Document:

Preferred Stock Rights Agreement

 Exhibit 4.1 
  
 AMENDMENT NO. 1 
  
 to 
  
 PREFERRED STOCK RIGHTS AGREEMENT 
  
 by and
between 
  
 BEA SYSTEMS, INC., 
  
 and 
  
 EQUISERVE TRUST COMPANY, N.A. 
  
 Dated as of January 15, 2003 

  
 AMENDMENT TO PREFERRED STOCK RIGHTS AGREEMENT 
  
 THIS AMENDMENT NO. 1 TO PREFERRED STOCK RIGHTS (this “Amendment”) is made and entered into as of January 15, 2003 by and
between BEA Systems, Inc., a Delaware corporation (the “Company”), and EquiServe Trust Company, N.A. (the “Rights Agent”), and amends that certain Preferred Stock Rights Agreement, dated as of September 14, 2001, by
and between the Company and EquiServe Trust Company, N.A. (the “Agreement”). Capitalized terms used herein and not otherwise defined herein have the meanings ascribed to such terms in the Agreement. 
  
 W I T N E S S E T H: 
  
 WHERAS, on September 14, 2001 the Board of Directors of the Company approved the adoption of the Agreement in order to preserve for Stockholders the long-term value of the Company in the event of a takeover of the Company.

  
 WHEREAS, in order to preserve the Company’s long-term value for the Stockholders, the parties to the
Agreement believe it is in the best interests of the holders of Rights under the Agreement and the Company to amend the Agreement as set forth herein. 
  
 NOW, THEREFORE, in consideration of the premises and of the mutual agreements, covenants, representations and warranties contained herein, the parties, intending to be legally bound, agree as follows:

  
 AMENDMENT OF AGREEMENT 
  
 1. Amendment of Agreement. 
  
 (a) Effective as of the date of
this Amendment, the parties to this Amendment hereby amend Section 1(a) of the Agreement to read in its entirety as follows: 
  
 “(a) ‘Acquiring Person’ shall mean any Person, who or which, together with all Affiliates and Associates of such Person, shall be the Beneficial Owner of 15% or more of the Common Shares then outstanding, but
shall not include the Company, any Subsidiary of the Company or any employee benefit plan of the Company or of any Subsidiary of the Company, or any entity holding Common Shares for or pursuant to the terms of any such plan. Notwithstanding the
foregoing, no Person shall be deemed to be an Acquiring Person as the result of an acquisition of Common Shares by the Company which, by reducing the number of shares outstanding, increases the proportionate number of shares beneficially owned by
such Person to 15% or more (or 16% or more in the case of FMR, as defined below) of the Common Shares of the Company then outstanding; provided, however, that if a Person shall become the Beneficial Owner of 15% or more (or 16% or more in the case
of FMR) of the Common Shares of the Company then outstanding by reason of share purchases by the Company and shall, after such share purchases by the Company, become the Beneficial Owner of any additional Common Shares of the Company (other than
pursuant to a dividend or distribution paid or made by the Company on the outstanding Common Shares in Common Shares or pursuant to a split or 

