<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14a INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
<TABLE>
<S> <C>
Filed by Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|X| Preliminary Proxy Statement |_| Confidential, for use of the Commission
only (as permitted by Rule 14a-6(e)(2)
|_| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
PEROT SYSTEMS CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transactions applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11(set forth the amount on which the filing fee
is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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|_| Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No:
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(3) Filing Party:
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(4) Date Filed:
<PAGE> 2
PEROT SYSTEMS CORPORATION
12377 Merit Drive
Suite 1100
Dallas, Texas, 75251
[ ], 1998
Dear Stockholder:
Enclosed is a Consent Statement of Perot Systems Corporation (the
"Company"), in connection with action to be taken by the Company's stockholders
without a meeting. Also enclosed is a Consent Card and pre-addressed return
envelope.
Your consent is important to the Company and the Company's Board of
Directors encourages you to complete and return you Consent Card in the
enclosed envelope as promptly as possible and, in any event, prior to [ ],
1998.
Sincerely,
Ross Perot Chairman,
President and CEO
<PAGE> 3
CONSENT STATEMENT DISSEMINATED BY
PEROT SYSTEMS CORPORATION
To the Stockholders of Perot Systems Corporation:
This Consent Statement (the "Consent Statement") and related
solicitation materials are being furnished to you in connection with the
solicitation of executed consents ("Consents") of the Stockholders of the
Company (the "Stockholders") by the Board of Directors (the "Board of
Directors") of Perot Systems Corporation, a Delaware corporation (the
"Company"). This information is being released to Stockholders on or about
August 19, 1998.
This Consent Statement is being sent to you in connection with a
possible initial public offering the ("Proposed IPO") by the Company of its
Class A Common Stock, par value $.01 per share ("Class A the Common Stock")
within six months of the date of this Consent Statement. The Company can
provide no assurance that an initial public offering will occur within the next
six months or at any time in the future, and the Company has the right, in its
sole discretion, at any time prior to an initial public offering not to proceed
with such offering, without further action by the Stockholders.
The Company is soliciting Consents to act upon the following proposals
(each a "Proposal" and collectively the "Proposals"):
1. Approving the 1998 Associate Stock Purchase Plan;
2. Amending the Amended and Restated Certificate of Incorporation
of the Company ("Certificate of Incorporation") to increase the number of
shares of the Company's Class A Common Stock from 100,000,000 shares to
200,000,000 shares;
3. Amending the Certificate of Incorporation to authorize five
million (5,000,000) shares of "blank check" preferred stock;
4. Amending the Certificate of Incorporation and the Bylaws to
eliminate Stockholder action by written consent unless the Board of Directors
allows such action;
5. Amending the Certificate of Incorporation and the Bylaws to
permit only the Chairman of the Board or the President, or the Chairman of the
Board, President, or the Secretary at the request in writing of a majority of
the Board of Directors, to call special meetings of Stockholders and to limit
the business permitted to be conducted at such meetings to that brought before
the meetings by or at the direction of the Board of Directors;
6. Amending the Certificate of Incorporation and the Bylaws to
implement an advance notice procedure for the submission of director
nominations and other business to be considered at annual meetings of
Stockholders; and
<PAGE> 4
7. Amending the Bylaws to require either a majority vote of the
Board of Directors or an affirmative vote of 80% of the outstanding Common
Stock entitled to vote in order to adopt, amend, or repeal the Bylaws.
An explanation of the consent solicitation process, including the date
on which Consents expire and the revocability of Consents is provided in the
section of this Consent Statement entitled "Voting Rights and Solicitation."
A WHITE form of Consent is enclosed. Stockholders are requested to
mark, sign, and date the enclosed WHITE form of Consent and return it as
promptly as possible and, in any event, prior to [ ], 1998 in the
envelope provided with these materials, which requires no postage if mailed in
the United States.
THE CONSENT PROCEDURES
The matters being considered by the Stockholders are being submitted
for action by written consent, rather than by votes cast at a meeting. Section
228 of the General Corporation Law of the State of Delaware states that, unless
otherwise provided in the certificate of incorporation, any action that may be
taken at any annual or special meeting of stockholders, may be taken without a
meeting, without prior notice and without a vote, if consents in writing,
setting forth the action so taken, are signed by the holders of outstanding
stock having not less than the minimum number of votes that would be necessary
to authorize or take such action at a meeting at which all shares entitled to
vote thereon were present and voted, and those consents are delivered to the
corporation by delivery to its registered office in Delaware, its principal
place of business, or an officer or agent of the corporation having custody of
the book in which proceedings of meetings of stockholders are recorded.
Section 213(b) of the Delaware General Corporation Law sets forth the
rules for ascertaining the record date to determine which stockholders of a
corporation are eligible to consent to action by written consent pursuant to
Section 228 of the Delaware General Corporation Law. Section 213(b) provides
in relevant part:
(b) In order that the corporation may determine the
stockholders entitled to consent to corporate action in writing
without a meeting, the board of directors may fix a record date, which
record date shall not precede the date upon which the resolution
fixing the record date is adopted by the board of directors, and which
date shall not be more than ten days after the date upon which the
resolution fixing the record date is adopted by the board of
directors. If no record date has been fixed by the board of
directors, the record date for determining stockholders entitled to
consent to corporate action in writing without a meeting, when no
prior action by the board of directors is required by this chapter,
shall be the first
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date on which a signed written consent setting forth the action taken
or proposed to be taken is delivered to the corporation by delivery to
its registered office in this State, its principal place of business,
or an officer or agent of the corporation having custody of the book
in which proceedings of meetings of stockholders are recorded.
The Company's Certificate of Incorporation currently contains no
provision or language in any way limiting the right of Stockholders of the
Company to take action by written consent.
VOTING RIGHTS AND SOLICITATION
VOTING
In the case of this Consent Solicitation, written, unrevoked consents
of the Stockholders of the requisite number of shares of Company's Class A
Common Stock outstanding and entitled to vote on July 20, 1998, the record date
for determining Stockholders entitled to express consent to the actions
proposed in this solicitation (the "Consent Record Date"), must be delivered to
the Company as described above to effect the actions as to which Stockholder
consents are being solicited hereunder. On the Consent Record Date there were
38,408,884 shares of Class A Common Stock outstanding. Each Stockholder of
record on the Consent Record Date is entitled to one vote for each Class A
Share held by such Stockholder on the Consent Record Date.
If a Consent is executed but no indication is made with respect to any
one or more particular resolutions contained in such Consent as to what action
is to be taken, such Consent will be deemed to constitute a consent to each
particular resolution with respect to which no indication is made. Consent
Cards that reflect abstentions will be treated as voted for purposes of
determining the affirmative vote necessary to approve the Proposals. An
abstention from voting on a Proposal will have the same legal effect as a vote
against such Proposal.
Stockholders who do not consent to the approval of the Proposals by
execution of the Consent Card will nonetheless be bound by the Proposals if
sufficient written consents are received by the Company to approve such
Proposals as set forth above. No dissenters or similar rights apply to
Stockholders who do not approve the Proposals.
None of the Company's shares of Class A Common Stock is held by
brokers. Shares of the Company's Class B Common Stock, par value $.01 per share
("Class B Common Stock, together with the Class A Common Stock, the "Common
Stock") Class B Common Stock will have no voting rights with respect to the
Proposals set forth in this Consent Statement. The beneficial ownership of the
Company's Common Stock by certain Stockholders and by each of the Company's
directors, certain of its most highly compensated executive officers and all
executive officers and directors as a group is set forth below under "Security
Ownership of Certain Beneficial Owners and Management." Information regarding
compensation for each of the Company's directors, the Chief Executive Officer
and
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certain of its highly compensated executive officers is set forth below under
"Executive Compensation and Related Information."
SOLICITATION OF CONSENTS
The Company will bear the entire cost of solicitation, including the
preparation, assembly, printing, and mailing of this Consent Statement, the
Consent, and any additional solicitation material furnished to Stockholders.
Copies of solicitation material will be furnished to fiduciaries and custodians
holding shares in their names that are beneficially owned by others. The
original solicitation of Consents by mail may be supplemented by a solicitation
by telephone, telegram, or other means by directors, officers, or employees of
the Company. No additional compensation will be paid to these individuals for
any such services. Except as described above, the Company does not presently
intend to solicit Consents other than by mail.
REVOCABILITY OF SIGNED CONSENTS
A Consent executed by a Stockholder may be revoked at any time
provided that a written, dated revocation is executed and delivered prior to
the time that signed unrevoked Consents by the holders of the requisite number
of the Class A Common Stock outstanding on the Consent Record Date have been
delivered to the Company pursuant to Section 228 of the General Corporation Law
of the State of Delaware. A revocation may be in any written form validly
signed by the record holder as long as it clearly states that the Consent
previously given is no longer effective. The revocation must be delivered to
the Company's principal executive offices or any other address provided by the
Company.
EXPIRATION OF CONSENTS
All Consents, regardless of when dated, will expire unless valid,
unrevoked Consents constituting the requisite number of outstanding shares
of Class A Common Stock are delivered to the Company on or before
September 18, 1998 (sixty (60) days from the Consent Record Date).
NOTIFICATION TO STOCKHOLDERS
If the actions described in this Consent Statement are taken, the
Company will notify promptly the Stockholders who have not consented to the
actions taken as required by Delaware law.
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<PAGE> 7
PROPOSAL NO. 1
APPROVAL OF THE 1998 ASSOCIATE STOCK PURCHASE PLAN
Effective as of July 17, 1998, the Board of Directors adopted the 1998
Associate Stock Purchase Plan (the "1998 Plan"). A summary of the material
features of the 1998 Plan follows. This summary does not purport to be
complete and is qualified in its entirety by reference to the full text of the
1998 Plan, a complete copy of which is included as Appendix A to this Consent
Statement. Capitalized terms not defined in this Proposal shall have the
meaning given them in the 1998 Plan.
General. The purpose of the 1998 Plan is to provide employees of the
Company and corporations, foreign or domestic, of which the Company, directly or
indirectly, holds not less than 50% of the total combined voting power of all
classes of voting stock that are approved by the Board (the "Participating
Affiliates") with the opportunity and a convenient means to purchase Class A
Common Stock of the Company at a discount from the market price through a
program of voluntary, regular payroll deductions. The Company intends to have
the 1998 Plan qualify as an "Employee Stock Purchase Plan" under Section 423 of
the Internal Revenue Code of 1986, as amended from time to time (the "Tax
Code").
Shares Issuable through the 1998 Plan. A total of 10,000,000 Shares of
Class A Common Stock are authorized and reserved for issuance under the 1998
Plan. Appropriate adjustments in the aggregate number of Shares subject to the
1998 Plan will be made in the event of any merger, consolidation,
reorganization, recapitalization, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange of
shares, change in corporate structure or other transaction not involving the
receipt of consideration by the Company. Shares of Class A Common Stock subject
to options that are not exercised for any reason will again be available for
issuance under the 1998 Plan.
Administration of the 1998 Plan. The Board of Directors will
administer the 1998 Plan and will have complete authority to construe,
interpret, and administer the provisions of the 1998 Plan.
The Stock Purchase Plan. The 1998 Plan permits "Eligible Associates"
to participate in the Plan. An Eligible Associate an employee of the Company
and Participating Affiliates who works more than 20 hours per week on a regular
basis for more than five months per calendar year and is not engaged under an
independent contractor or similar agreement, whether or not such person is
determined to be an independent contractor. Eligible Associates who own five
percent or more of the Company's outstanding Class A Common Stock may not
purchase Shares under this 1998 Plan.
The 1998 Plan permits Eligible Associates to purchase, through regular
payroll deductions, shares of Class A Common Stock at a price equal to 85% of
the fair market value of one share of the Common Stock on the Exercise Date for
the Offering Period. Except for the first Offering Period, each Offering Period
will start on the first day of the second month of a calendar quarter and end on
the last day of the first month of the next calendar quarter. The
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Exercise Date is the last day of the applicable Offering Period. As soon as
practical after each Exercise Date, the Company will issue a stock certificate
to each Participant or to the Plan Custodian for the benefit of each
Participant for the Shares purchased on that Exercise Date.
On the Exercise Date for each Offering Period, unless the Participant
has withdrawn from the 1998 Plan at least 10 business days before such Exercise
Date, all amounts withheld from the Participant's paycheck during the applicable
Offering Period shall be used to purchase the maximum number of whole Shares of
Class A Common Stock that may be bought pursuant to the terms of the 1998 Plan.
If the funds withheld from the Participant's paycheck during the applicable
Offering Period exceed the funds necessary to purchase the number of whole
Shares of Class A Common Stock by less than the fair market value of a whole
Share, the excess amount is carried forward to the next Offering Period. If the
excess funds represent more than the fair market value of a Share, such excess
funds are refunded to the Participant.
Each Participant may elect to contribute up to 10% of his or her wages
and other eligible compensation and, subject to future Board approval, up to 50%
of his or her bonuses and other incentive compensation to the 1998 Plan. During
an Offering Period, a Participant may not change the percentage of payroll
deductions contributed to the 1998 Plan, except by withdrawing from the 1998
Plan. To withdraw from the 1998 Plan, the Participant must complete and deliver
a Withdrawal Agreement to the Stock Administrator. As soon as practical after
receiving the Withdrawal Agreement, contributions to the Plan will cease and the
Participant will receive a refund of any amounts previously withheld that have
not been used to purchase Shares under the 1998 Plan. No Participant may
purchase more than $25,000 of Class A Common Stock in any calendar year,
measured using the fair market value of a Share of Class A Common Stock on the
date the relevant option is granted.
Termination of Employment; Leave of Absence. If a Participant's
employment with the Company terminates on or before an Exercise Date, the
Participant will be deemed to have elected to withdraw from the applicable
Offering Period effective as of the date the Participant's employment
terminated. As soon as practical after a Participant's termination of
employment, the Company will refund all amounts withheld pursuant to the 1998
Plan that have not been used to purchase Class A Common Stock from the Company
or otherwise refunded and distribute any Shares held on the Participant's behalf
to the Participant or the Participant's designee.
If a Participant begins an approved leave of absence from the Company
or a Participating Affiliate on or before an Exercise Date, the Participant
will remain in the 1998 Plan for the applicable Offering Period, but will be
deemed to have elected to stop participating in the 1998 Plan for each future
Offering Period until the Participant returns to work and submits a new
enrollment form.
Parallel Plans. The Company is authorized under the 1998 Plan to
adopt similar stock purchase plans revised as necessary to conform to local tax
laws and regulations for those Eligible Associates who reside outside the
United States if the economic and tax benefits
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extended under the 1998 Plan are lower due to local tax laws and regulations,
with the exception of tax rates, than those enjoyed by Eligible Associates who
reside in the United States under the Tax Code.
Amendments to the 1998 Plan. The Board of Directors may amend the
1998 Plan without notice, at any time, subject to certain restrictions set
forth in the 1998 Plan. The 1998 Plan will automatically terminate after ten
years, or on the date all Shares authorized to be sold under the 1998 Plan have
been sold, subject to the right of the Board of Directors to terminate the 1998
Plan at an earlier time.
Federal Income Tax Consequences. The following general description of
U.S. federal income tax consequences is based upon current statutes,
regulations and interpretations and does not purport to be complete. Reference
should be made to the applicable provisions of the Tax Code. There also may be
additional applicable state, local and non-U.S. income tax consequences.
A Participant under the 1998 Plan will not recognize income subject to
federal income tax at the commencement of an Offering Period or at the time
Shares are purchased. Funds withheld under the 1998 Plan and applied toward the
purchase of Class A Common Stock are taxed to the Participant in the same manner
as other regular earnings. A taxable event will not occur until a Participant
sells or makes a gift of the Shares purchased through the 1998 Plan. Whether
the Participant disposes of the Shares during or after the two-year period
following the last day of the relevant Offering Period (the "Holding Period")
will determine the federal income tax consequences to the Participant.
If a Participant disposes of Shares purchased under the 1998 Plan more
than two years after the applicable Holding Period, or dies at any time while
holding Shares, ordinary income will be equal to the lesser of (i) the fair
market value of the Shares at the time of disposition minus the price paid
under the 1998 Plan; or (ii) the fair market value of the Shares on the last
day of the applicable Offering Period less the price paid. The Company would
not be entitled to a deduction for this amount. In addition, a capital gain
will be recognized on the excess, if any, of the amount recognized on a sale
over the Participant's basis (the amount paid per Share plus the ordinary
income as a result of the sale). Any loss will be treated as a capital loss.
Participants who purchase Shares under the Stock Purchase Plan and
dispose of them within the applicable Holding Period will recognize ordinary
income on the difference between the price paid per Share and the fair market
value on the last business day of the Offering Period, regardless of the market
price of the Shares at the time of the sale. A corresponding deduction may be
available to the Company. In addition, a Participant who sells Shares within
the applicable Holding Period will recognize a capital gain or loss (the amount
will depend on the length of time such Shares are held) on the difference
between the amount realized on the sale and his or her basis (the price paid
plus any ordinary income recognized as a result of the sale).
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The Company will generally not be entitled to a deduction for federal
income tax purposes upon the granting of any option under the 1998 Plan. The
Company generally will be entitled to a deduction for federal income tax
purposes when a Participant disposes of Shares purchased under the 1998 Plan
within the two-year Holding Period, in an amount equal to the ordinary income
realized by the Participant.
Stockholder Approval. The Board of Directors believes that the 1998
Plan is in the best interests of the Company and its Stockholders. Under
Delaware law and the Certificate of Incorporation, this Proposal requires the
unrevoked signed Consents of the holders as of the Consent Record Date of a
majority of the Company's outstanding Shares of Class A Common Stock. Failure
to obtain Stockholder approval will void the 1998 Plan, any options granted
under the 1998 Plan, any Share purchases pursuant to the 1998 Plan, and all
rights of all Participants under the 1998 Plan.
The Board of Directors recommends the execution of the enclosed
Consent to CONSENT to this Proposal No. 1.
AMENDMENT AND RESTATEMENT OF THE COMPANY'S
CERTIFICATE OF INCORPORATION AND BYLAWS
The Board of Directors unanimously has adopted, and recommends that
the Company's Stockholders consent to the following amendments to the Company's
Amended and Restated Certificate of Incorporation (the "Certificate of
Incorporation") and Amended and Restated Bylaws (the "Bylaws") to: (i) increase
the Company's authorized Class A Common Stock from 100,000,000 shares to
200,000,000 shares; (ii) authorize a new class of 5,000,000 shares of preferred
stock ("Preferred Stock"); (iii) eliminate Stockholder action by written
consent unless action by written consent is permitted by the Board of
Directors; (iv) permit only the Chairman or President of the Board, or the
Chairman of the Board, President or the Secretary at the request in writing of
a majority of the Board of Directors, to call special meetings of Stockholders
and to limit the business permitted to be conducted at such meetings to that
brought before the meetings by or at the direction of the Board; (v) provide
for an advance notice procedure for the submission by Stockholders of director
nominations and other business to be considered at an annual meeting of the
Stockholders; and (vi) require either a majority vote of the Board or an
affirmative vote of at least 80% of the outstanding Common Stock entitled to
vote thereon in order to adopt, amend, or repeal the Bylaws.
There is currently no public market for the Class A Common Stock, and
there is no assurance that a market will ever develop. If a public market for
the Class A Common Stock were to develop, the Proposals could have the effect
of delaying, hindering, or preventing change of control of the Company.
The Proposals give added protection to the Company's Stockholders, and
may help the Company obtain a better price in a potential transaction. The
Proposals,
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however, may delay the assumption of control by a holder of a large block of
Class A Common Stock and the removal of incumbent management, even if such
removal might be beneficial to some or all of the Stockholders. Furthermore,
the Proposals may have the effect of deterring or frustrating certain types of
future takeover attempts that may not be approved by the incumbent Board, even
if a majority of the shares of Class A Common Stock may deem it to be in their
best interest or some or all of the Stockholders would receive a substantial
premium over prevailing market prices for their stock. By discouraging takeover
attempts, the Proposals also could have the incidental effect of inhibiting
certain changes in management (some or all of the members of which might be
replaced in the course of a change of control) and also the temporary
fluctuation in the market price of Class A Common Stock that often result from
actual or rumored takeover attempts.
