Document:

<PAGE>   1
                                                                     EXHIBIT 4.3

                            PEROT SYSTEMS CORPORATION
                          2001 LONG-TERM INCENTIVE PLAN

1.       PURPOSES OF THE PLAN.

                  The purposes of this Plan are to provide an incentive to
         eligible employees, officers, independent consultants, directors who
         are also employees or consultants, and advisors of the Company whose
         present and potential contributions are important to the continued
         success of the Company; to encourage ownership in the Company by key
         personnel whose long-term employment is considered essential to the
         Company's continued progress; and to enable the Company to continue to
         enlist and retain the best available personnel to contribute to the
         success of the Company's business and, thereby, to encourage
         Participants to act in the stockholders' interest and share in the
         Company's success.

2.       DEFINITIONS.

         As used herein, the following definitions shall apply:

         (a)      "Administrator" means the Board or any of its Committees
                  administering the Plan in accordance with Section 4 of the
                  Plan.

         (b)      "Affiliate" means any entity that is directly or indirectly
                  controlled by the Company or any entity in which the Company
                  has a significant ownership interest as determined by the
                  Administrator, including but not limited to any entity (i) in
                  which the Company, directly or indirectly, owns a 40% or
                  greater voting, equity or other economic interest and (ii) the
                  financial statements of which are consolidated with the
                  financial statements of the Company.

         (c)      "Applicable Laws" means the legal requirements relating to the
                  administration of stock plans under U.S. federal, state and
                  local corporate, securities and tax laws and regulations, the
                  New York Stock Exchange or any other stock exchange or
                  quotation system on which the Common Stock is listed or quoted
                  and the analogous applicable laws of any country or
                  jurisdiction where Awards are granted under the Plan.

         (d)      "Award" means a Cash Award, Stock Award, Stock Appreciation
                  Right or Option granted to a Participant in accordance with
                  the terms of the Plan.

         (e)      "Award Agreement" means an instrument or agreement, in written
                  or electronic form, between the Company and an Awardee
                  evidencing the terms and conditions of an individual Award
                  which instrument or agreement may, but need not, be executed
                  or acknowledged by the Awardee. The Award Agreement is subject
                  to the terms and conditions of the Plan.

<PAGE>   2

         (f)      "Awardee" means the holder of an outstanding Award.

         (g)      "Board" means the Board of Directors of the Company.

         (h)      "Cash Awards" means cash awards granted pursuant to Section 13
                  of the Plan.

         (i)      "Code" means the United States Internal Revenue Code of 1986,
                  as amended.

         (j)      "Committee" means a committee of Directors appointed by the
                  Board in accordance with Section 4 of the Plan.

         (k)      "Common Stock" means the Class A common stock of the Company.

         (l)      "Company" means Perot Systems Corporation, a Delaware
                  corporation, or any successor entity.

         (m)      "Consultant" means any person, including an advisor, engaged
                  by the Company or a Subsidiary to render bona fide services
                  (provided that such services are not provided in connection
                  with the offer and sale of securities in capital-raising
                  transactions) to such entity or any person who is an advisor,
                  director or consultant of an Affiliate.

         (n)      "Director" means a member of the Board who is also an Employee
                  or Consultant.

         (o)      "Employee" means a regular employee of the Company, any
                  Subsidiary or any Affiliate, including Officers and Directors,
                  who is treated as an employee in the personnel records of the
                  Company, any Subsidiary or any Affiliate for the relevant
                  period, but shall exclude individuals who are classified by
                  the Company, any Subsidiary or any Affiliate as (A) leased
                  from or otherwise employed by a third party; (B) independent
                  contractors; or (C) contingent, intermittent or temporary,
                  even if any such classification is changed retroactively as a
                  result of an audit, litigation or otherwise. A Participant
                  shall not cease to be an Employee solely as the result of (i)
                  any leave of absence approved by the Participant's Employer,
                  subject to the provisions of Section 6(b), or (ii) transfers
                  between locations of the Participant's Employer or transfers
                  of the Participant's employment among the Company, any
                  Subsidiary or any Affiliate. Neither service as a Director nor
                  payment of a director's fee by the Company shall be sufficient
                  to constitute "employment" by the Company.

         (p)      "Employer" means, with respect to an Awardee on the relevant
                  date, the Company or any Subsidiary or Affiliate of which
                  Awardee is an Employee or to which Awardee is a Consultant.

Perot Systems Corporation                               Approved by Stockholders
2001 Long Term Incentive Plan                                            09May01
<PAGE>   3

         (q)      "Exchange Act" means the Securities Exchange Act of 1934, as
                  amended.

         (r)      "Fair Market Value" means, as of any date, the last reported
                  sale price for one Share on such date (or the most recent
                  prior date for which the last reported sale price is
                  available) on the principal national securities exchange on
                  which the Common Stock is listed or admitted to trading or, if
                  no such reported sale price is available, the average of the
                  closing bid and asked prices for one Share on such exchange on
                  such date (or the most recent prior date for which such prices
                  are available), in either case as reported in The Wall Street
                  Journal or such other source as the Administrator shall
                  determine.

         (s)      "Grant Date" means the date selected by the Administrator,
                  from time to time, upon which an Award is granted to a
                  Participant pursuant to this Plan.

         (t)      "Incentive Stock Option" means an Option intended to qualify
                  as an incentive stock option within the meaning of Section 422
                  of the Code and the regulations promulgated thereunder.

         (u)      "Nonstatutory Stock Option" means an Option not intended to
                  qualify as an Incentive Stock Option.

         (v)      "Officer" means a person who is an officer of the Company
                  within the meaning of Section 16 of the Exchange Act and the
                  rules and regulations promulgated thereunder.

         (w)      "Option" means an option of any type permitted by Applicable
                  Laws to purchase Shares granted pursuant to this Plan.

         (x)      "Participant" means an Employee, Director or Consultant.

         (y)      "Plan" means this 2001 Long-Term Incentive Plan, as amended
                  from time to time.

         (z)      "Predecessor Plans" means the Company's (i) 1988 Restricted
                  Stock Plan, (ii) 1989 Pioneer Stock Option Plan, (iii) 1991
                  Stock Option Plan, (iv) 1992 Advisor Stock Option/Restricted
                  Stock Incentive Plan, and (v) 1996 Advisor and Consultant
                  Stock Option/Restricted Stock Incentive Plan.

         (aa)     "Restricted Stock" means shares of Common Stock acquired
                  pursuant to a grant of a Stock Award under Section 11 of the
                  Plan.

         (bb)     "Severance Date" means the date shown in the Company's, its
                  Subsidiaries' and Affiliates' personnel or other records as
                  the last day an Awardee was a Participant or, with respect to
                  an Awardee who has a Total Disability, the day such Total

Perot Systems Corporation                               Approved by Stockholders
2001 Long Term Incentive Plan                                            09May01
<PAGE>   4

                  Disability ceases to exist unless such Awardee becomes an
                  Employee within a reasonable period determined by the
                  Administrator in its sole discretion.

         (cc)     "Share" means a share of the Common Stock, as adjusted in
                  accordance with Section 15 of the Plan.

         (dd)     "Stock Appreciation Right" means a right to receive cash equal
                  to the difference between the Fair Market Value of Common
                  Stock on the Grant Date and the Fair Market Value of Common
                  Stock on the date such right is exercised by the Awardee
                  granted pursuant to Section 12 of the Plan.

         (ee)     "Stock Awards" means the right to purchase or receive Common
                  Stock pursuant to Section 11 of the Plan.

         (ff)     "Subsidiary" means a "subsidiary corporation," whether now or
                  hereafter existing, as defined in Section 424(f) of the Code.

         (gg)     "10% Shareholder" means the owner of stock (as determined
                  under Code Section 424(d)) possessing more than 10% of the
                  total combined voting power of all classes of stock of the
                  Company (or any parent or Subsidiary of the Company).

         (hh)     "Total Disability" means a mental or physical condition that
                  results in an Employee's continued entitlement to long term
                  disability benefits under a long term disability plan
                  sponsored by the Employee's Employer or the U.S. Social
                  Security Act or any equivalent law governing non-U.S.
                  Employees, provided that such mental or physical condition is
                  not the result of any condition or circumstance that the
                  Administrator, in its sole discretion, determines to have
                  resulted from the Awardee's illegal or reckless use of
                  alcohol, drugs or other chemical substances, or from actions
                  taken by the Awardee with the intention of causing self-injury
                  or with reckless disregard for personal health and safety.

3.       STOCK SUBJECT TO THE PLAN.

         (a)      Subject to the provisions of Section 15 and Section 6(d) of
                  the Plan, the maximum aggregate number of Shares that may be
                  issued in connection with any combination of Awards under the
                  Plan is (i) the aggregate number of Shares remaining available
                  for grants under the Predecessor Plans on the date this Plan
                  is approved by the Company's stockholders, plus (ii) the
                  additional Shares described in paragraph (b) below. The Shares
                  may be authorized, but unissued, or reacquired Common Stock.

