<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
Perot Systems Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-----------------------------------------------------------------------
(3) Filing Party:
-----------------------------------------------------------------------
(4) Date Filed:
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<PAGE> 2
PEROT SYSTEMS CORPORATION
MARCH 31, 2000
To THE STOCKHOLDERS OF PEROT SYSTEMS CORPORATION:
You are invited to attend the Annual Meeting of Stockholders (the "Annual
Meeting") of Perot Systems Corporation which will be held at the Hotel Inter-
Continental, 15201 Dallas Parkway, Addison, Texas on Wednesday, May 10, 2000, at
2:00 p.m., local time.
Details of the business to be conducted at the Annual Meeting are given in
the attached Notice of Annual Meeting and Proxy Statement.
Whether or not you plan to attend the Annual Meeting, please complete,
sign, date, and return the enclosed proxy promptly in the accompanying reply
envelope. If you decide to attend the Annual Meeting and wish to change your
proxy vote, you may do so automatically by voting in person at the Annual
Meeting.
We look forward to seeing you at the Annual Meeting.
/s/ ROSS PEROT
Ross Perot
Chairman, President, and CEO
YOUR VOTE IS IMPORTANT
In order to assure your representation at the Annual Meeting, we request
that you complete, sign, and date the enclosed proxy as promptly as possible and
return it in the enclosed envelope (to which no postage need be affixed if
mailed in the United States).
<PAGE> 3
PEROT SYSTEMS CORPORATION
12404 PARK CENTRAL DRIVE
DALLAS, TEXAS 75251
---------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 10, 2000
---------------------
The Annual Meeting of Stockholders (the "Annual Meeting") of Perot Systems
Corporation (the "Company") will be held at the Hotel Inter-Continental, 15201
Dallas Parkway, Addison, Texas on Wednesday, May 10, 2000, at 2:00 p.m., local
time, for the following purposes:
1. To elect six nominees to serve as Directors of the Company until
the next Annual Meeting and until their successors have been elected and
qualified;
2. To approve the division of the 1999 Employee Stock Purchase Plan
into plans for United States associates and non-United States associates;
3. To ratify the selection of PricewaterhouseCoopers, LLP as the
Company's independent accountants for the fiscal year ending December 31,
2000; and
4. To act upon such other matters as may properly come before the
Annual Meeting or any adjournments or postponements thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice. The record date for determining those
stockholders who will be entitled to notice of, and to vote at, the Annual
Meeting and at any adjournment or postponement thereof is March 20, 2000 (the
"Record Date"). The stock transfer books of the Company will not be closed
between the Record Date and the date of the Annual Meeting. A list of
stockholders entitled to vote at the Annual Meeting will be available for
inspection at the offices of the Company.
Whether or not you plan to attend the Annual Meeting, please complete,
date, sign, and return the enclosed proxy promptly in the accompanying reply
envelope. Your proxy may be revoked at any time prior to the Annual Meeting. If
you decide to attend the Annual Meeting and wish to change your proxy vote, you
may do so automatically by voting in person at the Annual Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ PETER ALTABEF
Peter Altabef
Secretary
Dallas, Texas
March 31, 2000
<PAGE> 4
PEROT SYSTEMS CORPORATION
---------------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
---------------------
This Proxy Statement (the "Proxy Statement") and related proxy materials
are furnished in connection with the solicitation of proxies by the Board of
Directors (the "Board of Directors" or "Board") of Perot Systems Corporation, a
Delaware corporation (the "Company"), for the Annual Meeting (the "Annual
Meeting") of the Stockholders of the Company (the "Stockholders") to be held at
the Hotel Inter-Continental, 15201 Dallas Parkway, Addison, Texas on Wednesday,
May 10, 2000, at 2:00 p.m. local time, and at any adjournments or postponements
of the Annual Meeting. These proxy materials were first mailed to Stockholders
on or about March 31, 2000.
PURPOSE OF MEETING
The specific proposals to be considered and acted upon at the Annual
Meeting are summarized in the accompanying Notice of Annual Meeting of
Stockholders. Each proposal is described in more detail in this Proxy Statement.
VOTING RIGHTS AND SOLICITATION
VOTING
The Company's Class A Common Stock, par value $.01 per share ("Class A
Common Stock"), is the only type of security entitled to vote at the Annual
Meeting. On March 20, 2000, the record date (the "Record Date") for
determination of Stockholders entitled to vote at the Annual Meeting, there were
91,955,492 shares of Class A Common Stock ("Class A Shares") outstanding. As to
all matters brought before the Annual Meeting, each Stockholder of record on the
Record Date is entitled to one vote for each Class A Share held by such
Stockholder on the Record Date. Abstentions and broker non-votes will be counted
for purposes of determining whether a quorum is present and for the purposes of
determining the affirmative vote necessary to approve a proposal. An abstention
from voting on a proposal will have the same legal effect as a vote cast against
such proposal. Broker non-votes are not counted toward a nominee's total and
will not be treated as entitled to vote on other proposals before the Annual
Meeting. The Company does not have cumulative voting for the election of
directors.
PROXIES
Whether or not you are able to attend the Annual Meeting, you are urged to
complete and return the enclosed proxy, which is solicited by the Board of
Directors and which will be voted as you direct on your proxy when properly
completed. In the event no directions are specified, such proxies will be voted
FOR the nominees of the Board of Directors (Proposal 1), FOR approval of the
division of the 1999 Employee Stock Purchase Plan into plans for United States
associates and non-United States associates (Proposal 2), FOR the ratification
of the selection of PricewaterhouseCoopers LLP ("PricewaterhouseCoopers") as the
independent accountants for the Company for the fiscal year ending December 31,
2000 (Proposal 3), and in the discretion of the proxy holders as to other
matters that may properly come before the Annual Meeting. You may revoke or
change your proxy at any time before the Annual Meeting. To do this, send a
written notice of revocation or another signed proxy with a later date to the
Secretary of the Company at the Company's principal executive offices located at
12404 Park Central Drive, Dallas, Texas 75251, before the beginning of the
Annual Meeting. You may also revoke your proxy by attending the Annual Meeting
and voting in person.
<PAGE> 5
SOLICITATION OF PROXIES
The Company will bear the entire cost of solicitation, including the
preparation, assembly, printing, and mailing of this Proxy Statement, the proxy,
and any additional soliciting material furnished to Stockholders. Copies of
solicitation material will be furnished to fiduciaries and custodians holding
shares in their names that are beneficially owned by others. The original
solicitation of proxies will be by mail or, in cases where the Stockholder has
previously consented to electronic delivery, by electronic means. The original
solicitation may be supplemented by a solicitation by telephone, telegram, or
other means by directors, officers, or employees of the Company. No additional
compensation will be paid to these individuals for any such services. The
Company does not presently intend to solicit proxies by means other than those
described above.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
GENERAL
The Company is proposing the reelection of all of the current directors of
the Company. The nominees and their positions and offices with the Company are
set forth in the table below. The proxy holders intend to vote all proxies
received by them in the accompanying form for the nominees listed below unless
otherwise instructed. In the event any nominee is unable or declines to serve as
a director at the time of the Annual Meeting, the proxies will be voted for any
nominee who may be designated by the present Board of Directors to fill the
vacancy. As of the date of this Proxy Statement, the Board of Directors is not
aware of any nominee who is unable or who will decline to serve as a director.
The six nominees receiving the highest number of affirmative votes of the
shares entitled to vote at the Annual Meeting will be elected directors of the
Company to serve until the next Annual Meeting and until their successors have
been elected and qualified.
<TABLE>
<CAPTION>
NOMINEE AGE POSITIONS AND OFFICES HELD WITH THE COMPANY
- ------- --- -------------------------------------------
<S> <C> <C>
Ross Perot.......................................... 69 Chairman of the Board, President, and Chief
Executive Officer
James Champy........................................ 57 Vice President and Director
Steve Blasnik....................................... 42 Director
William K. Gayden................................... 58 Director
Carl Hahn........................................... 73 Director
Ross Perot, Jr. .................................... 41 Director
</TABLE>
BUSINESS EXPERIENCE OF DIRECTORS
Ross Perot, one of the Company's founders, has served as a director,
President, and Chief Executive Officer of the Company since November 1997, and
Chairman of the Board since February 1998. In addition, from April 1988 to
August 1994, Mr. Perot served as a director of the Company. From June 1988 to
June 1992, Mr. Perot held the position of Chairman of the Company. Mr. Perot has
been a private investor from June 1992 to the present.
James Champy joined the Company in August 1996 as a Vice President and a
director. From 1993 until 1996, Mr. Champy was Corporate Vice President and
Chairman -- Consulting Group of Computer Sciences Corporation. Mr. Champy was
one of the founders of, and from 1969 to 1996 served in a variety of capacities
for, Index (a management consulting firm) and CSC Index (the management
consulting arm of Computer Sciences Corporation formed upon the acquisition of
Index by Computer Sciences Corporation in 1988). Most recently, Mr. Champy was
Chairman and Chief Executive Officer of CSC Index.
Steven Blasnik was elected a director of the Company in September 1994.
Since 1987, Mr. Blasnik has served as President of Perot Investments, Inc., a
private investment firm and an affiliate of Ross Perot. Mr. Blasnik also serves
as a director and member of the compensation committee of Zonagen, Inc.
2
<PAGE> 6
William K. Gayden was elected a director of the Company in October 1998.
Mr. Gayden founded Merit Energy Company ("Merit") in 1989 and has been President
of Merit since its founding. Mr. Gayden spent twenty years with Electronic Data
Systems Corporation ("EDS") during which time he held many senior positions
including President of EDS World Corporation, Senior Vice President of EDS, and
a member of the Board of Directors of EDS.
Carl Hahn was elected a director of the Company in April 1993. Since June
1996, Mr. Hahn has been a private investor. From June 1993 until June 1996, Mr.
Hahn served as Chairman of the Board of Directors of Saurer Ltd., a manufacturer
of textile machines. Prior to that time, Mr. Hahn served as Chairman of the
Board of Management of Volkswagen AG until December 1992. Mr. Hahn also serves
as a director of Gerling AG, Hawesko, AG, and Sachsenring, AG.
Ross Perot, Jr. was elected a director of the Company in June 1988. Since
March 1988, Ross Perot, Jr. has served as Chairman of Hillwood Development
Corporation, a real estate development company. Ross Perot, Jr. is the son of
Ross Perot.
BOARD COMMITTEES AND MEETINGS
The Board of Directors has established two committees to assist in the
discharge of its responsibilities: the Executive Committee and the Audit
Committee. The Executive Committee consists of Ross Perot, Ross Perot, Jr., and
Steven Blasnik. The Audit Committee consists of William K. Gayden and Carl Hahn.
Generally, the Executive Committee has the full power and authority of the
Board of Directors in the management of the business and affairs of the Company,
except with respect to matters that cannot be delegated under Delaware law. The
Executive Committee met one time in 1999.
The Audit Committee assists the Board of Directors in fulfilling its
oversight responsibilities. The Audit Committee's activities are governed by a
charter that is revised and reassessed annually by the Board of Directors. The
Audit Committee's primary responsibilities and duties are to review the annual
financial statements of the Company and the professional services provided by
the Company's independent public accountants, including the scope of their audit
coverage, the auditor's reports to management and management's responses to such
reports, and the independence of such accountants from the management of the
Company. The Audit Committee also reviews the scope of the Company's internal
audits, the internal auditors' reports to management and management's responses
to such reports, the effectiveness of the Company's internal audit staff,
possible violations of the Company's Standards and Ethical Principles, and such
other matters with respect to the accounting, auditing and financial reporting
practices and procedures of the Company as it may find appropriate or as have
been brought to its attention. The Audit Committee met four times in 1999.
The Board of Directors may, from time to time, establish other committees
to facilitate the management of the Company or for other purposes it may deem
appropriate.
The Board of Directors met seven times in 1999.
DIRECTOR COMPENSATION
The Company compensates its non-employee directors (except for Ross Perot,
Jr.) $2,000 for each meeting of the Board of Directors attended in person.
Employee directors receive no additional compensation for attending Board of
Directors or committee meetings. Directors are reimbursed for their reasonable
out-of-pocket expenses associated with attending Board of Directors and
committee meetings.
The Company's 1996 Non-Employee Director Stock Option/Restricted Stock Plan
(the "Non-Employee Director Plan") provides for the issuance of nonqualified
stock options or restricted stock to non-employee directors of the Company and
any of its majority-owned subsidiaries. The Non-Employee Director Plan is
administered by the Board of Directors, which has the authority to interpret the
Non-Employee Director Plan. Directors eligible to receive awards under the
Non-Employee Director Plan are those (except for Ross Perot, Jr.) who are not
employees of the Company. Grants are made upon election to
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<PAGE> 7
the Board of Directors for new directors and, for existing directors, at
completion of the original vesting schedule for the director's existing options
or restricted shares. The Non-Employee Director Plan currently provides for a
grant to each eligible director of (i) an option to purchase 40,000 shares of
Class A Common Stock vesting over five years or (ii) the right to purchase
40,000 restricted shares of Class A Common Stock vesting over five years. The
exercise price of options or the purchase price of restricted shares of Class A
Common Stock awarded under the Non-Employee Director Plan must be at least equal
to 100% of the fair value of a share of Class A Common Stock on the date of the
award.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors recommends that the Stockholders vote FOR the
election of each of the nominees listed herein.
PROPOSAL 2
APPROVAL OF THE DIVISION OF THE
1999 EMPLOYEE STOCK PURCHASE PLAN
INTO UNITED STATES AND NON-UNITED STATES PLANS
BACKGROUND
On March 1, 1999, the Company implemented the 1999 Employee Stock Purchase
Plan (the "1999 Plan"), which was approved by the Company's Board of Directors
and stockholders in 1998. The purpose of the 1999 Plan is to encourage and
assist a broad spectrum of the Company's and its participating subsidiaries' and
affiliates' associates ("Associates") to acquire equity in the Company through
the purchase of the Company's Class A Common Stock. In order to ensure that
United States Associates continue to receive tax benefits under Section 421 and
423 of the United States Internal Revenue Code, the Company's Board of Directors
has approved the division of the 1999 Plan into the Perot Systems Corporation
Employee Stock Purchase Plan/U.S. (the "U.S. Plan") and the Perot Systems
Corporation Employee Stock Purchase Plan/ Non-U.S. (the "Non-U.S. Plan",
together with the U.S. Plan, the "Plans"), subject to stockholder approval.
Non-United States Associates will not be affected by the division of the 1999
Plan. Effective as of January 1, 2000, the Company stopped issuing any further
rights to purchase shares under the 1999 Plan as it existed prior to division.