Under Delaware law and the Certificate of Incorporation, Proposals 2
through 6 require the unrevoked signed Consents of the holders as of the
Consent Record Date of at least 66 2/3% of the Company's outstanding shares of
Class A Common Stock. In accordance with Delaware law, the Certificate of
Incorporation of the Company confers the power to adopt, amend or repeal the
Bylaws upon the Board of Directors and, therefore, the Company is not required
to obtain Stockholder approval for Proposal 7. The fact that such power has
been conferred upon the Board of Directors does not divest the Stockholders nor
limit their power to adopt, amend or repeal the Bylaws, however, and therefore,
the Company is seeking the unrevoked signed Consents of at least 66 2/3% of the
Company's outstanding shares of Class A Common Stock for Proposal 7. The Board
of Directors has the power to adopt Proposal 7 whether or not approved by the
Stockholders but does not intend to implement any of the Proposals set forth
below unless each Proposal is consented to by the Stockholders. All of the
Proposals are permitted by law.
Stockholders are urged to read carefully the following sections of
this Consent Statement, which summarize the material changes to the Certificate
of Incorporation and Bylaws that would be effected by adoption of the
Proposals. These summaries are qualified in their entirety by reference to the
text of the Company's proposed Second Amended and Restated Certificate of
Incorporation, a complete copy of which is included as Appendix B to this
Consent Statement, and the text of the Company's proposed Second Amended and
Restated Bylaws, a complete copy of which is included as Appendix C to this
Consent Statement.
Unless each of the Proposals set forth below is consented to by the
Stockholders, none of such Proposals will be implemented. If the Stockholders
consent to all of the Proposals, the Company expects to file with the Secretary
of State of the State of Delaware an amendment to the Certificate of
Incorporation that reflects the Proposals. The approved amendments to the
Certificate of Incorporation will become effective upon the filing with the
Secretary of State of the State of Delaware of a certificate with respect to
such amendments, and the approved amendments to the Bylaws will become
effective immediately upon such consent.
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NOTWITHSTANDING AUTHORIZATION OF THE FOLLOWING PROPOSALS BY THE
STOCKHOLDERS, THE BOARD OF DIRECTORS WILL HAVE THE RIGHT, IN ITS SOLE
DISCRETION, AT ANY TIME PRIOR TO THE EFFECTIVENESS OF THE FILING OF THE
AMENDMENTS WITH THE SECRETARY OF STATE TO ABANDON THE ANY OR ALL OF THE
FOLLOWING PROPOSALS TO AMEND THE CERTIFICATE OF INCORPORATION OR THE BYLAWS
WITHOUT FURTHER ACTION BY THE STOCKHOLDERS.
PROPOSAL NO. 2
INCREASE IN AUTHORIZED COMMON STOCK
The Company's authorized Class A Common Stock is currently 100,000,000
shares. The Board has adopted, subject to stockholder consent, an amendment to
the Certificate of Incorporation to increase the number of authorized shares of
Class A Common Stock from 100,000,000 shares to 200,000,000 shares.
As of the Consent Record Date, 38,408,884 shares of Class A Common Stock
were issued and outstanding. Shares of Common Stock may also be issuable
pursuant to a Stockholder Rights Agreement that the Company intends to
implement. For a discussion of the Stockholder Rights Agreement, see Proposal
No. 3.
Although the Company does not currently have any plans, agreements,
commitments, or understandings with respect to the issuance of additional shares
of Class A Common Stock to be available under the proposed amendment, other than
the Proposed IPO, the Board is proposing this amendment at this time in order to
provide flexibility for future activities. The Board believes that the Proposal
is desirable in order to assure that there will be sufficient authorized shares
for a variety of corporate purposes, including without limitation, to obtain
financing, to consummate future acquisitions, to facilitate the growth and
expansion of the Company, for stock splits and dividends, and for stock options
and other employee benefit plans.
The Board may issue the additional shares of Class A Common Stock,
together with currently authorized but unused and unreserved shares of Class A
Common Stock, at such time, to such persons and for such consideration as the
Board may determine to be in the Company's best interests without further
Stockholder approval, except as otherwise required by statute or stock exchange
rules (should the Company's shares become listed on a stock exchange in
connection with the Proposed IPO). Depending on the circumstances, issuance of
additional shares of Class A Common Stock could affect the existing holders of
shares by diluting the voting power of the outstanding shares. The Stockholders
do not have preemptive rights under the Certificate of Incorporation and will
not have such rights with respect to the additional authorized shares of Class A
Common Stock. While Delaware General Corporation Law Section 214 provides that
a company's certificate of incorporation may provide for cumulative voting, such
voting is not provided for under the Certificate of Incorporation. Therefore,
the holders of a majority of the shares of Class A Common Stock can elect all of
the directors being elected at any annual meeting of the Stockholders.
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While the proposed amendment is not designed to deter or to prevent a
change in control, under certain circumstances, the Company could use the
additional shares of Class A Common Stock (as it could use the currently
authorized but unissued shares of Class A Common Stock or the preferred stock
to be authorized under Proposal No. 3) to create voting impediments or to
frustrate persons seeking to effect a takeover or otherwise gain control of the
Company or to dilute voting power of the outstanding shares. The Board is not
aware of any efforts to obtain control of the Company, and the proposal of this
measure is not being made in response to any such efforts.
The Board recommends the execution of the enclosed Consent to CONSENT
to this Proposal No. 2.
PROPOSAL NO. 3
AUTHORIZATION OF PREFERRED STOCK
Under the existing Certificate of Incorporation, no shares of
Preferred Stock are authorized, issued, or outstanding. The Board has adopted,
subject to Stockholder consent, an amendment to the Certificate of
Incorporation authorizing the Company to issue up to five million shares of
"blank check" preferred stock ("Preferred Stock") from time to time in one or
more series, without additional Stockholder action.
If this Proposal is adopted, the Board of Directors would be empowered
to determine the designations and relative voting, distribution, dividend,
liquidation, and other rights, preferences, and limitations of the Preferred
Stock, including, among other things: (i) the designation of each class or
series and number of shares in the class or series; (ii) the dividend rights,
if any, of the class or series; (iii) the redemption provisions, if any, of the
shares; (iv) the preference, if any, to which any class or series would be
entitled in the event of the liquidation or distribution of the Company's
assets; (v) the provisions of a purchase, retirement or sinking fund, if any,
provided for the redemption of the Preferred Stock; (vi) the rights, if any, to
convert or exchange the share into or for other securities; (vii) the voting
rights, if any (in addition to any prescribed by law), of the holders of shares
of the class or series; (viii) the conditions or restrictions, if any, on
specified actions of the Company affecting the rights of the shares; and (ix)
any other preferences, privileges, powers, rights, qualifications, limitations,
or restrictions of or on the class or series.
The Board of Directors believes that the availability of the Preferred
Stock would provide the Company with flexibility of action for possible future
actions, such as stock splits, stock dividends, financings, corporate mergers,
acquisitions, employee benefit plans, and other corporate purposes. Having
such authorized shares available for issuance in the future would allow shares
of Preferred Stock to be issued without the expense and delay of a special
Stockholder's meeting. The shares of Preferred Stock would be available for
issuance without further action by the Stockholders.
11
<PAGE> 14
The authorized but unissued shares of Preferred Stock could be used to
impede a change in control of the Company. Under certain circumstances, such
shares could be used to create voting impediments or to deter persons seeking
to effect a takeover or otherwise gain control of the Company. Such shares
could be sold in public or private transactions to purchasers who might side
with the Board of Directors in opposing a takeover bid that the Board of
Directors determines not to be in the best interest of the Company and its
Stockholders. In addition, the Board of Directors could authorize holders of a
series of Preferred Stock to vote, either separately as a class or with the
holders of Common Stock, on any merger, sale or exchange of assets by the
Company or any other extraordinary corporate transaction.
The Preferred Stock could have the effect of discouraging an attempt by
another person or entity, through the acquisition of a substantial number of
shares of the Company's Class A Common Stock, to acquire control of the Company
with a view to imposing a merger, sale of all or any part of the Company's
assets; or a similar transaction, since the issuance of new shares could be used
to dilute the stock ownership of an acquiror. If this Proposal is adopted, the
rights, preferences and privileges of holders of Common Stock would be subject
to, and could be adversely affected by, the rights of the holders of shares of
any series of Preferred Stock which the Company might designate and issue in the
future. Also, the Board of Directors could issue the Preferred Stock with
voting or conversion rights that dilute the voting power and equity of the
holders of Common Stock and adversely effect the market price of such stock.
The Board presently plans to reserve shares of Preferred Stock in
connection with the adoption of a Stockholder Rights Plan in which the Preferred
Stock will have the essentially same economic value and voting rights as shares
of Common Stock upon the occurrence of certain triggering events. The existence
of this Stockholder Rights Plan could delay, impede, or prevent offers for the
Company not approved by the Board of Directors.
The Board of Directors recommends the execution of the enclosed
Consent to CONSENT to this Proposal No. 3.
PROPOSAL NO. 4
ELIMINATING STOCKHOLDER ACTION
BY WRITTEN CONSENT WITHOUT BOARD APPROVAL
Under Delaware law, unless otherwise provided in the certificate of
incorporation, any action required or permitted to be taken by stockholders of
a corporation may be taken without a meeting, without prior notice and without
a stockholder 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 an action at a
meeting of stockholders at which all shares entitled to vote thereon were
present and voted. The Certificate of Incorporation does not currently
12
<PAGE> 15
preclude such Stockholder action by written consent and the Bylaws expressly
provide for such action. The Board has adopted, subject to Stockholder
consent, an amendment to the Certificate of Incorporation and a corresponding
amendment to the Bylaws to provide that actions required or permitted to be
taken at any annual or special meeting of the Stockholders may, unless
authorized by the Board of Directors, be taken only upon the vote of the
Stockholders at a meeting duly called and may not be taken by written consent
of the Stockholders.
The Board of Directors believes that this Proposal would give all the
Stockholders of the Company increased opportunity to participate in determining
any proposed action and would prevent the holders of the requisite voting power
of the Company from using the written consent procedure to take Stockholder
action without a meeting. The ability of holders of a simple majority of the
voting stock of the Company to take action without the opportunity for
discussion at a meeting decreases the ability of minority Stockholders to have
their views considered.
The adoption of this Proposal would eliminate the ability of the
Company's Stockholders to act by written consent in lieu of a meeting without
the approval of a majority vote of the Board of Directors. The effect of this
Proposal may be to make more difficult or less attractive, or delay, certain
actions by a person or a group acquiring a substantial percentage of the
Company's Class A Common Stock, even though such actions might be desired by, or
beneficial to, the holders of a majority of the Company's Class A Common Stock.
The Board is not aware of any efforts to obtain control of the Company, and the
proposal of this measure is not in response to any such efforts.
The Board of Directors recommends the execution of the enclosed
Consent to CONSENT to this Proposal No. 4.
PROPOSAL NO. 5
LIMITATIONS ON STOCKHOLDERS
WITH RESPECT TO SPECIAL MEETINGS
The Bylaws currently provide that special meetings of Stockholders may
be called by the Chairman of the Board or the President, or by the Chairman of
the Board, President or the Secretary at the request in writing of a majority
of the Board of Directors or at the request in writing of Stockholders of
record owning at least one-tenth (1/10) of all shares issued and outstanding
and entitled to vote at such meeting.
The Board has adopted, subject to Stockholder consent, an amendment to
the Certificate of Incorporation and a corresponding amendment to the Bylaws to
require that special meetings of Stockholders may only be called by the
Chairman of the Board or the President, or by the Chairman of the Board,
13
<PAGE> 16
President or the Secretary at the request in writing of a majority of the Board
of Directors. The Stockholders of the Company will not be permitted to call a
special meeting or to require that the Chairman of the Board, President or the
Secretary call a special meeting of the Stockholders unless authorized by the
Board of Directors and the business permitted to be conducted at such meetings
be limited to that brought before the meetings by or at the direction of the
Board.
This Proposal will provide for the orderly conduct of all Company
affairs at special meetings of Stockholders. Accordingly, a Stockholder could
not force Stockholder consideration of a proposal over the opposition of the
Board by calling a special meeting of Stockholders prior to the next annual
meeting or prior to such time that the Board believes such consideration to be
appropriate. As a result, the Board would have the opportunity to inform other
Stockholders adequately of the matters to be considered.
Persons attempting a takeover bid could be delayed or deterred by not
being able to propose a transaction at a time advantageous for them. The
Board, however, is not aware of any efforts to obtain control of the Company,
and the proposal of this measure is not in response to any such efforts.
The Board of Directors recommends the execution of the enclosed
Consent to CONSENT to this Proposal No. 5.
PROPOSAL NO. 6
ADVANCE NOTICE OF STOCKHOLDER
NOMINATIONS AND PROPOSALS
The Board has adopted, subject to Stockholder approval, an amendment
to the Certificate of Incorporation and a corresponding amendment to the Bylaws
requiring that Stockholders submit director nominations and other business to
be considered at annual meetings of Stockholders in accordance with specific
advance notice procedures. No such procedure is currently provided for in
either the Certificate of Incorporation or the Bylaws.
The proposed amendments will provide a detailed and circumscribed
notice procedure with regard to the nomination other than by or at the
direction of the Board of Directors of candidates for election as directors
(the "Nomination Procedures") and with regard to Stockholder proposals to be
brought before an annual meeting of Stockholders (the "Business Procedures").
The Nomination Procedures provide that only persons who are nominated
by or at the direction of the Board, or by a Stockholder who has given timely
prior written notice to the Secretary of the Company prior to the meeting at
which directors are to be elected, will be eligible for election as directors.
The Business Procedures provide that Stockholder proposals must be submitted in
writing in a timely manner in order to be considered at any annual meeting. To
be timely, notice for nominations or Stockholders proposals must be received by
the Company not less than sixty (60) days nor more than ninety (90) days prior
to the annual meeting; provided, however, that in the event that less
14
<PAGE> 17
than seventy (70) days notice or prior public disclosure of the date of the
annual meeting is given or made to Stockholders, notice by a Stockholder, to be
timely, must be received no later than the close of business on the tenth
(10th) day following the date on which such notice of the date of the annual
meeting was made or such public disclosure was made, whichever first occurs.
Under the Nomination Procedures, notice to the Company from a
Stockholder who proposes to nominate a person at a meeting for election as a
director must contain certain information about that person, including age,
business and residence addresses, principal occupation, the class and number of
shares of Common 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 Stockholder proposing to nominate that
person. Under the Business Procedures, notice relating to a Stockholder
proposal must contain certain information about such proposal and about the
Stockholder who proposes to bring the proposal before the meeting.
The purpose of the Nomination Procedures is to afford the Board a
meaningful opportunity to consider the qualifications of the proposed nominees
during the appropriate period when the Board is focused on nominations and, to
the extent deemed necessary or desirable by the Board, to inform Stockholders
about such qualifications. The purpose of the Business Procedures is to
provide a more orderly procedure for conducting annual meetings of Stockholders
and, to the extent deemed necessary or desirable by the Board, to provide the
Board with a meaningful opportunity to analyze such proposals and to decide
whether it is appropriate to either (i) omit such proposal or (ii) inform
Stockholders, prior to such meetings, of any proposal to be introduced at such
meetings, together with any such recommendation or the Board's position or
belief as to action to be taken with respect to such proposal, so as to enable
Stockholders better to determine whether they desire to attend such meeting or
grant a proxy to the Board as to the disposition of any such proposal.
Although the amendments do not give the Board any power to approve or
disapprove Stockholder nominations for the election of directors or any other
proposal submitted by Stockholders, the amendments may have the effect of
precluding or making more difficult a Stockholder nomination for the election
of directors or the submission by Stockholders of proposals at a particular
Stockholders meeting, because of the difficulty of the procedures to be
followed, and may discourage a Stockholder from conducting a solicitation of
proxies to elect its own slate of directors or otherwise attempting to obtain
control of the Company, even if the conduct of such solicitation or such
attempt might be beneficial to the Company and its Stockholders. The Board,
however, is not aware of any efforts to obtain control of the Company, and the
proposal of this measure is not in response to any such efforts.
The Board of Directors recommends the execution of the enclosed
Consent to CONSENT to this Proposal No. 6.
15
<PAGE> 18
PROPOSAL NO. 7
SUPERMAJORITY VOTING REQUIRED TO AMEND BYLAWS
Delaware law confers sole authority to adopt, amend, or repeal bylaws
in the stockholders unless the certificate of incorporation also confers such a
power upon the board of directors. The Certificate of Incorporation expressly
confers such powers upon the Board. In addition, the Bylaws currently provide
that the Bylaws may be adopted, altered, amended, or repealed by the vote of
the Stockholders at the time entitled to vote or by the Board. However, any
Bylaw adopted by the Board may be amended or repealed at any annual meeting of
the Stockholders or at any special meeting of the Stockholders at which a
quorum is present or represented, by the affirmative vote of the holders of a
majority of the shares entitled to vote at such meeting and present or
represented. The Board has adopted, subject to Stockholder approval, an
amendment to the Bylaws to require the affirmative vote of eighty percent (80%)
of the outstanding shares of Common Stock entitled to vote to adopt, amend or
repeal the Bylaws.
This Proposal, by limiting the manner in which the Bylaws may be
amended, is intended not only to promote continuity of operations and thereby
enhance the Company's ability to attain its long term goals, but also to allow
the Board to more effectively manage the affairs of and internal operating
procedures of the Company. This Proposal is intended to have the effect of
making it more difficult for Stockholders to eliminate the constituent elements
contained in Proposals 4 through 6.
This Proposal will have the effect of making it more difficult for
Stockholders and the Board to change the internal operating procedures of the
Company. These provisions may further discourage potentially unfriendly bids
for shares of the Company. The Board, however, is not aware of any efforts to
obtain control of the Company, and the proposal of this measure is not in
response to any such efforts.
The Board of Directors recommends the execution of the enclosed
Consent to CONSENT to this Proposal No. 7.
16
<PAGE> 19
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth certain information known to the
Company with respect to beneficial ownership of Common Stock as of June 30,
1998 for (i) all persons who are beneficial owners of five percent or more of
the Company's Common Stock, (ii) each director and nominee for director, (iii)
the Company's Chief Executive Officer and the other executive officers named in
the Summary Compensation Table below, and (iv) all executive officers and
directors as a group:
<TABLE>
<CAPTION>
CLASS B
CLASS A COMMON STOCK COMMON STOCK
----------------------------------- -----------------
EXECUTIVE OFFICERS SHARES BENEFICIALLY PERCENT SHARES BENEFICIALLY
AND DIRECTORS(1) OWNED (2) OF CLASS (2) OWNED (2)
--------- ------------ ---------
<S> <C> <C> <C>
Ross Perot (3) 15,853,000 41.4% --
James Champy (4) 500,067 1.3% --
John King (5) 803,448 2.1% --
Terry Ashwill (6) 40,047 * --
Ross Reeves (7) 983,475 2.6% --
Guillermo Marmol (8) 80,254 * --
Steven Blasnik (9) 9,000 * --
Carl Hahn 220,000 * --
George Heilmeier (10) 6,000 * --
Ross Perot, Jr. (3) 15,853,000 41.4% --
ADDITIONAL 5% BENEFICIAL OWNERS
Morton H. Meyerson (11) 4,000,390 10.4% --
UBS AG (12) -- * 3,667,160
ALL EXECUTIVE OFFICERS AND DIRECTORS
as a Group (13 persons) 19,828,429 51.8% --
</TABLE>
*Less than 1%
(1) The address for Ross Perot, Ross Perot, Jr., and HWGA, Ltd. ("HWGA")
is 12377 Merit Drive, Suite 1700, Dallas, Texas 75251. The address
for Mr. Meyerson is 4514 Cole Ave., Suite 400, Dallas, Texas 75205.
(2) Percentages are based on the total number of shares of Common Stock
outstanding at June 30, 1998, plus the total number of outstanding
options and
17
<PAGE> 20
warrants held by each person that are exercisable within 60 days of
such date. Shares of Common Stock issuable upon exercise of
outstanding options and warrants, however, are not deemed outstanding
for purposes of computing the percentage ownership of any other
person. Except as indicated in the footnotes to this table, other
than shared property rights created under joint tenancy or marital
property laws as between the Company's directors and executive
officers and their respective spouses, each Stockholder named in the
table has sole voting and investment power with respect to the shares
of Class A Common Stock set forth opposite such Stockholder's name.
