Document:

exv10w2

 

Exhibit 10.2

TRONOX INCORPORATED

DEFINED BENEFIT RESTORATION PLAN

(Effective March 30, 2006)

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	ARTICLE I. Purpose
	 	 	1	 
	 
	 	 	 	 
	ARTICLE II. Definitions
	 	 	1	 
	 
	 	 	 	 
	ARTICLE III. Eligibility and Participation
	 	 	4	 
	 
	 	 	 	 
	ARTICLE IV. Provisions for Benefits
	 	 	4	 
	 
	 	 	 	 
	ARTICLE V. Amount of Benefits
	 	 	4	 
	 
	 	 	 	 
	ARTICLE VI. Payment of Benefits
	 	 	5	 
	 
	 	 	 	 
	ARTICLE VII. Administration
	 	 	6	 
	 
	 	 	 	 
	ARTICLE VIII. General Provisions
	 	 	10	 

 

 

Tronox Incorporated

Defined Benefit Restoration Plan

ARTICLE I.

PURPOSE

     The purpose of this Plan is to provide benefits which are not payable to an Eligible
Employee under the Defined Benefit Plan because of benefit limitations under the Code. The Plan is
intended (1) to comply with Code section 409A and official guidance issued thereunder for credited
amounts earned and vested after December 31, 2004, while credited amounts earned and vested prior
to January 1, 2005 are not intended to be subject to the provisions of Code section 409A (the
“Grandfathered Amounts”), to the fullest extent permitted by Code section 409A and official
guidance, (2) to be an unfunded “excess benefit plan,”
(within the meaning of Section 3(36) of ERISA
to the extent the Plan provides benefits in excess of the limits imposed by Code Section 415, and
(3) to be an unfunded plan providing “deferred compensation for a select group of management or
highly compensated employees” (within the meaning of Sections 201(2), 301(a)(3), and 401(a)(1) of
ERISA) to the extent the Plan provides benefits in excess of other
Code restrictions and/or
limitations. Notwithstanding any other provision of this Plan, this Plan shall be interpreted,
operated and administered in a manner consistent with these intentions.

ARTICLE II.

DEFINITIONS

     The masculine gender, where appearing in the Plan shall be deemed to include the feminine
gender, the single may include the plural, and visa versa, unless the context clearly indicates to
the contrary. Where capitalized words and phrases appear in this Plan, they shall have the
respective meanings set forth below.

     2.1.
Affiliate. Affiliate means:

            (a) Any corporation other than the Company (i.e., either a subsidiary corporation or an
affiliated or associated corporation of the Company), which together with the Company is a member
of a “controlled group” of corporations;

            (b) Any organization with which the Company is under “common control;”

            (c) Any organization which together with the Company is an “affiliated service group;”

            (d) A limited liability company wholly owned by the Company; or

            (e) Any foreign affiliate of the Company which is covered by an agreement under
Section 3121(1) of the Code;

as those terms are used in Code Sections 406(a), 414(b), 414(c), and 414(m).

     2.2.
Basic Defined Benefit Plan Benefit. The amount payable to the Participant under the
Defined Benefit Plan after reduction to comply with the Limits of the Code.

 

 

     2.3.
Beneficiary. The beneficiary of a deceased Participant’s Restored Defined Benefit Plan
Benefits shall be the trust, person or persons on whose behalf benefits may be payable under the
Defined Benefit Plan after the Participant’s death. Provided, if there is no Beneficiary, then any
Restored Defined Benefit Plan Benefit shall be payable to the deceased Participant’s estate.

     2.4.
Board of Directors. The duly elected and serving Board of Directors of Tronox
Incorporated or any duly authorized committee of the Board of Directors.

     2.5.
Change of Control. Change of Control shall mean any one of the following:

            (a) any person (“Person”) as defined in Section 3(a)(9) of the Securities Exchange Act of
1934, as amended (the “Exchange Act”), and as used in Section 13(d) and 14(d) thereof, including a
“group” as defined in Section 13(d) of the Exchange Act but excluding the Company and any
subsidiary and any employee benefit plan sponsored or maintained by the Company or any subsidiary
(including any trustee of such plan acting as trustee), directly or indirectly, becomes the
“beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), of securities of the Company
representing 25% or more of the combined voting power of the Company’s then outstanding securities
(other than indirectly as a result of the Company’s redemption of its securities); or

            (b) the consummation of any merger or other business combination of the Company, sale of 50%
or more of the Company’s assets, liquidation or dissolution of the Company or combination of the
foregoing transactions (the “Transactions”) other than a Transaction immediately following which
the shareholders of the Company and any trustee or fiduciary of any Company employee benefit plan
immediately prior to the Transaction own at least 60% of the voting power, directly or indirectly,
of (A) the surviving corporation in any such merger or other business combination; (B) the
purchaser of or successor to the Company’s assets; (C) both the surviving corporation and the
purchaser in the event of any combination of Transactions; or (D) the parent company owning 100% of
such surviving corporation, purchaser or both the surviving corporation and the purchaser, as the
case may be; or

            (c) within any twenty-four month period, the persons who were directors immediately before
the beginning of such period (the “Incumbent Directors”) shall cease (for any reason other than
death) to constitute at least a majority of the Board of Directors or the board of directors of a
successor to the Company. For this purpose, any director who was not a director at the beginning of
such period shall be deemed to be an Incumbent Director if such director was elected to the Board
of Directors by, or on the recommendation of or with the approval of, at least two-thirds of the
directors who then qualified as Incumbent
Directors (so long as such director was not nominated by a person who commenced or threatened
to commence an election contest or proxy solicitation by or on behalf of a Person (other than the
Board of Directors) or who has entered into an agreement to effect a Change of Control or expressed
an intention to cause such a Change of Control); or

            (d) a majority of the members of the Board of Directors in office immediately prior to a
proposed transaction determine by a written resolution that such proposed transaction, if taken,
will be deemed a Change of Control and such proposed transaction is consummated.

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     2.6.
Code. The Internal Revenue Code of 1986, as amended from time to time and related IRS
notices, rules and regulations.

     2.7. Committee. The persons appointed to administer this Plan in accordance with Article VII.

     2.8.
Company. Tronox Incorporated, or any successor thereto.

     2.9. Defined Benefit Plan. Tronox Incorporated Retirement Plan or its successor plan.

     2.10. ERISA. The Employee Retirement Income Security Act of 1974, as amended.

     2.11. Eligible Employee. Any employee of the Company or an Affiliate whose benefit under the
Defined Benefit Plan is subject to the Limits of the Code.

     2.12. Grandfathered Amounts. Grandfathered Amounts mean amounts that were deferred under the
Plan and earned and vested as of December 31, 2004. Grandfathered Amounts are subject to the
distribution rules in effect prior to this amendment and restatement.

     2.13. Key Employee. Key Employee means an employee treated as a “specified employee” under
Code section 409A(a)(2)(B)(i) (i.e., a key employee (as defined in Code section 416(i) without
regard to paragraph (5) thereof)) of the Company. Key Employees shall be determined by the
Committee in accordance with Code section 409A using a December 31 identification date.

     2.14. Limits of the Code. The limitations imposed under the Code, which shall include by
example but not by limitation Sections 401(a)(17) and/or 415, on the amount of benefits which may
be earned under the Defined Benefit Plan.

