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FORM 8-A
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR 12(g) OF THE
SECURITIES EXCHANGE ACT OF 1934
PEROT SYSTEMS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 75-2230700
(State of incorporation (I.R.S. Employer
or organization) Identification No.)
12404 Park Central Drive, Dallas, Texas 75251
(Address of Principal Executive Offices) (Zip Code)
-------------------------
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange
to be registered on which each class is
to be registered
None None
Securities to be registered pursuant to Section 12(g) of the Act: Preferred
Stock Purchase Rights.
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ITEM 1. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED.
On January 5, 1998, the Board of Directors of Perot Systems Corporation
(the "Company") adopted a Stockholder Rights Plan, providing that one Class A
right (a "Class A Right") will be attached to each share of Class A common
stock, par value $.01 per share, of the Company (the "Class A Common Stock") and
one Class B right (a "Class B Right" and, together with the Class A Rights, the
"Rights") will be attached to each share of Class B Common Stock, par value $.01
per share, of the Company (the "Class B Common Stock" and, together with the
Class A Common Stock, the "Common Stock") as of the close of business on January
7, 1999 (the "Record Date"). Each Class A Right entitles the registered holder
to purchase from the Company a unit consisting of one one-thousandth of a share
of Series A Junior Participating Preferred Stock, par value $0.01 per share (the
"Series A Preferred Stock"), at a Purchase Price of $55.00 per unit (the
"Purchase Price"), subject to adjustment. Each Class B Right entitles the
registered holder to purchase from the Company a unit consisting of one
one-thousandth of a share of Series B Junior Participating Preferred Stock, par
value $0.01 per share (the "Series B Preferred Stock" and, together with the
Series A Preferred Stock, the "Preferred Stock"), at the Purchase Price of
$55.00 per unit (the "Purchase Price"), subject to adjustment. The description
and terms of the Rights are set forth in the Rights Agreement (the "Rights
Agreement"), dated as of January 28, 1999, between the Company and The Chase
Manhattan Bank as Rights Agent (the "Rights Agent").
Initially, the Class A Rights will be attached to all Class A Common
Stock certificates representing shares outstanding as of the Record Date and the
Class B Rights will be attached to all Class B Common Stock certificates
representing shares outstanding as of the Record Date, and no separate Rights
Certificates will be distributed. The Rights will separate from the Common Stock
and a Distribution Date will occur upon the earlier of (i) 10 calendar days
following a public announcement that a person or group of affiliated or
associated persons (an "Acquiring Person") has acquired, or obtained the right
to acquire, beneficial ownership of 20% or more of the outstanding shares of
Common Stock or 20% or more of the outstanding shares of Class A Common Stock
(the date of such announcement being the "Stock Acquisition Date"), (ii) 10
business days following the commencement of a tender offer or exchange offer
that would result in a person or group beneficially owning 20% or more of the
outstanding shares of Common Stock or 20% or more of the outstanding shares of
Class A Common Stock, or (iii) the Board of Directors of the Company determining
that any Person or Persons have become the Beneficial Owner of an amount of
Common Stock that the Board of Directors determines to be substantial (which
amount will in no event be less than 11% of the shares of Common Stock or Class
A Common Stock outstanding) and that (a) such Person or Persons intend to cause
the Company to repurchase the Common Stock beneficially owned by such Person or
Persons or to exert pressure against the Company to take any action or enter
into any transaction or series of transactions with the intent or the effect of
providing such Person or Persons
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with short-term gains or profits under circumstances in which the Board of
Directors determines that the long-term interests of the Company and its
stockholders would not be served by taking such action or entering into such
transactions or series of transactions or (b) beneficial ownership by such
Person or Persons is reasonably likely to have a material adverse effect on the
business, competitive position, prospects, business reputation, or financial
condition of the Company and its subsidiaries (an "Adverse Person"). Until the
Distribution Date, (i) the Rights will be evidenced by the Common Stock
certificates and will be transferred with and only with such Common Stock
certificates, (ii) new Common Stock certificates will contain a notation
incorporating the Rights Agreement by reference; and (iii) the surrender for
transfer of any certificates for Common Stock outstanding will also constitute
the transfer of the Rights associated with the Common Stock represented by such
certificate.
The Rights Agreement provides that Ross Perot, and certain of his
successors and affiliates are excluded from the definition of "Acquiring
Person." Mr. Perot and certain of his successors and affiliates are also
excluded from the definition of "Adverse Person."
The Rights are not exercisable until the Distribution Date and will
expire at the close of business on January 7, 2009, unless earlier redeemed by
the Company as described below.
As soon as practicable after the Distribution Date, Rights Certificates
will be mailed to holders of record of the Common Stock as of the close of
business on the Distribution Date and, thereafter, the separate Rights
Certificates alone will represent the Rights. Except as otherwise determined by
the Board of Directors, only shares of Common Stock outstanding prior to the
Distribution Date will be issued with Rights.
In the event that (i) any person becomes an Acquiring Person or (ii)
the Board of Directors declares a person to be an Adverse Person, each holder of
a Class A Right will thereafter have the right to receive, upon exercise, Class
A Common Stock (or, in certain circumstances, cash, property, or other
securities of the Company) and each holder of a Class B Right will thereafter
(subject to limitations on ownership under the Bank Holding Company Act of 1956)
have the right to receive, upon exercise, Class B Common Stock (or in certain
circumstances cash, property or other securities of the Company), having a value
equal to two times the Exercise Price of the Right. The Exercise Price is the
Purchase Price times the number of shares of Common Stock associated with each
Right (initially, one). Notwithstanding any of the foregoing, following the
occurrence of either of the events set forth in this paragraph (the "Flip-In
Events"), all Rights that are, or (under certain circumstances specified in the
Rights Agreement) were, beneficially owned by any Acquiring Person or any
Adverse Person, or an Associate or Affiliate of any Acquiring Person or Adverse
Person, will be null and void.
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For example, at an exercise price of $55 per Right, each Right not
owned by an Acquiring Person or an Adverse Person (or by certain related
parties) following an event set forth in the preceding paragraph would entitle
its holder to purchase Common Stock with a value of $110 (or other
consideration, as noted above) for $55. Assuming that the Common Stock had a per
share value of $55 at such time, the holder of each valid Right would be
entitled to purchase 2.0 shares of Common Stock for $55.
In the event that following the Stock Acquisition Date or the date a
person becomes an Adverse Person, (i) the Company is acquired in a merger or
consolidation in which the Company is not the surviving corporation or (ii) 50%
or more of the Company's assets or earning power is sold or transferred, each
holder of a Right (except Rights that have previously been voided as set forth
above) will thereafter have the right (a flip-over right) to receive, upon
exercise of the Right, Common Stock of the acquiring company having a value
equal to two times the Exercise Price of the Right.
The Purchase Price payable, and the number of units of Preferred Stock
or other securities or property issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution (i) in the event of
a stock dividend on, or a subdivision, combination or reclassification of, the
Preferred Stock, (ii) if holders of the Preferred Stock are granted certain
rights or warrants to subscribe for Preferred Stock or convertible securities at
less than the current market price of the Preferred Stock, or (iii) upon the
distribution to holders of the Preferred Stock of evidences of indebtedness or
assets (excluding regular quarterly cash dividends) or of subscription rights or
warrants (other than those referred to above). With certain exceptions, no
adjustments in the Purchase Price will be required until cumulative adjustments
amount to at least 1% of the Purchase Price. No fractional units will be issued
and, in lieu thereof, an adjustment in cash will be made based on the market
price of the Preferred Stock on the last trading date prior to the date of
exercise.
The Board of Directors may redeem all of the Rights at a price of
$0.001 per Right at any time prior to 10 days after the date that any person
becomes an Acquiring Person or an Adverse Person.
At any time after any person has become an Acquiring Person or an
Adverse Person (but before any person becomes the beneficial owner of 50% or
more of the Company's Common Stock), the Board of Directors may exchange all or
part of the Rights (other than the Rights beneficially owned by the Acquiring
Person or Adverse Person and certain affiliated persons) for shares of Common
Stock at an exchange ratio of one share of Common Stock per Right.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends. While the distribution of the Rights will not
be taxable to stockholders or to the Company, stockholders may, depending upon
the circumstances,
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recognize taxable income in the event that the Rights become exercisable for
Common Stock (or other consideration) of the Company as set forth above.
For so long as the Rights are redeemable, the Rights Agreement may be
amended in any respect. At any time after the Rights are no longer redeemable,
the Rights Agreement may be amended by the Board of Directors (without approval
of the holders of the Rights) in any respect that does not (i) adversely affect
the Rights holders (other than any Acquiring Person or Adverse Person and
certain affiliated persons), (ii) cause the Rights Agreement again to become
amendable other than in accordance with this paragraph, or (iii) cause the
Rights again to become redeemable.
The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire the Company
in certain circumstances. Accordingly, the existence of the Rights may deter
certain acquirors from making takeover proposals or tender offers.
The Rights Agreement between the Company and the Rights Agent
specifying the terms of the Rights, which includes as Exhibit B the Form of
Rights Certificate, is attached as an exhibit and incorporated by reference. The
foregoing description of the Rights does not purport to be complete and is
qualified in its entirety by reference to the Rights Agreement.
Item 2. EXHIBITS
Exhibit Number Description of Exhibit
3.1 Second Amended and Restated Certificate of Incorporation of the
Registrant (incorporated by reference to Exhibit 3.1 to the
Registrant's Registration Statement of Form S-1 (Registration No.
333-60755))
4.1 Rights Agreement dated as of January 28, 1999 between the Registrant
and The Chase Manhattan Bank, as the Rights Agent (filed herewith).
4.2 Form of Certificate of Designation, Preferences, and Rights of
Series A Junior Participating Preferred Stock of the Registrant
(included as Exhibit A-1 in Exhibit 4.1 filed herewith).
4.3 Form of Certificate of Designation, Preferences, and Rights of
Series B Junior Participating Preferred Stock of the Registrant
(included as Exhibit A-2 in Exhibit 4.1 filed herewith).
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SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereto duly authorized.
PEROT SYSTEMS CORPORATION
By: /s/ PETER ALTABEF
Name: Peter Altabef
Title: Vice President, General Counsel,
and Secretary
Date: February 18, 1999
<PAGE> 7
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Number Description of Exhibit
- -------------- ----------------------
<S> <C>
3.1 Second Amended and Restated Certificate of Incorporation of the
Registrant (incorporated by reference to Exhibit 3.1 to the
Registrant's Registration Statement of Form S-1 (Registration No.
333-60755))
4.1 Rights Agreement dated as of January 28, 1999 between the Registrant
and The Chase Manhattan Bank, as the Rights Agent (filed herewith).
4.2 Form of Certificate of Designation, Preferences, and Rights of
Series A Junior Participating Preferred Stock of the Registrant
(included as Exhibit A-1 in Exhibit 4.1 filed herewith).
4.3 Form of Certificate of Designation, Preferences, and Rights of
Series B Junior Participating Preferred Stock of the Registrant
(included as Exhibit A-2 in Exhibit 4.1 filed herewith).
</TABLE>
<PAGE> 1
Exhibit 4.1
PEROT SYSTEMS CORPORATION
and
THE CHASE MANHATTAN BANK,
as Rights Agent
Rights Agreement
January 28, 1999
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Table of Contents
<TABLE>
<CAPTION>
Section
<S> <C>
1. Certain Definitions---------------------------------------------------------1
2. Appointment of Rights Agent-------------------------------------------------6
3. Issue of Rights Certificates------------------------------------------------6
4. Form of Rights Certificates-------------------------------------------------8
5. Countersignature and Registration-------------------------------------------9
6. Transfer, Split Up, Combination, and Exchange of
Rights Certificates; Mutilated, Destroyed, Lost, or
Stolen Rights Certificates-------------------------------------------------10
7. Exercise of Rights; Purchase Price;
Expiration Date of Rights--------------------------------------------------11
8. Cancellation and Destruction of Rights Certificates------------------------13
9. Reservation and Availability of
Capital Stock--------------------------------------------------------------13
10. Preferred Stock Record Date------------------------------------------------15
11. Adjustment of Purchase Price, Number, and Kind of Shares or
Number of Rights-----------------------------------------------------------16
12. Certificate of Adjusted Purchase Price or Number of Shares-----------------25
13. Consolidation, Merger, or Sale or Transfer of Assets or Earning Power------26
14. Fractional Rights and Fractional Shares------------------------------------28
15. Rights of Action-----------------------------------------------------------29
16. Agreement of Rights Holders------------------------------------------------30
17. Rights Certificate Holder Not Deemed a Stockholder-------------------------30
18. Concerning the Rights Agent------------------------------------------------31
19. Merger or Consolidation or Change of Name of Rights Agent------------------31
</TABLE>
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<TABLE>
<S> <C>
20. Duties of Rights Agent-----------------------------------------------------32
21. Change of Rights Agent-----------------------------------------------------35
22. Issuance of New Rights Certificates----------------------------------------35
23. Redemption and Termination-------------------------------------------------36
24. Notice of Certain Events---------------------------------------------------36
25. Notices--------------------------------------------------------------------37
26. Supplement and Amendments--------------------------------------------------38
27. Successors-----------------------------------------------------------------39
28. Determinations and Actions by the Board of Directors, Etc.-----------------39
29. Benefits of this Agreement-------------------------------------------------39
30 Severability---------------------------------------------------------------40
31. Governing Law--------------------------------------------------------------40
32. Counterparts---------------------------------------------------------------40
33. Interpretation-------------------------------------------------------------40
34. Establishment of Fund for Directors ---------------------------------------40
35. Exchange-------------------------------------------------------------------40
</TABLE>
Exhibit A-1 -- Form of Certificate of Designation, Preferences, and Rights of
Series A Junior Participating Preferred Stock
Exhibit A-2 -- Form of Certificate of Designation, Preferences, and Rights of
Series B Junior Participating Preferred Stock
Exhibit B -- Form of Rights Certificate
Exhibit C -- Form of Summary of Rights
<PAGE> 4
RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of January 28, 1999 (the "Agreement"),
between Perot Systems Corporation, a Delaware corporation (the "Company"), and
The Chase Manhattan Bank, a New York corporation (the "Rights Agent").
BACKGROUND
On January 5, 1999 (the "Rights Dividend Declaration Date"), the Board
of Directors of the Company authorized and declared a dividend distribution of
one Class A Right (the "Class A Rights") for each share of Class A common stock,
par value $.01 per share, of the Company (the "Class A Common Stock") and one
Class B Right (the "Class B Rights" and, together with the Class A Rights, the
"Rights") for each share of Class B Common Stock, par value $.01 per share, of
the Company (the "Class B Common Stock" and together with the Class A Common
Stock, the "Common Stock") outstanding at the Close of Business on January 7,
1999 (the "Record Date"), and has authorized the issuance of one Class A Right
(as such number may be adjusted pursuant to the provisions of SECTION 11(p)) for
each share of Class A Common Stock of the Company and one Class B Right (as such
number may be adjusted pursuant to the provisions of SECTION 11(p)) for each
share of Class B Common Stock of the Company issued between the Record Date
(whether originally issued or delivered from the Company's treasury) and the
Distribution Date. Each Class A Right initially will represent the right to
purchase one one-thousandth of a share of Series A Junior Participating
Preferred Stock of the Company having the rights, powers, and preferences set
forth in the form of Certificate of Designation, Preferences, and Rights
attached to this Agreement as EXHIBIT A-1, upon the terms and subject to the
conditions set forth below. Each Class B Right initially will represent the
right to purchase one one-thousandth of a share of Series B Junior Participating
Preferred Stock of the Company having the rights, powers, and preferences set
forth in the form of Certificate of Designation, Preferences, and Rights
attached to this Agreement as EXHIBIT A-2, upon the terms and subject to the
conditions set forth below.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements set forth in this Agreement, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" means any Person that, together with
all Affiliates and Associates of such Person, is the Beneficial Owner
of 20% or more of the shares of Common Stock then outstanding or 20% or
more of the shares of Class A Common Stock then outstanding, but does
not include (i) any Exempt Person; (ii) any Perot Family Excluded
Person; (iii) any Person that has reported
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or is required to report such beneficial ownership (but less than 22%)
on Schedule 13G (or any comparable or successor report) or on Schedule
13D under the Exchange Act (or any comparable or successor report)
under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), which Schedule 13D does not state any intention to, or reserve
the right to, control or influence the management or policies of the
Company or engage in any of the actions specified in Item 4 (or
successor item) of such Schedule 13D (other than the disposition of the
Common Stock) and, within five (5) Business Days of being requested by
the Company to advise it regarding the same, certifies to the Company
that such Person acquired beneficial ownership of shares of Common
Stock in excess of 19.9% inadvertently or without knowledge of the
terms of the Rights and such certification is accepted as true by the
Board of Directors acting in good faith and that, together with all of
such Person's Affiliates and Associates, thereafter does not acquire
additional shares of Common Stock while the Beneficial Owner of 20% or
more of the shares of Common Stock then outstanding or 20% or more of
the shares of Class A Common Stock then outstanding; (iv) any Person
that becomes an Acquiring Person solely as a result of a reduction in
the number of outstanding shares of Common Stock in a transaction that
is approved by the Board of Directors; provided that such Person will
immediately be an Acquiring Person in the event such Person thereafter
acquires any additional shares of Common Stock (other than pursuant to
a dividend or distribution paid to made by the Company on the
outstanding Common Stock or pursuant to a split or subdivision of the
outstanding Common Stock) while the Beneficial Owner of 20% or more of
the shares of Common Stock then outstanding or 20% or more of the
Shares of Class A Common Stock then outstanding; and (v) any Person
that is the Beneficial Owner as of the date of this Agreement of in
excess of 20% of the outstanding Common Stock or 20% or more of the
outstanding Class A Common Stock that has publicly disclosed such
Beneficial Ownership; provided that such Person will immediately be an
Acquiring Person in the event such Person thereafter acquires any
additional shares of Common Stock (other than pursuant to a dividend or
distribution paid to made by the Company on the outstanding Common
Stock or pursuant to a split or subdivision of the outstanding Common
Stock) while the Beneficial Owner of 20% or more of the shares of
Common Stock then outstanding or 20% or more of the Shares of Class A
Common Stock then outstanding.
(b) "Adverse Person" means a Person (alone or together with
any other Person) as to which the Board of Directors has, after
consultation with such advisors and such other investigation as it
considers necessary, made the following determinations: (i) such Person
or Persons any time after the Rights Dividend Declaration Date have
become the Beneficial Owner of a substantial (but in no event less than
11% of the shares of Common Stock then outstanding) amount of Common
Stock; and (ii) (A) such Person or Persons intend to cause the Company
or its Affiliates to repurchase such Common Stock or Class A Common
Stock beneficially owned by such Person or Persons or to exert pressure
against the Company or its Affiliates to take any action or enter into
any
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transaction or series of transactions with the intent or effect of
providing such Person or Persons with short-term gains or profits under
circumstances in which the Board of Directors of the Company determines
that the long-term interests of the Company and its stockholders would
not be served by taking such action or entering into such transaction
or series of transactions; or (B) beneficial ownership of Common Stock
by such Person or Persons is reasonably likely to have a material
adverse effect on the business, competitive position, prospects,
business reputation, or financial condition of the Company and its
Subsidiaries; provided, however, that no Perot Family Excluded Person
will be an Adverse Person under the terms of this Agreement. No delay
or failure by the Board of Directors to make a determination that any
Person is an Adverse Person will in any way waive or otherwise
adversely affect the power of the Board of Directors to declare any
Person an Adverse Person.
(c) "Affiliate" and "Associate" and "Control" have the
respective meanings ascribed to such terms in Rule 12b-2 of the General
Rules and Regulations under the Exchange Act as in effect on the date
of this Agreement.