         (b)      If an Award or any award or grant under any Predecessor Plan
                  expires or becomes unexercisable without having been exercised
                  in full, the unpurchased Shares which were subject thereto, if
                  any, shall become available for future grant or sale

Perot Systems Corporation                               Approved by Stockholders
2001 Long Term Incentive Plan                                            09May01
<PAGE>   5

                  under the Plan (unless the Plan has terminated). Shares of
                  Restricted Stock that are either forfeited or repurchased by
                  the Company shall become available for future grant or sale
                  under the Plan. Shares that are tendered, whether by physical
                  delivery or by attestation, to the Company by the Participant
                  as full or partial payment of the exercise price of any Award
                  or in payment of any applicable withholding for federal,
                  state, city, local or other taxes incurred in connection with
                  the exercise of any Award shall become available for future
                  grant or sale under the Plan.

4.       ADMINISTRATION OF THE PLAN.

         (a)      Procedure.

                  (i)      Multiple Administrative Bodies. The Plan may be
                           administered by different Committees with respect to
                           different groups of Participants.

                  (ii)     Section 162(m). To the extent that the Administrator
                           determines it to be desirable to qualify Awards
                           granted hereunder as "performance-based compensation"
                           within the meaning of Section 162(m) of the Code, the
                           Plan shall be administered by a Committee of two or
                           more "outside directors" within the meaning of
                           Section 162(m) of the Code.

                  (iii)    Rule 16b-3. To the extent desirable to qualify
                           transactions hereunder as exempt under Rule 16b-3
                           promulgated under the Exchange Act, the transactions
                           contemplated hereunder shall be structured to satisfy
                           the requirements for exemption under Rule 16b-3.

                  (iv)     Other Administration. The Board may delegate to the
                           Executive Committee of the Board or the chief
                           executive officer of the Company the power to approve
                           Awards to Participants who are not (A) subject to
                           Section 16 of the Exchange Act or (B) at the time of
                           such approval, "covered employees" under Section
                           162(m) of the Code.

         (b)      Powers of the Administrator. Subject to the provisions of the
                  Plan, and in the case of a Committee or the chief executive
                  officer of the Company, subject to the specific duties
                  delegated by the Board to such Committee or officer, the
                  Administrator shall have the authority, in its discretion:

                  (i)      to select the Participants to whom Awards may be
                           granted hereunder;

                  (ii)     to determine the number of shares of Common Stock to
                           be covered by each Award granted hereunder;

                  (iii)    to approve forms of agreement for use under the Plan;

Perot Systems Corporation                               Approved by Stockholders
2001 Long Term Incentive Plan                                            09May01
<PAGE>   6

                  (iv)     to determine the terms and conditions, not
                           inconsistent with the terms of the Plan, of any Award
                           granted hereunder. Such terms and conditions include,
                           but are not limited to, the exercise price, the time
                           or times when an Award may be exercised (which may or
                           may not be based on performance criteria), any
                           vesting acceleration or waiver of forfeiture
                           restrictions, and any restriction or limitation
                           regarding any Award or the Shares relating thereto,
                           based in each case on such factors as the
                           Administrator, in its sole discretion, shall
                           determine;

                  (v)      to construe and interpret the terms of the Plan and
                           Awards granted pursuant to the Plan;

                  (vi)     to adopt rules and procedures relating to the
                           operation and administration of the Plan to
                           accommodate the specific requirements of local laws
                           and procedures. Without limiting the generality of
                           the foregoing, the Administrator is specifically
                           authorized (A) to adopt the rules and procedures
                           regarding the conversion of local currency,
                           withholding procedures and handling of stock
                           certificates which vary with local requirements, and
                           (B) to adopt sub-plans and Plan addenda as the
                           Administrator deems desirable, to accommodate non-US
                           laws, regulations and practice, including but not
                           limited to non-US tax laws and regulations;

                  (vii)    to prescribe, amend and rescind rules and regulations
                           relating to the Plan, including rules and regulations
                           relating to sub-plans and Plan addenda;

                  (viii)   to modify or amend each Award, including the
                           discretionary authority to extend the
                           post-termination exercisability period of Options
                           longer than is otherwise provided for in the Plan,
                           provided, however, that any such amendment is subject
                           to Section 16(c) of the Plan and may not impair any
                           outstanding Award unless agreed to in writing by the
                           Participant;

                  (ix)     to allow Participants to satisfy withholding tax
                           obligations by electing to have the Company withhold
                           from the Shares to be issued upon exercise of an
                           Award that number of Shares having a Fair Market
                           Value equal to the amount required to be withheld.
                           The Fair Market Value of the Shares to be withheld
                           shall be determined on the date that the amount of
                           tax to be withheld is to be determined. All elections
                           by an Awardee to have Shares withheld for this
                           purpose shall be made in such form and under such
                           conditions as the Administrator may deem necessary or
                           advisable;

                  (x)      to authorize conversion or substitution under the
                           Plan of any or all outstanding stock options or
                           outstanding stock appreciation rights held by
                           employees, directors, officers, consultants, advisors
                           or other service

Perot Systems Corporation                               Approved by Stockholders
2001 Long Term Incentive Plan                                            09May01
<PAGE>   7

                           providers of an entity acquired by the Company (the
                           "Conversion Options"). Any conversion or substitution
                           shall be effective as of the close of the merger or
                           acquisition. The Conversion Options may be
                           Nonstatutory Stock Options or Incentive Stock
                           Options, as determined by the Administrator;
                           provided, however, that with respect to the
                           conversion of stock appreciation rights in the
                           acquired entity, the Conversion Options shall be
                           Nonstatutory Stock Options. Unless otherwise
                           determined by the Administrator at the time of
                           conversion or substitution, all Conversion Options
                           shall have the same terms and conditions as Options
                           generally granted by the Company under the Plan;

                  (xi)     to provide, upon direction by the Board in its sole
                           discretion in the event there is a change of control
                           of the Company or any Subsidiary, as determined by
                           the Board, for the (A) assumption or substitution of,
                           or adjustment to, each outstanding Award; (B)
                           acceleration of the vesting of Options and the
                           termination of any restrictions on Cash Awards or
                           Stock Awards; and/or (C) the cancellation of Awards
                           for a cash payment to the Awardee;

                  (xii)    to delegate to any officer of the Company any of its
                           powers hereunder, to the extent permitted by
                           Applicable Laws, and to authorize any person to
                           execute on behalf of the Company any instrument
                           required to effect the grant of an Award previously
                           granted under this Plan; and

                  (xiii)   to make all other determinations deemed necessary or
                           advisable for administering the Plan and any Award
                           granted hereunder.

         (c)      Effect of Administrator's Decision. The Administrator's
                  decisions, determinations and interpretations shall be final
                  and binding on all Participants.

5.       ELIGIBILITY.

         One or more Awards may be granted to Participants, provided, however,
         that Incentive Stock Options may be granted only to Employees of the
         Company or any Subsidiary.

6.       AWARD LIMITATIONS.

         (a)      Each Option shall be designated in the Award Agreement as
                  either an Incentive Stock Option or a Nonstatutory Stock
                  Option. However, notwithstanding such designation, to the
                  extent that the aggregate Fair Market Value of the Shares with
                  respect to which Incentive Stock Options are exercisable for
                  the first time by the Participant during any calendar year
                  (under all plans of the Company and any Subsidiary) exceeds
                  $100,000, such Options shall be treated as Nonstatutory Stock
                  Options. For purposes of this Section 6(a), Incentive Stock
                  Options shall be

Perot Systems Corporation                               Approved by Stockholders
2001 Long Term Incentive Plan                                            09May01
<PAGE>   8

                  taken into account in the order in which they were granted.
                  The Fair Market Value of the Shares shall be determined as of
                  the time the Option with respect to such Shares is granted.

         (b)      For purposes of Incentive Stock Options, no leave of absence
                  may exceed 90 days, unless reemployment upon expiration of
                  such leave is guaranteed by statute or contract. If
                  reemployment upon expiration of a leave of absence approved by
                  the applicable Employer is not so guaranteed, on the 91st day
                  of such leave an Awardee's employment with the Company shall
                  be deemed terminated for Incentive Stock Option purposes and
                  any Incentive Stock Option held by the Awardee shall cease to
                  be treated as an Incentive Stock Option and shall be treated
                  for tax purposes as a Nonstatutory Stock Option three months
                  thereafter.

         (c)      No Participant shall have any claim or right to be granted an
                  Award and the grant of any Award shall not be construed as
                  giving an Awardee the right to continue in the employ or hire
                  of the Company, its Subsidiaries or Affiliates. Further, the
                  Company, its Subsidiaries and Affiliates expressly reserve the
                  right, at any time, to dismiss a Participant at any time
                  without liability or any claim under the Plan, except as
                  provided herein or in any Award Agreement entered into
                  hereunder.

         (d)      The following limitations shall apply to grants of Awards:

                  (i)      No Participant shall be granted, in any fiscal year
                           of the Company, Options to purchase more than
                           2,000,000 Shares.

