Document:

exv10w9

 

Exhibit 10.9

PEROT SYSTEMS CORPORATION

2001 LONG-TERM INCENTIVE PLAN

(As Amended through March 22, 2006)

	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 an entity with whom the Company would be considered a single
employer under Code Sections 414(b) or 414(c); provided, however, that for purposes of
determining a controlled group of corporations under Code Section 414(b) and of
determining trades or businesses (whether or not incorporated) that are under common
control for purposes of Code Section 414(c), the phrase “at least 50% shall be
substituted for the phrase “at least 80%” everywhere it appears in Code Sections
1563(a)(1), (2) and (3) and in treasury regulation 1.414(c)-2. In addition, where the
use of Common Stock for a stock grant under this Plan is based upon legitimate business
criteria, the phrase “at least 20% shall be substituted in each place noted above. The
Administrator may designate a different permissible ownership threshold percentage, but
such percentage may not be made effective for at least 12 months after adoption of such
change and the same designation must apply to all compensatory stock plans of the
Company subject to Code Section 409A.
	 
	 	(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.
	 
	 	(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

					
	 	 	 	 	 
	Perot Systems Corporation
	 	 	 	 
	2001 Long Term Incentive Plan
	 	Plan 2 of 25
	 	 

 

 

	 	 	 	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.
	 
	 	(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.

					
	 	 	 	 	 
	Perot Systems Corporation
	 	 	 	 
	2001 Long Term Incentive Plan
	 	Plan 3 of 25
	 	 

 

 

	 	(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 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

					
	 	 	 	 	 
	Perot Systems Corporation
	 	 	 	 
	2001 Long Term Incentive Plan
	 	Plan 4 of 25
	 	 

 

 

	 	 	 	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 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:

					
	 	 	 	 	 
	Perot Systems Corporation
	 	 	 	 
	2001 Long Term Incentive Plan
	 	Plan 5 of 25
	 	 

 

 

	 	(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;
	 
	 	(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 other than a modification that would subject
the Award to Code Section 409A; 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

					
	 	 	 	 	 
	Perot Systems Corporation
	 	 	 	 
	2001 Long Term Incentive Plan
	 	Plan 6 of 25
	 	 

 

 

	 	 	 	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
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 and shall meet the requirements of Treasury regulation § 1.424-1
for statutory options, as modified by the regulations under Code Section 409A.
Subject to the preceding sentence, 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 time of the conversion or
substitution (and subject to the requirements of Code Section 409A), all
Conversion Options shall have the same terms and conditions as Options
generally granted by the Company under the Plan;
	 
	 	(xi)	 	subject to Section 15(c) of the Plan, to provide, upon
direction by the Board in its sole discretion in the event there is a change in
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, but only to the extent such action
does not violate Code Section 409A;
	 
	 	(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.

					
	 	 	 	 	 
	Perot Systems Corporation
	 	 	 	 
	2001 Long Term Incentive Plan
	 	Plan 7 of 25
	 	 

 

 

	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 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).

					
	 	 	 	 	 
	Perot Systems Corporation
	 	 	 	 
	2001 Long Term Incentive Plan
	 	Plan 8 of 25
	 	 

 

 

	 	(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 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.

					
	 	 	 	 	 
	Perot Systems Corporation
	 	 	 	 
	2001 Long Term Incentive Plan
	 	Plan 9 of 25
	 	 

 

 

	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 100% of the Fair Market Value on the Grant
Date.
	 
	 	(iii)	 	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 Fair Market Value on the Grant
Date so long as the requirements of Code Section 409A regarding substitutions
of stock rights are met.

	 	(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 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;

					
	 	 	 	 	 
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	2001 Long Term Incentive Plan
	 	Plan 10 of 25
	 	 

 

 

	 	(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.

	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

					
	 	 	 	 	 
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	2001 Long Term Incentive Plan
	 	Plan 11 of 25
	 	 

 

 

	 	 	 	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 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

					
	 	 	 	 	 
	Perot Systems Corporation
	 	 	 	 
	2001 Long Term Incentive Plan
	 	Plan 12 of 25
	 	 

 

 

	 	 	 	(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.
	 
	 	(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.

					
	 	 	 	 	 
	Perot Systems Corporation
	 	 	 	 
	2001 Long Term Incentive Plan
	 	Plan 13 of 25
	 	 

 

 

	 	(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 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.

					
	 	 	 	 	 
	Perot Systems Corporation
	 	 	 	 
	2001 Long Term Incentive Plan
	 	Plan 14 of 25
	 	 

 

 

	 	(d)	 	Form of Payment. The Company’s obligation arising upon the exercise of
a Stock Appreciation Right shall be paid as soon as administratively possible after
exercise 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.
	 
	 	(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. Cash Awards
that include any deferral of payment greater than 21/2 months after the end of the calendar
year in which vesting occurs shall comply with the requirements of Code Section 409A and no
participant elections regarding the time of payment shall be allowed.
	 
	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

					
	 	 	 	 	 
	Perot Systems Corporation
	 	 	 	 
	2001 Long Term Incentive Plan
	 	Plan 15 of 25
	 	 

 

 

	 	 	 	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 conform to the requirements of Code
Section 409A and 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.
	 
	 	(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, Asset Sale or Other Change in Control.
	 
	 	 	 	(i) Change in Control without Termination of Employment. In the event there
is a change in control of the Company or any Subsidiary, as determined by the Board,
without a related termination of the Participant’s employment as provided in Section
15(c)(ii) and (iii) below, the Board may, in its discretion to the extent such
action does not violate Code Section 409A, (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 or Stock Awards; and (C)
provide for the cancellation of Awards for a cash payment to the Awardee.
	 
	 	 	 	(ii) Change in Control where Participant has Entered into a Severance
Agreement. Notwithstanding anything in the related Award Agreement to the
contrary, if (A) the Participant has entered into a letter agreement between such
Participant and the Company which sets out the severance benefits such Participant
would be entitled to in the event of the Participant’s involuntary termination under
particular circumstances following the Company’s execution of a definitive agreement
to effect a change in ownership or control of the Company (“Severance Agreement”)
and (B) the Participant is entitled to receive any benefit under such Severance
Agreement, then the Awards granted under this Plan and any holding period,
restrictions or other provisions applicable to such Awards

					
	 	 	 	 	 
	Perot Systems Corporation
	 	 	 	 
	2001 Long Term Incentive Plan
	 	Plan 16 of 25
	 	 

 

 

	 	 	 	shall be governed by the
provisions of the Severance Agreement, as it may be
amended from time to time, to the extent the Severance Agreement addresses such
Awards. A Participant who has entered into a Severance Agreement and is entitled to
benefits thereunder is not entitled to the Change in Control Benefit, the
cancellation of buy back or repayment of profits provisions or any other benefit set
out in Section 15(c)(iii) of the Plan (unless and only to the extent so provided in
the Participant’s Severance Agreement).
	 
	 	 	 	(iii) Change in Control Benefit for Participants Who Have Not Entered into
Severance Agreements. Notwithstanding anything in the Participant’s Award
Agreement to the contrary, should a Participant’s employment with the Company
terminate by reason of an Involuntary Termination and such Participant has not
entered into a Severance Agreement or the Participant is not entitled
to receive any benefit under such Severance Agreement, then the Participant shall become entitled to
receive a Change in Control Benefit (as defined below); provided, however, that to
be entitled to a Change in Control Benefit, the Participant must also execute a
release of all employment-related claims against the Company and its affiliates
existing as of the date of execution, in the standard form used by the Company
without material modification, addition or deletion.
	 
	 	 	 	In addition, upon the occurrence of a Change in Control, the provisions of Section 8
of a Participant’s Nonstatutory Stock Option Award Agreement, Section 8 of a
Participant’s Restricted Stock Unit Award Agreement under the Plan or any similar
provisions of the Plan or an Award Agreement to (i) cancel any Award granted to a
Participant, (ii) buy back Common Stock issued to a Participant upon the
Participant’s exercise of an Award and/or (iii) require repayment with respect to
certain proceeds received from the sale of any Common Stock issued to a Participant
upon the Participant’s exercise of an Award, shall be deemed to be cancelled and
deleted from such documents and shall be of no further force and effect.
	 