In addition, if approved, the Plans will remain effective until July 16, 2008,
the original expiration date of the 1999 Plan.
PROPOSAL
The Company is asking the Stockholders to approve the division of the 1999
Plan and each of the Plans. Approval of the division of the 1999 Plan and each
of the Plans requires the affirmative vote of a majority of the votes cast at
the Annual Meeting at which a quorum of the voting power must be represented.
Should such stockholder approval not be obtained, the 1999 Plan will continue in
effect.
SHARES COVERED
Under the 1999 Plan, 20,000,000 shares of Class A Common Stock were
authorized for sale and issuance to the Associates and 333,025 of such shares
were issued through December 31, 1999. Following the division of the 1999 Plan
into the Plans, an aggregate of 19,736,311 shares of Class A Common Stock were
authorized for sale and issuance under the Plans. As of March 20, 2000, 36,121
of such shares had been issued in 2000. As previously required by the 1999 Plan,
the Plans require that the Board provide for adjustment to (1) the maximum
number and classes of shares of Class A Common Stock subject to the Plans and
(2) the classes, number, and per share price of shares subject to outstanding
rights under the Plans upon any change in the Class A Common Stock through
merger, consolidation, reorganization, recapitalization, stock dividend,
dividend in property other than cash, stock split, liquidating dividend,
combination of shares, exchange of shares, change in corporate structure, or
other transaction not involving the receipt of consideration by the
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<PAGE> 8
Company. Shares of Class A Common Stock available under the Plans may be either
outstanding shares repurchased by the Company or newly issued shares.
ELIGIBLE PARTICIPANTS
The Plans permit United States and non-United States Associates to purchase
the Company's Class A Common Stock at a discounted price. Associates of any
corporation controlled by the Company and approved by the Board may participate
in the U.S. Plan, provided that the Board may not approve any corporation for
participation in the U.S. Plan if such participation would disqualify the U.S.
Plan under any provision of the Internal Revenue Code. Associates of any
corporation, joint venture, general or limited partnership, limited liability
company, or other business that is approved by the Board may participate in the
Non-U.S. Plan. However, no entity may participate in the Non-U.S. Plan that
participates in the U.S. Plan. Associate participation in the Plans is
voluntary.
Generally, all Associates, including executive officers and directors who
are Associates, customarily employed more than 20 hours per week and more than
five months per year by the Company or a participating subsidiary are eligible
to participate in the Plans for a quarterly period. Members of the Board who are
otherwise eligible Associates under the Plans may participate in the Plans,
provided that they may not vote on any matter affecting the administration of
the Plans or grant of any rights under the Plans and that they do not serve on a
committee of the Board appointed to administer the Plans. However, the following
otherwise eligible Associates are disallowed from participation under the
Non-U.S. Plan and disallowed under the U.S. Plan if the Internal Revenue Code
prohibits participation in an offering period because:
- the Associate holds, directly or through exercisable options, five
percent or more of the entire voting common stock of the Company, or
- the Associate holds rights to purchase Class A Common Stock under all of
the Company's employee stock purchase plans (including the plans of
corporate subsidiaries of the Company controlled by the Company) that
would, after receiving the right to shares of Class A Common Stock under
the Plans, accrue at a rate that exceeded $25,000 during that calendar
year.
Further, applicable laws or regulations may prohibit some otherwise eligible
Associates from participating in the Non-U.S. Plan.
PARTICIPATION
Participants may elect to make contributions to the Plans up to a maximum
of 10% of that participant's regular rate of compensation, including, wages,
salary, bonuses, and commissions. The Company will withhold the selected amount
from a participant's paychecks during each quarterly offering period in which
the participant chooses to participate. Quarterly offering periods begin on the
first day of February, May, August, and November in each year. On January 31,
April 30, July 31, and October 31 of each year (each an "Exercise Date"), the
Company will apply the funds each participant has had withheld for that
quarterly offering period to the purchase of shares. The cost of each share
purchased is 85% of the closing selling price per share on the New York Stock
Exchange on the Exercise Date or, if no shares are traded on the Exercise Date,
then the closing selling price on the immediately preceding date on which
trading occurred. Shares purchased for each participant will be held by the
Company or a custodian appointed by the Company until the participant requests
delivery of the shares or the participant's employment is terminated. The
closing sale price per share of the Company's Class A Common Stock on the New
York Stock Exchange on March 20, 2000 was $19.25. Participants may not transfer
or assign shares purchased under the Plans for six months after the date the
shares are issued to the participant.
If (1) a dissolution or liquidation of the Company or a sale of all or
substantially all of its assets; (2) a merger or consolidation in which the
Company is not the surviving corporation; (3) a reverse merger in which the
Company is the surviving corporation but the shares of the Company's Class A
Common Stock outstanding immediately preceding the merger are converted by
virtue of the merger into other property, whether in the form of securities,
cash, or otherwise; or (4) any other capital reorganization in which more
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<PAGE> 9
than 50% of the shares of the Company entitled to vote are exchanged, is
proposed to be consummated, then, the Exercise Date for the applicable quarterly
offering period will be accelerated to the date such transaction is consummated,
and the amounts withheld from participants' compensation will be used to
purchase Class A Common Stock immediately prior to such transaction and all
further rights of the participants under the Plans will terminate, unless
otherwise provided by the Board in its sole discretion.
A participant will be refunded the amounts withheld for an offering period
from the participant's paycheck if at least ten business days before an Exercise
Date the participant withdraws from the Plans or the participant's employment
terminates before an Exercise Date.
PLAN ADMINISTRATION
The Board may administer the Plans or may delegate some or all of its
authority to a committee of directors. The routine matters arising under the
administration of the Plans will be managed by the Stock Administration
Department or Human Resources Department of the Company. The Board may amend or
terminate the Plans without notice. However, stockholder approval is required
for amendments that would (1) increase the maximum number of shares that may be
sold under the Plans, (2) amend the eligibility requirements under the Plans, or
(3) permit members of a committee appointed by the Board to administer the Plans
to participate in the Plans. The Board may amend the eligibility requirements
under the Non-U.S. Plan without stockholder approval to the extent the amendment
is necessary to comply with any applicable law. No amendment may make any change
in any rights granted under the Plans that adversely affect the rights of any of
the Plans' participants without the consent of the affected participants, except
the U.S. Plan may be amended without the consent of affected participants if the
amendment is required to comply with Section 423 of the Internal Revenue Code or
to obtain a favorable ruling from the Internal Revenue Service.
Approximately 7,000 Associates are currently eligible to participate in the
Plans. Since the number of shares purchased under the Plans by an Associate and
the purchase price thereof are determined by the level of voluntary contribution
by such Associate and the market price of the shares in effect from time to
time, the Company cannot determine the number of shares that may be purchased
under the Plans in the future by any eligible individual or group of individuals
or the purchase price of those shares.
FEDERAL INCOME TAX CONSEQUENCES
In general, participants who are citizens or residents of the United States
("U.S. Participants") will not have taxable income or loss as a result of the
U.S. Plan until they sell or otherwise dispose of shares acquired under the U.S.
Plan (or die holding those shares). If the shares are held, as of the date of
sale or disposition, for longer than both: (1) two years after the Exercise
Date; and (2) one year after the Exercise Date, a U.S. Participant will have
taxable ordinary income equal to 15% of the fair market value of the shares on
the Exercise Date (but not in excess of the gain on the sale). Any additional
gain from the sale will be long-term capital gain. The Company is not entitled
to an income tax deduction if the holding periods are satisfied.
If the shares are disposed of before the expiration of both of the
foregoing periods (a "disqualifying disposition"), a U.S. Participant will have
taxable ordinary income equal to the excess of the fair market value of the
shares on the purchase date over the purchase price. In addition, the U.S.
Participant will have taxable capital gain (or loss) measured by the difference
between the sale price and the U.S. Participant's purchase price plus the amount
of ordinary income recognized, which gain (or loss) will be long-term if the
shares have been held as of the date of sale for more than one year. The Company
is entitled to an income tax deduction equal to the amount of ordinary income
recognized by a U.S. Participant in a disqualifying disposition.
Special rules apply to U.S. Participants who are directors or officers. The
consequences to non-U.S. Participants in the Non-U.S. Plan are governed by laws
of other jurisdictions, which typically do not offer the same tax advantages as
United States law.
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<PAGE> 10
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board recommends a vote "FOR" approval of Proposal No. 2.
PROPOSAL NO. 3
RATIFICATION OF INDEPENDENT ACCOUNTANTS
The Company is asking the Stockholders to ratify the selection of
PricewaterhouseCoopers as the Company's independent accountants for the fiscal
year ending December 31, 2000. The affirmative vote of a majority of the
outstanding voting shares of the Company present or represented and entitled to
vote at the Annual Meeting is required to ratify the selection of
PricewaterhouseCoopers.
PricewaterhouseCoopers and one of its predecessor firms have audited the
Company's financial statements annually since fiscal 1989. Its representatives
will be present at the Annual Meeting, will have the opportunity to make a
statement if they desire to do so, and will be available to respond to
appropriate questions.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors recommends that the Stockholders vote "FOR" the
ratification of the selection of PricewaterhouseCoopers.
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information known to the Company
with respect to beneficial ownership of shares of Common Stock as of March 15,
2000 for (i) all persons who are beneficial owners of five percent or more of
the Company's Common Stock, (ii) each director, (iii) the Company's Chief
Executive Officer and the other executive officers named in the Summary
Compensation Table below, and (iv) all executive officers and directors as a
group:
<TABLE>
<CAPTION>
CLASS B
COMMON
CLASS A COMMON STOCK STOCK
--------------------------- ------------
SHARES PERCENT SHARES
BENEFICIALLY OF BENEFICIALLY
OWNED(1) OWNERSHIP(1) OWNED
------------ ------------ ------------
<S> <C> <C> <C>
EXECUTIVE OFFICERS AND DIRECTORS
Ross Perot(2).................................... 31,749,100 34.5% --
James Champy(3).................................. 975,286 1.1% --
Terry Ashwill.................................... 86,761 * --
Ken Scott(4)..................................... 263,825 * --
Joseph Boyd(5)................................... 246,401 * --
Steven Blasnik(6)................................ 42,000 * --
William K. Gayden(7)............................. 23,000 * --
Carl Hahn........................................ 285,000 * --
Ross Perot, Jr.(8)............................... 31,710,000 34.5% --
ALL EXECUTIVE OFFICERS AND DIRECTORS AS A GROUP
(12 PERSONS)(9)................................ 37,569,294 40.8% --
ADDITIONAL 5% BENEFICIAL OWNERS
Morton H. Meyerson(10)........................... 5,143,051 5.6% --
UBS(11).......................................... -- -- 7,334,320
</TABLE>
- ---------------
* Less than 1%
(1) Percentages are based on the total number of shares of Class A Common Stock
outstanding at March 15, 2000, plus the total number of outstanding options
and warrants held by each person that are
7
<PAGE> 11
exercisable within 60 days of such date. Shares of Class A Common Stock
issuable upon exercise of outstanding options and warrants, however, are
not deemed outstanding for purposes of computing the percentage ownership
of any other person. Except as indicated in the footnotes to this table,
other than shared property rights created under joint tenancy or marital
property laws as between the Company's directors and executive officers and
their respective spouses, each stockholder named in the table has sole
voting and investment power with respect to the shares of Class A Common
Stock set forth opposite such stockholder's name. The shares of Class A
Common Stock listed include shares of Class A Common Stock held by the
Company's Retirement Savings Plan and Trust for the benefit of the named
individuals. Voting and investment power over such shares of Class A Common
Stock is held by the trustee of such trust subject to the direction of the
Company's 401(k) Plan Committee.
(2) Includes 31,705,000 shares owned by HWGA, Ltd. ("HWGA") and 100 shares
owned by Mr. Perot's spouse. Ross Perot, Chairman, President, and Chief
Executive Officer of the Company, is the managing general partner of HWGA.
Mr. Perot has voting and investment power over shares owned by HWGA. Ross
Perot, Jr. is a general partner of HWGA who has authority to manage HWGA if
Ross Perot ceases to be managing general partner of HWGA. Accordingly,
shares owned by HWGA are also shown in this table as being beneficially
owned by Ross Perot, Jr. The address for Ross Perot and HWGA is 12377 Merit
Drive, Suite 1700, Dallas, Texas 75251.
(3) Includes 200,000 shares of Class A Common Stock held by the Champy Family
Irrevocable Trust (the "Champy Trust") of which Mr. Champy is a trustee. As
trustee, Mr. Champy shares voting and investment power with respect to the
shares of Class A Common Stock held by the Champy Trust and, therefore, is
deemed the beneficial owner of such shares of Class A Common Stock.
(4) Includes 74,800 shares of Class A Common Stock that Mr. Scott has the right
to acquire upon the exercise of vested options.
(5) Includes 20,000 shares of Class A Common Stock that Mr. Boyd has the right
to acquire upon the exercise of vested options and 4,000 shares of Class A
Common Stock held by Mr. Boyd's spouse, with respect to which Mr. Boyd
shares voting and investment power.
(6) Includes 36,000 shares of Class A Common Stock that Mr. Blasnik has the
right to acquire upon the exercise of vested options and 6,000 shares of
Class A Common Stock held by Mr. Blasnik's spouse. Mr. Blasnik disclaims
beneficial ownership of such shares.
(7) Includes 10,000 shares held by partnerships of which Mr. Gayden is a
general partner and 8,000 shares of Class A Common Stock that Mr. Gayden
has the right to acquire upon the exercise of vested options.
(8) Includes 31,705,000 shares owned by HWGA and 5,000 shares owned by Mr.
Perot's spouse. Mr. Perot disclaims beneficial ownership of the shares held
by his spouse. The address for Ross Perot, Jr. is 12377 Merit Drive, Suite
1700, Dallas, Texas 75251.
(9) Includes 166,800 shares of Class A Common Stock that the Executive Officers
and Directors have the right to acquire upon the exercise of vested
options.
(10) This data is based on information contained in Amendment No. 2 to Form 13G
filed by the Meyerson Family Limited Partnership with the Securities and
Exchange Commission on February 11, 2000. Includes 18,353 shares which are
owned by an estate for which Mr. Meyerson is executor and 4,602,000 shares
held by the Meyerson Family Limited Partnership of which Mr. Meyerson is
general partner. The address of Mr. Meyerson is 4514 Cole Ave., Dallas,
Texas 75205.
(11) Includes 5,550,000 shares of Class B Common Stock that UBS has the right to
acquire upon the exercise of options. The address for UBS AG is
Bahnhofstrasse, CH 8001, Zurich, Switzerland.
