Excerpted from SPATIAL TECHNOLOGY's Form PREM14A filed Sept 6/00

REASONS FOR THE TRANSACTION; RECOMMENDATION OF THE BOARD

Spatial believes that its future and capabilities lie in its
Internet-based applications service business known as PlanetCAD. Spatial's small
size has made it difficult for Spatial to maintain simultaneously the proper
degree of management attention to both PlanetCAD and the component software
division necessary for the continued success of both businesses. Furthermore,
the component software division has seen intense competition and Spatial has
suffered narrowing profit margins in recent years. Although Spatial believes
that its component software division, including ACIS and its related
technologies, is the superior product in its market, it also believes that the
investments necessary to compete successfully in the market and significantly
expand its market presence are beyond its resources. By selling the component
software division to Dassault, Spatial's management will be able to direct its
attention to expanding and developing PlanetCAD. Spatial's management believes
that Dassault will be positioned to utilize its greater resources to expand and
operate the component software division. Spatial's board of directors therefore
believes that the sale of the component software division will enhance the
growth and prospects of PlanetCAD and, at the same time, benefit Spatial's
existing customers and present new challenges and opportunities to the employees
of the component software division who have made that business a success.

In addition, Dassault has agreed to make a $2.0 million loan to
Spatial, which will be funded upon three business days' notice and repaid by
Spatial at the closing of the purchase agreement, or upon termination of the
purchase agreement, and to make an investment in PlanetCAD of $2.0 million in
exchange for the issuance by Spatial of 555,556 shares of its common stock.
Because of Dassault's name recognition in the market, Spatial believes that
Dassault's investment is a significant endorsement of PlanetCAD to its market.
Both the loan and the investment will provide Spatial with additional, needed
working capital to be used in developing and marketing PlanetCAD to its targeted
customers. See "Approval of Sale and Issuance of Spatial Common Stock to
Dassault - Use of Proceeds" on page 47 of this proxy statement.

The board believes that the sale of the component software division to
Dassault is fair to you and in your best interest and will provide increased
long-term stockholder value to you. See "Opinion of Roth Capital Partners, Inc."
beginning on page 26 of this proxy statement. The affirmative vote of the
holders of a majority of the outstanding shares of Spatial common stock as of
the record date is required to approve the sale of the component software
division to Dassault

HISTORY OF THE TRANSACTION

Dassault Systemes approached the board of directors of Spatial in
October 1999 with a proposal to purchase Spatial for a per share price of $4.00.
This proposal was rejected as inadequate by the board at meetings in New York on
October 28 and 29, 1999. The board believed that the offer placed insufficient
value on the Internet activities of Spatial, subsequently organized as the
PlanetCAD division, which had become a major focus of Spatial
in June of 1999 and in which Spatial had invested significant time and money.
Roth Capital Partners, Inc. was retained to assist the board in evaluating the
adequacy of the Dassault offer.

After the board's rejection of the proposal, Dassault Systemes
informally approached Mr. Richard Sowar, Spatial's Chairman of the board of
directors and Chief Technology Officer, in late November 1999 to inquire as to
whether or not he believed the board would consider a proposal for the sale of
Spatial's component software division, leaving Spatial to operate the PlanetCAD
activity as a dedicated business. The proposal was discussed by the members of
the board of directors in several conversations during late November and early
December 1999. On December 24, 1999, Mr. Bruce Morgan, Spatial's President and
Chief Executive Officer, received a call from Mr. Thibault de Tersant, Executive
Vice President and Chief Financial Officer of Dassault Systemes, to inform him
that Dassault Systemes wished to begin formal negotiations for the purchase of
the component software division.

The board authorized Mr. Morgan to begin exploratory talks on the
potential sale of the component software division in January 2000 though no
decision was made at that time as to whether or not Spatial would be prepared to
consummate any such transaction. In the course of initial discussions in January
and February, Dassault Systemes made it clear that it was willing to enter into
a broad strategic relationship with Spatial that would include Dassault
Systemes' purchase and commitment to the long term viability of the component
software division, which was experiencing significant financial stress due to an
ongoing change in the purchasing patterns of customers away from up-front
license fees and towards a back-end royalty and service payment model. The
strategic relationship would also include Dassault Systemes' provision of key
technologies to Spatial that are important to the success of PlanetCAD,
including a CATIA/ACIS model converter that Spatial believes is critical to the
success of its 3Dshare.com model interoperability service, and a joint
marketing and technology agreement that would make Dassault a significant
technology and distribution partner of PlanetCAD. Roth Capital Partners was
retained to assist Mr. Morgan in negotiations with Dassault Systemes, and the
board of directors was provided with regular updates on the status of the
negotiations.

During the course of the initial negotiations, Spatial negotiated a
round of venture financing for its PlanetCAD division. As this financing was
being finalized, Dassault Systemes agreed to participate in the funding round
and to invest $1 million to show serious intent in the long term success of
Spatial's PlanetCAD business. The financing closed on February 22, 2000.