The shares of Class A Common Stock listed include shares of Class A
Common Stock held by the Company's Retirement Savings Plan and Trust
for the benefit of the named individuals. Voting and investment power
such shares of Class A Common Stock is held by the trustee of such
trust subject to the direction of the Company's 401(k) Plan Committee.
(3) Shares are owned by HWGA. Ross Perot, Chairman, President and Chief
Executive Officer of the Company, is the managing general partner of
HWGA. Mr. Perot has voting and investment power over such shares.
Ross Perot, Jr. is the general partner of HWGA who has authority to
manage HWGA if Ross Perot ceases to be managing general partner of
HWGA. Accordingly, shares owned by HWGA are also shown in this table
as being beneficially owned by Ross Perot, Jr. Subsequent to June 30,
1998, Mr. Perot has agreed to acquire an additional 200,000 shares of
Class A Common Stock from an existing stockholder.
(4) Includes 100,000 shares of Class A Common Stock held by the Champy
Family Irrevocable Trust (the "Champy Trust") of which Mr. Champy is a
trustee. As a trustee, Mr. Champy shares voting and investment power
with respect to the shares of Class A Common Stock held by the Champy
Trust and, therefore, is deemed the beneficial owner of such shares of
Class A Common Stock.
(5) Includes 2,000 shares of Class A Common Stock held by Mr. King's
spouse with respect to which Mr. King shares voting and investment
power.
(6) Includes 40,000 shares of Class A Common Stock that Mr. Ashwill has
the right to acquire upon the exercise of vested options.
(7) Includes 2,000 shares of Class A Common Stock held by Mr. Reeves'
spouse with respect to which Mr. Reeves shares voting and investment
power and 20,000 shares of Class A Common Stock that Mr. Reeves has
the right to acquire upon the exercise of vested options.
(8) Includes 4,000 shares of Class A Common Stock held by Mr. Marmol's
children over which Mr. Marmol has voting and investment power.
(9) Includes 3,000 shares of Class A Common Stock held by Mr. Blasnik's
spouse. Mr. Blasnik disclaims beneficial ownership of such shares.
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<PAGE> 21
(10) Includes 6,000 shares of Class A Common Stock that Mr. Heilmeier has
the right to acquire upon the exercise of vested options.
(11) Includes 3,971,200 shares held by the Meyerson Family Limited
Partnership and 27,200 shares held by four trusts of which Mr.
Meyerson is the Trustee.
(12) Includes 3,617,160 shares of Class B Common Stock that UBS AG has the
right to acquire upon the exercise of options.
EXECUTIVE COMPENSATION AND RELATED INFORMATION
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
This report is provided by the Board of Directors to assist
stockholders in understanding the Board's objectives and procedures in
establishing the compensation of the Company's Chief Executive Officer and the
Company's other executive officers.
The Board is responsible for establishing and administering the
Company's executive compensation program. Prior to February 25, 1998, the
Board had a Compensation Committee that was responsible for establishing and
administering the Company's executive compensation program. The Compensation
Committee consisted of three non-employee directors, Ross Perot, Jr., John
Segall and Craig Fields. Messrs. Segall and Fields have resigned from the
Board of Directors. The Board met six times during 1997. The Compensation
Committee met three times during 1997.
In structuring the Company's compensation programs, the Board and,
previously the Compensation Committee, were advised on plan design by external
compensation consultants, as well as the Company's compensation staff.
COMPENSATION PHILOSOPHY AND OBJECTIVES
The Board believes that compensation of the Company's key executives
should:
o consider equity as a key component
o be cost effective - designed to minimize fixed salary and maximize
variable pay which tracks to business results
o benchmark with industry peers to ensure competitiveness
o attract and retain high caliber Associates on a long term basis
o align with the business strategy of our fast paced, growing company
The Company's policy is to position compensation to be competitive
with peer information technology ("IT") companies with which the Company
competes for talent, with appropriate variation for individual and company
performance.
19
<PAGE> 22
EXECUTIVE COMPENSATION COMPONENTS
The Company's executive compensation program consists of two pay
elements: Base Salary and Short-Term Cash Incentives. The Company believes
short-term incentive pay should be linked to the Company's financial
performance and strategic goals and should represent a significant portion of
each senior executive's total cash compensation. The Company believes that the
combination of these two cash compensation elements in conjunction with the
equity compensation elements provides both effective retention and motivational
value. In addition, the Company has sometimes paid bonuses to specific
individuals based on the satisfaction of particular individual goals.
Base Salary
o Base salary ranges for all Perot Systems' employees - including the
Company's top executives - are based on comparisons to the competitive
marketplace to assure equitable salary range.
o Salaries within these salary ranges vary by individual based on
sustained performance toward the achievement of Perot Systems' goals
and objectives.
o Increases to base salary are determined by anticipated increases to
external market comparison groups. From these comparisons, the
Company derives a target annual increase percentage. Final increases
actually made to base pay are determined by individual performance.
Short-Term Incentive
The 1997 Global Variable Pay Plan (GVP) was an annual cash incentive
program which linked to corporate financial and strategic results. Individual
target awards varied by position and were based on competitive practices in the
IT industry.
o Performance objectives were based on corporate financial and strategic
goals and were set at the beginning of the plan year. The financial
corporate target is set as the corporate pre-tax profit.
o Individuals will have individual performance assessments and,
therefore, final payment percentages will be different based on
individual performance.
The Company did not make GVP incentive payments to its senior executives for
1997.
Other Bonuses
The Company paid certain executive officers bonuses in 1997 in
connection with their individual efforts on a particular transaction.
20
<PAGE> 23
CEO COMPENSATION
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
Since November 7, 1997 the position of Chief Executive Officer has
been held by Ross Perot. Mr. Perot has not accepted cash or non-cash
compensation for his role in the Company.
COMPENSATION OF THE FORMER CHIEF EXECUTIVE OFFICERS
Morton H. Meyerson served as interim Chief Executive Officer and
President from July 25, 1997 until November 7, 1997. James Cannavino served as
Chief Executive Officer and President of Perot Systems through July 25, 1997.
Messrs. Cannavino and Meyerson's target compensation, base salary and bonuses,
were determined in the manner described above.
CONCLUSION
Financial success which equates to shareholder value was the driver
for reward under the 1997 bonus program. Although the Company's financial
performance was healthy, the executive team did not achieve the significant
targets set at the beginning of the year. As a result, the executive team did
not receive a bonus under the short-term cash bonus program for 1997. Certain
executives were rewarded a bonus for significant individual contributions. CEO
performance for 1997 was based in equal parts on financial targets and on the
development of structural capabilities required to sustain Perot Systems
Corporation for the long term. No person who served as CEO received a GVP
bonus for the fiscal year 1997. Messrs. Meyerson and Cannavino received bonuses
in 1997 relating to significant efforts with respect to a particular
transaction.
BOARD OF DIRECTORS
Ross Perot
Steve Blasnik
James Champy
Carl Hahn
George Heilmeier
Ross Perot, Jr.
INSIDER PARTICIPATION IN COMPENSATION DECISIONS AND BOARD INTERLOCKS
As members of the Board of Directors, Messrs. Perot and Champy will
participate in future compensation decisions.
In January 1996, the Company entered into an agreement with Perot
Investments, Inc.("PII") pursuant to which the Company licensed certain software
from PII. PII is an affiliate of Ross Perot. Mr. Blasnik is the President of
PII. The Company sublicensed such
21
<PAGE> 24
software to The Witan Company L.P. ("Witan"). In connection with this project,
Witan paid a license fee of $1,000,000 directly to PII in connection with the
license. The Company had a separate contract with Witan to perform development
work on the licensed software, which was terminated in May 1997.
22
<PAGE> 25
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The Summary Compensation Table below shows compensation for the 1997
fiscal year of each person who served in the capacity of Chief Executive
Officer during the year, the four most highly compensated executive officers
other than the Chief Executive Officer who were serving as executive officers
at the end of the 1997 fiscal year, and one person who served as an executive
officer for a portion of 1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long Term
----------------------------- Compensation Awards
-----------------------
Other Restricted Securities
Annual Stock Under- All Other
Name and Principal Position Bonus Compen- Award(s) lying Compen-
Salary (1) sation (2) (3) Options sation (4)
Year ($) ($) ($) ($) (#) ($)
-------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Ross Perot..................... 1997 $ -- $ -- $ -- $ -- -- $ --
Chairman, President &
Chief Executive Officer (5)
Morton Meyerson................ 1997 600,000 180,000 10,286 -- -- 34,173
Former Chairman & 1996 583,333 180,000 10,507 -- -- 40,216
Chief Executive Officer (6)
James Cannavino................ 1997 475,000 180,000 -- -- -- 1,531,353
Former Chairman & 1996 538,542 180,000 6,725 -- -- 200,086
Chief Executive Officer (7)
James Champy................... 1997 500,000 -- 5,738 -- -- 23,307
Vice President (8) 1996 195,192 117,115 -- -- (9) -- 3,744
John King...................... 1997 308,000 50,000 5,293 -- -- 22,862
Vice President 1996 300,000 85,000 8,543 -- -- 17,232
Terry Ashwill.................. 1997 324,876 -- 96,276 -- (11) 350,000 --
Vice President & Chief
Financial Officer (10)
Ross Reeves.................... 1997 319,849 -- 205,255 -- -- 17,569
Vice President 1996 356,249 110,000 263,207 -- -- 17,232
Guillermo Marmol............... 1997 400,000 50,000 -- -- -- 7,740
Former Vice President (12) 1996 400,000 110,000 -- -- (13) 200,000 6,639
</TABLE>
23
<PAGE> 26
(1) Bonus amounts shown for 1997 were earned and paid in 1997. Bonus
amounts shown for 1996 were earned in 1996 and paid in 1997.
(2) With respect to Mr. Ashwill, represents $92,668 paid in connection
with his relocation and $3,608 for home office equipment. With
respect to Mr. Reeves, represents $125,479 in taxes paid for Mr.
Reeves and $79,776 in perquisites during 1997 and $263,207 in
perquisites during 1996, which were, in all cases, primarily related
to an overseas assignment (including relocation expenses). With
respect to all other named executive officers, represents the payment
of taxes related to the life insurance policies referenced in Note 4
to this table.
(3) The number of restricted shares of Class A Common Stock held by the
named executive officers and the value of such shares of Class A
Common Stock (less the amount paid therefor) at December 31, 1997 were
as follows: Mr. Meyerson - 28,800 shares of Class A Common Stock,
$144,000; Mr. Champy - 450,000 shares of Class A Common Stock,
$1,912,500; Mr. Cannavino - 200,000 shares of Class A Common Stock,
$1,150,000; and Mr. Marmol - 240,000 unvested shares of Class A Common
Stock, $1,140,000. There is currently no market for the Class A Stock.
Therefore, the values in the preceding sentence are based on periodic
appraisals of the shares of Class A Common Stock made for the Company
by independent appraisers.
(4) In 1997, represents (i) with respect to Mr. Cannavino, in addition to
other amounts provided in items (ii) and (iii) below, $1,440,000 in
accrued severance obligations and $74,121 paid in connection with the
maintenance of living quarters and payment of some other living
expenses pending his permanent relocation; (ii) $27,836, $11,232,
$16,970, $16,525 and $11,232 in life insurance premiums paid for the
benefit of Messrs. Meyerson, Cannavino, Champy, King and Reeves
respectively; (iii) $6,337 in Company contributions to the Company's
401(k) plan for the benefit of each of Messrs. Meyerson, Champy, King,
Marmol and Reeves, and $6,000 for the benefit of Mr. Cannavino. In
1996, represents (i) $17,550, $11,232, $693, $11,232, $3,744 and
$11,232 in life insurance premiums paid for the benefit of Messrs.
Meyerson, Cannavino, Marmol, King, Champy and Reeves; (ii) $16,666 for
the retroactive application of a salary increase for Mr. Meyerson,
which amount relates to compensation for services rendered in 1995;
and (iii) $6,000 in Company contributions to the Company's 401(k) plan
for the benefit of each of Messrs. Meyerson, Cannavino, Marmol, King
and Reeves.
(5) Mr. Perot has served as President and Chief Executive Officer since
November 7, 1997 and Chairman since February 28, 1998. Mr. Perot
serves the Company without compensation.
(6) Mr. Meyerson served as Chairman until he resigned from the Company on
January 5, 1998. Mr. Meyerson also served as interim President and
Chief Executive Officer of the Company from July 25, 1997 until
November 7, 1997.
24
<PAGE> 27
(7) Mr. Cannavino held the posts of President and Chief Executive Officer
until July 25, 1997.
(8) Mr. Champy joined the Company as an executive officer on July 8, 1996.
(9) Mr. Champy purchased 500,000 restricted shares of Class A Common Stock
for $2.50 per share (the fair value of such shares on the date of
purchase). The shares vest ratably over a ten-year period. The first
vesting date was August 12, 1997.
(10) Mr. Ashwill joined the Company and was elected Vice President and
Chief Financial Officer as of January 28, 1997.
(11) Mr. Ashwill purchased 100,000 restricted shares of Class A Common
Stock on January 28, 1997, and an additional 20,000 restricted shares
of Class A Common Stock on February 14, 1997. In each case, the
purchase price was $3.75 per share (the fair value of such shares on
the respective dates of the purchase). The restricted shares of Class
A Common Stock were scheduled to vest ratably over a ten-year period.
On December 23, 1997, Mr. Ashwill sold all of such shares to the
Company for an amount equal to the cost of purchase plus 8% interest
accrued from the respective purchase dates. The sale was in
connection with the issuance of options described in the table "Option
Grants in the Last Fiscal Year".
(12) Mr. Marmol resigned his position with the Company on March 31, 1998.
(13) On January 2, 1996, Mr. Marmol purchased 200,000 restricted shares of
Class A Common Stock for $1.75 per share (the fair value of such
shares on the date of purchase) and was granted options with an
exercise price of $1.75 per share to purchase an additional 200,000
shares of Class A Common Stock. The shares and options vest ratably
over a ten-year period. The first vesting date was January 2, 1997.
On June 17, 1996, Mr. Marmol purchased an additional 100,000
restricted shares of Class A Common Stock for $2.50 per share (the
fair value of such shares on the date of purchase). In connection
with the June 17 purchase, Mr. Marmol surrendered options to purchase
100,000 shares of Class A Stock that had been granted on January 2.
At the time of his resignation from the Company, Mr. Marmol held
240,000 unvested shares of restricted Class A Common Stock. All of
Mr. Marmol's unvested shares of restricted stock were repurchased by
the Company.
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<PAGE> 28
STOCK OPTIONS
The following table provides information relating to option grants in
1997 to the named executive officers.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Individual Grants
-------------------------------------------------------------------------------
Percent of
Total Potential Realized Value at
Options Assumed Annual Rates of Stock
Number of Granted Price Appreciation For Option
Securities to Term (1)
underlying Employees Exercise ------------------------------
Options in Fiscal Price Expiration
Name Granted Year ($/Sh) Date 5% ($) 10% ($)
---------------------- ----------- ---------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Ross Perot . . . . . -- -- -- -- -- --
Morton Meyerson . . . -- -- -- -- -- --
James Cannavino . . . -- -- -- -- -- --
James Champy . . . . -- -- -- -- -- --
John King . . . . . . -- -- -- -- -- --
Terry Ashwill . . . . 230,000 3.29% $3.75 01/28/08 $612,668 $1,598,313
120,000 (2) 1.71% $6.75 01/28/08 $575,375 $1,501,025
Ross Reeves . . . . . -- -- -- -- -- --
Guillermo Marmol. . . -- -- -- -- -- --
</TABLE>
(1) These amounts represent assumed rates of appreciation in value
from the date of grant until the end of the option term, at the rates set by
the Securities and Exchange Commission and, therefore, are not intended to
forecast possible future appreciation, if any, in the shares of Class A Common
Stock.
(2) Grant was made in connection with the repurchase of restricted
stock from Mr. Ashwill by the Company on December 23, 1997.
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<PAGE> 29
OPTION EXERCISES AND HOLDINGS
The following table provides information regarding exercises of stock
options by named executive officers during 1997:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of
Securities Value (1) of
Underlying Unexercised
Unexercised in-the-Money
Options Options
Class at Fiscal Year-End at Fiscal Year-End
A Shares Value (1) (#) End ($)
Acquired on Realized --------------------------- ---------------------------
Name Exercise (#) ($) Exercisable Unexercisable Exercisable Unexercisable
---------------------- ---------------- --------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Ross Perot . . . . . . . . -- -- -- -- -- --
Morton Meyerson . . . . . . -- -- -- -- -- --
James Cannavino . . . . . . -- -- -- -- -- --
James Champy . . . . . . . -- -- -- -- -- --
John King . . . . . . . . . -- -- -- -- -- --
Terry Ashwill . . . . . . . -- -- -- 350,000 -- 690,000
Ross Reeves . . . . . . . . -- -- 20,000 20,000 125,000 125,000
Guillermo Marmol . . . . . 10,000 $20,000 -- 90,000 -- 450,000(2)
</TABLE>
(1) There is currently no market for the shares of Class A Common Stock.
Therefore, the values set forth in these columns are based on periodic
appraisals of the shares of Class A Common Stock made for the Company by
independent appraisers.
(2) Following Mr. Marmol's resignation from the Company, options held by
him to purchase 80,000 shares of Class A Common Stock expired uninvested.
DIRECTOR COMPENSATION
In October 1997, the Company began compensating its non-employee
directors (other than Ross Perot, Jr.) $2,000 for each meeting of the Board of
Directors attended in person. Employee directors receive no cash compensation
for attending committee meetings. Directors are also reimbursed for their
reasonable out-of-pocket expenses associated with attending Board of Directors
and committee meetings. Prior to October 1997, directors received no cash
compensation for their service on the Board of Directors or any committee of
the Board of Directors.
Except for Mr. Hahn, prior to December 1996, upon their election to
the Board of Directors, non-employee directors (other than affiliates of Ross
Perot) were offered either (i) the opportunity to purchase 60,000 restricted
shares of Class A Common Stock or (ii) the grant of an option to acquire 60,000
shares of Class A Common Stock at a purchase or exercise price equal to the
fair value of such shares of Class A Common Stock at the
27
<PAGE> 30
date of purchase or grant, with such restricted shares of Class A Common Stock
or options to acquire Class Shares vesting ratably over a five-year period. In
April 1993, Mr. Hahn received 200,000 restricted shares of Class A Common Stock
at a price equal to the fair value of such shares at the date of purchase,
which shares vest ratably over a five- year period.
In December 1996, the Company adopted the 1996 Non-Employee Director
Stock Option/Restricted Stock Plan (the "Non-Employee Director Plan"). The
Non-Employee Director Plan provides for the issuance of nonqualified stock
options or restricted stock to non-employee directors of the Company and any of
its majority-owned subsidiaries. The Non- Employee Director Plan is
administered by the Board of Directors, which has the authority to interpret
the Non-Employee Director Plan. Directors eligible to receive awards under the
Non-Employee Director Plan are those (other than Ross Perot, Jr.) who are not
employees of the Company. Each eligible existing director will receive
comparable grants at completion of the original vesting schedule for such
director's current options or restricted shares. Grants are made upon election
to the Board of Directors for new directors and, for existing directors, at
completion of the original vesting schedule for the director's existing options
or restricted shares. The Non-Employee Director Plan provides for a grant to
each eligible director of (i) an option to purchase 20,000 shares of Class A
Common Stock or (ii) the right to purchase 20,000 restricted shares of Class A
Common Stock. (The number of shares of Class A Common Stock or options
issuable to each director were reduced from 30,000 to 20,000 on September 30,
1997.) The exercise price of options or the purchase price of restricted
shares of Class A Common Stock awarded under the Non-Employee Director Plan
must be at least equal to 100% of the fair value of a Class A Share on the date
of the award.
Dr. Heilmeier also served as a consultant of the Company under an
agreement that has been terminated effective as of August 31, 1998
Mr. Hahn purchased 20,000 shares of Restricted Stock under the
Non-Employee Director Plan in May 1998.
EMPLOYMENT CONTRACTS AND CHANGE IN CONTROL AGREEMENTS
Morton Meyerson. Mr. Meyerson's assignee, the Meyerson Family Limited
Partnership ("MFLP"), purchased 4,000,000 shares of Class A Common Stock from
the Company pursuant to the terms of a stock purchase agreement between Mr.
