PEROT SYSTEMS CORPORATION

                          2001 LONG-TERM INCENTIVE PLAN

 

 

1.       PURPOSES OF THE PLAN.

 

                  The purposes of this Plan are to provide an incentive to

         eligible employees, officers, independent consultants, directors who

         are also employees or consultants, and advisors of the Company whose

         present and potential contributions are important to the continued

         success of the Company; to encourage ownership in the Company by key

         personnel whose long-term employment is considered essential to the

         Company's continued progress; and to enable the Company to continue to

         enlist and retain the best available personnel to contribute to the

         success of the Company's business and, thereby, to encourage

         Participants to act in the stockholders' interest and share in the

         Company's success.

 

2.       DEFINITIONS.

 

         As used herein, the following definitions shall apply:

 

         (a)      "Administrator" means the Board or any of its Committees

                  administering the Plan in accordance with Section 4 of the

                  Plan.

 

         (b)      "Affiliate" means any entity that is directly or indirectly

                  controlled by the Company or any entity in which the Company

                  has a significant ownership interest as determined by the

                  Administrator, including but not limited to any entity (i) in

                  which the Company, directly or indirectly, owns a 40% or

                  greater voting, equity or other economic interest and (ii) the

                  financial statements of which are consolidated with the

                  financial statements of the Company.

 

         (c)      "Applicable Laws" means the legal requirements relating to the

                  administration of stock plans under U.S. federal, state and

                  local corporate, securities and tax laws and regulations, the

                  New York Stock Exchange or any other stock exchange or

                  quotation system on which the Common Stock is listed or quoted

                  and the analogous applicable laws of any country or

                  jurisdiction where Awards are granted under the Plan.

 

         (d)      "Award" means a Cash Award, Stock Award, Stock Appreciation

                  Right or Option granted to a Participant in accordance with

                  the terms of the Plan.

 

         (e)      "Award Agreement" means an instrument or agreement, in written

                  or electronic form, between the Company and an Awardee

                  evidencing the terms and conditions of an individual Award

                  which instrument or agreement may, but need not, be executed

                  or acknowledged by the Awardee. The Award Agreement is subject

                  to the terms and conditions of the Plan.

 

 

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

 

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

 

         (h)      "Cash Awards" means cash awards granted pursuant to Section 13

                  of the Plan.

 

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

                  as amended.

 

         (j)      "Committee" means a committee of Directors appointed by the

                  Board in accordance with Section 4 of the Plan.

 

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

 

         (l)      "Company" means Perot Systems Corporation, a Delaware

                  corporation, or any successor entity.

 

         (m)      "Consultant" means any person, including an advisor, engaged

                  by the Company or a Subsidiary to render bona fide services

                  (provided that such services are not provided in connection

                  with the offer and sale of securities in capital-raising

                  transactions) to such entity or any person who is an advisor,

                  director or consultant of an Affiliate.

 

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

                  or Consultant.

 

         (o)      "Employee" means a regular employee of the Company, any

                  Subsidiary or any Affiliate, including Officers and Directors,

                  who is treated as an employee in the personnel records of the

                  Company, any Subsidiary or any Affiliate for the relevant

                  period, but shall exclude individuals who are classified by

                  the Company, any Subsidiary or any Affiliate as (A) leased

                  from or otherwise employed by a third party; (B) independent

                  contractors; or (C) contingent, intermittent or temporary,

                  even if any such classification is changed retroactively as a

                  result of an audit, litigation or otherwise. A Participant

                  shall not cease to be an Employee solely as the result of (i)

                  any leave of absence approved by the Participant's Employer,

                  subject to the provisions of Section 6(b), or (ii) transfers

                  between locations of the Participant's Employer or transfers

                  of the Participant's employment among the Company, any

                  Subsidiary or any Affiliate. Neither service as a Director nor

                  payment of a director's fee by the Company shall be sufficient

                  to constitute "employment" by the Company.

 

         (p)      "Employer" means, with respect to an Awardee on the relevant

                  date, the Company or any Subsidiary or Affiliate of which

                  Awardee is an Employee or to which Awardee is a Consultant.

 

 

 

 

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

                  amended.

 

         (r)      "Fair Market Value" means, as of any date, the last reported

                  sale price for one Share on such date (or the most recent

                  prior date for which the last reported sale price is

                  available) on the principal national securities exchange on

                  which the Common Stock is listed or admitted to trading or, if

                  no such reported sale price is available, the average of the

                  closing bid and asked prices for one Share on such exchange on

                  such date (or the most recent prior date for which such prices

                  are available), in either case as reported in The Wall Street

                  Journal or such other source as the Administrator shall

                  determine.

 

         (s)      "Grant Date" means the date selected by the Administrator,

                  from time to time, upon which an Award is granted to a

                  Participant pursuant to this Plan.

 

         (t)      "Incentive Stock Option" means an Option intended to qualify

                  as an incentive stock option within the meaning of Section 422

                  of the Code and the regulations promulgated thereunder.

 

         (u)      "Nonstatutory Stock Option" means an Option not intended to

                  qualify as an Incentive Stock Option.

