business Matters. CASE does
not engage in any international business.
Section 3.32 Maintenance and Enhancement Agreements.
Except as set forth on Schedule 3.32, CASE has not orally or in
writing committed to provide selective special enhancements to any
of its software products for any CASE customers other than SDRC or
to provide special or increased maintenance obligations to any of
its customers other than SDRC.
Section 3.33 Full Disclosure. No representation or
warranty made by CASE in this Agreement or any Schedule or Exhibit
hereto and no statement or certificate or memorandum furnished or to
be furnished by CASE pursuant hereto or in connection with the
transactions covered hereby contains or will contain any untrue
statement of a material fact, or omit any material fact, the
omission of which would be misleading.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SDRC
SDRC hereby represents and warrants to CASE and to Shareholder,
their heirs, successors and assigns as follows:
Section 4.1 Organization and Good Standing. Each of SDRC
and the Surviving Corporation is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Ohio, and is duly authorized to carry on the business presently
conducted by it.
Section 4.2 Capitalization. SDRC's authorized capital
stock consists of 100,000,000 shares of common stock, no par value,
of which 35,655,143 shares were issued and outstanding as of the
close of business on the last business day prior to the date of this
Agreement, all of which were fully paid and nonassessable.
Section 4.3 Corporate Power and Authorization. The Board
of Directors of SDRC, by resolution adopted by a vote of the
directors at a meeting duly called and held in accordance with
applicable law, has duly approved this Agreement, all in accordance
with and as required by law and in accordance with the Articles of
Incorporation and Code of Regulations of SDRC. SDRC has the
corporate power and authority to enter into this Agreement and to
carry out its obligations hereunder subject to certain required
regulatory approvals. This Agreement, when executed and delivered,
will be duly authorized and will constitute a valid and binding
obligation of SDRC, enforceable in accordance with its terms, except
to the extent that (i) enforceability thereof may be limited by
insolvency, reorganization, liquidation, bankruptcy, readjustment of
debt or other laws of general application relating to or affecting
the enforcement of creditors' rights, and (ii) the availability of
certain remedies may be precluded by general principles of equity,
subject, however, to the receipt of requisite regulatory approvals.
Upon the formation of Surviving Corporation, SDRC as the sole
shareholder of Surviving Corporation, shall cause the board of
directors and the sole shareholder to approve the Merger and shall
cause the Surviving Corporation to meet all of its obligations in
connection with the Merger as set forth in this Agreement.
Section 4.4 No Violation. Neither the execution of this
Agreement, nor the consummation of the transactions contemplated
hereby, (i) conflicts with, results in a breach of, violates or
constitutes a material default under SDRC's Articles of
Incorporation or Code of Regulations or any federal, state or local
law, statute, ordinance, rule, regulation or court or administrative
order, or any agreement, arrangement, or commitment, to which SDRC
or any of its property is subject or bound; (ii) results in the
creation of or gives any person the right to create any lien,
charge, encumbrance, security agreement or any other rights of
others or other adverse interest upon any material right, property
or asset belonging to SDRC; (iii) terminates or gives any person the
right to terminate, amend, abandon, or refuse to perform any
material agreement, arrangement or commitment to which CASE is a
party or by which SDRC's rights, properties or assets are subject or
bound; or (iv) accelerates or modifies, or gives any party thereto
the right to accelerate or modify, the time within which, or the
terms according to which, SDRC is to perform any duties or
obligations or receive any rights or benefits under any material
agreements, arrangements or commitments.
Section 4.5 Shares to be Issued. The shares of SDRC Common
Stock to be issued and delivered pursuant to this Agreement will,
when so issued, be duly and validly issued, fully paid and
nonassessable.
Section 4.6 SEC Filings. SDRC has delivered to CASE true
and complete copies of its (i) Annual Report on Form 10-K for the
year ended December 31, 1996 as filed with the Securities and
Exchange Commission ("SEC"), and its Annual Report to Shareholders
for such year; (ii) proxy statements relating to SDRC's meeting of
shareholders held on April 29, 1997; and (iii) all other reports,
statements and registration statements (including Quarterly Reports
on Form 10-Q and Current Reports on Form 8-K) filed by SDRC with the
SEC since December 31, 1996 (collectively, the "SEC Filings"). As
of their respective dates, the SEC Filings (including all exhibits
and schedules thereto and documents incorporated by reference
therein) complied as to form in all material respects with the
applicable laws and rules and regulations of the SEC and did not
contain any untrue statement of material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which
they were made, not misleading. The financial statements of SDRC
and its subsidiaries included or incorporated by reference in the
SEC Filings (including the related notes and schedules) have been
prepared in accordance with generally accepted accounting principles
applied on a consistent basis during the periods involved (except as
may be indicated in the notes thereto) and fairly present the
consolidated assets, liabilities and financial position of SDRC and
its consolidated subsidiaries as of the dates thereof and the
consolidated results of their operations and changes in financial
position for the periods then ended (subject, in the case of any
unaudited interim financial statements, to normal year-end
adjustments).
