Exhibit 10(s)
THE DOCUMENT COMPANY
XEROX
CONFIDENTIAL
Xerox Corporation
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, XX 00000
Xxxx X. Xxxxxxx
President and Chief Operating Officer
April 2, 2001
Mr. Xxxxxx Xxxxxxx
0 Xxxxx Xxxx
Xxxxxx, XX 00000
Dear Xxxxxx:
This letter will summarize our understanding and agreement regarding your
employment status. I appreciate your agreement to remain employed at Xerox
Corporation ("Xerox" or the "Company") until the end of 2002. I am counting on
your support to help us during this turnaround period.
I know your pension and other aspects of your pay have been of concern to you. I
have received Executive Compensation and Benefits Committee approval for the
following actions, assuming you remain employed through 12/31/2002:
At the earliest possible date, Xerox will direct Xerox Spain to move to
"externalize" your Spanish pension in a manner consistent with proposed Spanish
law requirements. For purposes of this agreement, "externalization" of the
Spanish pension plans refers to actions taken by Xerox in Spain under Spanish
legislation which results, inter alia, in the complete segregation of pension
assets for the benefit of plan beneficiaries and the denial of any creditor
access to such plan assets unless and until all plan liabilities are settled.
You will sign documents as may be necessary to enable vesting at age 60 and
benefits payments beginning at age 60. Your benefits will be based on your
Notional Salary in Spanish Pasetas at the time of "externalization" updated by
the Company's actuary with the general rules applied to the participants of the
Xerox Spain Pension Fund.
To the extent "externalization" results in an imposition of U.S. Tax to you,
Xerox will indemnify you for the actual amount of such tax arising from the
"externalization" of your Spanish pension for the period ending 12/31/2006. For
purposes of this Agreement, 'Tax" shall be: (i) the incremental amount of U.S.
and state individual income taxes (including any penalties or interest) net of
any foreign tax credit you actually receive in Spain or any other foreign
jurisdiction for such Tax (ii) plus a gross-up amount in an amount that makes
you economically whole on an after-tax basis. For the sake of clarity it is
understood between the parties hereto that the Tax shall be calculated by
comparing the Tax you would owe with the inclusion of your Spanish pension
versus the Tax you would owe without inclusion of your Spanish pension. The
calculation of Tax shall be made by tax advisors
acceptable to the Company. You agree that you will cooperate with the Company
and its advisors in order to determine the proper amount of Tax. Such
cooperation shall include but not be limited to; providing Xerox with copies of
all your relevant tax returns plus any relevant correspondence from the
appropriate taxing jurisdictions and; instructing your advisors to cooperate
with Xerox including sharing copies of all their relevant tax workpapers. You
will be responsible for payment of taxes in Spain, or other jurisdictions. You
will be responsible for any U.S. tax payments after 12/31/2006. Xerox shall have
the right to contest any imposition with the Internal Revenue Service and/or the
appropriate state taxing jurisdiction ("Contest"). Xerox shall control such
Contest. No payment of Tax will be due until the conclusion of the Contest. You
will, and you will instruct your tax advisors, to cooperate with Xerox in a
Contest.
Following the completion of your active employment on 12/31/2002, the Company
will provide relocation assistance per the terms of the Transferred Relocation
policy, at a cost not to exceed $100,000, and you will remain as an employee of
Xerox Espana, S.A. on salary continuance for the three-year period ending
12/31/2005. Your retirement will be effective 1/1/2006. Your rate of salary paid
during salary continuance will be Pesetas 4,389,600 per month for 36 months,
less applicable taxes. You agree to waive any other severance benefits that you
otherwise may be eligible to receive. If you cannot waive rights to any
additional severance benefit, the amount of salary continuance shall be reduced
by an amount equal to the other amounts payable. Required withholding taxes will
be taken out of all such payments and reported on the appropriate Form W-2 or
Form 1099.
During salary continuation, you will remain as Chairman of Xerox Espana, S.A. at
the discretion of the CEO of Xerox Corporation.
Xxxxxx continuance will be conditioned upon your signing a General Release
acceptable to the Company prior to the commencement of salary continuance.
You agree that your awards under the New LEEP program granted effective on
1/1/2001 and to be granted effective on 1/1/2002 will vest 100% on 1/1/2007
notwithstanding any other terms or provisions of the award. You agree that these
awards will be forfeited in their entirety if the Company is required to make
tax reimbursement and related payments in excess of the Value of the New LEEP
awards as a result of U.S. taxation of your Spanish pension. If the tax
reimbursement and related payments made by the Company are less than the Value
of your New LEEP awards, you will continue to vest, per the terms of the awards,
in that portion of the New LEEP awards that the Value exceeds the amount of tax
reimbursement and related payments made by the Company. For purposes of this
paragraph, Value means an amount equal to the sum of the following:
- Number of shares of restricted stock granted to you under the New LEEP
program times the Fair Market Value of each share on 1/1/2007, or any earlier
vesting date; and
- An amount equal to the total spread (the Fair Market Value of Xerox stock as
of 1/1/2007, or any earlier vesting date, less the option Purchase Price) on the
stock options awarded to you under the New LEEP program.
. You will not be eligible for a New LEEP award in 2003.
Should you leave the Company's employment for any reason other than death or
under circumstances which would give you the right to receive severance payments
under the Severance Agreement between you and the Company dated as of October
15, 2000 prior to 12/31/2002:
- Unless the CEO authorizes (subject to ECBC approval) continuation of vesting
in some or all LEEP awards granted 1/1/2001 and 1/1/2002 they will immediately
cancel;
- You will not be eligible for any salary continuance or other termination
benefits whatsoever;
- The Company's promise to reimburse you for any U.S. tax on your Spanish
pension will immediately expire; and
- You will immediately reimburse the Company for any tax related payments made
to you with respect to your Spanish pension.
This letter agreement supersedes and replaces the letter agreement dated
December 21, 2000.
Sincerely,
/s/ XXXX X. XXXXXXX
Xxxx X. Xxxxxxx
AMM/pba
AGREED AND ACCEPTED
/s/ Xxxxxx Xxxxxxx
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Xxxxxx Xxxxxxx
Date:
Copies:
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