Meyerson and the Company (the "MFLP Agreement). Under the MFLP Agreement,
prior to June 1997, the Company had the right to repurchase a portion of the
shares of Class A Common Stock held by the MFLP if Mr. Meyerson voluntarily
resigned as Chairman unless the parties agreed to an arrangement for Mr.
Meyerson to remain with the Company. In June 1997, the Company's right to
repurchase shares of Class A Common Stock held by the MFLP terminated.
28
<PAGE> 31
In December 1995, Mr. Meyerson purchased 200,000 restricted shares of
Class A Common Stock pursuant to the terms of a Restricted Stock Agreement
between Mr. Meyerson and the Company (the "Meyerson Agreement"). Under the
Meyerson Agreement, the Company had the right to purchase unvested shares of
Class A Common Stock if Mr. Meyerson voluntarily resigned. There were 28,800
unvested shares of Class A Common Stock at Mr. Meyerson's resignation in January
1998. The Company exercised its right to repurchase for a price equal to Mr.
Meyerson's cost plus 8% interest per annum.
James A. Cannavino. Mr. Cannavino's employment agreement (the
"Cannavino Agreement") with the Company provided for a base salary of $500,000
per year, subject to adjustment from time to time by the Board of Directors.
Mr. Cannavino's base salary was increased by the Board to $600,000 for 1997.
On July 25, 1997, Mr. Cannavino resigned his positions with the Company. Under
the terms of the Cannavino Agreement, Mr. Cannavino will receive a severance
payment equal to two years of his highest base salary. The second year's
salary will be reduced by amounts earned by Mr. Cannavino from other sources
during that year.
The 2,000,000 restricted shares of Class A Common Stock acquired by
Mr. Cannavino pursuant to his stock option grant were scheduled to vest in
equal installments over ten years beginning on the first anniversary of the
commencement of Mr. Cannavino's employment by the Company. Mr. Cannavino's
restricted shares of Class A Common Stock are scheduled to continue to vest
through October 1998. The Company has repurchased 1,400,000 of the shares of
Class A Common Stock formerly owned by Mr. Cannavino that will not vest under
the terms of his stock option grant for a price equal to his after-tax cost of
purchase for those shares plus eight percent per annum. Mr. Cannavino
continues to hold 550,000 shares of Class A Common Stock. Mr. Cannavino has
transferred 50,000 shares of Class A Common Stock to his former spouse. If the
shares of Class A Common Stock are not publicly traded prior to the year 2010,
Mr. Cannavino has the right to require the Company to repurchase his shares of
Class A Common Stock at their then fair value.
James Champy. Mr. Champy's associate agreement provides for a base
salary of $500,000 per year, which is to be reviewed at least annually. Mr.
Champy's associate agreement provides for additional benefits, including: (i)
a bonus to be determined in accordance with the then current bonus plan
applicable to the most senior officers of the Company, (ii) payment of life
insurance premiums and (iii) some travel benefits. Mr. Champy's associate
agreement also provides that, in the event that Mr. Champy is terminated by the
Company other than for cause or substantial misconduct (as defined in his
associate agreement) or Mr. Champy is deemed to have been constructively
terminated (as defined in his associate agreement), Mr. Champy will receive a
severance payment equal to six months of Mr. Champy's then current base salary.
If Mr. Champy's employment is terminated by either party (other than for cause
by the Company) within one year of a change in control of the Company (as
defined in his associate agreement),
29
<PAGE> 32
Mr. Champy would be entitled to receive a severance payment equal to six months
of Mr. Champy's then current base salary.
The 500,000 restricted shares of Class A Common Stock acquired by Mr.
Champy pursuant to his restricted stock agreement vest in equal installments
over ten years beginning on the first anniversary of the commencement of Mr.
Champy's employment by the Company. Vesting is contingent on continued
employment; provided, however, that Mr. Champy's restricted shares of Class A
Common Stock will continue to vest for limited periods following the
termination of his employment if his employment is terminated by the Company
other than for cause or substantial misconduct (as defined in his associate
agreement) or Mr. Champy is deemed to have been constructively terminated (as
defined in his associate agreement). If Mr. Champy's employment is terminated
by the Company other than for cause or substantial misconduct effective on or
before August 12, 1998 or Mr. Champy is deemed to have been constructively
terminated on or before August 12, 1998, Mr. Champy's restricted shares of
Class A Common Stock will continue to vest to and including the vesting date in
2000, as scheduled. If Mr. Champy's employment is terminated by the Company
other than for cause or substantial misconduct or Mr. Champy is deemed to have
been constructively terminated after August 12, 1998, Mr. Champy's restricted
shares of Class A Common Stock will continue to vest as scheduled for two years
following termination of employment. If there is a change in control of the
Company (as defined in his associate agreement) and Mr. Champy's employment is
terminated within one year of such change in control by either party (other
than for cause by the Company), Mr. Champy's shares of Class A Common Stock
will continue to vest as follows: (i) if the change in control occurs on or
before August 12, 1998, all shares of Class A Common Stock scheduled to vest to
and including his vesting date in the year 2000 will vest on schedule or (ii)
if the change in control occurs after August 12, 1998, all shares of Class A
Common Stock scheduled to vest through the next two vesting dates will vest on
schedule. In the event that Mr. Champy is terminated for any reason by either
party, Mr. Champy has the right to require the Company to purchase his shares
for their original cost plus simple interest at the rate of eight percent per
annum.
Terry Ashwill. Pursuant to the letter agreement pursuant to which Mr.
Ashwill accepted employment with the Company, he is assured that at least
50,000 options and/or shares of the Company's stock will vest if his employment
is terminated (i) by Mr. Ashwill and he does not work for a competitor of the
Company for 12 months or, within six months of the date of termination, work
for a company with which he discussed employment prior to the termination of
his employment or (ii) by the Company without cause. This special vesting
provision is only applicable to the extent necessary to cause the value of
vested shares and options to be equal to $1,500,000 on the third anniversary of
his employment by the Company. In addition, the Company agreed to pay certain
expenses related to Mr. Ashwill's relocation to Dallas.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company licenses the right to use the names "Perot Systems" and
"Perot" (collectively, the "Perot Name") in its current and future businesses,
products, or services
30
<PAGE> 33
from the Perot Systems Family Corporation and Ross Perot. The license is a
non-exclusive, royalty-free, non- transferable license without geographic
restriction. The Company may also sublicense its rights to the Perot Name to
its affiliates. Under the License Agreement, as amended, either party may, in
their sole discretion, terminate the license at any time, with or without cause
and without penalty, by giving the other party written notice of such
termination. Upon termination by either party, the Company must discontinue
all use of the Perot Name within one year following receipt of the notice of
termination.
The Company made loans to each of Ron Nash, Joseph Boyd, Guillermo
Marmol (a former executive), and Susan Fairty (a former executive) in
connection with the purchase by such persons of Class A Common Stock from the
Company. Each of such loans accrues interest at the rate of 8% per annum and
is secured by the purchased stock. As of June 30, 1998, the total amount
outstanding for each such loan (including accrued interest) was $265,912,
$70,782, $0 and $0 for Messrs. Nash, Boyd, Marmol and Ms. Fairty, respectively.
The highest amounts outstanding under such loans since January 1, 1996, were as
follows: Mr. Nash, $267,377; Mr. Boyd, $75,600; Mr. Marmol, $133,795; and Ms.
Fairty, $570,380.
The Company made loans to Terry Ashwill in connection with his
purchase of shares of Class A Common Stock from the Company. Mr. Ashwill's
loans accrued interest at the rate of 8% per annum and were secured by the
purchased stock. On December 23, 1997, the aggregate amount outstanding for
Mr. Ashwill's loans ( including accrued interest) was $474,859, the highest
amount outstanding with respect to such loans since their inception. On
December 23, 1997, the Company repurchased the 120,000 shares of Class A Common
Stock held by Mr. Ashwill for $3.75 per share plus 8% per year for the time
that he held the stock (an aggregate of $481,364). The Company paid the
purchase price of the stock by offsetting the amounts due Mr. Ashwill against
the principal and accrued interest on his loans and paying the remaining $6,875
in cash (which is equal to amounts previously paid by Mr. Ashwill for interest
that had accrued on his loans). In connection with the repurchase, the Company
granted Mr. Ashwill options to purchase 120,000 shares of Class A Common Stock
with an exercise price of $6.75 per share.
On August 27, 1997, the Company loaned $250,000 to John King secured
by his shares of Class A Common Stock. Mr. King's loan accrues interest at 8%
per annum. The total amount outstanding for Mr. King's loan (including accrued
interest) on June 30, 1998 as $266,822, the highest amount outstanding since
the inception of the loan.
The Company has made loans to James Cannavino secured by his shares of
Class A Common Stock. As of June 30, 1998, Mr. Cannavino had the outstanding
principal amounts of $420,000 and $1,169,624 accruing interest at the rates of
8% per annum and 7.25% per annum, respectively. As of June 30, 1998, the
aggregate amount outstanding (including accrued interest) relating to these
loans was $1,774,857. The highest amount outstanding with respect to such
loans (including accrued interest) since its inception was $3,695,375. The
Company also loaned Mr. Cannavino $1,000,000 in connection with his
31
<PAGE> 34
purchase of a permanent residence in Dallas. This loan is secured by a
mortgage on such residence and bears interest at 7.25% per year. As of June
30, 1998, the total amount outstanding (including accrued interest) relating to
this loan was $1,035,952. Since its inception, the highest amount outstanding
for this loan was $1,052,041.
Messrs. Nash, Drobny, and Altabef have outstanding loans with
NationsBank of Texas, N.A. ("NationsBank") in the respective principal amounts
of $207,868, $350,000, and $126,400. Interest accrues on all such loans at the
rate of NationsBank prime plus 1% (currently 9.75%). The Company had agreed
that it would, at the request of NationsBank, purchase such loans from
NationsBank for an amount equal to principal plus accrued and unpaid interest
if the Company has not had an initial public offering that results in the
shares of Class A Common Stock being publicly traded before the maturity of the
notes. The maturity dates are February 26, 2000, July 1, 2000 and July 20,
2000 for amounts borrowed by Messrs. Drobny, Nash and Altabef, respectively.
Each loan is secured by a pledge of shares of Class A Common Stock held by the
borrower.
The Company paid $91,425 to the law firm of Locke Purnell Rain Harrell
for services rendered to the Company during 1997. The spouse of Mr. Altabef is
a shareholder of that firm.
For the years ended December 31, 1995, 1996 and 1997, and for the
seven month period ended July 31, 1998, the Company paid to Hughes & Luce,
L.L.P. $394,509, $635,665, $650,779, and $55,846, respectively, for services
rendered to the Company. Mr. Perot's son-in-law is a partner in that firm.
PERFORMANCE GRAPH
The Company is not publicly traded and there is no market for its
securities. Therefore, the performance of the Company's securities cannot be
compared to the performance of publicly-traded securities based on trading
prices.
32
<PAGE> 35
SHAREHOLDER PROPOSALS FOR 1998 PROXY STATEMENT
Shareholder proposals that are intended to be presented at the annual
meeting to be held in 1999 must be received by the Company no later than
December 7, 1998 in order to be included in the proxy statement and related
proxy materials.
YOUR CONSENT IS IMPORTANT, PLEASE MARK, SIGN AND DATE THE ENCLOSED
WHITE CONSENT CARD AND RETURN IT IN THE ENCLOSED ENVELOPE PROMPTLY.
BY ORDER OF THE BOARD OF
DIRECTORS
Peter Altabef
SECRETARY
33
<PAGE> 36
APPENDIX A
PEROT SYSTEMS CORPORATION
1998 Associate Stock Purchase Plan
Effective as of July 17, 1998
<PAGE> 37
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
1. PURPOSE OF THE PLAN
1.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Tax Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. PARTICIPATION IN THE PLAN
2.1 Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.2 Enrollment to Buy Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.3 Designation of Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.4 Contributions; Payroll Deductions; Account; No Interest . . . . . . . . . . . . 2
2.5 Changes in Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.6 Withdrawal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.7 Termination of Employment; Leave of Absence . . . . . . . . . . . . . . . . . . 3
2.8 Transferability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3. PURCHASE OF STOCK
3.1 Offering Periods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.2 Grant of Option; Exercise Price . . . . . . . . . . . . . . . . . . . . . . . . 4
3.3 Automatic Exercise of Option . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.4 Payment for Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.5 Delivery of Shares; Voting . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.6 Periodic Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.7 No Rights in Common Stock Prior to Exercise . . . . . . . . . . . . . . . . . . 6
4. OPERATION OF THE PLAN
4.1 Effective Date and Term of Plan . . . . . . . . . . . . . . . . . . . . . . . . 6
4.2 Shares Authorized for Sale and Issuance Under the Plan . . . . . . . . . . . . 6
4.3 Conditions Upon Issuance of Shares . . . . . . . . . . . . . . . . . . . . . . 6
4.4 Administration; Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.5 Amendment or Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.6 Approval of the Board of Directors and Shareholders . . . . . . . . . . . . . . 9
4.7 No Liability for Good Faith Determinations . . . . . . . . . . . . . . . . . . 9
5. MISCELLANEOUS LEGAL PROVISIONS
5.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.2 Adjustments Upon Changes in Capitalization . . . . . . . . . . . . . . . . . . 12
5.3 Notices; Waiver of Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.4 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.5 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.6 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.7 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.8 No Right to Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
</TABLE>
1998 Associate Stock Purchase Plan Page i Rev: 980717.0
<PAGE> 38
PEROT SYSTEMS CORPORATION
1998 Associate Stock Purchase Plan
1. PURPOSE OF THE PLAN
1.1 General. Perot Systems has adopted this Plan to provide Eligible
Associates with the opportunity and a convenient means to purchase Common Stock
as an incentive (i) to exert their maximum efforts for the success of the
Company, and (ii) to remain employed with the Company.
1.2 Tax Treatment. Perot Systems intends that options to purchase to
purchase stock granted under this Plan qualify as options granted under an
"employee stock purchase plan" as defined in Section 423(b) of the Tax Code,
and this Plan will be construed so as to extend and limit participation in a
manner consistent with the requirements of that Section.
1.3 Parallel Plans. If the economic and tax benefits extended under this
Plan to Eligible Associates who reside outside the United States are lower due
to local tax laws and regulations, with the exception of tax rates, than those
enjoyed by Eligible Associates who reside in the United States under the Tax
Code, the Stock Administrator may implement separate plans for those Eligible
Associates that are revised as necessary to conform to local tax laws and
regulations.
2. PARTICIPATION IN THE PLAN
2.1 Eligibility.
(a) General Rule. Each Eligible Associate who is employed by an
Employer on an Enrollment Date may participate in the Plan during the
relevant Offering Period, unless the Tax Code prohibits his or her
participation in that Offering Period because:
(i) The Eligible Associate (together with certain
affiliates of the Eligible Associate described in Section
424(d) of the Tax Code), would be deemed to own a number of
shares of stock and certain exercisable options to purchase
stock that together represent 5% or more of the total combined
voting power or value of all classes of stock of Perot Systems
or any Participating Affiliate (computed in accordance with
Section 423(b)(3) of the Tax Code; or
(ii) The Eligible Associate would have the right to
purchase stock under all the employee stock purchase plans
described in Section 423 of the Tax Code of the Company and
its Subsidiaries more than $25,000 of stock (computed based on
the fair market value on the Enrollment Date in accordance
with Section 423(b)(3) of the Tax Code) during the calendar
year of that Offering Period.
2.2 Enrollment to Buy Stock. Each Eligible Associate who:
(a) completes an Enrollment Agreement in the form, format, and as
otherwise required by the Stock Administrator, and
(b) delivers that Enrollment Agreement to the Stock Administrator
at least 10 business days before the Enrollment Date for an Offering
Period,
may purchase Common Stock on the Exercise Date for that Offering
Period, subject to the other provisions of this Plan.
2.3 Designation of Beneficiary. Each Participant may designate a
beneficiary by filing a written beneficiary designation form with the Stock
Administrator. Such beneficiary shall receive any refunds under Section 2.7 of
amounts not used to purchase Shares prior to Participant's death. Shares
issued prior to the Participant's death shall
1998 Associate Stock Purchase Plan Page 3 of 12 Rev: 980717.0
<PAGE> 39
be delivered to the appropriate representative of Participant's estate. If no
beneficiary was designated, any cash refunds shall be made to the appropriate
representative of Participant's estate.
2.4 Contributions; Payroll Deductions; Account; No Interest.
(a) The Company will withhold from each Participant's paycheck the
percentage (not to exceed 10% or, in the case of Incentive
Compensation, a percentage not to exceed 50% selected by the Committee
from time to time) of Eligible Compensation specified in his or her
then-current Enrollment Agreement commencing on the first pay date
after the next Enrollment Date of an Offering Period and continuing
throughout that Offering Period and each future Offering Period until
he or she ceases to be a Participant.
(b) Perot Systems will hold and use the amounts withheld from each
Participant's paycheck until the earlier of the date those amounts are
(i) used to purchase Common Stock, or (ii) refunded to the
Participant. Perot Systems will not be required to segregate any of
these funds from its general corporate funds, and will not pay
interest on any of these funds.
(c) If the funds in the payroll deduction account of a Participant
are in a currency other than United States dollars on any Exercise
Date, for purposes of determining the maximum whole number of shares
that may be purchased under this Plan, such funds will be deemed to
have been converted into United States dollars based upon the foreign
exchange selling rates, as reported by the Dow Jones News/Retrieval
Service of Dow Jones and Company, Inc., on such date, or if not so
reported on such date, as reported on the next preceding date on
which such rates are reported.
2.5 Changes in Contributions. During an Offering Period, a Participant
may not change the percentage of Eligible Compensation to be withheld from his
or her paycheck, except by withdrawing from the Plan.
2.6 Withdrawal.
(a) A Participant may stop participating in the current Offering
Period and each future Offering Period by delivering a Withdrawal
Agreement to the Stock Administrator at least 10 business days before
the Exercise Date for then-current Offering Period. Delivery of a
Withdrawal Agreement will:
(i) permanently and irrevocably terminate the Withdrawing
Associate's participation in the then- current Offering
Period, and
(ii) suspend the Withdrawing Associate's participation in
any future Offering Periods until he or she delivers an
Enrollment Agreement to the Stock Administrator.
An election to stop participating in one Offering Period will not
prevent an Eligible Associate from participating in any future
Offering Period or in any other Plan adopted by Perot Systems,
provided that the Eligible Associate will not participate in any
future Offering Period until he or she submits a new Enrollment
Agreement.
(b) As soon as practical after receiving a Withdrawal Agreement,
Perot Systems will:
(i) stop withholding the applicable percentage of
Eligible Compensation from the Withdrawing Associate's
paychecks, and
(ii) refund to the Withdrawing Associate all amounts
previously withheld from his or her paychecks during the
then-current Offering Period, plus any other amounts carried
over from a previous Offering Period as provided in
Section 3.3.
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2.7 Termination of Employment; Leave of Absence.
(a) If a Participant's employment with the Company terminates on
or before an Exercise Date, he or she will be deemed to have elected
to withdraw from the applicable Offering Period effective as of the
date his or her employment terminated.
(b) As soon as practical after a Participant's termination of
employment, Perot Systems will:
(i) refund all amounts withheld from his or her paycheck
under this Plan that have not been used to purchase Common
Stock from Perot Systems or otherwise refunded; and
(ii) distribute, or direct the Plan Custodian to
distribute, any Shares held by the Employer or the Plan
Custodian on the Participant's behalf to the Participant or
his or her designee.
(c) If a Participant begins an approved leave of absence from his
or her Employer on or before an Exercise Date, he or she will remain
in the Plan for the applicable Offering Period, but will be deemed to
have elected to stop participating in the Plan for each future
Offering Period until he or she returns to work and submits a new
Enrollment Form.
2.8 Transferability. Neither any monies credited to Participant's
Participant Account nor any rights with regard to the exercise of an option to
purchase Common Stock under the Plan may be assigned, transferred, pledged, or
otherwise disposed of in any way (other than by will or the laws of descent and
distribution) by the Participant. Any such attempt at assignment, transfer,
pledge, or other disposition will be without effect, except that Perot Systems
will treat such act as an election to withdraw funds in accordance with Section
2.6.
3. PURCHASE OF STOCK
3.1 Offering Periods. Except for the first Offering Period, each Offering
Period will start on the first day of the second month of a calendar quarter
and end on the last day of the first month of the next calendar quarter. The
first Offering Period will start on the date public trading of the Stock
commences or such other date specified by the Board and end on the last day of
the first month of the next calendar quarter occurring at least 60 days after
the Offering Period has started.