In March 2000, the board of directors agreed to permit Mr. Morgan, with
the assistance of Roth Capital, to begin formal negotiations toward agreement on
a Letter of Intent providing an outline of the transaction for the sale of the
component software division. The parties agreed to a Letter of Intent on March
29, 2000. Following its review of the Letter of Intent, the board authorized Mr.
Morgan to begin negotiations towards a binding agreement based on the conditions
detailed in the Letter of Intent

. In April 2000, Spatial retained Hogan & Hartson L.L.P. to represent it
in the negotiation of the definitive agreements. These agreements included the
purchase agreement, a technology cross licensing agreement, a joint software
agreement, a co-branding agreement, a web services agreement, a server software
agreement and an intravision agreement. Intense negotiations occurred throughout
May and June, with regular updates provided to the board. On June 21, 2000 the
board authorized Roth Capital to contact potential third party bidders. The
board received a fairness opinion from Roth Capital on June 28, 2000, which Roth
Capital updated on August 28, 2000. On July 2, 2000, Mr. Morgan flew to Paris to
finalize the negotiations and documentation relating to the transaction, which
occurred on July 3 and 4, 2000. The definitive purchase agreement was executed
at the close of business on July 4, 2000. The transaction was announced to the
public on July 5, 2000.

Included in the purchase agreement was a provision that Spatial and
Roth Capital could continue to pursue negotiations with third parties contacted
prior to the agreement signature through July 24, 2000. Spatial did receive a
request for additional due diligence information from Structural Dynamics
Research Corporation ("SDRC"), and executives from Spatial visited SDRC's
corporate headquarters in Milford, Ohio on July 12, 2000. Subsequently, a team
of technical and financial experts from SDRC visited Spatial's premises in
Boulder, Colorado on July 17 and 18, 2000, to complete due diligence on the
proposed transaction.

On August 4, 2000, Mr. Morgan received a call from SDRC's
representatives requesting a meeting on August 9, 2000 in Denver, Colorado. At
that meeting, SDRC's representatives presented a proposal to Spatial's
management that was subsequently judged by Spatial's board of directors in a
telephonic meeting the same day to be superior to the offer from Dassault. SDRC
offered a purchase price of $26 million for the component software division
coupled with a $3 million investment in Spatial's common stock at a purchase
price of $4.00 per share. In addition, SDRC indicated that it was willing to
guarantee a total of $2 million of revenues for PlanetCAD from SDRC's Internet
customers. The SDRC offer was also subject to a break-up fee of $1.5 million and
provided for a more limited indemnification obligation for any breach by Spatial
of its obligations, representations or warranties. All other material terms of
the SDRC were identical to the terms set forth in the purchase agreement. As
required by the purchase agreement, Mr. Morgan provided on August 10, 2000 both
oral and written notice to Dassault regarding the determination by Spatial's
board of directors that the offer by SDRC constituted a superior proposal, as
defined in the purchase agreement. Pursuant to the terms of the purchase
agreement, Dassault had five days to respond to the SDRC proposal with any
modifications to the consideration provided for under the purchase agreement.

On August 10, 2000, Mr. Morgan also provided Dassault Systemes'
management, at their request, a list of seven ideas that would clarify for
investors and customers in PlanetCAD's target markets that Dassault Systemes was
committed to a long term, mutually beneficial relationship with PlanetCAD if the
purchase agreement were to be approved by Spatial's stockholders. Mr. Morgan
also spoke with representatives of Dassault Systemes on August 12, 2000 to
provide some additional details on possible revisions to Dassault Systemes'
offer. Mr. Morgan arranged a meeting between Mr. Bernard Charles, the President
of Dassault Systemes, and Mr. Gene Fischer, one of Spatial's directors, to take
place in San Jose, California on August 15, 2000. At that meeting, Mr. Charles
clarified for Mr. Fischer Dassault Systemes' desire to build strategic
relationships between Dassault Systemes and PlanetCAD's Internet-based
application services for the engineering marketplace upon completion of the sale
of the component software division to Dassault.

On August 15, 2000, Mr. Morgan received a revised offer from Dassault
that included an increased purchase price for the component software division to
$25 million and agreements to enter into additional agreements that would help
promote PlanetCAD's Internet-based applications services in the future. During a
telephonic meeting of Spatial's board of directors on August 17, 2000, the board
determined that the revised Dassault offer was superior to the offer received
from SDRC. In particular, the board determined that, in light of the
approximately $1 million of fees and expenses that would be due to Dassault
under the purchase agreement if Spatial completed a transaction with SDRC, the
$26 million purchase price offered by SDRC was functionally equivalent to the
$25 million offered by Dassault. Moreover, the board determined that given their
relative size and market positions, the future support and relationship with
Dassault and Dassault Systemes would be more beneficial to PlanetCAD than the
relationship proposed by SDRC. Mr. Morgan informed SDRC of the board's decision
on August 17, 2000.

USE OF PROCEEDS

Spatial anticipates net proceeds from this transaction to be
approximately $22.5 million, after deductions for expenses and taxes related to
the transaction and after giving effect to certain adjustments to the purchase
price provided for in the purchase agreement totaling approximately $4.5
million. Spatial plans to use the net proceeds of this transaction for general
corporate purposes, including sales and marketing, research and development,
capital expenditures and working capital. In addition, Spatial may use a portion
of the net proceeds to acquire complementary products, technologies or
businesses or to make strategic investments. Spatial currently has no agreements
with respect to any such acquisitions or investments. Pending any of these uses,
Spatial intends to invest the net proceeds in short-term, investment-grade,
interest-bearing securities.

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