(d) A Person will be deemed the "Beneficial Owner" of, and
will be deemed to "beneficially own," any securities that:
(i) such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to acquire
(whether such right is exercisable immediately or only upon
the occurrence of certain events or the passage of time or
both) pursuant to any agreement, arrangement, or
understanding, other than customary agreements with and
between underwriters and selling group members with respect to
a bona fide public offering of securities, (in each case,
whether or not in writing) or upon the exercise of conversion
rights, exchange rights, rights, warrants or options, or
otherwise; provided, however, that a Person will not be deemed
the "Beneficial Owner" of, or to "beneficially own," (A)
securities tendered pursuant to a tender or exchange offer
made by such Person or any of such Person's Affiliates or
Associates until such tendered securities are accepted for
purchase or exchange, (B) securities that such Person has a
right to acquire upon exercise of Rights at any time prior to
the occurrence of a Triggering Event, or (C) securities
issuable upon exercise of Rights from and after the occurrence
of a Triggering Event, which Rights were acquired by such
Person or any of such Person's Affiliates or Associates prior
to the Distribution Date or pursuant to SECTION 3(a) or
SECTION 22 (the "Original Rights") or pursuant to SECTION
11(i) or SECTION 11(p) in connection with an adjustment made
with respect to any Original Rights;
(ii) such Person or any of such Person's Affiliates
or Associates, directly or indirectly, has the right to vote
or dispose of or has "beneficial ownership" of (as determined
pursuant to Rule 13d-3 of the
3
<PAGE> 7
General Rules and Regulations under the Exchange Act),
including pursuant to any agreement, arrangement, or
understanding (whether or not in writing and whether or not
such right is exercisable immediately or only upon the
occurrence of certain events or the passage of time or both);
provided, however, that a Person will not be deemed the
"Beneficial Owner" of, or to "beneficially own," any security
under this SECTION 1(d)(ii) as a result of an agreement,
arrangement, or understanding to vote such security if such
agreement, arrangement, or understanding: (1) arises solely
from a revocable proxy given in response to a public proxy or
consent solicitation made pursuant to, and in accordance with,
the applicable provisions of the General Rules and Regulations
under the Exchange Act, and (2) is not also then reportable by
such Person on Schedule 13D under the Exchange Act (or any
comparable or successor report); or
(iii) are beneficially owned, directly or indirectly,
by any other Person (or any Affiliate or Associate of such
Person) with respect to which such Person (or any of such
Person's Affiliates or Associates) has any agreement,
arrangement, or understanding, other than customary agreements
with and between underwriters and selling group members with
respect to a bona fide public offering of securities (in each
case, whether or not in writing), for the purpose of
acquiring, holding, voting (except pursuant to a revocable
proxy as described in the proviso in SECTION 1(d)(ii)), or
disposing of any voting securities of the Company;
provided, however, that no Person who is an officer, director or
employee of an Exempt Person or a Perot Family Excluded Person will be
deemed, solely by reason of such Person's status or authority as such,
to be the "Beneficial Owner" of, to have "beneficial ownership" of or
to "beneficially own" any securities that are "beneficially owned,"
including, without limitation, in a fiduciary capacity, by an Exempt
Person or a Perot Family Excluded Person or by any other such officer,
director, or employee of an Exempt Person or a Perot Family Excluded
Person.
(e) "Business Day" means any day other than a Saturday,
Sunday, or a day on which banking institutions in Dallas, Texas are
authorized or obligated by law or executive order to close.
(f) "Close of Business" on any given date will mean 5:00 p.m.,
Dallas, Texas time, on such date; provided, however, that if such date
is not a Business Day it will mean 5:00 p.m., Dallas, Texas time, on
the next succeeding Business Day.
(g) "Common Stock" has the meaning set forth in the recital to
this Agreement, except that "Common Stock" when used with reference to
any Person other than the Company will mean the capital stock of such
Person with
4
<PAGE> 8
the greatest voting power, or the equity securities or other equity
interest having power to control or direct the management, of such
Person.
(h) "Exempt Person" means the Company or any Subsidiary of the
Company, in each case including, without limitation, in its fiduciary
capacity, or any employee benefit plan of the Company or of any
Subsidiary of the Company, or any entity or trustee holding Common
Stock for or pursuant to the terms of any such plan or for the purpose
of funding any such plan or funding other employee benefits for
employees of the Company or of any Subsidiary of the Company.
(i) "Perot Family Excluded Person" means each of (i) Ross
Perot and his spouse; (ii) Ross Perot's lineal descendants and their
spouses with respect to Beneficial Ownership of Common Stock received
from Ross Perot, Ross Perot's spouse, Ross Perot's lineal descendants
or their spouses, or any entity referred to in CLAUSES (iii) or (iv);
(iii) any Person established by one or more of the Persons referred to
in CLAUSES (i) or (ii) for charitable or estate planning purposes; (iv)
HWGA, Ltd. or any other Person controlled by one or more persons
referred to in CLAUSES (i), (ii), or (iii) or in which the Persons
referred to in CLAUSES (i), (ii), or (iii) beneficially own in excess
of 51% of the beneficial interest.
(j) "Person" means any individual, firm, corporation,
partnership, or other public or private entity.
(k) "Preferred Stock" means (i) shares of Series A Junior
Participating Preferred Stock, par value $0.01 per share, of the
Company and (ii) shares of Series B Junior Participating Preferred
Stock, par value $0.01 per share, of the Company, and, to the extent
that there are not a sufficient number of shares of Series A Junior
Participating Preferred Stock or Series B Junior Participating
Preferred Stock authorized to permit the full exercise of the Rights,
any other series of preferred stock of the Company designated for such
purpose containing terms substantially similar to the terms of the
Series A Junior Participating Preferred Stock or the or Series B Junior
Participating Preferred Stock, as the case may be.
(l) "Section 11(a)(ii) Event" means any event described in
SECTION 11(a)(ii).
(m) "Section 13 Event" means any event described in clauses
(x), (y), or (z) of SECTION 13(a).
(n) "Stock Acquisition Date" means the first date of public
announcement (which, for purposes of this definition, will include,
without limitation, a report filed pursuant to ss. 13(d) under the
Exchange Act) by the Company or an Acquiring Person that an Acquiring
Person has become an Acquiring Person.
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<PAGE> 9
(o) "Subsidiary" means, with reference to any Person, any
entity of which an amount of voting securities sufficient to elect at
least a majority of the directors or similar Persons of such entity is
beneficially owned, directly or indirectly, by such Person, or
otherwise controlled by such Person.
(p) "Triggering Event" means any Section 11(a)(ii) Event or
any Section 13 Event.
Section 2. Appointment of Rights Agent. The Company hereby
appoints the Rights Agent to act as agent for the Company in accordance with the
terms and conditions of this Agreement, and the Rights Agent hereby accepts such
appointment. The Company may from time to time appoint such Co-Rights Agents as
it may deem necessary or desirable. The Rights Agent will have no duty to
supervise, and in no event will be liable for, the acts or omissions of any such
co-Rights Agent.
Section 3. Issue of Rights Certificates.
(a) Until the earlier of (i) the Close of Business on the
tenth calendar day after the Stock Acquisition Date (or, if the tenth
calendar day after the Stock Acquisition Date occurs before the Record
Date, the Close of Business on the Record Date); (ii) the Close of
Business on the tenth Business Day (or such later date as may be
designated prior to the occurrence of a Section 11(a)(ii) Event by
action of the Board of Directors) after the date that a tender offer or
exchange offer by any Person (other than the Company or any Exempt
Person) is first published or sent or given within the meaning of Rule
14d-2(a) of the General Rules and Regulations under the Exchange Act,
if upon consummation thereof, such Person would be an Acquiring Person;
or (iii) the Close of Business on the day (or such later date as may be
designated prior to the occurrence of a Section 11(a)(ii) Event by
action of the Board of Directors) that a Person has become an Adverse
Person (the earlier of the times referred to in CLAUSES (i), (ii), and
(iii) being referred to as the "Distribution Date"), (x) the Class A
Rights will be evidenced (subject to the provisions of this SECTION
3(a)) by the certificates for the Class A Common Stock registered in
the names of the holders of the Class A Common Stock (which
certificates for Class A Common Stock will be deemed also to be
certificates for Class A Rights), and the Class B Rights will be
evidenced (subject to the provisions of this SECTION 3(a)) by the
certificates for Class B Common Stock registered in the names of the
holders of the Class B Common Stock (which certificates for Class B
Common Stock will be deemed also to be certificates for Class B
Rights), and, in each such case, not by separate certificates, and (y)
the Rights will be transferable only in connection with the transfer of
the underlying shares of Common Stock (including a transfer to the
Company). As soon as practicable after the Distribution Date, the
Rights Agent upon receipt by it of all necessary information will send
by first-class,
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<PAGE> 10
insured, postage prepaid mail, to each record holder of the Common
Stock as of the Close of Business on the Distribution Date, at the
address of such holder shown on the records of the Company, one or more
rights certificates, in substantially the form of EXHIBIT B (the
"Rights Certificates"), evidencing one Right for each share of Common
Stock so held, subject to adjustment as provided in this Agreement. In
the event that an adjustment in the number of Rights per share of
Common Stock has been made pursuant to SECTION 11(p), at the time of
distribution of the Rights Certificates, the Company will make the
necessary and appropriate rounding adjustments (in accordance with
SECTION 14(a)) so that Rights Certificates representing only whole
numbers of Rights are distributed and cash is paid in lieu of any
fractional Rights. As of and after the Distribution Date, the Rights
will be evidenced solely by such Rights Certificates.
(b) As promptly as practicable following the Record Date, the
Company will send a copy of a Summary of Rights, in substantially the
form of EXHIBIT C, by first-class, postage prepaid mail, to each record
holder of the Common Stock as of the Close of Business on the Record
Date, at the address of such holder shown on the records of the
Company. With respect to certificates for the Common Stock outstanding
as of the Record Date, until the Distribution Date, the Rights will be
evidenced by such certificates for the Common Stock and the registered
holders of the Common Stock will also be the registered holders of the
associated Rights. Until the earlier of the Distribution Date and the
Expiration Date (as defined in SECTION 7), the transfer of any
certificates representing shares of Common Stock in respect of which
Rights have been issued will also constitute the transfer of the Rights
associated with such shares of Common Stock.
(c) Rights will be issued in respect of all shares of Common
Stock that are issued (whether originally issued or from the Company's
treasury) after the Record Date but prior to the earlier of the
Distribution Date or the Expiration Date. Certificates representing
such shares of Common Stock will also be deemed to be certificates for
Rights, and will bear the following legend:
THIS CERTIFICATE ALSO EVIDENCES AND ENTITLES THE HOLDER TO
CERTAIN RIGHTS AS SET FORTH IN THE RIGHTS AGREEMENT BETWEEN
PEROT SYSTEMS CORPORATION (THE "COMPANY") AND THE CHASE
MANHATTAN BANK (THE "RIGHTS AGENT") DATED AS OF JANUARY 28,
1999 (AS AMENDED FROM TIME TO TIME, THE "RIGHTS AGREEMENT"),
THE TERMS OF WHICH ARE HEREBY INCORPORATED IN THIS CERTIFICATE
BY REFERENCE AND A COPY OF WHICH IS ON FILE AT THE PRINCIPAL
OFFICES OF THE COMPANY. UNDER CERTAIN CIRCUMSTANCES, AS SET
FORTH IN THE RIGHTS AGREEMENT, SUCH RIGHTS MAY BE EVIDENCED BY
SEPARATE CERTIFICATES AND NO LONGER BE EVIDENCED BY THIS
CERTIFICATE, MAY BE REDEEMED OR EXCHANGED OR MAY EXPIRE. THE
COMPANY WILL MAIL TO THE HOLDER OF THIS CERTIFICATE A COPY OF
THE RIGHTS AGREEMENT, AS IN EFFECT ON THE DATE OF MAILING,
WITHOUT
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<PAGE> 11
CHARGE PROMPTLY AFTER RECEIPT OF A WRITTEN REQUEST. UNDER
CERTAIN CIRCUMSTANCES SET FORTH IN THE RIGHTS AGREEMENT,
RIGHTS BENEFICIALLY OWNED BY ANY PERSON WHO IS, WAS, OR
BECOMES AN ACQUIRING PERSON OR AN ADVERSE PERSON OR ANY
AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON OR AN ADVERSE
PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT),
WHETHER CURRENTLY HELD BY OR ON BEHALF OF SUCH PERSON OR BY
ANY SUBSEQUENT HOLDER, MAY BECOME NULL AND VOID.
Section 4. Form of Rights Certificates.
(a) The Rights Certificates (and the forms of election to
purchase and of assignment to be printed on the reverse of the rights
certificates) will each be substantially in the form set forth in
EXHIBIT B and may have such marks of identification or designation and
such legends, summaries, or endorsements as the Company may deem
appropriate (but that do not change or alter the rights or duties of
the Rights Agent) and as are not inconsistent with the provisions of
this Agreement, or as may be required to comply with any applicable law
or with any rule or regulation made pursuant thereto or with any rule
or regulation of any stock exchange or quotation system on which the
Rights may from time to time be listed, or to conform to usage. Subject
to the provisions of SECTION 11 and SECTION 22, the Rights
Certificates, whenever distributed, will be dated as of the Record Date
and on their face will entitle the holders of such Rights Certificates
to purchase such number of one one-thousandths of a share of Preferred
Stock as is set forth in such Rights Certificates at the price set
forth in such Rights Certificates (such exercise price per one
one-thousandth of a share, the "Purchase Price"), but the amount and
type of securities purchasable upon the exercise of each Right and the
Purchase Price will be subject to adjustment as provided in this
Agreement.
(b) Any Rights Certificate issued pursuant to SECTION 3(a) or
SECTION 22 that represents Rights beneficially owned by (i) an
Acquiring Person or an Adverse Person or any Associate or Affiliate of
an Acquiring Person or an Adverse Person, (ii) a transferee from an
Acquiring Person or an Adverse Person (or from any Associate or
Affiliate of an Acquiring Person or an Adverse Person) that becomes a
transferee after the Acquiring Person or an Adverse Person becomes an
Acquiring Person or an Adverse Person, or (iii) a transferee from an
Acquiring Person or an Adverse Person (or of any Associate or Affiliate
of an Acquiring Person or an Adverse Person) that becomes a transferee
prior to or concurrently with the Acquiring Person or an Adverse Person
becoming an Acquiring Person or an Adverse Person and receives such
Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person or Adverse Person to holders
of equity interests in such Acquiring Person or Adverse Person or to
any Person with whom such Acquiring Person or Adverse Person has any
continuing agreement, arrangement, or understanding regarding the
transferred Rights or (B) a transfer that the Board of Directors of the
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<PAGE> 12
Company has determined is part of an agreement, plan, arrangement, or
understanding that has as a substantial purpose or effect avoidance of
SECTION 7(e), and any Rights Certificate issued pursuant to SECTION 6
or SECTION 11 upon transfer, exchange, replacement, or adjustment of
any other Rights Certificate referred to in this SECTION 4(b), will
contain (to the extent the Rights Agent has knowledge thereof and to
the extent feasible), and the Company will have the right to affix
thereto, the following legend:
THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE
BENEFICIALLY OWNED BY A PERSON WHO IS, WAS, OR BECAME AN
ACQUIRING PERSON OR AN ADVERSE PERSON OR AN AFFILIATE OR
ASSOCIATE OF AN ACQUIRING PERSON OR AN ADVERSE PERSON (AS SUCH
TERMS ARE DEFINED IN THE RIGHTS AGREEMENT). ACCORDINGLY, THIS
RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY
BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN THE
RIGHTS AGREEMENT.
Section 5. Countersignature and Registration.
(a) The Rights Certificates will be executed on behalf of the
Company by its Chairman of the Board, its Chief Executive Officer, its
Chief Operating Officer, its President, or any Vice President, either
manually or by facsimile signature; will have affixed thereto the
Company's seal or a facsimile thereof; and will be attested by the
Secretary or an Assistant Secretary of the Company, either manually or
by facsimile signature. The Rights Certificates will be countersigned
by the Rights Agent, either manually or by facsimile signature and will
not be valid for any purpose unless so countersigned. In case any
officer of the Company who has signed any of the Rights Certificates
ceases to be such officer of the Company before countersignature by the
Rights Agent and issuance and delivery by the Company, such Rights
Certificates, nevertheless, may be countersigned by the Rights Agent
and issued and delivered by the Company with the same force and effect
as though the Person who signed such Rights Certificates had not ceased
to be such officer of the Company, and any Rights Certificate may be
signed on behalf of the Company by any Person who, at the actual date
of the execution of such Rights Certificate, is a proper officer of the
Company to sign such Rights Certificate, although at the date of the
execution of such Rights Certificate any such Person was not such an
officer.
(b) Following the Distribution Date and after receipt by the
Rights Agent of all necessary information, the Rights Agent will keep
or cause to be kept, at its principal office or offices designated as
the appropriate place for surrender of Rights Certificates upon
exercise or transfer, books for registration and transfer of the Rights
Certificates issued under this Agreement. Such books will show the
names and addresses of the respective holders of the Rights
Certificates, the number of Rights evidenced on the face of the Rights
Certificates, and the date of each of the Rights Certificates.
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<PAGE> 13
Section 6. Transfer, Split Up, Combination, and Exchange of
Rights Certificates; Mutilated, Destroyed, Lost, or Stolen Rights Certificates.
(a) Subject to the provisions of SECTION 4(b), SECTION 7(e),
and SECTION 14, at any time after the Distribution Date, and at or
prior to the Expiration Date, any Rights Certificate or Certificates
may be transferred, split up, combined, or exchanged for another Rights
Certificate or Rights Certificates, entitling the registered holder to
purchase a like number of one one-thousandths of a share of Preferred
Stock (or, following a Triggering Event, Common Stock, other
securities, cash, or other property, as the case may be) as the Rights
Certificate or Rights Certificates surrendered then entitled such
holder (or former holder in the case of a transfer) to purchase. Any
registered holder desiring to transfer, split up, combine, or exchange
any Rights Certificate or Rights Certificates will make such request in
writing delivered to the Rights Agent, and will surrender the Rights
Certificate or Rights Certificates to be transferred, split up,
combined, or exchanged at the principal office or offices of the Rights
Agent designated for such purpose. Neither the Rights Agent nor the
Company will be obligated to take any action whatsoever with respect to
the transfer of any such surrendered Rights Certificate until the
registered holder has completed and signed the certificate contained in
the form of assignment on the reverse side of such Rights Certificate
and has provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company requests in good faith. Thereupon,
the Rights Agent will, subject to SECTION 4(b), SECTION 7(e), and
SECTION 14, countersign and deliver to the Person entitled thereto a
Rights Certificate or Rights Certificates, as the case may be, as so
requested. The Company may require payment of a sum sufficient to cover
any tax or governmental charge that may be imposed in connection with
any transfer, split up, combination, or exchange of any Rights
Certificate.
(b) Upon receipt by the Company and the Rights Agent of
evidence reasonably satisfactory to them of the loss, theft,
destruction, or mutilation of a Rights Certificate, and, in case of
loss, theft, or destruction, of indemnity or security satisfactory to
them, and reimbursement to the Company and the Rights Agent of all
reasonable expenses incidental thereto, and upon surrender to the
Rights Agent and cancellation of the Rights Certificate if mutilated,
the Company will execute and deliver a new Rights Certificate of like
tenor to the Rights Agent for countersignature and delivery to the
registered owner in lieu of the Rights Certificate so lost, stolen,
destroyed, or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights.
(a) The registered holder of any Rights Certificate may
exercise the Rights evidenced thereby (except as otherwise provided in
this Agreement including, without limitation, the restrictions on
exercisability set forth in SECTION
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<PAGE> 14
7(e), SECTION 7(f), SECTION 9(c), SECTION 11(a)(iii), and SECTION 35)
in whole or in part at any time after the Distribution Date upon
surrender of the Rights Certificate, with the form of election to
purchase and the certificate on the reverse side of the Rights
Certificate duly executed, to the Rights Agent at the principal office
or offices of the Rights Agent designated for such purpose, together
with payment of the aggregate Purchase Price with respect to the total
number of one one-thousandths of a share of Preferred Stock (or other
securities, cash, or other property, as the case may be) as to which
such surrendered Rights are then exercisable, at or prior to the
earlier of (i) the Close of Business on the tenth anniversary of the
Record Date) (the "Final Expiration Date"), and (ii) the time at which
the Rights are redeemed as provided in SECTION 23 (the earlier of the
times referred to in CLAUSES (i) and (ii) being referred to as the
"Expiration Date")).
(b) The Purchase Price for each one one-thousandth of a share
of Preferred Stock pursuant to the exercise of a Right will initially
be $55.00; will be subject to adjustment from time to time as provided
in SECTION 11, and SECTION 13(a); and will be payable in accordance
with SECTION 7(c).