                  (ii)     If an Option is cancelled, forfeited, or lapses in
                           the same fiscal year of the Company in which it was
                           granted (other than in connection with a transaction
                           described in Section 15), the cancelled, forfeited or
                           lapsed Option will be counted against the limits set
                           forth in subsection (i).

                  (iii)    The foregoing limitations shall be adjusted
                           proportionately in connection with any change in the
                           Company's capitalization as described in Section 15.

         (e)      The following limitations shall apply to grants of Awards to
                  an Employee who is not exempt from the overtime pay provisions
                  of the Fair Labor Standards Act of 1938, as amended (a
                  "Non-Exempt Employee"):

                  (i)      Options or Stock Appreciation Rights (but not
                           Restricted Stock) may be granted under this Plan to
                           Non-Exempt Employees.

                  (ii)     Options or Stock Appreciation Rights granted to
                           Non-Exempt Employees must comply with the exercise
                           price and exercise period restrictions set forth
                           below, and other provisions of the "Worker Economic
                           Opportunity

Perot Systems Corporation                               Approved by Stockholders
2001 Long Term Incentive Plan                                            09May01
<PAGE>   9

                           Act" of 2000, P.L. 106-202, or other provisions of
                           law, sufficiently to insure that such Options, and
                           any profits, gains or income resulting from such
                           Options, are excluded from such Non-Exempt Employee's
                           overtime pay calculations.

                  (iii)    No Option granted to a Non-Exempt Employee may be
                           exercisable less than six months after the effective
                           date of the grant of such Option, except in the case
                           of death, Total Disability, retirement or change in
                           control.

7.       TERM OF PLAN.

         Subject to Section 21 of the Plan, the Plan shall become effective upon
         its adoption by the Board and its approval by the Company's
         shareholders. It shall continue in effect for a term of 10 years from
         the later of the date the Plan or any amendment to add shares to the
         Plan is adopted by the Board and approved by the stockholders unless
         terminated earlier under Section 16 of the Plan.

8.       TERM OF AWARD.

         The term of each Award shall be determined by the Administrator and
         stated in the Award Agreement. In the case of an Incentive Stock
         Option, the term shall be 10 years (five years if the Awardee is a 10%
         Shareholder) from the Grant Date or such shorter period as may be
         provided in the Award Agreement. In the case of an Option other than an
         Incentive Stock Option, the term shall be 10 years from the Grant Date
         or such shorter term as may be provided in the Award Agreement;
         provided that the term may be up to 11 years in other circumstances
         deemed appropriate in the discretion of the Administrator.

9.       OPTION EXERCISE PRICE AND CONSIDERATION.

         (a)      Exercise Price. The per share exercise price for the Shares to
                  be issued pursuant to exercise of an Option shall be
                  determined by the Administrator, subject to the following:

                  (i)      In the case of an Incentive Stock Option the per
                           Share exercise price shall be no less than 100% of
                           the Fair Market Value on the Grant Date; provided
                           that if any Participant to whom an Incentive Stock
                           Option is granted is a 10% Shareholder, then the per
                           Share exercise price shall be no less than 110% of
                           the Fair Market Value on the Grant Date.

                  (ii)     In the case of a Nonstatutory Stock Option, the per
                           Share exercise price shall be no less than 85% of the
                           Fair Market Value on the Grant Date. In the case of a
                           Nonstatutory Stock Option intended to qualify as
                           "performance-based compensation" within the meaning
                           of Section 162(m)

Perot Systems Corporation                               Approved by Stockholders
2001 Long Term Incentive Plan                                            09May01
<PAGE>   10

                           of the Code, the per Share exercise price shall be no
                           less than 100% of the Fair Market Value on the Grant
                           Date.

                  (iii)    The exercise price per Share for a Nonstatutory Stock
                           Option granted to a Non-Exempt Employee must be not
                           less than 85% of the Fair Market Value per Share on
                           the effective date of grant of the Option.

                  (iv)     Notwithstanding the foregoing, at the Administrator's
                           discretion, Conversion Options (as defined in Section
                           4(b)(x)) may be granted with a per Share exercise
                           price of less than 100% of the Fair Market Value on
                           the Grant Date.

         (b)      Vesting Period and Exercise Dates. At the time an Option is
                  granted, the Administrator shall fix the period within which
                  the Option may vest and be exercised and shall determine any
                  conditions that must be satisfied before the Option may be
                  exercised.

         (c)      Form of Consideration. The Administrator shall determine the
                  acceptable form of consideration for exercising an Option,
                  including the method of payment. In the case of an Incentive
                  Stock Option, the Administrator shall determine the acceptable
                  form of consideration at the Grant Date. Acceptable forms of
                  consideration may, but except for cash, check and wire
                  transfers are not required to, include:

                  (i)      cash;

                  (ii)     check or wire transfer (denominated in U.S. Dollars
                           or other currency the Administrator determines is
                           acceptable);

                  (iii)    other Shares which (A) in the case of Shares acquired
                           upon exercise of an Option, have been owned by the
                           Participant for more than six months on the date of
                           surrender, and (B) have a Fair Market Value on the
                           date of surrender equal to the aggregate exercise
                           price of the Shares as to which said Option shall be
                           exercised;

                  (iv)     consideration received by the Company under a
                           cashless exercise program implemented by the Company
                           in connection with the Plan;

                  (v)      any combination of the foregoing methods of payment;
                           or

                  (vi)     such other consideration and method of payment for
                           the issuance of Shares to the extent permitted by
                           Applicable Laws.

Perot Systems Corporation                               Approved by Stockholders
2001 Long Term Incentive Plan                                            09May01
<PAGE>   11

10.      EXERCISE OF OPTION.

         (a)      Procedure for Exercise; Rights as a Stockholder.

                  (i)      Any Option granted hereunder shall be exercisable
                           according to the terms of the Plan and at such times
                           and under such conditions as determined by the
                           Administrator and set forth in the respective Award
                           Agreement.

                  (ii)     An Option granted hereunder shall continue to vest
                           during any authorized leave of absence and such
                           Option may be exercised to the extent vested during
                           such leave of absence.

                  (iii)    No Option may be exercised for a fraction of a Share.

                  (iv)     An Option shall be deemed exercised when the Company
                           receives:

                           (A)      written or electronic notice of exercise (in
                                    accordance with the Award Agreement or the
                                    procedures established by the Administrator
                                    from time to time) from a person entitled to
                                    exercise the Option;

                           (B)      full payment for the Shares with respect to
                                    which the related Option is exercised; and

                           (C)      full payment of all applicable taxes
                                    required to be withheld by the Company or
                                    the Awardee's employer in connection with
                                    such exercise.

                  Shares issued upon exercise of an Option shall be issued in
                  the name of the Awardee or, if requested by the Awardee, in
                  the name of the Awardee and his or her spouse, or in the name
                  of any permitted transferee. Until the Shares are issued (as
                  evidenced by the appropriate entry on the books of the Company
                  or of a duly authorized transfer agent of the Company), no
                  right to vote or receive dividends or any other rights as a
                  stockholder shall exist with respect to the Shares subject to
                  an Option, notwithstanding the exercise of the Option. The
                  Company shall issue (or cause to be issued) such Shares
                  promptly after the Option is exercised. No adjustment will be
                  made for a dividend or other right for which the record date
                  is prior to the date the Shares are issued, except as provided
                  in Section 15 of the Plan. Exercising an Option in any manner
                  shall decrease the number of Shares thereafter available, both
                  for purposes of the Plan and for sale under the Option, by the
                  number of Shares as to which the Option is exercised.

         (b)      Termination of Employment. Unless otherwise provided in the
                  Award Agreement, if an Awardee ceases to be an Employee, other
                  than as a result of circumstances

Perot Systems Corporation                               Approved by Stockholders
2001 Long Term Incentive Plan                                            09May01
<PAGE>   12

                  described in Sections 10(c), (d), or (e) below, the Awardee's
                  Options shall (i) cease to vest immediately upon the Awardee's
                  Severance Date and (ii) terminate on the earlier of 90 days
                  after the Awardee's Severance Date or the expiration of the
                  term of such Option. If the Awardee does not exercise any
                  Shares covered by the vested portion of his or her Option, the
                  unexercised Shares covered by the vested portion of such
                  Option shall revert to the Plan on the earlier of 90 days
                  after the Awardee's Severance Date or the expiration of the
                  term of such Option.

         (c)      Total Disability. Unless otherwise provided in the Award
                  Agreement, if an Awardee ceases to be an Employee as a result
                  of the Awardee's Total Disability, the Awardee's Options shall
                  (i) continue to vest while the Total Disability continues to
                  exist and (ii) terminate on the earlier of 90 days after the
                  Awardee's Severance Date unless prior to such date the Awardee
                  becomes an Employee or the expiration of the term of such
                  Option. On the Awardee's Severance Date, the Shares covered by
                  the unvested portion of his or her Option shall revert to the
                  Plan. If the Awardee does not exercise any Shares covered by
                  the vested portion of his or her Option, the unexercised
                  Shares covered by the vested portion of such Option shall
                  revert to the Plan on the earlier of 90 days after the
                  Awardee's Severance Date or the expiration of the term of such
                  Option. The Option may be exercised by the guardian of
                  Awardee's property if one has been appointed.