	 	 	 	The following definitions shall apply for purposes of this Section 15(c)(iii):

“Cause” means the Participant has:

     (A) participated in fraud, embezzlement or another act of material
misconduct involving the Company, which has resulted in significant harm to
the Company;

     (B) admitted, confessed or entered a plea bargain or a plea of nolo
contendere to, or been convicted of, a crime constituting a felony (or its
equivalent) under the laws of any jurisdiction in which the Company or any
applicable Affiliate conducts its business or any crime involving moral
turpitude or dishonesty;

					
	 	 	 	 	 
	Perot Systems Corporation
	 	 	 	 
	2001 Long Term Incentive Plan
	 	Plan 17 of 25
	 	 

 

 

     (C) willfully and continually failed to perform substantially the
appropriate duties of Participant’s position with the Company (other than
any such failure resulting from Participant’s physical or mental illness,
incapacity or disability), for a period of at least 14 days after a written
demand for substantial performance is delivered to Participant by a Senior
Executive which specifically identifies the manner in which the Senior
Executive believes that Participant has not substantially performed
Participant’s duties; provided that, in the event that Participant has not
commenced to perform substantially the duties of Participant’s position
during such 14-day grace period after written demand is made by the Company,
the Company shall not terminate the Participant for Cause except in
accordance with the procedures set forth below. In no event shall an event
that would constitute Specified Reason be considered the failure to perform
substantially the appropriate duties of Participant’s position with the
Company; or

     (D) failed to meet the acceptable performance standards for an employee
in Participant’s position, which shall be evaluated based on the goals and
objectives of Participant and similarly situated employees of the Company
(including any Affiliates of the Company) established in connection with the
applicable annual performance review program; provided that (i) the Company
has provided Participant with a written performance improvement plan with
specific requirements for Participant to meet such standards and providing
not less than 60 days for Participant to effect such improvement and (ii) a
Senior Executive has determined in good faith that Participant’s performance
is below the applicable acceptable performance standards and that
Participant has failed to substantially meet the requirements of
Participant’s performance improvement plan.

For purposes of the definition of Cause, no act or failure to act on the part of
Participant shall be considered “willful” unless it is done, or omitted to be
done, by Participant intentionally, not in good faith and without reasonable
belief that Participant’s action or omission was in the best interests of the
Company. Any act, or failure to act, based upon authority given pursuant to a
resolution duly adopted by the Board or, if applicable, upon the instructions of
the Chief Executive Officer or other Senior Executive of the Company or based
upon the advice of counsel for the Company shall be conclusively presumed to be
done, or omitted to be done, by Participant in good faith and in the best
interests of the Company.

The termination of employment of Participant shall not be deemed to be for Cause
unless and until, following the expiration of the 14-day grace period or the
60-day improvement period, if applicable, set forth above, there shall have

					
	 	 	 	 	 
	Perot Systems Corporation
	 	 	 	 
	2001 Long Term Incentive Plan
	 	Plan 18 of 25
	 	 

 

 

been delivered to Participant written notice of a Senior Executive, after
reasonable notice is provided to Participant and Participant is given an
opportunity to be heard by such Senior Executive, finding that, in the good
faith opinion of such Senior Executive, Participant has engaged in conduct which
would constitute Cause under paragraphs (A)-(D) above and specifying the
particulars thereof in detail.

         “Change in Control” means the happening of any of the events described in
paragraphs (A) through (D) below:

     (A) the acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) promulgated under the Securities
Exchange Act of 1934, amended (the “Exchange Act”)) of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 30%
or more of either (1) the then-outstanding shares of common stock of the
Company (the “Outstanding Company Common Stock”) or (2) the combined voting
power of the then-outstanding voting securities of the Company entitled to
vote generally in the election of directors (the “Outstanding Company Voting
Securities”); provided, however, that for purposes of this paragraph (A),
the following acquisitions shall not constitute a Change in Control: (A) any
acquisition directly from the Company; (B) any acquisition by the Company or
a subsidiary of the Company; (C) any acquisition by any employee benefit
plan (or related trust) sponsored or maintained by the Company or a
subsidiary of the Company; (D) any acquisition by any Perot Stockholder; (E)
any acquisition by any entity pursuant to a transaction that complies with
clauses (1), (2) and (3) of paragraph (C) of this definition; or (F) in
respect of any Restricted Stock held by a Participant, any acquisition by
such Participant or any group of Persons including such Participant (or any
entity controlled by such Participant or any group of Persons including such
Participant).

     (B) individuals who, as of the date hereof, constitute the Board of
Directors (the “Incumbent Board”), cease for any reason to constitute at
least a majority of the Board; provided, however, that any individual
becoming a director subsequent to the date hereof whose election, or
nomination for election by the Company’s stockholders, was approved by a
vote of a majority of the directors then comprising the Incumbent Board
(either by specific vote or by approval of the proxy statement of the
Company in which such person is named as a nominee for director, without
written objection to such nomination) shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with

					
	 	 	 	 	 
	Perot Systems Corporation
	 	 	 	 
	2001 Long Term Incentive Plan
	 	Plan 19 of 25
	 	 

 

 

     respect to the election or removal of directors or other actual or
threatened solicitation of proxies or consents by or on behalf of a Person
other than the Board until 24 months after such initial assumption of
office;

     (C) consummation by the Company of a reorganization, merger,
consolidation or sale or other disposition of all or substantially all of
the assets of the Company (a “Business Combination”), in each case, unless,
following such Business Combination:

     1. the Outstanding Company Common Stock and Outstanding Company
Voting Securities immediately prior to such Business Combination (or,
if applicable, the stock into which the Outstanding Company Common
Stock and Outstanding Company Voting Securities are converted
pursuant to such Business Combination) represents more than 60% of,
respectively, the then-outstanding shares of common stock and the
combined voting power of the then-outstanding voting securities
entitled to vote generally in the election of directors, as the case
may be, of the corporation or other entity resulting from such
Business Combination (including without limitation a corporation or
other entity that as a result of such transaction owns the Company or
all or substantially all of the Company’s assets either directly or
through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such Business
Combination, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities, as the case may be;

     2. no Person (excluding the Company, a subsidiary of the
Company, any corporation or other entity resulting from a Business
Combination or any employee benefit plan (or related trust) thereof
or a Perot Stockholder) beneficially owns, directly or indirectly,
30% or more of, respectively, the then-outstanding shares of common
stock of the corporation or other entity resulting from such Business
Combination or the combined voting power of the then-outstanding
voting securities entitled to vote generally in the election of
directors of such corporation or entity, except to the extent that
such ownership existed prior to the Business Combination; and

     3. at least a majority of the members of the board of
directors of the corporation or other entity resulting from such
Business Combination were members of the Incumbent Board at the
time of the execution of the initial agreement, or of the action of
the Board, providing for such Business Combination; or

					
	 	 	 	 	 
	Perot Systems Corporation
	 	 	 	 
	2001 Long Term Incentive Plan
	 	Plan 20 of 25
	 	 

 

 

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

     “Change in Control Benefit” means:

     (A) Each outstanding Option or Stock Appreciation Right which the
Participant holds at the time of the Participant’s Involuntary Termination,
to the extent that Option or Stock Appreciation Right is not otherwise
exercisable for all the underlying shares of common stock or other
securities at the time subject to that Option or Stock Appreciation Right,
will immediately vest and become exercisable for all those underlying shares
and may be exercised for any or all of those underlying shares. Each such
accelerated Option and Stock Appreciation Right will remain so exercisable
until the earlier of (i) the expiration of the Option or Stock
Appreciation Right or (ii) the post-service exercise period specified in the
Participant’s Award Agreement. Any Options and Stock Appreciation Rights
not exercised prior to the expiration of the applicable post-service
exercise period will terminate and cease to remain exercisable for any of
the underlying shares.

     (B) Each outstanding share of Restricted Stock which the Participant
holds at the time of the Participant’s Involuntary Termination, to the
extent that share of Restricted Stock is not otherwise payable will
immediately vest and be paid to the Participant as soon as administratively
practicable following the date of the Participant’s Involuntary Termination.

     (C) Each outstanding Cash Award which the Participant holds at the time
of the Participant’s Involuntary Termination, to the extent that Cash Award
is not otherwise exercisable for the entire amount of the cash at the time
subject to that Cash Award, will immediately become exercisable for the
entire amount of the Cash Award.