Section 4.7 No Material Adverse Change. Except as
disclosed in the SEC Filings filed with the SEC through the date of
this Agreement, since September 30, 1997, there has been no change
in, and no event, occurrence or development in the business of SDRC,
the Surviving Corporation or any of the SDRC subsidiaries that,
taken together with other events, occurrences and developments with
respect to such business, has had or would reasonably be expected to
have a Material Adverse Effect on SDRC or the ability of SDRC to
consummate the transactions contemplated hereby.
Section 4.8 Current Plans or Intentions. To the knowledge
of SDRC neither SDRC nor any of its subsidiaries, affiliates or
shareholders has taken or agreed to take any action that would
prevent the Merger from constituting a transaction qualifying as a
reorganization under Sections 368(a)(1)(A) and 368(a)(2)(D) of the
Code and SDRC does not have any current plan or intention to take
any of the following actions within the twelve month period
immediately following the Effective Date:
(a) liquidate the Surviving Corporation;
(b) merge the Surviving Corporation with or into
another corporation, except if the Surviving Corporation is the
surviving corporation;
(c) cause the Surviving Corporation or any Surviving
Corporation Subsidiary to sell or otherwise dispose of any of its
assets to any entity other than the Surviving Corporation or a
Surviving Corporation Subsidiary, with the following exceptions: (i)
sales or dispositions in the ordinary course of business, or (ii)
sales or dispositions which would not violate the "substantially
all" test as defined in Rev. Proc. 77-37, 1977-2 568 Section 3.01;
(d) dispose of any stock of the Surviving Corporation
except for transfers to corporations controlled by SDRC, as defined
in Section 368(c) of the Code, or cause the Surviving Corporation to
issue shares of its stock to anyone other than SDRC that would
result in SDRC losing 80% control of the Surviving Corporation, as
defined in Section 368(c) of the Code.
For purposes of this Section 4.8, the term "Surviving
Corporation Subsidiary" shall mean any entity with respect to which
the Surviving Corporation or another Surviving Corporation
Subsidiary (so defined), at the time of the occurrence of the event
described in this Section 4.8, owns stock that possesses at least
80% of the total voting power of such entity and has a value equal
to at least 80% of the total value of the stock of such entity.
Section 4.9 Litigation. Except as disclosed in SDRC's SEC
Filings, there are no actions, suits, proceedings, investigations or
assessments of any kind pending before any court, administrative
agency, arbitration association, or other regulatory body, or to the
knowledge of SDRC, threatened against SDRC or any of its
subsidiaries which if successful might have a Material Adverse
Effect or which questions the validity or legality of this Agreement
or of any action taken or to be taken by SDRC or the Surviving
Corporation in connection with this Agreement.
Section 4.10 Brokers' Fees. SDRC has not (i) directly or
indirectly, dealt with any broker or finder in connection with this
transaction and (ii) has not incurred or will not incur any
obligation for any broker's or finder's fee or commission in
connection with the transactions provided for in this Agreement.
Section 4.11 Governmental Authorities; Consents. Except for
the filing of the Articles of Merger with the Secretary of State of
the State of Ohio, SDRC is not required to submit any notice, report
or other filing with any governmental authority in connection with
the execution or delivery by it of this Agreement, the Articles of
Merger or the consummation of the transactions contemplated hereby
or thereby. No approval or authorization of any governmental or
regulatory authority or any other party or person (except the
approval of the Agreement of Merger and Plan of Reorganization by
the shareholders of CASE and Surviving Corporation) is required to
be obtained by SDRC or Surviving Corporation in connection with
their execution, delivery and performance of this Agreement, the
Articles of Merger or the transactions contemplated hereby or
thereby.
