This SEPARATION AGREEMENT (the
“Agreement”) made as of the 27th day of September,
2009, among Affiliated Computer Services, Inc. (the
“Company”), Xerox Corporation (“Parent”)
and Darwin Deason (the “Executive”).
WHEREAS, the Executive and the Company are
currently parties to that certain Amended and Restated Employment
Agreement made and effective as of the 7th day of December, 2007,
and amended as of December 30, 2008 (the “Employment
Agreement”);
WHEREAS, the Executive currently serves as the
Chairman on the Board of Directors (the “Board”) of the
Company and previously served as its Chief Executive
Officer;
WHEREAS, the Company, Parent, and a subsidiary
of Parent have, as of the date hereof, entered into an Agreement
and Plan of Merger (the “Merger Agreement”) pursuant to
which the stock of the Company will be converted into the stock of
Parent (as well as the right to receive certain cash consideration)
through a merger (the “Merger”); and
WHEREAS, the parties hereto hereby acknowledge
that the Executive intends to, and will, resign as Chairman of the
Board and from all other positions the Executive holds at the
Company or any of its subsidiaries effective upon consummation of
the Merger upon the Effective Time, as defined in the Merger
Agreement (such date, the “Merger Date”).
NOW, THEREFORE, in consideration of the
foregoing and of the respective covenants and agreements of the
parties herein contained, the parties hereto agree as
follows:
1.
Effectiveness . This Agreement shall constitute a
binding obligation of the parties as of the date hereof, but the
operative provisions of this Agreement shall only become effective
as of the Merger Date; provided, however, that this Agreement will
be null and void ab initio and of no further force or effect if the
Merger Agreement is terminated prior to the Merger
Date. Upon the effectiveness of this Agreement, the
Employment Agreement shall cease to have any further force or
effect, without further obligation of either party thereunder, and
shall be deemed replaced in its entirety by this
Agreement.
2.
Resignation . Upon, and subject to the occurrence
of, the Merger Date, the Executive shall be deemed to have resigned
immediately, and without any further action being necessary, from
his position as Chairman of the Board and all other positions that
he may hold at the Company and its subsidiaries and
affiliates.
3.
Payments . Upon, and subject to the occurrence
of, the Merger Date, the Executive shall be entitled to the
following:
(a)
Severance Payments . The Executive shall receive
from the Company:
(i) an
amount in cash equal to the aggregate of the amount of base salary
(assuming an annual base salary rate of $1,017,437) that otherwise
would have been payable to the Executive from the Merger Date
through May 18, 2014, which shall be payable in equal monthly
installments commencing on the first business day of the first
month following the Merger Date and continuing through May 18,
2014; provided, however, that no such payment shall be made until
the first business day that is at least six months after the Merger
Date (the “Delayed Payment Date”), and on the Delayed
Payment Date the Executive shall receive from the Company an amount
in cash equal to the aggregate amount of the payments that would
have been made from the Merger Date through the Delayed Payment
Date in the absence of this proviso, without interest;
and
(ii) (A)
four guaranteed annual bonus payments of $2,543,592.20 each in
August 2010, 2011, 2012 and 2013 and (B) in August, 2014, a
guaranteed pro-rata bonus in the amount of $2,243,935, which
represents the aggregate target amount of the annual bonuses that
would have been payable to the Executive during the period
beginning on July 1, 2013 and ending on May 18, 2014.
(b)
Continued Benefits . Until the earlier of May 18,
2014 or the date on which the Executive becomes employed by a new
employer, the Company shall, (A) to the extent that benefits under
any of the Company’s medical, dental, life insurance,
disability and accidental death and dismemberment benefit plans, or
materially equivalent plans maintained by the Company in
replacement thereof (the “Health Plans”) will not be
taxable to the Executive, provide continued coverage at the
Company’s expense under any such plans to the Executive and
his spouse, or (B) to the extent that benefits under any Health
Plan would be taxable to the Executive, access to the
Executive and his spouse to such Health Plan by his paying the full
cost of coverage thereunder for the coverage period under this
Section 3(b) and prompt reimbursement by the Company for the
Executive’s premiums for continued coverage under such Health
Plan in an amount equal to the cost of such coverage (provided, in
the case of this clause (B), the amount of reimbursement during the
period from the Merger Date through the Delayed Payment Date shall
be paid to the Executive on the Delayed Payment Date, without
interest), in either case for the Executive and the
Executive’s dependents’ at the highest level provided
to the Executive immediately prior to the Merger Date, provided,
however, that if the Executive becomes employed by a new employer
which maintains a major medical plan that either (i) does not cover
the Executive with respect to a pre-existing condition which was
covered under the Company’s major medical plan, or (ii) does
not cover the Executive for a designated waiting period, the
Executive’s coverage under the Company’s major medical
plan shall continue (but shall be limited in the event of
noncoverage due to a preexisting condition, to the preexisting
condition itself) until the earlier of the end of the applicable
period of noncoverage under the new employer’s plan or May
18, 2014. Except as specifically permitted by Section
409A (as defined below), the benefits provided to the Executive
under this Subsection 3(b) during any calendar year shall not
affect the benefits to be provided to the Executive under this
Subsection 3(b) in any other calendar year and the right to
such benefits cannot be liquidated or exchanged for any other
benefit, in accordance with Treas. Reg.