     2.15. Participant. An Eligible Employee who meets the requirements to participate in the Plan
in accordance with the provisions of Article III hereof.

     2.16. Plan. Tronox Incorporated Defined Benefit Restoration Plan, as amended from time to
time.

     2.17. Restored Defined Benefit Plan Benefit. A Participant’s benefit, if any, provided
under Section 5.1 hereof attributable to the reduction in the Participant’s Defined Benefit Plan
benefit based on the Limits of the Code.

     2.18. Separation from Service. Separation from Service or Separates from Service means a
“separation from service” within the meaning of Code section 409A.

     2.19. Senior Executive Group. Participants designated by the Chairman of the Board of
Directors prior to a Change of Control to be a member of the Senior Executive Group.

     2.20. Senior Executive Group Member. Senior Executive Group Member means a participant in the
Senior Executive Group.

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ARTICLE III.

ELIGIBILITY AND PARTICIPATION

     Any Eligible Employee whose benefit under the Defined Benefit Plan is subject to the Limits of
the Code shall participate in this Plan.

ARTICLE IV.

PROVISIONS FOR BENEFITS

     Benefits provided by this Plan shall constitute general obligations of the Company and shall
at all times be subject to the claims of the general creditors of the Company, in accordance with
the terms hereof. No amounts in respect of such benefits shall be set aside or held in trust and no
recipient of any benefit shall have any right to have the benefit paid out of any particular assets
of the Company; provided, however, that nothing herein shall be
construed to prevent a transfer of funds to a grantor trust for the purpose of paying benefits or any part thereof as directed by the
Committee under this Plan. The amount payable shall not be in addition to any benefit payable under
any supplement to this Plan.

ARTICLE V.

AMOUNT OF BENEFITS

     5.1 Restored Defined Benefit Plan Benefits. If the amount payable to a Participant from the
Defined Benefit Plan is subject to the Limits of the Code, and any subsequent modifications
thereto, the amount by which such benefit is so
limited shall be provided for such Participant under this Plan. The amount payable shall not
be in addition to any benefit payable under any supplement to this Plan. In calculating the amounts
payable under this Plan, such calculation shall be made under the terms of the Defined Benefit Plan
without the Limits of the Code.

     5.2 Restored Benefits. Regardless of whether a Participant’s Basic Defined Benefit Plan
Benefit is subject to Limits of the Code, such Participant shall still be entitled to receive the
excess of the Basic Defined Benefit Plan Benefit as provided under Section 8.4 over the amounts, if
any, payable under the Defined Benefit Plan. Notwithstanding anything to the contrary, benefits
payable under this Section shall be deemed to constitute Restored Defined Benefit Plan Benefits.

     5.3 Payment to Beneficiary. In the event any benefit payable upon Participant’s death to a
Beneficiary under the Defined Benefit Plan prior to commencement of the Basic Defined Benefit Plan
Benefit thereunder is subject to the Limits of the Code, the amount by which such benefit is so
limited shall be payable to the Participant’s Beneficiary pursuant to the terms and conditions of
Section 6.2 herein.

     5.4 Supplement to the Plan. The Supplement which is attached hereto shall be a part of this
Plan for all purposes, and, unless specifically stated to the contrary in the applicable
Supplement, the terms of the Plan shall control and provide the basis for administration of the
Supplement.

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     5.5 Vesting. Participants shall at all times be fully vested in their benefits under the
Plan.

ARTICLE VI.

PAYMENT OF BENEFITS

     6.1 Payment of Grandfathered Amounts. Notwithstanding anything herein to the contrary, the
distribution of the Grandfathered Amounts shall be made in accordance with the terms of the
Kerr-McGee Corporation Benefits Restoration Plan as in effect on December 31, 2004, which are
summarized in this Section 6.1. Payment of the Restored Defined Benefit Plan Benefit shall be made
all at one time (in the form of a single lump-sum payment) as of the date of retirement. The
lump-sum payment shall be defined as the pre-federal and state income tax amount necessary to
purchase an annuity (from a company with a rating of AA+ or better by a recognized rating agency
selected by the Committee) for the Eligible Employee at the time of retirement. Such annuity
would provide the Eligible Employee a monthly amount which is equivalent to the amount, after
considering federal and state income taxes, that the Eligible Employee is entitled to receive on a
monthly basis from the Plan. For example, if an Eligible Employee
is entitled to receive monthly Plan payments of $8,333 ($100,000 annually), the lump-sum
payment would be equal to the Eligible Employee’s pre-federal and state income tax cost of an
annuity which would provide the Eligible Employee (after deducting federal and state income taxes)
$5,083 monthly (i.e., $8,333 less federal and state income taxes of $3,250, assuming a 39 percent
effective tax rate). Any actuarial adjustment to a Restored Defined Benefit Plan Benefit hereunder
shall be computed using the same actuarial assumptions used on the corresponding Basic Defined
Benefit Plan Benefit.

     6.2 Payment of Benefits Subiect to Code Section 409A. Payment of the Restored Defined Benefit
Plan Benefit (other than Grandfathered Amounts) shall be made to the Participant, or in the event
of his death, his Beneficiary, all at one time (in the form of a single lump-sum payment) 60 days
following the Participant’s Separation from Service. The lump-sum payment shall be defined as the
pre-federal and state income tax amount necessary to purchase an annuity (from a company with a
rating of AA+ or better by a recognized rating agency selected by the Committee) for the Eligible
Employee at the time of retirement. Such annuity would provide the Eligible Employee a monthly
amount which is equivalent to the amount, after considering federal and state income taxes, that
the Eligible Employee is entitled to receive on a monthly basis from the Plan. For example, if an
Eligible Employee is entitled to receive monthly Plan payments of $8,333 ($100,000 annually), the
lamp-sum payment would be equal to the Eligible Employee’s pre-federal and state income tax cost of
an annuity which would provide the Eligible Employee (after deducting federal and state income
taxes) $5,083 monthly (i.e., $8,333 less federal and state income taxes of $3,250, assuming a 39
percent effective tax rate). Any actuarial adjustment to a Restored Defined Benefit Plan Benefit
hereunder shall be computed using the same actuarial assumptions used on the corresponding Basic
Defined Benefit Plan Benefit.

     6.3
Six-Month Delay. Notwithstanding anything herein to the contrary, distributions may not
be made to a Key Employee upon a Separation from Service before the date which is six months after
the date of the Key Employee’s Separation from Service (or, if earlier, the date of death of the
Key Employee). If applicable, any amounts payable to the Participant during such

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six
(6) month period shall be accumulated and paid on the first day
of the seventh month following the
Participant’s Separation from Service. Interest shall accrue on such amounts during such six month
period based upon the 1-Year Treasury Bill rates. The determination of the applicable rate shall be
updated on an annual basis as of January 1 of each year.

ARTICLE VII.

ADMINISTRATION

     7.1 Administration by Committee. The Tronox Incorporated Benefits Committee shall, unless
otherwise determined by the Board of Directors, administer this Plan. The Committee shall be the
“plan administrator” with respect to the Plan.

     7.2 Rules of Conduct. The Committee shall adopt such rules for the conduct of its business and
the administration of this Plan as it considers desirable, provided
they do not conflict with the
provisions of this Plan.