(c) Upon receipt of a Rights Certificate representing
exercisable Rights, with the form of election to purchase and the
certificate duly executed, accompanied by payment, with respect to each
Right so exercised, of the Purchase Price per one one-thousandth of a
share of Preferred Stock (or other shares, securities, cash, or other
property, as the case may be) to be purchased as set forth below and an
amount equal to any applicable transfer tax, the Rights Agent will,
subject to SECTION 20(k), promptly (i) (A) requisition from any
transfer agent of the shares of Preferred Stock (or make available, if
the Rights Agent is the transfer agent for such shares) certificates
for the total number of one one-thousandths of a share of Preferred
Stock to be purchased, (the Company hereby irrevocably authorizing its
transfer agent to comply with all such requests), or (B) if the Company
has elected to deposit the total number of shares of Preferred Stock
issuable upon exercise of the Rights with a depository agent,
requisition from the depository agent depository receipts representing
such number of one one-thousandths of a share of Preferred Stock as are
to be purchased (in which case certificates for the shares of Preferred
Stock represented by such receipts will be deposited by the transfer
agent with the depository agent) and the Company will direct the
depository agent to comply with such request; (ii) requisition from the
Company the amount of cash, if any, to be paid in lieu of fractional
shares in accordance with SECTION 14; (iii) after receipt of such
certificates or depository receipts, cause such certificates or
depository receipts to be delivered to or upon the order of the
registered holder of such Rights Certificate, registered in such name
or names as may be designated by such holder; and (iv) after receipt
thereof, deliver such cash, if any, to or upon the order of the
registered holder of such Rights Certificate. The payment of the
Purchase Price (as such amount may be reduced pursuant to SECTION
11(a)(iii)) will be made in cash or by certified bank check or bank
draft
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<PAGE> 15
payable to the order of the Company. In the event that the Company is
obligated to issue other securities (including Common Stock) of the
Company, pay cash, or distribute other property pursuant to SECTION
11(a), the Company will make all arrangements necessary so that such
other securities, cash, or other property are available for
distribution by the Rights Agent, if and when necessary to comply with
this Agreement. The Company reserves the right to require prior to the
occurrence of a Triggering Event that, upon any exercise of Rights, a
number of Rights be exercised so that only whole shares of Preferred
Stock would be issued.
(d) In case the registered holder of any Rights Certificate
exercises less than all the Rights evidenced thereby, a new Rights
Certificate evidencing Rights equivalent to the Rights remaining
unexercised will be issued by the Rights Agent and delivered to, or
upon the order of, the registered holder of such Rights Certificate,
registered in such name or names as may be designated by such holder,
subject to the provisions of SECTION 6 AND SECTION 14.
(e) Notwithstanding anything in this Agreement to the
contrary, from and after the first occurrence of a Section 11(a)(ii)
Event, any Rights beneficially owned by any Person referred to in
CLAUSES (i) through (iii) below will become null and void without any
further action, and no holder of such Rights will have any rights
whatsoever with respect to such Rights, whether under any provision of
this Agreement or otherwise: (i) an Acquiring Person or an Adverse
Person or an Associate or Affiliate of an Acquiring Person or an
Adverse Person, (ii) a transferee from an Acquiring Person or an
Adverse Person (or from any Associate or Affiliate of an Acquiring
Person or Adverse Person) that becomes a transferee after the Acquiring
Person or an Adverse Person becomes such, or (iii) a transferee from an
Acquiring Person or an Adverse Person (or of any such Associate or
Affiliate) that becomes a transferee prior to or concurrently with the
Acquiring Person or Adverse Person becoming such and that receives such
Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person or the Adverse Person to
holders of equity interests in such Acquiring Person or Adverse Person
or to any Person with whom the Acquiring Person or Adverse Person has
any continuing agreement, arrangement, or understanding regarding the
transferred Rights or (B) a transfer that the Board of Directors of the
Company has determined is part of an agreement, arrangement, or
understanding that has as a substantial purpose or effect the avoidance
of this SECTION 7(e). The Company will notify the Rights Agent promptly
when this SECTION 7(e) applies and will use reasonable efforts to
insure that the provisions of this SECTION 7(e) and SECTION 4(b) are
complied with, but neither the Company nor the Rights Agent will have
any liability under this Agreement to any holder of Rights Certificates
or other Person as a result of any failure to make any determinations
with respect to an Acquiring Person, an Adverse Person, or any of their
Affiliates, Associates, or transferees.
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<PAGE> 16
(f) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company will be obligated to
undertake any action with respect to a registered holder upon the
occurrence of any purported exercise as set forth in this SECTION 7
unless such registered holder has (i) properly completed and signed the
certificate contained in the form of election to purchase set forth on
the reverse side of the Rights Certificate surrendered for such
exercise, (ii) not indicated an affirmative response to clause 1 or 2
thereof, and (iii) provided such additional evidence of the identity of
the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company or the Rights Agent requests in good
faith.
Section 8. Cancellation and Destruction of Rights Certificates.
All Rights Certificates surrendered for the purpose of exercise, transfer, split
up, combination, or exchange will, if surrendered to the Company or any of its
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, will be canceled by it, and no Rights
Certificates will be issued in lieu thereof except as expressly permitted by any
of the provisions of this Agreement. The Company will deliver to the Rights
Agent for cancellation and retirement, and the Rights Agent will so cancel and
retire, any other Rights Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent will deliver all
canceled Rights Certificates to the Company, or will, at the written request of
the Company, destroy such canceled Rights Certificates, and in such case will
deliver a certificate of destruction to the Company.
Section 9. Reservation and Availability of Capital Stock.
(a) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued shares
of Preferred Stock (and, following the occurrence of a Triggering
Event, out of its authorized and unissued shares of Common Stock or
other securities or out of its authorized and issued shares held in its
treasury), the number of shares of Preferred Stock (and, following the
occurrence of a Triggering Event, Common Stock or other securities)
that (as provided in this Agreement including, without limitation,
SECTION 11(a)(iii)), will be sufficient to permit the exercise in full
of all outstanding Rights.
(b) So long as the shares of Preferred Stock (and, following
the occurrence of a Triggering Event, Common Stock or other securities)
issuable and deliverable upon the exercise of the Rights may be listed
on any national securities exchange or automated quotation system, the
Company will use its reasonable efforts to cause, from and after such
time as the Rights become exercisable, all shares reserved for such
issuance to be listed on such exchange or automated quotation system
upon official notice of issuance upon such exercise.
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<PAGE> 17
(c) The Company will use its best reasonable efforts to (i)
file, as soon as practicable following the earliest date after the
first occurrence of a Section 11(a)(ii) Event on which the
consideration to be delivered by the Company upon exercise of the
Rights has been determined in accordance with SECTION 11(a)(iii), a
registration statement under the Securities Act of 1933, as amended
(the "Act"), with respect to the securities purchasable upon exercise
of the Rights on an appropriate form, (ii) cause such registration
statement to become effective as soon as practicable after such filing,
and (iii) cause such registration statement to remain effective (with a
prospectus at all times meeting the requirements of the Act) until the
earlier of (A) the date as of which the Rights are no longer
exercisable for such securities, and (B) the date of the expiration of
the Rights. The Company will also take such action as may be
appropriate under, or to ensure compliance with, the securities or
"blue sky" laws of the various states in connection with the
exercisability of the Rights. The Company may temporarily suspend, for
a period of time not to exceed ninety (90) days after the date set
forth in clause (i) of the first sentence of this SECTION 9(c), the
exercisability of the Rights in order to prepare and file such
registration statement and permit it to become effective. Upon any such
suspension, the Company will issue a public announcement stating that
the exercisability of the Rights has been temporarily suspended, as
well as a public announcement at such time as the suspension is no
longer in effect. In addition, if the Company determines that a
registration statement is required following the Distribution Date, the
Company may temporarily suspend the exercisability of the Rights until
such time as a registration statement has been declared effective.
Notwithstanding any provision of this Agreement to the contrary, the
Rights will not be exercisable in any jurisdiction if the requisite
qualification in such jurisdiction has not been obtained, the exercise
of such Rights is not permitted under applicable law, or a registration
statement has not been declared effective.
(d) The Company covenants and agrees that it will take all
such action as may be necessary to ensure that all shares of Preferred
Stock (and, following the occurrence of a Triggering Event, Common
Stock or other securities) delivered upon exercise of Rights will, at
the time of delivery of the certificates for such shares (subject to
payment of the Purchase Price), be duly and validly authorized and
issued and fully paid and nonassessable.
(e) The Company further covenants and agrees that it will pay
when due and payable any and all federal and state transfer taxes and
charges that may be payable in respect of the issuance or delivery of
the Rights Certificates and of any certificates for a number of one
one-thousandths of a share of Preferred Stock (or Common Stock or other
securities, as the case may be) upon the exercise of Rights. The
Company will not, however, be required to pay any transfer tax that may
be payable in respect of any transfer or delivery of Rights
Certificates to a Person other than, or the issuance or delivery of a
number of one one-thousandths of a share of Preferred Stock (or Common
Stock or other securities, as the case may be) in respect of a name
other than that of, the
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<PAGE> 18
registered holder of the Rights Certificates evidencing Rights
surrendered for exercise or to issue or deliver any certificates for a
number of one one-thousandths of a share of Preferred Stock (or Common
Stock or other securities, as the case may be) in a name other than
that of the registered holder upon the exercise of any Rights until
such tax has been paid (any such tax being payable by the holder of
such Rights Certificate at the time of surrender) or until it has been
established to the Company's satisfaction that no such tax is due.
Section 10. Preferred Stock Record Date. Each Person in whose
name any certificate for a number of one one-thousandths of a share of Preferred
Stock (or Common Stock or other securities, as the case may be) is issued upon
the exercise of Rights will for all purposes be deemed to have become the holder
of record of such fractional shares of Preferred Stock (or Common Stock or other
securities, as the case may be) represented thereby on, and such certificate
will be dated, the date upon which the Rights Certificate evidencing such Rights
was duly surrendered and payment of the Purchase Price (and all applicable
transfer taxes) was made; provided, however, that if the date of such surrender
and payment is a date upon which the Preferred Stock (or Common Stock or other
securities, as the case may be) transfer books of the Company are closed, such
Person will be deemed to have become the record holder of such shares
(fractional or otherwise) on, and such certificate will be dated, the next
succeeding Business Day on which the Preferred Stock (or Common Stock or other
securities, as the case may be) transfer books of the Company are open. Prior to
the exercise of the Rights evidenced thereby, the holder of a Rights Certificate
will not be entitled to any rights of a stockholder of the Company with respect
to shares for which the Rights is exercisable, including, without limitation,
the right to vote, to receive dividends or other distributions, or to exercise
any preemptive rights, and will not be entitled to receive any notice of any
proceedings of the Company, except as provided in this Agreement.
Section 11. Adjustment of Purchase Price, Number, and Kind of
Shares or Number of Rights. The Purchase Price, the number and kind of shares
covered by each Right and the number of Rights outstanding are subject to
adjustment from time to time as provided in this SECTION 11.
(a) (i) In the event the Company at any time after the date of
this Agreement (A) pays a dividend on the Preferred Stock
payable in shares of Preferred Stock, (B) subdivides the
outstanding Preferred Stock, (C) combines the outstanding
Preferred Stock into a smaller number of shares, or (D) issues
any shares of its capital stock in a reclassification of the
Preferred Stock (including, without limitation, any such
reclassification in connection with a consolidation or merger
in which the Company is the continuing or surviving
corporation), except as otherwise provided in this SECTION
11(a) and SECTION 7(e), the Purchase Price in effect at the
time of the record date for such dividend or of the effective
date of such subdivision, combination, or reclassification,
and the number and kind of shares of Preferred Stock or
capital stock, as the case may be, issuable
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<PAGE> 19
on such date, will be proportionately adjusted so that the
holder of any Right exercised after such time will be entitled
to receive, upon payment of the Purchase Price then in effect,
the aggregate number and kind of shares of Preferred Stock or
capital stock, as the case may be, that, if such Right had
been exercised immediately prior to such date and at a time
when the Preferred Stock transfer books of the Company were
open, such holder would have owned upon such exercise and been
entitled to receive by virtue of such dividend, subdivision,
combination, or reclassification. If an event occurs that
would require an adjustment under both this SECTION 11(a)(i)
and SECTION 11(a)(ii), the adjustment provided for in this
SECTION 11(a)(i) will be in addition to, and will be made
prior to, any adjustment required pursuant to SECTION
11(a)(ii).
(ii) In the event that:
(A) any Person, at any time after the Rights
Dividend Declaration Date, becomes an Acquiring
Person; or
(B) the Board of Directors of the Company
declares any Person to be an Adverse Person;
then, promptly following the first occurrence of a Section 11(a)(ii)
Event, proper provision will be made so that (A) each holder of a Class
A Right (except as provided below in this SECTION 11(a)(ii) and in
SECTION 7(e)) will thereafter have the right to receive, upon exercise
of such Right at the then current Purchase Price in accordance with the
terms of this Agreement, in lieu of a number of one one-thousandths of
a share of Preferred Stock, such number of shares of Class A Common
Stock of the Company as equals the result obtained by (x) multiplying
the then current Purchase Price by the then number of one
one-thousandths of a share of Preferred Stock for which a Right was
exercisable immediately prior to the first occurrence of a Section
11(a)(ii) Event, and (y) dividing that product (which, following such
first occurrence, will thereafter be referred to as the "Purchase
Price" for each Class A Right and for all purposes of this Agreement)
by 50% of the Current Market Price (determined pursuant to SECTION
11(d)) per share of Class A Common Stock on the date of such first
occurrence (such number of shares, the "Class A Adjustment Shares") and
(B) each holder of a Class B Right (except as provided below in this
SECTION 11(a)(ii) and in SECTION 7(e)) will thereafter have the right
to receive, upon exercise of such Right at the then current Purchase
Price in accordance with the terms of this Agreement, in lieu of a
number of one one-thousandths of a share of Preferred Stock, such
number of shares of Class B Common Stock of the Company as equals the
result obtained by (x) multiplying the then current Purchase Price by
the then number of one one-thousandths of a share of Preferred Stock
for which a Right was exercisable immediately prior to the first
occurrence of a SECTION 11(a)(ii) Event, and (y) dividing that product
(which, following such first occurrence, will thereafter be referred to
as the "Purchase
16
<PAGE> 20
Price" for each Class B Right and for all purposes of this Agreement)
by 50% of the Current Market Price (determined pursuant to SECTION
11(d)) per share of Class A Common Stock on the date of such first
occurrence (such number of shares, the "Class B Adjustment Shares" and,
together with the Class A Adjustment Shares, the "Adjustment Shares");
provided that if the transaction that would otherwise give rise to the
foregoing adjustment is also subject to the provisions of SECTION 13,
then only the provisions of SECTION 13 will apply and no adjustment
will be made pursuant to this SECTION 11(a)(ii).
(iii) In the event that the number of shares of
Common Stock that are authorized by the Company's articles of
incorporation but not outstanding or reserved for issuance for
purposes other than upon exercise of the Rights is not
sufficient to permit the exercise in full of the Rights in
accordance with SECTION 11(a)(ii), the Company will (A)
determine the value of the Adjustment Shares issuable upon the
exercise of a Class A Right or Class B Right, as the case may
be (the "Current Value"), and (B) with respect to each Right
(subject to SECTION 7(e)), make adequate provision to
substitute for the Adjustment Shares, upon the exercise of a
Right and payment of the applicable Purchase Price, (1) cash,
(2) a reduction in the Purchase Price, (3) Common Stock or
other equity securities of the Company (including, without
limitation, shares, or units of shares, of preferred stock,
such as the Preferred Stock, that the Board of Directors has
deemed to have essentially the same value or economic rights
as shares of Common Stock (such securities being referred to
as "Common Stock Equivalents")), (4) debt securities of the
Company, (5) other assets or property, or (6) any combination
of the foregoing, having an aggregate value equal to the
Current Value (less the amount of any reduction in the
Purchase Price), where such aggregate value has been
conclusively determined based upon the advice of a nationally
recognized investment banking firm; provided, however, that if
the Company has not made adequate provision to deliver value
pursuant to CLAUSE (B) above within thirty (30) days following
the first occurrence of a Section 11(a)(ii) Event then the
Company will be obligated to deliver, upon the surrender for
exercise of a Right and without requiring payment of the
Purchase Price, shares of Class A Common Stock or Class B
Common Stock, as the case may be, (to the extent available)
and then, if necessary, cash, which shares or cash have an
aggregate value equal to the Spread. For purposes of the
preceding sentence, the term "Spread" means the excess of (i)
the Current Value over (ii) the Purchase Price. To the extent
that action is to be taken pursuant to the first sentence of
this SECTION 11(a)(iii), the Company (1) will provide, subject
to SECTION 7(e), that such action will apply uniformly to all
outstanding Rights, and (2) may suspend the exercisability of
the Rights until the expiration of the 30-day period above in
order to determine the appropriate form of distribution to be
made pursuant to such first sentence and to determine the
value of such distribution. In the event of any such
suspension, the Company will
17
<PAGE> 21
issue a public announcement stating that the exercisability of
the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in
effect. For purposes of this SECTION 11(a)(iii), the value of
each Adjustment Share will be the Current Market Price per
share of the Class A Common Stock or the Class B Common Stock,
as the case may be, on the date of the first occurrence of a
Section 11(a)(ii) Event and the per share or per unit value of
any Common Stock Equivalent will be deemed to equal the
Current Market Price per share of the Class A Common Stock or
the Class B Common Stock, as the case may be, on such date;
and the value of other securities or assets shall be
determined pursuant to SECTION 11(d)(iii). In carrying out the
provisions of this CLAUSE (iii), the Company will, to the
fullest extent possible, provide that the issuance of
property, assets, securities, or rights to the holders of
Class B rights will be effected in a manner that does not
cause the holders of Class B Rights to be in violation of the
Bank Holding Company Act of 1956, as amended, and the
regulations and interpretations under such act (the "BHCA").
Notwithstanding the preceding sentence, to the extent that the
Company, after use of all commercially reasonable efforts, is
unable to effect the distributions contemplated by CLAUSE
(iii) within two years of the date of distribution without
causing holders of Class B Rights to be in violation of the
BHCA, the holders of Class B Rights will cease to have the
right to any distribution under CLAUSE (iii) that would cause
such violation.
(b) In case the Company fixes a record date for the issuance
of rights, options, or warrants to holders of any class or series of
Preferred Stock entitling them to subscribe for or purchase (for a
period expiring within forty-five (45) calendar days after such record
date) Preferred Stock (or securities having the same rights,
privileges, and preferences as the shares of Preferred Stock
("Equivalent Preferred Stock")) or securities convertible into
Preferred Stock or Equivalent Preferred Stock at a price per share of
Preferred Stock or per share of Equivalent Preferred Stock (or having a
conversion price per share, if a security convertible into Preferred
Stock or Equivalent Preferred Stock) less than the Current Market Price
(as determined pursuant to SECTION 11(d)) per share of Preferred Stock
on such record date, the Purchase Price to be in effect after such
record date will be determined by multiplying the Purchase Price in
effect immediately prior to such record date by a fraction, the
numerator of which is the number of shares of Preferred Stock
outstanding on such record date, plus the number of shares of Preferred
Stock that the aggregate offering price of the total number of shares
of Preferred Stock or Equivalent Preferred Stock so to be offered (or
the aggregate initial conversion price of the convertible securities so
to be offered) would purchase at such Current Market Price, and the
denominator of which is the number of shares of Preferred Stock
outstanding on such record date, plus the number of additional shares
of Preferred Stock or Equivalent Preferred Stock to be offered for
subscription or purchase (or into the maximum number of shares into
which the convertible securities so to be offered
18
<PAGE> 22
are initially convertible). In the event that the number of shares of
Preferred Stock or Equivalent Preferred Stock issuable under the terms
of a convertible security, or the conversion or exercise price of such
convertible security, changes after the initial issuance of such
convertible security, an adjustment will be made to the Purchase Price
that conforms with the adjustment set forth in this SECTION 11(b). In
case such subscription price may be paid by delivery of consideration
part or all of which may be in a form other than cash, the value of
such consideration will be as conclusively determined in good faith by
the Board of Directors, whose determination will be described in a
statement filed with the Rights Agent and will be binding on the Rights
Agent and the holders of the Rights. Shares of Preferred Stock owned by
or held for the account of the Company will be deemed not to be
outstanding for the purpose of any such computation. Such adjustment
will be made successively whenever such a record date is fixed, and in
the event that such rights, options, or warrants are not so issued, the
Purchase Price will be adjusted to be the Purchase Price that would
then be in effect if such record date had not been fixed.