 

         (v)      "Officer" means a person who is an officer of the Company

                  within the meaning of Section 16 of the Exchange Act and the

                  rules and regulations promulgated thereunder.

 

         (w)      "Option" means an option of any type permitted by Applicable

                  Laws to purchase Shares granted pursuant to this Plan.

 

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

 

         (y)      "Plan" means this 2001 Long-Term Incentive Plan, as amended

                  from time to time.

 

         (z)      "Predecessor Plans" means the Company's (i) 1988 Restricted

                  Stock Plan, (ii) 1989 Pioneer Stock Option Plan, (iii) 1991

                  Stock Option Plan, (iv) 1992 Advisor Stock Option/Restricted

                  Stock Incentive Plan, and (v) 1996 Advisor and Consultant

                  Stock Option/Restricted Stock Incentive Plan.

 

         (aa)     "Restricted Stock" means shares of Common Stock acquired

                  pursuant to a grant of a Stock Award under Section 11 of the

                  Plan.

 

         (bb)     "Severance Date" means the date shown in the Company's, its

                  Subsidiaries' and Affiliates' personnel or other records as

                  the last day an Awardee was a Participant or, with respect to

                  an Awardee who has a Total Disability, the day such Total

 

 

 

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                  Disability ceases to exist unless such Awardee becomes an

                  Employee within a reasonable period determined by the

                  Administrator in its sole discretion.

 

         (cc)     "Share" means a share of the Common Stock, as adjusted in

                  accordance with Section 15 of the Plan.

 

         (dd)     "Stock Appreciation Right" means a right to receive cash equal

                  to the difference between the Fair Market Value of Common

                  Stock on the Grant Date and the Fair Market Value of Common

                  Stock on the date such right is exercised by the Awardee

                  granted pursuant to Section 12 of the Plan.

 

         (ee)     "Stock Awards" means the right to purchase or receive Common

                  Stock pursuant to Section 11 of the Plan.

 

         (ff)     "Subsidiary" means a "subsidiary corporation," whether now or

                  hereafter existing, as defined in Section 424(f) of the Code.

 

         (gg)     "10% Shareholder" means the owner of stock (as determined

                  under Code Section 424(d)) possessing more than 10% of the

                  total combined voting power of all classes of stock of the

                  Company (or any parent or Subsidiary of the Company).

 

         (hh)     "Total Disability" means a mental or physical condition that

                  results in an Employee's continued entitlement to long term

                  disability benefits under a long term disability plan

                  sponsored by the Employee's Employer or the U.S. Social

                  Security Act or any equivalent law governing non-U.S.

                  Employees, provided that such mental or physical condition is

                  not the result of any condition or circumstance that the

                  Administrator, in its sole discretion, determines to have

                  resulted from the Awardee's illegal or reckless use of

                  alcohol, drugs or other chemical substances, or from actions

                  taken by the Awardee with the intention of causing self-injury

                  or with reckless disregard for personal health and safety.

 

3.       STOCK SUBJECT TO THE PLAN.

 

         (a)      Subject to the provisions of Section 15 and Section 6(d) of

                  the Plan, the maximum aggregate number of Shares that may be

                  issued in connection with any combination of Awards under the

                  Plan is (i) the aggregate number of Shares remaining available

                  for grants under the Predecessor Plans on the date this Plan

                  is approved by the Company's stockholders, plus (ii) the

                  additional Shares described in paragraph (b) below. The Shares

                  may be authorized, but unissued, or reacquired Common Stock.

 

         (b)      If an Award or any award or grant under any Predecessor Plan

                  expires or becomes unexercisable without having been exercised

                  in full, the unpurchased Shares which were subject thereto, if

                  any, shall become available for future grant or sale

 

 

 

 

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                  under the Plan (unless the Plan has terminated). Shares of

                  Restricted Stock that are either forfeited or repurchased by

                  the Company shall become available for future grant or sale

                  under the Plan. Shares that are tendered, whether by physical

                  delivery or by attestation, to the Company by the Participant

                  as full or partial payment of the exercise price of any Award

                  or in payment of any applicable withholding for federal,

                  state, city, local or other taxes incurred in connection with

                  the exercise of any Award shall become available for future

                  grant or sale under the Plan.

 

4.       ADMINISTRATION OF THE PLAN.

 

         (a)      Procedure.

 

                  (i)      Multiple Administrative Bodies. The Plan may be

                           administered by different Committees with respect to

                           different groups of Participants.

 

                  (ii)     Section 162(m). To the extent that the Administrator

                           determines it to be desirable to qualify Awards

                           granted hereunder as "performance-based compensation"

                           within the meaning of Section 162(m) of the Code, the

                           Plan shall be administered by a Committee of two or

                           more "outside directors" within the meaning of

                           Section 162(m) of the Code.

 

                  (iii)    Rule 16b-3. To the extent desirable to qualify

                           transactions hereunder as exempt under Rule 16b-3

                           promulgated under the Exchange Act, the transactions

                           contemplated hereunder shall be structured to satisfy

                           the requirements for exemption under Rule 16b-3.