         (d)      Retirement. Unless otherwise provided in the Award Agreement,
                  if an Awardee ceases to be an Employee as a result of the
                  Awardee's retirement on or after attaining the age of 65
                  years, or otherwise in accordance with his or her Employer's
                  retirement policy, the Awardee's Options shall (i) cease to
                  vest immediately upon the Awardee's Severance Date and (ii)
                  terminate on the earlier of one year after the Awardee's
                  Severance Date or the expiration of the term of such Option.
                  On the Awardee's Severance Date, the Shares covered by the
                  unvested portion of his or her Option shall revert to the
                  Plan. If the Awardee does not exercise any Shares covered by
                  the vested portion of his or her Option, the unexercised
                  Shares covered by the vested portion of such Option shall
                  revert to the Plan on the date such Option terminates.

         (e)      Death. Unless otherwise provided in the Award Agreement, if an
                  Awardee ceases to be an Employee as a result of his or her
                  death, or dies while the Awardee has a Total Disability to
                  which Section 10(c) applies, the Awardee's Option shall (i)
                  immediately vest with respect to all Shares covered by such
                  Option, and (ii) terminate on the expiration date of such
                  Option. The Option may be exercised by the beneficiary
                  designated by the Awardee (as provided in Section 17), the
                  executor or administrator of the Awardee's estate or, if none,
                  by the person(s) entitled to exercise the Option under the
                  Awardee's will or the laws of descent or distribution. If such
                  Option is not exercised with respect to any Shares covered by
                  such Option, the unexercised Shares shall revert to the Plan
                  on the expiration of the term of such Option.

Perot Systems Corporation                               Approved by Stockholders
2001 Long Term Incentive Plan                                            09May01
<PAGE>   13

         (f)      Buyout Provisions. At any time, the Administrator may, but
                  shall not be required to, offer to buy out for a payment in
                  cash or Shares an Option previously granted based on such
                  terms and conditions as the Administrator shall establish and
                  communicate to the Awardee at the time that such offer is
                  made.

11.      STOCK AWARDS.

         (a)      General. Stock Awards may be issued either alone, in addition
                  to, or in tandem with other Awards granted under the Plan,
                  except to Non-Exempt Employees. After the Administrator
                  determines that it will offer a Stock Award under the Plan, it
                  shall advise the Participant in writing or electronically, by
                  means of an Award Agreement, of the terms, conditions and
                  restrictions related to the offer, including the number of
                  Shares that the Participant shall be entitled to receive or
                  purchase, the price to be paid, if any, and, if applicable,
                  the time within which the Participant must accept such offer.
                  The offer shall be accepted by execution of an Award Agreement
                  in the form determined by the Administrator. The Administrator
                  will require that all Shares subject to a right of repurchase
                  or forfeiture be held in escrow until such repurchase right or
                  risk of forfeiture lapses.

         (b)      Termination of Employment. Unless the Administrator determines
                  otherwise, the Award Agreement shall provide for the
                  forfeiture of the unvested Restricted Stock upon the Awardee
                  ceasing to be an Employee except as provided below in Sections
                  11(c), (d) and (e). To the extent that the Awardee purchased
                  the Restricted Stock, the Company shall have a right to
                  repurchase the unvested Restricted Stock at the lesser of (i)
                  the Fair Market Value or (ii) the original price paid by the
                  Awardee, on or after the Awardee's Severance Date, except as
                  provided below in Sections 11(c), (d) and (e).

         (c)      Total Disability. Unless otherwise provided for by the
                  Administrator in the Award Agreement, if an Awardee ceases to
                  be an Employee as a result of the Awardee's Total Disability,
                  (i) the Awardee's Stock Award shall continue to vest while the
                  Awardee's Total Disability continues to exist, and (ii) to the
                  extent that the Awardee purchased the Restricted Stock, the
                  Company shall have a right to repurchase the unvested
                  Restricted Stock at the lesser of (A) the Fair Market Value or
                  (B) the original price paid by the Awardee, on or after the
                  Awardee's Severance Date.

         (d)      Retirement of Awardee. Unless otherwise provided for by the
                  Administrator in the Award Agreement, if an Awardee ceases to
                  be an Employee as a result of the Awardee's retirement on or
                  after attaining the age of 65 years, or otherwise in
                  accordance with his or her Employer's retirement policy, the
                  Awardee's Stock Award shall (i) cease to vest immediately upon
                  the Awardee's Severance Date, and (ii) to the extent that the
                  Awardee purchased the Restricted Stock, the

Perot Systems Corporation                               Approved by Stockholders
2001 Long Term Incentive Plan                                            09May01
<PAGE>   14

                  Company shall have a right to repurchase the unvested
                  Restricted Stock at the lesser of (A) the Fair Market Value,
                  or (B) the original price paid by the Awardee, on or after the
                  Awardee's Severance Date.

         (e)      Death of Awardee. Unless otherwise provided for by the
                  Administrator in the Award Agreement, if an Awardee ceases to
                  be an Employee as a result of his or her death, or dies while
                  the Awardee has a Total Disability to which Section 11(c)
                  applies, the Awardee's Stock Award shall immediately vest with
                  respect to all Shares covered by such Stock Award. The vested
                  portion of the Stock Award shall be delivered to the
                  beneficiary designated by the Participant (as provided in
                  Section 17), the executor or administrator of the
                  Participant's estate or, if none, by the person(s) entitled to
                  receive the vested Stock Award under the Participant's will or
                  the laws of descent or distribution.

         (f)      Rights as a Stockholder. Unless otherwise provided for by the
                  Administrator in the Award Agreement, once the Stock Award is
                  accepted, the Awardee shall have the rights equivalent to
                  those of a stockholder, and shall be a stockholder when his or
                  her acceptance of the Stock Award is entered upon the records
                  of the duly authorized transfer agent of the Company.

12.      STOCK APPRECIATION RIGHTS.

         (a)      General. The Committee, in its discretion, may grant Stock
                  Appreciation Rights to Participants. The following provisions
                  apply to such Stock Appreciation Rights.

         (b)      Grant of Stock Appreciation Right. The Stock Appreciation
                  Right shall entitle the holder upon exercise to an amount for
                  each Share to which such exercise relates equal to the excess
                  of (i) the Fair Market Value on the date of exercise over (i)
                  the base or exercise price per Share set forth in the
                  applicable Award Agreement. Notwithstanding the foregoing, the
                  Committee may place limits on the amount that may be paid upon
                  exercise of a Stock Appreciation Right.

         (c)      Forfeiture of Option. If a Stock Appreciation Right is granted
                  in tandem with an Option, upon exercise of such Stock
                  Appreciation Right, the related Option shall no longer be
                  exercisable and shall be deemed canceled to the extent of such
                  exercise.

         (d)      Form of Payment. The Company's obligation arising upon the
                  exercise of a Stock Appreciation Right may be paid currently
                  or on a deferred basis with such interest or earnings
                  equivalent as may be determined by the Committee, and may be
                  paid in Common Stock or in cash, or in any combination of
                  Common Stock and cash, as the Committee, in its sole
                  discretion, may determine.

Perot Systems Corporation                               Approved by Stockholders
2001 Long Term Incentive Plan                                            09May01
<PAGE>   15

         (e)      Other Provisions. The Award Agreement evidencing a Stock
                  Appreciation Right shall contain such other terms, provisions
                  and conditions not inconsistent with the Plan as may be
                  determined by the Committee in its sole discretion. The
                  provisions of such Awards need not be the same with respect to
                  each recipient.

13.      CASH AWARDS.

         Cash Awards may be granted either alone, in addition to, or in tandem
         with other Awards granted under the Plan. After the Administrator
         determines that it will offer a Cash Award, it shall advise the
         Participant in writing or electronically, by means of an Award
         Agreement, of the terms, conditions and restrictions related to the
         Cash Award.

14.      NON-TRANSFERABILITY OF AWARDS.

         Unless determined otherwise by the Administrator with respect to any
         Award other than an Incentive Stock Option, an Award may not be sold,
         pledged, assigned, hypothecated, transferred, or disposed of in any
         manner other than by beneficiary designation, will or by the laws of
         descent or distribution and may be exercised, during the lifetime of
         the Awardee, only by the Awardee. If the Administrator makes an Award
         transferable, the Award Agreement for such Award shall contain such
         additional terms and conditions as the Administrator deems appropriate.

15.      ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR DISSOLUTION OR
         LIQUIDATION.

