INTERGRAPH CORPORATION - FORM PREM14A
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities
Exchange Act of 1934
Filed by the Registrant þ
Filed by a Party other than the
Registrant o
Check the appropriate box:
þ Preliminary
Proxy Statement
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Confidential, for Use of the Commission
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Only (as permitted by
Rule 14a-6(e)(2))
o Definitive Proxy
Statement
o Definitive Additional
Materials
o Soliciting Material
Pursuant to
§240.14a-12
INTERGRAPH CORPORATION
(Name of Registrant as Specified In
Its Charter)
(Name of Person(s) Filing Proxy
Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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No fee required.
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þ
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Fee computed on table below per Exchange Act
Rules 14a-6(i)(1)
and 0-11.
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(1)
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Title of each class of securities to which transaction applies:
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Common stock, par value $0.10 per share, of Intergraph
Corporation (the Intergraph common stock)
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(2)
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Aggregate number of securities to which transaction applies:
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29,430,789 shares of Intergraph common stock (including
restricted shares and restricted share units) and 1,098,311
options to purchase Intergraph common stock.
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(3)
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Per unit price or other underlying value of transaction computed
pursuant to Exchange Act
Rule 0-11
(set forth the amount on which the filing fee is calculated and
state how it was determined):
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The transaction value was determined based upon the sum of
(a) $44.00 per share of 29,430,789 shares of
Intergraph common stock (including restricted shares and
restricted share units); and (b) $44.00 minus weighted
average exercise price of $15.8678 per share of outstanding
options to purchase 1,098,311 shares of Intergraph common
stock.
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(4)
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Proposed maximum aggregate value of transaction:
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$1,325,052,621.71
$141,866.23
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Fee paid previously with preliminary materials:
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Check box if any part of the fee is offset as provided by
Exchange Act
Rule 0-11(a)(2)
and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its
filing.
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(1)
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Amount Previously Paid:
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(2)
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Form, Schedule or Registration Statement No.:
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INTERGRAPH
CORPORATION
P.O. Box 240000
Huntsville, Alabama 35824
,
2006
Dear Stockholder:
On August 31, 2006, the board of directors of Intergraph
Corporation (Intergraph, we,
us or our) approved, and Intergraph
entered into, a merger agreement with Cobalt Holding Company and
its
wholly-owned
subsidiary Cobalt Merger Corp. Cobalt Holding Company is
currently owned primarily by private equity funds sponsored by
Hellman & Friedman LLC and Texas Pacific Group. Under
the terms of the merger agreement, Cobalt Merger Corp. will be
merged with and into us, with Intergraph continuing as the
surviving corporation. If the merger is completed, you will be
entitled to receive $44.00 in cash, without interest, for each
share of Intergraph common stock that you own.
You will be asked, at a special meeting of our stockholders to
be held
on ,
2006,
at .m.,
local time, to vote on a proposal to adopt the merger agreement
so that the merger can occur. After careful consideration, our
board of directors has approved the merger agreement and
determined that the merger and the merger agreement are
advisable and in the best interests of Intergraph and our
stockholders. Our board of directors recommends that you vote
FOR the adoption of the merger agreement.
The special meeting will be held [in the Building 15b
Auditorium at Intergraphs executive offices located at 170
Graphics Drive, Madison, Alabama 35758]. Notice of the
special meeting and the related proxy statement is enclosed.
The accompanying proxy statement gives you detailed information
about the special meeting and the merger and includes a copy of
the merger agreement attached thereto as Annex A. The
receipt of cash in exchange for shares of Intergraph common
stock pursuant to the merger will constitute a taxable
transaction to U.S. persons for U.S. federal income
tax purposes. We encourage you to read the proxy statement and
the merger agreement carefully. You may also obtain additional
information about Intergraph from documents filed with the
Securities and Exchange Commission.
Your vote is very important, regardless of the number of
shares you own. We cannot complete the merger unless holders of
a majority of all outstanding shares of Intergraph common stock
entitled to vote on the matter vote to adopt the merger
agreement. If you fail to vote on the merger agreement, the
effect will be the same as a vote against the adoption of the
merger agreement.
Whether or not you plan to attend the special meeting, please
complete, date, sign and return, as promptly as possible, the
enclosed proxy in the accompanying reply envelope, or submit
your proxy by telephone or the Internet.
Our board of directors and management appreciate your continuing
support of Intergraph, and we urge you to support this
transaction.
Sincerely,
Sidney L. McDonald
Chairman of the Board
Neither the Securities and Exchange Commission nor any state
securities regulatory agency has approved or disapproved the
merger, passed upon the merits or fairness of the merger or
passed upon the adequacy or accuracy of the disclosure in this
document. Any representation to the contrary is a criminal
offense.
The proxy statement is
dated ,
2006, and is first being mailed to stockholders on or
about ,
2006.
INTERGRAPH
CORPORATION
P.O. Box 240000
Huntsville, Alabama 35824
NOTICE OF SPECIAL MEETING OF
STOCKHOLDERS
To Be Held
On ,
2006
Dear Stockholder:
NOTICE IS HEREBY GIVEN that a special meeting of stockholders of
Intergraph Corporation, a Delaware corporation (which we refer
to as Intergraph, we, us or
our), will be held
on , ,
2006,
at .m.,
local time, [in the Building 15b Auditorium at
Intergraphs executive offices located at 170 Graphics
Drive, Madison, Alabama 35758], for the following purposes:
1. To consider and vote on a proposal to adopt the
Agreement and Plan of Merger, dated as of August 31, 2006,
by and among Intergraph, Cobalt Holding Company, a Delaware
corporation, and Cobalt Merger Corp., a Delaware corporation and
a wholly-owned subsidiary of Cobalt Holding Company, as the
merger agreement may be amended from time to time;
2. To approve the adjournment of the special meeting, if
necessary, to solicit additional proxies if there are
insufficient votes at the time of the meeting to adopt the
merger agreement; and
3. To transact such other business as may properly come
before the special meeting and any and all adjourned or
postponed sessions thereof.
The record date for the determination of stockholders entitled
to notice of and to vote at the special meeting
is ,
2006. Accordingly, only stockholders of record as of the close
of business on that date will be entitled to notice of and to
vote at the special meeting or any adjournment or postponement
of the special meeting.
We urge you to read the accompanying proxy statement carefully
as it sets forth details of the proposed merger and other
important information related to the merger.
Your vote is important, regardless of the number of shares of
Intergraph common stock you own. The adoption of the merger
agreement requires the affirmative approval of the holders of a
majority of the outstanding shares of our common stock entitled
to vote thereon. The adjournment proposal requires the
affirmative vote of a majority of the shares of our common stock
present at the special meeting and entitled to vote thereon.
Even if you plan to attend the special meeting in person, we
request that you complete, date, sign and return the enclosed
proxy, or submit your proxy by telephone or the Internet, prior
to the special meeting and thus ensure that your shares will be
represented at the special meeting if you are unable to attend.
If you fail to return your proxy card or fail to submit your
proxy by telephone or the Internet, your shares will not be
counted for purposes of determining whether a quorum is present
at the meeting and will have the same effect as a vote against
the adoption of the merger agreement, but will not affect the
outcome of the vote regarding the adjournment proposal.
Please note that space limitations may make it necessary to
limit attendance at the special meeting to stockholders. If you
attend, please note that you may be asked to present valid
picture identification. Street name holders will
need to bring a copy of a brokerage statement reflecting stock
ownership as of the record date. Cameras, recording devices and
other electronic devices will not be permitted at the special
meeting.
Stockholders of Intergraph who do not vote in favor of the
adoption of the merger agreement will have the right to seek
appraisal of the fair value of their shares of Intergraph common
stock if they deliver a demand for appraisal before the vote is
taken on the merger agreement and comply with all requirements
of Delaware law, which are summarized in the accompanying proxy
statement.
YOUR VOTE IS VERY IMPORTANT. WHETHER OR NOT YOU PLAN TO
ATTEND THE SPECIAL MEETING, PLEASE COMPLETE, DATE, SIGN AND
RETURN, AS PROMPTLY AS POSSIBLE, THE ENCLOSED PROXY IN THE
ACCOMPANYING REPLY ENVELOPE, OR SUBMIT YOUR PROXY BY TELEPHONE
OR THE INTERNET.
By Order of the Board of Directors,
David Vance Lucas
Secretary
Huntsville, Alabama
,
2006
TABLE OF
CONTENTS
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1
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1
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4
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4
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7
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11
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12
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12
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12
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41
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42
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42
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42
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50
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51
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53
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53
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54
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63
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64
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A-1
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B-1
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C-1
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ii
References to Intergraph, we,
our or us in this proxy statement refer
to Intergraph Corporation and its subsidiaries unless otherwise
indicated by context.
SUMMARY
TERM SHEET
This Summary Term Sheet, together with the Questions
and Answers About the Special Meeting beginning on
page 7, summarizes selected information in the proxy
statement and may not contain all the information important to
you. You should carefully read this entire proxy statement and
the other documents to which this proxy statement refers you for
a more complete understanding of the matters being considered at
the special meeting. In addition, this proxy statement
incorporates by reference important business and financial
information about Intergraph. You may obtain the information
incorporated by reference into this proxy statement without
charge by following the instructions in Where You Can Find
More Information beginning on page 64.
The
Merger and the Merger Agreement
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The Parties to the Merger (see
page 12). Intergraph, a Delaware
corporation, is a leading global supplier of spatial information
management software. Cobalt Holding Company, a Delaware
corporation, which we refer to as Cobalt Holding, was formed
solely for the purpose of effecting the merger with Intergraph
and the transactions related to the merger. Cobalt Holding has
not engaged in any business except in furtherance of this
purpose. Cobalt Merger Corp., a Delaware corporation and a
wholly-owned subsidiary of Cobalt Holding, which we refer to as
Merger Sub, was formed solely for the purpose of effecting the
merger. Merger Sub has not engaged in any business except in
furtherance of this purpose. At the time of the merger, Cobalt
Holding will be owned primarily by private equity funds
sponsored by Hellman & Friedman LLC, Texas Pacific
Group and JMI Equity, which we sometimes refer to as the sponsor
group.
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The Merger. You are being asked to vote to
adopt an agreement and plan of merger, which we refer to as the
merger agreement, pursuant to which Merger Sub will merge with
and into Intergraph, which we refer to as the merger, on the
terms and subject to the conditions in the merger agreement.
Intergraph will be the surviving corporation in the merger,
which we refer to as the surviving corporation, and will
continue to do business as Intergraph following the
merger. As a result of the merger, Intergraph will cease to be a
publicly traded company and will become a wholly-owned
subsidiary of Cobalt Holding. See The Merger
Agreement beginning on page 42.
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Merger Consideration. If the merger is
completed, you will be entitled to receive $44.00 in cash,
without interest, for each share of Intergraph common stock that
you own. You will not own shares in the surviving corporation.
See The Merger Agreement Merger
Consideration beginning on page 42.
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Treatment of Outstanding Options, Restricted Shares and
Restricted Share Units. Except as otherwise
agreed by a holder and Cobalt Holding:
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all outstanding options to acquire Intergraph common stock under
Intergraphs equity incentive plans will become fully
vested and immediately exercisable upon consummation of the
merger, and each option will be cancelled and converted into the
right to receive a cash payment equal to the number of shares of
Intergraph common stock underlying the option multiplied by the
amount by which $44.00 exceeds the option exercise price,
without interest and less any applicable withholding
taxes; and
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restrictions applicable to all shares of restricted stock and
restricted share units will lapse and those shares or units will
be cancelled and converted into the right to receive a cash
payment equal to the number of outstanding restricted shares or
the number of shares of Intergraph common stock previously
subject to the restricted share units multiplied by $44.00
(together with the value of any deemed dividend equivalents
accrued but unpaid with respect to restricted share units),
without interest and less any applicable withholding taxes.
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See The Merger Agreement Treatment of Options
and Other Awards beginning on page 42.
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Conditions to the Merger (see
page 50). The consummation of the merger
depends on the satisfaction or waiver of a number of conditions,
including the following:
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the merger agreement must have been adopted by the affirmative
vote of the holders of a majority of the outstanding shares of
our common stock;
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no statute, rule, executive order, regulation, order or
injunction which prevents or prohibits the merger shall be in
effect;
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the waiting period (and any extension thereof) under the
Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, which we
refer to as the HSR Act, and applicable foreign antitrust laws
must have expired or been terminated;
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the respective representations and warranties of Intergraph,
Cobalt Holding and Merger Sub in the merger agreement must be
true and correct as of the closing date in the manner described
under the caption The Merger Agreement
Conditions to the Merger beginning on page 50; and
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Intergraph, Cobalt Holding and Merger Sub must have performed
and complied in all material respects with all covenants and
agreements that each is required to perform or comply with under
the merger agreement.
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Restrictions on Solicitations of Other Offers (see
page 51).
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The merger agreement provides that we are generally not
permitted to:
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solicit, initiate, propose or knowingly encourage the submission
of an acquisition proposal for us or engage in any negotiations
or discussions with respect thereto, or otherwise participate,
engage or knowingly assist in, or knowingly facilitate an
acquisition proposal; or
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approve or recommend any acquisition proposal for us or enter
into any letter of intent, memorandum of understanding,
agreement, option agreement or other similar agreement providing
for or relating to any acquisition proposal for us or withdraw
or modify, in a manner adverse to Cobalt Holding or Merger Sub,
the approval or recommendation of our board of directors of the
merger agreement or the merger or announce that it has resolved
to take that action or publicly propose to do any of the
foregoing.
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Notwithstanding these restrictions, under certain circumstances,
our board of directors may respond to an unsolicited proposal
for an alternative acquisition or terminate the merger agreement
and enter into an acquisition agreement with respect to a
superior proposal, so long as we comply with certain terms of
the merger agreement described under The Merger
Agreement Recommendation Withdrawal/Termination in
Connection with a Superior Proposal and Third Party Tender
Offers beginning on page 53.
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Termination of the Merger Agreement (see page 53).
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The merger agreement may be terminated at any time prior to the
consummation of the merger, whether before or after stockholder
approval has been obtained:
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by mutual written consent of Intergraph and Cobalt Holding;
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by either Intergraph or Cobalt Holding, if:
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the merger is not consummated on or before March 31, 2007,
except that this right to terminate will not be available to any
party whose action or failure to fulfill any obligation under
the merger agreement or failure to act in good faith has been
the principal cause of, or resulted in, the failure of the
merger to be consummated by that date;
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a court of competent jurisdiction or other governmental entity
has issued a final, non-appealable order, decree or ruling or
taken any other action, or there exists any statute, rule or
regulation, in
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each case preventing or otherwise prohibiting the consummation
of the merger or that otherwise has the effect of making the
merger illegal, and the party seeking to terminate the merger
agreement has used all reasonable efforts to prevent the entry
of and to remove the order, decree, ruling, action, or statute,
rule or regulation to the extent of its control or
influence; or
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our stockholders fail to adopt the merger agreement at a duly
held meeting; or
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our board of directors withdraws or modifies, or publicly
proposes to withdraw or modify, in a manner adverse to Cobalt
Holding, the approval or recommendation of our board of
directors of the merger agreement or the merger or announces
that it has resolved to take that action;
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our board of directors recommends to our stockholders or
approves any acquisition proposal or resolves to effect the
foregoing;
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our board of directors fails to include in this proxy statement
its recommendation that our stockholders approve the merger
agreement and the merger;
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our board of directors fails to recommend against a tender or
exchange offer related to an acquisition proposal in any
publicly disclosed position taken pursuant to the United States
Securities Exchange Act of 1934, as amended, which we refer to
as the Exchange Act; or
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there has been a breach of, or inaccuracy in, any
representation, warranty, covenant or agreement of Intergraph
under the merger agreement which would result in the failure of
certain conditions to closing and where the breach or inaccuracy
is reasonably incapable of being cured, or is not cured, within
20 business days after Intergraph receives notice of the breach
or inaccuracy and neither Cobalt Holding nor Merger Sub is in
material breach of its representations, warranties, covenants
and obligations under the merger agreement so as to cause the
failure of certain conditions to closing; or
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Intergraph concurrently enters into a definitive agreement with
respect to a superior proposal; provided that we have paid, or
simultaneously with doing so, pay to Cobalt Holding the
termination fee as described below;
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there has been a breach of, or inaccuracy in, any
representation, warranty, covenant or agreement of Cobalt
Holding or Merger Sub under the merger agreement which would
result in the failure of certain conditions to closing and where
the breach or inaccuracy is reasonably incapable of being cured,
or is not cured, within 20 business days after Cobalt Holding
receives notice of the breach or inaccuracy and we are not in
material breach of our representations, warranties, covenants
and obligations under the merger agreement so as to cause the
failure of certain conditions to closing; or
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the conditions to closing have been satisfied (other than those
conditions that by their terms are to be satisfied at closing,
and no state of facts or circumstances exists that would cause
the conditions to not be satisfied, and nothing has occurred and
no conditions exist that would cause those conditions not to be
satisfied if the closing were to occur on the last day of the
marketing period as further described below) and
Cobalt Holding has failed to consummate the merger by the last
day of the marketing period.
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Termination Fees (see page 54). If the
merger agreement is terminated under certain circumstances:
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Intergraph will be obligated to reimburse Cobalt Holdings
out-of-pocket
fees and expenses, up to a limit of $7,000,000;
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Intergraph will be obligated to pay a termination fee of
$33,140,000 (less, in some circumstances, any
out-of-pocket
fees and expenses previously reimbursed as described
above); or
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Cobalt Holding will be obligated to pay us a termination fee of
$53,020,000. Investment funds affiliated with each of
Hellman & Friedman LLC, Texas Pacific Group and JMI
Equity have agreed
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severally to guarantee the obligation of Cobalt Holding to pay
this termination fee, subject to a cap. The cap for each
investment fund is equal to the investment funds pro rata
share of $53,020,000, which share is proportionate to its equity
commitment to Cobalt Holding as compared to the equity
commitment of the other guarantors. The $53,020,000 termination
fee payable to Intergraph is our exclusive remedy unless, in
general, Cobalt Holding is otherwise in willful and material
breach of the merger agreement, in which case we may pursue a
damages claim. The maximum aggregate liability of Cobalt Holding
and its affiliates, including the investment funds affiliated
with each of Hellman & Friedman LLC, Texas Pacific
Group and JMI Equity arising from any breach of the merger
agreement is in any event capped at $99,420,000. See The
Merger Guarantees; Remedies beginning on
page 35.
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The
Special Meeting
See Questions and Answers About the Special Meeting
beginning on page 7 and The Special Meeting
beginning on page 13.
Other
Important Considerations
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Board Recommendation. After careful
consideration, the independent members of our board of directors
unanimously determined that the merger agreement and the merger
are advisable, fair to and in the best interests of Intergraph
and our stockholders and unanimously recommend that our
stockholders vote FOR the adoption of the merger
agreement and FOR the adjournment of the special
meeting, if necessary, to solicit additional proxies. For a
discussion of the factors our board of directors considered in
deciding to recommend the adoption of the merger agreement, see
The Merger Reasons for the Merger;
Recommendation of Our Board of Directors beginning on
page 23.
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Share Ownership of Directors and Executive
Officers. As
of ,
2006, the record date for the special meeting, the directors and
executive officers of Intergraph held and were entitled to vote,
in the
aggregate, shares
of Intergraph common stock, representing
approximately % of the outstanding
shares of the Intergraph common stock. See The Special
Meeting Voting Rights; Quorum; Vote Required for
Approval beginning on page 13.
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Interests of Intergraphs Directors and Executive
Officers in the Merger. In reaching its decision
concerning the merger agreement, our board of directors
extensively consulted with our management team and legal and
financial advisors. Members of management generally participated
in meetings of our board of directors; however, R. Halsey Wise,
our president and chief executive officer, abstained from the
vote regarding the merger agreement due to his potential
continuing interest in the surviving corporation. In considering
the recommendation of our board of directors with respect to the
merger, you should be aware that some of Intergraphs
directors and executive officers (including Mr. Wise) who
participated in meetings of our board of directors have
interests in the merger that may be different from, or in
addition to, the interests of our stockholders generally. For
example, the merger agreement provides that, at the effective
time of the merger, each option to purchase shares of our common
stock, including those options held by our directors and
executive officers, will accelerate and become fully vested and
will generally be cashed out in an amount equal to the excess of
$44.00 over the option exercise price, and all shares of
restricted stock and restricted share units, including those
held by our directors and executive officers, will become free
of restrictions and will be cashed out at $44.00 per share
(together with the value of any deemed dividend equivalents
accrued but unpaid with respect to restricted share units).
Certain of our executive officers may be entitled to severance
or retention payments under certain circumstances following the
merger pursuant to existing employment agreements with us.
Certain of our executive officers may also be permitted to
invest in Cobalt Holding by the payment of cash
and/or
contribution of their Intergraph equity securities to the
surviving corporation. The surviving corporation may grant new
stock options in the surviving corporation to certain of our
executive officers, who may also enter into new employment
agreements with the surviving corporation
and/or
become directors of the surviving corporation. These and other
interests or potential interests of our directors and executive
officers are more fully described under The
Merger Interests
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of Intergraphs Directors and Executive Officers in the
Merger beginning on page 36. Our board of directors
was aware of these interests in making its decisions.
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Opinion of Goldman, Sachs & Co. In
connection with the proposed merger, Goldman, Sachs &
Co., which we refer to as Goldman Sachs, delivered its opinion
to our board of directors that, as of August 31, 2006, and
based upon and subject to the factors and assumptions set forth
therein, the $44.00 per share in cash to be received by the
holders of shares of Intergraph common stock pursuant to the
merger agreement was fair from a financial point of view to such
holders. The full text of the written opinion of Goldman Sachs,
dated August 31, 2006, which sets forth assumptions made,
procedures followed, matters considered and limitations on the
review undertaken in connection with the opinion, is attached as
Annex B to this proxy statement. Goldman Sachs provided
its opinion for the information and assistance of our board of
directors in connection with its consideration of the
transaction. The Goldman Sachs opinion is not a recommendation
as to how any holder of Intergraphs common stock should
vote with respect to the transaction. Pursuant to an
engagement letter between Intergraph and Goldman Sachs, we have
agreed to pay Goldman Sachs a transaction fee of 0.85% of the
aggregate consideration paid in the transaction, all of which is
payable upon consummation of the merger. See The
Merger Opinion of Goldman, Sachs &
Co. beginning on page 25.
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Sources of Financing. The merger agreement
does not contain any condition relating to the receipt of
financing by Cobalt Holding; provided, however, that Cobalt
Holding is not required to consummate the merger until the
completion of the marketing period described under
The Merger Agreement Marketing Period.
In connection with the merger, Cobalt Holding will cause
$1,325.6 million to be paid out to our stockholders and
holders of other equity interests in Intergraph, with the
remaining funds to be used to pay customary fees and expenses in
connection with the proposed merger, the financing arrangements
and the related transactions. Funding of the equity and debt
financing is subject to the satisfaction of the conditions set
forth in the commitment letters pursuant to which the financing
will be provided. Cobalt Holding has agreed to use its
reasonable best efforts to arrange the debt financing on the
terms and conditions set forth in the debt commitment letter.
The payments to our stockholders and of customary fees and
expenses are expected to be funded by a combination of the
following:
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an aggregate of $441.1 million in equity contributions by
affiliates of Hellman & Friedman LLC, Texas Pacific
Group and JMI Equity;
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new senior secured credit facilities in the amount of
$464.5 million, consisting of a $389.5 million senior
secured term loan and a $75.0 million senior secured
revolving credit facility (not all of which is expected to be
drawn at the closing);
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$276.5 million aggregate principal amount of senior
subordinated notes or, alternatively, a senior subordinated
bridge loan facility in the amount of $276.5 million;
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a new $60.0 million senior secured
payment-in-kind
loan facility; and
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cash and cash equivalents held by Intergraph and our
subsidiaries at closing.
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See The Merger Financing of the Merger
beginning on page 34.
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Regulatory Approvals (see
page 33). Under the HSR Act, and the rules
promulgated thereunder by the Federal Trade Commission, which we
refer to as the FTC, the merger may not be completed until
notification and report forms have been filed with the FTC and
the Antitrust Division of the Department of Justice, which we
refer to as the DOJ, and the applicable waiting period has
expired or has been terminated. Intergraph and Cobalt Holding
each filed notification and report forms under the HSR Act with
the FTC and the Antitrust Division of the DOJ on
September 15, 2006. If Intergraph and Cobalt Holding do not
receive a request for additional information, the waiting period
will expire at 11:59 p.m. on October 16, 2006, if not
terminated earlier. The merger is also subject to the expiration
of waiting periods or receipt of clearance opinions in
connection with foreign merger control filings in Austria,
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Germany and Norway, which were filed with the applicable
antitrust authorities on September 8, 2006,
September 8, 2006 and September 15, 2006, respectively.
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Tax Consequences. The merger will be a taxable
transaction for U.S. federal income tax purposes. Your
receipt of cash in exchange for your shares of Intergraph common
stock pursuant to the merger generally will cause you to
recognize gain or loss measured by the difference, if any,
between the cash you receive pursuant to the merger (determined
before the deduction of any applicable withholding taxes) and
your adjusted tax basis in your shares of Intergraph common
stock. If you are a
non-U.S. holder
(as defined below) of Intergraph common stock, the merger
generally will not be a taxable transaction to you under
U.S. federal income tax law unless you have certain
connections to the United States. Under U.S. federal income
tax law, you will be subject to information reporting on cash
received pursuant to the merger unless an exemption applies.
Backup withholding may also apply with respect to cash you
receive pursuant to the merger, unless you provide proof of an
applicable exemption or a correct taxpayer identification number
and otherwise comply with the applicable requirements of the
backup withholding rules. You should consult your own tax
advisor for a full understanding of how the merger will affect
your particular tax consequences, including federal, state,
local and/or
foreign taxes and, if applicable, the tax consequences of the
receipt of cash in connection with the cancellation of your
options to purchase shares of Intergraph common stock, your
shares of restricted stock
and/or your
restricted share units. See The Merger
Material U.S. Federal Income Tax Consequences of the Merger
to Our Stockholders beginning on page 38.
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Appraisal Rights. Under Delaware law, holders
of Intergraph common stock who do not vote in favor of adopting
the merger agreement will have the right to seek appraisal of
the fair value of their shares, as determined by the Delaware
Court of Chancery, if the merger is completed, but only if they
comply with all requirements of Delaware law, which are
summarized in this proxy statement. This appraisal amount you
would receive could be more than, the same as or less than the
amount a stockholder would be entitled to receive under the
terms of the merger agreement. Any holder of Intergraph common
stock intending to exercise the holders appraisal rights,
among other things, must submit a written demand for an
appraisal to us prior to the vote on the adoption of the merger
agreement and must not vote or otherwise submit a proxy in favor
of adoption of the merger agreement. Your failure to follow
exactly the procedures specified under Delaware law will result
in the loss of your appraisal rights. See The Special
Meeting Rights of Stockholders Who Object to the
Merger and Appraisal Rights beginning on
pages 14 and 58, respectively, and the text of the Delaware
appraisal rights statute reproduced in its entirety as
Annex C.
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Market Price of Intergraph Common Stock (see
page 60). The closing sale price of
Intergraph common stock on the Nasdaq Global Select Market,
which we refer to as the NASDAQ, on August 30, 2006, the
last trading date before the date of the merger agreement, was
$37.30 per share. The $44.00 per share to be paid for each
share of Intergraph common stock pursuant to the merger
represents a premium of approximately 22% over Intergraphs
average closing share price for the 20 trading days prior to the
date of the merger agreement.
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6
QUESTIONS
AND ANSWERS ABOUT THE SPECIAL MEETING
The following questions and answers are intended to address
briefly some commonly asked questions regarding the special
meeting. These questions and answers do not address all
questions that may be important to you as an Intergraph
stockholder. You should still carefully read the Summary
Term Sheet and the more detailed information contained
elsewhere in this proxy statement, the annexes to this proxy
statement and the documents referred to or incorporated by
reference in this proxy statement.
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When and where is the special meeting? |
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The special meeting of stockholders of Intergraph will be held
on
, ,
2006,
at .m.,
local time, [in the Building 15b Auditorium at
Intergraphs executive offices located at 170 Graphics
Drive, Madison, Alabama 35758]. |
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What matters will be voted on at the special meeting? |
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You will be asked to consider and vote on the following
proposals: |
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to adopt the merger agreement;
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to approve the adjournment of the special meeting,
if necessary, to solicit additional proxies if there are
insufficient votes at the time of the meeting to adopt the
merger agreement; and |
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to transact such other business that may properly
come before the special meeting or any adjournment or
postponement of the special meeting. |
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How does Intergraphs board of directors recommend that
I vote on the proposals? |
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The independent members of the board of directors unanimously
recommend that you vote: |
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FOR the proposal to adopt the merger
agreement; and |
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FOR the adjournment proposal. |
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Q. |
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Who is entitled to vote at the special meeting? |
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A. |
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All holders of Intergraph common stock as of the close of
business
on ,
2006, the record date for the special meeting, are entitled to
vote at the special meeting. As of the record date, there were
approximately shares
of Intergraph common stock outstanding.
Approximately
holders of record held these shares. Every holder of Intergraph
common stock is entitled to one vote for each share the
stockholder held as of the record date. |
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Please note that space limitations may make it necessary to
limit attendance at the special meeting to stockholders. If you
attend, please note that you may be asked to present valid
picture identification. Street name holders will
need to bring a copy of a brokerage statement reflecting stock
ownership as of the record date. Cameras, recording devices and
other electronic devices are not permitted at the special
meeting. |
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Q. |
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What vote is required for Intergraphs stockholders to
adopt the merger agreement? |
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A. |
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An affirmative vote of the holders of a majority of all
outstanding shares of Intergraph common stock entitled to vote
on the matter is required to adopt the merger agreement. |
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Q. |
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What vote is required for Intergraphs stockholders to
approve the proposal to adjourn the special meeting, if
necessary, to solicit additional proxies? |
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A. |
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The proposal to adjourn the special meeting, if necessary, to
solicit additional proxies requires the affirmative vote of the
holders of a majority of the shares of Intergraph common stock
present or represented by proxy at the meeting and entitled to
vote on the matter. |
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Q. |
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Who is soliciting my vote? |
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A. |
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This proxy solicitation is being made and paid for by
Intergraph. In addition, we have retained Georgeson Inc. to
assist in the solicitation. We will pay Georgeson Inc.
approximately $15,000 plus
out-of-pocket
expenses for its assistance. Our directors, officers and
employees may also solicit proxies by personal interview, mail,
e-mail,
telephone, facsimile or by other means of communication. These
individuals will not be paid additional remuneration for their
efforts. We will also request brokers and other fiduciaries to
forward |
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proxy solicitation materials to the beneficial owners of shares
of Intergraph common stock that the brokers and fiduciaries hold
of record. We will reimburse them for their reasonable
out-of-pocket
expenses. |
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Q. |
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What do I need to do now? |
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A. |
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Even if you plan to attend the special meeting, after carefully
reading and considering the information contained in this proxy
statement, if you hold your shares in your own name as the
stockholder of record, please complete, sign, date and return
the enclosed proxy card; submit a proxy using the telephone
number printed on your proxy card; or submit a proxy using the
Internet proxy submission instructions printed on your proxy
card. You can also attend the special meeting and vote, or
change your prior vote, in person. Do NOT enclose or return
your stock certificate(s) with your proxy. If you hold your
shares in street name through a broker, bank or
other nominee, then you received this proxy statement from the
nominee, along with the nominees proxy card which includes
voting instructions and instructions on how to change your vote. |
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How do I vote? How can I revoke my vote? |
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You may cause your shares to be voted by signing and dating each
proxy card you receive and returning it in the enclosed prepaid
envelope, or as described below if you hold your shares in
street name. If you return your signed proxy card,
but do not mark the boxes showing how you wish your shares to be
voted, your shares will be voted FOR the proposal to
adopt the merger agreement and FOR the adjournment
proposal. You have the right to revoke your proxy at any time
before the vote taken at the special meeting: |
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if you hold your shares in your name as a
stockholder of record, by notifying us in writing at One Madison
Industrial Park, Huntsville, Alabama 35894, Attention: Investor
Relations; |
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if you hold your shares in your name as a
stockholder of record, by attending the special meeting and
voting in person (your attendance at the meeting will not, by
itself, revoke your proxy; you must vote in person at the
meeting); |
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if you hold your shares in your name as a
stockholder of record, by submitting a later-dated proxy
card; or |
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if you have instructed a broker, bank or other
nominee to vote your shares, by following the directions
received from your broker, bank or other nominee to change those
instructions. |
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Q. |
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Can I submit a proxy by telephone or electronically? |
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A. |
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If you hold your shares in your name as a stockholder of record,
you may submit a proxy by telephone or electronically through
the Internet by following the instructions included with your
proxy card. |
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If your shares are held by your broker, bank or other nominee,
often referred to as held in street name, please
check your proxy card or contact your broker, bank or other
nominee to determine whether you will be able to provide voting
instructions by telephone or electronically. |
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Q. |
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If my shares are held in street name by my
broker, bank or other nominee, will my broker, bank or other
nominee vote my shares for me? |
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A. |
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Your broker, bank or other nominee will only be permitted to
vote your shares if you instruct your broker, bank or other
nominee how to vote. You should follow the procedures provided
by your broker, bank or other nominee regarding the voting of
your shares. If you do not instruct your broker, bank or other
nominee to vote your shares, your shares will not be voted and
the effect will be the same as a vote against the adoption of
the merger agreement and will not have an effect on the proposal
to adjourn the special meeting. |
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What do I do if I receive more than one proxy or set of
voting instructions? |
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A. |
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If you hold shares both as a record holder and in street
name, or if your shares are otherwise registered
differently, you may receive more than one proxy
and/or set
of voting instructions relating to the special meeting. These
should each be returned separately in order to ensure that all
of your shares are voted. |
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Q. |
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How are votes counted? |
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A. |
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For the proposal to adopt the merger agreement, you may
vote FOR, AGAINST or ABSTAIN. Abstentions will not be
counted as votes cast or shares voting on the proposal to adopt
the merger agreement, but will count for the purpose of
determining whether a quorum is present. If you abstain, it will
have the same effect as if you vote against the adoption of the
merger agreement. In addition, if your shares are held in the
name of a broker, bank or other nominee, your broker, bank or
other nominee will not be entitled to vote your shares in the
absence of specific instructions. These non-voted shares, or
broker non-votes, will be counted for purposes of
determining a quorum, but will have the same effect as a vote
against the adoption of the merger agreement. |
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For the proposal to adjourn the special meeting, if necessary,
to solicit additional proxies, you may vote FOR, AGAINST or
ABSTAIN. Abstentions and broker non-votes will count for the
purpose of determining whether a quorum is present, but broker
non-votes will not count as shares present and entitled to vote
on the proposal to adjourn the meeting. As a result, abstentions
will have the same effect as a vote against the proposal to
adjourn the meeting and broker non-votes will have no effect on
the vote to adjourn the meeting, which requires the vote of the
holders of a majority of the shares of Intergraph common stock
present or represented by proxy at the meeting and entitled to
vote on the matter. |
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If you sign your proxy card without indicating your vote, your
shares will be voted FOR the adoption of the merger
agreement and FOR the adjournment of the special
meeting, if necessary, to solicit additional proxies, and in
accordance with the recommendations of our board of directors on
any other matters properly brought before the special meeting
for a vote. |
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Q: |
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Who will count the votes? |
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A: |
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A representative of our transfer agent, Computershare Investor
Services, LLC, will count the votes and act as an inspector of
election. Questions concerning stock certificates or other
matters pertaining to your shares may be directed to
Computershare Investor Services, LLC at (312) 360-5116. |
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Q. |
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When is the merger expected to be completed? What is the
marketing period? |
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A. |
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We are working toward completing the merger as soon as possible,
and we anticipate that it will be completed in the fourth
quarter of 2006. However, in order to complete the merger, we
must obtain stockholder approval and the other closing
conditions under the merger agreement must be satisfied or
waived. In addition, Cobalt Holding is not obligated to complete
the merger until the expiration of a 20-consecutive calendar day
marketing period that it may use to complete the
debt financing for the merger. The marketing period begins to
run after we have provided Cobalt Holding with certain financial
information required to be provided by us under the merger
agreement, obtained the stockholder approval and satisfied other
specified conditions under the merger agreement, but will begin
no earlier than November 11, 2006. If the marketing period
would not end on or before December 19, 2006, the marketing
period will commence no earlier than January 2, 2007. See
The Merger Agreement Marketing Period
and The Merger Agreement Conditions to the
Merger beginning on pages 49 and 50, respectively. |
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Q. |
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Should I send in my stock certificates now? |
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A. |
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No. After the merger is completed, you will be sent a
letter of transmittal with detailed written instructions for
exchanging your Intergraph common stock certificates for the
merger consideration. |
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If your shares are held in street name by your
broker, bank or other nominee, you will receive instructions
from your broker, bank or other nominee as to how to effect the
surrender of your street name shares in exchange for
the merger consideration. Please do not send your
certificates in now. |
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Q. |
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How can I obtain additional information about Intergraph? |
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A. |
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We will provide a copy of our Annual Report to stockholders
and/or our
Annual Report on
Form 10-K
for the year ended December 31, 2005, excluding certain of
its exhibits, and other filings, including our reports on
Form 10-Q,
which have been filed with the Securities and Exchange
Commission, which we refer to as the SEC, without charge to any
stockholder who makes an oral or written request to the Office
of Investor Relations, Intergraph Corporation, One Madison
Industrial Park, Huntsville, Alabama, 35894, |
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telephone:
(256) 730-2720.
Our Annual Report on
Form 10-K
and other SEC filings also may be accessed on the Internet at
http://www.sec.gov or on the Investor Relations page of
Intergraphs website at http://www.intergraph.com. Our
website address is provided as an inactive textual reference
only. The information provided on our website is not part of
this proxy statement and is not incorporated by reference. For a
more detailed description of how to obtain additional
information about Intergraph, please refer to Where You
Can Find More Information beginning on page 64. |
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Q. |
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Who can help answer my questions? |
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A. |
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If you need assistance in completing your proxy card or have
questions regarding the special meeting, please contact:
Georgeson Inc., 17 State Street, 10th Floor, New York, New
York 10004. Banks and brokers call
(212) 440-9800.
All others call toll-free
(866) 628-6079.
If your broker, bank or other nominee holds your shares, you can
also call your nominee for additional information. |
10
SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This proxy statement, and the documents to which we refer you in
this proxy statement, contain
forward-looking
statements based on estimates and assumptions. Forward-looking
statements include information concerning possible or assumed
future results of operations of Intergraph, the expected
completion and timing of the merger and other information
relating to the merger. There are forward-looking statements
throughout this proxy statement, including, without limitation,
under the headings Summary Term Sheet, The
Merger, and in statements containing the words
believes, plans, expects,
anticipates, intends,
estimates or other similar expressions. For each of
these statements, we claim the protection of the safe harbor for
forward-looking statements contained in the Private Securities
Litigation Reform Act of 1995. You should be aware that
forward-looking statements involve known and unknown risks and
uncertainties. Although we believe that the expectations
reflected in these forward-looking statements are reasonable, we
cannot assure you that the actual results or developments we
anticipate will be realized, or even if realized, that they will
have the expected effects on the business or operations of
Intergraph. These forward-looking statements speak only as of
the date on which the statements were made and we undertake no
obligation to publicly update or revise any forward-looking
statements made in this proxy statement or elsewhere as a result
of new information, future events or otherwise. In addition to
other factors and matters contained or incorporated in this
document, we believe the following factors could cause actual
results to differ materially from those discussed in the
forward-looking statements:
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the occurrence of any event, change or other circumstances that
could give rise to the termination of the merger agreement,
including a termination that under circumstances could require
us to pay a $33.14 million termination fee to Cobalt
Holding;
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the outcome of any legal proceedings that have been or may be
instituted against us and others relating to the merger
agreement;
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the failure of the merger to close for any reason, including the
inability to complete the merger due to the failure to obtain
stockholder approval or the failure to satisfy other conditions
to consummation of the merger, including the expiration of the
waiting period under the HSR Act, or the failure to obtain the
necessary debt financing arrangements set forth in commitment
letters received in connection with the merger, and the risk
that any failure of the merger to close may adversely affect our
business and the price of our common stock;
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the potential adverse effect on our business, properties and
operations of any covenants we agreed to in the merger agreement;
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risks that the proposed transaction diverts managements
attention and disrupts current plans and operations, and
potential difficulties in employee retention as a result of the
merger;
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the effect of the announcement of the merger and actions taken
in anticipation of the merger on our business relationships,
operating results and business generally;
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the amount of the costs, fees, expenses and charges related to
the merger; and
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other risks detailed in our current filings with the SEC,
including our most recent filings on
Forms 8-K,
10-Q and
10-K. See
Where You Can Find More Information beginning on
page 64.
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Many of the factors that will determine our future results are
beyond our ability to control or predict. In light of the
significant uncertainties inherent in the forward-looking
statements contained herein, readers should not place undue
reliance on forward-looking statements, which reflect our views
only as of the date of this proxy statement. We cannot guarantee
any future results, levels of activity, performance or
achievements. The statements made in this proxy statement
represent our views as of the date of this proxy statement, and
it should not be assumed that the statements made herein remain
accurate as of any future date. Moreover, we assume no
obligation to update forward-looking statements or update the
reasons that actual results could differ materially from those
anticipated in forward-looking statements, except as required by
law.
11
THE
PARTIES TO THE MERGER
Intergraph
Intergraph Corporation is a Delaware corporation and is
headquartered in Huntsville, Alabama. Our principal executive
offices are located at One Madison Industrial Park, Huntsville,
Alabama 35894 and our telephone number is
(256) 730-2000.
We are a leading global supplier of spatial information
management software. Our core mission is to enable businesses
and governments to make better and faster operational decisions
and, through software and services, help our customers organize
vast amounts of complex data into understandable visual
representations. Our technology enables customers to create
intelligent maps, manage assets and infrastructure, build and
better manage plants and ships, and dispatch, command, and
control emergency services to those in need. Founded in 1969,
Intergraph was a pioneer of computer graphics in the commercial
and government sectors and has delivered numerous innovations in
interactive graphics solutions. Intergraphs divisions
offer software, professional services, and maintenance solutions
to satisfy engineering, design, modeling, analysis, mapping, and
information technology needs. Products and services are sold
through industry-focused direct and indirect sales channels
worldwide. A significant portion of our revenues are generated
outside the U.S., primarily in Europe and Asia Pacific.
For a more detailed description of the business and properties
of Intergraph, see our Annual Report on
Form 10-K
for the fiscal year ended December 31, 2005, which is
incorporated by reference herein, or visit our website at
www.intergraph.com. Our website address is provided as an
inactive textual reference only. The information provided on our
website is not part of this proxy statement and is not
incorporated by reference. Intergraph is publicly traded on the
NASDAQ under the symbol INGR. See Where You
Can Find More Information.
Cobalt
Holding
Cobalt Holding Company, which we refer to as Cobalt Holding, is
a Delaware corporation that was formed solely for the purpose of
acquiring Intergraph. Cobalt Holding has not engaged in any
business except as contemplated by the merger agreement. The
principal office addresses of Cobalt Holding are
c/o Hellman & Friedman, One Maritime Plaza,
12th Floor, San Francisco, California 94111,
telephone:
(415) 788-5111,
and c/o Texas Pacific Group, 301 Commerce Street,
Suite 3300, Fort Worth, Texas 76102, telephone:
(415) 743-1500.
At the time of the merger, Cobalt Holding will be owned
primarily by private equity funds affiliated with
Hellman & Friedman LLC, JMI Equity and Texas Pacific
Group. Each of Hellman & Friedman LLC, Texas Pacific
Group and JMI Equity is engaged in the business of making
private equity and related investments.
Merger
Sub
Cobalt Merger Corp., which we refer to as Merger Sub, is a
Delaware corporation that was formed solely for the purpose of
completing the proposed merger. Upon the consummation of the
proposed merger, Cobalt Merger Corp. will cease to exist and
Intergraph will continue as the surviving corporation. Cobalt
Merger Corp. is wholly-owned by Cobalt Holding and has not
engaged in any business except as contemplated by the merger
agreement. The principal office addresses of Merger Sub are
c/o Hellman & Friedman, One Maritime Plaza,
12th Floor, San Francisco, California 94111,
telephone:
(415) 788-5111,
and c/o Texas Pacific Group, 301 Commerce Street,
Suite 3300, Fort Worth, Texas 76102, telephone:
(415) 743-1500.
12
THE
SPECIAL MEETING
This proxy statement is furnished in connection with the
solicitation of proxies by our board of directors in connection
with the special meeting of our stockholders relating to the
merger.
Date,
Time and Place of the Special Meeting
The special meeting is scheduled to be held as follows:
Date: ,
2006
Time: .m.,
local time
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Place:
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[Building 15b Auditorium
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170 Graphics Drive, Madison, Alabama 35758]
Proposals
to be Considered at the Special Meeting
At the special meeting, you will be asked to vote on a proposal
to adopt the merger agreement and to approve the adjournment of
the special meeting, if necessary, to solicit additional proxies
if there are insufficient votes at the time of the meeting to
adopt the merger agreement. If our stockholders fail to adopt
the merger agreement, the merger will not occur. A copy of the
merger agreement is attached as Annex A to this proxy
statement, and we encourage you to read it carefully and in its
entirety.
Record
Date
We have fixed the close of business
on ,
2006 as the record date for the special meeting, and only
holders of record of Intergraph common stock on the record date
are entitled to vote at the special meeting. On the record date,
there
were shares
of Intergraph common stock outstanding and entitled to vote.
Voting
Rights; Quorum; Vote Required for Approval
Each share of Intergraph common stock entitles the holder to one
vote on all matters properly coming before the special meeting.
The presence, in person or representation by proxy of
stockholders entitled to cast a majority of the votes of all
issued and outstanding shares entitled to vote, shall constitute
a quorum for the purpose of considering the proposals. Shares of
Intergraph common stock represented at the special meeting but
not voted, including shares of Intergraph common stock for which
proxies have been received but for which stockholders have
abstained, will be treated as present at the special meeting for
purposes of determining the presence or absence of a quorum for
the transaction of all business. In the event that a quorum is
not present at the special meeting, it is expected that the
meeting will be adjourned to solicit additional proxies.
Adoption of the merger agreement requires the affirmative vote
of the holders of a majority of the outstanding shares of
Intergraph common stock entitled to vote on the matter. For the
proposal to adopt the merger agreement, you may vote FOR,
AGAINST or ABSTAIN. Abstentions will not be counted as votes
cast or shares voting on the proposal to adopt the merger
agreement, but will count for the purpose of determining whether
a quorum is present. If you abstain, it will have the same
effect as if you vote against the adoption of the merger
agreement. In addition, if your shares are held in the name
of a broker, bank or other nominee, your broker, bank or other
nominee will not be entitled to vote your shares in the absence
of specific instructions. These non-voted shares, or
broker non-votes, will be counted for purposes of
determining a quorum, but will have the same effect as a vote
against the adoption of the merger agreement. Your broker,
bank or nominee will vote your shares only if you provide
instructions on how to vote by following the instructions
provided to you by your broker, bank or nominee.
The proposal to adjourn the special meeting, if necessary, to
solicit additional proxies requires the affirmative vote of the
holders of a majority of the outstanding shares of Intergraph
common stock present or represented by proxy at the special
meeting and entitled to vote on the matter. For the proposal to
adjourn the
13
special meeting, if necessary, to solicit additional proxies,
you may vote FOR, AGAINST or ABSTAIN. Abstentions and
broker non-votes will count for the purpose of determining
whether a quorum is present, but broker non-votes will not count
as shares present and entitled to vote on the proposal to
adjourn the meeting. As a result, abstentions will have the
same effect as a vote against the proposal to adjourn the
meeting and broker non-votes will have no effect on the vote to
adjourn the special meeting, which requires the vote of the
holders of a majority of the shares of Intergraph common stock
present or represented by proxy at the meeting and entitled to
vote on the matter.
As
of ,
2006, the record date, the directors and executive officers of
Intergraph held and were entitled to vote, in the
aggregate, shares
of Intergraph common stock, representing
approximately % of the outstanding Intergraph common
stock. If our directors and executive officers vote their shares
in favor of adopting the merger agreement, % of the outstanding
shares of Intergraph common stock will have voted for the
proposal to adopt the merger agreement. This means that
additional holders of
approximately ,
or %, of all shares entitled to
vote at the special meeting would need to vote for the proposal
to adopt the merger agreement in order for it to be adopted.
Submission
and Revocation of Proxies
Stockholders of record may submit proxies by
mail. Stockholders who wish to submit a proxy by mail
should mark, date, sign and return the proxy card in the
envelope furnished. If you hold your shares in your name as a
stockholder of record, you may submit a proxy by telephone or
electronically through the Internet by following the
instructions included with your proxy card. Stockholders who
hold shares beneficially through a nominee (such as a bank or
broker) may be able to submit a proxy by mail, or by telephone
or the Internet if those services are offered by the nominee.
Proxies received at any time before the special meeting, and not
revoked or superseded before being voted, will be voted at the
special meeting. Where a specification is indicated by the
proxy, it will be voted in accordance with the specification. If
you sign your proxy card without indicating your vote, your
shares will be voted FOR the adoption of the merger
agreement and FOR the adjournment of the special
meeting, if necessary, to solicit additional proxies, and in
accordance with the recommendations of our board of directors on
any other matters properly brought before the special meeting
for a vote.
