PRELIMINARY COPY
INTERGRAPH CORPORATION
Huntsville, Alabama 35894-0001
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD
May 16, 2002
TO THE SHAREHOLDERS OF INTERGRAPH CORPORATION:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders
(the "Meeting") of Intergraph Corporation (the "Company") will be
held at the Intergraph Auditorium, Building 15, Intergraph Way,
Huntsville, Alabama, on May 16, 2002, at 5:00 p.m. local time for
the following purposes:
1. To elect seven directors to the Board of Directors to serve
for the ensuing year and until their successors are duly
elected and qualified (designated as Proposal 1 in the
accompanying Proxy Statement).
2. To consider and vote upon a proposal to approve and adopt an
amendment to the Company's certificate of incorporation to
eliminate the ability of shareholders to act by written
consent in lieu of a meeting (designated as Proposal 2 in
the accompanying Proxy Statement).
3. To consider and vote upon the Intergraph Corporation 2002
Stock Option Plan (designated as Proposal 3 in the
accompanying Proxy Statement).
4. To ratify the appointment of Ernst & Young LLP as the
Company's independent auditors for the current year
(designated as Proposal 4 in the accompanying Proxy
Statement).
5. To transact such other business as may properly come before
the meeting or any adjournment or postponement thereof.
The close of business on March 20, 2002, has been fixed as the
record date for the determination of shareholders entitled to
notice of and to vote at the meeting.
A copy of the Annual Report to Shareholders for the year ended
December 31, 2001, is enclosed.
By Order of the Board of Directors,
JOHN R. WYNN
Secretary
Huntsville, Alabama
April 5, 2002
IF YOU DO NOT EXPECT TO ATTEND THE MEETING, PLEASE SIGN AND
DATE THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE IN ORDER THAT YOUR SHARES MAY BE REPRESENTED AT THE
MEETING. NO POSTAGE IS NEEDED IF MAILED IN THE UNITED STATES.
INTERGRAPH CORPORATION
HUNTSVILLE, ALABAMA 35894-0001
PROXY STATEMENT
This Proxy Statement is furnished in connection with the
solicitation of proxies by the Board of Directors (the "Board")
of Intergraph Corporation, to be voted at the Annual Meeting of
Shareholders to be held May 16, 2002, and at any and all
adjournments or postponements thereof. Proposals 1 through 4
inclusive will be presented at the Meeting by management.
With regard to Proposal 1, the form of proxy permits approval
of all nominees or withholding of votes as to all nominees or
specific nominees for director, and permits approval,
disapproval, or abstention with regards to Proposals 2 through 4
inclusive. If the enclosed form of proxy is properly executed,
returned, and not revoked, it will be voted in accordance with
the specifications, if any, made by the shareholder and, if
specifications are not made, will be voted FOR the nominees named
in this Proxy Statement to the Company's Board of Directors, FOR
approval and adoption of the amendment to the Company's
certificate of incorporation to eliminate the ability of
shareholders to act by written consent in lieu of a meeting, FOR
approval of the Intergraph Corporation 2002 Stock Option Plan,
and FOR the ratification of the appointment of Ernst & Young LLP
as the Company's independent auditors for the current year. In
addition, shares represented by your proxy will be voted in the
named proxies' discretion on any other business that may properly
come before the Meeting or any adjournments or postponements
thereof, including consideration of a motion to adjourn or
postpone such meeting for the purpose of soliciting additional
proxies.
The cost of solicitation of proxies will be borne by the
Company. Proxies may be solicited by directors, officers, or
regular employees of the Company in person or by telephone or
mail. In addition, the Company has retained Georgeson
Shareholder Communications to assist in soliciting proxies for a
fee estimated at $40,000, plus reimbursements of reasonable out-
of-pocket expenses. The Company requests that brokerage houses
and other custodians, nominees and fiduciaries forward
solicitation materials to the beneficial owners of shares of the
Company's common stock held of record by such persons and the
Company may reimburse such brokers and other fiduciaries for
their reasonable out-of-pocket expenses incurred when the
solicitation materials are forwarded. On or about April 5, 2002,
the Company will commence mailing this Proxy Statement, the
enclosed form of proxy, and the attached Notice to holders of its
common stock.
Shareholders who sign proxies have the right to revoke them at
any time before they are voted by filing with the Secretary of
the Company either an instrument revoking the proxy or a duly
executed proxy bearing a later date, or by attending the Meeting
and voting in person.
The close of business on March 20, 2002, has been fixed as the
record date for the determination of shareholders entitled to
notice of and to vote at the Meeting.
GENERAL
The holders of a majority of outstanding shares of Common Stock
as of the record date must be present in person or be represented
by proxy to constitute a quorum and act upon the proposed
business. Failure of a quorum to be represented at the Meeting
will necessitate an adjournment or postponement and will subject
the Company to additional expense.
Proposal 1 discussed in this Proxy Statement requires the
affirmative vote of a plurality of the outstanding shares
represented at the Meeting and entitled to vote. Proposal 2
discussed in this Proxy Statement requires the affirmative vote
of a majority of all shares outstanding as of the record date for
the Meeting. Proposals 3 and 4 discussed in this Proxy Statement
require the affirmative vote of the holders of a majority of the
outstanding shares represented at the Meeting and entitled to
vote thereon. The Board of Directors recommends that you vote
FOR each nominee for director and FOR Proposals 2 through 4
presented in this Proxy Statement.
Votes are counted by the Company's transfer agent. The
Company's certificate of incorporation and bylaws contain no
provisions concerning the treatment of abstentions and broker non-
votes. In accordance with Delaware law, abstentions and broker
non-votes will have no effect on the outcome of Proposal 1.
Abstentions and broker non-votes will have the same effect as a
vote cast against Proposal 2. Abstentions will have the same
effect as a vote cast against Proposals 3 and 4, and broker non-
votes will have no effect on the outcome of Proposals 3 and 4.
Both abstentions and broker non-votes will be included in the
determination of the presence of a quorum.
COMMON STOCK OUTSTANDING AND PRINCIPAL SHAREHOLDERS
As of January 31, 2002, there were outstanding 49,919,242
shares of the Company's common stock, $.10 par value (the "Common
Stock"). Holders of Common Stock are entitled to one vote per
share on all matters to be voted upon by shareholders.
The following table sets forth information as of January 31,
2002, as to:
(a) the only persons who were known by the Company to own
beneficially more than 5% of the outstanding Common
Stock of the Company,
(b) the shares of Common Stock beneficially owned by the
directors and nominees of the Company,
(c) the shares of Common Stock beneficially owned by James
F. Taylor Jr., Chairman of the Board and Chief
Executive Officer of the Company, who is also a
director and nominee; and the four most highly
compensated executive officers of the Company who
were serving as such at December 31, 2001,
(collectively, Mr. Taylor and the four most highly
compensated executive officers are the "Named
Executive Officers"), and
(d) the shares of Common Stock beneficially owned by all
directors, nominees, Named Executive Officers, and all
other executive officers of the Company as a single
group.
Number of Percentage of Total
Shares Beneficially Common Stock
Name (1) Owned (2) Outstanding (3)
--------------------- ------------------- -------------------
Intergraph Corporation
Stock Bonus Plan Trust 4,584,095 (4) 9.2%
Dimensional Fund
Advisors, Inc. 2,628,600 (5) 5.3%
Gardner Lewis Asset
Management, L.P. 2,563,556 (6) 5.1%
Director Nominees
-----------------
James F. Taylor Jr. 134,964 (7) *
Sidney L. McDonald 94,500 (8) *
Larry J. Laster 35,947 (9) *
Thomas J. Lee 7,500 (10) *
Joseph C. Moquin 2,000 (11) *
Lawrence R. Greenwood 1,200 (12) *
Linda L. Green 6,151 (13) *
Highest Compensated
Executive Officers
-------------------
William E. Salter 265,135 (14) *
Gerhard Sallinger 16,250 (15) *
Graeme J. Farrell 17,587 (16) *
Roger O. Coupland 32,847 (17) *
All directors, nominees,
and executive officers
as a group (18 persons),
including the foregoing
directors, nominees, and
Named Executive Officers 682,056 (18) 1.4%
------------------------
* Less than 1%
(1) The address of the Stock Bonus Plan Trust is Mellon Bank,
c/o The Boston Company, 1 Boston Place, Boston, MA 02108. The
address of Dimensional Fund Advisors, Inc. is 1299 Ocean
Avenue, 11th Floor, Santa Monica, CA 90401. The address of
Gardner Lewis Asset Management, L.P. is 285 Wilmington-West
Chester Pike, Chadds Ford, PA 19317.
(2) Unless otherwise noted, the indicated owner has sole voting
power and sole investment power.
(3) Shares issuable upon exercise of stock options that are
exercisable within 60 days of January 31, 2002, are considered
outstanding for the purpose of calculating the percentage of
total outstanding Common Stock owned by directors, executive
officers, and by directors, nominees, and executive officers
as a group. Such shares are not considered outstanding for
the purpose of calculating the percentage of total outstanding
Common Stock owned by any other person or group.
(4) Voting rights of the Common Stock held by the Stock Bonus
Plan Trust are passed through to participants in the Stock
Bonus Plan, which is a Company-sponsored retirement plan
covering substantially all U.S. employees of the Company.
However, if Plan participants do not properly complete, sign,
and return their voting instructions to the Trustee of the
Plan, the Trustee votes their shares in accordance with the
instructions of a majority of the participants exercising such
voting rights. On December 5, 2000, the Company's Board of
Directors resolved to terminate the Stock Bonus Plan effective
December 31, 2000. The Plan was submitted to the Internal
Revenue Service ("IRS") and the Securities and Exchange
Commission ("SEC") in April 2001, for determination of the
Plan's tax qualified status on termination and for
confirmation that the special stock buy-back provisions comply
with federal securities laws. In November 2001, the Company
was contacted by the IRS and the SEC requesting additional
information in order to complete their reviews. The Company
has responded to those requests. As of January 31, 2002, the
IRS examiner has reviewed and approved the request. The Plan
has now moved to senior level review. Upon receipt of a
favorable determination letter from the IRS that the Plan is
qualified at termination, each Plan participant will be
entitled to receive a lump sum distribution of his or her
account balance or to rollover the account balance into an
Individual Retirement Account or other qualified plan, and the
trust will be dissolved.
(5) As set forth on Schedule 13G/A filed with the Securities and
Exchange Commission on February 12, 2002.
(6) As set forth on Schedule 13G filed with the Securities and
Exchange Commission on February 14, 2002. Gardner Lewis Asset
Management, L.P. has sole voting power over 2,486,256 of these
shares.
(7) This figure includes 74,964 shares allocated to Mr. Taylor
under the Stock Bonus Plan and 10,000 shares over which Mr.
Taylor holds immediately exercisable stock options. This
figure excludes 100,000 shares owned by his wife as to which
Mr. Taylor expressly disclaims beneficial ownership.
(8) This figure includes 4,500 shares issuable upon the exercise
of stock options held by Mr. McDonald.
(9) This figure consists of 19,900 shares owned jointly by Mr.
Laster and his wife as to which voting and investment powers
are shared, 3,047 shares allocated to Mr. Laster under the
Stock Bonus Plan, and 13,000 shares issuable upon the exercise
of stock options held by Mr. Laster.
(10) This figure includes 4,500 shares issuable upon the exercise
of stock options held by Mr. Lee.
(11) This figure includes 1,000 shares issuable upon the exercise
of stock options held by Mr. Moquin and excludes 200 shares
owned by Mr. Moquin's wife as to which Mr. Moquin expressly
disclaims beneficial ownership.
(12) This figure includes 1,000 shares issuable upon the exercise
of stock options held by Dr. Greenwood.
(13) This figure excludes 2,051 shares owned by Mrs. Green's
husband as to which Mrs. Green expressly disclaims beneficial
ownership.
(14) This figure consists of 147,200 shares owned jointly by Dr.
Salter and his wife as to which voting and investment powers
are shared and 117,935 shares allocated to Dr. Salter under
the Stock Bonus Plan.
(15) This figure includes 8,750 shares issuable upon the exercise
of stock options held by Mr. Sallinger.
(16) This figure includes 581 shares owned jointly by Mr. Farrell
and his wife as to which voting and investment powers are
shared and 16,250 shares issuable upon the exercise of stock
options held by Mr. Farrell.
(17) This figure includes 2,345 shares allocated to Dr. Coupland
under the Stock Bonus Plan and 20,000 shares issuable upon the
exercise of stock options held by Dr. Coupland.
(18) This figure includes 204,891 shares allocated to such
persons under the Stock Bonus Plan and 105,875 shares issuable
upon the exercise of stock options.
PROPOSAL 1
ELECTION OF DIRECTORS
The Board of Directors has fixed the number of members of the
Board at seven by resolution pursuant to the authority granted by
the Bylaws of the Company. There are seven directors at present.
The directors of the Company are currently elected at each annual
meeting of shareholders and serve for a term of one year.
The Board of Directors proposes that the seven nominees listed
below be elected as directors to serve for a term of one year and
until their respective successors are duly elected and qualified,
subject to their prior death, resignation, retirement,
disqualification, or removal from office. Proxies may not be
voted for more than seven persons. In accordance with the
Company's Bylaws, Mr. Taylor was elected as Chairman of the Board
of Directors on May 17, 2001, at the meeting of the Board.
It is the intention of the persons named in the proxy to vote
the proxies for the election of the nominees listed below, all of
whom are presently directors of the Company. If any nominee
should become unavailable to serve as a director for any reason
(which is not anticipated), the persons named as proxies reserve
full discretion to vote for such other person or persons as may
be nominated.