3.2 Grant of Option; Exercise Price.
(a) On each Enrollment Date, Perot Systems will grant each
Participant an option to purchase on the next Exercise Date a number
of whole Shares equal to (i) his or her then-current Withholding
Percentage, multiplied by his or her Eligible Compensation for the
Offering Period, divided by the Exercise Price for the next Exercise
Date, minus (ii) the number of whole Shares, if any, necessary to
prevent (A) that Participant from exceeding the limits referred to in
Section 2.1(a), or (B) the Plan from issuing more shares than are
authorized as provided in Section 4.2.
(b) The Exercise Price for each Offering Period will be 85% of the
fair market value of one share of the Common Stock on the Exercise
Date for that Offering Period.
3.3 Automatic Exercise of Option. On each Exercise Date, each
Participant's option to purchase Shares will be exercised automatically to
purchase:
(a) the maximum number of whole Shares that may be bought with the
funds withheld from his or her paycheck during the applicable Offering
Period, minus
(b) any number of Shares required to comply with any limitations
described in Section 2.1 of this Plan on the maximum number of Shares
that may be purchased by that Participant.
If the funds withheld from the Participant's paycheck during the
applicable Offering Period exceed the funds necessary to purchase the
number of whole shares described above by less than the Fair Market
Value of a whole Share, the excess amount will be retained by Perot
Systems or the Employer for the
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benefit of the Participant as his or her additional contribution for
the next Offering Period. If the excess amount represents more than
the Fair Market Value of a fractional Share, such excess funds shall
be refunded to the Participant as soon as feasible after the Exercise
Date.
3.4 Payment for Stock. Immediately upon each exercise of each
Participant's option to purchase shares, the amount held by Perot Systems for
the benefit of that Participant will be reduced by the Fair Market Value of the
number of whole Shares of Common Stock purchased by that Participant in that
exercise.
3.5 Delivery of Shares; Voting.
(a) Subject to the restrictions of Section 3.5(b), as soon as
practical after each Exercise Date, a stock certificate will be issued
to each Participant or to the Plan Custodian for the benefit of each
Participant for the Shares purchased on that Exercise Date. Such
certificate may be issued in nominee name.
(b) All Shares purchased under this Plan will be held by Perot
Systems or the Plan Custodian until the earlier of (i) a request for
delivery of the shares by the associate, or (ii) the termination of
the Eligible Associate's employment by the Employer.
(i) As soon as practical after termination of an Eligible
Associate's employment by an Employer, certificates
representing shares purchased under the Plan will be issued in
the name of that Eligible Associate or, if timely requested by
that Associate in a form approved by the Plan Custodian, his
or her designee.
(ii) All Shares purchased under this Plan shall be
nontransferable and nonassignable for six months after the
date such Shares are issued to the Eligible Associate. Any
attempt to sell, gift, pledge or otherwise transfer any Shares
prior to the expiration of six months from issuance shall be
ineffective and void.
Perot Systems will pay all issue or initial transfer taxes of the Company with
respect to the issuance or initial transfer of shares, as well as all fees and
expenses necessarily incurred by Perot Systems in connection with such issuance
or initial transfer.
3.6 Periodic Reports. As soon as practical after each Exercise Date, a
statement will be sent to each person who has been a Participant under this
Plan, which statement will include (i) the total amount, in United States
dollars or local currency, of all payroll deductions made during the applicable
Offering Period or otherwise held under this Plan for the benefit of that
person by Perot Systems, and any applicable currency conversion rate, (ii) the
number of Shares purchased by that person on each applicable Exercise Date,
(iii) the per share and aggregate purchase price per Share for those Shares,
(iv) the remaining cash balance, if any held by any Employer for the benefit of
that person, and (v) such other information as the Stock Administrator or Plan
Custodian deems appropriate.
3.7 No Rights in Stock Prior to Exercise. Neither a Participant nor his
or her beneficiaries will have any interest or voting right in Common Stock
covered by an option granted this Plan until such option has been exercised and
the Shares purchased.
4. OPERATION OF THE PLAN
4.1 Effective Date and Term of Plan. This Plan will become effective upon
its adoption by the Board, provided that no Offering Period may commence until
the later of (i) the day on which the Common Stock is listed for trading
(including any listing on a when-issued basis) on a national securities
exchange or the national market system of the National Association of
Securities Dealers Automated Quotation system, or (ii) the day on which a
Registration Statement under the Securities Act of 1933, as amended, covering
the shares to be issued under the Plan becomes effective. This Plan will
remain effective for a term of ten years, unless sooner terminated under
Section 4.5.
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4.2 Shares Authorized for Sale and Issuance Under the Plan.
(a) The maximum number of Shares that may be sold and issued under
this Plan will be 10,000,000 Shares, which number will be adjusted as
provided in Section 5.2 below. If any option to purchase Shares
granted under this Plan is not exercised for any reason, the Shares
subject to that option will remain available to be sold and issued
under this Plan.
(b) If, for any reason, the number of Shares available for sale
and issuance under this Plan under Section 4.2(a) is less than the
number of Shares to be sold and issued under Section 3.3 on an
Exercise Date, Perot Systems will allocate the Shares available for
sale and issuance pro rata among the Participants in as uniform a
manner as it determines to be equitable. In such event, the Stock
Administrator or Plan Custodian will notify each Participant of the
reduction in the number of Shares and the reason for such reduction.
(c) Shares sold and issued under this Plan may, in the sole and
absolute discretion of the Board, be either authorized and unissued
Shares or treasury Shares that are bought or otherwise acquired in
public or private transactions.
4.3 Conditions Upon Issuance of Shares.
(a) Compliance With Laws. Perot Systems will not be required to
grant an option or to sell or issue any Shares under this Plan to any
Associate unless that option and the sale, issuance and delivery of
Shares upon exercise of that option complies, in the opinion of Perot
Systems' counsel, with all laws and regulations of each applicable
country and other jurisdiction, including, but not limited to, the
Securities Act of 1933 and the rules and regulations of the United
States Securities Exchange Commission, and all rules and regulations
of the New York Stock Exchange or other applicable stock exchange upon
which the Common Stock is listed.
(b) Investment Intent. As a condition to the exercise of an
option, Perot Systems may require the person exercising such option to
represent and warrant at the time of any such exercise that the Shares
are being purchased only for investment and without any present
intention to sell or distribute such Shares if, in the opinion of
counsel for the Company, such a representation is required by any of
the aforementioned applicable provisions of law.
4.4 Administration; Committee.
(a) Board of Directors. This Plan will be administered by the
Board. Unless otherwise provided in this Plan, the Board has the
power:
(i) To determine when and how rights to purchase Shares
will be granted and the provisions of each offering of such
rights (which need not be identical).
(ii) To designate Participating Affiliates.
(iii) To construe and interpret the Plan and rights granted
under it, and to establish, amend and revoke rules and
regulations for its administration. The Board, in the
exercise of this power, may correct any defect, omission or
inconsistency in the Plan, in a manner and to the extent it
will deem necessary or expedient to make the Plan fully
effective.
(iv) To amend or terminate this Plan as provided in
Section 4.5.
(v) To delegate administration of this Plan to a
Committee of two or more members of the Board.
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(vii) Generally, to exercise such powers and to perform
such acts as the Board deems necessary or expedient to promote
the best interests of Perot Systems.
(b) Committee. If administration of this Plan is delegated to a
Committee, it will have all the powers of the Board with respect to
this Plan, subject to any limitations on such powers stated in the
Board's resolutions delegating administration to the Committee.
Whether or not the Board delegates administration of this Plan to a
Committee, the Board retains the final power to determine all
questions of policy, procedure, and expediency that arise in the
administration of this Plan.
(c) Participation by Members of the Board or Committee. Members
of the Board who are Eligible Associates are permitted to participate
in this Plan; provided that (A) no member of the Board may vote on any
matter affecting the administration of, or the grant of any option
pursuant to, this Plan, and (B) if a Committee is appointed to
administrate this Plan, no member of the Committee will be eligible to
participate in this Plan.
(d) Stock Administrator. Perot Systems' day to day obligations
under this Plan will be administered by a Stock Administrator
appointed by the Board, subject to the Board's final power to
determine all questions of policy, procedure, and expediency that
arise in the administration of this Plan. The Stock Administrator
will have all of the following powers of the Board:
(i) To administer, or select and direct a Plan Custodian
to administer, this Plan in accordance with its terms;
(ii) To adopt rules of procedure and regulations necessary
for the administration of this Plan, provided they are
consistent with the terms of this Plan;
(iii) To determine all questions with regard to rights of
Eligible Associates and Participants under the Plan,
including, but not limited to, the eligibility of an Eligible
Associate to participate in the Plan;
(iv) To enforce the terms, rules and regulations of this
Plan;
(v) To direct the distribution of the Shares purchased
hereunder;
(vi) To furnish the Company with information which it
requires for tax or other purposes;
(vii) To engage the service of counsel (who may, if
appropriate, be counsel for the Company) and a Plan Custodian
or other agents he or she deems advisable to assist it with
the performance of its duties;
(viii) To prescribe procedures to be followed by
Participants in electing to participate in this Plan;
(ix) To receive from each Company and Associate any
information necessary to administer this Plan;
(x) To maintain, or cause Perot Systems, the Employer or
the Plan Custodian to maintain, an account in the name of each
Participant to reflect his or her participation in this Plan;
(xi) To interpret and construe the Plan; and
(xii) To make any changes or modifications necessary to
administer and implement the provisions of this Plan in any
foreign country to the fullest extent possible, including but
not limited to creation of parallel plans as contemplated by
Section 1.3.
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4.5 Amendment or Termination.
(a) The Board may amend or terminate this Plan without notice,
provided that the Board will not, without the approval of the
stockholders of Perot Systems, (i) increase the maximum number of
Shares that may be sold or issued under this Plan (except pursuant to
Section 5.1) or (ii) amend the requirements as to the class of
Associates eligible to purchase Shares under this Plan, or, if a
Committee is appointed to administrate this Plan, permit the members
of the Committee to participate in this Plan.
(i) Except as specifically provided in this Plan, as
required to comply with Code section 423, or as required to
obtain a favorable ruling from the Internal Revenue Service,
no amendment may make any change in any option granted under
this Plan that adversely affects the rights of any Participant
without the consent of that Participant.
(b) This Plan will automatically terminate on the Exercise Date
that Participants become entitled to purchase a number of Shares
greater than the number available for purchase under Section 4.2. In
the event of an automatic termination, reserved Shares remaining as of
such Exercise Date will be sold to Participants on a pro rata basis,
as described in Section 4.2(b).
4.6 Approval of the Shareholders. Commencement of the Plan will be
subject to approval by the shareholders of the Company within 12 months after
the date the Plan is adopted. Notwithstanding any provision to the contrary,
failure to obtain such shareholder approval will void the Plan, any options
granted under the Plan, any Share purchases pursuant to the Plan, and all
rights of all Participants.
4.7 No Liability for Good Faith Determinations. Neither the members of
the Board, the Stock Administrator or the Plan Custodian (nor their delegates)
will be liable for any act, omission, or determination taken or made in good
faith with respect to the Plan or any right to purchase Shares granted under
it, and members of the Board and the Stock Administrator (and their delegates)
will be entitled to indemnification and reimbursement by Perot Systems in
respect of any claim, loss, damage, or expense (including attorneys' fees, the
costs of settling any suit, provided such settlement is approved by independent
legal counsel selected by Perot Systems, and amounts paid in satisfaction of a
judgment, except a judgment based on a finding of bad faith) arising therefrom
to the full extent permitted by law and under any directors and officers
liability or similar insurance coverage that may from time to time be in
effect.
5. MISCELLANEOUS LEGAL PROVISIONS
5.1 Definitions.
(1) "Board" means the Board of Directors of Perot Systems or a
duly appointed committee of the Board.
(2) "Common Stock" means the Class A Common Stock, $.01 par value
per share, of Perot Systems.
(3) "Company" means Perot Systems, its subsidiaries and
affiliates.
(4) "Eligible Associate" means a natural person who on an
Enrollment Date is (i) employed as an employee of an Employer for more
than 20 hours per week on a regular basis by an Employer for more than
five months per calendar year, and (ii) not engaged under an
independent contractor or similar agreement, whether or not such
person is determined to be an independent contractor.
(5) "Eligible Compensation" means the total compensation paid to a
Participant by any Employer during an Offering Period, including
wages, salary, overtime, holiday, vacation, sick pay, shift premiums,
bonuses and salary continuations, but shall not include relocation
assistance payments, geographical hardship pay, noncash prizes and
awards, automobile allowances, severance type payments and
nonqualified deferred executive compensation.
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Eligible Compensation includes the amount of a Participant's elective
contributions that are made by the Employer on behalf of that
Participant that are not includable in gross income under Tax Code
Sections 125, 402(e)(3), 402(h), and 401(k).
(6) "Employer" means Perot Systems or the Participating Affiliate
by which an Eligible Associate is employed.
(7) "Enrollment Agreement" means the agreement submitted to the
Stock Administrator pursuant to Section 2.2.
(8) "Enrollment Date" means the first day of the applicable
Offering Period.
(9) "Exercise Date" means the last day of the applicable Offering
Period.
(10) "Exercise Price" means the price defined in Section 3.2(b).
(11) "Fair Market Value" of one share of Common Stock on a
particular date will be (i) if the Common Stock is listed or admitted
to trading on the New York Stock Exchange, then (a) if sales of Common
Stock occurred on that date, the mean of the high and low sale prices
for the Stock on the New York Stock Exchange Composite Tape for that
date (1) as reported by the Dow Jones News/Retrieval Service of Dow
Jones and Company, Inc., or (2) if not so reported, in a newspaper of
national circulation selected by the Board , or (b) if no sales of
Common Stock occurred on that date, the mean of the closing bid and
asked prices (regular way) on the New York Stock Exchange Composite
Tape on that date, or (ii) in all other cases, determined in a
reasonable way selected by the Board for that purpose.
(12) "Incentive Compensation" means bonuses and other incentive
compensation specified by the Committee that forms part of Eligible
Compensation. Incentive Compensation shall not include wages, salary,
overtime, holiday, vacation, sick pay, shift premiums and salary
continuations.
(13) "Offering Period" means each period commencing on the first
day of the second month following the end of a calendar quarter
(except as provided in Section 3.1), and ending on the last day of the
first month following the end of the calendar quarter, during which a
Participant has an option to purchase Common Stock.
(14) "Participant" means an Eligible Associate who has elected to
participate in an Offering Period and continues to participate in the
Offering Period through the Exercise Date.
(15) "Participant Account" means any account or accounting entry
maintained by Perot Systems, the Employer or the Plan Custodian to
record the amount that a Participant has contributed to the Plan
during an Offering Period and the Common Stock purchased under this
Plan.
(16) "Participating Affiliate" means (1) each corporation, domestic
or foreign, of which Perot Systems, directly or indirectly, holds, on
the applicable Enrollment Date, not less than 50% of the total
combined voting power of all classes of stock, whether or not such
corporation now exists or is hereafter organized or acquired by Perot
Systems or any of its subsidiaries which are approved by the Board to
participate in this Plan, and (2) each other corporation, joint
venture, general or limited partnership, limited liability company or
other business entity, domestic or foreign; both (1) and (2) as
approved by the Board to participate in this Plan, provided that the
Board will not approve any business entity for participation in this
Plan (although such participation may be approved in a parallel plan
as contemplated in Section 1.3) if its participation would disqualify
this Plan under the Tax Code.
(17) "Perot Systems" means Perot Systems Corporation, a Delaware
corporation, or any successor in interest that adopts this Plan.
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(18) "Plan" means this Perot Systems Corporation 1998 Associate
Stock Purchase Plan, as amended from time to time.
(19) "Plan Custodian" means the third party administrator appointed
by Perot Systems to administer this Plan in accordance with its terms.
(20) "Share" means one share of Common Stock.
(21) "Stock Administrator" means the person appointed by the Board
to act on behalf of the Board and administer the day to day operations
of this Plan in accordance with its terms.
(22) "Tax Code" means the Internal Revenue Code of 1986, as
amended.
(23) "Withdrawal Agreement" means the agreement submitted to the
Stock Administrator pursuant to Section 2.2.
(24) "Withdrawing Associate" means a Participant who withdraws from
this Plan as provided in Section 2.6(a).
(25) "Withholding Percentage means the percentage of Eligible
Compensation that a Participant elects, from time to time, to have
withheld as his or her contribution during an Offering Period.
5.2 Adjustments Upon Changes in Capitalization.
(a) If any change is made in the Common Stock, or subject to any
rights granted under the Plan (through merger, consolidation,
reorganization, recapitalization, stock dividend, dividend in property
other than cash, stock split, liquidating dividend, combination of
shares, exchange of shares, change in corporate structure or other
transaction not involving the receipt of consideration by the
Company), the Plan and outstanding rights will be appropriately
adjusted in the class(es) and maximum number of Shares subject to the
Plan and the class(es) and number of Shares and price per Share of
Common Stock subject to outstanding rights. Such adjustments will be
made by the Board, the determination of which will be final, binding
and conclusive. The conversion of any convertible securities of the
Company will not be treated as a "transaction not involving the
receipt of consideration by the Company."
(b) If (1) a dissolution or liquidation of Perot Systems or a sale
of all or substantially all of Perot Systems' assets; (2) a merger or
consolidation in which Perot Systems is not the surviving corporation;
(3) a reverse merger in which Perot Systems is the surviving
corporation but the shares of Common Stock outstanding immediately
preceding the merger are converted by virtue of the merger into other
property, whether in the form of securities, cash or otherwise; or (4)
any other capital reorganization in which more than 50% of the shares
of the Company entitled to vote are exchanged, is proposed to be
consummated, then, the Exercise Date for the applicable Offering
Period will be accelerated to the date such transaction is
consummated, and the payroll deductions of the Participants made
through the Exercise Date will be used to purchase Common Stock
immediately prior to such transaction and all further rights of the
Participants will terminate, unless otherwise provided by the Board in
its sole discretion.
5.3 Notices; Waiver of Notice.
(a) To a Participant. All notices or other communications
relating to the Plan given to a Participant or former Participant by
the Board, Perot Systems, or any Employer will be deemed delivered on
the day the notice or other communication is (1) personally delivered
to that person, (2) electronically transmitted to a person who on the
date of that transmission either is an Associate or has consented to
receiving notices by electronic transmission to the last known
electronic transmission address of that person, or (3) placed in the
official government mail of the country of the sender in an envelope
addressed to the last known address of that person, whichever is
earlier.
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(b) By a Participant. All notices or other communications
relating to the Plan given to the Board, Perot Systems, or an Employer
will be deemed delivered on the day the notice or other communication
is (1) received in tangible written form by the Stock Administrator at
Perot Systems' Corporate Headquarters address, or (2) electronically
transmitted by an Associate to the Stock Administrator by means of
Perot Systems' internal corporate e-mail or intranet system, provided
that such notice is in the form specified by Perot Systems.
(c) CONSENT TO ELECTRONIC DELIVERY OF NOTICES, PLAN DOCUMENTS AND
PROSPECTUSES. BY REQUESTING TO PARTICIPATE IN THE PLAN, AN ELIGIBLE
ASSOCIATE WILL BE DEEMED TO CONSENT TO RECEIVING COPIES OF ALL NOTICES
AND OTHER COMMUNICATIONS RELATING TO THE PLAN BY ELECTRONIC
TRANSMISSION, INCLUDING BUT NOT LIMITED TO THE PROSPECTUS RELATING TO
THE PLAN, ALL ENROLLMENT AND OTHER PARTICIPATION MATERIALS, AND ALL
OTHER DOCUMENTS REQUIRED TO BE DELIVERED IN CONNECTION WITH THE PLAN.
UPON REQUEST, PEROT SYSTEMS WILL PROVIDE ANY SUCH DOCUMENTS TO ANY
ELIGIBLE ASSOCIATE IN TANGIBLE WRITTEN FORM.
(d) Waiver of Notice. Any person entitled to notice under the
Plan may waive the notice.
5.4 Severability. If any provision of this Plan is held to be illegal or
invalid for any reason, the illegality or invalidity will not affect the other
provisions of this Plan, but will be fully severable and the Plan will be
construed and enforced as if the illegal or invalid provision had never been
included in this Plan.