     7.3 Legal, Accounting, Clerical and Other Services. The Committee may authorize one or more if
its members or any agent to act on its behalf and may contract for legal, accounting, clerical and
other services to carry out this Plan. The Company shall pay all expenses of the Committee.

     7.4 Records of Administration. The Committee shall keep records reflecting the administration
of this Plan which shall be subject to audit by the Company.

     7.5
_Expenses. The expenses of administering the Plan shall be borne by the Company.

     7.6 Indemnification. The officers and directors of the Company, members of the Committee, and
any employees of the Company who administer the Plan (including
in-house counsel who interprets the Plan)
shall be indemnified and held harmless by the Company against and from any and all loss, cost, liability,
or expense that may be imposed upon or reasonably incurred by them in connection with or resulting
from any claim, action, suit, or proceeding to which they may be a party or in which they may be
involved by reason of any action taken or failure to act under this Plan and against and from any and
all amounts paid by them in settlement with the Company’s written approval or paid by them in
satisfaction of a judgment in any such action, suit, or proceeding. The foregoing provision shall not
be applicable to any person if the loss, cost, liability, or expense is due to such person’s fraud or
willful misconduct.

     7.7
Liability. No member of the Board of Directors or of the
Committee shall be liable for any
act or action, whether of commission or omission, taken by any other member, or by any officer,
agent, or employee of the Company or of any such body, nor, except in circumstances involving his bad
faith, for anything done or omitted to be done by himself.

     7.8 Claims Review Procedures.

             (a) Filing
a Claim. A Participant (or an authorized representative) may file a claim for
benefits under the Plan by filing a written claim, identified as a claim for benefits, with the
Committee. In addition, the Committee may treat any writing or other communication received by it
as a claim for benefits, even if the writing or communication is not
identified as a

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claim for benefits.

             (b) Acknowledgement of Receipt of Claim. The Committee will send the claimant a letter
acknowledging the receipt of any communication that it treats as a claim for benefits. If the
claimant fails to receive such an acknowledgement within 60 days after making a claim, the claimant
should contact the Committee to determine whether the claim has been received and identified as a
claim for benefits.

             (c) Approval of Claim. A claim is considered approved only if its approval is communicated
in writing to a claimant. If a claimant does not receive a response to a claim for benefits within
the applicable time period, the claimant may proceed with an appeal under the procedures described
in Section 7.8(e).

             (d) Denial of Claim. If a claim is denied in whole or in part, the Committee will notify the
claimant of its decision by written notice, in a manner calculated to be understood by the
claimant.

	 	(1)	 	Timing of Notice. The notice of denial must be given within 90 days
after the claim is received by the Committee. If special circumstances
(such as a hearing) require a longer period, the claimant will be notified
in writing, before the expiration of the 90-day period, of the expected
decision date and the reasons for an extension of time; provided, however,
that no extensions will be permitted beyond 90 days after expiration of
the initial 90-day period.
	 
	 	(2)	 	Content of Notice. The notice will set forth:

	 	i.	 	the specific reasons for the denial of the claim;
	 
	 	ii.	 	a reference to specific provisions of the Plan on which the
denial is based;
	 
	 	iii.	 	a description of any additional material or information
necessary to perfect the claim and an explanation of why such
material or information is necessary; and
	 
	 	iv.	 	an explanation of the procedure for review of the denied or
partially denied claim, including the claimant’s right to
bring a civil action under ERISA section 502(a) following an
adverse benefit determination on review.

             (e) Request for Review of Denial. Upon denial of a claim in whole or in part, a claimant
(or his authorized representative) has the right to submit a written request to the Committee for a
full and fair review of the denied claim, and upon request and free of charge, to reasonable access
and copies of all documents, records, and other information relevant to the claimant’s claim for
benefits and may submit issues and comments in writing.

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	 	(1)	 	Scope of Review. The review takes into account all comments, documents,
records, and other information submitted by the claimant relating to the claim,
without regard to whether such information was submitted or considered in the initial
benefit determination.
	 
	 	(2)	 	Timing of Request for Review. A request for review of a claim must be
submitted within 60 days of receipt by the claimant of written notice of the denial
of the claim (or, if the claimant has not received a response to the initial claim,
within 150 days of the filing of the initial claim). If the claimant fails to file a
request for review within 60 days of the denial notification, the claim is deemed
abandoned and the claimant precluded from reasserting it.
	 
	 	(3)	 	Contents of Request for Review. If the claimant files a request for review, his
request must include a description of the issues and evidence he deems relevant.
Failure to raise issues or present evidence on review will preclude those issues or
evidence from being presented in any subsequent proceeding or judicial review of the
claim.

             (f) Denial Upon Review.

	 	(1)	 	Timing of Denial Notice. The Committee must render its decision on the
review of the claim no more than 60 days after the Committee’s receipt of the request
for review, except that this period may be extended for an additional 60 days if the
Committee determines that special circumstances (such as a hearing) require such
extension. If an extension of time is required, written notice of the expected
decision date and the reasons for the extension will be furnished to the claimant
before the end of the initial 60-day period.
	 
	 	(2)	 	Contents of Denial. If the Committee issues a negative decision, it
provides a prompt written decision setting forth:

	 	i.	 	the specific reason or reasons for the adverse determination;
	 
	 	ii.	 	a reference to specific Plan provisions on which the adverse
determination was made;
	 
	 	iii.	 	a statement that the claimant is entitled to receive, upon
request and free of charge, reasonable access to, and copies of, all
documents, records, and other information relevant to the claimant’s claim
for benefits; and
	 
	 	iv.	 	a statement describing any voluntary appeal procedures offered by the
plan and the claimant’s right to obtain the information

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	 	 	 	about such procedures and a statement of the claimant’s right
to bring an action under ERISA section 502(a).

	 	(3)	 	Authority of Committee. To the extent of its responsibility
to review the denial of benefit claims, the Committee has full authority
to interpret and apply in its discretion the provisions of the Plan. The
decision of the Committee is final and binding upon any and all claimants
and any person making a claim through or under them.

             (g) Limits on Right to Judicial Review. A claimant must follow the claims procedures described
by this Section before taking action in any other forum regarding a claim for benefits under the
Plan. Any suit or legal action initiated by a claimant under the Plan must be brought by the
claimant no later than one year following a final decision on the claim for benefits under these
claims procedures. The one-year statute of limitations on suits for benefits applies in any forum
where a claimant initiates such suit or legal action. If a civil action is not filed within this
period, the claimant’s benefit claim is deemed permanently waived and abandoned.

             (h) Other Claims. Any other claims that arise under or in connection with the Plan, even
though not claims for benefits, must be filed with the Committee and are considered in accordance
with these claims and appeals procedures.

     7.9 Finality of Determinations; Exhaustion of Remedies. To the extent permitted by law,
decisions reached under the claims procedures set forth in Section 7.8 shall be final and binding
on all parties. No legal action for benefits under the Plan shall be brought unless and until the
claimant has exhausted his remedies under Section 7.8. In any such legal action, the claimant may
only present evidence and theories which the claimant presented during the claims procedure. Any
claims which the claimant does not in good faith pursue though the review stage of the procedure
shall be treated as having been irrevocably waived. Judicial review of a claimant’s denied claim
shall be limited to a determination of whether the denial was an abuse of discretion based on the
evidence and theories the claimant presented during the claims procedure. This Section shall have
no application following a Change of Control as to a claim which is first asserted or first denied
after the Change of Control and, as to such a claim, the de novo standard of judicial review shall
apply.