The nominees for director, together with certain information
regarding them, are as follows:
Positions/Offices Director of the
Name and Age with the Company Company Since
-------------- ----------------- ---------------
James F. Taylor Jr. Chairman of the Board, 1973
(57) Chief Executive Officer,
and Director
Larry J. Laster Executive Vice President, 1987
(50) Chief Financial Officer,
and Director
Sidney L. McDonald Director 1997
(63)
Thomas J. Lee Director 1997
(66)
Lawrence R. Greenwood Director 2000
(62)
Joseph C. Moquin Director 2000
(77)
Linda L. Green Director 2001
(50)
Mr. Taylor joined the Company in July 1969, shortly after its
formation, and is considered a founder. Mr. Taylor was elected
Chief Executive Officer March 2, 2000. He served most recently
as Chief Executive Officer of Intergraph Public Safety, Inc., a
wholly owned subsidiary of the Company. Mr. Taylor was elected
Chairman of the Board of Directors on May 17, 2001.
Mr. Laster joined the Company in 1981 and served as Executive
Vice President and Chief Financial Officer from February 1987
through February 1998, at which time he resigned from the Company
to serve as Chief Operating Officer of a privately owned company
specializing in the development, sale, and support of business
systems for the petroleum distribution and convenience store
industries. He rejoined the Company in June 1998 as Chief
Financial Officer of Intergraph Public Safety, Inc., a wholly
owned subsidiary of the Company. In September 2001, Mr. Laster
was elected Executive Vice President and Chief Financial Officer
of Intergraph Corporation.
Mr. McDonald served as President of Brindlee Mountain Telephone
Company, a provider of local telephone services in north Alabama,
from 1961 until his retirement in July 2000. Mr. McDonald is a
founder of Deltacom Long Distance Services, Inc. and served as
its Chief Executive Officer from 1984 through 1996. He also
served as Chief Executive Officer of Marshall Cellular, a
cellular telephone service company, from 1988 through 1996, and
of Southern Interexchange Services, a fiber optic
telecommunications network, from 1990 through 1996. Mr. McDonald
has served in the Alabama Legislature and as Finance Director for
the State of Alabama.
Mr. Lee is a founder of Lee and Associates, an engineering
services firm specializing in guided missile systems, and has
served as its President since January 1997. He was employed for
thirty-six years by NASA, and was the Director of the George C.
Marshall Space Flight Center from June 1989 through January 1994.
Mr. Lee served as Special Assistant to the NASA Administrator for
Access to Space from January 1994 through March 1995. Mr. Lee is
a registered professional engineer and is a member of numerous
advisory boards and committees within his field.
Dr. Greenwood serves as Vice President of Research at the
University of Alabama in Huntsville and has served in that
capacity since August 1998. He spent fifteen years with NASA,
serving as Director of the Earth Observations Division in NASA
Headquarters and, most recently, as Manager of the Global
Hydrology and Climate Center in Huntsville from September 1994
through August 1998. He served as President of Nichols Research
Corporation, an information technology company specializing in
information solutions and services, from 1991 to 1994. He also
served as Vice President and General Manager of the General
Electric Astro Space Division from 1988 to 1991. Dr. Greenwood
is a member of the Alabama Aerospace Commission and is a
registered professional engineer and a certified financial
planner.
Mr. Moquin retired from Teledyne Brown Engineering, an
aerospace corporation specializing in ballistic missile defense
and space systems, in 1989 after thirty years of service. At the
time of his retirement, he was serving as Chairman and Chief
Executive Officer. He served as Interim President of the
University of Alabama in Huntsville from September 1990 through
July 1991. He served on the Board of Directors of SCI Systems,
Inc. ("SCI"), an international electronics manufacturing services
provider, from 1992 through 1997, and served as a Director
Emeritus, non-voting director, for SCI from 1997 to 2000. Mr.
Moquin is a registered professional engineer and has served on
numerous advisory boards and committees within his field.
Mrs. Green serves as Chief Executive Officer of the Northern
Region of Colonial Bank, the fiftieth largest bank in the United
States, and has served in that capacity since June 2000. From
July 1993 to June 2000, Mrs. Green served as President and Chief
Executive Officer of the Huntsville/Tennessee Region of Colonial
Bank. In January 2002, she was confirmed by the Alabama Senate
to serve on the State of Alabama's Ethics Commission. She also
serves on the University of Alabama in Huntsville Foundation.
Her past service includes Vice Chair and Chair of the Alabama
Space Science Commission, the Von Braun Center Board of Control,
the Alabama State Banking Board, 1998 Chair for the Huntsville
Madison County Chamber of Commerce, the Board of United Way and
numerous other civic and charitable organizations.
BOARD COMMITTEES AND ATTENDANCE
The Board of Directors and its Audit, Nominating, and
Compensation Committees meet periodically as meetings are deemed
necessary. During the year ended December 31, 2001, the Board of
Directors held seven meetings, the Audit Committee held five
meetings, the Nominating Committee held three meetings, and the
Compensation Committee held two meetings. All of the current
directors were present for 75% or more of the aggregate Board and
committee meetings for the periods during 2001 in which they
served, except for Dr. Greenwood who was present for 71% of the
aggregate meetings.
The Audit Committee consists of Mrs. Green, Dr. Greenwood, and
Mr. Lee. Mr. McDonald and Mr. Moquin rotated off the Audit
Committee effective July 30, 2001. Each member of the Audit
Committee is independent within the meaning of the listing
standards of the National Association of Securities Dealers. The
Nominating and Compensation Committees consist solely of all the
Company's independent directors, Mr. McDonald, Mrs. Green, Dr.
Greenwood, Mr. Lee, and Mr. Moquin. Mr. McDonald was appointed
by the Board in 2000 as the lead independent director to serve as
coordinator of the activities of the Board's independent
directors. Specific responsibilities of the lead independent
director include advising the Chairman of the Board as to the
scheduling and agenda for Board meetings, ensuring that the
quality, quantity, and timeliness of the flow of information from
Company management is sufficient to allow independent directors
to effectively and responsibly perform their duties, and
coordinating and moderating executive sessions of the Board's
independent directors.
The purpose of the Compensation Committee is to recommend and
oversee management compensation, including that of the Chief
Executive Officer. Additional information regarding the
functions performed by the Compensation Committee and the
determination of management compensation is included in the
"Report of the Compensation Committee" following.
The purpose of the Nominating Committee is to consider and
recommend nominees for director, including those recommended by
shareholders of the Company. Any recommendations of a nominee
should be submitted to John R. Wynn, Secretary, Intergraph
Corporation, Huntsville, Alabama 35894-0001. Such nominees will
be reviewed by the Nominating Committee in accordance with its
established procedures.
Information regarding the functions performed by the Audit
Committee is set forth in the "Report of the Audit Committee"
following. The Audit Committee is governed by a written charter
that was amended by the Board of Directors on March 4, 2002. For
a copy of the charter, refer to Appendix A in this Proxy
Statement.
Report of the Audit Committee
The Audit Committee oversees the Company's financial reporting
process on behalf of the Board of Directors. Management has
primary responsibility for the Company's financial statements and
reporting process, including the systems of internal controls.
In light of recent developments, the Audit Committee reviewed its
charter and determined that is was appropriate to amend the
charter to include among its specific responsibilities, a review
and discussion with management and the independent auditors of
the critical accounting policies used in the annual audited
financial statements, as well as a discussion with the
independent auditors of all matters affecting the quality of the
Company's financial reporting and the fairness of the
presentation in the financial statements of the financial
condition and financial risks of the Company. In fulfilling its
oversight responsibilities under this charter, the Committee
reviewed with management the Company's audited financial
statements included in the 2001 Annual Report, including a
discussion of the quality and acceptability of accounting
policies and principles, the reasonableness of significant
judgments, and the clarity of disclosures in the financial
statements.
The Company's independent auditors are responsible for
expressing an opinion on the conformity of those audited
financial statements with generally accepted accounting
principles. The Committee reviewed with the independent auditors
their judgments as to the quality and acceptability of the
Company's accounting policies and principles and such other
matters as are required to be discussed with the Committee under
generally accepted auditing standards. In addition, the
Committee has discussed independence of the auditors from
management and the Company, including the matters in the written
disclosures by the Independence Standards Board, and considered
the compatibility of non-audit services with the auditors'
independence.
The Committee discussed with the Company's internal and
independent auditors the overall scope and plans for their
respective audits. The Committee meets with the internal and
independent auditors, with and without management present, to
discuss the results of their examinations, their evaluations of
the Company's internal controls, and the overall quality of the
Company's financial reporting.
In reliance on the reviews and discussions referred to above,
the Committee recommended and the Board of Directors has
approved, the Company's audited financial statements in the
Annual Report on Form 10-K for the year ended December 31, 2001,
for filing with the Securities and Exchange Commission. The
Committee and the Board have also recommended, subject to
shareholder approval, the selection of the Company's independent
auditors (Proposal 3 in this Proxy Statement).
Members of the Audit Committee:
Linda L. Green, Chair
Thomas J. Lee
Lawrence R. Greenwood
The foregoing report of the Audit Committee does not
constitute soliciting material and shall not be deemed
incorporated by reference by any general statement incorporating
by reference the proxy statement into any filing by the Company
under the Securities Act of 1933 or the Securities Exchange Act
of 1934, except to the extent that the Company specifically
incorporates this information by reference, and shall not
otherwise be deemed filed under such acts.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires
the Company's officers, directors, and persons who own more than
ten percent of a registered class of the Company's equity
securities, if any, to file reports of ownership and changes in
ownership with the SEC and, in the case of the Company, with The
Nasdaq Stock Market. Officers, directors, and greater than ten
percent shareholders are required by SEC regulation to furnish
the Company with copies of all Section 16(a) forms they file.
Based solely on review of the copies of such forms and any
amendments thereto furnished to the Company, or on written
representations that no forms were required, the Company believes
that during the year ended December 31, 2001, all Section 16(a)
filing requirements applicable to its officers, directors, and
greater than ten percent beneficial owners were met, except that
Preetha Pulusani, an Executive Vice President of the Company and
President of Intergraph Mapping and GIS Solutions, filed one late
report covering one transaction.
EXECUTIVE COMPENSATION
Information relating to compensation of certain executive
officers of the Company, the policies and practices of the
Company relative to executive compensation, and the performance
of the Company's stock are presented in this section. This
information consists of a summary compensation table, information
on stock option grants, exercises, and year-end values, director
compensation, information on employment contracts, the Report of
the Compensation Committee, and a graph depicting the five-year
performance of the Company's stock against the performance of
peer companies and the Standard & Poor's 500 Stock Index.
Summary Compensation Table
The following table summarizes the compensation of James F.
Taylor Jr., Chairman of the Board and Chief Executive Officer of
the Company, and the four most highly compensated executive
officers of the Company who were serving as such at December 31,
2001.
Long Term
Compensation
Annual Compensation Awards
----------------------------- -----------
Other Securities All
Annual Underlying Other
Name and Compen- Options Compen-
Principal Position Year Salary($) Bonus($) sation($) (#) sation($)
------------------------ ---- --------- -------- --------- ---------- ---------
(1)
James F. Taylor Jr., 2001 300,000 --- --- --- 7,422
Chairman of the Board 2000 284,302 --- --- --- 8,189
and Chief Executive
Officer (2)
William E. Salter, 2001 260,000 195,000 --- 40,000 7,625
President, Intergraph 2000 196,800 --- --- --- 6,174
Government Solutions (3) 1999 145,600 --- --- --- 5,346
Gerhard Sallinger,
President, Process, 2001 194,166 72,078 --- 25,000 15,686
Power & Offshore (4)
Graeme J. Farrell, 2001 225,000 35,631 20,318 --- 38,432
Executive Vice 2000 204,789 --- 29,622 20,000 29,686
President, Asia 1999 190,000 --- 29,825 --- 28,964
Pacific Operations (5)
Roger O. Coupland, 2001 250,000 --- --- --- 7,572
President, Intergraph 2000 220,191 --- --- 30,000 6,694
Public Safety, Inc. (6)
(1) "Other Annual Compensation" for each of the named executives
does not include the value of certain personal benefits, if
any, furnished by the Company or for which it reimburses the
named executives, unless the value of such benefits in total
exceeds the lesser of $50,000 or 10% of the total annual
salary and bonus reported in the above table for the named
executive.
(2) Mr. Taylor was elected Chief Executive Officer of the Company
on March 2, 2000. Effective on that date, Mr. Taylor's annual
salary was set at $300,000. Mr. Taylor was elected Chairman
of the Board of Directors effective May 17, 2001.
"All Other Compensation" for Mr. Taylor consists of the following:
2001 2000
------- -------
Retirement plan contribution $ 5,100 $ 6,464
Term life insurance * 2,322 1,725
------- -------
Total $ 7,422 $ 8,189
------- -------
------- -------
(3) Dr. Salter first became an executive officer of the Company
in 1989. "All Other Compensation" for Dr. Salter consists of
the following:
2001 2000 1999
------- ------- -------
Retirement plan contribution $ 4,250 $ 4,920 $ 3,640
Term life insurance * 3,375 1,254 1,706
------- ------- -------
Total $ 7,625 $ 6,174 $ 5,346
------- ------- -------
------- ------- -------
(4) Mr. Sallinger first became an executive officer of the
Company in 2001. "All Other Compensation" for Mr. Sallinger
consists of the following:
2001
-------
Retirement plan contribution $ 7,767
Social security contribution 7,919
-------
Total $15,686
-------
-------
Mr. Sallinger's compensation is paid in European currencies
that fluctuate in value against the U.S. dollar.
