Document:

EXHIBIT (iv)

Page 1 of 11

 

 

 

 

 

 

Pitney Bowes Severance Pay Plan

As Amended and Restated Effective January 1, 1999

 

 

 

 

FOR EBC APPROVAL JANUARY 2000

 

 

EXHIBIT (iv)

Page 2 of 11

 

 

Pitney Bowes Severance Pay Plan

(As Amended and Restated Effective as of January 1,1999)

 

	
            I
 	
            Purpose and Introduction
 

 

The purpose of the Pitney Bowes Severance Pay Plan is to provide income to Employees who are involuntarily terminated by the Company for certain reasons. The provisions of this Plan generally do not apply in the case of an Employee’s voluntary termination. However, the Plan contains provisions providing certain benefits to Employees who resign under specified circumstances following a Change of Control. The Plan was originally effective June 1988. The Plan is hereby amended and restated effective as of January 1, 1999. Employees who terminated employment prior to January 1, 1999 shall have any rights in the Plan determined under the Plan document in effect prior to January

1, 1999.

 

	
            II.
 	
            Definitions
 

 

	
            A.
 	
            “Board” means the board of directors of Pitney Bowes Inc.
 

 

	
            B.
 	
            “Cause” means with respect to the Company, embezzlement, malfeasance, commission of a felony, the non-performance of one’s job or duties as determined by the Company in its sole discretion and acts of moral turpitude.
 

 

	
            C.
 	
            “Change of Control” means the following where:
 

 

(i)       there is an acquisition, in any one transaction or a series of transactions, other than from Pitney Bowes Inc., by any individual, entity or group (within the meaning of Section l3(d)(3) or l4(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act")), of beneficial ownership (within the meaning of Rule 13(d)(3) promulgated under the Exchange Act) of 20% or more of either the then outstanding shares of Common Stock or the combined voting power of the then outstanding voting securities of Pitney Bowes Inc. entitled to vote generally in the election of directors, but excluding, for this purpose, any such acquisition by Pitney Bowes Inc. or any of its subsidiaries, or any employee benefit plan (or related trust) of Pitney Bowes Inc. or its subsidiaries, or any corporation with respect
to which, following such acquisition, more than 50% of the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by the individuals and entities who were the beneficial owners, respectively, of the common stock and voting securities of Pitney Bowes Inc. immediately prior to such acquisition in  substantially the same proportion as their ownership, immediately prior to such acquisition, of the then outstanding shares of Common Stock or the combined voting power of the then outstanding voting securities of Pitney Bowes Inc. entitled to vote generally in the election of directors, as the case may be; or

 

(ii)       individuals who, as of January 1, 1999, constitute the Board (as of such date, the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board, provided 

 

 

EXHIBIT (iv)

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that any individual becoming a director subsequent to January 1, 1999, whose election, or nomination for election by Pitney Bowes’ shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board 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 is in connection with an actual or threatened election contest relating to the election of the directors of Pitney Bowes Inc. (as such terms are used in Rule 14(a)(11) or Regulation 14A promulgated under the Exchange Act); or

 

(iii)     there occurs either (A) the consummation of a reorganization, merger or consolidation, in each case, with respect to which the individuals and entities who were the respective beneficial owners of the common stock and voting securities of Pitney Bowes Inc. immediately prior to such reorganization, merger or consolidation do not, following such reorganization, merger or consolidation, beneficially own, directly or indirectly, more than 50% 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 resulting from such reorganization, merger or consolidation, or (B) an approval by the shareholders of Pitney
B owes Inc. of a complete liquidation of dissolution of Pitney Bowes Inc. or of the sale or other disposition of all or substantially all of the assets of Pitney B owes Inc.

 

	
            D.
 	
            “Committee” means the Employee Benefits Committee established by the Company.
 

 

	
            E.
 	
            “Company” means Pitney Bowes Inc. (and any successor entity) and the following related companies: Pitney Bowes Credit Corporation, Pitney Bowes Management Services, Inc. and Pitney Bowes Professional Services Inc.
 

 

	
            F.
 	
            “Contract Employee” means an employee who is employed by the Company pursuant to a written agreement and who is employed only for the duration of a particular project.
 

 

	
            G.
 	
            “DSR Employees” means employees who function at the district level and whose job responsibilities are primarily limited to inspection, maintenance, delivery and pickup of meters, collection of customer accounts payable, and maintenance of the metered mail system under statutory requirements.
 

 

	
            H.
 	
            “Employee” means any Employee who is employed by the Company other than contract Employees, Leased Employees, DSR Employees, PB Credit Union Employees, Temporary Employees, Part-Time Employees and independent contractors.
 

 

For purposes of determining an individual’s eligibility to participate in the plan, an individual who is an independent contractor and is reclassified by the Company, and governmental agency or a court as an employee for any purpose, including for purposes of employment taxes and wage withholding for Federal income taxes, shall not be eligible for participation in the Plan for the period during which such individual was an independent contractor.  Subsequent participation in the Plan by a reclassified employee shall be based on eligibility requirements under the Plan then applicable to the employee.

 

 

 

EXHIBIT (iv)

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            I.
 	
            “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
 

 

	
            J.
 	
            “Executive Leadership Committee” means the Company’s Executive Leadership Committee or a similar successor committee.
 

 

	
            K.
 	
            “Leased Employees” means any individuals who meet the definition of “leased employee” in Section 414(n) of the Internal Revenue Code, as amended and related regulations.
 

 

	
            L.
 	
            “Part-Time Employees” means employees who regularly work less than 30 hours per week.
 

 

	
            M.
 	
            “Participant” means any Employee who is covered by the Plan.
 

 

	
            N.
 	
            “Pay” means the base rate of pay (including merit rating and shift premium, where applicable) that is effective on the last working day of employment. For sales representatives, “Pay” will be the earnings paid to the Employee during the preceding 12 months. The following items will not be considered “Pay”: overtime, profit sharing, compensation in lieu of vacation, suggestion awards, special awards and prizes, adoption payments, severance payments, relocation payments, referral payments, year-end override bonus, performance-based compensation, cash incentive unit awards, bonuses, or any forms of deferred compensation, and sales representatives’ vacation pay, except in the case of Change of Control, in which event, profit sharing and bonuses other than performance-based compensation
and cash incentive unit award shall be considered “Pay” for purposes of this Plan.
 

 

	
            O.
 	
            “PB Credit Union Employee” means an employee of the Pitney Bowes Credit Union.
 

 

	
            P.
 	
            “PBC Employee” means any Employee who is eligible for the Performance Based Compensation Program at the Company.
 

 

	
            Q.
 	
            “Pitney Bowes” means Pitney Bowes Inc.
 

 

	
            R.
 	
            “Plan” means the Pitney Bowes Severance Pay Plan effective as of January 1, 1999, as amended and restated from time to time.
 

 

	
            S.
 	