     7.10 Effect of Committee Action. The Plan shall be interpreted by the Committee in accordance
with the terms of the Plan and their intended meanings. However, the Committee shall have the
discretion to make any findings of fact needed in the administration of the Plan, and shall have
the discretion to interpret or construe ambiguous, unclear or implied (but omitted) terms in any
fashion it deems to be appropriate in its sole judgment. The validity of any such finding of fact,
interpretation, construction or decision shall not be given de novo review if challenged in court,
by arbitration or in any other forum, and shall be upheld unless clearly arbitrary or capricious.
To the extent the Committee has been granted discretionary authority under the Plan, the
Committee’s prior exercise of such authority shall not obligate it to exercise its authority in a
like fashion thereafter. If, due to errors in drafting, any Plan provision does not accurately
reflect its intended meaning, as demonstrated by consistent interpretations or other

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evidence of intent, or as determined by the Committee in it sole and exclusive judgment, the
provision shall be considered ambiguous and shall be interpreted by the Committee in a fashion
consistent with its intent, as determined by the Committee in its sole discretion. The Committee,
without the need for Board of Directors’ approval, may amend the Plan retroactively to cure any
such ambiguity. This Section may not be invoked by any person to require the Plan to be interpreted
in a manner which is inconsistent with its interpretation by the Committee. All actions taken and
all determinations made in good faith by the Committee shall be final and binding upon all persons
claiming any interest in or under the Plan. This Section shall not apply to Committee actions or
interpretations which take place or are made following a Change of Control.

     7.11 Effect of Mistake. If, in the sole opinion of the Committee, a material mistake or
misstatement as to the eligibility of a Participant or the amount of
benefit payments made or to be made to or with respect to a Participant occurs, the Committee
shall, if possible, cause an adjustment to be made so as to correct such mistake and provide the
correct amount of payments with respect to such Participant.

ARTICLE VIII.

GENERAL PROVISIONS

     8.1 Plan Amendment, Suspension and/or Termination.

     The Board of Directors may, by resolution, in its absolute discretion, from time to time,
amend, suspend or terminate in whole or in part, and if terminated, reinstate any of all of the
provisions of this Plan, except that no amendment suspension or termination may apply so as to
decrease the payment to any Participant (or Beneficiary) of any benefit under this Plan accrued
prior to the effective date of such amendment, suspension or termination. Any such amendment,
suspension or terminations shall become effective on such date as shall be specified in such
resolution and, except as expressly limited in this Section 8.1, shall include provisions and shall
have such effect as the Board of Directors in its absolute discretion, deems desirable.
Notwithstanding the foregoing, on or after a Change of Control, any amendment, suspension or
termination of the Plan shall not apply to any Participant or Beneficiary in any way in which the
Participant or Beneficiary reasonably considers to be personally detrimental if the Participant
objects to such application in writing within thirty days after notice of the amendment unless the
Participant or Beneficiary theretofore had consented, or thereafter consents, to the amendment in
writing.

     Notwithstanding anything herein to the contrary, the Board of Directors may provide that upon
the termination of the Plan, all benefits other than the Grandfathered Amounts shall be paid on an
accelerated basis in accordance with the rules under Section 409A of the Code.

     8.2 No Material Modification. Notwithstanding the foregoing, no amendment of the Plan shall
apply to the Grandfathered Amounts, unless the amendment specifically provides that it applies to
such amounts. The purposes of this restriction is to prevent a Plan amendment from resulting in an
inadvertent “material modification” to amount that are “grandfathered” and exempt from the
requirements of Code section 409A.

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     8.3 Plan Not an Employment Contract. The Plan is strictly a voluntary undertaking on the part
of the Company and shall not constitute a contract between the Company or its Affiliates and any
Eligible Employee, or consideration for, or an inducement or condition of, the employment of an
Eligible
Employee. Nothing contained in the Plan shall give any Eligible Employee the right to be
retained in the service of the Company or its Affiliates or to interfere with or restrict the right
of the Company or its Affiliates, which is hereby expressly reserved, to discharge or retire any
Eligible Employee at any time for any reason not prohibited by statute, without the Company or its
Affiliates being required to show cause for the termination. Inclusion under the Plan will not give
any Eligible Employee any right or claim to any benefit hereunder except to the extent such right
has specifically become fixed under the terms of the Plan. The doctrine of substantial performance
shall have no application to Eligible Employees, Participants or Beneficiaries. Each condition and
provision, including numerical items, has been carefully considered and constitutes the minimum
limit on performance which will give rise to the applicable right.

     8.4 Non-alienation of Benefits. Except as provided in this Section and to the extent permitted
by law, benefits payable under this Plan shall not, without Committee consent, be subject in any
manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, charge,
garnishment, execution, or levy of any kind, either voluntary or involuntary. An unauthorized
attempt to charge or otherwise dispose of any right to benefits payable shall be subject to seizure
by legal process resulting from any attempt by creditors of or claimants against any Participant
(or Beneficiary), or any person claiming under or through the foregoing, to attach his interest
under this Plan. The anti-alienation restrictions of this Section shall not apply to “qualified
domestic relations order” described in Section 206(d) of ERISA. The Committee shall establish
procedures to determine whether domestic relations orders are “qualified domestic relation orders”
and to administer distributions under such qualified domestic relation orders. Nothing in this
Section shall preclude the Company or its Affiliates from withholding from amounts payable to a
Participant or his Beneficiary under this Plan amount the Participant owes the Company or its
Affiliates. Following a Change of Control, the Company or its Affiliates shall not be entitled to
withhold amounts in the manner described in the preceding sentence.

     8.5 Provisions in the Event of a Change of Control. Notwithstanding anything to the contrary,
following a Change of Control, each Senior Executive Group Member entitled prior to a Change of
Control to participate in the Plan shall upon termination of employment following a Change of
Control have a non-forfeitable right to benefits under the Plan. For purposes of computing such
benefits under Article V, each such Senior Executive Group Member shall be credited with five
additional years of service. For purposes of computing such Senior Executive Group Member’s age for
determining when the payment of the Grandfathered Amounts commence under Section 6.1, each Senior
Executive Group Member’s age shall be determined by adding additional years equal to the
lesser of (i) five years or (ii) the number of years necessary to bring such Senior Executive
Group Member to age 65.

     8.6 Special Payment Situations. The following provisions shall apply to the extent permitted
under Code section 409A.

             (a) Missing Participant or Beneficiary. Payment of benefits to the person entitled thereto
may be sent by first class mail, address correction requested, to the last known

11

 

address on file with the Committee. If, within two months from the date of issuance of the payment,
the payment letter cannot be delivered to the person entitled thereto or the payment has not been
negotiated, the payment shall be treated as forfeited. However, if the person to whom the benefit
became payable subsequently appears and identifies himself to the satisfaction of the Committee,
the amount forfeited (without earnings thereon) shall be distributed to the person entitled
thereto. The right of any person to restoration of a benefit which was forfeited pursuant to this
Section shall cease upon termination of the Plan.