(5) Mr. Farrell first became an executive officer of the
Company in 1999. "Other Annual Compensation" for Mr. Farrell
consists of the following:
2001 2000 1999
------- ------- -------
Car allowance $10,575 $14,159 $15,093
Education assistance for
dependant 1,275 8,015 8,183
Supplemental health insurance 8,205 7,448 6,549
Other 263 --- ---
------- ------- -------
Total $20,318 $29,622 $29,825
------- ------- -------
------- ------- -------
"All Other Compensation" for Mr. Farrell consists of the
following:
2001 2000 1999
------- ------- -------
Retirement plan contribution $22,818 $19,670 $19,463
Income protection insurance 3,147 2,552 2,518
Term life insurance * 12,467 7,464 6,983
------- ------- -------
Total $38,432 $29,686 $28,964
------- ------- -------
------- ------- -------
(6) Dr. Coupland first became an executive officer of the
Company in 2000.
"All Other Compensation" for Dr. Coupland consists of
the following:
2001 2000
------- -------
Retirement plan contribution $ 5,250 $ 5,452
Term life insurance * 2,322 1,242
------- -------
Total $ 7,572 $ 6,694
------- -------
------- -------
* Premium payments for term life insurance were not made to
split-dollar insurance arrangements.
Stock Option Grants, Exercises and Year-End Values
Grants. The Company from time to time awards stock options to
key employees, including executive officers and directors,
pursuant to stock option plans approved by the shareholders of
the Company. The following table sets forth information
concerning options granted under these plans to the Named
Executive Officers during the year ended December 31, 2001.
OPTION GRANTS (1)
--------------------------------------------------------------------------------
Number of Percent of
Securities Total Options
Underlying Granted to Exercise Grant Date
Options Employees Price Expiration Present
Name Granted (#) in 2001 per Share Date Value (2)
------------- ------------ ------------- ---------- ---------- ----------
William E. Salter, 40,000 17% $11.88 8/13/2011 $280,185
President, Intergraph
Government Solutions
Gerhard Sallinger, 25,000 11% $10.89 10/30/2011 $158,754
President, Process,
Power & Offshore
(1) Options were granted at fair market value on the date of
grant. Fair market value is the closing sale price of the
Company's stock as reported on The Nasdaq Stock Market.
Options first become exercisable two years from the date of
grant and vest at a rate of 25% per year from that point, with
full vesting on the fifth anniversary of the grant date.
Options are granted for a term of ten years from the date of
grant.
(2) The grant date present value of the options was determined
using the Black-Scholes option-pricing model. Estimated values
determined using this model are based on the market value of
the stock on the date of grant, the exercise price of the
option, and on assumptions as to the risk-free rate of return,
volatility of the Company's stock price, and expected term of
the option. Dividend yield is excluded from the calculation
since it is the present policy of the Company to retain all
earnings to finance operations. Assumptions used in valuing
the grants included an expected volatility of 73% and an
expected option life of 1.09 years after vest date. Risk-
free rates of return were determined separately for each of
the serial vesting periods of the options and ranged from 3.32%
to 4.57%.
The actual value, if any, an executive may realize from the
exercise of a stock option will equal the excess of the stock
price over the exercise price on the date the option is
exercised. There is no assurance that the value realized by
an executive will be at or near the value estimated using the
Black-Scholes model, or that any value will be realized.
Exercises. There were no options exercised by any of the Named
Executive Officers during the year ended December 31, 2001.
Year-End Values. The following table sets forth the number of
securities underlying unexercised stock options held by the Named
Executive Officers at December 31, 2001.
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options at Year End (#) Options at Year End ($)
-------------------------- --------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
----------------------- ----------- ------------- ----------- -------------
James F. Taylor Jr.,
Chairman of the Board and
Chief Executive Officer 10,000 10,000 83,650 83,650
William E. Salter,
President, Intergraph
Government Solutions --- 40,000 ---- 74,400
Gerhard Sallinger,
President, Process,
Power & Offshore 6,250 53,750 42,825 305,255
Graeme J. Farrell,
Executive Vice President,
Asia Pacific Operations 16,250 23,750 68,820 191,715
Roger O. Coupland,
President, Intergraph
Public Safety, Inc. 20,000 40,000 109,800 328,975
The value of unexercised in-the-money options is determined as
the excess of the closing sale price of the Company's Common
Stock as reported on The Nasdaq Stock Market on December 31,
2001, over the exercise prices of the options held by the Named
Executive Officers.
Compensation of Directors
Directors who are also employees of the Company do not receive
additional compensation for their service as directors. Non-
employee directors receive an annual retainer of $20,000, paid in
quarterly installments, plus $500 for each Board and committee
meeting attended. Other compensation includes mileage paid at
$.30 per mile for each member whose home is more than 25 miles
from Intergraph headquarters and $50 for each hour traveled,
computed round trip. In addition, any commercial travel expenses
are fully reimbursed. All directors received the full annual
retainer in 2001, except for Mrs. Green who received $10,000 for
her period of service after election to the Board of Directors in
May 2001.
The Intergraph Corporation Nonemployee Director Stock Option
Plan was approved at the 1998 Annual Shareholders' Meeting.
Under this plan, any new non-employee director is granted an
option to purchase 3,000 shares of the Company's Common Stock
upon his or her first election to the Board. At each annual
meeting of shareholders, each non-employee director re-elected to
the Board is granted an option to purchase an additional 1,500
shares of the Company's Common Stock. The exercise price of each
option granted is the fair market value of the Company's stock on
the date of grant. Options are granted for a term of ten years
from the date of grant. Options first become exercisable one
year from the date of grant and vest at a rate of 33% per year
from that point, with full vesting on the third anniversary of
the date of grant.
Employment Contracts
Mr. Farrell holds an employment agreement with the Company and
one of its Australian business entities that provides him a fixed
base salary, supplemental health insurance, supplemental defined
contribution pension and life insurance benefits, and expense
allowances for a vehicle and other personal expense items. The
contract is open-ended, but may be terminated by either party
with three months' written notification. The termination
provisions of his contract provide for severance benefits
calculated as a function of his length of service under the
agreement up to a maximum of two years' base salary.
Mr. Sallinger holds an employment agreement with one of the
Company's European business entities. The employment agreement
provides him a fixed base salary, a permanent advance for travel
expenses, and a vehicle. The contract is open-ended, but may be
terminated by either party giving a notice of six weeks prior to
the end of a quarter. A contract penalty equal to the last gross
monthly salary may apply if the employment relationship is
terminated prematurely.
Report of the Compensation Committee
The Compensation Committee of the Board of Directors is
composed of all non-employee directors. The following Committee
report reflects the Committee's activities in 2001 with regard to
executive compensation. The committee held two meetings wherein
it made compensation decisions based upon recommendations by the
Company's Chief Executive Officer ("CEO"), as well as based upon
its own subjective evaluations. This report also describes the
basis for compensation recommendations for 2001, and the
objectives that the Committee followed in reviewing and
determining executive compensation for 2001, as well as for
future years.
Committee Charter and Objectives
In accordance with its Charter, the responsibilities of the
Committee include the oversight of the Company's executive
officer compensation policies and practices. In fulfilling these
responsibilities, the committee conducts an annual review of the
Company's executive compensation programs and policies in order
to attain the following objectives:
o offer fair and competitive base salaries consistent with the
Company's position in the markets in which it competes,
o reward executive officers for corporate and individual
performance through incentive bonus programs,
o encourage future performance through the use of long-term
incentives such as stock options, and
o encourage executive officers to acquire and retain ownership
of the Company's Common Stock.
The Company's executive compensation programs and policies are
intended to enable the Company to attract, retain, and motivate
the highest quality of management talent. To achieve this
objective, the Committee utilizes annual base salaries together
with annual and long-term incentives tied to corporate
performance and increases in shareholder value. As a result, the
Committee works closely with the Administrative Committee of the
Company's Employee Stock Option Plan ("the Administrative
Committee") in the provision of incentive stock options and non-
qualified stock options to executive officers and other key
employees of the Company. The Administrative Committee reviews
and determines the award of individual employee stock option
grants under the Company's Employee Stock Option Plan. See
"Compensation Committee Interlocks and Insider Participation"
following for a summary of the options granted to the Company's
executive officers and directors during 2001.
Executive Officer Compensation for 2001
For 2001, the CEO was responsible for formulating a
recommendation for the compensation of all other executive
officers of the Company based on the authority and discretion
granted the CEO by the Board of Directors. The CEO and the
Committee also reviewed and considered independent industry
survey results concerning the compensation practices of similarly
situated companies, including, where available, specific
regional, industry, and competitor compensation data (including
that of the peer companies in the performance graph following
this report). Based upon a review of the information received,
their own business experience, and the recommendations of the
CEO, the Committee approved the compensation recommendations of
the CEO.
Each of the Business Segment Presidents participates in a
formal bonus plan that is tied to the financial performance of
the segment. There is no bonus until the Executive reaches the
income from operations targets established in the segment's
Annual Operating Plan. As the Executive exceeds the planned
performance, bonuses are earned. The bonus is capped at twice
the Executives' annual salary. There is no formal cash bonus
plan for executive officers that are not responsible for a
segment or a geographic region, but exceptional individual
performance is occasionally rewarded by a cash bonus. Overall
corporate performance neither guarantees nor precludes the award
of bonuses, but may influence the amount of such bonuses. Sales
executives are paid a base salary that approximates 70% of the
executives' total potential annual compensation. The base salary
amount may be supplemented in amounts up to an additional 30% of
total potential compensation if certain order and revenue
objectives are met.
The granting of stock options to purchase shares of the
Company's stock over a ten-year period at a specified price is
the primary means of providing long-term incentive to executive
officers to perform in a manner that benefits themselves, the
Company, and the Company's shareholders. There were no standard
performance factors, applicable to either the individual and his
or her job performance or the financial performance of the
Company, considered by the Administrative Committee. Decisions
to award stock options were based upon subjective evaluations of
job performance and expected contribution to the Company. Stock
options have also been used to attract new employees. Previous
option awards are considered when awarding new options. With
respect to incentive stock options, such options may not exceed
the amounts permitted under applicable Internal Revenue Code
provisions. The Committee reviewed and approved the
recommendations of the CEO with regard to the award of stock
options, for both existing executive officers' compensation plans
as well as new executive officers retained during 2001.
In the past, the Company has on occasion entered into
employment agreements with key executives. Such agreements
specified the terms of employment, including duration, separation
benefits, and compensation. Under most circumstances, separation
amounts do not exceed the balance of compensation due for the
remaining unfulfilled term of the agreement. Executives without
employment agreements who are terminated through a workforce
reduction or job elimination receive severance pay based on
standard Company policy applicable to all employees. During
2001, the Committee assimilated all employment agreements
existing between the Company and individual employees. The
Committee obtained copies of all such employment agreements, in
order to determine which agreements remained in effect with
Company executive officers. At the end of 2001, only three such
employment agreements remained in existence between the Company
and executive officers. During 2001, one such agreement expired
in accordance with its terms, and a second was exercised when the
executive terminated employment with the Company. Additionally,
during 2001, an employee of Intergraph (Deutschland) GmbH was
promoted to President of the Company's PP&O segment, thereby
becoming an executive officer of the Company. Said employee had
a preexisting employment agreement with Intergraph (Deutschland)
GmbH at the time of his promotion, which will remain effective in
his present capacity. The agreement does not address the
executive officer's current employment with the Company as
President of PP&O. The CEO did not recommend, nor did the
Committee approve, any new employment agreements during 2001.
CEO Compensation
There was no change in the compensation of the CEO for 2001.
The Committee did not utilize any standard corporate or
individual performance factors in its determination of CEO
compensation for 2001. The Committee establishes the
compensation for the CEO solely on the subjective evaluation of
the performance of the CEO and the level of compensation paid to
similar executives.
Members of the Compensation Committee: Sidney L. McDonald, Chair
Linda L. Green
Lawrence R. Greenwood
Thomas J. Lee
Joseph C. Moquin
Compensation Committee Interlocks and Insider Participation
The Administrative Committee of the Company's stock option
plan, which is appointed by and comprised of all current members
of the Board of Directors, may award both incentive stock options
and non-qualified stock options to executive officers and other
key employees. Members of the Administrative Committee who are
also employees of the Company, including James F. Taylor Jr.,
Chairman of the Board and Chief Executive Officer, and Larry J.
Laster, Chief Financial Officer, are eligible to receive options
under the Plan. During the year ended December 31, 2001, the
Administrative Committee awarded options for a total of 239,000
shares of the Company's Common Stock. Of this total, options for
174,000 shares were awarded to directors and executive officers
of the Company, including 9,000 options granted under the
Nonemployee Director Stock Option Plan, 65,000 granted to the
Named Executive Officers, and 20,000 granted to Mr. Laster.
During the year ended December 31, 2001, no executive officer
of the Company served as a director or as a member of the
compensation committee, or committee performing equivalent
functions, of another business entity.
Performance Graph
The following graph sets forth, for the five-year period ended
December 31, 2001, a comparison of the cumulative total
shareholder return to the Company's shareholders with that of the
Software and Services Index, and that of the Standard & Poor's
500 Stock Index. The Company uses the Media General Computer
Software and Services Index as the best representation of the
companies with which its business segments compete. The
cumulative total return for this index was provided to the
Company by Media General Financial Services. Total shareholder
return for each was determined by adding a) the cumulative amount
of dividends for a given year, assuming dividend reinvestment,
and b) the difference between the share price at the beginning
and at the end of the year, the sum of which was then divided by
the share price at the beginning of such year. The graph assumes
$100 was invested on December 31, 1996.