 
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 subdivision of the outstanding Common Shares), then such Person shall be deemed to be an Acquiring Person unless upon becoming the Beneficial
Owner of such additional Common Shares of the Company such Person does not beneficially own 15% or more (or 16% or more in the case of FMR) of the Common Shares of the Company then outstanding. Notwithstanding the foregoing, (i) if the
Company’s Board of Directors determines in good faith that a Person who would otherwise be an “Acquiring Person,” as defined pursuant to the foregoing provisions of this paragraph (a), has become such inadvertently (including, without
limitation, because (A) such Person was unaware that it beneficially owned a percentage of the Common Shares that would otherwise cause such Person to be an “Acquiring Person,” as defined pursuant to the foregoing provisions of this
paragraph (a), or (B) such Person was aware of the extent of the Common Shares it beneficially owned but had no actual knowledge of the consequences of such beneficial ownership under this Agreement) and without any intention of changing or
influencing control of the Company, and if such Person divested or divests as promptly as practicable a sufficient number of Common Shares so that such Person would no longer be an “Acquiring Person,” as defined pursuant to the foregoing
provisions of this paragraph (a), then such Person shall not be deemed to be or to have become an “Acquiring Person” for any purposes of this Agreement; (ii) if, as of the date hereof, any Person is the Beneficial Owner of 15% or more of
the Common Shares outstanding, such Person shall not be or become an “Acquiring Person,” as defined pursuant to the foregoing provisions of this paragraph (a), unless and until such time as such Person shall become the Beneficial Owner of
additional Common Shares (other than pursuant to a dividend or distribution paid or made by the Company on the outstanding Common Shares in Common Shares or pursuant to a split or subdivision of the outstanding Common Shares), unless, upon becoming
the Beneficial Owner of such additional Common Shares, such Person is not then the Beneficial Owner of 15% or more of the Common Shares then outstanding; and (iii) if FMR Corp. and its affiliates (collectively, “FMR”) is or becomes the
Beneficial Owner of 15% or more of the Common Shares outstanding, FMR shall not be or become an “Acquiring Person,” as defined pursuant to the foregoing provisions of this paragraph (a), unless FMR becomes the Beneficial Owner of more than
sixteen percent (16%) of the Common Shares outstanding or reports on Schedule 13G or Schedule 13D of the Exchange Act a present intention to hold such shares of Common Stock with the purpose or effect of changing or influencing the control of the
Company, or in connection with or as a participant in any transaction having such purpose or effect.” 
  
 (b)
Effective as of the date of this Amendment, the parties to this Amendment hereby amend Section 21 of the Agreement to read in its entirety as follows: 
  
 “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 Preferred Shares and the Common Shares by registered or certified mail, and to the holders of the Rights Certificates by first-class mail. In the event the transfer agency
relationship in effect between the Company and the Rights Agent is terminated by the Company, the Rights Agent will be deemed to resign automatically on the effective date of such termination; and any required notice will be sent by the Company. The
Company may remove the Rights Agent or any successor Rights Agent upon thirty (30) days’ notice in writing, mailed 

 
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 to the Rights Agent or successor Rights Agent, as the case may be, and to each transfer agent of the Preferred Shares and the Common Shares by
registered or certified mail, and to the holders of the Rights Certificates by first-class mail. If the Rights Agent shall resign or be removed or shall otherwise become incapable of acting, the Company shall appoint a successor to the Rights Agent.
If the Company shall fail 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 shall, with such notice, submit his or her Rights Certificate for inspection by the Company), then the 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, shall be a corporation organized and doing business under the laws of the United States or of any state of the United States, in good
standing, which is authorized under such laws to exercise corporate trust or stockholder services powers and is subject to supervision or examination by federal or state authority and which has at the time of its appointment as Rights Agent a
combined capital and surplus of at least $100 million. After appointment, the successor Rights Agent shall 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; but the predecessor Rights Agent shall deliver and transfer to the successor Rights Agent any property at the time held by it hereunder, 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 shall file notice thereof in writing with the predecessor Rights Agent and each transfer agent of the Preferred Shares and the Common Shares, and mail a notice thereof 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 therein, shall 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.” 
  
 (c) Effective as of the date of this
Amendment, the parties to this Amendment hereby amend the Agreement to insert immediately after Section 34 of the Agreement a new Section 35 as follows: 
  
 “Section 35. Force Majeure. Notwithstanding anything to the contrary contained herein, Rights Agent shall not be liable for any delays or failures in performance resulting from acts beyond
its reasonable control including, without limitation, acts of God, terrorist acts, shortage of supply, breakdowns or malfunctions, interruptions or malfunction of computer facilities, or loss of data due to power failures or mechanical difficulties
with information storage or retrieval systems, labor difficulties, war, or civil unrest.” 
  
 MISCELLANEOUS

  
 2. Governing Law.    This Amendment shall be governed by and construed in accordance
with the laws of the State of Delaware and for all purposes shall be governed by and construed in accordance with the laws of such State applicable to contracts to be made and performed entirely within such 

 
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 State. 
  