             (b) Private Investigators. If the Committee retains a private investigator or other person
or service to assist in locating a missing person, all costs incurred for such services shall be
charged against the benefit to which the missing person was believed to be entitled and the benefit
shall be reduced by the amount of the costs incurred, except as the Committee may otherwise direct.

             (c) Delayed Payment. Payments to Participants or Beneficiaries may be postponed by the
Committee until any anticipated taxes, expenses or amounts to be paid under a qualified domestic
relations order have been paid in full or until it is determined that such charges will not be
imposed. A payment to a Participant or Beneficiary may also be delayed in the event payment might
defeat an adverse potential or asserted claim by some other person to the payment. The cost
incurred by the Company in dealing with any such adverse claim shall be charged against the benefit
to which the claim relates, except as the Committee otherwise directs.

     8.7 Spinoffs. If a Participant ceases to be employed by the Company or its Affiliates because
of the disposition by the Company or its Affiliates of its interest in a subsidiary, plant,
facility or other business unit or if an entity which employs a Participant ceases to be an
Affiliate, such Participant’s employment shall be considered terminated for all Plan purposes. To
the extent permitted under Code section 409A, this Section 8.7 shall not apply to the extent it is
overridden by any contrary or inconsistent provision in applicable sales documents or any related
documents, whether adopted before or after the sale and any such contrary or
inconsistent provision shall instead apply and is hereby incorporated in the Plan by this
reference.

     8.8 Duty to Provide Data.

             (a) Data Requests. Every person with an interest in the Plan or claiming benefits under the
Plan shall furnish the Committee on a timely and accurate basis with such documents, evidence or
information as it considers necessary or desirable for the purpose of administering the Plan. The
Committee may postpone payment of benefits (without accrual of interest) until such information and
such documents have been furnished.

             (b) Addresses. Every person claiming a benefit under this Plan shall give written notice to
the Committee of his post office address and each change of post office address. Any communication,
statement or notice addressed to such a person at his latest post office address as filed with the
Committee will, on deposit in the United States mail with postage prepaid, be as binding upon such
person for all purposes of the Plan as if it had been received, whether actually received or not.
If a person fails to give notice of his correct address, the Committee, the Company and its
Affiliates shall not be obliged to search for, or to ascertain, his whereabouts.

12

 

             (c) Failure to Comply. If benefits which are otherwise currently payable cannot be paid to
the person entitled to the benefits because the individual has failed to comply with this Section
or other Plan provisions relating to claims for benefits, any unpaid past due amount shall be
forfeited on the individual’s death or presumed death.

     8.9 Tax Consequences Not Guaranteed. The Company does not warrant that this Plan will have any
particular tax consequences for Participants or Beneficiaries and shall not be liable to them if
tax consequences they anticipate do not actually occur. The Company shall have no obligation to
indemnify a Participant or Beneficiary for lost tax benefits (or other damage or loss) in the event
benefits are cancelled as permitted under Section 8.1, accelerated, or because of change in Plan
design or funding; e.g., establishment of a “secular trust.”

     8.10 Tax Withholding. The Company or other payor may withhold from a benefit accrual or
payment under this Plan any Federal, state or local taxes required by law to be withheld with
respect to such accrual or payment and may withhold such sum as the payor may reasonably estimate
as necessary to cover any taxes for which the Company may be liable and which may be assessed with
regard to such accrual or payment.

     8.11 Incompetency. Any person receiving or claiming benefits under the Plan shall be
conclusively presumed to be mentally competent until the date on which the Committee receives a
written notice, in an acceptable form and manner, that such person is incompetent and a guardian or
other person legally vested with the care of his estate has been appointed. If the Committee finds
that any person to whom a benefit is payable under the Plan is unable to care for his affairs
because of any disability or infirmity and no legal guardian of such person’s estate has been
appointed, any payment due may be paid to the spouse, a child, a parent, a sibling, or to any
person deemed by the Committee to have incurred expense for such person otherwise to the spouse, a
child, a parent, a sibling, or to any person deemed by the Committee to have incurred expense for
such person otherwise entitled to payment. Any such payment so made shall be a complete discharge
of any liability therefore under the Plan. If a guardian of the estate of any person receiving or
claiming benefits under the Plan shall be appointed by a court of competent jurisdiction, benefit
payments shall be made to such guardian, provided proper proof of appointment and continuing
qualification is furnished in the form and manner acceptable to the Committee. Any such payment so
made shall be a complete discharge of any liability therefore under the Plan.

     8.12 Severability. If any provision of the Plan is held invalid or illegal for any reason, any
illegality or invalidity shall not affect the remaining provisions of the Plan, and the Plan shall
be construed and enforced as if the illegal or invalid provision had never been contained therein.
The Company shall have the privilege and opportunity to correct and remedy such questions of
illegality or invalidity by amendment.

     8.13 Governing Law. The Plan shall be governed and construed in accordance with the laws of
the State of Delaware, except to the extent such laws are preempted by ERISA.

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     IN WITNESS WHEREOF, Tronox Incorporated has caused this Plan to be duly adopted and executed
effective as of March 30, 2006.

	 	 	 	 	 	 	 
	 	 	TRONOX INCORPORATED  
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Mary Mikkelson	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	MARY MIKKELSON	 	 
	 

	 	 	 	Senior Vice President and CFO,	 	 
	 

	 	 	 	Chairman of the Benefits Committee	 	 

	 	 	 
	Attest:
	 	 
	 
	 	 
	/s/ Roger G. Addison
	 	 
	 

ROGER G. ADDISON

	 	 
	Vice President, General Counsel
	 	 
	and Secretary
	 	 

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FIRST SUPPLEMENT TO THE 

TRONOX
INCORPORATED DEFINED

BENEFIT RESTORATION PLAN

EFFECTIVE MARCH 30, 2006

(As it applies to Participants who were Participants in the Kemira, Inc. Supplemental Executive
Retirement Plan As of December 31, 2000)

	(A)	 	Applicability of First Supplement

	 	(1)	 	This First Supplement to the Tronox Incorporated Defined Benefit Restoration
Plan (the “First Supplement”) forms a part of the Tronox Incorporated Defined Benefit
Restoration Plan as in effect on and after March 30, 2006 (“Plan”). The provisions of this
First Supplement shall apply only to those Participants in the Plan who were Participants
in the Kemira, Inc. Supplemental Executive Retirement Plan (“Kemira Plan”) as of December
31, 2000 (“Former Kemira Participants”) who became Participants in the Plan effective March
30, 2006 (hereinafter referred to as “First Supplement Participants”).
	 
	 	(2)	 	There shall be no duplication of benefits provided under the Plan and this
First Supplement, and the actuarially equivalent benefits payable under one shall be
inclusive of the actuarially equivalent benefits payable under the other unless
specifically provided otherwise in the provisions of the Plan or this First Supplement.
	 
	 	(3)	 	All terms used in this First Supplement shall have the meanings assigned to
them in the provisions of the Plan, unless a different meaning is plainly required by the
context.