5.5 Successors and Assigns. The Plan is binding on all Participants and
their respective heirs, legatees, and legal representatives, including but not
limited to their estate and the executors, any receiver, trustee in bankruptcy
or representative of creditors of such person, and upon the Employer, its
successors and assigns.
5.6 Headings. The titles and headings of the paragraphs are included for
convenience of reference only and are not to be considered in construction of
the provisions hereof.
5.7 Governing Law. This Plan and rights to purchase Shares that may be
granted under this Plan will be governed by and construed in accordance with
the laws of the State of Texas, without giving effect to any conflicts-of-law
rules or principles that might require the application of the laws of another
jurisdiction, except to the extent this Plan or those rights are governed by
the Delaware General Corporation Law, or the Federal law of the United States.
5.8 No Right to Employment. Nothing in this Plan, any amendment to this
Plan, or the creation of any Participant Account, the execution or submission
of any Enrollment Agreement or Withdrawal Agreement, or the issuance of any
Shares of Common Stock, will give any Eligible Associate any right (i) to
continue employment with any Employer, (ii) any legal or equitable right
against Perot Systems or any Employer, or any officer, director, or Associate
of Perot Systems or its Participating Affiliates, in connection with his or her
employment by the Company, or (iii) interfere in any way with the Employer's
right to terminate or otherwise modify his or her employment at any time,
except as expressly provided by the Plan or by applicable law.
This 1998 Associate Stock Purchase Plan has been adopted by the Board of
Directors of Perot Systems on July 17, 1998.
PEROT SYSTEMS CORPORATION
By:________________________________________________
Date:______________________________________________
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APPENDIX B
SECOND AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
PEROT SYSTEMS CORPORATION
Perot Systems Corporation, a corporation organized and existing under
the laws of the State of Delaware, hereby certifies as follows:
1. The name of the Corporation is Perot Systems Corporation.
Perot Systems Corporation was originally incorporated under the same name, and
the Certificate of Incorporation of the Corporation was filed with the
Secretary of State of the State of Delaware on December 19, 1995.
2. Pursuant to Sections 242 and 245 of the General Corporation
Law of the State of Delaware, this Restated Certificate of Incorporation
restates and integrates and further amends the provisions of the Certificate of
Incorporation of this Corporation.
3. The text of the Restated Certificate of Incorporation as
heretofore amended or supplemented is hereby restated and further amended to
read in its entirety as follows:
ARTICLE I
The name of the Corporation is Perot Systems Corporation.
ARTICLE II
The name of the Corporation's registered agent and the address of its
registered office in the State of Delaware is The Corporation Trust Company,
1209 Orange Street, Wilmington, New Castle County, Delaware 19805.
ARTICLE III
The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware.
ARTICLE IV
A. The aggregate number of shares of capital stock which the
Corporation shall have authority to issue is 229,000,000 shares, consisting of:
(i) 200,000,000 shares of Class A Common Stock, par value
$0.01 per share;
(ii) 24,000,000 shares of Class B Common Stock, par value
$0.01 per share; and
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<PAGE> 49
(iii) 5,000,000 shares of Preferred Stock, par value $0.01
per share.
B. Class B Common Stock.
(i) Shares of Class B Common Stock will have no voting rights,
except to the extent that the Delaware General Corporation Law requires a vote
of the Class B Common Stock with respect to an amendment to the Certificate of
Incorporation that would increase or decrease the par value of the Class B
Common Stock or alter or change the powers, preferences or special rights of
shares of Class B Common Stock so as to affect them materially and adversely.
No authorization or issuance of any capital stock of the Corporation will be
considered to alter or change the powers, preferences or special rights of
shares of Class B Common Stock. The number of authorized shares of Class B
Common Stock may be increased or decreased (but not below the number of shares
of Class B Common Stock then outstanding or reserved for issuance pursuant to
outstanding options, warrants or similar rights) by the affirmative vote of the
holders of a majority of the voting stock of the Corporation, voting as a
single class, without any vote by holders of the Class B Common Stock.
(ii) (a) Each share of Class B Common Stock shall be
convertible, on a share for share basis, at the option of the holder thereof,
into a fully paid and nonassessable share of Class A Common Stock upon
satisfaction of the terms of Section 1(b) below for the purpose of the
transfer, sale or other disposition thereof (a "sale") to a third party
purchaser that is not an "affiliate" (as defined in Rule 144(a)(1) under the
Securities Act of 1933, as amended) of the holder thereof (a "Third Party") if
such sale is made (a) in a widely dispersed public offering of the Class A
Common Stock; (b) to a Third Party that, prior to such sale, controls more than
50% of the then outstanding voting securities (as defined in the Bank Holding
Company Act of 1956, as amended, or in Regulation Y of the Board of Governors
of the Federal Reserve System) of the Corporation; (c) to a Third Party that,
after such sale, is the beneficial owner (directly or indirectly) of not more
than two percent (2%) of the outstanding voting stock of the Corporation having
power to elect directors; (d) in a transaction that complies with Rule 144 (or
any successor thereto) under the Securities Act of 1933, as amended; or (e) by
Swiss Bank Corporation or its affiliates in a transaction approved in advance
by the Board of Governors of the Federal Reserve System as being in compliance
with the requirements of the Bank Holding Company Act of 1956, as amended, and
any rules and regulations or interpretations promulgated by the Board of
Governors of the Federal Reserve System pursuant thereto (each, a "Qualifying
Sale").
(b) The conversion of Class B Common Stock into Class A
Common Stock for the purpose of making a Qualifying Sale will be effective only
after receipt by the Corporation of a certificate, executed by the holder of
the Class B Common Stock that is the subject of the sale, stating that the
proposed sale is a Qualifying Sale.
(c) As promptly as practicable after receipt by the
Corporation of the certificate referred to in Section B (ii)(b) and delivery to
the Corporation of the certificate or certificates evidencing any shares so
converted, duly endorsed for transfer, the Corporation shall issue and deliver
to the Third Party (or, if necessary for purposes of effecting the Qualifying
Sale, to the holder of the shares to be converted) a certificate or
certificates for the number of shares of
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Class A Common Stock that are the subject of the Qualifying Sale. If only a
portion of the shares of Class B Common Stock represented by a certificate are
transferred in a Qualifying Sale, the Corporation shall issue and deliver to
the holder of such Class B Common Stock a new certificate representing the
Class B Common Stock retained by such holder.
(d) The Corporation shall at all times reserve and keep
available, out of its authorized but unissued Class A Common Stock, solely for
the purpose of effecting the conversion of the Class B Common Stock, the number
of shares of Class A Common Stock deliverable upon the conversion of all Class
B Common Stock from time to time outstanding. The Corporation shall from time
to time (subject to obtaining necessary director and stockholder action), in
accordance with the laws of the State of Delaware, increase the authorized
amount of its Class A Common Stock if at any time the authorized number of
shares of its Class A Common Stock remaining unissued shall not be sufficient
to permit the conversion of all of the shares of Class B Common Stock at the
time outstanding.
C. Required Vote. Any amendment to the Certificate of
Incorporation, merger or consolidation, sale, lease or exchange of all or
substantially all of the Corporation's property and assets or voluntary
dissolution of the Corporation that (in any such case) requires approval by the
Corporation's stockholders under Delaware law must be approved by the
affirmative vote of the holders of at least 66-2/3% of the outstanding stock of
the Corporation entitled to vote thereon, and at least 66-2/3% of the
outstanding stock of each class entitled to vote thereon as a class.
D. Preferred Stock. The Board of Directors is expressly
authorized at any time, and from time to time, to provide for the issuance of
the Preferred Stock in one or more series, each with such voting powers, full
or limited, or without voting powers, and with such designations, preference
and relative participating, conversion, optional or other rights, and such
qualifications, limitation or restrictions thereof, as shall be stated in the
resolution or resolutions providing for the issue thereof adopted by the Board
of Directors, and as are not stated in this Certificate of Incorporation, or
any amendments thereto, including (but without limiting the generality of the
foregoing) the following:
(i) The distinctive designation and number of shares comprising
such series, which number may (except where otherwise provided by the Board of
Directors in creating such series) be increased or decreased (but not below the
number of shares then outstanding) from time to time by action of the Board of
Directors.
(ii) The dividend rate or rates on the shares of such series and
the relation which such dividends shall bear to the dividends payable on any
other class of capital stock or on any other series of preferred stock, the
terms and conditions upon which and the period in respect of which dividends
shall be payable, whether and upon what conditions such dividends shall be
cumulative and, if cumulative, the date or dates from which dividends shall
accumulate.
(iii) Whether the shares of such series shall be redeemable, and, if
redeemable, whether redeemable for cash, property or rights, including
securities of any other corporation, and whether redeemable at the option of
the holder or the Corporation or upon the happening of a specified
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event, the limitations and restrictions with respect to such redemption, the
time or times when, the price or prices or rate or rates at which, the
adjustments with which and the manner in which such shares shall be redeemable,
including the manner of selecting shares of such series for redemption if less
than all shares are to be redeemed.
(iv) The rights to which the holders of shares of such series shall
be entitled, and the preferences, if any, over any other series (or for any
other series over such series), upon the voluntary or involuntary liquidation,
dissolution, which rights may vary depending on whether such liquidation,
dissolution, distribution or winding up is voluntary or involuntary, and, if
voluntary, may vary at different dates.
(v) Whether the shares of such series shall be subject to the
operation of a purchase, retirement or sinking fund and, if so, whether and
upon what conditions such fund shall be cumulative or noncumulative, the extent
to which and the manner in which such fund shall be applied to the purchase or
redemption of the shares of such series for retirement or to other corporation
purposes and the terms and provisions relative to the operation thereof.
(vi) Whether the shares of such series shall be convertible into or
exchangeable for shares of any other class or of any other series of any class
of capital stock of the Corporation, and, if so convertible or exchangeable,
the price or prices or the rate or rates of conversion or exchange and the
method, if any, of adjusting the same, and any other terms and conditions of
such conversion or exchange.
(vii) The voting powers, full and/or limited, if any, of the shares
of such series, and whether and under what conditions the shares of such series
(alone or together with the shares of one or more other series having similar
provisions) shall be entitled to vote separately as a single class, for the
election of one or more additional directors of the Corporation in case of
dividend arrearages or other specified events, or upon other matters.
(viii) Whether the issuance of any additional shares of such series,
or of any shares of any other series, shall be subject to restrictions as to
issuance, or as to the powers, preferences or rights of any such other series.
(ix) Any other preferences, privileges and powers and relative,
participating, optional or other special rights, and qualifications,
limitations or restrictions of such series, as the Board of Directors may deem
advisable and as shall not be inconsistent with the provisions of this
Certificate of Incorporation.
ARTICLE V
In furtherance and not limitation of the powers conferred by the laws
of the State of Delaware, the Board of Directors is expressly authorized to
alter, amend or repeal the bylaws of the Corporation or to adopt new bylaws.
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ARTICLE VI
Except as otherwise provided in the resolutions of the Board of
Directors designating any series of Preferred Stock or otherwise authorized by
the Board of Directors, any action required or permitted to be taken by the
stockholders of the Corporation must be effected at a duly called annual or
special meeting of stockholders and may not be effected by a consent in writing
by any such stockholders.
Subject to the rights of holders of any class or series of Preferred
Stock, special meetings of stockholders may be called only by the Chairman of
the Board or President of the Corporation or by the Chairman of the Board,
President or the Secretary at the request in writing of a majority of the Board
of Directors. Stockholders of the Corporation are not permitted to call a
special meeting or to require that the Board call a special meeting of
stockholders unless authorized by the Board of Directors. The business
permitted at any special meeting of stockholders shall be limited to the
business brought before the meeting by or at the direction of the Board of
Directors.
ARTICLE VII
Subject to the rights of holders of any class or series of Preferred
Stock, nominations for the election of directors, and business proposed to be
brought before an annual meeting of stockholders may be made only by the Board
of Directors or a committee appointed by the Board of Directors or by any
stockholder entitled to vote in the election of directors generally. However,
any such stockholder may nominate one or more persons for election as directors
only at an annual meeting or propose business to be brought before an annual
meeting, or both, only if such stockholder has given timely notice in proper
written form of his or her intent to make such nomination or nominations or to
propose such business. To be timely, a stockholder's notice must be delivered
to or mailed and received by the Secretary of the Corporation not less than
sixty (60) days nor more than ninety (90) days prior to the annual meeting;
provided, however, that in the event that less than seventy (70) days notice or
prior public disclosure of the date of the annual meeting is given or made to
stockholders, notice by a stockholder, to be timely, must be received no later
than the close of business on the tenth (10th) day following the date on which
such notice of the date of the annual meeting was made or such public
disclosure was made, whichever first occurs. To be in proper written form, a
stockholder's notice to the Secretary shall set forth:
A. the name and address of the stockholder who intends
to make the nominations or propose the business and, as the case may
be, of the person or persons to be nominated or of the business to be
proposed;
B. a representation that the stockholder is a holder of
record of stock of the Corporation entitled to vote at such meeting
and, if applicable, intends to appear in person or by proxy at the
meeting to nominate the person or persons specified in the notice;
C. if applicable, a description of all arrangements or
understandings between the stockholder and each nominee and any other
person or persons (naming such person
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or persons) pursuant to which the nomination or nominations are to be
made by the stockholder;
D. such other information regarding each nominee or each
matter of business to be proposed by such stockholder as would be
required to be included in a proxy statement filed pursuant to the
proxy rules of the Securities and Exchange Commission had the nominee
been nominated, or intended to be nominated, or the matter been
proposed, or intended to be proposed, by the Board of Directors, and
such other information about the nominee as the Board of Directors
deems appropriate, including, without limitation, the nominee's age,
business and residence addresses, principal occupation and the class
and number of shares of Common Stock beneficially owned by the
nominee, or such other information about the business to be proposed
and about the stockholder making such business proposal before the
annual meeting as the Board of Directors deems appropriate, including,
without limitation, the class and number of shares of Common Stock
beneficially owned by such stockholder; and
E. if applicable, the consent of each nominee to serve
as director of the Corporation if so elected.
The chairman of the meeting may refuse to acknowledge the nomination
of any person or any proposal to transact any business not made in compliance
with the foregoing procedure.
ARTICLE VIII
A director of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the Delaware General
Corporation Law, or (iv) for any transaction from which the director derived
any improper personal benefit. If the Delaware General Corporation Law is
amended after the filing of this Second Amended and Restated Certificate of
Incorporation to authorize corporate action further eliminating or limiting the
personal liability of directors, then the liability of a director of the
Corporation shall be eliminated or limited to the fullest extent permitted by
the Delaware General Corporation Law, as so amended.
Any repeal or modification of the foregoing paragraph by the
stockholders of the Corporation shall not adversely affect any right or
protection of a director of the Corporation existing at the time of such repeal
or modification.
ARTICLE IX
A. Right to Indemnification. Each person who was or is made a
party or is threatened to be made a party to or is otherwise involved in any
action, suit or proceeding, whether civil, criminal, administrative or
investigative (hereinafter a "proceeding"), by reason of the fact that he
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or she, or a person of whom he or she is the legal representative, is or was a
director or officer of the Corporation or is or was serving at the request of
the Corporation as a director or officer of another corporation or of a
partnership, joint venture, trust or other enterprise, including service with
respect to an employee benefit plan (hereinafter an "indemnitee"), whether the
basis of such proceeding is alleged action in an official capacity as a
director or officer or in any other capacity while serving as a director or
officer, shall be indemnified and held harmless by the Corporation to the
fullest extent authorized by the Delaware General Corporation Law, as the same
exists or may hereafter be amended (but, in the case of any such amendment,
only to the extent that such amendment permits the Corporation to provide
broader indemnification rights than permitted prior thereto), against all
expense, liability and loss (including, without limitation, attorneys' fees,
judgments, fines, excise taxes or penalties and amounts paid or to be paid in
settlement) incurred or suffered by such indemnitee in connection therewith and
such indemnification shall continue with respect to an indemnitee who has
ceased to be a director or officer and shall inure to the benefit of the
indemnitee's heirs, executors and administrators; provided, however, that,
except as provided in paragraph (B) hereof with respect to proceedings to
enforce rights to indemnification, the Corporation shall indemnify any such
indemnitee in connection with a proceeding initiated by such indemnitee only if
such proceeding was authorized by the Board of Directors of the Corporation.
The right to indemnification conferred in this Article IX shall be a contract
right and shall include the right to be paid by the Corporation the expenses
incurred in defending any such proceeding in advance of its final disposition
(hereinafter an "advancement of expenses"); provided, however, that, if the
Delaware General Corporation Law requires, an advancement of expenses incurred
by an indemnitee shall be made only upon delivery to the Corporation of an
undertaking (hereinafter an "undertaking"), by or on behalf of such indemnitee,
to repay all amounts so advanced if it shall ultimately be determined by final
judicial decision from which there is no further right to appeal (hereinafter a
"final adjudication") that such indemnitee is not entitled to be indemnified
for such expenses under this Article IX or otherwise.
B. Right of Indemnitee to Bring Suit. If a claim under paragraph
(A) of this Article IX is not paid in full by the Corporation within sixty days
after a written claim has been received by the Corporation (except in the case
of a claim for an advancement of expenses, in which case the applicable period
shall be twenty days), the indemnitee may at any time thereafter bring suit
against the Corporation to recover the unpaid amount of the claim. If
successful in whole or in part in any such suit, the indemnitee shall also be
entitled to be paid the expense of prosecuting or defending such suit. In (i)
any suit brought by the indemnitee to enforce a right to indemnification
hereunder (but not in a suit brought by the indemnitee to enforce a right to an
advancement of expenses) it shall be a defense that, and (ii) in any suit by
the Corporation to recover an advancement of expenses pursuant to the terms of
an undertaking, the Corporation shall be entitled to recover such expenses upon
a final adjudication that, the indemnitee has not met the applicable standard
of conduct set forth in the Delaware General Corporation Law. Neither the
failure of the Corporation (including its Board of Directors, independent legal
counsel or its stockholders) to have made a determination prior to the
commencement of such suit that indemnification of the indemnitee is proper in
the circumstances because the indemnitee has met the applicable standard of
conduct set forth in the Delaware General Corporation Law, nor an actual
determination by the Corporation (including its Board of Directors, independent
legal counsel, or its stockholders) that the indemnitee has not met such
applicable standard of conduct,
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shall create a presumption that the indemnitee has not met the applicable
standard of conduct or, in the case of such a suit brought by the indemnitee,
be a defense to such suit. In any suit brought by the indemnitee to enforce a
right to indemnification or to an advancement of expenses hereunder or by the
Corporation to recover an advancement of expenses pursuant to the terms of an
undertaking, the burden of proving that the indemnitee is not entitled under
this Article IX or otherwise to be indemnified, or to such advancement of
expenses, shall be on the Corporation.
C. Non-Exclusivity of Rights. The rights to indemnification and
to the advancement of expenses conferred in this Article IX shall not be
exclusive of any other right which any person may have or hereafter acquire
under this Certificate of Incorporation or any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise.
D. Insurance. The Corporation may maintain insurance, at its
expense, to protect itself and any indemnitee against any expense, liability or
loss, whether or not the Corporation would have the power to indemnify such
person against such expense, liability or loss under the Delaware General
Corporation Law.
E. Indemnity of Employees and Agents of the Corporation. The
Corporation may, to the extent authorized from time to time by the Board of
Directors, grant rights to indemnification and to the advancement of expenses
to any employee or agent of the Corporation to the fullest extent of the
provisions of this Article IX or as otherwise permitted under the Delaware
General Corporation Law with respect to the indemnification and advancement of
expenses of directors and officers of the Corporation.
IN WITNESS WHEREOF, this Restated Certificate of Incorporation has
been signed by Peter A. Altabef, its authorized officer this [ ] day of
[ ], 1998.
----------------------------------------
Peter A. Altabef
Secretary
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APPENDIX C
SECOND AMENDED AND RESTATED BYLAWS
OF
PEROT SYSTEMS CORPORATION
ARTICLE I
OFFICES
Section 1. Registered Office. The registered office of the
corporation shall be in the City of Wilmington, County of New Castle, State of
Delaware.
Section 2. Other Offices. The corporation may also have offices at
such other places, both within and without the State of Delaware, as the Board
of Directors may from time to time determine or as the business of the
corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Place of Meetings. Meetings of stockholders may be held
at such time and place, within or without the State of Delaware, as shall be
stated in the notice of the meeting or in a duly executed waiver of notice
thereof.
