EXHIBIT 10.40
(PEROTSYSTEMS LOGO) [d38272d3827200.gif]
Date
Address
Address
Dear:
     We are pleased to inform you that the Human Resources and Compensation
Committee of the Company’s Board of Directors has approved a severance benefit
program for you. The purpose of this letter agreement is to set forth the terms
and conditions of your severance benefits and to explain certain limitations
that may govern their overall value or payment date.
     Your severance package will become payable should your employment terminate
under certain circumstances following the Company’s execution of a definitive
agreement to effect a change in ownership or control of the Company. To
understand the full scope of your benefits, you should familiarize yourself with
the definitional provisions of Part One of this letter agreement. The benefits
comprising your severance package are detailed in Part Two, and the terms and
conditions of the special excise tax gross up to which you may become entitled
are set forth in Part Three. Part Four deals with ancillary matters affecting
your severance arrangement.
PART ONE — DEFINITIONS
     For purposes of this letter agreement, the following definitions will be in
effect:
     Agreement means this letter agreement between you and the Company, as it
may be amended from time to time in accordance with the applicable provisions of
Part Four.
     Average Compensation means the average of your W-2 wages from the Company
for the five (5) calendar years (or, if you have been employed by the Company
for less than five (5) calendar years, such lesser period of time) completed
immediately prior to the calendar year in which the Change in Control is
effected. Any W-2 wages for a partial year of employment will be annualized, in
accordance with the frequency which such wages are paid during such partial
year, before inclusion in your Average Compensation.
     Award means any Cash Award, Option, RSU, Stock Appreciation Right or any
other award granted to you in accordance with the terms of a Plan.

Page 1

--------------------------------------------------------------------------------

 

     Award Agreement means any instrument or agreement, in written or electronic
form, between the Company and you evidencing the terms and conditions of an
individual Award (subject to the terms and conditions of a Plan), which
instrument may, but need not, be executed or acknowledged by you.
     Base Salary means the annual rate of base salary in effect for you
immediately prior to the Change in Control or (if greater) the annual rate of
base salary in effect at the time of your Involuntary Termination.
     Board means the Company’s Board of Directors.
     Cash Award means any cash awards granted to you pursuant to Section 13 of
the Company’s 2001 Long Term Incentive Plan, as such Plan may be amended from
time to time.
     Cash Award COC Payment means the portion of any Cash Award provided you
under Part Two of this Agreement which is deemed to constitute a parachute
payment within the meaning of Code Section 280G(b)(2) and the Treasury
Regulations issued thereunder.
     Cause is defined on Exhibit A.
     Change in Control is defined on Exhibit B.
     Change in Control Severance Benefits means the various payments and
benefits to which you may become entitled under Part Two of this Agreement upon
your Involuntary Termination. Such Change in Control Severance Benefits may
include one or more of the following: the accelerated vesting of your Options,
Stock Appreciation Rights, Cash Awards and/or RSUs, a lump sum severance
payment, a prorated bonus payment and continued health care coverage provided
for you and your spouse and eligible dependents at the Company’s expense.
     COC Payment means (i) any Change in Control Severance Benefits provided you
under Part Two of this Agreement which is deemed to constitute a parachute
payment within the meaning of Code Section 280G(b)(2) and the Treasury
Regulations issued thereunder, (ii) any Option COC Payment attributable to your
Acquisition-Accelerated Options, (iii) any RSU COC Payment attributable to your
Acquisition-Accelerated RSUs and (iv) any Stock Appreciation Right COC Payment
attributable to your Acquisition-Accelerated Stock Appreciation Rights.
     Code means the Internal Revenue Code of 1986, as amended.
     Common Stock means the Company’s common stock.
     Company means Perot Systems Corporation, a Delaware corporation, and any
successor corporation, whether or not resulting from a Change in Control.

Page 2

--------------------------------------------------------------------------------

 

     Independent Auditors means the accounting firm serving as the Company’s
independent certified public accountants immediately prior to the Change in
Control; provided, however, that in the event such accounting firm also serves
as the independent certified public accountants for the corporation or other
entity effecting the Change in Control transaction with the Company or such
accounting firm concludes that the services required of it hereunder would
adversely affect its independent status under applicable accounting standards or
the performance of such services would otherwise be in contravention of
applicable law, then the Independent Auditors shall mean a nationally-recognized
public accounting firm mutually acceptable to both you and the Company.
     Involuntary Termination means the termination of your employment by the
Company without Cause or by you with Specified Reason during a Protection Period
or a Pre-Closing Period.
     Option means any option granted you to purchase shares of Common Stock
under any Plan or other arrangement which is outstanding at the time of a Change
in Control (or if earlier, upon the termination of your employment during the
Pre-Closing Period) or upon your Involuntary Termination following a Change in
Control. Your Options will be divided into two (2) separate categories as
follows:
     Acquisition-Accelerated Options: any outstanding Option (or installment
thereof) which automatically accelerates, pursuant to the acceleration
provisions of the agreement evidencing that Option or any other agreement, upon
a Change in Control.
     Severance-Accelerated Options: any outstanding Option (or installment
thereof) which, pursuant to Part Two of this Agreement, accelerates upon your
Involuntary Termination.
     Option COC Payment means, with respect to any Acquisition-Accelerated
Option or any Severance-Accelerated Option, the portion of that Option deemed to
be a parachute payment under Code Section 280G and the Treasury Regulations
issued thereunder. The portion of such Option which is categorized as an Option
COC Payment will be calculated in accordance with the valuation provisions
established under Code Section 280G and the applicable Treasury Regulations.
     Other COC Payment means any payments in the nature of compensation (other
than your Cash Award COC Payment, your Option COC Payment, your RSU COC Payment,
your Stock Appreciation Right COC Payment and any other Change in Control
Severance Benefits to which you become entitled under Part Two of this
Agreement) which are made to you in connection with the Change in Control and
which qualify as parachute payments within the meaning of Code
Section 280G(b)(2) and the Treasury Regulations issued thereunder.
     Permissible COC Amount means a dollar amount equal to 2.99 times your
Average Compensation.