	(B)	 	Benefits Applicable to First Supplement Participants

	 	(1)	 	The term “Defined Benefit Plan” as applicable for a First Supplement
Participant means the Tronox Incorporated Retirement Plan or its successor plan or, prior
to January 1, 2001, the Kemira Pigments, Inc. Employees Retirement Plan.
	 
	 	(2)	 	The Restored Defined Benefit Plan Benefit under the Plan applicable to a
First Supplement Participant shall be the amount by which the benefit payable to a
Participant from the Defined Benefit Plan is limited by (a) the exclusion of bonuses from
the definition of compensation counted for benefits under the Kemira Pigments, Inc.
Employees Retirement Plan and (b) benefit and compensation limitations under the Code and
any subsequent modifications thereto.

 

 

	 	(3)	 	The Restored Defined Benefit Plan Benefit under the Plan accrued by a First
Supplement Participant on or before December 31, 2000, will be paid in a single lump sum
regardless of the form of payment of the benefit under the Defined Benefit Plan. The amount
of such lump sum will be determined as the actuarial equivalent of such Restored Defined
Benefit Plan Benefit. Such actuarial equivalency will be determined in the same manner as
and on the same basis as the actuarial assumptions provided in the Defined Benefit Plan.
The provisions of Sections 6.1 and 6.2 of the Plan are not applicable to the accrued
Restored Defined Benefit Plan Benefit of a First Supplement Participant as of December 31,
2000 (hereinafter referred to as the “Kemira Plan Restored Benefit”).
	 
	 	(4)	 	That portion, if any, of the Restored Defined Benefit Plan Benefit under the
Plan payable to a First Supplement Participant that is in excess of the Participant’s
Kemira Plan Restored Benefit will be payable in accordance with Section 6.1 of the Plan.
	 
	 	(5)	 	The Restored Defined Benefit Plan Benefit for Risto Ojala will be determined
as if he were a participant in the Kemira Pigments, Inc. Employees Retirement Plan and
accrued a vested retirement benefit under the plan for his period of service with Kemira
Pigments, Inc.

	(C)	 	Right to Amend or Terminate First Supplement

          The provisions of Section 8.1 and 8.2 of the Plan with respect to amendment and termination
thereof shall apply with equal force to this First Supplement.

2exv10w42

 

Exhibit 10.42

PEROT SYSTEMS CORPORATION 2001 LONG-TERM INCENTIVE PLAN

AMENDED AND RESTATED

EFFECTIVE JANUARY 1, 2007

1. Purposes of the Plan.

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

2. Definitions.

     As used herein, the following definitions shall apply:

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

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

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

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

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

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

     (g) “Board” means the Board of Directors of the Company.

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

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

1

 

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

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

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

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

     (n) “Covered Employee” means a Participant who is an executive officer of the Company.

     (o) “Director” means a member of the Board who is also an Employee or Consultant.

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

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

     (r) “Exchange Act” means the Securities Exchange Act of 1934, as amended.

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

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

     (u) “Gross Profit” means the Company’s Gross Profit as reported in the Consolidated Income
Statements contained in the Company’s Consolidated Financial Statements for such Performance
Period.

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

     (w) “Nonstatutory Stock Option” means an Option not intended to qualify as an Incentive Stock
Option.

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

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

     (z) “Participant” means an Employee, Director or Consultant.

     (aa) “Performance Period” means the Company’s fiscal year or such other period as designated
by the Committee.

     (bb) “Plan” means this 2001 Long-Term Incentive Plan, as amended from time to time.

2

 

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

     (dd) “Restricted Stock” means shares of Common Stock acquired or awarded subject to vesting or
other conditions under Section 11 of the Plan.

     (ee) “Restricted Stock Unit” means the contractual right to receive one share of Common Stock
in the future, subject the conditions under Section 11 of the Plan. The Awardee of a Restricted
Stock Unit shall have no shareholder rights with respect to the Shares subject to the Restricted
Stock Unit unless and until such Awardee is shown as the owner of such Shares upon the records of
the duly authorized transfer agent of the Company.

     (ff) “Severance Date” means the date shown in the Company’s, its Subsidiaries’ and Affiliates’
personnel or other records as the last day an Awardee was a Participant or, with respect to an
Awardee who has a Total Disability, the day such Total Disability ceases to exist unless such
Awardee becomes an Employee within a reasonable period determined by the Administrator in its sole
discretion.

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

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

     (ii) “Stock Awards” means the right to purchase or receive Common Stock pursuant to Section 11
of the Plan, including awards of Restricted Stock, Restricted Stock Units or any other award
meeting the requirements of Section 11 of the Plan.

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

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

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

3. Stock Subject to the Plan.

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

     (b) If an Award or any award or grant under any Predecessor Plan expires or becomes
unexercisable without having been exercised in full, the unpurchased Shares which were subject
thereto, if any, shall become available for future grant or sale under the Plan (unless the Plan
has terminated). Shares of Restricted Stock that are either forfeited or repurchased by the Company
shall become available for future grant or sale under the Plan. Shares that are tendered, whether
by physical delivery or by attestation, to the Company by the Participant as full or partial
payment of the exercise price of any Award or in payment of any applicable withholding for federal,
state, city, local or other taxes incurred in connection with the exercise of any Award shall
become available for future grant or sale under the Plan.

3

 

4. Administration of the Plan.

     (a) Procedure.

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

     (ii) Section l62(m). To the extent that the Administrator determines it to be desirable to
qualify Awards granted hereunder as “performance-based compensation” within the meaning of
Section 162(m) of the Code, the Plan shall be administered by a Committee of two or more
“outside directors” within the meaning of Section 162(m) of the Code. To the extent required by
Section 162(m) of the Code, the material terms of such performance-based compensation shall be
approved by the shareholders of the Company before such compensation is paid.

     (iii) Rule 16b-3. To the extent desirable to qualify transactions hereunder as exempt
under Rule 16b-3 promulgated under the Exchange Act, the transactions contemplated hereunder
shall be structured to satisfy the requirements for exemption under Rule l6b-3.

     (iv) Other Administration. The Board may delegate to the Executive Committee of the Board
or the chief executive officer of the Company the power to approve Awards to Participants who
are not

     (A) subject to Section 16 of the Exchange Act; or

     (B) at the time of such approval, Covered Employees.