            “Temporary Employees” means an employee whose employment with the Company is intended to be for a period not to exceed 12 months and whose work activity consists of short-term projects other than as a Contract Employee.
 

 

	
            T.
 	
            “Years of Service” means completed years and months of service with Company based on the period of service beginning with the Employee’s employment date (the date he or she first performs an hour of service as an Employee) to his or her termination date. The Employee shall continue to accrue Years of Service during approved leaves of absence, military service absences, paid holidays, paid vacations, temporary absences due to illness or injury, disability, or any other reason, if service is customarily accrued for purposes of the Pitney Bowes. Pension Plan or the retirement plan of the Company’s subsidiary for which the Employee works. In case of reemployment, subsequent termination pay 
 

 

 

 

EXHIBIT (iv)

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entitlement will be based upon credited service beginning on the date of rehire.

 

	
            III.
 	
            Eligibility
 

 

	
            A.
 	
            Eligibility. Each Employee shall be entitled to severance pay under the Plan payable in accordance with the applicable severance benefit formula set forth in this Section III. A, provided his or her employment is terminated by the Company for the following reasons:
 

 

	
            1.
 	
            The full or partial shutdown of a business or a facility or department.
 

 

	
            2.
 	
            The sale of all or part of a business of the Company by means of a sale of assets or stock, or any form of merger and reorganization where the Employee is not reemployed by the Company or a subsidiary or division thereof or by the buyer of the business.
 

 

	
            3.
 	
            The elimination of the Employee’s job or the consolidation or restructuring of his or her job functions on account of reorganization.
 

 

	
            4.
 	
            Employment termination within two years after a Change of Control of the Company.
 

 

	
            5.
 	
            In other circumstances deemed appropriate by the Company in its sole discretion from time to time, subject to Section III. C. hereof
 

 

	
            B.
 	
            Exception. Notwithstanding any other provision hereunder, an Employee shall not be eligible for severance pay hereunder if
 

 

	
            1.
 	
            Prior to or immediately after termination other than for reasons set forth in Section III.A.2. he or she is offered a comparable job with another subsidiary, division, or unit of the Company, except that an offer of continued employment or reemployment after a Change of Control shall be subject to the limitations set forth in Section IV. E. herein;
 

 

	
            2.
 	
            Within 60 days of termination for reasons set forth in Section III. A.2., he or she is offered a comparable job with another subsidiary, division or unit of the Company, except that an offer of continued employment or reemployment after a Change of Control shall be subject to the limitations set forth in Section IV. E. herein; or
 

 

	
            3.
 	
            The Employee is terminated for Cause.
 

 

	
            C.
 	
            Release. Notwithstanding any other provision hereunder to the contrary, any additional discretionary payments made pursuant to Section III.A.5. and Section IVA. may at the Company’s discretion be conditioned on the Employee’s signing a waiver or release of claims to the satisfaction of the company.
 

 

	
            IV.
 	
            Payment Formula
 

 

 

 

 

EXHIBIT (iv)

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            A.
 	
            Base Formula. Pursuant to Section III.A., the Company shall pay a minimum of one week of Pay for each completed full Year of Service (and prorated week of Pay for each completed partial Year of Service), with a minimum of two weeks of Pay (hereinafter, this is referred to as the “Minimum Payment”). In addition, subject to Section III.C., the Company reserves the right to pay additional amounts to Employees, but the Company may exercise its discretion to pay no additional amount at all.
 

 

Notwithstanding the foregoing formula, the Company reserves the right to make discretionary severance payments as business conditions warrant in lieu of payments based on the normal severance benefit formula described herein.

 

	
            B.
 	
            Change of Control Exception. If any Employee employed by the Company as of the date of a Change of Control resigns for the reasons set forth in Section IV. E. hereof and is then not subject to termination of employment by the Company for Cause or, if any Employee is terminated by the Company for the reasons set forth in Section III. A. (and an exception under Section III.B. is not applicable) within two years after a Change of Control occurs whether or not such termination is in connection with such Change of Control (“Change of Control Termination”), such Employee shall be entitled to severance pay in accordance with the following:
 

 

	
            1.
 	
            For non-exempt Employees, two weeks of Pay for each completed full or partial Year of Service, with a minimum of four weeks.
 

 

	
            2.
 	
            For exempt Employees, three weeks of Pay for each completed full or partial Year of Service, with a minimum of three months.
 

 

	
            3.
 	
            For PBC Employees or any other Employees whose job descriptions are rated at 1,000 or more job points under the Hay method of job evaluation, four weeks of Pay for each full or partial Year of Service, with a minimum of six months.
 

 

	
            4.
 	
            For members of the Executive Leadership Committee, four weeks of Pay for each full or partial Year of Service, with a minimum of one year of Pay.
 

 

	
            C.
 	
            Applicability of. Change of Control. “Change of Control” provisions only apply if Pitney Bowes Inc. incurs a “Change of Control.” Such provisions do not apply to employees of a Pitney Bowes’ subsidiary if that subsidiary or affiliated company undergoes a change of control.
 

 

	
            D.
 	
            Maximum Severance Benefit. Notwithstanding anything to the contrary, the maximum severance pay benefit payable hereunder to any Employee shall be an amount equal to two years of Pay.
 

 

	
            E.
 	
            Change of Control Termination. A “Change of Control Termination” shall include termination of the Employee’s employment by the Employee for the following reasons:
 

 

	
            1.
 	
            The assignment to an Employee of any duties inconsistent in any respect with the Employee’s position, authority, duties or responsibilities as existed on the day immediately prior to the Change of Control, or any other action by the Company which results in a diminution in such 
 

 

 

 

EXHIBIT (iv)

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position, authority, duties, or responsibilities, excluding for this purpose an isolated, insubstantial, and inadvertent action taken in good faith and remedied by the Company or subsidiary, as applicable, promptly after receipt of notice thereof given by the Employee;

 

	
            2.
 	
            Any failure by the Company following a Change of Control to continue to provide the Employee with Pay, benefits, or other compensation equal to or greater than that to which such Employee was entitled immediately prior to the date of the Change of Control, other than an isolated, insubstantial, and inadvertent failure occurring in good faith and remedied by the Company promptly after receipt of notice thereof given by the Employee;
 

 

	
            3.
 	
            The Company’s requiring the Employee to be based at any office or location more than 35 miles farther from the Employee’s place of residence or the office or location at which the Employee is employed immediately prior to the date of the Change of Control; or
 

 

	
            4.
 	
            Any failure by Pitney Bowes Inc. to require any successor company who acquires all or substantially all of the business and/or assets of Pitney Bowes Inc. (whether direct or indirect, by purchase, merger, consolidation or otherwise) to expressly assume and agree to perform the Company’s obligations under the Plan in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place.
 

 

For purposes of subparagraphs 1 through 4 of Section IV, any good faith determination made by an affected Employee shall be conclusive.

 

	
            F.
 	