You have the right to revoke your proxy at any time before the
vote taken at the special meeting:
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if you hold your shares in your name as a stockholder of record,
by notifying us in writing at One Madison Industrial Park,
Huntsville, Alabama 35894, Attention: Investor Relations;
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if you hold your shares in your name as a stockholder of record,
by attending the special meeting and voting in person (your
attendance at the meeting will not, by itself, revoke your
proxy; you must vote in person at the meeting);
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if you hold your shares in your name as a stockholder of record,
by submitting a later-dated proxy card; or
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if you have instructed a broker, bank or other nominee to vote
your shares, by following the directions received from your
broker, bank or other nominee to change those instructions.
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Please do not send in your stock certificates with your proxy
card. When the merger is completed, a separate letter of
transmittal will be mailed to you that will enable you to
receive the merger consideration in exchange for your stock
certificates.
Rights of
Stockholders Who Object to the Merger
Stockholders of Intergraph are entitled to appraisal rights
under Delaware law in connection with the merger. This means
that you are entitled to have the value of your shares
determined by the Delaware Court of Chancery and to receive
payment based on that valuation. The ultimate amount you receive
as a dissenting stockholder in an appraisal proceeding may be
more than, the same as or less than the amount you would have
received under the merger agreement.
14
To exercise your appraisal rights, you must submit a written
demand for appraisal to Intergraph before the vote is taken on
the merger agreement and you must not vote in favor of the
adoption of the merger agreement. Your failure to follow exactly
the procedures specified under Delaware law will result in the
loss of your appraisal rights. See Appraisal Rights
beginning on page 59 and the text of the Delaware appraisal
rights statute reproduced in its entirety as Annex C.
Solicitation
of Proxies
This proxy solicitation is being made and paid for by Intergraph
on behalf of our board of directors. In addition, we have
retained Georgeson Inc. to assist in the solicitation. We will
pay Georgeson Inc. approximately $15,000 plus
out-of-pocket
expenses for their assistance. Our directors, officers and
employees may also solicit proxies by personal interview, mail,
e-mail,
telephone, facsimile or other means of communication. These
individuals will not be paid additional remuneration for their
efforts. We will also request brokers and other fiduciaries to
forward proxy solicitation material to the beneficial owners of
shares of Intergraph common stock that the brokers and
fiduciaries hold of record. We will reimburse them for their
reasonable
out-of-pocket
expenses. In addition, we will indemnify Georgeson Inc. against
any losses arising out of that firms proxy soliciting
services on our behalf.
Other
Business
We are not currently aware of any business to be acted upon at
the special meeting other than the matters discussed in this
proxy statement. Under our by-laws, business transacted at the
special meeting is limited to the purposes stated in the notice
of the special meeting, which is provided at the beginning of
this proxy statement. If other matters do properly come before
the special meeting, or at any adjournment or postponement of
the special meeting, we intend that shares of Intergraph common
stock represented by properly submitted proxies will be voted in
accordance with the recommendations of our board of directors.
Questions
and Additional Information
If you have more questions about the merger or how to submit
your proxy, or if you need additional copies of this proxy
statement or the enclosed proxy card or voting instructions,
please call our proxy solicitor, Georgeson Inc., toll-free at
(866) 628-6079
(banks and brokerage firms call collect at
(212) 440-9800),
or contact Intergraph in writing at our principal executive
offices at One Madison Industrial Park, Huntsville, Alabama
35894, Attention: Investor Relations, or by telephone at
(256) 730-2720.
15
THE
MERGER
This discussion of the merger is qualified by reference to
the merger agreement, which is attached to this proxy statement
as Annex A. You should read the entire merger agreement
carefully as it is the legal document that governs the
merger.
Background
of the Merger
Our board of directors periodically reviews and assesses
strategic alternatives available to us to enhance stockholder
value. In the spring of 2005, Intergraph reorganized its
operations from four business units to two, which we refer to as
Security, Government & Infrastructure, or SG&I, and
Process, Power & Marine, or PP&M, and began to
restructure and streamline its global operations. The
restructuring actions were expected to be completed by the
second quarter of 2006. During the summer and fall of 2005,
certain parties expressed potential interest in discussing a
potential transaction with Intergraph. None of these progressed
beyond the preliminary stage or resulted in any specific
proposals. In the fall of 2005, our board of directors
considered whether a more formal review of our potential
strategic alternatives to enhance stockholder value was
appropriate. Following discussion, the board of directors
requested our management to invite Goldman Sachs to make a
presentation to the board of directors at its next regularly
scheduled meeting regarding potential strategic alternatives
available to us.
On January 25, 2006, at a regularly scheduled meeting of
the board of directors, our management reviewed with the board
of directors Intergraphs results of operations, including
an update regarding Intergraphs organizational realignment
and restructuring efforts, Intergraphs 2006 budget, and
our managements perspective regarding potential strategic
alternatives to enhance stockholder value. Representatives of
Goldman Sachs were then invited to join the meeting to discuss
their preliminary analyses of our potential strategic
alternatives. Goldman Sachs reviewed the possibility of pursuing
potential strategic alternatives relating to the continuation of
Intergraphs strategic plan and business transformation
efforts, a recapitalization (including a potential share
repurchase), growth through one or more strategic acquisitions
to complement our SG&I
and/or
PP&M business units, and the potential sale of all or part
of Intergraph, and discussed the supporting rationales, merits
and challenges associated with each potential alternative. With
respect to the sale of Intergraph alternative, Goldman Sachs
discussed, and our board of directors considered, several
potential processes and their respective benefits and risks,
including a targeted competitive process. Goldman Sachs also
reviewed the number and identity of parties whom Intergraph
might consider including in a targeted competitive process and
the expected levels of interest.
A representative of Bass, Berry & Sims PLC, our outside
corporate counsel, which we refer to as Bass, Berry &
Sims, was also present at this meeting and reviewed the
fiduciary duties of directors in the context of considering
strategic alternatives relating to Intergraph. After further
discussions between members of the board of directors and our
management, the board of directors determined that it would
explore potential strategic alternatives as discussed at the
meeting, including the potential sale of Intergraph through a
targeted competitive process, and authorized management to
negotiate the retention of Goldman Sachs to assist the board of
directors in exploring potential strategic alternatives.
On February 27, 2006, the board of directors met and
received an update from our management regarding
Intergraphs exploration of our strategic alternatives.
Following this meeting, we executed an engagement letter
retaining Goldman Sachs as our financial advisor.
Thereafter, and continuing into April 2006, acting on behalf of
Intergraph, Goldman Sachs contacted 11 potential strategic
parties to assess their interest in a potential business
combination transaction with Intergraph. These potentially
interested parties were selected primarily on the basis of their
expected financial resources and level of interest in a
transaction with Intergraph, including any previous expressions
of interest to Intergraph. Given the belief that a strategic
transaction was more likely in view of potential synergies, cost
savings and other factors, based in part on the advice of
Goldman Sachs and concerns regarding confidentiality of the
process, the board of directors determined not to contact
financial sponsors at this stage of the process. Acting on
behalf of Intergraph, Goldman Sachs distributed introductory
information materials and a form of confidentiality agreement to
prospective strategic parties who expressed interest in
Intergraph. We subsequently
16
executed confidentiality agreements with six prospective
strategic parties through April 2006. Also, our management, with
the assistance of Goldman Sachs, continued to refine their
analyses of other potential strategic alternatives.
Between March 15, 2006 and April 12, 2006, nine of the
11 strategic parties contacted by Goldman Sachs declined to
proceed further with the process. Several of these parties noted
the complexity of Intergraphs business, tax costs
associated with any subsequent disposition of businesses or
non-core assets and the relative size of Intergraphs
SG&I and PP&M business units.
At an April 19, 2006 meeting of our board of directors, our
board of directors reviewed with our management
Intergraphs recent financial and operational performance,
Intergraphs progress in its organizational realignment and
restructuring efforts, and other matters. Thereafter, Goldman
Sachs joined the meeting and reviewed for the board of directors
the work that our management, with the assistance of its legal
and financial advisors, had undertaken in connection with the
exploration of our potential strategic alternatives. With
respect to the potential sale of Intergraph alternative,
representatives of Goldman Sachs updated the board of directors
on the contacts made by Goldman Sachs to potential strategic
parties, noting that nine of the potential strategic parties
stated that they were not interested in exploring further a
transaction with Intergraph and that none of the potential
strategic parties expressed any meaningful degree of interest in
a transaction with Intergraph. Goldman Sachs also discussed a
list of financial sponsors that could be asked to bid for
Intergraph and assessed their desire and ability to acquire
Intergraph, as well as other potential strategic alternatives
available to Intergraph. Following a discussion regarding next
steps, the independent directors went into executive session, at
which time members of our management left the meeting. During
the executive session, the independent directors discussed the
potential inclusion of financial sponsors in the process, the
potential interests of our management in a transaction involving
a financial sponsor and the maintenance of the confidentiality
of the process. Following discussion, the board of directors
approved the inclusion of potentially interested financial
sponsors in the process and directed our management and legal
and financial advisors to continue to explore potential
strategic alternatives available to us. The independent
directors also instructed our management not to discuss their
personal financial interests in a potential transaction with a
financial sponsor without prior board of directors
approval.
Over the course of the following week, acting on behalf of
Intergraph, Goldman Sachs contacted potential financial sponsor
acquirors to assess their interest in acquiring Intergraph.
Acting on behalf of Intergraph, Goldman Sachs distributed a form
of confidentiality agreement to prospective financial sponsors
who expressed interest in Intergraph. We subsequently executed
confidentiality agreements with nine prospective financial
sponsor acquirors, as well as two additional prospective
strategic parties who expressed interest in teaming with a
financial sponsor, and distributed introductory materials to
each such party. On April 24, 2006, the remaining two
potential strategic parties contacted earlier in the process
informed Goldman Sachs that they would not participate further
in the process.
On May 4, 2006, Intergraph received three preliminary
indications of interest from financial sponsors or teams,
including an indication of interest from Hellman &
Friedman LLC and Texas Pacific Group. The Hellman &
Friedman LLC/Texas Pacific Group indication of interest included
a range of merger consideration of $47 to $52 per share.
The other two indications of interest included merger
consideration of $50 per share from a financial sponsor we
will refer to as Party X, and a range of $49 to $51 per
share from a financial sponsor we will refer to as Party Y,
respectively. Additionally, two financial sponsors indicated
interest in certain of Intergraphs assets but did not
submit an indication of interest regarding Intergraph as a whole.
On May 8, 2006, our board of directors met to receive an
update regarding the ongoing exploration of our strategic
alternatives. Our management updated the board of directors
regarding the process of evaluating our potential strategic
alternatives process. Representatives of Goldman Sachs updated
the board of directors with respect to the process, including
the potential sale of Intergraph process. Goldman Sachs
described the three written preliminary non-binding indications
of interest in an acquisition of Intergraph from financial
sponsors, and stated that one potential strategic party was
reconsidering participation in the process. The board of
directors discussed next steps in the process, and the
independent directors then met in executive session. Following
discussion during the executive session, the independent
directors resolved to authorize the
17
continuing participants in the sale of Intergraph process to
conduct additional due diligence and authorized the continued
exploration of our other potential strategic alternatives.
Over the course of May and June 2006, the continuing potential
acquirors conducted their due diligence of Intergraph with the
assistance of management and our legal and financial advisors.
In late May 2006, our management made presentations to each of
the continuing potential acquirors.
Our board of directors met on June 13, 2006 to receive an
update regarding the ongoing exploration of our strategic
alternatives. Representatives of our management reviewed
Intergraphs financial performance and other business
matters and provided an update regarding the process of
evaluating our potential strategic alternatives. Goldman Sachs
reviewed and discussed with the board of directors its ongoing
financial analyses of our strategic alternatives.
Representatives of Goldman Sachs also reported to the board of
directors on the progress of the potential sale of Intergraph
process, including the identity of the continuing potential
acquirors (none of which were stand-alone strategic parties) and
their due diligence efforts. Goldman Sachs also discussed
interest expressed in certain of Intergraphs assets.
Party X had expressed an interest in partnering with a
strategic party to explore its interest in the potential
acquisition of one of Intergraphs business units, and this
strategic party was permitted to enter the process. Following
discussion, the independent directors met in executive session.
Bass, Berry & Sims reviewed the board of
directors fiduciary duties, discussed the terms of a draft
merger agreement, and responded to questions.
On June 23, 2006, Hellman & Friedman LLC/Texas
Pacific Group informed Goldman Sachs that they would not
participate further in the process due to valuation concerns as
their analysis of their diligence review did not support their
initial indicated range of $47 to $52 per share.
On June 26, 2006, Bass, Berry & Sims distributed a
draft merger agreement, a draft of which was previously reviewed
by the board of directors, to Party X and Party Y.
Thereafter, a bid procedures letter was distributed that
requested proposals for an acquisition of Intergraph,
accompanied by equity and debt financing commitments, sponsor
guarantees and comments on the draft merger agreement, be
submitted by July 6, 2006. On June 28, 2006, a
previously contacted financial sponsor, whom we will refer to as
Party Z, submitted a joint indication of interest with a
strategic party desiring to enter the process for the entire
company at a range of $40 to $43 per share.
On June 30, 2006, the board of directors met to discuss
Intergraphs forecasted results of operations for the
second quarter and the status of the process for exploring
Intergraphs potential strategic alternatives. Our
management updated the board of directors regarding
Intergraphs results of operations and discussed a
potential pre-announcement of better than expected second
quarter results. Goldman Sachs updated the board of directors
regarding Intergraphs potential strategic alternatives,
including the potential sale process. Goldman Sachs described
the three interested participants or groups, which consisted of
Party X (interested in the entire company or in partnership
with a strategic party with a potential interest in one of
Intergraphs business units), Party Y (interested in
purchasing the entire company), and Party Z (teamed with a
strategic party desiring to enter the process interested in the
entire company). The board of directors discussed these matters
and Hellman & Friedman LLC/Texas Pacific Groups
withdrawal from the process. The board of directors and its
legal and financial advisors also discussed the timeline for the
process.
On July 5, 2006, Party Z increased its indication of
interest from a range of $40 to $43 to a range of $43 to
$50 per share. Intergraph received no other revised
indications of interest or comments regarding the draft merger
agreement prior to the July 6, 2006 deadline included in
the bid procedures letter, although Party Y submitted a
markup of the draft merger agreement the following day and the
others indicated their intent not to submit a markup at that
time.
At a meeting of our board of directors on July 11, 2006,
our management reviewed the draft press release announcing
upwardly revised guidance for the second quarter and 2006 with
the board of directors and discussed the factors driving
Intergraphs results. Thereafter, our management and
Goldman Sachs updated the board of directors regarding the
process of evaluating our potential strategic alternatives,
including a discussion regarding each of the three continuing
participants in the potential sale of Intergraph process. The
board of directors also discussed the potential impact of
various factors on the process, including fluctuations in
18
Intergraphs share price and various market indices, and
considered how such matters could affect potential bid levels.
The board of directors also reviewed with management their
projections for future company performance and the assumptions
and factors underlying the projections. Goldman Sachs reviewed
potential strategic alternatives and potential valuations
relating to each alternative. The alternatives considered
included continuing Intergraphs strategic plan and
business transformation efforts as a stand alone public company,
returning capital to stockholders, including through a more
leveraged capital structure, potential strategic acquisitions to
complement Intergraphs SG&I
and/or
PP&M business units, and the potential sale of all or part
of Intergraph. The independent directors met in executive
session with Goldman Sachs and Bass, Berry & Sims and
discussed the relative merits and potential risks associated
with the various potential alternatives. During the executive
session, the board of directors asked questions of Goldman Sachs
regarding the process, and Bass, Berry & Sims reviewed
the fiduciary duties of directors in the context of considering
potential strategic alternatives.
Following the meeting, Intergraph issued a press release
announcing upwardly revised expectations for the second quarter
and 2006 results of operations. On behalf of Intergraph, Bass,
Berry & Sims circulated a revised draft merger
agreement responding to comments received during the process.
Intergraph received draft equity and debt commitment letters
from Party Y. Goldman Sachs informed participants that
second round indications of interest were due July 17,
2006. As of that date, of the three remaining participants,
Party Z indicated that it valued Intergraph in the mid-$30s
per share (down from a previously indicated range of $43 to
$50 per share) and declined to submit a revised indication
of interest. The two remaining participants did not submit an
indication of interest by July 17, 2006.
The board of directors met on the evening of July 17, 2006
to receive an update regarding Intergraphs potential
strategic alternatives, including the potential sale process.
Goldman Sachs updated the board of directors regarding each of
the three participants in the potential sale process and
informed the board of directors that no written indications of
interest had been received. Goldman Sachs also discussed that
Party Z had orally indicated its valuation in the mid-$30s
per share and stated its intention not to submit a bid.
On July 18, 2006, the board of directors met to receive an
update regarding the process of evaluating our potential
strategic alternatives. Goldman Sachs informed the board of
directors that no written indications of interest had been
received. Party X had indicated that it continued to
evaluate the business, but that it was unlikely to submit an
indication of interest at its previously communicated level of
$50 per share. Goldman Sachs also informed the board
of directors that the other remaining participant, Party Y,
orally indicated that it intended to submit an indication of
interest, but that it would be conditioned upon
Intergraphs acquisition of an unaffiliated strategic
company due to Party Ys concerns regarding the size
of Intergraphs business units. The board of directors
discussed the potential sale process, as well as potential
business combination discussions with the referenced strategic
party. The independent directors met in executive session with
Goldman Sachs and Bass, Berry & Sims to discuss
the proposed next steps. Following discussion during the
executive session, the independent directors approved
preliminary acquisition discussions with the referenced
strategic party which, ultimately, did not progress due to
valuation concerns.
On July 19, 2006, the board of directors met to review the
status of the potential sale of Intergraph process and other
potential strategic alternatives. Our management and Goldman
Sachs reviewed the feedback received from the participants in
the potential sale process, other potential strategic
alternatives and a planned meeting of the board of directors on
July 26, 2006 to review further Intergraphs potential
strategic alternatives. The independent directors met in
executive session with Goldman Sachs and Bass, Berry &
Sims to discuss the status of the strategic alternatives process
and next steps, including parties that should be contacted.
Bass, Berry & Sims again reviewed the board of
directors fiduciary duties in the context of considering
potential strategic alternatives. Later that day, one of the two
remaining participants, Party Y, submitted a written
indication of interest reflecting a range from $41 to
$44 per share (down from $49 to $51 per share), but it
was conditioned upon the participants concurrent
acquisition of the referenced strategic party. On July 19,
2006, Goldman Sachs, on behalf of Intergraph, subsequently
contacted Hellman & Friedman LLC/Texas Pacific Group
and a strategic party to inquire about their respective interest
in re-entering the process. Hellman & Friedman LLC
subsequently orally indicated to Goldman Sachs that their
preliminary
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valuation of Intergraph reflected a range of $41 to $43 per
share and that they were willing to re-enter the process if
their expenses of doing so were reimbursed by us in certain
circumstances.
On July 25, 2006, Party X submitted a revised
indication of interest reflecting a range of $40 to
$42.50 per share (down from previously indicated merger
consideration of $50 per share).
On July 26, 2006, our management reviewed with the board of
directors Intergraphs results of operations for the second
quarter, expectations for the third quarter and 2006, and other
matters affecting Intergraph. Our management also updated the
board of directors regarding its analyses of the potential sale
process and other potential strategic alternatives. Thereafter,
Goldman Sachs joined the meeting to review potential strategic
alternatives and to update the board of directors on the
potential sale process, including the indication of interest
received the day before from Party X, and its contacts with
Hellman & Friedman LLC/Texas Pacific Group and a
strategic party regarding their willingness to
re-enter the
potential sale process. Goldman Sachs also reviewed its analyses
of Intergraphs potential strategic alternatives, including
continuing Intergraphs strategic plan and business
transformation efforts, revising Intergraphs capital
structure through a recapitalization (including a potential
share repurchase), pursuing a strategic acquisition to
complement Intergraphs SG&I or PP&M business
units, respectively, divesting one or more of Intergraphs
businesses
and/or
non-core assets, and the potential sale of Intergraph. Following
the Goldman Sachs presentation and discussion, the independent
directors met in executive session with Goldman Sachs and Bass,
Berry & Sims to discuss further potential strategic
alternatives and the values potentially attributable to each of
the alternatives discussed. The independent directors reached a
consensus that, at that time, the potential sale process, if
available on terms and conditions acceptable to the board of
directors, was the best alternative reasonably available to
Intergraph and its stockholders. Thereafter, Goldman Sachs was
excused from the meeting and Bass, Berry & Sims
reviewed the board of directors fiduciary duties. The
independent directors also agreed to the request of
Hellman & Friedman LLC/Texas Pacific Group for
reimbursement of their due diligence expenses under certain
circumstances should Hellman & Friedman LLC/Texas
Pacific Group re-enter the process. On July 26, 2006,
Hellman & Friedman LLC/Texas Pacific Group submitted a
written indication of interest reflecting a range of $41 to $43
per share and agreeing to re-enter the process, subject to our
agreement to reimburse up to $3 million of their due
diligence expenses if we entered into an agreement on or prior
to August 31, 2006 providing for a sale or other business
combination with another party and certain other conditions were
satisfied. We agreed in writing to the expense reimbursement
provision the following day. A draft merger agreement was
provided to Hellman & Friedman LLC/Texas Pacific Group
on August 1, 2006.
From July 27, 2006 through August 28, 2006, the
remaining participants continued to conduct their due diligence
and to meet with our management. On August 7, 2006, the
strategic party contacted by Goldman Sachs on July 19, 2006
regarding its interest in re-entering Intergraphs sale
process advised that it would not be participating in the
process due to the complexity of Intergraphs business.
Also, on that date, JMI Equity was permitted to enter the
process with Hellman & Friedman LLC/Texas Pacific
Group. In mid-August, Party Y indicated that it was no
longer interested in pursuing a transaction with Intergraph.
Party X and Hellman & Friedman LLC/Texas Pacific
Group submitted their comments to the draft merger agreement on
August 18 and August 21, 2006, respectively. During the
week of August 21, 2006, Party X and Hellman &
Friedman LLC/Texas Pacific Group described to Mr. Wise,
Mr. French and a representative from Goldman Sachs its
plans for Intergraph and typical compensation philosophy.
On August 25, 2006, the board of directors met to receive
an update regarding the process for exploring strategic
alternatives. Following an update from our management, Goldman
Sachs reviewed the potential sale process, including the
background, level of activity, proposed structure and valuation
indicated by Hellman & Friedman LLC/Texas Pacific
Group and the other continuing financial sponsor participant,
Party X. Representatives of Bass, Berry & Sims
reviewed with the board of directors the legal terms of the two
proposals, including terms relating to the conditionality of
each of the acquiror groups obligation to consummate the
merger. The proposal by Party X required Intergraph to
engage in pre-closing restructuring activities to facilitate the
operation and separate financing of two separate businesses by
Party X immediately following the consummation of the
transaction and provided that Intergraph could not require the
transaction to close for a period of five months following
the execution of the merger agreement, primarily in order to
coordinate the restructuring with the closing. The board
considered the potential operational and financing risk
20
associated with the pre-closing restructuring activities
necessary to facilitate Party Xs proposal, terms
relating to the conditionality and timing of Party Xs
obligation to consummate the merger, and other factors. Goldman
Sachs also updated the board of directors regarding the interest
expressed orally by a strategic party that had previously
participated in the process with a financial sponsor,
Party Z, to consider the acquisition of certain of
Intergraphs assets. The strategic party orally advised
Goldman Sachs earlier in the day that it intended to submit a
proposal no later than August 29, 2006, setting forth a
proposal to acquire Intergraph, a timeline for completion and
related financing. The board of directors discussed the
strategic partys relationship with and likely interest in
Intergraph, the potential benefits and risks associated with
pursuing the proposal, the likely delay to the process
associated with pursuing the proposal and its potential impact
on Intergraphs ability to pursue successfully a
transaction with either of the two remaining financial sponsor
participants. The board of directors also discussed the interest
of both financial sponsor participants in retaining management.
Mr. Wise confirmed that there had been no discussions
between management and either financial sponsor participant
regarding individual compensation or retention terms and
discussed managements willingness generally to work with
either participant following the consummation of a transaction.
Thereafter, the board of directors reviewed the timeline for
next steps in the sale process and the independent directors met
in executive session with Goldman Sachs and Bass,
Berry & Sims. In executive session, the independent
directors discussed the terms of the draft contracts and matters
relating to managements potential interests in a
transaction with an acquiring financial sponsor.
From August 26, 2006 through August 29, 2006, on
behalf of Intergraph, Bass, Berry & Sims negotiated
with respective counsels to the two potential financial sponsor
acquirors to narrow the outstanding legal issues. On the evening
of August 29, 2006, Hellman & Friedman LLC/Texas
Pacific Group and Party X submitted their respective
proposals for the acquisition of Intergraph, together with debt
and equity financing commitments, sponsor guarantees and
comments on the draft merger agreement. Intergraph also received
a written indication of interest subject to various conditions
from the strategic party referenced in the immediately preceding
paragraph.
Our board of directors met on August 30, 2006 to consider
the proposals submitted by the two continuing financial sponsor
participants and the indication of interest from the referenced
strategic party. Representatives of Goldman Sachs reviewed and
discussed with the board of directors the terms of the strategic
partys proposal. The strategic party indicated merger
consideration of $41 per share, subject to various
conditions including due diligence. The board of directors also
considered that this indication of interest was not supported by
committed financing and the timeline for its execution was
delayed compared to the other two proposals. Goldman Sachs also
discussed the financial terms of the acquisition proposals made
by Hellman & Friedman LLC/Texas Pacific Group and
Party X, including the amount of the proposed equity and
debt financing and the resulting transaction leverage. The board
of directors also considered the pre-closing restructuring
activities that were required to facilitate Party Xs
proposal, but were not required by the Hellman &
Friedman LLC/Texas Pacific Group proposal. Hellman &
Friedman LLC/Texas Pacific Group offered merger consideration of
$43.50 per share, while Party X offered merger
consideration of $41 per share. Representatives of Bass,
Berry & Sims reviewed with the board of directors the
legal terms of each of these proposals, including terms relating
to the conditionality of the potential acquirors
obligation to consummate the merger, the expected timing of
their closing and the remedies available to each party for a
breach of the merger agreement. Following discussion, the
independent directors met in executive session with Bass,
Berry & Sims and Goldman Sachs. During the executive
session, the independent directors discussed the bids and
related contract provisions. The independent directors
unanimously agreed that Intergraph, with the assistance of its
legal and financial advisors, should continue the sale of
Intergraph process and seek the best available terms and
conditions for the board of directors to consider. The directors
agreed that Intergraph should focus its efforts on
Hellman & Friedman LLC/Texas Pacific Group. The
independent directors also discussed our managements
potential interest in a transaction with a financial sponsor and
discussed the benefits and risks with various approaches.
Following discussion, the independent directors approved
Mr. Wises request that Intergraph pay the expense of
a single law firm to represent our senior management regarding
potential employment by a financial sponsor following a
transaction.
21
After the August 30, 2006 board of directors meeting,
Goldman Sachs, on behalf of Intergraph, communicated to each of
the potential financial sponsor acquiror groups that our board
of directors was seeking improved terms and requested that each
participant deliver its final and best proposal prior to a board
of directors meeting scheduled for the morning of
August 31, 2006. Bass, Berry & Sims held
discussions and negotiated terms of the merger agreement and
other acquisition documents with counsel for each of the
potential financial sponsor acquirors. Following discussions
with Goldman Sachs, Party X increased its offered merger
consideration to $42.50 per share and then to
$43.50 per share. Hellman & Friedman LLC/Texas
Pacific Group increased its offered merger consideration to
$43.80 per share. Thereafter, Party X made its final
bid and increased the merger consideration offered to
$44 per share, which bid, pursuant to its terms, expired at
10:00 p.m., New York City time, on August 31, 2006. On
the morning of August 31, 2006, before the meeting of our
board of directors discussed below, Hellman & Friedman
LLC/Texas Pacific Group orally informed Goldman Sachs that they
were increasing their proposal to $44 per share, which was
confirmed in writing that morning as their final proposal. This
proposal indicated by its terms that it would expire at
4:30 p.m., New York City time, on August 31, 2006.
On the morning of August 31, 2006, our board of directors
met to discuss our strategic alternatives and the proposals
submitted by the potential financial sponsor acquirors.
Representatives of Bass, Berry & Sims again discussed
with the board of directors the fiduciary duties of directors in
connection with evaluating strategic alternatives, including
extraordinary transactions such as the proposed merger.
Mr. Wise provided a summary of the process and bids
received from the participants since the August 30, 2006
board of directors meeting. Mr. Wise reviewed the board of
directors prior consideration of other strategic
alternatives, updated the board of directors regarding
Intergraphs expected results of operations and confirmed
that executive management was not aware of any material
subsequent changes relevant to the board of directors
consideration of Intergraphs other strategic alternatives.
Representatives of Goldman Sachs reported to the board of
directors regarding the negotiations that took place with
Hellman & Friedman LLC/Texas Pacific Group since the
board of directors meeting on August 30, 2006.
Goldman Sachs reviewed the financial and other terms of the
Hellman & Friedman LLC/Texas Pacific Group proposal and
responded to questions. Representatives of Bass,
Berry & Sims then reviewed with the board of directors
the legal terms of the Hellman & Friedman LLC/Texas
Pacific Group proposal and responded to questions from the board
of directors regarding the legal terms of the offer. Thereafter,
representatives of Goldman Sachs reported to the board of
directors regarding the negotiations that took place with
Party X since the board of directors meeting on
August 30, 2006. Goldman Sachs reviewed the financial and
other terms of its proposal and responded to questions.
Representatives of Bass, Berry & Sims then reviewed
with the board of directors the legal terms of its proposal and
responded to questions from the board of directors regarding the
legal terms of the offer. Following discussion, the board of
directors requested that Goldman Sachs render an opinion as to
whether the financial consideration to be received by our
stockholders in the proposed merger with entities sponsored by
Hellman & Friedman LLC/Texas Pacific Group was fair
from a financial point of view to our stockholders. Goldman
Sachs delivered to the board of directors an oral opinion, which
was subsequently confirmed by delivery of a written opinion
dated August 31, 2006, that, as of such date and based upon
and subject to the factors and assumptions set forth in its
written opinion, the $44 per share in cash to be received
by the holders of our common stock pursuant to the merger
agreement was fair from a financial point of view to such
holders. The full text of the written opinion of Goldman Sachs,
which set forth the assumptions made, procedures followed,
matters considered and limitations on the review undertaken in
connection with such opinions, is attached as Annex B to
this proxy statement.
Following this discussion, notwithstanding that Mr. Wise
had confirmed that neither he nor other members of management
had any agreement or understanding with either potential
acquiror group, the independent directors met separately in
executive session with Bass, Berry & Sims and Goldman
Sachs to discuss the strategic alternatives available to
Intergraph wherein the directors reached a consensus that the
sale of Intergraph was the best alternative reasonably available
to Intergraph and its stockholders and that the
Hellman & Friedman LLC/Texas Pacific Group proposal was
advisable and in the best interests of Intergraph and its
stockholders. Following the executive session of the independent
directors, the full board of directors reconvened, and
Mr. Wise expressed managements view regarding the
Hellman & Friedman LLC/Texas Pacific Group proposal.
22
Bass, Berry & Sims reviewed the terms of the proposed
resolutions relating to the proposed merger and responded to
questions. Thereafter, the independent members of our board of
directors unanimously approved the merger agreement with
entities sponsored by Hellman & Friedman LLC/Texas
Pacific Group, the merger and the other transactions
contemplated by the merger agreement, authorized Intergraph to
enter into the merger agreement and resolved to recommend that
our stockholders vote to adopt the merger agreement.
Mr. Wise abstained from the vote due to his potential
continuing interest in the surviving corporation.
The merger agreement was executed by Intergraph, Cobalt Holding,
and Cobalt Merger Corp. on August 31, 2006 after the close
of trading on the NASDAQ. Intergraph, Hellman &
Friedman LLC and Texas Pacific Group then issued a joint press
release announcing the merger.
Reasons
for the Merger; Recommendation of Our Board of
Directors
In reaching its decision to approve the merger agreement and to
recommend that our stockholders adopt the merger agreement, our
board of directors consulted with management, Goldman Sachs and
Intergraphs outside legal counsel. Our board of directors
considered a number of factors, including, without limitation,
the following potentially positive factors in support of the
merger:
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the current and historical market prices of the Intergraph
common stock, and the fact that the $44.00 per share to be
paid for each share of Intergraph common stock pursuant to the
merger represents a premium of 22% to the average closing price
for the 20 trading days ended August 30, 2006, the last
trading day before Intergraph announced the execution of the
merger agreement;
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its belief that the merger was more favorable to our
stockholders than any other alternative reasonably available to
Intergraph and our stockholders. The board of directors
considered possible alternatives to the sale of Intergraph,
including continuing to operate Intergraph on a stand-alone
basis (including the execution risks related to achieving our
strategic plan), pursuing potential acquisitions, engaging in a
recapitalization (including additional share repurchases) or
divesting a division or other significant assets, and the risks
and uncertain returns associated with the alternatives, each of
which the board of directors determined not to pursue when
compared to the opportunity of our stockholders to realize the
merger consideration in cash for their investment in connection
with the merger;
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the sale process conducted by Intergraph, with the assistance of
Goldman Sachs and our legal advisors over a period of seven
months, which involved engaging in discussions with
approximately 31 parties to determine their potential interest
in a business combination transaction with Intergraph, entering
into confidentiality agreements with 18 parties and the receipt
of two definitive proposals to acquire Intergraph; in addition,
Intergraph received two non-binding indications of interest that
were subject to conditionality and at no greater value per share
than the definitive proposals;
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the final price proposed by the sponsor group equaled the
highest price that Intergraph had received for the acquisition
of Intergraph, and the belief by our board of directors, after
consultation with its advisors, that the non-financial terms of
the merger agreement and the transaction proposed by Hellman
& Friedman LLC/Texas Pacific Group were, in the aggregate,
more favorable to Intergraph than the non-financial terms of the
proposal by the other financial sponsor, including as to
execution risk, timing, and conditionality;
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the presentation of Goldman Sachs and its opinion, dated
August 31, 2006, to the board of directors of Intergraph,
to the effect that, as of August 31, 2006 and based upon
and subject to the factors and assumptions set forth in the
opinion, the $44.00 per share in cash to be received by the
holders of shares of Intergraph common stock pursuant to the
merger agreement was fair, from a financial point of view, to
such holders (see The Merger Opinion of
Goldman, Sachs & Co. and Annex B to this
proxy statement);
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the terms of the merger agreement, including without limitation:
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the limited number and nature of the conditions to the
obligations of Cobalt Holding and Merger Sub to consummate the
merger and the limited risk of non-satisfaction of the
conditions, including that
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23
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for purposes of the merger agreement a material adverse
effect on Intergraph does not include events,
circumstances, developments or changes resulting from the
numerous circumstances or events described under The
Merger Agreement Representations and
Warranties;
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the ability of our board of directors, under certain
circumstances, to change its recommendation that our
stockholders vote in favor of the adoption of the merger
agreement;
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the provisions of the merger agreement that allow us, under
certain circumstances, to furnish information to and conduct
negotiations with respect to proposals by third parties;
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the ability of our board of directors, under certain
circumstances and upon the payment to Cobalt Holdings of a
termination fee of $33.14 million, to terminate the merger
agreement to accept a financially superior proposal;
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the conclusion of the board of directors that both the
$33.14 million termination fee (and the circumstances when
the fee is payable) and the requirement to reimburse Cobalt
Holding for certain expenses, up to a limit of $7 million
and without duplication of the termination fee, in the event
that the merger agreement is terminated because our stockholders
fail to adopt the merger agreement or as a result of a breach of
the merger agreement by us, were reasonable in light of the
benefits of the merger, the sale process conducted by
Intergraph, with the assistance of Goldman Sachs, and in the
context of termination fees that were payable in other
comparable transactions;
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the absence of a financing condition to the consummation of the
merger and the obligation of Cobalt Holding to pay Intergraph a
$53.02 million termination fee, without the need to prove
damages, if Cobalt Holding and Merger Sub fail to effect the
closing because of a failure to receive the proceeds of one or
more of the debt financings contemplated by the debt financing
commitments and all other conditions to closing are met; and
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our ability to seek up to an aggregate of $99.42 million in
damages from Cobalt Holding and Merger Sub in certain
circumstances in which Cobalt Holding or Merger Sub willfully
and materially breach the merger agreement;
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the favorable debt commitment letter obtained by Cobalt Holding,
including the absence of market outs and Cobalt
Holdings obligation to use reasonable best efforts to
arrange and consummate the debt financing; and
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the availability of appraisal rights to holders of our common
stock who comply with all of the required procedures under
Delaware law, which allows the holders to seek appraisal of the
fair value of their shares (see Appraisal Rights and
Annex C).
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The board of directors also considered and balanced against the
potentially positive factors the following potentially negative
factors concerning the merger:
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the risk that the merger might not be completed, including the
risk that the merger will not occur if the financing
contemplated by the debt commitment letter is not obtained;
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the fact that our stockholders will not participate in any
future earnings or growth of Intergraph and will not benefit
from any future appreciation in value of Intergraph;
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the actual and potential interests of Intergraphs
executive officers and directors in the merger (see The
Merger Interests of Intergraphs Directors and
Executive Officers in the Merger);
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the restrictions on our ability to solicit or engage in
discussions or negotiations with a third party regarding other
proposals and the requirement that Intergraph pay Cobalt Holding
a $33.14 million termination fee in order for the board of
directors to accept a superior proposal;
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the requirement that we reimburse Cobalt Holding for up to
$7 million of its expenses incurred in connection with the
proposed merger if the merger agreement is terminated under
certain circumstances;
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24
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the merger consideration consists of cash, and gains will
therefore be taxable to our stockholders for U.S. federal
income tax purposes;
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the risk of diverting management focus and resources from other
strategic opportunities and from operational matters while
working to implement the merger; and
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the possibility of employee disruption associated with the
merger.
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During its consideration of the transaction with Cobalt Holding
and Merger Sub described above, our board of directors was also
aware that some of our directors and executive officers may have
interests in the merger that may be different than or in
addition to those of our stockholders generally, described under
The Merger Interests of Directors and
Executive Officers in the Merger.
After taking into account all of the factors set forth above, as
well as others, the board of directors, with Mr. Wise
abstaining due to his potential continuing interest in the
surviving corporation (since Cobalt Holding has indicated that
it anticipates that Mr. Wise will continue as chief
executive officer of the surviving corporation after the merger
(see The Merger Interests of Intergraphs
Directors and Executive Officers in the Merger)),
determined that the potentially positive factors outweighed the
potentially negative factors and that the merger agreement and
the merger are advisable and fair and in the best interests of
Intergraph and our stockholders. The independent members of
the board of directors have unanimously approved the merger
agreement and the merger and recommend that Intergraphs
stockholders vote FOR the adoption of the merger
agreement at the special meeting.
This discussion of the information and factors considered and
given weight by our board of directors is not intended to be
exhaustive but is believed to address the material information
and factors considered by our board of directors. In view of the
number and variety of these factors, our board of directors did
not find it practicable to make specific assessments of, or
otherwise assign relative weights to, the specific factors and
analyses considered in reaching its determination. The
determination to approve the merger agreement and the
transactions contemplated thereby, including the merger, was
made after consideration of all of the factors and analyses as a
whole. In addition, individual members of our board of directors
may have given different weights to different factors.
Opinion
of Goldman, Sachs & Co.
Goldman Sachs rendered its opinion to Intergraphs board of
directors that, as of August 31, 2006 and based upon and
subject to the factors and assumptions set forth therein, the
$44.00 per share in cash to be received by the holders of
shares of Intergraph common stock pursuant to the merger
agreement was fair from a financial point of view to such
holders.
The full text of the written opinion of Goldman Sachs, dated
August 31, 2006, which sets forth assumptions made,
procedures followed, matters considered and limitations on the
review undertaken in connection with the opinion, is attached as
Annex B. Goldman Sachs provided its opinion for the
information and assistance of Intergraphs board of
directors in connection with its consideration of the
transaction. The Goldman Sachs opinion is not a recommendation
as to how any holder of Intergraph common stock should vote with
respect to the transaction.
In connection with rendering the opinion described above and
performing its related financial analyses, Goldman Sachs
reviewed, among other things:
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the merger agreement;
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annual reports to stockholders and Annual Reports on
Form 10-K
of Intergraph for the five fiscal years ended December 31,
2005;
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certain interim reports to stockholders and Quarterly Reports on
Form 10-Q
of Intergraph;
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certain other communications from Intergraph to
Intergraphs stockholders;
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25
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the summary appraisal reports with respect to certain properties
owned by Intergraph (collectively, the Real Estate
Appraisals); and
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certain internal financial analyses and forecasts for Intergraph
prepared by its management.
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Goldman Sachs also held discussions with members of the senior
management of Intergraph regarding their assessment of the past
and current business operations, financial condition and future
prospects of Intergraph. In addition, Goldman Sachs reviewed the
reported price and trading activity for Intergraph common stock,
compared certain financial and stock market information for
Intergraph with similar information for certain other companies,
the securities of which are publicly traded, reviewed the
financial terms of certain recent business combinations in the
software, defense and government information technology
industries specifically and in other industries generally and
performed such other studies and analyses, and considered such
other factors, as it considered appropriate.
Goldman Sachs relied upon the accuracy and completeness of all
of the financial, accounting, legal, tax and other information
discussed with or reviewed by it and assumed such accuracy and
completeness for purposes of rendering the opinion described
above. In that regard, the opinion stated that Goldman Sachs
assumed with the consent of the board that the internal
financial analyses and forecasts for Intergraph prepared by the
management of Intergraph were reasonably prepared on a basis
reflecting the best currently available estimates and judgments
of Intergraph. In addition, Goldman Sachs did not make an
independent evaluation or appraisal of the assets and
liabilities (including any contingent, derivative or
off-balance-sheet assets and liabilities) of Intergraph or any
of its subsidiaries and, except for the Real Estate Appraisals,
Goldman Sachs was not furnished with any evaluation or appraisal
of the assets or liabilities of Intergraph or any of its
subsidiaries. Goldman Sachs opinion does not address the
underlying business decision of Intergraph to engage in the
transaction or the relative merits of the transaction as
compared to any alternative transaction that might be available
to Intergraph. Goldman Sachs opinion was necessarily based
on economic, monetary, market and other conditions as in effect
on, and the information made available to Goldman Sachs as of,
the date thereof.
The following is a summary of the material financial analyses
delivered by Goldman Sachs to Intergraphs board of
directors in connection with rendering the opinion described
above. The following summary, however, does not purport to be a
complete description of the financial analyses performed by
Goldman Sachs, nor does the order of analyses described
represent relative importance or weight given to those analyses
by Goldman Sachs. Some of the summaries of the financial
analyses include information presented in tabular format. The
tables must be read together with the full text of each summary
and are alone not a complete description of Goldman Sachs
financial analyses. Except as otherwise noted, the following
quantitative information, to the extent that it is based on
market data, is based on market data as it existed on or before
August 30, 2006 and is not necessarily indicative of
current market conditions.
Historical Stock Trading Analysis. Goldman
Sachs reviewed the historical trading prices and volumes for
Intergraph common stock for the three-year period ended
August 30, 2006. In addition, Goldman Sachs analyzed the
consideration to be received by holders of Intergraph common
stock pursuant to the merger agreement in relation to various
market prices of the Intergraph common stock as more fully set
forth below.
This analysis indicated that the price per share to be paid to
Intergraph stockholders pursuant to the merger agreement
represented:
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a premium of 18.0% based on the August 30, 2006 market
price of $37.30 per share;
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a premium of 43.7% based on the July 11, 2006 market price
of $30.62 per share prior to disclosure by Intergraph upwardly
revising second quarter guidance later that day;
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a premium of 20.8% based on the one-week average market price as
of August 30, 2006 of $36.42 per share;
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a premium of 22.7% based on the four-week average market price
as of August 30, 2006 of $35.86 per share;
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a premium of 29.3% based on the three-month average market price
as of August 30, 2006 of $34.03 per share;
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a premium of 16.7% based on the six-month average market price
as of August 30, 2006 of $37.71 per share;
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a premium of 6.0% based on the one-year average market price as
of August 30, 2006 of $41.52 per share;
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a discount of 14.5% based on the
52-week high
market price as of August 30, 2006 of $51.47 per
share; and
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a premium of 45.5% based on the
52-week low
market price as of August 30, 2006 of $30.25 per share.
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Selected Companies Analysis. Goldman Sachs
reviewed and compared certain financial information for
Intergraph to corresponding financial information, ratios and
public market multiples for the following comparable companies
in the security, government & infrastructure and the
power, process & marine design software industries:
Security,
Government & Infrastructure
(SG&I)
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Verint Systems Inc.
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CACI International, Inc.
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ManTech International Corporation
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SRA International, Inc.
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NICE-Systems Ltd.
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Process,
Power & Marine (PP&M)
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Autodesk, Inc.
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Aspen Technology, Inc.
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Dassault Systemes
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Mentor Graphics Corp.
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Although none of the selected companies is directly comparable
to Intergraph, the companies included were chosen because they
are publicly traded companies with operations that for purposes
of analysis may be considered similar to certain operations of
Intergraph.
Goldman Sachs also calculated and compared various financial
multiples and ratios. The multiples and ratios of Intergraph
were based on information provided by Intergraphs
management and obtained from Wall Street research and excluded
restructuring charges and after-tax intellectual property
litigation income. The multiples and ratios for each of the
selected companies were based on information obtained from
International Brokers Estimate System, or IBES, estimates.
With respect to the selected companies, Goldman Sachs calculated:
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estimated price to earnings multiples for 2006 and 2007; and
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estimated price to earnings growth (PEG) ratios for
2006 and 2007.
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27
The results of these analyses are summarized as follows:
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2006E P/E
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2007E P/E
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2006E PEG
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2007E PEG
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Multiple
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Multiple
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Ratio
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Ratio
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SG&I Comparables
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SG&I Company Comparable Range
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18.5x - 25.8
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16.6x - 21.4
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x
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1.1x -1.9
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x
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0.9x - 1.7x
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SG&I Median
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23.6
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x
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19.4
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x
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1.3
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x
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1.2x
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PP&M Comparables
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PP&M Comparable Company Range
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21.0x - 30.8
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17.3x - 24.0
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x
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1.0x -3.6
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x
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0.8x - 2.8x
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PP&M Median
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24.0
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20.2
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x
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1.3
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x
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1.2x
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For Intergraph, Goldman Sachs calculated estimated price to
earnings multiples and PEG ratios for each of Intergraphs
market price as of August 30, 2006 and the $44.00 merger
consideration. The results of these analyses are summarized as
follows:
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2006E P/E
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2007E P/E
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2006E PEG
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2007E PEG
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Multiple
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Multiple
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Ratio
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Ratio
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Intergraph at:
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$44.00 Bid Price
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29.3
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x
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24.1
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x
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2.0
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x
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1.6x
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$37.30 Market Price
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24.8
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x
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20.4
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x
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1.7
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x
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1.4x
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Goldman Sachs considered for each of the selected companies and
Intergraph at the market price as of August 30, 2006 and at
the $44.00 merger consideration, estimated multiples for each of
sales, earnings before interest, taxes, depreciation and
amortization (EBITDA) and price to earnings for 2006
and 2007. The results of these analyses are summarized as
follows:
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2006E Sales
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2007E Sales
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2006E EBITDA
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2007E EBITDA
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2006E P/E
|
|
|
2007E P/E
|
|
|
|
Multiple
|
|
|
Multiple
|
|
|
Multiple
|
|
|
Multiple
|
|
|
Multiple
|
|
|
Multiple
|
|
|
SG&I Comparables
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SG&I Comparable Company Range
|
|
|
0.9x - 2.4
|
x
|
|
|
08.x - 2.0
|
x
|
|
|
9.9x -14.7
|
x
|
|
|
8.8x - 12.1
|
x
|
|
|
18.5x - 25.8
|
x
|
|
|
16.6x - 21.4x
|
|
SG&I Comparable Company Median
|
|
|
1.2
|
x
|
|
|
1.1
|
x
|
|
|
11.5
|
x
|
|
|
9.8
|
x
|
|
|
23.6
|
x
|
|
|
19.4x
|
|
PP&M Comparables
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PP&M Comparable Company Range
|
|
|
2.1x - 4.5
|
x
|
|
|
2.0x - 3.9
|
x
|
|
|
14.1x -17.8
|
x
|
|
|
12.1x - 14.5
|
x
|
|
|
21.0x - 30.8
|
x
|
|
|
17.3x - 24.0x
|
|
PP&M Comparable Company Median
|
|
|
3.9
|
x
|
|
|
3.5
|
x
|
|
|
15.8
|
x
|
|
|
13.3
|
x
|
|
|
24.0
|
x
|
|
|
20.2x
|
|
Intergraph at $44.00 Merger
Consideration
|
|
|
1.8
|
x
|
|
|
1.6
|
x
|
|
|
12.2
|
x
|
|
|
11.0
|
x
|
|
|
29.3
|
x
|
|
|
24.1x
|
|
Intergraph at $37.30 Market
Price
as of August 30, 2006
|
|
|
1.4
|
x
|
|
|
1.3
|
x
|
|
|
9.9
|
x
|
|
|
8.9
|
x
|
|
|
24.8
|
x
|
|
|
20.4x
|
|
Discounted Cash Flow Analysis. Goldman Sachs
performed an illustrative discounted cash flow analysis on
Intergraph using the June 30, 2006 balance sheet and
Intergraphs management forecasts. Goldman Sachs calculated
indications of net present value of unlevered free cash flows
for Intergraph for the years 2006 through 2010 using discount
rates ranging from 12.0% to 14.0%. Goldman Sachs calculated
illustrative terminal values in the year 2010 based on
perpetuity growth rates ranging from 3.50% to 5.50%. These
illustrative terminal values were then added to the present
value of future cash flows, net cash and the assumed value of
non-core assets to derive illustrative implied enterprise values
at the same perpetuity growth rates of 3.50% to 5.50%. The
illustrative enterprise values were discounted to calculate
implied indications of present values using discount rates
ranging from 12.0% to 14.0%. Goldman Sachs calculated implied
prices per share of the Intergraph common stock using Intergraph
managements forecasts and illustrative enterprise value
indications and assuming 29.4 million basic shares of
Intergraph common stock outstanding and dilution from the
exercise of 1.1 million
in-the-money
options with a weighted-average strike price of $15.82. The
implied per share value indications for Intergraph ranged from
$34.05 to $45.19 per share.