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

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

     (ii) subject to any applicable provisions of Section 162(m) of the Code, to determine the
amount of a Cash Award and the number of shares of Common Stock to be covered by a Stock Award,
a Stock Appreciation Right or an Option granted hereunder; provided that, with respect to
Covered Employees, either:

     (A) Stock Awards (the value of which shall be measured with respect to each Stock
Award at the time such award is made) and Cash Awards will be a percentage of Gross Profit
for each Performance Period; and provided further that the combined aggregate value of
Stock Awards and Cash Awards granted to each Covered Employee may not exceed one percent
(1%) of Gross Profit for such Performance Period; or

     (B) Stock Awards and Cash Awards granted to Covered Employees are based upon the
achievement of certain pre-established corporate performance goals based on one or more of
the following criteria: (i) return on total shareholder equity; (ii) earnings per share of
Common Stock; (iii) net income or operating income (before or after taxes); (iv) earnings
before interest, taxes, depreciation and amortization; (v) earnings before interest, taxes,
depreciation, amortization and charges for stock-based compensation; (vi) market to book
value ratio; (vii) sales or revenue targets; (viii) return on assets, capital or
investment; (ix) cash flow or free cash flow (cash flow from operations less capital
expenditures); (x) market share; (xi) cost reduction goals; (xii) budget comparisons;
(xiii) measures of customer satisfaction; (xiv) implementation, completion or progress of
projects, processes, products or product-lines strategic or critical to the Company’s
business operations; (xv) Share price (including, but not limited to, growth measures and
total shareholder return); (xvi) working capital; (xvii) economic value added; (xviii)
percentage of sales generated by new products; (xix) growth in sales of products or
product-lines; (xx) new product development or successful completion of research and
development projects; (xxi) any combination of, or a specified increase in, any of the
foregoing; and (xxii) the formation of joint ventures, research or development
collaborations, or the completion of other corporate transactions intended to enhance the
Company’s revenue or profitability or enhance its customer base;

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

4

 

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

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

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

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

     (viii) to modify or amend each Award other than a modification that would subject the
Award to Code Section 409A or, to the extent the Award is granted hereunder as
“performance-based compensation” within the meaning of Section 162(m) of the Code, would
preclude a deduction by the Company for the Award pursuant to Code Section 162(m); provided,
however, that any such amendment is subject to Section 16(c) of the Plan and may not impair any
outstanding Award unless agreed to in writing by the Participant;

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

     (x) to authorize conversion or substitution under the Plan of any or all outstanding stock
options or outstanding stock appreciation rights held by employees, directors, officers,
consultants, advisors or other service providers of an entity acquired by the Company (the
“Conversion Options”). Any conversion or substitution shall be effective as of the close of the
merger or acquisition and shall meet the requirements of Treasury regulation § 1.424-1 for
statutory options, as modified by the regulations under Code Section 409A. Subject to the
preceding sentence, the Conversion Options may be Nonstatutory Stock Options or Incentive Stock
Options, as determined by the Administrator; provided, however, that with respect to the
conversion of stock appreciation rights in the acquired entity, the Conversion Options shall be
Nonstatutory Stock Options. Unless otherwise determined by the time of the conversion or
substitution (and subject to the requirements of Code Section 409A and, to the extent an Award
is granted as “performance-based compensation” within the meaning of Section 162(m) of the
Code, Code Section 162(m)), all Conversion Options shall have the same terms and conditions as
Options generally granted by the Company under the Plan;

     (xi) subject to Section 15(c) of the Plan, to provide, upon direction by the Board in its
sole discretion, in the event there is a change in control of the Company or any Subsidiary, as
determined by the Board, for the (A) assumption or substitution of, or adjustment to, each
outstanding Award; (B) acceleration of the vesting of Options and the termination of any
restrictions on Cash Awards or Stock Awards; and/or (C) the cancellation of Awards for a cash
payment to the Awardee, but only to the extent such action does not conflict with the
provisions of Code Section 409A, if applicable, and, to the extent the Award is granted as
“performance-based compensation” within the meaning of Section 162(m) of the Code, Code Section
162(m);

     (xii) to delegate to any officer of the Company any of its powers hereunder, to the extent
permitted by Applicable Laws, and to authorize any person to execute on behalf of the Company
any instrument required to effect the grant of an Award previously granted under this Plan;
provided, however, to the extent the Award is granted as “performance-based compensation”
within the meaning of Section 162(m) of the Code, such delegation or authorization shall comply
with Code Section 162(m); and

5

 

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

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

5. Eligibility.

     One or more Awards may be granted to Participants, provided, however, that (i) Incentive Stock
Options may be granted only to Employees of the Company or any Subsidiary, and (ii) Awards granted
to Covered Employees that are intended to qualify as “performance-based compensation” under Code
Section 162(m) shall be subject to the applicable requirements of that Code section.

6. Award Limitations.

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

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

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

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

     (i) No Participant shall be granted, in any fiscal year of the Company, Options to
purchase and/or Stock Appreciation Rights based on more than 2,000,000 Shares. This limit
applies on an aggregate basis to all Options and Stock Appreciation Rights granted to the
relevant Participant in a given fiscal year.

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

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

     (iv) No Covered Employee shall be granted Cash Awards or Stock Awards designed to qualify
as “performance-based compensation” pursuant to the performance factors set forth in Section
4(b)(ii)(B) of the Plan if (A) such Cash Awards would exceed $5,000,000 in any fiscal year of
the Company or (ii) such Stock Awards would exceed 300,000 shares in any fiscal year of the
Company.

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

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

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     (ii) Options or Stock Appreciation Rights granted to Non-Exempt Employees must comply with
the exercise price and exercise period restrictions set forth below, and other provisions of
the “Worker Economic Opportunity Act” of 2000, P.L. 106-202, or other provisions of law,
sufficiently to insure that such Options, and any profits, gains or income resulting from such
Options, are excluded from such Non-Exempt Employee’s overtime pay calculations.

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

7. Term of Plan.

     Subject to Section 21 of the Plan, the Plan was originally effective upon its adoption by the
Board and its approval by the Company’s shareholders. It shall continue in effect for a term of 10
years from the later of the date the Plan or any amendment to add shares to the Plan is adopted by
the Board and approved by the stockholders unless terminated earlier under Section 16 of the Plan.
Subject to Section 16, this restatement of the Plan shall be effective January 1, 2007.

8. Term of Award.

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

9. Option Exercise Price and Consideration.

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

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

     (ii) In the case of a Nonstatutory Stock Option, the per Share exercise price shall be no
less than 100% of the Fair Market Value on the Grant Date.

     (iii) Notwithstanding the foregoing, at the Administrator’s discretion, Conversion Options
(as defined in Section 4(b)(x)) may be granted with a per Share exercise price of less than
Fair Market Value on the Grant Date so long as the requirements of Code Section 409A regarding
substitutions of stock rights are met.

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

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

     (i) cash;

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

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

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

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

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

10. Exercise of Option.

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

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

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

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

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

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

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

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

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

     (b) Termination of Employment. Unless otherwise provided in the Award Agreement, if an Awardee
ceases to be an Employee, other than as a result of circumstances described in Sections 10(c), (d),
or (e) below, the Awardee’s Options shall (i) cease to vest immediately upon the Awardee’s
Severance Date and (ii) terminate on the earlier of 90 days after the Awardee’s Severance Date or
the expiration of the term of such Option. If the Awardee does not exercise any Shares covered by
the vested portion of his or her Option, the unexercised Shares covered by the vested portion of
such Option shall revert to the Plan on the earlier of 90 days after the Awardee’s Severance Date
or the expiration of the term of such Option.

     (c) Total Disability. Unless otherwise provided in the Award Agreement, if an Awardee ceases
to be an Employee as a result of the Awardee’s Total Disability, the Awardee’s Options shall (i)
continue to vest while the Total Disability continues to exist and (ii) terminate on the earlier of
90 days after the Awardee’s Severance Date unless prior to such date the Awardee becomes an
Employee or the expiration of the term of such Option. On the Awardee’s Severance Date, the Shares
covered by the unvested portion of his or her Option shall revert to the Plan.