Page 3

--------------------------------------------------------------------------------

 

     Person means any individual or corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof)
or other entity of any kind.
     Plan means (i) the Company’s 1991 Stock Option Plan, as amended or restated
from time to time, (ii) the Company’s 2001 Long Term Incentive Plan, as amended
or restated from time to time and (iii) any other stock incentive plan
implemented or established by the Company.
     Pre-Closing Period means a period commencing with the Company’s execution
of the definitive agreement for a Change in Control transaction and ending upon
the earlier to occur of (i) the closing of the Change in Control contemplated by
such definitive agreement, or (ii) the termination of such definitive agreement
without the consummation of the contemplated Change in Control. In the event of
competing or superseding offers that result in definitive agreements, each such
agreement shall create a Pre-Closing Period.
     Present Value means the value, determined as of the date of the Change in
Control or other applicable date under code Section 280G and the regulations
thereunder, of any payment in the nature of compensation to which you become
entitled in connection with the Change in Control or your subsequent Involuntary
Termination, including (without limitation) the Option and RSU COC Payments
attributable to your Severance-Accelerated Options and Severance-Accelerated
RSUs and the additional Change in Control Severance Benefits to which you become
entitled under Part Two of this Agreement. The Present Value of each such
payment will be determined in accordance with the provisions of Code
Section 280G(d)(4), utilizing a discount rate equal to one hundred twenty
percent (120%) of the applicable Federal rate in effect at the time of such
determination, compounded semi-annually to the effective date of the Change in
Control.
     Protection Period means the period beginning on the date on which a Change
in Control occurs and ending on the two year anniversary of such date or such
earlier date as your employment with the Company terminates (other than an
Involuntary Termination).
     RSU means any restricted stock unit granted to you under any Plan or other
arrangement which is outstanding at the time of the Change in Control (or if
earlier, upon the termination of your employment during the Pre-Closing Period)
or upon your Involuntary Termination following a Change in Control.
          Acquisition-Accelerated RSUs: any outstanding RSU (or installment
thereof) which automatically accelerates, pursuant to the acceleration
provisions of the agreement evidencing that RSU or any other agreement, upon a
Change in Control.
          Severance-Accelerated RSUs: any outstanding RSU (or installment
thereof) which, pursuant to Part Two of this Agreement, accelerates upon your
Involuntary Termination.

Page 4

--------------------------------------------------------------------------------

 

     RSU COC Payment means, with respect to any Acquisition-Accelerated RSU or
any Severance-Accelerated RSU, the portion of that RSU deemed to be a parachute
payment under Code Section 280G and the Treasury Regulations issued thereunder.
The portion of such RSU which is categorized as a RSU COC Payment will be
calculated in accordance with the valuation provisions established under Code
Section 280G and the applicable Treasury Regulations.
     Specified Reason is defined on Exhibit C.
     Stock Appreciation Right means any stock appreciation right granted to you
pursuant to Section 12 of the Company’s 2001 Long Term Incentive Plan (or under
any Plan or other arrangement) which is outstanding at the time of a Change in
Control (or if earlier, upon the termination of your employment during the
Pre-Closing Period) or upon your Involuntary Termination following a Change in
Control. Your Stock Appreciation Rights will be divided into two (2) separate
categories as follows:
          Acquisition-Accelerated Stock Appreciation Rights: any outstanding
Stock Appreciation Right (or installment thereof) which automatically
accelerates, pursuant to the acceleration provisions of the agreement evidencing
that Stock Appreciation Right or any other agreement, upon a Change in Control.
          Severance-Accelerated Stock Appreciation Rights: any outstanding Stock
Appreciation Right (or installment thereof) which, pursuant to Part Two of this
Agreement, accelerates upon your Involuntary Termination.
     Stock Appreciation Right COC Payment means, with respect to any
Acquisition-Accelerated Stock Appreciation Right or any Severance-Accelerated
Stock Appreciation Right, the portion of that Stock Appreciation Right deemed to
be a parachute payment under Code Section 280G and the Treasury Regulations
issued thereunder. The portion of such Stock Appreciation Right which is
categorized as a Stock Appreciation Right COC Payment will be calculated in
accordance with the valuation provisions established under Code Section 280G and
the applicable Treasury Regulations.
     Subsidiary means a “subsidiary corporation,” whether now or hereafter
existing, as defined in Section 424(f) of the Code.
     Target Bonus means 100% of Base Salary.
     Termination Date means December 31, 2007; provided, however, that the
Termination Date shall automatically be extended to one or more successive
one-year anniversaries of such date, unless the Company provides you with
written notice of its decision not to extend the Termination Date at least one
hundred eighty (180) days prior to the next scheduled Termination Date. In the
event of such notice, this Agreement shall terminate on the next scheduled
Termination Date, unless such date falls within a Pre-Closing Period or a
Protection Period, in which case the Termination Date shall be the last day of
the Pre-Closing Period (in the event that

Page 5

--------------------------------------------------------------------------------

 

a Change in Control does not occur) or the last day of the Protection Period (if
a Change in Control has occurred or does occur within the applicable Pre-Closing
Period).
PART TWO — CHANGE IN CONTROL SEVERANCE BENEFITS
Should your employment with the Company terminate by reason of an Involuntary
Termination, then you will become entitled to receive the applicable Change in
Control Severance Benefits provided under this Part Two, provided you execute
and deliver to the Company a release substantially in the form of attached
Exhibit D, which becomes effective under applicable law.
     The Change in Control Severance Benefits provided under this Part Two shall
be in lieu of any other severance benefits to which you might otherwise become
entitled under any other severance plan, program or arrangement of the Company
upon an Involuntary Termination, except for severance benefits granted after the
Change in Control.
     1. Accelerated Vesting.
          (a) Each Option or Stock Appreciation Right which you hold at the time
of your Involuntary Termination, to the extent such Option or Stock Appreciation
Right is not otherwise exercisable for all the shares of Common Stock, or other
securities or the total amount of the Stock Appreciation Rights at the time
subject to that Option or Stock Appreciation Right, will immediately vest and
become exercisable as to all the shares or Stock Appreciation Rights subject to
such Option or Stock Appreciation Right and may be exercised as to any or all of
those shares or rights as fully vested shares or rights. Each such accelerated
Option or Stock Appreciation Right will remain so exercisable until the earlier
of the expiration of (i) the Option or Stock Appreciation Right or (ii) the
post-service exercise period specified in the Award Agreement evidencing such
Option or Stock Appreciation Right. Any Options and Stock Appreciation Rights
not exercised prior to the expiration of the applicable post-service exercise
period will terminate and cease to be exercisable.
          (b) Subject to Part Four, each outstanding RSU which you hold at the
time of your Involuntary Termination, to the extent such RSU is not otherwise
payable, will immediately vest and be paid to you as soon as administratively
practicable following the date of your Involuntary Termination.
          (c) Each outstanding Cash Award which you hold at the time of your
Involuntary Termination, to the extent that Cash Award is not otherwise at that
time vested and exercisable or due and payable for the entire amount of the cash
subject to such Cash Award, will immediately vest and become exercisable and/or
due and payable for the entire amount of the Cash Award.