Change in Control Benefits will not be payable if the Participant’s
employment with the Company terminates for reasons other than an Involuntary
Termination, including, without limitation, for involuntary termination by
the Company for Cause, voluntary termination by the Participant not
supported by Specified Reason, long term disability, Retirement or death.
For this purpose, (i) “long term disability” means the Participant is
entitled to receive benefits from the Company’s Long-Term Disability Plan or
another long term disability plan sponsored by the Company, and (ii)
“Retirement” means the Participant’s retirement in accordance with any
retirement policy generally applicable to the
Company’s salaried employees, as in effect immediately prior to the

					
	 	 	 	 	 
	Perot Systems Corporation
	 	 	 	 
	2001 Long Term Incentive Plan
	 	Plan 21 of 25
	 	 

 

 

Change in Control, or any written retirement arrangement established by the Company
and the Participant as in effect immediately prior to the Change in Control.

     “Involuntary Termination” means the termination of a Participant’s employment
by the Company without Cause or by the Participant with Specified Reason during a Protected
Period or a Pre-Closing Period.

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

     “Person” means any individual or corporation, partnership, trust, incorporated
or unincorporated association, joint venture, limited liability company, joint stock
company, government (or an agency or subdivision thereof) or other entity of any kind.

     “Pre-Closing Period” means a period commencing with the Company’s execution of
the definitive agreement for a Change in Control transaction and ending upon the
earlier to occur of (i) the closing of the Change in Control contemplated by such
definitive agreement, or (ii) the termination of such definitive agreement without the
consummation of the contemplated Change in Control. In the event of competing or
superseding offers that result in definitive agreements, each such agreement shall create a
Pre-Closing Period.

     “Protected Period” means the period beginning on the date on which a Change in
Control occurs and ending on the two-year anniversary of such date, or such earlier date as
the Participant’s employment with the Company terminates.

     “Senior Executive” means, if the Company, or one or more of its parent
companies has a class of securities registered under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), an officer subject to the reporting requirements of Section 16
of the Exchange Act, or, if the Company does not have a class of securities registered under
the Exchange Act, the Chief Executive Officer or a Vice President reporting directly to the
Chief Executive Officer of the Company’s ultimate parent.

     “Specified Reason” means:

     (A) the reduction of the Participant’s annual base salary as in effect
immediately prior to the Change in Control or as in effect thereafter,
unless such reduction is part of an across-the-board reduction of no more
than 10% in annual base salary; or

					
	 	 	 	 	 
	Perot Systems Corporation
	 	 	 	 
	2001 Long Term Incentive Plan
	 	Plan 22 of 25
	 	 

 

 

     (B) the Company’s requiring the Participant to be based at any office
or location that is more than 35 miles from the Participant’s principal work
location and residence immediately prior to the Change in Control.

Notwithstanding anything to the contrary set forth above, no event or
condition described above shall constitute Specified Reason unless (i) the
Participant, within 120 days after the occurrence of such event or
condition, gives the Company written notice specifying in reasonable detail
the event or condition which the Participant believes gives rise to
Specified Reason, (ii) within 30 days after the Company’s receipt of such
notice (the “Cure Period”), the Company fails to correct or remedy such
event or condition, and (iii) the Participant resigns his employment with
the Company not more than 120 days following expiration of the Cure Period.

	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 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

					
	 	 	 	 	 
	Perot Systems Corporation
	 	 	 	 
	2001 Long Term Incentive Plan
	 	Plan 23 of 25
	 	 

 

 

	 	 	 	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
	 	 	 	 
	2001 Long Term Incentive Plan
	 	Plan 24 of 25
	 	 

 

 

	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
	 	 	 	 
	2001 Long Term Incentive Plan
	 	Plan 25 of 25exv10w40

 

Exhibit 10.40

PEROT SYSTEMS CORPORATION LETTERHEAD

                                                                     
            
                   

                                                                    
                 
               

                                                                  
                 
                 

Dear                                      :

     We are pleased to inform you that [the Human Resources and Compensation Committee of] the
Company’s Board of Directors has approved a severance benefit program for you. The purpose of this
letter agreement is to set forth the terms and conditions of your severance benefits and to explain
certain limitations that may govern their overall value or payment date.

     Your severance package will become payable should your employment terminate under certain
circumstances following the Company’s execution of a definitive agreement to effect a change in
ownership or control of the Company. To understand the full scope of your benefits, you should
familiarize yourself with the definitional provisions of Part One of this letter agreement. The
benefits comprising your severance package are detailed in Part Two, and the terms and conditions
of the special excise tax gross up to which you may become entitled are set forth in Part Three.
Part Four deals with ancillary matters affecting your severance arrangement.

PART ONE — DEFINITIONS

     For purposes of this letter agreement, the following definitions will be in effect:

     Agreement means this letter agreement between you and the Company, as it may be amended from
time to time in accordance with the applicable provisions of Part Four.

     Average Compensation means the average of your W-2 wages from the Company for the five (5)
calendar years (or, if you have been employed by the Company for less than five (5) calendar years,
such lesser period of time) completed immediately prior to the calendar year in which the Change in
Control is effected. Any W-2 wages for a partial year of employment will be annualized, in
accordance with the frequency which such wages are paid during such partial year, before inclusion
in your Average Compensation.

     Award means any Cash Award, Option, RSU, Stock Appreciation Right or any other award granted
to you in accordance with the terms of a Plan.

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

Page 1

 

     Base Salary means the annual rate of base salary in effect for you immediately prior to the
Change in Control or (if greater) the annual rate of base salary in effect at the time of your
Involuntary Termination.

     Board means the Company’s Board of Directors.

     Cash Award means any cash awards granted to you pursuant to Section 13 of the Company’s 2001
Long Term Incentive Plan, as such Plan may be amended from time to time.

     Cash Award COC Payment means the portion of any Cash Award provided you under Part Two of this
Agreement which is deemed to constitute a parachute payment within the meaning of Code Section
280G(b)(2) and the Treasury Regulations issued thereunder,

     Cause is defined on Exhibit A.

     Change in Control is defined on Exhibit B.

     Change in Control Severance Benefits means the various payments and benefits to which you may
become entitled under Part Two of this Agreement upon your Involuntary Termination in connection
with a Change in Control or upon any earlier termination of your employment by the Company during
the Pre-Closing Period other than a Termination for Cause. Such Change in Control Severance
Benefits may include one or more of the following: the accelerated vesting of your Options, Stock
Appreciation Rights, Cash Awards and/or RSUs, a lump sum severance payment, a pro-rated bonus
payment and continued health care coverage provided for you and your spouse and eligible dependents
at the Company’s expense.

     COC Payment means (i) any Change in Control Severance Benefits provided you under Part Two of
this Agreement which is deemed to constitute a parachute payment within the meaning of Code Section
280G(b)(2) and the Treasury Regulations issued thereunder, (ii) any Option COC Payment attributable
to your Acquisition-Accelerated Options, and (iii) any RSU COC Payment attributable to your
Acquisition-Accelerated RSUs.

     Code means the Internal Revenue Code of 1986, as amended.

     Common Stock means the Company’s common stock.

     Company means Perot Systems Corporation, a Delaware corporation, and any successor
corporation, whether or not resulting from a Change in Control.

     Independent Auditors means the accounting firm serving as the Company’s independent certified
public accountants immediately prior to the Change in Control; provided, however, that in the event
such accounting firm also serves as the independent certified public accountants for the
corporation or other entity effecting the Change in Control transaction with the Company or such
accounting firm concludes that the services required of it hereunder would adversely affect its
independent status under applicable accounting standards or the performance

Page 2

 

of such services would otherwise be in contravention of applicable law, then the Independent
Auditors shall mean a nationally-recognized public accounting firm mutually acceptable to both you
and the Company.

     Involuntary Termination means the termination of your employment by the Company without Cause
or by you with Specified Reason during a Protection Period or a Pre-Closing Period.

     Option means any option granted you to purchase shares of Common Stock under any Plan or other
arrangement which is outstanding at the time of a Change in Control (or if earlier, upon the
Company’s termination of your employment during the Pre-Closing Period) or upon your Involuntary
Termination following a Change in Control. Your Options will be divided into two (2) separate
categories as follows:

          Acquisition-Accelerated Options: any outstanding Option (or installment thereof) which
automatically accelerates, pursuant to the acceleration provisions of the agreement evidencing that
Option or any other agreement, upon a Change in Control.

          Severance-Accelerated Options: any outstanding Option (or installment thereof) which,
pursuant to Part Two of this Agreement, accelerates upon your Involuntary Termination following a
Change in Control.