Comparative Five-Year Total Returns
Software and Services Index,
Standard & Poor's 500 Stock Index, and Intergraph Corporation
Software and 1996 1997 1998 1999 2000 2001
Services Index $100 $121 $180 $309 $186 $164
S&P 500 $100 $133 $171 $208 $189 $166
Intergraph $100 $ 98 $ 56 $ 46 $ 59 $134
PROPOSAL 2
AMENDMENT TO CERTIFICATE OF INCORPORATION TO ELIMINATE
THE ABILITY OF SHAREHOLDERS TO ACT BY WRITTEN CONSENT IN LIEU
OF A MEETING
At the Meeting, the shareholders will be asked to approve and
adopt an amendment to the certificate of incorporation to
eliminate the ability of shareholders to act by written consent
in lieu of a meeting, which we refer to as the Proposed Amendment
in this Proxy Statement.
Shareholders are urged to read carefully the description and
discussion of the Proposed Amendment that follows before voting
on this proposal.
If the Proposed Amendment is not approved, the existing
certificate of incorporation will remain in effect without
amendment. If the Proposed Amendment is approved, the Company
intends to amend the certificate of incorporation by filing a
certificate of amendment in substantially the form attached
hereto as Appendix B (the "Certificate of Amendment") reflecting
the Proposed Amendment. The Proposed Amendment would become
effective upon the filing of the Certificate of Amendment with
the Secretary of State of the State of Delaware. Under Delaware
law, the Company's shareholders are not entitled to dissenter's
rights with respect to the proposed amendment to the certificate
of incorporation. The Board of Directors has reserved the right
under Section 242(c) of the Delaware General Corporation Law (the
"DGCL") to abandon the Proposed Amendment, notwithstanding
approval of such proposal by the shareholders, without further
action by the shareholders.
Under Article VIII of the existing certificate of
incorporation, the Board of Directors has the power and authority
to amend the existing bylaws of the Company. If the Proposed
Amendment is approved, the Board of Directors intends to amend
and restate the existing bylaws of the Company which were last
restated on August 11, 1993 (the "Bylaws") to more closely follow
and complement the Proposed Amendment.
The amendment described in Proposal 2 is contained within the
Certificate of Amendment set forth in Appendix B to this Proxy
Statement, in substantially the form in which it will take effect
if the Certificate of Amendment is approved by the shareholders.
If approved by shareholders, the Certificate of Amendment will
become effective on the filing of the Certificate of Amendment
with the Secretary of State of the State of Delaware. The
following description of the amendment contained in the
Certificate of Amendment is qualified in its entirety by
reference to Appendix B.
Pursuant to the DGCL, approval of the Proposed Amendment will
require the affirmative vote of a majority of all shares
outstanding as of the record date. In tabulating the vote,
abstentions and broker non-votes will have the same effect as a
vote cast against the Proposed Amendment. The Board of Directors
unanimously recommends that shareholders vote FOR the approval
and adoption of the Proposed Amendment.
Description of the Proposed Amendment
Under Section 228 of the DGCL, unless otherwise provided in a
corporation's certificate of incorporation, any action required
or permitted to be taken by shareholders of a corporation may be
taken without a meeting and without a shareholder vote if a
written consent setting forth the action to be taken is signed by
the holders of shares of outstanding stock having the requisite
number of votes that would be necessary to authorize such action
at a meeting of shareholders and is delivered in accordance with
the procedures set forth under the DGCL. The Company's
certificate of incorporation as currently in effect is silent on
the matter of shareholder action by written consent.
Accordingly, Delaware law would permit the holders of a majority
of the outstanding shares of capital stock of the Company to take
such action.
The purpose of the Proposed Amendment is to require that any
action to be taken by the Company's shareholders may only be done
at a meeting duly held upon prior notice. Shareholders will no
longer have the ability to transact business or take action by a
consent in writing signed by the holders of at least a majority
of the issued and outstanding shares of the Company, without a
meeting and without prior written notice.
Reasons for the Proposed Amendment
The Proposed Amendment is not in response to any present
effort, of which the Company is aware, to accumulate our Common
Stock or to obtain control of the Company. However, the Board of
Directors has observed the relatively common use of certain
coercive takeover tactics, including the accumulation of
substantial capital stock positions as a prelude to a threatened
takeover or corporate restructuring, proxy contest and/or partial
tender offer and the related use of "two-tiered" pricing which
may lead to the unfair treatment of shareholders and a failure to
maximize shareholder value. The Board of Directors is also
mindful of the potential impact of current and potential legal
proceedings relating to the Company's patents, as well as the
significance of the Company's patents to others in the computer
industry. The potential for recovery of damages from one or more
of these parties could lead one or more of them to seek control
of the Company in an effort to end any litigation by the Company
against such party or parties before any judgment could be
reached on our claims. The Company believes that current or
potential litigants of the Company also may, without intending to
obtain control of the Company, use the threat of an unfriendly
takeover bid in an effort to force the Company to settle with
such party to avert the threat of a takeover. Given such
circumstances, the Board has determined that the ability of
stockholders to act by written consent makes the Company
especially vulnerable to the threat of an unsolicited hostile
takeover attempt by means of a tender offer combined with a
consent solicitation to remove the existing directors without a
meeting of stockholders. Since this type of takeover tactic
potentially could be accomplished within the minimum twenty
business day period prescribed under Federal tender offer rules,
barring any regulatory delays, the Board of Directors may not
have sufficient time to explore, evaluate and present to
shareholders financial alternatives that may be superior to the
unsolicited offer.
The Board of Directors believes that the best interests of the
Company's shareholders will be served if appropriate defenses to
coercive tender offers or other coercive efforts to gain control
of the Company are established. By effectively eliminating the
ability of a hostile acquiror to replace the then incumbent Board
of Directors without the Company properly calling an annual or
special meeting and giving all shareholders the opportunity to
consider and evaluate what other alternatives may be available,
the Proposed Amendment should provide shareholders with a greater
opportunity to maximize the value of their stock. The Proposed
Amendment will render more difficult, but not prevent, the
accomplishment of unsolicited tender offers and the assumption of
control by an undesired principal shareholder or shareholders
group, and/or the removal of current management and the Board of
Directors. Even these effects are somewhat limited, however, as
our Board of Directors is not classified and therefore the entire
Board of Directors is subject to reelection on an annual basis,
meaning a shareholder or group of shareholders acquiring control
of a majority of the shares of the Company, or proxies
representing such shares, could elect a new Board of Directors at
the next regular annual meeting of the Company.
The Board of Directors also believes that by requiring action
to be taken at a meeting of the shareholders and facilitating the
concurrent notice and informational disclosure associated with
such a meeting, the Proposed Amendment would help to avoid an ill-
advised shareholder action in a context that might not permit the
shareholders to have the full benefit of the knowledge, advice
and participation of the Company's management, Board of Directors
and other shareholders. A significant effect of the Proposed
Amendment, considered in conjunction with the Company's existing
anti-takeover devices described below, is to encourage persons
seeking to acquire control of the Company to initiate such an
acquisition through arm's length negotiations with the Board of
Directors rather than through a hostile takeover bid. Even in
the case of an "all cash" offer to all shareholders, the Proposed
Amendment can serve to provide leverage for the Board of
Directors to facilitate an organized bidding process and to
negotiate a higher price for the Company's shareholders. See
"Effects of the Proposed Amendment."
Existing Anti-Takeover Devices
Certificate of Incorporation. The existing certificate of
incorporation does not contain provisions intended by the Company
to serve as anti-takeover devices. However, the certificate of
incorporation authorizes 100,000,000 shares of Common Stock, $.10
par value. Shares of authorized and available Common Stock
could, within the limits imposed by applicable law and the rules
of the Nasdaq National Market, be issued by the Company as a
means to discourage a potential adverse acquiror from seeking
control of the Company by diluting public ownership of the
Company.
Amended and Restated Rights Agreement. The Board of Directors
adopted an amended and restated rights agreement on March 4, 2002
(which became effective March 5, 2002). Rights agreements are
designed to encourage potential acquirors to negotiate with a
company's board of directors to preserve for shareholders the
value of a company in the event of a takeover attempt,
particularly if the capital stock of the company is trading at
prices substantially lower than the company's long-term value.
Rights agreements reduce the likelihood that a potential acquiror
unwilling to pay a market premium determined to be sufficient by
a company's board of directors will attempt to acquire stock by
means of an open-market accumulation, front-end loaded tender
offer or other coercive or unfair takeover tactics.
The Company's original rights agreement was put into effect on
August 25, 1993, when the Board of Directors authorized a
dividend of one Common Stock purchase right (a "Right") for each
share of Common Stock outstanding at the close of business on
September 7, 1993, and each share issued thereafter during the
term of the plan. Unless exercised or triggered, the Rights
would have expired on September 7, 2003. On March 5, 2002, the
Company entered into an amended and restated rights plan which
extended the expiration date of the Rights to March 5, 2012. If
triggered, the Rights will cause substantial dilution to a person
or group that acquires 15% (and in some instances 10%) or more of
the Common Stock then outstanding on terms not approved by the
Board of Directors. The description and terms of the Rights are
set forth in an amended and restated rights agreement, dated as
of March 5, 2002, as the same may be amended from time to time,
between the Company and Computershare Investor Services, LLC.
The amended and restated rights agreement may discourage
unsolicited takeover bids from undesirable third parties, or make
these actions more difficult to accomplish. The rights plan was
adopted to ensure that in the case of an unsolicited takeover
offer, the Company and its shareholders would be protected from
takeover attempts, or the acquisitions of a substantial block of
equity, on terms which may be less favorable to its shareholders
generally than would be available in transactions negotiated with
and approved by the Board of Directors. With the rights
agreement in place, if a hostile takeover is threatened or an
offer to acquire a substantial block of Common Stock is made, the
Board of Directors is better able to manage the process to ensure
that any proposal which may be accepted is in the best interest
of all shareholders and, if required and to the extent
practicable, the price to the shareholders is maximized and that
all shareholders are treated equally.
Bylaws. The Company's bylaws currently provide that
shareholders may not call special meetings of shareholders and
must comply with a detailed notice procedure with regard to the
nomination by shareholders, other than by or at the direction of
the Board of Directors, of candidates for election as directors
(the "Nomination Procedure") and with regard to shareholder
proposals to be brought before an annual meeting of shareholders
(the "Business Procedure"). Nominations of persons for election
to the Board of Directors and the proposal of business to be
considered by the shareholders may be made at an annual meeting
of shareholders pursuant to the Company's notice of meeting, by
or at the direction of the Board of Directors, or by a
shareholder who has given timely prior written notice to the
Secretary of the Company prior to the meeting. To be timely,
notice for nominations or shareholder proposals must be received
by the Company not later than 60 days nor more than 90 days prior
to the first anniversary of the preceding year's annual meeting
(or, for annual meetings not held within 30 days before or 60
days after such anniversary, not earlier than 90 days prior to
such annual meeting and not later than the close of business on
the later of the 60th day prior to such annual meeting or the
10th day following the day on which such meeting is publicly
announced or disclosed).
Under the Nomination Procedure, notice to the Company from a
shareholder who proposes to nominate a person at a meeting for
election as a director must contain certain information about
that person, including name and addresses, age, principal
occupation, the class and number of shares of Common Stock or
other capital stock beneficially owned, the consent of such
person to be nominated and such other information as would be
required to be included in a proxy statement soliciting proxies
for the election of the proposed nominee, and certain
information about the shareholder proposing to nominate that
person. Under the Business Procedure, notice relating to a
shareholder proposal must contain certain information about such
proposal and about the shareholder who proposes to bring the
proposal before the meeting. Business transacted at any special
meetings of shareholders is limited to matters relating to the
purposes stated in the notice of that meeting.
The purpose of the Nomination Procedure is, by requiring a
specified amount of advance notice of nominations by
shareholders, to afford the Board of Directors a meaningful
opportunity to consider the qualifications of the proposed
nominees during the appropriate period when the Board of
Directors is focused on nominations and, to the extent deemed
necessary or desirable by the Board of Directors, to inform
shareholders about the qualifications of the proposed nominee.
The purpose of the Business Procedure is, by requiring a
specified amount of advance notice of shareholder proposals, to
provide a more orderly procedure for conducting annual meetings
of shareholders and, to the extent deemed necessary or desirable
by the Board of Directors, to provide the Board of Directors with
a meaningful opportunity to analyze such proposals and to decide
whether it is appropriate to either (i) omit such proposal or
(ii) inform shareholders, prior to such meetings, of any proposal
to be introduced at such meetings, together with any
recommendation of the Board of Directors as to action to be taken
with respect to such proposal, so as to enable shareholders
better to determine whether they desire to attend such meeting or
grant a proxy to the Board of Directors as to the disposition of
any such proposal.
Although these advance notice procedures do not give the Board
of Directors the power to approve or disapprove shareholder
nominations for the election of directors or any other proposal
submitted by shareholders, they could have the effect of making
more difficult a shareholder nomination for the election of
directors or the submission by shareholders of proposals at a
particular shareholders meeting because of the specificity of the
procedures to be followed.
Delaware Law. Section 203 of the DGCL, which is applicable to
the Company, may be deemed to have certain anti-takeover effects
by prescribing certain voting requirements in instances in which
there is a transaction between a publicly held Delaware
corporation and an "interested shareholder" (defined generally as
a person owning 15% or more of a corporation's outstanding voting
stock) during the three-year period following the time such
person became an interested shareholder.
