Exhibit (ii)
SENIOR EXECUTIVE SEVERANCE POLICY
I. Purpose
To provide a period of continued income to certain senior
executive employees whose employment is terminated within two
years after a Change of Control as defined herein.
II. Definitions
As used herein the following words and phrases shall have the
following respective meanings unless the context clearly
indicates otherwise.
1. Annual Incentive. The annual Performance Based
Compensation Incentive that a Participant is eligible to earn
pursuant to the Company's Key Employee Incentive Plan.
2. Annual Incentive Award. The highest amount a
Participant received as an annual Performance Based
Compensation Incentive award in any of the three years prior
to a termination of employment entitling the Participant to a
Separation Benefit.
3. Annual Salary. The Participant's regular
annual base salary immediately prior to his or her termination
of employment, including compensation converted to other
benefits under a flexible pay arrangement maintained by the
Company or deferred pursuant to a written plan or agreement
with the Company, but excluding overtime pay, allowances,
premium pay, compensation paid or payable under any Company
long-term or short-term incentive plan or any similar payment.
4. Board. The Board of Directors of the Company.
5. Code. The Internal Revenue Code of 1986, as
amended from time to time.
6. Date of the Change of Control. The date on
which a Change of Control occurs.
7. Date of Termination. The date on which a
Participant ceases to be an Employee.
8. Effective Date. The date specified in the
resolution of the Board adopting this Plan.
9. Employee. Any full-time, regular-benefit, non-
bargaining employee of the Company.
10. ERISA. The Employee Retirement Income Security
Act of 1974, as amended, and the regulations thereunder.
11. Participant. An individual who is designated
as such pursuant to Section III.
12. Plan. The Pitney Bowes Inc. Senior Executive
Severance Policy.
13. Separation Period. The period beginning on a
Participant's Date of Termination and ending upon the second
anniversary thereof.
III. Participation
Each of the individuals named on Schedule 1 hereto shall
be a Participant in the Plan. Schedule 1 may be amended
by the Board from time to time to add or delete
individuals as Participants.
IV. Separation Benefits
A. If any Participant is terminated as that term is
defined in Section IV.F. within two years after a Change
of Control occurs (whether or not such termination is as
a result of such Change of Control), the Company shall
pay such Participant, within ten days of the Date of
Termination, a cash lump sum as set forth in Section
IV.B. below and the continued benefits set forth in
Section IV.C. below. For purposes of determining the
benefits set forth in Sections IV.B. and IV.C., if the
termination of the Participant's employment follows a
reduction of the Participant's Annual Salary, opportunity
to earn an Annual Incentive, or other compensation or
employee benefits, such reduction shall be ignored.
B. The cash lump sum referred to in Section IV.A. is
the aggregate of the following amounts:
(i) the sum of (1) the Participant's
Annual Salary through the Date of Termination
to the extent not theretofore paid, (2) the
product of (x) the Annual Incentive Award and
(y) a fraction, the numerator of which is the
number of days in the such year through the
Date of Termination, and the denominator of
which is 365, and (3) any compensation
previously deferred by the Participant
(together with any accrued interest or earnings
thereon) and any accrued vacation pay, in each
case to the extent not theretofore paid and in
full satisfaction of the rights of the
Participant thereto;
(ii) 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; and
(iii) an amount equal to the difference
between (a) the 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
or, if higher, on the Effective Date, and (b)
the 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 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.
C. The continued benefits referred to above are as
follows:
(i) during the Separation Period, the
Participant and his or her family shall be
provided with medical, dental and life
insurance benefits 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 medical or other welfare
benefits 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 on the
last day of such period; and
(ii) 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 12% of base pay not to exceed fifty
thousand dollars ($50,000.00).
To the extent any benefits described in this Section
IV.C. cannot be provided pursuant to the appropriate
plan or program maintained for Company employees,
the Company shall provide such benefits outside such
plan or program at no additional cost (including
without limitation tax cost) to the Participant.
D. The cash lump sum and continuing benefits described
in Sections IV.A., IV.B. and IV.C. above 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
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.
E. For purposes of this Plan, a "Change of Control"
shall be deemed to have occurred if:
1. There is an acquisition, in any one transaction
or a series of transactions, other than from the Company,
by any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act")), of
beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 20% or more of
either the then outstanding shares of common stock of the
Company or the combined voting power of the then
outstanding voting securities of the Company entitled to
vote generally in the election of directors, but
excluding, for this purpose, any such acquisition by the
Company or any of its subsidiaries, or any employee
benefit plan (or related trust) of the Company 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 the Company 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 of the Company or the
combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in
the election of directors, as the case may be; or
2. Individuals who, as of December 11, 1995,
constitute the Board of Directors (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 director subsequent to December 11,
1995, whose election, or nomination for election by the
Company's 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 the Company (as such terms
are used in Rule 14a-11 or Regulation 14A promulgated
under the Exchange Act); or
3. There occurs either (i) 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 the Company 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 (ii) an approval by the shareholders of
the Company of a complete liquidation or dissolution of
the Company or of the sale or other disposition of all or
substantially all of the assets of the Company.