Page 6

--------------------------------------------------------------------------------

 

     2. Severance Payment.
          (a) Subject to Part Four, in the event your employment terminates
pursuant to an Involuntary Termination that occurs during the Protection Period,
the Company will make a lump-sum cash severance payment to you as soon as
administratively practicable following the date of your Involuntary Termination
in an amount equal to two (2) times the sum of your annual rate of Base Salary
and Target Bonus (the “Severance Payment”).
          The Severance Payment shall be subject to the Company’s collection of
all applicable withholding taxes, and you will only be paid the amount remaining
after such withholding taxes have been collected.
          (b) Subject to Part Four, in the event your employment terminates
pursuant to an Involuntary Termination that occurs during the Pre-Closing
Period, you will become entitled to the Severance Payment upon the closing of
the Change in Control, provided and only if that Change in Control is in fact
consummated prior to the expiration of that Pre-Closing Period. The Company will
make such lump-sum cash Severance Payment to you as soon as administratively
practicable following the effective date of the Change in Control. The Severance
Payment shall be subject to the Company’s collection of all applicable
withholding taxes, and you will only be paid the amount remaining after such
withholding taxes have been collected. In no event, however, will you become
entitled to all or any portion of the Severance Payment if the Change in Control
is not consummated prior to the expiration of that Pre-Closing Period.
3. Prorated Target Bonus.
          (a) In the event your employment terminates pursuant to an Involuntary
Termination that occurs during the Protection Period, the Company will make an
additional lump-sum cash severance payment (the “Prorated Bonus”) to you equal
to the dollar amount obtained by multiplying one-twelfth (1/12th) of the annual
Target Bonus in effect for you for the year of your Involuntary Termination by
the number of full or partial months of employment which you complete with the
Company in that year. Subject to Part Four, the payment of your Prorated Bonus
shall be made as soon as administratively practicable following the date of your
Involuntary Termination. The payment shall be subject to the Company’s
collection of all applicable withholding taxes, and you will only be paid the
amount remaining after such withholding taxes have been collected.
          (b) In the event your employment terminates pursuant to an Involuntary
Termination that occurs during the Pre-Closing Period, you will subsequently
become entitled to the Prorated Bonus upon the closing of the Change in Control,
provided and only if that Change in Control is in fact consummated prior to the
expiration of the Pre-Closing Period. Subject to Part Four, the Company will pay
the Prorated Bonus to you in a lump-sum as soon as administratively practicable
following the effective date of the Change in Control. The payment shall be
subject to the Company’s collection of all applicable withholding taxes, and you
will only be paid the amount remaining after such withholding taxes have been
collected. In no

Page 7

--------------------------------------------------------------------------------

 

event, however, will you become entitled to all or any portion of the Prorated
Bonus if the Change in Control is not consummated prior to the expiration of the
Pre-Closing Period.
     4. Continued Benefits.
     Should you elect under Code Section 4980B to continue health care coverage
under the Company’s group health plan and elect to continue coverage under the
Company’s group dental and vision plans for yourself, your spouse and your
eligible dependents following your Involuntary Termination and pay the Company
monthly an amount equal to your monthly employee contribution for such coverage
prior to your Involuntary Termination, then the Company shall provide such
continued health care, dental and vision coverage for you and your spouse and
other eligible dependents. The partial funding of such coverage by the Company
shall continue until the earliest of (i) the expiration of the six (6) month
period measured from the date of your Involuntary Termination, (ii) the first
date you are covered under another employer’s programs which provide
substantially the same level of benefits without exclusion for pre-existing
medical conditions, (iii) the date the definitive agreement for the Change in
Control is terminated without consummation of that Change in Control during the
Pre-Closing Period, or (iv) the date you discontinue any payments you are
required to make to continue coverage. Should the Company’s provision of such
continued coverage result in the recognition of taxable income (whether for
federal, state or local income tax purposes) by you or your spouse or other
eligible dependent, then each of you will be responsible for the payment of the
income and employment tax liability resulting from such coverage, and the
Company will not provide any tax gross-up payments to you (or any other Person)
with respect to such income and employment tax liability. To the extent you are
subject to the delayed benefit commencement provisions of Paragraph 1 of
Part Four, you shall directly pay for the health care, dental and vision
coverage provided hereunder with your own funds, and at the end of delayed
commencement period, the Company shall promptly reimburse you with a lump sum
cash payment equal to the cost you incurred for such coverage for that period in
excess of the amount of your monthly employee contribution for that period. In
addition, to the extent that the Company’s other benefit plans provide for the
continuation of benefits following termination of employment or the option for
the participant to continue such benefits following the termination of
employment, you shall have such benefits or the option to continue such
benefits, as the case may be, in accordance with the terms of such benefit plans
following any Involuntary Termination.
5. Cancellation of Buy Back and Repayment of Profits Provisions.
     Upon the occurrence of a Change in Control, the provisions of Sections 7
and 8 of each Nonstatutory Stock Option Agreement you hold under the Company’s
2001 Long-Term Incentive Plan, Sections 7 and 8 of each Restricted Stock Unit
Agreement you hold under the Company’s 2001 Long-Term Incentive Plan,
Sections 4(b)-(c) and 5 of each Stock Option Agreement you hold under the
Company’s 1991 Stock Option Plan, or any similar provisions of any Plan, Award
Agreement or any other arrangement to which you are party relating to the
Company’s rights to (i) cancel any Award granted to you, (ii) buy back Common
Stock issued to you upon your exercise of an Award and/or (iii) require
repayment with respect to certain

Page 8

--------------------------------------------------------------------------------

 

proceeds received from the sale of any Common Stock issued to you upon your
exercise of an Award, shall be deemed to be cancelled and deleted from such
documents and shall be of no further force and effect, regardless of whether
there is a termination of employment.
PART THREE — SPECIAL TAX PAYMENT
     1. Special Tax Gross-Up. In the event that (i) one or more of the
Acquisition-Accelerated Options, Stock Appreciation Rights or RSUs, any Cash
Awards or any of the Change in Control Severance Benefits to which you become
entitled under Part Two of this Agreement or any Other COC Payments are deemed,
in the opinion of the Independent Auditors or by the Internal Revenue Service,
to constitute an excess parachute payment under Code Section 280(G) and (ii) it
is determined that the aggregate Present Value of the COC Payment attributable
to those Change in Control Severance Benefits, the Option COC Payment
attributable to your Acquisition-Accelerated Options, the RSU COC Payment
attributable to your Acquisition-Accelerated RSUs, the Stock Appreciation Right
COC Payment attributable to your Acquisition-Accelerated Stock Appreciation
Rights, your Cash Award COC Payment and any Other COC Payments to which you are
entitled exceeds one hundred ten percent (110%) of the Permissible COC Amount,
then you shall be entitled to receive from the Company one or more additional
payments (collectively, the “Gross-Up Payment”) in an aggregate dollar amount
determined pursuant to the following formula, provided and only if the general
release required of you pursuant to the provisions of Part Two has become
effective:
X = Y ÷ [1 – (A + B + C)], where
X is the aggregate dollar payment of the Gross-up Payment.
Y is the total excise tax, together with all applicable interest and penalties
(collectively, the “Excise Tax”), imposed on you pursuant to Code Section 4999
(or any successor provision) with respect to the excess parachute payment
attributable to COC Payments and any Other COC Payments.
A is the Excise Tax rate in effect under Code Section 4999 for such excess
parachute payment,
B is the highest combined marginal federal income and applicable state income
tax rate in effect for you for the applicable calendar year in which the
Gross-Up Payment is made, determined after taking into account the deductibility
of state income taxes against federal income taxes to the extent actually
allowable for that calendar year, and
C is the applicable Hospital Insurance (Medicare) Tax Rate in effect for you for
the applicable calendar year in which the Gross-Up Payment is made.
     Should the aggregate Present Value of the COC Payment attributable to your
Change in Control Severance Benefits, the COC Payment attributable to your
Acquisition-Accelerated Options, RSUs and Stock Appreciation Rights, the COC
Payment attributable to your Cash Awards and any Other COC Payments to which you
become entitled not exceed one hundred ten percent (110%) of the Permissible COC
Amount, then no Gross-Up Payment shall be made