8
<PAGE> 12
REPORT OF THE BOARD OF DIRECTORS
ON EXECUTIVE COMPENSATION
INTRODUCTION
This report is provided by the Board of Directors to assist stockholders in
understanding the Board's objectives and procedures in establishing the
compensation of the Company's executive officers. Ross Perot, who serves as the
Company's Chief Executive Officer, receives no compensation for his services.
The Board is responsible for establishing and administering the Company's
executive compensation program. The Board met seven times in 1999.
In structuring the Company's compensation programs, the Board has been
advised by the Company's compensation staff.
COMPENSATION PHILOSOPHY AND OBJECTIVES
The Board believes that compensation of the Company's key executives
should:
- have equity as a key component
- be cost effective -- designed to minimize fixed salary and maximize
variable pay which tracks to business results
- be compared with industry peers to ensure competitiveness
- attract and retain high caliber Associates on a long-term basis
- align with the business strategy of our fast paced, growing company
The Company's policy is to position compensation to be competitive with
peer information technology companies with which the Company competes for
talent, with appropriate variation for individual and corporate performance.
1999 EXECUTIVE COMPENSATION COMPONENTS
The Company's 1999 executive compensation program consisted of three
elements: Base Salary, Short-Term Cash Incentives, and Equity Compensation. Base
Salary was set within a salary range for positions based on sustained individual
performance. The Company's Short-Term Cash Incentives program was linked to
individual Associate performance and the Company's financial performance and was
designed to provide a significant portion of each executive officer's total cash
compensation.
Base Salary
- Base salary ranges for all Perot Systems' Associates -- including the
Company's executive officers -- were based on comparisons to the
competitive marketplace to assure equitable salary ranges.
- Salaries within these salary ranges varied by individual based on
sustained performance toward the achievement of the Company's goals and
objectives.
- Increases to base salary were determined by anticipated increases to
external market comparison groups. From these comparisons, the Company
derived a target annual increase percentage. Final increases actually
made to base pay were determined by individual performance.
Short-Term Cash Incentives
The 1999 Short-Term Cash Incentives Program consisted of two distinct
phases:
- Outstanding Performer Bonuses. Bonuses were awarded when an Associate
performed in an outstanding manner. These bonuses were designed to
immediately recognize an Associate whose outstanding
9
<PAGE> 13
performance merited a reward, independent of other factors that might
influence the Year-End Bonus Review.
- The Year-End Bonus Review. The annual bonuses were linked to corporate
financial and strategic results. Corporate financial and strategic
results were measured against goals set at the beginning of the plan
year. The financial corporate goal was a targeted level of corporate
pre-tax profits. Individual target awards varied by position and were
based on competitive practices in the information technology industry.
Associates had individual performance assessments and final payment
percentages were based on individual performance.
Equity Compensation
The Company awarded stock options to Associates to accomplish two goals.
First, options directly link an Associate's long-term interest with the
interests of our stockholders by rewarding our Associates when our stock price
performs well. Second, options help retain valuable Associates for the long term
because the options vest over time.
As with other Associates, executive officers were considered for awards of
stock options based on the Company's need to retain the executive officer for
future years, the individual executive officer's prior awards of options and
restricted stock, and the vesting status of those awards.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
The position of Chief Executive Officer is held by Ross Perot. Mr. Perot
has not accepted cash or non-cash compensation for his role in the Company.
CONCLUSION
Bonuses awarded to executive officers were based on the Company's strong
1999 financial performance and the performance of each respective executive
officer.
BOARD OF DIRECTORS
Ross Perot
Steve Blasnik
James Champy
William K. Gayden
Carl Hahn
Ross Perot, Jr.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
As members of the Board of Directors, Ross Perot and James Champy will
participate in future compensation decisions.
10
<PAGE> 14
EXECUTIVE COMPENSATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The Summary Compensation Table below shows compensation for the 1997, 1998,
and 1999 fiscal years of the Chief Executive Officer and the four most highly
compensated executive officers, other than the Chief Executive Officer, who were
serving as executive officers at the end of the 1999 fiscal year.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION AWARDS
------------------------------
ANNUAL COMPENSATION SECURITIES
------------------------------------- RESTRICTED STOCK UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($)(1) OTHER($)(2) AWARD(S)($)(3) OPTIONS COMPENSATION($)(4)
- --------------------------- ---- --------- ----------- ----------- ---------------- ---------- ------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Ross Perot.................. 1999 -- -- -- -- -- --
Chairman, President &
Chief 1998 -- -- -- -- -- --
Executive Officer(5) 1997 -- -- -- -- -- --
James Champy................ 1999 513,333 325,000 12,627 -- -- 23,400
Vice President 1998 500,000 275,000 13,162 -- -- 23,400
1997 500,000 -- 5,738 -- -- 23,337
Terry Ashwill............... 1999 436,337 400,000 2,883 -- -- 6,400
Vice President & Chief 1998 368,754 400,000 -- -- 100,000 6,400
Financial Officer 1997 324,876 -- 96,276 --(6) 700,000 --
Joseph Boyd................. 1999 308,367 400,000 -- -- -- 6,400
Vice President 1998 240,000 350,000 -- -- 200,000 6,400
1997 179,667 -- -- -- -- 6,337
Ken Scott................... 1999 405,611 275,000 171,840(7) -- -- 6,400
Vice President 1998 324,240 325,000 -- -- -- --
1997 182,740 -- -- 315,000(8) 290,000 --
</TABLE>
- ---------------
(1) Bonus amounts shown for 1999 were earned in 1999 and paid in 2000. Bonus
amounts shown for 1998 were earned in 1998 and paid in 1999.
(2) With respect to Mr. Ashwill, represents $92,668 paid in 1997 in connection
with his relocation and $3,608 for home office equipment, and $2,883 for a
tax gross up relating to insurance premiums paid in 1998. With respect to
Mr. Champy, represents the payment of taxes related to the life insurance
premiums referenced in Note 4 to this table.
(3) The number of restricted shares of Class A Common Stock held by the named
executive officers and the value of such shares of Class A Common Stock
(less the amount paid therefor) at December 31, 1999 were as follows: Mr.
Champy -- 700,000 shares of Class A Common Stock, $12,337,500; Mr. Boyd --
28,000 shares of Class A Common Stock, $493,500; and Mr. Scott -- 151,200
shares of Class A Common Stock, $2,570,400. The holders of these restricted
shares are entitled to a pro rata distribution of any dividends paid by the
Company on the Class A Common Stock.
(4) In 1999, represents (i) $17,000 in life insurance premiums paid for the
benefit of Mr. Champy; and (ii) $6,400 in Company contributions to the
Company's 401(k) plan for the benefit of Messrs. Champy, Ashwill, Boyd, and
Scott. In 1998, represents (i) $17,000 in life insurance premiums paid for
the benefit of Mr. Champy; and (ii) $6,400 in Company contributions to the
Company's 401(k) plan for the benefit of each of Messrs. Champy, Ashwill,
and Boyd. In 1997, represents (i) $17,000 in life insurance premiums paid
for the benefit of Mr. Champy; and (ii) $6,337 in Company contributions to
the Company's 401(k) plan for the benefit of each of Messrs. Champy and
Boyd.
(5) Mr. Perot has served as President and Chief Executive Officer since November
7, 1997 and Chairman since February 25, 1998. Mr. Perot serves the Company
without compensation.
(6) Mr. Ashwill purchased 200,000 restricted shares of Class A Common Stock on
January 28, 1997, and an additional 40,000 restricted shares of Class A
Common Stock on February 14, 1997. In each case, the purchase price was
$1.875 per share (the fair value of such shares on the respective dates of
the
11
<PAGE> 15
purchase). The restricted shares of Class A Common Stock were scheduled to
vest over a three-year period at a rate of 80,000 shares per year. On
December 23, 1997, Mr. Ashwill sold all of such shares to the Company for an
amount equal to the cost of purchase plus 8% interest accrued from the
respective purchase dates. The sale was in connection with the issuance of
options to purchase 240,000 shares of Class A Common Stock at an exercise
price of $3.375 per share with the same vesting schedule that had applied to
the restricted stock.
(7) Includes $153,849 in housing expenses, $8,060 in automobile payments, and
$9,931 in tax gross ups related to an overseas assignment.
(8) Mr. Scott purchased 210,000 restricted shares of Class A Common Stock for
$1.875 per share. The fair value of such shares on the date of purchase was
$3.375 per share. The shares vest over a ten-year period. The first vesting
date was June 2, 1998.
OPTION EXERCISES AND HOLDINGS
The following table provides information regarding exercises of stock
options by named executive officers during 1999:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
CLASS A UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
SHARES OPTIONS AT FISCAL YEAR-END FISCAL YEAR-END($)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Ross Perot........... -- -- -- -- -- --
James Champy......... -- -- -- -- -- --
Terry Ashwill........ 160,000 3,016,585 10,000 630,000 78,750 9,528,750
Joseph Boyd.......... 68,000 1,082,000 -- 344,000 -- 5,719,500
Ken Scott............ -- -- 74,800 215,200 1,247,600 3,562,400
</TABLE>
EMPLOYMENT CONTRACTS AND CHANGE IN CONTROL AGREEMENTS
James Champy's associate agreement provides for a base salary of $500,000
per year, which is to be reviewed at least annually. Mr. Champy's associate
agreement provides for additional benefits, including: (i) a bonus to be
determined in accordance with the then current bonus plan applicable to the most
senior officers of the Company, (ii) payment of life insurance premiums, and
(iii) some travel benefits. Mr. Champy's associate agreement also provides that,
in the event that Mr. Champy is terminated by the Company other than for cause
or substantial misconduct (as defined in his associate agreement) or Mr. Champy
is deemed to have been constructively terminated (as defined in his associate
agreement), Mr. Champy will receive a severance payment equal to six months of
Mr. Champy's then current base salary. If Mr. Champy's employment is terminated
by either party (other than for cause by the Company) within one year of a
change in control of the Company (as defined in his associate agreement), Mr.
Champy would be entitled to receive a severance payment equal to six months of
Mr. Champy's then current base salary. Mr. Champy's employment agreement is
terminable by the Company upon 30 days' notice and payment of a severance
payment equal to six months' base pay plus benefits.
The 1,000,000 restricted shares of Class A Common Stock acquired by Mr.
Champy pursuant to his restricted stock agreement vest in equal installments
over ten years beginning on the first anniversary of the commencement of Mr.
Champy's employment by the Company. Vesting is contingent on continued
employment; provided, however, that Mr. Champy's restricted shares of Class A
Common Stock will continue to vest for limited periods following the termination
of his employment if his employment is terminated by the Company other than for
cause or substantial misconduct (as defined in his associate agreement) or Mr.
Champy is deemed to have been constructively terminated (as defined in his
associate agreement). If Mr. Champy's employment is terminated by the Company
other than for cause or substantial misconduct, Mr. Champy's restricted shares
of Class A Common Stock will continue to vest as scheduled for two years
12
<PAGE> 16
following termination of employment. If there is a change in control of the
Company (as defined in his associate agreement) and Mr. Champy's employment is
terminated within one year of such change in control by either party (other than
for cause by the Company), all of Mr. Champy's shares of Class A Common Stock
scheduled to vest through the next two vesting dates will vest on schedule. In
the event that Mr. Champy's employment is terminated for any reason by either
party, Mr. Champy has the right to require the Company to purchase his shares
for their original cost plus simple interest at the rate of 8% per annum.
BUSINESS EXPERIENCE OF EXECUTIVE OFFICERS
The following is a description of the business experience of executive
officers other than those serving on the Company's Board of Directors. The
Company's executive officers serve at the discretion of the Board of Directors.
Peter Altabef, 40, joined the Company in June 1993 and was elected as a
Vice President in June 1995 and Secretary in March 1996. Mr. Altabef became
General Counsel in April 1994. From January 1991 until May 1993, Mr. Altabef was
a partner in the Dallas law firm of Hughes & Luce, L.L.P.
Terry Ashwill, 55, joined the Company in January 1997 as a Vice President
and Chief Financial Officer. From November 1991 to December 1996, Mr. Ashwill
served as Executive Vice President and Chief Financial Officer of True North
Communications, Inc.
Joseph Boyd, 40, joined the Company in January 1990 and was elected as a
Vice President in March 1996. Mr. Boyd currently has responsibility for the
Company's North American sales and operations. Mr. Boyd previously served as the
General Manager of the Company's Healthcare Group.
Donald Drobny, 57, is one of the Company's founders. Mr. Drobny joined the
Company in June 1988 and was elected as a Vice President in April 1989. Mr.
Drobny currently has responsibility for the Company's European sales and
operations. Mr. Drobny previously had responsibility for the Company's training
and recruiting activities and prior to that time had responsibility for the
Company's project offices.
John King, 53, is one of the Company's founders. Mr. King joined the
Company in June 1988 and was elected as a Vice President in April 1989 and
currently has responsibility for the Company's Financial Services Group.
Ken Scott, 57, joined the Company in June 1997 and was elected Vice
President in November 1998. Mr. Scott currently has responsibility for the
Company's Energy Services Group. For the seven years prior to joining the
Company, Mr. Scott was the President of the Energy Division of EDS.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company licenses the right to use the names "Perot" and "Perot Systems"
in its current and future businesses, products, or services from the Perot
Systems Family Corporation and Ross Perot. The license is a non-exclusive,
royalty-free, non-transferable license without geographic restriction. The
Company may also sublicense its rights to these names to its affiliates. Under
the License Agreement, as amended, either party may, in their sole discretion,
terminate the license at any time, with or without cause and without penalty, by
giving the other party written notice of such termination. Upon termination by
either party, the Company must discontinue all use of the names "Perot" and
"Perot Systems" within one year following receipt of the notice of termination.
The Company made loans to each of Ken Scott, Ron Nash, and Joseph Boyd in
connection with the purchase by such persons of shares of Class A Common Stock
from the Company. Each of such loans was secured by the purchased stock. In
addition, the Company made a loan to John King secured by shares of Class A
Common Stock. All such loans accrued interest at 8% per annum. As of December
31, 1999, the total amount outstanding for each such loan had been paid in full.
The highest amounts outstanding under such loans since January 1, 1999 were as
follows: Mr. King, $292,018; Mr. Scott, $198,730; Mr. Nash, $267,315; and Mr.
Boyd, $75,002. Messrs. King, Scott, and Boyd are executive officers of the
Company.
13
<PAGE> 17
During 1999, Messrs. Altabef and Scott had outstanding loans with Bank of
America, N.A. ("Bank of America") in the respective principal amounts of
$126,400, and $325,809. Interest accrued on such loans at the rate of 9.76% for
Mr. Altabef and 9.50% for Mr. Scott. The Company had agreed that it would, at
the request of Bank of America, purchase such loans from Bank of America for an
amount equal to principal plus accrued and unpaid interest if the Company has
not had an initial public offering that results in the shares of Class A Common
Stock being publicly traded before the maturity of the notes. The Company's
repurchase obligation ended on February 2, 1999. Messrs. Altabef and Scott are
executive officers of the Company. As of December 31, 1999, the total amount
outstanding for each such loan had been paid in full.