Sum of the Parts Analysis. Goldman Sachs
performed an illustrative sum of the parts analysis on
Intergraph by analyzing separate parts of its operations and its
non-core assets. For each of Intergraphs PP&M
operations, SG&I operations, and non-core assets, Goldman
Sachs calculated low, mid and high implied
28
enterprise values based on managements 2006 estimated
EBITDA before restructuring charges. Implied equity value was
calculated by adding the implied enterprise values for PP&M,
SG&I and the non-core assets along with excess net cash
(assuming $50 million operating cash required for each of
PP&M and SG&I). Goldman Sachs then derived low, mid and
high implied equity values per share (assuming 29.4 million
basic shares of Intergraph common stock outstanding and dilution
from the exercise of 1.1 million
in-the-money
options with a weighted-average strike price of $15.82). Goldman
Sachs also calculated the implied equity values assuming the
sale of each of these parts in taxable transactions.
The following table presents the results of this analysis:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Implied Valuation at
|
|
Implied Valuation at June 30, 2006 Assuming Parts Sold
in
|
|
|
June 30, 2006*
|
|
Taxable Transactions
|
|
|
Low
|
|
Mid
|
|
High
|
|
Low
|
|
Mid
|
|
High
|
|
Implied Equity Per Share
|
|
$
|
36.66
|
|
|
$
|
42.40
|
|
|
$
|
47.74
|
|
|
$
|
27.75
|
|
|
$
|
31.56
|
|
|
$
|
35.37
|
|
Premium to $37.30 Share Price
as of August 30, 2006
|
|
|
(1.7
|
)%
|
|
|
13.4
|
%
|
|
|
28.5
|
%
|
|
|
(26.0
|
)%
|
|
|
(15.6
|
)%
|
|
|
(5.2
|
)%
|
|
|
|
* |
|
Implied valuation calculation discounted non-core assets, except
Bentley Systems, Inc., back to June 30, 2006 at 14.8% cost
of equity. |
Leveraged Buyout Analysis. Goldman Sachs
performed an illustrative leveraged buyout analysis using
Intergraphs management forecasts before restructuring
charges and assumed annual cost savings estimated by management
associated with the transition to private company status.
Goldman Sachs assumed, for purposes of this analysis, a purchase
price of $44.00 per share and base leverage of 6.0x
managements estimated 2006 EBITDA. Goldman Sachs also
assumed a range of estimated EBITDA exit multiples of 9.0x to
11.0x for the assumed exit year of 2011, which reflect
illustrative implied prices at which a hypothetical financial
buyer might sell Intergraph. This analysis resulted in
illustrative equity returns to a hypothetical financial buyer
ranging from 20.6% to 26.3%.
Using the same forecasts, Goldman Sachs also performed a
sensitivity analysis on the illustrative leveraged buyout
analysis. Goldman Sachs performed its sensitivity analysis on
the illustrative buyout analysis assuming an exit year of 2011,
and leverage multiples of 6.0x to 7.0x based on
managements estimated 2006 EBITDA. Based on the 6.0x to
7.0x range of leverage levels derived from 2006 estimated EBITDA
multiples and a range of 2011 EBITDA exit multiples of 9.0x to
11.0x, the sensitivity analysis indicated illustrative equity
returns to a hypothetical financial buyer ranging from 20.6% to
29.7% based on the acquisition price of $44.00 per share of
Intergraph common stock.
Present Value of Future Stock Price. Goldman
Sachs analyzed the present value of hypothetical future stock
prices of Intergraph common stock based on managements
internal forecasts. Goldman Sachs derived an implied enterprise
value for Intergraph by combining pro forma equity market
capitalization with estimated net debt for each of the years
2006 to 2010. Goldman Sachs calculated the present value of the
implied share prices using the implied enterprise value and
assuming 29.4 million basic shares of Intergraph common
stock outstanding and dilution from the exercise of
1.1 million
in-the-money
options with a weighted-average strike price of $15.82. Goldman
Sachs then calculated an implied future share price for years
2006 through 2010 based on price to earnings multiples ranging
from 21.0x to 23.0x. Goldman Sachs discounted the implied future
share prices to reflect total returns by assumed costs of equity
ranging from 13.8% to 15.8%.
The following table presents the results of this analysis based
on each years EBITDA as estimated by management:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006E
|
|
2007E
|
|
2008E
|
|
2009E
|
|
2010E
|
|
Present Value Range of Future
Share Prices
|
|
$
|
35.44 - $38.82
|
|
|
$
|
38.97 - $43.43
|
|
|
$
|
38.41 -$43.56
|
|
|
$
|
37.78 - $43.60
|
|
|
$
|
36.89 - $43.32
|
|
Selected Transactions Analysis. Goldman Sachs
analyzed certain information relating to the following selected
transactions, among others, in the software industry over
$300 million since January 1, 2004 and the
29
defense and government information technology industry since
January 1, 2000 (in each case the acquirer is listed first
and the target is listed second):
Software
Industry
|
|
|
|
|
IBM/Internet Security Systems Inc.
|
|
|
|
IBM/FileNet Corp.
|
|
|
|
IBM/MRO Software Inc.
|
|
|
|
Infor Global Solutions AG/SSA Global Technologies, Inc.
|
|
|
|
AttachmateWRQ/NetIQ Corporation
|
|
|
|
Silver Lake Partners/SERENA Software, Inc.
|
|
|
|
Golden Gate Capital/GEAC Computer Corporation, Ltd.
|
|
|
|
The Carlyle Group/SS&C Technologies, Inc.
|
|
|
|
Investor Group/SunGard Data Systems
|
|
|
|
Symantec Corporation/VERITAS Software Corp.
|
Defense
and Government Information Technology Industry
|
|
|
|
|
Investor Group/West Corp.
|
|
|
|
West Group/Intrado Inc.
|
|
|
|
General Dynamics Corporation/Anteon International Corp.
|
|
|
|
L-3 Communications Holding, Inc./Titan Corporation
|
|
|
|
BAE Systems North America/United Defense Industries, Inc.
|
|
|
|
BAE Systems North America Inc/DigitalNet Holdings, Inc.
|
|
|
|
General Dynamics Corporation/Veridian Corporation
|
For each of the selected transactions, Goldman Sachs analyzed
the premia of the transaction price to the targets average
trading price over the average one-week and four-week periods
prior to announcement of the transaction.
The following table presents the results of this analysis:
|
|
|
|
|
|
|
One-Week Average
|
|
Four-Week Average
|
|
Software Industry Premium Range
|
|
1.4% - 25.7%
|
|
10.3% - 37.3%
|
Defense and Government Information
Technology Premium Range
|
|
3.2% - 33.2%
|
|
11.0% - 43.1%
|
Goldman Sachs also analyzed the multiples of enterprise value to
EBITDA for the latest 12 months of financial information
available for the following transactions:
Software
Industry
|
|
|
|
|
IBM Corp/FileNet Corp.
|
|
|
|
IBM/MRO Software Inc.
|
|
|
|
Infor Global Solutions AG/SSA Global Technologies, Inc.
|
|
|
|
Golden Gate Capital/GEAC Computer Corporation, Ltd.
|
|
|
|
The Carlyle Group/SS&C Technologies Inc
|
30
|
|
|
|
|
Investor Group/SunGard Data Systems
|
|
|
|
Symantec Corporation/VERITAS Software Corp.
|
Defense
and Government Information Technology Industry
|
|
|
|
|
Investor Group/West Corp.
|
|
|
|
West Corp/Intrado Inc.
|
|
|
|
L-3 Communications Holding, Inc./Titan Corporation
|
|
|
|
BAE Systems North America/United Defense Industries, Inc.
|
|
|
|
BAE Systems North America Inc/DigitalNet Holdings, Inc.
|
|
|
|
General Dynamics Corporation/Veridian Corporation
|
Goldman Sachs noted an enterprise value/last
12-month
EBITDA multiple range of 8.2x to 19.7x for the software industry
transactions and a multiple range of 10.1x to 18.8x for the
defense and government information technology industry
transactions.
Goldman Sachs analyzed certain information relating to the
following selected financial sponsor transactions in the
technology industry since January 1, 2005 with deal values
above $500 million:
|
|
|
|
|
Infor Global Solutions AG/SSA Global Technologies, Inc.
|
|
|
|
AttachmateWRQ/NetIQ Corporation
|
|
|
|
Silver Lake Partners/SERENA Software, Inc.
|
|
|
|
Golden Gate Capital/GEAC Computer Corporation, Ltd.
|
|
|
|
The Carlyle Group/SS&C Technologies Inc
|
|
|
|
Investor Group/SunGard Data Systems
|
|
|
|
Golden Gate/Aspect Communications Corp
|
For each of the selected transactions, Goldman Sachs analyzed
the premia of the transaction price to the targets average
trading price over the four-week period prior to announcement of
the transaction and multiples of enterprise value to EBITDA for
the latest 12 months of financial information available.
Goldman Sachs noted a range in premia from 10.3% to 37.3% and a
range in multiples from 9.5x to 14.7x.
The preparation of a fairness opinion is a complex process and
is not necessarily susceptible to partial analysis or summary
description. Selecting portions of the analyses or of the
summary set forth above, without considering the analyses as a
whole, could create an incomplete view of the processes
underlying Goldman Sachs opinion. In arriving at its
fairness determination, Goldman Sachs considered the results of
all of its analyses and did not attribute any particular weight
to any factor or analysis considered by it. Rather,
Goldman Sachs made its determination as to fairness on the
basis of its experience and professional judgment after
considering the results of all of its analyses. No company or
transaction used in the above analyses as a comparison is
directly comparable to Intergraph or the contemplated
transaction.
Goldman Sachs prepared these analyses for purposes of Goldman
Sachs providing its opinion to Intergraphs board of
directors as to the fairness from a financial point of view of
the $44.00 per share in cash to be received by the holders
of shares of Intergraph common stock pursuant to the merger
agreement. These analyses do not purport to be appraisals nor do
they necessarily reflect the prices at which businesses or
securities actually may be sold. Analyses based upon forecasts
of future results are not necessarily indicative of actual
future results, which may be significantly more or less
favorable than suggested by these analyses. Because these
analyses are inherently subject to uncertainty, being based upon
numerous factors or events beyond the control of the parties or
their respective advisors, none of Intergraph, Goldman Sachs or
any other person assumes responsibility if future results are
materially different from those forecasted.
31
The merger consideration was determined through
arms-length negotiations between Intergraph and Cobalt
Holding Company and was approved by Intergraphs board of
directors. Goldman Sachs provided advice to Intergraph during
these negotiations. Goldman Sachs did not, however, recommend
any specific amount of consideration to Intergraph or its board
of directors or that any specific amount of consideration
constituted the only appropriate consideration for the
transaction.
As described above, Goldman Sachs opinion to
Intergraphs board of directors was one of many factors
taken into consideration by Intergraphs board of directors
in making its determination to approve the merger agreement. The
foregoing summary does not purport to be a complete description
of the analyses performed by Goldman Sachs in connection with
the fairness opinion and is qualified in its entirety by
reference to the written opinion of Goldman Sachs attached as
Annex B.
Goldman Sachs and its affiliates, as part of their investment
banking business, are continually engaged in performing
financial analyses with respect to businesses and their
securities in connection with mergers and acquisitions,
negotiated underwritings, competitive biddings, secondary
distributions of listed and unlisted securities, private
placements and other transactions as well as for estate,
corporate and other purposes. Goldman Sachs acted as financial
advisor to Intergraph in connection with, and participated in
certain of the negotiations leading to, the transaction
contemplated by the merger agreement. In addition, Goldman Sachs
has provided certain investment banking services to Intergraph
from time to time, including having acted as dealer manager of
Intergraphs repurchase of 10,000,000 shares of
Intergraph common stock in the fourth quarter of 2003 and as
counterparty in connection with Intergraphs accelerated
share repurchases of 3,797,949 shares and
5,407,000 shares of Intergraph common stock in July 2004
and March 2005, respectively. Goldman Sachs has provided, and
currently provides, certain investment banking services to each
of Cobalt Holdings financial sponsors and their respective
affiliates and portfolio companies, including having acted as
financial advisor to Hotwire Inc., a former portfolio company of
Texas Pacific Group, in connection with its sale to
IAC/Interactive Corp. in July 2004, as a lead manager in
connection with a bank loan (aggregate principal amount
$160,000,000) for Mitchell International, Inc., a portfolio
company of Hellman & Friedman LLC and JMI Equity, in
August 2004 and October 2005, as lender in connection with a
bank loan (aggregate principal amount $2,000,000,000) for Texas
Genco Holdings Inc., a former portfolio company of Texas Pacific
Group, in December 2004, as underwriter in connection with a
public offering of certain debt securities (aggregate principal
amount $3,800,000,000) of Spirit Group Ltd., a former portfolio
company of Texas Pacific Group, in December 2004 and as
financial advisor to Artisan Partners Limited Partnership, a
portfolio company of Hellman & Friedman LLC, in
connection with its recapitalization in June 2006. Goldman Sachs
may provide investment banking services to Intergraph and its
affiliates and each of Cobalt Holdings financial sponsors
and their respective affiliates and portfolio companies in the
future. In connection with the above-described investment
banking services Goldman Sachs received, and may receive in the
future, compensation.
Goldman Sachs is a full service securities firm engaged, either
directly or through its affiliates, in securities trading,
investment management, financial planning and benefits
counseling, risk management, hedging, financing and brokerage
activities for both companies and individuals. In the ordinary
course of these activities, Goldman Sachs and its affiliates may
provide services to Intergraph and its respective affiliates and
each of Cobalt Holdings financial sponsors and their
respective affiliates and portfolio companies, actively trade
the debt and equity securities (or related derivative
securities) of Intergraph and affiliates and portfolio companies
of each of Cobalt Holdings financial sponsors for their
own account and for the accounts of their customers and at any
time hold long and short positions of these securities.
Affiliates of Goldman Sachs have co-invested with affiliates of
Texas Pacific Group from time to time and may co-invest with
affiliates of each of Cobalt Holdings financial sponsors
in the future, and these affiliates of Goldman Sachs have
invested in limited partnership units of affiliates of each of
Texas Pacific Group and Hellman & Friedman LLC and may
invest in the future in limited partnership units of affiliates
of each of Cobalt Holdings financial sponsors.
The Intergraph board of directors selected Goldman Sachs as its
financial advisor because it is an internationally recognized
investment banking firm that has substantial experience in
transactions similar to the transaction. Pursuant to a letter
agreement, dated February 27, 2006, Intergraph engaged
Goldman Sachs to act as its financial advisor in connection with
the contemplated transaction. Pursuant to the terms of this
engagement letter, Intergraph has agreed to pay Goldman Sachs a
transaction fee of 0.85% of the aggregate
32
consideration paid in the transaction, all of which is payable
upon consummation of the transaction. In addition, Intergraph
has agreed to reimburse Goldman Sachs for its expenses,
including attorneys fees and disbursements, and to
indemnify Goldman Sachs and related persons against various
liabilities, including certain liabilities under the federal
securities laws.
Consideration
At the effective time of the merger, Merger Sub will be merged
with and into Intergraph. In connection with the merger:
|
|
|
|
|
each share of Intergraph common stock issued and outstanding
immediately prior to the effective time of the merger (other
than shares held in our treasury or owned by Cobalt Holding or
Merger Sub or shares as to which a stockholder validly exercises
and perfects appraisal rights in compliance with Delaware law)
will automatically be cancelled and converted into the right to
receive $44.00 in cash, without interest;
|
|
|
|
all unvested stock options will vest and all unexercised options
will be cancelled and converted into the right to receive a cash
payment equal to the number of outstanding options multiplied by
the amount (if any) by which $44.00 exceeds the option
exercise price (except with regards to any option as may be
otherwise agreed by the holder of the option and Cobalt
Holding); and
|
|
|
|
restrictions applicable to all shares of restricted stock and
restricted share units will lapse and those shares or units will
be cancelled and converted into the right to receive a cash
payment equal to the number of outstanding restricted shares
multiplied by $44.00 (and, with respect to restricted share
units, the value of any deemed dividend equivalents accrued but
unpaid with respect to the restricted share units) (except with
regards to any restricted stock or restricted stock units as may
be otherwise agreed by the holder of the restricted stock or
restricted stock unit and Cobalt Holding).
|
Delisting
and Deregistration of Intergraph Common Stock
If the merger is completed, the Intergraph common stock will be
delisted from the NASDAQ and deregistered under the Exchange
Act, and we will no longer file periodic reports with the SEC on
account of the Intergraph common stock.
Regulatory
Approvals
Under the HSR Act and the rules promulgated thereunder by the
FTC, the merger cannot be completed until Intergraph and Cobalt
Holding each file a notification and report form under the HSR
Act and the applicable waiting period has expired or been
terminated. Intergraph and Cobalt Holding each filed
notification and report forms under the HSR Act with the FTC and
the Antitrust Division of the DOJ on
September 15, 2006. If Intergraph and Cobalt Holding
do not receive a request for additional information, the waiting
period will expire at 11:59 p.m. on October 16, 2006,
if not terminated earlier. At any time before or after
consummation of the merger, notwithstanding the termination of
the waiting period under the HSR Act, the Antitrust Division or
the FTC could take action under the antitrust laws as it deems
necessary or desirable in the public interest, including seeking
to enjoin the consummation of the merger or seeking divestiture
of substantial assets of Intergraph or Cobalt Holding. At any
time before or after the consummation of the merger, and
notwithstanding the termination of the waiting period under the
HSR Act, any state could take action under the antitrust laws as
it deems necessary or desirable in the public interest. Such
action could include seeking to enjoin the consummation of the
merger or seeking divestiture of substantial assets of
Intergraph or Cobalt Holding. Private parties may also seek to
take legal action under the antitrust laws under certain
circumstances.
The merger is also subject to the expiration of waiting periods
or receipt of clearance opinions in connection with foreign
merger control filings in Austria, Germany and Norway, which
were filed with the applicable antitrust authorities on
September 8, 2006, September 8, 2006 and
September 15, 2006, respectively.
While there can be no assurance that the merger will not be
challenged by a governmental authority or private party on
antitrust grounds, Intergraph believes that the merger can be
effected in compliance with
33
federal, state and foreign antitrust laws. The term
antitrust laws means the Sherman Act, as amended,
the Clayton Act, as amended, the HSR Act, the Federal Trade
Commission Act, as amended, and all other Federal, state and
foreign statutes, rules, regulations, orders, decrees,
administrative and judicial doctrines, and other laws that are
designed or intended to prohibit, restrict or regulate actions
having the purpose or effect of monopolization or restraint of
trade.
Financing
of the Merger
In connection with the merger, Cobalt Holding will cause
$1,325.6 million to be paid out to our stockholders and
holders of other equity interests in Intergraph, with the
remaining funds to be used to pay customary fees and expenses in
connection with the proposed merger, the financing arrangements
and the related transactions. These payments are expected to be
funded by a combination of the following:
|
|
|
|
|
an aggregate of $441.1 million in equity contributions by
affiliates of Hellman & Friedman LLC, Texas Pacific
Group and JMI Equity;
|
|
|
|
new senior secured credit facilities in the amount of
$464.5 million, comprised of a $389.5 million senior
secured term loan facility and a $75.0 million senior
secured revolving credit facility (not all of which is expected
to be drawn at the closing);
|
|
|
|
$276.5 million aggregate principal amount of senior
subordinated notes or, alternatively, a senior subordinated
bridge loan facility in the amount of $276.5 million;
|
|
|
|
a new $60.0 million senior secured
payment-in-kind
(PIK) loan facility; and
|
|
|
|
cash and cash equivalents held by Intergraph and our
subsidiaries at closing.
|
Equity
Financing
Cobalt Holding has received an equity commitment letter from
private equity funds affiliated with Hellman & Friedman
LLC, Texas Pacific Group and JMI Equity, pursuant to which the
funds have committed to contribute an aggregate of
$441.0 million in cash to Cobalt Holding in connection with
the proposed merger. The parties to the commitment letters have
the right to assign all of their committed amounts to affiliated
funds. However, any assignment of a commitment to any other
party requires the prior written consent of the
Hellman & Friedman LLC and Texas Pacific Group and, in
the event assignment could delay or impede closing or would
cause a breach of a representation in the merger agreement
regarding foreign ownership interests in Cobalt Holding, also
requires the prior written consent of Cobalt Holding. The
obligation to fund these equity commitments is subject to the
satisfaction or waiver by Cobalt Holding (in the manner agreed
by Hellman & Friedman LLC and Texas Pacific Group) of
the conditions precedent to Cobalt Holdings and Merger
Subs obligation to complete the merger.
Debt
Financing
Debt
Commitment Letter
Cobalt Holding has received a fully executed debt commitment
letter, dated as of August 31, 2006, from Morgan
Stanley & Co. Incorporated (MS&Co),
Morgan Stanley Senior Funding, Inc. (MSSF), Wachovia
Bank, National Association (Wachovia Bank), Wachovia
Investment Holdings, LLC (Wachovia Investments), and
Wachovia Capital Markets, LLC (Wachovia Securities).
Under the debt commitment letter, subject to the conditions set
forth in the debt commitment letter:
|
|
|
|
|
MSSF and Wachovia Bank have each severally, but not jointly,
committed to provide (each individually committing to provide
50% of the entire aggregate principal amount) to Cobalt Holding
or one of its subsidiaries up to $464.5 million of senior
secured credit facilities, comprised of a $389.5 million
senior secured term loan facility and a $75.0 million
senior secured revolving credit facility (not all of which is
expected to be drawn at the closing) for the purpose of
financing the merger, repaying or refinancing certain existing
indebtedness of Intergraph and our subsidiaries, paying fees and
expenses incurred in connection with the merger and the other
transactions contemplated thereby, including the financing,
providing ongoing working capital and for other general
corporate purposes of the surviving corporation and its
subsidiaries.
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MSSF and Wachovia Investments have each severally, but not
jointly, committed to provide (each individually committing up
to provide 50% of the entire aggregate principal amount) to
Cobalt Holding or one or more of its subsidiaries a senior
subordinated unsecured bridge facility of up to
$276.5 million and a senior secured PIK loan facility of up
to $60 million, for the purpose of financing the merger,
repaying or refinancing certain existing indebtedness of
Intergraph and our subsidiaries and paying fees and expenses
incurred in connection with the merger and the other
transactions contemplated thereby.
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The debt commitments expire on March 31, 2007. The
documentation governing the senior secured credit facilities,
the bridge loan facility and the PIK loan facility has not been
finalized and, accordingly, the actual terms of the facilities
may differ from those described in this proxy statement.
Pursuant to the merger agreement, Cobalt Holding is obligated to
use its reasonable best efforts to obtain the debt financing set
forth in the debt commitment letter at or prior to the closing
of the merger. In the event that any portion of the debt
financing becomes unavailable on the terms contemplated in the
debt commitment letter, Cobalt Holding must use its reasonable
best efforts to arrange alternative financing from alternative
sources on terms not materially less favorable to Cobalt Holding
in the aggregate and in no event less favorable in terms of
pricing and economic terms (as determined in the good faith
reasonable judgment of Cobalt Holding), as promptly as
practicable but no later than the last day of the
marketing period, as defined in the merger agreement
(see The Merger Agreement Marketing
Period).
Conditions
Precedent to the Debt Commitments
The availability of the senior secured credit facilities, the
bridge loan facility and the PIK loan facility is subject to,
among other things, there not having occurred since
December 31, 2005 any change or condition that would
constitute a Company Material Adverse Effect as
defined in the merger agreement (see The Merger
Agreement Representations and Warranties); the
accuracy in all material respects at the closing date of
specified representations of Intergraph in the merger agreement;
consummation of the merger in accordance with the merger
agreement (and no provision being waived or amended in a manner
materially adverse to the lenders without the consent of
MS&Co and Wachovia Securities); the negotiation, execution
and delivery of definitive documentation; the delivery of
audited, unaudited and pro forma financial statements; with
respect to the PIK loan facility, the contribution of the assets
that will secure the PIK loan facility to a newly formed
subsidiary of ours that will be a borrower under the PIK loan
facility; and, with respect to the bridge loan facility, a 15
day minimum marketing period after receipt of a customary
offering document to market a senior subordinated notes offering.
Guarantees;
Remedies
In connection with the merger agreement, affiliated funds of
each of Hellman & Friedman LLC, Texas Pacific Group and
JMI Equity have agreed to guarantee the due and punctual
performance and discharge of certain of the payment obligations
of Cobalt Holding and Merger Sub under the merger agreement
(including payment of the $53,020,000 Cobalt Holding termination
fee), up to a maximum amount equal to their respective pro rata
share of $99,420,000 (calculated according to the applicable
funds equity commitment to Cobalt Holding). If the Cobalt
Holding termination fee is paid, and Cobalt Holding and Merger
Sub are not otherwise in willful material breach of the merger
agreement (other than a breach arising from the failure by
Cobalt Holding to obtain the debt financing), then
Intergraphs termination of the merger agreement and
receipt of payment of the $53,020,000 Cobalt Holding termination
fee shall be the sole and exclusive remedy against Cobalt
Holding, Merger Sub, Hellman & Friedman LLC, Texas
Pacific Group and JMI Equity and any of their respective
representatives, affiliates, directors, officers, employees,
partners, managers, members, or stockholders or any loss or
damage suffered as a result of the breach of the merger
agreement or any representation, warranty, covenant or agreement
contained therein by Cobalt Holding or Merger Sub or the failure
of the merger to be consummated. The merger agreement also
provides that Intergraph shall not be entitled to an injunction
or injunctions to prevent breaches of the merger agreement by
Cobalt Holding or Merger Sub or to enforce specifically the
terms and provisions of the merger agreement, and that our
remedies are limited to the payment obligations of Cobalt
Holding described in more detail below under The Merger
Agreement Termination Fees. Each guarantee
will remain in full force and effect until the earlier of:
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the effective time of the merger,
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the termination of the merger agreement under certain
circumstances in which Cobalt Holding and Merger Sub would not
be obligated to pay the termination fee and
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the first anniversary of the date of the termination of the
guarantee if the merger agreement is terminated under
circumstances giving rise to a payment obligation of Cobalt
Holdings or Merger Sub, if Intergraph has not made a claim under
the guarantee related to that obligation prior to the one year
anniversary date.
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Interests
of Intergraphs Directors and Executive Officers in the
Merger
In considering the recommendations of the board of directors,
Intergraphs stockholders should be aware that certain of
Intergraphs directors and executive officers have
interests in the transaction that may be different from,
and/or in
addition to, the interests of Intergraphs stockholders
generally. Our board of directors was aware of these potential
conflicts of interest in reaching their decisions to approve the
merger agreement and to recommend that our stockholders vote in
favor of adopting the merger agreement. Except as set forth
below, our directors and officers have, to our knowledge, no
material interest that differs from your interests generally.
Treatment
of Equity Awards
Upon the consummation of the merger, all of our equity
compensation awards (including our awards held by directors and
executive officers) will be subject, except as otherwise agreed
by a holder or participant and Cobalt Holding, to the treatment
described under The Merger Agreement Treatment
of Options and Other Awards. All of the related cash
payments will be subject to applicable withholding taxes.
The table below sets forth, as of September 12, 2006, for
each of our directors and executive officers (before any
deduction for applicable withholding taxes): the aggregate
number of stock options held by each director and executive
officer, including those that will vest upon the consummation of
the merger; the cash payment that will be made in respect of the
foregoing stock options upon the consummation of the merger
(based on the weighted average exercise price of the options);
the aggregate number of restricted shares and restricted share
units held by each director and executive officer that have
restrictions that will lapse upon consummation of the merger;
and the aggregate cash payment that will be made in respect of
the foregoing restricted shares and restricted share units upon
the consummation of the merger.
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Restricted Shares and
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Stock Options
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Restricted Share Units
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Cash
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Cash
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Name
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Number
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Payment
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Number
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Payment
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Directors
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Sidney L. McDonald
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10,500
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$
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336,240
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2,300
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$
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101,200
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R. Halsey Wise(1)
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150,000
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$
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3,315,000
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135,000
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$
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5,940,000
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Michael D. Bills
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3,000
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$
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60,390
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4,918
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$
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216,392
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Richard W. Cardin
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4,500
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$
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108,540
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2,300
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$
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101,200
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Linda L. Green
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6,000
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$
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164,940
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2,300
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$
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101,200
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Lawrence R. Greenwood
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7,500
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$
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231,333
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2,300
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$
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101,200
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Thomas J. Lee
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10,500
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$
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336,240
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2,300
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$
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101,200
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Kevin M. Twomey
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2,300
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$
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101,200
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Executive Officers
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R. Reid French, Jr.
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75,000
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$
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1,471,500
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52,750
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$
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2,321,000
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Larry J. Laster
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74,000
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$
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2,517,500
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27,250
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$
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1,199,000
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David Vance Lucas
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45,000
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$
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1,299,600
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20,250
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$
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891,000
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Gerhard Sallinger
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20,500
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$
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624,675
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30,750
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$
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1,353,000
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Benedict A. Eazzetta
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22,500
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$
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645,150
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27,750
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$
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1,221,000
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Anthony Colaluca, Jr.
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30,000
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$
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1,320,000
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Larry T. Miles
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13,000
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$
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572,000
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Mr. Wise also serves as the President and Chief Executive
Officer of Intergraph. |
36
Change
in Control Severance and Retention Arrangements
We have entered into employment contracts with Mr. Wise,
Mr. French, and Mr. Colaluca with the following change
in control provisions, which may or will be triggered following
the completion of the merger, as applicable:
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All stock options will immediately vest and all restrictions
relating to restricted stock awards will automatically lapse.
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If Mr. Wise is terminated without cause or
resigns for good reason (which includes, among other
things, a material reduction in his position, authority, duties
or responsibilities and a reduction in his base salary or target
bonus) following the merger, he is entitled to payments of 250%
of his then-current base salary, 250% of his then-current target
bonus and standard health insurance benefits for two years. In
addition, Mr. Wise will be indemnified by Intergraph for
any excise tax due under Section 4999 of the Internal
Revenue Code, which we refer to as the Code, of an amount
sufficient to place Mr. Wise in the same after-tax position
as he would have been had no excise tax been imposed upon or
paid by him.
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Mr. French will be entitled to a stay bonus
whereby he will receive an amount equal to one (1) times
his then-current annual base salary for the year in which the
merger occurs, as well as an amount equal to one half of his
then-current target bonus for that year, provided that he
remains employed by Intergraph for six months following the
completion of the merger. If his employment is terminated
following the completion of the merger, but prior to the date
that is six months following the completion of the merger,
Mr. French will receive a pro rata potion of the stay
bonus; provided, however, so long as his date of termination
occurs more than five business days after the completion of the
merger the pro rata portion will not be less than
1/3
of the stay bonus.
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If Mr. French or Mr. Colaluca resigns for good
reason (which includes, among other things, a resignation
of Mr. Wise for good reason or a termination of
Mr. Wise without cause) following the merger,
each will be paid accrued base salary through the date of
termination plus a separation payment of one (1) times his
then-current annual base salary and any other unpaid benefits to
which he is otherwise entitled. In addition, each will receive
fully
paid-up
medical, dental and prescription drug health insurance benefits
for one year.
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The following table shows the amount of potential cash severance
payable to each of Messrs. Wise, French and Colaluca based
on compensation and benefit levels in effect on
September 12, 2006, and assuming the merger is completed on
December 31, 2006, and the executives employment
terminates effective December 31, 2006 under circumstances
that entitle him to the maximum potential severance payment
immediately thereafter. The table also shows the estimated value
of continuing insurance benefits. No excise tax is currently
expected to be due under Section 4999 of the Internal
Revenue Code in respect of these severance and benefit payments.
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Amount of
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Estimated Value of
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Name
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Potential Severance
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Insurance Benefits
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R. Halsey Wise
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$
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3,000,000
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$
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24,000
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R. Reid French, Jr.(1)
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$
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700,000
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$
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12,000
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Anthony Colaluca, Jr.
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$
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568,750
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$
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12,000
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In addition, to the extent Mr. Frenchs employment
continues for six months following the merger, he will be
entitled to an additional bonus of $550,000, for a total maximum
stay bonus of $1,250,000, subject to proration as described
above. |
New
Management Arrangements
As of the date of this proxy statement, no member of our
management has entered into any amendments or modifications to
existing employment agreements with us in connection with the
merger. Cobalt Holdings has informed us that it currently
intends to retain members of our existing management team with
the
37
surviving corporation after the merger is completed, and that it
anticipates that R. Halsey Wise, our chief executive officer,
will continue as chief executive officer of the surviving
corporation. Mr. Wise and other members of management
currently are engaged in discussions with representatives of
Cobalt Holding regarding revised terms of employment that would
become effective at or after the closing of the merger. In
addition to revised terms of employment, Cobalt Holdings has
informed us that they may offer Mr. Wise and other members
of management the opportunity to convert a portion of their
current equity interests in Intergraph into, or otherwise invest
in, equity in the surviving corporation, and that they also
intend to set up equity-based incentive compensation plans for
management of the surviving corporation. As of the date of this
proxy statement, neither Mr. Wise nor any other member of
our management has entered into any agreement, arrangement or
understanding with Cobalt Holding, Merger Sub or their
affiliates (including Hellman & Friedman LLC, Texas
Pacific Group and JMI Equity) regarding employment with, or the
right to purchase or participate in the equity of, the surviving
corporation. Although we believe members of our management team
are likely to enter into new arrangements with Cobalt Holding,
Merger Sub or their affiliates regarding employment with, and
the right to purchase or participate in the equity of, the
surviving corporation, these matters are subject to further
negotiations and discussion and no terms or conditions have been
finalized. The new arrangements are currently expected to be
entered into at or prior to the completion of the merger. In
addition, it is possible that one or more of our executive
officers could be invited to join the board of directors of the
surviving corporation
and/or
Cobalt Holding following the merger. The board of directors
(without Mr. Wises participation), in recognizing
that management would require legal counsel in connection with
discussions and negotiations with representatives of Cobalt
Holding relating to managements retention, had previously
authorized reimbursement of managements reasonable
out-of-pocket
legal expenses in connection with these negotiations.
Benefit
Arrangements with Surviving Corporation
The commitments by Cobalt Holding with respect to benefit
arrangements are described below under The Merger
Agreement Employee Benefits.
Indemnification
and Insurance
See The Merger Agreement Indemnification and
Insurance.
Material
U.S. Federal Income Tax Consequences of the Merger to Our
Stockholders
The following is a summary of certain material U.S. federal
income tax consequences of the merger to holders of Intergraph
common stock whose shares of Intergraph common stock are
converted into the right to receive cash pursuant to the merger.
This summary does not purport to consider all aspects of
U.S. federal income taxation that might be relevant to our
stockholders. For purposes of this discussion, we use the term
U.S. person to mean a beneficial owner of
shares of Intergraph common stock that is, for U.S. federal
income tax purposes:
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a citizen or resident of the United States for U.S. federal
income tax purposes;
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a corporation, or other entity taxable as a corporation, created
or organized under the laws of the United States or any of its
political subdivisions;
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a trust that (i) is subject to the supervision of a court
within the United States and the control of one or more
U.S. persons or (ii) has a valid election in effect
under applicable U.S. Treasury regulations to be treated as
a U.S. person; or
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an estate that is subject to U.S. federal income tax on its
income regardless of its source.
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A
non-U.S. holder
is a person (other than a partnership) that is not a
U.S. person.
For U.S. federal income tax purposes, if a partnership
holds Intergraph common stock, the tax treatment of a partner
will generally depend on the status of the partner and the
activities of the partnership. A partner of a partnership
holding Intergraph common stock should consult its own tax
advisor.
38
This discussion is based on current law, which is subject to
change, possibly with retroactive effect. It applies only to
holders that are beneficial owners who hold shares of Intergraph
common stock as capital assets, and may not apply to shares of
Intergraph common stock received in connection with the exercise
of employee stock options or otherwise as compensation, holders
who hold an equity interest, directly or indirectly, in Cobalt
Holding or the surviving corporation after the merger, or to
certain types of beneficial owners who may be subject to special
rules (such as insurance companies, banks, tax-exempt
organizations, financial institutions, broker-dealers,
partnerships, S corporations or other pass-through
entities, mutual funds, traders in securities who elect the
mark-to-market
method of accounting, holders subject to the alternative minimum
tax, stockholders that have a functional currency other than the
U.S. dollar, or holders who hold Intergraph common stock as
part of a hedge, straddle or a constructive sale or conversion
transaction). This discussion does not address the receipt of
cash in connection with the cancellation of shares of restricted
stock, restricted share units or options to purchase shares of
Intergraph common stock, or any other matters relating to equity
compensation or benefit plans.
U.S. Holders
The exchange of shares of Intergraph common stock for cash
pursuant to the merger will be a taxable transaction for
U.S. federal income tax purposes. In general, a
U.S. holder whose shares of Intergraph common stock are
converted into the right to receive cash pursuant to the merger
(including pursuant to the exercise of appraisal rights) will
recognize capital gain or loss for U.S. federal income tax
purposes equal to the difference, if any, between the amount of
cash received in exchange for the shares (determined before the
deduction of any applicable withholding taxes) and the
U.S. holders adjusted tax basis in the shares. Gain
or loss will be determined separately for each block of shares
(i.e., shares acquired at the same cost in a single
transaction). The gain or loss will be long-term capital gain or
loss provided that a U.S. holders holding period for
the shares is more than 12 months at the time of the
consummation of the merger. Long-term capital gains of
individuals are eligible for reduced rates of taxation. There
are limitations on the deductibility of capital losses.
Backup withholding of tax may apply to cash payments to which a
non-corporate U.S. holder is entitled under the merger
agreement, unless the holder or other payee provides a taxpayer
identification number (social security number, in the case of
individuals, or employer identification number, in the case of
other stockholders), certifies that the number is correct, and
otherwise complies with the backup withholding rules. Each
U.S. holder should complete and sign the Substitute
Form W-9
included as part of the letter of transmittal and return it to
the paying agent, in order to provide the information and
certification necessary to avoid backup withholding, unless an
exemption applies and is established in a manner satisfactory to
the paying agent.
Backup withholding is not an additional tax. Any amounts
withheld under the backup withholding rules will be allowable as
a refund or a credit against a U.S. holders
U.S. federal income tax liability provided the required
information is timely furnished to the Internal Revenue Service.
Cash received pursuant to the merger will also be subject to
information reporting under certain circumstances unless an
exemption applies.
Non-U.S. Holders
Any gain realized on the receipt of cash pursuant to the merger
(or pursuant to the exercise of appraisal rights) by a
non-U.S. holder
generally will not be subject to U.S. federal income tax
unless:
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the gain is effectively connected with a trade or business of
the
non-U.S. holder
in the United States (and, if required by an applicable income
tax treaty, is attributable to a U.S. permanent
establishment of the
non-U.S. holder);
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the
non-U.S. holder
is an individual who is present in the United States for
183 days or more in the taxable year of that disposition,
and certain other conditions are met; or
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Intergraph is or has been a United States real property
holding corporation for U.S. federal income tax
purposes and the
non-U.S. holder
owned more than 5% of Intergraphs common stock at any time
during the five years preceding the merger.
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An individual
non-U.S. holder
described in the first bullet point immediately above will be
subject to tax on the net gain derived from the merger under
regular graduated U.S. federal income tax rates. An
individual
non-U.S. holder
described in the second bullet point immediately above will be
subject to a flat 30% tax on the gain derived from the merger,
which may be offset by U.S. source capital losses, even
though the individual is not considered a resident of the United
States. If a
non-U.S. holder
that is a foreign corporation falls under the first bullet point
immediately above, it will be subject to tax on its net gain in
the same manner as if it were a U.S. person as defined
under the Code and, in addition, may be subject to the branch
profits tax equal to 30% of its effectively connected earnings
and profits or at such lower rate as may be specified by an
applicable income tax treaty.
Intergraph believes that it is not and has not been a
United States real property holding corporation for
U.S. federal income tax purposes.
Information reporting and, depending on the circumstances,
backup withholding will apply to the cash received pursuant to
the merger (or pursuant to the exercise of appraisal rights),
unless the beneficial owner certifies under penalty of perjury
that it is a
non-U.S. holder
(and the payor does not have actual knowledge or reason to know
that the beneficial owner is a U.S. person as defined under
the Code) or such owner otherwise establishes an exemption.
Backup withholding is not an additional tax and any amounts
withheld under the backup withholding rules may be refunded or
credited against a
non-U.S. holders
U.S. federal income tax liability, if any, provided that
such
non-U.S. holder
furnishes the required information to the Internal Revenue
Service in a timely manner.
The U.S. federal income tax consequences set forth above
are not intended to constitute a complete description of all tax
consequences relating to the merger. Because individual
circumstances may differ, each holder should consult the
holders tax advisor regarding the applicability of the
rules discussed above to the holder and the particular tax
effects to the stockholder of the merger in light of the
holders particular circumstances, including the
application of state, local and foreign tax laws, and, if
applicable, the tax consequences of the receipt of cash in
connection with the cancellation of restricted shares,
restricted share units or options to purchase shares of
Intergraph common stock, including the transactions described in
this proxy statement relating to our other equity compensation
and benefit plans.
Certain
Relationships Between Cobalt Holding and Intergraph
There are no material relationships between Cobalt Holding and
Merger Sub or any of their respective affiliates, on the one
hand, and Intergraph or any of our affiliates, on the other
hand, other than in respect of the merger agreement.
Litigation
Related to the Merger
We are aware of two asserted class action lawsuits related to
the proposed merger filed against us. The case, Emil R.
Rossi, Individually and on behalf of all others similarly
situated v. Sidney L. McDonald, R. Halsey Wise, Thomas J.
Lee, Lawrence R. Greenwood, Linda L. Greene, Richard W. Cardin,
Michael D. Bills, Kevin M. Twomey and Intergraph Corporation
was filed on September 5, 2006 in the Chancery Court
for the State of Delaware in and for New Castle County (C.A. No
2398-N). The complaint alleges, among other things, that the
individual defendants (officers and directors of Intergraph)
approved an acquisition for a sales price that is unfair to
stockholders and below the inherent value of Intergraph. Among
other things, the complaint alleges that the defendants have
failed to maximize stockholder value by failing to become
familiar with other offers or consider other potential
purchasers of Intergraph. The complaint further alleges that the
defendants aided and abetted each other in a common plan and
scheme in disregard of their fiduciary duties. Among other
things, the complaint seeks a declaration that the defendants
have breached their fiduciary duty, an injunction to prevent the
closing of the proposed merger, rescission of the proposed
merger if it is
40
consummated, compensatory damages with prejudgment interest, and
costs and attorneys fees. We believe this lawsuit is
without merit and plan to defend it vigorously.
Shalom Rechdiener, on behalf of himself and all others
similarly situated v. Sidney L. McDonald, R. Halsey Wise,
Thomas J. Lee, Lawrence R. Greenwood, Linda L. Greene, Richard
W. Cardin, Michael D. Bills, Kevin M. Twomey, Intergraph
Corporation, Hellman & Friedman LLC, Texas Pacific
Group and JMI Equity was filed on September 18, 2006 in
the Chancery Court for the State of Delaware in and for New
Castle County (C.A.
No. 2426-N).
The complaint alleges, among other things, that the individual
defendants (officers and directors of Intergraph) breached their
fiduciary duties by failing to conduct a bona fide market check
or auction of Intergraph. Among other things, the complaint
alleges that the amount offered in the merger agreement is
grossly inadequate and has been timed to take advantage of
Intergraphs low stock price. The complaint further alleges
that the investor group defendants (Hellman & Friedman
LLC, Texas Pacific Group, and JMI Equity) have knowingly aided
and abetted the individual defendants alleged breaches of
fiduciary duties. Among other things, the complaint seeks an
order requiring the individual defendants to carry out their
fiduciary duties and the defendants, jointly and severally, to
account for all damages suffered or to be suffered in connection
with the proposed merger, a declaration that the individual
defendants have violated their fiduciary duties, and costs and
attorneys fees. We believe this lawsuit is also without
merit and plan to defend it vigorously. Additional lawsuits
pertaining to the proposed merger could be filed in the future.
Amendment
to Rights Agreement
Immediately prior to the execution of the merger agreement, the
Amended and Restated Rights Agreement, dated March 5, 2002,
between Intergraph and Computershare Investor Services, LLC,
which we refer to as the Rights Agreement, was amended to render
the stockholder rights inapplicable to both the merger agreement
and the consummation of transactions contemplated under the
merger agreement.
Fees and
Expenses of the Merger
We estimate that we will incur, and will be responsible for
paying, transaction-related fees and expenses, consisting
primarily of financial, legal, accounting and tax advisory fees,
SEC filing fees and other related charges, totaling
approximately $ million. This
amount includes the following estimated fees and expenses:
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Amount to
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Description
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be Paid
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SEC filing fee
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$
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141,866
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Printing, proxy solicitation and
mailing expenses
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Financial, legal, accounting and
tax advisory fees and expenses
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Miscellaneous expenses
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Total
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$
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41
THE
MERGER AGREEMENT
(PROPOSAL NO. 1)
This section of the proxy statement describes the material
provisions of the merger agreement but does not purport to
describe all of the terms of the merger agreement. The following
summary is qualified in its entirety by reference to the
complete text of the merger agreement, which is attached as
Annex A to this proxy statement and incorporated into this
proxy statement by reference. We urge you to read the full text
of the merger agreement because it is the legal document that
governs the merger. It is not intended to provide you with any
other factual information about us. Such information can be
found elsewhere in this proxy statement and in the public
filings we make with the SEC, as described in the section
entitled Where You Can Find More Information
below.
The
Merger
The merger agreement provides for the merger of Merger Sub with
and into Intergraph upon the terms, and subject to the
conditions, of the merger agreement. The merger will be
effective at the time the certificate of merger is filed with
the Secretary of State of the State of Delaware (or at a later
time, if agreed upon by the parties and specified in the
certificate of merger). We expect to complete the merger as
promptly as practicable after meeting the conditions precedent
to the merger, including that our stockholders adopt the merger
agreement and, if necessary, the expiration of the marketing
period, as described below.
As the surviving corporation, Intergraph will continue to exist
following the merger. Upon consummation of the merger, the
directors of Merger Sub will be the initial directors of the
surviving corporation and the officers of Intergraph will be the
initial officers of the surviving corporation. All officers of
the surviving corporation will hold their positions until their
successors are duly elected and qualified or until the earlier
of their resignation or removal.
Intergraph or Cobalt Holding may terminate the merger agreement
prior to the consummation of the merger in some circumstances,
whether before or after the approval of the merger agreement by
stockholders. Additional details on termination of the merger
agreement are described in Termination of the
Merger Agreement.
Merger
Consideration
Each share of Intergraph common stock issued and outstanding
immediately before the merger will automatically be cancelled
and will cease to exist and will be converted into the right to
receive $44.00 in cash, without interest and less any applicable
withholding taxes, other than:
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Shares held in treasury or owned by Cobalt Holding or Merger Sub
immediately prior to the merger that will be cancelled;
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Shares held by subsidiaries of Cobalt Holding or Intergraph,
which will remain outstanding after consummation of the
merger; and
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Shares held by holders who have properly demanded and perfected
their appraisal rights.
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After the merger is effective, each holder of a certificate
representing shares of Intergraph common stock (other than
shares for which appraisal rights have been properly demanded
and perfected) will no longer have any rights with respect to
the shares, except for the right to receive the merger
consideration. See Appraisal Rights.
Treatment
of Options and Other Awards
Upon the consummation of the merger, except as otherwise agreed
by the holder and Cobalt Holding, all outstanding options to
acquire Intergraph common stock under our equity incentive plans
will become fully vested and immediately exercisable, and each
option not exercised prior to the merger will be cancelled and
converted into the right to receive a cash payment equal to the
number of shares of Intergraph common stock
42
underlying the option multiplied by the amount by which $44.00
exceeds the exercise price for each share of Intergraph common
stock underlying the option, without interest and less any
applicable withholding taxes. Additionally, except as otherwise
agreed by the holder and Cobalt Holding, restrictions applicable
to all shares of restricted stock and restricted share units
will, in connection with the merger, lapse and those shares or
units will be cancelled and converted into the right to receive
a cash payment equal to the number of outstanding restricted
shares or the number of shares of Intergraph common stock
previously subject to the restricted share units, respectively,
multiplied by $44.00 (together, with respect to restricted share
units, the value of any deemed dividend equivalents accrued but
unpaid with respect to the restricted share units), without
interest and less any applicable withholding taxes.
The effect of the merger upon our employee stock purchase plan
and certain other employee benefit plans is described below
under Employee Benefits.