(c) In case the Company fixes a record date for a distribution
to holders of any class or series of Preferred Stock (including any
such distribution made in connection with a consolidation or merger in
which the Company is the continuing corporation) of evidences of
indebtedness, cash (other than a regular quarterly cash dividend out of
the earnings or retained earnings of the Company), assets (other than a
dividend payable in Preferred Stock, but including any dividend payable
in stock other than Preferred Stock) or subscription rights or warrants
(excluding those referred to in SECTION 11(b)), the Purchase Price to
be in effect after such record date will be determined by multiplying
the Purchase Price in effect immediately prior to such record date by a
fraction, the numerator of which is the Current Market Price (as
determined pursuant to SECTION 11(d)) per share of Preferred Stock on
such record date, less the fair market value (as conclusively
determined in good faith by the Board of Directors, whose determination
will be described in a statement filed with the Rights Agent) of the
portion of the cash, assets, or evidences of indebtedness so to be
distributed or of such subscription rights or warrants applicable to a
share of Preferred Stock and the denominator of which is such Current
Market Price (as determined pursuant to SECTION 11(d)) per share of
Preferred Stock). Such adjustments will be made successively whenever
such a record date is fixed, and in the event that such distribution is
not so made, the Purchase Price will be adjusted to be the Purchase
Price that would have been in effect if such record date had not been
fixed.
(d) (i) For the purpose of any computation under this
Agreement, other than computations made pursuant to SECTION
11(a)(iii), the "Current Market Price" per share of Common
Stock on any date will be deemed to be the average of the
daily closing prices per share of Common Stock for the thirty
(30) consecutive Trading Days (as defined below) immediately
prior to such date, and for purposes of computations made
pursuant to
19
<PAGE> 23
SECTION 11(a)(iii), the "Current Market Price" per share of
Common Stock on any date will be deemed to be the average of
the daily closing prices per share of Common Stock for the ten
(10) consecutive Trading Days immediately following such date;
provided, however, that in the event that the Current Market
Price per share of the Common Stock is determined during a
period following the announcement by the issuer of Common
Stock of (A) a dividend or distribution on such Common Stock
payable in shares of such Common Stock or securities
convertible into shares of such Common Stock (other than the
Rights), or (B) any subdivision, combination, or
reclassification of such Common Stock, and the ex-dividend
date for such dividend or distribution, or the record date for
such subdivision, combination, or reclassification has not
occurred prior to the commencement of the requisite thirty
(30) Trading Day or ten (10) Trading Day period, as set forth
above, then, and in each such case, the Current Market Price
will be properly adjusted to take into account ex-dividend
trading. The closing price for each day will be the last sale
price, regular way, or, in case no such sale takes place on
such day, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to
securities listed or admitted to trading on the New York Stock
Exchange or, if the shares of Common Stock are not listed or
admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal
national securities exchange on which the shares of Common
Stock are listed or admitted to trading or, if the shares of
Common Stock are not listed or admitted to trading on any
national securities exchange, the last quoted price or, if not
so quoted, the average of the high bid and low asked prices in
the over-the-counter market, as reported by NASDAQ or such
other system then in use, or, if on any such date the shares
of Common Stock are not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Common Stock
selected by the Board of Directors. If on any such date no
market maker is making a market in the Common Stock, the fair
value of such shares on such date as determined in good faith
by a nationally recognized investment banking firm will be
used. The term "Trading Day" means a day on which the
principal national securities exchange on which the shares of
Common Stock are listed or admitted to trading is open for the
transaction of business or, if the shares of Common Stock are
not listed or admitted to trading on any national securities
exchange, a Business Day. If the Common Stock is not publicly
held or not so listed or traded, Current Market Price per
share will mean the fair value per share as determined in good
faith by a nationally recognized investment banking firm, the
determination of which will be described in a statement filed
with the Rights Agent and will be conclusive for all purposes.
The Current Market Price of the Class B Common Stock will be
equal to the Current Market Price of the Class A Common Stock.
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<PAGE> 24
(ii) For the purpose of any computation under this
Agreement, the "Current Market Price" per share of any class
or series of Preferred Stock will be determined in the same
manner as set forth above for the Common Stock in SECTION
11(d)(i) (other than the last sentence thereof). If the
Current Market Price per share of Preferred Stock cannot be
determined in the manner provided above or if the Preferred
Stock is not publicly held or listed or traded in a manner
described in SECTION 11(d)(i), the Current Market Price per
share of Preferred Stock will be conclusively deemed to be an
amount equal to one thousand (1,000) (as such number may be
appropriately adjusted for such events as stock splits, stock
dividends, and recapitalizations with respect to the Common
Stock occurring after the date of this Agreement) multiplied
by the Current Market Price per share of the Common Stock. If
neither the Common Stock nor the Preferred Stock is publicly
held or so listed or traded, Current Market Price per share of
the Preferred Stock will mean the fair value per share as
determined in good faith by a nationally recognized investment
banking firm, whose determination will be described in a
statement filed with the Rights Agent and will be conclusive
for all purposes. For all purposes of this Agreement, the
Current Market Price of one one-thousandth of a share of
Preferred Stock will be equal to the Current Market Price of
one share of Preferred Stock divided by one thousand (1,000).
(iii) For the purpose of any computation hereunder,
the value of any securities or assets other than Common Stock
or Preferred Stock will be the fair value as determined by a
nationally recognized investment banking firm, which
determination will be described in a statement filed with the
Rights Agent and will be conclusive for all purposes.
(e) Anything in this Agreement to the contrary
notwithstanding, no adjustment in the Purchase Price will be required
unless such adjustment would require an increase or decrease of at
least one percent (1%) in the Purchase Price; provided, however, that
any adjustments that by reason of this SECTION 11(e) are not required
to be made will be carried forward and taken into account in any
subsequent adjustment. All calculations under this SECTION 11 will be
made to the nearest cent or to the nearest ten-thousandth of a share of
Common Stock or other share or one-millionth of a share of Preferred
Stock, as the case may be. Notwithstanding the first sentence of this
SECTION 11(e), any adjustment required by this SECTION 11 will be made
no later than the earlier of (i) three (3) years from the date of the
transaction that mandates such adjustment or (ii) the Expiration Date.
(f) If, as a result of an adjustment made pursuant to SECTION
11(a)(ii) or SECTION 13(a), the holder of any Right thereafter
exercised becomes entitled to receive any shares of capital stock other
than Preferred Stock, then the
21
<PAGE> 25
number of such other shares so receivable upon exercise of any Right
and the Purchase Price will be subject to adjustment from time to time
in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Preferred Stock contained in SECTIONS
11(a), (b), (c), (e), (g), (h), (i), (j), (k) and (m) and the
provisions of SECTIONS 7, 9, 10, 13, and 14 with respect to the
Preferred Stock will apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to
any adjustment made to the Purchase Price under this Agreement will
evidence the right to purchase, at the adjusted Purchase Price, the
number of one one-thousandths of a share of Preferred Stock purchasable
from time to time under this Agreement upon exercise of the Rights, all
subject to further adjustment as provided in this Agreement.
(h) Unless the Company has exercised its election as provided
in SECTION 11(i), upon each adjustment of the Purchase Price as a
result of the calculations made in SECTIONS 11(b) and (c), each Right
outstanding immediately prior to the making of such adjustment will
thereafter evidence the right to purchase, at the adjusted Purchase
Price, that number of one one-thousandths of a share of Preferred Stock
(calculated to the nearest one-millionth) obtained by (i) multiplying
(x) the number of one one-thousandths of a share covered by a Right
immediately prior to this adjustment, by (y) the Purchase Price in
effect immediately prior to such adjustment of the Purchase Price, and
(ii) dividing the product so obtained by the Purchase Price in effect
immediately after such adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights, in
lieu of any adjustment in the number of one one-thousandths of a share
of Preferred Stock purchasable upon the exercise of a Right. Each of
the Rights outstanding after such an adjustment in the number of Rights
will be exercisable for the number of one one-thousandths of a share of
Preferred Stock for which a Right was exercisable immediately prior to
such adjustment. Each Right held of record prior to such adjustment of
the number of Rights will become that number of Rights (calculated to
the nearest one ten-thousandth) obtained by dividing the Purchase Price
in effect immediately prior to adjustment of the Purchase Price by the
Purchase Price in effect immediately after adjustment of the Purchase
Price. The Company will make a public announcement of its election to
adjust the number of Rights, indicating the record date for the
adjustment, and, if known at the time, the amount of the adjustment to
be made. This record date may be the date on which the Purchase Price
is adjusted or any day thereafter, but, if the Rights Certificates have
been issued, will be at least ten (10) days later than the date of the
public announcement. If Rights Certificates have been issued, upon each
adjustment of the number of Rights pursuant to this SECTION 11(i), the
Company will, as promptly as practicable, cause to be distributed to
holders of record of Rights Certificates on such record date Rights
Certificates evidencing, subject to
22
<PAGE> 26
SECTION 14, the additional Rights to which such holders are entitled as
a result of such adjustment, or, at the option of the Company, will
cause to be distributed to such holders of record in substitution and
replacement for the Rights Certificates held by such holders prior to
the date of adjustment, and upon surrender thereof, if required by the
Company, new Rights Certificates evidencing all the Rights to which
such holders are entitled after such adjustment. Rights Certificates so
to be distributed will be issued, executed, and countersigned in the
manner provided for in this Agreement (and may bear, at the option of
the Company, the adjusted Purchase Price) and will be registered in the
names of the holders of record of Rights Certificates on the record
date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase
Price or the number of one one-thousandths of a share of Preferred
Stock issuable upon the exercise of the Rights, the Rights Certificates
theretofore and thereafter issued may continue to express the Purchase
Price per one one-thousandth of a share and the number of one
one-thousandths of a share that were expressed in the initial Rights
Certificates issued under this Agreement.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below the then stated value, if any, of the
number of one one-thousandths of a share of Preferred Stock issuable
upon exercise of the Rights, the Company will take any corporate action
that may, in the opinion of its counsel, be necessary in order that the
Company may validly and legally issue such number of fully paid and
nonassessable one one-thousandths of a share of Preferred Stock at such
adjusted Purchase Price.
(l) In any case in which this SECTION 11 requires that an
adjustment in the Purchase Price be made effective as of a record date
for a specified event, the Company may elect to defer until the
occurrence of such event the issuance to the holder of any Right
exercised after such record date the number of one one-thousandths of a
share of Preferred Stock and other capital stock or securities of the
Company, if any, issuable upon such exercise over and above the number
of one one-thousandths of a share of Preferred Stock and other capital
stock or securities of the Company, if any, issuable upon such exercise
on the basis of the Purchase Price in effect prior to such adjustment;
provided, however, that the Company will deliver to such holder a due
bill or other appropriate instrument evidencing such holder's right to
receive such additional shares (fractional or otherwise) or securities
upon the occurrence of the event requiring such adjustment.
(m) Anything in this SECTION 11 to the contrary
notwithstanding, the Company will be entitled to make such reductions
in the Purchase Price, in addition to those adjustments expressly
required by this SECTION 11, as and to the extent that, in its good
faith judgment, the Board of Directors of the Company determines it to
be advisable in order that any (i) consolidation or subdivision of
23
<PAGE> 27
the Preferred Stock, (ii) issuance wholly for cash of any shares of
Preferred Stock at less than the current market price, (iii) issuance
wholly for cash of shares of Preferred Stock or securities that by
their terms are convertible into or exchangeable for shares of
Preferred Stock, (iv) stock dividends, or (v) issuance of rights,
options, or warrants referred to in this SECTION 11, hereafter made by
the Company to holders of its Preferred Stock will not be taxable to
such stockholders.
(n) The Company covenants and agrees that it will not, at any
time after the Distribution Date, (i) consolidate with any other Person
(other than a Subsidiary of the Company in a transaction that complies
with SECTION 11(o)), (ii) merge with, from, or into any other Person
(other than a Subsidiary of the Company in a transaction that complies
with SECTION 11(o)), or (iii) sell or transfer (or permit any
Subsidiary to sell or transfer), in one transaction, or a series of
related transactions, assets or earning power aggregating more than 50%
of the assets or earning power of the Company and its Subsidiaries
(taken as a whole) to any other Person or Persons (other than the
Company or any of its Subsidiaries in one or more transactions each of
which complies with SECTION 11(o)), if (x) at the time of or
immediately after such consolidation, merger, sale, or transfer, there
are any rights, warrants, or other instruments or securities
outstanding or agreements in effect that could reasonably be expected
to substantially diminish or otherwise eliminate the benefits intended
to be afforded by the Rights or (y) prior to, simultaneously with, or
immediately after, such consolidation, merger, sale, or transfer, the
stockholders of the Person that constitutes, or would constitute, the
"Principal Party" for purposes of SECTION 13(a) has received a
distribution of Rights previously owned by such Person or any of its
Affiliates and Associates.
(o) The Company covenants and agrees that, after the
Distribution Date, it will not, except as permitted by SECTION 23 or
SECTION 26, take (or permit any Subsidiary to take) any action if at
the time such action is taken it is reasonably foreseeable that such
action will diminish substantially or otherwise eliminate the benefits
intended to be afforded by the Rights.
(p) Anything in this Agreement to the contrary
notwithstanding, in the event that the Company at any time after the
Rights Dividend Declaration Date and prior to the Distribution Date (i)
declares a dividend on the outstanding shares of Common Stock payable
in shares of Common Stock, (ii) subdivides the outstanding shares of
Common Stock, or (iii) combines the outstanding shares of Common Stock
into a smaller number of shares, the number of Rights associated with
each share of Common Stock then outstanding, or issued or delivered
thereafter but prior to the Distribution Date, will be proportionately
adjusted so that the number of Rights thereafter associated with each
share of Common Stock following any such event will equal the result
obtained by multiplying the number of Rights associated with each share
of Common Stock immediately prior to such event by a fraction the
numerator of which is the total
24
<PAGE> 28
number of shares of Common Stock outstanding immediately prior to the
occurrence of the event and the denominator of which is the total
number of shares of Common Stock outstanding immediately following the
occurrence of such event.
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in SECTION 11 or SECTION 13, the
Company will (a) promptly prepare a certificate setting forth such adjustment
and a brief statement of the facts and computations accounting for such
adjustment, (b) promptly file with the Rights Agent, and with each transfer
agent for the Preferred Stock and the Common Stock, a copy of such certificate,
and (c) mail a brief summary thereof to each holder of a Rights Certificate (or,
if prior to the Distribution Date, to each holder of a certificate representing
shares of Common Stock) in accordance with SECTION 25. The Rights Agent will be
fully protected in relying on any such certificate and on any adjustment
contained in such certificate and will have no duty with respect to and will not
be deemed to have knowledge of any adjustment unless and until it has received
such a certificate.
Section 13. Consolidation, Merger, or Sale or Transfer of Assets or
Earning Power.
(a) In the event that, following (i) a Stock Acquisition Date
or (ii) the time that an Adverse Person has been declared to exist and
continues to exist, directly or indirectly, (x) the Company
consolidates with, or merges from, with, or into, any other Person
(other than a Subsidiary of the Company in a transaction that complies
with SECTION 11(o)), and the Company is not the continuing or surviving
Person of such consolidation or merger; (y) any Person (other than a
Subsidiary of the Company in a transaction that complies with SECTION
11(o)) consolidates with, or merges from, with, or into, the Company,
and the Company is the continuing or surviving corporation of such
consolidation or merger and, in connection with such consolidation or
merger, all or part of the outstanding shares of Common Stock of the
Company is changed into or exchanged for stock or other securities of
any other Person or cash or any other property; or (z) the Company
sells or otherwise transfers (or one or more of its Subsidiaries sells
or otherwise transfers), in one transaction or a series of related
transactions, assets or earning power aggregating more than 50% of the
assets or earning power of the Company and its Subsidiaries (taken as a
whole) to any Person or Persons (other than the Company or any
Subsidiary of the Company in one or more transactions each of which
complies with SECTION 11(o)), then, and in each such case, proper
provision will be made so that (i) each holder of a Right, except as
provided in SECTION 7(e) or SECTION 13(d), will thereafter have the
right to receive, upon the exercise of such Right at the then current
Purchase Price in accordance with the terms of this Agreement, such
number of validly authorized and issued, fully paid, nonassessable, and
freely tradable shares of Common Stock of the Principal Party (as
defined below), not subject to any liens, encumbrances, preemptive
rights, rights of first refusal, or other adverse claims,
25
<PAGE> 29
as are equal to the result obtained by (1) multiplying the then current
Purchase Price by the number of one one-thousandths of a share of
Preferred Stock for which a Right is exercisable immediately prior to
the first occurrence of a Section 13 Event (or, if a Section 11(a)(ii)
Event has occurred prior to the first occurrence of a Section 13 Event,
multiplying the number of such one one-thousandths of a share for which
a Right was exercisable immediately prior to the first occurrence of a
Section 11(a)(ii) Event by the Purchase Price in effect immediately
prior to such first occurrence), and dividing that product (which,
following the first occurrence of a Section 13 Event, will be referred
to as the "Purchase Price" for each Right and for all purposes of this
Agreement) by (2) 50% of the Current Market Price (determined pursuant
to SECTION 11(d)(i)) per share of the Common Stock of such Principal
Party on the date of consummation of such Section 13 Event; (ii) such
Principal Party will thereafter be liable for, and will assume, by
virtue of such Section 13 Event, all the obligations and duties of the
Company pursuant to this Agreement; (iii) the term "Company" will
thereafter be deemed to refer to such Principal Party, it being
specifically intended that the provisions of SECTION 11 will apply only
to such Principal Party following the first occurrence of a Section 13
Event; (iv) such Principal Party will take such steps (including, but
not limited to, the reservation of a sufficient number of shares of its
Common Stock) in connection with the consummation of any such
transaction as may be necessary to assure that the provisions of this
Agreement will thereafter be applicable, as nearly as may be, in
relation to its shares of Common Stock thereafter deliverable upon the
exercise of the Rights; and (v) the provisions of SECTION 11(a)(ii)
will be of no effect following the first occurrence of any Section 13
Event.
(b) "Principal Party" means
(i) in the case of any transaction described in
CLAUSE (x) or (y) of the first sentence of SECTION 13(a), the
Person that is the issuer of any securities into which shares
of Common Stock of the Company are converted in such merger or
consolidation, and if no securities are so issued, the Person
that is the other party to such merger or consolidation; and
(ii) in the case of any transaction described in
CLAUSE (z) of the first sentence of SECTION 13(a), the Person
that is the party receiving the greatest portion of the assets
or earning power transferred pursuant to such transaction or
transactions;
provided, however, that in any such case, (1) if the Common
Stock of such Person is not at such time and has not been
continuously over the preceding twelve (12) month period
registered under Section 12 of the Exchange Act, and such
Person is a direct or indirect Subsidiary of another Person
the Common Stock of which is and has been so registered,
"Principal Party" will refer to such other Person; and (2) in
case
26
<PAGE> 30
such Person is a Subsidiary, directly or indirectly, of more
than one Person, the Common Stocks of two or more of which are
and have been so registered, "Principal Party" will refer to
whichever of such Persons is the issuer of the Common Stock
having the greatest aggregate market value.
(c) The Company will not consummate any such consolidation,
merger, sale, or transfer unless the Principal Party has a sufficient
number of authorized shares of its Common Stock that have not been
issued or reserved for issuance to permit the exercise in full of the
Rights in accordance with this SECTION 13 and unless prior thereto the
Company and such Principal Party have executed and delivered to the
Rights Agent a supplemental agreement providing for the Principal Party
to assume and perform the terms set forth in SECTIONS 13(a) and (b) and
further providing that, as soon as practicable after the date of any
consolidation, merger, or transfer mentioned in SECTION 13(a), the
Principal Party will
(i) prepare and file a registration statement under
the Act, with respect to the Rights and the securities
purchasable upon exercise of the Rights on an appropriate
form, and will cause such registration statement to (A) become
effective as soon as practicable after such filing and (B)
remain effective (with a prospectus at all times meeting the
requirements of the Act) until the Expiration Date; and
(ii) will deliver to holders of the Rights historical
financial statements for the Principal Party and each of its
Affiliates that comply in all respects with the requirements
for registration on Form 10 under the Exchange Act.
The provisions of this SECTION 13 will similarly apply to successive mergers,
consolidations, and sales or other transfers. In the event that a Section 13
Event occurs at any time after the occurrence of a Section 11(a)(ii) Event, the
Rights that have not theretofore been exercised will thereafter become
exercisable in the manner described in SECTION 13(a).
Section 14. Fractional Rights and Fractional Shares.