 

                  (iv)     Other Administration. The Board may delegate to the

                           Executive Committee of the Board or the chief

                           executive officer of the Company the power to approve

                           Awards to Participants who are not (A) subject to

                           Section 16 of the Exchange Act or (B) at the time of

                           such approval, "covered employees" under Section

                           162(m) of the Code.

 

         (b)      Powers of the Administrator. Subject to the provisions of the

                  Plan, and in the case of a Committee or the chief executive

                  officer of the Company, subject to the specific duties

                  delegated by the Board to such Committee or officer, the

                  Administrator shall have the authority, in its discretion:

 

                  (i)      to select the Participants to whom Awards may be

                           granted hereunder;

 

                  (ii)     to determine the number of shares of Common Stock to

                           be covered by each Award granted hereunder;

 

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

 

 

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                  (iv)     to determine the terms and conditions, not

                           inconsistent with the terms of the Plan, of any Award

                           granted hereunder. Such terms and conditions include,

                           but are not limited to, the exercise price, the time

                           or times when an Award may be exercised (which may or

                           may not be based on performance criteria), any

                           vesting acceleration or waiver of forfeiture

                           restrictions, and any restriction or limitation

                           regarding any Award or the Shares relating thereto,

                           based in each case on such factors as the

                           Administrator, in its sole discretion, shall

                           determine;

 

                  (v)      to construe and interpret the terms of the Plan and

                           Awards granted pursuant to the Plan;

 

                  (vi)     to adopt rules and procedures relating to the

                           operation and administration of the Plan to

                           accommodate the specific requirements of local laws

                           and procedures. Without limiting the generality of

                           the foregoing, the Administrator is specifically

                           authorized (A) to adopt the rules and procedures

                           regarding the conversion of local currency,

                           withholding procedures and handling of stock

                           certificates which vary with local requirements, and

                           (B) to adopt sub-plans and Plan addenda as the

                           Administrator deems desirable, to accommodate non-US

                           laws, regulations and practice, including but not

                           limited to non-US tax laws and regulations;

 

                  (vii)    to prescribe, amend and rescind rules and regulations

                           relating to the Plan, including rules and regulations

                           relating to sub-plans and Plan addenda;

 

                  (viii)   to modify or amend each Award, including the

                           discretionary authority to extend the

                           post-termination exercisability period of Options

                           longer than is otherwise provided for in the Plan,

                           provided, however, that any such amendment is subject

                           to Section 16(c) of the Plan and may not impair any

                           outstanding Award unless agreed to in writing by the

                           Participant;

 

                  (ix)     to allow Participants to satisfy withholding tax

                           obligations by electing to have the Company withhold

                           from the Shares to be issued upon exercise of an

                           Award that number of Shares having a Fair Market

                           Value equal to the amount required to be withheld.

                           The Fair Market Value of the Shares to be withheld

                           shall be determined on the date that the amount of

                           tax to be withheld is to be determined. All elections

                           by an Awardee to have Shares withheld for this

                           purpose shall be made in such form and under such

                           conditions as the Administrator may deem necessary or

                           advisable;

 

                  (x)      to authorize conversion or substitution under the

                           Plan of any or all outstanding stock options or

                           outstanding stock appreciation rights held by

                           employees, directors, officers, consultants, advisors

                           or other service

 

 

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                           providers of an entity acquired by the Company (the

                           "Conversion Options"). Any conversion or substitution

                           shall be effective as of the close of the merger or

                           acquisition. The Conversion Options may be

                           Nonstatutory Stock Options or Incentive Stock

                           Options, as determined by the Administrator;

                           provided, however, that with respect to the

                           conversion of stock appreciation rights in the

                           acquired entity, the Conversion Options shall be

                           Nonstatutory Stock Options. Unless otherwise

                           determined by the Administrator at the time of

                           conversion or substitution, all Conversion Options

                           shall have the same terms and conditions as Options

                           generally granted by the Company under the Plan;

 

                  (xi)     to provide, upon direction by the Board in its sole

                           discretion in the event there is a change of control

                           of the Company or any Subsidiary, as determined by

                           the Board, for the (A) assumption or substitution of,

                           or adjustment to, each outstanding Award; (B)

                           acceleration of the vesting of Options and the

                           termination of any restrictions on Cash Awards or

                           Stock Awards; and/or (C) the cancellation of Awards

                           for a cash payment to the Awardee;

 

                  (xii)    to delegate to any officer of the Company any of its

                           powers hereunder, to the extent permitted by

                           Applicable Laws, and to authorize any person to

                           execute on behalf of the Company any instrument

                           required to effect the grant of an Award previously

                           granted under this Plan; and

 

                  (xiii)   to make all other determinations deemed necessary or

                           advisable for administering the Plan and any Award

                           granted hereunder.

 

         (c)      Effect of Administrator's Decision. The Administrator's

                  decisions, determinations and interpretations shall be final

                  and binding on all Participants.