            As a condition of receiving any severance pay hereunder in connection with a Change of Control Termination, any termination by the Employee shall be communicated by a Notice of Termination to the Company. Any Notice of Termination shall be by written instrument which (i) indicates the specific termination provision in paragraph E above relied upon, (ii) sets forth in reasonable detail the facts - and circumstances claimed to provide a basis for termination of the Employee’s employment under the provision so indicated, and (iii) if the date of termination is other than the date of receipt of such notice, specifies the termination date (which date shall not be more than 15 days after the giving of such notice). The failure by any Employee to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of entitlement to
terminate under subparagraphs 1 through 4 of paragraph E above shall not waive any right of such Employee or preclude such Employee from asserting such fact or circumstance in enforcing his rights.
 

 

	
            G.
 	
            Any severance pay benefits made hereunder shall be reduced by the amount of statutory severance benefits paid to an Employee if Pitney Bowes had contributed to the fund or statutory scheme under which benefits are paid.
 

 

	
            H.
 	
            If severance payments under the Plan, plus payments or benefits under other severance types plans or arrangements designated by Pitney Bowes result in any excise or other special federal tax on any portion of the severance payments hereunder, the Company will reimburse any affected Employee an additional amount so that the affected Employee shall receive a net benefit that is approximately the amount he or she would have received as if no excise or other special tax had been payable.
 

 

 

 

 

EXHIBIT (iv)

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            V.
 	
            Forms of Payment
 

 

The Company may in its discretion make the payments provided for herein in a single lump sum payment or pursuant to a payment schedule, provided, however, that payments made as a result of termination occurring within two years after a Change of Control shall be made in a single lump sum payment. However, in no event shall the payment schedule extend over a period of more than two years. In the case of lump sum payout, payment shall be made as soon as practicable following the termination of employment date, which shall be determined in the sole discretion of the Company.

 

	
            VI.
 	
            Death
 

 

If an Employee dies during a period of severance payment hereunder, any remaining severance pay that would otherwise be payable if the Employee had not died shall be paid to the Employee’s estate. No severance benefits not otherwise payable hereunder shall be payable under this Plan by reason of the Employee’s death.

 

	
            VII.
 	
            Claim Procedure
 

 

	
            A.
 	
            Administrative Review. If an Employee makes a written request alleging a right to receive payments under this Plan or alleging a right to receive an adjustment in benefits being paid under this Plan, such actions shall be treated as a claim for benefits. All claims for benefits under this Plan shall be administered by the appropriate administrator at the Employee’s business unit. If the administrator determines that any individual who has claimed a right to receive benefits, or different benefits, under this Plan is not entitled to receive all or any part of the benefits claimed, the administrator shall inform the claimant in writing of such determination and the reasons therefor in terms calculated to be understood by the claimant. The notice shall be sent within 90 days of the claim unless the administrator determines that
additional time, not exceeding 90 days, is needed. The notice shall make specific reference to the pertinent Plan provisions on which the denial is based, and shall describe any additional material or information that is necessary. Such notice shall, in addition, inform the claimant of the procedure that the claimant should follow to take advantage of the review procedure set forth below in the event the claimant desires to contest the denial of the claim. If the Employee is not notified within the 90 day period specified herein, he or she may assume the claim has been denied.
 

 

	
            B.
 	
            Appeal to the Committee. The claimant may within 90 days thereafter submit in writing to the Committee a notice that the claimant contests the denial of his or her claims and desires a further review by the Committee. The Committee shall within 60 days thereafter review the claim. The Committee will render a final decision on behalf of the Company with specific reasons there for in writing and will transmit it to the claimant within 60 days of the written request for review, unless it is determined that additional time, not exceeding 60 days, is needed, and so notifies the Employee. If the Committee fails to respond to a claim filed in accordance with the foregoing within 60 days or any such extended period, the Company shall be deemed to have denied the claim.
 

 

	
            C.
 	
            Reimbursement of Claimant’s Expenses. Upon and following the occurrence of a Change of Control, any decision rendered under the Plan may be contested by any claimant and the Company agrees to pay, to the full extent permitted by law, all legal -fees and expenses which a claimant may reasonably 
 

 

 

 

EXHIBIT (iv)

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incur as a result of any contest, provided the claimant substantially prevails in the outcome thereof.

 

	
            VIII.
 	
            Amendment and Termination
 

 

	
            A.
 	
            This Plan is established by the Company on a voluntary basis and not on past consideration for services rendered, and the benefits herein are provided at the will of the Company. Neither the establishment of this Plan nor the payment of benefits by the Company shall be construed or interpreted as a condition of employment, nor shall this Plan modify or enlarge any rights of any person covered by it to be continued or to be retained in the employ of the Company.
 

 

	
            B.
 	
            Prior to the time a Change of Control has occurred, the Company may, in its sole discretion, without notice, amend or modify, in whole or in part, all of the terms and conditions of this Plan; provided, however, that this Plan may not be so amended or modified in connection with an actual or threatened Change of Control in any manner which would adversely affect the interests of Employees. Such amendment or modification may be retroactive in application; provided, however, such retroactive application shall not require or provide for the return or repayment of any benefits paid prior to the date of the adoption of the amendment or modification.
 

 

	
            C.
 	
            Prior to the time a Change of Control has occurred, the Company shall have the sole and absolute right to terminate this Plan without notice at any time; provided, however, that this Plan may not be so terminated in connection with an actual or threatened Change of Control. Such termination shall be effective as of the date specified by the Company and, if no date is specified, the date of the action of termination by the Company. Upon termination, the Company will continue to make payments according to the terms of any effective terminated pay agreements, which have not been fully paid.
 

 

	
            D.
 	
            When a Change of Control, as defined herein, occurs, then all rights to severance payments contained herein shall vest in all covered Employees and shall be considered a contract right enforceable against the Company and any successors thereto.
 

 

	
            IX.
 	
            Plan Administration
 

 

	
            A.
 	
            The Committee shall be authorized to adopt administrative rules and procedures concerning the Plan or delegate to the business units such authority and any such rules and procedures shall be binding upon Participants.
 

 

	
            B.
 	
            All expenses reasonably incurred in the administration of the Plan shall be paid by the Company, as the Company.
 

 

	
            C.
 	
            The determination or action of the Committee with respect to any question arising out of or in connection with the administration of the Plan shall, to the extent not inconsistent with the provisions of the Plan, be final, conclusive, and binding upon all persons having an interest in the Plan.
 

 

	
            D.
 	
            The Committee shall have the following powers and duties concerning the Plan:
 

 

 

 

EXHIBIT (iv)

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            1.
 	
            to interpret and construe the terms and provisions of the Plan, to apply such terms and provisions as the Committee may exclusively determine, to determine questions of eligibility and of the status and rights of Participants;
 

 

	
            2.
 	
            to make and enforce such rules and regulations as it shall deem necessary or proper for the efficient administration of the Plan;
 

 

	
            3.
 	
            to delegate to the business units at Pitney Bowes such powers and duties to enable them to administer the Plan.
 