(a) The Company will not be required to issue fractions of
Rights, except prior to the Distribution Date as provided in SECTION
11(p), or to distribute Rights Certificates that evidence fractional
Rights. In lieu of such fractional Rights, there will be paid to the
registered holders of the Rights Certificates with regard to which such
fractional Rights would otherwise be issuable, an amount in cash equal
to the same fraction of the current market value of a whole Right. For
purposes of this SECTION 14(a), the current market value of a whole
Right will be the closing price of the Rights for the Trading Day
immediately prior to the date on which such fractional Rights would
have been otherwise issuable. The closing
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price of the Rights for any day will be the last sale price, regular
way, or, in case no such sale takes place on such day, the average of
the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system
with respect to securities listed or admitted to trading on the New
York Stock Exchange or, if the Rights are not listed or admitted to
trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the
Rights are listed or admitted to trading, or if the Rights are not
listed or admitted to trading on any national securities exchange, the
last quoted price or, if not so quoted, the average of the high bid and
low asked prices in the over-the-counter market, as reported by NASDAQ
or such other system then in use or, if on any such date the Rights are
not quoted by any such organization, the average of the closing bid and
asked prices as furnished by a professional market maker making a
market in the Rights selected by the Board of Directors. If on any such
date no such market maker is making a market in the Rights the fair
value of the Rights on such date as conclusively determined in good
faith by a nationally recognized investment banking firm will be used.
(b) The Company will not be required to issue fractions of
shares of Preferred Stock (other than fractions that are integral
multiples of one one-thousandth of a share of Preferred Stock) upon
exercise of the Rights or to distribute certificates that evidence
fractional shares of Preferred Stock (other than fractions that are
integral multiples of one one-thousandth of a share of Preferred
Stock). In lieu of fractional shares of Preferred Stock that are not
integral multiples of one one-thousandth of a share of Preferred Stock,
the Company may pay to the registered holders of Rights Certificates at
the time such Rights are exercised as provided in this Agreement an
amount in cash equal to the same fraction of the current market value
of one one-thousandth of a share of Preferred Stock. For purposes of
this SECTION 14(b), the current market value of one one-thousandth of a
share of Preferred Stock will be one one-thousandth of the closing
price of a share of Preferred Stock (as determined pursuant to SECTION
11(d)(ii)) for the Trading Day immediately prior to the date of such
exercise.
(c) Following the occurrence of a Triggering Event or upon any
exchange pursuant to SECTION 35, the Company will not be required to
issue fractions of shares of Common Stock upon exercise of the Rights
or to distribute certificates that evidence fractional shares of Common
Stock. In lieu of fractional shares of Common Stock, the Company may
pay to the registered holders of Rights Certificates at the time such
Rights are exercised or exchanged as provided in this Agreement an
amount in cash equal to the same fraction of the current market value
of one share of Common Stock. For purposes of this SECTION 14(c), the
current market value of one share of Common Stock will be the Current
Market Value of one share of Common Stock (as determined pursuant to
SECTION 11(d)(i)) for the Trading Day immediately prior to the date of
such exercise or exchange.
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(d) The holder of a Right, by the acceptance of the Rights,
expressly waives the right to receive any fractional Rights or any
fractional shares upon exercise of a Right, except as permitted by this
SECTION 14.
Section 15. Rights of Action. All rights of action in respect of this
Agreement are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Stock); and any registered holder of any Rights Certificate (or, prior to
the Distribution Date, of the Common Stock), without the consent of the Rights
Agent or of the holder of any other Rights Certificate (or, prior to the
Distribution Date, of the Common Stock), may, in its own behalf and for its own
benefit, enforce, and may institute and maintain any suit, action, or proceeding
against the Company to enforce, or otherwise act in respect of, its right to
exercise the Rights evidenced by such Rights Certificate in the manner provided
in such Rights Certificate and in this Agreement. Without limiting the foregoing
or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach of this Agreement and will be entitled to specific performance of
the obligations under this Agreement and injunctive relief against actual or
threatened violations of the obligations under this Agreement of any Person
subject to this Agreement.
Section 16. Agreement of Rights Holders. Every holder of a Right by
accepting the Rights consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of Common Stock;
(b) after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if
surrendered at the principal office or offices of the Rights Agent
designated for such purposes, duly endorsed or accompanied by a proper
instrument of transfer, and with the appropriate forms and certificates
fully executed;
(c) subject to SECTION 6(a) and SECTION 7(f), the Company and
the Rights Agent may deem and treat the person in whose name a Rights
Certificate (or, prior to the Distribution Date, the associated Common
Stock certificate) is registered as the absolute owner of the Rights
evidenced thereby (notwithstanding any notations of ownership or
writing on the Rights Certificates or the associated Common Stock
certificate made by anyone other than the Company or the Rights Agent)
for all purposes whatsoever, and neither the Company nor the Rights
Agent, subject to the last sentence of SECTION 7(e), will be required
to be affected by any notice to the contrary; and
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<PAGE> 33
(d) notwithstanding anything in this Agreement to the
contrary, neither the Company nor the Rights Agent will have any
liability to any holder of a Right or other Person as a result of its
inability to perform any of its obligations under this Agreement by
reason of any preliminary or permanent injunction or other order,
decree, or ruling issued by a court of competent jurisdiction or by a
governmental, regulatory, or administrative agency or commission, or
any statute, rule, regulation, or executive order promulgated or
enacted by any governmental authority, prohibiting or otherwise
restraining performance of such obligation; provided, however, the
Company will use its reasonable best efforts to have any such order,
decree, or ruling lifted or otherwise overturned as soon as possible.
Section 17. Rights Certificate Holder Not Deemed a Stockholder. No
holder, as such, of any Rights Certificate will be entitled to vote or receive
dividends or be deemed for any purpose the holder of the number of one
one-thousandths of a share of Preferred Stock or any other securities of the
Company that may at any time be issuable on the exercise of the Rights
represented thereby, nor will anything contained in this Agreement or in any
Rights Certificate be construed to confer upon the holder of any Rights
Certificate, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
stockholders, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in SECTION 24), or to receive dividends or subscription rights, or
otherwise, until the Right or Rights evidenced by such Rights Certificate have
been exercised in accordance with the provisions of this Agreement.
Section 18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it under this Agreement and,
from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and disbursements and other disbursements
incurred in the preparation, execution, delivery, amendment, and
administration of this Agreement and the exercise and performance of
its duties under this Agreement. The Company also agrees to indemnify
the Rights Agent for, and to hold it harmless against, any loss,
liability, damage, fine, penalty, claim, demand, settlement, cost, or
expense, incurred without gross negligence, bad faith, or willful
misconduct on the part of the Rights Agent, for any action taken or
suffered or omitted to be done by the Rights Agent in connection with
the acceptance and administration of this Agreement, including, without
limitation, the costs and expenses of defending against any claim of
liability. In no case will the Rights Agent be liable for special,
indirect, incidental, punitive or consequential loss or damages of any
kind whatsoever, even if the Rights Agent has been advised or is
otherwise aware of the likelihood of such loss or damage.
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<PAGE> 34
(b) The Rights Agent will be protected and will incur no
liability for or in respect of any action taken, suffered, or omitted
by it in connection with its acceptance and administration of this
Agreement in reliance upon any Rights Certificate or certificate for
Common Stock or for other securities of the Company, instrument of
assignment or transfer, power of attorney, endorsement, affidavit,
letter, notice, direction, consent, certificate, statement, or other
paper or document believed by it to be genuine and to be signed,
executed, and, where necessary, verified or acknowledged, by the proper
Person or Persons.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
(a) Any Person into or with which the Rights Agent or any
successor Rights Agent may be merged or with which it may be
consolidated, or any Person resulting from any merger or consolidation
to which the Rights Agent or any successor Rights Agent is a party, or
any Person succeeding to the corporate trust or shareholder services
business of the Rights Agent or any successor Rights Agent, will be the
successor to the Rights Agent under this Agreement without the
execution or filing of any paper or any further act on the part of any
of the parties to this Agreement; provided, however, that such Person
would be eligible for appointment as a successor Rights Agent under the
provisions of SECTION 21. In case at the time such successor Rights
Agent succeeds to the agency created by this Agreement, any of the
Rights Certificates have been countersigned but not delivered, any such
successor Rights Agent may adopt the countersignature of a predecessor
Rights Agent and deliver such Rights Certificates so countersigned; and
in case at that time any of the Rights Certificates not have been
countersigned, any successor Rights Agent may countersign such Rights
Certificates either in the name of the predecessor or in the name of
the successor Rights Agent; and in all such cases such Rights
Certificates will have the full force provided in the Rights
Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent is
changed and at such time any of the Rights Certificates have been
countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Rights Certificates
so countersigned; and in case at that time any of the Rights
Certificates have not been countersigned, the Rights Agent may
countersign such Rights Certificates either in its prior name or in its
changed name, and in all such cases such Rights Certificates will have
the full force provided in the Rights Certificates and in this
Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes only
the duties and obligations expressly imposed by this Agreement upon the
following terms and conditions, by all of which the Company and the holders of
Rights Certificates, by their acceptance of such Rights Certificates, will be
bound:
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(a) The Rights Agent may consult with legal counsel (who may
be legal counsel for the Company), and the advice or opinion of such
counsel will be full and complete authorization and protection to the
Rights Agent as to any action taken, suffered, or omitted by it in good
faith and in accordance with such advice or opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent deems it necessary or desirable that any
fact or matter (including, without limitation, the identity of any
Acquiring Person or Adverse Person and the determination of "Current
Market Price") be proved or established by the Company prior to taking
or suffering any action under this Agreement, such fact or matter
(unless other evidence in respect of such fact or matter is
specifically prescribed in this Agreement) may be deemed to be
conclusively proved and established by a certificate signed by the
Chairman of the Board, the Chief Executive Officer, the Chief Operating
Officer, the President, any Vice President, the Treasurer, any
Assistant Treasurer, the Secretary, or any Assistant Secretary of the
Company and delivered to the Rights Agent; and such certificate will be
full authorization to the Rights Agent and the Rights Agent will incur
no liability for any action taken, omitted, or suffered in good faith
by it under the provisions of this Agreement in reliance upon such
certificate.
(c) The Rights Agent will be liable under this Agreement only
for its own gross negligence, bad faith or willful misconduct.
(d) The Rights Agent will not be liable for or by reason of
any of the statements of fact or recitals contained in this Agreement
or in the Rights Certificates or be required to verify the same (except
as to its countersignature on such Rights Certificates), but all such
statements and recitals are and will be deemed to have been made by the
Company only.
(e) The Rights Agent will not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery
of this Agreement (except the due execution of this Agreement by the
Rights Agent) or in respect of the validity or execution of any Rights
Certificate (except its countersignature); nor will it be responsible
for any breach by the Company of any covenant or condition contained in
this Agreement or in any Rights Certificate; nor will it be responsible
for any adjustment required under the provisions of SECTION 11 or
SECTION 13, or responsible for the manner, method, or amount of any
such adjustment or the ascertaining of the existence of facts that
would require any such adjustment (except with respect to the exercise
of Rights evidenced by Rights Certificates after actual notice of any
such adjustment); nor will it by any act under this Agreement be deemed
to make any representation or warranty as to the authorization or
reservation of any shares of Common Stock or Preferred Stock to be
issued pursuant to this Agreement or any Rights Certificate or as to
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<PAGE> 36
whether any shares of Common Stock or Preferred Stock will, when so
issued, be validly authorized or issued, fully paid, or nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge, and deliver or cause to be performed, executed,
acknowledged, and delivered all such further and other acts,
instruments, and assurances as may reasonably be required by the Rights
Agent for the carrying out or performing by the Rights Agent of the
provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties under
this Agreement from the Chairman of the Board, the Chief Executive
Officer, the Chief Operating Officer, the President, any Vice
President, the Secretary, any Assistant Secretary, the Treasurer, or
any Assistant Treasurer of the Company, and to apply to such officers
for advice or instructions in connection with its duties, and it will
not be liable for any action taken, omitted, or suffered to be taken by
it in good faith in accordance with instructions of any such officer.
(h) The Rights Agent and any stockholder, affiliate, director,
officer, or employee of the Rights Agent may buy, sell, or deal in any
of the Rights or other securities of the Company or become pecuniarily
interested in any transaction in which the Company may be interested,
contract with or lend money to the Company, or otherwise act as fully
and freely as though it were not Rights Agent under this Agreement.
Nothing in this Agreement will preclude the Rights Agent from acting in
any other capacity for the Company or for any other Person.
(i) The Rights Agent may execute and exercise any of the
rights or powers vested by this Agreement in it or perform any duty
under this Agreement either itself or by or through its attorneys or
agents, and the Rights Agent will not be answerable or accountable for
any act, default, neglect, or misconduct of any such attorneys or
agents or for any loss to the Company or any other Person resulting
from any such act, default, neglect, or misconduct; provided, however,
reasonable care was exercised in the selection and continued employment
of such Person.
(j) No provision of this Agreement will require the Rights
Agent to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties under this Agreement
or in the exercise of its rights if it believes that repayment of such
funds or adequate indemnification against such risk or liability is not
reasonably assured to it.
(k) If, with respect to any Right Certificate surrendered to
the Rights Agent for exercise or transfer, the certificate attached to
the form of assignment or form of election to purchase, as the case may
be, has either not been completed or indicates an affirmative response
to clause 1 or 2 of such
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certificate, the Rights Agent will not take any further action with
respect to such requested exercise of transfer without first consulting
with the Company.
(l) The Company will promptly give the Rights Agent notice of
any election, public announcement, suspension, deferral, or notice to
Rights holders made by it under or pursuant to any section under this
Agreement.
(m) Whenever this Agreement calls for the Company to take
certain actions, including, without limitation, actions under SECTION
6(a) and 14 of this Agreement, the Rights Agent will have no duty or
obligation to perform, monitor, or enforce such actions, unless
specifically directed in writing by the Company and provided with all
necessary information (and funds, if applicable) to perform such
actions.
Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon thirty (30) days' notice in writing mailed to the Company, and to each
transfer agent of the Common Stock and Preferred Stock, by registered or
certified mail, and to the holders of the Rights Certificates by first-class
mail. The Company may remove the Rights Agent or any successor Rights Agent upon
thirty (30) days' notice in writing, mailed to the Rights Agent or successor
Rights Agent, as the case may be, and to each transfer agent of the Common Stock
and Preferred Stock, by registered or certified mail, and to the holders of the
Rights Certificates by first-class mail. If the Rights Agent resigns or is
removed or otherwise becomes incapable of acting, the Company will appoint a
successor to the Rights Agent. If the Company fails to make such appointment
within a period of thirty (30) days after giving notice of such removal or after
it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by the holder of a Rights Certificate
(who will, with such notice, submit such holder's Rights Certificate for
inspection by the Company), then any registered holder of any Rights Certificate
may apply to any court of competent jurisdiction for the appointment of a new
Rights Agent. Any successor Rights Agent, whether appointed by the Company or by
such a court, will be a Person organized and doing business under the laws of
the United States or a State of the United States, in good standing, that is
subject to supervision or examination by federal or state authority and that has
at the time of its appointment as Rights Agent a combined capital and surplus of
at least $50,000,000. After appointment, the successor Rights Agent will be
vested with the same powers, rights, duties, and responsibilities as if it had
been originally named as Rights Agent without further act or deed, except that
the predecessor Rights Agent will deliver and transfer to the successor Rights
Agent any property at the time held by it under this Agreement and execute and
deliver any further assurance, conveyance, act, or deed necessary for the
purpose. Not later than the effective date of any such appointment, the Company
will file notice of such appointment in writing with the predecessor Rights
Agent and each transfer agent of the Common Stock and the Preferred Stock, and
mail a notice of such appointment in writing to the registered holders of the
Rights Certificates. Failure to give any notice provided for in this SECTION 21,
however, or any defect in such notice, will not affect the legality or validity
of the resignation or removal of the Rights Agent or the appointment of the
successor Rights Agent, as the case may be.
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Section 22. Issuance of New Rights Certificates. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the Company
may, in its discretion, issue new Rights Certificates evidencing Rights in such
form as may be approved by its Board of Directors to reflect any adjustment or
change in the Purchase Price and the number or kind or class of shares or other
securities or property purchasable under the Rights Certificates made in
accordance with the provisions of this Agreement. In addition, in connection
with the issuance or sale of shares of Common Stock following the Distribution
Date and prior to the redemption or expiration of the Rights, the Company (a)
will, with respect to shares of Common Stock so issued or sold pursuant to the
exercise of stock options or under any employee plan or arrangement, granted or
awarded as of the Distribution Date, or upon the exercise, conversion, or
exchange of securities issued by the Company, and (b) may, in any other case, if
deemed necessary or appropriate by the Board of Directors of the Company, issue
Rights Certificates representing the appropriate number of Rights in connection
with such issuance or sale; provided, however, that (y) no such Rights
Certificate will be issued if, and to the extent that, the Company is advised by
counsel that such issuance would create a significant risk of material adverse
tax consequences to the Company or the Person to whom such Rights Certificate
would be issued, and (z) no such Rights Certificate will be issued if, and to
the extent that, appropriate adjustment has otherwise been made in lieu of the
issuance of such Rights Certificate.
Section 23. Redemption and Termination. The Company may, at its option,
by action of its Board of Directors at any time prior to the earlier of (i) the
Close of Business on the tenth day following the occurrence of a Section
11(a)(ii) Event and (ii) the Final Expiration Date, redeem all but not less than
all the then outstanding Rights at a redemption price of $0.001 (one-tenth of
one cent) per Right, as such amount may be appropriately adjusted to reflect any
stock split, stock dividend, or similar transaction occurring after the date of
this Agreement (such redemption price being referred to as the "Redemption
Price"). Notwithstanding anything in this Agreement to the contrary, the Rights
will not be exercisable after the first occurrence of a Section 11(a)(ii) Event
except during the period that the Company's right of redemption under this
Agreement has expired. The Company may, at its option, pay the Redemption Price,
in cash, shares of Common Stock (based on the Current Market Price as defined in
SECTION 11(d)(i), of the Common Stock at the time of redemption) or any other
form of consideration deemed appropriate by the Board of Directors. Immediately
upon the action of the Board of Directors of the Company ordering the redemption
of the Rights, evidence of which has been filed with the Rights Agent and
without any further action and without any notice, the right to exercise the
Rights will terminate and the only right thereafter of the holders of Rights
will be to receive the Redemption Price for each Right so held. Promptly after
the action of the Board of Directors ordering the redemption of the Rights, the
Company will give notice of such redemption to the Rights Agent and the holders
of the then outstanding Rights by mailing such notice to all such holders at
each holder's last address as it appears upon the registry books of the Rights
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Agent or, prior to the Distribution Date, on the registry books of the transfer
agent for the Common Stock. Any notice that is mailed in the manner in this
Agreement provided will be deemed given, whether or not the holder receives the
notice. Each such notice of redemption will state the method by which the
payment of the Redemption Price will be made.
Section 24. Notice of Certain Events.
(a) In case the Company proposes, at any time after the
Distribution Date, (i) to pay any dividend payable in stock of any
class to the holders of Preferred Stock or to make any other
distribution to the holders of Preferred Stock (other than a regular
quarterly cash dividend out of earnings or retained earnings of the
Company); (ii) to offer to the holders of Preferred Stock rights or
warrants to subscribe for or to purchase any additional shares of
Preferred Stock or shares of stock of any class or any other
securities, rights, or options; (iii) to effect any reclassification of
its Preferred Stock (other than a reclassification involving only the
subdivision of outstanding shares of Preferred Stock); (iv) to effect
any consolidation or merger from, into, or with any other Person (other
than a Subsidiary of the Company in a transaction that complies with
SECTION 11(o)), or to effect any sale or other transfer (or to permit
one or more of its Subsidiaries to effect any sale or other transfer),
in one transaction or a series of related transactions, of more than
50% of the assets or earning power of the Company and its Subsidiaries
(taken as a whole) to any other Person or Persons (other than the
Company or any of its Subsidiaries in one or more transactions each of
which complies with SECTION 11(o)); or (v) to effect the liquidation,
dissolution or winding up of the Company, then, in each such case, the
Company will give to each holder of a Rights Certificate, to the extent
feasible and in accordance with SECTION 25, a notice of such proposed
action, which will specify the record date for the purposes of such
stock dividend, distribution of rights or warrants, or the date on
which such reclassification, consolidation, merger, sale, transfer,
liquidation, dissolution, or winding up is to take place and the date
of participation therein by the holders of the shares of Preferred
Stock, if any such date is to be fixed, and such notice will be so
given in the case of any action covered by CLAUSE (i) or (ii) above at
least twenty (20) days prior to the record date for determining holders
of the shares of Preferred Stock for purposes of such action, and in
the case of any such other action, at least twenty (20) days prior to
the date of the taking of such proposed action or the date of
participation in such proposed action by the holders of the shares of
Preferred Stock, whichever is the earlier.