For the year ended December 31, 1999, the Company paid $164,132 to the law
firm of Locke Liddell & Sapp LLP for services rendered to the Company. The
spouse of Mr. Altabef was a shareholder of that firm during 1999.
For the year ended December 31, 1999, the Company paid to Hughes & Luce,
L.L.P. $750,400 for services rendered to the Company. A partner in that firm is
a son-in-law of Mr. Perot.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's officers and
directors and persons who own more than 10% of the Company's Common Stock
(collectively, "Reporting Persons") to file reports of ownership and changes in
ownership with the Securities and Exchange Commission. Reporting Persons are
required by the Securities and Exchange Commission regulations to furnish the
Company with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received or written
representations from Reporting Persons, the Company believes that with respect
to the fiscal year ended December 31, 1999, Mr. King inadvertently filed a late
report.
14
<PAGE> 18
PERFORMANCE GRAPH
The performance of the Company's securities since February 2, 1999, the
inception of public trading, have been compared to the performance of
publicly-traded securities in the graph set forth below. The starting point for
the graph was $43.50 per share, the closing price on the Company's first day of
trading following its initial public offering. Therefore, the graph does not
reflect the 172% increase from the Company's $16.00 per share initial public
offering price that occurred on the first day of trading.
COMPARE CUMULATIVE TOTAL RETURN
AMONG PEROT SYSTEMS CORPORATION
NYSE MARKET INDEX AND MG GROUP INDEX
ASSUMES $100 INVESTED ON FEBRUARY 02, 1999
ASSUMES DIVIDEND REINVESTED
FISCAL YEAR ENDING DECEMBER 31, 1999
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
02/02/1999 03/31/1999 06/30/1999 09/30/1999 12/31/1999
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Perot Systems Corporation(1) 100.00 58.91 67.82 42.96 43.39
MG Group Index(2) 100.00 84.02 98.16 92.72 117.66
NYSE Market Index 100.00 100.73 108.25 98.96 109.05
</TABLE>
- ---------------
(1) The starting point for the table was $43.50 per share, the closing price on
the Company's first day of trading following its initial public offering.
Therefore, the table does not reflect the 172% increase from the Company's
$16.00 per share initial public offering price that occurred on the first
day of trading. If the $16.00 initial public offering price is used as a
measure for a $100 investment, the December 31, 1999 value would be $117.97.
(2) The Media General (MG) Group Index reflects the performance of a peer group
of companies selected by the Company. The Company has included in the peer
group companies it believes maintain operations and lines of businesses
similar to those of the Company.
15
<PAGE> 19
STOCKHOLDER PROPOSALS FOR THE ANNUAL MEETING AND
THE 2001 PROXY STATEMENT
Under Article II, Section 4 of the Company's Amended and Restated Bylaws,
proposals by Stockholders intended to be presented at the Annual Meeting, must
be received by the Company no later than the close of business on April 2, 2000.
Stockholder proposals that are intended to be presented at the Annual
Meeting to be held in 2001 must be received by the Company no later than
December 1, 2000 in order to be included in the Proxy Statement and related
proxy materials under Rule 14a-8 of the Securities Exchange Act of 1934, as
amended.
OTHER MATTERS
The Board of Directors knows of no other matters to be presented for
Stockholder action at the Annual Meeting. However, if other matters do properly
come before the Annual Meeting or any adjournments or postponements thereof, the
Board of Directors intends that the persons named in the proxies will vote upon
such matters in accordance with their best judgment.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ PETER ALTABEF
Peter Altabef
Secretary
16
<PAGE> 20
APPENDIX A
PEROT SYSTEMS CORPORATION
1999 Employee Stock Purchase Plan/US
(Revised January 7, 2000)
Effective January 1, 2000
<PAGE> 21
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
1. Purpose of the Plan
1.1 General...................................................................1
1.2 Tax Treatment.............................................................1
2. Participation in the Plan
2.1 Eligibility...............................................................1
2.2 Enrollment to Buy Stock...................................................1
2.3 Designation of Beneficiary................................................2
2.4 Contributions; Payroll Deductions; Account; No Interest...................2
2.5 Changes in Contributions..................................................2
2.6 Withdrawal................................................................2
2.7 Termination of Employment; Leave of Absence...............................3
2.8 Transferability...........................................................4
3. Purchase of Stock
3.1 Offering Periods..........................................................4
3.2 Grant of Option; Exercise Price...........................................4
3.3 Automatic Exercise of Option..............................................4
3.4 Payment for Stock.........................................................4
3.5 Delivery of Shares; Voting................................................5
3.6 Periodic Reports..........................................................5
3.7 No Rights in Stock Prior to Exercise......................................6
4. Operation of the Plan
4.1 Effective Date and Term of Plan...........................................6
4.2 Shares Authorized for Sale and Issuance Under the Plan....................6
4.3 Conditions Upon Issuance of Shares........................................6
4.4 Administration; Committee.................................................7
4.5 Amendment or Termination..................................................8
4.6 Approval of the Stockholders..............................................9
4.7 No Liability for Good Faith Determinations................................9
5. Miscellaneous Legal Provisions
5.1 Definitions...............................................................9
5.2 Adjustments Upon Changes in Capitalization...............................12
5.3 Notices; Waiver of Notice................................................12
5.4 Severability.............................................................13
5.5 Successors and Assigns...................................................13
5.6 Headings.................................................................13
5.7 Governing Law............................................................13
5.8 No Right to Employment...................................................13
</TABLE>
<PAGE> 22
PEROT SYSTEMS CORPORATION
1999 Employee Stock Purchase Plan/US
(Revised January 7, 2000)
1. PURPOSE OF THE PLAN
1.1 General. Perot Systems has adopted this Plan to provide Eligible
Associates with the opportunity and a convenient means to purchase
Common Stock as an incentive (a) to exert their maximum efforts for the
success of the Company, and (b) to remain employed with the Company.
1.2 Tax Treatment. Perot Systems intends that options to purchase stock
granted under this Plan qualify as options granted under an "employee
stock purchase plan" as defined in Section 423(b) of the Tax Code, and
this Plan will be construed and applied so as to be consistent with
Section 423 of the Code, including the requirement of Section 423(b)(5)
of the Code that all Participants granted options to purchase Shares
under the Plan have the same rights and privileges with respect to such
options.
2. PARTICIPATION IN THE PLAN
2.1 Eligibility. Each Eligible Associate who is employed by an Employer on
an Enrollment Date may participate in the Plan during the relevant
Offering Period, unless the Tax Code prohibits his or her participation
in that Offering Period because:
(a) Immediately after the grant of an option under this Plan on the
Exercise Date, the Eligible Associate (together with certain
individuals and entities associated with or related to the Eligible
Associate as described in Section 424(d) of the Tax Code) would be
deemed to own a number of shares of stock and certain exercisable
options to purchase stock that together represent 5% or more of the
total combined voting power or value of all classes of stock of Perot
Systems or any Subsidiary (computed in accordance with Section
423(b)(3) of the Tax Code); or
(b) Immediately after the grant of an option under this Plan to an
Eligible Associate on the Exercise Date, the Eligible Associate's
rights to purchase Common Stock under all of the employee stock
purchase plans described in Section 423 of the Tax Code of Perot
Systems and each Subsidiary would accrue at a rate that exceeded
$25,000 (computed based on the Fair Market Value on the Exercise Date
in accordance with Section 423(b)(8) of the Tax Code) during the
calendar year of that Offering Period.
2.2 Enrollment to Buy Stock. Each Eligible Associate who:
(a) completes an Enrollment Agreement in the form, format, and as
otherwise required by the Stock Administrator, and
(b) delivers that Enrollment Agreement to the Stock Administrator at
least 10 business days before the Enrollment Date for an Offering
Period, or
1999 Employee Stock Purchase Plan/US A-1
<PAGE> 23
(c) calls the Plan Custodian's automated phone system and completes the
enrollment process, may purchase Common Stock on the Exercise Date for
that Offering Period, subject to the other provisions of this Plan.
2.3 Designation of Beneficiary. Each Participant may from time to time
designate a beneficiary by filing a written beneficiary designation
form with the Stock Administrator. Such beneficiary shall receive any
refunds of amounts not used to purchase Shares and any Shares issued to
the Participant. If no beneficiary was designated, any cash refunds and
transfers of Shares shall be made to the appropriate representative of
Participant's estate.
2.4 Contributions; Payroll Deductions; Account; No Interest.
(a) The Company will withhold from each Participant's paycheck the
percentage (not to exceed 10%) of Eligible Compensation specified in
his or her then-current Enrollment Agreement commencing on the first
pay date after the next Enrollment Date of an Offering Period and
continuing throughout that Offering Period and each future Offering
Period until he or she ceases to be a Participant or, if earlier,
changes his or her Enrollment Agreement.
(b) Perot Systems will hold and use the amounts withheld from each
Participant's paycheck until the earlier of the date those amounts are
(i) used to purchase Common Stock, or (ii) refunded to the Participant.
Perot Systems will not be required to segregate any of these funds from
its general corporate fund, and will not pay interest on any of these
funds.
(c) If the funds in the Participant Account of a Participant are in a
currency other than United States dollars on any Exercise Date, for
purposes of determining the maximum number of whole and fractional
shares that may be purchased under this Plan, such funds will be deemed
to have been converted into United States dollars based upon the
foreign exchange selling rates, as reported by the Dow Jones
News/Retrieval Service of Dow Jones and Company, Inc., on such date, or
if not so reported on such date, as reported on the next preceding date
on which such rates are reported.
2.5 Changes in Contributions. During an Offering Period, a Participant may
not change the percentage of Eligible Compensation to be withheld from
his or her paycheck, except by withdrawing from the Plan. However, a
new Enrollment Agreement may be submitted for any subsequent Offering
Period.
2.6 Withdrawal.
(a) A Participant may stop participating in the current Offering Period
and each future Offering Period by delivering a Withdrawal Agreement to
the Stock Administrator or calling the Plan Custodian's automated phone
system and completing the withdrawal process at least 10 business days
before the Exercise Date for then-current Offering Period. Delivery of
a Withdrawal Agreement or completing the withdrawal process will:
(i) permanently and irrevocably terminate the Withdrawing
Associate's participation in the then-current Offering Period, and
1999 Employee Stock Purchase Plan/US A-2
<PAGE> 24
(ii) suspend the Withdrawing Associate's participation in any
future Offering Periods until he or she delivers an Enrollment
Agreement to the Stock Administrator.
An election to stop participating in one Offering Period will not
prevent an Eligible Associate from participating in any future Offering
Period or in any other Plan adopted by Perot Systems, provided that the
Eligible Associate will not participate in any future Offering Period
until he or she submits a new Enrollment Agreement.
(b) As soon as practical after receiving a Withdrawal Agreement, Perot
Systems will:
(i) stop withholding the applicable percentage of Eligible
Compensation from the Withdrawing Associate's paychecks or
otherwise accepting contributions to the Withdrawing
Associate's Participant Account, and
(ii) refund to the Withdrawing Associate all amounts
previously withheld from his or her paychecks or otherwise
contributed to the Withdrawing Associate's Participant Account
during the then-current Offering Period.
2.7 Termination of Employment; Leave of Absence.
(a) If a Participant's employment with the Company terminates,
including by death, on or before an Exercise Date, he or she will be
deemed to have elected to withdraw from the applicable Offering Period
effective as of the date his or her employment terminated.
(b) As soon as practical after a Participant's termination of
employment, Perot Systems will:
(i) refund all amounts withheld from his or her paycheck or
otherwise contributed under this Plan that have not been used
to purchase Common Stock from Perot Systems or otherwise
refunded; and
(ii) distribute, or direct the Plan Custodian to distribute,
any Shares held by the Employer or the Plan Custodian on the
Participant's behalf to the Participant or his or her
designee.
(c) If a Participant begins an approved leave of absence from his or
her Employer on or before an Exercise Date, he or she will remain in
the Plan for the applicable Offering Period and each subsequent
Offering Period, but only so long as such Participant's approved leave
of absence, measured from the first day of his or her leave of absence,
has not exceeded the greater of: (i) 90 days, or (ii) the period during
which such Participant's right to reemployment with the Company is
guaranteed either by statute or contract (the "Leave Period"). If a
Participant's approved leave of absence exceeds his or her Leave
Period, such Participant will be deemed to have elected to stop
participating in the Plan on the day immediately after the last day of
the Leave Period, and such deemed election to stop participating shall
be effective for each such Offering Period and each subsequent Offering
Period until he or she returns to work and submits a new Enrollment
Form.
1999 Employee Stock Purchase Plan/US A-3
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2.8 Transferability. Neither any monies credited to a Participant Account
nor any rights with regard to the exercise of an option to purchase
Common Stock under the Plan may be assigned, transferred, pledged, or
otherwise disposed of in any way (other than by will or the laws of
descent and distribution) by the Participant, and an option granted to
a Participant under this Plan will be exercisable, during his or her
lifetime, only by such Participant. Any such attempt at assignment,
transfer, pledge, or other disposition will be without effect, except
that Perot Systems will treat such act as an election to withdraw funds
in accordance with Section 2.6.
3. PURCHASE OF STOCK
3.1 Offering Periods. Except for the first Offering Period, each Offering
Period will start on the first day of the second month of a calendar
quarter and end on the last day of the first month of the next calendar
quarter. The first Offering Period will start on January 1, 2000 and
end on January 31, 2000.
3.2 Grant of Option; Exercise Price.
(a) On each Enrollment Date, Perot Systems will offer each Participant
the opportunity to have Eligible Compensation withheld from his or her
paycheck to be used to purchase on the next Exercise Date a number of
Shares. The number of shares the Participant will have an option to
purchase (on that Exercise Date and using the funds accumulated since
the prior Enrollment Date) will be a number of whole and fractional
Shares equal to (i) his or her then-current Withholding Percentage,
multiplied by his or her Eligible Compensation for the Offering Period,
divided by the Exercise Price for the next Exercise Date, minus (ii)
the number of whole and fractional Shares, if any, necessary to prevent
(A) that Participant from exceeding the limits referred to in Section
2.1(a), or (B) the Plan from issuing more shares than are authorized as
provided in Section 4.2.
(b) The Exercise Price for each Offering Period will be 85% of the Fair
Market Value of one share of the Common Stock on the Exercise Date for
that Offering Period.