     Option COC Payment means, with respect to any Acquisition-Accelerated Option or any
Severance-Accelerated Option, the portion of that Option deemed to be a parachute payment under
Code Section 280G and the Treasury Regulations issued thereunder. The portion of such Option which
is categorized as an Option COC Payment will be calculated in accordance with the valuation
provisions established under Code Section 280G and the applicable Treasury Regulations.

Page 3

 

     Other COC Payment means any payments in the nature of compensation (other than your Cash Award
COC Payment, your Option COC Payment, your RSU COC Payment, your Stock Appreciation Right COC
Payment and any other Change in Control Severance Benefits to which you become entitled under Part
Two of this Agreement) which are made to you in connection with the Change in Control and which
accordingly qualify as parachute payments within the meaning of Code Section 280G(b)(2) and the
Treasury Regulations issued thereunder.

     Permissible COC Amount means a dollar amount equal to 2.99 times your Average Compensation.

     Person means any individual or corporation, partnership, trust, incorporated or unincorporated
association, joint venture, limited liability company, joint stock company, government (or an
agency or subdivision thereof) or other entity of any kind.

     Plan means (i) the Company’s 1991 Stock Option Plan, as amended or restated from time to time,
(ii) the Company’s 2001 Long Term Incentive Plan, as amended or restated from time to time and
(iii) any other stock incentive plan implemented or established by the Company.

     Pre-Closing Period means a period commencing with the Company’s execution of the definitive
agreement for a Change in Control transaction and ending upon the earlier to occur of (i)
the closing of the Change in Control contemplated by such definitive agreement, or (ii) the
termination of such definitive agreement without the consummation of the contemplated Change in
Control. In the event of competing or superseding offers that result in definitive agreements,
each such agreement shall create a Pre-Closing Period.

     Present Value means the value, determined as of the date of the Change in Control, of any
payment in the nature of compensation to which you become entitled in connection with the Change in
Control or your subsequent Involuntary Termination, including (without limitation) the Option and
RSU COC Payments attributable to your Severance-Acceleration Options and Severance-Acceleration
RSUs and the additional Change in Control Severance Benefits to which you become entitled under
Part Two of this Agreement. The Present Value of each such payment will be determined in
accordance with the provisions of Code Section 280G(d)(4), utilizing a discount rate equal to one
hundred twenty percent (120%) of the applicable Federal rate in effect at the time of such
determination, compounded semi-annually to the effective date of the Change in Control.

     Protection Period means the period beginning on the date on which a Change in Control occurs
and ending on the two year anniversary of such date or such earlier date as Participant’s
employment with the Company terminates (other than an Involuntary Termination).

     RSU means any restricted stock unit granted to you under any Plan or other arrangement which
is outstanding at the time of the Change in Control (or if earlier, upon the Company’s termination
of your employment during the Pre-Closing Period) or upon your Involuntary Termination following a
Change in Control.

Page 4

 

          Acquisition-Accelerated RSUs: any outstanding RSU (or installment thereof) which
automatically accelerates, pursuant to the acceleration provisions of the agreement evidencing that
RSU or any other agreement, upon a Change in Control.

          Severance-Accelerated RSUs: any outstanding RSU (or installment thereof) which,
pursuant to Part Two of this Agreement, accelerates upon the termination of your employment by the
Company during the Pre-Closing Period for any reason other than a Termination for Cause or upon
your Involuntary Termination following a Change in Control.

     RSU COC Payment means, with respect to any Acquisition-Accelerated RSU or any
Severance-Accelerated RSU, the portion of that RSU deemed to be a parachute payment under Code
Section 280G and the Treasury Regulations issued thereunder. The portion of such RSU which is
categorized as a RSU COC Payment will be calculated in accordance with the valuation provisions
established under Code Section 280G and the applicable Treasury Regulations.

     Specified Reason is defined on Exhibit C.

     Stock Appreciation Right means any stock appreciation right granted to you pursuant to Section
12 of the Company’s 2001 Long Term Incentive Plan (or under any Plan or other arrangement) which is
outstanding at the time of a Change in Control (or if earlier, upon the Company’s termination of
your employment during the Pre-Closing Period) or upon your Involuntary Termination following a
Change in Control. Your Stock Appreciation Rights will be divided into two (2) separate categories
as follows:

          Acquisition-Accelerated Stock Appreciation Rights: any outstanding Stock Appreciation
Right (or installment thereof) which automatically accelerates, pursuant to the acceleration
provisions of the agreement evidencing that Stock Appreciation Right or any other agreement, upon a
Change in Control.

          Severance-Accelerated Stock Appreciation Rights: any outstanding Stock Appreciation
Right (or installment thereof) which, pursuant to Part Two of this Agreement, accelerates upon your
Involuntary Termination following a Change in Control.

     Stock Appreciation Right COC Payment means, with respect to any Acquisition-Accelerated Stock
Appreciation Right or any Severance-Accelerated Stock Appreciation Right, the portion of that Stock
Appreciation Right deemed to be a parachute payment under Code Section 280G and the Treasury
Regulations issued thereunder. The portion of such Stock Appreciation Right which is categorized
as a Stock Appreciation Right COC Payment will be calculated in accordance with the valuation
provisions established under Code Section 280G and the applicable Treasury Regulations.

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

Page 5

 

     Target Bonus means [___]% of Base Salary.

     Termination Date means December 31, 2007; provided, however, that the Termination Date shall
automatically be extended to one or more successive one-year anniversaries of such date, unless the
Company provides you with written notice of its decision not to extend the Termination Date at
least one hundred eighty (180) days prior to the next scheduled Termination Date. In the event of
such notice, this Agreement shall terminate on the next scheduled Termination Date, unless such
date falls within a Pre-Closing Period or a Protection Period, in which case the Termination Date
shall be the last day of the Pre-Closing Period (in the event that a Change in Control does not
occur) or the last day of the Protection Period (if a Change in Control has occurred or does occur
within the applicable Pre-Closing Period).

PART TWO — CHANGE IN CONTROL SEVERANCE BENEFITS

     Should your employment with the Company terminate by reason of an Involuntary Termination,
then you will become entitled to receive the applicable Change in Control Severance Benefits
provided under this Part Two, provided you execute and deliver to the Company a general release
(substantially in the form of attached Exhibit D) which becomes effective under applicable
law and pursuant to which you release the Company and its officers, directors, stockholders,
employees and agents from any and all claims you may otherwise have with respect to the terms and
conditions of your employment with the Company and the termination of that employment. In no event,
however, shall such release cover any claims, causes of action, suits, demands or other obligations
or liabilities relating to:

          (a) any payments, benefits or indemnification to which you are or become entitled pursuant to
the provisions of this Agreement (including, without limitation, the severance benefits provided
under this Part Two, the special tax gross up payment to which you may become entitled under Part
Three and the continued indemnification coverage to which you are entitled under Paragraph 2 of
Part Four of this Agreement); and

          (b) any claims for workers’ compensation benefits under any of the Company’s workers’
compensation insurance policy or fund.

     The Change in Control Severance Benefits provided under this Part Two shall be in lieu of any
other severance benefits to which you might otherwise become entitled under any other severance
plan, program or arrangement of the Company upon an Involuntary Termination, except for severance
benefits granted after the Change in Control.

Page 6

 

     1. Accelerated Vesting.

          (a) Each outstanding Option or Stock Appreciation Right which you hold at the time of your
Involuntary Termination, to the extent that Option or Stock Appreciation Right is not otherwise
exercisable for all the shares of Common Stock or other securities at the time subject to that
Option or Stock Appreciation Right, will immediately vest and become exercisable as to all the
shares subject to such Option or Stock Appreciation Right and may be exercised as to any or all of
those shares as fully vested shares. Each such accelerated Option or Stock Appreciation Right will
remain so exercisable until the earlier of (i) the expiration of the Option or Stock
Appreciation Right or (ii) the post-service exercise period specified in the Award Agreement
evidencing such Option or Stock Appreciation Right. Any Options and Stock Appreciation Rights not
exercised prior to the expiration of the applicable post-service exercise period will terminate and
cease to be exercisable.

          (b) Subject to Part Four, each outstanding RSU which you hold at the time of your Involuntary
Termination, to the extent that RSU is not otherwise payable will immediately vest and be paid to
you as soon as administratively practicable following the date of your Involuntary Termination.

          (c) Each outstanding Cash Award which you hold at the time of your Involuntary Termination, to
the extent that Cash Award is not otherwise at that time vested and exercisable or due and payable
for the entire amount of the cash subject to such Cash Award, will immediately vest and become
exercisable and/or due and payable for the entire amount of the Cash Award.