(b) In case any of the events set forth in SECTION 11(a)(ii)
occurs, then, in any such case, (i) the Company will as soon as
practicable give to each holder of a Rights Certificate, to the extent
feasible and in accordance with SECTION 25, a notice of the occurrence
of such event, which will specify the event and the consequences of the
event to holders of Rights under SECTION 11(a)(ii), and (ii)
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all references in SECTION 24(a) to Preferred Stock will be deemed
thereafter to refer to Common Stock or, if appropriate, other
securities.
Section 25. Notices. Notices or demands authorized by this Agreement to
be given or made by the Rights Agent or by the holder of any Rights Certificate
to or on the Company will be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is filed in writing with
the Rights Agent) as follows:
Perot Systems Corporation
12404 Park Central Drive
Dallas, Texas 75251
Attention: Chief Executive Officer
with a copy to:
Perot Systems Corporation
12404 Park Central Drive
Dallas, Texas 75251
Attention: General Counsel
Hughes & Luce, L.L.P.
1717 Main Street
Suite 2800
Dallas, Texas 75201
Attention: Glen Hettinger
Subject to the provisions of SECTION 21, any notice or demand
authorized by this Agreement to be given or made by the Company or by the holder
of any Rights Certificate to or on the Rights Agent will be sufficiently given
or made if sent by first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Company) as follows:
The Chase Manhattan Bank
85 Challenger Road
Ridgefield Park, New Jersey 07610
Attention: Relationship Manager
Notices or demands authorized by this Agreement to be given or made by
the Company or the Rights Agent to the holder of any Rights Certificate (or, if
prior to the Distribution Date, to the holder of certificates representing
shares of Common Stock) will be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to such holder at the address of
such holder as shown on the registry books of the Company.
Section 26. Supplement and Amendments. For so long as the Rights
are redeemable, the Company may, and the Rights Agent will, if the Company so
directs,
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supplement or amend any provision of this Agreement in any respect without the
approval of any holders of certificates representing shares of Common Stock,
except that no amendment or supplement will alter or change the duties, rights,
obligations, or liabilities of the Rights Agent. At any time when the Rights are
no longer redeemable, the Company may, and the Rights Agent will if the Company
so directs, supplement or amend this Agreement without the approval of any
holders of Rights, except that no such supplement or amendment may (a) adversely
affect the interests of the holders of Rights as such (other than an Acquiring
Person or an Adverse Person or an Affiliate or Associate of an Acquiring Person
or Adverse Person), (b) cause this Agreement again to become amendable other
than in accordance with this sentence, or (c) cause the Rights again to become
redeemable and, except that no amendment or supplement will alter or change the
duties, rights, obligations, or liabilities of the Rights Agent. Upon the
delivery of a certificate from an appropriate officer of the Company which
states that the proposed supplement or amendment is in compliance with the terms
of this Section, the Rights Agent will execute such supplement or amendment.
Section 27. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent will bind and
inure to the benefit of their respective successors and assigns under this
Agreement.
Section 28. Determinations and Actions by the Board of Directors,
Etc. For all purposes of this Agreement, any calculation of the number of shares
of Common Stock outstanding at any particular time, including for purposes of
determining the particular percentage of such outstanding shares of Common Stock
of which any Person is the Beneficial Owner, will be made in accordance with the
last sentence of Rule 13d-3(d)(1)(i) of the General Rules and Regulations under
the Exchange Act as in effect on the date of this Agreement. The Board of
Directors of the Company will have the exclusive power and authority to
administer this Agreement and to exercise all rights and powers specifically
granted to the Board or to the Company, or as may be necessary or advisable in
the administration of this Agreement, including, without limitation, the right
and power to (a) interpret the provisions of this Agreement, and (b) make all
determinations deemed necessary or advisable for the administration of this
Agreement (including, without limitation, a determination to redeem or not
redeem the Rights or to amend the Agreement). All such actions, calculations,
interpretations and determinations (including, for purposes of CLAUSE (y) below,
all omissions with respect to the foregoing) that are done or made by the Board
in good faith, will (x) be final, conclusive, and binding on the Company, the
Rights Agent, the holders of the Rights, and all other Persons, and (y) not
subject the Board to any liability to the holders of the Rights. The Rights
Agent is entitled to always assume the Company's Board of Directors acted in
good faith and will be fully protected and incur no liability in reliance on
such assumption
Section 29. Benefits of this Agreement. Nothing in this Agreement
will be construed to give to any Person other than the Company, the Rights
Agent, and the registered holders of the Rights Certificates (and, prior to the
Distribution Date, registered holders of the Common Stock) any legal or
equitable right, remedy, or claim
38
<PAGE> 42
under this Agreement; and this Agreement will be for the sole and exclusive
benefit of the Company, the Rights Agent, and the registered holders of the
Rights Certificates (and, prior to the Distribution Date, registered holders of
the Common Stock).
Section 30. Severability. If any term, provision, covenant, or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void, or unenforceable, the remainder of the
terms, provisions, covenants, and restrictions of this Agreement will remain in
full force and effect and will in no way be affected, impaired, or invalidated.
Section 31. Governing Law. This Agreement, each Right, and each
Rights Certificate issued under this Agreement will be deemed to be a contract
made under the laws of the State of Delaware and for all purposes will be
governed by and construed in accordance with the laws of such State applicable
to contracts made and to be performed entirely within such State.
Section 32. Counterparts. This Agreement may be executed in any
number of counterparts and each of such counterparts will for all purposes be
deemed to be an original, and all such counterparts will together constitute but
one and the same instrument.
Section 33. Interpretation. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and will not
control or affect the meaning or construction of any of the provisions of this
Agreement. References in this Agreement to Sections and Exhibits are references
to the Sections of and Exhibits to this Agreement unless the context requires
otherwise. In this Agreement, the word "or" is not exclusive.
Section 34. Establishment of Fund for Directors. The Board may,
at any time it deems appropriate, establish or set aside one or more funds,
whether in trust, escrow or otherwise (and regardless of whether such fund is
combined with any other fund established or set aside by the Company), for the
purpose of assuring that adequate resources are available to the Board of
Directors in order to enable them to carry out their prescribed functions under
this Agreement and to fulfill their fiduciary obligations to stockholders of the
Company.
Section 35. Exchange.
(a) The Company may, at its option by action of its Board of
Directors, at any time after the first occurrence of a Section
11(a)(ii) Event, exchange all or part of the then outstanding and
exercisable Rights (other than Rights that have become null and void as
provided in SECTION 7(e)) for shares of Common Stock at an exchange
ratio of one share of Common Stock per Right, appropriately adjusted to
reflect any stock split, stock dividend, or similar transaction
occurring after the date hereof (the "Exchange Number").
Notwithstanding the foregoing, the Company will not be empowered to
effect such exchange at any time after
39
<PAGE> 43
any Person (other than the Company, any Subsidiary of the Company, any
employee benefit plan of the Company or any such Subsidiary or any
Person organized, appointed or established by the Company or any of its
Subsidiaries for or pursuant to any such plan), together with all
Affiliates and Associates of such Person, becomes the Beneficial Owner
of 50% or more of the shares of Common Stock then outstanding.
(b) Immediately upon the action of the Board of Directors
ordering the exchange of any Rights pursuant to SECTION 35(a), and
without any further action and without any notice, the right to
exercise such Rights will terminate and the only right of a holder of
such Rights will be to receive that number of shares of Common Stock,
Preferred Stock, or units of other property equal to the number of such
Rights held by such holder multiplied by the Exchange Number. Promptly
after the action of the Company ordering the exchange of the Rights,
the Company will give notice to the Rights Agent and the holders of the
Rights to be exchanged in the manner set forth in SECTION 26; provided
that the failure to give, or any defect in, such notice shall not
affect the validity of such exchange. Any notice that is mailed in the
manner provided in this SECTION 35(b) will be deemed given, whether or
not the holder receives the notice. Each such notice or exchange will
state the method by which the exchange will be effected and, in the
event of any partial exchange, the number of Rights that will be
exchanged. Any partial exchange will be effected pro rata based on the
number of Rights (other than Rights that have become null and void as
provided in SECTION 7(e)) held by each holder of Rights.
(c) In any exchange pursuant to this SECTION 35, the Company,
at its option, may substitute Common Stock Equivalents for shares of
Common Stock exchangeable for Rights, at the initial rate of one Common
Stock Equivalent for each share of Common Stock, as appropriately
adjusted to reflect adjustments in dividend, liquidation, and voting
rights of Common Stock Equivalents pursuant to
40
<PAGE> 44
the terms thereof, so that each Common Stock Equivalent delivered in
lieu of each share of Common Stock will have essentially the same
dividend, liquidation, and voting rights as one share of Common Stock.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and attested, all as of the day and year first above written.
Attest: /s/ CHARLES BELL PEROT SYSTEMS CORPORATION
By: /s/ PETER ALTABEF
Name: Peter Altabef
Its: Vice President and General Counsel
Attest: /s/ ERIC LEASON THE CHASE MANHATTAN BANK
By: /s/ W.H. BERLS
Name: W. H. Berls
Its: Senior Vice President
41
<PAGE> 45
Exhibit A-1
to Rights Agreement
[Form of]
CERTIFICATE OF DESIGNATION, PREFERENCES,
AND RIGHTS OF SERIES A JUNIOR
PARTICIPATING PREFERRED STOCK
of
PEROT SYSTEMS CORPORATION
Pursuant to Section 151, of the General Corporation Law of the State of
Delaware
The undersigned officers of Perot Systems Corporation (the
"Corporation"), a corporation organized and existing under the General
Corporation Law of the State of Delaware, in accordance with the provisions of
Section 151, thereof, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors by
the Second Amended and Restated Certificate of Incorporation of such
Corporation, such Board of Directors on January 5, 1999, adopted the resolutions
set forth below creating a series of 200,000 shares of Preferred Stock
designated as "Series A Junior Participating Preferred Stock":
That no shares of Series A Junior Participating Preferred Stock have
heretofore been issued.
RESOLVED, that pursuant to the authority vested in the Board of
Directors of this Corporation in accordance with the provisions of its Second
Amended and Restated Certificate of Incorporation, a series of Preferred Stock
of the Corporation be and it hereby is created, and that the designation and
amount thereof and the voting powers, preferences, and relative, participating,
optional, and other special rights of the shares of such series, and the
qualifications, limitations, or restrictions thereof are as follows:
(1) Designation and Amount. The shares of such series will be
designated as "Series A Junior Participating Preferred Stock" and the number of
shares constituting such series will be 200,000. Such number of shares of Series
A Junior Participating Preferred Stock may be increased or decreased by
resolution of the Board of Directors; provided that no decrease shall reduce the
number of shares of Series A Junior Participating Preferred Stock to a number
less than the number of shares then outstanding plus the number of shares
issuable upon exercise or conversion of outstanding rights, options, or other
securities issued by the Corporation.
A-1-1
<PAGE> 46
(2) Dividends and Distributions.
(a) The holders of shares of Series A Junior Participating
Preferred Stock will be entitled to receive, when, as, and if declared
by the Board of Directors out of funds legally available for the
purpose, quarterly dividends payable in cash on the last day of March,
June, September, and December in each year (each such date being
referred to as a "Quarterly Dividend Payment Date"), commencing on the
first Quarterly Dividend Payment Date after the first issuance of a
share or fraction of a share of Series A Junior Participating Preferred
Stock, in an amount per share (rounded to the nearest cent) equal to
the greater of (i) $0.01 and (ii) subject to the provision for
adjustment set forth below, one thousand times the aggregate per share
amount of all cash dividends, and one thousand times the aggregate per
share amount (payable in kind) of all non-cash dividends or other
distributions other than a dividend payable in shares of Class A Common
Stock, par value $.01 per share (the "Class A Common Stock"), or the
Class B Common Stock, par value $.01 per share (the "Class B Common
Stock") (the Class A Common Stock and the Class B Common Stock are
referred to together as the "Common Stock"), or a subdivision of the
outstanding shares of Class A Common Stock or Class B Common Stock (by
reclassification or otherwise), declared on the Class A Common Stock
since the immediately preceding Quarterly Dividend Payment Date, or,
with respect to the first Quarterly Dividend Payment Date, since the
first issuance of any share or fraction of a share of Series A Junior
Participating Preferred Stock. In the event the Corporation at any time
after January 5, 1999 (the "Rights Declaration Date") (i) pays any
dividend on the Class A Common Stock payable in shares of Common Stock,
(ii) subdivides the outstanding Class A Common Stock, or (iii) combines
the outstanding Class A Common Stock into a smaller number of shares,
then in each such case the amount to which holders of shares of Series
A Junior Participating Preferred Stock were entitled immediately prior
to such event under clause (ii) of the preceding sentence will be
adjusted by multiplying such amount by a fraction the numerator of
which is the number of shares of Common Stock outstanding immediately
after such event and the denominator of which is the number of shares
of Class A Common Stock that were outstanding immediately prior to such
event.
(b) The Corporation will declare a dividend or distribution on
the Series A Junior Participating Preferred Stock as provided in
Section 2(a) above immediately after it declares a dividend or
distribution on the Class A Common Stock or Class B Common Stock (other
than a dividend payable in shares of Common Stock); provided that, in
the event no dividend or distribution has been declared on the Common
Stock during the period between any Quarterly Dividend Payment Date and
the next subsequent Quarterly Dividend Payment Date, a dividend of
$0.01 per share on the Series A Junior Participating Preferred Stock
will nevertheless be payable on such subsequent Quarterly Dividend
Payment Date.
A-1-2
<PAGE> 47
(c) Dividends will begin to accrue and be cumulative on
outstanding shares of Series A Junior Participating Preferred Stock
from the Quarterly Dividend Payment Date next preceding the date of
issue of such shares of Series A Junior Participating Preferred Stock,
unless the date of issue of such shares is prior to the record date for
the first Quarterly Dividend Payment Date, in which case dividends on
such shares will begin to accrue from the date of issue of such shares,
or unless the date of issue is a Quarterly Dividend Payment Date or is
a date after the record date for the determination of holders of shares
of Series A Junior Participating Preferred Stock entitled to receive a
quarterly dividend and before such Quarterly Dividend Payment Date, in
either of which events such dividends will begin to accrue and be
cumulative from such Quarterly Dividend Payment Date. Accrued but
unpaid dividends will not bear interest. Dividends paid on the shares
of Series A Junior Participating Preferred Stock in an amount less than
the total amount of such dividends at the time accrued and payable on
such shares will be allocated pro rata on a share-by-share basis among
all such shares at the time outstanding. The Board of Directors may fix
a record date for the determination of holders of shares of Series A
Junior Participating Preferred Stock entitled to receive payment of a
dividend or distribution declared thereon, which record date will be no
more than 30 days prior to the date fixed for the payment thereof.
(3) Voting Rights. In addition to any other voting rights required
by law, the holders of shares of Series A Junior Participating Preferred Stock
will have the following voting rights:
(a) Subject to the provision for adjustment set forth below,
each share of Series A Junior Participating Preferred Stock will
entitled the holder to a number of votes on all matters submitted to a
vote of the stockholders of the Corporation equal to one thousand times
the number of votes per share to which shares of Class A Common Stock
are entitled. In the event the Corporation at any time after the Rights
Declaration Date (i) pays any dividend on Class A Common Stock payable
in shares of Class A Common Stock, (ii) subdivides the outstanding
Class A Common Stock, or (iii) combines the outstanding Class A Common
Stock into a smaller number of shares, then in each such case the
number of votes per share to which holders of shares of Series A Junior
Participating Preferred Stock were entitled immediately prior to such
event will be adjusted by multiplying such number by a fraction the
numerator of which is the number of shares of Class A Common Stock
outstanding immediately after such event and the denominator of which
is the number of shares of Class A Common Stock that were outstanding
immediately prior to such event.
(b) Except as otherwise provided in this Agreement or by law,
the holders of shares of Series A Junior Participating Preferred Stock
and the holders of shares of Common Stock will vote together as one
class on all matters submitted to a vote of stockholders of the
Corporation.
A-1-3
<PAGE> 48
(c) (i) If at any time dividends on any Series A Junior
Participating Preferred Stock are in arrears in an amount
equal to six (6) quarterly dividends thereon, the occurrence
of such contingency will mark the beginning of a period (a
"default period") that will extend until such time when all
accrued and unpaid dividends for all previous quarterly
dividend periods and for the current quarterly dividend period
on all shares of Series A Junior Participating Preferred Stock
then outstanding have been declared and paid or set apart for
payment. During each default period, all holders of preferred
stock of the Corporation (the "Preferred Stock") (including
holders of the Series A Junior Participating Preferred Stock)
with dividends in arrears in an amount equal to six (6)
quarterly dividends thereon, voting as a class, irrespective
of series, will have the right to elect two (2) Directors.
(ii) During any default period, such voting right of
the holders of Series A Junior Participating Preferred Stock
may be exercised initially at a special meeting called
pursuant to Section 3(c)(iii) or at any annual meeting of
stockholders, and thereafter at annual meetings of
stockholders, provided that neither such voting right nor the
right of the holders of any other series of Preferred Stock,
if any, to increase, in certain cases, the authorized number
of Directors will be exercised unless the holders of ten
percent (10%) in number of shares of Preferred Stock
outstanding are present in person or by proxy. The absence of
a quorum of the holders of Common Stock will not affect the
exercise by the holders of Preferred Stock of such voting
right. At any meeting at which the holders of Preferred Stock
exercise such voting right initially during an existing
default period, they will have the right, voting as a class,
to elect Directors to fill such vacancies, if any, in the
Board of Directors as may then exist up to two (2) Directors
or, if such right is exercised at an annual meeting, to elect
two (2) Directors. If the number that may be so elected at any
special meeting does not amount to the required number, the
holders of the Preferred Stock will have the right to make
such increase in the number of Directors as is necessary to
permit the election by them of the required number. After the
holders of the Preferred Stock have exercised their right to
elect Directors in any default period and during the
continuance of such period, the number of Directors will not
be increased or decreased except by vote of the holders of
Preferred Stock as provided herein or pursuant to the rights
of any equity securities ranking senior to or pari passu with
the Series A Junior Participating Preferred Stock.
(iii) Unless the holders of Preferred Stock, during
an existing default period, have previously exercised their
right to elect Directors, the Board of Directors may order, or
any stockholder or stockholders owning in the aggregate not
less than ten percent (10%) of the total number of shares of
Preferred Stock outstanding, irrespective of series, may
request, the calling of a special meeting of the holders of
Preferred Stock, which
A-1-4
<PAGE> 49
meeting will thereupon be called by the Chief Executive
Officer, the Chief Operating Officer, the President, a
Vice-President, or the Secretary of the Corporation. Notice of
such meeting and of any annual meeting at which holders of
Preferred Stock are entitled to vote pursuant to this Section
3(c)(iii) will be given to each holder of record of Preferred
Stock by mailing a copy of such notice to such holder at such
holder's last address as it appears on the books of the
Corporation. Such meeting will be called for a time not
earlier than 20 days and not later than 60 days after such
order or request or in default of the calling of such meeting
within 60 days after such order or request, such meeting may
be called on similar notice by any stockholder or stockholders
owning in the aggregate not less than ten percent (10%) of the
total number of shares of Preferred Stock outstanding.
Notwithstanding the provisions of this Section 3(c)(iii), no
such special meeting will be called during the period within
60 days immediately preceding the date fixed for the next
annual meeting of the stockholders.
(iv) In any default period, the holders of Common Stock,
and other classes of stock of the Corporation if applicable,
will continue to be entitled to elect the whole number of
Directors until the holders of Preferred Stock have exercised
their right to elect two (2) Directors voting as a class,
after the exercise of which right (x) the Directors so elected
by the holders of Preferred Stock will continue in office
until their successors have been elected by such holders or
until the expiration of the default period, and (y) any
vacancy in the Board of Directors may (except as provided in
Section 3(c)(ii)) be filled by vote of a majority of the
remaining Directors theretofore elected by the holders of the
class of stock that elected the Director whose office has
become vacant. References in this Section 3(c) to Directors
elected by the holders of a particular class of stock will
include Directors elected by such Directors to fill vacancies
as provided in clause (y) of the foregoing sentence.