Payment
for the Shares
Before the merger, Cobalt Holding will designate a paying agent
reasonably acceptable to us to make payment of the merger
consideration as described above. At or prior to the effective
time of the merger, Cobalt Holding will deposit, or cause to be
deposited, in trust with the paying agent the funds appropriate
to pay the merger consideration to the applicable stockholders.
Upon the consummation of the merger and the settlement of any
transfers that occurred prior to the effective time, we will
close our stock ledger. After that time, there will be no
further transfer of shares of Intergraph common stock.
As soon as reasonably practicable after the consummation of the
merger, the surviving corporation will send, or cause the paying
agent to send, you a form of letter of transmittal and
instructions advising you how to surrender your stock
certificates in exchange for the merger consideration. The
paying agent will pay you your merger consideration after you
have (1) surrendered your stock certificates to the paying
agent and (2) provided to the paying agent your signed
letter of transmittal and any other items specified by the
letter of transmittal. Interest will not be paid or accrue in
respect of the merger consideration. The surviving corporation
will reduce the amount of any merger consideration paid to you
by any applicable withholding taxes. YOU SHOULD NOT FORWARD YOUR
STOCK CERTIFICATES TO THE PAYING AGENT WITHOUT A LETTER OF
TRANSMITTAL, AND YOU SHOULD NOT RETURN YOUR STOCK CERTIFICATES
WITH THE ENCLOSED PROXY.
If any cash deposited with the paying agent is not claimed
within one year following the effective time of the merger, the
cash will be returned to the surviving corporation upon demand
subject to any applicable unclaimed property laws. Any unclaimed
amounts remaining immediately prior to when the amounts would
escheat to or become property of any governmental authority will
be returned to the surviving corporation free and clear of any
prior claims or interest thereto.
If the paying agent is to pay some or all of your merger
consideration to a person other than you, as the registered
owner of a stock certificate, you must have your certificates
properly endorsed or otherwise in proper form for transfer, and
you must pay any transfer or other taxes payable by reason of
the transfer or establish to Cobalt Holdings satisfaction
that the taxes have been paid or are not required to be paid.
The transmittal instructions will tell you what to do if you
have lost your certificate, or if it has been stolen or
destroyed. You will have to provide an affidavit to that fact
and, if required by the surviving corporation, post a bond in an
amount that the surviving corporation reasonably directs as
indemnity against any claim that may be made against it in
respect of the certificate.
Representations
and Warranties
The merger agreement contains representations and warranties
made by us to Cobalt Holding and Merger Sub and representations
and warranties made by Cobalt Holding and Merger Sub to us. The
assertions embodied in those representations and warranties were
made solely for purposes of the merger agreement and may be
subject to important qualifications and limitations agreed by
the parties in connection with negotiating
43
its terms (including exceptions described in the confidential
disclosure schedules to the merger agreement). Moreover, some of
those representations and warranties may not be accurate or
complete as of any particular date because they are subject to a
contractual standard of materiality or material adverse effect
different from that generally applicable to public disclosures
to stockholders or used for the purpose of allocating risk
between the parties to the merger agreement rather than
establishing matters of fact. For the foregoing reasons, you
should not rely on the representations and warranties contained
in the merger agreement as statements of factual information.
In the merger agreement, Intergraph, Cobalt Holding and Merger
Sub each made representations and warranties relating to, among
other things:
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corporate organization and existence;
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corporate power and authority to enter into and perform its
obligations under, and enforceability of, the merger agreement;
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required regulatory filings and consents and approvals of
governmental entities;
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the absence of conflicts with or defaults under organizational
documents, other contracts and applicable laws and judgments;
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litigation;
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brokers fees; and
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information supplied for inclusion in this proxy statement.
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In the merger agreement, Cobalt Holding and Merger Sub also each
made representations and warranties relating to the availability
of the funds necessary to perform its obligations under the
merger agreement, guarantees, and the operations of Cobalt
Holding and Merger Sub.
Intergraph also made representations and warranties relating to,
among other things:
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capital structure;
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subsidiaries;
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documents filed with the SEC;
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undisclosed liabilities;
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absence of certain changes or events since December 31,
2005;
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compliance with applicable laws;
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contracts and other agreements;
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intellectual property and software matters;
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real property matters;
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insurance matters;
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tax matters;
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compliance with the Employee Retirement Income Securities Act of
1974, as amended, and other employee benefit matters;
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labor and employee matters;
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environmental matters;
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the absence of any breach of organizational documents, contracts
and applicable laws as a result of the execution, delivery and
performance of the merger agreement;
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board of directors approval of the merger agreement and the
transactions contemplated thereby, including the merger, and
board of directors recommendation to our stockholders to approve
and adopt the merger agreement and the transactions contemplated
thereby, including the merger;
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state takeover statutes and our rights plan;
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the required vote of our stockholders in connection with the
merger agreement;
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the receipt of a fairness opinion from our financial
advisor; and
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affiliate transactions.
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Many of Intergraphs representations and warranties are
qualified by a material adverse effect standard. For purposes of
the merger agreement, material adverse effect on
Intergraph, which we refer to in the merger agreement as a
Company Material Adverse Effect, is defined to mean:
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any event, circumstance, development, change or effect that is,
individually or in the aggregate, materially adverse to the
business, assets, condition (financial or otherwise) or results
of operations of Intergraph and our subsidiaries, taken as a
whole; provided, however, that none of the following shall
constitute, or shall be considered in determining whether there
has occurred, and no event, circumstance, development, change or
effect resulting from or arising out of any of the following
shall constitute, a material adverse effect on
Intergraph:
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the announcement of the execution of the merger agreement or the
pendency of consummation of the merger;
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changes in the national or world economy or financial markets as
a whole or changes in general economic conditions that affect
the industries in which Intergraph and our subsidiaries conduct
their business (including, without limitation, the applicable
software, design and spatial industries), so long as the
conditions do not adversely affect Intergraph or our
subsidiaries in a materially disproportionate manner relative to
other similarly situated participants in the industries or
markets in which they operate;
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any change in general budget or appropriations policies of any
governmental entities (as opposed to individual procurement
decisions) or any applicable law, rule or regulation or
generally accepted accounting principles or interpretation
thereof after the date of the merger agreement, so long as the
changes do not adversely affect Intergraph or our subsidiaries
in a materially disproportionate manner relative to other
similarly situated participants in the industries or markets in
which they operate;
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any failure by Intergraph to meet any published estimates of
revenues, earnings or other financial projections (it being
understood, however, that any events, changes or developments
causing or contributing to the failures may, except as provided
in any of the other provisions of this definition of material
adverse effect, be deemed to constitute or be taken into account
in determining whether a material adverse effect has occurred);
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any outbreak or escalation of war of hostilities, any occurrence
or threats of terrorist acts or any armed hostilities associated
therewith and any national or international calamity, disaster
or emergency or any escalation thereof, so long as the
conditions do not adversely affect Intergraph or our
subsidiaries in a materially disproportionate manner relative to
other similarly situated participants in the industries or
markets in which they operate;
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a decline in the price, or a change in the trading volume, of
the Intergraph common stock on the NASDAQ) (it being understood,
however, that any events, changes or developments causing or
contributing to the decline or change may, except as provided in
any of the other provisions of this definition of material
adverse effect, be taken into account in determining whether a
material adverse effect has occurred); and
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taking any action outside of the ordinary course of business
required by the merger agreement, or taking or not taking any
actions outside ordinary course of business at the written
request of, or with the written consent of, Cobalt
Holding; and
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an effect that prevents our ability to consummate the
transactions contemplated by the merger agreement in accordance
with the dates specified in the merger agreement.
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Conduct
of Business Pending the Merger
We have agreed in the merger agreement that, until the
consummation of the merger (or the termination of the merger
agreement), except as expressly contemplated by the merger
agreement or consented to in writing by Cobalt Holding (which
consent shall not be unreasonably withheld or delayed) or
required by applicable law, we and each of our subsidiaries will:
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conduct our business in the ordinary course;
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use reasonable best efforts to, on a basis consistent with past
practices:
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preserve intact our business organizations, keeping available
the services of our current officers, employees and consultants,
and preserve our relationships with customers, suppliers, and
others having significant business relations with us;
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advertise, promote, and market Intergraphs products;
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keep our material properties substantially intact, preserve our
goodwill and business, and maintain all physical properties in
good repair and condition;
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perform and comply in all material respects with the terms of
our contracts; and
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maintain, and comply in all material respects with, all
governmental approvals or requirements necessary for the
operation of Intergraphs business;
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use reasonable best efforts to keep in effect material insurance
policies in coverage amounts substantially similar to those in
effect as of the date of the merger agreement; and
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use reasonable best efforts to take, and to cause our
subsidiaries to use reasonable best efforts to take, all action
reasonably requested by Cobalt Holding in order to cause all, or
the portion as Cobalt Holding shall request, of
Intergraphs and our subsidiaries unrestricted cash
equivalents (excluding, for avoidance of doubt, any cash
equivalents which cannot be distributed, contributed or
otherwise delivered to Intergraph in accordance with applicable
laws, including those relating to solvency, adequate surplus and
similar capital adequacy tests) to be liquidated and converted
into cash of Intergraph that is available to Intergraph at the
effective time of the merger to pay as part of the merger
consideration.
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We have also agreed that, until the consummation of the merger,
except as expressly contemplated or permitted by the merger
agreement or consented to in writing by Cobalt Holding (which
consent shall not be unreasonably withheld or delayed), we will
not, and will not permit any of our subsidiaries to:
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incur any indebtedness for borrowed money or issue any debt
securities or assume, guarantee, endorse or otherwise become
payable for any indebtedness, in an aggregate amount in excess
of $3,000,000, other than intercompany transactions and certain
performance bonds and letters of credit;
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change the compensation payable to any executive officer,
officer, employee, agent or consultant or enter into or amend
any employment, change in control, bonus, severance,
termination, retention or other agreement or arrangement with
any officer, employee, agent or consultant of Intergraph or our
subsidiaries, or adopt, establish, enter into, amend or
terminate, or increase the benefits (including fringe benefits),
severance or termination pay under, any employee benefit plan or
agreement or otherwise, or otherwise grant any severance or
termination pay to any of the foregoing, except as required by
law or in accordance with existing agreements and in the case of
annual increases in salary and wages for employees (other than
executive officers), in the ordinary course of business
consistent
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with past practice; make any loans or advances to any of our
directors, officers or employees, agents or consultants, other
than advancements of business expenses in the ordinary course in
accordance with Intergraphs existing policies, or make any
material change in our existing borrowing or lending
arrangements for or on behalf of any persons pursuant to a plan
or otherwise; subject to certain exceptions for newly hired
employees (other than executive officers) and for employees
(other than executive officers) in the context of promotions
based on job performance or workplace requirements;
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split, combine or reclassify any of our capital stock or make
any change in the number of shares of our capital stock
authorized, issued or outstanding (other than through the
exercise of Intergraph options outstanding as of the date of the
merger agreement or repurchases or cancellation of restricted
shares in accordance with the terms of the applicable award
agreements or similar arrangements to satisfy withholding
obligations upon the vesting of restricted shares or the
exercise of Intergraph options) or grant, sell or otherwise
issue or authorize the issuance of any share of capital stock,
any other voting security or any security convertible into, or
any option, warrant or other right to purchase (including any
equity-based award), or convert any obligation (other than
restricted share units outstanding as of the date of the merger
agreement) into, shares of our capital stock or any other voting
security, declare, set aside, make or pay any dividend or other
distribution with respect to any shares of our capital stock,
sell, encumber or transfer any shares of our capital stock, or
acquire, redeem or otherwise repurchase any shares of our
capital stock or any rights, warrants or options to purchase any
of our capital stock, or any securities convertible into or
exchangeable for any shares, or amend or alter in any respect,
or grant any waiver or exception under, the Rights Agreement;
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amend, or otherwise alter or modify in any respect, the
certificate of incorporation or by-laws of Intergraph or any
material Intergraph subsidiary in a manner adverse to Cobalt
Holding;
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acquire or license (including by merger, consolidation or
acquisition of stock or assets or any other business
combination), or enter into any binding memorandum of
understanding, letter of intent or other agreement, arrangement
or understanding to acquire or license all or substantially all
the assets equity interests of any corporation, partnership,
other business or any division, except that Intergraph can
engage in one (and only one) such acquisition having a
transaction price less than $3,000,000 or, in the case of
licenses, in the ordinary course of business consistent with
past practice;
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sell or transfer or mortgage, pledge, lease, license, terminate
any lease or license, or otherwise dispose of or encumber any
tangible or intangible asset or related assets (including
capital stock or other equity interests) with a value in excess
of $1,000,000 individually or $3,000,000 in the aggregate, other
than sales and non-exclusive licenses of products and services
of Intergraph and our subsidiaries in the ordinary course of
business consistent with past practice;
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enter into any material contract that terminates, provides a
right to terminate, is modified or results in any payment or
penalty as a result of the completion of the merger;
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enter into any contract that is material to Intergraph and our
subsidiaries, taken as a whole, other than in the ordinary
course of business on terms consistent with past practice; or
voluntarily terminate or modify in any material respect any
contract of the type specified other than modifications in the
ordinary course of business consistent with past practice;
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authorize any single capital expenditure or purchase of assets,
or a series of related expenditures or purchases, in excess of
$2,000,000;
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except as may be required as a result of a change in law or GAAP
(or any interpretation thereof), change any of the accounting
practices or principles used by us or our material subsidiaries;
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write up, write down or write off the book value of any assets
of Intergraph and material Intergraph subsidiaries, other than
in the ordinary course of business and consistent with past
practice or as may be required by GAAP or the Financial
Accounting Standards Board;
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other than in connection with the settlement of certain
intellectual property disputes, settle or compromise any pending
or threatened suit, action or claim which:
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is material to Intergraph and our subsidiaries taken as a whole;
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requires payment to or by Intergraph or any of our subsidiaries
(exclusive of attorneys fees, including success fees) in
excess of $1,000,000;
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relates to the transactions contemplated by the merger agreement;
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involves material restrictions on the business activities of
Intergraph or any of our subsidiaries or other equitable
remedies that materially adversely affect the business
activities of Intergraph or any of our subsidiaries; or
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would involve the issuance of Intergraph securities;
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adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, or recapitalization of Intergraph or any
of our subsidiaries (other than the merger agreement);
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except as required by law, establish, adopt, enter into or amend
any collective bargaining, bonus, profit sharing, thrift,
compensation, stock option, restricted stock, pension,
retirement, deferred compensation, employment, termination,
severance or other plan, agreement, trust, fund, policy or
arrangement for the benefit of any current or former directors,
officers or employees of Intergraph or any of our subsidiaries,
pay any discretionary bonuses to any employee of Intergraph or
any of our subsidiaries, except for the exercise of
discretionary elements under compensation, employment or other
benefit plans or arrangements existing as of the date of the
merger agreement, or change in any material respect the manner
in which contributions to any plan or arrangement are made or
the basis on which contributions are determined;
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except in each case as required by applicable law or treasury
regulation, make, revoke or change any material tax election,
file any amended tax return with respect to any material tax,
settle or compromise any material federal, state, local or
foreign tax liability, surrender any right to claim a material
tax refund, waive any statute of limitations in respect of a
material amount of taxes, agree to an extension of time with
respect to an assessment or deficiency for a material amount of
taxes or change any annual tax accounting period;
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except as requested by Cobalt Holding, fail to manage and retain
cash and cash equivalents and investments in marketable
securities in a manner substantially consistent with past
practice and in their current jurisdiction and substantially in
conformity with the reasonable instructions of Cobalt Holding or
intentionally fail to manage accounts payable or accounts
receivable in a manner substantially consistent with past
practice;
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take any action that is intended to materially impair,
materially delay or prevent Cobalt Holdings obtaining of
financing contemplated by the debt financing commitments; or
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authorize, commit or obligate itself to do any of the above
actions.
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Notwithstanding the foregoing, nothing contained in the merger
agreement shall give Cobalt Holding, directly or indirectly, the
right to control or direct the Intergraphs or
Intergraphs subsidiaries operations prior to the
effective time of the merger; prior to the effective time of the
merger, each of Intergraph and Cobalt Holding shall exercise,
consistent with the terms and conditions of the merger
agreement, complete control and supervision over its and its
subsidiaries respective operations; and no consent of
Cobalt Holding shall be required with respect to any matter set
forth above or elsewhere in the merger agreement to the extent
the requirement of such consent would, upon advice of counsel,
violate applicable antitrust law.
Efforts
to Complete the Merger
Upon the terms and subject to the conditions set forth in the
merger agreement, each of the parties to the merger agreement
has agreed to use its reasonable efforts to take, or cause to be
taken, all actions, to file, or cause to be filed, all
documents, and to do, or cause to be done, and to assist and
cooperate with the other parties in doing, all things necessary,
proper or advisable to consummate and make effective, the
merger, including the taking of all acts necessary to satisfy
the conditions necessary for the completion of the merger; the
obtaining of all necessary actions or non-actions, expirations
of all necessary waiting periods, waivers,
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consents, clearances, approvals, orders and authorizations from
governmental entities and any other third parties; the defending
of any suits, claims, actions, investigations or proceedings,
whether judicial or administrative, challenging the merger
agreement or the consummation of the merger; and the execution
or delivery of any additional instruments necessary to
consummate the merger.
Cobalt Holding has agreed to use its reasonable best efforts to
arrange the debt financing to fund the proposed merger and
related transactions contemplated by the debt financing
commitments executed in connection with the merger agreement and
to cause its financing sources to fund the financing required to
consummate the proposed merger. Intergraph has agreed to
cooperate in connection with the financing. See The
Merger Financing of the Merger for a
description of the financing arranged by Cobalt Holding to fund
the proposed merger and related transactions.
In the event any portion of the debt financing becomes
unavailable, Cobalt Holding has also agreed to use its
reasonable best efforts to arrange to obtain alternative
financing on terms and conditions not materially less favorable
to Cobalt Holding in the aggregate and in no event less
favorable as to pricing and economic terms (as determined in
Cobalt Holdings good faith reasonable judgment) than those
contemplated by the debt financing commitments as promptly as
practicable following the occurrence of the event, but no later
than the last day of the marketing period described below.
Marketing
Period
Unless otherwise agreed to by the parties to the merger
agreement, the parties are required to close the merger no later
than the second business day after the satisfaction or waiver of
the conditions described under Conditions to
the Merger below, provided that if the marketing period
has not ended at that time, the parties are obligated to close
the merger on the date following the satisfaction or waiver of
the conditions that is the earliest of a date during the
marketing period specified by Merger Sub on no less than three
business days notice and the final day of the marketing
period.
For purposes of the merger agreement, marketing
period means the first period of twenty (20) consecutive
calendar days following November 11, 2006 throughout which:
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Cobalt Holding has certain financial information required to be
provided by Intergraph under the merger agreement in connection
with Cobalt Holdings financing of the merger; and
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the stockholder approval and certain other conditions to the
obligations of each of the parties to complete the merger are
satisfied, including the continuing accuracy of certain of
Intergraphs representations and warranties.
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If the marketing period would not end on or prior to
December 19, 2006, the marketing period will be deemed to
commence no earlier than January 2, 2007. In addition, the
marketing period will not be deemed to have commenced if, prior
to the completion of the marketing period, Ernst &
Young LLP shall have withdrawn its audit opinion with respect to
any financial statements contained in our reports filed with the
SEC since January 1, 2003.
The purpose of the marketing period is to provide Cobalt Holding
a reasonable and appropriate period of time during which it can
market and place the debt financing contemplated by the debt
financing commitments for the purposes of financing the merger.
Cobalt Holding has agreed:
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to use reasonable best efforts to take, or cause to be taken,
all actions and do, or cause to be done, all things necessary,
proper or advisable to arrange the debt financing on the terms
and conditions described in the debt financing commitments,
including using reasonable best efforts to satisfy, in all
material respects, on a timely basis all conditions applicable
to Cobalt Holding and Merger Sub to obtaining the debt financing
as set forth the commitment letters; and
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in the event that any portion of the debt financing becomes
unavailable on the terms and conditions contemplated in the debt
financing commitments, to use its reasonable best efforts to
arrange alternative financing sufficient to consummate the
merger on terms not materially less favorable to Cobalt Holding
in the aggregate and in no event less favorable as to economic
terms (as determined in the good faith
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reasonable judgment of Cobalt Holding) as promptly as
practicable but in no event later than the last day of the
marketing period.
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In addition, in the event that any portion of the debt financing
structured as high yield financing has not been consummated,
then, subject to certain exceptions, Cobalt Holding must use the
proceeds of the bridge financing to replace the high yield
financing no later than the last day of the marketing period.
Conditions
to the Merger
Conditions to Each Partys
Obligations. Each partys obligation to
complete the merger is subject to the satisfaction or waiver of
the following conditions:
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the merger agreement must have been adopted by the affirmative
vote of the holders of a majority of all outstanding shares of
Intergraph common stock;
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no statute, rule, executive order or regulation shall have been
enacted, issued, entered or promulgated by any governmental
entity which prohibits the consummation of the merger, and there
shall be no order or preliminary or permanent injunction of a
court of competent jurisdiction, including any temporary
restraining order, in effect preventing or prohibiting the
merger; and
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any applicable waiting period (and any extension thereof) under
the HSR Act or any other applicable foreign competition or
merger control laws shall have been terminated or shall have
expired, and approvals under all foreign competition or merger
control laws, and approvals or waiting periods of governmental
entities that are applicable to the merger shall have been
obtained or expired, as the case may be.
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Conditions to Cobalt Holdings and Merger Subs
Obligations. The obligations of Cobalt Holding
and Merger Sub to complete the merger are subject to the
satisfaction or waiver of the following additional conditions:
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all representations and warranties made by us in the merger
agreement (with certain exceptions) must be true and correct as
of the closing date as if made at and as of that time (without
regard to materiality qualifiers), except to the extent that the
representations and warranties expressly relate to an earlier
date, and except where the failure of the representations and
warranties to be true and correct, individually or in the
aggregate, has not had and would not reasonably be expected to
have, individually or in the aggregate, a material adverse
effect on Intergraph;
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we must have performed and complied in all material respects
with all covenants and agreements we are required by the merger
agreement to perform or comply with on or prior to the closing
date; and
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we must deliver to Cobalt Holding at closing a certificate with
respect to the satisfaction of the foregoing conditions relating
to representations, warranties, obligations, covenants and
agreements.
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Conditions to Intergraphs
Obligations. Our obligation to complete the
merger is subject to the satisfaction or waiver of the following
further conditions:
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the representations and warranties of Cobalt Holding and Merger
Sub must be true and correct, as of the date of the closing date
(without regard to materiality qualifiers), except to the extent
that the representations and warranties expressly relate to an
earlier date, and except where the failure of the
representations and warranties to be true and correct would not
reasonably be expected to prevent or materially impede the
timely consummation of the merger;
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Cobalt Holding and Merger Sub must have performed and complied
in all material respects with all covenants and agreements they
are required by the merger agreement to perform or comply with
on or prior to the closing date; and
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Cobalt Holding and Merger Sub must each deliver to Intergraph at
closing a certificate with respect to the satisfaction of the
foregoing conditions relating to representations, warranties,
obligations, covenants and agreements.
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If a failure to satisfy one of these conditions to the merger is
not considered by our board of directors to be material to our
stockholders, our board of directors could waive compliance with
that condition. Our board of directors is not aware of any
condition to the merger that cannot be satisfied. Under Delaware
law, after the merger agreement has been adopted by our
stockholders, among other limitations, the merger consideration
cannot be changed and the merger agreement cannot be altered in
a manner adverse to our stockholders without re-submitting the
revisions to our stockholders for their approval.
No
Solicitations of Other Offers
The merger agreement provides that neither we nor our
representatives (as defined in the merger agreement) will
directly or indirectly:
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solicit, initiate, propose or knowingly encourage or take any
other action to knowingly facilitate the submission of an
acquisition proposal (defined below);
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enter into any letter of intent, memorandum of understanding,
agreement, option agreement or other agreement or arrangement
with respect to any acquisition proposal;
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enter into, continue, participate, engage or knowingly assist in
any manner in negotiations or discussions with, or provide any
non-public information or data to, any person (other than Cobalt
Holding or any of its affiliates or representatives) relating to
any acquisition proposal, or grant any waiver or release under
any standstill; or
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take any action to
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other than as contemplated by the merger agreement in connection
with the merger, render the rights issued pursuant to the terms
of the Rights Agreement inapplicable to an acquisition proposal
or the transactions contemplated thereby, exempt or exclude any
person from the definition of an acquiring person (as defined in
the Rights Agreement) under the terms of the Rights Agreement or
allow Intergraph rights to expire prior to their expiration
date; or
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exempt any person from the restrictions on business
combinations contained in Section 203 of the General
Corporation Law of the State of Delaware, which we refer to as
the DGCL, (or any similar provision) or otherwise cause those
restrictions not to apply.
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However, we may (and may authorize and permit our
representatives to) at any time prior to the adoption of the
merger agreement by our stockholders, in response to an
unsolicited takeover proposal (defined below) that is made after
the date of the merger agreement and that is a superior proposal
(defined below) or is reasonably expected to constitute a
superior proposal, if our board of directors determines in good
faith (after receiving advice of outside counsel) that doing so
would be in the best interests of Intergraph and our
stockholders and that the failure to take that action could
violate our board of directors fiduciary duties to our
stockholders under applicable law and after giving Cobalt
Holding oral and written notice (including the identity of the
other party and the material terms of the inquiry, offer,
proposal or request, and, in the case of written materials
provided to Intergraph, copies or written summaries of the
written materials) within one business day after receiving the
proposal:
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furnish information concerning, and provide access to, our
business, properties, employees and assets pursuant to a
confidentiality agreement with terms and conditions no less
favorable in any material respect to us than the terms of our
confidentiality agreement with Cobalt Holding, provided that the
information must be provided to Cobalt Holding prior to or
substantially concurrent with the time of its provision to the
third party to the extent not previously made available to
Cobalt Holding; and
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participate, engage or assist in any manner in negotiations and
discussions with the party making a takeover proposal regarding
the takeover proposal.
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In addition, we have agreed that neither our board of directors
nor any of its committees will:
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withdraw or modify, or publicly propose to withdraw or modify,
in a manner adverse to Cobalt Holding or Merger Sub, the
approval or recommendation of our board of directors of the
merger agreement or the merger or announce that it has resolved
to take the action;
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approve, recommend or adopt or publicly propose to approve,
recommend or adopt any acquisition proposal; or
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approve, recommend, adopt or allow Intergraph to enter into any
letter of intent, memorandum of understanding, option agreement
or similar arrangement with respect to any acquisition proposal.
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For purposes of these restrictions, an acquisition
proposal means any transaction or proposed transaction or
series of related transactions involving:
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any direct or indirect acquisition or purchase by any person or
group (as defined in Section 13(d) of the
Exchange Act) of a 20% interest or more in the total outstanding
shares of equity or voting securities of Intergraph, a material
subsidiary or any other Intergraph subsidiary that is a
significant subsidiary within the meaning of
Rule 1-02 of
Regulation S-X
promulgated by the SEC;
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any tender offer or exchange offer that if consummated would
result in any person or group beneficially owning 20% or more of
the total outstanding shares of equity or voting securities of
Intergraph;
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any sale or disposition of consolidated assets or rights of
Intergraph or any Intergraph subsidiary to any person or group
for consideration equal to 20% or more of the aggregate fair
market value of all of the outstanding shares of Intergraph
common stock; or
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any consolidation, merger, business combination,
recapitalization, liquidation, dissolution or similar
transaction with respect to Intergraph or any Intergraph
subsidiary that is a significant subsidiary within
the meaning of
Rule 1-02
of
Regulation S-X
promulgated by the SEC.
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For purposes of these restrictions, a takeover
proposal means any acquisition proposal or inquiry (other
than the transactions contemplated by the merger agreement) that
is reasonably likely to lead to an acquisition proposal that:
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provides for any person or group to acquire, directly or
indirectly, a majority of the issued and outstanding shares of
Intergraph common stock (or a majority of the voting securities
of any surviving corporation in a merger or consolidation with
Intergraph); or
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provides for the acquisition of all or substantially all of the
consolidated assets of Intergraph.
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For purposes of these restrictions, a superior
proposal means any takeover proposal:
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that is unsolicited, and which our board of directors determines
in good faith, after consultation with our financial advisor and
outside counsel, which is, or is reasonably likely to result in,
a takeover proposal that is more favorable, from a financial
point of view to our stockholders taking into account all of the
terms and conditions of the proposal, than the merger agreement
(including any binding written and complete proposal to amend
the terms of the merger agreement);
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for which financing, to the extent required, is then committed
and on terms and conditions that our board of directors
determines, after consultation with our financial advisor, are
reasonably likely to result in disbursement sufficient for the
consummation of the transactions contemplated by the takeover
proposal; and
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for which, in the good faith opinion of our board of directors
(or any committee thereof), after consultation with outside
legal counsel, providing information or access or participating,
engaging or assisting in the negotiations or discussions is or
would be in the best interests of Intergraph and our
stockholders and that the failure to take the action could
violate our board of directors fiduciary duties to our
stockholders under applicable law.
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Recommendation
Withdrawal/Termination in Connection with a Superior Proposal
and Third Party Tender Offers
Our board of directors may also, at any time prior to the
adoption of the merger agreement by our stockholders, withdraw
or modify, or publicly propose to withdraw or modify, in a
manner adverse to Cobalt Holding, the approval or recommendation
of our board of directors of the merger agreement or the merger
or announce that it has resolved to take that action or
terminate the merger agreement and enter into a definitive
agreement with respect to a superior proposal if our board of
directors concludes in good faith (after consultation with our
financial advisor and outside legal counsel) that failure to do
so could violate its obligations to comply with its fiduciary
duties under applicable law and, and only after (i) we give
written notice to Cobalt Holding and Merger Sub at least three
business days in advance of the superior proposal and the
material terms and conditions of the superior proposal, and
(ii) we pay to Cobalt Holding the termination fees
described in Termination Fees.
Nothing described above limits our ability to take and disclose
a position recommending rejection with respect to any tender or
exchange offer by a third party pursuant to
Rules 14d-9
and 14e-2(a)
promulgated under the Exchange Act, or from making any similar
disclosure to our stockholders with respect to any takeover
proposal; provided, however, that our board of directors shall
not:
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recommend that our stockholders tender their shares of
Intergraph common stock in connection with the tender or
exchange offer (or otherwise approve or recommend any
acquisition proposal or take any action under the Rights
Agreement to facilitate the tender or exchange offer); or
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withdraw or modify its approval or recommendation of the merger
agreement and the merger, unless in each case the applicable
requirements described above have been satisfied.
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Termination
of the Merger Agreement
The merger agreement may be terminated at any time prior to the
consummation of the merger, whether before or after our
stockholders have adopted the merger agreement:
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by mutual written consent of Intergraph and Cobalt Holding;
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by either Intergraph or Cobalt Holding, if:
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the merger has not been consummated by March 31, 2007,
except that this right to terminate will not be available to any
party whose action or failure to fulfill any obligation under
the merger agreement or failure to act in good faith has been
the principal cause of, or resulted in, the failure of the
merger to be consummated by that date;
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a court of competent jurisdiction or other governmental entity
has issued a final, non-appealable order, decree or ruling or
taken any other action, or there exists any statute, rule or
regulation, in each case preventing or otherwise prohibiting the
consummation of the merger or that otherwise has the effect of
making the merger illegal and the party seeking to terminate the
merger agreement has used all reasonable efforts to prevent the
entry of and to remove the order, decree, ruling, action, or
statute, rule or regulation to the extent of its control or
influence; or
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Intergraphs stockholders fail to adopt the merger
agreement at a duly held meeting; or
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Intergraphs board of directors withdraws or modifies, or
publicly proposes to withdraw or modify, in a manner adverse to
Cobalt Holding, the approval or recommendation of
Intergraphs board of directors of the merger agreement or
the merger or announces that it has resolved to take that action;
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Intergraphs board of directors recommends to our
stockholders or approves any acquisition proposal or resolves to
effect the foregoing;
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Intergraphs board of directors fails to include in this
proxy statement its recommendation that Intergraphs
stockholders adopt the merger agreement;
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Intergraphs board of directors fails to recommend against
a tender or exchange offer related to an acquisition proposal in
any publicly disclosed position taken pursuant to the Exchange
Act; or
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there has been a breach of, or inaccuracy in, any
representation, warranty, covenant or agreement of Intergraph
under the merger agreement which would result in the failure of
certain conditions to closing and where the breach or inaccuracy
is reasonably incapable of being cured, or is not cured, within
20 business days after Intergraph receives notice of the breach
or inaccuracy and neither Cobalt Holding nor Merger Sub is in
material breach of its representations, warranties, covenants
and obligations under the merger agreement so as to cause the
failure of certain conditions to closing; or
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Intergraph concurrently enters into a definitive agreement with
respect to a superior proposal; provided that Intergraph has
paid, or simultaneously with doing so, pays to Cobalt Holding
the termination fee as described below;
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there has been a breach of, or inaccuracy in, any
representation, warranty, covenant or agreement of Cobalt
Holding or Merger Sub under the merger agreement which would
result in the failure of certain conditions to closing and where
the breach or inaccuracy is reasonably incapable of being cured,
or is not cured, within 20 business days after Cobalt Holding
receives notice of the breach or inaccuracy and Intergraph is
not in material breach of our representations, warranties,
covenants and obligations under the merger agreement so as to
cause the failure of certain conditions to closing; or
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the conditions to closing have been satisfied (other than those
conditions that by their terms are to be satisfied at closing,
and no state of facts or circumstances exists that would cause
the conditions to not be satisfied, provided that nothing has
occurred and no conditions exist that would cause those
conditions not to be satisfied if the closing were to occur on
the last day of the marketing period) and Cobalt Holding has
failed to consummate the merger by the last day of the marketing
period.
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Termination
Fees
Payable
by Intergraph
Intergraph has agreed to reimburse Cobalt Holdings
out-of-pocket
fees and expenses, up to a limit of $7,000,000, if:
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Cobalt Holding terminates the merger agreement because
Intergraph has breached a representation, warranty, covenant or
agreement such that the closing conditions would not be
satisfied and the breach has not been cured within the specified
time; or
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Intergraph or Cobalt Holding terminates the merger agreement
because Intergraphs stockholders fail to adopt the merger
agreement at a duly held meeting.
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In addition, Intergraph has agreed to pay Cobalt Holding a
termination fee of $33,140,000 if:
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Cobalt Holding terminates the merger agreement because
Intergraphs board of directors withdraws or modifies, or
publicly proposes to withdraw or modify, in a manner adverse to
Cobalt Holding, the approval or recommendation of
Intergraphs board of directors of the merger agreement or
the merger or announces that it has resolved to take that action;
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Cobalt Holding terminates the merger agreement because
Intergraphs board of directors recommends to
Intergraphs stockholders or approves any acquisition
proposal or resolves to effect the foregoing;
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Cobalt Holding terminates the merger agreement because
Intergraphs board of directors fails to include in this
proxy statement its recommendation that Intergraphs
stockholders adopt the merger agreement;
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Cobalt Holding terminates the merger agreement because
Intergraphs board of directors fails to recommend against
a tender or exchange offer related to an acquisition proposal in
any publicly disclosed position taken pursuant to the Exchange
Act;
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Intergraph terminates the merger agreement because Intergraph
has entered into a definitive agreement with respect to a
superior proposal;
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Cobalt Holding terminates the merger agreement because
Intergraph has breached a representation, warranty, covenant or
agreement such that the closing conditions would not be
satisfied and the breach has not been cured within the specified
time and
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prior to termination, an acquisition proposal is publicly
announced or is otherwise communicated to Intergraphs
board of directors; and
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within 12 months after the termination, Intergraph enters
into a definitive agreement with respect to an acquisition
proposal or a transaction pursuant to an acquisition proposal is
otherwise consummated;
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Intergraph or Cobalt Holding terminates the merger agreement
because the merger is not consummated by March 31,
2007 and
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prior to termination, an acquisition proposal is publicly
announced or is otherwise communicated to Intergraphs
board of directors; and
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within 12 months after the termination, Intergraph enters
into a definitive agreement with respect to an acquisition
proposal or a transaction pursuant to an acquisition proposal is
completed; or
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Intergraph or Cobalt Holding terminates the merger agreement
because Intergraphs stockholders fail to adopt the merger
agreement at a duly held meeting and
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prior to termination, an acquisition proposal is publicly
announced or is otherwise communicated to Intergraphs
board of directors; and
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within 12 months after the termination, Intergraph enters
into a definitive agreement with respect to an acquisition
proposal or a transaction pursuant to an acquisition proposal is
completed.
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If Intergraph becomes obligated to pay a termination fee
pursuant to the last three scenarios listed above, any amounts
previously paid to Cobalt Holding as expense reimbursement will
be credited toward the termination fee amount payable by
Intergraph, and solely for purposes of determining whether a
termination fee is payable by us, an acquisition
proposal is:
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any direct or indirect acquisition or purchase by any person or
group (as defined in Section 13(d) of the
Exchange Act) of a 50% interest or more in the total outstanding
shares of equity or voting securities of Intergraph, a material
subsidiary or any other Intergraph subsidiary that is a
significant subsidiary within the meaning of
Rule 1-02
of
Regulation S-X
promulgated by the SEC;
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any tender offer or exchange offer that if consummated would
result in any person or group beneficially owning 50% or more of
the total outstanding shares of equity or voting securities of
Intergraph;
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any sale or disposition of consolidated assets or rights of
Intergraph or any Intergraph subsidiary to any person or group
for consideration equal to 50% or more of the aggregate fair
market value of all of the outstanding shares of Intergraph
common stock; or
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any consolidation, merger, business combination,
recapitalization, liquidation, dissolution or similar
transaction with respect to the Intergraph or any Intergraph
subsidiary that is a significant subsidiary within
the meaning of
Rule 1-02
of
Regulation S-X
promulgated by the SEC.
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Payable
by Cobalt Holding
Cobalt Holding has agreed to pay Intergraph a termination fee of
$53,020,000 if:
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Intergraph terminates the merger agreement because the
conditions to closing have been satisfied (other than those
conditions that by their terms are to be satisfied at closing,
and no state of facts or circumstances exists that would cause
the conditions to not be satisfied, provided that nothing has
occurred and no conditions exist that would cause those
conditions not to be satisfied if the closing
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were to occur on the last day of the marketing period) and
Cobalt Holding has failed to consummate the merger by the last
day of the marketing period by reason of a failure of Cobalt
Holding or Merger Sub to receive the proceeds of the debt
financing contemplated by the debt commitment letter.
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This termination fee payable to Intergraph is our exclusive
remedy unless, in general, Cobalt Holding is otherwise in
willful and material breach of the merger agreement, in which
case Intergraph may pursue a damages claim. The maximum
aggregate liability of Cobalt Holding and its affiliates
(including Hellman & Friedman LLC, Texas Pacific
Group and JMI Equity) arising from any breach of the merger
agreement is in any event capped at $99,420,000.
Employee
Benefits
The surviving corporation has agreed to pay to each employee who
continues as an employee of Intergraph during the benefits
continuation period (one year from the date the certificate of
merger is filed with the Secretary of State of the State of
Delaware) salary, wages, cash incentive opportunities,
severance, medical benefits and other welfare benefit plans
programs and arrangements (with the exception of any equity
compensation programs or defined benefit plans) which are at
least comparable in the aggregate to those provided by us prior
to the closing of the merger; provided, that with respect to
continuing employees who are subject to employment agreements
that have not been superseded by agreements with Cobalt Holding,
the surviving corporation shall expressly assume the employment
agreements, and fulfill all obligations under the employment
agreements. During the benefits continuation period, the
surviving corporation has agreed to pay, subject to the terms
and conditions as it shall establish and the terms of applicable
employment agreements, any continuing employee whose employment
is involuntarily terminated by Cobalt Holding, the surviving
corporation or any of their subsidiaries without cause an amount
of severance pay in cash equal to the amount of cash severance
pay that would have been payable to the continuing employee
under the terms of the severance policy applicable to the
continuing employee immediately prior to the date of the merger
agreement or, if applicable, the continuing employees
employment agreement.
The merger agreement also provides that the surviving
corporation shall:
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waive any applicable pre-existing condition exclusions and
waiting periods with respect to participation and coverage
requirements in any replacement or successor welfare benefit
plan of the surviving corporation that a continuing employee is
eligible to participate in following the effective time of the
merger to the extent the exclusions or waiting periods were
inapplicable to, or had been satisfied by, the continuing
employee immediately prior to the effective time of the merger
under the relevant plan in which the continuing employee
participated;
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provide each continuing employee with credit for any co-payments
and deductible paid prior to the effective time in satisfying
any applicable deductible or
out-of-pocket
requirements; and
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to the extent that any continuing employee is allowed to
participate in any employee benefit plan of Cobalt Holding, the
surviving corporation or any of their subsidiaries following the
effective time of the merger, cause the plan to recognize the
service of the continuing employee with Intergraph and our
subsidiaries prior to the effective time of the merger for
purposes of eligibility to participate, vesting and benefit
accrual (but not for benefit accrual under any defined benefit,
retiree welfare or similar plan) to the extent of the service;
provided, however, that the crediting of service shall not
operate to duplicate any benefit or the funding of any the
benefit.
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Under to the merger agreement, we are also required to suspend
our 2005 Employee Stock Purchase Plan, which we refer to as the
ESPP, as of the date of the merger agreement and ensure that
there are no outstanding rights of participants under the ESPP
following its termination as of the effective time of the
merger. With respect to persons participating in the ESPP on the
date of the merger agreement (and who have not withdrawn from or
otherwise ceased participation in the ESPP prior to that date),
we must apply accumulated contributions on that date to the
purchase of Intergraph common stock in accordance with the
ESPPs terms, and return any remaining balances in the
withholding accounts of the participants in the ESPP in
accordance with the terms of the ESPP.
56
Indemnification
and Insurance
The merger agreement provides that the certificate of
incorporation
and/or
by-laws of the surviving corporation shall contain provisions
with respect to indemnification not less favorable than those
set forth in our certificate of incorporation and by-laws as of
the date the merger agreement was signed, and the provisions may
not be amended, repealed or otherwise modified for a period of
six years from the effective time of the merger in any manner
that would adversely affect the rights under those provisions of
individuals who at, or prior to, the effective time of the
merger were directors or officers of Intergraph.
In addition, the merger agreement provides that Intergraph
shall, to the fullest extent permitted under applicable law or
under our certificate of incorporation, by-laws or any
applicable indemnification agreements, and regardless of whether
the merger becomes effective, indemnify, defend and hold
harmless, and, after the effective time of the merger, the
surviving corporation shall, and Cobalt Holding shall cause the
surviving corporation to, to the fullest extent permitted under
applicable law, indemnify, defend and hold harmless each present
and former director or officer of Intergraph or any of our
subsidiaries against any costs or expenses (including
attorneys fees), judgments, fines, losses, claims,
damages, liabilities and amounts paid in settlement in
connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or
investigative, arising out of or pertaining to (x) the fact
that the person is or was an officer, director, employee, agent
or other fiduciary of Intergraph or our subsidiary or
(y) the merger agreement or the transactions contemplated
by the merger agreement, whether in any case asserted or arising
before or after the effective time of the merger. The surviving
corporation has agreed to, and Cobalt Holding has agreed to
cause the surviving corporation to, promptly advance to the
party his or her legal expenses (including the cost of any
investigation and preparation incurred in connection therewith);
provided that any person to whom expenses are advanced provides
an undertaking, to the extent then required by the DGCL, to
repay the advances if it is finally judicially determined that
the person is not entitled to indemnification.
The merger agreement also provides that Cobalt Holding shall
cause the surviving corporation to honor and fulfill in all
respects the obligations of Intergraph pursuant to
indemnification agreements with our directors, officers,
employees or agents existing at or prior to the effective time
of the merger to the fullest extent permitted by applicable law
or under the relevant certificate of incorporation or by-laws.
The merger agreement further provides that the surviving
corporation shall obtain a tail insurance policy
from an insurance carrier with the same or better credit rating
as our current insurance carrier with respect to directors
and officers liability insurance that provides coverage
for the six years following the effective time of the merger at
least comparable in amount and scope to the coverage provided
under our directors and officers insurance policy in effect as
of the effective time of the merger for the individuals who are
or were directors and officers of Intergraph for claims arising
from facts or events occurring prior to the effective time of
the merger. If Intergraph is unable to obtain the
tail insurance policies, for an amount equal to or
less than a specified amount, Intergraph shall be entitled to
obtain as much comparable tail insurance as possible
for an amount equal to that specified amount.
Amendment,
Extension and Waiver
The parties may amend the merger agreement at any time;
provided, however, that after our stockholders adopt the merger
agreement, there shall be no amendment that by law requires
further approval by our stockholders without the approval having
been obtained. All amendments to the merger agreement must be in
writing signed by us, Cobalt Holding and Merger Sub.
At any time before the consummation of the merger, each of the
parties to the merger agreement may, by written instrument:
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extend the time for the performance of any of the obligations or
other acts of the other parties thereto; or
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waive compliance with any of the agreements or conditions
contained in the merger agreement.
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Our board of directors recommends that you vote
FOR the adoption of the merger agreement.
57
APPRAISAL
RIGHTS
Under the DGCL, you have the right to receive payment in cash
for the fair value of your Intergraph common stock as determined
by the Delaware Court of Chancery, together with a fair rate of
interest, if any, as determined by the Chancery Court, in lieu
of the consideration you would otherwise be entitled to pursuant
to the merger agreement. These rights are known as appraisal
rights. Intergraphs stockholders electing to exercise
appraisal rights must comply with the provisions of
Section 262 of the DGCL in order to perfect their rights.
Intergraph will require strict compliance with the statutory
procedures.
The following is intended as a brief summary of the material
provisions of the Delaware statutory procedures required to be
followed by a stockholder in order to perfect appraisal rights.
This summary, however, is not a complete statement of all
applicable requirements and is qualified in its entirety by
reference to Section 262 of the DGCL, the full text of
which appears in Annex C to this proxy statement. Failure
to precisely follow any of the statutory procedures set forth in
Section 262 of the DGCL may result in a termination or
waiver of your appraisal rights.
Section 262 requires that stockholders be notified that
appraisal rights will be available not less than 20 days
before the stockholders meeting to vote on the merger. A
copy of Section 262 must be included with the notice. This
proxy statement constitutes Intergraphs notice to our
stockholders of the availability of appraisal rights in
connection with the merger in compliance with the requirements
of Section 262. If you wish to consider exercising your
appraisal rights, you should carefully review the text of
Section 262 contained in Annex C since failure to
timely and properly comply with the requirements of
Section 262 will result in the loss of your appraisal
rights under the DGCL.
If you elect to demand appraisal of your shares, you must
satisfy each of the following conditions:
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You must deliver to Intergraph a written demand for appraisal of
your shares before the vote with respect to the merger is taken.
This written demand for appraisal must be in addition to and
separate from any proxy or vote abstaining from or voting
against the adoption of the merger agreement. Voting against or
failing to vote for the adoption of the merger agreement by
itself does not constitute a demand for appraisal within the
meaning of Section 262; and
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You must not vote in favor of the adoption of the merger
agreement. A vote in person, or a proxy submitted by mail, over
the Internet or by telephone, in favor of the adoption of the
merger agreement will constitute a waiver of your appraisal
rights in respect of the shares so voted and will nullify any
previously filed written demands for appraisal. If you fail to
comply with either of these conditions and the merger is
completed, you will be entitled to receive the cash payment for
your shares of Intergraph common stock as provided for in the
merger agreement, but you will have no appraisal rights with
respect to your shares of Intergraph common stock.
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All demands for appraisal should be addressed to Intergraph
Corporation, One Madison Industrial Park, Huntsville, Alabama,
Attention: Corporate Secretary, and must be delivered before the
vote on the merger agreement is taken at the special meeting,
and should be executed by, or on behalf of, the record holder of
the shares of Intergraph common stock. The demand must
reasonably inform Intergraph of the identity of the stockholder
and the intention of the stockholder to demand appraisal of his,
her or its shares.
To be effective, a demand for appraisal by a holder of
Intergraph common stock must be made by, or in the name of, the
registered stockholder, fully and correctly, as the
stockholders name appears on his or her stock
certificate(s). Beneficial owners who do not also hold the
shares of record may not directly make appraisal demands to
Intergraph. The beneficial holder must, in such cases, have the
registered owner, such as a broker or other nominee, submit the
required demand in respect of those shares. If shares are
owned of record in a fiduciary capacity, such as by a trustee,
guardian or custodian, execution of a demand for appraisal
should be made by or for the fiduciary; and if the shares are
owned of record by more than one person, as in a joint tenancy
or tenancy in common, the demand should be executed by or for
all joint owners. An authorized agent, including an authorized
agent for two or more joint owners, may execute the demand for
appraisal for a stockholder of record; however, the agent must
identify the record owner or owners and expressly disclose the
fact that, in executing the demand, he or she is acting as agent
for the record owner. A
58
record owner, such as a broker, who holds shares as a nominee
for others, may exercise his or her right of appraisal with
respect to the shares held for one or more beneficial owners,
while not exercising this right for other beneficial owners. In
that case, the written demand should state the number of shares
as to which appraisal is sought. Where no number of shares is
expressly mentioned, the demand will be presumed to cover all
shares held in the name of the record owner.
If you hold your shares of Intergraph common stock in a
brokerage account or in other nominee form and you wish to
exercise appraisal rights, you should consult with your broker
or the other nominee to determine the appropriate procedures for
the making of a demand for appraisal by the nominee.