 

	
            E.
 	
            The Committee shall be the “Plan Administrator” of the Plan for purposes of ERISA. However, the Committee has delegated to the appropriate Human Resources professionals in the business units the day-to-day, on-going administrative responsibilities of the Plan. In addition, the Committee has delegated to the Human Resources professionals’ administrative responsibility regarding employee eligibility for the Plan. It is intended that Human Resources administrators in the business units shall have no discretion such that these individuals performing services in these business units with respect to the Plan would not be considered to be “fiduciaries” within the meaning of Section (3)(21) of ERISA.
 

 

	
            F.
 	
            All fiduciaries shall discharge their duties with respect to the Plan solely in the interest of the Employees and for the exclusive purpose of providing benefits to Employees and of defraying reasonable expenses of administering the Plan, with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims. The Company shall purchase and maintain liability insurance (which insurance shall not permit recourse against the insured parties), with scope of coverage and limits of liability sufficient to protect the fiduciaries from monetary liability for any breach of their responsibilities not resulting from their own gross negligence or willful misconduct.
 

 

	
            X
 	
            Miscellaneous
 

 

	
            A.
 	
            Benefits under the Plan are not in any way subject to the debts or other obligations of the persons entitled thereto and may not be voluntarily or involuntarily sold, transferred, hypothecated, pledged or assigned. When any person entitled to benefits under the Plan is under a legal disability or in the opinion of the Committee is in any way incapacitated so as to be unable to manage his or her affairs, the Committee may cause such person’s benefits to be paid to or for the benefit of such person in any manner that the Committee may determine without responsibility of the Committee or the Company. Payments made pursuant to such power shall operate as a complete discharge of the obligation under the Plan to make such payments. Payments hereunder are, however, subject to all applicable withholding taxes.
 

 

	
            B.
 	
            The headings of the section in this Plan are placed herein for convenience of reference and, in the
 

 

 

 

EXHIBIT (iv)

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case of any conflict, the text of the Plan, rather than such headings, shall control.

 

	
            C.
 	
            The masculine or feminine pronoun used herein refers to both men and women and, used in singular, is intended to include the plural, whenever appropriate.
 

 

	
            D.
 	
            To the extent not inconsistent with ERISA, the provisions of this Plan shall be construed in accordance with the laws of the State of Connecticut other than its choice of law rules.
 

 

	
            E.
 	
            In the event a person receives a benefit payment under the Plan which is in excess of the benefit payment that should have been made, the Committee shall have the right to recover the amount of such excess from such person. The Committee may at its option, deduct the amount of such excess from any subsequent benefits payable under the Plan to, or for, the person.
 

 

	
            F.
 	
            Any action required or permitted to be taken under the Plan by the Company may be taken by such individual, Committee or entity as the Company may designate from time to time.
 

 

	
            G.
 	
            No payment may be made under this Plan that would cause it to be a “pension” plan as distinguished from a “welfare” plan under the Employees Retirement Income Security Act of 1974 and the Department of Labor Regulations 29 CFR 2510.3-2(b) and successor regulations.
 

 

	
            H.
 	
            This Plan shall have no effect on the Employee’s eligibility for other benefits customarily provided after termination unless otherwise stated in a written agreement executed by an authorized representative of the Company or in the applicable employee benefit plan document. The payments of benefits under this Plan shall not be deemed to be a continuation of employment.
 

 

	
            I.
 	
            This Plan is intended to be an unfunded plan. All payments pursuant to the Plan shall be made from the general funds of the Company and no special or separate fund shall be established or other segregation of assets made to assure payment. No Participant or other person shall have under any circumstances any interest in any particular property or assets of the Company as a result of participating in the Plan.
 

 

	
            J.
 	
            The invalidity or unenforceability of any provision of this Plan shall not affect the validity or enforceability of any other provision of this Plan, which shall remain in full force and effect, and any prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.EXHIBIT (v)
Page 1 of 16 

 

 

 

 

 

 

 

 

 

 

 

 

PITNEY BOWES SENIOR EXECUTIVE SEVERANCE POLICY

 

(As Amended and Restated Effective as of January 1, 2000)

 

 

 

 

 

 

 

 

 

 

 

 

FOR BOARD APPROVAL JULY 2000

 

 

EXHIBIT (v)

Page 2 of 16

 

 

PITNEY BOWES

SENIOR EXECUTIVE SEVERANCE POLICY

 

INDEX

 

	
            SECTION
 	
            PAGE
 

 

SECTION ONE—Introduction and Purpose

 

	
             
 	
            1.1
 	
            Introduction and Purpose
 	
            3
 

 

SECTION TWO—Definitions

 

	
             
 	
            2.1
 	
            Annual Incentive
 	
            4
 
	
             
 	
            2.2
 	
            Annual Incentive Award
 	
            4
 
	
             
 	
            2.3
 	
            Annual Salary
 	
            4
 
	
             
 	
            2.4
 	
            Board
 	
            4
 
	
             
 	
            2.5
 	
            Change of Control
 	
            4
 
	
             
 	
            2.6
 	
            Code
 	
            5
 
	
             
 	
            2.7
 	
            Company
 	
            5
 
	
             
 	
            2.8
 	
            Date of the Change of Control
 	
            5
 
	
             
 	
            2.9
 	
            Date of Termination
 	
            5
 
	
             
 	
            2.10
 	
            Employee
 	
            5
 
	
             
 	
            2.11
 	
            ERISA
 	
            5
 
	
             
 	
            2.12
 	
            Participant
 	
            5
 
	
             
 	
            2.13
 	
            Plan
 	
            5
 
	
             
 	
            2.14
 	
            Restatement Effective Date
 	
            5
 
	
             
 	
            2.15
 	
            Separation Period
 	
            5
 

 

	
            SECTION THREE—Participation
 	
            6
 

 

	
            SECTION FOUR—Separation Benefits
 	
            7
 

 

	
            SECTION FIVE—Termination of Employment
 	
            9
 

 

	
            SECTION SIX—Administration and Claims
 	
            11
 

 

	
            SECTION SEVEN—Amendment and Termination
 	
            12
 

 

	
            SECTION EIGHT—Certain Additional Payments
 	
            13
 

 

SECTION NINE—Miscellaneous

	
             
 	
            9.1
 	
            Non-Alienability
 	
            16
 
	
             
 	
            9.2
 	
            Eligibility for Other Benefits
 	
            16
 
	
             
 	
            9.3
 	
            Unfunded Plan Status
 	
            16
 
	
             
 	
            9.4
 	
            Validity and Severability
 	
            16
 
	
             
 	
            9.5
 	
            Governing Law
 	
            16
 
	
             
 	
            9.6
 	
            Plan Records
 	
            16
 
	
             
 	
            9.7
 	
            Legal Service
 	
            16
 
						

 

 

 

EXHIBIT (v)

Page 3 of 16

 

 

SECTION ONE

 

INTRODUCTION AND PURPOSE

 

	
            1.1
 	
            The Pitney Bowes Senior Executive Severance Policy was initially adopted in December 1995 and is hereby amended and restated effective as of January 1, 2000. The purpose of the Plan is to provide certain designated senior executive employees with continued compensation and benefits, subject to the specific terms and conditions set forth in the Plan, in the event there is a Change of Control and the covered executive incurs a Termination of Employment.  In addition, the Plan is intended to provide an incentive to covered executives to continue to perform their job duties on behalf of the Company where the Company is faced with a Change of Control. No Change of Control occurred under the terms of the Plan as in effect prior to January 1, 2000.
 