3.3 Automatic Exercise of Option. On each Exercise Date, each Participant's
option to purchase Shares will be exercised automatically to purchase:
(a) the maximum number of whole and fractional Shares that may be
bought with the funds withheld from his or her paycheck during the
applicable Offering Period, minus
(b) any number of Shares required to comply with any limitations
described in Section 2.1 of this Plan concerning the maximum number of
Shares that may be purchased by that Participant.
3.4 Payment for Stock. Immediately upon each exercise of each Participant's
option to purchase shares, the amount held by Perot Systems for the
benefit of that Participant will be reduced by the Exercise Price
multiplied by the number of whole and fractional Shares of Common Stock
purchased by that Participant in that exercise.
1999 Employee Stock Purchase Plan/US A-4
<PAGE> 26
3.5 Delivery of Shares; Voting.
(a) Subject to the restrictions of Section 3.5(b), as soon as practical
after each Exercise Date, a stock certificate will be issued to each
Participant or to the Plan Custodian for the benefit of each
Participant for the Shares purchased on that Exercise Date. Such
certificate may be issued in nominee name.
(b) All Shares purchased under this Plan will be held by Perot Systems
or the Plan Custodian until the earlier of (i) a request for delivery
of the shares by the Participant, or (ii) the termination of the
Participant's employment by the Employer.
(i) As soon as practical after termination of a Participant's
employment by an Employer, certificates representing shares
purchased under the Plan will be issued in the name of that
Participant or, if timely requested by that Participant in a
form approved by the Plan Custodian, his or her designee.
(ii) All Shares purchased under this Plan shall be
nontransferable and nonassignable for six months after the
date such Shares are issued to the Participant. Any attempt to
sell, gift, pledge or otherwise transfer any Shares prior to
the expiration of six months from issuance shall be
ineffective and void.
Perot Systems will pay all issue or initial transfer taxes of the
Company with respect to the issuance or initial transfer of shares, as
well as all fees and expenses necessarily incurred by the Company in
connection with such issuance or initial transfer.
(c) A Participant who purchases Shares under this Plan shall be
transferred at such time substantially all of the rights of ownership
of such Shares, in accordance with Treasury Regulations Section
1.421-1(f) as in effect on the Effective Date. Such rights of ownership
shall include the right to vote, the right to receive declared
dividends, the right to share in the assets of Company in the event of
liquidation, the right to inspect Company's books and the right to
pledge or sell such Shares, subject to the restrictions on such rights
in this Plan and the restrictions on such rights imposed by applicable
law.
3.6 Periodic Reports. As soon as practical after each Exercise Date, a
statement will be sent to each person who has been a Participant under
this Plan, which statement will include (i) the total amount, in United
States dollars or local currency, of all payroll deductions or other
contributions made during the applicable Offering Period or otherwise
held under this Plan for the benefit of that person by Perot Systems,
and any applicable currency conversion rate, (ii) the number of Shares
purchased by that person on each applicable Exercise Date, (iii) the
per share and aggregate purchase price per Share for those Shares, (iv)
the remaining cash balance, if any held by any Employer for the benefit
of that person, and (v) such other information as the Stock
Administrator or Plan Custodian deems appropriate.
1999 Employee Stock Purchase Plan/US A-5
<PAGE> 27
3.7 No Rights in Stock Prior to Exercise. Neither a Participant nor his or
her beneficiaries will have any interest or voting right in Common
Stock covered by an option granted this Plan until such option has been
exercised and the Shares purchased.
4. OPERATION OF THE PLAN
4.1 Effective Date and Term of Plan. This Plan will become effective upon
January 1, 2000. This Plan will remain effective until July 16, 2008,
unless sooner terminated under Section 4.5.
4.2 Shares Authorized for Sale and Issuance Under the Plan.
(a) The maximum number of Shares that may be sold and issued under this
Plan will be 20,000,000 Shares, although the stated maximum of
20,000,000 Shares will be (i) reduced by the number of Shares issued
pursuant to exercises of options granted under the Perot Systems 1999
Employee Stock Purchase Plan and any parallel plans created thereunder
and (ii) adjusted as provided in Section 5.2 below. If any option to
purchase Shares granted under this Plan is not exercised for any
reason, the Shares subject to that option will remain available to be
sold and issued under this Plan.
(b) If, for any reason, the number of Shares available for sale and
issuance under this Plan under Section 4.2(a) is less than the number
of Shares to be sold and issued under Section 3.3 on an Exercise Date,
Perot Systems will allocate the Shares available for sale and issuance
pro rata among the Participants in as uniform a manner as it determines
to be equitable. In such event, the Stock Administrator or Plan
Custodian will notify each Participant of the reduction in the number
of Shares and the reason for such reduction.
(c) Shares sold and issued under this Plan may, in the sole and
absolute discretion of the Board, be either authorized and unissued
Shares or treasury Shares that are bought or otherwise acquired in
public or private transactions.
4.3 Conditions Upon Issuance of Shares.
(a) Compliance With Laws. Perot Systems will not be required to grant
an option or to sell or issue any Shares under this Plan to any
Eligible Associate unless that option and the sale, issuance and
delivery of Shares upon exercise of that option complies, in the
opinion of Perot Systems' counsel, with all applicable laws and
regulations, including, but not limited to, the Securities Act of 1933
and the rules and regulations of the United States Securities Exchange
Commission, and all rules and regulations of the New York Stock
Exchange or other applicable stock exchange upon which the Common Stock
is listed.
(b) Investment Intent. As a condition to the exercise of an option,
Perot Systems may require the person exercising such option to
represent and warrant at the time of any such exercise that the Shares
are being purchased only for investment and without any present
intention to sell or distribute such Shares if, in the opinion of
counsel for the Company, such a representation is required by any of
the aforementioned applicable provisions of law.
1999 Employee Stock Purchase Plan/US A-6
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4.4 Administration; Committee.
(a) Board of Directors. This Plan will be administered by the Board.
Unless otherwise provided in this Plan, the Board has the power:
(i) To determine when and how rights to purchase Shares will
be granted and the provisions of each offering of such rights
(which need not be identical).
(ii) To designate Participating Affiliates.
(iii) To construe and interpret the Plan and rights granted
under it, and to establish, amend and revoke rules and
regulations for its administration. The Board, in the exercise
of this power, may correct any defect, omission or
inconsistency in the Plan, in a manner and to the extent it
will deem necessary or expedient to make the Plan fully
effective.
(iv) To amend or terminate this Plan as provided in Section
4.5.
(v) To delegate administration of this Plan to a Committee of
two or more members of the Board.
(vi) Generally, to exercise such powers and to perform such
acts as the Board deems necessary or expedient to promote the
best interests of Perot Systems.
(b) Committee. If administration of this Plan is delegated to a
Committee, it will have all the powers of the Board with respect to
this Plan, subject to any limitations on such powers stated in the
Board's resolutions delegating administration to the Committee. Whether
or not the Board delegates administration of this Plan to a Committee,
the Board retains the final power to determine all questions of policy,
procedure, and expediency that arise in the administration of this
Plan.
(c) Participation by Members of the Board or Committee. Members of the
Board who are Eligible Associates are permitted to participate in this
Plan; provided that (A) no member of the Board who participates in this
Plan may vote on any matter affecting the administration of, or the
grant of any option pursuant to, this Plan, and (B) if a Committee is
appointed to administrate this Plan, no member of the Committee will be
eligible to participate in this Plan.
(d) Stock Administrator. Perot Systems' day to day obligations under
this Plan will be managed by the Stock Administrator, subject to the
Board's final power to determine all questions of policy, procedure,
and expediency that arise in the administration of this Plan. The Stock
Administrator will have all of the following powers of the Board:
(i) To manage, or select and direct a Plan Custodian to
manage, the daily operations of this Plan in accordance with
its terms;
(ii) To adopt rules of procedure and regulations necessary for
the operation of this Plan, provided they are consistent with
the terms of this Plan;
1999 Employee Stock Purchase Plan/US A-7
<PAGE> 29
(iii) To determine all questions with regard to rights of
Eligible Associates and Participants under the Plan,
including, but not limited to, the eligibility of any person
to participate in the Plan;
(iv) To enforce the terms, rules and regulations of this Plan;
(v) To direct the distribution of the Shares purchased
hereunder;
(vi) To furnish the Company with information which it requires
for tax or other purposes;
(vii) To engage the service of counsel (who may, if
appropriate, be counsel for the Company) and a Plan Custodian
or other agents it deems advisable to assist it with the
performance of its duties;
(viii) To prescribe procedures to be followed by Participants
in electing to participate in this Plan;
(ix) To receive from each Company and Eligible Associate any
information necessary to administer or manage this Plan;
(x) To maintain, or cause Perot Systems, the Employer or the
Plan Custodian to maintain, an account in the name of each
Participant to reflect his or her participation in this Plan;
and
(xi) To interpret and construe the Plan.
4.5 Amendment or Termination.
(a) The Board may amend or terminate this Plan without notice, provided
that the Board will not, without the approval of the stockholders of
Perot Systems, (i) increase the maximum number of Shares that may be
sold or issued under this Plan (except pursuant to Section 5.2), or
(ii) amend the requirements as to the class of Eligible Associates
eligible to purchase Shares under this Plan or if a Committee is
appointed to administer this Plan, permit the members of the Committee
to participate in this Plan.
(b) Except as specifically provided in this Plan, as required to comply
with Code section 423, or as required to obtain a favorable ruling from
the Internal Revenue Service, no amendment may, without the consent of
that Participant, make any change in any option granted under this Plan
that adversely affects the rights of any Participant.
(c) This Plan will automatically terminate on the Exercise Date that
Participants become entitled to purchase a number of Shares greater
than the number available for purchase under Section 4.2. In the event
of an automatic termination, reserved Shares remaining as of such
Exercise Date will be sold to Participants on a pro rata basis, as
described in Section 4.2(b).
1999 Employee Stock Purchase Plan/US A-8
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4.6 Approval of the Stockholders. Commencement of the Plan will be subject
to approval by the stockholders of the Company within 12 months after
the date the Plan is adopted. Notwithstanding any provision to the
contrary, failure to obtain such stockholder approval will void the
Plan, any options granted under the Plan, any Share purchases pursuant
to the Plan, and all rights of all Participants.
4.7 No Liability for Good Faith Determinations. Neither the members of the
Board, the Stock Administrator nor the Plan Custodian (nor their
delegates) will be liable for any act, omission, or determination taken
or made in good faith with respect to the Plan or any right to purchase
Shares granted under it. Members of the Board and the Stock
Administrator (and their delegates) will be entitled to indemnification
and reimbursement by Perot Systems in respect of any claim, loss,
damage, or expense (including attorneys' fees, the costs of settling
any suit, provided such settlement is approved by independent legal
counsel selected by Perot Systems, and amounts paid in satisfaction of
a judgment, except a judgment based on a finding of bad faith) arising
therefrom to the full extent permitted by law and under any directors
and officers' liability or similar insurance coverage that may from
time to time be in effect.
5. MISCELLANEOUS LEGAL PROVISIONS
5.1 Definitions.
(1) "Board" means the Board of Directors of Perot Systems or a duly
appointed committee of the Board.
(2) "Committee" means a committee of the Board appointed to administer
this Plan.
(3) "Common Stock" means the Class A Common Stock, $.01 par value per
share, of Perot Systems.
(4) "Company" means Perot Systems and each Subsidiary.
(5) "Eligible Associate" means a natural person who, on the applicable
Exercise Date, (i) has been employed by an Employer (as determined in
accordance with Treasury Regulations Section 1.421-7(h)), (ii) is
customarily employed for more than 20 hours per week, and (iii) is
customarily employed for more than five months in the calendar year.
(6) "Effective Date" means the date specified in Section 4.1.
(7) "Eligible Compensation" means the regular rate of compensation paid
to a Participant by any Employer during an Offering Period, including
wages, salary, bonuses and commission, but shall not include relocation
assistance payments, geographical hardship pay, noncash prizes and
awards, automobile allowances, severance type payments and nonqualified
deferred executive compensation.
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Eligible Compensation includes the amount of a Participant's elective
contributions that are made by the Employer on behalf of that
Participant that are not includable in gross income under Tax Code
Sections 125, 402(e)(3), 402(h), and 401(k).
(8) "Employer" means Perot Systems or the Participating Affiliate by
which an Eligible Associate is employed.
(9) "Enrollment Agreement" means the agreement submitted to the Stock
Administrator pursuant to Section 2.2; provided, however, that
notwithstanding anything to the contrary in the Plan, the enrollment
agreement or enrollment process which an Eligible Associate completed
prior to the Effective Date under the Perot Systems Corporation 1999
Employee Stock Purchase Plan shall be his or her Enrollment Agreement
and shall be deemed to have satisfied all of the requirements of
Section 2.2, including, without limitation, Sections 2.2(b) and (c),
required for the Eligible Associate to become a Participant on the
Effective Date, without further action by the Eligible Associate.
(10) "Enrollment Date" means the first day of the applicable Offering
Period.
(11) "Exercise Date" means the last day of the applicable Offering
Period.
(12) "Exercise Price" means the price defined in Section 3.2(b).
(13) "Fair Market Value" of one share of Common Stock on a particular
date will be (i) if the Common Stock is listed or admitted to trading
on the New York Stock Exchange, then (A) if sales of Common Stock
occurred on that date, the closing selling price per share of Common
Stock on the New York Stock Exchange Composite Tape for that date (1)
as reported by the Dow Jones News/Retrieval Service of Dow Jones and
Company, Inc., or (2) if not so reported, in a newspaper of national
circulation or other authoritative source selected by the Board , or
(B) if no sales of Common Stock occurred on that date, the closing
selling price per share of Common Stock as of the next preceding date
for which the price is reported on the New York Stock Exchange
Composite Tape on that date, or (ii) in all other cases, determined in
a reasonable way selected by the Board for that purpose.
(14) "Offering Period" means each period commencing on the first day of
the second month following the end of a calendar quarter and ending on
the last day of the first month following the end of the calendar
quarter, during which a Participant has an option to purchase Common
Stock; provided, however, that the first Offering Period will begin on
January 1, 2000 and end on January 31, 2000.
(15) "Participant" means an Eligible Associate who has elected to
participate in any Offering Period and continues to participate in that
Offering Period through its Exercise Date.
(16) "Participant Account" means any account or accounting entry
maintained by Perot Systems, the Employer, the Stock Administrator or
the Plan Custodian to record the amount that a Participant has
contributed to the Plan during an Offering Period and the Common Stock
purchased under this Plan.