Page 9

--------------------------------------------------------------------------------

 

under this Part Three, and the Change in Control Severance Benefits shall
instead be subject to reduction in accordance with the benefit limitation
provisions of Appendix I to this Agreement.
     2. Determination Procedures. All determinations required to be made under
this Part Three shall be made by the Independent Auditors in accordance with the
following procedures:
          (a) If your Involuntary Termination occurs during the Pre-Closing
Period, then within ten (10) business days after the closing of the Change in
Control, the Independent Auditors shall provide both you and the Company with a
written determination of the COC Payments attributable to your
Acquisition-Accelerated Options, Acquisition-Accelerated RSUs and
Acquisition-Accelerated Stock Appreciation Rights (if any), the COC Payment
attributable to your Change in Control Severance Benefits under Part Two, the
COC Payment attributable to your Cash Award and any Other COC Payment to which
you are entitled, together with detailed supporting calculations with respect to
the Gross-Up Payment due you by reason of those various COC Payments. Except to
the extent the deferred payment provisions set forth in Paragraph 1 of Part Four
are applicable to your Gross-Up Payment, the Company shall pay the resulting
Gross-Up Payment to you within three (3) business days after receipt of such
determination.
          (b) In the event your Involuntary Termination occurs during the
Protection Period, then the following determination procedures shall be in
effect:
          Within ten (10) business days after the closing of the Change in
Control, the Independent Auditors shall provide both you and the Company with a
written determination of the COC Payment attributable to your
Acquisition-Accelerated Options, Acquisition-Accelerated RSUs and Acquisition
–Accelerated Stock Appreciation Rights (if any), together with detailed
supporting calculations with respect to the Gross-Up Payment due you by reason
of that COC Payment. The Company shall pay the resulting Gross-Up Payment to you
within three (3) business days after receipt of such determination.
          Within ten (10) business days after the date of your Involuntary
Termination, the Independent Auditors shall provide both you and the Company
with a written determination of the COC Payments attributable to any Change in
Control Severance Benefits, the COC Payment attributable to your Cash Award or
Other COC Payment to which you are entitled, together with detailed supporting
calculations with respect to the Gross-Up Payment due you by reason of those COC
Payments. Except to the extent the deferred payment provisions set forth in
Paragraph 1 of Part Four are applicable to your Gross-Up Payment, the Company
shall pay the resulting Gross-Up Payment to you within three (3) business days
after receipt of such determination or (if later) contemporaneously with the
Change in Control Severance Benefits or Other COC Payment triggering such
Gross-Up Payment.
          (c) In the event the Treasury Regulations under Code Section 280G (or
applicable judicial decisions) specifically address the status of any Change in
Control Severance Benefits or Other COC Payment or the method of valuation
therefor, the characterization

Page 10

--------------------------------------------------------------------------------

 

afforded to such payment by the Regulations (or such decisions) shall, together
with the applicable valuation methodology, be controlling. All other
determinations by the Independent Auditors shall be made on the basis of
“substantial authority” (within the meaning of Section 6662 of the Code).
          (d) Both you and the Company shall provide the Independent Auditors
with access to and copies of any books, records and documents in your or its
possession which may be reasonably requested by the Independent Auditors and
shall otherwise cooperate with the Independent Auditors in connection with the
preparation and issuance of the determinations contemplated by this Part Three.
          (e) All fees and expenses of the Independent Auditors and the
appraisers shall be borne solely by the Company, and to the extent those fees or
expenses are treated as a COC Payment, they shall be taken into account in the
calculation of the Gross-Up Payment, if any, to which you are entitled under
this Part Three.
     3. Additional Claims. You shall provide written notification to the Company
of any claim made by the Internal Revenue Service which would, if successful,
require the payment by the Company of an additional Gross-Up Payment. Such
notification shall be given as soon as practicable after you are informed in
writing of such claim and shall apprise the Company of the nature of such claim
and the date on which such claim is requested to be paid. You shall not pay such
claim prior to the expiration of the thirty (30) day period following the date
on which such notice is given to the Company (or such shorter period ending on
the date that any payment of taxes, interest and/or penalties with respect to
such claim is due). Prior to the expiration of such thirty (30) day or shorter
period, the Company shall ether (i) pay you the additional Gross-Up Payment
attributable to the Internal Revenue Service claim or (ii) provide written
notice to you that the Company shall contest the claim on your behalf. In the
event, the Company provides you with such written notice, you shall:
          (a) provide the Company with any information reasonably requested by
the Company relating to such claim;
          (b) take such action in connection with contesting such claim as the
Company may reasonably request in writing from time to time, including (without
limitation) accepting legal representation with respect to such claim by an
attorney reasonably selected by the Company and reasonably satisfactory to you,
with the fees and expenses of such attorney to be the sole responsibility of the
Company without any tax implications to you in accordance with the same tax
indemnity/gross-up arrangement as in effect under subparagraph (d) below;
          (c) cooperate with the Company in good faith in order to effectively
contest such claim; and
          (d) permit the Company to participate in any proceedings relating to
such claim; provided, however, that the Company shall bear and pay directly all
additional Excise

Page 11

--------------------------------------------------------------------------------

 

Taxes imposed upon you and all costs, legal fees and other expenses (including
additional interest and penalties) incurred in connection with such contest and
shall indemnify you for and hold you harmless from, on an after-tax basis, any
additional Excise Tax (including interest and penalties) imposed upon you and
any Excise Tax or income or employment tax (including interest and penalties)
attributable to the Company’s payment of that additional Excise Tax on your
behalf or imposed as a result of such representation and payment of all related
costs, legal fees and expenses. The amounts owed to you by reason of the
foregoing shall be paid to you or on your behalf as they become due and payable.
Without limiting the foregoing provisions of this subparagraph (d), the Company
shall control all proceedings taken in connection with such contest and, at its
sole option, may pursue or forgo any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in respect of
such claim and may, at the Company’s sole option, either direct you to pay the
tax claimed and sue for a refund or contest the claim in any permissible manner,
and you shall prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine; provided, however, that should
the Company direct you to pay such claim and sue for a refund, the Company shall
advance the amount of such payment to you, on an interest-free basis, and shall
indemnify you for and hold him harmless from, on an after-tax basis, any Excise
Tax or income or employment tax (including interest or penalties) imposed with
respect to such advance or with respect to any imputed income with respect to
such advance or any income resulting from the Company’s forgiveness of such
advance; provided, further, that the Company’s control of the contest shall be
limited to issues with respect to which a Gross-Up Payment would be payable
hereunder, and you shall be entitled to settle or contest, as the case may be,
any other issue raised by the Internal Revenue Service or any other taxing
authority.
PART FOUR — MISCELLANEOUS
     1. Delayed Commencement of Benefits. Notwithstanding any provision to the
contrary in this Agreement, no Severance Payment, Prorated Bonus and no
Company-paid health care coverage to which you otherwise become entitled under
Part Two of this Agreement or any Gross-Up Payment to which you may become
entitled under Part Three or any Cash Award or other Award subject to Code
Section 409A which would otherwise become payable to or distributable to you
under Part Two of this Agreement shall be made, paid or provided to you prior to
the earlier of (i) the expiration of the six (6) month period measured from the
date of your “separation from service” with the Company (as such term is defined
in Treasury Regulations issued under Code Section 409A) or (ii) the date of your
death, if you are deemed at the time of such separation from service to be a
“key employee” within the meaning of that term under Code Section 416(i) and
such delayed commencement is otherwise required in order to avoid a prohibited
distribution under Code Section 409A(a)(2). Upon the expiration of the
applicable Code Section 409A(a)(2) deferral period, all payments and benefits
deferred pursuant to this Paragraph (whether they would have otherwise been
payable in a single sum or in installments in the absence of such deferral)
shall be paid or reimbursed to you in a lump sum, and any remaining payments and
benefits due under this Agreement shall be paid or provided in