Although Section 214 of the DGCL provides that a corporation's
certificate of incorporation may provide for cumulative voting
for directors, the certificate of incorporation does not provide
for cumulative voting. As a result, the holders of a majority of
the shares of Common Stock have the ability to elect all of the
directors being elected at any annual meeting of shareholders.
The Board of Directors has no current intention to propose
other additional anti-takeover measures in future solicitations,
although the Board of Directors may determine to propose one or
more of such measures at a later date. Except for the filing of
the Certificate of Amendment and the adoption of amended and
restated Bylaws, both as discussed above, the Board of Directors
has no current intention to otherwise adopt any other anti-
takeover measures, although the Board of Directors may determine
to adopt one or more of such measures at a later date.
Effects of the Proposed Amendment
Although the Board of Directors believes that the Proposed
Amendment should be adopted for the reasons set forth in this
Proxy Statement, the Board of Directors is aware that the
Proposed Amendment may have anti-takeover effects. Although the
Proposed Amendment is designed as a protective measure for the
Company's shareholders, the Proposed Amendment may have the
effect of preventing shareholders from realizing an opportunity
to sell their shares of Common Stock at higher than market prices
by deterring unfriendly tender offers or other efforts to obtain
control of the Company. The Proposed Amendment would also mean
that incumbent directors could not be replaced through a consent
solicitation even though a majority of the shareholders may deem
such a result desirable.
The Board of Directors believes that the approval and adoption
of the Proposed Amendment should encourage those seeking to
obtain control of the Company to negotiate with the Board of
Directors. The Board of Directors believes that if the Company
is to be acquired, the interests of the shareholders will best be
served by a negotiated transaction that results from careful
consideration of all strategic alternatives available to the
Company and its shareholders, including the proposed terms of any
takeover proposal, such as the availability of the benefits of
the transaction to all shareholders, the price to be paid to
shareholders (including minority shareholders) and the form of
consideration paid and tax effects of the transaction.
The Board of Directors believes that the use of certain
takeover tactics, combined with the written consent process, can
place undue pressure on a corporation's board of directors and
shareholders to act hastily and without complete information and,
therefore, can be highly disruptive to a corporation as well as
divert valuable corporate resources. These tactics can also
result in a lost opportunity to consider fully all available
alternatives, before shareholders are forced to act, so as to
avoid the differences in treatment of shareholders between those
who act immediately in response to announcements of takeover
activity and those who act later or not at all.
Even though the Board of Directors believes that the Proposed
Amendment would help to protect the Company's shareholders and
may help the Company obtain the best price in a potential
transaction, shareholders should also note that there are certain
disadvantages. The Proposed Amendment may have the effect of
deterring or delaying certain types of takeover attempts that may
not be approved by the incumbent directors, but that the holders
of a majority of the shares of Common Stock may deem to be in
their best interests or in which some or all of the Company's
shareholders may receive a substantial premium over the
prevailing market price of their shares of Common Stock. The
Proposed Amendment may delay the assumption of control by a
holder of a large block of Common Stock and the removal of
incumbent directors and management, even if such removal may be
beneficial to some or all of the Company's shareholders. By
discouraging takeover attempts, the Proposed Amendment also could
have the incidental effect of inhibiting the temporary
fluctuations in the market price of Common Stock that often
result from actual or rumored takeover attempts.
The Board of Directors recognizes that a takeover might in some
circumstances be beneficial to some or all of the Company's
shareholders, but, nevertheless, believes that the shareholders
as a whole will benefit from the adoption of the Proposed
Amendment. The Board of Directors further believes that it is
preferable to act on the Proposed Amendment now when it can be
considered carefully rather than hastily during an unsolicited
bid for control.
Recommendation of the Board of Directors
The Board of Directors has carefully considered the potential
adverse effects of the Proposed Amendment and has concluded that
these effects are substantially outweighed by the benefits that
it would afford the Company and its shareholders. Accordingly,
the Board of Directors unanimously recommends that shareholders
vote FOR the approval and adoption of the Proposed Amendment.
PROPOSAL 3
APPROVAL OF THE INTERGRAPH CORPORATION
2002 STOCK OPTION PLAN
At the Meeting, the shareholders will be asked to approve and
adopt the Intergraph Corporation 2002 Stock Option Plan (the
"Plan"), which has been unanimously approved by the Board,
subject to its approval by the shareholders.
The following description of the principal provisions of the
Plan is intended solely as a summary, and is subject to, and
qualified by, the full text of the Plan set forth in Appendix C
attached to this Proxy Statement.
The Board believes that the Plan will encourage key employees
to increase their productivity, will motivate them to excel on
behalf of the Company, and will help the Company attract highly
qualified employees. The Plan will serve not only to attract and
retain outstanding employees, but also will enable these
employees to acquire or increase their proprietary interest in
the Company.
The Plan permits the Committee (as defined below) to grant
both incentive stock options ("Incentive Options"), within the
meaning of Section 422 of the Internal Revenue Code of 1986, as
amended, and options which do not qualify as Incentive Options
("Non-Statutory Options"). (Incentive Options and Non-Statutory
Options are collectively referred to as "Options".) The
Committee is also entitled to make awards of restricted stock
("Restricted Stock"). For purposes of the Plan, Incentive
Options, Non-Statutory Options, and awards of Restricted Stock,
whether singly or in combination, are sometimes referred to as
"Awards."
The Plan will be administered by a committee (the "Committee")
composed of either the entire Board of Directors or composed
solely of two or more "Non-Employee Directors," as defined in
Rule 16b-3 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as amended. As of the date of
this Proxy Statement, the entire Board of Directors constitutes
the Committee. In the event the Committee is composed of two or
more Non-Employee Directors, the Board of Directors may from
time to time remove members from, add members to, and fill
vacancies on the Committee. The Committee shall select one of
its members as Chairman, and shall hold meetings at such times
and places as it may determine. Action taken by a majority of
the Committee at which a quorum is present, or action reduced
to writing or approved in writing by a majority of the members
of the Committee, shall be valid acts of the Committee.
The Committee will have the discretion to designate Awards
recipients and the number of Awards to be granted to each such
recipient, provided that not more than 200,000 Options shall be
granted to the Chief Executive Officer of the Company and the
other four (4) most highly compensated officers in any calendar
year.
Awards may be granted pursuant to the Plan from June 1, 2002,
through May 31, 2012, to key employees (including officers and
Committee members) of the Company and its subsidiaries
(approximately 650 persons as of January 31, 2002). An Award
recipient may, subject to the terms and restrictions set forth
in the Plan, hold more than one type of Award. In selecting
individuals for Awards, the Committee will weigh the position
and responsibility of the individual being considered, the
nature of his or her services, his or her present and potential
contributions to the Company, and other factors deemed relevant
by the Committee. The Committee has full discretion to
determine the timing and recipients of any Awards under the Plan
and the number of shares subject to Awards that may be granted
under the Plan. Therefore, the Awards that may be granted under
the Plan or that would have been granted under the Plan during
the year ended December 31, 2001, if the Plan had been in
effect, are not determinable.
The stock subject to Awards issued under the Plan will be
shares of the Company's authorized but unissued or reacquired
Common Stock. Under the Plan, the Committee may, in its
discretion, grant Awards for up to 2,000,000 shares of the
Company's Common Stock, of which no more than 400,000 shall be
shares of Common Stock with respect to which Restricted Stock
awards may be granted. The 2,000,000 shares authorized for
issuance under the Plan represent approximately four percent
(4%) of the Common Stock outstanding as of January 31, 2002
(subject to adjustment in the event of stock dividends, stock
splits, or stock consolidations of the Common Stock, or any
other increase or decrease in the number of shares effected
without receipt of consideration by the Company). The closing
sale price of the Common Stock on January 31, 2002, was $14.40
per share.
The Committee will have the sole and complete authority to
determine the participants to whom Restricted Shares shall be
granted, the number of Restricted Shares to each participant,
the duration of the period during which the Restricted Shares
may be forfeited to the Company, and the other terms and
conditions of such Restricted Share awards. An award agreement
will set forth the period of time during which the grantee of a
Restricted Share award must remain in the continuous employment
of the Company in order for the forfeiture and transfer
restrictions to lapse. As determined by the Committee, the
restrictions may lapse during the restricted period in
installments with respect to specified portions of shares of
Common Stock covered by the Restricted Share award.
At the time of a Restricted Share award, a certificate
representing the number of shares of Common Stock awarded
thereunder shall be registered in the name of the grantee. Such
certificate shall be held by the Company or any custodian
appointed by the Company for the account of the grantee subject
to the terms and conditions of the Plan, and shall bear such a
legend setting forth the restrictions imposed thereon as the
Committee, in its discretion, may determine. The grantee shall
have all rights of a stockholder with respect to the Restricted
Shares, including the right to receive dividends and the right
to vote such shares of Common Stock, subject to the following
restrictions: (i) the grantee shall not be entitled to delivery
of the stock certificate until the expiration of the restricted
period and the fulfillment of any other restrictive conditions
set forth in the award agreement with respect to such shares of
Common Stock; (ii) none of the shares of Common Stock may be
sold, assigned, transferred, pledged, hypothecated or otherwise
encumbered or disposed of during such restricted period or until
after the fulfillment of any such other restrictive conditions;
and (iii) except as otherwise determined by the Committee at or
after grant, all of the shares of Common Stock shall be
forfeited and all rights of the grantee to such shares of Common
Stock shall terminate, without further obligation on the part of
the Company, unless the grantee remains in the continuous
employment of the Company for the entire restricted period in
relation to which such shares of Common Stock were granted and
unless any other restrictive conditions relating to the
Restricted Share award are met. Any shares of Common Stock, any
other securities of the Company, and any other property (except
for cash dividends) distributed with respect to the shares of
Common Stock subject to Restricted Share awards shall be subject
to the same restrictions, terms, and conditions as such
Restricted Shares.
At the end of the restricted period and provided that any
other restrictive conditions of the Restricted Share awards are
met, or at such earlier time as otherwise determined by the
Committee, all restrictions set forth in the award agreement
relating to the Restricted Share award or in the Plan shall
lapse as to the restricted shares of Common Stock subject
thereto, and a stock certificate for the appropriate number of
shares of Common Stock, free of the restrictions and restricted
stock legend, shall be delivered to the grantee or the grantee's
beneficiary or estate, as the case may be.
Each Award agreement shall state the number of shares to which
it pertains, whether the Award granted is an Incentive Option, a
Non-Statutory Option (and, in the case of Non-Statutory Options,
the vesting period relating to such Options) or an award of
Restricted Stock.
Each Option agreement shall state the Option exercise price.
The per share exercise price for shares obtainable to any
Option, shall not be less than 100% of the Fair Market Value
(as defined below) of the shares of Common Stock on the date the
Option is granted. The Fair Market Value of shares, unless
otherwise determined by the Committee in good faith, will be the
closing sale price of the Common Stock as reported on the Nasdaq
National Market (or the mean between the highest and lowest per
share sales price should the Common Stock be listed on an
exchange) on a given day, or if such stock is not traded on that
day, then on the next preceding day on which such stock was
traded (the "Fair Market Value"). The aggregate Fair Market
Value (determined at the time the Incentive Option is granted)
of the Common Stock with respect to which Incentive Options are
exercisable for the first time by the Option recipient during
any calendar year (under all such plans of the Company and its
subsidiaries) will not exceed $100,000. If an Option recipient
is granted an Incentive Option which exceeds this limitation,
the Incentive Option shall be considered a Non-Statutory Option
to the extent the limitation is exceeded. No Incentive Option
shall be granted to an employee who, immediately after such
Incentive Option is granted, owns or has rights to stock
possessing more than ten percent (10%) of the total combined
voting power of all classes of stock of the Company, unless such
Incentive Option is granted at a price which is at least ten
percent (10%) greater than the Fair Market Value of the stock
subject to the Incentive Option, and such Incentive Option by
its terms is not exercisable after the expiration of five (5)
years from the date such Incentive Option is granted.
The Option recipient may pay the Option exercise price in
cash, by means of unrestricted shares of the Company's Common
Stock (subject to certain restrictions outlined below), or any
combination thereof. As determined by the Committee in its
discretion, at or (except in the case of an Incentive Option)
after grant, payment in full or in part may be made in the form
of Common Shares already owned by the optionee and held by the
Option recipient for at least six (6) months. If payment is
made in the Company's Common Stock, the shares so used will be
taken at the Fair Market Value on the date the Option is
exercised. The Option recipient must pay for shares received
pursuant to an Option exercise on or before the date the Option
recipient takes delivery of the shares. Subject to the
requirements of rules promulgated by the Securities and Exchange
Commission and Regulation T promulgated by the Federal Reserve
Board, the Committee, in its sole discretion, may establish
procedures whereby an employee may exercise an Option or a
portion thereof without making a direct payment of the Option
price to the Company. If the Committee so elects to establish a
cashless exercise program, the Committee shall determine, in its
sole discretion, and from time to time, such administrative
procedures and policies as it deems appropriate and such
procedures and policies shall be binding on any Option recipient
utilizing the cashless exercise program. The proceeds from all
payments pursuant to the exercise of Options will be used for
general corporate purposes. The Company and its subsidiaries
will receive no cash or other payment upon the granting of
Options pursuant to the Plan.
The vesting period for all Non-Statutory Options shall be
determined by the Committee in its sole discretion. No
Incentive Option will be exercisable either in whole or in part
prior to twelve (12) months from the date it is granted, and in
no event will an Option be exercisable after the expiration of
ten (10) years from the date it is granted. Up to one-fourth of
the Options granted pursuant to an Incentive Option may be
exercised in each of the following installment periods, each
beginning from the date the Option is granted: (1) after twelve
(12) months, (2) after twenty-four (24) months, (3) after
thirty-six (36) months, and (4) after forty-eight (48) months.
