[Letterhead of Pitney Bowes]
October 27, 2000
Marc C. Breslawsky
51 Eleven O'Clock Road
Weston, Connecticut 06883
RE: Letter of Agreement
Dear Marc:
This letter agreement is intended to set forth the commitments Pitney Bowes (the
"Company") intends to undertake if the Company both establishes a new legal
entity to operate the majority of the Company's existing Office Systems Division
business (the "Business") and spins off the Business in a separate transaction
to be determined in the future. For purposes of this Agreement, the spin-off
Business shall be referred to as "Spinco."
The Company shall offer you the position of Chief Executive Officer of Spinco.
During your employment with the Company, you agree to perform the duties of
Chief Executive Officer of Spinco in addition to your duties of Chief Operating
Officer of the Company without any additional compensation. Immediately prior to
the spin off of the Business in a separate transaction, you will assume the
duties of the Chief Executive Officer of Spinco on a full-time basis and your
compensation, benefits and incentive package as the full-time Chief Executive
Officer of Spinco shall be as follows:
1. Salary. Your annual salary shall be $825,000.
2. Annual Incentive. You will be eligible to participate in Spinco's
annual incentive compensation program. For the first full fiscal year of your
employment, you shall be entitled to a minimum incentive award of $577,500, the
equivalent of 70% of your salary, and a maximum award of $1,072,500, the
equivalent of 130% of your salary, depending upon the achievement of performance
targets established by Spinco's Board of Directors.
3. Long-Term Incentive. You shall be eligible to participate in Spinco's
Long-Term Incentive Plan. You shall be eligible for a minimum award of $625,000
and a maximum of award $1,250,000, depending upon Spinco's achievement of
performance goals established by the Board of Directors of Spinco for multi-year
cycles. The payment
[LOGO] Pitney Bowes
shall be made at the end of each performance cycle in accordance with the terms
of the plan.
4. Equity. You may be granted stock options in Spinco at the discretion of
Spinco's Board of Directors.
5. Benefits. During the period of your employment, you shall be eligible
to participate in Spinco's benefits programs which are made available to Spinco
employees of equal status.
6. Welfare Benefits. During your employment, you and your eligible
dependents shall be eligible to participate in Spinco's group medical and dental
plans which are made available to Spinco employees of equal status.
You understand and agree that immediately prior to the spin-off, the terms and
conditions of your employment with Spinco may be reflected in a formal written
document, which would contain the compensation terms herein and would be subject
to the approval of the Spinco Board following the spin-off. In the event the
Business is not spun-off, this agreement imposes no further independent
obligations upon the Company with respect to your employment or termination of
employment by the Company.
This agreement shall be effective as of the date you sign the agreement and
shall continue in effect until you are notified in writing by me that the
agreement ceases to be effective as of a date I shall specify in the notice.
Sincerely,
/s/ Michael J. Critelli
Michael J. Critelli
Chairman and
Chief Executive Officer
Agreed to and Accepted by:
/s/ Marc C. Breslawsky
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Marc C. Breslawsky
11/8/00
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DATE
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[LOGO] Pitney Bowes
Chairman of the Board
and Chief Executive Officer
October 27, 2000
Marc C. Breslawsky
51 Eleven O'Clock Road
Weston, Connecticut 06883
RE: Separation Agreement
Dear Marc:
This letter is intended to provide you with the Company's understanding of how
the Separation Agreement between you and the Company dated October 27, 2000 (the
"Separation Agreement") will affect certain employee and executive benefit and
incentive plans and programs in which you participate if you incur a termination
of employment pursuant to the Separation Agreement. This letter will also serve
as the Company's commitment to administer these plans and programs in the manner
set forth below. The defined terms in this letter have the meanings that are
contained in the Separation Agreement unless a term is more specifically defined
in this Agreement.
Stock Options.