 

5.       ELIGIBILITY.

 

         One or more Awards may be granted to Participants, provided, however,

         that Incentive Stock Options may be granted only to Employees of the

         Company or any Subsidiary.

 

6.       AWARD LIMITATIONS.

 

         (a)      Each Option shall be designated in the Award Agreement as

                  either an Incentive Stock Option or a Nonstatutory Stock

                  Option. However, notwithstanding such designation, to the

                  extent that the aggregate Fair Market Value of the Shares with

                  respect to which Incentive Stock Options are exercisable for

                  the first time by the Participant during any calendar year

                  (under all plans of the Company and any Subsidiary) exceeds

                  $100,000, such Options shall be treated as Nonstatutory Stock

                  Options. For purposes of this Section 6(a), Incentive Stock

                  Options shall be

 

 

 

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                  taken into account in the order in which they were granted.

                  The Fair Market Value of the Shares shall be determined as of

                  the time the Option with respect to such Shares is granted.

 

         (b)      For purposes of Incentive Stock Options, no leave of absence

                  may exceed 90 days, unless reemployment upon expiration of

                  such leave is guaranteed by statute or contract. If

                  reemployment upon expiration of a leave of absence approved by

                  the applicable Employer is not so guaranteed, on the 91st day

                  of such leave an Awardee's employment with the Company shall

                  be deemed terminated for Incentive Stock Option purposes and

                  any Incentive Stock Option held by the Awardee shall cease to

                  be treated as an Incentive Stock Option and shall be treated

                  for tax purposes as a Nonstatutory Stock Option three months

                  thereafter.

 

         (c)      No Participant shall have any claim or right to be granted an

                  Award and the grant of any Award shall not be construed as

                  giving an Awardee the right to continue in the employ or hire

                  of the Company, its Subsidiaries or Affiliates. Further, the

                  Company, its Subsidiaries and Affiliates expressly reserve the

                  right, at any time, to dismiss a Participant at any time

                  without liability or any claim under the Plan, except as

                  provided herein or in any Award Agreement entered into

                  hereunder.

 

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

 

                  (i)      No Participant shall be granted, in any fiscal year

                           of the Company, Options to purchase more than

                           2,000,000 Shares.

 

                  (ii)     If an Option is cancelled, forfeited, or lapses in

                           the same fiscal year of the Company in which it was

                           granted (other than in connection with a transaction

                           described in Section 15), the cancelled, forfeited or

                           lapsed Option will be counted against the limits set

                           forth in subsection (i).

 

                  (iii)    The foregoing limitations shall be adjusted

                           proportionately in connection with any change in the

                           Company's capitalization as described in Section 15.

 

         (e)      The following limitations shall apply to grants of Awards to

                  an Employee who is not exempt from the overtime pay provisions

                  of the Fair Labor Standards Act of 1938, as amended (a

                  "Non-Exempt Employee"):

 

                  (i)      Options or Stock Appreciation Rights (but not

                           Restricted Stock) may be granted under this Plan to

                           Non-Exempt Employees.

 

                  (ii)     Options or Stock Appreciation Rights granted to

                           Non-Exempt Employees must comply with the exercise

                           price and exercise period restrictions set forth

                           below, and other provisions of the "Worker Economic

                           Opportunity

 

 

 

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                           Act" of 2000, P.L. 106-202, or other provisions of

                           law, sufficiently to insure that such Options, and

                           any profits, gains or income resulting from such

                           Options, are excluded from such Non-Exempt Employee's

                           overtime pay calculations.

 

                  (iii)    No Option granted to a Non-Exempt Employee may be

                           exercisable less than six months after the effective

                           date of the grant of such Option, except in the case

                           of death, Total Disability, retirement or change in

                           control.

 

7.       TERM OF PLAN.

 

         Subject to Section 21 of the Plan, the Plan shall become effective upon

         its adoption by the Board and its approval by the Company's

         shareholders. It shall continue in effect for a term of 10 years from

         the later of the date the Plan or any amendment to add shares to the

         Plan is adopted by the Board and approved by the stockholders unless

         terminated earlier under Section 16 of the Plan.

 

8.       TERM OF AWARD.

 

         The term of each Award shall be determined by the Administrator and

         stated in the Award Agreement. In the case of an Incentive Stock

         Option, the term shall be 10 years (five years if the Awardee is a 10%

         Shareholder) from the Grant Date or such shorter period as may be

         provided in the Award Agreement. In the case of an Option other than an

         Incentive Stock Option, the term shall be 10 years from the Grant Date

         or such shorter term as may be provided in the Award Agreement;

         provided that the term may be up to 11 years in other circumstances

         deemed appropriate in the discretion of the Administrator.

 

9.       OPTION EXERCISE PRICE AND CONSIDERATION.

 

         (a)      Exercise Price. The per share exercise price for the Shares to

                  be issued pursuant to exercise of an Option shall be

                  determined by the Administrator, subject to the following:

 

                  (i)      In the case of an Incentive Stock Option the per

                           Share exercise price shall be no less than 100% of

                           the Fair Market Value on the Grant Date; provided

                           that if any Participant to whom an Incentive Stock

                           Option is granted is a 10% Shareholder, then the per

                           Share exercise price shall be no less than 110% of

                           the Fair Market Value on the Grant Date.