Option recipients may accumulate installments not yet exercised,
which may be exercised, in whole or in part, in any subsequent
period but not later than ten (10) years from the date the
Option is granted. Notwithstanding the foregoing, the Committee,
in its discretion, may provide for the exercise of Options after
the initial twelve (12) month period, either as an increased
percentage of shares per year or as to all remaining shares, if
the Option recipient dies, is or becomes disabled or retires. An
Option will be exercisable only by the Option recipient (or the
Option recipient's guardian or legal representative) and will
not be assignable or transferable other than by will or the laws
of descent and distribution.
If, for any reason other than death, an Option recipient
ceases to be employed by the Company or its subsidiaries, all
Options held by him under the Plan will terminate and become
void and of no effect three (3) months from the date the Option
recipient's employment with the Company terminates, provided
that no Option shall be exercisable after ten (10) years from
the date it is granted. If the Option recipient dies while
employed by the Company, the Option recipient's successors in
interest, within one (1) year of death, may exercise the
unexercised portion of any of the Option recipient's
exercisable but unexercised Options; however, in no event shall
an Option be exercisable after ten (10) years from the date it
is granted. Such successors in interest, where the Option is
transferred to the Option recipient's estate or another person,
may not transfer such Option except to the distributees of the
Option recipient's estate entitled thereto.
Subject to the terms and limitations of the Plan, the
Committee may modify, extend, or renew outstanding Options
granted under the Plan, or accept the surrender of outstanding
Options and authorize the granting of new Options in
substitution for such outstanding Options. The Committee may
not, however, modify any outstanding Incentive Options so
as to specify a lower price, or accept the surrender of any
outstanding Incentive Options and authorize the granting of new
Options in substitution therefore specifying a lower price. The
Board may, to the extent permitted by law, from time to time,
with respect to any shares not then subject to Options, suspend,
discontinue, revise, or amend the Plan in any respect, but may
not, without shareholder approval, change the number of shares
for which Awards may be granted under the Plan, change the
provisions relating to the determination of employees eligible
to receive Awards, decrease the price at which Incentive Options
may be granted, or remove the administration of the Plan from
the Committee.
In the event of an actual or anticipated change in ownership
of the Company, the Committee may take any of the following
actions that the Committee may deem appropriate in its sole and
absolute discretion: (i) cancel any Option by providing for the
payment to the Award recipient of the excess of the Fair Market
Value of the shares subject to the Award over the exercise
price of the Option, (ii) substitute a new Option of
substantially equivalent value for any Option, (iii) accelerate
the exercise terms of any Award, or (iv) make such other
adjustments in the terms and conditions of any Option as it
deems appropriate.
The shares purchased under the Incentive Stock Option
provisions of the Plan may qualify for special tax treatment
under United States federal income tax rules. The shares
purchased under the Non-Statutory Stock Option provisions of the
Plan are subject to tax treatment under Section 83 of the United
States federal income tax Code. Generally, the tax treatment of
the options may be summarized as follows:
1. There will be no tax consequences to optionees when
an Option is granted.
2. There will be no tax consequence to optionees when
an Incentive Stock Option is exercised, except that the
difference between the exercise price per share and the
Fair Market Value per share constitutes a tax preference
item for purposes of the alternative minimum tax. In the
case of Non-Statutory Options, optionees will recognize
ordinary income when such Options are exercised in an
amount equal to the difference between the exercise price
per share and the Fair Market Value per share as of the
date of exercise. The Company will withhold an amount for
payroll withholding and taxes based upon this difference.
3. In general, the difference between the cost of the
stock acquired by exercise of an Incentive Stock Option and
the sale price realized upon sale of the stock will be
taxed to the optionee at the time he or she sells the
stock. Stock sold prior to the required holding period,
however, is a "disqualifying disposition." A disqualifying
disposition occurs if an optionee disposes of his or her
stock within two (2) years after the option is granted or
within one (1) year after the option is exercised. Gains
from the sale or exchange of an optionee's stock which is
not a disqualifying disposition are treated for federal
income tax purposes as long-term capital gains. Long-term
capital gains are included in income and taxed at a maximum
rate of 20%.
4. In the case of Non-Statutory Options, optionees
will be taxed when the stock is sold on the difference
between (a) the cost of the stock, increased by the taxable
income realized upon exercise of the Non-Statutory Option
and (b) the sale price realized upon sale of the stock. If
the stock is sold after having been held more than one (1)
year after exercise of the Non-Statutory Option, the amount
realized will be subject to long-term capital gain or loss
treatment. If the stock is held for one year or less, the
optionee will recognize short-term gain or loss. Short-
term capital gains are taxed as ordinary income; however,
the maximum federal income tax rate at which long-term
capital gains will be taxed is 20%.
This is merely a summary of some of the tax consequences of
the grant, exercise and disposition of the Options. Option
recipients should consult with their tax advisers regarding the
Option granted to them for more specific information. Income
tax liability is the responsibility of the Option recipients.
An Option recipient's tax consequences may to change if new tax
laws are enacted after the date of the grant of an Option. In
order to provide the Company with the opportunity to claim the
benefit of any income tax deductions which may be available to
it upon the exercise of an Option or upon a disqualifying
disposition, and in order to comply with all applicable federal
or state tax laws or regulations, the Company may take such
action, including withholding additional amounts from an Option
recipient's regular wages or salary, as it deems appropriate to
insure that, if necessary, all applicable federal, state or
other taxes are withheld or collected from such Option
recipient.
The Board of Directors recommends a vote FOR Proposal 3.
PROPOSAL 4
RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors of the Company has appointed Ernst &
Young LLP as the Company's independent auditors to audit the
financial statements of the Company and to perform other
accounting services, if appropriate, for the year ending December
31, 2002. Such appointment will be presented to the shareholders
for ratification at the Meeting. If the shareholders do not
ratify the appointment, the selection of another firm will be
considered by the Board. A representative of Ernst & Young LLP
is expected to be present at the Meeting to respond to questions
from shareholders and will be given the opportunity to make a
statement if so desired.
Fees paid to Ernst & Young LLP for services provided during
2001 are presented below. The Company did not engage Ernst &
Young to perform financial information systems design or
implementation services during the year. "Audit-Related Fees"
consists primarily of local statutory audits performed in various
international locations and audits of the Company's employee
benefit plans. "All Other Fees" consist primarily of fees
for income tax services and other miscellaneous professional
services.
Audit Fees Audit-Related Fees All Other Fees
---------- ------------------ --------------
$487,000 $344,000 $257,000
The Board of Directors recommends a vote FOR Proposal 4.
DATE FOR RECEIPT OF SHAREHOLDER PROPOSALS
Shareholder proposals intended for presentation at the 2003
Annual Meeting and for inclusion in the Company's 2003 proxy
material must be received by the Company, in writing, no later
than December 7, 2002, and must comply with the rules of the SEC
relating to shareholder proposals. The named proxies solicited
by the Board of Directors for the 2003 Annual Meeting will confer
discretionary authority to vote on any shareholder proposal not
received in writing by the Company by February 19, 2003, and will
exercise authority in accordance with the recommendation of the
Board of Directors.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
This Proxy Statement incorporates by reference the financial
statements, supplementary financial information, management's
discussion and analysis of financial condition and results of
operations and quantitative disclosures about market risk
included in the Company's Annual Report to shareholders attached
as Exhibit 13 to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 2001, as filed with the Securities
and Exchange Commission on March 29, 2002, pursuant to Section 13
or 15(d) of the Exchange Act.
Any statement contained in a document incorporated herein by
reference shall be deemed to be modified or superseded for
purposes of this Proxy Statement to the extent that a statement
contained herein modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this Proxy
Statement.
OTHER
Management does not know of any other matters to be presented
at the Meeting for action by shareholders; however, if any other
matters are properly brought before the Meeting or any
adjournment or postponement thereof, votes will be cast pursuant
to the proxies in accordance with the best judgment of the proxy
holders with respect to such matters.
UPON WRITTEN REQUEST OF ANY SHAREHOLDER TO JOHN R. WYNN,
SECRETARY, INTERGRAPH CORPORATION, HUNTSVILLE, ALABAMA 35894-
0001, THE COMPANY WILL PROVIDE WITHOUT CHARGE A COPY OF THE
COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER
31, 2001, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.
By Order of the Board of Directors,
JOHN R. WYNN
Secretary
DATED: April 5, 2002
APPENDIX A
INTERGRAPH CORPORATION
AMENDED AND RESTATED
AUDIT COMMITTEE CHARTER
I. Organization
This charter governs the operations of the audit committee.
The committee shall review and reassess the charter at least
annually and obtain the approval of the board of directors. The
audit committee shall be appointed by the board of directors and
shall comprise at least three directors. Each director shall
meet the independence and experience and other requirements of
the Nasdaq rules. Accordingly, all committee members shall be
independent as defined by Nasdaq rules and shall be financially
literate, or shall become financially literate within a
reasonable period of time after appointment to the committee),
and at lease one member shall have accounting or related
financial management expertise. The duties of the Chairman of
the Audit Committee shall be to call meetings of the Audit
Committee and to preside at such meetings.
II. Statement of Policy
The audit committee shall provide assistance to the board of
directors in fulfilling their oversight responsibility to the
shareholders and others relating to the Company's financial
statements and the financial reporting process, the systems of
internal accounting and financial controls, the internal audit
function, and the annual independent audit of the Company's
financial statement. In so doing, it is the responsibility of
the committee to maintain free and open communication between the
committee, the independent auditors, the internal auditors, and
management of the Company. In discharging its oversight role,
the committee is empowered to investigate (or direct management
or internal audit to investigate) any matter brought to its
attention with full access to all books, data, records,
facilities, and personnel of the Company and the power to retain
outside counsel, or other experts for this purpose.
III. Responsibilities
The Committee's duty is one of oversight, and it recognizes
that the Company's management is responsible for preparing the
Company's financial statements and that the outside auditors are
responsible for auditing those financial statements.
Additionally, the Committee recognizes that the Company's
financial management, including the internal audit department, as
well as its outside auditors, have more knowledge and more
detailed information regarding the Company and its financial
reports than do Committee members; consequently, in carrying out
its oversight responsibilities, the Committee is not providing
any expert or special assurance as to the Company's financial
statements or any professional certification as to the outside
auditors' work, and is not conducting an audit or investigation
of the financial statements nor determining that the financial
statements are true and complete or have been prepared in
accordance with generally accepted accounting principles. Nor is
it the duty of the Committee to resolve disagreements, if any,
between management and the outside auditors or to ensure
compliance with laws and regulations or any compliance or ethical
policies of the Company.
The directors serving on the Audit Committee of the Company
shall have no greater standard of liability in the performance of
their duties than the standard of liability applicable to all
directors. Audit Committee members who are previously employed
by the Company or who have special training or experience in
financial or audit matters shall have no greater duty or
responsibility as a result of such prior training services or
experience. Members of the Audit Committee shall have the full
protection against personal liability for breach of fiduciary
duties as set forth in Article IX to the Certificate of
Incorporation, adopted by the shareholders in the meeting of
April 23, 1987. In addition, members of the Audit Committee
shall be entitled to be indemnified against liability by the
Corporation as provided in Articles VIII and IX of the
Certificate of Incorporation and Article Nine of the By-laws.
IV. Processes
The following shall be the principal recurring processes of
the audit committee in carrying out its oversight
responsibilities. The processes are set forth as a guide with
the understanding that the committee may supplement them as
appropriate without modifying this charter.
A. The committee shall have a clear understanding
with management and the independent auditors that the
independent auditors are ultimately accountable to the
board and the audit committee, as representatives of the
Company's shareholders. The committee shall have the
ultimate authority and responsibility to evaluate and,
where appropriate, replace the independent auditors.
The committee shall discuss with the auditors their
independence from management and the Company and matters
included in the written disclosures required by the
Independence Standards Board. The committee shall
consider whether to establish policies and procedures
for the engagement of the outside auditor to provide non
audit services and whether the provision of non audit
services by the outside auditors is compatible with
maintaining the outside auditors' independence.
Annually, the committee shall review and recommend to
the board the selection of the Company's independent
auditors.
B. The committee shall discuss with the internal
auditors and the independent auditors the overall scope
and plans for their respective audits including the
adequacy of staffing and compensation. Also, the
committee shall discuss with management, the internal
auditors, and the independent auditors the adequacy and
effectiveness of the accounting and financial controls.
Further, the committee shall meet separately with the
internal auditors and the independent auditors, with and
without management present to discuss the results of
their examinations.
C. The committee shall review the interim
financial statements with management and the independent
auditors prior to the public release of such interim
financial statement and prior to the filing of the
Company's Quarterly Report on Form 10Q. Also, the
committee shall discuss the results of the quarterly
review and any other matters required to be communicated
to the committee by the independent auditors under
generally accepted auditing standards. The chair of the
committee may represent the entire committee for the
purpose of this review.
D. The committee shall review and discuss with
management and the independent auditors the financial
statements to be included in the Company's Annual Report
on Form 10-K (or the annual report to the shareholders
if distributed prior to the filing of Form 10-K), and
the selection, application and disclosure of critical
accounting policies used in such financial statements.
The review and discussion shall include their judgment
about the quality, not just the acceptability, of
accounting principles, the reasonableness of significant
judgments, and the clarity of the disclosures in such
financial statements. Also, the committee shall review
and discuss any off balance sheet financing
transactions, any related party transactions, and any
issues that may affect in any material way the fairness
of the financial statement presentation, the financial
risks of the Company and the internal control systems of
the Company.