Page 12

--------------------------------------------------------------------------------

 

accordance with the normal payment dates specified for them herein. You shall be
entitled to interest on the deferred benefits and payments for the period the
commencement of those benefits and payments is delayed by reason of Code
Section 409A(a)(2), with such interest to accrue at the prime rate in effect
from time to time during that period and to be paid in a lump sum upon the
expiration of the deferral period.
     2. Continued Indemnification. The benefits of the indemnification and
advancement-of-expenses provisions for officers and directors under the
Company’s certificate of incorporation, bylaws, directors and officers liability
insurance policy (if any) and any indemnification agreement between you and the
Company shall (to the maximum extent permitted by law) be extended to you during
the period following your resignation or termination of employment for any
reason, whether or not in connection with a Change in Control, with respect to
all acts or omissions occurring during your period of employment with the
Company. Notwithstanding any provisions of this Agreement to the contrary, this
Section 2 shall survive, with respect to all acts or omissions occurring during
your period of employment with the Company, the Termination Date and any such
resignation or termination of employment for a period of six years; provided,
however, that if any claim is asserted or made within such six-year period, all
rights under this Section 2 shall continue until disposition of such claim.
     3. Deferred Compensation. To the extent you participate in any deferred
compensation arrangements with the Company which are subject to Code
Section 409A, the payment provisions in effect for that deferred compensation
shall continue in effect, and nothing in this Agreement shall be deemed to
modify, revise or otherwise alter those payment provisions.
     4. No Mitigation Duty. The Company shall not be entitled to set off any of
the following amounts against the Change in Control Severance Benefits to which
you may become entitled under Part Two of this Agreement: (i) any amounts which
you may subsequently earn through other employment or service following your
termination of employment with the Company or (ii) any amounts which you might
have potentially earned in other employment or service had you sought such other
employment or service.
     5. Death. Should you die before your receive the full amount of payments
and benefits to which you may become entitled under this Agreement, then the
balance of such payments shall be made, on the due dates hereunder had you
survived, to the executors or administrators of your estate. Should you die
before you exercise all your outstanding Options as accelerated hereunder, then
such Options may be exercised, within the applicable exercise period following
your death, by the executors or administrators of your estate or by the Persons
to whom those Options are transferred pursuant to your will or in accordance
with the laws of inheritance. In no event, however, may any such Option be
exercised after the specified expiration date of the option term.
     6. Successors and Assigns. The provisions of this Agreement shall inure to
the benefit of, and shall be binding upon, (i) the Company and its successors
and assigns, including any successor entity by merger, consolidation or transfer
of all or substantially all of the

Page 13

--------------------------------------------------------------------------------

 

Company’s assets (whether or not such transaction constitutes a Change in
Control), and (ii) you, the personal representative of your estate and your
heirs and legatees.
     7. Amendment and Termination.
          (a) This Agreement may only be amended by written instrument signed by
you and an authorized officer of the Company. This Agreement shall remain in
effect through the Termination Date.
          (b) This Agreement may not be terminated during a Pre-Closing Period
or a Protection Period that begins prior to what would otherwise be a
Termination Date, and no subsequent termination of this Agreement shall
adversely affect your right to receive any benefits to which you may have
previously become entitled hereunder in connection with your Involuntary
Termination.
     8. Governing Law/Other Agreements. This Agreement is to be construed and
interpreted under the laws of the State of Delaware, without giving effect to
the conflicts of laws principles thereof. This Agreement supersedes all prior
agreements between you and the Company relating to the subject of severance
benefits payable upon a change in control or ownership of the Company, and you
will not be entitled to any other severance benefits upon such a termination
other than those that are provided in this Agreement.
     9. At Will Employment. Nothing in this Agreement is intended to provide you
with any right to continue in the employ of the Company (or any Subsidiary) for
any period of specific duration or interfere with or otherwise restrict in any
way your rights or the rights of the Company (or any Subsidiary), which rights
are hereby expressly reserved by each, to terminate your employment at any time
and for any reason, with or without cause.
     10. Arbitration. Any controversy or dispute arising out of or relating to
this Agreement shall be settled by arbitration in accordance with the Employment
Dispute Resolution Rules of the American Arbitration Association (or such other
rules as may be agreed upon by both you and the Company). The arbitration shall
be held in Dallas County in the State of Texas, and any court having
jurisdiction thereof may enter judgment upon the award rendered by the
arbitrator(s). Such award shall be binding and conclusive upon the parties
     11. Section 409A of the Code. This Agreement is intended to comply with the
applicable requirements of section 409A of the Code and its corresponding
regulations and related guidance, and shall be administered in accordance with
section 409A of the Code to the extent section 409A of the Code applies to this
Agreement.
     12. Severability. If any provision of this Agreement (including any
provision within a single section, paragraph or sentence) or the application of
such provision to any person or circumstance, shall be judicially declared to be
invalid, unenforceable or void, such decision will not have the effect of
invalidating or voiding the remainder of this Agreement or affect the

Page 14

--------------------------------------------------------------------------------

 

application of such provision to other persons or circumstances, it being the
intent and agreement of the parties that this Agreement shall be deemed amended
by modifying such provision to the extent necessary to render it valid, legal
and enforceable while preserving its intent, or if such modification is not
possible, by substituting therefor another provision that is valid, legal and
enforceable and that achieves the same objective. Any such finding of invalidity
or unenforceability shall not prevent the enforcement of such provision in any
other jurisdiction to the maximum extent permitted by applicable law.
     Please indicate your agreement with the foregoing terms and conditions of
your change in control severance package by signing the Acceptance section of
the enclosed copy of this letter and returning it to the Company.
Very truly yours,

      PEROT SYSTEMS CORPORATION
 
   
By:
  Thomas D. Williams
 
   
Title:
  Vice President, General Counsel and Secretary

ACCEPTANCE
     I hereby agree to all the terms and provisions of the foregoing Agreement
governing the special benefits to which I may become entitled in the event my
employment should terminate under certain prescribed circumstances in connection
with a Change in Control of the Company.