 

                  (ii)     In the case of a Nonstatutory Stock Option, the per

                           Share exercise price shall be no less than 85% of the

                           Fair Market Value on the Grant Date. In the case of a

                           Nonstatutory Stock Option intended to qualify as

                           "performance-based compensation" within the meaning

                           of Section 162(m)

 

 

 

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                           of the Code, the per Share exercise price shall be no

                           less than 100% of the Fair Market Value on the Grant

                           Date.

 

                  (iii)    The exercise price per Share for a Nonstatutory Stock

                           Option granted to a Non-Exempt Employee must be not

                           less than 85% of the Fair Market Value per Share on

                           the effective date of grant of the Option.

 

                  (iv)     Notwithstanding the foregoing, at the Administrator's

                           discretion, Conversion Options (as defined in Section

                           4(b)(x)) may be granted with a per Share exercise

                           price of less than 100% of the Fair Market Value on

                           the Grant Date.

 

         (b)      Vesting Period and Exercise Dates. At the time an Option is

                  granted, the Administrator shall fix the period within which

                  the Option may vest and be exercised and shall determine any

                  conditions that must be satisfied before the Option may be

                  exercised.

 

         (c)      Form of Consideration. The Administrator shall determine the

                  acceptable form of consideration for exercising an Option,

                  including the method of payment. In the case of an Incentive

                  Stock Option, the Administrator shall determine the acceptable

                  form of consideration at the Grant Date. Acceptable forms of

                  consideration may, but except for cash, check and wire

                  transfers are not required to, include:

 

                  (i)      cash;

 

                  (ii)     check or wire transfer (denominated in U.S. Dollars

                           or other currency the Administrator determines is

                           acceptable);

 

                  (iii)    other Shares which (A) in the case of Shares acquired

                           upon exercise of an Option, have been owned by the

                           Participant for more than six months on the date of

                           surrender, and (B) have a Fair Market Value on the

                           date of surrender equal to the aggregate exercise

                           price of the Shares as to which said Option shall be

                           exercised;

 

                  (iv)     consideration received by the Company under a

                           cashless exercise program implemented by the Company

                           in connection with the Plan;

 

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

                           or

 

                  (vi)     such other consideration and method of payment for

                           the issuance of Shares to the extent permitted by

                           Applicable Laws.

 

 

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10.      EXERCISE OF OPTION.

 

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

 

                  (i)      Any Option granted hereunder shall be exercisable

                           according to the terms of the Plan and at such times

                           and under such conditions as determined by the

                           Administrator and set forth in the respective Award

                           Agreement.

 

                  (ii)     An Option granted hereunder shall continue to vest

                           during any authorized leave of absence and such

                           Option may be exercised to the extent vested during

                           such leave of absence.

 

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

 

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

                           receives:

 

                           (A)      written or electronic notice of exercise (in

                                    accordance with the Award Agreement or the

                                    procedures established by the Administrator

                                    from time to time) from a person entitled to

                                    exercise the Option;

 

                           (B)      full payment for the Shares with respect to

                                    which the related Option is exercised; and

 

                           (C)      full payment of all applicable taxes

                                    required to be withheld by the Company or

                                    the Awardee's employer in connection with

                                    such exercise.

 

                  Shares issued upon exercise of an Option shall be issued in

                  the name of the Awardee or, if requested by the Awardee, in

                  the name of the Awardee and his or her spouse, or in the name

                  of any permitted transferee. Until the Shares are issued (as

                  evidenced by the appropriate entry on the books of the Company

                  or of a duly authorized transfer agent of the Company), no

                  right to vote or receive dividends or any other rights as a

                  stockholder shall exist with respect to the Shares subject to

                  an Option, notwithstanding the exercise of the Option. The

                  Company shall issue (or cause to be issued) such Shares

                  promptly after the Option is exercised. No adjustment will be

                  made for a dividend or other right for which the record date

                  is prior to the date the Shares are issued, except as provided

                  in Section 15 of the Plan. Exercising an Option in any manner

                  shall decrease the number of Shares thereafter available, both

                  for purposes of the Plan and for sale under the Option, by the

                  number of Shares as to which the Option is exercised.

 

         (b)      Termination of Employment. Unless otherwise provided in the

                  Award Agreement, if an Awardee ceases to be an Employee, other

                  than as a result of circumstances

 

 

 

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                  described in Sections 10(c), (d), or (e) below, the Awardee's

                  Options shall (i) cease to vest immediately upon the Awardee's

                  Severance Date and (ii) terminate on the earlier of 90 days

                  after the Awardee's Severance Date or the expiration of the

                  term of such Option. If the Awardee does not exercise any

                  Shares covered by the vested portion of his or her Option, the

                  unexercised Shares covered by the vested portion of such

                  Option shall revert to the Plan on the earlier of 90 days

                  after the Awardee's Severance Date or the expiration of the

                  term of such Option.