Section 4.12 Full Disclosure. No representation or
warranty made by SDRC in this Agreement or exhibit hereto and no
statement or certificate or memorandum furnished or to be furnished
by SDRC pursuant hereto or in connection with the transactions
covered hereby contains or will contain any untrue statement of a
material fact, or omit any material fact, the omission of which
would be misleading.
ARTICLE 5
COVENANTS
Section 5.1 Cooperation. Each of the parties hereto shall
cooperate with the other party in all reasonable respects, and shall
take all other steps necessary to carry out and consummate the
transactions contemplated by this Agreement at the earliest
practicable time including, without limitation, the filing of
applications, notices and other documents with, and obtaining
approval from, appropriate governmental regulatory agencies.
Section 5.2 Access to Information. CASE has permitted
SDRC, its officers, employees, accountants, agents and attorneys,
and SDRC has permitted CASE, its officers, employees, accountants,
agents and attorneys, to have reasonable access during business
hours to their respective books, records and properties for the
purpose of making a detailed examination or updating and amplifying
prior examinations of the financial condition, assets, liabilities,
legal compliance, affairs and the conduct of the business of CASE or
SDRC, as the case may be, and permitting one another to undertake
a complete due diligence investigation to its satisfaction provided,
however, that any such due diligence investigation by SDRC or CASE
shall not relieve SDRC or CASE from any responsibility or liability
for any material misrepresentation or material breach of warranty
hereunder discovered in the course of or subsequent to such
investigation and prior to the Effective Date.
Section 5.3 Conduct of the Business Until the Effective
Date. Except for actions contemplated hereby or taken with the
prior written consent of SDRC and CASE, SDRC and CASE will, from the
date of this Agreement until the Effective Date, conduct their
business only in the ordinary course and consistent with past
practices, and CASE will refrain from taking any action which would
result in a material breach of any representation and warranty made
by CASE herein. During the period from the date of this Agreement
to the Effective Date, CASE shall not without prior written consent
from SDRC, which consent will not be unreasonably withheld or
delayed, (1) license, sell or otherwise dispose of any asset,
property or intellectual property rights, in any form, in whole or
in part; (2) except for payroll and related employee benefit
payments, make any individual disbursements, commitments or
purchases in excess of $10,000; and (3) Subchapter S "triple A" end
of year distributions to Shareholder in accordance with CASE's past
practices, provided that such distributions shall not deplete the
total combined cash of CASE and LDI to less than $200,000 as of the
Effective Date.
Section 5.4 Capital Structure and Dividends. From the date
of this Agreement until the Effective Date, CASE will not issue any
long term debt or additional securities of any kind or warrants or
options to purchase any of such securities. As of the date of this
Agreement, CASE shall take no actions which change or affect its
capital structure; nor shall CASE, without the prior written consent
of SDRC, except as set forth on Schedule 5.4, pay any dividends or
make any distributions on CASE's stock.
Section 5.5 No Other Negotiations. From the date of this
Agreement until the Effective Date, CASE agrees that neither it, nor
any officer, director, employee or agent on its behalf will initiate
or hold discussions, negotiate or bargain with or entertain offers
from any other party concerning the acquisition or change in control
of CASE, however structured. In the event CASE receives an
unsolicited offer relating to the type of transaction contemplated
hereby, CASE shall immediately notify SDRC in writing of the
existence and contents of the offer, the identity of the offeror,
and shall provide SDRC with a copy of the offer and any related
correspondence. CASE shall immediately inform the offeror of the
existence of this Agreement and CASE shall reject such offer.
Section 5.6 Private Placement of Securities. SDRC and CASE
shall use reasonable efforts to meet the requirements of Regulation
D promulgated under the Securities Act of 1933 in order to
accomplish the issuance of shares of SDRC Common Stock to the
shareholders of CASE in the Merger. SDRC's obligation to consummate
the Merger is contingent upon the satisfaction of all of the
conditions required by Regulation D, the execution and delivery of
an Investor Agreement in the form appended hereto as Exhibit 2.2 by
each of the shareholders of CASE on or before the Effective Date,
and delivery to SDRC of evidence satisfactory to SDRC that each of
the shareholders of CASE is an "accredited investor" as such term is
defined by the rules of the Securities and Exchange Commission under
the Securities Act of 1933.
Section 5.7 Employee Matters.
(a) Subject to the following agreements, after the
Effective Date, SDRC shall have the right to continue, amend or
terminate any or all of the Benefit Plans (as defined in Section
3.17) in accordance with the terms thereof and subject to any
limitation arising under applicable law. Until SDRC shall take such
action, however, such Benefit Plans shall continue in force for the
benefit of present and former employees of CASE who have any present
or future entitlement to benefits under any of the Benefit Plans
("CASE Employees").