             
 
  Signature:        
 
     
 
   
 
  Dated:        
 
     
 
   
 
  Address        
 
     
 
   
 
           
 
     
 
   

Page 15

--------------------------------------------------------------------------------

 

APPENDIX I
BENEFIT LIMIT
1. Benefit Limit. Should it be determined that the aggregate Present Value of
the COC Payment attributable to the Change in Control Severance Benefits, the
Option COC Payment attributable to your Acquisition-Accelerated Options, the RSU
COC Payment attributable to your Acquisition-Accelerated RSUs, the Stock
Appreciation Right COC Payment attributable to your Acquisition-Accelerated
Stock Appreciation Rights and your Cash Award COC Payment, when added to the
Present Value of any Other COC Payment to which you may be entitled, does not
exceed one hundred ten percent (110%) of the Permissible COC Amount, then no
Gross-Up Payment shall be made to you under Part Three of the Agreement.
Instead, the limitations set forth in this Appendix I to the Agreement shall
apply. Accordingly, the amount of the Change in Control Severance Benefits
otherwise due you under Part Two of the Agreement shall be reduced to the extent
necessary to assure that the aggregate Present Value of the COC Payment
attributable to your Change in Control Severance Benefits, the Option COC
Payment attributable to your Acquisition-Accelerated Options, the RSU COC
Payment attributable to your Acquisition-Accelerated RSUs, the Stock
Appreciation Right COC Payment attributable to your Acquisition-Accelerated
Stock Appreciation Rights, your Cash Award COC Payment and any Other COC
Payments to which you may be entitled does not exceed the greater of the
following dollar amounts (the “Benefit Limit”)
     (a) the Permissible COC Amount, or
     (b) the amount which yields you the greatest after-tax amount of benefits
under Part Two of the Agreement after taking into account any excise tax imposed
under Code Section 4999 on the COC Payment attributable to the Change in Control
Severance Benefits which are provided you under Part Two, the Option COC Payment
attributable to your Acquisition-Accelerated Options, the RSU COC Payment
attributable to your Acquisition-Accelerated RSUs, the Stock Appreciation Right
COC Payment attributable to your Acquisition-Accelerated Stock Appreciation
Rights, your Cash Award COC Payment or any Other COC Payments to which you are
entitled.
2. Benefit Reduction.
     (a) To the extent the aggregate Present Value of (i) the Option, RSU and
Stock Appreciation Right COC Payments attributable to your
Acquisition-Accelerated and Severance-Accelerated Options, RSUs and Stock
Appreciation Rights (or installments thereof) plus (ii) the COC Payment
attributable to your other Change in Control Severance Benefits under Part Two
of the Agreement plus (iii) your Cash Award COC Payment would, when added to the
Present Value of all of your Other COC Payments, exceed the Benefit Limit, then
the following reductions shall be made to the Change in Control Severance
Benefits to which you are otherwise entitled under Part Two of this Agreement
and your Acquisition-Accelerated Options and RSUs, to the extent necessary to
assure that such Benefit Limit is not exceeded:

Appendix I – Page 1

--------------------------------------------------------------------------------

 

     first, the dollar amount of the Severance Payment to which you would
otherwise be entitled shall be reduced,
     next, the dollar amount of the Prorated Bonus to which you would otherwise
be entitled shall be reduced,
     next, your RSUs which would otherwise be payable shall be reduced (based on
the amount of RSU COC Payment attributable to such RSUs), with the actual RSUs
to be so reduced to be determined by you,
     next, your Cash Awards which would otherwise be payable shall be reduced
(based on the amount of the Cash Award COC Payment attributable to such Cash
Awards), with the actual Cash Awards to be so reduced to be determined by you,
and
     then the number of shares as to which Acquisition-Accelerated and
Severance-Accelerated Options and Stock Appreciation Rights would otherwise be
exercisable shall be reduced (based on the amount of the Option COC Payment
attributable to each such Option and the Stock Appreciation Right COC Payment
attributable to each such Stock Appreciation Right) to the extent necessary to
eliminate such excess, with the actual Options and Stock Appreciation Rights to
be so reduced to be determined by you.
     (b) In the event your Involuntary Termination occurs during the Pre-Closing
Period, the Benefit Limit shall be calculated in good faith first at the time of
such termination, with such calculation to be based upon the probability of the
consummation of the contemplated Change in Control, and any benefit reduction
required by Paragraph 2 above on the basis of such good-faith calculation shall
be applied at that time. The Benefit Limit shall be recalculated in accordance
with this Appendix I as soon as administratively practicable following the
expiration of the Pre-Closing Period. To the extent any Options or RSUs are
reduced and terminated in connection with the initial calculation made at the
time of your termination of employment, those Options and RSUs will not be
subsequently restored in connection with the re-calculation of the Benefit Limit
following the expiration of the Pre-Closing Period, even if those terminated
Options and RSUs could have otherwise fallen within the Benefit Limit as so
re-calculated.
3. Resolution Procedures. In the event there is any disagreement between you and
the Company as to whether one or more payments to which you become entitled in
connection with the Change in Control or your subsequent Involuntary Termination
constitute COC Payments, Option COC Payments, RSU COC Payments, Stock
Appreciation Right COC Payments, Cash Award COC Payments or Other COC Payments
or as to the determination of the Present Value thereof, such dispute will be
resolved as follows:
     (a) In the event the Treasury Regulations under Code Section 280G (or
applicable judicial decisions) specifically address the status of any such
payment or the method of valuation therefor, the characterization afforded to
such payment by the Regulations (or such decisions) will, together with the
applicable valuation methodology, be controlling.

Appendix I – Page 2

--------------------------------------------------------------------------------

 

     (b) In the event Treasury Regulations (or applicable judicial decisions) do
not address the status of any payment in dispute, the matter will be submitted
for resolution to the Independent Auditors. The resolution reached by the
Independent Auditors will be final and controlling; provided, however, that if
in the judgment of the Independent Auditors, the status of the payment in
dispute can be resolved through the obtainment of a private letter ruling from
the Internal Revenue Service, a formal and proper request for such ruling will
be prepared and submitted by the Independent Auditors, and the determination
made by the Internal Revenue Service in the issued ruling will be controlling.
All expenses incurred in connection with the retention of the Independent
Auditors and (if applicable) the preparation and submission of the ruling
request shall be shared equally by you and the Company.
     (c) In the event Treasury Regulations (or applicable judicial decisions) do
not address the appropriate valuation methodology for any payment in dispute,
the Present Value thereof will, at the Independent Auditor’s election, be
determined through an independent third-party appraisal, and the expenses
incurred in obtaining such appraisal shall be shared equally by you and the
Company.