 

         (c)      Total Disability. Unless otherwise provided in the Award

                  Agreement, if an Awardee ceases to be an Employee as a result

                  of the Awardee's Total Disability, the Awardee's Options shall

                  (i) continue to vest while the Total Disability continues to

                  exist and (ii) terminate on the earlier of 90 days after the

                  Awardee's Severance Date unless prior to such date the Awardee

                  becomes an Employee or the expiration of the term of such

                  Option. On the Awardee's Severance Date, the Shares covered by

                  the unvested portion of his or her Option shall revert to the

                  Plan. If the Awardee does not exercise any Shares covered by

                  the vested portion of his or her Option, the unexercised

                  Shares covered by the vested portion of such Option shall

                  revert to the Plan on the earlier of 90 days after the

                  Awardee's Severance Date or the expiration of the term of such

                  Option. The Option may be exercised by the guardian of

                  Awardee's property if one has been appointed.

 

         (d)      Retirement. Unless otherwise provided in the Award Agreement,

                  if an Awardee ceases to be an Employee as a result of the

                  Awardee's retirement on or after attaining the age of 65

                  years, or otherwise in accordance with his or her Employer's

                  retirement policy, the Awardee's Options shall (i) cease to

                  vest immediately upon the Awardee's Severance Date and (ii)

                  terminate on the earlier of one year after the Awardee's

                  Severance Date or the expiration of the term of such Option.

                  On the Awardee's Severance Date, the Shares covered by the

                  unvested portion of his or her Option shall revert to the

                  Plan. If the Awardee does not exercise any Shares covered by

                  the vested portion of his or her Option, the unexercised

                  Shares covered by the vested portion of such Option shall

                  revert to the Plan on the date such Option terminates.

 

         (e)      Death. Unless otherwise provided in the Award Agreement, if an

                  Awardee ceases to be an Employee as a result of his or her

                  death, or dies while the Awardee has a Total Disability to

                  which Section 10(c) applies, the Awardee's Option shall (i)

                  immediately vest with respect to all Shares covered by such

                  Option, and (ii) terminate on the expiration date of such

                  Option. The Option may be exercised by the beneficiary

                  designated by the Awardee (as provided in Section 17), the

                  executor or administrator of the Awardee's estate or, if none,

                  by the person(s) entitled to exercise the Option under the

                  Awardee's will or the laws of descent or distribution. If such

                  Option is not exercised with respect to any Shares covered by

                  such Option, the unexercised Shares shall revert to the Plan

                  on the expiration of the term of such Option.

 

 

 

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         (f)      Buyout Provisions. At any time, the Administrator may, but

                  shall not be required to, offer to buy out for a payment in

                  cash or Shares an Option previously granted based on such

                  terms and conditions as the Administrator shall establish and

                  communicate to the Awardee at the time that such offer is

                  made.

 

11.      STOCK AWARDS.

 

         (a)      General. Stock Awards may be issued either alone, in addition

                  to, or in tandem with other Awards granted under the Plan,

                  except to Non-Exempt Employees. After the Administrator

                  determines that it will offer a Stock Award under the Plan, it

                  shall advise the Participant in writing or electronically, by

                  means of an Award Agreement, of the terms, conditions and

                  restrictions related to the offer, including the number of

                  Shares that the Participant shall be entitled to receive or

                  purchase, the price to be paid, if any, and, if applicable,

                  the time within which the Participant must accept such offer.

                  The offer shall be accepted by execution of an Award Agreement

                  in the form determined by the Administrator. The Administrator

                  will require that all Shares subject to a right of repurchase

                  or forfeiture be held in escrow until such repurchase right or

                  risk of forfeiture lapses.

 

         (b)      Termination of Employment. Unless the Administrator determines

                  otherwise, the Award Agreement shall provide for the

                  forfeiture of the unvested Restricted Stock upon the Awardee

                  ceasing to be an Employee except as provided below in Sections

                  11(c), (d) and (e). To the extent that the Awardee purchased

                  the Restricted Stock, the Company shall have a right to

                  repurchase the unvested Restricted Stock at the lesser of (i)

                  the Fair Market Value or (ii) the original price paid by the

                  Awardee, on or after the Awardee's Severance Date, except as

                  provided below in Sections 11(c), (d) and (e).

 

         (c)      Total Disability. Unless otherwise provided for by the

                  Administrator in the Award Agreement, if an Awardee ceases to

                  be an Employee as a result of the Awardee's Total Disability,

                  (i) the Awardee's Stock Award shall continue to vest while the

                  Awardee's Total Disability continues to exist, and (ii) to the

                  extent that the Awardee purchased the Restricted Stock, the

                  Company shall have a right to repurchase the unvested

                  Restricted Stock at the lesser of (A) the Fair Market Value or

                  (B) the original price paid by the Awardee, on or after the

                  Awardee's Severance Date.