         (a)      Changes In Capitalization. Subject to any required action by
                  the stockholders of the Company, the number and kind of shares
                  of Common Stock covered by each outstanding Award, and the
                  number and kind of shares of Common Stock which have been
                  authorized for issuance under the Plan but as to which no
                  Awards have yet been granted or which have been returned to
                  the Plan upon cancellation or expiration of an Award, as well
                  as the price per share of Common Stock covered by each such
                  outstanding Award, shall be proportionately adjusted for any
                  increase or decrease in the number or kind of issued shares of
                  Common Stock resulting from a stock split, reverse stock
                  split, stock dividend, combination or reclassification of the
                  Common Stock, or any other increase or decrease in the number
                  of issued shares of Common Stock effected without receipt of
                  consideration by the Company; provided, however, that
                  conversion of any convertible securities of the Company shall
                  not be deemed to have been "effected without receipt of
                  consideration." Such adjustment shall be made by the Board,
                  whose determination in that respect shall be final, binding
                  and conclusive. Except as expressly provided herein, no
                  issuance by the Company of shares of stock of any class, or
                  securities convertible into shares of stock of any class,
                  shall affect, and no adjustment by reason thereof shall be
                  made with respect to, the number or price of shares of Common
                  Stock subject to an Award.

Perot Systems Corporation                               Approved by Stockholders
2001 Long Term Incentive Plan                                            09May01
<PAGE>   16

         (b)      Dissolution or Liquidation. In the event of the proposed
                  dissolution or liquidation of the Company, the Administrator
                  shall notify each Awardee as soon as practicable prior to the
                  effective date of such proposed transaction. The Administrator
                  in its discretion may provide for an Option to be fully vested
                  and exercisable until 10 days prior to such transaction. In
                  addition, the Administrator may provide that any restrictions
                  on any Award shall lapse prior to the transaction, provided
                  the proposed dissolution or liquidation takes place at the
                  time and in the manner contemplated. To the extent it has not
                  been previously exercised, an Award will terminate immediately
                  prior to the consummation of such proposed transaction.

         (c)      Merger or Asset Sale. In the event there is a change of
                  control of the Company or any Subsidiary, as determined by the
                  Board, the Board may, in its discretion, (A) provide for the
                  assumption or substitution of, or adjustment to, each
                  outstanding Award; (B) accelerate the vesting of Options and
                  terminate any restrictions on Cash Awards or Stock Awards; and
                  (C) provide for the cancellation of Awards for a cash payment
                  to the Awardee.

16.      AMENDMENT AND TERMINATION OF THE PLAN.

         (a)      Amendment and Termination. The Board may at any time amend,
                  alter, suspend or terminate the Plan and the Administrator may
                  at any time, subject to the authority set forth in Section 4,
                  adopt subordinate arrangements, policies and programs in each
                  case, in such manner as may be necessary to enable the Plan to
                  achieve its stated purposes in any jurisdiction outside the
                  United States in a tax-efficient manner and in compliance with
                  local rules and regulations by adopting schedules of
                  provisions to be applicable to awards granted in such
                  jurisdiction.

         (b)      Stockholder Approval. The Company shall obtain stockholder
                  approval of any Plan amendment to the extent necessary or
                  desirable to comply with Applicable Laws.

         (c)      Effect of Amendment or Termination. No amendment, alteration,
                  suspension or termination of the Plan shall impair the rights
                  of any Award, unless mutually agreed otherwise between the
                  Awardee and the Administrator, which agreement must be in
                  writing and signed by the Awardee and the Company. Termination
                  of the Plan shall not affect the Administrator's ability to
                  exercise the powers granted to it hereunder with respect to
                  Awards granted under the Plan prior to the date of such
                  termination.

17.      DESIGNATION OF BENEFICIARY.

         (a)      An Awardee may file a written designation of a beneficiary who
                  is to receive the Awardee's rights pursuant to his or her
                  Award or the Awardee may include his or

Perot Systems Corporation                               Approved by Stockholders
2001 Long Term Incentive Plan                                            09May01
<PAGE>   17

                  her Awards in an omnibus beneficiary designation for all
                  benefits under the Plan. To the extent that an Awardee has
                  completed a designation of beneficiary while employed with the
                  Company or its Subsidiaries or Affiliates, such beneficiary
                  designation shall remain in effect with respect to any Award
                  hereunder until changed by the Awardee.

         (b)      Such designation of beneficiary may be changed by the Awardee
                  at any time by written notice. In the event of the death of an
                  Awardee and in the absence of a beneficiary validly designated
                  under the Plan who is living at the time of such Awardee's
                  death, the Company shall allow the executor or administrator
                  of the estate of the Awardee to exercise the Award, or if no
                  such executor or administrator has been appointed (to the
                  knowledge of the Company), the Company, in its discretion, may
                  allow the spouse or one or more dependents or relatives of the
                  Awardee to exercise the Award.

18.      LEGAL COMPLIANCE.

         Shares shall not be issued pursuant to the exercise of an Option or
         Stock Award unless the exercise of such Option or Stock Award and the
         issuance and delivery of such Shares shall comply with Applicable Laws
         and shall be further subject to the approval of counsel for the Company
         with respect to such compliance.

19.      INABILITY TO OBTAIN AUTHORITY.

         To the extent the Company is unable, or the Administrator deems it
         infeasible or commercially impracticable, to obtain authority from any
         regulatory body having jurisdiction, which authority is deemed by the
         Company's counsel to be necessary to the lawful issuance and sale of
         any Shares hereunder, the Company shall be relieved of any liability
         with respect to the failure to issue or sell such Shares as to which
         such requisite authority shall not have been obtained.

20.      RESERVATION OF SHARES.

         The Company, during the term of this Plan, will at all times reserve
         and keep available such number of Shares as shall be sufficient to
         satisfy the requirements of the Plan.

21.      STOCKHOLDER APPROVAL.

         The Plan shall be subject to approval by the stockholders of the
         Company within 12 months of the date the Plan is adopted. Such
         stockholder approval shall be obtained in the manner and to the degree
         required under Applicable Laws.

Perot Systems Corporation                               Approved by Stockholders
2001 Long Term Incentive Plan                                            09May01
<PAGE>   18

22.      NOTICE.

         Any written notice to the Company required by any provisions of this
         Plan shall be addressed to the Secretary of the Company and shall be
         effective when received.

23.      GOVERNING LAW.

         This Plan and all determinations made and actions taken pursuant hereto
         shall be governed by the substantive laws, but not the choice of law
         rules, of the state of Delaware.

24.      UNFUNDED PLAN.

         Insofar as it provides for Awards, the Plan shall be unfunded. Although
         bookkeeping accounts may be established with respect to Participants
         who are granted Awards of Shares under this Plan, any such accounts
         will be used merely as a bookkeeping convenience. Except for the
         holding of Restricted Stock in escrow pursuant to Section 11, the
         Company shall not be required to segregate any assets which may at any
         time be represented by Awards, nor shall this Plan be construed as
         providing for such segregation, nor shall the Company nor the
         Administrator be deemed to be a trustee of stock or cash to be awarded
         under the Plan. Any liability of the Company to any Participant with
         respect to an Award shall be based solely upon any contractual
         obligations which may be created by the Plan; no such obligation of the
         Company shall be deemed to be secured by any pledge or other
         encumbrance on any property of the Company. Neither the Company nor the
         Administrator shall be required to give any security or bond for the
         performance of any obligation which may be created by this Plan.

Perot Systems Corporation                               Approved by Stockholders
2001 Long Term Incentive Plan                                            09May01<PAGE>   1
                              VARI-L COMPANY, INC.
                         EXECUTIVE EMPLOYMENT AGREEMENT

         THIS AGREEMENT, effective January 22, 2001, is made and entered into by
and between VARI-L COMPANY, INC. (the "Company") and RICHARD P. DUTKIEWICZ
("Employee").

         WHEREAS, the Company wishes to engage Employee as the Company's Chief
Financial Officer and Vice President-Finance to lead the Company's accounting
department and to manage, coordinate and actively participate in the Company's
corporate finance, accounting, banking, investor relations and financial
reporting functions, as part of the Company's continuing efforts to build
shareholder value; and

         WHEREAS, the Company's Board of Directors, comprised solely of
disinterested directors, has determined to provide Employee with this employment
agreement, including the severance package and other benefits provided hereby,
for the purpose of inducing Employee to accept a position with the Company and
to continue to provide diligent and efficacious services to the Company during
his employment.

         NOW, THEREFORE, for good and valuable consideration, the parties hereto
agree as follows:

         I. EMPLOYMENT. The Company hereby employs Employee, and Employee hereby
accepts employment, upon the terms and conditions hereinafter set forth.

         II. TERM. Subject to the provisions for termination as hereinafter
provided, the term of this Agreement is for a period commencing January 22,
2001, and expiring January 21, 2003 (the "Initial Term"). On January 21 of each
year, beginning in 2003, the term of this Agreement shall be automatically
extended for an additional year without any further action on the part of the
Company or Employee unless terminated under the provisions of Section VIII of
this Agreement.