Within 10 days after the effective time of the merger, the
surviving corporation must give written notice that the merger
has become effective to each Intergraph stockholder who has
properly filed a written demand for appraisal and who did not
vote in favor of the merger agreement. At any time within
60 days after the effective time, any stockholder who has
demanded an appraisal has the right to withdraw the demand and
to accept the cash payment specified by the merger agreement for
his or her shares of Intergraph common stock. Within
120 days after the effective date of the merger, any
stockholder who has complied with Section 262 shall, upon
written request to the surviving corporation, be entitled to
receive a written statement setting forth the aggregate number
of shares not voted in favor of the merger agreement and with
respect to which demands for appraisal rights have been received
and the aggregate number of holders of the shares. The written
statement will be mailed to the requesting stockholder within
10 days after the written request is received by the
surviving corporation or within 10 days after expiration of
the period for delivery of demands for appraisal, whichever is
later. Within 120 days after the effective time, either the
surviving corporation or any stockholder who has complied with
the requirements of Section 262 may file a petition in the
Delaware Court of Chancery demanding a determination of the fair
value of the shares held by all stockholders entitled to
appraisal. Upon the filing of the petition by a stockholder,
service of a copy of the petition shall be made upon the
surviving corporation. The surviving corporation has no
obligation to file a petition in the event there are dissenting
stockholders. Accordingly, the failure of a stockholder to file
a petition within the period specified could nullify the
stockholders previously written demand for appraisal.
If a petition for appraisal is duly filed by a stockholder and a
copy of the petition is delivered to the surviving corporation,
the surviving corporation will then be obligated, within
20 days after receiving service of a copy of the petition,
to provide the Chancery Court with a duly verified list
containing the names and addresses of all stockholders who have
demanded an appraisal of their shares and with whom agreements
as to the value of their shares have not been reached by the
surviving corporation. After notice to dissenting stockholders
who demanded appraisal of their shares, the Chancery Court is
empowered to conduct a hearing upon the petition, and to
determine those stockholders who have complied with
Section 262 and who have become entitled to the appraisal
rights provided thereby. The Chancery Court may require the
stockholders who have demanded payment for their shares to
submit their stock certificates to the Register in Chancery for
notation thereon of the pendency of the appraisal proceedings;
and if any stockholder fails to comply with that direction, the
Chancery Court may dismiss the proceedings as to that
stockholder.
After determination of the stockholders entitled to appraisal of
their shares of the Intergraph common stock, the Chancery Court
will appraise the shares, determining their fair value exclusive
of any element of value arising from the accomplishment or
expectation of the merger, together with a fair rate of
interest, if any. When the value is determined, the Chancery
Court will direct the payment of that value, with interest
thereon accrued during the pendency of the proceeding, if the
Chancery Court so determines, to the stockholders entitled to
receive the same, upon surrender by the holders of the
certificates representing those shares.
In determining fair value, the Chancery Court is required to
take into account all relevant factors. You should be aware
that the fair value of your shares as determined under
Section 262 could be more than, the same as, or less than
the value that you are entitled to receive under the terms of
the merger agreement.
59
Costs of the appraisal proceeding (which do not include
attorneys fees or the fees and expenses of experts) may be
imposed upon the surviving corporation and the stockholders
participating in the appraisal proceeding by the Chancery Court
as the Chancery Court deems equitable in the circumstances. Upon
the application of a stockholder, the Chancery Court may order
all or a portion of the expenses incurred by any stockholder in
connection with the appraisal proceeding, including, without
limitation, reasonable attorneys fees and the fees and
expenses of experts, to be charged pro rata against the value of
all shares entitled to appraisal. Any stockholder who had
demanded appraisal rights will not, after the effective time of
the merger, be entitled to vote shares subject to that demand
for any purpose or to receive payments of dividends or any other
distribution with respect to those shares, other than with
respect to payment as of a record date prior to the effective
time; however, if the stockholder delivers a written withdrawal
of his or her demand for appraisal and an acceptance of the
terms of the merger within 60 days after the effective time
of the merger, then the right of that stockholder to appraisal
will cease and that stockholder will be entitled to receive the
cash payment for shares of his, her or its Intergraph common
stock pursuant to the merger agreement. Any withdrawal of a
demand for appraisal made more than 60 days after the
effective time of the merger may only be made with the written
approval of the surviving corporation. In addition, no appraisal
proceeding may be dismissed as to any stockholder without the
approval of the Chancery Court and such approval may be
conditioned upon such terms as the Chancery Court deems just.
In view of the complexity of Section 262,
Intergraphs stockholders who may wish to pursue appraisal
rights should consult their legal advisors.
MARKET
PRICE OF INTERGRAPHS STOCK
Intergraph common stock is listed for trading on the NASDAQ
under the symbol INGR. The following table sets
forth, for the fiscal quarters indicated, the high and low sales
prices per share as reported on the NASDAQ composite tape for
Intergraph common stock.
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High
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Low
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FISCAL YEAR ENDED
DECEMBER 31, 2004
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First Quarter
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25.66
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19.41
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Second Quarter
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25.98
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23.55
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Third Quarter
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27.40
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25.22
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Fourth Quarter
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28.12
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24.50
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FISCAL YEAR ENDED
DECEMBER 31, 2005
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First Quarter
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30.70
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26.81
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Second Quarter
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34.80
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28.42
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Third Quarter
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45.76
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34.20
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Fourth Quarter
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51.77
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42.54
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FISCAL YEAR ENDED
DECEMBER 31, 2006
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First Quarter
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51.20
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35.70
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Second Quarter
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45.77
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30.19
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Third Quarter (through
September 12, 2006)
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44.17
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30.04
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The closing sale price of Intergraph common stock on the NASDAQ
on August 30, 2006, the last trading day prior to the
announcement of the merger, was $37.30 per share. The
$44.00 per share to be paid for each share of Intergraph
common stock pursuant to the merger represents a premium of 22%
to the average closing price for the 20 trading days ended
August 30, 2006. On 2006, the most recent practicable date
before this proxy statement was printed, the closing price for
the Intergraph common stock on the NASDAQ was
$ per share. You are
encouraged to obtain current market quotations for Intergraph
common stock in connection with voting your shares.
60
Intergraph has never declared or paid a cash dividend on the
Intergraph common stock. It is the present policy of our board
of directors not to declare or pay cash dividends on the
Intergraph common stock, and we are currently restricted by the
merger agreement from paying cash dividends.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of
September 12, 2006, concerning the common stock of
Intergraph beneficially owned by (1) each person who is
known to us to own beneficially more than 5% of our outstanding
common stock, (2) each of our directors, (3) our chief
executive officer and our four most highly compensated executive
officers other than the chief executive officer who were serving
as executive officers at the end of the last completed fiscal
year, and (4) all officers and directors as a group.
Number
Of Shares And Nature Of Beneficial Ownership
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Name & Address
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Common Shares
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Percent of
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of Beneficial Owner**
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Owned(1)
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Class(2)
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Directors
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Sidney L. McDonald
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106,100
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*
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R. Halsey Wise
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312,802
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*
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Michael D. Bills
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10,438
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*
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Richard W. Cardin
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10,100
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*
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Linda L. Green
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17,751
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(3)
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*
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Lawrence R. Greenwood
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15,849
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*
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Thomas J. Lee
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20,938
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*
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Kevin M. Twomey
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10,600
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(4)
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*
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Other Named Executive Officers
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William E. Salter(5)
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135,217
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*
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R. Reid French, Jr.
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132,100
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*
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Larry J. Laster
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121,224
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(6)
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*
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Gerhard Sallinger
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57,566
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*
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5% Stockholders
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Goldman Sachs Asset Management,
L.P.
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2,933,587
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(7)
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10.0
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%
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All directors and executive
officers as a group
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(16 persons), including the
foregoing directors and Named Executive Officers
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1,131,149
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(8)
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3.8
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%
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Indicates beneficial ownership of less than 1% |
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Except as otherwise indicated below, the address of our
directors, nominees and executive officers is
c/o Intergraph
Corporation, P.O. Box 240000, Huntsville, AL 35824. |
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Unless otherwise noted, the indicated owner has sole voting
power and sole investment power. Includes shares which may be
acquired pursuant to stock options exercisable within
60 days of September 12, 2006 as follows:
Mr. McDonald, 10,500; Mr. Wise, 112,500; Mr. Lee,
10,500; Mr. Greenwood, 7,500; Mrs. Green, 6,000;
Mr. Cardin, 4,500; Mr. Bills, 3,000; Mr. Salter,
13,500; Mr. Laster, 70,000; Mr. Sallinger, 16,500; and
Mr. French, 56,250. |
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(2) |
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Percentages reflected in the table are based on
29,430,789 shares of Intergraph common stock outstanding on
September 12, 2006. Shares issuable upon exercise of stock
options that are exercisable within 60 days of
September 12, 2006, are considered outstanding for the
purposes of calculating the percentage of total outstanding
common stock owned by directors and executive officers, and by
directors and executive officers together as a group, but the
shares are not considered outstanding for the purposes of
calculating the percentage of total outstanding Intergraph
common stock owned by any other person or group. |
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(3) |
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This figure excludes 2,051 shares owned by
Mrs. Greens husband as to which Mrs. Green
expressly disclaims beneficial ownership. |
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(4) |
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These shares are held by the Kevin Twomey Revocable Trust of
which Mr. Twomey and his wife serve as trustees. |
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(5) |
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Mr. Salter retired as an executive officer effective
January, 2006 and currently serves as a consultant to Intergraph. |
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(6) |
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This figure contains 14,706 shares owned jointly by
Mr. Laster and his wife as to which voting and investment
powers are shared. |
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(7) |
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This information is as of December 31, 2005 and is based
solely on a Schedule 13G filed by Goldman Sachs Asset
Management, L.P. (GSAM), on March 9, 2006. GSAM
reports sole voting and dispositive power as to the shares
listed by GSAM. GSAM disclaims beneficial ownership of any
securities managed on GSAMs behalf by third parties. The
address of the principal business office of GSAM is 32 Old Slip,
New York, New York, 10005. |
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(8) |
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Includes 374,500 shares which may be acquired pursuant to
stock options exercisable within 60 days of
September 12, 2006. |
INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
The consolidated financial statements of Intergraph and our
managements assessment of the effectiveness of internal
control over financial reporting included in the Annual Report
on
Form 10-K
for the year ended December 31, 2005, incorporated by
reference in this proxy statement, have been audited by
Ernst & Young LLP, an independent registered public
accounting firm, as stated in their reports appearing in the
Annual Report on
Form 10-K.
ADJOURNMENT
OF THE SPECIAL MEETING
(PROPOSAL NO. 2)
Intergraph may ask our stockholders to vote on a proposal to
adjourn the special meeting, if necessary, to solicit additional
proxies if there are insufficient votes at the time of the
meeting to adopt the merger agreement. We currently do not
intend to propose adjournment at our special meeting if there
are sufficient votes to adopt the merger agreement. If the
proposal to adjourn our special meeting for the purpose of
soliciting additional proxies is submitted to our stockholders
for approval, the approval requires the affirmative vote of the
holders of a majority of the shares of Intergraph common stock
present or represented by proxy and entitled to vote on the
matter.
Our board of directors recommends that you vote
FOR the adjournment of the special meeting, if
necessary, to solicit additional proxies.
OTHER
MATTERS
Other
Matters for Action at the Special Meeting
As of the date of this proxy statement, our board of directors
knows of no matters that will be presented for consideration at
the special meeting other than as described in this proxy
statement.
Future
Stockholder Proposals
If the merger is consummated, we will not have public
stockholders and there will be no public participation in any
future meeting of stockholders. However, if the merger is not
completed, we expect to hold a 2007 annual meeting of
stockholders. Stockholders proposals will be eligible for
consideration for inclusion in the proxy statement for the 2007
annual meeting pursuant to
Rule 14a-8
under the Exchange Act if the proposals are received by
Intergraph before the close of business on December 28,
2006. Notices of
62
stockholders proposals submitted outside the processes of
Rule 14a-8
will generally be considered timely (but not considered for
inclusion in our proxy statement), pursuant to the advance
notice requirement set forth in our by-laws, if the notices are
filed with our Secretary not less than 60 days nor more
than 90 days prior to the first anniversary of the 2006
Annual Meeting of stockholders in the manner specified in the
by-laws. For proposals that are not timely filed, the named
proxies will retain discretion to vote proxies that Intergraph
receives and will exercise authority in accordance with the
recommendation of the board of directors. For proposals that are
timely filed, the named proxies will retain discretion to vote
proxies that Intergraph receives provided (1) Intergraph
includes in its proxy statement advice on the nature of the
proposal and how the named proxies intend to exercise their
voting discretion and (2) the proponent does not issue a
proxy statement.
Householding
of Special Meeting Materials
Some banks, brokers, and other nominee record holders may be
participating in the practice of householding proxy
statements and annual reports. This means that only one copy of
this notice and proxy statement may have been sent to multiple
stockholders in your household. If you would prefer to receive
separate copies of a proxy statement or annual report either now
or in the future, please contact your bank, broker or other
nominee. Upon written or oral request to the Office of Investor
Relations at Intergraph Corporation, One Madison Industrial
Park, Huntsville, Alabama 35894,
(256) 730-2000,
we will provide a separate copy of the annual reports and proxy
statements. In addition, security holders sharing an address can
request delivery of a single copy of annual reports or proxy
statements if you are receiving multiple copies upon written or
oral request to the Office of Investor Relations at the address
and telephone number stated above.
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WHERE YOU
CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements
and other information with the SEC. You may read and copy any
document we file at the SECs public reference room located
at 100 F Street, N.E., Room 1580, Washington, D.C.
20549. Please call the SEC at
1-800-SEC-0330
for further information on the public reference room. Our SEC
filings are also available to the public at the SECs
website at
http://www.sec.gov.
You also may obtain free copies of the documents Intergraph
files with the SEC by going to the Investors
Relations section of our website at www.intergraph.com.
Our website address is provided as an inactive textual reference
only. The information provided on our website is not part of
this proxy statement, and therefore is not incorporated by
reference.
Statements contained in this proxy statement, or in any document
incorporated in this proxy statement by reference regarding the
contents of any contract or other document, are not necessarily
complete and each statement is qualified in its entirety by
reference to that contract or other document filed as an exhibit
with the SEC. The SEC allows us to incorporate by
reference into this proxy statement documents we file with
the SEC. This means that we can disclose important information
to you by referring you to those documents. The information
incorporated by reference is considered to be a part of this
proxy statement, and later information that we file with the SEC
will update and supersede that information. We incorporate by
reference the documents listed below and any documents filed by
us pursuant to Sections 13(a), 13(c), 14 or 15(d) of the
Exchange Act after the date of this proxy statement and before
the date of the special meeting:
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Intergraph Filings:
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Periods
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Annual Report on
Form 10-K
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Year ended December 31, 2005
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Proxy Statement on Form 14A
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April 25, 2006
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Quarterly Reports on
Form 10-Q
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Quarters ended March 31, 2006
and June 30, 2006
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Current Reports on
Form 8-K
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Filed January 26, 2006,
January 31, 2006, February 3, 2006, February 15,
2006, March 22, 2006, April 6, 2006, April 27,
2006, May 22, 2006, July 12, 2006, July 27, 2006,
and August 31, 2006
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Notwithstanding the foregoing, information furnished under
Items 2.02 and 7.01 of any Current Report on
Form 8-K,
including the related exhibits, is not incorporated by reference
in this proxy statement.
You may request a copy of the documents incorporated by
reference into this proxy statement, excluding certain exhibits,
by writing to or telephoning us. Requests for documents should
be directed to the Office of Investor Relations, Intergraph
Corporation, One Madison Industrial Park, Huntsville, Alabama
35894, telephone:
(256) 730-2720.
If you would like to request documents from us, please do so at
least five business days before the date of the special meeting
in order to receive timely delivery of those documents prior to
the special meeting.
THIS PROXY STATEMENT DOES NOT CONSTITUTE THE SOLICITATION OF A
PROXY IN ANY JURISDICTION TO OR FROM ANY PERSON TO WHOM OR FROM
WHOM IT IS UNLAWFUL TO MAKE A PROXY SOLICITATION IN THAT
JURISDICTION. YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED
OR INCORPORATED BY REFERENCE IN THIS PROXY STATEMENT TO VOTE
YOUR SHARES AT THE SPECIAL MEETING. WE HAVE NOT AUTHORIZED
ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT FROM
WHAT IS CONTAINED IN THIS PROXY STATEMENT. THIS PROXY STATEMENT
IS
DATED ,
2006. YOU SHOULD NOT ASSUME THAT THE INFORMATION CONTAINED IN
THIS PROXY STATEMENT IS ACCURATE AS OF ANY DATE OTHER THAN THAT
DATE, AND THE MAILING OF THIS PROXY STATEMENT TO STOCKHOLDERS
DOES NOT CREATE ANY IMPLICATION TO THE CONTRARY.
64
ANNEX A
AGREEMENT
AND PLAN OF MERGER
by and among
COBALT HOLDING COMPANY,
COBALT MERGER CORP.,
and
INTERGRAPH CORPORATION
Dated as of August 31, 2006
TABLE OF
CONTENTS
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Section 1.
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The Merger
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A-1
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Section 1.1
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The Merger; Effects of the Merger
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A-1
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Section 1.2
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Closing
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A-2
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Section 1.3
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Effective Time
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A-2
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Section 1.4
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Directors and Officers of the
Surviving Corporation
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A-2
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Section 2.
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Conversion of Securities
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A-2
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Section 2.1
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Conversion of Capital Stock
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A-2
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Section 2.2
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Dissenting Shares
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A-3
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Section 2.3
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Company Options, Restricted
Shares, Restricted Share Units and ESPP
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A-3
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Section 2.4
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Exchange of Certificates
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A-4
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Section 2.5
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Withholding
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A-5
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Section 2.6
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Transfer Taxes
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A-5
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Section 3.
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Representations and Warranties of
Company
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A-6
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Section 3.1
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Organization and Qualification
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A-6
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Section 3.2
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Authority
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A-7
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Section 3.3
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Capitalization
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A-7
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Section 3.4
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Company Subsidiaries
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A-8
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Section 3.5
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SEC Filings; Financial Statements;
Undisclosed Liabilities
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A-9
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Section 3.6
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Absence of Certain Changes or
Events
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A-10
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Section 3.7
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Compliance with Laws
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A-10
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Section 3.8
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Claims, Actions and Proceedings
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A-11
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Section 3.9
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Contracts and Other Agreements
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A-11
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Section 3.10
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Intellectual Property
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A-13
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Section 3.11
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Real Property; Title to Assets
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A-15
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Section 3.12
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Insurance
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A-16
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Section 3.13
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Tax Matters
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A-16
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Section 3.14
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Employee Benefit Plans
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A-18
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Section 3.15
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Labor and Employee Matters
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A-19
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Section 3.16
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Environmental Matters
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A-20
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Section 3.17
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No Breach
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A-21
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Section 3.18
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Board Approvals; Anti-Takeover;
Vote Required
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A-21
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Section 3.19
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Financial Advisor
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A-22
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Section 3.20
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Information in the Proxy Statement
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A-22
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Section 3.21
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Affiliate Transactions
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A-22
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Section 3.22
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No Other Representations or
Warranties; Investigation by Parent
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A-22
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Section 4.
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Representations and Warranties of
Parent
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A-23
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Section 4.1
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Organization
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A-23
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Section 4.2
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Authority to Execute and Perform
Agreement
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A-23
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Section 4.3
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No Conflict; Required Filings and
Consents
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A-23
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Section 4.4
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Information in the Proxy Statement
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A-24
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Section 4.5
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Litigation
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A-24
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Section 4.6
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Financing
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A-24
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Section 4.7
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Guarantee
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A-24
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Section 4.8
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Parent and Merger Sub
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A-25
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Section 4.9
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Brokers
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A-25
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Section 4.10
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No Other Representations or
Warranties
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A-25
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i
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Section 5.
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Conduct of Business Pending the
Merger; No Solicitation; Employee Matters
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A-25
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Section 5.1
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Conduct of Business
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A-25
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Section 5.2
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No Solicitation
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A-29
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Section 5.3
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Employee Matters
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A-31
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Section 6.
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Additional Agreements
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A-32
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Section 6.1
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Proxy Statement
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A-32
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Section 6.2
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Company Stockholders Meeting
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A-32
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Section 6.3
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Access to Information,
Confidentiality
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A-33
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Section 6.4
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Regulatory Filings; Reasonable
Efforts
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A-33
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Section 6.5
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Directors and Officers
Indemnification and Insurance
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A-35
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Section 6.6
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Director Resignations
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A-36
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Section 6.7
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Conduct of Business of Parent and
Merger Sub Pending the Merger
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A-36
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Section 6.8
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Financing
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A-36
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Section 6.9
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Public Disclosure
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A-38
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Section 6.10
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Notification of Certain Matters
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A-38
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Section 7.
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Conditions Precedent to the
Obligation of the Parties to Consummate the Merger
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A-39
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Section 7.1
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Conditions to Obligations of Each
Party to Effect the Merger
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A-39
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Section 7.2
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Additional Conditions to the
Obligations of Parent and Merger Sub
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A-39
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Section 7.3
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Additional Conditions to the
Obligations of the Company
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A-39
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Section 8.
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Termination, Amendment and Waiver
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A-40
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Section 8.1
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Termination
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A-40
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Section 8.2
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Effect of Termination
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A-41
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Section 8.3
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Fees and Expenses
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A-42
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Section 8.4
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Amendment
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A-43
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Section 8.5
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Waiver
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A-43
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Section 9.
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Miscellaneous
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A-43
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Section 9.1
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Entire Agreement
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A-43
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Section 9.2
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No Survival
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A-43
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Section 9.3
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Parent Guarantee
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A-43
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Section 9.4
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Notices
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A-44
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Section 9.5
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Binding Effect; No Assignment; No
Third-Party Beneficiaries
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A-44
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Section 9.6
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Severability
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A-44
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Section 9.7
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Governing Law
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A-45
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Section 9.8
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Submission to Jurisdiction; Waiver
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A-45
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Section 9.9
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Specific Enforcement; Remedies
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A-45
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Section 9.10
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Interpretation
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A-45
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Section 9.11
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No Waiver of Rights
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A-46
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Section 9.12
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Counterparts; Facsimile Signatures
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A-46
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Index of Defined Terms
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Annex A
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Exhibits:
Exhibit A Certificate of Incorporation of
Surviving Corporation
Exhibit B By-laws of Surviving Corporation
ii
AGREEMENT
AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the
Agreement), dated as of August 31, 2006, is by
and among Cobalt Holding Company (Parent), a
newly-formed Delaware corporation, Cobalt Merger Corp.
(Merger Sub), a newly-formed Delaware corporation
and a direct wholly-owned subsidiary of Parent, and Intergraph
Corporation (the Company), a Delaware corporation.
WHEREAS, the Board of Directors of the Company (the
Company Board of Directors) has (i) determined
that it is in the best interests of the Company and the
stockholders of the Company, and has approved and declared it
advisable for the Company, to enter into this Agreement with
Parent and Merger Sub providing for the merger of Merger Sub
with and into the Company in accordance with the General
Corporation Law of the State of Delaware (the DGCL),
upon the terms and subject to the conditions set forth herein,
and (ii) resolved to recommend adoption of this Agreement
by the stockholders of the Company;
WHEREAS, the Boards of Directors of Parent and Merger Sub
have each approved and declared it advisable to enter into this
Agreement providing for the Merger in accordance with the DGCL,
upon the terms and conditions set forth herein;
WHEREAS, as a condition and material inducement to the
Companys willingness to enter into this Agreement, the
Sponsors and the Lenders have delivered to the Company the
Commitment Letters and the Sponsors have delivered to the
Company the Guarantees; and
WHEREAS, the Company, Parent and Merger Sub desire to
make certain representations, warranties, covenants and
agreements in connection with the Merger and the other
transactions contemplated hereby and also to prescribe various
conditions to the Merger.
NOW, THEREFORE, in consideration of the foregoing and the
respective covenants, agreements, representations and warranties
herein contained, the parties hereto, intending to be legally
bound, hereby agree as follows:
Section 1. The
Merger.
Section 1.1 The
Merger; Effects of the Merger.
(a) At the Effective Time, upon the terms and subject to
the conditions of this Agreement, and in accordance with the
DGCL, the Company and Merger Sub shall consummate a merger (the
Merger) pursuant to which Merger Sub shall be merged
with and into the Company, and the Company shall continue as the
surviving corporation of the Merger (sometimes hereinafter
referred to as, the Surviving Corporation).
(b) The Merger shall have the effects set forth in
Section 259 of the DGCL. Without limiting the generality of
the foregoing, and subject thereto, at the Effective Time:
(i) Merger Sub shall be merged with and into the Company,
and the separate corporate existence of Merger Sub shall
thereupon cease; (ii) the Surviving Corporation shall
continue to be governed by the laws of the State of Delaware;
(iii) the corporate existence of the Surviving Corporation
with all its property, rights, privileges, immunities, powers
and franchises shall continue unaffected by the Merger; and
(iv) all the property, rights, privileges, immunities,
powers and franchises of Company and Merger Sub shall be vested
in the Surviving Corporation, and all debts, liabilities and
duties of Company and Merger Sub shall become the debts,
liabilities and duties of the Surviving Corporation.
(c) The certificate of incorporation of the Surviving
Corporation shall be amended and restated at the Effective Time,
substantially in the form attached hereto as
Exhibit A, and, as so amended, such certificate of
incorporation shall be the certificate of incorporation of the
Surviving Corporation until thereafter changed or amended as
provided therein or by the DGCL.
(d) The by-laws of Merger Sub, as in effect immediately
prior to the Effective Time and substantially in the form
attached hereto as Exhibit B, shall be the by-laws
of the Surviving Corporation, except as to the name of the
Surviving Corporation, until thereafter amended as provided by
the DGCL, the certificate of incorporation of the Surviving
Corporation and such by-laws.
A-1
Section 1.2 Closing. The
closing of the Merger (the Closing) will take place
at 11:00 a.m. (New York time) on a date to be
specified by the parties, such date to be no later than the
second business day after satisfaction or waiver of all of the
conditions set forth in Section 7 capable of satisfaction
prior to the Closing (it being understood that the occurrence of
the Closing shall remain subject to the satisfaction or waiver
of the conditions that by their terms are to be satisfied at
Closing), at the offices of Bass, Berry & Sims PLC, 315
Deaderick Street, Suite 2700, Nashville, Tennessee 37238,
unless another time, date
and/or place
is agreed to in writing by the parties hereto; provided,
however, that Parent and Merger Sub shall not be required to
close prior to the earlier of (i) a date during the
Marketing Period specified by Merger Sub on no less than three
business days notice to the Company and (ii) the end
of the Marketing Period. The date on which the Closing occurs is
referred to in this Agreement as the Closing Date.
Section 1.3 Effective
Time. At the Closing, Parent, Merger Sub and
the Company shall cause the Merger to be consummated by
executing and filing a certificate of merger (the
Certificate of Merger) with the Secretary of State
of the State of Delaware as provided in the DGCL. The Merger
shall become effective at the time and date on which the
Certificate of Merger has been duly filed with the Secretary of
State of the State of Delaware or such later time and date as is
specified in the Certificate of Merger, such time referred to
herein as the Effective Time. Parent, Merger Sub and
the Company shall make all other filings or recordings required
under the DGCL in connection with the Merger.
Section 1.4 Directors
and Officers of the Surviving
Corporation. The directors of Merger Sub
immediately prior to the Effective Time shall, from and after
the Effective Time, be the directors of the Surviving
Corporation, and the officers of the Company immediately prior
to the Effective Time shall, from and after the Effective Time,
be the officers of the Surviving Corporation, in each case until
their respective successors shall have been duly elected,
designated or qualified, or until their earlier death,
resignation or removal in accordance with the Surviving
Corporations certificate of incorporation and by-laws.
Section 2. Conversion
of Securities.
Section 2.1 Conversion
of Capital Stock. At the Effective Time, by
virtue of the Merger and without any action on the part of the
Company, Merger Sub or the holders of any shares of outstanding
common stock of the Company, par value $0.10 per share
(including the associated Company Rights, the Company
Common Stock), or the other securities described below:
(a) Conversion of Shares of Company Common
Stock. Each issued and outstanding share of
Company Common Stock (other than shares of Company Common Stock
to be cancelled in accordance with Section 2.1(c) and other
than Dissenting Shares), shall be cancelled and converted into
the right to receive $44.00 in cash, without interest (the
Per Share Price), payable to the holder thereof (the
Merger Consideration), upon the surrender in
accordance with Section 2.4 of the certificate that
formerly evidenced such shares, or as otherwise specified for
Book-Entry Shares. From and after the Effective Time, all such
shares of Company Common Stock shall no longer be outstanding
and shall automatically be cancelled and retired and shall cease
to exist, and each holder of Book Entry Shares or a certificate
representing any such shares of Company Common Stock shall cease
to have any rights with respect thereto, except the right,
subject to Section 2.4 and Section 2.5, to receive the
applicable Merger Consideration therefor.
(b) Merger Sub Common Stock. Each
issued and outstanding share of common stock of Merger Sub
outstanding immediately prior to the Effective Time shall be
converted into and become one validly issued, fully paid and
nonassessable share of common stock of the Surviving Corporation.
(c) Cancellation of Treasury Stock; Parent-Owned
Stock. All shares of Company Common Stock
that are owned by the Company as treasury stock and any shares
of Company Common Stock owned by Parent or Merger Sub
immediately prior to the Effective Time shall automatically be
cancelled and retired and shall cease to exist, and no
consideration shall be delivered in exchange therefor.
(d) Adjustments. The Per Share
Price shall be appropriately adjusted for any stock dividend,
stock split or like transaction affecting the Company Common
Stock after the date hereof and prior to the Effective Time.
A-2
Section 2.2 Dissenting
Shares.
(a) Notwithstanding anything in this Agreement to the
contrary, shares of Company Common Stock that are issued and
outstanding immediately prior to the Effective Time and which
are held by holders of shares of Company Common Stock who are
entitled to demand and who have properly demanded and perfected
their rights to be paid the fair value of such shares in
accordance with Section 262 of the DGCL (the
Dissenting Shares) shall not be converted into the
right to receive the Merger Consideration, and the holders
thereof shall be entitled to only such rights as are granted by
Section 262 of the DGCL; provided, however, that if
any such holder shall fail to perfect or shall effectively
waive, withdraw or lose such holders rights under
Section 262 of the DGCL, such holders shares of
Company Common Stock shall thereupon be deemed to have been
converted, at the Effective Time, into the right to receive,
subject to Section 2.4 and Section 2.5, the Merger
Consideration as set forth in Section 2.1(a) of this
Agreement.
(b) The Company shall give Parent (i) prompt notice of
any appraisal demands received by the Company, withdrawals
thereof and any other instruments served pursuant to
Section 262 of the DGCL and received by the Company and
(ii) the opportunity to participate in all negotiations and
proceedings with respect to the exercise of appraisal rights
under Section 262 of the DGCL. The Company shall not,
except with the prior written consent of Parent (not to be
unreasonably withheld) or as otherwise required by applicable
Law, make any payment with respect or settle or offer to settle
any such demands.
Section 2.3 Company
Options, Restricted Shares, Restricted Share Units and
ESPP. Except to the extent otherwise agreed
in writing by the Company and Parent prior to the Effective Time:
(a) The Company shall ensure that, (i) immediately
prior to the Effective Time, each outstanding option to acquire
shares of Company Common Stock (Company Options)
granted under the Companys Amended and Restated 1997 Stock
Option Plan, Second Amended and Restated 2002 Stock Option Plan,
Amended and Restated Non-Employee Director Stock Option Plan,
and 2004 Equity Incentive Plan (collectively, the Stock
Option Plans), shall become fully vested and exercisable
(without regard to whether the Company Options are then vested
or exercisable), (ii) at the Effective Time, all Company
Options not theretofore exercised shall be cancelled and, in
exchange therefor, converted into the right to receive a cash
payment from the Surviving Corporation in an amount equal to the
product of (x) the excess, if any, of the Per Share Price
over the exercise price of each such Company Option and
(y) the number of shares of Company Common Stock subject to
such Company Option to the extent not previously exercised (such
payment, if any, to be net of applicable Taxes withheld pursuant
to Section 2.5), and (iii) after the Effective Time,
any such cancelled Company Option shall no longer be exercisable
by the former holder thereof, but shall only entitle such holder
to the payment described in subsection (ii) without
interest. In the event the exercise price per share of Company
Common Stock subject to a Company Option is equal to or greater
than the Per Share Price, such Company Option shall be cancelled
without consideration and have no further force or effect.
(b) The Company shall ensure that, immediately prior to the
Effective Time, (i) each share of Company Common Stock
granted subject to vesting or other lapse restrictions pursuant
to any Stock Option Plan (collectively, Restricted
Shares) which is outstanding immediately prior to the
Effective Time shall vest and become free of such restrictions
(without regard to whether the Restricted Shares are then vested
or the applicable restrictions have then lapsed) and
(ii) the holder thereof shall receive in exchange for each
Restricted Share a cash payment from the Company in an amount
equal to the Per Share Price with respect to each such
Restricted Share, less any required withholding Taxes pursuant
to Section 2.5.
(c) The Company shall ensure that, (i) immediately
prior to the Effective Time, each restricted share unit under
any Stock Option Plan (RSUs) which is outstanding as
of the Effective Time, shall vest and become free of any lapse
restrictions (without regard to whether the RSUs are then vested
or the applicable restrictions have lapsed) and, as of the
Effective Time be canceled, and (ii) at the Effective Time,
and in lieu of settling such RSUs in shares of Company Common
Stock, the holder thereof shall be entitled to receive a cash
payment from the Surviving Corporation, in consideration for
such cancellation, in an amount equal to the sum of (1) the
product of (A) the number of shares previously subject to
such RSU and (B) the Per Share Price, and (2) the
value of any deemed dividend equivalents accrued but unpaid with
respect to such RSUs,
A-3
less any required withholding Taxes pursuant to
Section 2.5. The aggregate amount specified in
Sections 2.3(a) and (c) with respect to the Company
Options and RSUs is referred to herein as the Cash Out
Amount.
(d) The Company shall ensure that, (i) the
Companys 2005 Employee Stock Purchase Plan (the
ESPP and together with the Stock Option Plans, the
Equity Plans) shall be suspended and no new offering
periods will be commenced subsequent to the date hereof,
(ii) with respect to persons participating in the ESPP on
the date hereof (and who have not withdrawn from or otherwise
ceased participation in the Plan prior to such date),
accumulated contributions will be applied on such date to the
purchase of Company Common Stock in accordance with the
ESPPs terms, (iii) any remaining balances in the
withholding accounts of the participants in the ESPP are
returned in accordance with the terms of the ESPP, and
(iv) there are no outstanding rights of participants under
the ESPP following the termination thereof at the Effective Time
as provided in Section 2.3(e).
(e) The Company shall ensure that, as of the Effective
Time, the Equity Plans shall terminate and that no person shall
have any right under the Equity Plans, except as set forth
herein (including, to the extent necessary, obtaining any
necessary consents of the holders of Company Options, Restricted
Shares and RSUs to effect this Section 2.3).
(f) At or promptly after the Effective Time, the Surviving
Corporation shall, and Parent shall cause the Surviving
Corporation to, deliver the applicable Cash Out Amount to the
holders of Company Options and RSUs, without interest and less
any applicable withholding Taxes, which payments may, at
Parents request, be conditioned upon the execution and
delivery of a letter of transmittal (in customary form). If for
any reason the Surviving Corporation does not have adequate
freely available and unrestricted cash to pay the aggregate Cash
Out Amount, (i) Parent shall promptly deposit additional
cash with the Surviving Corporation sufficient to make all
required payments to the holders of Company Options and RSUs in
respect of the Cash Out Amount and (ii) Parent and the
Surviving Corporation shall in any event be liable for payment
thereof.
(g) Notwithstanding any other provision in this
Section 2.3 to the contrary, the Company shall reasonably
cooperate (at Parents expense) with Parent to allow,
immediately prior to the Effective Time, certain Restricted
Shares to be contributed to Parent in exchange for shares of
common stock of Parent, with the written agreement of Parent and
the holders of such Restricted Shares.
Section 2.4 Exchange
of Certificates.
(a) Paying Agent. Prior to the
Effective Time, the Parent shall designate a bank or trust
company reasonably acceptable to Company to act as paying agent
for the holders of shares of Company Common Stock in connection
with the Merger (the Paying Agent) and to receive
the funds to which holders of shares of Company Common Stock
will become entitled pursuant to Section 2.1. At or prior
to the Effective Time, Parent shall provide, or shall cause to
be provided, to the Paying Agent cash necessary to pay for the
shares of Company Common Stock converted into the right to
receive the Merger Consideration (such cash being hereinafter
referred to as the Exchange Fund). If for any reason
the Exchange Fund is inadequate to pay the amounts to which
holders of shares of Company Common Stock shall be entitled
under Section 2.1, Parent shall, or shall cause the
Surviving Corporation to, promptly deposit additional cash with
the Paying Agent sufficient to make all payments of Merger
Consideration and Parent and the Surviving Corporation shall in
any event be liable for payment thereof.
(b) Exchange Procedures. As soon
as reasonably practicable after the Effective Time, the
Surviving Corporation shall cause to be mailed to each
(i) record holder, as of the Effective Time, of an
outstanding certificate or certificates which immediately prior
to the Effective Time represented shares of the Company Common
Stock (the Certificates) or (ii) holder, as of
the Effective Time, of shares of Company Common Stock
represented by book-entry (Book-Entry Shares), a
form of letter of transmittal (which shall be in customary form
and shall specify that delivery shall be effected, and risk of
loss and title to the Certificates held by such person shall
pass, only, subject to Section 2.4(c), upon delivery of the
Certificates to the Paying Agent) and instructions for use in
effecting the surrender of the Certificates or Book-Entry Shares
for payment of the Merger Consideration therefor. Upon surrender
to the Paying Agent of a Certificate or Book Entry Shares for
cancellation, together with such letter of transmittal, duly
completed and validly executed in
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accordance with the instructions thereto, and such other
documents as may be reasonably required pursuant to such
instructions, the holder of such Certificate or Book-Entry
Shares shall be entitled to receive in exchange therefor the
Merger Consideration for each share formerly represented by such
Certificate or Book-Entry Shares and such Certificate or
applicable book-entry shall then be canceled. No interest shall
be paid or accrued for the benefit of holders of the
Certificates or Book-Entry Shares on the Merger Consideration
payable in respect of the Certificates or Book-Entry Shares.
Until surrendered for cancellation as contemplated by this
Section 2.4(b), each Certificate and each Book-Entry Share
shall be deemed at any time after the Effective Time to
represent only the right to receive upon such surrender the
applicable Merger Consideration as contemplated by this
Section 2.
(c) Lost Certificates. If any
Certificate has been lost, stolen, defaced or destroyed, upon
the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen, defaced or destroyed and,
if required by the Surviving Corporation, the posting by such
person of a bond in such amount as the Surviving Corporation may
reasonably direct as indemnity against any claim that may be
made against it or the Parent with respect to such Certificate,
the Paying Agent shall issue in exchange for such lost, stolen
or destroyed Certificate the applicable Merger Consideration
with respect thereto without interest.
(d) Transfer Books; No Further Ownership Rights in
Shares of Company Common Stock. At the
Effective Time, the stock transfer books of the Company will be
closed and thereafter there will be no further registration of
transfers of shares of Company Common Stock on the records of
the Company. From and after the Effective Time, the holders of
Certificates evidencing ownership of shares of Company Common
Stock outstanding immediately prior to the Effective Time shall
cease to have any rights with respect to such shares of Company
Common Stock, except as otherwise provided for herein or by
applicable Law. If, after the Effective Time, Certificates are
presented to the Surviving Corporation for any reason, they
shall be cancelled against delivery of the Merger Consideration
as provided in this Section 2 without interest.
(e) Termination of Exchange
Fund. At any time following the date that is
one year after the Effective Time, the Surviving Corporation
shall be entitled to require the Paying Agent to deliver to it
any funds (including any interest received with respect thereto)
made available to the Paying Agent and not disbursed (or for
which disbursement is pending subject only to the Paying
Agents routine administrative procedures) to holders of
Certificates, and thereafter such holders shall be entitled to
look only to the Surviving Corporation (subject to abandoned
property, escheat or similar Laws) only as general creditors
thereof with respect to the Merger Consideration payable upon
due surrender of their Certificates, without any interest
thereon.
(f) No Liability. None of Parent,
the Surviving Corporation or the Paying Agent shall be liable to
any holder of a Certificate for Merger Consideration delivered
to a public official pursuant to any applicable abandoned
property, escheat or similar Law.
Section 2.5 Withholding. Each
of Parent, Company and the Surviving Corporation is entitled to
deduct and withhold, or cause the Paying Agent to deduct and
withhold, from any amounts payable or otherwise deliverable
pursuant to this Agreement to any holder or former holder of
shares of Company Common Stock (including Restricted Shares),
Company Options, or RSUs such amounts as are required to be
deducted or withheld therefrom under the Internal Revenue Code
of 1986, as amended (the Code), or any provision of
state, local or foreign Tax Law or under any other applicable
legal requirement. To the extent such amounts are so deducted or
withheld, such amounts shall be treated for all purposes under
this Agreement as having been paid to the person to whom such
amounts would otherwise have been paid.
Section 2.6 Transfer
Taxes. If payment of the Merger Consideration
payable to a holder of shares of Company Common Stock pursuant
to the Merger is to be made to a person other than the person in
whose name the surrendered Certificate is registered, it shall
be a condition of payment that the Certificate so surrendered
shall be properly endorsed or shall be otherwise in proper form
for transfer and that the person requesting such payment shall
have paid all transfer and other Taxes required by reason of the
payment of the Merger Consideration to a person other than the
registered holder of the Certificate surrendered (or shall have
established to the reasonable satisfaction of Parent that such
Tax either has been paid or is not applicable).
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Section 3. Representations
and Warranties of Company. Except (i) as
set forth in the disclosure schedule delivered by the Company to
Parent on the date hereof (the Company Disclosure
Schedule) or (ii) as disclosed in reasonable detail
in the Company SEC Reports filed prior to the date hereof (other
than disclosure referred to in the Factors That May Affect
Future Results, Risk Factors or Forward
Looking Statements sections of such Company SEC Reports),
the Company hereby makes the representations and warranties set
forth in this Section 3 to Parent and Merger Sub. The
section numbers of the Company Disclosure Schedule are numbered
to correspond to the section numbers of this Agreement to which
they refer. Any information set forth in one section of the
Company Disclosure Schedule will be deemed to apply to each
other section or subsection of this Agreement to which its
relevance is reasonably apparent.
Section 3.1 Organization
and Qualification.
(a) Each of the Company and each subsidiary of the Company
(all such Company subsidiaries being, collectively, the
Company Subsidiaries) is a corporation or other
legal entity duly organized, validly existing and in good
standing (with respect to jurisdictions that recognize the
concept of good standing) under the federal, state, local or
foreign laws, statutes, regulations, rules, ordinances and
judgments, decrees, orders, writs and injunctions (collectively,
Laws) of any court or any nation, government, state
or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative
functions of, or pertaining to, government (Governmental
Entity) of its jurisdiction of organization and has the
requisite corporate or similar power and authority to own, lease
and operate its properties and assets it purports to own and to
carry on its business as now being conducted, except as has not
had, individually or in the aggregate, a Company Material
Adverse Effect. Each of the Company and each Company Subsidiary
is qualified or otherwise authorized to transact business as a
foreign corporation or other organization in all jurisdictions
where the nature of their business or the ownership, leasing or
operation of their properties make such qualification or
authorization necessary, except for jurisdictions in which the
failure to be so qualified or authorized or in good standing has
not had, individually or in the aggregate, a Company Material
Adverse Effect. Company Material Adverse Effect
shall mean (i) any event, circumstance, development, change
or effect that is, individually or in the aggregate, materially
adverse to the business, assets, condition (financial or
otherwise) or results of operations of the Company and the
Company Subsidiaries, taken as a whole; provided,
however, that none of the following shall constitute, or
shall be considered in determining whether there has occurred,
and no event, circumstance, development, change or effect
resulting from or arising out of any of the following shall
constitute, a Company Material Adverse Effect: (A) the
announcement of the execution of this Agreement or the pendency
of consummation of the Merger, (B) changes in the national
or world economy or financial markets as a whole or changes in
general economic conditions that affect the industries in which
the Company and the Company Subsidiaries conduct their business
(including, without limitation, the applicable software, design
and spatial industries), so long as such conditions do not
adversely affect the Company or the Company Subsidiaries in a
materially disproportionate manner relative to other similarly
situated participants in the industries or markets in which they
operate, (C) any change in general budget or appropriations
policies of any Governmental Entities (as opposed to individual
procurement decisions) or any applicable Law, rule or regulation
or GAAP or interpretation thereof after the date hereof, so long
as such changes do not adversely affect the Company or the
Company Subsidiaries in a materially disproportionate manner
relative to other similarly situated participants in the
industries or markets in which they operate, (D) any
failure by the Company to meet any published estimates of
revenues, earnings or other financial projections (it being
understood, however, that any events, changes or developments
causing or contributing to such failures may, except as provided
in any of (A), (B), (C), (E), (F) or (G) of this
definition, be deemed to constitute or be taken into account in
determining whether a Company Material Adverse Effect has
occurred), (E) any outbreak or escalation of war of
hostilities, any occurrence or threats of terrorist acts or any
armed hostilities associated therewith and any national or
international calamity, disaster or emergency or any escalation
thereof, so long as such conditions do not adversely affect the
Company or the Company Subsidiaries in a materially
disproportionate manner relative to other similarly situated
participants in the industries or markets in which they operate,
(F) a decline in the price, or a change in the trading
volume, of the Company Common Stock on the Nasdaq National
Market (including any successor exchange, Nasdaq)
(it being understood, however, that any events, changes or
developments causing or contributing to such decline or change
may, except as provided in any of (A), (B), (C), (D),
(E) or (G) of this definition, be taken into account
in determining
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whether a Company Material Adverse Effect has occurred) and
(G) taking any action outside of the ordinary course of
business required by this Agreement, or taking or not taking any
actions outside ordinary course of business at the written
request of, or with the written consent of, Parent (including,
without limitation, any actions requested pursuant to
Section 5.1(a)(iii)), and (ii) an effect that prevents
the Companys ability to consummate the transactions
contemplated hereby in accordance with this Agreement prior to
the outside dates specified in Section 8.1.
(b) The Company has made available to Parent true, correct
and complete copies of the certificate of incorporation and
by-laws, or other organizational documents, of the Company and
each material Company Subsidiary set forth in
Section 3.4(a) of the Company Disclosure Schedule (each, a
Material Company Subsidiary) as presently in effect.
The Company is not in default in the performance, observation or
fulfillment of its certificate of incorporation or by-laws. The
Company Subsidiaries are not in default, in any material
respect, in the performance, observation or fulfillment of their
respective certificate of incorporation or by-laws or other
organizational documents.
Section 3.2 Authority. The
Company has all necessary corporate power and authority to enter
into, execute and deliver this Agreement and each instrument
required hereby to be executed and delivered by it at the
Closing and, subject in the case of consummation of the Merger
to the adoption of this Agreement by the requisite holders of
Company Common Stock, to perform its obligations hereunder and
thereunder and consummate the Merger and the other transactions
contemplated hereby. The execution, delivery and performance of
this Agreement and each instrument required hereby to be
executed and delivered at the Closing by the Company and the
consummation by the Company of the Merger and the other
transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action and no other
corporate proceedings on the part of the Company are necessary
to authorize this Agreement or to consummate the Merger and the
other transactions contemplated hereby (other than adoption of
this Agreement by the holders of Company Common Stock and the
filing with the Secretary of State of the State of Delaware of
the Certificate of Merger as required by the DGCL). This
Agreement has been duly and validly executed and delivered by
the Company and, assuming the due authorization, execution and
delivery hereof by Parent and Merger Sub, constitutes a legal,
valid and binding obligation of the Company enforceable against
the Company in accordance with its terms, except to the extent
that enforcement of the rights and remedies created hereby is
subject to bankruptcy, insolvency, reorganization, moratorium
and other similar Laws of general application affecting the
rights and remedies of creditors and to general principles of
equity (regardless of whether enforceability is considered in a
proceeding in equity or at Law).
Section 3.3 Capitalization.
(a) The authorized capital stock of the Company consists of
100,000,000 shares of Company Common Stock, of which, as of
August 23, 2006, 29,414,834 shares (including an
aggregate of 642,767 Restricted Shares and RSUs for which the
restrictions have not lapsed) were issued and outstanding and
27,946,528 shares were held in the treasury of the Company.
All of the issued and outstanding shares of such Company Common
Stock are duly authorized, validly issued, fully paid and
nonassessable, and, other than Company Rights, were issued free
of any preemptive (or similar) rights. The Company is not
authorized to issue and does not have any issued and outstanding
preferred stock.
(b) As of August 23, 2006, the Company has reserved
3,928,044 shares of Company Common Stock for issuance
pursuant to all of the Company Option Plans, of which Company
Options to purchase 1,111,851 shares of Company Common
Stock with a weighted average exercise price of
$15.8155 per share were outstanding as of August 23,
2006 (all of which had an exercise price less than the Per Share
Price), and 2,816,193 shares remain available for grant as
of such date. The maximum remaining number of shares of Company
Common Stock authorized for purchase under the ESPP, as of
August 23, 2006, is 936,586 shares. All shares of
Company Common Stock reserved for issuance as specified above,
shall be, upon issuance on the terms and conditions specified in
the instruments pursuant to which they are issuable, duly
authorized, validly issued, fully paid and nonassessable and,
other than Company Rights, will not be issued subject to any
preemptive (or similar) rights.