-------------
As of the Registration Date, all outstanding stock options granted to you prior
to October 20, 2000 pursuant to the Company's 1991 Stock Plan or any successor
plan shall remain exercisable in accordance with their existing terms. Such
options shall expire on their stated expiration date; provided, however, options
granted prior to 1999 will expire on the earlier of (i) the fourth anniversary
of your termination from the Company or any company that is a spin-off of the
Company, as defined in the 1991 Stock Plan (a "Spin Off"), whichever occurs
later, and (ii) their original term.
The special option granted on October 20, 2000 ("Accelerated Option Grant")
shall vest and be exercisable in accordance with the terms and conditions set
forth in your award agreement. Such terms shall include a provision requiring
the forfeiture of the entire Accelerated Option Grant if you retire or
voluntarily resign from the Company or the Spin Off, prior to February 1, 2002.
If you retire or voluntarily resign from the Company or the Spin-off on or after
February 1, 2002, the Accelerated Option Grant shall become immediately 100%
vested and exercisable as of such retirement or voluntary resignation.
If you are terminated pursuant to Section 3 of the Separation Agreement prior to
February 1, 2002, the entire Accelerated Option Grant shall be immediately 100%
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vested and exercisable as of the date of such termination. For purposes of the
1991 Stock Plan and options granted to you thereunder, your termination of
employment from the Company as a result of your employment with the Spin Off
shall not be treated as a retirement or other termination of employment from the
Company. The 1991 Stock Plan will be amended to reflect the terms and conditions
of the Accelerated Option Grant and other commitments described herein,
including the retirement, termination of employment, vesting and exercise
treatment with respect to the Spin Off.
The treatment of your stock options following the execution of the Separation
Agreement do not differ from that of any similarly situated executive of the
Company.
Deferred Incentive Savings Plan
-------------------------------
The Company will pay you as soon as practicable following the Resignation Date a
lump sum amount in cash equal to the balance of your accounts under the Deferred
Incentive Savings Plan pursuant to the payment provisions of the plan.
Retirement Plans
----------------
The Company will treat your retirement plan benefits in the following manner:
(a) 401(k) Plan
As of the Resignation Date, your participation in and contributions to the
Pitney Bowes 401(k) Plan ("401(k) Plan") will cease. Your rights to a
distribution, rollover, forms of payment and deferral regarding your account
balance will be determined in accordance with the terms of the 401(k) Plan.
(b) Pension Plan
You will be credited during your Severance Period with service through March 31,
2004 in lieu of actual years of service with the Company for all purposes under
the Pitney Bowes Pension Plan, including determining your basic pension benefit
and any transition credits to which you may be entitled under the Pension Plan.
Your severance payment under Section 3 of the Separation Agreement and any PBC
incentive award under Section 4(a) of the Separation Agreement will be credited
as pensionable earnings. Any CIU payment made under Section 4(b) of the
Separation Agreement will not be credited as pensionable earnings in accordance
with the plan's existing provisions. If, after providing the service credit and
determining pensionable earnings as described in the preceding sentences, your
pension benefit under the Pension Plan exceeds the limits imposed by the plan
and applicable law, the excess amounts will be paid from the Pitney Bowes
Supplemental Pension Plan ("SERP"). If your employment with the Company
continues beyond March 31, 2004, you will continue to accrue pension benefits in
accordance with the terms and conditions of the Pension Plan and SERP. The
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[LOGO] [Pitney Bowes]
determination and payment of your pension benefits under the Pension
Plan and the SERP remain in all respects subject to the terms and
conditions of the respective plans.
Sincerely,
/s/ Michael J. Critelli
Michael J. Critelli
Chief Executive Officer
AGREED TO AND ACCEPTED BY
/s/ Marc C. Breslawsky
------------------------------
Marc C. Breslawsky
10/27/00
------------------------------
Date
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SEPARATION AGREEMENT
AGREEMENT dated as of October 27, 2000 between Pitney Bowes Inc., a
Delaware corporation (the "Company"), and Marc C. Breslawsky ("the Executive").