(b) SDRC will honor the obligations of CASE with
respect to vested rights under Benefit Plans and agreements of CASE
relating to CASE Employees in accordance with the terms of such
vested rights and subject to the provisions of Section 5.7(a).
(c) SDRC will credit all employees of CASE with all
service with CASE for purposes of eligibility to participate,
eligibility for benefits, calculation of benefits and vesting under
any of the Surviving Corporation's or SDRC's existing or future
employee benefit plans, programs or arrangements under which the
right to or the amount of benefits is based on service of such
employees.
(d) This Section 5.7 is an agreement solely between
CASE and SDRC. Nothing in this Section 5.7, whether express or
implied, confers upon any employee of CASE or SDRC or any other
person, any rights or remedies, including, but not limited to: (i)
any right to employment or recall, (ii) any right to continued
employment for any specified period, or (iii) any right to claim any
particular compensation, benefit or aggregate of benefits, of any
kind or nature whatsoever, as a result of this Section 5.7.
(e) SDRC acknowledges that in 1998 CASE would but for
the Merger make a substantial voluntary contribution to its 401(k)
plan for the benefit of its employees with respect to the year 1997.
SDRC hereby covenants and agrees to make such voluntary contribution
equal to an amount not to exceed 71/2% of the total wages and
bonuses paid to CASE Employees for 1997 services, estimated to be
approximately $176,000, no later than March 15, 1998.
Section 5.8 Tax and Accounting Treatment. CASE and SDRC
shall use reasonable efforts to cause the Merger to qualify, and
shall not take any actions which could prevent the Merger from
qualifying, for pooling-of-interests accounting treatment and as a
"reorganization" pursuant to Sections 368(a)(1)(A) and 368(a)(2)(D)
of the Code that would be tax free to the shareholders of CASE.
Section 5.9 SEC Reports. SDRC agrees to provide to CASE
copies of all reports and other documents filed with the SEC by it
and between the date hereof and the Effective Date within five days
after the date such reports or other documents are filed with the
SEC.
Section 5.10 Shareholder Approval. CASE shall call a
meeting of its shareholders 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 CASE 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.
Section 5.11 Sales of SDRC Common Stock. In order that
SDRC may account for the Merger as a pooling of interests, CASE
shall use its best efforts to cause the directors and officers of
CASE and other affiliates not to sell any shares of SDRC Common
Stock until after SDRC has filed with the SEC financial results for
at least 30 days of the combined operations of SDRC and CASE. SDRC
hereby covenants and agrees to file its routine first quarter 1998
earnings press release with the SEC as an exhibit to a Form 8-K as
soon as is practicable after it issues such press release and in any
event not later than April 30, 1998.
Section 5.12 Tax Files. CASE shall maintain and make
available to SDRC all of its files, working papers and Returns
associated with the federal income tax obligations of CASE for the
earliest fiscal year for which unused net operating loss carry
forwards exist through 1997, inclusive.
ARTICLE 6
CONDITIONS PRECEDENT TO CLOSING
Section 6.1 Conditions to the Obligations of Each of the
Parties. The obligation of each of the parties hereto to consummate
the transaction provided for herein is subject to the fulfillment on
or prior to the Effective Date of each of the following conditions:
Section 6.1.1 Corporate Approvals. The shareholders
of CASE and Surviving Corporation each shall have duly approved and
adopted this Agreement and the Merger in accordance with and as
required by law and in accordance with each company's charter and
bylaws or code of regulations.
Section 6.1.2 Governmental Approvals. All necessary
governmental and regulatory orders, consents, clearance and
approvals and requirements shall have been secured and satisfied and
all applicable waiting periods expired for the consummation of the
transaction contemplated hereby.
Section 6.1.3 Private Placement of Securities. SDRC
shall have complied with Regulation D promulgated by the SEC under
the 1933 Act to enable SDRC to issue the Shares as restricted
securities to the shareholders of CASE in the Merger under the
private placement exemption of the 1933 Act. On or before the
Effective Date, each of the shareholders of CASE shall have executed
and delivered to SDRC an Investment Agreement in the form appended
hereto as Exhibit 2.2.