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(c) Except for (i) shares of Company Common Stock
indicated in Section 3.3(a) as issued and outstanding as of
August 23, 2006 and (ii) shares issued after
August 23, 2006 but prior to the date hereof as Restricted
Shares, or upon the exercise of Company Options or RSUs granted
prior to the date hereof or Options under the ESPP,
at the Effective Time there will not be any shares of Company
Common Stock issued and outstanding. Except as set forth in
Section 3.3(c) of the Company Disclosure Schedule, no
Company Options, RSUs or Restricted Shares have been issued
since August 23, 2006.
(d) No registration rights involving the Company securities
will survive consummation of the Merger.
(e) The Companys authorized capital stock consists
solely of the Company Common Stock described in
Section 3.3(a). There are not authorized or outstanding any
subscriptions, options, conversion or exchange rights, warrants,
calls, repurchase or redemption agreements, or other agreements,
instrument, contracts, claims or commitments of any nature
whatsoever obligating the Company or any Company Subsidiary to
issue, transfer, deliver, sell, repurchase or redeem, or cause
to be issued, transferred, delivered, sold, repurchased or
redeemed, additional shares of the Company Common Stock or other
securities of the Company or to make payments with respect to
the value of any of the foregoing or obligating the Company to
grant, extend or enter into any such agreement or commitment,
other than (i) Company Options and RSUs outstanding on the
date hereof, (ii) the rights (the Company
Rights) issued pursuant to the Amended and Restated Rights
Agreement, dated as of March 5, 2002 (the Company
Rights Agreement), between the Company and Computershare
Investor Services, LLC, as rights agent, in respect of which no
Distribution Date (as defined in the Company Rights Agreement)
has occurred and (iii) Options issued pursuant
to the ESPP. There are no stockholder agreements, voting trusts,
proxies or other agreements or instruments with respect to the
voting of the capital stock of the Company to which the Company
or any of its officers or directors are a party and, to the
knowledge of the Company, no other party is a party to any
stockholder agreements, voting trusts, proxies or other
agreements or instruments with respect to the voting of the
capital stock of the Company.
(f) The Company has no outstanding bonds, debentures, notes
or other indebtedness that have the right to vote (or which is
convertible into, or exchangeable for, securities having the
right to vote) on any matters on which stockholders may vote.
(g) The Company Common Stock constitutes the only class of
securities of the Company registered under the Securities
Exchange Act of 1934, as amended (together with the rules and
regulations promulgated thereunder, the Exchange
Act).
(h) Section 3.3(h) of the Company Disclosure Schedule
sets forth a schedule of all outstanding cash, cash equivalents
and marketable debt investments (collectively, Cash
Equivalents) of the Company and the Company Subsidiaries
as of July 31, 2006, including the currency in which such
Cash Equivalents are denominated, the entity that owns such Cash
Equivalents and the country in which such Cash Equivalents are
held. Neither the Company nor any Company Subsidiary is a party
to any Contract (excluding, for avoidance of doubt, any solvency
or capital surplus requirements under applicable Law) that would
prevent any Cash Equivalents of the Company or the Company
Subsidiaries from being utilized to satisfy in part the Merger
Consideration.
Section 3.4 Company
Subsidiaries.
(a) Section 3.4(a) of the Company Disclosure Schedule
sets forth a complete list of the names and jurisdictions of
organization of each Company Subsidiary. All issued and
outstanding shares or other equity interests of each Company
Subsidiary have been duly authorized, validly issued, are fully
paid and nonassessable and are owned directly or indirectly by
the Company free and clear of any pledges, charges, liens,
encumbrances, restrictions on the transfer, voting or dividend
rights, rights of first offer or first refusal, security
interests or adverse rights or claims of any nature whatsoever
(Liens), except for (i) Liens for current taxes
and assessments not yet past due or that are being contested in
good faith, (ii) Liens imposed by applicable Law, and
(iii) any other Liens that do not secure a liquidated
amount, that have been incurred or suffered in the ordinary
course of business and that would not, individually or in the
aggregate, have a material effect on the Companys
ownership interest in such Company Subsidiary or the ability of
Parent, the Company or any Company Subsidiary to pledge such
shares or other equity interests of such Company Subsidiary in
connection with the Debt Financing. None of the Company
Subsidiaries own any shares of Company Common Stock.
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(b) There are not any authorized or outstanding
subscriptions, options, conversion or exchange rights, warrants,
calls, repurchase or redemption agreements, or other agreements,
claims, contracts or commitments of any nature whatsoever
obligating any Company Subsidiary to issue, transfer, deliver,
sell, register, repurchase or redeem, or cause to be issued,
transferred, delivered, sold, repurchased or redeemed,
additional shares of the capital stock or other securities of
the Company Subsidiary or to make payments with respect to the
value of any foregoing or obligating the Company Subsidiary to
grant, extend or enter into any such agreement.
Section 3.5 SEC
Filings; Financial Statements; Undisclosed Liabilities.
(a) The Company has filed all forms, reports,
registrations, statements, certifications and other documents
required to be filed by it with, or furnished by the Company to,
the United States Securities and Exchange Commission (the
SEC) for all periods beginning on or after
January 1, 2003 (the Company SEC Reports). The
Company SEC Reports were prepared in accordance with the
applicable requirements of the Exchange Act and the Securities
Act of 1933, as amended (together with the rules and regulations
promulgated thereunder, the Securities Act), and did
not, as of their respective dates (or, if amended, as of the
date of such amendment), contain any untrue statement of a
material fact or omit to state a material fact required to be
stated or incorporated by reference therein or necessary to make
the statements therein, in light of the circumstances under
which they were made, not misleading. The Company has made
available to Parent and Merger Sub copies of all comment letters
from the SEC relating to the Company SEC Reports and all
responses thereto. As of the date of this Agreement, there are
not outstanding or unresolved comments in comment letters
received from the SEC. To the knowledge of the Company, as of
the date hereof, none of the Company SEC Reports is the subject
of ongoing SEC review. No Company Subsidiary is required to file
any form, report, registration, statement or other document with
the SEC.
(b) The consolidated financial statements contained in the
Company SEC Reports (including the related notes and schedules,
where applicable) (the Financial Statements)
(i) present fairly, in all material respects, the
consolidated financial condition and results of operations and
cash flows and statements of stockholders equity of the Company
and its consolidated subsidiaries as of and for the periods
presented therein (subject, in the case of unaudited quarterly
financial statements, to normal year-end adjustments and, with
respect to pro forma financial statements, to the qualifications
stated therein), (ii) have been prepared in all material
respects in accordance with United States generally accepted
accounting principles (GAAP) applied on a consistent
basis throughout the periods involved, except as otherwise
indicated therein or, in the case of the unaudited quarterly
financial statements as permitted by
Form 10-Q,
and (iii) when filed complied as to form in all material
respects with the rules and regulations of the SEC with respect
thereto. Since December 31, 2005, there has been no
material change in the Companys accounting methods or
principles that would be required to be disclosed in the
Companys financial statements in accordance with GAAP,
except as described in the notes to such financial statements.
The management of the Company has implemented and maintains
disclosure controls and procedures (as defined in
Rule 13a-15(e)
of the Exchange Act) to ensure that material information
relating to the Company, including the consolidated Company
Subsidiaries, is made known to the chief executive officer and
the chief financial officer of the Company by others within
those entities. The Companys principal executive officer
and principal financial officer have disclosed, based on their
most recent evaluation of internal control over financial
reporting, to the Companys auditors and the audit
committee of the Company Board of Directors (or persons
performing the equivalent functions): (A) all significant
deficiencies and material weaknesses within their knowledge in
the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the
Companys ability to record, process, summarize and report
financial information; and (B) any fraud that involves
management or other employees who have a significant role in the
Companys internal control over financial reporting. The
Companys principal executive officer and principal
financial officer have made, with respect to the Company SEC
Reports, all certifications required by the Sarbanes-Oxley Act
of 2002 and any related rules and regulations promulgated by the
SEC. As of the date hereof, the Company has not identified any
material weaknesses in the design or operation of the internal
controls over financial reporting except as disclosed in the
Company SEC Reports filed prior to the date hereof. As of the
date hereof, neither the Company nor any of the
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Company Subsidiaries has outstanding, or has arranged any
outstanding, extensions of credit to directors or
executive officers of the Company within the meaning of
Section 402 of the Sarbanes-Oxley Act of 2002.
(c) To the knowledge of the Company, neither the Company,
any Company Subsidiaries, nor any of their respective officers
or directors, nor any of the Companys Affiliates
(including any holder of five percent (5%) or more of the
Companys outstanding equity interests) (i) appears on
the Specially Designated Nationals and Blocked Persons List of
the Office of Foreign Assets Control of the United States
Department of the Treasury (OFAC) or on any other
similar list maintained by OFAC pursuant to any authorizing
statute, executive order or regulation; (ii) is otherwise a
party with whom, or has its principal place of business or the
majority of its business operations (measured by revenues)
located in a country in which, transactions are prohibited by
(A) United States Executive Order 13224, Blocking Property
and Prohibiting Transactions with Persons Who Commit, Threaten
to Commit, or Support Terrorism; (B) the United States
Uniting and Strengthening America by Providing Appropriate Tools
Required to Intercept and Obstruct Terrorism Act of 2001;
(C) the United States Trading with the Enemy Act of 1917,
as amended; (D) the United States International Emergency
Economic Powers Act of 1977, as amended or (E) the foreign
asset control regulations of the United States Department of the
Treasury; (iii) has been convicted of or charged with a
felony relating to money laundering or (iv) is under
investigation by any governmental authority for money laundering.
(d) Neither the Company nor any Company Subsidiary has any
liabilities, whether accrued, absolute, contingent or otherwise,
other than liabilities and obligations (i) reflected or
reserved against on the Financial Statements in accordance with
GAAP or reasonably apparent from the notes or managements
discussion and analysis related thereto, (ii) incurred in
connection with the transactions contemplated herein or since
the date of the most recently audited Financial Statements in
the ordinary course of business consistent with past practice,
(iii) discharged or paid prior to the date of this
Agreement, or (iv) that have not had, individually or in
the aggregate, a Company Material Adverse Effect.
Section 3.6 Absence
of Certain Changes or Events.
(a) Since December 31, 2005, except as specifically
contemplated by, or disclosed in, this Agreement, there have not
been any changes, events or circumstances that have had or would
reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect.
(b) There has not been any action taken by the Company or
any Company Subsidiary during the period from December 31,
2005 through the date hereof, that, if taken during the period
from the date hereof through the Effective Time, would
constitute a breach of Section 5.1, except for such actions
as have not had or would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse
Effect.
Section 3.7 Compliance
with Laws.
(a) The Company and the Company Subsidiaries have obtained
each federal, state, county, local or foreign governmental
consent, license, permit, registration, order, grant or other
authorization of a Governmental Entity that is required for the
operation of the business of the Company or any of the Company
Subsidiaries or the holding of any interest in any of their
properties (collectively referred to herein as, the
Permits), except where the failure to have, or the
suspension or cancellation of, any Permit would not have,
individually or in the aggregate, a Company Material Adverse
Effect. Except as would not have, individually or in the
aggregate, a Company Material Adverse Effect, the Permits are
not subject to any conditions or requirements that are not
generally imposed on the holders thereof, all of such Permits
are valid and in full force and effect and neither the Company
nor any Material Company Subsidiary has violated the terms of
such Permits. No proceeding is pending or, to the knowledge of
the Company, threatened in writing to revoke, suspend, cancel,
terminate, or adversely modify any Permit.
(b) Neither the Company nor any Company Subsidiary, and no
director, officer, agent or employee acting in his or her
capacity as a director, officer, agent or employee of the
Company or the Company Subsidiaries, has (i) used any funds
for unlawful contributions, gifts, entertainment or other
unlawful expenses relating to political activity, (ii) made
any unlawful payment to foreign or domestic government officials
or employees or to foreign or domestic political parties, or
campaigns or violated any provision of the Foreign Corrupt
Practices Act of 1977, as amended, or (iii) taken any
action that would constitute a violation of the Foreign
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Corrupt Practices Act of 1977, as amended, that in the case of
clauses (i), (ii) and (iii) would result,
individually or in the aggregate, in a Company Material Adverse
Effect.
(c) Except as would not have, individually or in the
aggregate, a Company Material Adverse Effect, the Company and
the Company Subsidiaries are in and have been in compliance
with, are not in default or violation of, and have not, to the
knowledge of the Company, received any notice of non-compliance,
default or violation with respect to, any Laws applicable to the
business of the Company and the Company Subsidiaries or to which
any of its or their properties are bound.
(d) Neither the Company nor any Company Subsidiary is a
party to, or has a legally binding commitment to enter into, any
joint venture, off balance sheet partnership or any similar
contract (including any contract or arrangement relating to any
transaction or relationship between or among the Company or the
Company Subsidiary, on the one hand, and any unconsolidated
affiliate, including any structured finance, special purpose or
limited purpose entity or person, on the other hand or any
off balance sheet arrangements (as defined in
Item 303(a) of
Regulation S-K
under the Exchange Act)).
Section 3.8 Claims,
Actions and Proceedings. There are no
outstanding orders, writs, judgments, injunctions, decrees or
other requirements of any court or arbitrator against the
Company, any Company Subsidiary or any of their securities,
assets or properties that would have, individually or in the
aggregate, a Company Material Adverse Effect. There are no
actions, suits, claims, investigations, arbitrations, legal or
administrative proceedings (collectively, Actions)
or, to the knowledge of the Company, any governmental
investigations or inquiries pending or overtly threatened,
against the Company or any Company Subsidiary or any of their
securities, assets or properties, except as would not have,
individually or in the aggregate, a Company Material Adverse
Effect and other than Actions challenging this Agreement or the
transactions contemplated hereby, or seeking to prohibit the
Merger. As of the date hereof, there are no Actions pending or,
to knowledge of the Company, overtly threatened, against the
Company or any Company Subsidiary challenging this Agreement or
the transactions contemplated hereby, or seeking to prohibit the
Merger.
Section 3.9 Contracts
and Other Agreements.
(a) Except for this Agreement, or as set forth in
Section 3.9(a) of the Company Disclosure Schedule or in the
exhibit lists of the Company SEC Reports, none of the Company
nor any Company Subsidiary is a party to or bound by any note,
bond, mortgage, indenture, contract, agreement, lease, license,
Permit or other instrument or obligation (each, a
Contract): (i) that would be required to be
filed by the Company as a material contract pursuant
to Item 601(b)(10) of
Regulation S-K
under the Securities Act or disclosed on Form 8 K;
(ii) that (a) contain covenants binding upon the
Company or any of its affiliates that restrict the ability of
the Company or any Company Subsidiary to compete in any business
or in any geographic area in a manner that is material to the
Company and the Company Subsidiaries, taken as a whole, or
(b) grant any exclusive rights to make, sell or distribute
the Companys material products and services, or otherwise
prohibit or limit in any material respect the right of the
Company and the Company Subsidiaries to develop, manufacture,
market, sell or distribute any material products or services;
provided, however, that this subsection (ii) shall not
include Contracts that may be fully canceled by the Company or
any Company Subsidiary upon notice of 90 days or less
without any material payment or penalty; (iii) that would
obligate the Company or any Company Subsidiary to file a
registration statement under the Securities Act, which filing
has not yet been made; (iv) that involves any license
agreement that is material to the Company and the Company
Subsidiaries taken as a whole, or is a license for software
incorporated into or directly used in any applications that form
part of the products or services of the Company or any Company
Subsidiary (other than off the shelf software and any software
that is not material to any product or replaceable without
significant expense or effort) (each a License
Agreement); (v) relating to indebtedness for borrowed
money, guarantees of indebtedness for borrowed money, lines of
credit (whether or not drawn), letters of credit, capitalized
lease or surety bonds having an outstanding principal amount in
excess of $2,000,000 in the aggregate; (vi) that involves
acquisition or disposition, directly or indirectly (by merger or
otherwise), of assets or capital stock or other voting
securities or equity interests of another person or the Company
for aggregate consideration in excess of $3,000,000 that
involves continuing or contingent obligations of the Company or
the Company Subsidiaries or is not yet consummated;
(vii) under which the Company or any Company Subsidiary has
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advanced or loaned any funds in excess of $1,000,000 or has
guaranteed any obligations of another person in excess of
$1,000,000 individually or $3,000,000 in the aggregate, other
than extensions of credit to customers in the ordinary course of
business consistent with past practice, (viii) that would
constitute one of the Companys (a) top ten contracts
in terms of revenues received from the sale of products or
services (as measured by the revenue reasonably expected to be
derived therefrom during the twelve (12) months ended
December 31, 2006) (the applicable customers being, the
Major Customers)), or (b) top ten contracts
with its suppliers or other licensors (determined on the basis
of amounts reasonably expected to be paid by the Company or the
Company Subsidiaries in the 12 months ended
December 31, 2006) (the applicable suppliers or licensors
being, the Major Suppliers), (ix) that requires
the payment by or to the Company or any Company Subsidiary of
more than $5,000,000 annually in respect of customers or
vendors, (x) that is in respect of any employment,
retention, severance or change of control arrangement, in each
case with an executive officer of the Company or any Company
Subsidiary, any employee of the Company or any Company
Subsidiary who is paid a base salary of $200,000 or more or with
the potential for annual or one time payments equal to an
aggregate of $300,000 during any 12 month period,
(xi) with respect to any property of the Company or any
Company Subsidiary, real or personal (whether owned or leased),
that involves annual payments in excess of $1,000,000,
(xii) that relates to any single or series of related
capital expenditures by the Company in excess of $1,000,000,
(xiii) to which the Company or any Company Subsidiary is a
party constituting a general or limited partnership, a limited
liability company or a joint venture (whether limited liability
or other organizational form) or alliance or similar arrangement
that is material to the business of the Company and the Company
Subsidiaries, taken as a whole, (xiv) that relates to any
settlement agreement, other than (a) releases immaterial in
nature or entered into with former employees or independent
contractors of the Company in the ordinary course of business in
connection with the cessation of such employees or
independent contractors employment with the Company,
(b) settlement agreements for cash only (which has been
paid or accrued for) and does not exceed $1,000,000 as to such
settlement or (c) settlement agreements entered into more
than two years prior to the date of this Agreement under which
none of the Company or Company Subsidiaries have any continuing
obligations, liabilities or rights (excluding releases), in each
case material to the Company and the Company Subsidiaries taken
as a whole other than settlements listed on another section of
the Company Disclosure Schedule or entered into after the date
hereof with respect to patent litigation in accordance with
Section 5.1, (xv) that relates to conditional sale
arrangements or hedging activities, in each case in connection
with which the aggregate actual or contingent obligations of the
Company and the Company Subsidiaries under such Contract are
greater than $1,000,000 in the aggregate, (xvi) that
involves the entity set forth in Section 3.9(a)(xvi) of the
Company Disclosure Schedule and (xvii) to which the Company
or any Company Subsidiary is a party that creates a lien or
other encumbrance on the assets or properties of the Company or
any Company Subsidiary that is material to the Company and the
Company Subsidiaries, taken as a whole. Each such Contract
described in clauses (i) through (xvii) is referred to
herein as a Material Contract.
(b) Except as has not had, and would not reasonably be
expected to have, individually or in the aggregate, a Company
Material Adverse Effect, each of the Material Contracts is in
full force and effect and is valid and binding on the Company
and each Company Subsidiary party thereto and, to the knowledge
of the Company, each other party thereto, enforceable against
such parties in accordance with their terms, except to the
extent that enforcement of the rights and remedies created
thereby is subject to bankruptcy, insolvency, reorganization,
moratorium and other similar laws of general application
affecting the rights and remedies of creditors and to general
principles of equity (regardless of whether enforceability is
considered in a proceeding in equity or at Law).
(c) Except as has not had, and would not reasonably be
expected to have, individually or in the aggregate, a Company
Material Adverse Effect, (i) neither the Company nor any
Company Subsidiary has breached, is in default under, or has
received written notice of any breach of or default under, any
Material Contract, and no event has occurred that with the lapse
of time or the giving of notice or both would constitute a
default thereunder by the Company or any Company Subsidiary. To
the Companys knowledge, no other party to any Material
Contract to which the Company or any Company Subsidiary is a
party is in breach or violation of, or default under, such
Material Contract. A complete and correct copy, subject to
redaction if
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required pursuant to the terms thereof or if required by
applicable Law, of each Material Contract has previously been
made available by the Company to Parent or filed by the Company
with the SEC.
(d) As of the date of this Agreement, since January 1,
2006, none of the Major Customers or Major Suppliers has
(i) terminated or required any amendment materially adverse
to the Company or any Material Company Subsidiary to any of
their respective contracts with the Company or applicable
Company Subsidiary, or otherwise altered in writing their
relationships with the Company or applicable Company Subsidiary
in any respect materially adverse to the Company or
(ii) failed to renew any such contract to the extent such
contract was renewable by its terms or the nature of the
contract or relationship otherwise expressly contemplated an
ongoing purchase or supply relationship.
(e) In the past three years, neither Company nor any of the
Company Subsidiaries nor, to the knowledge of the Company, any
of their respective officers or directors or principals (as
defined in FAR 52.209-5) has been debarred or suspended from
doing business with the United States Government or any of its
agencies, nor has the Company received written notice that any
such suspension or debarment action has been proposed. In the
past three years, no show cause notices, notices of termination
for default or cure notices have been issued against Company or
any of the Company Subsidiaries, except as to any such cure
notices, those with respect to which cure has been made in the
ordinary course of business. Neither Company nor any of the
Company Subsidiaries nor, to the knowledge of the Company, any
of their respective officers or directors or principals (as
defined in FAR 52.209-5) is currently and has not been in the
past three years, convicted or under criminal indictment or had
a civil judgment rendered against them with respect to any
alleged irregularity, misstatement or omission arising under or
in any way relating to any Contract with the United States
Government or any of its agencies. Neither Company nor any of
the Company Subsidiaries in the past three years has
(i) made any voluntary disclosure regarding material
non-compliance relating to any Material Contract with the United
States Government or any of its agencies that remains unresolved
in any material respect or (ii) ever been denied a security
clearance necessary to perform any Contract with the United
States Government or any of its agencies unless such clearance
has later been granted. To the knowledge of the Company, in the
past three years, neither Company nor any of the Company
Subsidiaries, nor any of their officers, directors, or
employees, has been in material violation of the provisions and
requirements of the National Industrial Security Program
Operating Manual or the requirements of the Company facility
security clearances or the individual security clearances of the
officers, directors, or employees. Neither Company nor any of
the Company Subsidiaries has assigned or otherwise conveyed or
transferred, or agreed to assign, to any persons, any Contracts
with the United States Government or any of its agencies, or any
account receivable relating thereto, whether as a security
interest or otherwise.
(f) To the knowledge of the Company, with respect to any
Material Contract with the United States Government or any of
its agencies, or with any of their prime contractors or
subcontractors: (i) no material amount of money due the
Company or any of the Company Subsidiaries is being withheld or
offset; (ii) no claim or action for relief or dispute
proceeding is pending against the Company or any of the Company
Subsidiaries; (iii) no material customer complaint that
remains unresolved (as determined in the Companys
reasonable discretion) has been received by the Company or any
of the Company Subsidiaries; (iv) other than routine cost
or pricing audits, neither the Company nor any of the Company
Subsidiaries is being audited by the United States Government or
any of its agencies; and (v) neither the Company nor any of
the Company Subsidiaries, nor any of their respective officers
or directors is under administrative, civil, or criminal
investigation by the United States Government or any of its
agencies.
Section 3.10 Intellectual
Property.
(a) Section 3.10(a) of the Company Disclosure Schedule
contains a list, as of the date hereof, of all United States and
foreign Registered Intellectual Property owned by the Company or
any Company Subsidiary (Owned Intellectual
Property). The Intellectual Property owned by and licensed
to the Company and the Company Subsidiaries (collectively, the
Company Intellectual Property) constitutes all
Intellectual Property used, held for use or necessary for the
conduct of the business of the Company and the Material Company
Subsidiaries as presently conducted, except as has not had,
individually or in the aggregate, a Company Material Adverse
Effect. Each item of Company Intellectual Property immediately
prior to the Effective Time
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hereunder will be available for use on substantially the same
terms and conditions immediately subsequent to the Effective
Time, except as is not reasonably likely to have, individually
or in the aggregate, a Company Material Adverse Effect. The
consummation of the transactions contemplated by this Agreement
will not in any material way (i) alter, impair or
extinguish any material Company Intellectual Property, or
(ii) trigger any obligation to grant rights under any such
items or pay any, or accelerate the payment of any, royalties to
any third party in excess of the amounts payable prior to the
Closing.
(b) The Company
and/or each
Company Subsidiary (i) own the entire right, title and
interest in and to all of the Owned Intellectual Property, free
and clear of all Liens and/or, with respect to intellectual
property embedded in the Owned Intellectual Property or
otherwise, has the right to use the material Company
Intellectual Property licensed for use by the Company or any
Company Subsidiary pursuant to the terms of subsisting license
agreements, and (ii) has not received any written notice or
written claim challenging the Companys or
Subsidiarys ownership of the Owned Intellectual Property.
Other than as listed on Section 3.10(b) of the
Companys Disclosure Schedule, no Owned Intellectual
Property has been licensed or a covenant not to sue been granted
to a third party other than licenses that accompany the sale or
licensing of the Company and Company Subsidiaries products and
services in the ordinary course of business consistent with
statutory provisions governing the sale of goods.
(c) Neither the Company nor any Company Subsidiary has
infringed upon, misappropriated, diluted or otherwise come into
conflict with any Intellectual Property rights of any third
parties, other than any such infringement, misappropriation,
dilution or conflict which is not reasonably likely to have,
individually or in the aggregate, a Company Material Adverse
Effect. Other than as listed on Section 3.10(c) of the
Company Disclosure Schedule and other than for matters which
have been resolved, neither the Company nor any Company
Subsidiary has received any written charge, complaint, claim,
demand, or notice alleging any infringement, invalidity,
unenforceability, misappropriation, misuse or violation of any
third partys Intellectual Property rights (including any
invitations to license or communications that claim
that a person must license or refrain from using any
Intellectual Property rights of any third party) or of unfair
competition relating to third party Intellectual Property
rights. There are no Actions pending asserting the invalidity,
misuse, infringement or unenforceability of any Owned
Intellectual Property. To the knowledge of the Company, no third
party is infringing upon, misappropriating or otherwise
violating any of the material Owned Intellectual Property that
is currently used in the Companys material commercial
software products except for such infringement, misappropriation
or violation which is not reasonably likely to have,
individually or in the aggregate, a Company Material Adverse
Effect.
(d) Except as would not have, individually or in the
aggregate, a Company Material Adverse Effect, the Company or
each Company Subsidiary has taken commercially reasonable
actions to maintain the Companys and each Company
Subsidiarys Owned Intellectual Property with the relevant
Governmental Entity, including payment of all fees, annuities
and all other payments which have heretofore become due to any
government authority with respect to the Owned Intellectual
Property. To the knowledge of the Company, the Owned
Intellectual Property (i) is valid and enforceable and
(ii) is not the subject of any opposition filed with the
United States Patent and Trademark Office or the corresponding
offices of any foreign jurisdiction where such Intellectual
Property is owned or registered except as has not had,
individually or in the aggregate, a Company Material Adverse
Effect.
(e) The Company and the Company Subsidiaries maintain
policies and procedures regarding data security and privacy that
are commercially reasonable and, in any event, in compliance in
all material respects with all their obligations to their
customers and under applicable Laws. Except as has not had,
individually or in the aggregate, a Company Material Adverse
Effect, there has been no security breach relating to, violation
of any security policy regarding, or unauthorized access or
unauthorized use of, any confidential or proprietary data used
in the businesses of the Company or a Company Subsidiary. The
use and dissemination of any and all data on concerning
individuals by their businesses is in compliance in all material
respects with customer agreements and applicable Law.
(f) Except as would not have, individually or in the
aggregate, a Company Material Adverse Effect, no material
commercial product marketed or sold by the Company or any
Company Subsidiary, uses, incorporates
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or has embedded in it any source, object or other software code
subject to an open source license or other similar type of
license (including without limitation, the GNU General Public
License, Library Generally Public License, Lesser General Public
License, Mozilla License, Berkeley Software Distribution
License, Open Source Initiative license, MIT, Apache or Public
Domain Licenses, (each an Open Source License) such
that such product of the Company or such Company Subsidiary is,
as a whole, subject to the terms of such Open Source License as
such terms pertain to the requirement to distribute the source
code for such product.
(g) To the knowledge of the Company, and except as would
not have a Company Material Adverse Effect, no trade secret or
any other confidential or proprietary information of the Company
or any Company Subsidiary has been disclosed by the Company or
any Company Subsidiary to any third party other than pursuant to
a written nondisclosure agreement restricting the disclosure and
use of such information. The Company and each Company Subsidiary
have taken commercially reasonable security measures to protect
the confidentiality of their trade secrets and all third party
confidential information provided to them that they are legally
obligated to maintain in confidence. The Company and each
Company Subsidiary has in place a policy and practice whereby
they execute confidentiality and Intellectual Property
assignment of rights
and/or
employee assignment of rights agreement with all of their
respective employees, consultants and contractors.
(h) Intellectual Property means the entire
right, title and interest in and to all intellectual property or
other proprietary rights throughout the world of every kind and
nature, whether existing under statute or at common law or
equity, now or hereafter recognized, including all rights and
interests pertaining to or deriving from (a) any
(i) fictitious trade business names, trade names, corporate
names, registered and unregistered trademarks, service marks and
logos, trade dress, together with any goodwill related to the
foregoing, (ii) (A) all patents (including all
continuations, continuations in part, revisions, renewals,
reissues, reexaminations, and divisionals) and any applications
therefor (Patents), and (B) inventions and
discoveries that may be patentable, (iii) copyrights in
both published works and unpublished works including any
registrations and applications therefor and whether registered
or unregistered, or (iv) all trade secrets, confidential
information, customer lists, software, databases, works of
authorship, mask works, technical information, data, drawings,
blue prints, proprietary processes, formulae, algorithms,
models, user interfaces, concepts, ideas, techniques, methods,
and methodologies, (b) technical and confidential
information, rights of privacy and publicity, moral rights, and
shop rights, (c) computer software and firmware programs
and systems, source code, object code, databases, and
documentation relating to the foregoing, and (d) Internet
domain names, and all registrations and applications therefor,
and web sites and web pages and related items (and all
intellectual property and proprietary rights incorporated
therein) and email addresses. Intellectual Property does not
include any third party software modules, components or other
technology included or incorporated into any Intellectual
Property of the Company or any Company Subsidiary.
Registered Intellectual Property means each of the
following included in the Intellectual Property everywhere
throughout the world: Patents and statutory invention
registrations, registered trademarks, registered service marks,
registered copyrights, Internet domain name registrations and
the registrations of and applications for registration of any of
the foregoing.
Section 3.11 Real
Property; Title to Assets.
(a) Section 3.11(a) of the Company Disclosure Schedule
lists each parcel of real property owned by the Company or any
Company Subsidiary (the Real Property). The Company
or any Company Subsidiary has good, valid and marketable title
to all of the Real Property, in each case free and clear of all
mortgages, pledges, liens, leases, security interests,
conditional and installment sale agreements, encumbrances,
charges or other claims of third parties of any kind, including,
without limitation, any easement, right of way or other
encumbrance to title, or any option, right of first refusal, or
right of first offer, other than (i) liens for current
taxes and assessments not yet past due or being contested in
good faith, (ii) inchoate liens for construction in
progress, (iii) mechanics, materialmens,
workmens, repairmens, warehousemens and
carriers liens arising in the ordinary course of business
of the Company or such Company Subsidiary consistent with past
practice for sums not yet delinquent or being contested in good
faith by appropriate proceedings, and (iv) all Liens and
other imperfections of title (including matters of record) and
encumbrances that do not materially interfere individually or in
the aggregate with the conduct of the business of the Company
and the Company Subsidiaries, taken as a whole, materially
detract from the value or use of the Real Property or have,
individually or in the aggregate, a Company Material Adverse
Effect (collectively, Permitted Liens).
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(b) Section 3.11(b) of the Company Disclosure Schedule
lists by address each parcel of real property leased or
subleased by the Company or any Company Subsidiary that is
currently used in, and material to, the conduct of the business
of the Company and the Company Subsidiaries (together with all
other real property leased by the Company and the Company
Subsidiaries, the Leased Properties), with the name
of the lessor and the date of the lease or sublease. Except as
would not have, individually or in the aggregate, a Company
Material Adverse Effect, the Company or one of the Company
Subsidiaries has the right to the use and occupancy of the
Leased Properties, subject to the terms of the applicable Lease
and Permitted Liens. The Company or any Company Subsidiary has
good leasehold title to the material Leased Properties, subject
to Permitted Liens. There is no pending or, to the
Companys knowledge, overtly threatened eminent domain
taking affecting any of the material Real Property or the
material Leased Properties or any material portion thereof or
material interest therein.
(c) Each of the Company and the Company Subsidiaries is in
compliance in all material respects with the terms of all leases
to material Leased Properties to which it is a party (each a
Lease and, collectively, the Leases),
and each such lease is a legal, valid and binding agreement of
the Company or the Company Subsidiary, as the case may be and,
to the knowledge of the Company, of each other party thereto,
enforceable against the Company or such Company Subsidiary, as
the case may be, and, to the knowledge of the Company, against
the other party or parties thereto, in each case, in accordance
with its terms, except to the extent that enforcement of the
rights and remedies created hereby is subject to bankruptcy,
insolvency, reorganization, moratorium and other similar Laws of
general application affecting the rights and remedies of
creditors and to general principles of equity (regardless of
whether enforceability is considered in a proceeding in equity
or at Law).
Section 3.12 Insurance. The
Company and the Company Subsidiaries maintain insurance in such
amounts and against such risks as is sufficient to comply with
applicable Law. Except as would not have, individually or in the
aggregate, a Company Material Adverse Effect, all policies or
binders of material fire, liability, product liability,
workers compensation, vehicular, directors and
officers and other material insurance held by or on behalf
of the Company and the Company Subsidiaries (collectively, the
Company Insurance Policies) are (i) except for
policies that have expired under their terms, in full force and
effect, and (ii) to the knowledge of the Company, valid and
enforceable in accordance with their terms. Except as would not
have, individually or in the aggregate, a Company Material
Adverse Effect, neither the Company nor any Company Subsidiary
is in breach or default with respect to any provision contained
in such policy or binder. Neither the Company nor any Company
Subsidiary has (a) received notice of actual or threatened
modification or termination of any material Company Insurance
Policy, or (b) received notice of cancellation or
non-renewal of any such Company Insurance Policy, other than in
connection with ordinary renewals.
Section 3.13 Tax
Matters.
(a) For purposes of this Agreement, the term
Tax (and, with correlative meaning,
Taxes and Taxable) means all United
States federal, state and local, and all foreign, income,
profits, franchise, gross receipts, payroll, transfer, sales,
employment, social security, unemployment insurance,
workers compensation, use, property, excise, value added,
ad valorem, estimated, stamp, alternative or add-on minimum,
recapture, environmental, capital, gain, withholding taxes, any
other taxes, and any fees, assessments, liabilities, levies,
charges, duties, tariffs, impositions or assessments in the
nature of taxes, together with all interest, penalties, fines
and additions imposed on or with respect to such amounts,
whether disputed or not, including any liability for taxes of a
predecessor entity. Tax Return (and, with
correlative meaning, Tax Returns) means any return,
declaration, report, claim for refund or information return or
similar statement filed or required to be filed with any taxing
authority or any other Governmental Entity in connection with
Taxes, including any attachments thereto and any amendments
thereof.
(b) Except as would not, individually or in the aggregate,
have a Company Material Adverse Effect:
(i) All Tax Returns required to be filed by or with respect
to the Company and the Company Subsidiaries have been filed or
will be filed with the appropriate tax authority within the time
and in the manner prescribed by Law. All such Tax Returns are
true, correct and complete in all respects, and all Taxes owed
by the Company or the Company Subsidiaries, whether or not shown
on any Tax Return,
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have been timely paid or fully reserved for on the Financial
Statements. No claim (which has not been settled and paid or
accrued in the Financial Statements) has ever been made in
writing by any taxing authority in any jurisdiction in which any
of the Company or the Company Subsidiaries does not file a Tax
Return that the Company or the Company Subsidiaries are or may
be subject to taxation by that jurisdiction. Since
January 1, 2003, no adjustment relating to any Tax Return
of the Company or any Company Subsidiary has been proposed in
writing by any Tax Authority (insofar as such adjustment relates
to the activities or income of the Company or any Company
Subsidiary).
(ii) There are no Liens with respect to Taxes upon any of
the assets or properties of the Company or the Company
Subsidiaries, other than with respect to Taxes not yet due and
payable.
(iii) No audit, assessment, examination, dispute,
investigation or judicial or administrative proceeding is
currently pending or ongoing with respect to any Tax Return or
Taxes of the Company or the Company Subsidiaries with respect to
which the Company or a Company Subsidiary has been notified
orally or in writing. No deficiency for any Taxes has been
proposed or assessed in writing against the Company or the
Company Subsidiaries, which deficiency has not been paid or
accrued in full. All Tax deficiencies determined as a result of
any past completed audit with respect to Taxes of the Company
and the Company Subsidiaries have been satisfied.
(iv) There are no outstanding requests, agreements, waivers
or arrangements extending the statutory period of limitation
applicable to any claim for, or the period for the collection or
assessment of, Taxes due from or with respect to the Company or
the Company Subsidiaries for any taxable period. No power of
attorney granted by or with respect to the Company or the
Company Subsidiaries relating to Taxes is currently in force.
(v) With respect to any period ending on or before the date
of the latest balance sheet included in the Financial Statements
for which Tax Returns have not yet been filed, or for which
Taxes are not yet due or owing, the Company and the Company
Subsidiaries have, in accordance with and to the extent required
by GAAP, made accruals for such Taxes in their Financial
Statements.
(vi) All withholding and payroll Tax requirements required
to be complied with by the Company and the Company Subsidiaries
(including requirements to deduct, withhold and pay over amounts
to any Governmental Entity and to comply with associated
reporting and record keeping requirements) have been satisfied
or accrued in the Financial Statements.
(vii) Neither the Company nor any Company Subsidiary has
any liability for the Taxes of any other person (other than the
Company and the Company Subsidiaries) under Treasury
Regulation 1.1502-6
(or any similar provision of state, local or foreign Law) by
contract or as a transferee or successor. No person has any
right to any payment from the Company or any Company Subsidiary
with respect to any Tax refunds received or due to be received
by the Company.
(viii) The Company has delivered or made available to
Parent complete copies of all Tax Returns of the Company with
respect to 2003 and 2004.
(ix) Neither the Company nor any Company Subsidiary has
participated in a listed transaction within the
meaning of Treasury Regulation
section 1.6011-4(b)(2).
(x) Neither the Company nor any Company Subsidiary is a
party to any joint venture, partnership, or other arrangement
(other than an arrangement related to royalties) that the
parties treat as a partnership for federal or applicable state,
local or foreign Tax purposes.
(xi) Except as disclosed in its Tax Returns, neither the
Company nor any Company Subsidiary has received approval to make
or agreed to a change in any accounting method or has any
written application pending with any Tax authority requesting
permission for any such change.
(xii) The Company has not been a distributing
corporation or a controlled corporation within
the meaning of Code section 355(a)(1)(A) in a transaction
occurring within the past five years.
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(xiii) Neither the Company nor any Company Subsidiary is
party to or bound by any active closing agreement pursuant to
Section 7121 of the Code (or any similar provision of
state, local or foreign law) or offer in compromise with any
U.S. Tax authority.
(xiv) Neither the Company nor any of the Company
Subsidiaries is a party to any indemnification, allocation,
sharing or similar agreement, with respect to Taxes that would
give rise to a payment or indemnification obligation (other than
agreements among the Company and the Company Subsidiaries).
Section 3.14 Employee
Benefit Plans.
(a) With respect to each material pension, savings, profit
sharing, retirement, deferred compensation, employment, welfare,
fringe benefit, insurance, short and long term disability,
medical, death benefit, incentive, bonus, stock, other
equity-based, vacation pay, severance pay, cafeteria plan and
other plan, program and arrangement for the benefit of any
current or former employee, director or consultant of the
Company or any Company Subsidiary (collectively, the
Company Employees), or their beneficiaries,
including each employee benefit plan (as that term
is defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended (ERISA))
that is not a Foreign Plan (as defined in Section 3.14(h)),
and that is sponsored or maintained by the Company
and/or by
one or more Company Subsidiaries or to which the Company
and/or one
or more Company Subsidiaries has contributed or under which the
Company or any Company Subsidiary has any present or future
liability (each, a Plan), the Company has delivered
or made available to Parent current, accurate and complete
copies of each of the following together with, when applicable,
all amendments: (i) the Plan, or, if the Plan has not been
reduced to writing, a written summary of its material terms,
(ii) if the Plan is subject to the disclosure requirement
of Title I of ERISA, the summary plan description, and in
the case of each other Plan, any similar employee summary,
(iii) if the Plan is intended to be qualified under
Section 401(a) of the Code, the most recent determination
letter (or opinion letter upon which the Company is entitled to
rely) issued by the Internal Revenue Service (IRS),
(iv) if the Plan is subject to the requirement that a
Form 5500 series annual report/return be filed, the three
most recently filed annual reports/returns, (v) all related
trust agreements, group annuity contracts, administrative
services agreements, (vi) for each Plan that is funded, the
three most recent financial statements and actuarial reports for
each such Plan and (vii) since January 1, 2003, any
material communications received from or sent to the IRS or the
U.S. Department of Labor relating to an audit or similar
process involving the Plan. Section 3.14(a) of the Company
Disclosure Schedule sets forth a list of all material Plans.
(b) There is no entity (other than the Company or any
Company Subsidiary) that together with the Company or any
Material Company Subsidiary that was, during the five years
preceding the date of this Agreement, or currently would be
treated as a single employer within the meaning of
Section 414(b), (c), (m) or (o) of the Code or
Section 4001(b) of ERISA. None of the Plans is a defined
benefit plan subject to Title IV of ERISA.
(c) Each Plan has been established and administered in all
material respects in accordance with its terms and the
provisions of applicable law, including ERISA and the Code (and
the rules and regulations thereunder), and to the knowledge of
the Company, nothing has been done or not done with respect to
any Plan, the doing or not doing of which could result in any
material liability on the part of the Company or any Company
Subsidiary under Title I of ERISA or Chapter 43 of the
Code. None of the Plans is currently under examination by the
IRS or the U.S. Department of Labor. All contributions,
premiums and expenses, if any, due under each Plan have been
timely made. Each Plan intended to be qualified under
Section 401(a) of the Code has received a favorable
determination letter (or opinion letter upon which the Company
may rely) from the IRS that it is so qualified, and to the
knowledge of the Company nothing has occurred since the date of
such letter that could reasonably be expected to adversely
affect the qualified status of such Plan. Each trust created
under any such Plan is exempt from tax under Section 501(a)
of the Code. No Plan is or has been subject to Section 302
of ERISA or Section 412 of the Code. To the knowledge of
the Company, no event has occurred and no condition exists that
would subject the Company or any Company Subsidiary either
directly or by reason of their affiliation with any member of
their Controlled Group (defined as any organization
that is a member of a controlled group of organizations within
the meaning of Sections 414 (b), (c), (m) or
(o) of the Code), to any tax, fine, lien, penalty or other
liability imposed by ERISA, the Code or other applicable
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laws, rules or regulations which could result in any material
liability on the part of the Company or any Company Subsidiary.
(d) Except for continuation of health coverage described in
Section 4980B of the Code or Section 601 et seq. of
ERISA (COBRA), no Plan provides for medical, dental,
life insurance coverage or any other welfare benefits after
termination of employment or for other post-employment welfare
benefits.
(e) No Action (other than routine claims for benefits in
the ordinary course) is pending or, to the knowledge of the
Company, threatened against any Plan (including any audit or
other administrative proceeding by the U.S. Department of
Labor, the IRS or other governmental agencies), except as would
not have, individually or in the aggregate, a Company Material
Adverse Effect.
(f) Neither the Company nor any of the Company Subsidiaries
has ever maintained, sponsored, contributed to, been required to
contribute to, or incurred any liability under any defined
benefit pension plan subject to Title IV of ERISA,
including without limitation any multi-employer plan as defined
in Section 3(37) or Section 4001(a)(3) of ERISA or any
multiple employer plan as defined in Section 413(c) of the
Code, or any plan that has two or more contributing sponsors at
least two of whom are not under common control, within the
meaning of Section 4063(a) of ERISA.
(g) Neither the Company nor any Company Subsidiary, nor, to
the knowledge of the Company, any other disqualified
person or party in interest (as defined in
Section 4975(e)(2) of the Code and Section 3(14) of
ERISA, respectively) has engaged in any transactions in
connection with any Plan that would result in the imposition on
the Company of a material penalty pursuant to Section 502
of ERISA, material damages pursuant to Section 409 of ERISA
or a material tax pursuant to Section 4975 of the Code.
(h) Each non-governmental plan maintained, or contributed
to, by or on behalf of the Company or any Company Subsidiary
applicable to employees of the Company or any Company Subsidiary
located outside of the United States (a Foreign
Plan) and each material non-governmental welfare benefit
plan maintained or contributed to by or on behalf of the Company
or any Company Subsidiary applicable to employees of the Company
or any Company Subsidiary located outside of the United States
(a Foreign Welfare Plan), has been administered in
material compliance with its terms and the requirements of all
applicable Laws and regulations, and all required contributions
to each Foreign Plan and Foreign Welfare Plan have been made.
All Foreign Plans that are required to be funded are funded to
the extent required in all material respects. There are no
Actions (other than routine benefit claims) pending or, to the
knowledge of the Company, threatened against any Foreign Plan or
Foreign Welfare Plan, or, to the Companys knowledge, no
facts or circumstances exist that could give rise to any such
Actions, except in each case as would not have, individually or
in the aggregate, a Company Material Adverse Effect.
(i) Except as required by applicable Law, no Plan exists
that, as a result of the execution of this Agreement,
shareholder approval of this Agreement, or the transactions
contemplated by this Agreement, would (i) result in
severance pay or any increase in severance pay upon any
termination of employment after the date of this Agreement
(except as required by the Code or ERISA) (ii) except as
contemplated by Section 2 with respect to Options,
Restricted Shares and RSUs, accelerate the time of payment or
vesting or result in any payment or funding (through a grantor
trust or otherwise) of compensation or benefits under, increase
the amount payable or result in any other material obligation
pursuant to, any Plan, or (iii) limit or restrict the right
of the Company to merge, amend or terminate any of the Plans.
Section 3.15 Labor
and Employee Matters. Except as has not had,
individually or in the aggregate, a Company Material Adverse
Effect, no work stoppage, slowdown or labor strike against the
Company or any Company Subsidiary is pending or, to the
knowledge of the Company, threatened. Except as has not had and
would not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect, the Company and
the Company Subsidiaries (a) have no direct or indirect
liability with respect to any misclassification of any Persons
as an independent contractor rather than as an employee and
(b) are in compliance with all applicable foreign, federal,
state and local laws, rules and regulations respecting
employment, employment practices, terms and conditions of
employment and wages and hours, in each case, with respect to
their employees. Except as set forth on Section 3.15 of the
Company Disclosure Schedules,
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neither the Company nor any Company Subsidiary is party to any
collective bargaining agreement or other labor union contract or
statutory works council applicable to Company Employees, nor to
the knowledge of the Company, are there any activities by any
labor unions to organize such Company Employees.
Section 3.16 Environmental
Matters.
(a) Except as would not have, individually or in the
aggregate, a Company Material Adverse Effect, (i) none of
the Company or any of the Company Subsidiaries is in violation
of any Environmental Law or, except for any violation that has
been fully resolved, has violated in the past any Environmental
Law; (ii) there is and has been no Release of Hazardous
Substances at, on or under (A) any of the properties
currently owned, leased or operated by the Company or any of the
Company Subsidiaries or, formerly owned, leased or operated by
the Company or any of the Company Subsidiaries or, (B) to
the knowledge of the Company, any other locations (including any
location used for the storage, disposal, recycling or other
handling of any Hazardous Substances), that would reasonably be
expected to result in a liability or obligation of the Company
or any of the Company Subsidiaries; (iii) the Company and
the Company Subsidiaries have obtained and are in compliance
with all Environmental Permits that are required for the
operation of the business of the Company or any of the Company
Subsidiaries or the holding of any interest in any of their
properties and, except for any noncompliance that has been fully
and finally resolved, have at all prior times been in compliance
with such Environmental Permits; and (iv) to the knowledge
of the Company, there are no actions, orders claims or notices
pending or issued to or threatened against the Company or any of
the Company Subsidiaries alleging violations of or liability
under any Environmental Law or otherwise concerning the Release,
threatened Release or management of Hazardous Substances.
(b) Parent and Merger Sub acknowledge that (i) the
representations and warranties contained in this
Section 3.16 are the only representations and warranties
being made with respect to compliance with or liability under
Environmental Laws or with respect to any environmental, health
or safety matter, including natural resources, related in any
way to the Company or to the Company Subsidiaries or to this
Agreement or to its subject matter and (ii) no other
representation or warranty contained in this Agreement
(including pursuant to Section 3.7) shall apply to any such
matters and no other representation or warranty, express or
implied, is being made with respect thereto.