E. The committee shall, at least annually, meet
with the senior officer with oversight of the
Company's ethics and compliance policies for a report
on such programs.
APPENDIX B
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
INTERGRAPH CORPORATION
INTERGRAPH CORPORATION, a Delaware corporation (the
"Corporation"), hereby certifies as follows:
1. The Board of Directors of said corporation duly
adopted a resolution by unanimous written consent, dated March
14, 2002, setting forth and declaring advisable the amendment of
the certificate of incorporation of said corporation so that, as
amended, a new Article IX shall be inserted following Article
VIII to read as follows:
"ARTICLE IX
Stockholder Action
No action of stockholders of the corporation required
or permitted to be taken at any annual or special
meeting of stockholders of the corporation may be taken
without a meeting of stockholders, without prior notice
and without a vote, and the power of stockholders of
the corporation to consent in writing to the taking of
any action without a meeting is specifically denied."
2. The above amendment has been approved and adopted
by the holders of a majority of the outstanding shares of the
Corporation in accordance with the provisions of the General
Corporation Law of the State of Delaware.
3. As a result of the foregoing, the amendment has
been duly adopted in accordance with the provisions of Section
242 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, INTERGRAPH CORPORATION has caused
this certificate to be signed by ------------------, its
----------------, on the ---------- day of ----------, 2002.
INTERGRAPH CORPORATION
By:
------------------------------
Name:
Title:
APPENDIX C
INTERGRAPH CORPORATION
2002 STOCK OPTION PLAN
1. PURPOSE
This 2002 Stock Option Plan of Intergraph Corporation (the
"Plan") is intended as an incentive for key employees (including
officers) which will foster increased productivity, encourage
them to remain in the employ of Intergraph Corporation (the
"Corporation"), and enable them to acquire or increase their
proprietary interest in the Corporation. At the discretion of the
Committee (as defined below), options issued pursuant to this
Plan may be either incentive stock options within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended
("Incentive Options"), or options which are not Incentive Options
("Non-Statutory Options") (Incentive Options and Non-Statutory
Options are collectively referred to as "Options"). The
Committee shall also be entitled to make awards of restricted
stock ("Restricted Stock") in accordance with the terms of the
Plan. For the purposes of the Plan, Incentive Options, Non-
Statutory Options and awards of Restricted Stock, whether singly
or in combination, shall sometimes be referred to as "Awards."
2. ADMINISTRATION
The Plan shall be administered by a committee (the
"Committee") composed of the entire Board of Directors or a
committee of the Board of Directors that is composed solely of
two or more "Non-Employee Directors." For this purpose, the term
"Non-Employee Director" shall mean a person who is a member of
the Corporation's Board of Directors who (a) is not currently an
employee and is not, nor has ever been, an officer of the
Corporation or any parent or subsidiary of the Corporation, (b)
does not directly or indirectly receive compensation for serving
as a consultant or in any other non-director capacity from the
Corporation or any parent or subsidiary of the Corporation that
exceeds the dollar amount for which disclosure would be required
pursuant to Item 404(a) of Regulation S-K promulgated under the
Securities Act of 1933, as amended, and the Securities Exchange
Act of 1934, as amended ("Regulation S-K"), (c) does not possess
any interest in any other transaction with the Corporation or any
parent or subsidiary of the Corporation for which disclosure
would be required pursuant to Item 404(a) of Regulation S-K, and
(d) is not engaged in a business relationship with the
Corporation or any parent or subsidiary of the Corporation which
would be disclosable under Item 404 (b) of Regulation S-K. In
the event the Committee is a committee composed of two or more
Non-Employee Directors, the Board of Directors may from time to
time remove members from, add members to, and fill vacancies on,
the Committee. A member of the Committee shall be eligible to
participate in the Plan and receive Awards under the Plan.
The Committee shall select one of its members as Chairman,
and shall hold meetings at such times and places as it may
determine. Action taken by a majority of the Committee at which
a quorum is present, or action reduced to writing or approved in
writing by a majority of the members of the Committee, shall be
valid acts of the Committee.
The Committee may from time to time and at its discretion,
grant Awards to eligible employees. Subject to the terms of this
Plan, the Committee shall exercise its sole discretion in
determining which eligible employees shall receive Awards, and
the number of shares subject to each Award granted; provided that
not more than 200,000 Options shall be granted to any 162(m)
Employee in any calendar year. For the purposes of this Plan, a
"162(m) Employee" shall mean the Chief Executive Officer of the
Corporation and the other four (4) most highly compensated
officers, within the meaning of U.S. Treasury Regulation Section
1.162-27(c)(2).
The Committee's interpretation and construction of any
provision of the Plan, or any Award granted under it, shall be
final. No member of the Committee shall be liable for any action
or determination made in good faith with respect to the Plan or
any Award granted under the Plan.
3. ELIGIBILITY
Persons eligible to receive Awards shall be such key
employees (including officers) of the Corporation and its
subsidiaries as the Committee shall from time to time select. The
determination of whether a company is a subsidiary of the
Corporation shall be made in accordance with Section 425(f) of
the Internal Revenue Code, as amended. An Award recipient may,
subject to the terms and restrictions set forth in the Plan, hold
more than one type of Award. No person shall be eligible to
receive an Award for a larger number of shares than is granted to
him or her by the Committee. In selecting the individuals to
whom Awards shall be granted, as well as determining the number
of shares subject to each Award, the Committee shall weigh the
position and responsibility of the individual being considered,
the nature of his or her services, his or her present and
potential contributions to the Corporation, and such other
factors as the Committee deems relevant to accomplish the
purposes of the Plan.
4. STOCK
The stock subject to Awards issued under the Plan shall be
shares of the Corporation's authorized but unissued, or
reacquired, ten cent ($.10) par value common stock (hereafter
sometimes called "Capital Stock" or "Common Stock"). The
aggregate number of shares which may be issued pursuant to Awards
under the Plan shall not exceed 2,000,000 shares of Capital
Stock, of which no more than 400,000 shall be shares of Capital
Stock with respect to which Restricted Stock awards may be
granted. The limitations established by each of the preceding
sentences shall be subject to adjustment as provided in Article
6(g) of the Plan. Notwithstanding the foregoing and subject to
Article 6(g) of the Plan, no Award recipient may receive Awards
under the Plan in any calendar year that relate to more than
200,000 shares of Capital Stock.
In the event that any outstanding Award under the Plan for
any reason expires or is terminated, the shares of Capital Stock
allocable to the unexercised portion of such Award may again be
subjected to an Award under the Plan.
5. RESTRICTED SHARES
(a) Grant
(i) Subject to the provisions of the Plan, the
Committee shall have sole and complete authority to
determine the participants to whom Restricted Shares shall
be granted, the number of Restricted Shares to each
participant, the duration of the period during which, and
the conditions under which, the Restricted Shares may be
forfeited to the Corporation, and the other terms and
conditions of such Restricted Share awards. The Restricted
Share awards shall be evidenced by agreements in such form
as the Committee shall from time to time approve, which
agreements shall comply with and be subject to the terms and
conditions provided hereunder and any additional terms and
conditions established by the Committee that are consistent
with the terms of the Plan.
(ii) Subject to Section 4, each Restricted Share award
made under the Plan shall be for such number of shares of
Capital Stock as shall be determined by the Committee and
set forth in the award agreement containing the terms of
such Restricted Share award. Such agreement shall set forth
a period of time during which the grantee must remain in the
continuous employment of the Corporation in order for the
forfeiture and transfer restrictions to lapse. If the
Committee so determines, the restrictions may lapse during
such restricted period in installments with respect to
specified portions of the shares of Capital Stock covered by
the Restricted Share award. The award agreement may also,
in the discretion of the Committee, set forth performance or
other conditions that will subject the shares of Capital
Stock to forfeiture and transfer restrictions. The
Committee may, at its discretion, waive all or any part of
the restrictions applicable to any or all outstanding
Restricted Share awards.
(b) Delivery of Shares and Transfer Restrictions
At the time of a Restricted Share award, a certificate
representing the number of shares of Capital Stock awarded
thereunder shall be registered in the name of the grantee.
Such certificate shall be held by the Corporation or any
custodian appointed by the Corporation for the account of
the grantee subject to the terms and conditions of the Plan,
and shall bear such a legend setting forth the restrictions
imposed thereon as the Committee, in its discretion, may
determine. The grantee shall have all rights of a
stockholder with respect to the Restricted Shares, including
the right to receive dividends and the right to vote such
shares of Capital Stock, subject to the following
restrictions: (i) the grantee shall not be entitled to
delivery of the stock certificate until the expiration of
the restricted period and the fulfillment of any other
restrictive conditions set forth in the award agreement with
respect to such shares of Capital Stock; (ii) none of the
shares of Capital Stock may be sold, assigned, transferred,
pledged, hypothecated or otherwise encumbered or disposed of
during such restricted period or until after the fulfillment
of any such other restrictive conditions; and (iii) except
as otherwise determined by the Committee at or after grant,
all of the shares of Capital Stock shall be forfeited and
all rights of the grantee to such shares of Capital Stock
shall terminate, without further obligation on the part of
the Corporation, unless the grantee remains in the
continuous employment of the Corporation for the entire
restricted period in relation to which such shares of
Capital Stock were granted and unless any other restrictive
conditions relating to the Restricted Share award are met.
Any shares of Capital Stock, any other securities of the
Corporation and any other property (except for cash
dividends) distributed with respect to the shares of Capital
Stock subject to Restricted Share awards shall be subject to
the same restrictions, terms and conditions as such
Restricted Shares.
(c) Termination of Restrictions
At the end of the restricted period and provided that
any other restrictive conditions of the Restricted Share
award are met, or at such earlier time as otherwise
determined by the Committee, all restrictions set forth in
the award agreement relating to the Restricted Share award
or in the Plan shall lapse as to the restricted shares of
Capital Stock subject thereto, and a stock certificate for
the appropriate number of shares of Capital Stock, free of
the restrictions and restricted stock legend, shall be
delivered to the grantee or the grantee's beneficiary or
estate, as the case may be.
6. TERMS AND CONDITIONS OF THE PLAN
No obligation to retain an Award recipient as an employee of
the Corporation or its subsidiaries, or to provide or continue
providing the Award recipient with, or to permit the Award
recipient to retain, any incident associated with or arising out
of employment with the Corporation or its subsidiaries,
including, but not limited to, tenure, salary, benefits, title or
position, shall be imposed on the Corporation or its subsidiaries
by virtue of the adoption of the Plan, the grant or acceptance of
an Award granted pursuant to the Plan, or the exercise of an
Option under the Plan. Awards granted under the Plan shall be
authorized by the Committee and shall be evidenced by agreements
in such form as the Committee shall from time to time approve.
Such agreements shall conform with, and be subject to, the
following terms and conditions:
(a) Number of Shares and Form of Award
Each Award agreement shall state the number of shares to
which it pertains, whether the Award granted is an Incentive
Option, a Non-Statutory Option (and, in the case of Non-Statutory
Options, the vesting period relating to such Options) or an award
of Restricted Stock.
(b) Option Price
Each Option agreement shall state the Option exercise price.
The per share exercise price for shares obtainable pursuant to
any Option, including any Option granted to a 162(m) Employee,
shall not be less than 100% of the Fair Market Value, as defined
below, of the shares of Capital Stock of the Corporation on the
date the Option is granted. For all purposes under the Plan,
"Fair Market Value" shall mean, unless otherwise determined by
the Committee in good faith, the closing sale price of the Common
Stock as reported on the Nasdaq National Market (or the mean
between the highest and lowest per share sales price should the
Common Stock be listed on an exchange) on a given day, or if the
Common Stock is not traded on that day, then on the next
preceding day on which such stock was traded (the "Fair Market
Value"). Subject to the foregoing, the Committee shall have full
authority and discretion, and shall be fully protected, with
respect to the price fixed for shares obtainable pursuant to the
exercise of Options. The aggregate Fair Market Value (determined
at the time the Incentive Option is granted) of the Common Stock
with respect to which Incentive Options are exercisable for the
first time by the Option recipient during any calendar year
(under all such plans of the Corporation and its subsidiary
corporations) shall not exceed $100,000. If an Option recipient
is granted Incentive Options which exceed this limitation, the
Incentive Options shall be considered a Non-Statutory Option to
the extent such limitation is exceeded. Notwithstanding the
foregoing, no Incentive Option shall be granted to an employee
who, immediately after such Option is granted, owns or has rights
to stock possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Corporation,
unless such Option is granted at a price which is at least 10%
greater than the Fair Market Value of the stock subject to the
Incentive Option and such Option by its terms is not exercisable
after the expiration of five (5) years from the date such Option
is granted.
(c) Medium and Time of Payment
Subject to any other exercise restrictions contained in the
Plan, the Option recipient may pay the Option exercise price in
cash, by means of unrestricted shares of the Corporation's Common
Stock (subject to the provisions of this Section 6(c)), or in any
combination thereof. As determined by the Committee, in its sole
discretion, at or (except in the case of an Incentive Option)
after grant, payment in full or in part may be made in the form
of shares of Common Stock already owned by the optionee and held
by the Option recipient for at least six months (in each case
valued at the Fair Market Value of the Common Stock on the date
the Option is exercised). The Option recipient must pay for
shares received pursuant to an Option exercise on or before the
date of delivery of the shares to the Option recipient. Subject
to the requirements of rules promulgated by the Securities and
Exchange Commission and Regulation T promulgated by the Federal
Reserve Board, the Committee, in its sole discretion, may
establish procedures whereby an Option recipient may exercise an
Option or a portion thereof without making a direct payment of
the Option price to the Corporation. If the Committee so elects
to establish a cashless exercise program, the Committee shall
determine, in its sole discretion, and from time to time, such
administrative procedures and policies as it deems appropriate
and such procedures and policies shall be binding on any Option
recipient utilizing the cashless exercise program. Payment in
currency or by check, bank draft, cashier's check, or postal
money order shall be considered payment in cash. In the event of
payment in the Corporation's Common Stock, the shares used in
payment of the purchase price shall be taken at the Fair Market
Value of such shares on the date they are tendered to the
Corporation.