Section 6.1.4 Tax Opinion. Counsel for SDRC, shall
have delivered an opinion to both CASE and SDRC, satisfactory to
both parties, that the transaction contemplated hereby will be
treated for tax purposes as a tax-free exchange of stock pursuant to
the Code.
Section 6.1.5 Employment of CASE Employees. Prior to
the Effective Date, SDRC shall have identified those employees of
CASE which shall be retained by SDRC.
Section 6.1.6 No Orders. The consummation of the
Merger or the transactions contemplated hereby shall not have been
restrained, enjoined, or prohibited by any court or governmental
authority of competent jurisdiction, and there shall be no action or
proceeding pending which seeks such relief.
Section 6.1.7 Other Merging Closing. Concurrently
with the closing of the Merger on the Effective Date, the merger of
LDI into the Surviving Corporation shall also have closed and become
effective.
Section 6.2 Conditions to the Obligations of SDRC. The
obligation of SDRC to consummate the transaction provided for herein
is subject to fulfillment at or prior to the Effective Date of each
of the following conditions unless waived by SDRC in a writing
delivered to CASE which specifically refers to the condition or
conditions being waived:
Section 6.2.1 Representations and Warranties. All of the
representations and warranties of CASE set forth in Article 3 of
this Agreement shall be true and correct in all material respects at
and as of the respective dates set forth with respect to each, as of
the date of this Agreement and at and as of the Effective Date as if
each such representation and warranty was given on and as of the
Effective Date (except (i) that any such representation and warranty
made as of a specified date shall only need to have been true in all
material respects on and as of such date, and (ii) that any
liability or potential liability which accrues to CASE as a result
of its compliance with any other Covenants or Conditions to Closing
specified in this Agreement shall not constitute a breach of any
CASE's representations and warranties, hereunder).
Section 6.2.2 CASE's Covenants. CASE shall have
performed all covenants and obligations required by this Agreement
to be performed by it on or before the Effective Date.
Section 6.2.3 Financial Statements. CASE shall have
delivered to SDRC unaudited financial statements for the year ended
December 31, 1996 prior to the Effective Date and SDRC shall have
caused its independent public accountants to have reviewed such
unaudited 1996 financial statements and CASE's unaudited financial
statements as of the end of the month immediately preceding the
Effective Date, performed such other auditing procedures as may be
requested by SDRC and reported that it is not aware of any material
modifications that should be made in order for such financial
statements to be in substantial conformity with generally accepted
accounting principles and to accurately state CASE's financial
condition and results of operations as of the respective dates
thereof.
Section 6.2.4 Pooling of Interests. SDRC shall have
received assurances satisfactory to it that the transaction
contemplated hereby may be accounted for as a pooling-of-interests,
the SEC shall have raised no objection to such accounting treatment
and SDRC shall have received on or before the Effective Date a
letter from Price Waterhouse, L.L.P. supporting the pooling-of-interests
accounting treatment for the Merger. In addition, Clark,
Schaefer, Hackett & Co. shall have issued, prior to the Effective
Date, a letter indicating that CASE is a poolable entity.
Section 6.2.5 Dissenter's Rights. The holders of not
more than 10% of the outstanding shares of CASE Common Stock shall
have exercised dissenter's rights in connection with the
shareholders' vote taken on the Merger.
Section 6.2.6 Merger of LDI Into Surviving
Corporation. Prior to the Effective Date, LDI shall have been
merged into or otherwise acquired in its entirety by Surviving
Corporation.
Section 6.2.7 Opinion of CASE's Corporate Counsel.
Counsel for CASE, shall have delivered to SDRC a customary opinion
of counsel dated the Effective Date, in the form attached hereto as
Exhibit 6.2.7.
Section 6.2.8 Consents. On or before the Effective Date,
CASE shall have delivered to SDRC evidence satisfactory to it of
receipt or anticipated receipt of all material consents, licenses
and authorizations from all customers, lessors, licensors,
government agencies and any other persons or organizations, the
consent, license or authorization of which are necessary to permit
SDRC to continue CASE's business after the Effective Date.