(c) To the Companys knowledge, the Company has made
available to Parent a copy of all material environmental
reports, studies, assessments and audits prepared on or after
January 1, 1999 with respect to the Company or any of the
Company Subsidiaries that are currently in the possession or
control of the Company or any of the Company Subsidiaries.
(d) For purposes of this Agreement:
(i) Environmental Laws means any Laws
(including common law) of the United States federal, state,
local, non-United States, or any other Governmental Entity,
relating to (A) Releases or threatened Releases of
Hazardous Substances or materials containing Hazardous
Substances; (B) the manufacture, handling, transport, use,
treatment, storage, emission, discharge, disposal or arranging
for disposal of Hazardous Substances or materials containing
Hazardous Substances; or (C) pollution or protection of the
environment or of human health and safety as such is affected by
Hazardous Substances or materials containing Hazardous
Substances.
(ii) Environmental Permits means any permit,
consent, license, registration, order, grant, approval,
notification or any other authorization pursuant to
Environmental Law.
(iii) Hazardous Substances means (A) those
substances, materials or wastes defined as toxic, hazardous,
acutely hazardous, pollutants or contaminants, in, or regulated
under, the following United States federal statutes and any
analogous foreign or state statutes, and all regulations
thereunder: the Hazardous Materials Transportation Act, the
Resource Conservation and Recovery Act, the Comprehensive
Environmental Response, Compensation and Liability Act, the
Clean Water Act, the Safe Drinking Water Act, the Atomic Energy
Act, the Federal Insecticide, Fungicide, and Rodenticide Act and
the Clean Air Act; (B) petroleum and petroleum products,
including crude oil and any fractions thereof; (C) natural
gas, synthetic gas, and any mixtures thereof; and
(D) polychlorinated biphenyls, asbestos,
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molds that would reasonably be expected to have an adverse
effect on human health and urea formaldehyde foam insulation.
(iv) Release means any release, spilling,
leaking, pumping, pouring, discharging, emitting, emptying,
escaping, leaching, injecting, dumping, disposing or migrating
into or through the indoor or outdoor environment.
Section 3.17 No
Breach. The execution, delivery and
performance of this Agreement do not and the consummation by the
Company of the Merger and the other transactions contemplated by
this Agreement will not (i) violate any provision of the
certificate of incorporation or by-laws of the Company or the
comparable organizational documents of a Material Company
Subsidiary, (ii) violate, conflict with or result in the
breach of any of the terms or conditions of, result in
modification of or the cancellation or loss of a benefit under,
require any notice or action under, or otherwise give any other
contracting party the right to terminate, accelerate obligations
under or receive payment or additional rights under or
constitute (or with notice or lapse of time, or both,
constitute) a default under, any Contract (excluding Permits),
(iii) violate any Law applicable to the Company or the
Company Subsidiaries or by which any of the Companys or
the Company Subsidiaries assets or properties is bound,
(iv) violate any Permit, (v) except for
(a) filings with the SEC under the Exchange Act,
(b) filings pursuant to the DGCL as contemplated herein,
(c) the filing of a pre-merger notification report under
the
Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the
HSR Act), and any merger control, competition or
fair trade Law filings in foreign jurisdictions if and to the
extent required, (d) filings required with, and approvals
required by, the Nasdaq rules and regulations, and (e) the
notifications and consents listed on Section 3.17 of the
Company Disclosure Schedule, require any registration or filing
with, notice to, or Permit, order, authorization, consent or
approval of, any Governmental Entity or any third party pursuant
to a Material Contract or any material Lease, or
(vi) result in the creation of any Lien on the assets or
properties of the Company or a Company Subsidiary (other than
Permitted Liens), excluding from the foregoing
clauses (ii), (iii), (iv), (v) and
(vi) violations, conflicts, breaches, accelerations, rights
or entitlements, defaults and Liens which, and filings,
registrations, notices, Permits, orders, authorizations,
consents and approvals the absence of which would not have,
individually or in the aggregate, a Company Material Adverse
Effect. Notwithstanding the foregoing, for all purposes of the
Agreement, the Company does not make any representation or
warranty (pursuant to this Section 3.17 or elsewhere in
this Agreement) regarding the effect of the applicable
antitrust, merger control, competition or fair trade Laws on its
ability to execute, deliver, or perform its obligations under
the Agreement or to consummate the Merger as a result of the
enactment, promulgation, application, or threatened or actual
judicial or administrative investigation or litigation under, or
enforcement of, any antitrust, merger control, competition or
fair trade Law with respect to the consummation of the Merger.
Section 3.18 Board
Approvals; Anti-Takeover; Vote Required.
(a) The Company Board of Directors has (i) duly and
validly approved and adopted resolutions addressing all
corporate action required to be taken by the Company Board of
Directors to authorize this Agreement and the Merger,
(ii) resolved that the Merger is advisable and in the best
interests of the stockholders of the Company, and
(iii) subject to the other terms and conditions of this
Agreement, resolved to submit this Agreement to the stockholders
of the Company and to recommend that the stockholders of the
Company approve and adopt this Agreement and the Merger.
(b) Assuming the accuracy of the representations and
warranties set forth in Section 4.8(c), the Company and the
Company Board of Directors has taken all action necessary such
that no restrictions contained in any fair price,
moratorium, control share acquisition,
business combination or similar statute or
regulation or provision in the Companys certificate of
incorporation or by-laws, including without limitation
Section 203 of the DGCL, or any applicable regulation
thereunder, will apply to the execution, delivery or performance
of or compliance with this Agreement or the Merger.
(c) The Company has delivered or made available to Parent a
true and correct copy of the Company Rights Agreement, as
amended to date, and the Company Board of Directors has taken
such action as is necessary to amend the Company Rights
Agreement such that the execution, delivery or performance of or
compliance with this Agreement and the Merger will not:
(i) result in Parent becoming an Acquiring
Person
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under the Company Rights Agreement or (ii) result in the
grant of any rights to any person under the Company Rights
Agreement or enable, require or cause the Company Rights to
become exercisable, detach from the Company Common Stock, be
exercised or deemed exercised, or be distributed or otherwise
triggered.
(d) Assuming the accuracy of the representations and
warranties set forth in Section 4.8(c), the affirmative
vote of the holders of a majority of the outstanding shares of
Company Common Stock (the Company Stockholder
Approval) is the only vote of the Companys
stockholders necessary to approve or adopt this Agreement and
the transactions contemplated hereby.
Section 3.19 Financial
Advisor.
(a) The Company Board of Directors has received the opinion
of Goldman Sachs & Co. substantially to the effect
that, as of the date hereof, and based upon and subject to the
factors and assumptions set forth therein, the Per Share Price
to be received by the holders of shares of Company Common Stock
pursuant to this Agreement is fair from a financial point of
view to such holders, a signed copy of which will be shown to
Parent promptly after it is available following the date hereof.
(b) Other than Goldman Sachs & Co., no broker,
investment banker, financial advisor, finder, agent or similar
intermediary has acted on behalf of the Company or any Company
Subsidiary in connection with this Agreement or the transactions
contemplated hereby, and there are no other brokerage
commissions, finders fees, financial advisors fees
or similar fees or commissions payable in connection herewith
based on any agreement, arrangement, commitment or understanding
with the Company or any Company Subsidiary, or any action taken
by or on behalf of the Company or any Company Subsidiary. The
Company has made available to Parent a true, complete and
correct copy of the Companys engagement letter with
Goldman Sachs & Co. prior to the date hereof.
Section 3.19(b) of the Company Disclosure Schedule sets
forth the Companys good faith estimate as of the date
hereof of the amount of all legal and advisory fees and expenses
to be incurred by the Company in connection with the Merger.
Section 3.20 Information
in the Proxy Statement. The proxy statement
to be provided to the Companys stockholders in connection
with the Company Stockholders Meeting (such proxy statement,
inclusive of any amendment thereof or supplement thereto, the
Proxy Statement) on the date mailed to the
Companys stockholders and at the time of any meeting of
the Companys stockholders to be held in connection with
the Merger, will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not
misleading, except that no representation is made by the Company
with respect to statements made therein based on information
supplied by Parent, Merger Sub or any Sponsor expressly for
inclusion in the Proxy Statement. The Proxy Statement will
comply as to form in all material respects with the provisions
of the Exchange Act and the rules and regulations thereunder.
Section 3.21 Affiliate
Transactions. No executive officer or
director of the Company or any Company Subsidiary or any person
owning 5% or more of the Company Common Stock or any affiliate
or family member of any such officer, director or owner (an
Affiliated Party) is a party to any Contract with or
binding upon the Company or any Company Subsidiary or has any
material interest in any property or assets owned by the Company
or any Company Subsidiary or has engaged in any transaction
(other than those related to employment or incentive
arrangements) with the Company that is material to the Company
within the last 12 months, in each case, of the type that
would be required to be disclosed under Item 404 of
Regulation S-K
under the Securities Act.
Section 3.22 No
Other Representations or Warranties; Investigation by
Parent. Except for the representations and
warranties contained in this Section 3, and any
certificates delivered by the Company in connection with
Closing, each of Parent and Merger Sub acknowledges and agrees
that neither the Company nor any other person on behalf of the
Company makes, nor have Parent nor Merger Sub relied upon or
otherwise been induced by, any other express or implied
representation or warranty with respect to the Company or with
respect to any other information made available to Parent or
Merger Sub in connection with the transaction contemplated
hereunder. Neither the Company nor any other person will have or
be subject to any liability or indemnification obligation to
Parent, Merger Sub or any other person resulting from the
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distribution to Parent or Merger Sub, or Parents or Merger
Subs use of, any such information, including any
information, documents, projections, forecasts or other material
made available to Parent or Merger Sub in certain data
rooms or management presentations in expectation of the
transactions contemplated by this Agreement, unless any such
information is expressly included in a representation or
warranty contained in this Section 3 or in the
corresponding section of the Company Disclosure Schedule.
Notwithstanding the foregoing or any other provision of this
Agreement, nothing herein shall relieve the Company or any other
person from liability for fraud.
Section 4. Representations
and Warranties of Parent.
Except as set forth in the disclosure schedule delivered by
Parent to the Company on the date hereof (the Parent
Disclosure Schedule), the Parent and Merger Sub hereby
jointly and severally make the representations and warranties
set forth in this Section 4 to the Company. The section
numbers of the Parent Disclosure Schedules are numbered to
correspond to the section numbers of this Agreement to which
they refer. Any information set forth in one section of the
Parent Disclosure Schedule will be deemed to apply to each other
section or subsection of this Agreement to which its relevance
is reasonably apparent.
Section 4.1 Organization. Parent
and Merger Sub are corporations duly organized, validly existing
and in good standing under the Laws of the State of Delaware.
Parent and Merger Sub are duly qualified or licensed as a
foreign corporation or organization to do business, and are in
good standing, in each jurisdiction where the character of the
properties owned, leased or operated by them or the nature of
their business makes such qualification or licensing necessary,
except for such failures to be so qualified or licensed and in
good standing that would not reasonably be likely to prevent or
materially delay Parent and Merger Subs ability to
consummate the transactions contemplated hereby (a Parent
Material Adverse Effect). Parent and Merger Sub have been
formed solely for the purpose of engaging in the transactions
contemplated by this Agreement.
Section 4.2 Authority
to Execute and Perform Agreement. Parent and
Merger Sub have the necessary corporate power and authority to
enter into, execute and deliver this Agreement and to perform
fully their obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery of
this Agreement by Parent and Merger Sub and the consummation of
the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of Parent and
Merger Sub. This Agreement has been duly executed and delivered
by Parent and Merger Sub and, assuming this Agreement
constitutes the valid and binding obligation of the other
parties hereto, constitutes a valid and binding obligation,
enforceable against them in accordance with its terms, except to
the extent that enforcement of the rights and remedies created
hereby is subject to bankruptcy, insolvency, reorganization,
moratorium and other similar laws of general application
affecting the rights and remedies of creditors and to general
principles of equity (regardless of whether enforceability is
considered in a proceeding in equity or at Law).
Section 4.3 No
Conflict; Required Filings and Consents.
(a) The execution and delivery by Parent and Merger Sub of
this Agreement do not, and the consummation of the transactions
contemplated hereby and compliance with the terms hereof will
not, (i) violate in any material respect (A) any
provision of the certificate of incorporation, by-laws or other
organizational documents of Parent or Merger Sub (including the
limited partnership or similar agreements of the Sponsors), or
(B) subject to the filings and other matters referred to in
Section 4.3(b), any Law applicable to Parent or Merger Sub
or their properties or assets or (ii) require the consent
of, or registration, declaration or filing with, any third party
under any Contract to which Parent or Merger Sub is a party or
by which their respective assets or properties are bound.
(b) No consent of, or registration, declaration or filing
with, any third party or Governmental Entity is required to be
obtained or made by or with respect to Parent or Merger Sub in
connection with the execution, delivery and performance of this
Agreement or the consummation of the transactions contemplated
hereby, other than (i) filing of a pre-merger notification
report under the HSR Act, (ii) the filing with the SEC of
such reports under Section 13 of the Exchange Act as may be
required in connection with this Agreement and the transactions
contemplated hereby, (iii) the filing of the Certificate of
Merger with the Secretary of State of the State of Delaware and
any appropriate documents with the relevant authorities of the
other jurisdictions in
A-23
which Parent or Merger Sub is qualified to do business,
(iv) compliance with and filings under the merger control,
competition or fair trade Laws of any foreign jurisdiction, if
and to the extent required, (v) as set forth in
Section 3.17 of the Company Disclosure Schedule and
(vi) such items that have not had and are not reasonably
likely to have, individually or in the aggregate, a Parent
Material Adverse Effect.
Section 4.4 Information
in the Proxy Statement. The information
supplied by Parent and Merger Sub expressly for inclusion in the
Proxy Statement will not contain at the time it is first mailed
to the stockholders of the Company or at the time of the Company
Stockholders Meeting, any untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not
misleading.
Section 4.5 Litigation. As
of the date of this Agreement, there is no Action pending or, to
the knowledge of Parent, threatened, against Parent or any of
its affiliates before any Governmental Entity that would or
seeks to materially delay or prevent the consummation of the
Merger. As of the date of this Agreement, neither Parent nor any
of its affiliates is subject to any continuing order of, consent
decree, settlement agreement or other similar written agreement
with, or, to the knowledge of Parent, continuing investigation
by, any Governmental Entity, or any order, writ, judgment,
injunction, decree, determination or award of any Governmental
Entity that would or seeks to materially delay or prevent the
consummation of the Merger.
Section 4.6 Financing. Parent
has delivered to the Company true and complete copies of
(i) the Equity Commitment Letter, dated as of the date
hereof (the Equity Commitment Letter), by and
between Parent and each of Hellman & Friedman Capital
Partners V, L.P., JMI Equity Fund V, L.P. and TPG
Partners V, L.P. (each, a Sponsor and
collectively, the Sponsors), pursuant to which each
Sponsor has committed, subject to the terms and conditions set
forth therein, to provide certain of the cash equity financing
to Parent in connection with the transactions contemplated
hereby, and (ii) the Debt Commitment Letter, dated as of
the date hereof (as amended, supplemented or otherwise modified
from time to time pursuant to Section 6.8) (the Debt
Commitment Letter), between Parent and Morgan
Stanley & Co. Incorporated, Morgan Stanley Senior
Funding, Inc., Wachovia Bank, National Association, Wachovia
Investment Holdings, LLC, Wachovia Capital Markets, LLC
(collectively, the Lenders), pursuant to which the
Lenders have committed, subject to the terms and conditions set
forth therein, to provide the debt financing set forth therein
(the Debt Financing) to Parent in connection with
the transactions contemplated hereby. The Equity Commitment
Letter, together with the Debt Commitment Letter, are sometimes
referred to collectively herein as, the Commitment
Letters, and the amounts committed pursuant to the
Commitment Letters being, the Financing. As of the
date hereof, the commitments contained in the Commitment Letters
have not been withdrawn or rescinded in any respect. As of the
date hereof, the Commitment Letters are in full force and effect
in the form so delivered. There are no conditions precedent or
other contingencies related to the funding of the full amount of
the Financing, other than as set forth in or contemplated by the
Commitment Letters. Parent has fully paid all commitment fees
required in connection with the Debt Commitment Letter. Assuming
the satisfaction in full of the conditions set forth in
Section 7.2, the aggregate proceeds contemplated by the
Commitment Letters will, together with the unrestricted Cash
Equivalents net of any tax liabilities associated with making
such Cash Equivalents available to pay the Merger Consideration
(excluding, for avoidance of doubt, any cash which cannot be
distributed, contributed or otherwise delivered to the Company
in accordance with applicable Laws, including those relating to
solvency, adequate surplus and similar capital adequacy tests)
of the Company and the Company Subsidiaries (assuming that the
sum, as of the Effective Time, of such cash and cash received
upon the liquidation of all Cash Equivalents, as calculated
above, will equal at least $190,000,000), be sufficient when
funded for Parent and the Surviving Corporation to pay the
aggregate Merger Consideration, Cash Out Amount and any other
payments contemplated in this Agreement and to pay all fees and
expenses related to the Financing or the Merger. As of the date
of this Agreement, Parent does not have any reason to believe
that any of the conditions to the Financing will not be
satisfied or that the Financing will not be available to Merger
Sub on the Closing Date. For avoidance of doubt, it shall not be
a condition to Closing for Parent to obtain the Financing or any
alternative financing.
Section 4.7 Guarantee. Concurrently
with the execution of this Agreement, Parent and Merger Sub have
delivered to the Company guarantees, dated the date hereof, of
each Sponsor with respect to certain
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matters on the terms specified therein (the
Guarantees). Each Guarantee is in full force and
effect and has not been amended, withdrawn or rescinded in any
respect. Prior to the close of business on the third business
day after the date of this Agreement, Parent will cause to be
delivered an opinion of counsel for each Sponsor, in each case
in form and substance reasonably satisfactory to the Company, as
to the authorization of the Guarantee of such Sponsor, which
opinion has not been withdrawn or modified.
Section 4.8 Parent
and Merger Sub.
(a) Each of Parent and Merger Sub has been formed solely
for the purpose of engaging in the transactions contemplated
hereby and prior to the Effective Time will have engaged in no
other business activities and will have incurred no liabilities
or obligations other than as contemplated herein.
(b) Prior to the Effective Time, Parent shall deliver to
the Company a complete and correct description of its projected
(immediately following the Effective Time) ownership. At the
Effective Time, the Sponsors shall own a majority of the
outstanding equity interests in Parent, and no Person other than
the Sponsors shall own five percent (5%) or more of the
outstanding equity interests in Parent. Parent will not, at or
immediately following the Effective Time, be owned or controlled
by a foreign person or persons for purposes of the International
Traffic in Arms Regulations or by a foreign person or persons
such that any foreign person(s), directly or indirectly, will
own or have beneficial ownership (defined as the power to vote
or direct the voting of a security or to impose or direct the
disposition of a security) of five percent (5%) or more of the
outstanding shares of any class of Parents equity
securities.
(c) Each of Parent, Merger Sub, each Sponsor and their
respective affiliates is not, nor at any time during the last
three years has it been, an interested stockholder
of the Company as defined in Section 203 of the DGCL. Each
of Parent, Merger Sub, each Sponsor and their respective
affiliates do not own (directly or indirectly, beneficially or
of record) and is not a party to any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or
disposing of, in each case, any shares of capital stock of the
Company (other than as contemplated by this Agreement).
Section 4.9 Brokers. No
broker, finder, agent or similar intermediary has acted on
behalf of any Sponsor, Parent or Merger Sub in connection with
this Agreement or the transactions contemplated hereby, and
there are no brokerage commissions, finders fees or
similar fees or commissions payable in connection herewith based
on any agreement, arrangement or understanding with any Sponsor,
Parent or Merger Sub, or any action taken by any Sponsor, Parent
or Merger Sub other than fees and commissions that would not be
borne by the Company in the event the Closing does not occur.
Section 4.10 No
Other Representations or Warranties. Except
for the representations and warranties contained in this
Section 4, and any certificate delivered by Parent or
Merger Sub in connection with Closing the Company acknowledges
and agrees that none of Parent, Merger Sub or any other person
on behalf of Parent or Merger Sub makes, nor has the Company
relied upon or been induced by, any other express or implied
representation or warranty with respect to Parent or Merger Sub
or with respect to any other information provided to the Company
in connection with the transactions contemplated hereunder.
Section 5. Conduct
of Business Pending the Merger; No Solicitation; Employee
Matters.
Section 5.1 Conduct
of Business. During the period from the date
of this Agreement and continuing until the earlier of the
termination of this Agreement or the Effective Time, the Company
and each Company Subsidiary shall, except as required by Law, as
expressly contemplated by this Agreement, as set forth on
Section 5.1 of the Company Disclosure Schedule, or to the
extent that Parent shall otherwise consent in writing (not to be
unreasonably withheld or delayed), conduct its business in the
ordinary course. Without limiting the generality of the
foregoing, without the prior written consent of Parent (not to
be unreasonably withheld or delayed), during the period from the
date hereof and continuing until the earlier of the termination
of this Agreement or the Effective Time, the Company and the
Company Subsidiaries shall observe the
A-25
following covenants, in each case except as required by Law or
as contemplated by this Agreement or as set forth on
Section 5.1 of the Company Disclosure Schedule:
(a) Affirmative Covenants Pending
Closing. The Company agrees that the Company
and the Company Subsidiaries shall:
(i) Preservation of the Business; Maintenance of
Properties; Material Contracts. Use
reasonable best efforts to, on a basis consistent with past
practices, (A) preserve the business of the Company and the
Company Subsidiaries, including without limitation, keeping
available the services of the current officers, employees and
consultants of the Company and the Company Subsidiaries and to
preserve the present relationships of the Company and the
Company Subsidiaries with customers, suppliers and other persons
with which the Company or any Company Subsidiary has significant
business relations, (B) advertise, promote and market the
Companys products, (C) keep the Companys and
the Company Subsidiaries material properties substantially
intact, to preserve their goodwill and business, to maintain all
physical properties in good repair and condition,
(D) perform and comply in all material respects with the
terms of its Contracts, and (E) maintain, and comply in all
material respects with, all Permits;
(ii) Insurance. Use reasonable
best efforts to keep in effect general liability, casualty,
product liability, workers compensation, directors
and officers liability and other material insurance
policies in coverage scope and amounts (except as contemplated
by Section 6.5) substantially similar to those in effect at
the date hereof; and
(iii) Company Cash. The Company
agrees to use reasonable best efforts to take and to cause the
Company Subsidiaries to use reasonable best efforts to take, all
action reasonably requested by Parent in order to cause all, or
such portion as Parent shall request, of the Companys and
the Company Subsidiaries unrestricted Cash Equivalents
(excluding, for avoidance of doubt, any Cash Equivalents which
cannot be distributed, contributed or otherwise delivered to the
Company in accordance with applicable Laws, including those
relating to solvency, adequate surplus and similar capital
adequacy tests) to be liquidated and converted into cash of the
Company that is available to the Company at the Effective Time
to pay as part of the Merger Consideration.
(b) Negative Covenants Pending
Closing. The Company agrees that each of the
Company and the Company Subsidiaries shall not:
(i) Indebtedness. Other than
(x) intercompany transactions among the Company
and/or one
or more Company Subsidiaries, (y) performance bonds issued
in the ordinary course of business, and (z) letters of
credit issued in the ordinary course of business consistent with
past practice under the Credit Agreement, dated as of
September 4, 2002, between the Company and Wells Fargo
Bank, National Bank, and the Credit Agreement, dated as of
January 26, 2005, between Intergraph Deutschland GmbH and
Fortis Bank Germany, each as amended and in effect on the date
hereof, incur any indebtedness for borrowed money or issue any
debt securities or assume, guarantee, endorse or otherwise
become payable for any indebtedness in an aggregate amount in
excess of $3,000,000;
(ii) Compensation. (1) Change
the compensation payable to any executive officer, officer,
employee, agent or consultant or enter into or amend any
employment, change in control, bonus, severance, termination,
retention or other agreement or arrangement with any officer,
employee, agent or consultant of the Company or a Company
Subsidiary, or adopt, establish, enter into, amend or terminate,
or increase the benefits (including fringe benefits), severance
or termination pay under, any employee benefit plan or agreement
or otherwise, or otherwise grant any severance or termination
pay to any of the foregoing, except (A), in each case, as
required by Law or in accordance with existing agreements and
(B) in the case of annual increases in salary and wages for
employees (other than executive officers), in the ordinary
course of business consistent with past practice, or
(2) make any loans or advances to any of its directors,
officers or employees, agents or consultants, other than
advancements of business expenses in the ordinary course in
accordance with
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the Companys existing policies, or make any material
change in its existing borrowing or lending arrangements for or
on behalf of any such persons pursuant to a Plan or otherwise;
provided, however, that the foregoing clause (1)
shall not restrict the Company or any of the Company
Subsidiaries from entering into or making available to newly
hired employees (other than executive officers) or to employees
(other than executive officers) in the context of promotions
based on job performance or workplace requirements, in each case
in the ordinary course of business, plans, agreements, benefits
and compensation arrangements (excluding equity or equity-based
grants) that have a value that is consistent with the past
practice of making compensation and benefits available to newly
hired or promoted employees in similar positions;
(iii) Capital Stock. Split,
combine or reclassify any of its capital stock or make any
change in the number of shares of its capital stock authorized,
issued or outstanding (other than through the exercise of
Company Options outstanding on the date hereof or repurchases or
cancellation of Restricted Shares in accordance with the terms
of the applicable award agreements or similar arrangements to
satisfy withholding obligations upon the vesting of Restricted
Shares or the exercise of Company Options) or grant, sell or
otherwise issue or authorize the issuance of any share of
capital stock, any other voting security or any security
convertible into, or any option, warrant or other right to
purchase (including any equity-based award), or convert any
obligation (other than RSUs outstanding on the date hereof)
into, shares of its capital stock or any other voting security,
declare, set aside, make or pay any dividend or other
distribution with respect to any shares of its capital stock,
sell, encumber or transfer any shares of its capital stock, or
acquire, redeem or otherwise repurchase any shares of its
capital stock or any rights, warrants or options to purchase any
of its capital stock, or any securities convertible into or
exchangeable for any such shares, or amend or alter in any
respect, or grant any waiver or exception under, the Company
Rights Agreement (including taking any action so that any Person
is not an Acquiring Person thereunder);
(iv) Charter, By Laws and
Directors. Amend, or otherwise alter or
modify in any respect, the certificate of incorporation or
by-laws of the Company or any Material Company Subsidiary in a
manner adverse to Parent;
(v) Acquisitions. Acquire or
license (including by merger, consolidation or acquisition of
stock or assets or any other business combination), or enter
into any binding memorandum of understanding, letter of intent
or other agreement, arrangement or understanding to acquire or
license all or substantially all the assets thereof or equity
interests therein of any corporation, partnership, other
business or any division thereof, except that the Company can
engage in one (and only one) such acquisition having a
transaction price less than $3,000,000 without obtaining
Parents prior consent or, in the case of licenses, in the
ordinary course of business consistent with past practice;
(vi) Disposition of Assets. Sell
or transfer, or mortgage, pledge, lease, license, terminate any
lease or license, or otherwise dispose of or encumber any
tangible or intangible asset or related assets (including
capital stock or other equity interest of any Person, including
the Company or a Company Subsidiary) with a value in excess of
$1,000,000 individually or $3,000,000 in the aggregate, other
than sales and non-exclusive licenses of products and services
of the Company and the Company Subsidiaries in the ordinary
course of business consistent with past practice;
(vii) Material
Contracts/Amendments. Enter into, or permit a
Company Subsidiary to enter into (A) any Material Contract
that terminates, provides a right to terminate, is modified or
results in any payment or penalty as a result of completion of
the Merger, (B) any Contract that is material to the
Company and the Company Subsidiaries, taken as a whole, other
than in the ordinary course of business on terms consistent with
past practice; voluntarily terminate or modify in any material
respect any Contract of the type specified in
subsection (B) other than modifications in the
ordinary course of business consistent with past practice;
(viii) Capital
Expenditures. Authorize any single capital
expenditure or purchase of assets, or a series of related
expenditures or purchases, in excess of $2,000,000;
A-27
(ix) Accounting Policies. Except
as may be required as a result of a change in Law or GAAP (or
any interpretation thereof), change any of the accounting
practices or principles used by it;
(x) Writing Up or Down
Assets. Write up, write down or write off the
book value of any assets of the Company and the Material Company
Subsidiaries, other than (i) in the ordinary course of
business and consistent with past practice or (ii) as may
be required by GAAP or the Financial Accounting Standards Board;
(xi) Legal. Other than in
connection with the settlement of an intellectual property
dispute pursuant to which a license may be granted in
Intellectual Property of the Company or any Company Subsidiary
that is not incorporated in the primary commercial products of
the Security, Government & Infrastructure Division or
Process, Power & Marine Division of the Company and the
Company Subsidiaries which settlement does not involve the
Company or any Company Subsidiary making any payments or
agreeing to any restrictions on its business, with respect to
which settlements the Company agrees to consult with Parent and
consider Parents views in good faith, settle or compromise
any pending or threatened suit, action or claim which
(a) is material to the Company and the Company Subsidiaries
taken as a whole, (b) requires payment to or by the Company
or any Company Subsidiary (exclusive of attorneys fees,
including success fees) in excess of $1,000,000,
(c) relates to the transactions contemplated hereby,
(d) involves material restrictions on the business
activities of the Company or any Company Subsidiary or other
equitable remedies that materially adversely affect the business
activities of the Company or any Company Subsidiary, or
(e) would involve the issuance of Company securities;
(xii) Extraordinary
Transactions. Adopt a plan of complete or
partial liquidation, dissolution, merger, consolidation, or
recapitalization of the Company or any of the Company
Subsidiaries (other than the Merger);
(xiii) Plans. Except as required
by Law, establish, adopt, enter into or amend any collective
bargaining, bonus, profit sharing, thrift, compensation, stock
option, restricted stock, pension, retirement, deferred
compensation, employment, termination, severance or other plan,
agreement, trust, fund, policy or arrangement for the benefit of
any current or former directors, officers or employees of the
Company or any Company Subsidiary, pay any discretionary bonuses
to any employee of the Company or any Company Subsidiary, except
for the exercise of discretionary elements under existing Plans
or arrangements, or change in any material respect the manner in
which contributions to any such Plan or arrangement are made or
the basis on which such contributions are determined;
(xiv) Tax Matters. Except in each
case as required by Law or Treasury regulation, make, revoke or
change any material Tax election, file any amended Tax Return
with respect to any material Tax, settle or compromise any
material federal, state, local or foreign Tax liability,
surrender any right to claim a material Tax refund, waive any
statute of limitations in respect of a material amount of Taxes,
agree to an extension of time with respect to an assessment or
deficiency for a material amount of Taxes or change any annual
Tax accounting period;
(xv) Cash
Management. (i) Except as requested by
Parent, including pursuant to Section 5.1(a)(iii), fail to
manage and retain cash and Cash Equivalents and investments in
marketable securities in a manner substantially consistent with
past practice and in their current jurisdiction and
substantially in conformity with the reasonable instructions of
Parent, or (ii) intentionally fail to manage accounts
payable or accounts receivable in a manner substantially
consistent with past practice;
(xvi) Merger Financing. Take any
action that is intended to materially impair, materially delay
or prevent Parents obtaining of financing contemplated by
the Debt Commitment Letter; or
(xvii) Obligations. Authorize,
commit or obligate itself to do any of the foregoing.
A-28
(c) No Control of the Companys
Business. Parent acknowledges and agrees
that: (i) nothing contained in this Agreement shall give
Parent, directly or indirectly, the right to control or direct
the Companys or the Company Subsidiaries operations
prior to the Effective Time, (ii) prior to the Effective
Time, each of the Company and Parent shall exercise, consistent
with the terms and conditions of this Agreement, complete
control and supervision over its and its subsidiaries
respective operations, and (iii) notwithstanding anything
to the contrary set forth in this Agreement, no consent of the
Parent shall be required with respect to any matter set forth in
Section 5.1 or elsewhere in this Agreement to the extent
the requirement of such consent would, upon advice of counsel,
violate applicable anti-trust Law.
Section 5.2 No
Solicitation.
(a) Each of the Company, the Company Subsidiaries and their
respective Representatives (as defined below) has ceased and
caused to be terminated all existing solicitations, discussions
and negotiations with any persons with respect to any inquiry,
offer or proposal from any person or group other than the Parent
or any of its affiliates relating to any transaction or proposed
transaction or series of related transactions involving:
(A) any direct or indirect acquisition or purchase by any
person or group (as defined under Section 13(d)
of the Exchange Act) of a twenty percent (20%) interest or more
in the total outstanding shares of any class of equity or voting
securities of the Company or any Material Company Subsidiary or
any other Company Subsidiary that is a significant
subsidiary within the meaning of
Rule 1-02
of
Regulation S-X
promulgated by the SEC (collectively the Significant
Company Subsidiaries), or any tender offer or exchange
offer that if consummated would result in any person or
group beneficially owning twenty percent (20%) or
more of the total outstanding shares of any class of equity or
voting securities of the Company, (B) any sale or
disposition of consolidated assets or rights of the Company
(including for this purpose the outstanding assets, rights and
equity securities of the Company Subsidiaries) to any person or
group for consideration equal to twenty percent
(20%) or more of the aggregate fair market value of all of the
outstanding shares of Company Common Stock, or (C) any
consolidation, merger, business combination, recapitalization,
liquidation, dissolution or similar transaction with respect to
the Company or any Significant Company Subsidiary (any of the
foregoing inquiries, offers or proposals being an
Acquisition Proposal). Except as provided in
Section 5.2(b), (c) or (d), from the date hereof,
until the earlier of the termination of this Agreement or the
Effective Time, the Company shall not and shall not authorize or
permit its officers, directors, employees, investment bankers,
attorneys, accountants, financial or other advisors or other
agents or those of any Company Subsidiary (collectively,
Representatives) to, directly or indirectly,
(i) solicit, initiate, propose or knowingly encourage or
take any other action to knowingly facilitate the submission of
an Acquisition Proposal, (ii) enter into any letter of
intent, memorandum of understanding, agreement, option agreement
or other agreement or arrangement with respect to any
Acquisition Proposal, (iii) enter into, continue,
participate, engage or knowingly assist in any manner in
negotiations or discussions with, or provide any non-public
information or data to, any person (other than Parent or any of
its affiliates or representatives) relating to any Acquisition
Proposal, or grant any waiver or release under any standstill,
or (iv) take any action to (A) other than as
contemplated by this Agreement in connection with the Merger,
render the Company Rights issued pursuant to the terms of the
Company Rights Agreement inapplicable to an Acquisition Proposal
or the transactions contemplated thereby, exempt or exclude any
person from the definition of an Acquiring Person (as defined in
the Company Rights Agreement) under the terms of the Company
Rights Agreement or allow the Company Rights to expire prior to
their expiration date or (B) exempt any person from the
restrictions on business combinations contained in
Section 203 of the DGCL (or any similar provision) or
otherwise cause such restrictions not to apply.
(b) Notwithstanding the foregoing, prior to obtaining the
Company Stockholder Approval, the Company (i) may (and may
authorize and permit its Representatives to), pursuant to a
confidentiality agreement with terms and conditions no less
favorable in any material respect to the Company than the
Confidentiality Agreements (except for such changes as are
necessary to allow the Company to comply with the terms of this
Agreement), furnish information concerning, and provide access
to, its business, properties, employees and assets to any Person
(and its Representatives acting in such capacity) that has made
an Acquisition Proposal, provided that any such information must
be provided to Parent prior to or substantially concurrent with
the time of its provision to such third party to the extent not
previously made available to Parent, and (ii) may
participate, engage or assist in any manner in negotiations and
discussions with any Person (and its
A-29
Representatives acting in such capacity) that has made an
Acquisition Proposal with respect to such Acquisition Proposal
if, but only if, in the case of both clause (i) and (ii):
(x) such Acquisition Proposal provides for any Person or
group to acquire, directly or indirectly, a majority of the
issued and outstanding shares of Company Common Stock (or a
majority of the voting securities of any surviving corporation
in a merger or consolidation with the Company) or provides for
the acquisition of all or substantially all of the consolidated
assets of the Company (a Takeover Proposal);
(y) such Takeover Proposal was not solicited or initiated
in violation of Section 5.2(a) by the Company, any Company
Subsidiary or any of their respective Representatives and the
Company Board of Directors (or any committee thereof) determines
in good faith, after consultation with its financial advisor and
outside counsel, that such Takeover Proposal is, or is
reasonably likely to result in, a Takeover Proposal from such
Person that is more favorable, from a financial point of view,
to the Companys stockholders taking into account all of
the terms and conditions of such proposal, including any
break-up
fees, expense reimbursement provisions and conditions to
consummation and the likelihood of consummation in light of all
financing, regulatory, legal, and other aspects of such
proposal, and this Agreement (including any binding written and
complete proposal to amend the terms of this Agreement) and for
which financing, to the extent required, is then committed and
on terms and conditions that the Company Board of Directors (or
any committee thereof) determines, after consultation with its
financial advisor, are reasonably likely to result in
disbursement sufficient for consummation of the transactions
contemplated by the Takeover Proposal; and (z) in the good
faith opinion of the Company Board of Directors (or any
committee thereof), after consultation with outside legal
counsel, providing such information or access or participating,
engaging or assisting in such negotiations or discussions is or
would be in the best interests of the Company and its
stockholders and that the failure to take such action could
violate the Company Board of Directors fiduciary duties to
the Companys stockholders under applicable Law (a Takeover
Proposal which satisfies clauses (x), (y) and
(z) being referred to herein as a Superior
Proposal). The Company shall promptly, and in any event
within one business day after receipt of any inquiries,
proposals or offers received by, any request for information
from, or any negotiations sought to be initiated or continued
with, either the Company or its Representatives concerning an
Acquisition Proposal or that could reasonably be expected to
lead to an Acquisition Proposal, notify Parent orally and in
writing and disclose the identity of the other party and the
material terms of such inquiry, offer, proposal or request and,
in the case of written materials provided to the Company,
provide Parent copies or written summaries of such materials as
promptly as reasonably practicable. The Company will keep Parent
informed on a reasonably prompt basis of the status and any
discussions or negotiations (including amendments and proposed
amendments) relating to any Takeover Proposal or other inquiry,
offer, proposal or request.
(c) Except as set forth in this subsection (c),
neither the Company Board of Directors nor any committee thereof
shall (i) withdraw or modify, or publicly propose to
withdraw or modify, in a manner adverse to Parent or Merger Sub,
the approval or recommendation of the Company Board of Directors
of this Agreement or the Merger or announce that it has resolved
to take such action (any such action under this clause (i),
a Change in Recommendation), (ii) approve,
recommend or adopt or publicly propose to approve, recommend or
adopt any Acquisition Proposal or (iii) approve, recommend,
adopt or allow the Company to enter into any letter of intent,
memorandum of understanding, option agreement or similar
arrangement with respect to any Acquisition Proposal.
Notwithstanding the foregoing, in response to a Takeover
Proposal that did not arise from a breach by the Company, any
Company Subsidiary or any of their respective Representatives of
Section 5.2(a), prior to the Company Stockholder Approval
(x) the Company Board of Directors (or any committee
thereof) shall be permitted to make a Change in Recommendation
if it determines in good faith, after consultation with its
financial advisor and outside legal counsel, that such Takeover
Proposal is a Superior Proposal and that the failure to take
such action could violate the Company Board of Directors
fiduciary duties to the Companys stockholders under
applicable Law and (y) the Company may enter into a
definitive agreement with respect to such Takeover Proposal if
the Company Board of Directors (or a committee thereof) has made
the determination in clause (x), has determined in good
faith, after consultation with its financial advisor and outside
legal counsel, that such Takeover Proposal constitutes a
Superior Proposal and, concurrently with entering into such
definitive agreement, terminates this Agreement pursuant to
Section 8.1(g) and pays the applicable termination fee as a
condition to such termination. The Company shall not be entitled
to terminate pursuant to Section 8.1(g), effect a Change in
Recommendation or enter into an agreement with respect to a
A-30
Superior Proposal unless and until (A) after the third
business day following Parents receipt of a written notice
(a Notice of Superior Proposal) from the Company
advising Parent that the Company intends to take such action and
specifying the reasons therefor, including the material terms
and conditions of the Superior Proposal that is the basis of
such action in such Notice of Superior Proposal, and stating
that the Company intends to terminate the Agreement pursuant to
Section 8.1(g) or effect a Change in Recommendation, as
applicable (it being understood and agreed that (1) in
determining whether to cause or permit the Company to so
terminate this Agreement, the Company Board of Directors (or a
committee thereof) shall take into account any changes to the
financial terms of this Agreement proposed by the Sponsor to the
Company in any binding written proposal in response to a Notice
of Superior Proposal or otherwise, and (2) any material
amendment to the financial terms of such Superior Proposal shall
require a new Notice of Superior Proposal and a new three
business day period), (B) the Company has complied in all
material respects with this Section 5.2 and (C) in the
case of a termination pursuant to Section 8.1(g) to enter
into an agreement for a Superior Proposal, the Company has paid,
or caused to be paid to, Parent or its designee all amounts due
Parent pursuant to Section 8.2 of this Agreement as a
result of a termination pursuant to Section 8.1(g).
(d) Nothing contained in this Section 5.2 or any other
provision of this Agreement shall prohibit the Company or the
Company Board of Directors (or any committee thereof) from
taking and disclosing to the Companys stockholders a
position with respect to any tender or exchange offer by a third
party pursuant to
Rules 14d-9
and 14e-2(a)
promulgated under the Exchange Act, provided that any such
disclosure (other than a recommendation of rejection of such
tender or exchange offer or a stop, look and listen
letter or similar communication of the type contemplated by
Rule 14d-9(f)
under the Exchange Act) shall be deemed to be a Change in
Recommendation; provided, however, that the Company Board of
Directors (or any committee thereof) shall not
(A) recommend that the stockholders of the Company tender
their shares of Company Common Stock in connection with such
tender or exchange offer (or otherwise approve or recommend any
Acquisition Proposal or take any action under the Company Rights
Agreement to facilitate such tender or exchange offer) or
(B) withdraw or modify its approval or recommendation of
this Agreement and the Merger, unless in each case the
applicable requirements of Section 5.2(c) shall have been
satisfied.
Section 5.3 Employee
Matters.
(a) Except as provided in Section 5.3(a) of the
Company Disclosure Schedule, until the first anniversary of the
Effective Time (the Benefits Continuation Period),
the Surviving Corporation shall pay or cause to be paid to each
employee who continues as an employee of the Company, the
Company Subsidiaries or the Surviving Corporation during the
Benefits Continuation Period (the Continuing
Employees) salary, wages, cash incentive opportunities,
severance, medical benefits and other welfare benefit plans
programs and arrangements (with the exception of any equity
compensation programs or defined benefit plans) which are at
least comparable in the aggregate to those provided prior to the
Closing Date under the Plans; provided, that with respect to
Continuing Employees who are subject to employment agreements
that have not been superseded by agreements with Parent and
which are listed in Section 3.9(a)(x) of the Company
Disclosure Schedule (the Employment Agreements), the
Surviving Corporation shall expressly assume such Employment
Agreements, and fulfill all obligations thereunder. During the
Benefits Continuation Period, the Surviving Corporation shall
pay, subject to such terms and conditions as it shall establish
and the terms of applicable Employment Agreements, any such
Continuing Employee whose employment is involuntarily terminated
by the Parent, the Surviving Corporation or any of their
Subsidiaries without cause an amount of severance pay in cash
equal to the amount of cash severance pay that would have been
payable to such Continuing Employee under the terms of the
severance policy listed in Schedule 3.14(a) of the Company
Disclosure Schedule and applicable to such Continuing Employee
immediately prior to the date of this Agreement or, if
applicable, such Continuing Employees Employment
Agreement. The foregoing provisions of this Section 5.3
shall not be construed or interpreted to restrict in any way the
Surviving Corporations or Parents ability to amend,
modify or terminate any Plan or policy (including, without
limitation, to change the entities who administer such Plans or
policies, or the manner in which such Plans or policies are
administered) to the extent not inconsistent with such foregoing
restrictions or any other plan made available to the Continuing
Employees or, subject to the terms of applicable Employment
Agreements, to terminate any persons employment at any
time or for any reason.
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(b) The Surviving Corporation shall (i) waive any
applicable pre-existing condition exclusions and waiting periods
with respect to participation and coverage requirements in any
replacement or successor welfare benefit plan of the Surviving
Corporation that a Continuing Employee is eligible to
participate in following the Effective Time to the extent such
exclusions or waiting periods were inapplicable to, or had been
satisfied by, such Continuing Employee immediately prior to the
Effective Time under the relevant Plan in which such Continuing
Employee participated, (ii) provide each such Continuing
Employee with credit for any co-payments and deductible paid
prior to the Effective Time (to the same extent such credit was
given under the analogous Plan prior to the Effective Time) in
satisfying any applicable deductible or
out-of-pocket
requirements and (iii) to the extent that any Continuing
Employee is allowed to participate in any employee benefit plan
of the Parent, the Surviving Corporation or any of their
subsidiaries following the Effective Time, cause such plan to
recognize the service of such Continuing Employee with the
Company and the Company Subsidiaries prior to the Effective Time
for purposes of eligibility to participate, vesting and benefit
accrual (but not for benefit accrual under any defined benefit,
retiree welfare or similar plan) to the extent of such service;
provided, however, that such crediting of service shall not
operate to duplicate any benefit or the funding of any such
benefit.
(c) Parent and Company acknowledge and agree that the
provisions contained in this Section 5.3 shall not create
any right in any other Person, including, without limitation,
any Continuing Employee or any participant in any Plan, or shall
interfere with the right of Parent or the Surviving Corporation
to amend, modify or terminate any Plan (subject to the
provisions of Section 5.3(a) and (b) above) or to
terminate the employment of any Continuing Employee for any
reason.
(d) Prior to the Effective Time, the Company shall take all
such steps as may be reasonably necessary (to the extent
permitted under applicable Law) to cause any dispositions of the
Company Common Stock (including derivative securities with
respect to the Company Common Stock) resulting from the Merger
or the other transactions contemplated by Section 2 of this
Agreement by each individual who is subject to the reporting
requirements of Section 16(a) of the Exchange Act with
respect to the Company to be exempt under
Rule 16b-3
promulgated under the Exchange Act.
Section 6. Additional
Agreements.
Section 6.1 Proxy
Statement. The Company shall, as soon as
practicable following the date hereof, prepare and file with the
SEC the Proxy Statement in preliminary form, and each of the
Company, Parent and Merger Sub shall use their reasonable
efforts to respond as promptly as practicable to any comments of
the SEC or its staff with respect thereto. The Company shall
notify Parent promptly of the receipt of any comments from the
SEC or its staff and of any request by the SEC or its staff for
amendments or supplements to the Proxy Statement or for
additional information and shall supply Parent with copies of
all correspondence between the Company or any of its
representatives, on the one hand, and the SEC or its staff, on
the other hand, with respect to the Proxy Statement. The Company
shall use its reasonable best efforts to cause the Proxy
Statement to be mailed to the Companys stockholders as
promptly as practicable after filing with the SEC. If at any
time prior to receipt of the Company Stockholder Approval there
shall occur any event that should, upon the advice of the
Companys outside legal counsel, be set forth in an
amendment or supplement to the Proxy Statement so that the Proxy
Statement shall not contain any untrue statement of a material
fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not
misleading, the Company shall promptly prepare, file with the
SEC and mail to its stockholders such an amendment or
supplement. Notwithstanding anything to the contrary stated
above, prior to filing or mailing the Proxy Statement or any
other SEC filing required in connection with the transactions
contemplated hereby (or, in each case, any amendment or
supplement thereto) or responding to any comments of the SEC
with respect thereto, the party responsible for filing or
mailing such document shall provide the other party an
opportunity to review and comment on such document or response
and shall include in such document or response comments
reasonably proposed by the other party.
Section 6.2 Company
Stockholders Meeting. The Company shall, as
soon as practicable following the date hereof, duly call, give
notice of, convene and hold a meeting of its stockholders (the
Company
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Stockholders Meeting) for the purpose of seeking the
Company Stockholder Approval. Subject to Section 5.2(c),
the Companys Board of Directors (or any committee thereof)
shall recommend adoption and approval of this Agreement and the
Merger by the stockholders of the Company and include such
recommendation in the Proxy Statement. Unless such
recommendation shall have been modified or withdrawn in
accordance with Section 5.2(c), the Company shall take all
action that is both reasonable and lawful to solicit from its
stockholders proxies in favor of the proposal to adopt and
approve this Agreement and the Merger and shall take all other
reasonable actions necessary or advisable to secure the vote or
consent of the stockholders of the Company that are required by
the Nasdaq rules or the DGCL. For avoidance of doubt, the
Company shall not be required to hold the Company Stockholders
Meeting if this Agreement is terminated before that meeting is
held.