1999 Employee Stock Purchase Plan/US A-10
<PAGE> 32
(17) "Participating Affiliate" means each corporation, domestic or
foreign, (i) of which Perot Systems, directly or indirectly, holds, on
the applicable Exercise Date, not less than 50% of the total combined
voting power of all classes of stock, whether or not such corporation
now exists or is hereafter organized or acquired by Perot Systems or
any Subsidiary, and (ii) which is approved by the Board to participate
in this Plan; provided, however, that the Board will not approve any
corporation for participation in this Plan if its participation would
disqualify this Plan under any provision of the Tax Code, including,
without limitation, Section 423 of the Tax Code.
(18) "Perot Systems" means Perot Systems Corporation, a Delaware
corporation, or any successor in interest that adopts this Plan.
(19) "Plan" means this Perot Systems Corporation 1999 Employee Stock
Purchase Plan/US (Revised January 7, 2000), as amended from time to
time.
(20) "Plan Custodian" means the third party administrator appointed by
Perot Systems to manage this Plan in accordance with its terms.
(21) "Share" means one share of Common Stock.
(22) "Stock Administrator" means the Stock Administration or Human
Resources Department of Perot Systems.
(23) "Subsidiary" means a domestic or foreign corporation of which not
less than 50% of the total combined voting power of all classes of
stock is held either by (i) Perot Systems or (ii) any other corporation
in an unbroken chain of corporations (beginning with Perot Systems, and
in which not less than 50% of the total combined voting power of all
classes of stock is held by each corporation in the chain), without
regard to whether such corporation now exists or is hereafter organized
or acquired.
(24) "Tax Code" means the Internal Revenue Code of 1986, as amended.
(25) "Withdrawal Agreement" means the agreement submitted to the Stock
Administrator pursuant to Section 2.6.
(26) "Withdrawing Associate" means a Participant who withdraws from
this Plan as provided in Section 2.6(a).
(27) "Withholding Percentage means the percentage of Eligible
Compensation that a Participant elects, from time to time, to have
withheld as his or her contribution during an Offering Period.
1999 Employee Stock Purchase Plan/US A-11
<PAGE> 33
5.2 Adjustments Upon Changes in Capitalization.
(a) If any change is made in the Common Stock, or subject to any rights
granted under the Plan (through merger, consolidation, reorganization,
recapitalization, stock dividend, dividend in property other than cash,
stock split, liquidating dividend, combination of shares, exchange of
shares, change in corporate structure or other transaction not
involving the receipt of consideration by the Company), the Plan and
outstanding rights will be appropriately adjusted in the class(es) and
maximum number of Shares subject to the Plan and the class(es) and
number of Shares and price per Share of Common Stock subject to
outstanding rights. Such adjustments will be made by the Board, the
determination of which will be final, binding and conclusive. The
conversion of any convertible securities of the Company will not be
treated as a "transaction not involving the receipt of consideration by
the Company."
(b) If (i) a dissolution or liquidation of Perot Systems or a sale of
all or substantially all of Perot Systems' assets; (ii) a merger or
consolidation in which Perot Systems is not the surviving corporation;
(iii) a reverse merger in which Perot Systems is the surviving
corporation but the shares of Common Stock outstanding immediately
preceding the merger are converted by virtue of the merger into other
property, whether in the form of securities, cash or otherwise; or (iv)
any other capital reorganization in which more than 50% of the shares
of the Company entitled to vote are exchanged, is proposed to be
consummated, then, the Exercise Date for the applicable Offering Period
will be accelerated to the date such transaction is consummated, and
the payroll deductions of the Participants made through the Exercise
Date will be used to purchase Common Stock immediately prior to such
transaction and all further rights of the Participants will terminate,
unless otherwise provided by the Board in its sole discretion.
5.3 Notices; Waiver of Notice.
(a) To a Participant. All notices or other communications relating to
the Plan given to a Participant or former Participant by the Board,
Perot Systems, or any Employer will be deemed delivered on the day the
notice or other communication is (i) personally delivered to that
person, (ii) electronically transmitted to a person who on the date of
that transmission either is an Eligible Associate or has consented to
receiving notices by electronic transmission to the last known
electronic transmission address of that person, or (iii) placed in the
official government mail of the country of the sender in an envelope
addressed to the last known address of that person, whichever is
earlier.
(b) By a Participant. All notices or other communications relating to
the Plan given to the Board, Perot Systems, or an Employer will be
deemed delivered on the day the notice or other communication is (i)
received in tangible written form by the Stock Administrator at Perot
Systems' Corporate Headquarters address, or (ii) electronically
transmitted by an Eligible Associate to the Stock Administrator by
means of Perot Systems' internal corporate e-mail or intranet system,
provided that such notice is in the form specified by Perot Systems and
is acknowledged by the Stock Administrator.
(c) Consent to Electronic Delivery of Notices, Plan Documents and
Prospectuses. By requesting to participate in the Plan, an Eligible
Associate will be deemed to consent to receiving copies of all notices
and other communications relating to the Plan by electronic
transmission, including but not limited to the Prospectus relating to
the Plan, all enrollment and other
1999 Employee Stock Purchase Plan/US A-12
<PAGE> 34
participation materials, and all other documents required to be
delivered in connection with the Plan. Upon request, Perot Systems will
provide any such documents to any Eligible Associate in tangible
written form.
(d) Waiver of Notice. Any person entitled to notice under the Plan may
waive the notice.
5.4 Severability. If any provision of this Plan is held to be illegal or
invalid for any reason, the illegality or invalidity will not affect
the other provisions of this Plan, but will be fully severable and the
Plan will be construed and enforced as if the illegal or invalid
provision had never been included in this Plan.
5.5 Successors and Assigns. The Plan is binding on all Participants and
their respective heirs, legatees, and legal representatives, including
but not limited to their estate and the executors, any receiver,
trustee in bankruptcy or representative of creditors of such person,
and upon the Employer, its successors and assigns.
5.6 Headings. The titles and headings of the paragraphs are included for
convenience of reference only and are not to be considered in
construction of the provisions hereof.
5.7 Governing Law. This Plan and rights to purchase Shares that may be
granted under this Plan will be governed by and construed in accordance
with the laws of the State of Texas, without giving effect to any
conflicts-of-law rules or principles that might require the application
of the laws of another jurisdiction, except to the extent this Plan or
those rights are governed by the Delaware General Corporation Law, or
the Federal law of the United States.
5.8 No Right to Employment. Nothing in this Plan, any amendment to this
Plan, or the creation of any Participant Account, the execution or
submission of any Enrollment Agreement or Withdrawal Agreement, or the
issuance of any Shares of Common Stock, will give any Eligible
Associate any right (a) to continue employment with any Employer, (b)
any legal or equitable right against Perot Systems or any Employer, or
any officer, director, or Associate of Perot Systems or its
Participating Affiliates, in connection with his or her employment by
the Employer, or (c) interfere in any way with the Employer's right to
terminate or otherwise modify his or her employment at any time, except
as expressly provided by the Plan or by applicable law.
This Plan has been executed by a duly authorized officer of the Company,
effective on the Effective Date.
PEROT SYSTEMS CORPORATION
By: /s/ KELLY PARSONS
-----------------------------------
Its: Director, Corporate Finance and
Human Resources
-------------------------------
1999 Employee Stock Purchase Plan/US A-13
<PAGE> 35
Perot Systems Corporation
1999 Employee Stock Purchase Plan/US
Participating Affiliates
The following corporations are approved by the Board as Participating Affiliates
to participate in this Plan.
Applewhite & Gittleson (US Market Link)
Benton International Incorporated
perot.com inc.
Perot Systems Communication Services, Inc.
Perot Systems Financial Services Corporation
Perot Systems Healthcare Services Corporation
Perot Systems International, Inc.
PSC Government Services Corporation
PSC Health Care, Inc.
Security Services, Inc.
The Technical Resource Connection, Inc.
<PAGE> 36
APPENDIX B
PEROT SYSTEMS CORPORATION
1999 EMPLOYEE STOCK PURCHASE PLAN/NON-US
(REVISED JANUARY 7, 2000)
AMENDED AND RESTATED EFFECTIVE JANUARY 1, 2000
<PAGE> 37
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
1. Purpose of the Plan
1.1 General.................................................
1.2 Parallel Plans..........................................
2. Participation in the Plan
2.1 Eligibility.............................................
2.2 Enrollment to Buy Stock.................................
2.3 Designation of Beneficiary..............................
2.4 Contributions; Payroll Deductions; Account; No
Interest....................................................
2.5 Changes in Contributions................................
2.6 Withdrawal..............................................
2.7 Termination of Employment; Leave of Absence.............
2.8 Transferability.........................................
3. Purchase of Stock
3.1 Offering Periods........................................
3.2 Grant of Option; Exercise Price.........................
3.3 Automatic Exercise of Option............................
3.4 Payment for Stock.......................................
3.5 Delivery of Shares; Voting..............................
3.6 Periodic Reports........................................
3.7 No Rights in Stock Prior to Exercise....................
4. Operation of the Plan
4.1 Effective Date and Term of Plan.........................
4.2 Shares Authorized for Sale and Issuance Under the
Plan........................................................
4.3 Conditions Upon Issuance of Shares......................
4.4 Administration; Committee...............................
4.5 Amendment or Termination................................
4.6 No Liability for Good Faith Determinations..............
5. Miscellaneous Legal Provisions
5.1 Definitions.............................................
5.2 Adjustments Upon Changes in Capitalization..............
5.3 Notices; Waiver of Notice...............................
5.4 Severability
5.5 Successors and Assigns..................................
5.6 Headings................................................
5.7 Governing Law...........................................
5.8 No Right to Employment..................................
</TABLE>
(i)
<PAGE> 38
PEROT SYSTEMS CORPORATION
1999 EMPLOYEE STOCK PURCHASE PLAN/NON-US
(REVISED JANUARY 7, 2000)
1. PURPOSE OF THE PLAN
1.1 General. Perot Systems has adopted this Plan to provide Eligible
Associates with the opportunity and a convenient means to purchase Common Stock
as an incentive (a) to exert their maximum efforts for the success of the
Company, and (b) to remain employed with the Company.
1.2 Parallel Plans. If revisions to this Plan are necessary to comply with
employment, labor, securities, tax or other laws or regulations (or, in the sole
discretion of Perot Systems, business customs) which apply to a Participating
Affiliate, the Stock Administrator may implement separate plans (or
country-specific addenda implementing revisions to this Plan) for those Eligible
Associates that are revised as necessary to conform to such laws, regulations
and business customs.
2. PARTICIPATION IN THE PLAN
2.1 Eligibility. Each Eligible Associate who is employed by an Employer on
an Enrollment Date may participate in the Plan during the relevant Offering
Period, unless:
(a) Immediately after the grant of an option under this Plan on the
Exercise Date, the Eligible Associate (together with certain individuals
and entities associated with or related to the Eligible Associate as
described in Section 424(d) of the Tax Code) would be deemed to own a
number of shares of stock and certain exercisable options to purchase stock
that together represent 5% or more of the total combined voting power or
value of all classes of stock of Perot Systems or any Subsidiary (computed
in accordance with Section 423(b)(3) of the Tax Code); or
(b) Immediately after the grant of an option under this Plan to an
Eligible Associate on the Exercise Date, the Eligible Associate's rights to
purchase Common Stock under all of the employee stock purchase plans
described in Section 423 of the Tax Code of Perot Systems and each
Subsidiary would accrue at a rate that exceeded $25,000 (computed based on
the Fair Market Value on the Exercise Date in accordance with Section
423(b)(8) of the Tax Code) during the calendar year of that Offering
Period; or
(c) Other applicable laws or regulations prohibit the Eligible
Associate's participation.
2.2 Enrollment to Buy Stock. Each Eligible Associate who:
(a) completes an Enrollment Agreement in the form, format, and as
otherwise required by the Stock Administrator, and
(b) delivers that Enrollment Agreement to the Stock Administrator at
least 10 business days before the Enrollment Date for an Offering Period,
or
(c) calls the Plan Custodian's automated phone system and completes
the enrollment process, may purchase Common Stock on the Exercise Date for
that Offering Period, subject to the other provisions of this Plan.
2.3 Designation of Beneficiary. Each Participant may from time to time
designate a beneficiary by filing a written beneficiary designation form with
the Stock Administrator. Such beneficiary shall receive any refunds of amounts
not used to purchase Shares and any Shares issued to the Participant. If no
beneficiary was designated, any cash refunds and transfers of Shares shall be
made to the appropriate representative of Participant's estate.
2.4 Contributions; Payroll Deductions; Account; No Interest.
(a) The Company will withhold from each Participant's paycheck (or, in
jurisdictions where payroll deductions are not allowed, will allow each
Participant to contribute) the percentage (not to exceed 10%)
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of Eligible Compensation specified in his or her then-current Enrollment
Agreement commencing on the first pay date after the next Enrollment Date
of an Offering Period and continuing throughout that Offering Period and
each future Offering Period until he or she ceases to be a Participant or,
if earlier, changes his or her Enrollment Agreement.
(b) Perot Systems will hold and use the amounts withheld from each
Participant's paycheck(or otherwise contributed by each Participant) until
the earlier of the date those amounts are (i) used to purchase Common
Stock, or (ii) refunded to the Participant. Perot Systems will not be
required to segregate any of these funds from its general corporate fund,
and will not pay interest on any of these funds unless otherwise required
by applicable law.
(c) If the funds in the Participant Account of a Participant are in a
currency other than United States dollars on any Exercise Date, for
purposes of determining the maximum number of whole and fractional shares
that may be purchased under this Plan, such funds will be deemed to have
been converted into United States dollars based upon the foreign exchange
selling rates, as reported by the Dow Jones News/Retrieval Service of Dow
Jones and Company, Inc., on such date, or if not so reported on such date,
as reported on the next preceding date on which such rates are reported.
2.5 Changes in Contributions. During an Offering Period, a Participant may
not change the percentage of Eligible Compensation to be withheld from his or
her paycheck (or otherwise to be contributed), except by withdrawing from the
Plan. However, a new Enrollment Agreement may be submitted for any subsequent
Offering Period.
2.6 Withdrawal.
(a) A Participant may stop participating in the current Offering
Period and each future Offering Period by delivering a Withdrawal Agreement
to the Stock Administrator or calling the Plan Custodian's automated phone
system and completing the withdrawal process at least 10 business days
before the Exercise Date for then-current Offering Period. Delivery of a
Withdrawal Agreement or completing the withdrawal process will:
(i) permanently and irrevocably terminate the Withdrawing
Associate's participation in the then-current Offering Period, and
(ii) suspend the Withdrawing Associate's participation in any
future Offering Periods until he or she delivers an Enrollment Agreement
to the Stock Administrator.