Appendix I – Page 3

--------------------------------------------------------------------------------

 

EXHIBIT A
CAUSE
     Cause means you have:

  (a)   participated in fraud, embezzlement or another act of material
misconduct involving the Company, which has resulted in significant harm to the
Company;     (b)   admitted, confessed or entered a plea bargain or a plea of
nolo contendere to, or been convicted of, a crime constituting a felony (or its
equivalent) under the laws of any jurisdiction in which the Company or any
applicable Subsidiary conducts its business or any crime involving moral
turpitude or dishonesty; or     (c)   willfully and continually failed to
perform substantially the appropriate duties of your position with the Company
(other than any such failure resulting from your physical or mental illness,
incapacity or disability), for a period of at least 14 days after a written
demand for substantial performance is delivered to you by the Board or the Chief
Executive Officer of the Company which specifically identifies the manner in
which the Board or the Chief Executive Officer believes that you have not
substantially performed your duties; provided that, in the event that you have
not commenced to perform substantially the duties of your position during such
14-day grace period after written demand is made by the Company, the Company may
not terminate you for Cause except in accordance with the procedures set forth
below. In no event shall an event that would constitute Specified Reason be
considered the failure to perform substantially the appropriate duties of your
position with the Company.

     For purposes of the definition of Cause, no act or failure to act on your
part shall be considered “willful” unless it is done, or omitted to be done, by
you intentionally, not in good faith and without reasonable belief that your
action or omission was in the best interests of the Company.
     Any act, or failure to act, based upon authority given pursuant to a
resolution duly adopted by the Board or, if applicable, upon the instructions of
the Chief Executive Officer or based upon the advice of counsel for the Company
shall be conclusively presumed to be done, or omitted to be done, by you in good
faith and in the best interests of the Company. The termination of your
employment shall not be deemed to be for Cause unless and until, following the
expiration of the 14-day grace period set forth above, there shall have been
delivered to you a copy of a resolution of the Board (or, if the Company is a
Subsidiary of a publicly traded corporation, the board of directors of such
publicly traded corporation), duly adopted by the affirmative vote of not less
than 66-2/3% of the entire membership of the applicable board of directors
(excluding you if you are a member of such board of directors) at a meeting of
such board of directors called and held for such purpose (after reasonable
notice is provided to you and you are given an opportunity, together with
counsel, to be heard before such board of directors), finding that, in the good
faith opinion of such board of directors, you have engaged in conduct which
would constitute Cause under any of paragraphs (a) through (c) above and
specifying the particulars thereof in detail.
Exhibit A – Page 1

 

--------------------------------------------------------------------------------

 

EXHIBIT B
CHANGE IN CONTROL
     Change in Control means the happening of any of the events described in
paragraphs (a) through (d) below:

  (a)   the acquisition by any individual, entity or group (within the meaning
of Section 13(d)(3) or 14(d)(2) promulgated under the Securities Exchange Act of
1934, as amended (the “Exchange Act”)) of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of 30% or more of
either (1) the then-outstanding shares of common stock of the Company (the
“Outstanding Company Common Stock”) or (2) the combined voting power of the
then-outstanding voting securities of the Company entitled to vote generally in
the election of directors (the “Outstanding Company Voting Securities”);
provided, however, that for purposes of this paragraph (a), the following
acquisitions shall not constitute a Change in Control: (A) any acquisition
directly from the Company; (B) any acquisition by the Company or a Subsidiary of
the Company; (C) any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or a Subsidiary of the Company; (D) any
acquisition by any Perot Stockholder (as hereinafter defined); (E) any
acquisition by any entity pursuant to a transaction that complies with clauses
(1), (2) and (3) of paragraph (c) of this definition; or (F) in respect of any
outstanding Awards held by you, any acquisition by you or any group of Persons
including you (or any entity controlled by you or any group of Persons including
you);     (b)   individuals who, as of the date hereof, constitute the Board
(the “Incumbent Board”), cease for any reason to constitute at least a majority
of the Board; provided, however, that any individual becoming a director
subsequent to the date hereof whose election, or nomination for election by the
Company’s stockholders, was approved by a vote of a majority of the directors
then comprising the Incumbent Board (either by specific vote or by approval of
the proxy statement of the Company in which such person is named as a nominee
for director, without written objection to such nomination) shall be considered
as though such individual were a member of the Incumbent Board, but excluding,
for this purpose, any such individual whose initial assumption of office occurs
as a result of an actual or threatened election contest with respect to the
election or removal of directors or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than the Board until
24 months after such initial assumption of office;     (c)   consummation by the
Company of a reorganization, merger, consolidation or sale or other disposition
of all or substantially all of the assets of the Company (a “Business
Combination”), in each case, unless, following such Business Combination:

Exhibit B – Page 1

 

--------------------------------------------------------------------------------

 

  1.   the Outstanding Company Common Stock and Outstanding Company Voting
Securities immediately prior to the consummation of such Business Combination
(or, if applicable, the stock into which the Outstanding Company Common Stock
and Outstanding Company Voting Securities are converted pursuant to such
Business Combination) represents more than 60% of, respectively, the
then-outstanding shares of common stock and the combined voting power of the
then-outstanding voting securities entitled to vote generally in the election of
directors, as the case may be, of the corporation or other entity resulting from
such Business Combination (including without limitation a corporation or other
entity that as a result of such transaction owns the Company or all or
substantially all of the Company’s assets either directly or through one or more
subsidiaries) in substantially the same proportions as their ownership,
immediately prior to such Business Combination, of the Outstanding Company
Common Stock and Outstanding Company Voting Securities, as the case may be;    
2.   no Person (excluding the Company, a Subsidiary of the Company, any
corporation or other entity resulting from a Business Combination, any employee
benefit plan (or related trust) thereof or a Perot Stockholder) beneficially
owns, directly or indirectly, 30% or more of, respectively, the then-outstanding
shares of common stock of the corporation or other entity resulting from such
Business Combination or the combined voting power of the then-outstanding voting
securities entitled to vote generally in the election of directors of such
corporation or entity, except to the extent that such ownership existed prior to
the Business Combination; and     3.   at least a majority of the members of the
board of directors of the corporation or other entity resulting from such
Business Combination were members of the Incumbent Board at the time of the
execution of the initial agreement, or of the action of the Board, providing for
such Business Combination; or

  (d)   approval by the stockholders of the Company of a complete liquidation or
dissolution of the Company.