(v) Immediately upon the expiration of a default period,
(x) the right of the holders of Preferred Stock as a class to
elect Directors will cease, (y) the term of any Directors
elected by the holders of Preferred Stock as a class will
terminate, and (z) the number of Directors will be such number
as may be provided for in the certificate of incorporation or
by-laws irrespective of any increase made pursuant to the
provisions of Section 3(c)(ii) (such number being subject,
however, to change thereafter in any manner provided by law or
in the articles of incorporation or by-laws). Any vacancies in
the Board of Directors effected by the provisions of clauses
(y) and (z) in the preceding sentence may be filled by a
majority of the remaining Directors.
Except as set forth herein, holders of Series A Junior Participating
Preferred Stock will have no special voting rights and their consent will not be
required (except to the extent they are entitled to vote with holders of Common
Stock as set forth herein) for taking any corporate action.
A-1-5
<PAGE> 50
(4) Certain Restrictions.
(a) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Junior Participating Preferred
Stock as provided in Section 2 are in arrears, thereafter and until all
accrued and unpaid dividends and distributions, whether or not
declared, on shares of Series A Junior Participating Preferred Stock
outstanding have been paid in full, the Corporation will not
(i) declare or pay dividends on, make any other
distributions on, or redeem or purchase or otherwise acquire
for consideration any shares of stock ranking junior (either
as to dividends or upon liquidation, dissolution, or winding
up) to the Series A Junior Participating Preferred Stock;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution, or
winding up) with the Series A Junior Participating Preferred
Stock, except dividends paid ratably on the Series A Junior
Participating Preferred Stock and all such parity stock on
which dividends are payable or in arrears in proportion to the
total amounts to which the holders of all such shares are then
entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking on a parity (either
as to dividends or upon liquidation, dissolution, or winding
up) with the Series A Junior Participating Preferred Stock,
provided that the Corporation may at any time redeem,
purchase, or otherwise acquire shares of any such parity stock
in exchange for shares of any stock of the Corporation ranking
junior (either as to dividends or upon dissolution,
liquidation, or winding up) to the Series A Junior
Participating Preferred Stock; or
(iv) purchase or otherwise acquire for consideration
any shares of Series A Junior Participating Preferred Stock,
or any shares of stock ranking on a parity with the Series A
Junior Participating Preferred Stock, except in accordance
with a purchase offer made in writing or by publication (as
determined by the Board of Directors) to all holders of such
shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and
other relative rights and preferences of the respective series
and classes, determines in good faith will result in fair and
equitable treatment among the respective series or classes.
A-1-6
<PAGE> 51
(b) The Corporation will not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any
shares of stock of the Corporation unless the Corporation could, under
Section 4(a), purchase or otherwise acquire such shares at such time
and in such manner.
(5) Reacquired Shares. Any shares of Series A Junior Participating
Preferred Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever will be retired and canceled promptly after the acquisition thereof.
All such shares will upon their cancellation become authorized but unissued
shares of Preferred Stock and may be reissued as part of a new series of
Preferred Stock to be created by resolution or resolutions of the Board of
Directors, subject to the conditions and restrictions on issuance set forth
herein.
(6) Liquidation, Dissolution, or Winding Up.
(a) Upon any liquidation (voluntary or otherwise),
dissolution, or winding up of the Corporation, no distribution will be
made to the holders of shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution, or winding up) to the
Series A Junior Participating Preferred Stock unless, prior thereto,
the holders of shares of Series A Junior Participating Preferred Stock
have received an amount equal to $10.00, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not
declared, to the date of such payment (the "Series A Liquidation
Preference"). Following the payment of the full amount of the Series A
Liquidation Preference, no additional distributions will be made to the
holders of shares of Series A Junior Participating Preferred Stock
unless, prior thereto, the holders of shares of Common Stock have
received an amount per share (the "Common Adjustment") equal to the
quotient obtained by dividing (i) the Series A Liquidation Preference
by (ii) 1,000 (as appropriately adjusted as set forth in Section 6(c)
to reflect such events as stock splits, stock dividends, and
recapitalizations with respect to the Common Stock) (such number in
clause (ii), the "Adjustment Number"). Following the payment of the
full amount of the Series A Liquidation Preference and the Common
Adjustment in respect of all outstanding shares of Series A Junior
Participating Preferred Stock and Common Stock, respectively, holders
of Series A Junior Participating Preferred Stock and holders of shares
of Common Stock will receive their ratable and proportionate share of
the remaining assets to be distributed in the ratio of the Adjustment
Number to 1 with respect to such Preferred Stock and Common Stock, on a
per share basis, respectively.
(b) In the event, however, that there are not sufficient
assets available to permit payment in full of the Series A Liquidation
Preference and the liquidation preferences of all other series of
preferred stock, if any, that rank on a parity with the Series A Junior
Participating Preferred Stock, then such remaining assets will be
distributed ratably to the holders of such parity shares in proportion
to their respective liquidation preferences. In the event, however,
that there are
A-1-7
<PAGE> 52
not sufficient assets available to permit payment in full of the Common
Adjustment, then such remaining assets will be distributed ratably to
the holders of Common Stock.
(c) In the event the Corporation at any time after the Rights
Declaration Date (i) pays any dividend on Class A Common Stock or Class
B Common Stock payable in shares of Class A Common Stock and Class B
Common Stock, (ii) subdivides the outstanding Class A Common Stock or
Class B Common Stock, or (iii) combines the outstanding Class A Common
Stock or Class B Common Stock into a smaller number of shares, then in
each such case the Adjustment Number in effect immediately prior to
such event will be adjusted by multiplying such Adjustment Number by a
fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which
is the number of shares of Common Stock that were outstanding
immediately prior to such event.
(7) Consolidation, Merger, etc. In case the Corporation enters
into any consolidation, merger, combination, or other transaction in which the
shares of Common Stock are exchanged for or changed into other stock or
securities, cash, and/or any other property, then in any such case the shares of
Series A Junior Participating Preferred Stock will at the same time be similarly
exchanged or changed in an amount per share (subject to the provision for
adjustment set forth below) equal to one thousand times the aggregate amount of
stock, securities, cash, and/or any other property (payable in kind), as the
case may be, into which or for which each share of Class A Common Stock is
changed or exchanged. In the event the Corporation at any time after the Rights
Declaration Date (i) pays any dividend on Class A Common Stock or Class B Common
Stock payable in shares of Class A Common Stock or Class B Common Stock, (ii)
subdivides the outstanding Class A Common Stock or Class B Common Stock, or
(iii) combines the outstanding Class A Common Stock or Class B Common Stock into
a smaller number of shares, then in each such case the amount set forth in the
preceding sentence with respect to the exchange or change of shares of Series A
Junior Participating Preferred Stock will be adjusted by multiplying such amount
by a fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
(8) No Redemption. The shares of Series A Junior Participating
Preferred Stock will not be redeemable.
(9) Amendment. The Second Amended and Restated Certificate of
Incorporation of the Corporation will not be further amended in any manner
(whether by merger or otherwise) that would materially alter or change the
powers, preferences, or special rights of the Series A Junior Participating
Preferred Stock so as to affect them adversely without the affirmative vote of
the holders of a majority or more of the outstanding shares of Series A Junior
Participating Preferred Stock, voting separately as a class.
A-1-8
<PAGE> 53
(10) Fractional Shares. Series A Junior Participating Preferred
Stock may be issued in fractions of a share that entitle the holder, in
proportion to such holders fractional shares, to exercise voting rights, receive
dividends, participate in distributions, and to have the benefit of all other
rights of holders of Series A Junior Participating Preferred Stock.
(11) Rank. The Series A Junior Participating Preferred Stock shall
rank junior (as to dividends and upon liquidation, dissolution and winding up)
to all other series of the Corporation's preferred stock except any series that
specifically provides that such series shall rank junior to the Series A Junior
Participating Preferred Stock. The Series A Junior Participating Preferred Stock
will ranked equal as to dividends and upon liquidation, dissolution, and winding
up with the Series B Junior Participating Preferred Stock, par value $0.01 per
share, of the Company.
A-1-9
<PAGE> 54
IN WITNESS WHEREOF, the officer set forth below has executed this
Certificate of Designation on behalf of the Corporation and such officer affirms
the foregoing as true under the penalties of perjury this __ day of January,
1999.
PEROT SYSTEMS CORPORATION
By:
------------------------------------
Name:
---------------------------------
Title:
---------------------------------
THE STATE OF TEXAS )
)
COUNTY OF )
The foregoing instrument was acknowledged before me this _______ day of
January, 1999, by ___________, _________ of Perot Systems Corporation, a
Delaware corporation, on behalf of said corporation.
[ ] was known to me or proved to me on the oath of
_________________; or
[ ] was proved to me through ____________________ to be the
person whose name is subscribed to the foregoing instrument.
[SEAL]
- -----------------------------
Notary Public in and for
the State of
----------
My Commission Expires:
- --------------------
A-1-10
<PAGE> 55
Exhibit A-2
to Rights Agreement
[Form of]
CERTIFICATE OF DESIGNATION, PREFERENCES,
AND RIGHTS OF SERIES B JUNIOR
PARTICIPATING PREFERRED STOCK
of
PEROT SYSTEMS CORPORATION
Pursuant to Section 151, of the General Corporation Law of the State
of Delaware
The undersigned officers of Perot Systems Corporation (the
"Corporation"), a corporation organized and existing under the General
Corporation Law of the State of Delaware, in accordance with the provisions of
Section 151, thereof, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors by
the Second Amended and Restated Certificate of Incorporation of such
Corporation, such Board of Directors on January 5, 1999, adopted the resolutions
set forth below creating a series of 10,000 shares of Preferred Stock designated
as "Series B Junior Participating Preferred Stock":
That no shares of Series B Junior Participating Preferred Stock have
heretofore been issued.
RESOLVED, that pursuant to the authority vested in the Board of
Directors of this Corporation in accordance with the provisions of its Second
Amended and Restated Certificate of Incorporation, a series of Preferred Stock
of the Corporation be and it hereby is created, and that the designation and
amount thereof and the voting powers, preferences, and relative, participating,
optional, and other special rights of the shares of such series, and the
qualifications, limitations, or restrictions thereof are as follows:
(1) Designation and Amount. The shares of such series will be
designated as "Series B Junior Participating Preferred Stock" and the number of
shares constituting such series will be 10,000. Such number of shares of Series
B Junior Participating Preferred Stock may be increased or decreased by
resolution of the Board of Directors; provided that no decrease shall reduce the
number of shares of Series B Junior Participating Preferred Stock to a number
less than the number of shares then outstanding plus the number of shares
issuable upon exercise or conversion of outstanding rights, options, or other
securities issued by the Corporation.
A-2-1
<PAGE> 56
(2) Dividends and Distributions.
(a) The holders of shares of Series B Junior Participating
Preferred Stock will be entitled to receive, when, as, and if declared
by the Board of Directors out of funds legally available for the
purpose, quarterly dividends payable in cash on the last day of March,
June, September, and December in each year (each such date being
referred to as a "Quarterly Dividend Payment Date"), commencing on the
first Quarterly Dividend Payment Date after the first issuance of a
share or fraction of a share of Series B Junior Participating Preferred
Stock, in an amount per share (rounded to the nearest cent) equal to
the greater of (i) $0.01 and (ii) subject to the provision for
adjustment set forth below, one thousand times the aggregate per share
amount of all cash dividends, and one thousand times the aggregate per
share amount (payable in kind) of all non-cash dividends or other
distributions other than a dividend payable in shares of Class A Common
Stock, par value $.01 per share (the "Class A Common Stock"), or the
Class B Common Stock, par value $.01 per share (the "Class B Common
Stock") (the Class A Common Stock and the Class B Common Stock are
referred to together as the "Common Stock"), or a subdivision of the
outstanding shares of Class A Common Stock or Class B Common Stock (by
reclassification or otherwise), declared on the Class B Common Stock
since the immediately preceding Quarterly Dividend Payment Date, or,
with respect to the first Quarterly Dividend Payment Date, since the
first issuance of any share or fraction of a share of Series B Junior
Participating Preferred Stock. In the event the Corporation at any time
after January 5, 1999 (the "Rights Declaration Date") (i) pays any
dividend on the Class B Common Stock payable in shares of Common Stock,
(ii) subdivides the outstanding Class B Common Stock, or (iii) combines
the outstanding Class B Common Stock into a smaller number of shares,
then in each such case the amount to which holders of shares of Series
B Junior Participating Preferred Stock were entitled immediately prior
to such event under clause (ii) of the preceding sentence will be
adjusted by multiplying such amount by a fraction the numerator of
which is the number of shares of Common Stock outstanding immediately
after such event and the denominator of which is the number of shares
of Class B Common Stock that were outstanding immediately prior to such
event.
(b) The Corporation will declare a dividend or distribution on
the Series B Junior Participating Preferred Stock as provided in
Section 2(a) above immediately after it declares a dividend or
distribution on the Class A Common Stock or Class B Common Stock (other
than a dividend payable in shares of Common Stock); provided that, in
the event no dividend or distribution has been declared on the Common
Stock during the period between any Quarterly Dividend Payment Date and
the next subsequent Quarterly Dividend Payment Date, a dividend of
$0.01 per share on the Series B Junior Participating Preferred Stock
will nevertheless be payable on such subsequent Quarterly Dividend
Payment Date.
A-2-2
<PAGE> 57
(c) Dividends will begin to accrue and be cumulative on
outstanding shares of Series B Junior Participating Preferred Stock
from the Quarterly Dividend Payment Date next preceding the date of
issue of such shares of Series B Junior Participating Preferred Stock,
unless the date of issue of such shares is prior to the record date for
the first Quarterly Dividend Payment Date, in which case dividends on
such shares will begin to accrue from the date of issue of such shares,
or unless the date of issue is a Quarterly Dividend Payment Date or is
a date after the record date for the determination of holders of shares
of Series B Junior Participating Preferred Stock entitled to receive a
quarterly dividend and before such Quarterly Dividend Payment Date, in
either of which events such dividends will begin to accrue and be
cumulative from such Quarterly Dividend Payment Date. Accrued but
unpaid dividends will not bear interest. Dividends paid on the shares
of Series B Junior Participating Preferred Stock in an amount less than
the total amount of such dividends at the time accrued and payable on
such shares will be allocated pro rata on a share-by-share basis among
all such shares at the time outstanding. The Board of Directors may fix
a record date for the determination of holders of shares of Series B
Junior Participating Preferred Stock entitled to receive payment of a
dividend or distribution declared thereon, which record date will be no
more than 30 days prior to the date fixed for the payment thereof.
(3) Voting Rights. Except as required by law, the holders of
shares of Series B Junior Participating Preferred Stock will have no
voting rights. In any case where the Series B Participating Preferred
Stock is required by law to vote, the holders of shares of Series B
Junior Participating Preferred Stock and the holders of shares of
Common Stock will, except as provided in the Certificate of
Incorporation (as amended form time to time) of the Corporation or as
required by law, vote together as one class on all matters submitted to
a vote of stockholders of the Corporation.
(4) Certain Restrictions.
(a) Whenever quarterly dividends or other dividends or
distributions payable on the Series B Junior Participating Preferred
Stock as provided in Section 2 are in arrears, thereafter and until all
accrued and unpaid dividends and distributions, whether or not
declared, on shares of Series B Junior Participating Preferred Stock
outstanding have been paid in full, the Corporation will not
(i) declare or pay dividends on, make any other
distributions on, or redeem or purchase or otherwise acquire
for consideration any shares of stock ranking junior (either
as to dividends or upon liquidation, dissolution, or winding
up) to the Series B Junior Participating Preferred Stock;
A-2-3
<PAGE> 58
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution, or
winding up) with the Series B Junior Participating Preferred
Stock, except dividends paid ratably on the Series B Junior
Participating Preferred Stock and all such parity stock on
which dividends are payable or in arrears in proportion to the
total amounts to which the holders of all such shares are then
entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking on a parity (either
as to dividends or upon liquidation, dissolution, or winding
up) with the Series B Junior Participating Preferred Stock,
provided that the Corporation may at any time redeem,
purchase, or otherwise acquire shares of any such parity stock
in exchange for shares of any stock of the Corporation ranking
junior (either as to dividends or upon dissolution,
liquidation, or winding up) to the Series B Junior
Participating Preferred Stock; or
(iv) purchase or otherwise acquire for consideration
any shares of Series B Junior Participating Preferred Stock,
or any shares of stock ranking on a parity with the Series B
Junior Participating Preferred Stock, except in accordance
with a purchase offer made in writing or by publication (as
determined by the Board of Directors) to all holders of such
shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and
other relative rights and preferences of the respective series
and classes, determines in good faith will result in fair and
equitable treatment among the respective series or classes.
(b) The Corporation will not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any
shares of stock of the Corporation unless the Corporation could, under
Section 4(a), purchase or otherwise acquire such shares at such time
and in such manner.
(5) Reacquired Shares. Any shares of Series B Junior Participating
Preferred Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever will be retired and canceled promptly after the acquisition thereof.
All such shares will upon their cancellation become authorized but unissued
shares of Preferred Stock and may be reissued as part of a new series of
Preferred Stock to be created by resolution or resolutions of the Board of
Directors, subject to the conditions and restrictions on issuance set forth
herein.
(6) Liquidation, Dissolution, or Winding Up.
(a) Upon any liquidation (voluntary or otherwise),
dissolution, or winding up of the Corporation, no distribution will be
made to the holders of shares of stock ranking junior (either as to
dividends or upon liquidation,
A-2-4
<PAGE> 59
dissolution, or winding up) to the Series B Junior Participating
Preferred Stock unless, prior thereto, the holders of shares of Series
B Junior Participating Preferred Stock have received an amount equal to
$10.00, plus an amount equal to accrued and unpaid dividends and
distributions thereon, whether or not declared, to the date of such
payment (the "Series B Liquidation Preference"). Following the payment
of the full amount of the Series B Liquidation Preference, no
additional distributions will be made to the holders of shares of
Series B Junior Participating Preferred Stock unless, prior thereto,
the holders of shares of Common Stock have received an amount per share
(the "Common Adjustment") equal to the quotient obtained by dividing
(i) the Series B Liquidation Preference by (ii) 1,000 (as appropriately
adjusted as set forth in Section 6(c) to reflect such events as stock
splits, stock dividends, and recapitalizations with respect to the
Common Stock) (such number in clause (ii), the "Adjustment Number").
Following the payment of the full amount of the Series B Liquidation
Preference and the Common Adjustment in respect of all outstanding
shares of Series B Junior Participating Preferred Stock and Common
Stock, respectively, holders of Series B Junior Participating Preferred
Stock and holders of shares of Common Stock will receive their ratable
and proportionate share of the remaining assets to be distributed in
the ratio of the Adjustment Number to 1 with respect to such Preferred
Stock and Common Stock, on a per share basis, respectively.
(b) In the event, however, that there are not sufficient
assets available to permit payment in full of the Series B Liquidation
Preference and the liquidation preferences of all other series of
preferred stock, if any, that rank on a parity with the Series B Junior
Participating Preferred Stock, then such remaining assets will be
distributed ratably to the holders of such parity shares in proportion
to their respective liquidation preferences. In the event, however,
that there are not sufficient assets available to permit payment in
full of the Common Adjustment, then such remaining assets will be
distributed ratably to the holders of Common Stock.
(c) In the event the Corporation at any time after the Rights
Declaration Date (i) pays any dividend on Class A Common Stock or Class
B Common Stock payable in shares of Class A Common Stock and Class B
Common Stock, (ii) subdivides the outstanding Class A Common Stock or
Class B Common Stock, or (iii) combines the outstanding Class A Common
Stock or Class B Common Stock into a smaller number of shares, then in
each such case the Adjustment Number in effect immediately prior to
such event will be adjusted by multiplying such Adjustment Number by a
fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which
is the number of shares of Common Stock that were outstanding
immediately prior to such event.
(7) Consolidation, Merger, etc. In case the Corporation enters
into any consolidation, merger, combination, or other transaction in which the
shares of
A-2-5
<PAGE> 60
Common Stock are exchanged for or changed into other stock or securities, cash,
and/or any other property, then in any such case the shares of Series B Junior
Participating Preferred Stock will at the same time be similarly exchanged or
changed in an amount per share (subject to the provision for adjustment set
forth below) equal to one thousand times the aggregate amount of stock,
securities, cash, and/or any other property (payable in kind), as the case may
be, into which or for which each share of Class A Common Stock is changed or
exchanged. In the event the Corporation at any time after the Rights Declaration
Date (i) pays any dividend on Class A Common Stock or Class B Common Stock
payable in shares of Class A Common Stock or Class B Common Stock, (ii)
subdivides the outstanding Class A Common Stock or Class B Common Stock, or
(iii) combines the outstanding Class A Common Stock or Class B Common Stock into
a smaller number of shares, then in each such case the amount set forth in the
preceding sentence with respect to the exchange or change of shares of Series B
Junior Participating Preferred Stock will be adjusted by multiplying such amount
by a fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
(8) No Redemption. The shares of Series B Junior Participating
Preferred Stock will not be redeemable.