          (d) Notwithstanding the foregoing provisions of this Section, the accelerated vesting or
payment of an outstanding Award hereunder shall be limited to the extent (if any) necessary to
avoid contravention of any applicable requirements of Code Section 409A or any prohibited
distribution under Code Section 409A(a)(2). In such event, payment of each affected Award shall be
made as soon as administratively practicable following the first date such payment can be made in
compliance with Code Section 409A.

Page 7

 

     2. Severance Payment.

          (a) Subject to Part Four, in the event your employment terminates pursuant to an Involuntary
Termination that occurs during the Protected Period, the Company will make a lump-sum cash
severance payment to you as soon as administratively practicable following the date of your
Involuntary Termination in an amount equal to two (2) times the sum of your annual rate of Base Salary and Target Bonus (the “Severance
Payment”).

          The Severance Payment shall be subject to the Company’s collection of all applicable
withholding taxes, and you will only be paid the amount remaining after such withholding taxes have
been collected.

          (b) Subject to Part Four, in the event your employment terminates pursuant to an Involuntary
Termination that occurs during the Pre-Closing Period, you will become entitled to the Severance
Payment upon the closing of the Change in Control, provided and only if that Change in Control is
in fact consummated prior to the expiration of the Pre-Closing Period. The Company will make such
lump-sum cash Severance Payment to you as soon as administratively practicable following the
effective date of the Change in Control. The Severance Payment shall be subject to the Company’s
collection of all applicable withholding taxes, and you will only be paid the amount remaining
after such withholding taxes have been collected. In no event, however, will you become entitled
to all or any portion of the Severance Payment if the Change in Control is not consummated prior to
the expiration of the Pre-Closing Period.

     3. Pro-Rated Target Bonus.

          (a) In the event your employment terminates pursuant to an Involuntary Termination that occurs
during the Protected Period, the Company will make an additional lump-sum cash severance payment
(the “Pro-Rated Bonus”) to you equal to the dollar amount obtained by multiplying one-twelfth
(1/12th) of the annual Target Bonus in effect for you for the year of your Involuntary Termination
by the number of full or partial months of employment which you complete with the Company in that
year. Subject to Part Four, the payment of your Pro-Rated Bonus shall be made as soon as
administratively practicable following the date of your Involuntary Termination. The payment shall
be subject to the Company’s collection of all applicable withholding taxes, and you will only be
paid the amount remaining after such withholding taxes have been collected.

          (b) In the event your employment terminates pursuant to an Involuntary Termination that occurs
during the Pre-Closing Period, you will subsequently become entitled to the Pro-Rated Bonus upon
the closing of the Change in Control, provided and only if that Change in Control is in fact
consummated prior to the expiration of the Pre-Closing Period. Subject to Part Four, the Company
will pay the Pro-Rated Bonus to you in a lump-sum as soon as administratively practicable following
the effective date of the Change in Control. The payment shall be subject to the Company’s
collection of all applicable withholding taxes, and

Page 8

 

you will only be paid the amount remaining after such withholding taxes have been collected.
In no event, however, will you become entitled to all or any portion of the Pro-Rated Bonus if the
Change in Control is not consummated prior to the expiration of the Pre-Closing Period.

     4. Continued Health Care Coverage.

     Should you elect under Code Section 4980B to continue health care coverage under the Company’s
group health plan for yourself, your spouse and your eligible dependents following your Involuntary
Termination and pay the Company monthly an amount equal to your monthly employee contribution for
health care coverage prior to your Involuntary Termination, then the Company shall provide such
continued health care coverage for you and your spouse and other eligible dependents. Such health
care coverage, partially funded by the Company shall continue until the earliest of (i) the
expiration of the six (6) month period measured from the date of your Involuntary Termination, (ii)
the first date you are covered under another employer’s heath benefit program which provides
substantially the same level of benefits without exclusion for pre-existing medical conditions,
(iii) the date the definitive agreement for the Change in Control is terminated without
consummation of that Change in Control during the Pre-Closing Period, or (iv) the date you
discontinue any payments you are required to make to continue health care coverage. Should the
Company’s provision of such continued health care coverage result in the recognition of taxable
income (whether for federal, state or local income tax purposes) by you or your spouse or other
eligible dependent, then each of you will be responsible for the payment of the income and
employment tax liability resulting from such coverage, and the Company will not provide any tax
gross-up payments to you (or any other Person) with respect to such income and employment tax
liability. To the extent you are subject to the delayed benefit commencement provisions of
Paragraph 1 of Part Four, you shall directly pay for the health care coverage provided hereunder
with your own funds, and at the end of delayed commencement period, the Company shall promptly
reimburse you with a lump sum cash payment equal to the cost you incurred for the such health care
coverage for that period.

     5. Cancellation of Buy Back and Repayment of Profits Provisions.

     Upon the occurrence of a Change in Control, the provisions of Section 8 of each Nonstatutory
Stock Option Agreement you hold under the Company’s 2001 Long Term Incentive Plan, Section 8 of
each Restricted Stock Unit Agreement you hold under the Company’s 2001 Long-Term Incentive Plan,
Section 4(b)-(c) of each Stock Option Agreement you hold under the Company’s 1991 Stock Option
Plan, or any similar provisions of any other Plan, Award Agreement or any other arrangement to
which you are party relating to the Company’s rights to (i) cancel any Award granted to you, (ii)
buy back Common Stock issued to you upon your exercise of an Award and/or (iii) require repayment
with respect to certain proceeds received from the sale of any Common Stock issued to you upon your
exercise of an Award, shall be deemed to be cancelled and deleted from such documents and shall be
of no further force and effect.

Page 9

 

PART THREE — SPECIAL TAX PAYMENT

     1. Special Tax Gross-Up. In the event that (i) one or more of the
Acquisition-Accelerated Options, Stock Appreciation Rights or RSUs, any Cash Awards or any of the
Change in Control Severance Payments to which you become entitled under Part Two of this Agreement
or any Other COC Payments are deemed, in the opinion of the Independent Auditors or by the Internal
Revenue Service, to constitute an excess parachute payment under Code Section 280(G) and (ii) it is
determined that the aggregate Present Value (measured as of the Change in Control) of the COC
Payment attributable to those Change in Control Severance Payments, the Option COC Payment
attributable to your Acquisition-Accelerated Options, the RSU COC Payment attributable to your
Acquisition-Accelerated RSUs, the Stock Appreciation Right COC Payment attributable to your
Acquisition-Accelerated Stock Appreciation Rights, your Cash Award COC Payment (to the extent not
otherwise included in the COC Payment attributable to your Change in Control Severance Payments)
and any Other COC Payments to which you are entitled exceeds one hundred ten percent (110%) of the
Permissible COC Amount, then you shall be entitled to receive from the Company one or more
additional payments (collectively, the “Gross-Up Payment”) in an aggregate dollar amount determined
pursuant to the following formula, provided and only if the general release required of you
pursuant to the provisions of Part Two has become effective:

X = Y ÷ [1 — (A + B + C)], where

X is the aggregate dollar payment of the Gross-up Payment.

Y is the total excise tax, together with all applicable interest and penalties (collectively,
the “Excise Tax”), imposed on you pursuant to Code Section 4999 (or any successor provision)
with respect to the excess parachute payment attributable to (i) one or more of the Change in
Control Severance Payments provided you under Part Two of this Agreement, (ii) your
Acquisition-Acceleration Options and RSUs and (iii) any Other COC Payments.

A is the Excise Tax rate in effect under Code Section 4999 for such excess parachute payment,

B is the highest combined marginal federal income and applicable state income tax rate in effect
for you for the applicable calendar year in which the Gross-Up Payment is made, determined after
taking into account the deductibility of state income taxes against federal income taxes to the
extent actually allowable for that calendar year, and

C is the applicable Hospital Insurance (Medicare) Tax Rate in effect for you for the applicable
calendar year in which the Gross-Up Payment is made.

     Should the aggregate Present Value (measured as of the Change in Control) of the COC Payment
attributable to your Change in Control Severance Payments, the COC Payment attributable to your
Acquisition-Accelerated Options, RSUs and Stock Appreciation Rights, the COC Payment attributable
to your Cash Awards (to the extent not otherwise included in the COC Payment attributable to your
Change in Control Severance Payments) and any Other COC Payments to which you become entitled not
exceed one hundred ten percent (110%) of the

Page 10

 

Permissible COC Amount, then no Gross-Up Payment shall be made under this Part Three, and the
Change in Control Severance Payments shall instead be subject to reduction in accordance with the
benefit limitation provisions of Appendix I to this Agreement.