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If the Awardee does not exercise any Shares covered by the vested portion of his or her
Option, the unexercised Shares covered by the vested portion of such Option shall revert to the
Plan on the earlier of 90 days after the Awardee’s Severance Date or the expiration of the term of
such Option. The Option may be exercised by the guardian of Awardee’s property if one has been
appointed.

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

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

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

11. Stock Awards.

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

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

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

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

9

 

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

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

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

12. Stock Appreciation Rights.

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

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

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

     (d) Form of Payment. The Company’s obligation arising upon the exercise of a Stock
Appreciation Right shall be paid as soon as administratively possible after exercise and may be
paid in Common Stock or in cash, or in any combination of Common Stock and cash, as the Committee,
in its sole discretion, may determine.

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

13. Cash Awards.

     Cash Awards may be granted either alone, in addition to, or in tandem with other Awards
granted under the Plan. After the Administrator determines that it will offer a Cash Award, it
shall advise the Participant in writing or electronically, by means of an Award Agreement, of the
terms, conditions and restrictions related to the Cash Award. Cash Awards that include any deferral
of payment greater than 21/2 months after the end of the calendar year in which vesting occurs shall
comply with the requirements of Code Section 409A, and no participant elections regarding the time
of payment shall be allowed.

14. Non-Transferability of Awards.

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

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15. Adjustments Upon Changes in Capitalization or Dissolution or Liquidation.

     (a) Changes In Capitalization. Subject to any required action by the stockholders of the
Company, the number and kind of shares of Common Stock covered by each outstanding Award, and the
number and kind of shares of Common Stock which have been authorized for issuance under the Plan
but as to which no Awards have yet been granted or which have been returned to the Plan upon
cancellation or expiration of an Award, as well as the price per share of Common Stock covered by
each such outstanding Award, shall be proportionately adjusted for any increase or decrease in the
number or kind of issued shares of Common Stock resulting from a stock split, reverse stock split,
stock dividend, combination or reclassification of the Common Stock, or any other increase or
decrease in the number of issued shares of Common Stock effected without receipt of consideration
by the Company; provided, however, that conversion of any convertible securities of the Company
shall not be deemed to have been “effected without receipt of consideration.” Such adjustment
shall conform to the requirements of Code Sections 162(m) and 409A and shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive. Except as expressly
provided herein, no issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof
shall be made with respect to, the number or price of shares of Common Stock subject to an Award.

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

     (c) Merger or Asset Sale or Other Change in Control.

     (i) Change in Control without Termination of Employment. In the event there is a
change in control of the Company or any Subsidiary, as determined by the Board, without a
related termination of the Participant’s employment as provided in Section 15(c)(ii) and (iii)
below, the Board may, in its discretion to the extent such action does not violate Code Section
409A, (A) provide for the assumption or substitution of, or adjustment to, each outstanding
Stock Award, Stock Appreciation Right or Option in accordance with the principles of Section
15(a); (B) accelerate the vesting of Options and terminate any restrictions on Cash or Stock
Awards; and (C) provide for the cancellation of Awards for a cash payment to the Awardee.

     (ii) Change in Control where Participant has Entered into a Severance Agreement.
Notwithstanding anything in the related Award Agreement to the contrary, if (A) the Participant
has entered into a letter agreement between such Participant and the Company which sets out the
severance benefits such Participant would be entitled to in the event of the Participant’s
involuntary termination under particular circumstances following the Company’s execution of a
definitive agreement to effect a change in ownership or control of the Company (“Severance
Agreement”) and (B) the Participant is entitled to receive any benefit under such Severance
Agreement, then the Awards granted under this Plan and any holding period, restrictions or
other provisions applicable to such Awards shall be governed by the provisions of the Severance
Agreement, as it may be amended from time to time, to the extent the Severance Agreement
addresses such Awards. A Participant who has entered into a Severance Agreement and is entitled
to benefits thereunder is not entitled to the Change in Control Benefit, the cancellation of
buy back or repayment of profits provisions or any other benefit set out in Section 15(c)(iii)
of the Plan (unless and only to the extent so provided in the Participant’s Severance
Agreement).

     (iii) Change in Control Benefit for Participants Who Have Not Entered into Severance
Agreements. Notwithstanding anything in the Participant’s Award Agreement to the contrary,
should a Participant’s employment with the Company terminate by reason of an Involuntary
Termination and such Participant has not entered into a Severance Agreement or the Participant
is not entitled to receive any benefit under such Severance Agreement, then the Participant
shall become entitled to receive a Change in Control Benefit (as defined below); provided,
however, that to be entitled to a Change in Control Benefit, the Participant must also execute
a release of all employment-related claims against the Company and its affiliates existing as
of the date of execution, in the standard form used by the Company without material
modification, addition or deletion.

11

 

     In addition, upon the occurrence of a Change in Control, the provisions of Section 8 of a
Participant’s Nonstatutory Stock Option Award Agreement, Section 8 of a Participant’s
Restricted Stock Unit Award Agreement under the Plan or any similar provisions of the Plan or
an Award Agreement to (i) cancel any Award granted to a Participant, (ii) buy back Common Stock
issued to a Participant upon the Participant’s exercise of an Award and/or (iii) require
repayment with respect to certain proceeds received from the sale of any Common Stock issued to
a Participant upon the Participant’s exercise of an Award, shall be deemed to be cancelled and
deleted from such documents and shall be of no further force and effect.

     The following definitions shall apply for purposes of this Section 15(c)(iii):

     “Cause” means the Participant has:

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

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

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

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

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

     The termination of employment of Participant shall not be deemed to be for Cause unless
and until, following the expiration of the 14-day grace period or the 60-day improvement
period, if applicable, set forth above, there shall have been delivered to Participant written
notice of a Senior Executive, after reasonable notice is provided to Participant and
Participant is given an opportunity to be heard by such Senior Executive, finding that, in the
good faith opinion of such Senior Executive, Participant has engaged in conduct which would
constitute Cause under paragraphs (A)—(D) above and specifying the particulars thereof in
detail.

12

 

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

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

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

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

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

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

     3. at least a majority of the members of the board of directors of the corporation
or other entity resulting from such Business Combination were members of the Incumbent
Board at the time

13

 

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.

     “Change in Control Benefit” means:

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

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

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

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

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

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

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

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

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

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

     “Specified Reason” means:

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

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

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

16. Amendment and Termination of The Plan.

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

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

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

17. Designation of Beneficiary.

     (a) An Awardee may file a written designation of a beneficiary who is to receive the Awardee’s
rights pursuant to his or her Award or the Awardee may include his or her Awards in an omnibus
beneficiary designation for all benefits under the Plan. To the extent that an Awardee has
completed a designation of beneficiary while employed with the Company or its Subsidiaries or
Affiliates, such beneficiary designation shall remain in effect with respect to any Award hereunder
until changed by the Awardee.

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

15

 

18. Legal Compliance.

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

19. Inability To Obtain Authority.

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

20. Reservation of Shares.

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

21. Notice.

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

22. Governing Law.

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

23. Unfunded Plan.

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

     IN WITNESS WHEREOF, the Company has caused this document to be executed by its duly authorized
officer on this            day of      , 2007.

	 	 	 	 	 
	 	Perot Systems Corporation

 	 
	 	By:  	 	 
	 	 	Its:	 	 
	 	 	 	 
	 

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