Section 6.2.9 Closing Documents. Prior to the Effective
Date, CASE shall have delivered to SDRC all of the following:
(a) certificates of the Chief Executive Officer
and the Chief Financial Officer of CASE, dated as of the date of the
Effective Date, stating that the conditions precedent set forth in
Sections 6.2.1 and 6.2.2 above have been satisfied;
(b) copies of the third party and governmental
consents and approvals and of the authorizations referred to in
Section 6.2.8 above;
(c) CASE's minute books, stock transfer records,
corporate seal and other materials related to CASE's corporate
administration;
(d) a copy of the Articles of Incorporation of
CASE as amended to date, certified by the Secretary of State in each
jurisdiction in which such corporation exists, and a Certificate of
Good Standing of CASE from the Secretary of State in each
jurisdiction in which such corporation exists evidencing the good
standing of CASE in such jurisdiction;
(e) a copy of each of (i) the text of the
resolutions adopted by the board of directors of CASE authorizing
the execution, delivery and performance of this Agreement and the
Articles of Merger, (ii) the text of the resolutions adopted by the
shareholders of CASE authorizing the execution, delivery and
performance of this Agreement and the Articles of Merger and the
consummation of all of the transactions contemplated by this
Agreement and the Articles of Merger, and (iii) the bylaws of CASE;
along with certificates executed on behalf of CASE 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;
(f) incumbency certificates executed on behalf of
CASE by its corporate secretary certifying the signature and office
of each officer executing this Agreement and the Articles of Merger;
(g) an Investment Agreement in the form appended
hereto as Exhibit 2.2 duly executed by each of the shareholders of
CASE;
(h) such other documents, instruments and
certificates as SDRC may reasonably request.
Section 6.3 Conditions to the Obligations of CASE. The
obligation of CASE to consummate the transaction provided for herein
is subject to the fulfillment at or prior to the Effective Date of
each of the following conditions unless waived by CASE in a writing
delivered to SDRC which specifically refers to the condition or
conditions being waived:
Section 6.3.1 Representations and Warranties. All of the
representations and warranties of SDRC set forth in Article 4 of
this Agreement shall be true and correct in all material respects at
and as of the respective dates set forth with respect to each, as of
the date of this Agreement and at and as of the Effective Date as if
each such representation and warranty was given on and as of the
Effective Date (except that any such representation and warranty
given as of a specified date shall only need to have been true in
all material respects on and as of such date).
Section 6.3.2 SDRC's Covenants. SDRC shall have
performed all covenants and obligations required by this Agreement
to be performed on or before the Effective Date.
Section 6.3.3 Opinion of SDRC's Counsel. Counsel for
SDRC, shall have delivered to CASE a customary opinion of counsel
dated the Effective Date, in the form attached hereto as Exhibit
6.3.3.
Section 6.3.4 Closing Documents. Prior to the Effective
Date, SDRC shall have delivered to CASE all of the following:
(a) certificates of the Chief Executive Officer
and the Chief Financial Officer of SDRC dated as of the date of the
Effective Date, stating that the conditions precedent set forth in
Sections 6.3.1 and 6.3.2 above have been satisfied;
(b) copies of the third party and governmental
consents and approvals and of the authorizations referred to in
Section 6.2.9 above;
(c) a copy of the Articles of Incorporation of
SDRC and Surviving Corporation, as amended to date, certified by the
Secretary of State of the State of Ohio, and a Certificate of Good
Standing of SDRC and Surviving Corporation from the Secretary of the
State of Ohio evidencing the good standing of SDRC and Surviving
Corporation;
(d) a copy of each of (i) the text of the
resolutions adopted by the boards of directors of SDRC and Surviving
Corporation authorizing the execution, delivery and performance of
this Agreement and the Articles of Merger and the consummation of
all of the transactions contemplated by this Agreement and the
Articles of Merger, (ii) the text of the resolutions adopted by the
sole shareholder of Surviving Corporation authorizing the execution,
delivery and performance of this Agreement and the Articles of
Merger and the consummation of all of the transactions contemplated
by this Agreement and the Articles of Merger, and (iii) the codes of
regulations of SDRC and Surviving Corporation; along with
certificates executed on behalf of SDRC and Surviving Corporation by
their respective corporate secretaries certifying to CASE that such
copies are true, correct and complete copies of such resolutions and
codes of regulations were duly adopted and have not been amended or
rescinded;
(e) incumbency certificates executed on behalf of
SDRC and Surviving Corporation by their respective corporate
secretaries certifying the signature and office of each officer
executing this Agreement and/or the Articles of Merger; and
(f) such other documents, instruments and
certificates as CASE may reasonably request.
<PAGE>
ARTICLE 7
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 party; provided,
however, that in the case of an announcement which SDRC may be
required by law, by any governmental agency or by the Nasdaq
National Market to make, issue or release, such action by SDRC
without the prior approval by the other parties shall not constitute
a breach of this Section.