         III. DUTIES. Employee is engaged as Chief Financial Officer and Vice
President-Finance of the Company, to have primary responsibility for and
authority over the management and direction of all accounting, finance and tax
functions of the Company, including the management and coordination of, and
active participation in, the Company's corporate finance, accounting, banking,
investor relations and financial reporting functions, and such other duties as
may be assigned to Employee by the Audit Committee of the Company's Board of
Directors, subject only to the direction of the Audit Committee and, to the
extent such authority is delegated by the Audit Committee to the Chief Executive
Officer or any other officers of the Company, the direction or supervision of
such other officers.

         IV. EXTENT OF SERVICES. Employee shall faithfully, industriously, and
to the best of his ability, experience, and talents, perform all of the duties
that may be required of and from him pursuant to this Agreement. Nothing herein
shall be construed as preventing Employee from (a) investing his assets in such
form or manner as will not require any services on the part of Employee in the
operations or the affairs of the companies in which such investments are

<PAGE>   2

made or (b) serving as a director, advisor, or consultant; provided, however,
that such investments or services may not be in connection with a business which
is in competition with the Company (excluding (i) indirect investments through
mutual funds or other broad based investment vehicles, (ii) investments in debt
instruments, and (iii) investments in less than 5% of the stock of any publicly
held business). For purposes hereof, "in competition with the Company" shall be
construed consistently with Section VII hereof.

         V. COMPENSATION AND EMPLOYEE BENEFITS.

              A. ANNUAL BASE SALARY. For all services rendered by Employee under
this Agreement, the Company shall pay Employee an annual base salary of at least
$150,000, payable in equal bi-weekly installments. The amount of such base
salary shall be determined at the beginning of each fiscal year by the
Compensation Committee of the Company's Board of Directors in its sole
discretion on the basis of merit and the Company's financial success and
progress but in no event shall such base salary be less than the annual base
salary indicated in this paragraph.

              B. BONUS COMPENSATION. Upon Employee's completion of ninety (90)
days employment under this Agreement, the Company will pay an initial signing
bonus of $10,000 to Employee. In addition to and not as a substitute for such
bonus, Employee may receive such additional bonuses, payable in cash or shares
of the Company's stock, as may be determined at the beginning of each fiscal
year of the Company by the Board of Directors or the Compensation Committee of
the Board of Directors, in its sole discretion, on the basis of: (i) Employee's
success in meeting his personal performance goals, as established by the Audit
Committee of the Board of Directors; (ii) Employee's merit, including but not
limited to the quality of the services provided by Employee and his
industriousness and diligence in performing such services; and (iii) the
Company's financial success and progress in the prior fiscal year. It is
anticipated that, if Employee is judged to have been successful under the
foregoing criteria, his annual bonus would be equal to approximately thirty
percent (30%) of his annual base salary for the preceding year.

              C. VACATION. Employee shall be entitled to accrue three (3) weeks
of paid vacation for each year of service provided. After one year of service,
that amount will increase to four (4) weeks per year. Any accrued but unused
vacation time shall be paid to Employee at or before the termination of his
employment, in accordance with Company policy, in addition to any amounts due
and payable to Employee under Section VIII hereof. Employee shall be required to
take at least two (2) weeks vacation per year, including in at least one case a
vacation lasting no less than five (5) consecutive business days.

              D. EMPLOYEE BENEFITS. Employee shall be entitled to receive all of
the rights, benefits, and privileges of an employee and an executive officer
under any retirement, pension, profit-sharing, insurance, health and hospital,
and other employee benefit plans which may be now in effect or hereafter adopted
by the Company. It is agreed that, in 2001, Employee will be granted options to
purchase 20,000 shares of the Company's common stock under the Company's Tandem
Stock Option and Stock Appreciation Rights Plan, which option shall vest ratably
over a four year period and shall be subject to the other terms and conditions
of that plan. Employee's right to receive grants in subsequent years will be
determined on the same basis as other senior

                                       2
<PAGE>   3

executives of the Company considering, in Employee's case, the performance
standards set forth in Section V. B above.

              E. WORKING FACILITIES. Employee shall be furnished with a private
office, business tools, and such other facilities and services suitable to
Employee's position and adequate for the performance of the duties required by
this Agreement.

              F. EXPENSES. Subject to limits which may be imposed by the Chief
Executive Officer, President or the Board of Directors, including any committee
thereof, Employee is authorized to incur reasonable expenses in connection with
his responsibilities in conducting the business of the Company, including
expenses for entertainment, travel, and similar items. The Company will
reimburse Employee for all such expenses upon the presentation by Employee, from
time to time, of an itemized account of such expenditures, including receipts or
other adequate documentation, or Employee may pay such expenses with a Company
credit card, if a Company credit card is issued to Employee, and Employee shall
appropriately document the business purpose of such expenditures. Employee's
expenses must be submitted to and approved by the Audit Committee or another
officer or employee designated by the Audit Committee to review and approve such
expenses.

         VI. PROPRIETARY INTERESTS OF COMPANY.

              Employee and the Company recognize that the Company is in a highly
competitive business in a highly technical industry. The parties acknowledge
that the success or failure of the Company depends largely on the development
and use of certain proprietary and confidential information and trade secrets,
including without limitation, information concerning any of the Company's
patented components, research and development projects and in patent process
components, and personal relationships with present and potential customers,
suppliers, contractors, and governmental agencies as well as technology,
procedures, systems, and techniques relating to the products developed or
distributed by the Company (hereinafter collectively referred to as
"Confidential Information"). Confidential Information is a substantial asset of
the Company. Confidential Information will be disclosed to Employee in the
normal course of operation. Employee acknowledges that Confidential Information
is extremely valuable to the Company and must be protected from unauthorized use
by the Company's competitors or other persons. Therefore, Employee agrees not to
disclose or use, whether for the benefit of Employee or any other person or
entity, at any time during or after his employment, any Confidential Information
to any person or entity other than the Company or persons authorized by the
Company to receive such Confidential Information.

              Employee recognizes that, during the term of his employment with
the Company, he may develop new products, technology, processes, devices,
inventions, or methods of production, including but not limited to computer
hardware, software or "firmware," and may enhance, improve or perfect existing
products, technology, processes, devices, inventions or methods of production
(hereinafter collectively referred to as "Inventions"). As partial consideration
for the salary and other benefits provided by the Company to the Employee,
Employee hereby agrees that his entire work product while in the employ of the
Company, including any Inventions, is the exclusive property of the Company.
Employee also agrees to cooperate fully with the Company and to do whatever acts
are reasonably necessary in order to

                                       3
<PAGE>   4

obtain United States or foreign letters patent or copyrights, or both, and to
vest the entire right and title thereto in the Company. Employee further agrees
that the Company shall have the royalty-free right to use in its business, and
to make, use, and sell such Inventions whether or not patentable, regardless of
whether they are conceived or made by the Employee during the hours which he is
employed by the Company or with the use of or assistance of the Company's
facilities, materials or personnel.

              Except as required in his duties to the Company, Employee will
not, directly or indirectly, use, disseminate, disclose, lecture upon, or
publish articles concerning any Confidential Information without the prior
written consent of the Company.

              Upon termination of his employment with the Company, all
documents, records, notebooks, and similar repositories of or containing
Confidential Information, including copies thereof, then in Employee's
possession, whether prepared by Employee or others, will be left with the
Company, and no copies thereof will be retained by the Employee.

              It is agreed that any breach of this section of the Agreement will
cause immediate irreparable harm to the Company and monetary damages would be
difficult if not impossible to ascertain. Therefore, the parties agree that,
upon any breach of any covenant in this Section VI, that the Company may obtain
from the district court for the City and County of Denver, Colorado, or any
other court of competent jurisdiction, an appropriate restraining order,
preliminary injunction or other form of equitable relief with respect thereto.
Nothing contained herein shall be construed as prohibiting the Company from
pursuing any other available remedies for such breach, including the recovery of
damages, costs, and attorney fees.

         VII. NONCOMPETE AND NONSOLICITATION. During the term of this Agreement
and for a period of the greater of (a) one year after termination or expiration
of this Agreement or (b) the period during which a Severance Amount or
consulting arrangement is being paid to Employee by the Company (the "Noncompete
Period"), the Employee will not, directly or indirectly, own, manage, operate,
control, provide services to, be employed by, participate in, or be connected in
any manner with the ownership, management, operation, or control of any business
which develops, manufactures, distributes or sells the same type of products as
the Company, or products which are the functional equivalent of the Company's
products or currently planned products, within and to the same market as the
Company's market at the time of Employee's activity or, after the termination of
this Agreement, at the time of such termination. Employee certifies that his
employment with the Company will not breach a previous employment agreement.
Employee agrees not to engage in the unauthorized use of the proprietary assets
of others during the term of his employment by the Company. Employee agrees not
to enter into any other employment agreement, oral or written, which will run
concurrently, in whole or in part, with Employee's employment by the Company,
provided, however, that the Company acknowledges and agrees that Employee may,
for a period of up to three (3) months after the date of this Agreement, provide
consulting services on a part time basis to his former employer in order to
assist it in the transition and training of his replacement. It is agreed that
any breach of this section of the Agreement will cause immediate irreparable
harm to the Company and that monetary damages for such breach would be difficult
if not impossible to ascertain. Therefore, the parties agree that upon any
breach of the covenants of this section the Company may obtain from the district
court for the City and County of Denver, Colorado, or any other court of

                                       4
<PAGE>   5

competent jurisdiction, an appropriate restraining order, preliminary injunction
or other form of equitable relief with respect thereto. Nothing contained herein
shall be construed as prohibiting the Company from pursuing any other available
remedies for such breach, including the recovery of damages, costs, and attorney
fees.

