exv10w40



 







Exhibit 10.40




PEROT SYSTEMS CORPORATION LETTERHEAD




                                                                     
            
                   




                                                                    
                 
               




                                                                  
                 
                 




Dear                                      :




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



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



PART ONE — DEFINITIONS




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



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



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



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



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



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



     Board means the Company’s Board of Directors.



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



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



     Cause is defined on Exhibit A.



     Change in Control is defined on Exhibit B.



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



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



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



     Common Stock means the Company’s common stock.



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



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



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



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



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



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




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




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



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



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



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



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



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



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



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



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



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




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




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



     Specified Reason is defined on Exhibit C.



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



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




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




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



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



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     Target Bonus means [___]% of Base Salary.



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



PART TWO — CHANGE IN CONTROL SEVERANCE BENEFITS




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



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




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




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



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     1. Accelerated Vesting.



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




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




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




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




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     2. Severance Payment.



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




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




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




     3. Pro-Rated Target Bonus.



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




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




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




     4. Continued Health Care Coverage.



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



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



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



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PART THREE — SPECIAL TAX PAYMENT




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




X = Y ÷ [1 — (A + B + C)], where




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




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




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




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




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



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



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



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



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




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




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




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




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




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




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




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



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




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




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




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




PART FOUR — MISCELLANEOUS




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



Page 13









 







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



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



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



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



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



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



Page 14









 







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



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



     8. Amendment and Termination.



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




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




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



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



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



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



Page 15









 







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



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



	 	 	 	 	 
	 	Very truly yours,





PEROT SYSTEMS CORPORATION

 	 
	 	By:  	 	 
	 	 	 	 
	 	Title:  	 	 
	 



ACCEPTANCE





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



	 	 	 	 	 
	 

	 	Signature:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Dated:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Address	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 





Page 16









 





APPENDIX I




BENEFIT LIMIT



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




     (a) the Permissible COC Amount, or



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




	2.	 	Benefit Reduction.





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



Appendix I
– Page 1




 









 




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





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




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




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




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




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



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


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




Appendix I
– Page 2




 









 




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




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



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



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



Appendix I
– Page 3




 









 







EXHIBIT A




CAUSE




     Cause means you have:




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





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



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



Exhibit A – Page 1




 









 






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



Exhibit A – Page 2




 









 





EXHIBIT B




CHANGE IN CONTROL




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




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






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






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





Exhibit B – Page 1




 









 






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






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





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



Exhibit B – Page 2




 









 





EXHIBIT C




SPECIFIED REASON




     Specified Reason means:




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





Exhibit C – Page 1




 









 






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





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



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



Exhibit C – Page 2