An election to stop participating in one Offering Period will not
prevent an Eligible Associate from participating in any future Offering
Period or in any other Plan adopted by Perot Systems, provided that the
Eligible Associate will not participate in any future Offering Period
until he or she submits a new Enrollment Agreement.
(b) As soon as practical after receiving a Withdrawal Agreement, Perot
Systems will:
(i) stop withholding the applicable percentage of Eligible
Compensation from the Withdrawing Associate's paychecks or otherwise
accepting contributions to the Withdrawing Associate's Participant
Account, and
(ii) refund to the Withdrawing Associate all amounts previously
withheld from his or her paychecks or otherwise contributed to the
Withdrawing Associate's Participant Account during the then-current
Offering Period.
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2.7 Termination of Employment; Leave of Absence.
(a) If a Participant's employment with the Company terminates,
including by death, on or before an Exercise Date, he or she will be deemed
to have elected to withdraw from the applicable Offering Period effective
as of the date his or her employment terminated.
(b) As soon as practical after a Participant's termination of
employment, Perot Systems will:
(i) refund all amounts withheld from his or her paycheck or
otherwise contributed under this Plan that have not been used to
purchase Common Stock from Perot Systems or otherwise refunded; and
(ii) distribute, or direct the Plan Custodian to distribute, any
Shares held by the Employer or the Plan Custodian on the Participant's
behalf to the Participant or his or her designee.
(c) If a Participant begins an approved leave of absence from his or
her Employer on or before an Exercise Date, he or she will remain in the
Plan for the applicable Offering Period and each subsequent Offering
Period, but only so long as such Participant's approved leave of absence,
measured from the first day of his or her leave of absence, has not
exceeded the greater of: (i) 90 days, or (ii) the period during which such
Participant's right to reemployment with the Company is guaranteed either
by statute or contract (the "Leave Period"). If a Participant's approved
leave of absence exceeds his or her Leave Period, such Participant will be
deemed to have elected to stop participating in the Plan on the day
immediately after the last day of the Leave Period, and such deemed
election to stop participating shall be effective for each such Offering
Period and each subsequent Offering Period until he or she returns to work
and submits a new Enrollment Form.
2.8 Transferability. Neither any monies credited to a Participant Account
nor any rights with regard to the exercise of an option to purchase Common Stock
under the Plan may be assigned, transferred, pledged, or otherwise disposed of
in any way (other than by will or the laws of descent and distribution) by the
Participant, and an option granted to a Participant under this Plan will be
exercisable, during his or her lifetime, only by such Participant. Any such
attempt at assignment, transfer, pledge, or other disposition will be without
effect, except that Perot Systems will treat such act as an election to withdraw
funds in accordance with Section 2.6.
3. PURCHASE OF STOCK
3.1 Offering Periods. Except for the first Offering Period, each Offering
Period will start on the first day of the second month of a calendar quarter and
end on the last day of the first month of the next calendar quarter.
3.2 Grant of Option; Exercise Price.
(a) On each Enrollment Date, Perot Systems will offer each Participant
the opportunity to have Eligible Compensation withheld from his or her
paycheck (or to contribute Eligible Compensation in a manner approved by
Perot Systems) to be used to purchase on the next Exercise Date a number of
Shares. The number of shares the Participant will have an option to
purchase (on that Exercise Date and using the funds accumulated since the
prior Enrollment Date) will be a number of whole and fractional Shares
equal to (i) his or her then-current Withholding Percentage, multiplied by
his or her Eligible Compensation for the Offering Period, divided by the
Exercise Price for the next Exercise Date, minus (ii) the number of whole
and fractional Shares, if any, necessary to prevent (A) that Participant
from exceeding the limits referred to in Section 2.1(a), or (B) the Plan
from issuing more shares than are authorized as provided in Section 4.2.
(b) The Exercise Price for each Offering Period will be 85% of the
Fair Market Value of one share of the Common Stock on the Exercise Date for
that Offering Period.
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3.3 Automatic Exercise of Option. On each Exercise Date, each
Participant's option to purchase Shares will be exercised automatically to
purchase:
(a) the maximum number of whole and fractional Shares that may be
bought with the funds withheld from his or her paycheck (or otherwise
contributed) during the applicable Offering Period, minus
(b) any number of Shares required to comply with any limitations
described in Section 2.1 of this Plan concerning the maximum number of
Shares that may be purchased by that Participant.
3.4 Payment for Stock. Immediately upon each exercise of each
Participant's option to purchase shares, the amount held by Perot Systems for
the benefit of that Participant will be reduced by the Exercise Price multiplied
by the number of whole and fractional Shares of Common Stock purchased by that
Participant in that exercise.
3.5 Delivery of Shares; Voting.
(a) Subject to the restrictions of Section 3.5(b), as soon as
practical after each Exercise Date, a stock certificate will be issued to
each Participant or to the Plan Custodian for the benefit of each
Participant for the Shares purchased on that Exercise Date. Such
certificate may be issued in nominee name.
(b) All Shares purchased under this Plan will be held by Perot Systems
or the Plan Custodian until the earlier of (i) a request for delivery of
the shares by the Participant, or (ii) the termination of the Participant's
employment by the Employer.
(i) As soon as practical after termination of a Participant's
employment by an Employer, certificates representing shares purchased
under the Plan will be issued in the name of that Participant or, if
timely requested by that Participant in a form approved by the Plan
Custodian, his or her designee.
(ii) All Shares purchased under this Plan shall be nontransferable
and nonassignable for six months after the date such Shares are issued
to the Participant. Any attempt to sell, gift, pledge or otherwise
transfer any Shares prior to the expiration of six months from issuance
shall be ineffective and void.
Perot Systems will pay all issue or initial transfer taxes of the
Company with respect to the issuance or initial transfer of shares, as well
as all fees and expenses necessarily incurred by the Company in connection
with such issuance or initial transfer.
(c) A Participant who purchases Shares under this Plan shall be
transferred at such time substantially all of the rights of ownership of
such Shares. Such rights of ownership shall include the right to vote, the
right to receive declared dividends, the right to share in the assets of
Company in the event of liquidation, the right to inspect Company's books
and the right to pledge or sell such Shares, subject to the restrictions on
such rights in this Plan and the restrictions on such rights imposed by
applicable law.
3.6 Periodic Reports. As soon as practical after each Exercise Date, a
statement will be sent to each person who has been a Participant under this
Plan, which statement will include (i) the total amount, in United States
dollars or local currency, of all payroll deductions or other contributions made
during the applicable Offering Period or otherwise held under this Plan for the
benefit of that person by Perot Systems, and any applicable currency conversion
rate, (ii) the number of Shares purchased by that person on each applicable
Exercise Date, (iii) the per share and aggregate purchase price per Share for
those Shares, (iv) the remaining cash balance, if any held by any Employer for
the benefit of that person, and (v) such other information as the Stock
Administrator or Plan Custodian deems appropriate.
3.7 No Rights in Stock Prior to Exercise. Neither a Participant nor his or
her beneficiaries will have any interest or voting right in Common Stock covered
by an option granted this Plan until such option has been exercised and the
Shares purchased.
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4. OPERATION OF THE PLAN
4.1 Effective Date and Term of Plan. This Plan has been adopted, amended
and restated, effective January 1, 2000, under the terms of the Perot Systems
1998 Employee Stock Purchase Plan and will remain effective until July 16, 2008,
unless sooner terminated under Section 4.5.
4.2 Shares Authorized for Sale and Issuance Under the Plan.
(a) The maximum number of Shares that may be sold and issued under
this Plan will be 20,000,000 shares, although the stated maximum of
20,000,000 shares will be (i) reduced by the number of Shares issued
pursuant to exercises of options granted under the Perot Systems 1999
Employee Stock Purchase Plan, the Perot Systems 1999 Employee Stock
Purchase Plan/US and any other parallel plans created hereunder and (ii)
adjusted as provided in Section 5.2 below. If any option to purchase Shares
granted under this Plan is not exercised for any reason, the Shares subject
to that option will remain available to be sold and issued under this Plan.
(b) If, for any reason, the number of Shares available for sale and
issuance under this Plan under Section 4.2(a) is less than the number of
Shares to be sold and issued under Section 3.3 on an Exercise Date, Perot
Systems will allocate the Shares available for sale and issuance pro rata
among the Participants in as uniform a manner as it determines to be
equitable. In such event, the Stock Administrator or Plan Custodian will
notify each Participant of the reduction in the number of Shares and the
reason for such reduction.
(c) Shares sold and issued under this Plan may, in the sole and
absolute discretion of the Board, be either authorized and unissued Shares
or treasury Shares that are bought or otherwise acquired in public or
private transactions.
4.3 Conditions Upon Issuance of Shares.
(a) Compliance With Laws. Perot Systems will not be required to grant
an option or to sell or issue any Shares under this Plan to any Eligible
Associate unless that option and the sale, issuance and delivery of Shares
upon exercise of that option complies, in the opinion of Perot Systems'
counsel, with all applicable laws and regulations, including, but not
limited to, the Securities Act of 1933 and the rules and regulations of the
United States Securities Exchange Commission, and all rules and regulations
of the New York Stock Exchange or other applicable stock exchange upon
which the Common Stock is listed.
(b) Investment Intent. As a condition to the exercise of an option,
Perot Systems may require the person exercising such option to represent
and warrant at the time of any such exercise that the Shares are being
purchased only for investment and without any present intention to sell or
distribute such Shares if, in the opinion of counsel for the Company, such
a representation is required by any of the aforementioned applicable
provisions of law.
4.4 Administration; Committee.
(a) Board of Directors. This Plan will be administered by the Board.
Unless otherwise provided in this Plan, the Board has the power:
(i) To determine when and how rights to purchase Shares will be
granted and the provisions of each offering of such rights (which need
not be identical).
(ii) To designate Participating Affiliates.
(iii) To construe and interpret the Plan and rights granted under
it, and to establish, amend and revoke rules and regulations for its
administration. The Board, in the exercise of this power, may correct
any defect, omission or inconsistency in the Plan, in a manner and to
the extent it will deem necessary or expedient to make the Plan fully
effective.
(iv) To amend or terminate this Plan as provided in Section 4.5.
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(v) To delegate administration of this Plan to a Committee of two
or more members of the Board.
(vi) Generally, to exercise such powers and to perform such acts as
the Board deems necessary or expedient to promote the best interests of
Perot Systems.
(b) Committee. If administration of this Plan is delegated to a
Committee, it will have all the powers of the Board with respect to this
Plan, subject to any limitations on such powers stated in the Board's
resolutions delegating administration to the Committee. Whether or not the
Board delegates administration of this Plan to a Committee, the Board
retains the final power to determine all questions of policy, procedure,
and expediency that arise in the administration of this Plan.
(c) Participation by Members of the Board or Committee. Members of the
Board who are Eligible Associates are permitted to participate in this
Plan; provided that (A) no member of the Board who participates in this
Plan may vote on any matter affecting the administration of, or the grant
of any option pursuant to, this Plan, and (B) if a Committee is appointed
to administrate this Plan, no member of the Committee will be eligible to
participate in this Plan.
(d) Stock Administrator. Perot Systems' day to day obligations under
this Plan will be managed by the Stock Administrator, subject to the
Board's final power to determine all questions of policy, procedure, and
expediency that arise in the administration of this Plan. The Stock
Administrator will have all of the following powers of the Board:
(i) To manage, or select and direct a Plan Custodian to manage, the
daily operations of this Plan in accordance with its terms;
(ii) To adopt rules of procedure and regulations necessary for the
operation of this Plan, provided they are consistent with the terms of
this Plan;
(iii) To determine all questions with regard to rights of Eligible
Associates and Participants under the Plan, including, but not limited
to, the eligibility of any person to participate in the Plan;
(iv) To enforce the terms, rules and regulations of this Plan;
(v) To direct the distribution of the Shares purchased hereunder;
(vi) To furnish the Company with information which it requires for
tax or other purposes;
(vii) To engage the service of counsel (who may, if appropriate, be
counsel for the Company) and a Plan Custodian or other agents it deems
advisable to assist it with the performance of its duties;
(viii) To prescribe procedures to be followed by Participants in
electing to participate in this Plan;
(ix) To receive from each Company and Eligible Associate any
information necessary to administer or manage this Plan;
(x) To maintain, or cause Perot Systems, the Employer or the Plan
Custodian to maintain, an account in the name of each Participant to
reflect his or her participation in this Plan;
(xi) To interpret and construe the Plan; and
(xii) To make any changes or modifications necessary to administer
and implement the provisions of this Plan in any jurisdiction to the
fullest extent possible, including but not limited to creation of
parallel plans as contemplated by Section 1.2.
4.5 Amendment or Termination.
(a) The Board may amend or terminate this Plan without notice,
provided that the Board will not, without the approval of the stockholders
of Perot Systems, (i) increase the maximum number of Shares that may be
sold or issued under this Plan (except pursuant to Section 5.2), or (ii)
amend the
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requirements as to the class of Eligible Associates eligible to purchase
Shares under this Plan (except to the extent necessary to comply with any
applicable law), or, if a Committee is appointed to administer this Plan,
permit the members of the Committee to participate in this Plan.
(b) Except as specifically provided in this Plan, no amendment may,
without the consent of that Participant, make any change in any option
granted under this Plan that adversely affects the rights of any
Participant.
(c) This Plan will automatically terminate on the Exercise Date that
Participants become entitled to purchase a number of Shares greater than
the number available for purchase under Section 4.2. In the event of an
automatic termination, reserved Shares remaining as of such Exercise Date
will be sold to Participants on a pro rata basis, as described in Section
4.2(b).
4.6 No Liability for Good Faith Determinations. Neither the members of the
Board, the Stock Administrator nor the Plan Custodian (nor their delegates) will
be liable for any act, omission, or determination taken or made in good faith
with respect to the Plan or any right to purchase Shares granted under it.
Members of the Board and the Stock Administrator (and their delegates) will be
entitled to indemnification and reimbursement by Perot Systems in respect of any
claim, loss, damage, or expense (including attorneys' fees, the costs of
settling any suit, provided such settlement is approved by independent legal
counsel selected by Perot Systems, and amounts paid in satisfaction of a
judgment, except a judgment based on a finding of bad faith) arising therefrom
to the full extent permitted by law and under any directors and officers'
liability or similar insurance coverage that may from time to time be in effect.
5. MISCELLANEOUS LEGAL PROVISIONS
5.1 Definitions.
(1) "Board" means the Board of Directors of Perot Systems or a duly
appointed committee of the Board.
(2) "Committee" means a committee of the Board appointed to administer
this Plan.
(3) "Common Stock" means the Class A Common Stock, $.01 par value per
share, of Perot Systems.
(4) "Company" means Perot Systems and each Subsidiary.