(9) Amendment. The Second Amended and Restated Certificate of
Incorporation of the Corporation will not be further amended in any manner
(whether by merger or otherwise) that would materially alter or change the
powers, preferences, or special rights of the Series B Junior Participating
Preferred Stock so as to affect them adversely without the affirmative vote of
the holders of a majority or more of the outstanding shares of Series B Junior
Participating Preferred Stock, voting separately as a class.
(10) Fractional Shares. Series B Junior Participating Preferred
Stock may be issued in fractions of a share that entitle the holder, in
proportion to such holders fractional shares, to exercise voting rights, receive
dividends, participate in distributions, and to have the benefit of all other
rights of holders of Series B Junior Participating Preferred Stock.
(11) Rank. The Series B Junior Participating Preferred Stock shall
rank junior (as to dividends and upon liquidation, dissolution and winding up)
to all other series of the Corporation's preferred stock except any series that
specifically provides that such series shall rank junior to the Series B Junior
Participating Preferred Stock. The Series B Junior Participating Preferred Stock
will ranked equal as to dividends and upon liquidation, dissolution, and winding
up with the Series A Junior Participating Preferred Stock, par value $0.01 per
share, of the Company.
A-2-6
<PAGE> 61
IN WITNESS WHEREOF, the officer set forth below has executed this
Certificate of Designation on behalf of the Corporation and such officer affirms
the foregoing as true under the penalties of perjury this __ day of January,
1999.
PEROT SYSTEMS CORPORATION
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
THE STATE OF TEXAS SS.
SS.
COUNTY OF SS.
The foregoing instrument was acknowledged before me this _______ day of
January, 1999, by ___________, _________ of Perot Systems Corporation, a
Delaware corporation, on behalf of said corporation.
[ ] was known to me or proved to me on the oath
of _________________; or
[ ] was proved to me through ____________________ to be the
person whose name is subscribed to the foregoing instrument.
[SEAL]
- ------------------------------
Notary Public in and for
the State of
----------
My Commission Expires:
- --------------------
A-2-7
<PAGE> 62
Exhibit B
to Rights Agreement
Form of Rights Certificate
Certificate No. R-[A] [B](1)-Class [A] [B] Rights
NOT EXERCISABLE AFTER JANUARY 7, 2009 OR EARLIER IF REDEEMED BY THE
COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT
$0.001 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR AN ADVERSE
PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON OR ADVERSE PERSON (AS
SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF
SUCH RIGHTS MAY BECOME NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS RIGHTS
CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO IS, WAS, OR BECAME AN
ACQUIRING PERSON OR AN ADVERSE PERSON OR AN AFFILIATE OR ASSOCIATE OF AN
ACQUIRING PERSON OR AN ADVERSE PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
AGREEMENT). ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED
HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN SUCH
AGREEMENT.]2
Rights Certificate
PEROT SYSTEMS CORPORATION
This certifies that _____________, or registered assigns, is the
registered owner of the number of Class [A] [B] Rights set forth above, each of
which entitles the owner thereof, subject to the terms, provisions, and
conditions of the Rights Agreement, dated as of January 28, 1999 (as amended
from time to time, the "Rights Agreement"), between Perot Systems Corporation, a
Delaware corporation (the "Company"), and The Chase Manhattan Bank, (the "Rights
Agent"), to purchase from the Company at any time prior to 5:00 p.m. (Delaware
time) on January 7, 2009 at the office or offices of the Rights Agent designated
for such purpose, or its successors as Rights Agent, one one-thousandth of a
fully paid, nonassessable share of Series [A] [B]Junior Participating Preferred
Stock (the "Preferred Stock") of the Company, at a purchase price of $ 55.00 per
one one-thousandth of a share (the "Purchase Price"), upon presentation and
surrender of this Rights Certificate with the Form of Election to Purchase and
related Certificate duly executed. The number of Rights evidenced by this Rights
Certificate (and the number of shares that may be purchased upon exercise
thereof) set forth
- -------------------
(1) Wherever the designation [A] [B] is used, the form A should be inserted
for Class A Rights and the form B should be inserted for Class B
Rights.
(2) The portion of the legend in brackets shall be inserted only if
applicable and shall replace the preceding sentence.
B-1
<PAGE> 63
above, and the Purchase Price per share set forth above, are the number and
Purchase Price as of January 28, 1999 based on the Preferred Stock as
constituted at such date. The Company reserves the right to require prior to the
occurrence of a Triggering Event (as such term is defined in the Rights
Agreement) that a number of Rights be exercised so that only whole shares of
Preferred Stock will be issued.
Upon the occurrence of a Section 11(a)(ii) Event (as such term is
defined in the Rights Agreement), if the Rights evidenced by this Rights
Certificate are beneficially owned by (i) an Acquiring Person or an Adverse
Person or an Affiliate or Associate of any such Acquiring Person or Adverse
Person (as such terms are defined in the Rights Agreement), (ii) a transferee of
any such Acquiring Person, Adverse Person, Associate, or Affiliate, or (iii)
under certain circumstances specified in the Rights Agreement, a transferee of a
Person who, after such transfer, became an Acquiring Person or an Adverse
Person, or an Affiliate or Associate of an Acquiring Person or an Adverse
Person, such Rights will become null and void and no holder of this certificate
will have any right with respect to such Rights from and after the occurrence of
such Section 11(a)(ii) Event.
As provided in the Rights Agreement, the Purchase Price and the number
and kind of shares of Preferred Stock or other securities, that may be purchased
upon the exercise of the Rights evidenced by this Rights Certificate are subject
to modification and adjustment upon the happening of certain events, including
Triggering Events.
This Rights Certificate is subject to all of the terms, provisions, and
conditions of the Rights Agreement, which terms, provisions, and conditions are
hereby incorporated in this Rights Certificate by reference and made a part of
this certificate and to which Rights Agreement reference is hereby made for a
full description of the rights, limitations of rights, obligations, duties, and
immunities hereunder of the Rights Agent, the Company, and the holders of the
Rights Certificates, which limitations of rights include the temporary
suspension of the exercisability of such Rights under the certain circumstances
set forth in the Rights Agreement. Copies of the Rights Agreement are on file at
the above-mentioned office of the Rights Agent and are also available upon
written request to the Rights Agent.
This Rights Certificate, with or without other Rights Certificates,
upon surrender at the principal office or offices of the Rights Agent designated
for such purpose, may be exchanged for another Rights Certificate or Rights
Certificates of like tenor and date evidencing Rights entitling the holder to
purchase a like aggregate number of one one-thousandths of a share of Preferred
Stock as the Rights evidenced by the Rights Certificate or Rights Certificates
surrendered have entitled such holder to purchase. If this Rights Certificate is
exercised in part, the holder will be entitled to receive upon surrender of this
Rights Certificate another Class [A] [B] Rights Certificate or Rights
Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate may be redeemed by the Company at its option at a redemption
price of
B-2
<PAGE> 64
$0.001 per Right at any time prior to the earlier of the Close of Business on
(i) the tenth day following the occurrence of a Section 11(a)(ii) Event (as such
time may be extended pursuant to the Rights Agreement) and (ii) the Final
Expiration Date. In addition, in certain circumstances the Rights may be
exchanged, in whole or in part, for shares of the Class [A] [B] Common Stock, or
shares of preferred stock of the Company having essentially the same value or
economic rights as such shares. Immediately upon the action of the Board of
Directors of the Company authorizing any such exchange, and without any further
action or any notice, the Rights (other than Rights that are not subject to such
exchange) will terminate and the Rights will only enable holders to receive the
shares issuable upon such exchange.
No fractional shares of Preferred Stock will be issued upon the
exercise of any Right or Rights evidenced hereby (other than fractions that are
integral multiples of one one-thousandth of a share of Preferred Stock, which
may, at the election of the Company, be evidenced by depository receipts), but
in lieu thereof a cash payment will be made, as provided in the Rights
Agreement.
No holder of this Rights Certificate will be entitled to vote or
receive dividends or be deemed for any purpose the holder of shares of Preferred
Stock or of any other securities of the Company that may at any time be issuable
on the exercise hereof, nor will anything contained in the Rights Agreement or
herein be construed to confer upon the holder of this certificate, as such, any
of the rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or, to
receive notice of meetings or other actions affecting stockholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Rights
Certificate have been exercised as provided in the Rights Agreement.
B-3
<PAGE> 65
This Rights Certificate will not be valid or obligatory for any purpose
until it has been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal.
Dated as of
--------------------
ATTEST: PEROT SYSTEMS CORPORATION
- ------------------- By:
-------------------------------
Title:
----------------------------
Countersigned:
THE CHASE MANHATTAN BANK
By
-----------------------------
Authorized Signature
B-4
<PAGE> 66
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to
transfer the Rights Certificate.)
FOR VALUE RECEIVED hereby sells, assigns, and transfer unto
(Please print name and address of transferee)
This Rights Certificate, together with all right, title, and interest
therein, and does hereby irrevocably constitute and appoint _________________
attorney, to transfer the within Class [A] [B] Rights Certificate on the books
of the within-named Company, with full power of substitution.
Dated: ,
------------------ ---- -----------------------------------
Signature
Signature Guaranteed:
Certificate
The undersigned hereby certifies by checking the appropriate boxes that:
(1) this Rights Certificate [ ] is [ ] is not being sold, assigned, or
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Adverse Person or an Affiliate or Associate of any such Acquiring Person or
Adverse Person (as such terms are defined in the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it [ ] did
[ ] did not acquire the Rights evidenced by this Rights Certificate from any
Person who is, was, or subsequently became an Acquiring Person or an Adverse
Person or an Affiliate or Associate of an Acquiring Person or an Adverse Person.
Dated: ,
------------------ ---- -----------------------------------
Signature
Signature Guaranteed:
B-5
<PAGE> 67
NOTICE
The signature to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
To: PEROT SYSTEMS CORPORATION:
The undersigned hereby irrevocably elects to exercise __________ Class
[A] [B] Rights represented by this Rights Certificate to purchase the shares of
Preferred Stock issuable upon the exercise of the Rights (or such other
securities of the Company or of any other Person that may be issuable upon the
exercise of the Rights) and requests that certificates for such shares be issued
in the name of and delivered to:
Please insert social security or other identifying number
(please print name and address)
If such number of Rights are not all the Rights evidenced by this
Rights Certificate, a new Rights Certificate for the balance of such Rights will
be registered in the name of and delivered to:
please insert social security
or other identifying number
(please print name and address)
Dated: ,
------------------ ---- -----------------------------------
Signature
Signature Guaranteed:
Certificate
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Rights Certificate [ ] are [ ] are not
being exercised by or on behalf of a Person who is or was an Acquiring Person or
an Adverse Person or an Affiliate or Associate of any such Acquiring Person or
an Adverse Person (as such terms are defined in the Rights Agreement);
B-6
<PAGE> 68
(2) after due inquiry and to the best knowledge of the undersigned, it
[ ] did [ ] did not acquire the Rights evidenced by this Rights Certificate from
any Person who is, was or became an Acquiring Person or Adverse Person or an
Affiliate or Associate of an Acquiring Person or an Adverse Person.
Dated: ,
------------------ ---- -----------------------------------
Signature
Signature Guaranteed:
B-7
<PAGE> 69
Exhibit C
to Rights Agreement
FORM OF SUMMARY OF RIGHTS
On January 5, 1998, the Board of Directors of Perot Systems Corporation
(the "Company") adopted a Stockholder Rights Plan, providing that one Class A
right (a "Class A Right") will be attached to each share of Class A common
stock, par value $.01 per share, of the Company (the "Class A Common Stock") and
one Class B right (a "Class B Right" and, together with the Class A Rights, the
"Rights") will be attached to each share of Class B Common Stock, par value $.01
per share, of the Company (the "Class B Common Stock" and, together with the
Class A Common Stock, the "Common Stock") as of the close of business on January
7, 1999 (the "Record Date"). Each Class A Right entitles the registered holder
to purchase from the Company a unit consisting of one one-thousandth of a share
of Series A Junior Participating Preferred Stock, par value $0.01 per share (the
"Series A Preferred Stock"), at a Purchase Price of $55.00 per unit (the
"Purchase Price"), subject to adjustment. Each Class B Right entitles the
registered holder to purchase from the Company a unit consisting of one
one-thousandth of a share of Series B Junior Participating Preferred Stock, par
value $0.01 per share (the "Series B Preferred Stock" and, together with the
Series A Preferred Stock, the "Preferred Stock"), at the Purchase Price of
$55.00 per unit (the "Purchase Price"), subject to adjustment. The description
and terms of the Rights are set forth in the Rights Agreement (the "Rights
Agreement"), dated as of January 28, 1999, between the Company and The Chase
Manhattan Bank as Rights Agent (the "Rights Agent").
Initially, the Class A Rights will be attached to all Class A Common
Stock certificates representing shares outstanding as of the Record Date and the
Class B Rights will be attached to all Class B Common Stock certificates
representing shares outstanding as of the Record Date, and no separate Rights
Certificates will be distributed. The Rights will separate from the Common Stock
and a Distribution Date will occur upon the earlier of (i) 10 calendar days
following a public announcement that a person or group of affiliated or
associated persons (an "Acquiring Person") has acquired, or obtained the right
to acquire, beneficial ownership of 20% or more of the outstanding shares of
Common Stock or 20% or more of the outstanding shares of Class A Common Stock
(the date of such announcement being the "Stock Acquisition Date"), (ii) 10
business days following the commencement of a tender offer or exchange offer
that would result in a person or group beneficially owning 20% or more of the
outstanding shares of Common Stock or 20% or more of the outstanding shares of
Class A Common Stock, or (iii) the Board of Directors of the Company determining
that any Person or Persons have become the Beneficial Owner of an amount of
Common Stock that the Board of Directors determines to be substantial (which
amount will in no event be less than 11% of the shares of Common Stock or Class
A Common Stock outstanding) and that (a) such Person or Persons intend to cause
the Company to repurchase the Common Stock beneficially owned by such Person or
Persons or to exert pressure against the Company to take any action or enter
into any transaction or
C-1
<PAGE> 70
series of transactions with the intent or the effect of providing such Person or
Persons with short-term gains or profits under circumstances in which the Board
of Directors determines that the long-term interests of the Company and its
stockholders would not be served by taking such action or entering into such
transactions or series of transactions or (b) beneficial ownership by such
Person or Persons is reasonably likely to have a material adverse effect on the
business, competitive position, prospects, business reputation, or financial
condition of the Company and its subsidiaries (an "Adverse Person").
Until the Distribution Date, (i) the Rights will be evidenced by the
Common Stock certificates and will be transferred with and only with such Common
Stock certificates, (ii) new Common Stock certificates will contain a notation
incorporating the Rights Agreement by reference; and (iii) the surrender for
transfer of any certificates for Common Stock outstanding will also constitute
the transfer of the Rights associated with the Common Stock represented by such
certificate. The Rights Agreement provides that Ross Perot, and certain of his
successors and affiliates are excluded from the definition of "Acquiring
Person." Mr. Perot and certain of his successors and affiliates are also
excluded from the definition of "Adverse Person."
The Rights are not exercisable until the Distribution Date and will
expire at the close of business on January 7, 2009, unless earlier redeemed by
the Company as described below.
As soon as practicable after the Distribution Date, Rights Certificates
will be mailed to holders of record of the Common Stock as of the close of
business on the Distribution Date and, thereafter, the separate Rights
Certificates alone will represent the Rights. Except as otherwise determined by
the Board of Directors, only shares of Common Stock outstanding prior to the
Distribution Date will be issued with Rights.
In the event that (i) any person becomes an Acquiring Person or (ii)
the Board of Directors declares a person to be an Adverse Person, each holder of
a Class A Right will thereafter have the right to receive, upon exercise, Class
A Common Stock (or, in certain circumstances, cash, property, or other
securities of the Company) and each holder of a Class B Right will thereafter
(subject to limitations on ownership under the Bank Holding Company Act of 1956)
have the right to receive, upon exercise, Class B Common Stock (or in certain
circumstances cash, property or other securities of the Company), having a value
equal to two times the Exercise Price of the Right. The Exercise Price is the
Purchase Price times the number of shares of Common Stock associated with each
Right (initially, one). Notwithstanding any of the foregoing, following the
occurrence of either of the events set forth in this paragraph (the "Flip-In
Events"), all Rights that are, or (under certain circumstances specified in the
Rights Agreement) were, beneficially owned by any Acquiring Person or any
Adverse Person, or an Associate or Affiliate of any Acquiring Person or Adverse
Person, will be null and void.
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For example, at an exercise price of $55 per Right, each Right not
owned by an Acquiring Person or an Adverse Person (or by certain related
parties) following an event set forth in the preceding paragraph would entitle
its holder to purchase Common Stock with a value of $110 (or other
consideration, as noted above) for $55. Assuming that the Common Stock had a per
share value of $55 at such time, the holder of each valid Right would be
entitled to purchase 2.0 shares of Common Stock for $55.
In the event that following the Stock Acquisition Date or the date a
person becomes an Adverse Person, (i) the Company is acquired in a merger or
consolidation in which the Company is not the surviving corporation or (ii) 50%
or more of the Company's assets or earning power is sold or transferred, each
holder of a Right (except Rights that have previously been voided as set forth
above) will thereafter have the right (a flip-over right) to receive, upon
exercise of the Right, Common Stock of the acquiring company having a value
equal to two times the Exercise Price of the Right.
The Purchase Price payable, and the number of units of Preferred Stock
or other securities or property issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution (i) in the event of
a stock dividend on, or a subdivision, combination or reclassification of, the
Preferred Stock, (ii) if holders of the Preferred Stock are granted certain
rights or warrants to subscribe for Preferred Stock or convertible securities at
less than the current market price of the Preferred Stock, or (iii) upon the
distribution to holders of the Preferred Stock of evidences of indebtedness or
assets (excluding regular quarterly cash dividends) or of subscription rights or
warrants (other than those referred to above). With certain exceptions, no
adjustments in the Purchase Price will be required until cumulative adjustments
amount to at least 1% of the Purchase Price. No fractional units will be issued
and, in lieu thereof, an adjustment in cash will be made based on the market
price of the Preferred Stock on the last trading date prior to the date of
exercise.
The Board of Directors may redeem all of the Rights at a price of
$0.001 per Right at any time prior to 10 days after the date that any person
becomes an Acquiring Person or an Adverse Person.
At any time after any person has become an Acquiring Person or an
Adverse Person (but before any person becomes the beneficial owner of 50% or
more of the Company's Common Stock), the Board of Directors may exchange all or
part of the Rights (other than the Rights beneficially owned by the Acquiring
Person or Adverse Person and certain affiliated persons) for shares of Common
Stock at an exchange ratio of one share of Common Stock per Right.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends. While the distribution of the Rights will not
be taxable to stockholders or to the Company, stockholders may, depending upon
the circumstances, recognize taxable income in the event that the Rights become
exercisable for Common Stock (or other consideration) of the Company as set
forth above.
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For so long as the Rights are redeemable, the Rights Agreement may be
amended in any respect. At any time after the Rights are no longer redeemable,
the Rights Agreement may be amended by the Board of Directors (without approval
of the holders of the Rights) in any respect that does not (i) adversely affect
the Rights holders (other than any Acquiring Person or Adverse Person and
certain affiliated persons), (ii) cause the Rights Agreement again to become
amendable other than in accordance with this paragraph, or (iii) cause the
Rights again to become redeemable.
The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire the Company
in certain circumstances. Accordingly, the existence of the Rights may deter
certain acquirors from making takeover proposals or tender offers.
[The Rights Agreement between the Company and the Rights Agent
specifying the terms of the Rights, which includes as Exhibit B the Form of
Rights Certificate, is attached as an exhibit and incorporated by reference. The
foregoing description of the Rights does not purport to be complete and is
qualified in its entirety by reference to the Rights Agreement.]*
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* This paragraph to be included only in the Form 8-A to be filed with the
Commission.
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