F. For purposes of this Plan, a "termination" shall
include not only any termination by the Company of a
Participant for reasons other than (i) an act or acts of
personal dishonesty by such Participant at the expense of
the Company or its subsidiaries or (ii) the conviction of
such Participant of a felony involving moral turpitude,
but also shall include 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 or for any of the following
reasons:
1. The assignment 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, opportunity to earn Annual Incentives,
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. The Company's requiring the Participant to be
based 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
4. Any failure by the Company 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 agree to perform the
Company's obligations under this Severance 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 this
Section IV.F., any good faith determination made by
a Participant shall be conclusive.
G. Any termination by the Company or by the Participant
in accordance with Section IV.F. 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
IV.F. 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 4 of Section IV.F. above
shall not waive any right of such Participant or preclude
such Participant from asserting such fact or circumstance
in enforcing his rights.
H. In case of death, any unpaid allowance will be paid
to the Participant's survivors or estate.
V. Plan Administration and Claims
A. The Plan Administrator shall be Pitney Bowes Inc.,
World Headquarters, Stamford, CT 06926- 0700.
Claims with regard to eligibility or other matters
covered in the Plan may be brought to the attention
of the following individual:
Executive Director-Compensation.
B. 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 Company shall treat it as a claim for benefit.
All claims for benefit under the Plan shall be sent
to the Executive Director-Compensation of the
Company and must be received within 90 days after
termination of employment. If the Company
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 Company
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 Company a notice that the claimant
contests the denial of his or her claim by the
Company and desires a further review. The Company
shall within 60 days thereafter review the claim and
authorize the claimant 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 Company. The Company 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
Company 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.
C. If a Participant institutes any legal action in
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.
VI. Miscellaneous
A. Amendment and Termination
1. 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.
2. 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, 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.
3. 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, 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 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 executed terminated pay agreements which
have not been fully paid.
4. 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.
B. Certain Additional Payments by the Company.
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 or distribution by the Company to or
for the benefit of any Participant (whether
paid or payable or distributed or distributable
pursuant to the terms of this Plan or
otherwise, but determined without regard to any
additional payments required under this
Section VI.B.) (a "Payment") would be subject
to the excise tax imposed by Section 4999 of
the Code or any interest or penalties are
incurred by the Participant with respect to
such excise tax (such excise tax, together with
any such interest and penalties, are
hereinafter collectively referred to as the
"Excise Tax"), then 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.
2. Subject to the provisions of Section VI.B.3.,
all determinations required to be made under this Section
VI.B., 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 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. In the event that the Accounting Firm is
serving as accountant or auditor for the individual,
entity or group effecting the Change of Control, the
Company shall appoint another nationally recognized
accounting firm to make the determinations required
hereunder (which accounting firm shall then be referred
to as the Accounting Firm hereunder). All fees and
expenses of the Accounting Firm shall be borne solely by
the Company. Any Gross-Up Payment, as determined
pursuant to this Section VI.B. 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 VI.B.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.
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 Participant in writing prior
to the expiration of such period that it desires to
contest such claim, the Participant shall:
(i) give the Company any information
reasonably requested by the Company
relating to such claim,
(ii) 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,
(iii) cooperate with the Company in
good faith in order effectively to contest
such claim, and
(iv) permit 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 VI.B.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
is 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.
4. If, after the receipt by the Participant of an
amount advanced by the Company pursuant to
Section VI.B.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 VI.B.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 VI.B.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.
C. Non-Alienability
No benefit 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.
D. 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 other benefits, including, but
not limited to, benefits available in the Company's
Retirement Plan, Major Medical Plan, or Dental Plan.
E. 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.
F. 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.
G. 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.
H. Plan Records
The records for this Plan are kept on a plan year
beginning on January 1 and ending on the following
December 31.
I. 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.
J. Plan Identification Numbers
The following number(s) is(are) used for
identification on certain forms which must be filed
with various U.S. Government agencies:
Employer Identification Number: 06-0495050
SCHEDULE 1
EXECUTIVE SENIOR MANAGEMENT EMPLOYEES DESIGNATED AS
PARTICIPANTS UNDER THE PITNEY BOWES INC. SENIOR EXECUTIVE
SEVERANCE POLICY
Carmine F. Adimando
Marc C. Breslawsky
Michael J. Critelli
George B. Harvey
Douglas A. Riggs
Carole F. St. Mark
Johnna G. Torsone