 

 

 

EXHIBIT (v)

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SECTION TWO

 

DEFINITIONS

 

For the purposes of the Plan, the following words and phrases shall have the following respective meanings unless the context clearly indicates otherwise.

 

	
            2.1
 	
            “Annual Incentive” shall mean the annual Performance Based Compensation Incentive that a Participant is eligible to earn pursuant to the Pitney Bowes Key Employee Incentive Plan.
 

 

	
            2.2
 	
            “Annual Incentive Award” shall mean the highest Annual Incentive amount Participant received in any of the three consecutive twelve month periods prior to the Date of Termination.
 

 

	
            2.3
 	
            “Annual Salary” shall mean the Participant’s regular annual base salary in effect immediately prior to his or her Date of Termination, including cash compensation converted to other benefits under a flexible benefit arrangement maintained by the Company or deferred pursuant to a written plan or agreement with the Company, but excluding any type of allowances, reimbursements, premium pay, Cash Incentive Units, sign-on bonus, stock options and any actual gain thereon, prizes, awards, special bonuses and incentive payments other than the Annual Incentive Award.
 

 

	
            2.4
 	
            “Board” shall mean the Board of Directors of the Company.
 

 

	
            2.5
 	
            “Change of Control” For purposes of this Plan, a “Change of Control” shall be deemed to have occurred if:
 

 

(i) there is an acquisition, in any one transaction or a series of transactions other than from Pitney Bowes Inc., by any individual, entity or group (within the meaning of Section l3(d)(3) or l4(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), of beneficial ownership (within the meaning of Rule 13(d)(3) promulgated under the Exchange Act) of 20% or more of either the then outstanding shares of common stock or the combined voting power of the then outstanding voting securities of Pitney Bowes Inc. entitled to vote generally in the election of directors, but excluding, for this purpose, any such acquisition by Pitney Bowes Inc. or any of its subsidiaries, or any employee benefit plan (or related trust) of Pitney Bowes Inc. or its subsidiaries, or any corporation with respect to which, following such acquisition, more than 50%
of the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by the individuals and entities who were the beneficial owners, respectively, of the common stock and voting securities of Pitney Bowes Inc. immediately prior to such acquisition in substantially the same proportion as their ownership, immediately prior to such acquisition, of the then outstanding shares of Common stock or the combined voting power of the then outstanding voting securities of Pitney Bowes Inc. entitled to vote generally in the election of directors, as the case may be; or

 

(ii) individuals who, as of January 1, 2000, constitute the Board (as of such date, the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board, provided that any individual becoming a 

 

EXHIBIT (v)

Page 5 of 16

 

 

director subsequent to January 1, 2000, whose election, or nomination for election by Pitney Bowes shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board 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 is in connection with an actual or threatened election contest relating to the election of the directors of Pitney Bowes Inc. (as such terms are used in Rule 14(a)(l 1) or Regulation l4A promulgated under the Exchange Act); or

 

(iii) there occurs either (A) the consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company, in each case, with respect to which the individuals and entities who were the respective beneficial owners of the common stock and voting securities of Pitney Bowes Inc. immediately prior to such reorganization, merger or consolidation do not, following such reorganization, merger or consolidation, beneficially own, directly or indirectly, more than 50% 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 resulting from such reorganization, merger or consolidation, or (B) an approval by the shareholders of Pitney
Bowes Inc. of a complete liquidation of dissolution of Pitney Bowes Inc. or of the sale or other disposition of all or substantially all of the assets of Pitney Bowes Inc.

 

	
            2.6
 	
            “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.
 

 

	
            2.7
 	
            “Company” shall mean Pitney Bowes Inc. and any successor thereto
 

 

	
            2.8
 	
            “Date of the Change of Control” shall mean the date on which a Change of Control is determined to first occur.
 

 

	
            2.9
 	
            “Date of Termination” shall mean the date on which a Participant incurs a Termination of Employment as defined in Section hereof.
 

 

	
            2.10
 	
            “Employee” shall mean any regular full-time employee of the Company or a subsidiary or affiliate of the Company, as determined by the Company.
 

 

	
            2.11
 	
            “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended, and the regulations there under.
 

 

	
            2.12
 	
            “Participant” shall mean an Employee who is designated as a Participant pursuant to Section III hereof
 

 

	
            2.13
 	
            “Plan” shall mean the Pitney Bowes Senior Executive Severance Policy.
 

 

	
            2.14
 	
            “Restatement Effective Date” shall mean January 1, 2000.
 

 

	
            2.15
 	
            “Separation Period” shall mean (i) for Participants who are in Executive Bands A, B, C, or D, the period beginning on a Participant’s Date of Termination and ending on the third anniversary thereof (ii) for Participants who are in Executive Bands E, F or G or who are corporate officers of Pitney Bowes Inc. but do not participate in the Long Term Incentive Program, the period beginning on a Participant’s Date of Termination and ending on the second anniversary thereof.
 

 

EXHIBIT (v)

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SECTION THREE

 

PARTICIPATION

 

	
            3.1
 	
            Each Employee who falls within Executive Bands A, B, C, D, E, F or G, or who is a corporate officer of Pitney Bowes Inc. shall be a Participant in the Plan.
 

 

	
            3.2
 	
            Prior to the time a Change of Control has occurred, the Board may, in its sole discretion, without notice, amend, modify or terminate the eligibility of certain individual Employees or classes of Employees or Participants to participate in the Plan; provided, however, that such eligibility or participation may not be so amended, modified or terminated in connection with an actual, threatened, or proposed Change of Control in any manner which would result in an Employee or Participant otherwise becoming ineligible to participate in the Plan; and provided further that any amendment, modification or termination of an Employee is or Participant’s participation in the Plan occurring within one year prior to a Change of Control shall be deemed to be in connection with an actual, threatened, or proposed Change of Control and shall
be void.
 

 

In addition, when a Change of Control occurs, all rights of an Employee or Participant to eligibility and participation under the Plan shall vest and shall be considered a contract right enforceable against the Company and any successors thereto, subject to the terms and conditions hereof.