 3. Additional Acts and Documents.    Each party hereto agrees to do such things, take all such actions, and make, execute and deliver such other documents and instruments, as shall be reasonably requested
to carry out the provisions, intent and purpose of this Amendment, in each case, at the sole expense of the party or parties so requested. 
  
 4. Counterparts; Facsimile Signatures.    This Amendment may be executed in any number of counterparts, each of which so executed shall be deemed an original and all of which, when taken together,
shall constitute one and the same instrument. This Amendment may be executed by facsimile signature. 
  
 5.
Headings.    The headings of the Articles, Sections and paragraphs of this Amendment are inserted for convenience only and shall not be deemed to constitute part of this Amendment or to affect the construction hereof.

  
 6. Effect of Amendment.    Except as expressly modified by this Amendment, the
remaining terms of the Agreement shall remain unmodified and in full force and effect. 

 
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 IN WITNESS WHEREOF, the undersigned have hereunto executed this Amendment No. 1
to the Preferred Stock Rights Agreement as of the day and year first above written. 
  
 
	 “COMPANY”
 	 	  	 	 BEA Systems, Inc.
 
	 
	  	 	  	 	  	 	 By:
 	 	 /s/ William M. Klein
 

	  	 	  	 	  	 	 Name:
 	 	 William M. Klein
 
	 
	  	 	  	 	  	 	 Title:
 	 	 Executive Vice President—Administration and Chief Financial Officer
 

 
  
  
 
	 “RIGHTS AGENT”
 	 	  	 	 EquiServe Trust Company, N.A.
 
	 
	  	 	  	 	  	 	 By:
 	 	 /s/ Carol Mulvey Eori
 

	  	 	  	 	  	 	 Name:
 	 	 Carol Mulvey-Eori
 
	 
	  	 	  	 	  	 	 Title:
 	 	 Managing Director2003 Incentive Compensation Plan

  
 Exhibit 10.1 
  
 2003 RMH Incentive Compensation Plan 
 September 2002 

 
 The 2003 RMH Incentive Compensation Plan is designed to provide a reasonable return for RMH shareholders before providing any upside opportunity to
the management team. The plan will provide a mechanism for management to earn both cash bonuses and stock option awards based on the overall operational success of the business. The reward mechanisms are performance based and direct
management’s attention toward providing the shareholders with a consistent return on their investment in the Company. In the event that SEC requirements change requiring stock options to be directly expensed, the cost of the stock options
awarded, if any, will be deducted from the bonus pool. RMH management will utilize a cost model for stock options, subject to approval by RMH Board’s Compensation Committee, to determine the overall expense related to the options awarded. Stock
options shall be awarded when the company meets its target return on equity (ROE) of 18% subject to approval by the Administration Committee of the board. 
  
 For site management and certain corporate Managers and Directors (defined as groups 1 & 2), awards will be based on individual business unit performance and the attainment of specific operating objectives. Cash awards
will be paid quarterly based on an annual formula, and stock option awards will be paid annually. 
  
 For Vice President level positions and
above (defined as groups 3 & 4), and certain Group 2 Directors, awards will be based on the corporate achievement of stated Return on Equity (ROE) objectives. For these two groups, a bonus pool will be established that will be funded entirely
through the allocation of 50% of RMH’s incremental operating income that exceeds an 18% ROE. The awards and options for Groups 3 & 4 will be paid annually following formal approval from The Compensation Committee. 
  
 The bonus pool, funded through incremental operating income, if any, will be divided through a share allocation process. Individuals in groups 3 & 4 will be
eligible to earn 0.25 to 1.0 shares based on their position. Based on the existing headcount in groups 3 & 4, there are a total of 12.25 shares in the pool plus an additional 4 discretionary shares for a total of 16.25. Changes in headcount will
impact the number of shares and the compensation available to individuals. Incentive shares for new hires will be prorated on a monthly basis. The overall amount of the pool will be determined solely by the management team’s ability to generate
an ROE in excess of 18%. For the purposes of the compensation plan ROE will be calculated by taking the after tax net income for the period divided by the average shareholders equity for the period. An example of how the distribution would be
calculated and paid is attached in exhibit A. 