Section 1.409A-3(i)(1)(iv) or any successor
thereto.
(c)
Payment of Accrued But Unpaid Amounts . Within
two (2) business days after the Merger Date, the Company shall pay
the Executive any unpaid portion of compensation previously earned
by the Executive.
(d)
Post-Retirement Welfare Benefits . For purposes
of determining the Executive’s eligibility for
post-retirement benefits under any welfare benefit plan (as defined
in Section 3(1) of the Employee Retirement Income Security Act of
1974, as amended) maintained by the Company immediately prior to
the Merger Date and in which the Executive then participated, the
Executive shall be credited with an additional number of credited
years of service and additional age credit equal to the period
between the Merger Date and May 18, 2014. If, after
taking into account the credited participation and age, the
Executive would have been eligible for post-retirement benefits,
the Executive shall receive, commencing on the Merger Date,
post-retirement benefits based on the terms and conditions of the
applicable plans in effect immediately prior to the Merger Date;
provided, that to the extent that any such benefits would be
taxable to the Executive, the Executive shall pay the full cost of
coverage thereunder for the coverage period set forth in the
applicable plan and the Company will promptly reimburse the
Executive for the cost of the premiums for continued participation
in such post-retirement benefits in an amount equal to the cost of
such participation (provided, that the amount of such
reimbursements for the period from the Merger Date through the
Delayed Payment Date shall be paid to the Executive on the Delayed
Payment Date, without interest).
(e)
Perquisites . Until May 18, 2014, the Executive
shall be entitled to continue to receive the perquisites and fringe
benefits in accordance with present practices existing on or prior
to the date hereof or pursuant to an arrangement entered into with
the consent of Parent, including without limitation, those listed
and described on Exhibit A hereto, provided, that (i) Executive
shall have no right to use of the Company’s aircraft, but the
Company shall instead pay to the Executive on the fifth (5th)
business day of each calendar quarter (or the fifth business day
after the Merger Date with regard to the first payment) during the
period between the Merger Date and May 18, 2014, an amount equal to
the cost the Executive would incur to charter an aircraft
comparable to the Company’s current airplane (as determined
by the charter cost schedule for comparable aircraft of Million Air
Dallas luxury jet service (or, if it is not doing such chartering,
a comparable company) for 31 1/4 flight hours per calendar quarter
(or pro rata for any partial quarter during the period), unless the
parties mutually agree in writing for any calendar quarter that the
Executive will use the Company aircraft instead of being provided
with payment for such quarter) and (ii) the Executive will continue
to be provided with his current personal security arrangements,
provided that the parties, to the extent permitted under Code
Section 409A and other applicable tax laws, may mutually agree in
writing for any period to pay to Executive an amount in cash equal
to the cost of obtaining such personal security arrangements for
such period. The Executive acknowledges that the Company
reflected in its most recent proxy, to the extent required by, and
in accordance with, applicable securities laws the costs of
providing such security.
(f) Effect
on Existing Plans. Except as provided below, all
“change of control” or “change in control”
provisions applicable to the Executive and contained in any plan,
program, agreement or arrangement maintained on or after the date
hereof by the Company (including, but not limited to, any stock
option, restricted stock or pension plan) shall remain in effect
for such period after the date of a change of control or change in
control as is necessary to carry out such provisions and provide
the benefits payable thereunder, and may not be altered in a manner
which adversely affects the Executive without the Executive’s
prior written approval. No benefits shall be paid to the
Executive, however, under any severance plan maintained generally
for the employees of the Company if the Executive is eligible to
receive benefits under this Section 3.
(g)
Outplacement Counseling . The Company shall
reimburse all reasonable expenses incurred by the Executive for
professional outplacement services by qualified consultants
selected by the Executive, provided that such expenses are incurred
on or prior to the last day of the second calendar year following
the calendar year in which the Executive’s separation from
service (within the meaning of Section 409A) occurs, in accordance
with Treas. Reg. Section 1.409A-1(b)(9)(v) or any successor
thereto. Such expenses shall be reimbursed no later than
the last day of the third calendar year following the calendar year
in which the Executive’s separation from service (within the
meaning of Section 409A) occurs, in accordance with Treas. Reg.
Section 1.409A-1(b)(9)(v) or any successor thereto.
(h)
Mitigation . The Executive shall not be required
to seek other employment after the Merger Date and any compensation
earned from other employment shall not reduce the amounts otherwise
payable under this Agreement.
(i)
Gross-up . In the event it shall be determined
that any payment, benefit or distribution (or combination thereof)
by the Company or Parent, or any trust established by the Company,
Parent or any other person or entity for the benefit of its
employees, to or for the benefit of the Executive payable pursuant
to the terms of this Agreement, the Prior Agreement or otherwise
pursuant to the terms of any compensatory arrangement between the
Company and the Executive on or prior to the date hereof (a
“Payment”) would be subject to the excise tax imposed
by Section 4999 of the Internal Revenue Code of 1986, as amended
(the “Code”) and any interest or penalties are incurred
by the Executive with respect to such excise tax (the excise tax,
together with interest and penalties thereon, hereinafter
collectively ref