ARTICLE 8
TERMINATION
Section 8.1 Circumstances of Termination. This Agreement may
be terminated (notwithstanding approval of the shareholders of
CASE):
(i) By the mutual consent in writing of SDRC and CASE;
(ii) By SDRC if any condition provided in Section 6.1
or 6.2 hereof has not been materially satisfied or waived on or
before the Effective Date;
(iii) By CASE if any condition provided in Section
6.1 or 6.3 has not been materially satisfied or waived on or before
the Effective Date;
(iv) By either SDRC or CASE if the merger contemplated
by this Agreement is not fully and legally consummated by February
28, 1998.
Section 8.2 Effect of Termination. In the event of a
termination of this Agreement pursuant to Section 8.1 hereof, each
party shall pay the costs and expenses incurred by it in connection
with this Agreement and no party (or any of its officers, directors
or shareholders) shall be liable to any other party for any costs,
expenses, damage or loss of anticipated profits hereunder.
ARTICLE 9
EFFECTIVE DATE OF MERGER
After adoption and approval of this Agreement by the
shareholders of CASE in accordance with the requirements of
applicable law, and upon satisfaction of each of the conditions set
forth in Article 6 (unless waived 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),
and at such time as shall be agreed upon in writing by CASE and SDRC
(if no such agreement has been reached, then on the day of the
meeting of shareholders of CASE at which this Agreement is
approved), a Certificate of Merger shall be submitted for filing
with the Secretary of State of Ohio and the Articles of Merger shall
be submitted for filing with the Secretary of State of Ohio. The
date of the later of such filings, or at such other date as the
parties may agree upon in writing pursuant to applicable law, is
referred to in this Agreement as the "Effective Date." The
Effective Date shall not be extended beyond February 28, 1998
without the written consent of CASE.
ARTICLE 10
CERTAIN LIMITATIONS ON LIABILITIES
Section 10.1 Survival of Representations and Warranties.
The representations and warranties of CASE in Article 3 above and of
SDRC in Article 4 above shall survive the Effective Date and the
consummation of the Merger until the later of the close of business
on (i) March 31, 1999, or (ii) the date audited consolidated
financial statements of SDRC for the year 1998 are filed with the
Securities and Exchange Commission by SDRC (the "Survival Period").
No claims or causes of action arising out of any breach or alleged
breach of such representations and warranties by either party may be
asserted unless (i) during the Survival Period, written notice of
such breach or alleged breach is served upon the party alleged to
have breached, and (ii) if the parties are unable to amicably settle
such claim, a suit or other legal proceeding is commenced within 12
months after the end of the Survival Period.
Section 10.2 Basket Provision. Neither party shall be
liable to the other party for any individual breach or alleged
breach of its representations and warranties set forth in this
Agreement for which the damages resulting therefrom, when aggregated
together with any damages resulting from any breaches of the
representations and warranties in the merger agreement relating to
the merger of LDI into Surviving Corporation, would not exceed a
combined total of $100,000, provided that if such cumulative
aggregate amount of damages attributable to all breaches or alleged
breaches of a party's representations and warranties do exceed
$100,000, then such party shall be fully liable for all damages
attributable to all such breaches.
Section 10.3 Dollar Limitation. Neither CASE nor
Shareholder shall be liable to SDRC or Surviving Corporation in the
event of any breach or breaches of any representations or warranties
set forth in the Agreement in a cumulative aggregate amount in
excess of a dollar amount equal to the number of Shares issued in
the Merger multiplied by the closing per share price of SDRC Common
Stock on The Nasdaq National Market on the Effective Date.
ARTICLE 11
MISCELLANEOUS
Section 11.1 Headings. The subject headings of the
sections, paragraphs and subparagraphs of this Agreement are
included for purposes of convenience only, and shall not affect the
construction or interpretation of any of its provisions.
Section 11.2 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, including without limitation the Offer
Letter, representations and understandings of the parties; provided,
however, the Confidentiality Agreement between CASE and SDRC
relating to the Merger shall survive until the Effective Date. 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.
Section 11.3 Knowledge. For purposes of this Agreement,
"knowledge" or "best knowledge" means the actual knowledge of
current members of the board of directors and officers of CASE, as
such knowledge has been obtained in the normal conduct of the
business and following a reasonable investigation by such
individuals.