Section 6.3 Access
to Information, Confidentiality. Prior to the
Effective Time, except as otherwise prohibited by applicable Law
or the terms of any Contract entered into prior to the date
hereof or entered into with the United States federal government
to which the Company or any Company Subsidiary is a party or as
would be reasonably expected to violate the attorney-client
privilege of the Company or a Company Subsidiary (it being
agreed that the parties shall use their reasonable efforts to
cause such information to be provided in a manner that does not
cause such violation or prohibition), the Company shall, and
shall cause the Company Subsidiaries to, afford to Parent and
its directors, employees, representatives, financial advisors,
lenders, legal counsel, accountants and other advisors and
representatives, to have such access to the books and records,
financial, operating and other data, assets, properties,
facilities, plants, offices, employees, auditors, authorized
representatives, business and operations of the Company and the
Company Subsidiaries as Parent may reasonably request, including
access by Parent and its representatives to supporting
documentation with respect to the preparation of the financial
statements included in the Required Financial Information and,
with the consent of the auditor, the independent auditors
work papers relating to such financial statements. Any such
investigation and examination shall be conducted at reasonable
times upon reasonable advance notice and under reasonable
circumstances so as to minimize disruption to or impairment of
the Companys business. In order that Parent may have full
opportunity to make such investigation and, provided such
persons are bound by the confidentiality agreements, dated as of
May 3, 2006, between Sponsors and the Company (the
Confidentiality Agreements), or have otherwise
agreed to be bound to the provisions of such agreement
applicable to representatives, the Company shall furnish the
representatives of Parent during such period with all such
information and copies of such documents concerning the affairs
of the Company as such representatives may reasonably request.
The information and documents so provided shall be subject to
the terms of the Confidentiality Agreements. No investigation or
disclosure pursuant to this Section 6.3 or otherwise shall
affect any representation, warranty, covenant in this Agreement
of any party hereto (or the remedies with respect thereto) or
any condition to the obligations of the parties under this
Agreement.
Section 6.4 Regulatory
Filings; Reasonable Efforts.
(a) As promptly as practicable after the date hereof, each
of Parent, Merger Sub and the Company shall use reasonable best
efforts to make and shall cause their affiliates or owners to
use reasonable best efforts to make all filings, notices,
petitions, statements, registrations, submissions of
information, application or submission of other documents
required by any Governmental Entity or any foreign labor
organization or works council in connection with the Merger,
including, without limitation: (i) the filings identified
on Section 3.17 of the Company Disclosure Schedule that are
required to be made with a Governmental Entity,
(ii) pre-merger notification reports to be filed with the
United States Federal Trade Commission (the FTC) and
the Antitrust Division of the United States Department of
Justice (DOJ) as required by the HSR Act,
(iii) filings required by the merger notification or
control Laws, and any other applicable antitrust or fair trade
Law, of any applicable foreign jurisdiction or filings required
by any foreign labor organization or works council,
(iv) any filings required under the Securities Act, the
Exchange Act, any applicable state or securities or blue
sky laws and the securities laws of any foreign country,
or (v) any other applicable Laws or rules and regulations
of any Governmental Entity relating to, and material to the
consummation of, the Merger.
(b) Subject to restrictions required by Law, each of
Parent, Merger Sub, and the Company shall promptly supply, and
shall cause their affiliates or owners promptly to supply, the
others with any information which may be reasonably required in
order to make any filings or applications pursuant to
Section 6.4(a).
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(c) Subject to applicable confidentiality restrictions or
restrictions required by Law, each of Parent, Merger Sub and the
Company will notify the others promptly upon the receipt of:
(i) any comments or questions from any officials of any
Governmental Entity in connection with any filings made pursuant
hereto or the Merger itself and (ii) any request by any
officials of any Governmental Entity for amendments or
supplements to any filings made pursuant to any applicable Laws
and rules and regulations of any Governmental Entity or answers
to any questions, or the production of any documents, relating
to an investigation of the Merger by any Governmental Entity.
Whenever any event occurs that is required to be set forth in an
amendment or supplement to any filing made pursuant to
Section 6.4(a), Parent, Merger Sub or the Company, as the
case may be, will promptly inform the others of such occurrence
and cooperate in filing with the applicable Governmental Entity
such amendment or supplement. Without limiting the generality of
the foregoing, each party shall provide to the other parties (or
their respective advisors) upon request copies of all
correspondence between such party and any Governmental Entity
relating to the Merger. The parties may, as they deem advisable
and necessary, designate any competitively sensitive materials
provided to the other under this Section as outside
counsel only. Such materials and the information contained
therein shall be given only to outside counsel of the recipient
and will not be disclosed by such outside counsel to employees,
officers, or directors of the recipient without the advance
written consent of the party providing such materials. In
addition, to the extent reasonably practicable, all discussions,
telephone calls, and meetings with a Governmental Entity
regarding the Merger shall include representatives of Parent,
Merger Sub, and Company. Subject to applicable Law, the parties
will consult and cooperate with each other in connection with
any analyses, appearances, presentations, memoranda, briefs,
arguments, and proposals made or submitted to any Governmental
Entity regarding the Merger by or on behalf of any party.
(d) Upon the terms and subject to the conditions set forth
in this Agreement, each of the Company, on the one hand, and
Parent and Merger Sub, on the other hand, agrees to use its
reasonable efforts to take, or cause to be taken, all actions,
and to do, or cause to be done, and to assist and cooperate with
the other parties in doing, all things necessary, proper or
advisable to consummate and make effective the Merger, including
using its reasonable efforts to accomplish the following:
(i) the causing of all of the conditions set forth in
Section 7 to the other parties obligations to
consummate the Merger to be satisfied and to consummate and make
effective the Merger and the other transactions contemplated
hereby, (ii) the obtaining of all necessary actions or
non-actions, expirations of all necessary waiting periods,
waivers, consents, clearances, approvals, orders and
authorizations from Governmental Entities required by it and the
making of all necessary registrations, declarations and filings
(including registrations, declarations and filings with
Governmental Entities, if any) required by it, (iii) the
obtaining of all necessary consents, approvals or waivers from
third parties, (iv) the defending of any suits, claims,
actions, investigations or proceedings, whether judicial or
administrative, challenging this Agreement or the consummation
of the Merger to which it is a party, including seeking to have
any stay or temporary restraining order entered by any court or
other Governmental Entity vacated or reversed, and (v) the
execution or delivery of any additional instruments necessary to
consummate the Merger, and to carry out fully the purposes of,
this Agreement. In case at any time after the Effective Time any
further action is necessary or desirable to carry out the
purposes of this Agreement, the proper officers and directors of
the Surviving Corporation and Parent shall use all reasonable
efforts to take, or cause to be taken, all such necessary
actions. Without limiting the foregoing, the parties shall
request and shall use reasonable efforts to obtain early
termination of the waiting period provided for in the HSR Act.
Notwithstanding anything herein to the contrary, Parent agrees
to take, and to cause its affiliates and owners to take,
whatever action may be necessary to resolve any objections
relating to the consummation of the Merger as may be asserted
under the HSR Act or any other applicable merger control,
antitrust, competition or fair trade Laws with respect to the
Merger.
(e) Notwithstanding anything to the contrary in this
Agreement, except as contemplated under Section 6.8, in
connection with obtaining any approval or consent from any
person (other than a Governmental Entity) with respect to the
Merger, (i) without the prior written consent of Parent,
which shall not be unreasonably withheld or delayed, none of the
Company or any Company Subsidiaries or the Surviving Corporation
shall pay or commit to pay to such person whose approval or
consent is being solicited any material amount of cash or other
material consideration, make any material commitment or incur
any material liability or other material obligation due to such
person or materially modify any Contract with such person and
(ii) neither Parent nor
A-34
any of its affiliates shall be required to pay or commit to pay
to such person whose approval or consent is being solicited any
cash or other consideration, make any commitment or to incur any
liability or other obligation.
Section 6.5 Directors
and Officers Indemnification and Insurance.
(a) The certificate of incorporation
and/or
by-laws of the Surviving Corporation shall contain provisions
with respect to indemnification not less favorable than those
set forth in the certificate of incorporation and by-laws of the
Company as of the date hereof, which provisions shall not be
amended, repealed or otherwise modified for a period of six
years from the Effective Time in any manner that would adversely
affect the rights thereunder of individuals who at, or prior to,
the Effective Time were directors or officers of the Company.
(b) The Company shall, to the fullest extent permitted
under applicable Law or under the Companys certificate of
incorporation, by-laws or any applicable indemnification
agreements, and regardless of whether the Merger becomes
effective, indemnify, defend and hold harmless, and, after the
Effective Time, the Surviving Corporation shall and Parent shall
cause the Surviving Corporation, to the fullest extent permitted
under applicable Law, to indemnify, defend and hold harmless
each present and former director or officer of the Company or
any of the Company Subsidiaries (collectively, the
Indemnified Parties) against any costs or expenses
(including attorneys fees), judgments, fines, losses,
claims, damages, liabilities and amounts paid in settlement in
connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or
investigative, arising out of or pertaining to (x) the fact
that the Indemnified Party is or was an officer, director,
employee, agent or other fiduciary of the Company or a Company
Subsidiary or (y) this Agreement or the transactions
contemplated by this Agreement, whether in any case asserted or
arising before or after the Effective Time. Without limiting the
generality of the foregoing, if any Indemnified Party becomes
involved in any actual or threatened suit, action, claim,
proceeding or investigation with respect to which such
Indemnified Party is entitled to indemnification pursuant to
this Section 6.5 after the Effective Time, the Surviving
Corporation shall and Parent shall cause the Surviving
Corporation to, to the fullest extent permitted by Law, promptly
advance to such Indemnified Party his or her legal expenses
(including the cost of any investigation and preparation
incurred in connection therewith); provided that any person to
whom expenses are advanced provides an undertaking, to the
extent then required by the DGCL, to repay such advances if it
is finally judicially determined that such person is not
entitled to indemnification. Any determination required to be
made, for purpose of this Section 6.5 in advance of final
judicial determination, with respect to whether an Indemnified
Partys conduct complied with the standards set forth under
Delaware law, the Companys certificate of incorporation,
by-laws or indemnification agreements, as the case may be, shall
be made by independent counsel mutually acceptable to Parent and
the Indemnified Party.
(c) Parent shall cause the Surviving Corporation to honor
and fulfill in all respects the obligations of the Company
pursuant to indemnification agreements with the Companys
directors, officers, employees or agents existing at or prior to
the Effective Time to the fullest extent permitted by applicable
Law or, subject to Section 6.5(a), under the relevant
certificate of incorporation or by-laws. Neither Parent nor the
Surviving Corporation shall settle, compromise or consent to the
entry of any judgment in any threatened or actual claim for
which an Indemnified Party would be entitled to indemnification
hereunder, unless such settlement, compromise or consent
includes an unconditional release of such Indemnified Party from
all liability arising out of such claim or such Indemnified
Party otherwise consents in writing to such settlement,
compromise or consent. The Surviving Corporation shall cooperate
with an Indemnified Party in the defense of any matter for which
such Indemnified Party could seek indemnification hereunder.
(d) At or prior to the Effective Time, the Surviving
Corporation shall obtain a tail insurance policy
from an insurance carrier with the same or better credit rating
as the Companys current insurance carrier with respect to
directors and officers liability insurance that
provides coverage for the six years following the Effective Time
at least comparable in amount and scope to the coverage provided
under the Companys directors and officers insurance policy
in effect as of the Effective Time for the individuals who are
or were directors and officers of the Company for claims arising
from facts or events occurring prior to the Effective Time;
provided however, that in no event shall the aggregate premium
payable for such tail insurance policy
A-35
exceed the amount set forth on Section 6.5(d) of the
Company Disclosure Schedule (the Maximum Premium).
The Company agrees to consult with Parent and Merger Sub in
connection with purchasing such insurance coverage. If the
Company is unable to obtain the tail insurance
described in the first sentence of this Section 6.5(d) for
an amount equal to or less than the Maximum Premium, the Company
shall be entitled to obtain as much comparable tail
insurance as possible for an amount equal to the Maximum Premium.
(e) Nothing in this Agreement is intended to, shall be
construed to or shall release, waive or impair any rights to
directors and officers insurance claims under any
policy that is or has been in existence with respect to the
Company or the Company Subsidiaries any of their officers or
directors, it being understood and agreed that the
indemnification provided for in this Section 6.5 is not
prior to or in substitution for any such claims under such
policies.
(f) This Section shall survive the consummation of the
Merger at the Effective Time, is intended to benefit the
Company, the Surviving Corporation and the Indemnified Parties,
shall be binding on all successors and assigns of the Surviving
Corporation and shall be enforceable by the Indemnified Parties.
In the event Parent or the Surviving Corporation or any of their
respective successors or assigns (i) consolidates with or
merges into any other person and shall not be the continuing or
surviving corporation or entity of such consolidation or merger,
or (ii) transfers all or substantially all of its
properties and assets to any person, then, and in each such
case, proper provision shall be made so that the successors and
assigns of Parent or the Surviving Corporation, as the case may
be, shall succeed to the obligations set forth in this
Section 6.5.
Section 6.6 Director
Resignations. The Company shall obtain and
deliver to Parent at the Closing evidence reasonably
satisfactory to Parent of the resignation, effective as of the
Effective Time, of those directors of the Company or any
Material Company Subsidiary designated by Parent to the Company
in writing at least fifteen (15) business days prior to the
Closing.
Section 6.7 Conduct
of Business of Parent and Merger Sub Pending the
Merger. Each of Parent and Merger Sub agrees
that, between the date of this Agreement and the Effective Time,
it shall not, directly or indirectly, (i) engage in any
business activities and will incur no liabilities or obligations
other than as expressly contemplated by this Agreement, or
(ii) take any action (a) intended, or that would
reasonably be expected, to cause its representations and
warranties set forth in Section 4 to be untrue in any
material respect; or (b) that would, or would reasonably be
expected to, individually or in the aggregate, prevent,
materially delay or materially impede the ability of Parent or
Merger Sub to consummate the Merger or the other transactions
contemplated by this Agreement. Parent agrees that it will
promptly notify the Company of any assignments under
Section 3 of the Equity Commitment Letter by any Investor
(as defined in the Equity Commitment Letter) to the extent other
than to an affiliated fund of such Investor, and Parent agrees
that it will not grant any consent under the last sentence of
such Section 3 of the Equity Commitment Letter with respect
to an assignment to other than an affiliated fund.
Section 6.8 Financing.
(a) Parent shall use reasonable best efforts to take, or
cause to be taken, all actions and do, or cause to be done, all
things necessary, proper or advisable to arrange the Debt
Financing on the terms and conditions described in the Debt
Commitment Letter, including using reasonable best efforts to
(i) satisfy, in all material respects, on a timely basis
all conditions applicable to Parent and Merger Sub to obtaining
the Debt Financing set forth therein, (ii) negotiate and
enter into definitive agreements with respect thereto on the
terms and conditions contemplated by the Debt Commitment Letters
(including the flex provisions related to the Debt Financing) or
on other terms acceptable to Parent (to the extent not more
conditional than those provided in the Debt Commitment Letters),
and (iii) consummate the Debt Financing at or prior to
Closing. In the event any portion of the Debt Financing becomes
unavailable on the terms and conditions contemplated in the Debt
Commitment Letter, Parent shall use its reasonable best efforts
to arrange to obtain alternative financing from alternative
sources in an amount sufficient, when combined with the funds
under the Equity Commitment Letters and the unrestricted and
freely available cash and short-term investments of the Company
and the Company Subsidiaries (excluding, for avoidance of doubt,
any cash which cannot be distributed, contributed or otherwise
delivered to the Company in accordance with applicable Laws,
including those relating to solvency, adequate surplus and
similar capital adequacy tests), to consummate the transactions
contemplated by this
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Agreement on terms and conditions not materially less favorable
to Parent in the aggregate and in no event less favorable as to
pricing and other economic terms (as determined in the good
faith reasonable judgment of Parent) than the Debt Financing as
promptly as practicable following the occurrence of such event
but no later than the last day of the Marketing Period. For the
avoidance of doubt, in the event that (x) all or any
portion of the Debt Financing structured as high yield financing
has not been consummated, (y) all closing conditions
contained in Section 7 shall have been satisfied or waived
(other than those conditions that by their terms are to be
satisfied at the Closing, provided that nothing has occurred and
no conditions exist that would cause those conditions to not be
satisfied) and (z) the bridge facilities contemplated by
the Debt Commitment Letter (or alternative bridge financing
obtained in accordance with this Section 6.8(a)) are
available on the terms and conditions substantially as described
in the Debt Commitment Letter (or replacements thereof as
contemplated by this Section 6.8(a)), then Parent shall
cause the proceeds of such bridge financing to be used to
replace such high yield financing no later than the last day of
the Marketing Period. For purposes of this Agreement,
Marketing Period shall mean the first period of 20
consecutive calendar days after the Initiation Date,
(A) throughout which (1) Parent shall have the
Required Financial Information that the Company is required to
provide to Parent pursuant to Section 6.8(b) and
(2) nothing has occurred and no condition exists that would
cause any of the conditions set forth in Section 7.2 to
fail to be satisfied assuming the Closing were to be scheduled
for any time during such 20 consecutive-calendar-day period, and
(B) at the end of which the conditions set forth in
Section 7.1 shall be satisfied; provided, that if the
Marketing Period has not ended on or prior to December 19,
2006, the Marketing Period shall commence no earlier than
January 2, 2007; and provided, further, that the Marketing
Period shall not be deemed to have commenced if, prior to the
completion of the Marketing Period, Ernst & Young LLP
shall have withdrawn its audit opinion with respect to any
financial statements contained in the Required Financial
Information. For purposes of this Agreement, Initiation
Date shall mean the first date after the date hereof on
which all of which (a) Parent shall have the Required
Financial Information that the Company is required to provide to
Parent pursuant to Section 6.8(b), (b) nothing has
occurred and no condition exists that would cause any of the
conditions set forth in Section 7.2 to fail to be satisfied
assuming the Closing were to be scheduled at any time during the
next 20-consecutive calendar day period and (c) the
conditions set forth in Section 7.1 have been satisfied,
provided that in no event shall the Initiation Date be earlier
than November 12, 2006. Parent shall give the Company
prompt notice of any material breach by any party of the
Commitment Letters of which Parent or Merger Sub becomes aware
or any termination of the Commitment Letters. Parent shall keep
the Company informed on a reasonably current basis in reasonable
detail of the status of its efforts to arrange the Financing and
provide to the Company copies of executed copies of the
definitive documents related to the Debt Financing (excluding
any fee letters, engagement letters or other agreements that are
confidential by their terms).
(b) The Company agrees to provide, and shall cause the
Company Subsidiaries and its and their Representatives to
provide, all reasonable cooperation (including with respect to
timeliness) in connection with the arrangement of the Debt
Financing as may be reasonably requested by Parent (provided
that such requested cooperation does not unreasonably interfere
with the ongoing operations of the Company and the Company
Subsidiaries) including without limitation,
(i) participation in meetings, drafting sessions,
presentations, road shows, and rating agency and due diligence
sessions, (ii) furnishing Parent, Merger Sub and their
financing sources with financial and other pertinent information
regarding the Company as may be reasonably requested by Parent
to consummate the Debt Financing or alternative financing,
including all financial statements and financial data required
to consummate the high yield financing at the time during the
Companys fiscal year such offering will be made if such
offering were registered under the Securities Act and of the
type and form customarily included in private placements under
Rule 144A of the Securities Act (the Required
Financial Information) (and shall allow Parents
Representative the opportunity to review and comment upon the
financial statements (including pro forma financial statements)
in draft form to the extent such financial statements were not
prepared prior to the date hereof), (iii) assisting Parent,
Merger Sub and their financing sources in the preparation of
(A) offering documents, business projections, pro forma
financial information, private placement memoranda, bank
information, memoranda, prospectuses and similar documents for
any portion of the Debt Financing or alternative financing,
including the offering of the high yield financing, and
(B) materials for rating agency presentations,
(iv) reasonably cooperating with the marketing efforts of
Parent, Merger Sub and their financing sources for any portion
of the Debt Financing or the alternative financing,
A-37
(v) executing and delivering any underwriting or placement
agreements, pledge and security documents, other definitive
financing documents and delivering such other certificates,
legal opinions or documents as may be reasonably requested by
Parent (including a certificate of the chief financial officer
of the Company or any Subsidiary with respect to solvency
matters and consents of accountants for use of their reports in
any materials relating to the Debt Financing) and otherwise
reasonably facilitating the pledging of collateral,
(vi) using reasonable best efforts to satisfy the
conditions set forth in Exhibit E to the Commitment Letter,
(vii) using reasonable best efforts to obtain legal
opinions, surveys and title insurance as reasonably requested by
Parent, (viii) using reasonable best efforts to cause an
independent auditor of the Company to provide an unqualified
opinion (to the extent applicable), consents and customary
comfort letter with respect to the financial statements included
in the Required Financial Information, (ix) providing
monthly and quarterly unaudited financial statements (excluding
footnotes) within the time frame, and to the extent, the Company
prepares such financial statements for the Company Board of
Directors, (x) entering into one or more credit or other
agreements on terms satisfactory to Parent in connection with
the Debt Financing immediately prior to the Effective Time;
provided that, subject to taking the actions required by
clause (xi) below, the Company shall not be required
to enter into any purchase agreement for any
high-yield
debt financing (other than bridge financing), (xi) taking
all corporate actions, subject to the occurrence of the Closing,
reasonably requested by Parent to permit the consummation of the
Debt Financing and the direct borrowing or incurrence of all of
the proceeds of the Debt Financing, including any high yield
debt financing, by the Surviving Corporation immediately
following the Effective Time; provided that none of the Company
or any Company Subsidiary shall be required to pay any
commitment or other similar fee or incur any other liability in
connection with the Debt Financing prior to the Effective Time
except for any liabilities that are conditioned on the Effective
Time having occurred. If this Agreement is terminated prior to
the Effective Time, Parent shall, promptly upon request by the
Company, reimburse the Company for all reasonable
out-of-pocket
costs incurred by the Company or the Company Subsidiaries in
connection with such cooperation. If this Agreement is
terminated prior to the Effective Time, Parent and Merger Sub
shall, on a joint and several basis, indemnify and hold harmless
the Company, the Company Subsidiaries and their respective
Representatives for and against any and all losses suffered or
incurred by them in connection with the arrangement of Debt
Financing or any alternative financing and any information
utilized in connection therewith (other than information
provided by the Company or the Company Subsidiaries expressly
for use in connection therewith). The Company hereby consents to
the reasonable use of its and the Company Subsidiaries
logos in connection with the Debt Financing, provided that such
logos are used solely in a manner that is not intended to nor
reasonably likely to harm or disparage the Company or any of the
Company Subsidiaries or the reputation or goodwill of the
Company or any of the Company Subsidiaries and its or their
marks.
Section 6.9 Public
Disclosure. The initial press release
concerning the Merger shall be a joint press release and,
thereafter, so long as this Agreement is in effect, neither
Parent, Merger Sub nor the Company will disseminate any press
release or other public announcement concerning the Merger or
this Agreement or the other transactions contemplated by this
Agreement (other than a press release or other announcement that
primarily relates to a Superior Proposal) to any third party,
except as may be required by Law or by any listing agreement
with Nasdaq, without the prior consent of each of the other
parties hereto, which consent shall not be unreasonably
withheld. The parties have agreed to the text of the joint press
release announcing the execution of this Agreement.
Notwithstanding the foregoing, without prior consent of the
other parties, the Company (a) may communicate with
customers, financial analysts, investors and media
representatives in a manner consistent with its past practice in
compliance with applicable Law and (b) may disseminate the
information included in a press release or other document
previously approved for external distribution by the Parent, and
Parent and Merger Sub and their affiliates may, subject to
taking appropriate steps to ensure the confidentiality of such
information (to the extent non-public), disseminate information
concerning the Merger or this Agreement or the other
transactions contemplated by this Agreement to potential sources
of financing for the Merger or such other transactions solely
for the purposes of consummating the Debt Financing in
accordance with Section 6.8.
Section 6.10 Notification
of Certain Matters. Each party shall give
prompt notice to the other parties of (i) the occurrence or
non-occurrence of any event the occurrence or non-occurrence of
which would reasonably be expected to cause any representation
or warranty made by such party in this Agreement to be
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untrue or inaccurate in any material respect at the Effective
Time, or would reasonably be expected to cause any condition set
forth in Section 7 not to be satisfied in any material
respect at the Closing, and (ii) any material failure of
such party or any of its representatives to comply with or
satisfy any covenant, condition or agreement to be complied with
or satisfied by it hereunder; provided, however, that no such
notification shall affect the representations, warranties,
covenants or agreements of the parties (or the remedies with
respect thereto) or the conditions to the obligations of the
parties under this Agreement.
Section 7. Conditions
Precedent to the Obligation of the Parties to Consummate the
Merger.
Section 7.1 Conditions
to Obligations of Each Party to Effect the
Merger. The respective obligations of each
party to this Agreement to effect the Merger shall be subject to
the satisfaction or written waiver at or prior to the Closing
Date of the following conditions:
(a) Stockholder Approval. The
Company Stockholder Approval shall have been obtained.
(b) Statutes; Court Orders. No
statute, rule, executive order or regulation shall have been
enacted, issued, entered or promulgated by any Governmental
Entity which prohibits the consummation of the Merger, and there
shall be no order or preliminary or permanent injunction of a
court of competent jurisdiction, including any temporary
restraining order, in effect preventing or prohibiting
consummation of the Merger.
(c) Regulatory Approvals. The
waiting period (and any extension thereof) applicable to the
Merger under the HSR Act and applicable foreign competition or
merger control Laws shall have been terminated or shall have
expired, and approvals under all foreign competition or merger
control Laws set forth in Section 7.1(c) of the Company
Disclosure Schedule, and approvals or waiting periods of
Governmental Entities set forth in Section 7.1(c) of the
Company Disclosure Schedule to the Merger shall have been
obtained or expired, as the case may be.
Section 7.2 Additional
Conditions to the Obligations of Parent and Merger
Sub. The obligations of Parent and Merger Sub
to consummate and effect the Merger shall be subject to the
additional conditions, which may be waived in writing in whole
or in part by Parent or Merger Sub to the extent permitted by
applicable Law, that:
(a) Representations, Warranties and
Covenants. The representations and warranties
of the Company contained in this Agreement (other than the
representations and warranties set forth in Sections 3.2,
3.3, 3.6(a) and 3.18), disregarding all qualifications and
exceptions contained therein relating to materiality or Material
Adverse Effect, shall be true and correct as of the Closing Date
as if made on and as of the Closing Date (or, if given as of a
specific date, at and as of such date), except where the failure
or failures of any such representations and warranties to be so
true and correct have not had and would not reasonably be
expected to have, individually or in the aggregate, a Company
Material Adverse Effect. The representations and warranties of
the Company contained in Sections 3.2, 3.3 and 3.18 shall
be true and correct in all material respects as of the Closing
Date as if made on and as of the Closing Date (or, if given as
of a specific date, at and as of such date). The representations
and warranties of the Company contained in Section 3.6(a)
shall be true and correct as of the Closing Date as if made on
and as of the Closing Date. The Company shall have performed and
complied in all material respects with all covenants and
agreements required by this Agreement to be performed or
complied with by it on or prior to the Closing Date. The Company
shall have delivered to Parent a certificate from an officer of
the Company, dated the Closing Date, to the foregoing effect.
Section 7.3 Additional
Conditions to the Obligations of the
Company. The obligations of the Company to
consummate and effect the Merger shall be subject to the
additional conditions, which may be waived in writing in whole
or in part by the Company to the extent permitted by applicable
Law, that:
(a) Representations, Warranties and
Covenants. The representations and warranties
of the Parent and Merger Sub contained in this Agreement,
disregarding all qualifications and exceptions contained therein
relating to materiality or Material Adverse Effect, shall be
true and correct as of the Closing Date as if made on and as of
the Closing Date (or, if given as of a specific date, at and as
of such date), except
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where the failure or failures of any such representations and
warranties to be so true and correct would not reasonably be
expected to prevent or materially impede the timely consummation
of the Merger. The Parent and Merger Sub shall have performed
and complied in all material respects with all covenants and
agreements required by this Agreement to be performed or
complied with by it on or prior to the Closing Date. The Parent
and Merger Sub shall each have delivered to the Company a
certificate from an officer of the Parent and the Merger Sub, as
applicable, dated the Closing Date, to the foregoing effect.
Section 8. Termination,
Amendment and Waiver.
Section 8.1 Termination. This
Agreement may be terminated and the transactions contemplated
hereby may be abandoned at any time before the Effective Time,
whether before or after the Company Stockholder Approval:
(a) By mutual written consent of Parent and the Company
authorized by the Parent Board of Directors and the Company
Board of Directors;
(b) By either Parent or the Company, if the Merger has not
been consummated by March 31, 2007 (the Termination
Date); provided, however, that the right to
terminate this Agreement pursuant to this Section 8.1(b)
shall not be available to any party whose action or failure to
fulfill any obligation under this Agreement or failure to act in
good faith has been the principal cause of, or resulted in, the
failure of the Merger to be consummated by such date;
(c) By either Parent or the Company, if a court of
competent jurisdiction or other Governmental Entity shall have
issued a final, non-appealable order, decree or ruling or taken
any other action, or there shall exist any statute, rule or
regulation, in each case preventing or otherwise prohibiting
(collectively, Restraints) the consummation of the
Merger or that otherwise has the effect of making the Merger
illegal; provided, however, that the party seeking to terminate
this Agreement pursuant to this Section 8.1(c) shall have
used all reasonable efforts to prevent the entry of and to
remove such Restraints to the extent within their control or
influence;
(d) By Parent (if neither it nor Merger Sub is in material
breach of it representations, warranties, covenants and
obligations under this Agreement so as to cause any of the
conditions set forth in Section 7.1 or 7.3 not to be
satisfied) if there has been a breach of, or inaccuracy in, any
representation, warranty, covenant or agreement of the Company
set forth in this Agreement, which breach or inaccuracy would
cause any condition set forth in Section 7.1 or 7.2 not to
be satisfied (and such breach or inaccuracy has not been cured
or such condition has not been satisfied within twenty
(20) business days after the receipt of notice thereof or
such breach or inaccuracy is not reasonably capable of being
cured or such condition is not reasonably capable of being
satisfied prior to the Termination Date);
(e) By the Company (i) (if it is not in material
breach of its representations, warranties, covenants and
obligations under this Agreement so as to cause any of the
conditions set forth in Section 7.1 or 7.2 not to be
satisfied) if there has been a breach of, or inaccuracy in, any
representation, warranty, covenant or agreement of Parent or
Merger Sub set forth in this Agreement, which breach or
inaccuracy would cause any condition set forth in
Section 7.1 or 7.3 not to be satisfied (and such breach or
inaccuracy has not been cured or such condition has not been
satisfied within twenty (20) business days after the
receipt of notice thereof or such breach or inaccuracy is not
reasonably capable of being cured or such condition is not
reasonably capable of being satisfied prior to the Termination
Date or, if sooner, the date the Company becomes entitled to
terminate this Agreement under subsection (ii) below),
or (ii) if the conditions set forth in Sections 7.1
and 7.2 have been satisfied (other than those conditions that by
their terms are to be satisfied at Closing, and no state of
facts or circumstances exists that would cause such conditions
to not be satisfied, provided that nothing has occurred and no
conditions exist that would cause those conditions to not be
satisfied if the Closing were to occur, for purposes of this
Section 8.1(e)(ii), on the last day of the Marketing
Period) and Parent has failed to consummate the Merger by the
last day of the Marketing Period;
(f) By Parent, if (i) the Company Board of Directors
shall have (A) made or resolved to make a Change in
Recommendation, (B) failed to recommend against a tender or
exchange offer related to an
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Acquisition Proposal in any publicly disclosed position taken
pursuant to
Rules 14d-9
and 14e-2
under the Exchange Act (other than a stop, look and
listen disclosure), (C) recommended to the
stockholders of the Company or approved any Acquisition Proposal
or resolved to effect the foregoing or (D) failed to
include in the Proxy Statement its recommendation that the
stockholders adopt and approve this Agreement and the Merger;
(g) By the Company, at any time prior to the Company
Stockholder Approval, if the Company concurrently enters into a
definitive agreement with respect to a Superior Proposal in
accordance with, and subject to the terms and conditions of,
clause (y) of Section 5.2(c) and at least three
business days have passed since the last Notice of a Superior
Proposal; provided that, any such purported termination pursuant
to this Section 8.1(g) shall be void and of no force or
effect unless the Company has paid the applicable termination
fee in accordance with Section 8.2; or
(h) By either Parent or the Company, if upon a vote at a
duly held meeting to obtain the Company Stockholder Approval at
which a quorum is present, the Company Stockholder Approval is
not obtained.
Section 8.2 Effect
of Termination.
(a) Any termination of this Agreement under
Section 8.1 hereof will be effective immediately upon the
delivery of a valid written notice of the terminating party to
the other parties hereto and, if then due, payment of the
termination fee required pursuant to this Section 8.2. In
the event of termination of this Agreement as provided in
Section 8.1 hereof, (i) this Agreement shall forthwith
become null and void and be of no further force or effect,
except as set forth in the penultimate sentence of
Section 6.3, the indemnification and reimbursement
obligations set forth in Section 6.8(b), Section 8,
Section 9, the Confidentiality Agreements (insofar as
Parent, Merger Sub and the Company have rights and obligations
to each other thereunder) and the Guarantees, each of which
shall remain in full force and effect and survive any
termination of this Agreement in accordance with the terms
thereof, and (ii) there shall be no liability on the part
of Parent, Merger Sub or the Company (or any of their respective
affiliates, directors, officers, employees, stockholders, agents
or representatives), except as may be provided in
Section 8.2(b), (c) or (d), the first sentence of
Section 8.2(e), Section 8.2(f), Section 9.9 or
the Guarantees; provided, however, that except as provided in
Section 8.2(e) nothing herein shall relieve any party from
liability for fraud or the willful and material breach by Parent
or the Company of any of its representations, warranties,
covenants or agreements set forth in this Agreement.
(b) If Parent terminates this Agreement pursuant to
Section 8.1(d) or if the Company or Parent terminates this
Agreement pursuant to Section 8.1(h), the Company shall
promptly pay Parent or its designee the documented and
reasonable expenses of Parent referred to in Section 8.3 up
to $7,000,000.
(c) If Parent or the Company terminates this Agreement
pursuant to Section 8.1(f) or Section 8.1(g),
respectively, the Company shall pay to Parent or its designee a
termination fee of $33,140,000 concurrently with the termination
of this Agreement by the Company or no later than two
(2) business days after such termination by Parent, as
applicable.
(d) If Parent terminates this Agreement pursuant to
Section 8.1(d) or if Parent or Company terminates this
Agreement pursuant to Section 8.1(b) or
Section 8.1(h), and (i) if prior to the date of such
termination (but on or after the date hereof) a bona fide
Acquisition Proposal is publicly announced or is otherwise
communicated to the Company Board of Directors, and
(ii) within twelve (12) months after the date of such
termination, the Company enters into a definitive agreement with
respect to any Acquisition Proposal or an Acquisition Proposal
is otherwise consummated (which need not be the same Acquisition
Proposal), the Company shall pay to Parent or its designee a
termination fee of $33,140,000 (less any amounts previously paid
or owing pursuant to Section 8.2(b)) concurrently with the
execution of such definitive agreement or consummation of such
Acquisition Proposal, as the case may be; provided, that solely
for purposes of Section 8.2(d), the term Acquisition
Proposal shall have the meaning ascribed thereto in
Section 5.2(a), except that all references to twenty
percent (20%) therein shall be changed to fifty percent (50%).
(e) In the event this Agreement is terminated by the
Company pursuant to Section 8.1(e)(ii) and Parent has
failed to consummate the Merger by reason of a failure of Parent
or Merger Sub to receive the proceeds of the debt financing
contemplated by the Debt Commitment Letter, then Parent shall
pay to the Company a fee
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of $53,020,000 the Parent Termination Fee) within
two (2) business days after such termination by the
Company. If the Parent Termination Fee is paid, and Parent and
Merger Sub are not otherwise in willful material breach of this
Agreement (other than any breach arising from the failure by
Parent, after complying with its obligations under
Section 6.8 of this Agreement, to obtain the Debt
Financing), then the Companys termination of this
Agreement and receipt of payment of the Parent Termination Fee
shall be the sole and exclusive remedy (except as expressly
provided in Section 9.9 with regards to a breach of
Section 6.3) against Parent, Merger Sub, Sponsors and any
of their respective Representatives, Affiliates, directors,
officers, employees, partners, managers, members, or
stockholders (each, a Parent Party) for any loss or
damage suffered as a result of the breach of this Agreement or
any representation, warranty, covenant or agreement contained
herein by Parent or Merger Sub or the failure of the Merger to
be consummated (such losses or damages, collectively,
Company Damages). Notwithstanding anything to the
contrary in this Agreement, the maximum aggregate liability of
all Parent Parties in the aggregate for all Company Damages
shall be limited to $99,420,000 less any Parent Termination Fee
paid or payable (the Parent Liability Limitation),
and in no event shall the Company, any Company Subsidiaries or
any of their affiliates seek (and the Company shall cause its
affiliates not to seek) any Company Damages or any other
recovery, judgment, or damages of any kind, including
consequential, indirect, or punitive damages, against any Parent
Party in excess of Parent Liability Limitation from any Parent
Party in connection therewith and the Company, the Company
Subsidiaries and their affiliates shall be precluded from any
other remedy against any Parent Party at Law or in equity or
otherwise. In addition, notwithstanding anything to the contrary
in this Agreement, in all cases, the maximum liability of each
Sponsor, directly or indirectly, shall be limited to the express
obligations of such Sponsor under their Guarantee. For the
avoidance of doubt, subject to the first sentence of this
Section 8.2(e), there shall be no liability of any Parent
Party for Company Damages other than liability for fraud or the
willful and material breach by Parent or the Company of any of
its representations, warranties, covenants or agreements set
forth in this Agreement.
(f) The Company and the Parent each acknowledge that the
agreements contained in this Section 8.2 are an integral
part of the transactions contemplated by this Agreement, and
that, without these agreements, Parent or the Company would not
enter into this Agreement; accordingly, if the Company or Parent
fails promptly to pay the amounts due pursuant to
Sections 8.2(b), (c), (d) or (e), respectively, and,
in order to obtain such payment, the Company or Parent commences
a suit which results in a final non-appealable judgment against
the Parent or the Company, the Company or the Parent shall pay
to Parent or the Company, as applicable, its reasonable
attorneys fees and expenses actually incurred in
connection with such suit, together with interest on the amount
of the fee from the date such payment was required to be made
until the date such payment is actually made.
(g) Each of the Company and Parent (for itself and its
affiliates, including the Sponsors) hereby agrees, that, upon
any termination of this Agreement under circumstances where it
is entitled to a termination fee pursuant to
Section 8.2(c), 8.2(d) or 8.2(e) and provided such
termination fee is paid in full, except as provided in
Section 8.2(e) or Section 9.9, the Company or Parent
and their respective affiliates shall be precluded from any
other remedy against the Company or Parent and their respective
affiliates, at Law or in equity or otherwise, and neither the
Company or Parent nor any of their affiliates may seek (and the
Company or Parent shall cause its affiliates not to seek) to
obtain any recovery, judgment, or damages of any kind, including
consequential, indirect, or punitive damages, against the
Company, Parent, Sponsors or any of their respective directors,
officers, employees, partners, managers, members, or
stockholders in connection with this Agreement or the
transactions contemplated hereby.
Section 8.3 Fees
and Expenses. Except as otherwise expressly
provided in Section 8.2 and 6.8(b), all costs and expenses
incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such
expenses whether or not the Merger is consummated, including all
out-of-pocket
expenses (including all fees and expenses of counsel,
accountants, investment bankers, financing sources, hedging
counterparties, experts and consultants to a party hereto and
its affiliates) incurred by a party or on its behalf (or, with
respect to Parent, incurred by Sponsor, Parents
stockholders or on their behalf) in connection with or related
to the authorization, preparation, negotiation, execution and
performance of this Agreement, the preparation, printing, filing
and mailing of the Proxy Statement, the solicitation of the
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Company Stockholder Approval, regulatory filings and notices,
the Financing and all other matters related to the closing of
the Merger, provided that if the Effective Time shall occur,
Parent may require the Surviving Corporation to reimburse Parent
for all fees and expenses incurred by Parent and its Affiliates.
Section 8.4 Amendment. Subject
to applicable Law, this Agreement may be amended, modified and
supplemented in any and all respects, whether before or after
any vote of the stockholders of the Company contemplated hereby,
by written agreement of the parties hereto, by action taken by
their respective Boards of Directors, but after the approval of
this Agreement by the stockholders of the Company, no amendment
shall be made which by Law requires further approval by such
stockholders without obtaining such further approval. This
Agreement may not be amended except by an instrument in writing
signed on behalf of each of the parties hereto.
Section 8.5 Waiver. At
any time prior to the Effective Time, each party hereto may
(a) extend the time for the performance of any of the
obligations or other acts of any other party hereto or
(b) waive compliance with any of the agreements of any
other party or any conditions to its own obligations;
provided, that any such extension or waiver shall be
binding upon a party only if such extension or waiver is set
forth in a writing executed by such party.
Section 9. Miscellaneous.
Section 9.1 Entire
Agreement. This Agreement, together with the
Company Disclosure Schedule and the Parent Disclosure Schedule
and the documents and instruments referred to herein that are to
be delivered at the Closing, contains the entire agreement among
the parties with respect to the Merger and related transactions,
and supersedes all prior agreements, written or oral, among the
parties with respect thereto, other than the Confidentiality
Agreements and the Guarantees, which shall survive execution of
this Agreement and shall terminate in accordance with the
provisions thereof. EACH PARTY HERETO AGREES THAT, EXCEPT FOR
THE REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS AGREEMENT,
NEITHER PARENT, MERGER SUB NOR THE COMPANY MAKES ANY OTHER
REPRESENTATIONS OR WARRANTIES, AND EACH HEREBY DISCLAIMS ANY
OTHER REPRESENTATIONS OR WARRANTIES MADE BY ITSELF OR ANY OF ITS
RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, FINANCIAL AND
LEGAL ADVISORS OR OTHER REPRESENTATIVES (OTHER THAN AS SET FORTH
IN THE CONFIDENTIALITY AGREEMENTS OR THE GUARANTEES), WITH
RESPECT TO THE EXECUTION AND DELIVERY OF THIS AGREEMENT OR THE
MERGER, NOTWITHSTANDING THE DELIVERY OR DISCLOSURE TO THE OTHER
OR THE OTHERS REPRESENTATIVES OF ANY DOCUMENTATION OR
OTHER INFORMATION WITH RESPECT TO ANY ONE OR MORE OF THE
FOREGOING.
Section 9.2 No
Survival. None of the representations,
warranties and, except as provided in the following sentence,
covenants contained herein or in any instrument delivered
pursuant to this Agreement shall survive the Effective Time.
This Section 9, the agreements of Parent and the Company in
Section 6.5, Section 8.2 and Section 8.3 and
those other covenants and agreements contained herein that by
their terms apply, or that are to be performed in whole or in
part, after the Effective Time shall survive the consummation of
the Merger.
Section 9.3 Parent
Guarantee. Parent agrees to take all action
necessary to cause Merger Sub or the Surviving Corporation, as
applicable, to perform all of its respective agreements,
covenants and obligations under this Agreement. Subject to the
provisions of Section 8.2 and 9.9 hereof, Parent
unconditionally guarantees to the Company the full and complete
performance by Merger Sub or the Surviving Corporation, as
applicable, of its respective obligations under this Agreement
and shall be liable for any breach of any representation,
warranty, covenant or obligation of Merger Sub or the Surviving
Corporation, as applicable, under this Agreement. Parent hereby
waives diligence, presentment, demand of performance, filing of
any claim, any right to require any proceeding first against
Merger Sub or the Surviving Corporation, as applicable, protest,
notice and all demands whatsoever in connection with the
performance of its obligations set forth in this
Section 9.3.
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Section 9.4 Notices. Any
notice or other communication required or permitted hereunder
shall be in writing and shall be deemed given when delivered in
person, by overnight courier, by facsimile transmission (with
receipt confirmed by telephone or by automatic transmission
report) or two business days after being sent by registered or
certified mail (postage prepaid, return receipt requested), as
follows:
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If to Parent or Merger
Sub:
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With copies (which shall not
constitute notice) to:
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Cobalt Holding Company
Cobalt Merger Corp
c/o Hellman & Friedman
One Maritime Plaza, 12th Floor
San Francisco, CA 94111
Telephone:
(415) 788-5111
Facsimile:
(415) 788-0176
Attn.: David Tunnell
Arrie Park
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Simpson Thacher &
Bartlett LLP
2550 Hanover Street
Palo Alto, California 94304
Telephone: (650) 251-5000
Facsimile: (650) 251-5202
Attn.: Richard Capelouto, Esq.
Kirsten Jensen, Esq.
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and
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c/o Texas Pacific Group
301 Commerce Street, Suite 3300
Fort Worth, TX 76102
Telephone:
(415) 743-1500
Facsimile:
(415) 743-1501
Attn.: Bryan Taylor
David Spuria
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If to the Company:
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With copies (which shall not
constitute notice) to:
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Intergraph Corporation
c/o Chief Financial Officer
One Madison Industrial Park IW 2000
Huntsville, AL
35894-0001
Telephone:
(256) 730-2000
Facsimile:
(256) 730-2048
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J. Allen Overby, Esq.
Bass, Berry & Sims, PLC
315 Deaderick Street, Suite 2700
Nashville, TN 37238
Telephone: (615) 742-6211
Facsimile: (615) 742-2711
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Any party may by notice given in accordance with this
Section 9.4 to the other parties designate another address
or person for receipt of notices hereunder.
Section 9.5 Binding
Effect; No Assignment; No Third-Party Beneficiaries.
(a) This Agreement shall not be assigned by any of the
parties hereto (whether by operation of Law or otherwise)
without the prior written consent of the other parties. Subject
to the preceding sentence, but without relieving any party
(including any assignor) hereto of any obligation hereunder,
this Agreement will be binding upon, inure to the benefit of and
be enforceable by the parties and their respective successors
and assigns.
(b) Other than Section 6.5 with respect to the
Indemnified Parties thereunder, nothing in this Agreement,
express or implied, is intended to or shall confer upon any
person other than Parent, Merger Sub and the Company and their
respective successors and permitted assigns any right, benefit
or remedy of any nature whatsoever under or by reason of this
Agreement.
Section 9.6 Severability. If
any provision of this Agreement is held invalid or unenforceable
by any court of competent jurisdiction, the other provisions of
this Agreement shall remain in full force and effect. Any
provision of this Agreement held invalid or unenforceable only
in part or degree shall remain in full force and effect to the
extent not held invalid or unenforceable. The parties further
agree to negotiate in good faith to replace such invalid or
unenforceable provision of this Agreement, or invalid or
unenforceable portion thereof, with a valid and enforceable
provision that will achieve, to the extent possible, the
economic, business and other purposes of such invalid or
unenforceable provision or portion thereof.
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Section 9.7 Governing
Law. This Agreement and all actions arising
under or in connection therewith shall be governed by the
performance of the transactions contemplated herein and
obligations of the parties hereunder will be governed by, and
construed in accordance with, the laws of the State of Delaware,
without giving effect to any choice of Law principles that would
result in the application of the law of any other state.
Section 9.8 Submission
to Jurisdiction; Waiver. Each of the Company,
Parent and Merger Sub irrevocably submits to the jurisdiction
and venue of the Court of Chancery of the State of Delaware (or,
in the case of any claim as to which the federal courts have
exclusive subject matter jurisdiction, the Federal court of the
United States of America) sitting in the State of Delaware in
any action arising out of or relating to this Agreement, and
hereby irrevocably agrees that all claims in respect of such
action may be heard and determined in such court. Each of the
Company, Parent and Merger Sub hereby irrevocably waives, and
agrees not to assert, by way of motion, as a defense,
counterclaim or otherwise, in any action or proceeding with
respect to this Agreement, (a) any claim that it is not
personally subject to the jurisdiction of the above-named courts
for any reason other than the failure to lawfully serve process,
(b) that it or its property is exempt or immune from
jurisdiction of any such court or from any legal process
commenced in such courts (whether through service of notice,
attachment prior to judgment, attachment in aid of execution of
judgment, execution of judgment or otherwise), and (c) to
the fullest extent permitted by applicable Law, that
(i) the suit, action or proceeding in any such court is
brought in an inconvenient forum, (ii) the venue of such
suit, action or proceeding is improper or (iii) this
Agreement, or the subject matter hereof, may not be enforced in
or by such courts. Each of the Company, Parent and Merger Sub
waives, to the fullest extent permitted by applicable Laws, any
right it may have to a trial by jury in respect of any action,
suit or proceeding arising out of or relating to this Agreement.
Section 9.9 Specific
Enforcement; Remedies. The parties recognize
and agree that if for any reason any of the provisions of this
Agreement are not performed by the Company in accordance with
their specific terms or are otherwise breached, immediate and
irreparable harm or injury would be caused for which money
damages would not be an adequate remedy. Accordingly, each party
agrees that, in addition to other remedies, prior to any
termination by Parent or Merger Sub of this Agreement pursuant
to Section 8.1, Parent and Merger Sub shall be entitled to
specific performance of the terms hereof, in addition to any
other remedy at Law or equity. In the event that any action
shall be brought in equity to enforce the provisions of the
Agreement, the Company shall not allege, and hereby waives the
defense, that there is an adequate remedy at Law. The parties
further acknowledge that the Company shall not be entitled to an
injunction or injunctions to prevent breaches of this Agreement
by Parent or Merger Sub or to enforce specifically the terms and
provisions of this Agreement and that the Companys sole
and exclusive remedy with respect to any such breach shall be
the Parent Termination Fee (if applicable) and, if applicable,
the other remedies at Law available to the Company to the extent
set forth in Section 8.2 (subject to the Parent Liability
Limitation); provided, however, that the Company shall be
entitled to specific performance against Parent and Merger Sub
to prevent any breach by Parent or Merger Sub of
Section 6.3.