  
 The Summary for Plan Year 2003, for all groups is as follows: 
  
             Group 1 

	 	•
	 
	Participants: Supervisors, Relationship Managers, Outbound Sales Managers, Production Managers, Account Managers 
 

	 	•
	 
	Bonus: 15% of base salary 
 

	 	•
	 
	Payment: Quarterly (Based on 15% annual base salary, divided by 4) 
 

	 	•
	 
	Maximum cumulative annual bonus of 15% 
 

	 	•
	 
	Objectives: financial, quality and agent attrition components weighted equally 
 

  

            Group 2 

	 	•
	 
	Participants: General Managers, Directors 
 

	 	•
	 
	Bonus: 25% of base salary 
 

	 	•
	 
	Payment: Quarterly (same as above) 
 

	 	•
	 
	Maximum cumulative annual bonus of 25% 
 

	 	•
	 
	Objectives: financial, quality and agent attrition components weighted equally 
 

  

            Group 3 

	 	•
	 
	Participants: Executive Vice Presidents of Operations, Vice President of Technology, Senior Vice Presidents, Vice Presidents (excluding Sales) 

	 	•
	 
	Bonus: Participation on a share basis in a bonus pool that is calculated as follows: 50% of operating income that exceeds an ROE hurdle rate of 18%. Executive
Vice Presidents and Vice President of Technology are eligible for (1) share; SVPs are eligible for (0.5) share; VPs are eligible for (.25) share (total shares: 7.25). The value of a share will be determined by dividing the bonus pool by the total
number of shares in Group 3 and Group 4. 
 

	 	•
	 
	Payment: Annually 
 

	 	•
	 
	Objective: financial, quality and agent attrition components weighted equally for operations employees and a basic scorecard system for non- operations
employees. 
 

	 	•
	 
	No merit increases, or salary increases for this group should the company not meet its 18% ROE hurdle. 
 

  
 For groups 1, 2 and 3 the percentage of goals achieved determines the percentage of the eligible bonus share earned. Two times an
individual’s base salary is the maximum upside, 75% of objective is the floor. In addition, the company will no longer give any employee a “guaranteed” bonus either oral or by contract. 
  
 Example 1 

  
 EVP achieves 120% of financial, 100% of quality, 70% of rep attrition objectives.

 (1.2)(.333) + (1.0)(.333) + (0)(.333) = .733 
 EVP earns 73% of one share. 
  
 Example 2 
 Supervisor earns 100% of financial, 75% of quality, 110% of rep attrition objectives. 
 (1.0)(.333) + (0.75)(.333) + (1.1)(.333) = .949 
 Supervisor earns 95% of 15% of their base salary. 
  
         Group 4 

	 	•
	 
	Participants: CEO, COO, CFO, EVP Human Resources 
 

	 	•
	 
	Bonus: Participation on a share basis in a bonus pool that is calculated as follows: 50% of operating income that exceeds an ROE hurdle rate of 18%.
Participants are eligible for one share each with an upside potential of 2x base salary. 
 

	 	•
	 
	Payment: Annually. 
 

	 	•
	 
	Objectives: ROE of 18% 
 

  
 Stock Options 
  
 Beginning at the end of the 2003 fiscal year, and at each year-end thereafter, the following
employees would be eligible for stock option awards. The awards will be granted upon attainment of the company’s primary objective of an 18% ROE. The value and quantity of the options will be determined at that time and the awards will be
granted at the discretion of the Board and after approval by the Administrative Committee. 
  
 
	 Level
 
	 	 Title
 
	 	 # of Options
 

	 1
 	 	 Director, General Manager
 	 	 TBD
 
	 2
 	 	 SVP, VP
 	 	 TBD
 
	 3
 	 	 C – Level, EVP, VP Technology
 	 	 TBD
 

 
  
 Highly Compensated Policy 
  

In the event an employee or group of employees earn in excess of $1MM, the ceiling for the corporate tax deduction, the company will create a non-qualified plan where the excess over $1MM
would be deposited as deferred income, available for distribution at retirement or separation. Dave Madigan will chair the committee to establish the plan. It is the express intent, if possible, to allow Group 3 and 4 officers to participate in this
plan.

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