     2. Determination Procedures. All determinations required to be made under this Part
Three shall be made by the Independent Auditors in accordance with the following procedures:

          (a) If your Involuntary Termination occurs during the Pre-Closing Period, then within ten (10)
business days after the closing of the Change in Control, the Independent Auditors shall provide
both you and the Company with a written determination of the COC Payments attributable to your
Acquisition-Accelerated Options, Acquisition-Accelerated RSUs and Acquisition-Accelerated Stock
Appreciation Rights (if any), the COC Payment attributable to your Change in Control Severance
Payments under Part Two, the COC Payment attributable to your Cash Award (to the extent not
otherwise included in the COC Payment attributable to your Change in Control Severance Payments)
and any Other COC Payment to which you are entitled, together with detailed supporting calculations
with respect to the Gross-Up Payment due you by reason of those various COC Payments. Except to
the extent the deferred payment provisions set forth in Paragraph 1 of Part Four are applicable to
your Gross-Up Payment, the Company shall pay the resulting Gross-Up Payment to you within three (3)
business days after receipt of such determination.

          (b) In the event your Involuntary Termination occurs during the Protection Period, then the
following determination procedures shall be in effect:

          Within ten (10) business days after the closing of the Change in Control, the Independent
Auditors shall provide both you and the Company with a written determination of the COC Payment
attributable to your Acquisition-Accelerated Options,
Acquisition-Accelerated RSUs and Acquisition-Accelerated Stock Appreciation Rights (if any), together with detailed supporting calculations
with respect to the Gross-Up Payment due you by reason of that COC Payment. The Company shall pay
the resulting Gross-Up Payment to you within three (3) business days after receipt of such
determination.

          Within ten (10) business days after the date of your Involuntary Termination, the Independent
Auditors shall provide both you and the Company with a written determination of the COC Payments
attributable to any Change in Control Severance Payments, the COC Payment attributable to your Cash
Award (to the extent not otherwise included in your COC Payment attributable to your Change in
Control Severance Payments) or Other COC Payment to which you are entitled, together with detailed
supporting calculations with respect to the Gross-Up Payment due you by reason of those COC
Payments. Except to the extent the deferred payment provisions set forth in Paragraph 1 of Part
Four are applicable to your Gross-Up Payment, the Company shall pay the resulting Gross-Up Payment
to you within three (3) business days after receipt of such determination or (if later)
contemporaneously with the
Change in Control Severance Payment or Other COC Payment triggering such Gross-Up Payment.

Page 11

 

          (c) In the event the Treasury Regulations under Code Section 280G (or applicable judicial
decisions) specifically address the status of any Change in Control Severance Payment or Other COC
Payment or the method of valuation therefor, the characterization afforded to such payment by the
Regulations (or such decisions) shall, together with the applicable valuation methodology, be
controlling. All other determinations by the Independent Auditors shall be made on the basis of
“substantial authority” (within the meaning of Section 6662 of the Code).

          (d) Both you and the Company shall provide the Independent Auditors with access to and copies
of any books, records and documents in your or its possession which may be reasonably requested by
the Independent Auditors and shall otherwise cooperate with the Independent Auditors in connection
with the preparation and issuance of the determinations contemplated by this Part Three.

          (e) All fees and expenses of the Independent Auditors and the appraisers shall be borne solely
by the Company, and to the extent those fees or expenses are treated as a COC Payment, they shall
be taken into account in the calculation of the Gross-Up Payment to which you are entitled under
this Part Three.

     3. Additional Claims. You shall provide written notification to the Company of any
claim made by the Internal Revenue Service which would, if successful, require the payment by the
Company of an additional Gross-Up Payment. Such notification shall be given as soon as practicable
after you are informed in writing of such claim and shall apprise the Company of the nature of such
claim and the date on which such claim is requested to be paid. You shall not pay such claim prior
to the expiration of the thirty (30) day period following the date on which such notice is given to
the Company (or such shorter period ending on the date that any payment of taxes, interest and/or
penalties with respect to such claim is due). Prior to the expiration of such thirty (30) day or
shorter period, the Company shall ether (i) pay you the additional Gross-Up Payment attributable to
the Internal Revenue Service claim or (ii) provide written notice to you that the Company shall
contest the claim on your behalf. In the event, the Company provides you with such written notice,
you shall:

          (a) provide the Company with any information reasonably requested by the Company relating to
such claim;

          (b) take such action in connection with contesting such claim as the Company may reasonably
request in writing from time to time, including (without limitation) accepting legal representation
with respect to such claim by an attorney reasonably selected by the Company and reasonably
satisfactory to you, with the fees and expenses of such attorney to be the sole responsibility of
the Company without any tax implications to you in accordance with the same tax indemnity/gross-up
arrangement as in effect under subparagraph (d) below;

Page 12

 

          (c) cooperate with the Company in good faith in order to effectively contest such claim; and

          (d) permit the Company to participate in any proceedings relating to such claim; provided,
however, that the Company shall bear and pay directly all additional Excise Taxes imposed upon you
and all costs, legal fees and other expenses (including additional interest and penalties) incurred
in connection with such contest and shall indemnify you for and hold you harmless from, on an
after-tax basis, any additional Excise Tax (including interest and penalties) imposed upon you and
any Excise Tax or income or employment tax (including interest and penalties) attributable to the
Company’s payment of that additional Excise Tax on your behalf or imposed as a result of such
representation and payment of all related costs, legal fees and expenses. The amounts owed to you
by reason of the foregoing shall be paid to you or on your behalf as they become due and payable.
Without limiting the foregoing provisions of this subparagraph (d), the Company shall control all
proceedings taken in connection with such contest and, at its sole option, may pursue or forgo any
and all administrative appeals, proceedings, hearings and conferences with the taxing authority in
respect of such claim and may, at the Company’s sole option, either direct you to pay the tax
claimed and sue for a refund or contest the claim in any permissible manner, and you shall
prosecute such contest to a determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall determine; provided,
however, that should the Company direct you to pay such claim and sue for a refund, the Company
shall advance the amount of such payment to you, on an interest-free basis, and shall indemnify you
for and hold him harmless from, on an after-tax basis, any Excise Tax or income or employment tax
(including interest or penalties) imposed with respect to such advance or with respect to any
imputed income with respect to such advance or any income resulting from the Company’s forgiveness
of such advance; provided, further, that the Company’s control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be payable hereunder, and you shall be
entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue
Service or any other taxing authority.

PART FOUR — MISCELLANEOUS

     1. Delayed Commencement of Benefits. Notwithstanding any provision to the contrary in
this Agreement, no Severance Payment, Pro-Rated Bonus and no Company-paid health care coverage to
which you otherwise become entitled under Part Two of this Agreement or any Gross-Up Payment to
which you may become entitled under Part Three or any Cash or other Award subject to Code Section
409A which would otherwise become payable to distributable to you under Part Two of this Agreement
shall be made, paid or provided to you prior to the earlier of (i) the expiration of the
six (6) month period measured from the date of your “separation from service” with the Company (as
such term is defined in Treasury Regulations issued under Code Section 409A) or (ii) the date of
your death, if you are deemed at the time of such separation from service to be a “key employee”
within the meaning of that term under Code Section 416(i) and such delayed commencement is
otherwise required in order to avoid a prohibited distribution under Code Section 409A(a)(2). Upon
the expiration of the

Page 13

 

applicable Code Section 409A(a)(2) deferral period, all payments and benefits deferred
pursuant to this Paragraph (whether they would have otherwise been payable in a single sum or in
installments in the absence of such deferral) shall be paid or reimbursed to you in a lump sum, and
any remaining payments and benefits due under this Agreement shall be paid or provided in
accordance with the normal payment dates specified for them herein. You shall be entitled to
interest on the deferred benefits and payments for the period the commencement of those benefits
and payments is delayed by reason of Code Section 409A(a)(2), with such interest to accrue at the
prime rate in effect from time to time during that period and to be paid in a lump sum upon the
expiration of the deferral period.

     2. Continued Indemnification. The indemnification provisions for Officers and
Directors under the Company’s bylaws, the Directors and Officers Liability Insurance Policy (if
any) and any Indemnification Agreement between you and the Company shall (to the maximum extent
permitted by law) be extended to you during the period following your resignation or termination of
employment for any reason (other than a Termination for Cause), whether or not in connection with a
Change in Control, with respect to all matters, events or transactions occurring or effected during
your period of employment with the Company.