 

 

EXHIBIT (v)

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SECTION FOUR

 

SEPARATION BENEFITS

 

	
            4.1
 	
            If any Participant incurs a Termination of Employment within two years after a Change of Control occurs (whether or not such termination is a result of such Change of Control) or a Participant is terminated before a Change of Control at the request of a third party who has taken steps reasonably calculated to effect a Change of Control or otherwise in connection with or in anticipation of a Change of Control, and a Change of Control subsequently occurs, the Company shall pay such Participant, within ten days of the Date of Termination, a cash payment in one lump sum as determined in Section 4.2 hereof and the benefits as determined in Sections 4.3 and 4.4 hereof. For purposes of determining the benefits set forth in Sections 4.3 and 4.4, if the Participant incurs a Termination of Employment following a reduction of the
Participant’s Annual Salary, opportunity to earn an Annual Incentive, or other compensation or employee benefits, such reduction shall be not be given effect.
 

 

	
            4.2
 	
            The cash payment in one lump sum described in Section 4.1 hereof shall be determined by aggregating amounts described in Sections 4.2(a) and (b).
 

 

	
             
 	
            (a)
 	
            For a Participant in Executive Bands A, B, C, or D, an amount equal to the product of (1) three times (2) the sum of (x) the Participant’s Annual Salary and (y) the Participant’s Annual Incentive Award.
 

 

For a Participant in Executive Bands E, F, or G, or who is a corporate officer of Pitney Bowes Inc but does not participate in the Long Term Incentive Program, an amount equal to the product of (1) two times (2) the sum of (x) the Participant’s Annual Salary and (y) the Participant’s Annual Incentive Award.

 

	
             
 	
            (b)
 	
            An amount equal to the difference between (1) the lump sum actuarial equivalent of the benefit under the Company’s qualified defined benefit retirement plan (the “Retirement Plan”) and any excess or supplemental retirement plans in which the Participant participates (collectively, the “SERP”) which the Participant would receive if his or her employment continued during the Separation Period, assuming that the Participant’s compensation during the Separation Period would have been equal to his or her compensation as in effect immediately before the termination and assuming the Participant is fully vested in his or her benefit under the Retirement Plan as of the Date of Termination, and (2) the lump sum actuarial equivalent of the Participant’s actual benefit (paid or payable), if any, under the
Retirement Plan and the SERP as of the Date of Termination. The actuarial determination hereunder shall be made as of the Date of Termination and the actuarial assumptions used for purposes of determining actuarial equivalence shall be no less favorable to the Participant than the most favorable of those in effect under the Retirement Plan and the SERP on the Date of Termination and the Effective Date.
 

 

	
            4.3
 	
            During the Separation Period, the Participant and his or her Dependents shall continue to be provided with the medical, prescription drug, dental and life insurance and other health and welfare benefits in which the 
 

 

EXHIBIT (v)

Page 8 of 16

 

 

Participant has coverage under the plans or programs of the Company or its affiliates at the Date of Termination as if the Participant’s employment had not been terminated; provided, however, that if the Participant becomes reemployed with another employer and is eligible to receive a particular benefit described above under another employer-provided plan, the medical and other welfare benefits described herein shall be secondary to those provided under such other plan during such applicable period of eligibility. For purposes of determining eligibility (but not the time of commencement of benefits) of the Participant for retiree medical, dental and life insurance benefits under the Company’s plans, practices, programs and policies, the Participant shall be considered to have remained employed during the Separation Period and to have retired or terminated employment on the last
day of such period. The “COBRA” continuation period for a Participant shall commence following the last day of the Separation Period.

 

	
            4.4
 	
            The Company shall, at its sole expense as incurred, provide the Participant with outplacement services the scope and provider of which shall be selected by the Company, but at a cost to the Company of not more than the lesser of (i) 12% of Annual Salary and (ii) fifty thousand dollars ($50,000.00).
 

 

	
            4.5
 	
            To the extent any benefits described in this Section 4.1 cannot be provided to the Participant pursuant to the appropriate plan or program maintained for Company employees in which a Participant participates, the Company shall provide such benefits outside such plan or program at no additional cost (including without limitation tax cost) to the Participant.
 

 

	
            4.6
 	
            The cash lump sum payment and continuation benefits set forth in Sections 4.1, 4.2, 4.3 and 4.4 shall be payable in addition to, and not in lieu of, all other accrued or vested or earned but deferred rights, options or other benefits which may be owed to a Participant upon or following termination, including but not limited to regular Annual Salary earned but unpaid as of the Date of Termination, Annual Incentives earned but unpaid as of the Date of Termination, accrued vacation or sick pay, amounts or benefits payable under any incentive (other than the Annual Incentive) or other compensation plans, stock option plan, stock ownership plan, stock purchase plan, life insurance plan, health plan, disability plan or similar or successor plan, but excluding any severance pay or pay in lieu of notice required to be paid to such
Participant under applicable law or any other severance plan, program or policy of the Company and it affiliates.
 

 

 

EXHIBIT (v)

Page 9 of 16

 

 

SECTION FIVE

 

TERMINATION OF EMPLOYMENT

 

	
            5.1
 	
            For purposes of the Plan, “Termination of Employment” shall mean (i) a termination of a Participant’s employment by the Company other than because of (x) the willful and continued failure of the Participant to perform substantially the Participant’s duties with the Company or any of its affiliates (other than any such failure resulting from incapacity due to physical or mental illness) or (y) the willful engaging by the Participant in illegal conduct or gross misconduct which is materially and demonstrably injurious to the Company, and (ii) a termination of employment by the Participant for any reason during the 30-day period. Immediately following the first anniversary of the Date of the Change of Control termination of employment by the Participant or for any of the following reasons:
 

 

	
             
 	
            1.
 	
            The assignment following a Change of Control to a Participant of any duties inconsistent in any respect with the Participant’s position, authority, duties and responsibilities as existed on the day immediately prior to the Change of Control, or any other action by the Company which results in a diminution in such position, authority, duties, or responsibilities, excluding for this purpose an isolated, insubstantial, and inadvertent action not taken in bad faith and which is remedied by the Company promptly after receipt of notice thereof given by the Participant;
 

 

	
             
 	
            2.
 	
            Any failure by the Company following a Change of Control to continue to provide the Participant with Annual Salary, employee benefits, or other compensation equal to or greater than that to which such Participant was entitled immediately prior to the Date of the Change of Control, other than an isolated, insubstantial, and inadvertent failure not occurring in bad faith and which is remedied by the Company promptly after receipt of notice thereof given by the Participant;
 

 

	
             
 	
            3.
 	
            Any failure by the Company following a Change of Control to continue. to provide the Participant with the opportunity to earn Annual Incentives (and long-term incentive compensation as applicable) on a basis at least equal to that provided to the Participant prior to the Date of the Change of Control, taking into account the level of compensation that can be earned and the relative difficulty of any associated performance goals;
 

 

	
             
 	
            4.
 	