WHEREAS, Marc C. Breslawsky is a valued executive of the Company;
WHEREAS, the Company considers it essential to the best interests of its
shareholders to provide the Company and the Executive with the protections of
this Agreement; and
WHEREAS, the parties desire to enter into this Agreement;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein and for other good and valuable consideration, the parties agree as
follows:
SECTION 1 Definitions
For purposes of this Agreement, the following terms shall have the meanings
indicated.
"Board" means the Board of Directors of the Company.
"Cause" means (i) the Executive's conviction or plea of guilty or nolo
contendere to a felony or crime involving moral turpitude, dishonesty, breach of
trust or unethical business conduct or any crime involving the business of the
Company; (ii) the Executive, in the performance of his duties for the Company,
to the material and demonstrable detriment of the Company, engaging in (A)
willful misconduct, (B) willful or gross neglect, (C) fraud, (D)
misappropriation, (E) embezzlement or (F) theft; (iii) the Executive's willfully
disobeying the directions of the Board to adhere to the policies and practices
of the Company or to devote substantially all of his business time and effort to
the Company; (iv) the breach of this Agreement in any material respect, if such
breach remains uncured (if curable) for a period of thirty (30) days following
written notice by the Company of such breach; or (v) the Executive's
acknowledgment in writing in any agreement or stipulation to, or the
adjudication in, any civil suit, of the commission of any theft, embezzlement,
fraud, or other intentional act of dishonesty involving any other person. No act
or failure to act on the Executive's part shall be deemed willful unless done or
omitted to be done by the Executive not in good faith and without reasonable
belief that the Executive's action or omission was in the best interest of the
Company.
"Resignation Date" means the date that the Executive terminates employment
with the Company at the Company's request in its sole discretion and resigns
from all positions and directorships within the Company, including, but not
limited to, a termination of employment with the Company as a result of
employment with a division
or subsidiary that has been divested, spun-off, split-off, or sold by the
Company ("the Divested Entity").
SECTION 2 Term of Agreement
This Agreement shall be in effect from the date hereof.
SECTION 3 Severance
(a) If the Executive's employment with the Company is terminated by the
Company at its request in its sole discretion without Cause (other than by
reason of disability or death), the Company shall pay the Executive cash
compensation in the amount of $2,805,000, which is equal to the sum of two (2)
times his current base salary plus 140% of his base salary. If the Executive's
employment is terminated hereunder prior to April 1, 2002, the payment shall be
made in equal monthly installments over the period from the Resignation Date
through March 31, 2004. If the Executive's employment is terminated hereunder on
or after April 1, 2002, the payment shall be made in equal monthly installments
over a two year period beginning on the Resignation Date. The period during
which the payment hereunder is made shall be referred to in this Agreement as
the (the "Severance Period").
(b) The severance payments to be made under this Section 3 shall be in
lieu of any severance pay to which the Executive may otherwise be entitled under
the Company's severance plans and practices; provided, however, that in the
event of a change of control of the Company the Executive may be entitled to
certain rights that exist under the Company's Senior Executive Severance Policy,
which rights would be offset by the severance payments made to the Executive
under Section 3 hereof.
SECTION 4 Other Incentives
(a) The Executive shall be eligible for a pro-rated PBC incentive award
pursuant to the Company's Key Employee Incentive Plan ("the KEIP") based on the
number of whole months of service completed with the Company by the Executive
during the year in which the Resignation Date occurs. The payment shall be made
at the time such incentive awards are paid to actively employed senior
executives in accordance with the terms of the KEIP. It is understood that the
Executive has no entitlement to the PBC incentive award described hereunder and
that the determination to pay the Executive such PBC incentive award is made at
the sole discretion of the Board with the Executive's individual performance
rating being based on the Company's overall performance rating.
(b) The Company shall pay the Executive a payout of outstanding Cash
Incentive Units ("CIUs") pursuant to the KEIP at the close of each respective
cycle in accordance with the terms of KEIP; provided, however, that such payout
of CIUs shall be based on the Executive's total number of completed months of
active service with the Company during each 36 month CIU cycle and on the
achievement of performance-based targets associated with the CIUs. For purposes
of this prorated calculation, the targeted payout
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shall be multiplied by a fraction, the n