     3. Deferred Compensation. To the extent you participate in any deferred compensation
arrangements with the Company which are subject to Code Section 409A, the payment provisions in
effect for that deferred compensation shall continue in effect, and nothing in this Agreement shall
be deemed to modify, revise or otherwise alter those payment provisions.

     4. No Mitigation Duty. The Company shall not be entitled to set off any of the
following amounts against the Change in Control Severance Benefits to which you may become entitled
under Part Two of this Agreement: (i) any amounts which you may subsequently earn through other
employment or service following your termination of employment with the Company or (ii) any amounts
which you might have potentially earned in other employment or service had you sought such other
employment or service.

     5. Death. Should you die before your receive the full amount of payments and benefits
to which you may become entitled under this Agreement, then the balance of such payments shall be
made, on the due dates hereunder had you survived, to the executors or administrators of your
estate. Should you die before you exercise all your outstanding Options as accelerated hereunder,
then such Options may be exercised, within the applicable exercise period following your death, by
the executors or administrators of your estate or by the Persons to whom those Options are
transferred pursuant to your will or in accordance wit the laws of inheritance. In no event,
however, may any such Option be exercised after the specified expiration date of the option term.

     6. Successors and Assigns. The provisions of this Agreement shall inure to the
benefit of, and shall be binding upon, (i) the Company and its successors and assigns, including
any successor entity by merger, consolidation or transfer of all or substantially all of the

Page 14

 

Company’s assets (whether or not such transaction constitutes a Change in Control), and (ii)
you, the personal representative of your estate and your heirs and legatees.

     7. General Creditor Status. The benefits to which you may become entitled under Part
Two of this Agreement shall be paid, when due, from the Company’s general assets. No trust fund,
escrow arrangement or other segregated account shall be established as a funding vehicle for such
payments. Your right (or the right of the executors or administrators of your estate) to receive
such benefits shall at all times be that of a general creditor of the Company and shall have no
priority over the claims of other general creditors.

     8. Amendment and Termination.

          (a) This Agreement may only be amended by written instrument signed by you and an authorized
officer of the Company. This Agreement shall remain in effect through December 31, 2007 and shall
be subject to one or more successive one-year automatic renewals in accordance with the provisions
of the Termination Date definition in Part One.

          (b) This Agreement may not be terminated during a Pre-Closing Period or a Protection Period
that begins prior to what would otherwise be a Termination Date, and no subsequent termination of
this Agreement shall adversely affect your right to receive any benefits to which you may have
previously become entitled hereunder in connection with your Involuntary Termination.

     9. Termination for Cause/Resignation. In the event of your Termination for Cause or
your resignation under circumstances which would otherwise constitute grounds for a Termination for
Cause, the Company will only be required to pay you (i) any unpaid compensation earned for services
previously rendered through the date of such termination and (ii) any accrued but unpaid vacation
benefits or sick days, and no benefits will be payable to you under Part Two of this Agreement.

     10. Governing Law/Other Agreements. This Agreement is to be construed and interpreted
under the laws of the State of Delaware. This Agreement supersedes all prior agreements between
you and the Company relating to the subject of severance benefits payable upon a change in control
or ownership of the Company, and you will not be entitled to any other severance benefits upon such
a termination other than those that are provided in this Agreement.

     11. At Will Employment. Nothing in this Agreement is intended to provide you with any
right to continue in the employ of the Company (or any Subsidiary) for any period of specific
duration or interfere with or otherwise restrict in any way your rights or the rights of the
Company (or any Subsidiary), which rights are hereby expressly reserved by each, to terminate your
employment at any time and for any reason, with or without cause.

     12. Arbitration. Any controversy or dispute arising out of or relating to this
Agreement shall be settled by arbitration in accordance with the Employment Dispute Resolution

Page 15

 

Rules of the American Arbitration Association (or such other rules as may be agreed upon by
both you and the Company). The arbitration shall be held in Dallas County in the State of Texas,
and any court having jurisdiction thereof may enter judgment upon the award rendered by the
arbitrator(s). Such award shall be binding and conclusive upon the parties

     Please indicate your agreement with the foregoing terms and conditions of your change in
control severance package by signing the Acceptance section of the enclosed copy of this letter and
returning it to the Company.

	 	 	 	 	 
	 	Very truly yours,

PEROT SYSTEMS CORPORATION

 	 
	 	By:  	 	 
	 	 	 	 
	 	Title:  	 	 
	 

ACCEPTANCE

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

	 	 	 	 	 
	 

	 	Signature:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Dated:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Address	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 

Page 16

 

APPENDIX I

BENEFIT LIMIT

1. Benefit Limit. Should it be determined that the aggregate Present Value (measured as of
the Change in Control) of the COC Payment attributable to the Change in Control Severance Payments,
the Option COC Payment attributable to your Acquisition-Accelerated Options, the RSU COC Payment
attributable to your Acquisition-Accelerated RSUs, the Stock Appreciation Right COC Payment
attributable to your Acquisition-Accelerated Stock Appreciation Rights and your Cash Award COC
Payment (to the extent not otherwise included in the COC Payment attributable to your Change in
Control Severance Payments), when added to the Present Value of any Other COC Payment to which you
may be entitled, does not exceed one hundred ten percent (110%) of the Permissible COC Amount, then
no Gross-Up Payment shall be made to you under Part Three of the Agreement. Instead, the
limitations set forth in this Appendix I to the Agreement shall apply. Accordingly, the amount of
the Change in Control Severance Payments otherwise due you under Part Three of the Agreement shall
be reduced to the extent necessary to assure that the aggregate Present Value of the COC Payment
attributable to your Change in Control Severance Payments, the Option COC Payment attributable to
your Acquisition-Accelerated Options, the RSU COC Payment attributable to your
Acquisition-Accelerated RSUs, the Stock Appreciation Right COC Payment attributable to your
Acquisition-Accelerated Stock Appreciation Rights, your Cash Award COC Payment (to the extent not
otherwise included in the COC Payment attributable to your Change in Control Severance Payments)
and any Other COC Payments to which you may be entitled does not exceed the greater of the
following dollar amounts (the “Benefit Limit”)

     (a) the Permissible COC Amount, or

     (b) the amount which yields you the greatest after-tax amount of benefits under Part Two of
the Agreement after taking into account any excise tax imposed under Code Section 4999 on the COC
Payment attributable to the Change in Control Severance Payments which are provided you under Part
Two, the Option COC Payment attributable to your Acquisition-Accelerated Options, the RSU COC
Payment attributable to your Acquisition-Accelerated RSUs, the Stock Appreciation Right COC Payment
attributable to your Acquisition-Accelerated Stock Appreciation Rights, your Cash Award COC Payment
(to the extent not otherwise included in the COC Payment attributable to your Change in Control
Severance Payments) or any Other COC Payments to which you are entitled.

	2.	 	Benefit Reduction.

     (a) To the extent the aggregate Present Value, measured as of the Change in Control, of (i)
the Option, RSU and Stock Appreciation Right COC Payments attributable to your
Acquisition-Accelerated and Severance-Accelerated Options, RSUs and Stock Appreciation Rights (or
installments thereof) plus (ii) the COC Payment attributable to your other Change in Control
Severance Benefits under Part Two of the Agreement plus (iii) your Cash Award COC Payment (to the
extent not otherwise included in the COC Payment attributable to your Change in Control Severance
Payments)would, when added to the Present Value of all of your Other

Appendix I
– Page 1

 

 

COC Payments, exceed the Benefit Limit, then the following reductions shall be made to the
Change in Control Severance Benefits to which you are otherwise entitled under Part Two of this
Agreement and your Acquisition-Accelerated Options and RSUs, to the extent necessary to assure that
such Benefit Limit is not exceeded:

     first, the dollar amount of the Severance Payment to which you would otherwise
be entitled shall be reduced,

     next, the dollar amount of the Pro-Rated Bonus to which you would otherwise be
entitled shall be reduced,

     next, your RSUs which would otherwise be payable shall be reduced (based on the
amount of RSU COC Payment attributable to such RSUs), with the actual RSUs to be so reduced
to be determined by you,

     next, your Cash Awards which would otherwise be payable shall be reduced (based
on the amount of the Cash Award COC Payment attributable to such Cash Awards), with the
actual Cash Awards to be so reduced to be determined by you, and

     then the number of shares as to which Acquisition-Accelerated and
Severance-Accelerated Options and Stock Appreciation Rights would otherwise be exercisable
shall be reduced (based on the amount of the Option COC Payment attributable to each such
Option and the Stock Appreciation Right COC Payment attributable to each such Stock
Appreciation Right) to the extent necessary to eliminate such excess, with the actual
Options and Stock Appreciation Rights to be so reduced to be determined by you.