 

         (d)      Retirement of Awardee. Unless otherwise provided for by the

                  Administrator in the Award Agreement, if an Awardee ceases to

                  be an Employee as a result of the Awardee's retirement on or

                  after attaining the age of 65 years, or otherwise in

                  accordance with his or her Employer's retirement policy, the

                  Awardee's Stock Award shall (i) cease to vest immediately upon

                  the Awardee's Severance Date, and (ii) to the extent that the

                  Awardee purchased the Restricted Stock, the

 

 

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                  Company shall have a right to repurchase the unvested

                  Restricted Stock at the lesser of (A) the Fair Market Value,

                  or (B) the original price paid by the Awardee, on or after the

                  Awardee's Severance Date.

 

         (e)      Death of Awardee. Unless otherwise provided for by the

                  Administrator in the Award Agreement, if an Awardee ceases to

                  be an Employee as a result of his or her death, or dies while

                  the Awardee has a Total Disability to which Section 11(c)

                  applies, the Awardee's Stock Award shall immediately vest with

                  respect to all Shares covered by such Stock Award. The vested

                  portion of the Stock Award shall be delivered to the

                  beneficiary designated by the Participant (as provided in

                  Section 17), the executor or administrator of the

                  Participant's estate or, if none, by the person(s) entitled to

                  receive the vested Stock Award under the Participant's will or

                  the laws of descent or distribution.

 

         (f)      Rights as a Stockholder. Unless otherwise provided for by the

                  Administrator in the Award Agreement, once the Stock Award is

                  accepted, the Awardee shall have the rights equivalent to

                  those of a stockholder, and shall be a stockholder when his or

                  her acceptance of the Stock Award is entered upon the records

                  of the duly authorized transfer agent of the Company.

 

12.      STOCK APPRECIATION RIGHTS.

 

         (a)      General. The Committee, in its discretion, may grant Stock

                  Appreciation Rights to Participants. The following provisions

                  apply to such Stock Appreciation Rights.

 

         (b)      Grant of Stock Appreciation Right. The Stock Appreciation

                  Right shall entitle the holder upon exercise to an amount for

                  each Share to which such exercise relates equal to the excess

                  of (i) the Fair Market Value on the date of exercise over (i)

                  the base or exercise price per Share set forth in the

                  applicable Award Agreement. Notwithstanding the foregoing, the

                  Committee may place limits on the amount that may be paid upon

                  exercise of a Stock Appreciation Right.

 

         (c)      Forfeiture of Option. If a Stock Appreciation Right is granted

                  in tandem with an Option, upon exercise of such Stock

                  Appreciation Right, the related Option shall no longer be

                  exercisable and shall be deemed canceled to the extent of such

                  exercise.

 

         (d)      Form of Payment. The Company's obligation arising upon the

                  exercise of a Stock Appreciation Right may be paid currently

                  or on a deferred basis with such interest or earnings

                  equivalent as may be determined by the Committee, and may be

                  paid in Common Stock or in cash, or in any combination of

                  Common Stock and cash, as the Committee, in its sole

                  discretion, may determine.

 

 

 

 

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         (e)      Other Provisions. The Award Agreement evidencing a Stock

                  Appreciation Right shall contain such other terms, provisions

                  and conditions not inconsistent with the Plan as may be

                  determined by the Committee in its sole discretion. The

                  provisions of such Awards need not be the same with respect to

                  each recipient.

 

13.      CASH AWARDS.

 

         Cash Awards may be granted either alone, in addition to, or in tandem

         with other Awards granted under the Plan. After the Administrator

         determines that it will offer a Cash Award, it shall advise the

         Participant in writing or electronically, by means of an Award

         Agreement, of the terms, conditions and restrictions related to the

         Cash Award.

 

14.      NON-TRANSFERABILITY OF AWARDS.

 

         Unless determined otherwise by the Administrator with respect to any

         Award other than an Incentive Stock Option, an Award may not be sold,

         pledged, assigned, hypothecated, transferred, or disposed of in any

         manner other than by beneficiary designation, will or by the laws of

         descent or distribution and may be exercised, during the lifetime of

         the Awardee, only by the Awardee. If the Administrator makes an Award

         transferable, the Award Agreement for such Award shall contain such

         additional terms and conditions as the Administrator deems appropriate.

 

15.      ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR DISSOLUTION OR

         LIQUIDATION.

 

         (a)      Changes In Capitalization. Subject to any required action by

                  the stockholders of the Company, the number and kind of shares

                  of Common Stock covered by each outstanding Award, and the

                  number and kind of shares of Common Stock which have been

                  authorized for issuance under the Plan but as to which no

                  Awards have yet been granted or which have been returned to

                  the Plan upon cancellation or expiration of an Award, as well

                  as the price per share of Common Stock covered by each such

                  outstanding Award, shall be proportionately adjusted for any

                  increase or decrease in the number or kind of issued shares of

                  Common Stock resulting from a stock split, reverse stock

                  split, stock dividend, combination or reclassification of the

                  Common Stock, or any other increase or decrease in the number

                  of issued shares of Common Stock effected without receipt of

                  consideration by the Company; provided, however, that

                  conversion of any convertible securities of the Company shall

                  not be deemed to have been "effected without receipt of

                  consideration." Such adjustment shall be made by the Board,

                  whose determination in that respect shall be final, binding

                  and conclusive. Except as expressly provided herein, no

                  issuance by the Company of shares of stock of any class, or

                  securities convertible into shares of stock of any class,

                  shall affect, and no adjustment by reason thereof shall be

                  made with respect to, the number or price of shares of Common

                  Stock subject to an Award.