              The foregoing agreement not to compete shall not be held invalid
because of the scope of the territory or the actions restricted thereby, or the
period of time within which such agreement is operative; but any judgment by a
court of competent jurisdiction may define the maximum territory and actions
subject to, and restricted by, this paragraph and the period of time during
which such agreement is enforceable.

              Notwithstanding the foregoing, in the event of a Change of
Control, as hereinafter defined, not recommended by a majority of the Board of
Directors of the Company as constituted prior to the date of such Change of
Control, this non-compete agreement shall terminate upon the date of such Change
of Control.

         VIII. TERMINATION OF EMPLOYMENT.

              A. TERMINATION BY MUTUAL AGREEMENT. The Company and Employee may
agree to terminate this Agreement on terms and conditions mutually acceptable to
them as of the date of termination.

              B. DEATH. In the event of Employee's death during the term of this
Agreement, including the Consulting Period, if any, the Company shall pay to
Employee's estate any unpaid wages or other amounts owing at the time of death
and shall pay, in addition to and not as a substitute for the proceeds from any
life insurance policies on Employee's life paid for by the Company, an amount
equal to the Severance Amount which would have been payable to Employee if there
had been a Voluntary Termination on the date of Employee's death and all notice
and other requirements for the payment of such Severance Amount had been
satisfied.

              C. DISABILITY. If Employee becomes Disabled during the term of
employment or during the Consulting Period, the Company, at its option, may
thereafter, upon written notice to Employee or Employee's personal
representative, terminate the employment or Consulting Agreement. Employee shall
thereafter be eligible to receive disability benefits under the Company's
standard employee disability insurance policy like any other employee.

              D. VOLUNTARY OR INVOLUNTARY TERMINATION. Upon a Voluntary or
Involuntary Termination as defined herein, Employee shall continue to render his
services to the Company, if and to the extent required by the Company, up to the
date of such Voluntary or Involuntary Termination as referenced in the written
notice of termination submitted to Employee by the Company, or vice versa, and
shall be paid (i) the unpaid amount of the then applicable annual base salary up
to the date of such Voluntary or Involuntary Termination, (ii) any bonuses which
the Company's Board of Directors may determine, in its sole discretion, to be
due and payable to Employee, and (iii) the Severance Amount as defined herein.
In the event of a Voluntary Termination, as a condition to Employee's receipt of
the foregoing payments to Employee, during the time between the submission of a
notice of termination by Employee and the effective date of termination set
forth in such notice, Employee shall continue to diligently provide the Company
with such services as the Company may request. In the event of an

                                       5
<PAGE>   6

Involuntary Termination, all unvested stock options and stock appreciation
rights that have previously been granted to Employee will fully vest and remain
exercisable for a period of time equal to the later of three (3) months after
such termination or the end of the Consulting Period.

              E. DEFINITIONS. All the terms defined in this Section shall have
the meanings given below throughout this Agreement.

                 1. "CHANGE IN DUTIES, COMPENSATION, OR BENEFITS" shall mean any
one or more of the following:

                     a. a significant and detrimental change in the nature or
scope of Employee's authority, responsibilities or duties from those currently
applicable to him;

                     b. a reduction in Employee's annual base salary from that
currently provided to him;

                     c. a diminution in Employee's eligibility to participate in
bonus, stock option, incentive award or any other compensation plan which
provides opportunities to receive compensation from those currently applicable
to him, except for: (i) changes in the eligibility requirements for plans that
are applicable to employees generally; (ii) changes in plans that are applicable
to all executives and result in a diminution of Employee's benefits under such
plan that is fair and proportional as compared to the diminution of benefits for
all executives; and (iii) changes that are required by applicable law;

                     d. a material diminution in employee benefits (including
but not limited to medical, dental or life insurance and long-term disability
plans) and perquisites currently applicable to Employee, except for: (i) changes
in the eligibility requirements for benefits that are applicable to employees
generally; (ii) changes in benefits and perquisites that are applicable to all
executives and result in a diminution of Employee's benefits that is fair and
proportional as compared to the diminution for all executives; and (iii) changes
that are required by applicable law;

                     e. a change in the location of Employee's principal place
of employment by the Company (including its subsidiaries) by more than fifty
(50) miles from the location where he was principally employed immediately prior
to the date on which a Change of Control occurs; or

                     f. a reasonable determination by a majority of those
persons comprising the Board of Directors of the Company prior to a Change of
Control (even if such determination is made after such Change of Control) that,
as a result of a Change of Control and a change in circumstances thereafter
significantly affecting his position, Employee is unable to exercise the
functions or duties attached to his position immediately prior to the date on
which a Change of Control occurs.

                 2. "CHANGE OF CONTROL" shall be deemed to have occurred if:

                     a. any "person," including a "group" as determined in
accordance with Section 13(d)(3) of the Securities Exchange Act of 1934 (the
"Exchange Act"),

                                       6
<PAGE>   7

is or becomes the beneficial owner, directly or indirectly, of securities of the
Company representing 50% or more of the combined voting power of the Company's
then outstanding securities;

                     b. as a result of, or in connection with, any tender offer
or exchange offer, merger or other business combination, sale of assets or
contested election, or any combination of the foregoing transactions (a
"Transaction"), the persons who were directors of the Company before the
Transaction shall cease to constitute a majority of the Board of Directors of
the Company or any successor to the Company;

                     c. the Company is merged or consolidated with another
corporation or entity and, as a result of the merger or consolidation, less than
80% of the outstanding voting securities of the surviving corporation or entity
is then owned in the aggregate by the former stockholders of the Company;

                     d. a tender offer or exchange offer is made and consummated
for the ownership of securities of the Company representing 50% or more of the
combined voting power of the Company's then outstanding voting securities; or

                     e. the Company transfers all or substantially all of its
assets to another corporation which is not a wholly-owned subsidiary of the
Company.

                 3. "DISABLED" OR "DISABILITY" shall mean mental or physical
illness or condition rendering Employee incapable of performing any portion of
Employee's normal duties with the Company even after the Company's reasonable
accommodation of any such disability in accordance with the Americans with
Disabilities Act and the Colorado Nondiscrimination statute.

                 4. "INVOLUNTARY TERMINATION" shall mean any termination except:

                     a. VOLUNTARY TERMINATION;

                     b. termination by mutual agreement;

                     c. termination as a result of death; or

                     d. Employee's voluntary retirement from employment or
mandatory retirement from employment pursuant to a retirement plan to which
Employee was subject prior to any Change of Control. ("Retirement").

                 5. "SEVERANCE AMOUNT" is equal to:

                     a. in the case of an Involuntary Termination not following
a Change of Control, one-half of Employee's annual base salary payable ratably
over a six (6) month period on the Company's regular payroll dates, in addition
to and not as a substitute for compensation payable to Employee on account of
post-termination consulting services provided by Employee to the Company, if
any, pursuant to Section XI hereof. In the case of a Involuntary Termination
following a Change of Control, the Severance Amount shall be an amount equal to

                                       7
<PAGE>   8
seventy five percent (75%) of Employee's then annual base salary, payable in a
single lump sum no later than thirty (30) days following such termination. In
the event of Voluntary Termination, no Severance Amount shall be payable until
Employee has completed one (1) year of service under this Agreement, in which
case the Severance Amount will be equal to one (1) month's salary for every year
of service completed under this Agreement, up to a maximum of three (3) months,
payable ratably on the Company's regular payroll dates.

                     b. In the case of a Voluntary Termination or an Involuntary
Termination resulting from Employee's resignation following a Change in Duties,
Compensation or Benefits, Employee must give the Company proper notice of such
Termination in order to receive the Severance Amount. For purposes hereof,
proper notice is defined as written notice received by the Company not less than
thirty (30) days prior to the date of termination of employment.

                     c. In the case of an Involuntary Termination by the
Company, the Company must give Employee not less than thirty (30) days prior
written notice of such termination.

                     d. Notwithstanding any other provision of this Agreement,
in the event that the Employee is found to have violated the non-compete
provisions of Section VII of this Agreement by a court of competent jurisdiction
("Breach"), all Severance Amounts due and owing under this Agreement shall be
terminated upon the effective date of the Breach and the Employee shall
reimburse the Company for any portion of the Severance Amount previously paid to
Employee.

                 6. "VOLUNTARY TERMINATION" shall mean any termination which
results from a resignation by the Employee other than a resignation following a
Change in Duties, Compensation, or Benefits as defined herein.

                 7. "VOTING SECURITIES" shall mean any securities which
ordinarily possess the power to vote in the election of directors without the
occurrence of any pre-condition or contingency other than the passage of time.