     (b) In the event your Involuntary Termination occurs during the Pre-Closing Period, the
Benefit Limit shall be calculated in good faith first at the time of such termination, with such
calculation to be based upon the probability of the consummation of the contemplated Change in
Control within the Pre-Closing Period, and any benefit reduction required by Paragraph 2 above on
the basis of such good-faith calculation shall be applied at that time. The Benefit Limit shall be
recalculated in accordance with this Appendix I as soon as administratively practicable following
the expiration of the Pre-Closing Period. To the extent any Options or RSUs are reduced and
terminated in connection with the initial calculation made at the time of your termination of
employment, those Options and RSUs will not be subsequently restored in connection with the
re-calculation of the Benefit Limit following the expiration of the Pre-Closing Period, even if
those terminated Options and RSUs could have otherwise fallen within the Benefit Limit as so
re-calculated.

3. Resolution Procedures. In the event there is any disagreement between you and the
Company as to whether one or more payments to which you become entitled in connection with the
Change in Control or your subsequent Involuntary Termination constitute COC Payments, Option COC
Payments, RSU COC Payments, Stock Appreciation Right COC Payments, Cash

Appendix I
– Page 2

 

 

Award COC Payments or Other COC Payments or as to the determination of the Present Value thereof,
such dispute will be resolved in accordance with as follows:

     (a) In the event the Treasury Regulations under Code Section 280G (or applicable judicial
decisions) specifically address the status of any such payment or the method of valuation therefor,
the characterization afforded to such payment by the Regulations (or such decisions) will, together
with the applicable valuation methodology, be controlling.

     (b) In the event Treasury Regulations (or applicable judicial decisions) do not address the
status of any payment in dispute, the matter will be submitted for resolution to the Independent
Auditors. The resolution reached by the Independent Auditors will be final and controlling;
provided, however, that if in the judgment of the Independent Auditors, the status of the payment
in dispute can be resolved through the obtainment of a private letter ruling from the Internal
Revenue Service, a formal and proper request for such ruling will be prepared and submitted by the
Independent Auditors, and the determination made by the Internal Revenue Service in the issued
ruling will be controlling. All expenses incurred in connection with the retention of the
Independent Auditors and (if applicable) the preparation and submission of the ruling request shall
be shared equally by you and the Company.

     (c) In the event Treasury Regulations (or applicable judicial decisions) do not address the
appropriate valuation methodology for any payment in dispute, the Present Value thereof will, at
the Independent Auditor’s election, be determined through an independent third-party appraisal, and
the expenses incurred in obtaining such appraisal shall be shared equally by you and the Company.

Appendix I
– Page 3

 

 

EXHIBIT A

CAUSE

     Cause means you have:

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

     For purposes of the definition of Cause, no act or failure to act on your part shall be
considered “willful” unless it is done, or omitted to be done, by you intentionally, not in good
faith and without reasonable belief that your action or omission was in the best interests of the
Company.

     Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted
by the Board or, if applicable, upon the instructions of the Chief Executive Officer or based upon
the advice of counsel for the Company shall be conclusively presumed to be done, or omitted to be
done, by you in good faith and in the best interests of the Company. The termination of your
employment shall not be deemed to be for Cause unless and until, following the expiration of the
14-day grace period set forth above, there shall have been delivered to you a copy of a resolution
of the Board (or, if the Company is a Subsidiary of a publicly traded corporation, the board of
directors of such publicly traded corporation), duly adopted by the affirmative vote of not less
than
66-2/3% of the entire membership of the applicable board of directors (excluding you if you
are a member of such board of directors) at a meeting of such board of directors called and held
for such purpose (after reasonable notice is provided to you and you are given an opportunity,
together with counsel, to be heard before such board of directors), finding that, in the good faith
opinion of such board of directors, you have engaged in conduct which would constitute Cause under
any of paragraphs (a) through (c) above and
specifying the particulars thereof in detail.

Exhibit A – Page 1

 

 

     For purposes of this Exhibit A, “Affiliate” means an entity with whom the Company
would be considered a single employer under Code Sections 414(b) or 414(c); provided, however, that
for purposes of determining a controlled group of corporations under Code Section 414(b) and of
determining trades or businesses (whether or not incorporated) that are under common control for
purposes of Code Section 414(c), the phrase “at least 50% shall be substituted for the phrase “at
least 80%” everywhere it appears in Code Sections 1563(a)(1), (2) and (3) and in treasury
regulation 1.414(c)-2. In addition, where the use of Common Stock for a stock grant under this
Plan is based upon legitimate business criteria, the phrase “at least 20% shall be substituted in
each place noted above. The Administrator may designate a different permissible ownership
threshold percentage, but such percentage may not be made effective for at least 12 months after
adoption of such change and the same designation must apply to all compensatory stock plans of the
Company subject to Code Section 409A.

Exhibit A – Page 2

 

 

EXHIBIT B

CHANGE IN CONTROL

     Change in Control means the happening of any of the events described in paragraphs (a) through
(d) below:

	 	(a)	 	the acquisition by any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) promulgated under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”)) of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 30% or more of either (1) the then-outstanding
shares of common stock of the Company (the “Outstanding Company Common Stock”) or (2)
the combined voting power of the then-outstanding voting securities of the Company
entitled to vote generally in the election of directors (the “Outstanding Company
Voting Securities”); provided, however, that for purposes of this paragraph (a), the
following acquisitions shall not constitute a Change in Control: (A) any acquisition
directly from the Company; (B) any acquisition by the Company or a Subsidiary of the
Company; (C) any acquisition by any employee benefit plan (or related trust) sponsored
or maintained by the Company or a Subsidiary of the Company; (D) any acquisition by any
Perot Stockholder; (E) any acquisition by any entity pursuant to a transaction that
complies with clauses (1), (2) and (3) of paragraph (c) of this definition; or (F) in
respect of any outstanding Awards held by you, any acquisition by you or any group of
Persons including you (or any entity controlled by you or any group of Persons
including you);

	 	(b)	 	individuals who, as of the date hereof, constitute the Board (the “Incumbent
Board”), cease for any reason to constitute at least a majority of the Board; provided,
however, that any individual becoming a director subsequent to the date hereof whose
election, or nomination for election by the Company’s stockholders, was approved by a
vote of a majority of the directors then comprising the Incumbent Board (either by
specific vote or by approval of the proxy statement of the Company in which such person
is named as a nominee for director, without written objection to such nomination) shall
be considered as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial assumption of office
occurs as a result of an actual or threatened election contest with respect to the
election or removal of directors or other actual or threatened solicitation of proxies
or consents by or on behalf of a Person other than the Board until 24 months after such
initial assumption of office;

	 	(c)	 	consummation by the Company of a reorganization, merger, consolidation or sale
or other disposition of all or substantially all of the assets of the Company (a
“Business Combination”), in each case, unless, following such Business Combination:

Exhibit B – Page 1

 

 

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

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

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

Exhibit B – Page 2

 

 

EXHIBIT C

SPECIFIED REASON

     Specified Reason means:

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

Exhibit C – Page 1

 

 

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

     Notwithstanding anything to the contrary set forth above, no event or condition described
above shall constitute Specified Reason unless (i) you, within 120 days after the occurrence of
such event or condition, give the Company written notice specifying in reasonable detail the event
or condition which you believe give rise to Specified Reason, (ii) within 30 days after the
Company’s receipt of such notice (the “Cure Period”), the Company fails to correct or remedy such
event or condition, and (iii) you resign your employment with the Company not more than 120 days
following expiration of the Cure Period.

     For this purposes of this Exhibit C, (i) “long term disability” means you are entitled
to receive benefits from the Company’s Long-Term Disability Plan or another long term disability
plan sponsored by the Company, and (ii) “Retirement” means your retirement in accordance with any
retirement policy generally applicable to the Company’s salaried employees, as in effect
immediately prior to the Change in Control, or any written retirement arrangement established by
the Company and you as in effect immediately prior to the Change in Control.

Exhibit C – Page 2

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