 

 

 

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         (b)      Dissolution or Liquidation. In the event of the proposed

                  dissolution or liquidation of the Company, the Administrator

                  shall notify each Awardee as soon as practicable prior to the

                  effective date of such proposed transaction. The Administrator

                  in its discretion may provide for an Option to be fully vested

                  and exercisable until 10 days prior to such transaction. In

                  addition, the Administrator may provide that any restrictions

                  on any Award shall lapse prior to the transaction, provided

                  the proposed dissolution or liquidation takes place at the

                  time and in the manner contemplated. To the extent it has not

                  been previously exercised, an Award will terminate immediately

                  prior to the consummation of such proposed transaction.

 

         (c)      Merger or Asset Sale. In the event there is a change of

                  control of the Company or any Subsidiary, as determined by the

                  Board, the Board may, in its discretion, (A) provide for the

                  assumption or substitution of, or adjustment to, each

                  outstanding Award; (B) accelerate the vesting of Options and

                  terminate any restrictions on Cash Awards or Stock Awards; and

                  (C) provide for the cancellation of Awards for a cash payment

                  to the Awardee.

 

16.      AMENDMENT AND TERMINATION OF THE PLAN.

 

         (a)      Amendment and Termination. The Board may at any time amend,

                  alter, suspend or terminate the Plan and the Administrator may

                  at any time, subject to the authority set forth in Section 4,

                  adopt subordinate arrangements, policies and programs in each

                  case, in such manner as may be necessary to enable the Plan to

                  achieve its stated purposes in any jurisdiction outside the

                  United States in a tax-efficient manner and in compliance with

                  local rules and regulations by adopting schedules of

                  provisions to be applicable to awards granted in such

                  jurisdiction.

 

         (b)      Stockholder Approval. The Company shall obtain stockholder

                  approval of any Plan amendment to the extent necessary or

                  desirable to comply with Applicable Laws.

 

         (c)      Effect of Amendment or Termination. No amendment, alteration,

                  suspension or termination of the Plan shall impair the rights

                  of any Award, unless mutually agreed otherwise between the

                  Awardee and the Administrator, which agreement must be in

                  writing and signed by the Awardee and the Company. Termination

                  of the Plan shall not affect the Administrator's ability to

                  exercise the powers granted to it hereunder with respect to

                  Awards granted under the Plan prior to the date of such

                  termination.

 

17.      DESIGNATION OF BENEFICIARY.

 

         (a)      An Awardee may file a written designation of a beneficiary who

                  is to receive the Awardee's rights pursuant to his or her

                  Award or the Awardee may include his or

 

 

 

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                  her Awards in an omnibus beneficiary designation for all

                  benefits under the Plan. To the extent that an Awardee has

                  completed a designation of beneficiary while employed with the

                  Company or its Subsidiaries or Affiliates, such beneficiary

                  designation shall remain in effect with respect to any Award

                  hereunder until changed by the Awardee.

 

         (b)      Such designation of beneficiary may be changed by the Awardee

                  at any time by written notice. In the event of the death of an

                  Awardee and in the absence of a beneficiary validly designated

                  under the Plan who is living at the time of such Awardee's

                  death, the Company shall allow the executor or administrator

                  of the estate of the Awardee to exercise the Award, or if no

                  such executor or administrator has been appointed (to the

                  knowledge of the Company), the Company, in its discretion, may

                  allow the spouse or one or more dependents or relatives of the

                  Awardee to exercise the Award.

 

18.      LEGAL COMPLIANCE.

 

         Shares shall not be issued pursuant to the exercise of an Option or

         Stock Award unless the exercise of such Option or Stock Award and the

         issuance and delivery of such Shares shall comply with Applicable Laws

         and shall be further subject to the approval of counsel for the Company

         with respect to such compliance.

 

19.      INABILITY TO OBTAIN AUTHORITY.

 

         To the extent the Company is unable, or the Administrator deems it

         infeasible or commercially impracticable, to obtain authority from any

         regulatory body having jurisdiction, which authority is deemed by the

         Company's counsel to be necessary to the lawful issuance and sale of

         any Shares hereunder, the Company shall be relieved of any liability

         with respect to the failure to issue or sell such Shares as to which

         such requisite authority shall not have been obtained.

 

20.      RESERVATION OF SHARES.

 

         The Company, during the term of this Plan, will at all times reserve

         and keep available such number of Shares as shall be sufficient to

         satisfy the requirements of the Plan.

 

21.      STOCKHOLDER APPROVAL.

 

         The Plan shall be subject to approval by the stockholders of the

         Company within 12 months of the date the Plan is adopted. Such

         stockholder approval shall be obtained in the manner and to the degree

         required under Applicable Laws.

 

 

 

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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.