            The Company’s requiring the Participant to be based, after a Change of
Control, at any office or location more than 35 miles farther from the Participant’s place of residence than the office or location at which the Participant is employed immediately prior to the Date of the Change of Control or the Company’s requiring the Participant to travel on Company business to a substantially greater extent than required immediately before the Change of Control;
 

 

	
             
 	
            5.
 	
            Any failure by the Company, after a Change of Control, to require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) who acquired all or substantially all of the business and/or assets of the Company to expressly assume and 
 

 

EXHIBIT (v)

Page 10 of 16

 

 

agree to perform the Company’s obligations under the Plan in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place.

 

Any good faith determination made by a Participant that an event described in subparagraphs 1 through 5 of this Section 5.1 has occurred shall be conclusive.

 

	
            5.2
 	
            Any termination by the Company or by the Participant in accordance with Section 5.1 shall be communicated by a Notice of Termination to the other party. Any Notice of Termination shall be by written instrument which (i) indicates the specific termination provision in Section 5.1 above relied upon, (ii) sets forth in reasonable detail the facts and circumstances claimed to provide  a basis for termination of the Participant’s employment under the provision so indicated, and (iii) if the Date of Termination is other than the date of receipt of such notice, specifies the Date of Termination (which date shall not be more than 15 days after the giving of such notice). The failure by any Participant to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of entitlement to terminate under
subparagraphs 1 through 5 of Section 5.1 above shall not be deemed to be a waiver of any right of such Participant or preclude such Participant from asserting such fact or circumstance in enforcing his rights.
 

 

In case of death, any unpaid payment or benefits to which the Participant was entitled at the time of death shall be paid to the Participant’s survivors or estate.

 

 

EXHIBIT (v)

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SECTION SIX

 

ADMINISTRATION AND CLAIMS

 

	
            6.1
 	
            The Plan Administrator shall be the Board or its delegate. If an Employee or former Employee makes a written request alleging a right to receive benefits under this Plan or alleging a right to receive an adjustment in benefits being paid under the Plan, the Board shall treat it as a claim for benefits. All claims for benefits under the Plan shall be sent to the Executive Director, Corporate Compensation of the Company, or equivalent position, and must be received within 90 days after Termination of Employment. If the Board determines that any individual who has claimed a right to receive benefits, or different benefits, under the Plan is not entitled to receive all or any part of the benefits claimed, it will inform the claimant in writing of its determination and the reasons therefor in terms calculated to be understood by the
claimant. The notice will be sent within 90 days of the claim unless the Board determines additional time, not exceeding 90 days, is needed. The notice shall make specific reference to the pertinent Plan provisions on which the denial is based, and describe any additional material or information as necessary. Such notice shall, in addition, inform the claimant what procedure the claimant should follow to take advantage of the review procedures set forth below in the event the claimant desires to contest the denial of the claim. The claimant may within 90 days thereafter submit in writing to the Board a notice that the claimant contests the denial of his or her claim by the Board and desires a further review. The Board shall within 60 days thereafter review the claim and authorize the claimant and his or her personal representative to appear personally and review pertinent documents and submit issues and comments relating to the claim to the persons responsible for making the
determination on behalf of the Board. The Board will render its final decision with specific reasons therefor in writing and will transmit it to the claimant within 60 days of the written request for review, unless the Board determines additional time, not exceeding 60 days, is needed, and so notifies the Participant. If the Company fails to respond to a claim filed in accordance with the foregoing within 60 days or any such extended period, the Company shall be deemed to have denied the claim.
 

 

If, after a Change of Control, a Participant institutes any legal action seeking to obtain or enforce, or is required to defend in any legal action the validity or enforceability of, any right or benefit provided by this Plan, the Company will pay for all actual legal fees and expenses incurred (as incurred) by such Participant, regardless of the outcome of such action and whether such action is between the Company and the Participant or between either of them and any third party.

 

 

EXHIBIT (v)

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SECTION SEVEN

 

AMENDMENT AND TERMINATION

 

	
            7.1
 	
            This Plan is established by the Company on a voluntary basis and not as consideration for services rendered in the past, and the benefits herein are provided at the will of the Company. Neither the establishment of this Plan nor the payment of benefits by the Company shall be construed or interpreted as a condition of employment, nor shall this Plan modify or enlarge any rights of any person covered by it to be continued or to be retained in the employ of the Company.
 

 

Prior to the time a Change of Control has occurred, the Board may, in its sole discretion, without notice, amend or modify, in whole or in part, all of the terms and conditions of this Plan; provided, however, that this Plan may not be so amended or modified in connection with an actual, threatened, or proposed Change of Control in any manner which would result in a reduction of benefits to any Participant; and provided further that any amendment or modification occurring within one year prior to a Change of Control shall be deemed to be “in connection with” an actual, threatened, or proposed Change of Control and shall be void unless the amended or modified Plan provides equivalent or greater benefits to every eligible Participant. Such amendment or modification may be retroactive in application; provided, however, such retroactive application shall not require or provide for
the return or repayment of any benefits paid prior to the date of the adoption of the amendment or modification.

 

Prior to the time a Change of Control has occurred, the Board shall have the sole and absolute right to terminate this Plan without notice at any time; provided, however, that this Plan may not be so terminated in connection with an actual, threatened, or proposed Change of Control, unless a new severance plan is adopted which provides equivalent or greater benefits to every eligible Participant; and provided further that any termination occurring within one year prior to a Change of Control shall be deemed to be in connection with an actual, threatened, or proposed Change of Control, and shall be void unless a new severance plan is adopted which provides equivalent or greater benefits to every eligible Participant. Any valid termination shall be effective as of the date specified by the Board and, if no date is specified, the date of the action of termination by the Board. Upon
termination, the Company will continue to make payments which have not been fully paid, in accordance with the terms of the Plan immediately prior to termination.

 

When a Change of Control, as defined herein, occurs, then all rights to severance payments contained herein shall vest in all covered Participants and shall be considered a contract right enforceable against the Company and any successors thereto, subject to the terms and conditions hereof.

 

 

EXHIBIT (v)

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SECTION EIGHT

 

CERTAIN ADDITIONAL PAYMENTS

 

	
            8.1
 	
            Anything in this Plan to the contrary notwithstanding and except as set forth below, in the event it shall be determined that any Payment would be subject to the Excise Tax, the Participant shall be entitled to receive an additional payment (a “Gross-Up Payment”) in an amount such that after payment by the Participant of all taxes (including any interest or penalties imposed with respect to such taxes), including, without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the Participant retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments. Notwithstanding the foregoing provisions of this Section 8.1, if it shall be determined that the Participant is entitled to a Gross-Up Payment, but that the
Parachute Value of Payments does not exceed 110% of the Safe Harbor Amount, then no Gross-Up Payment shall be made to the Participant and the Plan Payments, in the aggregate, shall be reduced to (but not below zero) such that the Parachute Value of all Payments equals the Safe Harbor Amount, determined in such a manner as to maximize the Value of all Payments actually made to the Participant.
 