Section 2. Annual Meetings. An annual meeting of stockholders shall
be held on such day in each fiscal year of the corporation and at such time and
place as may be fixed by the Board of Directors, at which meeting the
stockholders shall elect a Board of Directors and transact such other business
as may properly be brought before the meeting.
Section 3. Notice of Annual Meeting. Written or printed notice of
the annual meeting, stating the place, day and hour thereof, shall be given to
each stockholder entitled to vote thereat at such address as appears on the
books of the corporation, not less than ten days nor more than sixty days
before the date of the meeting.
Section 4. Advance Notice of Stockholder Nominations and Proposals.
Subject to the rights of holders of any class or series of Preferred Stock,
(a) nominations for the election of directors, and
(b) business proposed to be brought before an annual meeting of
stockholders
may be made only by the Board of Directors or a committee appointed by
the Board of Directors or by any stockholder entitled to vote in the election
of directors generally.
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Notwithstanding anything to the contrary, a stockholder may nominate one or
more persons for election as directors only at an annual meeting or propose
business to be brought before an annual meeting, or both, and only if such
stockholder has given timely notice in proper written form of his or her intent
to make such nomination or nominations or to propose such business. To be
timely, a stockholder's notice must be delivered to or mailed and received by
the Secretary of the corporation not less than sixty (60) days nor more than
ninety (90) days prior to the annual meeting; provided, however, that in the
event that less than seventy (70) days notice or prior public disclosure of the
date of the annual meeting is given or made to stockholders, notice by a
stockholder, to be timely, must be received no later than the close of business
on the tenth (10th) day following the date on which such notice of the date of
the annual meeting was made or such public disclosure was made, whichever first
occurs. To be in proper written form, a stockholder's notice to the Secretary
shall set forth:
(i) the name and address of the stockholder who intends
to make the nominations or propose the business and, as the case may
be, of the person or persons to be nominated or of the business to be
proposed;
(ii) a representation that the stockholder is a holder of
record of stock of the corporation entitled to vote at such meeting
and, if applicable, intends to appear in person or by proxy at the
meeting to nominate the person or persons specified in the notice;
(iii) if applicable, a description of all arrangements or
understandings between the stockholder and each nominee and any other
person or persons (naming such person or persons) pursuant to which
the nomination or nominations are to be made by the stockholder;
(iv) such other information regarding each nominee or each
matter of business to be proposed by such stockholder as would be
required to be included in a proxy statement filed pursuant to the
proxy rules of the Securities and Exchange Commission had the nominee
been nominated, or intended to be nominated, or the matter been
proposed, or intended to be proposed, by the Board of Directors, and
such other information about the nominee as the Board of Directors
deems appropriate, including, without limitation, the nominee's age,
business and residence addresses, principal occupation and the class
and number of shares of Common Stock beneficially owned by the
nominee, or such other information about the business to be proposed
and about the stockholder making such business proposal before the
annual meeting as the Board of Directors deems appropriate, including,
without limitation, the class and number of shares of Common Stock
beneficially owned by such stockholder; and
(v) if applicable, the consent of each nominee to serve
as director of the corporation if so elected.
The chairman of the meeting may refuse to acknowledge the
nomination of any person or any proposal to transact any business not
made in compliance with the foregoing procedure.
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Section 5. Special Meetings. Subject to the rights of holders of
any class or series of Preferred Stock, special meetings of stockholders may be
called only by the Chairman of the Board or President of the corporation or by
the Chairman of the Board, President or the Secretary at the request in writing
of a majority of the Board of Directors. Stockholders of the corporation are
not permitted to call a special meeting or to require that the Board call a
special meeting of stockholders unless authorized by the Board of Directors.
Section 6. Notice of Special Meetings. Written or printed notice of
a special meeting of stockholders, stating the place, day and hour and purpose
or purposes thereof, shall be given to each stockholder entitled to vote
thereat at such address as appears on the books of the corporation, not less
than ten days nor more than sixty days before the date of the meeting.
Section 7. Business at Special Meetings. The business permitted at
any special meeting of stockholders shall be limited to the business brought
before the meeting by or at the direction of the Board of Directors.
Section 8. Stockholder List. At least ten days before each meeting
of stockholders, a complete list of the stockholders entitled to vote at such
meeting or any adjournment thereof, arranged in alphabetical order, with the
address of and the number of voting shares held by each, shall be prepared by
the Secretary. Such list shall be open to the examination of any stockholder,
for any purpose germane to the meeting, during ordinary business hours, for
such ten day period, either at a place within the city where the meeting is to
be held, which place shall be specified in the notice of the meeting, or, if
not so specified, at the place where the meeting is to be held. Such list
shall also be produced and kept open at the time and place of the meeting and
shall be subject to the inspection of any stockholder during the meeting.
Section 9. Quorum. The holders of a majority of the votes attributed
to the shares of capital stock issued and outstanding and entitled to vote
thereat, represented in person or by proxy, shall constitute a quorum at all
meetings of the stockholders for the transaction of business except as
otherwise provided by statute, the certificate of incorporation or these
bylaws. The stockholders present may adjourn the meeting despite the absence
of a quorum. When a meeting is adjourned for less than thirty days in any one
adjournment and a new record date is not fixed for the adjourned meeting, it
shall not be necessary to give any notice of the adjourned meeting if the time
and place to which the meeting is adjourned are announced at the meeting at
which the adjournment is taken, and at the adjourned meeting any business may
be transacted that might have been transacted on the original date of the
meeting. When a meeting is adjourned for thirty days or more, or when after
the adjournment a new record date is fixed for the adjourned meeting, notice of
the adjourned meeting shall be given as in the case of an original meeting.
Section 10. Majority Vote. When a quorum is present at any meeting,
the vote of the holders of a majority of the shares having voting power
represented in person or by proxy shall decide any question brought before such
meeting, unless the question is one upon which, by express provision of
statute, the certificate of incorporation or these bylaws, a different vote is
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required, in which case such express provision shall govern and control the
decision of such question.
Section 11. Proxies. (a) Each stockholder entitled to vote at a
meeting of stockholders or to express consent or dissent to corporate action in
writing without a meeting may authorize another person or persons to act for
him by proxy, but no such proxy shall be voted or acted upon after three years
from its date, unless the proxy provides for a longer period.
(b) Without limiting the manner in which a stockholder
may authorize another person or persons to act for him as proxy pursuant to
subsection (a) of this Section 11, the following shall constitute a valid means
by which a stockholder may grant such authority:
(i) A stockholder may execute a writing
authorizing another person or persons to act for him as proxy.
Execution may be accomplished by the stockholder or his or its
authorized officer, director, employee or agent signing such writing
or causing his or her signature to be affixed to such writing by any
reasonable means including, but not limited to, by facsimile
signature.
(ii) A stockholder may authorize another person or
persons to act for him as proxy by transmitting or authorizing the
transmission of a telegram, cablegram, or other means of electronic
transmission to the person who will be the holder of the proxy or to a
proxy solicitation firm, proxy support service organization or like
agent duly authorized by the person who will be the holder of the
proxy to receive such transmission, provided that any such telegram,
cablegram or other means of electronic transmission must either set
forth or be submitted with information from which it can be determined
that the telegram, cablegram or other electronic transmission was
authorized by the stockholder. If it is determined that such
telegrams, cablegrams or other electronic transmissions are valid, the
inspectors or, if there are no inspectors, such other persons making
that determination shall specify the information upon which they
relied.
(c) Any copy, facsimile telecommunication or other
reliable reproduction of the writing or transmission created pursuant to
subsection (b) of this Section 11 may be substituted or used in lieu of the
original writing or transmission for any and all purposes for which the
original writing or transmission could be used, provided that such copy,
facsimile telecommunication or other reproduction shall be a complete
reproduction of the entire original writing or transmission.
Section 12. Voting. Unless otherwise provided by statute or the
certificate of incorporation, each stockholder shall have one vote for each
share of stock having voting power, registered in his name on the books of the
corporation.
Section 13. Consent of Stockholders in Lieu of Meeting. Except as
otherwise provided in the resolutions of the Board of Directors designating any
series of Preferred Stock or otherwise authorized by the Board of Directors,
any action required or permitted to be taken by the
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stockholders of the corporation must be effected at a duly called annual or
special meeting of stockholders and may not be effected by a consent in writing
by any such stockholders.
Section 14. Inspectors. (a) The corporation may, in advance of any
meeting of stockholders, appoint one or more inspectors to act at the meeting
and make a written report thereof. The corporation may designate one or more
persons as alternate inspectors to replace any inspector who fails to act. If
no inspector or alternate is able to act at a meeting of stockholders, the
chairman of the meeting shall appoint one or more inspectors to act at the
meeting. Each inspector, before entering upon the discharge of his duties,
shall take and sign an oath faithfully to execute the duties of inspector with
strict impartiality and according to the best of his ability.
(b) The inspectors shall (i) ascertain the number of
shares outstanding and the voting power of each, (ii) determine the shares
represented at a meeting and the validity of proxies and ballots, (iii) count
all votes and ballots, (iv) determine and retain for a reasonable period a
record of the disposition of any challenges made to any determination by the
inspectors, and (v) certify their determination of the number of shares
represented at the meeting, and their count of all votes and ballots. The
inspectors may appoint or retain other persons or entities to assist the
inspectors in the performance of the duties of the inspectors.
(c) The date and time of the opening and the closing of
the polls for each matter upon which the stockholders will vote at a meeting
shall be announced at the meeting. No ballot, proxies or votes, nor any
revocations thereof or changes thereto, shall be accepted by the inspectors
after the closing of the polls unless the Delaware Court of Chancery, upon
application by a stockholder, shall determine otherwise.
(d) In determining the validity and counting of proxies
and ballots, the inspectors shall be limited to an examination of the proxies,
any envelopes submitted with those proxies, any information provided in
accordance with Article II, Section 11(b)(ii), ballots and the regular books
and records of the corporation, except that the inspectors may consider other
reliable information for the limited purpose of reconciling proxies and ballots
submitted by or on behalf of banks, brokers, their nominees or similar persons
that represent more votes than the holder of a proxy is authorized by the
record owner to cast, or more votes than the stockholder holds of record. If
the inspectors consider other reliable information for the limited purpose
permitted herein, the inspectors at the time they make their certification
pursuant to subsection (b)(v) of this Section shall specify the precise
information considered by them including the person or persons from whom they
obtained the information, when the information was obtained, the means by which
the information was obtained and the basis for the inspector's belief that such
information is accurate and reliable.
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ARTICLE III
BOARD OF DIRECTORS
Section 1. Powers. The business and affairs of the corporation shall
be managed by a Board of Directors. The Board may exercise all such powers of
the corporation and do all such lawful acts and things as are not by statute,
by the certificate of incorporation or these bylaws directed or required to be
exercised or done by the stockholders.
Section 2. Number of Directors. The number of directors which shall
constitute the whole Board shall be fixed from time to time by resolution of
the Board of Directors, provided that such number shall not be less than one
(1).
Section 3. Election and Term. Except as provided in Section 4 of this
Article III, directors shall be elected at the annual meeting of the
stockholders, and each director shall be elected to serve until the next annual
meeting and until his successor shall have been elected and shall qualify, or
until his death, resignation, or removal from office. Directors need not be
stockholders of the corporation.
Section 4. Vacancies and Newly Created Directorships. If the office
of any director or directors becomes vacant by reason of death, resignation,
retirement, disqualification, removal from office, or otherwise, or the number
of directors constituting the whole Board shall be increased, a majority of the
remaining or existing directors, though less than a quorum, may choose a
successor or successors, or the director or directors to fill the new
directorship or directorships, who shall hold office for the unexpired term in
respect to which such vacancy occurred or in the case of a new directorship or
directorships, until the next annual meeting of the stockholders.
Section 5. Removal. The stockholders may remove a director either
for or without cause at any meeting of stockholders, provided notice of the
intention to act upon such matter shall have been given in the notice calling
such meeting.
ARTICLE IV
MEETINGS OF THE BOARD
Section 1. First Meeting. The first meeting of each newly elected
Board of Directors shall be held at the location of and immediately following
the annual meeting of stockholders, and no notice of such meeting shall be
necessary to the newly elected directors in order legally to constitute the
meeting, provided a quorum shall be present; or the Board may meet at such
place and time as shall be fixed by the consent in writing of all the
directors. All meetings of the Board of Directors may be held at such place,
either within or without the State of Delaware, as from time to time shall be
determined by the Board of Directors.
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Section 2. Regular Meetings. Regular meetings of the Board may be
held at such time and place and on such notice, if any, as shall be determined
from time to time by the Board.
Section 3. Special Meetings. Special meetings of the Board may be
called by the President or the Chairman of the Board on twenty-four hours'
notice to each director, delivered either personally or by mail or by telegram
or telecopier. Special meetings shall be called by the President or the
Secretary in like manner and on like notice on the written request of one
director.
Section 4. Quorum and Voting. At all meetings of the Board, a
majority of the directors at the time in office shall be necessary and
sufficient to constitute a quorum for the transaction of business; and the act
of a majority of the directors present at any meeting at which there is a
quorum shall be the act of the Board of Directors, except as may be otherwise
specifically provided by statute, the certificate of incorporation or these
bylaws. If a quorum shall not be present at any meeting of directors, the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
Section 5. Telephone Meetings. Directors may attend any meeting of
the Board or any committee thereof by conference telephone, radio, television
or similar means of communication by means of which all persons participating
in the meeting can hear each other, and all members so attending shall be
deemed present at the meeting for all purposes including the determination of
whether a quorum is present.
Section 6. Action by Written Consent. Any action required or
permitted to be taken by the Board or any committee thereof, under the
applicable provisions of any statute, the certificate of incorporation, or
these bylaws, may be taken without a meeting if a consent in writing, setting
forth the action so taken, is signed by all the members of the Board or
committee, as the case may be.
ARTICLE V
COMMITTEES
Section 1. Executive Committee. The Board of Directors, by
resolution adopted by a majority of the whole Board, may designate one or more
directors to constitute an Executive Committee, which Committee, to the extent
provided in such resolution, shall have and may exercise all of the authority
of the Board of Directors in the business and affairs of the corporation except
where action by the Board of Directors is expressly required by statute. The
Executive Committee shall keep regular minutes of its proceedings and report
the same to the Board when required.
Section 2. Other Committees. The Board of Directors may similarly
create other committees for such terms and with such powers and duties as the
Board deems appropriate.
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Section 3. Committee Rules; Quorum. Each committee may adopt rules
governing the method of calling and time and place of holding its meetings.
Unless otherwise provided by the Board of Directors, a majority of any
committee shall constitute a quorum for the transaction of business, and the
act of a majority of the members of such committee present at a meeting at
which a quorum is present shall be the act of such committee.
ARTICLE VI
COMPENSATION OF DIRECTORS
The Board of Directors shall have authority to determine, from time to
time, the amount of compensation, if any, which shall be paid to its members
for their services as directors and as members of committees. The Board shall
also have power in its discretion to provide for and to pay to directors
rendering services to the corporation not ordinarily rendered by directors as
such, special compensation appropriate to the value of such services as
determined by the Board from time to time. Nothing herein contained shall be
construed to preclude any director from serving the corporation in any other
capacity and receiving compensation therefor.
ARTICLE VII
NOTICES
Section 1. Methods of Notice. Whenever any notice is required to be
given to any stockholder, director or committee member under the provisions of
any statute, the certificate of incorporation or these bylaws, such notice
shall be delivered personally or shall be given in writing by mail addressed to
such stockholder, director or committee member at such address as appears on
the books of the corporation, and such notice shall be deemed to be given at
the time when the same shall be deposited in the United States mail with
postage thereon prepaid. Notice to directors and committee members may also be
given by telegram, which notice shall be deemed to be given at the time it is
delivered to the telegraph office, or by telecopy, which notice shall be deemed
to be given at the time it is transmitted or in person, which notice shall be
deemed to be given when received.
Section 2. Waiver of Notice. Whenever any notice is required to be
given to any stockholder, director or committee member under the provisions of
any statute, the certificate of incorporation or these bylaws, a waiver thereof
in writing signed by the person or persons entitled to said notice, whether
before or after the time stated therein, shall be deemed equivalent to the
giving of such notice. Attendance at any meeting shall constitute a waiver of
notice thereof except as otherwise provided by statute.
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ARTICLE VIII
OFFICERS
Section 1. Executive Officers. The executive officers of the
corporation shall consist of at least a President and a Secretary, each of whom
shall be elected by the Board of Directors. The Board of Directors may also
elect as officers of the corporation a Chairman of the Board, a President, one
or more Vice Presidents, one or more of whom may be designated Executive or
Senior Vice Presidents and may also have such descriptive titles as the Board
shall deem appropriate, and a Treasurer. Any two or more offices may be held
by the same person.
Section 2. Election and Qualification. The Board of Directors at its
first meeting after each annual meeting of stockholders shall elect the
officers of the corporation.
Section 3. Other Officers and Agents. The Board may elect or appoint
Assistant Vice Presidents, Assistant Secretaries and Assistant Treasurers, and
such other officers and agents as it shall deem necessary, who shall hold their
offices for such terms and shall exercise such powers and perform such duties
as shall be determined from time to time by the Board of Directors.
Section 4. Salaries. The salaries of all officers of the corporation
shall be fixed by the Board of Directors except as otherwise directed by the
Board.
Section 5. Term, Removal and Vacancies. The officers of the
corporation shall hold office until their successors are chosen and qualify.
Any officer or agent of the corporation may be removed at any time by the
affirmative vote of a majority of the Board of Directors, or by the President.
Any vacancy occurring in any office of the corporation may be filled by the
Board of Directors or otherwise as provided in this Article VIII.
Section 6. Execution of Instruments. The Chairman of the Board and
the President (and such other officers as are authorized thereunto by
resolution of the Board of Directors) may execute in the name of the
corporation bonds, notes, debentures and other evidences of indebtedness, stock
certificates, deeds, mortgages, deeds of trust, indentures, contracts, leases,
agreements and other instruments, requiring a seal under the seal of the
corporation, and may execute such documents where not requiring a seal, except
where such documents are required by law to be otherwise signed and executed,
and except where the signing and execution thereof shall be exclusively
delegated to some other officer or agent of the corporation.
Section 7. Duties of Officers. The duties and powers of the officers
of the corporation shall be as provided in these bylaws, or as provided for
pursuant to these bylaws, or (except to the extent inconsistent with these
bylaws or with any provision made pursuant hereto) shall be those customarily
exercised by corporate officers holding such offices.
Section 8. Chairman of the Board. The Chairman of the Board shall
preside when present at all meetings of the Board of Directors and the
stockholders. The Chairman shall advise and counsel the other officers of the
corporation, shall exercise such powers and perform such duties
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as shall be assigned to or required of him from time to time by the Board of
Directors and shall see that all orders and resolutions of the Board of
Directors are carried into effect. The Chairman of the Board shall, in the
absence or disability of the President, perform the duties and exercise the
powers of the President, and may perform such other duties as requested by the
President. The Chairman of the Board may, from time to time, delegate all, or
any, of his powers and duties to the President.
Section 9. President. The President shall advise and counsel the
other officers of the corporation and shall exercise such powers and perform
such duties as shall be assigned to or required of him from time to time by the
Board of Directors. The President shall be ex-officio a member of all standing
committees. The President shall, in the absence or disability of the Chairman
of the Board, perform all the duties and have all the powers of the Chairman of
the Board.
Section 10. Vice Presidents. The Vice Presidents, in the order
determined by the Board of Directors, shall, in the absence or disability of
the President, perform the duties and exercise the powers of the President, and
shall perform such other duties as the Board of Directors, the Chairman of the
Board or the President may prescribe.
Section 11. Secretary. The Secretary shall attend all meetings of
the Board of Directors and all meetings of the stockholders and record all
votes and the minutes of all proceedings in a book to be kept for that purpose
and shall perform like duties for the committees of the Board of Directors
when required. Except as may be otherwise provided in these bylaws, he shall
give, or cause to be given, notice of all meetings of the stockholders and
special meetings of the Board of Directors, and shall perform such other duties
as may be prescribed by the Board of Directors and the President. He shall
keep in safe custody the seal of the corporation, if any, and shall have
authority to affix the same to any instrument requiring it, and when so affixed
it may be attested by his signature. The Board of Directors may give general
authority to any other officer to affix the seal of the corporation and to
attest the affixing by his signature. In the absence of the Treasurer and all
Assistant Treasurers, the Secretary shall perform all the duties and have all
the powers of the Treasurer.