(d) Term and Exercise of Options
The vesting period for all Non-Statutory Options shall be
determined by the Committee in its sole discretion. No Incentive
Options shall be exercisable either in whole or in part prior to
twelve (12) months from the date that they are granted. Subject
to the right of accretion provided in the next to last sentence
of this Article 6(d), each Incentive Option shall be exercisable
in four (4) installments, as follows: (1) up to one-fourth of the
total shares covered by the Option may be purchased after twelve
(12) months from the date the Option is granted; (2) one-fourth
of the total shares covered by the Option may be purchased after
twenty-four (24) months from the date the Option is granted; (3)
up to one-fourth of the total shares covered by the Option may be
purchased after thirty-six (36) months from the date the Option
is granted; and (4) up to one-fourth of the total shares covered
by the Option may be purchased after forty-eight (48) months from
the date the Option is granted. The Committee may provide,
however, for the exercise of an Option after the initial twelve
(12) month period, either as an increased percentage of shares
per year or as to all remaining shares, if the Option recipient
dies, is or becomes disabled or retires. During the Option
recipient's lifetime, the Option shall be exercisable only by the
Option recipient, or the Option recipient's guardian or legal
representative if one has been appointed, and shall not be
assignable or transferable other than by will or the laws of
descent and distribution. To the extent not exercised, Option
installments shall accumulate and be exercisable, in whole or in
part, in any subsequent period but not later than ten (10) years
from the date the Option is granted. No Option is exercisable
after the expiration of ten (10) years from the date it is
granted.
(e) Termination of Employment Except Death
If an Option recipient's employment with the Corporation or
its subsidiaries ceases for any reason other than the Option
recipient's death, all Options held by him pursuant to the Plan
and not previously exercised as of the date of such termination
shall terminate and become void and of no effect three (3) months
from the date the Option recipient's employment is terminated,
provided that no Option shall be exercisable after the expiration
of ten (10) years from the date it is granted. Authorized leaves
of absence or absence for military service shall not constitute
termination of employment for the purposes of the Plan.
(f) Death of Option Recipient and Transfer of Option
If an Option recipient dies while employed by the
Corporation or its subsidiaries and has not fully exercised all
of his or her exercisable Options, such Options may be exercised,
at any time within one (1) year after death, by the Option
recipient's executors or administrators, or by any person or
persons who shall have acquired the Option directly from the
Option recipient by bequest or inheritance. In no event,
however, shall the Option be exercisable more than ten (10) years
after the date such Option is granted. An Option transferred to
an Option recipient's estate or to a person to whom such right
devolves by reason of the Option recipient's death shall be
nontransferable by the Option recipient's executor or
administrator or by such person, except that the Option may be
distributed by the Option recipient's executors or administrators
to the distributees of the Option recipient's estate entitled
thereto.
(g) Recapitalization
Subject to any required action by the shareholders, the
aggregate number of shares which may be issued pursuant to
Awards, the number of shares of Capital Stock covered by each
outstanding Award, and the price per share applicable to shares
under such Awards, shall be proportionately adjusted for any
increase or decrease in the number of issued shares of Capital
Stock of the Corporation resulting from a subdivision or
consolidation of shares or the payment of a stock dividend (but
only on the Capital Stock), or any other increase or decrease in
the number of such shares effected without receipt of
consideration by the Corporation.
If the Corporation is merged with or consolidated into any
other corporation, or if all or substantially all of the business
or property of the Corporation is sold, or if the Corporation is
liquidated or dissolved, or if a tender or exchange offer is made
for all or any part of the Corporation's voting securities, or if
any other actual or threatened change in control of the
Corporation occurs, the Committee, with or without the consent of
the Option recipient, may (but shall not be obligated to), either
at the time of or in anticipation of any such transaction, take
any of the following actions that the Committee may deem
appropriate in its sole and absolute discretion: (i) cancel any
Option by providing for the payment to the Award recipient of the
excess of the Fair Market Value of the shares subject to the
Award over the exercise price of the Option, (ii) substitute a
new Option of substantially equivalent value for any Option,
(iii) accelerate the exercise terms of any Award, or (iv) make
such other adjustments in the terms and conditions of any Option
as it deems appropriate.
In the event of a change in Capital Stock of the Corporation
as presently constituted, which is limited to a change of all of
its authorized shares with par value into the same number of
shares with a different par value or without par value, the
shares resulting from any change shall be deemed to be the
Capital Stock within the meaning of the Plan.
To the extent that the foregoing adjustments relate to stock
or securities of the Corporation, such adjustments shall be made
by the Committee, whose determination in that respect shall be
final.
Except as otherwise expressly provided in this Article 6(g),
the Option recipient shall have no rights by reason of any
subdivision or consolidation of shares of stock of any class, or
the payment of any stock dividend or any other increase or
decrease in the number of shares of stock of any class, or by
reason of any dissolution, liquidation, merger or consolidation
or spin-off of assets or stock of another corporation. Any issue
by the Corporation of shares of stock of any class, or securities
convertible into shares of stock of any class, shall not affect,
and no adjustment by reason thereof shall be made with respect
to, the number or price of shares of Capital Stock subject to the
Option.
The grant of an Option pursuant to the Plan shall not affect
in any way the right or power of the Corporation to make
adjustments, reclassifications, reorganizations, or changes of
its capital or business structure, or to merge, consolidate,
dissolve, liquidate, sell, or transfer all or any part of its
business or assets.
(h) Rights as a Stockholder
An Option recipient or a transferee of an Option shall have
no rights as a stockholder with respect to any shares subject to
his Option until a stock certificate is issued to him for such
shares. No adjustment shall be made for dividends (ordinary or
extraordinary, whether in cash, securities, or other property),
distributions, or other rights for which the record date is prior
to the date such stock certificate is issued, except as provided
in Article 6(g) of the Plan.
(i) Modification, Extension, and Renewal of Awards
Subject to the terms of the Plan, the Committee may modify,
extend, or renew outstanding Options granted under the Plan, or
accept the surrender of outstanding Options (to the extent not
theretofore exercised) and authorize the granting of new Options
in substitution therefor (to the extent not theretofore
exercised). The Committee shall not, however, modify any
outstanding Incentive Options so as to specify a lower price, or
accept the surrender of outstanding Incentive Options and
authorize the granting of new Options in substitution therefor
specifying a lower price. Notwithstanding the foregoing,
however, no modification of an Option shall, without the consent
of the Option recipient, alter or impair any rights or
obligations under any Option theretofore granted under the Plan.
(j) Withholding
Whenever the Corporation proposes or is required to issue or
transfer shares of Capital Stock under the Plan, the Corporation
shall have the right to require the Option recipient, prior to
the issuance or delivery of any certificates for such shares, to
remit to the Corporation, or provide indemnification satisfactory
to the Corporation for, an amount sufficient to satisfy any
federal, state, local, and foreign withholding tax requirements
incurred as a result of an Award under the Plan by such Award
recipient. The Corporation shall have the right to withhold such
amounts from any other source owed to the recipient, including
regular wages or salary.
(k) Other Provisions
The Award agreements authorized under the Plan shall contain
such other provisions, including, without limitation,
restrictions upon the exercise of the Award, as the Committee
shall deem advisable. Limitations and restrictions shall be
placed upon the exercise of Incentive Options, in the Incentive
Option agreement, so that such Options will be "incentive stock
options" as defined in Section 422 of the Internal Revenue Code
of 1986.
7. TERM OF PLAN
Awards may be granted pursuant to the Plan from time to time
within a period of ten (10) years commencing on June 1, 2002, and
continuing through May 31, 2012.
8. INDEMNIFICATION OF COMMITTEE
In addition to such other rights of indemnification as they
may have as directors or as members of the Committee, the members
of the Committee shall be indemnified by the Corporation against
the reasonable expenses, including, attorney's fees, actually and
necessarily incurred in connection with the defense of any
action, suit, or proceeding, or in connection with any appeal
therein, to which they or any of them may be a party by reason of
any action taken or failure to act under or in connection with
the Plan or any Award granted hereunder, and against all amounts
paid by them in settlement thereof (provided such settlement is
approved by independent legal counsel selected by the
Corporation) or paid by them in satisfaction of a judgment in any
such action, suit, or proceeding, except in relation to matters
as to which it shall be adjudged in such action, suit, or
proceeding, that such Committee member is liable for willful
misconduct in the performance of his duties; provided, that
within sixty (60) days after institution of any such action,
suit, or proceeding a Committee member shall in writing offer the
Corporation the opportunity, at its own expense, to handle and
defend the same.
9. AMENDMENT OF THE PLAN
The Board of Directors, insofar as permitted by law, shall
have the right from time to time with respect to any shares at
the time not subject to Awards, to suspend or discontinue the
Plan or revise or amend it in any respect whatsoever, except that
without approval of the shareholders of the Company, no such
revision or amendment shall: (a) change the number of shares for
which Awards may be granted under the Plan either in the
aggregate or to any individual employee, (b) change the
provisions relating to the determination of employees to whom
Awards shall be granted, (c) remove the administration of the
Plan from the Committee, or (d) decrease the price at which
Incentive Options may be granted.
10. APPLICATION OF FUNDS
The proceeds received by the Corporation from the sale of
Capital Stock pursuant to the exercise of Options will be used
for general corporate purposes.
11. NO OBLIGATION TO EXERCISE OPTION
The granting of an Option shall impose no obligation upon
the Option recipient to exercise such Option.
12. APPROVAL OF STOCKHOLDERS
This Plan shall take effect on June 1, 2002, subject to
approval by the affirmative vote of the holders of the majority
of the outstanding shares of Capital Stock of the Corporation
present, or represented, and entitled to vote at a meeting of the
shareholders, which approval must occur within the period
beginning twelve (12) months before and ending twelve (12) months
after the date the Plan is adopted by the Board of Directors.
Intergraph Corporation
[ ] Mark this box with an X if you have made changes to
your name and address details below.
Use a black pen. Print in
CAPITAL letters inside the grey
areas as shown in this example. A B C 1 2 3 X
-----------------------------------------------------------------------------
Annual Meeting Proxy Card
-----------------------------------------------------------------------------
A. Election of Directors
The Board of Directors recommends a vote FOR the listed nominees.
1. Election of Directors -
For Withhold
01- James F. Taylor Jr. [ ] [ ]
02- Larry J. Laster [ ] [ ]
03- Sidney L. McDonald [ ] [ ]
04- Thomas J. Lee [ ] [ ]
05- Lawrence R. Greenwood [ ] [ ]
06- Joseph C. Moquin [ ] [ ]
07- Linda L. Green [ ] [ ]
B. Issues
The Board of Directors recommends a vote FOR the following proposals.
For Against Abstain
2. Proposal to approve and adopt an amendment
to the Company's certificate of incorporation
to eliminate the ability of shareholders to act
by written consent in lieu of a meeting. [ ] [ ] [ ]
3. Proposal to approve the Intergraph Corporation
2002 Stock Option Plan. [ ] [ ] [ ]
4. Proposal to ratify the appointment of Ernst &
Young LLP as the Company's independent auditors
for the current fiscal year. [ ] [ ] [ ]
* COM = Common Stock Shares; ESP = Employees Stock Purchase Plan Shares
C. Authorized Signatures - Sign Here - This section must be
completed for your instructions to be executed.
Please sign exactly as your name appears above. If registered in the names
of two or more persons, each should sign. Executors, administrators,
trustees, guardians, attorneys, and corporate officers should show their
titles.
Signature 1 Signature 2 Date (dd/mm/yyyy)
------------------------- ------------------------- ----/----/------
-----------------------------------------------------------------------------
Proxy - Intergraph Corporation
-----------------------------------------------------------------------------
THIS PROXY IS SOLICITED ON BEHALF OF THE INTERGRAPH CORPORATION
BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF SHAREHOLDERS, MAY 16, 2002.
The undersigned hereby appoints James F. Taylor Jr. and
John R. Wynn, or either of them, as Proxies and Attorneys-
in-fact, each with the power to appoint his substitute,
and hereby authorizes them to represent and to vote, as
designated below, all the shares of Common Stock of
Intergraph Corporation which the undersigned would be
entitled to vote if personally present at the Annual
Meeting of Shareholders to be held May 16, 2002, or any
adjournment(s) or postponement(s) thereof. In their
discretion, the Proxies are authorized to vote upon such
other business as may properly come before the meeting or
any adjournment(s) or postponement(s) thereof.
This proxy, when properly executed, will be voted in the
manner directed herein by the undersigned shareholder. IF
NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR
ELECTION OF ALL NOMINEES LISTED ON THE REVERSE SIDE AND
FOR PROPOSALS 2, 3, AND 4.
The Board of Directors recommends a vote FOR election of
all nominees listed on the reverse side and FOR Proposals
2, 3,and 4.
PLEASE MARK, SIGN, DATE, AND RETURN THE PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
(Continued and to be signed on reverse side.)