SENIOR EXECUTIVE
AGREEMENT
Senior Executive Agreement (the “
Agreement ”) made this 27th day of September, 2009,
among Affiliated Computer Services, Inc. (the “
Company ”), Xerox Corporation (“ Parent
”) and Tom Burlin (the “ Executive
”).
WHEREAS, the Executive and the Company are
currently parties to that certain Change of Control Agreement made
and effective as of June 9, 2008, as amended December 23, 2008 (the
“ Prior Change of Control Agreement
”);
WHEREAS, the Company, Parent and a subsidiary of
Parent (the “ Merger Sub ”) have, as of the date
hereof, entered into an Agreement and Plan of Merger (the “
Merger Agreement ”) pursuant to which the Company will
merge with and into the Merger Sub, and 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 ”);
WHEREAS, it is the intention of the parties that
effective upon, and subject to the occurrence of, the Merger, this
Agreement shall exchange and settle in all respects, the Prior
Change of Control Agreement which shall thereupon cease to be of
further force or effect.
NOW, THEREFORE, in consideration of the
foregoing and the respective covenants and agreements of the
parties contained herein, the parties hereto agree as
follows:
From and after the Effective Time (as defined in
the Merger Agreement), reference to the Company herein shall be
deemed to refer to the surviving entity in connection with the
Merger.
The Company has determined that both the
Executive’s performance and the Company’s ability to
retain the Executive as an employee will be significantly enhanced
if the Executive is provided with fair and reasonable protection
and incentives in connection with the consummation of the Merger.
Accordingly, the Company and the Executive agree as
follows:
1. Defined Terms . Unless
otherwise indicated, capitalized terms used in this Agreement shall
have the meanings set forth herein or in Exhibit A
.
2. Effective Time; Term .
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 Effective Time;
provided, however, that this Agreement will be null and void ab
initio and of no further force or effect (and the Prior Change of
Control Agreement shall be deemed to thereupon remain in effect) if
the Merger Agreement is terminated prior to the Effective
Time. Upon the effectiveness of this Agreement upon the
occurrence of the Effective Time, the Prior Change of Control
Agreement shall cease to have any further force or effect and shall
be deemed replaced in its entirety by this
Agreement. The parties agree that no payments or
benefits shall be provided pursuant to the Prior Change of Control
Agreement unless and until this Agreement is terminated due to the
termination of the Merger Agreement without the Effective Time
having occurred.
3. Position; Base Salary; Annual
Bonus; Employee Benefits; LTIP .
(a) Position . Upon the
Effective Time and until the third anniversary of the Effective
Time, the Executive shall have such title, duties and general
responsibilities as are comparable to the title, duties and general
responsibilities of the Executive as of the date of this Agreement
and the Executive’s primary place of employment will remain
within a reasonable commuting distance of the location of
Executive’s primary place of employment as was applicable to
the Executive as of the date of this Agreement, subject to travel
in the course of performing the Executive’s duties for the
Company or any of its subsidiaries.
(b) Base Salary . Upon the
Effective Time and during the Executive’s employment with the
Company or any of its subsidiaries, the Company shall pay the
Executive a base salary at the annual rate of $600,000 (the “
Base Salary ”), payable in regular installments in
accordance with the Company’s usual payment
practices. The Executive’s Base Salary shall not
in any way be reduced below this rate from the period between the
Effective Time and the third anniversary of the Effective
Time.
(c) Annual Bonus . For the
2009 and 2010 calendar years, the Executive will:
(i) on and prior to the Effective
Time, remain eligible to receive an annual cash incentive award
under the Company’s annual incentive plan as in effect as of
the date of this Agreement or as adopted after the date of this
Agreement; provided, that:
(A) if the Effective Time occurs on
or prior to June 30, 2010, the Executive shall receive an annual
cash incentive award that is pro-rated for the period from July 1,
2009 through the Effective Time and based on deemed achievement of
75% of target performance, and
(B) if the Effective Time occurs
after June 30, 2010, (x) the Executive shall be entitled to the
payment of any annual incentive award payable with respect to the
fiscal year ending June 30, 2010 based on actual performance and in
accordance with the terms of the applicable Company annual
incentive plan and (y) the Executive shall receive an annual cash
incentive award for the fiscal year ending June 30, 2011 based on
deemed achievement of 75% of target performance and pro-rated for
the period from July 1, 2010 through the Effective Time;
and
(ii) for the remainder of the
calendar year in which the Effective Time occurs, be eligible for
an annual target cash incentive under the applicable Parent annual
incentive plan equal to no less than 150% of Base Salary (the
“ Target Bonus ”), and an annual maximum cash
incentive equal to two (2) times the Target Bonus (the “
Maximum Bonus ”), pro-rated for the period from the
Effective Time through December 31 of such calendar
year.