(5) "Eligible Associate" means a natural person who on an Enrollment
Date is (i) receiving wages from the Employer and (ii) customarily employed
as a common law employee of an Employer (A) on a full-time basis, (B) for
more than 20 hours per week on a regular basis by an Employer for more than
five months per calendar year, or (C) to the extent required by applicable
law, for 20 or less hours per week. Without limitation, the term "Eligible
Associate" shall exclude any individual for the period that such
individual's paycheck is being reduced during an Offering Period under any
other employee stock purchase plan related to the Perot Systems 1999
Employee Stock Purchase Plan (including but not limited to the Perot
Systems 1999 Employee Stock Purchase Plan/US).
(6) "Effective Date" shall mean January 1, 2000.
(7) "Eligible Compensation" means the regular rate of compensation
paid to a Participant by any Employer during an Offering Period, including
wages, salary, bonuses and commission, but shall not include relocation
assistance payments, geographical hardship pay, noncash prizes and awards,
automobile allowances, severance type payments and nonqualified deferred
executive compensation.
Eligible Compensation includes the amount of a Participant's elective
contributions that are made by the Employer on behalf of that
Participant that are not includable in gross income under applicable
law.
(8) "Employer" means Perot Systems or the Participating Affiliate by
which an Eligible Associate is employed.
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(9) "Enrollment Agreement" means the agreement submitted to the Stock
Administrator pursuant to Section 2.2; provided, however, that
notwithstanding anything to the contrary in the Plan, the enrollment
agreement or enrollment process which an Eligible Associate completed prior
to the Effective Date under the Perot Systems Corporation 1999 Employee
Stock Purchase Plan shall be his or her Enrollment Agreement and shall be
deemed to have satisfied all of the requirements of Section 2.2, including,
without limitation, Sections 2.2(b) and (c), required for the Eligible
Associate to become a Participant on the Effective Date, without further
action by the Eligible Associate.
(10) "Enrollment Date" means the first day of the applicable Offering
Period.
(11) "Exercise Date" means the last day of the applicable Offering
Period.
(12) "Exercise Price" means the price defined in Section 3.2(b).
(13) "Fair Market Value" of one share of Common Stock on a particular
date will be (i) if the Common Stock is listed or admitted to trading on
the New York Stock Exchange, then (A) if sales of Common Stock occurred on
that date, the closing selling price per share of Common Stock on the New
York Stock Exchange Composite Tape for that date (1) as reported by the Dow
Jones News/Retrieval Service of Dow Jones and Company, Inc., or (2) if not
so reported, in a newspaper of national circulation or other authoritative
source selected by the Board , or (B) if no sales of Common Stock occurred
on that date, the closing selling price per share of Common Stock as of the
next preceding date for which the price is reported on the New York Stock
Exchange Composite Tape on that date, or (ii) in all other cases,
determined in a reasonable way selected by the Board for that purpose.
(14) "Offering Period" means each period commencing on the first day
of the second month following the end of a calendar quarter and ending on
the last day of the first month following the end of the calendar quarter,
during which a Participant has an option to purchase Common Stock.
(15) "Participant" means an Eligible Associate who has elected to
participate in any Offering Period and continues to participate in that
Offering Period through its Exercise Date.
(16) "Participant Account" means any account or accounting entry
maintained by Perot Systems, the Employer, the Stock Administrator or the
Plan Custodian to record the amount that a Participant has contributed to
the Plan during an Offering Period and the Common Stock purchased under
this Plan.
(17) "Participating Affiliate" means (i) (A) each corporation,
domestic or foreign, of which Perot Systems, directly or indirectly, holds,
on the applicable Exercise Date, not less than 40% of the total combined
voting power of all classes of stock or other equity interest, whether or
not such corporation now exists or is hereafter organized or acquired by
Perot Systems or any Subsidiary, and (B) each other corporation, joint
venture, general or limited partnership, limited liability company or other
business entity, domestic or foreign; and (ii) which is approved by the
Board to participate in this Plan. Notwithstanding the foregoing, no
Participating Affiliate will be eligible to participate in this Plan and
any other employee stock purchase plan related to the Perot Systems 1999
Employee Stock Purchase Plan (including but not limited to the Perot
Systems 1999 Employee Stock Purchase Plan/US) simultaneously.
(18) "Perot Systems" means Perot Systems Corporation, a Delaware
corporation, or any successor in interest that adopts this Plan.
(19) "Plan" means this Perot Systems Corporation 1999 Employee Stock
Purchase Plan/Non-US, amended from time to time.
(20) "Plan Custodian" means the third party administrator appointed by
Perot Systems to manage this Plan in accordance with its terms.
(21) "Share" means one share of Common Stock.
(22) "Stock Administrator" means the Stock Administration or Human
Resources Department of Perot Systems.
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(23) "Subsidiary" means a domestic or foreign corporation of which not
less than 50% of the total combined voting power of all classes of stock is
held either by (i) Perot Systems or (ii) any other corporation in an
unbroken chain of corporations (beginning with Perot Systems, and in which
not less than 50% of the total combined voting power of all classes of
stock is held by another corporation in the chain), without regard to
whether such corporation now exists or is hereafter organized or acquired.
(24) "Tax Code" means the Internal Revenue Code of 1986, as amended.
(25) "Withdrawal Agreement" means the agreement submitted to the Stock
Administrator pursuant to Section 2.6.
(26) "Withdrawing Associate" means a Participant who withdraws from
this Plan as provided in Section 2.6(a).
(27) "Withholding Percentage means the percentage of Eligible
Compensation that a Participant elects, from time to time, to have withheld
as his or her contribution during an Offering Period.
5.2 Adjustments Upon Changes in Capitalization.
(a) If any change is made in the Common Stock, or subject to any
rights granted under the Plan (through merger, consolidation,
reorganization, recapitalization, stock dividend, dividend in property
other than cash, stock split, liquidating dividend, combination of shares,
exchange of shares, change in corporate structure or other transaction not
involving the receipt of consideration by the Company), the Plan and
outstanding rights will be appropriately adjusted in the class(es) and
maximum number of Shares subject to the Plan and the class(es) and number
of Shares and price per Share of Common Stock subject to outstanding
rights. Such adjustments will be made by the Board, the determination of
which will be final, binding and conclusive. The conversion of any
convertible securities of the Company will not be treated as a "transaction
not involving the receipt of consideration by the Company."
(b) If (i) a dissolution or liquidation of Perot Systems or a sale of
all or substantially all of Perot Systems' assets; (ii) a merger or
consolidation in which Perot Systems is not the surviving corporation;
(iii) a reverse merger in which Perot Systems is the surviving corporation
but the shares of Common Stock outstanding immediately preceding the merger
are converted by virtue of the merger into other property, whether in the
form of securities, cash or otherwise; or (iv) any other capital
reorganization in which more than 50% of the shares of the Company entitled
to vote are exchanged, is proposed to be consummated, then, the Exercise
Date for the applicable Offering Period will be accelerated to the date
such transaction is consummated, and the payroll deductions of the
Participants made through the Exercise Date will be used to purchase Common
Stock immediately prior to such transaction and all further rights of the
Participants will terminate, unless otherwise provided by the Board in its
sole discretion.
5.3 Notices; Waiver of Notice.
(a) To a Participant. All notices or other communications relating to
the Plan given to a Participant or former Participant by the Board, Perot
Systems, or any Employer will be deemed delivered on the day the notice or
other communication is (i) personally delivered to that person, (ii)
electronically transmitted to a person who on the date of that transmission
either is an Eligible Associate or has consented to receiving notices by
electronic transmission to the last known electronic transmission address
of that person, or (iii) placed in the official government mail of the
country of the sender in an envelope addressed to the last known address of
that person, whichever is earlier.
(b) By a Participant. All notices or other communications relating to
the Plan given to the Board, Perot Systems, or an Employer will be deemed
delivered on the day the notice or other communication is (i) received in
tangible written form by the Stock Administrator at Perot Systems'
Corporate Headquarters address, or (ii) electronically transmitted by an
Eligible Associate to the Stock Administrator by means of Perot Systems'
internal corporate e-mail or intranet system, provided that such notice is
in the form specified by Perot Systems and is acknowledged by the Stock
Administrator.
B-9
<PAGE> 47
(c) Consent to Electronic Delivery of Notices, Plan Documents and
Prospectuses. By requesting to participate in the Plan, an Eligible
Associate will be deemed to consent to receiving copies of all notices and
other communications relating to the Plan by electronic transmission,
including but not limited to the Prospectus relating to the Plan, all
enrollment and other participation materials, and all other documents
required to be delivered in connection with the Plan. Upon request, Perot
Systems will provide any such documents to any Eligible Associate in
tangible written form.
(d) Waiver of Notice. Any person entitled to notice under the Plan may
waive the notice.
5.4 Severability. If any provision of this Plan is held to be illegal or
invalid for any reason, the illegality or invalidity will not affect the other
provisions of this Plan, but will be fully severable and the Plan will be
construed and enforced as if the illegal or invalid provision had never been
included in this Plan.
5.5 Successors and Assigns. The Plan is binding on all Participants and
their respective heirs, legatees, and legal representatives, including but not
limited to their estate and the executors, any receiver, trustee in bankruptcy
or representative of creditors of such person, and upon the Employer, its
successors and assigns.
5.6 Headings. The titles and headings of the paragraphs are included for
convenience of reference only and are not to be considered in construction of
the provisions hereof.
5.7 Governing Law. This Plan and rights to purchase Shares that may be
granted under this Plan will be governed by and construed in accordance with the
laws of the State of Texas, without giving effect to any conflicts-of-law rules
or principles that might require the application of the laws of another
jurisdiction, except to the extent this Plan or those rights are governed by the
Delaware General Corporation Law, or the Federal law of the United States.
5.8 No Right to Employment. Nothing in this Plan, any amendment to this
Plan, or the creation of any Participant Account, the execution or submission of
any Enrollment Agreement or Withdrawal Agreement, or the issuance of any Shares
of Common Stock, will give any Eligible Associate any right (a) to continue
employment with any Employer, (b) any legal or equitable right against Perot
Systems or any Employer, or any officer, director, or Associate of Perot Systems
or its Participating Affiliates, in connection with his or her employment by the
Employer, or (c) interfere in any way with the Employer's right to terminate or
otherwise modify his or her employment at any time, except as expressly provided
by the Plan or by applicable law.
This Plan has been executed by a duly authorized officer of the Company,
effective on the Effective Date.
PEROT SYSTEMS CORPORATION
By: /s/ KELLY PARSONS
---------------------------------
Its: Director, Corporate Finance
and Human Resources
-------------------------------
B-10
<PAGE> 48
PEROT SYSTEMS CORPORATION
1999 EMPLOYEE STOCK PURCHASE PLAN/NON-US
PARTICIPATING AFFILIATES
The following corporations are approved by the Board as Participating
Affiliates to participate in this Plan (or, to the extent determined appropriate
by the Stock Administrator, a parallel plan).
Deutsche Perot Systems GmbH
Icarus Consulting A.G.
Icarus Consulting GmbH
Perot Systems A.G.
Perot Systems Asia Pacific Pte Ltd.
Perot Systems B.V.
Perot Systems (Canada) Corporation
Perot Systems Europe (Energy Services) Limited
Perot Systems Europe Limited
Perot Systems Holdings Pte Ltd.
Perot Systems Investments BV
Perot Systems (Japan) Ltd.
Perot Systems Monaco S.A.M.
Perot Systems S.A.
Persys Ireland Limited
Syllogic B.V.
Syllogic Limited
Syllogic Ireland Limited
Perot Systems International, Inc.
B-11
<PAGE> 49
PROXY
PEROT SYSTEMS CORPORATION
FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MAY 10, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned appoints Peter A. Altabef and Rex C. Mills, or either of
them, proxies, each with full power to appoint his substitute, and hereby
authorizes them to represent and to vote, as designated below, all of the
shares of Class A Common Stock of Perot Systems Corporation held of record by
the undersigned on March 20, 2000, at the Annual Meeting of Stockholders to be
held on May 10, 2000 or any adjournment thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR THE ELECTION OF ALL NOMINEES LISTED ON THE OPPOSITE SIDE OF THIS
CARD, FOR THE PROPOSAL TO DIVIDE THE 1999 EMPLOYEE STOCK PURCHASE PLAN INTO A
PLAN FOR UNITED STATES EMPLOYEES AND A PLAN FOR NON-UNITED STATES EMPLOYEES AND
TO APPROVE SUCH PLANS, AND FOR THE RATIFICATION OF THE APPOINTMENT OF
PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT PUBLIC ACCOUNTANTS OF THE COMPANY.
YOU MAY REVOKE THIS PROXY AT ANY TIME PRIOR TO THE VOTING THEREOF.
- --------------------------------------------------------------------------------
o FOLD AND DETACH HERE 0
<PAGE> 50
<TABLE>
Please mark
your votes as
indicated in [ X ]
this example
<S> <C> <C>
1.Election of Directors (INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE 2.Proposal to divide the 1999 Employee Stock
FOR ANY INDIVIDUAL NOMINEE, STRIKE A LINE Purchase Plan into a plan for United States
FOR all nominees WITHHOLD THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.) employees and a plan for non-United States
listed to the AUTHORITY employees and to approve such plans.
right (except to vote for Ross Perot James Champy Carl Helm
as marked to all nominees FOR AGAINST ABSTAIN
the contrary) listed to the right Steve Blasnik William K. Gayden Ross Perot, Jr.
[ ] [ ] [ ] [ ] [ ]
3.Proposal to ratify the appointment of 4. In their discretion, the proxies The undersigned hereby acknowledges receipt
PricewaterhouseCoopers LLP as independent are authorized to vote upon such of the Proxy Statement and hereby expressly
public accountants of the Company and its other business as may properly revokes any and all proxies heretofore given
subsidiaries. come before the meeting. or executed by him with respect to the shares
represented by the proxy.
FOR AGAINST ABSTAIN
[ ] [ ] [ ] Dated this ____ day of ________________, 2000
_____________________________________________
Signature
_____________________________________________
Signature
Please sign exactly as name appears on stock
certificates. When shares are held by joint
tenants, both should sign. When signing as
attorney, executor, administrator, trustee or
guardian, please give full title as such. If
a corporation, please sign in full corporate
name by President or other authorized officer.
If a partnership, please sign in partnership
name by authorized person.
If necessary, please correct your address in
the space provided below.
_____________________________________________
_____________________________________________
_____________________________________________
(PLEASE SIGN, DATE, AND RETURN PROMPTLY USING THE ENCLOSED ENVELOPE).
- ------------------------------------------------------------------------------------------------------------------------------------
* FOLD AND DETACH HERE *
</TABLE>