 

	
            8.2
 	
            Subject to the provisions of Section 8.3, all determinations required to be made under this Section 8, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by such nationally recognized certified public accounting firm as may be designated by the Company (the “Accounting Firm”), which shall provide detailed supporting calculations both to the Company and the Participant within 15 business days of the receipt of notice from the Participant that there has been a Payment, or such earlier time as is requested by the Company. All fees and expenses of the Accounting Firm shall be borne solely by the Company. Subject to Section 8.5 below, any Gross-Up Payment, as determined pursuant to this Section 8,
shall be paid by the Company to the Participant within five days of the receipt of the Accounting Firm’s determination. Any determination by the Accounting Firm shall be binding upon the Company and the Participant. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 8.3, and the Participant thereafter is required to make a payment of any Excise  Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of the Participant. 
 

 

	
            8.3
 	
            The Participant shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten business days after the Participant is informed in writing of such claim and shall apprise the Company of the nature of such claim and the date on which such claim is• requested to be paid. The Participant shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies the 
 

 

EXHIBIT (v)

Page 14 of 16

 

 

Participant in writing prior to the expiration of such period that it desires to contest such claim, the Participant shall:

 

	
             
 	
            (a)
 	
            give the Company any information reasonably requested by the Company relating to such claim,
 

 

	
             
 	
            (b)
 	
            take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company, cooperate with the Company in good faith in order effectively to contest such claim, and the Company to participate in any proceedings relating to such claim; provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold the Participant harmless, on an after-tax basis, for any Excise Tax or income tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and
expenses. Without limitation on the foregoing provisions of this Section 8.3, the Company shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forgo any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct the Participant to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and the Participant agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however, that if the Company directs the Participant to pay such claim and sue for a refund, the Company shall advance the amount of such payment to the Participant, on an interest-free basis and shall indemnify and hold the Participant harmless, on an after-tax basis, from any Excise Tax or
income tax (including interest or penalties with respect thereto) imposed with respect to such advance or with respect to any imputed income with respect to such advance; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Participant with respect to which such contested amount claimed to be due is limited solely to such contested amount. Furthermore, the Company’s control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and the Participant shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority.
 

 

	
            8.4
 	
            If, after the receipt by the Participant of an amount advanced by the Company pursuant to Section 8.3, the Participant becomes entitled to receive any refund with respect to such claim the Participant shall (subject to the Company’s complying with the requirements of Section 8.3) promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by the Participant of an amount advanced by the Company pursuant to Section 8.3, a determination is made that the Participant shall not be entitled to any refund with respect to such claim and the Company does not notify the Participant in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven
and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.
 

 

 

EXHIBIT (v)

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            8.5
 	
            Notwithstanding any other provision of this Section 8, the Company may withhold and pay over to the Internal Revenue Service for the benefit of the Participant all or any portion of the Gross-Up Payment that it determines in good faith that it is or may be in the future required to withhold, and the Participant hereby consents to such withholding
 

 

	
            8.6
 	
            Definitions. The following terms shall have the following meanings for purposes of this Section 8.
 

 

(a)     “Excise Tax” shall mean the excise tax imposed by Section 4999 of the Code, together with any interest or penalties imposed with respect to such excise tax.

 

(b)    The “Net After-Tax Amount” of a Payment shall mean the Value of a payment net of all taxes imposed on the Participant with respect thereto under sections 1 and 4999 of the Code and applicable state and local law, determined by applying the highest marginal rates that are expected to apply to the Participant’s taxable income for the taxable year in which the Payment is made.

 

(c)      “Parachute Value” of a Payment shall mean the present value as of the date of the event constituting the change of control for purposes of Section 280G of the Code of the portion of such Payment that constitutes a “parachute payment” under Section 280G(b)(2), as determined by the Accounting Firm for purposes of determining whether and to what extent the Excise Tax will apply to such Payment.

 

	
             
 	
            (d)
 	
            A “Payment” shall mean any payment or distribution in the nature of compensation
 

(within the meaning of Section 280G(b)(2) of the Code) to or for the benefit of a Participant, whether paid or payable pursuant to this Plan or otherwise.

 

(e) A “Plan Payment” shall mean a Payment paid or payable pursuant to this Plan (disregarding this Section 8).

 

(f) The “Safe Harbor Amount” means the maximum Parachute Value of all Payments that the Participant can receive without any Payments being subject to the Excise Tax.

 

(g) “Value” of a Payment shall mean the economic present value of a Payment as of the date of the event constituting the change of control for purposes of Section 280G of the Code, as determined by the Accounting Firm using the discount rate required by Section 280G(d)(4) of the Code.

 

 

EXHIBIT (v)

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SECTION NINE

 

MISCELLANEOUS

 

	
            9.1
 	
            Non-Alienability. No benefit or payments provided hereunder shall be subject to any forms of sale, assignment or transfer. Benefits provided by this Plan shall not be subject to attachment, garnishment or other legal or equitable proceedings by creditors or persons representing creditors. Such payments are, however, subject to all applicable taxes and appropriate withholdings.
 

 

	
            9.2
 	
            Eligibility for Other Benefits. This Plan shall have no effect on the Participant’s eligibility for other benefits customarily provided after termination unless otherwise stated in a written agreement executed by an authorized representative of the Company. The payments of benefits under this Plan shall not be deemed to be a continuation of employment, pay, or credited service for purposes of determining the availability, nature, or extent of the Company’s benefit plans, programs or policies, except as expressly set forth herein.
 

 

	
            9.3
 	
            Unfunded Plan Status. This Plan is intended to be an unfunded plan maintained primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees, within the meaning of Section 401 of ERISA. All payments pursuant to the Plan shall be made from the general funds of the Company and no special or separate fund shall be established or other segregation of assets made to assure payment. No Participant or other person shall have under any circumstances any interest in any particular property or assets of the Company as a result of participating in the Plan. Notwithstanding the foregoing, the Company may (but shall not be obligated to) create one or more grantor trusts, the assets of which are subject to the claims of the Company’s creditors, to
assist it in accumulating funds to pay its obligations under the Plan.
 

 

	
            9.4
 	
            Validity and Severability. The invalidity or unenforceability of any provision of the Plan shall not affect the validity or enforceability of any other provision of the Plan, which shall remain in full force and effect, and any prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
 

 

	
            9.5
 	
            Governing Law. The validity, interpretation, construction and performance of the Plan shall in all respects be governed by the laws of the State of Connecticut without reference to principles of conflict of law, except to the extent pre-empted by federal law.
 

 

	
            9.6
 	
            Plan Records. The records for this Plan are kept on a plan year beginning on January 1 and ending on the following December 31.
 

 

	
            9.7
 	
            Legal Service. The person designated to receive legal papers or summons in connection with this Plan is the Corporate Secretary, Pitney Bowes Inc., World Headquarters, Stamford, CT 06926-0700.

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