The Target Bonus and Maximum Bonus will each be
based upon the achievement of performance objectives established by
the Board of Directors of Parent (the “ Parent Board
”) generally within the first three months of such calendar
year, which performance objectives will be determined by Parent
based upon Parent’s guidelines and ordinary course process
for other senior executives of Parent and its
subsidiaries. For any calendar year following the
calendar year in which the Effective Time occurs, the Executive
will be eligible for a Target Bonus and a Maximum Bonus in
accordance with Parent’s annual incentive plan on the same
basis as is generally made available to other senior executives of
Parent and its subsidiaries. The Annual Bonus, if any, shall be
paid to the Executive when annual bonuses are generally paid to
other executives of the Company but in no event later than two and
one-half (2.5) months after the end of the fiscal or calendar year,
as applicable.
(d) Employee Benefits .
Subject to the Executive’s continued employment with the
Company or any of its subsidiaries, the Executive will be entitled
to the following:
( i) For the remainder of the 2009
calendar year and during the 2010 calendar year, the
Executive’s participation in the existing Company employee
benefit and perquisite programs as of the date of this Agreement
(excluding any programs relating to the Company’s stock, but
including benefits comparable to the Company’s Executive
Benefit Plan) will continue on substantially comparable terms, but
will in no event be less favorable in the aggregate than those in
effect on the date of this Agreement.
(ii) For the 2011 calendar year,
Executive will be entitled to participate in employee benefit and
perquisite programs (excluding any programs relating to the
Company’s stock) that are no less favorable in the aggregate
than those in effect on the date of this Agreement.
(iii) For the 2012 calendar year,
the Executive will be eligible to participate in the employee
benefit and perquisite programs that are no less favorable in the
aggregate than benefit and perquisite programs generally made
available to similarly situated executives of Parent or its
subsidiaries.
(e) Equity Awards .
Beginning in the 2010 calendar year, the Executive will become
eligible to participate in Parent’s Long Term Incentive
Program (“ LTIP ”) on the same basis as is
generally made available to other senior executives of the Parent
and its subsidiaries. The Executive will be eligible to
receive awards under the LTIP at the discretion of senior
management at Parent based on the Executive’s performance and
contribution in relation to the Executive’s peers in
comparable positions at Parent and its subsidiaries.
4. Merger Benefits . Upon the
Effective Time, the Executive shall be entitled to the benefits
provided herein.
(a) Merger Cash Payments .
Subject to the Executive’s continued employment with the
Company through the dates set forth below (each a “ Merger
Cash Payment Date ”), the Company shall pay the Executive
an aggregate cash amount equal to the sum of (i) $3,104,100 plus
(ii) $900,000 multiplied by a fraction, the numerator of which
shall be the number of days the Executive was employed by the
Company in the fiscal year of the Company in which the Effective
Time occurs and the denominator of which shall be 365
(collectively, the “ Merger Cash Payments ”).
The Merger Cash Payments are intended to correspond to the amounts
due under the Prior Change of Control Agreement.
The Merger Cash
Payments shall be paid to the Executive as set forth
below:
(1) Subject to the Executive’s continued
employment with the Company through the second anniversary of the
Effective Time, fifty percent (50%) of the Merger Cash Payments
shall be payable in a lump sum in cash as soon as practicable but
not later than ten (10) business days after the second anniversary
of the date of the Effective Time; and
(2) Subject to the Executive’s continued
employment with the Company through the third anniversary of the
Effective Time, fifty percent (50%) of the Merger Cash Payments
shall be payable in a lump sum in cash as soon as practicable but
not later than ten (10) business days after the third anniversary
of the date of the Effective Time.
Notwithstanding the foregoing, in the event the
Executive’s employment with the Company is terminated by the
Company without Cause, by the Executive for Good Reason or due to
death or Disability on or prior to the third anniversary of the
date of the Effective Time, subject to the Executive’s
execution and delivery of a general release of claims in a
customary form (which shall not include any additional restrictive
covenants) reasonably satisfactory to the Company (and expiration
of any applicable revocation periods), the Executive shall be paid
an amount equal to any remaining unpaid Merger Cash Payments no
later than 30 days following such termination of
employment.
(b) Pre-August 2009 Option
Grants . All outstanding options to purchase Company
common stock held by the Executive and which were granted prior to
August of 2009 (the “ Pre-August Options ”)
shall be immediately, and fully vested and exercisable upon the
occurrence of the Effective Time and converted into options to
acquire Parent common stock as set forth in the Merger Agreement
and shall remain outstanding and exercisable in accordance with
their terms.