                 8. "BENEFICIALLY OWNED" shall mean beneficial ownership by the
Employee, the Employee's spouse, or a trust or similar arrangement established
by or for the benefit of the Employee, the Employee's spouse, or the Employee's
minor children as well as the meaning of such term under Section 13 or Section
16 of the Securities Exchange Act.

              F. SECTION 280G PAYMENT. In the unlikely event that the Severance
Amount payments under this Agreement are determined by an independent accounting
firm retained by Employee (but paid for by the Company) to constitute "excess
parachute payments" within the meaning of Section 280G of the Internal Revenue
Code of 1986, as amended, (the "Code") and any regulations thereunder, such
Severance Amount shall be reduced by the amount necessary to avoid such
classification.

              G. MEDICAL AND DENTAL BENEFITS. If Employee's employment by the
Company or any subsidiary or successor of the Company is terminated because of
Death, Disability, or Involuntary Termination, then to the extent that Employee
or any of Employee's

                                       8
<PAGE>   9

dependents may be covered under the terms of any medical and dental plans of the
Company (or any subsidiary) immediately prior to the termination, the Company
will provide Employee and those dependents with the same or equivalent coverages
until three (3) months after any such termination of employment. The Company
may, at its election, procure such coverages apart from, and outside of the
terms of, the plans applicable to other employees. The Company's obligation to
provide such coverages will be limited by the requirement that Employee and
Employee's dependents comply with all of the conditions of the medical or dental
plans applicable to employees generally and the Company is under no obligation
to obtain special coverages for Employee which would not be covered by the plans
applicable to employees generally. In consideration for these benefits, Employee
must make contributions equal to those required from time to time from other
employees for equivalent coverages under the medical or dental plans. If and to
the extent that Employee is eligible to participate in a medical, dental or
other health insurance plan of another employer after the termination of his
employment by the Company, then the benefit provided by this section shall be
eliminated or commensurately diminished.

         IX. LIFE INSURANCE.

              A. GROUP LIFE INSURANCE. The Company shall provide Employee with
personal life insurance under the Company's group life insurance policy as in
effect from time to time which shall be payable to a beneficiary designated by
Employee in addition to, and not as a substitute for, any Severance Amount
payable under Section VIII.B. above. Employee acknowledges that, while the
Company currently maintains group life insurance which provides for a death
benefit equal to three (3) times an officer's annual base salary at the time of
death as well as an accidental death and dismemberment policy (the AD&D Policy")
which also provides for an additional benefit in the same amount as the group
life insurance if the cause of death is covered by the AD&D Policy, such
coverages may be altered or amended in the future on a Company-wide basis,
provided, however, that under no circumstances will such coverages be reduced
unless other officers of comparable rank within the Company are correspondingly
reduced.

              B. KEY MAN LIFE INSURANCE. Employee hereby consents to the
purchase by the Company, at the Company's option, of one or more "key man" life
insurance policies on Employee's life naming the Company or its designee as
beneficiary (the "Key Man Policies"); provided, however, that the Company shall
not be required to obtain such insurance. Employee agrees that he shall take any
reasonable actions which may be requested by the Company, and otherwise fully
cooperate with the Company, in its efforts to purchase and maintain the Key Man
Policies. The Key Man Policies will be owned by the Company and the proceeds
made payable to the Company or its designee. If purchased by the Company, the
Key Man Policies shall be for the purpose of providing funds necessary to obtain
a replacement for Employee and for any other reasonable business purpose as may
be determined by the Company in amounts sufficient to accomplish their intended
purposes.

         X. DIRECTORS AND OFFICERS INSURANCE. The Company shall maintain and
keep in force directors and officers liability insurance coverage on all
directors and officers in such an amount as the Company deems reasonable and
necessary under the circumstances but in no event less than $7.5 million of
aggregate coverage.

                                       9
<PAGE>   10

         XI. POST-TERMINATION CONSULTING. In the event of Employee's Involuntary
or Voluntary Termination, Employee agrees to provide services to the Company as
a consultant for a period of ninety (90) days following the termination of his
employment (the "Consulting Period"), in exchange for cash compensation at the
rate of $100 per hour. While the Consulting Period will only begin after
termination of employment under this Agreement, Employee shall nevertheless
continue to be an "employee" of the Company during the Consulting Period for
purposes of the Company's Tandem Stock Option and Stock Appreciation Rights Plan
and Stock Bonus Plan, although the scope of Employee's services and
responsibilities shall be diminished in such manner and amounts as may be agreed
upon by the Company and Employee. Employee shall have the right to decline to
provide any consulting services after an Involuntary Termination or Voluntary
Termination but such refusal will result in the forfeiture of Employee's right
to the Severance Amount hereunder. If Employee does elect to provide consulting
services, Employee shall be obligated to provide no more than ten (10) hours of
consulting services per week during the Consulting Period, if and to the extent
requested by the Company. Employee may determine to cease providing such
services to the Company at any time but such a determination, to the extent it
is made prior to the completion of the full ninety (90) day Consulting Period,
shall proportionately reduce Employee's entitlement to the Severance Amount
payable hereunder.

         XII. NOTICES. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing and delivered in person or sent by
registered or certified mail to Employee's residence as indicated in Employee's
personnel file at in the Company's records in the case of Employee or to its
principal office in the case of the Company.

         XIII. WAIVER. The waiver of any provision of this Agreement shall not
operate or be construed as a waiver of any other provision of this Agreement. No
waiver shall be valid unless in writing and executed by the party to be charged
therewith.

         XIV. SEVERABILITY/MODIFICATION. In the event that any clause or
provision of this Agreement shall be determined to be invalid, illegal or
unenforceable, such clause or provision may be severed or modified to the extent
necessary, and, as severed and/or modified, this Agreement shall remain in full
force and effect.

         XV. ASSIGNMENT. Except for a transfer by will or by the laws of descent
or distribution, Employee's right to receive payments or benefits under this
Agreement shall not be assignable or transferable, whether by pledge, creation
of a security interest or otherwise. In the event of any attempted assignment or
transfer contrary to this paragraph, the Company shall have no liability to pay
any amount so attempted to be assigned or transferred. Employee acknowledges
that the services to be rendered under this Agreement are unique and personal.
Accordingly, Employee may not assign such duties or obligations under this
Agreement.

         XVI. SUCCESSORS. This Agreement shall be binding upon and inure to the
benefit of the Company, its successors and assigns (including, without
limitation, any company into or with which the Company may merge or
consolidate). The Company agrees that it will not effect the sale or other
disposition of all or substantially all of its assets unless either (i) the
person or entity acquiring the assets or a substantial portion of the assets
shall expressly assume by an instrument in writing all duties and obligations of
the Company under this Agreement or (ii) the Company

                                       10
<PAGE>   11

shall provide, through the establishment of a separate reserve or otherwise, for
the payment in full of all amounts which are or may reasonably be expected to
become payable to Employee under this Agreement.

         XVII. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
concerning the employment arrangement between the parties and shall, as of the
effective date hereof, supersede all other such agreements between the parties,
provided, however, that nothing in this Agreement shall prevent the Company from
granting additional or special compensation or benefits to Employee after the
date of execution of this Agreement. This Agreement may not be amended except by
an agreement in writing signed by both parties.

         XVIII. GOVERNING LAW AND JURISDICTION. This Agreement shall be
interpreted, construed, and enforced under the laws of the State of Colorado.
The courts of the State of Colorado shall have sole jurisdiction and venue over
all controversies which may arise with respect to this Agreement.

         XIX. TIME. In comparing any period of time prescribed or allowed by
this Agreement, the day of the act, event or default from which the designated
period of time begins to run shall not be included. Time accounting shall begin
upon midnight of the following calendar day. All periods of time shall be
assumed to be specified in calendar days unless otherwise noted. In the case of
fractional days of time, the appropriate equivalent hours can be calculated and
accounted for against midnight of the calendar day in which the period of time
started. For purposes of calculating the duration of the covenant not to compete
the time period of such covenant shall be extended by one day for each day that
Employee competes with Company in violation of such covenant.

         XX. COLORADO WAGE ACT. The Company and Employee agree that the
Severance Amount, if any, payable under this Agreement shall be considered
"wages" for purposes of the Colorado Wage Act, C.R.S. Section 8-4-101 et seq.

         XXI. COUNTERPARTS. This Agreement may be signed in one or more
counterparts which, taken together, shall constitute a single binding agreement
between the parties. Photocopies or telecopies of the parties' original
signatures hereto may be relied upon as originals for all purposes.

                                       11
<PAGE>   12

         IN WITNESS WHEREOF, the parties have executed this Agreement the date
and year indicated below.

                           THE COMPANY:

                           VARI-L COMPANY, INC.

                           By:
                               -------------------------------------------------
                               G. Peter Pappas, Chief Executive Officer

                           EMPLOYEE:

                           -----------------------------------------------------
                           Richard P. Dutkiewicz

                                       12

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00025-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00025-of-00352.parquet"}]]