Section 12. Assistant Secretaries. The Assistant Secretaries in the
order determined by the Board of Directors shall, in the absence or disability
of the Secretary, perform the duties and exercise the powers of the Secretary
and shall perform such other duties as the Board of Directors, the Chairman of
the Board or the President may prescribe. Assistant secretaries may be
appointed by the President without prior approval of the Board of Directors.
Section 13. Treasurer. The Treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the corporation and shall
deposit all monies and other valuable effects in the name and to the credit of
the corporation in such depositories as may be designated by the Board of
Directors. He shall disburse the funds of the corporation as may be ordered by
the Board, taking proper vouchers for such disbursements, and shall render to
the Board of Directors, the Chairman
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of the Board or the President, whenever any of them may require it, an account
of all of his transactions as Treasurer and of the financial condition of the
corporation.
Section 14. Assistant Treasurers. The Assistant Treasurers in the
order determined by the Board of Directors shall, in the absence or disability
of the Treasurer, perform the duties and exercise the powers of the Treasurer
and shall perform such other duties as the Board of Directors, the Chairman of
the Board or the President may prescribe.
ARTICLE IX
SHARES AND STOCKHOLDERS
Section 1. Certificates Representing Shares. Every holder of stock
in the corporation shall be entitled to have a certificate, signed by, or in
the name of the corporation by, the Chairman or Vice Chairman of the Board of
Directors, or the President or a Vice President and the Treasurer or an
Assistant Treasurer or the Secretary or an Assistant Secretary of the
corporation, certifying the number of shares owned by him in the corporation.
The signature of any such officer may be facsimile. In case any officer who
has signed or whose facsimile signature has been placed upon such certificate
shall have ceased to be such officer before such certificate is issued, it may
be issued by the corporation with the same effect as if he were such officer at
the date of its issuance. If the corporation shall be authorized to issue more
than one class of stock or more than one series of any class, the powers,
designations, preferences and relative, participating, optional or other
special rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights shall be set
forth in full or summarized on the face or back of the certificate which the
corporation shall issue to represent such class or series of stock, provided
that, except as otherwise provided in Section 202 of the General Corporation
Law of the State of Delaware, in lieu of the foregoing requirements, there may
be set forth on the face or back of the certificate which the corporation
shall issue to represent such class or series of stock a statement that the
corporation will furnish without charge to each stockholder who so requests the
designations, preferences and relative, participating, optional or other
special rights of each class or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights.
Section 2. Transfer of Shares. Subject to valid transfer
restrictions and to stop-transfer orders directed in good faith by the
corporation to any transfer agent to prevent possible violations of federal or
state securities laws, rules or regulations, or for any other lawful purpose,
upon surrender to the corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books.
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Section 3. Fixing Record Date.
(a) In order that the corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, the Board of Directors may fix a record date, which record
date shall not precede the date upon which the resolution fixing the record
date is adopted by the Board of Directors, and which record date shall not be
more than sixty nor less than ten days before the date of such meeting. If no
record date is fixed by the Board of Directors, the record date for determining
stockholders entitled to notice of or to vote at a meeting of stockholders
shall be at the close of business on the day next preceding the date on which
notice is given, or, if notice is waived, at the close of business on the date
next preceding the day on which the meeting is held. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided, however,
that the Board of Directors may fix a new record date for the adjourned
meeting.
(b) In order that the corporation may determine the stockholders
entitled to consent to corporate action in writing without a meeting, the Board
of Directors may fix a record date, which record date shall not precede the
date upon which the resolution fixing the record date is adopted by the Board
of Directors, and which date shall not be more than ten days after the date
upon which the resolution fixing the record date is adopted by the Board of
Directors. If no record date has been fixed by the Board of Directors, the
record date for determining stockholders entitled to consent to corporate
action in writing without a meeting, when no prior action by the Board of
Directors is required by this Section, shall be the first date on which a
signed written consent setting forth the action taken or proposed to be taken
is delivered to the corporation by delivery to its registered office in the
State of Delaware, its principal place of business, or an officer or agent of
the corporation having custody of the book in which proceedings of meetings of
stockholders are recorded. Delivery made to the corporation's registered
office shall be by hand or by certified or registered mail, return receipt
requested. If no record date has been fixed by the Board of Directors and
prior action by the Board of Directors is required by statute, the record date
for determining stockholders entitled to consent to corporate action in writing
without a meeting shall be at the close of business on the day on which the
Board of Directors adopts the resolution taking such prior action.
(c) In order that the corporation may determine the stockholders
entitled to receive payment of any dividend or other distribution or allotment
of any rights or the stockholders entitled to receive any rights in respect of
any change, conversion or exchange of stock, or for the purpose of any other
lawful action, the Board of Directors may fix a record date, which record date
shall not precede the date upon which the resolution fixing the record date is
adopted, and which record date shall be not more than sixty days prior to such
action. If no record date is fixed, the record date for determining
stockholders for any such purpose shall be at the close of business on the day
on which the Board of Directors adopts the resolution relating thereto.
Section 4. Registered Stockholders. The corporation shall be
entitled to recognize the exclusive right of a person registered on its books
as the owner of any share or shares to receive dividends, and to vote as such
owner, and for all other purposes as such owner; and the
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corporation shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person, whether or
not it shall have express or other notice thereof, except as otherwise provided
by the laws of the State of Delaware.
Section 5. Lost Certificates. The Board of Directors may direct a
new certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the corporation alleged to have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen or destroyed. When
authorizing such issue of a new certificate or certificates, the Board of
Directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed certificate or
certificates, or his legal representative, to advertise the same in such manner
as it shall require and/or give the corporation a bond in such sum as it may
direct as indemnity against any claim that may be made against the corporation
with respect to the certificate alleged to have been lost, stolen or destroyed.
ARTICLE X
INDEMNIFICATION
(a) Each person who was or is made a party or is threatened to be
made a party to or is otherwise involved in any action, suit or proceeding,
whether civil, criminal, administrative or investigative (hereinafter a
"proceeding"), by reason of the fact that he or she, or a person of whom he or
she is the legal representative, is or was a director or officer of the
corporation or is or was serving at the request of the corporation as a
director or officer of another corporation or of a partnership, joint venture,
trust or other enterprise, including service with respect to an employee
benefit plan (hereinafter an "indemnitee"), whether the basis of such
proceeding is alleged action in an official capacity as a director or officer
or in any other capacity while serving as a director or officer, shall be
indemnified and held harmless by the corporation to the fullest extent
authorized by the Delaware General Corporation Law, as the same exists or may
hereafter be amended (but, in the case of any such amendment, only to the
extent that such amendment permits the corporation to provide broader
indemnification rights than permitted prior thereto), against all expense,
liability and loss (including, without limitation, attorneys' fees, judgments,
fines, excise taxes or penalties and amounts paid or to be paid in settlement)
incurred or suffered by such indemnitee in connection therewith and such
indemnification shall continue with respect to an indemnitee who has ceased to
be a director or officer and shall inure to the benefit of the indemnitee's
heirs, executors and administrators; provided, however, that, except as
provided in paragraph (b) of this Article X with respect to proceedings to
enforce rights to indemnification, the corporation shall indemnify any such
indemnitee in connection with a proceeding initiated by such indemnitee only if
such proceeding was authorized by the Board of Directors of the corporation.
The right to indemnification conferred in this Article X shall be a contract
right and shall include the right to be paid by the corporation the expenses
incurred in defending any such proceeding in advance of its final disposition
(hereinafter an "advancement of expenses"); provided, however, that, if the
Delaware General Corporation Law requires, an advancement of expenses incurred
by an indemnitee shall be made only upon delivery to the corporation of an
undertaking (hereinafter an "undertaking"), by or on behalf of such indemnitee,
to repay all amounts so
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advanced if it shall ultimately be determined by final judicial decision from
which there is no further right to appeal (hereinafter a "final adjudication")
that such indemnitee is not entitled to be indemnified for such expenses under
this Article X or otherwise.
(b) If a claim under paragraph (a) of this Article X is not paid
in full by the corporation within sixty days after a written claim has been
received by the corporation (except in the case of a claim for an advancement
of expenses, in which case the applicable period shall be twenty days), the
indemnitee may at any time thereafter bring suit against the corporation to
recover the unpaid amount of the claim. If successful in whole or in part in
any such suit, the indemnitee shall also be entitled to be paid the expense of
prosecuting or defending such suit. In (i) any suit brought by the indemnitee
to enforce a right to indemnification hereunder (but not in a suit brought by
the indemnitee to enforce a right to an advancement of expenses) it shall be a
defense that, and (ii) in any suit by the corporation to recover an advancement
of expenses pursuant to the terms of an undertaking, the corporation shall be
entitled to recover such expenses upon a final adjudication that, the
indemnitee has not met the applicable standard of conduct set forth in the
Delaware General Corporation Law. Neither the failure of the corporation
(including its Board of Directors, independent legal counsel or its
stockholders) to have made a determination prior to the commencement of such
suit that indemnification of the indemnitee is proper in the circumstances
because the indemnitee has met the applicable standard of conduct set forth in
the Delaware General Corporation Law, nor an actual determination by the
corporation (including its Board of Directors, independent legal counsel, or
its stockholders) that the indemnitee has not met such applicable standard of
conduct, shall create a presumption that the indemnitee has not met the
applicable standard of conduct or, in the case of such a suit brought by the
indemnitee, be a defense to such suit. In any suit brought by the indemnitee
to enforce a right to indemnification or to an advancement of expenses
hereunder or by the corporation to recover an advancement of expenses pursuant
to the terms of an undertaking, the burden of proving that the indemnitee is
not entitled under this Article X or otherwise to be indemnified, or to such
advancement of expenses, shall be on the corporation.
(c) The rights to indemnification and to the advancement of
expenses conferred in this Article X shall not be exclusive of any other right
which any person may have or hereafter acquire under the certificate of
incorporation or any bylaw of the corporation, agreement, vote of stockholders
or disinterested directors or otherwise.
(d) The corporation may maintain insurance, at its expense, to
protect itself and any indemnitee against any expense, liability or loss,
whether or not the corporation would have the power to indemnify such person
against such expense, liability or loss under the Delaware General Corporation
Law.
(e) The corporation may, to the extent authorized from time to
time by the Board of Directors, grant rights to indemnification and to the
advancement of expenses to any employee or agent of the corporation to the
fullest extent of the provisions of this Article X or as otherwise permitted
under the Delaware General Corporation Law with respect to the indemnification
and advancement of expenses of directors and officers of the corporation.
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ARTICLE XI
GENERAL
Section 1. Dividends. Dividends upon the capital stock of the
corporation, subject to the provisions of the certificate of incorporation, if
any, or of the resolutions, if any, providing for any series of stock, may be
declared by the Board of Directors at any meeting thereof, or by the Executive
Committee at any meeting thereof. Dividends may be paid in cash, in property
or in shares of the capital stock of the corporation, subject to the provisions
of the certificate of incorporation or of the resolutions, if any, providing
for any series of stock.
Section 2. Reserves. Before payment of any dividend, there may be
set aside out of any funds of the corporation available for dividends such sum
or sums as the Board of Directors from time to time, in its absolute
discretion, deems proper as a reserve fund to meet contingencies, or for
equalizing dividends, or for repairing or maintaining any property of the
corporation, or for such other purpose or purposes as the Board of Directors
shall think conducive to the interests of the corporation, and the Board of
Directors may modify or abolish any such reserve in the manner in which it was
created.
Section 3. Shares of Other Corporations. Each of the Chairman of the
Board, the President and any Vice President is authorized to vote, represent
and exercise on behalf of the corporation all rights incident to any and all
shares of any other corporation or other entity standing in the name of the
corporation. The authority herein granted to said officer may be exercised
either by said officer in person or by any person authorized so to do by proxy
or power of attorney duly executed by said officer. Notwithstanding the above,
however, the Board of Directors, in its discretion, may designate by resolution
any additional person to vote or represent said shares of other corporations
and other entities.
Section 4. Checks. All checks, drafts, bills of exchange or demands
for money of the corporation shall be signed by such officer or officers or
such other person or persons as the Board of Directors may from time to time
designate.
Section 5. Corporate Records. The corporation shall keep at its
registered office or principal place of business, or at the office of its
transfer agent or registrar, a record of its stockholders giving the names and
addresses of all stockholders and the number and class and series, if any, of
shares held by each. All other books and records of the corporation may be
kept at such place or places within or without the State of Delaware as the
Board of Directors may from time to time determine.
Section 6. Fiscal Year. The fiscal year of the corporation shall be
fixed by the Board of Directors; if not so fixed, it shall be the calendar
year.
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ARTICLE XII
AMENDMENTS
In furtherance, and not in limitation of the powers conferred by statute, the
Board of Directors is expressly authorized to make, alter, amend, change, add
to or repeal the bylaws of the corporation and shall have the right (which, to
the extent exercised, shall be exclusive) to establish the rights, powers,
duties, rules and procedures that from time to time shall govern the Board of
Directors and each of its members, including, without limitation, the vote
required for any action by the Board of Directors, and that from time to time
shall affect the directors' powers to manage the business and affairs of the
corporation, provided that such bylaws are not inconsistent with the General
Corporation Law of the State of Delaware or the certificate of incorporation,
as amended, and such bylaws related to the business of the corporation, the
conduct of its affairs, and its rights or powers or the rights or powers of its
stockholders, directors, officers or employees. In addition, the bylaws of the
corporation may not be adopted, repealed, altered, amended or rescinded by the
holders of stock of the corporation except by the affirmative vote of eighty
percent (80%) of the outstanding stock of the corporation entitled to vote
generally in the election of directors, voting as a single class, provided that
such bylaws are not inconsistent with the General Corporation Law of the State
of Delaware or the certificate of incorporation, and such bylaws relate to the
business of the corporation, the conduct of its affairs, and its rights or
powers, or the rights or powers of its stockholders, directors, officers or
employees. In addition to the powers and authority herein before or by statute
expressly conferred upon them, the directors are hereby empowered to exercise
all such powers and do all such acts and things as may be exercised or done by
the corporation, subject, to the provisions of the General Corporation Law of
the State of Delaware, the certificate of incorporation, and any bylaws adopted
by the stockholders; provided, however, that no bylaws hereafter adopted by the
stockholders shall invalidate any prior act of the directors that would have
been valid if such bylaws had not been adopted.
If any Bylaw regulating an impending election of directors is made, altered,
amended, changed, added or repealed by the Board of Directors, there shall be
set forth in the notice of the next meeting of stockholders for the election of
directors the Bylaw so made, altered, amended, changed or repealed, together
with a concise statement of the changes made.
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CONSENT CARD
CONSENT BY STOCKHOLDERS OF PEROT SYSTEMS CORPORATION
TO ACTION WITHOUT A MEETING
THIS CONSENT IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS OF PEROT SYSTEMS CORPORATION
The undersigned a stockholder of record of Perot Systems Corporation
(the "Company") on July 20, 1998, hereby consents, pursuant to Section 228 of
the Delaware General Corporation Law, with respect to all shares of Class A
Common Stock, par value $.01 per share, of the Company held by the undersigned,
to each of the following actions without a meeting, without prior notice and
without a vote.
THE COMPANY STRONGLY RECOMMENDS THAT THE STOCKHOLDERS OF THE COMPANY CONSENT TO
EACH OF THE FOLLOWING SEVEN RESOLUTIONS.
1. Adoption of the following resolution to approve the 1998
Associate Stock Purchase Plan, as follows:
RESOLVED, that the 1998 Associate Stock Purchase Plan Stock be approved.
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If no box is marked above with respect to Resolution 1, the
undersigned will be deemed to consent to such Resolution.
2. Adoption of the following resolution to amend the Amended and
Restated Certificate of Incorporation of the Company ("Certificate of
Incorporation") to increase the Company's authorized Class A Common Stock from
100,000,000 shares to 200,000,000 shares, as follows:
RESOLVED, that the Amended and Restated Certificate of
Incorporation (the "Certificate of Incorporation") be amended to increase the
Company's authorized Class A Common Stock from 100,000,000 shares to
200,000,000 shares of Class A Common Stock, par value $.01 per share ("Class A
Common Stock").
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<PAGE> 73
If no box is marked above with respect to Resolution 2, the
undersigned will be deemed to consent to such Resolution.
3. Adoption of the following resolution to amend the Certificate
of Incorporation to authorize five million (5,000,000) shares of "blank check"
preferred stock, as follows:
RESOLVED, that the Certificate of Incorporation be amended to
authorize one million (5,000,000) shares of "blank check" preferred stock.
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If no box is marked above with respect to Resolution 3, the
undersigned will be deemed to consent to such Resolution.
4. Adoption of the following resolution to amend of the
Certificate of Incorporation and the Bylaws to eliminate Stockholder action by
written consent unless authorized by the Board of Directors, as follows:
RESOLVED, that the Certificate of Incorporation and Bylaws be
amended to eliminate stockholder action by written consent unless authorized by
the Board of Directors.
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If no box is marked above with respect to Resolution 4, the
undersigned will be deemed to consent to such Resolution.
5. Adoption of the following resolution to amend the Certificate
of Incorporation and the Bylaws to permit only Chairman of the Board or the
President, or the Chairman of the Board, President, or the Secretary at the
request in writing of a majority of the Board of Directors, to call special
meetings of Stockholders unless authorized by the Board of Directors and to
limit the business permitted to be conducted at such meetings to that brought
before the meetings by or at the direction of the Board of Directors, as
follows:
RESOLVED, that the Certificate of Incorporation and Bylaws be
amended to permit only the Chairman of the Board or the President, or the
Chairman of the Board, President, or the Secretary at the request in writing of
a majority of the Board of Directors, to call special meetings of stockholders
unless authorized by the Board of Directors and to limit the business permitted
to be conducted at such meetings to that brought before the meetings by the
Board of Directors.
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<PAGE> 74
If no box is marked above with respect to Resolution 5, the
undersigned will be deemed to consent to such Resolution.
6. Adoption of the following resolution to amend the Certificate
of Incorporation and the Bylaws to implement an advance notice procedure for
the submission of director nomination and other business to be considered at
annual meetings of Stockholders, as follows:
RESOLVED, that the Certificate of Incorporation and Bylaws be
amended to require an advance notice procedure for the submission of director
nominations and other stockholder proposals.
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If no box is marked above with respect to Resolution 6, the
undersigned will be deemed to consent to such Resolution.
7. Adoption of the following resolution to amend the Bylaws to
require either a majority vote of the Board of Directors or an affirmative vote
of 80% of the outstanding Common Stock entitled to vote in the election of
directors in order to adopt, amend or repeal the Bylaws, as follows:
RESOLVED, that the Bylaws be amended to require either a vote
of the Board of Directors or a vote of 80% of the Common Stock entitled to vote
in the election of directors in order to adopt, amend or repeal the Bylaws.
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If no box is marked above with respect to Resolution 7, the
undersigned will be deemed to consent to such Resolution.
The invalidity, illegality or unenforceability of any particular provision of
this Consent will be construed in all respects as if such invalid, illegal or
unenforceable provision were omitted without affecting the validity, legality
or enforceability of the remaining provisions hereof.
(This Consent card is continued on the reverse side. Please mark, sign and
date this Consent card on the reverse side before returning the Consent card in
the enclosed envelope).
<PAGE> 75
PLEASE SIGN, DATE AND RETURN THIS CONSENT PROMPTLY,
USING THE ENCLOSED ENVELOPE.
PLEASE SIGN BELOW EXACTLY AS NAME APPEARS ON THIS CONSENT. If shares are
registered in more than one name the signatures of all such persons are
required. A corporation should sign in its full corporate name by a duly
authorized officer, stating his title. Trustees guardians, executors and
administrators should sign in their official capacity giving their full title
as such. If a partnership, please sign in the partnership name by authorized
persons. MAKE SURE THAT THE NAME ON YOUR CERTIFICATE(S) AND THE NUMBER OF
SHARES ARE EXACTLY AS YOU INDICATE ABOVE.
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NUMBER OF SHARES
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(SIGNATURE)
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DATED
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(SIGNATURE IF HELD JOINTLY)
TITLE OR AUTHORITY IF APPLICABLE
*THIS IS YOUR CONSENT CARD*