(c) August 2009 Option Grants
. With respect to all outstanding options to purchase
Company common stock held by the Executive and which were granted
in, or after, August of 2009 (the “ August Options
”), upon the Effective Time all such August Options shall be
converted into options to acquire Parent common stock as set forth
in the Merger Agreement, except that the Executive hereby waives
any accelerated vesting of the August Options in connection with
the Merger or the transactions contemplated
thereby. Following the Effective Time, the August
Options will continue to vest according to the vesting schedule set
forth in the Option Agreement applicable to the August Options (the
“ Option Agreement ”), provided that (A) if the
performance goals associated with “target” level
performance under the PSs described in Section 3(d) below
are cumulatively achieved, any remaining unvested August Options
that the Executive holds will become vested on the third
anniversary of the Effective Time and (B) if the Executive’s
employment is terminated by the Company without Cause, by the
Executive for Good Reason or due to death or Disability, all
outstanding August Options, whether or not vested, shall become
immediately vested and exercisable. The August Options
shall be deemed to be amended hereby to incorporate the terms of
this Section 3(c) . All terms and conditions with
respect to the August Options shall be governed by the
Company’s Amended and Restated 2007 Equity Incentive Plan and
the Option Agreement, including any amendments thereto and as
amended hereby.
(d) Performance Share Grant
. On the Effective Time, the Executive will be entitled
to a special one-time grant of performance shares (“
PSs ”) pursuant to the Parent’s December 2007
Amendment and Restatement of the 2004 Performance Incentive Plan
(the “ PIP ”) pursuant to which the Executive
will be eligible to receive a number of shares of Parent common
stock (each, a “ Parent Share ”), subject to,
and based upon, the achievement of the relevant performance goals
which shall be established on an annual basis for each of the three
years in the applicable vesting period, and which shall be set
forth on the Grant Date (as defined below) in an award
agreement. The aggregate number of Parent Shares
deliverable upon achievement of threshold, target and maximum
performance shall be determined as of the Grant Date and shall have
an aggregate value on such date equal to:
(i) Threshold Value : 50% of
Base Salary;
(ii) Target Value : 100% of
Base Salary;
(iii) Maximum Value : 200% of
Base Salary plus 50% of the value of the August Options
(determined by multiplying the number of shares of Company Class A
common stock subject to such Options immediately prior to the
conversion pursuant to the Merger Agreement by the excess of the
Option Value (as defined below) over the exercise price per share
of such Options (immediately prior to the conversion pursuant to
the Merger Agreement)). For the purposes of this
Agreement, the “Option Value” shall mean the
“Class A Merger Consideration” with the “Class A
Stock Consideration” (each as defined in the Merger
Agreement) deemed to equal the product of the “Class A
Exchange Ratio” (as defined in the Merger Agreement) times
the closing price per Parent Share as reported in The Wall Street
Journal in the New York Stock Exchange Composite Transactions as of
immediately prior to the Effective Time.
For purposes of
the foregoing, the fair market value of a Parent Share shall be
deemed to be the closing price as reported in The Wall Street
Journal in the New York Stock Exchange Composite Transactions on
the date that the PSs are granted (such date, the “ Grant
Date ”). Such award of PSs shall constitute a
promise to deliver (or cause to be delivered) to the Executive,
subject to the terms of this Agreement, the PIP and the PS award
agreement pursuant to which it is granted, a number of Parent
Shares based on the foregoing schedule as soon as reasonably
practicable following vesting (the date of vesting, the “
Vesting Date ”).
The Vesting
Date will be the third anniversary of the Effective Time, subject
to achievement of the relevant performance goals set forth in the
PS award agreement. All terms and conditions with
respect to the PSs shall be governed by the PIP and the PS award
agreement pursuant to which such PSs are granted, which shall be
consistent in all respects with this Section 3(d)
. Such award agreement shall be substantially in the
form attached as Exhibit B hereto.
(e) Effect on Existing Plans
. All change of 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 the Merger
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 (except as modified hereby). The
compensation payable to Executive hereunder shall not be considered
part of the Executive’s earnings for purposes of calculating
current or future benefits under any compensation or benefit
programs maintained or sponsored by the Company or any of its
affiliates, including retirement plans, 401(k) plans and other
benefit plans.
5. Mitigation . The Executive
shall not be required to seek other employment after the Merger and
any compensation earned from other employment shall not reduce the
amounts otherwise payable under this Agreement.
6. Gross-up .
(a) 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 whether payable pursuant to the terms of this Agreement
(excluding any LTIP grants made to Executive following the date
hereof, but including any PSs awarded pursuant