     For purposes of this Exhibit B, “Perot Stockholder” means Ross Perot, Ross
Perot, Jr., HWGA, Ltd. or any of their respective Affiliates and Associates
(within the meaning of Rule 12b-2 of the Exchange Act).
Exhibit B – Page 2

 

--------------------------------------------------------------------------------

 

EXHIBIT C
SPECIFIED REASON
Specified Reason means:

(a)   the assignment to you of duties inconsistent, in any materially adverse
manner, with your position (including offices, titles and reporting
requirements), authority, duties and responsibilities with the Company
immediately prior to the Change in Control (other than as a result of a
promotion or advancement); a material reduction in the nature or scope of the
authority, functions or duties attached to the position that you held
immediately prior to the Change in Control (including, without limitation, as a
result of you ceasing to hold a comparable executive office in a publicly traded
corporation); a material change in your reporting responsibilities (other than
as a result of a promotion or advancement); or you are removed from, or there is
a failure to re-elect you to, any position with the Company that you held
immediately prior to the Change in Control, except in connection with a
promotion or advancement or the termination of your employment due to Cause,
long-term disability, Retirement (as hereinafter defined) or death;   (b)   the
reduction of your Base Salary, unless such reduction is part of an
across-the-board reduction of no more than 10% in compensation of all executive
officers of the Company (and, if the Company is a Subsidiary of a publicly
traded corporation, all executive officers of such publicly traded corporation);
  (c)   any reduction in your maximum bonus or incentive compensation potential
(including any material adverse change in the formula or metrics used to compute
whether such bonus or incentive compensation has been earned), unless such
reduction is part of an across-the-board reduction of no more than 25% in
maximum bonus or incentive compensation potential of all executive officers of
the Company (and, if the Company is a Subsidiary of a publicly traded
corporation, all executive officers of such publicly traded corporation);   (d)
  except as required by law, the failure by the Company to continue to provide
to you employee benefits substantially equivalent, in the aggregate, to those
enjoyed by you under the qualified and nonqualified employee benefit and welfare
plans of the Company, including, without limitation, the savings, retirement,
pension, insurance, medical, dental, health and disability plans, in which you
were eligible to participate immediately prior to the Change in Control, or the
failure by the Company to provide you with the number of paid vacation days to
which you were entitled under the Company’s vacation policy immediately prior to
the Change in Control;   (e)   a failure by the Company to continue in effect
any stock option or other equity-based compensation in which you participate
immediately prior to the Change in

Exhibit C – Page 1

 

--------------------------------------------------------------------------------

 

    Control, unless you are afforded the opportunity to participate in a
substantially equivalent alternative compensation arrangement (embodied in an
ongoing substitute or alternative plan), or a failure by the Company to continue
your participation in any such plan on substantially the same basis, both in
terms of the amount of benefits provided and the level of your participation
relative to other participants, as existed immediately prior to the Change in
Control;   (f)   the Company’s requiring you to be based at any office or
location that is more than 35 miles from your principal work location and
residence immediately prior to the Change in Control; or   (g)   the Company’s
requiring you to travel on Company business to an extent substantially more
burdensome than your travel obligations immediately prior to the Change in
Control.

     Notwithstanding anything to the contrary set forth above, no event or
condition described above shall constitute Specified Reason unless (i) you,
within 120 days after the occurrence of such event or condition, give the
Company written notice specifying in reasonable detail the event or condition
which you believe give rise to Specified Reason, (ii) within 30 days after the
Company’s receipt of such notice (the “Cure Period”), the Company fails to
correct or remedy such event or condition, and (iii) you resign your employment
with the Company not more than 120 days following expiration of the Cure Period.
     For this purposes of this Exhibit C, (i) “long-term disability” means you
are entitled to receive benefits from the Company’s Long-Term Disability Plan or
another long-term disability plan sponsored by the Company, and (ii)
“Retirement” means your retirement in accordance with any retirement policy
generally applicable to the Company’s salaried employees, as in effect
immediately prior to the Change in Control, or any written retirement
arrangement established by the Company and you as in effect immediately prior to
the Change in Control.
Exhibit C – Page 2

 

--------------------------------------------------------------------------------

 

EXHIBIT D
RELEASE
NOTE: YOU SHOULD CONSULT WITH AN ATTORNEY PRIOR TO
SIGNING THIS DOCUMENT
WAIVER AND RELEASE OF CLAIMS
          1. Pursuant to this Waiver and Release of Claims (this “Waiver”) and
in consideration of the benefits to be provided to me under that certain letter
to me, dated                     , from Perot Systems Corporation (hereinafter,
the “Company”) regarding change in control severance benefits (the “Program”),
subject to the limitations set forth below, I
                                                            , hereby waive and
release any and all claims, suits, damages, liabilities, demands and causes of
action, whether known or unknown, existing or contingent, or whether at law or
equity relating to any of the following (“Claims”):

  •   age discrimination Claims under the federal Age Discrimination in
Employment Act;     •   age discrimination Claims under any state or local laws;
    •   discrimination Claims under federal, state, or local laws based on race,
color, creed, marital status, veteran status, sex, sexual preference, national
origin, citizenship, disability, handicap or religion;     •   common law
contract or tort Claims, including, but not limited to: wrongful discharge or
public policy Claims; Claims for breach of an express or implied contract;
Claims for breach of an implied covenant of good faith and fair dealing;
intentional infliction of emotional distress Claims; defamation Claims; tortious
interference with contract or prospective economic advantage Claims; Claims for
personal injury, including but not limited to mental anguish, emotional
distress, pain and suffering, humiliation, and damage to name or reputation;
Claims for severance, and retaliation Claims;     •   whistleblower Claims under
the Sarbanes-Oxley Act or any other federal, state, or local laws;     •  
Claims under the federal Employee Retirement Income Security Act;     •   Claims
under the federal Family and Medical Leave Act;     •   Claims for liquidated or
punitive damages or for attorneys’ fees and costs asserted under any of the
above theories;

Exhibit D – Page 1

 

--------------------------------------------------------------------------------

 

which I may have against the Company, its parent, subsidiaries, affiliated
businesses and divisions, or its or their directors, officers, employees, or
agents. This Waiver and Release of Claims shall not apply to (a) Claims for
workers’ compensation benefits or unemployment compensation benefits, (b) Claims
under the Program, (c) Claims brought under the Company’s Certificate of
Incorporation or Bylaws, any indemnification agreement between the Company and
me, or insurance policies maintained by the Company, or (e) Claims for any
employee pension or health and welfare benefits I may be entitled to in
accordance with the terms of the governing plan documents.
          2. My last day of work as an employee of the Company will be
                    , ___, and the Company has no obligation to re-employ me in
the future.
          3. The Company has not made any representations to me concerning the
terms of the termination of my employment other than those set forth in this
Waiver and the Program.
          4. I may revoke this Waiver for a period of seven (7) days following
the day I sign it by submitting written notice of my revocation to [NAME],
[TITLE], [ADDRESS].
          5. I acknowledge that I have been advised in writing to consult with
an attorney prior to signing this Waiver and that I have been given twenty-one
(21) days to consider this Waiver.
          6. This Waiver shall be binding upon me and my heirs, administrators,
representatives, executors, and assigns.
          I HAVE CAREFULLY READ THIS ENTIRE DOCUMENT. I UNDERSTAND THAT BY
SIGNING THIS DOCUMENT, I AM WAIVING THE SPECIFIED CLAIMS ABOVE. I HAVE SIGNED
THIS WAIVER VOLUNTARILY, INTENDING TO BE LEGALLY BOUND.
          I have signed this Waiver this ___ day of
                                        , ___.
Employee Signature:                                                             
Exhibit D – Page 2