Section 11.4 Material Adverse Effects. As used in this
Agreement, the term "Material Adverse Effect" with respect to any
party means any single or a series of related conditions, events,
changes or occurrences that have or may reasonably be expected to
have a financially adverse effect on the business, operations,
results of operations and/or financial condition of such party and
its subsidiaries, if any, taken as a whole, in the amount of
$100,000 or more.
Section 11.5 Consents. Where any consent or waiver of SDRC 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 CASE is required or
requested hereunder, James D. Young, President of CASE, shall be the
authorized person to provide any such consent or waiver.
Section 11.6 Counterparts. This Agreement may be executed
simultaneously in one or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one
and the same instrument.
Section 11.7 Further Assurances. At any time and from time
to time after the Effective Date, each party will execute such
additional instruments and take such actions as may be reasonably
requested by the other party to confirm or perfect title to any
property transferred hereunder or otherwise to carry out the intent
and purposes of this Agreement.
Section 11.8 Assignment. This Agreement shall be binding
on, and shall inure to the benefit of, the parties to it and their
respective heirs, legal representatives, successors and assigns;
provided, however, that any assignment by either party of its rights
under this Agreement without written consent of the other party
shall be void.
Section 11.9 Effect of Certain Actions. No action taken
pursuant to or related to this Agreement, including without
limitation any investigation by or on behalf of any party, shall be
deemed to constitute a waiver by the party taking such action of
compliance with any representation, warrant, condition or agreement
contained herein.
Section 11.10 Notices. All notices, requests, demands and
other communications under this Agreement shall be in writing and
shall be deemed to have been duly given on the date of service if
served personally on the party (including, without limitation,
service by overnight courier service) to whom notice is to be given,
or on the third day after mailing if mailed to the party to whom
notice is to be given, by first class mail, registered or certified,
postage prepaid, at the address set forth below, or on the date of
service if delivered by facsimile to the facsimile number set forth
below, which facsimile is confirmed within three days by deposit of
a copy of such notice in first class mail, registered or certified,
postage prepaid at the address set forth below. Any party may
change its address for purposes of this paragraph by giving the
other parties written notice of the new address in the manner set
forth above.
If to SDRC:
Structural Dynamics Research Corporation
2000 Eastman Drive
Milford, Ohio 45150
Fax No. (513) 576-2049
Attn: John A. Mongelluzzo
Copy to:
Dinsmore & Shohl LLP
1900 Chemed Center
255 East Fifth Street
Cincinnati, Ohio 45202
Attn: Charles F. Hertlein, Jr.
If to CASE:
Computer Aided Systems for Engineering, Inc.
2000 Eastman Drive
Milford, Ohio 45150
Attn: James D. Young
Copy to:
Keating, Meuthing & Klekamp
1800 Provident Tower
One East Fourth Street
Cincinnati, OH 45202
Attn: Robert E. Coletti
Section 11.11 Governing Law. This Agreement shall be governed
by and construed in accordance with laws of the State of Ohio,
without reference to its principles governing conflicts of law.
IN WITNESS WHEREOF, the parties to this Agreement have duly
executed it as of the date set forth above.
COMPUTER AIDED SYSTEMS FOR ENGINEERING, INC.
By:/s/ James D. Young
Its: President
SDRC ACQUISITION CORPORATION
By:/s/ Thomas F. Eberle
Its: President
STRUCTURAL DYNAMICS RESEARCH CORPORATION
By:/s/ Thomas F. Eberle
Its: Assistant Secretary
SHAREHOLDER:
/s/ James D. Young
James D. Young
<PAGE>
EXHIBIT LIST
Exhibit Description
2.2 Investment Agreement
3.29 Tax Opinion
6.2.7 Form of Opinion of CASE's Corporate Counsel
6.3.3 Form of Opinion of SDRC's Corporate Counsel
SCHEDULES
Schedule Description
3.1 Jurisdictions in which Qualified to do
Business
3.4 Financial Statement Exceptions
3.6 Accounts Receivable
3.7 Real Property
3.8 Environmental Matters
3.9 Absence of Material Adverse Changes
3.12 Litigation
3.13 Taxes
3.14 Contracts, Agreements and Commitments
3.15 Intellectual Property
3.16 Dividends Paid
3.17 Employees and Employee Plans
3.20 Employee Claims
3.21 Discrimination
3.22 Insurance Policies
3.23 Bank Accounts and Loans
3.24 Stock Issuances
3.30 Violations
3.32 Software Maintenance Agreements
5.4 Permitted Distributions
